Schaeffer's Midday Options Update Features Google, Allied Domecq, Napster, International Speedway, Pfizer

Business Wire, April 5, 2005

CINCINNATI -- Today's Schaeffer's Midday Options Update features Google (NASDAQ:GOOG), Allied Domecq (NYSE:AED), Napster (NASDAQ:NAPS), International Speedway (NASDAQ:ISCA), and Pfizer (NYSE:PFE). 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. http://www.schaeffersresearch.com/redirect.aspx?CODE=PRMOU1M&PAGE=1.

Options Update: Is Google Gagging on Optimism?

Once again, a pull back in crude prices has the equity markets bouncing lightly higher in midday trading. But the stress of rising interest rates and energy concerns have pulled stocks from their highs of the day, as anticipation surrounding Greenspan's speech on energy to a petrochemical industry group in San Antonio later today has contributed to trader trepidation. Those economic report junkies out there were tossed a bit of a bone today when Challenger, Gray, & Christmas reported that planned job reductions fell by 20 percent in March to 86,396, their lowest level since August. Despite the decline, first quarter job-cut announcements have risen 9.2 percent on a year-over-year basis to 287,184. Job cuts are on track to exceed one million for the fifth year in a row.

A Round of Pernod for the Street!

In merger and acquisition news, Allied Domecq (NYSE:AED) soared more than 16 percent after the company reported that it is in talks with Pernod Ricard, which is working with Fortune Brands (FO), on a potential acquisition bid. However, according to AED, the discussions are still in the early stages and "there can be no certainty" that an offer will come to fruition.

In the Fast Lane at Speedway

International Speedway (NASDAQ:ISCA) whet the appetites of those waiting for the spring earnings season to gear up when it reported first-quarter net income of $41.1 million, or 77 cents per share. This figure rose over last year's $27.8 million, or 52 cents per share. Revenue for the period rose to $179.4 million from last year's $130.6 million. Looking forward, ISCA forecasted second-quarter revenue of $150 million to $155 million, while raising its earnings guidance to 47-49 cents per share.

Napster Back on the Hit List

No, it's not the RIAA's hit list. In fact, Napster (NASDAQ:NAPS) has apparently regained some of its street credit with subscribers, as the company cited "rapid" subscriber growth when it lifted its fourth-quarter revenue forecast. NAPS now sees revenue of $16.5 million to $17.5 million for the quarter, following on the heels of its February forecast hike to $14 million. In the realm of subscribers, the company reportedly added 143,000 customers for its pay-per-download service during the latest quarter, in part because of its "Napster To Go" promotion.

Cost Cutting at Pfizer

In the world of blue-chip stocks, the Dow received a nice boost when Pfizer (NYSE:PFE) reported that it was going ahead with a plan to annualize cost savings of $4 billion by 2008. Additionally, PFE forecast 2005 earnings (excluding items) of about $2 per share, below the Street's estimate of $2.13 per share. For the first quarter, the company projected earnings of about 53 cents per share, besting the consensus by a penny. On a GAAP basis, full-year earnings are expected at $1.16 per share, with first-quarter earnings arriving at 13 cents per share.

Most-Active Options Update

At 1:02 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10,461.9) has gained 40.6 points, or 0.39 percent, while the S&P 500 Index (SPX - 1,181.22) is 0.43 percent higher. The Nasdaq Composite (COMP - 1,996.8) is higher by 0.29 percent. At 1:46 p.m., 1,648,731 calls and 1,0155,023 puts had traded hands, equaling a composite put/call ratio across all six exchanges of 0.70. The CBOE put/call volume ratio for equity options totaled 0.77.

Google

Our favorite Internet search guru is back in the news today, as Lehman Brothers upgraded the equity to "overweight" from "equal weight" on the prospects of continued strong fundamentals and an attractive valuation. As a result of the lift, Google (NASDAQ:GOOG) has rallied more than two percent higher today, running smack into overhead resistance at the 190 level. This support/resistance area has troubled the shares on numerous occasions in the past several months, and could pose a problem for GOOG over the near term. And while the security has managed to reclaim its 10-week and 20-week moving averages in the past couple of days, this intermediate-term duo is poised for a bearish cross, should this new-found strength lack the conviction to overcome potentially staunch resistance at the 190 level.

Checking in on GOOG's quantitative sentiment front, we find that options players have shifted into a rather bullish gear. While there is not enough data for an annual percentile ranking, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.75 has declined sharply over the past month to its current reading of 0.75. Today's activity in the options pits could perpetuate this pullback in the stock's SOIR, as more than 5,000 calls have crossed the tape at GOOG's April 190 strike so far today. This peak front-month call strike is already home to 20,141 of these bullishly oriented contracts, outstripping all other strikes in April. This accumulation of optimistic positions could add a layer of options-related resistance to the stock's already troublesome technical resistance in the 190 area.