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by 10/30/2000 2:25 PM
Stocks quoted in this article:
Golden West Financial (GDW – 56-5/16) is the holding company for World Savings Bank, FSB, World Savings and Loan Assocation and World Savings Bank, SSB. On Friday, Schaeffer's put/call open interest ratio (SOIR) on GDW jumped from 0.66 on Thursday to 1.1 at Friday's close. This means that there are 1.1 open puts in the front three-month series for every call. This ratio currently stands at 1.0. For more information on SOIR, please visit Schaeffer's Daily Sentiment.

Amidst this seemingly pessimistic attitude, the equity eclipsed a new all-time high today of 56-9/16, suggesting bullish tendencies in the eyes of most contrarians. The equity was finally able to crack the 55 mark, which has provided overhead resistance for the past month. Consequently, during that timeframe, GDW posted earnings that missed First Call estimates by a penny, yet maintained positive momentum. The shares have been trading in a steady upward channel that has seen the stock double in value over the past eight months.
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by 10/30/2000 1:41 PM
Stocks quoted in this article:
The Morgan Stanley Cyclical Index (CYC – 467.20) has shot up by just over 21 points, or more than four percent, in early afternoon trading. This upswing has the index ready to notch its highest closing mark since September 14. The CYC has also surged back above its 10-week moving average, a trendline that had provided stingy overhead resistance on a weekly closing basis for about the past two months.

Leading CYC performers today include Alcoa (AA – 28-3/16), up 12.7 percent; Union Carbide (UK – 40-1/4), up 9.5 percent; Georgia-Pacific Group (GP – 26-9/16), up 9.5 percent; Ryder Systems (R – 18-1/4), up 9.3 percent; Dana (DCN – 22-1/16), up 8.6 percent; and Phelps Dodge (PD – 46-1/8), up 8.5 percent.

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by 10/30/2000 12:01 PM
Stocks quoted in this article:
A major weekly financial publication noted in its recent issue that newspaper name Gannett (GCI – 56-11/16) "is a terrific cash-flow machine. They are terrific operators and the share price imploded." In reaction to these comments, the stock has reached its highest intraday level since September 1 and is now over one percent in the black.

The shares have been technically sound over the short term, dashing ahead by almost 17 percent since their September 25 intraday bottom. Throughout most of this climb, GCI has been supported by its uptrending five-day moving average. What's more, the equity is receiving support from its 20-week moving average, an intermediate-term trendline that it finished last week's action higher than for the first time since late March.

Short-interest players apparently believe that GCI's winning ways will soon be over. From mid-September to mid-October, short interest on the security rose by nearly 32 percent to 1.42 million shares, a six-month high. As contrarians, we believe that this skepticism could have bullish implications for this leader's near-term prospects.

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by 10/30/2000 11:06 AM
Stocks quoted in this article:
One of the top lagging indices this morning is the GSTI Multimedia Networking Index (GIP – 475.2), which has fizzled by more than 22 points, or over four percent. This retreat has the GIP poised to close at levels not seen since early December. The index, which has stepped back by 34 percent since its near-term intraday high on September 1, is now trading beneath its 20-month moving average. The GIP has never closed a month beneath this long-term trendline, which we view as the line of demarcation between a bull and a bear market.

Stocks sending the index lower today include Sycamore Networks (SCMR – 59-5/16), down 9.1 percent; Foundry Networks (FDRY – 68-7/16), down 8.9 percent; Redback Networks (RBAK – 105-1/4), down 7.7 percent; and Qualcomm (QCOM – 69-1/16), down 7.6 percent.


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by 10/30/2000 10:54 AM
Stocks quoted in this article:
As I stated in a Market Observation in late September, Pharmacia (PHA – 53-1/4) had to breach the peak call open interest that had been building on the October 60 call. The shares managed to peak at 60-15/16 before reversing back toward the 50 level on their inability to break free of the strike.

Despite the security's weakness, options investors had maintained an aggressively bullish stance on the stock as the company approached its earnings release. According to Schaeffer's Daily Sentiment, Schaeffer's put/call open interest ratio (SOIR) on PHA stood at a 10th percentile ranking through Friday's options translations. A ranking this low indicated that options traders have been more bearish toward the shares' 90 percent of the time. The November calls at the 50, 55, and 60 strikes greatly dwarf their put counter parts of similar strikes.

The equity gapped down by 3-5/8 points at its delayed open today after reporting third-quarter earnings results of 33 cents per share, matching the Street's consensus opinion. With expectations at a reasonably high level, most investors that trade the shares are already bought into the stock, leaving little buying pressure to offset what selling pressure might enter the market post-earnings.


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