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Daily Newsletter, Sunday, 07/20/2003

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The Option Investor Newsletter                   Sunday 07-20-2003
Copyright 2003, All rights reserved.                        1 of 5
Redistribution in any form strictly prohibited.


Entire newsletter best viewed in COURIER 10 font for alignment

In Section One:

Wrap: Unexpected Bullishness
Futures Market: Retest
Index Trader Wrap: CATCH UP
Editor's Plays: Sticking With The Plan
Market Sentiment: Reversal or Correction
Ask the Analyst: Money supply is "surging," but where's it going?
Coming Events: Earnings, Splits, Economic Events


Posted online for subscribers at http://www.OptionInvestor.com
******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        WE 7-18         WE 7-11         WE 7-04         WE 6-27
DOW     9188.15 + 68.56 9119.59 + 49.38 9070.21 + 81.16 -211.70
Nasdaq  1708.50 - 25.43 1733.93 + 70.48 1663.45 + 38.19 - 19.46
S&P-100  501.50 -   .98  502.48 +  6.40  496.08 +  4.47 - 10.78
S&P-500  993.32 -  4.82  998.14 + 12.44  985.70 +  9.48 - 19.47
W5000   9546.66 - 64.23 9610.89 +148.38 9462.51 +104.02 -153.14
RUT      464.76 -  9.01  473.77 + 17.42  456.35 +  7.60 -  0.81
TRAN    2576.29 + 30.71 2545.58 +130.27 2415.31 -  1.72 - 25.25
VIX       21.36 +   .64   20.72 -  0.89   21.61 -  0.10 +  0.62
VXN       33.41 +   .61   32.80 +  0.33   32.47 +  1.54 -  1.41
TRIN       0.60            0.94            1.98            1.93
Put/Call   0.61            0.98            1.07            0.99
Avg Highs   522             791             435             291
Avg Lows     29              21              25              22
******************************************************************

Unexpected Bullishness
by Jim Brown

Let's see if I got this right. Intel beat estimates by a penny
and the market dropped. IBM announced a headline number that was
inline with estimates and the stock was killed and the market
dropped. MSFT misses earnings by a penny and market celebrated.
What did I miss?

Dow Chart



Nasdaq Chart




Consumer Sentiment also missed the mark slightly on Friday with
a headline 90.3 for July compared to the consensus estimates for
90.9. Not a big miss on the surface but the whisper number was in
the 92 range. The present conditions component rose to 102.1 from
94.7 but the expectations component fell to 82.7 from 86.4. The
consumer is beginning to feel better about things with the market
moving up and tax cut dollars about to hit their paychecks. They
are becoming less convinced that the year end recovery is going
to happen.

The ECRI Weekly Leading Index posted a strong gain to 126.8 from
124.9 mostly due to the bounce in interest rates and the drop in
Jobless Claims. This report is not a market mover since it is a
summary of all the prior data from other reports. Still it is
confirmation that the economy is continuing to stabilize.

While it would be hard to build a case for the Friday rally on
these two reports, each is one more brick on the path to recovery.
In fact it would be hard to build a case for the Friday rally on
anything but options expiration volatility and asset allocation
programs. Friday is tied with October 9th as the worst trading
day of the year over the last 22 years with only a 23.8% chance
of the S&P closing up. For whatever reason it has closed down
more than 75% of the time in the past it made up for many of
those negative days with Friday's performance.

The surprising bullishness came despite negative comments from
almost every quarter. We had negative comments from MSFT, IBM,
INTC, NOK, MOT and dozens of other techs and that knocked the
Nasdaq to a -25 point loss for the week but it still managed a
close over 1700. The Dow actually recovered enough on the strength
of CAT, MMM, PG and WMT to post a slight +60 point gain for the
week.

Part of the bullishness came from an analysis of earnings already
announced. With over 30% of the S&P already announced the 2Q
earnings are coming in at +9.9% year-over-year despite estimates
of only 7%. Surprised? You should be because the earnings have
been far from exciting to date. Probably more visible are the
earnings warnings that have been running 2:1 over those who are
raising guidance. So why are the earnings so "good"? The key
words here are year-over-year. To put it bluntly the 2Q of 2002
was very bad and provides a very poor comparison to the current
reporting cycle. If XYZ Company has averaged 25 cents of earnings
in the 2Q for years and only managed 5 cents in 2Q-2002 then a six
cent earnings for this cycle would be +20% earnings growth. It is
far from great earnings considering the 25 cent prior average but
it is all in how you spin the numbers. If analysts can put a spin
on the ball by picking their comparisons then you can count on
them doing it. The next two quarters are going to be a lot
tougher with expectations of +13.4% for Q3 and +21.2% for Q4.

The Friday gains were subtle and caught many traders off guard.
The midday volume was almost nonexistent and the overall volume
was the third lowest since May-1st. On Thursday the declining
volume beat advancing volume nearly 6:1. On Friday with nearly
one billion fewer shares trading, the up volume beat down volume
nearly 3:1. There was a strong shift in sentiment but we only
reversed about 50% of the Thursday sentiment. Also, despite
the bullish day there were fewer new highs than there was on
Thursday. New lows hit another two month high. When taken in
context the Friday was not nearly as bullish in the internals
as it was on the surface.

One of the weakest sectors for the week was the semiconductors
once the Intel bounce failed. Various semiconductor makers said
visibility was still bad, no pickup in demand and there were
several subsectors like communications that performed worse.
Other companies said business was good and they were seeing an
increase in some types of orders. The general consensus was the
improvements were spotty and selective. After the close on Friday
the Semiconductor Book-to-Bill report was released and it only
showed a 0.93 headline number. This was only slightly above the
0.90 from May. More troubling was the large drop in both orders
and shipments. Orders fell by -0.4% in June and shipments fell
by an even larger -4.3%. Had we not seen such a steep drop in
shipments the BTB number would have dropped from May. YTD orders
are down -18% from the same period last year and bookings are
down -39%. Remember, last year was a very poor comparison and
we are well below those numbers. The shipments in June dropped
to their lowest level since Feb-2002 and orders fell for the 4th
consecutive month. This was not a positive report despite how
the talking heads will try to spin it on Monday.

I gave you the negative comments from INTC, IBM and MSFT in the
Thursday commentary and they did not paint a pretty picture. On
Friday there were some additional news items. Fairchild Semi
said they were looking for a decline in revenue for Q3 of -4%
to -6%. They said they were receiving some new orders but the
pricing remained challenging. You have to give it away to sell
it. XLNX lost ground after it said revenue would be only flat
to slightly higher. PMCS said revenue would be flat and at the
low end of prior estimates and they based their cautious outlook
on corporate spending and difficulty in gauging demand. Dell
CEO Michael Dell said that U.S. corporate spending on technology
appears to be stabilizing but it is going to take a couple more
quarters to see improvement. Dell President Kevin Rollins said
that while the stabilization in the U.S. is very hopeful they
are not seeing any change in the European markets. The bottom
line is slow and steady but not the 100% profit growth that
analysts have been predicting through Q2 of next year.

I have to admit I was surprised to see the rebound on Friday. I
expected some short covering before the weekend to capture profits
from the four day slide. The magnitude of the rebound, +130 points
to 9180 surprised me. However, the Dow was the only major index
to gain for the week and it was on the strength of only a handful
of stocks. Looking forward we still have multiple problems. The
PE on the S&P is 32 and growing. The PE on the Nasdaq is 54 and
growing. Both those numbers are at the same extreme level as the
top of the Internet bubble. Interest rates are rocketing with the
ten year hitting 4% on Friday. Oil is still $32 a barrel and acting
like an undeclared tax on the economy. There are simply a large
number of reasons why the market should not rush immediately
higher and a large number of reasons why it should consolidate
before going up at all.

On Thursday the Dow was threatening to break support at 9000 and
the Nasdaq closed under 1700. Both pulled away from those key
levels on Friday and appeared to catch their second wind. Maybe
by now it is their 8th or 9th wind but either way they caught it.
If this was option related then we could consolidate on Monday
and then begin to slide again. If it is a real summer rally then
no amount of negative earnings news next week will be able to
push us below those levels again. It will however be a touchy
week. Next week is devoid of any material economic reports. We
will be left to churn based on stock news alone. Recently we have
not done well without economic guidance even when that guidance
was bad. With strong resistance just above us it may take a lot
more than just inline guidance from the next one third of S&P
companies that announce next week. Enjoy the rally if it continues
but keep looking for the storm clouds to appear. This is the dog
days of summer and those severe thunderstorms can appear suddenly
and without warning.

Enter Very Passively, Exit Very Aggressively!

Jim Brown


**************
FUTURES MARKET
**************

Retest
Jonathan Levinson

The Nasdaq, Dow and S&P futures whipped back up from a higher low
this morning in what was a very light volume opex Friday session.
From excruciatingly boring to suddenly shocking, the indices ran
back up to test the underside of their daily rising trendlines on
the Dow and S&P futures in a "return to the scene of the crime"
rally.


150-tick chart of the ES





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

Figures rounded to the nearest point:

           R2     R1    Pivot   S1     S2
ES03U     1001    996    988    983    974
YM03U     9257   9206   9113   9062   8969
NQ03U     1283   1272   1258   1247   1233


10 minute chart of the US Dollar Index




One way of putting it would that "The US Dollar Index did not go
up today."  97.30 once again held back the advance, with a lower
low following the swan dive.  The action was, as expected,
bullish for gold and other commodities, with the CRB dropping .04
but crude futures gaining 2% for the session.

Daily chart of August gold




August gold held the 343 support level again, with an intraday
low of 343.20.  The gains today stopped right at the descending
upper trendline we've been watching since May.  A break above
that level could constitute a bull flag breakout.  The
oscillators are trying to turn up from higher levels on this
downphase, also bullish.


Daily chart of the ten year note yield




Bonds took a breather today, giving back some of their gains over
the past two days and printing an inside day.  Yields closed near
their session lows, still holding huge gains on the week.  It's
tempting to bet on treasuries to go higher, and well they might,
but the weekly candle print for the ten year note yield was a
bullish "separating lines" formation.  Without going into the
details of the formation, just take a look at the daily TNX chart
above.  It remains in a very strong uptrend, with no clear sign
of a reversal just yet.

Daily NQ candles




Friday's end of session rally certainly didn't do much to inspire
fear in the hearts of bears.  The daily ascending trendline was
touched for the first time since June, and nothing was done to
alter the sell signals printed on the oscillators.


30 minute 20 day chart of the NQ




The upphase I discussed in Thursday's market wrap is weak in the
extreme, just a sideways up-phase so far, or a "swup" in the
words of my cycle mentor.  Using Thursday's channel analogy,
think of the price as moving sideways within its upsloping
channel, placed within the broader downsloping channel indicated
by the oscillators on the daily chart.  When the sideways-moving
price collides within the wider down-channel, the decline will
resume.


Daily ES candles




The S&P futures put in a far more impressive showing than the NQ,
but unfortunately, so much technical damage has been done in the
past weeks that it did nothing to improve its outlook either.
The upper trendline was barely touched from below, let alone
tested, and the descending oscillators remain in their
downphases.

20 day 30 minute chart of the ES




The shorter cycle upphase depicted on the above 30 minute chart
is in full swing, and the price is moving upward as opposed to
the "swupping" NQ price.  Once again, however, the daily
oscillators are in a downphase, and should keep a lid on this
move.  As noted in the intraday Futures Monitor, I would be
surprised to see the price get much beyond 997.  That said, the
oscillators don't always describe the cycles perfectly.  The
intraday high was 993.25, and it set a double top as seen on the
150 tick chart above.


Daily YM candles




The YM chart was the most troublesome, as rallied much further
than either of its peers.  I suppose that 30 stocks are easier to
move on a light-volume op-ex Friday than the 500 S&P stocks, but
it's irrelevant to the chart.  The ascending trendline was
cleared on a closing basis, despite the failure to reverse the
sell signals on the oscillators.  The YM has been far weaker on a
technical basis than the NQ, and so today's action was divergent.
We'll have to see how it holds on Monday, particularly with more
earnings announcements due before the bell.


20 day 30 minute chart of the YM




We see the same picture on the 30 minute chart of the YM-
surprising strength, out of the ordinary.  The phase in the
stochastic is growing long in the tooth, but showed no sign of
reversing as of the close.

For next week, I expect more weakness from equities, despite what
we saw in the YM contract on Friday.  While the shorter term
oscillators could give us a pop on Monday, the longer cycles
appear to have topped this week.  While the possibility of higher
highs exists, it looks unlikely to me, particularly given the
listless showing from the Nasdaq on Friday.

The weakness in bonds exceeded that in equities, but the story
remains one of a contraction in liquidity, bringing selling in
stocks and bonds together, just as the rally saw the reverse.  I
expect to see this trend continue next week.

See you at the bell!


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

CATCH UP
By Leigh Stevens
lstevens@OptionInvestor.com

Playing catch up is what select big cap stocks have been doing
relative to recent Nasdaq gains, especially in the Dow stocks
that have delivered improved Q2 earnings. The weekly stats tell
the story, with the Dow up 0.8% for the week, the S&P (500) off a
half percent and the Nasdaq down by 1.5%.

THE BOTTOM LINE -
The trend looks overall to be sideways for some more weeks, as
the market "consolidates" its substantial gains off the bottom.
This puts the market in a trading range until and unless renewed
upside momentum (and a second leg higher) is signaled by a
decisive upside penetration of 1013-1015 in SPX (S&P 500), 505 in
the OEX (S&P 100) and 1760 in the COMPX (Nasdaq Composite).  I
anticipate the market will work still higher over time, in line
with a longer-term bullish outlook for an improving economy.

The economy is however only recovering slowly and further overall
Index gains may also come slowly, ahead of the all-important Q3
numbers. As the earnings rebounds are selective, some good option
plays will be found in individual stocks, such as was seen with
CAT (Caterpillar) this past week. Conversely, the levels that
would "signal" breakdowns of the current trends are discussed in
conjunction with the Index charts below.

FRIDAY'S TRADING -
The market snapped a 3-day losing streak on Friday, lead by the
Dow Average in a rally fueled by CAT and MCD. At the close, the
Dow nearly got back to 9200, after rebounding off the low end of
its hourly uptrend channel. The Industrial Average was up 137
points (1.5%) to 9188. The Nasdaq Composite was up slightly on
the day (+10.5 points or .6%) but was lower on the week as noted.

Caterpillar (CAT) and McDonald's (MCD) were responsible for a
significant part of the Dow run up. Bargain hunting investors bid
up MCD by 4.4% on an upgrade in an analyst's opinion at Bear
Stearns. CAT rallied another 3% on Friday after an impressive 8%
advance on Thursday. The company blew through consensus
(earnings) estimates when it reported Q2 earnings of $1.15 per
share versus estimates of only $0.66.  Caterpillar said that a
weaker dollar against the euro and Australian dollar, helped
boost results with revenues rising 12.1% year-over-year to $5.93
billion, versus a consensus of $5.10 billion. The company's
machinery and engine volumes were strong. Hey, this is relatively
low tech but big muscle business.

McDonalds (MCD) ended at $21.18 or up 3.4%. Bear Stearns upgraded
the hamburger giant to "outperform", based on the analyst's
belief that there earnings will be better than the Street
consensus, based on some improved trends and the current
management plan - more Big Mac's please.

Microsoft rallied to above 27 (27.08), a gain of .39 (1.5%) after
the Seattle software giant announced late Thursday that its
fiscal Q4 income rose 26% on an 11% increase in sales. The
welcome surprise was that they "guided" which is unusual for the
company as they more often see their own outlook more in line
with the Wall Street consensus. Hey, Bill Gates has some dreams
of his own!

Another Dow component, Hewlett-Packard gained 3.4% - Lucent
technologies was up 5% and Nortel rose 3.9%. As usual, tech stock
gains, as reflected in the Nasdaq Composite and Nasdaq 100 (NDX),
have run "ahead" of the economy relative to actual current
earnings.  However, the profit improvement seem to be coming as
business spending picks up, albeit slowly.  Companies,
universities and consumers are starting to replace aging
equipment, take on digital hardware and expand their networking
capabilities.  I'm living proof as I upgraded my PC not long ago
to take advantage of the big jump in speed and capacity at LESS
money for the box.

Despite the market's weakness during the start of earnings
season, earnings reports have mostly come out better than
expected - of 151 companies in the S&P 500 reporting so far,
2/3rds have beat or exceeded expectations, with about 6% missing
the forecasted numbers. The problem of course, if you want to
call it that, is that the market has run well AHEAD of
expectations. Old market saying: buy the rumor (expectations) and
sell the fact (when earnings match expectations).

The University of Michigan's preliminary July consumer sentiment
index rose to 90.3 from June's 89.7. The number was marginally
lower compared with economists' estimates for a 90.5 reading.

Most market sectors headed higher Friday, led by the oil service,
utility and networking groups. Only airline and paper issues
dripped in red ink.

With some of recent recovery in some of the airline stocks - AMR
comes to mind - the Dow Transportation average appears to be
breaking out above its long standing monthly downtrend line per
the chart below, thereby joining its big brother, the Industrial
average, shown for comparison -





As per the usual practice the date shown (7/31/03) is when the
bar "ends" at month end. We won't know the full story on the
close until then of course.

A further note on the above charts - 10,000 on the Industrials
and 3000 on the Transports look like big overhanging resistance
levels.  It's one thing to break out above trendlines and another
to churn through increasing amounts (supply) of stock expected to
be for sale at key price areas. Stay tuned for the fall and
beyond!

OTHER MARKETS -
Government bonds extended recent losses that took benchmark
yields to 10-week highs. (Inverse relationship: prices up, yields
down - prices down, yields up.) The 10-year Treasury note was
down a half point, to yield 3.985%, which puts us back to nearly
4% on the benchmark Treasury.

Mortgage rates last week also spiked higher and if this continues
expect a minor shock to ripple outward to home owners still
looking to refinance.  Hard to believe that anyone is left that
is doing that, but it has been on ongoing trend. And, of course,
there is the ongoing rush into the new home market and a slowdown
here would undermine a key component of the economic growth that
has been seen in the last 18 months.

Among next week's economic releases of significance for bonds and
stocks: June leading economic indicators, weekly initial
unemployment claims, June new and existing home sales and June
durable goods orders.

The U.S. dollar gave back some early gains against its major
trading partners and headed lower, as the dollar fell slightly,
to 118.41 yen. The euro climbed 0.4 percent to $1.1265.

INDEX OUTLOOKS –

S&P 500 (SPX) - Daily chart:
Some change occurred last week in the technical picture presented
by the chart and its indicators.  While the sideways move
continues, we now have need to account for a potential double
top. While I don't currently think that the formation marks a
"final" top, the reality is that double tops are not something to
explain away either - rather, they are potent reminders that that
there may be at least a good-sized pullback before another
advance and a challenge is made to the prior highs.

While, for example, the apparent double top in March did not lead
to much of a dip, there are some differences that can be seen.
Mainly, I look for the amount of time that passes from one top to
another.  If the tops are separated by at least 2-3 weeks, I tend
to take more notice of the pattern.

Also, when a new high is not "confirmed" by other indicators such
as the RSI (RSI is substantially lower the second time) or there
is a bullish extreme in my sentiment indicator, this tends to
reinforce the possibility of a significant peak.





Last week my trading "sentiment" indicator, taken from the call
to put daily volume in all equities options (CBOE), got to an
extreme on the call side - foretelling a correction. Well, if we
(option traders) were usually RIGHT, the indicator would work the
other way round.

The "typical" correction pattern that consolidates the kind of
sizable advance or run up we've seen, is for a larger pullback,
such as to below recent lows below 980. There could be a pullback
to 950-960 zone at some point that would conform to the pattern.
The 21-day moving average is usually key to this - inability to
hold above it suggests a downswing ahead. This week may tell the
story on that.

To be a strong buyer of Index calls, such as out to Aug-Sept., I
would like to see an oversold reading, or close to one, on the
14-day RSI, which is currently neutral at around 50 (see above).

Dow Industrials Hourly (DJX.X) chart:
What is chugging along is the Dow - there is sometimes what is
known as the "solitary walk of the Dow", where enough of the 30
stocks are in rallies to keep an uptrend intact.  The well-
defined uptrend still being maintained on the Dow hourly chart is
not being "confirmed" recently by similar action in the S&P 500
(SPX).





Based on its uptrend channel, 90 appears to be level to watch in
the Dow Index (DJX) as a key support - if pierced, it would
suggest a next downside target to the 88.75-89 area.

Another thing to watch for is whether the Dow is able to take out
the prior recent high in the 9250 area or instead makes a lower
relative high.  Such a pattern would suggest that upside momentum
was slowing down.

The 21-hour stochastic is nearing an overbought reading,
suggesting a buy of DJX puts on a further extension of Friday's
rally that carried into Monday.  Buying puts on rallies into
declining rally peaks gives an exit point (stop) that is close at
hand, or just above the prior top; i.e., a move above the prior
high suggests risk of a further advance for a holder of puts.

S&P 100 Index (OEX) – Hourly chart:
The sideways trading range as I see it is outlined in the OEX
hourly chart below along with estimated technical resistance and
support areas.

OEX stayed mostly above its prior lows in the 495 area, which was
a signal for the potential to then rally after the retest of this
bottom.  However, I have put the next level of support at down in
the 485 area at the earlier late-June bottom.

I think the broad trading range we're looking at in the OEX is
bounded by 485 to around 510, although I also see resistance
coming in at the previously broken ("kiss of death") hourly up
trendline intersecting currently around 507.

My suggested strategy is to buy puts somewhere in the 507-512
price zone.  Exactly where can be pinned down by how much further
the current upside momentum can carry.  Conversely, I continue to
suggest buying calls in zone noted on the chart - this is a
broader range and again is best determined by when the price
trend stalls and then starts to reverse. In a trading range, it
can be difficult to get the right entry without tuning in during
trading and commentary during the session, such as to the OIN
Market Monitor.






SEMICONDUCTOR INDEX -
Before getting into the broader Nasdaq index, the trouble in
sustainability of the tech advance was signaled by the Philly
semiconductor index or SOX.  While the strong bellwether
component Intel (INTC) was bucking this trend and pierced its
prior high, the SOX was signaling at least a temporary top by its
bearish price/RSI divergence -





Nasdaq Composite Index (COMPX) – Weekly:

Predictably enough the recent rally stalled at the top end of the
weekly uptrend channel, especially given the overbought weekly
oscillators like the RSI (setting = 13).  The Nasdaq has not been
this "overbought" on a 13-week (fourth of a year) basis since
late-1999/early-2000.  While an overbought extreme should not be
used "mechanically" - buy puts and that's it - but does indicate
that the probability of a correction is on the rise. That said,
the rally could stay alive into the Sept/Oct time frame when
there is a tendency for a seasonable top.

If the weekly channel works here, there would typically be a
drift lower toward the middle to lower end of the channel, before
a next rally sets up.  As much as is going to realized from the
bull flag pattern that developed in prior weeks probably has been
seen. Typical bull flag: sharp up move (the "flagpole"), followed
by a few bars consolidating the first run up, then a move higher
above the "box" outlining the flag that is equal to approximately
the first upswing.





The pattern seen on the daily chart at right is the up trendline,
maybe about to be broken, if the downside momentum suggested by
the falling stochastic is realized.  If so, downside potential is
back to the 1600 area. Stay tuned!

Nasdaq 100 Tracking Stock (QQQ) - Hourly:
QQQ dropped back to the lower end of its hourly uptrend channel
with the move down to the 31 area - prior resistance has, so far,
"become" a new support. This typically comes about because
traders who sold those prior peaks and then didn't get back on
the dip, will buy again as the Q's come back down to this area.
They will also exit in a hurry if this level is penetrated!

I favor shorting rallies, especially on a move back up to the
prior peak in the 32.50 area, or a bit higher such as on up
toward the top of channel - this seems doubtful right now as many
of the underlying Nasdaq 100 stocks that have led the rally are
correcting.





If 31 is broken then I would also consider being short on the
break, or adding to short positions from higher levels, with an
objective to the 29 area.

Good Trading Success!


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**************
Editor's Plays
**************

Sticking With The Plan

Two weeks of drops and several days of fanatic rebounds have
played havoc with the current DJX put play. Every time I think
we are about to get the big break down everything falls apart
with a sudden recovery. We still have four weeks left on the
August puts and anything can still happen.

Using the 3,3,3,3,3 scenario and purchasing 3 Aug-88 DJX puts
at each level of 90.50, 91.00, 91.50, 92.00 and 92.50 you would
have a total of 15 contracts with an average price of $1.18
today. As of today that would not be a bargain since those
puts are selling for 70 cents after Friday's rally. They were
trading for $1.10 at one point on Thursday.

We sold the 10 insurance calls on Monday the 7th for $1.85 when
the Dow was dropping back through 9225 from its high at 9261.
We bought those calls for 75 cents on the Dow drop to 8871 on
July 1st. That $1100 profit offset our cost in the puts making
our adjusted basis $670 or 44.6 cents each.

I keep getting emails from readers wanting to know if we should
abort the play and cash out for a profit. I would say take the
money and run if you are worried. For 44 cents I think we have
a great lottery ticket for a market drop over the next two weeks.

It may never happen OR it could hit 8500. Either way the 44 cents
is not going to break me and a $2 profit if we hit 8600 would
sure be nice.

Your choice!

DJX Chart





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

Play updates:

I am only listing the current recommendations with a
link to the initial write up and unless the play changed
substantially.


EMC Call from Feb-2nd  $10.00
($7.70 when recommended)

After hitting $11.76 two weeks ago EMC has been slipping and
after their earnings report this week they dropped even farther.
This is a long term play that was started when EMC was $7.70
and should still improve. I am however going to quit following
it on a weekly basis.

http://members.OptionInvestor.com/editorplays/edply_020203_1.asp


Powerball

It would have taken $1,255 to buy one contract of each on
January-2nd. Any bets on what this will be worth on 12/31/03

Powerball Chart




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

Remember, these are high risk plays and should only be made
with risk capital.

Good Luck

Jim Brown


****************
MARKET SENTIMENT
****************

Reversal or Correction
Jonathan Levinson

Zooming out to the long term charts for perspective, this week
gave us negative closing prints for the Dow, Nasdaq and S&P
indices.  As profiled in the Futures Wraps this week, the S&P and
Dow violated the ascending trendlines on their daily charts for
the first time since the March bottom, while the Nasdaq did not.

On the weekly candles, we had bearish candle patterns for this
week's candle prints on all three indices, with the Nasdaq giving
us a higher high and lower low, but on a negative close.  This is
one of the more esoteric candlestick formations I can identify,
but it looks like a "meeting lines" formation to me:  bullish
optimism failing from higher levels and closing at a lower price
than the previous week.

The Dow was the most troublesome to identify, as the sudden rally
heading into Friday's close left the weekly candle on what is
either a harami cross, or the lesser known "deliberation" pattern
with a higher low and lower high, closing positive but revealing
indecision.  Both patterns are bearish indecision patterns. The
S&P printed a harami, the same as the Dow but with a broader
overall range.  Particularly given the daily ascending trendline
violation by these two indices this week, the outlook is not
bullish, despite the Dow's challenge of the trendline on light
volume going into Friday's close.  The S&P remained below it
throughout the session.

