Schaeffer's Option Bytes Features McDonald's, ChevronTexaco, Texas Instruments, National Semiconductor, and Dean Foods

Business Wire, Sept 8, 2004

CINCINNATI -- Among the stocks featured in the September 8 edition of Schaeffer's Option Bytes are McDonald's (NYSE:MCD), ChevronTexaco (NYSE:CVX), Texas Instruments (NYSE:TXN), National Semiconductor (NYSE:NSM), Dean Foods (NYSE:DF).

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, September 8, 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

10:22 AM McDonalds Puts Active Ahead of Report

This morning, McDonald's (NYSE:MCD) reported comparable sales for August with an increase of 3.9 percent globally, while system wide sales rose 8.6 percent. Yesterday, puts on MCD traded six times the daily average. There were 4,295 total puts traded with 3,202 contracts crossing at the September 27.50 strike. The Schaeffer's put/call open interest ratio (SOIR) jumped from 0.75 to 1.00 and the percentile ranking jumped from 34 percent to 87 percent.

11:15 AM Puts Pile for Chevron Texaco

Yesterday, puts traded actively on Chevron Texaco (NYSE:CVX) , as put volume was 6.3 times heavier than average. More than 11,600 contracts changed hands, with the most active being the September 100 strike (CVX UT). Investors exchanged more than 10,500 CVX UT contracts. A closer look into the activity reveals that a large portion of the activity was concentrated in a block of 5,000 contracts that crossed the tape at 9:41 a.m. It appears that these contracts were sold, however, it is difficult to say for certain because the trade was marked "late." While put buyers have a bearish stance on the underlying security, put sellers have a neutral to bullish stance. Today CVX is trading two cents higher to $99.94.

9:53 AM Calls on Texas Instruments Active Ahead of Update

Texas Instruments (NYSE:TXN) is scheduled to give a mid-quarter update this evening, and judging by option activity, expectations are for a positive report. In yesterday's trading, calls traded 3.4 times the daily average, with a total of 29,564 calls crossing the tape. The most active option was the September 20 strike, with 19,791 contracts changing hands. The Schaeffer's put/call open interest ratio (SOIR) dropped to 0.59, its lowest reading in the past year. The short-interest ratio also reflects optimism, with a reading of 1.40. Current analyst ratings show 18 "buys," eight "holds," and three "sell" ratings.

11:22 AM Investors Add National Semiconductor Puts Ahead of Earnings

Yesterday, puts traded briskly on National Semiconductor (NYSE:NSM) , as put volume was 3.1 times heavier than the daily average. Nearly 6,900 contracts crossed the tape, with the most active being the September 12.50 strike (NSM UV). Nearly 4,700 NSM UV contracts changed hands, as investors are apparently lining up on the bearish side ahead of the company's quarterly earnings report. NSM will release earnings tomorrow, with analysts expecting the company to report earnings of 26 cents per share. At last check, NSM was trading 17 cents lower to $12.24.

1:03 PM Dean Foods Lowers Third-Quarter Earnings

Dean Foods (NYSE:DF) has lost nearly 17 percent today, after the company lowered its third-quarter, fourth-quarter, and full-year earnings estimates last night. For the third quarter, DF now expects earnings of 44-46 cents per share, versus preliminary reports of 54-57 cents per share and the Street's estimate of 56 cents. The news prompted two analysts to downgrade DF, one from "buy" to "hold" and another from "neutral" to "outperform." DF gave three major reasons for the change in expectations: high operating costs, rising raw milk prices, and a highly competitive grocery environment. Zacks currently shows nine analysts reporting on the equity, giving DF five "strong buys," one "buy," and three "holds." However, options players remain unconvinced, as DF's Schaeffer's put/call open interest ratio (SOIR) of 2.23, is higher than 85.6 percent of the readings taken over the past year.

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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