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Daily Newsletter, Sunday, 11/16/2003

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The Option Investor Newsletter                   Sunday 11-16-2003
Copyright 2003, All rights reserved.                        1 of 5
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Big News Ahead
Futures Market: The Airball Zone
Index Trader Wrap: Fumble
Editor's Plays: So Many Choices
Market Sentiment: A Shadow of Pessimism
Ask the Analyst: Buy/Sell Program Alerts, Pivot Analysis, and 5-MRT
Coming Events: Earnings, Splits, Economic Events


Posted online for subscribers at http://www.OptionInvestor.com
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MARKET WRAP  (view in courier font for table alignment)
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       WE 11-14        WE 11-07        WE 10-31        WE 10-24
DOW     9768.68 - 41.11 9809.79 +  8.67 9801.12 +218.66 -139.33
Nasdaq  1930.26 - 40.48 1970.74 + 38.53 1932.21 + 66.62 - 46.77
S&P-100  519.01 -  1.69  520.70 +  0.72  519.98 +  9.73 -  6.87
S&P-500 1050.35 -  2.86 1053.21 +  2.50 1050.71 + 21.80 - 10.41
W5000  10244.66 - 45.10 10289.7 + 65.24 10224.5 +241.02 -114.88
RUT      532.96 - 10.00  542.96 + 14.74  528.22 + 21.79 - 13.93
TRAN    2927.64 - 51.65 2979.29 + 66.18 2913.11 + 85.86 - 20.03
VIX       16.94 +  0.01   16.93 +  0.83   16.10 -  1.61 +  0.09
VXO       17.63 +  0.07   17.56 +  0.41   17.15 -  1.78 -  0.26
VXN       26.16 +  0.96   25.20 +  0.31   24.89 -  0.56 +  0.12
TRIN       1.35            1.21            1.02            1.44
Put/Call   0.69            0.78            1.12            0.91
******************************************************************



Big News Ahead
by Jim Brown

The markets received another dose of mixed economic news on
Friday as well as some mixed earnings news. The result was
more indecision as to direction and another aimless day spent
wandering about on low volume. If November and December are
going to follow through on the historical best two months of
the year rally they are going to have to hurry.

Dow Chart


Nasdaq Chart



The mixed economic reports began with the PPI at +0.8% and
four times the expectations at +0.2%. Higher beef prices
benefiting from the lack of cattle exports from Canada were
a strong component. Higher auto prices needed to offset the
high sales incentives was the other major price jump. Still,
the core rate, minus food and energy, also rose +0.5%. Sure
glad we don't need food and energy to live. Shucks if we took
out the spike in auto prices as well the index would only be
up +0.2% and inline with estimates. Obviously none of us can
live without those components so the +0.8% inflation in prices
put some more fear into analysts that the Fed would have to
act sooner rather than later.

The MARTS Retail Sales number for October fell -0.3% and more
than expected. The biggest drop was in auto parts, gas stations
and food and beverage stores. The drop in gas stations could
be attributed to the drop in oil prices in October but on
Friday oil prices again hit a three-month high. This drop in
retail store sales is not really severe enough to be a problem
but it was the second consecutive monthly drop. Slowing cash
flow now that the tax checks are gone and the lack of mortgage
refis are the real culprit. This was the first two consecutive
months of drops since Jan-2002.

Industrial Production fell slightly in October to only +0.2%
from September's +0.5%. Remember that blowout last month and
in July? (+0.8%) Back to reality again at a mediocre +0.2 and
Capacity Utilization rose a miniscule +0.1% from 74.9 to 75%.
This is a far cry from the hopes of rising demand causing
ranks of new employees to be hired and new assembly lines
purchased. With 25% capacity still unused there is not going
to be a surge in equipment purchases or hiring any time soon.
Production of consumer goods and business equipment fell in
October after several months of gains. This follows my theory
that the 3Q GDP bounce was simply a production of merchandise
for the holiday season and they are going back to business as
usual already. That usual business has become filling orders
as they appear and no inventory building. Those inventories
are still at record lows and any real increase in demand
could cause a very strong spike in Industrial Production but
so far it has failed to appear.

Depending on what numbers you believe, consumers are a
bipolar group. The November Michigan Sentiment Survey rose to
93.5 for a jump of +4 points over the October numbers. This
was the high for the year and analysts were jumping all over
this with glowing outlooks. More lies from men in ties would
be my first thought. Retail sales is dropping like a rock
from the highs in Aug/Sep. Auto sales are slowing. Home sales
are slowing and mortgage loan applications hit a 52-week low
last week. Wal-Mart missed earnings because the broadest
measure of sentiment, their customers, were curtailing their
spending. Why is the sentiment survey up when all the
economics appear to be weakening. Could it be that consumers
have just bought the recovery story completely and are camped
out on the beach to watch the tidal wave arrive? The numbers
are not adding up on my calculator but I am all for a big
jump in expectations and a happy consumer. Happy people buy
things and they could be already mentally cashing their
January tax checks two months early.

Regardless of how we read the economic reports from Friday or
how we see consumer sentiment the markets did not like what
they saw. With all the reports public but the sentiment the
futures were trending lower and the indexes opened down. As
if by magic just as the markets appeared ready to tank a
major buy program appeared to push the Dow within 8 points
of 9900 and the Nasdaq to nearly 1980. Nice try by somebody
with deep pockets but no cigar. The instant the buy program
completed the markets took back control and headed for the
basement. The bulls tried to buy the dip at prior support
of 9820 and 1950 but they could only slow the process, not
stop it. Shortly after 1:PM there was one more attempt to
rally the troops but the sellers were ready. Multiple
support levels were broken on both indexes and the Dow
ended up taking a loss for the week closing down -69 on
Friday. The Nasdaq took the biggest hit closing nearly -50
points off the morning high and right at the lows of the
day. While this may sound very bearish we need to keep it
in perspective. Both indexes are still above the lows for
the week. They did lose ground for the week but only about
-40 points each. Definitely not a major crash despite the
magnitude of the day's drop. It was the speed of the
intraday drop that concerned traders not the distance.

Volume was still light at 3.8 billion shares total but
contrary to the strong bullish ratios from Wednesday the
declining volume was better than 3:1 over advancing volume.
Sounds bad but remember that Wednesday's triple digit gain
came on 6:1 up volume over down. We have to keep things in
perspective and part of that view has to include the new
52-week highs at over 700 on both Thursday and Friday. No
weakness there. So what happened?

There were multiple reasons that prompted investors to
reconsider holding stocks over the weekend. GE started off
the day with a major broker cutting earnings estimates by
a full nickel. This put GE, which has been under pressure,
on the defensive from the opening bell. GE closed at the
low of the day at 27.86 and a three month low on volume of
27 million shares. That is 40% more than the average daily
volume of 19 mil shares.

Microsoft announced they would be taking a charge this
quarter for employee stock option conversions and made
some statements about continuing legal problems. MSFT has
also been under pressure all week and it closed at the low
of the day and a three month low of 25.46.

CSCO found itself under pressure after Chambers sold two
million shares. This is not a relative amount for Chambers
but it helped to push CSCO back to 22.27 and erase the gains
for the week.

