Option Investor

Daily Newsletter, Wednesday, 11/14/2001

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The Option Investor Newsletter                Wednesday 11-14-2001
Copyright 2001, All rights reserved.                        1 of 1
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MARKET WRAP  (view in courier font for table alignment)
      11-14-2001          High     Low     Volume Advance/Decline
DJIA     9823.61 + 72.66  9859.38  9741.41 1.43 bln   1880/1229
NASDAQ   1903.19 + 11.08  1922.45  1875.27 2.14 bln   2060/1538
S&P 100   589.16 +  2.12   592.44   584.56   Totals   3940/2767
S&P 500  1141.21 +  2.12  1148.28  1132.87
RUS 2000  452.82 +  4.48   452.82   448.29
DJ TRANS 2392.97 + 51.35  2395.84  2339.23
VIX        28.60 +  0.02    30.11    28.00
VXN        56.38 +  0.44    58.48    55.85
TRIN        0.88
Put/Call    0.53

Consumer-Led Rally

The Commerce Department has been using its current method of
reporting retail sales figures for about 10 years.  The jump
in October was the largest on record.  The Commerce Department
reported retail sales rose by 7.1 percent in the month, much
higher than economists had expected.  Granted, a large portion
of the jump was due to zero percent financing offered by auto
dealers.  However, minus the auto sales, retail sales grew by
1 percent during October, which was well above the consensus
estimate of 0.3 percent growth.

The ex-auto sales figures rebounded back to where they were in
August.  While the 1 percent growth isn't considered that of
an economic expansion, it did reveal that the U.S. consumer
remained resilient during the month of October.  Many
economists had feared that the consumer would curb spending in
the wake of the terrorist attacks and perpetuate the
business-led slowdown in the economy.  The October sales
figures suggested otherwise.

It's early, but some economists suggested that the strong
rebound in retail sales could actually move fourth-quarter
gross domestic product (GDP) into positive territory and the
economy back on the growth track.  The bond market echoed
those views Wednesday as yields sharply rallied, potentially
discounting an economic recovery and the accompanying

The broader retail sector moved sharply higher following the
report.  The S&P Retail Sector Index (RLX.X) advanced past
another resistance level, en route to climbing closer to its
52-week high at 937.  The RLX.X is currently one of the
strongest sectors of the market.  It seems to me that this
sector would be a good one to watch on any dip.  Three of the
stronger stocks within the group are Best Buy (NYSE:BBY),
Kohls (NYSE:KSS), and AutoZone (NYSE:AZO).

The strength in the retail sector helped to offset weakness
in the energy and healthcare sectors.  Without the weakness
in the latter two, the S&P 500 (SPX.X) would've finished
much stronger Wednesday.  Still, the index held above its
breakout point yesterday at the 1130 level.  With that level
now below, the S&P doesn't have much resistance until the
1170 to 1175 area.

The Dow Jones Industrial Average ($INDU) broke above its
resistance level at 9700 yesterday and continued higher
today.  The INDU doesn't have a lot of near-term congestion
until 10,000.  While support may now form around 9700.

INDU component Hewlett-Packard (NYSE:HWP) reported quarterly
numbers this morning.  HWP handily beat consensus estimates,
which inspired buyers of its shares.  The stock finished
higher by 9 percent.  Despite Hewlett's positive report,
another INDU/hardware stock slid lower.  IBM (NYSE:IBM)
was under pressure ahead of its analyst meeting after the bell.
Rumors were again flying ahead of the company's meeting.  But
the company didn't offer any financial guidance during its
meeting.  An IBM official did say that demand was returning
for technology services, which may put the stock in play
Thursday morning.

Applied Materials (NASDAQ:AMAT) was less positive.  The
chip equipment giant reported after the bell.  Its numbers
fell one penny short of consensus estimates.  In addition,
the company said that its business could continue worsening
in the current quarter as its customers continue delaying
orders.  The stock was down almost $2 in the evening session.

