by Andrew Houghton and Nick Atkeson 05/02/08
In the case of German software company SAP AG (SAP), the big picture matters.
On April 1, ChangeWave Research reported that corporate buying of PCs and software -- with the exception of planned purchases of Apple (AAPL) equipment -- are trending down. SAP is a global corporate software vendor much like Oracle (ORCL) and exposed to the full brunt of this trend.
From our standpoint at Big Money Options, the real big picture is occurring in the open interest of puts and calls in the stock. While put open interest in SAP was meaningfully higher than call open interest last fall and winter, the stock dropped from about $60 to about $45.
In January, the call open interest lifted dramatically to be higher than the put open interest and the stock appreciated from $45 to about $50. In mid-April, the tide turned again. On our screen, it is a red tide as puts are shown in a red color and calls in green.
Put open interest now exceeds call open interest in a meaningful way and it appears that SAP is again moving southward.
For more fresh options trading ideas from Andrew and Nick, click here.
