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To: Don Westermeyer who wrote (37311)1/28/1999 1:04:00 AM
From: Torty  Read Replies (1) | Respond to of 164684
 
An intriguing, if slightly paranoid theory. This implies a feedback loop something to the effect of: stock price --> option price ---> stock price, etc. Maybe that's where some of the ever increasing volatility comes from.

Would be one interesting algorithm that would calculate stock price at option expiration that would screw over the most option buyers and maximize the profit for the option house. However, stranger things have happened no doubt.

It is certainly difficult to figure why some option spreads go from half a point or less to two or more points over such short time intervals.