Midday Options Update: BEA Systems Sees Heavy Put Action on January 10 Call Contract

Strategic Insights -

Microsoft's valuation concerns led to a downgrade by Credit Suisse First Boston, causing the stock to drop more than 1.5 percent. IBM announced changes to its pension plan, which has no effect on current retirees, employees, or former employees with vested benefits. Ruby Tuesday's second-quarter earnings matched consensus estimates, while the Great Atlantic & Pacific Tea Company reported a narrower quarterly loss and a 1.8 percent increase in U.S. comparable sales. BEA Systems' January 10 call contract saw heavy put action after an upgrade from Credit Suisse First Boston, which increased the company's price target to $12 from $9 per share.

Key Takeaways:

  • Microsoft (MSFT) shares slipped after a brokerage downgrade, losing more than 1.5 percent in trading.
  • IBM (IBM) announced changes to its pension plan, effective January 2008, which will not affect current retirees, employees, or former employees with vested benefits.
  • Ruby Tuesday (RI) reported second-quarter net earnings of $17.4 million, matching consensus estimates, with same-restaurant sales increasing 1.9 percent.
  • The Great Atlantic & Pacific Tea Company (NYSE:GAP) announced a third-quarter loss of $1.74 per share, narrower than the previous year's same-quarter loss, with U.S. comparable sales increasing 1.8 percent.
  • BEA Systems (BEAS) saw heavy put action on its January 10 call contract after an upgrade from Credit Suisse First Boston, increasing the company's price target to $12 from $9 per share.

Statistics:

  • 3,648,406 calls have changed hands compared to 2,084,126 puts, resulting in a single-day put/call volume ratio of 0.57.
  • The CBOE's equity put/call volume ratio also came in at 0.57.
  • BEA Systems' Schaeffer's put/call open interest ratio (SOIR) stands at 0.23, with 52 percent of the percentile ranking being middle-of-the-road.

Sources:

  • Schaeffer's Investment Research (www.SchaeffersResearch.com)
  • Credit Suisse First Boston
  • Labor Department
  • Zacks
  • Forbes
  • Barron's
  • Schaeffer's e-newsletters (Opening View, Market Recap, and Monday Morning Outlook)