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Technology Stocks : DELL & MU from a TA point of view ONLY !
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To: TREND1 who wrote ()3/30/1999 6:55:00 PM
From: John Graybill  Read Replies (1) of 36
 
Comparing MU option prices today, Tue 3/30, with prices of Thurs 3/25,
says that out-of-the-money puts lost a full strike price of premium in
just three trading days (actually just today), and those days were in
their favor to boot, which means they have lost even more. Time
premium doesn't happen this fast with this much time left until
expiration.

The closing price for MU and closing bid/ask for the options:

3/25 MU 47 3/4 (1/4 above the strike price of 47 1/2)
MUPH 40.0 1 3/16 x 1 1/4
MUPV 42.5 1 3/4 x 1 7/8
MUPI 45.0 2 5/8 x 2 3/4
MUPW 47.5 3 3/4 x 4

3/30 MU 45 5/16 (5/16 above the strike price of 45)
MUPH 40.0 1 1/16 x 1 3/16
MUPV 42.5 1 13/16 x 1 15/16
MUPI 45.0 2 3/4 x 2 7/8
MUPW 47.5 4 1/8 x 4 3/8

Note that the stock has dropped a full strike, but the options have
barely moved. I am absolutely certain that I'm not "off by one", for
I have been watching this in horror as an interested party the entire
time. Furthermore, this collapse in put premium all happened today,
because I called my broker when MU was 47 1/2; MUPW was 3 3/8 x 3 3/4.

MU had to drop an entire strike price from that point for the bid to
move to 4 1/8. The option should have moved *at least* 1 1/4 (at
least one-half of the stock movement, because it is "in-the-money")
rather than 3/4, plus perhaps a little more because "the trend is your
friend" in option price appreciation.

My conclusion: "They" don't want you to sell put options to them;
because there will be a big move up tomorrow.
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