The following was on posted on AOL tonight. I have copied it verbatim it for this forum because I would like to hear some comments and discussion on what this person has said. His AOL profile is included here at the end.
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Subj: What really happened part 1
Date: 97-01-16 16:55:26 EST
From: CatsklPubs
If there is anyone out there who is buying into the line that Intel has suffered so much in the past few days due to fears of a "flat first quarter", or perhaps "profit taking", I have a few bridges to sell you.
Subj: What really happened part 2
Date: 97-01-16 16:49:45 EST
From: CatsklPubs
If you had any idea that it would turn out this way, would you have played January calls on INTC?
Whatever, I may be digressing into rambling. I apologize if I have lost coherence. Anyway, I am still an options trader. I have made over 2 million this year trading options. I have helped many others to do extraordinarily well at options trading also. I have witnessed this type of manipulation in other somewhat illiquid options. I.e. look to see when NIKE ever closed above the strike with the most active open contracts. Anyway, this was something I did not expect, I lost my head in irrational exuberance. I guess I too got greedy. I was holding nearly 1000 calls when this stock fell out of bed. And all but my 135 calls will probably go out worthless tomorrow. I have 100 of those, which I paid $12 for. I will lose nearly $300,000 tomorrow. And on Monday, Intel will be released from prison by the greedy bastards who did this and it will start all over again for February.
I have learned some very important things as a result of this fiasco, but I am too drained to relate them here. And I guarantee you, next month, I will begin a new campaign to bury those greedy bastard market makers in their own mess. But for now, I am going to watch LA Law reruns and go to sleep. My wife just gave me a hug. Thanks honey, I really needed that.................
Oh the precipitous drops in our favorite vehicle to wealth IS profit taking all right, but not in the value of the stock, but in the options. I feel that for all of us, who ever believed that we had a chance to make money, playing the Intel options, this could and should be the mother of all wake up calls. More options were written for the 140 - 155 January calls than I have ever seen before. Believe me also that very few of these calls were "covered", that is, offered for sale with good faith money on the part of the call seller. I calculated the average cost of these few strikes which have been added to the open interest in the past 2 weeks and found that nearly 30,000 new contracts were written for these strikes. Additionally, the average cost was around $7. So multiply that by the shares involved and we see a 21 million dollar windfall for someone with the ability to write that many calls. Now with everyone and his grandmother expecting "knock my socks off" earnings from Intel, which she graciously supplied, we provided a willing market for those options sellers.
But you may say, "Catskill, You are crazy, who has the money to drain that much liquidity from good old Intel like it has been done in the past 2 days?" EASY folks, the same GREEDY BASTARDS who sold the calls to us in the first place. The same folks who sold us the calls without taking one red cent out of their pockets to do so. The folks with virtually unlimited margin. You guessed it, our friendly neighborhood, Market Makers!
This script has been played out so many times, with so many stocks, (like Nike) in so many stocks, that I am surprised at myself for not expecting it right away. I admit, I thought that Intel was too liquid an equity to be manipulated like this. And by the way, my number of 21 million is just for the options added in the past 2 weeks. If we add in all the poor worthless orphans of tomorrow's expiration slaughter, and the in the money options which had 5 and 6 dollar time premiums built into them as recently as 6 days ago, and the number could exceed 200 million dollars that the poor innocents, will lose.
Before you think me completely insane, (which my wife now tells me, I am) please remember that Market Makers have the ability to short a stock on a down tick, thus spiraling the downward movement of a stock..... and someone, or someone's with a 200 million dollar plus war chest can do a lot of selling. Then once the trend has begun, market dynamics take over until a bottom is reached. When the stock recovers a bit, and begins to show some strength, BAM! Short the stock some more. They cover and continue to short at the lower levels until panic selling takes the stock several strikes out of the money. Not being content to cover their calls at the lower levels, it is apparent to me, that the plan is to see, these 3 and possibly 4 strikes go out completely worthless, while still collecting nearly 9 DOLLARS in time premium for the February calls, which now will have less than 30 days to expire. I mean just look at the Feb. 150 Calls, with Intel 8 dollars out of the money, they want 5 dollars for the call. Knowing that we need Intel to go to 158 by Feb. expiration, just to break even!!!! What's worse, at least for me, is that I actually paid 9 dollars for the Feb. 150, when INTC was only at 148! I am so ashamed.
Folks, to put it mildly, we done been had! This was a turkey shoot, and we were the turkeys! It was the easiest money in the history of trading for those greedy bastards. The collusion on this one probably is running rampant through the hallowed halls of Goldman Sachs and Morgan Stanley. Even if you bought deep in the money, you still paid an extravagant time premium. >>
His Profile:
Member Name: The Catskill Eagle
Location: West Palm Beach FL
Hobbies: Publishers of Several Best Sellers on Trading The Stock and Commodity Markets
Personal Quote: Please see our Web page here on AOL and our main page at: Catskill@cris.com
FWIW.
Barry |
