Yahoo Inc. (NASDAQ: YHOO) -- July options expensive into July EPS & Speculation. YHOO is recently trading up $0.19 to $27.61. YHOO is expected to report EPS on July 17. YHOO is frequently mentioned as a merger candidate of MSFT and there are rumors of upper level management changes. YHOO July option implied volatility of 40 is above its 26-week average of 40 according to Track Data, suggesting larger risk.

Brinker International (NYSE: EAT) -- volatility Flat as activists investors circle Restaurant concepts. EAT operates restaurant concepts including Chili's, Macaroni Grill, Maggiano's & On the Border. EAT reported a 2.8% decrease in same store sales in May. EAT is expected to report EPS on August 7. SPHN says "sales turnaround could take longer than expected, as changes at both Chili's and On The Border are in preliminary stages." SPHN goes on to say, "EAT is currently trading at 17.1x our FY08 EPS estimate of $1.89, vs. the group at 19.7x." EAT has a market cap of $3.5 billion with long-term debt of $593 million. EAT reported quarterly March 2007 revenue of $1.1 billion. EAT over all option implied volatility of 28 is near its 26-week average according to Track Data, suggesting non-directional risk.

The Volatility Index for S&P 500 Options (VIX) is up 1.06 to 15.93.

Option volume leaders today are: Yahoo Inc. (NASDAQ: YHOO), Apple Inc. (NASDAQ: AAPL), Google Inc. (NASDAQ: GOOG) and NovaStar Financial (NYSE: NFI).

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.