""AH," THE OPTIONS TRADER said as he surveyed the market before it opened. "I love the smell of greed in the morning. Smells like … a normal market."
Perhaps Stephen Schwartzman, chief executive of Blackstone Group (BX), a private-equity firm, agrees. Even if he doesn't, the options market does, which suggest shares of this somewhat battered private-equity powerhouse are poised to advance.
Heavy were the bets made Monday that Blackstone would be a prime beneficiary of the federal government's plan to provide financing to qualified private investors who are willing to buy toxic assets from banks. For some particularly well-qualified investors, the U.S. government will provide $3 for every $1 invested.
With the Standard & Poor's 500 Index up about 6% on Monday, Blackstone's stock gained about 23%, and call volume, which is considered a bullish indicator, jumped to 10 times average daily volume. The stock is at its highest price since Jan. 9, even if it is now technically overbought, and may have trouble advancing beyond resistance at $8 to $8.50.
However, the outstanding options positions in Blackstone suggest that many investors expect the company's stock could trade as high as $12.50 by January."