The major news and possibly the major reason for the speedy
afternoon exit was an announcement by the SEC that they
would announce a major settlement on Monday with a
substantial financial penalty against a major broker. The
advance warning with no clue as to the nature and identity
of the culprit pushed financial stocks over the edge. Later
in the day one SEC official said in an interview that this
would be an entirely new area of investigation and not
related to mutual fund market timing or late trading. This
started the rumors flying and the consensus is the broker
will be censured for selling higher commission funds to
unsuspecting clients when possible.

This was not the only new fund worries. American Express
came under pressure when it was announced the NASD and the
SEC had investigated fund trading and enforcement action
had been recommended against them. They were not alone.
Schwab announced they were under investigation by the SEC
and had found instances of improper trading in their funds.
While these two companies may have been seen as above the
prior scandal it is clear that no stone is being left
unturned. In addition to AMX and SCH there were new
announcements of subpoenas or findings of problems at Legg
Mason, Raymond James, Labranche and Prudential. Fidelity
Investments also said they had slashed their investments
in PRU, MMC, TROW and BEN as the scandal begin to grow.

The explosion of negative news in the blue chip companies
like AXP, PRU and SCH and the SEC warning that something
big is coming on Monday probably proved too much risk for
investors. Funds are still under pressure from investors
shifting money but there is still money flowing into funds.
The bullish 4Q sentiment continues to flow according to
the fund trackers. AMG Data said $3.5 billion flowed into
funds last week. TrimTabs.com claimed an inflow of +$4.4B.
AMG said the four-week moving average rose to $5.4 billion
and the highest level since May-2001. Obviously all the
numbers contradict each other as the different companies
calculate numbers differently. Both will have even more
trouble in the future now that funds like Putman have
stopped giving out fund flow data. I guess they were tired
of hearing sound bites every two minutes about how much
money investors had withdrawn from their funds. Fearing
a monkey see, monkey do pattern they stopped the reporting.
It was learned on Friday that Putman may face additional
charges as more information is made public. They already
have 16 class action lawsuits in progress. Spitzer also
announced on Friday that he was not only looking at just
fund timing and late trading but was branching out into
all the other areas including the annuity business. This
scandal is not going away anytime soon.

Not only were the big caps hit today, led by GE and MSFT,
but the techs that had gained the most recently were the
hardest hit. After very good chip news this week the SOX
lost -3% led by AMAT which lost -6.7% and Intel which lost
-3% for the week. I mentioned on Thursday to watch drugs
for money rotating out of techs. On Friday with the market
in the tank the $DRG.x rose +5.22 or +1.62% to cap a week
where it jumped from Tuesday's low of 304 to 326 at the
close on Friday. (+7.2%) There are multiple reasons given
for the sudden attention to drugs like the potential for
a Medicare bill and some more consolidation in the industry.
There is always a reason given but the coincidence is amazing.
The jump in market cap on PFE, which traded a whopping
40 million shares on Friday, pushed PFE to be the third
largest company by market cap at $265 billion. It ranks
behind GE $280B and MSFT $276B. CSCO which once had a
market cap of $550B has shrunk to only $157B, well behind
INTC at $220B.

Next week is shaping up to be a whopper. Not only is it
an option expiration week but there are tremendous forces
at work. According to the Stock Traders Almanac the week
before Thanksgiving has been up TEN years in a row. That
is a very good record that has traditionally been helped
by the best two months of the year syndrome that begins
in November. Unfortunately the history books cannot tell
us what new scandal is going to be announced by the SEC
on Monday.

What we do know is the economic calendar will be light
next week with only Business Inventories and NY State
Manufacturing Survey on Monday followed by the CPI on
Tuesday. If the CPI shows more inflation creeping into
consumer prices you can bet the market will not be pleased.

My bias is neutral for next week. For any other week of
the year with the same factors leading into it I would
expect a negative result. However, I think the drop on
Friday was due to the fund news and the SEC announcement.
The very unusual announcement on Friday that there was
going to be a very big announcement on Monday was simply
too much of an unknown for traders to risk. How big is
very big? What new crime were they going to describe?
Who was the culprit? Citibank, BAC, ONE? Nobody knows.
It could even be Fidelity or Merrill. When is the next
announcement going to be the last straw for investors?
This unknown going into a Friday close with the Ramadan
terror threat was just too much. I almost forgot to
mention that at 12:30 Dow component XOM was handed an
$11.9 billion judgment payable to the state of Alabama.
Needless to say the market was under attack from all sides.

I would continue to watch the internals once the SEC news
has passed. The bullish bid is still there and with the
ten year record for next week fresh in investors minds
the odds are very good they will try to buy every dip.
Assuming the SEC announcement on Monday does not alter
reality as we know it the odds are good that Dow 9725
will hold as support. I would buy a bounce at that level
once the news is out. However, should that level break
the next stop could be significantly lower, possibly in
the 9600-9650 range. The Nasdaq is at strong support at
1925-1930 and should that break we could easily see 1880.
Neither of those worst case scenarios would be life changing
for the markets. The uptrend would still be intact or maybe
I should say the sideways trend since we have not made any
substantial progress in over a month. The key is clearly
the SEC announcement on Monday but given their penchant
for showboating it may end up as no big deal when the
smoke clears. Buy the bounce and sell the break but don't
get married to your positions until a trend appears. You
remember a trend don't you? That is where the market goes
in one direction for more than two days. Until then a long
term position may be measured in hours.

Enter Very Passively, Exit Very Aggressively!

Jim Brown


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

The Airball Zone
Jonathan Levinson

Economic data released Friday morning refuted the Fed's recent
comments about the continued risks of "dis-inflation", as the
CRB, gold and silver hit multiyear highs.  Bonds advanced,
equities declined, and the US Dollar Index bounced off Thursday's
low.

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 the week selling off and managed to not
go down on Friday, closing at 91.42.  This week saw the US Dollar
Index sell off sharply in a bearish engulfing move that confirmed
last week's candle print as a shooting star doji.  90-91 is the
current bottom of this move, and a failure to hold above it
should confirm the next wave down in the US Dollar bear that has
taken the index down from 120 in early 2002.  The CRB closed a
better than 5 year high at 257.29, +2.29, led by natural gas,
cocoa and silver futures.


Daily chart of December gold


December gold made a sharp breakout to new multiyear highs,
printing a large bullish engulfing candle above 383.  The
intraday high on Friday was 399.40, with a low of 394.40.  The
move set the daily cycle oscillators on buy signals, lining up
with the weekly cycle upphase.  While gold and silver are clearly
extended here, the higher oscillator low sets up a good launch
pad for the so-far successful assault on the 390-410 resistance
zone.


Daily chart of the ten year note yield


The ten year note cruised through resistance, with the yield
(TNX) breaking support, dropping 3.8 bps to close at 4.233%.  The
weekly candle is a bearish engulfing resembling that on the US
Dollar Index. The daily cycle oscillators are on early sell
signals, while the weekly is mixed but on sell signals.  In
retrospect, the upside pennant breakout was a fake, and the moves
from Thursday and Friday appear stronger and more reliable.
Combined with the selling in equities on Friday, the pattern
appears uncertain, but so far, dollar weakness has equated to
strength in treasuries and weakness in equities.


