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Technology Stocks : Loral Space & Communications

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To: Geoff who wrote (2115)	3/6/1998 7:10:00 PM
From: ccryder	of 10852

When options go deeper in the money, the time premiums are reduced. When the stock gets more volatile, the time premiums are increased. Since LOR seems to not be very volatile, and since we think the stock price some time in 1999 might be about $50, I suspect any of the LEAPS available today will have very little time premium in them. The time premium mid 1999 would probably be more a function of interest rates, that is, the cost of money it would take to exercise from that time to expiration. Although one hates to think of loosing time premium, our analysis of which LEAP to buy if the price doubles in two years pointed to the higher strike option which has the highest time premium. All this calculation assumes a linearly increasing stock price so your "mileage" may vary. ;<)

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