Midday Options Update: Market Sentiment and Sentiment-driven Stocks

Strategic Insights -

The Midday Options Update from Schaeffer's Research highlights various market activities and notable stocks, including SunGard Data Systems, American International Group, Walgreen Co., Ligand Pharmaceutical, and Dow Chemical. The current market sentiment is influenced by crude oil prices, economic reports, and analyst opinions. The update also discusses the unusual put activity in Dow Chemical's options, which may indicate pessimism among traders.

Key Takeaways:

  • SunGard Data Systems (NYSE:SDS) is being acquired by a consortium of private investment firms for $11.3 billion, representing a 14% premium over its closing price.
  • American International Group (NYSE:AIG) faces an ongoing investigation into its accounting practices, with 12 executives receiving subpoenas from the Securities and Exchange Commission.
  • Walgreen Co. (NYSE:WAG) reported second-quarter earnings that fell short of expectations, with pharmacy sales growth of 13.8% and overall sales increasing by 12.3%.
  • Ligand Pharmaceuticals (NASDAQ:LGND) announced that its non-small cell lung cancer treatment, Targretin, missed its endpoints in two phase III clinical trials.
  • Dow Chemical (NYSE:DOW) has unusually high put activity, with 3,503 April 50 put contracts traded, which may indicate pessimism among traders.
  • The S&P 500 Index (SPX) and Nasdaq Composite (COMP) are trading slightly higher, with the Dow Jones Industrial Average (DJIA) up 0.51% at 10,496.2.

Statistics:

  • The Dow Jones Industrial Average (DJIA) is up 0.51% at 10,496.2.
  • The S&P 500 Index (SPX) is up 0.39% at 1,175.97.
  • The Nasdaq Composite (COMP) is up 0.33% at 1,997.6.
  • 1,716,640 calls and 1,051,716 puts have traded hands, with a put/call ratio of 0.61 across all six exchanges.
  • Dow Chemical (NYSE:DOW) has a put/call open interest ratio of 0.70, higher than 59% of the readings taken over the past 52 weeks.

Sources:

  • Schaeffer's Investment Research, "Midday Options Update: Schaeffer's Research"
  • Schaeffer's Research, "Monthly Chart of DOW since January 2003"
  • Schaeffer's Research, "Option Advisors, contrarian approach"
  • The Wall Street Journal, "SEC investigates AIG's accounting practices"
  • Forbes, "Top options website"
  • Barron's, "Top options website"