Daily NQ candles


The NQ rewarded bears with a big reversal on Friday, dropping 30
points or 2.08%, but traversing 43 points from its 10AM spike
high.  The NQ severely underperformed the ES and YM, which fell
87% and .73% respectively.  More significantly, however, the
lower bear wedge support line failed below 1420, and the daily
cycle oscillators remained in their downphases, which was an
outcome not at all apparent at 10AM.  The downside projection on
a bear wedge breakdown is 1300, and while this is a very
ambitious target, a failure to recover back above the trendline
on Monday would have me looking to next support in the 1365 area.


30 minute 20 day chart of the NQ


The bearish divergences we've been tracking this week paid off
handsomely, with a beautiful breakdown on the 30 minute chart.
The move bounced right at the last bottom above 1400, and the 30
minute cycle oscillators gave their first indication of a near
term bottom.  In the absence of bad news over the weekend, I
would expect price to begin firming here, as the intraday short
cycle oscillators are very oversold as well.  However, with the
weekly and daily cycles on sell signals within downphases, I
believe that we may have seen a significant high today confirmed
on NQ and actually breached for a tick or two on the ES.


Daily ES candles


As noted above the ES was stronger than the NQ, actually printing
a new 52 week high on the 10AM stop-runner to 1064.25.  This,
however, allowed the ensuing selloff to result in a key outside
reversal day, with a higher high and lower low that engulfed the
previous day's candle.  There are a number of bearish oscillator
divergences now on the chart, but the lower support line held on
the bear wedge.  A break below 1045 would constitute a decisive
bear wedge breakout, but as we see on Friday's 30 minute chart
below, the wedge might not be ready to break just yet.


20 day 30 minute chart of the ES


As with the NQ, the 30 minute chart is a thing of beauty, with
bearish oscillator divergences completely refuting the 10AM panic
high, and presaging the ensuing plunge.  1045 appears as a
Fibonacci level on this shorter timeframe, and there's a twitch
on the almost-oversold 30 minute cycle oscillator.  An absence of
bad geopolitical or economic news could allow for a bounce on
Monday, and the top of that bounce, if lower than the Friday
high, should be a good shorting opportunity.

150-tick ES


The intraday 150-tick ES shows the decline and subsequent failure
through downtrending support.  A break above 1050.25 will re-
establish a possible bull wedge projecting back to the Friday
high.

Daily YM candles


YM resembles ES most closely.  Bear wedge support remains intact
for now.

20 day 30 minute chart of the YM


This week gave us a bearish reversal in the US Dollar Index, with
a bearish-neutral doji in equities, reflecting indecision on a
failure at the highs.  Gold and bonds both printed bullish
candles for the week.  Intermarket relationships are open to
interpretation, but I see nothing good on the horizon for
equities.  The VXO broke and held below 17, closing higher at
17.63.  These outrageously low volatility levels (about which
I've been ranting more violently than usual this week) are not
just a signal for bulls to be careful, but in fact a ringing
indictment of equities at current levels.  In my view, with this
much for the VXO to run to the upside, equities are potentially
sitting atop a huge airball zone.

Timing is everything, however, and I prefer to follow the
oscillators.  However, where they are uncertain or ambiguous, I
believe that we are either at or very close to a period in which
equities will be resolving that uncertainty to the downside.  See
you Monday morning!


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

Fumble
Jonathan Levinson

Friday's numbers look stronger than the day actually felt, with the
Dow dropping 69 to close at 9768, the Nasdaq 37 to close at 1930
and the SPX –8.06 to 1050.35.  The bulls can take comfort in the
fact that the Nasdaq did not go out with a 1929 print.

For the week, the Dow lost 0.4%, the Nasdaq –2.1% and the SPX -.3%,
with the bulk of these declines accounted for by Friday's drop.
Year to date, the Dow is up 17.1%, the SPX 19.4% and the Nasdaq
44.5%.

More ominous, however, are the following facts: the Commodities
Index (CRB), the Amex Goldbugs Index, and the Phlx Gold and Silver
Index (XAU) all made multiyear highs this week and on Friday, while
the various volatility indices, notably the VXO, made multiyear
lows.  Moreover, equity weakness on Friday lined up with strength
in bonds, commodities and the other classic "refuge", treasury
bonds.

The VXO printed a low of 16.62 on Thursday and rose 4.69% Friday to
close at 17.63.  Without wishing to beat a dead horse on this
issue, volatility hasn’t tended to stay low for extended stretches,
and this week saw sustained readings below 17 at what are 5 year
lows.  Unless an equity bull believes that this is a new bull
market, the VXO is telling us that current price levels are simply
untenable, and Friday's reversal from its highs was the first whiff
of confirmation.

The Nasdaq significantly underperformed the SPX and Dow, and the
QQQ underperformed the Nasdaq.  QQQ tends to be a market leader,
and its leading weakness is yet another portent of trouble ahead.
With that said, let's look at the chart and review this week's
action on the cycles we follow:


Weekly COMPX candles


This week's bearish doji confirmed last week's shooting star doji
as a top.  Whether this proves to merely temporary or more
significant cannot be known for the moment, but if this week's
weakness continues below 1890-1900 support, bears may well have
something about which to cheer.  The pullback so far is routine,
and does nothing to alter what remains an impressive uptrend off
the March lows.  But that rise is occurring within a now-extremely
low volatility environment, within a large bearish ascending wedge.
More worrisome is the bearish divergence on the 10 week stochastic,
drifting lower against higher price highs.  The Nasdaq appears very
toppy on this timeframe, and while a bounce off the 1890-1900
support line is possible, the bear wedge is edging ever-closer to
an apex, and a decisive break is due.  The oscillators tell us that
a downside break is the more likely outcome.


Weekly INDU candles


The picture is identical on the Dow, with 9650 the support level to
watch.  The Dow became less oversold than the Nasdaq last year, and
it is for this reason that the bear wedge has a less positive slope
than that of the Nasdaq.  The Dow is even closer to its apex, and I
expect a breakout anytime, with 3 weeks as my outside guestimate.
The bearish oscillator divergence is also apparent here, and it
portends a breakdown.


Daily OEX candles


Zooming in to our primary trading vehicles on the daily candles, we
see more bearish divergences, both on the Macd and the stochastic,
with Friday's decline confirming the sell signals on the 10 day
stochastic.  The weekly and daily cycle oscillators are now in gear
to the downside, which puts the wind at bears' backs.  The decline
on Friday stopped right on the lower support trendline of a bear
wedge projecting to a potential downside target of 497.  If support
holds, we can expect another bounce, but the synchronous
downphasing weekly and daily oscillators make anything more than a
deadcat bounce unlikely.


20 day 30 minute chart of the OEX


The 30 minute candles show the precipitous drop from Friday's 10AM
spike high.  The end of day short-covering bounce caused a slight
uptick in the otherwise downphasing 30 minute cycle oscillators,
and this hints at a possible bounce on Monday.  But, I believe that
the sharp selloff from 10AM makes the outlook clear, and I don’t
expect that high to be exceeded on the next bounce.  The shorter
the timeframe, the less power its cycles exert.  With the daily and
weekly cycles pointed south, the 30 minute oscillators should hit
the ceiling without generating higher price highs.


