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To: GTC Trader who wrote (83980)11/12/1999 3:44:00 AM
From: KeepItSimple  Read Replies (3) | Respond to of 164684
 
>What is the best way to calculate where the MMs make the most money?

The best way is to calculate the value in dollars for each strike, for both puts and calls. Then draw a distribution graph of that data. (what impristine does with his options infection) You can sort of eyeball that and come close to the right number- the market makers will try and reach a happy medium of screwing as many call buyers as possible and as many put buyers as possible, at the same time.

Or you can do a density distribution model to find the exact points where the put values are greatest, and the points of highest call density. Crank it through any of several proprietary formulas, like Max-Pain, and you've got your results.

So i didn't actually answer your question, but the point is that options MMs actually DO manipulate stocks on a monthly basis to make most options expire worthless.