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Strategies & Market Trends : From the Trading Desk

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To: CJ who wrote (2000)	12/14/1997 1:04:00 PM
From: steve goldman	Read Replies (1) of 4969

CJ..thanks for the note... An opening transaction (your 'buy cover')is entirely a distinct transaction from a closing transaction (buy to open). Nonetheless, I do not think they are two seperate securities as I have on occassion mislabeled a ticket as closing when it should haev been opening. The floor clerk gives me a call to verify and simply corrects it but it does not mean I have an 'error' costing the firm money. I don't need to undo the position and get the 'right' security. I think it is more clerical than substantive. Perhaps your firm considers them two seperate trades and thus must run through two tickets and has twice the clearing costs so twice the commission to you rather than the incremental commission. You could have tried the second option, doing them all to open and then a day or so later, send an email that you made a mistake and 1/2 were to cover, to close. Very similar to long or short stock. Once you get it off, its more clerical. Second question: It is my understanding that the clearing firm has the right to determine which accounts which are marginally in the money will be exercised. for deep in the money options, forget it, eveyone gets exercised as it would like throwing away money. Sometimes, the firm doesnt want to do it because they are only in the money fractionally and bad news on monday or transactions cost could disrupt the profitability of the barely in-the-money option. Feel free to contact me any time. I generally like to not talk about options online as they are pretty complicated and have certain compliance issues with them. I will call down to our options clearing department and find out if I can get a straight answer on #2. Call anytime. Regards, Steve@yamner.com

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