Weird call buying here today, Shack. The size is interesting.
From Dow Jones
[Back] 2975 DJ 23-May-01 at 15:30:00 15:55 Page
DJN =DJ Options Report: Investors Snap Up Calls In Nortel,
Pride
NEW YORK (Dow Jones)--Nortel Networks Corp. and Pride International Inc.
were among the companies to attract the attention of bullish investors
Wednesday, amid the continued hedging and selling in the options market.
Investors opened new positions and focused on buying Nortel's longer-term
calls, and the just out-of-the-money January 17.50 calls that expire 2002
traded more than 35,000 contracts, compared with open interest of 5,372.
It isn't immediately clear what drove the heavy call buying, but these
investors were willing to pay about $270 to lock in - until next January -
the
right to buy 100 shares of Nortel stock for $17.50. Perhaps these investors
expect the economy and Nortel to revive by that time. Nortel also had won an
exclusive contract to supply equipment for a network in the Mediterranean
sea,
and while the initial contract is estimated at just $15 million, the scope
might be expanded as additional loops are planned for other surrounding
countries starting in 2002.
Nortel stock most recently was at $15.35, down 25 cents. At the Philadelphia
Stock Exchange, which captured much of this volume, the January 17.50 calls
were at $2.70 on volume of 24,853 contracts, while 10,329 contracts traded
at
other exchanges.
Pride International Inc.'s calls too traded robustly, driven by speculation
that Nabors Industries Inc. is planning an acquisition of the offshore driller.
Some option investors appear to be buying the rumor, which surfaced earlier in the session after trading of Pride stock was delayed at the opening.
Pride's near-month, at-the-money calls saw heavy trading volume - likely a sign investors buying these expect the stock price to appreciate in the near
future. The volatility associated with these calls also spiked, indicating
that traders and investors expect a significant move in the underlying
stock. |
