Schaeffer's Midday Options Update Features United Technologies.CINCINNATI -- Today's Schaeffer's Midday Options Update features United Technologies (NYSE NYSE See: New York Stock Exchange :UTX UTX United Technologies Corporation (stock abbreviation, AMEX) UTX Unreal Texture (a texture pack for Unreal-engine games) UTX Unit Training Exercise UTX Under Track Crossing ). 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. Take advantage of the timely Schaeffer commentaries by signing up for 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 and get entered to win an iPod Nano A flash-based digital music player from Apple, introduced in 2005. Like larger iPod models, the nano has a color screen. Although the nano name suggests ultra-small "nanotechnology," the iPod shuffle is actually smaller. See iPod. . http://www.schaeffersresearch.com/redirect.aspx?CODE=PRMOU13M&PAGE=1. Options Update: Call Buyers Stand United on United Technologies The only major economic news this morning came in the form of weekly crude inventory reports. 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 Energy Department, crude supplies dropped for a fourth week, slipping 6.3 million barrels to 329.1 million last week. Motor gasoline supplies increased 1 million barrels to 200.9 million and distillates increased 1.2 million barrels to 133.1 million. The increase in distillate dis·til·late n. A liquid condensed from vapor in distillation. distillate a product of distillation. inventory was the first in 11 weeks. This news sent crude futures past Futures Past ((2006, ISBN 978-0441014545) is a science fiction anthology edited by Jack Dann and Gardner Dozois. It was published in 2006, and includes stories on the theme of "futures past" that were originally published from 1956 to 2004. $64 per barrel, but the February contract failed to hold this level before dropping to $63.60, which is still an advance of 14 cents. Most-Active Options Update At 1:38 pm 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). - 12,469.7) is hovering near the break-even level, shedding 1.7 points, while 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. - 1,424.27) has slipped 1.3 points. 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 - 2,428.3) has slipped slightly more than one point as well. At 1:40 p.m. Eastern Time, 2,632,677 calls have changed hands compared to 1,595,983 puts, equaling a single-day put/call volume ratio of 0.60. The CBOE's equity put/call volume ratio stands at 0.56, while the ISE's ratio weighs in at 0.70. United Technologies Today, we are going to deal with Dow component United Technologies (NYSE:UTX). According to Hoover's, UTX is more commonly known through names such as Otis (elevators), Pratt & Whitney (engines), Sikorsky (helicopters), and Carrier (heating and air conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful. ). Today, UTX appears on our notably active call list thanks to heavy activity on its January 2007 65 call (UTX AM). The activity may have been spurred by the blue chip's inclusion in a MarketWatch report titled, 10 Stocks That Could Outperform in 2007. Digging into the option activity a bit, it appears that four sizeable chunks of options crossed the tape at the bid price. Those four blocks consisted of 230, 286, 1,213, and 1,672 contracts, respectively. The fact that they crossed at the bid price suggests that these contracts were potentially sold, but we need to wait until tomorrow to see how the activity translates and its effect on the options' implied volatility Implied volatility The expected volatility in a stock's return derived from its option price, maturity date, exercise price, and riskless rate of return, using an option pricing model such as Black-Scholes. . One thing is certain, UTX is currently trading below 65. Moreover, this level has provided resistance on various different occasions since the beginning of May. Adding to the potential resistance at this level is the fact that it is the site of peak call open interest in the January and February options series. So, is UTX's chances at breaking through the overhead resistance equal to those of a snowball in the realm of Satan? My answer is no; let's take a look at my rationale. The first reason I think the 65 level may fall is UTX's 50-week moving average. This trendline has helped guide the stock higher since the middle of June 2004. Since that time, the equity has closed below this trendline just three times. As this moving average continues its ascending pattern, watch for it to lift the stock. The final reason I think UTX is destined des·tine tr.v. des·tined, des·tin·ing, des·tines 1. To determine beforehand; preordain: a foolish scheme destined to fail; a film destined to become a classic. 2. to break through the 65 level comes in the form of a tag team tag team n. A team of two or more wrestlers who take turns competing against one of the wrestlers on another team, with the idle teammates waiting outside the ring until one of them is tagged by their competing teammate. : its 10-month and 20-month moving averages. The last time UTX finished a month below this dynamic duo
Dynamic Duo (다이나믹 듀오) is a Korean hip hop duo, made up of members Choiza and Gaeko (former members of the trio, CBMass). was March 2003. As this terrific tandem continues to march higher, watch for the stock to tag along for the ride. Trepidation creeps in when I take a look at UTX's sentiment backdrop. Very little exists in the form of short-covering support for the firm. Less than one percent of UTX's float is sold short, and it would take only two days to buy back these shorted shares. Moreover, 14 of the 16 analysts following UTX rate it a "buy" or better. In fact, 69 percent (11 of 14) of those dole out a "strong buy" rating on the firm. This configuration leaves little potential for upgrades, which could push the stock through the overhead resistance at 65. So, why do I think UTX will eventually fight through the 65 level? First, its historical performance. The second reason is that the speculative options crowd is bearishly aligned. UTX's Schaeffer's put/call open interest ratio (SOIR SOIR Schaeffer's Put/Call Open Interest Ratio SOIR Simultaneous Operations on Intersecting Runways ) of 0.85 is higher than 84 percent of those taken during the past 52 weeks. If this bearish bunch catches on to the company's performance, we could see some buying pressure creep into the picture. If you want to make a bit of money, take a look at UTX, a long look (if you catch my drift). Click here to see a Daily Chart of UTX Since May 2006, a Weekly Chart of UTX Since January 2004 With 50-Week Moving Average, and a Monthly Chart of UTX Since January 2002 With 10-Month and 20-Month Moving Averages: http://www.schaeffersresearch.com/wire?ID=17918. 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 and get entered to win an iPod Nano. http://www.schaeffersresearch.com/redirect.aspx?CODE=PRMOU13M&PAGE=1. 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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