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Technology Stocks : NCR Corporation: An AT&T Spinoff -- Ignore unavailable to you. Want to Upgrade?

To: waitwatchwander who wrote (272)	8/14/1998 3:57:00 PM
From: judge	Read Replies (1) \| Respond to of 379

Jan99 25 call The intrinsic value = the price of the stock(31)- the exercise price 25).. Another example, Since the option gives you the right to buy ncr at 25, you could turn around and sell ncr stock at 31, the intrinsic value 6 dollars.. The reason the jan99 25 call sell for 7.25 is the time value.. Basically the closer you get to the call date the lower the time value of the option will be. Also, more volatile stocks will have a higher time value(premium) than a less volatile stock.. The ncr jan25 call will move just like ncr stock.. for example if ncr goes up 2 dollars.. the option will go up two dollars. The difference is the option is only 7 dollars,, options are a nice way to leverage money.. If ncr hits 40, jan 25 options will be 15 dollars a share plus the time value amt.. not bad.. if ncr hits 35 the options will be worth 10 dollars.. not a bad return considering they are at 7.25 right now.. Risk wise.. options are extremely risky.. if ncr drops below 25 when the options expire you lose your investment.but nothing more.. But its risk vs reward.. I'll post back in Jan to see how much the Jan 25 call options are selling for.. If your interested in options read a couple books and make some mock trades.. options are best bought on companies you have been following for years.. j