Option update: MF Global volatility spikes as shares down 26% on unauthorized trade

Posted Feb 28th 2008 4:05PM by Paul Foster
Filed under: Options

MF Global (NYSE: MF), a broker of exchange-listed futures and options, is recently down $7.20 to $22.02 after disclosing a bad debt provision of $141 million in response to unauthorized personal trading activity by one of the company's registered representatives.

Deutsche Bank says: "this event, coupled with recent lawsuits and regulatory issues, seem to raise risk profile associated with MF."

MF call option volume of 7,924 contracts compares to put volume of 7,767 contracts. MF April option implied volatility of 68 is above its 26-week average of 41 according to Track Data, suggesting larger price risk.

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

Tags: inthenews, mf, mf global, MfGlobal, option implied volatility, OptionImpliedVolatility