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The Battle in the Options Pits

There's a lot of open interest in names like Intel and Microsoft, but Cramer expects no fireworks for the next 25 hours.
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The battles are all behind the scenes on days like today, in the options pits. There is gigantic open interest in some important names -- names like Intel (INTC) - Get Free Report and Microsoft (MSFT) - Get Free Report with calls that expire tomorrow.

What's the effect?

Let's take Intel, which has an open interest of 25,000 May 60 calls. That means there are tons of people betting that this stock is not going above 60. (Each call has someone long it and someone short it. If you thought that the stock was about to ramp, you would buy your short call in.)

Microsoft has 31,000 of the 80s in open interest. Again, just think lid.

It means it will be mighty hard to chew through all of that stock. It is more than likely, that, barring any strange goings-on, these stocks are stuck here until after the close Friday when calls expire.

It is often like that with calls. I always check open interest in calls (we get it from our


terminals) as we get closer to expiration. When I see big piles of calls, I stop being frustrated with the lack of movement and accept that the lid of calls have "pinned" the strike.

I have seen stocks bust through calls periodically. But it is rarely because of the "market." If you knew, for instance, that the government was going to break news with Microsoft tonight, you might be tempted by those calls. However, I have no idea how you would know that without being an insider, and therefore you shouldn't be trading anyway. So, I expect no fireworks from these


bellwethers for the next 25 hours.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Microsoft. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at