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Strategies & Market Trends : Tech Stock Options
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To: jjs_ynot who wrote (40290)4/18/1998 7:32:00 PM
From: Patrick Slevin  Read Replies (2) of 58727
 
I am still unsure as to this question on beta on an index.

I have asked Peter to define the question precisely as to how beta works with respect to an index option and I pass it on...in print...to an options specialist and he says questions of a nature that deal with options on an index with respect to beta make no sense.

I do not wish to hold myself forth as an expert in this area. After three times, I still cannot relay the answer very well. He says that asking about beta on an index on an option makes no sense, because the Index creates the beta for the stocks in the index and to derive an beta for the index then the alpha is zero and the beta is one and therefore the beta becomes the delta. This is because the beta is one so the you must multiply one times the delta.

He has patiently explained this to me three times. I can't keep it in my head long enough to find a pencil.

So I wish you fellows luck with this.
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