Futures were initially called from unchanged down to 20 lower this morning, with the lower estimate coinciding with the actual opening.
Little to no export business has been concluded in the all important Far East markets this week, and without a firm early bid this morning, December was allowed to open at new contract lows this morning and continue sliding for the rest of the session.
Although the spec funds have quite a large “traditional short” position on in that the trend following shorts are being offset by the index tracking funds, the specs continue to sell on a steady, daily basis with today being no exception.
The extra weakness however, was owed more to the fact that one of the largest merchants was again a heavy seller of March via the options pit. This group of note bought 1200 Dec 48 puts for 115-140, sold 750 March 55 calls fro 130, and 500 March 56 calls for 95.
Resulting delta offsets from the locals kept the futures market weak, and Dec managed to test out support around the 48 cent level before settling down 45. The Dec March spread traded a little around the 350 level, though activity in this has been fairly light.
The real action won't take place until the index fund roll, scheduled to begin on the 7th of November, and with Dec open interest now a staggering 121,000 contracts, its going to be a very interesting roll.
Estimated volume today at 10.500 lots was not overtly impressive, and in fact was overshadowed by the market.
marketing@alchempro.com
