Schaeffer's Midday Options Update Features Nokia and Devon Energy.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Nokia (NYSE:NOK) and Devon Energy (NYSE:DVN). 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. E[acute accent]Take advantage of the timely Schaeffer commentaries by signing up for 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 and get entered to win an iPod Nano. http://www.schaeffersresearch.com/redirect.aspx?CODE=PRMOU13M&PAGE=1 .

E[acute accent]Options Update: Nokia Pressured By Risks to Economic Growth

E[acute accent]The major market indices are languishing in the red as we head into the latter half of the trading session. Traders were hit with a renewed wave of inflation concerns this morning following the release of a couple key economic reports. The most inflammatory, however, was the non-farm productivity for the second quarter. The reading was revised to reflect an increase of 1.6 percent, matching the consensus view. However, unit labor costs in the second quarter rose 4.9 percent, outpacing the earlier projection for a 4.2-percent increase. This was well above the 4.1-percent rise analysts were anticipating. On a year-over-year basis, labor costs have risen five percent, the fastest pace since the end of 1990. Unit labor costs are typically regarded as a key gauge of inflationary pressures, as labor is typically the most important expense for companies.

E[acute accent]Most-Active Options Update

E[acute accent]At 1:51 p.m. Eastern Time, the Dow Jones Industrial Average (DJIA - 11,436.4) is currently 0.29 percent lower. The S&P 500 Index (SPX - 1,305.68) has dropped 0.58 percent, and the Nasdaq Composite (COMP - 2,181.8) has given up 1.08 percent. At 1:52 p.m. Eastern Time, 2,223,109 calls have changed hands compared to 2,059,070 puts, equaling a single-day put/call volume ratio of 0.94. The CBOE's equity put/call volume ratio stands at 1.08, while the ISE's ratio comes in at 1.09.

E[acute accent]Option Activity Follow-Up

E[acute accent]Yesterday, I commented on independent oil and gas concern Devon Energy (NYSE:DVN). The stock surged more than 12 percent on the day, taking out round-number resistance at the 70 level on news of a potentially lucrative new oil discovery in the Gulf of Mexico. While the shares have pulled back some 2.5 percent today, support at the 70 level appears to be kicking in. I still look for this level to hold as support for the shares during the intermediate term, especially if the stock can hold this level amid today's broad-market weakness. As I suspected, however, yesterday's heavy call activity at the September 70 call had quite an impact, pushing open interest from 3,147 contracts to 9,139 contracts. Consequently, DVN's Schaeffer's put/call open interest ratio (SOIR) dropped sharply to 0.98 in the 53rd percentile. I can't stress how important it is for DVN to hold the 70 level. Not only is it a key technical region for the shares, but the 70 strike is now home to peak call open interest for the September series. A breach of this level could have the shares trending sideways once again. E[acute accent]Click here to see a September open interest configuration for DVN: http://www.schaeffersresearch.com/wire?ID=17281 .

E[acute accent]Nokia

E[acute accent]Following some bad news in Europe, shares of wireless communications concern Nokia (NYSE:NOK) are taking quite a beating today. At last check, NOK was down nearly four percent due to a report from the International Monetary Fund stating that risks to economic growth are increasing. NOK is being more harshly punished than other stocks on the news because the company is more sensitive to economic expansion than others, according to reports. E[acute accent]With the shares in full retreat, options players are piling into NOK October puts today, with the majority of the activity taking place at the 20 strike. So far today, more than 22,000 of these potentially bearishly aligned contracts have changed hands on open interest of 25,383 contracts, hinting that we could see an increase in open interest when this volume finally translates. E[acute accent]Technically speaking, NOK's plunge today has taken it back below long-term technical resistance at the 20 level. This pullback also negates any potential options-related support that the stock may have garnered from the heavy put activity at this level. Delving a bit deeper, it seems that NOK's recent uptrend may have finally come to an end. The shares have rallied along the support of their 10-month and 20-month moving averages since October 2004, with the stock logging only one breach of this duo during this time frame. However, NOK has once again fallen behind its 10-month trendline, and appears poised to retest its 20-month in the coming weeks. That's a nearly seven-percent drop for the shares just to find technical support to halt this decline.

E[acute accent]Sentiment Rundown for NOK:

E[acute accent]--Percent of analysts tracked by Zacks who rate the stock with a "buy": 67%

E[acute accent]--Number of analysts tracked by Zacks: 21

E[acute accent]--Short interest as a percent of float: 0.40%

E[acute accent]--Short-interest ratio: 1.76

E[acute accent]--Schaeffer's put/call open interest ratio (SOIR): 0.77

E[acute accent]--SOIR percent rank: 75%

E[acute accent]--Schaeffer's Equity Scorecard: 6.0

E[acute accent]Looking through the sentiment figures, I don't really see much to get excited about when it comes to NOK. Analysts are extremely bullish, as 14 of the 21 brokerage firms covering the shares rate them a "buy" or better. Downgrades amid the security's recent trend lower would certainly not be helpful. Meanwhile, there is practically no short interest to speak of, leaving NOK in the lurch when it comes to short-covering support. E[acute accent]On the other hand, it seems that (barring today's obsession with puts) options players have become increasingly bullish toward the stock. NOK's SOIR has been in decline mode for the past several weeks, and with the shares trending in the direction of this ratio, a continued interest in calls could place even more downward pressure on the equity. E[acute accent]In summary, I would certainly not be surprised to see NOK go on a seven-percent bender to the downside and retest support at its 20-month trendline. Keep a close eye on this support, as there is little left below the shares to help stall this decline once it gets going. As always, good luck in your trading. E[acute accent]Click here to see a SOIR chart for NOK since August 2005 and a Monthly chart of NOK since October 2005 with 10-month and 20-month moving averages: http://www.schaeffersresearch.com/wire?ID=17281 .

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E[acute accent]About Schaeffer's Investment Research (www.SchaeffersResearch.com)

E[acute accent]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 .