The bad news from AMAT may already be discounted into the
stock.  I hate to put too much credence into the after hours
session weakness.  There was a similar reaction to QCOM's
report a week ago, but the stock ended higher the following
day.  Nevertheless, it may pay to observe how the broader
chip sector reacts to AMAT's guidance.

The Nasdaq-100 (NDX.X) worked its way through the resistance
zone between 1575 and 1600 if you count the gap higher
Tuesday morning.  The index looks strong and could continue
advancing up to the 1650 to 1700 area.

Dell (NASDAQ:DELL) is set to report after the bell tomorrow.
Dell will impact the chip sector as well as the broader
Nasdaq, so it will be one to watch Thursday and into
Friday.  In addition to the reception of the Dell report
Friday morning, retail inflation figures are set for
release.  The wholesale figures recently reported revealed
that inflation was a non-issue, so the CPI should reveal
similar data.

Eric Utley
Option Investor



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PMCS - call
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FFIV - call
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BRCM - call
Adjust from $39 up to $40

AOL  - call
Adjust from $34.50 up to $35.25

CMVT - call
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NOC  - put
Adjust from $97.85 down to $97


No Dropped Calls for Wednesday.


No Dropped Puts for Wednesday.


Is The Bear Dead?
By Mark Phillips
Contact Support

Or just resting up for its next attack?  This seems to be the
most hotly debated question in the Financial press over the past
several weeks, so at the risk of putting my readers to sleep by
putting in my 2-cents worth on the issue, that will be the focus
of our discussion here tonight.  Simply put, I don't have the
answer to that question, but I think I'm pretty good at weighing
the evidence and I hope I can help provide some illumination to
traders pursuing a longer-term investment approach.

There are two schools of thought on evaluating the financial
markets; Fundamental Analysis and Technical Analysis.  Once upon
a time, I believed that Technical Analysis provided all the
information necessary (i.e., all the information available was
reflected in the price charts) to make prudent investing
decisions.  Over the past few years, I have come to the
conclusion that we MUST also pay attention to important
fundamental factors such as the state of the economy, interest
rate policy, and the underlying business conditions of the
industry and stock in which we are considering an investment.

So let's start by looking at some of the larger fundamental
issues that are currently vying for our attention.  Over the
past year, the Fed has cut interest rates 10 times in an attempt
to fend off the recession in which we are currently mired, but
so far the majority of these cuts have yet to be felt in the
economy.  Management in leading companies in several sectors are
telling us that they think orders have bottomed and should
rebound in the first half of next year.  Due to the fact that
the market tends to look 6-9 months into the future, investors
have been voting with their wallets lately and momentum is
clearly to the upside, judging by the recent statistics on money
moving back into equities.  And let's not forget that Congress
is working on an economic stimulus package that should give
provide another shot of antibiotics against the current
recessionary malady.  That would seem, at least on a fundamental
basis, to indicate that the bulls are back in town and have
driven the bears back into hibernation.

But there is always a counter-point to be made, and there are
plenty of indications that the bulls' recent rampage may be
premature.  Earnings are still terrible, and there are few
indications that point to a substantial improvement anytime
soon.  Bulls have been calling a bottom to the market's decline
for over a year now, but all they have to show for it are a
series of bear-market rallies as the economy has continued to
worsen.  We now have all of the major indices above their 9/11
levels and some Technology stocks are up 100-200% from those
depressed price levels, driving P/E ratios further from value
levels that typically accompany significant market bottoms.

Let's just say that the fundamental case is currently unclear
and leave it at that.  I could (and I guess I have) make a case
for either the death of the bear, or the arrival of the latter
stages of the most recent bear-market rally.  My strength is in
analyzing chart movement, so I'd like to spend the remainder of
our visit looking at what I think are some important (if
incomplete) developments.  Remember my commentary from September
23rd, when I put up the following monthly chart of the S&P500
(SPX.X)?  I chose the SPX rather than one of the other indices,
as it is perhaps the best representation of the state of the
broad market and that is what we are trying to evaluate.

Remember that I was looking for some indication of what would
happen over the long-term from the monthly Stochastics
oscillator, but at the same time, expected we would test the
950 level and possibly the 900-910 level.  Let's take a look
at the same chart, updated with current data and see what it
has to say.

