Tuesday's Trade

The results on the day for Tuesday's trade were: The extent of the decline mid-day of the CBOT TBONDS Dec 2011 contract was a total decline of ~1%.

The news release by GBN.V on the day during trading hours probably affected the share price most with a ~5.4% rise.

http://quotes.ino.com/chart/?s=CBOT_ZB.Z11.E

Sudden rise in open interest at various levels for the December contract expiry are clustered at the high set in September for the calls, which is now likely out-of-the-money, but the largest put is clustered around 140. There is a lengthy cascade of puts below this level.

This gives contract holders the right to sell all of these futures contracts after options expiry should the price decline past this point and expire in-the-money. That means that the bets are placed so that the option holders are using leverage to sell these contracts once options expire in December.

Options expiry in November resulted in a sell-off.

http://quotes.ino.com/options/?s=CBOT_ZB.Z11.E

Gaps need to be filled on the interest rate swap associated with the 30-year treasury and will likely be filled:

http://quotes.ino.com/chart/?s=CBOT_I3.Z11.E

The forecast would be that a sell off should occur in long-dated treasuries in December. GBN.V shares should reflect this move by rising proportionately in price.

The scenario that most favours a gold mining stock would be low to negative nominal interest rates at the short end of the yield curve, pushing up gold prices, and rising rates at the long end of the curve, favouring gold-related equities.

-F6