Bullish options activity in
suggests investors are checking in to the hotel franchiser, hoping the company has finally put its accounting woes behind it.
The price on Cendant's May 12.50 calls was up $1.25 ($125) to $3.50 ($350) on volume of 250 contracts Wednesday, following strong action on Tuesday, when almost 3,300 of the company's April 15 calls changed hands.
Investors abandoned Cendant in April 1998, after revelations of accounting fraud emerged from the company's breakneck merger and acquisition activity. Recently, though, its shares have been on the rebound, rising more than 60% year-to-date. Shares slipped today, falling 40 cents to $15.31 around midday.
"Investors think it's cleaning up its act," says Lillian Seidman, options trader at
. The company is due to report earnings next Wednesday before the market opens, and Seidman says despite the fact that the options premium is a "little high," she thinks it's a good way to play the stock right now.
Options investors are also showing some old tech favorites -- and semiconductors in particular -- a little kindness today, for a change. A bullish
Salomon Smith Barney
call including a
group upgrade from outperform to neutral sparked confidence in a range of tech names, not just those mentioned in the report.
More than 2,600
April $47.50 calls traded with the price running up 40 cents ($40) to 90 cents ($90). Micron stock jumped $3.98, or 10.4% to $42.10.
May 60 calls traded, with the price rising 10 cents ($10) to $4.10 ($410). Microsoft is up 92 cents to $60.60.
Semiconductors were on fire following the Salomon note, with the
Philadelphia Stock Exchange Semiconductor Index
jumping 10% at midday.
And more than 16,000
April 27.50 calls traded, with the price up 75 cents ($75) to $1.25 ($125). Intel stock is up $2.87, or 11.6%, to $27.64.
The price of
July 45 calls was up $3.10 ($310) to $9.50 ($950) with about 4,100 contracts changing hands. The stock was up $4.10 to $46.76 at midday.
Seidman expressed confidence in today's tech stock upside. She sees 1735 in the
as "a good support level." It is currently sitting at about 1655.
"It may not be a bear market rally," she says of today's action.