by Craig Hemke, Sprott Money:
It’s that time of the month again where options on COMEX gold and silver will price and settle. This typically brings all sorts of price manipulation shenanigans, and this week promises to be no different.
Actually, the fun began last week with the monthly NYSE option expirations on Friday, March 21. All sorts of listed options on ETFs and mining shares expired at the NYSE close that day, and after strong price rallies earlier in the month, shenanigans were expected for NYSE option expiration too. We didn’t have to wait long. As soon as the NYSE opened at 8:30 CT, down went COMEX gold.
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Gold – 5-minute candlestick chart
Impact of NYSE Expiration on Mining Shares and ETFs
The ripple effect moved many mining share and ETF calls out of the money, and by the close, they were worthless. Nowhere was this more evident than in the trading of the big silver ETF, the SLV.
I had tried to warn TFMR site members and all of my X followers that these antics were pending, but what else could we do? In the end, we were powerless to stop them.
SLV Price Manipulation and Options
By the time Friday began, there were 84,130 open call options at the $30 strike price AND there were also 40,310 open puts, with price beginning the day at $30.50. If any of these options were to settle “in the money”, they would pay out in cash to the option holder later in the day. Instead, the price of SLV closes RIGHT AT $30.00—thus making all 124,440 options worthless.
And that’s just one example. How many countless thousands of options on the other ETFs and mining shares were rigged out of the money by the time the NYSE closed on Friday?
COMEX April Gold Contract and Upcoming Expiration
Now our attention turns to the monthly COMEX option expiration, which is scheduled for the COMEX close on Wednesday, the 26th. COMEX option expiration day almost always brings price manipulation attempts as the option writers attempt to maneuver price into a spot that minimizes their potential loss exposure.
The current contract of interest is the Apr25 COMEX gold. This contract has served as the front month for the past 60 days and has seen considerable trading volume in its options too. As I type this on Monday, the 24th, the current price of the Apr25 gold is down to $3014 after peaking at $3065 back on Thursday, the 20th. Could this “correction” be related to the pending option expiration for Wednesday?
