MRV Communications (MRVC) opinions? Message Board

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Technology Stocks : MRV Communications (MRVC) opinions?

MRVC 9.975

-0.1%

Aug 15 5:00 PM EST

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To: ahhaha who wrote (14329)	7/7/1999 3:06:00 PM
From: Bruce L	Read Replies (2) of 42804

MMs would have an incentive to hold the stock to 15 if they had sold uncovered calls at that strike. It's my understanding that they frequently do this- sell short term options - to generate income. Also,most MMs will at times hold a positive inventory of the stock in their trading accounts and will sell call options to reduce the risk/increase the return. They may not want to lose these shares when the stock is obviously going up. How do they do it? It's a widely shared observation of stock traders that stocks usually close at or close to the nearest strike, in this case 15 for MRVC. Since the observation is widely believed, it tends to be self-fulfilling: No one wants to buy MRVC above 15 if they believe it can't get anywhere. In this environment, it would be easy -and safe - for MMs to help the process by selling short anytime the stock pokes its head above the strike. Anyhow, that's how I explain the phenomena.

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