U.S. stocks were slightly higher on light trading volume. The Dow was up 0.45%, the NASDAQ 100 up 0.35%, the S&P 500 up 0.35%, while 10-year bond rates decreased to 4.6030%. The CBOE VIX was up .02 to 11.38.
- Telik Inc's (NASDAQ: TELK) January option implied volatility collapsed after disappointing data. Telik was recently down $11.47 to $4.79. TELK Phase 3 trails related to its cancer drug Telcyta (treatment for non-small cell lung cancer & ovarian cancer) "did not achieve statistically significant improvement in overall survival." JANY & STFL downgraded Telik to sell. Telik's January option implied volatility was at 85, according to Track Data, below a level of 215 from last week, suggesting decreasing risk.
- Eli Lilly's (NYSE: LLY) January 55 calls were active on 6,163 contracts as Lilly rallies. Eli Lilly recently rallied .43 to $51.77, after a Court of Appeals for the Federal Circuit in Washington, D.C. ruled its 2011 Zyprexa patent was valid. Lilly faced pressure last week on documents leaked to the NY Times indicating Zryprexa (schizophrenia treatment) had understated weight gain and diabetes risk. Lilly's Zyprexa accounts for approximately 25% of Lilly's sales & 50% of its EPS. Lilly's January option implied volatility of 19 was near its 26-week average of 19, according to Track Data, suggesting non-directional risks.
- U.S. Bancorp's (NYSE: USB) calls active on company going ex-dividend on 12/27/06. USB goes ex-dividend on 12/27/06, paying a dividend of .40 cents. USB total intra-day call option volume was heavy on over 962,946 contracts, according to Track Data. Heavy call volume was attributable to traders hoping to take advantage of option exercises, call pricing discrepancies and low option transaction commission fees.
Liquid stocks with option implied volatility above 90, according to Track Data: AtheroGenics (NASDAQ:
AGIX), Momenta Pharmaceuticals (NASDAQ:
MNTA), Dendreon Corp (NASDAQ:
DNDN), Escala Group (NASDAQ:
ESCL), and Northfield Laboratories (NASDAQ:
NFLD).
Option volume leaders today were Telik Inc, Altria Group (NYSE:
MO), Clear Channel Communications (NYSE:
CCU), and Apple Computer (NASDAQ:
AAPL).
Options analysis provided by Paul Foster, options strategist for Theflyonthewall.com.
Novartis AG (NYSE: NVS) shares are trading higher today after the company reported progress with Galvus, a drug the company is developing to treat type-2 diabetes. Shares are up slightly on this news even as another drug being developed by NVS and Momenta (NASDAQ: MNTA) was denied approval by the FDA. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NVS.
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