In a world where we write emails instead of memos, read newspapers online, and reuse office paper as much as possible, it's little wonder that the market for paper isn't thriving like it used to. This is particularly true for uncoated free-sheet paper (UFS), the kind generally used in business settings. Demand for UFS has fallen more than 15% since 2000. So why then is Goldman Sachs rating Domtar Corporation (NYSE: UFS), a company that derives much of its business from UFS sales and manufacturing, a buy?

In a tough market, Domtar has taken an interesting approach to the fact that demand for its product is decreasing: It has cut back on its operations and increased its prices. The plan is to make Domtar the lowest cost producer of UFS in North America, in an attempt to stay competitive with companies like International Paper (NYSE: IP), who have the advantage of operating in traditionally lower cost countries in South America.

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

Mirant Corp. (NYSE:MIR) implied volatility Elevated at 32 as MIR trades near Record levels.

MIR is expected to report full EPS & hold a conference call on 3/5. MIR has been frequently mentioned as a potential candidate for announcing a recapitalization or a share repurchase. MIR call option volume of 1,044 contracts compares to put volume of 3,001 contracts. MIR overall option implied volatility of 32 is above its 26-week average of 26 according to Track Data, suggesting larger price risks.

New Century Financial Corp (NYSE:NEW) low cost deep OTM April & May 5 put spread trades as Hedge.

NEW, a real estate investment trust, providing mortgage products to borrowers nationwide, is recently down 37c to $15.47. NEW deep out of the money April 5 puts traded 4,715 contracts near the bid at .12 & .13 cents above its theoretical value of .01 cent. NEW deep out of the money May 5 puts traded 5,568 contracts on the offer of .40 cents above theoretical value of .04 cents according to Track Data, suggesting spreaders paying up to hedge risk.