- This topic has 0 replies, 1 voice, and was last updated 9 years, 9 months ago by
.
-
Posts
-
Lexmark shares up on takeover talk and earnings
Oct
, 2007 CHICAGO – Shares in computer printer maker Lexmark
International Inc rose nearly 7 percent on Wednesday and its options
volume surged, fueled by optimism about the company’s upcoming
quarterly earnings and renewed takeover speculation.Shares of Lexmark,
based in Lexington, Kentucky, gained $2.74 to close at $43.80 on the
New York Stock Exchange after earlier hitting an intraday high of
$44.15. The company is due to report third-quarter results on October
23.In all, 26,192 calls compared to 2,281 puts, traded in Lexmark, 12
times the normal volume, according to market research firm Track
Data.Jon Najarian, co-founder of Web information site optionmonster.com
in Chicago, said that in addition to bullishness about the company’s
earnings prospects, a rumor that Dell Inc founder and Chief Executive
Michael Dell might be looking at the company, was circulating.A
Lexmark spokesman said the company does not comment on rumors or
speculation. A spokesman for Dell, the world’s No. 2 personal computer
maker, also said it does not comment on speculation.Investors focused
on the October, November and January calls, giving them the right to
buy Lexmark shares at $45 a piece, option analysts said.Option players
typically use equity calls, which allow them to buy the company’s
shares at a given price and time, to speculate on further strength in
the stock.”We have seen buying in the October, November and January
calls at the $45 strike as investors position themselves for upside
share price movement,” said Rebecca Engmann Darst, equity options
analyst at Interactive Brokers Group.She noted the strong call interest
could be due to positioning ahead of earnings and the return of
takeover rumors that surrounded Lexmark as recently as June.”The
November $45 calls are the most interesting to us as they give the
owners 38 days rather than just 10 days to be right” if the takeover
speculation leads to a deal, Najarian said. October calls expire on
October 19.The November calls, which had volume of 8,600 contracts,
cost $2.30 a contract, up $1.55 on the day.The flurry of options
activity was accompanied by a rise in Lexmark’s overall option implied
volatility, which measures the expected magnitude of share movement
based on options prices.It stood at around 47.8 percent, up from 38.8
percent on Tuesday, Darst said.Both Paul Foster, options strategist at
Web site theflyonthewall.com, and Darst said the high volatility
indicated option participants expected more price swings in the stock.
- You must be logged in to reply to this topic.