MCI WorldCom (WCOM - 50-3/8) is seeing heavy option activity on the February 50 call with 5,271 contracts trading today versus open interest of 18,778 contracts. This follows last night's earnings report, which beat the average estimate of 41 cents per share by one penny. Schaeffer's put/call open interest ratio (SOIR) for WCOM ranks in the relatively pessimistic 76th percentile of the last 12 months worth of readings. Today, the stock is up over four percent on volume of 13 million shares versus its 30-day average volume of 32.6 million shares. In terms of analysts' recommendations, there is not much room for upgrades, as the stock has 31 of 32 "buy" ratings.
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Last night following the close, Tricon Global Restaurants (YUM - 30-5/8) said that fourth-quarter earnings weighed in at 78 cents per share, versus last year's figure if 55 cents. Breaking it down by units, Pizza Hut experienced a six-percent rise in same-store sales, Taco Bell's same-store sales fell by one percent in the quarter, and KFC saw a two-percent rise in its same-store sales numbers. For the next year, YUM officials predict that over 1,300 new restaurants will be opened, while 500-600 restaurant locations will be sold. YUM appears to have made a short-term bottom on February 2 just above the 28 mark and has now risen back above its descending 10-day moving average. YUM shares are trading about two percent higher this morning.
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After a six-percent plunge on Monday, May Department Stores (MAY - 27-11/16) is currently trading at low levels not seen since July 1996. The retailing name is trading well below all of its significant moving averages. This morning, the company announced a trio of good news, beginning with fourth-quarter earnings results that topped analysts' expectations by a penny per share. MAY officials also announced a four-cent boost in the firm's quarterly dividend, and declared a stock buyback worth up to $650 million. On this slew of positive news, the stock has risen a mere 5/16 of a point. Despite the stock's recent weakness, options players are showing a decidedly positive slant. Presently, total call open interest stands at about 2,400 contracts, versus only 338 contracts residing in total put open interest. The site of heaviest open interest overall is the out-of-the-money March 40 call, which is home to 1,700 call contracts.
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The managed-care stocks have been in a coma for some time now. The former high-flying group, once hailed as a panacea for ending the healthcare debate, has come back down to earth. As we noted recently, Aetna (AET - 42-1/16) reported higher-than-expected medical costs, which sent investors flat lining. AET moved down 18 percent on Tuesday and was down more than seven percent on Wednesday. The Morgan Stanley Healthcare Payors Index (HMO - 219.42) is actually below its inception price in early 1996. United Healthcare (UNH - 53-15/16) is the latest company to report its earnings, beating Street estimates by five cents per share by posting a positive earnings surprise of 88 cents per share. The company’s medical cost trends will likely be closely scrutinized, which as AET discovered, can outweigh even a seemingly positive earnings surprise.<
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Wall Street's lackluster close has not inspired confidence around the globe with many of the major markets sinking overnight. Only five of 17 world markets are higher thus far. In overnight trading, the following were the leading and lagging indices around the globe. The top four major markets and their respective returns are as follows: Australia (SYIND - 3172.5), up 1.23 percent; Italy (MILND - 31110), up 0.45 percent; Spain (IBEND - 11985), up 0.38 percent; and Sweden (AFFND - 6127.3), up 0.16 percent.

The bottom four major markets and their respective returns are as follows: Finland (HEXND - 16094), down 2.18 percent; Japan (NIKKEI - 19710), down 1.49 percent; Denmark (CSIND - 264.64), down 1.35 percent; and Belgium (BELND - 2780.4), down 1.23 percent.
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