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Daily Newsletter, Wednesday, 10/29/2003

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The Option Investor Newsletter                Wednesday 10-29-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Bulls Catch Their Breath
Futures Wrap: Volatility Crash
Index Trader Wrap: Indices traded steady ahead of Q3 GDP


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
     10-29-2003            High     Low     Volume Advance/Decline
DJIA     9774.53 + 26.22  9787.27  9724.68 1.91 bln   1744/1085
NASDAQ   1936.56 +  4.30  1937.37  1923.56 1.95 bln   1868/1150
S&P 100   518.66 +  0.02   519.69   516.54   Totals   3612/2235
S&P 500  1048.11 +  1.32  1049.83  1043.35
RUS 2000  531.81 +  5.96   531.99   524.00
DJ TRANS 2901.55 + 18.28  2902.03  2877.64
VIX        16.43 -  0.39    17.02    16.34
VXO        17.15 -  0.69    18.09    17.07
VXN        24.72 -  0.28    25.37    24.61
Total Volume 4,207M
Total UpVol  2,591M
Total DnVol  1,539M
52wk Highs     894
52wk Lows       25
TRIN          1.44
PUT/CALL      0.58
*******************************************************************

Bulls Catch Their Breath
by James Brown

Momentum in the rally slowed on Wednesday as bulls were left to
catch their breath after yesterday's FOMC-inspired sprint higher.
The Dow spent most of the day churning sideways as investors
battled their urge to sell the losers Johnson-and-Johnson (JNJ)
and AT&T (T) versus buying the winners Boeing (BA), Eastman Kodak
(EK) and Alcoa Inc (AA).  Yet by day's end the major averages
ended green making it three straight gains for the markets.  The
largest gains were seen gold stocks, defense, airlines and
homebuilders.  Suffering the brunt of Wednesday's selling
pressure were biotechs and drugs.

U.S. markets got a boost from a strong Japanese NIKKEI, which
added 178 points or 1.69% to close at 10,739.  The Hong Kong Hang
Seng also posted a gain up 38 points to 12,130.  European stocks
were mixed but German equities turned in a strong performance
with the DAX index up 1.87% to 3615.  The Dow Jones Industrials
added 26 to close at 9774.  The NASDAQ Composite added just 4
points to close at 1936 and the S&P 500 squeaked out a 1.3-point
gain to close at 1048, under heavy resistance at 1050.  Market
internals were positive.  The NYSE reported 17 winning stocks for
every 10 losers.  The NASDAQ turned in 18 winners for every 11
losers.  New highs sprung back to live with 761 new 52-week highs
between the two exchanges.  Volume was strong with more than 1.9
billion shares on each exchange.

Chart of DJIA:




Chart of NASDAQ:




Powering the DFI defense index to a new 52-week high were strong
earnings from Boeing (BA) and Northrop Gruman (NOC).  The world's
largest plane manufacturer was also the biggest gainer in the Dow
Jones Industrials with a 6.8% gain after reporting strong Q3
earnings.  BA turned in a profit of 32 cents a share, which beat
estimates for 27 cents.  The company also lifted their 2003 sales
guidance from $49 billion to $50 billion.  Its defense-sector
buddy, NOC, the world's preeminent naval ship builder, add 3.26%
to its own stock price and closed above resistance at $90, its
50-dma and its 200-dma.  NOC reported Q3 earnings this morning of
$1.21 a share, which beat consensus estimates by 21 cents.  The
company told analysts it expects double-digit profit growth next
year.

Suppressing the Dow's gains were components AT&T, Johnson &
Johnson and Microsoft.  AT&T's troubles produced a 4.4% decline
in the stock after the Wall Street Journal reported that
BellSouth (BLS) had backed out of merger talks with Ma Bell
because the price tag was too high.  Those close to the deal said
BLS wasn't willing to pay $19 billion for AT&T, the No. 1 long-
distance phone company.  Meanwhile JNJ clogged up the advance
after news hit that the FDA issued a statement on JNJ's Cypher
stents.  JNJ was the first to introduce stents to the lucrative
U.S. market but now the FDA is saying it has received almost 300
reports of blood clotting in patients with more than 60 deaths
linked to the devices.  A Merrill Lynch analyst said the reaction
to the FDA statement is overdone.  Even the FDA stated that
hundreds of thousands of patients have been successfully treated
with the Cypher stent.  The agency is ordering a new 2,000
patient study to evaluate the clotting issues.  In a tangent to
the JNJ story, shares of Boston Scientific (BSX), a rival in the
stent market and soon to be approved for a drug-eluting stent
that is supposed to reduce clotting occurrences, saw its shares
rise 3.5% and closing near all-time highs.

Shares of software titan Microsoft (MSFT) weighed on both the Dow
and the NASDAQ, closing down 1.7%.  Mr. Softee has agreed to
settle several antitrust class-action lawsuits with multiple
states for vouchers worth $200 million.  This is certainly a step
in the right direction but MSFT still has at least four other
state lawsuit settlements that have not yet been approved by the
courts.  Casting another dark cloud on the software giant is a
new probe by the European Union.  The Financial Times is
reporting that the EU commission has sent at least 20 hardware
makers formal inquiries regarding their Microsoft licenses.  One
analyst at Deutsche Bank expects that odds are growing for the EU
to issue a negative ruling.

Another stock putting pressure on technology, specifically
biotech stocks was Gilead Sciences (GILD).  The company reported
earnings after the close yesterday but missed consensus
estimates.  GILD said slower than expected sales of its HIV
treatment Viread were to blame for the miss.  Furthermore they
warned that total Viread sales for the year would likely be 5%
less than previously forecast.  The stock gapped lower and closed
down 12.5% just barely closing above its simple 200-dma.

Tomorrow could be an interesting day for traders.  Unlike today
we have a full boat of economic reports.  Weekly initial jobless
claims should come in before the open and Wall Street is
expecting close to 385,000 new claims.  We'll also get the much-
anticipated Q3 GDP report.  Most of Wall Street's biggest
institutions have come out with estimates in the 6.0%, 6.5% even
7.0% Q3 GDP growth.  Thus if we do get strong GDP growth at 6% or
better there may not be much of a reaction and we could
potentially see a sell-the-news (take profits) sort of move.
Economists will also be waiting for the Employment Cost Index,
the Help Wanted Index and the FOMC minutes will be released.
Let's not forget that we'll still be hearing from dozens of
companies reporting their Q3 earnings.  It certainly seems like
most of the surprises lately have been to the downside.

