Call Sellers: They Just Keep Going And Going…

Yesterday’s
late rally has dissipated completely on this Wednesday morning,
as
continued poor earnings reports and a key analyst report predicting
California’s imminent slide into recession hit home in traders minds. Options
players are responding to the dip in the markets in the typical fashion of late,
selling calls on light to moderate volume. Call selling is by far the name of
the game today in the techs. With the singular exception of AOL, where buyers
are out this morning, the predominance of customer sell paper continues. Volume
is, as mentioned above, slightly below average, registering a 21 on a Scale of 1
to 100.

Here’s
how the numbers look…

Pre-open
order volume was light today. In the overall market, call sellers led buyers at
almost 3:1, and put sellers and buyers were even at 1:1. The top five pre-bell
order volume leaders today were:
(
CSCO |
Quote |
Chart |
News |
PowerRating)
,
(
AOL |
Quote |
Chart |
News |
PowerRating)
,
(
MSFT |
Quote |
Chart |
News |
PowerRating)
,
(
ORCL |
Quote |
Chart |
News |
PowerRating)

and
(
INTC |
Quote |
Chart |
News |
PowerRating)
. In CSCO, pre-bell call sellers were out in force, leading
buyers 6:1, while put buyers trounced sellers 3:1. AOL call buyers led sellers
3:2. MSFT call sellers crushed buyers 6:1. ORCL call sellers destroyed buyers
15:1.
(
NOK |
Quote |
Chart |
News |
PowerRating)
call sellers were pounding buyers 2:1.
(
EMC |
Quote |
Chart |
News |
PowerRating)
call sellers
beat up the buyers 6:1.

After
the first hour of trading, overall call sellers edge out buyers 8:7, 
but put sellers trailed buyers 6:7. The top five pre-bell order-volume
leaders today were: CSCO,
(
JNPR |
Quote |
Chart |
News |
PowerRating)
, AOL, INTC and
(
QCOM |
Quote |
Chart |
News |
PowerRating)
. In CSCO, first-hour
call buyers came back, leading sellers 3:2, while put buyers trounced sellers
3:1. AOL call buyers led sellers 3:2. MSFT call sellers crushed buyers 6:1. ORCL
call sellers destroyed buyers 15:1. NOK call sellers were pounding buyers 2:1.
EMC call sellers beat up the buyers 6:1.

We continue to be
long the CSCO and
(
EXTR |
Quote |
Chart |
News |
PowerRating)
verticals. You
will recall that  EXTR has earnings
coming up and CSCO keeps plummeting. Think about selling some of the 42 1/2 – 47
1/2 spread on top to recoup some of your investment. We continue to scan for
diamonds in the rough, as no particular strategy stands out at this time. 
Remember, always think before you act in this business.

In terms of the
reader mail, which has been coming in very strongly and steadily, the top three
questions surround execution issues, selection and risk/reward thresholds. For
those of you we haven’t heard from yet, and for those of you who have friends
with similar things on their minds, fire ‘em in. We will be assembling these
for a chart we’ll post. Tonys@tradingmarkets.com