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VMware, Inc. Message Board

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  • funkytraderguy funkytraderguy Dec 20, 2007 11:01 PM Flag

    Options are a SCAM take advantage!

    First of all, i am neither long or short VMW. I am an options trader and have thousands of open VMW contracts open, calls and puts. The reason stocks often gravitate toward a strike on expiration is not bc the "big boys" want it to... if anyone thinks the "big boys" are only short options then they truly need some investing help. The max pain is also the max gain for the other side of all trades. Open interest is all open contracts and it is quite naive to think that everyone is long options going into expiration. The real reason stocks can go towards a strike is bc most options are covered. By that i mean most people have stock against open options, even the "big boys". If i am long lets say the at the money option in VMW tomorrow and the stock opens up or down big, i will either sell or buy stock, depending on which direction from the strike the stock goes... up i sell, down i buy. The majority of institutions are doing the same thing. But short optoin holders are doing the opposite. If the stock opens up they buy.. why, thats bc options on expiration are really just stock. If short the option it acts like the opposite of whichever direction the stock goes... stock goes up u either are naked short or u buy a corresponding number of shares to get "flat" The net effect is at tiimes stocks go toward strikes... max pain is the equivalent of listening to cramer and doing whatever he tells u.

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