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To: Ilaine who wrote (9882)	8/10/2000 12:49:06 AM
From: John Pitera	Respond to of 436258

Cobalt, I'm not saying that they are equivalent. the point is that when one has puts that are worth something and a rally shows up that will make your puts become worthless the only thing that can ultimately be done to maintain the value of the puts is to buy the common stock to let you gain a dollar for every dollar of put value lost if prices rally higher. as you know prices can rally higher, and the delta move of an option is not 1 to 1 with the underlying common stock. it's a ratio depending on all the greeks. you may say it's only 200 dollars I will lose but lets say you have 56,000 or those 2$ puts then your potential loss if they expire worthless is 11.2 million dollars and now we are talking real money. If they are worth 7 bucks then we're talking 39.2 million dollars. institutions who are the big players in this area, are just naturally doing ratio hedging with other options and futures and common strategies that can easily get pretty complex. when one is doing large scale options trading their are quasi arbitrage opportunities that show up all the time and if you have 56000 puts you probably have bids and ask prices on CSCO options all the way up and down the ladder and in several months so if some sucker wants to overpay for options you can accomodate him and lock in your profit by another option or stock transaction. John