Yahoo! Options Plays Defy Nasdaq's Morning Dip

Call-buyers just won't quit on the Internet powerhouse.
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The craziness of the

Nasdaq's

recent ascent to record heights has moved much of the options market away from its traditional hunt for big scores and takeover whispers.

"We've been seeing a lot of aggressive trading in

Yahoo!

(YHOO)

,

CMGI

(CMGI)

,

Qualcomm

(QCOM) - Get Report

, and

Cisco's

(CSCO) - Get Report

making a move here above 100," said an options trader with

Wall St. Access

, an options and brokerage firm in downtown New York City. "There's been quite a bit of speculation in that name."

Keep in mind, however, that amid a rally like this week's, the spread -- the difference between the bid and offer price -- on some of these technology options can be very wide for the average retail investor (never mind the prices!).

That usually means there's some opportunity to sell options that have become abnormally -- and temporarily -- expensive.

On Yahoo!'s December 250 calls, for instance, the bid-ask was 45 3/8 ($4,537.50) to 47 3/8 ($4.737.50) per contract. Typically a two-buck spread would prompt a federal investigation, but with Yahoo! up 15 7/8 to 296 5/8, the floor traders almost had no choice.

Cisco, meanwhile, logged heavy activity in December and January options, with a massive 1,200 December 105 put trade crossing at 4 5/8 ($462.50).

And despite the hefty premiums, call-buying continued in most brand-name technology equity options.

"It's a different market than it used to be: lots of call-buying in tech, but not a lot of solid takeover stories likely to hit the options pits until next year," said Michelle Skupp with the

Miller Tabak

options-trading firm.

For instance, she said, she discounts rumors -- such as those that

Comdisco

(CDO)

might consider a tracking stock -- as just year-end fluff, despite frothy activity in the options over the past week.

Ancor Communications

(ANCR)

, meanwhile, was pushing the outer limits in options, as investors opened up new, edge-of-the-universe positions in January, February and May out-of-the-money options.

The strikes can barely keep up with the stock price, up 19 5/16 to 82 7/16 on news of an investment by

Intel

(INTC) - Get Report

and excitement over the stock-price performance of industry peer

Brocade

(BRCD)

.

As

Herb Greenberg

warned in a Tuesday column, Ancor's deal with Intel is one of many out of Intel's $4.8 billion venture fund, and Intel paid just $52.86 for the shares. But that didn't seem to matter to options investors, who were buying incrementally the January 85 calls at 12 1/2 ($1,250) per contract.