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U.S. stock market report 1649 ET 18Nov2009 E*Trade call volume soars on deal prospects ------------------------------------------------------------------------------

E*Trade shares rose 9.03 percent to $1.69 and its call options surged after Ameritrade Holding Corp's Chief Executive Fred Tomczyk said he wants to put his cash to work, and will even entertain a deal involving smaller rival E*Trade Financial Corp under the right circumstances. An acquisition involving a fellow online broker is the best use of the company's cash cushion, Tomczyk told the Reuters Global Finance Summit in New York. The news prompted a flurry of activity in E*Trade's bullish options. In all, about 51,000 calls traded which is more than five times the number of its put options and three times the average daily call volume for the stock, said WhatsTrading.com option strategist Frederic Ruffy. Investors snapped up the $2 call strikes in the November contract which expires this Friday and in the December contract which expires in 30 days, The stock would need to rise another 18.3 percent for the calls to finish in-the-money, he said.

Reuters Messaging: doris.frankel.reuters.com@reuters.net 1617 ET 18Nov2009-US STOCKS-Wall St ends lower; tech outlook weighs ------------------------------------------------------------------------------

U.S. stocks ended lower on Wednesday and snapped three days of gains, with the tech sector leading the decline after worrisome outlooks from two major software makers, including Autodesk Inc.

A surprising drop in U.S. housing starts last month also weighed on the market.

Based on the latest available data, the Dow Jones industrial average fell 11.11 points, or 0.11 percent, to end unofficially at 10,426.31. The Standard & Poor's 500 Index inched down just 0.52 of a point, or 0.05 percent, to finish unofficially at 1,109.80. The Nasdaq Composite Index slipped 10.64 points, or 0.48 percent, to close unofficially at 2,193.14.

Reuters Messaging: angela.moon.reuters.com@reuters.net 1605 ET 18Nov2009-Simon Property put spread suggests protective play-analyst ------------------------------------------------------------------------------

Shares Simon Property Group Inc ended up 4.7 percent at $75.58 on news that the largest U.S. mall owner has hired investment adviser Lazard Ltd to help it explore a possible bid for all or part of bankrupt rival General Growth Properties Inc.

In the options market, one cautious investor scooped up downside protection on Simon Property, suggesting the trader may be fearing the stock's short-term decline if it acquires General Growth Properties, or is simply taking a bearish stance on the stock, said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in a note to clients. The investor initiated a put spread by purchasing 4,000 puts at the December $70 strike for $2.25 each, and by selling the same number of puts at the December $65 strike for $1 apiece. The net cost of the spread amounted to $1.25 per contract and protects the trader if shares fall through the break-even price of $68.75 over the next four weeks, he said. Wilkinson also noted that Simon Property shares have remained higher than the effective break-even point since Nov. 6.

Reuters Messaging: angela.moon.reuters.com@reuters.net 1603 ET 18Nov2009-Thermo Fisher gets bearish option play-analyst ------------------------------------------------------------------------------

Thermo Fisher Scientific Inc attracted bearish option investors to the March 2010 contract, said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in a note to clients. One investor appears to have established a put spread by buying 3,000 puts at the March $45 strike for $2.50 apiece, marked against the sale of the same number of puts at the lower March $40 strike for $1 each. The net cost of the protective play amounted to $1.50 per contract. The scientific instruments maker ended up 0.7 percent at $46.45.

The trader responsible for the spread is likely aiming to protect the value of a long position in the underlying stock, Wilkinson said. If so, the investor is protected in the event that shares slip beneath the break-even price of $43.50 by March expiration.

Reuters Messaging: angela.moon.reuters.com@reuters.net 1549 ET 18Nov2009-Coach draws put option bears and bulls ------------------------------------------------------------------------------

Shares of U.S. leather goods company Coach Inc extended declines on Wednesday, dipping 0.2 percent to $34.42 despite an upgrade on the stock by Goldman Sachs Group to 'buy' from 'neutral' on Monday. Option traders displayed mixed sentiment on Coach by trading put options, said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in a note to clients. Bullish investors sold 3,300 puts at the November $34 strike for an average premium of 25 cents each. Put-sellers retain the full 25 cents on the trade if shares stay at or above $34 through expiration on Friday. Meanwhile, option bears targeted the December $33 strike to purchase 2,800 calls at an average price of $1.15 apiece. Pessimistic individuals accrue profits if Coach shares fall through the break-even price point to the downside at $31.85 by December expiration, he said.

Reuters Messaging: angela.moon.reuters.com@reuters.net 1526 ET 18Nov2009 Hecla call volume rises as gold scales record high ------------------------------------------------------------------------------
Option players are apparently hoping to catch a rally in precious metals

company Hecla Mining Co as the bull run in gold keeps going. U.S. gold futures ended higher after scaling a record high above $1,150 an ounce earlier in the session as stronger-than-expected U.S. consumer prices and a steadily weakening dollar stirred inflation. Hecla shares rose 1.95 percent to $6.27 after hitting a session high of $6.54.

Overall option volume double the norm with about 35,000 calls and 7,973 puts traded in Hecla, according to Trade Alert. One popular option was the December $7.50 call strike with 7,373 contracts traded. The volume included a block of 2,700 at a 30-cent premium on the International Securities Exchange which is an opening customer buyer, according to ISEE data, said WhatsTrading.com option strategist Frederic Ruffy. In fact, ISEE data indicate that 7,800 Hecla calls have been bought-to-open, Ruffy added. Reuters Messaging: doris.frankel.reuters.com@reuters.net 1439 EST 18Nov2009-Markets fall on home construction data, tech ------------------------------------------------------------------------------

U.S. stocks fell on Wednesday, threatening to end three days of gains, following worrying outlooks from two major software makers and a surprise drop in home construction last month.

Business software maker Autodesk Inc was cautious about the outlook for the current quarter, while sector peer Salesforce.com Inc reported a slowdown in new business. The news was a setback to investors looking for signs of a pickup in demand.

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The Dow Jones industrial average fell 0.4 percent to 10,396.61 while the S&P 500 lost 0.3 percent to 1,106.62 and the Nasdaq was off 0.8 percent to 2,186.69.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net

1353 ET 18Nov2009-Massey Energy call option volume builds ------------------------------------------------------------------------------

Massey Energy Co shares fell 2.72 percent to $39.29 in afternoon trade on Wednesday, after earlier notching a 52-week high of $41.14. In the options market, volume was four times the average daily turnover. In all, about 27,000 calls and 9,856 puts traded in Massey and directional sentiment based on order flow was 52 percent bullish, according to Trade Alert.

WhatsTrading.com option strategist Frederic Ruffy said that large block 13,000 MEE April $50 calls might have been sold earlier in the session rather than bought at a $2.40 premium. If so, he said, it might be part of an overwrite play, as a number of blocks of Massey shares traded Wednesday mornimg at prices ranging from $40.19 to $40.87. In an overwrite, an investor sells call options on an existing share position, a strategy that combines the benefits of stock ownership and options trading, and each component provides some risk protection for the other.

Reuters Messaging: doris.frankel.reuters.com@reuters.net Keywords: MARKETS STOCKSNEWS

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