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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: May Lee who wrote (1537)	1/5/1999 5:16:00 PM
From: Chuzzlewit	Respond to of 41369

May, the shorting means that there were way too many buy orders flooding the specialist firm. There was a tremendous amount of speculation surrounding the inclusion of AOL in the S&P500, and whenever a highly visible stock like AOL is substituted for another company there is invariably a lot of volatility associated with it. That happened recently with both ASND and PSFT, but those stocks are not as volatile (just compare the betas). According to the rules of the NYSE specialists are prohibited from preferentially trading for the account of their own firm, so I believe that this rule must mean that they must cover the short position at the first opportunity. That removes any incentive on their part in depressing the price of the stock. In any case, if they were selling short at $160, don't you think that they would be covering at $146. TTFN, CTC