Linda Gavin has a options answer ; my Intuit - ion not withstanding
May never know the facts of the Intuit flap , which represents 10 % of Intuit's revenues , but it sure froze AAPL's stock and delayed any potential bondholder conversion .
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Gavin Young's email :
Subject: more contracts
Date: Thu, 30 Apr 1998 21:07:04 -0700
From: Gavin Gregor Young <gyoung2@gte.net>
To: jamesx@ibm.net
Linda asked the following question on SI (12453).
"To: dobr (12445 )
From: Linda Kaplan
Friday, May 1 1998
12:14AM ET
Reply # of 12453
David, What I meant is this: If someone wants to buy 20,000
contracts and there are only a few sell orders waiting, how does the
Specialist deal with that? What does he do to get more contracts,
assuming he doesn't have his own just lying around waiting for a buyer?
Something happens to increase the "float" of them and I've never gotten a call telling me that they need calls, so would I like to write some. :-)"
Gavin's reply: ------------------------
A representative from the Chicago Board of Options said that the
specialists, if needed, will buy shares of the stock and then write
options on it (and asking the appropriate premium). Then there are
options that can be sold to meet the demand. Its their job be be a
market MAKER. As an example, when I bought my first May 22.5 calls
there was no open interest, yet my order was filled within minutes.
The open interest then equalled the number of contracts that I bought.
In other words stock can be broken into its calls and puts components
and they can likewise be reassembled back into stock. The spread on the options reflects the the interest that could have been earned in
t-bills. Please forward this to SI.
Gavin
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