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Technology Stocks : Egghead Computer (EGGS) -- Ignore unavailable to you. Want to Upgrade?

To: Bnad who wrote (437)	3/16/1998 4:37:00 PM
From: taxikid	Respond to of 8307

there is an old myth that the stock price will close @ or near a commonly held strike price, thus making the puts and call virtually worthless, considering how far and fast this stock has moved, it was bound to go down, especially after i covered. unfortunately i see that this may actually be somewhat bullish for the stock, but there is little high ground that a chartist can call for here. taxi

To: Bnad who wrote (437)	3/16/1998 10:43:00 PM
From: Gloria G	Read Replies (1) \| Respond to of 8307

I'm no options expert but I'll do my best to explain it. When the stock is above the common strike price [10 in this case for March, but 12.5 for April], the people with calls can exercise their options and sell [they only have to pay the lower strike price, so whatever the price differential will be profit for them]. If the stock goes below the strike price the people with puts can buy more cheaply, and they profit over the difference. Right now the puts are worthless. Since the stock is above the strike price there will be more selling. However, the short sellers must buy back shares before 3/25/98. This is very bullish for the stock, especially since they know that analyst coverage will probably start very soon. The puts and short sellers explain the crowd thats routing for the stock to go down. Good luck.