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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: Rich Wolf who wrote (14639)	9/17/1999 2:55:00 AM
From: Harold Hertzfeld	Read Replies (1) \| Respond to of 27311

Rich, Supposing that the purchaser of the 750 Sep 5 calls--which he exercises to receive 75,000 shares of VLNC-- was also the seller of the Dec 5 calls (at $2 per share) to hedge his new 75,000 stock position. As buyer of the Sep 5s and seller of the Dec 5's he is simply taking the other side of the trade of the person who wished to roll his Sep calls to the December calls. As long as the stock price stayed above 4 he would not be losing money on his strategy. If the stock is above 5 at the Dec. options expiration date it would be exercised by the owner of the call options at that time for $ 5 per share. So he would make a dollar a share on a $6 per share investment in 3 months. In a market as illiquid as this one it was a very attractive way to take a sizeable position in the stock without running the price of the stock up. Harold