"VmWare (NYSE: VMW) or EMC (NYSE: EMC): which is the better buy?" asks contrarian Joseph Hargett.

The analyst with Schaeffer's Investment Research suggests, "The debate is likely to continue for quite a while, as more conservative investors back the tried and true success of EMC, while speculators continue to tout the potential for VMW."

"Both sides were recently dealt winning hands, as VMware -- one of the most successful IPOs this year -- bested analyst earnings forecasts by 6 cents per share, while EMC matched expectations but provided strong guidance for the coming quarters.

"Following the IPO of VmWare, EMC shares took a bit of a breather from their run higher, only to resume their uptrend once buyers came back into the market in late September. As such, EMC recovered in fine fashion and continues to set new multi-year highs.

"VMW's indicators are few and far between for the stock as it has only been publicly tradable since mid-August. Still, this hasn't stopped bearish options speculators from jumping on the shares.

"Since the shares first became optionable, their Schaeffer's put/call open interest ratio (SOIR) has steadily risen from a reading of 0.35 to today's perch at 0.75. What this means is that options traders are favoring put options over call options for the equity, presumably in an attempt to call a top to the stock's advance.

"This reading is a bullish indicator from a contrarian perspective, and could hint at additional buying pressure for the security.

"EMC, meanwhile, has a smattering of pessimism on the options front, while the rest of the stock's indicators are decidedly more optimistic. Analysts heavily favor EMC, which has only been bolstered by the company's exposure to VMW.

"EMC's options outlook showed a buildup in put open interest ahead of the company's earnings report, indicating low expectations for solid quarterly figures from the firm. However, EMC defied these naysayers, and an unwinding of this pessimism could benefit the shares by supplying additional buying pressure.

"As for investing in EMC over VMW? It all depends on your risk tolerance at this point. While VMW will certainly be prone to more drastic upside moves, EMC seems to have settled into a steady growth pattern for the time being."

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