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Re: Millstone post# 49788

Tuesday, 01/12/2016 3:43:48 PM

Tuesday, January 12, 2016 3:43:48 PM

Post# of 462181
I'm trying to understand the relationship of options with the price of its underlying stock and the mechanisms involved. Please enlighten me if I am wrong:

if most options expire worthless, the buying of a $5 July call - wouldn't that give reason, ammunition, motivation for the seller of that option to keep the share price of that stock below $5? I am assuming the seller, (smart money since most expire worthless), may have the means to keep the price down. And I'm asking this under the premise that we, (a lot of the longs on this board who have been here awhile), desire for the price of the stock to continue up in a bullish fashion. ie - get really high, as soon as possible.

And/or is the thinking that since the call is so far out in July, market forces, news, what-have-you, should trump the fact that most options expire worthless? I understand the calls bought can be sold anytime before the cut-off date.

Thanks for your insights. Much respect!

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