Our IBM Nov 95 calls looked brain-dead when I left for breakfast at a Berkeley eatery yesterday morning. What a difference 90 minutes can make! The stock had begun the morning on weakness, trading 40 cents beneath the previous day's close, and the options -- at one point more than $3 out of the money and with just a few days left on them -- were comatose, offered at 0.05 with no bids in sight. On returning from pancakes and eggs at the Sunny Side Caf�, I'd expected to find stocks mired in ugliness, but imagine my delight and surprise at discovering the blue chip index up nearly 90 points. The Nov 95 IBM calls had barely budged, but so what. With three days remaining for them to push into-the-money, and the stock sitting less than $2 below the strike price, I'd much rather be long this option than short it. (Click on table to enlarge) The November 95 calls ended the day on an 'arranged' sale at 0.07, even though my Black-Scholes model had them worth twice that. But you don't need a model to tell you that they represent a greater risk for the short-seller at this point than for the buyer who would be on the other side of the trade. The most the short seller could possibly make would be $7 apiece; but if Big Blue were to pop to, say, $96 between now and Friday ' hardly inconceivable, given the way the stock has surged on some recent days -- he would be out $93 apiece for them. Which side of that bet do you want to take? Now, that doesn't mean you should rush out and buy fifty Nov 95 calls this morning, since they still figure to be no better than a very
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