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Technology Stocks : PSFT - 1997 Outlook [closed thread] -- Ignore unavailable to you. Want to Upgrade?

To: Robert Graham who wrote (856)	2/3/1998 11:11:00 AM
From: Rick	Read Replies (1) \| Respond to of 940

Bob - Thanks for your post. Though it was somewhat difficult to extract all of your points, we seem to agree on my main points which were: 1) Options activity, though not a perfect indicator, is important information to know for predicting short term price movements, especially around earnings time. Nothing is certain, but it is information to take into account. 2) Options are a zero sum game. Ignoring any intermediary, you have a buyer and a seller. Any profits from the transaction for one party come at the expense of the other party. This is really simple mathematics. My explanation using the intermediary was not intended to be a description of the actual trading situation, but was a simplification of real life to help explain the basic mathematical fact that for any given options transaction any gain by one party comes at the expense of the other. 3) There are likely more people that lose money with options than make money. This is likely caused by the well informed (insider traders, sophisticated hedgers, etc.) making alot of money with large successful options trades at the expense of many less informed traders making small bets (usually simple gambles). It's similar to the notion that if you split the entire wealth of our nation evenly among all adults, within a few years we would be back to the status quo allocation as the informed few would find a way to transfer wealth from the less informed many. Cheers. Rick. P.S. I am familiar with Mr. Angell's work. In fact I just read his 1st book - "Sure Thing How to Sell Sure Thing Books to Complete Fools"