 BBS: Channel 1(R) Communications [ATI 2400 v.42]  617-354-7077
Date: 02-18-93 (14:45)              Number: 13469
  To: KIRT MCALEXANDER              Refer#: NONE               
From: JACK HOCH                       Read: NO                 
Subj: OPTIONS REPOST     3 OF 3     Status: PUBLIC MSG
Conf: Finance (52)               Direction: FORWARD

Ok, we finally have the end in sight....(are you still sane???) <G>.

Here are some general conclusions:

1) In-the-money options are less risky than out of the money
   options because in-the-money options possess "intrinsic value".

2) Your % gains and losses with in-the-money options are normally
   less than those for out of the money options.  Less risk and less
   reward.

3) The further out in time you go for a given strike price, the more
   expensive the option, but the slower the rate of change of price of
   the option.

4) The "decay rate" of the "time value" for options increases as
   you draw closer to option expiration.

5) Volatility of the underlying stock greatly affects the premium
   (time value) above the strike price one pays for a given option
   on a stock.  The more volatile the stock, the more expensive the
   option premium.

6) Options = leverage.  Using options, you stand to profit or
   lose close to the same amount as if buying the stock, but you're
   using much less principal.  However, the odds of "winning"
   with option buying is less because of the time constraints.

7) Different investors use the leverage provided by options in
   different ways.  Combining in-the-money and out-of-the-money
   options allows an investor to define his/her risk.

8) The most important aspect of option buying relates to the
   quality of the underlying stock.  Analyze the stock first, then
   try to find the option which most suits your situation and risk
   tolerance.

Well, I'm fried.  I can't believe I went on like this for 3 entire
messages, but if it does anyone any good then I'll feel vindicated.
Let's hope the stock market isn't as boring in the future as it
was today! <g>.              
