Schaeffer's Midday Options Update Features Whirlpool.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Whirlpool (NYSE:WHR). 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: Is Your Portfolio Relaxing in the Whirlpool?

As we head into the final hours of the trading session, not much has improved on the Street. The major market indices are still modestly lower, even after the Dow flirted with its all-time high early in the session. In news hitting the Street this morning, the University of Michigan announced that consumer sentiment strengthened in late September, with its consumer sentiment index rising to 85.4 from 84.4 earlier in the month. This figure marked the highest sentiment level since April. The increase was in line with forecasts of Wall Street economists.

Most-Active Options Update

At 1:24 p.m. Eastern Time, the Dow Jones Industrial Average (DJIA - 11,711.3) is currently down 0.07 percent and the S&P 500 Index (SPX - 1,338.74) has dropped 0.05 percent. Meanwhile, the Nasdaq Composite (COMP - 2,270.6) has advanced 0.03 percent. At 1:25 p.m. Eastern Time, 1,780,259 calls have changed hands compared to 1,380,262 puts, equaling a single-day put/call volume ratio of 0.77. The CBOE's equity put/call volume ratio stands at 0.68, while the ISE's ratio comes in at 0.74.

Whirlpool

According to Yahoo!Finance, Whirlpool (NYSE:WHR) engages in the manufacture and marketing of home appliances. Even without a Scylla to help it devour the competition, this Charybdis of the home appliance realm is one of the most well-known and respected in the market, sporting a market capitalization of roughly $6.6 billion to boot. Even the company's Greek mythological counterpart can't claim that!

Today, however, WHR is sucking down put contracts in the options pits. More than 6,000 of the bearishly aligned contracts have crossed the tape at the November 80 strike so far on the session, with open interest numbering a mere 59 contracts. With this kind of activity, we are sure to see some translation into new positions at this strike come Monday. Currently, the 75 strike holds the title for peak put open interest in the front three months of options, but if the 80 strike continues to see days like today, it could quickly challenge for the crown.

How does this activity affect WHR? Well, the shares are currently trading just below the 85 level and could certainly use the added support of some sizeable put adds below. Without this potential for options-related support, however, the 80 region is shaping up to be a solidly defended battleground of support. Currently, WHR's 80-week moving average resides in the 80 area, and the stock has closed only a handful of weeks below this trendline since May 2005. Furthermore, the 80 level was a former spot of resistance for WHR from August 2005 through February, indicating that it could reverse roles and provide a layer of technical support for the shares. However, in order to test this wellspring of support, WHR would have to first break the support of its 50-week moving average, upon which the shares are currently perched.

Sentiment Rundown for WHR:

* Percent of analysts tracked by Zacks who rate the stock with a "buy": 50%

* Number of analysts tracked by Zacks: 4

* Short interest as a percent of float: 10.69%

* Short-interest ratio: 8.01

* Schaeffer's put/call open interest ratio (SOIR): 1.88

* SOIR percent rank: 98%

* Schaeffer's Equity Scorecard: 7.0

On the sentiment front, WHR appears to be primed and ready to go for a rebound. Analysts have largely ignored the shares amid their run higher, and with only four brokerage firms offering up an opinion, there is ample room for more analysts to join the party. Furthermore, short sellers are panning the stock heavily, as more than 10 percent of WHR's float is sold short and it would take roughly eight days to buy back these bearish bets. Should the security bounce from support, these naysayers could be forced into buy-back mode, creating a short-squeeze situation for WHR. Looking at a chart of the stock's short-interest situation, I noticed that the number of WHR shares sold short continues to rise along with the shares. Not only is this a positive for the stock, as it has been able to post gains amid this pessimism, but these sellers have to become buyers eventually.

Finally, today's interest in put options by the speculative options crowd is not just a one-day fad. A chart of the stock's Schaeffer's put/call open interest ratio (SOIR) reveals that puts have been the investment vehicle of choice for options players during the past several weeks. This bodes well for WHR, as the shares tend to trend in the direction of this ratio. Furthermore, a look at the stock's open interest configuration reveals little in the way of potential options-related resistance. Roughly 1,500 calls wait at the 90 level in the October series, while a pittance of these bullish bets reside at the 85 level.

With sentiment strongly in favor of a rally for WHR, and the stock poised to rebound from long-term support, I find very few reasons not to be bullish on the equity. Our Schaeffer's Equity Scorecard even doles out a rating of 7.0 out of 10, indicating that the path of least resistance leads higher. Personally, I view WHR's consolidation into its rising 50-week moving average as a buying opportunity for stock investors, while options players may want to check out an in-the-money, intermediate- to long-term call position. As always, thanks for reading and good luck with your trading.

Click here to see a SOIR Chart for WHR since September 2005 and a Weekly chart of WHR Since May 2005 with 50-week and 80-week moving averages: http://www.schaeffersresearch.com/wire?ID=17448

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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.