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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: The Insider who wrote (20359)	8/10/1998 4:42:00 PM
From: matt fahy	Read Replies (1) \| Respond to of 45548

Insider, If someone is writing doesn't someone have to be buying? This always confuses me. Any thoughts? Matt

To: The Insider who wrote (20359)	8/11/1998 1:22:00 AM
From: Bruce L	Respond to of 45548

<What makes you think it's buying and not writing?> A very good question. My answer to you assumed it was buying without much thought. Upon reflection - and a little bit of study - I still think it was buying. First, my experience has been that surges in buying of calls has usually been associated with buying. I can't prove it to you empirically but I believe that individual investors and funds, if they fear a drop in a stock, are going to first, sell the stock, and second, buy puts. IMO only as a last resort would they sell(deep in the money) covered calls. Second, the modest time premiums on the August 25 calls also leads me to believe it was buying. The stock closed at 28 1/8. The calls sold for as high as 3 3/4 and as low as 2 3/4. The closing bid ask was 3 1/8 to 3 1/2 with the last trade at 3 1/8. In my experience (again I can't prove it empirically) investors- as opposed to option market makers -who write covered calls do so in the hope that they can do it without losing their stock. They usually write out of the money calls for the extra income. I could be wrong. If a market maker wanted to hedge his COM$ holding he could write covered calls. But if this was the case, again, why not just sell the stock?