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Strategies & Market Trends : Waiting for the big Kahuna

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To: epicure who wrote (20659)	6/18/1998 3:33:00 PM
From: James F. Hopkins	Read Replies (1) of 94695

Take a long hard look at a bear market, after the first big spike down they go into a tight trading range, check then the time premium put on the money. In short even with a down trend in place, the puts options GET so expensive that most of them leave very little profit after the spread and commissions. It's supply and demand, and in the down market you have every bear in the universe trying to buy puts. It's not as easy as one might think, unless you are in front of the curve you can get eat up. There is no good reason to think that the grope of people who originally write puts are dumber than the buyers. ( generally speaking ) But I can think of several reasons why the writers are likely to be smarter. Experience being the main one. Generally speaking most of the option writers have been in the market much longer than option buyers. --------------------- As for shorts the brokers, specialist, and market makers are the experts, and have the up to minute data to front run the issues, and the ability to pick off stop loses set to close. Jim

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