Big Names Steal Witching Thunder from Index Plays

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From the looks of this morning's trading, the lull in the American and British bombing of Iraq and an impending impeachment vote have knocked the three witches of expiration right off their brooms.

"It looks like maybe the momentum was finished off yesterday," says

R.F. Lafferty

options boss Jay Shartsis, referring to the

Dow's

85.

With the Dow frozen in single digits today after a morning jump, the overall market doesn't look like it will provide much fuel for a fire at the close as traders adjust their positions in major index component stocks. "Right now, the top five stocks in the

S\&P 100

, or OEX, are within a half point of their strike price, so the market doesn't look like it'll move too far," said Jerry Hegarty of

Cape Market Research

at about 11:30 a.m. "Anybody looking for a big move today will be disappointed."

While many scour the index options for insight, major action today was coming in some of those large stocks Hegarty mentioned, as traders jockey to see which stocks will get "pinned" (close exactly at strike prices) and have options assigned to the sellers. In those top five OEX stocks, Hegarty placed

GE

(GE) - Get Report

,

Coke

(KO) - Get Report

,

Exxon

(XON) - Get Report

,

Intel

(INTC) - Get Report

and

Merck

(MRK) - Get Report

.

At New York discounter

Wall St. Access

, options trader Cary Steiner says the company's desk had traded more than 15,000 contracts this morning in names such as

Intel

,

Microsoft

(MSFT) - Get Report

and

Compaq

(CPQ)

.

Intel's quick three-point jump to 120 this morning was cause for some of it. "Basically when Intel started moving, we were closing down the short sides of some spreads we had on for clients," Steiner says. In Microsoft, Steiner says, investors seemed keen on selling premium for the past two sessions, primarily in the December 135 and 140 calls.

Indications that traders glean from prices in at-the-money options show the S\&P 100 likely to close in the 585 range. At midday, it was at 585.36, up 1.73 on the day. Volume was keeping to a tight range, concentrated between the December 580 and 585 strike prices. The December 585 calls traded more that 8,200 contracts and were trading at 2 1/8 ($212.50) at midday. The December 580 put volume topped 8,500 and cost just about 11/16 ($68.75).

Other traders pointed to the fact that political crises had many players going short this week. That situation, according to

Strome Susskind

options pro Kyle Rosen, may cause a pop at the end of the session. "With all the bad news, the speculators were pressing bets on the short side early in the week. That may cause the need to buy at the close."

Still, Rosen says he finds it difficult to get a reliable indication until about 30 minutes before the close, when he watches the price movement of at-the-money puts and calls to see which contracts move more dramatically.

Our

Crystal Ball of the Week

award goes to the prescient traders who bought more than 1,400 December 25 puts on

Boston Scientific

(BSX) - Get Report

before the news came out that the company could be the subject of a federal government inquiry into one of its key medical products.

Those puts traded in the 3/8 ($37.50) range yesterday, but today were worth 2 11/16 ($268.75) as the stock fell 2 13/16 to 22 7/8.

Today, rumors are coursing through the market about investigations into the medical-device company's recall two months ago of its Nir with Sox stent product. The

Department of Justice

has sent subpoenas to hospitals requesting records about the Nir stent product.

BSX did not return a call seeking comment.