The Pre Market Tape

[CesiumFormate]

Thanks Trans and others. You would think that this obvious stock manipulation would catch the attention of regulators. It's probably worth reporting now that is has been so blatantly carried out on 5/24. Has anyone thought of reporting this?

Somebody here posted an increased Failes to Deliver count.... from the SEC's own website, so don't hold your breath. I assume it's also not illegal to buy put options in large quantities, but I suppose it doesn't do any harm reporting

I posted it.  The next report comes out on May 31.  I will update the analysis.

CF

Trans and JFT - thank you for the option strategy explanation.

[admin]

the options market maker is delta hedging and I don't think he likely holds the sold put long enough,,or more likely , he just naked shorts the common stock for his hedge

Well, yes, but if we sell puts, that blunts the put buying by the shorts and set you up for a nice return at the same time, either collecting highly inflated premium or stock at distressed levels.

[TxPm]

Thought this link would be beneficial for those wanting to know how the MM hedge their positions:

http://www.ma.utexas.edu/users/mcudina/L...d5and6.pdf

[admin]

Thought this link would be beneficial for those wanting to know how the MM hedge their positions: http://www.ma.utexas.edu/users/mcudina/L...d5and6.pdf

Thanks Tx, is there anything that can be done to make it more readable, most parts are very faint, unfortunately.

[jiminsidz]

Thought this link would be beneficial for those wanting to know how the MM hedge their positions: http://www.ma.utexas.edu/users/mcudina/L...d5and6.pdf

Thanks Tx, is there anything that can be done to make it more readable, most parts are very faint, unfortunately.

Hi Admin.  I downloaded it as a .pdf file, and found as I page through it, the faint part is darkened as the presentation proceeds.  Just a presentation style.  An interesting topic, and I believe it explains much of the shorted shares, and sadly, why we will unlikely have a violent short squeeze.

[kommonsents]

If you scroll through it with your mouse scroll wheel after you download it, the letters darken up nicely.

[admin]

If you scroll through it with your mouse scroll wheel after you download it, the letters darken up nicely.

Yea, and if you scroll advance, time-wise, Friday's red ink will darken as well..

[trans]

the options market maker is delta hedging and I don't think he likely holds the sold put long enough,,or more likely , he just naked shorts the common stock for his hedge

Well, yes, but if we sell puts, that blunts the put buying by the shorts and set you up for a nice return at the same time, either collecting highly inflated premium or stock at distressed levels.

A marketmaker isn't an investor, or may be, but the best way to imagine what they do with their delta hedges is  like an accordion: :  The firm takes in a position, that involves firm capital risk.  The firm trader (marketmaker) immediately delta hedges his risk, so that he is both long and short the positon.  You're as a size buyer or seller, are out as a manager, because the marketmaking firm (such as goldman sachs) now is fully hedged.  But, as soon as the market allows, he works off that delta hedge, keeping his overall position as even as he can.  This can happen very fast, or may take some time.  Imo, this is one of the primary reasons IOC may dip down and stay down for a spell, because the marketmaker is ( or at least attempting to ) influencing trading til he can even his position.  Don't think this isn't done.  I've observed it for many years.  So, in reality, the marketmaker is in a primary position to make money on the trade, but he's' primariliy interested in facilitating the trade and exciting the transaction without losing firm capital,  second is making some money onthe trade, which they do, imo, too often too much.

[admin]

the options market maker is delta hedging and I don't think he likely holds the sold put long enough,,or more likely , he just naked shorts the common stock for his hedge

Well, yes, but if we sell puts, that blunts the put buying by the shorts and set you up for a nice return at the same time, either collecting highly inflated premium or stock at distressed levels.

A marketmaker isn't an investor, or may be, but the best way to imagine what they do with their delta hedges is  like an accordion: :  The firm takes in a position, that involves firm capital risk.  The firm trader (marketmaker) immediately delta hedges his risk, so that he is both long and short the positon.  You're as a size buyer or seller, are out as a manager, because the marketmaking firm (such as goldman sachs) now is fully hedged.  But, as soon as the market allows, he works off that delta hedge, keeping his overall position as even as he can.  This can happen very fast, or may take some time.  Imo, this is one of the primary reasons IOC may dip down and stay down for a spell, because the marketmaker is ( or at least attempting to ) influencing trading til he can even his position.  Don't think this isn't done.  I've observed it for many years.  So, in reality, the marketmaker is in a primary position to make money on the trade, but he's' primariliy interested in facilitating the trade and exciting the transaction without losing firm capital,  second is making some money onthe trade, which they do, imo, too often too much.

With all respect, I understand that, Trans. I realize the market maker will delta hedge those outsized put buying by selling shares short, and that theMM have more leeway in doing that. In fact, if the MM didn't have more leeway, there would be little difference with outright shorting by the shorts.

However, what I was suggesting was a way to profit from this by selling OTM puts. It's a low risk strategy (as long as you make sure you have funds to buy in), and at the same time, it counterbalances all that put buying, so I expect the effect to be to smooth out all the violence from the short a bit, depending whether it's done in volume.

[jft310]

You now know why I luv selling puts on IOC. Especially after a nasty fall like Friday. Can be wildly profitable. As can call buying after one of these fake drops. Best opportunity we had was when IOC dropped below $10. We bought out of the money calls in size and the stock of course recovered. Thats why I was trying to buy Sept $105 Friday but missed my fill by being a PIG!! Sad to say.