In the wake of the nation's subprime worries, Wall Street has over the past year tried to offload its risky mortgage-backed securities to just about anyone who showed an interest, including university endowments. Last month, it was reported that the top 53 university endowments, with assets of about $217Bi, have invested nearly 18% of their money into hedge funds. In contrast, the average pension fund has around 5% in hedge funds.

Today The Wall Street Journal reported that Harvard University's endowment fund has lost about $350M through its investment through Sowood Capital Management, a hedge fund founded by Jeffrey Larson and Stuart Porter. Larson managed Harvard's foreign stock holdings until 2004, and then left to start Sowood, which recently lost over half its $3B value through poor bond investments.

Harvard Management Co, manager of the university's endowment, has always been considered one of the nation's most successful investment management firms, with annualized returns of 15.2% over the past 10 years through 2006.

Their hedge fund strategy worked well in the past, especially during the period 2000-2002, when they generally outperformed other investments. Endowments, however, are late to the table. While $350M is only a dent in Harvard's $29B endowment, it highlights the risks that colleges are taking in nontraditional investments like hedge funds and private equity. If Harvard is making these mistakes, other universities need to seriously look at what they are doing.

Volatility Index S&P 500 Options-VIX down 1.38 to 15.41

Boeing Co. (NYSE: BA) -- implied volatility indicates low Risk. BA's first flight for the 787 Dreamliner (airplane #1) is "expected-targeted" in late August 2007. BA held a quarterly media briefing with commercial airplanes' CEO Scott Carson. BA is recently up $.32 to $90.31. BA's overall option implied volatility of 22 is near its 26-week average of 24, according to Track Data, suggesting decreasing price risk.

Oracle Corp. (NASDAQ: ORCL) -- April option implied volatility suggests Flat risk into EPS and Outlook. ORCL is expected to release EPS of $.23 after the close on March 20. Wachovia says "we anticipate in-line or better results, solid guidance for the rest of the year, and upbeat perspective on the market environment. Maintain Outperform." ORCL April option volatility of 28 is near its 26-week average according to Track Data, suggesting non-directional fluctuations.

Option volume leaders today were: AtheroGenics (NASDAQ: AGIX), Microsoft (NASDAQ: MSFT) and Qaulcomm (NASDAQ: QCOM).

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

How frequent are ultra-volatility days -- those during which the market moves 3% or more? More common than one might think.

Tom Dyson in Daily Wealth defines notes that ultra-volatile days -- or UVDs -- have occurred 115 times in the S&P 500 since 1950, or an average of two per year. Between 2002 and 2003, the S&P 500 had 21 UVDs. Over the same period, the Nasdaq experienced even more -- some 51 UVDs.

Says Dyson, "UVDs really aren't that extraordinary. And because they aren't, there's no need to change our investment strategies because of them. These things happen."

In fact, he notes, the only reason the press is making a big deal out of this one is because it had been a long time since we last saw one. The last UVD was in March 2003, nearly four years ago.

Shareholders of American Power Conversion Corp. (Nasdaq: APCC) got a nice surprise today, as the stock price surged 25% to $29.79. The company accepted a buyout offer from Schneider Electric SA, an electric equipment maker based in France.

APC develops systems like uninterruptible power supplies and surge arrests. In fact, as the Internet surges -- requiring much more datacenter capacity for companies like Google -- there is certainly rising demand for products from APC. In other words, Schneider is willing to pay a high price to get a piece of a growth segment.

And something else: in September, one of APC's big shareholders, Matrix Asset Advisors, sent a letter to management with a simple message: things are not going well and the company should be sold off.

Yes, it's definitely a letter to frame.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.