Speaking of downside, we've made much about the low levels in the
VIX, VXN and specifically the VXO or old VIX.  The VXO has
slipped to another new multi-year low at 17.15 today.  This is
screaming "market top" but if you remember our previous comments
on the volatility indices it is more art than science and any
peak in the markets could be still be a couple of days to several
days away.  There is certainly nothing in the rule books that
state the markets can't become even more overbought pushing the
VIX to even lower lows.  Yet it is worth nothing that market
veterans are probably growing antsy and more reluctant to open
new bullish plays.  More importantly let me remind everyone that
it can be dangerous to your financial health if you try and pick
the top before the market does.  Currently the trend is still up
and it's safer to play the trend, just do so with a disciplined
stop.  That way when the markets turn, you'll be out and ready to
start looking for bearish positions.


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

Volatility Crash
Jonathan Levinson

The OEX-volatility index, the VXO, formerly known as the VIX, set
a new multiyear low at 17.08 today, accompanied by persistently
low put to call readings.  The combination made new long
positions risky, but price remained firm, frustrating the shorts.
Gold and HUI advanced, treasuries decline, and the US Dollar
Index struggled below 92.

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.

10 minute chart of the US Dollar Index


The US Dollar Index spent more time below the 92 level, rising
off the intraday lows in wedge.  Despite the bounce, gold, the
HUI and XAU, and commodities rallied, with strength in corn, lean
hogs, soybeans and live cattle futures.


Daily chart of December gold


December gold made another surprise move today, this time to the
upside, engulfing yesterday’s candle and flipping the curling
oscillators back onto buy signals.  At this point, the
oscillators on the daily chart are changing direction almost as
frequently as the price.  The intraday high was 388.50, low
380.60.  Resistance begins at 390, and has been very solid so
far.

The HUI traded above 222 for most of the session at what I
believe to be an alltime high for that index.  The CRB added .70
to close at 249.77.


Daily chart of the ten year note yield


Ten year treasury bonds got sold today, with the TNX adding 8.6
bps to close at 4.275%.  The Fed’s modest 1.75B repo drain does
not account for the selling today, which ran countertrend to the
ongoing daily chart upphase in treasuries/downphase in the yield.
I’m looking for a test of the lower wedge trendline as the
likelier zone for a sustained bounce in the yield.

Daily NQ candles


We expected either a blowoff top or, less likely, an immediate
failure, and so naturally the market did neither, printing a doji
star and closing flat atop yesterday’s gains.  The daily cycle
downphase got clipped again, leaving the 10 day stochastic on a
bullish kiss.  The rally highs were not tested, and volatility
collapsed, with the VXN joining the VXO at extreme multiyear low
levels.  The entire session was either a consolidation below the
52 week highs or a distribution top, and with volatility so low,
it’s tempting to think the latter.  Traders attempted to go long
and short today, and unless they were very choosy about their
entry levels, the only winner was the broker reeling in
commissions.


30 minute 20 day chart of the NQ


Bulls or panicked shorts succeeded in bucking the downtrend that
kicked off today following yesterday’s sharp closing rally.
Bearish divergences abounded, compounding the alert being
signaled all day by the bottomy volatility readings.  With prices
high, volatility low, and daily, weekly and 30 minute chart
oscillators all in gear to the downside, long positions weren’t
particularly easy to put on.  But, shorts did not work, and it
appears that the plethora of economic data before the cash open
will provide the push in whichever direction it turns out to be.

If the break proves to be to the upside, it will cause the 30
minute oscillators to trend, the daily oscillator downtrend to
truncate, and most likely a trending collapse in volatility.  All
of these are unlikely events, and would be very bullish.  The
more likely outcome is a downside break.  The first sign of
trouble for bulls will be a break below 1415, followed by 1400,
1387 and so on, with 1345 critical support.


Daily ES candles


The ES also closed flat, defying downphases on the weekly, daily
and 30 minute chart oscillators.  It was a bullish candle printed
today, and the lack of pullback was an impressive display from
the bulls, sufficient to leave us with a bullish kiss on the
oscillators.  The session high of 1048.75 is just below major
resistance continuing up to the rally high at 1056, but a short
covering panic could provide the energy to test it if 1050 is
broken tomorrow morning.


20 day 30 minute chart of the ES


ES treated us to a bearish divergence on the 300 minute
stochastic even as it trended higher.  The chart pattern here is
a clean, steep bear wedge, with support up to 1045.50.  It
projects to a possible downside target of 1016.


150-tick ES


The 150 chart of the ES shows the pain inflicted on traders today
with a flat wedge/pennant narrowing price throughout the
afternoon, despite the plethora of sell signals and divergences
and subterranean volatility readings.  The short cycle
oscillators are trending uselessly in overbought, waiting for a
downside break of the day’s range.


Daily YM candles


Same picture on the YM.


20 day 30 minute chart of the YM



A reader sent me the following email after the cash close:

“hi jon, how can one trade what u see?  besides price/vol action, a
 massive seell signal  has been given.  even when greeny flooded
capital before y2k, our vix wasn't that low.  we did however printed
doji's today. i am ready to capitulate however, so pls talk some sense
into me.  sincerely  mike”

Mike’s comments are the best market summary I could provide after
a day like today.  Given that equities went nowhere today, it was
not a mistake not to go long, and nor were shorts the wrong trade
either, provided that they weren’t stopped on the various upside
spikes.  The fact is that in the current low volatility
environment, long positions at current levels are imprudent in
the extreme.  But, given that price is in a nascent uptrend,
shorts are risky.  While cash is a position, I’m willing to
assume the risk of shorts at current levels, but would much
prefer an upside spike to the rally highs from which to enter.
If it does not come, risk-conscious bears can wait for 1038-40 to
be cracked to the downside.

Days like today are frustrating and discouraging in the extreme,
as is any flat or coiled market.  But, like the moment of
weightlessness when a steep rise reverses, we may well be
witnessing a distribution top.  Patience is key.  Don’t force the
trade, and keep your stops in place.  There’s no need to catch
the exact top, and with the VXO at current extreme lows, the
implication is that there will be plenty of downside if and when
the break occurs.  See you in the Futures Monitor.


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

Indices traded steady ahead of Q3 GDP

The major indices finished today's session either fractionally
higher or unchanged as yesterday's bullish tone held together as
investors await a first look at how fast the economy grew in the
third quarter.

Tomorrow morning and 08:30 AM EST, the government will release it
preliminary third-quarter Gross Domestic Product (GDP) figures,
where economists are forecasting the economy to have grown at a
6.0% annual rate in the third quarter, up from the second
quarter's 3.3% annual rate and higher still from a 1.4% annual
rate of growth in the first quarter.

On the heels of strong consumer spending, economists predict
personal consumption expenditures to have swelled to 6.4%, the
strongest level of personal consumption since the third-quarter
of 1997.

