Schaeffer's Midday Options Update Features BEAS Systems, J.C. Penney, Viacom, Boeing, and Krispy Kreme Doughnuts.

CINCINNATI -- Today's Schaeffer's Midday Options Update Features BEAS Systems (NASDAQ:BEAS), J.C. Penney (NYSE:JCP), Viacom (NYSE:VIA), Boeing (NYSE:BA), and Krispy Kreme Doughnuts (NYSE:KKD). 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 .Is

BEA Systems Still the BEAS Knees?

Traders might be stocking up on their Dramamine today, as the slew of mediocre economic reports combined with today's petroleum figures has the market cycling through a series of sharp ups and downs. Stocks began the day lower following the Commerce Department's report that January durable goods orders dropped by 0.9 percent due to a sharp decrease in civilian aircraft demand. Economists were calling for a flat report. Excluding the 5.3-percent plunge in transportation goods, new orders increased by 0.8 percent. Elsewhere, orders for core capital goods jumped by 2.9 percent in January after a 3.3-percent gain in December.

Adding to the economic data woe on the Street was a steeper-than-expected increase in the latest initial jobless claims. According to the Labor Department, initial jobless claims for the most recent week rose by 9,000 to 312,000, marking the first increase after three consecutive weeks of decline. However, the Street had forecast a more modest increase to 308,000. The four-week moving average fell by 3,250 to 308,750 - it's lowest level since November 2000.

See a Penney Pick it Up

A handful of big names slid into the earnings confessional today. Retailer J.C. Penney (NYSE:JCP) stepped up to record fourth-quarter net income of $333 million, or $1.17 per share, versus the prior year's loss of $1.07 billion, or $3.42 per share. Excluding discontinued operations, earnings from continuing operations jumped to $328 million, or $1.16 per share, flying past the Street's estimate by five cents per share. Sales for the quarter slipped from the previous year to $6.07 billion from $6.1 billion. Looking forward, JCP forecast first-quarter earnings of 48-53 cents a share, in line with the consensus estimate, while full-year guidance of $2.89 to $3.01 per share missed the Street's view of $3.10 per share.

Viacom Reports Charged Loss

Viacom (NYSE:VIA) wrote down an $18-billion non-cash charge in the fourth-quarter, pushing the company to a steep loss in the period. For the quarter, VIA logged a loss of $17.1 billion, or $10.21 per share, compared to last year's profit of 33 cents per share. Excluding charges, operating income rose to $1.3 billion, or 42 cents per share, besting the Street's guidance of 38 cents per share. Meanwhile, fourth-quarter revenue jumped six percent to $6.3 billion, riding the wave of double-digit increases in VIA's cable networks including MTV and Nickelodeon.

Order Up

Boeing (NYSE:BA) is attempting to lift blue chips today following the confirmation of a new order from Irish airline Ryanair. Ryanair confirmed that it has placed an order for 140 new BA 737-800 aircraft in a deal worth more than $4 billion. The firm stated that the aircraft are due for delivery between 2008 and 2012.

Where's the Kreme Filling?

Trouble is finding its way in to the batter for Krispy Kreme Doughnuts (NYSE:KKD) once again today. The company announced that it is the subject of yet another government investigation, as the U.S. Attorney's Office for the Southern District of New York will conduct interviews with some of KKD's current and former officers and employees. KKD stated that it thinks that the probes are related to the Securities and Exchange Commission's inquiry of the company's reporting of franchise repurchasing.

Most-Active Options Update

At 1:29 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10,671.2) is down 0.03 percent and the S&P 500 Index (SPX - 1,191.11) is higher by 0.02 percent. The Nasdaq Composite (COMP - 2,029.5) is down 0.09 percent. At 1:30 p.m. in the options pits, 1,839,686 calls and 1,275,177 puts traded for a composite put/call ratio across all six exchanges of 0.69. The CBOE put/call ratio for equity options weighed in at 0.91.

BEA Systems

According to Hoover's, BEA Systems (NASDAQ:BEAS) is a leading provider of application server software used by software developers to establish platforms upon which software applications run. Its products enable companies to create and deploy platforms that support functions such as transaction processing, billing, customer service, provisioning, and securities trading. The company also offers services such as training, maintenance, and support.

The options pits are a buzz with activity today ahead of BEAS's earnings report after the market close tonight. The Street is forecasting a profit of 10 cents per share for the firm, in line with last year's earnings for the same quarter. While the company's earnings performance hasn't been stellar during the past five quarters, BEAS's performance has been solid, meeting these estimates three times, while topping them by an average of 11 percent in the remaining two.

Turning back to the options pits, BEAS's March 7.50 put is apparently the speculative group's target ahead of tonight's report, as more than 10,700 of these bearishly oriented options have crossed the tape so far today. With open interest of a mere 4,345 contracts, much of today's activity could translate into new positions. However, it would take considerably more bearish activity from the group to make a drastic change in the stock's Schaeffer's put/call open interest ratio (SOIR). Currently, BEAS's SOIR rests in the bottom one percent of its annual range at 0.20, indicating that calls outnumber puts by a five-to-one ratio. Furthermore, many of these bullish contracts reside at the equity's 10 strike, as more than 65,000 call contracts lay in wait in the March, April, and June series. This hefty accumulation of call activity could provide a solid layer of options-related resistance for the security going forward.

On the short front, short sellers decreased their positions by 31 percent during January (February data is due out later this week). The resultant short-interest ratio is now a rather paltry 0.84 days to cover, indicating that BEAS is sorely lacking in support from any form of short-covering rally.

Only Wall Street is poised on the bearish pulse of BEAS. According to Zacks, 18 of the 24 covering analysts rate the shares a "hold" or worse. However, investors should take note that fully 17 of these analysts maintain "hold" ratings, leaving a lot of air beneath them for potential downgrades should BEAS fail to impress with tonight's earnings release.

Turing to the technical beat, BEAS has had some trouble of late. The stock is down more than 16 percent since hitting a near-term high of 9.86 in early December. Furthermore, the equity has broken below former support at its 10-week and 20-week moving averages, which are now poised for a bearish cross. However, the stock still maintains the support of its 10-month trendline, which is located in an area of long-term support defined by the eight level. While a solid report tonight could spark a nice bounce higher for the equity, a disappointing reaction to earnings and subsequent breach of support could send BEAS tumbling lower as the wealth of bullish investor sentiment unwinds in the form of added selling pressure.

Click on the following link to see the Monthly Chart of BEAS since January 2004 With 10-Month Moving Average: http://www.schaeffersresearch.com/wire?ID=12591&obspage=2 .

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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 .