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To: djane who wrote (51905)	8/11/1998 2:02:00 PM
From: djane	Respond to of 61433

Options Buzz: Big Options Trade Looks for Tech to Get Mashed thestreet.com By Dan Colarusso Senior Writer 8/11/98 1:29 PM ET Some options traders refer to the Morgan Stanley High Tech 35 index as the "Mush." Today someone risked a lot of money that the Mush will get mashed between now and the third Friday of September. Chattering in a parlance reserved mostly for bookies and traders, one options trader said this morning that a major firm, acting for a customer, "sold the September 580 Mush combo, 500 times for five bucks." Translated into English, that means that a major investor paid a $5 differential to sell the high-tech index' September 580 calls and buy the September 580 puts. With the index -- the benchmark for tech investors of all sizes -- down 15.8 to 588.6 at around noon, the trade was one of the more clear speculative signs to emerge from a day that's been, at its best, choppy. Essentially, the High Tech 35 must finish the third week of September below 575, a level that would mark its 52-week low. For the calls not to be assigned, the index will have to stay below 585 in the same period. "It's like synthetically selling stock," said Brent Houston, an options trader at Mr. Stock, a discount brokerage. The call portion of the trade is used simply to reduce the cost of buying the put. If the investor would have bought puts to express that same sentiment, it would have cost about 24 ($2,400). Instead, selling the call helped pull in about 30 ($3,000). A combination position is priced and packaged as one so the individual put and call prices wouldn't be as high as if they were purchased or sold separately. "I think fundamentally, they're probably right," said Kyle Rosen, the options strategist for hedge fund Strome Susskind. "But the volatilites have gotten to such a level that we could see a bounce and there would be some short-term pain. If you're long the stock, it's certainly a good bet." Rosen said the implied volatilities on the Morgan Stanley High Tech 35 have risen to 50 from 27, a sign that could be construed as worrisome. "Whenever people are willing to pay any price for puts, there could be a rally." Rosen, echoing the sentiment of many options traders, said if the market holds at today's levels some corners will perceive the action as a successful test of a bottom and put some cash to work in the following days. In New York, R.F. Lafferty options director Jay Shartsis said he was looking for the put/call ratio to hit 0.80 before he felt comfortable that the market had found its bottom. Talk of a Dresdner takeover of PaineWebber (PWJ:NYSE) intensified as the brokerage firm's shares swam against the tide of losers in the market. At midday, PaineWebber was up 2 7/8 to 47 7/8. Options traders, who have chased PaineWebber takeovers in the past, sent volume up to 1,100 on its August 50 calls. The price of the play rose 1 1/2 ($150) to 1 3/4 ($175) on the day, making speculation an increasingly expensive proposition. There also was action in the September 50 calls, where volume of 694 contract pushed premium up 1 7/8 ($187.50) to 2 7/8 (287.50). See Also OPTIONS BUZZ VIX Levels Show Growing Fear in Morning Tumble 8/11/98 10 AM OPTIONS BUZZ ARCHIVE