Commodities swung back into the Wall Street limelight Monday with a massive oil-driller merger deal, highlighting the shotgun-marriage trend in that sector, and some heavy retail options trading in gypsum wallboard maker
A deal announced Monday by
lit a fire under the drilling sector. Schlumberger agreed to spin off its offshore contract drilling business and merge it with
"This is an underowned sector among institutions, and they've been beaten up so bad they've had to consolidate," said one head of a major institutional options desk. "All these companies were on the fringe in the last year or so, and now people want a little more play in the group."
Among the more active index plays were the July 70 and September 70 calls in the oil-services index, which trades as OSX on the
Philadelphia Stock Exchange
. The OSX was up 0.45 to 79.90.
July 70 calls gained 5/8 ($62.50) to 10 1/8 ($1,012.50) on volume of 3,000 contracts, compared with open interest of 8,588. September 70 calls gained 3/8 ($37.50) to 13 5/8 ($1,362.50) on volume of 3,000 contracts and open interest of 7,775.
Monday raised its target price on oil stocks such as
, citing an increase in oil prices and technical factors. With the stock up 3 5/16 to 117 1/2, the oil giant's August 120 call options shot up 1 1/16 ($106.25) to 2 7/8 ($287.50). October 120 calls gained 2 1/2 ($250) to 6 1/8 ($612.50) on roughly equal volume and open interest of 820 contracts.
Meanwhile, there were a few other companies with unusual options activity but no news, among them
ARM Financial Group
, oft-mentioned as among the lowest-rated financial services stocks by Wall Street analysts. The company provides retail and institutional products for retirement savings, annuities and guaranteed investment contracts.
Call options, nevertheless, were up across the active strike prices. ARM's stock was up just 7/16 to 9 1/2, not far off its 52-week low. August 10 calls ticked up 1/2 ($50) to 1 3/8 ($137.50), and November 15 calls gained 7/16 ($43.75) to 1/2 ($50).
Finally, heavy retail call buying in USG, up 1/2 to 60, attracted the attention of options players, with the August 60 calls gaining 1/4 ($25) to 3 1/2 ($350). August 65 calls were up 3/8 ($37.50) to 1 7/8 ($187.50).
USG is a holding company whose subsidiaries manufacture and sell
gypsum wallboard under the brand name
and cement board under the
agreed to buy
in a transaction valued at $531 million in Goldman stock, options and cash. In a press release Monday, Goldman said the transaction is scheduled to close in the fall and is subject to regulatory approval.
Hull Group provides electronic market-making and transaction services on 28 exchanges. In May,
broke the news that Hull
filed a registration statement with the
Securities and Exchange Commission
for an initial public offering, which it had expected to complete in this month. Instead, however, it chose to sell.