What if the CFTC (U.S. Commodity Futures Trading Commission) takes action on the derivative market? Should one still use gold and silver options?
Generally, yes. The market discounts the information about the possibility of the action taken by the CFTC, since it is generally known that such a possibility exists. Consequently, the price patterns that we analyze already include this information. Over the past 10 years there were many times when many investors expected a sudden surge in the price of the white metal based on COMEX default, big CFTC intervention etc. - yet, it did not take place. However, please note that corrections DID take place many times.
We are not saying that the above will not happen at some point. All we are saying is that there is a bigger chance that the market will behave in a "regular" way - meaning that no default and no big intervention will take place. How do we deal with that? We keep our physical holdings intact, while using speculative capital (in this case: options) for trade in case the market once again behaves in a "normal" way.
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