Hi Tim, did you have a good weekend? I was wrong in thinking that those big block trades in Thusday & Friday was from institutions. Below is something I found, but the future outlook for ASND still bright so I still remain bullish on ASND, and thanks for the book title, I need that.
CHICAGO, Dec 5 (Reuters) - Options investors jumped on the
Ascend Communications Inc takeover bandwagon Friday,
snapping up calls on speculation that the computer networking
gear maker would be bought out, traders said.
But they said all the action was on the retail side,
indicating institutional investors were staying away.
"There's all kinds of retail speculation out there," said
one options trader in New York. "There's an absolute flood of
retail orders. Nothing institutional."
Some options participants believe institutional activity
often lends credence to takeover speculation.
Institutional funds are often viewed as "smart money."
In late trade, shares of Ascend were up 2 at 28-7/8 after
reaching 32-1/4. It was the most active stock on Nasdaq, with
turnover topping 29 million shares.
Late Thursday, the company declined to comment on the
takeover speculation, but said it remained on track to report
fourth-quarter earnings in line with Wall Street expectations.
In an interview late Thursday, chief financial officer
Michael Ashby called the buyout talk "an old rumor."
Ascend has come up at least three times as an acquisition
target in the last year.
"This is one that retail people can grasp," an options
trader in Chicago said of the Ascend takeover talk. "Retail
guys love tech stock takeovers."
Among the options, the December 30 call traded 11,530
contracts and the December 35 call traded 11,475, making them
the two busiest Ascend options.
Call action was heavy in the January series also, led by
the 30 and 40 strikes, and remained steady through the March
and June series, though at a slower pace.
Put action was focused on the December 30, which traded
about 4,775 contracts. The January 30 put traded 2,940.
"There's no real institutional paper," the trader in
Chicago said, adding that he speculated the initial rumor,
which surfaced Thursday afternoon, was floated by an investor
who had bought the stock as it fell from around 30 in late
October to the low 20s.
The activity pumped implied volatilities sharply higher.
Implied volatility in the December 25, 30 and 35 options
ranged from the upper 70s to the low 90s. Volatility in
November averaged about 55. Over the last 60 trading days,
volatility has averaged about 65.
Lucent Technologies Inc and Northern Telecom Ltd
were the rumored suitors of Ascend and both
declined to comment on the speculation.
In other action, options on MCI Communications Corp
increased, mainly on the call side, as the stock
popped to a new year's high at 45 before backing off.
MCI gained 3/16 to 44-13/16 after reaching 45. Volume was
modest at about 1.97 million shares.
Among the options, The January 42-1/2 call traded more than
7,900 contracts, the April 50 call traded about 7,620 and the
January 45 call traded 6,630.
Duke
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