Wednesday January 5, 2:45 pm Eastern Time
U.S. Options - BMC Software, General Magic busy
CHICAGO, Jan 5 (Reuters) - Volume swelled and implied volatility jumped on Wednesday in options on BMC Software Inc. (NasdaqNM:BMCS - news) as its shares slumped some 37 percent after an earnings warning.
Implied volatility for the January 45s rose to around 85 percent in brisk trading.
``All across the board they're (implied vols) probably up I'd say about 10 points,' said a designated primary market maker at Rathunas Trading on the Chicago Board Options Exchange.
He said players on Wednesday appeared to be evening up options positions but some might have sold out their stock and bought cheaper calls as a type of proxy for long shares.
``We had quite a bit of open interest, so I would guess it's mostly closing orders,' the DPM added. ``But it would seem to me if people are selling their stock out they might be buying calls' as a less-expensive way to stay long the stock.
Volume soared from its more-typical totals on Wednesday, and by 12:45 p.m. CST (1845 GMT) roughly 11,135 calls and 9,125 puts had changed hands on the three U.S. options exchanges combined.
``It's (volume) up huge,' the DPM said. ``We normally do like 1,200 to 1,500 contracts in a day. ... This is an aberration.'
At the CBOE, the January 50 calls slid 24-1/2 to 3-1/8 on interexchange volume of roughly 2,345 and open interest of 412. The January 45 puts rose 1-7/8 to 2 on combined interexchange volume of about 2,045 and open interest of 820.
The Houston-based business software maker on Wednesday said its earnings would fall short of Wall Street expectations because of weakness in the North American market.
BMC said it expects earnings of $100 million to $110 million, or 40 to 44 cents per diluted share. Analysts had expected 53 cents a share for the quarter, ended Dec. 31.
BMC shares fell 28-1/4 to 48-3/4 on Nasdaq market volume of 41.2 million.
Elsewhere, turnover also grew Wednesday in options on General Magic Inc. (NasdaqNM:GMGC - news) as a customer closed a big long put/short call position in the February 5s, said Paul Jiganti, designated primary market market with Susquehanna at the CBOE.
At the CBOE alone, the February 5.0 puts rose 5/16 to 1-3/16 on volume of 20,010 and open interest of 41,405, while the corresponding call dipped 5/8 to 1-5/16 on volume of 20,737 and open interest of 51,417.
``Volume normally is about 100 (contracts) a day,' Jiganti said of options turnover.
Implied volatility in the option has risen recently but drew less attention because of the stock's low price.
``Actually, (implied) vols have gone up a reasonable amount,' he added, noting that on Wednesday they stood near 180 percent. ``It was about 140-150 percent last week, but that makes very little difference in these 'teeny' options.'
Shares of the California-based developer of voice-enable Internet services slipped 11/16 to 5-1/16 on Nasdaq market volume of 6.0 million. The stock rose on Tuesday as well, also on heavy volume and a dearth of news, Jiganti noted. |
