Among the stocks featured in the November 29 edition of Schaeffer's Option Bytes are Pacific Sunwear of California, DuPont, Rite Aid, Alcoa, and American Eagle Outfitters. 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 Monday, November 29, 2004:
Below are just a few of today's Option Bytes. Click here to read all of today's Option Bytes.
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1:23 PM Unusual Put Activity on Pacific Sunwear of California
Pacific Sunwear of California's (NASDAQ:PSUN) put options appeared on today's unusual option-activity list, as more than 2,900 of these bearishly oriented contracts have traded for all PSUN options with less than three months to expiration. This is more than 19 times the stock's average daily volume for these options. Nearly all the volume arrived at the out-of-the-money December 20 put (PVQ XD), which has traded more than 2,800 contracts. Most of this volume executed as many large and small block trades mostly between 11:01 a.m. and 11:08 p.m. Eastern time. The trades went off nearer the ask price at 0.25. With open interest of just 216 contracts, the trades look to be the initiation of bearish long put positions. PSUN was trading near 22.60 at the time of the option trades.
12:08 PM Heavy DuPont Call Buying
Chemical giant DuPont's (NYSE:DD) out-of-the-money April 50 call (DD DJ) has traded more than 7,900 contracts; 7,500 of which have crossed on the American Exchange (AMEX). This volume executed as two block trades that changed hands at 11:20 and 11:22 a.m. Eastern time. The trades went off near the ask price at 0.40 and 0.45, suggesting they were purchases. With open interest of 4,342 contracts, this could have been the initiation of a bullish long call position. DD was trading near 45.02 at the time of the option trades.
11:29 AM Options Trade Actively on Rite Aid
On Friday, options traded actively on Rite Aid (NYSE:RAD), as call volume was 11.6 times heavier than average and put volume was 18.6 times heavier than average. More than 2,500 call contracts crossed the tape, with the most active being the January 5.00 strike (RAD AA). More than 2,400 put contracts crossed the tape, with the most active being the January 5.00 strike (RAD MA). A look at overall option activity on RAD reveals that investors currently hold 62,400 calls compared to 17,800 puts in the front three months of option activity. Today, RAD is trading two cents lower to $3.83.
11:21 AM Calls Trade Actively on Alcoa
On Friday, calls traded actively on Alcoa (NYSE:AA), as call volume was 2.9 times heavier than average. More than 10,400 call contracts changed hands, with the most active being centered on the stock's December 35 strike (AA LG). Investors traded more than 8,600 AA LG contracts Friday. A closer look into the trading activity shows that the largest trade of the day occurred at 10:41 a.m. when a block of 1,000 contracts crossed the tape. The trade went off in between the bid and the ask, making it difficult to tell if the contracts were purchased or sold. A look at overall option activity on AA shows that investors currently hold 120,300 calls compared to 61,100 puts in near-term activity. Today, AA is trading 24 cents lower to $34.40.
10:36 AM Pessimism Toward American Eagle Outfitters Continues
American Eagle Outfitters (NASDAQ:AEOS) has risen by 165 percent since the beginning of the year, but pessimism continues to grow toward the retailer of casual clothing. On Friday, 1,518 puts changed hands, which is three times the stock's average daily put volume. The Schaeffer's put/call open interest ratio jumped from 1.29 to 1.61 (in the 100th percentile) as a result of this activity. Analysts are fairly neutral on the stock, with 10 "buy" ratings, 12 "hold" ratings, and one "sell" rating.
The above are just a few of today's Option Bytes. Click here to read all of today's Option Bytes.
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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.