Tomorrow's GDP brings a first test to yesterday's decision by the
Fed to leave rates unchanged, despite signs that the economy is
improving.

Why is this a first test?  It a test for the market's reaction on
weather the Fed has accurately measured its monetary policy, in
relation to just how fast the economy is growing.  It is probably
hard to believe that the economy could grow too fast, and trigger
a negative reaction from the market, and while this type of
reaction would be unlikely, we'll want to keep an eye on gold and
Treasury YIELDS just in case.

Today's trade saw the December Gold futures contract (gc03z)
$387.00 +0.9% gain $3.60 and recoup the bulk of yesterday's
losses, while the AMEX Gold Bugs Index ($HUI.X) 222.41 +2.82%
shined as today's sector winner to close at an all-time high as
it nears closer to its current point and figure chart bullish
vertical count of 226.

Based on the premise of gold trading between $400 and $300 per
oz., I thought the Fed should keep interest rates where they
were, and while the markets greeted the decision with a strong
session on Tuesday, tomorrow's Q3 GDP data is the first test of
that decision.

If the Fed is "too easy" and GDP accelerates well above
economists' forecast, I think we should have an eye on gold,
which in its own right has been signaling thoughts of economic
growth, which should bring some healthy signs of inflation in the
early part of an economic recovery.

But just as Goldilocks preferred her porridge "just right" and
not too cold or too hot, gold and Treasury YIELD trade may be two
observations outside of the major market indices for traders to
keep an eye on.

Just as I did not expect shares of Garmin (NASDAQ:GRMN) $52.05
+15.7% to trade an intra-day high of $54.08 when it triggered a
triple-top buy signal in today's trade, I don't expect gold to
shoot above the $400 level as if to signal the Fed is way to easy
with its monetary policy, but it never hurts to be alert.  With
the December Gold futures (gc03z) showing a bullish vertical
count of 442 (box size $2) on its point and figure chart, there
is reason for gold bugs to be optimistic for higher price.

The www.stockcharts.com point and figure chart of the Continuous
Gold Contract ($GOLD) set on $2 box scale, would look very
similar to the December gold futures contract.

Gold - Continuous Contract ($GOLD) - $2 box




The PnF chart of $GOLD is bullish and today's low of $380 would
have come at the extension of the recently broken to the upside
bearish resistance trend (red +), and by session's end, demand
found price higher at $386.  Support looks firm above the $366
level, and should the preliminary GDP figure some in much above
6% to 6.5% tomorrow, gold equities, which often move ahead of the
commodity itself are at 52-week highs.  Newmont Mining (NYSE:NEM)
$43.78 +2.4% is perhaps the bellwether for the sector, and any
hedging the company may do with its gold production is very small
and a good stock to closely track price movement with gold.

If memory serves me correct, NEM was profiled as bullish in early
June (red 6 on a Pnf Chart) when it triggered a triple-top buy
signal at $31.  It's PnF chart currently hints at a bullish
vertical count of $77, which at this point would only be negated
with a trade at $37, just below its October (red A on PnF chart)
low.

And just as gold recouped the bulk of yesterday's losses,
Treasuries gave back the bulk of yesterday's gains with the
benchmark 10-year YIELD ($TNX.X) rising 8.6 basis points to
4.275%.  The one comment I heard today from market economists was
that he would begin getting concerned for stocks on a near-term
basis should the 10-year YIELD move much above the 4.5% level at
this point.  On a technical basis, the 10-year YIELD found YIELD
resistance in August at the 4.6% level.

Here's a quick look at the Pivot Analysis Matrix.  Little change
today, but the Dow Diamonds (AMEX:DIA) $97.87 +0.24% did trade
their WEEKLY R1, and showed some strength within the WEEKLY pivot
matrix.

Pivot Analysis Matrix -




In last night's Index Wrap, about the only early correlative
support level we could find in the MATRIX was at OEX 513.
Tomorrow, the OEX once again looks to be the index to monitor for
correlative support, but higher at 515 (DAILY S2 and MONTHLY R1).

I've "dashed green" some very early tentative levels, at the
DAILY Pivots and WEEKLY R1s for the DIA, QQQ, BIX.X.

The upside bullish level looks to also have the OEX a key major
index tomorrow at DAILY R2 and WEEKLY R1 of 521, 522 to be safe.
It would have to be my thought that the MARKET just loves the way
things are going if the OEX were to break above 522, and if so,
that could have OEX 530 in play.

If yesterday's trade and bullish response to the Fed was just a
hoax, the OEX 515, say 514 would fail to hold support.

S&P 100 Index Chart (OEX.X) - Daily Interval




Taking note of correlative support at 515 in tomorrow's matrix,
this would be at the MONTHLY R1 and I still think traders need to
give at least that much room to things.  In fact, early today,
with banks having trouble finding much of a bid and markets
trading either side of unchanged, I was planning on the OEX
trending back into 513, with the thought that market participants
were going to sit things out ahead of tomorrow morning's GDP
report.  The OEX proved me wrong, and traded stronger than that
analysis.

I'm going to remove a "cloned" trend we've had on the OEX chart
for sometime.  It just doesn't seem to be a trend that is in
play.  However, just as we had cloned that trend and placed it at
the September 18 and 19 relative high, where it did appear to be
in play on the rally back higher from 496, I'm going to simply
slide that cloned trend to the recent highs, challenge the OEX,
and if the OEX can get above this downward trend, the I think the
"love trade" unfolds with the OEX having potential to WEEKLY R2
and MONTHLY R2 zone.

Should a bull "love" the OEX enough to plow every last dollar of
his/her trading account into OEX calls on a break above 522 or
525?  No way, but I would "like" a bulls chances should price
action move above 522 and MACD see a bullish crossover above its
SIGNAL.

Today's trade saw a net gain of 1 stock to a point and figure buy
signal in the narrower S&P 100 Bullish % ($BPOEX).  Still "bull
correction" at 79%, but up from Monday's relative low 77%.
Nothing major here, but slight sign of a couple stocks where
demand is outstripping supply.

S&P 500 Index (SPX.X) Chart - Daily Interval




While the Fed may see its first true test to keep interest rates
where they were, tomorrow may be the real test for last week's
scenario that the SPX could duplicate the mid-September rebound
to make a new 52-week high.

Aside from my SPY bullish trade being stopped out by a 2-cent
margin, the SPX duplication of the mid-September trade setup is
very close to coming to fruition.  Still, there's work to be
done.  A TRADER/INVESTOR is more alert to DIVERGENCE to the past
than duplication, or history repeating.  I would thing an SPX
trade back below 1,038 would be this signal for DIVERGENCE.

