Option Investor

Daily Newsletter, Wednesday, 02/12/2003

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The Option Investor Newsletter                Wednesday 02-12-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.

In Section One:

Wrap: Point of No Return?
Futures Wrap: Fearing the Future
Index Trader Wrap: (See Note)
Weekly Fund Family Profile: Babson Fund Group
Options 101: Fixated on the VIX
Traders Corner: Let's make that "Gold:  Some Strategies and

Updated on the site tonight:
Swing Trader Game Plan: Bleeding Continues

Posted online for subscribers at http://www.OptionInvestor.com
MARKET WRAP  (view in courier font for table alignment)
02-12-2003                   High    Low     Volume Advance/Decl
DJIA     7758.17 -  84.94  7854.62  7753.71   1474 mln  277/1170
NASDAQ   1278.97 -  16.49  1301.11  1278.74   1191 mln  189/956
S&P 100   413.61 -  4.97    419.95  413.45    totals    466/2126
S&P 500   818.68 -  10.52   832.12  818.49
RUS 2000  355.38 -  4.58    360.50  355.38
DJ TRANS 2100.67 -  27.61   2136.02 2100.67
VIX        39.10 +  1.75    39.42   38.11
VIXN       47.49 +  0.59    48.84   47.48
Put/Call Ratio 0.90

Point of No Return?
by Steven Price

We continue to ratchet down in the broader markets, as buyers
continue their strike in the face of war fears. Alan Greenspan
continued his testimony before Congress, sparring mostly over the
how the President's tax-cut plan will affect the economy. By mid-
morning, we had taken out relative lows and each day continues to
bring signs of a further weakening stock market. It was not a
massive sell-off and volume remained on the light side, but we
continue to push the envelope to the downside and today brought
further evidence that the bounces we are seeing on a technical
basis continue to be short entry opportunities.

The last couple of days have been a prime example of the short-
entry theory.  The news out of Iraq on Monday, that the country
would allow U2 fly-overs (old news now) gave us a big rally as we
tested new lows.  That rally continued on Tuesday ahead of Alan
Greenspan's testimony. As the Fed Chairman spoke, the rally
eventually faded, possibly due to the comments that the
President's dividend tax-cut plan, while fundamentally sound,
would be a better idea if it did not result in deficit spending
to finance it.   The rally may have also faded as short-covering
that began on the Iraq announcement on Monday afternoon, finished
off when Greenspan didn't say anything earth-shatteringly
positive, or imply further immediate rate cuts. After all, if he
doesn't necessarily think we need a stimulus package before we
know just how much the geo-political concerns are affecting us,
it seems unlikely that he would be in a rush to lower rates below
already historically low levels.  His take on the deficit that
would result from the dividend tax cut did not sound supportive,
even though we continued to hear that the cut was a good idea on
a policy basis. Greenspan said he did support the President's
plan, but his comments about deficit spending in general did not
echo that sentiment. He talked about it being possible to
maintain flat debt to GDP ratios while running small deficits of
of 1-2%, but the president's plan exceeds that, likely crossing
over the 3% mark.  Greenspan said, "But if we get into a
position... where we are finding that the debt-to-GDP ratio
begins to accelerate, we have to be very careful because there is
no (self-correction) mechanism when that is occurring, because a
rise in the debt increases the amount of interest payments, which
in turn increases the debt still further, and there is an
accelerating pattern after you reach a certain point of no
return."  His description of a point of no return certainly does
not sound like he thinks the president's stimulus plan requiring
larger deficits than he is comfortable with is such a hot idea,
in spite of his statement of support.  President Bush spent some
time on air defending his plan, but there is no doubt the damage
was done and the democrats will have plenty of ammo to counter
with. That certainly could be another reason we are seeing
selling over the past couple days, when combined with the ever-
present geo-political problems.

The rally ahead of his testimony on Monday and Tuesday, however,
was enough to turn the point and figure charts back up into
columns of "X," which represent significant upward movement.  A
reversal requires three-boxes in the opposite direction of the
downtrend and therefore is supposed to represent a reversal in
sentiment.  However, we have now seen the last four Dow reversals
up indicate contrary profitable short entry levels.  The last
five reversals in the SPX and OEX have been short entry
opportunities.  What's even more impressive is that the last
reversals on Tuesday not only failed, but failed at a lower level
and were unable to move back above the previous breakdown levels.
We continue to set lower lows, and we are approaching territory
not seen on the way down since September, when were on our way to
setting lows below even those seen in July.  After consolidating
between 7950 and 8150 in the Dow, we ratcheted down a notch and
have been trading between 7800 and 8000. That is, until today.

The lows of the last few days had been 7830, 7801 and 7806,
indicating the bulls were staunchly defending the 7800 support
level. This morning, we broke down below 7800, reaching a low of
7753, and eventually finished the day at 7757.  The pattern is
becoming clearer each day.  While we are getting bounces in the
broader markets, those bounces continue to come at lower levels.
We take out the floor of the previous consolidation range, get a
bounce and then eventually collapse below that floor,
establishing a lower range as bounces come at successively lower
levels. This pattern has continued ever since the bullish
percents began rolling over in December and January.  Those
percents measure the number of stocks in a given index currently
giving buy signals.  Right now the Dow bullish percent is the
most extended to the downside, registering only 20%.  The SPX
sits at 42%, coming off a December high of 68% and the OEX sits
at 38%, coming off a December high of 75%.  The NDX sits at 38%,
after coming off a December high of 82%.  The Dow is the only
index of these to have entered oversold territory below 30%,
however we need to keep in mind that the last two bottoms came at
4% (July) and 8% (October)in the Dow, so it is still a ways from
support.  The sinking bullish percent has been a good indicator
that bounces would be only temporary on the way down, just as a
rising bullish percent in October and November was a good
indication that pullbacks were temporary on the way up. Still, we
must note that we are getting closer to the extreme bottom end of
the range we have traded in over the last year and risks will
begin to shift less in favor of bears as we continue to drop.  It
is true that the October drop took us below the drop in July and
we certainly could be headed to sub-7000 Dow range on this drop.
However, as we reach those bottoms, shorts would be best advised
to tighten stops and take some chips off the table.

Point and Figure Chart of the SPX

Point and Figure Chart of the Dow

Dow Bullish Percent

We spent some time talking about head and shoulders patterns over
the last couple of months and so far those patterns are bearing
fruit to the downside. We saw the similar pattern over the summer
and fall end up very close to its downside objective before
bouncing, with the Dow actually coming within just a few points
of its objective on the July drop. The target of the current Dow
head and shoulders pattern is 7500, while the SPX is targeting a
low around 785.  Those would both be higher than the October lows
and if we get there we can then decide just how significant a
higher low would be.

Daily chart of the Dow

Daily Chart of the SPX

Notables: The COMP closed well below previous support at 1300,
finding resistance there once again on an intraday basis. Its
mid-morning rebound high was 1301. The VIX is again testing the
40% level that has signaled short-term rebounds, although those
rebounds have continued to eventually fail.  The ten-year yield
took out recent lows, but has yet to approach the low from late
January or late February.  The five-year yield finished up on the
day, in contrast to the ten and thirty year.

This morning's testimony from CIA chief George Tenet that North
Korea has an untested ballistic missile capable of reaching the
U.S. and likely has as many as two plutonium based nuclear
weapons, which came alongside the International Atomic Energy
Agency's 35-nation executive board's citation of Pyongyang for
being in breach of U.N. safeguards, also weighed on markets.  In
the end, it turns out the news of the missile had been known to
U.S officials for a couple of years, but the splash across the
news screens certainly made buyers think twice about buying a
dip. Most of the blame for today's drop has fallen on concerns
over a war in Iraq. Whatever the reason the market continues to
be sold, the Iraq concerns are as good a reason as any.  However,
we are not exactly getting positive news from the corporate
sector either.

General Motors saw its price target cut at Banc of America
Securities from $32 to $28.  B of A cited a lower rate of free-
cash-flow growth, saying the new target reflects 23% downside
from current levels.  It also said that if GM's pension fund
assets were marked to market right now, the price target would
drop to $24. The big concern for investors is also B of A's
assertion that the company will be forced to cut its dividend.
GM finished down $2.03 on the day.  The analyst cited cash-flow
growth problems at all big three U.S. automakers, which are being
hurt by increased foreign capacity in the truck market.  He
mentioned increases for Toyota pickups specifically.  Ford's
price target was lowered from $13 to $11.

Viacom also released earnings that showed improved profits, after
a year ago loss, but also found only sellers. In spite of beating
estimates by three cents per share, the company's cable and video
results fell short of expectations.  The lower than expected cash
flow in those areas gave bears all the ammo they needed in a
market that seems to be looking for the bad news in just about
any earnings release.  We have seen a slew of stocks sold-off in
spite of beating forecasts and this was no exception. The stock
started off the day sinking over $2 before rebounding to show a
loss of $0.98 for the day.

