Schaeffer's Midday Options Update Features Google, Biogen Idec, Elan, and Microsoft.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Google (NASDAQ:GOOG), Biogen Idec (NASDAQ:BIIB), Elan (NYSE:ELN), and Microsoft (NASDAQ:MSFT). 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: News From Google; Options Trading on Microsoft

We're in the middle of hump day this trading week, and the market just can't catch a break. An inadvertent slip of the proverbial tongue from Google and the threat of further rate hikes are weighing on the market, with all major indices sitting in the red during the lunch hour. One investment officer speculated that "everybody is waiting for the employment data," as the nonfarm payrolls report for February is scheduled for Friday morning. Economists are expecting payrolls to have increased by 206,000 during the month, with a jobless rate of 4.8 percent, up a fraction from January. Breadth is decidedly negative once again, with decliners trumping advancers by a margin of two to one on both the New York Stock Exchange and the Nasdaq Market.

Crude futures are in negative territory after OPEC conclusively decided to maintain its current oil production output of 28 million barrels today. While this move (or lack thereof) was largely expected, crude futures have still dropped to a two-week low, falling $1.62 cents at $59.90 per barrel.. In other news, the Energy Department said crude inventories swelled by 6.8 million barrels last week to total 335.1 million. This reading is 10 percent above year-ago levels and at their highest level since May 1999. Analysts were expecting a much more modest build of 1.2 million barrels. Meanwhile, gasoline stocks dropped by 1.1 million barrels to 224.8 million, 0.5 percent below last year's inventories. Distillate supplies were down 2.7 million barrels to 131.4 million, but 13.7 percent above last year's figures.

Google Blows Its Own Whistle

Google (NASDAQ:GOOG) shares are back in the news today and in negative territory, to boot. The stock is off by more than three percent after last night's inadvertent release of the firm's financial projections on the GOOG website. In notes that were in fact prepared for presentations at its analyst day conference last Thursday, the search giant projected that revenue from its advertising business is projected to grow to "$6 billion this year and $9.5 billion next year based purely on trends in traffic and monetization growth," according to the firm's regulatory filing. The report adds that these notes "were not created for financial planning purposes and should not be regarded as financial guidance." In response to this blunder, Goldman Sachs reduced its target price on GOOG this morning from $500 to $490. The brokerage also reduced its 2006 and 2007 earnings estimates for the company.

Tysabri Returning to the Market?

A U.S. Food and Drug Administration (FDA) panel recommended the reintroduction of multiple-sclerosis drug, Tysabri, manufactured by Biogen Idec (NASDAQ:BIIB) and Elan (NYSE:ELN) . The panel said the treatment could return to the market and be distributed without restrictions. A formal vote from the 12-member group was unanimous. The FDA typically follows its panels' advice, but is not required to do so. The agency expects to have a firm decision by the end of the month. Both BIIB and ELN are refraining from comment until the panel meeting's conclusion, which is expected for 5:00 p.m. Eastern time. The shares of both biotech firms remain halted and may very well stay that way until trading begins on Thursday.

Most-Active Options Update

At 1:28 p.m. Eastern time, the Dow Jones Industrial Average (DJIA - 10,970.4) has dropped 9.5 points, or 0.09 percent. The S&P 500 Index (SPX - 1,274.02) has shed 0.15 percent, and the Nasdaq Composite (COMP - 2,261.2) has lost 0.32 percent. At 1:28 p.m. Eastern time, 2,521,184 calls have changed hands versus 2,093,685 puts, equaling a single-day put/call volume ratio of 0.83. The CBOE's equity put/call volume ratio weighed in at 0.87.

Microsoft

The software king of the world has made some headway today, as investors maintain high hopes for sales of the latest version of Windows, Vista, which will launch later this year. The rumor mills and the blogs of the technologically savvy are also churning with conjecture that Microsoft (NASDAQ:MSFT) will release an "ultra-portable" personal computer as soon as tomorrow.

All of this excitement has sent MSFT about a percent higher today. While this is nothing to sneeze at, particularly on a day where the market has turned south, it doesn't do much for the stock's long-term outlook. The stock has been unable to muster much of a rally in years, preferring to trade within an ever-shrinking sideways range. What's more, MSFT has not traded above its 80-month moving average since late 2002. This long-term trendline has now reversed into a decline, which could portend future downside in the shares.

Turning to sentiment indicators, it quickly becomes clear that MSFT remains the epitome of an overloved underperformer. For starters, the company saw its short-interest reading plunge 47 percent last reporting period to its lowest level since 1999. As a result, less than half a percent of the stock's float is sold short, and it would take just over half of one trading day (that's about three hours, folks) to eradicate every last one of these bearish bets. In short? MSFT will not be the beneficiary of a short-covering rally anytime soon.

The options trading crowd isn't any more skeptical. The Schaeffer's put/call open interest ratio (SOIR) for MSFT stands at 0.32, which is lower than 92 percent of the past year's readings. What's more, just overhead at the 27.50 strike are nearly 84,000 open call contracts in the March series, easily making this the site of heaviest open interest in the front month. The strike is also notable in the April series, with 145,000 open contracts. Today's intraday chart of MSFT shows that the 27.50 may indeed be a strong level of structural resistance.

In today's trading, MSFT has seen above-average call volume at both the March (MSQ CY) and April (MSQ DY) 27.50 strikes. When we grabbed our numbers, more than 17,500 contracts had swapped hands on the front-month call, with nearly 10,000 contracts trading on the April 27.50 call. Blocks of all sizes have been changing hands on both calls since the onset of the trading day. While few of these trades were explicitly indicated as a "spread," the activity could be related. Bullish traders could be giving themselves more time by rolling out their front-month positions to the next series. A calendar spread could be in the works; this would assume that the investor is selling the March position and purchasing the April call. Finally, today's action could consist of close-outs, as investors take advantage of today's move higher in the shares.

Wall Street continues to wave the bullish flag on MSFT, even after years of price-action struggles. There are currently 11 "strong buy" ratings on the software giant, according to Zacks (www.Zacks.com), along with six "buy" ratings. The two "holds" and one "strong sell" leave MSFT vulnerable to future downgrades, should this optimistic group begin to alter its collective opinion.

Click the following link to see a Monthly Chart of MSFT Since May 2000 With 80-Month Moving Average: http://www.schaeffersresearch.com/wire?ID=15488 .

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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 .