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 : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (80595)	6/18/2002 2:34:39 PM
From: brightness00	Read Replies (1) \| Respond to of 99280

M, I have given some thoughts to this very point that you have raised several times in the past. I think, the power of P/C ratio is the statistical argument; i.e. the law of large numbers. Most option buys do not generate profit, on a net-net basis. Statisticly speaking, the profit takers on puts are the writers. The really strong hands do not need to buy back in order to lock in profit on puts that they write; they make money when writing, and then wait for expiration; it's almost always more profitable to delta-hedge an option that you have written than buying it back, if you really know which way the market is going to go. Heck, if your hand is really strong, you don't need to delta-hedge at all ;-), but I doubt it. Therefore, statisticly speaking, the buyers of options, regardless buying to open or buying to close, are the weeker hands. What do you think of this theory?