The huge market swings yesterday--including a 200 point rebound in the Dow during the last half hour--may have had some traders chugging Maalox. But others thrive on the roller-coaster ride. Don't look for the big ups and downs to stop anytime soon.
Speculators in homebuilder stock options had a volatile day as they chased rumors that Beazer Homes was about to file for bankruptcy, only to hear the company deny the rumors.As one trader said: "It's a chiropractors' market as we whip up and down".
The options market is indicating a soured hedge fund strategy likely magnified losses in the small cap Russell 2000 index and its iShares counterpart, known as the IWM. The Russell slumped 7% last week compared with slides on the order of a little more than 4% for the Dow Jones Industrial average and the Nasdaq Composite.
Volatility is the life blood of the options markets, and investors have been getting plenty of it amid the implosion of the housing market and worries about tightening credit.
A federal judge on Friday sentenced former Qwest Communications chief executive Joe Nacchio to six years in prison for his insider trading conviction.
Chinese Web search company Baidu.com on Wednesday said its quarterly net profit grew 143 percent, reflecting market share gains in the world's second-largest Internet market. Its shares rose 22 percent.
Anheuser-Busch, the U.S.' largest brewer, said Wednesday its second-quarter profit rose 6.1 percent, on a 6.1 percent rise in sales. The maker of Budweiser, Bud Light and other beers earned $677 million, or 88 cents per share, in the three months ended June 30; the figures are up from $638 million, or 82 cents per diluted share, in the same period in 2006.
The Financial Select Sector SPDR ETF, also known as the XLF, has been down for five consecutive sessions and could be in for a sixth down day today. Traders in the options market are making bets the XLF has further to fall.
While corporate credit markets are all in a frenzy, some of the more sober traders out there point out the underlying fundamentals are still in good shape.
Options-straddle prices in Amazon.com and Apple continue to predict that the stocks could move by 12% or more following earnings. But the straddle prices in Baidu.com have reached rarified levels ahead of its earnings on Wednesday evening.
AT&T -- the sole network provider for Apple's iPhone -- reported service plan activation numbers that were lower than analysts expected.
Texas Instruments posted a lower quarterly profit on weak demand for its calculators and other products, and gave a disappointing revenue forecast for the third quarter, sending shares down 3% on Monday.
Speculators continue to have a big appetite for buying volatility, at least if trading in options of the Volatility index is any indication. The VIX has been holding close to where it left off after Friday's sell-off in spite of today's market rebound, indicating that traders are anticipating more swings in the market.
Bausch & Lomb is likely to stick to its agreement to be acquired by Warburg Pincus for $3.67 billion, or $65 per share in cash, reported CNBC's David Faber.
Shares of Tellabs surged 19 percent Monday, after a financial news Web site reported the U.S. telecommunications equipment maker was entertaining a $7 billion bid by a joint venture of Nokia and Siemens.
Schering-Plough on Monday said second-quarter earnings more than doubled, driven by growing demand for its Zetia and Vytorin cholesterol drugs and its treatments for arthritis and allergies.
The flurry of quarterly results is set to continue in the coming week and options trading volume has been pointing to a number of earnings plays that are on the radar of traders.
China may be known for a lot of things--its rich culture, its gastronomic delights, its burgeoning economy. But I bet you'd never, ever guess that it's also got a budding, European style wine industry. I visited the ninth biggest winery today, in the northwest corner of Beijing. Amid the wide roadways, the construction sites and scores of people who simply have no fear of moving vehicles sits the Dragon Seal winery.
One area of trading that has seen explosive growth this year is the options market. Year over year trading volume in June jumped over 30% and is up 25% for the first half of the year, according to the Options Industry Council.
Options speculators chasing after rumors that Lehman Brothers would be forced to announce exposure problems to subprime derivatives paid little attention to the firm even after it called the rumors "unfounded".