Schaeffer's Daily Market Blog Features: Logitech International SA, Advanced Micro Devices, Apple Computer, McDonalds, and Duke Energy

Business Wire, Oct 19, 2006

CINCINNATI -- Among the stocks featured in the October 19 edition of Schaeffer's Market Blog are Logitech International SA (NASDAQ:LOGI), Advanced Micro Devices (NYSE:AMD), Apple Computer (NASDAQ:AAPL), McDonalds (NYSE:MCD), and Duke Energy (NYSE:DUK). Schaeffer's Market Blog is just one of the many free market commentaries written every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. The Market Blog is 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. To have this report delivered to you free via email every day click on the following link and you'll also get an opportunity to win an iPod Nano. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB13M&PAGE=1.

Don't forget that many of our observations are available as audio presentations that you can hear on your computer or download from Apple's iTunes Music Store to play on a portable device such as an iPod. To see the full menu of podcasts, please visit http://www.schaeffersresearch.com/commentary/podcasts/.

7:33 AM Free Financial Videos and Podcasts

Good morning. We're busy building a new video studio here at Schaeffer's. Yesterday, we produced shows that featured J.P. Morgan Chase, Illumina, IBM, and Pfizer.

We also produce podcasts, audio presentations that you can hear on your computer or download from Apple's iTunes Music Store to play on a portable device such as an iPod. Our library features about 900 podcasts so far, and our founder Bernie Schaeffer has agreed to appear in "Podcast 1000" next month.

You can find all these shows at http://www.schaeffersresearch.com/commentary/podcasts/. You'll see podcasts in the left-hand column and videos in the right-hand column.

10:12 AM Advanced Micro Devices Suffers on Margins

Despite topping the Street's earnings estimate by three cents per share, shares of Advanced Micro Devices (NYSE:AMD) have plunged more than 10 percent this morning. The reason? Analysts believe that semiconductor leader Intel's counter-attack for market share may be taking its toll, as AMD stated that its profit margins and average selling prices for chips were lower during the quarter.

Looking at the sentiment, analysts have plenty of room for upgrades. However, at least one brokerage firm has decided to lower its rating on the shares today, as J.P. Morgan downgraded AMD to "underweight" from "neutral." According to Zacks AMD had garnered six "buy" or better ratings and 15 "holds" prior to this morning's downgrade. With no "sell" ratings to be found, there is still room for analysts to lower their opinions even further should this trend catch on.

10:57 AM Put Open Interest Jumps for Duke Energy

A put/call open interest ratio is simply the ratio of total put open interest to total call open interest. We compute Schaeffer's put/call open interest ratio (SOIR) based on open interest in the front three months only. These near-term options tend to attract a more speculative crowd, the sentiment of which is more useful for shorter-term trading.

One of the filters available in our Schaeffer's Plus is the Daily SOIR Changes filter, which lists the stocks that have seen the largest percentage jump in their SOIR overnight.

This morning, I was caught by the significant jump in Duke Energy (NYSE:DUK) SOIR from 0.44 to 1.36, which is now an annual high. In trading on Wednesday, open interest at the equity's November 30 put exploded from 615 contracts to nearly 20,600 contracts. The option saw a block of 2,000 contracts cross the tape at 12:41 p.m. Eastern time at 0.28, which was closest to the ask price. Meanwhile, a block of 9,687 contracts traded at 2:43 p.m. at an ask price of 0.35.

12:38 PM A Ratio Backspread on McDonald's

The shares of McDonald's (NYSE:MCD) appear to be the focus of what appears to be a ratio backspread. This is like a typical credit spread, except the investor buys more of one option than the other. In this instance, a block of 28,850 contracts crossed the tape at the stock's January 2007 35 put at an ask price of 0.35 around 11:26 a.m. Eastern time. At roughly the same time, the January 40 put had a block of 10,386 contracts trade at a bid price of 1.50 followed by a block 4,039 contracts that traded at 1.55. The total for the January 40 put was 14,425, or exactly one half of the block that traded on the January 35 put.

This morning, the company announced third-quarter earnings of $843.3 million, or 68 cents per share, as sales climbed 10 percent to $5.88 billion on a global same-store sales increase of 5.8 percent. Analysts had predicted a profit of 68 cents per share on revenue of $5.75 billion. At last check, the stock was down 1.67 percent at $40.77.

2:37 PM Wednesday Call Adds Smart Money on Apple

Yesterday's heavy call activity on digital music guru Apple Computer (NASDAQ:AAPL) seems to have been the smart money ahead of the company's earnings report. Last night, AAPL reported a fourth-quarter profit of $546 million, or 62 cents per share - blowing away the analyst expectations for 51 cents per share and the whisper number of 55 cents per share. More than 9,000 calls were added to the stock's October 75 strike yesterday, as AAPL attempted to breach this potential resistance level yesterday.