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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (9077)	7/6/1998 9:37:00 PM
From: umbro	Read Replies (3) \| Respond to of 164684

Skeeter, something weird happend with AMZN options. They killed the implied volatility in one fell swoop. The current implied vol. is about 77%, and it was over 102% at the beginning of the day. It means an Oct 100 put that was selling at 10 suddenly dropped to 5. This cuts both ways. The calls are now a lot cheaper also. What does that mean? It should mean that the market's expectation of AMZN volatility has dropped. Which if, correct means the market is predicting that AMZN trades in a much narrower range here than it has been (say +/- 20% or from 114 to 170 over the next 20 trading days). It could also mean simply that the market for calls and puts has dried up, and the market makers want to take back some money from traders that speculated on out of the money options. In any event, I haven't seen vols. collapse like this in the heat of the battle, so to speak. Usually this kind of thing happens just after a big announcement (like in the biotech world, where everything hinges on an FDA announcement). bottom line is the stock didn't move much in the final hours, but the out of the money options lost half their value. By the way, the current implied vols. are more in line with historic (ie, a couple of month ago) vols. for AMZN, now. Any options traders out there got a perspective on this? Skeeter wrote: the volatility is way too high