Schaeffer's Daily Market Blog Features: PepsiCo, Dell, Yahoo!, QUALCOMM, and American Express.

CINCINNATI -- Among the stocks featured in the October 12 edition of Schaeffer's Market Blog are PepsiCo (NYSE:PEP), Dell (NASDAQ:DELL), Yahoo! (NASDAQ:YHOO), QUALCOMM (NASDAQ:QCOM), and American Express (NYSE:AXP). Schaeffer's Market Blog is just one of the many free market commentaries written

every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. The Market Blog is 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. To have this report delivered to you free via email every day click on the following link and you'll also get an opportunity to win an iPod Nano. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB13M&PAGE=1 .

Don't forget that many of our observations are available as audio presentations that you can hear on your computer or download from Apple's iTunes Music Store to play on a portable device such as an iPod. To see the full menu of podcasts, please visit http://www.schaeffersresearch.com/commentary/podcasts/.

10:33 AM Calls Active on PepsiCo

PepsiCo (NYSE:PEP) banked a third-quarter profit of $1.48 billion, or 88 cents per share, as revenue rose nine percent to $8.95 billion. Analysts had predicted a profit of 86 cents per share on sales of $8.8 billion. While PEP surpassed the consensus, investors appear disappointed with the company's outlook for the full year. Looking ahead, the firm expects earnings of at least $2.98 per share for 2006, versus the Street estimate of $2.99 per share.

Investor expectations were on the rise ahead of the company's earnings report. The equity saw open interest at its October 65 call jump on Wednesday by nearly 4,000 contracts to 20,800 contracts. This out-of-the money option is the site of peak front-month call open interest. This pop in call open interest also caused the stock's Schaeffer's put/call open interest ratio to drop overnight from 0.62 to 0.59 in the 34th percentile. In trading today, speculators are focusing on the equity's October 62.50 call, as more than 5,500 contracts have already crossed the tape on open interest of 8,300 contracts.

10:52 AM Dell Put Open Interest Explodes

A put/call open interest ratio is simply the ratio of total put open interest to total call open interest. We compute Schaeffer's put/call open interest ratio (SOIR) based on open interest in the front three months only. These near-term options tend to attract a more speculative crowd, the sentiment of which is more useful for shorter-term trading.

One of the filters available in our Schaeffer's Plus is the Daily SOIR Changes filter, which lists the stocks that save the largest percentage jump in their SOIR overnight. In the table in our blog, I have listed the top 10 stocks that saw the largest increase in their SOIRs.

From the list, I was caught by the sharp increase in Dell's (NASDAQ:DELL) SOIR from 0.82 to 1.14. In trading on Wednesday, open interest at the stock's November 25 put exploded by more than 57,600 contracts to total 85,416 contracts. Furthermore, the equity's October 22.50 put added more than 5,000 contracts to total 32,000 contracts.

2:01 PM Call Trading Brisk on Yahoo!

Yahoo! (NASDAQ:YHOO) has been the focus of some extremely heavy call activity today. More than 17,000 contracts have crossed the tape on the security's January 2007 27.50 call. Open interest for this option currently stands at 35,718 contracts. A block of 10,000 contracts changed hands at 12:21 p.m. Eastern time at $0.95. However, the trade was marked "adjusted" on my screen, making it difficult to determine whether the contracts were bought or sold. A block of 2,205 contracts traded at 12:50 p.m. Eastern time at an ask price of $1.00, while another block of 2,000 changed hands at 1:21 p.m. Eastern time at a bid price of $0.95.

Overall, option players continue to exhibit an overwhelming preference for calls. The stock's Schaeffer's put/call open interest ratio sits at 0.50, as call open interest doubles put open interest among near-term options. This ratio is also lower than 88 percent of those taken during the past 52 weeks.

2:09 PM QUALCOMM Sees Increased Optimism

QUALCOMM (NASDAQ:QCOM) is seeing an overwhelming amount of call options trade compared with put options thus far today. Call volume currently is running at more than 10 times put volume. While this activity may be short-term supportive for the stock, it could also be giving insight into how overly optimistic traders might be about the shares right now. Just how optimistic are they? There is volume of more than 12,000 contracts at the QCOM November 42.50 call that is nearly 10 percent out-of-the-money. Watch for the shares to struggle during the near term.

2:14 PM Calendar Spread on American Express

It appears that American Express (NYSE:AXP) is the focus of a calendar spread. A calendar spread is where an investor will sell a short-term call (or put) and then buy a longer-term call (or put) at the same strike. In this case, a block of 9,093 contracts on the stock's November 60 call crossed at a bid price of $0.45 around 10:28 a.m. Eastern time. At roughly the same time, a block of 9,093 contracts crossed on the stock's January 2007 60 call at an ask price of $1.45. The debit on this trade is currently $1.00.

Meanwhile, a block of 2,500 contracts changed hands on the November 60 call at 12:57 p.m. Eastern time at a bid price of $0.50, while a matching set of 2,500 contracts crossed on the January 2007 60 call at an ask price of $1.50.

For more information on these stocks or any stock in your portfolio, feel free to visit our Schaeffer's Equity Scorecard feature. Click here to read all of today's Market Blog: http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB13C&PAGE=1.

Take advantage of the timely Schaeffer commentaries by signing up for their free e-newsletters -- Opening View, Market Recap and Monday Morning Outlook. Click here to have the Schaeffer's commentaries delivered to you free via email every day and get entered to win an IPod Nano. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB13M&PAGE=1.

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 .