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Strategies & Market Trends : Join stock club--Tang Fund -- Ignore unavailable to you. Want to Upgrade?

To: Arthur Tang who wrote (106)	12/30/1999 7:00:00 AM
From: Arthur Tang	Read Replies (1) \| Respond to of 145

Is AOL safe as a long term investment? Fundamentally sound. Technically, gyration creates momentum. Liquidity is superb. Management is seasoned. Stockholders are stronghands, venture capitalists, and most favored customers of many large broker houses(gets 35-40% guaranteed income from their investments which is old Wall street custom). When brokerages short, they are covering with options long to be insured against short squeeze(Salomon Smith Barney has recently purchased 12,000 contracts of Jan80 and 90 in all three exchanges). We can assume they sold short 1,200,000 shares @above $90/share and some above $80/share(which they had to pay more premium). On the other hand, options are not flexible because of the price increments, shorts around 77.5 will be a problem for Salomon(too much premium). However, technical charting will show AOL is currently under pressure of overbought. Pull back further is expected. Only breakout will change the direction of the curve. Of course, story can be expected anytime, since AOL has so many fires on the stove.