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Daily Newsletter, Thursday, 08/28/2003

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The Option Investor Newsletter                Thursday 08-28-2003
Copyright 2003, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Showdown at Jackson Hole
Futures Markets: Treasuries and Equities Gain
Index Trader Wrap: See Note
Market Sentiment: Q2 GDP on fire!


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      08-28-2003           High     Low     Volume Advance/Decline
DJIA     9374.21 + 40.40  9392.59  9261.57 1.41 bln   2192/ 978
NASDAQ   1800.18 + 18.10  1800.65  1772.98 1.44 bln   1942/1225
S&P 100   501.24 +  2.51   502.07   495.90   Totals   4134/2203
S&P 500  1002.84 +  6.05  1004.12   991.42
W5000    9719.88 + 68.20  9728.74  9603.52
RUS 2000  495.81 +  4.89   495.81   487.90
DJ TRANS 2668.45 + 35.80  2672.05  2629.65
VIX        19.93 -  0.41    21.31    19.81
VXN        30.31 +  0.26    31.47    30.13
Total Volume 3,058M
Total UpVol  2,223M
Total DnVol    763M
52wk Highs  554
52wk Lows    37
TRIN       0.85
NAZTRIN    0.57
PUT/CALL   0.61
************************************************************

Showdown at Jackson Hole

The markets displayed a bipolar personality on Thursday as
traders prepared to get the lowdown at the showdown. Greenspan
speaks on Friday morning on Monetary Policy and Uncertainty and
by all accounts this will be a pivotal speech. Bond traders are
ticked about the hide and seek game that sent bonds to a 45
year high and then no follow through from the Fed. Analysts
expect Greenspan to clearly lay out the plan for future policy
and a failure to do that could be very negative. Word games
are history, they want to hear some hard policy.

Dow Chart



Nasdaq Chart



S&P Chart




The day started out positive with Jobless Claims rising +3000
to 394,000. One more week below 400,000 but only barely. The
four-week moving average rose to 396,250 and continuing claims
rose +26,000 to 3.657 million. The headline number was lower
than I expected after the blackout but we are still two weeks
away from the week I expect to reflect the true numbers. The
week ending 9/12 would be the first week after the Labor Day
holiday marks an end to summer. It is the "back to work" bell
and those putting off the task will have to punch the alarm
and trudge off to the employment office to begin the hunt
again. While the Labor Dept claimed there was no impact due to
the blackout last week, they revised that number up +5,000 to
391,000 this week due to the blackout.

The most surprising report for the day was the GDP for the 2Q.
It was revised up to +3.1% from +2.4% when everyone expected
a major downward revision. The revision was due to higher
consumer spending than was previously expected at +3.8%.
Corporate profits were up +10.8% and the 3rd consecutive
quarterly gain. Durable goods consumption rose to 24.1% from
22.6% in the first estimate. Inventories fell -$20.9 billion,
down from the prior estimate of -$17.9 billion. The inventory
drop was attributed to fear of a lingering war and the impact
on the economy. It is likely this drop in inventories is what
prompted the bounce in the July economic numbers as that
pipeline was replenished after the quick war and the victory
over SARS. This is a very bullish report and shows an economy
that is growing much faster than previously thought. The only
problem is it reflects the second quarter and we are nearing
the end of the third. With all the cautious comments out of
the tech companies it is not clear if this bounce has legs
or it has already run its course.

Supporting the GDP view was the Chicago Fed National Activity
Index which came in at -0.20 and much improved over the -0.32
in June. This was the third consecutive monthly improvement
but it is still moving very slowly and indicates a below
normal growth trend. Employment was the major laggard and
continues to decline at 6.2%.

The most negative report for the day was the Monthly Mass
Layoffs which showed there were 2,087 mass layoffs which will
put 226,435 employees out of work. With the announcements in
July the layoffs will normally occur over the next 90 days.
That puts us right in the middle of the actual job cuts now.
We will see what real impact this has when the Nonfarm Payrolls
are announced next Friday. As usual manufacturing bore the
brunt of the pain with -136,410 job losses. This was up
from only -40,845 in June. The headline number at 226K was
an increase of nearly 70,000 over the June numbers. State
and local governments were responsible for 7% of the job cuts
as the local budgets are still recoiling from the bubble in
tax income. The economy will continue to grow slowly with a
constant loss of jobs and rising unemployment. You must have
a paycheck to consume more than basic necessities. Forrester
Research said they saw 3.5 million white-collar jobs leaving
the US over the next ten years with the primary beneficiary
being India. This is above the 10 million blue-collar jobs
expected to flow out of country in the same period. Tough
to pay $20 an hr in the US when you can pay $1 an hour
overseas with far fewer taxes and benefits.

Getting a job is still a challenge with the Help Wanted Index
still flat at 38 and only barely improved from its May low
of 35. The labor markets are not showing any increase in
hiring and the headline number is still six points below the
July numbers from 2002 when employment was terrible. While
the hiring may have bottomed in May it is not growing and it
could set a stage for a greater than 6.2% unemployment number
next week. The Jobs Report has shown six consecutive months
of job losses, nearly -500,000, and the estimates are for a
minimal gain of +10,000 in August. I find that hard to believe
but analysts are hugging the unchanged line so they can be
close to right either way it goes. If the Jobs Report were
to show a large negative OR a large positive it would directly
impact the current market sentiment in a big way. We are
priced for perfection as they like to say.

Friday will be focused entirely on the Greenspan speech despite
a flood of economic reports. We have PMI, NY-NAPM, Personal
Income, Risk of Recession and Michigan Sentiment again. All
but the PMI are before the open. The speech is at 10:EDT and
we will probably get the script a few minutes ahead of the
intro. Greenspan has typically used this particular speech
to explain why he has made the decisions in the past and what
decisions we can expect in the future. Considering the concern
over his head fake on bonds earlier this year and the resulting
implosion he will be hard pressed to prove he is in control
of anything but his personal checkbook. This is why analysts
think we could see fireworks. This is his best chance to
seize control once again or go down in flames for what could
be his final fling. There are rumors that he could be replaced
when his term is over due to the lingering impact of the stock
market implosion. Surpluses turned to deficits and retirement
accounts were decimated. The rumor is that Bush may want to
cut the ties to Greenspan's handling of the event and put a
new horse on the hot seat. Ball is in your court, Alan. Art
Cashin said on Thursday that if Alan disappoints traders will
be fleeing the market in planes, trains, buses, taxis and
any other vehicle they can find to escape the carnage. That
may have been an overstatement based on Thursday's performance.

