For the options experts out there please advise your analysis of this story. Bullish or bearish or neither? Thanks in advance, Jeff
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U.S. OPTIONS/Applied Materials vols stay high
Reuters Story - March 01, 1999 19:53
CHICAGO, March 1 (Reuters) - Implied volatility on Applied Materials options eased on Monday but remained at lofty levels as the stock recovered from a sharp decline last week.
Implied volatility, a key factor in determining options prices, held at around 70 percent, down from nearly 80 percent on Friday, but still up from its average of about 60 percent, traders said.
The stock, which had shed more than 17 percent of its value in the latter part of last week in a sector-wide decline, rebounded 1-7/16 to 57-1/16.
"It's a theoretical play," said Paul Foster, investment strategist and editor of 1010WallStreet.com.
He said implied volatility was well bid amid expectations of slowdown in revenue growth because of declining chip prices.
Santa Clara, Calif.-based Applied Materials makes and services semiconductor wafer fabrication equipment and so would be hurt by weak chip prices, he added.
On the Pacific Exchange, call volume outpaced put volume 1,441 contracts to 352.
A market maker said it seemed that some of the heavy call buying and put selling that had marked Friday's session was being reversed today as the stock rebounded.
"There may have been some reversing (positions).... We definitely saw more two-way trade today," he said.
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