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

To: Gary Leger who wrote (10766)	5/11/1998 7:57:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 14631

Good of you to provide me with some feedback. I wish more people would speak up even it meant disagreeing with me. What I was referring to with "blowing out" a large long CALL position is how the hedge funds sell the stock ahead of receiving the same stock on the exersize of their option. Technically, this is selling short, but it locks in the current profits made on the CALL option. Once they receive the stock on their exersized option, they then use this stock to cover their short position. But the end result is the same as selling the common on the exersized in-th-money CALL position. Yes, they do it backwards in this way. But it allows them to quickly lock in profits without having to sell their very large open CALL position in a relatively illiquid market which would work against them. This is the same thing that MMs do during expiration. Or did I misunderstand what you are saying? I will carefully review my post just to be sure I did not get it the wrong way. Given the past several days, I would not be surprised I did this. Bob Graham