Options action in
Wednesday continues to raise the eyebrows of some options market pros.
Options activity has been heavier than usual
lately, with call buying popping up, which indicates that speculators are betting that there will be high times ahead for the stock. Also, implied volatility -- a crucial part of an option's price and the measure of how much the market thinks a stock can move -- in Pall's options has drawn attention. Implied volatility only indicates the expected severity of the move of the stock, not its direction. But considering that call buying has been taking place in the options recently, it's clear some people are betting for an upside pop in the stock.
Paul Foster of
in Chicago said the implied volatility on Pall remained high Wednesday, though it was down a bit from Tuesday. The implied volatility level for the August 22 1/2 options stood at 83 while for the September 22 1/2 options it was at 72 to 73, he said. The 52-week average implied volatility level on Pall options is about 44, he said. He also noted that a week ago, implied volatility on Pall spiked up from the mid-50s to 80 to 85. Implied volatility has remained around that level for the most part since then.
Pall, an East Hills, N.Y., filtration systems maker, was trading Wednesday up 5/16 to 20 9/16.
Richard Eastman, an analyst at
Robert W. Baird
, said that the company's earnings growth is pretty solid. But Pall shares have been underperforming peers, Eastman noted. He rates Pall a market outperform, and his firm has no investment banking relationship with Pall.
Trading Wednesday was heaviest in the August 22 1/2 calls, where 265 contracts have changed hands. The calls were up 3/16 ($18.75) to 1 1/8 ($112.50). Speculators will buy call options when they expect the price of the underlying stock will jump, instead of buying the stock outright because they don't have to shell out near as much money to buy the call option.