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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 236.20

-0.6%

2:04 PM EST

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To: Don Westermeyer who wrote (807)	11/19/1997 5:44:00 PM
From: Bilow	Read Replies (2) of 164684

I'm showing the time premiums for the Dec calls and puts identical to within about 1/2. This is just as options theory would dictate. Otherwise an arbitrageur could clock some easy dollars. For instance. With AMZN at $52, Dec 50 Call = ZQNLJ = $6.125 = $2.000 + $4.125 Dec 50 Put = ZQNXJ = $4.250 = $0.000 + $4.250 So the time premiums are within 1/8, (and both quite high). Farther out: Jul 50 Call = ZQNGJ = $13.625 = $2.000 + $11.625 Jul 50 Put = ZQNSJ = $12.000 = $0.000 + $12.000 So the time premiums are within 3/8, and pretty high. If you think the time premiums are a little too dear, you can simply sell a (naked) call instead of buying a put. That will clock you dollars if either the stock drops or the implied volatility goes down. Unfortunately, your risk is unlimited if the reverse happens. More complicated trading strategies exists, but none of them look too good to me due to the high spreads. Maybe somebody else has some ideas.... -- Carl

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