Schaeffer's Midday Options Update Features Micron Technology, Reebok International, Time Warner, Duke Energy, and RealNetworks.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Micron Technology (NYSE:MU), Reebok International (NYSE:RBK), Time Warner (NYSE:TWX), Duke Energy (NYSE:DUK), and RealNetworks (NASDAQ:RNWK). 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=PRMOU1M&PAGE=1 .

Options Update: A Call-ing Concern for Micron Technology

So far, the session has been packed with data, setting traders and the market on their heels. Starting things off, Challenger Gray & Christmas reported that U.S. corporations announced 102,971 job reductions in July, down seven percent from June's total. Meanwhile, the Institute of Supply Management's (ISM) non-manufacturing index tumbled to 60.5 percent from 62.2 percent in June. Economists had predicted a decline to 61.4 percent. Readings above 50 percent indicate expansion in the sectors.

Surprise Rise in Oil Supplies

Crude has pulled back this morning following the latest releases from the Department of Energy (DOE) and the American Petroleum Institute (API). The DOE announced that crude supplies inched higher by 200,000, versus expectations for another decline. Meanwhile, the API announced that crude levels plunged by 4.9 million barrels. At last check, crude oil for September delivery was down 49 cents at $61.40 per barrel, off its intraday high of $62.47 per barrel. However, gasoline is leaving its mark on the Street today. The DOE posted a four-million-barrel drop in gasoline inventories for the week of July 29. On the other hand, the APO posted a 55,000-barrel rise in gasoline levels. The September gasoline futures contract tagged a new high at $1.81 per gallon. In distillates, the DOE reported a 1.5-million-barrel rise, compared to the API's report of a 1.7-million-barrel rise.

What's Up Doc?

Time Warner (NYSE:TWX) left a bad taste on traders' pallets this morning when it posted a second-quarter loss of seven cents per share. The company cited a $3 billion charge to settle securities class-action litigation as reasoning for the loss. Excluding this charge, TWX still would have missed the Street's estimate for earnings of 19 cents per share by a penny. Revenue for the quarter also came up short of expectations, dropping to $10.7 billion compared to the consensus view for $10.95 billion. Elsewhere, TWX's board announced the authorization of a $5 billion stock repurchase program for the next two years, and maintained its 2005 guidance.

All Day I Dream About Shoes

Ok so that's not what Adidas stands for, but it was certainly on the company's mind when it announced a merger deal today that would help it compete with rival Nike (NKE). Adidas-Salomon AG announced bright and early this morning that it has agreed to buy Reebok International (NYSE:RBK) for $3.8 billion. The German company is to pay a 34-percent premium over RBK's Tuesday closing price in order to secure the purchase, which comes out to $59 per share. Adidas hopes that this deal will not only help it compete against NKE, but that it will increase its presence in North America as well. This footwear takeover doubles the group's share of the U.S. athletic-shoe market to roughly 20 percent, according to the Financial Times.

Duke Gets Dunked

Before the open, Duke Energy (NYSE:DUK) reported second-quarter earnings of $309 million, or 32 cents per share, down from $432 million, or 45 cents per share, in the year-ago period. Excluding non-recurring items, earnings would have been 30 cents per share, missing the Street's view for 38 cents per share. Revenue rose to $5.65 billion from last year's $5.32 billion. DUK reiterated its 2005 earnings forecast of $1.60 per share. Investor reaction, however, hasn't been that severe, as the shares were hovering around breakeven at last check.

Keeping it Real

Also taking its turn in the earnings confessional, RealNetworks (NASDAQ:RNWK) reported second-quarter earnings of $4.7 million, or three cents per share, compared with last year's loss of $4.7 million, or three cents per share. The Street was looking for breakeven results. Revenue rose 26 percent over last year to $82.7 million. RNWK also stated that it had more than two million subscribers paying for its premium services, rising over last year's 1.4 million. Looking ahead, RNWK expects third-quarter revenue in a range of $80 million to $82 million.

Most-Active Options Update

At 12:46 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10,684.9) has added 0.01 percent. The S&P 500 Index (SPX - 1,244.92) is higher by 0.06 percent, and the Nasdaq Composite (COMP - 2,218.5) has added 0.01 percent. At 12:47 p.m. Eastern time, 1,784,033 calls have changed hands compared to 1,190,078 puts, equaling a single-day put/call volume ratio of 0.66. The CBOE's equity put/call volume ratio weighed in at 0.73.

Micron Technology

Technically speaking, Micron Technology (NYSE:MU) has been on a tear since late April, rising more than 30 percent along the loose support of its 10-day and 20-day moving averages. Furthermore, the stock has overtaken long-term resistance in the 12 area. This region troubled the shares greatly from October 2004 through March 2005, until the security finally succumbed to the pressure. One last concern remains for the equity, as it must now face overhead resistance at its declining 20-month moving average. The shares have not bested this long-term trendline since July 2004.

On the sentiment side, MU makes our list today due to the unusually high number of calls being batted around the options pits today. So far, more than 7,100 MU calls have crossed the tape at the stock's October 12 strike. This level also represents the site of peak call open interest for the front three months of options. However, with the shares currently trading above this level, the next concern becomes the 13 level, where bullish activity continues to build. On the put side, peak open interest lies at the 11 strike for the front three months, with a sizeable accumulation at the 12 level that could come in handy for potential support. Breaking it all down, the bulls currently dominate MU's options picture, as the security's Schaeffer's put/call open interest ratio (SOIR) of 0.43 falls below 88 percent of all those taken in the past year.

Short interest could lend a hand to the equity, however, as short sellers increased their positions by 16 percent during July. The net result of this activity leaves MU with a short-interest ratio of 5.33 days to cover, potentially ample fuel for a covering rally if the stock's technical performance improves.

Lastly, Wall Street remains a concern for this purveyor of semiconductors. According to Zacks, eight of the 18 covering analysts rate the shares a "buy" or better. With seven more giving the stock a "hold," there is plenty of room for downgrades that could spoil MU's plans to continue its trek higher.

With a largely optimistic sentiment backdrop, and a struggling (but recovering) technical outlook, MU has earned a Schaeffer's Equity Scorecard rating of 4.0 out of 10. While this is far from a bearish reading for the security, it does indicate that the path of least resistance for the shares remains to the downside.

Click on the following link to see a Daily Chart of MU since April 2005 with 10-day and 20-day Moving Averages: http://www.schaeffersresearch.com/wire?ID=13786 .

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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 .