It'll take more than a correction to scare



But in the wake of the Nasdaq's 187-point decline Thursday, options investors went back to trafficking in call options and showed a renewed desire to get long some important tech names.

Stocks such as





(CSCO) - Get Report

saw call buyers come early and often in today's session, driving volume up.

That worries Jay Shartsis, the senior options strategist at

R.F. Lafferty

, a New York brokerage that specializes in options. "Until they stop buying calls and start buying puts, this market isn't safe and the rallies really won't go anywhere," he said. "There's no fear in this market."

Shartsis said despite yesterday's bloodbath in the Nasdaq, the put/call ratio was never really pushed into the stratosphere by worried investors looking to play the market slide or buy protection in the form of put options.

Ideally, he said, the put/call ratio would be in the 75 range for about two or three days and the

Chicago Board Options Exchange

volatility index at a level of at least 35 or 40. The VIX has been bobbing in the mid- to high-20s and the put/call ratio creeping between the high-30s and low-40s.

When call buyers, or bulls, so heavily outnumber put buyers, or bears, options professionals employ contrarian thinking to surmise that the lack of fear in the market will lead to a slide. The VIX analysis works on the same theory, since that number is gleaned from price changes in S&P 100 index options.

But in the names, there seemed to be little outright fear showing itself.

As Novell was relatively calm, down 1/16 to 27 in midday trading, volume in its May 35 calls jumped to 1400. The premium on the contract climbed 3/16 ($18.75) to 1 3/16 ($118.75).

In Cisco, however, the call volume seemed mixed as the stock was flat at 73 5/8. Buyers mostly went for the April 80 calls, which traded about 1700 contracts and popped 3/16 ($18.75) to 1 5/8 ($162.50). It looked like the April 75 calls, though, were mostly the province of sellers.

Those options sellers were playing the possibility that Cisco wouldn't finish the third week of April above 75. For taking that risk, the premium on the option was 3 1/2 ($350), down 1/8 ($12.50), as more than 2000 of those calls changed hands.

Tobacco stocks have become popular speculative plays, ahead of a key tobacco liability trial and potential legislation, suggested by the Florida attorney general, to require compensatory damages paid before punitive-damage amounts are set. That could delay a lump-sum damage award in a case involving

Philip Morris

(MO) - Get Report


That was apparently the reason for yesterday's big call buying in Philip Morris, a trend that continued into this morning.

As shares edged up 1/4 to 21 3/4, the June 25 calls traded more than 11,000 contracts. The price moved just 3/16 ($18.75) to 1 5/16 ($131.25).

With more than 25,000 of those contracts already opened, the volume could have been generated by investors closing the position and satisfied with whatever appreciation picked up in the past few sessions.