Schaeffer's Midday Options Update Features Pixar Animation Studios, Walt Disney, Federated Department Stores, Microsoft, and Research in Motion Limited.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Pixar Animation Studios (NASDAQ:PIXR), Walt Disney (NYSE:DIS), Federated Department Stores (NYSE:FD), Microsoft (NASDAQ:MSFT), and Research in Motion Limited (NASDAQ:RIMM). 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=PRMOU11M&PAGE=1 .

Options Update: Stock Strategies for Research in Motion

The markets fell early in the day, but inventory figures from the U.S. Energy Department triggered some modest rises at 10:30 a.m. Eastern time, and we saw some further gains kick in at 12:15 p.m., although they faded again as the mood became a little more subdued.

Those Energy figures showed improvements in inventory for the fifth straight week. U.S. crude inventories rose 4.42 million barrels last week to 323.6 million, a gain of almost 13 percent on the year-ago figure. The consensus rise was 2.0 million barrels. Gasoline inventories climbed 4.22 million barrels to 201.1 million barrels, beating the consensus estimate for a rise of 1.2 million barrels. Distillate supplies dropped by 84,000 barrels to 120.8 million. On the New York Mercantile Exchange, December crude oil futures were down 66 cents to 59.05 per barrel, and you can track the prices in our Today's Market reports issued throughout the day.

Incredibles' Earnings

Pixar Animation Studios (NASDAQ:PIXR) hit an all-time high today after the firm reported third-quarter earnings of $27.4 million, or 22 cents per share, ahead of the Street estimate of 11 cents per share. Steve Jobs, who heads both PIXR and Apple Computer (AAPL), said that the filmmaker is still talking to Walt Disney (NYSE:DIS) regarding their partnership. DIS has acted as distributor of PIXR's movies, and the two organizations are in "deep discussions," which will conclude by the end of the year. "This is a few months later than we would have liked," Jobs said.

Federated Sales Jump

Cincinnati-based Federated Department Stores (NYSE:FD), which operates Macy's and Bloomingdales, department stores, reported that third-quarter profit showed a fivefold increase over last year. Earnings were $436 million, or $1.79 per share, including earnings from recently acquired May Department Stores. Excluding items, earnings came in at 36 cents per share, ahead of the consensus estimate of 23 cents per share. Sales saw a jump of 64 percent to $5.78 billion.

Sir Bill to Launch Online Video News With AP

Starting in the first quarter of 2006, Microsoft (NASDAQ:MSFT) and the Associated Press are to offer an advertising-supported video news network over the Internet. Now that Internet radio has become commonplace, we are seeing increasing signs that television could follow, so this latest experiment is going to be worth watching. Since television signals, even compressed television signals, require much greater bandwidth than audio, Internet infrastructure companies are the ones to watch today, and the ones who own so-called "dark fiber," or unused fiber-optic cabling, are the ones I think could benefit the most. MSFT is to provide the technology and advertising support for this new joint venture, while AP's broadcast division will provide the video content.

What Happens After Chapter 11?

Delphi (DPHIQ), the autoparts maker spun off from General Motors (GM) in 1999, has reported a third-quarter loss of $788 million, or $1.40 per share. The firm is already under Chapter 11 protection and it faces many challenges, including GM's own sales problems, which pushed GM stock to a 13-year low today. Incidentally, a message entitled "Fitch Ratings Cuts GM Ratings Deep Into Junk Terrority" hit my inbox today. I think the key points are, alas, probably all in the Subject line.

Most-Active Options Update

At 1:25 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10,589.3) has gained 0.47 percent. The S&P 500 Index (SPX - 1,225.3) is up 0.55 percent and the Nasdaq Composite (COMP - 2,181.9) has tacked on 0.45 percent. At 1:26 p.m. Eastern time, 2,007,194 calls have changed hands compared to 1,503,938 puts, equaling a single-day put/call volume ratio of 0.74. The CBOE's equity put/call volume ratio weighed in at 0.70.

Research In Motion Limited

Shares of Research in Motion Limited (NASDAQ:RIMM) are down nearly four percent this afternoon. A federal judge is expected to review a disputed settlement in the patent infringement suite against the company. According to a report by Reuters, U.S. District Judge James Spencer told a hearing he would decide whether to go ahead with an injunction against the maker of the BlackBerry e-mail device after deciding whether a contested $450 million settlement deal with patent holding company NTP Inc. is enforceable.

The stock has put in a rather pathetic technical performance recently. The equity has fallen back below its 10-day and 20-day moving averages, and is clinging to support at the 60 level. Furthermore, the security is below its bearishly configured weekly trendlines and has breached long-term support at its monthly moving averages. In fact, the stock's continued downtrend has left its 10-month and 20-month trendlines poised to form a bearish cross.

From an options standpoint, the security has seen some extremely heavy put trading this afternoon, which shouldn't be all that surprising considering the equity's lackluster performance. The stock's November 60 put has had more than 10,500 contracts cross the tape in a series of small block trades since the open. The 60 strike is currently the site of peak put open interest in the November series with more than 13,500 contracts. This bulk of bearish bets could provide a layer of options-related support at this level. However, a negative judgment today against the equity could force it below support.

Short sellers, on the other hand, have grown somewhat complacent toward the security's technical and fundamental woes. Short interest for RIMM remained relatively flat during the most recent reporting period at 14.5 million shares. With a short-interest ratio of only 1.7 days to cover, it is unlikely the stock is going to benefit from much short-covering support should the judge rule in favor of the shares.

Meanwhile, Wall Street is split on the stock. Zacks reports that 11 of the 22 analysts following RIMM rate it a "buy," seven give it a "hold," and four award it a "strong sell." This configuration leaves the various brokerage firms some room to maneuver following the court ruling.

Click on the following link to access a Monthly Chart of RIMM Since March 2003: http://www.schaeffersresearch.com/wire?ID=14569 .

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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 .