Call Sellers Crash Chairman’s Belated New Year’s Bash

• January 4, 2001
• Tony Saliba

As we wake from from an elation-induced stupor, we look around and note that it wasn’t
a dream, but ask “Will it last?” The (not-so) surprise move of the real Big Al
helped our bullish verticals to a tremendous degree as
(
EXTR |
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(
CSCO |
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the world. Those of you who are in, have another chance to take a triple off of the
table in the
(
CSCO |
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the euphoria may not last too long, certain names will find a floor at yesterday’s prices
or better. This would point me to some put spread strategies that would lean on this
notion.

Call-selling is the name of the game today, especially in the tech sector. Reversing
yesterday’s brief visit from the buyers, palms are out in modest fashion. Volume is
moderate, slightly above the 30-day moving average. We show a 38 on our scale
(1-100). Yesterday’s appearance of call-buyers in the options market (most of whom
are smiling today) was rare in the past few weeks. Seems that they are happy with a one-day party. Stay tuned tomorrow to see how the sellers fare.

face=”arial, helvetica” color=”#800000″ size=”2″>Pre-open order volume was moderate this morning. Overall, call sellers led buyers
3:1, while put sellers and buyers were even at 1:1. Top five order volume leaders were as
follows:
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CSCO |
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INTC |
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JNPR |
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QCOM |
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outnumber buyers 3:1, while put sellers lead buyers at 3:1 as well. INTC call sellers
dominated buyers 5:1, while put sellers and buyers were even. QCOM,
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ORCL |
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CIEN |
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call sellers all crushed their respective buyers at 15:1.
(
JDSU |
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3:1.
(
SUNW |
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face=”arial, helvetica” color=”#800000″ size=”2″>First-hour order volume picked up slightly, but remained moderate. Overall,
call sellers led buyers 2:1, while put sellers and buyers were even at 1:1. Top five order
volume leaders were as follows: CSCO, INTC, SUNW,
(
AOL |
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(
MSFT |
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outnumber buyers 3:1, while put buyers lead sellers at 3:2. INTC call sellers led
buyers 3:2, while put sellers led buyers 2:1. SUNW call sellers topped buyers at
2:1, while put buyers led sellers 3:2.
(
EMC |
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sellers led buyers 2:1.
(
IBM |
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(
DELL |
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sellers outpaced buyers 10:1. GE put activity was heavy, buyers over sellers 5:1.

I’m looking at put verticals in January, we still have two weeks worth of
“juice” and
there are some interesting plays. How about the
(
CIEN |
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credit. Can you imagine the stock back to its low near $63? That would shave more than 25%
off the current level and be the area where you would have risk in this spread. If you are
neutral to bullish at all, this is a chance for a 2:3 risk reward play. In any event, hang
on for what appears will be an interesting ride today. Talk to me at COLOR=”#0000ff”>tonys@tradingmarkets.com.
So far, the correspondence
has been brisk and informed.