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Market Insights from Schaeffer's Market Blog August 3, 2005

Strategic Insights

— 1 min read

On Wednesday, August 3, 2005, Schaeffer's Market Blog provided timely insights into the daily market activity from an options perspective. The blog featured articles on NetEase.com, CIGNA, AutoZone, Microsoft, and CVS Corporation, highlighting their earnings reports, technical analysis, and sentiment indicators. Schaeffer's Market Blog is a free market commentary written by the firm's financial analysts and traders, offering quick insights into the most notable market activity.

Key Takeaways:

  • NetEase.com (NASDAQ:NTES) soared 20% after reporting stellar second-quarter earnings, with profits of 83 cents per share, 17 cents higher than expectations, and revenue rising 27% to $50.4 million.
  • CIGNA (NYSE:CI) topped earnings expectations with quarterly earnings of $1.98 per share, 43 cents better than analyst expectations, and guided 2005 earnings higher to $7.00-$7.40.
  • AutoZone (NYSE:AZO) was upgraded by Smith Barney from "hold" to "buy," propelling the stock through overhead resistance at the 100 level, with short interest accounting for more than seven percent of AZO's float.
  • Microsoft (NASDAQ:MSFT) call volume has been strong, with the stock up more than five percent in the past two sessions, but optimism towards MSFT may be getting out of control, with a basement-level Schaeffer put/call open interest ratio of 0.33.
  • CVS Corporation (NYSE:CVS) reported uninspiring earnings, with the stock down a little more than one percent at $30.88, and option activity echoing a lack of buying support, with August expirations seeing nearly twice as many calls trade compared to puts.

Statistics:

  • NetEase.com stocks surged as high as 74.09, surpassing its former all-time high of 72.00.
  • CIGNA shares have increased by more than 73% during the past year.
  • AutoZone has been in a pronounced uptrend since late 2003.
  • Microsoft call option volume exceeds 65,000 contracts versus only about 15,000 contracts of put volume.
  • CVS option activity has seen nearly twice as many calls trade compared to puts in August expirations.

Sources:

  • Schaeffer's Market Blog August 3, 2005
  • NetEase.com (NASDAQ:NTES) press release
  • CIGNA (NYSE:CI) press release
  • Smith Barney research on AutoZone (NYSE:AZO)
  • Microsoft (NASDAQ:MSFT) option activity data
  • CVS Corporation (NYSE:CVS) press release
  • Schaeffer's Investment Research website (www.SchaeffersResearch.com)

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