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Daily Newsletter, Wednesday, 07/16/2003

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The Option Investor Newsletter                Wednesday 07-16-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: The Day After
Futures Wrap: Reprieve
Index Trader Wrap: See Note
Weekly Fund Family Profile: Banknorth Funds


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
     07-16-2003         High     Low     Volume Advance/Decline
DJIA     9094.49 - 34.38  9153.42  9042.19 2.16 bln    595/1518
NASDAQ   1747.97 -  5.24  1767.90  1734.14 1.95 bln    731/1200
S&P 100   501.07 -  3.00   505.89   498.85   Totals   1326/2718
S&P 500   994.09 -  6.33  1003.47   989.30
RUS 2000  473.68 -  3.25   477.97   471.93
DJ TRANS 2597.51 + 23.54  2597.54  2569.41
VIX        22.29 +  0.45    22.74    21.62
VXN        33.94 -  0.01    35.48    33.63
Total Volume 4,360M
Total UpVol  1,370M
Total DnVol  2,908M
52wk Highs     471
52wk Lows       33
TRIN          1.08
PUT/CALL      0.70
*******************************************************************

The Day After
Jonathan Levinson

We were treated to a second day of Alan Greenspan's testimony,
and the markets obliged us with a second day of large moves.  The
initial move was hard down for equities, and if you missed it,
you spent the remainder of the day chasing a tight range rich
with temptation and menace.

One year daily candle chart of the INDU




In honour of the broad, macroeconomic issues being discussed by
lawmakers for the past two days, I've zoomed out to the yearly
chart of the indices for some perspective on where we sit.  We
see the Nasdaq fresh off a recent yearly high, with the Dow
lagging behind, having just failed to break its previous top.
The lower oscillator high on the INDU is particularly worrisome
for bulls, and in terms of risk/reward, the better bet appears to
be to the downside.  For a more detailed analysis of the indices
and the day's action, I have covered the US Dollar, gold,
treasuries, as well as the Dow, Nasdaq and S&P futures in
tonight's Futures Wrap.

One year daily candle chart of the COMPX




The Commerce Department reported that U.S. businesses inventories
dropped by 0.2 percent in May as sales declined.  This was the
first reduction in business inventories since April 2002. The
inventory-to-sales ratio remained flat at 1.40. Inventories were
unchanged in April while sales sank 1.7 percent.  Inventories
were expected to be unchanged from April to May.

The Federal Reserve reported that industrial production rose 0.1
percent in June. Manufacturing output rose 0.4 percent. Capacity
utilization of US factories, mines and utilities remained at 74.3
percent, indicating massive ongoing idle capacity.

The Consumer Price Index rose 0.2 percent in June, while the core
rate excluding food and energy costs remained unchanged.  The CPI
was inline with expectations, while the core rate disappointed by
0.1 percent.  The CPI was up 2.1 percent year-over-year, while
the core rate increased 1.5 percent. For the first six months of
2003, the CPI has increased at a 2.2 percent seasonally adjusted
annual rate.

The American Petroleum Institute reported a 4.8 million barrel
drop in crude inventories for the week ended July 11. The Energy
Department had reported a drop of 3.6 million barrels, a welcome
consensus after last week's disagreement between the two sources.
The AIP  reported that supplies now stand at 277.7 million
barrels. Gasoline supplies rose by 5.2 million barrels to 209.4
million barrels and distillate inventories reached 113.4 million
barrels on a gain of 4.8 million barrels from the previous week.

The Mortgage Bankers Association (MBA) announced that seasonally-
adjusted demand for mortgage refinancings, the MBA refinancing
index, dropped 1.6% for the week ended July 11.  Demand for loans
with which to buy homes, the Purchase index, rose 8%. The average
interest rate for a 30-year fixed rate mortgage fell to 5.33%
from 5.37%.  Note that the previous week was a shortened holiday
week, and so the decline in the refi index compounded a very poor
showing the week before. The National Association of Home
Builders reported that its index for current sales rose to 69
from 67, its index for buyers' traffic rose to 50 from 47, and
its  expectations index rose to a two-year high of 73 from 70 in
June.

In our continuing glance at macro issues, I have updated the MZM
money supply chart, and have added some others.  I encourage you
to look at the past two Wednesday Market Wraps for greater
perspective on this subject.

Chairman Greenspan addressed the Senate Banking Committee today,
discussing the usual plethora of pertinent issues, including the
retirement of the baby boomers, currency intervention by central
banks, the revaluation of the yuan, rising deficits, tax cuts and
unconventional measures.  He held out sufficient hope of the
latter to give a boost to sagging treasury bond prices, which had
started the day continuing the slide from yesterday's selloff.  I
find these issues fascinating and could discuss them ad nauseum,
but will instead continue the analysis of these broader issues by
looking at the latest data.

The first set of charts demonstrates the efforts made by the
Federal Reserve to stimulate the economy.  The inflation of the
money supply, which is an effective tax or devaluation on the
intrinsic value of every dollar in circulation, is demonstrated
in the 13 year chart of MZM:

MZM chart



The Fed's ongoing interventions are reflected in the 13 year
chart of its open market operations, also very inflationary.
Note the scale on these charts, as they reflect multiple hundred
percentage point increases.


Chart of overnight and term repurchase agreements (repos)



The effect of this inflation of the money supply by the Fed has
resulted in stock and bond market rallies.  The Fed has helped
this along by lowering the Federal Funds Rate to 45 year lows.


Chart of the Fed Funds Rate





Here is another effect of these operations.  As the Fed has
Lowered the cost and value of money, consumers have borrowed
increasing amounts of it:


Chart of Total Consumer Credit



Despite these inflationary measures, which the Fed characterizes
as "stimulative" to the economy, unemployment remains persistent,
and worst of all, the duration of that unemployment is
increasing:

Chart of Unemployment Rate



Most disconcerting is that the Federal Funds rate and treasury
yields, which determine the "price" of a borrowed dollar, are
arguably seeking or have found a bottom, with the ten year note
yield breaking above its 200 day moving average yesterday, and
are now ticking higher.  While the Fed has succeeded in lowering
the value of the greenback, the economy remains shaky, most so
where we live.  Congressmen Sanders and Paul harangued Chairman
Greenspan on this issue yesterday.

Chart of US Bankruptcy Filings




Once again, note the scale of these charts, as they reflect large
trends.


Chart of State and Local Surplus or Deficit





Last week, this is what I said:

"Lastly, the selling in treasuries since the Fed's last quarter-
point rate cut has caused a spike in yields. In light of the
rising number of bankruptcies during the past year and the 45
year low federal funds rate, I believe that the single greatest
current danger to the economy is higher interest rates.  Given
the Fed's strong words about its intention to keep rates down, I
do not expect the selloff in treasuries to go much further. "

In fact, we saw just the opposite yesterday, as Chairman
Greenspan told Congress that, in his opinion, the economy was
showing signs of imminent recovery and that the Fed was not
planning on aggressive purchasing treasury bonds.  This sparked a
selloff in bonds, driving yields up nearly 25 basis points.  It
was news the last time the Fed lowered the Fed Funds rate by that
amount.  The statement that the Fed has been "pushing on a
string" once again came to mind.  With the 12-month change in the
Consumer Price Index at 2.1%, the current 3-month T-bill rate of
0.9% is -1.2% in real terms.   Judging from this, the Fed is
pushing very, very hard on that string, to the detriment of
savers who must put their money at risk just to keep up with
price inflation.