Well one out of two isn't bad.  Sure enough the SPX declined a
bit further from the level shown in the first chart and bounced
from just below 950 (actually 945) and it is still heading
higher from that bounce.  We are starting to see some bullish
Stochastics divergence, but the Stochastics are still below
the descending trendline, indicating we haven't broken out of
the bearish trend yet.  And the descending trendline on the
price chart has not yet been broken by the bulls.

So even the charts are giving us mixed messages, with a strong
bullish reversal that has yet to break out of the dominant
bearish trend.  Until that dominant trend is broken, we need
to continue to treat the current rally as another bear-market

The reason I've gone through this analysis is to try to shed
some light on the reasons behind the management of the LEAPS
Portfolio and Watch List.  After much deliberation, we finally
ventured into some LEAP Put plays, and we still have some
Entry Targets on our LEAP Call plays that are well below the
current market prices.  That is clearly due to the fact that I
expect one more sizeable selloff in the broad market to bring
those plays down significantly from current levels.  And with
weekly and daily charts currently buried in overbought territory
for all the major indices, as well as most equities, I think we
are going to be right.  With that being said, I believe it will
take an incredible shock to push the broad markets and most
equities below their late-September lows.  It could be that we
have seen THE BOTTOM of the current bear market, but I'm not
yet prepared to say that it is over.

It takes a lot of discipline and patience to stick with your
trading plan when it feels like you may have missed the
beginning of the next major bull market.  Hopefully this
discourse helps to demonstrate why I am willing to wait for
better entry points on our bullish plays and actually dabble
with some select plays to the downside in the meantime.

Stay tuned, as we'll revisit this analysis in the future when
we can make a determination as to whether my current trepidation
was prudent or foolish.

Have a great week!

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PDLI - Protein Design Labs $36.05 -0.79 (+2.33 this week)

Protein Design Labs is engaged in the development of humanized
monoclonal antibodies for the prevention and treatment of
disease.  The company has licensed certain rights to its first
humanized antibody product, Zenapaz, to Hoffman-La Rouche and
its affiliates Roche, which markets Zenapaz for the prevention
of kidney transplant rejection.

Most Recent Update

The AMEX Biotechnology Sector Index (BTK.X) opened at its day
low Tuesday and closed at its day high.  The day prior, the
BTK.X rebounded from its 200-dma at the 537 mark.  Judging by
its big rebound over the past two days, the Biotech Sector is
poised to work higher over the short-term.  The BTK.X has
resistance at the 600 level.  Above 600, congestion sits at
620.  A component of the BTK.X, PDLI has been one of the
stronger stocks in the group.  In fact, it was the best performing
stock in the BTK.X Tuesday.  If the BTK.X is going to test
resistance near 600 or breakout, then PDLI should follow suit
with a breakout of its own.  The stock faces short-term
resistance at the $37 level.  A move above that level could
carry PDLI up to the $40 level over the short-term, possibly as
high as $43.  In terms of execution, a breakout above $37
could be used as an entry point, but only if the BTK.X and
Nasdaq are advancing.  Otherwise, look for a pullback to
support between the $33.75 and $34 levels, which is the site
of PDLI's gap created by Tuesday's opening.  The 10-dma at
$35 may provide support, too, so keep an open mind about the
potential for a bounce from the 10-dma.  Our stop is initially
in place at $32.


The biotechs pulled back with the weakness in the broader
healthcare space today.  Look for the BTK.X to rebound in
Thursday's session.  Strength in the BTK.X should allow PDLI
to work higher.  The stock has resistance between $37.25 and
$37.50.  Watch for an advance past that zone.