One sector that showed surprising strength was the semiconductor
group.  Last night, AMAT missed profit and revenue estimates, as
well as said, "In the near term, we do not expect to see a
significant upturn in capital spending and will continue to
implement cost-cutting measures, as necessary, to better align
our operations with business conditions." It also said it would
shut down for two weeks this quarter. These comments followed a
warning at the end of January and only added to the bearish
evidence piling out of the sector.  However, the Semiconductor
Index (SOX) actually spent most of the day in the green, as
investors were apparently expecting even worse things from AMAT.
The SOX eventually gave in with the broad market sell-off,
dropping two points on the day, but if not for that heavy
pressure, very well could have ended positively.

After the bell, TMP Worldwide, parent of Monster.com, pulled its
guidance for 2003, saying, "The fragile economy and the
unpredictability of world events make it imprudent to discuss
specific guidance. Any prior guidance is therefore not

While we have seen nothing to make us anything but bearish, we
have to start thinking about a bottom.  Things looked awfully
ugly before big rebounds in July and October, as well.  Those
bounces both eventually failed, as we are approaching the lows
once again, but after a sell-off of over 1000 Dow points, a
bounce making up less than 1/2 of that drop can whip us around by
500 points very quickly.  I am not predicting that bounce in the
immediate future, but the possibility grows greater with each leg
down.  Bears can be comforted by the fact that we did consolidate
for a while in the 7950-8150 range and that could have been our
bounce.  If that is the case, then the drop could be much steeper
than the H&S patterns indicate.  However, my guess is that when
it comes, it may run a little more than 200 points. For right
now, any short-term rallies have been good shorting opportunities
and until that trend changes then we should go with it.  Traders
should continue to watch the bullish percents, because if we do
reverse up at the same time we begin to bounce, then that may be
our first signal that the tide may be turning. Until then, lean
short, but stay cautious.


Fearing the Future
By John Seckinger

With Geopolitical events becoming a daily occurrence, are the
futures contracts pricing in enough worry as the aura of
uncertainty grows?

Wednesday, February 12th at 4:15 P.M.

Contract       Last    Net Change    High        Low       Volume

Dow Jones     7758.17    -84.94    7854.62     7753.71
YM03H         7735.00   -104.00    7845.00     7729.00     29,194
Nasdaq-100     956.77    -14.84     978.06      956.57
NQ03H          958.50    -13.50     979.50      957.00    196,557
S&P 500        818.68    -10.52     831.91      818.49
ES03H          816.75    -13.00     831.50      816.25    621,239

Contract         S2         S1       Pivot        R1         R2

Dow Jones      7687.92    7723.04   7788.83    7823.95    7889.74
YM03H          7654.00    7694.00   7770.00    7810.00    7886.00
Nasdaq-100      947.00     959.50    975.00     987.50    1003.00
NQ03H           942.50     950.50    965.00     973.00     987.50
S&P 500         809.61     814.15    823.03     827.57     836.45
ES03H           806.25     811.50    821.50     826.75     836.75

Weekly Levels

Contract         S2         S1        Pivot        R1         R2

YM03H         7608.00    7730.00    7932.00    8054.00    8256.00
NQ03H          921.50     940.50     970.50     989.50    1019.50
ES03H          801.25     815.75     840.00     854.50     878.75

Monthly Levels (January's High, Low, and Close)

Contract        S2         S1        Pivot       R1         R2

YM03H         7237.00    7642.00    8253.00    8658.00    9269.00
NQ03H          875.75     930.25    1019.25    1073.75    1162.75
ES03H          775.00     814.75     876.00     915.75     977.00

YM03H = E-mini Dow $5 futures
NQ03H = E-mini NDX 100 futures
ES03H = E-mini SP500 futures

Note: The 03H suffix stands for 2003, March, and will change as
the exchanges shift the contract month. The contract months are
March, June, September, and December. The volume stats are from

Before we begin, let us take a look at Jim Brown's day in the
Futures Monitor. Recapping his signals:

Short 830.00/831.00, exit 826.50, change +4.00
Short 826.50, exit 822.50, change +4.00
Short 822.50/823.25/823.75, exit 824.25, change -1.08

Total for the day: +6.92
Total for the week: +11.17

For information on the Futures Monitor and Jim Brown's posts,
please go to the following link and download the current market
monitor. If you already have the most recent version, simply go
to the Futures Monitor Post on the upper left hand portion of the


The March E-mini S&P 500 Contract (ES03H)

The bearishness continued once again on Wednesday, as traders
allowed the ES contract to get 0.50 from the daily pivot before
sending prices down to the support are of 821.  This level not
only becomes resistance, but it is the daily pivot for Thursday.
The intermediate objective of 805 is still intact, and only a
close above 839 should change this perspective.  The daily S2
level is at 806.25, so we could get close to this 805 level
during the next few days of trading.  Along the way, I definitely
expect the 811 to 815 area to act as a "support zone" and be used
for traders to square positions temporarily.  From a bullish
point of view, a move above the daily pivot and the 822.25 area
(50% of two daily retracement levels) will most likely have
shorts covering and bears less aggressive until either resistance
is tested (daily R1 at 826.75) or the daily pivot is cleared to
the downside and a failure materializes.

Chart of ES03H, Daily

A 5-minute chart of the ES contract shows the aggressive bearish
channel containing prices over the last few days.  Note that, if
the daily pivot is cleared, this channel should be broken as
well.  The bottom of the channel currently comes in at the 811 to
815 support zone area, increasing this areas significance.  At
current levels, the risk/reward is not great; therefore, I will
look for either a roll down from the pivot or a bounce upwards if
the daily S1 is reached (811.50).  Remember, once 811 is cleared,
then the "zone of support" become the "zone of resistance."

Chart of ES03H, 5-minute

Bullish Percent of SPX: 39.80% after falling 1.60% on Wednesday.
The column of O's is now at 12.  I still expect a move in the
bullish percent to the 30% level.  This indicator is currently in
"Bull Correction" status.  Looking at P&F analysis, the SPX
contract reversed back into a column of O's on Wednesday, and
this sets up for a buy signal if 845 is reached.  The 845 level
is the quadruple bottom level, and solid short covering should
take place if this level is now reached.  Nevertheless, least
resistance is still lower, with support seen from 805
to 810.  The bearish price objective remains at 750.

The March E-mini Nasdaq 100 Contract (NQ03H)

The NQ contract set a lower low and lower high versus Tuesday's
session, and this contract is once again edging towards the
941.50 objective.  The NQ is also below both the 50% area of two
daily retracement levels and Thursday's pivot (961.75 and 965,
respectively).  If 965 is cleared to the upside, there will most
likely be a short-covering move.  Will the move end up above 983?
If bearish, this would not be a good sign.  Speaking of being
bearish, the MACD oscillator is still in bearish mode, most
likely representing bulls on the sidelines waiting for either the
Geopolitical uncertainty to end (which, as we saw in 1991,
doesn't mean the market will immediately rally) or until a
perception of value is reached.  I think 941 is a good beginning
when looking for value.

Chart of NQ03H, Daily

The following 15-minute chart of the NQ03H contract shows the
formation of a Head & Shoulders pattern and its objective of
938.25.  This 938.50 area would come close to the intermediate
rising bullish support line in the chart above (thick blue line).
As the chart shows, a move above the daily pivot would take
prices above the neckline and most likely signal to shorts that
is makes sense to take a breather.  Also noted is S1 at 950.50,
and can be used by aggressive traders.

Chart of NQ03H, 15-minute

Bullish Percent for NDX:  This indicator fell one percent on
Wednesday to 38, and added to the column of "O's" (now at 14).  .
This indicator is in "Bear Confirmed Status".   Note: The NDX,
according to P&F charts, still shows resistance at 1000 and
support below at 925.  The bearish objective is 825.  On
Wednesday, the NDX did not trade 950 and add another "O" to the
recent column.

The March Mini-sized Dow Contract (YM03H)

The YM contract actually shows the most bullishness of all three
contracts, closing within a solid "support zone" as well as at
the bottom of a descending support line (blue).  The same theory,
however, applies to the YM contract as well.  A move above the
daily pivot should send the contract to 7810, but if the pivot is
cleared to the downside (failure) before 7810 is reached, I would
then look for more downside pressure.  Once under 7730 (five-
minute close), look for support at the daily S1 (7694).  On
Thursday, there is always the possibility that this downward move
will go into a more "vertical" state; therefore, if 7694 is
cleared, by all means look for 7654 to be hit while keeping a
tight stop.  I would then go flat at the end of the day, since
such "verticalness" could mean capitulation.

Chart of YM03H, 120-minute

Bullish Percent of Dow Jones: A P&F chart of the Dow added
another "O" on Wednesday, lowering the bearish price objective to
7400.  The quadruple bottom remains higher at 7950, and should be
defended by bearish traders protecting profits.  Support is now
seen at 7600.  As far as the bullish percent is concerned, it
fell 3.33% to 16.67%.  The column of O's is now at twenty-one.
Note: The last column of O's ended at 10%.  Moreover, the next
column of X's will put this indicator in "Bull Alert" status.

Good Luck.

Questions are welcomed,

John Seckinger


Check the Site Later Tonight For Jeff’s Index Trader Article

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Babson Fund Group

Our Weekly Fund Family Profile this week looks at the Babson Fund
Group, which manages and administers 10 pure no-load mutual funds
across the three asset classes.  David L. Babson & Co., Inc. acts
as the investment advisor to the Babson Funds, while another fund
affiliate, Jones & Babson, Inc. serves as the underwriter and the
distributor of the Babson Funds.  David L. Babson & Co. has been
managing assets for institutional clients for more than 60 years.

