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Daily Newsletter, Wednesday, 10/30/2002

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The Option Investor Newsletter                Wednesday 10-30-2002
Copyright 2002, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.

In Section One:

Wrap: Better Than 
Futures Corner: P & L examples from Tuesday's Futures Trade Signals.
Index Trader Wrap: There were times when....
MUI CONTENT OF THE DAY: RS Funds
Options 101: Important Changes in the VIX

Updated on the site tonight:
Swing Trader Game Plan: Getting Weaker 

Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
10-30-2002                High    Low     Volume Advance/Decl
DJIA     8427.41 + 58.47 8459.31  8307.42  1702 mln   1155/538
NASDAQ   1326.73 + 26.19 1334.63  1300.55  1089 mln   1377/251
S&P 100   452.60 +  3.74  455.20  446.69   totals     2532/789
S&P 500   890.71 +  8.56  895.28  879.19
RUS 2000  374.17 +  5.54  374.17  368.14
DJ TRANS 2277.25 + 29.02 2298.89  2246.63
VIX        36.08 -  0.72   37.67  35.76
VIXN       51.29 -  1.18   54.58  50.38
Put/Call Ratio .85
*******************************************************************

Looking Ahead
by Steven Price

There are slow days and there are excruciatingly slow days.  This 
one was the latter.  We got little momentum to trade, but we did 
get a look at previous support and resistance levels and some 
surprising action in a couple of sector indices. By the end of 
the day, most averages were positive, but there wasn't a lot of 
commitment in the numbers.

It appears as though we are in a holding pattern ahead of 
Thursday and Friday's economic data, and next Wednesday's FOMC 
interest rate decision.  As that economic data flows in, 
speculation will fly as to just how much the Fed will lower 
rates.  The debate about whether or not rates will be lowered, 
has turned into a debate over whether it will be a 25 or 50 basis 
point move.   Goldman Sachs indicated it is looking for a 50 
basis point cut next week, while the consensus is for 25 points. 
This may simply be the firm backtracking to its August prediction 
of a 75 basis point cut by the end of the year. With only two 
meetings left before the end of 2002, it doesn't leave much time 
for that prediction to pan out.  The FOMC meets November 6 and 
December 10.   The Fed Funds futures are currently predicting a 
25 basis point cut, as can be seen below. 

Chart of the Fed Funds Futures


Another indicator of how far we've come and whether we will run 
out of steam here is the bullish percentage.  Bullish percent 
measures the number of stocks in a particular index currently 
giving point and figure buy signals.  While the bullish percents 
of the Nasdaq Composite and S&P 500 are currently in the middle 
of their ranges, the Dow and NDX have reached significant 
resistance points.   The Dow has rebounded from a low of 4% to a 
current reading of 56%, just below its bearish resistance line.  
The last rebound stopped dead at this level, as evidenced by the 
previous column of "X". The fact that the Dow's recent rally 
became range bound, between 8200 and 8550, as the index hit its 
bearish resistance line, may not be entirely coincidental, as 
many institutions pay close attention to the bullish percentages. 

Chart of the Dow Bullish Percentage


The Nasdaq 100, which includes some of the largest tech stocks in 
the market, has also run into bearish resistance on the bullish 
percentage chart.  It rebounded from a low of 14%, to a current 
reading of 54% and is right below its bearish resistance line at 
58%.   Similarly to the Dow, it failed this level on the last 
attempt, shown in the previous column of "X". 


Chart of the NDX Bullish Percentage


With consumer spending making up two thirds of GDP, we are 
heading into a crucial time of the year, as the holiday shopping 
season is around the corner.   The market has been able to shake 
off bad news from the techs recently, and continue to hold up 
over Dow 8000 and Nasdaq 1300.  However, if consumer spending 
drops off heading into the busiest time of the year for 
retailers, it will be hard to sustain the current rally. 
Yesterday's Consumer Confidence data, which missed expectations 
by about a thousand miles, sent the retail group lower, but 
wasn't enough to keep them down.  Concrete evidence of that lack 
of confidence may now be appearing.  This morning saw a downgrade 
of Wal-Mart (WMT) by Goldman Sachs, which took the stock off its 
recommended list and labeled it a "market performer."  Goldman's 
analyst was concerned about same store sales comparisons heading 
into the holiday season and the fact that WMT has lowered its 
monthly growth expectations to 2-4%, from the usual 4-6% 
(something we've been pounding the table on recently in this 
space).  WMT is the biggest of the big retialers and even Goldman 
says, "(T)he company is best positioned for current lackluster 
spending environment."  However, it also commented on a "an 
increasing challenge coming up against these strong results in, 
if we are correct, a decelerating consumer-spending environment 
next year."  If we continue to see a drop in consumer spending in 
2003, then any recovery may be stretched back to 2004 at the 
earliest.  What may also be significant is that the retail 
sector, as measured by the Retail Index (RLX.X), finally broke 
down through its 50-dma, after rebounding from that level on 
recent pullbacks.  The RLX also has rounded off to its second 
lower low, including the second peak of a double top formation.   
Traders looking for shorts in the sector should now watch for 
intraday resistance under the 50-dma, as well as continued 
weakness from WMT. 

Chart of the Retail Index (RLX.X)



The networking sector rallied on news from France's Alcatel, 
which said the company's cost-cutting plan is ahead of schedule. 
The company also said it has increased its cash position, 
soothing bankruptcy concerns.  Alcatel still said sales dropped 
17.2% and the bottom line was affected by higher than expected 
write-offs. The sales decline was worse than expected, but the 
company's comments about returning to profitability in 2003 
helped boost the Networking Index more than 8% and Lucent almost 
20% to $1.20.

The semiconductors got mixed news, as Maxim Integrated Products 
(MXIM) reported earnings after the bell on Tuesday that met 
expectations, but warned about poor visibility for its end users 
and a lack of long-term orders, as a result.  Today, however, 
Microchip Technology (MCHP) said at the Prudential Technology 
Conference that it was raising its fiscal 2004 earnings guidance 
and revenue forecasts.  That was the first time in a while that 
we have heard anything but the opposite from the sector and it 
seemed to underscore comments from IBM's CEO that the economy may 
have bottomed.  The news was enough to get the Nasdaq rolling, as 
the COMP tacked on 26.19, to close at 1326.73.  The Semiconductor 
Index (SOX.X) also rallied, and managed its first close over 300 
since September 11. The Sox has pulled back and tested its 50-dma 
several times since breaking through on October 21, and continues 
to set higher highs and higher lows.  It is difficult to believe 
in a sector that has had mostly bad news, with no prediction of a 
turnaround, until this morning.  It is also a group that has 
posted a 41% gain since October 9, without any real positive 
fundamental news.  Bulls can point out, however, that the run has 
come during the meat of earnings season and that the prior sell-
off was based on earnings expectations that were far worse than 
what we got.  I would certainly feel more comfortable if less 
than 90% of the companies reporting earnings in the sector had 
not made negative comments about business conditions in the near 
future.   I have been looking for a ceiling on the sector for 
short plays, but have yet to see it, now that the SOX is back 
above 300. 

Chart of the SOX

 
One report that did not receive much press in today's news was 
the Market Composite Index of Mortgage Loan Applications.  The 
index can be seen as a leading indicator for housing, as 
applications are usually filed several weeks before purchases.  
The index showed a 19.3% decline in mortgage loan applications 
for purchases and refinancings for the week ending October 25.   
While housing has remained strong, this will be a sector to keep 
an eye on, as much of the economy has hinged on the housing 
market. Housing stocks have begun to sink, as mortgage rates have 
crept higher, and this data seems to confirm the effects are 
real. The Dow Jones Home Construction Index (DJUSHB) has rolled 
over and is once again testing support at the 300-level. Builders 
may be whistling a different tune soon, as seasonal changes and 
creeping rates combine to put a crimp in record home purchasing 
rates.  Shorts in the sector are looking more attractive, but 
I'll wait for the DJUSHB to break below 300 to avoid a bounce. 

Chart of the DJUSHB



The Dow and S&P continue to move sideways, as we await the flood 
of data this week.  Tomorrow we will get initial jobless claims 
for last week.  The consensus estimate is 400K, and this will be 
one of the main indicators the Fed will look at when assessing 
the health of the economy.  A decrease in claims from the 
previous week's 389K may reduce the need to jump start the 
economy with the first rate cut in almost a year.  However, it is 
more likely that any number over 400K will simply jump start 
speculation that the cut may be 50 basis points. The other big 
numbers tomorrow are 3rd quarter GDP, which is expected to 
reflect an annualized growth rate of 3.6%, and the Chicago PMI, 
expected to be 49.0.  Anything below 50 reflects a contraction 
and would underscore the need for a rate drop.

Friday's data includes nonfarm payrolls, unemployment rate, 
personal and construction spending, the ISM index (like the 
Chicago PMI expected to indicate contraction), construction 
spending and auto and truck sales.

It will be interesting to watch the market action the next two 
days, in response to the economic data, as it may be 
counterintuitive to what we might expect.  Poor economic data may 
send us higher, as it will raise expectations of a 50 basis point 
cut, while good economic data may send us lower. The SPX has yet 
to close over 900, and that should be the first sign for bulls 
that want to jump on the bandwagon.  However, next Wednesday's 
FOMC announcement should shake out investors who are less than 
committed and next Thursday may be the first day of a longer term 
trend.




