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To: Henry J Costanzo who wrote (85865)	11/15/2003 2:53:39 PM
From: mishedlo	Read Replies (2) \| Respond to of 209892

Huge OI - particulary when it is equal on both sides is like a magnet. Look at QQQ 35 action this past week. If we are in panic mode (and much of this year was in panic buy mode) it will not work. It will not work in panic sell mode either. In choppy markets or non-trending markets, option sellers ususally have a field day. Furthermore high OI at a strike provides resistance on calls, and support on puts. It is when those beak, that delta hedging kicks in an the option sellers have to hedge in the direction of the move eggagerating the swing. We are in an ENORMOUSLY derrivative market right now IMO, and one of these days there is going to be a huge break when there are tons of puts out there and all hell will break loose. Such a waterfall would be impossible to time but you sure as H do not want to be long when it happens.. M

To: Henry J Costanzo who wrote (85865)	11/15/2003 7:16:45 PM
From: The Freep	Read Replies (3) \| Respond to of 209892

Mc -- others have touched on the relevant put/call stuff. Using the case of NOK, as that's where I first brought it up... There is a huge preponderence of calls vs. puts at 17.5 for this month. The stock is close enough to that strike price that it would be in "their" interest to get it to close near there, thus meaning the options writers don't have to pay money out PLUS they get to keep whatever they sold the calls for. Since they won't lose anything on the put side, this is the "sweet spot" for expiry. Does it always work that way? Of course not. If it did, I'd be riiiiiich. Instead I'm a Freeeeeeep. We've also talked about all the QQQ puts out there (heck, there's 400K puts at QQQ 34 in December!!!) and how they've "put a floor under the market." Here's a case where a huge decline would seem to be hugely expensive to the options writers. "They" would have incentive not to let the QQQ price get too far below 34... if they can help it. And can they? If all else is equal (i.e. no sudden shock to the system), they probably can, as that's a slew of $$$ at stake. Now, this doesn't mean we won't go below 34 on the QQQ in december... but I would expect, if we did, we'd rebound before expiry. Did this help at all? It's all a crapshoot anyway <g> the freep