A ”Super Magnet” was placed yesterday with roughly 37,351 new Comex gold call options in the February 2014 option cycle.
10,546 calls were added at the $2,100 strike price, costing something like $24.20 per ounce, so one option contract would cost $2,420, or roughly $25,521,320 for this position.
8,250 calls were added at a newly created $2,300 strike price, costing something like $12.60 per ounce, so one option contract would cost $1,260 for a rough total of $10,395,000 for this position.
10,000 calls were added at a newly created $2,400 strike price, costing something like $9.60 per ounce, so one option contract would cost $960, for a rough total cost of $9,600,000 for this position.
5,000 calls were added at a newly created $2,700 strike price, costing something like $5.00 per ounce, with one option contract costing $500, for a rough total cost of $2,500,000 for this position.
2,625 calls were added at a newly created $2,780 strike price, costing something like $3.50 per ounce, so one option contract would cost $350, for a rough total cost of $918,750 dollars for this position.
So, the approximate grand total cost for this CALL OPTION loading into the February 2014 option cycle comes to $48,935,070.00. Let’s say $50 MILLION in round numbers.
With a total of 42,230 new call options added yesterday, of which 37,351 were added in the February 2014 option cycle, the total Comex call option open interest increased yesterday (January 15, 2013) by 6.14%! This was a huge increase by historical norms.
This call action could be a result of several pending new issues, one being the new dispute between the South African government with the mining industry. Another pending development is a fight over raising the debt ceiling. Additionally, in Europe there are ECB suggestions of currency devaluations, and the situation in Japan could very well be spooking the currency markets. Any and all of these developments might be yet another excuse to “buy option insurance” on gold.
The last time a “Super Magnet” was placed was back in July of 2012 when gold was bottoming out. That “Super Magnet” was done over several days. Yesterday’s action was far more dramatic.
The July 2012 “Super Magnet” was at strike prices far lower than those shown below and had the effect of pulling gold prices higher from the low $1,500’s to just short of $1,800, where a roadblock was built with a huge net call position in the December 2012 option cycle. If it wasn’t for that road block, I think gold would have gone a lot higher, perhaps over $1,900 back in the fall.
Anyway, this “Super Magnet” possibly could put enough upside pressure on prices to finally get gold past the $1,800 mark and perhaps to new highs. If the time frame holds true, the spike in prices should kick in sometime in early February and run perhaps through April or May 2013.
What will be interesting is to see if there are additional calls placed over the next several days.