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Daily Newsletter, Sunday, 10/19/2003

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The Option Investor Newsletter                   Sunday 10-19-2003
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: Happy Anniversary
Futures Market: Early Reversals
Index Trader Wrap: Bear Tracks
Editor's Plays: Place Your Bets
Market Sentiment: Earnings Sentiment
Ask the Analyst: "High Pole" warning
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 10-17        WE 10-10        WE 10-03         WE 9-26
DOW     9721.79 + 47.11 9674.68 +102.37 9572.31 +259.23 -331.74
Nasdaq  1912.36 -  2.95 1915.31 + 34.74 1880.57 + 88.50 -113.63
S&P-100  518.12 +  0.07  518.05 +  2.88  515.17 + 15.56 - 21.01
S&P-500 1039.32 +  1.26 1038.06 +  8.21 1029.85 + 33.00 - 39.45
W5000  10098.38 + 13.06 10085.3 + 95.02 9990.30 +343.82 -407.59
RUT      520.36 +  1.30  519.06 +  6.78  512.28 + 27.00 - 34.92
TRAN    2847.28 + 23.73 2823.55 + 38.70 2784.85 +121.02 -130.88
VIX       17.62 -  0.83   18.45 -  1.05   19.50 -  2.73 +  3.16
VXO       19.19 -  0.05   19.24           20.49
VXN       25.33 -  2.29   27.62 -  1.58   29.20 -  1.68 +  1.14
TRIN       1.59            1.24            0.60            1.42
Put/Call   0.64            0.93            0.75            0.98
******************************************************************

Happy Anniversary
by Jim Brown

Last week we celebrated the one-year birthday of the new bull
market. This week we celebrate the 16 year anniversary of the
October-19th market crash of 1987. Stocks dropped -508 points,
-23%, on that Monday and traders were caught completely off
guard. The market had just set a new all time high and the
drop was made worse by an all time high of stocks bought on
margin. With stocks only a couple days from recent highs and
margin debt at an all time high again some traders felt the
drop on Friday could have been fears of a repeat.

Dow - October 1987



October Crash - Intraday




While nobody expects 1987 to repeat 16 years later there are
professional traders who remember that day and probably take
precautions each October. Some of those precautions this week
could have been taking some profits off the table on Friday.
After all the markets are very extended and many traders could
quit today and have a very good year.

Unlike 1987 we are doing much better economically than we
were just a few months ago. On Friday Residential Construction
rose to 1.89 million units amid another spurt in buying
prompted by last months temporary dip in interest rates. This
is a huge number for this late in the cycle and only 2,000
away from the record June rate. Building permits declined
slightly as we near the fall weather slow down.

The new highs in the market helped boost Consumer Sentiment
to 89.4 from 87.7 in September. Both current conditions and
expectations rose with present conditions soaring to 102.2.
This is a very strong survey and represents a widespread
feeling of economic improvement by consumers. Despite the
war, yes it is still underway, unemployment and rising energy
prices the average consumer feels pretty good about the future.
The market is strong, interest rates although higher are still
very low and you have dozens of talking heads on daily TV
talking about the economic recovery and +6% GDP. The yellow
brick road could need to be widened if this euphoria gets
any stronger.

Despite the prior comments that euphoria could evaporate in
a moment with another terrorist attack, market crash or the
failure of the economic recovery to appear. Yes, despite the
better than expected earnings in this cycle there are still
hushed conversations in dark places about the chances of a
real recovery. Those conversations are likely taking on much
more relaxed tones with the top line revenue numbers for S&P
companies rising +8% for those already reported. Actually
the pressure to perform is easing as the earnings parade
continues to build. Estimates for the 3Q were +16% two weeks
ago and with 92% of the companies meeting or beating that
number has risen to +20%. Very strong earnings even if they
are being compared to a weak quarter in 2003.

There have been some stumbles and there are some clouds on
the horizon. The misses have been spotty and sporadic with
only a few in the high profile names. On Friday Mohawk
Industries warned that there was still uncertainty in
consumer confidence trends and unemployment continued to
depress sales. The carpet company lost -$4.60 or -6% in
heavy trading. XL Capital, a reinsurance business, slashed
forecasts for the 3Q due to stronger than expected losses.
The company lost -$6.03 or -7.6% on the news. SUNW and EBAY
were under pressure after their earnings reports despite
the earnings meeting or exceeding estimates. EBAY dropped
-5% after giving guidance that was less than what the street
expected. As companies like EBAY become more mature the
astronomical growth rates of the early years fade and while
still good they do not live up to investor hopes. EBAY is
currently trading at a PE of 78 using 2003 earnings. CAT
lost several of its lives with a drop of nearly -$6 after
failing to reward investors to the level they expected.
In Q2 CAT earnings increased +75% and CAT closed at a new
52-week high the day before announcing earnings this week.
Everyone expected another blowout performance. Instead they
only saw a gain of +4% this quarter and raised estimates to
$3.00 for the year and guided to a +10% growth rate. Analysts
were expecting $3.15 for the year because of the 2Q gains.
They also missed street estimates substantially for the 3Q.
DCLK missed estimates and guided lower and added pressure
to the Internet sector in front of the AMZN earnings next
week.

After months of market gains the "valuation" downgrades
are beginning to fly. Sears was cut by Prudential despite
strong improvements in their retail model. This is just an
example but the trend is beginning to heat up. With many
stocks up +50% or even +100% from their bear market lows
they are low hanging fruit for analysts trying to get their
name in print. This trend will intensify by the end of next
week when nearly 70% of companies will have completed their
earnings confession.

Friday's market action was not unexpected. The lack of a real
and sustainable bounce over the last five days was beginning
to suggest that all the good news was priced into the market
and the bullish bloom was fading. The sell off did not occur
on strong volume with only 3.6 billion shares traded across
all markets but that volume was 4:1 to the downside. That
was the strongest ratio in either direction since Sept-26th.
Decliners beat advancers over 2:1. The worst indicator for
the health of the market was one I discussed positively just
a few days ago. The Russell 2000 lost -9.28 (-1.7%) after
stalling for four days at a new three year highs. By itself
this would not be a material move but it is a reversal of
the strong trends from last week. Funds were pouring money
into small caps when they would normally be cutting back on
positions before their fiscal year end in two weeks. We do
not know if this was just profit taking by different funds
or the leading edge of that suspected portfolio reshuffle.
It was a dramatic move from an index that has been so
strong.

Russell 2000




The Dow has tried to climb over 9800 for four consecutive
days and on Friday it lost ground to trade at 9701 before
seeing some short covering at the close. A -69 point Dow
drop after +500 points of gains over the last two weeks is
nothing. It is barely legitimate profit taking and should
not be construed as anything else. We can speculate that it
could be the leading edge of a bigger October event but it
would just be speculation.

Dow 60 min Chart




The Nasdaq suffered more than the Dow by losing nearly -2%
or -38 points and closing in on 1900 once again. Tech stocks
that disappointed or in some cases surprised with earnings
this week were getting killed as investors raced for the
exits. Losers on Friday for instance included DCLK -24%,
RSAS -20%, WEBX -18%, SPRT -17%, BRCM -8%, PXLW -8%, MRVL
-6%, RMBS -6%, ALTR -6%. Add in EBAY -5% and AAPL -8% and
the index never had a chance. If anything this could be
the leading indicator for the future of the market. These
companies were sold despite good news from several. The
tech sector and the market have very high hopes already
priced in and once those earnings are out those hopes are
meeting reality. The reality is great earnings across the
board but not great enough to protect stocks from potential
profit taking.

Nasdaq Chart




Next week we have over 700 companies reporting earnings,
most in the first four days. Most will meet or beat the
street if the current 92% average hold true. There are no
material economic reports and we will be left to fixate
on the individual earnings and watch as the winners and
sinners hit the tape after earnings. Whether those stocks
will be rewarded with cheers or catcalls is up to investor
expectations. Intel, helped power techs on Wednesday with
its very strong report but closed Friday at a three day
low. The 15 min of fame can be very fleeting and investors
are very demanding.

With options expiration on Friday we should see a very active
open on Monday. Funds who sold covered calls on stocks while
hoping to squeeze a couple more dollars of profit out at the
top should have those stocks called away because of the market
gains over the last four weeks. If they do this on stocks they
are planning to sell anyway then being called away prevents
having to sell them. Depending on how widespread this tactic
was it could be a volatile Monday as those stocks are put
back into circulation by the option holders.

Either way next week promises to be very volatile. With 700
earnings reports, almost no economic reports and only two
weeks to go before fund year end anything can happen. Based
on my email I know the bullish sentiment is alive and well.
With margin debt at an all time high many of those bulls
have bet it all on the 4Q recovery. That puts a lot of stock
in weak hands and according to all reports economic conditions
are improving but still challenging. GE, CAT, INTC, IBM and
many others all repeated the same story. "Signs of economic
stabilization but too soon to call it a recovery." It is like
they all have the same speech writers. If you are a hard core
bull you are thinking I am crazy. I had an email to that effect
on Friday. Something along the lines of "Are you on drugs?
Everybody knows we will be at 11,000 before the end of the
month." You know, it is possible. I cannot concoct a scenario
that would make it happen but then the market does not ask
me for direction. I just try to paint the picture as I see
it and let the readers make their own decisions. I thought
Thursday would be the high for the week but CAT and IBM
spoiled the party and Wednesday turned out to be the winner.

I guess it all boils down to this. We know that some companies
will beat estimates next week and some will miss. The question
is whether enough companies best estimates by a wide enough
margin to offset the negative sentiment from those who don't.
Who is announcing next week that has the power to explode the
market over 9800? MMM, MSFT? What could they say that would
be better than the Intel earnings? At this point it would
have to be a lot better because the excitement is beginning
to fade. Even if we do see some profit taking over the next
couple of weeks it is just PROFIT taking. It will not be the
end of the world. Just think of it as a buying opportunity.
There are millions of investors sitting by their PC this
weekend just hoping there will be a normal October buying
opportunity so they can get that second chance for a cheaper
entry. Those reluctant investors who missed the last several
dips and have been watching the Dow close in on 10,000 are
chomping at the bit to go long. If it comes there is a lot
of money still on the sidelines and I would be very surprised
if that 10K level was not in our rear view mirror by year end.
Until then keep those seat belts fastened because the lead car
in this thrill ride may be just about to disappear from sight.

Enter Very Passively, Exit Very Aggressively!

Jim Brown


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

Early Reversals
Jonathan Levinson

This week brought early potential reversal candles in equities,
treasuries, gold and the US Dollar Index.  Next week will provide
either confirmation or rejection of these preliminary prints,
while opex Friday left traders contemplating the bigger picture
to try to make sense of the day's action.

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



Note regarding pivot matrix:  The support, pivot and resistance
levels above are derived from the high, low and closing price
levels by a simple mathematical formula.  They are not intended
to be predictive of market turning points or to serve as targets,
but rather represent the range retracement levels as generated by
the pivot algorithm.  Do not think of them as market "calls"
or predictions.  Like any technically-derived indicator or price
level, the pivot matrix values should be regarded as decision
points at which to evaluate current market conditions.  Visit us
in the Futures Monitor for our realtime views of the various
markets covered here.

15 minute chart of the US Dollar Index




The US Dollar Index was back to its old tricks on Friday
following Wednesday's countertrend bounce.  A steep selloff
following the release of the Michigan sentiment data brought the
index back to 92.40, with the USD trading 92.20 as of this
writing.  The commodities index (CRB) dropped 2.69 to 243.30, led
by weakness in natural gas, crude and heating oil, and cocoa
futures.

For the week, the US Dollar Index printed a bullish harami at the
bottom of an eight week downtrend.  This inside week will either
resolve itself in a bullish reversal off the higher low just
printed, or extend the downtrend further.

Daily chart of December gold




December gold dropped 1.20 on Friday, testing the range lows with
a spike to 367.30 but recovering most of its losses as the
session progressed.  The move continued what has been developing
into a negative sloping range on the bounce from the spike lows
printed two weeks ago.  The bounce off the intraday low on Friday
was enough to turn the daily chart oscillators toward bullish
kisses, after a bearish-looking Thursday.  Suffice it to say that
gold remains a toss up at current levels.  For the week, the
December gold contract printed a possible bullish doji bottom,
but the 370 level is going to have to hold for that
interpretation to remain valid.


Daily chart of the ten year note yield




The TNX dropped 6.7 basis points to 4.388% on Friday, touching
but not violating the rising trendline that has supported the
yield for the duration of its bullish descending wedge breakout.
The decline was enough to suggest the beginning of a top on the
10 day stochastic, but until the trendline breaks, the trend
remains up.  For the week, the TNX printed a possible doji top,
but it will take a continuation of Friday's decline to confirm.
This week, a firming in the dollar corresponded with firmness in
treasuries, and, as we will see, a weakening in equities.


Daily NQ candles




The NQ has favored us with a clear, obvious bear wedge breakout
coinciding with rolling overbought oscillators at the end of a
week that featured a blowoff spike to new 52 week highs.  The
weekly candle is a shooting star doji with a tall upper shadow,
and the high on the daily chart failed right at the upper
Bollinger band.

The decline was sufficiently orderly to leave the QQV and the
VXN, which are the volatility indices for the NDX and COMPX
respectively, both negative on the day despite a 2.38% bath for
the NQ.  The implied price target on this bear wedge breakdown is
1300, and the rolling oscillators confirm the chart pattern.
Despite this nearly perfect bearish picture on the daily chart, I
do not expect a straight line down, as the intraday oscillators
had grown predictably oversold by session's end on Friday.


30 minute 20 day chart of the NQ




The trendline break on the 30 minute chart was rendered trickier
by the continued climb beneath it on Thursday, but bulls on
Friday didn't have a chance.  An opening spike was sold
immediately following the Michigan sentiment data, and the only
variable from that point on was the speed of the decline and the
weakness of the bounces.  The bearish divergences on the
oscillators on this shorter timeframe were predicting trouble to
come, and it arrived on Friday.

That said, the oscillators are as oversold as they've been in
nearly three weeks, and price has advanced considerably since
then.  The shape of the anticipated bounce from here will tell
all.  If the NQ doesn't bounce on Monday, then the 30 minute
chart oscillators will begin trending, and the herding of the
bulls will have officially begun.

Daily ES candles




The break is even more inspiring on the ES, helped along by the
impressive Dow weakness.  The 10 day stochastic rollover is an
early but nonetheless complete sell signal, awaiting confirmation
on the Macd.  Support on Friday's decline came at the low of
1034.75, which lines up with Fibonacci support off the Wednesday
spike high.  The downside bear wedge target is at 987.75.


20 day 30 minute chart of the ES




As on the NQ, the break on the ES was telegraphed by the bearish
oscillator divergences on the 30 minute chart.  However, unlike
with the NQ, there was no troublesome secondary drift along the
bottom of the trendline.  The ES broke down on Friday and never
looked back, bouncing twice from the level 1039 before hitting a
low at 1034.75.  1039 was a level tested throughout the past two
weeks, and on the shorter timeframes, 1041 appeared as the
neckline of a head and shoulders formation.  The downside
formation target would be 1028, which is the next significant
confluence and Fibonacci support.


Daily YM candles




Same picture on the YM.

20 day 30 minute chart of the YM




For the week, we had bearish reversals in equities breaking out
of bearish patterns from oversold territory on the daily charts,
with a potential bullish reversal in treasuries, gold and the US
Dollar Index.  I don't expect gold and the US Dollar Index to
rise together for long, but that's the early message this week on
the weekly candles.

To my mind, Monday's either going to tank or bounce.  This isn't
as trite as it seems.  The 30 minute and shorter intraday
timeframes are all quite oversold, and a technical bounce is
expected by the charts if the markets remain orderly.  If so,
I'll be looking for resistance between 1039 and 1044 ES, above
which the bulls will have a lot of shorts running for cover.
However, markets are not always orderly, and if it does not
bounce, then the potential is there for this week's technical
damage to develop into a rout.  Bulls have amassed considerable
profits this year, and any further profit-taking would become a
trending move on the intraday cycles.


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

Bear Tracks
Jonathan Levinson

Unlike a doji day, which features an abrupt 180-degree change in
price and mood, a doji week accomplishes the same end but over a
span of 5 days.  What looked like a very bullish market on
Wednesday morning looked just as bearish on Friday afternoon,
coinciding with a doji top printed on the weekly candle chart.

Weekly COMPX candles




The heavier volume this week was on the sell side for both the
Nasdaq and the Dow.  The week began quite bullishly, and although
it's just a speck on this three year weekly chart of the Nasdaq,
we see this week having made a new high of the year, pushing
against the upper 20-week Bollinger band and pinning the weekly
chart oscillators in overbought territory.  The 10 week
stochastic had been printing a negative divergence, but
Wednesday's spike high, subsequently reversed on Thursday and
Friday, began the process of reversing that negative oscillator
slope.

Nevertheless, the weekly oscillators are overbought and waiting
to begin their downphases.  The Nasdaq's 37.78 point, 1.9% drop
on Friday, following Wednesday afternoon's and Thursday's
weakness may have provided the push.

Daily COMPX candles




The daily COMPX candles show the index pinned to the upper
resistance trendline of a large bear wedge covering the duration
of the rally off the March lows.  The selling that commenced
Wednesday and accelerated on Friday was sufficient to end the
oscillator upphase that has carried this leg of the rally.  As
we've been discussing in the nightly Futures Wraps, this cycle
upphase had been dominating the 30 minute chart cycle, as those
oscillators had been consistently aborting their downphases
during the past two weeks.  With this oscillator now rolling
over, uncertainty should resolve itself to the downside.

Weekly INDU candles




Impressive weakness in a number of Dow components this week
prevented the Wednesday spike from tilting the 10 week stochastic
to the same extent as it did on the COMPX.  We see upper wedge
trendline resistance touched but not broken this week, and while
the apex of the wedge could be at higher prices, the oscillators
on this long timeframe are signaling a significant challenge for
bull to take it there from here.  A bear wedge breakdown below the
9400 level targets a possible retest of the March lows, 2000
points below.

Daily INDU candles




The weekly oscillators are topped out and sport a bearish
divergence.  The daily chart oscillators appear to have topped on
Wednesday, but longer timeframes take longer to complete and
confirm the top.  With trend-following oscillators, key reversal
points are always confirmed in the rearview mirror, and we're
forced to intuit the moment at which such occurs.  Most often,
the end of a cycle will see a blowoff move in the direction of
that cycle, and while Wednesday's top lacked the intensity and
drama that I expected, the change in mood from Monday to Friday
was impressive.  Next week will tell the tale.

Daily OEX candles




Moving down to our primary trading vehicles, we see the same
downphase setting up on the daily OEX chart.  Resistance at 525
will be the maginot line, and while the rolling longer term
oscillators and unbroken upper resistance lines suggest that the
rally highs have been seen, the topping process may not be over.
A move to 525 would not over disturb the daily oscillators, and
as can be partially seen in the 30 minute chart below, all of the
intraday oscillators were oversold and beginning upphases heading
into Friday's close.

The broken trendline will provide strong resistance at 522, and
the 520 confluence / Fibonacci line will give bulls a struggle.
Note that the 300 minute stoch on the 30 minute chart has not
been this oversold in more than two weeks, since before this leg
of the rally began.  For these reasons, a possibly meaningful
bounce cannot be ruled out.

The difference between now and then is that the daily oscillator
had not topped three weeks ago but it has now, which implies that
another stage to significantly higher highs in unlikely.
Furthermore, while the 300 minute and 10 day stochastics are now
opposed, the shorter the cycle, the more susceptible it is of
trending.  I'd expect some kind of bounce on Monday to a lower
high, followed by a renewed plunge to lower lows.  The weakness
in bellwethers, notable GE and more recently, IBM, combined with
the sustained sub-20 VXO readings this week has me far from
thinking bullish thoughts for next week.


20 day 30 minute chart of the OEX





Daily QQQ candles




The Qubes look every bit as weak as the OEX, and what is the
beginning of a bounce on the 300 minute stochastic for the OEX is
a weak twitch on that of QQQ (below).  The stage looks set as of
Friday's close for further decline on Monday morning, but a
weaker bounce, possibly starting from 34.50 support would be
easiest to imagine.  35.70 should no be exceeded to the upside,
and below 34.50, 33.30 is the next downside target.


20 day 30 minute chart of the QQQ





For next week, there's the additional uncertainty of the
unwinding of October option positions, which should skew Monday
morning's trading.

Given how extreme the sentiment, volatility, breadth and even
price-based indicators have become, it's almost irresistible to
read the above charts with a bearish bias, as I have done.  The
cycle configuration has not been this well aligned for a
sustained downside move in a long time.  The Fed drained 5B via
expiring repos on Friday, most likely to support the struggling
dollar  but in any event displaying a willingness to let the
markets sink or swim on their own, and rates have been rising.
These factors as well support a bearish bias.

If the 2003 rally has taught traders anything, it is to not get
married to a point of view.  Good traders can change perspective
jion a dime, just as the market can do.  While I believe that the
conditions are ripe for a washout, I won't hesitate to change my
stance should prices reverse strongly.  Caution and capital
preservation remain key, but as we've been urging for days now,
bulls need to keep those stops active and snugged up (if they
didn't trigger on Friday).  See you at the bell!


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

Place Your Bets

The DJX put play from last week did not go off exactly as
expected. The Dow did not reach 9975 as we hoped and there
is a good possibility the trend has already changed.

