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To: Magrathea who wrote (221840)	12/31/2006 10:50:06 AM
From: xiaxia	Read Replies (1) \| Respond to of 275872

>>This instantly raises the volatility of the stock Options pricing does not always follow the B-S formula. That is why we have implied volatility vs. theoretical volatility. Implied volatility is based on anticipation or price swings. A change in stock price may not relate volatility directly. An example would be the drop in both call and put options prices after an earning report--implied volatility is high before the earning report. It decreases after the report unless larger than anticipated stock price swing occurs. Thus buying short term options may end up losing money even if the stock moves in your expected direction.

To: Magrathea who wrote (221840)	12/31/2006 11:48:30 AM
From: neolib	Respond to of 275872

I know little about options, but one other possible thought is that games might be played for tax reasons between two hands of the same party, especially if the transaction spans the year end. What is legal vs. illegal can be somewhat murky, but a very large option transaction between related parties using the market to make it appear open, may meet the legal requirements. Just a WAG.