Daily QQQ candles


The daily candle chart of the Qubes is also rich with oscillator
divergences, and 35 is looking like a critical level for bulls to
defend on Monday.  With Friday's key outside reversal stopping
just above the rising bear wedge trendline, there will either be a
violent selloff on Monday, or some kind of recovery at or above
the rising trendline.  I'd be inclined to wait for confirmation at
a conservative 35.75 to put on new shorts so as to avoid getting
whipsawed.  With volatility this low and prices this high, there
should be plenty of downside to catch from there.  I am not
interested in long positions for the same reason, although more
nimble or daring trades can try the bounce off the trendline in
the knowledge that they're fighting a synchronous downphase on the
daily and weekly oscillators.


20 day 30 minute chart of the QQQ


More divergences on the 30 minute QQQ.  Again, we see the 300
minute stochastic in bottoming territory, and a bounce is to be
expected.  If it is anything more than weak, I'll be surprised,
but it wouldn't be the first time.  Unless the upphase gets
excellent price traction, I expect it's top to be confirmation of
a new downleg in the market, possible The end to this year's
rally, and, obviously, an excellent shorting opportunity.  If 36
gets exceeded, we'll have to reconsider.

Whichever direction you choose, we have daily and weekly wedges
building to an apex, and volatility very low.  That means that
big, sudden moves are increasingly likely, which means more
caution than usual for wise traders.  Use stops, be alert, and
don't get married to a direction that isn't working out.  Cash is
an excellent position when you're uncertain.  See you at the bell!


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

So Many Choices

Trapped again with too many choices and not enough answers.
As I wrote the market wrap for the weekend I kept thinking
picking a play for this week would be a snap. Once I started
looking at charts and option prices the fog began to roll
in once again.

My bias is really neutral for next week. I believe the Dow
will bounce at 9725 on Monday unless the SEC news is too
ugly to bear and the bulls pass out from fright. However,
there is just enough question in my mind to keep me from
just going long at the open.

Since I can't say "go long if xyz happens on the announcement"
it makes it tough to pick a directional play. While I believe
the SEC is grandstanding to make up for the slap on the wrist
for Putman it is just speculation on my part.

I looked at the DJX calls with the thought to go long if
9725 was touched but they were very expensive. (At least to
me) The Nov-98 call was 60 cents and the 97 call 1.15. If
we consider very little shrinkage on a drop to 9725 due to
an increase in volatility from the announcement then it
would take a monster bounce to recover your premium much
less make any money. With only four days until expiration
it is not worth the risk. Using the December calls the
numbers escalate to $1.55 and $2.15 respectively and that
is too much to risk in the current circumstances.

I switched to the QQQ for cheaper options and with the Qs
at $35 the $35 call was 45 cents. The Qs are right on
support at $35 and "should" bounce if the news is tolerable.
The keyword is should. Techs have been weak and there is
some money rotating into drugs. I fear that any bounce could
be weak and not fast enough to make any money. The December
options jump up to $1.15 and again too much for a purely
speculative play ahead of the unknown.

The only play I would consider ahead of the announcement
would be a long call on SUNW. I know, what am I thinking?
The SEC was not the only organization to announce a major
announcement on Monday. SUNW issued a press release that
Scott McNealy will be the keynote speaker at the Comdex
kickoff on Monday and he will be making a major announcement.
He will also hold a press conference immediately following
his speech. OK, so SUNW has not been on the A list recently.
I am thinking if Lucent can recover maybe SUNW can as well.

I checked on calls on SUNW and there is a great lottery
play available. SUNW closed at $4.10 on Friday and the
December $5 call is only 10 cents. Shucks the January $5
call is only 20 cents. Let's assume that Scott really has
an ace up his sleeve and he rekindles the excitement in
SUNW. It would not take much excitement to get the stock
over $5.00.

Granted this is a wild card of a lottery play but the price
is right. While the rock and rollers are thinking 10 cents
is a great price for December I am thinking 20 is better
for January. You can still sell in December when there is
still some time premium left if you want but there is always
that extra month just in case. Heck, five contracts for
$100 bucks is a bargain. I bet more than that on a single
roll of the dice in Vegas and it only last 10 seconds. Here
I get a full two months to agonize over it.

Because this is a true "lottery" play I am not going to
make it a real recommendation. I was going to say it was
a coin toss more than anything else but a coin toss would
have much better odds. It is just a lottery play and one
with a short fuse. Who knows, maybe he will announce that
IBM is buying them. (grin)

Spend Monday's lunch money on SUNW and maybe you can fund
your New Years Eve outing with the result. Or maybe you
will just go home hungry on Monday.

The speech is 9:AM-10:AM Pacific Time
Press Conference 10:15 PT
Webcast: http://www.sun.com/webcasts/powerplay


Jan-$5 Call SUQ-AA 20 cents.

SUNW Chart







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

Play Recaps

GE Call (recommended 11/02)

The GE Halloween rally has failed and the rebound attempt on
Wednesday has also failed. GE closed at 27.86 on Friday and
while the stop at 27.50 has not been hit I am dropping this
play. The concept here was to capitalize on a fourth quarter
rally into Dow 10,000. That was the outlook when GE was trading
at $29.25 when October closed. We all know about the deepening
mutual fund scandal and the liquidation process currently
underway at some funds. GE is the largest stock and the widest
held by funds. It is also the most liquid and easiest to dump.
Write this one off and let's move on.

http://members.OptionInvestor.com/editorplays/edply_110203_1.asp


Dell Put (recommended 11/09)

Dell never reached the entry point at $36.75. Play was never
triggered and is cancelled.

http://members.OptionInvestor.com/editorplays/edply_110903_1.asp

Powerball

The tech pull back knocked $75 off the portfolio but we still
have two months to go. Keep your fingers crossed that next
week follows the trend from the last ten years and ends with
a strong bullish gain.

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

Powerball Chart




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

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

Good Luck

Jim Brown


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

A Shadow of Pessimism
- J. Brown

Friday just ended two weeks in a row that traders thought the
markets would hit Dow 10,000 and NASDAQ 2,000.  Two weeks of
churning sideways for the major averages when they should have
been climbing on a host of positive economic news.  You probably
heard the term before but is all the good news "already baked
into the cake?"  The sell-off on Friday fueled some strong
bearish internals with decliners out pacing advancers 17 to 11 on
the NYSE and 20 to 10 on the NASDAQ.  Down volume more than
doubled up volume on the NYSE and was nearly five times stronger
on the NASDAQ.  These are pretty negative but they don't eclipse
the strong positive internals from Wednesday's rally.

Something I will note that should raise an eyebrow or two is the
net long and short positions in the new CBOT data below.
Commercial traders, who tend to be right more often than not,
have been net short the NDX futures for the last four weeks in a
row if not longer.  Obviously with the NDX and NASDAQ near one-
year highs it has been somewhat painful to be short but
institutions can withstand a lot more pain than retail traders.
What raises a note of caution to me is how commercial traders
have been slowly raising their net short positions week after
week.  There haven't been any huge jumps but their conviction for
a reversal in the NDX is growing.  Small Traders tend to be on
the wrong side of the trade and just like clockwork have slowly
pushed their net longs in the NDX futures to the most bullish
position in weeks.  It definitely makes one ponder the
possibilities, especially given the extremely low volatility
indices.

