Schaeffer’s Daily Market Blog Features NVIDIA, Sirius Satellite Radio, XM Satellite Radio, Guidant, and Pre-Paid Legal Services
CINCINNATI — Among the stocks featured in the December 7 edition of Schaeffer’s Option Bytes are NVIDIA (NASDAQ:NVDA), Sirius Satellite Radio (NASDAQ:SIRI), XM Satellite Radio (NASDAQ:XMSR), Guidant (NYSE:GDT), and Pre-Paid Legal Services (NYSE:PPD). Schaeffer’s Option Bytes are just one of the many free market commentaries written everyday at www.SchaeffersResearch.com – the home of Bernie Schaeffer and Schaeffer’s Investment Research. Option Bytes are written throughout every trading day by Schaeffer’s financial analysts and traders. They are quick insights to the day’s most notable market activity from an options perspective. For additional information about this report or to have it delivered to you free via email every day click on the following link. http://www.schaeffersresearch.com/redirect.aspx?CODE=PRMOU1M&PAGE=1 .
Schaeffer’s Option Bytes for Tuesday, December 7, 2004:
Below are just a few of today’s Option Bytes. Click here to read all of today’s Option Bytes. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1C&PAGE=1
9:57 AM NVIDIA Sees Unusually High Put Volume
In yesterday’s trading, NVIDIA (NASDAQ:NVDA) saw its puts trade at a pace 3.9 times greater than average. A total of 12,129 contracts traded with the most active being the December 22.50 strike with volume of 4,835. The Schaeffer’s put/call open interest ratio (SOIR) jumped from 0.53 to 0.63 and the percentile ranking jumped from 29 percent to 56 percent. Since last Monday, the SOIR has jumped from 0.43 to its current level. The percentile ranking at that time was only three percent. While the put open interest has been building, the stock has moved above potential resistance in the 20.50-21 range. This area served as support back in May and then acted as resistance in late June. NVDA shares are currently trading at 24.50, up 12.7 percent on the day.
10:20 AM Sirius Satellite Radio Continues to Climb as Does Its Put/Call Ratio
Can you tell which is climbing faster, Sirius Satellite Radio’s (NASDAQ:SIRI) stock or its Schaeffer’s put/call open interest ratio (SOIR)? In the last month, SIRI is up 106 percent, moving from 3.94 to close yesterday at 8.12. However, the SOIR is up 109 percent, moving from 0.22 to 0.46. Despite the unbelievable performance over the last month, analysts still aren’t jumping on board with the stock. There are currently 15 analysts covering the stock and 11 of the 15 have the stock rated as a “hold” or worse.
10:52 AM Toyota Deal Tunes Up XM Satellite’s Stock Price
As discussed in the previous posting, Sirius Satellite Radio Holding (NASDAQ:SIRI) has been powering higher in the midst of increasing skepticism from option players. Both SIRI and XM Satellite Radio Holdings (NASDAQ:XMSR) have made impressive gains today after announcing deals with Toyota Motors (TM). TM will install satellite radio in its various models. Over the past 52-weeks, XMSR has gained nearly 71 percent, according to Yahoo!Finance. However, there are signs of skepticism in its sentiment backdrop. Option players have been increasing their bearish bets, causing the Schaeffer’s put/call open interest ratio (SOIR) to trend higher. The current SOIR of 0.62 is higher than 99 percent of all readings taken over the past year. Short sellers have also made large wagers against the security, as it would take more than 10 days to cover all the shorted shares. From a contrarian perspective, pessimism in the face of strong price action is a bullish indicator.
11:36 AM Johnson & Johnson Reportedly in Talks to Acquire Guidant
This morning, The New York Times reported that Johnson & Johnson (JNJ) is in negotiations to acquire Guidant (NYSE:GDT) for more than $24 billion. The deal would give JNJ a foothold in the defibrillators and pacemakers market. Furthermore, a GDT takeover would also strengthen JNJ’s position in the stent market, which is a multibillion market for the tiny metal-mesh cylinders that prop open blood vessels after doctors have cleared out blockages. While GDT is the market leader for bare metal stents, the drug-eluting stent market is currently dominated by Boston Scientific (BSX). JNJ’s drug-eluting stent Cordis was swept aside earlier this year when BSX introduced its Taxus stent, which cardiologists say is easier to insert.
1:13 PM Pre-Paid Legal Services Skyrocketing Higher
Pre-Paid Legal Services (NYSE:PPD) is skyrocketing higher again today. The stock earns the spot as the biggest gainer on the New York Stock Exchange with a 7.38-percent gain as of the time of this post. PPD is up more than 46-percent in the last six weeks alone. Yesterday after the markets closed, the CEO released a letter to shareholders announcing a year-end dividend of 50 cents per share. The letter also said the company will consider a quarterly dividend payment next year. The recent rally has been spurred in part by short covering. Short interest stands at more than seven million shares. With a daily average stock volume of less than 100,000 shares, the short-interest ratio is a huge 79.9 days. Short interest as a percentage of float is also a rather sizeable 66 percent. Look for more upside if the stock holds its gains as more shorts are forced to stem their losses by buying back shares.
The above are just a few of today’s Daily Market Blog entries. Click here to read all of today’s Daily Market Blog. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1C&PAGE=1
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About Schaeffer’s Investment Research (www.SchaeffersResearch.com)
Schaeffer’s Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer’s Option Advisor, the nation’s leading options subscription newsletter. The firm’s contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm’s website, http://www.SchaeffersResearch.com , is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron’s. Click here for more details about Schaeffer’s trading methodology: http://www.SchaeffersResearch.com/method.
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