US OPTIONS FOCUS/Micron puts busy before earnings
Reuters, Thursday, September 18, 1997 at 16:17
CHICAGO, Sept 18 (Reuter) - Investors have been buying up
Micron Technology Inc (NYSE:MU) put options recently ahead of the
company's quarterly earnings report scheduled for release
Monday, traders said Thursday.
"A lot of people basically are buying October and selling
September (options) because Micron is going to report earnings
Monday," said Rob Kovell, a lead market maker in Micron options
at the Pacific Exchange.
"So people are selling September to let that go out before
the earnings and then they'll obviously be long the options
going out," he said.
September options expire at the end of the week.
Kovell added that most of the activity was on the put side,
suggesting investors are gearing up for a downside move in the
stock.
According to First Call, analysts' consensus estimate for
Micron's fiscal fourth quarter profit is $0.47 a share, up from
the $0.09 a share earned in its 1996 fiscal fourth quarter.
In late trading Thursday, Micron shares were down 1/4 at
38-7/8 on consolidated volume of about 4.8 million shares.
The most active Micron option was the October 35 put, which
traded about 7,775 contracts. It had open interest of about
4,800 contracts.
The October 45 put, which had open interest of 15,780
contracts, traded 1,805 and the October 40, with open interest
of neearly 12,000, traded 1,025.
"There's mostly been a lot of put buyers over the last
couple of weeks," Kovell said. "October put buyers have been
huge. Mostly I would guess there's speculation on the way the
earnings are going to come out."
Among Micron calls, the October 35 traded 6,920 contracts.
It had open interest of about 1,200 contracts. The September 40
call traded 1,630 contracts and the October 45 call traded
1,225.
Kovell said implied volatility in the Micron October
options was up near 70 percent. Over the last 20 trading days,
volatility has averaged about 38 percent.
Elsewhere, another earnings-related stock drew heavy
options activity.
Nike Inc (NYSE:NKE) options were busy ahead of the footwear
maker's fiscal first quarter earnings, due after the close.
"There's just a lot of activity" in Nike options, a market
maker at the Pacific Exchange said, adding that some investors
were buying the 50/55 strangle, which consisted of buying both
a call and a put. He added that the October/September 50 put
spread was also popular.
The Nike October 50 put traded 3,445 contracts and the
September 50 put traded 5,050. The September 55 call traded
5,680 contracts and the September 55 put traded 4,760. In the
October series, the 55 put traded 3,375 and the 55 and 60 calls
traded 2,525 and 2,340 contracs, respectively.
Nike shares gained 1-5/8 to 54-1/8 in heavy trade.
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Copyright 1997, Reuters News Service |
