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Technology Stocks : America On-Line (AOL)
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To: Going Short who wrote (34423)11/24/1999 12:24:00 PM
From: Brian Malloy  Read Replies (2) of 41369
 
U.S. Options - Profit-taking hits AOL after split

CHICAGO, Nov 23 (Reuters) - Speculators sold calls on America Online Inc. <AOL.N> to take profits Tuesday and implied volatility in the options slumped in the wake of the company's two-for-one stock split.

Implied volatility for the December at-the-money AOL options was scaled back to 56 percent from 60 percent before the company's latest stock split became effective Monday.

The split, declared Oct. 28, is the seventh in seven years for the No. 1 Internet service provider. Although speculative call buying heated up and implied volatility rose in typical fashion ahead of the split, activity in the options was more subdued this time around because many investors by now have become savvy to the usual trading patterns, said a trader with TFM Investment Group, the designated primary market maker in AOL options at the Chicago Board Options Exchange.

"It's been busier in the past. This has been a relatively calm split," the market maker said.

Investors generally look for shares to rise immediately following a split. AOL shares were up 2-5/16 at 83-7/16 on Tuesday afternoon.

While selling of December calls across a variety of strikes constituted the bulk of the session's activity in the options, some speculators had already begun to take profits on Monday by selling out of their previously purchased calls, the market maker said.

"People are getting smarter. Some of the smarter guys sold yesterday," he said.


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