Since its founding in 1940, Babson has grown to become one of the
leading money managers in the U.S. with more than $70 billion in
assets under management and a staff of over 500.  The DLB website
(www.dlbabson.com) indicates that the firm's predominant strategy
is one of "fundamental analysis."  Investment decisions are made,
they say, using in-depth, internal research.  Based in Cambridge
and Springfield, Massachusetts, Babson and its subsidiaries have
clients throughout the U.S. and worldwide.

Babson launched its first mutual fund, Babson Growth Fund in 1959
and today offers 10 distinct mutual funds with different risk and
reward opportunities.  In managing the mutual funds, Babson takes
a conservative approach to both equity and fixed income portfolio
management similar to the way it manages assets for institutional
accounts.  The Babson Funds believe their first responsibility is
to avoid taking unnecessary risks with investors' money.  They're
long-term investors who invest in high quality securities to help
preserve capital while still offering investors a range of growth
and income opportunities.

Part of the appeal of the Babson Funds is their 100% no-load cost
structure and low minimum initial investment of $1,000.  Babson's
mutual funds are pure no-load funds, meaning they impose no sales
or redemption charges, or 12b-1 fees.  Babson is also a member of
the Mutual Fund Education Alliance, an organization that seeks to
educate the public about the benefits of direct-purchase, no-load
fund investing.  For more information on the Babson Funds' lineup
or to download a prospectus, go to www.babsonfunds.com.

Fund Overview

The Babson Fund Group currently offers 10 mutual funds to retail
investors across the range of asset classes including six equity
funds, three fixed income funds and one market money fund.  D.L.
Babson & Co., the firm's investment arm, built its reputation in
stock investments, mostly large-cap equities.

The Babson Growth Fund (BABSX), started in 1960, seeks growth of
capital over time by investing in reasonably priced high-quality
growth companies.  Here Babson emphasizes larger-sized companies
with consistent records of increasing net earnings and dividends.
Most investments are in the giant-cap and large-cap ranges, with
the fund's top five holdings at year-end 2002 being AIG, Freddie
Mac, Medtronic, Pfizer and Amgen.

At $183 million, the Babson Growth Fund is one of three funds to
be valued at more than $150 million in assets today.  The Babson
Enterprise Fund (BABEX) started operations in 1983, and has $175
million in assets today.  It seeks long-term growth by investing
in stocks of smaller-size, faster growing companies whose stocks
are realistically priced at the time of purchase.  Typically the
fund will hold stocks of companies with market values of between
$15 million (micro-cap) to $500 million (small-cap).  The Babson
Enterprise II Fund (BAETX) came out in 1991 and is comparable to
its older sibling except that the market capitalization range of
stock holdings is between $250 million and $1 billion.

Babson Value Fund (BVALX) was launched in 1984 and currently has
the most assets of any Babson fund today, at $347 million.  This
fund seeks long-term growth consistent with a conservative value
strategy.  Its value orientation is evident in its below average
P/E ratio relative to the overall market (S&P 500).  That offers
investors some protection from market declines and fluctuations.
The value-driven Babson Shadow Stock Fund (SHSTX) was started in
1987.  It uses a value approach to invest in the smallest stocks.
This generally means micro-cap stocks with market values of $175
million or less.

Babson Stewart Ivory International Fund (BAINX) is a partnership
between David L. Babson & Co. and Stewart Ivory & Company.  Note
though that this fund has had its share of problems and received
a new manager and strategy as of October 2002.  Morningstar says
that has created some uncertainty there.  For a mutual fund that
has been around since 1988, its assets stand at just $12 million

Below is a summary of the Babson Funds by investment class:

 Babson Equity Funds:
 Babson Growth (BABSX) Large-Cap Growth
 Babson Value (BVALX) Large-Cap Value
 Babson Shadow Stock (SHSTX) Small-Cap Value
 Babson Enterprise (BABEX) Small-Cap Value
 Babson Enterprise II (BAETX) Small-Cap Blend
 Babson Stewart Ivory International (BAINX) Foreign Stock

 Babson Fixed Income and Money Market Funds:
 Babson Bond Trust - S (BBDSX) Intermediate-Term
 Babson Bond Trust - L (BABIX) Intermediate-Term
 Babson Tax-Free Income (BALTX) Muni National Long-Term
 Babson Money Market (BMMXX) Money Market

Four income-oriented funds complement the six Babson equity fund
products.  Babson Bond Trust - S (BBDSX) seeks high income, with
reasonable stability of principal, by investing in bonds with an
average quality rating of AA.  AAA- and AA-rated bonds represent
the two highest rungs of the investment-grade classification and
are considered to be "high-grade" securities.  It is designed to
appeal to more risk-adverse investors due to its focus on short-
term maturities.  Babson Bond Trust - L (BABIX) seeks to provide
a slightly higher level of income than its short-term sibling by
investing in intermediate-term, high-grade debt securities.

Fund Performance

Of the nine Babson equity and bond funds tracked by Morningstar,
only one currently sports an above average (4 stars) or high (5
stars) rating from the funds tracker for relative risk-adjusted
performance.  Compared to its small-cap blend peers, the Babson
Enterprise II Fund has produced average-to-above average return
through the years with a below average-to-average level of risk,
earning it a Morningstar overall rating of 4 stars.

For the trailing 10-year period through January 31, 2002, Babson
Enterprise II Fund had a 8.9% average annual return, compared to
just 6.5% a year for its index benchmark, the Russell 2000 index.
This fund has benefitted from stable management, and an emphasis
on profitable, established small-cap companies that are dominant
in their industries.  Portfolio manager, Lance F. James has been
D.L. Babson since 1986.  Today, he is an Executive VP, and heads
Babson's small-cap investing effort.

Below are trailing 5-year returns and category rankings according
to Morningstar as of Tuesday, February 11, 2003 for the different
Babson mutual funds.

 5-Year Annualized Returns (February 11, 2003):
 -6.8% Babson Growth (BABSX) 72nd Percentile
 -3.0% Babson Value (BVALX) 62nd Percentile
 +3.1% Babson Shadow Stock (SHSTX) 26th Percentile
 +2.6% Babson Enterprise (BABEX) 35th Percentile
 +0.7% Babson Enterprise II (BAETX) 40th Percentile
 -8.6% Babson Stewart Ivory Int'l (BAINX) 90th Percentile
 +5.7% Babson Bond Trust - S (BBDSX) 68th Percentile
 +5.6% Babson Bond Trust - L (BABIX) 73rd Percentile
 +4.8% Babson Tax-Free Income (BALTX) 28th Percentile

 10-Year Annualized Returns (January 31, 2003):
 +5.8% Babson Growth (BABSX)  57th Percentile
 +9.1% Babson Value (BVALX)  34th Percentile
 +9.4% Babson Shadow Stock (SHSTX) 50th Percentile
 +9.1% Babson Enterprise (BABEX) 57th Percentile
 +8.9% Babson Enterprise II (BAETX) 48th Percentile
 +1.7% Babson Stewart Ivory Int'l (BAINX) 87th Percentile
 +6.0% Babson Bond Trust - S (BBDSX) 81st Percentile
 +6.2% Babson Bond Trust - L (BABIX) 68th Percentile
 +5.5% Babson Tax-Free Income (BALTX) 58th Percentile

As you can see, Babson's performance has generally been average,
with some funds doing a little better than average while others
lagged their category peers.  Babson's trailing 10-year returns
are respectable, not great relative to similar funds, according
to Morningstar's rankings.  When you look at the 10-year return
figures, however, you do see some consistency, with four equity
funds averaging between 8.9% to 9.4% over the past 10 years per

The flagship Babson Growth Fund has struggled at times and over
the past 10 years has produced an average annual return of just
5.8%, ranking it in the 57th percentile of the large-cap growth
category.  Controlling risk has been a prime focus, but returns
have still lagged similar funds by a small margin.  The same is
true for the two bond funds in the Babson Bond Trust.  Here you
can see the difference a few basis points makes in the world of
fixed income investing, with a 6.2% annualized return earning a
68th percentile ranking and a 6.0% annualized return ranking in
the intermediate-term category's 81st percentile.  According to
Morningstar, average intermediate-term bond fund had an average
annual return of 6.5% for the same 10-year period.  So a little
bit off there too on a relative basis to category peers.


Overall, the Babson Fund Group has delivered decent returns for
investors and largely achieved fund objectives.  Performance in
relation to similar funds could be a little better overall, but
on the other hand it hasn't been that bad with the exception of
Babson Stewart Ivory International Fund, which has struggled in
the last five years.  The new manager and strategy adopted last
October hasn't revived the fund.  During the past three months,
returns have ranked in the bottom decile of the foreign equity
category, per Morningstar.

Because Babson takes a long-term perspective in managing money,
their funds are appropriate for long-term financial plans, such
as the accumulation of wealth, college savings, and retirement.
If you share the firm's long-term perspective, the Babson Funds
have a few options worth considering for long-term investments.

