Schaeffer's Daily Market Blog Features Encysive Pharmaceuticals, Eli Lilly, Apex Silver Mines, Pan American Silver, and the Oil Service HOLDRs Trust.

CINCINNATI -- Among the stocks featured in the March 28 edition of Schaeffer's Market Blog are Encysive Pharmaceuticals (NASDAQ:ENCY), Eli Lilly (NYSE:LLY), Apex Silver Mines (NYSE:SIL), Pan American Silver (NASDAQ:PAAS), and the Oil Service HOLDRs Trust (AMEX:OIH). Schaeffer's Market Blog is just one of the many free market commentaries written everyday 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. For additional information about this report or to have it delivered to you free via email every day click on the following link. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB12M&PAGE=1 .

Schaeffer's Market Blog for Tuesday, March 28, 2006:

Below are just a few of today's Market Blog entries. Click here to read all of today's Market Blog. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1C&PAGE=1 .

10:53 AM More on Encysive Pharmaceuticals' Plunge

Yesterday I wrote about Encysive Pharmaceuticals' (NASDAQ:ENCY) stock plunge. What I didn't point out in that post was that the April 7.50 put (IQE PU) saw its open interest jump from 12,507 to 16,146 last week. So there were some who were adding puts ahead of today's bad news. Interestingly, most of the IQE PU open interest was added on March 15, when the open interest went from 2,065 to 12,469. A 4,000-contract trade and a 6,000-contract trade at 1:01 p.m. eastern time that day made up a bulk of the volume. It appears those might have been put purchases. The bottom line? Those puts were bid 0.40 at Friday's close. Today they're bid 2.55. That's a jump of more than 500 percent.

12:54 PM Eli Lilly Stumbles on Brokerage Downgrades

Eli Lilly (NYSE:LLY) has dropped nearly 3.5 percent today following two brokerage downgrades. First, Merrill Lynch reduced its rating to "neutral" from "buy," saying LLY's antidepressant Cymbalta is making little headway in terms of prescription share growth, despite promotional efforts. Friedman Billings, meanwhile, downgraded its rating to "underperform" from "market perform," noting that the company's business remains pressured by declining growth in three product lines, a disappointing late-stage pipeline, and increased competition.

The stock is fresh from pegging a new six-month high last Friday, but today's move has dropped it beneath its 10-day and 20-day moving averages for the first time since March 3. The downgrades might not be over for LLY, as it has many remaining fans on Wall Street. Ahead of today's news, the stock boasted nine "strong buy" ratings and one "buy," compared with just one "sell" and nine "holds." Options players, on the other hand, are camped in bearish territory, evidenced by the stock's Schaeffer's put/call open interest ratio (SOIR) reading of 1.08, which is a new annual high. LLY subsequently earns a very neutral Schaeffer's Equity Scorecard grade of 5.5.

2:11 PM Silver Soars

Silver made a fresh 22-year high yesterday ahead of the proposed launch of a silver-backed exchange traded fund (ETF) that is expected to make it easier to gain exposure to the metal. Last Tuesday the Securities and Exchange Commission (SEC) approved the iShares Silver Trust. Silver prices have risen more than 40 percent since last November when Barclays Global Investors initially filed its application to the SEC for the share market listing of iShares Silver Trust. The continuous front-month futures contract (SI/) ended yesterday at 10.925 per troy ounce. Notable stocks within the sector include Apex Silver Mines (NYSE:SIL) , Pan American Silver (NASDAQ:PAAS) , Silver Wheaton (SLW) , and Silver Standard Resources (SSRI) . All are at or near all-time highs.

2:47 PM Energy Holds Up

Just about everything is lower after the Fed's interest-rate announcement except energy. With crude up almost two bucks per barrel, energy is the top-performing sector today as the Oil Service HOLDRs Trust (AMEX:OIH) is up over 2.50 percent. In fact, the OIH is a few pennies higher than it was at 2:17, when the Fed decision came out. On the flip side, housing isn't very happy with the Fed's decision - as the PHLX Housing Sector Index (HGX) is down 0.59 percent, about 1.50 percent lower since the decision.

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Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com , is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method .