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Daily Newsletter, Thursday, 11/16/2000

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The Option Investor Newsletter                 Thursday 11-16-2000
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******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        11-16-2000        High      Low     Volume Advance/Decline
DJIA    10656.00 - 51.60 10757.70 10639.30  943 mln   1213/1654
NASDAQ   3031.88 -133.61  3175.63  3031.76 1.52 bln   1170/2703
S&P 100   724.18 -  9.35   736.78   722.96   totals   2383/4357
S&P 500  1372.32 - 17.72  1394.68  1370.40           35.4%/51.7%
RUS 2000  481.64 - 10.15   491.79   481.27
DJ TRANS 2812.91 - 28.10  2841.60  2807.22
VIX        28.38 -  0.39    29.09    27.78
Put/Call Ratio      0.81
******************************************************************

Yep, relief rally was definitely over!

The markets never caught fire today after the court battles heated
up in Florida. The big uncertainty problem with the possibility of
the election dragging out for weeks has simply made the volume
evaporate. The Nasdaq volume was only 1.48 bln and the NYSE also
shrunk to barely over 900 million. Advance declines reversed with
declines on the NYSE beating advances 4:3 with the Nasdaq much
worse at 5:2. The shrinking volume was definitely on the buy side
with sellers in abundance. Still there was no panic selling just
a continuation of the trend to move to the sidelines until the
election is over. The choppy markets can drain even the most
experienced traders and more investors are taking a wait and see
attitude.







Most of the real stock news came early in the morning with Merrill
Lynch downgrading AMCC, PMCS, TXCC, VTSS and BRCM. Considering
they are a week late you wonder why bother. The downgrade
was based on "inventory concerns and the belief that there is no
near-term catalyst for the group." They said inventory could be
as much as 40% higher than historical norms and could cause a
correction in these stocks in the next two quarters. Thank you
Merrill Lynch. The correction came today after the downgrades
with BRCM losing -25, PMCS -18, AMCC -10, VTSS -5 and TXCC -7.
After being hammered on October 25th and again on Nov-7th is
this the third strike that takes these companies out of the game?
I don't think so but investors will be gun shy of these stocks
for some time to come. Without a major analyst or two coming to
their rescue soon they will probably languish until a rising
market floats all stocks. They definitely will not rise on their
own this month.

With chip stocks already in the tank from the AMAT profit caution
last night there was no joy in chipville today. Goldman Sachs
lowered estimates on AMAT in line with the guidance from that firm.
AMAT actually held up fairly well losing only -1.13. Investors
are probably looking for any port in the storm that can generate
$3 billion in revenue and solid earnings when compared to the
current disasters in the Internet sector. Chip earnings look
great in that light.

Nortel dropped another -8% after persistent comments that the
share price still overestimates the outlook for earnings as the
economy slows in coming quarters. NT closed at a 52 week low.
While NT is not in everyone’s portfolio the other sector leaders
GLW, JDSU and SDLI got killed by association. SDLI lost -25,
GLW -4 and JDSU -7.

If you take chips and fiber out of the Nasdaq it is tough to
find any heavyweight leadership. About the only thing green
on my screen was QCOM which is making a great run after spending
five months in the tank. Of the 300 or so stocks I watch on
a daily basis there were only 19 green for the day. Only nine
of those were Nasdaq stocks. QCOM was the only one that looked
decent. The others were only up because time expired before
they could go negative after moving up sharply at the open.
The Nasdaq leaders all tanked after the court in Florida
ruled to allow recounts to continue but the real killer was
SUNW. SunMicro closed -$10 off its high as traders sold before
an expected analyst meeting after the close. SUNW ended down
-6.69 for the day. The analyst meeting was positive and SUNW
said they were on track to meet estimates. Surprise! SUNW then
traded up after the close +2.00. Still a -$10 drop intraday
was the major reason the Nasdaq fell so quickly at the close.
Not the only reason but a major cause. When any index starts
dropping quickly it triggers further selling of other stocks
which accelerates the drop. The unknown cause can produce a
dramatic impact across the board.

After the close there was a bunch of earnings announcements
and warnings. Proving that the telecom sector can get worse
BellSouth said that growth would probably be in the 7-9% range
instead of the prior estimates of 13-15%. BLS dropped almost
-5 in after hours. SBUX announced earnings of $.22 which was
inline with estimates but said they had heavy write-offs of
their Internet investments. So what is new? We traders have
considerable write-offs as well! They did say they would open
1100 new stores in 2001 which would put them over 10,000.

On the bright side DELL said they won a contract to sell 2000
terabytes of storage to the U.S. Navy and Marine Corp as part
of a communication network upgrade. Dell gained +1 in after hours.
That was about the only bright side. Broadbase Software said they
would lose $.05 instead of the expected penny. AGIL beat analyst
estimates by a penny and regained +$2 of the -$9 they lost before
the announcement. LNUX also announced earnings that met reduced
expectations. Yawn...

TheStreet.com announced a series of layoffs today and a closing
of their European operations. They will have to pay close to $8
million in payments to foreign investors to avoid a $48 million
poison pill regarding the close. There were rumors that several
firms were interested in taking them over but the major name,
CBS Marketwatch, MKTW, which actually has a smaller market cap
than TSCM, said no. The CEO said on CNBC that there was too
much overlap in the readership and the deal did not make sense.
TSCM management also said they were not in talks with anyone at
this time.

In the "can it get worse" category, the chairman of PSIX was
hit with a margin call on 11 million shares of PSIX stock.
The CEO was the market all day. I feel for him. He tried to
build the best business he could. He went way out on the limb
to bet on his vision and got toasted instead. The stock had risen
in early trading today after the company announced they had hired
Goldman Sachs to advise on alliances or a possible sale. Just
when he thought there was daylight at the end of the tunnel the
bank forced him to sell into the rally. Good try Mr Schrader, I
hope you pull out of it.

With the election at the forefront of every traders mind as well
as a vote of no confidence from the Fed and a drop in earnings
estimates for the S&P of almost half for the fourth quarter is
there any reason the market is skittish? With the S&P estimates
cut from 29% to only 16% growth for the fourth quarter many
traders are still expecting more weakness in the markets. This
PE compression is common in times of a softening economy but
many of the current crop of investors have never seen it before.
As we know trading a bear market is not nearly as easy as making
money in a bull market. It requires perfect timing and nerves of
steel. Add in all the negative news events and many traders are
taking their cash off the table to wait for the cards to turn
in their favor. Jobless claims fell -20,000 this week as the
unemployment rate remains tight. The CPI only rose +0.2% in Oct
as expected but nobody cared. Prior support is becoming resistance
on almost a daily basis and Nasdaq 3000 may be the next mile marker
to fall on Friday. The election may be resolved over the weekend
and then again maybe not. This uncertainty may cause traders to
run for cover again this Friday just like they did last Friday.
I see a lot of potential for Friday. Both upside and downside.
With a decision on the value of the recounts to be decided and
the absentee ballot deadline of Friday night, there is likely to
be a lot of volatility. Read that as big moves in both directions.
If the court decision says the Secretary of State can ignore the
recounted votes then the election will be over with the absentee
ballots on Saturday. I would buy any dip on a "don't count"
decision. If the recounts will count then it could be as much as
ten more days before the final recounts are completed. I would
not buy that dip. For conservative traders 3200 still looks like
a great benchmark for entry into new plays. Under 3200 stay out,
over 3200 go long. Simple strategy, low stress, let the market
tell you when to buy. You type A traders never listen to me
anyway so you are on your own!

