US OPTIONS- CompUSA volatility still high
edreyfus.com
CHICAGO, June 1 (Reuters) - Implied volatility stayed strong and volume remained fairly high Tuesday in options on computer retailer CompUSA Inc.
Implied vols in the June 7.5 option stood near 104 percent, with the June 10s averaging 111 percent.
The one-month historical volatility of the stock is about 72 percent.
''That's (implied volatility) definitely up there, and the action late last week...we had a lot of customers buying options, the June 7s and 10s,'' said a market maker in the options at the Chicago Board Options Exchange. ''I think the low end of the vol range has been in the 80s or 90s.''
''Volumes are definitely good,'' he added, noting that by midday Tuesday some 1,600 contracts already had changed hands. ''I think the option probably trades in a (volume) range of 800 to 1,200 a day. It's not what we were seeing last week...but it's good.''
Some analysts cited recurrent talk that the company might be taken over.
''There is a rumor, which is not particularly new, that Staples is looking to take over CPU,'' wrote Larry McMillan, of McMillan Analysis Corp, in commentary. ''Options implied volatility has remained fairly high for several weeks. Stock volume patterns are improving.''
McMillan said later on Tuesday that volatility remained high at around 115 percent.
''So they're (vols) still up there,'' he said.
A spokeswoman for Dallas-based CompUSA declined comment. Officials of Staples, an office supplies retailer based in Framingham, Mass., could not immediately be reached for comment.
But an options strategist said the options' recent behavior could reflect a cyclical movement of investors' money among the computer retailers.
''The cycle here is if you own Best Buy, you have to take some money off the table and put it into the next winner,'' he said.
At 1331 CDT/1831 GMT, June 10 calls in CompUSA options were flat at 5/16 on CBOE volume of 1,413 and open interest of 6,341. The June 7.5 calls lost 1/4 to 15/16 on turnover of 442 and open interest of 9,322.
Shares of CompUSA on the New York Stock Exchange were off 2/16 at 7-15/16 on volume of 913,800. Staples stock traded on the Nasdaq market lost 1 to 27-3/4 on turnover of 1.8 million.
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