To: shoe who wrote (63773 ) 3/23/2006 6:31:42 AM From: sixty2nds Respond to of 64865 Sun Calls Active As Outlook Boosts Already Hot Pace By MOHAMMED HADI March 23, 2006; Page C6 Investors snapped up calls on Sun Microsystems Inc., adding to an already brisk week of trading in these options. In particular, with the Santa Clara, Calif., computer maker's stock up nine cents to $4.81 in 4 p.m. Nasdaq Stock Market composite trading, the focus of activity was on the April 5 calls. About 17,940 of these traded, and they rose 10 cents to 25 cents on the International Securities Exchange. All told, more than 24,650 calls traded yesterday, and implied volatility on the options ticked higher to 42% from 40%, according to Track Data. That's the highest level for this measure of risk perception in about a month. Stacey Briere, options strategist at Susquehanna Financial Group, noted that yesterday's activity followed the buying of about 45,000 October 4 calls on Monday. So far this week, more than 115,000 calls on Sun Microsystems have changed hands. By comparison, in all of February, about 70,500 calls traded. There might be good reason for investors to trade bullishly on Sun. In a research note this week, Merrill Lynch analyst Richard Farmer wrote that the company's fiscal third quarter is "tracking well." Mr. Farmer also cited the potential for the financial chief Michael Lehman to be more aggressive with cost cuts. Meanwhile, there was heavy trading in options on Elan Corp., after the Food and Drug Administration delayed a decision on whether to allow the company's multiple-sclerosis drug Tysabri back on the market. As Elan's shares slid 55 cents to $13.80 in New York Stock Exchange trading, trading in both puts and calls was heavy. More than 222,120 options contracts changed hands in the session, at multiple strike prices. On a typical day in February, by comparison, about 61,943 options contracts traded. --Jennifer Corbett Dooren contributed to this article. Write to Mohammed Hadi at mohammed.hadi@dowjones.com