************
FUTURES WRAP
************


Futures: P & L examples from Tuesday's Futures Trade Signals
by Alan Hewko
futures@OptionInvestor.com

___________________________________________________

Abbreviations used by the Futures Market:
                                    Ticker $ move per index pt
ES = E-mini SP500 December futures   ES02Z    $ 50 per ES pt
YM = E-mini Dow $5 December futures  YM02Z    $  5 per YM pt
NQ = E-mini NDX 100 December futures NQ02Z    $ 20 per NQ pt

_____________________________________________________________

NOTE: My cable modem which died early this morning prevented any 
internet access of any type all day and since I have no idea when 
a technician from my ISP shall arrive to replace the damaged 
cable modem, there shall be no Futures Wrap for today. There's 
been two repair trucks here for three hours, and at 5:00 PM ET I 
don't know if I'll have a working cable modem or not for 
Thursday. It was frustrating watching CNBC and seeing Dow hold 
8300 and not be able to a Long; or Dow hitting its 8450 
resistance and not being able to take a 30-40 Short on it 
[grins]. 

Since I already had some charts on my hard-drive, I thought I 
would take this opportunity to answer some reader questions. In 
case you are wondering how I was able to upload this article to 
the website, the answer is my public library and Yahoo email. 
[grins]


PROFIT EXAMPLES FROM TUESDAY'S FUTURES TRADE SIGNALS

As many of you know, Futures comments such as support and 
resistance numbers as well as actual Trade Signals are provided 
each day in a real-time manner via the OptionInvestor.com's 
Market Monitor. The below examples are from Tuesday's  posted 
Future's Trade signals, and is the best way I can answer 
continuing questions regarding Future's Margins and computing the 
Dollar profit/loss on a Trade. 

Tuesday's two trades were both on YM (Dow $5 futures) or the 
YM02Z, and each futures contract is worth $5.00 for each 1 point 
move in the Dow; hence the name "Dow $5". Also, margin on this 
contract will vary between $500 and $1500 per contract so I'll 
continue to use the average of $1000.

What this means is that you would need $1,000 for each YM 
Contract you wished to daytrade. If you have $5,000 in your 
futures account, you could buy or sell up to five contracts for 
Daytrading. If you have $25,000 in your futures account, you 
could buy or sell up to 25 YM contracts.

Many of you are familiar with OEX options, and it's not uncommon 
to see an OEX option with a price of $16 and ten of them would 
require a cash amount of $16,000 to buy or sell ten of these OEX 
options.

A similar $16,000 in a futures account would allow you to day-
trade up to 16 YM Dow futures contracts; and that's the dollar 
amount I will use for the below example.

(note: since I do not have internet access to confirm these 
numbers online, I'm doing them from memory)

TRADE Example 1:
Entry: Open a LONG YM at 8180.
There were 3 Exits on this trade, 1/4 Size for +30, 1/2 size of 
position for +55, and 1/4 Size for +35 to finally go Flat:

Remember, this examples you are using $16,000 of cash in your 
futures account.

Buy     Number of  YM     YM Profit or       Profit or
or Sell Contracts  Price  Loss in YM points  Loss in Dollars
===============================================================
Buy      16       8180           0                 0
Sell      4       8210        + 30      + $ 600 (4x$5x30 YM pts)
Sell      8       8235        + 55      + $2200 (8x$5x55 YM pts)
Sell      4       8215        + 35      + $ 700 (4x$5x35 YM pts)

TOTALS: This example shows a $ 3,500 gain.  Using the $16,000 
amount of money you would have needed to do this trade the $3500 
would represent a hypothetical gain of + 22%.

(As a FYI, the last 4 contracts were "almost" held throughout the 
afternoon. They were not as the Profit trail-stop was hit, but 
merely as example, if they had been held at Break-even stop loss 
instead and held until Dow kissed the 8400 cash number, YM at 
that point was 8385.



Let's redo the above numbers then with those numbers:


Buy     Number of  YM     YM Profit or       Profit or
or Sell Contracts  Price  Loss in YM points  Loss in Dollars
==============================.================================
Buy      16       8180           0                 0
Sell      4       8210        + 30      + $ 600 (4x$5x30 YM pts)
Sell      8       8235        + 55      + $2200 (8x$5x55 YM pts)
Sell      4       8385        +205      + $4100 (4x$5x205 YM pt)

TOTALS:  This example illustrates a potential $ 6,900 gain. Using 
the $16,000 amount of money you would have needed to do this 
trade the $6900 would represent a hypothetical gain of + 43%.


TRADE Example 2:
This trade was a quick scalp from the Dow cash 8400 level rather 
late in the day at 3:30 PM; and had a rather respectable % gain 
in one hour even with the Dow not really moving that much.

Entry: Open a SHORT YM at 8367 (near 3:30 PM)
Exits were for +30, +15, +25 
     Entry time: 3:30 PM. 
     Exit time of final contracts covered to go flat: 4:30 PM
     Total time in trade: one hour

Buy     Number of  YM     YM Profit or       Profit or
or Sell Contracts  Price  Loss in YM points  Loss in Dollars
===============================================================
Short    16       8367           0                 0
Cover     8       8337        + 30      + $1200 (8x$5x30 YM pts)
Cover     4       8352        + 15      + $ 300 (4x$5x15 YM pts)
Sell      4       8342        + 25      + $ 500 (4x$5x205 YM pt

TOTALS: This example shows a potential $ 2,000 gain.  Using the 
$16,000 amount of money you would have needed to do this One-Hour 
trade the $2000 would represent a hypothetical gain of + 12.5%.


Below is a chart showing the Dow cash index during the time of 
these two trades.

Chart: Dow Industrials (cash) for Tues. Oct. 29




I'll now use a prior ES and NQ chart to provide similar possible 
Dollar Profit or Losses. Note, the below trades are merely 
examples and weren't "real" trades, but the math of course is the 
same.



TRADE EXAMPLE 3:


Chart: ES02Z (E-mini SP500 Futures)



ES (E-mini SP500 futures) are worth $50 for each 1 point move, 
and also, on average, have a day-trade margin of $1000 per 
contract. Using the same $16,000 cash in your futures account 
we've used above, you would be able to day-trade up to 16 ES 
contracts. 

You are flat, and near 14:30 (2:30 PM) in the above chart, you 
see the possible double bottom at ES 868. By the time you see the 
trade and get your LONG, ES is at 870.75 x 871.00

ENTRY: LONG 16 ES Contracts at 871.00
Your first exit is on 1/4 of your position size which is 4 
contracts at ES 876; and you exit the remaining 12 contracts at 
881 3:30 PM as there's a possibility the 880 support will fail 
going into the close.

Buy     Number of  ES     ES Profit or       Profit or
or Sell Contracts  Price  Loss in ES points  Loss in Dollars
===============================================================
Buy      16     871.00          0                 0
Sell      4     876.00        + 5      + $1000 (4x$50x5 ES pts)
Sell     12     881.00        + 10     + $6000 (12x$50x10 ES pts)

TOTALS: This example shows a hypothetical gain of $ 7,000.  Using 
the $16,000 amount of money you would have needed to do this 
trade this would have been a potential + 44% gain.  

Time in the Trade : Approx. 90 minutes



TRADE EXAMPLE 4:


Chart: NQ02Z (E-mini NDX Nasdaq 100 Futures)



NQ (E-mini NDX Nasdaq 100 futures) are worth $20 for each 1 point 
move, and also, on average, have a day-trade margin of $1000 per 
contract. Using the same $16,000 cash in your futures account 
we've used above, you would be able to day-trade up to 16 NQ 
contracts. 

You are flat, and near 10:30 AM in the above chart, you see NQ 
trading at known chart support of 955. You decide to open a LONG 
at this support level. By the time you see the trade and get your 
LONG, NQ is at 955.50 x 956.00

ENTRY: LONG 16 NQ Contracts at 956.00

For hours, NQ simply drifts sideways at the 950 level, and you 
maintain your Longs. 
You are using an 8 NQ point stop-loss, or 948 (956-8).
Near 1 PM, NQ breaks down, and your 8 NQ point stop-loss hits on 
the entire position, taking you to FLAT, and giving you a 8 point 
NQ loss on this trade.

Buy     Number of  NQ     NQ Profit or       Profit or
or Sell Contracts  Price  Loss in ES points  Loss in Dollars
===============================================================
Buy      16     956.00          0                 0
Sell     16     948.00        - 8      - $2560 (16x$20x8 NQ pts)


TOTALS: This example shows a loss of $ 2,560.  Using the $16,000 
amount of money you would have needed to do this trade this 
represents a hypothetical loss of - 16%.

Time in the Trade: Approx. 2.5 hours


TRADE EXAMPLE 5:
This example is on a POSITION trade held for two weeks.

On Oct. 10th, the Dow touched 7200.

A few days later, you become bullish and open a POSITION trade of 
LONG YM (Dow $5 Futures) at 7500 and hold it for 2 weeks.
Being well aware of the resistance level in the Dow at 8500, you 
exit the trade at 8500 for 1000 point gain.

Entry: Open a LONG YM at 7500.

