Schaeffer's Midday Options Update Features United Parcel

Service, Genzyme, OfficeMax, Boston Beer Company, and Computer Associates 
Today's Schaeffer's Midday Options Update Features
United Parcel Service (NYSE:UPS), Genzyme (NASDAQ:GENZ), OfficeMax
(NYSE:OMX), Boston Beer Company (NYSE:SAM), and Computer Associates
International (NYSE:CA). The Midday Options Update contains a brief
commentary on the day's most notable activity and a table listing the
most active calls and puts for the day. The Midday Options Update is
published every day at - the home of Bernie
Schaeffer and Schaeffer's Investment Research. For additional
information about this report or to have it delivered to you free via
email every day click on the following link. 
Options Update: Computer Associates International Ahead of
This morning kicked off with fresh U.S. trade data from the
Commerce Department, and it was rather disappointing. For the month of
November, the trade gap widened to a record $60.3 billion. This
shocked economists as, according to a CBS MarketWatch survey, it was
believed that the gap would drop to $53.3 billion. Exports suffered a
2.3-percent drop to $95.6 billion, a five-month low. All the while,
imports rose 1.3 percent to hit a record $155.8 billion. 
The disappointing trade gap information was followed up by mixed
information in the weekly report on crude oil inventories. The
Department of Energy (DOE) reported a decline in crude oil inventories
to 288.8 million, a 3.0-million-barrel drop. The DOE saw distillate
supplies mark an increase of 1.9 million barrels to tag the
123-million level. Additionally, the DOE saw gasoline levels rise by
one million barrels to reach 215.3 million. The American Petroleum
Institute (API) released some conflicting data. The API reported an
increase of 2.8 million crude oil barrels. Furthermore, the API noted
a gain of 2.5 million barrels in distillates and 2.4 million barrels
in gasoline. For more information on the DOE and the API data, read
"Oil Supply Report Mixed." 
UPS and Downs 
After the market closed yesterday, delivery guru United Parcel
Service (NYSE:UPS) issued an earnings warning. UPS cut its
fourth-quarter earnings estimation to a range between 81 and 82 cents
per share. Before a tax benefit, the earnings are believed to come in
around 75 to 76 cents per share. Originally, UPS had forecast earnings
of 83 to 87 cents per share. Excluding one-time items, the consensus
estimate for UPS's earnings was 85 cents per share. UPS blamed the
lowered expectations on higher operating costs stemming from the
severe weather in the Midwest during the company's peak delivery
season. While this news was bad, the company did reaffirm its 2005
outlook for an increase in net income falling in the 13-to-17-percent
range. This did little to deflect the ire of analysts as JP Morgan
downgraded the company to "neutral" from "overweight" and Credit
Suisse First Boston followed suit with a downgrade to "neutral" from
Gen-ie In A Bottle 
Genzyme (NASDAQ:GENZ) announced today that its fourth-quarter
revenue jumped 23 percent after the completion of two mergers, the
approval of Clolar, and the purchase of the U.S. sales and marketing
rights for Synvisc. The company's fourth-quarter revenue leapt to $591
million, $110 million higher than last year's fourth-quarter revenue,
and $8 million higher than the Street expected. Revenue for the year
jumped 39 percent to $2.2 billion, above the consensus estimate of
$2.19 billion. Thanks to the better-than-expected results, the company
announced that it expects pro-forma earnings for 2004 to come in
between $1.75 and $1.80 per share, above its previous forecast range
and the Street's expectation of a profit of $1.77 per share. 
A Max-imum Disappointment 
Office supply giant OfficeMax (NYSE:OMX) let the Street down a
bit today, announcing that it needs to postpone its fourth-quarter and
full-year earnings reports. The postponement depends upon the
conclusion of the expanded probe into accounting fraud. This
investigation was first announced on December 20, 2004, after the
company confirmed vendor claims that some employees created false
documents to bolster claims totaling near $3.3 billion, which were
billed in 2003 and 2004. Four employees have been fired during the
investigation. OMX expects to have the investigation wrapped up by the
third full week of February. 
Sam is Smiling 
Boston Beer Company (NYSE:SAM) received accolades from an analyst
this morning, and has seen a nice jump in trading action. Deutsche
Bank upgraded SAM from a "hold" to a "buy," citing evidence that SAM's
fourth-quarter volumes are on pace to come in ahead of original
expectations. This jump in volume can be attributed to underlying
strength in demand for SAM's products. 
Most-Active Options Update 
At 1:22 p.m. eastern time, the Dow Jones Industrial Average (DJIA
- 10,572.3) is up 0.15 percent and the S&P 500 Index (SPX - 1,182.97)
is down by 0.01 percent. The Nasdaq Composite (COMP - 2,081.2) is up
0.08 percent. At 1:23 p.m. in the options pits, 1,814,001 calls and
1,321,526 puts traded for a composite put/call ratio across all six
exchanges of 0.72. The CBOE put/call ratio for equity options weighed
in at 0.73. 
Computer Associates International 
According to Hoover's, Computer Associates International (NYSE:CA)
offers software for a variety of enterprise tasks such as business
intelligence, storage, security, and network management applications.
The company's applications work across both mainframes and distributed
computing environments; including its Unicenter enterprise management
software that is designed to give customers centralized control over
software, hardware, and network infrastructure. 
The firm announced today that it will release its third-quarter
earnings figures on Tuesday, January 25 after the market close.
Currently, the Street is expecting the software firm to post a profit
of 18 cents per share, a 12.5-percent improvement over the same
quarter last year. Furthermore, CA has bested the consensus estimate
in each of the past four reporting periods, coming out on top by an
average margin of 16.68 percent. 
Recently, the shares have been subject to the whims of the recent
market downturn and the inherent weakness in the tech sector as a
whole. Since setting a multi-year high in early December, CA has given
back more than 12 percent, falling beneath former support at its
10-day and 20-day moving averages and ultimately pulling these
short-term trendlines into a bearish cross. Furthermore, the equity
has even taken out intermediate-term support at its 10-week and
20-week moving averages. However, long-term support appears to have
halted the security's plunge for the moment, as CA is clinging to its
rising 10-month and 20-month trendlines. The shares have not suffered
a monthly close beneath these long-term trendlines since January 2003. 
Options investors have reacted to the security's technical
weakness by piling into bearishly oriented puts lately. In fact,
today's trading has seen more than 10,400 puts cross the tape at the
stock's February 25 strike. With open interest resting at a paltry
3,810 contracts, much of today's activity could translate into new
open positions. However, while CA's Schaeffer's put/call open interest
ratio has been on the rise lately, jumping higher from its December 15
reading of 0.62 in the 11th percentile, its current reading of 0.74 in
the 37th percentile is still far from a bearish extreme. 
On the other hand, short interest continues to creep higher for
the equity. The number of CA shares sold short inched higher by one
percent during December to 19.2 million shares, its second highest
reading of the past year. However, given the weakness in the tech
sector and CA's recent downturn, these bearish investors will be in no
rush to cover their bets any time soon unless the firm's earnings
report is stellar. 
Brokerage firms also have their doubts about the equity. According
to Zacks, eight of the 13 covering analysts rate the shares a "hold."
Analysts are in a similar situation as the short selling community.
Barring any surprises in the earnings confessional, brokerage firms
have just as much reason to downgrade the shares as they do to upgrade
Click on the following link to see a Monthly Chart of CA Since
January 2003 With 10-Month and 20-Month Moving Averages: . 
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Tom Godich, 513-589-3800
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