Tyco Must Be Doing A Bang-Up Job At The Bear Stearns Conference In Boston…
Tyco
International
(
TYC |
Quote |
Chart |
News |
PowerRating) is presenting at a Bear Stearns Industrial
and Power Technologies Conference in Boston today, and from the dollar weighted
call option volume I must assume the talk is going very well! Our reasoning is
that while the absolute volume is a mere 4:1, the dollar-weighted volume is an
astonishingly bullish 41:1. In other words, some pretty serious institutional
interest in shares of the installer of, and services provider for undersea
telecommunications systems (For our HOT TRADE for TYC, see www.1010WallStreet.com).Â
| Symbol
|
Call
Volume
|
Put
Volume
|
$W
Call Vol
|
$W
Put Vol
|
| TYC
|
4,569
|
1,102
|
47,329
|
1,133
|
Our
recent spreads in Palm
(
PALM |
Quote |
Chart |
News |
PowerRating) have moved significantly in our favor over
the past two trading sessions (HOT TRADES 5/18/01, ).
Presently, PALM is trading for $6.58 and the November 5 calls are trading for
$2.70. Breaking it down, PALM stock is up $1.81 and our short call is likewise
up $1.20, so a net of $.61 on a $3.27 hedged trade in 2 ½ trading sessions!
  Â
Yesterday E*Trade
(
ET |
Quote |
Chart |
News |
PowerRating) made two big
moves, neither of which has been widely applauded by Wall Street, as shares of
the discount broker, on-line bank and mortgage broker are off $1 to $9.20. The
first move was the acquisition of Chicago-based on-line broker Web
Street
(
WEBS |
Quote |
Chart |
News |
PowerRating) for $45 million, or about $1.75 a share. The
second was the sale of $250 million of convertible subordinated notes due 2008
in a private placement.
   Â
For their $45 million they got 34,000 active Web Street brokerage accounts, as
well as branch offices in San Francisco, Denver, Boston and Beverly Hills. While
E*Trade expects the acquisition of WEBS to be accretive to earnings and revenue
immediately, some were questioning whether the price per account was too high.
While that may or may not prove correct, the price ET paid was barely 1/6th
of the $11 per share investors paid for WEBS during the firm’s initial public
offering in 1999!
  Â
As frequently happens in situations where a convertible is involved, the
volatility of ET options has been crushed. Reason: Buyers of the converts will
pound the listed options at or above the strike of their converts to glean
additional cash flow from their investment. ET options have never been among the
most actively traded, but volatility has shrunk from a 3-month average of 107%,
to just 70%. OUCH!
(1010WallStreet.com has licensed
the use of Hamzei Analytics proprietary options analytics)