Daily options report: Novellus Systems elevated, Diamond Offshore Drilling volatility increased

Analysis provided by Paul Foster of Theflyonthewall.com:

U.S. stocks sold off on a disappointing November manufacturing survey and further weakness in the dollar. The Dow down 0.82%, NASDAQ 100 down 1.32%, S&P 500 down 0.76%, and the 10 year bond rates decreased to 4.425%. The CBOE VIX was up 1.00 to 11.89.

Novellus Systems, Inc. (NASDAQ:NVLS) implied volatility near elevated as NVLS trades up to 30-month highs. NVLS develops, manufactures, sells and supports equipment used in the fabrication of integrated circuits. CIBC say's "NVLS up $2 intraday as speculation re-surfaces on Tokyo Electron LTD (TEL) buyout. This AM, our high-level sources at both TEL and Hermes Epitek (TEL's distributor in Taiwan) flatly denied talks are in progress." NVLS call option volume of 21,883 contracts compares to put volume of 43.442 contracts. NVLS December option implied volatility of 50 is above its 26-week average of 36 according to Track Data, suggesting larger price fluctuations.

Diamond Offshore Drilling, Inc. (NYSE:DO) implied volatility increased on heavy volume as DO rallied. DO, a drilling service provider to the energy industry, was recently up $2.78 to $80.40. DO has a market cap of $10.3 billion with long term debt of $965 million. MOKE issued a report suggesting DO, NE & ESV are possible acquisition candidates of SeaDrill. DO call option volume of 9,844 contracts compares to put volume of 3,271 contracts DO over all option implied volatility of 38 above a level of 31 this morning and near its 26-week average according to Track Data, indicating non-directional fluctuations.

Option volume leaders today were The Home Depot, Inc. (NYSE:HD), Apple Computer, Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Ford Motor Company (NYSE:F), and ExxonMobil Corporation (NYSE:XOM).