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Technology Stocks : INTEL TRADER

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To: Jurgen Trautmann who wrote (9043)	2/22/2001 2:39:04 PM
From: MonsieurGonzo	Read Replies (1) of 11051

JT> option pricing ja, I have seen many times this "hanging" or, reluctance of options' prices to move 1:1 with the underlying. Typically, the ASK ticks up but the BID does not ~ the spread increases thus... then given more gain in the underlying, the BIDxASK goes up as it is supposed to... but then the delta becomes noticeably smaller: I interpret this as reduction of implied volatility in the options' pricing; so, yes ~ the option pricing formula does appear to be in there, somewhere. in the past, we have tended to buy out-of-the-money LEAP CALLs or, 60~90 day out CALLs ~ sit on them for awhile ~ and sell them when the underlying crosses strike... ie., at the peak of their "torque curve". More recently I have been playing with in-the-money or at-the-money options ~ and day-trading with these... looking for quick, 20%~40% fractional gains (and no more). one of the things I like about all these new "index" and "sector-specific" ETF vehicles is that they tend to have option strikes spaced every $1 rather than every $5. -Steve

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