Good luck and don't buy too soon.

Jim Brown
Editor


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****************
MARKET SENTIMENT
****************

Fourth Quarter
By Austin Passamonte

It's the fourth quarter of year 2000 and these markets remind us
of years gone by. Just not any recent ones.

Traders waiting for the annual fall rally to begin are getting a
bit impatient around here. Testy too. Enough of this chopping
around... let's buy calls & make some money!

Sounds good to us if it works that way soon and we think it
might. First things first.

(Weekly/Daily: Comp)



So we are all on the same page and free from denial, let's view a
monthly/weekly twin chart template of the NASDAQ Comp. On the
left is our definition of a bear market from early 2000 to date.
It was a great run to that point but we now have some basing to
do and that process is currently underway.

The bad news? NASDAQ has not seen its 20-period moving average
(middle red line) be anything but support for years until now. We
are trading on the bearish half of this Bollinger band standard
deviation and look what our price level two-standard deviations
at the lower band is. Not saying we'll see it anytime soon, just
be aware that we are closer to that than the upper extreme at
4,800.

The weekly chart and daily chart (not shown) both exhibit classic
bullish divergence. What does this all mean? NASDAQ 5,000+ may
not be in the cards for awhile but a very tradable rally should
be near.

The Comp won't see new market highs for a long time. Many of the
ridiculously-inflated "noprofits.com" components are now dead &
gone. This doesn't mean that good stocks won't rally to new highs
and other great stocks will emerge to soar as well because they
certainly will. It just means that not every IPO will soar 1,000%
for years to come.

Good stocks will continue to yield good returns with calls and
puts as market conditions dictate. It will soon be time for
calls.


(Weekly/Daily: SPX)



We've heard 1575 SPX for 11 months now from someone and 5th most
powerful or not, we just don't see 200 index points emerging from
here real soon. Our money would bet that we should be closer to
1500 than 1400 by New Year's but new index highs might wait until
they can see their shadow along with Punxatawny Phil instead.

Don't take our word for it; we aren't even on the radar screen of
rated market "gurus". Just watch the charts and decide for
yourself.

More of the same. Big blocks of QQQ and SPX puts were clearing
around 11:30am this afternoon at/above current "bid" prices, a
sure clue that smart money smelled weakness hours before it
became reality.




See the -14 trade at 12:15:54 yesterday and -6 thru -4 trades
today? These were ITM block purchases just under and at/above
current "ask" upon execution respectively. That means someone
shucked out $250,000 for the first block yesterday and almost
$800,000 today for the second batch. Trust their judgment? Those
are pretty big votes.

We watch this block flow because they have more money than us and
almost always find themselves on the right side of market moves.

By the way, that $800,000 play had a closing value of $1.2
million and it didn't get sold either. Sell too soon? We sure
would!

Our best guess? More downside to come, probably tomorrow if so.
However, it is now time to start watching for signs of a pending
rally. Too much downside pressure has been exerted and there is a
penchant to buy that will be tough to suppress much longer.

Will the next rally last six months? Let's shoot for six weeks
first and then go from there. Meanwhile, why don't we follow the
big boy's example and play the downside when markets rally south.
Can you find any fault with the block trade of QQQ puts as shown
above that took all of five hours from purchase until the bell?
We've worked much longer and harder for less and expect to do so
again. Market Sentiment fondly hopes this is your trade, or at
least that the next will be!

*****

VIX
Thursday 11/16 close; 28.38


30-yr Bonds
Thursday 11/16 close; 5.75%

Support/Resistance Indicator
The Index Support/Resistance(S/R)Ratio is a formula used to
gauge possible support or resistance based on open-interest
disparity. Ratio listed is percentage of calls to puts or
puts to calls respectively.

Support is factored from dividing puts by calls at strike
levels beneath index closing price. Resistance is factored
from dividing calls by puts at strike levels above current
closing price.

                                   Thursday
                                 (11/16/2000)
  (Open Interest)       Calls        Puts          Ratio
S&P 100 Index (OEX)
Resistance:
765 - 750               15,163        2,788         5.44
745 - 730               20,419        9,387         2.18

OEX close: 724.18

Support:
720 - 705                5,186       13,911         2.68
700 - 685                  625       27,122        43.40***
Maximum calls: 740/6,976
Maximum puts : 700/13,531

Moving Averages
 10 DMA  736
 20 DMA  736
 50 DMA  751
200 DMA  776


NASDAQ 100 Index (NDX/QQQ)
Resistance:
 82 - 80                62,100        41,835         1.48
 79 - 77                18,340        52,738          .35
 76 - 74                44,790        46,311          .97

QQQ(NDX)close: 72.875

Support:

 71 - 69                 5,454        26,199         4.80
 68 - 66                   528        10,652        20.17***

Maximum calls: 75/26,448
Maximum puts : 80/26,048
Moving Averages
 10 DMA 76
 20 DMA 79
 50 DMA 83
200 DMA 93

S&P 500 (SPX)
Resistance:
1450                   22,785         8,602          2.65
1425                   12,544        11,766          1.07
1400                   35,633        30,854          1.15

SPX close: 1372.32

Support:
1350                    9,985        17,316          1.73
1325                    2,697         9,244          3.43
1300                    1,641        13,149          8.01


Maximum calls: 1400/35,633
Maximum puts : 1400/30,854

Moving Averages
 10 DMA 1396
 20 DMA 1397
 50 DMA 1414
200 DMA 1441

*****

CBOT Commitment Of Traders Report: Monday 11/13
Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts on the
Chicago Board Of Trade. Small specs are the general trading
public with commercials being financial institutions.
Commercials are historically on the correct side of future
trend changes while small specs are not. Extreme divergence
between each signals a possible market turn in favor of the
commercial trader’s direction.


