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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: yard_man who wrote (258148)8/29/2003 3:14:04 PM
From: Ira Player  Read Replies (1) of 436258
 
Why the assumption that someone is buying?

The market maker taking the other side of an option transaction will hedge to remain market neutral while collecting the spread. Long or Short.

The originator of the transaction is taking a market position. It could be buying puts to profit on the way down...or it could be put selling to profit as it goes up or stays flat.

Predictive value of things like put / call ratio requires, unfortunately, knowledge of the unhedged open interest, not the raw open interest.

In my opinion, of course.

Ira
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