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Strategies & Market Trends : Options 201: Beyond Obi-Wan-Kenobe
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To: Ira Player who wrote (1032)6/18/2004 4:19:28 PM
From: Herschel Rubin  Read Replies (2) of 1064
 
Anyone know why most of the options open interest for a particular strike price on expiration day does not trade?

For example, take a look at the RIMM June calls:

finance.yahoo.com

The June $55 calls have 9,514 contracts (open interest), yet only 1600 traded today.

Are we to assume that the remaining 8000 contracts representing about 800,000 shares were exercised? I can't imagine that there are that many options players who exercise their in-the-money options as it requires substantially more capital to do so than the amount vested in their options.

Or if some contracts are involved in straddles or bull/bear spreads, they don't need to be exercised, thus explaining the apparent lack of final reconciliation for these outstanding puts & calls on expiration day?

Intelligent comments appreciated...
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