To: Jan Crawley who wrote (49161 ) 4/6/1999 8:10:00 PM From: Glenn D. Rudolph Read Replies (1) | Respond to of 164684
U.S. OPTIONS/Yahoo vols remain bid, sector lifted CHICAGO, April 6 (Reuters) - Implied volatility on Yahoo! Inc. <YHOO.O> options remained well bid on Tuesday as the underlying stock rallied to yet another record. By 1122 CDT/1622 GMT, the stock was up 8-7/8 to 228, having climbed as high as 244 earlier. It was the second most actively traded stock after Dell Computer Corp. <DELL.O>. Volatility, a key factor in determining options prices, was trading around 121 percent for the nearby contract. "Vols absolutely deserve to be up here," said Jesse Stamer, a general partner at TradeNet and a designated primary market maker at the Chicago Board Options Exchange. "Yahoo has got to be one of the busiest and most volatile stocks on the floor," he said, noting that speculators were trading the options more than the stock to gain leverage. "I think they can go higher still, because people expect consolidation in the industry." Yahoo recently agreed to buy Broadcast.com Inc. <BSCT.O>, a broadcaster of audio and video programs via the Web, and GeoCities Inc. <GCTY.O>, a community of more than 3.5 million personal home pages. "Broadcast.com and GeoCities vols are tracking Yahoo's," said Paul Foster, investment strategist and editor of 1010WallStreet.com. He said volatility on Broadcast.com and GeoCities options was trading at about 105 percent and 93 percent respectively. "Vols will have to converge upon the closure of these deals, so either Yahoo will have to come down or Broadcast.com and GeoCities will have to go up," Foster added. Elsewhere, trading in the April 45 calls on Dell were extremely active for a second session, registering volume of more than 14,000 contracts by midday. Traders attributed the activity to bullish sentiment ahead of the company's analysts' meeting this week and also to news that the top supplier of corporate personal computers would support Linux, an alternative to Microsoft Corp.'s <MSFT.O> Windows software. Dell stock was up 1-3/16 to 45-1/4.