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Technology Stocks : Micron Only Forum
MU 226.81-3.2%2:56 PM EST
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To: psujr who wrote (30165)3/14/1998 12:48:00 PM
From: John Graybill  Read Replies (1) of 53903
 
>>Which strike price though?

Ah that is the million-dollar question! :-) All the
numbers we see on open interest say that 35 is the magic
number, and this month sure has been absolutely perfect
for writers of 35 puts and calls. Plenty of opportunity
to write the option and collect premium, and just as many
opportunities to buy 'em back at a lower price. It's
been a while since MU traded in this tight a range for an
entire option cycle.

OTOH, somebody posted that he saw a block of 4500 35 puts on Friday. Imagine my surprise -- a giant block of
options being traded exactly one week before option
expiration, on the day before very important company
information comes out. We saw this in December AND
January as well. The difference this time is that *the
public* also knows that the information is coming out.
The Dec and Jan stunts were people trading on Goldman
Sachs touts that came out over the weekend. As it turns
out, they bought those options, and they made millions.

My conclusion: Anybody writing 35 options this month has had plenty of time to buy them back (and write 'em and close 'em again and again). There's no reason to be out on a limb now with option liability in front of option expiration and the quarterly report. But if you have inside information on MU, you are probably gonna buy a shipload of options and make a mint -- just like you did in December and January.
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