Options Report: Bear Steans, Macy's, Blackstone
As the Wall Street bulls struggled with worries about credit market conditions, brokerage stocks as measured by the AMEX Securities Broker/Dealer Index were among the weakest of the stock groups on Friday.
Bear Stearns , again, took its place as the biggest laggard among financial stocks as worries persist about liquidations at two of its troubled hedge funds.
CNBC's Charlie Gasparino reported Friday that the Securities and Exchange Commission has requested that the firm provide documents on its two troubled hedge funds.
Speculators in the options market have been making pessimistic bets on Bear, reaching down to the July 130 puts, a bet Bear Stearns will fall to $130 by expiration on the third Friday of July, swelling volume to more than 2,100 contacts.
Overall trading in Bear Stearns puts swamped call volume by a margin of 4 to 1 on Friday.
Put options volume also picked up in Merrill Lynch where more than 1,500 contracts traded in the Merrill July 75 puts, a bet that Merrill would drop to $75 or less by July expiration.
Merrill Lynch, according to Thomson Financial, ranked as the top underwriter by reported fees in the first half of 2007. Investors are worried that a diminished appetite for lower rated debt may dampen business for investment banks.
Shopping at Macy's, or For Macy's?
Last Friday, shares of Macy's rallied on speculation it could be a candidate for a leveraged buyout, but the rumors quickly faded when no deal appeared this past Monday. The takeover talk persists, however. In a report to clients this morning, Goldman Sachs noted that an LBO for the company could make sense at as high as $52 a share. The report did not give a potential timetable.
While trading in July Macy's options wasn't overwhelmingly heavy, market makers were on guard. Even as Macy's shares pulled off the highs to a small decline as the overall stock market sold off, options premiums in the Macy's out of the money July calls held steady late Friday.
Macy's spokeswoman Susan Bateman said, "the company does not comment on market speculation or rumors."
Blackstone Options
Private equity giant Blackstone Group made its market debut last Friday. According to Reuters data, Blackstone's stock is off more than 15.7% on its first full week, including Friday.
In a statement, CBOE said Blackstone options will trade on the March expiration cycle, with introductory expirations in July, August, September and December. Initial strike prices have been set at 25, 30 and 35, with position limits of 250,000 contracts. Group One Trading, LP has been named the Designated Primary Market Maker in the options.
Other U.S. options exchanges are expected to follow suit, since the majority of equity options are multiply listed.