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+S64 Part V: Index Options and Futures 
+However, the concept is still a valid one, and it is now generally being practiced 
+with the purchase of put options. The futures strategy was, in theory, superior to buy­
+ing puts because the portfolio manager was supposed to be able to collect the pre­
+mium from selling the futures. However, its breakdown came during the crash in that 
+it was impossible to buy the insurance when it was most needed - similar to attempt­
+ing to buy fire insurance while your house is burning down. 
+Currently, the portfolio manager buys puts to protect his portfolio. Many of 
+these puts are bought directly over-the-counter from major banks or brokerage hous­
+es, for they can be tailored directly to the portfolio manager's liking. This practice 
+concerns regulators somewhat, because the major banks and brokerage houses that 
+are selling the puts are taking some risk, of course. They hedge the sales (with futures 
+or other puts), but regulators are concerned that, if another crash occurred, it would 
+be the writers of these puts who would be in the market selling futures. in a mad fren­
+zy to protect their short put positions. Hopefully, the put sellers will be able to hedge 
+their positions properly without disturbing the stock market to any great degree. 
+IMPACT AT EXPIRATION - THE RUSH TO EXIT 
+Some traders persist in attempting to get out of their positions on the last day, at the 
+last minute. These traders are not normally professional arbitrageurs, but institu­
+tional clients who are large enough to practice market basket hedging. Moreover, 
+they have positions in indices whose options expire at the close of trading (OEX, for 
+example). If these hedgers have stock to sell, what generally happens is that some 
+traders begin to sell before the close, figuring they will get better prices by beating 
+the crowd to the exit. Thus, about an hour before the close, the market may begin to 
+drift down and then accelerate as the closing bell draws nearer. Finally, right on the 
+bell that announces the end of trading for the day, whatever stock has not yet been 
+sold will be sold on blocks - normally significantly lower than the previous last sale. 
+These depressed sales will make the index decline in price dramatically at the last 
+minute, when there is no longer an opportunity to trade against it. 
+These blocks are often purchased by large trading houses that advance their 
+own capital to take the hedgers out of their positions. The hedgers are generally cus­
+tomers of the block trading houses. Normally, on Monday, the market will rebound 
+somewhat and these blocks of stock can be sold back into the market at a profit. 
+Whatever happens on Monday, though, is of little solace to the trader trapped 
+in the aftermath of the Friday action. For example, if one happened to be short puts 
+and the index was near the strike as the close of trading was drawing near on Friday 
+afternoon, he might decide to do nothing and merely allow the puts to expire, figur­
+ing that he would buy them back for a small cost when he was assigned at expiration.