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Daily Newsletter, Thursday, 10/23/2003

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The Option Investor Newsletter               Thursday 10-23-2003
Copyright 2003, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Back From The Brink
Futures Markets: MSFT Bunker Buster
Index Trader Wrap: See Note
Market Sentiment: Bewildered.


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      10-23-2003           High     Low     Volume Advance/Decline
DJIA     9613.13 + 14.90  9622.16  9551.73 2.05 bln   1527/1651
NASDAQ   1885.51 - 12.60  1893.20  1874.11 1.93 bln   1316/1839
S&P 100   514.88 +  1.48   515.59   511.21   Totals   2843/3490
S&P 500  1033.77 +  3.41  1035.44  1025.87
W5000   10029.20 + 21.90 10047.48  9955.10
RUS 2000  510.49 -  2.66   513.55   506.81
DJ TRANS 2828.52 + 10.50  2828.78  2799.99
VIX        17.68 +  0.01    18.51    17.48
VXO VIX-O  19.10 +  0.04    19.99    19.02
VXN        26.09 +  0.41    26.57    25.58
Total Volume 4,269M
Total UpVol  1,729M
Total DnVol  2,485M
52wk Highs  271
52wk Lows    30
TRIN       1.12
NAZTRIN    2.26
PUT/CALL   0.85
************************************************************

Back From The Brink

If you had told me at 2:AM with the Nikkei off -550 points
and our futures falling through the floor that the Dow would
only drop -50 points at its worst and close up +15 I would
have thought I was dreaming. Sometimes reality is stranger
than fiction and today was definitely one of those days.

Dow Chart



Nasdaq Chart




Nikkei Chart




We had yet another math miracle before the open with Jobless
Claims. The number came in at 386,000 and a four-week low.
You should be confused. Last weeks number was a multimonth
low at 384,000 and the week before that was even lower at
382,000. Each was trumpeted as new cycle lows. Unfortunately
the 382K from three weeks ago was revised up to 388K the
next week. The 384K from two weeks ago was revised up to
390K. These revisions make today's 386K the new four week
low at least until it is revised up next week. Using the
+6k revision average that should put today's number near
392K. Either way there is a slight upward trend in the
claims but nothing serious.

A better number to gauge the strength of the job market was
the Monthly Mass Layoffs for September which came in at 868
and considerably better than the prior two months. 82,647
workers were laid off in September compared to 133,839 in
August and 226,435 in July. This is a definite improvement
in the trend. Whether it means the pace of cost cutting
has slowed as we approach a seasonal increase in business
or that companies just don't have as many workers they can
cut is unclear. Either way the slow down in the pace of
layoffs should help ease the pressure in the job market.

The lack of real economic reports today left the markets
to fixate on earnings and Wednesday earnings were less than
exciting on several front. Companies warning or missing
estimates included some high profile names like JPM, MRK,
THC, WHR, SGP, KLAC, STX and ERTS to name a few. We had the
obligatory comments about "no signs of an economic recovery
yet" from Dow component Dow Chemical. SNE said they had 50%
excess capacity for the current demand. Bucking the trend
UPS saw a strengthening in shipments. While these high
profile bad apples drew the headlines the overall earnings
were still strong. With over 300 of the S&P companies
reported the number meeting or beating estimates is around
64%. If you have been reading my commentary you know that
is down from 92% two weeks ago and 66% last week. Still
strong but slipping as the smaller companies report. I
have not seen Chuck Hill on CNBC this week but should he
appear with a lowered estimate for 3Q earnings the sentiment
could get a lot worse.

Guidance for the 4Q from those 300+ companies has 36% guiding
higher, 22% guiding inline and 42% warning. This means just
under half of all companies are warning and very close to
the historical trend. In other words the ratios are not as
good as some analysts hoped. You have also seen me quote the
earnings estimates for the 4Q as +20% to +25% growth based
on First Calls published summaries. The 4Q estimate as of
the close today had dropped to +18%. Still strong but maybe
a hint of further trimming to come.

After the bell today Microsoft announced earnings that beat
the street by a penny and initially caused their stock to
rise. The company raised guidance slightly and bragged about
strong enterprise sales. They said that "while IT spending
was only improving slowly over the quarter they did see
increasing strength across the consumer sector". The raised
guidance left little for traders to be excited about. MSFT
raised full year estimates to a range of $1.10-$1.12. The
analyst community was already expecting $1.11 so the fanfare
fell on deaf ears. The stock began to fall almost immediately
once the guidance was disseminated without waiting for the
conference call. One factor suggested as accelerating the
drop was a more than double than expected drop in unearned
or deferred income. This line item is normally used as a
slush fund for earnings that can be "adjusted" as needed
to make earnings targets. Deferred income is money received
before the product is shipped. If a corporation ordered
a large amount of various software products late in the
quarter, possibly some in short supply or not yet released
then Microsoft does not claim the income until the software
is shipped. There is always a backlog as companies preorder
new products or products for conversions from legacy systems.
This "order backlog" is seen as an indicator of strength
for Microsoft. High backlog equals lots of orders, low
backlog means excess product on hand. (simple explanation)
Microsoft had guided analysts to expect a drop of $300
million in this number. The actual drop was over $600 mil
and twice Microsoft estimates. Considering MSFT had net
profits of $2.6 billion for the quarter I would not think
this is a critical problem. Just something for the analysts
to question to earn their 15 min of fame. Most informative
was their raised guidance. They are only expecting PC growth
in upper single digits for 2004. This is not going to be
exciting for the tech outlook. They also projected a drop
in subscribers to their MSN Internet service. A couple
more less than positive comments included, "we missed some
forecasts and you (analysts) should be concerned" and "we
are not expecting any significant revenue growth for the
rest of the year."  MSFT closed the after hours session
at $27.54 and down nearly -1.50 from the regular session
close.

