Nasdaq 100's

stunning snapback from its early plunge has some market players of the bullish variety thinking that perhaps the tech sector is through retesting its lows, and that there could be some improvement on the horizon.

One West Coast options trader, before the Nasdaq 100, or NDX, really bounced back strong, pointed out that many investors were still talking about the market falling further. The trader added, however, that few of those investors were actually acting on those beliefs in the options market.

At midday, the NDX was up 95.29, or 2.7%, to 3601.00.

The main culprit for the early swoon in stocks were some higher-than-anticipated inflation numbers that the government released Thursday morning. The greater-than-expected reading in the implicit price deflator component of the

gross domestic product

report, and a higher-than-expected

Employment Cost Index

reading, sparked inflation fears and worries that the


will be aggressive in raising interest rates going forward to help bottle up inflation pressure.

Jordan Kahn of hedge fund

Kahn Asset Management

said he was surprised the


bounced back considering the awful economic data that was released.

As far as volatility in options, Kahn said he's encouraged by the recent action in the

Chicago Board Options Exchange

volatility index. He pointed out that although the VIX has declined since mid-month, it has still trended up and "from a contrarian point of view that's a good sign." The VIX was down 1.36% at midday to 29.06, off a high of 31.81.

Meanwhile, volatility on the options of the

Nasdaq 100 unit trust

(QQQ) - Get Report

, or QQQ, which stood at 52.3 on April 13, has had a nice move upward and as of Wednesday's close it was at 77.1, Kahn said, citing data from



He said the volatility increase "shows that there is some fear in the market," which is a sign that usually has options traders thinking about some sort of a rally.

Kahn also said a lot of the chatter in the market lately about retesting the bottom is positive for stocks from a contrarian viewpoint.

Meanwhile, money manager Dave Schultz of

Summit Capital Holdings

, speaking while the NDX was soaring, said he sees clear sailing ahead for the most part on the belief that the market has bottomed.

He said was a buyer of stock Thursday, diving in to


(ORCL) - Get Report


Amazon Action

(AMZN) - Get Report

, which after the close Wednesday

posted a narrower-than-expected loss, was seeing solid action in its options.

The Amazon June 50 puts were seeing significant action, with a total of about 1,800 contracts trading as the stock fell 7/8 to 52 5/8 by midday, Schultz noted. "I bet people are selling those like hot cakes." An investor could sell the June 50 puts for a decent premium, speculating that the options will expire out of the money on the third Friday in June.

On the CBOE, where 1,150 contracts have traded, the June 50 puts last traded at 6 5/8 ($662.50 per contract), up 3/8 ($37.50).