JFT,
What the hypothesis says is that, based on yesterday's spectrum of Oct'98 open interest, DELL's price should be attracted to $60 on expiry day. Now, first thing to be said is that DELL is a creature of momentum. Second thing to mention is that the Max-Pain™ effect is a second order effect ie it gets swamped out by first order effects eg breaking news, earnings reports, Greenspan, other momentum causing events, etc. Third, Dell has notoriously foiled most attempts to characterize it's movement with Max-Pain™ options analysis. I post the result of the calculation looking for that time when DELL begins, if ever, to react to the Max-Pain™ effect as other stocks seem to.
Now if, and I emphasize IF, DELL's price action behaved like some other stocks, with regard to the Max-Pain™ effect, then your assumptions might be valid. But that is just an inference, not investment advice. You could still get Greenspanned........
Ben A. |
