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

To: Marq Spencer who wrote (9985)	3/16/1998 8:09:00 PM
From: James A. Shankland	Read Replies (1) \| Respond to of 14631

If [IFMX hits $12] were likely in the next six to eight months, one should buy a bunch of IFMX Jan99 $10 calls (VIFAB). They're trading for 1.75, and if IFMX hits 12 before Nov 98, they will easily be going for greater than $4. That would be over 100% gains, even after accounting for commissions. Anyone for it? If IFMX hits $12 on November 1, the VIFAB's will likely be going for $3 or so. If IFMX doesn't hit 12 until January 1, the VIFAB's will be worth just a hair over $2. If IFMX hits 11 on 1/15/99, the VIFAB's will be worth $1, and you will have lost almost half your investment. Another way to look at it: draw a graph with time (now to Jan. 15 1999) on the horizontal axis, and IFMX's stock price on the vertical axis. Now draw a straight line from the price today (8 15/32 on 3/16/98) to $11.75 on 1/15/99. This is, approximately, the breakeven line for VIFAB's bought today for $1.75. When IFMX's actual stock price is above this straight line, you will likely be ahead on your VIFAB's; if it's below the straight line, you will likely be behind. None of this means the VIFAB's are necessarily a bad idea. If, for example, IFMX rises to 10 or 10 1/2 by May on clearly improving prospects and another good quarter, then its price may be well above the straight line, and those VIFAB's will be looking very good indeed. But note that the slope of that straight line is pretty steep, representing an annual appreciation rate of about 67%. The bar is set pretty high.