<<calls vs puts>>
A little education, please, Freep......
Never particularly followed open interest on options, and not clear what to make of them.......If I'm not mistaken, the general view around here is that heavy put OI relative to calls is a positive for a stock (or index), and vice versa......My take, to the extent I have one, would tend to be the opposite....based on the following - maybe erroneous - reasoning:
Re put OI, the market-makers who sold those puts, thereby going long, would have had to cover themselves with off-setting short positions. On expiration of these puts (or redemption) the MMs will be left net short, and would move immediately to close out by BUYING to cover their shorts. And if put OI much larger than call OI, stocks/indexes with heavy OI puts should move up with that MM buying.........and, turning all this around. stocks with heavier call OI should fall under pressure of MM selling to close out their long hedge positions.
Hope I explained this clearly enough...?? Would appreciate your setting me straight when you have some free time (between Freeplet feedings?........g) |
