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.

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

To: LTK007 who wrote (830)	5/12/1998 9:36:00 AM
From: William G. Murray	Read Replies (1) \| Respond to of 2241

Max90, Each contract is based on 100 shares. Therefore, 100 contracts at 1/16 will cost you .0625 X 100 (shares per contract) X 100 contracts + commission, or $625 + commission. If the stock closes Friday at $65.500, your May 65 calls are worth 50 cents each. That is $65.500 (stock price) - $65 (option strike price) equals 50 cents each. Your 100 contracts are worth $5000 less commissions. On expiration Friday, any close on the stock at or below $65 makes your calls worthless. The miniscule 1/16 current value on the options is time premium. Hope this is of some help. B.M.

To: LTK007 who wrote (830)	5/13/1998 12:45:00 AM
From: Madpinto	Read Replies (1) \| Respond to of 2241

Max, these questions have real merit. As a matter of fact, it gets a little complicated. First of all, 100 calls at 1/16 will cost $625 plus your commissions. The options will go out worthless if the stock stays below $65 at expiration. However, a rumor leaked this week could make your calls go up in value even if the stock never trades above $65! It all comes down to what another investor (or mkt maker) is willing to pay for them. Accordingly, the stock moving to $65 1/2 does not necessarily mean you will be able to sell your options for $1/2 each (intrinsic value). The bid may be below the current intrinsic value. You could sell stock (at any price over $65) and exercise your options, but you would incur additional commissions. The most you can lose is the original purchase price unless you exercise the calls. May expiration is Saturday, but you have until a short time after the close on Friday to decide if you want to exercise your options. Your firm will automatically exercise them for you if they finish 3/4 point or more in the money (over $65) unless you instruct them otherwise. Mike