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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Uncle Frank who wrote (23606)	4/26/2000 12:03:00 PM
From: TigerPaw	Respond to of 54805

RE>> Most options are closed out before expiration. I don't have hard data, this is my impression by watching open interest on options as they go through their cycles. 2. If it is repurchased by whoever initially shorted it This is the scenario which I think is common. The options are sold with the expectation that there will be a price movement in a certain direction. When the movement occurs the option is repurchased at a cheaper price. (If the movement doesn't occur the option is often left to expire worthless or if it occurs the wrong way an often painful exit strategy has to be devised). I guess I am talking about short term options and not leaps which have a different psychology, but all options end up short term eventually. After a price movement it is much less risky to take the profit and watch the reaction than to just keep holding. If the price movement is large, then the option will lose much of it's time value, so again it doesn't pay to hold it once the movement is sufficient. TP

To: Uncle Frank who wrote (23606)	4/26/2000 5:05:00 PM
From: ggamer	Read Replies (3) \| Respond to of 54805

A few days back (post #23397) I asked Mike Buckely a question but I did not get a response. Can someone help me answer the following question please: If Japan does go with WCDMA technology do you think it will change the status of QCOM as a gorilla? I understand that QCOM will be getting royalty from any flavor of CDMA. But can they continue to hold on to their gorilla status in the CDMA market IF they will not dominate the ASIC side of the business in Asia and Europe. GGamer

To: Uncle Frank who wrote (23606)	4/26/2000 5:15:00 PM
From: Gerald Walls	Read Replies (1) \| Respond to of 54805

I'd be interested to see some data supporting that contention, TP, as my impression is otherwise. One possible source would be to track the open interest numbers provided in quotes at cboe.com Selling to close a long position on an option merely transfers ownership to someone else; it doesn't close the option itself. The way I understand it (but I'm no expert) is that most options are bought and sold by the market maker, not by a cross between a buyer and seller. Each purchase or sale that isn't crossed would affect the net long/short position of the market maker. Except for certain stocks, months, and strikes, options just don't have the volume and liquidity required to efficiently match buyers and seller.

To: Uncle Frank who wrote (23606)	4/26/2000 6:59:00 PM
From: Dinesh	Respond to of 54805

uf: Here is an unsubstantiated quote. Of all, OCC must know. "Economists at the Options Clearing Corporation estimate that 30% - 33% of stock and index options expire worthless, and perhaps as much as another 20% - 33% are offset at a loss. The remainder? OCC staff says some 12%-15% are exercised, and 55% are offset by closing sale (this includes the 20% to 33% offset at a loss). These figures can vary widely month to month and security to security, they say." Regards Dinesh

To: Uncle Frank who wrote (23606)	4/26/2000 11:08:00 PM
From: Bridge Player	Respond to of 54805

<<Selling to close a long position on an option merely transfers ownership to someone else; it doesn't close the option itself.>> When an option is sold to close, then the total open interest in that option will be reduced only if the buyer previously had a short position that he is also closing. That may or not be the market maker; if he was able to match your order with one to buy it could have been a public (non-MM) customer. If the MM himself had been short and was also closing, he might have been short from the exact transaction on which you went long. However, that is extremely unlikely. He could have been short anywhere from 5 seconds to months or anything in between, and if there is any volume in the option at all, the chances that he went short on exactly the same trade that you bought are pretty tiny. If a NEW long position is opened by the buyer at the same time that you sell to close, then the total open interest remains unchanged. BP