Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Ask da_cheif -- Ignore unavailable to you. Want to Upgrade?

To: da_cheif™ who wrote (2437)	6/14/2001 9:35:20 PM
From: Chip McVickar	Respond to of 8150

To the Thread: A Clip from Hahn's Corner hahnscorner.com Updated: Wednesday, June 13, 2001 9:46 PM Strike Price Magnets and “Fed Speak” Galore Before we discuss the substantial market moving events emanating from the Federal Reserve, it's important for everyone to be aware of a unique situation in the derivatives market. The open interest of the DJX (representing the DIA tracking stock of the DJIA) is posted below. There are natural magnets for options' expiration Friday at $110, $108 and $100, which correlate with Dow 11,000, 10,800 and 10,000. Normally, there would be no reason to expect a move below 10,800. However, from a greed standpoint, the option writers have a very large motivation to let the market fall to Dow 10,000. There are more than 50,000 $100 strike call contracts “in the money”. It would be rare to reward that many contracts with unchallenged profits. (It is true there are 70,000 $100 strike worthless puts “out of the money”, but, they don't come into play unless the DJIA drops below 10K by Friday's close, which is very unlikely.) But, a drop of 800 points to the 10,000 level in two days is not unprecedented and it would maximize the profits of the call writers by taking all of the “in the money” premium from the call buyers. Just so you are aware....