The $16,000 cash we've used for each of the above example still 
applies, except there is one important difference. Because we are 
NOT doing a day-trade but are rather taking the position home, 
the margin rules are different. Rather than each YM contract 
requiring cash of $1,000 for daytrading, you are now required to 
have $2,000 (or double) for each YM contract to be taken home. 
Therefore, the number of YM contracts you can buy here is reduced 
from 16 to 8. ($16,000 divided by $2,000 = 8 YM contracts)

Entry: LONG 8 YM contracts at 7500

Exit: SELL (to close) 8 YM contracts at 8500

Buy     Number of  YM     YM Profit or       Profit or
or Sell Contracts  Price  Loss in YM points  Loss in Dollars
==============================.================================
Buy       8       7500           0                 0
Sell      8       8500      + 1000          + $ 40,000 Profit

$40,000 = 8 YM contracts x $5 per point x 1000 points

TOTALS: This two-week example of a major market move illustrates 
a potential $40,000 gain.  Using the $16,000 amount of money you
would have needed to do this trade the $40K represents a 
hypothetical gain of + 250%.

Time in Trade: 2 weeks
Obviously, trades such as this only will occur a few times a year 
at best, but it does show the tremendous possibilities for 
POSITION trading futures once this current market becomes less 
range-bound of ES/SPX 875 to 900.

Lastly, in this last example, it would have been a very smart to 
HEDGE this position by buying some protective DJX (Dow Jones 
Index) puts, perhaps costing $2000 to $3000 to protect yourself 
if you were wrong.

Investors should always remember that there is significant risks 
in trading futures.  The potential gains are balanced by the 
potential risks.  Traders can attempt to limit these risks by 
using stops but there is never a guarantee.


Alan Hewko

As always, any questions or comments, please email them to
futures@OptionInvestor.com



********************
INDEX TRADER SUMMARY
********************

There were times when....

When looking at the charts of various market indexes, sectors and 
individual stocks, there were times today when I thought the 
indexes looked lower, then an hour later, here would come a rally 
and things looked like they might blow up to the upside.  Then 
wait an hour and the proverbial "house of cards," was about to 
crumble.

It wasn't just the equity markets that saw some intraday up and 
down action.  Even the "steadier" bond market seemed uncertain of 
things ahead of tomorrow weekly jobs data and advance Q3 GDP 
data.  The market looks jittery right now and the FOMC meeting 
isn't until next week.  December Treasury futures had Treasuries 
little changed by session's end after early selling, turned to 
buying into the close.  At one point, YIELDS actually turned red 
with bond prices showing gains.  At session's end, Treasury 
futures for the 5, 10 and 30-year traded inside of Tuesday's 
trading range.

If I have one word of wisdom for any trader right now, it would 
be to trade partial positions, have one bullish index trade in 
place and one bearish trade in place.  

Every trader "knows" that if the economy were to every jump back 
into robust growth mode, the technology and perhaps the NASDAQ-
100 Index (NDX.X) 986 +2.63% would stand to benefit most.  
Conversely, if thing go the course of recent past, then it would 
also be the NASDAQ-100 Index that would continue to suffer.

I think it is IMPOSSIBLE to try and predict just how the market 
will respond to a 25 basis point rate cut, which looks to be set 
in stone.  Add to his some comments from Goldman Sachs that the 
Fed will cut 50-basis point on Wednesday, and further uncertainty 
builds.

With Fed funds currently at 1.75%, that give the Fed room for 7 
more 25-basis point cuts.  The bearish economy camp will look 
back at the sharp decline in the Q2 GDP report along with 
plummeting consumer confidence and tell the bull's they're 
dangling at the end of a rope.  A rope where the noose just 
hasn't been tightened enough to bring a bull to his knees.  Some 
think a 25 basis point, let a lone a 50 basis point cut is 
admittance from the Fed at how fragile it views the state of the 
economy.

On the other side of the coin is the bull's camp that springs new 
optimism.  With consumer confidence below last year's recession 
lows and post terrorist levels, the bad news is out.  Bulls will 
say last weeks better than expected jobless data should already 
have consumer confidence beginning to up-tick.  As the Fed lowers 
rates to stimulate economic growth, the rise we're seeing in tech 
and talk of "trough quarters" for the telecom equipment and 
semiconductors sectors will be realized in the months to come.

Dow Industrials Chart - Daily Interval



Dow bull's breathe a sigh of relief today after the triple-bottom 
sell signal in the point and figure chart yesterday.  It would 
take a trade at 8,600 to get the p/f chart back on a buy signal 
and that's where we have horizontal resistance for the Dow over 
the past 8 sessions.  One piece of DIVERGENCE I pick up on the 
Dow's bar chart compared to late August is a bit of a "kink" 
developing in the Stochastics.  We can perhaps see how the 50-day 
SMA comes into play here as the Dow rebounded intra-day yesterday 
from the 50-day SMA.  There's nothing that says MACD has to roll 
over like it did in late August, which had the Dow falling back 
below its 50-day SMA on an extended run lower.  While the Dow 
looks range-bound right now between 8600-8250, there's enough 
uncertainty ahead of next week's Fed meeting and tomorrow's 
economic data that a break from the range, up or down could see 
an extended move take place.  I tend to be more "bullish" the Dow 
from a risk profile and fundamental view of potential economic 
growth.  However, it is concerning that the "generals" of the Dow 
have General Electric (GE) and General Motors (GM) trading more 
like deserters in the scope of a potential economic recovery.

Today's action saw no net change in the very narrow Dow 
Industrials Bullish % ($BPINDU), with current status still "bull 
confirmed" at 56.67%.

S&P 500 Index Chart - Daily Interval



Yesterday's trade at SPX 875 had the SPX giving a double-bottom 
sell signal.  Today's reversal back to 885 then higher has the 
bearish vertical count column now completed and hints of 
potential downside risk to 830.  It would currently take a trade 
back above Monday's spike higher and a trade at 910 to negate the 
current bearish count.  Technology sectors lead the SPX gains 
after IBM executives said they're seeing signs of a bottom in the 
economy.  Networking, Fiber Optic and Wireless sectors were 
bolstered after French telecom service provider Alcatel 
(NYSE:ALA) $5.11 +32.7% reported a net loss of $-1.33 per share, 
compared to the estimate of one analyst that bothers to follow 
the stock and estimate for a $-0.33 per share loss.  Alcatel said 
it has been reducing its debt burden with positive cash flow and 
expects to show a profit in 2003.

Chuckling.... while the MARKET was buying telecom-related sectors 
(I still think bulk of buying is massive profits being taken by 
shorts) on renewed hopes that they will be earnings to the bottom 
line in the future, retailers were seeing selling after Goldman 
Sachs downgraded Wal-Mart (WMT) $53.90 -4.7% saying the stock has 
simply outperformed the S&P 500 by too much the past couple of 
years and trades at a historically high P/E multiple relative to 
the S&P 500.  See what happens to you when you make money, while 
the broader market list of stocks experience bottom line 
slowdowns?  E-gad, I can't figure out these fundamental-based 
analyst calls.

Today's action saw the S&P 500 seeing a net gain of 3 stocks to a 
point and figure buy signal, with the S&P 500 Bullish % ($BPSPX) 
edging back higher to 49.00%.  So far, the internals as depicted 
by the bullish % are mimicking the externals of the S&P 500 and 
current status remains "bull alert."

S&P 100 Index Chart - Daily Interval



Last night's comments about the higher relative low in the OEX 
point and figure chart found some bullish e-mails coming in from 
some longer-term, yet cautious bulls.  Here's a very simplistic 
bar chart.  Suffice it to say, a close below 435 in the OEX would 
be viewed as BEARISH.  The ability for the OEX to hold above its 
old downward trend on a CLOSING basis shows there's still some 
demand to hold the OEX together.  If not, then where the heck 
were bears today when they had every opportunity to put a lid on 
things early in the session?  Just as a trade at 465 would be a 
spread-triple-top buy signal on the OEX p/f chart, then so would 
a break and close above 465 on the bar chart.  When in an UPWARD 
trend, no matter how short, a close above 465 has seen higher 
price follow through.  When in a DOWNWARD trend, no matter how 
short, a close below 435 has seen lower price follow through.

Today's action saw the OEX Bullish % ($BPOEX) rise 1% to 56%.  
This matches Monday's high reading and the internals continue to 
hold up.

NASDAQ-100 Index - Daily Interval



I don't profess to me much of a Bollinger Band technician.  Just 
trying to get a little different look at the NDX.  First glance 
has me thinking the NDX might be losing a bit of steam near-term, 
but a move CLOSE 1,001 could see some more shorts come in to 
cover on a following session.  After a sharp 8 session move 
higher, the last 8 have been bound between 953 and 1001 for he 
most part.  A close below 952 has the 21-day SMA in play at 911.  
If that's broken, the bottom of Bollinger Band and base-
retracement become targets.

It's staggering to look at the NDX on a weekly interval chart.  
While I'm a bit "tongue and cheek" with my Alcatel (ALA) comments 
from above, when you look at the fun bears have had in the NDX 
and technology stocks the past couple of years, a 32% surge in 
ALA seems like a lot.  It is if you initiate a short in the stock 
the day before that kind of move takes place.  However, the 
weekly chart really bring some smelling salts to the table if any 
trader doesn't think there can't possibly be further short-covering
that could take place.

After today's action there was no net change in the NASDAQ-100 
bullish % ($BPNDX).  Current status remains "bull alert" at 54%.  

