COT Gold, Silver and US Dollar Index Report - September 30, 2016
COT Gold, Silver and US Dollar Index Report - September 30, 2016
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Published: Friday, 30 September 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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