Jocelynn Drake Reports on Costco Wholesale, Lennar, Bank One.
CINCINNATI--(BUSINESS WIRE)--Sept. 19, 2003
Options activity has been brisk as speculators jockey for position ahead of September expiration, according to Jocelynn Drake of SchaeffersResearch.com. Costco Wholesale (Nasdaq:COST), Lennar (NYSE:LEN), and Bank One (NYSE:ONE) are three examples of stocks that saw unusual option activity yesterday.
This commentary is originally published on 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 via email every day click on the following link. http://www.schaeffersresearch.com/addinfo .
1. Options players piled into Costco Wholesale (Nasdaq:COST) puts yesterday, sending open interest at its October 30 put from 7,146 to 11,596 contracts. This is now the site of peak back-month put open interest and could serve as options-related support should the shares pull back. Investors have been growing skeptical of the security, with its Schaeffer's put/call open interest ratio (SOIR) checking in at 0.95. This reading is higher than 93 percent of those taken over the past year. Wall Street is even giving the shares the cold shoulder, with 16 of the 22 analysts following the company rating it a "hold" or worse. Any upgrades could boost the equity higher. Technically speaking, COST gapped higher this morning, moving average peak October call open interest at the 32.50. This strike is already home to more than 11,300 contracts. Trader should be aware of potential overhead resistance in the form of the stock's declining 10-week moving average. This trendline has capped the security past six weeks. A close above this intermediate-term moving average could succeed in winning over investors, which would boost the security higher on renewed buying strength.
Click the following link to see the Weekly Chart of COST since June 2003 with 10-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=8491 .
2. Earlier this week homebuilder and financial services company, Lennar (NYSE:LEN), reported earnings of $2.43 per share, besting the Street estimate of $2.23 per share. Net income for the third quarter soared 42 percent while revenue climbed 23 percent. The firm also raised its full-year guidance to $8.90 per share. The equity has steadily climbed higher off of support from a 50-percent retracement level (at 62.73) of its rally from its March low of 43.85 to its June high of 81.61. LEN has also enjoyed the steadfast support of its 20-week moving average. However, the stock must still overcome former resistance at the 76 level. The stock's recent fundamental and technical strength has won over options player, with its SOIR of 0.69 lower than 95 percent of those taken over the past 52 weeks. In fact, its October 65 call added more than 3,500 contracts yesterday. Furthermore, short interest plunged 19 percent in August to 6.8 million shares. This is still more than four times its average daily trading volume and a covering rally could lift LEN.
Click the following link to see the Weekly Chart of LEN since February 2003 with 20-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=8491 .
3. Optimism is also on the rise on Bank One (NYSE:ONE). In trading Thursday, its October 40 strike added nearly 5,000 contracts to bring open interest up to 8,003. What's more, calls more than double puts in the front three months of options, giving it a SOIR of 0.43. This ratio is lower than 78 percent of those taken over the past 52 weeks. Its short-interest ratio also sits at 3.79 days to cover. Only Wall Street is exhibiting some hesitance toward the shares, with 10 of the 21 analysts following ONE rating it a "hold" and seven rating it a "sell." Any upgrades could boost the shares higher. From a technical perspective, the stock continues to be capped by staunch resistance at the 40 level. This area has troubled the shares since September 1999. It is also the site of peak October call open interest. The equity has pulled back to support at its rising 20-week trendline and may use this moving average to springboard higher. However, with sentiment approaching an extreme, the equity may not have the buying strength behind it to push it through this level.
Click the following link to see the Monthly Chart of ONE since December 1998: http://www.schaeffersresearch.com/wire?ID=8491 .
For additional information about this report or to have it delivered to you via email every day click on the following link. http://www.schaeffersresearch.com/addinfo .
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 .
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|Date:||Sep 19, 2003|
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