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Technology Stocks : The New QUALCOMM - Coming Into Buy Range -- Ignore unavailable to you. Want to Upgrade?

To: Jim Mullens who wrote (5144)	5/6/2009 10:32:36 AM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 9132

Re: Put options. For every put option that is bought, there has to be a put option sold. Selling put options that are in the money can generate income, if the stock price remains stable or rises. So it isn't clear to me that an increase in put option activity signals a weakness in the stock price. An increase in options written, whether puts or calls, may indicate more volatility expected in the stock price. Given market and economic conditions, that should not be surprising. Art

To: Jim Mullens who wrote (5144)	5/7/2009 6:35:23 AM
From: Gaffer	2 Recommendations Read Replies (1) \| Respond to of 9132

…QCOM Option Activity Put Volume Surges …On Monday, traders on the International Securities Exchange (ISE) bought to open 4,062 puts on QCOM, compared to just 377 calls Jim, each put option represents 100 shares of stock. So, 4,062 put options represent 4,062 x 100 or 406,200 underlying shares. Given Qualcomm’s average daily volume is in the 20,000,000 range, this ‘bearish bet’ represents only 2% of just one day’s trading volume. Not a big deal. If a large investor, after the 30% run in the market, wanted to protect part of the gains in his long position, he could sell shares of stock, sell a call option against his position or buy a put option on his stock. For example, let’s say that this put option is the right to sell 100 shares of Qualcomm at $35 (strike price with the most volume) and expires at the end of July. The cost is around $0.70. This ‘protection’ insures that the holder can sell his shares (to the put seller) at $35 between now and expiration in July. If the stock does not go down but goes up to $50, the buyer loses his $0.70 but may look at this as ‘cheap’ insurance. At $50, he may decide to buy another put at a higher strike price. This can be a way of protecting some of his downside risk while not limiting his upside potential on his long position. Take a look at the other side of the trade. The put seller receives the $0.70 and is prepared to buy Qualcomm at $35 between now and expiration in July. If the stock does not go down to $35, he keeps the $0.70. He then can sell another put and receives the premium for another period of time. Note that this is what Qualcomm has been doing. In addition to stock buybacks, they have also been selling put options. Gansett