Options (and the Week) Expire With a Whimper as Bonds Steady

U.S. Treasury Bond prices traded in a very tight range yesterday in opposition to the wild intraday swings the markets have had to bear with all week.  Consequently, it was a relatively quiet, low volume day after the beatings on Wall St. all week long with the S&P 500 remaining essentially flat, closing at 1215.65 down 48.20 or 3.8% for the week.  The Dow Jones Industrials fared better gaining 25.43 but still closed the week down 357.52 to 11796.16, a 2.9% loss.  With option contracts for November expiring today there is always the possibility of wild swings as traders attempt to make good their leveraged bets on price.

However, the crisis in Europe subsided, albeit temporarily, on rumors of an International Monetary Fund bailout of some form, funded by the European Central Bank, surfaced and “gained traction” that calmed credit markets.  The ECB was also seen in the Italian and Spanish Bond pits shoring up prices there.

Similarly, the commodity pits were also muted in their trading as Gold was also essentially unchanged at $1724.00/oz.  Copper, which can act as a leading indicator in commodity prices gained $0.03 to close the week at $3.40/lb.  Silver took back some of what it lost on Thursday after the Shanghai exchange raised margins to 18% from 15% gaining $0.53 to close at $32.28/oz.  The industrial metals, technically, are in bearish short-term formations which this week’s trading did nothing to alleviate.  Gold has held above its 50 day moving average which is acting as support.

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Tom Luongo

About Tom Luongo

Tom Luongo is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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