Schaeffer's Midday Options Update Features Coca-Cola, Target, Circuit City, RealNetworks, and J.P. Morgan Chase.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Coca-Cola (NYSE:KO), Target (NYSE:TGT), Circuit City (NYSE:CC), RealNetworks (NASDAQ:RNWK), and J.P. Morgan Chase (NYSE:JPM). 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: Options Traders Love Chasing J.P. Morgan Calls

Earlier this morning, the Commerce Department announced that retail sales outpaced expectations and rose a seasonally adjusted 2.3 percent in January. The report noted that gasoline and automobile sales strengthened. Taking the three-percent gain in auto sales out of the picture, seasonally adjusted retail sales increased 2.2 percent, the strongest number since May 2004. A MarketWatch survey of economists pegged expectations at a gain of 0.9 percent, retail ex-auto sales were expected to come in at 0.8 percent. December's retail sales were revised to 0.4 percent from 0.7 percent, with retail sales left unchanged. This news coupled with a drop in crude spurred the Dow Jones Industrial Average to a triple-digit gain early this afternoon.

While driving home yesterday, I noticed that my local gas station's sign displayed something that I haven't seen in quite a while . . . a price featuring a one in the dollar position. The drop continues this morning as traders continue to shake off the latest news on Iran's nuclear research program in order to turn their focus on U.S. inventories. Michael Fitzpatrick from Fimat USA noted that the warm January "permitted a window of opportunity to stage an early refinery turnover," and that "gasoline has been quickly rebuilding stockpiles in advance of summer." March-dated crude dropped as low as $60.10 per barrel on the New York Mercantile Exchange, the lowest since the end of December. Remember, tomorrow brings us the weekly update on crude supplies from the Energy Department and the American Petroleum Institute.

Buffet Steps Down

Berkshire Hathaway (BRKA) Chairman and Chief Executive Warren Buffett decided not to run for reelection to the board of Coca-Cola (NYSE:KO). This move was echoed by J. Pedro Reinhard, who decided to take the same action. Buffett stated that he was making the move to focus on BRKA's acquisitions, which will maintain an equity stake in KO.

Blame It on the Snow

Target (NYSE:TGT) lowered the top end of its February same-store sales forecast this morning, causing the retailer to slump in early trading. TGT attributed its revised outlook for a drop off in customer traffic this past weekend thanks to the heavy snowstorm. According to a survey conducted by the International Council of Shopping Centers and UBS Securities, chain-store sales during the past week increased 3.3 percent compared to a year ago. Unfortunately, sales increased a meager 0.4 percent on a week-over-week basis, reflecting the effect of the blizzard.

Broker Boosts

A couple of companies found a bit of a boost from brokerages this morning. First, Circuit City Stores (NYSE:CC) was upgraded to "buy" from "hold" by Citigroup. The brokerage noted that CC will benefit from strong digital television and video-game sales in 2006 and a shift to selling products with higher margin technology.

Piper Jaffray also got in on the upgrade parade this morning. The brokerage upped its recommendation on RealNetworks (NASDAQ:RNWK) to "outperform" from "market perform." The brokerage citing the strong performance of RNWK's Rhapsody digital music download service, an "underappreciated" gaming portfolio, and solid cash reserves available for acquisitions and share buybacks as reasons for the upgrade. Piper Jaffray also notes that RNWK's valuation is attractive relative to its online media peer group.

Most-Active Options Update

At 2:00 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 11,030.5) is sporting a triple-digit gain of 138.1 points. The S&P 500 Index (SPX - 1,275.79) was more than one percent higher, and the Nasdaq Composite (COMP - 2,260.7) gained 0.92 percent. At 2:02 p.m. Eastern time, 2,907,247 calls have changed hands versus 2,227,277 puts, equaling a single-day put/call volume ratio of 0.78. The CBOE's equity put/call volume ratio weighed in at 0.78.

J.P. Morgan Chase

Yesterday, J.P. Morgan Chase (NYSE:JPM), the third-largest financial services firm in the U.S., announced that its J.P. Morgan Worldwide Securities Services unit purchased the middle and back office operations of Paloma Partners Management Company. The Greenwich-based Paloma Partners is part of a privately owned investment fund management group. The price tag on the purchase was not revealed. This news gave options players reason to show some love to the company's February 40 call (JPMBH).

Technically, the 40 level has acted as a rather significant level of resistance in the past. This region now has the chance to reverse that role. If the 40 level isn't enough support, JPM's 10-week moving average currently rests slightly below its current perch and appears ready to provide support. Should this trendline give, JPM's 20-week trendline rests slightly lower, and provided support on two occasions in January 2006.

The security also enjoys support from its powerful 80-month moving average. Since dropping below this trendline in September 2002, the security has managed to finish four months above this moving average. Two of these closes occurred in December 2005 and January, and it appears that February is relying on the trendline's support as well. Before I go running bullishly about the trading floor singing the virtues of JPM, I need to note the 41.20 level. Why? It is the 50-percent retracement level from JPM's March 2000 high and October 2002 near-term low. This level adds another hurdle for the shares to overcome. Of course, if this hurdle is cleared, there is little in the way of overhead options-related resistance to hold the shares in check. JPM's performance recently took a turn for the better, and it seems that options players took notice. The company's Schaeffer's put/call open interest ratio (SOIR) of 0.47 rates lower than 99 percent of those taken during the past 52 weeks. This low SOIR ranking indicates that optimism is running at extreme levels.

Analyst rankings may be able to provide a bit of a boost for JPM. According to Zacks, 10 of the 16 covering the banking company rate it a cautious "hold." Should this group join the six analysts rating the company a "buy" or better, the stock may receive a much-needed boost.

Click the following link to see a Monthly Chart of JPM Since January 2000 With 80-Month Moving Average: http://www.schaeffersresearch.com/wire?ID=15304 .

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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 .