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.

Strategies & Market Trends : Swing Trading With Options -- Ignore unavailable to you. Want to Upgrade?

To: underdog430 who wrote (40)	8/8/2001 7:04:17 PM
From: Road Walker	Respond to of 88

430, re: How much of option trading is retail vs. institutional? When the trading is institutional, are they really placing their bets with options or are the options merely a hedge? I don't know the answer. But there is a lot of stuff going on. For instance, for the week ending 7/27, 26.3% of total volume on the NYSE was program trades by brokerage houses. Of that, about 8.8% was index arbitrage or "other derivative related". That's a lot of volume. I don't know the way the game is played at the trading desks, maybe someone else does. John

To: underdog430 who wrote (40)	8/9/2001 1:03:45 AM
From: Dan Duchardt	Read Replies (1) \| Respond to of 88

Mark, The person on SI I think most likely to know the answers about institutional and hedge trading is KFE over on Subject 19444 He's playing a lot of golf this summer, but stops by from time to time. Very helpful and really knows his stuff. The support and resistance argument has the same basis as the theory of Maximum Pain. The assumption is that the smart/powerful money is on the short side of open interest, and the fish are on the long side. It is therefore in the interest of the smart money to expire as many options worthless as they possibly can. A large open interest at any one strike is therefore likely to be resistance if calls, and likely support if puts. You can find the complete MaxPain profile of a stock for any month at iqauto.com It is a dollar calculation that considers open interest at all strikes and computes the value of all open contracts. The calculation can be done for any closing price, but they tabulate and graph the results at the strike prices. As expiration approaches, the MaxPain point and price tend to converge. Often the MaxPain point moves toward price as people close contracts about to expire. Dan

To: underdog430 who wrote (40)	8/22/2001 9:29:00 PM
From: Jerome	Read Replies (1) \| Respond to of 88

UD...max pain theories.... Looking at last Friday's expiration.... Flex dropped well below 25. About the first of the month 17 1/2 was considered max pain for CSCO and it closed well below that strike.. AMAT, NVLS, LRCX and a lot of other tech stocks closed well below their maximum pain point. Its my opinion that when an option or stock has high volume near expiration...(CSCO, DELL, ORCL, INTC), the maximum pain indicator is worthless. It would take too much money to move CSCO or ORCL in any particular direction, and bring it into alignment with a maximum pain point. Good luck on this thread.....Jerome.