U.S. OPTIONS/Tech trade active on sector bounce
Reuters Story - June 02, 1998 18:14
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CHICAGO, June 2 (Reuters) - Stepped-up activity in options
on U.S. technology stocks Tuesday was a mixture of speculative
and protective trade as the sector rebounded from the previous
day's selloff, analysts said.
The Nasdaq 100 Index rose 21.60 to 1187.15 after
bouncing off an 11-week low of 1160.13 reached Monday.
Volumes were heavier than normal in technology options on
both the Pacific Exchange and Philadelphia Stock Exchange,
analysts said.
Among the busiest were Dell Computer Corp. ,
General Instrument Corp. , 3Com Corp. ,
Microsoft Corp. , Compaq Computer Corp. and
Applied Materials Inc. , traders and analysts said.
"People are chasing stocks that are moving, trying to play
the quick rebound," said Larry McMillan, president of McMillan
Analysis Corp.
But holders of technology shares were also writing covered
calls and buying puts, said a market maker at the Pacific
Exchange.
"Paper in general is protective in nature, looking for more
movement to the downside," the market maker said. "People see
the Dow not moving as significant."
The Dow Jones Industrial Average finished 31.13
lower at 8891.24, posting an inside technical day after trading
higher in the morning.
Stocks' recent daily pattern of afternoon deterioration
following opening strength is atypical for a bull market, where
the reverse usually holds true, said Jerry Hegarty, publisher
of Hegarty's Options Navigator.
"This is a bad precedent the market has been setting,"
Hegarty said.
Tech options implied volatilities have snapped back from
their lows of about a week ago, traders noted. Dell volatility,
for example, is back trading above 50 percent after dipping
into the mid-40s.
The S&P 100 Index ended 1.13 higher at 528.71, after
a choppy session that saw good buyers of both puts and calls
emerge on market dips, said Jack Callahan, a market maker at
the Chicago Board Options Exchange. |
