Option Investor
Newsletter

Daily Newsletter, Wednesday, 10/10/2001

HAVING TROUBLE PRINTING?
Printer friendly version
The Option Investor Newsletter                Wednesday 10-10-2001
Copyright 2001, All rights reserved.                        1 of 1
Redistribution in any form strictly prohibited.

To view this email newsletter in HTML format with embedded
charts and graphs, click here:
http://www.OptionInvestor.com/htmlemail/1554_1.asp

Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
      10-10-2001          High     Low     Volume Advance/Decline
DJIA     3204.86 +188.42  9252.90  9000.14 1.30 bln   2239/ 871	
NASDAQ   1626.26 + 56.07  1626.99  1558.81 1.83 bln   2385/1214
S&P 100   554.76 + 12.92   555.42   539.80   Totals   4624/2085
S&P 500  1080.99 + 24.24  1081.62  1052.70
RUS 2000  421.66 + 12.98   421.66   408.68
DJ TRANS 2228.61 + 99.94  2228.80  2126.97
VIX        33.46 -  2.53    36.64    33.25
VXN        66.19 -  0.07    69.14    66.19
TRIN        0.53
Put/Call    0.64
*******************************************************************

"Catalysts Can Emerge When Least Expected..."

Tuesday's pullback felt like another routine day of consolidation.
But Wednesday's rally was anything but routine.  It's been quite
a while since I've witnessed a concerted, broad-based rally across
the vast majority of sectors such as the one I witnessed Wednesday.
The buying Wednesday was the real deal.

Of the 25 sectors I closely follow, only two finished lower
Wednesday.  The Gold and Silver Sector Index (XAU.X) shed 3 percent,
but it's a defensive play so if other stocks are being bought, it's
likely to be sold.  And the Utility Sector Index (UTY.X) finished
fractionally lower.  What's important to note, however, is that the
vast majority of sectors finished measurably higher.  There weren't
any sector rotations Wednesday, it was concerted buying across the
board.



I could sense that a big move was nearing as I suggested in
Tuesday's Market Sentiment column, but had no idea that it would
take place so soon.  In all honesty, I thought the major market
averages would spend a little more time trading sideways to lower
as I suggested in Monday's Market Wrap.  I was wrong about that!

Reportedly, the catalyst that emerged Wednesday was a large
institution allocating capital out of the bond market and into
stocks.  After viewing the sector list above, the asset allocation
thesis makes perfect sense because of the highly visible buying
across virtually all sectors.  The short-term impact of such heavy
buying is obviously a good thing for bulls.  But, there's an
intermediate-term impact to consider in the wake of Wednesday's
big buy program.  There was obviously a lot of money put to work
in stocks by "strong hands."  The buyer of stocks Wednesday,
whoever it may have been, is probably going to hold onto those
stocks for much longer than the run-of-the-mill "weak hand"
holder.  With some supply now securely held by "strong hands,"
the potential for a bottom in stocks grows stronger.

Last Monday, I used 60-minute interval charts of the major market
averages to try to pinpoint support levels.  After reviewing
those same charts Wednesday evening, I noticed something quite
interesting.

The Dow Jones Industrial Average ($INDU) and Nasdaq-100 (NDX.X)
both ran right up to their 200-period moving averages on their
60-minute charts.  Now, don't confuse this moving average with
the 200-DAY; the moving average on the charts below is of the
last 200 60-minute periods.

The INDU broke above its relative high at the 9190 level Wednesday
and ran up to its 200-period moving average that currently sits
at 9255.  Of the three major market averages, the INDU is the only
one above its relative high.  If the INDU can advance above its
200-period moving average, I don't see any short-term resistance
until 9600, which was its level prior to the terrorist attacks.



The NDX finished below its relative high, which was recently
traced up around the 1313 level.  The 200-period moving average
of the NDX is currently at 1300.  Yes, the NDX finished 5 points
above that level, but it's right there nonetheless.

In addition to the 200-period moving average, the NDX has a
double-top at its relative high around the 1313 level.  But
above that level is open space for about 50 points.  Like the
INDU, I think that the NDX could trade up to its short-term
resistance level if it can clear its immediate hurdles.



While the INDU and NDX were "pinned" at their 200-period
moving averages Wednesday afternoon, the S&P 500 (SPX.X)
settled well above its moving average.  Yet, the SPX didn't
manage to climb above its relative high around the 1084
level.  If the SPX does advance past its relative high in
the coming days, which is only 4 points away from current
levels, then it should be able to trade up to its pre-attack
levels around 1100.