Wednesday's earnings and market action led to massive drops
overseas. The Nikkei suffered the biggest one-day drop of
(-554) since 9/12/01 and the day after the WTC attack. This
was a huge event and all the Asian and European markets
suffered. To some extent it was triggered by our drop on
Wednesday. Still the outlook looked VERY negative at the
open and a triple digit Dow drop looked like a certainty.
When the Dow opened down -50 it was immediately met with
a very large buy program that consumed immense amounts of
selling volume as it powered the markets higher. Within
20 min the Dow was back in positive territory and the
buying stopped. Almost immediately another drop began and
again only 10 min later another large buy program blasted
the average to a new high. Bears were dumbfounded and
shorts thinking they had a free ride after the drop in Asia
were starting to think about covering. Over the next hour
the indexes bled points but very slowly as nobody knew
what was happening. About 11:20 the Dow touched a new low
and immediately was met with more buy programs. By noon
traders were glazed over and the Dow was stuck just below
9600 where it hovered for two hours. Traders simply did
not know what was happening. Shorts and longs alike were
afraid to trade and volume slowed to a crawl.

About 2:PM there appeared to be a surge in short covering
in front of MSFT earnings but the bears gained confidence
when the Dow could not break to a new high. They were
able to knock it down once again but each dip was met
with new buy programs. Market on close orders were
weighted to the buy side and bears gave up. S&P Futures
were 1032 at the cash close and they managed to close
the Dow back over 9600. Amazing. Unfortunately once the
earnings began to hit the wire the selling began again
in earnest and once MSFT spoiled the party the futures hit
a new low for the day at 1018.75 and significantly down
from the close. As I type this at 6:30 they have recovered
to 1021.50, -7.50 with Nasdaq futures down -17.00.

What a day. Volume was very strong with over 2 bil shares
on the NYSE and 1.93B on the Nasdaq. Because of the huge
buy programs the down volume was only 4:3 over up volume.
It appeared at the close that somebody with big money had
rescued the markets just when they needed it worst. The
reaction to the after hours earnings brings that rescue
back into question.

There are multiple reasons for the after hours negativity.
First, MSFT did not uphold the standard set by Intel and
Yahoo. Great earnings expectations had been priced into
the market and we are seeing those great expectations
slowly deteriorate into just good news sprinkled with
some weaker than expected guidance. Is this going to
cause a further dip? Odds are good but after today I
would not bet on it. Deep pockets bought the open this
morning to hold up the markets. Not to buy stock at
bargain prices but to hold up the market. Think about it.
If you were going to buy billions of dollars in stock
today and the market was showing a triple digit drop
before the open, possibly a -200 day or more, then why
would you buy immediately at the open at -25? Would you
not rather wait for an hour or so to get a better price?
Wouldn't you be afraid that the negativity at the open
could cause that drop AFTER you spent those billions
and put you in a significant loss before the day was
over? Any reasonable trader with far less money at stake
would have waited for the drop to slow before buying the
dip. This smacks of market manipulation by somebody.
Somebody with very deep pockets. The conspiracy theorists,
including me, were speculating that the Fed could be
propping up the markets to keep the recovery hopes alive.
Another possibility is Japan. With the Nikkei tanking
-5% overnight from multiyear highs on fears about a weak
U.S. recovery then what better way to spend some of those
billions in dollars they have been hoarding than to buy
the U.S. market. They have been spending billions each
week trying to control the currency rates and boosting
our markets would certainly help their markets.

Another possibility was mutual fund related. Funds have
been beaten so badly for the last two years that they are
scared. They are riding a huge rally wave that could have
been about to crumble. Investors had poured in more than
$4.3 billion into funds each of the last two weeks and
funds had a vested interest in keeping the markets up.
A sharp correction could stem the flow of money and
blunt investor sentiment for a couple more months. The
only question is did the funds have enough money to
orchestrate the massive buying and head off the opening
crash? If so which one? Was it a team effort and if so
then how did they coordinate it? Far too many questions
and no answers.

The real question is what about tomorrow? What a tossup!
We have yet to see how the Asian markets are going to
respond to tonight's earnings. Futures have stabilized
at about 1021 for the time being and while negative they
have at least quit falling. Traders are confused. Each
time the markets reached resistance today the retail
buyers disappeared. The buy programs provided the reversal
momentum but nobody jumped on the train at the highs.
Shorts were never forced to cover because resistance
levels were never broken. If Asia shakes off the earnings
from MSFT and others and their oversold conditions from
Thursday then we may have a chance. If the deep pockets
from this morning are still around at the open on Friday
then they might be able to build on any Asian gains. If
the reverse happens and Asia tanks again then it may take
more than deep pockets to slow us down at Friday's open.