As Jim discussed in his wrap one of the growing investor
sentiment issues that could be the next market hurdle is the
mutual fund scandal.  Thus far it has had limited affect on the
markets and fund flows remain positive.  Unfortunately, the list
of culprits and institutions that have "uncovered" improper
trading practices is growing.  Friday, two of the biggest names
in the business, American Express and Charles Schwab, revealed
that they are now under investigation by the SEC and/or the NASD.
Meanwhile, the rest of the mutual fund community continues to
announce new findings, layoffs, disciplinary actions or
subpoenas.  The newest development is the SEC announcement on
Friday that they would unveil a major settlement against a major
player on Wall Street this Monday.  This sent the XBD broker-
dealer index to a 4% loss on Friday.  The SEC must be taking
their cues from sweeps week television to leave the markets with
such a cliffhanger.  Until the SEC makes their announcement
trading could be cautious on Monday.

Traders will also keep their ears open for any news from the huge
COMDEX technology conference going on this week.  Comdex is one
of several analyst conferences and these can be a stage for
companies to announce good or bad news.  Fortunately, the markets
do have an historical bias to be up the week before Thanksgiving.
At least that's what the Stock Trader's Almanac is reporting but
the combination of options expiration and a growing mutual fund
scandal might prompt November to join August as a month that
failed to hold to historical norms.

Trade carefully.


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

Market Averages

DJIA ($INDU)

52-week High:  9903
52-week Low :  7197
Current     :  9786

Moving Averages:
(Simple)

 10-dma: 9813
 50-dma: 9639
200-dma: 8908



S&P 500 ($SPX)

52-week High: 1063
52-week Low :  768
Current     : 1050

Moving Averages:
(Simple)

 10-dma: 1053
 50-dma: 1034
200-dma:  956



Nasdaq-100 ($NDX)

52-week High: 1453
52-week Low :  795
Current     : 1407

Moving Averages:
(Simple)

 10-dma: 1429
 50-dma: 1389
200-dma: 1209



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

There is little change in the volatility indices despite Friday's
gains in all of them.  They remain near all-time or five-year
lows and continue to suggest the markets are at a top.

CBOE Market Volatility Index (VIX) = 16.94 +0.47
CBOE Mkt Volatility old VIX  (VXO) = 17.63 +0.79
Nasdaq Volatility Index (VXN)      = 26.16 +0.71


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.69        785,626       541,118
Equity Only    0.55        662,739       361,347
OEX            1.17         32,520        38,086
QQQ            1.25         33,039        41,201


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

Bullish Percent Data

           Current   Change   Status
NYSE          73.4    + 0     Bull Confirmed
NASDAQ-100    72.0    + 0     Bear Confirmed
Dow Indust.   80.0    - 3     Bull Correction
S&P 500       80.8    + 0     Bull Confirmed
S&P 100       80.0    - 1     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: 1.14
10-dma: 1.14
21-dma: 1.12
55-dma: 1.10


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    1100      1010
Decliners    1710      2088

New Highs     215       192
New Lows       16        12

Up Volume    537M      294M
Down Vol.   1054M     1437M

Total Vol.  1601M     1797M
M = millions


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

Commitments Of Traders Report: 11/11/03

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

Commercial traders continue to stall on making any big bets.
They remain slightly net short in the big S&P contracts. We
see the same hesitation in the small traders with little
overall change.


Commercials   Long      Short      Net     % Of OI
10/21/03      394,176   411,246   (17,070)   (2.1%)
10/28/03      391,596   412,498   (20,902)   (2.6%)
11/04/03      391,079   415,136   (24,057)   (3.0%)
11/11/03      389,965   415,259   (25,294)   (3.1%)

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
10/21/03      136,643    88,290    48,343    21.5%
10/28/03      137,791    76,791    61,000    28.4%
11/04/03      137,829    78,206    59,623    27.6%
11/11/03      136,072    74,249    61,823    29.4%

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

Hmm... now we are seeing some action in the e-minis.
Commercial traders have eliminated 12K short contracts and
upped their longs by 7K.  This has narrowed the gap but they
remain net short.  Small Traders have made big changes and
reduced a big chunk (40K) of their long positions and 12K
of their shorts but they remain net long.


Commercials   Long      Short      Net     % Of OI
10/21/03      226,985   236,906    ( 9,921)  ( 2.2%)
10/28/03      220,171   260,644    (40,473)  ( 8.4%)
11/04/03      242,409   270,785    (28,376)  ( 5.5%)
11/11/03      249,864   258,503    ( 8,639)  ( 1.7%)

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
10/21/03      168,236    56,564   111,672    49.7%
10/28/03      123,569    59,742    63,827    34.8%
11/04/03      135,525    63,006    72,519    36.5%
11/11/03       94,649    51,815    42,834    29.2%

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


NASDAQ-100

Unfortunately we still don't see any big changes in the
NDX futures from the Commercial traders.  They have slowly
been upping their short positions, which is bearish for
the tech-heavy NDX.  Meanwhile small traders are at their
most bullish in four weeks.  Sounds like a potential top.


Commercials   Long      Short      Net     % of OI
10/21/03       36,314     43,305   ( 6,991) ( 8.8%)
10/28/03       36,168     46,272   (10,104) (12.3%)
11/04/03       34,159     48,293   (14,134) (17.1%)
11/11/03       35,889     49,201   (13,312) (15.6%)

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
10/21/03       16,917     9,750     7,167    26.9%
10/28/03       21,640     8,830    12,810    42.0%
11/04/03       24,132     9,703    14,429    42.6%
11/11/03       26,212    10,730    15,482    41.9%

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

Commercials still aren't making big bets in the INDU futures
and remain net long.  Small traders are hedging their bets a
bit by upping their longs and reducing their shorts by about
1,000 contracts each.


Commercials   Long      Short      Net     % of OI
10/21/03       16,876     9,037    7,839      30.3%
10/28/03       20,504    11,366    9,138      28.7%
11/04/03       21,756    11,903    9,853      29.3%
11/11/03       20,209    11,660    8,549      26.8%

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
10/21/03        5,392     8,842   (3,450)   (23.1%)
10/28/03        5,295     8,864   (3,569)   (25.2%)
11/04/03        5,099     9,160   (4,061)   (28.5%)
11/11/03        6,105     8,201   (2,096)   (14.7%)

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

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


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

Buy/Sell Program Alerts, Pivot Analysis, and 5-MRT

A naive question but does a buy program mean that the basket of
stocks is bought and the futures are sold?  If so, there seems to
have been only one program this morning, which was a buy program
at 10.00 when the Consumer Confidence Report was released
(10/28/03).  Would that mean that the S&P futures (es0Z3) would
likely pull back as it did?  Thanks.

