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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Ira Player who wrote (7138)	3/22/1998 12:43:00 PM
From: margin_man	Read Replies (1) \| Respond to of 14162

<<How do the Market Makers hedge the position when they buy calls from you?>> They just have to drive the stock price up and unload their position. It's only a thought. Patriot

To: Ira Player who wrote (7138)	3/22/1998 5:11:00 PM
From: VincentTH	Read Replies (1) \| Respond to of 14162

Ira, The following "proof" is taken from OPTIONS published by the CBOE: The following positions are equivalent at expiration: Long Stock == Long Call + Short Put. That's because a move of the stock in either direction yield the same result for both positions. If follows that Long Stock + Long Put = Long Call So when the MM buy the call from you, in order to maintain equilibrium w.r.t. market movement, the MM also buy the put and the stock. That explains why at triple witch Fridays, stock tends to go down as people tries to roll their expired calls forward, thus forcing the MM to sell the stock and the puts, thus bringing the stock down. //V