Schaeffer's Midday Options Update Features Pfizer, Disney
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CINCINNATI, Aug. 21 /PRNewswire/ -- Today's Schaeffer's Midday Options Update features Pfizer (NYSE: PFE), Walt Disney (NYSE: DIS), Goodyear Tire & Rubber (NYSE: GT), and AOL Time Warner (NYSE: AOL). 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. Each new subscriber will receive a FREE copy of Bernie Schaeffer's Options 101 CD-ROM (a $49.95 value). http://www.schaeffersresearch.com/addinfo .
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Schaeffer's Midday Options Update
Stocks pressed higher today on the heels of some positive news on both the economic and geopolitical fronts. Initial jobless claims for the week ending August 16 declined by 17,000 to 386,000 -- the lowest level since February. Even more important was the move below the key 400,000 mark, which most analysts view as the divider between strength and weakness in the job market. In other news, the capture of Ali Hassan al-Majid (also known as "Chemical Ali") provided some early optimism for investors to chew on. Ali is number five on the list of most wanted Iraqis.
In corporate news, shares of Pfizer (NYSE: PFE) are trading lower today after one analyst questioned the safety of its patent for the top-selling Lipitor drug. Walt Disney (NYSE: DIS) is also selling off after being downgraded from "outperform" to "market perform." Yesterday, the Wall Street Journal announced that Vice Chairman Roy E. Disney plans to sell as many as 7.5 million DIS shares in a "Variable Prepaid Forward" transaction with Credit Suisse First Boston.
Goodyear Tire & Rubber (NYSE: GT) is rallying today after the company announced that it has reached a tentative agreement on a new three-year contract with the United Steelworkers of America union.
At 1:13 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 9428.3) is up 0.33 percent and the S&P 500 Index (SPX - 1002.17) is up 0.19 percent. The Nasdaq Composite (COMP - 1769.7) is higher by 0.52 percent. At 1:15 p.m. in the options pits, 1,229,181 calls and 853,634 puts traded for a composite put/call ratio across all five exchanges of 0.69. The CBOE put/call ratio for equity options weighed in at 0.54.
Pessismism remains heavy toward AOL Time Warner (NYSE: AOL). The stock has seen more than 7,100 contracts change hands this afternoon at its October 15 put. An additional 2,500 contracts have crossed the tape at its October 16 put. What's more, the security's Schaeffer's put/call open interest ratio sits at 0.90, as puts nearly equal calls in the front three months of options. This reading is higher than 96 percent of those taken over the past year. Furthermore, short interest is nearly four times its average daily trading volume, raising the chances of a covering rally boosting it higher. Wall Street has even grown skeptical of this former favorite. Zacks reports that 13 of the 24 analysts following the equity rate it a "hold" and one even rates it a rare "strong sell." Any upgrades could give it a boost higher.
From a technical perspective, AOL recently pulled back to successfully test support at its 20-week moving average. The stock used this trendline to launch itself higher. Additional support lies below in the form of its 10-day moving average, which just crossed above its 20-day moving average. The security is currently battling resistance at its 20-month moving average. AOL has enjoyed only one monthly close above this trendline since June 2000. A solid close above this long-term moving average could result in further substantial gains as investors unwind their bearish positions.
Click the following link to see the Monthly Chart of AOL since April 2000 with 20-Month Moving Average: http://www.schaeffersresearch.com/wire?ID=8311 .
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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 .
Contact: Tom Godich at Schaeffer's, Phone: ; Email:
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