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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: PaperChase who wrote (29667)	10/1/1998 3:36:00 AM
From: Robert Schling	Read Replies (2) \| Respond to of 94695

EUROPE down big time this morning, France -3+, Germany -4+. They'll probably recover some before the close, but along with Japan the tone for today's session for WStreet has been set. RS (from across the big pond, short some, waiting for more cracks to develop before shorting the "New Era" highfliers)

To: PaperChase who wrote (29667)	10/1/1998 1:56:00 PM
From: James F. Hopkins	Read Replies (2) \| Respond to of 94695

Paper ; That's a ball game I have a lot of reservations about, there is no way at this time I would play in that game, what I see is that even if your right you run a risk of losing. There is no way to know who actual writes the option to start with, the one you buy them from may not be the one you can collect from if you are right, they just passed them onto you. If indeed as is sometimes the case you buy puts, ( on any thing) and they were originally written by the same company you are betting against , as a way for them to raise capitol, then indeed they do go broke, you wind up with puts no one can or will honor. The small print in most option agreements points out that the broker who sells you these things is not in a position to guarantee them. In the event of a market melt down a lot of put holders may find the person on the other end of that agreement is no longer solvent. I have no idea if that would be the case in Hong Gong options if you could find them, but on the other hand I do not think there is any way to find out. ----------------------------- In my opinion many people who do play options are unaware that with puts there are two forms of risk. Not just that you could be wrong and the issue go up and not down, but that the original writer of that put may indeed go bankrupt and not be in a position to honor it. If you read the small print you will find that your broker has left himself a back door, after all, from his point of view all he made was a small commission that in no way justifies that he should be held responsible for the puts ability to be solvent. To top that off when you signed the agreement to buy or sell options you also signed that you understood the risks and gave away your right to sue the broker. That any options you buy may not at some time in the future be marketable, ( or solvent ) is spelled out in the small print. In a case like Hong Kong, you could be right and still lose, I suspect some of this happened recently with options LTCM wrote, but I doubt if we will get to the truth of even half of what happened with LTCM. Jim PS, in the case of options it's much safer to play with ones that are liquid and trade a lot.