Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 200.78

-0.7%

1:37 PM EST

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To: Thomas M. who wrote (34972)	2/15/1998 10:08:00 PM
From: Glenn D. Rudolph	Read Replies (1) of 61433

This sounds interesting, but I don't quite understand. Can you please explain? Thomas, The Market Makers typically write calls and they are naked calls. Approximately eighty percent of all calls expire worthless so the Market Maker /brokerage house make a lot of money on writing these calls. The small investor typically lose a lot of money by buying calls. The Market Makers can adjust the stock price somewhat until expiration to get the most out of the written calls by either shorting shares or going long shares depending upon need. However, it became clear the demand for ASND shares was high enough that the Market Makers did not want to be short that many shares. There was a lot of open interest in the Feb 30 calls. The Market Makers provided incentive for owners of those calls to close them early by creating a locked market (the bid and ask for the option was the same. At the same time, they tried to increase the open interest in the Feb 35s for their profit and I feel they will have ASND close this Friday within 3/8ths of 35. Did that makes sense? Glenn

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