Stocks quoted in this article:
Morgan Stanley Dean Witter (MWD – 74-7/8) has led brokerage stocks lower today on rumors that a brokerage firm has suffered significant losses from junk bond positions. In late trading, MWD was down almost 12 percent. This move has taken the stock well below its 10-month moving average, but it remains above its 20-month trendline, which resides near the 66 area.
MWD's options pit is active today, particularly on the put side. The October 80 put is leading the way with almost 4,300 contracts in volume on open interest of 6,120 contracts. This is followed by volume of 2,080 and 3,222 contracts, respectively, on the October 75 and January 80 puts, which have open interest of 1,384 and 3,222, respectively.
On the call side, the October 75 call has seen 1,600 contracts cross the tape. Since this option has open interest of just 128 contracts, this activity likely represents new positions. In addition, the October 85, 90, and 100 calls have also registered volume of over 1,000 contracts each.