Buyers Back Off On Lighter Order Flow

• January 25, 2001
• Tony Saliba

Thursday
morning brings a view of options players seemingly backing away a
bit. Order flow volume slackened today from yesterday’s pace, registering a 26
on a scale of 1 to 100. Call sellers are beating back yesterday’s precocious
buyers to regain the lead of first hour volume, but buyers are still making
themselves heard. This trend has pointed to acceleration in decay of premiums in
general.

Volatility
remains lower than we have seen in the past few months, commensurate with lower
volume and a slight upward push in prices. 
Fed-watching is the order of the day… with two key pieces of economic
information due today — 4^th Quarter employment cost numbers and Fed
Chairman Alan Greenspan’s endorsement (or lack thereof) of a national tax cut
—- along with a possible hint at a rate break next week, has options traders
hanging back before making any substantial commitments.

Low-cost
butterflies (condors in some cases) just out of the money would be preferred.
Put butters would look nice if this upward creep does not last.

Tech activity
characteristically takes the lion’s share this morning, with some unusually
heavy activity in
(
BRCM |
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PowerRating),
(
SNDK |
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(
GLW |
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Here are
today’s numbers…

Pre-open
order volume was moderate to light this morning. Overall, call sellers led
buyers 2:1, while put sellers squashed buyers at 2:1.  In pre-bell
activity,
(
BRCM |
Quote |
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PowerRating) call sellers
outnumber buyers 2:1, while put buyers trounce sellers 4:1.
(
GLW |
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PowerRating)
call sellers led buyers 3:1, while put sellers led buyers at 3:1. 
JDSU call buyers showed up leading sellers 3:2.
(
SNDK |
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call sellers crushed buyers 5:1.
(
FDRY |
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call sellers beat up buyers 2:1.
(
WCOM |
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call buyers dominated sellers 2:1.

First
our volume was moderate to light this morning. Overall, call sellers led buyers
3:2, while put sellers squashed buyers at 2:1.  In first hour, GLW call
buyers outnumber sellers 2:1, while put sellers trounce buyers 6:1. 

(
QCOM |
Quote |
Chart |
News |
PowerRating)
call sellers led buyers 2:1, while put buyers led sellers at 2:1. 

(
JDSU |
Quote |
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News |
PowerRating)
call buyers showed up leading sellers 3:2.  

(
SNDK |
Quote |
Chart |
News |
PowerRating)
call buyers crushed sellers 4:1. 
(
AMGN |
Quote |
Chart |
News |
PowerRating)
call sellers beat up buyers 6:1. 
(
NEWP |
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PowerRating)
call buyers beat up sellers 6:1. 
(
JNPR |
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Chart |
News |
PowerRating)
call sellers led buyers 3:2.

We’ll
let you know if our search points up some butterflies that can be done with good
risk/reward levels. Talk to us…
tonys@tradingmarkets.com