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Strategies & Market Trends : Classic TA Workplace

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To: Henry J Costanzo who wrote (85865)	11/15/2003 7:16:45 PM
From: The Freep	Read Replies (3) of 209892

Mc -- others have touched on the relevant put/call stuff. Using the case of NOK, as that's where I first brought it up... There is a huge preponderence of calls vs. puts at 17.5 for this month. The stock is close enough to that strike price that it would be in "their" interest to get it to close near there, thus meaning the options writers don't have to pay money out PLUS they get to keep whatever they sold the calls for. Since they won't lose anything on the put side, this is the "sweet spot" for expiry. Does it always work that way? Of course not. If it did, I'd be riiiiiich. Instead I'm a Freeeeeeep. We've also talked about all the QQQ puts out there (heck, there's 400K puts at QQQ 34 in December!!!) and how they've "put a floor under the market." Here's a case where a huge decline would seem to be hugely expensive to the options writers. "They" would have incentive not to let the QQQ price get too far below 34... if they can help it. And can they? If all else is equal (i.e. no sudden shock to the system), they probably can, as that's a slew of $$$ at stake. Now, this doesn't mean we won't go below 34 on the QQQ in december... but I would expect, if we did, we'd rebound before expiry. Did this help at all? It's all a crapshoot anyway <g> the freep

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