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Technology Stocks : Applied Magnetics Corp
APM 1.400+2.6%Nov 7 9:30 AM EST
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To: Greg Jung who wrote (11224)1/14/1998 10:11:00 PM
From: Mark Adams  Read Replies (1) of 12298
 
The open interest for Jan puts on APM is so high that I would say 1/2 the short positions are related to delta hedges by the market makers.

As the stock price declines, the delta for any strike increases (the put is further in the money), and the hedge requires selling short more shares to neutralize the risk.

Unwinding this should prove a valuable lesson in the impact of
options on the market.
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