That said, this was options expiration week, and anomalous price
action is more the rule than the exception.  The failure of the
Nasdaq to keel over points to merely corrective action, and the
relatively tame put to call readings back that up.  On the other
hand, one of my pet conditions for a severe decline is
complacency on the part of the bulls, and the tame put to call
and volatility readings support that.  Unfortunately, op-ex week
skews that data, and so we look to next week for guidance.


-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High:  9353
52-week Low :  7197
Current     :  9188

Moving Averages:
(Simple)

 10-dma: 9133
 50-dma: 8950
200-dma: 8446



S&P 500 ($SPX)

52-week High: 1015
52-week Low :  768
Current     :  993

Moving Averages:
(Simple)

 10-dma:  996
 50-dma:  972
200-dma:  901



Nasdaq-100 ($NDX)

52-week High: 1316
52-week Low :  795
Current     : 1259

Moving Averages:
(Simple)

 10-dma: 1282
 50-dma: 1207
200-dma: 1067




-----------------------------------------------------------------

The rebound in Friday's markets did much to defuse the escalating
concern in the volatility indices.  Both fell comfortably back towards
complacency as investors still refuse to show much fear even after
the first major week of earnings.

CBOE Market Volatility Index (VIX) = 21.36 -1.46
Nasdaq-100 Volatility Index  (VXN) = 33.41 -2.06

-----------------------------------------------------------------

          Put/Call Ratio  Call Volume   Put Volume

Total          0.61      1,039,369       633,043
Equity Only    0.52        896,577       473,850
OEX            1.08         53,221        57,825
QQQ            0.75        106,861        80,481


-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          72.1    + 0     Bull Confirmed
NASDAQ-100    81.0    + 0     Bull Confirmed
Dow Indust.   83.3    + 0     Bull Confirmed
S&P 500       77.2    - 1     Bull Confirmed
S&P 100       82.0    - 1     Bull Confirmed


Bullish percent measures the number of stocks in an index
currently trading on a buy signal on their point and figure
chart.  Readings above 70 are considered overbought, and readings
below 30 are considered oversold.

Bull Confirmed  - Aggressively long
Bull Alert      - Cautiously long
Bull Correction - Pause or pullback in upward trend
Bear Alert      - Take defensive action if long
Bear Confirmed  - High risk if long, good conditions for shorting
Bear Correction - Pause or rebound in downtrend

-----------------------------------------------------------------

 5-Day Arms Index  0.92
10-Day Arms Index  0.87
21-Day Arms Index  1.13
55-Day Arms Index  1.12


Extreme readings above 1.5 are bullish, and readings below .85
are bearish.  These signals don't occur often and tend be early,
but when they do, they can signal significant market turning
points.

-----------------------------------------------------------------

Market Internals

            -NYSE-   -NASDAQ-
Advancers    1920      1772
Decliners     880      1259

New Highs      59        78
New Lows       10         8

Up Volume   1266M      995M
Down Vol.    301M      555M

Total Vol.  1581M     1563M

M = millions


-----------------------------------------------------------------

Commitments Of Traders Report: 07/15/03

Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the
Chicago Mercantile Exchange and Chicago Board of Trade. COT data
can be found at www.cftc.gov.

Small specs are the general trading public with commercials being
financial institutions. Commercials are historically on the
correct side of future trend changes while small specs tend
to be wrong.

S&P 500

Stuck in limbo.  The large S&P contracts saw little movement
by both the small traders and the large commercial traders.
Investors could be waiting to get some sort of reading on
trader sentiment after the first week of earnings has been
completed.

Commercials   Long      Short      Net     % Of OI
06/24/03      405,382   447,526   (42,144)   (4.9%)
07/01/03      415,976   453,005   (37,029)   (4.3%)
07/08/03      415,053   453,720   (38,667)   (4.5%)
07/15/03      414,020   453,033   (39,013)   (4.5%)

Most bearish reading of the year: (111,956) -  3/06/02
Most bullish reading of the year:   18,486  -  6/17/03

Small Traders Long      Short      Net     % of OI
06/24/03      159,405    85,182    74,223    30.3%
07/01/03      150,232    75,937    74,295    32.8%
07/08/03      152,239    74,749    77,490    34.2%
07/15/03      148,716    70,279    78,437    35.8%

Most bearish reading of the year:  (1,657)- 5/27/03
Most bullish reading of the year: 114,510 - 3/26/02


E-MINI S&P 500

The S&P e-mini contracts saw more shuffling than the larger
contracts (above) but overall there is little to discern.
Except for the slight less bearish bias in the Commercials
who bumped up their long positions while scaling back a few
of their shorts, which effectively reduced their net short
to a meager 4500 contracts.  Meanwhile the small traders
lightened up on both long and short contracts but remain
rather bearish.

Commercials   Long      Short      Net     % Of OI
06/24/03      150,208   201,724    (51,516)  (14.6%)
07/01/03      175,893   216,993    (41,100)  (10.5%)
07/08/03      192,815   224,124    (31,309)  ( 7.5%)
07/15/03      214,274   218,765    ( 4,491)  ( 1.0%)

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year:  ( 4,491)  - 07/15/03

Small Traders Long      Short      Net     % of OI
06/24/03       84,081    44,347    39,734    30.9%
07/01/03       57,639    67,449    (9,810)   (7.8%)
07/08/03       56,394    72,090   (15,696)  (12.2%)
07/15/03       45,372    54,654    (9,282)   (9.3%)

Most bearish reading of the year: (15,696)  - 07/08/03
Most bullish reading of the year: 449,310   - 06/10/03


NASDAQ-100

Much like the larger S&P futures there was little change
in the NASDAQ 100 futures.  Yet we must note one exception.
The shuffling in the commercial long/short positions produced
the most bearish reading in months.  Close a few long contracts
here, add a few short contracts here and we have a new relative
high in net short positions.

Commercials   Long      Short      Net     % of OI
06/24/03       28,780     47,425   (18,645) (24.4%)
07/01/03       28,662     48,265   (19,603) (25.5%)
07/08/03       30,489     48,311   (17,822) (22.6%)
07/15/03       28,467     49,154   (20,687) (26.7%)

Most bearish reading of the year: (20,687)  - 07/15/03
Most bullish reading of the year:   9,068   - 06/11/02

Small Traders  Long     Short      Net     % of OI
06/24/03       24,519     7,064    17,455    55.3%
07/01/03       26,777     8,498    18,279    51.8%
07/08/03       26,136     9,035    17,101    48.6%
07/15/03       26,489     8,004    18,485    53.6%

Most bearish reading of the year: (10,769) - 06/11/02
Most bullish reading of the year:  19,088  - 01/21/02

DOW JONES INDUSTRIAL

Somewhat interesting behavior by the commercials last
week.  They scaled down their short positions, which
significantly bumped up their net long holdings over all.
This is effectively telling us that institutions still
think the Industrials well be stronger in the coming
weeks.

Commercials   Long      Short      Net     % of OI
06/24/03       19,373    11,565    7,808      25.2%
07/01/03       20,504    11,871    8,633      26.7%
07/08/03       20,752    11,860    8,892      27.3%
07/15/03       21,607     7,855   13,752      46.7%

Most bearish reading of the year: (8,322) -  1/16/01
Most bullish reading of the year: 15,135  - 10/16/01

Small Traders  Long      Short     Net     % of OI
06/24/03        5,950     7,442   (1,492)   (11.1%)
07/01/03        5,799     6,822   (1,023)   ( 8.1%)
07/08/03        5,005     8,093   (3,088)   (23.6%)
07/15/03        5,475     9,717   (4,242)   (27.9%)

Most bearish reading of the year:  (8,777) - 10/12/01
Most bullish reading of the year:   1,909  -  1/16/01

-----------------------------------------------------------------


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***************
ASK THE ANALYST
***************

Money supply is "surging," but where's it going?

Jeff the money supply is surging, yet there's no inflation and
equities are flat.  Where is the money going?  Not copper.  Gold?
I doubt it.  Real estate?  How can we wisely follow it?

Think real hard.  Actually, don't think at all about this
trader's question.  Money supply is "surging."  If the ONLY
alternative is stocks where money would flow does a growing money
supply necessarily "mean" that the alternative asset will rise?
I thought about this subscriber's question, some work, but if I
hadn't been as complex in my thinking, I would have come to the
answer (or a logical attempt at an answer) much quicker.

I was still in high school when President Reagan mentioned,
"trickle down economics" and while it seemed to be a catchy
phrase at the time, this economic concept is an option for the
Fed in order to help stimulate the economy.

While I love technical analysis, there's going to be little of
that in this commentary, but there are ways a technician can
still look to apply his/her skills to find out where the money is
going.

I'm not sure if the trader's question is regarding our June 18th
Index Wrap at OptionInvestor.com
http://members.OptionInvestor.com/Itrader/marketwrap/iw_061803_1.ASP
 or the follow up and June 19th Index Wrap
http://members.OptionInvestor.com/Itrader/marketwrap/iw_061903_1.ASP
that has triggered this trader's question  In those wraps we
discussed money supply and some options the Fed (Mr. Greenspan)
still has in its arsenal to try and stimulate the economy.

If you've ever heard that "money is to root of all evil," then
read on.  I believe about 60% of that saying.  After all...
"money is the root!"

If the trader's question is in relation to these two Index Wraps,
then I'm flattered and proud that a trader/investor would be
following this dynamic of supply/demand analysis, which may well
be a key driver to get an anemic economy back on the mend.

As a quick review, there are three levels of money supply, which
the Federal Reserve will track.  Remember who has printing
presses!  The Federal Government has the printing presses for
printing money that goes into circulation, which allow the
efficient exchange of cash for goods and services.

Explanation of M1, M2, M3 money supply




Below, we're going to look at an update from the Federal Reserve
for M1, M2 and M3 money supply on a seasonally adjusted basis
(June is preliminary data) and the trader's observation that
money supply is "surging" is correct.  He's also correct that
there is little inflation (CPI and PPI indicate little
inflation).  Are equities flat?  That's debatable considering the
rebound we've seen from March.  Remember... the MARKET is smart,
and it tends to be forward looking.

I've also taken things a step further from the recent Index
Trader Wraps and have built a table that also includes other
investment classes.

Believe it or not, CASH is an asset class so I'm showing some
historical data on the U.S. Dollar Index (dx00y) which is simply
a way to show the value of a U.S. dollar against a basket of
seven major foreign currencies.  An increase/decrease can be
partially viewed as a way to measure the inflow/outflow of
dollars into/out of the United States.  At the most basic
explanation of RISK, cash in your pocket is perhaps deemed "most
safe" (effects of inflation excluded).  Stepping up the scale of
RISK the U.S. Treasury bond, which is backed by the full faith
and credit of the United States Government may be deemed safer.
For simplicity sake, I'm using the benchmark 10-year YIELD
($TNX.X) as a general benchmark for government debt.  A higher
YIELD depicts selling in the bond, while a falling YIELD
represents selling in the bond as price is falling.  The next
greater degree of investment risk a trader/investor will take to
try and obtain a higher return on his/her capital is higher grade
corporate bonds.  I'm using the iShares Gs $ Investment
(AMEX:LQD) $111.69 to represent PRICEs for a basket of higher
grade corporate bonds.  These bonds are backed by the full faith
and credit of the underlying company.  If the company were to
ever to file for bankruptcy, creditors (banks) then you the
bondholder of the corporations' debt are first in line to get as
much of your money back as possible.  Stepping out further on the
"limb of risk" is junk bonds or low-rated debt.  I'm using the
Pacholder High Yield Fund (NYSE:PHF) $8.59, which should pay a
higher YIELD than government or higher grade corporate bonds,
simply because the RISK the investor is taking with these type of
securities is greater.  Finally, the highest degree of risk is
publicly traded stocks.  I'm using the S&P 500 Index (SPX.X) 993
to represent this asset class.  While not necessarily
representative of the commodity gold, I'm using the Amex Gold
Bugs Index ($HUI.X) as a representation of what gold price
generally may have been doing over the time period studied.

Table of Money Supply, dollar and asset classes




Starting from the left, I've color coded some months to mark
those where the FOMC made a decision to lower its Fed Funds rate
(cut interest rates).  About the only impact on money supply a
fed rate cut will have on money supply, is the amount of
influence it has on an investor's decision of what country they
will move their cash.  It is arguable that M1 and M2 showed a
decline in October of 2001 due to the terrorist attacks of
September 11, 2001.  The Fed also cut rates by 50 basis points on
some concern that citizens might "panic" and withdrawal cash from
their savings accounts during a period of great uncertainty.  By
lowering Fed funds rates aggressively, the Fed was allowing a
cheaper cost of borrowing among banks to fund withdrawals.

Aggressive easing by the Fed actually found the dollar rising in
October has foreign currency came into the United States.
Remember, if you own euro and want to buy IBM anything here in
the U.S., you've got to sell your euro and buy dollar before
doing so!  Where did the foreign capital go in October after
things settle down after September 11th?  Every asset class found
buying. (I have no data for the LQD as it had not been created at
that time.

Without going through each month, you can begin to track the flow
of capital.  Not only money supply, but inflows/outflows of
foreign capital with increases/decreases in the dollar (dx00y).

April 2002 may be another notable month were we see a decline in
M1 and M2.  A decline in the dollar may explain the decline in
the SPX as capital moved out of the U.S.  Exacerbating the
decline in the SPX was that capital moved into Treasuries
($TNX.X), while capital stayed unchanged in "junk bonds" as
investors there felt the risks taken were worth the higher
interest payments being received each month.

With a basic understanding of how we can attempt to understand
how money flows around and how all the variables (dollar,
Treasure and corporate bond and stocks) interact and will depict
where money is flowing, lets address the trader's question.

First, the S&P 500 Index (SPX.X) is up 1.9% since the end of
June.  In June, the SPX was up 1.1%, so I would say stocks have
been moving based on these benchmarks and at a faster rate the
past two weeks than from the end of May to June.

But the most interesting thing I've learned from all of this.....

Each month I set aside a certain amount of capital to a savings
account.  A portion of that account is for emergency purposes,
and another portion is for a certain goal I have in mind.

Last month I deposited the same amount of money into my money
market account that I did the month prior, but when I got my
monthly account statement, I didn't earn as much interest as I
did the month before!  How could that be?  I had a larger
balance, but the interest was lower?  Oh yeah.  The Fed lowered
interest rates by 25 basis points.  No wonder I received less
interest on my last statement.

While I would say that stocks are moving, lets imagine that they
have stayed unchanged for the past three months.

If you're employed and went to your job on Monday and your
employer told you that you had to work an extra hour each day,
but he was cutting your pay by 20%, how would you feel?  Not very
good is my thinking.  If you thought you could get another job on
Tuesday, you might well quit your job right there on the spot!

Now.... think back to the trader's own observation of growing
money supply.  Then ask the question... "why aren't stocks
moving?"  We could also imagine that all of the asset classes
were unchanged the past three months, but money supply was
"surging."

In a way, the FACT that money supply is surging tells us what?
It may tell us that people are saving more money couldn't it?

Look at the various subcategories in the first chart shown in our
research, with focus on M1 and M2 subcategories.

In a way, a growing money supply doesn't necessarily mean that
stocks, bonds, gold, or any other asset is going to see price
appreciation does it?

If I gave you $1,000.00 and you could put it in a savings account
and earn 30% interest, you'd probably take the $1,000 and put it
in the saving's account.  But if I gave you $1,000 and lowered
that interest rate to 1%, well..... you might decide to either
invest it somewhere else, or... as Alan Greenspan would rather
you do, GO BUY SOMETHING!  A refrigerator!  A dishwasher!  A
stereo!  A vacation!  Quit saving it at an unattractive rate of
interest!

I'm thinking of buying a piece of property on the Platte River in
Northeastern Colorado that I can enjoy.  In recent weeks, I
bought some higher YIELDing junk bonds that pay a higher rate of
interest

I laugh.... I typed all of those numbers in the above table in on
thought that I could explain why "stocks aren't moving" as money
supply "surged."  While the full answer isn't as simple as "the
reason stocks aren't moving is because money supply is growing as
consumers are saving money at low rates," it is the starting
point.

Look at the dates where M1 and/or M2 declines.  Then, look at
what the dollar did during that time.  If the dollar went down,
then follow the various asset classes from lower risk to higher
risk (Treasury to SPX).

October 2001:  M1 and M2 declines, dollar increases (money coming
into U.S.) this tells us cash from M1 and M2 is moving somewhere,
and it's staying here in the U.S.  Treasuries see selling (more
cash freeing up), "junk bonds" increase in price (demand created
from money/cash), with the bullish % at low risk levels it may
have gone to the SPX?

April 2002:  M1 and M2 declines, dollar DECLINES, (money leaving
the U.S), Treasuries see buying, "junk bonds" stay flat.  Guess
what's left at the end of risk scale?  You got it.  The SPX.
With money moving out of the U.S. and left-over money going into
Treasuries, odd-man out is equities.

August 2002:  M1 declines, but not M2.  Dollar increases,
Treasuries see buying, higher grade corporate bonds (LQD) see
nice gain (hey... some risk is being taken as we step out on the
scale of risk), "junk bonds" see selling (too much risk for
interest received) and equities (SPX.X) sees marginal gain.

Are you getting a feel for things?  Without looking back at the
table you finish this observation.  In November of 2002, M1
declines (money moving somewhere from savings accounts), dollar
increases, Treasuries see selling, higher grade corporate bonds
see fractional gains, "junk bonds" see nice gain, and SPX see
(gain or loss).  Now look above and see if you got it right.

Now look where we are!  And this exercise has really helped me
understand why the bullish % charts have reached as high as they
have for this long!

Yes, M1, M2 and M3 are growing!  My goodness he dollar has been
strengthening recently hasn't it?  Money has been staying here in
the U.S.  We're seeing selling in Treasuries aren't we?  That
more cash freeing up.  Hey!  some of it can go into M1, M2 and
even M3.  That's OK.  Maybe IBM, GM, CAT, INTC or other
corporations have been selling Treasuries and building cash
reserves.  Higher grade corporate bonds have been seeing selling,
but "junk bonds" are holding unchanged and kicking off 11% annual
interest payments (maybe higher or lower too) and equities look
to be doing just fine.

At this point, we can chart and project trends or monitor moving
averages on everything except M1, M2 and M3.

Is it concerning that M1, M2 and M3 are "surging" if you're an
equity investor?  It could be, but the "surge" in money supply
could well be the parking of cash near-term as profits are taken
in the Treasury and corporate bond markets.

Is Fed Chairman Alan Greenspan and fellow FOMC governors on the
right track with a sloooooow cutting of interest rates?  Are they
attempting to slooowly push the money-plowing money market saver
into buying goods and services?

While the Fed is always cognizant of the stock and bond markets
(more concerned with bond market as various consumer interest
rates are derived from the bond market), but its main job is to
provide a healthy economy!

Every consumer in the United States and even around the world has
different near-term and longer-term goals or ideas of what they
want to do with their money.  Whether it is a prime piece of
property in the heart of a waterfowl migration, or that new "boom
box" a teenager is saving for after he/she has saved enough money
to be on track to pay for their first semester at college.  There
is always some type of goal to be saving for.  But when a rate of
return in a money market account is no longer sufficient to have
the goal obtainable with the money being earned from a job, then
further RISK must be taken in order to achieve the eventual goal!

For some, one way to achieve a goal faster is to take on more
risk, and move cash out of a lower returning, but safer
investment, to a risking, but potentially higher return type of
investment.

Maybe a 2% gain per month from equities isn't everyone's idea of
"fast growth."  If so, then I would think that investor wants to
see a decline in M1 and M2, see the U.S. dollar at least hold
unchanged if not higher, see selling in Treasuries, selling in
corporate bonds, selling in "junk bond" and watch those equities
SURGE!

Last thing.  Has anyone noticed that M3 has not declined in the
above table?  Other than the very fractional decline in January
of this year.  This is an area to monitor for corporate spending!
M3 continues to hint that corporations are still trying to get
the balance sheets in order, income statements fine tuned and
lean.

It may indeed take a decline in M1 and M2, a firming dollar to
show the consumer (most consumer money ready to buy products is
in M1 or M2) spending at a more aggressive pace, which then
builds the demand for products that the nation's company's
produce to then begin to see better revenues and earnings.  Once
that takes place, then corporations are going to start increasing
their spending as production lines are bought back into action.

This has been a very helpful exercise for me and hopefully you
to.  I have been wondering why stocks have been able to hang
tough the past several weeks and for the first time, I took the
time to actually create a table where I could try and track M1,
M2, M3 along with the dollar, to better understand some of the
basic supply/demand characteristics, where MONEY is the root
driver that is the initial catalyst for demand.

For me, it really brings into new focus the relationship between
money supply and where it flows.

And now I've got some things to think about over the weekend.

Jeff Bailey


*************
COMING EVENTS
*************

==========================================
Market Watch for the week of July 21st
==========================================

------------------------
Major Earnings This Week
------------------------

Symbol  Company               Date           Comment      EPS Est

------------------------- MONDAY -------------------------------

MMM    3M Company            Mon, Jul 21  Before the Bell     1.51
ALTR   Altera Corporation    Mon, Jul 21  4:15 pm ET          0.09
AMX    America Movil         Mon, Jul 21  After the Bell      0.39
AME    AMETEK Inc.           Mon, Jul 21  After the Bell      0.65
ARM    ArvinMeritor, Inc.    Mon, Jul 21  Before the Bell     0.66
BNK    Banknorth Group Inc.  Mon, Jul 21  Before the Bell     0.54
BWA    BorgWarner, Inc.      Mon, Jul 21  Before the Bell     1.54
CD     Cendant Corporation   Mon, Jul 21  After the Bell      0.35
CTX    Centex Corporation    Mon, Jul 21  After the Bell      1.84
CHKP   Check Point Sftwr TechMon, Jul 21  Before the Bell     0.24
CNF    CNF Inc.              Mon, Jul 21  After the Bell      0.28
GLW    Corning               Mon, Jul 21  After the Bell     -0.01
RE     Everest Re Group      Mon, Jul 21  After the Bell      1.92
GSPN   GlobespanVirata, Inc. Mon, Jul 21  After the Bell      0.04
GDW    Golden West Financial Mon, Jul 21  -----N/A-----       1.69
HAS    Hasbro, Inc.          Mon, Jul 21  Before the Bell     0.04
HE     Hawaiian Electric     Mon, Jul 21  After the Bell      0.77
IDXX   Idexx Laboratories    Mon, Jul 21  Before the Bell     0.42
ICBC   Indep Comm Bank       Mon, Jul 21  After the Bell      0.62
INET   Instinet Group Incorp Mon, Jul 21  -----N/A-----        N/A
LH     Lab Corp of America   Mon, Jul 21  After the Bell      0.60
LEE    Lee Enterprises Inc   Mon, Jul 21  Before the Bell     0.46
LXK    Lexmark International Mon, Jul 21  Before the Bell     0.78
LRY    Liberty Prop Trust    Mon, Jul 21  After the Bell      0.79
LNCR   Lincare Holdings      Mon, Jul 21  After the Bell      0.50
MHM    Masonite Intl Corp    Mon, Jul 21  -----N/A-----       0.51
MRK    Merck & Co., Inc.     Mon, Jul 21  Before the Bell     0.84
MEOH   Methanex              Mon, Jul 21  -----N/A-----       0.50
NHY    Norsk Hydro           Mon, Jul 21  03:30 am ET         0.97
NVS    Novartis Corporation  Mon, Jul 21  Before the Bell     0.51
NVLS   Novellus Systems, Inc Mon, Jul 21  -----N/A-----       0.05
PBI    Pitney Bowes Inc.     Mon, Jul 21  After the Bell      0.59
PCL    Plum Creek Timber     Mon, Jul 21  After the Bell      0.26
PNC    PNC Finl Serv Group   Mon, Jul 21  Before the Bell     0.93
SANM   Sanmina-SCI Corp.     Mon, Jul 21  After the Bell      0.01
SLAB   Silicon Laboratories  Mon, Jul 21  After the Bell      0.21
SII    Smith International   Mon, Jul 21  Before the Bell     0.26
SWBT   Southwest Bank Texas  Mon, Jul 21  After the Bell      0.46
SWFT   Swift Transportation  Mon, Jul 21  After the Bell      0.24
TXN    Texas Instruments     Mon, Jul 21  After the Bell      0.06
BBDA   Bank of Bermuda Lmtd  Mon, Jul 21  Before the Bell      N/A
UHS    Universal Health Serv Mon, Jul 21  After the Bell      0.80
WRE    Wash Rl Est InvstTrst Mon, Jul 21  After the Bell      0.50
WFT    Weatherford Intl      Mon, Jul 21  Before the Bell     0.31


