The Effect of Options Trading on Underlying Instrument

C

chasinfla

I'm trying to understand this better. To kick things off, I thought this would make an interesting read, even if it is a bit dated.
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yes, that is very interesting stuff...I have always enjoyed reading material about true trading experience as opposed to all of the hypothetical stuff out there...Charles Cottle wrote some great stuff about market making in the options market...Unfortunately, his classic book went out of print a few years ago...From what I hear it has been re-published under a different title with some updated sections since the ISE has become a bigger force in the markets and commissions have dropped considerably...

It does not surprise me, the numbers this guy wrote about the hedgers, mm's comprising that much volume each day...Those guys are always spreading risk...
 
My friend its all about the concentration of the strike. When the underlying(1st derivative) approaches a strike,, is the owner of the option with growing value, going to sell the option or hedge or somewhat hedge the underlying?,,,,How about the shorts of the option, What are they going to do now??? When you answer these questions,,,you will have the answer.......Pm me for the answer If you need to.....
 
Originally posted by OVERtheLINE
My friend its all about the concentration of the strike. When the underlying(1st derivative) approaches a strike,, is the owner of the option with growing value, going to sell the option or hedge or somewhat hedge the underlying?,,,,How about the shorts of the option, What are they going to do now??? When you answer these questions,,,you will have the answer.......Pm me for the answer If you need to.....
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Let me get this straight...You are asking a question about what "they" are going to do, however you are giving three separate possibilities as to what they are going to do?...Of course there is going to be a concentration of orders around a specific strike and therefore more activity off of that specific level...But I do not even understand the question, as you put it forth?
 
Originally posted by chasinfla
I'm trying to understand this better. To kick things off, I thought this would make an interesting read, even if it is a bit dated.
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I too do not understand your question...if there is one. I was at the IBM post on the CBOE for a while. Tell me what you want to know.
 
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