Steve, in continuing our theoretical discussion, you asked But if, for whatever reason, there are more buy that sell orders or vice versa, the price will move accordingly.
Aha! I say. From whence commeth these additional buy or sell orders? They come from the fundamentalists who are either selling when target prices have been reached, or buying when target buy points have been breached. If that's true, then the momo boys may in fact be playing a negative sum game.
BTW, the argument that I made about balanced effects of buys and sells is the one I used to counter Voltaire's argument that the market is constantly manipulated by MMs, or those who argue that there is economic profit to be made in moving a market up (by temporary buying) or down (by shorting) as options expire.
The other point of disagreement that we have is your point about options. The difference between options and equities is that options are wasting assets, whereas no time constraint exists for equities. So here, short-term equity movements affects option holders and writers profoundly (particularly those very close to expiration), whereas those concerns are absent from the long-term investor.
TTFN,
CTC |
