Lernout & Hauspie Speech Products (LHSP - 75-1/4) saw fairly heavy option activity at the September 45 put with 1,000 trading today versus open interest of 129 contracts. This activity came ahead of LHSP's earnings release after the close. The company beat estimates by two cents per share, coming in at 22 cents per share. The stock managed a gain ahead of the report and finished up 3.84 percent. The volume of 1.3 million today was only modestly ahead of its 30-day average volume of 896,460 shares. The stock has made a massive run in the last month, up 38.28 percent. Only time will tell if this sharp rally is a sign of high expectations ahead of the earnings report.<
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The Commerce Department released December wholesale inventory numbers today. While analysts had expected wholesale inventories to increase by 1.0 percent on Y2K stockpiling, inventories actually increased by only 0.4 percent. This less-than-expected gain led analysts to expect that fourth-quarter GDP, which was released in late January, may be revised downward. However, the lack of inventory stockpiling removes much of the possibility that a first-quarter economic slowdown will occur. Some had expected that the economy might cool in the first quarter as companies using existing excess inventories would scale back on new orders. In fact, the lack of an oversupply of inventory may cause companies to increase production in the quarter, hampering the Federal Reserve's attempts to slow the economy. <
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Supply concerns caused crude oil prices to jump today. The March crude oil futures contract soared 75 cents to $28.77 a barrel, partly because of number released this morning that showed that U.S. crude stocks were still low. The Department of Energy released data that showed that crude oil stocks were essentially unchanged from last week’s low figure. Moreover, U.S refineries ran at only 85.7-percent capacity versus 88.5 percent a week ago, fueling fears that supply may not keep up with demand, pushing prices even higher. Separately, U.S. Energy Secretary Bill Richardson said that he does not currently plan to release oil reserved from the Strategic Petroleum Reserve in an attempt to lower oil prices.
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The Mortgage Banker’s Association of America released the results of its weekly mortgage survey earlier today. In the week ending February 4, the market index, the purchase index, and the refinance index all rose. In fact, the softening of interest rates over the past three weeks caused the seasonally adjusted numbers of each of the indices to rise to their highest point since mid-November. However, only the purchase index was higher than the year-ago figures, indicating the home buying market is still strong.
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AT&T (T - 49-3/16) has captured the attention of options players of late, as call open interest at the May 55 call has surged from 3,455 to 7,490 contracts over the last two days. A number of mid-sized blocks were traded in the early afternoon on this out-of-the-money position. These were generally traded off the ask price. Today, speculators are concentrating on the back-month series, as over 1,000 contracts have traded on the March 50 call already today. On the other side of this strike, 2,700 put contracts have swapped hands at the March 50 strike. None of this volume has yet been executed as spreads. Additionally, speculators have traded nearly 1,400 calls at the April 50 strike.
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