America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: Xpiderman who wrote (2332)	3/10/1997 9:41:00 PM
From: James F. Hopkins	of 13594

Hi XY, all I can lose is put money..as I have not shorted stock shorting you should hold calls to cover your rear..most of these shorters bought cheap calls long time ago..squezz play is when lenders of stock..take it off the lending shelf.. If you have a margin account people can borrow your stock, you never know if it's borrowed, the brokers do that..But if you tell broker..hey take AOL out of my margin accout..then broker calls the borrowed stock back in..and if he can find no more to lend to the shorter..the shorter is sqezzed..at that point he must buy...or use up his calls to replace the stock..the lender has the edge..he can always take his stock off shelf..or say call it back in, BTW if you short stock that pays a divendend, you must also pay any dividend the stock would pay to the lender..(so I have been told, but never sold short yet ) I just use puts to go short.. I'll add this I got some jul35puts and jan25puts, even though she went up 5 points my july puts only fell 7/8 and jan 3/8 not enough yet to temp me to average down..well not enough to do me much good if I average down..for a 5 pt rise that suprises me..some one has little faith she will stay up. take july45 call at end of day 7-3/8..it has $2 built in value as she closed at 47....so real cost is 5-3/8 if you hold to exdate she must make 52 3/8 for you to break even..above that is profit and any time before july she get above 52 3/8 you can take profit by forse, ...now look at july45 puts..6-3/8 ( thats to much ) as here you have to add 2 = 8-3/8 real cost..so hidden spread is $3..more to down side..the underwirters are betting she will fall..or at least making it expensive now for buying puts. Was not that way even a week ago. Looks like she need to go to 52 to 55 before I can gain much buying more puts. the bulls are mad..but they are scared too, or not such a big spread to the down side..$3 spread on say 6-3/8 they want 47% more for puts than calls..all things else equal, and thats how much faith they have..or don't have. If you bought calls now..and any time she popped above 52 3/8 shorted her..you would be covered..and could not lose..as you sold her at 52 3/8...but can call her at 45, so you get call money back..no matter if she go on up.. ( you break even ) but if she go down then your in bussness..you buy back cheaper..and hope she go back up..so you can do it again before calls run out of time..but to break know you can break even on short sell..she has to hit that 52 3/8 if not maybe you make ome selling calls to someone else..but if you buy calls and she goes down..you can lose all of your 7-3/8..or most of it depends on how fast he goes down..still the call is cheap if you think she go to 55..before july..but not for me.. as any one of 60 some funds could decide to exit this stock..any day..and fall could be faster than climb.. jim

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