GO
Loading...

Redemption in Dell

Thursday, 19 Nov 2009 | 2:47 PM ET

It's been a tough day for stocks and for tech in particular. A firmer dollar, some lousy economic data, and a nasty semiconductor sector downgrade from Merrill are all weighing on the market.

But do options traders sense redemption in Dell ?

The world's third largest PC maker will report results after the bell tonight.

And while the stock is trading lower, optimism abounds in the pits as Dell at-the-money calls appear much more active than puts, with notable buying of the 16-strike calls for both the November and December expires.

Earnings may grab the headlines, but it's Dell's margins that are sure to move the stock.

"They've lost share both globally and domestically to Hewlett and Acer," said Kaufman Brother's Shaw Wu. "So if they can maintain their margins, it would validate their pricing discipline."

Long-term, it remains to be seen if Dell can those get those customers back. But in the short term, options traders appear to be more upbeat.

"The average move the last four quarters has been less than 3%. So that call buying could just be options traders taking a punt," said Options Action star and Phoenix Partners' Chief Derivatives Strategist Dan Nathan.

Questions, comments send them to us at: optionsaction@cnbc.com

  Price   Change %Change
4331
---

Contact

  • Showtimes

    Fridays, 5:30p ET
    Saturday, 6a ET
    Sunday, 6a ET
  • Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

Latest Video

Options Action Daily Reports

Sponsored Related Links

More on thinkorswim by TD Ameritrade

  • Make sure you’re always keeping up with the market with up-to-the-minute news and breaking stories. Move on possible breakout stocks and options with potential opportunity. Plus, get in-depth analysis on futures and forex in one seamless, integrated experience. Join TD Ameritrade and trade commission-free for 60 days + get up to $600 cash.

You Make the Call

  • Mike Khouw, Options Action trader, shares his view on News Corp stock on the heels of testimony from Rupert Murdoch before British Parliament.

  • Do you have a question for the Options Action team? Options Action selects a viewer's question and gives the answer on the show's Make The Call Web Extra video.