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Politics : Formerly About Advanced Micro Devices
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To: EricRR who wrote (117003)6/22/2000 1:53:00 AM
From: TimF  Read Replies (1) of 1570910
 
"Ted, this is important! It could mean that Elmer isn't a "real" AMD long after all. If he is writing long term CC's on all his AMD
shares as I suspect (and short term puts) it means that he's heeding the advise of one Ashok Kumar, who famously
proclaimed:"

I also have long term covered calls against almost all of my AMD shares. However I used the money to buy mid term (Jan 01) calls betting that the stock will move up a lot sooner then January and that I'll be able to buy the LEAPS back by selling only part of my Jan 01 call position.
If I was only slightly bullish about AMD (and if I had LV III option privileges) I might consider a strategy somewhat like Elmer's.
I am thinking about using a similar covered call strategy on CEGE. The prices for its calls are extremely high. I can't fully calculate potential returns using CBOE's Options Toolbox program because it doesn't work with implied volatility of over 100%.

Question: If AMD shoots up suddenly would that increase the implied volatility of AMD options and thus increase their value in addition to the increase resulting more directly from the higher stock price? I know really the value is determined by supply and demand for the options but people do look at volatility when they decide how much they will pay for options.

Tim
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