Schaeffer's Daily Market Blog Features Lucent Technologies, Lennar, Encysive Pharmaceuticals, Steel Dynamics, and General Electric.

CINCINNATI -- Among the stocks featured in the March 27 edition of Schaeffer's Market Blog are Lucent Technologies (NYSE:LU), Lennar (NYSE:LEN), Encysive Pharmaceuticals (NASDAQ:ENCY), Steel Dynamics (NASDAQ:STLD), and General Electric (NYSE:GE). 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 Monday, March 27, 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 .

10:35 AM More on Lucent Technologies Heavy Call Volume Friday

Here's a quick follow-up to John's comment Friday afternoon about heavy volume on Lucent Technologies (NYSE:LU) call options. There were 147,973 call options traded Friday across all LU call strikes. This compares to put volume of just 16,652 contracts. The April option activity was even more skewed - 69,614 calls to 3,121 puts traded. This volume compares to just 184 LU call contracts and 60 LU put contracts that changed hands the day before. Of course, this can be attributed to Friday's news that Alcatel (ALA) is far along in talks to merge with LU. It is interesting to note that the open interest at the April 3 call (LU DG) rose about 17,600 contracts to 141,609 contracts even though the volume Friday on that option was 67,498. That suggests that there were nearly as many call liquidations as new positions. LU ended Friday up 8.5 percent to 3.06. This morning the stock is up another 2.3 percent to 3.13.

12:33 PM Lennar Options Trading Ahead of Earnings

Homebuilding issue Lennar (NYSE:LEN) is seeing put additions grow at its near-the-money April 60 strike. The stock's Schaeffer's put/call open interest ratio (SOIR) has been on the rise over the last few months after hitting a historical low of 0.24 in mid-January. Despite the indicator's increase, these is ultimately very little put open interest on LEN shares, leaving the SOIR at an underwhelming 0.42. After Friday's addition of more than 3,000 April 60 puts, there are just over 4,000 contracts open at this strike. On the call side, meanwhile, there are more than 30,000 open contracts at the 55 strike, and 15,000 open calls at the 50 strike. The May options series is similarly dominated by call positions.

LEN is scheduled to visit the earnings confessional tomorrow morning. Reuters is expecting per-share results of $1.53, up from $1.17 per share banked in the year-ago period. The revenue estimate is calling for sales of $3.04 billion.

12:44 PM Encysive Pharmaceuticals Plunges on FDA Request for More Information

An internal e-mail was sent around on our trading floor last Thursday morning noting the unusual option activity on biotech firm Encysive Pharmaceuticals (NASDAQ:ENCY) . My colleague Rick Pendergraft pointed out that ENCY puts were being added at the out-of-the-money April 7.50 strike (IQE PU), and that it looked like buying. The put adds caused ENCY's Schaeffer's put/call open interest ratio (SOIR) to spike sharply higher. He also noted that this heavy put activity was interesting considering the stock has been consolidating around the nine level for the past two months. He finished by noting that being a pharmaceutical company, there is the potential for an explosive move in one direction or the other.

ENCY ended Friday down 3.9 percent to 9.08. But today it's down more than 47 percent to 4.78 after news that the FDA issued an approvable letter for its pulmonary arterial hypertension Thelin. However, the letter also contains concerns and observations that must be satisfied prior to achieving approval, including a request for additional clinical trial work. This will delay the launch of the drug and allow other competing drugs to gain ground in the rush to get to market.

1:16 PM More of the Same

More of the same today - very slow action as everyone is content on waiting until Bernanke's stance on interest rates is revealed tomorrow afternoon. Volume is light and internals are mixed. Add it up and I'd be very shocked if we saw much action before tomorrow at 2:15 pm. Nonetheless, two of our favorites are once again having good days - airlines and steel. The AMEX Airline Index (XAL) is up about a percent and technically looks like it is consolidating recent gains before its next move higher. Turning to steel, the SIG Steel Producers Index (STQ) is up over one percent and once again making a new all-time high. Leading the way higher for the group today is Steel Dynamics (NASDAQ:STLD) , which is up over five-percent after an upgrade this morning. To reinforce what I've been saying for a while now, these are two groups that technically look great and I see no reason to expect a top anytime soon.

1:31 PM Call Options Popular on GE

Call options on General Electric (NYSE:GE) are becoming increasingly popular despite the stock's sad performance recently. The shares have dropped more than three percent in the past six sessions, and are down nearly 10 percent from their 2005 peak. Nevertheless, there seems to be optimism among investors toward the equity. Friday's call volume was four times respective put volume, and today's call volume is running at more than six times put volume. The current Schaeffer put/call open interest ratio (SOIR) on GE of 0.69 is already below 91 percent of all readings over the past year. Given the high level of optimism amid such weak price action, I expect the stock to continue to struggle in the near-term.

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