Options on investment bank
picked up Monday in the wake of a research report by a
Salomon Smith Barney
analyst who said Bear Stearns "acknowledges it would consider acquisition offers."
The Friday report from Guy Moszkowski of Salomon, which is a unit of
, said that he met with Bear Stearns' CEO Jimmy Cayne, who "made it quite clear that an acquisition is not out of the question." The buyer, however, "would have to be willing to pay at least 4 times book value, or nearly $120 per share today."
Moszkowski pointed out that he didn't "believe any particular deal is on the near-term horizon, and Cayne noted that to date most talks have ended relatively quickly."
That didn't stop options action from perking up on Bear Stearns, as its shares soared 5 1/4, or 11.3%, to 51 9/16.
The August 50 calls on the
Chicago Board Options Exchange
were seeing brisk action, with 529 contracts trading, enough volume to move the option's price up 2 1/2 ($250) to 3 1/8 ($312.50). Typically, Bear's options are not busy.
Call options appreciate along with a stock's price and often rise on speculation of an increase in the immediate future. As a result, they are often monitored and used by speculators playing takeover situations.
The September 50 calls -- which expire the third Friday of September and are useful for longer-term speculators -- have seen 121 contracts change hands and the price rise 2 ($200) to 4 3/8 ($437.50) halfway through today's session.
Options action in
, a small filtration systems maker, has caught the attention of options market pros lately as volume and prices of the stock's options have picked up markedly.
On Friday, traders were showing a lot of interest in the August 22 1/2 calls on the CBOE, where more than 1,000 contracts traded, compared to open interest of 249 contracts at the close Thursday.
Pall shares were down 1/16 to 19 11/16 Monday. The August 22 1/2 calls were most active, with 122 contracts trading on the CBOE, with the calls down 1/2 ($50) to 3/4 ($75).
On Monday, Pall option's implied volatility -- a crucial part of an option's price and the measure of how much the market thinks the stock can move -- remained at levels higher than 90.
Paul Foster of
in Chicago pointed out that over the last year the average implied volatility on Pall options has been 46-47. Foster said he didn't see any news on Pall, and it isn't expected to release earnings for about another month and a half. "Something's out of the ordinary," Foster said.
The options market so far was greeting
announced acquisition of
with a gaping yawn.
And perhaps for good reason, considering the uncertainty surrounding the deal. Not only is the deal expected to take a long time to close, but also there has been resistance to a deal -- even before it was announced officially --among some U.S. lawmakers.
On Monday, shares of Deutsche Telekom were getting crushed, down 5 1/8, or 10%, to 46 3/8, while VoiceStream was slumping 10 3/4, or 7%, to 139, but is still up 20% for the month of July.
Clues of what the options market thinks of the deal were scant, however, according to some market pros.
One trader on the
said there wasn't much activity in VoiceStream options Monday. The trader noted there were a few put-options sellers and a few call buyers, but that was about it.
American Stock Exchange
, the out-of-the-money August 140 calls were trading down 9 1/2 ($950) to 8 5/8 ($862.50), while the August 140 puts were trading up 1/2 ($50) to 8 ($800).
Options activity in Deutsche Telekom has been dominated by put selling, as traders sell the puts they've bought in the last few days to close out positions, according to a CBOE floor source.
The heaviest action in Deutsche Telekom options was in the August 50 puts on the Amex, where nearly a 1,000 contracts have changed hands. The puts were trading up 1 5/8 ($162.50) to 4 3/8 (437.50).
The CBOE said today it will begin trading in decimals on Mon., Aug. 28, in options on
The minimum price variation for those options will be 5 cents in options that trade below $3 and 10 cents for those that trade above $3. The change to decimals in those options is being made in conjunction with the beginning of decimal trading in the underlying stocks at the
New York Stock Exchange