Uncertainty Blankets Options Traders

As we awoke Wednesday (those that even went to
sleep) in a state of profound uncertainty, options players reacted by largely
staying on the sidelines, one more day. Those that have appeared, seemed itching
to get into the “Bush-favored” sectors game, however, suggesting that
a rally in in these issues might still occur. Drug names remained poised to take
off with a Bush victory, initially MSFT popped up slightly on the news of
Lehman’s raising its price target to 115,

    Volume was
    markedly low in the pre-open today, and market sentiment remained mixed.
    Overall, call sellers outnumbered buyers 5:2, while put sellers outnumbered
    buyers again, 3:1. No big surprises in terms of 4 of the 5 top names in order
    volume : MSFT, CSCO, ORCL, and QCOM; BRCM, however, nudged into the top-tier
    after the stock plummeted yesterday due to the chip providers sympathetic
    relationship to CSCO and its earnings news.

    options players were almost exclusively selling calls today, after being
    downgraded by more than one house (also a law suit was announced last night
    against the telecom giant). WCOM paper showed a great preponderance of call
    sellers over buyers.

    After the
    first hour, trading remained light with BRCM seeing call buyers dominating.
    SUNW had unusually heavy volume, with call buying, once again in favor… 2:1

We all hate uncertainty and the shocking results
of last night’s election activities can only be labeled as such. Although we
believe the general market will grind higher through year end, and options
premiums will trail off to lower volatility levels, the current “sticky
of the electorate will keep options sellers on their toes, waiting until the
coast is clear.