You know, that average floor-piker who lost 52.5 million in two days? (CBOE, OEX puts.)


I think Tom's blunder may be more accurate when applied to off-floor/retail traders. Floor traders often get wrecked by fast moves and gaps, which happened plenty to the upside in CitiCorp, Chrylser(?), other buyouts, and throughout the Internet era.


But for off-floor traders, usually any big move over time is a gap - since they don't hedge dynaimically - and they are usually net long the market. Since they post monster margins, the move of a size required to blow them out would have to be some surprise negative revelation about a company.


When we talk about stocks shooting to the moon, and covered call writers and mutual-fund investors, usually it feels more like oxygen than the Option Grim Reaper.


Also, it may very well be that bond options have a lot of volatility because people have a long memory going back to 1982, and the absolute Keynesian/Argentina doomsday scenario.


eLROY