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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Thomas M. who wrote (24044)	11/19/1997 4:12:00 PM
From: vegetarian	Respond to of 61433

Looking at ASND price action, it seems that it is not going to be able to cross much above 25. I had thought that the options pressure may push it to just under 30 but looks like it is not going to happen. This action also means that ASND may go down after the expiration to some extent if all that puts can't push the price up. I am thinking os a DEC 25 straddle on ASND since the direction is unclear (buying both DEC 25 calls and puts). Why might such a strategy be a bad idea? comments? One problem I can think of is the option premium, for 1 contract the straddle price would be $450-500 so ASND would need to move at least 5 points on either side to be profitable. But at last option it was 35 now 25 so a 10 point move. What is the probability that ASND will stay between 20-30 range for next expiration?

To: Thomas M. who wrote (24044)	11/19/1997 4:54:00 PM
From: pae	Read Replies (4) \| Respond to of 61433

re Options Conspiracy Theory: if those short the 30 puts (probably largely MMs?) shorted the stock north of 30 to hedge their options exposure; to unwind they can now either a) buy back the puts or b) take delivery of the stock at a price of 30 when exercized. If they buy in their puts, they then will probably at least consider covering the underlying shorts, or they will roll out to short the December 30s. If they take delivery and then net out the equity positions then short interest will decline w/o buying pressure. So should we write off some of the rallies of the past week (assend up when other networkers down) to un-winding (buy in puts, cover equity shorts)? And expect more of same tomorrow? But then expect winding (un-un-winding) for december beginning next week? Also, if those short naked puts get exercized and end up with the stock monday, they may sell immediately especially if under margin pressure. How many derivatives can dance on the head of an equity? How's this sound to the options semi-pros out there? Cheers!