In corporate news, AMR reported an improved Q2 net loss of $75
million, equal to 47 cents per share, compared with Q2 2002's
loss of $495 million or $3.19 per share.  Excluding special
items, including a $358 million cash payment from the
Transportation Security Administration, Q2's loss was $2.26 per
share.  The stock gained nearly 10% on the news.

The House Capital Markets Subcommittee Richard Baker, R-La.,
cancelled a hearing scheduled for Thursday on regulatory reform
of Freddie Mac (FRE) and Fannie Mae (FNM), citing an alleged lack
of cooperation on the part of the companies.  Baker said, "Their
lack of cooperation is unfortunate and raises questions about
their seriousness. I may have no choice but to consider extending
a different form of invitation."  Sounds like possible subpoenas to me.

After the bell, AMD reported a smaller than expected loss, losing
40 cents per share vs. -.54 estimated and estimating next
quarter's sales to increase by an unspecified amount.  AAPL beat
by 2 cents, coming in at .05 per share, but announcing Q3 profits
lower by 41 percent.  It expects a "slight increase" in Q4
profits and sales notwithstanding.  IBM met estimates of .98 per
share, up 10% y-o-y on acquisitions and cost-cutting with gains
from foreign exchange, the stock trading  down over 1$ as of this
writing.  QLGC met estimates as well at .33 per share EPS, with
net revenues for Q1 up 28% over Q1 2002.  CDWC missed by a penny
at 51 cents per share.

COF beat by 13 cents at 1.23 cents, and estimated EPS of no less
than $4.55 for 2003. ALL announced a 70 percent increase in
profit in Q2 2003, posting net income of 84 cents per share
vs. estimates of .76.  ET met estimates of .14 per share, its
profit falling this quarter due to restructuring and other
charges.

We have the following economic data due tomorrow:

              Report                     Briefing  Market   Prior
                                         Expects   Expects
Jul 17 8:30 AM Building Permits Jun -    1.850M    1.790M  1.803M
Jul 17 8:30 AM Housing Starts Jun -      1.830M    1.750M  1.732M
Jul 17 8:30 AM Initial Claims 07/12 -      425K      425K    439K
Jul 17 12:00 PM Philadelphia Fed Jul -     7.0       7.0     4.0


For tomorrow, traders remain acutely aware of options expiration
Friday almost upon us, and the ongoing earnings season.  The
unpredictable chop that characterized today's session is on the
menu for tomorrow.  I continue to expect the market to be more
sensitive than usual to the unemployment data, particularly after
the heightened emphasis placed on that issue by members of
Congress yesterday and of the Senate today in their Q&A session
with Mr. Greenspan.  That data is due tomorrow before the opening
bell, and will likely set the tone for the open.  All things
being equal, I expect more downside ahead, but we'll have to be
content to trade whatever the market gives us.


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

Reprieve
Jonathan Levinson

The US Dollar Index gave back some of yesterday's gains as
Chairman Greenspan addressed the Senate Banking Committee.  Among
other things, he backed off yesterday's implication that the Fed
would allow treasury yields to sink or swim on their own.  The
action was bullish for treasuries, bearish for the dollar, and
bullish for gold.

Daily Pivots (generated with a pivot algorithm and unverified):

Figures rounded to the nearest point:

           R2     R1    Pivot   S1     S2
ES03U     1017   1006    997    986    977
YM03U     9253   9170   9092   9009   8931
NQ03U     1233   1315   1296   1278   1259


10 minute chart of the US Dollar Index





The US Dollar Index failed to hold 97.40 and found support at
96.60, trading slight above it at 96.72 as of this writing.

Photograph of Fed Chairman Greenspan





August gold regained the 343 support level we've been watching so
closely, although the miners and the CRB were all negative, with
the CRB down .47 to 232.65, the HUI –1.98 to 141.63, and XAU –
1.36 to 73.42.

Daily chart of August gold




August gold have us an inside day, adding 1 to 343.20 on the
bearish action in the US Dollar Index and printing a possible
bullish descending wedge within what I believe to be a longer
term bull flag.


Daily chart of the ten year note yield




While treasuries finished negative on the day, Chairman
Greenspan's remarks did a good job of what was setting up to be
another sell-a-thon following yesterday's huge move.  The ten
year note yield finished higher by 3.1 basis points at 3.945%
after breaking 4% at the open.


Daily NQ candles




The Nasdaq futures were again the strongest index, actually
printing a higher high before the morning plunge and its lower
low.  The action was sufficient to cause the oscillators to pause
in their upcycles in overbought territory, and the ensuing
downphase could be sufficient to give us a trendline test just
above 1230.

30 minute 20 day chart of the NQ




I've drawn two competing interpretations here, both supported by
the oscillators which bottomed in the afternoon.  Either way, it
appears that we're not yet looking at a downside break of the
bearish ascending wedge, but another day like today would change
that picture drastically.  Again, the downside target of a full
bear wedge break would be the bottom of the formation at 1180.
For now, however, the oscillators appear to favor near-term
upside.

Daily ES candles




The ES tested the lower ascending daily trendline again.  The
stochastics appear anxious for a move lower, but the shorter
cycle oscillators below are indicating upside.  This opposing
cyclicality  can bring us either chop, such as we had for most of
today's session, or can cause either the longer or the shorter
period cycle to begin trending.  Given that the daily oscillator
has not yet given a sell signal, my guess would be that there's
one more push to the upside left, but it's just a guess.

20 day 30 minute chart of the ES




I haven't filled in the alternate lower ascending trendline as I
did on the NQ chart, but the interpretation applies equally here
on the S&P futures.

Daily YM candles




On the Dow futures, we have the same cyclical setup as on the
other two contracts, except that the chart does not support a
secondary interpretation of the lower trendline placement.  On
this chart, there is no lower trendline break, and this is
supported by the shorter oscillator, which hit sell signals on
the bounce.

20 day 30 minute chart of the YM




For tomorrow, I expect to see further upside from equities on the
basis of the 30 minute candle oscillators.  How far this goes
will be anyone's guess, particularly given the impulsive nature
of the selling we saw again today.  Downside continues to feel
like the easier trade, but as we learned in the chop that
followed today's initial plunge, it doesn't pay to fight the
tape.  Futures remained strong as of this writing, but the longer
cycle oscillators have grown toppy.

See you at the bell!


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

Check the Site Later Tonight For Jeff's Index Trader Article
http://members.OptionInvestor.com/itrader/marketwrap/iw_071603_1.asp


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

Banknorth Funds

The Banknorth Funds offer four mutual funds designed to meet the
financial needs, tax sensitivities and long-term goals of people
primarily in the New England region.  Each of Banknorth's mutual
funds is managed through Banknorth Investment Management Group, a
division of Banknorth, N.A., the banking subsidiary of Banknorth
Group, Inc.  With $26 billion in assets, Banknorth Group, Inc. is
the third largest retail/commercial banking company headquartered
in New England.

Banknorth Group operates subsidiaries and divisions in insurance,
investments, mortgage banking, etc.  Their investment management
group manages $8 billion in assets, primarily for high net worth
individuals, pensions and mutual funds.  There is currently over
$300 million invested in the Banknorth Mutual Funds, using asset
information from Morningstar.com.  Banknorth's first mutual fund,
Banknorth Large Cap Core Fund (BNCRX) started operations in 1997.

