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Strategies & Market Trends : The picks
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To: Cory Edelbrock who wrote (4950)2/13/1997 4:23:00 PM
From: Shawn Murphy   of 6124
 
Cory, Re: IOM

I am not clear if I totally understand what you are saying, but options work on time and price premium. Although the time premium will go down by Thur. the price premium rises as the stock price nears the option strike price.

So lets say that IOM is at $19.50 on Thur. and the option,(Feb.20calls), expires on Friday at the close.

Would I buy these options and how much would they cost ?

The quick answer is yes. and the price should be between 1/4 to 1/2

If you have followed what happened last month on the PRGS feb.20 calls

you would see that this situation resembles it.

THIS IS A GAMBLE, and if you pay .375 for the option the stock would have to go to $20.375 before you can even brake even, not including trading cost.

However, if the stock goes to $21.00 the option you bought for .375 would now be "in the money" and worth approx. .75 to 1.00.

NOT a huge profit, but still a profit.

again, the above is just a "what if" scenario and in no way says exactly what will happen.
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