                     Small Specs                Commercials
DJIA futures    (Current)  (Previous)      (Current)  (Previous)
Open Interest
Net Value         -1105       -1066          -792        +657
Total Open
Interest %       (-14.39%)  (-11.56%)        (-3.33%)  (+2.84%)
                 net-short  net-short        net-short  net-long

NASDAQ 100
Open Interest
Net Value        -1999         -448          -293        -927
Total Open
Interest %       (-11.37%)    (-2.40%)      (-.60%)    (-1.89%)
                 net-short    net-short     net-short  net-short

S&P 500
Open Interest
Net Value        +58260        +60112         -67783     -70603
Total Open
Interest %      (+30.75%)    (+31.64%)      (-10.52%)   (-11.10%)
                net-long      net-long      net-short   net-short

What COT Data Tells Us: Commercial positions in S&P 500 remain at
their ten-year extreme short levels while small specs held their
net-long positions as compiled Tuesday 11/07 by the CFTC.

Commercials have gone to a net-short position on the DOW, while
the small specs have increased their net-short positions on the
NASDAQ 100.


**************
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TRADERS CORNER
**************

Down on the Year
By Molly Evans

I took a walk down Memory Lane last night.  I couldn't sleep so
got up and started surfing the net.  Somehow, I stumbled into
a financial chat site.  It's been quite sometime since I'd been
to visit those pages but they're still keeping my original
portfolio tracked for me.  Amazing.  There it was, all my first
stocks ever purchased and long since sold.  I had all the darlings
of those days: DELL, INTC, CSCO, SUNW, CMGI, YHOO, PFE, C, and
then a couple of the hot ones, KIDE and HLIT.  I see that if
I'd held, as in long term buy and hold, I'd be down 37% on my
original cost.  I guess it's been a little over a year since I
had updated it on the site.  I recall that it was this time last
year that the Pokemon craze had sparked a mania in KIDE (now KDE)
the company that brought about Pikachu and a trading card frenzy
with younger school-aged kids.  Dell and INTC were the first
stocks I ever bought.  Dell at $107 and INTC at $70, both
presplits.  I see they're both split again but funny how the
number of shares didn't go up with those splits.

Holy cow.  When we're trading day to day and we look at the
charts - we're looking to the future.  Of course we look at
where the stock has traded before to view the resistance points
but when I looked at these things last night from a different
perspective...I was just dumbfounded.  I know we've had a
huge correction, I haven't exactly been sleeping here.  But to
see the impact of where this had gone and now come is numbing!
I remember what those numbers USED to be.  I sold CMGI at $120 in
my kid's account.  They're now at $13 and change!  I took the loss
on DELL long ago.  I was the last person in on DELL.  It's never
seen those numbers since that day.  HLIT - ha!  What did I buy
that for?  Must have had an enticing chart at the time that it was
$60 presplit.  It ran up to $150 this spring as I recall.  It
closed at $11 7/8 today.  And KIDE.  I loved KIDE.  It nearly
wiped me out though.  Talk about a mania.




KIDE was quite the story.  Here was a stock with a tiny float,
Only 5 million shares.  I was on an email group that was playing
it heavily.  One day, one of the guys commented that the twenty
or so people in our group controlled about 5% of the entire float.
I think that scared one of the big rollers and he got out on top.
Not me man!  I was in there buying all the dips and leveraging
myself as much as Fidelity would let me.  Ignorance is bliss.
Talk about the mistakes we all make as novices.  I had no plan.
I just saw that KIDE was going up $8.00 everyday.  The movie was
coming out, Burger King was giving out Pokemon balls and my kid
wanted every trading card he could possibly get his hands on.
Where would it stop?  No one knew!  I remember sending an email to
a buddy of mine bragging to check out the KIDE quote for that day.
He emailed me back saying that he had always suspected it but now
had irrefutable evidence that I did indeed need a brain transplant.
I just laughed.

Now that I look back on it, I think how utterly frustrating it
must have been for traders who know how the markets work.  Here
was a stock flinging itself to the stars; they know it's insane,
so they're shorting it all the way but then there are the people
like me, bidding it right on up, sending shorts running for
cover.  They finally won though.  KIDE came down with a crashing
thud.  We blamed it on KIDE's management.  They didn't split the
stock again and that disappointed shareholders.  They didn't do
this and they didn't do that.  Whatever.  Only now, nearly a year
later, can I see that it was ourselves who chopped off our own
noses.  Remember that Soros comment I quoted a week or so ago?
It was about how the big money comes from recognizing a trend
with a false premise, riding that trend and then stepping off
before the lot of other participants realizes that they've been
conned.   The popping of the KIDE bubble was just a prelude to
the bigger explosions to come.

If you are a Q Charts subscriber you can pull up some interesting
pages.  Click on the little fire icon - the hot lists.  From that
take a gander at the U.S. Stocks, Yearly Percentage Losers.  What
do we see here?  Lots of dot bombs.  The top ten stocks listed
have lost more than 98% of their value:  Mortgage.com, Garden.com,
Virtual Communities, US Interactive, E Stamps.com, PlanetRX.com
and even ICGE.  Let's look at this USIT, US Interactive.  Here is
a company that IPO'd in August of '99 at $10.50.  Within six months
it hit its all time high of $92 and has now bled off nearly every
single day since then.  It closed at $0.59 today.  The thing that
gets me, and Joe Kernan and David Faber like to banter about this
on CNBC too, is that not until Sept 20 of THIS year did USIT get
a downgrade from Buy to Market Perform by Deutshce Banc Alex
Brown.  By then, the stock was at $3.50.  Then, just last
Thursday, someone else downgraded them to Sell.  The stock was at
$1.00 by then!  Great call!  Why bother?

The top gainers on the year typically belong in the biotech
category.  In fact, the biotech index is one of the three best
performing sectors on the year.  It's up 62%.  Care to guess what
the other two are?  The Health Payer index (HMO.X)is up 102% and
the Natural Gas Index (XNG.X)has seen 87% ytd gains.  Who says
there was nothing to buy this year?

If you didn't get the chance to read Buzz Lynn's article last
night on fundamentals on the IndexSkybox site, I'd urge you to
have a look at that too.  Never has it been more important to know
what you buy.  Judging from today's market activity, anything with
four letters is apparently cursed but this too shall pass.  When?
We don't know.  I've got my latest KIDE though(now KDE).  I
couldn't resist.  Harry Potter is the real deal in the kid world
right now.  Enesco, the company that markets Precious Moments
figurines won the rights to market Harry in the coming year.  ENC
has a PE of 7 (KDE's is now 4).  I sure hope we get one of those
false premises again.


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PICKS WE DROPPED
****************
When we drop a pick it doesn't mean we are recommending a sell
on that play. Many dropped picks go on to be very profitable.
We drop a pick because something happened to change its
profile. News, price, direction, etc. We drop it because we
don't want anyone else starting a new play at that time.
We have hundreds of new readers with each issue who are
unfamiliar with the previous history for that pick and we
want them to look at any current pick as a valid play.


