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Technology Stocks : VLSI Technology - Waiting for good news from NASDAQ !!! -- Ignore unavailable to you. Want to Upgrade?

To: Yiqun Xie who wrote (3163)	3/16/1998 9:22:00 AM
From: DanZ	Read Replies (2) \| Respond to of 6565

Yiqun Xie, I have observed over the years that stock prices tend to close near an exercise price on expiration day but I haven't done enough analysis to say statistically what the correlation is between option open interest and where the stock trades. This would be an interesting study and I'd like to do it sometime when I get time. Intuitively, I think you are correct: Stock prices probably tend to move towards an exercise price where the most number of option contracts expire worthless. I bought ORCL last month on option expiration day because I thought the stock would move towards 25 by the end of the day. Based on that, I bought it at 24 1/2 and sold it a few hours later at 25. I guess one could say that I was lucky, but this happens far too often to be considered luck. Dreyfus Brokerage has a very nice option montage at 206.7.107.50. This is the best site that I have found for option quotes because you can see all the option series' on the same page in a spreadsheet format. The only problem is that you can't get to it during trading hours unless you are a Dreyfus customer. You can also get the open interest in option contracts at discoverbrokerage.com but you will have to click on each option one by one. Here is the open interest in the options that are closest to the money. March 17.5 call: 135 March 20 call: 628 March 17.5 put: 84 March 20 put: 612 Going on the hypothesis that the stock will move towards the strike price where the most number of contracts expire worthless, I would think that the stock would move towards 20 so the March 20 calls and March 20 puts expire worthless.