Schaeffer's Midday Options Update Features FedEx, Level 3 Communications, Marvel Entertainment, SanDisk, and Motorola.CINCINNATI -- Today's Schaeffer's Midday Options Update features FedEx (NYSE NYSE See: New York Stock Exchange :FDX See full-duplex. fdx - full-duplex ), Level 3 Communications
Level 3 Communications NASDAQ: LVLT is a communications and information services company headquartered in Broomfield, Colorado, USA. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :LVLT LVLT Level 3 Communications, Inc. (stock abbreviation, AMEX) ), Marvel Entertainment Marvel Entertainment, Inc. (NYSE: MVL) is an American entertainment company. The company traces its origins to the May 1933 publication of Western Supernovel Magazine. (NYSE:MVL MVL Multiple-Valued Logic MVL Multiple Virtual Line MVL Montavista Linux MVL Moshannon Valley League (Pennsylvania high school baseball) MVL Mercury Vapor Light MVL Minimum Vector Length MVL Musikverein Lustenau ), SanDisk (NASDAQ:SNDK), and Motorola (NYSE:MOT). 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: Checking Back in on Motorola (MOT) It hasn't been the best of mornings for the market, as the price of oil advances and the dollar continues to demonstrate weakness. The U.S. dollar dropped to a 13-month low against the euro ahead of a European Central Bank European Central Bank (ECB) Bank created to monitor the monetary policy of the countries that have converted to the Euro from their local currencies. The original 11 countries are: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, (ECB See electronic code book. ) decision on interest rates. A hike of 0.25 percentage points from the ECB (to 2.75 percent) is widely expected. The dollar also continues to struggle thanks to Friday's weak U.S. employment report. More importantly, the per-barrel price of crude has increased more than 80 cents after Iran threatened to stop oil shipments if provoked. Over the weekend, Iran's Ayatollah Ali Khamenei warned that the fourth-largest oil exporter would halt shipments if the U.S. takes actions. Khamenei told the BBC BBC in full British Broadcasting Corp. Publicly financed broadcasting system in Britain. A private company at its founding in 1922, it was replaced by a public corporation under royal charter in 1927. that "If you make a wrong move regarding Iran, definitely the energy flow in this region will be seriously endangered." These comments come mere days after the permanent members of the U.N. Security Council and Germany agreed on a package of incentives to offer Iran in an attempt to persuade the country to stop its nuclear research. Iran continues to insist that it's trying to create a civilian energy program. While the incentive package is part of an effort to solve the dispute between Iran and the West with diplomacy, this weekend's comments suggest that Iran has not ruled out the possibility of the U.S. leading a military action. Condoleezza Rice responded on U.S. television by cautioning not to place "too much emphasis" on Iran's threats. Making a Federal Case of it FedEx (NYSE:FDX) has slipped a bit this afternoon, after it was hit with $61 million in penalties on Friday. The fine stems from a decision in a racial-harassment lawsuit filed by two drivers of Lebanese descent. The two claimed they were repeatedly subjected to racial slurs by a FDX manager and sued the company for failing to enforce its anti-discrimination policies. A court awarded the two men $50 million in compensatory damages A sum of money awarded in a civil action by a court to indemnify a person for the particular loss, detriment, or injury suffered as a result of the unlawful conduct of another. plus $11 million in punitive damages Monetary compensation awarded to an injured party that goes beyond that which is necessary to compensate the individual for losses and that is intended to punish the wrongdoer. . FDX stated that it will appeal the decision. Through the Looking Glass Looking Glass - A desktop manager for Unix from Visix. Earlier, Level 3 Communications (NASDAQ:LVLT) announced that it will buy Looking Glass Networks Looking Glass Networks, Inc. is an U.S. telecommunications company headquartered in Oak Brook, Illinois. The company provides rapid delivery of data transport services including SONET/SDH, Wavelength and Ethernet as well as IP connectivity, dark fiber and carrier-neutral colocation. . LVLT will pay $87 million of stock and $9 million in cash for the provider of metropolitan data-transport services. LVLT will also pay $69 million of Looking Glass's liabilities, mainly senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. . Marvel-ous News Earlier today, Marvel Entertainment (NYSE:MVL) announced that its board authorized the company to buy back an additional $100 million of common stock. The comic company also announced that it completed a previous $100 million buyback. MVL is more than one percent higher on the news this afternoon. San-ding Tall SanDisk (NASDAQ:SNDK) is more than three percent higher this afternoon after Bear Stearns upped