Why Aren’t We Seeing More Puts Trade In QCOM?

    

If you count yourself among the few bulls left in today’s market, you
probably took some comfort from yesterday’s closing action and Wall
Street’s reaction to yesterday’s disaster d’ jour Brocade
Communications Systems
(
BRCD |
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PowerRating) and today’s offering: Sun
Microsystems
(
SUNW |
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PowerRating). We tracked some outstanding bullish
action in SUNW call options this morning, as institutions seemed to want to
accumulate March 20 & 22 calls. 

     

Action in JDS Unipahse
(
JDSU |
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PowerRating), EMC
(
EMC |
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PowerRating),
IBM
(
IBM |
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PowerRating) and AOL
(
AOL |
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PowerRating) options has been heavy on the bearish side,
with anywhere from 3:1, to 6:1 dollar-weighted money flowing into put options
versus calls. 

    

If you are looking for
likely turnaround scenarios, you may want to take a look at Microsoft

(
MSFT |
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PowerRating), Qualcomm
(
QCOM |
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PowerRating) and to a
lesser extent, Merck & Co. Inc.
(
MRK |
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PowerRating).
MSFT is up 1/2 (as of 12:45 pm) and QCOM, down 14 1/2, but 2 1/2 off its lows.
These ratios tell us that either the institutions are tired of selling in
these two issues, or that given their relationship to the rest of the market,
they are fairly priced. Especially in the case of QCOM, it is rare to see a
balanced dollar-weighted put/call ratio on such a down day. If you were
looking to catch a falling knife, at least the numbers are telling us that
this might be the one. 

    

Bullish $W Call/Put Ratios: