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Daily Newsletter, Wednesday, 11/13/2002

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The Option Investor Newsletter                Wednesday 11-20-2002
Copyright 2002, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.

In Section One:

Wrap: My Opinion? Who Cares!
Futures Wrap: Called up to the Majors
Index Trader Wrap: Today was about the future
MUI CONTENT OF THE DAY: Russell Funds
Options 101: Spreading Relative Strength

Updated on the site tonight:
Swing Trader Game Plan: Wing and a Prayer

Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
11-20-2002                High    Low     Volume Advance/Decl
DJIA     8623.01 + 148.23 8643.03 8439.06  1874 mln   1382/481
NASDAQ   1419.35 +  44.84 1419.64 1375.41  1200 mln   1524/194
S&P 100   466.91 +   9.30  467.40  456.61   totals    2906/675
S&P 500   914.15 +  17.41  915.01  894.93
RUS 2000  388.59 +   9.02  388.59  379.37
DJ TRANS 2281.37 +  11.55 2288.12  2263.91
VIX        28.66 -   2.70   31.46   28.66
VIXN       44.82 -   0.70   47.67   42.78
Put/Call Ratio 0.63
*******************************************************************


My Opinion? Who Cares!
by Steven Price

Talk about rangebound! The broader markets cannot seem to break 
out in either direction right now, leading to one headache after 
another for momentum traders. About the only market participants 
happy right now are those that started selling option premium 
when the Market Volatility Index (VIX) was still around 50 in the 
middle of October.  Since then, we have seen a 44% drop in the 
VIX, and an awful lot of premium decay along with it. The current 
sideways movement is taking a toll on premiums and as we head 
into the holiday season and market action slows, market makers 
will be quicker to lower premium levels, rather than continue to 
purchase as the VIX falls. 

The current market movement is a study in how option premiums are 
affected in upward trending markets, even if that upward trend is 
only an intermediate one.  Many investors believe the VIX 
represents movement in the OEX and the overall market.  While 
this is partly true, there is a little more to it than that.  
With a Dow that has not seen a trading range of less than 100 
points since September 20, and only two since June 18, common 
sense says that volatility should still be near all-time highs.  
I'm sure there are many long option holders right now wondering 
why a $3.00 call went to $2.50, even thought the stock went up a 
dollar.  In reality, implied volatility almost always comes down 
as the market goes up.  The one big exception to that rule was 
during the internet boom of the late 1990s, when stocks were 
liable to gap up as quickly as they went down.  However, that was 
the exception to the rule.  There are a couple of reasons for 
this phenomenon. Under normal market conditions, stocks go up 
much more slowly than they fall.  Additionally, the most common 
option trade is the covered write.  This is when purchasers of 
stock sell out of the money calls against their purchase to 
reduce the price. While they risk having the stock called away if 
the stock rallies through the strike before expiration, therefore 
limiting upside potential, it still provides a winner on the 
rally up to the strike. This activity also provides a tremendous 
amount of selling pressure on options during market rallies, 
therefore leading to a drop in implied volatility, or the price 
of the option, relative to stock price.  So if you are wondering 
what happened to the price of your options, this is the most 
likely culprit. 

I mentioned in a couple of articles last week and this that the 
VIX does not drop from 36 to 30 in three days without some 
institutional selling. And institutions don't sell lots of 
options if they think the market is about to drop. It's a good 
bet that the same players that were selling premium, were also 
planning on buying some stock, or were writing calls on purchases 
at the very least. The fact that the VIX has now dropped under 30 
looks bullish to me, since the big boys don't see immediate 
downside risk. 

Chart of the Dow and VIX




Today's rally put at least a temporary halt to the head and 
shoulders pattern that had been developing in the Dow/SPX/OEX 
took a turn to the upside, rather than completing the right 
shoulder, as it appeared it would after yesterday's action.   
While we are not yet out of the woods on the downside, the Dow 
did take out the relative high, at 8636 on Monday, in intraday 
action, before falling back to close at 8623.01. The SPX hit the 
relative high of 915 and was turned back right at that level, 
finishing at 914. While these failures show that resistance is 
still in place, particularly in the SPX, bears need to be aware 
that we are still testing highs, as opposed to lows, which 
"feels" bullish for the moment.  That doesn't mean I'm going full 
position long, as the bearish head and shoulders is still alive 
and well - as long as the Dow doesn't break 8800, or the SPX 
breaks 925.  However, our new pivot point in the SPX for short 
term trades looks like 915. 

Chart of the SPX


The Nasdaq also has yet to break the August high of 1426, which 
has served as resistance on several occasions now.   However, the 
pattern beginning to emerge in the Nasdaq is a series of higher 
lows with the flat top.   This is a bullish formation, and bears 
may want to switch teams if we get a breakout.  While it is hard 
to imagine techs continuing this rally without a change in the IT 
spending environment, we are trying to capture moves for a 
profit, rather than funding our 401 (k) for the long haul. 

Chart of the Nasdaq



One of the big reasons for the rise in the Nasdaq is chip stocks.  
The Semiconductor Sector Index (SOX) once again tested new 
relative highs today.  This morning saw an upgrade from 
Soundview, which said evidence is growing that the first quarter 
could be a turnaround in the order picture for the semiconductor 
equipment industry. It raised price targets on several stocks in 
the sector, including KLAC, TER, NVLS and LRCX.  This followed 
last night's earnings release from Analog Devices (ADI), which 
met expectations, but warned that it could miss consensus 
estimates for next quarter.  The company did say, however, that a 
slow August order rate improved in September and grew 
significantly in October. The SOX not only ended the day on a new 
relative closing and intraday high, but closed near its high of 
the day, as well. The strength in the sector, in spite of more 
warnings than I can count on the entire OI staff's fingers and 
toes over the last couple of months, cannot be ignored.  It has 
now set a series of higher highs and higher lows and bounced from 
a previous resistance level at 310, which could now be viewed as 
possible support.  We still haven't seen a shift in capital 
spending, and even Alan Greenspan said yesterday that there are 
"very high hurdles" to capital spending that must be removed 
before investments in new technologies resume.  However, 
investors are betting that it will come back and are scooping the 
sector to prove it. 

Chart of the SOX



After the bell, Hewlett-Packard released earnings that beat 
estimates by $0.02, tripling its year ago number from 0.8 to 0.24 
per share, prior to the Compaq merger.  If we combined Compaq and 
HP results from last year, the company would have been over $500 
million in the red in the year ago period, which makes the number 
even more impressive.  The stock was trading $18.50, up $1.65 
(9.7%) after hours. This may help boost the Nasdaq through that 
August resistance, but we won't count our chickens just yet. We 
have seen sentiment change overnight many times, so we'll wait 
for the actual breakthrough before declaring a rally. 


There was conflicting data today from the housing sector.  The 
number that got the most attention was the 11.4% drop in housing 
starts in October. It was the largest drop since January 1994. In 
fact, the annualized pace dropped to 1.603 million, which matches 
the number of units started in 2001. This was a drop from last 
month's annualized rate of 1.81, which was a 16-year high. The 
decline was also worse than expected; economists were expecting a 
rate of 1.72 million.   The number that got less attention, but 
helped lead to a rally in the Dow Jones Home Construction Index 
(DJUSHB), was the The Market Composite Index of mortgage loan 
applications, which measures mortgage loan applications for 
purchases and refinancings.  The index showed an increase of 21% 
in the week ended November 15, and a 22% increase over the same 
week a year ago. There were also increases in the Purchase Index 
and Refinance Index.  This also marked the seventeenth straight 
week the Refinance Index was above 4000.  The data was 
accompanied by news from Hovanian Enterprises (HOV), currently on 
our call list, which raised its guidance for full year 2002 
earnings and said new home orders in November remain strong. 


The bond market seems to be confirming the switch from bonds into 
stocks.  In fact, for all the talk of a bearish head and 
shoulders formation in the Dow and S&P, a look at the ten-year 
bond shows a similar formation during the recent equity rally.  
Today's bond sell-off seemed to just about complete the right 
shoulder.  If this H&S breaks through as the Dow rallies, then 
the bulls may be in business.

Chart of the Ten-Year Note



It seems that I switch sides on a daily basis, but in a 
rangebound, bouncing market, that is what tends to happen.  If 
you were to pick one direction and simply stick with it, you'd 
see an awful lot of whipsaws.  While that may not make much 
difference to long-term traders, short-termers better be willing 
to change sides as quickly as needed. Today the trend is up, but 
we are right at resistance in the broader markets, so we could be 
due for another rollover to the bottom of the range.  If we see a 
fall in the morning, then I'm jumping on for what could be only a 
short drop.  However, if we break through 915 in the SPX, then 
I'm jumping on long for the next 10 points.  Then it will be time 
to reassess again at 925.  If the Nasdaq breaks 1426, then I'm in 
until I see a rollover. Get the point? We need to be willing to 
get in and out quickly in this choppiness and leave our opinions 
out of the equation.


