hi CostAverageMAN, your post is very insightful, but i dont think the institutional traders (the ¡°Monster players¡±) are stupid enough to hold CSCO under like 20. A few reasons for that:
1. the option expiry will affect stock tradings, it is true though, but options are much smaller market than stocks, it's not strong enough to hold certain price level
2. institutional traders are mostly "holders", which means they long the positions, only very few hedge funds doing shortings. so you are right that institutional traders sell covered calls to reduce long cost, but they have risk in downside, not upside, so they'd rather see stock up than pressuring it down
3. institutional players' most commonly strategy is to buy more CSCO or mostly likely roll over the covered call positions (buy back part or all of the 20 calls sell some calls at higher strikes) because they want to keep the long positions in theire portfolios
Last but not least, even number price levels are psycological barriers, plus the effect of the option strikes on even price levels. so inevitablly the volumn is unusally high. Also the options that are just out of the money is traded the most, so when the price get close to the strike that options are getting more actively traded, it also increase the stock volumn, because option traders trade stocks against it
just my 2cent
HHHO
Quote from $CostAverageMAN:
The big thing with option pressure is, Monster players in the market who have like 3% Cisco in thier portfolio are the ones who are selling covered calls.... Feb (for example) the price ran up real close to 20.00 just right before expiration...Big players were selling covered calls for Febuary to all the little people...Covered call meaning they owned the stock and were reducing the cost by selling calls on that stock