Jonathan W. White is chief investment strategist and a senior VP
with Banknorth Investment Management Group.  The 30-year veteran
has managed or co-managed the Banknorth Large Cap Core Fund since
its 1997 inception.  Robert Magan has been co-portfolio manager
of the fund since September 2000.  White and Magan have also co-
managed Banknorth Small/Mid Cap Core Fund (BNSMX) since its March
2003 inception.  Previously, White worked for Mass. Financial
Services and served as VP, Research at the Bank of New England.

The Banknorth funds have a minimum initial investment of $2,500.
There is a 5.50% front-end load on the two stock funds.  The two
Banknorth bond funds carry a 3.75% sales charge.  Expense ratios
range from a low of 0.81% (Banknorth Vermont Municipal Bond Fund)
to a high of 1.49% (Banknorth Small/Mid Cap Core Fund).  For more
information, go the Banknorth Funds' site (www.banknorth.com) and
click the link to the Banknorth Funds.

Fund Overview

The $106 million Banknorth Large Cap Core Fund (BNCRX) seeks long
term growth through a diversified portfolio of equities issued by
large-cap companies selected through growth-based and value-based
strategies.  According to Morningstar, the fund is categorized as
a large-cap growth fund, but as its "low" Morningstar risk rating
implies, the fund has exhibited lower volatility than the average
large-growth offering.  You may want to compare it to other large
blends as well.

Banknorth Small/Mid Cap Core Fund (BNSMX) seeks growth of capital
through a diversified portfolio of small- to mid-sized companies.
Like its large-core sibling, the fund selects stocks using growth
and value screens.  As the Banknorth Funds website states, small-
cap stocks may be less liquid and may be subject to greater price
volatility than large capitalization stocks.  While the fund will
likely be more volatile in the short-term than its large-cap fund
sibling, the Banknorth Small/Mid-Cap Core Fund offers potentially
greater returns over the long run.

The $122 million Banknorth Intermediate Bond Fund (BNNBX), which
has been co-managed by Carol Smith and William Wolff for nearly 3
years, seeks to provide current income through investments in a
diversified, high quality portfolio of U.S. government/corporate
debt securities.  Most bond holdings fall into the "intermediate"
duration/maturity range.   Banknorth Vermont Municipal Bond Fund
(BNVTX) has $85 million in assets.  It seeks to provide investors
with current income that is exempt from federal income tax and
Vermont State and municipal personal income tax.  Its portfolio
consists primarily of high-grade Vermont municipal bonds.

Fund Performance

Unfortunately, only one of the Banknorth funds is currently rated
by Morningstar.  Banknorth Large Cap Fund (BNCRX) sports a 5-star
overall rating by Morningstar, their highest risk-adjusted return
rating (versus category peers).  According to Morningstar, it has
produced above-average returns with low risk in relation to other
large-cap growth funds.  Its low 13.72 average standard deviation
over the past 3 years is among the lowest in the "large-cap" peer
group.

However, the fund's conservatism has caused it lag so far in '03.
On a YTD return basis through July 15, 2003, Banknorth Large Cap
Core Fund has risen just 7.7%, lagging the S&P 500 index by 7.0%.
So if you're looking for a stock fund that has potential to lead
its peers in market upswings, this fund may not be your best bet.
Investors concerned that the market may fluctuate or fall may be
well suited to this fund's conservative style.

Over the trailing 5-year period through July 15, Banknorth Large
Cap Fund has produced an annualized total return of 1.3%, strong
enough to rank in the 10th percentile of the large-growth group,
per Morningstar.  The fund's calendar year returns in 2000, 2001
and 2002 ranked the category's top 10%.  In 1998, this portfolio
cranked out a 37.7% return for shareholders, so it has proven in
the past that it's capable of capturing return in an "up-market."

Conclusion

Long-term investors that want to invest in the U.S. stock market,
but don't want to take a lot of equity risk, may want to look at
the Banknorth Large Cap Core Fund.  Those that seek greater long-
term growth over time may prefer the Banknorth Small/Mid Cap Core
Fund, but it has an insufficient track record.  If you prefer the
latter fund, you may want to inquire about the firm's performance
record on the institutional side.

Neither of the Banknorth bond funds are rated, so you may wish to
proceed with caution there.  They too appear to be conservatively
managed.  In 2003, more aggressive high-yield funds have outpaced
more conservative high-quality funds.  But, they may do well when
compared to similar funds over the long term on a "risk-adjusted"
performance basis.


Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com


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The Option Investor Newsletter                Wednesday 07-16-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: NONE
Dropped Calls: DGX
Dropped Puts: BLL
Play of the Day: Call - EBAY
Spreads, Combinations & Premium-Selling Plays: Intel Sparks Rally
But Shares Finish Lower!
Watch List: Old Highs, Failed Rallies & Profit Taking

Updated on the site tonight:
Market Posture: Over Resistance! Under Support!



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

None


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

Quest Diagnostics - DGX - close: 65.21 change: -0.84 stop: 64.75

By yesterday, the price action in our DGX play was starting to
give us a bit of heartburn, as it appeared last week's breakout
may be failing.  Sure enough, that was the case on Wednesday, as
the stock fell as low as $64.50 (below our stop) before a minor
rebound into the close.  Even at the close, DGX was trading below
last week's breakout level and it is just too difficult to make a
case for a continued bullish view on the stock.  It has fallen
back into its prior consolidation range and risk now must be
measured down to the 50-dma just above $63.  Rather than play the
wait and hope game, we're pulling the plug tonight to make room
for other better looking plays.

Picked on July 1st at     $65.78
Change since picked:       -0.57
Earnings Date           07/22/03 (unconfirmed)
Average Daily Volume =     913 K



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

Ball Corp. - BLL - close: 45.30 change: +2.72 stop: 45.00

Ouch!  After going our way for the past week and falling to strong
support near $42.50 yesterday, we were looking for BLL to give us
an oversold rebound to provide a fresh entry point.  What we got
was a very sharp and strong rebound, with the stock tacking on
more than 6% by the closing bell on volume that more than doubled
the ADV.  That's a huge warning sign to the bears that it is time
to get out.  There was no news to explain the sharp move, and
that's precisely what stops are for.  BLL closed above $45,
although still just below the 20-dma.  We'll take our lumps and
the slight loss and move on, because such a strong bounce
indicates that the downtrend is over, at least for the time being.

Picked on July 8th at    $45.14
Change since picked:      +0.16
Earnings Date          07/24/03 (confirmed)
Average Daily Volume =    636 K



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

eBay Inc - EBAY - close: 113.07 change: +0.99 stop: 110.99 *new*

Company Description:
eBay is the world's online marketplace(TM). Founded in 1995, eBay
created a powerful platform for the sale of goods and services by
a passionate community of individuals and businesses. On any given
day, there are millions of items across thousands of categories
for sale on eBay. eBay enables trade on a local, national and
international basis with customized sites in markets around the
world. (source: company press release)

Why we like it:
We're down to the last few trading days before EBAY's big Q2
earnings report.  Bulls should still be happy with the stock's
relative strength, especially as the markets drift lower today.
There isn't much new to add to our play.  If the broader markets
can stay positive then we could see a last minute ramp up of
momentum into EBAY's earnings report.  There is the possibility of
a stock split announcement with their earnings but at the moment
that concept remains speculation.  We raised our stop loss over
the weekend to $110.99.  Those traders trying to minimize risk
might want to up their stop loss to just under the 10-dma.  Due to
the brief time frame, we would not suggest new plays at this time.