Impacting our markets on Thursday was any lingering end of
month rebalancing or posturing and we had a couple serious
buy and sell programs. The first sell program hit at 9350
and knocked the Dow back to nearly 9250 before it expired.
The bounce was not immediate but two buy programs at 11:10
and 12:35 managed to push the index back the 9340 level where
it hit a wall for the rest of the afternoon. The Nasdaq broke
out of its 1782 resistance at the open and despite the early
sell program it rebounded back over that level very quickly.
The S&P was fighting a different battle and after hitting
the electric fence at 1000 on the initial bounce it struggled
all day to return to that level. Strong resistance at 998
kept the lid on it, at least until 3:PM.

Once the bond market closed at the high of the day the stock
market exploded past resistance on strong volume. At least
strong for a pre holiday Thursday. The Nasdaq led the charge
and shot up to close at 1800 and a 17 month high. The rest
of the indexes were dragged higher by the tech strength. The
S&P hit 1004 and closed very near to that high. The Dow
finally broke over the 9340 resistance and ended at 9382 and
very close to the 9392 high. This was a very bullish reversal
of the decline that began last Friday at 9500. The Dow fell
to 9233, a -267 point drop from the high and has now retraced
back to 9382. Very bullish when you remember what season we
are in. After the closing rally we are priced even more to
perfection considering the Friday events ahead of us.

After the close we got mid quarter updates from chip companies
NVLS and IDTI. NVLS affirmed estimates with no increase but
said they were going to take a $70 million charge to write
down excess inventory. The market did not like the concept
of inline affirmation and excess inventory and the stock lost
$1 in after hours. IDTI affirmed estimates and said revenues
would be flat to down -4%. They also lost ground in after hours.
Ironically, even after a record day the Nasdaq futures barely
even blinked. The SOX has soared back over 450 from its 425
low on Tuesday. It will be interesting to see what happens to
it tomorrow. There is a good chance there will be some short
covering at the open if Europe/Asia rallies on our performance.
If so then we could break 1800 with volume and cause yet
another wave of gains before Greenspan even begins speaking.
The short interest on the Nasdaq is huge with most professional
traders and institutions betting on the historical August
and September decline. The bears are going crazy and tomorrow
should push them a little farther over the edge. Do they
cover at the open or wait and hope Greenspan eats his foot
and the market tanks. Tough riding on the bleeding edge and
if you are short in front of this market you are bleeding.

The bottom line for tomorrow. It all depends on Greenspan
and the betting line is he better have a grandstand
performance or we could see some strong weakness. How long
that weakness lasts is another matter. The day after Labor
Day has been up seven of the last eight years. Do you think
the bulls are betting on another repeat and the bears are
staying out of the way? Could be. Buy the dips until the
trend changes but be aware it could change at any moment.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


***************
FUTURES MARKETS
***************

Treasuries and Equities Gain
Jonathan Levinson

The Fed added 14 billion dollars in open market operations today,
and bonds rallied until the 3PM close, after which equities took
off, hitting new highs for the week.  The Nasdaq, NDX and SOX
printed new 12 month closing highs.

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






10 minute chart of the US Dollar Index




The US Dollar Index starting selling off just ahead of the 8:30
AM economic data and bottomed at 10 AM, climbing gradually for
the remainder of the session.  The move corresponded with a .84
gain for the CRB to 241.74, led by cocoa, soybeans and natural
gas futures, while gold and silver retraced part of yesterday's
gains.

Daily chart of December gold




December gold printed an inside day, a bearish harami from the
looks of it, retracing 3 to close at 371.10 following yesterday's
breakout.  The oscillators remain in a bullish uptrend, although
the stochastic is closer to the top than to the bottom of its
range.  Today's volume was inferior to that of yesterday, which
is a bullish sign.  A pullback was expected after yesterday's
strong advance, and left something to encourage bulls and bears
alike.  Tomorrow should provide some enlightenment.  The HUI
added .69 to a new 6 year closing high at 194.62, XAU dropped .38
to 91.

Daily chart of the ten year note yield




Ten year treasuries were bought strongly today, with the yield
(TNX) dropping 10.7 basis points to 4.429%, below the secondary
trendline.  The stochastic finally rolled over, sell signals on
the Macd and stochastic for the first time in a week. The move
completed a slow, lazy rollover on the daily yield chart, and
looks quite bullish for bonds on what may have been frontrunning
of Greenspan's appearance tomorrow.


Daily NQ candles




The NQ's ongoing up-phase on the daily chart continued today,
marching to a new closing high for the year.  The bullish hammer
cleared the ascending trendline, and the pause in the stochastic
we observed last night undrew itself handily, advancing into
"overbought" territory above the 80 level.  The last two times
this occurred, in July and June, preceded notable declines within
the ongoing uptrend, but note that the Macd is not as overbought
as it was then.  Bears still need to be very careful with the NQ.


30 minute 20 day chart of the NQ




I'm scowling at the oscillators on the 30 minute chart of the NQ,
because they exercised their least loved right, which is to
oscillate, or rather vacillate.  A very neat rollover beneath a
trendline gave bears reason to be bold today, and there was a
drop on schedule in the morning.  The oscillators warned of this
last night.  However, the downphase terminated almost
immediately, tempting bears along the way to short every bounce,
which turned out to be a very poor strategy.  The 3PM breakout,
financed with what I presume to be the Fed's 14B repo money in
this thin, pre-holiday market, reversed the sell signal and warns
that the oscillators could begin trending higher within the
ongoing daily cycle up-phase.

