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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 659.00

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Nov 21 4:00 PM EST

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To: Roebear who wrote (1482)	12/12/1998 11:58:00 AM
From: Haim R. Branisteanu	of 99985

Roebear, It may be you misunderstood my post. Your observation is exactly what I was commenting about. The option premiums dwindle whenever there is a pause in the indexes fall (puts) or rise (calls), anticipating a reversal. Now that is likely simplistic but it is just my observation. The index options move very quickly and it is best to sell a bought put or call just before it reverses rather than after the index has bottomed or topped. My coment was that may be stock option prelude the stock which prelude index option. Now this may not be true on the SPX were there the premium prelude the index and prelude the stocks. All I was trying to find out was if the theoretical B&S formula persist or actually expectation in pricing of option on a underlying financial instrument. In certain stocks I watch the option behaviour is not equal. And as Vitas said they do not want to give teh option between the spread which usually is 1/4 so you can lose 3/8 to 1/2 point to the MM in equity option. Haim

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