T.G.I.F, at least most big drops do not occur on Fridays.
Fridays are not immune but they tend to be less severe.
Traders leaving early for the weekend and trying to
capture profits for the week tend to equalize the
opposing pressures. Odds favor a range bound day without
a big move in either direction but then odds favored a
huge drop at the open today and it did not happen. Amazing
how that VXO at 17.50 worked on Wednesday. But then most
assume it was just a coincidence. (grin)

Now that MSFT has announced the earnings week is winding
down and there will be little to capture investor attention.
Less than 50 companies report on Friday and there are no
major names. With six days left in October I would not
count this month out just yet. Keep your fingers crossed
and seatbelts fastened.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

MSFT Bunker Buster
Jonathan Levinson

Gold and treasuries pulled back, while equities mounted a
surprisingly weak bounce from their overnight lows.  Any residual
uncertainty on the part of sellers appeared to have been
vaporized by the market's reaction to MSFT's earnings after the
cash close.

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 took its time at the overnight lows, with
several spikes to the 91.10 level before beginning a timid retest
of the former range bottom below 91.70, failing on each attempt.
Gold declined on the dollar strength, but silver and the CRB
advanced, with the latter approaching its year highs, up 2.84 to
248.17 on strength in corn, cotton, wheat and soybean futures.

Daily chart of December gold



December gold retraced part of yesterday's gain, spiking to a
high of 389.90 while setting a higher low at 383.50.  The
pullback did nothing to impede the upphase now confirmed on the
oscillators.  To my mind, the real test begins at the lower
rising wedge trendline which is now pointing at round number
resistance at 395.  390-420 is the start of a confluence zone
dating back to the period between 1986-89 and 1993-96 that should
provide resistance.  However, my having to visit a 20-year chart
to examine resistance speaks volumes about the glorious move
taken by gold since 1999 and 2001 lows.

Daily chart of the ten year note yield




Treasuries slipped today, with the TNX adding 4.3 bps to close at
4.316%, engulfing yesterday's decline and filling the gap on the
daily chart.  The move was good for an upward twitch on the daily
chart oscillators, which remain nevertheless on sell signals.
It will take a move above the 4.4% level to reverse the current
downphase.

Daily NQ candles



It was a bad day for the NQ, becoming worse as I type with MSFT
selling off following the release of its earnings report after
the cash close.  The move today helped the NQ catch up to the ES
and YM on the downside, breaking below the 78.6% Fibonacci
support line and extending the sell signals that were confirmed
with yesterday's bearish engulfing candle.  Volume on the Nasdaq
was strong at 1.95B shares, and we saw some TRINQ readings that
exceeded 3.0, showing very strong selling breadth.  The bearish
ascending wedge downside target of 1300 is looking increasingly
plausible, with next significant support at the 1340 level.

30 minute 20 day chart of the NQ




We left off last night with the 300 minute stochastic on the 30
minute chart ticking up on a buy signal from oversold territory,
and reasoned that a bounce was likely.  That bounce, which lined
up with a bull wedge breakout, was surprisingly weak, just a
sideways upphase, and couldn't clear first resistance at 1390.
This looked like a return to the scene of the crime bounce below
the preliminary neckline of the head and shoulders pattern
discussed last night, and I've highlighted a potential secondary
neckline at 1370.  A break below 1370 with a high at 1440 would
project to 1300 as a head and shoulders target, which lines up
perfectly with our daily bear wedge projection above.  With the
sideways upphase almost done on this chart, and the NQ appearing
to fail from a much lower high, the next downphase, commencing as
soon as... now...  should be reach 1340 easily.  If support at
1360 holds, we will have to reassess.


Daily ES candles




The ES managed to not fall apart, closing the cash session at 4PM
with marginal gains, but well above the overnight lows below
1020.  The post-MSFT selloff has ES trading at 1024.50 currently,
and on the daily chart above, the fractional gain did nothing to
reverse the downphase confirmed yesterday or undo any of the
significant technical damage caused by yesterday's selloff.
987.75 is the bear wedge target, with support at 1021, 1018, 1014
and 1008 below.


20 day 30 minute chart of the ES



The stochastic upphase on the 30 minute chart generated
shockingly little price traction, with the ES unable to crack
1034 for longer than thirty or forty seconds.  I've moved the
secondary, larger head and shoulders support line to 1021, which
gives us a target of 987, again coinciding perfectly with the
daily pattern projection.  I see absolutely nothing bullish on
these charts at this time, with lower bounce highs and tired-
looking price action despite oscillator support.   That support
ended for the ES at the close, and a lower low below 1019 for
this downphase, which looks easily achievable from where I sit
this evening, would confirm the current bearish view.


Daily YM candles



The YM extended its slide, and despite the bounce fueled by the
30 minute oscillator upphase, could not close positive.  The
outlook is the same as for the ES and NQ.

