Home Site Map About Us My Account Shopping Cart Help Sign In

Schaeffer's Options Center

newer

Schaeffer's Daily Option Blog

older

Summer Movie Madness

Jocelynn Drake (jdrake@sir-inc.com)

4/3/2007 11:05:52 AM

It's just around the corner. Memorial Day weekend typically heralds that beginning of the blockbuster movies that will hit the big screen. This morning, brokerage firm Stifel Nicolaus started coverage of Marvel Entertainment (MVL: sentiment, chart, options) with a "buy" rating and a price target of $34 a share, partly on expected success for the Spider-Man 3 movie, which is set for release on May 4. "We see an attractive longer-term growth opportunity with the impending launch of the company's film slate, an initiative that serves as a catalyst for the business and offers significant earnings and cash flow upside potential," analyst Drew Crum wrote in a note to clients.

But MVL isn't the only one going in for round 3 in the movie line-up. Walt Disney (DIS: sentiment, chart, options) will step forward with its highly successful Pirates of the Caribbean 3: At World's End, which is slated for release on May 25. According to The Numbers.com, in terms of total box office sales, Pirates of the Caribbean 2: Dead Man's Chest is the sixth highest grossing movie of all time. What's more, the shares of DIS have some room for upgrades from Wall Street. Zacks reports that eight analysts rate the stock a "buy" and nine give it a "hold" rating.

<

permalink

RSS |

Del.icio.us |

Facebook |

Reddit |

Newsvine |

Digg |

Mixx

Options Update: Microsoft

Mark Fightmaster (mfightmaster@sir-inc.com)

2/23/2007 1:56:06 PM

A daily feature available on SchaeffersResearch.com is "Options Update." Every day, we'll focus on the stocks that are the center of some heavy option trading. Today's featured stock is Microsoft (MSFT).

With little in the way of economic news to drive action today, oil has stepped to the forefront. The front-month contract has advanced today, furthering its jump this week. Today's advance comes courtesy of digesting of yesterday's data showing a bigger-than-expected decline in distillate supplies (which includes heating oil) in the past week. Further fuel was thrown on the fire by continued tensions related to Iran's nuclear defiance, and violence in Nigeria. The advance in crude prices has pushed stocks lower.

Most-Active Options Update

At 1:46 pm Eastern Time, the Dow Jones Industrial Average (DJIA � 12,646.0) has shed roughly 40 points. The S&P 500 Index (SPX � 1,450.81) has dropped more than five points, and the Nasdaq Composite (COMP � 2,515.9) has dropped slightly. At 1:47 p.m. Eastern Time, 2,487,730 calls have changed hands compared to 2,428,758 puts, equaling a single-day put/call volume ratio of 0.97. The CBOE's equity put/call volume ratio stands at 1.18, while the ISE's ratio weighs in at 0.92.

Microsoft

What would a week filled with covering my favorite stocks be without a look at Microsoft (MSFT: sentiment, chart, options) ? Why, it would be like cookies without milk, peanut butter (but not the Peter Pan variety, been there, ate it, got sick) without jelly, Tango without Cash, you get the idea (I hope). So, let's take a look at the news coming from the vicar of Vista, the sultan of software, the wizard of Windows, the dean of desktops, oh, you get the idea . . . let's see what is up with MSFT. (Maybe I should have given up making silly little nicknames for companies for Lent rather than pop.)

Late yesterday, it was announced that a federal court jury in San Diego retuned a $1.52 billion verdict against MSFT after deciding that it infringed on two digital audio (MP3) patents owned by Alcatel-Lucent (ALU: sentiment, chart, options) . Lucent had filed a suit against MSFT customers in 2003, which MSFT responded to with a corresponding declaratory action. MSFT announced that it will seek relief from the trial judge and, if necessary, file an appeal. The company had argued that it was authorized to use the MP3 audio technology in question based on an agreement with the German Fraunhofer Institute (which originally developed MP3 technology together with Bell Labs, which became Lucent, which became part of ALU), and that "the damages award seems particularly outrageous when you consider we paid Fraunhofer only $16 million to license this technology." A spokesperson for MSFT noted that the judgment amount was based on worldwide sales of the company's Windows operating system since May 2003.

This latest development is simply an addition to the ongoing struggle between the two companies. Last week, MSFT sued ALU, claiming infringement of four of its patents related to computer and phone systems. However, the news doesn't stop there. It seems that Office Live LLC has decided to get in on the suing fun, filing a complaint in U.S. District Court for the Central District of California (in late December) that it acquired the "Office Live" trademark in 2002. In 2006, MSFT began marketing a service called Office Live.