This might also be a point where an AGGRESSIVE bear might look
for a trade, but he/she may also be waiting things out into next
week, to see what happens from an SPX 52-week high near 1,060.
Just as history looks to be playing out for the bulls, we might
well want to use the decline from SPX 1,039 to 1,000 to set up an
AGGRESSIVE bear trade next week.

Again.. I personally am always more hesitant to try and short/put
a security that is trading 52-week highs or has shown the ability
to trade a high, as overhead supply is simply too limited and
nobody likes to be short when an angry bear decides to cover.

Today's trade saw a net gain of 5 stocks to point and figure buy
signals in the broader S&P 500 Bullish % ($BPSPX).  Still "bull
confirmed" and up 1% to 79.6% bullish.

If the OEX is going to see a "love trade" to its WEEKLY/MONTHLY
R2 zone, and since we just talked about angry bear's, then let's
look at the QQQ where short interest has been growing since April
15 and has a key economic report due out in less that 12-hours.

NASDAQ-100 Tracking Stock (QQQ) - Daily Intervals




Today's high in the QQQ matched yesterday's, and if anything,
showed conviction by bears.  At the same time though, bulls
didn't cave in, and it looks like traders are ready for some
fireworks tomorrow.  I'd still want to be on the bullish side of
things, especially if the QQQ kicks above $35.71.

One of our "short squeeze" pulse stocks found NetFlix (NFLX)
$59.06 +4.56% trading another 52-week high, yet James Cramer said
tonight on CNBC that there's no stock to borrow in order to
short, meaning the public float is basically short and bulls
aren't selling.  While NFLX is not a NDX/QQQ component the run
from $40 has been further painful to bears.

Breadth for the NDX/QQQ finished at 51 gainers, 2 unchanged, and
47 decliners.  Just about as even as you can get in the NDX/QQQ.

SANM +5.29%, ERICY +4.13% and SSCC +3.75% lead the gainer's list,
while GILD -12.5%, MNST -4.6% and GENZ -2.8% lead the list of
losers.  The most heavily-weighted MSFT -1.69% looks to threaten
Friday's lows.

Today's trade saw a net gain of 3 stock to point and figure buy
signals and edges back up 3% to 78%.  Still "bear correction"
status.

Dow Industrials (INDU) Chart - Daily Intervals




In an attempt to challenge the INDU with a downward trend, I
cloned an "old" trend where resistance broken saw a move higher,
then have the broken trend serve support on a retest.  Cloning
that trend and placing it at the recent 52-week high would have
the INDU above that trend.  Tomorrow, a move much above 9,800 has
the INDU further above this broken trend and back into its upward
regression channel.  In last night's Wrap, we looked at a sliver
of support in the DIA chart, and that is present in the INDU from
9,689-9,678, and would be deemed near-term support, and allow
some wiggle room on a negative knee-jerk reaction to the GDP
data.  Still, a break below that level would spell DIVERGENCE to
our bullish mid-September rebound to new highs.

Dow components setting new high had AA, HD, INTC, MMM and MO
setting new intra-day 52-week highs.  MO is perhaps the newest
component to set a new 52-weeker as it did pierce its July 8 high
of $47.07 today, when it traded a session high of $47.20.

JNJ set a new 52-week low.

Today's trade saw now net change in the very narrow Dow
Industrials Bullish % ($BPIND).  Still "bull correction" status
at 83.33%.

Jeff Bailey


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The Option Investor Newsletter                Wednesday 10-29-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: None
Dropped Calls: None
Dropped Puts: AVID
Play of the Day: SEE NOTE
Spreads, Combinations & Premium-Selling Plays: Bullish Momentum
     Continues...Barely!
Watch List: Another Round of Bullish Breakouts

Updated on the site tonight:
Market Posture: MACD Turns its Frown Upside Down


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Live Securities Brokerage Service with Licensed Option Principals

OCO Stop & Profit Orders                        OneStopOption
All types of Spreads and Buy Writes             888-281-9569
Auto-Trade Market Monitor Signals
Personal Service and Education


**Services available for Foreign Traders including Canada**

http://www.OneStopOption.com

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

None


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

None


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

Avid Technology - AVID - cls: 52.35 chg: +1.83 stop: 52.51

It is arguable if our stop may have been too tight on AVID but
shares have certainly reversed course on us after breaking under
the $50 level a few days ago.  The over zealous bullish
enthusiasm for stocks the last couple of days hasn't helped our
position here.  AVID traded through our stop loss at 52.51 midday
today so we're closing it.  A move up through the $54 level and
short-term traders may want to consider bullish positions.

Picked on October 24 at $49.90
Change since picked:    + 2.45
Earnings Date         10/16/03 (confirmed)
Average Daily Volume:      628 thousand
Chart =



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

There is no POD for tonight!


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

Bullish Momentum Continues...Barely!
By Ray Cummins

Stocks drifted to a higher close Wednesday as investors remained
optimistic about the economy in the wake of the Federal Reserve's
interest-rate policy statement.

The Dow Jones Industrial Average added 26 points to end at 9,774
on strength on Boeing (NYSE:BA), which rallied after posting
better-than-expected third quarter results.  On the downside,
Johnson & Johnson (NYSE:JNJ) slumped to a 52-week low after the
FDA warned of "adverse events" associated with the company's
drug-coated stents.  The NASDAQ Composite climbed 4 points to
1,936, despite a bout of profit-taking in Internet stocks.  The
S&P 500 Index closed 1 point higher at 1,048 with biotechnology
and drug shares losing ground, while precious metals, tobacco,
and oil service stocks generally moved higher.  In the broader
market, advancing issues outnumbered declining stocks by a small
margin on both the NYSE and the NASDAQ.  Volume was 1.5 billion
shares on the Big Board and 1.9 billion shares on the technology
exchange.  The price of the 10-year Treasury fell 26/32 while its
yield climbed to 4.28%, due to jitters over upcoming bond sales.

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

SUMMARY OF CURRENT POSITIONS - AS OF 10/28/03

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

The following summary is a reasonable account of the positions
previously offered in this section.  However, no representation
is being made as to the actual performance of a position and in
fact, there are frequently large differences between the summary
results and those of our subscribers, due to the variety of ways
in which each play can be opened, closed, and/or adjusted.  In
addition, the summary might not be completely representative of
the manner in which the average trader would react to changing
conditions in a position and to the options market in general.
The editor of this section does not take actual positions in any
published plays and the summary comments are simply a service to
help new traders understand when positions might be opened and
closed.  In most cases, actions taken based on the commentary
would be far too late to be effective, thus it is not intended
as a substitute for personal trade management nor does it in
any way replace your duty to diligently monitor and manage the
positions in your portfolio.


