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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: freeus who wrote (33293)	3/14/2001 7:38:52 AM
From: edamo	Read Replies (1) \| Respond to of 65232

lynn..i'm sure "formulae" exist...but what do they relly tell you? basically you pay much more for a dotm leap then a ditm leap...why, because the former has no intrinsic value, and you are paying for time and volatility factors which will erode...the latter has intrinsic value, and although more expensive gives the ability to act as a common stock replacement....i like to buy itm, ditm, that when the premium is added to the strike, it is not much higher the the share price...this is possible on stocks that have stabilized and lost much of the volatility....any stock that has extreme recent movements will still be pricey...look at the position that keith likes...sunw 0335 at $2????...great to trade in and out, tremendous leverage, but will not appreciate as time wanes and sunw approaches 35.....it was easy to profit with dotm in the bull run...maybe not so easy now....i would be a buyer of that which has intrinsic value at these levels, over an outright gamble....