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Stan Rubenstein wrote:
>
> DanG: thanks for responding but you didn't address the key question;
> are you saying that DMG delayed the announcement to the post-Expiry date
> to avoid illegality? What governed their decision to make public their MRK
> recommendation the very first day after Options Expiration?
>
> By the way the stock moved up significantly, 105.xx to 109.xx the last
> 3 days before the DMG recommendation.
>
> Regards,
> STAN
>
> ----------
> > From: TheGonch at MediaKat <Daniel.Goncharoff@xxxxxxxxxxxxxxxxxxxx>
> > To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> > Subject: Re: Fw: Post Expiration Announcement
> > Date: Wednesday, January 21, 1998 4:03 AM
> >
> > It would be entirely illegal to accumulate atock or options in
> > anticipation of a broker recommendation. Despite the myths, the big
> > firms don't do it because the risk to their reputation is too great.
> >
> > I have no doubt that if the recommendation had come out during expiry
> > week, there would have been accusations of manipulating expiration...
> >
> > DanG
> >
> > Stan Rubenstein wrote:
> >
> > > >
> > > > The problem I would like to address to RT group concerns the timing
> of
> > > the
> > > > DMG recommendation relative to Option
> > > > Expiration. As follows:
> > > > I know from my own corporate experience that such Broker
> recommendations
> > > > are not made overnight and usually
> > > > require time for reviews by management levels in the Brokerage. This
> > > could
> > > > be a matter of days or a even a week.
> > > > Since Option expiration was close at hand when DMG must have made the
> MRK
> > > > decision they had to also decide
> > > > on which side of the Expiration day to make it public..
> > > >
> > > > Would they have taken into consideration that many Call buyers would
> > > > benefit from a pre-Expiration announcement
> > > > and DMG didn't want to unduly enrich such outsiders?
> > > >
> > > > Since some of DMG's preferred clients with early knowledge of the
> pending
> > > > public recommendation would have placed
> > > > MRK calls to take advantage of it an announcement before expriration
> > > could
> > > > have appeared self-serving to DMG.
> > > >
> > > > Or are there any SEC rules governing the timing of Broker
> recommendations
> > > > on or about Options Expiration date?
> > > >
> > > > The Open Interest on Jan 105 and Jan 110 calls was approximately
> 13,500
> > > > contracts so this decision by DMG
> > > > was not trivial.
> > > >
> > > > Hope to hear from RTers who share the question; what are the factors
> > > > governing a Broker Recommendation
> > > > Announcement prior to or after a near-in Options Expiration?
> > > >
My point is that I don't think anything influenced the release after
expiry. There is only 20 trading days a month, and hundreds of stocks
being followed. At random, earnings changes will come out before, during
and after expiry. Yes, it will have an effect on trading in the
environment caused by expiry, but major firms will not take the legal
risk to manipulate the timing of the announcements for a few small $$.
It just looks like it to those predisposed to a conspiracy theory of the
stock market. (That is not intended as a personal comment, but a
reaction to the many many posts I read whining about how every broker,
MM, etc. is out to screw you -- this is true to the same extent that
many appliance stores try to sell you a refrigerator at as high a price
as you will accept.)
JMHO
TheGonch
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