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Technology Stocks : Ascend Communications (ASND)
ASND 220.42+4.9%Dec 12 9:30 AM EST
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To: Glenn D. Rudolph who wrote (3176)5/19/1997 7:28:00 AM
From: Heg Heg   of 61433
 
For those who understand options, here is a question:

I am watching options for ASND and see that on friday the OI on the
Jun 35 put has DROPPED from 780 to 590, some 24 %.

I can't make sense of what it means, and here is why:

The put is deeply out of the money, so nobody would exercise it.
The only other way how the OI can drop (I believe, please correct
me if i am wrong!) is if the optionwriters buy back the puts to
close out the transaction. WHY WOULD THEY DO THIS ????

DO they really believe that there is a risk that the option could be
in the money within four weeks (it is currently OOM by $12.5).

Or is this part of some strategy where options are bought back
as soon as they have dropped far enough, no matter how low the risk
of an exercise might be???

At the price of 0.25 that is still approx $5000, so for what reason
would somebody pay that out to buy back those puts???

Other significant movers on ASND for that day are listed below.
I would appreciate if somebody could shed some light on this.
Any ideas or enlightenments are welcome.

Thanks, Heg

16-05-1997 Share Price : 47.5 ASCEND

SYMBOL TYPE STRIKE ITM OOTM Price PREMIUM OPENI OI_CHANGE %
ASND C97JUN 45.0 2.5 5.250 2.750 1866 106 5
ASND C97JUN 55.0 -7.5 1.125 8.625 3294 364 11
ASND P97JUN 35.0 -12.5 0.250 12.750 590 -190 -24 #
ASND P97JUN 55.0 7.5 8.500 1.000 1322 961 72
ASND C97MAY 45.0 2.5 2.438 -0.062 4994 108 2
ASND P97MAY 45.0 -2.5 0.063 2.563 8962 333 3
ASND P97MAY 50.0 2.5 2.875 0.375 2792 390 13
ASND C97SEP 40.0 7.5 12.250 4.750 1845 395 21
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