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 : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (57410)	10/22/2002 5:52:40 PM
From: Jack of All Trades	Respond to of 209892

Institutions don't just trade options like the retail trader. They are writing or buying to protect their positions in the market. Who knows what offsetting positions the writer has. I'll say one thing, you can bet they have some type of offsetting position... Let's say inst #1 has a QQQ short position @25 to equal the Nov 23 puts they wrote for say $1.00 If the QQQ goes to $20 the puts are worth $3 intrinsic, but they have a have a $5 profit on the short and $1 for the writing of the puts. If the QQQ goes to $25 they still have the $1 profit. This trade only starts going negative if the QQQ goes above $26. Now you ask about the buyer of those puts... Well they could have a taken a long position at $23 and wanted to minimize the loss to $1. The buyer could have actually sold today and locked in a profit and thrown the puts away... All hypothetical of course...

To: ild who wrote (57410)	10/22/2002 6:18:33 PM
From: mishedlo	Respond to of 209892

Well yes but the battle over 23 will likely stop it. This puts pressure both ways. Some big player wants or expects down another big player does not want 23 to break. This is different than Joe Retail wanting down. Pressure both ways is more likely to pin us to max pain in Nov without an overrun either way. That is a possible implication of this, lending creedence to the theory that we have a pullback but it will be mild. QQQ 23 might be a floor with that huge number of options. Which was my entire point to begin with. ggg We are a long way from expiry and things can change so bear in mind this viewpoint is way way early. I was startled by the huge volume of the QQQ 23 strike, that is all. 77K puts out of the blue seemed high. M