Schaeffer's Midday Options Update Features Micron Technology and Texas Instruments.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Micron Technology (NYSE:MU) and Texas Instruments (NYSE:TXN). 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: Options Speculators Betting Against Micron Technology

With earnings reports few and far between and the economic calendar a blank slate, the major market indices have managed to find positive territory amid this quite Friday afternoon. Crude futures are continuing lower after Thursday's finish at a five-month low, helping to drive stocks higher today. Elsewhere, the dollar is attracting some attention, reaching a six-week high against the euro and gaining ground against the yen. The Japanese currency is lower in reaction to news that the Bank of Japan will lift interest rates gradually.

Most-Active Options Update

At 12:58 p.m. Eastern Time, the Dow Jones Industrial Average (DJIA - 11,373.8) is currently 0.37 percent higher. The S&P 500 Index (SPX - 1,296.71) has added 0.21 percent, and the Nasdaq Composite (COMP - 2,161.40) has risen 0.29 percent. At 12:59 p.m. Eastern Time, 1,683,197 calls have changed hands compared to 1,462,702 puts, equaling a single-day put/call volume ratio of 0.86. The CBOE's equity put/call volume ratio stands at 1.04, while the ISE's ratio comes in at 0.90.

Option Activity Follow-Up

Yesterday, I took a closer look at Texas Instruments (NYSE:TXN), noting that investors were piling into TXN's September 30 put. On the day, more than 9,000 contracts crossed the tape, pushing open interest higher by more than 3,000 contracts to more than 21,000 contracts. TXN closed yesterday perched on key support at the 30.50 level, and today has bounced back by nearly one percent, pacing the gains on the Street. Yesterday's put activity could be seen as the bolstering of additional support for the shares, with the 30 level arriving as the home of peak front-month put open interest for TXN.

Click here to see a September open interest configuration for TXN: http://www.schaeffersresearch.com/wire?ID=17301

Micron Technology

Checking in on today's activity in the options pits, Micron Technology (NYSE:MU) has emerged as a favorite target for put volume. In fact, more than 9,300 of these bearishly aligned contracts have changed hands at the stock's October 17 strike, which is currently home to open interest of 13,820 contracts. Technically speaking, the 17 level could emerge as a key support level for MU, as this region previously acted as resistance for the shares. Checking the charts, the security has been a solid performer during the past several months. Since April 2005, MU has enjoyed the support of its rising 10-month and 20-month moving averages, gaining more than 87 percent during this time frame.

Sentiment Rundown for MU:

--Percent of analysts tracked by Zacks who rate the stock with a "buy": 40%

--Number of analysts tracked by Zacks: 15

--Short interest as a percent of float: 5.45%

--Short-interest ratio: 4.17

--Schaeffer's put/call open interest ratio (SOIR): 0.72

--SOIR percent rank: 67%

--Schaeffer's Equity Scorecard: 6.0

In contrast to many of the stocks I have reviewed in this space this week, MU has garnered ample bearish sentiment amid its uptrend, with the exception of the options pits. While a SOIR percentile rank of 67 has bearish implications, it is far from that extreme reading that we like to see. In other words, the more pessimistic the options crowd is, the better chances for MU to find additional sideline money to propel it higher. Looking at the stock's September options configuration, however, it seems that most of this bullish activity from options speculators is located at the in-the-money 16 strike, leaving little in the way of overhead options-related resistance.

Outside the options pits, there is plenty of potential for sideline money. The brokerage bunch has issued nine "holds" out of 15 total ratings, leaving room for upgrades that could help spur a rally for MU. Meanwhile, more than five percent of the equity's float is sold short and it would take roughly four days to buy back these bearish bets. With MU still locked in a long-term uptrend, I would look for more of these naysayers to cover their positions, thus adding buying pressure to the security. For a sharp upside move, keep an eye on MU to break above the 17.50-18 region. The shares have not seen this territory since September 2002, and a break above this region could spark quite a bit of buying interest.

Click here to see a September open interest configuration for MU and Monthly chart of MU since June 2003 with 10-month and 20-month moving averages: http://www.schaeffersresearch.com/wire?ID=17301

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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.