------------------------- TUESDAY ------------------------------

NDN    99 CENTS Only         Tue, Jul 22  After the Bell      0.21
ABGX   Abgenix               Tue, Jul 22  -----N/A-----      -0.38
ATVI   Activision            Tue, Jul 22  -----N/A-----       0.00
AL     Alcan Inc.            Tue, Jul 22  -----N/A-----       0.42
AMZN   Amazon.com, Inc.      Tue, Jul 22  -----N/A-----       0.06
AMTD   Ameritrade Holding    Tue, Jul 22  Before the Bell     0.10
AMGN   Amgen                 Tue, Jul 22  After the Bell      0.46
AOT    Apogent Technologies  Tue, Jul 22  After the Bell      0.34
AHG    Apria Healthcare Grp  Tue, Jul 22  Before the Bell     0.52
ARMHY  ARM Holdings Plc.     Tue, Jul 22  02:00 am ET         0.02
AJG    Arthur J. Gallagher   Tue, Jul 22  After the Bell      0.37
ASH    Ashland               Tue, Jul 22  -----N/A-----       1.16
AVY    Avery Dennison Corp   Tue, Jul 22  11:00 am ET         0.70
BPC    Banco Com Portugues   Tue, Jul 22  -----N/A-----        N/A
BZH    Beazer Homes USA Inc. Tue, Jul 22  After the Bell      2.90
BJS    BJ SVCS CO            Tue, Jul 22  Before the Bell     0.30
BXP    Boston Properties     Tue, Jul 22  -----N/A-----       1.00
BSX    Boston Sci Corp       Tue, Jul 22  After the Bell      0.30
BRCM   Broadcom              Tue, Jul 22  After the Bell      0.09
BNI    Brlngtn No Santa Fe   Tue, Jul 22  Before the Bell     0.52
CHRW   C.H. Robinson Wrldwde Tue, Jul 22  Before the Bell     0.34
CNI    Canadian Natl Railway Tue, Jul 22  Before the Bell     0.89
CECO   Career Education      Tue, Jul 22  After the Bell      0.31
CME    CHICAGO MERCANTILE    Tue, Jul 22  Before the Bell     0.93
CPS    ChoicePoint, Inc.     Tue, Jul 22  Before the Bell     0.37
CNET   CNET Networks         Tue, Jul 22  After the Bell     -0.09
CTSH   Cognizant Tech Sol    Tue, Jul 22  -----N/A-----       0.18
CL     Colgate-Palmolive     Tue, Jul 22  -----N/A-----       0.62
CPWR   Compuware Corporation Tue, Jul 22  After the Bell      0.03
CPO    Corn Products Intl    Tue, Jul 22  Before the Bell     0.50
CFC    Countrywide Financial Tue, Jul 22  Before the Bell     2.83
CYMI   Cymer, Inc.           Tue, Jul 22  After the Bell     -0.20
DNB    D&B                   Tue, Jul 22  After the Bell      0.50
DCLK   DoubleClick           Tue, Jul 22  After the Bell      0.01
ELNK   EarthLink             Tue, Jul 22  Before the Bell     0.03
ECL    Ecolab Inc.           Tue, Jul 22  Before the Bell     0.25
EW     Edwards Lifesciences  Tue, Jul 22  After the Bell      0.39
EFII   Electronics for Imag  Tue, Jul 22  After the Bell      0.15
ESA    Extended Stay America Tue, Jul 22  After the Bell      0.14
FII    Federated Investors B Tue, Jul 22  After the Bell      0.44
FISV   Fiserv                Tue, Jul 22  After the Bell      0.39
FLS    Flowserve Corp        Tue, Jul 22  Before the Bell     0.32
HET    Harrah's Entert       Tue, Jul 22  Before the Bell     0.74
HCA    HCA                   Tue, Jul 22  Before the Bell     0.77
HCP    Health Care Property  Tue, Jul 22  Before the Bell     0.89
HMA    Health Management Ass Tue, Jul 22  Before the Bell     0.30
HRH    Hilb, Rogal Hamilton  Tue, Jul 22  Before the Bell     0.50
HNI    HON INDUSTRIES, Inc.  Tue, Jul 22  Before the Bell     0.33
ITW    Illinois Tool Works   Tue, Jul 22  Before the Bell     0.88
RX     IMS Health            Tue, Jul 22  After the Bell      0.24
N      Inco                  Tue, Jul 22  -----N/A-----       0.10
IFX    Infineon Technologies Tue, Jul 22  01:30 am ET        -0.30
IPCR   IPC Holdings          Tue, Jul 22  After the Bell      1.07
LSCC   Lattice Semiconductor Tue, Jul 22  -----N/A-----       0.02
LLTC   Linear Technology     Tue, Jul 22  After the Bell      0.20
LOGI   Logitech Intl         Tue, Jul 22  Before the Bell     0.10
LZ     Lubrizol              Tue, Jul 22  Before the Bell     0.58
MXO    Maxtor Corp           Tue, Jul 22  After the Bell      0.08
MDCO   MEDICINES CO          Tue, Jul 22  After the Bell     -0.12
MRBK   Mercantile Bankshare  Tue, Jul 22  Before the Bell     0.71
MDG    Meridian Gold Inc.    Tue, Jul 22  After the Bell      0.09
MGM    Metro-Goldwyn-Mayer   Tue, Jul 22  -----N/A-----      -0.23
MLNM   Millennium Pharm      Tue, Jul 22  After the Bell     -0.17
MKSI   MKS Instruments       Tue, Jul 22  4:00 pm ET         -0.06
MCO    Moody's Corporation   Tue, Jul 22  After the Bell      0.56
NU     Northeast Utilities   Tue, Jul 22  Before the Bell     0.15
OXY    Occidental Petroleum  Tue, Jul 22  Before the Bell     0.95
OI     Owens Illinois        Tue, Jul 22  After the Bell      0.47
PLD    ProLogis Trust        Tue, Jul 22  After the Bell      0.58
PEG    PSEG                  Tue, Jul 22  Before the Bell     0.51
PTZ    Pulitzer Inc.         Tue, Jul 22  Before the Bell     0.53
DGX    Quest Diagnostics     Tue, Jul 22  Before the Bell     1.10
RSH    RadioShack Corp       Tue, Jul 22  Before the Bell     0.29
RYN    Rayonier Inc.         Tue, Jul 22  Before the Bell     0.70
RGC    Regal Ent Grp         Tue, Jul 22  Before the Bell     0.33
RNR    RenaissanceRe Hold    Tue, Jul 22  After the Bell      1.40
RTRSY  Reuters Group         Tue, Jul 22  02:00 am ET          N/A
ROK    Rockwell Automation   Tue, Jul 22  Before the Bell     0.30
RYL    Ryland Group          Tue, Jul 22  After the Bell      1.80
SLB    Schlumberger          Tue, Jul 22  After the Bell      0.32
SEPR   Sepracor              Tue, Jul 22  Before the Bell    -0.60
SHW    Sherwin-Williams      Tue, Jul 22  -----N/A-----       0.75
SEBL   Siebel Systems        Tue, Jul 22  -----N/A-----       0.02
SIAL   Sigma-Aldrich Corp    Tue, Jul 22  4:00 pm ET          0.66
SLG    SL Green Realty       Tue, Jul 22  After the Bell      0.86
STK    Storage Technology    Tue, Jul 22  -----N/A-----       0.24
SUNW   Sun Microsystems      Tue, Jul 22  -----N/A-----       0.02
TE     TECO Energy Inc.      Tue, Jul 22  -----N/A-----       0.29
TK     TKAY SHIP MARSHALL    Tue, Jul 22  -----N/A-----       2.29
TLAB   Tellabs               Tue, Jul 22  Before the Bell    -0.08
CAKE   The Cheesecake Fact   Tue, Jul 22  After the Bell      0.30
JOE    The St. Joe Company   Tue, Jul 22  Before the Bell     0.17
SWK    The Stanley Works     Tue, Jul 22  Before the Bell     0.50
TMO    Thermo Electron Corp  Tue, Jul 22  After the Bell      0.24
TMA    Thornburg Mortgage    Tue, Jul 22  After the Bell       N/A
TDW    Tidewater             Tue, Jul 22  Before the Bell     0.29
TMK    Torchmark             Tue, Jul 22  Before the Bell     0.95
UPS    UNITED PARCEL SERVICE Tue, Jul 22  Before the Bell     0.59
VVC    Vectren Corporation   Tue, Jul 22  After the Bell      0.15
VFC    VF                    Tue, Jul 22  -----N/A-----       0.60
VTSS   Vitesse Semiconductor Tue, Jul 22  After the Bell     -0.04
WAT    Waters Corporation    Tue, Jul 22  Before the Bell     0.32
WLP    WellPoint Hlth Net    Tue, Jul 22  After the Bell      1.39
WSTC   West Corporation      Tue, Jul 22  After the Bell      0.30
WFSI   WFS Financial         Tue, Jul 22  After the Bell      0.77
WWY    Wm. Wrigley Jr. Co.   Tue, Jul 22  -----N/A-----       0.56
XTO    XTO Energy Inc.       Tue, Jul 22  -----N/A-----       0.37


-----------------------  WEDNESDAY -----------------------------

TW     21st Century Ins      Wed, Jul 23  After the Bell      0.18
ABY    Abitibi-Consolidated  Wed, Jul 23  Before the Bell      N/A
ACXM   Acxiom                Wed, Jul 23  After the Bell      0.06
ADO    Adecco SA             Wed, Jul 23  01:00 am ET          N/A
ADVP   AdvancePCS            Wed, Jul 23  After the Bell      0.49
AFFX   Affymetrix            Wed, Jul 23  After the Bell      0.03
AFL    AFLAC Incorporated    Wed, Jul 23  After the Bell      0.45
ALB    Albemarle Corp        Wed, Jul 23  Before the Bell     0.42
AGN    Allergan              Wed, Jul 23  Before the Bell     0.52
ALO    Alpharma              Wed, Jul 23  After the Bell      0.25
DOX    Amdocs Limited        Wed, Jul 23  After the Bell      0.22
BUD    Anheuser-Busch Co     Wed, Jul 23  -----N/A-----       0.75
AOL    AOL Time Warner       Wed, Jul 23  Before the Bell     0.10
ABI    Applied Biosystems    Wed, Jul 23  Before the Bell     0.22
AWE    AT&T Wireless         Wed, Jul 23  After the Bell      0.04
AVP    Avon Products Inc.    Wed, Jul 23  -----N/A-----       0.69
BLS    BellSouth Corp        Wed, Jul 23  08:00 am ET         0.49
BBI    Blockbuster Inc.      Wed, Jul 23  -----N/A-----       0.25
BC     Brunswick Corporation Wed, Jul 23  After the Bell      0.54
BOBJ   Business Objects      Wed, Jul 23  -----N/A-----       0.17
CBT    Cabot                 Wed, Jul 23  After the Bell      0.50
CSG    Cadbury Schweppes     Wed, Jul 23  -----N/A-----        N/A
CP     Canadian Pac Railway  Wed, Jul 23  Before the Bell     0.38
CHIR   Chiron                Wed, Jul 23  After the Bell      0.33
CHH    Choice Hotels Intl    Wed, Jul 23  After the Bell      0.41
CTXS   Citrix Systems        Wed, Jul 23  After the Bell      0.16
CGNX   Cognex                Wed, Jul 23  After the Bell      0.06
COLT   COLT Telecom Group    Wed, Jul 23  Before the Bell      N/A
COLM   Columbia Sportswear   Wed, Jul 23  After the Bell      0.20
CYH    Community Health Sys  Wed, Jul 23  After the Bell      0.29
CA     Computer Ass Intl     Wed, Jul 23  After the Bell      0.09
CVG    Convergys Corporation Wed, Jul 23  Before the Bell     0.27
CVD    Covance               Wed, Jul 23  After the Bell      0.29
CFR    Cullen/Frost Bankers  Wed, Jul 23  Before the Bell     0.59
CYTC   Cytyc Corporation     Wed, Jul 23  After the Bell      0.16
DP     Diagnostic Products   Wed, Jul 23  Before the Bell     0.54
DL     Dial                  Wed, Jul 23  Before the Bell     0.33
DBD    Diebold               Wed, Jul 23  Before the Bell     0.57
DST    DST Systems           Wed, Jul 23  After the Bell      0.44
EK     Eastman Kodak Company Wed, Jul 23  Before the Bell     0.29
EDS    Electronic Data Sys   Wed, Jul 23  After the Bell      0.34
EEP    Enbridge Energy Part  Wed, Jul 23  After the Bell      0.46
EGN    Energen               Wed, Jul 23  -----N/A-----       0.46
ESRX   Express Scripts, Inc. Wed, Jul 23  After the Bell      0.78
FIC    Fair Isaac Corp       Wed, Jul 23  4:05 pm ET          0.57
FNF    Fidelity Natl Finl    Wed, Jul 23  Before the Bell     1.59
FNIS   Fidelity Natl Inf Sol Wed, Jul 23  Before the Bell     0.31
FR     First Indl Realty TrstWed, Jul 23  After the Bell      0.71
FMBI   First Midwest Bancorp Wed, Jul 23  Before the Bell     0.48
FLIR   FLIR Systems, Inc.    Wed, Jul 23  Before the Bell     0.31
FTI    Fmc Technologies      Wed, Jul 23  After the Bell      0.29
FDRY   Foundry Networks      Wed, Jul 23  After the Bell      0.10
FCN    FTI Consulting        Wed, Jul 23  After the Bell      0.41
FBN    Furniture Brands      Wed, Jul 23  After the Bell      0.43
GYI    GETTY IMAGES INC      Wed, Jul 23  -----N/A-----       0.20
GSK    GlaxoSmithKline       Wed, Jul 23  07:00 am ET         0.69
GSF    GlobalSantaFe Corp.   Wed, Jul 23  -----N/A-----       0.06
GG     Goldcorp              Wed, Jul 23  After the Bell      0.10
GLK    Great Lakes Chemical  Wed, Jul 23  After the Bell      0.37
GBBK   Greater Bay Bancorp   Wed, Jul 23  Before the Bell     0.41
DA     Groupe Danone         Wed, Jul 23  -----N/A-----       0.71
HRS    Harris                Wed, Jul 23  After the Bell      0.39
HHS    Harte-Hanks           Wed, Jul 23  -----N/A-----       0.25
HMT    Host Marriott         Wed, Jul 23  Before the Bell     0.21
HUBb   Hubbell Incorporated  Wed, Jul 23  11:00 am ET         0.43
HYSL   Hyperion              Wed, Jul 23  After the Bell      0.24
IMO    Imperial Oil Limited  Wed, Jul 23  -----N/A-----        N/A
INMRY  Instrumentarium       Wed, Jul 23  02:00 am ET          N/A
ISIL   Intersil Corporation  Wed, Jul 23  -----N/A-----       0.16
JKHY   Jack Henry & Ass      Wed, Jul 23  -----N/A-----       0.15
KMB    Kimberly Clark        Wed, Jul 23  -----N/A-----       0.81
KB     Kookmin Bank          Wed, Jul 23  -----N/A-----        N/A
LLL    L-3 Comm Holdings     Wed, Jul 23  Before the Bell     0.58
LRCX   Lam Research          Wed, Jul 23  After the Bell      0.02
LF     LeapFrog Enterprises  Wed, Jul 23  After the Bell     -0.15
LIN    Linens 'n Things Inc. Wed, Jul 23  Before the Bell     0.12
LSI    LSI Logic             Wed, Jul 23  After the Bell     -0.08
MACR   Macromedia            Wed, Jul 23  After the Bell      0.10
MENT   Mentor Graphics       Wed, Jul 23  After the Bell      0.09
MCRL   Micrel Semiconductor  Wed, Jul 23  After the Bell     -0.01
MOLX   Molex Inc.            Wed, Jul 23  4:00 pm ET          0.15
MYL    Mylan Laboratories    Wed, Jul 23  Before the Bell     0.38
NATI   National Instruments  Wed, Jul 23  After the Bell      0.15
NSCN   NetScreen Tech        Wed, Jul 23  After the Bell      0.16
NCEN   New Century Finl      Wed, Jul 23  After the Bell      1.55
NBL    Noble Energy, Inc.    Wed, Jul 23  -----N/A-----       0.44
NSC    Norfolk Southern Corp Wed, Jul 23  Before the Bell     0.37
NCX    NOVA Chemicals        Wed, Jul 23  Before the Bell     0.02
OSI    Outback Steakhouse    Wed, Jul 23  After the Bell      0.60
OVER   Overture Services Inc Wed, Jul 23  After the Bell      0.06
PFCB   P.F. Chang's          Wed, Jul 23  Before the Bell     0.27
PTV    Pactiv                Wed, Jul 23  After the Bell      0.37
PTEN   Patterson-UTI Energy  Wed, Jul 23  Before the Bell     0.08
PAS    PepsiAmericas         Wed, Jul 23  Before the Bell     0.35
PKI    PerkinElmer           Wed, Jul 23  Before the Bell     0.11
PX     Praxair Inc           Wed, Jul 23  Before the Bell     0.87
PGN    Progress Energy       Wed, Jul 23  Before the Bell     0.78
PSD    Puget Energy          Wed, Jul 23  After the Bell      0.35
QCOM   QUALCOMM Inc.         Wed, Jul 23  After the Bell      0.30
QSFT   Quest Software Inc.   Wed, Jul 23  After the Bell      0.06
RHD    R.H. Donnelley Corp   Wed, Jul 23  After the Bell      0.68
R      Ryder System, Inc.    Wed, Jul 23  Before the Bell     0.52
SGP    Schering-Plough       Wed, Jul 23  Before the Bell     0.12
SEE    Sealed Air            Wed, Jul 23  11:00 am ET         0.57
SINA   SINA CORP             Wed, Jul 23  After the Bell      0.19
SWKS   Skyworks              Wed, Jul 23  After the Bell     -0.04
STN    Station Casinos       Wed, Jul 23  -----N/A-----       0.22
STM    STMicroelectronics    Wed, Jul 23  After the Bell      0.12
SDS    SunGard Data Systems  Wed, Jul 23  After the Bell      0.31
SWMAY  Swedish Match         Wed, Jul 23  -----N/A-----        N/A
SY     Sybase                Wed, Jul 23  Before the Bell     0.21
SYMC   Symantec              Wed, Jul 23  -----N/A-----       0.39
TELN   Telenor ASA           Wed, Jul 23  -----N/A-----        N/A
TDS    Telephone Data        Wed, Jul 23  Before the Bell     0.56
TIN    Temple-Inland, Inc.   Wed, Jul 23  -----N/A-----      -0.05
BA     The Boeing Company    Wed, Jul 23  -----N/A-----       0.45
FAF    The First Am Corp     Wed, Jul 23  Before the Bell     1.07
REY    The Reynolds Reynolds Wed, Jul 23  -----N/A-----       0.40
TKR    The Timken Company    Wed, Jul 23  After the Bell      0.25
USM    U.S. Cellular         Wed, Jul 23  Before the Bell     0.36
USTR   United Stationers Inc Wed, Jul 23  After the Bell      0.53
VARI   Varian, Inc.          Wed, Jul 23  After the Bell      0.33
VTR    Ventas                Wed, Jul 23  After the Bell      0.37
VRTS   VERITAS Software Corp Wed, Jul 23  After the Bell      0.15
EYE    VISX Inc.             Wed, Jul 23  -----N/A-----       0.07
VOLVY  Volvo AB              Wed, Jul 23  02:00 am ET          N/A
BER    W.R. Berkley          Wed, Jul 23  After the Bell      1.10
WSH    Willis Group Holdings Wed, Jul 23  After the Bell      0.47
WYE    WYETH                 Wed, Jul 23  07:00 am ET         0.48
YCC    Yankee Candle         Wed, Jul 23  Before the Bell     0.12
ZMH    Zimmer Inc.           Wed, Jul 23  After the Bell      0.42


------------------------- THURSDAY -----------------------------

RKY    Adolph Coors, Co.     Thu, Jul 24  -----N/A-----       1.88
AFCI   Advanced Fibre Comm   Thu, Jul 24  After the Bell      0.07
AG     AGCO                  Thu, Jul 24  -----N/A-----       0.31
ARG    Airgas                Thu, Jul 24  After the Bell      0.25
ACV    Alberto-Culver Co.    Thu, Jul 24  10:30 am ET         0.68
ALEX   Alexander & Baldwin   Thu, Jul 24  After the Bell      0.45
ALE    Allete                Thu, Jul 24  -----N/A-----       0.53
AT     ALLTEL Corp.          Thu, Jul 24  -----N/A-----       0.77
AXL    American Axle Manu    Thu, Jul 24  -----N/A-----       0.96
AIG    American Intl Group   Thu, Jul 24  -----N/A-----       0.94
APPX   American Pharm Part   Thu, Jul 24  -----N/A-----       0.30
AMT    American Tower Corp.  Thu, Jul 24  Before the Bell    -0.39
ABC    AmeriSourceBergen     Thu, Jul 24  Before the Bell     1.03
APA    Apache Corporation    Thu, Jul 24  09:00 am ET         1.76
ADM    Archer Daniels MidlandThu, Jul 24  Before the Bell     0.16
ARW    Arrow Electronics     Thu, Jul 24  Before the Bell     0.15
AZN    AstraZeneca PLC       Thu, Jul 24  06:00 am ET         0.33
T      AT&T                  Thu, Jul 24  Before the Bell     0.53
AN     AutoNation            Thu, Jul 24  Before the Bell     0.30
AV     Avaya                 Thu, Jul 24  After the Bell      0.00
BHI    Baker Hughes Incorp   Thu, Jul 24  Before the Bell     0.21
BLL    Ball Corporation      Thu, Jul 24  -----N/A-----       1.15
BOL    Bausch & Lomb         Thu, Jul 24  -----N/A-----       0.48
BDX    Becton, Dickinson Co  Thu, Jul 24  Before the Bell     0.54
BMS    Bemis Company, Inc.   Thu, Jul 24  Before the Bell     0.70
BGEN   Biogen, Inc.          Thu, Jul 24  Before the Bell     0.37
BDK    Black & Decker Corp   Thu, Jul 24  Before the Bell     0.93
BPL    Buckeye Partners      Thu, Jul 24  -----N/A-----       0.64
BR     Burlington Resources  Thu, Jul 24  Before the Bell     1.28
CCMP   Cabot Microelect      Thu, Jul 24  Before the Bell     0.38
CBL    CBL & Associates Prop Thu, Jul 24  After the Bell      1.11
CLS    Celestica             Thu, Jul 24  Before the Bell    -0.04
CEY    Certegy               Thu, Jul 24  Before the Bell     0.34
CIN    Cinergy Corp.         Thu, Jul 24  -----N/A-----       0.46
CIT    CIT Group             Thu, Jul 24  Before the Bell     0.61
CNH    CNH Global N.V.       Thu, Jul 24  10:00 am ET         0.49
CGI    Commerce Group        Thu, Jul 24  -----N/A-----       0.73
CFB    Commercial Federal    Thu, Jul 24  Before the Bell     0.51
CNXT   Conexant Systems Inc. Thu, Jul 24  After the Bell     -0.09
CNX    CONSOL Energy         Thu, Jul 24  Before the Bell     0.17
CBE    Cooper Industries Ltd Thu, Jul 24  Before the Bell     0.67
CR     Crane                 Thu, Jul 24  After the Bell      0.41
CSX    CSX                   Thu, Jul 24  Before the Bell     0.58
DCX    DaimlerChrysler       Thu, Jul 24  07:00 am ET         0.07
DCN    Dana                  Thu, Jul 24  -----N/A-----       0.30
DASTY  Dassault Systemes SA  Thu, Jul 24  -----N/A-----       0.28
EMN    Eastman Chemical Co   Thu, Jul 24  After the Bell      0.49
EBAY   eBay                  Thu, Jul 24  -----N/A-----       0.35
LLY    Eli Lilly             Thu, Jul 24  Before the Bell     0.60
ENDP   Endo Pharmaceuticals  Thu, Jul 24  Before the Bell     0.28
ELAB   Eon Labs              Thu, Jul 24  Before the Bell     0.29
ERIE   Erie Indemnity        Thu, Jul 24  -----N/A-----       0.75
EXLT   EXULT                 Thu, Jul 24  After the Bell      0.04
FHR    Fairmont Htl Resorts  Thu, Jul 24  -----N/A-----       0.28
FLEX   Flextronics           Thu, Jul 24  After the Bell      0.05
FLA    Fl East Coast Ind     Thu, Jul 24  Before the Bell      N/A
BEN    Franklin Resources    Thu, Jul 24  -----N/A-----       0.48
GTW    Gateway, Inc.         Thu, Jul 24  After the Bell     -0.28
GR     Goodrich Corporation  Thu, Jul 24  Before the Bell     0.11
GXP    Great Plains Energy   Thu, Jul 24  09:00 am ET         0.41
HSC    Harsco Corporation    Thu, Jul 24  Before the Bell     0.62
HR     Healthcare Rlty Trst  Thu, Jul 24  After the Bell      0.69
HP     Helmerich & Payne     Thu, Jul 24  -----N/A-----       0.08
IKN    Ikon Office Solutions Thu, Jul 24  Before the Bell     0.25
IMN    Imation Corp.         Thu, Jul 24  Before the Bell     0.53
IDC    Interactive Data Corp Thu, Jul 24  Before the Bell     0.18
IFF    Intl Flavors Frag     Thu, Jul 24  10:00 am ET         0.59
IP     Intl Paper Co.        Thu, Jul 24  Before the Bell     0.17
IVGN   Invitrogen Corp       Thu, Jul 24  -----N/A-----       0.52
JDSU   JDS Uniphase Corp     Thu, Jul 24  After the Bell     -0.03
KLAC   KLA-Tencor            Thu, Jul 24  After the Bell      0.15
KRON   Kronos Incorporated   Thu, Jul 24  -----N/A-----       0.40
LR     Lafarge               Thu, Jul 24  -----N/A-----        N/A
LVLT   Level 3 Comm          Thu, Jul 24  -----N/A-----      -0.58
LMT    Lockheed Martin       Thu, Jul 24  -----N/A-----       0.52
LYO    Lyondell Petrochem    Thu, Jul 24  Before the Bell    -0.06
MFC    Manulife Financial    Thu, Jul 24  2:00 pm ET          0.50
MRO    Marathon Oil Corp     Thu, Jul 24  -----N/A-----       0.94
KRB    MBNA                  Thu, Jul 24  Before the Bell     0.39
MCK    McKesson Corporation  Thu, Jul 24  After the Bell      0.51
MDU    MDU Resources         Thu, Jul 24  -----N/A-----       0.52
MEDI   MedImmune             Thu, Jul 24  -----N/A-----       0.03
MTD    Mettler-Toledo Intl   Thu, Jul 24  After the Bell      0.58
MTX    MINERALS TECHNOLOGIES Thu, Jul 24  After the Bell      0.68
MRH    Montpelier Re Hldngs  Thu, Jul 24  After the Bell      0.95
NCR    NCR Corporation       Thu, Jul 24  Before the Bell     0.07
NFX    Newfield Exploration  Thu, Jul 24  Before the Bell     0.88
NE     Noble Corporation     Thu, Jul 24  -----N/A-----       0.33
NT     Nortel Networks       Thu, Jul 24  -----N/A-----       0.00
NBP    Northern Border Part  Thu, Jul 24  After the Bell      0.64
NST    NSTAR                 Thu, Jul 24  -----N/A-----       0.61
ODP    Office Depot Inc.     Thu, Jul 24  Before the Bell     0.16
ONB    Old National Bancorp  Thu, Jul 24  Before the Bell     0.41
ORI    Old Republic Intl     Thu, Jul 24  -----N/A-----       0.91
OSK    Oshkosh Truck         Thu, Jul 24  Before the Bell     0.95
PCAR   Paccar                Thu, Jul 24  -----N/A-----       0.98
PPE    Park Place Enter      Thu, Jul 24  -----N/A-----       0.14
POM    Pepco Holdings, Inc.  Thu, Jul 24  -----N/A-----       0.37
PRX    Pharmaceutical Res    Thu, Jul 24  Before the Bell     0.72
POT    Potash Corp Saskatch  Thu, Jul 24  Before the Bell     0.48
PCO    Premcor Inc.          Thu, Jul 24  Before the Bell     0.57
PHM    Pulte Homes Inc.      Thu, Jul 24  Before the Bell     1.74
IQW    Quebecor World        Thu, Jul 24  -----N/A-----       0.26
RTN    Raytheon              Thu, Jul 24  Before the Bell     0.40
RBK    Reebok                Thu, Jul 24  Before the Bell     0.41
RGA    Reinsurance Grp Am IncThu, Jul 24  After the Bell      0.75
RESP   Respironics, Inc.     Thu, Jul 24  Before the Bell     0.49
SWY    Safeway, Inc.         Thu, Jul 24  -----N/A-----       0.47
SBC    SBC Communications    Thu, Jul 24  Before the Bell     0.41
SPI    Scottish Power        Thu, Jul 24  Before the Bell      N/A
SRA    Serono S.A.           Thu, Jul 24  -----N/A-----       0.16
SC     Shell Transport Trdng Thu, Jul 24  -----N/A-----       0.77
SCRI   SICOR                 Thu, Jul 24  -----N/A-----       0.23
SI     Siemens AG            Thu, Jul 24  Before the Bell      N/A
SNE    Sony Corporation      Thu, Jul 24  09:30 am ET          N/A
SFG    StanCorp Financial Gr Thu, Jul 24  Before the Bell     1.14
SBUX   Starbucks             Thu, Jul 24  -----N/A-----       0.16
HOT    Starwood Htl Resorts  Thu, Jul 24  Before the Bell     0.21
STE    Steris                Thu, Jul 24  -----N/A-----       0.21
SEO    Stora Enso            Thu, Jul 24  06:00 am ET         0.08
SUN    Sunoco                Thu, Jul 24  Before the Bell     1.17
TARO   Taro Pharm Ind        Thu, Jul 24  11:00 am ET         0.50
DOW    The Dow Chemical Co   Thu, Jul 24  Before the Bell     0.35
TAC    TRANSALTA CORP        Thu, Jul 24  -----N/A-----        N/A
TRH    Transatlantic Hldings Thu, Jul 24  Before the Bell     1.28
TSM    TSMC                  Thu, Jul 24  Before the Bell     0.06
TUES   Tuesday Morning Corp  Thu, Jul 24  Before the Bell     0.15
UNP    Union Pacific         Thu, Jul 24  Before the Bell     1.03
UDI    United Defense Ind    Thu, Jul 24  Before the Bell     0.59
URI    United Rentals        Thu, Jul 24  Before the Bell     0.33
VCI    Valassis Comm         Thu, Jul 24  Before the Bell     0.55
VAR    Varian Medical Sys    Thu, Jul 24  After the Bell      0.40
VSEA   Varian Semi Equip Ass Thu, Jul 24  After the Bell      0.03
VRSN   VeriSign, Inc.        Thu, Jul 24  After the Bell      0.14
VRTX   Vertex Pharm Incorp   Thu, Jul 24  After the Bell     -0.61
VVI    Viad Corp             Thu, Jul 24  Before the Bell     0.40
WC     WellChoice, Inc.      Thu, Jul 24  After the Bell      0.54
WEN    Wendy's International Thu, Jul 24  -----N/A-----       0.53
WDC    Western Digital Corp. Thu, Jul 24  After the Bell      0.19
WHR    Whirlpool Corporation Thu, Jul 24  06:00 am ET         1.31
WPS    WPS Resources         Thu, Jul 24  -----N/A-----       0.4


------------------------- FRIDAY -------------------------------

AVX    AVX Corporation       Fri, Jul 25  Before the Bell    -0.03
BLC    Belo                  Fri, Jul 25  Before the Bell     0.33
CUM    Cummins Inc.          Fri, Jul 25  Before the Bell     0.12
EAS    Energy East Corp      Fri, Jul 25  After the Bell      0.11
FPL    FPL Group             Fri, Jul 25  Before the Bell     1.35
HCR    MANOR CARE INC NEW    Fri, Jul 25  Before the Bell     0.35
NOI    National Oilwell      Fri, Jul 25  Before the Bell     0.27
NRD    NORANDA INC           Fri, Jul 25  Before the Bell      N/A
NUE    Nucor                 Fri, Jul 25  Before the Bell     0.22
PGL    Peoples Energy Corp.  Fri, Jul 25  Before the Bell     0.25
RHA    Rhodia S.A.           Fri, Jul 25  Before the Bell      N/A
SCG    SCANA                 Fri, Jul 25  Before the Bell     0.39
TROW   T. Rowe Price         Fri, Jul 25  -----N/A-----       0.38
TRP    TransCan Pipelines    Fri, Jul 25  -----N/A-----        N/A
WY     Weyerhaeuser Co.      Fri, Jul 25  -----N/A-----       0.26


----------------------------------------------
Upcoming Stock Splits In The Next Two Weeks...
----------------------------------------------

Symbol  Company Name              Ratio    Payable     Executable

PULB    Pilaski Financial Corp.   2:1      Jul  21st   Jul  22nd
MRTN    Marten Transport          3:2      Jul  24th   Jul  25th
SYNX    Synergx                   2:1      Jul  25th   Jul  28th


--------------------------
Economic Reports This Week
--------------------------

The second full week of Q2 earnings is about to begin with another
25% of the S&P 500 reporting.  Look for Dow Jones Industrials
component MMM to begin the earnings parade Monday morning before
the bell.  Earnings will likely overshadow the economic reports
this week set to come out on Monday and Friday.

