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Technology Stocks : Long Term Investors' Outpost
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To: hueyone who wrote (422)8/20/2002 7:50:11 PM
From: Uncle Frank  Read Replies (2) of 562
 
>> It is really quite comical that I am sitting here with a successful trader/investor, well experienced in puts and call options trading, debating the point whether options have a value at date of grant.

You're confusing premium price and value, Huey. The fact that market makers use the Black-Scholes model to price an option doesn't mean the option will have any value at expiration. In fact, the vast majority of them don't. Most options players (the sane ones) never consider holding an option until expiration; they merely trade the swings in premium values prior to expiration. Employee options are a special case, since they can only be traded (exercised) after a specified date. If that were the case with normal options, the premiums they could command would decline by 90%. But that's jmho.

Regards
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