That said, it could be that this advance is a bear wedge, as I've
drawn, and if so, the odds (according to Bulkowski's
"Encyclopedia of Chart Patterns") favor a breakdown below the
lower trendline.  Patience is required so long as the up-trend
holds.  Bulls could buy at the lower trendline with tight stops
just underneath, and sell at the upper line.  This scalp strategy
requires a quick hand and tight active stops, and is for
gunslingers only.

Daily ES candles




The ES printed a bullish hammer on the daily chart, and the Macd
undrew its sell signal.  The stochastic is now pointing sideways,
reversing its sell signal as well.  The ES (and YM) continue to
seriously lag the NQ, which I attribute to the quality of the
buying on the NQ.  Price is the only benchmark that matters, but
I believe that the divergence we see owes itself to short
squeezes, possibly being orchestrated by fund managers chasing
performance in high beta stocks.  I doubt if there's actual
"investing" going on at this point.  Managers can target those
stocks with the highest short interest, launch a buy program, and
trip off a short covering rally, which attracts the momentum
players, and so on.  On an index-wide basis, this translates into
the NQ outperforming the ES and particularly the stodgy old Dow,
which was again the case today.  In any event, the ES is weaker
than the NQ, and remains in topping territory on its daily and 30
minute cycle oscillators.


20 day 30 minute chart of the ES




The bear wedge was exceeded at the end of day ramp, but after
hours, I see ES trading 1000.75 as of this writing, which would
be right at the upper trendline.  This is either a routine
"return to the scene of the crime" pullback, or another of the
wedge apex fakeouts that are becoming the signature formation for
this year.  1004 remains a heavy congestion zone, as is 998, and
we have the makings of another range at what is either a
consolidation or distribution zone.

Daily YM candles




As noted, the YM was the weakest equity future again, still on
sell signals and still within a potential bear wedge on the 30
minute chart.


20 day 30 minute chart of the YM




Whether we are watching the start of phase 2 of the 2003 rally or
just more chop within a broad top being printed on the daily
charts cannot be said.  This is thin summer trading toward the
end of the month and a holiday weekend.  Best not to draw too
many conclusions.


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

Q2 GDP on fire!
- J Brown

Today was all about the GDP numbers and the jobless claims
report.  The Q2 GDP numbers were revised upward from a +2.4% pace
to a much higher +3.1%.  This helped ease many fears that the
economy may not be improving fast enough.  Contributing to the
positive economic news was the weekly jobless claims report that
came in below the pivotal 400,000 level.  Economists had been
expecting a small bounce and they got it, +3,000 to 394,000
jobless claims.  Both reports came out before the opening bell
and despite the positive indications the markets tanked early in
the session. Fortunately, there was a lack of follow through and
the markets managed a steady rebound despite the lack volume
ahead of the Labor day weekend.

As far as investor sentiment, the VIX and VXN continue to read at
very low and dangerous levels but the slow drift up in the
markets appears to be the most damaging to the bears.  I looked
at several hundred charts today and the overwhelming theme was
bullish with several fresh breakouts or bounces from previous
resistance.  Now everyone knows we're approaching September and
you've heard multiple times how it is traditionally the worst
month of the year.  Well, August is typically a pretty poor month
for the markets and thus far the major indices are going to close
it with a gain so September may turn out to be a surprise as
well.

The minefield that investors will need to navigate is the
numerous mid-quarter corporate reports set to come out in
September.  The biggest landmine of all may be Greenspan's
appearance tomorrow in Wyoming, which Jim covers in more detail
on the wrap this evening.  Trade carefully and watch those stops.



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

Market Averages

DJIA ($INDU)

52-week High:  9499
52-week Low :  7197
Current     :  9374

Moving Averages:
(Simple)

 10-dma: 9369
 50-dma: 9191
200-dma: 8607



S&P 500 ($SPX)

52-week High: 1015
52-week Low :  768
Current     : 1002

Moving Averages:
(Simple)

 10-dma:  994
 50-dma:  990
200-dma:  918



Nasdaq-100 ($NDX)

52-week High: 1342
52-week Low :  795
Current     : 1332

Moving Averages:
(Simple)

 10-dma: 1302
 50-dma: 1258
200-dma: 1114



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


The VIX and VXN continue to drift lower just as the markets drift
higher.  While we know it's dangers to trade with the markets at
extremes there is nothing to prevent these reading from becoming
more extreme.

CBOE Market Volatility Index (VIX) = 19.93 -0.41
Nasdaq Volatility Index (VXN)      = 30.31 +0.26

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.61        494,942       302,766
Equity Only    0.49        418,387       206,314
OEX            1.07         12,931        13,871
QQQ             .83         80,191        67,117


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

Bullish Percent Data

           Current   Change   Status
NYSE          70.8    + 0     Bull Confirmed
NASDAQ-100    74.0    + 1     Bear Correction
Dow Indust.   80.0    + 0     Bull Correction
S&P 500       77.6    + 0     Bull Correction
S&P 100       82.0    + 0     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  0.98
10-Day Arms Index  0.94
21-Day Arms Index  0.96
55-Day Arms Index  1.06


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    1929      1855
Decliners     866      1184

New Highs     143       177
New Lows        6         6

Up Volume   1020M     1062M
Down Vol.    353M      372M

Total Vol.  1400M     1449M
M = millions


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

Commitments Of Traders Report: 08/19/03

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

There is nothing eye opening to report in the large S&P futures
contracts today.  Commercials remain slight more short than long
and small traders are significantly long the market.


Commercials   Long      Short      Net     % Of OI
07/29/03      405,429   445,114   (39,685)   (4.7%)
08/05/03      395,633   450,988   (55,353)   (6.5%)
08/12/03      399,414   456,767   (57,353)   (6.7%)
08/19/03      404,665   455,381   (50,716)   (5.9%)

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
07/29/03      155,216    73,030    82,186    36.0%
08/05/03      159,971    72,951    87,020    37.4%
08/12/03      158,821    71,040    87,781    38.2%
08/19/03      162,034    87,064    74,970    30.1%

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

Meanwhile for the e-mini contracts commercial traders are
still net long.  Small traders are still net short but we
saw a big increase in long positions.


