Schaeffer's Midday Options Update Features Micron Technology, Microsoft, KLA-Tencor, Chevron, and Bristol-Meyers Squibb

Business Wire, Oct 28, 2005

CINCINNATI -- Today's Schaeffer's Midday Options Update features Micron Technology (NYSE:MU), Microsoft (NASDAQ:MSFT), KLA-Tencor (NASDAQ:KLAC), Chevron (NYSE:CVX), and Bristol-Meyers Squibb (NYSE:BMY). 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: Traders Mull Puts on Micron Technology

So far, its been a banner day on the Street, and should today's groove continue into the close, it could be a nice cap to a very hectic week for traders. In economic news, the major market indices received a nice boost on the open following the release of the third-quarter Gross Domestic Product. The Commerce Department said the U.S. economy grew at a 3.8-percent seasonally adjusted annual rate in the third quarter of 2005. Consumer spending contributed most to the growth rate, while the trade sector was a slight drag. The Street had expected a 3.6-percent increase after 3.3-percent growth in the second quarter.

Microsoft's Buena Vista

Despite declining more than three percent in after-hours trading, shares of Microsoft (NASDAQ:MSFT) have rebounded more than two percent so far today. After the close last night, the leading software firm posted a first-quarter profit of 29 cents per share, missing the Street's estimate by a penny. However after some creative accounting, including stock-based compensation charges but excluding other one-time items, the company's bottom-line result outpaced expectations by a penny. Revenue for the quarter arrived at $9.74 billion. MSFT also forecast second-quarter earnings of 32-33 cents per share, with revenue expected to arrive between $11.9 and $12 billion. For the year, the company placed earnings at $1.26-$1.30 per share on revenue of $43.7 to $44.5 billion.

Chevron Earnings Blown Away

In other earnings news, Chevron (NYSE:CVX) reported third-quarter earnings of $3.6 billion, or $1.64 per share, up from a year-ago profit of $3.2 billion, or $1.51 per share. Sales and operating revenue arrived at $53.38 billion, up from $39.61 billion in the same period a year earlier. However, the figures were not good enough to impress the Street, where analysts were expecting a profit of $1.91 per share on revenue of $55.48 billion. CVX noted that the impact of Hurricanes Katrina and Rita offset the positive earnings contributions of the former Unocal operations. The company estimated that the hurricanes reduced its crude and natural gas production by about 90,000 barrels per day during the quarter, with translated into an earnings reduction of roughly $600 million. Furthermore, CVX believes that the carryover impact on its fourth-quarter results will be "even more significant."

Squibb Kicked

Continuing our earnings coverage, Bristol-Myers Squibb (NYSE:BMY) reported third-quarter earnings from continuing operations of $964 million, or 49 cents per share, up from last year's profit of $755 million, or 38 cents per share. Excluding items, earnings arrived at 31 cents per share, missing the consensus estimate by two cents. Sales from continuing operations totaled $4.77 billion, down slightly from $4.78 billion last year. Looking ahead, BMY placed earnings, excluding items, near the middle of its previous range of $1.35 to $1.45 per share for 2005. Wall Street is currently expecting $1.44 per share for the year.

A Chip Shot

Finally, KLA-Tencor (NASDAQ:KLAC) reported that first-quarter net income slid to $77 million, or 38 cents per share, versus net income of $116 million in the year-ago period. Revenue fell seven percent to $484 million, as the company shipped less equipment amid the slowdown in the chip-equipment industry. Sales, however, topped the Street's estimate of $479 million.

Most-Active Options Update

At 1:22 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10,330.7) has rallied 0.98 percent. The S&P 500 Index (SPX - 1,189.63) is up 0.91 percent, and the Nasdaq Composite (COMP - 2,077.4) has added 0.66 percent. At 1:23 p.m. Eastern time, 2,011,232 calls have changed hands compared to 1,584,1633 puts, equaling a single-day put/call volume ratio of 0.78. The CBOE's equity put/call volume ratio weighed in at 0.81.

Micron Technology

According to Hoover's, Micron Technology (NYSE:MU) is one of the biggest semiconductor makers anywhere. In particular, MU trails only Samsung Electronics among the world's top memory chip makers. The company makes dynamic random-access memories (DRAMs), flash memory chips, and memory modules, as well as image sensor chips.

Today, options players are piling into the stock's January 2006 12.50 put, with more than 23,500 of these bearishly oriented contracts crossing the tape. Open interest at this back-month strike currently rests at 23,026 and is second only to the 10 strike in terms of the sheer number of put contracts in residence. However, should much of today's activity translate as new positions, the 12.50 strike could steal this crown away tomorrow.