BUY CALL DEC-30 PQI-LF OI= 104 at $7.50 SL=6.00
BUY CALL DEC-35*PQI-LG OI=1077 at $4.20 SL=3.00
BUY CALL DEC-40 RPV-LH OI= 566 at $2.15 SL=1.25
BUY CALL FEB-35 PQI-BG OI=1531 at $6.30 SL=5.00
BUY CALL FEB-40 RPV-BH OI= 556 at $4.40 SL=3.00

Average Daily Volume = 2.17 mln


Hewlett-Packard Spurs Blue-Chip Rally!
By Ray Cummins

U.S. equities finished higher today with the industrial segment
leading the way after Dow component Hewlett-Packard (NYSE:HWP)
reported better-than-expected quarterly profits.

The hardware giant posted earnings of $0.19 per share on revenue
of $11 billion, easily surpassing the consensus earnings estimate
of $0.08 per share and the revenue estimate of $10 billion.  The
news boosted HP's shares as well as Compaq (NYSE:CPQ), which HWP
is purchasing, and other computer makers such as Dell Computer
(NASDAQ:DELL), Apple Computer (NASDAQ:AAPL) and Gateway Computer
(NYSE:GTW).  Among the Dow's other winners were Alcoa (NYSE:AA),
America Express (NYSE:AXP), Home Depot (NYSE:HD), International
Paper (NYSE:IP), and Walt Disney (NYSE:DIS).  On the NASDAQ, the
chip sector paused for a day after the recent rally but Internet
and networking issues remained in favor as traders searched for
downtrodden stocks in the technology segment.  Web-based shares
were among the top performers in tandem with Yahoo's (NASDAQ:YHOO)
bullish activity.  The Internet giant announced a new deal with
Dow company SBC Communications (NYSE:SBC) to offer co-branded,
high-speed Internet access to SBC's 13-state region.  Also, the
New York Post reported on Wednesday that Yahoo is mulling a 13%
workforce reduction.  The move is intended to streamline Yahoo's
expenses and boost revenues in the coming year.  Stocks in the
networking group edged higher despite the decline in shares of
Network Appliance (NASDAQ:NTAP).  The issue slid over 10% after
telling investors that its results for the fiscal third quarter
are expected to approximate those of the just completed quarter.
In the software sector, Oracle (NASDAQ:ORCL) rebounded from the
losses induced by a profit warning on Tuesday.  SG Cowen & Co.
didn't help matters though, cutting its view on ORCL to "neutral"
from a "buy" to reflect a prolonged recovery in fundamentals,
rich valuation and increased competition in the applications
and database segments.  In the broader market, buyers enjoyed
other bullish news including favorable October retail sales,
which surged 7.1% versus the anticipated 3.2% increase, and
a report that more of Afghanistan appeared to be under the
opposition Northern Alliance's control, with rumors circulating
that the Taliban's southern stronghold of Kandahar had fallen.
Investors dabbled in airline shares, which rebounded after the
drubbing earlier in the week, and also initiated new positions
in brokerage, retail, paper, chemical and cyclical issues.  The
worst performing sectors were natural gas, utility, major drug
and biotechnology.  Oil and oil service issues were also lower
in the wake of a plunge in crude prices.  The renewed selling
pressure was prompted by an increase in crude inventories last
week, as well as continued wrangling between OPEC and non-OPEC
members over the size of future production cuts.

Summary of Current Positions (as of 11/13/01):

Covered Calls: (Margin not used in calculations)

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

EBAY    NOV     50   47.28   55.68   2.72     4.6%
ELNT    NOV     30   28.95   38.05   1.05     4.6%
INTU    DEC     45   40.85   42.15   1.30     2.2%

Naked Puts:

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

CERN    NOV    45    44.20   57.55   0.80     5.0%
EBAY    NOV    40    39.05   59.86   0.95     6.2%
GILD    NOV    50    48.85   67.68   1.15     6.7%
IMCL    NOV    45    43.85   62.38   1.15     7.2%
SYMC    NOV    35    34.40   61.34   0.60     4.8%
ACS     NOV    80    78.90   91.29   1.10     4.1%
ELNT    NOV    25    24.60   37.59   0.40     7.0%
GILD    NOV    55    54.30   67.68   0.70     6.0%
IMCL    NOV    50    49.35   62.38   0.65     6.1%
SEPR    NOV    40    39.35   47.51   0.65     7.2%
SYMC    NOV    45    44.40   61.34   0.60     6.3%
CCMP    NOV    55    54.30   71.48   0.70     7.9%
SEPR    NOV    40    39.45   47.51   0.55     8.1%
TARO    DEC    40    39.80   38.58  (1.22)    0.0%

The speculative synthetic position in Taro (NASDAQ:TARO)
lasted only one day as the issue plummeted almost $6 on
11/08/01.  There was no immediate news to explain the
unexpected sell-off, but the bullish trend was clearly
over for the near-term.  We decided to close the sold
put for a loss and hold the call as a "lottery" ticket.

