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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Don Westermeyer who wrote (807)	11/19/1997 12:47:00 PM
From: Michel Bera	Read Replies (1) \| Respond to of 164684

Don, I want to know much more about this market before starting on options. Even then, I think that I shall go for LEAPS. I feel more like an investor than a trader. But I agree with you that premiums must be crazy high for Net stocks, especially now with both Saddam and Competition entering. I am long on EGRP (and 20% in the red currently). Regards, MiB

To: Don Westermeyer who wrote (807)	11/19/1997 12:52:00 PM
From: Oeconomicus	Respond to of 164684

Don, hadn't looked this afternoon, but mid-morning the Jan 50 puts were 6-6 5/8 (couldn't get a quote on the 45s). Considering the volatility of the stock, the number of AMZN bears out there and the likely hedging by insider longs, the put premiums being high doesn't surprise me. But I'm gonna wait to see whether the normal pattern of newly optionable stocks rallying holds true here. If it does, or if it just sits here for a little while, the premiums should come down. There should be plenty of chances to make money off the downside here, so no big hurry. Bob

To: Don Westermeyer who wrote (807)	11/19/1997 5:44:00 PM
From: Bilow	Read Replies (2) \| Respond to of 164684

I'm showing the time premiums for the Dec calls and puts identical to within about 1/2. This is just as options theory would dictate. Otherwise an arbitrageur could clock some easy dollars. For instance. With AMZN at $52, Dec 50 Call = ZQNLJ = $6.125 = $2.000 + $4.125 Dec 50 Put = ZQNXJ = $4.250 = $0.000 + $4.250 So the time premiums are within 1/8, (and both quite high). Farther out: Jul 50 Call = ZQNGJ = $13.625 = $2.000 + $11.625 Jul 50 Put = ZQNSJ = $12.000 = $0.000 + $12.000 So the time premiums are within 3/8, and pretty high. If you think the time premiums are a little too dear, you can simply sell a (naked) call instead of buying a put. That will clock you dollars if either the stock drops or the implied volatility goes down. Unfortunately, your risk is unlimited if the reverse happens. More complicated trading strategies exists, but none of them look too good to me due to the high spreads. Maybe somebody else has some ideas.... -- Carl