Commercials   Long      Short      Net     % Of OI
07/29/03      272,659   216,166     56,493    11.6%
08/05/03      310,662   249,004     61,658    11.0%
08/12/03      306,014   217,233     88,781    17.0%
08/19/03      296,971   235,779     61,192    11.5%

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year:   88,781   - 08/12/03

Small Traders Long      Short      Net     % of OI
07/29/03       44,437    93,144   (48,707)  (35.4%)
08/05/03       56,663    95,919   (39,256)  (25.7%)
08/12/03       62,534   106,403   (43,869)  (26.0%)
08/19/03       90,428   125,980   (35,552)  (16.4%)

Most bearish reading of the year: (48,707)  - 07/29/03
Most bullish reading of the year: 449,310   - 06/10/03


NASDAQ-100

Hmm... interesting development here.  Commercial traders
are still net short the NDX so that's not a surprise but
the extreme just brushed a new "high" so to speak.  Retail
traders are still net long but there was a big bump in
short positions.


Commercials   Long      Short      Net     % of OI
07/29/03       31,456     50,294   (18,838) (23.0%)
08/05/03       32,813     52,383   (19,570) (23.0%)
08/12/03       34,374     53,015   (18,641) (21.3%)
08/19/03       32,107     53,665   (21,558) (25.1%)

Most bearish reading of the year: (21,558)  - 08/19/03
Most bullish reading of the year:   9,068   - 06/11/02

Small Traders  Long     Short      Net     % of OI
07/29/03       25,691     7,810    17,881    53.4%
08/05/03       22,188     7,783    14,405    48.1%
08/12/03       23,957     7,871    16,086    50.5%
08/19/03       25,607    10,134    15,473    43.3%

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

Wow!  We see a big change in sentiment by the commercial
traders in the DJ futures.  Short positions doubled indicating
a growing expectation that the market could rollover.
Right on cue the retail trader is picking the wrong direction
and more than doubled their long positions while slashing
their shorts.  This sort of extreme flip-flop would indicate
a market reversal in the making.


Commercials   Long      Short      Net     % of OI
07/29/03       23,696     9,572   14,124      42.5%
08/05/03       23,981     9,264   14,717      44.3%
08/12/03       24,942     9,878   15,064      43.3%
08/19/03       21,088    18,984    2,104       5.3%

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
07/29/03        5,744    11,601   (5,857)   (33.8%)
08/05/03        5,716    10,422   (4,706)   (29.2%)
08/12/03        6,933    13,248   (6,315)   (31.3%)
08/19/03       15,717     9,143    6,574     26.4%

Most bearish reading of the year:  (8,777) - 10/12/01
Most bullish reading of the year:   6,574  -  8/19/03

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


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The Option Investor Newsletter                  Thursday 08-28-2003
Copyright 2003, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: EBAY, HIG
Dropped Puts: None
Call Play Updates: BSX, CCMP, GILD, LLL, OMC, SPW
New Calls Plays: ERTS, UTX
Put Play Updates: ESRX, LEH, WLP, XL
New Put Plays: None


****************
PICKS WE DROPPED
****************

When we drop a pick it doesn't mean we are recommending a sell
on that play. Many dropped picks go on to be very profitable.
We drop a pick because something happened to change its
profile. News, price, direction, etc. We drop it because we
don't want anyone else starting a new play at that time.
We have hundreds of new readers with each issue who are
unfamiliar with the previous history for that pick and we
want them to look at any current pick as a valid play.


CALLS:
*****

eBay, Inc. - EBAY - close: 109.52 change: -1.98 stop: 110.50

We ran out of time on our EBAY play today, as investors starting
the final profit taking move right at the open.  The stock
swiftly dropped from above $111 to the $109 area, where it spent
the remainder of the day in a tight consolidation pattern.
Apparently nobody was interested in holding into the stock split,
which takes place tomorrow.  We were hoping for one more thrust
towards the $115 highs from last month, but last week's brief
foray above $114 was all she wrote.  With our stop tightened up
to $110.50, clearly this successful play is over.  We'll chalk it
up as a winner that we should have exited after last Friday's
sharp reversal from the $114 area.

Picked on August 12th at   $103.43
Change since picked:         +6.09
Earnings Date             10/23/03 (unconfirmed)
Average Daily Volume =    6.72 mln
Chart =


---

Hartford Fin. Svcs - HIG - close: 53.05 change: +0.17 stop: 51.75

We've certainly given HIG ample time to get moving, and there's
just been no movement that we can call bullish.  Sure the stock
is holding above $52 support, but the inability to even reclaim
$54 with broad market strength is discouraging.  While the bulls
may eventually succeed in breaking above that resistance, we've
lost patience and are pulling the plug tonight.  Our
recommendation for traders already in the play would be to exit
here and look to re-deploy capital into a stronger play.

Picked on August 14th at    $54.14
Change since picked:         -1.09
Earnings Date             11/05/03 (unconfirmed)
Average Daily Volume =    2.12 mln
Chart =



PUTS:
*****

None


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********************
PLAY UPDATES - CALLS
********************

Boston Scientific - BSX - cls: 62.69 chg: -0.56 stop: 61.99

Our bullish play in BSX took a hard hit from Morgan Stanley early
Wednesday morning.  The analyst cut BSX from "overweight" to
"equal weight" and its comments to investors boiled down to take
some profits.  MWD also lowered their price targets on BSX from
$75 to $69.  This downgrade overshadowed positive news that the
FDA has given approval for BSX's EPT-1000 XP Cardiac Ablation
System for atrial flutter.  This should be good news for BSX
considering the 200,000 new patients diagnosed with atrial
flutter each year in the U.S.  We strongly considered closing
this bullish play on BSX but shares have not yet hit our stop and
it just might bounce from the $62.00 level and its simple 50-dma.
We are not suggesting new long positions at this time. Assuming
we are not stopped out tomorrow, if we don't get a bounce we'll
probably close the play.