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

Called up to the Majors 
By John Seckinger
jseckinger@OptionInvestor.com

A lot of minor resistance areas were easily taken out during 
trading on Wednesday, forcing us to now turn towards more major 
areas of resistance for guidance going forward.  

Wednesday, November 20th at 4:15 P.M. 

Contract          Net Change     High        Low        Volume    

ES02Z     914.50    +16.50      915.50      894.00      620,867
YM02Z    8630.00   +154.00     8647.00     8435.00       17,870
NQ02Z    1076.00    +42.50     1077.00     1028.00      269,725

ES02Z  =  E-mini SP500 futures    
YM02Z  =  E-mini Dow $5 futures    
NQ02Z  =  E-mini NDX 100 futures     

Note:  The 02Z suffix stands for 2002, December, and will change 
as the exchanges shift the contract month.  The contract months 
are March, June, September, and December.  The volume stats are 
from Q-charts.  

Fundamental News: October Housing Starts fell 11.4%; however, 
traders seemed to blame the weather and instead turned towards 
the building permits release for guidance.  October building 
permits rose 1.7% to 1.763 million, and above the 1.70 consensus 
estimates.  

Technical News:  Bond prices started out lower, and then 
dramatically reversed; sending the 30-year lower by 1’02 by 
session’s end.  The 111’01 close is still within a well-defined 
range of 113 to 110, and traders should continue to look for a 
break out above/below one of these major levels.  Elsewhere, the 
Utility Index (UTY) and Transportation Index (TRAN) under 
performed the major indices(higher by 0.40 and 0.50 percent, 
respectively); therefore, look for confirmation out of these 
indices for more longer term trades (example:  Utility Index is 
currently at 239.82, and should rise above 243 to confirm the 
overall strength in the equity markets).  Additionally, oil 
rose 1.3% and closed at its 440 pivotal level.  A rise in the XOI 
Index should help stock prices.  

=================================================================

The Majors

Being patient in the futures market sounds like an oxymoron; 
however, bearish traders playing Wednesday’s rally had to do just 
that.  Looking at a 120-minute chart of the Mini-sized Dow 
contract (YM02Z), a lot of recent relative highs failed to 
provide resistance for a market seemingly on a mission towards 
higher valuations.  With that said, it is now time to take a step 
back and look at possible major resistance and support areas 
going forward.  The most obvious appears at 8700, which coincides 
with the mid-point of a daily regression channel.  
Between current levels and 8700, two other resistance areas 
exist: 8658 and 8684 (see below).  

If the YM contract does come under pressure, the two areas of 
major support is at the rising blue trend line (based off a 
series of relative lows), as well as the bottom of the daily 
regression channel.  These upward trend lines currently come in 
at 8450 and 8400, respectively.  A possible trade would be to Go 
LONG above 8700 and the mid-regression point (should be near 8730 
during trading on Thursday), expecting a move to 8800 (target)
with a stop at 8680.  

Chart of Mini-sized Dow (YM02Z), 120-minute 



Taking things to a more micro level, a 5-minute chart of the YM 
contract shows the breakout at 8541 and objective mapped out at 
8684.  As always, the market could hit 8684, come under some 
profit taking, and then power above and use that level as 
support.  Nevertheless, it should be traders’ minds going into 
Thursday.  Note:  If the YM CLOSES back under the 8541 level, 
shorts will most likely try to wash out weak longs heading into 
Friday.  Why?  Solid breakouts should NOT come back and test the 
breakout level at any time.    

Chart of YM02Z, 5-minute



The S&P 500 Index appears to have some catching up to do.  With a 
series of relative highs (120-minute chart) taken out on 
Wednesday, the next major area of resistance is not found until 
the 924.02 to 925.66 range.  Moreover, if the market doesn’t hit 
these levels in the near term, there is a chance that the bearish 
trend line from early March will reach the 925 area and 
strengthen that level.  Nevertheless, longs should look for a 
move towards 924 UNLESS the market CLOSES back below 902.  With 
MACD breaking the bearish trend, and prices seemingly controlled 
by an underpinning bid, the upward momentum has to be respected 
UNTIL a close back below support tells us otherwise.  If a 
‘failed close’ takes place, then we can look for a move back to 
the bottom of the contract’s range (894).  Remember, a ‘failed 
close’ could be a move above 925 and then close at 920.  

Chart of S&P 500 Index, 120 minute



A 30-minute chart of the Dec S&P 500 contract shows prices in 
after hours trading higher at 918.70 and above the relative high 
of 916.70.  Furthermore, Wednesday’s session seems to have 
finally broken away from the converging path of two longer-term 
trend lines (Bearish from March 15th in black; Bullish from 
October 10th in blue).  ‘Out of sight,’ but should not be ‘out of 
mind’.  With that said, I will now be using the 900 area 
(corresponds with the 902.68 support above) as an influential 
pivotal area going forward.  Looking upwards, resistance comes in 
at 927 and then 931.  

So, which levels hold more weight?  The aforementioned 924.02 to 
925.66 area, or the ones just mentioned?  I would personally try 
to encompass all of them, via a stop above 931.  Therefore, look 
to Go SHORT the ES02Z contract at 926.50 with a target of 914.50 
(intermediate target of 900) and stop at 931.50 (above the 38.2% 
retracement line).  Note:  Until 924 is reached, expect 
underpinning bids unless 905.50 is taken out.  The wildcard will 
be where the descending green trend line is when prices hit 924.

Chart of Dec S&P 500, 30-minute 



A look at the Nasdaq-100 shows some tiered resistance above 
current levels; however, don’t be fooled by all the horizontal 
lines.  If the market gets above 1079, expect prices to stay 
above UNTIL they close back underneath 1079 and gives a sell 
signal.  The first objective for bulls above 1079 will be for a 
move to 1100, with a more intermediate range forecast of 1142 and 
1172 (see last chart).  Once above 1100 in the Nasdaq-100, NQ02Z 
traders long should look to raise stops.  

Chart of Nasdaq-100, Daily 



A 30-minute chart of the Dec Nasdaq 100 gives a more exact figure 
of 1172, based on a wedge breakout taking place just as the 
markets closed.  Use that 1073 level as support until the market 
tells us otherwise (I love saying that).  The only support seen 
below 1073 is at 1052 and 1020; therefore, execution is critical 
for trading on Thursday.  If anything, I will remain cautiously 
bullish and expect at test of at least 1100 during trading on 
Thursday.  Then it will be up to volume on whether the market 
settles above 1100.  

Chart of Dec Nasdaq 100, 30-minute 




Good Luck.

Questions are welcomed,

John Seckinger
jseckinger@OptionInvestor.com 



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

Today was about the future

Stocks reversed yesterday's losses and then some as bulls were 
back at the table betting on a robust future for a recovering 
economy.

While "yesterday's" housing starts saw a weaker than expected 
picture of housing starts for October, the look to the future in 
a stronger than expected building permits, which portends further 
building of new homes, turned an early bullish frown into smiles 
as the Dow Jones Home Construction Index (DJUSBH) 298 +1.8% 
reversed an early session decline of -1.5% into a winning sector 
trade.  Bulls bought the thought that the weaker October starts 
number was simply due to colder winter weather and not 
necessarily a sign of economic trouble.

While Dow component Home Depot (NYSE:HD) $24.70 -0.84% traded 
weak again today after yesterday's drubbing and today's report on 
October housing starts, the improvement retailer managed to hold 
above a 52-week low of $23.18 and perhaps hints that even a 
battered HD bull looks to the future and not yet willing to cave 
in with little "good" news to hold onto.  After a weak session 
yesterday in the retailing group, the S&P Retail Index (RLX.X) 
283 +1.97% rebounded to close back above its intermediate-term 
50-day SMA of 282.70, giving ever so marginal hope that there may 
still be some holiday cheer by year's end.

Technology stocks rebounded strong today and here too it was some 
optimistic comments regarding the future for semiconductor 
equipment stocks that bolstered gains.  In what has been a game 
of dueling analysts in recent weeks, today's call out of 
Soundview that it sees signs of good fortune for the 
semiconductor-equipment sector in the first quarter of next year 
found buyers in the chip stocks, sending the Semiconductor Index 
(SOX.X) 338 +8.25% to the top of the sector leader board.