We did get triggered on one third of the suggested DJX-96
puts and your fill should have been in the $1.35 range. You
should still have the orders at 99.00 and 99.75 but we may
not see those numbers next week. If the trend has changed
the potential for getting over 98.00 again could be slim.

Our current stop loss is a distant 10,100. Should the Dow
trade under 9600 the plan was to lower the stop loss to
9700. The profit targets were to sell 1/2 position at
Dow 9500 and another 1/2 at 9300. If we do not fill any
more positions then I would suggest selling them all at
Dow 9500. There is not enough with only 5 contracts to
break them up. If you went out on the limb for more than
five then break up the exit any way you like. Dow 9300
seems like a long way off but we were below that level on
October 1st. My best guess for the beginning of a market
event was next Tuesday Oct-21st give or take a couple days.
Just a guess based on option expiration settlement and the
mutual fund year end cycle in two weeks.


Got Books? Toys, Trains, TVs, Telephones?

It is that time again. Amazon earnings. Amazon has evolved
from just a book seller to a seller of anything that is
not illegal or controlled. They have struck up partnerships
with almost every major retailer in the country and they
take orders for instant shipment of anything on the net.

My how times have changed. Amazon is the favorite of short
sellers because of their extreme valuations for a book
seller. Favorite is a strange term because shorting AMZN
stock has been a very expensive hobby for years. Regardless
of the earnings or non earnings it just keeps going up.
Now that they actually have earnings they are faced with
the same problem as EBAY. There is something to measure
them against and they are a maturing business model. The
competition on the Internet is increasing with multiple
ways for any hobby trader to sell anything to anybody.

AMZN is at a three year high at $60.00 and is begging to
be shorted again. AMZN is currently the 9th most shorted
stock with 43 million shares short. Average daily volume
is 8 million shares. This represents a huge potential
for a short squeeze. However with the stock up +272% in
the last 12 months there is also a huge potential for some
profit taking. If AMZN should disappoint it could hit $50
in a day. It was just there ten days ago to going back
would not be tough.

I wrestled with how to play this and tried several different
combinations but the premiums are so high on AMZN options
that nothing made sense other than just a straight put
option.

If you bought the stock and sold a covered call you are
at risk of the stock dropping. If you sold the call naked
you are at risk of a short squeeze. Because AMZN is exactly
$60 the options on either side of the price are $10 apart
and the difference in prices make credit spreads impractical.
I could not make any combination work without going to
extremes.

I settled on a simple directional put. The Jan-$55 put at
$3.80. The Nov $55 put is $1.75 and actually should be a
little cheaper on Monday afternoon now that October has
expired. The only challenge is price movement in AMZN on
Monday. Earnings are on Tuesday night after the close. To
avoid escalation in price if the market weakness carries
over to Monday I think we should just bite the bullet and
buy them at the Monday open. We can watch the market and
the stock and if there is no negative movement we could
let the premium bleed off a little bit before making the
buy but these are volatile options on a volatile stock and
anything is possible.

Buy AMZN Nov-$55 PUT ZQN-WK $1.75 at Friday's close
Buy AMZN Jan-$55 PUT ZQN-MK $3.80 at Friday's close

I personally like the NOV put but many readers do not like
to speculate on the shorter time frames. Going a little
farther out to January costs about $2 more but the time
decay would be much slower. I suspect that any drop in
AMZN will be brief unless they really miss badly. That
gives us 2-3 weeks before the Q4 ramp begins. A $5 drop
in AMZN would bump the Jan put premium from $3.80 to $6.00.
Only a +2.10 gain but the risk of premium deflation would
be safer. A $5 drop would jump the Nov put from $1.75 to
$3.75 "IF" it happened next week. If it took two weeks
the time premium could decay as fast as the price of the
stock decreased. Choose the one you like but for the
official recommendation I am going with the Jan option.

The optimistic price target would be $50 but the realistic
target is $55. Choose your own exit here and I strongly
suggest you put a limit order in immediately after you
buy the option. We could get a spike dip on the open after
the announcement to some obscene level only to be bought
several seconds later.

Amazon Chart






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

Play Recaps

MMM Bull Put Spread (recommended 10/05)

Still patiently waiting.

http://members.OptionInvestor.com/editorplays/edply_100503_1.asp


LUV Calls (recommended 9/14)

With oil prices hovering around $32 a barrel and OPEC cutting
back on production I am going to close this play. It is right
where we started it four weeks ago.  Call it a breakeven and
let it go.

http://members.OptionInvestor.com/editorplays/edply_091403_1.asp


Powerball

We lost a little ground with EMC buying Documation but still
holding our own. We are likely to lose some value over the
next couple weeks before any 4Q ramp begins. TLAB still the
black sheep in the portfolio.

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

Earnings Sentiment
- J. Brown

I hope everyone is familiar with the term "sell the news" because
we may be seeing that on a market-wide scale soon.  For weeks
we've been told about how great the Q3 earnings were going to be.
Thankfully, not only have they been good but most companies are
beating even the strong estimates for 16 percent improvement.
Sure there are a few misses here and there but there always will
be.  Yet now that earnings are here it tends to be anticlimactic.
We'll get some earnings announcement spikes but many times we'll
be left with a post-earnings depression.

Momentum traders pull out looking for their next ride and the
markets are left with the thought "what's next?"  Of course I'm a
little early to be discussing the denouement to Q3 earnings
season.  This coming week we'll hear from hundreds of companies
and as Jim alludes to in his wrap the roller coaster is just
getting started.  Like many coasters we tend to have a long, slow
grind higher setting us up for the thrilling, sometimes
terrifying drop.  Of course it's the big fall that gives us
enough velocity to make it up the next hill.  Judging from the
market internals on Friday we could see a continuation of the
selling early next week.  On both the NYSE and the NASDAQ
decliners outnumbered advancers by more than 2 to 1 and down
volume out paced up volume by more than 3 to 1 on the NYSE and 4
to 1 on the NASDAQ.  We haven't seen bearish internals like that
in a while.

Traders should be double-checking their stops and looking at
their favorite stocks for the next support level.  There's still
going to be a lot of dip buying but the question is how deep will
the dip be.  It can be painful to try and pick the bounce before
it's truly begun so use extreme caution.


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

Market Averages

DJIA ($INDU)

52-week High:  9850
52-week Low :  7197
Current     :  9721

Moving Averages:
(Simple)

 10-dma: 9712
 50-dma: 9480
200-dma: 8774



S&P 500 ($SPX)

52-week High: 1053
52-week Low :  768
Current     : 1039

Moving Averages:
(Simple)

 10-dma: 1041
 50-dma: 1016
200-dma:  940



Nasdaq-100 ($NDX)

52-week High: 1439
52-week Low :  795
Current     : 1394

Moving Averages:
(Simple)

 10-dma: 1403
 50-dma: 1342
200-dma: 1171



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

Normally when the markets slide the volatility or fear indices tend
to move higher.  We do see some small gains but investors are still
feeling pretty fear-less.

CBOE Market Volatility Index (VIX) = 17.62 +0.43
CBOE Market Volatility Index (VXO) = 19.19 +0.07
Nasdaq Volatility Index (VXN)      = 25.33 -0.14


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.64      1,152,086       733,258
Equity Only    0.46      1,017,225       463,135
OEX            1.24         43,281        53,726
QQQ            0.97         79,996        77,558


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

Bullish Percent Data

           Current   Change   Status
NYSE          73.8    + 0     Bull Confirmed
NASDAQ-100    79.0    + 0     Bear Correction
Dow Indust.   83.3    + 0     Bull Correction
S&P 500       80.8    + 0     Bull Confirmed
S&P 100       79.0    + 0     Bull Correction


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  1.09
10-Day Arms Index  1.04
21-Day Arms Index  1.16
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     839       927
Decliners    1944      2130

New Highs     100       119
New Lows       10         3

Up Volume    350M      310M
Down Vol.   1173M     1412M

Total Vol.  1561M     1737M
M = millions


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

Commitments Of Traders Report: 10/14/03

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

Unfortunately we're still not seeing much change in sentiment
for the Commercials in the big S&P futures.  They remain slightly
net short.  Small traders aren't making many moves either and
they remain net long.


Commercials   Long      Short      Net     % Of OI
09/23/03      395,123   397,858   ( 2,735)   (0.0%)
09/30/03      395,713   397,577   ( 1,864)   (0.0%)
10/07/03      390,232   402,964   (12,732)   (1.6%)
10/14/03      391,972   410,299   (18,327)   (2.3%)

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
09/23/03      139,482    87,981    51,501     22.6%
09/30/03      144,681    96,801    47,880    19.8%
10/07/03      138,644    88,018    50,626    22.3%
10/14/03      133,940    86,418    47,522    21.6%

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

It's the same story here.  Commercials increased their positions
in both longs and shorts but remains slightly net short.  Small
traders trimmed some short positions and opened 30K more long
contracts just in time for the late week weakness.

Commercials   Long      Short      Net     % Of OI
09/23/03      109,417   204,026   ( 94,609)  (30.2%)
09/30/03      163,828   218,991   ( 55,163)  (14.4%)
10/07/03      212,273   225,377   ( 13,104)  ( 3.0%)
10/14/03      221,897   233,066   ( 11,169)  ( 2.5%)

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year:  133,299   - 09/02/03

Small Traders Long      Short      Net     % of OI
09/23/03      175,750    62,558   113,192    47.5%
09/30/03      131,698    65,259    66,439    33.8%
10/07/03      134,990    63,560    71,430    36.0%
10/14/03      161,208    59,213   101,995    46.3%

Most bearish reading of the year: (77,385)  - 09/02/03
Most bullish reading of the year: 449,310   - 06/10/03


NASDAQ-100

Sorry...no big changes for the Commercial traders here either.
They remain net short while the Small Trader remains net long.


Commercials   Long      Short      Net     % of OI
09/23/03       32,648     42,565   ( 9,917) (13.2%)
09/30/03       33,571     42,993   ( 9,422) (12.3%)
10/07/03       33,253     40,861   ( 7,608) (10.3%)
10/14/03       34,639     41,880   ( 7,241) ( 9.5%)

Most bearish reading of the year: (21,858)  - 08/26/03
Most bullish reading of the year:   9,068   - 06/11/02

Small Traders  Long     Short      Net     % of OI
09/23/03       17,862     9,880     7,982    28.8%
09/30/03       19,803     9,917     9,886    33.3%
10/07/03       18,182     9,688     8,494    30.5%
10/14/03       16,822     9,046     7,776    30.1%

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

No one seems willing to make any big bets.  Commercials have
been stuck in the same range for weeks now and remain net long
the DJ futures.  Small traders took some money out of their long
and dumped some of it into shorts but not much.

Commercials   Long      Short      Net     % of OI
09/23/03       15,911     9,123    6,788      27.1%
09/30/03       16,561     8,932    7,629      31.5%
10/07/03       16,277     9,528    6,749      26.2%
10/14/03       16,595     9,433    7,162      27.5%

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
09/23/03        7,505     7,779   (  274)   ( 1.8%)
09/30/03        7,578     8,125   (  547)   ( 3.5%)
10/07/03        7,392     7,910   (  518)   ( 3.4%)
10/14/03        6,427     8,495   (2,068)   (13.9%)

Most bearish reading of the year:  (8,777) - 10/12/01
Most bullish reading of the year:   8,523  -  8/26/03

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


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

"High Pole" warning

I would appreciate it if would explain "high pole warning" now
showing in eBay regarding your comments ... "after retracing more
than 50% of the stock's recent rise from $54 to $61.  The first
sign of weakness would be a trade at $52."  I also noticed the
"high pole warning" in your StockCharts.com link.

This is a great question and one that I get asked quite often,
especially by those traders/investors that are using
www.stockcharts.com's point and figure charts, where they will
sometimes see "Alert High Pole Warning" or "Alert Low Pole
Warning" in the upper left-hand corner of StockCharts.com's point
and figure charts.

In their most basic form, these are "warnings" that a potential
reversal of trend may be in the making.  But I always urge great
caution in any rush to judgment when we see such an alert or
point and figure chart formation develop.  It is very rarely used
as a "take trade action" pattern, but used as an alert to the
potential reversal back lower from a bullish trend.

It is extremely important to perform SECTOR and or MARKET
analysis when trying to ascertain the potential implications of
the "high pole" or "low pole" warning, with most common
sector/market analysis using the bullish percent.  The "high pole
warning" pattern is most reliable in a bear-configured market.

I put greater importance on a high pole warning when ....

1)  A stock has recently achieved, exceeded, or come close to
achieving its bullish vertical count, where the "high pole"
warning may then be signaling the stock may have achieved the
market's target for the stock and is now looking to distribute or
sell the stock back lower as the market's price goal has been
achieved.

2)  A sector or like-market bullish % is at overbought levels,
which is a higher level of risk condition for bulls, and the
"high pole" warning develops as if the market has suddenly deemed
the stock too risky based on the information at hand.

I will show eBay's point and figure chart a little later, but I
want to show you an example of an accurate and inaccurate high
pole warning that would have been issued in SanDisk (NASDAQ:SNDK)
$74.68 back in December of 2003 and March of this year.

The "high pole" warning is issued whenever a point and figure
chartist observes a long column of X that gets retraced by more
than 50%.

In SanDisk's (SNDK) chart, we're going observe the accurate high
pole warning, where SNDK's PnF chart built a column of X from $19
to $29 (12 Xs) and then retraced more than 50% (more than 6 Xs)
with a column of 0 from $28 to $21.

Here is a chart of Sandisk (SNDK) on the left, and the ever-
important NASDAQ-100 Bullish % ($BPNDX) on the right, where that
market's risk would be evaluated.

SanDisk and NASDAQ-100 Bullish % Chart comparisons




On the left, I've shown 2 separate "high pole warning" formations
where we can see a long column of X being retraced by more than
50%.

In December of last year (Red C on a PnF chart) the "high pole
warning" on SNDK's PnF chart may have deserved greater attention
as the chart on the right, the NASDAQ-100 Bullish % ($BPNDX) was
at high levels of bullish risk at 82%.  In December of 2002, the
NASDAQ-100 Bullish % was reading "bull confirmed" at 82%, but
when it reversed back below 70%, it would have then read "bear
alert."  This "bear alert" status is what is referenced as a
bear-configure market, where the "high pole warning" is given
greater importance.

However, in mid-March (between RED 3 and RED 4) the "high pole
warning" could have still been observed, but may not have
received as much credence and the NASDAQ-100 Bullish % ($BPNDX)
was reversing up from 30% in March (RED 3), had turned "bull
alert" status and the NASDAQ-100 internals looked to be building
strength with 50 of the stocks (50% of 100 stocks is 50 stocks)
showing PnF buy signals on their charts.

Furthermore, when SNDK's PnF chart gave in inaccurate "high pole
warning" it had just achieved its bearish vertical count.

Today, after the October 17, 2003 close, the NASDAQ-100 Bullish %
($BPNDX) is currently in "bear correction" status at 79% bullish.
Levels above 70% are deemed higher risk levels for bulls, and for
the better part of the last 5-months, the NASDAQ-100 would have
been and still is deemed very bullish, but also at a very high
risk level for bulls.

Therefore, we should give greater credence to "high pole
warnings."

Now, before we proceed with a chart of eBay (NASDAQ:EBAY) $54.86
-4.59%, where its chart gave the "high pole warning," just re-
study the SNDK chart above in December (RED C) and January (RED
1) on its PnF chart.

It's Friday night when I'm writing this column and I just got
through listening to William J. O'Neil talking about how his
paper, Investor's Business Daily uses models that are based on
history, where they look for history to repeat.

This "look to history to repeat" is a strong belief of mine, but
I also look for DIVERGENCE to history, where greater profits are
often found (to the upside and downside).

When I recently profiled a bullish trade in eBay (NASDAQ:EBAY)
near $55 dollars, I was looking for an Internet stock, that was
NOT overextended on its point and figure chart, or was in some
resemblance of a base of consolidation.  The reason I wanted to
find an Internet or Internet-related stock in a base was that we
were making constant observations of various Internet stocks
still surging to new 52-week highs despite the higher levels of
BULLISH RISK as depicted by the various bullish % charts, like
the NASDAQ-100 Bullish % ($BPNDX) above.

With BULLISH RISK high, I wanted to at least look for an Internet
stock that was in a base of accumulation, and a stock that was
showing signs of breaking out of that base of accumulation.

With that in mind, lets now look at eBay's PnF chart.  I'm hoping
that those of you reading this article will also look to apply
some of the items discussed in today's column to other stocks you
currently hold, or are thinking about buying.

eBay (EBAY) Chart - $1 box




The "high pole warning" on EBAY's PnF chart wasn't developed
until today and came after the company reported quarterly
earnings, where a gap lower situation occurred.

Bears have been warning bulls all year and even late last year
that EBAY was or has been overvalued, but the market simply
hasn't been listening.

Perhaps today's "high pole warning" is just that, a warning that
the euphoric bullish that began in October of last year at $31,
when EBAY gave a triple-top buy signal is about to come to an
end.

I would suggest a BULL that is holding a FULL position (if you
normally buy $5,000 worth of stock as a FULL position) then they
should most likely give credence to the current "high pole
warning" and look for a rally point, which I've marked at $57, as
a point to lighten up on positions.

With the stock gapping lower at today's open, it may have been
worth hanging onto the bullish position, until a trade at $52,
where a sell signal would be generated, would then have the
trader looking to hedge their bullish position, just in case the
stock were to violated more critical support above $50, which is
something the MARKET has not allowed EBAY to do since August.

So.. there you have it.  That's what a point and figure chartist
describes as a "high pole warning," and how a trader/investor
might look to combine a bullish % chart when attempting to
interpret this warning or weigh its credence.

Neither StockCharts.com or DorseyWright.com has searches for the
high pole warning, as it isn't really a "pattern" to screen for,
but more of an "alert."

The high pole warning is probably more analogous to a flashing
yellow street light that says... "hey... slow down a bit and be
careful.  There may be danger just around the corner."  The
yellow light would be flashing a little faster in a bear-
configured market/sector environment.

In Friday's 01:00 PM EST update, I invited subscribers at both
OptionInvestor.com and premierinvestor.net to send me some
technology stocks that might have been left behind in the recent
technology stock advance, where the Stock Trader's Almanac points
out that late October is the time to begin buying DEPRESSED high
tech stocks.

I didn't get receive any e-mail so I decided to tackle the "high
pole warning" as I had received several questions regarding its
referance in EBAY's PnF chart.

Now... there is also the "low pole warning," which as you can
probably guess, is a warning to BEARS that a stock might be
coming back into favor with the market on a longer-term basis, as
it retraces more than 50% of a decline, and long column of O
(supply).  This is a good point and figure "warning" pattern to
be looking for this time of year to perhaps signal a stock where
demand is beginning to outstrip supply, and a longer-term change
of bearish trend may be taking place.

Over the course of this week, try thinking back to some of the
"old favorites" among technology stocks, that just haven't
participated in the rally since March.  Maybe there is one or two
where we can quickly look at some PnF charts and maybe, just
maybe there's a "low pole warning" that has been developing.

While I've discussed the "high pole warning" think just the
inverse as it relates to a "low pole warning."  One "low pole
warning" that comes to mind is Geron (NASDAQ:GERN) $14.90 -2.48%,
where its PnF chart developed a "low pole warning" in February of
this year, when it retraced more than 50% of a long column of O
from $4.25 to $1.50.  It wasn't until this spring that we
actually picked up on the stock's PnF chart at the $5 level, but
that "low pole warning" and bullish supply/demand characteristics
that were developing sure proved correct.

Again... I don't have any PnF stock screens available to find
this low pole warning, which might hint of a longer-term reversal
of fortune for a stock, and I've got just two eyeballs.

Try to think of stocks that were high flyers like GERN, which
used to fetch over $70 per share, and even though the stock you
think of may have rising from $5 to $10 and is up 100%, I would
still consider it to be a "beaten down" tech stock, and perhaps
not unlike GERN, there's some old bulls still around that even at
$10.00 can still see $70 at some point in the future.  We don't
care if the stock can go from $10 back to $70, but $10 to $25
would be just fine.

Did you see Brooktrout (NASDAQ:BRKT) $12.75 +50% today?  I
remember this "old favorite" fetching $50 just over 3-years ago!

