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

To: JR who wrote (10700)	5/5/1998 1:49:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 14631

There are allot of out-of-the-money CALLs as your table indicates. Also there is a non-trivial amount of MAY 7.5 CALLs. What is interesting is that these CALLs are below parity which can create an arbitage play which would cause the stock to be sold short. In other words, right now I can purchase 7.5 CALLs, exersize, and sell the stock for a 1/4 point profit. May not be worthwhile to us, even though there are SOES bandits that trade for less. But this is worthwhile for the floor trader. So what happens is when the option is purchased to be exersized in a situation like this, stock is immediately sold show in order to lock in the 1/4 point profit. Then when the stock shows up dues to the option being exersized, it is used to cover the trader's short position. The 29525 MAY 10.0 CALLs will keep a cap of 10 on this stock, while the 9040 7.5 CALLs may help to place downward pressure on the stock to keep it trading around 9 for the time being. So at least for the next couple weeks, I do not expect this stock to go anywhere. If it does per chance hit 10 or above, I will be prepared to write another set of covered CALLs on this stock depending on how the options respond to this stock price to give me a premium that will make this play worthwhile. Bob Graham