Option Investor
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Daily Newsletter, Monday, 10/01/2001

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The Option Investor Newsletter                   Monday 10-01-2001
Copyright 2001, All rights reserved.                        1 of 1
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******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        10-01-2001        High      Low     Volume Advance/Decline
DJIA     8836.80 - 10.80  8850.70  8732.10 1.17 bln   1294/1856	
NASDAQ   1480.46 - 18.34  1491.45  1458.41 1.48 bln   1350/2293
S&P 100   533.40 +  0.30   534.34   526.88   totals   2644/4149
S&P 500  1038.55 -  2.39  1040.94  1026.76           
RUS 2000  397.60 -  7.27   404.87   393.00
DJ TRANS 2142.16 - 52.52  2196.33  2119.77
VIX        34.78 -  0.41    36.55    34.71
Put/Call Ratio  0.62
******************************************************************

Another Rate Cut?  Does Anyone Care?

With investors holding their breath ahead of Tuesday's FOMC
meeting and anticipated rate cut, the important question is not
whether they'll cut again or by how much.  The real important
question is how the cut and its size will be greeted by already
shell-shocked investors.  Based on the Fed Funds rate, the market
is expecting a 50 basis point cut, so if they get it, it could be
a non-event.  But if the Fed is stingy and doles out a measly
quarter-point cut, investors might sell in protest for not
getting their anticipated dose of easy money.

So if a small cut isn't going to make investors happy, then what
about a 75 or 100 basis point cut?  Forget for a moment that a
cut that large is unlikely.  Investors would likely interpret it
as a sign that the Fed is more worried than previously thought
and would likely sell in response to such a dramatic move.  So
let's recap.  The Fed is expected to cut by 50 points and that
is factored into the market already.  The increasing economic
sickness demands continued aggressive action from the Fed and
their continuing rate-cut inoculations are having progressively
less and less impact on the direction of the markets.  If the
Fed deviates from investor expectations, by cutting more OR less
than the expected 50 points, investors are likely to take the
news badly and press the sell button.  I'd sure hate to be in
Alan Greenspan's shoes now.  He's been firing his high-caliber
weapons (rate cuts and increasing the money supply) for the past
9 months and there isn't even a hint that it has helped either
the market or the economy.  And he's running out of ammunition
for the rate-cut gun, as short-term rates are drilling down to
levels not seen for more than a decade.

Those looking for some excitement ahead of the FOMC meeting were
sorely disappointed as all the broad indices sold off to their
lows in the first 90 minutes of trading and then gradually
clawed their way back to post small losses on the day.  The DJIA
lost less than 11 points, while the NASDAQ Composite shed just
over 18 points.  Both exchanges saw fairly light volume, with
the NYSE coming in at 1.17 billion shares and the NASDAQ ending
the day just below 1.5 billion shares.  Internals certainly
didn't cheer up the bulls with advancers outpacing decliners on
the NYSE by a ratio of 13:18 and the NASDAQ was even worse with
a ratio of 13:23.

The actual action was pretty dull today, as you can see from the
charts of the DJIA and NASDAQ Composite.  Both are battling in
ever narrowing wedge formations, and we'll just have to wait and
see which way things break.  The Fed will be the likely
catalyst, with more earnings data likely to add weight to the
bearish side of the scale.

 

Die-hard Tech bulls got another dose of pessimism today as
Lazard Freres downgraded Cisco Systems (NASDAQ:CSCO) to a rare
Sell rating with a price target of $9, citing expectations for
a further 30% revenue contraction in 2002.  Proof that rational
thinking does not come easily to analysts, the same firm
upgraded Juniper Networks (NASDAQ:JNPR) from a Hold to a Buy.
Reasons cited for the upgrade included 1)growth in IP router
spending should resume within the next 12 months; 2)company is
still well-positioned to compete with CSCO and 3)believes that
the company is trading at an attractive valuation.  While JNPR
has come down to a PE of 23, I'm not sure I'd consider that a
great deal in the current economic climate.  Notice the
recurring theme?  Stocks are labeled as compelling values based
on the revenue and earnings growth that is EXPECTED next year
because we KNOW that the Tech sector will recover soon.  I'd
sure like a reliable definition of "soon" from one of these
guys, as we've been hearing about the recovery that is just
around the corner since the this time last year.  I don't know
about you, but I don't believe it anymore.

