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Strategies & Market Trends : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: UnBelievable who wrote (46556)	7/20/2002 9:22:48 PM
From: yard_man	Read Replies (1) \| Respond to of 209892

HUH??? >>The reason for this is that the owners of in the money options tend to close the equity position that the option created. Since last week was weak most of the in the money options were puts. This means anyone who did not sell the option before the close will be put the option shares and on Monday they will be short the shares that they have been put. Most option holders do not maintain the short positions which have been created (usually the margin requirements for the amount of stock they have been put is far in excess of their available equity and they essentially (actually) receive a margin call) so they buy to cover. The boyz are well aware of this and help get the ball rolling for this the counter trend effect. << The maker of a the market for the option, i.e the writer -- shorts the underlying and sells the put taking the spread. In the event that shares are delivered via exercise -- they are flat on after the exercise. For the holder who held deep itm through expiry -- I am not aware of them having a choice -- exercise will be done for them. Nothing is put to them -- they must "put" the shares to the writer if they don't sell the option -- that's done through open market purchase on Fri expiration.