Comment Text:
options need to be reported daily by the # of shares that could be transferred by strike price. further, someone in the commission needs to figure out whether these shares that could be transferred is lower than the # of shares in the float.
this is an easy way to manipulate price and make a profit, if you short or drive up the price. it is too bad that such speculation is happening because there are industries that have financial interests and want to hedge, and the speculators want to exaggerate the price (up or down) so that they can make their profit on the back of commercial interests.
somehow, you need to right this ship because the speculation has gone too far. while options are easy to trade, cheap to make a profit, these qualities also draw speculation.
the CFTC is going to have to join the regulatory agencies to examine the effect of many strategies that are used in conjunction with derivatives, options, bonds and equities. in a way, options are the easiest to look at impact because they settle every month for that month's strike price.
some of the traders have inside information because they are involved with renting warehouse space for commodities or they are involved in the industry. most particularly, i am thinking of the banks that have warehouse subsidiaries to house the commodities so that they can buy low and sell high. banks should not be trading in options, even though it's cheap, even though it's an easy way to make profit. the bank $ seems to have overwhelmed the other interests in the market.
but anyone who has a financial interest in commodities has some inside information, such as contract prices offered or agreed to, etc. however, the bank is not a producer and not a consumer of the commodities. it is merely a middleman, trying to make a profit. did high frequency trading first begin with the banks so that they could profit in options, commodities and equities? does high frequency trading suck the demand out so that lower prices are easier to reach, so that price triggers will cause the investor to sell cheaply? all this trading does have an impact on the classic supply and demand curve and the sooner we deal with this, the better. speculation does have an endpoint, but the endpoint might be brutal to some interests. the stock market facilitates capital formation and traders are a parasite on that. however, when trading becomes the major force, particularly if they want to drive prices downward, then the investor will suffer. the investor will pay a price too high and sell too low. if traders and speculators cannot follow rules, then maybe we need to go back to the basics and not have options or derivatives or commodities. i don't know. certainly, the market should be examined to disclose the ownership interest or financial interest of the participants.
banks are a trusted institution. they should not be betting against the consumer, against the farmer, against their customers, against the economy. banks cannot be the government or a one-stop monopoly. banks should be banks. if banks don't want to be banks, they should give back all the customers' deposits, they should give up the FDIC insurance, they should divest themselves of any subsidiaries that are not necessary for a bank.
if news does not drive the price, then something else is driving the price. it means weak longs are no longer in the market trading and the market force that is moving prices should be examined. this is an indication that the market might be broken.
an option can never be used to substitute for a share of stock because the option depends on a counterparty producing said share.
and a single-stock derivative is just a future contract for a share of stock. if there is no option for the stock, then there should be no single-stock derivatives.
it appears to me that the market is "trading-crazy", obsessed with making the profit without making the investment. can you trade? yes. but should you? not sure.