The corporate earnings releases began to flow following
Wednesday's close.  Internet bellwether Yahoo (NASDAQ:YHOO)
reported a 1 cent profit before various items, but fell short
of revenue estimates.  The company recorded sales of $166 million
during the quarter, while estimates had been pegged at $170
million.  While Yahoo stuck by its guidance for a 5 cent profit
during the fourth-quarter, the company lowered its revenue
expectations for the quarter to $698 million from a previous
forecast of $720 million.  Despite the lowering of expectations,
shares of Yahoo added about 45 cents in the after hours
session.

Redback Networks (NASDAQ:RBAK) reported a net loss, after a
$2.7 billion write-off of goodwill, of 28 cents per share,
while estimates had been calling for a 29 cent loss.  That
was good for about a 20 cent rally in shares in the after
hours session.

E-Trade (NYSE:ET) reported a 3 cent profit -- 3 cents better
than estimates.  But, the company fell short on the revenue
front by about $3 million.  The stock also traded higher in
the after hours.

The truly good news in the after hours was delivered by two
biotech companies.  IDEC Pharma (NASDAQ:IDPH) raised EPS
estimates by one penny ahead of its earnings release next
week.  And Genentech (NYSE:DNA) reported a solid quarter; its
shares added about $2.20 in the after hours.

If the myriad earnings reports weren't enough this week, there
are several big economic reports due in the next two days.
September retail numbers are set for release Thursday morning.
Retailers will report their September monthly sales figures,
which are expected to be the worst numbers in more than 50
years because of the terrorist attacks.  Just how bad the
numbers are remains to be seen, but the market is expecting
a 0.7 percent decline.

The producer price index is slated for release Friday morning.
Inflation has remained in check so the number is likely to be
a moot point.  But the consumer sentiment data released on
the same morning could move the markets.  Estimates are calling
for a sentiment reading of around 75.7 percent.

Ahead of economic and earnings reports this week, the major
market averages are bumping into resistance and are still
relatively overbought in the short-term.  But, as I've written
many times in the past, an overbought market can always grow
more overbought.

Eric Utley
Option Investor


************************Advertisement*************************

GREAT TECHNOLOGY, LOW RATES

* EASY screens for covered calls, spreads, and straddles
* FREE REAL-TIME quotes and custom option chains
* $1.50 Per Contract (10+ contracts) or $14.95 Minimum. No Hidden Fees.
* ZERO minimum deposit required to open an account
Visit: http://www.optionsxpress.com/marketing.asp?source=optinv1

Note: Options involve risk. Risk disclosure:
http://www.optionsxpress.com/welcome_risk_index.htm
**************************************************************


*****************
STOP-LOSS UPDATES
*****************

MO   - call
Adjust from $49 up to $49.50

ENZN - call
Adjust from $54 up to $55

IP   - call
Adjust from $34 up to $35

PPG  - call
Adjust from $45 up to $46

TEVA - call
Adjust from $62.75 up to $63.50


*************
DROPPED CALLS
*************

No Dropped Calls for Wednesday.


************
DROPPED PUTS
************

QCOM $44.90 +4.05 (+6.44) QCOM charged nearly 10% higher
today, closing above our stop at $44.  The stock didn't
show any signs of letting up going into the close of trading
and that might indicate that it could move higher tomorrow.
Traders with open positions might look for any pullback
tomorrow to exit plays.

AIG $80.70 +3.35 (+1.68) AIG followed the broader market
higher Wednesday.  The Insurance Sector Index (IUX.X) finished
the day 2% higher, but AIG managed to climb by more than 4%.
Its out performance was evident and add to that fact that
the stock closed above our upside protective stop at $80.
We're dropping coverage this evening in light of AIG's stop
violation.  Traders who didn't get stopped out of open plays
might look for weakness below the $80 level Thursday to cut
losses.


************************Advertisement*************************
Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
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!

http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
**************************************************************


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

SEPR - Sepracor $40.74 +1.64 (+2.47 this week)

Sepracor is a research-based pharmaceutical company dedicated
to treating and preventing human disease through the discovery,
development and commercialization of pharmaceutical products
that are directed toward serving unmet medical needs.

