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

To: Seldom_Blue who wrote (4987)	3/14/2000 6:28:00 PM
From: Bridge Player	Respond to of 8096

<< But what I was trying to say is that not all trades are done by investors. >> You are right. MMs are most likely to have to hedge on thinly traded options where there is no real public demand on either side, so they set their spread fairly wide and then hedge when a stray public order comes along, assuming they can't match it up. When I sold an MRVC April 160 put today for 20 3/4 it was the only trade all day. On contracts trading thousands a day, they just sit there and suck up the public order flow, buying at 2 1/4 and selling 10 seconds later at 2 3/8, adjusting the price as necessary to accommodate price changes in the underlying and/or changes in public demand (usually 2 sides of the same coin.) One thing has puzzled me for a long time, perhaps some of the knowledgeable posters here might be familiar. With hundreds of different strikes and months, I am assuming that the pricing is normally established by computer according to some predetermined algorithm e.g. Black-Scholes, but where the MM can manually intervene to adjust those prices as needed. But isn't there an actual floor on the option exchanges, with open outcry? I thought the CBOE traded that way; is that now passe and all trading is computerized? Clues, knowledge, or thots from anyone? TIA BP

To: Seldom_Blue who wrote (4987)	3/14/2000 8:23:00 PM
From: Poet	Read Replies (1) \| Respond to of 8096

Seldom, My take on things today was that the market used Clinton's biotech statements (which I agree with Loffy are rather meaningless, as CRA and other companies have NOT had their IP rights taken from them)as as reason to take profits. Remember, we're at taxpaying time. May this Nas correction be brief. I'm stuck in a bunch of RMBS April 460 calls (no smiling, ed <g>) and my long term port got hit, but I'm essentially OK. Is anyone else here in need of guidance, counsel, or a cyberhug?