Schaeffer's Midday Options Update Features AutoNation, Ford Motor, Research in Motion Limited, Starbucks, and Phelps Dodge.CINCINNATI -- Today's Schaeffer's Midday Options Update features AutoNation (NYSE NYSE See: New York Stock Exchange :AN), Ford Motor (NYSE:F), Research in Motion Limited (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :RIMM (Rambus Inline Memory Module) See RDRAM. See also RIM. ), Starbucks (NASDAQ:SBUX SBUX Starbucks Corporation (stock symbol) SBUX Starbucks Coffee Company ), and Phelps Dodge Phelps Dodge Corporation is a former United States company founded in 1834 by Anson Greene Phelps and William E. Dodge. On March 19, 2007, it was acquired by Freeport-McMoRan and now operates under the name Freeport-McMoRan Copper & Gold Inc. (NYSE:PD). 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/redirect.aspx?CODE=PRMOU12M&PAGE=1 . Options Update: Can Phelps Dodge (PD) Continue to Ride Higher? According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the Labor Department The Department of Labor (DOL) administers federal labor laws for the Executive Branch of the federal government. Its mission is "to foster, promote, and develop the welfare of the wage earners of the United States, to improve their working , U.S. nonfarm payrolls Nonfarm payrolls is an economic employment report released monthly. It is a compiled name for goods-producing, construction and manufacturing companies. The data is released at 1:30pm BST on the first Friday of every month, or according to the U.S. increased by 211,000 in March, topping analyst's expectations. According to a survey of economists by MarketWatch, payrolls were expected to come in at 187,000. The month's job growth was concentrated in services, with 202,000 jobs created. Goods-producing industries added 9,000 jobs, while the government tacked on 24,000. In addition, the jobless rate dropped to 4.7 percent from 4.8 percent. The jobless rate now matches the cyclical low. Elsewhere, the Commerce Department reported that inventories at U.S. wholesalers increased by 0.8 percent in February, while sales were flat. The consensus expected an increase of 0.5 percent. In addition, the yield on the 30-year Treasury bond broke above the five-percent level earlier this morning. This is the first time the long bond has eclipsed this level since being resurrected in February. The last time the 30-year Treasury bond was above this level was December 2004. AutoNation for the People AutoNation (NYSE:AN) upped its first-quarter estimate for earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the to a range of 36 to 38 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . Previously, the company's forecast stood at 32 to 35 cents per share. AN's results received a boost from its premium luxury business. The firm also announced that it expects its planned equity tender offer, debt tender offer, and consent solicitation Consent Solicitation A solicitation by one party to the stakeholders of a particular security for the consent of a material change. Notes: Should the majority of stakeholders provide valid consent prior to the consent expiry date, the issuer may then follow through with will add 10 to 15 cents per share per year. Here is Your Gold Watch Ford Motor (NYSE:F) announced late yesterday that President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. Jim Padilla Jim Padilla is an American automobile industry executive. He was born in Detroit, Michigan, attending the University of Detroit and earning bachelor's and master's degrees in chemical engineering and a master's degree in economics. He is also a Distinguished Eagle Scout. plans to retire effective July 1. Padilla has been with F for 40 years. The company's Chairman and Chief Executive Bill Ford will assume Padilla's responsibilities through heading a new executive operating committee. This committee will be composed of the company's executive vice presidents. In addition, Padilla will not stand for re-election to the company's board at the annual meeting in May. RIMM Shot Yesterday, Research in Motion Limited (NASDAQ:RIMM) posted fourth-quarter results of 65 cents per share (excluding charges). While these earnings were within the company's range of 64 to 66 cents per share, they fell short of the consensus estimate for 67 cents per share. The company stated that operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the first quarter will rise 12 percent from the fourth quarter, as sales and marketing costs are expected to rise 13 percent. The company forecast first-quarter sales between $580 million and $610 million, shy of the consensus estimate of $625 million. Excluding expenses, RIMM expects to earn between 62 and 67 cents per share in the first quarter, short of the Street's forecast for 76 cents per share. Caffeinated Results Starbucks (NASDAQ:SBUX) quenched quench tr.v. quenched, quench·ing, quench·es 1. To put out (a fire, for example); extinguish. 