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Technology Stocks : America On-Line (AOL)
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To: Ben Antanaitis who wrote (10985)4/16/1999 4:53:00 PM
From: Steve Robinett  Read Replies (1) of 41369
 
Ben,
I looked at your site. So what? The max-pain theory is just another paranoid delusion theory about market manipulation. If you track equity or index options expiration after expiration, you see that option open interest does clump around the closing price at expiration--but again, so what? The most active options--and the largest open interest--are always clumped at the money. There is no incentive for option market makers, who try to go home delta neutral every night and make their living off the spread, to prefer one strike price over another. As for market makers in the stock, they cannot control the order flow, especially in a stock like AOL with massive daily volume. In this case, anyway, the tail does not wag the dog.
Best,
--Steve
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