Ascend (ASND) Traders Message Board

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Technology Stocks : Ascend (ASND) Traders

ASND 201.60

-1.0%

Oct 31 9:30 AM EST

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To: Nazbuster who wrote (338)	10/5/1997 10:55:00 PM
From: Carl R.	of 369

OK, lets muddy the waters some more. Gary is only partly correct. If the stock price moves one dollar an option moves somewhat less than a dollar. An option that is deep in the money tends to move about 1:1 because the value is basically the natural value. An option that is well out of the money is much less volititle. And an option that is at the money may move 50 cents for a dollar move in the stock. To make things even more confusing, the amount of time left also plays a part. As time runs out, the value moves to the natural value (i.e. stock price minus strike price). Thus out of the money options move to zero. Therefore the net effect is that if you sell 35 puts and buy 30 calls you do not lose $2 for every move in the stock price between 30 and 35 except as you approach expiration. If you are dealing with March options with 5 months left on them the actual move will be less than $2. If I had a nice computer program with the Black-Sholes option model I could tell you the exact amount, but shooting from the hip I'd say the move would be about $1.20 or so right now. Good luck, Carl

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