Schaeffer's Daily Market Blog Features: International Securities Exchange, Red Robin Gourmet Burgers, International Rectifier, Novell, and Coca-Cola.

CINCINNATI -- Among the stocks featured in the November 3 edition of Schaeffer's Market Blog are International Securities Exchange (NYSE:ISE), Red Robin Gourmet Burgers (NASDAQ:RRGB), International Rectifier (NYSE:IRF), Novell (NASDAQ:NOVL), and Coca-Cola (NYSE:KO). Schaeffer's Market Blog is just one of the many free market commentaries written every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. The Market Blog is written throughout every trading day by Schaeffer's financial analysts and traders. They are quick insights to the day's most notable market activity from an options perspective. To have this report delivered to you free via email every day click on the following link and you'll also get an opportunity to win an iPod Nano. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB13M&PAGE=1 .

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9:34 AM International Securities Exchange Making News

Yesterday, the International Securities Exchange (NYSE:ISE) announced that it has filed a complaint in the U.S. District Court for the Southern District of New York, seeking to end the exclusive listing of certain index options. The exchange has asked the court to issue a declaratory judgment holding that it does not need a license to list index options on the Dow Jones Industrial Average (DJIA) and S&P 500 Index (SPX), which trade on the Chicago Board Options Exchange exclusively. In June 2006, the U.S. Court of Appeals for the Second Circuit ruled that ISE does not need a license to list options on the SPDR (SPX) and Diamonds (DJIA) exchange-traded funds.

Shares of the exchange have pulled back a bit, but have found a measure of support at its 10-week moving average. Since the end of June, the equity has finished below this trendline merely twice. Further support is found in the form of ISE's 10-month moving average, which it has not finished a month below since its inception.

9:55 AM Robin Gets Rocked

Red Robin Gourmet Burgers (NASDAQ:RRGB) plunged in after-hours trading yesterday afternoon after reporting third-quarter profits of $5.99 million, or 36 cents per share, from $6.47 million, or 39 cents per share, last year. Excluding items, however, per-share earnings eased up two pennies to 47 cents. Analysts were expecting per-share results of 43 cents. Quarterly revenue rose to $148.6 million, narrowly outpacing Street expectations for $148 million.

This morning before the opening bell, the upscale fast-food eatery was pillaged by a slew of brokerage downgrades. Friedman Billings, CIBC, Banc of America, and McAdams Wright Ragen have all lowered their respective ratings on the stock. Less than 30 minutes into the trading day, the shares have lost more than 28 percent to reach a new annual low on heavy volume.

11:10 AM International Rectifier Receives an Upgrade

I was flipping through a list of stocks making a sizeable move this morning, and found myself searching for a bit of news on International Rectifier (NYSE:IRF). Hoover's notes that IRF is a top producer of power semiconductors used to refine the electricity flowing into a device from a battery or power grid. Now, that sounds like a great deal of technological mumbo jumbo, but Hoover's assures me that IRF's products (including MOSFETs, diodes, and rectifiers) enable more efficient operation in consumer appliances, automobiles, computers, communication devices, lighting systems, and military equipment.

In today's trading, IRF is more than 10 percent higher, thanks to an upgrade to "buy" from "hold" by brokerage Sanders Morris. This news supplied the momentum for the shares to gap higher and climb from this morning's open. While the move higher allowed the stock to take out prior resistance at the 37 level, it may have met its match at the round-number 40 level. Earlier this year, the 40 level provided some measure of support earlier this year and in 2005. Today's push higher could be the result of a short-squeeze situation, as more than six percent of IRF's float is sold short. Keep an eye on IRF's action throughout the day; rejection at 40 should be expected, but a break and close above 40 could signal a continued run.

11:17 AM Will Novell Go Supernova, or Just Fizzle?

Are expectations high for Novell (NASDAQ:NOVL) following the company's agreement with Microsoft (MSFT)? You can bet your CTL+ALT+DEL they are. More than 18,000 calls were added at the stock's November 7.50 strike yesterday, placing this as the site of peak call open interest for the month. In fact, every other strike for November (including the put side) has less than 3,000 contracts in open interest. What's more, open interest at NOVL's 7.50 call in the December series swelled by more than 9,000 contracts. However, investors might want to hold off on reserving the ballroom just yet, as NOVL must still overcome some pretty staunch technical resistance at the seven level. This level held NOVL in check yesterday following The Wall Street Journal story, and it appears to be holding as resistance today following the confirmation from MSFT. Which brings up the question, was yesterday's plethora of call adds at the 7.50 strike smart money or just speculation? My gut tells me we could be in for a bumpy ride.

11:46 AM Have a Coke and a Spread

Coca-Cola (NYSE:KO) appears on the most-active options charts today, as 15,000 contracts have crossed the tape at the January 2007 47.50 strike (KO AW). This near-the-money call was previously home to just under 15,000 contracts itself, so today's volume could go either way, as far as a massive liquidation or new positions. Given that the January 47.50 put (KO MW) is also active with 15,000 contracts trading (on open interest of only 1,589), it is unlikely that open interest will decline at the call strike come Monday.

Checking out the details, it looks like a massive spread traded shortly before 11:00 a.m. On the call strike, the 15,000-contract block traded at the ask price of 0.70, making the transaction worth a cool $1.05 million. For the put, a block of 6,000 contracts changed hands at 1.30 while a block of 9,000 contracts crossed the tape at 1.35. At the time, the bid price on the option was 1.30, while the ask was 1.40. This could be a straddle, where the speculator expects a big move in either direction from the underlying stock and so he buys both calls and puts. In today's action, KO shares are virtually unchanged as they consolidate just below their 10-day moving average.

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