UPDATE - Computer Glitch Lingers in Lucent Options

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Thursday July 20, 5:33 pm Eastern Time

CBOE Computer Glitch Lingers in Lucent Options

By Laura Jacobs

CHICAGO, July 20 (Reuters) - Wednesday's limited computer glitch at the Chicago Board Options Exchange lingered briefly early on Thursday, causing the biggest U.S. options exchange to halt options trading for 14 minutes on giant telecommunication equipment maker Lucent Technologies Inc. (NYSE:LU - news).

``This was related to the problem yesterday,'' CBOE spokeswoman Lynne Howard-Reed said. ``They cleaned up all 266 (options series) from yesterday except for this one.''

The CBOE on Wednesday had what it called a ``limited system problem'' that forced market makers to execute orders manually in 266 of the CBOE's roughly 112,000 options series.

Those orders normally would have been handled electronically by the CBOE's electronic order book system.

On Thursday, Lucent stock opened nearly $9 lower after it cut its growth forecasts. It subsequently fell further, ending down 10-5/16 at 54-3/8 on New York Stock Exchange volume of 66 million shares.

The CBOE's Rapid Opening System opened the front-month series in Lucent options but got ``stuck'' as it progressed, likely due to the huge price changes in the stock price and options premiums, Howard-Reed said.

The CBOE halted trading in all its Lucent options at 8:52 a.m. CDT (1352 GMT), resolved the computer problem and reopened the options at 9:06 a.m. CDT (1406 GMT), she added.

The ROS is the CBOE's electronic system that opens an option as a single event rather than starting each option's series one by one.

In options, a ``series'' is defined as contracts on the same underlying stock having the same strike price and expiration month, such as Lucent July 60 puts.

Spokesmen for the Pacific Exchange and the Philadelphia Stock Exchange said they had no systems problems on Thursday related to Lucent options, which are multiply listed.

The American Stock Exchange also said it had no problems opening Lucent options on Thursday, although the heavy Lucent options volume on Thursday underscored the constraints in options price-reporting capacity that the options industry is facing.

``It's very heavy volume, and it's a capacity problem,'' said Amex spokesman Bob Rendine.


-- (Dee360Degree@aol.com), July 21, 2000

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