Schaeffer's Midday Options Update Features CV Therapeutics, 3M, Adobe Systems, Eli Lilly, and Bank of America.

CINCINNATI -- Today's Schaeffer's Midday Options Update features CV Therapeutics (NASDAQ:CVTX), 3M (NYSE:MMM), Adobe Systems (NASDAQ:ADBE), Eli Lilly (NYSE:LLY), and Bank of America (NYSE:BAC). 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=PRMOU1M&PAGE=1.

Options Update: Options Players Finding CVTX Quite Therapeutic

As earnings season continues in earnest, equity markets are mixed this afternoon, as blue-chip names are striving to emerge from negative territory, while technology shares are hovering just above the breakeven mark. Near-term crude futures have mounted a recovery after notching an overnight low of $49.66 per barrel. In trading so far today, the May contract has stepped slightly higher to $52.20 a barrel.

Adobe Orders a Big Mac

In a move that seems like a fairly good synergy, Adobe Systems (NASDAQ:ADBE) , the maker of desktop publishing software PhotoShop and PageMaker, announced plans to acquire Macromedia (MACR), parent of such design software as Flash, Dreamweaver, and FreeHand. The stock deal, worth $3.4 billion, values MACR shares at a 25-percent premium over Friday's close. ADBE's CEO said his company is targeting a return to breakeven from the deal within one year after the acquisition closes. The companies also offered a pledge to grow forward together, launching new products and forging fresh developments. In midday activity, ADBE shares are lower by more than 10 percent, while MACR has rallied more than nine percent to achieve a new annual high.

They're Comin' to America

Bank of America (NYSE:BAC) posted a handsome 75-percent increase in its first-quarter net earnings. Excluding items related to merger and restructuring costs, the financial-services giant collected $1.12 per share, well ahead of Wall Street's consensus view of 97 cents. Revenue spiked up 47 percent to $14.02 billion. Contributing to BAC's prosperity this reporting period was its new acquisition, FleetBoston, as well as an increase in consumer checking-account activity. BAC is trading fractionally higher today but remains fettered by its overhead 40-week moving average.

Eli, Eli - Oh!

Pharmaceutical concern Eli Lilly (NYSE:LLY) visited the earnings confessional this morning. For the first quarter, LLY banked 68 cents per share, or $736.6 million. Wall Street analysts had expected earnings-per-share of 66 cents. Sales were higher by 3.6 percent during the period to $3.5 billion. Looking forward, LLY officials target second-quarter earnings of 65-68 cents per share, a shade below the consensus view of 69 cents but above year-ago results of 60 cents per share. LLY has gained more than one-and-a-half percent today. If the stock retains these gains, it will close at its highest point in 2005.

The Minnesota Twinge 

3M (NYSE:MMM) is responsible for nearly all of the Dow Jones Industrial Average's weakness today; the stock is lower by more than six percent, which translates into nearly 36 index points, while the index itself has dropped just 16 points on the day. Spurring the equity's notable retraction was the consumer-products firm's first-quarter earnings report. The company netted $809 million, or $1.03 per share, during the reporting period. This figure exceeded Wall Street's forecast by two pennies per share and topped year-ago results by 12 percent. Revenue, however, grew by just 4.6 percent to $5.17 billion, falling short of the 6.5-percent growth expected by analysts.

The Name of the Game

GameStop (GME) declared its intention to purchase Electronics Boutique (ELBO) for $1.44 billion in cash and stock. This values ELBO shares at 34 percent above its Friday close. The merger of the two retailers will create an empire boasting annual sales of $3.8 billion and 3,800 stores around the globe. GME officials say the deal will handily add to the firm's bottom line by the second half of 2006. GME shares have surged more than 13 percent today while ELBO has rocketed higher by more than 35 percent. Both securities have reached new 52-week highs today.

Most-Active Options Update

At 12:49 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10,067.7) is down 0.20 percent, while the S&P 500 Index (SPX - 1,144.62) has edged higher by 0.18 percent. The Nasdaq Composite (COMP - 1,912.7) is in the plus column by 0.23 percent. At 12:50 p.m., 2,312,090 calls and 1,764,499 puts had traded hands, equaling a composite put/call ratio across all six exchanges of 0.76. The CBOE put/call volume ratio for equity options weighed in at 0.78.

CV Therapeutics

CV Therapeutics (NASDAQ:CVTX) is getting some attention today after a study revealed that the firm's Ranexa drug achieved its stated goal of reducing weekly angina frequency. If all goes as planned with the U.S. Food and Drug Administration, CVTX hopes to have the treatment available in the first half of 2006. First Albany was especially encouraged by this news, boosting the stock to a "strong buy" from a "buy." The shares spiked up more than 12 percent on heavy volume after the opening bell today but have steadily pared down this gain. Shortly after 12:30 p.m. Eastern time, the stock was higher by just over two percent.

Since November, CVTX shares have been traipsing sideways between the 19.50 and 24 levels. Throughout this consolidation, the stock has remained above its 10-month and 20-month moving averages, which themselves recently completed a bullish crossover. In the shorter term, the stock is attempting to fight its way back above its 20-week moving average, which recently made a bearish cross above the stock's 10-week trendline.

Sentiment indicators on the security are notably mixed. Schaeffer's put/call open interest ratio (SOIR) for CVTX experienced a post-options-expiration drop from 0.40 (in the 26th annual percentile) on Friday to its current reading of 0.26, a new annual low. In the front three-months' series, there are about 122,600 open call positions compared to just under 32,000 open puts.

Short interest on CVTX had been in decline mode since August, but this trend reversed course last month, as the number of shorted CVTX shares grew by more than 10 percent to 6.5 billion. This constitutes more than 18 percent of the equity's float. What's more, the short-interest ratio of 8.6 days to cover implies that, should short-covering activity commence, it would require nearly two week's worth of trading to unload all of these bearish bets.

Wall Street is aligned with the speculative crowd, as they are fairly complacent toward the stock. The latest Zacks readings reveal five "buy" or "strong buy" ratings, just one "hold," and a pair of outright "sell" designations.

Click on the following link to see the Weekly Chart of CVTX since July 2004 with 10-Week and 20-Week Moving Averages: http://www.schaeffersresearch.com/wire?ID=12972.

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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.