Schaeffer's Midday Options Update Features Ford Motor, Microsoft, Symantec, Walt Disney, and Dell.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Ford Motor (NYSE:F), Microsoft (NASDAQ:MSFT), Symantec (NASDAQ:SYMC), Walt Disney (NYSE:DIS) and Dell (NASDAQ:DELL). 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=PRMOU11M&PAGE=1 .

Options Update: A Look at Walt Disney Options

Yesterday, I suggested that the 10,950 level had set in as resistance last Wednesday for the Dow Jones Industrial Average (DJIA), and it seemed to be "about as far as the strongest bulls could push, a signal that no one is quite ready even to tiptoe up to that 11,000 psychological barrier." It looks to me as if the bulls are ready for a bit of a sit down after all their strenuous effort. My eye is on 10,900 as resistance today. Monday and Tuesday saw closes below this level, after tentative forays north, and the index is slipping back in the afternoon session.

Hit 'Menu' for 'A La Carte' TV

A retired friend gave me a piece of advice the other day. "You spend the first half of your life," she said, "making everything more and more complicated, and the second half trying to make everything simple again." With that thought in mind, today's news about U.S. cable operators interests me. They look set to challenge claims by regulators that consumers would be better off if they could purchase cable channels individually instead of in bundles. That sounds like a simplification to me, which would come as good news, because I suspect my cable box can do a whole lot of things I don't know about. I'm certain my VCR can. It's usually easier just to read a book. Tree technology - I can cope with that.

The Big Cat Gets a Trim

Ford Motor (NYSE:F), which owns the luxury Jaguar marque, plans to cut production of the cars by as much as seven percent next year, The Wall Street Journal reports. There is a possibility that F might even sell Jaguar's historic plant in Coventry, U.K., where many of the classic models, including the E-Type and the XJ-S sports cars, were made.

Not Finished Yet, But It's Free

Beta is geekspeak for "not finished yet," Microsoft (NASDAQ:MSFT) explains on its website. Today, "Sir" Bill invites us to join the beta test of Windows OneCare Live, a new online offering that promises to make your PC more secure. They make it sound all rather cozy. The software "runs quietly in the background, providing anti-virus and firewall protection" and "updates itself to help you keep ahead of the latest threats." If you're interested in trying this new system, get in now, because while the beta is free, the final version will require a subscription. This news, of course, has the potential to impact Symantec (NASDAQ:SYMC), which offers the popular range of Norton security products that cost relatively little, work extremely well, and have been tested by a massive user base for many years; so there's going to be a struggle. At last check, SYMC stood at 17.59, down 0.41 cents.

Most-Active Options Update

At 2:20 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10,860.5) has lost 0.26 percent. The S&P 500 Index (SPX - 1,254.53) has shed 0.23 percent, and the Nasdaq Composite (COMP - 2,236.1) has added 0.15 percent. At 2:20 p.m. Eastern time, 1,974,664 calls have changed hands compared to 1,536,503 puts, equaling a single-day put/call volume ratio of 0.77. The CBOE's equity put/call volume ratio weighed in at 0.68.

Walt Disney

Walt Disney (NYSE:DIS) saw some heavy activity at its January 25 put this morning, with 8,293 contracts changing hands by the time we grabbed our figures.

I'm going to take a look at DIS today, but first let's revisit Dell (NASDAQ:DELL), my featured stock yesterday. More than 7,330 of DELL's January 2006 32.50 calls had changed hands. Now that all of yesterday's activity has been netted up, I see that open interest increased by 4,701 contracts to 70,317 to buy-to-open and/or sell-to-open predominated.

DIS made the news twice this morning. First, The Financial Times reported on its website that DIS has narrowed the field of bidders for its ABC Radio division to three. Those always-quotable "people familiar with the matter" have suggested that we'll see a sale close before the end of the year. I read on the Dow Jones Newswires that analysts have estimated the deal could have a value as high as $3 billion.

The second piece of news came in a press release inviting us to visit www.disneysgamecafe.com, the company's first downloadable games collection and website specifically tailored for a "grown-up" audience. You can try for free, or download for a fee, with prices ranging from $9.95 to $19.95.

I wrote about DIS on November 4, in Street Chatter at SchaeffersResearch.com. The stock had been under pressure from its declining 80-day moving average, but showed signs of puncturing through to the upside.

Today's daily chart shows what happened next: the stock continued higher and rose above its 160-day moving average, too. But the air was a little too thin, and it fell back, neatly confirming support at the 80-day trendline and the 25 level. These might serve as springboards to push the stock higher again.

Let's take a look at the sentiment. We track a large number of sentiment indicators, but we frequently focus on three key areas:

-- Analyst ratings, to gauge Street sentiment

-- Equities sentiment, in the form of short selling 

-- Options sentiment, in the form of put/call ratios and trends, and peak open interest

From Zacks I see that analysts award:

-- 8 "strong buys"

-- 4 "buys"

-- 8 "holds"

-- 0 "sells"

-- 1 "strong sell"

Those eight supposedly rare "strong buy" ratings are ranged against just one "strong sell." Remember, though, that the eight "holds" represent caution, so this is skewed less to the optimistic extreme than it looks. To be sure, there's room for downgrades, but only 57 percent of the votes are to the "buy" side.

In the options pits, sentiment shows a pessimistic bias. The stock's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.72 in the 78th percentile. In other words, this reading, which is higher than 78 percent of all those taken during the past year, is much closer to pessimism than optimism.

Short interest on the stock moved 12 percent higher in November, pushing the short-interest ratio to 5.4 days to cover, perhaps enough to fuel a short-covering rally. We monitor short interest because sometimes sudden good news comes along and pushes a stock's price up sharply. This might shake out some of the short sellers, who suddenly see that it will cost more money to buy their stocks back than they tucked under the mattress when they originally sold the positions. If these turncoat short sellers suddenly transform into buyers, they can push the stock price yet higher and perhaps provoke further short covering. We usually take note when the short-interest ratio passes five.

Overall, DIS needs to demonstrate that its days of decline are behind it. Sentiment is a little mixed, and I think we need to watch that 25-level carefully for the next clue. And January is coming. I notice a major peak of 59,025 contracts of the January 2006 30 call. Calls have the potential to exert options-related resistance.

Click on the following link to access a Daily Chart of DIS Since March 2005: http://www.schaeffersresearch.com/wire?ID=14697 .

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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 .