Most Recent Update

SEPR has been trading well relative to the AMEX Biotechnology
Sector Index (BTK.X).  The stock didn't falter much during the
group's recent pullback.  That relative strength should help
to carry SEPR higher over the short-term if the BTK.X moves
higher.  Over the past three weeks, SEPR has traced a mini
cup-with-handle formation that could catapult the stock higher.
The formation is normally indicative of a bottom and often
leads to advancing prices.  In this case, it's a much shorter
time period, but we're concerned with short time periods because
we trade a decaying asset.  The pivot point in SEPR's current
formation is right around current levels, up to around the
$39.50 level.  Any traders who enter a breakout above the
$39.50 level should only do so after confirming direction in
the BTK.X.  From there, confirmation of trend would be provided
with a breakout above the $40 level.  If the stock does pullback
once more before attempting a breakout, bidders should
gather around the $38 level.  The company announces earnings on
the 19th of this month, so we have about a week and a half to
play.  Our stop is initially in place at $37.

Comments

SEPR broke out above the $39.50 level Wednesday and proceeded
to take out the $40 level.  The stock is now poised to work
higher over the short term.  Bullish traders can take new
positions at current levels early Thursday if the BTK.X confirms
doing so.  Traders taking positions around current levels should
target the $42 to $43 area as an exit point.

***October contracts expire next week***

BUY CALL OCT-35 ERQ-JG OI=1106 at $6.30 SL=5.25
BUY CALL OCT-40*ERQ-JH OI=3979 at $2.55 SL=1.75
BUY CALL NOV-40 ERQ-KH OI=  42 at $4.40 SL=3.50
BUY CALL JAN-45 ERQ-AI OI=1414 at $4.50 SL=3.50

Average Daily Volume = 775 K



*****************************************
BIG CAP COVERED CALLS & NAKED PUT SECTION
*****************************************

Winning The Battle On The Home-front
By Ray Cummins

Stocks climbed to recent highs today after some upbeat forecasts
from blue-chip companies bolstered the outlook for a recovery in
the U.S. economy.

The major equity averages closed the session near their highest
levels thanks to solid performances in the technology, financial
and cyclical segments.  Among the old economy issues, Home Depot
(NYSE:HD), International Paper (NYSE:IP), Minnesota Mining and
Manufacturing (NYSE:MMM), DuPont (NYSE:DD), General Electric
(NYSE:GE), General Motors (NYSE:GM) and Kodak (NYSE:EK) led the
Dow advance while Intel (NASDAQ:INTC) and Nokia (NYSE:NOK) were
the NASDAQ stalwarts.  Chip, networking and web-related issues
also rallied as investors searched for downtrodden technology
stocks and the broader-market industry groups saw fresh buying
pressure in retail, natural gas, biotechnology, transportation,
and consumer products shares.  Stocks in the news included Abott
Labs (NYSE:ABT), a maker of pharmaceutical products, nutritional
supplements and hospital products, and PepsiCo (NYSE:PEP), the
popular bottler of liquid refreshments.  Abott boosted the drug
manufacturing sector higher after reporting quarterly revenues
that met forecasts and PepsiCo shares rallied on forecasts of
strong earnings growth in coming years as it remains resilient
despite the economic downturn.  The soft-drink company announced
it is committed to double-digit earnings-per-share increases in
2002 and beyond.  In the wireless sector, Motorola (NYSE:MOT), a
maker of cellular telephones and equipment, said it anticipates
higher handset sales in the fourth quarter, but will probably
report another loss as demand for its products falls.  Microsoft
(NYSE:MSFT) was the big loser in the software segment, slumping
on news the Supreme Court denied the company's recent request to
hear an appeal of the unanimous appellate court ruling that found
the software colossus illegally maintained its Windows operating
system monopoly.  In small-cap trading, AVANT Immunotherapeutics
(NASDAQ:AVAN) jumped more than 50% after announcing it signed a
contract with a U.S. government-licensed firm to help generate
vaccines against infectious and contagious diseases that might
arise from biological attacks.

Despite the continued military activity in Afghanistan and the
potential for negative earnings surprises during the quarterly
reporting season, the stock market performed very well today.
Analysts say a meaningful bottom has been established; one that
could be the basis for future rallies.  Lets hope their outlook
is correct!


