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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: ild who wrote (155594)3/13/2002 12:54:44 AM
From: KeepItSimple  Read Replies (2) of 436258
 
Wrong. To maintain orderly markets, all option orders must be filled for a certain minimum amount of contracts if you hit the bid. They can only "walk it away" from you for so long before gigantic arb profits pop up or the common stock moves dramatically.

If I buy 50,000 puts that are 15 points out of the money on INTC with 3 days left to go before expiration, my order MUST be filled, or the exchange ceases to function. The clearinghouse *must* provide liquidity. Whether or not they choose to cover their asses by actually shorting or purchasing the 100 shares of underlying common stock per contract is up to their risk management and credit departments.

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To me this block transaction is a mistery. Somebody was a buyer and somebody was a seller and both thought it was a money making opportunity.
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