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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: Jane4IceCream who wrote (11253)	2/1/1999 7:23:00 PM
From: Tim Luke	Respond to of 90042

Monday February 1, 5:49 pm Eastern Time U.S. OPTIONS/Cisco volume swells pre-earnings CHICAGO, Feb 1 (Reuters) - Investors snapped up calls on Cisco Systems Inc. (Nasdaq:CSCO - news) Monday, a day before the company is due to release second-quarter earnings, and implied volatility on the options expanded beyond its normal range, traders said. ''It appears everyone is expecting them to match the quarterly number and possibly exceed it a little. It also appears as though people are trying to load up on what were out-of-the-money calls to take advantage of a stock split,'' said Patrick Hamilton, designated primary market maker for Cisco options at the Chicago Board Options Exchange. Several big-name companies have announced plans for stock splits in recent days, among them International Business Machines Corp., Microsoft Corp. and McDonald's Corp. This morning, Oracle Corp. (Nasdaq:ORCL - news) said it would split its common stock three-for-two. Calls on Oracle shares saw active trade for a second straight day in anticipation of further appreciation in the stock price, said a specialist in the options at CBOE. Cisco is due to release second-quarter earnings Tuesday, and analysts are looking for per-share income of $0.35. Cisco earned $0.29 per share in the second quarter last year. Cisco shares shot up 5-7/16 to 117. Implied volatility in Cisco February 115 calls rose to 61 percent, exceeding the typical range of 36-59 percent. Hamilton said he expected volatility levels to remain relatively lofty after earnings rather than deflate because Cisco is getting swept up in the general Internet-stock hooplah. Call buyers dominated the action in Cisco's February 105, 110, 115 and 120 calls, while a customer exiting half of a long call position initiated early last week accounted for most of the volume in the 100 strike, Hamilton said. The five February strikes saw combined volume of nearly 35,000 contracts by late afternoon.