M. Carter, You said. "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."
Here is the current information on ASND options:
Strike Calls Puts Total
35 330 443 773
40 860 3313 4173
45 2970 9994 12964
50 6838 6657 13495
55 12300 2116 14416
60 5762 151 5913
Total 29060 22674 51734
%age 56.2% 43.8% 100.0%
Expiration Scenarios:
x=Close Calls Puts Total P - C Tot. Shrs Bull Support
x<35 0 22674 22674 22674 2,267,400 2,267,400
35<x<40 330 22231 22561 21901 2,256,100 2,190,100
40<x<45 1190 18918 20108 17728 2,010,800 1,772,800
45<x<50 4160 8924 13084 4764 1,308,400 476,400
50<x<55 10998 2267 13265 -8731 1,326,500 -873,100
55<x<60 23298 151 23449 -23147 2,344,900 -2,314,700
60<x 29060 0 29060 -29060 2,906,000 -2,906,000
x = close at expiration
P - C is the put open interest less the call open intrest at the close
price.
Total Shares is the total number of shares which will change hands,
represented by the affected options
Bull support is the number of shares that will pass to the put
sellers.
With out any impirical evidence on who are the actual option sellers
it is interesting to note that the number of put sellers exceeds the
number of call sellers at strikes below 50. This would suggest that
there is considerable bullishness on the stock below 50.
I will not argue that option writers are probably more educated than
option buyers, but I doubt that the market makers have any concern
about where the price of an optionable security is trading. From my
experience, I would presume that most options are written by average
ordinary Joe Investors on individual securities, or by institutions
that have a position or wish to establish a position, not by market
makers. A call writer is typically a person or institution that has
an established position in the security and is looking to generate
additional income. A put writer is typically a person who is bullish
about a stock and is trying to generate additional income and is
willing to own the underlying security at a specified price, which is
typically less than the current market price of the stock, net of
premiums.
Generally, most options trade on different exchanges than do the
securities for which they are written against. Most options trade at
the Chicago, American, or Philidelphia Exchanges, which are totally
seperate exchanges and quotation systems than the stock exchanges and
quotation systems. For a market maker to trade options, they must
clear through the exchange on which the options trade.
You can believe your "market maker conspiracy theories" if you want,
but I personally do not subcribe to them. These theories might have
some credibility when put into the context of thinly traded securities
where manipulation is easier. For lager, more liquid securities like
ASND, INTC, MSFT, COMS, etc., I have to disagree. To manipulate a
security like ASND, that trades rougly 4 to 5 million shares a day,
you would need to have $200 million plus, on a daily basis, committed
to manipulating the price of the stock.
Wayde. |
