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Options Traders Dancing to Golden Oldies

Philip Morris, Coke and even Budweiser see call buyers galore.

At least in one corner of the market today, MO -- as in

Philip Morris

(MO) - Get Report

-- has replaced Big Mo, as in momentum.

With the

Dow

looking strong at midday, Morris and some other old favorites were showing up on options traders' radar screens. "Some Old Economy names are doing well today. These days you have to be quick to change what you're looking at," said Joe Sunderman, the head of research at options firm

Schaeffer's Investment Research

.

Sunderman said investors were seeing more strength in cyclical and consumer-oriented stocks, the kinds of names that haven't gotten much attention from options traders lately.

Separately, what was getting attention was a systemwide backup in quote traffic that had options quotes sitting in a queue that delayed them about five minutes, according to some traders. The backup affected all four options exchanges.

Philip Morris popped more than 10% to 21 1/16 this morning as lawsuits and settlements continued to swirl around the tobacco industry.

RJ Reynolds

(RJR)

also showed some strength, rising 7.5% to 16 15/16 at midday.

Options traders were making a run for Phillip Morris, though, sending volume on its April 20 calls over 6,000, while its April 22 1/2 calls flew past the 4,000 mark.

Philip Morris and other tobacco stocks, according to Sunderman, had been "basing out but people now seem to be speculating on the upside."

Part of that upside has been institutional demand for Morris shares. Traders said they had seen a number of block trades this morning, with the biggest being 650,000 shares.

That fed options market demand. The price of the busy April 20 calls climbed 15/16 ($93.75) to 1 5/8 ($162.50) and the April 22 1/2 calls moved 5/16 ($31.25) to 9/16 ($56.25).

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One of the other names that's had some newfound interest among options players is

Budweiser

(BUD) - Get Report

, which saw volume of almost 300 contracts in its April 60 calls. While that may not sound like much, Sunderman pointed out that with open interest at just 354 contracts, it could be significant.

Budweiser was up 2 1/16 to 62 1/2 at midday.

On the less alcoholic side of the market,

Coke

(KO) - Get Report

had options traders riding the coattails of its stock today. Its shares were up 2 to 48 7/8 and traders moved quickly on its out-of-the-money April 50 calls, which traded almost 800 contracts.

The premium on that option rose 5/8 ($62.50) to 1 7/16 ($143.75).

Meantime, the

Nasdaq

was being hammered for another day and traders in the new benchmark

Nasdaq unit trust

(QQQ) - Get Report

options were paying up for some cover.

The QQQ was down 2 7/16 on the Nasdaq's 135-point slide at midday. Traders went hot and heavy for the April 110 puts and sent volume to more than 21,000 contracts against open interest of 15,000 contracts.

That cover wasn't coming cheap, either. For an option that was just 3 points in the money and with just three weeks to live before expiration, the April 110 put traded for 6 3/4 ($675), up 1 ($100) on the day.

Even the out-of-the-money April 105 puts jumped 1 ($100) to 4 3/4 ($475) on volume of about 1,600 contracts.