Summary of Previous Candidates (as of 10/09/01):

Covered Calls: (Margin not used in calculations)

Stock  Strike Strike Cost   Current  Gain  Potential
Symbol Month  Price  Basis   Price  (Loss) Mon. Yield

GILD    OCT    50    47.65   58.86   2.35     6.3%
ACDO    OCT    45    33.21   33.26   0.05     0.2%
PRX     OCT    35    33.79   35.50   1.21     6.4%

Accredo Health (NASDAQ:ACDO) closed below our target exit
point last week and we closed the play early to preserve
portfolio capital.  Pharmaceutical Resources (NYSE:PRX) is
now at a "key" moment and a move below near-term technical
support at $34 would be a potential early-exit signal.


Naked Puts:

Stock  Strike Strike Cost   Current  Gain  Potential
Symbol Month  Price  Basis   Price  (Loss) Mon. Yield

IMCL   OCT      40   39.30   57.21   0.70     5.9%
ACDO   OCT      30   29.65   33.26   0.35     4.8%
ATK    OCT      70   69.25   90.85   0.75     4.6%
GILD   OCT      45   44.55   58.86   0.45     4.4%
LLL    OCT      70   69.10   95.95   0.90     5.6%
ENZN   OCT      50   49.40   57.78   0.60     6.8%
ADRX   OCT      65   64.45   67.86   0.55     4.8%
NNS    OCT      65   64.20   72.85   0.80     5.8%
ADVP   OCT      65   64.35   72.45   0.65     5.4%
MRX    OCT      50   49.25   55.03   0.75     7.8%
PRX    OCT      35   33.80   35.50   1.20    15.5%
VRSN   OCT      35   34.70   45.09   0.30     5.6%

Closed Positions: Although our position in Andrx Group
(NASDAQ:ADRX) is positive, most traders would not have
initiated the position after the company announced last
Thursday morning that the FDA has advised that, in order
to address certain issues related to Omeprazole raised
by AstraZeneca, marketing approval of ADRX's ANDA for a
generic version of Prilosec. may be delayed.


Naked Calls:

Stock  Strike Strike Cost   Current  Gain  Potential
Symbol Month  Price  Basis   Price  (Loss) Mon. Yield

ABK     OCT     55   55.75   54.24   0.75    5.9%

New Position:

ABK     NOV     60   60.85   54.24   0.85    4.1%

Ambak (NYSE:ABK) has enjoyed a significant rebound since the
bearish play was initiated and although it is profitable,
last week's rally prompted us to roll to a NOV-$60 Call for
a small credit.


Sell Strangles:

Stock  Strike Strike Cost   Current  Gain   Potential
Symbol Month  Price  Basis   Price  (Loss) Mon. Yield

IVGN    OCT    50-P  49.20   67.50   0.80     7.0%  (Closed)
IVGN    OCT    70-C  70.85   67.50   0.85     6.9%  (Closed)

Closed Positions:

Invitrogen's (NASDAQ:IVGN) unexpected rally two weeks ago was
sufficient to warrant an early exit in the bearish position.
With an overall credit of $1.80 in the original play, a small
loss (or break-even) exit should have been easily achieved.


Credit Spreads:

Stock  Pick     Last    Position   Credit   C/B    G/L   Status

HB     56.72    56.03  OCT50P/55P   0.95   54.05   0.95   Open
IBM    91.30    97.14 OCT105C/100C  0.70  100.70   0.70   Open
JEC    64.63    68.85  OCT50P/55P   0.70   54.30   0.70   Open
NOC    97.00   108.97  OCT85P/90P   1.00   89.00   1.00   Open
SBC    47.44    46.69  OCT40P/45P   0.60   44.40   0.60   Open
SZA    63.00    61.76  OCT55P/60P   0.85   59.15   0.85   Open
VZ     53.90    54.45  OCT45P/50P   0.70   49.30   0.70   Open

Suiza Foods (NYSE:SZA) has retreated amid the broad-market rally
as safety stocks lose their attraction.  A move below $60 will
signal a potential early-exit in the bullish position.

Closed Positions: Progressive (NYSE:PGR) and Affiliated Computer
Services (NYSE:ACS); which is currently profitable and should
qualify as the Murphy's Law "Play of the Month."


New Candidates:

This following group of plays is simply a list of candidates to
supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
are suitable for your skill level, risk-reward tolerance and
portfolio outlook.  In addition, we recommend that you avoid any
strategy or technique in which you are not completely comfortable
with the potential loss, the necessary adjustments and the common
entry-exit strategies.  (We monitor the positions marked with ***).