Jeff Bailey


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

-----------------
Earnings Calendar
-----------------

Symbol  Company               Date           Comment      EPS Est

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

MMM    3M Company            Mon, Oct 20  Before Market Open   0.79
ALTR   Altera Corporation    Mon, Oct 20  After Market Close   0.11
AME    AMETEK Inc.           Mon, Oct 20  After Market Close   0.64
ACI    ARCH COAL INC         Mon, Oct 20  Before Market Open   0.02
CD     Cendant Corporation   Mon, Oct 20  After Market Close   0.45
CHKP   Check Point Sftwr TechMon, Oct 20  Before Market Open   0.23
C      Citigroup Inc.        Mon, Oct 20  Before Market Open   0.85
CNF    CNF Inc.              Mon, Oct 20  After Market Close   0.48
EW     Edwards Lifesciences  Mon, Oct 20  After Market Close   0.35
RE     Everest Re Group, Ltd Mon, Oct 20  After Market Close   2.05
FBP    First BanCorp         Mon, Oct 20  Time Not Supplied    0.53
HAS    Hasbro, Inc.          Mon, Oct 20  Before Market Open   0.42
HRH    Hilb Rogal Hobbs Com  Mon, Oct 20  After Market Close   0.55
IDXX   Idexx Laboratories    Mon, Oct 20  Before Market Open   0.41
ICBC   Independ Comm Bank    Mon, Oct 20  After Market Close   0.64
JCOM   j2 Global Commu       Mon, Oct 20  Time Not Supplied    0.27
KEM    Kemet                 Mon, Oct 20  After Market Close  -0.12
LXK    Lexmark International Mon, Oct 20  Before Market Open   0.69
LRY    Liberty Property TrustMon, Oct 20  After Market Close   0.79
LNCR   Lincare Holdings      Mon, Oct 20  After Market Close   0.55
MEOH   Methanex              Mon, Oct 20  Time Not Supplied    0.28
NE     Noble Corporation     Mon, Oct 20  Time Not Supplied    0.39
NHY    Norsk Hydro           Mon, Oct 20  Before Market Open   1.05
NVS    Novartis Corporation  Mon, Oct 20  Before Market Open   0.52
PCL    Plum Creek Timber     Mon, Oct 20  After Market Close   0.28
SLAB   Silicon Laboratories  Mon, Oct 20  After Market Close   0.24
LUV    Southwest Airlines    Mon, Oct 20  Before Market Open   0.13
SWBT   Southwest Bank Texas  Mon, Oct 20  After Market Close   0.48
TXN    Texas Instruments     Mon, Oct 20  After Market Close   0.09
TNB    Thomas & Betts        Mon, Oct 20  After Market Close    N/A
TMA    Thornburg Mortgage    Mon, Oct 20  After Market Close    N/A
UHS    Universal Health Serv Mon, Oct 20  After Market Close   0.76
WWY    Wm. Wrigley Jr. Co.   Mon, Oct 20  Time Not Supplied    0.50


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

NDN    99 CENTS Only         Tue, Oct 21  Before Market Open   0.18
ABGX   Abgenix               Tue, Oct 21  Time Not Supplied   -0.39
AFCI   Advanced Fibre Comm   Tue, Oct 21  After Market Close   0.10
ACS    Affiliated Comp Serv  Tue, Oct 21  Before Market Open   0.60
ALB    Albemarle Corporation Tue, Oct 21  Time Not Supplied    0.40
AED    Allied Domecq PLC     Tue, Oct 21  Before Market Open   N/A0
AMZN   Amazon.com, Inc.      Tue, Oct 21  Time Not Supplied    0.10
AMX    America Movil, S.A.   Tue, Oct 21  After Market Close   0.39
AMTD   Ameritrade Holding    Tue, Oct 21  Before Market Open   0.13
AMGN   Amgen                 Tue, Oct 21  After Market Close   0.51
ARB    Arbitron Inc.         Tue, Oct 21  Before Market Open   0.54
ARMHY  ARM Holdings Plc.     Tue, Oct 21  Before Market Open   0.02
AJG    Arthur J. Gallagher   Tue, Oct 21  After Market Close   0.51
ASH    Ashland               Tue, Oct 21  Time Not Supplied    1.30
T      AT&T                  Tue, Oct 21  Before Market Open   0.53
AVB    Avalonbay Communities Tue, Oct 21  After Market Close   0.78
AV     Avaya                 Tue, Oct 21  After Market Close   0.04
AVY    Avery Dennison Corp   Tue, Oct 21  During the Market    0.66
ONE    Bank One              Tue, Oct 21  Before Market Open   0.75
BSG    BISYS GROUP INC       Tue, Oct 21  After Market Close   0.15
BCC    Boise Cascade         Tue, Oct 21  Before Market Open   0.41
BXP    Boston Properties     Tue, Oct 21  After Market Close   0.97
BSX    Boston Scientific CorpTue, Oct 21  After Market Close   0.29
EAT    Brinker International Tue, Oct 21  Before Market Open   0.47
BNI    Burlington No Santa FeTue, Oct 21  Before Market Open   0.55
CHRW   C.H. Robinson Wrldwde Tue, Oct 21  After Market Close   0.34
CARS   Capital Automotive    Tue, Oct 21  Before Market Open   0.59
CECO   Career Education      Tue, Oct 21  Time Not Supplied    0.21
CNP    CenterPoint Energy    Tue, Oct 21  Before Market Open   0.31
CTX    Centex Corporation    Tue, Oct 21  After Market Close   2.33
CKFR   CheckFree             Tue, Oct 21  After Market Close   0.20
CPS    ChoicePoint, Inc.     Tue, Oct 21  Before Market Open   0.35
COH    Coach, Inc.           Tue, Oct 21  Before Market Open   0.18
CTSH   Cognizant Tech Solut  Tue, Oct 21  Time Not Supplied    0.22
CPWR   Compuware Corporation Tue, Oct 21  Time Not Supplied   -0.01
CPO    Corn Products Intl    Tue, Oct 21  Before Market Open   0.54
CYMI   Cymer, Inc.           Tue, Oct 21  After Market Close  -0.07
DCX    DaimlerChrysler       Tue, Oct 21  Before Market Open   0.63
DFG    Delphi Financial Grp  Tue, Oct 21  After Market Close   1.06
XRAY   DENTSPLY InternationalTue, Oct 21  After Market Close   0.49
DV     DeVry                 Tue, Oct 21  Time Not Supplied    0.17
DCTM   Documentum            Tue, Oct 21  After Market Close   0.08
D      Dominion Resources IncTue, Oct 21  Before Market Open   1.29
ELNK   EarthLink             Tue, Oct 21  Before Market Open   0.06
ECL    Ecolab Inc.           Tue, Oct 21  Before Market Open   0.31
ELUX   Electrolux AB         Tue, Oct 21  Time Not Supplied    0.89
ESV    ENSCO International   Tue, Oct 21  Before Market Open   0.19
FHR    Fairmont Htl & ResortsTue, Oct 21  Time Not Supplied    0.20
FII    Federated Investors   Tue, Oct 21  After Market Close   0.46
FISV   Fiserv                Tue, Oct 21  After Market Close   0.41
FLS    Flowserve Corporation Tue, Oct 21  Before Market Open   0.25
FULT   Fulton Financial      Tue, Oct 21  Time Not Supplied    0.33
GG     Goldcorp              Tue, Oct 21  After Market Close   0.10
GDW    Golden West Financial Tue, Oct 21  Time Not Supplied    1.77
HRS    Harris                Tue, Oct 21  After Market Close   0.36
HCA    HCA                   Tue, Oct 21  Before Market Open   0.61
HMA    Health Management Ass Tue, Oct 21  Before Market Open   0.28
HUBb   Hubbell Incorporated  Tue, Oct 21  During the Market    0.49
HYSL   Hyperion              Tue, Oct 21  After Market Close   0.21
N      Inco                  Tue, Oct 21  Time Not Supplied   -0.06
IPCR   IPC Holdings          Tue, Oct 21  After Market Close   1.04
LF     LeapFrog Enterprises  Tue, Oct 21  After Market Close   0.60
LOGI   Logitech InternationalTue, Oct 21  Time Not Supplied    0.23
LZ     Lubrizol              Tue, Oct 21  Before Market Open   0.60
MHM    Masonite InternationalTue, Oct 21  Time Not Supplied    0.56
MXO    Maxtor Corp           Tue, Oct 21  After Market Close   0.16
MDCO   MEDICINES CO          Tue, Oct 21  After Market Close  -0.11
MEL    Mellon Financial Corp Tue, Oct 21  After Market Close   0.42
MRBK   Mercantile Bankshares Tue, Oct 21  Before Market Open   0.66
MGG    MGM MIRAGE            Tue, Oct 21  Before Market Open   0.37
MKSI   MKS Instruments       Tue, Oct 21  After Market Close  -0.02
JNC    Nuveen Investments    Tue, Oct 21  Before Market Open   0.39
OXY    Occidental Petroleum  Tue, Oct 21  Before Market Open   1.01
OI     Owens Illinois        Tue, Oct 21  After Market Close   0.40
PTZ    Pulitzer Inc.         Tue, Oct 21  Before Market Open   0.46
DGX    Quest Diagnostics     Tue, Oct 21  Before Market Open   1.08
RSH    RadioShack CorporationTue, Oct 21  Before Market Open   0.32
RJF    Raymond James         Tue, Oct 21  During the Market    0.44
RYN    Rayonier Inc.         Tue, Oct 21  After Market Close   0.12
RGC    Regal Entertainment   Tue, Oct 21  Before Market Open   0.32
RNR    RenaissanceRe HoldingsTue, Oct 21  After Market Close   1.44
RFMD   RF Micro Devices, Inc.Tue, Oct 21  Time Not Supplied    0.00
RYL    Ryland Group          Tue, Oct 21  After Market Close   2.14
SBC    SBC Communications    Tue, Oct 21  Before Market Open   0.39
SLB    Schlumberger          Tue, Oct 21  After Market Close   0.40
STX    Seagate Technology    Tue, Oct 21  After Market Close   0.36
SIAL   Sigma-Aldrich Corp    Tue, Oct 21  After Market Close   0.65
SSD    Simpson Manufacturing Tue, Oct 21  After Market Close   0.70
SLG    SL Green Realty       Tue, Oct 21  After Market Close   0.87
SO     Southern Company      Tue, Oct 21  Before Market Open   0.78
STK    Storage Technology    Tue, Oct 21  After Market Close   0.28
SUSQ   Susquehanna BancsharesTue, Oct 21  Time Not Supplied    0.41
TLTOB  Tele2 AB              Tue, Oct 21  Before Market Open    N/A
TGN    Texas Genco Holdings  Tue, Oct 21  Before Market Open    N/A
CAKE   The Cheesecake FactoryTue, Oct 21  After Market Close   0.28
TSFG   The South Financial   Tue, Oct 21  Before Market Open   0.44
JOE    The St. Joe Company   Tue, Oct 21  Before Market Open   0.16
TMO    Thermo Electron Corp  Tue, Oct 21  After Market Close   0.27
TMIC   Trend Micro           Tue, Oct 21  Time Not Supplied     N/A
TRMK   Trustmark Corporation Tue, Oct 21  Time Not Supplied    0.50
USB    U.S. Bancorp          Tue, Oct 21  Time Not Supplied    0.51
UBSI   United Bankshares     Tue, Oct 21  Time Not Supplied    0.55
UPS    UNITED PARCEL SERVICE Tue, Oct 21  Before Market Open   0.60
VVC    Vectren Corporation   Tue, Oct 21  After Market Close   0.20
WFSL   Washington Federal    Tue, Oct 21  Before Market Open   0.52
WM     Washington Mutual     Tue, Oct 21  After Market Close   1.12
WFC    Wells Fargo & Company Tue, Oct 21  Time Not Supplied    0.93
WSTC   West Corporation      Tue, Oct 21  After Market Close   0.35
WES    Westcorp              Tue, Oct 21  After Market Close   0.67
XTO    XTO Energy Inc.       Tue, Oct 21  Before Market Open   0.44
YCC    Yankee Candle         Tue, Oct 21  After Market Close   0.24


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

EK     Eastman Kodak Company Wed, Oct 22  Before Market Open   0.57
ERTS   Electronic Arts       Wed, Oct 22  After Market Close   0.44
EDS    Electronic Data Sys   Wed, Oct 22  After Market Close   0.32
EFII   Electronics for Imag  Wed, Oct 22  After Market Close   0.22
LLY    Eli Lilly             Wed, Oct 22  Time Not Supplied    0.66
EEP    Enbridge Energy Part  Wed, Oct 22  After Market Close   0.46
ELE    Endesa, S.A.          Wed, Oct 22  Before Market Open    N/A
FMBI   First Midwest Bancorp Wed, Oct 22  Before Market Open   0.49
FTN    First Tennessee Natl  Wed, Oct 22  Before Market Open   0.91
FBC    Flagstar Bancorp      Wed, Oct 22  After Market Close   1.33
FLEX   Flextronics           Wed, Oct 22  After Market Close   0.07
FLA    Florida East Coast IndWed, Oct 22  Before Market Open    N/A
FDG    Fording Inc.          Wed, Oct 22  Time Not Supplied     N/A
FDRY   Foundry Networks      Wed, Oct 22  Time Not Supplied    0.12
FBN    Furniture Brands      Wed, Oct 22  After Market Close   0.35
GYI    GETTY IMAGES INC      Wed, Oct 22  After Market Close   0.25
GSK    GlaxoSmithKline       Wed, Oct 22  Before Market Open   0.59
GSF    GlobalSantaFe Corp.   Wed, Oct 22  Before Market Open   0.06
GLK    Great Lakes Chemical  Wed, Oct 22  After Market Close   0.15
GXP    Great Plains Energy   Wed, Oct 22  After Market Close   0.97
GBBK   Greater Bay Bancorp   Wed, Oct 22  Before Market Open   0.38
TV     Grupo Televisa, S.A.  Wed, Oct 22  Time Not Supplied    0.37
HAR    Harman Intl Ind       Wed, Oct 22  Time Not Supplied    0.37
HET    Harrah's EntertainmentWed, Oct 22  Time Not Supplied    0.89
HHS    Harte-Hanks           Wed, Oct 22  Before Market Open   0.26
HLT    Hilton Hotels Corp    Wed, Oct 22  Before Market Open   0.09
HNI    HON INDUSTRIES, Inc.  Wed, Oct 22  Time Not Supplied    0.47
RX     IMS Health            Wed, Oct 22  After Market Close   0.28
IR     Ingersoll-Rand Co. LtdWed, Oct 22  Before Market Open   0.75
ICST   Integrated Cir Sys    Wed, Oct 22  Before Market Open   0.24
ISIL   Intersil Corporation  Wed, Oct 22  After Market Close   0.15
JPM    J.P. Morgan Chase & CoWed, Oct 22  Before Market Open   0.75
JCI    Johnson Controls      Wed, Oct 22  Before Market Open   2.27
KMB    Kimberly Clark        Wed, Oct 22  Before Market Open   0.84
KLAC   KLA-Tencor            Wed, Oct 22  After Market Close   0.17
NITE   Knight Trading Group  Wed, Oct 22  Before Market Open   0.19
LLL    L-3 Communications    Wed, Oct 22  Time Not Supplied    0.73
LM     Legg Mason            Wed, Oct 22  Before Market Open   0.88
LIN    Linens 'n Things Inc. Wed, Oct 22  Before Market Open   0.46
LPX    LP Corp               Wed, Oct 22  Before Market Open   0.90
LSI    LSI Logic             Wed, Oct 22  After Market Close   0.02
LU     Lucent Technologies   Wed, Oct 22  Before Market Open  -0.04
MACR   Macromedia            Wed, Oct 22  After Market Close   0.13
MCD    McDonalds Corporation Wed, Oct 22  Time Not Supplied    0.40
MWV    MeadWestvaco          Wed, Oct 22  Before Market Open   0.09
MHS    Medco Health SolutionsWed, Oct 22  After Market Close   0.42
MENT   Mentor Graphics       Wed, Oct 22  After Market Close   0.05
MRK    Merck & Co., Inc.     Wed, Oct 22  Before Market Open   0.85
MERQ   Mercury Interactive   Wed, Oct 22  After Market Close   0.23
MDG    Meridian Gold Inc.    Wed, Oct 22  After Market Close   0.09
MCRL   Micrel Semiconductor  Wed, Oct 22  After Market Close   0.01
MTGNY  Modern Times Group    Wed, Oct 22  Time Not Supplied     N/A
NHP    Nationwide Health PropWed, Oct 22  Before Market Open   0.41
NCEN   New Century Financial Wed, Oct 22  After Market Close   1.72
NYB    New York Comm Bancorp Wed, Oct 22  Before Market Open   0.53
NXTP   Nextel Partners       Wed, Oct 22  Before Market Open  -0.10
NCX    NOVA Chemicals        Wed, Oct 22  Before Market Open  -0.45
PFCB   P.F. Chang's          Wed, Oct 22  Before Market Open   0.25
PTV    Pactiv                Wed, Oct 22  After Market Close   0.38
PMTC   PARAMETRIC TECHNOLOGY Wed, Oct 22  Before Market Open  -0.11
PAS    PepsiAmericas         Wed, Oct 22  Before Market Open   0.40
PKI    PerkinElmer           Wed, Oct 22  After Market Close   0.14
PFE    Pfizer                Wed, Oct 22  Before Market Open   0.44
PMI    PMI Group             Wed, Oct 22  Before Market Open   0.78
POT    Potash Corp of Saskat Wed, Oct 22  Before Market Open   0.30
POWI   Power Integrations    Wed, Oct 22  After Market Close   0.15
PGN    Progress Energy       Wed, Oct 22  Before Market Open   1.41
PLD    ProLogis Trust        Wed, Oct 22  After Market Close   0.58
PEG    PSEG                  Wed, Oct 22  Before Market Open   0.79
PHM    Pulte Homes Inc.      Wed, Oct 22  After Market Close   2.36
QSFT   Quest Software Inc.   Wed, Oct 22  After Market Close   0.04
QUIK   QuickLogic CorporationWed, Oct 22  After Market Close  -0.07
QVDX   Quovadx               Wed, Oct 22  Time Not Supplied   -0.04
R      Ryder System, Inc.    Wed, Oct 22  Before Market Open   0.60
SGP    Schering-Plough       Wed, Oct 22  Before Market Open   0.10
POOL   SCP Pool Corporation  Wed, Oct 22  Before Market Open   0.46
SEE    Sealed Air            Wed, Oct 22  Time Not Supplied    0.65
SJR    Shaw Communications   Wed, Oct 22  Before Market Open    N/A
SSTI   Silicon Storage Tech  Wed, Oct 22  After Market Close  -0.01
SNA    Snap-on Incorporated  Wed, Oct 22  Before Market Open   0.31
STM    STMicroelectronics    Wed, Oct 22  After Market Close   0.10
SDS    SunGard Data Systems  Wed, Oct 22  After Market Close   0.32
SWBD   Switchboard Incorp    Wed, Oct 22  Before Market Open    N/A
SYMC   Symantec              Wed, Oct 22  Time Not Supplied    0.45
TKLC   Tekelec               Wed, Oct 22  After Market Close   0.08
TDS    Telephone Data        Wed, Oct 22  Before Market Open   0.60
TEX    Terex Corporation     Wed, Oct 22  After Market Close   0.32
BK     The Bank of New York  Wed, Oct 22  Before Market Open   0.42
FAF    The First American    Wed, Oct 22  Before Market Open   1.42
MNI    The McClatchy Company Wed, Oct 22  Before Market Open   0.71
PGR    The Progressive       Wed, Oct 22  After Market Close   1.38
SWK    The Stanley Works     Wed, Oct 22  Before Market Open   0.62
USM    U.S. Cellular         Wed, Oct 22  Before Market Open   0.43
WOOF   VCA Antech, Inc.      Wed, Oct 22  After Market Close   0.31
VRTS   VERITAS Software Corp Wed, Oct 22  After Market Close   0.18
EYE    VISX Inc.             Wed, Oct 22  Time Not Supplied    0.11
WAT    Waters Corporation    Wed, Oct 22  Before Market Open   0.33
WHR    Whirlpool Corporation Wed, Oct 22  Before Market Open   1.47
WSH    Willis Group Holdings Wed, Oct 22  After Market Close   0.36
WYE    WYETH                 Wed, Oct 22  Before Market Open   0.59
YRK    York International    Wed, Oct 22  Before Market Open   0.67
ZMH    Zimmer Inc.           Wed, Oct 22  After Market Close   0.41


