Union Carbide Calls Stay Busy

Speculators may be chasing the chemical company's options.
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Next up on the rumor mill might be

Union Carbide

(UK)

, where call-option trading seems unusually busy for a company whose stock hasn't been going gangbusters.

Union Carbide has been in the midst of a minirally, but it hasn't approached its 52-week high of 55 3/4. On Wednesday, it closed at 37 5/8, and today it was up 1/2 to 38 1/8.

Chatter in the Union Carbide options pit at the

American Stock Exchange

focused on "interesting speculation that could be takeover speculation," says one trader, who adds that there have been rumors of a European firm making a run at the chemical company.

Michele Skupp of the Seidman-Skupp options team at

Miller Tabak Hirsch

said that Union Carbide premiums "were still high" but didn't comment on the potential of a takeover or any other factor that could give the stock a dramatic lift.

This morning, the company's options weren't running away, but they were showing some vibrancy, especially the March call contracts. Volume on the March 37 1/2 hit 435 as the price moved 3/8 ($37.50) to 3 7/8 ($387.50). The price of the out-of-the-money March 42 1/2 calls was up 1/8 ($12.50) to 1 3/4 ($175) on volume of 230 contracts by midday.

Signs that

Transamerica

(TA) - Get Report

could be acquired were showing in the options market Wednesday.

Both Larry McMillan of

McMillan Analysis

and Paul Foster of

1010WallStreet.com

said they saw unusually high options volume and high implied volatility readings yesterday afternoon. This morning, Dutch insurer

Aegon

said it agreed to acquire Transamerica for $9.7 billion in cash and stock.

Transamerica options volume topped 2,900 compared to its typical traffic of just over 100. The implied volatility readings -- a gauge of a stock's expected price movement -- showed an even greater disparity from its normal levels. Foster said that for the past two years, Transamerica's implied volatility was stable at about 28. But Wednesday, it had climbed to 68 from around the 40 level.

The

Chicago Board Options Exchange

Wednesday announced its latest technology, the Rapid Opening System, which will allow all options on a specific stock to open as a single event within seconds of the stock's opening.

The ROS electronically matches marketable customer buy and sell orders received before the opening trade or assigns the orders to market makers at the opening price.

Of the four U.S. options exchanges, the CBOE has been quickest to ratchet up its technology capacity ahead of the January 2000 debut of screen-based options trading.

TheStreet.com E-Commerce Index

options traded 12 contracts in its debut on the American Stock Exchange Wednesday. Specialized index options traditionally are slow starters, and traders are spending most of this week concentrating on expiration-related plays.