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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: MikeyT who wrote (79496)	3/14/2000 4:52:00 PM
From: Night Writer	Read Replies (2) \| Respond to of 97611

April 30 calls anyone? (DOW JONES) DJN: =DJ Options Report: Bearish Sentiment Is Bullish For Te DJN: =DJ Options Report: Bearish Sentiment Is Bullish For Techs By Steven M. Sears NEW YORK (Dow Jones)--Worry not about the Nasdaq's decline. An analysis of options activity on the Nasdaq-100 Trust, a popular proxy for the Nasdaq Stock Market, suggests technology stocks are poised to rally higher on completion of the current round of profit-taking. Traders are far more interested in bearish Nasdaq-100 put options than bullish call options on the super-hot technology sector, according to Schaeffer's Investment Research Inc. Bernie Schaeffer, head of the Cincinnati firm that bears his name, said seven puts are trading on the Nasdaq-100 Trust for every one call. That means that options traders, who are among the largest buyers and sellers of stocks in America, are worried that the technology sector will decline because put options increase in value when the price of the underlying securities decline. Finding optimism in such clearly pessimistic data may seem contrary to reason, but history has proven that extreme sentiment in the options market is often wrong. When traders are overly bullish, experience shows that stocks often decline because traders sooner or later run out of money to invest. Conversely, stocks often rise when traders are overly bearish because they hoard their money to invest at a later time. Sophisticated traders understand the nuances in the options market and use it to their advantage. Over the past six months, while other investors bought put options to hedge the value of their rising technology stocks, hedge funds and other wealthy investors aggressively bought call options on technology stocks. A lot of money has been made during this period buying technology call options. Despite the recent weakness in the technology sector, Schaeffer remains "bullish" on the group and expects more money to flow into the Nasdaq market. He said the mutual-fund index craze that began in full force in the mid-1990s is ebbing, as investors tire of funds that mirror the Standard & Poor's 500 index. Schaeffer expects money to be taken out of index funds and reinvested in the technology sector. "We're in the early days of that transition," Schaeffer said. Indeed, call options on technology stocks remained well bid for another session as traders used the Nasdaq's decline to buy discounted call options. Call options activity was also brisk on stocks that rallied higher. In Dell Computer Corp., traders bought April 60 calls as the stock gained 2 1/2 to 57 1/4. The April 60 calls gained 5/8 to 3 1/4 on Chicago Board Options Exchange volume of 2,894 contracts, compared with composite open interest 11,503 contracts. More than 3,000 additional contracts traded at the Philadelphia Stock Exchange, American Stock Exchange and Pacific Exchange. In Intel Corp., whose stock declined 1/8 to 122, the April 115 calls fell 1/2 to 6 5/8 on Amex volume of 1,553 contracts, compared with composite open interest of 7,794 contracts. In Compaq Computer Corp., traders bought April 30 calls as the stock rose 1 1/8 to 29 5/8. The contract rose 3/16 to 2 1/4 on Pacific Exchange volume of 8,254 contracts, compared with composite open interest of 64,952 contracts. Elsewhere in the options market: - The CBOE's Market Volatility Index, or VIX, which measures certain Standard & Poor's 100 option prices to determine investor sentiment, declined 0.19 to 25.17. When the index rises, it shows that traders are getting uptight about the stock market. When the index declines, it shows that traders are optimistic about the stock market. -By Steven M. Sears, Dow Jones Newswires, 201-938-5355 (END) DOW JONES NEWS 03-14-00 03:30 PM * end of story *