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Semiconductor industry

Midday Options Update: Intel, Exxon, and Verizon Trading Notes

Strategic Insights

— 2 min read

The market is attempting to overcome mixed economic data, with traders largely ignoring reports in the early going, only to see major indices pull back from session highs as the day wears on. Intel and Exxon Mobil are notable movers among the Dow Jones Industrial Average's biggest winners, while Verizon Communications' September 32.50 call has seen unusual activity, with over 11,453 contracts changing hands. This unusual option activity precedes expiration, and the trader who placed the block of 10,000 contracts appears to be betting on a nearly one-percent gain for VZ.

Key Takeaways:

  • Intel (NASDAQ:INTC) has added over one percent after being upgraded to "neutral" from "underperform" by Credit Suisse First Boston, with the firm lifting its price target to $27.50 from $24.
  • Exxon Mobil (NYSE:XOM) has also been upgraded, this time to "buy" from "hold" by Deutsche Bank, with a corresponding price target increase to $75.
  • Adobe Systems (NASDAQ:ADBE) reported third-quarter profit of $144.9 million, or 29 cents per share, up 21 percent from the same period last year, with no analyst was expecting a profit of 27 cents per share on revenue of $487 million.
  • Movie Gallery (NASDAQ:MOVI) shares dropped nearly three percent after the company said it expects third-quarter same-store revenue to fall eight to 10 percent compared to last year.
  • Verizon Communications (NYSE:VZ) has seen unusual option activity on its September 32.50 call, with over 11,453 contracts changing hands, nearly doubling open interest, indicating a large trader may be attempting to capitalize on a nearly one-percent gain for the stock.
  • Despite VZ's technical struggles, including being hampered by 10-day and 20-week moving averages, some market analysts suggest the stock might receive a short-term boost from long-term support at the 32 area, which it has not breached on a weekly basis since September 2002.
  • Analysts' sentiment has shifted towards the bearish end, with Zacks reporting 17 of 25 covering analysts now rate VZ a "hold" compared to 15 of 24 on July 20.

Statistics:

  • Intel's price target increased to $27.50 from $24 represents an 11.5% increase, September 2002, the last time Verizon broke long-term support in the 32 area on a weekly basis.
  • Despite the bullish short-term analysis on VZ, there remains considerable danger of a downside move, especially if VZ were to break below 32.
  • The Dow Jones Industrial Average (DJIA) has gained 0.43 percent, with the S&P 500 Index (SPX) and the Nasdaq Composite (COMP) up 0.39 percent and 0.11 percent respectively.
  • 2,551,918 calls have changed hands, compared to 1,791,591 puts, with the CBOE's equity put/call volume ratio at 0.70.

Sources:

  • Credit Suisse First Boston - In the News
  • Deutsche Bank - News
  • Adobe Systems - About Adobe Systems
  • Movie Gallery - Investor Relations
  • Zacks - Zacks Equity Research
  • http://www.schaeffersresearch.com/ - Schaeffer's Investment Research

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