Jeff Bailey



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**************************
WEEKLY FUND FAMILY PROFILE
**************************

RS Funds 


RS Investments, formerly known as Robertson Stephens Investment 
Management, is a San Francisco-based investment adviser focused 
on equity investments in small- and mid-sized public companies.  
The firm manages over $4 billion in mutual funds, institutional 
accounts, and alternative investments.  Assets under management 
today are less than half what they were in 2000.  RS is perhaps 
best known for their investment ability in identifying emerging 
business trends and analyzing companies involved with the "New 
Economy."

RS manages eleven no-load mutual funds, including eight growth-
oriented funds and three value-driven funds.  According to data 
from Morningstar, the eleven funds total $2.4 billion in assets 
today, though 70% of total fund assets are held in two RS funds: 
Emerging Growth (RSEGX) and Diversified Growth (RSDGX).  The RS 
Emerging Growth Fund ($1.2 billion), the firm's flagship mutual 
fund, is small-cap growth oriented, but currently closed to new 
investors.  The RS Diversified Growth Fund ($0.5 billion) has a 
small-cap growth bias as well, and is currently open.  

The RS Funds may be purchased directly or through the major fund 
networks on a no-load, no-transaction fee (NTF) basis.  Expenses 
range from 1.33% to 1.88% of assets, using data from Morningstar.  
For complete fund information, call the RS Funds at 800-766-3863 
or log on to www.rsfunds.com.  Please read the prospectus before 
investing.


Firm History


Robertson Stephens Investment Management (RSIM) was established 
in 1981 as a subsidiary of Robertson Stephens & Co., a private 
investment-banking firm serving the "equity" financing needs of 
emerging growth companies.  RSIM was organized to leverage the 
parent company's underwriting, financing, trading, and venture 
capital expertise.

In 1997, Robertson Stephens & Company's investment banking and 
asset management entities were sold to Bank of America, but in 
1999, RSIM executives negotiated a buyout with Bank of America 
and the firm returned to private ownership.  The firm is today 
independent and employee-owned.


Fund Overview


As stated earlier, RS Investments manages eight growth-driven 
funds and three value-driven funds.  A summary is shown below.

 RS Growth Funds:
 Aggressive Growth Fund (RSAGX) Multi-Cap Growth
 Diversified Growth Fund (RSDGX) Small-Cap Growth
 Emerging Growth Fund (RSEGX) Small-Cap Growth (Closed)
 Information Age Fund (RSIFX) Sector
 Internet Age Fund (RIAFX) Sector
 MidCap Opportunities Fund (FSMOX) Mid-Cap Growth
 Smaller Company Growth Fund (RSSGX) Small-Cap Growth
 Value + Growth Fund (RSVPX) Multi-Cap Growth

 RS Value Funds:
 Contrarian Fund (RSCOX) Mid-Cap Value
 Global Natural Resources Fund (RSNRX) Sector
 Partners Fund (RSPFX) Small-Cap Value

At RS Investments, research is the cornerstone of the investment 
process and culture.  Their investment professionals perform on-
site meetings, discussions with company management, and in-depth 
financial analysis.  RS analysts combine hands-on experience and 
an in-depth, industry knowledge in identifying opportunities and 
offer investment insight.

The RS website states that the secret to their performance is in 
their "people."  The firm's focus is on their team of investment 
professionals and the passion that they bring to their portfolio 
management roles.  Most of them are focused primarily on the New 
Economy.  Each RS fund features one or more focused entrepreneur 
("portfolio manager") at the reins.  The firm contends that it's 
well positioned to stay connected with New Economy companies and 
venture capitalists being headquartered in San Francisco.

Jim Callinan is managing director and portfolio manager with RS 
Investment Management, his employer since June 1996.  Before he 
joined RS, Callinan spent nine years with Putnam Investments as 
senior VP and portfolio manager.  Callinan manages the flagship 
Emerging Growth Fund (closed) and Aggressive Growth Fund, which 
was launched in May 2000 following the close of Emerging Growth 
Fund.  It can invest in companies of any size and has a "multi" 
cap growth style.  Callinan is one of three co-managers running 
The Information Age Fund and the RS Internet Age Fund.

John Wallace is another star growth manager with RS Investments, 
his employer since 1995.  Previously, he was a VP and portfolio 
manager with Oppenheimer Management Corporation for nine years.  
He co-manages Diversified Growth Fund, a small-cap growth fund, 
along with John Seabern, and is sole manager of two mid-growth 
products: MidCap Opportunities Fund and RS Value & Growth Fund.

Andy Pilara is a managing director with RS Investments and runs 
the show on the value side.  He joined the firm in 1993 and had 
his own investment advisory firm named Pilara Associates before 
joining RSIM (now RS Investments).  Prior to that, he worked in 
institutional sales with Dean Witter Reynolds.  Wallace is sole 
manager of three RS value-oriented funds: Partners Fund, Global 
Natural Resources Fund, and The Contrarian Fund.

Note that the firm's board of trustees has approved a merger of 
the RS Aggressive Growth Fund into the RS Emerging Growth Fund, 
and will seek shareholder approval later this year.  Both funds 
are managed by Jim Callinan.  Because of the contraction in the 
value of large-cap growth stocks, many of the stocks previously 
off limits for purchase by the RS Emerging Growth portfolio are 
now available for investment.  This merger would allow Callinan 
and his team of analysts to focus effort on a single investment 
portfolio of smaller, rapidly growing companies.  It would also 
likely reduce expenses for Aggressive Growth fund shareholders. 


Favorite Funds


Should the RS Emerging Growth Fund reopen to new investors, the 
flagship fund run by Jim Callinan would be worth considering if 
small-cap growth stocks lead the way as they often do following 
recessions.  In 1999, this fund delivered an astonishing 182.6% 
total return for investors to rank in the 2nd percentile of the 
small-cap growth category, per Morningstar.  The average small-
cap growth fund that year earned a whopping 62.6% total return.      
 



In April 2000, RS Emerging Growth Fund closed to new investors.  
It has since fallen on hard times like so many pro-growth fund 
portfolios.  If you look at this fund's long-term track record, 
however, you can see that it has added value.  For the 10-year 
period as of September 30, 2002, Emerging Growth Fund returned 
10.3% a year on average, a 1.3% advantage to the S&P 500 large-
cap index and 3.3% better than the Russell Midcap Growth index.  
The fund's performance over the last ten years, which Callinan 
deserves partial credit, ranks it in the top quintile (20%) of 
the Morningstar small-cap growth category.

If you seek small/mid-cap growth exposure today, you might want 
to consider one of the portfolios John Wallace manages is or co-
manager of.  We like the RS Value + Growth Fund (RSVPX), though 
Wallace replaced former fund manager Ron Elijah in mid-2001, so 
you can't attribute the fund's track record to him.  It invests 
primarily in equity securities of mid- and large-cap companies 
(market caps over $1.5 billion) and has a multi-cap growth bias 
overall.  Those seeking specific exposure to mid- and small-cap 
growth stocks may consider the RS Diversified Growth Fund or RS 
MidCap Opportunities Fund.  The Diversified Growth Fund (RSDGX) 
invests primarily in small-growth companies but can invest some 
assets in large companies and attempts to be fairly diversified 
across industry sectors (hence it's name).




Like RS Emerging Growth Fund, the RS Diversified Growth Fund put 
up great numbers from 1997 to 1999, including a 150.2% return in 
1999.  Like its small-cap growth sibling, the Diversified Growth 
Fund has since struggled in the market correction.  Again, it is 
helpful to look at this fund's track record over a longer period.  

For the trailing 5-year period through October 29, 2002, Wallace, 
Seabern and their team of analysts produced a 4.6% average total 
return for investors.  That beat the S&P 500 index by an average 
of 4.0% a year and the Russell 2000 Growth index by 12.5% a year, 
ranking in the top 15% of the small-cap growth fund category per 
Morningstar. 

The RS Partners Fund (FSPFX), run by Andy Pilara, is the value-
driven product we like the best.  In that fund, Pilara normally 
invests in stocks of companies with market caps of $1.5 billion 
or less that the firm believes are undervalued.   However, note 
that Morningstar has put the fund in its small-cap growth style 
box since 2001, a bit of a contradiction to its value-oriented 
approach.  Morningstar also compares the Partners Fund against 
"world stock" funds, with roughly 16% of stock assets invested 
abroad, per the latest fund report.  So, it is not your typical 
small-cap value product.


 

Pilara's undervalued approach has produced superior returns over 
the last three years.  According to Morningstar, the fund sports 
an annualized total return of 15.63% for the 3-year period ended 
October 29, 2002, ranking in the best 1% of the world stock fund 
category.  That average return was 28.6% better than the average 
return generated by the MSCI World index.  The fund's annualized 
return of positive 0.8% over the past five years just missed the 
first quartile within the category and represented a 5.7% return 
advantage to the MSCI World benchmark.

One of Pilara's other charges, RS Global Natural Resources Fund, 
has a positive YTD total return of 11.5% as of October 29, 2002.


Conclusion


It should be noted that some of the RS growth funds, such as the 
Emerging Growth and Diversified Growth portfolios, have greater-
than-average volatilities.  Like Alger, Janus, Berger, and other 
pro-growth managers, these growth-driven funds will run with the 
bulls and tank with the bears.  Accordingly, they're geared more 
to risk-tolerant investors who can stomach such NAV fluctuations.

