Schaeffer's Midday Options Update Features Qwest Communications International, MCI Inc., DoubleClick, International Securities Exchange, and SanDisk.

CINCINNATI -- In the first graph, first sentence, the stock exchange for MCI Inc. should read (NASDAQ:MCIP) (sted (NYSE:MCIP)).

The corrected release reads:

SCHAEFFER'S MIDDAY OPTIONS UPDATE FEATURES QWEST COMMUNICATIONS INTERNATIONAL, MCI INC., DOUBLECLICK, INTERNATIONAL SECURITIES EXCHANGE, AND SANDISK

Today's Schaeffer's Midday Options Update features Qwest Communications International (NYSE:Q), MCI Inc. (NASDAQ:MCIP), DoubleClick (NASDAQ:DCLK), International Securities Exchange (NYSE:ISE), and SanDisk (NASDAQ:SNDK). 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: Scanning SanDisk's Sentiment

This morning began with futures facing downward, but this gloomy outlook suddenly became sunny thanks to March housing data. For the month, existing home sales gained one percent, totaling 6.89 million. Analysts expected March home sales to fall to 6.76 million from February's number of 6.79 million. The report included a revision higher to February's rate, from 6.76 million to 6.82 million. The inventory of unsold homes saw a 0.2-percent decrease to 2.33 million, representing a supply of four months. Investors can only hope that the rest of the economic reports coming in this week continue today's better-than-expected housing numbers. Tomorrow will bring us consumer confidence data, a first reading on first-quarter economic growth on Thursday, and Friday will see the report on manufacturing data.

Oil stays in focus, as crude prices have held steady above $55 per barrel. Sharp gains in U.S. gasoline prices following last week's unexpected drop have driven the market. This is a bit of a switch as crude had been the major factor in the market; watch for gasoline now to take over the driver's seat. All eyes turn to Wednesday's report on gasoline inventory figures as investors will look for evidence that the current price rally may find its way to an end. At last check, June crude was trading 11 cents higher at 55.50.

Is the Third Time a Charm in this Qwest?

Will it never end? Apparently, we may be getting close to the end of the story as MCI Inc. (NASDAQ:MCIP) has given Verizon Communications (VZ) until early next week to raise its offer to buy MCIP. If the $7.6-million deal isn't sweetened by the end of the week, MCIP may decide to accept Qwest Communications International's (NYSE:Q) Friday offer of $9.7 billion. MCIP stated that it will continue to recommend its agreement with VZ until Friday. MCIP doesn't have to change its recommendations until May 3, the date MCIP has to meet Q's deadline for accepting its latest offer. This doesn't mean that VZ is out of the picture; it could still force MCIP to hold a shareholder vote in its proposal, which would more than likely be rejected as it is 30-percent lower than Q's new offer. According to The Wall Street Journal, VZ will consider all of its options but hinted that the company may raise its offer. This is Q's third different offer for MCIP, and stated that it is its "best and final offer." Talk about deja vu.

Rebuilding the Big Board?

Taking a break from its MCIP, Q, VZ coverage, The Wall Street Journal reported yesterday that Home Depot (HD) co-founder, Kenneth Langone, may be preparing a counter bid for the New York Stock Exchange (NYSE) and Archipelago Holdings (AX). According to the Journal, Langone has reportedly contacted several Wall Street execs to see if they would join him in a bid for the two exchanges.

One Hellman of a Deal

Advertising technology and data company, DoubleClick (NASDAQ:DCLK), announced early this morning that it has signed a deal to be bought by private firm, Hellman & Friedman. The deal is worth a reported $1.1 billion. DCLK shareholders will receive $8.50 in cash for each DCLK stock. This is a 106-percent premium over the average closing price of the company's stock over the past 30 trading days. The deal is expected to close in the third quarter. Last week, DCLK reported a first-quarter loss of one cent per share compared to last year's same-quarter profit of five cents per share. After announcing the deal, DCLK also stated that CEO, Kevin Ryan, will be stepping down after the deal is closed.

ISE, ISE, Baby

International Securities Exchange (NYSE:ISE) has gained nearly four percent in trading today, thanks to its first-quarter earnings report. The options trading firm reported net income of 25 cents per share, $8.9 million, in the quarter. Last year, ISE raked in 22 cents per share in the quarter, 19 percent lower than this year's first-quarter earnings. The Street expected ISE to report earnings of 18 cents per share. In the quarter, ISE's revenue rose to $34.5 million from last year's first-quarter revenue of $31 million. This was the company's first quarterly report since it went public on March 14.

Most-Active Options Update

At 1:54 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10,231.9) has moved ahead by 0.74 percent, and the S&P 500 Index (SPX - 1,160.55) has also gained, by 0.73 percent. The Nasdaq Composite (COMP - 1,945.7) was higher by 0.70 percent. By 1:54 p.m., 1,505,644 calls and 1,008,765 puts had crossed the tape, for a composite put/call ratio (across all six options exchanges) of 0.66. The CBOE put/call volume ratio for equity options stood at 0.67.

SanDisk

According to Hoover's, SanDisk (NASDAQ:SNDK) is a top producer of storage products based on flash memory. These products retain data even if power is interrupted. SNDK's products include removable and embedded memory cards that are used in digital cameras, PDAs, networking equipment, medical devices, and other electronics. SNDK finds itself in the unenviable spot of competition against AAPL's uber-hip iPod shuffle music player.

Today, SNDK found its way onto our midday unusual activity list, thanks to heavy trading on its May 25 put (SWQ QE). This pessimistic onslaught should be now surprise, as SNDK reported disappointing sales in the first quarter. After missing analysts' expectations, SNDK lost 9.5 percent. Today's action moves SNDK's Schaeffer's put/call open interest ratio (SOIR) to 0.76, which ranks higher than 70 percent of the readings taken over the past 52 weeks. This is approaching the level of pessimistic extreme marked by a reading higher than 80 percent of the readings taken over the past year. Analysts lean to the optimistic side on SNDK as, according to Zacks, the firm garners five "strong buys," one "buy," five "holds," and one "sell" ranking.

Technically, the earnings disappointment from this past Thursday is evident on SNDK's daily chart. Following Monty Python's advice to look on the bright side of life, this glitch may be short lived. Before the negative report, SNDK had mounted an impressive march higher along the support of its 10-day moving average. Unfortunately, like the little mountain climber on the Price is Right game, the shares advanced too far and lost this support. As we speak, the memory maker is finding support from the 25 level, assuming a role that it played on various occasions in the past. Can this level act as a trampoline for the shares? It seems possible, especially taking into account underlying support from the chip champ's 10-month trendline. This moving average acted as support for the company from mid-June 2002 until January 2004. On the negative side, this drop has caused SNDK's 10-day moving average to complete a bearish cross of its 20-day trendline. A move of this sort is usually a precursor to a continued downtrend.

The combination of lukewarm Street sentiment and a long-term uptrend combine for an Equity Scorecard ranking of 6.0 out of a possible 10.0

Click on the following link to see the Daily Chart and Equity Scorecard of SNDK since September 2004 with 10-Day and 20-Day Moving Averages: http://www.schaeffersresearch.com/wire?ID=13029.

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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.