SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Lucent Technologies (LU)
LU 2.670-0.4%3:59 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: wiley murray who wrote (2800)6/10/1998 8:28:00 AM
From: Ben Antanaitis  Read Replies (1) of 21876
 
wiley,

Most options writers, in fact, are only interested in making and keeping the premium they get from the option buyers. They never want the option contracts they write to end up 'in-the-money' and exercised since most are written 'naked' by the options MMs and hedge funds. They play on the over optimism and over pessimism of the open interest buyers. They also have the leverage (ie $ and tactics) to 'help' the price of the underlying stock tend toward the strike price that will yield the maximum number of open interest contracts expiring worthless. This is what I've called the Point of Maximum Pain or the Max-Pain point. I have plotted the curves for this effect for a spectrum of stocks at ez-pnf.com in the Options Analysis section. there is an explanation of the analysis technique in a fully described example.

Looking at your post about the surge in calls... one way of looking at it might be to say that someone decided that LU won't get to $80.5 on the 19th and they wrote either 'covered' calls or naked calls that an over optimistic public snatched up 'at a bargain'.

Like you said 'time will tell'. I'll be posting the updated LU June'98 Max-Pain graph early this weekend.

Ben A.
ez-pnf.com
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News