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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Ausdauer who wrote (7137)	9/28/1999 8:45:00 AM
From: Art Bechhoefer	Respond to of 60323

Aus, as can be seen by the modest recovery yesterday, plus an expected benefit from the Lexar news, these options are now, as they say, in the money (i.e., they have intrinsic value). However, the premium paid for the options last week was about 10 percent, and that premium evaporates as the option expiration date approaches. By its nature, an option is a very short term investment, intended to capitalize on some event where information is imperfect. (Under a perfect market theory, where everybody has the same information and acts accordingly, there would be no gain.) In this case, the uncertainty created by the earthquake, combined with the remarks from MSFT, caused an overreaction, which is now being realized. I'll probably sell these options today or tomorrow, not because the company prospects have lessened but because each day between now and the third Friday in October (option expiration day) means slightly less premium on the options. After nearly 20 years of experience with options, my experience tells me, "Don't be greedy!"