How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 483.03

+0.5%

Dec 5 9:30 AM EST

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To: Jean M. Gauthier who wrote (17293)	3/6/1999 12:20:00 PM
From: t2	Read Replies (1) of 74651

Jean, I am not good at pricing models for options. They make no sense to me and I have spent my time to understand them. My point is that they appear to be cheap considering the stock split. Of course when the option strike price also splits-----there should be zero effect on the premium. This would be logical and should not affect an investor's decision. However, I just disagree. I find that hard to believe no matter what options pricing models are used. This is just my belief and like I stated before, I have no experience pricing options. I am thinking about the April calls only in the stock split adjusted basis when I ponder which ones to buy. Like I posted before at current price of MSFT--split adjusted basis everything appears as so: Stock 77 1/2; April 85 calls at 1 5/8. That is too cheap for me. Just go back to January earnings and you will see how expensive being 7.50 out of the money calls have been leading to an earnings month. I have not really looked too much into other stocks that have announced splits but will split before the expiry of April options but I think they are probably cheap as well. Jean, in my opinion any April calls are cheap; 150s, 160s, 170s, 175s. (maybe even higher but I am unwilling to speculate on those at this point in time). The above scenario assumes no movement up in stock price from now til march 26 split-----that i find hard to imagine. Just my opinions; I am not recommending you buy options.

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