More evidence of the severity of the slowing economy came from
the Food-Service sector today, and the wording of the warning is
likely a hint of what we can expect from hundreds of other
companies in the next couple weeks.  The first warning came from
Jack in the Box (NYSE:JBX), and "Jack" must have had quite a
blame-storming session with the other executives to come up with
this one.  JBX warned that slower sales after the Sep 11 attacks
will reduce 3Q EPS to $0.49 from prior guidance of $0.53-0.57.
But the real zinger is the reduction of 2002 estimates from
$2.47 to $2.18!  While the company goes ahead and cites the
usual list of excuses, from increased economic uncertainty,
rising utility, minimum wage and occupancy costs, the fast-food
chain is putting the fallout of the September 11th terrorist
attack at the top of the list.  Hmmm, and the restaurant chain
is predominantly a western-U.S. operation, and they are telling
us that the events on the east coast are responsible for an
8-18% shortfall in earnings for this quarter?  This looks like a
case of blaming the incident of 3 weeks ago for every evil that
exists in the business and hoping that investors buy the
deception.

And it isn't likely to end there.  I'm expecting every unhealthy
business to trot out the saddest face and confess earnings
shortfalls in the next couple weeks.  And at the head of their
list of excuses will be the economic fallout of September 11th.
Whatever skeletons were hidden in the closet will be dragged out
and labeled as collateral damage of terrorism in hopes that
investors will allow them to use the disaster as a "Get out of
Jail FREE Card".  The bottom line is that this earnings season
is likely to be a fiasco, and smart CEOs will lump as much of
the bad news into this quarter in hopes that things will look
better (at least on a comparative basis) next quarter.

Markets are likely to be fairly quiet again tomorrow ahead of
the announced results of the FOMC meeting, due to be released at
2:15pm ET.  The prudent approach will be to wait for the
volatility immediately following the announcement to die down
before initiating any new positions, and then let the market's
direction be your guide.  Remember that the oversold condition
has been largely alleviated, and with earnings warnings
continuing to flow at a record pace, my money would be on puts
following the Fed's decision.

Even though the VIX is still above 30 (actually 34.78), its
daily chart is looking very oversold and due to reverse.  I
expect the associated market decline to initiate the process of
completing a double bottom as we retest the lows of last month.
Then we should have a decent base from which we can launch the
next sustained bullish move.  For eager bulls, I offer this
advice -- Patience is a virtue!

Capital preservation is key in these uncertain markets, so trade
only when the risk/reward ratio is in your favor.


Mark Phillips
Research Analyst


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

Market Sentiment
Russ Moore

“Slowdown, you are now in a Fed Zone”

A tedious, low volume session ushered in the new quarter, as investors 
chose to abstain ahead of tomorrow’s FOMC release. Compared to recent 
volume levels, today’s 982 million shares on the NYSE, and 1.26 billion 
shares on the NASDAQ were very light. Trading action was tight, as 
evidenced by the 14 point intraday move on the SPX.

The DOW ended the day with a minimal loss of –0.5 percent. The NASDAQ 
and NDX were off –1.2 percent. Losers out-dueled winners by a 19/12 
count on the NYSE and 23/13 on the NASDAQ.

Positive sector action was limited to gold, biotech, utility, healthcare 
and drugs.

Economic data included the National Association of Purchasing Managers 
Index coming in at 47, down from the previous months reading of 47.9, 
but much better than the 44.8 forecast. The sub-50 reading marked the 
fourteenth consecutive month of contraction.

Personal income was flat while personal spending rose +0.2 percent. 
Economists were expecting both numbers to show a gain of +0.3 percent.

August construction spending showed some increased weakness with a 
decline of –1.1 percent. Expectations were for a flat performance.

Another batch of profit warnings made their way to Wall Street with 
Compaq Computers heading the list. The company now expects to lose 
–0.05 to –0.07 cents versus expectations for a gain of +0.05 cents. 
Revenue is expected to come in at 7.4 billion dollars, a 12 percent 
sequential decline.

