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Biotech / Medical : Biotech Valuation
CRSP 53.85-4.5%Jan 9 9:30 AM EST
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To: tom pope who wrote (21137)9/3/2006 11:58:04 PM
From: Biomaven  Read Replies (3) of 52153
 
In the context of general valuation talk, the following post is interesting:

Message 22777818

The market may not be cheap, but on an historical basis, most options are. Given the uncertain world in which we live, one may wonder why this is the case. My impression though is that the volatility "smile" or "smirk" has deepened - thus out-of-the money puts and calls are comparatively more expensive than they used to be when compared with the at-the-money strikes. If that is correct, the market is saying that likely actual stock volatility will continue very low, but there is an increased chance than there used to be of a very big move.

Peter

P.S. This relates to general option prices, not biotechs with an upcoming binary event.
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