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As a follow-up to yesterday's Market Observation
on Procter & Gamble (PG – 66-15/16), this beleaguered consumer issue today surged ahead by just over five points, or more than eight percent, after the company said that it sees sales growth of two to three percent for full-year 2001. In addition, PG anticipates full-year 2001 earnings-per-share growth of seven to 10 percent.
With this price action, the shares reached their highest intraday level in more than five months. They also broke out of a short-term trading range that had capped the security between the 60 and 64-1/2 levels since August 15.
As discussed in the Market Observation, investors expectations were low on PG, as evidenced by heavy put activity yesterday. The out-of-the-money November 55 put saw its open interest increase by 3,000 contracts on Wednesday, while open interest on the January 55 put rose by 5,000 contracts. Our research shows that this rise in pessimism, along with the company's earnings report today, could have bullish implications for the equity.