=DJ Options Report: Activity Heavy In QQQ Puts, AOL Calls
By Cheryl Winokur Munk and Kopin Tan Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Options investors remained cautious on the tech sector Wednesday, even as the overall market showed strength.
Puts on the heavily traded Nasdaq 100 Tracking Stock, or QQQ, were particularly popular, as investors continued to worry about this sector which has been vexed by bad news over the past few sessions.
In the QQQ, more than 17,000 of the May 31 puts traded, compared with open interest of 35,297. These puts rose 5 cents to 60 cents on the American Stock Exchange where much of the volume was. The QQQ traded recently at $33.90, up 31 cents.
More than 12,000 of the May 35 puts traded, compared with open interest of 43,643. These puts rose 20 cents to $2.40 on the Chicago Board Options Exchange, where volume was the heaviest.
Meanwhile, call options in AOL Time Warner Inc. traded briskly, as a sizable block trade sent shares lower. The activity came a day after AOL announced a management shakeup in which the company replaced the head of its flagship Internet operation. Shares hit a 52-week low of $20 amid concern by investors about the operation's performance.
More than 28,000 of AOL's April 20 calls traded, compared with open interest of 3,413. These calls fell 85 cents to $1.15 on the Philadelphia Stock Exchange, where much of the volume was. More than 41,000 of AOL's April 22.50 calls traded, compared with open interest of 35,118. These out-of-the-money calls fell 25 cents to 20 cents on the Amex, where volume was heavy.
American International Group Inc.'s November 80 call options were also popular, with more than 14,600 contracts changing hands, compared with open interest of 1,263. These out-of-the-money calls fell 20 cents to $3.50 on the Pacific Exchange, where most of the volume was. The stock fell 0.8% to $74.69.
Also on Wednesday, the CBOE's equity put/call ratio was 0.82. Early in the morning, the ratio exceeded the rare 1.0 mark, which contrarians view as a bullish sign. The ratio is considered to be sending a bullish signal if it is between 0.75 and 1, neutral from 0.4 to 0.75, and bearish if it is below 0.40.
The CBOE's index put/call ratio was 0.96. This ratio also is a contrarian sentiment indicator, particularly for institutional investors. It is seen to be bullish if the ratio is above 1.50, neutral from 0.75 to 1.5, and bearish if below 0.75.
Elsewhere in the options market:
Susquehanna Investment Group, one of the largest option specialist firms to maintain its independence, signed an agreement to acquire an estimated 62 option specialist books from Botta Capital, a Chicago specialist firm that has been exploring a whole or partial sale of its specialist operations.
If the sale is approved, Susquehanna is expected to take over and become the CBOE specialist in options including Texas Instruments, Qualcomm, Sprint Corp., Best Buy and RF Micro Devices.
Susquehanna, which is already the specialist at other exchanges in some of these options, would be required to relinquish some specialist books to avoid overlap since firms are barred from being the specialist in the same option in more than one market.
-Cheryl Winokur Munk, Dow Jones Newswires; 201-938-2123; cheryl.munk@dowjones.com
-Kopin Tan, Dow Jones Newswires; 201-938-2202; kopin.tan@dowjones.com
(END) DOW JONES NEWS 04-10-02 |
