COT Gold, Silver and US Dollar Index Report - April 15, 2016
COT Gold,
Silver and US Dollar Index Report - April 15, 2016
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Published: Saturday, 16 April 2016.
The COT reports which we look at each
week provide a breakdown of each Tuesday's open interest for markets in which
20 or more traders hold positions equal to or above the reporting levels
established by the CFTC. The weekly reports for Futures-and-Options-Combined
Commitments of Traders are released every Friday at 3:30 p.m. Eastern
time. The short report shows open interest separately by
reportable and Non-reportable positions. For reportable positions,
additional data is provided for commercial and non-commercial holdings,
spreading, changes from the previous report.
Futures and Options Combined
What does this title
mean? A future is a standardized contract traded through
regulated exchanges where an investor buys or sells a contract at a specified
price for a specific date in the future. The price includes
the interest charge due to the seller by the buyer from the date of the
contract to the due date. An option is the ‘right to buy or
sell’ a contract at a fixed date in the future at a specific [strike]
price. The difference is that a futures contract is an
agreement to buy or sell, whereas an option gives the holder the
right to buy or sell. An option holder can decide not to
take up that right and will only lose the cost of buying the
option. His loss is therefore definable at the start of his
investment, while the potential profit has not limit to
it. A futures contract is usually leveraged [a loan
provided] up to 90% of the contract. However, with the owner
liable to top up his ‘margin’ to maintain this 10% his potential losses can
rise far higher than his investment. A ‘long’ [buying] contract
limits its loss to the full price of the item, whereas the ‘short’ [selling]
contract has no limit except the height that the price of the item can rise
to.
The Commitment of Traders report [COT]
is therefore a report on the overall position of the Commodity Exchange
[COMEX or NYMEX].
Large & Small Speculators
The word “speculator” implies that the person is simply making a bet on
the way he thinks the price of the item is going to move. In
essence, he is a gambler. A trader might be this, but then
again he might be an Arbitrageur, buying in one market and selling in another
to capture the price difference between the two. He wants to
deal as fast as possible so as to minimize his risk of a price movement while
he is exposed. We would not put him in the same category as
a speculator.
Contract
One contract is 100 ounces of gold, or 5,000 ounces
silver. The numbers referred to above are therefore the
number of contracts in that position. The net long
speculative position is found by adding the large and small speculators
bought contracts and deducting the large and small speculators sold
contracts. We work on there being 32,150 ounces in a tonne.
Buy [Long]
A long position is where an investor, trader, speculator buys 100 ounces
x the number of contracts.
Sell [Short]
A short position is where an investor, trader, speculator sells 100
ounces x the number contracts.
Spreading
For the options-and-futures-combined report, spreading measures the
extent to which each non-commercial trader holds equal combined-long and
combined-short positions. For example, if a non-commercial trader in Gold
futures holds 2,000 long contracts and 1,500 short contracts, 500 contracts
will appear in the "Long" category and 1,500 contracts will appear
in the "Spreading" category.
Open Interest
Open interest is the total of all futures and/or option contracts entered
into and not yet offset by a transaction, by delivery, by exercise, etc.
The aggregate of all long open interest is equal to the aggregate of all
short open interest.
Reportable Positions
Clearing members, futures commission merchants, and foreign brokers
(collectively called "reporting firms") file daily reports with the
Commission. Those reports show the futures and option positions of traders
that hold positions above specific reporting levels set by CFTC regulations.
Commercial and Non-commercial Traders
When an individual reportable trader is identified to the Commodities
Futures Trading Commission, the trader is classified either as
"commercial" or "non-commercial." All of a trader's
reported futures positions in a commodity are classified as commercial if the
trader uses futures contracts in that particular commodity for hedging as
defined in the Commission's regulations (1.3(z)).
Non-reportable Positions
The long and short open interest shown
as "Non-reportable Positions" are derived by subtracting total long
and short "Reportable Positions" from the total open interest.
Accordingly, for "Non-reportable Positions," the number of traders
involved and the commercial/non-commercial classification of each trader are
unknown.
Changes in Commitments from Previous
Reports
Changes represent the differences
between the data for the current report date and the data published in the
previous report.
Number of Traders
To determine the total number of
reportable traders in a market, a trader is counted only once regardless whether
the trader appears in more than one category (non-commercial traders may be
long or short only and may be spreading; commercial traders may be long and
short). To determine the number of traders in each category, however, a
trader is counted in each category in which the trader holds a position.
Therefore, the sum of the numbers of traders in each category will often
exceed the "Total" number of traders in that market.
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