june calls

[Investor1979]

Would someone explain how someone can write /sell that many calls, unless they own the underlying shares, such as the market makers. Would they own that many shares or are they regular shareowners, who have sold the calls and must then give up their shares, when the shorts exercise them TIA

[CAC]

As a matter of interest, whatever happened to all those June calls ?!?! When I look at the open interest today, they all appear to have "evaporated" !?!? Am I crazy or did I just dream we had thousands of calls traded yesterday ??? (OK - don't answer that !) Did someone buy and sell thousands of calls during the same day (ie, round trip these trades?) ???

It appears to be short covering.  The large volume transactions occurred within the same few minutes with virtually identical pricing if my memory is correct.  If the calls are bought and exercised on the same day, the transaction would not show up in the open interest nor would the assignment of the calls show up in the daily volume of the stock (per my query to Fidelity).

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So does this result in no purchases on the open market?  If it is the market maker that is delivering the exerciced shares, do they just do this out of their inventory without having to buy?  If so, does this mechanism greatly reduce the risk of a short squeeze?  I would think the open market would eventually have to see shares bought as part of this transaction...but maybe not. 

[Rob Cos]

Would someone explain how someone can write /sell that many calls, unless they own the underlying shares, such as the market makers. Would they own that many shares or are they regular shareowners, who have sold the calls and must then give up their shares, when the shorts exercise them TIA

With a margin agreement signed and proven experience you are allowed to write naked calls - its a dangerous game - but it can be done.

[tarulestheday]

Would someone explain how someone can write /sell that many calls, unless they own the underlying shares, such as the market makers. Would they own that many shares or are they regular shareowners, who have sold the calls and must then give up their shares, when the shorts exercise them TIA

The MM are obligated to take the other side of the trade. Otherwise they would not be a MM for the stock.

[jft310]

So who tracked the O/I??
I think they can't borrow shares so they sell deep in the money calls and buy them back after a push down and get more shares as bozos sell their shares and those shares get lent out. So that explains why the bigs aren't trimming anymore but accumulate on weakness. Retail trims and makes their current position weaker as they sell a few shares hoping to buy them back cheaper.
That helps the shorts as does loaning out your shares. Why help the shorts???

[johnwgrant]

I'm looking at the Options Open Interest this morning (Thurs) - still no sign of the 1,000's of options that traded 2 days ago (Tues) !?!?

Either they were "bogus" trades that were cancelled, or, they "round-tripped" the trades the same day....

[jft310]

jwg- round trips might be right

[katytrader]

I'm looking at the Options Open Interest this morning (Thurs) - still no sign of the 1,000's of options that traded 2 days ago (Tues) !?!? Either they were "bogus" trades that were cancelled, or, they "round-tripped" the trades the same day....

Tuesday´s Time and Sales data do not reflect round trips. I do not know if cancelled trades are simply erased in the options trading data; cancellations were not posted.  So I stay with my belief that the shares were called on Tuesday because the open interest does not reflect those large volumes of calls.  We can only speculate on who sold the calls / delivered the shares.

[jft310]

A deal announcement solves all this brain power. Soon

[johnwgrant]

A deal announcement solves all this brain power. Soon

Soon, Imminent, tout-de-suite, pronto, right away, today . . .        I like the last one best.....