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

SE     7-Eleven              Thu, Oct 23  Before Market Open   0.31
RKY    Adolph Coors, Co.     Thu, Oct 23  Before Market Open   1.51
ACV    Alberto-Culver Co.    Thu, Oct 23  Time Not Supplied    0.73
ALEX   Alexander & Baldwin   Thu, Oct 23  Time Not Supplied    0.53
AT     ALLTEL Corp.          Thu, Oct 23  After Market Close   0.80
AEP    American Electric Pow Thu, Oct 23  Before Market Open   0.86
AIG    American InternationalThu, Oct 23  Before Market Open   0.98
APPX   American Pharm Part   Thu, Oct 23  Time Not Supplied    0.23
ACF    AmeriCredit Corp.     Thu, Oct 23  After Market Close   0.18
AVZ    AMVESCAP PLC          Thu, Oct 23  Before Market Open   0.22
APA    Apache Corporation    Thu, Oct 23  Before Market Open   1.77
AMCC   Applied Micro CircuitsThu, Oct 23  After Market Close  -0.03
ARW    Arrow Electronics, IncThu, Oct 23  Time Not Supplied    0.15
ASCL   Ascential Software    Thu, Oct 23  After Market Close   0.03
AZN    AstraZeneca PLC       Thu, Oct 23  Before Market Open   0.35
BHI    Baker Hughes Incorp   Thu, Oct 23  Before Market Open   0.24
BMS    Bemis Company, Inc.   Thu, Oct 23  Before Market Open   0.74
BHE    Benchmark Electronics Thu, Oct 23  Time Not Supplied    0.47
BMY    Bristol-Myers Squibb  Thu, Oct 23  Before Market Open   0.41
BOBJ   Business Objects      Thu, Oct 23  After Market Close   0.16
CCMP   Cabot MicroelectronicsThu, Oct 23  Before Market Open   0.44
ELY    Callaway Golf         Thu, Oct 23  After Market Close   0.02
CAH    Cardinal Health, Inc. Thu, Oct 23  During the Market    0.77
CLS    Celestica             Thu, Oct 23  Before Market Open  -0.02
CELG   Celgene Corp.         Thu, Oct 23  Before Market Open   0.04
CEY    Certegy               Thu, Oct 23  Before Market Open   0.40
CSB    Ciba Specialty Chem   Thu, Oct 23  Time Not Supplied    0.47
CIN    Cinergy Corp.         Thu, Oct 23  Time Not Supplied    0.70
CIT    CIT Group             Thu, Oct 23  Before Market Open   0.67
CNH    CNH Global N.V.       Thu, Oct 23  Before Market Open  -0.13
KOF    COCA-COLA FEMSA S A   Thu, Oct 23  Before Market Open   0.49
CL     Colgate-Palmolive     Thu, Oct 23  Before Market Open   0.63
COLT   COLT Telecom Group    Thu, Oct 23  Before Market Open    N/A
COLM   Columbia Sportswear   Thu, Oct 23  After Market Close   1.51
CYH    Community Health Sys  Thu, Oct 23  After Market Close   0.30
CTC    Compania de Telecom   Thu, Oct 23  After Market Close   0.04
CE     Concord EFS           Thu, Oct 23  Before Market Open   0.18
CBE    Cooper Industries Ltd.Thu, Oct 23  Before Market Open   0.74
CFC    Countrywide Financial Thu, Oct 23  Before Market Open   5.02
CR     Crane                 Thu, Oct 23  After Market Close   0.45
DASTY  Dassault Systemes SA  Thu, Oct 23  Time Not Supplied    0.28
DP     Diagnostic Products   Thu, Oct 23  Before Market Open   0.46
DQE    DQE                   Thu, Oct 23  After Market Close   0.35
EMN    Eastman Chemical      Thu, Oct 23  After Market Close   0.28
ELX    Emulex                Thu, Oct 23  Time Not Supplied    0.23
ENDP   Endo Pharmaceuticals  Thu, Oct 23  Before Market Open   0.26
EC     Engelhard Corporation Thu, Oct 23  Before Market Open   0.47
ETR    Entergy               Thu, Oct 23  Before Market Open   1.53
ELAB   Eon Labs              Thu, Oct 23  Before Market Open   0.31
FMX    FEMSA                 Thu, Oct 23  Before Market Open   1.48
FR     First Indl Realty TrstThu, Oct 23  Time Not Supplied    0.87
FE     FirstEnergy           Thu, Oct 23  Time Not Supplied    0.89
FPL    FPL Group             Thu, Oct 23  Before Market Open   1.81
BEN    Franklin Resources    Thu, Oct 23  Time Not Supplied    0.56
FDP    Fresh Del Monte PrduceThu, Oct 23  Before Market Open   0.57
GTW    Gateway, Inc.         Thu, Oct 23  After Market Close  -0.19
GMT    GATX Corporation      Thu, Oct 23  Before Market Open   0.28
GR     Goodrich Corporation  Thu, Oct 23  Before Market Open   0.20
GT     Goodyear Tire & RubberThu, Oct 23  Before Market Open  -0.14
HSC    Harsco Corporation    Thu, Oct 23  Before Market Open   0.63
HCN    Health Care REIT, Inc.Thu, Oct 23  Time Not Supplied    0.70
IMN    Imation Corp.         Thu, Oct 23  Before Market Open   0.49
IDC    Interactive Data Corp Thu, Oct 23  Before Market Open   0.19
IFF    Intl Flav Fragrances  Thu, Oct 23  Before Market Open   0.61
IVGN   Invitrogen CorporationThu, Oct 23  Before Market Open   0.52
SFI    iStar Financial       Thu, Oct 23  Before Market Open    N/A
ITT    ITT Industries        Thu, Oct 23  Before Market Open   0.96
JDSU   JDS Uniphase Corp     Thu, Oct 23  After Market Close  -0.02
JBLU   JetBlue Airways       Thu, Oct 23  Before Market Open   0.37
KZL    Kerzner International Thu, Oct 23  Time Not Supplied    0.18
KIM    KIMCO REALTY CORP     Thu, Oct 23  After Market Close   0.81
LH     Laboratory Corp of Am Thu, Oct 23  Before Market Open   0.59
LVLT   Level 3 CommunicationsThu, Oct 23  Time Not Supplied   -0.43
LYO    Lyondell PetrochemicalThu, Oct 23  Before Market Open  -0.33
MRO    Marathon Oil Corp     Thu, Oct 23  Time Not Supplied    0.84
MEE    Massey Energy Company Thu, Oct 23  After Market Close  -0.19
MCK    McKesson Corporation  Thu, Oct 23  After Market Close   0.52
MEDI   MedImmune             Thu, Oct 23  Before Market Open  -0.08
MSFT   Microsoft             Thu, Oct 23  Time Not Supplied    0.29
MTX    MINERALS TECHNOLOGIES Thu, Oct 23  After Market Close   0.63
NBG    National Bank Greece  Thu, Oct 23  Before Market Open    N/A
NFG    National Fuel Gas Co  Thu, Oct 23  After Market Close   0.00
NATI   National Instruments  Thu, Oct 23  After Market Close   0.15
NCR    NCR Corporation       Thu, Oct 23  Before Market Open   0.12
NET    Network Associates    Thu, Oct 23  Time Not Supplied    0.11
NRD    NORANDA INC           Thu, Oct 23  Time Not Supplied     N/A
NT     Nortel Networks       Thu, Oct 23  Time Not Supplied    0.00
NST    NSTAR                 Thu, Oct 23  Time Not Supplied    1.27
NUE    Nucor                 Thu, Oct 23  Before Market Open   0.15
ONB    Old National Bancorp  Thu, Oct 23  Before Market Open   0.40
PCBC   Pacific Cap Bancorp   Thu, Oct 23  Before Market Open   0.39
PPE    Park Place Entertain  Thu, Oct 23  Before Market Open   0.16
PRX    Pharmaceutical Res    Thu, Oct 23  Before Market Open   1.06
PHLY   Phil Consolidated     Thu, Oct 23  Time Not Supplied    0.87
PBI    Pitney Bowes Inc.     Thu, Oct 23  After Market Close   0.62
PSD    Puget Energy          Thu, Oct 23  After Market Close   0.08
QLTI   QLT Inc.              Thu, Oct 23  Before Market Open   0.13
IQW    Quebecor World        Thu, Oct 23  Time Not Supplied    0.49
RTN    Raytheon              Thu, Oct 23  Before Market Open   0.43
RBK    Reebok                Thu, Oct 23  Time Not Supplied    0.93
RGA    Reinsurance Grp Am    Thu, Oct 23  After Market Close   0.78
RESP   Respironics, Inc.     Thu, Oct 23  Before Market Open   0.38
RD     Royal Dutch Petroleum Thu, Oct 23  Time Not Supplied    0.93
TSG    Sabre Holdings Corp.  Thu, Oct 23  Before Market Open   0.23
SANM   Sanmina-SCI Corp.     Thu, Oct 23  Time Not Supplied    0.02
SLE    Sara Lee              Thu, Oct 23  Before Market Open   0.26
SAY    Satyam Comp Serv LmtedThu, Oct 23  Time Not Supplied    0.15
SFA    Scientific-Atlanta IncThu, Oct 23  After Market Close   0.26
SRA    Serono S.A.           Thu, Oct 23  Before Market Open   0.16
SCRI   SICOR                 Thu, Oct 23  Time Not Supplied    0.24
SNE    Sony Corporation      Thu, Oct 23  Before Market Open    N/A
PCS    Sprint Corp           Thu, Oct 23  Before Market Open  -0.07
FON    Sprint FON Group      Thu, Oct 23  Before Market Open   0.34
SFG    StanCorp Financial GrpThu, Oct 23  Time Not Supplied    1.21
STE    Steris                Thu, Oct 23  Before Market Open   0.29
SEO    Stora Enso            Thu, Oct 23  Before Market Open   0.09
SUN    Sunoco                Thu, Oct 23  Before Market Open   1.36
SWMAY  Swedish Match         Thu, Oct 23  Time Not Supplied     N/A
SLVN   Sylvan Learning Sys   Thu, Oct 23  Before Market Open   0.14
TECH   Techne                Thu, Oct 23  Before Market Open   0.29
TE     TECO Energy Inc.      Thu, Oct 23  Time Not Supplied    0.39
DOW    The Dow Chemical Co   Thu, Oct 23  Before Market Open   0.25
MHP    The McGraw-Hill Co    Thu, Oct 23  Before Market Open   1.50
TKR    The Timken Company    Thu, Oct 23  Before Market Open   0.02
TDW    Tidewater             Thu, Oct 23  Before Market Open   0.24
TTN    Titan Corp.           Thu, Oct 23  Before Market Open   0.19
TMK    Torchmark             Thu, Oct 23  Before Market Open   0.97
TAC    TRANSALTA CORP        Thu, Oct 23  Time Not Supplied     N/A
TRH    Transatlantic HoldingsThu, Oct 23  Time Not Supplied    1.40
TRYF   Troy Financial        Thu, Oct 23  Before Market Open   0.40
TUES   Tuesday Morning Corp  Thu, Oct 23  Before Market Open   0.15
UNP    Union Pacific         Thu, Oct 23  Before Market Open   1.15
UDI    United Defense Ind    Thu, Oct 23  Before Market Open   0.48
URI    United Rentals        Thu, Oct 23  Before Market Open   0.40
USTR   United Stationers Inc.Thu, Oct 23  After Market Close   0.70
UPM    UPM-Kymmene Group     Thu, Oct 23  Time Not Supplied    0.14
UTSI   UTStarcom             Thu, Oct 23  After Market Close   0.45
VRSN   VeriSign, Inc.        Thu, Oct 23  After Market Close   0.14
VFC    VF                    Thu, Oct 23  Time Not Supplied    0.98
VVI    Viad Corp             Thu, Oct 23  Before Market Open   0.26
VTSS   Vitesse Semiconductor Thu, Oct 23  After Market Close  -0.03
VOLVY  Volvo AB              Thu, Oct 23  Time Not Supplied     N/A
WC     WellChoice, Inc.      Thu, Oct 23  After Market Close   0.58
WEN    Wendy's International Thu, Oct 23  Time Not Supplied    0.54
WDC    Western Digital Corp. Thu, Oct 23  After Market Close   0.19
WWCA   Western Wireless      Thu, Oct 23  After Market Close   0.00
WEC    Wisconsin Energy Corp Thu, Oct 23  Before Market Open   0.43
XEL    Xcel Energy           Thu, Oct 23  Before Market Open   0.40
XRX    Xerox Corporation     Thu, Oct 23  Before Market Open   0.10
ZBRA   Zebra Technologies    Thu, Oct 23  Before Market Open   0.48


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

ALE    Allete                Fri, Oct 24  Before Market Open   0.52
AEE    Ameren Corporation    Fri, Oct 24  Before Market Open   1.44
ANZ    Australia New Zeal BnkFri, Oct 24  Time Not Supplied     N/A
AVX    AVX Corporation       Fri, Oct 24  Before Market Open  -0.06
BC     Brunswick Corporation Fri, Oct 24  Before Market Open   0.37
CLP    Colonial Prop Trust   Fri, Oct 24  Time Not Supplied    0.82
CSX    CSX                   Fri, Oct 24  Before Market Open   0.54
DCN    Dana                  Fri, Oct 24  Before Market Open   0.26
EAS    Energy East Corp      Fri, Oct 24  After Market Close   0.16
HCR    MANOR CARE INC NEW    Fri, Oct 24  Before Market Open   0.36
MDU    MDU Resources         Fri, Oct 24  Time Not Supplied    0.90
NBP    Northern Border Part  Fri, Oct 24  Before Market Open   0.62
PNW    Pinnacle West Capital Fri, Oct 24  Before Market Open   1.20
ROP    Roper Industries      Fri, Oct 24  After Market Close   0.62
SCG    SCANA                 Fri, Oct 24  Before Market Open   0.81
TROW   T. Rowe Price         Fri, Oct 24  Before Market Open   0.48
UNA    UNOVA Inc.            Fri, Oct 24  After Market Close  -0.13
WY     Weyerhaeuser Co.      Fri, Oct 24  Time Not Supplied    0.53
WPS    WPS Resources         Fri, Oct 24  After Market Close   0.80


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

Symbol  Company Name              Ratio    Payable     Executable


ATU     Atuant Corp               2:1      Oct  21st   Oct  22nd
OTEX    Open Text Corp            2:1      Oct  28th   Oct  29th
GBR     Greenbriar Corporation    2:1      Oct  28th   Oct  29th
MDU     MDU Resources Group Inc   3:2      Oct  29th   Oct  30th
USNA    USANA Health Sciences Inc 2:1      Oct  30th   Oct  31st
AMRB    Am River HoldingsCorp     3:2      Oct  31st   Nov   3rd
UNTD    United Online             3:2      Oct  31st   Nov   3rd
EASI    Engineered Support Systems3:2      Oct  31st   Nov   3rd
MNRO    Monro Muffler Brake Inc   3:2      Oct  31st   Nov   3rd


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

Earnings will take center stage again this week with little on the
Economic front.


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

----------------
Monday, 10/20/03
----------------
Leading Indicators (DM) Sep  Forecast:    0.0%  Previous:     0.4%
Treasury Budget (DM)    Sep  Forecast:  $20.8B  Previous:   $42.5B
Semiconductor Book-to-Bill

-----------------
Tuesday, 10/21/03
-----------------
None


-------------------
Wednesday, 10/22/03
-------------------
API Weekly Statistics


------------------
Thursday, 10/23/03
------------------
Initial Claims  (BB)  10/18  Forecast:     N/A  Previous:     384K
Natural Gas Inventories

----------------
Friday, 10/24/03
----------------
None


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 10-19-2003
Sunday                                                      2 of 5


In Section Two:

Watch List: Plenty of Contenders
Put Play of the Day: ATK
Dropped Calls: BSC, EXC
Dropped Puts: None


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

Plenty of Contenders

Amazon.com - AMZN - close: 59.69 change: -0.22

WHAT TO WATCH: There are going to be a lot of traders eyeing
shares of AMZN this week.  The company announces earnings after
the close on Tuesday and estimates are for 10 cents/share.  The
stock has surged higher in October partly due to the very strong
earnings performance from fellow Internet darling Yahoo (YHOO).
Yet now there is some question about how AMZN might do or say in
their conference call after EBAY's announcement this last week.
EBAY hit their numbers but warned for the future.  We think that
one way to play AMZN might be a straddle but option premium is
pretty high.  Definitely one to watch.

Chart=


---

Golden West Financil - GDW - close: 95.91 change: -0.89

WHAT TO WATCH: One of the strongest stocks in the banking sector
has been GDW.  The stock has enjoyed a very strong October and
the company announces earnings on Tuesday before the opening
bell.  Estimates are for $1.77/share.  Because of the big ramp up
the stock could see a sell the news round of profit taking and
the technicals are looking a little tired.  A breakdown under $95
might lead to a retest of its simple 50-dma or at least $90.

Chart=


---

Electronic Arts - ERTS - close: 103.04 change: -1.79

WHAT TO WATCH: ERTS has been a frequent guest on our watch list.
Shares have rallied from the low 90s in late September to nearly
105 as of Thursday.  There is a lot of expectation for the
company's earnings announcement after the bell on Wednesday this
week.  Estimates are for 44 cents/share.  If ERTS fails to
perform or says something negative in their conference call there
is a lot of profit in this stock that could vanish as traders run
for the exits on any bad news.

Chart=


---
Countrywide Financial Corp - CFC - close: 94.42 change: -0.88

WHAT TO WATCH: Wow!  Talk about your bottle-rocket trajectories.
This stock has been in rally-mode almost non-stop from the $70
level in mid September.  The company announced a positive
earnings warning on October 10th and shares vaulted over the $90
level.  Now the stock is a contender for valuation downgrades and
we've already seen one of them this last week.  Traders will be
watching CFC because the company announces earnings before the
bell on Thursday.  Estimates are for $5.25/share.

Chart=


---

Symantec Corp - SYMC - close: 64.95 change: -1.24

WHAT TO WATCH: SYMC is yet another company announcing earnings
this week.  The stock is very extended and has been trading
sideways as investors wait to hear the company report.  Odds of a
sell the news type of reaction are high but SYMC could blow away
earnings and spook the shorts too.  It is a potential for a
straddle at the $65 strike.  Look for earnings on Wednesday after
the market's close.  Estimates are 45 cents/share.

Chart=



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

PCAR $77.50 -1.21 - PCAR has been a popular stock on our watch
lists and shares have run into resistance at its simple 50-dma
during the month of October.  Now watch for a reaction to
earnings on Oct. 21st.

HOT $36.29 -0.49 - Shares of HOT are in a very nice ascending
channel but the stock is looking a little weak and could be
heading toward the bottom of said channel.  Look for a bounce
from the 30 or 50-dma.

SFA $35.00 -1.65 - Is that a double-top in shares of SFA at the
$37.00 mark?  It certainly could be.  The company announces
earnings on Oct. 23rd.

SANM $10.47 -0.50 - SANM is also in a nice ascending channel but
has found resistance at the $11.00 level.  Stock traders may want
to watch for a bounce form its simple 30-dma near the $10 mark.

PD $56.15 -0.91 - Can you say overextended?  The stock has been
in rally mode since the bounce off its 50-dma in late September.
That was about $10 ago.  There is some potential support at $54
but we'd be watching for a break under $55.

BWA $77.65 -1.24 - Shares of BWA are also looking a little tired.
Watch out for earnings on Oct. 27th.

RYL $80.60 -1.20 - RYL is also looking a lot like a short
candidate, especially on a breakdown below the $80 mark.
Unfortunately, the company announces earnings on Oct. 21.  Hmm...
it may be another straddle candidate.


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

Put Play of the Day:
********************

Alliant Tech Systems - ATK - cls: 49.12 change: -0.38 stop: 50.51

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
^^^^^

Bear Stearns Cos - BSC - close: 75.32 chg: -1.94 stop: 75.25

The new scandal du' jour concerning specialists at the NYSE and
BSC's connection through the Bear Wagner specialist firm may have
contributed to BSC's weakness on Friday.  Or it could just be
profit taking from two and a half weeks of slowly climbing
higher.  Or it could be a reaction to BSC's announcement on
Friday to sell $5 billion in mixed securities and debt.  Whatever
the case the tone for BSC has turned more bearish and shares
actually traded below our stop during Friday's weakness.  We're
closing the play for a loss.

Picked on October 9 at $77.50
Change since picked:   - 2.18
Earnings Date        09/18/03 (confirmed)
Average Daily Volume:    1.2 million
Chart =


---

Exelon Corporation - EXC - close: 63.67 change: -0.63 stop: 63.25

We haven't officially been stopped out of EXC but the weakness on
Friday and close under the $64 level is enough to scare us out of
the play.  Technicals have turned bearish and with the market's
recent weakness we could see EXC consolidate back towards the
$61-62 region.  An additional reason to close the play is EXC's
upcoming earnings announcement on Thursday.  We traditionally
choose not to hold over an earnings announcement with straight
puts or calls.

Picked on September 28th at  $62.64
Change since picked:          +1.03
Earnings Date              10/23/03 (confirmed)
Average Daily Volume =     1.22 mln
Chart =



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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The Option Investor Newsletter                   Sunday 10-19-2003
Sunday                                                      3 of 5


In Section Three:

Current Calls: AZO, BBY, CBE, COO, FD
New Calls: None
Current Put Plays: COCO, MATK, MRK
New Puts: ATK, DNA


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

AutoZone, Inc. - AZO - close: 93.06 change: -0.88 stop: 91.95

Company Description:
AutoZone is a retailer of automotive parts and accessories,
primarily focusing on do-it-yourself customers.  Each of its more
than 2900 stores in 42 states and Mexico carries an extensive
product line for cars, vans and light trucks, including new and
re-manufactured automotive hard parts, maintenance items and
accessories.  Approximately half of its domestic stores also have
a commercial sales program, which provides commercial credit and
prompt delivery of parts and other products to local repair
garages, dealers and service stations.

Why we like it:
The October consolidation between 92.00 and 95.00 continue for
shares of AZO.  Tuesday the stock was close to breaking out but
the general weakness or drift lower in the broader indices was
too heavy an influence on AZO.  We remain untriggered and wait
for AZO to trade above the $95.00 mark.  Should this occur our
first target is $100.00 and we'll initiate the play with a stop
loss at 91.95.  More aggressive traders who prefer to target an
entry on a dip can look for a bounce from the $92.00 level,
especially if the markets continue to slip on Monday.

Suggested Options:
Shorter Term: The November 95 Call will offer short-term traders
the best return on an immediate move, as it is currently at the
money.

Longer Term: Aggressive traders looking to capitalize on an
extended rally will want to look to the November 100 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 will want to use the December 100 Call.

