Options Flurry in Tech Plays

A phalanx of tech and large-cap stocks hit 52-week lows today after Intel (INTC - commentary - Cramer's Take) slashed its fourth-quarter sales guidance and reinforced demand concerns for the tech sector. Abysmal weakness in large-cap stocks such as GE (GE - commentary - Cramer's Take) on no immediate news further exacerbated the market's low-grade pessimism today.

For the past couple of sessions we've noted hesitancy among traders to take "the other side" of volatility bets, opting instead for more conservative income-generating bets with clearer risk parameters, and sometimes even springing the extra dough for put protection. With that in mind, we're seeing a couple of divergent tendencies in large-cap tech stocks today, Research In Motion (RIMM - commentary - Cramer's Take) and Microsoft (MSFT - commentary - Cramer's Take), both of which are trading at new lows. BlackBerry maker Research In Motion hit its fresh 52-week low early in the session as well, and at $40.49 over the noon hour is down $2.73 from yesterday's closing levels. In an unusual show of contrarian positioning, front-month calls are attracting buying interest today -- most notably at the November $45 strike, where calls are being bought heavily on total volume nearly double the open interest. A drop in call-side premiums due to the share price action has made these bullish positions attractive to buyers on dips.

Microsoft puts, meanwhile, continue to attract opening long positions, which may reflect not just a dour outlook for the company's earnings but a strategy for hedging "the market" at large -- even as a fresh 52-week low for the tech bellwether has driven implied volatility and put prices to daunting highs. Shares broke below the $20 mark this morning. Heavy buying interest has since shown up in November and December $19 puts, both of these positions attracting volume of just under 15,000 lots. We should also note a healthy degree of buying interest in November $20 calls, where some opening longs have gone through this morning -- evidence of some traders either positioning long Microsoft volatility in nondirectional plays or looking for a recovery past the $20 level.

Elsewhere, shares in Capital One Financial (COF - commentary - Cramer's Take) also brushed a new 52-week low earlier today and are loitering around those levels at $29.70 as of the noon hour. Puts in the credit card issuer are unusually active today, with options overall registering double the normal volume. An opening position in downside puts at the January $25 strike, bought freshly for $4.00, appears to be tied to a stock play -- evidence of an investor looking to protect a long stock position from further erosion below the lows. Heavy volume was also seeing in December $40 puts, where a 10,000-lot position sold to the bid and may have represented the closing of an existing long stock position.

Relative volume gainers in today's rangy session have otherwise come from the ranks of pharma companies. Shares in Elan Pharmaceuticals (ELN - commentary - Cramer's Take) rose 2.3% to $6.30 as an increase in option trading volume to 4 times the normal level showed traders buying heavily into January out-of-the-money calls at the $12.50 and $14 strikes. While we can't verify that the volume here was opening positioning, we can report that implied volatility at 126.6% indicates option traders factoring in about 20% additional potential price risk to Elan shares over the next 30 days.

In a final note, Goldman Sachs' (GS - commentary - Cramer's Take) option implied volatility continues to move higher as its share price sets the latest in a cavalcade of lows. Moving against a 5.6% decline for shares to $63.22, implied volatility on all Goldman Sachs options rose 11.7% to 153.5%, suggesting higher prices on puts and calls to reflect greater-than-usual risk to its share price -- indeed, the options market is pricing in an additional risk premium of one-third above the historic record of deviation. Downside puts are attracting two-way traffic today, most conspicuously at the November and December $50 levels. Opening traffic at the December $22.50 put strike caught our attention for the sheer distance from the money -- but again, the split between buyers and sellers makes it hard to pinpoint a firm directional range as predicted by the options market.

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At the time of publication, Darst had no positions in the stocks mentioned.

Rebecca Engmann Darst is the Portfolio Manager for TheStreet.com?s Options Alerts Portfolio newsletter and an equity options analyst for RealMoney Each Thursday at 6:30 a.m. EST, she delivers the early-morning lowdown on option volume and sector trends on CNBC's "Squawk Box." Prior to her work in the equity options market, she spent seven years in Scandinavia as a Copenhagen-based chief reporter for a European Commission news service, correspondent for Spanish daily El Mundo and Radio Netherlands, followed by stints at Nordea Bank and Saxo Bank.