Hewlett-Packard (NYSE: HPQ) is closed down $2.48 to $46.65.

The WSJ reported HPQ is in advanced talks to acquire Electronic Data Systems (NYSE: EDS) for between $12 billion and $13 billion according to sources.

HPQ call option volume of 59,863 contracts compares to put volume of 21,209 contracts. HPQ June option implied volatility of 35 is near its 26-week average of 33 according to Track Data, suggesting slightly larger price risk.

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