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Technology Stocks : IFMX - Investment Discussion
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To: Dan O. who wrote (9570)2/19/1998 3:56:00 PM
From: FJV  Read Replies (2) of 14631
 
If a long were locking in profits, it doesn't seem logical to use a March 5 call. He would more likely go further out with an out-of-the-money call to protect his position without the risk of losing the underlying shares. I, for instance, am long 4000 shares of IFMX bot at 5.5. I wrote 40 Aug 10 calls before the earnings announcement last week just in case, effectively lowering my entry price to 4 5/16. A hedge of 15,000 calls would indicate protecting a long position of 1.5 million shares - a serious investor. I doubt that a player of that magnitude would hedge using a March 5, irrespective of his entry point. There wasn't enough juice in the trade.

If this is a nervous short sitting on the wrong side of 1.5 million shares, the purchase of 15,000 calls should have more profoundly effected the price of the option. It didn't. In short, neither scenario seems logical. If I'm all wet, please feel free to edify me. Go IFMX.
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