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To: Jenne who wrote (8386)	3/20/2000 10:30:00 PM
From: Voltaire	Read Replies (1) \| Respond to of 35685

Hi Jenne, let's hope that MM and the rest are correct. I am betting they are not. The Houses have 8 more trading days to ring what ever blood they can out of the NAZ to support their crap value stocks and there is one reason why I feel they will, BECAUSE THEY CAN, and why wouldn't they. I still see a move to $170 to $180 by July. If NOK comes around, it will do that in one day. V

To: Jenne who wrote (8386)	3/20/2000 11:37:00 PM
From: Ruffian	Read Replies (1) \| Respond to of 35685

Technology shares To infinity and beyond N E W Y O R K Search archive HAVING surged past the 5,000 mark last week, Nasdaq, that repository of all that is brightest in America?s new economy, was this week looking distinctly jaded. But an investor lucky enough to have held a favoured technology stock such as Rambus (up fivefold on the month), and who might have wanted to lock in his gains by buying a put option (the right to sell), would have had to shell out some 25% of the share?s value. The reason? Option traders are both being hurt by and contributing to an ever-more-volatile market. Volumes in equity options have surged. Last year, the American Stock Exchange (Amex) traded 4,000 options a day, on a security based on 100 of the most prominent non-financial companies listed on Nasdaq. This year, it trades 50,000. There has been a similar increase in options on individual shares. At the Pacific Exchange, daily volumes doubled last year to 300,000 contracts. They have risen by two-thirds so far this year. Has this surge in options activity been exacerbating movements in underlying markets? Volatility in the 100 most prominent stocks on Nasdaq has increased by a third over the past year. But the volatility numbers that traders plug into their models have increased far more than the actual increase in volatility would seem to warrant. The effect has been a huge increase in option prices. To cite one case, the cost of a put on Cell Pathways, an unprofitable biotech firm (up by 500% in the past year), is fully half the cost of its shares. This extra cushion that traders are demanding implies either that people expect markets to become even more volatile or, more likely, that traders no longer pay much attention to their pricing models. Why might that be? One of the more-or-less unrealistic assumptions that traders feed into those models is that markets are liquid. To hedge options that they have sold, sellers usually offset their positions by either buying or selling the underlying shares. This is not always possible, as was famously demonstrated in the 1987 crash. Dumping stocks in a market whose liquidity had all but disappeared drove the market down further. The recent problems faced by options folk have been of an altogether different sort: they have not been able to get their hands on shares on which they have sold calls (the right to buy). ?These stocks don?t crash down, they crash up,? said an exhausted trader on Amex. Traders saw the first sign of a change early last year. One recalls seeing shares in Yahoo! abruptly rise, then do so again and again. At one point, the Nasdaq screen which provides a list of bid and asked prices showed no Yahoo! shares being offered for sale at any price. Faced with a shortage of stock, options sellers panic buy; as they scramble to cover positions, they force prices?and volatility?higher. It has happened a number of times since in other shares. For some, the consequences have been brutal. A trader at Letco, an options market-maker, is said to have lost $30m after arranging a fancy options strategy on Qualcomm. Susquehanna Investment Group, another market-making outfit, supposedly lost $19m trading options on eBay. Though both deny the rumours, in each case, according to gossip, the problem was how rapidly shares rose. The more interesting question is what would happen when it is not offers that dry up, but bids. Egged on by options traders, equity markets might then become more volatile still.