Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: t2 who wrote (17994)	3/14/1999 4:37:00 PM
From: taxman	Read Replies (1) \| Respond to of 74651

"who are the actual buyers of the calls and puts?" in the case i used, you would be the buyer. however when you close out your position, you are the seller of the option and the market maker is the buyer. in any event, the stock and option market is related in the sense that when you go long and the market maker goes short the call option, the market maker may want to hedge his risk by buying a proportionate amount of microsoft common. therefore a big purchase of call options (whether by an individual investor or an institution) will generally result in additional purchases of the underlying stock. a large purchase of puts would require the market maker to short a proportionate amount of the underlying stock to hedge his obligation to purchase stock. "could it not be a considered a bullish sign if the big buyers are actually large investors?" only if they were right all the time--and they are not. since 1994 microsoft has gone from approximately 10 to 160 today. during that time i'm sure there were many times when these ratios turned bearish so what good are they? regards