Fed funds futures are now showing an 80 percent chance of a .50 basis 
point cut when the FOMC meets tomorrow afternoon. The Fed action may 
not have much of an impact with investor focus on overseas events and 
corporate earnings.




VIX 
Monday 10/01 close: 34.78


VXN
Monday 10/01 close: 64.98


30-yr Bonds
Monday 10/01 close:  5.30


Total Put/Call Ratio: .72


Equity Option Put/Call Ratio: .65


Index Option Put/Call Ratio: 1.10


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 28.73

Volume/Open Interest
Maximum calls: 30/104,479
Maximum puts : 25/ 39,321

Moving Averages
 10 DMA 29
 20 DMA 32
 50 DMA 37
200 DMA 47

Fibanocci Retracements
Relative High: 51.95 (05/22/01)
Relative Low:  27.00 (09/21/01)
38% 36.60
50% 39.57
62% 42.59

===

S&P 100 Index (OEX)
52-Week High:  834.93
52-Week Low:   491.70
Current close: 533.20

Volume/Open Interest
Maximum calls: 600/6,230
Maximum puts : 440/5,670

Moving Averages
 10 DMA  517
 20 DMA  543
 50 DMA  584
200 DMA  634

Fibanocci Retracements
Relative High: 680.03 (05/22/01)
Relative Low:  480.07 (09/21/01)
38% 556.14
50% 579.65
62% 603.55

===

S&P 500 (SPX)
52-Week High:  1530.01
52-Week Low:    965.80
Current close: 1038.24

Volume / Open Interest
Maximum calls: 1050/17,271
Maximum puts : 1050/20,118

Moving Averages
 10 DMA 1011
 20 DMA 1064
 50 DMA 1140
200 DMA 1228

Fibanocci Retracements
Relative High: 1315.93 (05/22/01)
Relative Low:   944.75 (09/21/01)
38% 1086.75
50% 1130.62
62% 1175.23

==

DJIA (INDU)
52-Week High:  11,518.83
52-Week Low:    8,235.81
Current close:  8,836.56

Volume / Open Interest
Maximum Calls: 100/26,413
Maximum Puts   100/42,733

Moving Averages:
 10 DMA  8,647
 20 DMA  9,232
 50 DMA  9,938
200 DMA 10,423

Fibanocci Retracements
Relative High: 11,350.05 (05/22/01)
Relative Low    8,062.34 (05/21/01)
38%  9,308.92
50%  9,693.99
62% 10,085.60

==

Biotech Index (BTK)
52-Week High:  811.61
52-Week Low:   383.28
Current close: 454.52

Volume / Open Interest
Maximum Calls: 520/ 301
Maximum Puts:  440/2000

Moving Averages
 10 DMA 435
 20 DMA 477
 50 DMA 500
200 DMA 551

Fibanocci Retracements
Relative High: 811.61 (09/25/00)
Relative Low:  383.28 (03/22/01)
38% 546.22
50% 596.57
62% 646.71

==

Semiconductor Index (SOX)
52-Week High: 1280.84
52-Week Low:   362.00
Current close: 362.49

Volume / Open Interest
Maximum Calls: 370/ 393
Maximum Puts:  390/2,120

Moving Averages
 10 DMA 390
 20 DMA 462
 50 DMA 538
200 DMA 599

Fibanocci Retracements
Relative High: 710.78 (05/22/01)
Relative Low:  343.93 (09/27/01)
38% 484.50
50% 527.18
62% 570.57

==

Pharmaceutical Index (DRG)
52-Week High:  455.28
52-Week Low:   339.49
Current close: 394.09

Volume / Open Interest
Maximum Calls: 400/531
Maximum Puts:  360/660

Moving Averages
 10 DMA 374
 20 DMA 379
 50 DMA 388
200 DMA 397

Fibanocci Retracements
Relative High: 448.43 (12/29/00)
Relative Low:  339.49 (03/22/01)
38% 382.22
50% 395.69
62% 409.03

*****

CBOT Commitment Of Traders Report: Friday 09/28
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.   

