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To: Geoff Nunn who wrote (72741)	10/17/1998 10:44:00 AM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Geoff, the spreads are even greater on lower priced options. For example, I am wanting to write Nov 50's against my TLAB position. The last prices were 1 7/8 x 2 1/8. But what I really want to point out is the huge premium here. With the underlying stock trading at 44 15/16 you receive almost 4.2%. Annualized, this comes to a little over 63% (neglecting commissions). The trade off is the limitation on potential gains. Since you receive the cash for the sale of the option at the same time you buy the stock (I'm assuming a coupled transaction here)the effective price is lowered to 43 1/16 with the largest potential sale of 50 in 1 month. Neglecting commissions, that works out to a capped gain of a little over 16% in one month, or over 500% annualized. So, the limitation on potential gain doesn't seem to be all that much of a stumbling block. TTFN, CTC