Daily Commentary from SIR Highlights the Following Stocks: Microsoft, ChevronTexaco, CIGNA, American Power Conversion, CV Therapeutics.

Business Editors

CINCINNATI--(BUSINESS WIRE)--Oct. 31, 2003

This daily report contains a brief commentary on the day's most notable activity and a table listing the most active calls and puts for the day. The Midday Options Update is published every day at SchaeffersResearch.com. For additional information about this report or to have it delivered to you via email everyday click on the following link: http://www.schaeffersresearch.com/addinfo.

Today's Daily Commentary focuses on: Microsoft (NASDAQ:MSFT), ChevronTexaco (NYSE:CVX), CIGNA (NYSE:CI), American Power Conversion (NASDAQ:APCC), CV Therapeutics (NASDAQ:CVTX).

Investors have been lucky as they have received more treats than tricks this Halloween session. The Chicago Purchasing Managers' Index came in at 55 for the month of October compared to September's reading of 51.2 and the Street estimate 55.6. This report is a reassuring sight as all readings above 50 indicate expansion among businesses. Consumer sentiment is also growing more optimistic, with October's University of Michigan Consumer Sentiment Index coming in at 89.6 versus last month's report of 87.7 and October's preliminary report of 89.4.

Turning to corporate news, Internet search engine Google has reportedly rebuffed overtures from Microsoft (NASDAQ:MSFT) to be acquired by the software behemoth. Teva Pharmaceutical Industries has been a little more successful, as it announced today plans to buy Sicor in a stock and cash deal valued at $3.4 billion.

In earnings news, ChevronTexaco (NYSE:CVX) saw third-quarter revenue soar to $30 billion, resulting in a net income of $2.02 per share. These results pounded the company's loss of 85 cents per share for the same period a year ago and the Street estimate of $1.62 per share. The shares are currently up almost three percent on the positive news. Health insurer CIGNA (NYSE: CI) posted a profit of $1.45 cents per share, outpacing the consensus estimate by 28 cents per share. The shares were also upgraded this morning from a "hold" to a "buy."

Speaking of analyst ratings, American Power Conversion (NASDAQ:APCC) was raised from "market perform" to "buy" while SBC Communications was upgraded from "underperform" to "sector perform." Alcoa was also boosted from "reduce" to "neutral" on the belief that demand could be stronger than expected due to the impressive Gross Domestic Product released yesterday.

At 1:12 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 9813.0) is up 0.27 percent and the S&P 500 Index (SPX - 1050.98) is higher by 0.39 percent. The Nasdaq Composite (COMP - 1932.7) is flat. At 1:14 p.m. in the options pits, 1,349,396 calls and 955,677 puts traded for a composite put/call ratio across all five exchanges of 0.70. The CBOE put/call ratio for equity options weighed in at 0.81.

CV Therapeutics (NASDAQ:CVTX) is attempting to dominate call activity this afternoon. The security has seen more than 8,600 contracts cross the tape at its December 25 call, 12,600 contracts changed hands at its December 20 call, and another 6,500 transacted at its December 27.50 call. This is an interesting development considering the fact that the shares gapped significantly lower this morning on heavy trading volume. The company announced that it received an approvable letter from the FDA regarding its angina treatment, Ranexa. While the letter indicates that the group believes the drug works, it also stated that it would still wait to hear a recommendation from its advisors in December before giving final approval. The Street was discouraged by this news, as two brokerage firm downgraded the shares.

Overall, sentiment toward the shares is mixed. The equity's Schaeffer's put/call open interest ratio stands at 0.55, which is lower than 81 percent of those taken over the past year. However, short interest is still more than five times its average daily trading volume, raising the potential for a covering rally if the stock can move higher once again.

From a technical perspective, the stock has been exactly blowing the doors out or anything. While the shares are attempting to rebound from this morning's sharp drop, CVTX continues to be capped by staunch resistance at its 10-week moving average. In addition, call contracts have accumulated heavily at the 22.50 and 25 strikes in the November series, adding another layer of potential resistance. The shares have a rough road ahead of them may find themselves lacking fuel as optimism has already begun to build and the short sellers see with little reason to cover their bearish positions.

Click the following link to see the Weekly Chart of CVTX since July 2003: http://www.schaeffersresearch.com/wire?ID=8781.