Sun Microsystems (JAVA, news, chart) January options saw active trading on a second day of straddle buying. On Tuesday, with shares at $8.81, we saw similar action, with 5,000 contracts of January 9 strikes trading offerside. The action came just hours before the stock rallied in after hours trading when JAVA issued upside earnings guidance. Today, the focus is on the January 10s. At approximately 14:15 Eastern time, with JAVA trading near $9.50, 10,000 of the January 10 calls traded offerside, or for $1.16 a contract. At the same time, 10,000 of January 10 puts traded askside, or for $1.59 a contract.
With open interest of 6,340 and 2,828, respectively, the action appears to be opening buy orders. If so, it seems that a player opened another substantial straddle on Sun in anticipation of heightened volatility in shares between now and the end of the year. Earnings due out on August 1.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.