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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: wally hieslmair who wrote (5970)	11/6/1997 11:36:00 PM
From: Russ	Read Replies (1) \| Respond to of 213176

Could you tell me , what the implications are ? As far as the open interest on the Nov 20 calls doubling in the last week, it means that a lot of people are betting that something will happen to drive the price of the stock above 20 between now and Nov. 21 (option expiration date). As far as the implications, that depends on whether the calls are naked or covered. If someone writing a call option owns the underlying stock, it's a covered call. If the option ends up in the money, the person who wrote the option has to sell his shares to you at the strike price, but there's no net increase in buying. If it's a naked call, once it ends up in the money it's the same as the short - the person who wrote the option has to go buy the shares somewhere to supply them to you. This increases buying pressure, the same as shorts covering. With 20% short on this stock, if it makes a big jump up, it'll really take off. Usually the smart money sells options. Overall, sellers of options come out ahead of buyers of options. However, when the buyer wins the bet, he wins big and the seller loses big. I have no idea which side the smart money is on these. We'll find out Monday. -Russ

To: wally hieslmair who wrote (5970)	11/7/1997 12:27:00 PM
From: phbolton	Read Replies (1) \| Respond to of 213176

Wally asked: "Could you tell me , what the implications are ? " presumably of the growing size of the call option positions. My guess is that some folks, including myself, think Jobs is going to announce a number of interesting things including the G3 machines, possibly a NC-rhapsody system with oracle, who knows what with lucent and so on, and that his "reality distortion field" will be at peak power and all of this will drive the stock price up at least for awhile. Some of the calls are most likely being bought by folks who are short. AAPL is clearly a stock that is played short/long/options by many big kids with no interest in the company. I do not think the call positons are big enough to moderate short term upside swings given the very large short position.