Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 209.98

+4.3%

Dec 11 3:59 PM EST

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To: Sowbug who wrote (38074)	3/7/1998 11:00:00 AM
From: Glenn D. Rudolph	Read Replies (1) of 61433

Anyway, can somebody explain why that works? I know that if I write a call, I am bearish on the stock and I will probably not buy it, so you can extrapolate from that that for every written call there is another bear out there. Yet at the same time, there must have been somebody who bought that call, meaning that there is another bull out there. So it seems that the two cancel each other out. Sowbug, Most people buy calls with the idea the stock will go up. It is a gamble since the call has a limited life. The assumption made about a buyer for each sellers is not correct. The Market Makers will sell as many calls as you or the entire market wishes to buy. The Market Maker is then short the stock but will take that chance since 80% of all calls expire worthless. There is a natural phenomenon that will cause the stock to go to the strike price with the highest OI that was expained well on SI. I will see if I can locate that post and post a link. Glenn

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