Even RS Partners Fund has fallen into Morningstar's small-growth 
style box, so it seeks value opportunities in growth equity turf, 
both domestically and abroad.  Those with less cast-iron stomachs 
may prefer Pilara's undervalued growth style to the other growth 
funds offered by Robertson Stephens.  Its risk or volatility has 
been closer to that of the stock market (S&P 500 index as proxy).

Because the RS growth funds and RS value funds have outperformed 
at different times, you may want to hedge your bets by investing 
in one growth product and one value product to obtain an overall 
"blend" style.  For more information, log on to www.rsfunds.com.


Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com


***********
OPTIONS 101
***********


Important Changes in the VIX
by Mark Phillips
mphillips@OptionInvestor.com

Those of you that have been following my rambling discourse on
the VIX over the past month already know that we've seen 3 months
of unprecedented high levels of volatility in the markets.  I've
penned a couple of articles recently trying to ascertain what the
VIX might be trying to tell us about what is happening, and more
importantly, what might be about to happen.  Since I don't want
to rehash our prior discussions today, if you're just tuning in,
be sure to check out the prior articles in this series.

Looking For Odd Clues
What's Wrong With The VIX?

I was looking for the VIX to break out of its recent 39-51 range
to give some sort of indication as to whether to favor the upside
or downside for the broad market.  Remember that historically, a
high VIX (above 30) has been a time to buy, while a low VIX (below
20) has been a signal to sell.  Needless to say, those simple
rules haven't provided much useful guidance over the past 3
months, as the VIX has stubbornly remained above the 30 level
since the first week in July!  Granted, my VIX charts only go
back to 1994, limiting my field of view to bull market conditions,
but late 1998 is the only other time period that showed sustained
high volatility.  And that period of VIX greater than 30 'only
lasted for a little less than 2 months.  So I continue to believe
that we are in uncharted territory here.

In the past few months, we've had several instances where the VIX
has spiked over 50, and we have had a couple of explosive rallies
off the lows, the first one amounting to about 1545 DOW points and
the second one delivering 1350 points so far.  In all that time,
the VIX has not cracked the 30 level.  What could this strange
behavior be telling us?  Simply put, it tells us that option
sellers are much more unsure of themselves (and the markets) are
demanding a much fatter premium before they are willing to write
those options.  That's what the VIX always measures -- the degree
of uncertainty or fear that exists in the marketplace at any
given point in time.

By historical measures, we really are in uncharted territory, but
that doesn't mean we can't use the tools we are familiar with to
start charting this unfamiliar land in which we find ourselves.
That is what I attempted to do in the prior two articles, and the
way things have shaped up in the past week, it looks like we might
have stumbled onto something useful.

Things started getting interesting last Thursday, with the VIX
falling to the 38 level intraday, hinting perhaps that some of the
fear was dissipating.  But the action really heated up on Friday
with the strong rally into the closing bell that drove the VIX
down near the 36 level.  I went into the significance of that
move in the LEAPS commentary last weekend, and if you're
interested in catching up, you can read all about it HERE.

The way I see it, something fundamental changed in the market
late last week that caused a portion of that 'fear premium' to
disappear EVEN BEFORE the strong afternoon rally.  That hypothesis
has been put to the test this week and I think it has held up
rather well.

Comparison of S&P 100 Index (OEX) To VIX - 30 Minute Interval



Isn't it interesting how the VIX and OEX diverged late last week,
and that divergence has continued this week.  While the VIX found
a floor (support) near 38 on Thursday, that level provided
resistance on Tuesday, despite the fact that the OEX actually
traded at a LOWER level than it did last Thursday and Friday.
Certainly we would have expected the VIX to trade a bit lower
on Monday, with the OEX moving slightly above the highs of last
Thursday, but if everything had remained the same, the sharp
selloff yesterday 'should' have driven the VIX back above 40.
That didn't happen, and so we can reasonably conclude that
something significant has changed.

I believe what has changed is that option writers are not as
uncertain about the direction of the market as they were a week
ago.  That doesn't mean that I think we have a strong rally ahead
of us.  What it means is that those who are writing the options
feel the risks of a dramatic selloff in the near term have been
reduced.  Perhaps it is expectations of an interest rate cut by
the Fed, or maybe they are looking at the seasonal pattern where
the markets have a tendency to put in a bottom in late
October/early November.  It could even be related to expectations
of the markets behaving better heading into the 
mid-term election.  One thing that I know isn't responsible is
an improving economic picture.  The abysmal Consumer Confidence
numbers yesterday bear that out, and yet the markets rebounded
and the VIX remained fairly muted, even on the early selloff.

Monday's low print on the VIX was 34.20, which marked its lowest
level since August 28th.  And turning once again to the Point
and Figure chart on the VIX, the column of O's on the current
Sell signal extended to 15 O's.  Performing a quick vertical
count calculation produces a 'target' of 19 for the VIX.  Don't
for a minute think that I give that target much credence.  I
think the likelihood of the VIX moving into the lower end of
its historically normal range in the next 30-60 days is remote,
at best.  But we can't argue with the fact that the current
VIX chart is the most equity-friendly it has been since late
August.  I would need to see the VIX moving back above 42
before I would be concerned that the 'equity-friendly' tone
had appreciably changed for the near term.

Let's turn our attention to the bigger picture on the VIX and
where it might be headed.  Recently I've had several readers
that have asked if perhaps the VIX is changing its spots and
moving into a new permanently higher range.  It's certainly a
valid question, given the high levels of volatility we have seen
over the past couple years.  But there just isn't enough data to
make that sort of assessment.  Looking at a monthly chart of the
VIX for the period of time for which Qcharts provides data shows
periodic excursions out of the 20-30 range, from which it always
reverts back to the mean.  To be sure, this is the longest
excursion out of the range that we can see on this chart.

Monthly Chart of the VIX



You can see in the chart above that the floor near 20 is very
consistent for the VIX range, while we occasionally get
excursions to the upside that become rather extended both in
terms of magnitude and duration.  While this chart is limited
to looking back to mid-1997, I did manage to pull up a chart of
the VIX on BigCharts.com that goes back to 1993.  As you can see,
the VIX was confined to a much narrower range between 1993 until
early 1997.  Then the VIX broke into its current 20-30 range
that we are familiar with.

Weekly Chart of the VIX Going Back to 1993



So what would we need to see to make the statement that the VIX
is moving into a permanently higher range?  First off, we need
to see the VIX come down and test the 30 level as support over
a period of several months.  We got that first test in August,
and we might just get another test over the next few weeks.  If
we are going to label the VIX as having moved into a new, higher
range, I would want to see from 3-5 successful rebounds from the
vicinity of 30, without spending any significant time down in its
historical 20-30 range.  To make that determination, we're going
to need more time.  But if I had to hazard a guess, I would say
the answer is no.  I believe the VIX will eventually fall back
into the range it has maintained over the past 5 years, although
we will continue to have periodic excursions outside of that
range.

The one big wild card in the whole shooting match is the makeup
of trading volume in the equity markets.  I believe a big part
of the recent rise in the VIX is due to the fact that a much
larger percentage of overall trading volume is coming from the
proliferation of hedge funds and program trading.  I think this
adds to the volatility and that is reflected in a higher VIX
reading.  If we remain in an environment that is dominated by
this sort of trading, then I would say yes, it is possible that
the VIX is moving to a higher range.  But, even in that case, we
are going to need to see the passage of a lot more time before
we can make a definite determination of the new/old long-term
range for the VIX.  Until then, let's stick with what we know for
sure.  And that boils down to trading as we have, based on the
historical observations and looking for important inflection
points in the charts like what we have seen over the past week.

I sure hope that helps!  If you've got any questions on this
topic, or another one that you'd like me to address in a future
article, be sure to send me an email and I'll address them as
time permits.

For all the rest of you big kids out there (like me), be sure
to have a Happy Halloween!

Mark

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***********************
SWING TRADER GAME PLANS
***********************

Getting Weaker 

The markets finished in the positive but the underlying 
strength was far from exciting. The afternoon rally was 
much weaker and could not hold the highs from earlier in 
the day. It was reported that equity funds saw outflows of
-$16.1 billion in September and it was the fourth month 
in a row for net withdrawals. All indications are that 
October has not changed and funds are still bleeding cash.


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The Option Investor Newsletter                Wednesday 10-30-2002
Copyright 2002, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.

