Schaeffer's Midday Options Update Features Altria Group, General Motors, Alliance Data Systems, Hershey, and PetroChina.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Altria Group (NYSE:MO), General Motors (NYSE:GM), Alliance Data Systems (NYSE:ADS), Hershey (NYSE:HSY), and PetroChina (NYSE:PTR). 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=PRMOU12M&PAGE=1 .

E[acute accent]Options Update: An Option Strategy for PetroChina

E[acute accent]The market continued to advance this morning, with the Dow Jones Industrial Average rising to its highest level since September 2000, and the other major indices hitting multi-year highs. Nevertheless, the advance/decline ratio on the NYSE was a lowly 0.78 at last check, and on the Nasdaq it stood at just 0.67. Remember that the DJIA comprises only 30 stocks, and General Motors (GM) is up more than nine percent as I write. Merck (MRK) is also helping the index higher, but widespread profit-taking is dragging the market down. Meanwhile, the S&P 500 Index (SPX) is up 0.11 percent this afternoon and the Nasdaq Composite (COMP) is down 0.43 percent.

E[acute accent]Altria Group Net Income Jumps 34 Percent

E[acute accent]Altria Group (NYSE:MO) reported first-quarter results this morning before the bell, revealing a 34-percent surge in net income to $3.48 billion, or $1.65 per share. Analysts had expected earnings of $1.28. Revenue increased by 3.1 percent to $24.36 billion.

E[acute accent]General Motors Reveals Better Figures

E[acute accent]General Motors (NYSE:GM) reported a preliminary first-quarter loss of $323 million, or 57 cents per share, compared to a $1.3 billion loss a year ago. The Dow Jones Newswires reported that the automaker took a charge of $681 million, or $1.20 per share, for a healthcare settlement for its retired workers. Revenue showed a 14-percent gain to $52.24 billion.

E[acute accent]Data from Alliance

E[acute accent]Alliance Data Systems (NYSE:ADS) was the leading stock on the New York Stock Exchange this morning, up 14.25 percent at last check. After the bell yesterday, the company boosted its 2006 outlook to $2.60 per share on revenue of $1.78 billion. The previous view was for $2.36 per share on revenue of $1.68 billion. The Wall Street consensus estimate was for earnings of $2.45 per share on revenue of $1.75 billion. I noticed three reiterations from brokerages this morning. CIBC World Markets reiterated ADS at a "sector outperform," JMP Securities keeps it at a "strong buy," and Stifel Nicolaus has it at "buy."

E[acute accent]Not so Sweet

E[acute accent]Hershey (NYSE:HSY) reported first-quarter earnings of $121 million, or 50 cents per share, which is up seven percent, but missing the analyst estimate by a penny. Sales were $1.13 billion. Hershey says an expansion of its dark chocolate, cookies and nuts businesses should help boost results this year. At last check, the shares were down three percent.

E[acute accent]Most-Active Options Update

E[acute accent]At 2:28 p.m. Eastern time, the Dow Jones Industrial Average (DJIA - 11,354.4) is up 0.67 percent. The S&P 500 Index (SPX - 1,312.14) has added 0.17 percent, and the Nasdaq Composite (COMP - 2,361.9) has fallen 0.38 percent. At 2:19 p.m. Eastern time, 5,111,056 calls have changed hands compared to 3,155,898, equaling a single-day put/call volume ratio of 0.61. The CBOE's equity put/call volume ratio weighed in at 0.70.

