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Technology Stocks : Ascend Communications (ASND)
ASND 209.88+1.6%3:53 PM EST
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To: EepOpp who wrote (35658)2/21/1998 9:18:00 AM
From: FUZFO  Read Replies (2) of 61433
 
does this mean that only the person who initiates the position (either by writing or buying the option) is the only one who can decrease the open interest that he/she has generated?

Will, this is my understanding of OI, I believe you are half correct:

x = total number of new contracts written
y = number of contracts closed out by original writers

OI = (x - y)

The rest of the contracts still exist and are floating around out there being bought and sold between investors. Individual investors can buy an option, sell it to close out their personal open interest, but unless the the option is sold back to an original option writer (note: it doesn't necessarily need to be the guy who wrote your option) someone else just takes possession of the contract and it remains an open contract for the market at large. As for your question, when you buy an option you are initiating a position for yourself, but not necessarily for the market at large, that depends on whether the entity you bought it from is the original writer who created a new contract out of thin air just for you , or someone selling to you an option which he bought previously from someone else, but nevertheless existed. Clear as Mud? Someone correct me if this is wrong.
Fuzfo
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