Remedy Calls Heat Up in an Otherwise Quiet Options Session
Options trading was quiet today amid moderate but broad selling pressure. Investors took their cues from company news in the absence of any clear-cut market trends.
News that software maker
Remedy
(RMDY)
is being acquired by rival
Peregrine Systems
(PRGN)
for $1.08 billion in stock and cash jump-started call-buying in the stock.
Remedy's July 25 calls were among the most actively traded on the
Chicago Board Options Exchange
this morning, with 4,950 calls changing hands, though volume has since dropped off. Calls give buyers the right, but not the obligation, to buy the underlying stock at a set price and generally indicate bullish sentiment. Remedy recently was up a hefty $11.31, or 61.7%, to $29.66, which means the July 25 calls are in the money.
Miller Tabak
trader Lillian Seidman says the trend on Remedy today is "obviously bullish." Though she also noticed a modest uptick in July 25 puts as well, she believes it's likely indicative of the seller looking for a profit on the put contract as opposed to a bet that the stock will fall through 25. A put gives a buyer the right, but not the obligation, to sell the underlying stock at a set price.
Joe Halpern, a trader at
Letco
, says movement in formerly active stocks was slowing down somewhat today as investors try to get a handle on the market's direction, particularly in tech. That could mean some relief for stocks such as
Juniper
(JNPR) - Get Report
, which took a beating Friday, dropping almost 19% after the networking equipment maker
warned second-quarter results would fall far short of expectations.
Though the stock was still under pressure today, lately off another 10%, Halpern says put buying has leveled off a bit, now that most of the damage has been done.
On a similar note, put buying in cable company
NTL
(NLI)
also was active this morning though that tailed off into the afternoon, notes Halpern. Activity in NTL's June 22.50 calls was up a bit with 1,847 changing hands on open interest of 4,631. Open interest indicates the number of contracts, whether puts or calls, on a particular stock, that haven't been closed out yet.