Schaeffer's Midday Options Update Features American Tower and JetBlue Airways.

CINCINNATI -- Today's Schaeffer's Midday Options Update features American Tower (NYSE:AMT) and JetBlue Airways (NASDAQ:JBLU). 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.

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A strong start to the session has turned mixed as we glide through afternoon trading. The Nasdaq Composite (COMP) charged out of the gate to peg yet another multi-year high, but now it and its index peers are hovering near the break-even zone. A mixed bag of earnings reports from the retailing sector is affecting the market, along with a modest recovery in crude futures.

Market watchers have a fair amount of economic data to sift through this morning, including a record-matching drop in October's Producer Price Index (PPI) and a narrower-than-expected pullback in retail sales. Additionally, business inventories rose 0.4 percent in September as sales pulled back two percent.

Most-Active Options Update

At 2:15 p.m. Eastern Time, the Dow Jones Industrial Average (DJIA - 12,140.3) has added 0.07 percent, while the S&P 500 Index (SPX - 1,385.10) has edged up 0.05 percent. The Nasdaq Composite (COMP - 2,408.5) is up 0.09 percent after reaching a new high. At 2:16 p.m. Eastern Time, 3,413,065 calls have changed hands compared to 2,174,459 puts, equaling a single-day put/call volume ratio of 0.63. The CBOE's equity put/call volume ratio stands at 0.61, while the ISE's ratio weighs in at 0.71.

Option Activity Follow-Up

Yesterday's "Options Update" featured a look at JetBlue Airways (NASDAQ:JBLU), which was seeing unusual trading on its March 2007 15 put. This option, which is roughly four months from expiration and nearly 10 percent in the money, ultimately saw its open interest grow by more than 10,600 puts. There are now more than 36,000 open contracts at this strike, easily making it the site of overall heaviest open interest across all call and put strikes. In second place is the January 2007 12.50 put, where about 29,000 contracts reside.

The bulk of yesterday's volume consisted of a block of 10,500 contracts that traded off the ask price of $2.10 per contract. Worth around $2.2 million, these were likely initiated by the buyers. Implied volatility on the option spiked up today to 278.7 percent from 222.3 percent yesterday. These options are richly priced, to say the least; one-month historical volatility on JBLU options stands at 37.4 percent. Three-month historical volatility weighs in at 34.3 percent.

By the end of Monday's trading, JBLU had rallied nearly five percent, perpetuating its uptrend. The stock is modestly lower today.

American Tower

The stock highlighted in today's "Options Update" is American Tower (NYSE:AMT), which operates more than 22,000 broadcast and communications towers in the U.S., Mexico, and Brazil. Last week, the company reported a 26-percent jump in third-quarter revenue.

Looking at today's options tables, the action on AMT is two-fold. More than 10,000 contracts have traded on both the January 40 call (AMT AH) and the January 32.50 put (AMT MT). Heading into today, these positions were respectively home to about 50,000 calls and 32,350 puts. Given the robust volume already on these options, it is difficult to determine if today's action is additions or liquidations. One thing we can assume is that the volume on these options is related; at 10:15 a.m., a block of 10,000 contracts went off at the bid price on the put position. At the same time, two blocks of 5,000 contracts traded between the bid and the ask at the 40 strike. It is possible that a spread has been executed by buying the call positions and selling the out-of-the-money puts.

Technically speaking, AMT looks ripe for a bounce. The stock is currently consolidating toward its 20-week moving average, which has provided sporadic support during the past 18 months. This trendline has risen into the 36 area, which marked a peak for the shares in early May and could now reverse roles to serve as support.

The shares are in the midst of a monster uptrend, having been in long-term rally mode since the final quarter of 2002. During this time span, the shares have literally increased in value 63-fold, moving from penny-stock status into the 38 region.

Despite this impressive uptrend, AMT is propped against a fairly steady backdrop of skepticism, which bodes well from our contrarian perspective. Options players are gathered in the bearish camp, as suggested by the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.26, which is four percentage points shy of a new annual peak.

Equity investors are also showing their bearish teeth; the short-interest ratio on AMT currently weighs in at 10.6 days to cover and short interest is six percent of the company's available float. A continuation of the equity's uptrend could force the hand of these short sellers, sending them out of their positions and generating some buying pressure.

The one contingent willing to tune in to AMT is Wall Street. Zacks (www.Zacks.com) reports that there are six "strong buy" ratings on AMT along with one regular "buy" and a single "hold." While this raises the risk of a downgrade on valuation or other concerns, there is also the possibility of additional broker coverage, which would call some positive attention to the shares. If today's options players are in fact selling an out-of-the-money put while buying a more aggressive out-of-the-money call, they could have a profitable idea. An isolated out-of-the-money put sell could also be a winning conservative bet.

Click here to see the following charts: Weekly Chart of AMT Since May 2005 With 20-week moving average, Monthly Chart of AMT Since September 2002 With 10-month and 20-month moving averages: http://www.schaeffersresearch.com/wire?ID=17737 .

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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 .