I found your posting is missing a lot of info. such as:
<<<So, when I buy a call, the options maker buys the stock. When I sell
(or execute) the option, the options writer sells (or delivers) the
stock. The effect is the reverse with puts - the MM shorts the stock
until the position is closed, at which point he buys it. >>>>
What if the stock price drops dramatically, the MMs are not going to
hold on to the stocks, they have to dump the stocks in order to maintain their profits
which would cause a drop in stock price. The
effect is the reverse with puts.
<<<< Thus, if the price were above 55, the effect would be to cause the execution of
23,298 calls, which causes the market makers to sell
2.3 million shares of stock, driving the stock down. >>>>
It's very confusing here. The option writer already bought/had the
shares (in a call case). If the option buyer exercises his/her
options, then the option writer has to deliver his/her shares for
money. This transaction does not affect the stock price unless
1. the option buyer sells his/her options instead of exercising them.
In this case, if the option write decides to sell his/her holdings
then the stock price will drop.
2. the option buyer exercises the options and turns around to sell
the shares.
Patriot |
