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Strategies & Market Trends : Options -- Ignore unavailable to you. Want to Upgrade?

To: Seldom_Blue who wrote (4956)	3/14/2000 11:54:00 AM
From: edamo	Respond to of 8096

seldom blue....puts, calls, in time they all come home to roost... the conversion to the underlying can not be avoided. expand your view to beyond your ownership of any option, you may close at any point prior to expiration......but come the third friday of every month somebody sweeps all open positions off the table for saturday/monday settlement...the underlying stock does not appear out of no where, it comes from the hedges that were established when the contract was sold. this buying and selling of the common for assignment or delivery is what causes the unusual gyrations in stock price at expiration.quite simply the stock is always called away or assigned to the ultimate holder of the contract, who in most times is not a retail entity. i really don't pay attention to put/call ratio to make my decisions...easier for me to follow momentum trend indicators which in essence give the probability of a high put to call ratio when the underlying is oversold, and a contra ratio when overbought. the "middle of the crowd" as someone aptly described the masses tend to set options positions at the incorrect time....buy when a stock is at a high, sell when at a low....hence the contra sentiment indicator... my belief that stock no longer trades on fundamentals, as they did years ago....it's a momentum market, and you must fully understand the components of momentum, or you base your decisions on pure luck...which in itself has worked for several years....