How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 509.10

+0.6%

3:42 PM EST

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To: edamo who wrote (30212)	9/27/1999 3:48:00 PM
From: codawg	Read Replies (1) of 74651

"don't you need continued volatility to move you, either direction, beyond your break even point." No, perhaps you're thinking of buying a straddle. This discussion has been about selling a straddle. You'd make the most money if the stock stayed exactly where it was when you opened the position. "doesn't low option premium equate to a cheap straddle cost" You're selling the derivatives, so low premium means less potential profit. The seller of the straddle is looking to make the premium. "perhaps high volatility in most cases create an inflated premium" Yes. "and correct me if i'm wrong, but doesn't the cost of your straddle determine your break even point" Yes, but the more expensive the wider your break-even band. "amazing, i always believed the best time to open a straddle, with minimum risk was when the implied volatility was lower then the historic volatility" No. "perhaps an example of your current play would help better explain!" I doubt it. My current play is long calls.

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