>> Craig: Do you know anything about how an options expiration impacts the market? The rolling over of large numbers of contracts can have an impact for several hours. It does not determine the direction of the market but it can cause very, very short term flucuations. Your posts sometimes lack sophistication. <<
Another little tid-bit for you know-it-alls on this thread who like to tell me I don't know what I'm talking about when I tell you this market is being shorted heavily and that's why it won't pullback.
The put call ratio hit 0.86 Thursday morning, a remarkably high number.
cboe.com
"No, no Craig, you don't know what you're talking about. You don't have any idea what the pros are doing with their shorts. You're obsessed with shorts, blah, blah, blah."
From RealMoney.com
JAY SHARTSIS
1/18/01 4:23 PM ET
As for reaction to earnings due out after today's close, here are some thoughts on the big ones. Microsoft (MSFT:Nasdaq) -- lots of put buying recently should propel this one up after the report, even if not so great.
JAY SHARTSIS
1/18/01 1:12 PM ET
The CBOE equity put/call ratio is a very high .75. This is certainly restraining my bearish instincts.
JAY SHARTSIS
1/18/01 12:16 PM ET
I said that I think the rally is done for now but I want to add that no serious downside should be expected before the option expiration on Friday. This is because the very high levels of put trading we have been witnessing probably means a significant number of January puts and short calls are outstanding and their unwinding should ensure things will hold up through Friday -- maybe Monday.
JAY SHARTSIS
1/18/01 11:11 AM ET
I shorted some AOL (AOL:NYSE) just below these levels. Did you see all the hype last week when the merger was finally approved? Biggest bash since that grand party thrown by the Shah of Iran back in the late 1970's. Has to be a short, I think.
Oh my, right before a $5 billion buyback announcement.
Information Overload
1/18/01 5:04 PM ET
You should see the boyz juggling conference calls the way Gekmo juggles the ladies. Mixed bag, so far, with 'Soft (MSFT:Nasdaq) and Nortel (NT:NYSE) trading higher and Sun Microsystems (SUNW:Nasdaq) trading a little lower. I think the current psychology probably digests these numbers, and we have a shot at NDX 2750 tomorrow.
Meanwhile, If I see one more company hide behind the veil of the economy, I think I'm gonna lose it. Live by the sword, die by the sword, fellas. Going to focus, digest, and hopefully get some rest for tomorrow expiry. Again, hope you all made some good money today. Good night.
R.P.
Long Microsoft, long Microsoft puts; long Nortel calls, short Nortel, short Sun Microsystems.
Buckets of Green
1/18/01 3:25 PM ET
P.S. Punting the other way on the close, and scooping a chunk of the QQQ 67 1/2 puts for a buckish. We figure, if tonight brings negatives, we have some "exponentiation" to the downside, and if tonight's good, we can buy QQQs against them and trade the gamma. So you know.
Long Microsoft, long Microsoft puts; long Nortel, long Sun Microsystems puts.
Mr. Mojo Rising
1/18/01 10:52 AM ET
I have gotten a lot of requests as to how I ascertain if buying is short-covering, and I can only say that it's a function of my trading relationships. I had gotten a handful of calls from my coverage guys telling me that shorts are scrambling (in the semis and selected networkers), so I passed it along.
Jim Cramer
Intra-month
1/18/01 2:39 PM ET
Remember that when the Philly Fed came out with his incredibly weak number the first thing you should thinkabout was more likely we do see a 50 basis point cut and then, you should think, last time we had that cut we saw a big ramp in the NDX and the SPX so DONT BE SHORT. All weak macro info should immediately translate into DON'T BE SHORT--even if the fundies aren't so hot. This is especially the case for the MNX and the QQQ crowd, all of which panic the moment they hear that the Fed might ease BEFORE the meeting. My Motto: don't be short when the Fed starts easing. PERIOD.
Jim Cramer
Trading Track
1/18/01 12:19 PM ET
If you are trading and you aren't reading Trading Track you are making a serious mistake. There is great stuff here. Jay Shartsis just makes the excellent point that there was massive put buying in the last few weeks and that those puts will buoy the market into Friday. Go there. It is excellent.
Big Blue Led the Way
By James J. Cramer
1/18/01 4:32 PM ET
My canvassing of mutual funds today indicates that, surprisingly, not a lot of money came in over the last day or two. I thought that there had been a ton of money headed toward stocks.
That tells me that I would bet this rally was mostly on the backs of the shorts, which means that at a certain point we will give back some of these gains. I just don't think it will be before expiration.
The Herd Stampedes Microsoft
By James J. Cramer
1/18/01 3:13 PM ET
Now, thousands upon thousands of these puts have been sold and the buyers of the puts all have pretty much the same mindset. I have talked endlessly about the herd mentality. This Microsoft situation is a perfect example. These puts, which looked like a great bet on the short side, become the reason people went long. So many people did this trade today, so many people took the risk-free long, that Microsoft moved higher simply because of the puts. (I am not even including, by the way, the hundreds of funds that own the Microsoft January 50 puts and -- rather than see them go out worthless -- put them to use as a low stop against common stock. Or, in English, they buy Microsoft knowing that if the quarter is bad, they can't get hurt below 50.)
And finally a real world anecdotal example of shorts leaning against this market from this very thread..
"I just bought some oex puts -- what we are seeing today is partly options related. Good luck."
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