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That is absolute fiction. It assumes the open interest is evenly distributed
between ITM,OTM,ATM and between puts and calls. The OCC calculates the number and
publishes it EVERY MONTH. It has NEVER been over 35% in the 25 year history of
listed option trading. If you doubt the data call the OCC or the CBOE and request
the market stats book. Your assumption would also assume that all positions are
carried to expiration...Generally over 60% close prior to expiration,,,,,again you
might want to reference the market stats book.
Ira wrote:
> 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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