Pat,
Don't turn into one of those people who are paranoid about the MM's having it out for you in particular!!! :):) You are obviously too well experienced to fall into that belief!! For all the other people who called Friday's action "manipulation" Hold on a minute.. Before any announcement of a deal, miraculously the stock price went up 4 points and ten of thousands of options traded ibn a stock that only traded 100k a day!!!! None of the longs out there called that manipulation??? What was it? Insider trading???
I'd like to point out that if the deal would have been 30$ and the 17.5's went to 30 no one would be crying except the MM's in the options who would have lost there shirts. I would bet my whole life's experience the following took place....... Before the news when people bought the tens of thousands of options, they expected something. When that something was announced, they sold stock against the long options. If they didn't they were stuck with a long option position they would have to close before expiration. Talk to any MM in the options and I'll bet you will find that on Friday the calls were offered for sale all day. So the MM's were selling stock all day against there calls they were buying..... Now, the people who sold stock against there long option position would have a short position in AMTX below 17.5 right? So what next.... below 17.5 those people were buyers. After they bought their stock back, they were just long the calls. So above 17.5 they were long again. So they were selling the stock then below 17.5 they bought stock and so on and so on.......... Given a 500K potential position due ti the options, and the actual stock volume having dwindled down near 300k, this 500k Position put pressure on the stock and would naturally push it towards 17.5 This is a form of risk free arbitrage, not manipulation.... Afterall, if anyone could be accused of manipulation it would be the public who miraculously new something was up before the announcement... Let's not confuse Manipulation with stealing. MM's don't manipulate the price of the stocks the order flow determines the direction of stocks, The MM's STEAL from this order flow taking 1/8 or 1/4's from the days trading... The market is much too big to be manipulated. I used to be an option MM on the floor . We are always the last to find out about anything.. We make $ from the bid /ask spread. that's all. If we could remain neutral all the time and just make the bid/ask spread we would... We hate risk!!!! By the way, I now trade from home options and stock. I watched the AMTX situation very carfully and find it to be typical in nature. I completely understand everyone frustration, but the real players will always buy the stock if they know best. There are no guessing games either you are right or wrong....... Options sometimes you win when you are wrong and lose when you are right...... I hope I was able toshed some light on this situation... In the future, look at the open interest in the option strike nearest the price. If the % of the option outstanding represents a large # in relation to the daily activity of stocks then expect the same kind of situation to repeat. Regardless of the situation at hand..... Best wishes.... SPEEDY=============================================================== |
