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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: S.C. Barnard who wrote (10778)	12/10/1997 8:08:00 PM
From: John Koligman	Read Replies (1) \| Respond to of 97611

CPQ options trading report from Dow Jones Newswires.... I hope these 'buyers' are right, for now the stock is exibiting all the classic negative signs that portend bad news. Management keeps saying things are great, and the stock keeps going down, with selling on every pop in price. Also, analyst commentary is increasingly negative, I know what we think of them, BUT, they do affect the price. It does seem to me that institutions that want out should have had no trouble getting out over the past two months, the average daily volume in this stock is around 10 million shares/day, double that fairly often. If we have had approximately 40 or so trading days since earnings, we must have traded north of 420 million shares since then. John Dow Jones Newswires -- December 10, 1997 Options Report: Compaq Attracts Bulls As Stock Falls By Steven M. Sears NEW YORK (Dow Jones)--Compaq is getting sold off in the stock market and bought right back up in the options market. A trader said the stock is falling in response to stock analysts' lowering the computer-maker's investment rating over fears of a slowdown of computer sales. Donaldson Lufkin & Jenrette is said to have cut Compaq's rating, while there are unconfirmed reports in the market that a large corporate reseller has more Compaq computers in inventory than anticipated. Options activity, however, suggests that Compaq has more upside than stock traders expect. Traders are buying the out-of-the money December 60, 65 and 75 calls, which suggests they are speculating that the stock price will retrace its losses and they'll be able to sell the calls at a profit. Compaq is now down 4 1/4 at 59 1/8. "The paper is bullish," a Compaq options trader said. Elsewhere in the options market: - Oracle's stock price is getting sandwiched between bearish stock trading and bullish options trading. After falling 29% on Tuesday and then ranging within $1 of 23, a market source said the call buying has carried into Wednesday, but some of the vehemence in the options market has faded. "There seems to be enough pressure both ways where it's not moving around," the person said. Options trading is likely to accelerate once the stock starts moving again. Volatilities are down from Tuesday's high of 80%, registering about 75% in the front-month, or December, and at about 65% in the more distant months. Volatility refers to how likely an option's underlying stock is to change in price in either direction. - A combination traded on Philip Morris December 35 calls and December 55 puts. Trading sources said they didn't know the strategy behind the trade, but noted that the execution was trader-to-trader. The calls are up an 1/8 at 9 1/2 on volume of 11,016 contracts, compared with open interest of 709 contracts. The puts are up 3/8 at 10 7/8 on volume of 11,000 contracts, compared with open interest of 460 contracts. The stock is down 1/8 at 44 7/16. The company said Tuesday that it is trying to jump-start its international food division. Part of the plan includes cutting its international work force by more than 2,500 employees as part of a restructuring that would result in a $630 million pretax charge. - It appears that a spread traded on RJR Nabisco Holdings that has mapped out a range of movement from the December 27 1/2 puts and the December 30 puts. The stock is up 1/16 at 36 7/8. - For reasons unbeknownst to sources, Eli Lilly's April 65 calls are trading more actively than normal. With the stock flat at 63 3/8, the out-of-the money contracts have gained 1/4 to 6 5/8 on volume of 2,166 contracts, compared with open interest of 938 contracts. Part of the trading may possibly be from traders who are getting into position before sales of Evista, an osteoporosis drug, start to show up in the stock. The drug was approved for marketing Wednesday by the Food and Drug Administration. While an earlier report cited sources on the trading floor who said they didn't know what was driving Philip Morris trading, the explanation is obvious to Michael Schwartz, CIBC Oppenheimer's chief options strategist. He noted that Philip Morris goes ex-dividend on Thursday. That means that traders are using a variety of strategies, including spreads, stocks against puts and buying deep in-the-money calls, to capture the dividend. Dividend trading also is behind the trading in RJR Nabisco. Powered by Quote Agentr and News Agentr from Gari Software/IDD Information Services Copyright c 1997 Dow Jones & Company, Inc. All Rights Reserved.