And if today's NASDAQ-100 Index (NDX.X) 1,070 +4.3% gain wasn't 
enough to have a bull still optimistic for higher prices, this 
evening's earnings report from Dow component Hewlett Packard 
(NYSE:HPQ) $16.85 +1.81% and after hours trading of $18.40 (+9% 
from its close) will lend further bullishness to tomorrows 
trading session.

All totaled, today's sector action saw just two sectors trading 
in negative territory by session's end, with Airlines (XAL.X) 
39.30 -2.89% and Gold/Silver (XAU.X) 65.20 -0.74% trading weak.

Early morning bullishness in Treasuries faded by mid-session and 
turned into losses with the December 10-year Treasury bond 
(ty02z) 113'105 -0.71% falling, while the benchmark bond's yield 
($TNX.X) rose to 4.075%, closing back above its shorter-term 21-
day SMA.  The longer-dated and "riskier" 30-year bond also fell 
in price, with its yield ($TYX.X) 4.941% jumping back above its 
rounding flat intermediate-term 50-day SMA of 4.872%.

With cash freeing up from Treasuries, shorter-term bears turned 
to cover positions with the thought that a bullish stamped with 
cash freeing up puts the relative highs in the indexes back into 
play.

With Wireless (YLS.X) 55.26 +5.85% and Internet (INX.X) 89.85 
+6.92% indexes making new multi-month highs and extending a move 
above recent upside breaks of their 200-day SMA's and today's 
Broker/Dealer Index (XBD.X) 439 +3.37% closing above its longer-
term 200-day SMA, the seemingly unbelievable and quick recovery 
in these groups have many looking for other sectors to perhaps 
test their longer-term 200-day SMA's in the not-so-distant 
future.

In recent sessions, you've probably seen some "bearish" looking 
POTENTIAL head/shoulder tops in the equity indexes, most notably 
the Dow Industrials.  However, equity bulls may also be 
monitoring the bond markets and what could pan out as bullish for 
equities, a POTENTIAL reverse head/shoulder pattern in the 
benchmark 10-year Treasury YIELD ($TNX.X) chart. 

With some "right shoulders" in the various head and shoulders 
patterns starting to grow into the "ear of the head" on the 
equity indexes, a break above 4.129% or thereabouts in the 10-
year YIELD could have the major equity indexes making their move 
above recent highs.

10-year YIELD chart - Daily Interval



The "cash register" for the stock market is the Treasury bond 
market and I see what could be a potential reverse head and 
shoulder pattern.  Should the neckline near 41.50 or 4.15% be 
broken to the upside, this could target a YIELD in the 10-year 
Treasury at 4.5%.  It should be encouraging to equity bulls that 
there is selling in Treasuries, but I still think an equity bull 
wants to see it continue as it tends to then generate cash that 
can flow toward equities.

With the Gold/Silver Index (XAU.X) 65.20 -0.74% not acting all 
that bullish, the only reason a Treasury bond holder would sell 
his/her bonds is if the YIELD received looks less attractive when 
considering the risk/reward of other investment alternative.  
These "alternative" would progress to high-grade corporate bonds 
with a high yield than Treasuries, then junk bonds with a higher 
yield yet, and then stocks.

The reason we monitor gold stocks along with the commodity itself 
is to make an observation of potential "inflation."  Bonds find 
selling when inflation is a concern, while gold will find buyers.  
The slight divergence we're seeing between the two hints that 
further selling in bonds (higher YIELD a result) coupled with a 
lower gold price, will help rule out inflation and even deflation 
or stagflation.  All "flation" words that equity bulls hate to 
hear.

Dow Industrials Chart - Daily Interval



It's going to take a terrible initial jobless claims number 
tomorrow morning to squash some of this evening's bullish after-
hours tone.  I think there has been some bears playing the 
POTENTIAL head/shoulders top that will rush to cover many of 
their DIA and DJX bearish trades on a break above Monday's high 
of 8,637 and have bulls targeting the round-number 9,000 level by 
week's end.  With Internet, Wireless and Broker-dealer indexes up 
at their 200-day SMA's, bearish that have been shorting/putting 
the Dow near current levels most likely look to keep losses 
small.  

Today's action saw no net change in the very narrow Dow 
Industrials Bullish % ($BPINDU) and status remains "bull 
confirmed" at 66.67%.

Weekly jobless claims numbers are released before the opening 
bell and economists look for a number near 396,500.  In my 
opinion, it would take a negative surprise above the 400-405K 
level to spoil this evening's bullish after-hours session.

S&P 500 Index Chart - Daily Interval



Evening trading has S&P futures (sp02z) higher at 919, which is 
upper end of that chart's Bollinger Band.  That action if it 
holds into tomorrow morning would have the above SPX chart 
trading just shy of 921.  If I were to remove the Bollinger 
Bands, then last near-term resistance before 950 would be 
November 6th high of 926.  On a positive jobless report I would 
think it in the bears best interest to close out a bearish trade, 
while bulls will play upward trend that looks to be in play.  The 
SPX has once again stuck its head above an the longer-term 
downward trend.  So far, bulls have been hard pressed to keep it 
there.

While jobless claims are released at 08:30 AM EST, that isn't all 
of tomorrow's economic data.  Leading indicators at 10:00, 
Philadelphia Fed at 12:00 will also be closely monitored and 
could impact trading.

Today's action saw the S&P 500 Bullish % ($BPSPX) rise 0.6% to 
56.6%.  This means the SPX saw a net gain of 3 stocks to point 
and figure buy signals.  While rather "miniscule" we're still 
seeing some internal strengthening and makes it VERY TOUGH to try 
hold bearish trades when a technical breakdown doesn't take 
place.

I tell you what, these tight Bollinger Bands make it tough 
trading period!

S&P 100 Index Chart - Daily Interval



Back above 465 and still alive says the bull as the relative high 
of 473 is back in play.  Upper Bollinger Band trying to turn up 
and may tie in with an OEX at 480 next week.

The narrower S&P 100 Bullish % ($BPOEX) saw a net loss of 1 stock 
to a point and figure sell signal today and has the bullish % 
slipping to 63%.  Nothing major as it would take a bullish % 
reading of 58% to have the OEX slipping back into "bull 
correction" status.  As it stands, still "bull confirmed" here.

NASDAQ-100 Index Tracking stock (QQQ) - Daily Chart



A bullish call regarding the semiconductor equipment stocks 
spoiled my best-laid plans when I profiled a short/put in the QQQ 
yesterday morning.  I personally "had" to hold that position 
tonight as the Q's didn't quite manage to break the $26.75 level 
of horizontal resistance (11/04/02 relative high was actually 
$26.82 on the Q's).  Tonight's earnings and post-market response 
has the QQQ trading $26.02 and NASDAQ futures (nd02z) at 1,082, 
compared to cash close of 1,076.  If these late numbers hold, 
that would be enough to have both over the top of my horizontal 
resistance and has the 200-day SMA in play.

A trader holding a QQQ put, may want to assess how holding that 
put, but offsetting it with a long position in the Q's might work 
in his/her account.  For instance, if holding 5 December $26 puts 
that cost approximately $1.45 at yesterday's open and traded 
$0.90 close, instead of closing out for $0.65 loss (based on 
numbers here), trader could go long 500 QQQ, target 200-day SMA 
near $28.  This would be a hedge type position that gives QQQ 
trade bullish exposure on what could portend to be a bullish 
session.  Mane goal of such a trade is to make back the $1.45 
expense of put, but doing so under a hedged position.

One "benefit" of not OVERLEVERAGING in options and trading them 
as outlined in this weekend's "Ask the Analyst" column regarding 
a business plan and account management, is that it can allow for 
a trader to utilize excess cash to actually go long the 
underlying stock if the option trade works against you, as it 
appears the QQQ are going to work against me and my bullish 
profile.  

Since Leigh Stevens is giving me some Friday afternoon "relief" 
from the Index Trade Wraps, I've had multiple e-mails from 
subscribers still wanting to see the "bigger picture" and weekly 
tabulations of all the different Index and Sector gains/losses.

As such, I will start, beginning tonight, monitoring the weekly 
action on a Wednesday to Wednesday close.  When I first started 
using the point and figure bullish % charts, Tom Dorsey would 
only update them once a week and post them each Wednesday 
evening.  His thoughts at the time were that it gave a good look 
at the markets/sectors, but by using Wednesday closes, tended to 
filter out some of the skewed Friday trading you can get with a 
weekend ahead, plus any skew from option expiration once a month.

That said... I did go back and one week, changed the closes to 
reflect last Wednesday's close and compared to tonight's close.  
I just didn't have the time or "energy" to go back and change all 
the prior weekly closes.

