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You have several situations that could create what we saw other then new
money coming into the market or just add to the clamor as new money does
enter the market. These should be considered when looking at the overall
picture of the market. Those who have large positions in the market and are
long calls with expiration on Friday can exercise those calls. Those that
are naked short calls have to buy stock to cover if they can't repurchase or
roll to cover at theoretical . Those that are short stock against an option
position could exercise for delivery against their short stock. There are a
lot of strategies that could call for exercise or the purchase of stock to
cover a position that is about to expire. Many just roll to the next month
if there is sufficient liquidity to do so and the options are trading at
theoretical. There was such a stink raised because of the volatility created
on expiration Friday that many of the large traders started to adjust
positions on the Wednesday prior to expiration.
Dan Harels wrote:
> Ira,
>
> Would you expand on this thought a little bit? Who is adjusting and and
> why?
>
> Thank you,
>
> Dan
>
> >After the past warnings about the Friday volatility, many of the option
> >related adjustments occur on the Wednesday prior to expiration. Ira
> >
>
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