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To: Francis Chow who wrote (5409)4/6/1998 11:56:00 AM
From: Ben Antanaitis  Read Replies (1) | Respond to of 6843
 
Francis,

Sorry if you have a problem with the data and the hypothesis. But others disagree with you. You can read about this phenomenon in many places in the archives of theStreet.com.There happened to be a segment addressing this effect of the open interest (ie options) driving the stock price just this past Saturday: thestreet.com
If you cannot access this, then sign up for theStreet.com's free trial offer.. that will give you access.

Yes, this is an effect that is a 'second order' effect, ie breaking news, an earnings report, a major up/downgrade can swamp the effect out. But no one can predict the unexpected, that's what unexpected means. If you know that the earnings are going to be announced the day before expiry, then the effect will only tell you what some folks think the announcement will be.... should you use the data? That's up to you. But on a mundane month... if you have an idea where the price may gravitate... you might use the info to make more informed decisions.

Ben A.