Option update: Merrill Lynch (MER) options indicate large trader speculation

Merrill Lynch (NYSE: MER) is recently down .65 to $65.86. MER is expected to report full 2Q EPS on 10/24. MER pre-announced on 10/5 "challenging credit market conditions will have an adverse impact on its net earnings for the third quarter. The company expects to report a net loss per diluted shares of up to $0.50 cents." MER intra-day call option volume of 105,451 contracts compares to intra-day put volume of 74,332 contracts. MER November option implied volatility of 47 is above its 26-week average of 31 according to Track Data, suggesting larger risk.

UAL Corp (NASDAQ: UAUA) is recently up $1.58 to $49.71. UAUA reported 3rd quarter pre-tax income, excluding special items, of $498 million, 127% higher than the same period in 2006. Goldman Sachs CO says "Key on UAUA's earnings call will likely be anticipated updates on the potential for a mileage plan spin-off or other shareholder-friendly actions." WTI Crude oil is down 0.81% $85.31 according to Bloomberg. UAUA November option implied volatility of 50 is near its 26-week average according to Track Data, suggesting non-directional risks.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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