Why This is our Play of the Day
Our EBAY play has really given us a nice run since we picked it
down at $104, but it is looking a bit extended up here.  We've
already tightened our stop about as far as we can, and that fact
was borne out by the fact today's intraday low was only 21 cents
above that stop.  The point of featuring EBAY as our Play of the
Day today is not to advocate new entries, as we feel that time has
passed.  Now is the time to maximize gains in the play.  EBAY
rebounded from just above $111 early in the day today, and then
worked gradually higher throughout the session, ending just above
the 10-dma ($112.68).  Use a continuation of that rebound to
negotiate a favorable exit near the recent highs.  EBAY has
earnings next Thursday after the close, so time is drawing short
on the play.  Expect any rally near the $115 area to meet with
stiff resistance, and use such a move to exit the play.

Suggested Options:
We only have six trading days left before EBAY's earnings.  Choose
options carefully.

*JULY OPTIONS EXPIRE THIS FRIDAY*

BUY CALL AUG-110 QXB-HB OI=2691 at $ 6.80 SL=4.00
BUY CALL AUG-115 QXB-HC OI=7770 at $ 4.20 SL=2.50

Annotated Chart of EBAY:




Picked on June 27th at    $104.05
Change since picked:        +9.63
Earnings Date             07/24/03 (confirmed)
Average Daily Volume =    6.46 mln



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*********************************************
SPREADS, COMBINATIONS & PREMIUM-SELLING PLAYS
*********************************************

Intel Sparks Rally But Shares Finish Lower!
By Ray Cummins

Stocks soared in early trading after Intel issued a positive
earnings report but the bullish activity soon ended as traders
showed their apprehension regarding the market's overbought
condition.

The blue-chip Dow Jones industrial average fell 34 points to 9,094
amid weakness in financial components Citigroup (NYSE:C) and J.P.
Morgan (NYSE:JPM).  The technology-laden NASDAQ slid 5 points to
1,747 as investors took profits in networking and Internet shares.
The broader Standard & Poor's 500 dropped 6 points to 994 despite
buying pressure in airline stocks.  Volume on the New York Stock
Exchange was about 1.7 billion shares, with declining stocks pacing
advancers 2 to 1.  On the technology exchange, losers beat winners
9 to 7 on volume of 1.9 billion shares.  The yield on the 10-year
Treasury note rose above 4% following Tuesday's huge sell-off in
bonds after Fed Chair Alan Greenspan testified to a congressional
committee.  The benchmark 10-year U.S. Treasury note added 16/32 to
97-19/32, while its yield fell to 3.92%.

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

SUMMARY OF CURRENT POSITIONS - AS OF 7/15/03

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

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.


MONTHLY YIELD FOR UNCOVERED OPTIONS: MAXIMUM & SIMPLE

The Maximum Yield (listed in the summary and with "naked" 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

BGEN     JUL    37    36.90  41.80   $0.60   4.59%   1.63%
CVTX     JUL    25    24.45  34.00   $0.55   4.93%   2.25%
MERQ     JUL    40    38.30  44.20   $1.70   7.53%   4.44%
NVDA     JUL    20    19.60  23.45   $0.40   4.97%   2.04%
AMHC     JUL    25    24.65  40.50   $0.35   4.99%   1.42%
ARTI     JUL    20    19.70  24.18   $0.30   5.63%   1.52%
AVCT     JUL    27    27.05  32.00   $0.45   5.32%   1.66%
GILD     JUL    42    42.00  69.11   $0.50   4.49%   1.19%
MERQ     JUL    35    34.50  44.20   $0.50   5.25%   1.45%
MVSN     JUL    17    17.25  23.35   $0.25   5.11%   1.45%
NVDA     JUL    20    19.60  23.45   $0.40   7.38%   2.04%
OVTI     JUL    25    24.45  39.12   $0.55   7.88%   2.25%
YHOO     JUL    27    24.80  32.36   $0.45   5.32%   1.81%
QCOM     JUL    32    32.00  37.80   $0.50   4.38%   1.56%
ARTI     JUL    20    19.75  24.18   $0.25   5.45%   1.27%
AVCT     JUL    27    26.90  32.00   $0.60   8.19%   2.23%
GILD     JUL    47    46.90  69.11   $0.60   4.96%   1.28%
ICST     JUL    25    24.75  33.57   $0.25   4.42%   1.01%
IMCLE    JUL    25    24.65  34.84   $0.35   6.83%   1.42%
JCOM     JUL    37    37.05  52.27   $0.45   5.97%   1.21%
OVTI     JUL    25    24.70  39.12   $0.30   5.93%   1.21%
RIMM     JUL    20    19.50  22.78   $0.50   9.72%   2.56%
SNDK     JUL    30    29.65  49.00   $0.35   5.51%   1.18%
YHOO     JUL    27    27.10  32.36   $0.40   5.82%   1.48%
AVCT     JUL    27    27.15  32.00   $0.35   7.25%   1.29%
AVID     JUL    35    34.65  41.00   $0.35   5.86%   1.01%
IVGN     JUL    40    39.70  50.60   $0.30   4.31%   0.76%
JCOM     JUL    40    39.60  52.27   $0.40   6.46%   1.01%
MATK     JUL    40    39.60  46.74   $0.40   5.68%   1.01%
MERQ     JUL    37    37.05  44.20   $0.45   6.64%   1.21%
NFLX     JUL    22    22.25  26.38   $0.25   7.36%   1.12%
NTE      JUL    11    11.56  18.99   $0.30   5.69%   2.60%
OSIP     JUL    25    24.75  33.59   $0.25   6.94%   1.01%
OVTI     JUL    30    29.60  39.12   $0.40   7.34%   1.35%
AMLN     AUG    20    19.30  23.35   $0.70   8.47%   3.63%
AVCT     JUL    30    29.65  32.00   $0.35  10.97%   1.18%
ELBO     AUG    22    22.10  25.59   $0.40   4.23%   1.81%
IVGN     AUG    40    39.40  50.60   $0.60   3.97%   1.52%
JCOM     AUG    40    39.30  52.27   $0.70   5.19%   1.78%
NFLX     AUG    20    19.65  26.38   $0.35   4.91%   1.78%
NVLS     JUL    35    34.70  39.35   $0.30   8.17%   0.86%
OVTI     JUL    35    34.65  39.12   $0.35   9.68%   1.01%
POWI     AUG    22    22.20  27.30   $0.30   4.15%   1.35%
SNDK     JUL    40    39.70  49.00   $0.30   8.16%   0.76%
MERQ     JUL    40    39.55  44.20   $0.45  10.56%   1.14%

Conservative traders should probably have closed the Biogen
(NASDAQ:BGEN) position, and possibly a few other suspect
issues, during the recent market slump.


