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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (88682)	1/20/2001 2:34:14 PM
From: mishedlo	Read Replies (1) \| Respond to of 132070

17,000 FEB 90 puts just sold Hey Earlie, Spek, & all check this out. thestreet.com Can they rally this pig to 90? ==================================================== EMC Put Option Seller Playing for a Rally By Brian Louis Staff Reporter 1/19/01 12:43 PM ET From all appearances, somebody out there thinks there's nothing but sunshine in store for data storage company EMC (EMC:NYSE - news), at least for the next month. Volatility Index Close Today % Change 26.29 -2.95 Source: ILX Apparently, a customer sold in the neighborhood of 17,000 in-the-money EMC February 90 puts yesterday, arguably a deeply bullish move. EMC added 88 cents, rising to $76.88 on Friday. Put/Call Ratio Close Today Previous Close 0.43 0.52 Source: ILX By selling the February 90 puts, the investor is betting that by Feb. 16, when these options expire, EMC will be trading above $90. Therefore, the investor won't have to buy the stock from whomever the puts were sold to. While put buyers are typically seen as bears, put sellers take in a premium against the risk of the stock's falling and having to purchase shares at the strike price ($90 in this case) to fulfill the contract's exercise. That makes the basic strategy of a put sale bullish, because the seller profits from the stock's rising, or sitting still because the options expire worthless. Put selling is among the riskiest strategies in options trading because it can saddle a trader with an obligation to buy a losing stock position. Related Stories Concern Among Analysts Drowns Out Sun's Strong Talk Your Final Answer on the Biggest Stocks? Let's Poll the Fund Manager Audience EMC to Distribute McData Stock to Shareholders of Record Jan. 24 Ralston-Purina Jumps on News of Nestle Purchase The investor apparently bought a like amount of January puts with strike prices of $75 and $85. Speculation is that the investor who did the trade was buying the January 75 and 85 puts to close out a position. Today is a double expiration, where equity and some index options expire. Trading in the February 90 puts was very light Friday and the contract's price was unchanged at 13 3/4 ($1,375) on the American Stock Exchange. EMC will post earnings before the opening Tuesday. The 20-analyst First Call/Thomson Financial estimate calls for the company to earn 23 cents a share. A 12-analyst First Call consensus calls for the company to post revenue of $2.562 billion. -------------------------------------------------------------------------------- Some of the action in the options market lately has heartened contrarian traders by hinting that the market may continue to have a decent amount of upside left in it. Alan Goldstein of Five Dollar Trading in Chicago, a market making firm, said a theme in the market recently was customers buying puts and selling calls to finance the put purchases. He said he's seen that trend in a lot of tech stocks, which doesn't surprise him. He said investors may recall that when the market tanked, and they didn't have put option protection on long positions, they perhaps said to themselves they might as well protect some downside "and if I have to finance by selling upside calls, I'll do it." That action is a bullish indicator, Goldstein said. To contrarian investors, who believe strong sentiment in one direction is a signal that a cycle is ending, having the public buying puts and selling calls would be bullish because it shows they are skeptical about the prospects for stocks in the future. According to this school of thought, such mass skepticism shows that a cycle may be coming to an end. A put option is the type of option that gives the purchaser the right but not the obligation to sell a security for a specified price at a certain time. Investors buy puts either to speculate the underlying security will drop or to protect a long position. Meanwhile, volume in the market continued robust. The Options Clearing Corp. said that yesterday the nation's options exchanges set a record of 5.291 million contracts traded, breaking the previous total of 4.877 million contracts, which was set Oct. 20. -------------------------------------------------------------------------------- Nice call -- at least so far -- by the big Sun Microsystems (SUNW:Nasdaq - news) call seller this week, considering that Sun was getting wasted Friday. Sun tumbled $3.88, or 11%, to $31, after posting earnings last night that met Wall Street's expectations, but fell short on analysts' revenue estimates. Ahead of today, a major investment bank had been a heavy seller of call options in Sun in the January 32 1/2, 33 3/4 and 35 strikes, an options market source said. The trading may have been part of a strategy in which the calls were sold against a long stock position. By selling those call options, the seller was betting that by today's expiration, Sun stock would be below at least some of those strike prices. Therefore, those options would expire worthless and the seller will be able to keep much of the premium it took in for selling the calls. Judging by Sun's stock this morning, the seller of the call options will keep all of that premium. -------------------------------------------------------------------------------- The Securities and Exchange Commission said the U.S. District Court in New York had entered a temporary restraining order Wednesday against "unknown persons who traded through Swiss banks" in options on Ralston Purina (RAL:NYSE - news) before Tuesday's announcement that Nestle would buy it, profiting potentially more than $300,000. The order prohibits temporarily those traders from obtaining or disposing of the proceeds from their dealings. The SEC's complaint alleges that highly profitable trades in Ralston options were made anonymously through Swiss bank accounts beginning on Nov. 14, five days after confidential takeover talks began between Nestle and Ralston. The SEC said that several of the options trades were made in the last two trading days before the announcement of the takeover. The SEC said that the defendants' purchases "represented an overwhelming percentage of the total trading volume in certain Ralston Purina call options on the relevant days." -------------------------------------------------------------------------------- Options volume at the American Stock Exchange in 2000 hit a record 207.7 million contracts, the first time the exchange hit the 200 million-contract mark as average daily volume reached 824,000.

To: Spekulatius who wrote (88682)	1/20/2001 6:00:16 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Spek, All economic fads go away. Some, like Greenspan's 1970s brainstorm, "Whip Inflation Now" buttons, don't have a long shelf life. Others, like his much more disastrous concept that lower rates and more credits solve all of the imbalances caused by too much credit, seem to have had nearly a radioactive half-life.