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Juniper Networks (NYSE:JNPR) – Shares in networking equipment maker Juniper are tagging along on the for the ride behind Cisco’s bigger fall, while some options players appear to be bracing for further downside. Juniper’s shares are down 6% to $26.00 while option activity involving a put spread in the October contract involves around 3,000 puts at the lower $24.00 and$21.00 strike prices. The combination trade in which a long put position is established at the higher strike plays out by selling the same amount of puts at the lower strike for a net premium of 90 cents. A decline in Juniper’s fortunes to $21.00 would establish at expiration gains of $2.10 for this investor. For that to happen, Juniper’s shares would still need to fall by 19%.

Cisco Systems Inc. (NASDAQ:CSCO) – A disappointing revenue forecast for the current quarter by computer giant Cisco late on Wednesday spawned more fears about the strength of global demand moving forward. Cisco’s shares fell pretty close to a 52-week low and stand 24% lower than an April peak. Options traffic was extremely hectic at 327,000 contracts. Atypical of a company in the aftermath of its earnings was a rise in implied volatility, which gained more than 10%. What stands out today is the put activity, where we’re noticing a preponderance to write premium. Investors are likely trying to take advantage of as much of a 13% share price decline to $21.00 on Thursday and used options expiring in the September contract to attempt a long entry to the stock. By selling puts at the $20.00 strike for 37 cents, investors are prepared to have stock in Cisco put to them at expiration in the event the stock trades south of the strike price. If not, they retain the premium in full as compensation for providing stock bears with the insurance. Of 12,000 contracts traded at that line, seven out of eight contracts were sold to the bid. The pattern was repeated in less daring fashion at the October $17.50 strike where an investor acted as a willing Cisco buyer through expiration in exchange for a 17 cent premium on 5,000 put options.

Macy’s Inc. (NYSE:M) – Despite its upbeat predictions for the remainder of the year when it topped earnings predictions on Wednesday, shares in Macy’s are caught in an otherwise weaker environment for retailers. Its shares are 1.2% lower at $20.26. Nevertheless one option investor took advantage of the current bout of weakness by targeting a call spread that will expire after next quarter’s earnings have been announced in November. The bullish play involved 20,000 call options spread evenly between the $21.00 and $24.00 strikes implying a maximum gain of $3.00 less the cost of today’s trade, which nets to 91 cents. The maximum gain of $2.09 would only occur in the event that shares in Macy’s rose 18.5% from present although on a simple breakeven basis the investor needs Macy’s shares to gain 5.5%.

SunPower Corp. (SPWRA) – A chunk of 20,000 put options was traded on SunPower earlier at the far-dated January 2012 expiration. Time and sales indicates that the puts were sold today and in looking at the history of open interest today’s action is probably a closing sale intended to protect a lurch lower in the share price, which is now higher today at $12.49. Although the initial purchase of the protective put options in mid-May might have coincided with a long stock position by an investor worried that SunPower might fall even further. They say that timing is everything and this case proves no exception. The likely buyer appears to have bought within one week of the 52-week low at $10.11. If that’s the case the buyer is signaling today that he’s so confident over the prospects for the future that the protection is no longer necessary.

Lennar Corp. (Len) – From time-to-time in the world of options we get bamboozled by the motivation driving some investors in their options activity. Here’s one of those examples. Shares in the homebuilder are down by 1% at $13.50 having breached a July 1 low at $13.30 earlier in the day. The next stop would appear to be a dip to the 52-week low at above $11.50. The increased uncertainty is also indicated by a nudge higher close to 50% in the options implied volatility at Lennar. The major batch of options appearing today is in the January 2012 expiration where 16,000 call options were sold at $5.05. This makes little sense to us. It could be a covered call, but the calls are deeply intrinsic. A naked premium-write would be far better off selling an out-of-the-money call option unless he has ambitions to deliver stock to a buyer at $10.00 a piece, yet the stock would by definition currently be un-owned. This one has us stumped.

Source: Thursday Options Brief: JNPR, CSCO, M, SPWRA & LEN