20 day 30 minute chart of the YM




The pullback in gold was expected, as was a countertrend bounce
in the ten year note yield.  Despite the potentially bullish
implications of simultaneous declines in gold and treasuries,
with a fresh bounce beginning on the longer intraday equity
oscillators, bulls staggered through the stages of their bounce,
unable to generate even mild short-covering, despite a market
full of bears with frayed nerves and damaged accounts after over
6 months of flagpole rallies, failed bear formations, relentless
short squeezes, and program bot attacks.  With weakness in GE now
apparently to be compounded with weakness in MSFT, there are two
1000-pound gorillas unable to pull themselves off the canvas.

This bearish view makes me nervous, because it appears too
obvious.  Keep your stops active, be ready for possible
surprises, and trade what you see.  I will be following the
weekly, daily and intraday oscillators, which paint a very
bearish picture tonight.


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

Bewildered.
- J. Brown

Investor sentiment today can probably best be summed up in one
word: confused.  The massive declines in the Japanese NIKKEI last
night (down more than 500 points) should have sent our own
markets into free fall.  This is especially true considering the
earnings miss and lowered guidance from KLAC last night.  Yet
despite all the negativity the $INDU managed to close in the
green and the NASDAQ cut its losses in half.  Market veterans
immediately began to wonder what magic was afoot.

Jim does an excellent job in the wrap tonight discussing some of
the theories on why our markets didn't melt down today so I won't
belabor the point.  Potentially contributing to the mixed markets
were the positive jobless claims number today and expectation
over MSFT's earnings.  However, now that MSFT has announced, the
news is not sitting well with investors.  Friday is liable to be
weak with most of the selling focused on tech issues.

Next week is the last full week of October.  While we will
continue to hear from corporate earnings there are numerous
economic events that are likely to take center stage, not the
least of which is the FOMC meeting on the 28th.  Trade carefully!


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

Market Averages

DJIA ($INDU)

52-week High:  9850
52-week Low :  7197
Current     :  9613

Moving Averages:
(Simple)

 10-dma: 9730
 50-dma: 9523
200-dma: 8799



S&P 500 ($SPX)

52-week High: 1053
52-week Low :  768
Current     : 1033

Moving Averages:
(Simple)

 10-dma: 1042
 50-dma: 1020
200-dma:  943



Nasdaq-100 ($NDX)

52-week High: 1439
52-week Low :  795
Current     : 1378

Moving Averages:
(Simple)

 10-dma: 1407
 50-dma: 1356
200-dma: 1178



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


The VXO has rebounded from its recent lows as have the VIX and
VXN.  Together they all remain very "oversold" for lack of a
better term indicating the markets are still primed for more
weakness.

CBOE Market Volatility Index (VIX) = 17.68 +0.01
CBOE Mkt Volatility (old vix)(VXO) = 19.13 +0.07
Nasdaq Volatility Index (VXN)      = 26.09 +0.41


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.85        579,837       493,493
Equity Only    0.72        493,194       354,797
OEX            1.45         15,490        22,420
QQQ            2.28         21,291        48,493


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

Bullish Percent Data

           Current   Change   Status
NYSE          73.2    + 0     Bull Confirmed
NASDAQ-100    75.0    - 3     Bear Correction
Dow Indust.   83.3    + 0     Bull Correction
S&P 500       79.2    - 2     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-dma: 1.21
10-dma: 1.09
21-dma: 1.09
55-dma: 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    1321      1281
Decliners    1482      1771

New Highs     102       140
New Lows       10        13

Up Volume   1049M      613M
Down Vol.    943M     1286M

Total Vol.  2003M     1927M
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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The Option Investor Newsletter                 Thursday 10-23-2003
Copyright 2003, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: None
Dropped Puts: None
Call Play Updates: ABC, AZO, BBY, COO, FD, QLGC
New Calls Plays: LOW
Put Play Updates: ATK, DNA, MATK
New Put Plays: AVID, WFT


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

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


CALLS:
*****

None


PUTS:
*****

None


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

AmerisourceBergen - ABC - close: 58.79 change: +1.68 stop: 55.75

Shares of ABC have certainly offered up plenty of volatility
since we initiated coverage on Tuesday, reversing sharply lower
yesterday and then rallying even stronger today to finally push
through the 200-dma ($58.59) for the first time since mid-
September.  Fortunately, we had the foresight to initiate the
play with a $59 trigger and since that hasn't yet been met, we're
still on the sidelines as interested observers.  Today's bullish
price action looks quite encouraging though and we could see that
breakout as early as tomorrow morning, depending on investors'
reaction to the myriad earnings reports tonight and in the
morning.  After the breakout, aggressive traders can take the
momentum entry, while those with a slightly more conservative
style can look to buy a subsequent dip and rebound that confirms
new support in the $57.50-58.50 area.

