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by 11/6/2000 4:06 PM
Stocks quoted in this article:
The percentage-gain leader on the Dow Jones Industrial Average (INDU - 10977.2) in late trading is General Motors (GM - 60-15/16). GM is up nearly seven percent on the day after bouncing off support at 57. This level acted as support in both June and July as GM free fell from its all-time high of 94-5/8 in late April. Though 57 failed to hold during GM's recent drop to 54-1/2, it was the intraday low on Friday as well as its Friday closing price. Though GM has moved steadily higher today to once again regain its 10-day and 20-day moving averages, it remains below its 10-week and 20-week moving averages, trendlines that rejected GM's rally attempt last week at 63-3/4.

Option activity continues to be weighted heavily toward the call side, as option speculators maintain their misguided optimism. The most active option is the at-the-money November 60 call with over 2,000 contracts traded. On the put side, the most active option is the November 55 put with just over 700 contracts traded. <
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by 11/6/2000 10:38 AM
Stocks quoted in this article:
The Nasdaq-100 Trust (QQQ - 83-1/16) mounted the comeback trail last week, pushing above its formerly overhead 10-day and 20-day moving averages. From a longer-term technical perspective, bulls can gain solace that the QQQ found support from its 20-month moving average despite the recent weakness in tech stocks. The 20-month moving average currently resides at approximately 79-1/2.

It is interesting to note that the two most-active November QQQ options on Friday were both puts. The out-of-the-money November 77 and November 80 puts traded over 20,500 and 13,600 contracts, respectively. The volume was mostly the work of speculators entering new positions, as open interest rose by 15,900 contracts on the November 77 put and by 9,000 contracts on the November 80 put.
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by 11/6/2000 10:37 AM
Stocks quoted in this article:
Abbott Laboratories (ABT - 52-3/4) has spent the last two months trending higher along its 20-day moving average. ABT has risen nearly 25 percent since its September 6 close, using this short-term trendline as support.

In Friday's trading, the November 50 put was active on ABT. This out-of-the-money option saw over 7,300 contracts change hands on Friday, with roughly 6,300 contracts of the volume translating into new open interest. The remaining front-month options saw only light volume.
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by 11/6/2000 9:30 AM
Stocks quoted in this article:
On October 26, consumer foods concern Kellogg (K – 26-9/16) agreed to acquire Keebler Foods (KBL – 40-9/16) for the sum of $42 a share. The deal is expected to close in the first quarter of 2001. Since the news, KBL shares have been trading in a narrow range just shy of the acquisition price.

It appears that an options speculator may be attempting to profit by selling out-of-the-money puts on KBL. In Friday's, trading the February 35 put was notably active. Altogether, over 6,200 contracts changed hands on the option, with over 6,000 contracts translating into new open interest. Most of the volume crossed the tape at the bid price, increasing the likelihood that these positions were entered as put writes. If the shares remain above 35 at February expiration (February 16), these options will expire worthless, allowing the trader to pocket the entire premium. <
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by 11/3/2000 3:29 PM
Stocks quoted in this article:
Aether Systems (AETH - 106-7/8) provides wireless data services. The company was one of the more successful initial public offerings of 1999. From its initial price of 16, the stock soared to a peak of 345. A reversal of fortune has the shares trading below their intermediate-term 10-week moving average, a trendline not breached on a closing basis since late July.

With the shares traveling through quite a broad range of prices, there are currently many option strikes open (so many as to require three options roots). Despite the variety, there are only about 10,500 current open option positions for options with up to three month until expiration. With the shares up about 18 percent in today's market, we are noticing a pickup in volume on the out-of-the-money November 100 put (1,528 contracts) and the in-the-money November 110 put (1,401 contracts). Compared to current open interest of 236 and 86 contracts, respectively, these volumes should translate into new positions.

Schaeffer's put/call open interest ratio (SOIR) for AETH has been flirting with levels that indicate extreme optimism. Today's activity may aid in reversing that trend.
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