Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 204.41

-1.0%

Nov 14 9:30 AM EST

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To: WBendus who wrote (8250)	8/9/1997 12:17:00 PM
From: vegetarian	of 61433

>>I am really getting tired of this whole market maker conspiracy crap! Everytime we go into an options expirations you fools seem to think that the market makers have some vested interest in putting the stock at some specified level. In case you have not figured it out yet, market makers make their money by TRADING stock. It is not to their benefit to fix the price of a stock at a certain price before expiration. If anything, they would try to fix the price so that the maximum number of contracts get exercised. Since calls typically have much larger open intrest, it would be to the benefit of the market makers to push the price of the stock up going into expiration. The reason you all seem to adopt this theory is that the nearest strike options always seem to get the greatest action, especially as expiration nears.<< The reason market makers might have interest in options expiring worthless is because they write a major portion of the options and thus collect premium from writing the options, whereas most of the other public are buyers of those options who are buying with the intention of either making a killing or hedging aginst their stock holding. This is not to say that public does not write options, they do, but they are not the majority. When the options expire worthless the writers get to keep the premium collected. It may not always be possible to drive the price to an optimum strike price but if you look at the charts of the companies at the time of options expiration you will see that it is not a mere coincidence that the prices at least moves toward the optimum strike price (if not, the next best). Although a company may have large capitalization the effort required to drive the price to optimal strike is not proportional to the cap but to the average volume traded for the stock. Even with this, I am willing to accept that it could be a coincidence but since you call people fools (not a nice thing to say unprovoked I may add) can you now prove to us that the money that market makers make through TRADING during options expiration will be more than the money that they can get to keep via options premium if the options expire worthless? I think that would enlighten the ignorant soles groping in the darkness once for all.

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