Schaeffer's Option Activity Watch Features Andrx, Cendant, General Mills.

Business Editors

CINCINNATI--(BUSINESS WIRE)--May 6, 2004

Today's Schaeffer's Option Activity Watch features Andrx (Nasdaq:ADRX), Cendant (NYSE:CD), and General Mills (NYSE:GIS). The Option Activity Watch is a report that takes a closer look at three equities appearing in our most unusual option activity report from the previous day. The Option Activity Watch is published on 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 Option Activity Watch:

1. Andrx (Nasdaq:ADRX) develops time-released generic versions of brand-name drugs such as Cardizem, Glucophage, and Naprelan. The company reported first-quarter earnings last night of 36 cents per share, trouncing the Street forecast of 26 cents per share. Revenue for the quarter rolled in at $292.2 million. The firm cited royalties and strong drug demand for the stellar performance. Investors were optimistic heading into the earnings report, as call open interest popped at the equity's May 25 strike. The front-month option added almost 1,400 contracts in trading, making it the site of peak May call open interest. However, the equity's Schaeffer's put/call open interest ratio (SOIR) is still higher than 93 percent of all those taken over the past year. (High SOIRs are a strong indication of heavy investor pessimism.) On the other hand, the number of ADRX shares sold short plunged by 36 percent in April to 1.9 million. At the stock's average daily trading volume, these bearish bets can be bought back in less than two days of trading. It is unlikely the security will find any kind of support from a short-squeeze situation. Wall Street is somewhat split on the company. According to Zacks, six analysts rate it a "buy" or better and six rate it a "hold."

Technically speaking, ADRX tumbled roughly 28 percent from its March 5 high to its April 30 low. Since then, the equity has rebounded into resistance at its declining 20-day moving average. In fact, the shares have drifted lower over the past two months under the guidance of their descending 10-day and 20-day trendlines. While the stock is clinging to support at its 10-month moving average, the equity must still break back above resistance at its 10-week and 20-week moving averages. Investors will want to keep a close eye on this stock. A break through long-term support could send the security sharply lower, as short sellers flock to this stock and analysts downgrade the firm. Conversely, if the shares can reclaim support at their short- and intermediate-term trendlines, ADRX may win the pessimistic options players over to the bullish camp, increasing buying pressure.

Click the following link to see the Daily Chart of ADRX since February 2004 with 10-Day and 20-Day Moving Averages:

http://www.schaeffersresearch.com/wire?ID=10079 .

2. Cendant (NYSE:CD) has its hands in a little bit of everything. The company is the world's top hotel franchiser, with more than 6,400 locations under the Days Inn, Super 8, and AmeriHost Inn brands. The firm also owns Avis Group, Budget Rent A Car, Century 21, Coldwell Banker, and tax preparation company Jackson Hewitt. Adding to its list, CD announced yesterday that it had acquired Landal Green Parks for about $150 million in cash. This new acquisition specializes in the rental of privately owned vacation homes in European holiday parks. The firm has more than 9,000 vacation homes in places like Holland, Germany, Austria, and the Czech Republic.

The stock has been the focus of increasing pessimism recently. The security's SOIR has slowly risen over the past two months to 0.64, and is now higher than 61 percent of all those taken over the past year. In fact, open interest at the equity's May 22.50 put increased from 5,480 to 7,170 contracts overnight. In addition, the security's short interest edged higher in April to 32.2 million shares. With a short-interest ratio of 5.99 days to cover, the stock could easily enjoy additional support from investors buying back their bearish bets. Brokerage firms have yet to catch on to this security, with just seven analysts following the company. Of those seven, five rate it a "buy" and two award it a "hold."

From a technical perspective, CD has pulled back to test support at its rising 20-week moving average. The security has steadily risen along the support of its 10-week and 20-week trendlines since February 2003. Furthermore, the stock has outperformed the broad market, with its weekly relative-strength measure versus the S&P 500 Index climbing on support from its 20-week trendline. A rebound off current support could force more short sellers to head for the exit, sending the stock even higher. However, a break below the stock's 20-week moving average could send CD down for a test of support at its 10-month trendline (at 21.80).

Click the following link to see the Weekly Chart of CD since January 2003 with 10-Week and 20-Week Moving Averages:

http://www.schaeffersresearch.com/wire?ID=10079 .

3. Open your cupboard and you're likely to find a General Mills (NYSE:GIS) product. The company is the number-two cereal maker in the United States, with brands like Cheerios, Chex, Total, Kix, and Wheaties. Adding to its product mix, GIS is a heavyweight in flour (Gold Medal), baking mixes (Betty Crocker, Bisquick), dinner mixes (Hamburger Helper), fruit snacks (Fruit Roll-Ups), and grain snacks (Chex Mix, Pop Secret). It is also tops in refrigerated yogurt (Colombo, Go-Gurt, and Yoplait). Furthermore, its acquisition of Pillsbury doubled the company's size, making it one of the world's largest food companies. The shares gapped sharply lower this morning after one major brokerage firm downgraded GIS from "overweight" to "equal weight" on concerns over foodservice outlook, commodity costs, and other expenses. The security has broken below potential support at its 20-day moving average and appears to be pulling back to its 10-week trendline. Furthermore, the stock continues to encounter resistance in the 48-50 area. This region has capped the equity's rally attempts since January 2003.

Pessimism is overwhelming toward this food producer. The equity's June 45 put added more than 7,700 contracts on Wednesday. This sharp increase in put activity caused the stock's SOIR to surge from 0.93 to 2.02 - indicating that puts (bearish bets) more than double calls (bullish bets) in the front three months of options. The current reading is now higher than 98 percent of all those taken over the past 12 months. What's more, short interest skyrocketed 14 percent over the most recent reporting period to 8.2 million shares. At the stock's average daily trading volume, it would take almost six days to cover these bearish bets. An unwinding of these positions could boost the stock higher.

Click the following link to see the Weekly Chart of GIS since December 2001 with 10-Week and 20-Week Moving Averages:

http://www.schaeffersresearch.com/wire?ID=10079 .

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About Schaeffer's Investment Research (www.SchaeffersResearch.com)

Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is 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 .