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

BULLISH PLAYS - Covered Calls, Naked Puts, & Combinations

***************
CERN  - Cerner  $55.70  *** Earnings Rally? ***

Cerner Corporation (NASDAQ:CERN) designs, develops, markets,
installs, hosts and supports software information technology and
content solutions for healthcare organizations and consumers.
Cerner's product categories include: Enterprise Systems, which
automate processes across and throughout the health system
enterprise; Financial and Operational Management Systems, which
automate business operations; Decision Support Systems and
Knowledge Solutions, which enhance many clinical and business
processes with information and actions; Point of Care Clinical
Systems, which automate the care processes within specific
domains of health systems; Systems for Clinical Centers, which
automate the clinical processes within specific departments;
Personal Health Systems for individuals to manage their own
health and connect to the health system; and also Interface
Technologies for connecting other technologies and systems to
HNA Millennium.

Shares of Cerner have been "on the move" in recent sessions and
today's rally on heavy volume indicates traders are speculating
on the company's upcoming earnings report.  Estimates suggest
the company will post EPS of $0.89 on revenues of $515.9 million
in fiscal 2001, well above the $0.57 earned on $404.5 million in
fiscal year 2000.  Analysts are optimistic about the report and
WR Hambrecht & Co. recently initiated research coverage on CERN
with a "buy" rating and $65 target.  WR Hambrecht's Healthcare
Services analyst Sean Wieland cites Cerner's marketing deftness
and sales growth of its main platform, HNA Millennium, as key
reasons for the rating.  Advest and Banc of America Securities
also recently issued positive ratings on the company and these
positions offer a method to speculate conservatively on the
company's future share value.

CERN  - Cerner  $55.70

PLAY (sell naked put):

Action    Month &  Option  Open     Closing  Cost     Target
Req'd     Strike   Symbol  Int.     Price    Basis    Mon. Yield

SELL PUT  NOV 45   CQN WI  305       0.80    44.20     5.2% ***
SELL PUT  NOV 50   CQN WJ  0         1.85    48.15     8.0%

http://www.OptionInvestor.com/charts/oct01/charts.asp?symbol=CERN
***************
EBAY - eBay  $56.88  *** On The Rebound! ***

eBay (NASDAQ:EBAY) is a United States-based dynamic pricing online
trading platform.  eBay developed a Web-based community in which
buyers and sellers are brought together in an efficient format to
buy and sell items, such as collectibles, automobiles, high-end or
premium art items, jewelry, consumer electronics and a host of
practical and miscellaneous items.  The eBay auction-style format
permits sellers to list items for sale, buyers to bid on items of
interest and all eBay users to browse through listed items.  eBay's
service is fully automated, topically arranged and easy to use.
Through its wholly owned and partially owned subsidiaries and
affiliates, the company operates trading platforms in the United
States, Germany, the United Kingdom, Australia, Japan, Canada,
France, Austria, Italy and South Korea.  eBay expects to expand its
online trading to include Spain, the Netherlands, Belgium, Portugal,
Sweden and Brazil.

There's little news to explain the recent bullish activity in EBAY
but today the issue continued to recover from last month's sell-off
amid a surge in buying pressure and robust volume.  Traders believe
the rally may be related to news the company will gradually merge
its Half.com subsidiary into the operations of eBay.com, a sign of
the company's growing effort to attract mainstream shoppers who buy
fixed-price goods like compact discs and books rather than using
auctions.  The move is likely to increase the company's rivalry
with Amazon.com (NASDAQ:AMZN) and eBay executives have commented
publicly about their desire to be the leader in the online book,
music and video markets, areas that Amazon currently dominates.
Regardless of the reason, EBAY is once again established in a
bullish trend and those who favor the company's plans for market-
share expansion can use these positions to speculate on the
future movement of the issue.

EBAY - eBay  $56.88

PLAY (sell covered call or naked put):

Action    Month &  Option   Open     Closing  Cost     Target
Req'd     Strike   Symbol   Int.     Price    Basis    Mon. Yield

SELL CALL NOV 50   QXB KJ   1,346     9.60    47.28     4.6% ***

SELL PUT  OCT 50   QXB VJ   6,927     0.85    49.15    15.5% ***

SELL PUT  NOV 40   QXB WH  12,160     0.95    39.05     6.2% ***
SELL PUT  NOV 45   QXB WI   1,210     1.60    43.40     9.9%

http://www.OptionInvestor.com/charts/oct01/charts.asp?symbol=EBAY
***************
FDC - First Data  $66.02  *** Rally Mode! ***

First Data (NYSE:FDC) is a financial services entity that operates
in the four primary business segments of payment services, merchant
services, card issuing services and emerging payments.  The payment
services segment includes Western Union, Integrated Payment Systems
and Orlandi Valuta Companies, and is a provider of non-bank money
transfer and payment services to consumers and commercial entities.
The merchant services segment is comprised of First Data Merchant
Services, TeleCheck and First Data Financial Services.  The segment
provides merchants with credit and other debit card transaction
processing services.  The card issuing services segment, offered by
First Data Resources, provides a comprehensive line of products and
processing and related services to financial institutions, issuing
Visa and MasterCard credit cards and other bank-debit cards.  The
emerging payments segment is comprised solely of eONE Global.

