Schaeffer's Midday Options Update Features Alcoa, Walt Disney, Cisco Systems, Oracle and Maxim Pharmaceuticals.

CINCINNATI -- Today's Schaeffer's Midday Options Update Features Alcoa (NYSE:AA), Walt Disney (NYSE:DIS), Cisco Systems (NASDAQ:CSCO), Oracle (NASDAQ:ORCL), and Maxim Pharmaceuticals (NASDAQ:MAXM). The Midday Options Update 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 www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. 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=PROB1M&PAGE=1

Schaeffer's Midday Options Update for Friday: Sentimental Prescription for Maxim Pharmaceuticals

Activity on the major market indexes appears to be mirroring yesterday afternoon's trading. With a broad swath of economic and corporate data cutting through the Street, the Dow is continuing Thursday's retreat, while the S&P 500 Index is flat to higher, and the Nasdaq Composite is seeking to carryover yesterday's rally. On the economic front, a pair of positive reports appeared this morning. The Labor Department reported that the Producer Price Index (PPI) for August fell 0.1 percent, while the core index followed suit with a 0.1-percent decline. Economists were expecting moderate gains in both of these figures. For more on the PPI report, read, "A Tame Inflation Report."

Elsewhere, the Commerce Department announced that the U.S. trade deficit narrowed 8.9 percent to $50.1 billion in July, marking the sharpest decline in the deficit since December 2001. However, despite the decline, the trade gap still ranks as the second highest on record. With this in mind, the figure still came in better than the economist forecast of $52.2 billion. For more on the trade deficit, read, "Trade Deficit Narrows."

Moving into the corporate realm, Dow aluminum giant Alcoa (NYSE: AA) plunged more than seven percent after drastically lowering its third-quarter earnings expectations. AA now anticipates earnings of 30-35 cents per share for the quarter, far below the current Street estimate of 52 cents per share. On the news, the stock was smacked with a downgrade to "equal weight" from "overweight."

It was a sad day for some in the Magic Kingdom, as Walt Disney (NYSE: DIS) CEO Michael Eisner announced plans to retire when his contract expires in September 2006. The embattled CEO is coming off probably his worst year at DIS, with shareholders forcing out of the chairman position on the company's board and a hostile takeover bid from Comcast. DIS shares were last up 1.50 percent on the day. For more on the Eisner/DIS situation, read, "Disney's Eisner to Retire in 2006."

Merger and acquisition news took the Street by storm today, as Cisco Systems (NASDAQ: CSCO) announced its bid to acquire NetSolve (NTSL) in a deal worth nearly $128.4 million, sending NTSL shares soaring more than 23 percent higher. Meanwhile, Artesyn Technologies (ATSN) also added more than 20 percent after releasing a statement saying that its board will review an unsolicited all-stock acquisition deal from Bel Fuse (BELFA).

But probably the most shocking merger and acquisition news was the appellate court reversal in Oracle's (NASDAQ: ORCL) takeover bid for PeopleSoft (PSFT). The court stated that the Department of Justice failed to prove its antitrust case against the database software behemoth, freeing ORCL to pursue its hostile takeover bid for PSFT. For more on this story, read, "Oracle Wins Antitrust Case."

At 1:17 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10,260.1) is down 0.28 percent and the S&P 500 Index (SPX - 1119.05) is higher by 0.06 percent. The Nasdaq Composite (COMP - 1881.7) is up 0.64 percent. At 1:18 p.m. in the options pits, 1,463,112 calls and 876,026 puts traded for a composite put/call ratio across all five exchanges of 0.59. The CBOE put/call ratio for equity options weighed in at 0.65.

According to Yahoo! Finance, Maxim Pharmaceuticals (NASDAQ: MAXM) is a global bio-pharmaceutical company with a diverse pipeline of drug candidates for life-threatening cancers and chronic liver diseases. Pessimism has reigned supreme on the stock lately, with puts outpacing calls in the front three months of options. In fact, MAXM's Schaeffer's put/call open interest ratio (SOIR) comes in at 1.18. While there is no percentile rank for the SOIR, as options have not traded for a full year on the security, this ratio has nearly doubled over the past month, rising from its August 12 reading of 0.61. Furthermore, short interest increased by eight percent over the past month to a seven-year high. Not only does this enormous accumulation of bearish bets account for more than 27 percent of the stock's total float, but it would take more than 37 days to cover the 7.6 million MZXM shares sold short. If the equity were to reverse its current downward trend, this wealth of pessimistic positions would obviously provide ample fuel for a covering rally. Meanwhile, Wall Street has chosen to ignore this pharmaceutical concern, as Zacks reports that only two analysts currently follow the firm (one with a "buy" and the other with a "strong sell.")

Turning to the technicals, it would appear that MAXM has acquired its dour investor outlook honestly. Since setting a multi-year high of 10.59 in January, the stock has shed more than 41 percent. What's more, for the past several months, MAXM has been driven lower by its declining 10-day and 20-day moving averages. This weakness has even taken the shares below long-term support at their 20-month moving average, which the security has not closed a month below since April 2003. There is hope for MAXM, however, as long-term support lies just below the equity at the six level. Should the shares rebound off this seemingly last bastion of support, MAXM could see a sharp move higher as extreme levels of pessimism unwind in the form of heavy buying pressure.

Click the following link to see the Monthly Chart of MXIM since April 2003 with 20-Month Moving Average: http://www.schaeffersresearch.com/wire?ID=11081.

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About Schaeffer's Investment Research (www.SchaeffersResearch.com)

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.