Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Dulane U. Ponder who wrote (13641)	1/15/1998 5:47:00 PM
From: Spots	Respond to of 97611

Slightly off topic: BTW, DU, did you catch the latest "Fact and Comment" by Steve Forbes (Jan 20 Forbes) re IMF? If not, read it on the Forbes web page. Regards Spots

To: Dulane U. Ponder who wrote (13641)	1/15/1998 9:22:00 PM
From: Seyda	Read Replies (2) \| Respond to of 97611

Dulane, re: <<I would be very interested in knowing your method, at least in some general sense>> Are you asking about my earlier post? There is not much to it. You may use the data from 206.7.107.50 Prepare three columns. Column 1 shows the cost per share for options. The following columns are obtained from the open interest as follows: Column 2 sum of the call-OI at the row header strike price and the lower strike prices (in terms of dollars). Column 3 is similar: Sum of the put open interest at the row header strike price and the higher strike prices (in terms of dollars). By nature, the first column is expected to be a list of increasing numbers and the second will be decreasing. The idea is to find the first column value where the two set of number (col 1 and col 2) intersect. You can do this in the last column, which starts with fractions and grows to large numbers. Using a regression analysis in an Excel spreadsheet or even with visual inspection you may find the approximate point. Since in an efficient market <<ggg>> option prices reflect expectations of players, as you get closer to the expry date the bets ought to converge to the equilibrium price within a reasonable tolerance. Common sense tells that the accuracy will deteriorate as we get distant from the target expry date. I suggest using this procedure as a gauge for risk expectations of market players rather than a prediction tool for the prices. I hope this helps. Happy investing. Regards Seyda