NetNews Usenet Archive 1993 #3/NN_1993_3.iso/spool/misc/invest/16874

Internet Message Format | 1993-01-23 | 1.6 KB

Xref: sparky misc.invest:16874 misc.taxes:4250
Newsgroups: misc.invest,misc.taxes
Path: sparky!uunet!mailgate.mobil.com!etpeters
From: [e-mail] (E. T. Peterson(Eric))
Subject: Re: Real Life PUT question
Message-ID: <[e-mail]>
Sender: [e-mail]
Organization: Mobil Exploration & Producing Technical Center(MEPTEC), Dallas.
References:  <[e-mail]>
Distribution: usa
Date: Fri, 22 Jan 1993 20:23:55 GMT
Lines: 24

In article <[e-mail]>, [e-mail] (Tim Gates) writes:
|> I'm a little confused by a current PUT price of an option and the underlying
|> stock price.  Can someone address this?
|>
|> A stock, lets call it XYZ, is trading at 9.  The current month (FEB) PUT
|> price, strike price being 15, is 1 1/4.
|>
|> This is confusing in that the option has an intrinsic value of 6 points.
|> Why isnt the 15 PUT option price reflecting this?

You are right that something is strange here.
There must be a typo in your source for the stock price or the put
price.  The put should sell for at least 6.

Another possibility is that the stock had a recent 2-1 split, and the
strike of 15 is an old strike that has not yet been corrected to 7.5
in the quotes.  Then the 1 1/4 price would be reasonable.

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Eric Peterson                  The sooner you fall behind,
Research Geophysicist          the more time you'll have to catch up!
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