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It looks like some options traders are setting up for

Eastman Kodak


to provide a less-than-sanguine business outlook at its analyst meeting Tuesday.

Eastman Kodak said the focus of the meeting will be to present the company's 2001 outlook. Shares of Kodak collapsed in late September after it issued an earnings warning. The day before its earnings warning, Sept. 25, the stock closed at $59. The morning of the warning saw Kodak stock get blown apart, to close that day at $44.50. On Friday, Eastman Kodak shares were off 31 cents to $39.13.



options team at

Miller Tabak

has noted continued put buying in Eastman Kodak options this week 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, but not the obligation, to sell the underlying security for a specific price by a certain time.

Implied volatility, a key component of an option's price, has been rising lately on Eastman Kodak options. 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. Based on these current levels in Eastman Kodak, traders may not be sure which way the stock will move but are betting it will be dramatic regardless of the direction.

Paul Foster of

in Chicago said the implied volatility of January 40 options was at 60, compared to the low-to-mid-40s yesterday. In August, the implied volatility in Eastman Kodak options was 27, he said.

Open interest in Eastman Kodak options expiring in December is heaviest in December 40 puts, with open interest of 7,555, far outpacing the December 45 puts, which have seen only 3,900 contracts opened up to this point. Open interest refers to the total number of options contracts not yet exercised or allowed to expire.

Based on the options activity to this point, traders think a slip in the shares may be more likely. For December options, total put open interest is 16,711 contracts compared to just 6,138 call contracts.

Eastman Kodak's board late Thursday named its president and chief executive, Daniel Carp, to an added

chairman post.


Options Industry Council

said that November equity options volume totaled 58.7 million contracts, 23% percent higher than the 47.8 million contracts in the year-ago period.

November month-end equity open interest totaled 66.4 million contracts compared to 48.8 million contracts in 1999, a 36% increase.

Year-to-date volume at of the end of November totaled 613.8 million contracts. That's 56% higher than the 393.9 million contracts traded during the same time period in 1999.