E[acute accent]PetroChina

E[acute accent]Today, I'm going to look at another stock that's in a clear trend. PetroChina (NYSE:PTR) hit an all-time high this morning and it appears twice on our list of most-active call options. The stock's June 95 call (PTR FS) began the day with open interest of 4,470 contracts, but a whopping 51,180 contracts had crossed the tape this morning by the time we grabbed our figures. Also, the June 100 call (PTR FT), which began the day with 3,294 contracts of open interest, saw 39,248 contracts change hands. The stock is trading at $120, so these calls are deep in the money. E[acute accent]Looking at the PTR FS, I notice that three large blocks crossed the tape on the Pacific Stock Exchange between 11:49 a.m. and 11:55 a.m. Eastern time. Each was for 17,049 contracts and the price was midway between the bid and the ask, so we cannot determine whether these were initiated by buyers or sellers. Big-block trading resumed at 1:48 p.m., with a couple of 10,000 contract trades on the Philadelphia Stock Exchange and two blocks of 13,501 contracts on the Pacific. Meanwhile, the PTR FT contracts saw three blocks of 13,059 contracts trade on the Pacific shortly before noon. E[acute accent]So what's happening here? PTR goes ex-dividend tomorrow, so these might be dividend capture plays. These are very substantial blocks to trade, and remember that one options contract is equivalent to 100 shares of the underlying equity, so 50,000 options have the same market-moving impetus as 5,000,000 shares. E[acute accent]PTR is based in Beijing, but it trades as an American Depositary Receipt in New York. According to Hoover's, the company is a subsidiary of state-owned China National Petroleum Corporation (CNPC). It produces two-thirds of China's oil and gas and has proved reserves of 11 billion barrels of oil and 32.5 trillion cubic feet of natural gas. E[acute accent]The stock has been in an uptrend since the start of 2003, gaining more than 528 percent since January 2003. The 10-month moving average has been supportive, but the stock has risen so convincingly, the 20-month is left far behind. The 10-week and 10-day trendlines also offer intermediate and short-term support.

E[acute accent]Quick Facts on PTR:

E[acute accent]-- Percent of analysts tracked by Zacks who rate the stock with a "buy" or better: 25%

E[acute accent]-- Number of analysts tracked by Zacks: 4

E[acute accent]-- Short interest as a percent of float: 0.90 %

E[acute accent]-- Short-interest ratio: 3.53

E[acute accent]-- Schaeffer's put/call open interest ratio (SOIR): 0.87

E[acute accent]-- SOIR percent rank: 49%

E[acute accent]-- Overall Schaeffer's Equity Scorecard rating: 7.0

E[acute accent]There is little in the picture to make contrarians enthusiastic about PTR. We'd like to see some negativity to suggest that there's money waiting on the sidelines, which could move in and propel the stock still higher. Alas, the short-interest configuration shows that short selling is minor. The Schaeffer's put/call open interest ratio (SOIR) for the stock is in the 49th percentile, a very neutral reading. E[acute accent]According to Zacks, only four brokerages rate the stock, and only one of those has it at a "buy," so there is a great deal of room for fresh coverage, which might help. E[acute accent]The stock has a lot of upward momentum, and it earns a Schaeffer's Equity Scorecard reading of 7.0, indicating that the upside still beckons. The stock does not receive much scrutiny, but today's enthusiastic options trading will probably put it on a lot of Wall Street screens this afternoon. And for that reason, I think it's one to watch. China is a booming market, and oil is hitting record highs, so this stock might just catch the public imagination. E[acute accent]I'm going to paper trade a May 120 call (PTR ED) today, and see where it goes. I don't have a feel for this stock, and I've never traded it before, so this is a learning exercise, not a recommendation, I hasten to add. E[acute accent]As always, keep in mind that playing options is far from an exact science, and that any positions could garner losses. However, with the leverage of options on your side, you stand to make more than your potential losses. Just remember to use sound judgment when entering any trade, set your stop-loss where you feel most comfortable, and never invest more than you can afford to lose. Until next time, good luck trading!

E[acute accent]Monthly chart of PTR since January 2003 with 10-month and 20-month moving averages: http://www.schaeffersresearch.com/wire?ID=15836 .

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E[acute accent]About Schaeffer's Investment Research (www.SchaeffersResearch.com)

E[acute accent]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 .