Naked Calls
***********

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

LLTC     JUL    37   38.30  36.22    $0.80   5.98%   2.09%
XLNX     JUL    32   33.05  26.81    $0.55   5.77%   1.66%
IGEN     JUL    45   45.90  32.53    $0.40   5.71%   0.87%
CNF      JUL    30   30.45  27.70    $0.45   5.02%   1.48%
TRMS     JUL    55   55.75  54.57    $0.75   5.65%   1.35%
AFFX     JUL    22   22.85  22.32    $0.35   7.97%   1.53%
DCTM     JUL    22   23.05  17.94    $0.55   12.14%  2.39%
HCA      JUL    35   35.45  33.58    $0.45   5.89%   1.27%
CERN     JUL    22   23.00  23.68   ($0.68)  0.00%   2.17%
CUM      JUL    40   40.25  37.04    $0.25   3.93%   0.62%
GM       JUL    37   37.80  36.25    $0.30   4.35%   0.79%
KO       JUL    45   45.30  43.99    $0.30   6.06%   0.66%
MO       JUL    45   45.60  40.50    $0.60   11.79%  1.32%
PPD      AUG    27   28.10  23.77    $0.60   6.82%   2.14%

The Cerner (NASDAQ:CERN) position has been closed to limit
losses and many of the remaining bearish plays are on the
"watch" list.  Affymetrix (NASDAQ:AFFX), Linear Technology
(NASDAQ:LLTC), HCA Incorporated (NYSE:HCA), and Trimeris
(NASDAQ:TRMS) appear to be the most critical issues and
those plays should be closed on further upside activity.


Put-Credit Spreads
******************

Symbol  Pick   Last   Month L/P S/P Credit  C/B    G/L   Status

CMCSA   32.85  32.37   JUL   27  30  0.20  29.80  $0.20   Open
IDPH    40.29  36.55   JUL   30  35  0.65  34.35  $0.65   Open
IGT     23.59  26.78   JUL   20  21  0.15  20.85  $0.15   Open
CCMP    52.60  59.45   JUL   40  45  0.50  44.50  $0.50   Open
CECO    69.32  76.44   JUL   55  60  0.50  59.50  $0.50   Open
LXK     76.99  77.09   JUL   65  70  0.50  69.50  $0.50   Open
BVF     46.00  42.50   JUL   35  40  0.30  39.70  $0.30  No Play
IGT     23.59  26.78   JUL   21  22  0.10  21.90  $0.10   Open
PRX     49.21  50.56   JUL   40  45  0.50  44.50  $0.50   Open
QLGC    50.25  52.56   JUL   45  47  0.25  47.25  $0.25   Open
SNDK    42.75  49.00   JUL   35  37  0.25  37.25  $0.25   Open
AGN     80.83  80.34   AUG   70  75  0.60  74.40  $0.60   Open
CDWC    50.04  49.96   AUG   40  45  0.60  44.40  $0.60   Open
ICST    34.20  33.57   AUG   25  30  0.55  29.45  $0.55   Open

The position in Nike (NYSE:NKE) has previously been closed for
a small loss.


Call-Credit Spreads
*******************

Symbol  Pick   Last   Month L/C S/C Credit  C/B    G/L   Status

CEPH    45.33  48.17   JUL  55  50   0.60  50.60  $0.60   Open
CI      49.61  41.28   JUL  60  55   0.55  55.55  $0.55   Open
MXIM    36.51  38.31   JUL  45  40   0.60  40.60  $0.60   Open
ADBE    32.07  35.10   JUL  40  35   0.50  35.50  $0.40   Open
CEPH    44.59  48.17   JUL  55  50   0.60  50.60  $0.60   Open
HDI     40.19  43.68   JUL  45  42   0.30  42.80 ($0.88) Closed
MDC     46.94  50.03   JUL  55  50   0.50  50.50  $0.47  Closed
TIN     43.56  43.45   JUL  50  45   0.50  45.50  $0.50   Open
DNA     73.52  78.21   JUL  85  80   0.45  80.45  $0.45   Open
NOC     88.00  87.75   JUL  95  90   0.60  90.60  $0.60   Open
ATK     51.37  53.11   AUG  60  55   0.50  55.50  $0.50   Open
LMT     47.89  49.30   AUG  55  50   0.60  50.60  $0.60   Open

As noted last week, MDC Holdings (NYSE:MDC) moved through near-
term resistance (and our sold call strike) at $50 and the close
above that price on heavy volume was our exit signal in the
play.  The Harley Davidson (NYSE:HDI) position was closed this
week and Adobe (NASDAQ:ADBE), Maxim Integrated (NASDAQ:MXIM),
Cephalon (NASDAQ:CEPH), and Genetech (NYSE:DNA) remain on the
early-exit "watch" list.


Synthetic Positions
*******************

No Open Positions


Debit Straddles
***************

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 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.

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

BULLISH PLAYS - NAKED PUTS

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.

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

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.

**************
ELBO - Electronics Boutique  $25.29  *** Bullish Retailer! ***

Electronics Boutique (NASDAQ:ELBO) is a specialty retailer of
electronic games.  The company sells video game hardware and
software, PC entertainment software and related accessories and
products.  The company operates stores primarily under the names
Electronics Boutique and EB GameWorld, in Australia, Canada,
Denmark, Germany, Italy, New Zealand, Norway, South Korea, Sweden
and the United States.  The company also operates a commercial
Website under the URL address, www.ebgames.com.  The company
carries game titles that are compatible with all major video game
hardware systems and PCs. In addition to video game titles and PC
entertainment software, it offers a complementary line of PC and
video game accessories and peripheral products, including various
controllers, joysticks, memory cards, remotes, books and magazines.

ELBO - Electronics Boutique  $25.29

PLAY (sell naked put):

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

SELL PUT  AUG 22.5  LQB TX     20    0.30  22.20   4.0%   1.4% *
SELL PUT  AUG 25    LQB TE     62    1.00  24.00   9.4%   4.2%


**************
FWHT - FindWhat.com  $23.24  *** Internet Locator! ***

FindWhat.com (NASDAQ:FWHT) operates online marketplaces that
connect the consumers and businesses that are most likely to
purchase specific goods and services with the advertisers that
provide those goods and services.  Online advertisers determine
the per-click fee they will pay for their advertisements, which
FindWhat.com and its private-label partners such as Terra Lycos's
Lycos.com and HotBot distribute to millions of Internet users.
Their network includes hundreds of distribution partners, such as
CNET's Search.com, Excite, Webcrawler, NBCi, MetaCrawler, Dogpile,
Go2Net and Microsoft Internet Explorer Autosearch.

FWHT - FindWhat.com  $23.24

PLAY (sell naked put):

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

SELL PUT  AUG 17.5  HFQ TW    100    0.50  17.00   9.8%   2.9% *
SELL PUT  AUG 20    HFQ TD     92    1.15  18.85  16.2%   6.1%


**************
GENZ - Genzyme General  $47.54  *** New Disease Treatments! ***

Genzyme General Division (NASDAQ:GENZ) is a division of Genzyme
Corporation, a biotechnology and human healthcare company that
develops products and provides services for unmet medical needs.
Genzyme General develops and markets therapeutic products and
diagnostic products and services with an emphasis on genetic
disorders and other chronic debilitating diseases with defined
patient populations.  The company is organized into two segments,
Therapeutics, which focuses on developing and marketing products
for genetic diseases and other chronic debilitating diseases,
including a family of diseases known as lysosomal storage
disorders, and specialty therapeutics, and Diagnostic Products,
which develops, markets and distributes in vitro diagnostic
products.  The company also operates a wholly owned subsidiary,
GelTex Pharmaceuticals.