CALLS:
*****

SDLI $228.38 -25.94 (+7.81) Simply put, we are no longer
recommending this play.  There are a number of reasons for this.
First, the stock attempted to rally above strong resistance at
$260 yesterday, but to no avail.  This was an especially key
level as it is where the 200-dma currently resides.  While the
stock did manage to gain $5.38 or 2.16% on 115% of ADV on
Wednesday, today's drop of over 10% put us back below 5 and
10-dma support (at $233.74 and $238.78).  While it can be argued
that volume was light today, less than 85% of ADV, the bulk of it
came near the close as traders headed to the exits.  Finally, the
close below our stop price of $230 is a sign that further selling
could be ahead.


PUTS:
*****

No dropped puts today


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The Option Investor Newsletter                 Thursday 11-16-2000
Copyright 2000, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.

To view this email newsletter in HTML format with embedded
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********************
PLAY UPDATES - CALLS
********************

QCOM $88.06 +3.88 (+14.13) The strength that QCOM is showing in
the face of a weak market is simply amazing.  Yesterday, despite
a downgrade by AG Edwards from a Buy rating to an Accumulate, the
stock powered up $3.81 or 4.74%, with volume over 170% of ADV.
The downgrade was based on projections that revenues from WCDMA
networks may come in later than previously expected.  The effects
however, were mitigated by comments from Banc of America
Securities, who reiterated their Buy rating on the stock, citing
improving sales in Korea as well as the possible easing of
advertising restrictions in Asia in the near future.  What's
more, Bank of America raised QCOM's price target to $125.  Today,
QCOM continued its ascent, gaining another 4.6 percent, a bullish
sign considering a red NASDAQ day.  With support at $85, $83 and
the 5-dma near $80, a pullback to these levels could offer an
aggressive entry while an entry on strength can be had on a high
volume break through the 200-dma near $90.  To protect our
profits, we are moving up our stop price up to $81.

CIEN $97.69 -2.75 (+9.69) After moving up fourteen points in
three days Ciena was due for consolidation.  Ciena came within
a couple of points of the 200-dma of $82 on Monday, and moved up
to a high over $106 on Wednesday, providing several good entry
points along the way.  Unfortunately, the Federal Reserve's
decision not to change the bias to neutral, combined with the
election indecision, was too much for most technology stocks,
including Ciena.  Ciena almost touched the 50-dma of $107 just
before the Fed decision was announced, and retreated, closing
the day at $100.44.  On Thursday, Ciena gave day traders an
opportunity for profit in the morning with a move from $97 to
$103.  As the market deteriorated in the afternoon, Ciena tried
once more to clear $100, but settled back to close just between
the 5-dma of $96.63 and the 10-dma of $98.38.  Considering the
circumstances, Ciena held up well from a technical standpoint.
If support at $97 is broken, the next support level is $92.50
Volume is approximately 30% stronger on up days.  Consider
taking positions on a move up from current levels with strong
volume, depending on market conditions.  A move past the 50-dma
of $107 on strong volume would be very bullish.  Continue to use
the $90 level as a stop.

AMGN $65.88 -1.50 (+1.31) Considering the bearish tone across
all the major indices, AMGN held up rather well today.  Giving
up only $1.50 on only two-thirds of the ADV, our play settled
just above the 200-dma ($65.38) and just below the 50-dma
($65.94).  Since posting its post-earnings low of $51.38, the
stock has been marching higher, creating a short-term ascending
trendline, which currently sits near $64.50.  Of course, the
stock will continue to find resistance at its longer-term
descending trendline, currently resting at $69.  Not only will
this put AMGN above its descending trendline, but it will also
have filled the post-earnings gap from late October.  Aggressive
traders may want to consider new positions on a bounce from the
$64 level, but only if it comes with the conviction of stronger
volume.  Unfortunately, heavy volume for drug stocks is unlikely
to materialize without some resolution to the election mess in
Florida, which means prudent investors will likely stand aside
until next week.  A conservative entry strategy will be to wait
for a decisive move through $69 on solid volume before starting
new plays.

JBL $46.00 -2.75 (+1.75) Chip stocks that operate in the
Communications sector took it on the chin again today, as Joe
Osha of Merrill Lynch downgraded them, based on concerns about
increasing inventories.  Although not directly in Mr. Osha's
sights, JBL felt the pressure, giving up $2.75 to close at $46,
right on the low of the day.  This puts the stock back below its
200-dma, and if the selling pressure continues on Friday, a test
of our $44 stop looks quite possible.  While a bounce at this
level would represent a good aggressive entry point, make sure
the stock bounces before playing.  With Semiconductor sentiment
taking another hit in today's session, you don't want to be
trying to catch the proverbial falling knife.  The safer
approach will be to wait for increasing volume to push our play
up through the $50 resistance level before playing.

MSFT $68.94 -1.13 (+2.26) Microsoft rallied from strong support
at the 50-dma of $65 on Monday to a high of $70.75 on Wednesday
before the Federal Reserve meeting.  MSFT has attempted to clear
resistance at $71 three times since last Monday, and bounced back
to support between the 5-dma of $68.25 and the 10-dma of $69 each
time.  Considering the overall market weakness and uncertainty,
MSFT is holding up remarkably well.  Depending on overall market
conditions, it might be possible to find new entry points on a
bounce off support at $68 on strong volume.  Day traders have
been able to profit from MSFT's almost predictable moves from $68
to $71.  If the stock can clear and close above $71 on strong
volume this would be a highly bullish indicator, and MSFT may have
a possibility of clearing the 200-dma of $73.  If MSFT keeps
trying, and the market conditions ease up, such a move seems very
likely.  A move above $73 could set the stock on its way up to
the high levels of the summer at $80.  Pay attention to the
market's reaction to the continuing election drama, and use
$66 as a stop if MSFT closes below that level.

IDPH $175.44 -6.38 (-24.25) Today's retrace on the NASDAQ
brought IDPH down to a premium entry level going into tomorrow.
And IDPH didn't go unnoticed by Merrill Lynch.  The brokerage
firm reiterated their bullish position on the stock and
reiterated a Buy recommendation.  Currently the $175 mark, in
conjunction with the rising 50-dma ($174.93), are showing signs
of becoming a short-term support.  Of course $170 offers firmer
support, but recall, OIN finds this level a bit too risky to
play.  We'll exit this call if IDPH closes below this mark.
Taking entries into the recovering momentum on strong bounces
off $175 is certainly geared for the more aggressive traders.
However, buying into strength as IDPH pushes through $180 is
quite reasonable.  The least risky approach is to be patient and
wait for momentum buyers to take IDPH through the $185
resistance before beginning opening positions.

