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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation? -- Ignore unavailable to you. Want to Upgrade?

To: basserdan who wrote (4280)	3/18/2009 11:09:41 PM
From: rrufff	1 Recommendation Respond to of 5034

Great video - urge all to watch - see the links between massive naked short selling,hedge funds and our current crisis. Also noted that Michael Moore is making a film about the current crisis. vimeo.com

To: basserdan who wrote (4280)	3/19/2009 1:40:27 PM
From: ogstel	Read Replies (1) \| Respond to of 5034

Okay, watched the vimeo video and thought it was great. Then, something else I had learned earlier came to me and I rewatched part. The thing I remembered was from an option trading course. Basically, that the market makers in options will hedge the option trades they make. This would mean that they would be expected to short the number of shares that they had sold puts on. Given that the strike price was not being actively traded, I would not expect other put sellers to be involved. So on the rewatch, it noted 5.7M shares were involved, but slightly disagreed by showing 55K options, which would indicated 5.5M shares. Later, Chris Dodd notes that the previous trading days showed 3M, 5M, 6M, 8M, 7M, and 2M shares being traded. That would make average trading volume for those days about 5.17M shares. So, am I missing something? Would a market maker take a trade that that would, if they decided to hedge, take more than average daily volume? How do they balance the possibilities of "insane or know something"? Then, did they hedge, and was that the first jump of 2M or so failures? It seems like they would be well aware trying to hedge that many shares in a short time would be likely to significantly move the market.