Schaeffer's Option Activity Watch Features Barr Pharmaceuticals, Coach, Edison International.

CINCINNATI -- Today's Schaeffer's Option Activity Watch Features Barr Pharmaceuticals (NYSE:BRL), Coach (NYSE:COH), and Edison International (NYSE:EIX). 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/redirect.aspx?CODE=PROAW1M&PAGE=1 .

Schaeffer's Option Activity Watch:

1. According to Hoover's, Barr Pharmaceuticals (NYSE:BRL) makes approximately 100 generic and proprietary drugs in such areas as anti-infectives, oncology, cardiology, psychotherapeutics, and women's health. The company has placed an emphasis on providing generic oral contraceptives and currently has 13 such drugs on the market. Optimism has skyrocketed toward this pharmaceutical firm recently. The stock's Schaeffer's put/call open interest ratio (SOIR) has dropped to 0.27, its lowest level in a year. What's more, open interest at the security's August 35 call jumped by almost 2,000 contracts on Friday to 4,217. This front-month option is now the site of peak call open interest. In addition, short sellers have abandoned their bearish bets on BRL. Short interest on the stock plunged by 34 percent to 1.3 million shares - a new multi-year low. Wall Street even favors the firm, with eight of the 13 analysts following BRL rating it a "buy" or better. Any downgrades from this optimistic bunch could spell trouble.

This wealth of optimistic sentiment is quite surprising considering the stock's technical performance. BRL has declined under resistance at its 10-week and 20-week moving averages since mid-March. The equity has also closed two consecutive months below its 10-month and 20-month trendlines. Furthermore, the security's recent weakness has left its long-term moving averages poised for a bearish cross. This combination of weak technical performance and extreme optimistic sentiment has bearish implications from a contrarian perspective.

There is potential catch to this bearish story. The company is slated to report earnings on August 5, with the Street expecting a profit of 57 cents per share. This is a 16-percent improvement over earnings for the same period a year ago. Historically, the firm has surpassed the consensus estimate for the past four quarters. However, with expectations already sitting so high heading into the announcement, BRL may be hard pressed to impress investors. Anything less than a stellar earnings report could result in sharp losses for the stock.

Click the following link to see the Weekly Chart of BRL since November 2003 with 10-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=10727 .

2. Coach (NYSE:COH) is a trendy designer of classically styled, high-quality leather goods and accessories, including luggage, purses, outerwear, and gloves. The company also licenses its name for watches, footwear, and furniture. The stock was the focus of some heavy put trading on Friday, as open interest at its August 40 strike spiked from 3,572 to 5,184 contracts. This increase in put activity pushed the equity's SOIR up to 0.98 - its highest level in a year. Not everyone is betting against the shares, however. Short sellers unloaded some of their positions in July, pushing short interest down 13 percent to 3.2 million. At the stock's average daily trading volume, these positions can be covered in less than three days. This lack of short interest sharply reduces the chances of COH benefiting from a covering rally. Brokerage firms are also enamored of the firm, with 10 of the 14 analysts following COH rating it a "buy" or better.

Technically speaking, the equity is struggling to hold support at its rising 20-week moving average. The equity has suffered only one weekly close below this trendline since mid-February. The security has also risen on support from its 10-month moving average since August 2002. COH may still have more room to run as options players unwind their bearish bets and jump on the stock's bandwagon.

Traders should also be aware that COH is scheduled to step into the earnings confessional on August 3. Analysts are looking for a profit of 31 cents per share, nearly doubling its year-ago gain of 16 cents per share. Historically, the firm has surpassed the Street estimate for the past five quarters by an average of 12 percent. Another positive report could spur the security higher.

Click the following link to see the Weekly Chart of COH since February 2003 with 10-Week and 20-Week Moving Averages: http://www.schaeffersresearch.com/wire?ID=10727 .

3. Utility giant Edison International (NYSE:EIX) continues to rally along the support of its 10-week and 20-week moving averages. Since November 2002, the stock has suffered only three weekly closes below both of these trendlines. The equity is also enjoying additional support at its 10-month moving average. Compared to the broad market, EIX has outperformed the S&P 500 Index since October 2002.

Despite its stellar technical performance, investors are mixed on the stock. Options speculators are in love with the company. The stock's SOIR of 0.11 is lower than all but two percent of the readings taken over the past year. Furthermore, investors continue to bulk up their call positions. The security's September 25 call added more than 7,500 contracts on Friday. On the other hand, short interest skipped 21 percent higher in July to 8.7 million shares - a new annual high. At the equity's average daily trading volume, it would take more than five days for traders to cover their positions. An unraveling of these bearish bets could fuel a significant rally in the shares. Wall Street also has some qualms over EIX. According to Zacks, seven of the nine analysts following the stock rate it a "hold." This leaves ample room for potential upgrades that could push the security higher.

Click the following link to see the Weekly Chart of EIX since October 2002 with 10-Week and 20-Week Moving Averages: http://www.schaeffersresearch.com/wire?ID=10727 .

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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 .