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Today’s tickers: RX, XRX, SLE, AMGN & ESI

Amgen ( AMGN - news - people ):Bullish investors took advantage of the 5% decline in shares of the world’s largest biotechnology company by initiating option plays at reduced premiums. Shares of AMGN slipped 5% to $56.43 after the firm revealed third-quarter sales declined and U.S. regulators requested additional studies  shell pearl jewelryits experimental bone drug. Option players jumped at the opportunity to trade calls toting premiums that have more than halved (in some cases) since Wednesday. Near-term bullish sentiment took the form of a call spread. It appears investor purchased 2,000 calls at the November 55 strike for an average premium of $2.68 apiece, and simultaneously sold 2,000 calls at the higher November 60 strike for 57 cents each. The net cost of picking up the in-the-money calls amounts to $2.11 per contract. Maximum potential profits of $2.89 apiece are available to call-spreaders if shares recover back to the $60-level by expiration.

One long-term optimist put on a ratio call spread in the April 2010 contract. It seems the investor purchased 1,000 calls at the April 55 strike for $6.05 apiece, and sold 2,000 calls at the higher April 65 strike for 1.96. The net cost of the call options shrinks to $2.13 per contract given the ratio of 2 calls sold to each purchased contract. This individual stands to accrue maximum profits of $7.87 apiece if AMGN rises 15% to $65, and no higher, by expiration in April.
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Xerox ( XRX - news - people )--The largest producer of high-speed color printers had bullish options activity in the December contract. Shares of XRX are trading 3.5% higher to $7.99 Thursday after the firm raised its 2011 profit forecast to $1.05 per share from 95 cents. Xerox posted third-quarter profits of 14 cents per share, surpassing average expectations of 12 cents per share, ahead of the opening bell Thursday.

Option traders appear to be making bullish bets on XRX by engaging in a couple of strategies. Plain-vanilla call buying in the amount of 2,500 contracts took place at the December 8.0 strike for 50 cents apiece. Investors long the calls may profit if shares rally 6% over the current price to surpass the break-even point at $8.50 by expiration. Other investors put on bullish risk reversals. It looks like 3,700 puts were sold at the December 7.0 strike for 10 cents apiece to inflatable water games partially offset the cost of buying the same number of calls at the December 8.0 strike for 40 cents each. The sale of the puts  lowers the effective break-even point to $8.30. A 31 cent increase in shares to $8.30 would allow reversal players to break even by December’s expiration day.

Sophisticated institutional investors are deeply divided over whether the red-hot world of high-frequency securities trading is a boon or a bane to their businesses. That's the gist of a survey of  freshwater pearl earrings 78 institutions in the U.S., Canada and Europe released this week by Greenwich Associates.

High-frequency trading is the practice of buying and selling securities up to thousands of times a second in a bid time and time again to pocket minuscule profits. Hundreds of firms are engaging in the practice, from famous ones like Goldman Sachs ( GS - news - people ), Barclays ( BCS - news - people ) and Citadel to rapidly growing upstarts like Getco in Chicago.

High-frequency trading has created enormous amounts of market liquidity. However, views on its overall impact are mixed. Among the institutions surveyed, 35 replied that high-frequency trading threatens to undermine the structure of the markets. In contrast, 28 said high-frequency trading benefits the market by adding liquidity and reducing the impact specific trades have on prices. Another 20% said they did not know enough about high-frequency trading to inflatable water games have an opinion.

The majority of investors agreed that there's no hard data to prove whether it is good or bad for trading costs. Yet 57% supported additional regulations. That's because high-frequency trading has become associated with controversial strategies, such as flash orders, which involve giving select participants an option to execute orders before they are shown to the overall market.

"There's a concern about the playing field being seen as tilted or shell pearl jewelry skewed in favor of some participants," said survey co-author John Colon.

"A high percentage couldn't point to specific data to back up their views, because they didn't feel that was readily at hand," said Colon.

The credit rating agencies, in principle regulated by the SEC, have done little to strengthen their roles as forward-looking estimators of credit risk. This is more crucial than you think, because the <a href="http://www.wholesale-pearl-jewelry.com">shell pearl jewelry</a> value of all bond issues--corporate, utility, municipal and sovereign--is far greater than the market value of all the world's common stocks.

