CHICAGO, June 15 (Reuters) - Implied volatility on Infoseek Corp. (SEEK - news) surged on Monday morning amid rumors that the Internet services provider is the target of a takeover, traders said.
By 1046 CDT/1546 GMT, the underlying stock was up 3 to 33-1/8 on above-average volume.
Trading in the options also was brisk as speculators scooped up calls. The soon-to-expire June 30 and June 35 calls drew the most interest, trading about 4,600 lots between the two contracts on the American Stock Exchange.
Call volume outpaced put volume 8,800 to 1,700.
Implied volatility for nearby at-the-money options traded as high as 145 percent, up from its usual range of 79 to 85 percent.
''It's one of those Internet stocks where vols are all over the place,'' an options analyst said.
No one at Infoseek was immediately available to comment on the rumors, which framed Disney (DIS - news) or Time Warner Inc. (TWX - news) as potential suitors.
The takeover price was pegged in the low $40 range, according to market rumors.
A deal was seen as imminent, traders said, noting that most of the trading volume was in the June options, which expire at the end of the week.
Elsewhere, traders pumped up implied volatility on Solectron Corp. (SLR - news) options ahead of the company's earnings, due out after the close today.
Volatility in the July at-the-money options rose to around 62 percent from its average of around 44 percent, traders said.
Most of the volume was in the June 45 puts, where more than 1,550 contracts traded, with the underlying stock down 1-1/8 to 37-3/4. |