BUY CALL NOV  90 AZO-KR OI= 603 at $5.10 SL=3.00
BUY CALL NOV- 95 AZO-KS OI= 623 at $2.45 SL=1.25
BUY CALL NOV-100 AZO-KT OI= 438 at $0.90 SL=0.45
BUY CALL DEC- 95 AZO-LS OI= 651 at $3.70 SL=1.75
BUY CALL DEC-100 AZO-LT OI= 427 at $1.95 SL=1.00

Annotated Chart of AZO:




Picked on October xxth at    $xx.xx
Change since picked:          -0.00
Earnings Date              12/22/03 (unconfirmed)
Average Daily Volume =          989 K
Chart =


---

Best Buy Company - BBY - cls: 52.65 chng: -0.97 stop: 51.75

Company Description:
Best Buy a specialty retailer of name-brand consumer electronics,
home office equipment, entertainment software and appliances.  The
company provides a broad selection of models within each product
line in order to provide the customer with a meaningful
assortment, offering more than 5800 products, not counting
entertainment software titles.  Growing its store count by 15% in
fiscal year 2000, brought the grand total to more than 4000 in 41
states by year end.

Why we like it:
Both the RLX retail index and BBY hit highs this week not seen
since April of 2000.  As we expected with BBY the stock has begun
to pull back with some profit taking.  Hopefully, this will set
us up for another entry point on a bounce but we need to be
careful with our timing.  This coming week is full of earnings
reports with nearly 700 companies reporting and BBY could be
influenced by any strong or weak retail announcements.  Another
item that makes us cautious is the RLX, which had been struggling
with the 382 level most of this last week, still looks like it
could consolidate further.  This may weigh on shares of BBY and
we wouldn't be surprised to see BBY pull back to its simple 50-
dma.  The bad news is this would stop us out and we hate to
adjust our stop losses backwards.  That's a bad habit we don't
want to start.

We are NOT going to recommend any new positions in BBY at this
moment.  We may change our tune if BBY can bounce from the $52.00
level again.  Currently our stop is at 51.75.


Suggested Options:
We are not suggesting new bullish entries at this time.  The
options listed below are only a reference should BBY bounce from
the $52.00 level.

BUY CALL NOV-50 BBY-KJ OI= 1533 at $4.00 SL=2.25
BUY CALL NOV-55 BBY-KK OI= 5155 at $1.40 SL=0.70
BUY CALL DEC-55 BBY-LK OI= 5384 at $2.45 SL=1.20

Annotated Chart of BBY:




Picked on October 5th at     $51.00
Change since picked:          +1.65
Earnings Date              12/17/03 (unconfirmed)
Average Daily Volume =     3.87 mln
Chart =


---

Cooper Industries - CBE - cls: 51.41 chg: -0.98 stop: 49.99*new*

Company Description:
Cooper Industries, Ltd., with 2002 revenues of $4 billion, is a
global manufacturer of electrical products and tools and
hardware. Incorporated in Bermuda, with administrative
headquarters in Houston, Texas, Cooper has more than 28,000
employees serving more than 100 locations around the world, and
sells products to customers in more than 50 countries.
(source: company press release)

Why We Like It:
We initially added CBE to the call list on a nice breakout from
its bull flag consolidation pattern.  Soon thereafter the stock
spent several days consolidating sideways between $50.00 and
51.20.  This Wednesday finally produced the upside move we have
been waiting for but the general market weakness late this week
has turned CBE around.  We certainly don't like the three-day
candlestick pattern in CBE now and suggest bulls tread
cautiously.  If the markets pull back again on Monday we'd look
for CBE to slip towards the psychological $50 level.  A bounce
from $50.00 might work but we have a deadline approaching that
may not sit well with traders.  CBE is expected to announce
earnings on Thursday and we don't plan to hold over the event.
That means we'll be dropping the play in the next two or three
days.

Due to the short time frame with CBE's earnings we are NOT
suggesting new bullish entries at this time.  We are going to
raise our stop loss to 49.99 but more conservative traders may
want to put theirs under $51.00 to escape closer to breakeven.

Suggested Options:
We are not suggesting new bullish entries at this time.

Annotated Chart:




Picked on October 5 at $51.00
Change since picked:   + 0.41
Earnings Date        10/23/03 (confirmed)
Average Daily Volume:    539 thousand
Chart =


---

Cooper Cos - COO - close: 42.05 chg: -0.85 stop: 39.99

Company Description:
The Cooper Companies, Inc. manufactures and markets specialty
healthcare products through its CooperVision and CooperSurgical
units.  CooperVision markets a broad range of contact lenses for
the vision care market. Headquartered in Lake Forest, Calif., it
manufactures in Huntington Beach, Calif., Rochester, N.Y.,
Norfolk, Va., Adelaide, Australia, Farnborough and Hamble,
England, Madrid, Spain and Toronto. CooperSurgical supplies
diagnostic products, surgical instruments and accessories to the
gynecology market. With headquarters in Trumbull, Conn., it also
manufactures in Bedminister N.J., Cranford, N.J., Fort Atkinson,
Wis., Malmo, Sweden, Montreal and Berlin. (source: company press
release)

Why We Like It:
Bulls in COO can't complain about the recent week.  The stock
confirmed the recent breakout from a five-week consolidation.  We
were encouraged to see the stock climb higher but after six days
in a row and the mood of the markets turning on Thursday we
suspected Friday would be a down day.  Thursday's update
suggested traders look for the $42.00 level to hold as support.
So far it has but market action in Monday will be key.  If the
markets continue to drop on profit taking then we may see COO
drift towards the $41.00 level.

News this week was light.  Diligent investors may have seen the
press release about these Optistock reports.  A new financial
report is highlighting the potential for double-digit growth for
higher-margin specialty contact lenses.  Gosh, who would benefit
from such an improvement?  Probably Coooper who just happens to
be one of the "sponsors" of said investment report.

Suggested Options:
Short-term traders should probably look over the November options
while longer-term traders can evaluate the February strikes.

BUY CALL NOV 40 COO-KH OI= 843 at $3.20 SL=1.60
BUY CALL NOV 45 COO-KI OI=1547 at $0.70 SL= --
BUY CALL FEB 45 COO-BI OI= 430 at $2.10 SL=1.05

Annotated chart:




Picked on October 12 at $41.40
Change since picked:    + 0.65
Earnings Date         09/03/03 (confirmed)
Average Daily Volume:      391 thousand
Chart =


---

Federated Dep Store - FD - cls: 46.41 chng: -0.57 stop: 44.25

Company Description:
Federated Department Stores, Inc. is a retail organization
operating department stores that sell a range of merchandise,
including men's, women's and children's apparel and accessories,
cosmetics, home furnishings and other consumer goods.  As of
February 2003, the company, through its subsidiaries, operated 394
department stores and 61 furniture galleries and other specialty
stores under the names Bloomingdale's, The Bon Marche, Burdines,
Goldsmith's, Lazarus, Macy's and Rich's.  In addition to its
stores in 34 states, Puerto Rico and Guam, the company conducts
direct-to-customer mail catalog and e-commerce business under the
Bloomingdale's By Mail and macys.com names.

Why we like it:
Would you like another chance?  Shares of FD tagged a fresh 52-
week high early Friday morning before sliding lower throughout
the remainder of the day.  The stock has been very strong from
its late September low and is overdue for some profit taking.  We
think the Friday weakness will continue into next week and bulls
should get another chance to buy the dip.  We'd look for a pull
back towards the 45.25-to-45.75 region (FYI: the simple 10-dma is
at 45.75).  Keep an eye on the RLX retail index.  It too looks
top heavy after fighting with the 382 level all week.  As the RLX
slips so should FD.  Traders can be patient and wait for the
bounce.

Suggested Options:
Short-term traders will probably be served best by the November 45
or 47.50 strikes.  Longer-term investors may want to look over the
January options.

BUY CALL NOV-45.00 FD -KI OI=287 at $2.70 SL=1.35
BUY CALL NOV-47.50 FD -KW OI=312 at $1.30 SL=0.65
BUY CALL JAN-47.50 FD -AW OI= 58 at $2.60 SL=1.30
BUY CALL JAN-50.00 FD -AJ OI=848 at $1.45 SL=0.75

Annotated Chart of FD:




Picked on October 9th at     $45.60
Change since picked:          +0.81
Earnings Date              11/12/03 (unconfirmed)
Average Daily Volume =     1.89 mln
Chart =



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

None


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

Corinthian Colleges - COCO - cls: 53.70 chg: -0.12 stop: 56.61

Company Description:
Corinthian Colleges, Inc. is one of the largest for-profit post-
secondary education companies in North America, and serves the
large and growing segment of the population seeking to acquire
career-oriented education to become more qualified and marketable
in today's increasingly demanding workplace. Corinthian's
colleges offer master's, bachelor's and associate's degrees and
diploma programs in a variety of fields, with a concentration on
careers in health care, business, criminal justice and
technology.  (source: company press release)

Why We Like It:
COCO was one of the big losers this week.  The stock finally
cracked its simple 50-dma and then broke through the bottom of
its rising channel.  Traders were quick to sniff out weakness and
shares fell quickly in profit taking after a very strong run this
year.  The stock almost hit our initial target near $50.00 on a
big intraday spike this last Wednesday.  Since then shares have
been trading sideways near its simple 100-dma but below old
support now new resistance at $55.00.

Traders might want to consider new positions on failed rallies in
the $54.50-55.00 range.  Meanwhile we're going to keep our stop
at 56.61, the high from Tuesday and just above its simple 10-dma.
This week brings an earnings announcement from another education
stock Career Education (CECO).  They announce on Oct. 21st after
the closing bell.  Estimates are for 21 cents.  If CECO fails,
misses or warns in any way then our play in COCO should continue
to do well.  If CECO turns in some sort of miraculous result then
we, as bears in COCO, could be in trouble.  Investors are
obviously optimistic about earnings for the group (just look at
their performances this year) but the sector has sold off this
past week with some very overdue profit taking.  Keep this in
mind when consider your current play or new positions.   COCO is
set to announce about 10 days from now.

Suggested Options:
Our preference for short-term trades will be the November puts.
Longer-term traders can look to the February strikes.  We'd
probably lean towards the $55 and $50 puts.

BUY PUT NOV 50 UCS-WJ OI=1392 at $1.45 SL=0.75
BUY PUT NOV 55 UCS-WK OI= 524 at $3.60 SL=1.75
BUY PUT FEB 55 UCS-NK OI= 128 at $5.80 SL=3.50
BUY PUT FEB 50 UCS-NJ OI= 178 at $3.20 SL=1.75

Annotated chart:




Picked on October 14 at $55.24
Change since picked:    - 1.54
Earnings Date         10/29/03 (confirmed)
Average Daily Volume:      686 thousand
Chart =


---

Martek Biosciences - MATK - cls: 46.64 chg: -2.84 stop: 51.32*new*

Company Description:
Martek Biosciences Corporation develops, manufactures and sells
products from microalgae. The Company's products include: (1)
specialty, nutritional oils for infant formula that aid in the
development of the eyes and central nervous system in newborns;
(2) nutritional supplements and food ingredients that may play a
beneficial role in promoting mental and cardiovascular health
throughout life; and (3) new, powerful fluorescent markers for
diagnostics, rapid miniaturized screening, and gene and protein
detection. (source: company press release)

Why We Like It: (Original Write up from Thursday)
It's been quite a ride for MATK investors.  Near its highs last
month the stock had appreciated 350% from its August '02 lows.
It had almost tripled just from its March '03 lows near $21.00.
Since the bottom in March the stock has not closed below its
simple 50-dma.  That technical strength failed this week.  Shares
peaked above $58 in late September and we've seen a trend of
lower highs ever since.  That trend has blossomed into a
technical breakdown below its 50-dma and the $50 mark, a
psychological level of support and resistance.  Volume has been
rather strong on the recent declines through support indicating
some conviction by sellers.

We're going to target a simple 38.2% retracement of the March to
September run.  That should bring MATK back towards the $44
level.  A secondary target could be the $40 mark.  A quick look
at the point-and-figure chart also shows MATK on a fresh triple-
bottom sell signal.  However, P&F traders have been fooled before
when MATK turned a bear sell signal into a bear trap in mid
August.  We do have to state that MATK is not without its own
element of danger for bears.  The latest data (as of September)
showed short interested measured almost 19% of the float.

! Weekend Update: Right on target!  The weakness in the broader
markets helped give MATK a little push and shares lost 5.7% on
the session.  Volume has been strong the last three days in a row
lending some conviction to the move.  Remember that our first
target is the $44.00 level. Once reached, short-term traders can
close the play or attempt to capture any potential move to $40.
We do have to stress that there were a couple of articles
recently suggesting MATK is a great choice for long-term stock
investors and they may be right but short-term we see future
weakness.  We are going to lower our stop to Thursday's high of
51.32.  No chance of a bear trap on the P&F chart now!  The
point-and-figure chart's sell signal is now forecasting a price
objective near $37.00.

Suggested Options:
Short-term traders can choose between the November and December
options for MATK while longer-term traders can look over the
March 04 options.  Our preference is the DEC 50's or 45's.
(the NOV 45s were not available on Thursday, they are a new
strike for the weekend).

BUY PUT NOV 45 KQT-WI OI=  0 at $1.95 SL=1.00
BUY PUT NOV 50 KQT-WJ OI=116 at $4.70 SL=2.35
BUY PUT DEC 40 KQT-XH OI= 46 at $1.20 SL=0.60
BUY PUT DEC 45 KQT-XI OI=470 at $2.85 SL=1.50
BUY PUT DEC 50 KQT-XJ OI=160 at $5.50 SL=3.25

Annotated Chart:




Picked on October 16 at $49.48
Change since picked:    - 2.84
Earnings Date         09/09/03 (confirmed)
Average Daily Volume:      466 thousand
Chart =


---

Merck & Co - MRK - close: 48.63 chg: -0.46 stop: 50.51*new*

Company Description:
Merck & Co., Inc. is a global research-driven pharmaceutical
products and services company. Merck discovers, develops,
manufactures and markets a broad range of innovative products to
improve human and animal health, directly and through its joint
ventures. (source: company press release)

Why We Like It:
Uh-oh.  We're running out of time in our put play for MRK.  The
stock continues to drift lower as drug stocks under perform the
broader markets.  Shares of MRK closed at new relative lows on
Friday but the velocity of its descent may be slowing as
investors pause to hear its earnings news on Wednesday, October
22nd.  We are not suggesting new plays because do not plan on
holding over the earnings announcement even though we don't
expect much.  We'll close MRK by Tuesday afternoon at the latest
and potentially at Monday's close.

Suggested Options:
MRK continues to sink but we're not going to hold over its earnings
announcement on Wednesday.  No new plays are suggested.

Annotated Chart:




Picked on October 6 at $49.90
Change since picked:   - 1.27
Earnings Date        10/22/03 (confirmed)
Average Daily Volume:    6.2 million
Chart =



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

Alliant Tech Systems - ATK - cls: 49.12 change: -0.38 stop: 50.51

Company Description:
ATK is a $2.2 billion aerospace and defense company with strong
positions in propulsion, composite structures, munitions,
precision capabilities, and civil and sporting ammunition. The
company, which is headquartered in Edina, Minn., employs
approximately 12,200 people and has three business groups:
Precision Systems, Aerospace, and Ammunition and Related
Products.  (source: company press release)

Why We Like It:
Shares of ATK have been under performing the markets and the
defense sector for the last three months.  The stock recently
bounded up through its declining channel but ran straight into
resistance at its simple 50-dma.  This was early October and ATK
has slowly been producing a trend of lower highs against its
declining 50-dma.  The stock looks ready to fall again and we
want to capture any weakness before its October 30th earnings
report.  Current positioning gives us a relatively low-risk entry
point with a stop loss at 50.51.  Some traders may want to use a
move below Friday's low at 48.98 as a trigger.  We're going to
open the play at current levels.  Our first target is $45.00.

Suggested Options:
We're going to suggest the November 50's and 45's for short-term
traders and the December or January's for longer-term trades.
Take note, December's don't have much interest yet.

BUY PUT NOV 45 ATK-WI OI= 156 at $0.45 SL= --
BUY PUT NOV 50 ATK-WJ OI= 376 at $2.15 SL=1.10
BUY PUT DEC 45 ATK-XI OI=   0 at $  -- SL=
BUY PUT DEC 50 ATK-XJ OI=   0 at $  -- SL=
BUY PUT JAN 45 ATK-MI OI=  86 at $1.15 SL=0.55
BUY PUT JAN 50 ATK-MJ OI= 351 at $3.00 SL=1.65

Annotated Chart:




Picked on October 19 at $49.12
Change since picked:    - 0.00
Earnings Date         10/30/03 (confirmed)
Average Daily Volume:      385 thousand
Chart =


---

Genentech Inc - DNA - close: 79.08 change: -1.14 stop: 82.30

Company Description:
Genentech is a leading biotechnology company that discovers,
develops, manufactures, and commercializes biotherapeutics for
significant unmet medical needs. Sixteen of the currently
approved biotechnology products originated from or are based on
Genentech science. Genentech manufactures and commercializes 11
biotechnology products in the United States. The company has
headquarters in South San Francisco, California, and is traded on
the New York Stock Exchange under the symbol DNA.
(source: company press release)

Why We Like It:
Right off the bat let us state this is a rather gutsy play.  DNA
is a perfect example of why you trade with stop losses whether
you're trading stocks or options and especially any time you're
trading drug or biotech stocks.  A quick look at the chart for
DNA and you'll notice the booster-rocket trajectory from mid-May.
It was a very painful day for the bears and it hasn't ended.  It
has been a very good six months for DNA.  Last May they announced
very positive results for their colorectal cancer treatment
Avastin.  Many analysts believe it will be approved by the FDA in
2004 and sales could reach $1.5 to $2 billion.  On top of the
Avastin news, DNA has also benefited from a successful Xolair
launch and an FDA approval for their Raptiva treatment.  Earnings
were on October 8th and DNA beat estimates by 2 cents with 27
cents/share.

With all this good news why are we trying to "short" it?  Well
nothing goes up forever and DNA is hinting at a potential
breakdown.  We're going to protect ourselves by ONLY opening
bearish plays if DNA trades through our TRIGGER at $77.50.
Should that occur then a retracement to the $70 level could be
fast with a potential for weakness towards the $65 area.  A move
under $77.00 would produce a quadruple bottom breakdown on its
P&F chart.  If we are triggered we'll start the play with a stop
at 82.30.  More conservative traders might be able to use a stop
closer to $81.00.  This is high risk and not suggested for all
traders.

Suggested Options:
Remember we're ONLY suggesting bearish positions if DNA trades at
or below our trigger at $77.50.  We like the November 80's and 75s
for short-term trades and December or January's for longer-
term trades.

BUY PUT NOV 75 DNA-WO OI= 906 at $1.60 SL=0.80
BUY PUT NOV 80 DNA-WP OI=1619 at $3.70 SL=1.80
BUY PUT DEC 75 DNA-XO OI=1669 at $2.90 SL=1.50
BUY PUT DEC 80 DNA-XP OI=3490 at $5.10 SL=3.00

Annotated Chart:




Picked on October xx at $xx.xx
Change since picked:    - 0.00
Earnings Date         10/08/03 (confirmed)
Average Daily Volume:      2.5 million
Chart =



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The Option Investor Newsletter                   Sunday 10-19-2003
Sunday                                                      4 of 5


In Section Four:

Leaps: See Note
Traders Corner: Reach Into Your Pocket – Do You Feel It?
Traders Corner: Where is the Dow Going?


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

Reach Into Your Pocket – Do You Feel It?
By Mike Parnos, Investing With Attitude

Besides feeling some lint, a key chain, one Tylenol tablet and a
crumbled up dry cleaning bill, I bet you'll find a roll of US
currency that could choke a horse – well, maybe a pony.  Above and
beyond, if you feel anything else, well, good for you.

This is my favorite column of the month.  Thus far, out of the
dozen CPTI educational portfolios we've monitored, eleven have
been profitable.  After a year, we've put $33,160 of
"hypothetical" CPTI money into our pockets.  Hey, check out our
"quickie" results this month.  Those were even more than our
monthly positions.  Note: we don't include "quickie" results in
our CPTI portfolio figures.

Rome wasn't built in a day.  Neither were the Pyramids.  Why?
They probably took long lunches and only lived till they were 30.
However, a lot of hard work went into both, but the end product
was worth it – except to those who didn't survive.  The same can
be said about our ongoing CPTI Portfolio.

The "mierde" that often happens, has been happening less and less.
Even when it does happen, we're prepared.  We're trading smarter.
However, the market may be lulling us into a false sense of
security.  Our losses (when we have to take them) are pretty
small.  Still, we have to be careful.  We can't be complacent.
I've been accused of being a cynic.  However, my type of cynic is
a lot like a grilled cheese sandwich – crunchy on the outside,
soft and gooey on the inside.  Okay, so I'm a softie on the
inside.  What did you expect?  Big Macs don't turn into muscle
(damn it!).

OCTOBER CLOSED POSITIONS
#1 – APPX Short Term Straddle:  $1,400 Profit
#2 – BBH "Siamese" Condor:  $300 Loss
#3 – INTC "Siamese" Condor:  $250 Loss
#4 – FDC "Siamese " Condor:  $350 Loss
#5 – SPX Iron Condor: $2,300 Profit
CPTI Portfolio Positions:  $2,800 PROFIT!!!

OCTOBER "QUICKIE" CLOSED POSITIONS
#1 – ADTN Bear Call Spread: $1,800 Profit
#2 – QLGC "Siamese" Condor:  $650 Profit
#3 – SPX Iron Condor:  $1,400 Profit
#4 – QQQ Lottery Play: $150 Loss
Quickie Totals:  $3,700 PROFIT!!!
_________________________________________________________________

REVIEW OF OCTOBER POSITIONS
October Position #1 – SPX Iron Condor – Trading @ 1050.07
We sold 10 contracts of the October 980 puts and also sold 10
contracts of the October 1065 calls.  Then we bought our
protection in the form of 10 contracts of the October 970 puts and
10 contracts of the October 1075 calls.
We took in a total of $2,300 in premium and that's our maximum
potential profit.  Our maximum profit range was 980 to 1065.  Our
safety range is 977.70 was 1067.30.  The SPX closed comfortably
within the range and we banked a $2,300 profit (hypothetically of
course).

