Schaeffer's Midday Options Update Features Motorola.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Motorola (NYSE:MOT). 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: Can Motorola Stay on a Roll?

The market has shrugged off some early weakness and has steadily rallied today. With less than two hours left in the regular trading session, the Dow Jones Industrial Average is up 53 points and the S&P 500 Index has added more than three points. The Nasdaq Composite has increased roughly 17 points.

This morning, the Energy Department announced that natural gas supplies rose by 19 billion cubic feet last week. The estimate range was for a rise in inventories between 17 billion and 30 billion cubic feet. In the prior week, natural gas supplies fell unexpectedly for the time since March.

Most-Active Options Update

At 2:49 p.m. Eastern Time, the Dow Jones Industrial Average (DJIA - 11,252.4) has surged 0.47 percent higher. The S&P 500 Index (SPX - 1,281.91) has added 0.26 percent, and the Nasdaq Composite (COMP - 2,096.0) has jumped 0.83 percent. At 2:50 p.m. Eastern Time, 2,898,743 calls have changed hands compared to 2,201,183 puts, equaling a single-day put/call volume ratio of 0.75. The CBOE's equity put/call volume ratio stands at 0.85, while the ISE's ratio comes in at 0.69.

Motorola

After reporting Street-beating earnings last week, Motorola (NYSE:MOT) has been the beneficiary of several rather upbeat news releases. Most recently, the firm announced a content agreement with Shanda Interactive Entertainment. From a technical perspective, MOT has rallied more than 25 percent since tagging a near-term low in mid-July. However, a week does not a long-term rally make. So, do the shares have what it takes to continue in this fortunate trend?

Let's start our analysts of MOT with a closer look at the stock's technical performance. Following up on the statement above, the stock has enjoyed a nice run higher along the support of its 10-day and 20-day moving averages.

Pulling back for a wider view of the shares, however, I notice a rather disturbing technical development looming just overhead. In the 23.50-24 region is some major chart congestion for MOT. In fact, the stock has bested this region only once since October 2000. Complicating matters is the heavy buildup in call open interest at the 25 level for the October series of options. This strike is gaining favor in the September series as well, and could provide a layer of options-related resistance.

Sentiment Run-Down for MOT:

-- Percent of analysts tracked by Zacks who rate the stock with a "buy": 89%

-- Number of analysts tracked by Zacks: 26

-- Short interest as a percent of float: 0.66%

-- Short-interest ratio: 0.93

-- Schaeffer's put/call open interest ratio (SOIR): 0.53

-- SOIR percent rank: 73%

-- Schaeffer's Equity Scorecard: 2.0

Given the stock's run higher during the past week, one might expect momentum to help carry MOT through this overhead region of resistance. However, scanning the sentiment figures above, I wouldn't bet on the stock moving much higher. Sure, positive reports can help boost a stock that appears to have very little sideline money available for a rally. But what happens when the party is over? Where does the money come from?

MOT could see an influx from the options crowd, as the stock's Schaeffer's put/call open interest ratio (SOIR) ranks in the 73rd percentile of its annual range. But with calls nearly doubling puts, it still doesn't seem that pessimism is sufficiently present for any meaningful influx of cash. What's more, today's heavy call activity at the October 25 call indicates that investors are not planning on bailing on MOT any time soon.

Outside the realm of options, there is practically no pessimism present at all. Short sellers are looking for greener pastures, and Wall Street is nearly all in when it comes to MOT. Sideline money? All I see is empty wallets and MOT heavy portfolios here. So what happens when the security is finally challenged by some real overhead resistance? I think you can answer that one for yourself.

That's my two cents, for what it's worth. As always, thank you for reading, and good luck in your trading!

Click here to see a Weekly Chart of MOT since September 2005 with 10-week and 20-week moving averages: http://www.schaeffersresearch.com/wire?ID=17056 .

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 .