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To: IKM who wrote (5198)	12/29/1997 7:31:00 PM
From: Rational	Respond to of 27307

IKM: Take the April 40 call price as $29 and April 60 call price as $15 as of today. If the price drops to $40 or less by April, the April 40 Call holder will lose $29; whereas the April 60 Call holder will lose only $15. If the price is $50, April 40 Call holder will lose $19 and the April 60 call holder will lose still $15. For all prices below $54, the April 40 call holder will lose more than the April 60 call holder; and so the option writer will gain more by promoting April 40 calls as opposed to April 60 calls. For prices greater than $54, however, the broker promoting April 40 calls will be worse off. It thus seems to me that brokers promoting April 40 calls (given substantial volumes) are hoping to have prices substantially below $54, maybe less than $40. Sankar