Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 196.81

-4.9%

Dec 9 3:59 PM EST

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To: Sowbug who wrote (36552)	2/27/1998 12:19:00 AM
From: Gary Korn	of 61433

We're in the home stretch for March options, meaning that the option price is going to be little more than its intrinsic value (i.e., amount by which the call option's strike price exceeds the current price of the underlying security). Thus, the delta (amount by which the option price moves for every dollar the stock moves) is very small, too. Things could be worse for you. I own 50 March 45 calls. I was tempted back in the infancy of my option-trading life by their tiny little 3/16 price. Even if Tim's right and ASND hits $40 tomorrow, I bet you they'll go to a bid price of only 1/4. And next week if ASND goes to $42 they may very well stay at $0 1/8. The week after that $44 is USELESS. In other words, it would take a 25% move in Ascend in three weeks for me to make money. That's practically takeover-rumor movement, meaning that the only way I'll profit on these options is if we hit the equivalent of the lottery. Stupid odds. Sowbug, Excellent, well-reasoned and well-stated post! Consistent with what you wrote, Glenn Rudolph often has observed that 80% of call contracts expire worthless. Gary Korn

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