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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: wiley murray who wrote (2800)	6/10/1998 8:28:00 AM
From: Ben Antanaitis	Read Replies (1) \| Respond to of 21876

wiley, Most options writers, in fact, are only interested in making and keeping the premium they get from the option buyers. They never want the option contracts they write to end up 'in-the-money' and exercised since most are written 'naked' by the options MMs and hedge funds. They play on the over optimism and over pessimism of the open interest buyers. They also have the leverage (ie $ and tactics) to 'help' the price of the underlying stock tend toward the strike price that will yield the maximum number of open interest contracts expiring worthless. This is what I've called the Point of Maximum Pain or the Max-Pain point. I have plotted the curves for this effect for a spectrum of stocks at ez-pnf.com in the Options Analysis section. there is an explanation of the analysis technique in a fully described example. Looking at your post about the surge in calls... one way of looking at it might be to say that someone decided that LU won't get to $80.5 on the 19th and they wrote either 'covered' calls or naked calls that an over optimistic public snatched up 'at a bargain'. Like you said 'time will tell'. I'll be posting the updated LU June'98 Max-Pain graph early this weekend. Ben A. ez-pnf.com

To: wiley murray who wrote (2800)	6/10/1998 8:36:00 AM
From: Caroline	Read Replies (2) \| Respond to of 21876

elepet: When there is a marked increase in call options such as the big LU June 80 CALLS increase from yesterday (just a few hundred) to 2731 today, it usually means that some option traders feel there will be a big move in LU by expiration date of next Friday. There has been a lot of good news this week on LU along with a lot of merger/takeover rumors about LU. Time will tell. The best options gurus I know (MacMillan & Schaeffer) would tell you that the crowd is usually wrong.