BirdDog,
-- =DJ Options Report: Action In EMC Calls, Computer Svcs Puts --
By Kopin Tan
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Options of technology companies traded actively as
stocks edged lower while investor anxiety edged up ahead of the next round of
corporate earnings.
EMC Corp.'s call options traded briskly, with a number of investors focused on
buying near-month calls that expire in April and May. It isn't clear what drove
the bullish call buying; investors might be covering short positions, or
anticipating a rebound since EMC stock was trading just above its 52-week low
midweek. Also, a market maker attributed the bullish activity in part to
takeover speculation, although traders remain skeptical and pointed out that EMC
had been a target of such rumors before.
The data storage concern most recently was up 32 cents to $11.56. EMC's April
12.50 calls traded about 16,000 contracts across various exchanges, compared
with existing positions of 50,137 contracts, and rose 10 cents to 50 cents at
the Chicago Board Options Exchange. EMC's May 10 calls traded 5,957 contracts,
compared with existing positions of 4,786 contracts, and were up 40 cents to $2
at the International Securities Exchange.
Juniper Network's calls also were sought after as the network equipment sector
in general and Juniper in particular had a good session. Juniper has fallen
about 33% this year, and some market watchers recently had been apprehensive as
earnings season approaches and some analysts last week downgraded the stock and
adjusted their outlooks. It isn't clear what drove the call buying: the more
bullish investors might believe the stock has been oversold and is due for
recovery, or is covering short positions in case the recent concern was
exaggerated.
Juniper stock was ahead 67 cents or 5.7% to $12.51. Its April 12.50 calls
traded more than 10,600 contracts, compared with open interest of 13,932
contracts, and gained 40 cents to $1.25 at the ISE.
Not all the tech action was bullish, however. Several computer services
companies attracted some protective put buying Friday, although the volume
wasn't inordinately heavy, noted Michele Skupp of the Seidman/Skupp option team
at Miller Tabak & Co.
The defensive activity might have been prompted by concerns about customer
demand this quarter. Late Thursday it was reported that the president of
Hewlett-Packard Co.'s services unit had warned her managers that the unit's
revenue and profits are "well below plan" so far this quarter, and that a "cause
for concern is that incoming order levels (for services) remain soft." Although
Hewlett-Packard provide different services from some of these companies,
investors nonetheless might be taking precautions for other computer services
companies in general.
In Electronic Data Systems, whose stock was at $63.38, the April 65 puts
traded 959 contracts, compared with open interest of 1,899 contracts, and rose
25 cents to $2.95 at the CBOE. A put spread involving the April 60 puts and the
April 55 puts also traded to the tune of about 4,000 contracts.
In Sungard Data Systems, whose stock was down 15 cents to $33 Friday
afternoon, the May 30 puts traded more than 3,000 contracts at the CBOE and the
American Stock Exchange and were at 90 cents. In Computer Services Corp., whose
stock was off $2.29 or 4.5% to $48.71, the May 45 puts traded 1,545 contracts at
the Pacific Exchange and the CBOE, compared with open interest of 10 contracts.
These puts were at $1.55.
Meanwhile, Micron Technology's long-term options expiring 2004 also saw some
action as an investor appears to have sold 7,500 straddles - selling January 35
calls expiring 2004 for about $1,070 a contract, and selling January 35 puts
expiring 2004 for about $930 a contract.
As savvy investors know, selling straddles can be profitable, particularly in
a neutral market, although the losses can also be substantial if the stock makes
an unexpected and drastic move in one direction. Here, the straddle seller
either expects implied volatility in Micron to decrease over the long term, or
does not expect Micron to move much from $35 a-share during this time.
Micron most recently was at $34.23, down 28 cents. At the Philadelphia Stock
Exchange, the January 35 calls expiring 2004 traded 7,500 contracts, compared
with open interest of 531, and were at $10.70. The January 35 puts expiring 2004
were at $9.30 as 7,500 contracts traded, compared with open interest of 343.
- Kopin Tan, Dow Jones Newswires; 201-938-2202
kopin.tan@dowjones.com
(END) DOW JONES NEWS 03-22-02
03:34 PM- - 03 34 PM EST 03-22-02
Symbols:
US;CSC US;DJDA US;EDS US;EMC US;HWP US;JNPR US;MU US;SDS CA;EMCX DE;JNP US;MUZ |
