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To: venividivici who wrote (134453)	7/16/2006 3:29:35 PM
From: Cisco	Read Replies (2) of 209892

>> I would think that the opportunity cost of holding a six-month out option would be higher than just allowing yourself to get stopped out of a front-month option.<< Perhaps I don't understand what you are saying here or there is a fundamental error in my understanding of options, but this doesn't make sense to me. Is there a reason why you can’t stop out a long expiration option just as well as a short expiration option? Let’s say you buy 10 Aug 38 calls on the QQQQ @ the ask of 0.35 and 10 Jan 38 calls on the QQQQ @ the ask of 1.70. Next, let’s run two examples where we assume that we close out or exercise both positions on the Aug expiration date. In example one, we will say the price at expiration was 38 and in the other it was 39. Would not the longer call still be a better value in both cases? Aug 38 Call: Breakeven Stock Price on Aug 19th: 38.35 Profit at 38 closing price on Aug 19th: -$350.00 Profit at 39 closing price on Aug 19th: $650.00 Jan 38 Call: Breakeven Stock Price on Aug 19th: $36.65 Profit at 38 closing price on Aug 19th: $728.51 Profit at 39 closing price on Aug 19th: $1,353.33 Supporting analysis:

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