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Strategies & Market Trends : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: Peter V who wrote (37100)	3/20/1998 5:20:00 PM
From: ViperChick Secret Agent 006.9	Read Replies (1) \| Respond to of 58727

Peter this is a fine art..... and because of different factors involved in pricing options...there is not a clear cut analysis to say...if the stock goes down to this the option will be worth that with the comfort of knowing with certainty that this is where it will be there is the Black Scholes model to tell you what options should be worth...but too many variables can effect. Electric was doing a study on that with one of his theories...dont know what happened to that. you always...well usually... want to close the position out .... so the numbers I gave you are based on closing the position out at the close today there are sometimes when you can do an arbitrage kind of thing for 3/16 (Rubble is the expert on that) but I dont even bother with looking for those kind of things.... one time last year because of a brokerage houses fault....I had to excercise CCI puts because they were in the money that I had and then had to buy 4000 shares of the stock on monday to cover...that was not a fun weekend and i was in fear that there would be a buy out rumor and the stock would jump 20 points on Monday morning... yes the old timers on this thread still remember that disaster... after that I never wait until the last few minutes to close a position. there are all kinds of scenarios..... if the stock had dropped to 20 you could close that out..and then hope for a bounce and have your 25's worth something but when I figure out potential of a spread I dont do that...I figure the top one will be worthless and will return no money. as far as in between the spread...the figure of profit I gave you last night was for the stock around 24...and remember that each day that goes by..the time premium lessens... so if the stock stayed at 24 for a week...the option would STILL be worth less...and thus buying it back cheaper.... Spreads dont stay constant...... just look at a spread...most dont have 3/8 or even 1/2 risk... best way to track this is to watch a volatile stock that has volatile options...say INTC or any one will do that is the best way to understand all the interaction that takes place