U.S. OPTIONS/Paychex vols rise, puts well bid
Wednesday March 3, 6:31 pm Eastern Time
CHICAGO, March 3 (Reuters) - Puts on Paychex Inc. (Nasdaq:PAYX) were well bid on Wednesday as the underlying stock sank to its lowest price in six months.
The stock, which has lost about a quarter of its value since the beginning of the year, was down 1-11/16 to 38-9/16 at 1332 CST/1932 GMT.
More than 1,400 puts traded by mid-afternoon, while just 266 calls traded hands on the Philadelphia Stock Exchange.
''Puts were active yesterday too. I don't know if it's because people think bad news is coming or if it's just because the stock made a new low,'' said Larry McMillan, president of options advisory group McMillan Analysis.
''But at this point, it's probably better to just short the stock than to buy the puts because the (downward) move has been so slow and choppy,'' he added.
Implied volatility, a key factor in determining options prices, rose to around 72 percent for the March 40 contract from an average of around 47 percent, Paul Foster, investment strategist and editor of 1010WallStreet.com, noted.
On the Chicago Board Options Exchange (CBOE), traders noted what appeared to be a rollover involving the January 40 LEAPS that expire in January 2000 and the April 40 calls on Bell Atlantic Corp. (NYSE:BEL - news).
Michael Schwartz, chief options strategist with CIBC Oppenheimer, reckoned that the trade was probably rolling a covered write or long position out of the April calls and into the LEAP.
The January 200 LEAPS and the April 40 calls, each registering more than 12,900 contracts, were by far the most actively traded options contracts on the day. |
