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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: James F. Hopkins who wrote (20930)	7/23/1999 9:04:00 AM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

put/call ratios are updated on the sentiment page at homestead.com regards, hb

To: James F. Hopkins who wrote (20930)	7/24/1999 9:13:00 AM
From: James F. Hopkins	Read Replies (2) \| Respond to of 99985

Well Jim ; No one told you but you made another good call, the NDX did open up dipped but closed up a little, and there was "rotation" just like you said. -------------------- Along with the dollar being manipulated I'm going to give you my take on last months option activity and how it effected the run up and sell off, ( by the way ) early that week before option expiration I said there would be a lot of stock for sale just after expiration. ------------------ The last run up was caused more by call sellers buying stock to cover their calls than any thing else, and as soon as expiration came there was a lot of stock for sale. This effect should move stocks down to what the Max Pain was before the expiration, it had been violated badly it may move them down even more because of Mo Mo. Like all the call buyers last month who made money did so leveraged, at ex date they had to be able to pay for the stock even if it was at a bargain as the major sellers of calls do not buy them back but let them have the stock. --------------------- Of the calls I sold I do not intend to buy one of them back they can take the stock, all I do buy more stock to cover the position. The only option "traders" who make out in the long run are the Floor Traders, other than that as far as I'm concerned options are mostly for selling and keeping the premium. 80% expire worthless , there are times I risk buying a few puts but damm if I don't think I'm going to quit that as the primary sellers have the advantage. Even major put sellers can place a "short" stop order in front of the strike so that if you put stock to them it just covers their short. It's like a no limit poker game and big money can buy the pot often enough that small players always lose if they play long enough. The Traders are locked into a "third" market with other "traders" and the Floor man in the middle taking a cut. They have to be good enough to not only beat 50% of the other traders but to do so good enough to pay the "NUT" that the floor traders run on the option, as well as the premium the primary seller put on the option when he sold it. For the most part trading options is a suckers game, but you can't tell the suckers taht, they win just often enough to stay hooked, and are always looking for the jackpot. I have to go back to the Max Pain thingy to get an idea of where this option related sell off effect will cancel out, then try to guess at the dollar effect. People who watch CNBC's hype and believe it; don't have a clue as to what is really happening in this mania, it's not a thing in the world to do with earnings it's all in the liquidity of the market and the currency swaps. Jim