US OPTIONS-Cabletron Systems vols firm, calls busy.
Tuesday May 18, 7:41 pm Eastern Time
CHICAGO, May 18 (Reuters) - Implied volatilities firmed in options on Cabletron Systems
Inc. (NYSE:CS - news) on Tuesday in fairly busy trading that concentrated on calls.
Implied vols in Cabletron Systems options on the American Stock Exchange increased to
around 106 percent in the June 10 calls, with the June 12.5 calls standing near the 99
percent level.
The historical 20-day moving average of implied volatility for the stock is about 95 percent.
''Volatility has remained intact (recently) but it's remained intact at a very high level,'' said Andrew Schwarz, senior partner,
AGS Specialist Partners.
''They (implied volatilities) are pretty much in line for the last few weeks'' as the stock began recovering, said Joe Sunderman,
senior research analyst, Schaeffer's Investment Research.
Cabletron's vols firmed only slightly more and its stock stayed up 1 at 12-3/16 at 1355 CDT/1855 GMT while other U.S.
stocks fell after the Federal Open Market Committee left rates unchanged but shifted to a tightening bias.
Sunderman and Schwarz figured the Cabletron options probably reflected ideas the stock will continue to recover after falling
to nearly 7 in mid-April from the May 1998 peak of just below 46.
More interesting to Sunderman was the call turnover Tuesday in the option, where more than 11,000 calls had changed hands
in early afternoon on the AMEX and the Philadelphia Stock Exchange combined. That compared to call open interest of about
37,000.
''So you have almost one-third the size of the total call open interest traded just today,'' he said.
Schwarz said a big chunk of the AMEX call volume, however, emanated from a big institutional call buyer Tuesday morning.
The June 10 call at the AMEX was up 1/2 at 2-5/8 on volume of 2,039 and open interest of 7,972. Of that turnover, a number
of 100-plus-contract trades were listed in time-and-sales.
In the June 12.5 calls, which rose 3/8 to 1-1/4, volume stood at 2,201 on open interest of 2,435, with several trades of 200
contracts or more recorded as spreads.
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