Net Options Move Ahead of Index Changes

Traders also shifted positions after the early release of NAPM data.
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Morgan Stanley Dean Witter is rebalancing its weightings in its widely watched MSCI index, and that move, plus an early, accidental release of the National Association of Purchasing Management data, sent options investors scurrying to shift positions Tuesday

Yahoo!

(YHOO)

,

CMGI

(CMGI)

,

Amazon.com

(AMZN) - Get Report

and

eBay

(EBAY) - Get Report

will be added to the MSCI index after the close of trading Tuesday.

"People were hoping they could afford to sell or at least hedge by Friday, but now with the NAPM number out prematurely, they didn't have the luxury of waiting," explained Kyle Rosen of

Rosen Capital Management

in Los Angeles. "It's supposed to be a level playing field, but it made people sell today rather than waiting."

Also, "People are starting to realize that

Federal Reserve

Chairman Alan Greenspan really means business," added Rosen. "He will do whatever he can to slow the economy down. It's not about pre-empting inflation but slowing the economy down -- and that would be a disaster for stocks."

That concern leaked into the Net sector and threw the key players into the day's most actively traded options. Among the busiest were the long-dated options in

Infoseek

(SEEK)

and Amazon puts and calls.

About 750 December 35 calls and 2000 March 40 puts in Infoseek crossed this morning on the

American Stock Exchange

at prices of 3 3/4 ($375) and 13 1/2 ($1,350).

In Amazon.com country, just over 1,000 contracts in 2001 January 200 calls traded down 9 1/2 ($950) to 20 1/8 ($2,012.50) against open interest of 1,261. The stock price in the Internet bellwether slumped 4 3/8 to 114 5/8 at midday.

Among other large trades,

Mirage Resorts

(MIR)

, a casino and hotel operator, saw a 2,000 contract trade in its October 12 1/2 puts, up 3/16 ($18.75) to 5/8 ($62.50). There were just 25 contracts in the open interest. The stock, meanwhile, was down 1/8 to 13 1/16.

Coulter Pharmaceuticals

(CLTR)

hit the headlines again after the implied volatility

exploded in the options recently.

Coulter unexpectedly had to

resubmit a drug approval application to regulators, and the stock took a hit.

Coulter's September 30 calls, which were trading at 3 1/4 ($325) the last time they were profiled in this column, had slumped to 3/8 ($37.50) by Tuesday.

The latest shots in the options listings war were fired by the

Pacific Exchange

, which said it was going to try to clear the technological decks with a new rule requiring that options generate at least $500 a month in trading revenue for them to continue listing on the exchange.

Alternatively, a market maker could step up and pay $500 to keep the options listed, said Pacific spokesman Dale Carlson, pointing out that even rarely traded options generate quote traffic for which the exchange has to pay. "Some market makers find those to be profitable. Fine, they'll pay for them," Carlson said.

The

Philadelphia Stock Exchange

, meanwhile, pulled a

Rocky Balboa in the listings war and popped back off the mat with further counter-listings:

3Com

(COMS)

,

Advanced Micro Devices

(AMD) - Get Report

,

Applied Materials

(AMAT) - Get Report

,

Compaq

(CPQ)

,

Microsoft

(MSFT) - Get Report

,

Nike

(NKE) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

will begin trading Sept. 1.

AT&T

(T) - Get Report

,

General Electric

(GE) - Get Report

and

Wal-Mart

(WMT) - Get Report

options will begin trading in Philadelphia on Sept. 2, an exchange spokeswoman said.