Networkers' Options Getting Good Play - TheStreet

Networking stocks appear to be the cat's meow as investors clawed at options in

Cisco

(CSCO) - Get Report

,

Redback Networks

(RBAK)

and

Juniper Networks

(JNPR) - Get Report

.

Some traders have said that the lack of negative news from the tech sector recently combined with

reassurance from programmable logic device maker

Xilinx

(XLNX) - Get Report

has brought buyers back into the market.

In Cisco, the June options traded heavily out of the gate this morning. The near-the-money June 20 calls traded about 32,000 contracts on open interest of 84,083 as investors forked over $1.70 ($170) for the premium. The June 22 1/2 calls traded over 10,000 contracts on open interest of 74,091. The premium on those calls are listed at 50 cents ($50) on the

Chicago Board Options Exchange

. According to one floor trader on the CBOE, the June call buyers were looking to establish a position before a pop in the share price this morning. Indeed, Cisco shares traded up $1.42, or 7.2%, to $21.16 in recent trading.

The July 25 calls were seeing plenty of interest as well, trading nearly 22,000 contracts on open interest of 60,150. One trader called the activity interesting because he hasn't seen aggressive moves in the July calls in some time. One customer buyer bought a large number of calls across several exchanges, expressing bullish sentiment on the stock, the trader said.

Redback options were fairly active, especially the July 17 1/2 calls, which traded over 6,100 contracts on an open interest of 1,059. Those calls were sold at a premium of $2 ($200). The stock hasn't moved above $17.50 since May 21, when its intraday high stood at $18.25. In recent trading, shares traded up 87 cents to $16.28.

On the M&A front, the battle between wood and paper manufacturers

Weyerhaeuser

(WY) - Get Report

and

Williamette

(WLL) - Get Report

is expected to reach a conclusion of sorts this week.

There has been a lot of

bad blood between the two firms since Weyerhaeuser made a hostile bid for Williamette at the end of last year. Williamette shareholders will vote Thursday on whether to elect a slate of directors backed by Weyerhaeuser, who then could vote to accept the $5.5 billion offer.

Ahead of the meeting, volatility in Williamette options picked up quite a bit. The July 50 calls traded over 2,000 contracts on an open interest of 4,015. The premium on those calls was most recently listed at $1.90 ($190). Larry McMillan, options strategist and head of

McMillan Analysis

, wrote in a research note, "If WY wins, they will proceed with the $50 cash tender offer. If they lose, WY claims that they will withdraw all bids. The hopes for an increased bid seem somewhat dimmed because both companies are heating up their rhetoric as the meeting date nears."

Williamette shares traded down a dime to $48.90 in afternoon trading; Weyerhaeuser was up $1.58 to $59.38.