S&P 500
Commercials   Long      Short      Net     %Change 
9/11/01      359,360   442,070   (82,710)     3.4%
9/18/01      406,387   471,823   (65,436)   (20.8%)
9/25/01      357,873   407,036   (49,163)   (24.9%)

Most bearish reading of the year: (111,956) - 3/6/01
Most bullish reading of the year: (41,144)  - 5/1/01

Small Traders   Long      Short      Net      %Change
9/11/01        156,500    69,090    87,410       2.7%
9/18/01        172,988   100,531    72,457      (5.6%)
9/25/01        122,613    71,721    50,892     (29.7%)

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year:  91,122 - 3/06/01

NASDAQ-100
Commercials   Long      Short      Net     %Change 
9/11/01       26,784    37,912   (11,128)   18.9%
9/18/01       35,497    45,731   (10,234)   (8.0%)
9/25/01       26,761    36,812   (10,051)   (1.8%)

Most bearish reading of the year: (15,521) - 3/13/01
Most bullish reading of the year:  (1,825) - 1/02/01

Small Traders  Long      Short      Net      %Change
9/11/01        15,263    12,555    2,708       6.8%
9/18/01        22,876    21,702    1,174     (56.6%)
9/25/01        10,699     6,580    4,119     251.0%)

Most bearish reading of the year:  (1,028) - 1/02/01
Most bullish reading of the year:   8,460  - 3/13/01

DOW JONES INDUSTRIAL
Commercials   Long      Short      Net     %Change 
9/11/01       25,445    13,033   12,412     32.6%
9/18/01       28,425    15,077   13,348      7.5%
9/25/01       20,013     7,806   12,207     (8.5%)

Most bearish reading of the year: (8,322) - 1/16/01
Most bullish reading of the year:  8,925  - 5/22/01

Small Traders  Long      Short      Net      %Change
9/11/01        7,460    12,735    (5,275)     (8.9%)
9/18/01        7,335    15,044    (7,709)     46.1%
9/25/01        4,530    12,621    (8,091)      4.9%
 
Most bearish reading of the year:  (7,572) - 5/08/01
Most bullish reading of the year:   1,909  - 1/16/01


                    Small Specs               Commercials
S&P 500         (Current)  (Previous)     (Current) (Previous)
Open Interest
Net Value        +50,892     +72,457        -49,163     -65,436

Total Open
Interest %       (+26.19%)  (+26.49%)     (-6.43%)   (-7.45%)
                 net-long   net-long      net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -8091      -7709          +12207     +13348
Total Open
interest %       (-64.11%)    (-34.45%)      (+43.88%)  (+30.68%)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +4119      +2708         -10,051    -11,128

Total Open
Interest %        (+23.84%)   (+9.73%)     (-15.81%) (-17.20%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices:.Both the Commercials and Small Specs held steady on 
their S&P net-short positions. The big move came on the DJIA 
where the Commercials added on to their net-longs while the Small 
Specs were loading up on net-short contracts.

Gold:.Talk about a shift in contracts    the Commercials went 
from 49,456 contracts net-short to 36,638 contracts net-long. 
Gold has been relatively flat since Tuesday so we’ll have to keep 
on eye on this one and see if they reverse their positions next 
week..

8/28  50,852 contracts net-short
9/04  49,839 contracts net-short
9/11  No Data.
9/18  49,456 contracts net-short
9/25  36,638 contracts net-long

Data compiled as of Tuesday 09/25 by the CFTC.


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

Option Pricing and The "Greeks"
By Mark Phillips
Contact Support

The recent gyrations in the equity markets have provided a stark
reminder that option trading is a very different endeavor than
stock trading.  Due to the plethora of additional factors that
influence option pricing, most notably "the Greeks", it is
possible to enter an option trade that produces a loss, even
when a corresponding trade in the underlying equity or index
would have produced a profit.  Understanding these factors and
their influence on option pricing is essential to profitable
option trading, especially in the volatile market we currently
have at our disposal.

