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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: taxman who wrote (17990)	3/14/1999 1:25:00 PM
From: t2	Read Replies (1) \| Respond to of 74651

taxman, Thanks for all the information you provided on options. The one thing that confuses me is the amount of activity from market makers. If market makers in options are just traders---who are the actual buyers of the calls and puts? OF course mutual funds may to some degree participate in selling calls and puts. I would imagine big mutual funds or big time hedge fund managers are the big buyers. Therefore if call buying increases, could it not be a considered a bullish sign if the big buyers are actually large investors? That is let's say MSQ Calls March 160s are being bought by big funds or brokerages which to plan to add a sizable amount of MSFT shares. Of course if they start buying shares on the open market only----the buying volume goes up and the shares move out of range. Instead they buy a lot of calls. In addition, they would be buying the shares on the market as well. Would this not be a very bullish sign contrary to the general theory. Momentum investors are known to jump aboard stocks like MSFT going into a split or earnings. I remember the run-up last February once the split was announced---the stock went from 135 or so to 160s very quickly---and settled at the post split price of about 80 for a while. Therefore can a low put/call ratio be thought of as a bearish indicator in error for this particular stock----when in reality it should be a bullish indicator. Would this kind of bullish activity in the stock like MSFT---- mean that the put/call ratio should actually decline? (a sort of contra-contrarian view <g>) Interested in your thoughts. thanks.