Smaller Options Plays Get Some Sun on a Postexpirations Friday
On a clear day, you can see the oddest things.
With volume thin and lots of options investors on vacation or scrambling to deal with more multiple listings, small options plays overlooked in the heat of last week's expiration are popping up like palm trees in the snow.
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Listings Update
Now we return to the multiple-listings war. We checked out the spreads in Tellabs (TLAB Quote) and Microsoft (MSFT Quote) options, both of which were listed Friday morning by the CBOE. Previously, those were exclusive listings of the Pacific Stock Exchange, which so far has declared neutrality in the options war. The Pacific declined to comment Friday after the CBOE said it would list 29 more Pacific- and Philadelphia Stock Exchange-listed options. Of the CBOE's 29 new options, 16 currently are exclusively listed on the PCX and the other 13 are offered only by the PHLX. War rages on: The Philadelphia exchange on Thursday raided seven of the CBOE's proprietary listings, including heavy traders Hewlett-Packard (HWP Quote), Merck (MRK Quote) and Texas Instruments (TXN Quote). As the battle for volume raged on, price spreads on Tellabs options narrowed almost immediately Friday morning. On Thursday, the spreads ranged from 3/8 to 1/2 on the September and October options, but after the CBOE said it would come onstream with a listing, the spreads -- the difference between the bid price and the ask price for the option -- narrowed to 1/4 or an 1/8. "We hoped [another exchange listing] wouldn't happen so soon," said John Oppenheimer, the Pacific's lead market maker for Tellabs. "But I'm sure the Pacific will respond at some level. ... By the end of the day, the doors will be blown off completely." The Pacific has a dilemma. "If they were smart, the Pacific would drag in the Amex to this battle," said one options veteran. "Why not? They want to add to the mix, so they water down the competition. All they do is pick off the leftovers anyway. Get the Amex and CBOE into a fray, the P-Coast can stand on the sides after they list the Amex options to see what the CBOE would do. They want to survive by having them kill each other." The CBOE has already listed Dell (DELL Quote). The following are the options the CBOE said it would begin trading Sept. 1: The 15 current PCX options listings the CBOE will add include: Compaq (CPQ Quote); Sun Microsystems (SUNW Quote); 3Com (COMS Quote); Applied Materials (AMAT Quote); Advanced Micro Devices (AMD Quote); Tellabs; Schering-Plough (SGP Quote); McKessonHBOC (MCK Quote); Alza (ALZA Quote); R&B Falcon (FLC Quote); First Union (FTU Quote); Nike (NKE Quote); Newbridge Networks (NN Quote); Data General (DG Quote); and Baker Hughes (BHI Quote). The 13 additional PHLX listings the CBOE will offer are Home Depot (HD Quote); Time Warner (TWX Quote); Fannie Mae (FNM Quote); Abbott Laboratories (ABT Quote); J.P. Morgan (JPM Quote); Rite Aid (RAD Quote); Newmont Mining (NEM Quote); IDT (IDTI Quote); Analog Devices (ADI Quote); Cambridge Technology Partners (CATP Quote); General Instrument (GIC Quote); Comcast Class A (CMCSA Quote); and Sprint (FON Quote).- Loading Comments...
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