The recent rally in FDC shares began Monday after the company
announced that quarterly profits rose 15%, helped by demand for
money transfers around the world.  The Denver-based firm, which
also owns money transfer company Western Union, earned $273.2
million in the third quarter, or $0.69 a share, on an operating
basis.  That compares with $238 million, or 0.58 a share, a year
earlier.  Analysts had expected First Data to earn 0.66 a share,
thus the announcement was an upside surprise.  The fundamental
outlook for the company is excellent and the sector is performing
very well; both factors that lead us to a bullish position in the
issue.  The premiums in the spread help provide a low risk cost
basis with a reasonable expectation of profit.

FDC - First Data  $66.02

PLAY (conservative - bullish/credit spread):

BUY  PUT  NOV-55  FDC-WK  OI=366  A=$0.40
SELL PUT  NOV-60  FDC-WL  OI=657  B=$1.00
INITIAL NET CREDIT TARGET=$0.70-$0.75  PROFIT(max)=16%

http://www.OptionInvestor.com/charts/oct01/charts.asp?symbol=FDC
***************
GILD - Gilead Sciences  $62.80  *** On The Move Again! ***

Gilead Sciences (NASDAQ:GILD) is an independent biopharmaceutical
company that seeks to provide accelerated solutions for patients
and the people who care for them.  Gilead discovers, develops,
manufactures and commercializes proprietary therapeutics for
challenging infectious diseases (viral, fungal and bacterial
infections) and cancer.  Gilead also has expertise in liposomal
drug delivery technology.  Currently, Gilead markets AmBisome
(amphotericin B) liposome for injection), an antifungal agent,
DaunoXome (daunorubicin citrate liposome injection), a drug
approved for the treatment of Kaposi's Sarcoma, and VISTIDE
(cidofovir injection) for the treatment of cytomegalovirus (CMV)
retinitis.  Roche markets Tamiflu (oseltamivir phosphate) for the
treatment of influenza, in a collaborative agreement with Gilead.
In addition, Gilead is developing products to treat diseases
caused by human immunodeficiency virus and hepatitis B virus,
bacterial infections and cancer.

The recent buying interest in Gilead Sciences began last month
after the company said that a U.S. Food and Drug Administration
panel was scheduled to review Viread, the company's new drug to
treat HIV infection, on October 3.  Viread is a single tablet
taken once daily and works by blocking an enzyme crucial to the
replication of HIV.  The company filed a New Drug Application for
Viread earlier in the year and the agency issued priority review
status that could allow for action by the FDA by November 1.  In
the weeks following the news, GILD shares suffered from extreme
profit-taking but in late September, Goldman Sachs gave investors
a new catalyst to buy the issue as they initiated coverage of
Gilead with a "market out-performer" rating, saying the company's
future growth is linked to their unique AIDS drug.  The brokerage
said the company had established a strong clinical and commercial
track record and that at maturity, Viread may see a market worth
more than $400 million.  Last week, a U.S. advisory panel backed
Gilead's HIV-fighting drug, saying it supports experimental use
of the antiviral treatment on adults who have already received
antiretroviral therapy.  Based on evidence in Gilead's application,
members of the FDA's antiviral drugs advisory committee recommended
adult use of Viread and the committee's decision, while not binding,
usually is heeded by the full FDA.

Investors were pleased with the news and the issue has shown signs
of a new bullish trend.  These positions offer a way to speculate
conservatively on the company's future share value.

