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Technology Stocks : All About Sun Microsystems
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To: im a survivor who wrote (44644)8/28/2001 5:13:09 PM
From: Just_Observing  Read Replies (1) of 64865
 
anybody like sunw leaps.....

Here are some calculations that I had performed for Sunw 03 leaps.

The Jan 03 35 calls are now going for $0.60 to $0.65.

If Sunw stock rises to $25 by the end of the year, the value of that option will increase to $3.50. If the volatility goes up (as it should), then that option will be worth about $5 to $6. Nearly a 1000% return.

On the other hand, if Sunw were to fall $10 by the end of the year, the value of the option will be less than $0.10. With volatility also falling, the fair value of the option will be less than a nickel. Or more than a 90% loss in option value.

If the stock is unchanged in price and the volatility is unchanged, the leap will lose about $0.25 in value by the end of the year. Currently, the leap loses about 3 cents in time value every ten trading days.
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