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To: UnBelievable who wrote (18963)	9/15/2000 10:15:12 PM
From: LLCF	Respond to of 436258

<While it is true that options, much like futures, have the ability to enable the transfer of risk for a fixed price (insurance), > Actually futures are just the underlying delivered at a future date... the critical "option" to deliver rather than the "obligation" to deliver is what makes options = insurance. In return for the 'option' rather than the 'obligation' a premium [on top of interest premium] is paid. Of course options can and are often used for purely speculative purposes, BUT owning an option is much more than leveraged stock [as the portfolio insurance practitioners learned in 1987], if it 'gaps' against you, you have limited loss.... THAT's why they have a premium other than interest... and that premium can be evaluated. DAK