Advanced Micro Devices - Moderated (AMD) Message Board

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Technology Stocks : Advanced Micro Devices - Moderated (AMD)

AMD 258.86

+9.0%

Nov 12 3:59 PM EST

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From: jspeed	10/20/2006 8:08:22 PM
	Read Replies (2) of 275872

Conspiracy Theory: Last month's action is a result of an illicit hedge fund scam. In AMD you have float of about 88M shares. The other 400M are owned by various funds or institutions and they don't buy or sell very often. So therefore the rest are retail and hedge funds. Now if you were an unscrupuluous hedge fund you might get together with 4 or 5 of you fellow unscrupulous hedge funds and each purchase say 5M shares of AMD for a measly $100M each. Then, you all agree whether you are going to move the stock up or down and for how long. When you do that, you buy the cheapest near term put or call as appropriate. Now that November $22.50 put costs 2.10 per share, so it is 10x cheaper than a share of AMD. Somebody just bought the equivalent of 4,078,600 short sales of AMD at $22.50. That cost them roughly $8M. If AMD goes down $1, then they make about $4M (50% return) Now, how do they make it go down a dollar you ask? Heres the game: say the stock price is $20. Hedge Fund A puts in a sell limit order at $19.90 for 20K shares. Hedge fund B puts in a buy limit order at $19.90 for 20K shares. Chances are no retailer is going to step in and buy a block that big. and mutual funds are on the sidelines 98% of the time (see bottom of this message). So they sell to each other at $19.90. Voila ... the stock is down .10. Now lather rinse repeat. They make all the money on those option bets, and just walk the stock back and forth in it's trading range. So with an investment is about $100M and if you have say a $5 trading range, you can make $20M on a 5 dollar move. And by the way you can do this over and over again and you get the $100M investment back when you're done. Still don't believe? look here: thomson.finance.lycos.com you will see that institutional trading was around 2% today. Of course, thompsons doesn't know about all the institutions, but that number is incredibly small? Prior to this month, that number is always upwards of 10%. For the month now it is only 5% even though volume is incredibly high. This month's trading is swamping the intstitutional trading. To me is another piece of evidence that corroborates the theory. The truth is out there.

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