Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : The Critical Investing Workshop -- Ignore unavailable to you. Want to Upgrade?

To: Voltaire who wrote (7959)	3/17/2000 9:31:00 AM
From: edward_k	Read Replies (1) \| Respond to of 35685

VOLTAIR can you explain this? Ibexx who wrote (69209) From: Ibexx Thursday, Mar 16, 2000 10:48 PM ET Reply # of 69222 The following is lifted from options expert Bernie Schaeffer's website: 8:45:19 AM A pair of near-the-money options in the April series on Qualcomm (QCOM - 128) saw heavy activity yesterday in what was likely the initiation of a mammoth straddle position. The April 125 call saw open interest rise to approximately 21,500 contracts from about 6,300 contracts at Tuesday's close. Similarly, the April 125 put saw heavy volume, which resulted in open interest rising to about 22,200 from around 6,700 contracts at Tuesday's close. The remaining options within the March and April series on QCOM were traded comparatively lightly. A straddle position is initiated by buying (in the case of a long straddle) or selling (in the case of a short straddle) the call and put with the same strike and expiration month. It is difficult to determine the motivation of the trader in this case with complete accuracy, although it is interesting to note that QCOM shares have been building a symmetrical triangle formation throughout 2000. This technical formation is generally resolved with a violent move, although the ultimate direction of the move remains to be seen. If this position was instigated as a long straddle position, the trader will benefit from such a violent move regardless of direction. Ibexx

To: Voltaire who wrote (7959)	3/17/2000 10:57:00 AM
From: Getch	Read Replies (1) \| Respond to of 35685

Morning Volt, call should not have moved lock step and therefore would be going for about $18. In this example, we had... Buy QCOM at 130 Sell Apr 132.5 CC for $11.50 QCOM stock goes to 160 Yes, the call price will not move in lock step (dollar-for-dollar) initially. Jim Willie posted a good chart last night (#7829) of the sliding deltas of options compared to their status deep in the money through far out of the money that was a "printer". This is an example of a call that will shift from at the money (move about 3/8 point per common point rise) to deep in the money (move about 3/4 - 7/8 point per common point rise). Figures from JW's post. At QCOM = 160 the 132.5 call will have $27.50 of intrinsic value and should trade for at least that amount.