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To: TigerPaw who wrote (115979)	4/10/1999 1:16:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

No, it depends on the option. Deep in the money options tend to behave like the stock (their delta approaches 1), but out of the money options tend to move more slowly relative to the underlying stock. Example (I'm making these numbers up): A June 10 might drop on almost a point for point basis with the underlying stock, but a June 50 might move only 25% as much as the stock moves. The ratio of the movement of the option compared to the movement of the stock is called the delta. The deeper the option is in the money, the greater the delta up to a maximum of 1.00 TTFN, CTC

To: TigerPaw who wrote (115979)	4/10/1999 2:23:00 PM
From: BGR	Read Replies (2) \| Respond to of 176387

TigerPaw, If you are talking of calls, in general, no, as the volatility usually shoots up with a strong drop in equity price. For example, if DELL drops to 40 (say) but the implied volatility (think of this as the riskiness inherent in the equity, which will grow because of the sudden fluctuation) increases from the present 65% to 70%, the call prices will remain almost unchanged. The put price OTOH will get a double booster dose, so it will increase in a phenomenal manner from the twin engines of lower prices and higher volatility. If I had the mentality of a put seller (given that I consider DELL to be in a very strong position) I would probably make a killing by selling puts (even if DELL equity price remains the same, simply as the volatility subsides). A few days afterwards (I believe with INTC earnings out) the uncertainty will decrease and so will the implied volatility. If the equity price is still depressed, then would be the time for the options to fall dramatically. -BGR.