Picked on October 21st at    $58.44
Change since picked:          +0.35
Earnings Date              11/05/03 (confirmed)
Average Daily Volume =     1.71 mln
Chart =


---

AutoZone, Inc. - AZO - close: 95.58 change: +1.35 stop: 91.95

While there wasn't much immediate follow-through to Tuesday's
peek over the $95 level, in hindsight, it was an important metric
that showed us the bulls' willingness to push shares of AZO
higher.  Yesterday's dip to the 10-dma (currently $93.90)
provided the perfect springboard for today's rally that punched
the stock solidly through that $95 ceiling to actually kiss $96
before pulling back slightly into the close.  AZO looks like it
is ready to deliver on expectations of a run at the $100
resistance level and today's breakout was just the opening
volley.  Traders that didn't enter on the initial breakout have
two choices here.  Wait for another pullback and rebound from
above the 10-dma or enter the fray on a breakout over $96.  The
one other remaining obstacle here is the 9/24 intraday high of
$96.10, so it might be best to wait for a trade above that level
before entering on strength.  While we're keeping our stop at
$91.95 tonight, more conservative traders can use a tighter stop
at $92.75, which is below both the 20-dma ($93.11) and last
Thursday's intraday low.

Picked on October 14th at    $94.42
Change since picked:          +1.16
Earnings Date              12/22/03 (unconfirmed)
Average Daily Volume =        923 K
Chart =


---

Best Buy Company - BBY - cls: 54.81 chng: +0.70 stop: 52.50*new*

Anyone that thinks the bulls are just going to roll over and play
dead has failed to notice the strong price action in certain
Retailers like BBY.  Each dip is met with eager bargain hunters,
as seen this week.  After falling back to the vicinity of $52.50
last Friday, shares of the electronics retailer rebounded smartly
and today's strong move back over $54 has us looking for that
elusive breakout to new recent highs.  Traders that took
advantage of the recent dip should be well positioned for the
expected breakout and aggressive momentum players can get set to
enter on a break above the 10/15 intraday high of $55.11.
Remember, we're looking to exit the play with a tidy gain if BBY
can trade into the $57-58 area, which is the site of solid
resistance from early 2000.  Raise stops to $52.50, just below
last Friday's intraday low.

Picked on October 5th at     $51.00
Change since picked:          +3.81
Earnings Date              12/17/03 (unconfirmed)
Average Daily Volume =     3.94 mln
Chart =


---

Cooper Cos - COO - close: 40.93 chg: +0.34 stop: 39.99

Our bullish play in COO may be on the endangered list.  The stock
has continued to slip and only found support near the 40.50 level
just above its simple 50-dma.  This could be an entry point just
above support for traders brave enough to take it.  Right now
we'd rather see COO trade back above 41.50 or 42.00 before
initiating any new positions.  Failure to see a bounce soon could
have us closing the play for lack of performance.

Picked on October 12 at $41.40
Change since picked:    - 0.47
Earnings Date         09/03/03 (confirmed)
Average Daily Volume:      391 thousand
Chart =


---

Federated Dep Store - FD - cls: 46.50 chng: +0.95 stop: 44.25

Things weren't looking too great for our FD play earlier in the
week, as the stock just continued to lose ground from last week's
highs, a move that looked all the more ominous after yesterday's
drop to just above $45.  But the bulls came to the rescue once
again, buying the dip aggressively and vaulting the stock back
over the 10-dma ($46.42) to wipe out the losses seen in the first
three days of the week.  This rebound from above former
resistance (now support) in the $44.50 area looks quite
constructive and a fresh assault on the highs seems in order.
Entries near $46 look favorable for upside continuation to $48
and possibly $50 ahead of the company's earnings report in mid-
November.  Maintain stops at $44.25 until FD can touch the $48
mark.

Picked on October 9th at     $45.60
Change since picked:          +0.90
Earnings Date              11/12/03 (unconfirmed)
Average Daily Volume =     1.90 mln
Chart =


---

QLogic Corp. - QLGC - close: 51.90 change: -1.42 stop: 50.00

To say our QLGC play got off on the wrong foot would be a large
understatement, as it fell prey to the selling frenzy in the
Semiconductor sector (SOX.X) today, in the wake of the dismal
earnings forecast from KLAC last night.  Today's drop broke the
3-week ascending channel and the picture looks grim.  But things
have looked bad before in recent months and buyers have continued
to show up to support stocks at critical points.  QLGC is at one
of those points tonight, as it came to rest right in the middle
of the $51.50-52.00 support area.  A break below here could have
a trip back down to the $50/50-dma area before a bounce can
materialize.  Aggressive traders can look at buying a rebound
from the $51 area, but those with a more conservative stance
should really wait until QLGC can fight its way back inside the
rising channel, the bottom of which is currently at $53.70.
Maintain stops at $50 and look for renewed signs of life from the
SOX before playing.

Picked on October 21st at    $54.21
Change since picked:          -2.30
Earnings Date               1/14/04 (unconfirmed)
Average Daily Volume =     4.88 mln
Chart =



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

Lowe's Companies - LOW - close: 46.31 change: +1.66 stop: 43.75

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

Why we like it:
The price action in shares of LOW has been truly impressive in
recent months, as the stock broke out to new all-time highs back
in the middle of August.  Since then, LOW twice tested that
breakout level as support and then vaulted to new highs yet again
in early October.  LOW has spent the past couple weeks in a
tight-range consolidation and with Thursday's 1.89% gain in an
overall weak market, a breakout to new all-time highs appears
imminent.  The PnF chart certainly gives a clear picture of the
stock's strength, as it is still on a solid Buy signal with a
ludicrous price target of $82!

