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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Eddie Kim who wrote (30752)	8/10/1998 10:30:00 PM
From: Kevin A. Lynch	Read Replies (1) \| Respond to of 97611

I don't think the MM are taking on alot of risk in the options market. If they are selling calls, my contention is they are willing to pocket the spread and purchase the stock in case it is called. This way the get the commission, the option premium, and then the strike price should they expire in the money. To do this, they are only gonna sell these calls at the ask price. The point is these market markers can forego all the risk and make pretty good money on the spread and the premium in the option market. In reverse, if you sell them the call, they just short the stock, and never give you more than the bid price for the contract. One good thing about trading CPQ options is the liquidity. Often the spread is fairly narrow because the bid and ask are actual traders and not MM. regards, Kman