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Gold/Mining/Energy : Ensco International Inc. (ESV) -- Ignore unavailable to you. Want to Upgrade?

To: Douglas V. Fant who wrote (728)	2/2/1998 2:50:00 AM
From: Czechsinthemail	Read Replies (2) \| Respond to of 2005

Doug, Though high call premiums may be a reflection of bullish sentiment, more likely it is an expectation of high volatility. Because of option conversion strategies that allow creating synthetic puts and calls, put premiums will also be high. Essentially the mechanism for this is that you can create an equivalent position by purchasing stock plus puts that you get from purchasing calls (or an equivalent to purchasing puts by shorting stock plus buying calls). Whenever you find significant buying of either puts or calls sufficient to boost the premiums, this balancing mechanism will work to increase the premium of the other options. Hope this helps, Baird