Schaeffer's Midday Options Update Features Western Wireless, Dell, Charter One Financial, Prudential Financial.

Business Editors

CINCINNATI--(BUSINESS WIRE)--May 5, 2004

Today's Schaeffer's Midday Options Update Features Western Wireless (Nasdaq:WWCA), Dell (Nasdaq:DELL), Charter One Financial (NYSE:CF), Prudential Financial (NYSE:PRU). 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

The market is trading marginally higher today after the bombing attacks in Greece and yesterday's FOMC report. The committee's remarks were largely expected, but the removal of the "patient" wording gave some investors reason for pause. For a deeper look at the Fed's remarks see this morning's Schaeffer's Opening View: Recapping the Fed and Violence in Greece.

Meanwhile, investors were greeted today with economic data from the Institute for Supply Management (ISM). According the ISM, the non-manufacturing index rose to a record 68.4 percent from the previous 65.8 set last month. The larger-than-expected increase indicated rising strength in the services sector. Economists had expected the index to slip to 64.5 percent. Digging into the report, new orders rose to 65.6 percent, the employment index rose to 54.5 percent, and the prices paid index rose to 68.6 percent. Readings over 50 percent indicate expansion.

In broker calls today, the oil services sector took a thrashing after a major brokerage downgraded the group to "underweight" from "overweight." The analyst cited a potential end to a cycle for high stock prices within the sector, stating that "This is NOT just a seasonal downgrade." Elsewhere in the analyst world, Dell (Nasdaq:DELL) received an upgrade to "buy" from "neutral," and a lift in its target price from $35 to $40. The brokerage cited "new-found enthusiasm" regarding DELL's earnings over the next several years.

Moving to mergers and acquisitions news, Citizens Financial Group, a unit of the Royal Bank of Scotland Group, announced that it would purchase Charter One Financial (NYSE:CF) in a deal worth $10.5 billion. Once completed, the merger would make Citizens one of the nation's 10 largest commercial banks.

In earnings news, Prudential Financial (NYSE:PRU) posted a profit of $290 million, or 57 cents per share for the first quarter, rising over its year-ago profit of $197 million, or 39 cents per share. Excluding items, PRU earned $379 million, or 74 cents per share, slipping past the Street's view by a penny.

At 12:57 a.m. eastern time, the Dow Jones Industrial Average (DJIA - 10299.2) is down 0.17 percent and the S&P 500 Index (SPX - 1119.66) is lower by 0.11 percent. The Nasdaq Composite (COMP - 1954.4) is up 0.22 percent. At 12.58 a.m. in the options pits, 1,047,557 calls and 771,295 puts traded for a composite put/call ratio across all five exchanges of 0.73. The CBOE put/call ratio for equity options weighed in at 0.64.

Western Wireless (Nasdaq:WWCA) has surged nearly 15 percent today after the firm blew away investors by reporting better-than-expected first-quarter earnings numbers. The company posted a profit of $31.4 million, or 32 cents per share, compared to last year's 30 cents per share. The figure trounced the Street's view by a whopping 20 cents as revenue for the quarter soared 37 percent over the previous period.

Shifting to the sentiment picture for WWCA reveals that investors were not expecting much out of this rural wireless provider. Options speculators were relatively complacent toward the security, as WWCA's Schaeffer's put/call open interest ratio of 0.46 rests smack in the middle of all readings taken over the past year. Today in the options pits, puts are the heavy favorite among investors, as 4,957 contracts have already crossed the tape at the stock's May 22.50 strike on open interest of 5,189. Given today's surge in price action, this could be a sign of investors closing out their positions, but we will have to wait until tomorrow to see how much of this activity translates into new positions.

Optimism is showing signs of creeping into the equity's short-interest picture, as short sellers decreased their positions by three percent during April. However, it would still take nearly four days to cover the 5.9 million WWCA shares sold short at the security's average daily trading volume. Today's earnings report could definitely spark a short covering rally in the shares. Alternately, Wall Street's opinion has a bullish slant, as six of the 10 covering analysts rate the shares a "buy" or better. Today's blasting of the consensus earnings estimates could yet prompt a few upgrades from this group, adding to the WWCA's rally.

Turing to the technical picture, before today's surge, WWCA had been trending lower since setting a new two-year high at 27.40. Staunch resistance at the stock's declining 10-day and 20-day moving averages had driven it below key support at both its intermediate-term trendlines. Today's positive price action, however, saw the shares gap above resistance/support at the 24 level. The security is has also regained the steadfast support of its 10-week and 20-week moving averages - trendlines that have supported the WWCA since May 2003. One note of concern still troubles the stock though, as today's rally appears to have been cut short by resistance at the 25 level. WWCA has only posted two weekly closes above this level since January 2002.

Given the decent amount of pessimistic sentiment among the short sellers and the potential for analyst upgrades, today's positive earnings surprise and subsequent rally could set WWCA back on the path to set a new string of yearly highs.

Click the following link to see the Daily Chart of WWCA since February 2004 with 10-Day and 20-Day Moving Averages: http://www.schaeffersresearch.com/wire?ID=10069 .

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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 .