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To: Rational who wrote (5195)	12/29/1997 6:41:00 PM
From: LRS	Respond to of 27307

This stock will be lucky if it is still in the 40s by April! I never thought that this baby could correct by as much as 50%, but my prediction is for the 30s in March. The trading in the stock and the options (like you said) smells rotten to me...(well sweet for me and rotten for whoever may be establishing long positions at these levels.)

To: Rational who wrote (5195)	12/29/1997 6:41:00 PM
From: IKM	Read Replies (1) \| Respond to of 27307

Nah. The further in the money, the smaller the time premium. Don't forget opportunity cost of the money you tie up by buying deep in the money calls. Options are all about leverage. Potential percentage gain is greater for the closer to the money option and total potential loss is less. Note there is still a spread for the specialist.

To: Rational who wrote (5195)	12/29/1997 8:58:00 PM
From: Oeconomicus	Read Replies (1) \| Respond to of 27307

the call writers (brokers) are promoting April 40 calls at a discount of $6. Sankar, near-the-money options generally have much higher time value than deep-in-the-money options, so I wouldn't really consider it a discount (not without checking the theoretical values that is). Also, the deep-in-the-money calls provide a better hedge for a long position where you are trying to lock in but defer realization of a gain and would be the preferred vehicle for that purpose. On the other hand, near-the-money or out-of-the-money calls would be the better choice if you are generally bullish on the stock and want to keep it beyond the option expiry, but want a little protection and to soak up some time premium to boost income. Bob

To: Rational who wrote (5195)	12/29/1997 9:11:00 PM
From: Mama Bear	Read Replies (2) \| Respond to of 27307

Sankar, you're not accounting for the time premium. As far as selling deep in the money calls it's just a way to short the stock, but only put up $29 to buy the call rather than 34 1/2 to short the common. The 40 calls will move almost dollar for dollar with the stock, the 60s will not. If the common moves to 60 the 40s will drop to close enough to 20, while the 60s will still fetch ~4. Gotta pay for the time when they're close to in the money or out of the money. You just need a little better understanding of Black Scholes. Barb!

To: Rational who wrote (5195)	12/31/1997 8:40:00 AM
From: santhosh mohan	Read Replies (1) \| Respond to of 27307

<<I noticed that April 60 Calls traded for $15, and April 40 Calls for $29. There is a difference of (60+15)-(40+29) = $6. If at all, April 60 calls should be cheaper because a price of $60 for YHOO is less likely than a price of $40; everything else is inherently the same for both contracts because it is the same underlying stock. >> Sankar, I am still trying to figure out this statement. The time/speculative value is highest at or near the money. Deep-in-the money have little of this. Also, nobody has discussed that the call buyers especially of deep-in-the money options may be short-sellers trying to hedge. In fact, this may be a more logical hedge than the same calls being written by long positions.