Re: Year 2k - for better or for worse

Scott Badger (wbadger@psyberlink.net)
Thu, 24 Apr 1997 11:34:49 -0500

I'm certainly no expert but my understanding is that if I somehow have the
ability to accurately predict a volatile market move tomorrow, then I am
rewarded ny having to pay a smaller premium for the option. If, on the
other hand, I want to have the luxury of betting that something volatile
will happen over the next 30 days, then I must expect top pay more for the
option. At some point, the increase in premium outweighs to potential
profit. My guess is that the media will work the public into a selling
frenzy and the market will plummet whether it's rationally based or not.
Besides options, you might consider selling commodity contracts on index
futures. You could ride the wave longer once the downtrend really begins.

-----Original Message-----
From: Alexander 'Sasha' Chislenko <sasha1@netcom.com>
To: extropians@extropy.com <extropians@extropy.com>
Date: Friday, March 27, 1998 9:09 PM
Subject: Re: Year 2k - for better or for worse

>At 05:24 04/24/97 -0500, Scott Badger wrote:
>>You might want to consider stock index options. You can bet that the
market
>>will climb, fall, or either over a certain period by at least a certain
>>amount. You would probably want to purchase these options as early as
>>possible, but the earlier you buy - the higher the premium. Read up on it.
>
>Why would you want to buy earlier if you have to pay a higher premium?
>Actually, the premium grows if the common model of the market stays the
same.
>If today everybody is sure that the market volatility is going to be
limited,
>but a week from now everybody starts expecting huge market swings, then the
>premium will *increase*.
>
>---------------------------------------------------------------
>Alexander Chislenko <http://www.lucifer.com/~sasha/home.html>
><sasha1@netcom.com> <sasha@lucifer.com> <sasha@media.mit.edu>
>---------------------------------------------------------------
>
>