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Just to be clear 80% of it isn't fluff. About 60+% of option trading is
nondirectional. Married puts would be just a trade. Where a long put is
actually part of a synthetic long call.... stock + put = call. There has
been an enormous amount of hedging activity completed in the past many
months. Much of it occurs in the listed put market, but a great deal more
occurs in the unlisted OTC collar market. This market is dominated by long
dated stuff which will probably not traded for many many months. Most of it
is dated after the first of the year anyway.
-----Original Message-----
From: Don Thompson [mailto:detomps@xxxxxxxxxxx]
Sent: Wednesday, March 14, 2001 3:32 PM
To: realtraders@xxxxxxxxxxxxxxx
Subject: Re: [RT] GEN: Novice Notice
Ira,
So if these people are the insitutions, then the potential exists for a fair
amount movement.. The third situation is, if they do nothing into
expiration, but that is stupid if they are sitting on a fair amount of
value.
But if they decide to exercise: Why is this dumping stock on to the market?
I just have a hard time getting the role of the
market maker and the market they service.
The good Doctor says about 80% of the option business is just fluff or some
kind of offsetting, because he says, or I interpret that the
PC ratios published by the CBOE are just a couple of grain of salt.
So why is this going to be a big deal?
Ira wrote:
> right now the most important thing is whether the holders of deep puts
decide
> to exercise and dump more stock on the markets or if they decide to sell
the
> puts and force the buyers to purchase stock.
>
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