Picked on August 21 at $66.50
Change since picked:    -3.81
Earnings Date        07/22/03 (confirmed)
Average Daily Volume:    2.78 million
Chart =


---

Cabot Microelect. - CCMP - cls: 66.09 chng: +1.64 stop:
62.50*new*

Even in the absence of any strength in the Semiconductor sector
(SOX.X) on Thursday, our CCMP play got off to a nice start.
Beginning the day right where it left off on Wednesday, the stock
pushed higher at the open, pulled back a bit to confirm intraday
support near $64.50 and then rallied through the remainder of the
day, closing just off its $66.50 high.  Based on the strong
volume today (50% above the ADV), this rally certainly looks like
the real deal, and CCMP should be able to test its highs near $68
from earlier in the month.  Another intraday pullback into the
$64.50-65.00 area looks good for new entries, but we're a bit
leery of momentum entries at this point with $68 resistance
looming only $2 above Thursday's close.  For those traders intent
on entering on further strength, make sure and confirm sector
strength with the SOX moving above $457.65 (last Friday's
intraday high) before playing.  Stops should now be raised to
$62.50, which is below the bottom of the rising channel, the 20-
dma ($63.28) and Tuesday's close.

Picked on August 27th at    $64.45
Change since picked:         +1.64
Earnings Date             10/23/03 (unconfirmed)
Average Daily Volume =       871 K
Chart =


---

Gilead Sciences - GILD - cls: 66.21 chg: +2.24 stop: 62.49

Would you believe the biotech index (BTK) has bounced back above
its 450 level again and is trying hard to break its trend of
lower highs?  Should this occur then GILD could have a clear path
to retest the $70 mark and push for its own breakout.  We are
seeing a strong trend of higher lows for the stock and today's
3.5 percent rebound is very encouraging.  The MACD should produce
a bullish buy signal any day now while its momentum, RSI, and
stochastic indicators are all pointing higher.  Now that the
stock is back above the $65-66 level traders who have not already
taken new positions can certainly consider one.

Picked on August 19 at $65.32
Change since picked:    +0.89
Earnings Date        07/31/03 (confirmed)
Average Daily Volume:    3.31 million
Chart =


---

L-3 Communications -LLL - close: 50.81 change: +0.76 stop: 48.90

Whew!  After much grunting and straining, the bulls finally
managed to push LLL over that pesky $50.60 resistance level,
which has been holding the stock back for a solid month.  Is this
breakout for real?  It's hard to gauge in this light-volume, pre-
holiday market, but the Magic 8 Ball says "Signs point to yes."
The pattern of higher lows remains intact (with the latest
pullback just missing our $48.90 stop) and with today's bullish
move, we have another higher high.  Support should now solidify
in the $49.50 area, with the 20-dma ($49.20) reinforcing that
support.  Shallow dips that find buyers above that support can be
used for new entries, although our preference remains to enter
this play on continued strength above $51.  Next resistance is
found at $52, followed by $54, where we are recommending that
conservative traders look to harvest some gains.

Picked on August 3rd at    $49.90
Change since picked:        +0.91
Earnings Date            10/22/03 (unconfirmed)
Average Daily Volume =      907 K
Chart =


---

Omnicom Group - OMC - close: 77.55 chg: +1.10 stop: 74.49*new*

Our advertising play is working like a charm.  The numbers may
not be that big yet but we suggested an entry point on the recent
dip and OMC is rebounding nicely.  There has not been much news
to report but the mildly positive market conditions (for stocks
like OMC) are playing out.  The bullish play still looks tempting
here even though our first target of $80.00 might slow down the
advance.  We're raising our stop loss to $74.49.

Picked on August 19 at $76.67
Change since picked:    +0.88
Earnings Date        07/29/03 (confirmed)
Average Daily Volume:     881 thousand
Chart =


---

SPX Corporation - SPW - cls: 48.83 chng: -0.04 stop: 47.25*new*

Higher highs and higher lows are music to the bulls' ears.
Earlier in the week, we weren't so sure about our SPW play, but
sure enough, the stock found support near $47.50 (the site of the
prior high) and rebounded from there.  That gave us the higher
low and now we need a breakout through $50 to give us the higher
high.  Some volatility at the open on Thursday, gave nimble bulls
a fleeting entry point, as the stock dipped to $47.75 and quickly
rebounded, after which it steadily worked higher throughout the
day, ending with a mere 4-cent loss.  This rebound has got the
daily Stochastics turning bullish again and SPW should now be
able to make a serious attempt at breaking above $50.  Dip buyers
should have taken the entry on the repeated rebounds from the $48
area, while those still sitting on the fence could target a push
over $49, which has been providing intraday resistance since last
Friday.  Momentum traders looking for a real breakout will need
to wait for a move over $50, preferably next week on a solid
increase in volume.  Note that we've raised our stop to $47.25.
This is below the 20-dma ($47.50), this week's intraday lows and
the ascending trendline for the past month, currently $47.75.  If
there's any serious upside to this play, those measures of
support should not be broken.

Picked on August 14th at    $48.14
Change since picked:         +0.68
Earnings Date             10/27/03 (unconfirmed)
Average Daily Volume =       910 K
Chart =



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

Electronic Arts - ERTS - close: 89.06 chg: +2.18 stop: 84.75

Company Description:
Electronic Arts (EA), headquartered in Redwood City, California,
is the world's leading interactive entertainment software
company. Founded in 1982, Electronic Arts posted revenues of $2.5
billion for fiscal 2003. The company develops, publishes and
distributes interactive software worldwide for video game
systems, personal computers and the Internet. Electronic Arts
markets its products under three brand names: EA SPORTS(TM), EA
GAMES(TM), and EA SPORTS BIG(TM). (source: company press release)

Why We Like It:
We've had our eyes on ERTS for a while now but the appropriate
entry point seemed to elude us.  Now with the GSO software index
breaking out to new one-year highs we think it may be time to
give ERTS another look.  Not only is the stock one of the leaders
in the group but the recent bounce from $86.00 was a move off old
resistance.  We'll certainly agree that the stock is overbought
but the bears can't seem to get a strong enough grip to slow it
down.  Of course it could be bears trying to cover that might be
boosting the stock price.  As of August 8th, the latest short
interest report showed 7.02 million shares held short or almost 5
percent of the float.  Traders will also note that ERTS is at all
time highs and way overdue for another split announcement.  They
last announced a stock split in August of 2000 near the $85
level.

