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Technology Stocks : General Magic -- Ignore unavailable to you. Want to Upgrade?

To: Iraklis who wrote (2383)	6/23/1998 10:08:00 AM
From: Ray Rueb	Read Replies (1) \| Respond to of 10081

RE: pricing of GMGC options << BTW - I've priced the July and August 15 calls. If GMGC trades on Wednesday for 15, then I expect the JULY 15 Calls to trade for 1 5/8 to 2 1/8. where as the August 15 Calls should trade between 2 1/2 to 3 1/2. These calculation are based using the Black Scholes method and volitility estimates (based on historical data) of 1.0 and 1.5 respectively. >> Black Scholes is good for estimating the VALUE of options, not the PRICE. Remember, I'm going to be in the market buying 300 contracts of the July 15's. Supply and Demand will take over and I'll personally push the price up since I'll be doing about 20% of the trades for the day. Now if the position premium on the options is too great, I'll just buy the stock on margin, like I've been doing. Good luck!