Schaeffer's Option Bytes Features EMC Corp., H&R Block, Williams-Sonoma, J.M. Smucker and Ditech Communications

Business Wire, August 25, 2004

CINCINNATI -- Among the stocks featured in the August 25 edition of Schaeffer's Option Bytes are EMC Corp. (NYSE:EMC), H&R Block (NYSE:HRB), Williams-Sonoma (NYSE:WSM), J.M. Smucker (NYSE:SJM), and Ditech Communications (NASDAQ:DITC).

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Schaeffer's Option Bytes for Wednesday, August 25, 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

10:00 AM Big Put Activity on EMC Sends Put/Call Ratio Higher

EMC Corp. (NYSE: EMC) saw a large amount of put activity yesterday with 30,638 contracts changing hands, 8.5 times the average daily put volume. The most active option was the September 10 strike with volume of 24,564. The Schaeffer's put/call open interest ratio (SOIR) jumped from 0.51 to 0.79, higher than 99 percent of the readings taken in the past year. EMC has rallied over the past two weeks and was able to overtake its 10-day and 20-day moving averages, but the 20-week trendline looms just overhead and could keep the rally in check.

11:05 AM H&R Block Misses Earnings Expectations

Last night after the market close, H&R Block (NYSE: HRB) reported a quarterly loss of 26 cents per share, missing analyst expectations by 18 cents per share. The company also issued in-line guidance for 2005 earnings. Yesterday, investors added HRB puts at a brisk pace, with put volume 6.9 times heavier than average. Nearly 3,300 put contracts changed hands, with the most active being the September 50 strike (HRB UJ). Investors traded nearly 2,500 HRB UJ contracts. Overall option activity on HRB shows that investors currently hold 6,000 calls compared to 10,500 puts in near-term activity. At last check, HRB was trading $3.93 lower to $47.30.

12:16 PM Earnings Come Home for Williams-Sonoma

Williams-Sonoma (NYSE: WSM) announced second-quarter earnings of 23 cents per share (thanks to a five-percent increase in same-store sales), topping the Street's estimate of 19 cents per share. This represents a 55-percent jump over last year's second-quarter earnings report of 15 cents per share. WSM also reiterated earnings expectations of 21 to 23 cents per share for the third quarter and 95 to 99 cents per share for the fourth quarter. Options players were skeptical of the firm ahead of its earnings report. WSM's Schaeffer's put/call open interest ratio (SOIR) stands at a sizeable 1.77 (up from 1.36 yesterday), higher than 88.8 percent of all the readings over the past year. WSM's stock is currently up almost three dollars to $34.49 in response to this good news.

11:35 AM Smucker's Sweet Earnings

J.M. Smucker (NYSE: SJM) reported first-quarter earnings of 57 cents per share, which is higher than the 51 cents per share reported for the same quarter in 2003, and ahead of the Street's expectations. SJM attributes the earnings to the purchase of International Multifoods. The market has responded accordingly to this news, as the shares have jumped 93 cents today after closing up 31 cents yesterday. SJM's ratings by eight analysts according to Zacks include four "buys" and four "holds." This leaves ample room for upgrades if the stock can continue to impress the Street.

10:53 AM Ditech Communications Beats Earnings Estimates

This morning, Ditech Communications (NASDAQ: DITC) topped earnings expectations on stronger-than-expected revenue, while raising its second-quarter revenue estimates above Wall Street's expectations. Yesterday, investors added DITC puts at a brisk pace, as put volume was 6.6 times heavier than average. More than 2,200 contracts crossed the tape, with the majority of the activity crossing the September 15 strike (QZD UC). More than 1,800 QZD UC contracts changed hands yesterday. A look at overall option activity on the equity reveals that investors currently hold 4,600 calls compared to 5,700 puts on DITC. The stock has responded very favorably to the positive earnings surprise, and at last check was trading up $4.20 to $22.48.

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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