STOCKS NEWS US-Wells Fargo gets large ratio put spread

Stocks on the move Real-time Equity news U.S. stock market report 1402 ET 03Nov2009 Player seeks safety net in Wells Fargo ------------------------------------------------------------------------------ A large ratio put spread in the January 2010 contract on Wells Fargo & Co suggests one investor is bracing for a rocky fourth quarter, wrote Interactive Brokers Group options analyst Caitlin Duffy in a note. This bearish transaction is consistent with a number of protective stances observed on individual financial stocks recently and on the Financial Select Sector SPDR ETF, she said. The investor bought 35,000 puts at the Jan $26 strike for $1.91 each and sold twice as many put contracts at the Jan $21 strike for an average premium of 67 cents apiece. The spread was purchased for a net cost of 57 cents per contract, she said. The puts provide protection should Wells Fargo shares slip beneath the break-even point at $25.43 by expiration. "Enacting the spread at the Jan $26 strike suggests financials are by no means out of the woods just yet." But the larger short position at the lower strike also points out that the investor does not foresee an all-out collapse either, Duffy said. Wells Fargo shares were last trading at $27.70, up 0.3 percent. Reuters Messaging: [e-mail] 1444 EST 03Nov2009-Option traders optimistic on Applied Materials ---------------------------------------------------------------------------- Applied Materials shares fell 3.4 percent to $11.87 in late afternoon trading as a Morgan Stanley downgrade of the chip sector weighed on the group, but sentiment in the options market seems somewhat bullish, said WhatsTrading.com option strategist Frederic Ruffy. After the stock's three-week slid of nearly 12 percent, some bottom fishers were possibly opening positions, Ruffy said. The Nov $12 calls were popular with 5,122 contracts earlier traded. About 90 percent of the volume hit ask-side against contracts outstanding of 1,230. The Nov and Dec $13 calls also attracted interest. The stock's average implied volatility stood at 49 percent, up from 47 percent the previous session, ahead of earnings expected on Nov. 11. The semiconductor index dipped 1.65 percent, and some analysts speculated the index could be nearing a key technical support level around 280. Reuters Messaging: [e-mail] 1312 ET 03Nov2009 Traders circle bullish calls in gold miners ------------------------------------------------------------------------------ Several gold miners shares rose and attracted bullish option order flow as gold swept to a record high above $1,080 per ounce. Option analytics firm Trade Alert data show that overall volume with a bias on the call side swelled in several stocks in late afternoon trade. They included Gold Fields whose option volume was double the norm with about 30,000 calls and 1,244 puts traded. Directional sentiment based on order flow was 78 percent bullish. Bullish flow was also detected in Iamgold Corp with 3,504 calls traded or two times the average daily volume. Hecla Mining Co option volume was double the norm with about 24,000 calls traded vs. 3,697 puts. Royal Gold Inc attracted 4,508 calls, twice the average daily turnover. Barrick Gold option volume was also double the norm as about 69,000 calls and 26,000 puts traded. Reuters Messaging: [e-mail] 1403 EST 03Nov2009-HSBC to cut 1,700 UK jobs ------------------------------------------------------------------------------ HSBC Holdings on Tuesday said it would cut more than 1,700 jobs in Britian, as it moves to cut costs. Most of the cuts are due to a restructuring of branch network management and a consolidation of its collections and cards operations. For details, see U.S.-listed shares of HSBC fell 1.6 percent to $55.28 on Tuesday. Reuters Messaging: [e-mail] 1343 ET 03Nov2009 Activision draws increased call activity ------------------------------------------------------------------------------ Shares of Activision Blizzard rose 1 cent to $10.38. In the options patch, there was a notable pickup in call volume, despite a significant drop in shares from the $12.50 range to $10.39 on news of trouble with Chinese regulators, said Trade Alert president Henry Schwartz. Online game firm NetEase.com, which won the license earlier this year to operate Activision's popular World of Warcraft game in China, has been ordered by a government regulator to shut down the game's commercial operations. Over the past four sessions, call open interest has grown by more than 20,000 contracts to 163,000, while at-the-money implied volatility rose about 20 points to 60 percent. The January $11 calls have been popular, with nearly 15,000 traded, most in the 70-cent range, and open interest growing from 1,600 to 14,000 contracts, he said. The company's earnings are expected on Thursday. Reuters Messaging: [e-mail] 1321 ET 03Nov2009 Union Pacific shrs, options surge after Berkshire-BNI offer ------------------------------------------------------------------------------ Union Pacific Corp shares rallied and its option volume surged after Warren Buffett's Berkshire Hathaway agreed to buy Burlington Northern in a deal that values the railroad company at $34 billion. UNP shares rose 6.76 percent to $58.78. Option activity was three times the average daily turnover with about 20,000 calls and 12,000 puts traded, according to Trade Alert. One top trade was a January 2010 $50-$70 risk reversal which appeared to be sold, 4,000 times. The investor collected 60 cents for the puts sold and the positions were tied to shares at $58.05, said WhatsTrading.com option strategist Frederic Ruffy. Speculation from the floor is that the risk reversal may be a closing trade based the current open interest in those respective strikes and the profit realized, said Joe Kinahan, chief derivatives strategist at TD Ameritrade. Meanwhile, the Nov $55 and $60 UNP calls were active with some buy-write sellers taking advantage of today's strength to collect premium, Ruffy added. Reuters Messaging: [e-mail] 1213 ET 03Nov2009-US STOCKS-Wall St pulled lower by semis, financials ------------------------------------------------------------------------------ U.S. stocks stumbled on Tuesday after Morgan Stanley downgraded the semiconductor sector and a shake-up at two big British banks prompted investors to sell financial shares. For more please double click Reuters Messaging: [e-mail] 1146 ET 03Nov2009-Semi index may be nearing support level: analysts ------------------------------------------------------------------------------ A Morgan Stanley downgrade of the semiconductor sector pushed the semi index into negative territory on Tuesday, and some analysts speculated that the index could be nearing a key technical support level around 280. The index fell 2.4 percent to 291 on Tuesday, and is down about 14 percent from a 2009 high reached in mid-October. "The early October low in the semi index is the support area that counts. Taking that out would be significant," said Frank Gretz, market technician for Shields & Co in New York. "There's been so much damage here that we could make a low and then drift for the rest of the year. I'm not optimistic that we'll get higher highs." Morgan Stanley downgraded the industry, citing rising inventory levels. For details, see Reuters Messaging: [e-mail] 1102 ET 03Nov2009-DuPont sees U.S. recovery taking hold ------------------------------------------------------------------------------ DuPont Co on Tuesday said an economic recovery was beginning to take hold in the United States, and forecast 2010 profit growth in line with Wall Street estimates. The chemicals maker said it was "well-positioned to outperform the rate at which the markets recover and improve" and forecast 2010 sales above the Wall Street consensus. For details, see Shares of the Dow component rose 1 percent to $32.59. Reuters Messaging: [e-mail] Keywords: MARKETS STOCKSNEWS COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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