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Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: Mark Oliver who wrote (3702)	10/4/1998 2:47:00 PM
From: steve goldman	Read Replies (1) \| Respond to of 4969

First off, let me suggest that you ask around and try to get your hands on some advanced books and other literature regarding options trading and options strategies. There are many strategists that would infer different things from such activity. And while, ultimately, the only parties that will know for sure what transpired are the buyers and sellers, you can infer a few things. A few thoughts come to mind: 1.Since there was no open interest, those first transactions were opening transactions, probably by someone who was interested either interest in writing calls against a stock position (to hedge the potential for a greater downturn) and the otherside by someone looking to go long the options in luei of the stock, to leverage the capital. If in fact someone were selling calls against the position, they probably had to shop around for a buyer, someone who was interested in buying 100,000 shares that day and was interested in the options at a discount from the going bid/ask. I dont know what the premium was at the time, but if they were deep enough and there was no time premium, just intrinsic, I could phathom the market maker laying off the risk buy selling the calls out of inventory and buying stock in the market. Whatever you get, you have a buyer of a large piece and a seller of a large piece. You have to ask yourself, under what circumstances could any trader handle such a piece , for what reasons, and how can the other side hedge risk. If you had the bid/ask on the option, the price it went off at and the bid/ask on the stock and price the stock was printing at, it would help. Regards, Steve@yamner.com