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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Teflon who wrote (29021)	9/1/1999 10:13:00 PM
From: edamo	Read Replies (1) \| Respond to of 74651

teflon...msft sept120put sale looks bullish....don't think it was msft...read the news release it was part of a reverse conversion of jan90 puts (13.2k traded) perhaps owner of 90's trying to recoup existing loss as 90's probably bought otm and have eroded timewise and appreciation wise...sold the 90's bought the 120's..........if this is the case the professional bear hedger doubts 90 or below by expiration but maybe in 11 days, may have taken the position early august and it went against him..trying to salvage......120 seller makes money above 92.....buyer below 98 (28-6=22, 120-22=98). logic would think just to close position, but not sure of circumstances as in hedges in place....sounds dumb...but remember long term capital... just a thought..

To: Teflon who wrote (29021)	9/1/1999 11:30:00 PM
From: Just_Observing	Read Replies (1) \| Respond to of 74651

>>What's significant about this trade is not that it represents a short or long bias for either party, but that it will be very tough to unload their new found position in the puts without working some magic. One side of this transaction is going to lose some serious money before next weeks complete. << I don't think that these puts have to be traded or, as you put it, unloaded. If I bought these puts to go short, I would exercise them at options expiration and be short the stock. As a market maker who sold the puts, I would be short the puts (bullish). So I would short an equal amount of stock (bearish). When options expire, and the puts are exercised, I'll transfer my short stock to the buyer of the puts. So the market maker has no risk (unless the stock goes above 120 by September expiration) and has probably made the money equal to some fraction the spread between the bid and ask. One can reverse the situation with the customer selling the puts and the market maker buying them. And the analysis is just inverted. So, overall I don't see this trade as a big risk for anybody. It is somewhat unusual and my gut feeling is that MSFT will be making some big moves in the next few days.