Tech Options Surge

The awareness of global warming and companies using "greener" business practices seems to have spilled over into today's trading, in which hugging unchanged prices closely is the main feature.

The active option list is being filled with technology names, but the volume is mostly in low-cost, out-of-the-money calls. That makes it seem like people are throwing random pitches, hoping to hit some big move.

For example, Qualcomm (QCOM - commentary - Cramer's Take) April $47.50 calls have traded more than 21,000 contracts with most of the volume at the 15-cent offer price. This represents about 60% of the open interest, which is substantial.

But open interest was still sufficient to indicate that the action could be short-covering. The company doesn't report earnings until April 25, which is after these options expire; I think traders are hoping for a price run-up into the news, maybe an early boost in guidance, possibly more good news on the Broadcom (BRCM - commentary - Cramer's Take) litigation front or, of course, a takeover.

Motorola (MOT - commentary - Cramer's Take) has seen 19,000 of its April $19 calls trade at 15 cents. Again, open interest is sufficient to cover the trade, so it may be liquidation. But with earnings coming out on April 18 -- also known as "two days prior to options expiration" -- it looks like traders are placing some early bets to get long odds that some goods news will emerge or that gadfly Carl Icahn will stir the pot some more and cook up higher prices

Micron Technology (MU - commentary - Cramer's Take) saw 13,000 of its May $13 calls trade a 30 cents and this is against prior open interest of just 1,250 contracts so it is clearly an opening transaction. The beaten down chip maker did receive an analyst upgrade this morning and the company is scheduled to report earnings this Wednesday after the close.

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Steven Smith writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He was a seatholding member of the Chicago Board of Trade (CBOT) and the Chicago Board Options Exchange (CBOE) from May 1989 to August 1995. During that six-year period, he traded multiple markets for his own personal account and acted as an executing broker for third-party accounts. He appreciates your feedback; click here to send him an email.

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