The research causing the spike noted the following:

• Dell has been busily assembling a full IT stack aimed at re-aligning the company away from secularly less attractive legacy businesses (e.g., PC) and incrementally toward future growth in the enterprise.
• With Dell’s acquisitions of EqualLogic, Perot and Compellent (among others), Dell now has a beach head in three of the four primary layers of this stack – storage, servers and services.
• Networking is the one crucial piece that is missing, but Dell has some limited networking technology in-house.
• Dell has clearly been seeing success cross-selling Ethernet switching with servers and storage
• The company has $7B of net cash on hand prior to any additional raise, equal to 23% of its market cap.

The most important note is, “Not owning this technology puts Dell at risk of simply hopping from one commoditized business into another.” Still, the analyst noted that he has no knowledge of any discussions between or around Dell and Brocade, nor does he suggest that there are any discussion he is unaware of.

The research call is driving Brocade today.  At 11:10 AM EST shares are up 5.1% at $7.01 and shares hit a new 52-week high today at $7.20.  We have seen about 225% of normal trading volume as there have already been about 23.1 million shares traded and the day is not even half-way done.

Normally we would not cover one research report in detail.  The reason we do is that we have believed Brocade would be a target for many companies that want to stave off competition from Cisco, H-P, and a half-dozen other players.

If we had to make odds over any company which could or should acquire Brocade, Dell would be at the top of the list of companies which could benefit from such a deal.

JON C. OGG

General Electric Co. (NYSE: GE) JAN11 $20 Call has 234,732 contracts; JAN11 $19 Call has 209,801 contracts; Share price at 11:30 $19.46.

Microsoft Corporation (NASDAQ: MSFT) JAN11 $30 Call 210,520 contracts; MSFT $27.50 Call 162,676 contracts…. Share price at 11:30 $28.10.

Pfizer Inc. (NYSE: PFE) JAN11 $17.50 Call… 186,517 contracts; JAN11 $20 Call… 192,992 contracts; Share price at 11:30 $18.25.

Intel Corporation JAN11 $22.50 Call has 186,623 contracts; JAN11 $21.00 Call has 164,583 contracts… Share price at 11:30 $20.90.

Yahoo! Inc. (NASDAQ: YHOO) JAN11 $17.50 Call has 161,010 contracts; Share price at 11:30 $16.01.

Cisco Systems, Inc. (NASDAQ: CSCO) JAN11 $19 Put has 142,583 contracts and the $20 Put has 136.060 contracts; Share price at 11:30 $20.78.

Wells Fargo & Co. (NYSE: WFC) JAN11 $30 Call… 104,257 contracts; Share price at 11:30 $32.49 so look at the $32.50: Call has 67,906 contracts and Put has 42,812 contracts.

In ETFs:

SPDR S&P 500 (NYSE: SPY) JAN11 $125 Put has 358,490 contracts; Share price at 11:30 $128.74.

PowerShares QQQ (NASDAQ: QQQQ) JAN11 $54 Put has 217,276 contracts; Share price at 11:30 $56.04.

iShares FTSE China 25 Index Fund (NYSE: FXI) JAN11 $40 Call has 138,131 contracts and teh $40 Put has 136,096 contracts; Share price at 11:30 $43.45, so other strike prices matter more.

Technology Select Sector SPDR (NYSE: XLK) JAN11 $26 Call… 132,322 contracts; Share price at 11:30 $25.86.

JON C. OGG

Investor confidence was shaken by John Chambers, CEO of the IT company’s, characterization of the market as possessing “unusual uncertainty.”

-Michael B. Sauter

China Armco Metals, Inc. (NASDAQ: CNAM) is down 4% at $9.05 on 15,000 shares as of 8:30 AM EST.  This stock has been all over the place since last week and has recently seen a high of $11.10. UPDATE 9:11 AM Down 3.1% at $9.15 on 16,500 shares.

