Exchange to Probe Surge in Nortel Options
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The Chicago Board Options Exchange is probing a surge in trading of Nortel Networks options Thursday, before the biggest maker of fiber-optic equipment forecast a first-quarter loss.
Trading in a so-called put option that gives investors the right to sell Nortel shares for $30 each through mid-March, for example, skyrocketed Thursday about an hour before Nortel released its earnings guidance. Purchasers of those options have profited immediately, with Nortel shares on Friday losing almost one-third of their value, falling $9.75 to $20.
More than 11,000 of the March $30 put contracts changed hands Thursday between 3 p.m. and 3:15 p.m. New York time, according to Bloomberg data.
Fewer than 1,600 had traded during the previous 5 1/2 hours.
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