It's not a good time for the options market, according to one observer.
"Option premiums are very high," said Rebecca Darst, an options analyst with TheStreet.com, on CNBC Friday. "It's a frustrating time to be trading in the options, because it's...I would say the premiums are prohibiltively high for anyone who enters an options position on the long side. Which is why you see, even for people who are entering directional positions, you're going to see them using spreads and maybe limiting the amount of risk that they take on, limiting the amount of profit that they could hope to realize as well. However even when you see a substantial move in the stock to the up or the down side, the premiums are so pumped up that you may not be able to close out the option position at a significant profit.
Insurers are in for especially rocky times, Darst suggested.
"The implied volatility will tell you it is toil and trouble for the insurers across the board," said Rebecca Darst, an options columnist with TheStreet.com. "There's a lot of concern as to whether insurance companies might seek some sort of federal assistance, under TARP funds, for example; we're in the midst of a very rocky earnings season for a lot of insurers. What's interesting from an implied volatility standpoint is that in many of these names you're seeing spikes in implied volatility, even after the numbers are already out. After Hartford Insurance lost half its value yesterday, we saw a dramatic spike in its implied volatility. It closed the day 75 percent higher; we saw action in the front-month puts at strikes as low as the $7.50 strike."