Naked Calls:

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

ABK     NOV     60   60.85   51.56   0.85     4.1%
ADVP    NOV     37   37.82   27.52   0.32     6.8%
QCOM    NOV     60   60.45   57.53   0.45     7.8%

Sell Strangles:

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

IDPH    NOV    40-P  39.25   67.60   0.75     6.6%
IDPH    DEC    75-C  75.70   67.60   0.70     5.1%

CVTX    NOV    25-P  23.60   38.39   1.40    27.0%
CVTX    NOV    55-C  56.20   38.39   1.20    23.6%

AZN     DEC    50-C  51.30   46.94   1.30     4.9%
AZN     DEC    47-P  43.60   46.94   1.40     5.3%

As noted last week, Idec Pharmaceuticals (NASDAQ:IDPH) moved
through the break-even point in the bearish portion of our
neutral position.  We decided to remain in the play for a
credit with a transition to a (short) December $75 call.

Debit Strangles:

Stock  Strike  Strangle  Initial Current   Max.    Potential
Symbol Month   Strikes    Debit   Price   Credit  Mon. Yield

PDLI    NOV    D37C/D35   2.15    36.84    2.65      23%

Protein Design Labs (NASDAQ:PDLI) reached our target profit
during Monday's session.

Credit Spreads:

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

FDC    66.02   73.26   NOV55P/60P   0.70   54.30   0.70   Open
PCSA   58.17   53.23   NOV45P/50P   0.75   49.25   0.75   Open
PEP    49.90   49.44   NOV45P/47P   0.45   47.05   0.45   Open
JNJ    57.77   59.65   NOV50P/55P   0.65   49.35   0.65   Open
MMC   102.51  104.49   NOV85P/90P   0.50   89.50   0.50   Open
ERTS   52.70   54.81   NOV65C/60C   0.90   60.90   0.90   Open
LLY    75.00   78.97   NOV85C/80C   1.00   81.00   1.00   Open
IBM   108.57  116.70   NO95P/100P   0.60   99.40   0.60   Open
TECD   45.00   42.56   NOV35P/40P   0.55   39.45   0.55   Open
HI     55.44   60.00   NOV65C/60C   0.65   60.65   0.65  Closed
CHIR   53.82   51.50   NOV45P/50P   0.55   49.45   0.55   Open
WLP   111.59  113.83   N100P/105P   0.50  104.50   0.50   Open
ACS    88.05   91.29   NO100C/95C   0.50   95.50   0.50   Open
PCAR   62.59   62.90   DEC50P/55P   0.70   54.30   0.70   Open
AHP    56.47   57.09   DEC65C/60C   0.65   54.35   0.65   Open

As noted last week, Household International (NYSE:HI) moved above
resistance at $58 and should have been closed to lock-in profits
or prevent future losses.

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 - Conservative Covered-Calls & Naked-Puts

BBY - Best Buy  $66.40  *** Retail Sector Rally! ***

Best Buy Company (NYSE:BBY) is a specialty retailer of consumer
electronics, home office equipment, entertainment software and
appliances.  The company operates retail stores and commercial
web-sites 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, offering customers a broad selection of brand
name models consisting of approximately 6,000 products.

The retail sector is performing very well and Best Buy is one
of the top companies in the group.  Shares of most consumer
electronics merchants have traded higher in recent sessions on
expectations of a recovery in demand for more family-oriented
entertainment, such as video games, music, home theater systems
and toys.  The fundamental outlook for the sector is improving
and our opinion is simply that Best Buy is an industry leader
and a blue-chip stock we would love to have in our long-term
growth portfolio.  Investors can establish a low risk basis in
the issue with these positions.