MONTHLY YIELD FOR UNCOVERED OPTIONS: MAXIMUM & SIMPLE

The Maximum Yield (listed in the summary and with "naked" option
selling plays) is the greatest possible profit available in the
position.  This amount, expressed as a percentage, is based on
the initial margin requirement as determined by the Board of
Governors of the Federal Reserve, the U.S. options markets and
other self-regulatory organizations.  Although increased margin
requirements may be imposed either generally or in individual
cases by various brokerage firms, our calculations use the widely
accepted margin formulas from the Chicago Board Options Exchange.
The "Simple Yield" is based on the cost of the underlying issue
(in the event of assignment), including the premium from the sold
option, thus it reflects the maximum potential loss in the trade.


Naked Puts
**********

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

DRIV     NOV    25    24.50  28.13   $0.50   4.78%   2.04%
ERES     NOV    32    31.50  48.93   $1.00   6.89%   3.17%
NTAP     NOV    20    19.50  25.86   $0.50   5.70%   2.56%
BRCM     NOV    27    27.00  32.00   $0.50   4.69%   1.85%
CYD      NOV    17    17.20  28.79   $0.30   4.95%   1.74%
ERES     NOV    35    34.20  48.93   $0.80   6.19%   2.34%
GENZ     NOV    47    46.55  48.58   $0.95   4.34%   2.04%
LRCX     NOV    22    22.20  28.99   $0.30   3.86%   1.35%
NVLS     NOV    35    34.15  40.63   $0.85   5.35%   2.49%
RMBS     NOV    20    19.55  25.12   $0.45   6.20%   2.30%
TXN      NOV    22    22.10  29.35   $0.40   4.23%   1.81%
VECO     NOV    22    22.00  24.50   $0.50   5.04%   2.27%
APPX     NOV    22    22.05  26.45   $0.45   7.08%   2.04%
CKFR     NOV    22    22.20  27.95   $0.30   4.03%   1.35%
CYD      NOV    20    19.75  28.79   $0.25   4.37%   1.27%
ERES     NOV    35    34.55  48.93   $0.45   4.25%   1.30%
LEND     NOV    20    19.70  29.00   $0.30   5.40%   1.52%
NFLX     NOV    40    39.45  56.48   $0.55   4.89%   1.39%
NSCN     NOV    20    19.70  24.34   $0.30   4.96%   1.52%
ONXX     NOV    17    17.15  23.60   $0.35   6.57%   2.04%
PALM     NOV    22    22.20  27.24   $0.30   3.97%   1.35%

There was no opportunity to initiate the bullish position
in New Century Financial Corporation (NASDAQ:NCEN), due to
bullish "gap-up" in the issue on the day after the play was
offered.


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

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

FLML     NOV    40   40.80  28.65   $0.80   8.88%    1.96%
IMCL     NOV    45   45.65  34.40   $0.65   6.97%    1.42%
SOHU     NOV    45   45.55  37.17   $0.55   5.85%    1.21%
BGEN     NOV    40   40.50  39.30   $0.50   3.96%    1.23% *
MGAM     NOV    45   45.30  36.82   $0.30   3.99%    0.66%
NPSP     NOV    35   35.25  27.35   $0.25   4.53%    0.71%

Biogen (NASDAQ:BGEN) is on the "watch" list and any further
upside activity would signal an exit in the bearish spread.


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

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

CUM     50.77  46.35   NOV  42  45   0.30  44.70  $0.30   Open
CYMI    45.27  44.99   NOV  35  40   0.60  39.40  $0.60   Open
ERTS   103.58  98.43   NOV  90  95   0.55  94.45  $0.55   Open
SYK     78.92  81.46   NOV  70  75   0.45  74.55  $0.45   Open
APOL    63.95  63.87   NOV  55  60   0.60  59.40  $0.60   Open
BDK     45.96  47.77   NOV  40  45   0.75  44.25  $0.75   Open
SEE     52.31  53.04   NOV  45  50   0.50  49.50  $0.50   Open

The position in J2 Global Communications (NASDAQ:JCOM) has
previously been closed to limit potential losses.


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

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

MEDI    33.09  26.86   NOV  40  38   0.30  37.80  $0.30   Open
WLP     78.72  89.95   NOV  90  85   0.60  85.60 ($3.15) Closed
BUD     48.89  49.20   NOV  55  50   0.50  50.50  $0.50   Open
KMX     32.31  31.92   NOV  40  35   0.70  35.70  $0.70   Open
NBR     36.75  36.93   NOV  43  40   0.25  40.25  $0.25   Open
AMGN    60.30  60.85   NOV  70  65   0.45  65.45  $0.45   Open
FRE     57.03  58.59   NOV  65  60   0.60  60.60  $0.60   Open
FNM     72.75  75.35   NOV  80  75   0.65  75.65  $0.30   Open

As noted last week, Wellpoint Health Networks (NYSE:WLP) was on
the "watch" list and traders who did not exit the bearish spread
were astonished by a merger announcement on Monday.  The stock
soared on the news and is currently trading near the long (call)
option in the position.  Due to the premium in that option, the
cost to close the spread is far less than the difference in
strike prices ($5) minus the premium ($0.60), and the summary
reflects that value.


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

No Open Positions


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

No Open Positions


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

NEW POSITIONS

This following group of plays is simply a list of candidates to
supplement your search for profitable trading positions.  As with
any new investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
are suitable for your personal skill level, risk-reward tolerance
and portfolio outlook.  In addition, we recommend that you avoid
any trading techniques in which you are not completely comfortable
with the potential capital loss, the necessary adjustments, and
the common entry-exit strategies.  The positions with "*" will be
included in the weekly summary.  Those with "TS" (Target-Shoot)
are below our minimum monthly return, but may offer a favorable
entry price with a limit order, due to the daily volatility of
the underlying issue.

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

BULLISH PLAYS - NAKED PUTS

All of these issues have robust option premiums and relatively
favorable technical indications.  However, current news and market
sentiment will have an effect on these stocks, so review each play
thoroughly and make your own decision about its future outcome.

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

The sale of uncovered puts entails considerable financial risk,
far more than the initial margin or collateral required to open
a position.  The maximum financial obligation for the sale of a
naked put is the strike price (of the underlying stock) that is
sold.  Although this obligation is reduced by the premium from
the sale of the option, a writer of puts should have the cash or
collateral equivalent of the sold strike price in reserve at all
times.  In addition, there is one very important rule when using
this strategy: Don't sell puts on stocks that you don't want to
own!  Why?  Because stocks occasionally experience catastrophic
declines, exponentially increasing the margin maintenance and
possibly causing a devastating shortfall in your portfolio.  It
is also important that you consider using trading stops on naked
option positions to help limit losses when a stock's price falls.
Many professional traders suggest closing the position when the
underlying share value moves below the sold strike, or using a
"buy-to-close" stop order at a price that is no more than twice
the original premium received from the sold option.