In addition to the technical strength of the share price we also
like the fundamental reasons to buy ERTS.  A P/E of 40 may be a
little high for some investors but ERTS is a software company
with rising revenues and growing net income.  Looking back to the
July 23rd earnings report we see that ERTS beat estimates by 10-
cents.  Since their earnings report Bank of America has raised
its price target on ERTS from $80 to $95 and Dougherty & Co
raised their price target from $85 to $100.  Plus, we're quickly
approaching the Q4 holiday sales season, which is a big one for
ERTS now that video game sales out pace movie revenues.

More conservative traders might feel better by using a trigger to
go long the stock above $90.00.  We'd suggest $90.05, 90.25, or
whatever suits your fancy.  Our play is a little aggressive as
we're suggesting new bullish positions now with the stock still
under resistance of $90.  Plus, our initial stop loss at $84.75
is a little wide.  Looking at the intraday chart one could
probably get by with a stop just under $86.00.

Suggested Options:
Bullish traders can choose from September, October and December
options.  There are only three weeks left for the September calls
so our preference is probably for the October strikes.

BUY CALL SEP 85 EZQ-IQ OI=2285 at $5.40 SL=3.00
BUY CALL SEP 90 EZQ-IR OI=3274 at $2.35 SL=1.00
BUY CALL SEP 95 EZQ-IS OI=1450 at $0.70 SL= -- higher risk
BUY CALL OCT 90 EZQ-JR OI= 294 at $4.00 SL=2.25
BUY CALL OCT 95 EZQ-JS OI= 131 at $2.10 SL=1.00
BUY CALL DEC 95 EZQ-LS OI= 108 at $4.60 SL=2.25

Annotated Chart:




Picked on August 28 at $89.06
Change since picked:    +0.00
Earnings Date        07/23/03 (confirmed)
Average Daily Volume:     3.3 million
Chart =


---

United Technologies - UTX - cls: 79.75 chg: +1.00 stop: 75.99

Company Description:
United Technologies Corp., based in Hartford, Connecticut, is a
diversified company that provides a broad range of high
technology products and support services to the building systems
and aerospace industries.  It's four main business segments are
Otis, Carrier, Pratt and Whitney, and Flight Systems.
(source: company press release)

Why We Like It:
The combination of an improving economy and higher defense
spending is going to translate into more business for companies
like UTX.  One look at the stock price and you can see that it's
no secret.  Shares have improved strongly and recent action put
UTX at two-year highs.  Giving the stock an extra boost has been
the recent blackouts.  A UTX spokesman said they are seeing more
interest in their fuel cell and microturbines power products.

We like the recent breakout above the $77 level and how shares
ran up to $80 before pulling back to retest $77 as support.  The
stock is knocking at the $80 level again and we're going to set a
TRIGGER at $80.05 to go long the stock.  Conservative traders can
use a tight stop under $77.00 but we're going to give it just a
little extra room and put our stop at $75.99 for now.

The old highs for the stock are near $87.50 from May 2001.  If
UTX can break $80.00 we'll aim for the old highs.

Suggested Options:
There are just three weeks left for the September options on UTX
so our preference would be for the October or November strikes.
However, we're going to list a couple of September calls for the
more aggressive traders.

BUY CALL SEP 75 UTX-IO OI=1025 at $5.40 SL=3.00
BUY CALL SEP 80 UTX-IP OI=2436 at $1.55 SL=0.75
BUY CALL OCT 75 UTX-JO OI= 271 at $6.30 SL=4.00
BUY CALL OCT 80 UTX-JP OI= 675 at $2.90 SL=1.50
BUY CALL OCT 85 UTX-JQ OI= 448 at $0.90 SL= --
BUY CALL NOV 80 UTX-KP OI=1072 at $3.80 SL=2.00
BUY CALL NOV 85 UTX-KQ OI=  21 at $1.75 SL=0.90

Annotated Chart:




Picked on August 28 at $xx.xx
Change since picked:    +0.00
Earnings Date        07/17/03 (confirmed)
Average Daily Volume:     2.1 million
Chart =



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*******************
PLAY UPDATES - PUTS
*******************

Express Scripts - ESRX - close: 64.49 change: +0.86 stop: 65.75

In keeping with the gravity-defying mood the broad markets are
in, our ESRX play broke down in a convincing high-volume way on
Monday and then promptly rebounded from just above $61.
Considering the light volume in the rest of the market, this rise
has come on stronger volume (although still below the ADV) than
we'd like, and Friday's session could provide a test of critical
resistance near $65.  If this bearish play has any future, then
the bulls should not be able to muster a close over that level,
which provided strong closing resistance throughout the past 3
weeks.  Aggressive traders can look to enter new positions on a
rollover from below that level, although the more conservative
approach would now be to wait for a break below $61 before
stepping into the fray.  Maintain stops at $65.75, which is just
above the 8/19 intraday high.

Picked on August 24th at   $63.48
Change since picked:        +1.01
Earnings Date            10/22/03 (unconfirmed)
Average Daily Volume =   1.41 mln
Chart =


---

Lehman Brothers - LEH - close: 65.31 change: +1.01 stop: 67.25

Despite the light volume ahead of the holiday weekend, the bulls
managed to pull out another victory, with all the major averages
advancing on the day.  The Broker/Dealer index (XBD.X) posted a
solid gain of 1.58%, and looks intent on testing the recent highs
near $580.  Our bearish play on LEH is at a critical juncture
here, as this week's rebound has buoyed the stock up near the
$65.50-66.00 resistance level, and just below the 50-dma (now at
$65.42).  The rise over the past few days has come on declining
volume, so that looks good for traders looking to enter the play
on the next rollover near resistance.  A failure below $66 looks
like just the ticket, although Friday may not be the day for new
entries, as volume is once again expected to be very light.
Conservative traders still looking for an entry may be wise to
wait until volume returns after the weekend.  We're maintaining
our stop at $67.25, although more conservative traders worried
about a strong rebound may want to use a stop near $66.25, just
over last Friday's intraday high.