BBY - Best Buy  $66.40

PLAY (sell naked put):

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

SELL PUT  DEC 55   BBY XK  3,625     1.00    54.00      5.1% ***
SELL PUT  DEC 60   BBY XL  511       1.85    58.15      6.9%
SELL PUT  DEC 65   BBY XM  428       3.60    61.40     10.3%

EBAY - eBay  $62.08  *** On The Move! ***

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.

eBay has completely recovered from a recent bout of profit-taking
and based on the recent bullish technicals, investors agree it is
one of the leading companies in the retail segment of the Internet
industry.  The issue would certainly be an excellent candidate for
any long-term portfolio and these positions offer favorable reward
potential at the risk of owning this unique company at a discounted
cost basis.

EBAY - eBay  $62.08

PLAY (sell naked put):

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

SELL PUT  DEC 50   QXB XJ  1,556     1.15    48.85      6.8% ***
SELL PUT  DEC 55   QXB XK  621       2.05    52.95      8.5%
SELL PUT  DEC 60   QXB XL  461       3.50    56.50     11.0%

ELBO - Electronics Boutique  $38.80  *** Games Sales Are Up! ***

Electronics Boutique Holdings (NASDAQ:ELBO) is a unique specialty
retailer of electronic games.  The company sells video games and
PC entertainment software, supported by the sale of video game
hardware, PC productivity software, PC accessories and related
products.  The company offers its products through its large and
growing store base, which included 737 stores located in 46 states,
Puerto Rico, Canada, Australia, New Zealand and South Korea.  The
company is operating primarily under the names Electronics Boutique,
EB GameWorld and Stop 'N Save Software, and through its web-site at
www.ebgames.com (formerly www.ebworld.com).  In addition to its
retailing activities, the company provides management services for
Electronics Boutique plc, a specialty retailer of electronic games
in the United Kingdom, Sweden and Ireland.

Companies that market electronic video games have rallied over the
past few sessions in anticipation of the most "hyped" week in the
29-year history of the industry: the upcoming launch of the Xbox,
a sleek black console from software giant Microsoft (NASDAQ:MSFT),
and the debut of GameCube, a unique next-generation platform for
Mario and Nintendo's other famous characters.  Analysts expect the
new product launches, combined with sales of Sony's PlayStation 2,
to ignite a new growth cycle in the video-gaming market, which
already surpasses Hollywood movies as a magnet for entertainment
dollars.  That's great news for companies like Electronics Boutique,
which sell and support video games and PC entertainment software.

The recent upside activity in the group suggests now is the time
to establish a bullish position and these plays offer a low risk
entry in an issue with a favorable technical outlook.

ELBO - Electronics Boutique  $38.80

PLAY (buy stock and sell covered call; or sell naked put):

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

SELL CALL DEC 35   LQB LG  108       5.30    33.50      3.7% ***

SELL PUT  DEC 30   LQB XF  20        0.50    29.50      5.0% ***
SELL PUT  DEC 35   LQB XG  1         1.75    33.25     10.7%

PCSA - Airgate PCS  $54.91  *** Favorable Earnings! ***

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.

Today's report from wireless telephone company AirGate PCS was a
positive event with the company announcing that fourth-quarter
net losses narrowed and revenues nearly quadrupled from a year
ago as it added 55,600 customers.  The company, which intends to
sell the Sprint PCS' wireless service segment, said its net loss
narrowed to $25 million, or $1.88 a share from $29.2 million, or
$2.30 a share a year ago.  Revenues rose to $62 million from $16
million a year ago, although average revenue per subscriber fell
to $62 a month from $63 in the third quarter.  AirGate also said
it expected to add 60,000 to 65,000 new subscribers in its fiscal
first quarter with average revenue per user per month of $60.

The news was favorable and since PCSA is once again established
in a bullish trend, traders who favor the Telecom Services group
can use this position to speculate conservatively on the future
movement of the issue.

