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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Dex in TX who wrote (35738)	2/21/1998 5:53:00 PM
From: Glenn D. Rudolph	Respond to of 61433

If I bought a call, didn't someone else "sell to close"? If so, aren't those offsetting and thus the OI would stay the same? ...or, are we just trading the bag of candy that someone else threw on the table and not really "selling to close"? Sorry if I'm rambling a bit - like I said at first, I'm confused by this issue and I think it is an important one that I need to understand. Dex, The above is not correct. Your buying calls has is not affect by anothers action of any kind. Assuming you have no call position and you buy 10 contracts to open, you increased OI by 10. Let's say the Market Maker does not want to be short the contracts you are long (not likely but we need an example), he could be selling you calls that another investor is writing to open. This means you added 10 to OI and the writer added 10 to OI. However, the writer in this case may buy back his short calls to close and in affect reduce OI by 10. The OI is back to 10. Your 10 OI can never be reduced by anyone but yourself. I wish to add confusion but not to be confusing. If you buy 10 call contracts to open and the Market Maker is comfortable being short the 10 call contracts, the Market Maker's position does not add to OI. Thus, the Market Maker is short 10 contracts as an "open" position and your are long 10 contracts as an open position but the total OI is 10. This type of bookkeeping gives the Market Makers an advantage. The Market Makers can determine the true amount of OI whereas, theirs are not counted. You will never know what the amount of OI is of the Market Makers. The Market Makers will always know the true OI. Glenn