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Strategies & Market Trends : Tech Stock Options

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To: Caroline who wrote (40708)	4/22/1998 8:56:00 AM
From: Patrick Slevin	of 58727

PFE Personally I have no intention of buying PFE; Dave asked about it so when I noticed the McMillan remark I passed it on. McMillan just does a daily commentary on stocks that pop out with unusual option volume and on stocks that have High Implied Volatility. PFE was on both lists. It's average daily volume in options is 21,788. Yesterday, it was 49,276. Of that number, 39,982 were calls. Evidently, the High Implied Vol is what is killing you on the Septs. He provides no reason for the remark on being overbought. During a brief conversation with an Registered Options whatchamacallit; I was told that options that have high volatility are very bullish/bearish...likely to produce the biggest moves (one way or the other). This is logical of course. So PFE is priced high because of anticipation of a large move. Conversely, GE is peanuts (option wise) because by comparison it is not expected to advance/decline by a big number.

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