BIG Buyers In SUNW And CSCO Options Create Interesting Opportunities…

Remember what Gordon Gecko said in Oliver Stone’s classic Wall Street,
“stick with the money!” Likewise, Doctor J says anyone willing to plunk
down $30 – $50 million worth of options is worth coat tailing.

A conservative player could buy the CSCO June 17 1/2 – 22 1/2 bull call spread
for $2.20. With CSCO trading for $19 1/8, that spread has an intrinsic value of
$1 5/8, so they’d only be paying $0.57 of extrinsic premium for the right to
enjoy the upside of the mother of all networking stocks.

Similarly, one could surf the wave in SUNW, by buying the July 17 1/2 calls for
$4.10 and sell a like number of the 25 calls for $1.10. The total
out-of-pocket will be just $3 for that $7 1/2 spread and with SUNW trading
$19.71; the spread is trading just $0.79 above its intrinsic value of $2.21.

Both offer very attractive risk-versus-reward characteristics and allow us to
piggyback on the massive accumulations in two of America’s premier
technology companies.