the company to "outperform" from "peer perform." The brokerage noted that the near-term oversupply o·ver·sup·ply n. pl. o·ver·sup·plies A supply in excess of what is appropriate or required. tr.v. o·ver·sup·plied, o·ver·sup·ply·ing, o·ver·sup·plies concern for the company is now "largely behind it." Bear Stearns also noted that "with a moderation in price declines expected in the second half of 2006, we forecast SanDisk to show significant earnings growth versus the first half of 2006." Most-Active Options Update At 2:09 p.m. Eastern Time, the Dow Jones Industrial Average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. (DJIA DJIA See Dow Jones Industrial Averager (DJIA). - 11,135.0) logs a triple-digit fall, losing 1.00 percent. The S&P 500 Index (SPX (Sequenced Packet EXchange) The transport layer protocol in the NetWare operating system. Similar to the TCP layer in TCP/IP, it ensures that the entire message arrives intact. SPX uses NetWare's IPX as its delivery mechanism. - 1,277.11) has slid 0.86 percent lower, and the Nasdaq Composite (COMP - 2,190.1) is down by 1.32 percent. At 2:11 p.m. Eastern Time, 2,141,445 calls have changed hands compared to 1,762,862, equaling a single-day put/call volume ratio of 0.82. The CBOE's equity put/call volume ratio was slanted toward the put side, weighing in at 0.87. Motorola This morning, Motorola (NYSE:MOT) announced that it plans to invest $60 million over the next two years in order to make Singapore the center of the company's global supply chain management. MOT also stated that it will employ another 200 people in Singapore by the end of 2007. MOT already bases several of its supply chain management functions in Singapore. Today, the world's largest mobile phone maker (by shipments) showed up on our notably active call activity list this afternoon. This occurrence gives me an opportunity to revisit MOT, as I looked at the company on May 10. Before turning to a technical breakdown of the phone firm, let me note that today's action at the June 22.50 call (MOT FX) has further entrenched en·trench also in·trench v. en·trenched, en·trench·ing, en·trench·es v.tr. 1. To provide with a trench, especially for the purpose of fortifying or defending. 2. this strike as the site of peak call open interest in the June and July options series. Frequent visitors to our site know that peak call open interest can often provide a layer of options-related resistance. Back in May, MOT sported a Schaeffer's Equity Scorecard rating of 4.0 out of a possible 10. This score was the result of stagnant technical performance and lukewarm sentiment. At that time, the 22.50 strike was the site of peak put open interest, which had provided options-related support. Well, the 22.50 strike continues to be the site of peak put open interest, but its support means little, as MOT is currently trading at 21.42. I cautioned investors in May, noting that "I would leave MOT out of my portfolio for now." I also suggested keeping an eye out for a "discernable jump through the resistance at 25." Well, there wasn't even a test of the resistance at 25. In fact, the shares were unable to break through resistance at their 10-week moving average and have continued to succumb to its downside pressure. Without options-related support to rely on, there isn't much to help boost the shares. The longer-term picture shows a layer of support, but it did so slightly more than a month ago as well. The shares continue to rely on the support of their 20-month moving average, as it did in May. This trendline is strong, but it is setting up a situation where we may see the shares squeezed between its support and the 22 level. Let's delve into MOT's sentiment backdrop: --Percent of analysts tracked by Zacks who rate the stock with a "buy" or better: 81% --Number of analysts tracked by Zacks: 27 --Short-interest ratio: 0.92 --Schaeffer's put/call open interest ratio (SOIR SOIR Schaeffer's Put/Call Open Interest Ratio SOIR Simultaneous Operations on Intersecting Runways ): 0.31 --SOIR percent rank: 9% --Overall Schaeffer's Equity Scorecard rating: 0.0 Well, MOT has moved from a 4.0 on our Scorecard to the lowest ranking possible in less than month. Admittedly, looking at the current sentiment data compared to that of a month ago, there is little difference. The major difference is the rejection at the 22.50 level and the fact that MOT has lost whatever options-related support was in place. Moreover, it would take less than one day to cover the shorted shares, so there is little in the way of fuel for a short-covering rally to push the shares through overhead resistance. Click here to see a Weekly Chart of MOT Since July 2005 With 10-Week Moving Average and a Monthly Chart of MOT since January 2003 With 20-month Moving Average: http://www.schaeffersresearch.com/wire?ID=16157 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. http://www.schaeffersresearch.com/redirect.aspx?CODE=PRMOU12M&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. |
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