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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: Petrol who wrote (1331)	9/18/2002 12:40:13 PM
From: Jorj X Mckie	Read Replies (1) \| Respond to of 57110

What is Delta Hedging? The big put sellers generally sell their puts naked. This means that they are going to have the stock put to them if the puts are ITM on expiration. So, to cover their position and thus limit losses, they have to short stocks. This adds selling pressure. The transaction goes like this: -Sell puts naked -Puts are ITM by a large margin, therefore the stock will be put to the person who opened the contract -Put seller Shorts stock -When the stock is put to the put seller, that covers the short.