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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Sergio H who wrote (4854)	5/17/1998 11:42:00 AM
From: Ken W	Respond to of 29382

Sergio, Excellent article. I saw that in GOTK last week or so with all of the large share movement. BICO is another, literally millions of shares per day at 1/16 with not movement. Just forr fun I checked into it...lots of Reg. S (off shore) and perferred out. BTW CHGO reported this past week...moving slowly toward the goal and opening new stores. Don't own any, but looking better Does Asia export pizza and beer? :-) Ken W

To: Sergio H who wrote (4854)	5/17/1998 12:27:00 PM
From: Sal D	Read Replies (1) \| Respond to of 29382

Sergio and Ken W., yes good article. Geoteck is also in Barrons this week (Sergio at the end of the article it mentions that site you directed ditchdigger to www.orisgames.com) Like some stars, there are stocks that make the greatest commotion while approching oblivion. Geotek Communica tions, the subject of disproportionate trading activity last week, is one such supernova. The stock trades for less than $1 and yet its May 5 put options were among the most active contracts one day last week. What's more, going into expira tion Friday, total open interest in the puts was a whopping 36,008 to go with a hefty 11,045 in calls, a remarkable display of interest in a mere speck of a stock. The most active May contract in America Online didn't have that much open inter est. The reasons for all the activity are expectations by traders that the stock will - in the words of one - "zero out," combined with the difficulty of borrowing such a low-priced stock to sell short. So, puts were sold at a profit by those who had bought them some time closer to Geotek's 52-week high near 7, while others were bought greedily by traders figuring al most any price is too high for the stock. The notion that the stock could disap pear comes from the varied trials of the company, a struggling maker of mobile communications systems that is fighting an effort by Nasdaq National Market to delist its shares for capital deficiency. (All options were delisted at Friday's close.) Geotek has retained banker to distressed companies, but so far hasn't been able to raise needed capital. It needs $85 million by year-end to execute its business plan, regulatory filings say, some of it by midyear. Further embolden ing the put buyers, if $25 million wasn't raised by Friday, a chunk of recently renegotiated preferred securities was to revert to the old terms, under which they could be converted under heavily dilutive circumstances. A company representative said Friday that "that situation has been eliminated by new arrangements." Geotek wouldn't comment further. In all, Geotek's troubles show how the options markets offered a rare chance for traders to make a buck in a situation that George Soros misplayed: His funds have been long-time backers of the company. FLOOR TRADERS WHO DEAL IN DEKALB Genetics options on the CBOE got burned last week, and they're still smoking mad over what one called "a classic case" of apparent insider trading. About 2,000 May call contracts on the agri-biotech stock traded at pricey levels Friday, May 8, indicating the public buyers were quite sure the shares - which closed the day at 77 - would easily reach 80-83 in the week that then remained until expiration. This is a stock, a floor source says, that was lucky to see 20 contracts trade before DeKalb decided to sell itself early this year. First thing Monday came word that Monsanto, 40% owner of DeKalb, had agreed to buy the rest for the blowout price of $100 a share. The buyers of the May 75 and 80 calls, in one trading day, would have cleared profits of 350% and 600%, respectively - much of it effectively coming out of the market makers' pockets. Traders cried "foul" to CBOE authorities, who told them they were already on the case. ALL THOSE OPTIONS-TRADING BULLS fans in Chicago now have a chance to put some (imaginary) money where their mouths are as the team moves through the NBA playoffs. A Phoenix accountant named Keenan Holte has begun a patented sports-options Web site that lets players "trade" options on teams fortunes in real time during real games. The site (www.orisgames.conm) would let players buy, for instance, a "Bulls beat Pacers by 10 points" option that would rise and fall in value over the course of the game depending on the score and the amount of time left in the game. Computer formulas cooked up by Holte continually price the options, and the computer is the always-willing counterparty on the other side of the trades. Holte believes sports bars are a natural outlet for the game. Eventually, even casinos might consider such a system using real money, which would surely chagrin options boosters who have a hard enough time now fighting the association of options with gambling.