U.S. stocks were mixed in trading yesterday. The Dow was down 0.01%, the NASDAQ 100 down 0.01%, the S&P 500 up 0.08%, and 10-year bond rates decreased to 4.5950%. The CBOE VIX was down .14 to 10.35. In the next twelve days, only six will be trading days.
- Redback Networks Inc.'s (NASDAQ: RBAK) call activity suggests another bid above Ericsson's (NASDAQ: ERIC) $25 bid is expected. Redback agreed to sell itself to Ericsson for $25 per share in cash, but has been recently trading at $25.58. Redback January 25 calls have traded 587 times on transaction volume of 21,094 contracts according to Track Data. Redback January 25 calls are bid .85 cents, suggesting option market makers expect a higher hostile buyout bid.
- Google Inc.'s (NASDAQ: GOOG) January option implied volatility of 24 suggests decreasing risk. Google is recently trading at $465.28, and with a January option implied volatility of 24 is at the low end of range according to Track Data, suggesting decreasing price risk.
- The Brink's Company's (NYSE:BCO) options have been busy on higher volatility as Brink's trades up to a new record. Brink's, a leader in security and risk management services, is recently up $1.62 to $64.49. Pirate Capital, an activist hedge fund with an 8.5% stake in the company, has been encouraging Brink's to immediately unlock long-term shareholder value. Brink's has a market cap of $3.1 billion with long term debt of $144 million, and reported 2005 revenues of $2.5 billion. Brink's call option volume of 2,797 contracts compares to put volume of 724 contracts. The January option implied volatility of 33 is above its 26-week average of 28 according to Track Data, suggesting increasing price risks.
Option volume leaders today were General Electric Company (NYSE:GE), Northfield Laboratories (NASDAQ:NFLD), Pfizer Inc. (NYSE:PFE) and Apple Computer, Inc. (NASDAQ:AAPL).
Options analysis provided by Paul Foster, options strategist for Theflyonthewall.com.
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