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Just a day after

Prudential Securities

cut its fourth-quarter estimates for



, a wave of

call-options buying may be hinting the Texas-size PC company could be poised to bounce.

A softening PC market and the threat of a broad economic slowdown have cut dramatically into the tech sector and haven't spared established stocks such as Dell, which was trading down 94 cents to $17 this morning, well off its 52-week high of $59.69.

Thursday's Prudential report said the firm was reducing its fourth-quarter estimates for Dell to $8.29 billion from $8.38 billion and cutting its 2002 earnings estimate to $1.06 a share from $1.12. That's bad news for one of the stocks that had made investors rich since 1997, one to which many remain unflaggingly loyal.

That's why traders were somewhat surprised that between 10:16 a.m. and 10:27 a.m., a major bank hit the market to buy more than 15,000 of Dell's January 20 call options. Those contracts appreciate as Dell's stock price rises, so it may be a sizable, if somewhat short-term, bullish bet on the PC firm's fortunes.

"Someone either expects the stock to rip through 20 or they are locking in gains by hedging a short stock position," a New York options trader said.

The contracts sold for roughly 9/16 ($56.25) each, and Chicago traders said the action added some to the implied volatility levels -- a factor in the options' price and an indicator of uncertainty in a stock -- bringing them to 81 in the wake of the big trades. The call buying was spread over four of the nation's five options exchanges, with roughly 5,000 of the trades being done on the

Chicago Board Options Exchange


The trade will be a winner in two cases: if Dell shares jump past 20 by the third Friday in January to make the options profitable to exercise or if the stock appreciates enough for the options to increase and be sold back before expiration. With them trading at relatively low levels, the stock price rise wouldn't have to be huge for the trade to end up a winner.

Paul Foster, the options strategist at

, said he has also been buying Dell call options. "After investors finish their tax-loss selling, people buy calls expecting a rally next week," he said. The calls are a less risky method of participating in a rally than buying the shares outright because there's a smaller capital commitment.

"There's the sense that Michael Dell is a player, that he's not going to let the stock deteriorate," Foster said, pointing out that Dell's

price-to-earnings ratio is now around 21, the lowest it's been in recent memory. "Some investors are looking for a turnaround."