GILD - Gilead Sciences  $62.80

PLAY (sell covered call or naked put):

Action    Month &  Option  Open     Closing  Cost     Target
Req'd     Strike   Symbol  Int.     Price    Basis    Mon. Yield

SELL CALL NOV 55   GDQ KK  1,677    10.10    52.70     3.5%

SELL PUT  NOV 50   GDQ WJ  395      1.15    48.85      6.7% ***
SELL PUT  NOV 55   GDQ WK  381      2.15    52.85      8.8%

http://www.OptionInvestor.com/charts/oct01/charts.asp?symbol=GILD
***************
IMCL - Imclone Systems  $58.00  *** Bristol-Myers Deal! ***

ImClone Systems (NASDAQ:IMCL) is a biopharmaceutical company that
is developing a portfolio of targeted biologic treatments designed
to address the medical needs of patients with a variety of cancers.
The company focuses on three main strategies for treating cancer,
growth factor blockers, cancer vaccines and unique angio-genesis
inhibitors.  The company's lead product candidate, IMC-C225, is a
therapeutic monoclonal antibody that inhibits stimulation of a
receptor for growth factors upon which certain solid tumors depend
in order to grow.  IMC-C225 has been shown in clinical trials to
have an acceptable safety profile, to be well tolerated and, when
administered with either radiation therapy or chemotherapy, to
enhance tumor reduction.

Bristol-Myers Squibb's (NYSE:BMY) recent $2 billion agreement to
co-develop a cancer drug formulated by ImClone Systems is the main
reason for the company's bullish share-price activity.  Last month,
Bristol-Myers said it will pay $1 billion for a 20% stake in IMCL,
and will co-develop and sell the biotechnology firm's experimental
cancer drug, IMC-C225.  The companies believe this investigational
drug already has great potential in the treatment of many cancers,
including colon, head and neck, pancreatic and non-small cell lung
cancer.  Analysts predict ImClone's new drug will generate annual
sales of $1 billion and that's the rationale behind Bristol Myers
contract to buy 14 million IMCL shares at a price of $70 per share.
If Bristol Myers thinks IMCL is worth $70 a share, who are we to
disagree?

IMCL - Imclone Systems  $58.00

PLAY (sell naked put):

Action    Month &  Option  Open     Closing  Cost     Target
Req'd     Strike   Symbol  Int.     Price    Basis    Mon. Yield

SELL PUT  NOV 45   QCI WI  1,558     1.15    43.85     7.2% ***
SELL PUT  NOV 50   QCI WJ  652       2.25    47.75    10.3%
SELL PUT  NOV 55   QCI WK  1,305     3.80    51.20    12.7%

http://www.OptionInvestor.com/charts/oct01/charts.asp?symbol=IMCL
***************
PCSA - Airgate PCS  $58.17  *** Hot Sector! ***

AirGate PCS (NASDAQ:PCSA) markets and provides digital personal
communication services.  The company is a network affiliate of
Sprint PCS, the personal communications services group of Sprint
Corporation.  Sprint PCS, directly and indirectly through many
affiliates, provides wireless services in more than 4,000 cities
and communities across the country.  Through a unique management
agreement with Sprint PCS, the company has the right to provide
Sprint PCS products and services under the Sprint and Sprint PCS
brand names in a territory that covers almost the entire state
of South Carolina, parts of North Carolina and the cities of
Augusta and Savannah in Georgia.  Its territory now encompasses
21 contiguous markets and over 7 million residents.

The cellular-phone industry has been performing very well since
the terrorist attack and analysts say companies in the group are
seeing a sales boost from the crisis because there was a need for
communication and people now realize that cell-phones really are
an important security tool.  In addition, industry forecasters
see the recent events as a new catalyst for a technology sector
that is already set for growth and even before the terrorist
activity, wireless telephone firms were on track to post solid
third-quarter results.  Bear Stearns recently started coverage of
AirGate PCS as a "buy" with a $69 price target, due to the fact
that the company owns the most attractive properties among the
public PCS affiliates and has also delivered consistently good
operating results.

We simply favor the bullish technical indications and our
conservative position offers a method to participate in the
future movement of the issue with relatively low risk.

PCSA - Airgate PCS  $58.17

PLAY (conservative - bullish/credit spread):

BUY  PUT  NOV-45  CQO-WI  OI=0  A=$0.75
SELL PUT  NOV-50  CQO-WJ  OI=0  B=$1.45
INITIAL NET CREDIT TARGET=$0.75-$0.85  PROFIT(max)=17%

http://www.OptionInvestor.com/charts/oct01/charts.asp?symbol=PCSA
***************
PEP - PepsiCo  $49.90  *** Reader's Request! ***

PepsiCo (NYSE:PEP) is engaged in the snack food, soft drink and
juice businesses.  The company, through its subsidiaries, markets,
sells and distributes salty and sweet snacks in the United States
and internationally, manufactures concentrates of brand Pepsi,
Mountain Dew and other brands for sale to franchised bottlers in
the United States and international markets and produces, markets,
sells and distributes juices under several Tropicana trademarks in
the United States and internationally.  PepsiCo's domestic snack
food business is conducted by Frito-Lay North America, and its
international snack food business is conducted through Frito-Lay
International.  The company's soft drink business operates as the
Pepsi-Cola Company and is comprised of two major business units,
Pepsi-Cola North America and Pepsi-Cola International.

