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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Bill/WA who wrote (44392)	1/23/1999 4:21:00 AM
From: Skeeter Bug	Respond to of 132070

bill, the pricing is strange. i will say that paying $1.50 for a june put that requires a stock to drop 70% to become in the money is awful expensive... for example, i paid $2 for a nvls june $40 put when it was $55. a 25% drop would have put me in the money. you needed a 70% drop plus for only 25% less money. you paid too much, imho. i admire your guts, though ;-) however, the darn stock has gone in your direction where nvls hasn't gone in mine. if you thought june 10s at $1.50 were cheap, you must love june 10s at $0.82 when the stock is $13 less expensive. i am at a loss except to say it looks like you where initially gouged prety bad.

To: Bill/WA who wrote (44392)	1/23/1999 10:13:00 AM
From: Don Lloyd	Read Replies (2) \| Respond to of 132070

Bill (Can you, or would you explain what's happening here, cause I sure can't find it in McMillan's.) An out of the money option is largely influenced by implied volatility, essentially an expression of the expectation of the possible trading range of the stock between the present and expiration. After the IPO was brought to market, a major portion of the uncertainty in the stock price action was removed, and it would only be expected that the pricing of the options would subsequently reflect the lower expectation of volatility. In addition, you need to look at the prices (especially the time value portion) of the call options over the same period. The value of the call options and the put options are not independent, as an arbitrage can be performed using long or short stock if one option or another becomes priced significantly out of line. Regards, Don

To: Bill/WA who wrote (44392)	1/23/1999 2:33:00 PM
From: Knighty Tin	Respond to of 132070

Bill, Sorry, can't explain it. The pricing looks totally insane to me. I think it is fairly priced now and was overpriced earlier. Time compression doesn't account to anything in that short a period. I've gotta tell you, it looks like a McMillan would say that the volatility premium has been taken out of the stock. But it makes no sense to me. I've never seen anything like it except in the days of the OTC options market in the early 1970s. And that was just sellers being crooks. MB