led the options charge Wednesday with some heavy September put-buying and call-selling, indicating that someone doesn't seem to have much faith in the near-term stock price.
Roughly 11,165 MCI WorldCom September 85 calls crossed at just before noon, well above the current open interest in the option. According to one market maker in the
Pacific Stock Exchange
trading crowd, the trade crossed in two chunks of 5,000 contracts apiece, but the initiating order was a sale, showing a somewhat bearish tilt.
Meanwhile, about 11,000 in total of the September 80 puts were also traded, about 7,400 on the
Chicago Board Options Exchange
and 3,300 on the Pacific.
What has raised the eyebrows of traders is that this isn't scattered retail-order flow. It appears it is concentrated. "We don't know what the news is yet, but it feels like something might happen," the market maker said. "Somebody doesn't like the stock. It's been predominantly one firm doing it, and the trades were about five minutes apart."
The September 85 calls were up 1/16 ($6.25) to 1 ($100) on the Pacific, while the September 80 puts were down 1/16 ($6.25) to 2 7/8 ($287.50) in Chicago and down 1/4 ($25) to 2 3/4 ($275) on the West Coast. The telecommunications giant's stock price was up 3/4 to 79 7/8.
Meanwhile, financial stocks were under fire Wednesday after an
earnings warning from one of the industry's anchors,
options were active again Wednesday, after breaking the surface earlier this month (the activity got some electronic ink in
this column at the time).
But Wednesday's trade looked somewhat like a "roll" out of the September 35 puts and into the October 35s. Options investors will often simply fiddle with the dials, changing the structure of their position using later-dated options or options with a different strike price but keeping the sentiment behind the bet the same.
The stock was down 7/16 to 35 3/16.
and other drug options lurched onto the most-actives list as well. "The stocks have been active for the past few days; what took the options world so long to catch up?" asked Michael Schwartz, the senior options strategist at
And an old takeover rumor was resurrected in the form of a pill. Some of
out-of-the-money call options spiked higher Wednesday along with the stock, up 1 1/4 to 13 3/16.
The September 15 calls nearly doubled, up 9/16 ($56.25) to 1 ($100) on volume of about 250 contracts and open interest of 586. September 17 1/2 calls edged up 1/16 ($6.25) to 5/16 ($31.25), but the September 20 calls were down 1/8 ($12.50) to 1/8 ($12.50), suggesting speculators are planning for a huge premium.