October Position #2 – QQQ Put Calendar Spread – Trading @ $34.61
We decided to risk a buck.  Since many folks think the market is
due to correct.  We created a cheap play that will let us take
advantage of a nice down move.  Meanwhile, we can continue to sell
against the January put while we wait.

We bought 10 contracts of January 04 QQQ $32 puts and sold 10
contracts of October 03 QQQ $32 puts for a total debit of $1.00
($1,000).
The October $32 puts expired worthless and we'll roll out to the
November $32 – when the QQQs trade down to about $34 on Monday or
Tuesday.  We should be able to take in at least $.30.  If/when we
do this, we'll have a new cost basis of about $.70.

OEX – Bearish Calendar Spread – OEX @ $518.12
We own 8 contracts of OEX November 470 puts @ $10.60 and sold 8
contracts of OEX September 470 puts @ $2.20 for a total debit of
$8.40.  The Sept. 470 puts obviously expired worthless.  We sold
the October 490 puts, took in another $3.10 and those also expired
worthless.  Now let's roll out and sell the November 485 puts for
about $2.50.  Our cost basis is now $2.80.  If we're going to make
money on this position, we'll need some cooperation from the
market.  The OEX will have to trade down to about 490 in the next
few weeks.  Then, we'll have to make an adjustment.  This may get
a bit tricky – another adventure and learning experience.

QQQ ITM Strangle – Ongoing Long Term -- $34.61.
We bought 10 contracts of the 2005 QQQ $39 puts and 10 contracts
of the 2005 QQQ $29 calls for a total debit of $14,300.  Then we
sold 10 contracts of the QQQ Oct. 33 puts and 10 contracts of the
QQQ Oct. 34 calls for a total credit of $1,900.  We bought back
our $33 puts and $34 calls and rolled out to November $34 puts and
$34 calls, taking in another $1.15 ($1,150).  So far, so good.

HPQ (Hewlett Packard) Bear-Put Spread – HPQ at $20.95.
This is a directional bet.  We anticipate HPQ may return to the
$15 range.  We own 10 contracts of the HPQ Feb. 2004 $20 puts @
$2.25 and we sold 10 contracts of the HPQ Feb. 2004 $15 puts @
$.40.  Total debit of $1.85.   Potential max profit of $3.15.
We'd gladly accept a profit of $800-900 and close the position
early if the opportunity presents itself.  This is a long-term
position.
__________________________________________________________

NEW POSITIONS FOR NOVEMBER
Position #1 – SPX Iron Condor – Trading @ 1039.32
Sell 10 contracts of the SPX November 1090 calls and buy 10
contracts of the November 1100 calls for a credit of about $1.00
($1,000).  Then sell 10 contracts of the SPX November 985 puts and
buy 10 contracts of the November 975 puts for a credit of about
$1.10 ($1,100).
Our total net credit is $2,100.  Our maximum profit range is 985
to 1090 – 105 points!  That's large.  Since November is a 5-week
option month, we may be taking in a little less, but we can sleep
a little better.

Position #2 – AFCI Iron Condor – Trading @ $26.70
Sell 10 contracts of the AFCI November $25 puts and buy 10
contracts of the AFCI November $20.00 puts for a credit of $1.05.
Then sell 10 contracts of the AFCI November $30 puts and buy 10
contracts of the AFCI November $30.00 calls for a credit of $.60.
Our total net credit is $1.65.  Our maximum profit range is $25 -
$30.  Our safety range is $23.35 to $31.65.  Those will also be
our exit parameters.

Position #3 – OEX Iron Condor (By Request) – 518.12
Sell 10 contracts of the OEX November 490 puts and buy 10
contracts of the OEX November 480 puts for a credit of about $.90.
Then, sell 10 contracts of the OEX November 545 calls and buy 10
contracts of the OEX November 555 calls for a credit of about
another $.90.  Our total net credit will be about $1.80.  Our
maximum profit range is 490 to 545.

Position #4 – BBH – Siamese Condor - $128.30
Sell 10 contracts of the BBH November $130 puts and 10 contracts
of the BBH November $130 calls for about $8.50.  Then, buy 10
contracts of BBH November $140 calls and 10 contracts of the BBH
November $120 puts for about $2.40.  The net credit should be
about $6.10.  Our profit range is $123.90 to $136.10 and those are
also our exit parameters.

For those who are not able to monitor their positions closely, an
alternative to the BBH Siamese Condor is a BBH Iron Condor.  This
one will have a large (20-point) range.  Establish a $120/$115
bull put spread for a credit of about $.60 and then the $140/$145
bear call spread for a credit of about $.35.  Trading 10 contracts
will give you about $950 and a huge range.

Those Friendly Reminders
November is a five-week option cycle.  Therefore, the Siamese
Condors may be a little more at risk.  The premiums quoted on the
above educational trades are based on Friday's closing bid/ask
prices.  In a few instances, when the bid/ask spread is wide, we
figure you may be able to shave off a nickel here and there.
Also, remember, on Monday the premiums may be different due to
market movement and/or the additional two days of time erosion.
Be careful.  If a stock gaps up or down, it may change the entire
dynamic of the trade.  Don't skydive without your parachute.  And
make sure you know the intricacies of a strategy before you trade.
__________________________________________________________

New To The CPTI?
Are you a new Couch Potato Trading Institute student?  Do you have
questions about our educational plays or our strategies?  To find
past CPTI (Mike Parnos) articles, look under "Education" on the OI
home page 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


Couch Potato Trading Institute Disclaimer

All results reported in this section are hypothetical. While the
numbers represented here may have been achieved or beaten by our
readers we make no representation that any individual investor
achieved these exact results. The tracking for the plays listed in
this section uses closing prices for the day the newsletter is
published and it is not meant to imply that any reader actually
received those prices or participated in these recommendations.
The portfolio represented here is hypothetical and for investment
education purposes only. It is only an illustration of what type
of gains a knowledgeable investor might receive utilizing these
strategies.


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

Where is the Dow Going?
By Steve Gould

I received a letter last Sunday from a reader who did not quite
understand how I could go from a 99% confidence level that the
market had finally reversed to a completely uncertain level after
the market had made a relatively minor new high.  After responding
to her email, I realized that there must be many others out there
who are equally perplexed.

Before I answer that concern, let me relate a story to you.  Early
on in my trading endeavors, I had a broker who would never give me
a straight answer when the market went down.  (This was before I
knew about puts and how to profit from them.)  He always had an
excuse as to why the market went lower.  I could rattle off his
litany of excuses but that is all they ever were -- excuses.  He
always took credit when the market went up, but always blamed
something or someone when it went down.  I have always disdained
those types of people who could not own up to the bad as well as
take credit for the good.  (Ask my kids.)  I have tried to make it
my practice not to give excuses as to why my analysis may at times
go haywire.  Things happen.  Remember that my analysis may be
wrong, but the market never is.

With that said, it wasn't my fault!  No, just kidding.  :)

When I wrote the 9/30/2003 column, the wave count could not have
been more perfect for the end of the 4 wave and the beginning of
the 5 wave.  Reread the analysis.  The chart pattern was
absolutely classic.  I have seen this set up so many times that I
did indeed have a very high confidence level that this was indeed
the moment.  And I was not the only one.  Many other Elliotticians
had the same view.  The wave count was just that perfect.

Then things changed.  It was not just a matter of a few extra
points when the market made a new high, it is the wave count.
When the market started going down, it went down in such a
characteristic way that every Elliottician's confidence soared.
However, when the market reversed course and made a new high, it
did more than just make a new high.  It altered the wave count.
As I mentioned in last week's article, the wave count is just not
consistent with a top as of yet.  Something else is going on and I
believe time will prove that out.

(Actually, I know exactly what it is.  I put a lot of money into
S&P 500 puts.  It was all my fault.  Had I bought calls, we would
not be at 650 by now.)

Don't lose faith.  Just be fluid when the market does not do what
you expect it to.  What the wave count is telling us now is that
we need to see what happens next at the 1060-1090 level.  That is
going to be the juncture.  If we burst through that, look to see
an S&P 500 of 1275.  If not, look out below.  You can make money
on that.  You just need not pull any triggers until you see the
white of the market's eyes.

With that said, let's see where the S&P 500 is.

Chart: S&P 500 Weekly 10/17/2003





The problem with looking at weekly charts after only one week is
that only one bar is new.  We can see that the new bar has not yet
reached the 1060 level.  Other than that it is rather difficult to
read anything else into this new bar.

One thing that we can see of note is that the oscillator has
broken the 138% retracement level.  Although "officially" the S&P
500 can retrace to 162%, piercing the 138% retracement level is
usually a sign that a continued upward movement is eminent.  We
shall see.  But first let's take a close up look of the 4 wave.

Chart: S&P 500 Weekly 10/17/2003 Close-up




A close up view of the S&P 500 shows that the 138% oscillator
level has just barely been pierced.  It may not be technically
significant just yet, or it may.  Any further movement past this
oscillator level is a bad omen for a reversal of direction.

The C wave is comfortably past the 1.38 level of the wave A (think
expanded flat corrections) and almost to the 38% retracement level
of wave 3.  The conditions are ripe for a downward reversal, but
we will have to look at a higher resolution charts to see if this
final five wave basic pattern is indeed complete.


Chart: S&P 500 Daily 10/17/2003





Take a close look at this chart of the daily S&P 500.  Quiz time.
Let's see how well you have been studying your Elliott Waves.
What is wrong with the labeling of this chart?

If you said that the 4 wave of the 5 (circle) wave overlaps into
the territory of wave 1, then you get to put a smiley face on your
brokerage statement this month.

I like things to be simple.  If an explanation gets too
complicated or we have to make too many exceptions to the rules,
then that solution is probably the wrong answer to the situation.
Sometimes rules have to be broken, but only as a last resort.  In
this case, this may possibly be the case.

I do not know the exact numbers, but for the sake of illustration,
let's say that Elliott's published works encompasses 1000 pages.
The first 100 pages or so are all the simple rules and guidelines.
You would do very well just to master those. Then as you read
further into the text, very rare conditions start to appear.
These are the exceptions to the rules and happen on only the most
infrequent of cases.  Yet, we need to know about them.  If you
read somewhere into the 800th page, the place where your eyes are
bleary and your brain is not functioning properly, you will read
about an expanding triangle in the 5th wave of a C wave of an A-B-
C correction from only a 4 wave.  Ya.  See what I mean.  For some
reason, this 5 wave can take on special characteristics that allow
it to violate basic rules of Elliott Wave theory.

It may be or it may not be, but some Elliotticians believe that
this final formation is a 5th wave expanding triangle.

I hate exceptions, but this may just be the ticket to the
reversal.  But are we at the top yet? Has this recent decline
signaled the start of reversal? In order to find out, we must take
a look at the hourly chart.

Chart: S&P 500 Hourly 10/17/2003





The hourly chart of the S&P 500 tells me that we are not quite
done with a final thrust up.  We should see a slight rise in the
S&P 500 (perhaps to 1043) followed by a further decline to about
1031-1024 to complete the five wave basic pattern of the C wave of
the 4 wave.  Next will come a 5 (square) rally to about the 1060
level making yet another new high.  Then, if this expanded
triangle is really an expanded triangle, we should see the
beginning of the decline to 650.

Bottom line, I see a new high for the S&P 500 (and the rest of the
markets, of course) over the coming week and maybe into the
beginning of the next week.  At that point, we will be at that
important juncture that should be the beginning of the decline of
the markets into the end of the year. Or not...

Finally, I just want to let all my readers know that I appreciate
getting all your emails and any questions, concerns or feedback
you may have.  So in the famous words of Dean Martin (yes, I am
dating myself) keep those cards and letters coming in.


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**********

Please read our disclaimer at:
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The Option Investor Newsletter                   Sunday 10-19-2003
Sunday                                                      5 of 5


In Section Five:

Covered Calls: Adjustment Strategies For Covered-Calls
Naked Puts: Q&A With The Editor
Spreads/Straddles/Combos: Rally Pauses As Investors Take Profits

Updated In The Site Tonight:
Market Posture: Finally Some Overdue Profit Taking


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

Trading Basics: Adjustment Strategies For Covered-Calls
By Mark Wnetrzak

One of our readers asked for some suggestions on how to manage a
covered-call position when the underlying stock doesn't move as
expected.


Attn: mark@OptionInvestor.com
Subject: Exits for Covered-Calls?

Hello,

I like your covered call strategy and recommendations -- what I
would like to know is when to exit the strategy if the underlying
stock price is heading way over the strike price or when the
underlying stock price starts heading down.  Please address answer
based on remaining time and also based on price increase/decrease
of the underlying stock.

Thank you

Mo


Hello Mo!

First, it is very important to remember that our strategy uses a
conservative covered write that views the entire position as a
single entity.  We are not interested so much in stock ownership
or upside movement, but in obtaining a monthly return on our
investment.  Therefore, by using In-The-Money (ITM) covered-calls,
we expect the underlying equity to be "called" away at expiration
(because the stock price is above the sold strike).

Generally when a stock price rises, there are several choices
available to the covered-call writer: One, do nothing, let the
underlying stock be assigned after expiration (called away) and
accept the original profit; Two, after evaluating the cost of
extra commissions verses the increase in the annualized return
(because of the shorter time frame), close the position early if
the call is trading near parity (usually this needs to occur
quickly after the entering the position); Three, an investor can
attempt to increase the potential profit by rolling the sold calls
forward and/or up.

Rolling-up or buying back the current calls and selling new calls
with a higher striking price (usually incurring a debit), is one
method to increase the profit potential at the expense of losing
downside protection.  The cost basis or break-even point will be
raised by the amount of debit required to roll-up (cost of buying
back the original calls less the premium of selling the new calls).
Many professional traders frown at putting more money on the table
(by increasing the cost basis) to increase the potential profit.

In an attempt to limit the debit of rolling up, investors may find
it advantageous to roll forward (and up) to a later expiration.
Moving to a future time frame or even a LEAP can more than offset
the cost of buying back the original calls.  Again, evaluating the
annualized return of the new position with the increased commission
costs and time frame is a must.  Generally, professionals do not
roll up if a 10% correction in the stock price cannot be withstood
(though this percentage may not be applicable to the more volatile
stocks).

If an investor is defensive and is trying to lower their cost
basis in their covered-call position, they would roll down and/or
forward.  If this is done before expiration, they would need to
buy back their 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 for exiting covered-call positions, there are many stop loss
signals an investor can employ:  a strict percentage of one’s
overall portfolio; a fixed dollar amount; a technical violation;
etc.  Once you decide to close a covered-call position, you
simply buy back the calls (at the "ask") and then sell the stock
(at the "bid").  A "net" order could also be used in closing a
covered-write to ensure a proper exit. You would place an order
with your broker to "sell" the stock and "buy to close" the calls
for a net credit -- a price reasonably close to parity.

Timing the adjustment is also important.  Professionals will wait
for the time premium to dissipate from the written calls before
rolling forward and/or up.  Be advised that with deep in-the-money
calls, the time premium can disappear quickly and well before
expiration.  As long as there is time premium left in the calls,
there is little risk of early assignment (and you are earning time
premium by staying with the original position).  However, once the
option trades at parity or a discount, there is a significant
probability of exercise by arbitrageurs (floor traders who don't
pay commissions).

As always, you need to evaluate the risk-reward scenarios above and
make a decision that fits your trading plan based on your outlook
for the underlying equity and stock market.

Larry McMillan's book, "Options: As a Strategic Investment," is an
excellent resource for option traders.  In Chapter 2, he explains
the various strategies (and possible adjustments too) involved in
writing covered-calls.

Best Regards,

Mark W.
OIN


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

HLIT     5.48    7.99  OCT  5.00  0.80    0.32*   9.9%
SCMR     5.20    5.09  OCT  5.00  0.65    0.45*   8.6%
STEC     7.73    9.62  OCT  7.50  0.50    0.27*   8.1%
BEAV     5.12    5.29  OCT  5.00  0.45    0.33*   7.7%
CHU      7.43    9.17  OCT  7.50  0.50    0.57*   7.1%
QSFT    12.44   13.71  OCT 12.50  0.50    0.56*   6.8%
ARIA     5.24    6.57  OCT  5.00  0.60    0.36*   6.7%
PVN     12.60   12.39  OCT 12.50  0.55    0.34    6.1%
MXO     12.90   15.10  OCT 12.50  1.05    0.65*   6.0%
OXGN    11.17   10.92  OCT 10.00  1.55    0.38*   5.7%
VXGN     6.50   11.86  OCT  5.00  1.80    0.30*   5.5%
XING     8.43    9.25  OCT  7.50  1.20    0.27*   5.4%
NTPA     7.97    8.45  OCT  7.50  0.65    0.18*   5.3%
CHKP    17.88   17.40  OCT 17.50  0.85    0.37    4.7%
CREE    19.21   17.96  OCT 17.50  2.25    0.54*   4.6%
NABI     8.22   10.76  OCT  7.50  0.95    0.23*   4.6%
SEAC    13.18   15.57  OCT 12.50  1.05    0.37*   4.4%
DSCM     7.99    7.74  OCT  7.50  0.85    0.36*   4.4%
ALKS    14.23   14.33  OCT 12.50  2.20    0.47*   4.2%
ALKS    15.28   14.33  OCT 15.00  1.00    0.05    0.8%
ISRG    17.75   16.64  OCT 17.50  0.70   -0.41    0.0%

BVSN     5.31    5.34  NOV  5.00  0.65    0.34*   5.3%
ALGN    15.60   15.21  NOV 15.00  1.60    1.01*   5.2%
PUMA     5.54    5.92  NOV  5.00  0.85    0.31*   4.8%
IBIS    14.42   14.01  NOV 12.50  2.65    0.73*   4.5%
BRCD     6.33    6.00  NOV  6.00  0.65    0.32    4.1%
TLAB     7.83    7.50  NOV  7.50  0.70    0.37    3.8%
ALKS    15.16   14.33  NOV 12.50  3.20    0.54*   3.3%

*   Stock price is above the sold striking price.

Comments:

Is it the beginning of the end of this year's bull rally?  Can
the indices really move higher through two-year old resistance?
Well, the next few weeks should offer some clues.  In the near
term however, some consolidation appears to be warranted as
Friday's sell-off was a bit worrisome.  Intuitive Surgical
(NASDAQ:ISRG) could have been closed this week though investors
with a neutral to bullish outlook may consider rolling into
next month.  Just depends on your outlook and personal risk
tolerance.

Positions Previously Closed: Hollis-Eden Pharma (NASDAQ:HEPH),
Incyte (NASDAQ:INCY) and ID Biomedical (NASDAQ:IDBE) -- both of
which ended up being profitable (Murphy's Law again!), ISIS
Pharmaceuticals (NASDAQ:ISIS), Ecollege.com (NASDAQ:ECLG), and
Thoratec (NASDAQ:THOR) -- profitable but an ugly looking chart.



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

SGMO    5.10  NOV  5.00  USJ KA  0.55  9      4.55  35   8.6%
TMM     3.44  NOV  2.50  TMM KZ  1.10  260    2.34  35   5.9%
SEAC   15.57  NOV 15.00  UEG KC  1.50  219   14.07  35   5.7%
ALKS   14.33  NOV 12.50  QAL KV  2.50  5310  11.83  35   4.9%
CMNT    9.22  NOV  7.50  QDO KU  2.10  25     7.12  35   4.6%
VECO   25.67  NOV 25.00  QVC KE  1.85  144   23.82  35   4.3%
SSTI   11.21  NOV 10.00  SJV KB  1.65  3560   9.56  35   4.0%


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).

*****
SGMO - Sangamo  $5.10  *** Biotech Speculation ***

Sangamo Biosciences NASDAQ:SGMO) is engaged in the research,
development and commercialization of engineered transcription
factors for the regulation of gene expression.  The company's
proprietary technology platform is based on the engineering
of a naturally occurring class of DNA transcription factors
referred to as zinc finger DNA-binding proteins (ZFPs).  The
DNA recognition and binding function of ZFPs can be used to
target a variety of functional domains to a gene-specific
location.  Its scientists engineer ZFP transcription factors
(ZFP TFs) that are able to regulate genes in a targeted
fashion by attaching ZFPs to certain functional domains that
either turn genes on or off.  Through several collaborations,
the company is applying its ZFP TF technology to assist in
the identification of new small-molecule drugs and to develop
fully human monoclonal antibodies.  Sangamo is once again
testing resistance near $5 as the stock continues to forge
a year-long Stage I base.  Investors can use this position
to target-shoot an entry point from which to speculate on
the company's future.

