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Technology Stocks : Lucent Technologies (LU)

LU 2.820

-2.4%

3:59 PM EST

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To: George the Greek who wrote (5636)	1/20/1999 10:53:00 PM
From: Haim R. Branisteanu	Read Replies (2) of 21876

George, stock valuation and stock prices have nothing to do with each other, the same way that AMZN was worth $199 few days ago and is now $130 or YHOO was $425 and is now worth 2/3 of that. Still LU is not worth more than 10% to 20% above NT price or double ERICY or similar to Siemens (not trading in the US)on a relative basis. It so happen that the talking heads and other clueless people are running LU to dizzing highs, you can only join the party and place close stops. Went long LU around 106 at 110 I wrote calls on them. Today I started to unwind. Now I am fully hedged. High implied volatility in a stock option is an indication of an over priced stock. LU implied volatility is around 58% to 60% which means that each day an at the money option depreciate over 1/4 to 3/8 of the underlying stock. You can benefit from the mania by writing out of money puts wen the stock dives and collect the premium or buy the stock and write calls. Several days ago the option on LU were over 8% of the stock price (LUBB). It is true the stock moved so much in 3 days <ggg> but you can not have it all. With time LU will come down to earth or earning will go up to realistic P/E's which BTW I am not so sure. (I do not think that LU will not hit $4 in earnings by 2000) Still on a comparable value LU should trade around $60 at present Tulip Mania Levels. But miracles still hapen. SUNW is one classic example I got tired of SUNW around $45 last spring and now it hits $105. SUNW is the same company as this summer at $45 to $48 but they run it now. In the meantime let hope LU earnings tomorrow are above $1.01 by 5 cents so I will able to unwind all the stock I own. LU is trading like an semi Internuz. The option premium is hard to resist.<GGG> Hope I will not get tempted with LU again <GGG> BWDIK Haim

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