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Strategies & Market Trends : Canadian Options
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To: Porter Davis who wrote (48)1/25/1997 5:29:00 PM
From: kajtek   of 1598
 
Porter

How will I know if people are buying or selling calls or puts.
Does the volatility increase when they are buying and decreases when they are selling.
Do all options go through specialists hands. What I mean If I buy, you sell and hedge it with stock and when I sell you buy and hedge or some transactions go client to client so when I sell somebody is buying and vice versa but it is not a specialist?

Is my assumption correct?
If a lot of people buy calls then the price of calls will increase even if underlying stock stays at the same level. Them implied volatility would increase. The reason for this is that specialist may set a higher price for calls if there is great demand.
If a lot of people sell calls then specialist have to buy them and if the demand is high they may offer less and lower the price of calls? Implied volatility would decline?

How does it work . I noticed on Friday during the end of the day implied volatility increased and later specialist from states said on Bre-X BB that a lot of calls had been bought.
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