Schaeffer's Midday Options Update Features Corning.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Corning (NYSE: GLW). 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.

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Options Update: Corning Where?

As we head into the final two hours of trading, the major market indices are hovering close to the break-even mark. Meanwhile, the fed funds futures market now believes it is more likely that the Federal Reserve will stand pat through the first quarter of 2007, rather than cut interest rates, following the release of this week's initial jobless claims. April fed fund futures last implied a 48-percent chance that the Fed would lower its target for overnight rates to five percent from 5.25 percent by the end of March. The odds have declined from 56 percent late Wednesday and a high of 76 percent on Friday.

Most-Active Options Update

At 2:20 p.m. Eastern Time, the Dow Jones Industrial Average (DJIA - 12,297.4) has slipped 12.4 points, while the S&P 500 Index (SPX - 1,410.97) has dropped 1.93 points. The Nasdaq Composite (COMP - 2,439.8) has given up 6.1 points. At 2:21 p.m. Eastern Time, 3,216,427 calls have changed hands compared to 2,260,548 puts, equaling a single-day put/call volume ratio of 0.70. The CBOE's equity put/call volume ratio stands at 0.66, while the ISE's ratio weighs in at 0.73.

Corning

While the company is still widely famous throughout the United States for its green and blue flowered place settings, Hoover's states that Corning (NYSE:GLW) is now the world's top maker of fiber-optic cable, placing it as a leading provider of optical fiber, cable products, and communications network equipment. Today, CFO James Flaws is expected to reiterate the company's outlook for the fourth quarter in a Lehman Brothers conference in San Francisco.

"We remain confident in the company's fourth-quarter guidance as outlined in our third-quarter earnings announcement on Oct. 24." That's the statement that GLW says that Flaws will deliver later this afternoon. Currently, the firm is expecting earnings of 26 to 29 cents per share on sales of between $1.28 billion and $1.33 billion.

Apparently, expectations have risen on the Street since GLW first issued the aforementioned guidance, as the shares were last down about four percent on the session. The tale is a bit different in the options pits, however, as the stock's December 22.50 call is seeing quite a bit of attention today. So far, more than 13,500 contracts have changed hands at this front-month strike, with open interest numbering about 39,812 contracts. Early volume on this option was weighted toward the ask price of 15 cents per option, or $15 per contract. This activity has, so far, constituted the bulk of today's trading volume for GLW's December 22.50 strike, indicating a bullish slant from the options community.

This sentiment has been echoed during the past several trading sessions for GLW, as the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.52 not only indicates that calls nearly double puts in the front three months, but it also ranks below 75 percent of those taken during the past year.

Other sentiment indicators are also bullishly aligned, as short interest represents less than one percent of the stock's total float available for trading. Meanwhile, Zacks reports that five of the eight analysts covering the shares rate them a "buy" or better, with nary a "sell" to be found. Normally, this heavy degree of optimism is a bad sign from a contrarian perspective. Let's check out the technical picture to see if this holds true.

Looking at a weekly chart, you can see that it's been a rollercoaster ride for GLW since the stock topped out at 29.61 in mid-April. During this time frame, the equity's 10-week and 20-week moving averages have proven quite troublesome. In fact, this intermediate-term due is on a crash course for a bearish cross, which could portend additional losses for the stock. GLW has found a modicum of support at the 21 level.

On a monthly chart, we begin to see why GLW has garnered its rather bullish following on the Street. However, the shares are poised to close the month below their 20-month trendline for the third time since March 2005. Continued tests and breaches of this support level could weaken its staying power. What's more, GLW's 10-month moving average has recently turned lower. A continuation of this trend would not bode well for the shares from a technical perspective.

While I am impressed with GLW's technical performance from a long-term perspective, I am more inclined to label the stock as a rollover candidate at this point given its heavy burden of bullish sentiment. If the stock finds continued resistance at its 20-month moving average, and/or breaks support in the 21-20 region, a bearish play on the security may be in order. Otherwise, look for the equity to meander sideways between support at 20-21 and resistance at 25 until a company report or overall market activity ultimately forces the shares to pick a direction.

As always, thank you very much for reading and good luck with your trading!

Click here to see a Monthly chart of GLW since October 2002 with 10-month and 20-month moving averages, Weekly chart of GLW since April 2006 with 10-week and 20-week moving averages: http://www.schaeffersresearch.com/wire?ID=17839.

The best way to take advantage of the timely Schaeffer commentaries is to sign up to receive their free e-newsletters -- Opening View, Market Recap and Monday Morning Outlook. Click here to have the Schaeffer's commentaries delivered to you free via email every day and get entered to win an iPod Nano. http://www.schaeffersresearch.com/redirect.aspx?CODE=PRMOU13M&PAGE=1.

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.