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Strategies & Market Trends : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: eabDad who wrote (58253)	12/8/1998 1:08:00 AM
From: Herschel Rubin	Read Replies (1) \| Respond to of 58727

Does anybody have a solid understanding of the exact process that occurs (with the Options Specialists) when you place a large order to buy some call options? It is my understanding that when you buy calls and if there aren't enough sellers of call options (who hold the underlying), the Options Specialists must create the call options for you by going opposite of your trade, which, of course, means BUYING STOCK. My concern is that if one were to buy into a significant call option position for an underlying stock with relatively low liquidity, does your call buying activity actually MOVE THE MARKET UP (and make your calls more expensive) because the specialist has to buy shares to create your options? Commentary would be welcome. Also, it is my understanding that Specialists have limited inventory of options they sell each day. True? Or suppose open interest was 200 contracts and you came up with a 1000 contract order? What are they going to do? Say no? I've read that they can also create options for sale (without having to buy the underlying), thus increasing open interest, but limited quantity is usually available because they don't want to go out on a limb.