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Strategies & Market Trends : The Covered Calls for Dummies Thread -- Ignore unavailable to you. Want to Upgrade?

To: jhs565 who wrote (4273)	5/27/2004 12:38:11 PM
From: Uncle Frank	Read Replies (1) \| Respond to of 5205

The 75 strike price is well out of the money, and the July prices are influenced by the slim chances of such great appreciation in a short period. With qcom trading at 66.54, let's look at the near-to-the-money 70s to demonstrate the point. The bid on July 70s is 1.55. Time to expiry is 35 market days, so the time premium is .0442 per day. The bid on October 70s is 4.00. Time to expiry is 101 market days, so the time premium is .0396 per day. So the time premium on shorter near-to-the-money option commands 12% more on a daily basis. I just hope I didn't screw up any of that analysis. duf