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Strategies & Market Trends : Options-Technical analysis

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To: browser who wrote (13)10/11/1998 5:49:00 PM
From: Caroline  Read Replies (2) of 296
 
AUD is a beautiful long:
timely.com

... if you want to go long in this market...

AUDKM Nov98 AUD 65C
tscn.com

With AUD at $69, AUDKM is $4 in the money.

Therefore, AUDKM @ $8.875 has $4.875 time premium and only 6 weeks to expiration. Implied volatility is 70.88. WAY too high.

If volatility imploded to zero (not likely, but the extreme risk), AUD could (conceivably) go to $73.875 and AUDKM would not have to change one cent.

Not a good buy in my opinion.

CB

[EDIT: changed 78.875 to $73.875 above]
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