Copper has slipped somewhat overnight but there is still a slew of fundamental reasons supporting the global bellwether of economic health at the moment.
Interestingly a Refinitiv piece has added another layer of complexity to the price rise in copper. Earlier in the year there was a spate of options buying with strikes between $7000-$8000/tonne. Now sellers of these options hardly expected the strong rise in the price and would have willingly sold them and used the premium to purchase puts as a zero-cost strategy. The issue is that we have gone through massive amounts of strikes and open interest over the past two weeks. The move from $7000/tonne to the high of $7708.50/tonne seen on Monday covers some240 000 tonnes of production. This would undoubtedly have required some form of delta hedging by purchasing either the underlying or the future to make good on the delivery component, all adding to the price pressures.
