Welcome to another day in press release-driven land, where earnings announcements, news of splits or the latest developments (however newsworthy) in a firm's .com connection are usually enough to spike interest, the stock price and options activity. And with overall options activity muted today -- except in the tech sector, of course -- individual news announcements tended to stand out.
Today's winner so far is
, although undoubtedly it would have rather had the title for announcing positive news. However, options activity was jumping in the software company's front- and next-month put options after PeopleSoft said it would cut about 450 jobs. The jettisoned jobs came after PeopleSoft reported fourth-quarter earnings 1 cent below Wall Street estimates. As a result, PeopleSoft's stock was dropping, down 3 to 19 7/16.
The company's in-the-money February 20 puts were seeing the most action, trading 2,500 contracts at climbing prices that reached 1 7/8, or $187.50 per contract. Also, the February 17 1/2 puts and the in-the-money March 20 puts were busy, moving 1,450 and 1,500 contracts respectively. The February 17 1/2s went out against no open interest.
Michael Schwartz, chief options strategist for
, said the activity was likely an unwinding of in-the-money puts, such as the February 20s and 22 1/2s, for the lower strike price February 17 1/2s. Market makers appeared to be selling the March 20s themselves to take in some capital as a hedge, Schwartz surmised.
The put activity in PeopleSoft had curiously edged up over the past few days as the company approached its earnings announcement, Schwartz noted. "I think there was a whisper out there that the earnings news would be bad," he said.
PeopleSoft wasn't the only active tech stock today, as
-- which saw heavy volume on a slow day -- was extremely busy.
Also among the techs, semiconductor maker
Advanced Micro Devices
saw 5,200 contracts of its in-the-money February 22 1/2 calls move against open interest of only half that amount. In addition, the trade came on a day when the stock was not moving at all. AMD was unchanged at 22 7/8 this afternoon.
"I think this is abnormal volume," speculated Joe Sunderman, senior research analyst at
Schaeffer Investment Research
. "A lot of news has already come out on AMD." Much of the activity was call-buying, indicating a bullish stance, Sunderman said, adding that maybe some investors believe the stock has been overly beaten down with the rest of the semiconductor sector. The stock has lost more than one-third of its value in recent weeks. "Maybe investors are seeing another turnaround," he said.
Another company getting some reaction to its latest news was
upgraded the company to trading buy from market outperform today. The stock jumped almost 4% on the news, up 2 7/16 to 66, this afternoon.
Kodak saw 3,000 contracts of its July 65 puts move against open interest of just 406 contracts. In addition, the same number of contracts traded in its LEAPs, the 2000 January 70 puts.
A large institutional player sold both sets of puts, perhaps playing the good news of the Goldman upgrade, according to a trader in the Kodak options pit on the
Chicago Board Options Exchange