Bay article from TSC.
Options Buzz: Bay Networks
Attracting Option Attention
Again as Market Calms
By Gregg Wirth
Staff Reporter
5/28/98 2:32 PM ET
The options market returned to simple mechanics
and chasing potential merger stories today as
investors shook their heads clear of yesterday's
elevator ride of a trading session.
Naturally enough, perennial takeover target Bay
Networks (BAY:NYSE) took center stage. Action
surged in its in-the-money June 25 calls, and its
June 27 1/2 and 30 calls, with more than 10,000
contracts trading in those three strikes combined.
"Bay's a nice little acquisition target, and this
volume is pretty out of the ordinary," said Paul
Foster, chief strategist at 1010WallStreet.com.
Bay's implied volatility increased to 71 for the
June options.
Bay Networks stock swelled 1 3/4 to 27 5/8 on
volume that topped 6.9 million shares by early
afternoon.
Speculation has mounted in recent weeks that Bay
might be acquired by a larger concern such as
Lucent (LU:NYSE) or Northern Telecom (NT:NYSE), as
those companies spring from the phone-gear
business into the Internet.
Analyst Conley Turner at Wall Street Strategies
gives a takeover by Nortel a probability of 8.5
out of 10. The price he hears is 33 to 35 per
share.
A Bay spokesman declined to comment on takeover
speculation, saying the company has no
announcements scheduled for Thursday. And
fundamental strength might also be pushing the
stock.
"I'm hearing the quarter's coming in strong," says
Stephen Koffler at Donaldson, Lufkin & Jenrette,
which hasn't performed underwriting for Bay. He
said he's investigating further. |