Picked on August 24th at    $64.41
Change since picked:         +0.90
Earnings Date             09/18/03 (unconfirmed)
Average Daily Volume =    3.00 mln
Chart =


---

Wellpoint Health Ntwk - WLP - cls: 76.89 chg: +0.09 stop: 77.51

To be honest we're surprised we have not been stopped out of WLP
in the last two sessions.  The bounce in the healthcare-insurance
group would put any bears on the defensive.  Thankfully the $77
level has held up as resistance but unfortunately the intraday
low today was a bounce off its simple 200-dma.  Shares are still
oversold and we are not suggesting new bearish plays in WLP until
the stock trades back below the 200-dma or the $75 level (your
choice).  We may consider closing the play tomorrow if the
markets continue to melt higher.

Picked on August 25 at $74.95
Change since picked:    +1.94
Earnings Date        07/22/03 (confirmed)
Average Daily Volume:     1.3 million
Chart =


---

XL Capital Ltd. - XL - close: 75.47 change: +0.22 stop: 78.25

Following last Friday's breakdown below $75 and Monday's rebound
from the top of the early April gap near $73.50, the action in
shares of XL has gotten pretty drifty.  The continued decline in
volume has allowed price to magnetize to the $75.50 level and
we're unlikely to see a meaningful move ahead of next Tuesday,
when hopefully we'll see the return of volume.  With resistance
looking pretty solid in the $76.00-76.50 area and the 10-dma
($75.96) falling to meet price, it looks like we're setting up
for another rollover entry.  In addition to the 10-dma, there is
resistance provided at the 20-dma ($76.94) and the descending
trendline from the late June and early August highs ($77.40).
These multiple resistance layers should serve to turn back any
feeble rebound attempt, and the rollover (so long as it commenced
from below $77.50) looks like a favorable risk/reward entry with
our stop set at $78.25.  We clearly still have to deal with gap
support in the $72.50-73.50 area, but we're still using an
initial profit target at $70.

Picked on August 21st at   $75.92
Change since picked:        -0.45
Earnings Date            10/30/03 (unconfirmed)
Average Daily Volume =      841 K
Chart =



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

None


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The Option Investor Newsletter                 Thursday 08-28-2003
Copyright 2003, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Play of the Day: CALL - ERTS
Traders Corner: With The "Glory" Gone – The Profits Remain


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

Electronic Arts - ERTS - close: 89.06 chg: +2.18 stop: 84.75

Company Description:
Electronic Arts (EA), headquartered in Redwood City, California,
is the world's leading interactive entertainment software
company. Founded in 1982, Electronic Arts posted revenues of $2.5
billion for fiscal 2003. The company develops, publishes and
distributes interactive software worldwide for video game
systems, personal computers and the Internet. Electronic Arts
markets its products under three brand names: EA SPORTS(TM), EA
GAMES(TM), and EA SPORTS BIG(TM). (source: company press release)

Why We Like It:
We've had our eyes on ERTS for a while now but the appropriate
entry point seemed to elude us.  Now with the GSO software index
breaking out to new one-year highs we think it may be time to
give ERTS another look.  Not only is the stock one of the leaders
in the group but the recent bounce from $86.00 was a move off old
resistance.  We'll certainly agree that the stock is overbought
but the bears can't seem to get a strong enough grip to slow it
down.  Of course it could be bears trying to cover that might be
boosting the stock price.  As of August 8th, the latest short
interest report showed 7.02 million shares held short or almost 5
percent of the float.  Traders will also note that ERTS is at all
time highs and way overdue for another split announcement.  They
last announced a stock split in August of 2000 near the $85
level.

In addition to the technical strength of the share price we also
like the fundamental reasons to buy ERTS.  A P/E of 40 may be a
little high for some investors but ERTS is a software company
with rising revenues and growing net income.  Looking back to the
July 23rd earnings report we see that ERTS beat estimates by 10-
cents.  Since their earnings report Bank of America has raised
its price target on ERTS from $80 to $95 and Dougherty & Co
raised their price target from $85 to $100.  Plus, we're quickly
approaching the Q4 holiday sales season, which is a big one for
ERTS now that video game sales out pace movie revenues.

More conservative traders might feel better by using a trigger to
go long the stock above $90.00.  We'd suggest $90.05, 90.25, or
whatever suits your fancy.  Our play is a little aggressive as
we're suggesting new bullish positions now with the stock still
under resistance of $90.  Plus, our initial stop loss at $84.75
is a little wide.  Looking at the intraday chart one could
probably get by with a stop just under $86.00.

Suggested Options:
Bullish traders can choose from September, October and December
options.  There are only three weeks left for the September calls
so our preference is probably for the October strikes.

BUY CALL SEP 85 EZQ-IQ OI=2285 at $5.40 SL=3.00
BUY CALL SEP 90 EZQ-IR OI=3274 at $2.35 SL=1.00
BUY CALL SEP 95 EZQ-IS OI=1450 at $0.70 SL= -- higher risk
BUY CALL OCT 90 EZQ-JR OI= 294 at $4.00 SL=2.25
BUY CALL OCT 95 EZQ-JS OI= 131 at $2.10 SL=1.00
BUY CALL DEC 95 EZQ-LS OI= 108 at $4.60 SL=2.25

Annotated Chart:




Picked on August 28 at $89.06
Change since picked:    +0.00
Earnings Date        07/23/03 (confirmed)
Average Daily Volume:     3.3 million
Chart =



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

With The "Glory" Gone – The Profits Remain
By Mike Parnos, Investing With Attitude

I recently watched the movie "Glory" again.  A good Civil War
flick, great cast, but the fighting tactics leave a lot to be
desired.  How much sense does it make for soldiers to line up, two
deep shoulder-to-shoulder, and let people shoot at you?   It's a
good way to get dead.

Do you think you can survive that kind of battle?  There's no
margin for error!  You have a better chance of winning the
lottery, finding the needle in a haystack or a virgin over the age
of 17.   It's a great way to curtail a population explosion, but
no way to trade.

