Bush Bounce
The market reacted to this morning’s pro-Bush ruling by the Florida
Circuit court upholding the Florida Secretary of State’s decision to deny the
hand-counted ballots, with a strong upside push. Options players braced for a day of
increased volatility; as once again political news is cracking the market like a whip.
Remember that while, as we mentioned yesterday, the market in general will register a
decrease in volatility in an upside move, in a reactive market the opposite may be the
case. Once we see this political issue is close to resolution, we would bring out
selective premium selling strategies.
Pre-open order volume was moderate today. In the overall market, call sellers are
leading buyers at a 5:4 ratio, and put buyers are on a par with sellers at 1:1.
No big surprises in the top five order volume leaders today:
(
CSCO |
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PowerRating)], [SUNW|SUNW},
(
QCOM |
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MSFT |
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(
ORCL |
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Note that CSCO call sellers out number buyers 5:1. MSFT call sellers outnumber
buyers 2:1. In JNPR, all pre-bell call orders were buys.
After the first hour of trading, order volume was heavy. In the overall market, call
buys and sells were even at 1:1, and put sells outnumbered buys 5:4.
(
NT |
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PowerRating) and
(
JNPR |
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PowerRating) had jumped into the top five volume leaders along with SUNW, QCOM and CSCO. CSCO call
sellers continue to lead buyers, now at 4:1. JNPR call buyers are out in force, leading
sellers 4:1. SUNW put sellers lead buyers 3:1. MSFT put sellers lead buyers 4:1.
(
CMRC |
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PowerRating) is registering an unusually high call buy/sell ratio with buyers over sellers 10:1 on
moderate volume.
Our mantra of the past week, “Don’t short volitility” remains the phrase of
the day. As expiration nears and political events continue to unfold, options
players should maintain a calm demeanor. Remember that Thanksgiving is right around
the corner and traders may be looking to take a breather, so the level of volitility in
the market may continue to be nothing but messy.
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