STOCKS NEWS US-NetApp put options draw interest

Stocks on the move

Real-time equity news

U.S. stock market report
1432 ET 19Feb2010 NetApp put options grab interest

Shares of data storage equipment maker NetApp Inc fell 1.99 percent to $31.05 in afternoon trade. In the options market, traders exchanged about 18,000 contracts, dominated by 15,000 put options on overall volume that was three times greater than the norm, according to Trade Alert. The most popular contracts were the March $31 and June $32 puts, which traded nearly 15,000 contracts combined.

The action included a buyer of 3,900 June $32 puts at $2.75, according to a source on the exchange floor, said WhatsTrading.com option strategist Frederic Ruffy. Another player bought 9,500 March $31 puts at $1.02 per contract against a position in shares at $31.35. So, it appears that some investors are bracing for potential volatility in NetApp shares in the months ahead, he said. The stock's option implied volatility was up about 1 percent to 32.5 percent. The company announced on Thursday that it will participate in a Goldman Sachs Technology Conference in San Francisco on Feb. 23.

Reuters Messaging: [e-mail]

1325 ET 19Feb2010 Volatility Index tests key 20 psych level

Wall Street's favorite yardstick of investor sentiment, the CBOE Volatility Index, fell below a key psychological level of 20 during this options expiration day. The so-called VIX fell 3.30 percent to 19.95 as the underlying S&P 500 index edged up to 1,111.40. The VIX is a 30-day risk forecast based off of S&P 500 option prices and typically moves inversely to the S&P benchmark. In VIX derivatives, a noteworthy options trade occurred earlier involving the VIX April 25-37.50 (1X2) call ratio spread, said WhatsTrading.com option strategist Frederic Ruffy. The analyst surmised it could be a backspread where an investor sold 25,000 April 25 call strikes at $2.39 to buy 50,000 April 37.50 calls at 62 cents per contract. 'If so, they collected $1.15 and might be closing or rolling a position. On the other hand, if it's an opening backspread, it's a bet that the VIX will either stay below a 25 level or see a dramatic spike towards 40 by April expiration, he said. VIX options are priced off of VIX futures contracts.

Reuters Messaging: [e-mail]

1300 ET 19Feb2010 Traders circle Smith International calls

Smith International Inc's shares hit a new 52-week high and option volume surged after the Wall Street Journal reported that U.S. oilfield services leader Schlumberger Ltd is in advanced talks to buy its rival, citing people familiar with the negotiations.. Smith shares rose more than 13 percent to $37.80 after notching a high of $38.16. In the options patch, volume was seven times greater than norm, with about 30,000 calls and 18,000 puts traded in afternoon trade, according to Trade Alert. One trade was 1,000 March $35 calls at $2.75 per contract, which could possibly be part of a buy-write, said WhatsTrading.com option strategist Frederic Ruffy. A buy-write involves the simultaneous purchase of stock and selling a call on the stock. Investors also gravitated to the March $40 calls, which traded 16,168 times and appeared to have attracted selling action. A few large blocks went off near the bid price of 90 cents in that strike, indicating call sellers boosted morning volume, said Jud Pyle, chief investment strategist at www.ONN.tv. These calls are home to open interest of zero contracts, indicating short positions were opened.

Reuters Messaging: [e-mail]

1248 EST 19Feb2010
S&P 500 on track for key technical milestone

The benchmark S&P 500 was on track on Friday to score its first close in nearly a month above the 50-day moving average, a key measure of market momentum.

The move would underscore some of the improvement in the market's underlying technicals following the recent sell-off from the Jan. 19 peak. The S&P 500 fell more than 8 percent from that peak, but it has since trimmed its losses to 3.3 percent.

Reuters Messaging rm://[e-mail]


1142 EST 19Feb2010
Honeywell shares rise after outlook

Diversified U.S. manufacturer Honeywell International Inc on Friday raised its first-quarter earnings forecast by excluding the possible impact of proposed healthcare legislation, which it estimated at up to 5 cents per share.

Honeywell said it now expected first-quarter earnings of 40 cents to 45 cents per share, excluding the impact of health legislation. Its earlier forecast had called for earnings of 35 cents to 40 cents, which included expenses related to healthcare costs for its employees.

For details, see

The stock rose 1.2 percent to $40.33.

Reuters Messaging: [e-mail]


1134 EST 19Feb2010
ARYx shares plummet after licensing talks fail

Shares of ARYx Therapeutics Inc fell on Friday, a day after the company said it is exploring strategic options after advanced talks over the licensing of its oral anti-arrhythmic agent, budiodarone, fell through.

The license fees through partnership were expected to play an important role in funding the company, as the near-term receipt of these fees is no longer anticipated, the company is exploring strategic options, Wedbush analyst Duane Nash wrote in a note to clients.

For details, see

The stock shed 43 percent to $1.61.

Reuters Messaging: [e-mail]


1122 EST 19Feb2010
Morgan Stanley bullish on banks after Fed move

Morgan Stanley recommended investors buy into U.S. banks after the Federal Reserve raised its discount rate, saying the move indicates rising confidence in the economic recovery.

'If this group trades down because investors assume that rising rates for the bank group is a negative, we strongly recommend investors buy,' Morgan Stanley analysts said in a note.

'The discount window rate hike signals rising confidence in the recovery,' they said, adding that they were overweight on major U.S. banks 'as we believe less bad is good for the stocks.'

For details, see

Reuters Messaging: [e-mail]


1109 EST 19Feb2010
EnergySolutions plummets after CEO resigns

Shares of EnergySolutions Inc tanked on Friday, after the company said its founder Steve Creamer resigned as chief executive, and a brokerage downgraded the stock based on the news.

The company, which provides services to the nuclear industry, said it promoted President Val John Christensen as its new chief executive.

FBR Capital markets analyst Alex Rygiel cut his rating on the stock to 'underperform' from 'outperform' and said he was 'concerned' about the resignation of Creamer and former company CFO Philip Strawbridge, who resigned in December.

For details, see

The stock dropped 27 percent to $5.67.

Reuters Messaging: [e-mail]


1057 ET 19Feb2010 Expiration may be tame event
analyst

Friday's expiration of February options may be a tame event. The unexpected increase in the Federal Reserve's discount rate late on Thursday had the potential for more market volatility and impacting expiration but so far it has had no major impact, said Scott Fullman, director of derivative investment strategy at WJB Capital Group. February options go off the board after the close. As of Thursday's close, the number of expiring call contracts in the market that had no bid rose to 45.3 percent from 43.6 percent. On the put side, the contracts expiring worthless climbed to 50 percent from 46.1 percent, he said. He also noted that open interest on the SPDR S&P 500 Trust indicate a potential pinning to the $110 strike and a possible secondary pinning to the $112 strike. The PowerShares Nasdaq 100 Index shows a potential pinning to the $45 strike and an additional possibility to the $47 strike. Pinning is when a security closes at or around its corresponding at-the-money option strike.

Reuters Messaging: [e-mail] Keywords: MARKETS STOCKSNEWS

COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.