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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: FJV who wrote (9568)	2/19/1998 3:09:00 PM
From: @jim	Read Replies (1) \| Respond to of 14631

>>>>>Something's up. Any comments.... Can only add to the question. Is this a positive or negative when call volume goes up? My guess is that higher call volume means increased perception of volatility in the stock and therefore higher speculation. To me options are much more speculative for the short players. I'm guessing that this is not positive because it creates false upside boundaries? As for me, I'm long on IFMX. No options trading here.

To: FJV who wrote (9568)	2/19/1998 3:46:00 PM
From: Dave Wulkan	Read Replies (1) \| Respond to of 14631

FJV, You need to look at the put volume as well. The total of puts and calls represent the rate at which losers are being replaced. So, if the total volume is increasing, it is healthy sign. The closer we get to expiration the faster the volume should increase as well. davew

To: FJV who wrote (9568)	2/20/1998 5:07:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 14631

It is covered call writers rolling up by covering and rewriting one month out. If I remember correctly, the open interest of the "in the money" Feb 5.0 CALL was over 30,000. This also explains the open interest and volume on a lack of premium. There are allot of CC writers on this stock trying to scoop themselves out of their hole, including myself. This is simple supply and demand: more CC writers than CALL purchases = low or non-existent premium on the CALLs. Please note that this was deceiving when it came to evaluating the earnings play. I expected a higher premium on the CALL option, so I thought there must be a pessimistic outlook on this earnings report that has come to pass. However, I then looked at the PUTs and found that there was no substantial activity on them. I then went back and looked at the volume and open interest of the CALL to determine that IMO what I was seeing was the result of substantial CC writing. So what traders were there making a speculative earnings play on this stock, which I think was in anticipation of a positive earnings release, were sucked up and outnumbered by the stock holders who are anxious to write CCs on their stock. Always attempt to account for hedging effects including CC writing before interpreting the message that is there to be seen from the options activity on a stock. Bob Graham