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To: dbblg who wrote (76173)	9/1/1999 2:36:00 PM
From: Bilow	Read Replies (2) \| Respond to of 164684

Hi Ganesh Gunasekaran; Regarding KIS's tendency to call for the apocalypse (or the ultimate blowoff top), I've noticed the same thing said about myself at the trading office... Of the people trading there, I trade on the shortest time scale. So what to me looks like a precipitous opportunity to make or lose money really doesn't look like much to everybody else. So one of the new guys complains when I say "we're about to dive," when what I am looking at is a likely 3 or 4 point drop in spoos, and an opportunity to scalp 3/16th out of MSFT. You just have to understand the time scale of the guy making the call. That said, I also have some difficulty understanding how KIS can enter and exit options positions without losing too much due to the spreads. On the other hand, there are some order handling rules on options that I am sort of unsure about... I think that one is that if the market maker doesn't take the order, and the order is for 10 contracts or more, he has to display the order to the market. Using this sort of technique, it would be possible to layout fairly big options positions without either bending the market a lot or losing too much to commissions, provided one's size was reasonably in line with what kind of volume that particular option does per day. I am anxiously awaiting the sharing of Schwab confirms over the next week, just like everyone else. But that doesn't have much to do with my impression of KIS's market calls, which is that they are very, very good. A trader could definitely profit from them in the Nasdaq market, rather than the options market. Sure he is wrong, and sure he changes his mind, but trading is all a matter of probabilities, and the rate at which a trader changes his mind is going to be determined by the time scale he trades at. Now if KIS did triple his "net worth", (which I interpret to mean the equity position in his account) on one trade, then he is definitely way overtrading, and will, sooner or later, ruin himself. An interesting comparision, by the way, is to take a look at the position sizes in the BEARX fund, a short mutual fund, which has been doing amazingly well even in the face of the Dow poking new highs. (edit) Ah, here's the data, valid as of March 1999. Note that this is a $100MM mutual fund, one which shorts and buys puts, but the largest put position they are holding is only $247,500. This consisted of 450 April '99 put contracts on INTC, with a strike of $120. This was a near the money, short term contract at the time of the figures... In any case, this is a better example of diversification than what KIS is supposing... prudentbear.com -- Carl