==============================================================
                       -For-

Monday, 07/21/03
----------------
Leading Indicators (DM) Jun  Forecast:    0.1%  Previous:     1.0%
Treasury Budget (DM)    Jun  Forecast:  $21.0B  Previous:   $29.1B


Tuesday, 07/22/03
-----------------
None


Wednesday, 07/23/03
-------------------
None


Thursday, 07/24/03
------------------
Initial Claims (BB)   07/19  Forecast:     N/A  Previous:      N/A


Friday, 07/25/03
----------------
Durable Orders (BB)     Jun  Forecast:    1.0%  Previous:    -0.4%
Existing Home Sales(DM) Jun  Forecast:   5.99M  Previous:    5.92M
New Home Sales (DM)     Jun  Forecast:   1135K  Previous:    1157K


Definitions:
DM=  During the Market
BB=  Before the Bell
AB=  After the Bell
NA=  Not Available


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The Option Investor Newsletter                   Sunday 07-20-2003
Sunday                                                      2 of 5


In Section Two:

Watch List: Ding!  Friday Goes To the Bulls
Call Play of the Day: FDX
Dropped Calls: AGN
Dropped Puts: None


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

Ding!  Friday Goes To the Bulls

Intl Flavors - IFF - close: 30.10 change: +0.20

WHAT TO WATCH: Aggressive traders willing to play any bounce
ahead of IFF's July 24th earnings report, take note.  Shares have
fallen from the top of its recent (descending) channel to the
bottom of it rather quickly.  This happened about a week ago.
Since then the stock has churned sideways at support between
$29.50 and $30.00 (where it found support in March).  Now the
stock looks ready to rebound back into its channel.

Chart=


---

Altera Corp - ALTR - close: 18.80 change: +0.59

WHAT TO WATCH: The SOX semiconductor index fell back from its
perch near 400 and it took shares of ALTR with it.  The chip
stock had been fighting with resistance at $20.00 but now that it
has rebounded from the $18.00 level and its 50-dma, bulls may get
another chance at a breakout.  Volume was pretty strong on Friday
so a retest of $20.00 looks like a good bet.

Chart=


---

Avid Technology - AVID - close: 44.23 change: +6.03

WHAT TO WATCH: Wow!  A $6 move and a 15.7% gain.  Beating your
earnings estimates by 8 cents (25 cents vs. estimates of 17
cents) can do that for a stock.  Volume was very big at 2.5
million shares.  Bulls might want to look for a pull back to the
$42.00 level before considering any plays.  Avid announced
earnings on Thursday (7/17) evening.

Chart=


---

Weyerhaeuser Co - WY - close: 54.51 change: +1.60

WHAT TO WATCH: The $53-55 area has been very tough resistance for
shares of WY.  The stock has been fighting to breakout for
several months.  Now that is has conquered the $52.50-53.00 level
bulls are trying to breakout above the $55 mark.  This could
spark a short covering rally and a quick move to $60 might be
around the corner.  A good catalyst would be the company's
earnings announcement on July 25th.

Chart=



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


VAR $60.85 - The stock produced a nice breakout over $60 on
Friday but earnings are expected on July 24th.

BWA $68.06 - Another breakout to a new high but this auto-related
stock is set to announce its earnings on Monday, July 21st.

ITT $67.02 - Nice volume, MACD about to turn bullish, the pop in
shares of ITT on Friday looks pretty good.  Yet overhead
resistance at $67-68 has yet to be conquered.  Watch for a move
but keep in mind ITT announces earnings on July 28th.


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*******************
THE PLAY OF THE DAY
*******************

Call Play of the Day:
*********************

Fedex Corp - FDX - close: 65.32 change: +1.20 stop: 61.99


See details in play list




**************************
PICKS WE DROPPED THIS WEEK
**************************

Remember that historically, when we drop a pick it will go up
10 to 15% the very next week. It is part of Murphy's Law.
Just because we drop a stock as a pick does not mean we are
advocating a "sell" on any position you have. We are simply
dropping our recommendation as a new play. Existing plays
can and do continue on and are usually profitable.


CALLS
^^^^^

Allergan, Inc. - AGN - close: 78.99 change: -0.21 stop: 78.50

The relative strength that first attracted us to our AGN play
gradually faded away throughout last week, with the final blow
coming on Friday, as the stock traded as low as $78 early in the
day.  That triggered our stop and despite the afternoon rebound
near the $79 level, it looks like the stock has lost the bullish
support that we had been relying on recently.  Traders that held
onto their positions may be able to get a better exit on a
continuation of that bounce on Monday, but be careful.  The
official play is closed this weekend so that we can focus on more
technically strong plays.

Picked on June 26th at     $78.74
Change since picked:        +0.25
Earnings Date             07/23/03 (confirmed)
Average Daily Volume =    1.02 mln


PUTS
^^^^

None

***********
DEFINITIONS
***********

SL  = Suggested stop loss. Sell if bid breaks this price.
OI  = Open Interest - the number of open contracts outstanding.
ITM = In the money
ATM = At the money
OTM = Out of the money
ADV = Average Daily Volume

The options with a "*" by the strike price are our choices from the
group. If the stock moves as expected we feel they have the best
chance to substantially increase or double in price with the best
risk/reward ratio compared to the other options for the same stock.
You must determine if they fit your risk profile for time and price.

Analysts ratings: 1-2-3-4-5
Analysts who follow each stock rate it and these rating are
accumulated and displayed as follows;

Position 1 = number of analysts recommending "strong buy"
Position 2 = number of analysts recommending "moderate buy"
Position 3 = number of analysts recommending "hold" or "neutral"
Position 4 = number of analysts recommending "moderate sell"
Position 5 = number of analysts recommending "strong sell"

Example rating 5-3-1-0-0 would be 5 "strong buys", 3 "moderate buys",
1 "hold" recommendation.

RISKS of SELLING PUTS:
The risk of selling naked puts is always the possibility
of a catastrophic event that drops the stock below the
strike price and could result in the stock being PUT to you.
Always protect yourself with a "buy to cover" limit order
to take you out before this can happen.


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**********
DISCLAIMER
**********

Please read our disclaimer at:
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The Option Investor Newsletter                   Sunday 07-20-2003
Sunday                                                      3 of 5


In Section Three:

Current Calls: GS, LOW, OMC, PCAR
New Calls: FDX
Current Put Plays: FITB, HD, INTU, LEN, XL
New Puts: LEH


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******************
CURRENT CALL PLAYS
******************

Goldman Sachs Grp. - GS - close: 87.69 change: +1.25 stop: 85.50

Company Description:
The Goldman Sachs Group is a global investment banking and
securities firm that provides a wide range of services worldwide
to a substantial and diversified client base that includes
corporations, financial institutions, governments and high net-
worth individuals. The company provides investment banking, which
includes financial advisory and underwriting, and trading and
principal investments, which includes fixed income, currency and
commodities, equities and principal investments.  GS recently
completed the acquisition of Spear, Leeds & Kellog, which is
engaged in securities clearing, execution and market making, both
floor-based and off-floor.

Why we like it:
Over the past couple weeks, we've been focusing on the
significance of support at the top of the July 7th gap, and GS
didn't disappoint last week.  Both of the last two days, the
stock found intraday support just below $86 (but above the top of
the gap at $85.70) and caught a decent rebound on Friday
afternoon to end safely above that critical support.  Similarly,
the Broker/Dealer index (XBD.X) managed to hold support at $550
and the key to further bullishness in GS will be whether the XBD
can continue that rebound.  We've been advocating new entries on
intraday rebounds from above the top of the gap, and traders have
certainly had ample opportunity for that over the past couple
days.  The next upside target for the play will be for a retest
of the $90 resistance, which turned back the bulls on Monday and
Tuesday of last week.  Conservative traders may want to harvest
partial gains near that level, but we're holding out for a
renewed assault on the $92 level, which is our final target for
the play.  Maintain stops at $85.50.

Suggested Options:
Shorter Term: The August 85 Call will offer short-term traders
the best return on an immediate move, as it is currently in the
money.

Longer Term: Aggressive traders looking to capitalize on an
extended rally will want to look to the August 90 Call.  This
option is currently out of the money, but should provide
sufficient time for the stock to move higher without time decay
becoming a dominant factor over the short run.  More conservative
long-term traders should utilize the October 90 call.

BUY CALL AUG-85 GS-HQ OI= 4793 at $4.20 SL=2.50
BUY CALL AUG-90 GS-HR OI= 4083 at $1.60 SL=0.75
BUY CALL OCT-90 GS-JR OI=15919 at $3.60 SL=1.75

Annotated Chart of GS:




Picked on July 1st at      $85.85
Change since picked:        +1.84
Earnings Date             09/24/03 (unconfirmed)
Average Daily Volume =    4.34 mln
Chart =


---

Lowe's Companies - LOW - close: 47.03 change: +0.39 stop: 44.90

Company Description:
As a retailer of home improvement products, Lowe's has a specific
emphasis on retail do-it-yourself and commercial business
customers.  The company specializes in offering products and
services for home improvement, home decor, home maintenance, home
repair and remodeling and maintenance of commercial buildings.

Why we like it:
Continuing its pattern of relative strength, LOW has been
consolidating its recent breakout over the past week, holding
very near its highs.  That breakout came at the $46.50 level, and
it is interesting to note how that level has persistently
attracted buyers over the past several sessions.  The stock
hasn't been able to materially advance over the past week either,
as the $48 level capped the breakout rally and now price is
holding up while the daily Stochastics cycle down towards
oversold -- a bullish sign.  While intraday dips near $46.50 have
proven to be decent points to enter the play so far, we remain
cognizant of the fact that a steeper pullback near $45.25-45.75
may be necessary to really confirm that old resistance has become
new support.  A dip and rebound from that area would make an even
more attractive entry point.  Traders looking to enter on
strength will need to wait for a breakout over $48, but must
evaluate the risk/reward scenario accordingly, as we're only
targeting a move to the $50 level.  Maintain stops at $44.90, as
the $45 level should be very strong support now.

Suggested Options:
Shorter Term: The August 45 Call will offer short-term traders
the best return on an immediate move, as it is currently in the
money.

Longer Term: Aggressive traders looking to capitalize on an
extended rally will want to look to the August 47 Call.  This
option is currently out of the money, but should provide
sufficient time for the stock to move higher without time decay
becoming a dominant factor over the short run.  More conservative
long-term traders could utilize the October 47 call.

BUY CALL AUG-45 LOW-HI OI= 4865 at $3.10 SL=1.50
BUY CALL AUG-47 LOW-HT OI= 2472 at $1.45 SL=0.75
BUY CALL OCT-47 LOW-JT OI= 2188 at $2.75 SL=1.40
BUY CALL OCT-50 LOW-JJ OI= 6316 at $1.70 SL=0.75

Annotated Chart of LOW:



Picked on July 13th at    $46.87
Change since picked:       +0.16
Earnings Date           08/18/03 (unconfirmed)
Average Daily Volume =  4.84 mln
Chart =


---

Omnicom - OMC - close: 72.47 change: +0.65 stop: 69.99

Company Description:
Omnicom is a leading global marketing and corporate
communications company. Omnicom's branded networks and numerous
specialty firms provide advertising, strategic media planning and
buying, direct and promotional marketing, public relations and
other specialty communications services to over 5,000 clients in
more than 100 countries. (source: company press release)

Why We Like It:
If you've been following along with our play on OMC then you
already know that we've grown a bit cautious now that shares have
turned under its simple 30-dma.  Previously, the moving average
was strong support and investors used the opportunity to buy more
shares when OMC would dip to it.  Now it looks like the stock may
be due for more consolidation, especially now that the broader
markets are caving into a little profit taking. The new lower
high in shares of OMC just over $75 is not encouraging.

Fundamentally, many believe that any rebound in the economy is
going to benefit media/advertising giants like OMC.
Unfortunately, that bullish outlook may not save it from
retracing part of its outstanding gains off its March lows.
Traders need to be careful.  Look for a bounce off its rising 50-
dma (currently at 70.81) or look for a move back over the $75
level.

News has been somewhat quiet but it appears OMC's earnings are
now expected in the first week of August.  We remain cautious and
do not strongly suggest new entries at this time.

Suggested Options:
As we don't plan on holding over OMC's earnings, our preference
will be for the August strikes but Octobers will be listed as
well.

BUY CALL AUG 70 OMC-HN OI= 371 at $4.40 SL=2.25
BUY CALL AUG 75 OMC-HO OI=2328 at $1.65 SL=0.85
BUY CALL AUG 80 OMC-HP OI=1407 at $0.55 SL= -- higher risk!
BUY CALL OCT 70 OMC-JN OI= 712 at $6.30 SL=4.00
BUY CALL OCT 75 OMC-JO OI=1299 at $3.60 SL=1.85
BUY CALL OCT 80 OMC-JP OI= 289 at $1.85 SL=1.00

Annotated Chart:



Picked on July 13 at $73.97
Change since picked:  -1.50
Earnings Date      08/06/03 (unconfirmed)
Average Daily Volume:  1.66 million
Chart =


---

PACCAR Inc. - PCAR - close: 73.46 change: +1.38 stop: 69.95

Company Description:
PACCAR is a global technology leader in the design, manufacture
and customer support of high-quality, light-, medium- and heavy-
duty trucks under the Kenworth, Peterbilt, DAF and Foden
nameplates. It also provides financial services and distributes
truck parts related to its principal business. In addition, the
Bellevue, Washington-based company manufactures winches under the
Braden, Gearmatic and Carco nameplates.  (source: company press
release)

Why We Like It:
We only have a few days left before PCAR's July 24th earnings
announcement.  Given the violent reaction we've seen this week to
some earnings reports it's really doesn't seem worth it to hold
over an announcement.  We plan to close the play ahead of the
report on Wednesday afternoon, if we aren't stopped out first.
Overall, if it weren't for the upcoming announcement, we'd be
relatively happy that shares of PCAR have been able to weather
the market weakness by consolidating above the $70.00 level.  The
Friday afternoon bounce added almost two percent but the stock
could not close over the $74 level, which appears to be new
resistance.

Given the short timeframe left in this play we are not suggesting
new positions for any but the most aggressive and nimble traders.
If you're not comfortable jumping in and out (possibly intraday)
then you may be better off to pass on this play.  Talk to your
broker if you're not sure.

Meanwhile, what could be driving interest in shares of PCAR? Not
only has the stock been a stellar performer since mid-March but
the company is now paying a cash dividend.  It's not much but the
dividend is set for Sept. 5th for shareholders on record as of
Aug. 18th.  Plus, there is speculation that PCAR could announce
another stock split.  It last split 3-for-2 on May 29th, 2002 in
the $70 range.  Surprise!  It's trading over $70 now.  With
management authorized to issue up to 200 million shares and there
are only 116.2 million outstanding, there are certainly enough
available for another 3:2 split.

Suggested Options:
We're not suggesting new positions as we plan to close the play
at Wednesday's market close.

Annotated Chart:




Picked on July 08 at $73.49
Change since picked:  -0.03
Earnings Date      07/24/03 (confirmed)
Average Daily Volume:  1.24 million
Chart =



**************
NEW CALL PLAYS
**************

Fedex Corp - FDX - close: 65.32 change: +1.20 stop: 61.99

Company Description:
With annual revenues of $22 billion, FedEx Corp. is the premier
global provider of transportation, e-commerce and supply chain
management services. The company offers integrated business
solutions through a network of subsidiaries operating
independently, including: FedEx Express, the world's largest
express transportation company; FedEx Ground, North America's
second largest provider of small-package ground delivery service;
FedEx Freight, the largest U.S. provider of regional less-than-
truckload freight services; FedEx Custom Critical, North
America's largest provider of expedited time-critical shipments;
and FedEx Trade Networks, North America's largest customs broker
and a provider of international freight forwarding and trade
facilitation services. FedEx ranked highest in the J. D. Power
and Associates 2002 Small Package Delivery Service Business
Customer Satisfaction Study(SM) in the categories of air, ground
and international delivery services. (source: company press
release)

Why We Like It:
It's the economy!  Okay, actually it's the Transports.  If the
economy is going to improve it can't do it without the transports
improving and leading the way is Fedex Corp.  The stock has been
very strong and rebounding quickly after some profit taking
sparked by its mid-June earnings report.  Now the Dow Jones
Transportation average is hovering below significant resistance
at 2600.  A breakout here and we could see a big move in the
group.  FDX looks ready to lead the charge as shares have already
hit new highs above $65.00, which marks a close above resistance.

Adding more enthusiasm to the fire is FDX's recent announcement
that it is adding 5 million shares to its current stock buy back
program, which still has 3.1 million shares still unbought (so
now FDX says it will buy back 8.1 million shares).

The relative strength and the new high look like a great momentum
trader's entry point for new bullish positions.  Our first target
will be the $70 level.  We're going to initiate the play with a
stop loss under the 50-dma at $61.99.  Keep an eye on that TRAN
average.  A pull back to 2550 in the $TRAN might equal a dip in
FDX back to the $64 area - yet another spot to look for an entry
point.  FYI... a trade at $66.00 would produce a fresh triple-top
buy signal on FDX's P&F chart.

Suggested Options:
We're going to list the August and October 65 and 70 calls but
should FDX dip back towards $62-63 then the 60 strikes might work
well.

BUY CALL AUG 60 FDX-HL OI= 491 at $5.80 SL=3.00
BUY CALL AUG 65 FDX-HM OI=1663 at $1.70 SL=0.90
BUY CALL AUG 70 FDX-HN OI= 175 at $0.30 SL= -- higher risk!
BUY CALL OCT 65 FDX-JM OI=3619 at $3.50 SL=1.75
BUY CALL OCT 70 FDX-JN OI= 668 at $1.30 SL=0.65

Annotated chart of FDX:



Picked on July 20 at $65.32
Change since picked:  +0.00
Earnings Date      09/23/03 (unconfirmed)
Average Daily Volume:  1.70 million
Chart =



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CURRENT PUT PLAYS
*****************

Fifth Third Bancorp - FITB - cls: 55.88 chg: +0.62 stop: 57.51

Company Description:
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. The Company has $88 billion in
assets, operates 17 affiliates with 943 full-service Banking
Centers, including 132 Bank Mart. locations open seven days a
week inside select grocery stores and 1,883 Jeanie. ATMs in Ohio,
Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee and
West Virginia. The financial strength of Fifth Third's affiliate
banks continues to be recognized by rating agencies with deposit
ratings of AA- and Aa1 from Standard & Poor's and Moody's,
respectively. Additionally, Fifth Third Bancorp continues to
maintain the highest short-term ratings available at A-1+ and
Prime-1 and is recognized by Moody's with one of the highest
senior debt ratings for any U.S. bank holding company of Aa2.
Fifth Third operates four main businesses: Retail, Commercial,
Investment Advisors and Fifth Third Processing Solutions.
(source: company press release)

Why We Like It:
Sometimes picking on the under-performer when the markets decide
to rollover can be a profitable way to catch the general trends.
With the INDU and COMPX suffering set backs and investors selling
their winners the banking sector, which has been one of the
aforementioned winners (since its March low), is a prime
candidate for some serious profit taking.  The BKX index has
fallen back under the 900 level and looks ready to retest the
late June support of 850 (currently at 882).  Meanwhile, shares
of FITB peaked weeks ago in early June (compared to the BKX which
peaked a few days ago) and FITB has been suffering a slow decline
ever since.  Now that selling pressure appears to be outweighing
buying pressure we could see FITB's decline pick up speed.

So far this month (July) shares of FITB bounced three times at
support near $56.00.   That support, which also included the
simple 50 & 200-dma's, failed today with the last half hour
really going to the bears.  The company announced their Q2
earnings two days ago when shares were near $58.00.  As you can
see the results didn't inspire much faith.  According to the
press releases, FITB's Q2 saw its profits rise eight percent over
last year's bolstered by stronger loan growth.  Wall Street had
been looking for 74 cents a share and FITB reported 75.  While it
was a positive surprise the stock has obviously been unable to
maintain any strength.

We're encouraged by the technical breakdown that is strengthened
by the bearish oscillators on both its daily and weekly charts.
A trade under the $55 mark would produce a fresh double-bottom
sell-signal in FITB's P&F chart.  We're going to suggest new
positions at current levels (under $56) but more cautious traders
may want to wait for a move under $55, which appears to be
significant support/resistance on its weekly chart.  Our first
target will be the $51-50 area.  We'll initiate the play with a
stop at 57.51 even though the month-long trend of lower highs is
suggesting a stop at just above $58.00.

*We just added FITB to the play list on Thursday night.  Nothing
has changed.  The market bounce on Friday produced a small bounce
in FITB but resistance at $56 and its 200-dma held.  Bearish
traders can use a failed rally at $56 or $57 as an entry point.
Meanwhile more cautious folks might want to see more conviction
with a move under the $55 level.  The chart below is from
Thursday.

Suggested Options:
We're going to list August and November strikes with a preference
for the $55 and 50 puts with the 50 puts being the riskier bet.

BUY PUT AUG 55 FTQ-TK OI=1781 at $1.20 SL=0.65
BUY PUT AUG 50 FTQ-TJ OI=1264 at $0.25 SL= --
BUY PUT NOV 55 FTQ-WK OI= 328 at $3.00 SL=1.50
BUY PUT NOV 50 FTQ-WJ OI=7832 at $1.35 SL=0.70

Annotated Chart:




Picked on July 17th at $55.26
Change since picked:    +0.62
Earnings Date        07/15/03 (unconfirmed)
Average Daily Volume =    2.4 million
Chart link:


---

The Home Depot - HD - close: 33.08 change: -0.02 stop: 34.75

Company Description:
A home improvement retailer, The Home Depot operates more than
1500 stores throughout the United States.  The do-it-yourself
warehouse retail stores offer building materials, home
improvement products and related furnishings.  Additionally, the
company provides lawn and garden products and an assortment of
services to both individual home-owners and independent
contractors.

Why we like it:
The other half of the Home Improvement Retailer duo, HD has been
rather stingy about delivering us the breakdown in price we've
been expecting.  Critical resistance has been found in the $34
area and failed intraday rallies there have made for solid entry
opportunities.  But at the same time, there hasn't been much
downward pressure below the $33 level either.  Friday's session
did see an intraday dip to $32.66, but the stock came bouncing
back into the range by the closing bell.  The past several
sessions have had the stock tracing out a neutral wedge and a
solid downside break of this wedge will be our first clue that
the bears are gaining some traction.  Aggressive entries can
still be had on failed intraday rallies below the $34 level, and
slightly more conservative traders can enter on a break below the
bottom of the wedge near $32.75.  Traders looking for more
confirmation before playing, will need to see the 50-dma ($32.18)
violated, preferably on rising volume.  Recall that our initial
target will be $30, with our final exit point sitting at $28.
Until this wedge breaks one way or the other, maintain stops at
$34.75, just above the recent double-top.

Suggested Options:
Aggressive short-term traders will want to focus on the August 32
Put, as it will provide the best return for a short-term play.
More conservative traders will want to utilize the August 35
contract, as it is currently in the money.

BUY PUT AUG-35 HD-TG OI=2087 at $2.40 SL=1.25
BUY PUT AUG-32 HD-TZ OI=7380 at $0.90 SL=0.40
BUY PUT NOV-32 HD-WZ OI=2216 at $2.10 SL=1.00

Annotated Chart of HD:




Picked on July 10th at   $32.43
Change since picked:      +0.65
Earnings Date          08/19/03 (unconfirmed)
Average Daily Volume =  9.42 mln
Chart =


---

Intuit Inc - INTU - close: 40.62 change: -0.46 stop: 44.01

Company Description:
Intuit Inc. is a leading provider of business and financial
management solutions for small businesses, consumers and
accounting professionals. Its flagship products and services,
including QuickBooks., Quicken. and TurboTax. software, simplify
small business management and payroll processing, personal
finance, and tax preparation and filing. ProSeries. and Lacerte.
are Intuit's leading tax preparation software suites for
professional accountants. (source: company press release)

Why We Like It:
So far so good.  Our bearish play in INTU is following the
script.  The series of lower highs under resistance finally gave
into more pronounced selling and the support in the $42.50-43.00
region finally caved in.  INTU quickly fell towards the $40.00
level on Thursday before bouncing late afternoon.  The $40 level
was our initial short-term target.  Hence, short-term traders can
begin taking profits and reducing the size of their trade.  If
nothing else, then consider using a tighter stop loss.  We're
encouraged that given the market bounce on Friday shares of INTU
did not participate.  Actually, it made a lower high.  Should the
stock bounce back towards the $42.00-42.50 area, then traders can
look for another failed rally to evaluate new bearish entries.
Otherwise, the better move is probably to wait for a breakdown
through the $40 level of support.  We're going to leave our stop
at $44.01 for the moment but tighter stops at $43.50 or $43.00
would not be out of the question.

