Richard: I am sure we can all relate to your characterization of AKSEF as the "pits of all slimeball stocks", but isn't the real reason for being in the calls for LEVERAGE?
As of friday, one could buy 100 JUL 5s @ 1/8 or $1250 (representing a right to buy 10,000 shares at 5 on or before 7/18/97). For the same $1250 one could buy 338 shares of the stock @3 11/16. If, miraculously, the stock rallies to 6, the calls are worth $10,000 and generate a profit of $8750; in contrast, the 338 shares are worth $2028 and generate a profit of $778. The LEVERAGE is better than 11 fold in this example. Of course, the downside in the calls is all the way to zero if the stock does not rise above 5 (and you and I have no doubt experienced this agonizing outcome) whereas the buyer of the 338 shares still has his stock (and may even have a paper-profit).
There is no doubt that this stock is very much out of favor. Most every one who owns it now is discouraged. The message boards here and on AOL have quieted (without RAZOR we would have little continuity here). I have found that this is the ideal situation for a reversal of sentiment. All we need is a catalyst. Perhaps the Oman well, proxy fight, peace in Sudan, some analyst's recommendation, (isn't it amazing that no oil analysts will come near AKSEF with a ten foot pole? - even Chuck Strain who has recommended the stock leaves it off his energy stock page on Westergaard) or even a buyout offer will set the spark. |
