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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: limtex who wrote (26165)	6/22/2004 9:06:46 AM
From: Art Bechhoefer	Respond to of 60323

Limtex--For every put buyer there must be a put seller. The increase in option contracts is normal, in the sense that the total of contracts will very likely increase from day one until expiration. How does the put option activity compare with call options? A second issue here is the premium on any option, which declines the closer the option gets to expiration. With barely a month left for July options, the premium is now at a point where one might use the option to hedge a position in the stock. For example, a person buying the stock might want to hedge by also buying a put, which would be a form of insurance against the stock dropping. If the stock goes up, then the put expires worthless, and the investor has simply paid an insurance premium for coverage against the risk of loss. I also believe that because SNDK did not change its guidance, and no news can create uncertainty, the stock will tend to be more volatile than normal. This, combined with overall fears about the impact of higher interest rates, seems to explain at least part of the weakness in the stock price. Art