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To: arthur pritchard who wrote (89805)	1/19/1999 9:32:00 AM
From: BGR	Respond to of 176387

Arthur, Options always have time premia, though it decreases over time. The rate of decrease of the price of the option is given by the options theta. An example from Hull: Say stock price is 305, strike is 300, dividend yield is 3%, interest rate is 8% and volatility is 25%/annum, then the options theta is -18.51/annum (ignoring the calculation as the CBOE options calculator does it for you). This means that everything else remaining the same, in 1 year the option price will decrease by 18.15. The theta increases for LEAPS as time goes on. Hope this helps. -Apratim.