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Strategies & Market Trends : Galapagos Islands
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To: Justa Werkenstiff who wrote (39444)5/13/2003 11:49:49 AM
From: Jorj X Mckie  Read Replies (2) of 57110
 
Hmmmm, on delta hedging...jury is still out on that one. It may be a case where we don't know it until after. Maxpain only watches options that can be traded on the open market. There is a whole other OTC market for options that you and I never see. When we see a bunch of puts opened we immediately assume that is a bullish event. But how do we know that it isn't a hedgie who is just offsetting an options position that was opened on the OTC market? How do we know that there isn't a corresponding opposite futures position? I guess what I am saying is that we won't know if there is delta hedging going on until it happens because we don't really know what other positions may be out there. If you remember, there were a couple of ocassions in the past 6 or 7 months where the delta hedging should have caused the market to collapse, but they didn't. In some cases, not only didn't they collapse, they managed to rally up to maxpain in the last couple of days before opex.
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