GENZ - Genzyme General  $47.54

PLAY (sell naked put):

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

SELL PUT  AUG 42.5  GZQ TR    488    0.65  41.85   5.4%   1.6% *
SELL PUT  AUG 45    GZQ TI    202    1.20  43.80   9.6%   2.7%


**************
IDCC - InterDigital Comm.  $25.74  *** Consolidation Complete? ***

InterDigital Communications (NASDAQ:IDCC) specializes in the
architecture, design and delivery of wireless technology and
product platforms.  Over the course of its corporate history,
the company has amassed a substantial and significant library of
digital wireless systems experience and know-how, and holds an
extensive worldwide portfolio of patents in the wireless systems
field.  InterDigital markets its technologies and solutions
primarily to wireless communications equipment producers and
related suppliers.  In addition, the company licenses its Time
Division Multiple Access and Code Division Multiple Access
patents to equipment manufacturers worldwide.

IDCC - InterDigital Communications  $25.74

PLAY (sell naked put):

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

SELL PUT  AUG 20    DAQ TD    197    0.30  19.70   5.2%   1.5% *
SELL PUT  AUG 22.5  DAQ TX    274    0.70  21.80  10.8%   3.2%
SELL PUT  AUG 25    DAQ TE    448    1.50  23.50  15.4%   6.4%


**************
MATK - Martek Biosciences  $46.93  *** The Rally Resumes! ***

Martek Biosciences (NASDAQ:MATK) develops and sells products
made from microalgae.  Microalgae are microplants.  The firm
is engaged in the commercial development of microalgae into a
portfolio of high value products and new product candidates
consisting of Nutritional Products, Advanced Detection Systems
and Other Products, primarily Algal Genomics.  Their nutritional
products include nutritional oils for infant formula, dietary
supplementation and other products. Advanced Detection Systems
products include fluorescent dyes from various algae for use
in scientific applications for detection of certain biological
processes.

MATK - Martek Biosciences  $46.93

PLAY (sell naked put):

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

SELL PUT  AUG 40    KQT TH     11    0.40  39.60   3.3%   1.0% TS
SELL PUT  AUG 45    KQT TI     44    1.55  43.45   8.5%   3.6%


**************
MEDI - MedImmune  $39.71  *** New 2003 High Coming? ***

MedImmune (NASDAQ:MEDI) is a biotechnology company with a range of
unique products on the market and a diverse product pipeline.  The
firm is focused on using advances in immunology and other biological
sciences to develop new products that address significantly unmet
medical needs in areas of infectious disease, immune regulation and
cancer.  MedImmune actively markets three products, Synagis, Ethyol
and CytoGam and MEDI's Chief Executive David Mott expects the FDA to
approve its inhaled influenza vaccine FluMist sometime this quarter.
MedImmune will co-market the vaccine with Wyeth and the companies
expect to provide the vaccine initially to healthy people between 5
and 49 years old, which will mean a potential market of 160 million
people a year in the United States.

MEDI - MedImmune  $39.71

PLAY (sell naked put):

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

SELL PUT  AUG 32.5  MEQ TZ    347    0.25  32.25   2.8%   0.8% TS
SELL PUT  AUG 35    MEQ TG    869    0.55  34.45   4.8%   1.6% *
SELL PUT  AUG 37.5  MEQ TU    879    1.10  36.40   7.5%   3.0%


**************
MOGN - MGI Pharma  $29.00  *** Rally Mode! ***

MGI Pharma (NASDAQ:MOGN) is an oncology-focused pharmaceutical firm
that buys, develops and commercializes proprietary pharmaceutical
products that meet patient needs.  MGI's current product candidates
are at various stages of development with an emphasis on advanced
stages of development, and are intended to have diverse roles in
treating cancer patients.  Of the company's product candidates, two
are in Phase III, one in Phase II and two in preclinical development
programs.  Of these programs, one is with a supportive care product
candidate, two are with cytotoxic product candidates, and two are
with cytostatic product candidates.

MOGN - MGI Pharma  $29.00

PLAY (sell naked put):

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

SELL PUT  AUG 22.5  QOG TX    135    0.60  21.90   9.5%   2.7% *
SELL PUT  AUG 25    QOG TE    672    1.20  23.80  13.8%   5.0%


**************
NFLX - Netflix  $25.48  *** Entry Point? ***

Netflix (NASDAQ:NFLX) is an online entertainment service in the
United States that provides more than 600,000 subscribers access
to a comprehensive library of more than 11,500 movie, television
and other filmed entertainment titles.  The company's standard
subscription plan allows subscribers to have three titles out at
the same time with no due dates, late fees or shipping charges.
Subscribers can view as many titles as they want in a month and
they select these titles at the firm's Website (www.netflix.com)
aided by its proprietary CineMatch technology.  They receive them
on DVD by first-class mail and return them to the company at their
convenience using prepaid mailers.  Once a title has been returned,
Netflix mails the next available title in a subscriber's queue.

NFLX - Netflix  $25.48

PLAY (sell naked put):

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

SELL PUT  AUG 20    QNQ TD    217    0.45  19.55   8.2%   2.3% *
SELL PUT  AUG 22.5  QNQ TX    538    0.90  21.60  11.2%   4.2%


**************
OVTI - OmniVision  $39.65  *** Multi-Year High! ***

OmniVision Technologies (NASDAQ:OVTI) designs, develops and sells
high performance, high quality and cost efficient semiconductor
imaging devices for computing, telecommunications, industrial,
automotive and consumer electronics applications.  The company's
main product, an image sensing device called a CameraChip, is used
to capture an image in cameras and camera-related products in a
range of imaging applications such as personal computer cameras,
digital still cameras, security and surveillance cameras, personal
digital assistant cameras, mobile phone cameras, and cameras for
automobiles and toys that incorporate both still picture and live
video applications.

OVTI - OmniVision  $39.65

PLAY (sell naked put):

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

SELL PUT  AUG 30    UCM TF    594    0.30  29.70   3.7%   1.0% TS
SELL PUT  AUG 35    UCM TG    910    1.15  33.85   9.4%   3.4%


**************
POWI - Power Integrations  $26.97  *** Up-Trend Intact! ***

Power Integrations (NASDAQ:POWI) designs, develops, manufactures
and markets proprietary, high-voltage, analog integrated circuits
for use primarily in alternating current to direct current power
conversion.  The firm's products address market segments including
communications, consumer, computer and industrial electronics.
The company's high-voltage power conversion ICs include TOPSwitch,
TinySwitch, LinkSwitch and DPA-Switch.  Since introducing its
TOPSwitch family of products in 1994, the company has shipped into
the market approximately 890 million ICs.  These ICs achieve a high
level of system integration by combining a number of electronic
components into a single IC.

POWI - Power Integrations  $26.97

PLAY (sell naked put):

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

SELL PUT  AUG 22.5  QPW TX     55    0.35  22.15   5.3%   1.6% *
SELL PUT  AUG 25    QPW TE     45    0.90  24.10   9.4%   3.7%


**************
SNDK - SanDisk  $48.70  *** Awesome Earnings! ***

SanDisk (NASDAQ:SNDK) designs, manufactures, and markets flash
memory storage products that are used in a wide variety of
electronic systems.  The company has designed its flash memory
storage solutions for applications in the consumer electronics
and industrial/communications markets.  The company's products
are used in a number of rapidly growing consumer electronics
applications, such as digital cameras, PDAs, portable digital
music players, digital video recorders and smart phones, as well
as in industrial and communications applications.  The company's
products include removable CompactFlash cards, MultiMediaCards,
FlashDisk cards and Secure Digital Cards and embedded FlashDrives
and Flash ChipSets with storage capacities ranging from eight
megabytes to 1.2 gigabytes.

