Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Don Green who wrote (65685)	2/9/2001 7:54:27 PM
From: Don Green	Respond to of 93625

Options Report: Traders Brace For Quiet, Tough Spell By KOPIN TAN DOW JONES NEWSWIRES February 9, 2001 NEW YORK -- Talk about tough days. Traders in Chicago who made it to work through the downpour found themselves staring at a market grayer and drearier than the February skies. Recurring fear about a sluggish economic recovery sent stocks down, with the Nasdaq Composite Index off nearly 12.5% its Jan. 24 peak and threatening to surrender its January gains. Options investors can handle good news, or bad news, but it's no news that makes life difficult. With the Federal Open Market Committee meeting seemingly far away in March and this dismal earnings season shuffling toward its sorry end, there seems little on the immediate horizon that could change the course of things. Against this backdrop, options investors braced themselves for the down days ahead. In Texas Instruments, for instance, at least one institutional investor bought about 2,000 contracts of the bearish March 45 puts. The stock fell $1.25 to $37.50. The in-the-money March 45 puts gained $1.70 to $8.00 on Chicago Board Options Exchange volume of 1,975 contracts, compared with open interest of 4,165. As tech stocks gave back some of their January gains, investors who bought stock along with protective puts looked to roll those puts down to lower strike prices, taking some profits while still maintaining protection. Meanwhile, the sliding stocks helped move up the premium levels of many bearish put options. Investors who had been writing or selling calls to generate income now are picking spots on the put side, focusing on stocks on which they are cautiously bullish, in order to take advantage and earn some premium. In BEA Systems Inc., an institution sold a large number of bearish out-of-the-money March 35 puts, at prices around $2, or $200 per contract (since each option contract represents 100 shares of stock). This is a cautiously bullish trade, as the investor likely does not expect the stock to fall below $35 by March 16, so these puts will expire unexercised. The application system software company also is one of the largest and most stable in its space, and its stock has not dipped below $35 since early June last year. BEA Systems most recently was down 11 cents to $52.56. At the Philadelphia Stock Exchange, which captured most of the volume, the March 35 puts edged up 6 cents to $1.94 on volume of 12,054 contracts, compared with open interest of 671. Another 3,070 contracts traded away. Investors also appear to be setting their sights further, with little by way of market-moving news expected in the short term. The volume of contracts that expire in further months picked up, and longer-term options that expire in July or even next January in companies including General Motors Corp. and Rambus Inc. all saw active trading Friday.