In Section Two: 
Stop Loss Updates: TRMS, HIG
Dropped Calls: None
Dropped Puts: None
Play of the Day: Call - TRMS
Big Cap Covered Calls & Naked Puts: 

Updated on the site tonight:
Market Watch
Market Posture

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

TRMS - call
Adjust from $48 up to $50

HIG - put
Adjust from $49.50 down to $45.00



***********************************************************
DROPS
***********************************************************

calls
^^^^^

none


puts
^^^^

none




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

TRMS -Trimeris - $53.35 +1.50 (+2.11 for the week)

Company Summary:
Trimeris, Inc. is a biopharmaceutical company engaged in the 
discovery and development of novel therapeutic agents for the 
treatment of viral disease. The core technology platform of 
fusion inhibition is based on blocking viral entry into host 
cells. Trimeris has two anti-HIV drug candidates in clinical 
development. FUZEON, currently in Phase III clinical trials, is 
the most advanced compound in development. A New Drug Application 
(NDA) and Marketing Authorisation Application (MAA) have been 
submitted for FUZEON with the US FDA and the EU EMEA, 
respectively. Trimeris' second fusion inhibitor product 
candidate, T-1249, has received fast track status from the FDA 
and is in Phase I/II clinical testing. Trimeris is developing 
FUZEON and T-1249 in collaboration with F. Hoffmann-La Roche. 
(source: company release)

Most Recent Write Up:

Trimeris has re-tested support at $50 several times this week, 
but has rebounded  to put together a series of higher lows the 
last three days.  It also broke through $52 intraday, a level it 
hasn't seen since May.  The stock traded as high as $52.28 this 
morning, before pulling back with the rest of the broader 
markets.  It found support, however, at $51 and then made another 
run at $52 into the close.  While it was unable to hold this 
level, the fact is that it continues to set higher highs. It also 
added another box the point and figure chart.  The recent $51 box 
constituted a spread triple top breakout, which carries with it 
the possibility of a bull trap.  A bull trap is a one-box 
breakout on a triple top, followed by a quick reversal down.  The 
trade of $52 got us past this possibility and also broke above 
the previous top on the bearish resistance line.   The current 
bullish vertical count for TRMS is $77, but achieving that count 
will likely depend on the success of the company's new HIV drug, 
which is currently under FDA priority status review, and should 
receive a decision by March 16.   New entries can look for 
intraday support over $52.  Place stops at $48.00.

Why This Is Our Play of the Day:

Trimeris has been moving sideways the last two weeks, after 
finding new support over $50.  The stock has pulled back on 
several occasions, before taking runs at successively higher 
levels. TRMS experienced a spread triple top point and figure 
breakout at $51, then tacked on another box at $52 to get us past 
the possibility of a bull trap.  The next barrier was the $53.20 
mark, which had served as intraday resistance all the way back in 
May.  The stock not only traded through that level intraday, but 
closed above it today, at $53.35.  A look at the weekly chart of 
TRMS shows a steady series of higher lows, along an ascending 
trendline from September 2001.  The last time the stock closed 
above $53 was in January of 2001 and the next level of resistance 
looks like $55, followed by $57.50.  While we wouldn't normally 
pick a stock with $1.65 to the next resistance level as our play 
of the day, this breakout has come as the company is getting 
close to market with its new HIV drug.  Rather than a possible $1 
billion a year in revenue being speculative, and years away, we 
are now only a few months from the FDA's March 16 decision 
deadline. We feel this time frame can get the stock rolling, now 
that it has hit another relative high.  Traders may want to look 
for a pullback above $52 for ideal entry, as that was the most 
recent resistance level the last several days.  It will also 
prove to us that prior resistance has now become support, as well 
as maximizing profits.  Momentum traders can look for intraday 
support over $53 as a sign to initiate long positions. 


BUY CALL NOV-50*RQM-KJ OI= 1127 at $4.90 SL=2.50
BUY CALL NOV-55 RQM-KK OI=  337 at $1.70 SL=0.75
BUY CALL DEC-50 RQM-LJ OI=   20 at $7.00 SL=3.50
BUY CALL DEC-55 RQM-LK OI=    7 at $3.50 SL=1.75

Average Daily Volume = 523 k



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**************
MARKET POSTURE
**************

Non-Committal

To Read The Rest of The OptionInvestor.com Market Watch Click Here
http://www.OptionInvestor.com/marketposture/mp_103002.asp


************
MARKET WATCH
************

Leaning  Bearish

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*********************************************
SPREADS, COMBINATIONS & PREMIUM-SELLING PLAYS
*********************************************
Optimistic Investors Buy The Dip!
By Ray Cummins

Stocks moved higher Wednesday after some positive comments from
Big Blue's (IBM) CEO, which led to a rally in computer hardware
issues.

The Dow Industrial Average advanced 58 points to 8,427, buoyed by
gains in blue-chip computer, financial and drug components.  The
NASDAQ also surged, up 26 points to 1,326 as networking companies
soared higher on reassuring revenue comments from France's Alcatel
(NYSE:ALA).  Telecom, semiconductor and Internet stocks also rose.
In the broader market groups, oil shares rebounded from a recent
slump and utility, biotechnology, airline, and banking issues were
generally higher.  Retail stocks under-performed after a downgrade
of Wal-Mart (NYSE:WMT).  The Standard & Poor's 500 Index climbed 8
points to 890.  Trading volume came in at 1.4 billion on the NYSE
and at 1.6 billion on the technology exchange.  Advancers outpaced
decliners by roughly 5 to 3 on both the Big Board and the NASDAQ.
Treasury issues retreated amid gains in the equity markets and the
Fed's announcement of a quarterly refunding auction of $22 billion
in 5-year treasury notes and $18 billion in 10-year treasury notes.
The 10-year note slumped 6/32 to yield 3.96% while the 30-year bond
slipped 1/4 to yield 5.03%.

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

SUMMARY OF CURRENT POSITIONS - AS OF 10/29/02

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

The following summary is a reasonable account of the positions
previously offered in this section.  However, no representation
is being made as to the actual performance of a position and in
fact, there are frequently large differences between the summary
results and those of actual traders, due to the variety of ways
in which each play can be opened, closed, and/or adjusted.  In
addition, the summary might not be completely representative of
the manner in which the average trader would react to changing
conditions in a position and to the options market in general.
The play commentary (when provided) is simply a service to help
new traders understand when positions might be opened and closed.
In most cases, actions taken based on the commentary would be far
too late to be effective, thus it is not intended as a substitute
for personal trade management nor does it replace your duty to
diligently monitor and manage the positions in your portfolio.


Naked Puts

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

GILD     NOV    25   24.35  33.87   $0.65    7.03%
TARO     NOV    27   26.90  34.20   $0.60    5.41%
AMGN     NOV    40   39.40  48.68   $0.60    5.34%
ATH      NOV    65   63.80  65.58   $1.20    5.16% *
ERTS     NOV    55   54.30  63.45   $0.70    4.50%
FRX      NOV    90   88.20  98.75   $1.80    5.14%
INVN     NOV    22   22.10  35.30   $0.40    5.46%
OVER     NOV    22   22.10  27.64   $0.40    5.98%
TRMS     NOV    40   39.35  51.85   $0.65    5.61%
WMT      NOV    50   49.25  56.47   $0.75    4.27%
AZO      NOV    75   74.25  84.30   $0.75    4.30%
CCMP     NOV    35   34.10  43.23   $0.90   11.63%
CEPH     NOV    40   39.40  50.60   $0.60    7.02%
CTSH     NOV    55   54.40  67.05   $0.60    5.56%
INVN     NOV    25   24.70  35.30   $0.30    5.38%
SLM      NOV    95   93.90  102.09  $1.10    4.55%
SRCL     NOV    30   29.70  36.35   $0.30    4.70%

Anthem (NYSE:ATH) is a candidate for early exit as the
issue has fallen below a recent technical support area.

  
Naked Calls

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

KSS      NOV    65    65.90  58.25   $0.90   5.79%
SIAL     NOV    50    50.75  44.84   $0.75   5.07%
BZH      NOV    75    75.90  66.15   $0.90   6.61%
DHR      NOV    70    70.85  57.86   $0.85   6.73%
SPW      NOV    52    52.85  41.00   $0.35   5.09%


Put-Credit Spreads

Stock                                             Gain
Symbol  Pick   Last  Month L/P S/P Credit  C/B   (Loss) Status

INTU    45.90  49.40  NOV   35  40  0.60  39.40  $0.60  Open
MME     38.08  37.50  NOV   30  35  0.55  34.45  $0.55 Closed
HCA     51.18  48.18  NOV   45  48  0.30  47.20  $0.30 Closed
UNH     97.98  94.68  NOV   85  90  0.65  89.35  $0.65  Open
EBAY    63.51  61.18  NOV   50  55  0.45  54.55  $0.45  Open
FPL     57.52  59.05  NOV   45  50  0.40  49.60  $0.40  Open
RKY     69.30  69.59  NOV   60  65  0.75  64.25  $0.75  Open

Mid-Atlantic Medical Services (NYSE:MME) and HCA Inc (NYSE:HCA)
both succumbed to the selling pressure in the health services
segment thus conservative traders should consider exiting these
position to lock-in profits and/or limit losses.  Also, traders
should monitor United Health Group (NYSE:UNH) for a move below
$92, which would suggest the beginning of a new bearish trend.

 
Call-Credit Spreads

Stock                                             Gain
Symbol  Pick   Last  Month L/C S/C Credit  C/B   (Loss) Status

AHC    62.35   49.68  NOV   75  70  0.60  70.60  $0.60   Open
HET    44.70   42.73  NOV   55  50  0.50  50.50  $0.50   Open
TLM    35.81   35.08  NOV   45  40  0.50  40.50  $0.50   Open
TEVA   64.90   71.05  NOV   75  70  0.90  70.90 ($0.15) Closed
CB     58.53   54.85  NOV   70  65  0.60  65.60  $0.60   Open
RCII   44.16   44.96  NOV   55  50  0.50  50.50  $0.50   Open

The previously closed position in H&R Block (NYSE:HRB) is now
positive (Murphy's Law!) and today's move to a recent high in
Teva Pharma (NASDAQ:TEVA) suggests further upside activity in
the issue.  Conservative traders should consider exiting the
position to limit losses.


