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To: H James Morris who wrote (115447)	1/16/2001 7:08:59 PM
From: craig crawford	Read Replies (1) \| Respond to of 164684

Try telling me again how pros haven't been shorting this market, smartass! Try telling me there aren't a bunch more shorting this market because we're bumping up against resistance and downtrend lines. Those sucker shorts are the ones who are going to give me some nice exits on my calls. thestreet.com Here is where the overly-aggressive firepower comes into play. The hedge funds figured that Chambers' words would trigger a horrendous decline in Cisco and in the rest of the tech market. They descended on Cisco in droves, buying puts on the stock in wave after wave after wave. They also played the Nazz on the news and bought puts on the QQQs (QQQ:Amex - news - boards), the NDX and the Mini-NDX (that is, the MNX). These waves were all put on pretty much at the same time, because the dissemination was perfect. They picked put contracts that would expire very soon -- most likely at the end of this week -- because, what the heck, the news was going to be out immediately and when people who were not in the room got wind of Chambers' talk, they would freak out and sell. They figured the stock would get clobbered. But nothing happened. The selling that should have materialized, according to the playbook, did materialize almost instantly, largely as an offset to the put-buying of the hedge funds. In other words, the market-makers who sold the puts to the hedge funds then banged out the stock as a hedge. Cisco, which was at 36, dropped to 34 under that pressure. The broader market sold off too, in part, again, because of the collateral pressure put on the market by the market-makers laying off the bets of NDX, QQQ and MNX put-buyers. (Again, if you are an institution and you go in and buy 1,000 puts against an index, the folks who sell you those puts can't do so naked, or unhedged. They have to turn around and sell the underlying futures or sell the stocks themselves to hedge the risk of what they sold you.)