sure


To: John Arnold/HOU/ECT@ECT, Timothy M Norton/HOU/ECT@ECT, John 
Griffith/Corp/Enron@Enron, Dutch Quigley/HOU/ECT@ECT
cc:  
Subject: Re: SMUD deal Asian options  

John,

Thank you for your flexibility regarding the asian option we purchased from 
you (average Feb-Aug GD HH settle).  Unfortunately, our customer would like 
to settle on 7 days, using the preceding day for any day for which Gas Daily 
is not published (i.e., Friday prices would be used for Saturday and Sunday) 
- so I know it's not your preference, but I need to take advantage of your 
offer.

Regards,
Gary
x31511





John Arnold
10/08/2000 02:05 PM
To: Gary Taylor/HOU/ECT@ECT
cc:  
Subject: Re: SMUD deal Asian options  

I can do it either way but would much rather just make it the simple average 
of prices, 5 per week.



   
	
	
	From:  Gary Taylor                           10/05/2000 07:25 PM
	

To: John Arnold/HOU/ECT@ECT, John Griffith/Corp/Enron@Enron
cc:  
Subject: SMUD deal Asian options

John(s),

How will the Asian options we purchased from the gas desk settle with respect 
to weekends... will the average of every day's gas daily settle mean the 
average of only the days on which Gas Daily is published?  or will it triple 
count each Friday's or Monday's price to account for the weekend (with a 
similar calculation on weekends).  I assume it is the former, not the 
latter.  Is this correct?  Are you indifferent if we want to switch to the 
latter?  Intuitively, it would seem to me that at this point, it wouldn't 
matter (because Friday or Monday prices are just as likely to be above the 
average as below the average), but you're wearing the risk, not us - so let 
me know.

Frankly, we don't have a preference as a desk, except that we need the 
settlement to be consistent with the deal we are entering into with SMUD.  
SMUD has questioned our calculation and I need to know how much I need to 
argue for one or the other.

Regards,
Gary
x31511