USRX /COMS - and other "stuff" Message Board

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Technology Stocks : USRX /COMS - and other "stuff"

COMS 0.00130

-13.3%

Nov 7 11:47 AM EST

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To: Glenn D. Rudolph who wrote (4490)	5/30/1997 7:55:00 PM
From: Dwight E. Karlsen	of 5244

Glenn, re deep in the money options never have time premium. Not true, Glenn, not true. The time premium depends on the time remaining to expiration. For example, the CPQ Nov. 75 calls have an intrinsic value of $33, but the closing bid today is $35, ask is $36. So there's a $2 premium. Last week or so the premium on those was more like $4. But when you're talking current month expiry, then what you say is true, but it's more to do with the fact that there's not much time to expiry, and the potential for great price improvement on a % basis on deep in-the-money calls is less than for on-the-money options. These are my observations, anyway. DK

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