PepsiCo was a "market mover" today, helping to boost the broader
industry groups with an upbeat forecast for future earnings.  The
company posted a 14% rise in profits and forecast strong earnings
growth in coming years as PepsiCo remains resilient despite the
economic downturn.  PepsiCo said it expects earnings-per-share
gains of 13% to 14% in 2002 and beyond and investors were bullish
on the news.  One of our readers noticed the "all-time" closing
high near $50 and asked for a conservative combination position
that would benefit from future upside activity.  With short-term
support near our cost basis, this spread offers a good balance of
risk and reward.

PEP - PepsiCo  $49.90

PLAY (moderately aggressive - bullish/credit spread):

BUY  PUT  NOV-45.00  PEP-WI  OI=353  A=$0.40
SELL PUT  NOV-47.50  PEP-WW  OI=186  B=$0.80
INITIAL NET CREDIT TARGET=$0.45-$0.50  PROFIT(max)=21%

http://www.OptionInvestor.com/charts/oct01/charts.asp?symbol=PEP
***************
SYMC - Symantec  $46.84  *** Internet Security! ***

Symantec (NASDAQ:SYMC) provides a broad range of content and
network security solutions to individuals and enterprises.  The
company is a provider of virus protection, firewall, virtual
private network, vulnerability management, intrusion detection,
remote management technologies and security services to consumers
and enterprises around the world.  The company currently views its
business in five operating segments: Consumer Products, Enterprise
Security, Enterprise Administration, Services and Other.

Shares of software and Internet security firms have rallied since
the terrorist activity in early September and analysts say some
companies have seen a 50% increase in sales over the past month.
The concerns caused by the attacks made security a matter of prime
importance in America and with countless billions in software,
computers and networking equipment, corporate, governmental, and
institutional users now face mounting security threats and will
have to incorporate a number of new steps into their daily routine
to make information secure.  Symantec is responding to these new
concerns by offering Symantec Security Check free to users around
the globe as part of a continued commitment to supplying consumers
with an innovative line of Internet security solutions to help
cultivate relationships with future customers and the number of
users visiting the Symantec site recently doubled to 30,000 per
day.  That's a good example of the demand for the company's unique
services and the trend is expected to continue in the coming year.

Symantec is one of the leading companies in the Software Security
industry and the current technical outlook is neutral to bullish.
Our target position offers an excellent reward potential at the
risk of owning this popular issue at a low-risk cost basis.

SYMC - Symantec  $46.84

PLAY (sell naked put):

Action    Month &  Option  Open     Closing  Cost     Target
Req'd     Strike   Symbol  Int.     Price    Basis    Mon. Yield

SELL PUT  NOV 35   SYQ WG  303       0.80    34.20     6.3% ***
SELL PUT  NOV 40   SYQ WH  5,248     1.75    38.25    10.3%
SELL PUT  NOV 45   SYQ WI  205       3.80    41.20    14.7%

http://www.OptionInvestor.com/charts/oct01/charts.asp?symbol=SYMC
***************


SEE DISCLAIMER
*****************************


************************Advertisement*************************
Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
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!

http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
**************************************************************


*******************
FREE TRIAL READERS
*******************

If you like the results you have been receiving we
would welcome you as a permanent subscriber.

The monthly subscription price is 39.95. The quarterly
price is 99.95 which is $20 off the monthly rate.


We would like to have you as a subscriber. You may
subscribe at any time but your subscription will not
start until your free trial is over.

To subscribe you may go to our website at

www.OptionInvestor.com

and click on "subscribe" to use our secure credit
card server or you may simply send an email to

 "Contact Support"

with your credit card information,(number, exp date, name)
or you may call us at 303-797-0200 and give us the
information over the phone.

You may also fax the information to: 303-797-1333


**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html


**************************************************************
ADVERTISING INFORMATION

For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support

DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives