Split Personality

Generally good earnings reports were met by selling in the past few weeks,
and now the re-thinking of some of the forecasts are making their way to the
market by virtue of updated official analysts outlooks. IS Cisco the first of
many? Could systematic lowering of the analysts outlooks be far behind?

The downgrade in Cisco the networking giant, by
Lehman Brothers caused a jump in the activity CSCO options. Pre-open activity
showed 80% of the orders tilted towards put buying, while large orders in AMAT
were entered to buy calls before the bell.

By the end of the first hour, though, the trend had
reversed in CSCO options, customer selling of puts had jumped back into the
lead, by a 3:1 margin.

JDSU continued to be more active than usual as the
marketplace tries to digest continued grim news in the communications sector.
Uniphase option orders came mostly in the flavor of call buying. QCOM options
were mostly call selling.

Increased activity in BRCD, JNPR and PMCS came in
the form of balanced buying and selling.

This increased liquidity in the last three names mentioned is interesting and
we will stay on top of what this may mean going forward. We are still working on
bringing our spread information to bear in this space, it looks as though we
have still a few days to go before modifications can be made to make it useful,
here. Stay tuned…

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