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Puts were proving the chic option to have

JDS Uniphase


Thursday, as the fiber optic equipment maker slumped ahead of its earnings announcement, which slated for after the close.

JDS Uniphase is expected to report fiscal first-quarter earnings of 16 cents a share, which would be up sharply from the year-ago 8 cents a share.

Shares of JDS have been hammered recently, and yesterday's action was particularly brutal. Traders couldn't unload their JDS stock fast enough, as it plummeted in sympathy with



and on an analyst downgrade.

Nortel disappointed Wall Street with its sales growth in its latest profit report, helping trigger a selloff in the sector. JDS fell $5.25 to $65.75.

Put options on JDS were seeing a lot of volume Thursday, action that could mean investors expected more pain on the stock.

On the

Philadelphia Stock Exchange

, around 5,500 of the November 70 puts traded, up 3 ($300) to 12 1/8 ($1,212.50).

A put option is a type of option that gives the purchaser the right, but not the obligation to sell a security for a specified price at a certain time. Investors and traders buy puts generally either to bet that a stock is going to sink, or they buy them as protection against a long position in a stock.

Pat Hickey, principal at market-making firm

TheStreet Recommends


on the

Pacific Exchange

, said options prices may be showing a bias toward the downside on some tech favorites.

That sentiment is coming from what Hickey has described as a skew in the implied volatility between prices on calls and puts on the options of




Sun Microsystems

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(QCOM) - Get Qualcomm Inc Report


While that concept may sound complicated, it boils down to the simple fact that investors are using proceeds from selling calls to buy puts. That juices the implied volatility -- and the price -- of the puts and decreases them on the calls.

Implied volatility is the annualized measure of how much the market thinks a stock or index can potentially move and is a critical factor in an option's price.

Typically, there isn't a great deal of difference between the implied volatility levels of calls and puts; when there is, it's called skew. With the implied volatility on the puts higher than the calls, it suggests to some that there is generally more fear of further downside than the possibility of upside among traders.

After a bit of a delay, trading in

iShares S&P 100

, an exchange-traded fund based on the S&P 100 index, will begin trading on the

Chicago Board Options Exchange


It is the first exchange-traded product to trade at the CBOE, and will trade under the ticker symbol OEF. iShares is a product of

Barclays Global Investors


Wolverine Trading

will be the designated primary market maker for the product.