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<DIV><FONT size=2><FONT face=Arial size=2>Omega TradeStation latest 1999 version
2000i, plus satellite dish and decoder sytem. Ideal </FONT><FONT size=2>for
anyone in Europe or USA.</FONT><FONT size=2>This is unused diskettes, complete
with manuals, instruction videos,</FONT><FONT size=2> control chip etc. Would
cost new $2600, will consider serious offers. Reason for sale, have
duplicate </FONT><FONT size=2>system at work. Please email me privately at <A
href="mailto:gledhill@xxxxx";>gledhill@xxxxx</A></FONT></FONT></DIV>
<DIV><FONT size=2><FONT size=2>Mark O.</FONT></FONT></DIV></DIV></BODY></HTML>
</x-html>From ???@??? Fri Aug 27 12:39:17 1999
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Date: Fri, 27 Aug 1999 11:35:32 -0700
To: droex@xxxxxxxxxxxx, GREHERT@xxxxxxx
From: Alexander Levitin <alevitin@xxxxxxxx>
Subject: Re: Options question
Cc: realtraders@xxxxxxxxxxxx
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Status:
With all due respect to your knowledge of options (and who could not
respect it) may I discuss one of your note?
I have found shorting LEAPS very profitable enterprise (make it just plain
profitable). LEAPS do fluctuate with the changes in underline securities.
And if underline moves in a trading range you could repeatedly sell LEAPS
at the top of the trading range and then repurchase it at the bottom.
The biggest problems I am seeing are (a) the luck of liquidity in the LEAPS
and (b) the luck of price levels for the options (the options do not
venture far enough from the price of underlining to construct some strategies.
Respectful Alex.
At 10:07 AM 8/27/99 -0500, THE DOCTOR wrote:
>Potentially you could both be correct or you could both be wrong. Options
>change
>in value for four reason. Time, price of the underlying, interest rates and
>volatility. It is true that most of the time erosion occurs late in the
>life of
>an ATM option, but it is not as true for ITM or OTM options. What you really
>want to do is go get a option pricing model and run a few simulations of ALL
>the
>inputs. The option GREEKS are essentially what you are looking to understand.
>
>THETA (time erosion)is greatest for short term options as you mention, but
>so is
>GAMMA(the rate of acceleration of the rate of change)so if you are wrong about
>direction and your short option goes into the money near expiration it would
>"hurt" you the most. So it is very difficult to generalize, because rarely is
>only one variable changing.
>
>Look at October 1987 as an extreme example. The market went down huge and
>volatility went up huge. You would have observed in October 1987 that
>people who
>wrote short calls(either covered or naked)were surprised to find that in many
>cases their short calls didn't decline in value by very much because of the
>increase in volatility.
>
>You also mention Leaps .... there is almost no reason to ever short a LEAP ..
>either covered or naked. Leaps have very little time erosion(THETA)and
>accordingly have very little(GAMMA) which makes an instrument that would most
>often be senseless to short. The only justification I've ever come across to
>short long options related to tax/timing issues or the need to sell a strike
>price that does exist in short term options.
>
>Lot's of web sites offer free option pricing models .. you might want to visit
>optionscentral.com for links to various sites.
>
>GREHERT@xxxxxxx wrote:
>
>> I have a question about options. I'm debating a point with a friend.
>>
>> If you sell a call to make a profit on the premium shrinkage, I understand
>> most of the shrinkage occurs in the last 30 days of the call. My friend
says
>> this is true but if the stock moves away from the strike price, the premium
>> goes away very early.
>>
>> Question: (1) is this true? (2) is it the same for LEAPs?
>>
>> Thanks for your consideration.
>>
>> Jerry Rehert
>
>
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