**************
ANPI - Angiotech  $45.95  *** JNJ Sell-Off = ANPI Rally! ***

Angiotech Pharmaceuticals (NASDAQ:ANPI) is engaged in the fusion
of medical device technologies and pharmaceutical therapies.  The
company's first product was a drug-coated stent.  A stent is a
cylindrical medical device, usually made of metal, inserted into
a body duct or tube to prevent collapse, blockage or overgrowth
of the duct or tube.  Angiotech's primary goal is to develop new
products to enhance the performance of medical devices and other
biomaterials through the use of pharmatherapeutics.  In 2002, the
company agreed to a merger with Cohesion Technologies, which will
continuing as a wholly owned subsidiary of Angiotech.

ANPI - Angiotech  $45.95

PLAY (sell naked put):

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

SELL PUT  NOV 40    AUJ WH     990   0.65  39.35   6.3%   1.7% *
SELL PUT  NOV 45    AUJ WI     402   1.95  43.05  12.8%   4.5%


**************
CYD - China Yuchai  $31.00  *** The Rally Continues! ***

China Yuchai International (NYSE:CYD) is a medium-duty diesel
engine manufacturer in China that also produces diesel power
generators and diesel engine parts.  The company owns a major
interest in Guangxi Yuchai Machinery and owns, through six
subsidiaries, 76.4% of the outstanding common shares of Yuchai.
Yuchai primarily makes and sells diesel engines for medium-duty
trucks in China.  Yuchai's primary products are its 6105QC and
6108 medium-duty engines, which are used in medium-duty trucks
with a load capacity of five to seven tons.  In addition, Yuchai
also offers light-duty engines and heavy-duty engines.  Besides
diesel engines, Yuchai produces a limited number of diesel power
generators and diesel engine parts.

CYD - China Yuchai  $31.00

PLAY (sell naked put):

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

SELL PUT  NOV 22.5  CYD WX     663   0.25  22.25   4.9%   1.1% *
SELL PUT  NOV 25    CYD WE     776   0.55  24.45  10.0%   2.2%


**************
GPRO - Gen-Probe  $25.95  *** Earnings Speculation ***

Gen-Probe (NASDAQ:GPRO) is a leader in the development, manufacture
and marketing of rapid, accurate and cost-effective nucleic acid
testing products used for the clinical diagnosis of human diseases
and for screening donated human blood.  Using its patented NAT
technology, Gen-Probe has received FDA approvals or clearances for
over 60 products that detect a variety of infectious microorganisms,
including those causing sexually transmitted diseases, tuberculosis,
strep throat, pneumonia and fungal infections.  Additionally, the
company developed and manufactures the only FDA-approved blood
screening assay for the simultaneous detection of HIV-1 and HCV,
which is marketed by Chiron Corporation.  Gen-Probe and Bayer
Corporation have formed a collaboration to develop, manufacture and
market nucleic acid diagnostic tests for certain viral organisms,
and under the agreement Bayer has the right to distribute these
tests.  Gen-Probe has 20 years of nucleic acid detection research
and product development experience, and its products are used daily
in clinical laboratories and blood collection centers throughout the
world.  Quarterly earnings are due on 10/30/03.

GPRO - Gen-Probe  $25.95

PLAY (sell naked put):

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

SELL PUT  NOV 22.5  PSU WX    6738   0.40  22.10   6.9%   1.8%
SELL PUT  NOV 25    PSU WE     923   1.10  23.90  13.2%   4.6%


**************
LEXR - Lexar Media  $22.50  *** Strong Sector! ***

Lexar Media (NASDAQ:LEXR) is a leading designer, marketer and
licensor of award-winning removable flash-based digital storage
media, card readers and ATA controller solutions for the digital
photography, consumer electronics, industrial and communications
markets.  Lexar brands digital memory cards in the industry's most
popular formats including CompactFlash, SmartMedia, Memory Stick,
MultiMediaCard and SD.  As a digital storage innovator, Lexar was
the first to develop and advance proprietary read-write speed
standards for its USB-enabled CompactFlash cards and holds over
60 controller and system patents.  Licensees of Lexar's technology
include Olympus, SanDisk, Samsung Electronics and Sony.

LEXR - Lexar Media  $22.50

PLAY (sell naked put):

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

SELL PUT  NOV 20    EQG WD    2104   0.30  19.70   5.6%   1.5% *
SELL PUT  NOV 22.5  EQG WX     128   1.20  21.30  14.9%   5.6%


**************
MSTR - MicroStrategy  $53.17  *** On The Rebound! ***

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

MSTR - MicroStrategy  $53.17

PLAY (sell naked put):

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

SELL PUT  NOV 45    EOU WI     638   0.45  44.55   4.3%   1.0% *
SELL PUT  NOV 50    EOU WJ     220   1.55  48.45  10.0%   3.2%


**************
NSCN - NetScreen Technologies  $24.24  *** Solid Earnings! ***

NetScreen Technologies (NASDAQ:NSCN) develops, markets and sells a
broad family of integrated network security solutions.  The firm's
security solutions provide key security technologies, such as
virtual private networking (VPN), denial of service protection,
firewall and intrusion detection and prevention (IDP), in a line
of easy-to-manage security systems and appliances.  NetScreen's
firewall and VPN systems and appliances deliver integrated firewall,
VPN and denial of service protection capabilities in a single device
using its proprietary application-specific integrated circuits, the
GigaScreen and GigaScreen-II ASICs, and its proprietary security
operating system and applications, ScreenOS.

NSCN - NetScreen Technologies  $24.24

PLAY (sell naked put):

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

SELL PUT  NOV 20    QKN WD     390   0.25  19.75   5.6%   1.3% TS
SELL PUT  NOV 22.5  QKN WX    1713   0.85  21.65  12.2%   3.9% *


**************
NTE - Nam Tai Electronics  $41.01  *** New All-Time High! ***

Nam Tai Electronics (NYSE:NTE) is a electronics manufacturing and
design services provider to original equipment manufacturers of
telecommunication and consumer electronic products.  Through its
electronics manufacturing services operations, the company makes
electronic components and subassemblies, including liquid crystal
display panels, transformers, LCD modules, and radio frequency
modules.  The firm also manufactures finished products, including
cordless phones, palm-sized personal computers, personal digital
assistants, electronic dictionaries, calculators and digital camera
accessories for use with cellular phones.  In addition, the company
assists its OEM customers in the design and development of their
products and furnishes full turnkey manufacturing services.  Its
services include hardware and software design, component purchasing,
assembly into finished products or electronic subassemblies and
post-assembly testing.

