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

To: Jimmy Augustino who wrote (9774)	3/3/1998 7:15:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 14631

Many who currently hold the stock are IMO writing those CALL options. That is one reason why the premiums have been so depressed from what I would normally expect, because there is a greater interest to short the option than there is to purchase the option. The large number of outstanding CALL options will tend to close the price of the stock out at the strike price of the option which is in this case 5. This is for the most part a natural consequence of the hedging practices of the market maker during options expiration. I am not saying that the stock will reach that number, because I see buying interest coming into the picture before it reaches 5. Furthermore, consider that the current price of the stock is about one full strike above the strike price of 5, which in this case means that the stock would have to move down 1/3 in value as the result of options expiration. There is an open interest of 13,000 5.0 CALL options that represent 1.3 million shares or a significant part of its daily volume. These options will have their impact on the stock at next expiration. Bob Graham