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To: mishedlo who wrote (6058)	11/23/2002 10:04:38 AM
From: Kip518	Respond to of 10157

Mish, interesting about huge bets in the Qs. Marko Budgyk, Helix Investment Junk Bond Manager, used an interesting phrase to describe what is happening in the market now. He calls it a "moral hazard meltup," meaning that there are so many hedge and mutual fund managers with jobs and careers now on the line that they are taking extreme risks to get fast, strong returns. Clearly, those with OPM are running scared. Whole interview worth a listen. aegeancapital.com

To: mishedlo who wrote (6058)	11/23/2002 11:54:06 AM
From: Prophet	Read Replies (1) \| Respond to of 10157

there is no question people are scare of this market. Look at the following page to see the madness that occurred this last Friday with QQQ Dec options puts. People are either scared to death or are pretty certain this market heading down.

To: mishedlo who wrote (6058)	11/23/2002 12:47:19 PM
From: Dan Duchardt	Read Replies (1) \| Respond to of 10157

100,000,000 shares of QQQ are bet in december options, on each side. At $27 per share that is $27,000,000,000 bet. I think your calculator slipped a decimal point <ggg> That would be $2,700,000,000. Still a pretty big number, but it does not really represent the $$ at risk. Actually your count was conservative; the totals are closer to 125,000,000 contracts on each side, so the dollars controlled are around $3,300,000,000 on each side. This may not seem so outrageous when you consider the shares outstanding for QQQ is 744,100,000 and it trades well over 10% of that on an average day. There are so many strategies one can employ with options that you cannot really get a feel for what is going on by looking at one months open interest. You don't know how much is involved in bullish strategies, bearish strategies, or market neutral strategies. I have some QQQ December options, almost all short calls, but they are offset by long LEAPS calls. The folks who are long those calls might have short QQQ they are protecting against a runaway. The total open interest on each side and the QQQ volume traded is certainly an indication of the popularity of these instruments, but it does not tell you much about where sentiment lies. MaxPain theory in its most objective form calculates the value of all open interest at any assumed closing price to identify the price that minimizes that value (the point of maximum pain). These values are usually tabulated at the strike prices, so we seldom see the exact MaxPain point in the table, but the trend is clearly evident and from that you can get an idea of what is really at risk. The current minimum value for Dec QQQ is $165,646,100 @25. If you go 3 1/2 points away from the minimum, that value approximately doubles, so in very rough numbers we are talking about $50,000,000 per QQQ point exposed to risk in QQQ options compared to $750,000,000 per point for QQQ shares outstanding. I don't find that absurd.