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Technology Stocks : Zitel-ZITL What's Happening -- Ignore unavailable to you. Want to Upgrade?

To: Deep Digm who wrote (13227)	12/9/1997 12:14:00 PM
From: Lyle Abramowitz	Respond to of 18263

Deep, I've been computerless for a few days--now I'm sort of back on-line. If I understand your post, you are interested in using the option price calculators which are available at StockSmart and other web sites. I am somewhat familiar with these tools and am interested also in the underlying mathematics. They are of some use in selecting options, but IMO the choice of the underlying stock is still the most important factor. That said, option pricing models can help in (at least) two respects. The models can estimate a theoretical price based upon the historical price volatility that can then be compared to the actual price which may suggest that the option is "mispriced." "Mispriced" would actually refer to market sentiment or anticipation such as takeover speculation. Of more use to me is to do "what if"--see how a given option will behave over time with different prices for the stock. This can help to determine buy/sell points and also give an idea as to whether it makes sense to continue to hold a position, roll it forward or sell. Hope this helps. Regards, Lyle