So what are the Greeks?  In order to answer that question, we
need to say a few words about how option prices are calculated.
Option prices are determined by applying the standard
Black-Scholes pricing model, which uses 5 inputs to create the
theoretical price of the option.  They are as follows:
1. Time to expiration
2. Strike price
3. Value of the underlying equity or index
4. Implied volatility of the underlying equity or index
5. The risk-free interest rate

Discussion of the inner workings of the Black-Scholes model is
far beyond the scope of this article, and there have been
numerous books written on the subject for the inquisitive
student.  Rather than delving into theory, I thought it would
be far more productive to deal with the practical measures of
option pricing and strike selection that can aid us in our
pursuit of profits.  These measures are commonly referred to
as the Greeks and the four most important Greeks, in my opinion,
are Delta, Gamma, Theta and Vega.

Delta measures the amount that a given option will move with
respect to the underlying security and is stated in terms of
percentage from 0 to 100.  If a stock moves $1 and the option
in question increases in value by $0.40, we know that the option
had a Delta of 40.  At-the-money (ATM) options typically have a
delta of 50, while out-of-the-money (OTM) options have a Delta
less than 50 and in-the-money (ITM) have a Delta greater than
50.  As we move further out-of-the-money, Delta approaches zero,
while it approaches 100 as we move deeper in-the-money.  Neither
of these extremes are met in practical application, but the
basic relationship should give us a useful working relationship.

Gamma is used to describe the rate-of-change of an option's
Delta, and those that understand the relationship can use their
knowledge to give their trading profits an extra boost.  Putting
the relationship in physics terms, Delta is the equivalent of
velocity, while Gamma can be equated to acceleration.  If you
recall your high school physics, you'll remember that
acceleration can really boost velocity over time.  The same is
true of the Delta-Gamma relationship.  I'll leave you to ponder
that concept and we'll revisit it in exacting detail on our next
visit.

The one constant in the universe (aside from taxes) is the
passage of time, and Theta is the Greek that measures the impact
of the Father Time on option prices.  Options are, by
definition, a wasting asset, meaning that the portion of the
option premium that is attributable to time, declines day after
day.  Adding insult to injury, the rate of decay of the
time-related portion of an option's value increases as expiration
Friday draws near.  The majority of an option's time value
disappears in the final 30 days of its life and most of that
evaporates in the final 2 weeks.  During expiration week, an
equity must move in your favor substantially, just to offset the
loss in value due to Theta-decay in an OTM or ATM option.

Volatility is perhaps the most apparent determinant of option
pricing; at least it has seemed that way during recent weeks as
we have watched the VIX race from 35 to 57 and then back again,
all in the space of 2 trading weeks.  While normal trending
markets don't have nearly that kind of volatility movement, when
it does occur, it can yield outsized returns for appropriately
positioned traders, and exact staggering losses from those
unaware of its potential effects.  Last week, I highlighted the
perils of trading in a high-volatility environment.  Traders
that sell options in such an environment can reap substantial
rewards, but need to be cognizant of the inherent risks that
come with the territory.

One interesting point about time-value in options is that on a
percentage basis, ATM options are the most expensive in terms of
time value.  So when we buy ATM options, we need to understand
that we are buying the most time-value possible for that
expiration month, and every last shred of that time-value will
melt away by expiration Friday.  By expiration, either all the
time value will have melted away leaving a worthless option
(great for option sellers, but unpleasant for option buyers), or
the stock will have appreciated so that the option is ITM, now
possessing intrinsic value equivalent to how far in the money
the option is.

As a simple example, let's take a $50 OCT Call on stock XYZ
which is trading for $3.00 one month before expiration.  If on
expiration Friday, the price of the stock is $48 (even if that
is above the price of the stock one month prior), the option
will expire worthless, with no time value and no intrinsic
value.  On the other hand, if XYZ appreciates to $54 by
expiration Friday, the option will be worth $4.00 ($4 intrinsic
value, and no time value).  In both cases, the time value of the
option fades away to nothing by expiration, but if the stock
moves sufficiently so that our option is in the money, we have
real, as opposed to anticipated value.

Delta and Vega are fairly easy to quantify, and there are a
number of websites that provide this data for those interested
in learning the inter-relationships and how they influence the
potential success of option trading.  One of my favorite sites
is www.ivolatility.com, which provides detailed analysis of
option Greeks, as well as historical volatility charts.  While
this site also provides an option calculator to determine Theta
and Gamma for specific options, I think these two Greeks are
more important to understand from a qualitative sense, so I tend
to focus less on the actual numbers and more on their general
influence on option prices.

