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Half, have to go out worthless. If all the calls are in the money, logic says
all the puts are worthless. Ira
THE DOCTOR wrote:
> The percentage of options going off-line as closing trades has been a bit
> higher month to date....this would allow one to conclude that a good portion
> of these users have in fact been successful. Drawing a conclusion as to
> "were they lucky or smart" is impossible. I'm anxious to see what
> expiration week activity looks like. At this point if the market stays up I
> would venture a very low percentage of options will go off worthless. At
> the point I wouldn't be too surprised to see the number in the mid 20%
> area...which would be a remarkably low value.
>
> znmeb@xxxxxxxxxxxx wrote:
>
> > [Quoth the THE DOCTOR:]
> > >
> > > Just a brief observation....Option Volume at CBOE the last
> > > few days has been huge. Normally this would bring one to
> > > the conclusion that the expiration rolls were occurring this
> > > week. It has grown quite common to sell the rolls occur the
> > > week before expiration, especially in the last few years.
> > > That DOES NOT seem to be the case. These last few days the
> > > volume has included only modest index volume where the rolls
> > > would occur. Today's volume included almost 60,000 Leaps.
> > > This kind of activity seems to indicate more of a day trader
> > > mentality, especially given that the volume has not been
> > > accompanied by a significant rise in Open Interest.
> > >
> > > Put/Call ratios, which I'm a believer really are no longer a
> > > credible indicator, are also fairly ordinary.
> > >
> > > Conclusion: I'm not certain....I expect with nominal stock
> > > prices viewed by some to be so high that there is a greater
> > > use of ITMs as day trading instruments. Additionally the
> > > mix of retail/institutional business has tipped a bit more
> > > toward the institutional side over the past couple of day,
> > > but again the numbers are not dramatically out of line.
> > >
> >
> > I think it has something to do with the explosion in prices well beyond
> > "conventional reasonable valuations" of Internet stocks like Amazon
> > (AMZN). You are probably right; people are daytrading these options
> > because their price swings are suitable for daytrading. But the
> > question, as always in technical analysis, is, "Are we talking smart
> > daytraders or stupid daytraders?"
> >
> > --
> > znmeb@xxxxxxxxxxxx (M. Edward Borasky) http://www.teleport.com/~znmeb
> >
> > If God had meant carrots to be eaten cooked, He would have given rabbits
> > fire.
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