Schaeffer's Midday Options Update Features Tyson Foods, Wal-Mart Stores, Napster, Cisco Systems, and Peabody Energy.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Tyson Foods (NYSE:TSN), Wal-Mart Stores (NYSE:WMT), Napster (NASDAQ:NAPS), Cisco Systems (NASDAQ:CSCO), and Peabody Energy (NYSE:BTU). 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: Peabody Energy Hits Another All-Time High

The Dow Jones Industrial Average hit another fresh multi-year high at about 9:40 a.m. Eastern time today, climbing to 11,428.4 before retreating to lower altitudes.

The Institute for Supply Management (ISM) said today that its index of manufacturing activity rose to 57.3 in April, up from 55.2 in March and 56.7 in February. Readings above 50 indicate expansion in factory activity. The reading was above analysts' consensus estimate of 54.8. The price index moved to 71.5 from 66.5 in March, while the employment index expanded to 55.8 from 52.5 the previous month. The new orders index edged slightly lower, dropping to 57.6 from 58.4.

Tyson Foods Slips

Tyson Foods (NYSE:TSN) is getting some attention today after reporting a second-quarter loss of $127 million, or 37 cents per share, compared to the 21 cents per share earned in the year-ago period. Sales slipped modestly lower to $6.25 billion during the reporting period. Analysts were expecting a per-share loss of 25 cents on sales of $6.27 billion. On April 19, TSN officials readjusted their earnings forecast to a loss of 38 cents per share due to fears about the avian flu. Looking forward, TSN expects increased demand in the beef and chicken markets for the second half of the year, which should contribute favorably to the company's third-quarter and fourth-quarter results.

Wal-Mart Lifts Dow

Elsewhere around the Street, Wal-Mart Stores (NYSE:WMT) have gained more than two percent after estimating April same-store sales growth of 6.8 percent, citing a late Easter as a primary reason behind this rise. This was above the retailer's previous forecast for an increase of four to six percent. The equity's move has contributed nearly nine positive points to the Dow this morning.

Free Music From Napster - No, Really

"Napster.com is now free," was the headline of a press release from Napster (NASDAQ:NAPS) this morning. The stock moved higher in early trading as the Street digested news that Napster is set to become "the first legal digital music service to offer music fans free, on-demand listening to over two million major and independent-label tracks five times each." Those final three words are the ones to focus on.

Cisco May Be Running Into Resistance

Cisco Systems (NASDAQ:CSCO) may be getting a bit overextended as investors are showing signs of over-optimism toward the issue. Today's call option volume on CSCO is running at more than 10 times respective put volume. On Friday, call volume on the stock was around four times put volume. The current Schaeffer's put/call open interest ratio (SOIR) on CSCO is 0.38, which is below 84 percent of all readings over the past year. Today's action should drive this ratio even lower. With the shares trading near a resistance level at $21.40, we're looking for a pullback over the near term.

Most-Active Options Update

At 2:22 p.m. Eastern time, the Dow Jones Industrial Average (DJIA - 11,403.4) has added 0.32 percent. The S&P 500 Index (SPX - 1,313.77) is 0.24 percent higher, while the Nasdaq Composite (COMP - 2,321.8) is 0.03 percent lower. At 2:22 p.m. Eastern time, 2,732,099 calls have changed hands compared to 1,956,203 calls, equaling a single-day put/call volume ratio of 0.71. The CBOE's equity put/call volume ratio weighed in at 0.69.

Peabody Energy

As contrarians, we look for investment opportunities where the underlying sentiment runs counter to a stock's price trend. For example, any time we see a stock display fundamental and technical strength amid pessimistic sentiment, there is a very real opportunity for gains to be made.

So, what would you say about a stock that just hit yet another all-time high, yet Wall Street doesn't seem to have noticed? According to Zacks, Peabody Energy (NYSE:BTU) is rated a "buy" by only 27 percent of analysts.

Is this nuts, or what? Just look at the monthly chart; the trendlines can't keep up!

BTU (isn't that a great ticker symbol?) is the world's largest coal producer, according to Hoover's, with more than 30 coal mines and processing facilities in the U.S. and Australia.

With a stock that's shooting up as abruptly as the one, we often find that the daily picture lacks moving-average support, but BTU's daily chart is rather encouraging. The 10-day has been very supportive recently, and despite trailing the stock by more than $5 today, it is rising very rapidly. The 20-day trendline is rising quickly too.

The options configuration shows that there's no danger of options-related resistance holding the stock back now. BTU appears on our list of most-actively traded puts today, thanks to volume of 8,496 contracts at the May 60 strike (BTU QL).

Let's delve into BTU's sentiment backdrop:

--Percent of analysts tracked by Zacks who rate the stock with a "buy" or better: 27%

--Number of analysts tracked by Zacks: 11

--Short interest as a percent of float: 2.49 %

--Short-interest ratio: 2.46

--Schaeffer's put/call open interest ratio (SOIR): 1.03

--SOIR percent rank: 65%

--Overall Schaeffer's Equity Scorecard rating: 6.0

The Schaeffer's put/call open interest ratio (SOIR) is in the 65th percentile, which is not close to an extreme reading, so it does not reveal any interesting sentiment in the options pits. The short-interest figures are not very encouraging either. Nevertheless, remember that it is rare for the stars to align perfectly. BTU is definitely one that we should be watching.

Monthly Chart of BTU Since May 2001 With 10-Month and 20-Month Moving Averages: http://www.schaeffersresearch.com/wire?ID=15910 .

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 .