Moodys, Standard & Poors and Fitch are certified by the SEC as a nationally recognized statistical rating organizations. "The case can be made that the credit crisis was abetted by the failure of the rating agencies to appreciate the toxic potential of the structured finance instruments," charges Morris W. Offit, chairman of Offit Capital Advisors. He was setting the record straight on how regulation always lags the marketplace. It is now a matter for the law courts as a federal judge recently ruled that the credit agencies had to defend themselves against fraud claims.

There is also not yet a regulator for the massive derivatives market. Don't be lulled into thinking that the clearance of trillions in derivative contracts on some clearinghouse is the equivalent of regulation. It isn't regulation. It's only record keeping. The survivors in derivatives, who handle 70% of all contracts, are behemoths  <a href="http://wwww.lpearls.com">pearl necklace</a> like JPMorgan Chase ( JPM - news - people ), Goldman Sachs ( GS - news - people ), Credit Suisse ( CS - news - people ), Deutsche Bank ( DB - news - people ), UBS ( UBS - news - people ) and the major French banks. I challenge anyone to understand precisely the level of risks involved in the concentration of activity in this unregulated part of the financial system.

So, what's Summers' prescription to deal with the crises to come? He is borrowing former Sen. Daniel Patrick Moynihan's solution for automobile safety proposed in the late 1950s when Moynihan was working for Averill Harriman in New York. The financial equivalent of "guardrails, shatterproof glass and speed limits," for Wall Street is Summers' clever model. He wasn't precise about the translation, except to recommend higher capital requirements (again, no numbers), a method to manage the failure of a financial institution so it doesn't bring down the system and a consumer protection agency.

I don't see any of Summers' ideas coming to fruition until Congress has the <a href="http://www.inflatable-wholesaler.com">inflatable water games</a> hearings that are necessary to organize public opinion.

Summers' idea to create a "social compact" between the financial community and the rest of the nation is pie in the sky. It has never existed and never will, I'd venture, because you can't regulate human nature.

Here we stand, with unemployment the highest it's been since the disaster days of the later years of Jimmy Carter or the early first term of Ronald Reagan. The "new normal" that the shell pearl jewelry guys at PIMCO like to talk about sure looks like the "old lousy."

In a sober warning, Summers noted that "roughly every three years for the last generation, a financial system that was intended to manage, distribute and control risk has, in fact, been the source of risk--with devastating consequences for workers, consumers and taxpayers."

How true, but what he didn't admit was that neither regulation nor market discipline, nor any major reform of the culture, has made the financial system safe from falling into the casino mentality.

With stocks and bonds and commodities rising in an era of zero cost of money, there is no public outrage building at the lack of muscle by the White House and Treasury. Let's go to the videotape. As the Fed ignored its supervisory role of the major money center banks in the run up to the crisis, we cannot really trust them to pearl necklace make sure the dangerous leveraging of balance sheets will not happen again. Even now, there is tough political opposition to giving the Fed ultimate power over the financial system.

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Reformers must beware the preference for placing a committee of freshwater pearl earrings all the regulators as a watchdog over the financial system without succinct powers to act resolutely. If this umbrella group can only recommend, it will only be a lagging nag, nothing more. The SEC has done a fine job of this on its own.

Don't bet that the headlines about capping compensation at AIG, Citigroup and Bank of America will restore the nation's expectation that the take-no-prisoners culture of Wall Street has been taken in cultured pearl jewelry hand by the Obama administration.

This gesture to put a limit on compensation at bailed-out banks is the result of building outrage, and is a mere sop to public opinion, involving only a tiny fraction of fat-cat financiers and business executives. A great deal more will be required to meet White House economic czar Lawrence Summers' call for a social compact between Wall Street and Main Street.

With the stock market moving above 10,000, few took heed as Summers flatly predicted a week ago that "the incidence of financial crises may be greater over the next 25 years than the inflatable water games past 25 years."

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To refresh your memory, that means we have more stuff to look forward to, like the 1987 crash in the stock market; the liquidation of Long Term Capital Management; the default of Russia and Argentina on freshwater pearl earrings their sovereign debts; serial monetary crises in Asia, Latin America and emerging markets; and the dot-com meltdown and the global subprime disaster that froze financial markets, requiring trillions in taxpayer bailout money.