Volatility Index S&P 500 Options-VIX up 1.19 to 11.16.

Microsoft Corp's. (NASDAQ: MSFT) February option implied volatility collapsed to 19 after record Q2 revenue of $12.54 billion. Microsoft reported Q2 EPS of 26 cents versus consensus estimates of 23 cents. Q2 revenue rose 6%. Microsoft launches Vista, Office 2007 and exchange Server 2007 on 1/30. Goldman Sachs says "good second quarter and stronger growth ahead." Microsoft February option implied volatility of 17 is below its 26-week average of 22 according to Track Data, suggesting decreasing price risk.

General Motors' (NYSE: GM) implied volatility was low at 34 going into the financial delay on its restatement. General Motors will delay its Q4 and full year earnings report, which was expected to be released next week, to again restate financial results. Citigroup has a $24 price target on General Motors. General Motors' overall option implied volatility of 34 is below its 26-week average of 42, according to Track Data, suggesting decreasing price fluctuations.

Option volume leaders today were: Amgen (NASDAQ: AMGN), Apple Computer (NASDAQ: AAPL), Nokia (NYSE: NOK), Microsoft and eBay (NASDAQ: EBAY).

Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.

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