In response to this amalgamation of news, MSFT has slipped more than 1.5 percent. Furthermore, the equity popped up on our notably active call and put options list. The option activity in question occurred at the 30 strike in the April (call) and March (put) series. The 30 level is now the site of peak call open interest in the March and April series, and it holds the same title on the put side.

Technically, this isn't the news that MSFT bulls wanted to hear. Mr. Softy was this (holding my pointer finger and thumb scant millimeters apart) close to making the 30 level act as support, but it appears that it wasn't meant to be. You see, last month was the first month since early 2002 that the equity finished above the 30 level. Another month of this sort of performance and this MSFT bear may have changed his stripes. Unfortunately for the stock, it now faces overhead resistance at the 30 level, a role that this level has relished since 2002. Now, it looks like the stock is back into its trading range and could be headed lower.

Monthly Chart of MSFT Since January 2000

To make matters worse . . . not only has the 30 level acted as resistance in the past, but it is also now the site of peak call open interest. Moreover, this level is rather close to a half high, meaning it is nearly one-half of MSFT's all-time high of $59.96. Half highs can provide resistance, which is further strength that the 30 level has against the shares.

So, is there any sentiment that may be able to drive MSFT out of this trading range and into the light above the 30 level? Not really. The options pits are almost right in the middle when it comes to MSFT, reflected by a Schaeffer's put/call open interest ratio that is higher than 55 percent of the past year's worth of readings.

If anything, there is more downside potential in MSFT's sentiment backdrop. According to Zacks, 14 of the 19 analysts following the company rate it a "buy" or better. This ratings configuration leaves quite a bit of room for downgrades, which could serve to push MSFT lower.

Think a short-squeeze situation could force the stock higher? Think again. Less than 1.5 percent of MSFT's float is sold short, and it would take just two days to buy back these shorted shares. This accumulation doesn't eliminate the chance, but it leaves a short-covering rally a nearly distant thought.

My gut feeling is that the stock is going to continue moving lower, but it could just be the macaroni and cheese I had for lunch.

** The tables below reference notably active call and put contracts across all six exchanges.**

Notably Active Calls

Notably Active Puts

To read more of my and my colleagues' thoughts on the market, please visit our Schaeffer's Daily Market Blog section throughout the trading day.

permalink

RSS |

Del.icio.us |

Facebook |

Reddit |

Newsvine |

Digg |

Mixx

newer

older

View Most Recent Blogs

Featured Brokers

Profile

Profile

Profile

Commentary by WhatsTrading.com

Terra Industries (TRA) $39.91 +4.75%

11/20/2009 3:00:04 PM

Terra Industries (TRA) is up $1.80 to $39.90 and options volume is running 4X the average daily on news Terra stockholders have approved all three of CF Industries' nominees to Terra's Board of Directors. We are pleased that Terra stockholders have voiced their support for CF Industries' proposed acquisition of Terra by voting for all three of our director nominees. It is time to move forward and put these two great companies together, according to a statement from Stephen Wilson, CF Industries' chief executive. TRA investors seem pleased as well. Shares are up. 24K calls and 13K puts traded on the stock. Nov 40, Dec 39, and Dec 40 calls are the most actives.

Yahoo Inc (YHOO) $15.51 -0.64%

11/20/2009 2:00:07 PM

96,000 calls traded on Yahoo (YHOO) today, or 8X the expected. A lot of the activity was due to two strategists. At about 12:20, one bought 20K January 2011 calls at 95 cents apiece against a position in 465K YHOO shares at $15.53. Thirty minutes later, a strategist sold Jan 2011 20 - 30 call spreads at 87 cents, 22000X, and also sold the Jan 2011 12.5 - 15 strangle at $2.75, 20000X, against a position in 520K shares at $15.53.

Allstate Corporation (ALL) $28.81 -0.21%

11/20/2009 12:00:13 PM

Allstate (ALL) is down 10 cents to $28.77 and Dec 31 calls are active, with almost 12K traded. One player bought 5000 at 20 cents and another 6000 at 20 cents. The contract has almost 40K of open interest and the most OI of any ALL contract. So, the actoin might be closing.

Bank of America Corporation (BAC) $16.04 -0.25%

11/20/2009 11:20:05 AM

A massive butterfly spread surfaced in BofA (BAC) a few moments ago. Shares are down 2 cents to $16.06 and the strategist is focused on the January 2011 calls. To be specific, they sold 100000 Jan11 30 calls at 37 cents to create the body of the fly. They bot half as many (50K each) of both the Jan11 20 calls and Jan11 40 calls, at $1.82 and 12 cents, respectively, for the wings. Consequently, they paid $1.20 per fly and are positioned for shares to move towards $30 during 2010.