Initiating a bullish play near the all-time highs is definitely
an aggressive approach and that's why we've opted to use an entry
trigger of $59.00, just over last Friday's intraday high of
$58.94.  A breakout over that level should be free to run to at
least $61 in the near-term, as that is currently the site of the
upper Bollinger band.  We're actually setting our sights a bit
higher and looking for a continued rally up to the $65 area ahead
of earnings in the third week of November.  Entries on the
initial break of $59 should work well, although it's possible to
also get a secondary entry on a subsequent pullback near $58.
Because of the aggressive nature of the play, we're using a tight
stop at $56.75, just under the intraday lows of the past 2 weeks.

Suggested Options:
Shorter Term: The November 55 Call will offer short-term traders
the best return on an immediate move, as it is currently in the
money.

Longer Term: Aggressive traders looking to capitalize on an
extended rally will want to look to the November 60 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 60 Call.

BUY CALL NOV-55 LOW-KK OI= 2245 at $4.30 SL=2,75
BUY CALL NOV-60 LOW-KL OI=11330 at $1.15 SL=0.60
BUY CALL DEC-55 LOW-LK OI=   29 at $5.00 SL=3.00
BUY CALL DEC-60 LOW-LL OI=  225 at $1.90 SL=1.00

Annotated Chart of LOW:




Picked on October 23rd at    $58.65
Change since picked:          +0.00
Earnings Date              11/17/04 (unconfirmed)
Average Daily Volume =     3.90 mln
Chart =



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

Alliant Tech Systems - ATK - cls: 48.46 change: +0.01 stop: 50.51

Right up until the final hour today, ATK looked like it might
actually deliver a decent rebound.  But a solid bout of selling
in the final 30 minutes wiped out the stock's intraday gains to
leave it essentially unchanged.  A failed rebound in the $49.00-
49.50 area certainly looked good for new entries -- unfortunately
we never quite got there on Thursday.  That area still looks
attractive for new entries, with the 50-dma looming overhead at
$49.55 and falling daily.  Traders looking to enter on weakness
should wait for a break below $48 (just under yesterday's
intraday low).  Maintain stops at $50.51.  Remember, ATK is set
to release earnings on October 30th, so there's only another week
to for the stock to reach our $45 target before we have to exit.

Picked on October 19th at $49.12
Change since picked:       -0.66
Earnings Date           10/30/03 (confirmed)
Average Daily Volume:      386 K
Chart =


---

Genentech Inc - DNA - close: 79.13 change: +1.56 stop: 82.30

Would you believe DNA is right where it left us on Tuesday?
Shares of DNA are unchanged after two days of volatility.
Meanwhile the BTK biotech index, which dropped strongly on
Wednesday produced a small bounce from the 450 level but did so
with out its biggest component AMGN.  Shares of AMGN continue to
sink.  The biotech giant has dropped below its simple 200-dma and
support at the $60.00 level.  This will weigh on the biotech
sector and potentially influence investors in DNA.  We still feel
that more confident entries can be made in DNA on a move below
77.50 but more aggressive traders can use these failed rallies
under $80 as entry points.

Picked on October 20 at $77.50
Change since picked:    + 1.63
Earnings Date         10/08/03 (confirmed)
Average Daily Volume:      2.5 million
Chart =


---

Martek Biosciences - MATK - cls: 46.00 chg: +0.23 stop: 50.51

MATK continues to consolidate its recent declines, which is fine
with us.  Bears need to catch their breath too if they're going
to continue the chase.  The question is which direction will MATK
move next?  The three-day consolidation has both lower highs and
higher lows, hinting at a breakout soon but one that could go up
or down.  Right now we'd probably refrain from opening new
bearish positions unless MATK traded below the 45.00 or 44.50
levels.  Our next target is $40.00.

Picked on October 16 at $49.48
Change since picked:    - 3.48
Earnings Date         09/09/03 (confirmed)
Average Daily Volume:      466 thousand
Chart =



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

Avid Technology - AVID - cls: 51.39 chg: -2.46 stop: See below

Company Description:
Avid Technology, Inc. is the world leader in digital nonlinear
media creation, management and distribution solutions, enabling
film, video, audio, animation, games, and broadcast news
professionals to work more efficiently, productively and
creatively. For more information about the company's Oscar.,
Grammy., and Emmy. award-winning products and services, please
visit: www.avid.com.  (source: company press release)

Why We Like It:
Why do we like AVID as a put play?  That's a good question
because longer-term we're pretty bullish on the stock.  The
company recently announced earnings earlier this month and beat
estimates by 5 cents.  Not only were revenues up more than 10%
for the quarter but AVID guided higher for the fourth quarter's
revenues and income.  That certainly doesn't sound like a bearish
play to us.  However, nothing goes up forever and we want to try
and capture any profit taking in this technology stock.