National Bank of Greece SA (NYSE: NBG) was not listed in our top ten analyst calls this morning but should have been.  Deutsche Bank has downgraded the Greek bank to Hold from Buy due to its finance woes due to the Greek situation.  At 8:25 AM EST we have shares down almost 3% at $4.22 on about 450,000 shares.  Average volume is now over 3 million shares versus what was not even a half-million as recently as November.  Update 9:11 AM -2.76% at $4.23 on almost 500,000 shares.

First Solar, Inc. (NASDAQ: FSLR) is still rather thin in volume but shares are down about 4% at $104.45 as of 8:25 AM EST.  The stock was downgraded to Underweight at JPMorgan. Update 9:11 AM -2.7% at $105.70 on 74,000 shares,

Jones Soda Co. (NASDAQ: JSDA) didn’t catch someone peeing in the drink mix but you wouldn’t know it if you saw the stock.  At 8:28 the shares are down 40% at $0.50 on only about 24,000 shares after a $0.84 close yesterday.  The 52-week range is $0.40 to $1.53.  Reed’s and Jones Soda are merging or at least have a letter of intent to merge; JSDA shareholders will receive 0.17 of a share of REED and will receive cash of $0.10 per JSDA share.  Reed’s closed at $1.58 yesterday so the merger price there would be almost $0.37.  Jones’ CEO will depart the company.  This is actually a “takeunder’ if it is even allowed.  UPDATE at 9:11 AM shares are down ‘only’ 26% at $0.62 on 31,000 shares.

DryShips, Inc. (NASDAQ: DRYS) is trading down about 1% at $6.03 on 200,000 shares as of 8:32 AM EST.  This is after yesterday’s price/volume spike up on rumors which have all but been panned by market watchers as hearsay. Update 9:12 AM -0.6% at $6.06 on 340,000 shares.

AgFeed Industries, Inc. (NASDAQ: FEED) is trading up 17.5% at $5.30 on 281,773 shares as of 8:35 AM EST. The company posted record revenues and said production volumes increased by 66% in the company’s hog division and 56% in the animal nutrition division.  Total 2009 revenue was a record $173.2 million, an increase of over 20% from 2008. Update 9:12 AM EST up 18% at $5.33 on 890,000 shares.

Broadwind Energy, Inc. (NASDAQ: BWEN) is up after JPMorgan started the stock with an Overweight rating and a $6.50 target.  Shares are up 3.7% at $5.30 on about 13,000 shares as of 8:35 AM EST.

First Marblehead Corp. (NYSE: FMD) is up 6% at $2.91 on about 15,000 shares as of 8:40 AM EST.  The OTS terminated a cease and desist order for its Union Federal unit which it is still evaluating alternatives.  This stock had originally indicated higher and above $3.00 after a $2.74 close.

You can join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

As of 1:00 PM EST today, in the FEB10 contracts, there have been over 47,000 contracts in the various call strikes versus about 12,000 of the combined Puts.

Shares are down 0.3% at $22.95 on just over 30 million shares ahead of earnings… average volume is over 41 million shares and the 52-week range is $13.61 to $25.10.

JON C. OGG

We have then converted what each options contract series means in control of share exposure on a fully leveraged basis versus the average daily volume.  The CBOE VOLATILITY INDEX closed out 2010 under 20.0, meaning it is at least in theory very cheap for speculators to use stock options for exposure.

Apple Inc. (NASDAQ: AAPL) $210.73; Avg. Daily volume 18.3 million shares.  Apple does not look like much, but if you will go back to last Monday the readings of speculative options trading was literally off the charts with the equivalent of more than 14 million shares in options trading on a fully leveraged basis.
CALL$    OpInt    Share Equivalent
$210.00    59,605    5.96 million
$220.00    60,598    6.05 million
$230.00    36,605    3.66 million

Bank of America Corp. (NYSE: BAC) $15.06; Avg. Daily volume 201 million shares
CALL$    OpInt    Share Equivalent
$16.00    297,920    29.7 million
$17.50    297,065   29.7 million

Research in Motion Ltd. (NASDAQ: RIMM) $67.54; Avg. Daily volume 17.7 million shares
CALL$    OpInt    Share Equivalent
$70.00    61,526    6.15 million
$75.00    41,724    4.17 million
$80.00    103,290    10.3 million

