As the market picked up steam this morning to officially begin its standard end-of-the-year rally, the chatter in the options market centered on tech plays and takeovers.
Actually it has been quite a few months since all the tech giants occupied the top spots in the options volume tables, but today, the whole lineup was basically intact. Call-buyers flooded
to get some cheap proxy investments going into the last week of the year, when the overall market traditionally outperforms.
Cisco's jump of almost 5 to 95 1/8 this morning got the most attention as traders sent volume skyrocketing on its January 90 and 100 calls. The January 90s traded about 5,000 contracts as buyers were willing to pay 7 5/8 ($762.50) for the play, 3 1/8 ($312.50) more than they would've had to ante up on Friday.
The same kind of action was happening in Dell trading as the box maker's shares gained 2 11/16 to pass the 70 mark in early trading. Volume on the January 70 calls was vintage Dell as it passed 7,100 by midday. The January 75 calls, out of the money (at least for now), got the same kind of play as more than 5,500 changed hands this morning.
Yet for all the traditional action in the tech sector, Michelle Skupp of the Siedman-Skupp options team at
Miller Tabak Hirsch
said she saw more deal possibilities reflecting themselves in options activity, especially in the auto parts and pharmaceutical sectors.
One company she said has been active is
Ballard Medical Products
, which last week sold some patents to
ESC Medical Systems
. Many traders thought the call-buying was in anticipation of that sale, but the volume has continued to be abnormally high.
The stock wasn't doing much today, trading up 7/16 to 24 15/16, but the January 20 and 25 calls traded more than 100 contracts each, enough to qualify as significant for a stock such as Ballard.
Another takeover target that options speculators are watching is
, where out-of-the-money calls activity was brisk today.
As the stock held at just above 31, the January 35 calls traded close to 400 contracts this morning, although the contract's price didn't rise considerably, staying close to 3/4 ($75).