NOV-5.00 USJ KA LB=0.55 OI=9 CB=4.55 DE=35 TY=8.6%


*****
TMM - Grupo TMM  $3.44  *** Bottom Fishing ***

Grupo TMM (NYSE:TMM) is an integrated logistics and transportation
company in Mexico whose main activity is providing maritime, land
and rail freight transportation, storage and agent services, as
well as attending to cruise ships and other similar activities
appropriate to the shipping and cargo transport business.  The
company organizes its businesses into four segments: specialized
maritime transportation, land transportation, operation of ports
and terminals and railroad transportation.  Specialized maritime
transportation operations include liquid petroleum products in
bulk, materials and supplies for drilling platforms and vehicle
transportation operations, as well as tugboat services.  Land
transportation includes truck services and logistics.  Their Port
operations include terminal activities, both cargo and passenger.
Rail transportation includes interline connections, consisting of
United States and Mexican railroad lines and traffic.  Grupo TMM
continues to build a base with support near $2 and this position
allows speculators to profit from that trend.  Target-shooting a
lower net-debit will lower the cost basis and raise the potential
yield in the position.  Earnings are due October 28.

NOV-2.50 TMM KZ LB=1.10 OI=260 CB=2.34 DE=35 TY=5.9%


*****
SEAC - SeaChange  $15.57  *** Rally Mode! ***

SeaChange International (NASDAQ:SEAC) is a developer, manufacturer
and marketer video storage servers that automate the management
and distribution of long-form video streams, such as movies or
other feature presentations, and short-form video streams, such
as advertisements.  The company sells its products and services to
cable system operators, telecommunications companies and broadcast
television companies.  The company's broadband network segment
includes its VOD (video-on-demand) System, which digitally
manages, stores and distributes digital video, allowing cable
system operators and telecommunications companies to offer VOD
and other interactive television services, including interactive
electronic advertising and retrieval of Internet content, through
TV.  SEAC rallied this week after Cox Communications (NYSE:COX)
selected SeaChange as a provider of VOD technology, which Cox
plans to install in select systems early next year.  Our outlook
is bullish due to the recent technical strength and this position
offers a reasonable cost basis in the issue.  Earnings are due
November 25.

NOV-15.00 UEG KC LB=1.50 OI=219 CB=14.07 DE=35 TY=5.7%


*****
ALKS - Alkermes  $14.33  *** Entry Point ***

Alkermes (NASDAQ:ALKS) is a pharmaceutical company developing
products based on applying its sophisticated drug delivery
technologies to enhance therapeutic outcomes.  The company's
areas of focus include controlled, extended-release of injectable
drugs using its ProLease and Medisorb delivery systems, and the
development of inhaled pharmaceuticals based on its proprietary
Advanced Inhalation Research pulmonary delivery system.  Alkermes
partners its proprietary technology systems and drug delivery
expertise with many other pharmaceutical companies, and it also
develops novel, proprietary drug candidates for its own account.
The company has a pipeline of products in various stages of
development including:  Risperdal Consta, Nutropin Depot,
Vivitrex, inhaled epinephrine, r-hFSH (recombinant human
follicle stimulating hormone), Exenatide LAR, inhaled insulin
and inhaled human growth hormone.  Alkermes recently rallied
above the June high on good volume making another new 52-week
high.  Investors who believe the bullish trend will continue
can use this position to profit from that outcome at the risk
of owning this Alkermes near its long-term (150-day) MA.

NOV-12.50 QAL KV LB=2.50 OI=5310 CB=11.83 DE=35 TY=4.9%


*****
CMNT - Computer Network  $9.22  *** Historical Support ***

Computer Network Technology (NASDAQ:CMNT) provides end-to-end
storage solutions, including hardware and software products,
related consulting and integration services and managed
services, in the storage networking market.  The company
focuses primarily on helping its customers design, develop,
deploy and manage storage networks, including storage area
networks, which are high-speed networks within a business'
existing computer system that allow the business to manage
its data storage needs with greater efficiency and less
disruption to its overall network.  The company designs,
manufactures, markets and supports a wide range of solutions
for critical storage networking applications such as remote
data replication and remote tape vaulting.  It also supplies
storage systems, fiber channel switches, telecommunications
capacity and storage application software.  CMNT has been
in a Stage I base for over a year and this position allows
investors to speculate on the company's future with a cost
basis near a long-term support area.

NOV-7.50 QDO KU LB=2.10 OI=25 CB=7.12 DE=35 TY=4.6%


*****
VECO - Veeco  $25.67  *** Rally Mode: Part II ***

Veeco Instruments (NASDAQ:VECO) designs, manufactures, markets
and services a line of equipment primarily used by manufacturers
in the data storage, semiconductor and telecommunications/wireless
industries.  The company's line of products allows customers to
improve time to market of next-generation products.  The company's
products are also enabling advancements in the field of nanoscience
and other areas of scientific and industrial research.  VECO offers
two principal product lines: process equipment and metrology.  The
company divested its leak detection business in January 2000, and
its remaining industrial measurement business (NeXray) in May 2002.
Veeco continues to rally off of last October's low and investors
who believe the trend will continue can use this position to profit
from that outcome.  Earnings are due October 27.

NOV-25.00 QVC KE LB=1.85 OI=144 CB=23.82 DE=35 TY=4.3%


*****
SSTI - Silicon Storage  $11.21  *** Rally Mode: Part III ***

Silicon Storage Technology (NASDAQ:SSTI) operates as a supplier
of flash memory semiconductor devices for the digital consumer,
networking, wireless communications and Internet markets.  The
company has over 90 products based on its proprietary SuperFlash
design and manufacturing process technology.  These include
include standard flash products, application specific memory
products, embedded controllers and mass data storage products.
Here is another stock that has rallied strongly since last May
and investors can speculate on the near-term performance of the
issue with this position.  Earnings are due on October 22.

NOV-10.00 SJV KB LB=1.65 OI=3560 CB=9.56 DE=35 TY=4.0%


*****


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

GNSS   16.01  NOV 15.00  QFE KC  2.25  2495  13.76  35   7.8%
ASYT   18.20  NOV 17.50  QQY KW  1.90  526   16.30  35   6.4%
SCMR    5.09  NOV  5.00  SMZ KA  0.40  1631   4.69  35   5.7%
NEOL   16.12  NOV 15.00  UOE KC  2.00  799   14.12  35   5.4%
CYD    24.30  NOV 22.50  CYD KX  3.10  404   21.20  35   5.3%
AFCI   26.70  NOV 25.00  AQF KE  3.10  705   23.60  35   5.2%
IBIS   14.01  NOV 12.50  UIB KV  2.15  171   11.86  35   4.7%
AZPN    5.75  NOV  5.00  ZQP KA  1.00  426    4.75  35   4.6%
NABI   10.76  NOV 10.00  NIQ KB  1.25  289    9.51  35   4.5%
CRGN    5.31  NOV  5.00  CQX KA  0.55  53     4.76  35   4.4%
VXGN   11.86  NOV 10.00  UWG KB  2.30  1682   9.56  35   4.0%
CCBL    7.87  NOV  7.50  LQE KU  0.70  186    7.17  35   4.0%
CE     13.95  NOV 13.00   CE KO  1.50  1444  12.45  35   3.8%
ISSX   13.70  NOV 12.50  ISU KV  1.70  452   12.00  35   3.6%
XING    9.25  NOV  7.50  QAE KU  2.05  25     7.20  35   3.6%
NWAC   13.86  NOV 12.50  NAQ KV  1.80  211   12.06  35   3.2%



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

Options 101: Q&A With The Editor
By Ray Cummins

This week's question concerns trading inside the bid/ask spread.


Attn: Contact Support
Subject: Execution/Fill related question

Hello Ray,

Hope all is well with you.  I would like to ask you a practical
question.  If the bid/ask spread is very wide, is it possible in
real world to get in a  fill by splitting the quote between them?.

Today on ELAB, I was planning to buy the Jan 40 straddle when the
bid/ask was 7.20 x 8.00...I placed a limit order @ 7.60...never
got a fill...then raised to 7.70 and never got a fill.  Finally,
I placed a market order and got filled @ 7.90.  Same situation
with KSWS...was not able to get a fill by splitting the Bid/Ask
spread.

I have heard that one can get fills by placing a price between
the bid and ask.  Is that True?  I use OptionsXpress and Preferred
Trade and have never been able to get a fill by splitting the
quote.  Have you encountered this?

Thanks and appreciate you sharing your experience with me.

Have a good one.

Cheers,

PA


First, here are some comments from other traders on the OIN staff:

In answer to the reader's question about splitting the bid/ask
spread, I can say that I have been successful at times in splitting
the bid and the ask, but it's often a question of how thinly traded
the option might be. I'm fairly patient and if conditions are right
will let my order sit for a while, and sometimes someone finally
takes it. If an issue's options are thinly traded however, that's
not going to happen. You're at the mercy of that wide bid/ask
spread. Those wide spreads in some issues have sometimes kept me
from initiating a credit spread I wanted to open. I'm paying too
much for the bought option and not getting enough credit for the
sold one to make it worthwhile.

Linda Piazza


Most of the times I have achieved a fill by "splitting the bid"
occurred when the stock moved in the appropriate direction, but
the potential for this event to occur also depends on how liquid
the option series is.  If the option series is getting a lot of
action, you can probably shave off a small amount, but then the
bid/ask spread would likely be closer as well.  When the spreads
are wide, there is obviously no market.  Therefore, if you want
in, you generally have to "be the market" with a market order.

Mark Wnetrzak


From my perspective, you can get an occasional fill by splitting
the quotes on higher priced options with large Bid/Ask spreads.
Keep in mind though, your fill may simply be the result of an
opposing trader's order and not the market-maker moving to your
price.  Also, you must remember that a market-maker or specialist
(who is not trading for his own account) must be able to complete
a risk-free transaction, either through a conversion or reversal
(reverse conversion) before he will agree to buy or sell an option
at a particular price.  More about that subject here:

http://www.OptionInvestor.com/archive/coveredcalls/2001/031801_1.asp

One of the most common problems in option trading is "slippage"
and the condition exists in all major financial markets.  However,
the effects of slippage are more noticeable when a number of trades
are grouped together in a short time, such as often occurs in a
recovery strategy like covering/uncovering a short option in a
"range-bound" issue.  Losses due to slippage are amplified by a
number of factors including: large bid/ask spreads (mostly due to
illiquid markets), incorrect or inaccurate pricing (inefficient
data provider) and delayed execution of trades (ineffective/untimely
brokerage service or trading platform).  Since there is no way to
alter the price activity of the underlying instrument, the key to
success (or achieving the maximum amount of success under the
circumstances) is to limit the consequences of slippage as much as
possible when opening/closing new positions and executing "stop"
orders.

In addition, you must always be concerned with volume and open
interest when trading options, especially when the positions
involve straight puts and calls.  These components are slightly
less important when executing spread/combination trades through
"limit" orders and with "net" credit or debit orders, moderate
activity and/or robust volume is a plus, but it is not necessary
to initiate a favorable trade.  The reason is, market-makers are
required by the exchanges to trade options, in a fair and equitable
manner, with all retail participants, regardless of whether or not
there is any public interest in the class or series.  Of course,
that does not mean they have to give you a "good" price, but since
these specialists use risk-less positions to "make a market," they
have no reason to avoid trading.

Readers often ask how some of the (Spreads/Combos/Premium Selling)
plays are entered when the volume of not only the underlying but
the option chains are low, or nonexistent, and how plays with so
little volume can be executed by more than just a few members, if
any.  The truth is, some of the positions offered in these sections
are NOT available for more than a few contracts, and some may offer
only one trade, or none at all, before the premium is gone.  At the
same time, that doesn't mean they are unfavorable plays.  In fact,
the general focus of the research for positions in these categories
is "premium disparities" in out-of-the-money options.  But, as you
know, you will rarely find mis-priced options in series that have
high volume and open interest because the liquidity in those series
keeps the market accurately priced.

Hope that helps!

Ray


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

EMIS     6.19    6.30  OCT  5.00  0.35    0.35*   6.5%  18.6%
RMBS    18.73   25.25  OCT 15.00  0.30    0.30*   4.4%  16.0%
CERN    35.47   36.20  OCT 30.00  0.55    0.55*   4.1%  12.9%
GERN    12.98   14.90  OCT 10.00  0.25    0.25*   3.7%  12.7%
ADLR    15.95   17.96  OCT 12.50  0.50    0.50*   3.6%  11.8%
USG     17.51   17.48  OCT 12.50  0.35    0.35*   3.1%   9.9%
SEAC    14.34   15.57  OCT 12.50  0.35    0.35*   3.1%   9.0%
LRCX    22.81   26.15  OCT 20.00  0.40    0.40*   3.0%   8.6%
STAT    14.58   12.47  OCT 12.50  0.40    0.37    2.7%   7.7%
MSTR    50.03   50.42  OCT 45.00  0.55    0.55*   2.7%   7.7%
NFLX    40.15   52.13  OCT 32.50  0.30    0.30*   2.0%   7.5%
PDII    25.06   24.45  OCT 22.50  0.40    0.40*   2.6%   7.4%
NKTR    13.83   14.63  OCT 10.00  0.25    0.25*   2.2%   7.2%
ONXX    23.92   25.93  OCT 20.00  0.40    0.40*   2.2%   7.2%
ERES    36.70   40.10  OCT 32.50  0.35    0.35*   2.4%   7.0%
RIMM    37.29   42.46  OCT 32.50  0.50    0.50*   2.3%   6.8%
BRCM    28.79   29.84  OCT 25.00  0.25    0.25*   2.2%   6.8%
CEPH    49.62   45.77  OCT 40.00  0.65    0.65*   1.8%   6.5%
ERES    33.63   40.10  OCT 27.50  0.30    0.30*   1.6%   5.7%
AMHC    41.98   42.50  OCT 35.00  0.40    0.40*   1.7%   5.7%
MERQ    45.76   47.54  OCT 40.00  0.50    0.50*   1.8%   5.6%
IDXC    26.02   24.30  OCT 22.50  0.35    0.35*   1.7%   5.3%
INSP    19.92   22.05  OCT 17.50  0.35    0.35*   1.8%   5.2%
GOLD    23.93   22.80  OCT 20.00  0.35    0.35*   1.5%   5.1%
ATMI    27.52   24.30  OCT 25.00  0.30   -0.40    0.0%   0.0%

XMSR    19.10   19.99  NOV 17.50  0.85    0.85*   3.7%   8.9%
FCEL    14.35   14.18  NOV 12.50  0.50    0.50*   3.0%   8.2%
PXLW    12.10   11.71  NOV 10.00  0.30    0.30*   2.2%   7.1%
MTZ     12.81   13.30  NOV 10.00  0.25    0.25*   1.9%   6.4%
NWAC    12.18   13.86  NOV 10.00  0.25    0.25*   1.9%   6.2%
CNX     21.88   22.23  NOV 20.00  0.55    0.55*   2.0%   5.4%
CY      20.44   19.72  NOV 17.50  0.40    0.40*   1.7%   5.1%

*  Stock price is above the sold striking price.

Comments:

Stocks moved lower Friday as profit-taking overcame news of
upbeat economic data.  A slew of less-than-outstanding profit
reports prompted traders to take profits from the recent rally
and the selling pressure did not abate until late in the day.
With the potential for further downside activity, traders are
encouraged to use diligent portfolio management in the coming
week.

Previously Closed Positions: Ask Jeeves (NASDAQ:ASKJ) and Nps
Pharmaceuticals (NASDAQ:NPSP), both of which remained profitable,
and Atmi Inc. (NASDAQ:ATMI) and Thoratec (NASDAQ:THOR).


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

ONXX   25.93  NOV 20.00  OIQ WD 0.60 636   19.40  35   2.7%   9.0%
AFCI   26.70  NOV 22.50  AQF WX 0.60 1420  21.90  35   2.4%   7.4%
ALGN   15.21  NOV 12.50  CUA WV 0.25 15    12.25  35   1.8%   6.0%
SCUR   14.09  NOV 12.50  UQU WV 0.30 38    12.20  35   2.1%   6.0%
FCS    20.04  NOV 17.50  FCS WW 0.40 447   17.10  35   2.0%   5.9%
AVCT   36.00  NOV 32.50  QVX WZ 0.75 472   31.75  35   2.1%   5.6%
IDXC   24.30  NOV 20.00  XQW WD 0.35 11    19.65  35   1.5%   5.3%


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).

*****
ONXX - Onyx Pharmaceuticals  $25.93  *** Multi-Year High! ***

Onyx Pharmaceuticals (NASDAQ:ONXX) is engaged in the discovery
and development of novel cancer therapies utilizing two primary
technology platforms, small molecules that inhibit the proteins
involved in excess growth signaling, and therapeutic viruses
that selectively replicate in cells with cancer-causing genetic
mutations.  The firm is developing a new small molecule compound,
BAY 43-9006, in collaboration with Bayer Pharmaceuticals.  Using
its proprietary virus technology, the company is also developing
ONYX-411, a second-generation product that targets cancers with
abnormal function of the retinoblastoma tumor-suppressor gene,
and is developing Armed Therapeutic Virus products.  Onyx is set
to present additional findings from one or more Phase II studies
of its experimental cancer drug BAY 43-9006 at a European cancer
research meeting later this month and investors are hoping for
a favorable report.  Traders who believe the reception will be
positive, and the recent upside activity will continue, should
consider this position.

NOV-20.00 OIQ WD LB=0.60 OI=636 CB=19.40 DE=35 TY=2.7% MY=9.0%


*****
AFCI - Advanced Fibre Comm.  $26.70  *** New 2-Year High! *** ***

Advanced Fibre Communications (NASDAQ:AFCI) develops, manufactures
and supports a family of telecommunications access products and
services.  The firm's products and services enable the connection
between the central office switches of telecommunications service
providers and their end users for voice and high-speed Internet,
data and video communications.  Their products include integrated
multi-service access platforms, central office switching platforms,
optical add-drop multiplexers, integrated access devices, network
element management systems and cabinets, as well as many related
professional services.  Networking stocks have been among the top
performers recently and last week's price activity in Advanced
Fibre put the issue at a new 2-year high.  Traders can speculate
on the outcome of the company's earnings report (due 10/21) with
this position.

NOV-22.50 AQF WX LB=0.60 OI=1420 CB=21.90 DE=35 TY=2.4% MY=7.4%


*****
ALGN - Align Technology  $15.21  *** Entry Point? ***

Align (NASDAQ:ALGN) is engaged in the design, manufacture and
marketing of Invisalign, a proprietary system for treating
malocclusion, or the misalignment of teeth.  Invisalign offers
ClinCheck, an Internet-based application that allows dental
professionals to simulate treatment, in three dimensions, by
modeling two-week stages of tooth movement, and Aligners, which
are thin, clear plastic, removable dental appliances that are
manufactured in a series to correspond to each two-week stage
of the ClinCheck simulation.  As of December 31, 2002, over
80,000 patients worldwide had started treatment with Invisalign.
Align will announce earnings next week and the stock price is
likely to be volatile prior to, and possibly after, the report.
Investors can use that activity to establish a conservative
entry point in this unique growth stock.

NOV-12.50 CUA WV LB=0.25 OI=15 CB=12.25 DE=35 TY=1.8% MY=6.0%


*****
SCUR - Secure Computing  $14.09  *** Rally Mode! ***

Secure Computing (NASDAQ:SCUR) has been protecting the most
important networks in the world for over 20 years.  With broad
expertise in security technology, they develop network security
products that help their customers create a trusted environment
both inside and outside of their organizations.  Their global
customers and partners include the majority of the Dow Jones
Global 50 Titans and the most prominent organizations in banking,
financial services, healthcare, telecommunications, manufacturing,
public utilities, and federal and local governments.  SCUR moved
to a new 52-week high Friday and the high-volume rally suggests
further upside activity in the near-term.  Traders can speculate
on that outcome in a conservative manner with this position.

NOV-12.50 UQU WV LB=0.30 OI=38 CB=12.20 DE=35 TY=2.1% MY=6.0%


*****
FCS - Fairchild Semi  $20.04  *** Chip Sector Speculation! ***

Fairchild Semiconductor (NYSE:FCS) is a leading global supplier
of high performance products for multiple end markets.  With a
focus on developing leading edge power and interface solutions
to enable the electronics of today and tomorrow, Fairchild's
components are used in computing, communications, consumer,
industrial and automotive applications.  Fairchild's employees
design, manufacture and market power, analog & mixed signal,
interface, logic, and optoelectronics products from its company
headquarters in South Portland, Maine, USA and numerous locations
around the world.  FCS recently posted a third-quarter loss that
included a significant restructuring charge, but the company also
predicted gains in fourth-quarter revenue and profit as a result
of strong bookings, including regional strength in Asia.  The
recent consolidation area near $18 should give the stock some
support in the event of a share value slump and investors can
establish a cost basis slightly below that price range with this
position.

NOV-17.50 FCS WW LB=0.40 OI=447 CB=17.10 DE=35 TY=2.0% MY=5.9%


*****
AVCT - Avocent  $36.00  *** Technical Break-Out! ***

Avocent Corporation (NASDAQ:AVCT), together with its wholly owned
subsidiaries, designs, manufactures and sells analog and digital
KVM (keyboard, video and mouse) switching systems, as well as serial
connectivity devices, extension and remote access products and also
display products for the computer industry.  The firm's switching
and connectivity solutions provide information technology managers
with access and control of multiple servers and network data centers
from any location. AVCT shares soared to multi-year highs last week
after the company reported higher sales, margins and net income for
the third quarter.  Investors who believe the bullish trend will
continue should consider this position.