Steve Wagner
Editor, Mutual Investor


Fixated on the VIX
by Mark Phillips

Regular readers of this column know that I pay a lot of attention
to the VIX, trying to unearth clues to the direction of the broad
market.  If you've been following the Market Monitor over the
past few weeks, you've been treated to a regular series of
comments from Linda Piazza, Kent Barton and Steven Price.  Some
of Linda's recent comments got us to talking about the VIX and
to what degree technical indicators and chart patterns can be
reliably used on the VIX.

The primary reason why this is even a subject for debate is that
the VIX is not a tradable vehicle.  It's fluctuations are
actually derived from action in the options market, which is
really derived from fluctuations in the price of the S&P 100
index (OEX.X).  If looking for more details than any rational
human should want to know about the creation of the VIX, feel
free to check out the links below, where I went into great
detail about how this index is calculated.

Measuring the Mood of the Markets
VIX Details for the Masochist

But I don't want to talk about any of the basis of the VIX
today.  While interesting to those with a mathematical bent,
the important question for traders to answer is "How do I use
the VIX?"  That is the question about which Linda and I have
debating recently.  Before I delve into this important topic
though, let's take a short detour into an interesting
observation I came to.  Linda and I both come from a fairly
solid mathematical background, with a bent towards the realm
of Physics.  I've reflected in the past that oscillators (in
one way of thinking of them) are a measure of the rate of
change of price action.  Relating this to the world of physics,
there may be an interesting parallel.  Speed or velocity of an
object is a measure of the rate of change of position.  Or for
those of you with an advanced math background, velocity is the
derivative of position.  Remember that?  Well, how about this?
Acceleration (the rate of change of velocity) is the derivative
of velocity.  Simple calculus gives us a mathematical
relationship between position, speed and acceleration in the
realm of physics.

So what does any of this have to do with the VIX?  Well the
option market is part of the "Derivatives" market, and the VIX
is really a derivative of the options market.  So my inquisitive
mind asked the question, "Is there a mathematical relationship
between the price of the OEX, OEX options and the VIX that is
roughly equivalent to the relationship between position,
velocity and acceleration in the Physics world?"  It may be a
silly question, and probably uninteresting to many of my
readers, but these are the strange kinds of questions that tend
to occur to me late at night when I should be staring at the
backs of my eyelids.  I don't want to dwell on the issue too
much here today, but if any of you have any bright ideas or
thoughts on the subject, I'd certainly be interested to hear
them.  Hey, I'll bet Linda would find it interesting too!

Alright, let's get back to the subject at hand, that of how do
we use the VIX.  The basic question that Linda and I have been
debating is "Since the VIX is really derived from the price
action in other vehicles (OEX and OEX options) how reliably
can we apply the study of chart patterns, oscillators and the
use of moving averages?"  I think Linda fired the first volley
in this debate a few months ago, when she started following the
action of the VIX as it related to its 200-dma.  That didn't
really get my attention, because at the time, I didn't see the
200-dma as providing much meaningful information with respect
to the support/resistance being observed in the VIX.  But it
was enough to get my attention and I started looking at the VIX
and its 200-dma.

Then a funny thing happened.  I noticed that the 200-dma seemed
to act as a reference point from which the rubber band (VIX)
tended to get stretched, with particularly interesting results
when it was stretched to the downside.  I made note of this in
the LEAPS column commentary back on January 26th, and I've
copied the pertinent part of my observations here.

The one thing I do know is that throughout the time period from
1998 through late 2002, the 200-dma of the VIX tended to
oscillate around the 25-26 area, sometimes rising as high as
29-30, and sometimes dropping as low as 23.50.  But throughout
that period of time, it remained confined to this range.  But
something interesting happened in the latter half of the year
we just closed out.  The VIX soared above 30 in early July and
it took nearly 4-1/2 months to come back under that level.  In
the intervening span of time, the 200-dma rose through the 30
level for the first time ever and continues to rise, now at

I looked at all the historical data for the VIX, and found that
it has never been more than 8 points below its 200-dma.  That
occurred back in July of 2001, with the VIX at 20 and the
200-dma at 28.  Doing a quick calculation from that difference,
I come up with a minimum possible VIX (with the 200-dma at 33)
of 25.  Allowing for the increase in the baseline with the
200-dma now at 33 (a percentage increase of just under 18%, I
come up with a maximum possible deviation from the 200-dma of
9.4.  That means that with the 200-dma at 33, the absolute
minimum VIX we could see would be around 23.5.

See the logic there?  Throughout the past 5 years, the position
of the VIX's 200-dma has helped to define a floor for the VIX
itself.  Up until recently the 200-dma has been confined to a
pretty steady range between 23-29, and that has helped to keep
the VIX in the 20-30 range most of the time.  But with the
significant increase in volatility in the overall market in
recent months, the 200-dma is persistently rising (now just
below 34) and the net result is that the floor for the VIX is
also rising.  So I think the 200-dma of the VIX is an important
indicator, but not necessarily as an absolute support or
resistance level.

Linda made another interesting observation last month, when she
pointed out the potential for a double bottom formation near
the 26 level.  Sure enough, that seems to have been a very
prescient observation, as the VIX soared through the 36 level
(the peak between the two valleys of that formation) in late
January, and since then has used that level as support.

Another interesting observation as it pertains to that double
bottom formation is the fact that Stochastics gave pretty solid
"Buy" signals as it moved up from the 26 area, both in late
November and then again in the middle of January.  However, note
that when the Stochastics rolled over from overbought in both
early December and then in late January, those "Sell" signals
were much less reliable.  So perhaps the Stochastics (and other
oscillators) can provide solid "trading" signals, but only in
the direction of the primary trend.

Finally, the descending trendline on the VIX from the July and
October highs appears to be an important level, as it has
continued to cap the upwards move in the VIX, even with the
broad markets continuing to break support levels, getting
closer and closer to the October lows.  My expectation is that
the VIX will eventually break above that trendline, and when
it does, should come with some force.  Remember that I've
occasionally talked about the PnF chart on the VIX.  It is
telling us something interesting as well, as a print at 41
would be another PnF Buy signal.  we've been close a couple of
times in the recent past, but I think it is interesting that
it hasn't been reached just yet.  Another important clue?  Time
will tell!

So what do we know now that we didn't know 1400 words ago?  I'm
not sure we can draw any firm conclusions, but it certainly
appears that there is merit to applying our tried and true
knowledge about technical analysis to the VIX.  Any observations
we draw there should be used in the context of other observations
we make directly on price action in the OEX, but I would view
chart patterns and indicators on the VIX as just one more tool
that we can use in our pursuit of understanding what the market
is trying to tell us.  Today's discussion isn't so much about
providing a definitive answer as it is about opening a new door
in the process of discovery.  I hope you found this as
provocative as I did.  If nothing else, it sure is interesting!

Questions and observations are certainly welcome!



Let's make that "Gold:  Some Strategies and Vehicles"
By: Jon Levinson

Hi Jon,

To diversify his portfolio, an acquaintance just plunked down
$185,000 to buy 500 ounces of gold through his private banker.  I
assume he was staking the "recommended" 5-10% of his portfolio in
the revived metal.

I cannot help thinking that from a capital utilization standpoint,
there must be a better way to achieve the same objective without
having to actually put the entire sum into this investment at one
time.  My own thinking was that if he exercised discipline with
available leverage, he had various options, including the

Buy distant gold futures (5 contracts) for an approximate margin
of $7,000.  Put an additional $28,000 into the margin account to
cover $56/ounce worth of drawdowns if gold retraces.  At worst,
put the remaining $150,000 into t-bills but perhaps better, use
other yield strategies, such as option-spreads on low-gold-
correlation assets to earn better absolute returns.  Or he could
sell short-term out-of the money calls on the gold futures on a
hopefully recurring basis.

The other possibility that occurred to me as I was writing this is
to sell deep in the money puts on gold (futures? XAU?) with the
safety margin tucked away?

Is buying 'physical' gold better because if all goes to h!&#,
financial exchanges collapse etc, the gold futures might be
"worthless"?  Could that happen?

Could I get your take on what would have been, theoretically
speaking, the correct way to analyze this issue, and the 'smart'
way of using the available capital (besides buying the corner pub
of course).

Many thanks....SR

This is a great question.  First things first-  I believe that the
margin requirements were changed last week, and $1500 per contract
is now $2025 per, if I'm not mistaken.  However, whatever the
exchange margin requirements are, your own contractual margin
requirement with your broker will vary, and the easiest way to
verify this important detail is with a call to your broker.

That said, the sagacity of your friend's decision will depend in
large measure on the scenario for which your friend is attempting
to plan.  As with any investment, the underlying motive is of
prime concern, and for sophisticated traders, the actual execution
is more of a mechanical response to that idea.  With experience
comes the almost robotic selection of the trading vehicle, the
trigger points for entry and exit, the size of the full position,
etc.  As Doug Cliggott put it in an interview a few weeks ago, a
true "hedge fund" is one which hedges ideas, and not merely
trading vehicles.  For this reason, it's difficult to assess your
friend's decision on the simple facts as described above.
Furthermore, without knowing the size and composition of his
portfolio, it's impossible to know what proportion of the total
his gold investment represents.  We will assume, as do you, that
it represents 5-10% of the total.

