Schaeffer's Midday Options Update Features Apple Computer and Intel.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Apple Computer (NASDAQ:AAPL) and Intel (NASDAQ:INTC). 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: Apple Computer and the Worldwide Developers Conference

Second-quarter productivity of the U.S. non-farm business sector rose at a 1.1 percent annual rate. Unit labor costs - a key gauge of inflationary pressures - rose 4.2 percent annualized, marking the largest increase since the fourth quarter of 2004. Both measures were above expectations. Economists had forecast a 0.9-percent in productivity for the second quarter. They forecast unit labor costs to rise 3.5 percent. In the first quarter, productivity was revised to a 4.3-percent increase from 3.7 percent previously. First-quarter unit labor costs rose 2.5 percent rather than the 1.6-percent increase originally reported. On a year-on-year basis, productivity is up 2.4 percent. Unit labor costs were up 3.2 percent on a year-on-year basis, the fastest pace since the fourth quarter of 2000.

Most-Active Options Update

At 1:20 p.m. Eastern Time, the Dow Jones Industrial Average (DJIA - 11,239.3) has added 0.18 percent. The S&P 500 Index (SPX - 1,278.15) has gained 0.19 percent, and the Nasdaq Composite (COMP - 2,076.8) has advanced 0.21 percent. At 1:20 p.m. Eastern Time, 2,288,757 calls have changed hands compared to 1,414,744 puts, equaling a single-day put/call volume ratio of 0.61. The CBOE's equity put/call volume ratio stands at 0.71, while the ISE's ratio comes in at 0.71.

Apple Computer

As always, Steve Jobs' presentation yesterday at Apple Computer's (NASDAQ:AAPL) Worldwide Developers Conference was masterful. The Phineas Taylor Barnum of Silicon Valley announced, amongst many other things, that the company's migration to Intel (NASDAQ:INTC) processor chips is now complete, and explained 10 key features of Leopard, the next major release of the Mac operating system. The faithful loved the 85-minute session, of course, and lapped up the statistics. For instance, I learned that AAPL retail stores, including the shiny new one on New York City's Fifth Avenue, welcomed 17 million visitors last quarter, and 1.33 million Macs shipped during that period. Sales growth of Macs far outpaced that of the boring old 'Wintel' PC, and half of the Macs sold during the most recent quarter went to customers new to the platform.

Alas, Wall Street seems less impressed. At last check, the stock was down more than one percent at $66.49. It has breached its 10-day and 10-month moving averages.

I've been watching AAPL options today, and the first one that caught my eye was the August 62.50 put (QAA TZ), which traded more than 3,000 contracts early this morning, on initial open interest of slightly more than 24,000 contacts. However, the August 65 put (QAA TM) is now leading the field, with volume of 11,067 contracts and open interest of 21,948 contracts.

Now, remember that an accumulation of puts might be able to offer options-related support if there are enough contracts in residence and if the strike price of the option is below the price of the underlying equity. Therefore, heavy put trading at the front-month 65 strike is interesting, but that put open interest of 21,948 is dwarfed by call open interest at the August 65 strike, which amounts to almost 40,000 contracts.

Turning to the sentiment, short sellers are steering clear of the shares. It would take less than one day to buy back all the shorted positions at the current average daily trading volume. Therefore, short-covering support is unlikely to be available. According to Zacks, 14 of the 16 analysts covering AAPL rate the shares a "buy" or better, leaving plentiful room for downgrades if AAPL continues to bump its head on the 70 level.

However, Schaeffer's put/call open interest ratio (SOIR) for AAPL is at an annual high, suggesting that there could be money waiting on the sidelines from the options-trading crowd.

I like AAPL. I don't own any of the stock but I do own some Macs. There will, I think, be opportunities to buy into AAPL and make money. But I don't think we'll see them this week, unfortunately.

Click here to see a Daily chart of AAPL since April 2006 with 10-day moving average: http://www.schaeffersresearch.com/wire?ID=17087 .

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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 .