Credit Strangles

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

CDWC     NOV     55C    56.10   48.87   $1.10    7.51%
CDWC     NOV     40P    38.85   48.87   $1.15    9.04%
GILD     NOV     40C    40.50   33.87   $0.50    5.77%
GILD     NOV     27P    26.90   33.87   $0.60    7.46%
CCR      NOV     55C    55.75   50.55   $0.75    6.09%
CCR      NOV     40P    39.50   50.55   $0.40    5.05%


Synthetic Positions:

Stock  Pick     Last    Position   Credit   C/B    M/V   Status

THC    51.55   39.25   NOV55C/46P   0.00   46.62   0.10  Closed
ANSI   37.38   31.40   NOV40C/35P	0.10   34.90   0.80  Closed

The previously closed position in Expedia (NASDAQ:EXPE) was big
winner during the market downturn and Advanced Neuromodulation
(NASDAQ:ANSI) offered an acceptable early-exit profit (on 10/11)
when the issue rallied to a new high at $39.01.  However, both
ANSI and Tenet Healthcare (NYSE:THC) should have been closed
when they broke below recent (bullish) trend-lines.

Questions & comments on spreads/combos to Contact Support
***************

NEW POSITIONS

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.  The positions with *** will be included
in the weekly summary.  Those with "TS" (Target-Shoot) are below
our minimum monthly return but may offer a favorable entry price
with a limit order, due to the daily volatility of the underlying
issue.

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

BULLISH PLAYS - Premium Selling

All of these issues have robust option premiums and relatively
favorable technical indications.  However, current news and market
sentiment will have an effect on these stocks, so review each play
thoroughly and make your own decision about its future outcome.

***************
CCMP - Cabot Microelectronics  $45.84  *** Premium Selling! ***

Cabot Microelectronics (NASDAQ:CCMP) is a global supplier of high
performance polishing slurries used in the manufacture of advanced
integrated circuit (IC) devices, within a process called chemical
mechanical planarization (CMP).  CMP is a polishing process used
by IC device manufacturers to planarize or flatten many of the
multiple layers of material that are built upon silicon wafers
and necessary in the production of advanced ICs.  Planarization is
a polishing process that levels, smoothes, and removes the excess
material from the surfaces of these layers.  CMP slurries are
liquid formulations that facilitate and enhance this polishing
process and generally contain engineered abrasives and proprietary
chemicals.  CMP enables IC device manufacturers to produce smaller,
faster and more complex IC devices with fewer defects.

CCMP - Cabot Microelectronics  $45.84

PLAY (sell naked put):

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

SELL PUT  NOV 35   UKR WG    2,344    0.30    34.70      5.9% ***
SELL PUT  NOV 40   UKR WH    1,498    1.05    38.95     15.3%
SELL PUT  NOV 45   UKR WI    1,798    2.50    42.50     24.4%


***************
CDWC - CDW Computer Centers  $51.80  *** A Big Day! ***

CDW (NASDAQ:CDWC), ranked #414 on the Fortune 500, is a leading
provider of technology solutions for businesses, government
agencies and educational institutions nationwide.  CDW is a
principal source of technology products and services including
top name brands such as Cisco, Compaq, Computer Associates,
Hewlett-Packard, IBM, Intel, Microsoft, and Toshiba.  The firm
distributes contracts to various end users for both customized
and standardized on-site services supplied directly by providers
such as HP Services and Unisys and for training programs provided
by firms such as KnowledgeNet and Productivity Point International.
CDWC was founded in 1984 as a home-based business and today employs
2,800 coworkers whose efforts generated net sales of $4 billion in
2001. CDW's direct model offers one-on-one relationships with its
knowledgeable account managers; purchasing by telephone, fax, the
company's award-winning site or customized CDW@work(TM) extranets;
custom solutions and daily shipping; flexible financing solutions;
and pre- and post-sales technical support, with factory-trained and
A+ certified technicians on staff.

CDWC - CDW Computer Centers  $51.80

PLAY (sell naked put):

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

SELL PUT  NOV 45   DWQ WI    1,328    0.60    44.40      7.9% ***
SELL PUT  NOV 50   DWQ WJ      419    1.40    48.60     13.1%


***************
COCO - Corinthian Colleges  $39.72  *** Solid Earnings! ***

Corinthian Colleges (NASDAQ:COCO) is one of the largest for-profit
post-secondary education companies in the United States.  As of
September 30, 2002, the company operated 64 colleges in 21 states
including 16 in California and 12 in Florida.  Upon the opening of
the previously announced four new branch campuses in Dallas (2),
Austin (1), Texas, and Norcross (1), Georgia, the firm will operate
68 colleges in 21 states.  Corinthian serves the large and growing
segment of the population seeking to acquire new, career-oriented
education to become more qualified and marketable in today's
increasingly demanding workplace environment.

COCO - Corinthian Colleges  $39.72

PLAY (sell naked put):

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

SELL PUT  NOV 32.5 UCS WZ     187     0.35    32.15      7.4% ***
SELL PUT  NOV 35   UCS WG     381     0.75    34.25     12.0%


***************
GILD - Gilead Sciences  $34.60  *** Still In A Range! ***

Gilead Sciences (NASDAQ:GILD) is an independent biopharmaceutical
company that discovers, develops and commercializes therapeutics
to advance the care of patients suffering from life-threatening
diseases.  The company has five products that are marketed in the
United States and in other countries worldwide.  These are Viread,
a drug for treating HIV infection; AmBisome, a drug for treating
and preventing life-threatening fungal infections; Tamiflu, a drug
for treating and preventing influenza; Vistide, a drug for treating
cytomegalovirus (or CMV) retinitis in AIDS patients, and DaunoXome,
a drug for treating AIDS-related Kaposi's sarcoma.

GILD - Gilead Sciences  $34.60

PLAY (sell naked put):

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

SELL PUT  NOV 30   GDQ WF    2,584    0.45    29.55      8.8% ***
SELL PUT  NOV 32.5 GDQ WZ      546    1.00    31.50     14.9%


***************
KLAC - KLA-Tencor  $36.28  *** Semiconductor Rally! ***

KLA-Tencor (NASDAQ:KLAC) is a supplier of process control and
yield management solutions for the semiconductor and related
microelectronics industries.  The firm's comprehensive portfolio
of products, software, analysis, services and product expertise
is designed to help integrated circuit (IC) manufacturers manage
yield throughout the entire wafer fabrication process, from
research and development to final mass production yield analysis.
 
KLAC - KLA-Tencor  $36.28

PLAY (sell naked put):

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

SELL PUT  NOV 30   KCQ WF   20,160    0.50    29.50     10.9% ***
SELL PUT  NOV 35   KCQ WG    5,322    1.65    33.35     21.1%


***************
NBIX - Neurocrine Biosciences  $44.28  ** Earnings Due! ***

Neurocrine Biosciences (NASDAQ:NBIX) develops and intends to
commercialize drugs for the treatment of neurologic and endocrine
system-related diseases and disorders.  The company's product
candidates address a number of worldwide pharmaceutical markets,
including insomnia, anxiety, depression, cancer, diabetes and
multiple sclerosis.  The company has approximately 15 products in
various stages of research and development, including 7 programs
in clinical development.  The company's lead clinical development
program is a drug for the treatment of insomnia which is being
evaluated in Phase III clinical trials.  The company's earnings
are due after the market closes today (10/30/02).

NBIX - Neurocrine Biosciences  $44.28

PLAY (sell naked put):

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

SELL PUT  NOV 35   UOT WG      647    0.40    34.60      8.2% ***
SELL PUT  NOV 40   UOT WH    1,496    1.05    38.95     13.8%


***************
NVLS - Novellus Systems  $32.33  *** Chip Sector Favorite! ***

Novellus Systems (NASDAQ:NVLS) manufactures, markets and services
semiconductor processing equipment.  The company's products are
comprised of advanced systems used to deposit thin conductive and
insulating films on semiconductor devices, as well as equipment
for preparing the chip's surface before these deposition processes.
Novellus is a supplier of high productivity deposition and surface
preparation systems used in the fabrication of integrated circuits.
Chemical Vapor Deposition systems use chemical plasmas to deposit
all of the dielectric (insulating) layers and certain of the metal
(conductive) layers on the surface of a semiconductor wafer.  The
Physical Vapor Deposition systems are used to deposit conductive
metal layers by sputtering metallic atoms from the surface of a
target source via high DC power.  Electrofill systems are used for
depositing copper conductive layers in a dual damascene design
architecture using an aqueous solution.

NVLS - Novellus Systems  $32.33

PLAY (sell naked put):

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

SELL PUT  NOV 27.5 NLQ WY    1,320    0.45    27.05     10.0% ***
SELL PUT  NOV 30   NLQ WF    4,156    1.00    29.00     16.4%


***************
QLGC - Qlogic  $35.45  *** On The Rebound! ***

QLogic (NASDAQ:QLGC) designs and supplies unique storage network
infrastructure components and software for server and storage
subsystem manufacturers.  The company's products are based on
SCSI, iSCSI, Fibre Channel and Infiniband standards.  The firm is
an end-to-end supplier of Fibre Channel network infrastructure
components that aid in the transfer and acquisition of data within
the SAN.  Products include its SANblade HBAs, SANbox Fibre Channel
Switches and SANsurfer Tool Kit management software.  QLogic is
the only HBA vendor to support SCSI, Internet Protocol, Virtual
Interface and FICON protocols with the same Fibre Channel HBA.  In
addition, the company designs and supplies controller chips used
in hard drives and tape drives as well as enclosure management and
baseboard management chip solutions that monitor the health of the
physical environment within a server or storage enclosure.  

