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

To: Rich Wolf who wrote (18908)	3/31/2000 9:15:00 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 27311

Rich, thanks for the insight, it would have been nice if it was posted on the breach of $30, I could have saved myself few bucks by selling at once rather than waiting for the breach of support at $26.5 (VBG). Zeev

To: Rich Wolf who wrote (18908)	3/31/2000 9:16:00 AM
From: kolo55	Read Replies (1) \| Respond to of 27311

My assessment as well. The only thing that could really explain Bear Stearn's big selling over the last week, is that they need to hedge the put they sold to the plaintiffs in the settlement case. According to the filing (which was filed with the SEC last Wednesday), they bought a put and sold a call on 600k shares. The strike prices on these were not revealed. Neither was the expiration, but since the distribution of the shares is expected in the fall, it appears the options are likely good at least until then. These options are NOT exchange options and won't show up on any of the option exchanges, but are 'custom options' written by Bear Stearns. BEST is almost certainly hedging the put by shorting stock against the 600k shares this last week. According to the SEC filing last week, they are allowed to short against these shares. But why sell all the shares in one week or so, instead of spreading the sales out over a longer time? It could be several reasons... First, that BEST did offer a fixed strike price on VLNC and would hedge the stock by shorting as the price dropped to protect themselves. Then they got caught by the short attack. Or Secondly, that BEST's strike price for the put (and call) is being set by the market pricing during some time period (March? First ten trading days? Lowest ten closing prices in March? Lowest five closes in the first ten trading days? etc.) In this case, BEST has a strong incentive to short stock during the pricing period to lower the put strike price. In either case, the fact that BEST has sold heavily into the decline played into a beautifully orchestrated short attack. More on that in the next post. Paul

To: Rich Wolf who wrote (18908)	5/4/2000 12:35:00 PM
From: John Curtis	Read Replies (2) \| Respond to of 27311

Rich: Just thinking out loud here, I went back to one of your postings which, from certain standpoints, has proven prescient. That is: BEST is likely manipulating and holding the stock to a predetermined price, for a brief period of time, in order to price the options they will buy/sell to the plaintiffs to 'protect' their shares until the fall when they are distributed. The assumption is that the plaintiffs would want to buy a put at, say, $22/share, and also offset the cost by writing a call just above the $29.50 shareprice of the time of the settlement. BEST is on the other side of these trades. It is in the interest of BEST to hold the stock well down while the options are priced (outside of the publicly traded options market, so we won't see them), in order to minimize the risk that BEST would have the stock 'put' to them come fall if things didn't work out for VLNC. Conversely, the presumed low ceiling on the calls means that the plaintiffs won't actually get shares when all is said and done. BEST will call them away, say if the stock is $50 in September, since they would own $30 calls on the 600k shares, for example. Sweet deal, eh? Plaintiffs get taken to the cleaners again. Interestingly enough this "capping for a brief period" is what is still going on today. Indeed, as I write this I see they've just set up a 10.4K block on the ask, with only a size of 3 registering on the bid. Ordinarily I'd expect a stocks valuation to slide in the face of that ask size. But it's not. Therefore sumbody's put a lid on VLNC right at ~$15. The question now becomes....how long will the ASK gambit be employed at this point, given your above statement reflects the current reality. Enquiring minds would like to know.... ;-) Regards! John~