Last night, it was announced that Canadian telecommunications equipment supplier Newbridge Networks (NN - 35) would be purchased by Alcatel (ALA - 47-3/4). NN also reported earnings of 13 cents per share, which exceeded the Street estimate that called for 11 cents per share. In front of this news, option speculators have been adding large call positions in the March series. Over the last three trading sessions, call open interest on the March 35 call jumped to approximately 20,000 contracts from roughly 9,900 contracts. On the March 40 call, open interest has expanded to 13,600 contracts from 7,500 contracts over the same time frame. Put activity in the March series has been notably light of late by comparison.
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It is shaping up to be another interesting day on Wall Street, with the global equity markets putting in a solid showing overnight amid signs of strength in U.S. markets. Federal Reserve Chairman Alan Greenspan's second half of the Humphrey-Hawkins testimony will take center stage today, as investors busily translate the "Fed speak" into predictions. Sixteen of 17 world markets are higher thus far. In overnight trading, the following were the leading and lagging indices around the globe. The top four major markets and their respective returns are as follows: Denmark (CSIND - 280.11), up 1.87 percent; Germany (FRIND - 7750), up 1.87 percent; United Kingdom (FTIND - 6147), up 2.19 percent; and Italy (MILND - 32405), up 1.98 percent. The bottom four major markets and their respective returns are as follows: Belgium (BELND - 2675.9), down 1.67 percent; Australia (SYIND - 3112.5), up 0.36 percent; Israel (ISRND - 551.11), up 0.56 percent; and Japan (NIKKEI - 19519.6), up 0.67 percent.<
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Neiman Marcus Group (NMG’A – 20-13/16) operates upscale department stores that offer men’s and women’s apparel, as well as fine china and jewelry. The company owns 33 stores in 20 states. Since August 1998, the shares have shown little taste for a defined trend, remaining sandwiched between the 21 and 31 levels. The stock has fallen toward the lower rail of this range of late, reaching a new yearly low of 20 last Thursday. Today after the close, NMG’A announced second-quarter earnings that topped the Street’s estimates by three cents per share. The company reported a net revenue of $41.3 million for the quarter, versus $31.2 million achieved last year. <
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In today's trading, Merck (MRK - 65-1/2) saw healthy option activity on the near-the-money March 65 call, with 2,629 contracts trading versus an open interest of 2,186 contracts heading into today's session. The drug companies received what should have been regarded as a positive ruling from the U.S. Supreme Court that upheld a lower court ruling about price fixing. The high court affirmed that there was no improper price fixing among drug manufacturers. MRK has reversed into positive territory along with the rest of the market, but drug stocks as a whole are largely unfazed by the news. MRK is trading at an important technical level, and the 60-15/16 low set in August was not violated on the recent move lower. The stock finished higher by more than five percent on above-average volume. MRK is a good distance from its annual high, currently about 26 percent from this mark, which is located at 87-3/8.<
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BEA Systems (BEAS - 137-7/8) provides consulting and support services in the e-commerce field. The company primarily helps businesses launch and maintain e-commerce capabilities. This morning, shares of BEAS rallied strongly out of the gate, gapping 11-1/2 points higher at the open to achieve a new all-time high at 157-3/4. The stock quickly relinquished these gains and proceeded to trade in the red for most of the day. A half hour before the closing bell sounded, the company released fourth-quarter earnings of nine cents per share, surpassing the Street's consensus estimate by two pennies. These figures also showed an impressive growth over last year's fourth-quarter numbers of two cents per share. Furthermore, BEAS officials declared a two-for-one stock split. BEAS fell lower despite this news and closed down over five percent on the day. Call activity was fairly heated on BEAS today, with a number of strikes seeing heavier-than-usual action. Most notable was the out-of-the-money March 150 call, which saw 2,324 contracts cross the tape. Prior to today, this strike was home to only 222 contracts in call open interest. Also busy was the June 150 call, which saw almost 1,500 contracts trade. This strike had 187 contracts in open interest heading into today's session. The most notable strike on the put side was the March 110 put, with 972 contracts trading. This strike was home to 815 contracts before today.
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