Schaeffer's Midday Options Update Features FedEx, Level 3 Communications, Marvel Entertainment, SanDisk, and Motorola

Business Wire, June 5, 2006

CINCINNATI -- Today's Schaeffer's Midday Options Update features FedEx (NYSE:FDX), Level 3 Communications (NASDAQ:LVLT), Marvel Entertainment (NYSE:MVL), SanDisk (NASDAQ:SNDK), and Motorola (NYSE:MOT). 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=PRMOU12M&PAGE=1

Options Update: Checking Back in on Motorola (MOT)

It hasn't been the best of mornings for the market, as the price of oil advances and the dollar continues to demonstrate weakness. The U.S. dollar dropped to a 13-month low against the euro ahead of a European Central Bank (ECB) decision on interest rates. A hike of 0.25 percentage points from the ECB (to 2.75 percent) is widely expected. The dollar also continues to struggle thanks to Friday's weak U.S. employment report.

More importantly, the per-barrel price of crude has increased more than 80 cents after Iran threatened to stop oil shipments if provoked. Over the weekend, Iran's Ayatollah Ali Khamenei warned that the fourth-largest oil exporter would halt shipments if the U.S. takes actions. Khamenei told the BBC that "If you make a wrong move regarding Iran, definitely the energy flow in this region will be seriously endangered." These comments come mere days after the permanent members of the U.N. Security Council and Germany agreed on a package of incentives to offer Iran in an attempt to persuade the country to stop its nuclear research. Iran continues to insist that it's trying to create a civilian energy program. While the incentive package is part of an effort to solve the dispute between Iran and the West with diplomacy, this weekend's comments suggest that Iran has not ruled out the possibility of the U.S. leading a military action. Condoleezza Rice responded on U.S. television by cautioning not to place "too much emphasis" on Iran's threats.

Making a Federal Case of it

FedEx (NYSE:FDX) has slipped a bit this afternoon, after it was hit with $61 million in penalties on Friday. The fine stems from a decision in a racial-harassment lawsuit filed by two drivers of Lebanese descent. The two claimed they were repeatedly subjected to racial slurs by a FDX manager and sued the company for failing to enforce its anti-discrimination policies. A court awarded the two men $50 million in compensatory damages plus $11 million in punitive damages. FDX stated that it will appeal the decision.

Through the Looking Glass

Earlier, Level 3 Communications (NASDAQ:LVLT) announced that it will buy Looking Glass Networks. LVLT will pay $87 million of stock and $9 million in cash for the provider of metropolitan data-transport services. LVLT will also pay $69 million of Looking Glass's liabilities, mainly senior unsecured debt.

Marvel-ous News

Earlier today, Marvel Entertainment (NYSE:MVL) announced that its board authorized the company to buy back an additional $100 million of common stock. The comic company also announced that it completed a previous $100 million buyback. MVL is more than one percent higher on the news this afternoon.

San-ding Tall

SanDisk (NASDAQ:SNDK) is more than three percent higher this afternoon after Bear Stearns upped the company to "outperform" from "peer perform." The brokerage noted that the near-term oversupply concern for the company is now "largely behind it." Bear Stearns also noted that "with a moderation in price declines expected in the second half of 2006, we forecast SanDisk to show significant earnings growth versus the first half of 2006."

Most-Active Options Update

At 2:09 p.m. Eastern Time, the Dow Jones Industrial Average (DJIA - 11,135.0) logs a triple-digit fall, losing 1.00 percent. The S&P 500 Index (SPX - 1,277.11) has slid 0.86 percent lower, and the Nasdaq Composite (COMP - 2,190.1) is down by 1.32 percent. At 2:11 p.m. Eastern Time, 2,141,445 calls have changed hands compared to 1,762,862, equaling a single-day put/call volume ratio of 0.82. The CBOE's equity put/call volume ratio was slanted toward the put side, weighing in at 0.87.

Motorola

This morning, Motorola (NYSE:MOT) announced that it plans to invest $60 million over the next two years in order to make Singapore the center of the company's global supply chain management. MOT also stated that it will employ another 200 people in Singapore by the end of 2007. MOT already bases several of its supply chain management functions in Singapore. Today, the world's largest mobile phone maker (by shipments) showed up on our notably active call activity list this afternoon. This occurrence gives me an opportunity to revisit MOT, as I looked at the company on May 10. Before turning to a technical breakdown of the phone firm, let me note that today's action at the June 22.50 call (MOT FX) has further entrenched this strike as the site of peak call open interest in the June and July options series. Frequent visitors to our site know that peak call open interest can often provide a layer of options-related resistance.