Schaeffer's Midday Options Update Features Apple Computer, Wal-Mart Stores, Rambus, and H.J. Heinz.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Apple Computer (NASDAQ:AAPL), Wal-Mart Stores (NYSE:WMT), Rambus (NASDAQ:RMBS), and H. J. Heinz (NYSE:HNZ). 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

Options Update: Economic Data Deluge; Options Trading on Apple Computer (AAPL)

The markets have been flooded with economic data today and will probably spend the rest of the session combing through the numbers and the further meaning, if any, behind the reports. The major averages are hoping to kick off the month of June in the black; they have been advancing slowly but surely since the opening bell sounded. Without further ado, let's hit the most-important indicators:

--Weekly initial jobless claims rose by 7,000 to 336,000 during the week of May 27. Excluding one week when a government shutdown in Puerto Rico boosted claims, that's the largest number of new claims since the week of October 15. The four-week average of new claims rose by 2,750 to 333,500. The number of people collecting unemployment benefits rose by 19,000 to 2.43 million in the week ending May 20, while the four-week average of continuing claims fell by 2,000 to 2.40 million.

--Productivity in the U.S. nonfarm business sector rose at an annual rate of 3.7 percent in the first quarter, stronger than the 3.2-percent gain reported previously. Unit labor costs were revised lower to a 1.6-percent annualized gain from 2.5 percent reported earlier. This reading is a key gauge of inflationary pressures stemming from wages. Economists had expected productivity to be revised higher to roughly four percent. However, unit labor costs came in lower than the 1.8 percent expected by the Street. Unit labor costs were revised for the fourth quarter to a decline of 0.6 percent, rather than rising by three percent.

--U.S. construction outlays fell 0.1 percent in April, dragged lower by a 1.1-percent decline in spending on home construction. Analysts had expected a 0.2-percent increase in construction spending for the month.

--The National Association of Realtors announced that pending home sales fell in April for the third straight month. The pending home sales index dropped 3.7 percent in April and is down 12.8 percent from its peak in August.

Details on Retails

Same-store sales numbers for May hit the newswires this first day of June. Among the larger names, Wal-Mart Stores (NYSE:WMT) posted a 2.3-percent rise in same-store sales, J.C. Penney (JCP) saw sales increase 11 percent, Gap (GPS) suffered a wider-than-expected drop of six percent in its same-store sales, and Target (TGT) said same-store sales rose by 5.7 percent for the month. Overall, the Thomson Financial same-store sales index of 68 retailers rose 4.4 percent last month, topping analysts' expected rise of 3.8 percent and blowing past the 2.8-percent increase posted in May 2005. Officials with retail chains and analysts admit that fuel prices continue to weigh on the American consumer, and that store visits may be fewer and far between as a result. In midday activity, the Retail HOLDRS Trust exchange-traded fund is up half a percent.

Playing Catch-Up

H.J. Heinz (NYSE:HNZ) announced this morning that its fourth-quarter net income slid roughly 19 percent lower to $160.9 million, or 50 cents per share, down from $206.5 million, or 59 cents, in the previous year. Restructuring expenses and a write-down of its business in Zimbabwe were credited for this pullback. Sales, meanwhile, edged higher to $2.4 billion. Analysts were expecting per-share results of 49 cents on $2.36 billion in sales. Looking ahead to fiscal 2007, HNZ officials expect earnings of $2.35 per share. In other fundamental news, the food company said it will reduce its work force by eight percent and boost its annual dividend payout to $1.40 per share from $1.20 per share. Additionally, HNZ has planned $1 billion in stock buybacks during the next two years. HNZ shares have registered a new annual high today and are currently trading half a percent higher.

The Wheels on the Rambus Go Round and Round

Rambus (NASDAQ:RMBS) has shot about 17 percent higher today after a report in this morning's Wall Street Journal revealed that competitors in the semiconductor market may have engaged in a price-fixing conspiracy to keep chip prices elevated. Emails from Micron Technology and Hynix Semiconductor are being used as initial evidence to support this claim.

Most-Active Options Update

At 2:57 p.m. Eastern Time, the Dow Jones Industrial Average (DJIA - 11,228.5) is higher by half a percent, or nearly 60 points. The S&P 500 Index (SPX - 1,280.50) is up 0.82 percent, and the Nasdaq Composite (COMP - 2,204.9) is up 1.20 percent. At 2:58 p.m. Eastern Time, 2,861,624 calls have changed hands compared to 1,899,289, equaling a single-day put/call volume ratio of 0.66. The CBOE's equity put/call volume ratio weighed in at 0.67 as well.

Apple Computer

Without the benefit of any discernable items on the news wires, Apple Computer (NASDAQ:AAPL) shares had shot up more than four percent by the time we grabbed our numbers for this report. The home of digital music innovation and hipster-friendly advertising may simply be benefiting from technical support today. Yesterday, AAPL came within striking distance of the 57-58 area, which marked a short-term low for the stock in late March. The equity is now contending with overhead resistance in the form of its 10-day moving average, which has spent the past few weeks barreling down on the shares.

The stock also appears to have had a favorable reaction to its 50-week moving average, which currently resides near the 60 mark. Coincidentally, the 60 strike is home to peak put open interest in the June series (nearly 25,000 open put contracts), and may offer structural put support.

Speaking of put support, options players are active today on AAPL's June 57.50 put (QAARY), as nearly 6,000 contracts have crossed the tape, making this one of our most-active put contracts. Heading into today's session, there were just 5,625 open puts at this front-month, out-of-the-money strike. Blocks of varying size, small and large, have changed hands throughout the trading day, suggesting individual speculators rather than institutions. A look at changes in implied volatilities can help determine tomorrow whether these were initiated by sellers or buyers.

On the sentiment front, it looks as though AAPL has a long road ahead of it, judging initially from its Schaeffer's Equity Scorecard rating of 3.0, which points to further downside ahead. Short interest recoiled nearly 14 percent last month, leaving a paltry short-interest ratio of 0.65, which doesn't inspire confidence in a short-covering rally. Analysts are aboard the bullish bandwagon, awarding nine "buys" or better, six "holds," and nary a "sell" rating to be found. Finally, the options-trading contingent is leaning toward the bullish end of the spectrum; Schaeffer's put/call open interest ratio (SOIR) for AAPL stands at 0.89, lower than 62 percent of the past year's data. Should the stock continue to benefit from technical and options-related support, we could have more confidence in this venerable tech name. But the sentiment indicators, at this point, seem to suggest that there is little sideline money available to fuel a reliable uptrend.

Click here to see a Daily Chart of AAPL Since December 2005 With 10-Day Moving Average and a Weekly Chart of AAPL Since May 2005 With 50-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=16132

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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.