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Technology Stocks : Oracle Corporation (ORCL)
ORCL 195.65-7.1%10:41 AM EST
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To: dragonpawn who wrote (11040)6/15/1999 2:20:00 PM
From: Georgecc  Read Replies (1) of 19079
 
The open interest on the Jun 25 Calls (a very short term play since they expire friday) is 30,000. The Jun 25 Puts open interest stands at 27000 contracts.

You will see this kind of action close to expiration, but many more thousands of contracts have been traded in 10's and 100's and a few 1000's over the past months since the Jun month was opened. In other words there are a lot of both pros and regular folks trading options.

The price will not likely "go the direction they want", especially considering that "they" are both traders of puts and calls, with nearly balanced open interest. Maybe on friday there will be some action caused by stock purchases or shorts to cover that will cause some movement. But which way will it go? I don't think you can predict based on just this info.

If the stock is close to or below 25 on Friday, the writer's of the calls will be richer since the calls will expire worthless or nearly so. If the stock closes on friday above 26 5/8 then the buyer of these calls will make a bundle. If the stock is at 25 or above the puts will expire worthless. Overall, the writers of both the puts and calls at 25 will make a bundle.

A closer look at yesterday reveals that at 10:19 there was a large block trade of stock and at 10:30 there was a large trade of the Jun 25 calls. At 10:39 the stock made its move from 25 7/8 to 26 5/8. What does it all mean?

As I speak the stock is at 25 5/16 (Tues. at 10:53 pacific).
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