OptionsNews, the daily news program on www.onn.tv,
today reported on the following companies:
Friday’s option volume for indexes and single
stocks registered nearly 15 ½ million
contracts, higher than the year to date average of 14 million contracts
and Thursday’s volume of just over 13 million
contracts. The CBOE volatility index, also known as the VIX, ended the
day at 23.56, up over 26% from Thursday’s
close of 18.63. We haven’t seen the VIX this
high since mid-April. To give you an idea of what the increase in the
VIX and the sharp-sell off in the market did to the S&P 500 options, the
at-the-money straddle on Thursday for the SPY was the 141 strike, which
closed at $4. However, the at-the money straddle is now down to the 137
strike on that sell-off, but the price is $4.88 due to the increase in
volatility.
Lehman Brothers has announced that they will post a 2.8 billion dollar
loss for the quarter, or $5.14 a share, from a gain of $489 million or
81 cents a share in the year-ago period. Total revenues less interest
expense will be $700 million, down from revenue of $5.5 billion in
revenue in the year-ago period. Net revenue for the second quarter
reflects negative mark to market adjustments and principal trading
losses, net of gains on certain debt liabilities, Lehman said. They will
be raising 6 billion dollars in new capital to help offset this loss. As
you will remember, we reported back on June 3rd
that this was a likely scenario, with Lehman posting their first
quarterly loss since they took the company public. Many analysts believe
that this new capital could come in the form of convertible bonds. In
this case, the long-term call options implicit with the issue tend to be
at a deep discount, so you should keep your eye on their effect on the
long-term volatility.
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