David - E-Trade, and I am sure, other services, provide Black-
Scholes for estimating pricing. For years, I have had various
templates on my spreadsheet program with charts for the pricing.
The charts change daily as the premium decays.
I'm sure that you know the following, but for anyone not
familiar with options, this is an easy explanation.
MU closed Fri at 26 3/8.
The Jun 27.5 put asking price is 2 11/16.
The Jun 30 put asking price is 4 3/8.
The Jun 32.5 put asking price is 6 1/2.
If the price of MU were to drop 2 1/2 points today, then the
Jun 27.5 would be approximately equal to the Jun 30 at 26 3/8,
or 4 3/8.
If the price of MU were to drop 5 points in the next couple of
days, then the Jun 27.5 would be approx. equal to the Jun 32.5
at 26 3/8, or 6 1/2.
(Jun 27.5 put w/MU@26.38-2.5pt)~=(Jun 30 put w/MU @26.38)
(Jun 27.5 put w/MU@26.38-5pt)~=(Jun32.5put w/MU@26.38)
and so on. With enough points, this can be plotted on a chart, but
requires a french curve, so I do some charts the old way.
Again, the charts changes daily with premium decay.
I want to also point out a downside to options that can
occassionally happen and really burn you, as I had happen this
past week. I took the biggest loss in options that I ever had in my
life last week.
When a stock gets a double wammy like MU did with Nat'l Semi
and Kurlak, one can buy or sell stock at the opening. Getting rid of
options is another story. As you know, my computer has me
changing trading directions about every two days, and I was
caught on the long side. I had 80 May 27.5 options expirating
Friday. You can't sell options at the open. I guess you can,
but why pay commissions on nothing. <gg>
I am going to take the high risk, whereas most should not,
especially if you are married and the wife might learn of it.<gg>
I presently feel fine, health wise, but my kidneys could fail
from my disease, and the party is over. So, I am not interested
in 6% CD's.<gg> Gotta make it or break it, and last week I
broke it. Lost a bundle. But I will do it again.
On the sidelines at the moment.
Patrick
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