TLAB $55.25 -1.44 (+2.00) The recent contention at the $56 level
finally ended in Wednesday's session.  A late day breakout of
its narrow channel took TLAB up to $57.06, for a strong close up
$1.13 to $56.69.  The upshot came ahead of Tellabs announcement
that it had inked a multi-year agreement with Beijing Bell
Telecommunications Equipment Manufacturing to sell its latest
switching technology in China.  The deal was well received by
the Street today.  An immediate upswing to $58.13 took TLAB
through the 200-dma ($57.50), which it hadn't seen the topside
of in over three months, before the market sentiment dragged the
share price down.  In all fairness, the strong bounces off
$53.38 and the $54 level provided reasonable entry points and
also, additional confirmation that TLAB is poised to run higher.
If you're cautious of taking positions, look for strong action
to take TLAB back through the $56 and $58 levels.  Our Stop
remains set at $52 for safekeeping.


*******************
PLAY UPDATES - PUTS
*******************

RATL $38.19 -3.25 (-8.38) The put play on RATL worked out well
in the past two sessions.  Yesterday's action provided
aggressive entries just under the $42 mark where RATL met a new
and lower ceiling of resistance on strong volume.  The reward
came during the last hours of trading today.  The $40 level
failed to hold and $39 couldn't stand up to the building
pressure either.  RATL slid to a new intraday low at $37.50 as
sellers took control.  Today's bearish close and the steadfast
volume amid RATL's breakdown hints of more downside to come.
Above, the 5-dma ($42.14) offers a nice gauge if you're
strategizing a riskier entry on a rollover; however let's keep
$44 set as our stop.  The more moderate approach to taking an
entry is to look for further weakness from the current level,
but take profits quickly.  Keep stops in place to protect
capital.

LVLT $33.50 -2.13 (-2.56) The stock's downside bias returned in
today's session; although yesterday it looked grim.  Tuesday's
gains had extended slightly before LVLT hit a wall at the $37
level.  After a bout of steady action at that mark, LVLT quickly
succumbed to the negative pressure of the NASDAQ and quickly
fell.   More tension in the marketplace put the clamp on LVLT's
share price.  It certainly headed south and breached the
supporting 5-dma line ($33.99), but we're not out of the woods
yet.  More conclusive evidence that the downward momentum can
move LVLT lower would be a break through the resistance at $33,
then a challenge of $30 on strong volume.  There is the danger
of an upswing at these lower price levels, so be prepared.  Our
stop remains set at $36.  Recently, Goldman Sachs reiterated that
LVLT was on their Recommend List.  It had no effect on current
trading, simply be aware of the sentiment.

NEWP $75.75 -11.19 (-10.00) The 5 and 10-dma, currently at $83.22
and $91.97, respectively, continue to act as formidable
resistance. On Wednesday, a failed attempt to break through $90
brought in the sellers.  While the stock closed down only
fractionally and on average volume, this set the stage for
today's move.  Opening below support at $85, the stock traded
sideways and on relatively low volume for most of the day until
an end of day sell-off ensued, closing the stock down almost 13%.
While volume today was light, only 70% of ADV, the sellers were
clearly in control.  At this point, a bounce is possible, with a
failure to rally above resistance at the 5-dma and $85 as
possible aggressive entry points.  There is also resistance at
$87, our new stop price, but as always, a close above this point
will likely see us taking our profits and moving on.  For a safer
entry, wait for a break below $75 support, backed by increased
selling volume, before entering.

VRSN $117.94 -2.00 (+4.75) Moving higher this morning, VRSN
actually tested our $123 stop level before succumbing to
widespread NASDAQ selling pressure.  The bearish comments from
Merrill Lynch on the Communications IC stocks sent the NASDAQ
into a tailspin and our play wasn't able to buck the trend.
Although the bulls tried mightily throughout the day to hold the
$120 level, they finally gave up in the last 30 minutes, and
VRSN fell below $118 at the close.  Near-term support is sitting
at $115, but with the NASDAQ closing at its low of the day,
tomorrow's open could easily push VRSN below this level for
another test of support near $108.  Volume has been weakening
throughout the week, with only two-thirds of the ADV changing
hands in today's session.  A resolution to the election this
weekend could be what is needed to get volume back up, and if
it returns, it will be a strong indication of which way VRSN is
likely to jump.  Another failed rally at the $120 level will
present new entry points for aggressive investors, while
conservative players will want to wait for a penetration of the
$115 level.

SLR $35.00 -0.31 (-1.00) Wednesday, Solectron announced they'd
raised $1.2 billion by offering 35 million additional shares
in a secondary stock offering.  The company also said it would
raise an additional $1.5 billion in liquid yield option notes
rated BBB by Standard and Poors.  This is a very large offering
for a $21 billion company, and helped our put play on Wednesday
and Thursday.  Solectron reached $36 in the pre-Federal Reserve
rally on Wednesday, but fell back under continued selling
pressure. SLR spent most of Thursday resting on support at the
5-dma of $35, and even an analyst upgrade from Hambrecht &
Quist didn't help.  Consider taking positions on a failed
attempt to rally past $36.  If SLR should fall below $35, the
next support level is $32, and then the 52-week low at $28.
Watch the market conditions, and continue to use the $37 level
as a stop, should SLR close above that level.


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**************
NEW CALL PLAYS
**************

AGGRESSIVE:

No new aggressive calls today


LOW VOLATILITY:

HUM - Humana $14.31 +0.75 (+0.69 this week)

Humana is one of the top health care providers in the US.  The
company offers medical services via HMOs and PPOs, it also
provides dental, group life, and disability insurance.  In
addition to these products, Humana provides health care
coverage to military personnel and their families.

Shares of HMO stocks have staged impressive rallies recently
amid election and market turmoil.  The catalyst behind HUM's
recent performance is the fact that the Republicans regained
control of Congress.  Investors viewed the Republican win as a
sign the patients' bill of rights legislation would not be
approved in Congress - a bill that is viewed as detrimental
to the HMO industry.  The political catalyst has investors
moving back into the once beaten down HUM.  We're looking to
profit from the stock's steady upward trend and cheap
options.  As for strategy, look to enter new positions on
pullbacks near the 10-dma, around the $13.50 level.
Additionally, a breakout above $15 on heavy volume would
provide suitable entry points.  However, a close below the
$13 level would signal an end to HUM's momentum and our
play as well.

