Executives at Mid Atlantic Medical Services generally get high marks from analysts for turning the company around. They are also apparently pretty good at knowing when to sell their own shares.

Mid Atlantic Medical stock enjoyed a healthy rally in early June, peaking on June 13 at $25. That rally was accompanied by heavy insider selling, with sales between late May and mid-June occurring between $20 and $25 a share. The stock has since tumbled, and now trades at around $17.625.

While analysts concede insider selling is worrisome, they are quick to add they can't find fault with the company, and expect it to hit their targets when it announces earnings on July 19 or 20. The Rockville, Md., health-maintenance-organization holding company won't give its own projections, but says it is ``comfortable'' with a range of 28 cents to 33 cents a share.

``Much of the selling was the result of the exercising of options,'' said Treasurer Paul Dillon, himself a seller of 8,000 shares in late May at $20.75. And Mr. Dillon says his case was fairly typical of those of other executives who sold.

He sold all the shares he received from exercising options he had been granted by the company in 1990. With part of the proceeds _ which according to him came to less than half the $166,000 realized in the sale, once the exercise price of $1.46 a share and taxes are subtracted _ Mr. Dillon says he bought a new van ``for my wife and my new child.''

He still had some money left, and with that he diversified his holdings, he said.

``All the analysts say it's better not to have all your portfolio in the same basket,'' Mr. Dillon said. Even though he didn't keep any of the shares he received from the options, he still owns 164,000 shares of Mid Atlantic, he said.

One atypical seller was Peter Leonard Flaherty, vice chairman of the board. He sold 50,000 shares that were not options-related, and that represented more than 15 percent of his total holdings, according to Securities and Exchange Commission filings culled by CDA/Investnet, a Fort Lauderdale, Fla., firm that monitors insider activity.

Another big seller was Vice President Eric Randolph Baugh, whose 36,000 shares sold on June 6 came in part from the exercise of options, according to Mr. Dillon. The 36,000 shares, sold for around $22, accounted for more than 21 percent of Mr. Baugh's total holdings.

Overall, CDA/Investnet says nine Mid Atlantic insiders sold 251,100 shares in the six weeks leading up to June 13. Bob Gabele, president of CDA/Investnet, said the heavy selling indicates to him that Mid Atlantic executives didn't expect the stock to break through its 1995 high of around $26 set in February.

``They must have felt that not much was going to change the picture and must have said, `this is the time to take some chips off the table.'''

Most analysts support Mr. Dillon's assessment that the firm is healthy.

``I feel very confident about the company,'' said Eleanor Kerns, HMO analyst at Alex. Brown. ``It's a good management team, and I believe they will make my earnings projections of 29 cents per share.''

Ms. Kerns says that despite the likely consolidation of the industry, she isn't worried that Mid Atlantic will become an acquirer, an action that often depresses a stock's price. ``They have said consistently that it is not a wise use of their capital,'' she said.

The industry looks strong, Ms. Kerns said, and even though there's always ``the threat of regulation in health care, most of that cloud dissipated last year.''

Robert Hoehn, health-care analyst at Bear Stearns, agrees with Ms. Kerns, even though insider selling is ``one of those things we never like to see.''

``Management has done a good job in turning the company around,'' Mr. Hoehn said, adding that in an industry that is undergoing a lot of pricing pressure, ``I would place them above the rest. Enrollment is up. They'll do well.''