Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: shasta23 who wrote (1485)	12/3/1997 1:03:00 PM
From: Paul Dubsky	Read Replies (1) \| Respond to of 27311

Another factor that I think is entering into the price action of VLNC recently is options trading, which I will not try to figure out the cause and effect, other than to say that I think it's having a short term negative effect given the imbalance in open lots between calls and puts. It looks like there's about a 10:1 call:put open interest ratio. In other words, a lot of speculation was made in purchasing calls at 5, 7 and 10 for December, Jan and March vs buying puts. So, people dealing in options expected the price to go up big time since they purchased so many calls vs puts. Even as of today with the price down to $6.25, there's over 1,000 open Dec 7s and 5s. So, to hedge against this negative price movement and end up with worthless options, the dealers could be selling the stock itself at these levels to offset the requirement to buy it back at 5 or even 7. Whatever the method to recoup their potential losses, it seems like the dealers would have to make a trade that's opposite the momentum than buying the stock (or buying a call). Surprising, there's still relatively little open interest or activity in puts. Anyone else have a take on this? I reviewed the option activity on Stocksmart.

To: shasta23 who wrote (1485)	12/3/1997 1:07:00 PM
From: Larry Brubaker	Read Replies (1) \| Respond to of 27311

Stefan: You are probably right about the momentum players being already out. As far as us being last to know about the fundamental picture, I completely agree. Obviously what everybody is worried about is that the stock price is telling us something about the fundamentals that we don't know yet. I hope this is not the case, and actually I doubt it. As someone suggested before, it would be an extremely dubious proposition for an insider to sell prior to the release of some negative fundamental news. While it is certainly not outside the realm of possibility, I am chosing for now to believe that is not happening here. I bought this stock because I like the story, knowing that it is a speculative stock and will be volatile. I am not going to let the volatility shake me out unless I have some reason to believe the fundamental story is not intact. It could well be that a year from now we will kick ourselves for not loading up on every share we can at these levels.