Upturn in Call-Trading Volume Doesn't Signal New Bullishness
NEW YORK -- Call trading picked up during the first session after last week's expiration of September options, but it wasn't because investors were making bullish bets on a stock-market bounce.</br></br>While some traders braced for a possible short-term correction, much of the call volume appeared driven by investors selling new calls against stocks after prior short-call positions had expired.</br></br>In Siebel Systems, for instance, an investor sold thousands of October 7.50 calls, while another investor bought a good portion of them. The call seller earned about $45 a contract and either doesn't expect Siebel stock to exceed $7.50 by Oct. 18 or is prepared to sell stock at that price.</br></br>Even with the Nasdaq skidding to 1996 levels, investors weren't positioning for a recovery. "There wasn't a whole lot of call buying," said one trader of the options on the Nasdaq-100 Index Tracking Stock. "I think investors are really waiting for the market to show a clearer direction before they are willing to commit."</br></br>At the Chicago Board Options Exchange, the ratio of equity puts traded to calls eased to 0.76 from last week's string of readings above the high 1.0 mark. While some contrarians regard a reading above the 0.75 level as a bullish signal, few were swayed enough to buy. A put is an option to sell a security at a specific price; a call is an option to buy a security at a specific price.