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To: Win-Lose-Draw who wrote (138795)	12/14/2001 9:20:53 PM
From: LLCF	Respond to of 436258

<Why the extra premium for the 40s?> The premium [assuming interest rates of zero] on a given line [strike] is the expected value of the index finishing 'through' that line. dAK

To: Win-Lose-Draw who wrote (138795)	12/15/2001 7:20:25 PM
From: energyplay	Read Replies (1) \| Respond to of 436258

You are buying the time value of the option and the volititlity of the underlying QQQs. When you are 10 points away, much of the time value is absorbed in the difference between the current price and the strike. The price is also a factor of supply and demand - how many want to buy QQQ puts, how many want to write (which is also a factor of how many are short) Volitility tends to figured out by computer algorithms, so during expiration week (like next week), volitility premiums drops because of many stocks 'pinned at the strike' This can be a good time to buy longer dated options, since they may be mis-priced slightly lower. Selling puts is usually good during earnings warning time (just before the end of the quarter ) If you buy a little longer (May ?) you will be able to include April 15 tax deadline - frequently lots of selling the week or so before April 15. Best of Luck

To: Win-Lose-Draw who wrote (138795)	12/17/2001 9:48:42 AM
From: yard_man	Read Replies (1) \| Respond to of 436258

premium is always greatest at or near the money, since at that point a given %-age move in the preferred direction increases the intrinsic value (resulting value at expiration) by the largest percentage suppose you have the 50's ~ intrinsic worth of 10 -- qqq's drop to from 40 to 39 -- you've got a 10% increase in your put for ~ 1/40 decrease in the underlying as the puts become worth 11. if the qqq's decrease another pt to 38 the value of the 50's increase from 11 to 12 -- a smaller %age increase now suppose you have the 40's (puts), qqq at 40, and qqq's drop to 39. Intrinsically your put was worth 0 -- now it is intrinsically worth 1 -- should the qqq's drop by another pt they'll be worth 2 -- doubling in value -- you see the higher gearing -- more value for the time or opportunity for you there??