SNDK - Sandisk  $48.70

PLAY (sell naked put):

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

SELL PUT  AUG 37.5  SWQ TT    808    0.45  37.05   4.5%   1.2% TS
SELL PUT  AUG 40    SWQ TH    857    0.80  39.20   7.0%   2.0% *
SELL PUT  AUG 42.5  SWQ TS    342    1.25  41.25   8.7%   3.0%


**************
UTSI - UTStarcom  $39.99  *** China Internet/Telecom Boom! ***

UTStarcom (NASDAQ:UTSI) is a global provider of wireless and
wireline access and Internet protocol switching solutions.  The
company designs, manufactures, sells and installs an integrated
suite of future-ready access network and next-generation switching
solutions.  It enables wireless and wireline operators in growth
markets worldwide to offer voice, data and Internet access services
rapidly and effectively by utilizing their existing infrastructure.
UTStarcom's products provide a seamless migration from wireline to
wireless, from narrowband to broadband and from circuit to packet
based networks by employing next-generation network technology.

UTSI - UTStarcom  $39.99

PLAY (sell naked put):

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

SELL PUT  AUG 30    UON TF    957    0.40  29.60   4.8%   1.4% *
SELL PUT  AUG 35    UON TG    441    1.20  33.80  10.0%   3.6%


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

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.

***************
IACI - InterActiveCorp  $41.28  *** Entertainment Mogul! ***

InterActiveCorp (NASDAQ:IACI), formerly known as USA Interactive,
is a multi-brand interactive commerce firm transacting business
worldwide via the Internet, television and the telephone.  Their
portfolio of companies collectively enables direct-to-consumer
transactions across many areas, including home shopping, tickets,
personals, travel, teleservices and local services.  During 2002,
InterActiveCorp completed two major transactions that together
transformed the company.  The firm acquired a majority interest
in Expedia.com and it accomplished the contribution of its
entertainment businesses to Vivendi Universal Entertainment, a
joint venture controlled by Vivendi Universal, S.A.  The firm's
business is organized into three groups: Electronic Retailing;
Information and Services, and Travel Services.

IACI - InterActiveCorp  $41.28

PLAY (less conservative - bullish/credit spread):

BUY  PUT  AUG-35.00  QTH-TG  OI=687  ASK=$0.45
SELL PUT  AUG-37.50  QTH-TU  OI=911  BID=$0.75
INITIAL NET-CREDIT TARGET=$0.35-$0.40
POTENTIAL PROFIT(max)=16% B/E=$37.15


**************
IVGN - Invitrogen  $49.48  *** New Trading Range? ***

Invitrogen (NASDAQ:IVGN) develops, manufactures and sells research
tools in kit form and provides other research products, including
informatics software to customers engaged in life sciences research
and the commercial manufacture of genetically engineered products.
The company supplies research kits and reagents that simplify and
improve gene cloning, gene expression and gene analysis techniques.
In addition, Invitrogen sells sera, cell and tissue culture media
and reagents used in life sciences research, as well as in other
processes for growing cells in the laboratory and producing major
pharmaceuticals and other materials.

IVGN - Invitrogen  $49.48

PLAY (conservative - bullish/credit spread):

BUY  PUT  AUG-40.00  IUV-TH  OI=348  ASK=$0.25
SELL PUT  AUG-45.00  IUV-TI  OI=31   BID=$0.85
INITIAL NET-CREDIT TARGET=$0.65-$0.75
POTENTIAL PROFIT(max)=15% B/E=$44.35


**************
MSTR - MicroStrategy  $42.05  *** Earnings Speculation! ***

MicroStrategy (NASDAQ:MSTR) is a global leader in the increasingly
critical business intelligence software market.  Large and small
firms alike are harnessing MicroStrategy's business intelligence
software to gain vital insights from their data to help them
proactively enhance cost-efficiency, productivity and customer
relations and optimize revenue-generating strategies.  The firm's
business intelligence platform offers exceptional capabilities that
provide organizations, in virtually all facets of their operations,
with user-friendly solutions to their data query, reporting, and
advanced analytical needs, and distributes valuable insight on this
data to users via Web, wireless, and voice.

MSTR - MicroStrategy  $42.05

PLAY (conservative - bullish/credit spread):

BUY  PUT  AUG-30.00  EOU-TF  OI=91   ASK=$0.40
SELL PUT  AUG-35.00  EOU-TG  OI=193  BID=$0.95
INITIAL NET-CREDIT TARGET=$0.60-$0.70
POTENTIAL PROFIT(max)=14% B/E=$34.40


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

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.

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

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.

***************
INTU - Intuit  $42.58  *** Next Leg Down? ***

Intuit (NYSE:INTU) is a provider of business tax preparation and
personal finance software products and Web-based services that
simplify complex financial tasks for consumers, small businesses
and accounting professionals.  The company's principal products
and services include Quicken, QuickBooks, Quicken TurboTax,
ProSeries, Lacerte and Quicken Loans. Intuit offers products and
services in five principal business divisions, which include Small
Business, Tax, Personal Finance, Quicken Loans and Global Business.

INTU - Intuit  $42.58

PLAY (sell naked call):

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

SELL CALL  AUG 47.5  IQU HW     194   0.40  47.90   3.2%   0.8% TS
SELL CALL  AUG 45    IQU HI     969   1.05  46.05   6.8%   2.3% *
SELL CALL  AUG 42.5  IQU HV     719   2.05  44.55  10.8%   4.6%


**************
PHTN - Photon  $26.78  *** Post-Earnings Slump? ***

Photon Dynamics (NASDAQ:PHTN) is a provider of yield management
solutions to the flat panel display (FPD) industry.  The company
also offers yield management solutions for the printed circuit
board assembly and advanced semiconductor packaging industries
and the cathode ray tube display and CRT glass and auto glass
industries.  The firm's test, repair and inspection systems are
used by manufacturers to collect data, analyze product quality
and identify and repair product defects at critical steps in the
manufacturing.

PHTN - Photon  $26.78

PLAY (sell naked call):

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

SELL CALL  AUG 32.5  PDU HZ      45   0.35  32.85   6.2%   1.1% *
SELL CALL  AUG 30    PDU HF     683   0.80  30.80   9.8%   2.6%
SELL CALL  AUG 27.5  PDU HY       1   1.70  29.20  14.7%   5.8%


**************
PPD - Pre-Paid Legal  $23.85  *** Mediocre Quarterly Results! ***

Pre-Paid Legal Services (NYSE:PPD) was one of the first companies
in the United States organized solely to design, underwrite and
market legal expense plans.  The company's legal expense plans
(referred to as Memberships) currently provide for a variety of
legal services in a manner similar to medical reimbursement plans.
Plan benefits are provided through a network of independent law
firms, typically one firm per state or province.  Members have
direct, toll-free access to their Provider law firm rather than
having to call for a referral.  Legal services include unlimited
attorney consultation, traffic violation defense, auto-related
criminal charges defense, letter writing/document preparation,
will preparation and review and a general trial defense benefit.