NOV-32.50 QVX WZ LB=0.75 OI=472 CB=31.75 DE=35 TY=2.1% MY=5.6%


*****
IDXC - IDX Systems  $24.30  *** Earnings Are Due! ***

IDX Systems Corporation (NASDAQ:IDXC) is a provider of software,
services and technologies for healthcare organizations.  IDX's
core business segment, providing information systems, services
and connectivity for group physician practices, hospitals and
integrated delivery networks, operates under the IDX brand name
and consists of software licensing, services and hardware sales.
Shares of IDXC are in a consolidation phase as investors await
the company's earnings report next week.  W.R. Hambrecht & Co.
also recently said that IDXC is "well-positioned for success in
two of the five contracts to be awarded by the U.K.'s National
Health System."  Investors who agree with an optimistic outlook
for the company's future profits should consider this position.

NOV-20.00 XQW WD LB=0.35 OI=11 CB=19.65 DE=35 TY=1.5% MY=5.3%


*****


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

CYD    24.30  NOV 20.00  CYD WD 0.55 554   19.45  35   2.5%   8.0%
NFLX   52.13  NOV 40.00  QNQ WH 1.05 2715  38.95  35   2.3%   8.0%
FLSH   20.58  NOV 17.50  FFU WW 0.45 55    17.05  35   2.3%   7.0%
PKTR   16.48  NOV 15.00  XOU WC 0.45 60    14.55  35   2.7%   7.0%
USG    17.48  NOV 10.00  USG WB 0.30 19648  9.70  35   2.7%   6.9%
DRIV   31.65  NOV 25.00  DQI WE 0.55 201   24.45  35   2.0%   6.9%
NITE   14.12  NOV 12.50  QTN WV 0.30 370   12.20  35   2.1%   6.0%
ERES   40.10  NOV 32.50  UDB WZ 0.60 116   31.90  35   1.6%   5.8%
MANH   30.82  NOV 25.00  MQR WE 0.45 214   24.55  35   1.6%   5.6%
JNPR   17.09  NOV 15.00  JUX WC 0.30 957   14.70  35   1.8%   5.2%


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


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

Rally Pauses As Investors Take Profits
By Ray Cummins

The major equity averages plunged Friday amid a slew of mediocre
earnings forecasts and concerns over share valuations.

The blue-chip Dow Jones industrial average fell 69 points to 9,721
on weakness in its financial, retail, transportation, and drug
components.  The technology-laden NASDAQ composite index slid 37
points to 1,912 due to robust profit-taking in computer hardware,
semiconductor and internet shares.  The broader Standard & Poor's
500-stock index lost 10 points to close at 1,039, with virtually
all sectors enduring to selling pressure.  Trading was volatile as
options expired for the month of October.  Over 1.3 billion shares
changed hands on the Big Board and more than 1.7 billion shares
were crossed on the NASDAQ.  Declining stocks trounced advancers
by a ratio of more than 2 to 1 on both the New York Stock Exchange
and the technology exchange.  The bond market rebounded as stocks
faded.  The 10-year note closed up 18/32 with its yield at 4.39%.

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

AMLN    29.04   27.00  OCT   22  25   0.30  24.70  $0.30  Closed
MERQ    49.41   47.54  OCT   40  42   0.30  42.20  $0.30  Closed
BBH    137.69  128.30  OCT  120 125   0.45 124.55  $0.45  Closed
CELG    45.48   42.00  OCT   35  40   0.50  39.50  $0.50  Closed
MYL     27.74   27.01  OCT   22  22   0.13  22.97  $0.13  Closed
SINA    37.41   40.00  OCT   25  30   0.45  29.55  $0.45  Closed
COGN    33.16   33.64  OCT   27  30   0.40  29.60  $0.40  Closed
CTSH    40.41   42.23  OCT   30  35   0.55  34.45  $0.55  Closed
IMDC    76.91   85.03  OCT   60  65   0.55  64.45  $0.55  Closed
NEM     40.66   39.13  OCT   35  37   0.30  37.20  $0.30  Closed
EBAY    54.22   54.86  OCT   47  50   0.25  49.75  $0.25  Closed
GENZ    46.00   49.67  OCT   40  42   0.35  42.15  $0.35  Closed
RIMM    37.29   42.46  OCT   30  32   0.20  32.30  $0.20  Closed
ADTN    72.64   68.57  OCT   60  65   0.35  64.65  $0.35  Closed
MRVL    40.61   40.84  OCT   35  37   0.20  37.30  $0.20  Closed
SNDK    71.18   74.68  OCT   60  65   0.50  64.50  $0.50  Closed
SMH     36.92   38.55  OCT   33  35   0.25  34.75  $0.25  Closed
AET     62.76   63.07  NOV   50  55   0.55  54.45  $0.55   Open
MXIM    44.82   44.29  NOV   35  40   0.50  39.50  $0.50   Open
PHS     54.50   53.91  NOV   45  47   0.30  47.20  $0.30   Open
PIXR    71.56   67.79  NOV   60  65   0.70  64.30  $0.70   Open

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

Adtran (NASDAQ:ADTN) did not offer the target credit, however it
may have been a viable position for conservative spread traders.
Pixar (NASDAQ:PIXR) is the first candidate on the "early-exit"
watch-list for November.


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

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

CAH     56.36   58.52   OCT   65  60   0.65  60.65  $0.65  Closed
PFE     30.51   30.56   OCT   35  32   0.25  32.75  $0.25  Closed
XL      76.05   73.37   OCT   85  80   0.60  80.60  $0.60  Closed
APC     42.70   41.35   OCT   47  45   0.35  45.35  $0.35  Closed
CI      47.15   47.26   OCT   55  50   0.50  50.50  $0.50  Closed
FRX     48.93   49.92   OCT   60  55   0.50  55.50  $0.50  Closed
BVF     36.75   28.14   OCT   45  40   0.50  40.50  $0.50  Closed
CERN    31.42   36.20   OCT   40  35   0.60  35.60 ($0.60) Closed
GPRO    51.70   24.10   OCT   65  60   0.50  60.50  $0.50  Closed
IMCL    37.73   33.38   OCT   50  45   0.40  45.40  $0.40  Closed
DNA     79.82   79.08   OCT   90  85   0.55  85.55  $0.55  Closed
FFH    157.95  155.50   OCT  175 170   0.45 170.45  $0.45  Closed
IMCL    39.64   33.38   OCT   50  45   0.40  45.40  $0.40  Closed
AVCT    31.20   36.00   NOV   37  35   0.35  35.35 ($0.65) Closed
CA      23.50   24.81   NOV   30  27   0.35  27.85  $0.35   Open
MTG     53.79   51.28   NOV   65  60   0.55  60.55  $0.55   Open

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

Cerner (NASDAQ:CERN) has previously been closed to limit losses.
Avocent (NASDAQ:AVCT) soared higher Monday in conjunction with
the rally in technology stocks, changing it's character from a
trading-range issue to a bullish "break-out."  Needless to say,
the position should have been closed during the subsequent upside
activity.


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

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

HTCH    33.02  34.70   OCT   25  30   4.50   29.50  0.50  Closed
AVII     5.54   4.95   DEC    5   7   0.90    5.90 (0.90) Closed
DELL    34.91  36.41   OCT   30  32   2.40   32.40  0.10  No Play
LLTC    40.77  40.49   NOV   35  37   2.20   37.20  0.30   Open

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

Dell (NASDAQ:DELL) didn't offer a viable entry in the bullish play.
America Pharma Partners (NASDAQ:APPX) and Novellus (NASDAQ:NVLS),
which is currently profitable, have previously been closed to
limit losses.  Avi Biopharma (NASDAQ:AVII) is a speculative play,
however with the near-term change in (technical) character, it may
be prudent to close the position.


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

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

LMT     48.70  45.90  OCT   55  50   4.60   50.40  0.40  Closed
CCMP    55.83  58.07  OCT   65  60   4.35   60.65  0.65  Closed

Lockheed Martin (NYSE:LMT) did not offer the target debit in the
bearish position, however the available spread price was viable
for conservative traders with a bearish outlook on the issue.


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

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

XING     9.13   9.40   DEC     12      7     0.10    0.30   Open
JNPR    16.63  17.62   NOV     19     14    (0.20)   1.00   Open?
LRCX    24.38  26.24   DEC     30     20     0.15    0.80   Open?
PHTN    32.40  31.09   JAN     40     25     0.00    0.00   Open

Juniper Networks (NASDAQ:JNPR), which cost slightly more to enter
than expected, and Lam Research (NASDAQ:LRCX) offered favorable
profits in less than one week.  Gene Logic (NASDAQ:GLGC), Andrx
(NASDAQ:ADRX) and CV Therapeutics (NASDAQ:CVTX), have previously
been closed to limit losses.


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

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

NTE     24.61  30.54   OCT    20P    30C    0.10     0.00  Closed

The "Reader's Request" position in Nam Tai Electronics (NYSE:NTE)
was closed early to limit potential losses.


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

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

PRU     36.41  38.52   DEC-37C   NOV-37C  (0.20)   0.10    Open
MSFT    27.31  28.91   JAN-27C   NOV-30C   1.70    2.40    Open

Positions in both Ing Groep (NYSE:ING) and The Medicines Company
(NASDAQ:MDCO) offered profitable opportunities prior to be closed.
Prudential (NYSE:PRU) now has a "locked-in" profit of $0.20, based
on the overall credit for the position.


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

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

CLS     17.55  16.96   OCT    17    17     2.35    3.10   Closed
NVDA    18.17  16.66   OCT    17    17     2.90    3.50   Closed
AFCI    22.66  26.70   OCT    22    22     3.10    4.50   Closed
YHOO    37.24  42.24   OCT    37    37     3.75    5.75   Closed
COF     59.70  60.50   OCT    60    60     2.80    3.75   Closed
TTWO    39.18  39.34   OCT    40    40     2.45    2.45   Closed
PII     79.35  83.25   OCT    80    80     2.80    3.70   Closed
WEBX    22.54  20.77   OCT    22    22     1.75    2.75   Closed
TRI     30.50  28.93   NOV    30    30     4.90    5.00    Open?
EASI    59.70  64.59   NOV    60    60     8.50    9.00    Open
ZMH     55.52  58.55   DEC    55    55     5.20    5.70    Open

Both of our new positions: Webex Communications (NASDAQ:WEBX)
and Polaris (NYSE:PII), offered excellent short-term profits.
Yahoo! (NASDAQ:YHOO) was a big winner this month after the firm
rallied on favorable earnings.  Capital One (NYSE:COF) was also
volatile in conjunction with the finance group and the position
yielded a great short-term gain.  Celestica (NYSE:CLS), Nvidia
(NASDAQ:NVDA), Zimmer Holdings (NYSE:ZMH) and Engineered Support
Systems (NASDAQ:EASI) have achieved small profits.  Advanced
Fibre Communications (NASDAQ:FIBR) was a very active issue and
it finally became a winner with a big gain on Thursday.  Triad
Hospitals (NYSE:TRI) made a $5 move in one day, but it has also
been unprofitable on a simultaneous order basis.  The position
in Sony (NYSE:SNE) has previously been closed to "lock-in" gains.


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

Stock   Pick   Last   Exp.   Short Short  Initial  Current   Play
Symbol  Price  Price  Month  Call   Put   Credit    Debit   Status

MANH    27.68  30.82  Oct     30    25     1.40     0.85    Closed

Questions & comments on spreads/combos to Contact Support
*************
NEW POSITIONS
*************

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

**************
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.

*****
COH - Coach  $31.43  *** Technicals Only! ***

Coach (NYSE:COH) is a designer, producer and marketer of modern
American classic accessories.  Coach's primary product offerings
include handbags, women's and men's accessories, business cases,
weekend and travel accessories, leather outerwear, gloves, hats,
scarves and personal planning products.  Together with its many
licensing partners, the company also offers watches, footwear,
jewelry, eyewear and home and office furniture with the Coach
brand name.  Coach's products are sold through a number of direct
to consumer channels, which, at the end of the fiscal year ended
June 28, 2003, included 156 United States retail stores, direct
mail catalogs, online store and 76 United States factory stores.

COH - Coach  $31.43

PLAY (conservative - bullish/credit spread):

BUY  PUT  NOV-27.50  COH-WY  OI=1505  ASK=$0.40
SELL PUT  NOV-30.00  COH-WF  OI=384   BID=$0.70
INITIAL NET-CREDIT TARGET=$0.30-$0.40
POTENTIAL PROFIT(max)=14% B/E=$29.70


*****
CYMI - Cymer  $44.99  *** Earnings Speculation! ***

Cymer (NASADQ:CYMI) is a supplier of excimer light sources, the
essential light source for deep ultraviolet photolithography
systems.  DUV lithography is a key technology that has allowed
the semiconductor industry to meet the exact specifications and
manufacturing requirements for volume production of advanced
semiconductor chips. The firm's light sources are incorporated
into step-and-repeat (steppers) and step-and-scan (scanners)
photolithography systems for use in the manufacture of various
semiconductors with critical feature sizes below 0.35 microns.
Cymer's products consist of photolithography light sources,
replacement parts and service. The firm maintains a worldwide
service organization that supports its installed base of light
sources.

CYMI - Cymer  $44.99

PLAY (conservative - bullish/credit spread):

BUY  PUT  NOV-35.00  CQG-WG  OI=968  ASK=$0.45
SELL PUT  NOV-40.00  CQG-WH  OI=512  BID=$1.05
INITIAL NET-CREDIT TARGET=$0.60-$0.70
POTENTIAL PROFIT(max)=14% B/E=$39.40


*****
SAP - SAP AG  $36.00  *** Strong Sector! ***

SAP AG (NYSE:SAP) operates as a business software company.  The
firm primarily offers the mySAP Business Suite, which is a suite
of unique business software applications and an application and
integration platform designed to enable companies to manage the
entire value chain across business networks, allowing SAP to adapt
quickly and remain flexible when faced with changing business
conditions.  In addition to its software solution portfolio, the
company provides service offerings such as business solutions
consulting, solution operations services, educational services,
hosting services and support services including project planning,
implementation assistance, ongoing post-implementation support
activities and virtual classroom training for new and existing
customers.  SAP's customers include multi-national enterprises,
as well as small and mid-sized businesses.

SAP - SAP AG  $36.00

PLAY (conservative - bullish/credit spread):

BUY  PUT  NOV-30.00  SAP-WF  OI=862  ASK=$0.25
SELL PUT  NOV-32.50  SAP-WZ  OI=106  BID=$0.55
INITIAL NET-CREDIT TARGET=$0.30-$0.40
POTENTIAL PROFIT(max)=14% B/E=$32.20


*****
BJS - BJ Services Company  $32.50  *** Oil Services Slump! ***

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.

BJS - BJ Services Company  $32.50

PLAY (conservative - bearish/credit spread):

BUY  CALL  NOV-37.50  BJS-KU  OI=684  ASK=$0.20
SELL CALL  NOV-35.00  BJS-KG  OI=259  BID=$0.50
INITIAL NET-CREDIT TARGET=$0.30-$0.40
POTENTIAL PROFIT(max)=14% B/E=$35.30


*****
CEPH - Cephalon  $45.77  *** Trading Range? ***

Cephalon (NASDAQ:CEPH) is an international biopharmaceutical firm
dedicated to the discovery, development and marketing of products
to treat sleep disorders, neurological disorders, cancer and pain.
In addition to conducting a very active research and development
program, the company markets three products in the United States
and a number of products in various countries throughout Europe.
Cephalon's United States products are comprised of Provigil, for
the treatment of excessive daytime sleepiness associated with
narcolepsy, Actiq for cancer pain management, and Gabitril for
the treatment of partial seizures associated with epilepsy.

CEPH - Cephalon  $45.77

PLAY (conservative - bearish/credit spread):

BUY  CALL  NOV-55.00  CQE-KK  OI=9067  ASK=$0.25
SELL CALL  NOV-50.00  CQE-KJ  OI=8134  BID=$0.75
INITIAL NET-CREDIT TARGET=$0.55-$0.60
POTENTIAL PROFIT(max)=12% B/E=$50.55


*****
HDI - Harley-Davidson  $47.26  *** Mediocre Outlook! ***

Harley-Davidson (NYSE:HDI) operates in two primary business
groups, the motorcycles and related products segment and the
financial services segment.  The motorcycles and related products
segment includes the companies doing business as Harley-Davidson
Motor Company (Motor Company), subsidiaries of H-D Michigan, Inc.
and Buell Motorcycle Company LLC.  The motorcycles segment designs,
manufactures and sells primarily heavyweight (engine displacement
of 651plus cubic centimeters) touring, custom and performance
motorcycles, as well as a complete line of motorcycle parts,
accessories, clothing and collectibles.  The financial services
segment consists of the company's subsidiary, Harley-Davidson
Financial Services, and its subsidiaries.  HDFS is engaged in the
business of financing and servicing wholesale inventory receivables
and consumer retail installment sales contracts (motorcycles and
aircraft).

HDI - Harley-Davidson  $47.26

PLAY (conservative - bearish/credit spread):

BUY  CALL  NOV-55.00  HDI-KK  OI=4129  ASK=$0.10
SELL CALL  NOV-50.00  HDI-KJ  OI=6777  BID=$0.60
INITIAL NET-CREDIT TARGET=$0.50-$0.55
POTENTIAL PROFIT(max)=11% B/E=$50.50


*****
SEPR - Sepracor  $26.98  *** Profit-Taking Underway! ***

Sepracor (NASDAQ:SEPR) is a research-based pharmaceutical company
dedicated to treating and preventing human disease through the
discovery, development and commercialization of pharmaceutical
compounds, including product candidates directed toward serving
unmet medical needs.  The firm's proprietary compounds are either
single-isomer or active metabolite forms of existing drugs, which
Sepracor refers to as improved chemical entities, or new chemical
entity compounds, which are unrelated to current products.

SEPR - Sepracor  $26.98

PLAY (conservative - bearish/credit spread):

BUY  CALL  NOV-35.00  ERQ-KG  OI=2257  ASK=$0.45
SELL CALL  NOV-32.50  ERQ-KZ  OI=522   BID=$0.70
INITIAL NET-CREDIT TARGET=$0.25-$0.35
POTENTIAL PROFIT(max)=11% B/E=$32.75


*************
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.

*****
NPSP - NPS Pharmaceuticals  $25.45  *** Drug Problems? ***

NPS Pharmaceuticals (NASDAQ:NPSP) is a biopharmaceutical company
engaged in discovering, developing and commercializing small
molecule drugs and recombinant proteins.  The company's product
candidates are primarily for the treatment of bone and mineral
disorders, gastrointestinal disorders and central nervous system
disorders.  NPS Pharmaceuticals has three product candidates in
active clinical development and several pre-clinical product
candidates.  Two of these product candidates, Preos and AMG 073,
are in Phase III clinical trials.  The company's third product
candidate, ALX-0600, is in a pilot Phase II clinical trial.

NPSP - NPS Pharmaceuticals  $25.45

PLAY (conservative - bearish/debit spread):

BUY  PUT  NOV-35.00  QKK-WG  OI=30    ASK=$10.00
SELL PUT  NOV-30.00  QKK-WF  OI=1181  BID=$5.60
INITIAL NET-DEBIT TARGET=$4.30-$4.40
POTENTIAL PROFIT(max)=14% B/E=$30.60


****************
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.

*****
SCRI - Sicor  $20.52  *** Promising Product Pipeline! ***

Sicor (NASDAQ:SCRI) is a vertically integrated, multinational
specialty pharmaceutical firm that focuses on generic finished
dosage injectables, active pharmaceutical ingredients and generic
biopharmaceuticals.  Using its internal research and development
capabilities, together with its operational flexibility and
manufacturing and regulatory expertise, the company is able to
take a variety of products from the laboratory to the worldwide
market.  Leveraging these capabilities, Sicor concentrates on
products and technologies that present significant barriers to
entry or offer first-to-market opportunities.  The company is
developing generic equivalents to existing biopharmaceutical
products, including granulocyte colony stimulating factor,
erythropoietin, and interferon.

SCRI - Sicor  $20.52

PLAY (speculative - bullish/calendar spread):

BUY  CALL  FEB-22.50  UEC-BX  OI=2794  ASK=$1.65
SELL CALL  NOV-22.50  UEC-KX  OI=4289  BID=$0.70
INITIAL NET DEBIT TARGET=$0.80-$0.90
INITIAL TARGET PROFIT=$0.45-$0.75


***********************
STRADDLES AND STRANGLES
***********************

Based on analysis of the historical option pricing and technical
background, these positions meet the fundamental criteria for
favorable volatility-based plays.

*****
PCLN - Priceline.com  $30.45  *** Earnings Speculation! ***

Priceline.com (NASDAQ:PCLN) offers products for sale in two major
categories: a travel service that offers leisure airline tickets,
hotel rooms, rental cars, packaged vacations and cruises; and a
personal finance service that offers home mortgages, refinancing
and home equity loans through an independent licensee.  PCLN also
owns travel Web sites Lowestfare.com and Rentalcars.com.  The firm
is part-owner of Internet travel service Travelweb.  Priceline.com
licenses its business model to independent licensees, including
pricelinemortgage and certain international licensees.

PCLN - Priceline.com  $30.45

PLAY (very speculative - neutral/debit straddle):

BUY CALL  NOV-30.00  PUZ-KF  OI=261  ASK=$2.40
BUY PUT   NOV-30.00  PUZ-WF  OI=268  ASK=$2.90
INITIAL NET-DEBIT TARGET=$5.00-$5.10
INITIAL TARGET PROFIT=$1.60-$1.95


*****


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

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