With the

Nasdaq

becoming investors' new punching bag over the past week, options traders are starting to take a deeper interest in getting themselves some protection or speculating on continued weakness.

That kind of action popped up in the bellwether

Morgan Stanley High Tech 30

index options this morning as volume showed an apparent spread that sought to capitalize on the weakness that had the Nasdaq trading down about 130 points by midday.

In the meantime, puts were trading heavily in major tech names such as

America Online

(AOL)

,

IBM

(IBM) - Get Report

and

Micron

(MU) - Get Report

.

While the specifics of the trade couldn't be confirmed off the floor, an investor apparently established a position by buying 2,100 in-the-money April 1120 puts on the Morgan Stanley High Tech index options, which trades on the

American Stock Exchange

TST Recommends

. To defray the hefty 69 ($6,900) price tag attached to them, that same investor sold 2,100 April 1180 calls for 25 ($2,500).

With the index trading down more than 4% to 1083 at midday, those 1120 puts bought for 69 at just before 10:30 a.m. were soon worth 75.

CIBC World Markets

senior options strategist Michael Schwartz said the trade looked like it made some sense because the trader wisely reduced his cost outlay for the puts, which will appreciate as tech stocks slip. If buying the puts and selling the calls created at debit of 44 for an option that was already 20 points in the money, the protection was established in a more cost-efficient basis than if the puts were purchased outright.

Those options expire on April 20, the third

Thursday

of the month, because markets are closed for Good Friday on April 21.

The apparent idea behind the trade was to sell those out-of-the-money calls for 25 with the hope they'd expire worthless as the tech sector slumbered.

It's also possible that the investor could have been trying to do the reverse, by buying the calls and selling the puts to play a big Nasdaq bounce. That's unlikely, Schwartz said, because the options expire too soon. The investor could also have been selling both with the idea that the Nasdaq would settle in somewhere between those strike prices.

"That kind of trade definitely makes sense," said hedge fund manager Jordan Kahn of the

KAM Quasar

fund. "Most people think there wasn't enough work done on the downside with tech stocks, so they're looking to get some puts or reduce some exposure."

Kahn says these days he's mostly using the

QQQ

(QQQ) - Get Report

options on the Nasdaq unit trusts to hedge his technology exposure.

Put-buyers were plentiful in that name, as well, but with the QQQ down 3 3/8 to 111 3/8, there was also some play for a rebound. Put-sellers seemed to be inhabiting the April 91 and 89 puts, which traded more than 2,000 contracts each. They bet against getting paid the options' premium to take on the obligation of buying shares if they fall to the strike price level. It's dangerous, but is also a somewhat bullish stance.

The April 89 puts traded for 9/16 ($56.25), and the 91s went for 3/4 ($75).