Some options traders were showing confidence that better days are ahead for beaten-up chip giant
While the options market was reflecting the subdued mood of the equity market, one Wall Street options trader said there was some notable put-option selling in Intel on Monday morning, in the January 35 puts and December 37 1/2 puts, totaling about 6,000 contracts around midmorning. Intel's stock was up $2.25 to $36.25. When traders sell puts, they are betting the price of the stock will remain higher than the option's strike price and the options will expire worthless. That allows them to keep the premium they took in for selling the option.
At about 10 a.m. EST, on the
Chicago Board Options Exchange
3,000 of the January 35 puts traded, down 5/8 ($62.50) to 3 1/4 ($325). By midday, those puts were off 1 1/8 ($112.50) to 2 3/4 ($275). The December 37 1/2 puts on the
American Stock Exchange
attracted volume of more than 3,000 contracts, as the price slid 2 1/4 ($225) to 2 ($200). By selling puts in those two strike prices, traders are betting that Intel's stock will be trading above 37 1/2 by Friday, which marks December equity option expiration, and above 35 by Jan. 19, January's option expiration date.
week, the chipmaker said fourth-quarter revenue won't meet analysts' expectations. By selling the puts, traders are betting that for the time being, all the bad news is priced in Intel's stock.
In addition, Intel said today it has
developed a low-voltage transistor that will enable a new generation of faster processors within the next five to 10 years.
Meanwhile, the bearish action on
has continued, according to some options market watchers.
Last week, the
options team at
noted continued put buying in Eastman Kodak options as investors sought either protection for the Kodak stock positions or a nice point of speculation on a downdraft. A put option gives the purchaser the right to sell the underlying security for a specific price by a certain time.
Eastman Kodak is slated to meet with analysts tomorrow in New York and provide an outlook for the company for 2001. Judging by the trading recently in Eastman Kodak's options, traders aren't betting on positive things to come out of the meeting.
With shares of Eastman Kodak slumped 63 cents to $38.38, put options again were the popularly traded option. About 500 of Kodak's January 40 puts traded on the Amex Monday morning, up 1/8 ($12.50) to 3 3/4 ($375).
Recent options action in
, the trucking company, have popped up on the radar screens of some options market analysts as the action in the stock warmed shareholders' hearts just in time for the holiday season.
The action in the company's stock and options comes in the wake of the November acquisition of trucking company
for a hefty premium. That deal juiced speculation that other trucking firms would get bought out.
As shares of CNF rose $1.75 to $29.50 Monday, the prices of the stock's options have drawn the interest of some market pros. Implied volatility, a key component of an option's price, has been high lately on CNF options, showing that traders are trying to estimate the size and likelihood of a move in the stock. (Implied volatility is an annualized estimate by the market of how much the underlying security can move. Generally, the implied volatility portion of the option's price rises ahead of a corporate news event, like earnings. Implied volatility -- which is reflected clearly by rising options prices -- doesn't indicate which direction people potentially think the underlying stock will move, only the severity of a potential move.)
The Skupp-Seidman team said today that call options prices jumped noticeably on CNF Friday.
Monday's volume in CNF options leaned to call options. The most popular with traders were the December 25 calls, where 337 contracts traded. The December 25 calls were up 1 1/4 ($125) to 4 3/8 ($437.50). A little more than 100 of the January 32 1/2 calls traded, compared to open interest of zero contracts as of Friday's close. Open interest refers to the number of contracts in existence. The January 32 1/2 calls were up 1/16 ($6.25) to 2 1/8 ($212.50).