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Technology Stocks : CMGI What is the latest news on this stock?
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To: Mark Peterson CPA who wrote (8544)5/25/1999 1:03:00 AM
From: Carl R.  Read Replies (1) of 19700
 
The volatility in the options suggests that the underlying stock is expected to go UP and DOWN.

A minor point, but if all the demand for an option is on one side, say down, the premium will still rise on the other side because you can create synthetic positions. For example you could but a 200 put. Or you could short the stock and buy a 200 call, which is essentially the same position. Thus a rising volatility premium for puts implies a rising price for calls even if there is no expectation of a rise.

Carl
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