Weekly Index/Sector Changes



Our last check of the weekly changes had the Indexes and Sectors 
relatively unchanged on a Friday-Friday basis (11/01-11/08).  A 
slight change from a Wednesday-Wednesday basis shows a rather 
MARKED change doesn't it?  I'm guessing that's part of the reason 
Tom Dorsey started updating his sector and index bullish % to 
reflect each day's changes (sectors much more active).

The thing I want to touch on in the weekly data is this.  The run 
in technology makes NO SENSE to me on a fundamental/economic 
basis, especially with the very economically sensitive Cyclical 
Index (CYC.X), which gained just 0.92% today and 1.8% on a weekly 
basis "dragging tail."  This just doesn't jive in my book that 
the bullishness found is based on any true conviction of economic 
recovery.

However, the rise in the 10-year YIELD this past week obviously 
finds cash rotating to equities.  Why is this?

I'm really starting to think this.

Every BEAR that shorted the heck out of technology over the past 
18 months, plowed that cash into higher YIELDING treasuries, 
driving YIELD lower.  That type of trade made BIG money on both 
ends.

Now technology, which is still down rather marked for this year 
alone, is seeing those shorts come off, and playing catch up to 
the relatively better performing Indexes/sectors of the past 
year.  I try to highlight this in "blue squares" in the sense 
12/31 column.  See how the "so far Q4%" shows COMPX and NDX 
vastly outperforming?

Several weeks ago, I highlighted the Russell-2000 Index (RUT.X) 
388 +2.37% as the "best" risk/reward trade in the equity indexes, 
thinking that the RUT.X would also play "catch up" and be the 
out performer, even compared to the NDX and COMPX.

That really hasn't happened to the extent I was looking for.  The 
RUT.X trade has made a bull money to his/her account, but not as 
much as I had hoped.  So why is that?  I'm thinking, and have 
mentioned it before, the smaller caps probably weren't as heavily 
shorted as they're a little more "illiquid" when compared to the 
volumes you see traded in the different NASDAQ-100 stocks.  One 
thing a bear hates is to be short an illiquid stock when it 
starts moving against him.

I also want to touch on past commentary regarding the Wireless 
Index (YLS.X) and noted "leadership" there.  Do you see how much 
gain that sector has had so far this quarter?  Wow!  But it is 
STILL down some 41.8% for the year.  What's next?  Don't tell me 
the Networkers (NWX.X) +5.3% and Fiber Optic (FOP.X) +8% are 
going to catch "bear fire" as they too look to close some ugly 
year-to-date losses.

But I think that's the kind of trade that may well be taking 
place.

Individual stock traders that saw a Monday bullish profile of 
Tellabs (TLAB) $8.73 +10.89%, then saw today's jump may 
understand what is taking place at the "stock" level and 
impacting the sector/index action.  It seems that any type of 
pullback in a stock to an "old" buy signal on the point and 
figure chart, or some type of resistance broken serving as 
support, sees some impressive upside stock action on just the 
slightest bit of renewed bullishness.  Almost like a bearish 
trader still holding TLAB short from $50 says.... "lock in some 
more gains."

As such, I still think that the action in Treasury YIELDS, while 
maybe not "depicting" the economy, gives us the best measure of 
cash flows toward stocks.  Even if it is continued short covering 
from "old bears" at much higher levels.

Jeff Bailey


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

Russell Funds 

The Russell Funds, managed by Frank Russell Investment Management 
Company of Tacoma, Washington, offers a broad range of funds that 
can serve as building blocks for one's long-term investment plans 
or as supplements to existing investment strategies.  Many of you 
know Frank Russell as the firm that has been providing investment 
consulting services to some of the nation's largest pension funds 
(AT&T, GM, etc.)

Others know Frank Russell for their U.S. equity indexes: Russell 
1000 large-cap index, Russell 2000 small-cap index, and Russell 
3000 all-cap index.  The Russell website (www.russell.com) notes 
that the firm now maintains 21 U.S. stock indexes, measuring the 
broad market and different styles, with similar indexes in Japan 
and Canada.  The firm goes on to say that more than $214 billion 
is invested in funds modeling their U.S. indexes, with more than 
$1 trillion benchmarked today to their global family of indexes.

For individual investors, Russell offers a variety of investment 
products including mutual funds, separately managed accounts and 
IRAs, which are sold and distributed through a worldwide network 
of financial professionals.  Russell Funds are offered in Class 
C, E and S shares, which vary in fees and availability.  Class C 
shares have a minimum initial investment of $1,000, with expense 
ratios as high as 3.08%, for Russell Emerging Markets C (REMCX).  
Class E and S shares have $2,500 initial investment minimums and 
expense ratios ranging from below 1.00% to as high as 2.33%, for 
Russell Emerging Markets E (REMEX).

Morningstar lists 800-787-7354 as the 800 number for the Russell 
Funds.  For complete fund information or a prospectus, log on to 
the Russell website at www.russell.com.  


Fund Overview


Russell categories its mutual fund products into four families of 
funds based on their unique approach to diversification: Russell 
Funds, LifePoint Funds, Money Market Funds and Tax-Managed Funds.

The Russell Funds seek long-term growth via investments all over 
the world, including the United States.  These funds are managed 
by "strategically selected" investment managers (sub-advisers) 
hired and monitored by Russell.  The firm uses a unique multi-
manager, multi-style approach whereby fund assets are divided 
among various investment subadvisers, with distinct investment 
styles that compliment one another.

The LifePoint Funds are designed to meet the needs of personal 
investors at different points in their lifecycle.  These funds 
address a variety of time horizons, risk tolerances and return 
objectives.  A key feature of the LifePoint funds, the website 
states, is professional rebalancing of funds to maintain their 
desired risk/return ratios.  The funds also give investors the 
flexibility to migrate to more aggressive or conservative risk 
options as your life situation changes.

The Money Market Funds provide current income consistent with 
preservation of capital and liquidity, and seek to maintain a 
stable $1 share price by investing assets in high-grade money 
market instruments with very short maturity dates (90 days or 
less).   

Lastly the Tax Managed Funds seek to provide capital growth or 
income on an "after-tax" or tax-exempt basis.  These funds seek 
to achieve their growth, the websites states, by investing in a 
variety of equity securities, investment-grade "municipal" debt 
securities, and short-term municipal obligations.

Russell's investment approach is founded on three principles.  
First, diversification among asset classes is one of the most 
prudent approaches to managing risk.  Second, diversification 
among different investment styles is important since they can 
move in and out of favor with the market.  Three, hiring and 
monitoring investment managers is needed since even the best 
money managers don't remain on top for extended time periods.

Russell aims to combine all three foundations in its approach.  

   
Our Favorite Funds


Starting first with the Russell Funds, our favorite equity fund 
is the $1.1 billion Russell Quantitative Equity Fund, available 
in C, E and S shares.  The fund's a decent option for investors 
seeking "core equity" exposure since it blends growth and value 
styles and includes stocks with medium to large capitalizations.  
Assets are allocated to 11 investment sub-advisers.

According to Morningstar, the Quantitative Equity Fund E (RQEEX) 
returned more than 31% in its first full year of operation, 1997, 
and then returned 24% and 21% the next two years.  In years 2000 
and 2001, the portfolio lost ground, but limited losses relative 
to the S&P 500 large-cap index.  In each of its first five years, 
the fund's performance ranked in the second quartile of the large 
blend category, per Morningstar.

Among fixed income products, we like the Russell Diversified Bond 
Fund (RDBEX), an intermediate-term investment-grade fund, and the 
Russell Multistrategy Bond Fund (RMSEX), a multi-sector bond fund 
that allocates assets among all bond market sectors including the 
high-yield and international bond markets.  

Russell's diversified bond fund seeks to provide diversification 
against equities and a stable level of cash flow by investing in 
fixed-income securities.  It is a suitable option for investors 
seeking a "core fixed-income" holding emphasizing intermediate-
term, investment-grade quality securities, and adding value via 
broad market sector rotation and issue selection.

The firm's multistrategy bond product seeks to provide "maximum" 
total return by assuming a greater level of volatility than the 
average intermediate-term, investment-grade offering.  It offers 
broad market exposure as well as exposure to high yielding areas 
of the bond market, including international and emerging markets.  
Russell utilizes a variety of total return strategies to enhance 
return without taking excessive portfolio risk.

According to Morningstar, Russell Diversified Bond Fund E (RDBEX) 
has a 3-year annualized return of 8.5% through November 19, 2002, 
ranking in the top third of the intermediate-term bond category.  
The fund's 5-year average return of 6.6% was also good enough to 
land it in the category's top third.  Russell Multistrategy Bond 
Fund E (RMSEX) produced a 3-year annualized total return of 7.3%, 
strong enough to rank in the top 5% of the multi-sector category, 
per Morningstar.  Between the two funds, we like the diversified 
product better.

