Novell (NOVL) dirt cheap, good buy? Message Board

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Technology Stocks : Novell (NOVL) dirt cheap, good buy?

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To: Ben Antanaitis who wrote (22781)	6/18/1998 12:21:00 PM
From: Paul Fiondella	Read Replies (1) of 42771

Almost on MAX PAin I think if your MAX PAin calculations are showing a stock price close to 10 and we are at close to 13, a calculation based only on open interest values is lacking another variable to be effective as a price determinant? My assumption is that open interest reflects all those options purchased and held vs executed. Therefore one wouldn't care what the purpose of buying the option (short long etc. etc.) was but only the premium paid for those still holding the option on expiration day. Some formula in which you take the premium into account would look something like this: For the range of premiums for a given strike price on a given day take (Premium * trade size * trades) and add that to the strike price then average for all trades to get the break even number for the majority of trades. To get your MAX PAin one could then average this number for each strike price weighted for volume against all the other strike prices to get the MAX PAIN point. IT might be more accurate than taking the strike price? I know I'm probably missing something here if you have the patience. Maybe when you do your numbers Friday you might look at this post again?

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