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To: Tommaso who wrote (40500)	11/2/2005 9:18:38 PM
From: mishedlo	Respond to of 116555

University of Illinois Study Casts Shadow on Options Trading By David Roeder Chicago Sun-Times Tuesday, October 18, 2005 suntimes.com How honest is the stock-options market? Newly published research from academics at the University of Illinois said there are times big trading firms manipulate the market to their advantage. The manipulation, which is illegal, takes place in the final days before options expire within a given month, said the study published in the October issue of the Journal of Financial Economics. The study is the work of finance professor Neil Pearson, associate professor Allen Poteshman, and Ph.D. student Sophie Xiaoyan Ni. They based their findings on a mathematical analysis of data from the Chicago Board Options Exchange that covered trading from 1996 through 2002. They said big investment banks that trade for both themselves and customer accounts often steer the markets by selling options on specific stocks a few days before expiration. Then they trade the stock itself so the price finishes "out of the money'' at expiration, meaning the options they sold won't be exercised, the researchers concluded. That allows the firms to keep the premiums they collected, which represent the cost of the options they sold. "This is an extremely profitable business" for the investment banks, Pearson said. He said the practice hurts some individual traders but that more likely victims are market making firms that work the CBOE floor. A CBOE spokesman had no immediate comment. It was the leading market for stock options during the years the study covered. The researchers also cited benign factors that contributed to stock- market disruptions on option expiration days. Options, which are contracts to buy or sell a stock at a given price, expire on the third Friday of each month, and traders have long noted that the day brings heavy volatility. Overall, the value of stocks that have options attached to them changes an average of $9.1 billion on expiration day, the report said. The researchers could not say which investment banks engaged in manipulation because the data they saw included only general coding about the sources of the trades. But their information has been sent to the Securities and Exchange Commission, which could follow up with more scrutiny. Pearson and Poteshman said nothing in their work indicates options trading is inherently corrupt. But they said they found strong evidence that options trading influences stock prices, an issue that's been a long-term SEC concern. Although both professors specialize in options research, they said they don't trade the contracts. "Independent of this study, I don't think it makes much sense for retail investors to trade options," Pearson said, acknowledging that his view would earn him enemies on LaSalle Street. Poteshman said options could be useful, but commented, "I would probably think twice before buying an option that expires in a few days."

To: Tommaso who wrote (40500)	11/2/2005 9:38:05 PM
From: mishedlo	Respond to of 116555

More Signs of Weakening Momentum In The Economy – Housing and Cars northerntrust.com

To: Tommaso who wrote (40500)	11/2/2005 9:44:30 PM
From: mishedlo	Respond to of 116555

A Separate Peace America is in trouble--and our elites are merely resigned. opinionjournal.com

To: Tommaso who wrote (40500)	11/2/2005 9:51:37 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Greenspan's last act: Ending an era of cheap borrowing iht.com

To: Tommaso who wrote (40500)	11/2/2005 9:58:48 PM
From: XBrit	Respond to of 116555

<But I bet you have not read it and do not know what you are talking about.> I've read numerous detailed news reports on it. The personal attack is totally uncalled for, btw. I have exchanged 2 messages with you in the past probably 5 years, and in both of them there was an unnecessary attack in your reply. What's that about? Message 21826721

To: Tommaso who wrote (40500)	11/2/2005 10:05:20 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

George W. Bush and a secret service agent are taking a stroll when they come upon a little girl carrying a basket with a blanket over it. Curious, Bush asks the girl, "What's in the basket?" She replies, "New baby kittens," and she opens the basket to show him. "How nice," says Bush. "What kind are they?" The little girl says, "Republicans." Bush smiles, pats the little girl on the head and continues on. Three weeks later, Bush is taking another stroll, this time with Karl Rove. They see the little girl again with the same basket. Bush says, "Watch this, Karl; it's really cute." They approach the little girl. Bush greets the little girl and asks how the kittens are doing, and she says, "Fine." Then, smirking, he nudges Rove with his elbow and asks the little girl, "And can you tell us what kind of kittens they are?" She replies, "Democrats" Abashed, Bush says, "But three weeks ago you said they were Republicans!" "I know," she says. "But now their eyes are open."