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

To: thebeach who wrote (1392)	5/20/1999 6:44:00 AM
From: Porter Davis	Read Replies (1) \| Respond to of 1598

>>or MM's taking advantage of the situation? Sort of a loaded question there, Beach, but let's take a look at it. Suppose I'm long 40 BCE November 75 calls and as the stock heats up, retail buyers come into the market buying my 40 lots. I'm happy, right?...I sold my options at my price, the offering side. Now let's say they buy another 50, so I'm now short them, not my natural position, so I raise the IV a snick to try to buy them back. No luck, in fact, buyers come in forcing me to sell another 100 or so. Now I seriously have to crank the IV up to try to attract sellers. Remember, I'm short them, so raising the vol costs me money. The market moves prices to where willing buyers meet willing sellers, and no one can change that fact. The above scenario is exactly what happened to me yesterday, so I can't exactly see how I was 'taking advantage' of the situation. BCE K75s started the day at 30 vol and went to bed at 34, and may go higher today. Trust me, it's not me doing it! Happy trading. Porter