Investors purchase gold for a variety of different reasons.  As
always, some invest in gold as a hedge against their "paper"
investments, others to catch the momentum of the current trend,
others still as a "put" on the entire financial world.  I wish to
examine these different motives with reference to your question, as
the motive or idea will determine the appropriate vehicles.

One of my favorite quotes about gold is from Peter Smith, VP at JP
Morgan Chase: "Gold is nobody else's paper."  Unlike bonds, stocks
or currencies, gold's value is not dependent on the health,
solvency, or honor of any counterparty.  Gold is not backed by the
full faith or credit of any company, debtor, government or other
authority.  If anything, its value is inversely correlated to the
financial health of companies, governments and other debtors.  To
this extent, gold as a commodity does well in times of inflation,
and it is free of default risk in times of deflation, making it a
comparatively stable store of wealth.  While the price of gold is
subject to swings, most would want to have gold and silver in
their pocket if taking a ride in a hypothetical time machine.  How
much cash will be enough in 1000 years?  Which currency?  Gold,
however, has always been gold, and its value has been stable
relative to other "things" throughout the millennia.

Most of us, however, aren't planning for a time machine ride any
time soon and storing our wealth in gold and silver for that
purpose isn't high on the list.  However, we see gold coins and
jewellery handed down from generation to generation for this very
reason.  From an investment perspective, however, this type of
planning is in most cases peripheral.  The advantage sought by
most investors in physical gold is for security, portability and
durability.  Gold is not as susceptible to the elements as cash or
other paper.  As well, it needn't be stored in a bank or in an
account.  In the event of a serious dislocation or "bank holiday",
any kind of systemic breakdown, the gold in one's possession is
handy and portable.  An investor who is "building an ark", as Buzz
Lynn puts it, will select gold and silver for this reason.
However, it's rare to hear of investors storing all of their
wealth in physical metal, given the relative unlikelihood of a
systemic breakdown to that degree.  Nevertheless, as our fellow
investors in Argentina know, never say never.

Other investors choose gold because it's in an uptrend and it pays
to be long whatever market is rallying at the time.  Investors
seeking to increase their profits on the run in gold can choose
from a multitude of different instruments, from futures to XAU
options to shares of gold miners to investment funds to equity
mutual funds.  Each vehicle has its own relative advantages and
disadvantages.  The one central distinction between these
investments and physical gold itself is that these "paper" assets
are dependent on the investor's ability to "cash out" one day.  In
the interim, they are "electrons on a screen", which under the
vast majority of circumstances is just fine, but again, never say
never.  Your alternative of using gold futures instead of simply
plunking down $185K on physical gold is vulnerable in this way.

Equities, whether the XAU, shares of individual miners, or mutual
funds comprised of mining stocks and related securities tend to
offer leverage on price moves in the underlying price of gold.
The simplest explanation for this leverage is that the share price
of a mining stock is based on the company's inventory of gold and
its production, with the "premium" implied by the p/e ratio.  The
result is best seen below in the comparison between the price of
gold and the price of the Amex Gold Bugs Index (HUI):

Of course, the flipside of leverage is that what gets levered up
can also be levered down, and for this reason, investors need to
exercise caution in allocating their portfolios to gold miners.
Somewhat of a middle ground is offered by "hedged" mining stocks,
comprised of companies such as Barrick (ABX) and Placerdome (PDG),
among others, which maintain bearish gold positions on their
books, often by selling calls or other such obligations against
the price of gold.  In a rising gold market, these companies will
underperform "unhedged" miners, but in a falling gold market, they
fall relatively less.  The Precious Metals Index (XAU) is
relatively overweighted with hedged miners, and the results can be
seen below.  Compare this to the chart of HUI above, as HUI is
comprised principally of unhedged miners.  It has outperformed the
XAU dramatically through this most recent bull run in gold.

For option traders, the XAU is optionable.  I have never traded
it, not just because of the low volume/ open interest/ wide
spreads, but also because of my own time horizon.  I am a precious
metals investor based on the intermediate to long term
fundamentals of gold.  Most of my position is made up of gold
equity mutual funds, most of which is based on unhedged miners,
but one which contains exposure to some hedgers.  In this manner I
can allow the trend to assert itself without having to deal with
time or premium concerns.

Although I never say never and have a part of my position in gold
and silver coins, it is a small one.  I maintain that position, as
well as a position in CEF, which is a fund that warehouses
physical gold and silver, to provide stability against the wider
swings in my equity funds.

The investor who purchased 500 physical ounces had something in
mind, and it might well have been to build an ark in the event of
financial flood.  Investors of such a mind are unlikely to put on
their position using gold futures or XAU options, given that these
are exposed not just to premium decay, but also to the possibility
of systemic failure.  Had more rapid profit been his priority with
the entirety of that position, he would have looked at options,
futures, equities or equity funds, or some combination of the

In choosing your own strategy, it's fundamental to understand why
you're considering precious metals.  From there, selecting from
variety of different vehicles should flow naturally.

If you trade options online, then you need an online broker that:
offers true direct access to each option exchange
offers stop and stop loss online option orders
offers contingent option orders based on the price of the option or
offers online spread order entry for net debit or credit
offers fast option executions

PreferredTrade offers these online option trading features and more;
call 1-888-889-9178 or click for more information.



Bleeding Continues

The trend continues. We have been ratcheting our way down ever
since breaking out of congestion a week ago.

To read the rest of the Swing Trader Game Plan Click here:

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options,” claims author Larry Spears in his new compact guide book:

“7 Steps to Success – Trading Options Online”.

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and clicking on the link to the book on its home page.



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The Option Investor Newsletter                Wednesday 02-12-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.

In Section Two:

Stop Loss Updates: None
Dropped Calls: None
Dropped Puts: None
Play of the Day: Put - AT
Big Cap Covered Calls & Naked Puts: Down, Down, Down We Go...

Updated on the site tonight:
Market Posture: Repeat Performance
Market Watch: Elevator Down

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

Trade instantly with Stop Losses at PreferredTrade Inc.
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.
Anything else is too slow!








If you trade options online, then you need an online broker that:
offers true direct access to each option exchange
offers stop and stop loss online option orders
offers contingent option orders based on the price of the option or
offers online spread order entry for net debit or credit
offers fast option executions

PreferredTrade offers these online option trading features and more;
call 1-888-889-9178 or click for more information.



AT - Alltel Corporation $44.50 (-2.37 last week)

Company Summary:
Alltel is a customer-focused technology company that provides
communications and information services.  The company's
communications operations consist of its wireless, wireline and
emerging business segments.  AT also sells telecommunications
products and publishes telephone directories.  The company owns
a majority interest in wireless operations in 69 Metropolitan
Statistical Areas, and a majority interest in 132 Regional
Service Areas.  Long-distance services are provided on both a
facilities-based and resale basis by the company's subsidiaries.

Why We Like It:
Amazingly, our AT play just continues
along its trend of lower highs and lower highs, with rally
attempts looking feeble at best.  Since the failure at the
200-dma on February 3rd, AT has hit a posted a lower low every
day and is looking pretty oversold right here.  But it looked
oversold a week ago too.  Proof that oversold can always become
more oversold.  At this point, gaming new entries is a tough
proposition, as there hasn't been enough of a bounce in the past
week to provide a solid risk/reward proposition, especially with
the PnF bullish support line at $44.  It looks like that support
is about to break, and AT came close on Tuesday with a low print
of $43.30.  Looking at the hourly chart shows that the stock
has repeatedly been turned back each time it has tested the
descending trendline that began in early January, so that's
where we'll define a possible new entry point.  A failed rally
attempt below this trendline (currently $44.50) can be used for
new entries, but keep in mind that we're now starting to get
aggressive with our stop, lowering it to $45.10 tonight.

Why This Is Our Play of the Day:

AT did finally breakthrough its bullish support and there looks to
be little support between current levels and $40.  The stock
received a backhanded upgrade this morning, with UBS raising it to
a buy and also lowering its 12 month price target by five dollars.
That eventual target was lowered from $57 to $52, but it does not
look like AT has much of a chance of achieving that level anytime
soon.  We particularly like today's failed rally following that
upgrade, which fell short at the trend line described in the last
write-up at $44.50 and eventually landed the stock in the red once
again.  Because the stock looks oversold, much like the rest of
the market, we think a move below the recent bottom at $43.30
would provide for additional entries.  If it manages to break down
to new lows, even after the upgrade, it looks like $40 could be
the next test in the near future. If we get a market bounce, then
traders should wait for a failure below that trend line once again
to target new entries.

*** February contracts expire in two weeks ***

BUY PUT FEB-45 AT-NI OI= 202 at $2.25 SL=0.75
BUY PUT MAR-45 AT-OI OI= 159 at $3.10 SL=1.25

”If you haven’t traded options online – you haven’t really traded
options,” claims author Larry Spears in his new compact guide book:

“7 Steps to Success – Trading Options Online”.

Order today and save 25% (only $15) by clicking on PreferredTrade
and clicking on the link to the book on its home page.



Down, Down, Down We Go...
By Ray Cummins

Stocks moved lower Wednesday amid growing fear of terrorism
and concerns over the impending war with Iraq.