Suggested Options:
Stocks tend to move lower much faster than they climb.  Thus, our
preference is for short-term options. We're going to suggest the
August contracts. However, we're going to list August and October
options.

BUY PUT AUG 45.00 IQU-TI OI= 449 at $5.00 SL=2.75
BUY PUT AUG 42.50 IQU-TV OI= 744 at $3.10 SL=1.65
BUY PUT AUG 40.00 IQU-TH OI= 701 at $1.80 SL=0.90
BUY PUT OCT 45.00 IQU-VI OI=1899 at $6.30 SL=4.00
BUY PUT OCT 40.00 IQU-VH OI=1648 at $3.40 SL=1.80

Annotated Chart:



Picked on July 8th at $43.35
Change since picked:   -2.73
Earnings Date       08/13/03 (unconfirmed)
Average Daily Volume =   4.1 million
Chart link:


---

Lennar Corp. - LEN - close: 68.35 change: -0.88 stop: 73.25*new*

Company Description:
Lennar Corporation has two core businesses, homebuilding and
financial services.  The company's homebuilding operations
include the sale and construction of single-family attached and
detached homes, as well as the purchase, development and sale of
residential land directly and through its unconsolidated
partnerships.  Its financial services subsidiaries provide
mortgage financing, title insurance, closing services and
insurance agency services for both buyers of its homes and
others, and sell the loans they originate in the secondary
mortgage market.

Why we like it:
It has taken several attempts, but it looks like we've finally
gotten our hands on a winner with our bearish play on the Housing
sector using LEN.  Wednesday's session gave us a little bounce
for aggressive entries on the subsequent rollover near $72, and
then LEN broke below $70 on Thursday.  Adding to our sense of
gratification on Friday, the stock continued south, breaking
below the 50-dma ($69.17) for the first time since early May.
After hitting an intraday low of $67.25 (we were looking for a
possible rebound from the $67 area, as noted in the Market
Monitor), LEN did in fact rebound into the close.  Look for any
continuation of that rebound early next week to run into
resistance first at $69.50 and then at $70.50.  A rollover from
either of those levels could be the setup for the next entry
point.  It may take a bit of work to crack under the $67 level,
but then the stock should be able to make a quick trip down
towards the $65 support level.  Conservative traders may want to
harvest partial gains there, as another bounce would seem highly
likely.  But so long as LEN continues to trace a pattern of lower
highs and lower lows, we'll stick with our original plan of
targeting an eventual drop to the $62-63 area.  Lower stops to
$73.25 this weekend, which is just above the 20-dma ($73.22).

Suggested Options:
Aggressive short-term traders will want to focus on the August 65
Put, as it will provide the best return for a short-term play.
With the volatility seen in the Home Building stocks lately, more
conservative traders may want to use the August 70 contract,
which is currently in the money and less susceptible to the
ravages of time decay.  Since there is nearly 2 months to the
company's next earnings release, we've also listed a NOV
contract, for those traders looking to take advantage of a
longer-term move.

BUY PUT AUG-70 LEN-TN OI=3353 at $3.90 SL=2.50
BUY PUT AUG-75 LEN-TM OI=1991 at $1.75 SL=0.90
BUY PUT NOV-65 LEN-WM OI= 424 at $4.60 SL=2.75

Annotated Chart of LEN:



Picked on July 15th at   $71.12
Change since picked:      -3.21
Earnings Date          09/09/03 (unconfirmed)
Average Daily Volume =  1.63 mln
Chart =


---

XL Capital Ltd. - XL - close: 80.22 change: +0.58 stop: 83.00

Company Description:
XL Capital Ltd. provides insurance and reinsurance coverages and
financial products and services to industrial, commercial and
professional service firms, insurance companies and other
enterprises on a worldwide basis.  Insurance business written
includes general liability, other liability, professional and
employment practices liability, environmental liability,
property, program business, marine and energy, aviation and
satellite, as well as other product lines.  Reinsurance business
written includes treaty and facultative reinsurance to primary
insurers of casualty and property risks, as well as life
reinsurance, primarily European term assurances, group life,
critical illness coverage , immediate annuities in payment and
disability income business.

Why we like it:
As proof that the bulls haven't completely given up yet, the
broad market caught a bit of a rebound on expiration Friday and
our new bearish play on XL caught a bit of a rebound as well.  We
can't help but think that part of the rebound in this stock was
due to a desire to pin price to the $80 strike for expiration.
The only concern we have is the fact that volume ran a bit
heavier than on the prior two days as the stock was breaking
below support.  The big picture remains unchanged though, with a
fresh PnF Sell signal and a target of $71.  That means we are
viewing this nascent bounce as nothing more than an oversold
bounce and when it fails, it will be time to jump aboard for the
ride back down.  Broken support in the $81-82 area should now
present solid resistance, so a rollover in that area is likely
the best we can do for new entries.  Traders that would prefer to
enter on weakness need to understand that is a more aggressive
approach with this play, as that entry won't come until a trade
below $79.40 (just below Friday's intraday low) and then there is
the possible support offered by the 200-dma at $78.47.  So the
safer approach in that case will be to wait for a violation of
the 200-dma before chasing XL lower.  Keep in mind that we're
targeting a drop to the $73-74 area, even though the PnF chart
says that a move down to $71 should be expected.  With earnings
set for July 31st, there just doesn't seem to be enough time for
a fall that far.  Maintain stops at $83.

Suggested Options:
Aggressive short-term traders will want to focus on the August 80
Put, as it will provide the best return for a short-term play.
While we've listed the $75 strike, note that it has just been
listed and does not yet have any open interest yet.  Aggressive
traders looking to use this strike will need to wait for open
interest.  Traders with a more conservative approach will want to
utilize the October contract, as it should not be subject to as
much time decay over the near term.

BUY PUT AUG-80 XL -TP OI= 476 at $2.25 SL=1.00
BUY PUT AUG-75 XL -TO OI=   0 at $0.85 SL=0.40
BUY PUT OCT-75 XL -VO OI= 263 at $2.25 SL=1.00

Annotated Chart of XL:



Picked on July 17th at   $79.64
Change since picked:      -0.58
Earnings Date          07/31/03 (confirmed)
Average Daily Volume =    762 K
Chart =



*************
NEW PUT PLAYS
*************

Lehman Brothers - LEH - close: 65.18 change: +1.14 stop: 68.50

Company Description:
Through its subsidiaries, LEH constitutes one of the leading
global investment banks, serving institutional, corporate,
government and high-net-worth individuals clients.  The company
is engaged primarily in providing financial services, including
securities writing and direct placements, corporate finance and
strategic advisory services, private equity investments and
securities sales and trading.  Completing its array of banking,
research and trading capabilities, LEH also engages in the
trading of foreign exchange, derivative products and certain
commodities.

Why we like it:
Take a quick look at the daily chart of the Broker/Dealer index
(XBD.X) and you wouldn't think this is the sector in which to be
looking for a bearish play.  After breaking into new high
territory in early July, the index has been consolidating near
those highs over the past couple weeks, finding support at former
resistance near $550.  In fact, we've been playing the upside in
the sector with a bullish play on GS.  But shares of LEH are
another story altogether.  After topping out near $76 in the
middle of June, the stock has been steadily losing ground.  In
fact, at Thursday's intraday low ($63.65), the stock had given
back 50% of its March-June rally.  Believe it or not, there
hasn't been an earnings-related event to trigger the weakness.
This is just plain old relative weakness, which is really
apparent when looking at a relative strength chart between LEH
and the XBD.  Thursday's breakdown below $65 looked like it might
be a real breakdown and traders that may have been puzzled by
Friday's rebound may want to look at that retracement bracket.
The 50% level is a common spot for a rebound against the current
trend, and it arrived right on schedule.

But don't look for it to last very long.  When LEH traded $65, it
produced a new PnF Sell signal, and a corresponding bearish price
target of $58.  Do you think it is a coincidence that the bullish
support line on the PnF chart is currently at $58?  Then we look
at the price chart, and we can see the latest rebound attempt
about two weeks ago failed at the 50-dma.  Most stocks that are
starting to weaken are just violating their 50-dmas, and LEH
broke its own more than 3 weeks ago!  Looking at the chart below,
you can see the strong resistance that now ought to be provided
by the descending trendline and the 20-dma ($67.64).  It's
certainly possible that the current rebound will fail near the
$66 area, but resistance looks stronger in the $67-68 area, and
therefore it ought to make a better entry.  Traders that prefer
to enter on continued weakness will need to wait for LEH to take
out the $63.40 level while at the same time the XBD is violating
the $550 support level.  Our initial target will be $60, as that
is the site of the 61% retracement ($60.40), with the 200-dma
($59.68) nearing that level.  LEH may fall all the way to the $58
bearish price target, but there's no need to be greedy.  Place
stops initially at $68.50, which is above both the 20-dma and
last Tuesday's intraday high.

Suggested Options:
Short-term traders will want to focus on the August 65 Put, as it
will provide the best return for a short-term play.  Conservative
traders entering on a bounce will want to utilize the 70 strike,
as it will still be in the money.  Aggressive traders looking for
a move down towards the $60 level or below will want to utilize
the August 60 contract, which although it is currently out of the
money, should provide enough time to achieve profitability before
time decay has a pronounced effect.

BUY PUT AUG-70 LEH-TN OI= 663 at $5.60 SL=3.50
BUY PUT AUG-65 LEH-TM OI= 794 at $2.30 SL=1.25
BUY PUT AUG-60 LEH-SL OI=2054 at $0.80 SL=0.40

Annotated Chart of LEH:




Picked on July 20th at    $65.18
Change since picked:       +0.00
Earnings Date           09/18/03 (unconfirmed)
Average Daily Volume =  2.70 mln
Chart =



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The Option Investor Newsletter                   Sunday 07-20-2003
Sunday                                                      4 of 5


In Section Four:

Leaps: Sell The News
Traders Corner: All Aboard!  The Profit Train Is Back On Track
Traders Corner: Elliott Wave Play Updates
Traders Corner: Where is the Dow Going?


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*****
LEAPS
*****

Sell The News
By Mark Phillips
mphillips@OptionInvestor.com

Call it what you want, but investors' reaction to the first full
week of earnings reports is not what I would call bullish.
Certainly, there have been pockets of strength, but looking at the
Technology Trifecta of IBM, INTC and MSFT, there certainly hasn't
been much to motivate the bulls, has there?  Definitely a "sell
the news" type reaction last week, as the news wasn't nearly as
good as investors were hoping for.  This is precisely the scenario
that Jim laid out a couple weeks ago, and I think it is just a bit
eerie how accurate his prognostication based on history has been.
Of course, the Fed hasn't helped matters much in recent weeks, as
the vague promises that everything is going to be ok finally
sparked a revolt in the Bond market on Tuesday.

You see, the Fed has been trying to talk long-term interest rates
down for months now and they were doing pretty well right up to
the rate cut at the June FOMC meeting.  Despite the quarter-point
cut, the wishy-washy statement that went with it told bond
investors that the Fed was waffling in its commitment to keep
long-term rates low.  That shaky belief took another body blow on
Tuesday, as Uncle Alan failed to reassure bond traders of his
intentions and they opted to call his bluff.  As a result of very
heavy selling, bond prices plunged and yields soared, bringing the
yield on the Ten-Year Note back to the 3.9-4.0% area that proved
so pivotal during April.  In one short move (a bad
miscalculation), the Fed managed to undo all of work that had
accomplished in talking the yields down through the middle of
June.  Better luck next time, Al.  I went into a lot of the
ramifications of this move (as I see them) in my Thursday Trader's
Corner article, so I won't restate them here.  But it isn't good
for the bond market, it isn't good for the Housing market, and it
isn't good for the equity market.  Who is it good for?  Precious
Metals.

I've stated my views on gold until blue in the face and there
isn't time to do so here today.  But I just wanted to re-state my
view that this market is one of the few areas of safety in the
storm I see coming.  Jonathan understands this and frequently
writes of it and our old buddy Buzz had it clearly in mind when he
set about the ark-building business a couple years ago.

Coming back to the equity markets, which is our focus here, I
continue to see weakness everywhere I look.  Ok, there are a few
pockets of strength like SNDK (can you believe the 26% rally in
the past 2 weeks?), but the broad market indices are starting to
weaken from within and I take a very dim view of any bullish
aspirations for the major indices over the next several weeks.  To
be entirely honest, I don't have a lot to say about the broad
market this week.  It looks like we're starting to roll over from
resistance as the catalyst of July earnings are being removed from
the table.  But how many times over the past 2 months have I
opined that the market looked ready to tip over?  I know, too
many!

The big picture is simple -- all of the major indices look like
they are weakening near their recent highs, and weekly Stochastics
(10,5,3) are starting to roll over from being in overbought
territory.  With the weakening of the internals (detailed below),
waning bullish catalysts and bearish technical setups, the case
for the bears is looking better all the time.  As I've stated
numerous times in the past, the second half economic recovery is a
delusional fantasy and if we're really lucky we might see that
recovery appear in 2004 -- but I won't be holding my breath!

Alright, let's take a look at the bullish percents again, as that
is our regular starting point for looking at market internals.

NASDAQ-100 - 81% Back in Bull Confirmed, down from the 91% high
NASDAQ Composite - 72.54% (just off another new all-time high)
DOW - 83.33% (Just below recent cycle high -- highs in 1998 = 92%)
S&P 500 - 77.20% (Cycle high of 82.80% - Still Bull Confirmed)
S&P 100 - 82% (Just below cycle high, 11/98 all-time high = 84%)

As we've been discussing here in seemingly endless fashion lately,
there just isn't any appreciable weakness in the internals, at
least not from looking at the bullish percent readings.  The
clearest picture of incipient weakness I can find in the internals
is in the SPX Bullish Percent chart shown below

SPX Bullish Percent SharpChart




Just as I speculated a couple weeks ago, the SPX Bullish Percent
SharpChart gave us a lower high and then another bearish cross
back under the 10-dma.  At the same time, we got a short-cycle
reversal on the CCI oscillator, which has now plunged back under
the -100 level.  Look back at the December-02/January-03 period of
time.  Doesn't this setup look awfully familiar?

Take a look at some of the other major indices' bullish percent
charts using the following link and I think you'll see the mixed
message that is still being delivered by the market.

http://stockcharts.com/def/servlet/SC.web?c=$bpspx,uu[w,a]dacaynay[dd][pb10]
[iLd20]&pref=G

Here are the pertinent Bullish Percent symbols.

DOW - $BPINDU
SPX - $BPSPX
OEX - $BPOEX
NDX - $BPNDX
COMPX - $BPCOMPQ

As you can see from the chart above, the SPX appears to be finally
showing the necessary internal weakening to get the bears
interested, but now we need to see the other indices follow suit.
The NDX appears to be setting up the same sort of pattern we can
see in the SPX and we ought to get that lower high and another
bearish cross on the SharpChart over the next week.

There's another measure of internal strength/weakness that I want
to just mention in passing this weekend, and that is the ratio of
new highs to new lows on both the NYSE and NASDAQ.  The reason I'm
only making brief mention is that I learned long ago not to
reinvent the wheel when it isn't necessary to do so.  Jeff Bailey
has been doing a great job of tracking this information and
reporting it periodically in his nightly Index Wraps.  Let me
encourage you to take a look at the updated table and his
commentary related to the deterioration in this measure of
internal strength from the Thursday wrap.  It is definitely
complimentary to our view of the bullish percent charts.

There's one more piece of the puzzle that I think warrants a brief
mention this weekend and that is the concept of Buying Pressure
vs. Selling Pressure.  For months now, Buying Pressure has been
holding up and Selling Pressure has been waning.  But that dynamic
is shifting as well, with Buying Pressure topping out in early
June and starting to weaken appreciably over the past week.  In
addition, Selling Pressure is finally starting to make a move to
the upside.  It took long enough, don't you think?!

Last but not least is our good buddy, the Market Volatility index
or VIX.  The broad market weakness throughout much of last week
was enough to have the VIX creeping back over the 23 level.  But
as proof that complacency seems to be increasing, we got one
little rally on Friday and that produced a more than 6% dive in
the VIX, which is once again knocking on the door of the 21 level.
Give us one more rally, with the VIX cracking below the 20 level,
and I'm going to be a lot more excited about entering our DJX
play, not to mention several of the other bearish plays that are
on one of the playlists below.

It isn't full bear ahead just yet, but things appear to be
starting to fall into place.  For those that don't want to
aggressively chase the downside quite yet, I understand your
caution, especially after this very choppy and unpredictable rally
of the past 2 months.  But at the very minimum, I would view any
rebound from here as the last chance to harvest bullish gains
before the summer slide gets underway.  We're quickly populating
our playlist, and heavily to the bearish side too.  Let's dive
right in and see what it has to offer!

Portfolio:

AIG - I'll be the first to admit that this bearish play has not
gone according to plan.  No matter how weak AIG looks each time it
approaches the $54 support level, it seems as though there is an
endless supply of willing dip buyers, and they performed on cue a
few weeks back when the stock dipped near that level.  Since then,
the stock has been steadily working higher and on Friday actually
managed a close over $60.  This is a critical point for the stock,
as it is right at strong resistance and just below our $61 stop.
Both the 50-dma and the 200-dma seem to have lost their
effectiveness in providing either support or resistance with the
numerous crossovers in the past couple months.  Technically, I'm
having a hard time making a case for AIG to head down, as the
patterns I've been relying on are not panning out.  For traders
already in the play, keep those stops in place.  Until we get
another close below $57, I am not advocating new positions.
Another item of note is the relative performance of the '04 and
'05 LEAPS in recent weeks.  Note how much worse the '04 LEAP has
performed as price has moved against us again.  This is the
beginning of time decay factors starting to creep into the front-
year LEAPS and the reason why we're now starting to introduce the
'06 LEAPS.

HD - Last week proved to be just a fairly volatile one of
consolidation for our HD play, as the stock tried on numerous
occasions to push back over $34, while at the same time being
unable to sustain a breakdown under $33.  The stock appears to be
weakening following its recent double top just below $35, but
there hasn't been a breakdown yet.  In order to solidify the
bearish picture, we'll need to see a break below the 50-dma, which
is now just over $32.

SMH - Last week certainly provided plenty of excitement for
traders in the Semiconductor sector, with 3 consecutive days of
the SOX pushing over the $400 level.  But with INTC failing to
provide the bullish catalyst that many seemed to have been
expecting with its earnings report, the sector caved in towards
the end of the week.  Our SMH play certainly gave us a Maalox
moment Wednesday morning, with its opening surge to $32.95, just a
nickel below our stop.  But fortunately that was followed by a
sharp pullback and then consolidation.  The pullback continued
through the open on Friday, with the stock trading briefly below
the $31 level before recovering into the end of the day.  I
continue to think we've seen a top in the sector for now and
traders that took advantage of last week's foray over $32 as an
entry point have likely gotten the best entry possible into the
play.  There's a long way to go though before we'll have anything
we can term a breakdown, which would require the SMH to break
under the bottom of its ascending channel, currently right at $29.
Maintain stops at $33 and settle in for some more volatility as
earnings season continues.

ADBE - I was really hoping to get an entry closer to the $36
target last week, but after several days of failing to hold over
$35, Thursday's plunge back below that level looked too good to
pass up.  So we've got another live bearish play in the Portfolio.

Watch List:

DJX - Are we having fun yet?  The DJX certainly is providing
plenty of up and down movement without going very far in either
direction!  Support at $90 is still holding firm, but it looks
like sellers are getting a bit more aggressive at resistance, as
the DJX continues to get knocked back every time it edges above
the $92 level.  This range will eventually break, and when it
does, it could get exciting.  Despite my bearish expectations, I
remain aware that we haven't yet seen any significant internal
weakening, with the Bullish Percent on the DOW holding at 83%.
That tells me that there's likely to be one more push towards the
June highs before support finally breaks.  I may miss this one,
but I'm sticking with the entry target of $93.50-94.00.  Next week
looks promising to deliver both that entry and the subsequent
rollover.

Radar Screen:

WMT - Alright, I may have gotten a bit too aggressive on my
bearish view of WMT.  With the Retail index (RLX.X) holding near
its recent highs, the stock is finally starting to catch up a
little and is testing the $58 resistance level.  This week I
backed out to the weekly view and noted that we can draw a
descending trendline from the 1999 high and the 2002 high, and
that line currently rests at $60.  I am going to exercise patience
here and look for a test of that trendline before considering WMT
as a new active play.

LEN - Oh, what might have been.  Rather than bouncing and giving
us an entry setup on a test of resistance, LEN (and the rest of
the Housing sector) got slammed lower on Tuesday in response to
the sharp selloff in Treasuries.  By Friday's close, the stock was
cracking below the 50-dma and it appears the decline off the
recent highs is underway.  The only way I'll consider a new play
on LEN at this point is if we can get a rebound back near the $75
level and right now that seems like an awful lot to ask.

BBH - Now that we've harvested our gains in AMGN, we can turn a
clear eye to trying to game the downside in the overall
Biotechnology index via the BBH.  Looking at the daily chart
though, I see nothing that makes me want to jump into that fire,
as the stock is holding up VERY well near its recent highs.  A
possibility exists for a rollover in the $135-140 area, but until
we see a lower high or a lower low, playing the downside in this
sector is just a bit too aggressive.

GM - Did you see GM's earnings report last week?  Shouldn't a 39-
cent upside surprise have generated some buying interest?  Rather
than rallying or selling off, the stock just continued to meander
in a very tight range near $36.  I think the key is that investors
were reminded that the bulk of GM's net income is coming from its
Financial Services arm, rather than automotive production.  With
long-term rates on the rise, it's bound to cut into that income
and there's no sign yet that GM has gotten any better at making
money from the automotive side of the game.  With interest rates
on the rise, I can't see how that is going to bode well for the
picture going forward.  Simply put, I want to short the heck out
of GM, but I refuse to play unless we can get the stock to pop up
near the $39-40 area.

SNDK - Forget about it!  The only decent entry on SNDK came back
in early June, as the chart has gone parabolic over the past few
weeks.  Even earnings last week were not able to stimulate the
"sell the news" crowd and SNDK delivered another 14% gain on the
week.  Add that to the 12% gain the week before, and I've lost all
interest in gaming the upside in this runaway move.

XL - I've made no secret of my displeasure with our AIG play, as
the stock has consistently bounced from support.  A couple weeks
ago, I ran across XL as an alternate in the Insurance sector and
we've certainly had a couple weeks of encouraging price action.
In fact, price has been heading down since finishing a double top
near $88 in mid-June.  Late last week, the stock broke below $81,
generating a new PnF Sell signal, with a tentative bearish price
target of $71.  All we need now is a decent rebound from current
levels, setting up a potential entry in the $83-85 area.

Closing Thoughts:

The first week of July earnings are now behind us and I certainly
didn't see anything there that made me want to second guess my
bearish outlook for the next couple months.  Nowhere have I seen a
report pointing to strong growth in any area of business.  The
upside surprises are coming from things like cost-cutting, and
favorable exchange rates.  Is that the stuff of which economic
recovery is born?  I think not.  Rising long-term interest rates
are not going to be good for the housing or equity markets, and I
think we just may be ready to tip over for the remainder of the
summer.

Hold onto your hats, because I don't think we're going to have a
typical listless summer!

Have a great weekend!

Mark


LEAPS Portfolio

Current Open Plays

SYMBOL OPENED     LEAPS    SYMBOL  ENTRY   CURRENT  CHANGE  STOP

Calls:
None

Puts:
AIG    04/24/03  '04 $ 55  AIG-MK  $ 5.60  $ 2.75  -50.89%  $61.00
                 '05 $ 55  ZAF-MK  $ 8.50  $ 6.10  -28.24%  $61.00
HD     07/09/03  '04 $ 32  HD -MZ  $ 2.45  $ 2.65  + 8.16%  $36.50
                 '05 $ 30  ZHD-MF  $ 3.20  $ 3.50  + 9.38%  $36.50
SMH    07/09/03  '04 $ 30  SMH-MF  $ 2.70  $ 2.85  + 5.56%  $33.00
                 '05 $ 30  ZTO-MF  $ 5.00  $ 5.00  + 0.00%  $33.00
ADBE   07/17/03  '04 $ 35  AEQ-MG  $ 4.20  $ 4.80  +14.29%  $38.50
                 '05 $ 35  ZAE-MG  $ 7.20  $ 7.70  + 6.94%  $38.50
                 '06 $ 35  WAE-MG  $ 9.00  $ 9.40  + 4.44%  $38.50


LEAPS Watchlist

Current Possibles

SYMBOL  SINCE    TARGET PRICE  TARGETED LEAP  SYMBOL

CALLS:
None


PUTS:
DJX    05/04/03  $93.50-94.00  DEC-2003 $ 92  DJV-XN
                               DEC-2004 $ 92  YDK-XN
LEH    07/20/03  $68-69        JAN-2004 $ 65  LEH-MM
                               JAN-2005 $ 65  ZHE-MM
                               JAN-2006 $ 60  WHE-ML
RIMM   07/20/03  $22-23        JAN-2004 $ 22  RUL-MX
                               JAN-2005 $ 20  XRY-MD



New Portfolio Plays

ADBE - Adobe Systems $34.22  **Put Play**

It seems we're developing a bit of a pattern here, as almost as
soon as I can move a play onto the Watch List, we get handed a
solid entry point.  ADBE didn't quite get up to our $36 target
last week, but Monday's sharply failed rally seemed good enough to
me.  After 3 more attempts to hold above $35, Thursday's decline
back under that level and close under the 50-dma was too good to
pass up.  That was just in time to catch Friday's slide down to
the $33.50 level and it could just be that we're off to the races.
Keep in mind though that that the $32 support level is really
going to be the key over the near term, as that is the site of the
ascending trendline from the October and March lows.  The decline
off the early June highs already generated a Sell signal on the
PnF chart, and that long column of O's gives a bearish vertical
count of $21.  There's plenty of room to fall and it looks like we
got a decent entry as well.  We're starting out with a fairly wide
stop at $38.50, just above the June closing highs.

