Motorola unveils recyclable phone, boosts volatility as demand for call options surges

Today’s tickers: MOT, RIO, ICE, ERTS & CHK MOT – Motorola Inc. – In an attempt to revamp its product line-up and find a successor to an unsuccessful Razr, Motorola just announced a new cellphone operable over third-generation networks to be made available in North America, Latin America and Asia. The phone will be made of recyclable plastic bottles and will be available through TMobile. Motorola came under fire for failing to stem seven consecutive quarterly earnings declines, along with failure to follow the lead of Apple or Blackberry by adopting touchtone screens and full keyboards. The news boosted shares at Motorola to $4.62 as they stretch towards $5.00 for the first time in two months. The option market was set alight by heavy demand for call options reserving rights to buy the stock at a fixed price of $5.00 per share ahead of the series February expiration. Overall option volume of 49,000 was heavily weighted towards call buying at the February 5.0 series where some 39,000 contracts changed hands as shares advanced. Implied volatility jumped one-fifth to 89% as dealers raised the premium on the speculative play. RIO – Cia Vale do Rio Doce - ADRs. – Much optimism surrounded commodity and emerging market theories Tuesday as the first concrete signs of President-elect Obama’s economic stimulus plan was revealed. Despite a broadly stronger U.S. dollar, which is usually commodity price bearish, emerging market currencies including the Brazilian real rose in value to express support for strengthening actual and anticipated flows back into those economies predicated on the success of the American spending package. Shares in Brazil’s largest copper producer, RIO jumped 5.6% to $14.89 to reflect a resumption of demand while option traders dove into bullish call options expiring in January. Heaviest-trafficked was the 15 strike where 13,500 calls were bought at around 1.00 each. Investors also bought 3,800 calls at the 18.75 strike where current open interest reads 5,228 lots. Implied options volatility of 82% was steady. Further forward contracts reflected even more bullish expectations as investors appeared to sell put options expiring in 12 months time at the 10.0 strike while buying 25 strike call options. The trade resulted in a net credit of 65 cents to investors. ICE – Intercontinental Exchange – Despite an annual rise in futures volume, ICE yesterday shook investors’ confidence and confounded analysts’ predictions when it reported a 22% drop in commissions generated by over-the-counter energy trading.…