Now that the sky's not falling on the stock market this week, it may be time to take notice of some big trades in options for
In the wake of
earnings Wall Street couldn't stop crowing over, Microsoft posted a fat trade for 10,000 November 90 puts Wednesday. The primary market maker,
, has been among those struggling to keep order flow for big issues coming their way as companies such as Microsoft were multiple-listed on more than one national option exchange.
With multiple listings of Microsoft options and others just weeks old, big market makers have
jumped on -- even, some say, lost money for -- clients in order to lure options order flow to their hometown exchange.
But the fact of the matter is, the delicious prices customers have enjoyed as a result of the options listings war can't last forever. "I don't think these tight markets are going to keep going, though we would love it if they would," said one institutional options trader, one of the many with big firms that have benefited from multiple listing of options.
"I'd be fooling you to say it doesn't make business more difficult, that you have to honor a competing price
on another exchange that may or may not be real," said Michael Cole, partner with Cole Roesler, the Microsoft market maker on the West Coast. "Hey, it's business as usual."
The November 90 puts crossed at a price of 3 1/4 ($325) per contract, down 2 7/8 as Microsoft's share price shot up 4 1/2 to 90 3/4 by midday.
While the bears headed for the exits considerably poorer, volume increase in Mister Softee's out-of-the-money November 95 calls, which jumped 13/16 ($93.75) to 2 3/16 ($218.75) on volume that was headed over 10,000 for the day.
was on the receiving end of a ruling in Florida's Third District Court of Appeals in Miami had juiced some of the options play on the company early this afternoon.
The appeals court agreed last month to reconsider a pro-tobacco ruling it made in the landmark
class action, rekindling the prospect of huge punitive damages against cigarette makers.
Philip Morris stock was down 1 3/16 to 29 9/16, and November 30 calls were down 7/8 ($87.50) to 1 1/8 ($112.50) on volume of almost 1,000 contracts.
cheap call options Tuesday in
after the company issued a profitability warning had also picked up some on Wednesday's rebound.
The value of the November 37 1/2 calls nearly halved to 2 15/16 ($293.75) Tuesday but by midday Wednesday, those same calls were trading at 3 3/8 ($337.50). The stock, meanwhile, has bounced 1 3/4 to 40 1/4.