BUY CALL DEC-12 HUM-LV OI=499 at $2.44 SL=1.25
BUY CALL DEC-15*HUM-LC OI= 95 at $0.88 SL=0.00
BUY CALL FEB-15 HUM-BC OI=443 at $1.50 SL=0.75
BUY CALL MAY-15 HUM-EC OI=146 at $2.38 SL=1.25

http://www.premierinvestor.net/oi/profile.asp?ticker=HUM


*************
NEW PUT PLAYS
*************

AGGRESSIVE:

ARBA - Ariba $77.88 -14.13 (-22.63 this week)

As a leading provider of B2B solutions and services to leading
companies around the world, including more than 20 of the FORTUNE
100, Ariba helps companies cut through the complexity of
opportunities presented by the new economy.  Ariba provides the
most comprehensive and open commerce platform to build B2B
marketplaces, manage corporate purchasing, and electronically
enable suppliers and commerce service providers on the Internet.
Made up of a complete set of integrated commerce solutions and
open network-based commerce services, the Ariba B2B Commerce
Platform offers a single system for managing buying, selling,
and marketplace eCommerce processes.

While still considered the leader in the B2B space, Ariba has
fallen upon hard times.  With its share price as high as $170
less than two months ago, the stock has been more than cut in
half.  There are a number of factors contributing to this, both
fundamental and technical.  A joint venture with EDS to service
Fortune 500 companies, EDS CoNext, while heavily promoted last
January, has failed to live up to its potential.  After a strong
start, signing up a number of high-profile customers, half of
them have now either left or are in the process of leaving.  Once
a sure-fire IPO candidate, analysts are now putting its business
model seriously in question.  Not only that, but ARBA's own
business model and place in the B2B sector is also being
re-evaluated.  While ARBA currently dominates the procurement
software part of the B2B space, more and more it appears that the
place to be is in supply-chain management.  If that is the case,
then ARBA's hold on its leadership position is tenuous at best.
From a technical standpoint, since the beginning of October, ARBA
has been trading in a wide and volatile range, with support at
$110 and resistance at $140.  Support at 200-dma was strong as it
successfully tested that level numerous times in October, but the
break below that level last week has since resulted in further
selling on increasing volume.  With the stock deeply in oversold
territory, a bounce at this point is likely, allowing aggressive
traders to target-shoot their entries.  Resistance overhead can
be found in increments of $5 at $80, $85.  There is also
resistance at its 5-dma near $90 but make sure that ARBA
continues to close below our stop price of $86 when making a
play.  If the selling continues tomorrow, a break through support
at $75 with conviction will allow for a more conservative entry.

BUY PUT DEC-80 IUR-XP OI=126 at $13.00 SL=9.75
BUY PUT DEC-75*IUR-XO OI=202 at $10.75 SL=8.25
BUY PUT DEC-70 IUR-XN OI=117 at $ 8.50 SL=6.00

http://www.premierinvestor.net/oi/profile.asp?ticker=ARBA


**********************
PLAY OF THE DAY - CALL
**********************

AMGN - Amgen, Inc. $65.88 -1.50 (+1.31 this week)

The biggest of the Biotech big guns, AMGN makes and markets
therapeutic products for hematology, oncology, bone and
inflammatory disorders, as well as neuroendocrine and
neurodegenerative diseases.  Anti-anemia drug Epogen and immune
system stimulator Neupogen account for about 95% of sales.  Its
Infergen has been commercialized as a treatment for hepatitis C,
and Stemgen is approved for stem cell therapy in Australia,
Canada, and New Zealand.  The company has a strong pipeline of
new drugs in various stages of development as well as research
and marketing alliances with Hoffman-La-Roche and
Johnson & Johnson.

Most Recent Write-Up

Considering the bearish tone across all the major indices, AMGN
held up rather well today.  Giving up only $1.50 on only two-thirds
of the ADV, our play settled just above the 200-dma ($65.38) and
just below the 50-dma ($65.94).  Since posting its post-earnings
low of $51.38, the stock has been marching higher, creating a
short-term ascending trendline, which currently sits near $64.50.
Of course, the stock will continue to find resistance at its
longer-term descending trendline, currently resting at $69.  Not
only will this put AMGN above its descending trendline, but it
will also have filled the post-earnings gap from late October.
Aggressive traders may want to consider new positions on a bounce
from the $64 level, but only if it comes with the conviction of
stronger volume.  Unfortunately, heavy volume for drug stocks is
unlikely to materialize without some resolution to the election
mess in Florida, which means prudent investors will likely stand
aside until next week.  A conservative entry strategy will be to
wait for a decisive move through $69 on solid volume before
starting new plays.

Comments

AMGN's "inside day" today held up extremely well as the other
NASDAQ stocks felt the selling heat.  The trading range was $1.63
and it was within the previous day's range, consolidating
Wednesday's gains.  AMGN closed above its 200-dma of $65.39, an
important technical level.  Bounces from $65 could provide entry
into the call play.  With resistance overhead at $67, a break
above this level on strong buying volume would be playable as
well.  Watch the other biotechs for indication of the sector
sentiment.

BUY CALL DEC-60*YAA-LL OI=6982 at $9.00 SL=6.75
BUY CALL DEC-65 YAA-LM OI=7028 at $6.00 SL=4.25
BUY CALL DEC-70 YAA-LN OI=2573 at $3.50 SL=1.75
BUY CALL JAN-70 YAA-AN OI=8483 at $5.75 SL=4.00
BUY CALL JAN-75 YAA-AO OI=6143 at $3.88 SL=2.00

SELL PUT DEC-60 YAA-XL OI=3275 at $2.75 SL=3.50
(See risks of selling puts in play legend)

http://www.premierinvestor.net/oi/profile.asp?ticker=AMGN


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************************************************************


************************
COMBOS/SPREADS/STRADDLES
************************

Here We Go Again!

Technology stocks plummeted today amid concerns about earnings
growth in the semiconductor industry.


Wednesday, November 15

The stock market ended higher today even as the Federal Reserve
maintained its hawkish stance on the economy, saying the risks
remain weighted toward higher inflation.  The Nasdaq closed up
27 points to 3,165.  The Dow finished 26 points higher at 10,707
and the broader market S&P 500 index ended up 7 points at 1,390.
Trading volume on the NYSE hit 1.06 billion shares, with advances
beating declines 1,660 to 1,190.  Activity on the Nasdaq exchange
was moderate at 1.7 billion shares, with advances edging declines
2,070 to 1,842.  In the bond market, the U.S. 30-year Treasury
rose 23/32, pushing its yield down to 5.76%.


Tuesday's new plays (positions/opening prices/strategy):

Central     CENT   MAY10C/DEC10C   $1.50   debit    calendar
Landry's    LNY    APR10C/APR10P   $0.06   credit   synthetic
MTI Corp.   MTIC   JAN10C/JAN5P    $0.38   debit    synthetic

The was little positive activity in our new spread positions
today.  None of the plays traded at our target entry prices on
a simultaneous order basis.  However, MTIC was relatively close
to the suggested debit (10 contracts crossed at $0.38) and we
will monitor the other issues for future entry opportunities.


