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Strategies & Market Trends : Options 201: Beyond Obi-Wan-Kenobe -- Ignore unavailable to you. Want to Upgrade?

To: Herschel Rubin who wrote (1036)	6/18/2004 5:33:03 PM
From: Ira Player	Read Replies (1) \| Respond to of 1064

Hi Herschel, I have had several occasions where I have shorted against the option at the end of the last trading day, when doing so was the cheapest exit. To sell the option, you have to take the bid and at the end of expiration day, they often offer a little less that the intrinsic value of the option. It can be more cost effective to sell the stock short, pay that commission and whatever fee your broker charges for the exercise, and then have the position flattened on Monday. Ira

To: Herschel Rubin who wrote (1036)	10/20/2004 12:55:52 AM
From: LLCF	Respond to of 1064

<Are we to assume that the remaining 8000 contracts representing about 800,000 shares were exercised? I can't imagine that there are that many options players who exercise their in-the-money options as it requires substantially more capital to do so than the amount vested in their options.> They're probably all professionals short stock against them... so they exercise and they're flat on monday. Look at ANY big equity option... MO, IBM, whatever... they all have tens of thousands OI on expiration... same story. <Or if some contracts are involved in straddles or bull/bear spreads, they don't need to be exercised, thus explaining the apparent lack of final reconciliation for these outstanding puts & calls on expiration day?> They're all 100D on expiry day and all hedged out... there is no more 'bull' or 'bear' left to the spread. DAK