Among Russell LifePoints Funds, we like the return-risk tradeoff 
provided by the Russell Conservative Strategy Fund E (RCLEX) and 
Russell Moderate Strategy Fund E (RMLEX) products.  Conservative 
Strategy Fund seeks to achieve a "moderate" total rate of return 
through low capital appreciation and reinvestment of income, and 
maintains a diversified portfolio of around 20% equities and 80% 
fixed-income securities.  It emphasizes capital preservation and 
stability through bond investments, with some exposure to equity 
investments.

LifePoints Moderate Strategy Fund seeks high current income and 
growth of capital and income, consistent with a moderate level 
fluctuations in year-to-year market values.  It typically will 
allocate around 40% of assets to equities for their long-term 
growth potential and 60% to fixed income securities for income 
and stability.  Both Russell LifePoints funds are classified by 
Morningstar as domestic hybrid funds.

According to Morningstar, the Conservative Strategy Fund has an 
average annualized total return of 5.1% as of November 19, 2002.  
That was 4.7% a year better than the broad U.S. stock market as 
measured by the S&P 500 index, and good enough to rank the fund 
in the top 12% of the Morningstar domestic hybrid fund category.  
The Moderate Strategy Fund's 4.0% average annual return was 3.7% 
better than the S&P 500 index and good enough to rank in the top 
22% of the hybrid fund group.


Conclusion


Internet connection problems have prevented me for doing a more 
thorough job of analyzing the Russell family of funds this week.  
Considering their reputation in the investment consulting world 
and institutional marketplace, the Russell mutual funds present 
an interesting multi-level approach to diversification and risk 
that you may want to consider further for your investment goals.

For more information, please go to the Russell Funds website at 
www.russell.com.  There you can find further information on the 
Russell indexes and the firm's lineup of distinct mutual funds.   


Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com




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

Spreading Relative Strength
by Mark Phillips
mphillips@OptionInvestor.com

Over the past 2 weeks we've been looking at the Dow Jones US Home
Construction index ($DJUSHB) and comparing it to the broader
market in an attempt to learn about Relative Strength (RS).  Once
we identified the DJUSHB as a potential source of weakness, we
dug into some of the components, looking for which stocks within
that sector might be the weakest, and therefore make for an
attractive bearish trade.  After much discussion and charting, I
came to the conclusion that of the four stocks we looked at, RYL
was likely the weakest and either CTX or PHM looked to be the
strongest (not good for a bearish trade).

If you're just joining us and interested in the prior analysis,
you can access the articles using the links below:

And Now For Something Completely Different
And The Verdict Is...

In the week since the last article, price action is confirming
that RYL is indeed the weakest of the bunch, and CTX seems to be
moving into the lead in terms of being the strongest of the
bunch.  During our last discussion, I briefly mentioned how we
can put on a spread to 'hedge our bets' with a bearish bias on
the Housing sector.  We want exposure to the downside, but don't
want to get clobbered by a rebound in the entire sector.  Things
like that can happen in a market that tends to be so news driven,
especially when the news (Housing Starts, Building Permits, etc.)
can be so volatile.  The DJUSHB seems to be building an nice
downtrend now, and I like the fact that resistance is building in
the 300 area, a former level of support.

The way we can put on a hedged position is by initiating a bullish
position on the strong stock in the sector, and a bearish trade on
the weak stock in the sector.  That way, if the sector sees a
strong rebound, we have exposure through a bullish position in
the strongest stock in the group, which we can expect will
outperform to the upside.  But if our bearish thesis is correct,
we have that bearish position on the weakling, which should
outperform to the downside.  While it certainly isn't a foolproof
strategy, it definitely has merit.  While we've already determined
our bullish and bearish candidates, there is one final RS
comparison I like to do before actually making the decision to put
on the trade, and that is a direct comparison between the two
stocks in question.

Relative Strength Chart of RYL vs. CTX



Looking at this direct comparison of the two stocks in question
confirms the relative weakness of RYL, and today's breakdown
below support tells us that the basis for our bias still makes
sense.  So let's go straight to the option chains and put
together a Relative Strength spread.  For the sake of simplicity,
we want to put the trade on using options as close as possible
to ATM (At the Money).

CTX is currently trading at $46.26, so we want to use the $45
Call.  Since we're already well into the December expiration
cycle, my preference would be to use options with a January
expiration, giving the trade some time to work without time
decay becoming a significant factor over the near term. The
JAN-03 $45 Call (CTX-AI) is currently trading for $4.80, making
the cost of this side of the spread $480 per contract.

RYL is still tooling around the $36 level, with Wednesday's close
at $36.55.  Fortunately, RYL has $2.50 strikes available,
allowing us to use the $37.50 put.  That JAN-03 $37 Put (RYL-MU)
is trading for $3.60 for a cost of $360 per contract.  So putting
on this spread as of Wednesday's closing prices would cost $840
and give us exposure to movement in the Housing sector over the
next 8 weeks.  The thing to keep in mind with this trade is that
it is entirely possible that both sides of the spread could be
profitable.  That would happen if RYL broke down further, and CTX
found its legs and headed back up the chart.  It's certainly not
a guarantee, but the research we've done up to this point shows
that it is a definite possibility.

Of course, we have the potential that the trade goes against us
as well, and we have to take protective action (read: stop
losses) to keep that risk under control.  We could implement a
stop loss (although it would have to be a mental one) on the
entire position, where we would exit the entire position if its
value dropped by more than 25-30%.  Alternatively, we could place
an individual stop on each leg of the spread, where we could end
up exiting only one side of the spread or the other, depending on
the price action of each of the two stocks.  This is a highly
individual issue, but if implementing this trade myself, I would
place a resting stop individually on each leg of the spread.

The other risk that we need to consider when putting on this type
of trade is the possibility of a large change in volatility.  If
volatility declines substantially, then we could see both sides
of this trade move against us, even without adverse price moves
in the underlying securities.  With the VIX finally breaking back
into its historical range, and the initial cost of entering this
trade, I would definitely consider this a significant risk.  So
how do we mitigate this risk?  Spreads.  One of the great
advantages of simple bull and bear spreads is that in addition
to reducing the cost of entry, they help to insulate us from the
effects of changing volatility.

So how would this RS spread strategy change if we were to utilize
a standard spread strategy?  Spread traders are probably way
ahead of me already, but I'm going to provide a bit more detail
for those that are less familiar with spreads.

Rather than just buy the call on CTX, we want to put on a Bull
Call spread by simultaneously buying the $45 call and sell a call
at a higher strike.  In this case, I'd select the $50 strike,
currently trading for $2.25.  So doing the math, the bullish side
of our RS spread would only cost $2.55 ($4.80-2.25). By putting
on the spread, we are cutting our risk on the bullish side of the
trade by almost 50%, but the price we pay for that reduction of
risk is that our upside is also limited.  The maximum return at
expiration would be $2.45 ($5.00-$2.55), while we are still
risking $2.55.  Normally that isn't great on a risk/reward basis.

Looking at the bearish side of the RS spread, we would supplement
our purchase of the $37 RYL put by selling a lower strike put
with the same expiration.  My preference would be for the $32 put
(RYL-MZ), currently trading for $1.60.  That reduces the cost of
the bearish side of the RS spread from $3.60 to $2.00.  Maximum
return on this side of the spread is limited to $3.00
($5.00-2.00), while the risk has been lowered to $2.00.

I'm not wild about the risk/return about using the Bull Call and
Bear Put spreads in place of just buying a call and buying a put.
But there are lots of possible permutations we could employ to
improve our odds.  Since we're doing a spread on RYL and a spread
on CTX, we've insulated ourselves from the effect of both changes
in volatility and time decay.  That means we could consider using
December contracts rather than January.  That would reduce our
cost of entering the spreads, while keeping the potential reward
unchanged.  That improves the risk to reward ratio.

Sophisticated spread traders could really have fun with this RS
Spread strategy, putting on a Bear Call spread (Buy the high
strike and sell the low strike) on RYL and a Bull Put spread (Buy
the low strike and sell the high strike) on CTX.  This strategy
allows us to take in a credit on each side of the RS Spread, and
we get to keep those credits, so long as both of the sold options
expire out of the money.

