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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (80135)	7/12/2001 8:39:26 PM
From: eichler	Respond to of 99985

Zeev, Agree that it's just another kind of sentiment indicator. My point is that I perceive there is sufficient disbelief that we can rally higher to serve as the contrary indication. I think you are actually among the majority at the moment. But as more jump on the boat, that will change. It wouldn't be the first time I've been wrong...but with the compx direction, it has been awhile....ggg Eichler

To: Zeev Hed who wrote (80135)	7/12/2001 9:00:52 PM
From: ajtj99	Read Replies (1) \| Respond to of 99985

There is a saying, "Fool me once, shame on you. Fool me twice, shame on me." (I remember seeing some actor say it on TV once). I don't know exactly what that means, but I think the Who said it best, "We Won't be Fooled Again". The memory of that short covering rally 2-weeks ago may be fresh in many people's minds, especially those who were sucked into it. Had that event happened 2-months ago, I think the retail investor would be more likely to participate in this "rally". My point is that this is a phenomenon that just happened 2-weeks ago, and I don't beleive many are of the opinion that this is a rally that will last, but maybe only one that they could possibly profit from short term.

To: Zeev Hed who wrote (80135)	7/13/2001 2:07:53 PM
From: Ira Player	Read Replies (2) \| Respond to of 99985

Zeev, I believe the 80% number is a very misleading "statistic". Most people I interact with that play in the options markets have no intention of holding the option (or staying short, if the position is short) to the expiration. When I sell a Put at the bottom of a cycle (IMHO, of course, as to the bottom), I do not (usually) plan on having the stock put to me. I will buy back the Put as expiration nears if it is still in the money and do something else. Same with Covered Call writing or Spreads. If the written Call is in the money, I will usually buy it back (Covered Call) and roll it out to a later month. If it is a spread, I close the Spread before expiration. When I buy Puts or Calls, I seldom actually want to put the stock to anyone and I do not want to buy the stock with the Call. It is a trading vehicle and will be closed prior to expiration. I do not feel I am the minority in these methods. So when "80% of options expire worthless" is stated, it really means that 80% of the options that were still open at expiration were worthless. But the majority of open interest over the life of the series never made it to expiration day before they were closed. Ira