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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Guy Gordon who wrote (33801)	1/14/2000 11:38:00 PM
From: Ian@SI	Read Replies (2) \| Respond to of 70976

Guy, For a moment, I thought that you were on to something. 1. Options are traded through Specialists who are charged with maintaining an orderly market. There's always a buyer and a seller. To see what the specialist does to ensure that he's not taking on excessive risk, read any of McMillan's books on Option Strategies. 2. Deep in the money options in most Semi Equipment companies would be highly illiquid. And if they're truly deep in the money, there's little, no or even a negative time premium. If you've written Covered Calls, then those shares can be called away at any time after you've written the option. ...especially if the time premium goes negative. At that point there's little point for the option holder to continue holding the option rather than take your shares and sell them. If you wrote naked calls, you've got 3 days max to deliver sufficient shares after being called. Same story applies to writing deep in the money PUTs, except the PUT holder can assign the shares and you get the privilege of buying them at the agreed to strike price. ++++++++ It would appear that you have some Options education to acquire before further advising others on very high risk options strategies. At the very least, it would be worthwhile to let others know that they might well be taking some risks that they didn't really expect existed. FWIW, Ian.

To: Guy Gordon who wrote (33801)	1/15/2000 7:06:00 AM
From: w0z	Read Replies (1) \| Respond to of 70976

The options are written (created) by the Market Maker. Unless they are written by another person...you can usually tell by looking at the spread. If you see a spread that is lower than normal, it means someone has a limit order on the other side of the option. Your concern about illiquidity is also a good one. The spreads on most options are usurious. And the MM can easily move the price if you try to buy or sell too many. The MM is only required to sell or buy 10 options at quoted bid and ask. If you plan to trade more than 10 at a time, it is imperative to use limit orders. In a stable market (does that exist any longer?), you can usually place a large order halfway between bid and ask and it will be filled in several hours. Many people form conspiracy theories about the evil Market Makers manipulating their stocks. It just doesn't happen on stocks of any reasonable size (i.e. non-penny stocks). But they sure as hell do manipulate the options prices. Badly, and to our detriment. Manipulation does still happen in thinly traded stocks (like CFMT). But it's SO SWEET to take money from them like I have with my options in COHU, CYMI and MTSN! Yesterday was a very good day. <VB$G> siliconinvestor.com