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Strategies & Market Trends : The Options Box -- Ignore unavailable to you. Want to Upgrade?

To: y2kate who wrote (189)	5/11/2000 11:27:00 AM
From: Poet	Read Replies (2) \| Respond to of 10876

Hi there Kate! It's so great to see you again, I'm glad you found us. About the QLGC calls: You bought the Oct 65 calls and even though the underlying is up a few points, the cost of the call is lower. My first reaction is that there hasn't been any time decay (because these are so far out in time) and that the change in the price of the option is due to a change in the volatility of the underlying. Basically, the price of an option is based on a number of things, the volatility of the stock is one factor. Esentially, the more volatile the stock, the more inflated the premium (all other factors held constant). I don't follow QLGC so I'm not familiar with what's happened to it this week, but I'd guess that you bought the option during a period of very high volatility, thus paying a slightly inflated premium. Does this make sense?