PCSA - Airgate PCS  $54.91

PLAY (sell naked put):

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

SELL PUT  DEC 45   CQO XI  21        0.95    44.05      6.0% ***
SELL PUT  DEC 50   CQO XJ  20        2.15    47.85      9.2%
SELL PUT  DEC 55   CQO XK  10        4.30    50.70     13.4%

TMPW - TMP Worldwide  $38.40  *** A Demand For Jobs! ***

TMP Worldwide (NASDAQ:TMPW) has built www.monster.com into an
Internet career destination portal.  Through Monstermoving.com,
the company is capitalizing on the relationship between job
recruitment and employee relocation.  Monstermoving.com features
information that addresses the entire moving process and provides
the ability to research a prospective move online.  The company
is also a recruitment advertising agency (through its Advertising
& Communications division), one of the selection and temporary
contracting firms (through its eResourcing division) and a global
executive search firm.  In addition to offering these web-based
career solutions, the company is also a yellow-page advertising

TMP Worldwide shares rallied this week after Monstermoving.com,
the flagship brand of the company, announced a record 3 million
unique visitors in the month of October.  The traffic milestone
represents a 1,358% increase in monthly site visitors since the
site launched in October 2000.  In addition, Monstermoving.com's
October traffic represents a 153% increase over the month of
September and traffic to the Monstermoving Mortgage Center more
than doubled in October, indicating that record numbers of new
customers are flocking to the web to take advantage of falling
interest rates.  The CEO recently commented, "Since our launch
last October, the company has experienced exciting growth and
expansion in both our corporate and consumer offerings."  As a
result, record numbers of consumers are turning to the company
as a trusted source of essential relocation resources.

The stock has excellent buying support near our cost basis and
the favorable option premiums will allow traders to speculate
in a conservative manner on the future movement of TMPW's share

TMPW - TMP Worldwide  $38.40

PLAY (buy stock and sell covered call; or sell naked put):

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

SELL CALL DEC 35   BSQ LG  862       5.20    33.20      4.5% ***

SELL PUT  DEC 30   BSQ XF  235       0.60    29.40      6.0% ***
SELL PUT  DEC 35   BSQ XG  1,168     1.95    33.05     11.5%


BULLISH PLAYS - Conservative Credit-Spreads

CSC - Computer Sciences  $45.09  *** Solid Outlook! ***

Computer Sciences Corporation (NYSE:CSC) is in the information
technology services industry.  The company has helped clients use
IT more efficiently in order to improve their operations and
profitability and to achieve business results.  CSC offers a wide
range of professional services to clients in the global commercial
and government markets, and specializes in the application of
advanced and complex IT to help its customers' achieve strategic
objectives.  Its service offerings include outsourcing, systems
integration and management consulting/professional services,
including e-business solutions.

Shares of technology services company Computer Sciences have been
in "rally mode" since the company posted earnings that outpaced
expectations and raised their forecast for fiscal 2002.  CSC said
it earned $68.2 million in its fiscal second quarter, or $0.40 a
share, down 38% from the $0.65 a share, in the same period a year
ago, but the number beat analysts' expected earnings of $0.37 per
share.  The CEO said they have "strong opportunities" supporting
both their commercial and government large scale transactions, and
he believes future business awards will support the revenue base.
CSC also raised profit expectations for the year, based on strong
sales growth and cost-cutting moves, and investors were bullish on
the news.

The premiums in this spread provide a low risk cost basis with a
reasonable expectation of profit.

CSC - Computer Sciences  $45.09

PLAY (conservative - bullish/credit spread):

BUY  PUT  DEC-35  CSC-XG  OI=2189  A=$0.45
SELL PUT  DEC-40  CSC-XH  OI=333   B=$0.90

PEP - PepsiCo  $50.28  *** New, All-time High! ***

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.  The company's snack food
business is conducted by Frito-Lay North America, and its global
snack food business is conducted through Frito-Lay International.
The company's soft drink business operates as Pepsi-Cola Company,
and is comprised of two business units, Pepsi-Cola North America
(PCNA) and Pepsi-Cola International (PCI).

