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Fear and anxiety indicators in the options market were sharply higher at midday amid another disastrous session for the

Nasdaq Composite Index

and the

Nasdaq 100



Chicago Board Options Exchange

volatility index and the equity put/call ratio, which some contrarian investors use to trade off of, were sharply higher. The spike in the VIX Friday soared to levels not seen since October 1998. The S&P 100 was down 2.4% to 758.78, off an intraday low of 742.84.

But while some contrarians might be pleased to see the spike in the VIX, Paul Foster of

cautioned that there was also a big spike in the VIX last week, and the bargain-hunters after that episode got hurt. The VIX rises when S&P 100 index put buying increases.

The VIX, while still up 10% on the day, has come in from its intraday peak of 41.13.

Options on the

Nasdaq 100 unit trust

(QQQ) - Get Invesco QQQ Trust Report

, were active. Around 14,500 contracts of the April 83 puts have traded as the price rose 1 3/4 ($175) to 3 3/8 ($337.50). On the call side, more than 9,000 of the April 90 calls have traded as the price hit 1 7/8 ($187.50), down 1 3/8 ($137.50).

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Volatility has surged across the board, said Pat Hickey, principal with


on the

Pacific Stock Exchange

. For example,


(QCOM) - Get Qualcomm Inc Report

volatility was up 15% from yesterday, and that was a 15% jump from the day before, he noted.

He said the market had more of a panic feel to it today.

One notable stock pattern in the options market: Around midmorning, call options in

SBC Communications


have been popping up on the most-actives list.

Since call buying is the favored route of the speculators, part of the reason for the action, market sources said, are rumors that a large suitor is perhaps interested in buying out SBC, the largest local phone company in the United States. SBC recently announced that it and



are merging their U.S. wireless operations.

Another possible scenario, traders said, could be call buyers are placing bullish bets that SBC and BellSouth may eventually do an IPO of the wireless operation, and it could result in the kind of pop



got ahead of its spinoff of




This is exactly the kind of chatter that has driven implied volatility -- the market's best guess at how much a stock can move in either direction -- on SBC options higher than the rest of its peers in the past week.

Foster of

pointed out that three months ago, implied volatility on SBC options was at about 34. Since then it's risen steadily to hit about 63 on SBC's May 45 calls midday Friday, Foster said.

With SBC down 1 3/16 t0 45 13/16 at midday, open interest on the May 45 calls yesterday stood at 46,433 contracts, while the open interest for the May 50 calls stood at 33,264.

In contrast, implied volatility for BellSouth May 50 options was 42 to 43 around midmorning, while for Bell Atlantic's May 65 implied volatility was 39, Foster said.

Activity in the SBC calls today, however, wasn't dramatic. The last trade on the May 45 calls on the

American Stock Exchange

took place at 4 1/8 ($412.50), down 1/2 ($50).

Foster contends that former Baby Bell SBC shouldn't be posting volatility levels in the 60s, and added that he doesn't think it has anything to do with its earnings, which are expected to be released in late April.