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Gold/Mining/Energy : BRE-X, Indonesia, Ashanti Goldfields, Strong Companies.
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To: mikesloan who wrote (19468)4/29/1997 8:08:00 PM
From: vandek   of 28369
 
OPTIONS ON BRE-X/BRESEA

I have read alot of threads regarding option trading on Bre-x/Bresea. You have to stop and look how much of a premium your paying.

Lets take for example the May 11 calls on Bre-x. They traded today at 0.45 cents. They are over 7.00 out of the money. They are way over priced, the market makers are making a killing on NEW IVESTORS INTO THE OPTION MARKET.

Everyone is saying buy options, buy options....Lets again take another example. The May 9 calls on Bre-x are trading around 0.65 cents. For an option that expires in less than 3 weeks and being over 5.00 out of the money they are too expensive.

These above options are trading about 270 % higher than they should be.

The closer your price is to the underlying security the move leverage you have. The May 5 calls are probally your best bet. They are trading around 1.50. They are about 1.20 out of the money. The premium your paying is strictly for the volatility of the market. Bre-x does'nt have to rise very much for your calls to be in the money. If Bre-x rises over the 5.00 range you will see the price of your calls rise much more dramtically than say a 7.00/9.00/11.00/13.00 dollar calls. Buy closer to the market and you will make alot more money.
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