Hi, Paul.

PE> Excuse me for being incredibly stupid, but why did GAW trade down to 16.3c
PE> or whatever on the first day?  Just what sort of dickheads take up a 20c
PE> offer that they didn't HAVE to, only to sell it for a loss on the first
PE> fucking day?  BFN.  Paul.

I'm afraid I can't speak for incredibly stupid dickheads, but some
possibilities are...

1) How do you know they sold at a loss? If they've kept their options
   and subsequently sell them at 8 cents plus, that ain't a loss.
   Similarly, some may have kept the shares and sold the options.

2) Many "traders" (as distinct from long-term investors) don't make a
   profit on every transaction. Of course they don't *intend* to make a
   loss, but if the expected gain doesn't happen, and they think it
   won't in the short term, they'll cut the loss and put the $ into
   whatever the next opportunity is. One option trader at SHAW reckoned
   that he only needed to get 1 out of 6 right, and he certainly wasn't
   losing money overall. Five small losses, one huge profit.

3) You don't even know if "they" have sold them. Of course there must
   be a change of beneficial ownership, but maybe, when the hoped-for
   profit didn't happen, the shares bought in say their company are
   sold to themselves where the tax loss is better utilised. Or say
   husband to wife, if she had the higher marginal tax rate.

4) Leverage. Sell 100,000 shares at 16, buy 320,000 options at 5.
   Share price goes to 20, you would have made 25%. Option price
   goes to say 8, you've made 60%.

5) Need the money for something else. You hoped to make a quick profit
   with some $ you didn't need until April, but were prepared to stand
   a small loss if it didn't happen.

Regards, fIM.

 * * Save on toilet paper...use both sides!
@EOT:

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