When properly understood, the inter-relationship of the Greeks
on option pricing can be very useful to option traders (both
buyers and sellers) who understand how to capitalize the
opportunities provided.  This week's article was necessarily
general so that I could set the stage for our future
discussions, which will delve into greater detail on each of
the Greeks.

As I mentioned over the weekend, I'll be out of circulation for
a few weeks, while I celebrate my wedding on the island of Maui.
Rest assured that I will return to this space on October 22nd,
ready to tackle the intricacies of Delta and Gamma with renewed
vigor.

Until then, I send my best trading wishes to all!

Mark Phillips
Contact Support


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

No new calls tonight


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

No new puts tonight


*********************
Stop-Loss Adjustments
*********************

No stop loss updates tonight


*****
DROPS
*****

calls
^^^^^

QCOM $44.80 -2.74 (-2.74) After struggling throughout last week
to rally through the $50 resistance level, the QCOM bulls
finally threw in the towel today, allowing the stock to fall
back more than 5% on above average volume.  The stock fell
through our $46 stop shortly after the opening bell and never
managed to reclaim it, even though the bulls gave it an honest
effort shortly after the lunch hour.  With daily Stochastics
rolling over without even entering overbought territory, it is
clear that QCOM doesn't belong on the call list, so we're
kicking it off tonight.


puts
^^^^

ENE $29.15 +1.92 (+1.92) In a rare show of strength, ENE built
on its gains from Friday, advancing nearly $2 and handily
topping our $28.50 stop.  With volume clocking in well above the
ADV, and the oscillators recovering from oversold, this actually
has the look of a real recovery.  We could try to fade the move,
but the prudent course of action is obviously to abide by our
stop and close the play tonight.


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Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.

Anything else is too slow!

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


*********************
PLAY OF THE DAY - PUT
*********************

BBY - Best Buy $43.35 -2.10 (-2.10 this week)

Best Buy Company, Inc. is a specialty retailer of consumer
electronics, home office equipment, entertainment software and
appliances. The Company operates retail stores and commercial
Websites under the brand names Best Buy (BestBuy.com), Media Play
(MediaPlay.com), On Cue (OnCue.com), Sam Goody (SamGoody.com),
Suncoast (Suncoast.com) and Magnolia Hi-Fi (MagnoliaHiFi.com).
Best Buy stores account for 68% of the Company's total retail
square footage.

Most Recent Write-Up

BBY rebounded in a big way last Friday on the heels of favorable
economic news.  But, was last Friday's nearly 7 percent gain
a solid entry point into new put plays?  Only time will tell.
Despite last Friday's advance, BBY is still under performing
the broader Retail Sector Index (RLX.X).  We maintain that the
stock should out perform to the downside if the S&P and RLX
weaken early next week.  If bearish traders observe weakness in
the RLX and S&P early next week, then new put positions in BBY
at its current levels may be a favorable proposition, especially
because risk can be fairly easily measured and managed at current
levels.  The stock stalled right at its 10-dma last Friday, which,
at the time, sat at $45.75.  Therefore, if the S&P and RLX
pullback early next week, new entries at current levels in BBY
can be managed with an ultra tight stop just above the 10-dma.
Picking tops is a lucrative game, but should only be attempted
with the proper risk management procedures in place!

Comments

Friday's rally began unraveling even before the opening bell this
morning, and BBY headed lower throughout the day, surrendering
nearly 5% by the end of the day.  A good measure of the inherent
weakness in the stock is the fact that daily Stochastics have
been moving up from oversold territory since September 21st,
while price has managed to go nowhere.  This just gives our play
more room to fall and that journey looks like it may have gotten
started today.  At a minimum, BBY needs to fill the gap down to
$41.50.  New positions will make sense on another rollover from
the $45 area or a drop below the top of the gap, near $43.

BUY PUT OCT-45   BBY-VI OI=7206 at $3.90 SL=2.50
BUY PUT OCT-42.5 BBY-VV OI=2470 at $2.55 SL=1.25
BUY PUT OCT-40   BBY-VH OI=  72 at $1.50 SL=0.75

Average Daily Volume = 3.00 mln



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