The above question was asked on October 28th, and I'm just getting
to it now, but the question is a very good one.  I'm going to also
try and tie in the Pivot Analysis levels we look at in each
evening's Index Trader Wrap at OptionInvestor.com, as I feel they
can play an important role in how a trader might use buy/sell
program alerts, to try and figure out just what the heck these
institutional computer programs are doing.  Then at the end of
this article, we can all fall out of our chairs when we also throw
in the technique we've learned by using a retracement bracket and
measuring the first 5-minutes of the opening bar on a bar chart.

The trader's question is not a naive question at all.  There can
be multiple answers, so there is really no definitive answer.

One answer could be "yes!"  A buy program could be triggered if a
basket of individual stocks are bought.  Heck!  If a big boy like
GE sees a sudden and sharp rise in price, or even a decline in
price, a buy or sell program could be generated as institutional
computers try and adjust inventory in the stock, or move quickly
to the futures markets to compensate for a sharp move in an index
heavyweight.

The buy/sell program premium alerts (every morning we give a buy
and sell program premium level in the 09:00 AM EST Update) are
generated when there is disparity between the S&P futures (sp03z)
and the S&P cash (SPX.X) market.  This disparity is what many
traders call arbitrage.  When there is arbitrage, it provides a
sudden opportunity for profit, or loss, which the MARKET is always
very quick to react and adjust for.

To fully understand why there can be various reasons for a buy or
sell program premium alert to be generated, just remember the
saying, "for every action, there is a reaction."

Here.  Let's first go back to the Pivot Analysis Matrix shown in
the October 27 Index Trader Wrap at OptionInvestor.com, which
would be the night before the October 28 trader's question was
asked.  The reason I want to show the Pivot Matrix is I'm going to
draw the correlative DAILY Pivot and WEEKLY Pivot levels on an SPX
chart, where there seemed to be some type of correlation taking
place near the 1,032 level.  You will also see that I've drawn the
WEEKLY R1 level of 1,045.55 on the SPX chart.

Here's the October 27, 2003 Pivot Analysis Matrix

Pivot Analysis Matrix - October 27, 2003




Each night, I try and quickly go through and look for overlapping
levels of support (green) and resistance (red) in the pivot
matrix.  The "dashed red" squares at were considered tentative
resistance levels for October 28, as the SPX has traded through
the 1,031.93 (WEEKLY Pivot) and 1,032.60 (DAILY Pivot) on October
27.  Might there be some significance to this 1,032 level the
following day on October 28th?  I had placed a green arrow
pointing to the right (higher) where I thought the SPX might move
if it could clear that level of near-term resistance.  Let's see
what the SPX did that day, and perhaps now bring in the buy/sell
Premium, the S&P 500 Index (SPX.X) and the e-mini futures (es03z),
which some futures traders like to trade.

In the picture that follows, I've arranged in vertical order the
Premium of S&P Futures (marked the buy/sell premium levels from
the Oct. 28 09:00 AM EST Intra-day Update), the S&P 500 cash
(SPX.X), and at the bottom, the e-mini S&P Futures Chart (es03z).
It is this picture, which will hopefully build the foundation for
understanding how a buy/sell program premium alert is actually
generated.  Or to say it simple, how arbitrage is identified.

Chart Montage - 5-minute intervals, data box set at 09:30-09:35



I really want to focus on the opening trade, where we can easily
begin to understand the BUY PROGRAM PREMIUM ALERT that was
generated at the opening of the cash market (09:30 AM EST).

For some traders that are just learning about the markets, you
should know that S&P futures (the bottom chart) have actually been
trading throughout the night and when 09:30 AM EST rolls around,
the cash markets (SPX) then begin trading.  The above picture,
with all data boxes set at 09:30 to 09:35, will show how the
opening tick for futures (lower chart) was at 1,034.50.  The
middle chart is the cash S&P 500 (SPX) and you can see its first
5-minute interval bar looks like it is trying to catch up to the
futures as its opening tick is at 1,032.75.

In simplistic fashion, we can see for ourselves how a program
trade is created.  I won't go into great detail about fair value,
but in its basic form, fair value is derived by taking the value
of the S&P 500 Index then multiplying it by the sum of 1.00 plus
the amount of interest paid to your broker to borrow money to buy
all the stocks in the SPX minus the dividends paid to you from the
companies you own in the S&P 500.  On October 27th when cash
closed at 04:00 PM EST, and after futures settled at 04:15 PM EST,
fair value was derived at $-1.16 for the next day's trade.  FV =
SPX [1+(I-D)].  Remember that as we near quarterly futures
expiration in March, June, September, or December, fair value
declines.

The trader is correct in his statement that a basket of 500 stocks
will be bought, and that futures will be sold against the buying
of that basket of stocks.

The "premium" or "spread" is the difference between the most
active S&P 500 Stock Index Futures Contract minus the actual S&P
500 Stock Index (cash).  That difference, which usually ranges
between $10.00 to $0.00, and slowly decays as we reach the S&P 500
Futures Contract expiration, is what program trading is based on.
When the PREM "premium" difference rises to a certain execution
level, "buy" programs kick in.  This is when large institutional
clients then buy the stocks in the S&P 500 Stock Index on the New
York Stock Exchange and sell the S&P 500 Stock Index Futures
Contract against those positions on the Chicago Mercantile
Exchange.  When the PREM difference drops to a certain execution
level, "sell" programs kick in and institutions will do the exact
opposite.  These transactions have extremely low risks because of
the abnormal market differences in the PREM as traders capture
those few points of profit before the PREM returns to normal
and/or fair value.  This type of program trading is called index
arbitrage and is very common.  But it accounts for less than 10%
of all program trading activity done each day.

What a day trader is more interested in, is knowing when these
buy/sell programs are activated.  We KNOW that when a buyer wants
to buy something, they must be thinking price is going to advance
higher.  We also KNOW that when a seller wants to sell something,
they must be thinking price is going to fall.  These buy/sell
program premium alerts serve as an ALERT to some type of large
institutional activity.

Let's take a closer look (2-minute bar chart) at the 10:00 AM EST
BUY program premium alert, and with a basic understanding of how
arbitrage creates the program alert, see if we can become alert to
some type of institutional buying, and process that information.
Please remember there is a "second" in time when the program alert
is generated, but hopefully we can get a feel for just what took
place on October 28, 2003 at 10:00 AM EST.

Chart Montage - 2-minute intervals, data box set at 10:00-10:02



I've now set the bar chart intervals to 2-minute increments, and
set my cursor on the 10:00-10:02 bar, which is lined up on the buy
program premium alert.  Do you see how the cash (SPX) showed a
higher high, while futures (es03z) jumped sharply, but sold back a
little more notably?  Do you see the rather notable increase in
volume?  This confirms that a basket of stocks had been bought and
futures were most likely sold against that purchase.

I marked on middle chart (SPX) how we had already received the
Durable Goods data before the cash (SPX) market opened.  How the
buy program was generated at 10:00-10:02 AM EST when durable goods
data was announced.  We still awaited the FOMC announcement on
interest rates at 02:15 PM EST.

