Daily option update - March 20, 2007

Volatility Index S&P 500 Options-VIX down 0.57 to 14.02.

Morgan Stanley (NYSE:MS) April option implied volatility-Risk stays elevated into EPS.
MS operates its business through four segments: retail brokerage, asset management, institutional securities. Investors expect to hear more about MS plan to spin off its Discovery Card, a company with 50 million card members and four million merchant /cash access locations. MS is expected to report EPS of $1.88 on 3/21 according to Thomson First Call. MS April option implied volatility of 28 is above its 26-week average of 24 according to Track Data, suggesting larger price risk.

Motorola Inc. (NYSE:MOT) volatility and volume Spikes on canceled CEO speech, LBO and PALM chatter.
MOT is recently up $0.46 to $18.74 on LBO speculation. Carl Icahn entities own 1.39% of MOT. The Chicago Tribune reported MOT CEO Edward Zander canceled his keynote speech at the cell phone's industry annual U.S. trade show, CTIA Wireless. Chatter is also circulating that MOT could purchase Palm Inc. (NASDAQ:PALM). MOT call option volume of 35,471 contracts compares to put volume of 18,121 contracts. MOT April option implied volatility of 35 is above a level of 30 from 70-minutes ago. MOT average option implied volatility over the last 26-week average is 29 according to Track Data. Increasing option volume and implied volatility suggests larger price risk fluctuations.

Option volume leaders today were: AtheroGenics Inc. (NASDAQ:AGIX), Motorola Inc. (NYSE:MOT) and Accredited Home Lenders Holding Co. (NASDAQ:LEND).

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