Schaeffer's Option Bytes Features Electronic Arts, J.P. Morgan Chase, Teradyne, Advanced Micro Devices, and Anthem.
Schaeffer's Option Bytes are just one of the many free market commentaries written everyday at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. Option Bytes are written throughout every trading day by Schaeffer's financial analysts and traders. They are quick insights to the day's most notable market activity from an options perspective. 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=PRMOU1M&PAGE=1 .
Schaeffer's Option Bytes for Wednesday, October 20, 2004:
Below are just a few of today's Option Bytes. Click here to read all of today's Option Bytes. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1C&PAGE=1
11:41 AM Electronic Arts Misses Earnings Expectations
Last night after the market close, Electronic Arts (NYSE:ERTS) reported quarterly earnings of 31 cents per share, missing analyst expectations by three cents per share. The company also guided third-quarter earnings expectations lower. Yesterday, options traded briskly on ERTS. Call volume was 6.3 times heavier than average, with more than 19,100 contracts changing hands. The most actively traded contract was the November 50.00 strike (EZQ KJ), which saw more than 11,500 cross the tape. Put volume was 3.4 times heavier than average, as more than 21,300 contracts traded. The most actively traded contract was the November 45.00 strike (EZQ WI), which saw nearly 8,300 contracts change hands. A look at overall option activity shows that investors currently hold 76,800 calls compared to 75,500 puts. Today, ERTS is trading down $2.07 to $44.64.
11:14 AM J.P. Morgan Misses Earnings Expectations
This morning before the market open, J.P. Morgan (NYSE:JPM) reported quarterly earnings of 60 cents per share, missing analyst estimates by 14 cents. The company also reported it is on track with respect to its merger plans with Bank One. Yesterday, options traded actively ahead of the company's quarterly earnings report. Call volume was 3.3 times heavier than average, with more than 37,700 contracts crossing the tape. The most actively traded contract was the November 40.00 strike (JPM KH), which saw more than 26,300 contracts changing hands. Put volume was 4.6 times heavier than average, as more than 47,600 contracts crossed the tape. The most active contract was the November 37.50 strike (JPM WU), and investors exchanged more than 12,300 JPM WU contracts. A look at overall option activity shows that investors currently hold 393,500 calls compared to 477,300 puts in near-term activity. Today, JPM is trading 79 cents lower to $37.21.
10:33 AM Teradyne Misses Third Quarter Forecasts
Teradyne (NYSE:TER) announced third-quarter earnings results of 21 cents per share last evening, below the consensus estimates of 22 cents per share. As if this wasn't enough bad news, the company issued fourth-quarter guidance that was below analyst estimates. Heading into the announcement, option investors leaned to the bullish side on the stock as the Schaeffer's put/call open interest ratio (SOIR) dropped sharply yesterday. Calls on TER were 13 times more active than usual yesterday, leading the SOIR to drop from 1.39 to 0.60. The percentile ranking also dropped from 98 to 43 percent. TER shares are down three percent this morning.
9:51 AM Advanced Micro Devices Breaks Through Potential Resistance as SOIR Continues to Climb
The Schaeffer's put/call open interest ratio (SOIR) for Advanced Micro Devices (NYSE:AMD) is currently at 0.76, which is higher than 98 percent of the readings taken over the past year. The SOIR has been rising since October 5, when the ratio was at 0.46 and the percentile ranking was at 16 percent. Option traders are not the only ones with a bearish view on AMD either. The short-interest ratio shows that it would take 7.75 days of average volume for the short sellers to cover. Analysts are also down on the stock showing only five "buy" ratings compared to 11 "hold" ratings and five "sell" ratings. While pessimism has been growing on AMD, the stock has moved through potential resistance at the 14 level over the last two days. This level had served as support in March, May, and June. It is not uncommon for former support to turn into resistance as a stock advances back to that level.
2:24 PM Anthem Rebounds Amid Pessimism
Anthem (NYSE:ATH) was drilled yesterday along with most of the major health insurers after it was announced that Eliot Spitzer plans to go over the business practices of the sector with a fine-tooth comb. Put options on ATH have been heavily traded in the wake of the news as well. Today's put volume has eclipsed nine times the average put volume for the security, adding to the already high level of pessimism toward the shares. Extreme pessimism may be contributing to the stock's rebound during today's session. ATH is trading up nearly three percent, and unless any serious problems are uncovered by the Spitzer probe, the stock may be back up to mid-$80 levels before long.
The above are just a few of today's Option Bytes. Click here to read all of today's Option Bytes. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1C&PAGE=1
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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.