QLGC - Qlogic  $35.45

PLAY (sell naked put):

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

SELL PUT  NOV 27.5 QLC WY    2,565    0.30    27.20      7.7% ***
SELL PUT  NOV 30   QLC WG    1,409    0.50    29.50     10.3%
SELL PUT  NOV 32.5 QLC WZ    2,170    0.95    31.55     14.8%


***************
SRCL - Stericycle  $35.42  *** Trading Range? ***

Stericycle (NASDAQ:SRCL) is a leading provider of waste management
services in the United States.  Stericycle operates on a regional
basis and internationally, providing waste collection, treatment,
and disposal services.  The company also has a fully integrated,
national medical waste management network.  Stericycle's network
includes 36 treatment/collection centers and 94 additional transfer
and collection sites.  The firm uses the network to provide medical
waste collection, transportation and treatment and many related
consulting, training and education services and products.  The
firm's Stericycle's treatment technologies include its proprietary
electro-thermal-deactivation system (ETD), as well as traditional
methods, such as autoclaving and incineration.

SRCL - Stericycle  $35.42

PLAY (sell naked put):

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

SELL PUT  NOV 30   URL WF    1,074    0.25    29.75      5.3% ***
SELL PUT  NOV 32.5 URL WZ    1,701    0.55    31.95      8.9%


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

BULLISH PLAYS - Credit Spreads

***************
TRMS - Trimeris  $53.35  *** New 18-Month High! ***

Trimeris (NASDAQ:TRMS) is engaged in the discovery and development
of fusion inhibitors, a new class of antiviral drug treatments.
Fusion inhibitors impair viral fusion, a complex process by which
viruses attach to and penetrate host cells.  If a virus cannot
enter a host cell, the virus cannot replicate.  By inhibiting the
fusion process of particular types of viruses, the company's drug
candidates under development offer a novel mechanism of action
with the potential to treat a variety of medically important viral
diseases.  Trimeris is a development stage company.  The firm has
invested a significant portion of its time and financial resources
in the development of T-20, its lead drug candidate.  If Trimeris
is unable to commercialize T-20, its business will be significantly
harmed.

TRMS - Trimeris  $53.35

PLAY (conservative - bullish/credit spread):

BUY  PUT  NOV-45.00  RQM-WI  OI=84  A=$0.60
SELL PUT  NOV-50.00  RQM-WJ  OI=31  B=$1.05
INITIAL NET-CREDIT TARGET=$0.50-$0.55
POTENTIAL PROFIT(max)=11% B/E=$49.50


***************
UN - Unilever  $62.81  *** Favorable Earnings! ***

Unilever N.V. (NYSE:UN) is a worldwide supplier of consumer goods
in foods, household care and personal product categories.  Since
January 2001, the company's operations have been organized into
two major global divisions, Foods and Home & Personal Care.  This
structure allows for improved focus on its division's activities
at both the regional and global levels.  These global divisions'
operations are organized into businesses on a regional basis, with
the exception of DiverseyLever and Prestige within Home & Personal
Care, and the global businesses of Ice Cream and Frozen Foods and
Foodservice within the Foods Division.

UN - Unilever  $62.81

PLAY (conservative - bullish/credit spread):

BUY  PUT  NOV-55.00  UN-WK  OI=256  A=$0.25
SELL PUT  NOV-60.00  UN-WL  OI=822  B=$0.70
INITIAL NET-CREDIT TARGET=$0.50-$0.55
POTENTIAL PROFIT(max)=11% B/E=$59.50


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

BEARISH PLAYS - Naked Calls

Based on analysis of option pricing and the underlying stock's
technical background, these positions meet our fundamental
criteria for bearish "premium-selling" strategies.  Each issue
has robust option premiums, a well-defined resistance area and
a high probability of remaining below the target strike prices.
As with any recommendations, these positions should be carefully
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and personal trading style.

***************
GSK - GlaxoSmithKline  $37.68  *** Trading Range? ***

GlaxoSmithKline (NYSE:GSK) is a research-based pharmaceutical and
healthcare company that is engaged in the creation and discovery,
development, manufacture and marketing of pharmaceutical products,
vaccines, over-the-counter medicines and health-related consumer
products.  GSK is committed to making products aimed at improving
the quality of human life and is active in four major therapeutic
areas: anti-infectives, central nervous system, respiratory and
gastro-intestinal/metabolic.  In addition, GlaxoSmithKline has a
growing portfolio of oncology products.

GSK - GlaxoSmithKline  $37.68

PLAY (conservative - sell naked call):

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

SELL CALL  NOV 42.5 GSK KV   2,334   0.25    42.75       4.5% ***
SELL CALL  NOV 40   GSK KH   2,253   0.50    40.50       7.2%


***************
OHP - Oxford Health  $36.63  *** Negative Earnings Report! ***

Oxford Health Plans (NYSE:OHP) is a healthcare company providing
health benefit plans in New York, New Jersey and Connecticut.  The
company's product line includes its point-of-service plans, the
Freedom Plan and the Liberty Plan, health maintenance organizations,
preferred provider organizations, Medicare+Choice plans and also
third-party administration of employer-funded benefit plans.  The
company offers its products through its HMO subsidiaries and also
through Oxford Health Insurance, a health insurance subsidiary.

OHP - Oxford Health  $36.63

PLAY (conservative - sell naked call):

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

SELL CALL  NOV 42.5 OHP KV   5,178   0.20    42.70       4.2% ***
SELL CALL  NOV 40   OHP KH     878   0.60    40.60       9.6%
SELL CALL  NOV 37.5 OHP KU     429   1.30    38.80      16.4%


***************
RYL - The Ryland Group  $40.14  *** Post-Earnings Slump! ***

The Ryland Group (NYSE:RYL) is a homebuilder and mortgage-finance
company.  The company has built more than 190,000 homes during its
34-year history.  Ryland homes are available in more than 260 new
communities in 21 markets across the United States.  In addition,
the Ryland Mortgage company has provided mortgage financing and
related services for more than 165,000 homebuyers.  The company's
operations span all the significant aspects of the home-buying
process, from design, construction and sale to mortgage financing,
title insurance, settlement, escrow and homeowners insurance.

RYL - The Ryland Group  $40.14

PLAY (conservative - sell naked call):

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

SELL CALL  NOV 45   RYL KI     458   0.40    45.40       6.6% ***
SELL CALL  NOV 42.5 RYL KV   2,136   1.00    43.50      12.9%


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

BEARISH PLAYS - Credit Spreads

All of these positions are favorable candidates for "bear-call"
credit spreads, based on the current price or trading range of
the underlying issue and its recent technical history or trend.
The probability of profit from these positions may be higher
than other plays in the same strategy, due to disparities in
option pricing.  However, current news and market sentiment will
have an effect on these issues, so review each play individually
and make your own decision about its future outcome.

***************
ATK - Alliant TechSystems  $59.40  *** Earnings Due! ***

Alliant Techsystems (NYSE:ATK) is a supplier of aerospace and
defense products to the U.S. government, America's allies and
major prime contractors.  ATK also is a supplier of ammunition
to federal and local law enforcement agencies and commercial
markets.  ATK designs, develops and produces rocket propulsion
systems for a range of government and commercial applications.
The company is also the sole supplier of the reusable solid
rocket motors used on NASA's Civil Manned Space Launch Vehicles.
ATK designs, develops and manufactures conventional munitions
for the U.S. and allied governments as well as for commercial
applications.  The firm manufactures and develops small-caliber
ammunition for the U.S. military, U.S. allies, federal and local
law enforcement agencies, and commercial markets.  The company's
quarterly earnings are due on 10/31/02.

ATK - Alliant TechSystems  $59.40

PLAY (conservative - bearish/credit spread):

BUY  CALL  NOV-70.00  ATK-KN  OI=899  A=$0.35
SELL CALL  NOV-65.00  ATK-KM  OI=942  B=$0.80
INITIAL NET-CREDIT TARGET=$0.50-$0.55
POTENTIAL PROFIT(max)=11% B/E=$65.50


***************
HET - Harrah's Entertainment  $41.93  *** Sector Slump! ***

Founded 65 years ago, Harrah's Entertainment (NYSE:HET) is the
most recognized and respected name in the casino entertainment
industry.  Harrah's operates 26 casinos in the United States
primarily under the Harrah's name.  Harrah's goal is to provide
great customer service in exciting and entertaining environments
to become the first choice for casino entertainment.  Harrah's
concentrates on building loyalty and value for its customers,
shareholders, employees, business partners, and communities by
being the most service-oriented, technology-driven, diversified
company in gaming.  Harrah's Code of Commitment seeks to promote
responsible gaming among Harrah's customers, and identifies the
firm's commitment to employees and the communities where Harrah's
casinos are located.

HET - Harrah's Entertainment  $41.93

PLAY (conservative - bearish/credit spread):

BUY  CALL  NOV-47.50  HET-KW  OI=920   A=$0.25
SELL CALL  NOV-45.00  HET-KI  OI=1377  B=$0.50
INITIAL NET-CREDIT TARGET=$0.30-$0.35
POTENTIAL PROFIT(max)=14% B/E=$45.30


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

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