My intent here isn't to provide what I think is a money-making
trade.  What I wanted to accomplish is show a creative way in
which trades can be crafted to take advantage of relative
strength where we find it.  The details of the RS example we've
gone through in the housing sector are unimportant.  If you
understand the process, then you know you can do this with any
sector in the market or any group of stocks you choose.  Finding
the disparity in Relative Strength is the technical analysis part
of the process.  Then that knowledge can be put to use, using
the strategy of your choice, whether that involves a
sophisticated spread strategy or simply going long the strong
and shorting the weak.  Knowledge is power.  Hopefully this
little exercise has you feeling invincible.

Have a great week!

Mark



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

Wing and a Prayer
 
This is what traders were calling the rally today.
They said stocks were being bought on the hope 
that a recovery would appear in 2003 despite 
constant news to the contrary. Traders managed to 
close the indexes right below strong resistance 
once again but this time the result could be 
different.


To read the rest of the Swing Trader Game Plan Click here:
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would welcome you as a permanent subscriber.

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


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The Option Investor Newsletter                Wednesday 11-13-2002
Copyright 2002, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:
Stop Loss Updates: CEPH, MBI
Dropped Calls: None
Dropped Puts: None
Play of the Day: Put - ABK
Big Cap Covered Calls & Naked Puts: A Brief Display Of Optimism

Updated on the site tonight:
Market Watch
Market Posture

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

CEPH - call
Adjust from $51.00 up to $53.00

MBI - put
Adjust from $45.00 down to $43.00



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

calls
^^^^^

none


puts
^^^^

none


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

ABK – Ambac Financial Group, Inc. $57.53 (-3.44 last week)

Company Summary:
Ambac Financial Group is a holding company that, through its
subsidiaries provides financial guarantee products and other
financial services to clients in both the public and private
sectors around the world.  The company provides financial
guarantees for municipal and structured finance obligations
through its principal operating subsidiary, Ambac Assurance
Corporation.  Through its financial services subsidiaries, the
company provides financial and investment products, including
investment agreements, interest rate swaps, funding conduits,
investment advisory and cash management services to its
financial guarantee clients, which include municipalities and
their authorities, school districts, healthcare organizations
and asset-backed issuers.

Most Recent Write-Up:
ABK $57.51 -0.11 (-0.02) Following the big slide of the past 2
weeks, we were expecting a bit of an oversold bounce from ABK
this week, but if that's all the bulls can muster, than the
outlook is not good. The Financial stocks managed a decent
rebound on Tuesday, with the Banking index (BKX.X) gaining 1.5%
and the Insurance index (IUX.X) rising by a more sedate 0.5%.
Poor ABK couldn't find any appreciable buying interest and after
a slight lift early in the day, fell back to close fractionally
in the red.  That is just what we want to see, as the stock
demonstrates its weakness relative to its peers.  The
consolidation of the past 2 days is likely due to the support
being provided by the 50-dma ($57.50), but it is worth noting
that the stock slid below that level at the close on Tuesday.
While intraday resistance came into play today just above the $58
level, we'd really like to see a failed rally up near $59 ($60
would be even better) to give us a better entry.  If ABK just
breaks down from here, look to enter the play on a drop below
$57, just below its most recent intraday support.  Keep stops
set at $61 for now.

Comments:
ABK finally broke down below intraday support at $57, which was 
the entry move we were targeting for new players. It filled the 
gap from 10/14-10/15, and just kept going. While some gap fills 
result in a bounce, ABK had no such luck. A look at the PnF chart 
shows the stock in a free fall, toward bullish support down at 
$53. The intraday rally in the broader markets propped it up only 
briefly before a late day sell-off.  Once the stock broke back 
below $57.50, it didn't bounce until it hit$56.27.  New entries 
can initiate a short play below $56.00, which will show us 
another down leg, after the bounce.  Alternative entry can be 
made on a failed bounce under $57.50, the point of today's sell-
off. 

*** November contracts expire this week ***

BUY PUT DEC-55*ABK-XK OI= 2055 at $3.70 SL=1.90
BUY PUT DEC-60 ABK-XL OI=   58 at $6.10 SL=3.10


Average Daily Volume = 848 K



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that:
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offers stop and stop loss online option orders
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option or stock
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offers fast option executions

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more; call 1-888-889-9178 or click for more information.

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

Running to Stand Still

To Read The Rest of The OptionInvestor.com Market Watch Click Here
http://www.OptionInvestor.com/marketposture/mp_111302.asp


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

Playing the News

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We would like to have you as a subscriber. You may
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start until your free trial is over.

To subscribe you may go to our website at

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and click on "subscribe" to use our secure credit
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information over the phone.

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*********************************************
SPREADS, COMBINATIONS & PREMIUM-SELLING PLAYS
***************
A Brief Display Of Optimism
By Ray Cummins

The major equity averages edged higher Wednesday after Saddam
Hussein accepted the U.N.'s resolution on weapons inspections
in Iraq.

Stocks initially slumped in early trading when Alan Greenspan,
testifying before the Joint Economic Committee, said consumer
spending had weakened and that business spending had shown few
signs of any "appreciable vigor."  Then share values bounced
back when Iraq announced it was unconditionally accepting a U.N
plan that will return weapons inspectors to the country after
nearly four years.  However, the upside activity did not last
long and the market struggled to a positive close as investors
chose to focus on the flagging U.S. economy, which continues to
offer little indication of a recovery in the near-term.  The
Dow Industrials ended 12 points higher at 8,398, bolstered by
interest in Philip Morris (NYSE:MO), Coca-Cola (NYSE:KO), J.P.
Morgan (NYSE:JPM), and Hewlett-Packard (NYSE:HPQ).  The NASDAQ
Composite index rose 11 points to 1,361 amid a subtle rally in
Internet and computer hardware stocks.  The broader-market S&P
500 index was relatively unchanged at 882 as buyers emerged in
the airline, retail, utility and consumer sectors while sellers
dominated defense, oil and gold shares.  Trading was average at
1.43 billion on the NYSE and a bit heavy at 1.9 billion on the
technology exchange.  Advancers edged past decliners 17 to 15
on the NASDAQ while breadth was roughly even on the Big Board.
The bond market ended with small gains as investors remained
skeptical about the outlook for stocks.  The 10-year Treasury
note rose 1/8 to yield 3.83% while the 30-year government bond
gained 3/32 to yield 4.79%.

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

SUMMARY OF CURRENT POSITIONS - AS OF 11/12/02

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

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  35.86   $0.65    7.03%
TARO     NOV    27   26.90  36.91   $0.60    5.41%
AMGN     NOV    40   39.40  45.52   $0.60    5.34%
ERTS     NOV    55   54.30  65.84   $0.70    4.50%
FRX      NOV    90   88.20  101.12  $1.80    5.14%
INVN     NOV    22   22.10  31.46   $0.40    5.46%
OVER     NOV    22   22.10  22.05  ($0.05)   0.00%
TRMS     NOV    40   39.35  50.30   $0.65    5.61%
WMT      NOV    50   49.25  53.85   $0.75    4.27%
AZO      NOV    75   74.25  81.77   $0.75    4.30%
CCMP     NOV    35   34.10  48.93   $0.90   11.63%
CEPH     NOV    40   39.40  55.51   $0.60    7.02%
CTSH     NOV    55   54.40  69.16   $0.60    5.56%
INVN     NOV    25   24.70  31.46   $0.30    5.38%
SLM      NOV    95   93.90  102.01  $1.10    4.55%
SRCL     NOV    30   29.70  36.60   $0.30    4.70%
CCMP     NOV    30   29.70  48.93   $0.30    5.92%
CDWC     NOV    45   44.40  53.80   $0.60    7.86%
COCO     NOV    32   32.15  37.94   $0.35    7.38%
GILD     NOV    30   29.55  35.86   $0.45    8.83%
KLAC     NOV    30   29.50  35.47   $0.50   10.89%
NBIX     NOV    35   34.60  46.40   $0.40    8.21%
NVLS     NOV    27   27.05  31.31   $0.45   10.01%
QLGC     NOV    27   27.00  38.34   $0.30    7.72%
SRCL     NOV    30   29.75  36.60   $0.25    5.28%
NVLS     NOV    27   27.30  31.31   $0.20    9.07%
QLGC     NOV    35   34.65  38.34   $0.35   12.89%
CTSH     NOV    65   64.60  69.16   $0.40    6.43%
EBAY     NOV    60   59.65  62.79   $0.35    5.70%
CCMP     DEC    40   38.80  48.93   $1.20    7.04%
CDWC     DEC    40   39.15  53.80   $0.85    5.10%
FRX      DEC    85   83.05  101.12  $1.95    5.14%
GILD     DEC    33   31.85  35.86   $0.65    4.41%
KLAC     DEC    30   29.25  35.47   $0.75    6.06%
NBIX     DEC    35   34.30  46.40   $0.70    4.64%

As noted last week, Anthem (NYSE:ATH) has been previously
closed to limit losses.

