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Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe) -- Ignore unavailable to you. Want to Upgrade?

To: ---------- who wrote (635)	1/30/1998 2:38:00 PM
From: Esteban	Read Replies (2) \| Respond to of 2241

Doug, I'm saying I think the MAR 17.5 should be priced higher than 3 3/8 to be on a more equal footing with the MAR 15 at 1 5/8, not lower. This would make the results more even in most scenarios, and I don't understand what is causing the discrepancy since with the higher implied volatility I would think it would command a higher relative premium. The price of this option is too close to intrinsic value at only 3/8 above the value of 3. From the limited research I've done on this point, this option price relationship between the two strikes seems typical. I'm coming from the point of view of one who likes the beaten down stock and wants to sell a put and be assigned to write a covered call. That places the put premium in my pocket to start the process as opposed to just buying the stock. A farther out of the money put option brings in more premium and increases the likelihood of being assigned in the event of a rebound that would make call writing attractive. But in the absence of a very substantial rebound, the 17.5 is a losing bet compared to the 15. Why this pricing ????? Thanks for your help. Esteban