The whole concept of not putting yourself in the "line of fire,"
is what we, at the Couch Potato Trading Institute, are all about.
We devote our efforts to learning guerilla-fighting tactics to
trade options.  We nibble around the edges of the market.  We take
our profits a little bit at a time – on the way to our own kind of
victory – not measured by dead soldiers, but by gently placing a
number of dead presidents in your pockets.  Why gently?  Because
dead presidents deserve our respect.
_____________________________________________________________

Mike,
Regarding your so-called "non play" for EBAY.  I wish I could
simply wish my mistakes to have never happened.  Yours truly,
The Option Fairy Godmother

Dear "Option Fairy Godmother,"
It's nice to know that you're out there watching out for (or at
least "watching") option players everywhere.  Tinkerbell is out of
business, so it's just you and the "Good Witch of the North."  It
would be nice to be able to wish away "mistakes," but Dorothy,
you're not in Kansas anymore. Let's try to avoid making the
mistakes in the first place.

For the record, my monthly CPTI educational portfolio suggestions
are based on the closing figures of expiration Friday.  The
following Monday, EBAY gapped up $3-4 and stayed there.  It became
a different story.  If Humpty Dumpty hadn't climbed the wall in
the first place, all the kings horses and all the kings men
wouldn't have had to eat omelettes for dinner.

Here are some trading rules that we've discussed at length in
previous columns that, obviously, bear repeating.

1.  Don't trade during the first hour of trading.  They call it
"amateur hour" for a reason.  That's when market makers wave their
wands and somehow your money ends up in their pockets.  Remember
that fools rush in where angels fear to tread.

2.  If ever a stock/index gaps significantly the morning you plan
to place a trade, the move may completely alter the whole dynamic
of the proposed trade.  Don't do the trade!  It's time to
recalculate.  Don't jump into the pool until you're sure the water
is still in there.  Perhaps, if the stock price retreats back to
near the proposed entry level, it would be OK to try again.  But,
once things have changed, let caution be your guide.

If you're not available to watch the first hour of trading, you
might consider using Alan and Andy at OneStopOption.com.  They're
knowledgeable and "live" brokers.  They'll know what to do – and,
hopefully, what NOT to do when placing an opening order.  You can
reach them at 888-281-9569.

If you did enter the EBAY trade with the $110/115 bear call spread
as part of the condor, I think there's a good chance that EBAY
will retreat (with the rest of the market) and finish within the
profit range and that the original proposed Iron Condor will still
be profitable. (EBAY closed at $109.52)
_____________________________________________________________

The Two Frogs
Two frogs dwelt in the same pool.  The pool being dried up under
the summer's heat, they left it, and set out together to seek
another home.  As they went along, they chanced to pass a deep
well, amply supplied with water.  One of the frogs said to the
other: "Let us descend and make our abode in this well, it will
furnish us with shelter and food."  The other replied with greater
caution: "But suppose the water should fail us, how can we get out
again from so great a depth?"  Do nothing without a regard to the
consequences.
-- Fables, Aesop, Sixth Century

Aesop would have made a hell-of-a trader.  Isn't it interesting
how, even in the sixth century, some had the presence of mind,
along with a little self-discipline, to plan ahead and apply a
little common sense to their lives.  But, then again, they didn't
trade options and have to deal with market makers.  They didn't
have CNBC either and they still survived.  Imagine that.
______________________________________________________________

More Words Of Wisdom
It seems that our CPTI students are full of it – wisdom, of
course.   Here are some of this week's submissions.  Keep 'em
coming.

1. Borrow money from a pessimist - they don't expect it back.
2. Experience is something you don't get until just after you need
it.
3. You know you're trailer trash when . . . you think a woman who
is "out of your league" bowls on a different night.
4. You know you're trailer trash when . . . you let your 12-year
old daughter smoke at the dinner table in front of her kids.
_______________________________________________________________

SEPTEMBER POSITIONS – Remember that September is a FIVE-WEEK
option cycle.  Expiration is Friday, September 19th.

September Position #1 – SPX Iron Condor – SPX @ 1002.84
S & P 500 Index = SPX
We sold 10 contracts of SPX 1040 Sept. calls and bought 10
contracts of SPX 1050 Sept. calls for a net credit.  Then we sold
10 contracts of the SPX 950 Sept. puts and bought 10 contracts of
the SPX Sept. 940 puts.  Our net credit was $2.70 (a total credit
of $2,700).  We have a huge maximum profit range of 950 to 1040.
More aggressive investors may have narrowed the range a bit and
take in more money.   At 1002.84, we're in good shape – for now.

September Position #2 – COF Sell Straddle – COF @ $52.89
Capitol One Financial = COF
We sold 10 contracts of COF Sept. $50 calls @ $2.35 and also sold
10 contracts of COT Sept. $50 puts @ $2.50 for a total credit of
$4.85 ($4,850).  We will make some profit if COF finishes anywhere
between $45.15 and $54.85.  The closer COF finishes to $50, the
more money we'll make.  Our bailout points are the parameters of
our profit range.  Maximum potential profit is, again, $4,850.
COF moved up a bit, but at $52.89 we're still comfortably in
profit territory.

September Position #3 – HPQ (Hewlett Packard) Bear Put Spread –
(Replacement) – HPQ at $19.77 .
Let's use the strategy we discussed above.  HPQ is weak and may
return to the $15 range.  So, lets:
Buy 10 contracts of the HPQ Feb. 2004 $20 puts @ $2.25
Sell 10 contracts of the HPQ Feb. 2004 $15 puts @ $.40
Total debit of $1.85.  Potential max profit of $3.15.  In reality,
if HWP makes the move down, it will probably happen on the
coattails of a market move down.  It shouldn't take until
February.  I'd gladly accept a profit of $800-900 and close the
position early if the opportunity presented itself.

September Position #4 (Replacement) – OEX – Bearish Calendar
Spread – OEX @ $501.24
Maybe Friday was a reversal day.  The market has run up pretty
fast and perhaps it's time to give some gains back.  Let's see if
we can take advantage of this with a calendar spread.
Buy 8 contracts of OEX November 470 puts @ 10.60
Sell 8 contracts of OEX September 470 puts @ 2.20
Total debit of $8.40.  As the market retreats, we will sell near
term puts against the November long 470 puts to further lower our
cost basis.  This position may take a few months to come to
fruition.
______________________________________________________________

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


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