Leap pricing stuff ... Not only Microsoft
On April 7, when you bought your leaps, Microsoft's stock price had appreciated about 6-7 dollars over the previous week. The market, observing the rising price, had priced the option anticipating additional price escalation. Today, although Microsoft is trading at similar price levels as April 7, investors' confidence does not exhibit the same optimism, and reasonably so, since over the last week Microsoft's stock price has only moved 2-3 dollars.
Likewise, if Microsoft had been trading in triple digits last week and declined to today's level, you'd see even further erosion in the value of your options.
Fortunately, you've until 2001 for the intrinsic value of the option to overtake the speculative value. I'm sure you've taken into account the inherent depreciation of your options over their lifetime and priced this into your investment decision.
Welcome fluctuations. If our investments didn't behave in ways that upset us from time to time, they'd be so accurately priced by the market there'd be little opportunity for trading profitably. We use this to our advantage.
Cheerios, PW.
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