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

To: Bilow who wrote (11855)	12/18/1997 9:51:00 PM
From: Defrocked	Read Replies (1) \| Respond to of 18056

RE: "The thing that scares me is the apparent movement of Federal reserve futures positions back out of the market tomorrow." Carl, if the Fed did buy Dec Spoos in Oct/Nov they can settle the transaction in cash through the settlement process. Don't worry about that...there's so many other things to worry about in this market!<g>

To: Bilow who wrote (11855)	12/18/1997 10:09:00 PM
From: Rmn	Respond to of 18056

If you could help me out. I'm not clear on what are the Fed Reserve Futures positons, and what is the implication of them being out of the market. Thanks Ramsey

To: Bilow who wrote (11855)	12/18/1997 10:19:00 PM
From: D & G	Respond to of 18056

Carl, <Maybe I should of let my Dow puts hit expiration...> Thats my point about taking profits and not looking back. On Wed I picked up the IBMXT's for 5/16 and closed out today at 1, now my stomach's turning thinking they might be worth 5 tomarrow. Don't look back Don, don't look back aaahhhhhhhhhhhhhh <ggg> DJF

To: Bilow who wrote (11855)	12/18/1997 11:04:00 PM
From: Bilow	Read Replies (2) \| Respond to of 18056

Regarding my comment on the Fed and the S&P expiration. I should of noted that this is under the assumption that the Fed bought futures on October 28 in order to save the market, and that those futures were for this expiration. These are all rumours, not necessarily true. (But I believe, of course) The rumour further is that someone is letting their long positions in the futures expire instead of rolling them into the March. This would mean that the Fed would take the cash (their intervention as of now would have been profitable) instead of selling their position and establishing a new one. The problem is that the Fed's counter party (presumably the market maker) probably hedged the transaction by purchasing stocks. This arbitrage is supposedly what drove the market to its highest point gain ever on October 28. But if the Fed were to let its position settle tomorrow, the counter party will have to unwind its stock position as well. The effect on the market is that all the stocks the Fed bought (through the hedging mechanism) last October would go on sale (at the opening price?) tomorrow. Not pretty. And all speculative in the worst way. Tomorrow will probably be just another dull day, say 200 points straight up. On the other hand, some of the dipsters I personally know are out of money and underwater. My suspicion is that we've used up at least half the dipster capital bank. -- Carl