Unusual Put-Call Ratio Could Mean Storm Clouds On Horizon For MSFT

Despite
the Nasdaq falling for three of the past four sessions, traders seem unfazed,
viewing the sell off as an expected, and natural following to the past six-week
rally. That said, the downgrades of Sun Microsystems
(
SUNW |
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and EMC
(
EMC |
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have given the bears new
hope for a prolonged slide and revenge for that same 1 ½-month run.

   

Bearish traders pointed to this morning’s U.S. personal income data, as they
think the report indicates consumer spending getting worse, not better, thus a
harbinger of things to come.  They feel a test of the  April 4th
bottom in the next few months may be a possibility.

   

In International Paper
(
IP |
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PowerRating)
we tracked
two 3,000-lot orders in the January 2002 option class. It seems a big spread
went up in which the buyer bought the Jan 30 2002 calls and sold the Jan 37 ½
calls. That 7 ½-point spread went up for $5, with the 30’s trading for $10
and the 37 ½’s trading for $5. That spread crushed the volatility in the 37
½ calls, as the crowd bought those calls down $.70 from the previous night’s
close, while the 30’s traded up $.20, virtually matching the underlying
stock’s $.26 rally.

Symbol

Call

Volume color:black”>

Put

Volume color:black”>

$W

Call Vol color:black”>

$W

Put Vol color:black”>

IP6,390

128

45,769

669

Outside
of the IP move, the bulk of the action has been on the downside, with Commerce
One

(
CMRC |
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PowerRating)
showing a 214:1 dollar weighted put to call ratio.
Lastly, a 2:1 actual put to call ratio in Microsoft
(
MSFT |
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PowerRating)
wouldn’t seem
so out-of-whack if the dollar weighted volume was 3:1, but the 5:1 dollar
weighted trade in MSFT put options tells us there may be more damage coming for
the software giant.

Symbol

Call

Volume color:black”>

Put

Volume color:black”>

$W

Call Vol color:black”>

$W

Put Vol color:black”>

CMRC

965

1,881

568

122,032

CMVT

1,227

1,379

3,469

45,987

RMBS

2,860

919

6,143

54,209

JDSU

6,384

2,904

8,509

71,236

IBM4,023

9,650

15,512

80,675

MSFT

22,664

47,433

71,215

356,981

(1010WallStreet.com has licensed
the use of Hamzei Analytics proprietary options analytics)