BIG Buyers In SUNW And CSCO Options Create Interesting Opportunities…

of the story may be today’s surprisingly strong response to the IPO of
technology (yes, I said technology!) provider Simplex

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. As of this writing, SPLX is up over 60% from
its offering price, a further sign that the worst may indeed be over for the
battered sector.

SPLX provides design verification software and services for chip firms for the
likes of Sun Microsystems
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and Texas

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, both of which are also enjoying the nice
wave the tech sector is riding.

In fact, when we looked over our computer runs this morning, SUNW was indeed a
standout, as the outright call versus put volume is an impressive 13:1.
What’s even more impressive and reason enough to take a more serious look is
the dollar weighted 27:1 call volume.

Symbol color:black”>




Call Vol$W

Put Vol

GMST color:black”>

color:black”>2,627 color:black”>107 color:black”>9,968 color:black”>318

SUNW color:black”>

color:black”>90,620 color:black”>6,980 color:black”>443,793 color:black”>16,181

LSI color:black”>

color:black”>10,422 color:black”>580 color:black”>25,893 color:black”>1,070

NITE color:black”>

color:black”>3,073 color:black”>62 color:black”>6,987 color:black”>339

BAC color:black”>

color:black”>1,817 color:black”>183 color:black”>4,736 color:black”>235

WMT color:black”>

color:black”>3,483 color:black”>836 color:black”>19,134 color:black”>959

SCH color:black”>

color:black”>7,998 color:black”>469 color:black”>17,400 color:black”>1,024

AMD color:black”>

color:black”>12,467 color:black”>1,803 color:black”>50,886 color:black”>4,675

VECO color:black”>

color:black”>425 color:black”>150 color:black”>5,699 color:black”>525

PALM color:black”>

color:black”>6,473 color:black”>978 color:black”>8,708 color:black”>806

NT color:black”>

color:black”>13,037 color:black”>1,702 color:black”>18,041 color:black”>1,790

AMCC color:black”>

color:black”>5,953 color:black”>1,203 color:black”>20,935 color:black”>2,201

CHKP color:black”>

color:black”>4,877 color:black”>991 color:black”>32,915 color:black”>3,607

SCMR color:black”>

color:black”>3,916 color:black”>491 color:black”>6,655 color:black”>740

SEBL color:black”>

color:black”>13,556 color:black”>3,686 color:black”>98,934 color:black”>12,753Apparently, a LARGE
customer has been buying the January 2002 15 calls faster than Kid Rock goes
through supermodels! Over the past three sessions this customer has
accumulated 75,000 January 2002 15 calls and according to our floor sources,
has a similar taste for Cisco
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January 17 1/2 calls. We hear the customer has picked up over 50,000 of those
little beauties, so we’ve got someone awfully serious about tech!

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.

Symbol color:black”>




Call Vol$W

Put Vol

CHIR color:black”>

color:black”>170 color:black”>639 color:black”>764 color:black”>8,691

EK color:black”>

color:black”>1,172 color:black”>5,169 color:black”>2,612 color:black”>26,566

T color:black”>

color:black”>1,061 color:black”>2,392 color:black”>1,603 color:black”>13,897

LLY color:black”>

color:black”>975 color:black”>2,772 color:black”>4,132 color:black”>25,814

GE color:black”>

color:black”>6,056 color:black”>25,708 color:black”>6,915 color:black”>35,045

MO color:black”>

color:black”>4,702 color:black”>22,659 color:black”>17,057 color:black”>82,135

WCOM color:black”>

color:black”>5,488 color:black”>4,875 color:black”>8,110 color:black”>31,547

DELL color:black”>

color:black”>3,874 color:black”>24,461

Although there hasn’t been much of note going on to the downside, I thought
I should include the dollar-weighted put action. Be sure to take note of the
serious put accumulation in one of the outperformers of the last six months, Phillip

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