Exxon Mobil Corp. (NYSE: XOM) $68.19; Avg. Daily volume 23.5 million shares
CALL$    OpInt    Share Equivalent
$70.00    81,379    8.13 million
$75.00    104,424    10.4 million
$80.00    70,442    7.04 million

Pfizer Inc. (NYSE: PFE) $18.19; Avg. Daily volume 52.8 million
CALL$    OpInt    Share Equivalent
$17.50    211,372    21.1 million
$19.00    102,084    10.2 million
$20.00    217,542    21.7 million

Cisco Systems, Inc. (NASDAQ: CSCO) $23.94; Avg. Daily volume 40 million shares
CALL$    OpInt    Share Equivalent
$22.50    44,248    4.42 million
$24.00    65,232    6.52 million
$25.00    132,091    13.20 million

Intel Corporation (NASDAQ: INTC) $20.40; Avg. Daily volume 61.3 million shares
CALL$    OpInt    Share Equivalent
$20.00    252,618    25.2 million
$21.00    97,351    9.73 million
$22.50    72,696    7.26 million

We also see this in both key metal ETF’s which track gold and silver prices, although these of course are metal price exposure plays rather than anything related to stocks:

SPDR Gold Shares (NYSE: GLD) $107.31; Avg. Daily volume 20.7 million shares and the equivalent of more than 46 million shares in options on a fully leveraged basis:
CALL$    OpInt    Share Equivalent
$100.00    66,713    6.67 million
$105.00    44,346    4.44 million
$110.00    74,437    7.44 million
$112.00    38,853    3.88 million
$113.00    22,898    2.28 million
$115.00    77,528    7.75 million
$116.00    27,953    2.79 million
$117.00    27,933    2.79 million
$120.00    88,176    8.81 million

iShares Silver Trust (NYSE: SLV) at $16.54; Avg. Daily volume 12.1 million shares; this comes to over 40 million shares on a fully leveraged basis:
CALL$    OpInt    Share Equivalent
$14.00    74,986    7.49 million
$15.00    15,300    1.53 million
$16.00    38,815    3.88 million
$17.00    74,446    7.44 million
$18.00    49,232     4.92 million
$19.00    128,848   12.8 million
$20.00    37,576    3.75 million

I would like to personally invite you to join in with the thousands of readers on our free daily email distribution list from 24/7 Wall St. to hear about ongoing day trader and options trader alerts, analyst upgrades and downgrades, stock and market rumors, Buffett and guru investor news, M&A and IPOs, and more.

JON C. OGG
January 2, 2010

JON OGG

If you will recall, Tel Aviv, Israel-based RADVISION shares fell from over $9.00 down to about $6.00 at the end of September when this Tandberg deal was announced by Cisco.  Cisco is RADVision’s largest customer, and if Cisco is not going to buying a larger company like Tandberg it may either look elsewhere or it may just keep its pacts with RADVision.  That may not offer key certainty by any stretch with “may” and with the hypothetical situations, but it leaves the upside for RADVision higher than it did.  It is also after the company’s earnings and its guidance.

Where this gets interesting is in the NOV and DEC $7.50 CALLS for a de-leveraged trade.  In December, we have seen only 10 contracts trade hands in the DEC-2009 $7.50 CALLS versus a prior open interest of 1,150 contracts.  And in November, we have seen only 30 contracts trade in the NOV-2009 $7.50 CALLS versus a prior open interest of 68 contracts.  The last price traded on the NOV CALLS was $0.25 and the last on the DEC CALLS was $0.15 and under the current market of $0.25 bid X $0.40 ask per contract.

Either way, with a 5.5% gain to $6.34 today traders are looking at the stock.  Volume is already twice-normal at over 420,000 shares as of 10:46 AM EST. That is already above yesterday’s 358,000 shares traded and well above the 100,000 or so seen on many days.  Some might also look at an ‘implied floor’ of about $5.60 seen from after the Cisco-Tandberg deal announcement right before earnings this week.

Reports do not constitute any definite outcomes.  But that won’t keep traders from speculating either way.

JON C. OGG
OCTOBER 30, 2009

JON C. OGG