I went back to the Market Monitor archive at OptionInvestor.com
for October 28th, to see what kind of gibberish I might have been
spewing out.  At 10:17:55 when the QQQ was trading just about at
the top of the early morning trade (just like the SPX) I thought
the QQQ was a good buy at $34.64 after seeing the morning gap
higher above the WEEKLY Pivot (PINK line on SPX chart) into the
FOMC announcement, with a stop just below the session's low.

While I had made other observations before making those comments,
I observed the QQQ or even the SPX above a LEVEL I thought would
be sign of a bullish move in the making, which we had discussed in
the prior evening's Index Trader Wrap at OptionInvestor.com, based
on the WEEKLY Pivot matrix.  Perhaps the observation of a buy
program at 10:00 AM EST could have given the trader the
observation that maybe, just maybe, an institution was buying a
basket of stocks.

What that institution, or institutions were thinking we don't
know.  It could have been a BULL that had positive thoughts into
the FOMC meeting, it could have been a BULL that liked the
consumer confidence numbers.  It could also have been a BEAR, that
was SHORT the day before, observed the trade was going against
him/her, and just like me, at the top of the morning trade,
decided to buy back in!

What was the upside risk to?  In the very first chart shown in
this column, I placed the WEEKLY R1 of 1,045.55 on the SPX chart.
With a buy program at 10:00 AM EST, maybe that would be a target
until a sell program would be found?  You never know.

Is there another day trading technique you've learned that might
be able to give additional levels during a day, other that the
pivot analysis matrix?

How about the 5-minute bar retracement technique?  Let's go back
to the 5-minute bars, continue to follow our chart montage, and
see how things progressed that day.  See if you can create a bias
based on how levels are being traded, and any buy or sell program
premium alerts you receive.

Chart Montage - 5-minute intervals, with added 5-MRT technique



In the middle chart (SPX) I've now added the 5-minute retracement
technique where all we do is fit a retracement from 0% to 19.1% on
the first 5-minute bar.  This technique gives additional levels,
which an institutional computer might be able to easily begin
calculation a DAY'S potential range, divide that range into
LEVELS, and begin measuring its inventory against buyers (demand)
and sellers (supply).

I've marked the day's four different buy program alerts (non
including the opening bell buy program) with Consumer Confidence,
FOMC, Boom! and Last one.

It is so fascinating to me how the 5-MRT seems to work (Cool!),
and we can perhaps see that when the Boom! buy program premium
alert was generated, it actually came AFTER the SPX finally made a
move above 1,039.01 to 1,040.48.  Doesn't it seem like
institutional computers simply said.. "gosh... I've got to buy a
basket of stocks because I'm running out of inventory!"
Sometimes, we will find how one of the 5-MRT retracement levels,
ties in with one of the levels in our pivot analysis matrix, and
to our amazement, an index will gravitate (up or down) to that
level, as if the MARKET was determined to get there.

From the above chart, we learn that it is important to always
HONOR YOUR TRADE based on price, FIRST AND FOREMOST.  It would be
incorrect to assume that just because there is a buy program, or a
sell program, that it most definitely means PRICE MUST MOVE in the
direction of the program.  However, if you're a day trader, and
you have your premium levels set each day, they can serve as
confirmation to your analysis.  They can also alert you to a
potential error in your intra-day analysis.

I have a long list of things I have to do during a day, and while
I would LOVE to monitor and alert traders in the Market Monitor to
every buy/sell program premium alert, and try to then guide
traders as to their eventual impact on the trading session,
there's a heck of a lot more taking place in a day that can
actually be the driver for the buy/sell programs to begin with.

We can never catch "all the news" and it isn't uncommon that you
and I might not see, or hear about intra-day breaking news that
can move a market.  The buy/sell program premium alerts can be
useful in this regard.

I would think if a day trader were sitting at his/her trading
terminal during the session and suddenly finds they are being
alerted to consecutive buy or sell program alerts, that something
might be going on that they should be alert for.

Wow!  This was a long article, based on the trader's question, but
his one question just lead to one observation after another.

Articles you might find further informative, that would tie in
with this article are as follows.

For the Pivot Matrix, a trading buddy and I teamed up on "Pivot
Analysis to define levels and ranges" in a 01/19/2003 Ask the
Analyst column.

For the 5-minute retracement technique, you might read the
09/21/03 Ask the Analyst column titled "Day trader's 5-minute bar
technique"

For more information on buy/sell program premium alerts, I also
wrote an article on 12/15/02 titled "Buy/Sell Program Premium
Levels."

One question asked about the buy/sell program premium symbol for
their trading software is "Do you know what the symbol is for X-
trading software?"

I use QCharts, and I know the symbol is $PREM.X.

I'm not familiar with other trading software programs and their
symbols, but HL Camp & Company gives the following list of
symbols, which you might try.

They are ...  sp-prem , prem , a0 , $prem , prem.x , sps , spinx
,and "any other weird ticker symbols."

HL Camp & Company also says there is a separate premium symbol for
the NDX, where the symbol is NPREM (nd-prem on the only data
vendor in the world that gets this one right).

Keep the question coming.  I don't know all the answers, and NO
QUESTION is considered "stupid" or "naive."

Jeff Bailey


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

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

Symbol  Co               Date           Comment      EPS Est

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

A      Agilent Technologies  Mon, Nov 17  After the Bell    0.05
ANPI   Angiotech Pharm       Mon, Nov 17  -----N/A-----    -0.16
DRYR   Dryr's Grnd Ice Crm   Mon, Nov 17  After the Bell     N/A
EON    E.ON AG               Mon, Nov 17  Before the Bell    N/A
ITY    Imperial Tobacco GroupMon, Nov 17  Before the Bell    N/A
JAS    Jo-Ann Stores, Inc.   Mon, Nov 17  After the Bell    0.51
LOW    Lowe's Companies      Mon, Nov 17  Before the Bell   0.53
OOM    MMO2                  Mon, Nov 17  Before the Bell    N/A
TOY    Toys R Us             Mon, Nov 17  Before the Bell  -0.10


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

ADI    Analog Devices Inc.   Tue, Nov 18  After the Bell    0.23
BJ     BJ's Wholesale Club   Tue, Nov 18  Before the Bell   0.27
CNO    CONSECO INC           Tue, Nov 18  After the Bell     N/A
DKS    Dick's Sporting Goods Tue, Nov 18  Before the Bell   0.16
EPC    Epcos                 Tue, Nov 18  -----N/A-----      N/A
HD     Home Depot Inc        Tue, Nov 18  Before the Bell   0.46
NTAP   Network Appliance     Tue, Nov 18  After the Bell    0.09
ROST   Ross Stores, Inc.     Tue, Nov 18  Before the Bell   0.65
SKS    Saks Incorporated     Tue, Nov 18  Before the Bell   0.03
SPLS   Staples, Inc.         Tue, Nov 18  -----N/A-----     0.32
VOD    Vodafone Group Public Tue, Nov 18  -----N/A-----      N/A
ZLC    Zale Corporation      Tue, Nov 18  Before the Bell  -0.35