NTE - Nam Tai Electronics  $41.01

PLAY (sell naked put):

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

SELL PUT  NOV 35    NTE WG     365   0.60  34.40   6.9%   1.7% *
SELL PUT  NOV 40    NTE WH     123   1.90  38.10  13.9%   5.0%


**************
NTLI - NTL Incorporated  $60.06  *** Up, Up And Away! ***

NTL Incorporated (NASDAQ:NTLI) provides communications services
to residential, business and wholesale customers.  The company
offers residential telephony, cable television and Internet
access services.  NTL also provides national and international
carrier telecommunications, satellite and radio communications,
as well as digital and analog television and radio broadcast
transmission services.

NTLI - NTL Incorporated  $60.06

PLAY (sell naked put):

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

SELL PUT  NOV 50    NUD WJ    1450   0.50  49.50   4.4%   1.0% *
SELL PUT  NOV 55    NUD WK    1302   1.40  53.60   8.7%   2.6%


**************
PHTN - Photon  $32.81  *** Next Leg Up? ***

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

PHTN - Photon  $32.81

PLAY (sell naked put):

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

SELL PUT  NOV 27.5  PDU WY     127   0.40  27.10   6.2%   1.5% *
SELL PUT  NOV 30    PDU WF     107   1.00  29.00  11.2%   3.4%


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

BULLISH PLAYS - CREDIT SPREADS

These candidates are based on the underlying issue's technical
history or trend.  The probability of profit in these positions
may also be higher than other plays in the same strategy, due to
small disparities in option pricing however, each play should be
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and trading style.

***************
GDT - Guidant  $51.47  *** Big News In The Stent Market! ***

Guidant Corporation (NYSE:GDT) pioneers lifesaving technology,
giving an opportunity for a better life today to millions of
cardiac and vascular patients worldwide.  The company, driven by
a strong entrepreneurial culture of more than 11,000 employees,
develops, manufactures and markets a broad array of products and
services that enable less invasive care for some of life's most
threatening medical conditions.

GDT - Guidant  $51.47

PLAY (less conservative - bullish/credit spread):

BUY  PUT  NOV-45.00  GDT-WI  OI=3007  ASK=$0.15
SELL PUT  NOV-50.00  GDT-WJ  OI=1417  BID=$0.70
INITIAL NET-CREDIT TARGET=$0.60-$0.70
POTENTIAL PROFIT(max)=14% B/E=$49.40


**************
IFIN - Investors Financial Services  $35.10  *** Comfort Zone? ***

Investors Financial Services (NASDAQ:IFIN) provides services
for a variety of financial asset managers including mutual
fund complexes, investment advisors, banks, and insurance
companies.  Through its wholly-owned subsidiary, Investors
Bank & Trust Company, they provide core services including
global custody, multicurrency accounting, and mutual fund
administration, as well as value-added services including
securities lending, foreign exchange, and cash management.

IFIN - Investors Financial Services  $35.10

PLAY (conservative - bullish/credit spread):

BUY  PUT  NOV-30.00  FLQ-WF  OI=244  ASK=$0.30
SELL PUT  NOV-32.50  FLQ-WZ  OI=490  BID=$0.55
INITIAL NET-CREDIT TARGET=$0.25-$0.30
POTENTIAL PROFIT(max)=11% B/E=$32.25


**************
MXIM - Maxim Integrated  $48.24  *** Technicals Only! ***

Maxim Integrated Products (NASDAQ:MXIM) designs, develops, makes
and markets a broad range of linear and mixed-signal integrated
circuits, commonly referred to as analog circuits.  The company
also provides a range of high-frequency design processes and
capabilities that can be used in custom design.  Maxim's products
include data converters, interface circuits, microprocessor
supervisors, operational amplifiers, power supplies, multiplexers,
delay lines, real-time clocks, microcontrollers, switches, battery
chargers, battery management circuits, radio frequency circuits,
fiber-optic transceivers, sensors and voltage references.  The
firm's unique products are sold to customers in various markets
including automotive, communications, consumer, industrial control,
instrumentation and data processing.

MXIM - Maxim Integrated  $48.24

PLAY (conservative - bullish/credit spread):

BUY  PUT  NOV-40.00  XIQ-WH  OI=3417  ASK=$0.15
SELL PUT  NOV-45.00  XIQ-WI  OI=4398  BID=$0.50
INITIAL NET-CREDIT TARGET=$0.40-$0.50
POTENTIAL PROFIT(max)=8% B/E=$44.60


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

BEARISH PLAYS - NAKED CALLS

Based on analysis of option pricing and the underlying stock's
technical background, these positions meet our fundamental
criteria for bearish "premium-selling" strategies.  Each issue
has robust option premiums, a well-defined resistance area and
a high probability of remaining below the target strike prices.
As with any recommendations, these positions should be carefully
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and personal trading style.

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

The sale of uncovered calls entails considerable financial risk,
far more than the initial margin or collateral required to open
the position.  The maximum financial obligation for the sale of a
naked option is the strike price (of the underlying stock) that
is sold.  Although this obligation is reduced by the premium from
the sale of the option, a writer of options must have the cash or
collateral equivalent of the sold strike price in reserve at all
times.  The simple fact is: stocks often experience large price
swings, exponentially increasing the margin maintenance and very
possibly causing a devastating shortfall in your portfolio.  It
is also important that you consider using trading stops on naked
option positions to help limit losses when a stock price moves in
a volatile manner.  Many professional traders suggest closing the
position when the underlying share value moves beyond the sold
strike, or using a "buy-to-close" stop order at a price that is no
more than twice the original premium received from the sold option.

***************
NTES - NetEase.com  $50.64  *** Sell-Off In Progress! ***

NetEase.com (NASDAQ:NTES) is a China-based Internet technology
company that pioneered the development of applications, services
and other technologies for the Internet in China.  The NetEase Web
sites, operated by a company affiliate, organize and provide access
to 18 content channels through distribution arrangements with more
than one hundred international and domestic content providers.  In
addition, the NetEase Internet sites offer a variety of products
and services, including Instant Messaging (Popo), Dating, Love,
Alumni and Personal Home Page.  These products and services enable
users to communicate about interests and areas of expertise.  At
the end of March 2003, the number of registered users of NetEase
Web sites reached 114 million with the average number of daily page
views over 370 million.

