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To: zurdo who wrote (72695)	10/16/1998 8:52:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Zurdo, the question is how they do it profitably, because if they can't there is no point in the exercise. We have the following scenario: the price of the stock has risen higher than the max-pain point. How does a market maker decrease the price of a stock so as to avoid a loss on his options. Here's my simple-minded way of thinking: suppose the magic point is $55, but the price of the stock is $58. Let's assume that the market maker is short a bunch of calls and is worried about losing $3 per call. He could attempt to drop the price of the stock by shorting a ton of it (but it won't work on a one to one basis). Okay, he's out of his option position, and he has several hundred shares short. How does he cover without driving the price back up? And how can this be done profitably? TTFN, CTC