The Dow Jones Industrials Average slumped 84 points to 7,758 with
General Motors (NYSE:GM) leading the slide after Banc of America
issued a "sell" rating on the blue-chip component.  The NASDAQ
fared only slightly worse, down 16 points to 1,278 as chip and
computer hardware stocks succumbed to the downside pressure amid
a mediocre quarterly report from semiconductor-equipment maker
Applied Materials (NASDAQ:AMAT).  The S&P 500 Index declined 10
points to a new four-month low at 818 on weakness in media, drug,
oil, gold and utility shares.  Paper and retail were among the
few groups enjoying gains.  In the broader market, losing issues
outnumbered advancing issues by more than 2 to 1 on the both the
New York Stock Exchange and the NASDAQ.  Trading volumes were
light, with about 1.2 billion shares traded on the Big Board and
1.2 billion shares changing hands on the technology exchange.  In
the bond market, prices climbed higher despite weak demand at the
government bond auction.  The yield on the benchmark 10-year bond
eased to 3.91%.




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 our subscribers, 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 editor of this section does not take actual positions in any
published plays and the summary comments are 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 in
any way replace your duty to diligently monitor and manage the
positions in your portfolio.


The Maximum Yield (listed in the summary and with new option
selling plays) is the greatest possible profit available in the
position.  This amount, expressed as a percentage, is based on
the initial margin requirement as determined by the Board of
Governors of the Federal Reserve, the U.S. options markets and
other self-regulatory organizations.  Although increased margin
requirements may be imposed either generally or in individual
cases by various brokerage firms, our calculations use the widely
accepted margin formulas from the Chicago Board Options Exchange.
The "Simple Yield" is based on the cost of the underlying issue
(in the event of assignment), including the premium from the sold
option, thus it reflects the maximum potential loss in the trade.

Naked Puts

Stock  Strike Strike  Cost Current   Gain    Max   Simple
Symbol  Month  Price Basis  Price   (Loss)  Yield  Yield

ASA      FEB    35   34.45  38.50   $0.55   4.44%  1.60%
COF      FEB    25   24.35  29.71   $0.65   7.31%  2.67%
IGEN     FEB    35   34.05  38.57   $0.95   8.27%  2.79%
INVN     FEB    22   22.05  26.50   $0.45   6.32%  2.04%
PHM      FEB    45   44.05  50.13   $0.95   5.39%  2.16%
AMGN     FEB    47   46.30  53.45   $1.20   5.40%  2.59%
CEPH     FEB    45   44.15  50.78   $0.85   5.04%  1.93%
AMGN     FEB    47   46.90  53.45   $0.60   3.66%  1.28%
AU       FEB    30   29.55  33.34   $0.45   4.94%  1.52%
CEPH     FEB    45   44.25  50.78   $0.75   5.18%  1.69%
SYMC     FEB    40   39.45  45.21   $0.55   4.22%  1.39%
COP      FEB    45   44.45  48.51   $0.55   4.35%  1.24%
CYMI     FEB    30   29.20  30.48   $0.80   9.95%  2.74%
DISH     FEB    22   22.20  25.14   $0.30   5.19%  1.35%
FTE      FEB    22   22.20  25.09   $0.30   5.86%  1.35%
MERQ     FEB    30   29.75  33.74   $0.30   5.03%  1.01%
MUR      FEB    37   37.10  43.69   $0.40   4.12%  1.08%
QCOM     FEB    35   34.40  37.65   $0.60   6.20%  1.74%
AVCT     FEB    25   24.75  26.60   $0.25   5.40%  1.01%
FTE      FEB    22   22.20  25.09   $0.30   7.60%  1.35%
MERQ     FEB    30   29.70  33.74   $0.30   6.16%  1.01%
PTEN     FEB    30   29.65  32.90   $0.35   6.04%  1.18%

As noted in last week's summary, losing positions in Accredo
Health (NASDAQ:ACDO) and Biosite (NASDAQ:BSTE), as well as
the (profitable) position in Genzyme General (NASDAQ:GENZ),
have been previously closed.  Cymer (NASDAQ:CYMI), Capital
One Financial (NYSE:COF) and Anglogold (NYSE:AU) are now on
the watch-list.

Naked Calls

Stock  Strike Strike  Cost   Current  Gain    Max   Simple
Symbol Month  Price   Basis  Price   (Loss)  Yield  Yield

EXPE     FEB    75    76.25  62.44   $1.25   6.84%  1.64%
MBG      FEB    30    30.65  25.44   $0.65   6.68%  2.12%
QCOM     FEB    42    43.05  37.65   $0.55   5.07%  1.28%
CCMP     FEB    60    61.15  41.78   $1.15   6.10%  1.88%
KLAC     FEB    45    45.80  32.10   $0.80   6.83%  1.75%
LLTC     FEB    32    33.25  27.07   $0.75   6.68%  2.26%
QLGC     FEB    47    48.40  33.29   $0.90   6.19%  1.86%
CDWC     FEB    50    50.55  42.59   $0.55   4.59%  1.09%
CTSH     FEB    65    65.75  66.00  ($0.25)  0.00%  1.14% *
NVLS     FEB    37    37.85  27.78   $0.35   5.41%  0.92%
EXPE     FEB    70    70.45  62.44   $0.45   3.20%  0.64%
ZBRA     FEB    60    60.75  56.76   $0.75   5.77%  1.23%
CTSH     FEB    70    70.65  66.00   $0.65   7.91%  0.92%
KLAC     FEB    37    37.75  32.10   $0.25   5.49%  0.66%
NVLS     FEB    32    32.75  27.78   $0.25   5.96%  0.76%

The more aggressive position (short $65 call) in Cognizant
Technologies (NASDAQ:CTSH) should be closed to limit losses.

Put-Credit Spreads

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

SLM    106.71 104.16  FEB   90  95  0.50  94.50  $0.50   Open
AGN     60.51  59.63  FEB   50  55  0.50  54.50  $0.50   Open
BRL     77.63  74.83  FEB   65  70  0.40  69.60  $0.40   Open
FIC     44.63  48.47  FEB   35  40  0.45  39.55  $0.45   Open
AET     44.21  43.40  FEB   35  40  0.50  39.50  $0.50   Open
BR      42.71  44.94  FEB   37  40  0.25  39.75  $0.25   Open
MMM    127.50 123.08  FEB  115 120  0.55 119.45  $0.55   Open
BLL     52.73  51.91  FEB   45  50  0.40  49.60  $0.40   Open
EBAY    74.93  73.40  FEB   65  70  0.55  69.45  $0.55   Open
BHE     34.68  34.26  MAR   25  30  0.60  29.40  $0.60   Open
GYI     30.85  30.46  FEB   25  30  0.60  29.40  $0.60   Open
MUR     42.63  43.69  FEB   37  40  0.25  39.75  $0.25   Open

As previously noted, P.F.Chang's (NASDAQ:PFCB) close below the
sold strike at $35 signaled our exit in the losing position.
Getty Images (NASDAQ:GYI) will be a candidate for early exit
on any daily close below $29.50.

Call-Credit Spreads

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

HET    37.47   32.95  FEB   42  40  0.40  40.40  $0.40   Open
PHA    42.00   40.16  FEB   50  45  0.60  45.60  $0.60   Open
ZBRA   57.32   56.76  FEB   70  65  0.50  65.50  $0.50   Open
ATK    59.65   50.18  FEB   70  65  0.50  65.50  $0.50   Open
GS     73.51   65.05  FEB   85  80  0.40  80.40  $0.40   Open
PDX    34.40   27.80  FEB   45  40  0.65  40.65  $0.65   Open
ABK    55.74   49.59  FEB   65  60  0.50  60.50  $0.50   Open
FITB   56.49   52.50  FEB   65  60  0.50  60.50  $0.50   Open
GM     37.28   36.05  FEB   42  40  0.25  40.25  $0.25   Open
WB     35.72   34.42  FEB   40  37  0.25  37.75  $0.25   Open
XL     75.92   71.50  FEB   85  80  0.50  80.50  $0.50   Open
FNM    64.10   63.00  MAR   75  70  0.55  70.55  $0.55   Open
ONE    35.65   35.17  FEB   40  37  0.20  37.70  $0.20   Open
TOT    67.33   64.45  FEB   75  70  0.25  70.25  $0.25   Open?

Although currently profitable, Harmon Electronics (NYSE:HAR)
was closed when the issue moved above the sold strike at $60.
Total Fina (NYSE:TOT) gapped lower last Thursday and never
recovered, thus a credit near the target was not available.

Calendar Spreads (Reader's Request)

Stock   Pick   Last     Long     Short    Current   Max     Play
Symbol  Price  Price   Option    Option    Debit   Value   Status

APA	  60.74  62.08   APR-65C   FEB-65C   1.35    1.70     Open
STJ	  43.69  41.19   APR-45C   FEB-45C   1.20    1.00     Open

Apache Oil (NYSE:APA) offered an acceptable entry point and the
position was profitable after only one week in play.