NTES - NetEase.com  $50.64

PLAY (sell naked call):

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

SELL CALL  NOV 60    NQG KL   1,675   0.80  60.80   8.7%   1.3% *
SELL CALL  NOV 55    NQG KK     800   1.85  56.85  13.2%   3.3%


**************
SEPR - Sepracor  $26.52  *** Drug Speculation! ***

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  $26.52

PLAY (sell naked call):

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

SELL CALL  NOV 32.5  ERQ KZ     882   0.20  32.70   4.6%   0.6% TS
SELL CALL  NOV 30    ERQ KF   1,045   0.60  30.60   9.8%   2.0% *
SELL CALL  NOV 27.5  ERQ KY     382   1.40  28.90  16.1%   4.8%


**************
SRDX - SurModics  $24.70  *** Stent Market Shake-Up! ***

SurModics (NASDAQ:SRDX) is a provider of surface modification
solutions to the medical device industry.  The company's primary
focus is the commercialization of its coating technologies through
licensing arrangements.  SurModics provides value-added surface
modification solutions to a variety of medical device markets and
product categories.  Examples of products in the market or under
development that incorporate the firm's coating technology include
guidewires, catheters, stents and other similar devices used in
interventional cardiology, neurology and urology markets.

SRDX - SurModics  $24.70

PLAY (sell naked call):

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

SELL CALL  NOV 30    UZF KF   1,921   0.25  30.25   6.1%   0.8% *
SELL CALL  NOV 25    UZF KE   1,105   1.60  26.60  18.1%   6.0%


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

BEARISH PLAYS - CREDIT SPREADS

All of these positions are favorable candidates for "bear-call"
credit spreads, based on the current price or trading range of
the underlying issue and its recent technical history or trend.
The probability of profit from these positions may be higher
than other plays in the same strategy, due to disparities in
option pricing.  However, current news and market sentiment will
have an effect on these issues, so review each play individually
and make your own decision about its future outcome.

**************
BBOX - Black Box  $42.35  *** SEC Subpoenas = Sell-Off! ***

Black Box (NASDAQ:BBOX) is a technical services firm dedicated
to designing, building and maintaining complicated network
infrastructure systems.  Black Box provides its clients with
around-the-clock technical support at no charge through a
hotline telephone consulting service, available to clients in
132 countries worldwide.  It also provides complete structured
cabling and telephony solutions, including design, installation
and maintenance.  In addition, the firm offers a line of network
infrastructure products, and more than 90,000 products through
its catalogs and Website.

PLAY (conservative - bearish/credit spread):

BUY  CALL  NOV-50.00  QBX-KJ  OI=60   ASK=$0.25
SELL CALL  NOV-45.00  QBX-KI  OI=470  BID=$0.60
INITIAL NET-CREDIT TARGET=$0.40-$0.50
POTENTIAL PROFIT(max)=8% B/E=$45.40


**************
GILD - Gilead Sciences  $52.00  *** A Big "Down" Day! ***

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

GILD - Gilead Sciences  $52.00

PLAY (less conservative - bearish/credit spread):

BUY  CALL  NOV-60.00  GDQ-KL  OI=10140  ASK=$0.20
SELL CALL  NOV-55.00  GDQ-KK  OI=2635   BID=$0.80
INITIAL NET-CREDIT TARGET=$0.65-$0.75
POTENTIAL PROFIT(max)=15% B/E=$55.65


**************
MANH - Manhattan Associates  $28.30  *** Mediocre Earnings ***

Manhattan Associates (NASDAQ:MANH) is a global leader in providing
supply chain execution solutions.  The company enables operational
excellence through our warehousing and distribution, transportation
and trading partner management applications.  The firm's integrated
solutions leverage state-of-the-art technologies, innovative supply
chain practices and their domain expertise to enhance performance,
profitability and competitive advantage.  Manhattan Associates has
licensed more than 870 customers from more than 1,300 facilities
worldwide, which include some of the world's leading manufacturers,
distributors and retailers.

MANH - Manhattan Associates  $28.30

PLAY (less conservative - bearish/credit spread):

BUY  CALL  NOV-35.00  MQR-KG  OI=2184  ASK=$0.25
SELL CALL  NOV-30.00  MQR-KF  OI=663   BID=$0.75
INITIAL NET-CREDIT TARGET=$0.55-$0.65
POTENTIAL PROFIT(max)=12% B/E=$30.55


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

SEE DISCLAIMER - SECTION 1

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


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

Another Round of Bullish Breakouts

Borg Warner Inc - BWA - close: 79.96 change: +2.96

WHAT TO WATCH: Argh!  We hate it when that happens.  We came this
close to adding BWA to the OI call play list last night.  The
stock surged higher today with many stocks in the auto-related
sector.  BWA is now a stock to watch because going long just
under the $80 level is not the best entry point.  A pull back and
bounce near 77.00-77.50 might work for new plays.

Chart=


---

Thor Industries - THO - close: 63.88 change: +1.67

WHAT TO WATCH: THO is another auto-related stock worth watching.
This mobile-home/RV maker has been consolidating sideways in a
range between $60 and $64.  A breakout above 64.00-64.25 might be
worth playing.  More aggressive traders can try and enter a
bounce near $60 but use a tight stop.

Chart=


---

Taro Pharmaceuticals - TARO - close: 64.90 change: +1.52

WHAT TO WATCH: This biotech/drug player has been consolidating
sideways in a wedge-pennant pattern for days.  The breakout today
was a bullish one and traders might want to target the $70 level.
However, be aware that TARO is due to announce earnings on Oct.
30th.  Estimates are for 52 cents a share.

Chart=


---

Infosys Technologies - INFY - close: 82.62 change: +2.77

WHAT TO WATCH: This India-based software developer has soared
from its April-May lows near $40.  Today the stock has broken out
to the upside from a bull flag pattern.  Short-term traders can
target the old highs near $86.00.  A bounce from $80 would be the
preferred entry point but it may not present itself.


Chart=



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

CMA $50.88 +0.37 - After months of consolidating sideways this
regional banking stock has soared on takeover speculation.  A
bounce from 49.50-50.00 might be playable.

GTK $44.22 +0.30 - The rising channel is still intact and the
simple 50-dma has been support for GTK.  A move over $45 may be
an entry point.

UOPX $69.97 +1.11 - The educational stocks are running again
(just see shares of COCO).  UOPX, a subsidiary of APOL, looks
like a buy over $70.00.  Use a good stop.


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

MACD Turns its Frown Upside Down

To Read The Rest of The OptionInvestor.com Market Posture Click Here
http://www.OptionInvestor.com/marketposture/mp_102903.asp


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