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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: justaview who wrote (221877)	1/1/2007 8:17:49 AM
From: niceguy767	Respond to of 275872

"The specialist selling the puts to the fund would have to protect the downside by shorting the stock." or, perhaps more likely, sell some (deep)? in the money calls.

To: justaview who wrote (221877)	1/1/2007 1:36:55 PM
From: Magrathea	Respond to of 275872

I rather like the idea of a fund selling it's long position. But instead of a middleman, why shouldn't the fund write it's own Puts? Our speculation must fit the data. The only real big puts that have been written are: Oct 19 AMDMD 80000 Nov 2 AMDPW 5531 Nov 10 AMDPD 9180 Nov 21 AMDXD 7151 Nov 29 AMDMD 6002 Nov 30 AMDXD 38462 Dec 13 AMDXD 15495 Dec 14 AMDXD 14835 Dec 21 AMDMD 9138 AMDMD = 07Jan 20 Put AMDPW = 07Apr 17.50 Put AMDPD = 07Apr 20 Put AMDXD = 06Dec 20 Put So there have been no major puts written except for the 20's of Jan and Dec. If I wanted to lighten my AMD long position at $21.75, why buy 22.50 Puts (where there are'nt enought of them) for $1.00+ when you can sell $20 puts for $1.50 to $2.00 and sell the stock for $21.00-$21.50? In this case, the $20 strike will act as a modest floor. The writer of the puts may be willing to buy back the stock at $20, having made $3.00 profit on the Puts and Sell-Buy round trip. 15% Profit. So the put writer might not be a shorter, but a long holder looking for a profitable way to lighten up. -Magrathea