2. To suppress; squelch: the thirst of analysts with its report that March same-store sales increased by 10 percent. According to Thomson First Call, the consensus estimate stood at an increase of 7.6 percent. SBUX added that overall sales were 24 percent higher in the five-week period, totaling $743 million. Most-Active Options Update At 1:48 p.m. eastern time, the Dow Jones Industrial Average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. (DJIA DJIA See Dow Jones Industrial Averager (DJIA). - 11,130.8) is down 0.76 percent. The S&P 500 Index (SPX (Sequenced Packet EXchange) The transport layer protocol in the NetWare operating system. Similar to the TCP layer in TCP/IP, it ensures that the entire message arrives intact. SPX uses NetWare's IPX as its delivery mechanism. - 1,296.32) has lost 0.97 percent, and the Nasdaq Composite (COMP - 2,339.5) has dropped 0.92 percent. At 1:49 p.m. Eastern time, 2,755,665 calls have changed hands compared to 2,051,116 puts, equaling a single-day put/call volume ratio of 0.74. The CBOE's equity put/call volume ratio weighed in at 0.86. Phelps Dodge No, it isn't a car dealership. In fact, according to Hoover's, Phelps Dodge (NYSE:PD) is the world's second-largest copper producer. PD doesn't just produce copper; gold, silver, molybedenum, and other mineral and chemical by-products are on the company's menu. Yesterday, the company announced that it will pay out a special dividend of $2 per share, or roughly $400 million. This news sent the shares to a new all-time high, but have fallen back to earth a bit today. In addition, RBC RBC red blood cell. RBC or rbc abbr. red blood cell RBC, n See red blood cell count. RBC red blood cells; red blood (cell) count (see blood count). Capital started PD at "sector perform" this morning and assigned a price target of $95. Today, PD's April 77.50 put (PDPE PDPE Professional Development and Personal Enrichment (Middle Tennessee State University) ) made our most-active options charts (which you will find below). This strike is not the site of peak put open interest in either April or May. In fact, there is little in the way of put open interest to provide support for the shares. By far, there is more call open interest overhead to apply a bit of downside pressure on the equity. The 80 strike is the site of peak call open interest in the two front months. Fortunately, it appears that PD will finish the day above the 80 strike, thus avoiding its potential resistance. Given the current run that metals are on, I find it hard not to try and jump on the momentum and ride PD higher. However, history shows that PD would not be a simple "momentum play." Comparing its performance to that of the S&P 500 Index (SPX), one will see that PD has steadily outstripped the broader index on a monthly basis since August 2001. One concern for me is the fact that PD is so far ahead of its 10-month moving average. Yes, since December 2002, the stock has finished below this trendline a mere three times; easily qualifying this support as solid. However, falling to this trendline's support would mark a drop of nearly 17 percent from PD's current price (which is 84.17). That is a bit more of a drop than I would like to see. While the drop from PD's current price to its 10-month moving average (which is near the 70 level) is large, there is a potential positive concerning a drop. A daily chart of PD shows that the 82 level acted as resistance in the past. Consistent Schaeffer's readers know that prior resistance can provide support when given the chance. Watch for that to happen here. Let's look at the sentiment backdrop of PD: --Percent of analysts tracked by Zacks who rate the stock with a "hold" or worse: 64% --Number of analysts tracked by Zacks: 11 --Short interest as a percent of float: 2.44% --Short-interest ratio: 1.62 --Schaeffer's put/call open interest ratio (SOIR SOIR Schaeffer's Put/Call Open Interest Ratio SOIR Simultaneous Operations on Intersecting Runways ): 0.85 --SOIR percent rank: 73% --Overall Schaeffer's Equity Scorecard rating: 5.5 The options pits have not been impressed by PD's solid performance. The firm's Schaeffer's put/call open interest ratio (SOIR) of 0.85 rates higher than 73 percent of those taken during the past 52 weeks. This reading indicates that pessimism is at a high, but not extreme, level. In addition, Zacks shows that seven of the 11 analysts covering PD rate it a "hold." Should this group decide to shift its coverage to the positive end of the spectrum, the shares could receive a further boost. Monthly chart of PD Since August 2002 With 10-Month Moving Average: http://www.schaeffersresearch.com/wire?ID=15746 . The best way to take advantage of the timely Schaeffer commentaries is to sign up to receive their free e-newsletters -- Opening View, Market Recap and Monday Morning Outlook. Click here to have the Schaeffer's commentaries delivered to you free via email every day. http://www.schaeffersresearch.com/redirect.aspx?CODE=PRMOU12M&PAGE=1 . 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 . |
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