Credit Strangles

No Open Positions

Synthetic Positions:

No Open Positions

Questions & comments on spreads/combos to Contact Support


This following group of plays is simply a list of candidates to
supplement your search for profitable trading positions.  As with
any new investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
are suitable for your personal skill level, risk-reward tolerance
and portfolio outlook.  In addition, we recommend that you avoid
any trading techniques in which you are not completely comfortable
with the potential capital 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.



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.


The sale of uncovered puts entails considerable financial risk,
far more than the initial margin or collateral required to open
a position.  The maximum financial obligation for the sale of a
naked put is the strike price (of the underlying stock) that is
sold.  Although this obligation is reduced by the premium from
the sale of the option, a writer of puts should have the cash or
collateral equivalent of the sold strike price in reserve at all
times.  In addition, there is one very important rule when using
this strategy: Don't sell puts on stocks that you don't want to
own!  Why?  Because stocks occasionally experience catastrophic
declines, exponentially increasing the margin maintenance and
possibly causing a devastating shortfall in your portfolio.  It
is also important that you consider using trading stops on naked
option positions to help limit losses when a stock's price falls.
Many professional traders suggest closing the position when the
underlying share value moves below the sold strike, or using a
"buy-to-close" stop order at a price that is no more than twice
the original premium received from the sold option.

ANF - Abercrombie & Fitch  $28.90  *** Bullish Retailer! ***

Abercrombie & Fitch Company (NYSE:ANF), through its subsidiaries
as specialty retailers, operates stores selling casual apparel,
personal care and other accessories for men, women and kids under
the Abercrombie & Fitch, abercrombie and Hollister Co. brands.  As
of February 2, 2002, the company operated 491 stores in the United
States.  A&F's stores and point-of-sale marketing are designed to
convey the principal elements and personality of each brand.  The
store design, furniture, fixtures and music are carefully planned
and coordinated to create a shopping experience that is consistent
with the A&F lifestyle.

ANF - Abercrombie & Fitch  $28.90

PLAY (sell naked put):

Action    Month &  Option    Open    Last  Cost    Max.  Simple
Req'd     Strike   Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  FEB 27.5 ANF NY     827    0.40  27.10  12.8%   1.5%
SELL PUT  MAR 25   ANF OE      70    0.60  24.40   6.0%   2.5% *
SELL PUT  MAR 27.5 ANF OY     173    1.30  26.20   9.3%   5.0%

CLX - The Clorox Company  $41.00  *** Profits Are Up! ***

The Clorox Company (NYSE:CLX) produces and markets non-durable
consumer products sold primarily through grocery and other retail
stores.  The company's Household Products - North America segment
includes household cleaning, bleach and other home care products,
water filtration products, food storage and trash disposal items
marketed in the United States and all products marketed in Canada.
The company's household products - Latin America - other segment
includes operations outside the United States and Canada, exports
and Puerto Rico, excluding European automotive care, and primarily
focuses on the laundry, household cleaning, automotive care,
insecticides (Brazil and Korea) and food storage and trash disposal
categories.  In addition, the Specialty Products segment includes
charcoal, United States and European automotive care, cat litter,
insecticides, dressings and sauces, and professional products

CLX - The Clorox Company  $41.00

PLAY (sell naked put):

Action    Month &  Option    Open    Last  Cost    Max.  Simple
Req'd     Strike   Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  FEB 40   CLX NH     479    0.30  39.70   6.5%   0.8%
SELL PUT  MAR 40   CLX OH      92    1.00  39.00   5.0%   2.6% *

IGEN - IGEN International  $38.59  *** Consolidation Complete? ***

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

IGEN - IGEN International  $38.59

PLAY (sell naked put):

Action    Month &  Option    Open    Last  Cost    Max.  Simple
Req'd     Strike   Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  FEB 35   GQ NG      954    0.35  34.65   9.7%   1.0% *
SELL PUT  MAR 30   GQ OF      917    0.60  34.40   4.0%   1.7%
SELL PUT  MAR 35   GQ OG    1,712    1.75  33.25  10.6%   5.3%

OTEX - Open Text  $28.05  *** Strong Profits! ***

Open Text (NASDAQ:OTEX) develops, markets, licenses and supports
collaboration and knowledge management software for intranets,
extranets and the Internet, enabling users to find electronically
stored information, work together in creative and collaborative
processes, perform group calendaring and scheduling and distribute
or make available to users across networks or the Internet the
resulting work product and other information.  The firm's principal
product line is Livelink, a collaboration and knowledge management
software for global enterprises.  Livelink offers several engines,
including, but not limited to, search, collaboration, workflow,
group calendaring and scheduling and document management.  As an
extension to its solutions-based offerings, the firm also provides
professional services, training, documentation as well as technical
support services to accelerate its customers' implementation of,
and satisfaction with, its products.

OTEX - Open Text  $28.05

PLAY (sell naked put):

Action    Month &  Option    Open    Last  Cost    Max.  Simple
Req'd     Strike   Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  MAR 25   QFT OE      0     0.50  24.50   4.7%   2.0% *

SYMC - Symantec  $45.24  *** Up-Trend Intact! ***

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

SYMC - Symantec  $45.24

PLAY (sell naked put):

Action    Month &  Option    Open    Last  Cost    Max.  Simple
Req'd     Strike   Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  FEB 45   SYQ NI   2,105    0.95  44.05  17.1%   2.2%
SELL PUT  MAR 40   SYQ OH     422    0.85  39.15   5.1%   2.2% *
SELL PUT  MAR 45   SYQ OI     296    2.35  42.65   9.6%   5.5%

VIP  - Vimpel-Communications  $33.66  *** Strong Telecom! ***

Vimpel-Communications (NYSE:VIP) is a current provider of
telecommunications services in Russia, operating under the Bee
Line family of brand names.  VimpelCom's license portfolio covers
approximately 70% of Russia's population (100 million people),
including the City of Moscow and the Moscow Region.  VimpelCom
introduced two digital cellular communications standards to Russia
and built a dual band GSM-900/1800 cellular network.  The company
also led the development and emergence of the mass consumer market
for wireless communications in Russia by introducing a prepaid
product solution.  In 2000, VimpelCom introduced new technologies,
such as wireless application protocol and BeeOnline, a multi-access
Internet portal that offers a multitude of wireless information and
entertainment services, including location-based features.

VIP  - Vimpel-Communications  $33.66

PLAY (sell naked put):

Action    Month &  Option    Open    Last  Cost    Max.  Simple
Req'd     Strike   Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  MAR 30   VIP OF     255    0.60  29.40   4.7%   2.0% *



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.

PRX - Pharmaceutical Resources  $33.67  *** Bullish Trend ***

Pharmaceutical Resources (NYSE:PRX) is a holding company that,
through its subsidiaries, is in the business of developing,
manufacturing and distributing a broad line of generic drugs
in the United States.  PRX operates primarily through its wholly
owned subsidiary, Par Pharmaceutical, Inc., a manufacturer and
distributor of generic drugs.  PRX's product line consists of
prescription and, to a lesser extent, over-the-counter generic
drugs consisting of approximately 119 products representing
various dosage strengths for 51 drugs.  The company also has
strategic alliances with several pharmaceutical and chemical
companies.  PRX markets its products primarily to wholesalers,
retail drug store chains, drug distributors and repackagers.

PRX - Pharmaceutical Resources  $33.67

PLAY (conservative - bullish/credit spread):

BUY  PUT  MAR-25.00  PRX-OE  OI=0   A=$0.15
SELL PUT  MAR-30.00  PRX-OF  OI=30  B=$0.55
POTENTIAL PROFIT(max)=8% B/E=$29.60

SLM - SLM Corporation  $105.54  *** Safe With Sally Mae! ***

SLM Corporation (NYSE:SLM), formerly USA Education, is a private
source of funding, delivery and servicing support for higher
education loans for students and their parents in the United
States.  SLM provides a range of financial services, processing
capabilities and information technology to meet the needs of
educational institutions, lenders, students and guarantee
agencies.  The company's managed portfolio of student loans,
including loans owned and loans securitized, totals over $70
billion, of which the majority is federally insured.  The firm
also has commitments to buy billions of dollars of additional
student loans.  Primarily a provider of education credit, the
company serves a diverse range of clients, including over 6,000
educational and financial institutions and guarantee agencies.
The company serves in excess of seven million borrowers through
its ownership or management of student loans.

SLM - SLM Corporation  $105.54

PLAY (very conservative - bullish/credit spread):

BUY  PUT  MAR-90  SLM-OR  OI=212  A=$0.60
SELL PUT  MAR-95  SLM-OS  OI=774  B=$0.95
POTENTIAL PROFIT(max)=8% B/E=$94.60



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.


The sale of uncovered calls entails considerable financial risk,
far more than the initial margin or collateral required to open
the position.  The maximum financial obligation for the sale of a
naked option is the strike price (of the underlying stock) that
is sold.  Although this obligation is reduced by the premium from
the sale of the option, a writer of options must have the cash or
collateral equivalent of the sold strike price in reserve at all
times.  The simple fact is: stocks often experience large price
swings, exponentially increasing the margin maintenance and very
possibly causing a devastating shortfall in your portfolio.  It
is also important that you consider using trading stops on naked
option positions to help limit losses when a stock price moves in
a volatile manner.  Many professional traders suggest closing the
position when the underlying share value moves beyond the sold
strike, or using a "buy-to-close" stop order at a price that is no
more than twice the original premium received from the sold option.

