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Strategies & Market Trends : Three Amigos Stock Thread

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To: Sal D who wrote (829)	2/18/1998 7:10:00 PM
From: Sergio H	Read Replies (1) of 29382

Joe, I think that what you've been reading is the variables and the formulas for setting fair market value for options. I have to admit that I am not sophisticated enough to take those factors into concideration. A good rule of thumb is to calculate the premium and compare it to the strike price and expiration date and find the best value. Here's a good example: Monday at opening call options for NRL had the following prices: march 20 2 1/2 - 2 7/8 June 20 3 3/8 - 3 3/4 March 22.5 1 1/16 to 1 5/16 June 22.5 2 - 2 3/8 March 25 5/16 - 1/2 then the leaps: March 99 15 7 1/4 - 7 3/4 march 99 17.5 4 3/4 - 5 1/8 The stock closed Fri. at 22 3/8. Using the ask price, the March 20's had a premium of 1/2. the June 20s had a premium of 1 3/8 and so on. The leaps seemed to be the best value, having almost no premium, being in the money and for the time frame. Sergio

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