-- =DJ Options Report: Fear Gauge Up 11% As Investors Worry --
By Kopin Tan
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Volatility in the options market increased to mirror
investors' growing apprehension, as stocks ignored a jump in new-home sales last
month and slipped in lackluster trading Friday.
The Chicago Board Options Exchange's market volatility index, or VIX, jumped
3.43 or 11% to 34.51. In the technology sector, the CBOE Nasdaq Volatility
Index, or VXN, edged up 1.97 to 47.33.
Since late October, VIX, the widely watched gauge of fear in the options
market, has hovered mostly between 26 and 35. Each time VIX approached the upper
end of that range, it had tended to relax as bargain hunters stepped up to buy
in the hopes of a year-end rally (which has yet to asseret itself). Meanwhile,
the tension with Iraq and the developing unease over North Korea continues to
spur demand for option protection, traders said, creating a floor that keeps
volatility and option premiums propped up.
As the dollar slipped, options pegged to the gold sector were active as
jittery investors sought a refuge. The Philadelphia Stock Exchange's gold and
silver index eased 0.22 to 79.05. Its February 75 calls gained 30 cents to $8.20
as 3,014 contracts traded, compared with open interest of 6,777 contracts.
Option trading was muted Friday as the holiday-shortened trading week drew to
a close. In fact, there seemed to be more action outside the CBOE than on the
trading floor, when a fire broke out in an adjacent office tower where many
option-trading firms had their offices.
The fire on the 22nd floor at 440 South LaSalle Street in downtown Chicago, a
building that incidentally housed the Chicago Stock Exchange offices, caused
some floors to be evacuated and created a buzz at the CBOE, located at 400 South
LaSalle Street. But the fire was extinguished quickly and trading at the CBOE
was uninterrupted, an exchange spokesman confirmed.
Tyco International's options traded heavily and implied volatility rose - a
sign traders expect the stock price to fluctuate in the short term - after newly
discovered e-mails revealed the company's attorneys may have been aware of the
former chairman's personal use of company funds.
Tyco stock slipped 67 cents to $15.11. The January 17.50 calls traded 9,744
contracts, compared with open interest of more than 76,000 contracts, and fell
10 cents to 40 cents at the CBOE. Its January 15 puts traded 11,672 contracts,
compared with open interest of more than 56,000 contracts, and gained 35 cents
to $1.25 at the Philadelphia Stock Exchange.
Expedia Inc.'s options also traded briskly amid questions raised by some U.S.
states on whether Internet travel companies should pay sales or occupancy taces
on merchant hotel revenue.
The online travel-services provider stock had slipped this week and was off
$2.49 or 3.9% to $64.48 Friday afternoon. Expedia's short-term calls were
active, and the bid and ask prices suggested that some investors may be
positioning for a possible rebound even as other investors sold calls. The
January 70 calls, for instance, traded 1,664 contracts and were off 70 cents to
$1.10 at the International Securities Exchange. Open interest was 3,449
contracts.
But the defensive puts also were more active than usual. The January 65 puts
traded 1,042 contracts, compared with open interest of 2,591 contracts, and rose
85 cents to $3.30 at the ISE.
-Kopin Tan, Dow Jones Newswires; 201-938-2202; kopin.tan@dowjones.com
(END) Dow Jones Newswires
12-27-02 1522ET- - 03 22 PM EST 12-27-02
Symbols:
US;DJDA US;EXPE US;TYC DE;EP7 DE;TYI DE;TYIF DE;TYIS DE;TYIX GB;TYI
27-Dec-2002 20:22:00 GMT
Source DJ - Dow Jones |
