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To: Gottfried who wrote (2408)	10/25/2002 4:18:33 PM
From: Ira Player	Read Replies (1) of 13403

OT *** AMAT option choice question. It depends....like everything else in options, on your opinion about what is going to happen and the time frame you intend to hold. If you are buying long term and will hold, here are some numbers to think about: Jan '05 12.5 Price $6.30 Breakeven $18.80 Jan '05 15.0 Price $5.30 Breakeven $20.30 Jan '05 12.5 more profitable below $28.25 Parity -- Both have 150% gain @ $28.25 Jan '05 15.0 more profitable above $28.25 If you believe AMAT will be above 28.25 at expiration, it's "better" to select the Jan '05 15. If below, the Jan '05 12.5 Also keep in mind Implied Volatility (IV). It's currently between 60% and 70%, depending on the time frame and how far in or out of the money for the individual options. It's been over 90% (late July, 2002) and below 50% (late March, 2002). The Jan '05 12.5 will be less sensitive to changes in the IV. But if you may only hold a short while and believe IV will rise, the Jan '05 12.5 would be more profitable. I usually prefer buying in the money options, personally. Ira

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