Options Action

Redemption in Dell

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

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