US OPTIONS -SGI vols ease from peak, volume swells
CHICAGO, June 23 (Reuters) - Implied volatility in options on Silicon Graphics Inc.
(NYSE:SGI - news) eased back from an intraday peak on Wednesday, but volume remained
robust.
Implied volatility in the American Stock Exchange-listed options had risen to about 90 percent, from Tuesday's
80-percent area, before edging back down toward 80 again.
The historical one-month volatility of the stock is about 39 percent.
Paul Foster, investment strategist with 1010wallstreet.com, said the initial volatility rise reflected good call buying
that was probably sparked by vague, recurrent buyout talk.
''There have been vague takeover rumors floating around, but there are also rumors that SGI's business has
improved substantially,'' Larry McMillan of McMillan Analysis Corp. wrote in options commentary Wednesday.
SGI spokesman John Cristofano said the company had not made any announcements in the last two days and
declined to comment on the recent rumors.
A month ago, implied volatility popped up and volume increased in SGI options, but no major alliance or takeover
news materialized.
On Wednesday, the stock stayed on the plus side despite a subsequent downward retracement in the vols that
followed some sizable sales in the August 17.5 calls.
''The crowd probably figured that's the end of the takeover talk,'' Foster added of the return downward in the implied
volatility. ''The angle here is it might be more of an alliance than an outright buy.''
The August 17.5 calls firmed 1/4 to 1-5/16 on volume of 8,473 and open interest of 1,804.
Turnover remained brisk for a second consecutive day, with roughly 11,993 calls and 4,593 puts changing hands. On
Tuesday, call plus put volume totaled about 9,400 options, well above the more typical 1,400-contract level.
Shares of the California-based technical computing firm ended up 1 at 15-9/16 on New York Stock Exchange
volume of 2.8 million. |
