USRX Message Board - Msg: 1091510

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To: Janice Shell who wrote (17242)	3/30/1997 12:09:00 PM
From: Glenn D. Rudolph	of 18024

An interesting question, isn't it? You would think that increased liquidity (as represented by rising OI) would result in reduced premiums. Except that recent experience indicates that it doesn't: look at the MSH--on the money calls asking 2 1/4 the the morning of expiry (Thursday a week ago). The OEX is no different. Janice, Did you take into account the uncertainty of the market with the pending interest rate increase? Possibly, that added premium because no one knew which way the market would move and it could move a great deal. There is a "theoretical value" of an option. How it is arrived at, I do not know. I suppose you could use it as an indicator to tell you if the option premium is correct but it will not change what that premium is. I no longer have any idea what I am driving at LOL:-) I can not even think of a good OI joke. I know when I sell a naked put and the option expires with the underlying security out of the money, my statement indicates option received. Strange wording considering the option no longer exists, there is no OI and how does one receive an option? Particularly, a nonexistant option. Should it not be option premium received? Let's try a discourse on the proper way to word brokerage statements<G> Glenn

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