Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 175.25

+0.6%

Dec 19 9:30 AM EST

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To: Ruffian who wrote (30366)	5/19/1999 4:26:00 PM
From: Robert	Read Replies (4) of 152472

Interesting message from the yahoo board. This is a classic call writer decline by: whereverimayroam1 20660 of 20664 I have seen this happen with so many stocks that have an unusually high ratio of calls to puts in a particular monthly expiration. From the 100 to 110 strike you have about 7000 total calls to 3000 total puts, with about 2000 of the puts at the 100 strike. The sweet spot for option writers right now is 100 dollars, about where it is right now and probably where it will end up at Friday's close if call writers have their way, and they usually do unless another big institution with buying power is on the other side of the trade. At 100 even the option writers get the premium on both sides of the trade. Don't expect QCOM to go much below 100 based on call writers manipulative activities because directly below this strike is support based on the put/call ratio. Someone mentioned strikes going to 22.5 as having an impact in this decline. That strike price of 22.5 should be fully hedged with the stock, unless that call writer is nuts. That is a stretch. When a professional call writer sells an out of the money option and the stock rallies, they are forced to buy the stock to hedge their position. This is called delta hedging. Delta hedging rallies help fuel stocks just like a normal short squeeze. What happens is when a stock nears expiration, the stock that was purchased to hedge the position at various strikes is sold off to drive the stock price down to the strike price that is most beneficial to the call writer, in this case, $100. Its tough to beat the big boys at their game. They are a bunch of dirty rotten SOB's that have gotten rich by taking your money. That is why I personally don't play short-term options much any more. Stick to the LEAPS. Call writers can have their way with stocks over short periods of time, but even they can fight the tape for only so long before the natural trend takes over. Robert.

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