They’re Back!

I was walking into the Fox television
as I do every weekday morning at 6:55 am, when I was greeted by what
has become a customary sight:  scores of harried workers scattering huge pails and
trashcans throughout the lobby to catch rainwater that was streaming through the
roof. (Now I’m sure some of you are wondering, what does this have to do with
today’s market? Well, to those of you that were thinking just that thought,
thanks for asking.)

As I dodged the workers and the pails, I couldn’t help but wonder how many
times the owners of the building had sent workers to repair this wonderful glass
ceiling that was leaking like the proverbial sieve. By my recollection, at least
five times since the spring I have seen workers re-erect scaffolding, delicately
climb over the plates of the glass roof and pour untold buckets of hot tar into what
they thought were the offending areas, only to see those same workers
return the day after our next hard rain.

So, as I worked my way through the makeshift groupings of cisterns, I thought
about the similarities between this leaky roof and the stock market. Alan
Greenspan and his fellow Fed governors keep climbing the ladder (FOMC
), slopping hot tar (another
rate cut
) and crossing their fingers, hoping against hope that this time the
fix will hold and the leak (market
) will stop.

Anyway, I guess that’s enough of that and I’d better get back to the market.
Many of you recall the large institutional customer we’ve noted several times
for his or her great timing of entry and exit of various tech stocks. This
player sells puts or buys calls at the bottom of the range, sometimes as large
as 100,000 contracts at a time. Well, to quote a young Drew Barrymore,
“they’re back!” This time the object of their desire is Sun

Quote |
Chart |
News |
. They’ve begun by accumulating 19,000
August 15 calls. Now, since SUNW just declared its earnings and is trading for
$15.125, those calls are just $1.05. In other words, a very cheap shot! You
don’t need a moon shot to double your money and since the buyer picked August
options, they must think a move to the upside will occur pretty fast.

Options involve risk and
are not suitable for all investors. Prior to buying or selling an option, a
person must receive a copy of Characteristics
and Risks of Standardized Options
. Copies of this document are available
from your broker or the Chicago Board Options Exchange, 400 S. LaSalle Street,
Chicago, IL 60605.