This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Compaq Call Options Jump on Stock Rally

Compaq (CPQ) bulls charged the options market this morning, buying a whopping amount of calls as the stock gapped higher.

Volatility Index
Today % Change
27.73 -5.10
Source: ILX

As shares of the computer maker soared $2.60, or 13%, to $22.67, traders snapped up the Compaq March 22 1/2 calls as volume on that option skyrocketed. Prices for the options also jumped sharply.

Nasdaq Volatility Index
Today % Change
69.54 -4.46
Source: ILX

Volume for the March 22 1/2 calls was heaviest as more than 28,500 contracts changed hands, with action on the Chicago Board Options Exchange and the American Stock Exchange accounting for about 25,000 of those contracts. Open interest (the total number of options contracts that have not been exercised or allowed to expire) as of Monday's close was just 6191 contracts, indicating that today's trading was the initiation of new positions at that strike price.

On the CBOE, the calls soared 85 cents ($85 per contract) to 1.10 ($110) on volume of nearly 13,000 contracts.

There was also a decent chunk of volume on the Philadelphia Stock Exchange, where more than 3500 of the March 22 1/2 calls traded.

Traders pushed their time horizon out a little further this morning, too. On the Pacific Exchange, volume in the April 22 1/2 calls also jumped sharply, with more than 10,000 contracts trading, compared to open interest of 6,845. Prices for the calls hopped 1.15 ($115) to 2.15 ($215).

Compaq's stock has enjoyed a nice run so far this year especially considering the carnage visited upon the tech sector. As of yesterday's close, Compaq was up 34% year-to-date.

Paul Foster of 1010WallStreet.com in Chicago, noted that the implied volatility (a key component of an option's price and the market's estimate of how much the underlying security can move) on the April 22 1/2 calls went out last night at 60 and went up to 71-72 this morning, a significant jump. Implied volatility generally moves higher when there's a lot of demand to buy options.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,903.61 +98.81 0.56%
S&P 500 2,070.35 -0.30 -0.01%
NASDAQ 4,772.4180 +7.0380 0.15%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs