Markets: A Rigorous Course

M10 · Problem 20 ★★ Check

Who is on the other side?

A disaggregated report (thousands of contracts, illustrative) shows: Producer/Merchant long 60, short 210; Swap Dealers long 90, short 40, spreading 20; Managed Money long 180, short 45, spreading 30; Other Reportables long 70, short 50, spreading 25. Open interest is 520. (a) Using Proposition 10.12, compute the nonreportable long and short positions. (b) Compute each category's net position and verify that they sum to zero. (c) A commentator writes "funds are near record long, so the market is crowded and hedgers are positioned for a fall". Which half of the sentence follows from the data, and which does not? Explain using the definition of the producer/merchant category. (d) Swap dealers are net long 50. Who, economically, is probably behind that position?

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