Food company stock may be soaring on industry consolidation hopes after
received a takeover offer from
, but options traders aren't seeing anything tasty enough to pass.
Call options on Bestfoods were garnering some interest in the wake of its rejection of an $18 billion, or $66 a share unsolicited buyout proposal from Unilever. Bestfoods said its board unanimously decided that the Unilever offer was "financially inadequate and not in the best interests of Bestfoods, its shareholders and other constituencies."
Shares of Bestfoods have exploded higher, up 11 5/16, or 22.4%, to 61 7/8. Shares of Unilever were tumbling, down 2 15/16, or 6.5%, to 42 1/2.
As for Bestfoods' options, on the
, 505 contracts of the June 55 calls have traded, compared to open interest of 67 as of Tuesday's close. The price of the contract had leaped 5 13/16 ($581.25) to 7 3/8 ($737.50).
Spanking new June 60 calls on the P-Coast were also seeing interest, trading nearly 300 to hit a high of 5 1/4 ($525).
Further out, the July 60 calls were active, with nearly 600 contracts trading, while investors were showing interest in the July 65 and July 70 calls also.
Meanwhile, put option volume on Bestfoods was minimal.
Bestfoods has been a merger candidate in the past. Last fall, merger discussions with
As for other food company stocks, Heinz was up 11.2% to 37 3/4,
was up 1 1/4, or 8.3% to 16 3/8 and
was up 1 1/16, or 6.2%, to 18 1/8.
At midday with the market tanking in part on interest rate jitters and traders' screens awash in red, put options on the
Nasdaq 100 unit trust
were proving a popular item.
The unit trust, better known as the QQQ, was off 2 1/8 to 88 at midday. On the
American Stock Exchange
, nearly 8,600 contracts of the QQQ May 88 at-the-money puts have traded, while the almost 3,800 contracts of the May 90
out-of-the-money puts have changed hands. The May 88 puts were trading for 4 3/4 ($475), up 3/4 ($75). The May 90 puts were going for 5 3/4 ($575), up 1 ($100).
Put options were also proving popular on the
, as evidenced by the
Chicago Board Options Exchange volatility index
, which has spiked up sharply showing investors' willingness to pay higher prices for puts.
The VIX was up 10.72% to 34.18. The VIX rises when the S&P 100 index put buying increases. The VIX, a gauge of fear in the options market, is around where it stood in mid-April.
Scott Fullman, chief options strategist at
Swiss American Securities
, noted that there's been of late a lot of drying up of volume in both stocks and options. Fullman said that part of the reason is that people aren't convinced that the market can make a sustained move higher.
Also not helping the market is the fact that the
is going to meet in about two weeks and there is a chance it will raise the target on the short-term federal funds rate by 50 basis points instead of the 25 basis point hikes it has implemented for now.
options were a market favorite again Wednesday -- after its disastrous session Tuesday -- when it
lowered its earnings and revenue expectations for 2000.
downgraded AT&T to attractive from buy. AT&T shares were still in a slump, off 2 1/16 to 39 7/8.
With the further slump in the stock, it looks as though some investors are perhaps seeing a bottom in the shares. AT&T June 40 out-of-the-money call options were active, with 4,312 contracts trading on the CBOE. The contract's premium had fallen 1 3/8 ($137.50) to 3 ($300).
in-the-money July 50 puts were trading up and were active, with 6,024 contracts changing hands. Last trade on the puts was at 10 ($1,000), up 7/8 ($87.50).
For those investors looking for intraday volume and put/call ratio data on the Internet, it's now available on the CBOE Web site at
http://www.cboe.com/Volumes/ViewHalfHourlyUpdate.htm, in the "Trader's Tools" portion of the site. The CBOE equity and index volume numbers -- with the calculated put/call ratios -- are updated every half-hour. Also in the Trader's Tools section are daily open interest numbers.