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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 691.72-0.1%Jan 16 4:00 PM EST
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To: Zeev Hed who wrote (51462)5/21/2000 7:14:00 PM
From: Casaubon  Read Replies (1) of 99985
 
This because, typically, when stocks are called, they are bought back (to continue and write covered calls)
providing some support, but if a lot of puts were in the money, I would guess that selling of the underlying stock
may be expected. I think that the decline Friday was "intrinsic" and not engineered, and thus would not be surprised
to see much lower prices Monday (as stock that was put to holders is now sold).

Zeev,

I agree with what you say here except, I suspect the mechanics are due to naked writes not covered writes. Thus, the necessity to go into the market and cover the written position influences the direction of the price movement. Whereas, covered positions simply exchange one owner for another. This is just a theory of mine, so feeedback would be interesting.
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