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Computer industry

Midday Options Update: Apple Computer, IBM, Intel, Yahoo!, and Dell in Focus

Strategic Insights

— 2 min read

The market indices plummeted today after disappointing earnings reports from Intel and Yahoo. The Dow Jones Industrial Average has dropped 0.68 percent, while the S&P 500 Index and the Nasdaq Composite have declined 0.82 percent and 1.32 percent, respectively. Apple Computer, IBM, and Dell were among the most active stocks, with Apple's market capitalization overtaking Dell's due to its 12-percent surge.

Key Takeaways:

  • Intel's fourth-quarter profit increased 16 percent, but its sales came in below expectations, leading to a decline in its stock price.
  • Yahoo's fourth-quarter profit of 16 cents per share excluding items fell short of expectations, while its net revenue of $1.068 billion met analysts' forecasts.
  • IBM's fourth-quarter profit of $3.19 billion, or $1.99 per share, exceeded expectations, but its revenue of $24.4 billion fell below projections.
  • Apple Computer's market capitalization rose to $72.13 billion, surpassing Dell's value of $71.97 billion, with its stock experiencing a 12-percent surge between December 10 and December 13.
  • Short interest in Apple Computer has declined steadily for the past several months, with the number of shares sold short dropping 25 percent since January 2005.
  • The Schaeffer's put/call open interest ratio (SOIR) for Apple Computer indicates that puts outnumber calls in the front three months of options, but this ratio may be influenced by increased call activity.
  • Analysts seem to be inoculated against the bullish Apple bug, with 10 of 18 covering brokerage firms rating the shares a "hold."

Statistics:

  • 3,158,961 calls have changed hands compared to 2,786,124 puts, equaling a single-day put/call volume ratio of 0.88.
  • The CBOE's equity put/call volume ratio weighed in at 0.86.
  • Intel's sales increased to $10.2 billion, lower than its forecast range of $10.4 billion to $10.6 billion.
  • Yahoo's net revenue for the quarter was $1.068 billion, in line with estimates.
  • IBM's revenue for the quarter totaled $24.4 billion, well below expectations of $25.4 billion.
  • Apple Computer's stock has advanced along its 10-week and 20-week moving averages since July.
  • Short interest in Apple Computer has declined by 25 percent since January 2005.
  • The SOIR for Apple Computer indicates that puts outnumber calls in the front three months of options, ranking above 94 percent of all SOIR readings taken during the past year.

Sources:

  • Schaeffer's Research, "Midday Options Update"
  • Dow Jones Newswire, "Apple Overtakes Dell in Market Capitalization"
  • Barron's, "More Polish Likely for Apple"
  • Zacks, "AAPL Stock Ratings"
  • CBOE, "Equity Put/Call Volume Ratio"
  • Intel, "Fourth-Quarter Earnings Report"
  • Yahoo, "Fourth-Quarter Earnings Report"
  • IBM, "Fourth-Quarter Earnings Report"
  • Apple Computer, "Market Capitalization"
  • Schaeffer's Research, "Weekly Chart of AAPL Since July 2005 With 10-Week and 20-Week Moving Averages"

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