Shares of AVID have tripled from the March '03 lows and have run
up more than 600% from early October a year ago.  Now it looks
like investors are ready to take some money off the table.  The
stock just broke its simple 50-dma for the first time since March
and technical indicators have all turned negative.  It's point-
and-figure chart just produced its first bearish sell signal
since last March as well.  However, we're concerned that traders
might try and buy the dip at $50.00 so we're going to use a
TRIGGER at $49.90 to open the play for us.  Until then we're just
spectators.

A 38.2% retracement of the March '03 to October run up should put
AVID near $43.25, which coincides with the early August support.
Once we are triggered we'll initiate the play with a stop loss at
52.51.

Suggested Options:
Short-term traders can look at the November and December 55's,
50's and 45's.  Longer-term traders can choose from the March '04
strikes.  We probably like the November 50's best or 45's if
you're more aggressive.

BUY PUT NOV 45 AQI-WI OI= 509 at $1.00 SL= --
BUY PUT NOV 50 AQI-WJ OI= 753 at $2.35 SL=1.15
BUY PUT NOV 55 AQI-WK OI= 135 at $5.10 SL=3.00
BUY PUT DEC 45 AQI-XI OI= 385 at $1.95 SL=1.00
BUY PUT DEC 50 AQI-XJ OI= 126 at $3.70 SL=1.75
BUY PUT DEC 55 AQI-XK OI= 101 at $6.30 SL=4.00

Annotated chart:




Picked on October xx at $xx.xx
Change since picked:    - 0.00
Earnings Date         10/16/03 (confirmed)
Average Daily Volume:      628 thousand
Chart =


---

Weatherford Intl - WFT - close: 34.70 change: -0.27 stop: 36.01

Company Description:
Weatherford is one of the largest global providers of innovative
mechanical solutions, technology and services for the drilling
and production sectors of the oil and gas industry. Weatherford
operates in over 100 countries and employs approximately 16,000
people worldwide. (source: company press release)

Why We Like It:
Shares of WFT have been under performing the market for quite
some time.  We've had our eye on it lately for a break under
long-time support at $35.00.  That breakdown came today after the
company warned that Q3 earnings would not meet expectations.
Consensus analyst estimates for WFT's Q3 performance were for
revenues of $672 million and net income at 38 cents a share.
WFT's new guidance puts revenues at $660 million and 35 cents a
share.  It's not a huge miss but it should be enough to spark a
new round of selling.

There is potential support in the $32.50 range but our target is
the round-number support at $30.00.  We'll initiate the play with
a stop loss at 36.01.

Suggested Options:
Short-term traders can choose between the November and December
options while longer-term players can evaluate the January and
February strikes.  The $35 and 30's look good to us but don't buy
too many 30's just because they look cheap!  Trade carefully.

BUY PUT NOV 35 WFT-WG OI= 2120 at $1.65 SL=0.85
BUY PUT NOV 30 WFT-WF OI= 1543 at $0.35 SL= --
BUY PUT DEC 35 WFT-XG OI=   25 at $2.10 SL=1.00
BUY PUT DEC 30 WFT-XF OI=   30 at $0.60 SL= --

Annotated chart:



Picked on October 23 at $34.70
Change since picked:    - 0.00
Earnings Date         10/30/03 (confirmed)
Average Daily Volume:      1.3 million
Chart =



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The Option Investor Newsletter                 Thursday 10-23-2003
Copyright 2003, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Play of the Day: PUT - WFT
Traders Corner: Reality Check:  If The Enemy Is In Range, So Are You


*********************
PLAY OF THE DAY - PUT
*********************

Weatherford Intl - WFT - close: 34.70 change: -0.27 stop: 36.01

Company Description:
Weatherford is one of the largest global providers of innovative
mechanical solutions, technology and services for the drilling
and production sectors of the oil and gas industry. Weatherford
operates in over 100 countries and employs approximately 16,000
people worldwide. (source: company press release)

Why We Like It:
Shares of WFT have been under performing the market for quite
some time.  We've had our eye on it lately for a break under
long-time support at $35.00.  That breakdown came today after the
company warned that Q3 earnings would not meet expectations.
Consensus analyst estimates for WFT's Q3 performance were for
revenues of $672 million and net income at 38 cents a share.
WFT's new guidance puts revenues at $660 million and 35 cents a
share.  It's not a huge miss but it should be enough to spark a
new round of selling.

There is potential support in the $32.50 range but our target is
the round-number support at $30.00.  We'll initiate the play with
a stop loss at 36.01.

Suggested Options:
Short-term traders can choose between the November and December
options while longer-term players can evaluate the January and
February strikes.  The $35 and 30's look good to us but don't buy
too many 30's just because they look cheap!  Trade carefully.

