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.

Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Rational who wrote (8989)	11/22/1997 5:25:00 PM
From: Joseph G.	Read Replies (1) \| Respond to of 18056

Sankar, if all world stock markets drop 30% one good day [-g-], I think option sellers' losses will be one of the "minor" problems. The Cambridge guy guessed at total OTC stock options as ~$300B of underlying, which is not very little, but not a lot. IMHO, it is surprisingly little. Shows tons of complacency. But, nobody really knows how much is there in OTC contracts. "Real time hedging" can sure drive markets, though they have "circuit breakers" just to shut off such activity. Just a regular old-fashionned panic is also possible. Or, there is no reason why a one month (as opposed to one day) 30% drop should be very pleasant to bulls, either. The simple truth they don't want to face is that ther is no reason to buy overpriced stocks now, no matter what will or will not be in 10 years or 30 years. It's all a delusion. Joe

To: Rational who wrote (8989)	11/22/1997 7:13:00 PM
From: Tommaso	Read Replies (5) \| Respond to of 18056

Because I am such a worrier I raise the question again: Has anyone ever sold short, believed they had made a fortune when stock price(s) collapsed, and then found they could not collect? I think that the BEARX fund has a big portfolio of US Treasuries to back all their positions--that in fact they use as security for their short positions. But is there any chance, for example, that my SPY short would fail to be honored if the market declines? (To ask this may seem paranoid, but over the years I have read about and even been caught up in so many scams, defaults, class action suits, write-offs, bad debts, etc that I wonder how secure the short side is, esepcially since if a small investor shorts the proceeds are never really his or hers)