BUY LEAP JAN-2004 $35 AEQ-MG $4.20
BUY LEAP JAN-2005 $35 ZAE-MG $7.20
BUY LEAP JAN-2006 $35 WAE-MG $9.00

New Watchlist Plays

LEH - Lehman Brothers $65.18  **Put Play**

I've had both GS and LEH listed as possible bearish plays on the
Radar Screen for a couple weeks and I've finally had to concede
that of the two, LEH is by far the weaker of the two stocks.
While GS isn't too far below its recent highs, LEH has already
retraced fully 50% of its rally from the March-June rally,
breaking the $65 support level last Thursday and generating a new
PnF Sell signal in the process.  That column of O's now gives a
tentative bearish price target of $58, and I find it interesting
that $58 is also the site of the bullish support line.  The
rebound from just below the $64 level really comes as no surprise,
as the stock just caught the expected rebound from the 50%
retracement mentioned above.  We'll be looking for an extension of
this rebound back near the $68-69 area, and a rollover from there
should make for a very nice entry for a ride down to our $58
target.  One other thing to keep a sharp eye on is the
Broker/Dealer index (XBD.X).  This index has been VERY strong,
breaking out to new 2-year highs recently.  Critical support is
now seen at $550 and critical resistance at $580.  Regardless of
price action in LEH, I do not feel that it would be wise to
initiate new bearish positions if the XBD is able to move through
that resistance at $580.  As with several of our new bearish Watch
List plays, you'll note that I'm not shooting for home runs right
now, just looking to catch moderate sized moves and then get out.
That's the way to win in this market environment, with strong
trending moves likely to be scarce between now and Labor Day.

BUY LEAP JAN-2004 $65 LEH-MM
BUY LEAP JAN-2005 $65 ZHE-MM
BUY LEAP JAN-2006 $60 WHE-ML

RIMM - Research In Motion, Ltd. $21.14  **Put Play**

We've been looking at shares of RIMM as a potential bearish play
here for a couple weeks now, noting how the stock has been working
higher in an ascending channel since early March.  As mentioned
here previously, we needed a breakdown out of that channel before
ever considering a bearish play and we got that last week when the
stock plunged below $22.20.  Given the strong bullish trend
leading up to that technical violation, I would have been very
surprised to see a steep breakdown and sure enough, we got a
slight rebound off of the $21 level last week as the 50-dma
provided support.  RIMM now needs to rebound back near the $22-23
area, test the bottom of the broken channel (now as resistance)
and roll over near the site of either the 20-dma ($22.54) or the
bottom of the channel.  It should be clearly understood that this
is a very aggressive bullish play, where I'm attempting to pick a
top in a Technology stock that has been performing well lately.
But with strong resistance at $23-24, weekly Stochastics turning
bearish and the PnF bullish price target of $22 having already
been achieved, I think we've got a nice setup for a downside play
over the next couple months.  I don't have any illusions about a
large drop, as support is very likely near $18 and should be very
strong at $16.  We're playing for a fairly small move in terms of
dollars, but when dealing with inexpensive options like we are
here, such a move could still work out quite nicely.
Unfortunately, RIMM doesn't have 2006 strikes available, but they
should show up in the next week or so.  Once they're released,
we'll add them in.

BUY LEAP JAN-2004 $22 RUL-MX
BUY LEAP JAN-2005 $20 XRY-MD

Drops

AMGN - $71.54 As Hannibal used to say on the old TV Show 'The A
Team', "I love it when a plan comes together.  While I really had
my doubts going in because of my overall negative bias for the
market, AMGN delivered the goods.  After letting us in just above
$60, the stock maintained its steady ascent until clearing $67.50
and then it really took off.  Last Tuesday, the stock hit the $72
level, which was both our target and the bullish price target from
the PnF chart.  Game over, time to harvest gains.  I wish they all
worked out this nicely, as after entry, AMGN just maintained its
ascending trend and never even threatened our stop.  The stock may
continue higher from here, but I just can't justify trying to
squeeze any more out of the play after the PnF price target has
been achieved.


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**************
TRADERS CORNER
**************

All Aboard!  The Profit Train Is Back On Track

By Mike Parnos, Investing With Attitude

Last month the CPTI took a hit.  This month we hit back for almost
$2,000.  The market cooperated reasonably well. We didn't have to
make any significant adjustments during the life of our trades.
It was almost as much fun as Kobe Bryant had in that Colorado
hotel room.  It was definitely safer.

The Breakdown:
SPX Iron Condor = +$1,620
LLTC Condor = +$950
DJX Bear Call Spread = (-$555)
QQQ Baby Strangle = (-$50)
Total:  +$1,965

New Total
Our new total, since we instituted the CPTI portfolio, bounced
back up to a still impressive $23,500 in eight months.  Feels good
to be back in the green.  Due to our conservative strategies, we
sort of nibble around the edges of the market.  Some traders
contacted me boasting about how much they made in the last few
months by buying calls on biotech stocks.  I asked if they took
their profits yet.  "No, they're going higher," I was told.  Mark
my words, the euphoria will revert to depression in a few months.
Meanwhile, we'll be plodding along, picking up a few thousand here
and a few thousand there – sleeping well and ordering our pizzas
with pepperoni and caviar.

Here's a recap of our July trades.  I always enjoy writing this
part – well, almost always.
_____________________________________________________________

JULY CPTI PORTFOLIO POSITION FINAL UPDATE

July Position #1 – LLTC Baby Condor – Closed at $34.56
We sold 10 contracts of LLTC July $35 calls @ $1.05 and bought 10
contracts of LLTC July $37.50 calls @ $.45 for a net credit is
$.60  Then we sold 10 contracts of LLTC July $30 puts @ $.75 and
bought 10 contracts of LLTC July $27.50 puts @ $.40 for a net
credit is $.35. Our total credit of $.95 and our risk was $1.55
($2.50 - $.95).

We created a maximum profit range of $30 to $35 and a safety range
of  $29.05 to $35.95.  Maximum profit was $950.  LLTC gave us a
scare, but finished at 34.56 -- slightly below our short $35 call.
We realized the full $950 profit.
______________________________________________________________

July Position #2 – SPX Iron Condor – Closed at $989.25
We sold 4 contracts of SPX July 940 puts and bought 4 contracts of
SPX July 925 puts for a net credit: $1.50.  Then we sold 4
contracts of SPX July 1025 calls and bought 4 contracts of SPX
July 1040 calls for a net credit of $2.55.  Our total credit was
$4.05 while our risk was $10.95 ($15 - $4.05)

The range was 940 to 1025.  I reduced the number of contracts to
four in order to reduce our exposure.  Maximum profit was $1,620.
The SPX closed comfortably in the range.  The trading part is
over.  The official settlement price, as of Friday morning's
opening, was 989.25.  We realized the full profit of $1,620.
______________________________________________________________

July Position #3 – DJX – Bear Call Spread – Plus – 91.27
We established a bear call spread by selling 15 contracts of DJX
July $90 calls @ $1.90 and buying 15 contracts of DJX July $92
calls @ $1.00.
Net credit of $.90 X 15 contracts = $1,350

If the DOW finishes below 9000 at July expiration, you keep the
$1,350.   Your exposure would be $1.10 (9200 – 9000) X $1,900.
Your maximum profit would be $1,350.  The DJX closed at 90.51 on
Thursday  -- BUT -- the DJX works the same way as the SPX.
Therefore, we had to wait until the 30 DOW stocks open Friday
morning before we could determine how we did.  The DJX settlement
open number was 91.27.  Our breakeven point was 90.90.  The result
was that we lost $555 ($.37 x 1500)
_____________________________________________________________

Position #4 – Ongoing QQQ ITM Baby Strangle – Currently at $31.18
In May we bought 10 contracts of the July QQQ $30 puts @ $2.05 and
bought 10 contracts of the July QQQ $28 calls @ $1.80 for a total
debit of $3.85.

Our objective was for a $3-4 move in the next month.  One of our
long options will hopefully pay for almost the entire position.
That will leave our other long option, which is now practically
free, poised for the bounce back as the QQQs reverse.  Our
exposure was only $1.85 because we had $2.00 of intrinsic value.

We sold the July $28 call for $3.80.  We owned the July $30 put at
a cost of $.05.  The QQQs never reversed sufficiently to realize
any profit on the July $30 put.  It expired worthless and we lost
$50.
_________________________________________________________________

July Position #3 – RUT Iron Condor – Never Entered.
_________________________________________________________________

Quickie Results:
1)  SPX Iron Condor with a range of 965 to 1025 – Credit of $2.30
The SPX closed Thursday, it's last day of active trading, at
981.73.  We had a nice cushion, but, as we learned last month, it
"ain't over till the fat lady sings."  And the "fat lady" sang
Friday morning and the SPX opened at 989.25 – well within our
range.  Our profit was $1,150 – in a week.

2)  QQQ Lottery Strangle – Bought the $31 put and $33 call – Cost
of $.30
The QQQs closed today at $31.28. The NASDAQ closed down a whopping
50 points.  During the day Thursday, the $31 puts could have been
sold for $.20.  We should have closed out the calls on Thursday,
but we risked very little.  Our loss was $300.

3)  BBH Sell Strangle – with a range of $130 to $135 – Credit of
$2.05
BBH closed today at $133.40 – comfortably inside our range.  Our
profit was $1,025 – for a week.

Total Gain From July Quickies -- $1,875.
It's interesting that our "one week" plays are often more
profitable than the regular month-long plays in our regular
portfolio.  Hmmmm . . . maybe that's deserving of a little more
attention.
_________________________________________________________________

NEW AUGUST CPTI PORTFOLIO TRADES

August Position #1 – BBH Iron Condor – Closed at $133.40
Let's sell 10 contracts of BBH August $125 puts @ $1.45 and buy 10
contracts of BBH August $120 puts @ $.80 for a net credit of $.60.
Let's also sell 10 contracts of BBH August $140 calls @ $1.75 and
buy 10 contracts of BBH August $145 calls @ $.85.
We have a maximum profit range of $125 to $140 with a total credit
of $1,550.   Our risk is $3,450.

August Position #2 – LLTC Sell Straddle – Closed at $34.40
We're going to sell 10 contracts of LLTC August $35 call @ $1.45
and sell 10 contracts of LLTC August $35 put @ $2.40 for a total
credit of $3.45. Our maximum profit can be about $3,450 if LLTC
finishes at $35.  Our profit range is from $31.55 to $38.45.  Our
bail-out points are at the parameters of the profit range.

August Position #3 – SPX Iron Condor – Closed at $993.32
This is a slightly more aggressive position than usual.  Why?  The
range is smaller.  Also, note the different number of contracts we
use for the calls and the puts.

We're going to sell 3 contracts of the SPX August 125 calls and
buy 3 contracts of the August 150 calls for a net credit of $3.70
($1,110).  Then, we'll sell 6 contracts of the August SPX 960 puts
and buy 6 contracts of the August SPX 950 puts for a net credit of
$2.00 ($1,200).  The total credit will be $2,310 – and that's our
maximum profit.  I reduced the number of contracts on the bear
call spread because there's a $25 exposure.  As of Friday's close,
SPX did not have call strike prices between 1025 and 1050.  If
they did, we would have undoubted used some configuration using a
higher short call.

These figures, obviously, aren't etched in stone.  There's a good
possibility that the SPX will open up additional strike prices
between the 1025 and 1050.  Let this SPX bear-call spread position
just be a guideline.  Be prepared to adjust before putting on the
position.

A Good Start
Let's start off with these three positions.  Perhaps we'll add
another later this week if something looks irresistible.
Remember, that all the numbers will change on Monday's open.  If
you reasonably close to getting the premiums in the above
position, the trades are still viable.
______________________________________________________________

Words of Wisdom
So far I've had a few responses to my request for "words of
wisdom" that you'd like to share.  "Words of wisdom" can encompass
almost anything – so don't be shy.  Don't worry, I won't reveal
you as the source.

a) You know you're getting old when . . .you wake up with that
morning-after feeling -- and you didn't do anything the night
before.
b) Why is a Laundromat a really bad place to pick up a woman?
Because a woman who can't even afford a washing machine will
probably never be able to support you.
______________________________________________________________

New To The CPTI?
Are you a new Couch Potato Trading Institute student?  Do you have
questions about our plays or our strategies?  Feel free to email
me your questions.  An excellent source for new students is the
OptionInvestor archives where we've been discussing strategies and
answering questions since last July.  To find past CPTI (Mike
Parnos) articles, look under "Education" and click on "Traders
Corner."  They're waiting for you 24/7
______________________________________________________________

Happy Trading!
Remember the CPTI credo: May our remote batteries and self-
discipline last forever, but mierde happens. Be prepared! In
trading, as in life, it’s not the cards we’re dealt. It’s how we
play them.

Your questions and comments are always welcome.
Mike Parnos
CPTI Master Strategist and HCP


**************
TRADERS CORNER
**************

Elliott Wave Play Updates
By Steve Gould

DJX

Chart: DJX update 7/18/2003





This play did not work out the way I had expected.  The net
position of the Dow in relation to when we bought the spread is
essentially the same and we are rapidly losing time value.  I
believe that the Dow is in the midst of a wave 4 correction.  (See
"Where is the Dow Going?" for a more detailed analysis.)  I
suspect that the Dow is as high as it is going to go for now and
that it should reach the 8650 level soon.  I am going to offer two
alternatives.  For the conservative trader, go ahead and sell the
options and exit the play.  For the more aggressive trader, sell
the call options and hang on to the put options. As the Dow falls,
the puts should increase in value and we may be able to exit this
trade at a break even or better.

Option

The original option values on 6/6/2003 were

DJX – 90.62

Pos   Qty   Sym     Strike      Type  Bid   Ask    Delta   IV
Buy        DJVIN    SEP 92      Call  2.80  3.00    0.51   15
Buy        DJVUJ    SEP 88      Put   2.70  2.90   -0.33   23
                                      ----  ----   -----
                                      5.50  5.90    0.18

Current values on 7/18/2003 are

DJX – 91.88

Pos   Qty   Sym     Strike      Type  Bid   Ask    Delta   IV
Buy        DJVIN    SEP 92      Call  2.35  2.60    0.56   14
Buy        DJVUJ    SEP 88      Put   1.40  1.60   -0.27   22
                                      ----  ----  ------
                                      3.75  4.20    0.29


QQQ

Chart: QQQ update 7/18/2003





Sometimes plays just work out great.  The QQQ gapped open on
Monday allowing us to buy back the July 37 option even cheaper.
If you chose to not repurchase the option, then you are sitting on
a profit.  If you did chose to repurchase, then you are up about
0.10.  The QQQ should continue to decline over the next week.  If
you do hold the Aug 03 37 puts, as the QQQs go lower, the spread
will increase in value because the delta is now positive.  Holders
of just the Jan 04 31 puts will see higher profits as the the Aug
37 put will not be offsetting the gains of the Jan 04 31 puts.
The QQQs should meander its way to 28.  Hold.


Option

The original option values on 6/13/2003 were

QQQ – 29.96

Pos   Qty   Sym     Strike      Type  Bid   Ask    Delta   IV
Buy   2    KLFME   Jan 04 31    Put   3.00  3.20   -0.44   32
Sell  1    QQQSK   Jul 03 37    Put   6.90  7.10    0.99   41

Credit: .50

Current values on 7/18/2003 are

QQQ – 31.28

Pos   Qty   Sym     Strike      Type  Bid   Ask    Delta   IV
Buy   2    KLFME   Jan 04 31    Put   2.70  2.80   -0.60   25
Sell  1    QQQSK   Aug 03 37    Put   5.60  5.80    0.99   58

Liquidation 1:  -0.40 + .50 =  0.10


BA

Chart: BA update 7/18/2003





BA is continuing its wave 4 correction (down) on the daily chart.
BA has reached the 40% retracement level but the oscillator
indicates more of a correction is forthcoming. However, the hourly
chart shows that BA is in the middle of a wave 4 correction (up)
of the C wave.  (Remember C waves are five wave basic patterns.)
Expect BA to move up to about 34 before continuing down to about
31.50.  At that point, we will buy back the Aug 30 call.


Option

The original option values on 6/17/2003 were

BA – 36.15

Pos   Qty   Sym     Strike      Type  Bid   Ask    Delta   IV
Sell  1     BAGF   Jul 03 30    Call  6.10  6.40   -99.5   29
Buy   2     BAAU   Jan 04 37.5  Call  2.70  2.85    52.6   25

Credit: 0.40

Current values on 7/18/2003 are

BA – 33.31

Pos   Qty   Sym     Strike      Type  Bid   Ask    Delta   IV
Sell  1     BAHF   Aug 03 30    Call  3.40  3.60   -97     21
Buy   2     BAAU   Jan 04 37.5  Call  1.10  1.25    32     24

Liquidation value: -1.40 + .40 = -1.00


T

Chart: T update 7/18/2003





T appears to need one more small leg down to complete the five
wave basic pattern of the 1 wave.  It should then retrace to about
20.20 (wave 2) before it continues heading back down.

I know that I get antsy to enter a play, but this is a good
example that sometimes it is best to wait for the optimal moment
before initiating a play.  Let’s stick to the original game plan
and wait until we get the price we want.


Option

T: $19.25

Pos  Num  Sym  Strike   Type   Bid   Ask   Delta   Vol   OI
Sell  1   TGC  Aug 15   Call  4.20  4.50    96     25    70
Buy   2   TJX  Oct 22.5 Call  0.45  0.55    24     15 10285

Credit: $310


**************
TRADERS CORNER
**************

Where is the Dow Going?
By Steve Gould

I went to school at the University of Illinois in Champaign-
Urbana.  In the main library was a wall devoted only to answering
questions.  Anyone could use a 3x5 card to submit a question.
Someone, no one knew who, would then research the question and
post an answer, usually within one or two days.

One day I noticed my roommate used a rubber stamp to imprint his
return address on an envelope.  (This was in the days before the
PC.)  I thought that was a tremendous time saver and wanted one.
However, I did not know where to get one.  I did know where I
could find out.  I submitted a question on the question wall.  I
asked, "Where could I get a rubber stamp made?"  The next day, a
response was posted.  It read, "Check the Yellow Pages under
Rubber Stamps."

Duh.  I knew the answer to that, but sometimes it takes someone
smacking you upside the head with the obvious answer to make you
realize you just asked a dumb question.

I called a buddy of mine, a fellow Elliottician, and asked him his
estimation about the market.  I wanted his opinion as to whether
we were already done with the correction and were now entering a
new five wave basic pattern up.

He is convinced that the market is headed down a bit more.  I told
him that the pattern on the Dow is really not conclusive either
way.  Of course, he said, but look at the S&P.  ** Smack **

The Dow and S&P 500 pretty much march in lock step.  Oh, sure
there are times when there are divergences, but if we were to
overlay the Dow and S&P 500, we would see pretty much the same
pattern.

Chart: Dow Weekly since 1962





Chart: S&P 500 Weekly since 1962





(Note: The S&P 500 index started in 1962, hence the time frame.)

It is rather clear from the chart that whatever one index does,
the other one follows suit.  Hence if the S&P 500 behaves in a
particular way, then it is a pretty good bet that the Dow is going
to follow.  And vice versa.

Since we are only interested in what has happened since the high
of January 2000, let's zoom in on that timeframe.

Chart: Dow Weekly since January 2000 to 7/18/2003





Chart: S&P 500 Weekly since January 2000 to 7/18/2003





A comparison of the above two charts leaves one wondering why the
Dow is acting so erratically and the S&P 500 a little bit more
predictably.  Hard to say exactly, but I would speculate that with
500 stocks versus only 30, the S&P 500 would adhere more to the
crowd behavior that Elliott Waves are so good at categorizing.

Whatever the reason, the S&P 500 is behaving with more easily
identifiable Elliott Waves than the Dow so let's take a moment to
analyze it.

Chart: S&P 500 Weekly since January 2000 to 7/18/2003 with
indicators






According to Advanced Get, and this seems reasonable, the S&P 500
is in a wave 4 retracement and is currently at about the 40%
level.  The oscillator is at about a 150% retracement.  This is a
little more than I would like to see but acceptable.  The
important thing to note is that the oscillator is turning.  The
S&P 500 target price by January 2005 is about 650.  The wave 4 so
far is tracing out a very nice A-B-C correction pattern.  Remember
that in an expanded flat, which is what this is looking like it is
turning out to be, the C wave will be a five wave basic pattern.
Looking a little closer at the C wave shows that it has a little
bit further to go on the upside, most likely 1060-1080, before it
should head down again.

This pattern and the analysis is no where near as evident on the
Dow.  However, since the Dow and S&P 500 trade pretty much
together, we can expect about the same behavior from the Dow.

Chart: S&P 500 daily 7-18-2003





Short term, the S&P 500 looks to be in the midst of a wave 4
retracement of the final C wave.  The oscillator is heading toward
zero as the S&P 500 retraces to the 930 level.  Applying the rule
of alternation, this should be a more complex correction than the
2 wave.  Advanced Get may have even labeled the top of the 3 wave
incorrectly.  It may be, in fact, the B wave in the in progress A-
B-C correction.  (see the Dow chart below)

If this scenario pans out, look for the S&P 500 to fall to the 930
level over the next several weeks and then rise again possibly up
to 1060-1080.  At that point the weekly 4 wave will be complete
and the S&P 500 will start its decline to 650.

Chart: Dow 500 daily 7-18-2003





Short term, the Dow presents the same type of scenario, but I
think just a bit clearer.  It appears that the 4 wave is well
underway.  Advanced Get shows the 4 wave complete, but it is hard
to visualize a nice A-B-C correction.  I would say that we have an
A wave (green lettering), a B wave and the start (waves i and ii)
of a C wave.  Expect the Dow to decline to the 8650 level before
bouncing back to 9800.  It will then start its decline to 6000.

Bottom line, I am short term bearish the markets.  I am expecting
a bounce after which I will be long term bearish.


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The Option Investor Newsletter                   Sunday 07-20-2003
Sunday                                                      5 of 5


In Section Five:

Covered Calls: Q&A With The Covered-Calls Editor
Naked Puts: Success Basics
Spreads/Straddles/Combos: Stocks Bounce Back As Traders Buy The Dip!

Updated In The Site Tonight:
Market Posture: Options Expire, Stocks Soar Higher


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

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*************
COVERED CALLS
*************

Trading Basics: Q&A With The Covered-Calls Editor
By Mark Wnetrzak

The recent volatile activity in stocks has generated a difficult
situation for one of our readers.

Attn: Covered-Calls Editor
Subject: Managing Losses

Hello Mark,

BCGI is getting creamed today. What is your suggestion for the
covered call position from last weekend's section?

Sincerely,

Kevin S


Regarding position management with covered-calls:

Even though the in-the-money covered-call strategy offers less
risk, it still requires a disciplined approach and sound money
management techniques, as there is risk of loss in all trading.
Covered-calls do hedge against downside movement, however they
are not a remedy for protracted bearish activity, nor for
catastrophic downside moves due to ill-timed news.  Whether an
investor exits a position or opts for an adjustment strategy
will depend on their long-term outlook for the stock -- due
diligence is mandatory! -- and their risk-reward tolerance.
One must weigh the "cost" of remaining in a position, often
times locking-in a (albeit smaller) loss, versus exiting the
position; preserving capital for those positions with a higher
probability of success.  This is a very difficult decision that
only you can make.


Regarding Covered-call Adjustments:

Generally, if you are defensive and trying to lower your cost
basis in your covered-call position, you would roll down and/or
forward.  If this is done before expiration, you would need to
buy back your current “sold” calls, which should be relatively
cheap.  An investor who remains bullish in the long-term will
do this to protect for short-term weakness, but ultimately, he
expects the stock to recover.  Usually, you will have to move
forward several months or use LEAPS in order to obtain a credit
in the new position.  Of course, in the case of a catastrophic
drop in price, the best that can be accomplished is to lock-in
a loss (until expiration), which would still be less than the
current loss, "if" the stock doesn't drop further.

A "ratio-call" spread can also be used as a repair technique
for long-term covered call stocks that have slumped in the
recent market.  The goal is to allow the stock owner to lower
the break-even price while significantly increasing the profit
potential through the addition of a bull-call spread.  The
idea is to buy an equivalent amount of calls as one owns in
shares of stock so that twice as many "covered" calls can be
sold: half the short calls are covered by the original stock
position while the other half are obligated in a "bull-call"
spread.

As in all repair strategies, a bullish outlook is retained for
the underlying issue and the investor must believe that the
"bearishness" is temporary or of a short-term nature.  Also,
it is very important to completely understand any strategy or
adjustment technique you intend to use -- YOU are the only one
who can decide what is right for your portfolio! -- and the
ability to manage losses is paramount to long-term success.
Larry McMillan's book, Options as a Strategic Investment, has
some great information on covered calls.  The book is a great
resource, covering all aspects of the covered-write strategy
and it should be available in the OIN bookstore or your local
library.

Hope this helps,

Mark W.

Editor's Note: Additional BCGI remarks in the summary below.


SUMMARY OF PREVIOUS CANDIDATES
*****

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.

Note:  Margin not used in calculations.

Stock   Price   Last    Option    Price   Gain  Potential
Symbol  Picked  Price   Series    Sold   /Loss  Mon. Yield

SVNT     5.30    5.52  JUL  5.00  0.60    0.30*  13.9%
IBIS     7.95    9.27  JUL  7.50  0.85    0.40*   8.2%
SUPG     5.86    5.18  JUL  5.00  1.20    0.34*   7.9%
BEAV     2.69    2.78  JUL  2.50  0.35    0.16*   5.9%
CNET     5.71    6.83  JUL  5.00  0.90    0.19*   5.7%
AMR     11.32   10.59  JUL 10.00  1.70    0.38*   5.7%
WEBX    13.90   15.19  JUL 12.50  2.10    0.70*   5.2%
GP      18.96   19.52  JUL 17.50  2.05    0.59*   5.1%
RSYS    13.00   14.51  JUL 12.50  1.05    0.55*   5.0%
BLUD    22.02   20.57  JUL 20.00  2.85    0.83*   4.7%
OVRL    20.68   20.37  JUL 20.00  1.50    0.82*   4.6%
MTON     5.60    5.19  JUL  5.00  0.90    0.30*   4.6%
ASIA     5.75   10.01  JUL  5.00  1.00    0.25*   4.6%
CYBX    24.04   23.38  JUL 22.50  2.00    0.46*   4.5%
WEBX    14.45   15.19  JUL 12.50  2.45    0.50*   4.5%
LEXR    10.85   12.76  JUL 10.00  1.05    0.20*   4.4%
EDS     21.99   22.46  JUL 20.00  3.00    1.01*   3.9%
IMMU     6.91    6.25  JUL  5.00  2.15    0.24*   3.7%
ASIA     5.97   10.01  JUL  5.00  1.15    0.18*   2.7%
MHR      8.11    7.37  JUL  7.50  0.95    0.21    2.5%
RHAT     8.27    7.17  JUL  7.50  1.20    0.10    1.0%
USG     19.95   14.55  JUL 15.00  5.40    0.00    0.0%
USG     19.57   14.55  JUL 15.00  4.90   -0.12    0.0%
Q        5.23    4.60  JUL  5.00  0.50   -0.13    0.0%
OI      13.91   11.94  JUL 12.50  1.75   -0.22    0.0%
BCGI    17.70   12.59  JUL 15.00  3.10   -0.75+   0.0%

INET     5.08    5.25  AUG  5.00  0.45    0.37*   6.9%
SSTI     5.47    5.00  AUG  5.00  0.75    0.28    5.2%
CHINA   13.48   13.40  AUG 10.00  4.00    0.52*   4.8%
CY      13.84   12.53  AUG 12.50  1.95    0.61*   4.5%
STEL     8.25    7.48  AUG  7.50  1.10    0.33    4.0%
RFMD     5.89    6.19  AUG  5.00  1.15    0.26*   4.0%
INSP    15.52   14.96  AUG 15.00  1.20    0.64    3.9%
BCGI    20.02   12.59  AUG 17.50  3.30   -2.90+   0.0%

*   Stock price is above the sold striking price.