  
Naked Calls

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

KSS      NOV    65    65.90  61.06   $0.90    5.79%
SIAL     NOV    50    50.75  46.75   $0.75    5.07%
BZH      NOV    75    75.90  58.60   $0.90    6.61%
DHR      NOV    70    70.85  56.45   $0.85    6.73%
SPW      NOV    52    52.85  43.39   $0.35    5.09%
GSK      NOV    42    42.75  39.30   $0.25    4.53%
OHP      NOV    42    42.70  34.00   $0.20    4.24%
RYL      NOV    45    45.40  36.03   $0.40    6.56%


Put-Credit Spreads

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

INTU    45.90  54.24  NOV   35  40  0.60  39.40  $0.60   Open
UNH     97.98  89.32  NOV   85  90  0.65  89.35 ($0.03) Closed
EBAY    63.51  62.79  NOV   50  55  0.45  54.55  $0.45   Open
FPL     57.52  55.05  NOV   45  50  0.40  49.60  $0.40   Open
RKY     69.30  64.05  NOV   60  65  0.75  64.25 ($0.20)  Open?
TRMS    53.35  50.30  NOV   45  50  0.50  49.50  $0.50   Open?
UN      62.81  63.19  NOV   55  60  0.50  59.50  $0.50   Open
FCN     41.18  39.90  DEC   30  35  0.55  34.45  $0.55   Open
MSFT    57.03  54.51  DEC   48  50  0.30  49.70  $0.30   Open
SNPS    47.35  45.45  DEC   35  40  0.60  39.40  $0.60   Open

Positions in Mid-Atlantic Medical Services (NYSE:MME), which is
positive, HCA Inc (NYSE:HCA), and UnitedHealth (NYSE:UNH) have
succumbed to the recent selling pressure in the health services
segment.  All three spreads have been closed to protect profits
and/or limit losses.  As noted last week, Coors (NYSE:RKY) is
also a candidate for early exit on any further downside movement.

 
Call-Credit Spreads

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

AHC    62.35   52.41  NOV   75  70  0.60  70.60  $0.60   Open
HET    44.70   41.51  NOV   55  50  0.50  50.50  $0.50   Open
TLM    35.81   34.73  NOV   45  40  0.50  40.50  $0.50   Open
CB     58.53   56.27  NOV   70  65  0.60  65.60  $0.60   Open
RCII   44.16   42.25  NOV   55  50  0.50  50.50  $0.50   Open
ATK    59.40   60.20  NOV   70  65  0.50  65.50  $0.50   Open
HET    41.93   41.51  NOV   48  45  0.30  45.30  $0.30   Open
CAH    70.01   67.00  DEC   85  80  0.55  80.55  $0.55   Open
FNM    68.21   64.31  DEC   80  75  0.75  75.75  $0.75   Open

The previously closed position in H&R Block (NYSE:HRB) is now
positive (Murphy's Law!) but Teva Pharma (NASDAQ:TEVA), which
was closed to limit losses, remains negative.


Credit Strangles

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

CDWC     NOV     55C    56.10   53.80   $1.10    7.51%
CDWC     NOV     40P    38.85   53.80   $1.15    9.04%
GILD     NOV     40C    40.50   35.86   $0.50    5.77%
GILD     NOV     27P    26.90   35.86   $0.60    7.46%
CCR      NOV     55C    55.75   50.03   $0.75    6.09%
CCR      NOV     40P    39.50   50.03   $0.40    5.05%
KBH      DEC     50C    52.00   42.69   $2.00    7.68%
KBH      DEC     40P    38.75   42.69   $1.25    6.67%

KB Homes (NYSE:KBH) will be one to watch in the coming days as
it tests support slightly above the sold put at $41-$42.


Synthetic Positions:

No Open Positions


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.

***************
AZO - Autozone  $84.08  *** Renewed Uptrend? ***

AutoZone (NYSE:AZO) is a specialty retailer of automotive parts
and accessories, primarily focusing on do-it-yourself customers.
The company operated over 3,000 auto parts stores in the United
States and 21 in Mexico.  Each store carries an extensive product
line for cars, vans and light trucks, including new as well as
re-manufactured automotive hard parts, maintenance items and car
accessories.  The company also has a commercial sales program in
the United States that provides commercial credit and prompt local
delivery of parts and other products to repair garages, dealers
and service stations.  AutoZone does not sell tires or perform
automotive repair or installation.  In addition, the company sells
automotive diagnostic and repair information software through its
ALLDATA subsidiary, and diagnostic and repair information through
alldatadiy.com.

AZO - Autozone  $84.08

PLAY (sell naked put):

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

SELL PUT  DEC 70   AZO XN    1,817    1.00    69.00       4.0% "TS"
SELL PUT  DEC 75   AZO XO    3,060    1.95    73.05       6.0% ***
SELL PUT  DEC 80   AZO XP    1,834    3.40    76.60       8.5%


***************
COCO - Corinthian Colleges  $38.91  *** Analyst Upgrade! ***

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  $38.91

PLAY (sell naked put):

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

SELL PUT  DEC 30   UCS XF      88     0.60    29.40       5.9% ***
SELL PUT  DEC 35   UCS XG     202     1.80    33.20      11.0%


***************
GILD - Gilead Sciences  $35.66  *** Back 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  $35.66

PLAY (sell naked put):

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

SELL PUT  DEC 30   GDQ XF     101     0.60    29.40       5.4% ***
SELL PUT  DEC 32.5 GDQ XZ     159     1.10    31.40       7.4%
SELL PUT  DEC 35   GDQ XG     391     1.75    33.25       9.4%


***************
IGEN - IGEN International  $36.89  *** Good News Coming? ***

IGEN International (NASDAQ:IGEN) develops and markets products
that utilize its proprietary electrochemiluminescence (ORIGEN)
technology, which permits the detection and measurement of
biological substances.  ORIGEN provides a combination of speed,
sensitivity, flexibility and throughput in a single technology
platform.  ORIGEN is incorporated into instrument systems and
related consumable reagents, and the company also offers assay
development as well as other services used to perform analytical
testing.  Products based on IGEN's ORIGEN technology address the
Life Sciences, Clinical Testing and Industrial Testing worldwide
markets.

IGEN - IGEN International  $36.89
 
PLAY (sell naked put):

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

SELL PUT  DEC 30   GQ XF     1,182    0.85    29.15       8.0% ***
SELL PUT  DEC 35   GQ XG     1,505    2.50    32.50      13.4%


***************
MSFT - Microsoft  $55.36  *** Entry Point! ***

Founded in 1975, Microsoft (NASDAQ:MSFT) is the worldwide leader
in software, services and Internet technologies for personal and
business computing.  The company offers a wide range of products
and services designed to empower people through great software at
any time, any place and on any device.  The company's software
products include scalable operating systems for servers, personal
computers (PCs) and intelligent devices; server applications for
various environments; information worker productivity applications;
business solutions applications, and software development tools.
The company's online efforts include the MSN network of Internet
products and services and alliances with companies involved with
broadband access and various forms of digital interactivity.  The
firm licenses consumer software programs, sells hardware devices,
provides consulting services and trains and certifies system
integrators and developers.

MSFT - Microsoft  $55.36

PLAY (sell naked put):

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

SELL PUT  DEC 47.5 MQF XW    9,848    0.60    46.90       3.3% "TS"
SELL PUT  DEC 50   MSQ XJ   22,226    1.00    49.00       4.6% ***
SELL PUT  DEC 55   MSQ XK   16,809    2.55    52.45       8.6%


***************
NBIX - Neurocrine Biosciences  $46.29  *** Premium Selling! ***

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  $46.29

PLAY (sell naked put):

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

SELL PUT  DEC 35   UOT XG       91    1.15    33.85       9.1% ***
SELL PUT  DEC 40   UOT XH    1,625    2.10    37.90      12.1%


***************
SNPS - Synopsys  $45.15  *** Expecting Favorable Earnings! ***

Synopsys (NASDAQ:SNPS) is a global supplier of electronic design
automation (EDA) software to the global electronics industry.  The
firm's products are used by designers of integrated circuits (ICs),
including system-on-a-chip ICs, and the electronic products (such
as computers, cellular phones and Internet routers) that use such
ICs to automate significant portions of their chip design process.
ICs are distinguished by the speed at which they run, their area,
the amount of power they consume and the cost of production.  The
company's products offer its customers the opportunity to design
ICs that are optimized for speed, area, power consumption and
production cost, while reducing overall design time.  The company
also provides consulting services to assist customers with their
IC designs, as well as training and support services.