Portfolio Plays:

Stocks rallied early in the session, then fell into the red in
afternoon trading before rebounding late in the day with modest
gains.  The volatility occurred as investors balanced the Fed's
decision to leave interest rates unchanged with the continued
uncertainty over the Presidential election.  The Fed decided to
keep its short-term interest rate unchanged at 6.50%, citing
evidence of slower economic growth, but the central bank also
said it believes that heightened inflation pressures remain the
main risk in the economy.  Still, the commentary was regarded as
"somewhat optimistic" and some analysts now believe the Fed will
shift to a neutral bias in December.  On the Dow, Wal-Mart (WMT),
Philip Morris (MO) and Microsoft (MSFT) led the advancing issues
while J.P. Morgan (JPM), Hewlett-Packard (HWP) and Boeing (BA)
moved lower.  The Nasdaq performed well in the wake of Tuesday's
gains and Sycamore Networks (SCMR) was a top performer, up $4 to
$68 after posting earnings that exceeded consensus estimates by a
penny.  At the same time, Network Appliance (NTAP) dropped $20 to
$76 after saying it expects gross margins to decline for the next
several quarters.  Analysts following the technology group said
that growth expectations remain excessively optimistic and that
the recent rally will not continue for long.  Among the broader
market industries, biotech stocks were strong and semiconductor
shares rallied after Analog Devices (ADI) reported profits that
beat Wall Street estimates by $0.04.  On the downside, financial
stocks slumped after Bank of America (BAC) said it would see a
substantial rise in loan loss provisions, write-offs and problem
assets.

Our portfolio traded in much the same manner as the broad market,
with leading technology and industrial sectors enjoying small
gains while less popular groups consolidated.  The top performing
issue in the semiconductor sector was Broadcom (BRCM), up almost
$11 as traders sought downtrodden stocks in the computer hardware
industry.  Seagate (SEG) led the data storage group, finishing $3
higher at $65 as shares of their financing partner Veritas (VRTS)
recovered.  In March, Veritas and an investment consortium led by
Silver Lake Partners announced plans to take Seagate private in
a complex $20 billion deal.  Under the deal, the investment group
would acquire Seagate's operating business; Veritas, which is 33%
owned buy Seagate, would get the 128 million Veritas shares and
other investments that Seagate holds.  Our (adjusted) position at
$50 appears to be in good shape.  Another mover was Human Genome
Sciences (HGSI), which rallied $6 to end at $76 after the stock
was upgraded by Prudential Securities.  A number of well known
genome-related companies reclaimed lost ground Tuesday after SG
Cowen analysts came to the sector's defense and hopefully the
optimistic outlook will help the group return to its previously
bullish trend.

In the industrial category, Healthcare shares were very popular
and our new positions in Wellpoint (WLP) and Unitedhealth (UNH)
have performed much better than expected.  Federal Express (FDX)
boosted the transport sector, up almost $2 to $47.75 on momentum
from the recent acquisition of American Freightways (AFWY).  The
merger target was listed in our Covered-Calls section last week,
just before the announcement lifted AFWY's shares $10.  Carter
Wallace (CAR) has been surprisingly strong over the past three
sessions and today the issue climbed to a recent resistance area
near $30.  Those of you that didn't take profits in October can
use the upside activity to roll to December options (on the short
side) for a favorable credit.  The new position; JAN25/DEC30C will
have a cost basis near $2 with a potential profit of 150%.  The
Food and Beverage group also participated in the small rally with
Kellogg (K) climbing $1 to $25.  Our long-term calendar spread is
at maximum profit with the issue near $30.


Thursday, November 16

Technology stocks plummeted today amid concerns about earnings
growth in the semiconductor industry.  The Nasdaq dropped 133
points to close at 3,031.  Industrial issues also retreated on
weakness in economically-sensitive companies.  The Dow closed
down 51 points at 10,656.  The S&P 500 index was down 17 points
to 1,372.  Activity on the Nasdaq was relatively light at 1.5
billion shares exchanged, with declines beating advances 2,707
to 1,172.  Trading volume on the NYSE hit 940 million shares,
with declines beating advances 1,657 to 1,221.  In the treasury
market, the 30-year bond rose 13/32, pushing its yield down to
5.74%.


Portfolio Plays:

The market tumbled today, under the weight of a sell-off in the
semiconductor sector.  The slide in chip and computer hardware
issues followed bearish comments about inventory concerns and a
belief that the group will suffer a slowdown in demand over the
next two quarters.  Stocks in the Networking and Communications
groups were also negatively affected and big-cap issues leading
the downtrend included Cisco Systems (CSCO), JDS Uniphase (JDSU),
and Juniper Networks (JNPR).  The Internet sector also struggled
overall, with only a few notable exceptions in E-tailing issues.
At the same time, the Dow Industrials turned lower after a brief
stay in positive territory due to declines in cyclical companies.
Paper stocks became the target of most of the selling pressure
after Bear Stearns lowered its fourth quarter and full-year 2000
estimates on International Paper (IP), due to sluggish demand in
paper, paperboard, and wood products.  Other stocks in the group
were also cited as having a potential for production losses with
the slowdown in the industry.  Inside the broad marketer, retail,
utility and brokerage stocks were higher initially, but they all
fell in the end as investors sold off those sectors, as well as
major drug, oil service, and biotechnology shares.

Our portfolio suffered along with the rest of the market and with
little hope of a quick resolution in the presidential election,
the slide may well continue into the weekend.  In addition, the
Federal Reserve's decision to retain a tightening bias drained
much of the enthusiasm from investors and it may also undermine
the recent rally.  Technicians have commented that the market's
inability to build on to significant advances like the one last
Tuesday is an indication that the primary downtrend is still in
effect.  With one session to go before options expire, there are
a number of issues that have our attention.  Juniper Networks
(JNPR) provided some of the bearish pressure in the technology
group and with today's retest of a 3-month low, we decided to
adjust the credit spread forward and down to a lower cost basis.
The premiums for December Put options are incredible, and rather
than move to a new spread, we simply sold the DEC-$110 Put to
cover the cost of closing the current position.  Our new basis
in the issue (in the event it is assigned) is near $109.  The
drug sector was also punished and Pharmacyclics (PCYC) endured
an excessive amount of selling pressure.  Those of you who are
concerned about owning the issue (via assignment) might roll out
to the DEC-$35 Put for a small credit.  The adjusted cost basis
in the issue would be near $34.38.

