Advanced Micro Devices - Moderated (AMD) Message Board

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Technology Stocks : Advanced Micro Devices - Moderated (AMD)

AMD 200.46

-17.2%

Feb 4 3:59 PM EST

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To: Magrathea who wrote (221840)	12/31/2006 10:50:06 AM
From: xiaxia	Read Replies (1) of 275872

>>This instantly raises the volatility of the stock Options pricing does not always follow the B-S formula. That is why we have implied volatility vs. theoretical volatility. Implied volatility is based on anticipation or price swings. A change in stock price may not relate volatility directly. An example would be the drop in both call and put options prices after an earning report--implied volatility is high before the earning report. It decreases after the report unless larger than anticipated stock price swing occurs. Thus buying short term options may end up losing money even if the stock moves in your expected direction.

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