Schaeffer's Midday Options Update Features General Motors, Merck, Merrill Lynch, Goldman Sachs, and Advanced Micro Devices.

CINCINNATI -- Today's Schaeffer's Midday Options Update features General Motors (NYSE:GM), Merck (NYSE:MRK), Merrill Lynch (NYSE:MER), Goldman Sachs (NYSE:GS), and Advanced Micro Devices (NYSE:AMD). 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: Calls Active on Advanced Micro Devices Ahead of Earnings

The market has pulled back this afternoon on growing concerns regarding crude oil supplies, rising interest rates, and continued inflation growth. At last check, all three major market indices were in the red while the price of gold has dipped back below the 600 level.

Strong Retail Sales

In economic news, according to a survey by the International Council of Shopping Centers (ICSC) and UBS Securities LLC, retail sales climbed 3.9 percent for the week of April 8 compared to the same period a year ago. The group stated that this is the strongest showing since the week of March 4, when sales rose by 4.3 percent on a year-over-year basis. On a week-over-week basis, sales rose 1.8 percent. For April, ICSC expects monthly chain store sales to rise by 5.0 percent to 5.5 percent on a year-over-year basis.

General Motors Struggles to Strengthen

General Motors (NYSE:GM) was briefly in the black this morning following its announcement that it is selling its 7.9-percent stake in Isuzu Motors. The automaker is selling its stake to the Japanese company's business partners and major shareholders Mitsubishi, Itochu, and Mizuho Corporate Bank. The American company expects to bring in roughly $300 million, which will be used to support its North American turnaround plan, to finance future growth initiatives, and strengthen the balance sheet.

Merck to Appeal Vioxx Decision

Merck (NYSE:MRK) has pulled back 0.64 percent this morning after announcing that it will appeal a New Jersey jury's verdict awarding one of the state's residents $9 million in punitive damages, as well as last week's split verdict for a compensatory damages award, regarding its recalled Vioxx painkiller. Last week, a state jury delivered a split decision in the cases of two men who said they suffered heart attacks after taking MRK's Vioxx. The jurors found the company liable for one of two former Vioxx users' heart attacks and ordered he receive $4.5 million in damages. The pharmaceutical firm reported that it will appeal those portions of the verdict that found the company violated the state consumer statute with respect to both plaintiffs. MRK is currently examining various bases for appeal.

More Legal Woes

Elsewhere, the U.S. Attorney's office in New York reported that it charged Stanislav Shpigelman, an investment banking analyst at Merrill Lynch (NYSE:MER) and Eugene Plotkin, an associate in fixed income research at Goldman Sachs (NYSE:GS) in a $6.7-million insider trading scheme. The two traded ahead of announced deals by MER and with pre-publication copies of BusinessWeek magazine.

Earnings Spotlight

After the close last night, Micron Technology (MU) banked a second-quarter profit of $193.2 million, or 27 cents per share, beating its year-ago profit by a dime. Sales for the quarter tumbled six percent to $1.225 billion. Meanwhile, the Street had predicted a profit of six cents per share on sales of $1.345 billion.

Most-Active Options Update

At 1:12 p.m. Eastern time, the Dow Jones Industrial Average (DJIA - 11,095.5) is down 0.41 percent. The S&P 500 Index (SPX - 1,289.48) has dropped 0.55 percent, and the Nasdaq Composite (COMP - 2,314.4) has declined 0.81 percent. At 1:13 p.m. Eastern time, 2,414,244 calls have changed hands compared to 2,056,377, equaling a single-day put/call volume ratio of 0.85. The CBOE's equity put/call volume ratio weighed in at 0.80.

Advanced Micro Devices

Semiconductor guru Advanced Micro Devices (NYSE:AMD) is seeing some hefty call trading ahead of tomorrow's earnings report. The bulk of the activity is occurring at the equity's April 37.50 call, which has had nearly 10,000 contracts change hands on open interest of 28,922. Of course, that's not the only strike investors are active.

To see the charts of most active call and put strike for AMD, please click the following link. http://www.schaeffersresearch.com/wire?ID=15771 .

There is a definite skew to the call side today, indicating that expectations may be running high ahead of the company's earnings report. Looking in at the put side of the picture, there are only two strikes that are seeing some heavy action, but it is nowhere near as brisk as the call side.

Digging deeper into the stock's sentiment picture, we find an interesting dichotomy. The stock's Schaeffer's put/call open interest ratio (SOIR) has drifted lower during the past several months as calls continue to be added at a faster past than puts among near-term options, indicating increasing optimism. The ratio currently ratio rests at 0.62 in the middle of it annual range.

Short sellers have also shrugged off their bearish bias toward the firm. While the number of AMD shares sold inched three percent higher in March, the accumulation of bearish bets is still resting near a multi-year low. What's more, the stock's short-interest ratio of 1.1 offers little in the way of potential short-covering support.

On the other hand, Wall Street is extremely bearish toward the chip company. Zacks reports that 14 of the 25 analysts following AMD rate it a "hold" and four give it a "strong sell." Should the company impress the Street with its earnings announcement and/or outlook for the rest of the year, there is ample room for potential upgrades.

Technically speaking, the shares rallied more than 95 percent from their October low to their March high before finally rolling over and drifting lower under pressure from their 10-day and 20-day moving averages. The stock is currently settled on support at the 33 level, but is trading below support at its 20-week trendline. However, from a longer-term perspective, the equity still has potential support in the form of its ascending 10-month moving average, which is creeping into the region.

Daily Chart of AMD since October 2005 with 10-Day and 20-Day Moving Averages: http://www.schaeffersresearch.com/wire?ID=15771 .

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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 .