Although ceaseless optimism carried Net stocks through 1998, the 1999 picture already is showing some short plays on the
TheStreet.com Internet Sector
index (DOT), where put activity could be reflecting the belief that investors think the Net sector may start catching its breath. (
doesn't receive any income from trades on the index.)
Put-buying on the index was active late yesterday and today as investors staked out the index's January strike prices in the range from 300 to 400. The index dropped almost 30 points to 405.97 yesterday and continued going south today. The DOT was at 402.55 at midday, down 3.42.
"It's put-buying, and it's coming from all ends of the earth," says Michael Gaudioso, the specialist for
pit where the DOT trades.
The heaviest put activity yesterday was in the January 375s, which moved 400 contracts against no open interest. The contracts went out at climbing prices, finally reaching 17 3/4, or $1,775 per contract. Also active yesterday were the 315s and 325s, which traded 200 and 100 contracts, respectively, both against little open interest.
Today, activity on the DOT was more subdued in the light volume of New Year's Eve as the puts were the only things flying. Most active today were the January 390s and 395s, which moved 252 and 256 contracts, respectively, against little open interest. Even the February puts were starting to see some play.
Jay Shartsis, head of options at
R. F. Lafferty
, says he expects to start seeing more put plays in February, both in individual stocks and in the indexes. "This way, investors like me can get our heads handed to us in a variety of ways," Shartsis jokes, hinting that anyone who has bet on the downfall of the stock market this year, especially in the Net sector, has been sorrowfully disappointed.
Still, that may be changing in the new year, he suggests. Shartsis says he thinks some Net stocks, such as
, are ripe for put plays, as is the
Standard & Poor's 100
index (OEX) as a whole.
saw a big put play as 1,100 contracts moved in its February 10s at 3/16, or $18.75 per contract. The stock of the New York company, which buys communications properties in the television, radio and cell-phone sectors, has been ticking up throughout the year. It is trading at 12 3/8, near its all time high, and was up 1/8 today.
Although the play came against 820 contracts of open interest, it could mean that some investors think this company's meteoric rise is running out of steam.
call holder a late Christmas gift. Several sources say one large investor looked to be closing out a big bet in Jabil Circuit's in-the-money January 70 calls, which traded 3,765 contracts at about 5 1/2 ($550) today.
The move came a day after Goldman started coverage of the circuit-board-assembly company with a "market outperform" rating and a 12-month price target of 85 per share. The stock jumped 3 1/8 to close at 74 yesterday on the news and lifted the price of the in-the-money options along with it. The stock hit a new high today of 74 5/8, but it gave back a little in later trading and was down 15/16 to 73 1/16 by midday.