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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (4617)	3/10/1998 2:42:00 PM
From: Mongo Slade	Respond to of 18691

Re: Random Walk Options pricing models usually assume that stocks follow what is called an Ito Process or some variant. Basically what this is for stocks is a random walk with drift. However if we are modelling interest rates it is often times more accurate to use a random walk model with mean reversion. Even though studies tend to show that option valuation models do not work very well there are many professionals which take them very seriously becaue it is the best gauge for value they've go. On another topic. you mentioned that you are only interested in valuation arguments. I thought that the ability of advertisers to eventually profit from advertising on YHOO is fundamental to YHOO's long term valuation. You simply cannot use valuation arguments to explain this current price run up. Mongo