This morning's 43 dollar drop in GOOG's price is an object lesson in how relatively volatile stocks have expensive premiums. The July put holders (and with today as expiration, that was a very risky bet!) were rewarded by the stock's drop, true:
But look how much more severely the call holders were punished.
There's nothing shocking here, of course. Option buyers are buying a premium based on the uncertainty of the future. Once that uncertainty is past, those premiums collapse, and only the greatly improved intrinsic value (that is, GOOG's $43 plunge) shores things up for the put holders.
I see it's dropped another $5 just in the couple of minutes it took me to type this. What a day………