Alliant Techsystems (ATK) $85.10 -.15%

11/20/2009 10:00:05 AM

Alliant Techsystems (ATK) sees a bullish 3-legged trade Thursday, as 1,250 February $75/$80 put spreads are sold for $1.20 to help finance the purchase of 1,250 February $90 calls for a net debit of $1. Shares have pulled back in recent days after posting great earnings and running higher on big volume recently, but this low volume pullback looks healthy. The military ammunition, weapon, and vehicle supplier trades just 9.45X earnings, 0.59X sales, and 12.5X cash flow.

Daily Rundown, November 20

11/20/2009 9:00:02 AM

Stocks are set to open lower on weakness in overseas markets and disappointing earnings forecast from Dell Computer (DELL). Forty-five minutes before the start of trading in New York, stock index futures indicate that the Dow Jones Industrial Average might lose 60 or 70 points at the open. \n
\nOverseas markets are mostly lower ahead of the weekend. After slipping 1.3 percent Thursday, Japans Nikkei lost another .5 percent after the Japanese government said the economy was back in deflation for the first time since 2006. Hong Kongs Hang Send slipped .8 percent.\n
\nMajor averages are broadly lower across Europe for a second day. Frances CAC 40 is pacing the decline with a .7 percent loss. \n
\nIn the US, the news is light. Dell Computer shares are taking a hit after the computer maker reported a quarterly profit of 28 cents per share, which missed Street estimates by a nickel. Dell blamed a slowdown in business IT spending for the 54 percent drop in net profits. \n
\nMetals, mining and energy names might see weakness for a second day after crude oil fell 73 cents to $76.73 a barrel and gold lost $4.20 to $1137.70 an ounce. \n
\nNo economic data is scheduled for today and bonds are holding modest gains in light early action. The benchmark is up 1/32nd and now yields 3.33 percent. \n
\nThe dollar is flat at 88.98 against the Yen. The euro fell .0092 to 1.4830 against the buck. \n
\nMeanwhile, the options expiration might add a little volatility to the mix for the equity market. Today is the last day to trade any remaining November 2009 options before they expire Saturday morning and volume is likely to pick up as players square positions. \n

Unusual Activity Roundup, Nov 19

11/19/2009 4:20:01 PM

Some less actively traded names seeing bullish order flow: Nordic Tankers (NAT), Cogent Comm. (CCOI), ArcSight (ARST). Bearish order flow: Cypress Bioscience (CYPB), Blackrock (BLK), GSI Commerce (GSIC). Post Earnings Activity: Sears Holding (SHLD), Netease (NTES), NetApp (NTAP), Suntech Power (STP), Gamestop (GME), Trina Solar (TSL), Williams Sonoma (WSM), the Limited (LTD). Pre-Earnings Activity: Dell Computer (DELL), Gap Stores (GPS), Dress Barn (DBRN). Ex-Div Activity: J&J (JNJ), Prudential (PRU).

Bunge Ltd (BG) $63.10 +0.80%

11/19/2009 3:20:13 PM

Bunge shares have crossed into positive territory and showing good relative strength amid the ag names like POT, MOS, and CF which are pulling back from recent gains. Like yesterday, it could be potential takeover talk is also driving a pick up in call buying in the No. $65 calls which have trade over 1,600 contracts, mostly in small lots. Likely speculation that a bid might emerge before end of week as the three way battle between CF, AGU and TRA is coming to a shareholders vote today and tomorrow.

Pre Paid Legal Services Inc (PPD) $33.85 -17.70%

11/19/2009 2:20:04 PM

Pre-Paid Legal Services (PPD) shares spiked down about 10 minutes ago and are getting slammed midday on news the co. has received a complaint letter from the FTC related to Identity Theft Shield and Affirmative Defense Response System (ADRS) Program. PPD is down $5.91 to $35.22 and options activity is running 11X average daily on increasing interest in Nov 35, Dec 30 and Dec 35 puts.