Comments:

The major averages managed to eek out a positive gain for the
week, mainly with the help of Friday's option-expiration rally.
Next week should be interesting as the bullish momentum is
showing some signs of waning.  The covered-call portfolio did
fairly well though one issue experienced a rather drastic drop.
Boston Communications (NASDAQ:BCGI) was hammered on Thursday
after the company said that Verizon Communications (NYSE:VZ),
which provides over half of BCGI's revenue, "may" try to create
its own internal prepaid platform in 2004 and reduce or eliminate
the need for BCGI.  The stock traded above $14 for the first 30
minutes on Thursday and an exit during that time would have
allowed the losses noted above in the summary.  Anyone still in
the August position will have a very difficult decision to make
as the cost basis in the issue, after buying back the calls (for
a quarter?), should be around $17.00.  Rolling-forward and down
doesn't offer much help and will be a long and tedious process.
The July position, with a cost basis around $14.70, offers a
slightly better prospect at a "break-even" exit using a DEC-12.50
call, providing the stock doesn't drop further.  Next week, we
will show the position closed.  A few of the Asian internet
stocks acted a bit worrisome this week as their parabolic moves
came under pressure and should be monitored closely.  So, besides
Chinadotcom (NASDAQ:CHINA), our August watch list will include:
SSTI, CY, STEL and INSP.

Positions Previously Closed:  Quest Software (NASDAQ:QSFT), Mirant
(NYSE:MIR), Siebel Systems (NASDAQ:SEBL), Shaw Group (NYSE:SGR),
and Dendreon (NASDAQ:DNDN).



NEW CANDIDATES
*********

Sequenced by Target Yield (monthly basis)
*****
Stock   Last   Option    Option  Last  Open  Cost  Days Target
Symbol Price   Series    Symbol  Bid   Int.  Basis Exp. Yield

BEAS   12.79  AUG 12.50  BUC HV  1.00  6157  11.79  28   6.5%
CYBX   23.38  AUG 20.00  QAJ HD  4.40  37    18.98  28   5.8%
AW     12.55  AUG 12.50   AW HV  0.60  65    11.95  28   5.0%
DRIV   21.98  AUG 20.00  DQI HD  2.80  122   19.18  28   4.6%
THOR   16.35  AUG 15.00  TQU HC  1.95  173   14.40  28   4.5%
EXTR    5.75  AUG  5.00  EXJ HA  0.95  2665   4.80  28   4.5%
ANEN   10.75  AUG 10.00  EVB HB  1.10  27     9.65  28   3.9%


Company Descriptions

LB-Last Bid price, OI-Open Interest, CB-Cost Basis or break-even
point, DE-Days to Expiry, TY-Target Yield (monthly basis).

*****
BEAS - BEA Systems  $12.79  *** A Merrill Lynch Boost ***

BEA Systems (NASDAQ:BEAS) is an application infrastructure software
provider.  The company's WebLogic Enterprise Platform includes BEA
WebLogic Server, a standards-based application server that serves
as a platform for deployment and integration of enterprise-scale
applications and Web services; BEA WebLogic Integration, a
standards-based platform for workflow, application integration,
Web services and business-to-business integration; BEA WebLogic
Portal, a sophisticated rules-based infrastructure for rich user
interfaces to a wide variety of enterprise data, and BEA WebLogic
Workshop, an easy-to-use framework for development and deployment
of Web services and Java-based applications.  Also included as
integral parts of the product line are BEA WebLogic JRockit, a
flexible Java Virtual Machine, BEA Tuxedo, a multi-language
enterprise platform for enterprise applications and BEA Liquid
Data for WebLogic, a tool for simplifying access and aggregation
of distributed information.  Merrill Lynch upgraded coverage of
BEAS on Wednesday to a "buy" and added the stock to the their
"Focus One" list with a price target of $15.  The friendly
nudge by Merrill launched BEAS above its near-term resistance
of $12.20, which should now provide support.  Investors who
agree with the Merrill Lynch outlook can gain a favorable cost
basis in the issue with this position.  Earnings are due in
August.

AUG-12.50 BUC HV LB=1.00 OI=6157 CB=11.79 DE=28 TY=6.5%


*****
CYBX - Cyberonics  $23.38  *** Waiting On The Results ***

Cyberonics (NASDAQ:CYBX) designs, develops, manufactures and
markets the NeuroCybernetic Prosthesis, an implantable medical
device that delivers a novel therapy, Vagus Nerve Stimulation,
for treating epilepsy and debilitating neurological, psychiatric
diseases and other disorders.  In July 1997, the NCP System was
approved by the United States Food and Drug Administration for
commercial distribution in the United States for the treatment
of epilepsy, which the firm sells using its own employee-based
direct marketing organization.  In addition, the NCP System is
marketed internationally for the treatment of epilepsy (mainly
in Europe) using a combination of Cyberonics' own direct sales
organization and independent distributors.  During fiscal 2001,
the firm obtained approval for commercial distribution of the
NCP System for the treatment of depression in Europe and Canada.
CYBX is in a bullish sector and the company has a product that
is proven and well known for treating epilepsy.  Cyberonics
intends to announce the results from its depression pivotal
study causality analysis plan on Wednesday, July 23, before
the market opens.  Investors can speculate on the results with
this position, which offers a cost basis near strong technical
support.

AUG-20.00 QAJ HD LB=4.40 OI=37 CB=18.98 DE=28 TY=5.8%


*****
AW - Allied Waste  $12.55  *** On The Move! ***

Allied Waste Industries (NYSE:AW) is a non-hazardous solid waste
management company in the U.S.  The company provides collection,
transfer, recycling and disposal services for approximately 10
million residential, commercial and industrial customers.  The
company operates as a vertically integrated company, which
entails picking up waste from businesses and residences and
disposing of that waste in its own landfills to the extent that
it is economically feasible.  The company serves its customers
through a network of 340 collection companies, 175 transfer
stations, 169 active landfills and 66 recycling facilities in
118 major markets within 39 states.  With earnings due on July
31, Allied Waste has been rallying on strong volume since the
April low and the recent move above the highs in DEC and JAN
suggests further upside potential.  Investors who agree with
the bullish outlook can "target shoot" an entry point in the
stock with this position.

AUG-12.50 AW HV LB=0.60 OI=65 CB=11.95 DE=28 TY=5.0%


*****
DRIV - Digital River  $21.98  *** Rally Mode ***

Digital River (NASDAQ:DRIV) is a provider of electronic commerce
outsourcing solutions.  As an application service provider, the
company enables its clients to access its proprietary electronic
commerce system over the Internet.  The company's technology plat-
form allows it to provide a suite of electronic commerce services,
including Web commerce development and hosting, transaction
processing, fraud screening, digital delivery, integration to
physical fulfillment and customer service.  Digital River also
provides analytical marketing and merchandising services to assist
clients in increasing Web page view traffic to, and sales through,
their Web commerce systems.  Digital River announced last week
that it will continue its agreement with TIBCO Software to provide
new software distribution and entitlement management capabilities.
In addition, the company has also signed an expanded e-commerce
agreement with Aladdin Systems, a pioneer of the global standard
in file compression.  On Wednesday, Digital River reported earnings
showing a revenue increase of 18% to $22.8 million from last year.
We simply favor the move to a new two-year high and investors who
believe the rally will continue can speculate on that outcome with
this conservative position.

AUG-20.00 DQI HD LB=2.80 OI=122 CB=19.18 DE=28 TY=4.6%


*****
THOR - Thoratec  $16.35  *** Rally Mode: Part II ***

Thoratec (NASDAQ:THOR) offers 2 complementary circulatory support
product lines, the Thoratec Ventricular Assist Device system (VAD
system), an external device for short- to mid-term cardiac support,
and the HeartMate Left Ventricular Assist system (HeartMate), an
internal device for longer-term cardiac support.  In addition to
its cardiac assist products, the company offers vascular access
grafts used in hemodialysis for patients with end-stage renal
disease.  The company is also developing a small-diameter access
graft for use in coronary artery bypass graft surgery.  Thoratec
also sells whole-blood coagulation testing equipment for use in
bedside anticoagulation management, coagulation screening and skin
incision devices for the drawing of blood from adult, children and
infant patients.  With Thoratec due to report earnings on July 22,
we simply favor the bullish technicals and our position offers a
conservative method to participate in the future movement of the
issue with a cost basis closer to support.

AUG-15.00 TQU HC LB=1.95 OI=173 CB=14.40 DE=28 TY=4.5%


*****
EXTR - Extreme Networks  $5.75  *** Bottom Fishing ***

Extreme (NASDAQ:EXTR) is a provider of network infrastructure
equipment for corporate, government, education and healthcare
enterprises and metropolitan service providers.  Its Layer 3
Summit, BlackDiamond and Alpine products share the same common
hardware architecture and operating system, enabling businesses
to build a network infrastructure that is simple, easy to manage
and scalable to meet the demands of future growth.  The company's
other products include ExtremeWare Software, and Infrastructure
and Services Management.  Extreme jumped sharply on Friday after
the company reported earnings and forecast a stronger future.
The company has been forming a Stage I base for almost a year
and recent technical signals suggest a bullish future.  This
position offers reasonable speculation with a cost basis near
recent buying support.  Target shooting a lower net-debit should
offer a better potential yield and lower costs basis.

AUG-5.00 EXJ HA LB=0.95 OI=2665 CB=4.80 DE=28 TY=4.5%


*****
ANEN - Anaren  $10.75  *** Bottom Fishing: Part II ***

Anaren (NASDAQ:ANEN) is a provider of microwave components and
assemblies for wireless and satellite communications and the
defense electronics markets.  Through its focused research and
development efforts, Anaren has designed and continues to design
components and subsystems that enable high speed wireless access
to the Internet and other broadband wireless applications, as
well as advanced radar and receiver applications for defense
electronics subsystem applications.  In addition, the company
is developing and producing a diverse set of products and
technologies to support the latest generation of wireless
communications systems.  The company's customer base includes
global OEMs that serve the wireless, satellite and defense
electronics markets, including, Ericsson, Lucent Technologies
and Nokia.  Anaren has been consolidating for over a year
and recently moved above a resistance area around $10.00.
With earnings due in August, investors can speculate on the
near-term performance of the issue with this position.

AUG-10.00 EVB HB LB=1.10 OI=27 CB=9.65 DE=28 TY=3.9%


*****


*****************
SUPPLEMENTAL COVERED CALL CANDIDATES
*****************

The following group of issues is a list of additional candidates
to supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary.

Sequenced by Target Yield (monthly basis)
*****
Stock   Last   Option    Option  Last  Open  Cost  Days Target
Symbol Price   Series    Symbol  Bid   Int.  Basis Exp. Yield

CHTR    5.13  AUG  5.00  CUJ HA  0.55  1568   4.58  28  10.0%
LEXR   12.76  AUG 12.50  EQG HV  1.15  667   11.61  28   8.3%
ABGX   13.01  AUG 12.50  AZG HV  1.35  537   11.66  28   7.8%
PVN    10.22  AUG 10.00  PVN HB  0.80  2251   9.42  28   6.7%
VIRL   10.43  AUG 10.00  UVB HB  1.00  67     9.43  28   6.6%
CERN   30.20  AUG 30.00  CQN HF  1.85  218   28.35  28   6.3%
GLFD    5.09  AUG  5.00  GQF HA  0.35  384    4.74  28   6.0%
GIVN   12.90  AUG 12.50  QPG HV  1.05  361   11.85  28   6.0%
RMBS   18.70  AUG 17.50  BNQ HW  2.10  4461  16.60  28   5.9%
ATYT   10.76  AUG 10.00  QFY HB  1.25  3152   9.51  28   5.6%
IMCO    6.02  AUG  5.00  IQZ HA  1.25  39     4.77  28   5.2%
PLCM   15.42  AUG 15.00  QHD HC  1.10  1637  14.32  28   5.2%
MKSI   21.66  AUG 20.00  QQB HD  2.45  29    19.21  28   4.5%
CTIC   11.01  AUG 10.00  CUC HB  1.40  896    9.61  28   4.4%
SLNK   16.22  AUG 15.00  SXU HC  1.75  16    14.47  28   4.0%



*****************
NAKED PUT SECTION
*****************

Options 101: Success Basics
By Ray Cummins

One of our readers asked for some help with strategy selection
and additional information on option trading fundamentals.

Attn: Questions@OptionInvestor.com
Subject: Trading Strategies


Greetings,

I recently started the trial subscription and I am overwhelmed
by the amount of information available on your website.  I was
hoping to learn the basics of trading through your service but
it seems as if most of the information is geared towards more
experienced readers.  Could you please recommend some links or
books that will help with the fundamentals of options and the
best strategies for new traders.

Thanks Much!

PI


Regarding Trading Strategies and Fundamentals:

The wonderful thing about option trading is its diversity.  There
are an incredible number of strategies available, one for every
type of market trend, character and outlook.  Positions involving
combinations of calls and puts, with different strike prices and
expiration months, along with index and futures options, offer the
astute trader a variety of ways to participate in the market.  This
assortment provides even the most conservative investor the ability
to construct positions with an acceptable level of risk and reward
in almost any situation.

The primary requirement for profitable trading is the ability to
achieve reasonable returns and control risk effectively.  For this
reason, a trader without specific goals and a loss-limiting system
is certain to fail in the long-run.  A very careful and deliberate
approach to strategy selection is the first step in the process.
After the principal techniques have been identified, it is crucial
to execute them with discipline and consistency.  Discipline in
option trading is the ability to maintain one’s self-control and
implement the pre-determined plan.  The most difficult skill that
traders must learn is the ability to overcome human (emotional)
impulses.  When real money is at stake, the influences of greed
and fear (of loss) will attempt to sway your judgment, hindering a
rational thought process.  If you can not overcome these effects,
the chances of success are slim.  In fact, that is the primary
reason it is so important to utilize strategies that promote a
mechanical approach to trading.  Techniques that offer little
opportunity for indecision generally provide more consistent
returns and they are exposed to far less risk than those with a
high level of maintenance.

Indeed, the secret to success in any form of trading is to have
a systematic strategy: a plan of attack.  The options market is
unique because it offers a variety of different ways to profit
however, the risk can often be significant.  The easiest way to
limit or control the potential for loss is to devise and follow
a specific process or set of rules.  The structure of this system
will require a variety of profitable strategies along with the
knowledge to implement and manage them correctly and consistently.
Profitable trading strategies have a number of common traits; well
defined principles, ease of execution and flexibility.  However,
the most important characteristic for the majority of investors is
asset preservation.  In the options market, the successful systems
are generally those which employ sound defensive measures.  The
ability to protect and conserve portfolio capital, while achieving
consistent returns is a fundamental requirement of any profitable
technique.  Fortunately, numerous option-trading strategies satisfy
this criteria and our goal at the OIN is to help novice investors
learn how to utilize the wide variety of trading techniques and
provide them with the tools necessary to profit on a regular basis.

For basic option trading information, visit the CBOE's educational
website:

http://www.cboe.com/LearnCenter/

or the learning center at the Options Clearing Corporation:

http://www.theocc.com/learning_center/opt_ed/get_started.jsp

Some of the most popular books among option traders are: McMillan
on Options, and Profit with Options: Essential Methods for Investing,
both by Lawrence McMillan; The Option Advantage, and The New Option
Secret by David Caplan; Option Volatility and Pricing Strategies, by
Sheldon Natenberg; The Complete Option Player, by Ken Trester; How I
Trade Options, by Jon Najarian, and The Options Course, by George
Fontanills.  All of these books are available in the OIN's online
bookstore.

Good Luck!


SUMMARY OF PREVIOUS CANDIDATES
*****

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.

Stock   Price   Last    Option    Price   Gain   Simple  Max
Symbol  Picked  Price   Series    Sold   /Loss   Yield  Yield

GNTA    14.21   12.32  JUL 10.00  0.50    0.50*   4.6%  13.0%
CBST    12.95   11.29  JUL 10.00  0.40    0.40*   3.6%  11.6%
FWHT    20.33   21.47  JUL 17.50  0.45    0.45*   3.8%  11.3%
SINA    23.53   29.02  JUL 20.00  0.30    0.30*   3.3%  10.5%
CDWC    48.30   47.91  JUL 45.00  0.80    0.80*   3.9%  10.3%
FWHT    19.14   21.47  JUL 15.00  0.40    0.40*   3.0%  10.3%
ADVS    17.74   16.89  JUL 15.00  0.45    0.45*   3.4%  10.2%
KMRT    25.20   24.25  JUL 20.00  0.50    0.50*   2.8%   9.8%
MERQ    41.34   41.08  JUL 37.50  0.50    0.50*   2.9%   8.2%
AVID    38.99   44.23  JUL 35.00  0.45    0.45*   2.8%   8.1%
OIIM    16.49   17.00  JUL 15.00  0.30    0.30*   3.0%   8.0%
CHKP    19.94   19.80  JUL 17.50  0.40    0.40*   2.5%   7.3%
ISIL    26.48   25.30  JUL 22.50  0.35    0.35*   2.3%   7.3%
AMLN    25.45   22.89  JUL 20.00  0.45    0.45*   2.0%   7.1%
SNDK    41.20   54.98  JUL 32.50  0.40    0.40*   1.8%   6.7%
NTE     14.00   17.94  JUL 11.63  0.10    0.10*   1.9%   6.4% **
MEDI    37.71   39.43  JUL 30.00  0.60    0.60*   1.8%   6.4%
MCHP    24.86   24.46  JUL 22.50  0.35    0.35*   2.3%   6.4%
AAII    20.10   20.74  JUL 17.50  0.25    0.25*   2.1%   6.4%
SOHU    32.45   40.90  JUL 22.50  0.50    0.50*   2.0%   6.2%
CTSH    24.25   27.53  JUL 20.00  0.40    0.40*   1.8%   5.9%
PLMD    42.59   36.28  JUL 35.00  0.50    0.50*   1.6%   5.5%
NTES    33.70   38.83  JUL 25.00  0.45    0.45*   1.6%   5.4%
CVTX    34.43   32.25  JUL 25.00  0.45    0.45*   1.6%   5.3%
YHOO    32.14   29.90  JUL 27.50  0.40    0.40*   1.6%   5.0%
JCOM    45.95   48.41  JUL 37.50  0.35    0.35*   1.4%   4.9%
AVCT    31.21   27.00  JUL 27.50  0.70    0.20    0.8%   2.3%
AVCT    30.97   27.00  JUL 27.50  0.40   -0.10    0.0%   0.0%

ALGN    13.38   11.35  AUG 10.00  0.35    0.35*   3.2%  10.1%
BLUD    23.10   20.57  AUG 20.00  0.65    0.65*   2.9%   8.3%
CYBX    23.72   23.38  AUG 20.00  0.60    0.60*   2.7%   8.2%
MSTR    43.68   41.00  AUG 35.00  0.75    0.75*   1.9%   6.8%
NFLX    26.49   24.15  AUG 20.00  0.35    0.35*   1.5%   5.4%
DRIV    23.05   21.98  AUG 17.50  0.30    0.30*   1.5%   5.3%
SNDK    48.18   54.98  AUG 37.50  0.60    0.60*   1.4%   5.1%
MRVL    38.10   35.32  AUG 32.50  0.60    0.60*   1.6%   5.1%

*  Stock price is above the sold striking price.
** Adjusted for a 3-1 split

Comments:

Friday's "technical bounce" ended another great month for bullish
option traders and the upside activity did much to bolster the
success of the Naked Puts section.  Only one position finished
the expiration period negative and looking forward, most of the
issues in the portfolio have weathered the past week's "sell-off"
relatively well.  The only play on the early-exit list is Immucor
(NASDAQ:BLUD), which tanked after the company reported slightly
lower-than-expected quarterly earnings and cut the top end of its
outlook for fiscal 2004.  Conservative investors should consider
closing this position unless they absolutely want to own the stock
for the long-term.  Issues on the "watch" list include Marvell
Technology Group (NASDAQ:MRVL), Netflix (NASDAQ:NFLX), and Align
Tech (NASDAQ:ALGN).

Previously Closed Positions: None


WARNING: THE RISK IN SELLING NAKED 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.


MARGIN REQUIREMENTS

The Initial Margin is the amount of collateral you must have in
your account to initiate the position.  In specific terms, margin
refers to cash or securities required of an option writer by his
brokerage firm as collateral for the writer's obligation to buy
or sell the underlying interest if assigned through an exercise.
The Maintenance Margin is the amount of cash (or securities)
required to offset the changing collateral requirements of the
written options in your portfolio.  As the price of the option
and the underlying stock changes, so does the maintenance margin.
With (short) put options, the margin requirements can increase
when the underlying stock price declines and also when it rises
significantly.  The reason is the manner in which the collateral
amount is determined (with the formula listed above) and traders
should always consider not only the initial margin requirement,
but also the maximum margin needed for the life of the position.
Option writers occasionally have to meet calls for additional
margin during adverse market movements and even when there is
enough equity in the account to avoid a margin call, the need
for increased collateral will make that equity unavailable for
other purposes.  Please consider these facts carefully before
you initiate any "naked" option positions.

For more information on margin requirements, please refer to:

http://www.cboe.com/LearnCenter/pdf/MarginManual2000.pdf


MONTHLY YIELD: MAXIMUM & SIMPLE

The Maximum Monthly Yield (listed in the summary and with each
new candidate) 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 Monthly 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 position.


NEW CANDIDATES
*********

Sequenced by Maximum Yield (monthly basis - margin)
*****
Stock  Last    Option    Option Last Open Cost  Days Simple  Max
Symbol Price   Series    Symbol Bid  Int. Basis Exp. Yield  Yield

LEXR   12.76  AUG 10.00  EQG TB 0.30 316   9.70  28   3.4%  11.4%
SOHU   40.90  AUG 35.00  UZK TG 1.20 864  33.80  28   3.9%  11.2%
SNDK   54.98  AUG 42.50  SWQ TS 0.70 694  41.80  28   1.8%   6.5%
RDC    23.43  AUG 22.50  RDC TX 0.45 206  22.05  28   2.2%   5.5%
TRN    21.93  AUG 20.00  TRN TD 0.35 300  19.65  28   1.9%   5.3%
SHPGY  22.05  AUG 20.00  UGH TD 0.35 295  19.65  28   1.9%   5.3%
CELG   32.18  AUG 25.00  LQH TE 0.30 591  24.70  28   1.3%   4.8%
BJS    38.34  AUG 35.00  BJS TG 0.45 493  34.55  28   1.4%   3.9%


Company Descriptions

LB-Last Bid price, OI-Open Interest, CB-Cost Basis or break-even
point, DE-Days to Expiry, SY-Simple Yield (monthly basis - without
margin), MY-Maximum Yield (monthly basis - using margin).

*****
LEXR - Lexar Media  $12.76  *** Solid Earnings! ***

Lexar Media (NASDAQ:LEXR) designs, develops and markets high
performance flash cards and connectivity products marketed as
"digital film" to the digital photography market, as well as to
other markets utilizing portable digital storage media for the
capture and retrieval of digital content.  The firm's digital
film products enable customers to capture digital images and
download them to a personal computer for editing, distributing
and printing.  Lexar Media offers flash cards in the five major
media formats used by digital cameras and other electronic
devices: CompactFlash, Memory Stick, SmartMedia, Secure Digital
Card and MultiMedia Card.  Last week, Lexar Media posted net
income that more than tripled from the same period last year,
beating consensus earnings expectations due to strong demand
for digital camera equipment.  Lexar also boosted its full-year
net income goal to $0.34 a share, up from analyst expectations
of $0.30, and investors who agree with a bullish outlook for
the company can speculate on its future share value with this
position.

AUG-10.00 EQG TB LB=0.30 OI=316 CB=9.70 DE=28 TY=3.4% MY=11.4%


*****
SOHU - Sohu.com  $40.90  *** Testing All-Time Highs! ***

Sohu.com (NASDAQ:SOHU) is an Internet portal in China.  The firm's
portal consists of sophisticated Chinese language Web navigational
and search capabilities, 15 main content channels, Internet-based
communications and community services, and a unique platform for
e-commerce and short messaging services.  Each of the company's
interest-specific main channels contains multi-level sub-channels
that cover a range of topics; news, business, entertainment, sports
and careers.  The firm also offers free Web-based e-mail.  Sohu.com
offers a universal registration system, and the company's portal
attracts consumers and merchants alike.  One of the key features is
a proprietary Web navigational and search capabilities that reflects
the cultural characteristics and thinking and viewing habits of the
People's Republic of China Internet users.  Internet use is growing
exponentially among foreign countries and China enjoys the largest
population in the world.  The inflated demand is reflected in the
value of all of the "china-dot-com" stocks and investors who want
to participate in the country's Internet explosion should consider
this position.

AUG-35.00 UZK TG LB=1.20 OI=864 CB=33.80 DE=28 TY=3.9% MY=11.2%


*****
SNDK - SanDisk  $54.98  *** Pure Premium-Selling! ***

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.  Sandisk shares moved to a multi-year
high last week after reporting lofty second-quarter profits as
sales grew substantially.  The results far exceeded Wall Street
estimates and although the stock is a bit overbought, the option
premiums offer a reasonable risk/reward outlook for aggressive
put-writers.

AUG-42.50 SWQ TS LB=0.70 OI=694 CB=41.80 DE=28 TY=1.8% MY=6.5%


*****
RDC - Rowan Companies  $23.43  *** Hot Sector! ***

Rowan Companies (NYSE:RDC) is a provider of international and
domestic contract drilling and aviation services.  Rowan also
operates, through LeTourneau, a subsidiary of the company, a
mini-steel mill, a manufacturing facility that produces heavy
equipment for the mining, timber and transportation industries
and a drilling products company that has designed and/or built
one-third of all mobile offshore jack-up drilling rigs.  Rowan
provides contract drilling services utilizing a fleet of 22
self-elevating mobile offshore drilling platforms (jack-up rigs),
one mobile offshore floating platform (semi-submersible rig) and
18 land drilling rigs.  Shares of oil service companies soared
Friday and RDC has one of the better looking charts in the group.
Traders who think the "rally has legs" can profit from continued
upside activity in the sector with this position.

AUG-22.50 RDC TX LB=0.45 OI=206 CB=22.05 DE=28 TY=2.2% MY=5.5%


*****
TRN - Trinity Industries  $21.93  *** Transport Sector Hedge! ***

Trinity Industries (NYSE:TRN) is engaged in the manufacture, sale
and leasing of a variety of products and services for the transport,
industrial, construction and energy sectors of the marketplace.  The
rail group manufactures and sells railcars and component parts.  The
construction products group manufactures and sells highway guardrail
and safety products, concrete and aggregate, girders and beams.  The
inland barge group manufactures and sells barges and related products
for inland waterway services.  The industrial products group makes
and sells container heads and pressure and non-pressure containers
for the storage and transportation of liquefied gases and other
liquid and dry products.  The railcar leasing and management services
group provides services such as fleet management and leasing.  The
company also has an all other segment that includes its captive
insurance and transportation companies, structural towers and other
peripheral businesses.  Shares of TRN have enjoyed a spike in buying
pressure over the last two weeks and the outlook for this industrial
firm appears fundamentally sound.  Investors who wouldn't mind owning
a stock in the transport group can establish a reasonable cost basis
in the issue with this position.

