| | *OT*Salesforce.com Investors Rush To Buy Puts as Shares Drop
By MOHAMMED HADI
The Wall St Journal
February 11, 2006; Page B3
Something about Salesforce.com Inc. spooked traders Friday, sending the stock sliding and investors rushing to pick up puts to protect themselves from continuing losses.
As the stock slid $4.27, or 11%, to $35.10 in 4 p.m. New York Stock Exchange composite trading, Michael Incorvaia, a trader on the Philadelphia Stock Exchange for Market Street Securities Inc., said investors were busy buying puts and put spreads.
All told more than 19,330 Salesforce.com puts traded Friday, and as they did implied volatility in the short-term options jumped to 62%, from 51%, according to Track Data. Calls were also relatively busy, trading about 9,076 contracts.
Mr. Incorvaia said he didn't know what in particular had motivated the put buying, but he noted that there was a rumor circulating that Salesforce.com lost a major contract to a rival software company. The San Francisco company said it doesn't comment on rumors.
But a number of Wall Street analysts were quick to defend the provider of customer-resource-management software. For example, Prudential Equity Group analyst Brent Thill said that even Salesforce.com's biggest customer accounts for only about 2% of fiscal 2006 revenue targets. "We think the potential customer loss issue is overblown," he wrote in a note to clients.
--Andrew Simons contributed to this article |
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