BUY PUT NOV 35 WFT-WG OI= 2120 at $1.65 SL=0.85
BUY PUT NOV 30 WFT-WF OI= 1543 at $0.35 SL= --
BUY PUT DEC 35 WFT-XG OI=   25 at $2.10 SL=1.00
BUY PUT DEC 30 WFT-XF OI=   30 at $0.60 SL= --

Annotated chart:



Picked on October 23 at $34.70
Change since picked:    - 0.00
Earnings Date         10/30/03 (confirmed)
Average Daily Volume:      1.3 million
Chart =



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

Reality Check:  If The Enemy Is In Range, So Are You
By Mike Parnos, Investing With Attitude

OK, troops.  We're finally settled on our November CPTI portfolio
positions.  The market may be trying to tell us something – that
it wants to come down.  Our cushions are ample – both front and
back.  Hopefully, so are our Iron Condor cushions.  Actually, some
of our longer-term positions will benefit by a market retreat.

We may have a casualty in AFCI.  Remember, when it's time to get
out, GET OUT!  It brings to mind a sign posted in an Air Force
Ammo Facility – "If you see a bomb technician running, follow
him!"

The military has a way of putting things in perspective.  Quote
from an Infantry Journal:  "Try to look unimportant.  They may be
low on ammo."
______________________________________________________________

SPX Plans A & B
In Wednesday's update I noted that SPX premium had disappeared
early in the week and the SPX Iron Condor (as originally posted)
was not realistic.  Well, apparently some CPTI students had
success in entering the trade Monday morning (go figure) with the
projected premiums.  However, we came up with a Plan B for the
less fortunate CPTI students and had no problem filling our new
"hypothetical" SPX Iron Condor.

Some readers (hopefully newbies) requested I go over the criteria
of what we look for in an Iron Condor.

Criteria For Iron Condor
We've been doing these Iron Condors long enough now that you
should be familiar with the basic criteria.  Here's a quick review
in case your head has been somewhere where it's not exposed to the
sun.

a) With over four weeks left until expiration, we want to
establish a range of anywhere between 90-100 points.  There's a
little flexibility here, depending on your risk tolerance.  The
wider the range, the safer the trade.
b) We want to keep our exposure to about $10,000 per spread.  That
means 10 contracts on a 10-point spread, 4 contracts on a 25-point
spread, 7 points on a 15-point spread, etc.
c) Try to make the spread as close to equidistant from where the
stock is trading as possible.  If the SPX is at 1030, we would
initially look at the 1075/1085 bear call spread and the 985/975
bull put spread.
d) Take in at least a total of $1.50 - $2.00.  Again, that can
vary depending on your risk tolerance.
______________________________________________________________

Hey Mike:
I was wondering if you could direct me in the proper direction to
find out the margin requirements for the "Iron Condor" technique
you utilize. Specifically, what is the margin requirement for 10
contracts on the S&P market?  I love to read your weekly columns.
They are informative and humorous.  The markets are tough but you
always seem to keep your perspective.  Keep up the good work!
Thanks for the help.  Kevin

Kevin,
Glad you're enjoying, and hopefully profiting (hypothetically, of
course) from, my column.
Margin requirements on the Iron Condor are as follows:
1. The margin requirements differ depending on the size of each
spread.
2. A 10-point SPX bear call spread (for example 1090/1100) would
require $1,000 per contract ($10 x 100) less the credit taken in
$120 ($1.20 x 100).  That would make the maintenance requirement
on the bear call spread portion of the Iron Condor $880 ($1,000
less $120).  Ten contracts would require $8,800 ($880 x 10
contracts)
3. The same holds true for the bull put spread.  Then, you would
have to add up the maintenance for both the bear call and bull put
spread to get the total required for the position).
4. A 15-point spread (890/875) would use a similar formula.  $150
x 100 = $1,500 per contract less the credit taken in.  Multiply
that figure by the number of contracts and you'll have the
maintenance required.
The above is true at most brokerages.  Double-check your broker's
policy.  Also, remember that you can't be wrong on both sides.
Your actual (worst case scenario) risk is only the highest
maintenance of one side less the total amount of premium you've
taken in on both sides.
_____________________________________________________________

NOVEMBER AND ONGOING POSITIONS
Position #1 – SPX Iron Condor – Trading @ 1033.77
We sold 10 contracts of November SPX 985 puts and bought 10
contracts of November SPX 975 puts for a credit of $1.10 ($1,100).
Then we sold 7 contracts of November SPX 1075 calls and bought 7
contracts of November SPX 1090 calls for a credit of $1.50
($1,050) and a total net credit of $2,150.
We've created a maximum profit range of 985 to 1075.  With four
weeks left, that's a reasonable range.

Position #2 – AFCI Iron Condor – Trading @ $23.10
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 calls and buy 10
contracts of the AFCI November $35.00 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) – 514.88
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 - $126.12
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.

Position #5 – QQQ Put Calendar Spread – Trading @ $34.17
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 will 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, on Wednesday, we
rolled out to the November $32 and took in a $.30 credit.  We now
have a new cost basis of $.70.

OEX – Bearish Calendar Spread – OEX @ $514.88
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.  On Thursday we sold the November 485 puts for $2.60.
Our cost basis is now $2.70.

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 may have to make an
adjustment.  This may get a bit tricky – another adventure and
learning experience.

QQQ ITM Strangle – Ongoing Long Term -- $34.17.
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 $21.00
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 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.


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