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To: Jonathan Bird who wrote (11227)	1/15/1998 12:29:00 AM
From: Mark Adams	Respond to of 12298

Well, if you assume that all the puts are hedged by selling stock short (which isn't the only way)- then you could say that as the stock dropped below 10, all the puts above 12.5 had a delta approaching 1. This means that if the puts are hedged delta neutral, then all of the sold puts have offsetting shorts. And on expiration day, the put owner forces the stock on the hedged MM, who then covers his short with the put stock. Hence the hedged puts with a delta of one should have no impact on the price of the underlying stock, as the stock was already sold to someone else (like me) who absorbed the loss. Now it seems that we do see stocks move towards strikes at expiration, which tend to neutralize as much as possible of the option value. In this case, that would require the stock bouncing an unreasonable amount, and it ain't going to happen. Like comparing the gravity of the moon to the earth, yeah, the moon has an impact on your weight but it's negligable in comparison to the earth. But in thinly traded issues with heavy call or put positions a point or two out, you can see the stock move on the close expiration day to minimize- like said above. The only parties that would be interested in seeing such a move would be those unhedged traders, ie people who sold massive 12.5 puts and didn't bother to sell short stock to hedge the delta- ie non-pros. If they could, they might try buying a bit of stock to move the price up to 12 7/8's, seeing the 12.5 puts expire worthless. I doubt we will see this happen. (and the 12.5 are a small portion of all puts outstanding). Really, there are two effects we are talking here. One is the increased volatility caused by large options interest (causing greater swings up or down, as the stock starts moving in one direction). The other is the attraction to a nearby strike at expiration, which I think is real but weak. I won't be selling Friday. I sold covered calls and am holding my position to see how things turn out, despite the grim report Monday. And I don't expect to see a big move either direction due to options, though it could be volatile as people close out their positions. My guess is Monday it will close at about where it is now.

To: Jonathan Bird who wrote (11227)	1/15/1998 12:35:00 AM
From: Robert T. Quasius	Read Replies (1) \| Respond to of 12298

Does anybody want to buy my Jan 40 calls?

To: Jonathan Bird who wrote (11227)	1/15/1998 5:17:00 PM
From: Greg Jung	Read Replies (1) \| Respond to of 12298

I saw 3com go down and richly reward the put holders and it richly rewarded the call buyers in June. At expire day I think the effect really just pegs it to the nearest strike, since lately the options players have been unwinding well before the friday. I've already bailed in November (at 17 5/8 Thu prior to expiration), 1/2 of position, and 1/2 of Cymer position in December. My margin can take APM now wherever it goes provided the rest hold up, and I'll be putting money in to go debt-free and forget abouts stocks for another decade. On the brighter side, I can earn $3,000 more each year for a while without advancing my tax bracket! The tax bite hurts this year because of my 1000% coms gain (against late-year losses). Greg