CMGI What is the latest news on this stock? Message Board

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Technology Stocks : CMGI What is the latest news on this stock?

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To: ClearSky who wrote (16798)	2/27/2000 3:45:00 AM
From: nihil	Read Replies (1) of 19700

Do you realize that for every long call there is a short call out there who will have to buy back the ITM call at maturity. Buying and selling calls can create an instantaneous excess demand. Most customers who short a call must hedge it with stock (sell covered calls) or other options (there is no cash cover for any short call where the potential loss is infinite). Brokers who short a call will ordinarily buy stock to cover (they have access to huge margin). Call volume at termination cannot effect the number of shares of outstanding stock and create either excess supply or demand. Buying and selling of stock has no effect on excess demand. Excess demand is instantaneously eliminated by the ordinary working of electronic non-specialist intermediated markets. Market makers who are merely facilitating trade do not create, but actually eliminate excess demand. In contrast, when a stock long takes a position from a corporation IPO he reduces excess demand since he no longer needs to make orders on the open market. When a short sells borrowed stock he reduces excess demand because the buyer no longer has an active open order.

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