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To: Naggrachi who wrote (158797)7/24/2000 10:26:59 PM
From: rudedog  Respond to of 176387
 
Zead - think of a call option as a proxy for the stock. The stock goes up, the call goes up. The stock goes down, the call goes down.

You are buying the right to purchase DELL stock. If the stock is cheaper, the value of that right is cheaper too.

There is also time value in options - but as they get close to expiration, that time value goes away and the option fluctuations are pretty much tied to stock price.



To: Naggrachi who wrote (158797)7/25/2000 3:16:31 PM
From: mepci  Respond to of 176387
 
N: If the strike price is at 30 and stock price at 52, the intrinsic value(value if you exercise the option and sell the stock), will be 22. At 46 that value is 16. That is when stock falls your options intrinsic value falls. That is why your option price fell.


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