SNPS - Synopsys  $45.15

PLAY (sell naked put):

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

SELL PUT  DEC 35   YPQ XG      960    0.50    34.50       4.3% ***
SELL PUT  DEC 40   YPQ XH    2,787    1.25    38.75       7.3%


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

BULLISH PLAYS - Credit Spreads

These candidates are based on the underlying issue's technical
history or trend.  The probability of profit in these positions
may also be higher than other plays in the same strategy, due to
small disparities in option pricing however, each play should be
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and trading style.

***************
COLM - Columbia Sportswear  $40.85  *** Xmas Shopping Season! ***

Columbia Sportswear Company (NASDAQ:COLM) is engaged in the design,
sourcing, marketing and distribution of active outdoor apparel and
footwear, with operations in North America, Europe and Asia.  In
the 1990's, the firm leveraged its brand awareness in by expanding
into related merchandise categories and developing its head-to-toe
outfitting concept. Columbia groups its merchandise into four
categories: Outerwear, including apparel for skiing, snowboarding,
hiking, hunting and fishing; Sportswear, including hiking shorts,
water sport trunks, fleece and pile products, sweaters, chinos,
knit shirts, woven shirts, sweats, and jeans; Rugged Footwear,
including fall and spring seasonal outdoor footwear for adults and
youths, as well as cold weather, hiking/trail and rugged comfort
styles, and Accessories, including hats, caps, scarves, gloves,
mittens and headbands.  During 2001, the company distributed its
products to approximately 10,000 retailers in over 40 countries.

COLM - Columbia Sportswear  $40.85

PLAY (conservative - bullish/credit spread):

BUY  PUT  DEC-30.00  TQQ-XF  OI=40  A=$0.30
SELL PUT  DEC-35.00  TQQ-XG  OI=31  B=$0.85
INITIAL NET-CREDIT TARGET=$0.60-$0.65
POTENTIAL PROFIT(max)=12% B/E=$34.40


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

Neutral Plays - Credit Strangles

Here is another candidate for traders who favor neutral-outlook
premium-selling strategies.  The issue has a relatively stable
chart pattern and robust option prices, however current news and
market sentiment will have an effect on this position, so review
the play thoroughly and make your own decision about its outcome.

***************
THO - Thor Industries  $34.97  *** Trading Range? ***

Thor Industries (NYSE:THO) produces and sells a wide range of
recreation vehicles and small and mid-size buses in the United
States and Canada.  Its principal recreation vehicle operating
subsidiaries are Aero Coach, Airstream, Dutchmen Manufacturing,
Four Winds International, Keystone RV Company, Komfort, Thor
America, Citair, and Thor California.  The company's principal
small and mid-size bus operating subsidiaries are Champion Bus,
ElDorado National California and ElDorado National Kansas.  In
November 2001, Thor acquired Keystone, which operates in the
recreational vehicle industry.

THO - Thor Industries  $34.97

PLAY (conservative - neutral/credit strangle):

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

SELL CALL  DEC 40   THO LH      4     0.50    40.50      4.3%
SELL PUT   DEC 30   THO XF     13     0.50    29.50      4.3%


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

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.

***************
ABK - Ambac Financial  $56.62  *** Trend Reversal! ***

Ambac Financial (NYSE:ABK) is a holding company that, through its
many subsidiaries provides financial guarantee products and other
financial services to clients in the public and private sectors
around the world.  The company provides financial guarantees for
municipal and structured finance obligations through its primary
operating subsidiary, Ambac Assurance Corporation.  Through its
financial services subsidiaries, the company provides financial
and investment products including investment agreements, interest
rate swaps, funding conduits, investment advisory and financial
management services, principally to its guarantee clients, which
include municipalities and their authorities, school districts,
healthcare organizations and asset-backed issuers.

ABK - Ambac Financial  $56.62

PLAY (conservative - sell naked call):

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

SELL CALL  DEC 65   ABK LM     51    0.90    65.90       4.9% ***
SELL CALL  DEC 60   ABK LL    134    2.40    62.40       9.1%


***************
ATK - Alliant TechSystems  $57.45  *** Sector Sell-Off! ***

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  $57.45

PLAY (conservative - sell naked call):

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

SELL CALL  DEC 65   ATK LM    107    1.05    66.05       5.2% ***
SELL CALL  DEC 60   ATK LL     86    2.50    62.50       9.0%


***************
EXPE - Expedia  $67.62  *** Premium-Sellers Only! ***

Expedia (NASDAQ:EXPE) is a provider of travel-planning services.
The firm's global travel marketplace includes direct-to-consumer
Websites offering travel-planning services located at Expedia.com,
Expedia.co.uk, Expedia.de, Expedia.ca, Expedia.nl and Expedia.it.
The firm also provides travel-planning services through its site,
Voyages-sncf.com, as part of a joint venture with the state-owned
railway group in France.  In addition, the company provides travel
planning services through its telephone call centers and through
private label travel Websites through its WWTE business.  WWTE is
a division of Travelscape, one of the company's subsidiaries.  In
February 2002, a controlling stake in the company was acquired by
USA Networks.

EXPE - Expedia  $67.62

PLAY (conservative - sell naked call):

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

SELL CALL  DEC 80   UED LP    362    1.05    81.05       5.5% ***
SELL CALL  DEC 75   UED LO    333    2.15    77.15       8.1%
SELL CALL  DEC 70   UED LN    930    4.00    74.00      11.5%


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

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.

***************
APA - Apache Oil  $50.00  *** Oil Shares Plunge!  ***

Apache Corporation (NYSE:APA) is an energy company that explores
for, develops and produces natural gas, crude oil and natural gas
liquids.  The company has interests in seven countries including
the United States, Canada, Egypt, Australia, China, Poland and
Argentina.  As of January 1, 2002, Apache had estimated reserves
of 599 million barrels of crude oil, condensate and NGLs (natural
gas liquids) and four Tcf (trillion cubic feet) of natural gas.
Combined, these total estimated proved reserves are equivalent to
1.3 billion barrels of oil or 7.6 Tcf of gas.  Worldwide, in 2001,
the company participated in drilling 939 new wells, with 828 (88%)
completed as producers.  Canada was Apache's most active region,
with 447 gross new wells at a success rate of 93%.  Apache also
performed over 1,350 major work-overs and re-completions in North
America during the year.

APA - Apache Oil  $50.00

PLAY (less conservative - bearish/credit spread):

BUY  CALL  DEC-60.00  APA-LL  OI=598  A=$0.25
SELL CALL  DEC-55.00  APA-LK  OI=237  B=$0.80
INITIAL NET-CREDIT TARGET=$0.65-$0.70
POTENTIAL PROFIT(max)=15% B/E=$55.65


***************
LLL - L-3 Communications  $44.49  *** Defense Sector Slump! ***

L-3 Communications Holdings (NYSE:LLL), including its wholly
owned subsidiary L-3 Communications, is a merchant supplier of
sophisticated secure communication systems and specialized
communication products.  Its customers include the United States
Department of Defense (DoD), certain United States government
intelligence agencies, major aerospace and defense contractors,
foreign governments and commercial customers.  The company has
two major business segments, Secure Communication Systems and
Specialized Communication Products.

LLL - L-3 Communications Holdings  $44.49
  
PLAY (less conservative - bearish/credit spread):

BUY  CALL  DEC-55.00  LLL-LK  OI=355   A=$0.25
SELL CALL  DEC-50.00  LLL-LJ  OI=1530  B=$0.80
INITIAL NET-CREDIT TARGET=$0.65-$0.70
POTENTIAL PROFIT(max)=15% B/E=$50.65


***************
TOT - TOTAL Fina Elf  $67.37  *** Disparity Play! ***

TOTAL Fina Elf (NYSE:TOT) is engaged in all aspects of petroleum
industry, including upstream operations (oil and gas exploration,
development and production); downstream operations (refining and
marketing); and the trading and shipping of crude and petroleum
products.  TOTAL also produces Petrochemicals and plastics, as
well as intermediates and performances polymers and specialties
for industrial and consumer use.  In addition, the company has
interests in coal mining and in the nuclear power, cogeneration
and electricity sectors.

TOT - TOTAL Fina Elf  $67.37

PLAY (conservative - bearish/credit spread):

BUY  CALL  DEC-80.00  TOT-LP  OI=0   A=$0.25
SELL CALL  DEC-75.00  TOT-LO  OI=22  B=$0.70
INITIAL NET-CREDIT TARGET=$0.50-$0.55
POTENTIAL PROFIT(max)=11% B/E=$75.50


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