PPD - Pre-Paid Legal  $23.85

PLAY (sell naked call):

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

SELL CALL  AUG 27.5  PPD HY     888   0.35  27.85   5.7%   1.3% *
SELL CALL  AUG 25    PPD HE     881   0.95  25.95  10.3%   3.7%


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

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.

**************
AVE - Aventis  $52.20  *** Sell-Off In Progress! ***

Aventis (NYSE:AVE) is a pharmaceutical industry company that
discovers, develops, makes and commercializes prescription drugs
for such therapeutic areas as oncology, cardiology, diabetes and
respiratory/allergy, as well as human vaccines.  The company's
therapeutic innovations include treatments for lung and breast
cancer, thrombosis, seasonal allergies, diabetes and hypertension.
The company's products include Allegra/Telfast, an antihistamine;
Lovenox/Clexane, an anticoagulant; Taxotere, a chemotherapy agent;
Lantus, a human insulin analog for Type I and Type II diabetes;
Actonel, a bisphosphonate used in treatment of postmenopausal
osteoporosis; Ketek, an antibiotic, and Copaxone, a treatment for
multiple sclerosis.  Aventis also offers a wide range of vaccine
products.

AVE - Aventis  $52.20

PLAY (conservative - bearish/credit spread):

BUY  CALL  AUG-60.00  AVE-HL  OI=156  ASK=$0.20
SELL CALL  AUG-55.00  AVE-HK  OI=178  BID=$0.75
INITIAL NET-CREDIT TARGET=$0.55-$0.65
POTENTIAL PROFIT(max)=12% B/E=$55.55


**************
ATH - Athem  $75.35  *** Sector Slump! ***

Anthem (NYSE:ATH) is a health benefits company serving over 11
million members, or customers, primarily in Indiana, Kentucky,
Ohio, Connecticut, New Hampshire, Maine, Colorado, Nevada and
Virginia, excluding the Northern Virginia suburbs of Washington,
D.C.  The company markets its products and services using the
exclusive Blue Cross Blue Shield names and marks in all nine
states under license agreements with the Blue Cross Blue Shield
Association, an association of independent BCBS plans.  The firm's
products include a mix of managed care products, including health
maintenance organizations, preferred provider organizations and
point of service plans, as well as traditional indemnity products.
The company also offers administrative and managed care services
and partially insured products for employer self-funded plans.

ATH - Athem  $75.35

PLAY (conservative - bearish/credit spread):

BUY  CALL  AUG-85.00  ATH-HQ  OI=67  ASK=$0.25
SELL CALL  AUG-80.00  ATH-HP  OI=95  BID=$0.80
INITIAL NET-CREDIT TARGET=$0.60-$0.65
POTENTIAL PROFIT(max)=14% B/E=$80.60


**************
JNJ - Johnson & Johnson  $52.60  *** Trading Range? ***

Johnson & Johnson (NYSE:JNJ) is engaged in the manufacture and
sale of a broad range of products in the healthcare field.  The
company's worldwide business is divided into three segments:
Consumer, Pharmaceutical and Medical Devices & Diagnostics.  The
Consumer segment's principal products are personal care products,
including nonprescription drugs, adult skin and hair care products,
baby care products, oral care products, first aid products, women's
health products and nutritional products.  The Pharmaceutical
segment's principal worldwide franchises are in the antifungal,
anti-infective, cardiovascular, contraceptive, dermatology,
gastrointestinal, hematology, immunology, neurology, oncology,
pain management, psychotropic (central nervous system) and urology
fields.  The Medical Devices & Diagnostics segment includes a broad
range of products used by, or under the direction of, physicians,
nurses, therapists, hospitals, diagnostic laboratories and clinics.

JNJ - Johnson & Johnson  $52.60

PLAY (very conservative - bearish/credit spread):

BUY  CALL  AUG-60.00  JNJ-HL  OI=1985   ASK=$0.10
SELL CALL  AUG-55.00  JNJ-HK  OI=10725  BID=$0.45
INITIAL NET-CREDIT TARGET=$0.40-$0.45
POTENTIAL PROFIT(max)=8% B/E=$55.40


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

SEE DISCLAIMER - SECTION 1

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


**********
Watch List
**********

Old Highs, Failed Rallies & Profit Taking

Zebra Technologies - ZBRA - close: $81.00 change: -2.05

WHAT TO WATCH: The pull back in shares of ZBRA appears to be
simple profit taking, especially after its strong run up from
late May.  Considering its rising channel a consolidation back
down to the $75 level would not be a surprise.  Short-term bears
might want to look for a move through $80 to trigger a brief put
play.  Watch out for earnings on July 28th.

Chart=


---

O'Reilly Automotive - ORLY - close: $36.84 change: -0.54

WHAT TO WATCH: Shares of ORLY have traded awfully close to their
old highs from December 2001.  After its nearly non-stop rally
from February this year, it's way overdue for some more serious
consolidation.  However, the bottom of that rising channel
appears to be near $34-$35.  Speculating bears could place their
bets and spin the wheel but we suggest VERY tight stops.  So far
new support at $36 is holding up and that's good news for the
bulls.

Chart=


---

Inamed Corp - IMDC - close: $54.44 change: -0.56

WHAT TO WATCH: Shares of this cosmetic surgery materials provider
have soared from their July 2002 lows near $13.50 to highs of
$58.00 last week.  The last few sessions have seen some minor
profit taking.  We suspect the selling could pressure shares back
down to the $50 level (and its simple 50-dma).  However, momentum
traders may try and keep the trend alive in a push towards the
company's July 30th earnings report.

Chart=


---

AnnTaylor Stores - ANN - close: $28.40 change: -0.34

WHAT TO WATCH: Shares of ANN have been trading sideways between
$27.75 and $30.00 for six weeks.  The $30.00 level has been long-
time overhead resistance for years.  Traders with a bearish bias
might want to watch the $27.75-$27.50 area as a trigger to
evaluate new bearish plays.  Earnings are in mid-August.

Chart=


---

Murphy Oil Corp - MUR - close: $49.55 change: -0.12

WHAT TO WATCH: The slow fade in the OIX oil sector is clearly
evident in MUR.  The stock has been under slow and steady profit
taking after its May-June rally.  Today marks the second close in
a row under psychological support of $50 and its 50-dma.  Bears
could use this as a trigger for new positions but we suggest
relatively tight stops.  The company has earnings at the end of
July.

Chart=




===================================
RADAR SCREEN - more stocks to watch:
===================================

CECO $74.55 - Have shares of CECO made a reversal?  The stock has
more than doubled from its January levels and certainly a target
for profit taking.  Earnings are July 22nd.

TBL $58.21 - Market weakness?  What market weakness?  Shares of
TBL retain their lofty levels ahead of their earnings report on
July 18th.

ALK $22.84 - Given the strong performance by AMR in their
earnings report today, shares of ALK may big higher ahead of
their own report on July 22nd.  A move over $23.00 might make a
good trigger for short-term trades with a target of current
overhead resistance at $24.50.


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

Over Resistance! Under Support!


To Read The Rest of The OptionInvestor.com Market Watch Click Here
http://www.OptionInvestor.com/marketposture/mp_071603.asp


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