Big Player Picks Bottom in SUNW… 

• March 30, 2001
• Jon Najarian

One plus,
on this otherwise dull end
of quarter, was that the average equity fund is still out of favor. I say
this is a positive because it means some of the fast-money investors have
left the building. With fewer of them to shake out, the rallies may become
more sustainable, as stronger hands are coming to the table. I’m still not
seeing any compelling reason to go 75% into equities like the beloved Goldman
Sachs analyst, but after the remaining tax selling (to raise money to pay
taxes) on April 9 passes, the picture may be a little
brighter.

Our computers saw that big institutional player step back into Sun
Microsystems
(
SUNW |
Quote |
Chart |
News |
PowerRating) this morning. With SUNW trading $14.68,
the player sold 38,000 April 12 1/2 puts for $0.55. Those puts represent up
to 3.8 million shares of stock, but the market makers that bought them
probably only needed to buy 500,000 shares to get a delta neutral hedge, as
the delta for those puts was about 13. SUNW ran like a scolded dog up to
nearly $15.5 and those puts slipped to a bid of $0.33 and were offered at
the traded price of $0.55.

This player has been extremely active and
profitable in his or her calls in SUNW. They covered their latest put sale
just two days before SUNW took its recent tumble and now today’s action
shows they believe a bounce is in the offing.

As the following table shows, we are also tracking
some bearish action in Ciena
(
CIEN |
Quote |
Chart |
News |
PowerRating),
Juniper Networks
(
JNPR |
Quote |
Chart |
News |
PowerRating), Microsoft

(
MSFT |
Quote |
Chart |
News |
PowerRating) and Xilinx
(
XLNX |
Quote |
Chart |
News |
PowerRating). In
XLNX, 6000 April 40 puts traded for about $7 and another 6000 April 50 puts
for $15 5/8. Meanwhile, CIEN is seeing some incredible put accumulations, as
14,000 April 45 puts and 14,000 April 50 puts dominate trade against the
anemic call volume.

Symbol color:black”>

Call VolumePut Volume$W Call Vol$W Put Vol

CIEN color:black”>

9,71533,59445,871341,743

JNPR color:black”>

6,03015,67521,031212,792

MSFT color:black”>

7,27120,91917,16581,805

XLNX color:black”>

2,72412,4198,645112,290 (1010WallStreet.com has licensed the use of Hamzei Analytics proprietary options analytics)