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Technology Stocks : Novell (NOVL) dirt cheap, good buy?
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To: Paul Fiondella who wrote (14183)6/26/1997 6:33:00 PM
From: E_K_S   of 42771
 
Paul - That was 25 times the July Open Interest. I do not really know what the average Open Interest is at these levels (unexplored territory!) but I would assume that the best indicator would be to look at the the January 1998 Open Interest which is 1/2 of the August'97 Open Interest. Therefore the smart money seems to think Novell will be between $ 7 1/2 and $10.00 by August.

The rule of thumb is that the stock will eventually trade to where the highest Open Interest level is. As of today's close, the Open Interest for the August $ 7 1/2 calls and August $10 calls account for 25K contracts. Therefore, IMO we MAY see a quick rebound back to the $7 1/2 - $8 5/8 range and no more.

By watching the rate of change in these open interest numbers Both on the Put side and Call side will tell you where the bias lies as we proceed to August. If the OI (Open Interest) decreases relative to the PUT side then the bias for a close above $7 1/2 by August goes down. However, if we continue to see the OI increase for these calls then we have a better shot at the upper end of this $7 1/2-$10 price range.

You can also throw in the window dressing manipulation. If Iwere a money manager, I would not want this stock to appear in my quarterly report <grin>.

Just my opinion..<No news out of the company to move the stock higher>

EKS
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