H-P Options Become Today's Hot Play

Big trades turn up as Hewlett-Packard's stock rockets.
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Animal-house stock

Qualcomm

(QCOM) - Get Report

today was joined by its bigger, older brother

Hewlett-Packard

(HWP)

in the frenzy that's unfolded in technology-stock options trading lately.

Qualcomm rebounded 20 bucks again Thursday before settling back, but the stock remains very difficult to hedge, according to options market makers.

So difficult, in fact, that Qualcomm has become the stuff of homicidal folklore. Rumors were swirling that Qualcomm stock this week was so volatile it was putting the

Pacific Exchange

market maker in Qualcomm options out of business. "We're 100% sure they're bankrupt," said a representative from one New York options-trading firm late Wednesday.

"Nonsense," said a representative of

Letco

, the Qualcomm market maker on the San Francisco trading floor, who, if bankrupt, was still bothering to answer the phone.

Welcome to the craziness of options, where volatile stocks like Qualcomm -- and Thursday, Hewlett-Packard -- turn investors into instant heroes or goats.

Qualcomm on Wednesday was apparently drawing big money into the options pits, with an investor placing a 5,000-contract bet on the November 300 puts and 340 calls. The investor sold out of the 300 puts, but so far doesn't appear to have sold the November 340 calls. "Whoever bought those, by the way, left about $30 million on the table. They could have sold them at 70," or $7,000 per contract, at the peak of the option's value, said another market maker. (At that time, the stock was trading close to 400.)

Those same November 340 calls on Thursday were trading at 12 ($1,200 per contract).

Hewlett-Packard: Join the discussion on

TSC

Message Boards.

Meanwhile, Hewlett-Packard's stock gained 11 9/16 to 92 9/16, and its call options were also rolling higher on earnings and its rollicking

spinoff,

Agilent Technologies

(A) - Get Report

.

H-P's most active options were, not surprisingly, November 90 puts, down 12 3/8 ($1,237.50) to 5/8 ($62.50). It would be worth checking in by expiration Friday to see if those puts expire worthless.

But the optimism about H-P's prospects looks likely to extend beyond just one day. December 100 calls were the next most active and shot up 1 1/16 ($106.25) to 2 1/2 ($250) on volume that was nearly 3 times the open interest in that strike price.

Further away from the big names Thursday, some interesting plays were taking place in

uBid

(UBID)

and

Documentum

(DCTM)

.

uBid's stock price was down 5/8 to 43 3/4, but its out-of-the-money call prices were rising nonetheless. Its November 45 calls gained 1/4 ($25) to 1 7/8 ($187.50), November 50 calls added 3/16 ($18.75) to 9/16 ($56.25) and December 45 calls gained 1 3/4 ($175) to 6 3/4 ($675).

Documentum shares have shed 3 5/8 to 32, and a huge trade in the November 30 calls crossed this afternoon. Roughly 1,700 contracts traded at prices of 3 ($300) and 3 3/4 ($375) on the

American Stock Exchange

and the

Philadelphia Stock Exchange

, respectively.

Ya heard it here

first:

Knight/Trimark

(NITE)

confirmed its purchase of the privately owned

Arbitrade

options-trading firm in a press release Thursday.

The price tag: $460 million in stock based on Knight's current share price, just a few million shy of the $500 million

Goldman Sachs

(GS) - Get Report

paid for the

Hull Group

in July.

Knight/Trimark's stock was up 3 3/4 to 47 3/8.