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

To: RDH who wrote (10852)	5/20/1998 11:17:00 AM
From: Robert Graham	Read Replies (3) \| Respond to of 14631

Thankyou for your good words about my efforts here on this thread. I am writing the deep in-the-money calls because I expect the stock to move to possibly 7 or below in the short run. right now there is at least 25M shares ready to be sold at a substantial profit by the company who has been financing Informix's operational costs, with warrants on more common and preferred. This will have the effect of lowering the current price of IFMX stock during this distribution period. I want to be ready for this. All I need to do is cover when the stock is below 8 before expiration for break even or a profit. The low open interest does increase the odds of my getting exersized prematurely. But I will not see my stock below 8 again. The writing of deep in-the-money CALLs is a form of insurance that is counting on the price to drop in order to work. Technically speaking,the stock has broken through its 8 price level and has been having problems moving back above 8 for the past couple days. So I expect to see lower prices in the near future. Due to the light trading volume, I do not think the common from the convertible preferred has been selling yet. All a good situation for lower prices, for if the technicals improve and the price does move above 8, I think it will be knocked back down as it meets additional selling. This type of distribution that causes dilution on this scale always lowers the price of the stock. The convertible preferred holder having a conversion cost of 4 allows him to sell at a 100% profit now and continue selling as the price drops. Bob Graham