Subject: [NEXTEL-1] Options Report Nextel's Calls Lure In Investors

From: [email-masked]
Date: Wed, 18 Dec 2002 15:59:07 -0500

http://sg.biz.yahoo.com/021218/72/35tcs.html

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/ 

Home -
Yahoo! -
Help

Singapore - International - Brokers - Editorial - AFP - Asia Pulse - Dow Jones - Reuters - WSJ.com - Countries - Industries

International

Wednesday December 18, 8:33 AM

Options Report: Nextel's Calls Lure In Investors

By Kopin Tan
Dow Jones Newswires
NEW YORK -- Option trading stayed defensive and listless as many investors took profits after stocks' run-up Monday.
But yesterday's fairly shallow pullback -- considering the weak outlook from McDonald's Corp. and soft retail sales data -- was a relief to those hoping for a year-end rally, who continued to look for reasonably priced options with which they can make bullish bets.
Among the calls that traded briskly, for instance, were those on Nextel Communications Inc., which traders noticed have attracted some buyer attention recently. It isn't clear what drove these trades. The wireless carrier backed its prior 2002 forecasts for operating cash flow and confirmed it expects to have 1.9 million net additional subscribers this year. But its stock price has run up steadily since June and in recent sessions, and is hovering 10% from its 52-week high, so it is possible that some cautious investors might be selling stock to lock in gains while replacing the sold stock with calls to maintain some upside exposure.
Nextel rose 41 cents to $13.23 at 4 p.m. in Nasdaq Stock Market trading. Its January 12.50 calls traded 2,984 contracts, compared with open interest of 31,967 contracts, and gained 15 cents to $1.60 at the American Stock Exchange. The February 15 calls traded 1,265 contracts, compared with open interest of 3,545 contracts, and gained 20 cents to $1.10 at the Chicago Board Options Exchange.
The CBOE's market volatility index, or VIX, barely budged and closed up 0.18 to 30.16. With many investors selling option contracts in anticipation of a quieter holiday stretch, there is often some downward pressure on volatility heading toward year-end. But the list of investor concerns -- from geopolitical fears to the impact of rising oil prices on the already wobbly economic recovery -- is keeping volatility propped up as some investors continue buying options for protection, traders say.
Defensive puts were fairly active as investors guarded recent gains and shielded their stock.
Intel Corp., for example, fell 33 cents to $17.89 on Nasdaq. Its January 17.50 puts traded 5,333 contracts, compared with open interest of more than 49,000 contracts, and gained five cents to $1 at the Amex. Bristol-Myers Squibb Co. fell 77 cents to $24.13. Its December 25 puts traded 4,788 contracts, compared with open interest of 15,447 contracts, and rose 40 cents to $1.05 at the CBOE.
Yahoo Corp.'s January options traded heavily with much of the volume accounted for by what could be a risk-reversal trade -- with an investor selling January 17.50 puts to buy January 17.50 calls. It isn't clear what drove the trade, but the investor might be trying to capitalize on what he thinks are attractive put premiums.
Yahoo stock edged up 14 cents to $17.44. At the Philadelphia Stock Exchange, the January 17.50 calls gained five cents to $1.30 as 13,515 contracts traded, compared with open interest of 10,199 contracts. The January 17.50 puts fell 15 cents to $1.35 as 13,502 contracts traded, compared with open interest of 4,497 contracts.
Special Offer: $10 off WSJ.com for Yahoo! users. Subscribe now!

Copyright © 2002 Dow Jones & Company, Inc. All rights reserved.

Copyright © 2002 Yahoo! Inc. All
Rights Reserved.

Privacy Policy - Terms of Service - Community - Help