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To: redwood who wrote (6572)	8/8/1998 10:42:00 PM
From: MrGreenJeans	Respond to of 42834

Redwood <<i'm a little unclear about losing my premium on the option-do you lose a little premium every day that you hold an option or only if it is going in the wrong direction- any opinion on whether oct or nov would be better months-strictly from a technical position[say i bought next week] an not whether i was right about timing? ...thanks...redwood>> If you are long an option time value, theta, works against you. Each day that passes is a day closer to expiration. Therefore, you are short theta. If the price of the equity does not change you lose time premium as well as another day passes without anything happening. Time premium is lost faster the closer you get to expiration. If the option does not expire in the money you lose the premium paid or the amount paid to purchase the option. I make it a policy always to buy the furthest option I can to expiration. Your direction may be correct but you need time on your side as much time as you can as far as I am concerned. So I would purchase the November or later options. Of course, the further out you go the higher the price of the option will be since you are purchasing more time.