Schaeffer's Midday Options Update Features Time Warner, Gentex, AutoZone, TiVo, Portal Software.Business Editors CINCINNATI--(BUSINESS WIRE)--May 26, 2004 Today's Schaeffer's Midday Options Update Features Time Warner (NYSE NYSE See: New York Stock Exchange :TWX (TeletypeWriter eXchange Service) A U.S. and Canadian dial-up communications service that became part of Telex. In 1971, the Bell System sold TWX to Western Union. TWX transmitted 5-bit Murray code or 7-bit ASCII code at up to 150 bps. See Telex. ), Gentex (Nasdaq:GNTX), AutoZone (NYSE:AZO), TiVo (Nasdaq:TIVO), Portal Software Portal Software was founded in 1985 as Portal Information Network, one of the first ISPs in the San Francisco Bay Area. It was founded by John Little. The company offered its own interface through modem access that featured Internet email. (Nasdaq:PRSF PRSF Presidio of San Francisco (US National Park Service) PRSF Peoples Republic of San Francisco ). 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/addinfo. Schaeffer's Midday Options Update Investors found themselves struggling to digest a new wave of earnings and economic data this morning. Renewed terror threats for the U.S., a drop in gasoline supplies, and new information on durable goods durable goods Goods, such as appliances and automobiles, that have a useful life over a number of periods. Firms that produce durable goods are often subject to wide fluctuations in sales and profits. Also called consumer durables. orders has held the major indexes to a mixed session today. New orders for durable goods fell 2.9 percent over the past month, missing economists' expectations for a 0.6-percent drop. Excluding transportation equipment, orders fell 2.1 percent in the month, marking the first backslide back·slide intr.v. back·slid , back·slid·ing, back·slides To revert to sin or wrongdoing, especially in religious practice. back in five months. Adding to investor's woes, new homes sales fell by a larger-than-expected 11.8 percent to a 10-year low in April, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the Commerce Department. In broker activity today, Gentex (Nasdaq:GNTX) was boosted to a "buy" from "neutral" due to valuation. The brokerage firm also set its target price for the stock at $46. Playtex was also lifted today when a major brokerage house upgraded the stock to "overweight" from "equal weight" with a target price of $8. Moving to the earnings calendar, AutoZone (NYSE:AZO) reported third-quarter earnings of $143.4 million, or $1.68 per share, rising over its profit of $126 million, or $1.30 per share, reported last year. Excluding changes in accounting principles and warranty negotiations, the firm posted earnings of $1.61 per share, topping the Street's view by six cents. Sales for the quarter rose to $1.36 billion from $1.29 billion a year ago. Digital recorder See DVR and CD-R. pioneer TiVo (Nasdaq:TIVO) also stepped into the earnings confessional, announcing a first-quarter loss that shaved nine cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. off of the consensus estimate and narrowed a penny from last year. Losses for the quarter came in at $9.1 million, or 11 cents per share, compared with last year's loss of $7.9 million, or 12 cents per share. The company also reiterated its 2005 estimates, stating that it would achieve "sustainable profitability" by the end of next year. Rounding out today's earnings coverage, Portal Software (Nasdaq:PRSF) posted a first-quarter loss of $5.2 million, or 12 cents per share, narrowing from last year's loss of $9.8 million, or 27 cents per share. On a pro-forma basis, PRSF reported a per-share loss of 19 cents compared with the Street's view for a 13-cent loss. The company also declined to provide pro-forma guidance for the coming period. At 12:58 p.m. eastern time, the Dow Jones Industrial Average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. (DJIA DJIA See Dow Jones Industrial Averager (DJIA). - 10111.9) is down 0.06 percent and the S&P 500 Index (SPX (Sequenced Packet EXchange) The transport layer protocol in the NetWare operating system. Similar to the TCP layer in TCP/IP, it ensures that the entire message arrives intact. SPX uses NetWare's IPX as its delivery mechanism. - 1114.31) is higher by 0.11 percent. The Nasdaq Composite The Nasdaq Composite is a stock market index of all of the common stocks and similar securities (e.g. ADRs, tracking stocks, limited partnership interests) listed on the NASDAQ stock market, meaning that it has over 3,000 components. It is highly followed in the U.S. (COMP - 1969.5) is up 0.24 percent. At 12:59 p.m. in the options pits, 1,359,254 calls and 935,900 puts traded for a composite put/call ratio across all five exchanges of 0.68. The CBOE CBOE See: Chicago Board Options Exchange CBOE See Chicago Board Options Exchange (CBOE). put/call ratio for equity options weighed in at 0.78. Media conglomerate Time Warner (NYSE:TWX) has garnered its fair share of pessimistic investor sentiment. Options speculators have shown a preference for bearish Bearish Words used to describe investor attitude. A bearish investor believes that a particular asset or the market as a whole will decline in value. bearish puts over bullish calls recently, as the security's Schaeffer's put/call open interest ratio has spiked from its near-term low of 0.43 (in the 16th percentile) to its current perch at 0.53 (in the 61st percentile). In today's trading, investors may be taking note of the stock's strong price action over the past two days, sending 11,008 call contracts across the tape at TWX's June 17 strike on open interest of 22,432. We will, however, have to wait until tomorrow to see if this activity translates into new positions. Short interest also persists in maintaining its elevated levels. The more than 14 million TWX shares sold short would take just over four days to cover at the stock's average daily trading volume Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. . This accumulation of bearish bets could spark a short-covering rally and add to the equity's newfound burst of strength. Wall Street has neglected to fully commit to the TWX bandwagon. Looking at the analyst rankings, we find 12 "buys," and 10 "holds." Any upgrades from the latter bunch of holdouts could also assist the shares is moving higher. From a technical perspective, a degree of pessimism is undoubtedly warranted. TWX has shed more than 11 percent since setting a new 52-week high back in January. However, after yesterday's surge, the stock has reclaimed the support of its 10-day and 20-day moving averages. Finally, TWX has additional support rising into the area in the form of its 10-month moving average - a trendline the security has not closed a month below since March 2003. With the shares attempting to rise higher off of key support levels, an unwinding of bearish sentiment could add fuel to TWX's newfound fire. Click the following link to see the Monthly Chart of TWX since January 2003 with 10-Month Moving Average: http://www.schaeffersresearch.com/wire?ID=10244 . The best way to take advantage of the timely Schaeffer commentaries is to sign up to receive their free e-newsletters -- Opening View, Market Recap and Monday Morning Outlook. Click here to have the Schaeffer's commentaries delivered to you free via email every day. http://www.schaeffersresearch.com/addinfo . 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 . |
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