BGEN - Biogen  $37.76  *** Downtrend Resumes? ***

Biogen (NASDAQ:BGEN) is a biopharmaceutical company principally
engaged in the business of developing, manufacturing and marketing
drugs for human healthcare.  The firm derives revenues from sales
of its AVONEX (Interferon beta-1a) product for the treatment of
relapsing forms of multiple sclerosis (MS) and from royalties on
worldwide sales by its licensees of a number of products covered
under patents it controls.  In addition, Biogen has a significant
number of ongoing research programs and a pipeline of development
stage products, including AMEVIVE (alefacept), which is being
considered for approval by the United States FDA and regulatory
authorities in the European Union and Canada for the treatment of
moderate to severe psoriasis.

BGEN - Biogen  $37.76

PLAY (sell naked call):

Action    Month &  Option    Open    Last  Cost    Max.  Simple
Req'd     Strike   Symbol    Int.    Price Basis  Yield  Yield

SELL CALL FEB 40   BGQ BH    3,122   0.30  40.30   7.7%   0.7% *
SELL CALL MAR 40   BGQ CH    1,215   1.15  41.15   6.7%   2.8%
SELL CALL MAR 42.5 BGQ CV      512   0.45  42.95   3.4%   1.0% TS

ESRX - Express Scripts  $46.90  *** Pre-Earnings Sell-Off! ***

Express Scripts (NASDAQ:ESRX) is a pharmacy benefit management
company in North America.  The company is independent from any
pharmaceutical manufacturer ownership, which allows it to make
unbiased formulary recommendations to its clients, balancing
both clinical efficacy and cost.  The company provides a full
range of pharmacy benefit management services, including retail
drug card programs, mail pharmacy services, drug formulary
management programs and other clinical management programs for
approximately 19,000 client groups that include HMOs, health
insurers, third-party administrators, employers, sponsored
benefit plans and government health programs.  As of January 1,
2002, some of the company's largest clients included AARP,
Aetna U.S. Healthcare and Blue Cross of Massachusetts.

ESRX - Express Scripts  $46.90

PLAY (sell naked call):

Action    Month &  Option    Open    Last  Cost    Max.  Simple
Req'd     Strike   Symbol    Int.    Price Basis  Yield  Yield

SELL CALL FEB 50   XTQ BJ    480     1.35  51.35  26.8%   2.6%
SELL CALL MAR 50   XTQ CJ     30     2.45  52.45  11.1%   4.7%
SELL CALL MAR 55   XTQ CK    593     0.70  55.70   5.1%   1.3% *

GM - General Motors  $34.02  *** A "Sell" Rating! ***

General Motors (NYSE:GM) is a diversified automotive business
with interests in communications services, locomotives, finance
and insurance.  GM's automotive business designs, manufactures,
and/or markets vehicles primarily in North America under the
Chevrolet, Pontiac, GMC, Oldsmobile, Buick, Cadillac, Saturn and
Hummer nameplates, and outside North America under the Vauxhall,
Opel, Holden, Isuzu, Saab, Buick, Chevrolet, GMC, and Cadillac
nameplates.  GM's communications services relate to its Hughes
Electronics Corporation subsidiary, which includes its digital
entertainment, information and communications services, and
satellite-based private business networks.  GM also is engaged
in the design, manufacturing and marketing of locomotives and
heavy-duty transmissions.  The firm's financing and insurance
operations are conducted through the General Motors Acceptance
Corporation, which provides a broad range of financial services.

GM - General Motors  $34.02

PLAY (sell naked call):

Action    Month &  Option    Open    Last  Cost    Max.  Simple
Req'd     Strike   Symbol    Int.    Price Basis  Yield  Yield

SELL CALL FEB 35   GM BG     2,161   0.40  35.40  10.4%   1.1%
SELL CALL MAR 35   GM CG     5,449   1.40  36.40   8.2%   3.8%
SELL CALL MAR 37.5 GM CU     9,073   0.60  38.10   4.6%   1.6% *

VIA - Viacom  $36.55  *** Sector Slump! ***

Viacom (NYSE:VIA), together with its subsidiaries, is a widely
diversified worldwide entertainment company.  The company owns
and operates advertiser-supported basic cable television program
services through MTV Networks and BET: Black Entertainment TV and
and premium subscription television program services through the
Showtime Network in the United States and internationally.  The
Television segment consists of the CBS and UPN television networks.
Infinity's operations are focused on "out-of-home" media with
operations in radio broadcasting.  The Entertainment segment's
principal businesses are Paramount Pictures, which produces and
distributes motion pictures.  The company operates in the home
video retail business, which includes both rental and sale of
videocassette and DVD products.  The company also publishes and
distributes consumer hardcover books.

VIA - Viacom  $36.55

PLAY (sell naked call):

Action    Month &  Option    Open    Last  Cost    Max.  Simple
Req'd     Strike   Symbol    Int.    Price Basis  Yield  Yield

SELL CALL FEB 37.5 VIA BU    520     0.65  38.15  15.3%   1.7%
SELL CALL MAR 37.5 VIA CU    323     1.90  39.40  10.0%   4.8%
SELL CALL MAR 40   VIA CH    414     0.95  40.95   6.4%   2.3% *
SELL CALL MAR 42.5 VIA CV    332     0.35  42.85   3.2%   0.8% TS



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.

CCU - Clear Channel Comm.  $36.70  *** Media Stocks Slide! ***

Clear Channel Communications (NYSE:CCU) is a diversified media
company with three business segments, radio broadcasting, outdoor
advertising and live entertainment.  The company owns, programs or
sells airtime for over 1,000 domestic radio stations and two
international radio stations and owns a national radio network.
In addition, the company has equity interests in various domestic
and international radio broadcasting companies.  The company is
also an outdoor advertising company, with a total advertising
display inventory of 149,171 domestic display faces and 549,094
international display faces.  Clear Channel is also a diversified
promoter, producer and venue operator for live entertainment
events and owns or operates over 100 live entertainment venues.

CCU - Clear Channel Comm.  $36.70

PLAY (moderately aggressive - bearish/credit spread):

BUY  CALL  MAR-45.00  CCU-CI  OI=1377  A=$0.30
SELL CALL  MAR-40.00  CCU-CH  OI=510   B=$1.05
POTENTIAL PROFIT(max)=16% B/E=$40.75

FDX - FedEx Corporation  $50.87  *** Air Cargo Slump! ***

FedEx (NYSE:FDX) is a global provider of transportation, e-commerce
and supply chain management services.  Services offered by the firm
include worldwide express delivery, ground small-package delivery,
less-than-truckload freight delivery, global logistics, supply
chain management and customs brokerage, trade facilitation, and
electronic commerce solutions. FedEx offers integrated business
solutions through a network of subsidiaries operating independently,
including FedEx Express, an express transportation company; FedEx
Ground, a provider of small-package ground delivery services, and
FedEx Freight, a provider of regional LTL freight services.  Other
operating companies include FedEx Custom Critical, a critical
shipment carrier; FedEx Trade Networks, a global trade services
company, and FedEx Services, a provider of sales, marketing, supply
chain management services and information technology (IT) support
for the company's global brands.

FDX - FedEx Corporation  $50.87

PLAY (conservative - bearish/credit spread):

BUY  CALL  MAR-60.00  FDX-CL  OI=270   A=$0.15
SELL CALL  MAR-55.00  FDX-CK  OI=1493  B=$0.70
POTENTIAL PROFIT(max)=12% B/E=$55.55

UTX - United Technologies  $60.50  *** Big Down Day! ***

United Technologies (NYSE:UTX), through its operating segments,
manufactures, installs and services elevators and escalators;
manufactures commercial and residential heating, ventilating
and air conditioning systems; produces commercial, aviation and
military aircraft engines, and military & commercial helicopters;
and supplies transport helicopters.  Otis manufactures, markets
and installs elevators, escalators, automated people movers and
service.  Carrier manufactures heating, ventilating and air
conditioning systems and equipment, and commercial and transport
refrigeration equipment.  Pratt & Whitney makes aircraft engines,
parts, industrial gas turbines and space propulsion.  The Flight
Systems division manufactures helicopters, and sells aircraft
power generation and management systems, engines, flight controls,
auxiliary power units, environmental control systems and propeller
systems, compressors, metering devices, fluid handling equipment
and enclosed gear drives.

UTX - United Technologies  $60.50

PLAY (moderately aggressive - bearish/credit spread):

BUY  CALL  MAR-70.00  UTX-CN  OI=1693  A=$0.30
SELL CALL  MAR-65.00  UTX-CM  OI=1025  B=$1.05
POTENTIAL PROFIT(max)=16% B/E=$65.75



The information published in this section should only be used by
experienced traders who are fully aware of the risks associated
with participating in complex financial markets.  Option traders
can lose their entire investment with a few unfavorable positions
and there is no assurance or expectation that current or future
candidates will be profitable or equal past performance.  Stock
and option quotes and other relevant data have been obtained from
sources believed to be reliable, however there is no guarantee
that any published material is accurate or complete and it should
not be relied upon to initiate a trade or position.  Personal "due
diligence" is recommended before participating in any financial



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