Salesforce.com (CRM) $62.40 -1.90%

11/19/2009 1:20:14 PM

Salesforce.com (CRM) options have been busy over the past few days after the company unveiled its new enterprise collaboration application called Salesforce Chatter. The product is unique; as it is designed for business, but also includes the ability to use popular social networking tools like Twitter and Facebook. It leverages the popularity of social networking apps to help a companys employees communicate more effectively in this new media world (link to additional details.)\n
\n"Why do I know more about strangers on Facebook than my own employees? Now, through Salesforce Chatter, my business is tweeting me. My employees can use the models they love to get the collaboration they need," according to Marc Benioff, chairman and CEO of salesforce.com.\n
\nThe action in the Salesforce.coms share price has been interesting. While the stock has been performing well in 2009, up 94.4 percent year-to-date, it is down over the last few days despite a lot of hype about the companys latest foray into social networking. CRM is down $1.28 to $62.32 today and off 6.8 percent since Monday. Moreover, as the chart below shows, there has been a steady increase in interest in CRM puts. Put open interest, a measure of outstanding options contracts, is up from 72K contracts on Nov 11 to 105K contracts today, an increase of 43 percent.\n
\n\nA falling stock price and increasing interest in puts is a sign that bearish sentiment is building. It seems kind of odd for a company in the midst of launching a true breakthrough product. Perhaps its a case of buy the rumor, sell the news? For whatever reason, the action in CRM stock and options doesnt seem to reflect a lot of enthusiasm for the new product. Next, investors will be tuning in to the companys second Keynote address at Dreamforce 2009 beginning at noon eastern time and then its final presentation at 7:15 p.m. \n

More Options Commentaries and Observations by Schaeffer�s

Market Recap: Stocks Skid on Dell's Weakness, Dollar's Strength

Stocks started the day on a negative note, after the latest quarterly earnings results from Dell (DELL) hit the Street with a resounding thud. The firm fell woefully short of analysts' profit and revenue expectations, sparking concerns about the health of the broader tech sector. Elsewhere, European Central Bank president Jean-Claude Trichet warned that "... it is too early to declare the [financial] crisis over." Nevertheless, Trichet indicated that supportive stimulus measures must soon be unwound, prompting traders to buy the U.S. dollar in a safe-haven stampede. The greenback's gains pressured oil futures lower, and energy stocks soon joined tech issues in the red.

Trading Tools to Build Your Portfolio: A Bearish Bet on Best Buy Co., Inc.

Stocks started the day on a negative note, after the latest quarterly earnings results from Dell (DELL) hit the Street with a resounding thud. The firm fell woefully short of analysts' profit and revenue expectations, sparking concerns about the health of the broader tech sector. Elsewhere, European Central Bank president Jean-Claude Trichet warned that "... it is too early to declare the [financial] crisis over." Nevertheless, Trichet indicated that supportive stimulus measures must soon be unwound, prompting traders to buy the U.S. dollar in a safe-haven stampede. The greenback's gains pressured oil futures lower, and energy stocks soon joined tech issues in the red.

Option Activity Alert: Skepticism Builds Toward Chevron Corporation

Stocks started the day on a negative note, after the latest quarterly earnings results from Dell (DELL) hit the Street with a resounding thud. The firm fell woefully short of analysts' profit and revenue expectations, sparking concerns about the health of the broader tech sector. Elsewhere, European Central Bank president Jean-Claude Trichet warned that "... it is too early to declare the [financial] crisis over." Nevertheless, Trichet indicated that supportive stimulus measures must soon be unwound, prompting traders to buy the U.S. dollar in a safe-haven stampede. The greenback's gains pressured oil futures lower, and energy stocks soon joined tech issues in the red.

The Option Coach: Strategies in Review

Stocks started the day on a negative note, after the latest quarterly earnings results from Dell (DELL) hit the Street with a resounding thud. The firm fell woefully short of analysts' profit and revenue expectations, sparking concerns about the health of the broader tech sector. Elsewhere, European Central Bank president Jean-Claude Trichet warned that "... it is too early to declare the [financial] crisis over." Nevertheless, Trichet indicated that supportive stimulus measures must soon be unwound, prompting traders to buy the U.S. dollar in a safe-haven stampede. The greenback's gains pressured oil futures lower, and energy stocks soon joined tech issues in the red.

Getting Started with Options

Introduction: Getting Started with Options

Tools and Filters

Options Strategies

Sponsored by

Unusual Option Volume

Stocks

Data by WhatsTrading.com

Option Flow

Call Buying
Put Buying

Data by WhatsTrading.com

Most Active Stocks

Stocks
Indexes
ETFs

Data by WhatsTrading.com

Most Active Option Strikes

Stocks
Indexes
ETFs

Data by WhatsTrading.com

Largest Open Interest

Stocks
Indexes
ETFs

Data by WhatsTrading.com

Online Store | Advertise | Broker Center | Media Events | Sitemap | Help/FAQ | Contact Us |
Media Kit | Privacy Policy | RSS Feeds | Additional Legal Notice

Featured Partners: money.aol.com

� 2009 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242
Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: service@sir-inc.com

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.
Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.