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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: rkral who wrote (64380)	8/8/2003 8:19:57 AM
From: rkral	Respond to of 77399

OT Correction ... Frank and Greg, re "the option writer ends up ahead* .. with the time-value portion of the premium, and the option buyer will lose the time-value." Incorrect statement, for sure. Consider an option writer who only writes ATM options. The option premium is 100% time-value, and the option premium is the maximum the writer can pocket. No way the writer pockets the maximum on all* trades .. so doing so on any single trade can't be the expectation .. for an ATM write, at least. So the expectation of an ATM call option write must be somewhere north of the time-value of money required to hedge (cover) .. but south of the time-value of the option .. before other costs. Ron