Schaeffer's Midday Options Update Features Boeing, Albertson's, General Electric, AtheroGenics, and Yahoo!

CINCINNATI -- Today's Schaeffer's Midday Options Update features Boeing (NYSE:BA), Albertson's (NYSE:ABS), General Electric (NYSE:GE), AtheroGenics (NASDAQ:AGIX), and Yahoo! (NASDAQ:YHOO). 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: Trading Options on AtheroGenics

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U.S. durable goods orders climbed 4.4 percent to $223.03 billion, beating the estimated one-percent rise. Orders for commercial aircraft soared 133.8 percent but demand for motor vehicles and parts fell by 5.7 percent.

November new homes sales plunged 11.3 percent to a seasonally adjusted 1.245 million units from October's 1.404 million figure, originally reported as 1.42 million. Economists expected sales to fall to 1.31 million in November. Inventories of homes on the market rose 3.3 percent to a record 503,000, representing a 4.9-month supply at the November sales pace.

The final December Consumer Sentiment Index reading from the University of Michigan came in at 91.5 compared to the Street's forecast for an increase to 88.7.

Boeing Wins Orders

Singapore Air seems likely to select Boeing (NYSE:BA) over its European rival Airbus to supply upwards of $10 billion worth of new long-range passenger planes, according to people familiar with the airline's plans. Also, state-run carrier Air India plans to raise loans totaling $429 million to make advance payments for 22 BA aircraft expected to be delivered between November 2006 and May 2008. The 22 aircraft are just part of an order totaling 68 planes that Air India plans to buy from Boeing at an estimated cost of $8 billion.

No Sale at Albertson's

It appears that the $9.6 billion sale of supermarket chain Albertson's (NYSE:ABS) has been called off. The stock gapped down, just as it did yesterday. It started to recover during the morning, but still showed a loss of more than 11 percent this afternoon. Credit Suisse First Boston reiterated ABS at "neutral" and cut its target price to $20 from $25. Edward J. Kelly said Albertson's "appears to have a long road ahead of it as a going concern." CIBC lowered its target price on ABS to $22 from $26 and speculated that a sale of the company's drugstore business "is still possible, for something approaching $4 billion." J.P. Morgan downgraded ABS to "underweight" from "neutral," and CIBC World Markets shifted the stock to "sector performer" from "sector outperformer." BB&T Capital Markets downgraded ABS to "hold." Prudential Equity reiterated the stock at "underweight."

Microsoft Gives Up Control?

General Electric's (NYSE:GE) NBC Universal has acquired a controlling stake in the cable-TV channel MSNBC from Microsoft (MSFT). The Dow Jones Newswires reports that NBC has the option to take complete control within two years, although the terms of the deal were not disclosed. "Acquiring a controlling interest in MSNBC will allow us to fully integrate the channel into our news operations and our overall cable platform," said Steve Capus, president of NBC Universal's NBC News. "MSNBC is a critical component of NBC News' success and has made some key viewership gains in recent months."

Most Active Options Update

At 2:39 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10,886.8) has faded 0.02 percent. The S&P 500 Index (SPX - 1,268.44) has tacked on just 0.03 percent, and the Nasdaq Composite (COMP - 2,247.6) has added 0.05 percent. At 2:39 p.m. Eastern time, 1,539,654 calls have changed hands compared to 971,669 puts, equaling a single-day put/call volume ratio of 0.78. The CBOE's equity put/call volume ratio weighed in at 0.61.

AtheroGenics

Today, I'm going to talk about a pharma from Georgia called AtheroGenics (NASDAQ:AGIX), but let me revisit the Yahoo! (NASDAQ:YHOO) trading that I discussed yesterday. I'd noticed that 10,284 contracts of YHOO's February 37.5 put (YHQ NU) crossed the tape, and these seemed likely to make quite a difference to the open interest, which was just 573 contracts at the start of the day. I saw two large blocks, one for 4,338 contracts and the other for 5,511 contracts, and I said that it looked as if these contracts were bought to open. Sure enough, open interest this morning for the company's February 37.5 put was 10,247, changing the options configuration quite considerably and adding the potential for a decent layer of options-related support once February approaches.

Turning now to AGIX, I notice that 6,403 of the firm's January 20 call (AUB AD) crossed the tape this morning. The record is kind of hard to read. There were a bunch of blocks of 1,000 that crossed on the International Securities Exchange, the electronic options exchange. But there were a couple of 1,000-contract cancellations, too, as if some of the trades were entered incorrectly. Then at 11:34 a.m. Eastern time, 1,000 contracts that traded on the Chicago Board Options Exchange, marked as a "spread," although the type of the spread is not indicated, and I haven't yet tracked it down. The prices ranged from 1.95 to 2.30, skewed to the high end of this range, closer to the ask than the bid, so the chances are that the deals were initiated by the buyer.

Yesterday afternoon, we learned that AstraZeneca has entered into a licensing deal with AGIX for the global development and commercialization of its anti-inflammatory cardiovascular product candidate, AGI-1067. AGIX fared well yesterday, and it is gaining today as well, on high volume as it springboards from the support of its 10-day and 20-day moving averages.

Taking a slightly longer-term view, the stock has finally managed to work its way above 20.96, half the all-time high that it made in October last year. This is a 2005 high. At last check, it stood at 21.27 after closing yesterday at 19.74.

From Zacks I see that 11 analysts rate the stock, awarding:

--4 "strong buys"

--2 "buys"

--4 "holds"

--1 "sell"

--0 "strong sells"

This sentiment allows room for downgrades, but it's interesting to note that five brokerages, almost half of those that express a preference, have AGIX at a cautious "hold" or worse. On good news, there's room for upgrades.

What about the short sellers? About 10.5 million AGIX shares are currently sold short, and the number increased by more than 10 percent during November. Almost 29 percent of the stock's float is sold short, and it would take 18.4 days to buy back these bearish bets at the current average daily trading volume. That's nearly a month, and provides a great deal of fuel for a short-covering rally.

In the options pits, today's Schaeffer's put/call open interest ratio (SOIR) for AGIX is 0.42, indicating that calls are considerably more popular than puts in the January and February series. It is higher than 67 percent of all the SOIR readings taken during the past 52 weeks, so it is a neutral to mildly-pessimistic indicator.

AGIX sports a Schaeffer's Equity Scorecard rating of 6.0 out of a possible 10, a reading that makes it a close call. But scorecard readings are recalculated every day, and today's price action makes me eager to see what AGIX scores when the markets open again on Tuesday. That short interest could make for a dramatic rally one of these days.

Click on the following link to access a Weekly Chart of AGIX Since April 2002: http://www.schaeffersresearch.com/wire?ID=14866 .

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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 .