AUG-20.00 TRN TD LB=0.35 OI=300 CB=19.65 DE=28 TY=1.9% MY=5.3%


*****
SHPGY - Shire Pharmaceuticals  $22.05  *** On The Rebound! ***

Shire Pharmaceuticals Group plc (NASDAQ:SHPGY) is an emerging
global pharmaceutical company with a strategic focus on four
therapeutic areas: central nervous system disorders, gastro
intestinal, oncology and anti-infectives.  The firm has sales
and marketing subsidiaries with a large portfolio of products
targeting the United States, Canada, the United Kingdom, the
Republic of Ireland, France, Germany, Italy and Spain.  Shire
also covers other significant pharmaceutical markets indirectly
through distributors.  It operates and manages its businesses
within three individual operating segments: United States,
International and Global Research and Development.  Shire is
an old favorite among pharmaceutical sector investors and it
appears that the stock is finally in "recovery" mode.  Traders
who like the risk/reward outlook for the issue from the current
levels can speculate on a continued rebound in its share value
with this position.

AUG-20.00 UGH TD LB=0.35 OI=295 CB=19.65 DE=28 TY=1.9% MY=5.3%


*****
CELG - Celgene  $32.18  *** Entry Point? ***

Celgene (NASDAQ:CELG) is a biopharmaceutical company engaged
in the discovery, development and commercialization of novel
therapies designed to treat cancer and immunological diseases
through regulation of cellular, genomic and proteomic targets.
The company has 3 major commercial-stage programs: Thalomid,
Focalin (d-MPH) and cellular therapeutics.  Thalomid is its
lead product and was approved for sale in the United States in
1998.  Thalomid is being evaluated in clinical trials for the
treatment of solid tumor and hematological cancers, as well as
serious inflammatory diseases.  CELG also has a preclinical
and clinical stage pipeline of new drug candidates and cell
therapies, highlighted by a range of classes of small molecule,
orally administered therapeutic agents.  Earnings for Celgene
are due next week and traders who are bullish on the company's
future can use this position to establish an entry point in the
stock with a basis near $25.

AUG-25.00 LQH TE LB=0.30 OI=591 CB=24.70 DE=28 TY=1.3% MY=4.8%


*****
BJS - BJ Services Company  $38.34  *** A Big Day! ***

BJ Services Company (NYSE:BJS) is a provider of pressure pumping
and oilfield services serving the petroleum industry worldwide.
The company's pressure pumping services consist of cementing and
stimulation services used in the completion of new oil and gas
wells and in remedial work on existing wells, both onshore and
offshore.  Other oilfield services include completion products
and tools, completion fluids and tubular services provided to the
oil and gas exploration and production industry, commissioning and
inspection services provided to refineries, pipelines and offshore
platforms, as well as specialty chemical services.  In 2002, the
company acquired OSCA, a completion services (pressure pumping),
completion tools and completion fluids company with operations
primarily in the Gulf of Mexico, Brazil and Venezuela.  Shares of
BJS soared Friday amid a buying frenzy in the oil service segment
and the recent technical indications suggest the issue may be
experiencing a trend reversal.  Traders who think the stock will
continue its upward momentum should target an entry point with a
slightly higher premium ($0.50 or more) for the sold put to allow
for a brief consolidation from Friday's rally.

AUG-35.00 BJS TG LB=0.45 OI=493 CB=34.55 DE=28 TY=1.4% MY=3.9%


*****


*****************
SUPPLEMENTAL NAKED PUT CANDIDATES
*****************

The following group of issues is a list of additional candidates
to supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary.

Sequenced by Maximum Yield (monthly basis - margin)
*****
Stock  Last    Option    Option Last Open Cost  Days Simple  Max
Symbol Price   Series    Symbol Bid  Int. Basis Exp. Yield  Yield

MOGN   26.91  AUG 22.50  QOG TX 0.95 137  21.55  28   4.8%  14.1%
ACLS    8.00  AUG  7.50  ULS TU 0.30 16    7.20  28   4.5%  10.9%
ZRAN   23.99  AUG 20.00  ZUO TD 0.60 68   19.40  28   3.4%  10.5%
JCOM   48.41  AUG 40.00  JQF TH 0.95 395  39.05  28   2.6%   8.7%
BRCM   25.56  AUG 20.00  RCQ TD 0.40 4007 19.60  28   2.2%   7.9%
POWI   25.66  AUG 22.50  QPW TX 0.55 55   21.95  28   2.7%   7.8%
AVID   44.23  AUG 40.00  AQI TH 1.00 31   39.00  28   2.8%   7.5%
WEBX   15.19  AUG 12.50  UWB TV 0.25 79   12.25  28   2.2%   7.5%
WBSN   19.99  AUG 17.50  DQH TW 0.40 12   17.10  28   2.5%   7.4%
SINA   29.02  AUG 20.00  NOQ TD 0.40 765  19.60  28   2.2%   7.0%
BRKS   16.69  AUG 15.00  BQE TC 0.30 50   14.70  28   2.2%   6.2%
NSCN   25.26  AUG 22.50  QKN TX 0.35 34   22.15  28   1.7%   4.9%


SEE DISCLAIMER IN SECTION ONE
*****************************


************************
SPREADS/STRADDLES/COMBOS
************************

Stocks Bounce Back As Traders Buy The Dip!
By Ray Cummins

Microsoft and McDonalds led a broad recovery Friday with the
software giant posting favorable earnings while the fast-food
giant received an upgrade from a popular investment brokerage.

The blue-chip Dow Jones industrial average advanced 137 points
to 9,188 amid strength in McDonald's (NYSE:MCD), which was the
target of an upgrade from Bear Stearns.  The tech-laced NASDAQ
Composite index finished up 10 points at 1,708 after Microsoft
(NASDAQ:MSFT) posted a 26% rise in net profit and boosted its
revenue forecast for its fiscal year.  The broader Standard &
Poor's 500-stock index added 11 points to end at 993 as buying
pressure emerged in oil & gas services, electronic manufacturing,
restaurant, steel, specialty retail, aluminum, and insurance
companies.  Trading volume was moderate with 1.4 billion shares
swapping hands on the New York Stock Exchange while 1.6 billion
shares were crossed on the NASDAQ.  Advancers paced decliners by
a 2 to 1 ratio on the Big Board and by 3 to 2 on the technology
exchange.  In the U.S. Treasury market, the benchmark 10-year
note slid 20/32 to a price of 96-31/32, while its yield rose to
4.00% from Thursday's close of 3.98%.

*****************
PORTFOLIO SUMMARY
*****************

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 or 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.


PUT CREDIT SPREADS
******************

Symbol  Pick   Last   Month  LP  SP  Credit  CB     G/L   Status

AGN     77.24   78.99  JUL   65  70   0.50  69.50  $0.50  Closed
ERTS    72.35   76.42  JUL   60  65   0.55  64.45  $0.55  Closed
UNH     48.93   52.44  JUL   42  45   0.60  44.40  $0.60  Closed
PRX     49.16   56.70  JUL   40  45   0.60  44.40  $0.60  Closed
WLP     86.87   81.69  JUL   75  80   0.60  79.40  $0.60  Closed
GILD    53.75   66.52  JUL   45  47   0.30  47.20  $0.30  Closed
JCOM    44.35   48.41  JUL   30  35   0.60  34.40  $0.60  Closed
MRK     62.59   61.77  JUL   55  60   0.50  59.50  $0.50  Closed
EBAY   102.36  110.11  JUL   90  95   0.35  94.65  $0.35  Closed
UNH     50.22   52.44  JUL   45  47   0.30  47.20  $0.30  Closed
YHOO    34.85   29.90  AUG   27  30   0.25  29.75  $0.15  Closed
IRF     28.00   28.00  AUG   22  25   0.25  24.75  $0.25   Open
MER     49.25   52.74  AUG   42  45   0.25  44.75  $0.25   Open
EBAY   113.07  110.11  AUG   95 100   0.50  99.50  $0.50   Open
GENZ    44.02   48.01  AUG   35  37   0.20  37.30  $0.20   Open
MEDI    39.01   39.43  AUG   32  35   0.25  34.75  $0.25   Open
SYMC    45.65   43.81  AUG   35  40   0.55  39.45  $0.55   Open

LP = Long Put  SP = Short Put  CB = Cost Basis  G/L = Gain/Loss

The position in Biogen (NASDAQ:BGEN), although previously closed,
ended profitably.  Yahoo! (NASDAQ:YHOO) has been closed to limit
potential losses.


CALL CREDIT SPREADS
*******************

Symbol  Pick    Last   Month  LC  SC  Credit  CB     G/L   Status

APC     44.46   44.42   JUL   50  47   0.40  47.90  $0.40  Closed
FNM     68.55   66.77   JUL   80  75   0.60  75.60  $0.60  Closed
LOW     44.15   47.03   JUL   50  47   0.30  47.80  $0.30  Closed
BZH     87.00   79.05   JUL  100  95   0.75  95.75  $0.75  Closed
HOV     62.12   52.65   JUL   75  70   0.65  70.65  $0.65  Closed
IBM     84.92   83.72   JUL   95  90   0.45  90.45  $0.45  Closed
IGEN    31.60   33.89   JUL   37  35   0.35  35.35  $0.35  Closed
MHK     56.56   66.39   JUL   65  60   0.45  60.45 ($2.10) Closed *
OEX    491.61  501.50   JUL  520 515   0.40 515.40  $0.40  Closed
ACS     45.06   43.90   AUG   55  50   0.65  50.65  $0.65   Open
BBBY    38.59   38.56   AUG   45  42   0.35  42.85  $0.35   Open
MMM    128.28  130.18   AUG  140 135   0.70 135.70  $0.70   Open
CI      44.49   41.11   AUG   55  50   0.30  50.30  $0.30  No Play
ICUI    27.90   24.00   AUG   35  30   0.60  30.60  $0.60   Open
PG      88.56   89.80   AUG   95  90   1.25  91.25  $1.25   Open

LC = Long Call  SC = Short Call  CB = Cost Basis  G/L = Gain/Loss

The big surprise this week was the sudden rally in Mohawk (NYSE:MHK),
which occurred a day after the carpet maker said its second-quarter
earnings "matched" year-ago results, beating analysts' expectations.
The news did not seem extraordinarily bullish but the stock reacted
as if the company had announced a 4-for-1 split and a $10 dividend.
In any case, there was little opportunity to exit the position in a
timely manner, thus we closed for a loss during Thursday's session
and the summary reflects the cost to exit the spread at that time.
Bearish positions in Kohl's (NYSE:KSS) and Guidant (NYSE:GDT) have
previously been closed to limit losses.  The bearish spread in Cigna
(NYSE:CI) was not available near the target credit and Proctor &
Gamble (NYSE:PG) is now on the "watch" list.


CALL DEBIT SPREADS
******************

Symbol  Pick   Last  Month  LC  SC   Debit   B/E   G/L   Status

NBIX    56.84  53.70  JUL   45  50   4.25   49.25  0.75  Closed
GILD    53.81  66.52  JUL   45  47   2.20   47.20  0.30  Closed
BSTE    48.96  55.01  JUL   40  45   4.50   44.50  0.50  Closed
EBAY   110.02 110.11  AUG   95 100   4.60   99.60  0.40  Closed
TECD    31.03  29.28  AUG   25  30   4.20   29.20  0.08   Open?

LC = Long Call  SC = Short Call  B/E = Break-Even  G/L = Gain/Loss

It appears we picked a bad time to speculate on Tech Data as the
issue was downgraded by two different brokerages after the recent
rally.  Conservative traders should consider closing the position
on any further downside movement.


PUT DEBIT SPREADS
*****************

Symbol  Pick   Last  Month  LP  SP   Debit   B/E    G/L   Status

INTU    46.13  40.62  JUL   55  50   4.50   50.50   0.50  Closed

LP = Long Put  SP = Short Put  B/E = Break-Even  G/L = Gain/Loss


SYNTHETIC (BULLISH)
*******************

Stock   Pick   Last   Expir.  Long  Short  Initial   Max.   Play
Symbol  Price  Price  Month   Call   Put   Credit   Value  Status

QCOM    33.55  35.49   JUL     37    30     0.10    1.25   Closed
ESI     29.63  36.70   OCT     35    25     0.15    3.30    Open?

ITT Educational Services (NYSE:ESI) was the top play of the month
with an outstanding $3.30 potential gain for speculative traders.
The position in Qualcomm (NASDAQ:QCOM) also achieved favorable
profits.  The Shaw Group (NYSE:SGR) position has previously been
closed to limit losses.


SYNTHETIC (BEARISH)
*******************

No Open Positions


CALENDAR & DIAGONAL SPREADS
***************************

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

CHKP    18.05  19.80   OCT-20C   JUL-20C   0.10    1.50    Open
GDT     39.98  49.40   OCT-45C   JUL-45C   0.80    2.20   Closed
SRNA    19.71  19.97   AUG-22C   JUL-22C   0.45    0.90   Closed
BEAS    11.08  12.79   SEP-12C   JUL-12C   0.65    1.00    Open
IR      47.95  49.41   SEP-50C   JUL-50C   1.20    1.60    Open
OVER    18.24  22.85   NOV-20C   JUL-20C   1.90    2.10   Closed
ADTN    55.69  49.50   AUG-60C   JUL-60C   1.40    1.60   Closed
ARTI    24.32  21.15   SEP-25C   JUL-25C   1.60    1.65    Open
NSCN    24.18  25.26   SEP-25C   JUL-25C   1.60    1.70    Open
GP      19.25  19.52   OCT-20C   JUL-20C   1.60    1.70    Open
MSFT    27.31  26.89   JAN-27C   JUL-27C   1.80    1.90    Open

Closed positions in Broadcom (NASDAQ:BRCM), Electronic Data Systems
(NYSE:EDS), National Semiconductor (NYSE:NSM), McData (NASDAQ:MCDT),
Verity (NASDAQ:VRTY), and Viacom (NYSE:VIA) have previously offered
profitable opportunities.


CREDIT STRANGLES
****************

No Open Positions


DEBIT STRADDLES
***************

Stock   Pick   Last   Exp.   Long  Long  Initial   Max     Play
Symbol  Price  Price  Month  Call  Put    Debit   Value   Status

TYC     17.27  19.13   JUL   17.5  17.5   1.80     2.70   Closed
BAC     80.01  83.15   JUL   80    80     2.40     5.00   Closed
CVTX    35.37  32.25   JUL   35    35     2.00     3.30   Closed
RJR     36.19  36.65   AUG   37.5  35.0   3.15     3.70    Open?
DG      18.64  18.28   AUG   20    17.5   1.20     1.30   Closed?
MBI     50.24  50.76   AUG   50    50     5.20     5.00   Closed?
BSX     60.00  57.55   AUG   60    60     7.00     7.30    Open
AIG     55.69  60.02   AUG   55    55     4.90     5.60    Open
FRE     50.00  51.94   AUG   50    50     5.10     6.25    Open?

Tyco (NYSE:TYC), R.J. Reynolds (NYSE:RJR) and Freddie Mac (NYSE:FRE)
have achieved favorable "early-exit" profits.  The Bank of America
(NYSE:BAC) straddle hit the target exit point in less than one week,
as did Core Therapeutics (NASDAQ:CVTX).  Dollar General (NYSE:DG)
and MBIA Inc. (NYSE:MBI) are now on the "early-exit" list.

Questions & comments on spreads/combos to Contact Support
*************************
OPTION-TRADING STRATEGIES
*************************

Controlling Risk With Options

The only thing that a trader can really control is the risks
associated with a particular strategy. I will attempt to address
some of the more creative ways to hedge or limit risk when involved
in the markets.

One basic strategy is the married put play.  This involves buying
stock and at the same time, purchasing one put option for every 100
shares of stock.  We are able to quantify the risk in this trade
until the option expires.  The risk is the difference between the
stock purchase price and the strike price on the option plus the
premium paid for the option. This sounds complicated, but is very
easy to figure. At or before expiration, you can sell the stock and
option, buy a new option to control risk or if the put is in the
money, you can exercise the option and this will sell the stock at
your strike price.  If the option expires worthless, you will have
to raise your cost of the stock by the amount of the premium paid
for the put options.

A quick example may help to clarify this example.  If we buy 100
shares of XYZ at $30 a share and one Aug 30 put for 1 point, at
expiration our cost on the stock will now be 31. This assumes that
the put expires worthless.  Also, it should be noted that our
maximum risk on the trade is only $1 per share.  I will mention
that after the put option expires, we will have to sell the stock
or purchase another put if we wish to hedge our position. Failure
to do so will open our exposure to the total cost of the stock
purchased, until we sell the stock or purchase another put option.

The married put strategy will allow the trader to quantify and
control the risks associated with the outright purchase of stock.
We will be able to sleep at night and not worry about items outside
of our control or outside the control of the company. The brokers
at One Stop Option can work with you to personally help you develop
a strategy that you are comfortable with.  We have the experience
to help you choose the proper option to limit your risk while at the
same time allowing the greatest possibility for profit.  Please feel
free to call and inquire about how we could enhance your investment
choices and determine the proper strategies for your risk tolerance.

Andrew Aronson VP Investments
One Stop Option
(888) 281-9569
(312) 528-3315


Andrew Aronson and Alan Knuckman have rejoined the OIN team with a
great service for option traders.  Andrew and Alan are experienced
option principles, as well as long-time OIN associates, and they
recently started a specialty brokerage for derivatives traders.
Their personal service will enable traders to be more confident,
comfortable and successful with options.  They will also help
novice market players learn the "right" way to trade options
with education and coaching for maximum portfolio performance.
Alan and Andrew's expertise is a resource that will easily pay
for itself thorough timely executions and the piece of mind that
comes from someone watching your trades throughout the day.  The
commission rates are comparable to discount brokers but you get
to speak directly with option professionals, not customer service
clerks.  Clients can call them directly to review positions and
update orders and they also offer "auto-trading" for many of the
plays in the newsletter.

OneStopOption Strengths:

* Dedicated option brokerage with "live" option principals/brokers
* Order routing to "best-priced" exchange and timely executions
* All types of orders (stop/limit/OCO) to encourage disciplined
  trading and proper money management
* Advanced option trading level approval for inexperienced traders
* Foreign accounts including Canada -- Futures trading available
* Direct electronic trading and personalized customer services
* Ability to filter recommendations and provide strategy advice
* Free OIN subscription for those who qualify (based on account
  size and portfolio activity)

Get Execution, Education, and Option Experience at OneStopOption

Visit their new site -- www.onestopoption.com -- or send an E-mail
to: Aaronson@OptionInvestor.com

*************
NEW POSITIONS
*************

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

**************
CREDIT SPREADS
**************

These candidates are based on the underlying issue's technical
history or trend.  The probability of profit in these positions
may be higher than other plays in the same strategy, due to
small disparities in option pricing.  Current news and market
sentiment will have an effect on these issues, so review each
play individually and make your own decision about its outcome.

*****
CCMP - Cabot Microelectronics  $57.61  *** Up-Trend Intact? ***

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

CCMP - Cabot Microelectronics  $57.61

PLAY (less conservative - bullish/credit spread):

BUY  PUT  AUG-45.00  UKR-TI  OI=491  ASK=$0.35
SELL PUT  AUG-50.00  UKR-TJ  OI=197  BID=$0.85
INITIAL NET-CREDIT TARGET=$0.55-$0.60
POTENTIAL PROFIT(max)=12% B/E=$49.45


*****
GILD - Gilead Sciences  $66.52  *** A Rally With No End? ***

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

GILD - Gilead Sciences  $66.52

PLAY (less conservative - bullish/credit spread):

BUY  PUT  AUG-55.00  GDQ-TK  OI=1697  ASK=$0.45
SELL PUT  AUG-60.00  GDQ-TL  OI=942   BID=$0.95
INITIAL NET-CREDIT TARGET=$0.55-$0.60
POTENTIAL PROFIT(max)=12% B/E=$59.45


*****
SII - Smith International  $37.87  *** A Big Day! ***

Smith International (NYSE:SII) is a worldwide supplier of premium
products and services to the oil-gas exploration and production
industry, the petrochemical industry and other industrial markets.
The company provides a range of technologically-advanced products
and engineering services, including drilling and completion fluid
systems, solids-control equipment, waste-management services,
three-cone and diamond drill bits, fishing services, drilling
tools, underreamers, casing exit and multilateral systems, packers
and liner hangers.  The company also offers supply-chain management
solutions through an extensive network providing pipe, valve, tool,
safety and maintenance products.

SII - Smith International  $37.87

PLAY (conservative - bullish/credit spread):

BUY  PUT  AUG-32.50  SII-TZ  OI=1189  ASK=$0.25
SELL PUT  AUG-35.00  SII-TG  OI=231   BID=$0.50
INITIAL NET-CREDIT TARGET=$0.25-$0.30
POTENTIAL PROFIT(max)=11% B/E=$34.75


*****
BRL - Barr Labs  $59.25  *** Sell-Off In Progress! ***

Barr Laboratories (NYSE:BRL) is a specialty pharmaceutical firm
primarily engaged in the development, manufacture and marketing
of generic and proprietary prescription pharmaceuticals.  The
company manufactures and distributes over 100 different dosage
forms and strengths of pharmaceutical products in core therapeutic
categories, including oncology, female healthcare including many
hormone replacement and oral contraceptives, cardiovascular anti
-infectives and psychotherapeutics.  In addition, the company has
a proprietary, novel vaginal ring drug delivery system it is using
to develop products intended to address a variety of female health
issues and unmet medical needs.

BRL - Barr Labs  $59.25

PLAY (conservative - bearish/credit spread):

BUY  CALL  AUG-70.00  BRL-HN  OI=2057  ASK=$0.35
SELL CALL  AUG-65.00  BRL-HM  OI=559   BID=$0.80
INITIAL NET-CREDIT TARGET=$0.50-$0.60
POTENTIAL PROFIT(max)=11% B/E=$65.50


*****
BGEN - Biogen  $40.05  *** A Brief Biotech Burnout? ***

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 number of
ongoing research programs and a pipeline of development-stage
products, the furthest along of which, Amevive (alefacept), is
being considered for approval by the United States Food and Drug
Administration and regulatory authorities in the European Union
and Canada for the treatment of moderate to severe psoriasis.

BGEN - Biogen  $40.05

PLAY (less conservative - bearish/credit spread):

BUY  CALL  AUG-47.50  BGQ-HW  OI=882    ASK=$0.35
SELL CALL  AUG-45.00  BGQ-HI  OI=12546  BID=$0.60
INITIAL NET-CREDIT TARGET=$0.30-$0.35
POTENTIAL PROFIT(max)=14% B/E=$45.30


*****
NVLS - Novellus Systems  $35.70  *** Premium-Selling Only! ***

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

NVLS - Novellus Systems  $35.70

PLAY (less conservative - bearish/credit spread):

BUY  CALL  AUG-42.50  NLQ-HA  OI=2116  A=$0.30
SELL CALL  AUG-40.00  NLQ-HH  OI=3287  B=$0.60
INITIAL NET-CREDIT TARGET=$0.30-$0.35
POTENTIAL PROFIT(max)=14% B/E=$40.30


*************
DEBIT SPREADS
*************

These candidates offer a risk-reward outlook similar to credit
spreads, however there is no margin requirement as the initial
debit for the position is also the maximum loss.  Since these
positions are based primarily on technical indications, traders
should review the current news and market sentiment surrounding
each issue and make their own decision about the outcome of the
position.

*****
LXK - Lexmark  $73.50  *** Trading Range? ***

Lexmark International (NYSE:LXK) is a leading developer, maker
and supplier of printing solutions, including laser and inkjet
printers, multifunction printing products, associated supplies
and services, for offices and homes in more than 150 countries.
Lexmark delivers high-powered solutions, services and supplies
that meet or exceed the needs of customers ranging from the small
office to the large corporate enterprise.  Years of industry
leadership, coupled with a close relationship with its customers,
allows Lexmark to develop high-quality, easy-to-use business
products and services.

LXK - Lexmark  $73.50

PLAY (speculative - bearish/debit spread):

BUY  PUT  AUG-85.00  LXK-TQ  OI=92   ASK=$12.10
SELL PUT  AUG-80.00  LXK-TP  OI=636  BID=$7.70
INITIAL NET-DEBIT TARGET=$4.30-$4.35
POTENTIAL PROFIT(max)=15% B/E=$80.65


****************
CALENDAR SPREADS
****************

A calendar spread (or time spread) consists of the sale of one
option and the simultaneous purchase of an option of the same
type and strike price, but with a future expiration date.  The
premise in a calendar spread is simple: time erodes the value of
the near-term option at a faster rate than the far-term option.
The positions in this section are speculative (out-of-the-money)
spreads with low initial cost and large potential profit.

*****
NE - Noble Corporation  $34.86  *** Sector Recovery? ***

Noble Corporation (NYSE:NE) is a provider of diversified services
to the oil and gas industry.  The firm performs contract drilling
services with a fleet of 49 offshore drilling units located in
key markets worldwide.  Its fleet of floating deepwater units
consists of nine semisubmersibles and three dynamically positioned
drillships, seven of which are designed to operate in water depths
greater than 5,000 feet.  Its premium fleet of 34 independent leg,
cantilever jack-up rigs includes 21 units that operate in depths
of 300 feet and greater, four of which operate in depths of 360
feet and greater, and 11 units that operate in depths up to 250
feet.  Its fleet also includes three submersible drilling units.
Over 60% of the fleet is deployed in global markets, principally
the North Sea, Brazil, West Africa, the Middle East, India and
Mexico.  The firm also provides labor contract drilling services,
site and project management services, and engineering services.

NE - Noble Corporation  $34.86

PLAY (speculative - bullish/calendar spread):

BUY  CALL  DEC-37.50  NE-LU  OI=64  ASK=$1.80
SELL CALL  AUG-37.50  NE-HU  OI=74  BID=$0.30
INITIAL NET DEBIT TARGET=$1.40-$1.45
INITIAL TARGET PROFIT=$0.55-$0.80


*****
ING - ING Groep N.V.  $19.07  *** Trading Range? ***

ING Groep N.V. (NYSE:ING) is a global financial institution that
offers banking, insurance and asset management to approximately
60 million clients in 60 countries.  The clients are individuals,
families, small businesses, large corporations, institutions and
governments.  The company is comprised of various businesses that
increasingly serve their clients under the ING brand.  It primarily
offers retail and wholesale financial services.  On the retail side,
the strategy focuses on retail wealth accumulation and financial
protection (retail banking, asset management, asset gathering, life
insurance and pensions) and private banking, supported by a unique
multi-product, multi-channel distribution approach.  This is a very
flexible mix of Internet, call centers, intermediaries and branches
that enables ING to deliver unlimited access, maximum convenience,
immediate and accurate execution, personal advice, tailor-made
solutions and competitive rates.

ING - ING Groep N.V.  $19.07

PLAY (conservative - bullish/calendar spread):

BUY  CALL  JAN-20.00  ING-AD  OI=20   ASK=$1.15
SELL CALL  AUG-20.00  ING-HD  OI=845  BID=$0.30
INITIAL NET DEBIT TARGET=$0.75-$0.80
INITIAL TARGET PROFIT=$0.45-$0.70


*****


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


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

Options Expire, Stocks Soar Higher


To Read The Rest of The OptionInvestor.com Market Posture Click Here
http://www.OptionInvestor.com/marketposture/MP_072003.asp


**********
DISCLAIMER
**********

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Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

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Option Investor Inc
PO Box 630350
Littleton, CO 80163

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