Midday Options Update: Questar, General Motors, and More

Strategic Insights -

The U.S. index of leading indicators rebounded in October, with September's index revised to a 0.8-percent drop from the initial 0.7 percent estimate. Oil prices have increased due to cold weather forecasts, and the Organization of Petroleum Exporting Countries has announced it will not consider an output cut at its December meeting unless prices fall. General Motors plans to cut its car-making capacity by one million by 2008 to save $7 billion annually. Ford Motor is cutting 4,000 salaried jobs, representing about 10 percent of its North American white-collar workforce. Questar's January 75 call has become the most-active option, with the company's recent performance and support from its 10-month moving average a concern.

Key Takeaways:

  • Questar's January 75 call has become the most-active option, with a recent bullish trend but also declining performance in October and November.
  • General Motors plans to cut its car-making capacity by one million by 2008, saving $7 billion annually, and eliminating 30,000 jobs.
  • Ford Motor is cutting 4,000 salaried jobs, about 10 percent of its North American white-collar workforce.
  • The Organization of Petroleum Exporting Countries will not consider an output cut at its December meeting unless prices fall.
  • Perry Ellis International lowered its 2006 forecast to reflect uncertainty related to industry consolidation and other factors.
  • Nike was downgraded to "neutral" from "overweight" by J.P. Morgan due to slowing market share growth.

Statistics:

  • The U.S. index of leading indicators rebounded 0.9 percent in October.
  • September's index was revised to a 0.8-percent drop from the initial 0.7 percent estimate.
  • Oil prices have increased due to cold weather forecasts.
  • The Organization of Petroleum Exporting Countries will not consider an output cut at its December meeting unless prices fall.
  • Questar's January 75 call has become the most-active option, with 2,512,706 calls and 1,372,614 puts changing hands.
  • Questar's put/call open interest ratio (SOIR) stands at 0.30, higher than 54 percent of the readings taken during the past 52 weeks.
  • Short interest and analyst rankings will give Questar little-to-no boost.

Sources:

  • SchaeffersResearch.com
  • The Wall Street Journal
  • Hoover's
  • Zacks
  • Forbes
  • Barron's
  • J.P. Morgan
  • Questar's annual report
  • Perry Ellis International's quarterly earnings report