Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: tim york who wrote (10036)	11/19/1997 7:34:00 PM
From: GROUND ZERO™	Respond to of 94695

Hi Tim, If I understand you correctly, your reasoning is sound, except that there are also those holders of the calls who want to sell their option and not exercise for the underlying stock. That puts negative pressure on both the option and the underlying stock. This is probably one of the reasons expiration afternoons are so volatile. As far as a call trading at a discount to the cash stock, I suppose anything is possible, but I doubt that floor traders who see that possibility would allow that to happen. They will likely bid the option back up over cash in an attempt to buy it for their own account. I don't know if I answered your question. What did you have in mind to do? GZ

To: tim york who wrote (10036)	11/19/1997 9:02:00 PM
From: William H Huebl	Respond to of 94695

Hi Tim, I never try to guess what the MMs are going to do! By far, the most profitable approach I have found to options trading is: - Pick the right stock - Pick the right option - Pick the right time - AND GET OUT WHEN YOU MAKE MONEY! Before finding this most simple of approaches, I used to worry if I was paying exactly the right amount for the option and whether I had priced the option I was selling at the max I could get. I did this for years and lost my shirt, my drawers, my lunch, and other things too groudy to mention. Let's face it... if you buy the right call at the right time and the stock goes up significantly, the MMs HAVE to pay you more than you did for the option... if you get out when you are ahead! It's that simple! Of course, the questions you have now are the hard ones! You might start over on the TA for Beginners where I started here on SI... Regards, Bill

To: tim york who wrote (10036)	11/19/1997 11:33:00 PM
From: Greg Jung	Respond to of 94695

Tim, more often the price goes flat on, or by, options day. Option price can indeed get less than par value because, who ya gonna sell to except an arbitrageur who has nothing to do except buy the calls/short-sell/exercise. Less volatility in price except often there is a last minute rush to the nearest strike. Some believe that the cumulated open interest will create an "attractor" maybe to move the price up or down. I've been watching since last fall, options friday can often hold up a stock price on bad news conditions. If the market is rallying, usually most ends on Wednesday preceding. More severe damage to the stock comes on Monday and Tuesday following when the trades get settled. Don't ask me why. Don't trade these days. Iomega may have a funny intraday chart to watch - it has a heavy options following and just ran up beyond reason again. Oh yeah it has a good reason, they are going to split it. (?) Greg