Extra Innings
Nothing is certain. With the prospect of another week or even month
(since the Electoral College doesn’t convene until December 18) of indecision, we can’t
see a reason for selling options premium at this moment. A poor earnings release in DELL
tempers our claim that volatility will come in drastically this morning. We still expect
volatility to drop, but a downgrade of DELL by key analysts may keep volatility a bit
higher than expected. INTC was also downgraded; so watch volatility in this name to pop a
bit.
Pre-open paper was sluggish. No real surprises
in the names of the top movers in order flow: INTC, MSFT, CSCO, DELL, SUNW. INTC, however,
jumped into most active on the news of its downgrade. Overall, call buys were 52% of total
calls. Put sells made up 53% of total puts. Of the top five names, INTC and CSCO puts were
predominantly weighted towards buyers. INTC call buyers outnumbered sellers 5:1.
After the first hour of trading, DELL has moved into
first place in terms of order volume. Put sellers in DELL outnumber buyers, more
than 5:1. Call buyers in DELL outnumber sellers more than 6:1. INTC put sellers
lead buyers 4:1, while call buyers lead sellers 5:1. In the overall market, call
buys make up 64% of all calls, while put buys constitute 39% of all puts. JNPR has
moved into the top five volume movers, just edging out MSFT. In terms of a sector
comparison, the techs. dominate as usual.
Drug names remain extremely volatile today in the face of the
electoral uncertainty, with a Bush administration perceived to be pro-pharmaceuticals. Put
buyers outnumber sellers in the healthcare sector 4:1 in the first hour.
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