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Strategies & Market Trends : Jim's Nasdaq100 Special as a basket. -- Ignore unavailable to you. Want to Upgrade?

To: OX who wrote (1356)	10/17/1999 1:29:00 PM
From: Matthew L. Jones	Read Replies (2) \| Respond to of 2103

You are the man! You are a number crunching animal! Go now! (that's southern talk for "great job"!) I think I understand how you got the maxpains for the individual issues (running option chains and sorting by open interest for the current month), but how did you then assign the proper weighting to the options? Did you multiply them by the percentage of the NDX that the underlying made up? And if you did, how did you then translate that into a strike price? I hope my questions make sense. I was looking at doing the same thing (only for just the top 10 stocks or so, which comprise 88% of the NDX so I've been told). I figure that would give me an answer close enough to pick the right strike price for the QQQ. In talking to Michael Williams who is an options Market Maker and floor trader on the PSE, I came to realize that when they have a large demand for a particular option, they typically offset the risk of that option by hedging on the equity market. They say that the stock MM's and specialists do the same. If that is true, it would seem that the max pain thing might be a leading indicator for the stock itself, and not just work coming into expiration (although it might have a stronger pull coming into the last week of the cycle). What do you think of that? Do you think the logic is worth pursuing? Matt