Shares of PepsiCo have been in a bullish trend since early last
week when the company announced that it is comfortable with the
current full year earnings forecast as it integrates Quaker Oats
and keeps its focus on convenience products.  The President and
Chief Financial Officer Indra Nooyi said PepsiCo expects to earn
$1.66 per share for the full year and plans to invest any extra
income into growing operations.  Analysts who follow the company
have forecast a consensus estimate near $1.66 per share, so the
company appears on track to meet expectations.  Investors are
obviously pleased with the outlook as they have pushed PEP's
share value to an "all-time high" and conservative traders can
profit from future bullish movement in the issue with this
combination position.

PepsiCo  $50.28

PLAY (conservative - bullish/credit spread):

BUY  PUT  DEC-45.00  PEP-XI  OI=185  A=$0.30
SELL PUT  DEC-47.50  PEP-XW  OI=215  B=$0.55

NKE - Nike  $51.56  *** On The Run! ***

Nike (NYSE:NKE) designs, develops and markets quality footwear,
apparel, equipment, and accessory products.  Nike is the largest
seller of athletic footwear and athletic apparel in the world.
The company sells its products to over 19,000 retail accounts in
the United States and through a mix of independent distributors,
licensees and subsidiaries in approximately 140 countries around
the world.  Virtually all of its products are manufactured by
independent contractors and most footwear products are produced
outside the United States, while apparel products are produced
both in the United States and abroad.

NIKE shares were "on the run" during today's rally in the retail
sector and based on the recent earnings report by its competitor
Adidas, the future looks bright for athletic clothing and shoe
sales.  An increase in sales in the U.S. market helped Adidas
post strong third-quarter profits last week and the company said
footwear backlogs are positive and the events of 9/11 have not
affected business so far.  Analysts at Morgan Stanley said the
results beat their expectations and they retained a "strong buy"
rating on the stock.  The positive outlook for Adidas bodes well
for Nike, which is the industry leader, and this conservative
position offers a method to participate in the future movement
of the issue with relatively low risk.

NKE - Nike  $51.56

PLAY (conservative - bullish/credit spread):

BUY  PUT  DEC-45.00  NKE-XI  OI=90   A=$0.65
SELL PUT  DEC-47.50  NKE-XW  OI=152  B=$0.95


BEARISH PLAYS - Naked Calls & Combinations

EASI - Engineered Support Sys.  $43.01  *** Technicals Only! ***

Engineered Support Systems (NASDAQ:EASI) is a holding company for
six wholly owned subsidiaries: Systems & Electronics, Engineered
Air Systems, Keco Industries, Engineered Coil Company d/b/a Marlo
Coil, Engineered Electric Company d/b/a Fermont, and Engineered
Specialty Plastics.  The company and its subsidiaries design and
manufacture military support equipment and electronics for the
United States Armed Forces.  The company also engineers and makes
air handling, heat transfer and materials handling equipment and
molded plastic products for commercial and industrial products.
Products are manufactured by the company within four operating
segments: heavy military support equipment, electronics and
automation systems, light military support equipment and plastic
products.  The company's quarterly earnings are due 12/11/2001.

This position is based on the current price or trading range of
the underlying issue and its recent technical history or trend.
Over the past week, selling pressure has emerged in the defense
sector and many of the stocks in that group have exhibited new
signs of potentially "failed" rallies.  In the case of EASI, the
premiums for the (OTM) call options are slightly inflated and the
possibility of a successful (technical) recovery is significantly
affected by the resistance just below our target strike price; a
perfect condition for a bearish "premium-selling" play.  Use any
near-term rally in the issue to increase the credit for the sold
(short) option.

EASI - Engineered Support Systems  $43.01

PLAY (aggressive - sell naked call):

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

SELL CALL  DEC 55  UFE LK  230       0.50    55.50      4.5% ***
SELL CALL  DEC 50  UFE LJ  84        1.35    51.35      9.6%
SELL CALL  DEC 45  UFE LI  14        3.00    48.00     13.5%



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