On the bright side, we enjoyed a number of bullish moves in the
safety sectors.  Our new synthetic position in Safeway (SWY) is
performing well and today the issue moved up $1.25 to a recent
high near $57.  Kellogg (K) continued to climb, closing up $1.43
on momentum from merger speculation in the group.  Another Food
industry issue, Flowers (FLO) is on the move and our new debit
straddle has achieved profitability in one week.  In the retail
sector, Genesco (GCO) jumped $1.12 to $20.62 after the company
reported earnings of $8.8 million, or $0.36 per share, for the
third quarter, compared with $5.9 million, or $0.25 per share,
in the third quarter last year.  Net sales increased 26% to $175
million and the CEO said the strong performance is a testament
to the popularity of the company's products.  Our bullish debit
spread is at maximum profit with the issue above $17.50.  The
insurance sector continues to perform well in troubling times
and Allstate (ALL) has been one of the more stable stocks in
the group.  Today the issue closed at a recent high of $39 and
our synthetic position in the issue; JAN40C/25P has returned a
$2.00 profit overall, against a collateral cost (the risk of
owning the stock) near $25.  Surprisingly, all of the premium
selling plays that expire in November are expected to finish at
maximum profit.  Of course, this excludes the Broadcom (BRCM)
position, which has been rolled forward to December in favor of
a reduced cost basis, as the issue searches for support in a new
trading range near $150.

Questions & comments on spreads/combos to Contact Support
******************************************************************
                         - NEW PLAYS -

The expiration period has yet to end and already I have received
another request for new credit spreads.  While my time is limited
today due to personal issues, I sorted through a list of bullish
stocks with (OTM) spreads returning 10% or more and here are some
of the more favorable candidates.

******************************************************************
CAH - Cardinal Health  $97.88  *** Health Sector Rally! ***

Cardinal Health is a healthcare service provider which offers
pharmaceutical services and products to independent and chain
drugstores, hospitals, alternate care centers, and the pharmacy
departments of supermarkets and mass merchandisers located
throughout the United States.  The company also offers support
services including computerized order entry and confirmation
systems, generic sourcing programs, product movement and cost
management reports, consultation on operation and merchandising,
and customer training.  Through Pyxis Corporation, the company
develops, manufactures, leases, sells and services systems that
automate the distribution, management, and control of primary
medications and supplies in healthcare facilities.  Through Owen
Healthcare, the company provides pharmacy management and other
information services to hospitals.  Through Medicine Shoppe
International, the company franchises new, independent retail
pharmacies.

The healthcare sector is performing well and in its quest to be
the leading provider of products and services for the industry,
Cardinal Health focuses on four key market segments, including
pharmaceutical distribution and provider services, medical and
surgical products, pharmaceutical technologies and services, and
automation and information services.  In past quarters, Cardinal
has demonstrated an ability to capitalize financially on the
trend in outsourcing by companies in the health care industry and
at the same time, focus on core competencies to increase revenues
consistently in almost every segment.  In addition, healthcare
companies have traded near recent highs on expectation of a Bush
victory in the Presidential election and a Republican majority in
congress.  With Republicans on both Capitol Hill and in the Oval
Office, the recent bullish performance of the group will likely
continue.  We simply favor the positive technical indications and
our conservative position offers a method to participate in the
future movement of the issue with relatively low risk.

Note: Target a higher premium in the position initially, as the
issue may consolidate during Friday's session.


PLAY (conservative - bullish/credit spread):

BUY  PUT  DEC-85  CAH-XQ  OI=833  A=$0.75
SELL PUT  DEC-90  CAH-XR  OI=184  B=$1.43
INITIAL NET CREDIT TARGET=$0.81-0.88  ROI(max)=19%


******************************************************************
OAT - Quaker Oats  $90.13  *** Sector Consolidation! ***

Quaker Oats Company is a major participant in the competitive
packaged food industry in the United States and Canada and is a
manufacturer of hot cereals, pancake syrups, grain-based snacks,
cornmeal, hominy grits and value-added rice products.  Also, the
company is a manufacturer of pancake mixes and value-added pasta
products and ready-to-eat cereals.

Speculation over who will buy Quaker Oats remains a hot topic on
Wall Street.  Shares in the company, whose Gatorade sports drink
business is considered a highly valued prize among food and soft
drink companies, have moved higher in recent sessions.  PepsiCo
(PEP) is reported to have held talks this month to buy Quaker for
about $13.7 billion in stock, but the talks failed to result in a
deal.  While analysts say Quaker's Gatorade would be a desirable
prize for PepsiCo, their Chief Financial Officer Indra Nooyi made
no specific mention of it in her remarks about a potential buyout.
She did say that the sports drink market in general had potential,
but noted that PepsiCo's own All-Sport beverage brand was just a
small part of the company's overall product lineup.

Quaker's stock traded near an all-time high of $92 again today as
speculation of a takeover continued, and this position offers a
conservative way to attempt to benefit from the recent bullish
activity.


PLAY (conservative - bullish/credit spread):

BUY  PUT  DEC-75  OAT-XO  OI=300  A=$0.56
SELL PUT  DEC-80  OAT-XP  OI=619  B=$1.06
INITIAL NET CREDIT TARGET=$0.62-$0.75  ROI(max)=14%


******************************************************************
IVGN - Invitrogen  $74.19  *** A Profitable Biotech? ***

Invitrogen develops, manufactures, and markets research tools in
kit form and provides other research products and services to
corporate, academic and government entities.  The company's
research kits simplify and improve gene cloning, gene expression
and gene analysis techniques as well as other molecular biology
activities.  These techniques and activities are used to study
how cells are regulated by genetic material, known as functional
genomics, and to search for drugs that can treat diseases.  The
company currently offers approximately 700 gene-identification,
cloning, expression and analysis products and services.

In early November, Invitrogen reported outstanding third quarter
results and said it expects earnings and revenues for the fourth
quarter and full year to surpass Wall Street estimates.  The
company announced third-quarter income of $7.8 million, or $0.26
a share, versus $3.1 million, or $0.14 a share, in the year-ago
period.  Revenues for the quarter rose 102% to $48 million from
$23.8 million a year ago.  Wall Street analysts on average were
expecting the company to post a profit of only $0.19 per share.
The CEO added that he expects fourth-quarter earnings to be in
the range of $0.30 to $0.33 per share, and revenues are expected
to be in the range of $140 million to $145 million.  Those are
excellent results for any small company, and certainly for one
in the volatile Biotech industry.

Based on the current price and trading range of the underlying
issue and the recent technical history or trend, this position
offers favorable speculation for traders who are bullish on the
issue.


PLAY (conservative - bullish/credit spread):

BUY  PUT  DEC-50  IUV-XJ  OI=0  A=$0.81
SELL PUT  DEC-55  IUV-XK  OI=3  B=$1.31
INITIAL NET CREDIT TARGET=$0.62  ROI(max)=14%




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