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

To: MileHigh who wrote (10587)	4/30/1998 9:30:00 PM
From: Ed Bowes	Read Replies (2) \| Respond to of 14631

In all this euphoria over the positive earning, I must remember the class-action lawsuits still pending from the Phil White days. Does anyone have any new info on those? Cheers! Ed.

To: MileHigh who wrote (10587)	5/1/1998 12:14:00 AM
From: James A. Shankland	Read Replies (1) \| Respond to of 14631

[Re: What does selling a May 10 call mean?] It means that if IFMX closes above 10 at May expiration, Bob will be called on his shares and he will net less than $1.00 premium per share. This is a common misconception, but it means no such thing. It means that if IFMX rises above 10 and stays there through expiration 11 trading days from now, Bob will have to buy back the option he wrote if he wants to keep his IFMX stock (which I expect he does). As long as IFMX stays below 10 7/8, Bob can probably close out his option for no more than what he got for it up front -- i.e., he makes a profit or breaks even on the deal. If IFMX rises above 10 7/8 in the next 11 days, Bob will end up closing out his option at a loss -- most likely not a big loss. Note that IFMX has to rise >10% in the next 11 days for this to happen. (Possible, of course.) Furthermore, if it does happen, Bob can recoup his loss by immediately writing a June 12.5 call. If IFMX crashes through 12.5 in the next 7 weeks (a ca. 30% gain from today's price), then Bob will have to close out his June 12.5 option. Bob can fund that closing purchase by writing August 15 calls. If IFMX breaks 15 by August .... Well, you folks who think IFMX will break 15 in the next 16 weeks, bless you for your optimism and your positive outlook on life. I'm a pretty cheerful guy myself, but in my view, that's at the extreme rosy end of the bell curve of possible outcomes.