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

BLI    Big Lots, Inc.        Wed, Nov 19  -----N/A-----    -0.04
HOTT   Hot Topic             Wed, Nov 19  After the Bell    0.28
INTU   Intuit                Wed, Nov 19  After the Bell   -0.26
LALW.OBLaidlaw Intl, Inc.    Wed, Nov 19  After the Bell     N/A
MRVL   Marvell Technology GrpWed, Nov 19  After the Bell    0.24
MW     Men's Wearhouse       Wed, Nov 19  After the Bell    0.20
OVTI   Omnivision Tech       Wed, Nov 19  After the Bell    0.31
PETC   PETCO ANIMAL SUPPLIES Wed, Nov 19  After the Bell    0.26
TLB    Talbots               Wed, Nov 19  -----N/A-----     0.60
TKA    Telekom Austria AG    Wed, Nov 19  Before the Bell    N/A
TTEK   Tetra Tech            Wed, Nov 19  After the Bell    0.28
UGI    UGI                   Wed, Nov 19  Before the Bell  -0.18


------------------------- THUSDAY -----------------------------

AEOS   Am Eagle Outfitters   Thu, Nov 13  Before the Bell   0.24
ARO    Aeropostale, Inc.     Thu, Nov 20  After the Bell    0.56
ADSK   Autodesk, Inc.        Thu, Nov 20  -----N/A-----     0.14
BKS    Barnes&Noble          Thu, Nov 20  After the Bell    0.09
BGP    Borders Group Inc.    Thu, Nov 20  After the Bell   -0.02
BRCD   Brocade Cmmu Sys, Inc.Thu, Nov 20  After the Bell    0.02
CLE    Claire's Stores       Thu, Nov 20  -----N/A-----     0.47
FL     Foot Locker, Inc.     Thu, Nov 20  -----N/A-----     0.34
FRED   Fred's                Thu, Nov 20  Before the Bell   0.23
GPS    Gap Inc.              Thu, Nov 20  After the Bell    0.27
SJM    J. M. Smucker Company Thu, Nov 20  Before the Bell   0.65
LMIN   Lastminute.com        Thu, Nov 20  Before the Bell    N/A
LTD    Limited Brands        Thu, Nov 20  Before the Bell   0.04
NGG    Ntl Grid Transco plc  Thu, Nov 20  Before the Bell    N/A
JWN    Nordstrom             Thu, Nov 20  After the Bell    0.22
NOVL   Novell                Thu, Nov 20  After the Bell    0.03
PETM   PetsMart              Thu, Nov 20  Before the Bell   0.20
SFD    Smithfield Foods      Thu, Nov 20  -----N/A-----     0.26
SCM    Swisscom AG           Thu, Nov 20  Before the Bell    N/A
TKP    Technip               Thu, Nov 20  -----N/A-----     0.26
DIS    Walt Disney           Thu, Nov 20  After the Bell    0.15
WSM    Williams-Sonoma       Thu, Nov 20  Before the Bell   0.19


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

KKD    Krispy Kreme Doughnut Fri, Nov 21  Before the Bell   0.23


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

Symbol  Co Name              Ratio    Payable     Executable

BLUD    Immucor, Inc              3:2      Nov  14th   Nov  17th
MSEX    Middlesex Water Company   4:3      Noc  14th   Nov  17th
LYTS    LSI Industries Inc        5:4      Nov  14th   Nov  17th
ERTS    Electronic Arts           2:1      Nov  17th   Nov  18th
SYMC    Symantec Corp             2:1      Nov  19th   Nov  20th
JBLU    JetBlue Airway            3:2      Nov  20th   Nov  21st
DIOD    Diodes Inc                3:2      Nov  25th   Nov  26th
JAH     Jarden Corporation        3:2      Nov  26th   Nov  27th
MFLR    Myflwr Co-operative Bank  3:2      Nov  28th   Dec   1st


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

Wall Street has a full week ahead.  Various economic reports dot
each day this week and we'll hear from numerous analysts
conferences.


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

----------------
Monday, 11/17/03
----------------
Business Inventories(BB)Sep  Forecast:    0.0%  Previous:    -0.4%
NY Empire State Indx(BB)Nov  Forecast:    27.0  Previous:     33.7
CSFB Financial Services & Insurance Conference
COMDEX 2003 Fall Expo

-----------------
Tuesday, 11/18/03
-----------------
CPI (BB)                Oct  Forecast:    0.1%  Previous:     0.3%
Core CPI (BB)           Oct  Forecast:    0.2%  Previous:     0.1%
CSFB 4th Annual Large Cap Pharmaceutical Confernce
Lehman Brothers 2003 Chip & Computer System Conf
Merrill Lynch Banking Conference

-------------------
Wednesday, 11/19/03
-------------------
Housing Starts (BB      Oct  Forecast:  1.850M  Previous:   1.888M
Building Permits (BB)   Oct  Forecast:  1.850M  Previous:   1.875M
Semi Book-to-Bill Report

------------------
Thursday, 11/20/03
------------------
Initial Claims  (BB)  11/15  Forecast:     N/A  Previous:     366K
Leading Indicators (DM) Oct  Forecast:    0.2%  Previous:    -0.2%
Philadelphia Fed (DM)   Nov  Forecast:    25.0  Previous:     28.0


----------------
Friday, 11/21/03
----------------
Treasury Budget (DM)    Oct  Forecast: -$72.5B  Previous:  -$54.1B


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


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Contact Support
The Option Investor Newsletter                   Sunday 11-16-2003
Sunday                                                      2 of 5


In Section Two:

Watch List: A Mixed Bag.
Put Play of the Day: AVID
Dropped Calls: JBL, VRTS
Dropped Puts: ATH


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

A Mixed Bag.

Nucor Corp - NUE - close: 55.14 change: +0.62

WHAT TO WATCH: The steel industry has been in the spotlight the
last couple of weeks because of the EU's threat to raise tariffs
due to President Bush's tariffs on imported steel.  Shares of NUE
are breaking out of a bull flag consolidation pattern and look
tempting for bulls to try and capture any move towards the $60
mark.

Chart=


---

Bank of America - BAC - close: 74.72 change: -0.69

WHAT TO WATCH: Financials were weak on Friday and one of the
banks leading the way was BAC.  The stock appears to have
finished its bounce from the late October drop and have now
rolled back over under the simple 200-dma and the $75 mark.
Interested bears might use Friday's close under 75 as an entry
point and target the $70 level but watch out for support at
$72.50.

Chart=


---

Education Management Corp - EDMC - close: 65.86 change: +0.95

WHAT TO WATCH: Merrill Lynch upgraded a couple of education
stocks to "buy" today but truly leading the group higher is EDMC.
The stock broke out from a week-long consolidation to hit a new
all-time high today on strong volume.  Bulls may want to give it
another look.

Chart=


---

Merrill Lynch - MER - close: 56.47 change: -2.13

WHAT TO WATCH: The broker-dealer sector has been a leader on the
way up but Friday it was a leader on the way down with the XBD
losing more than 4 percent.  Shares of MER joined the drop and
fell 3.6% to close under its simple 50-dma.  This moving average
has been rising support for MER and the breakdown could portend
further weakness for the stock.  Bulls can hope that historical
price support at $55 will hold up but if MER breaks the $55.00
mark as well it may end up on our put list.

Chart=



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

PG $95.71 -0.64 - Shares of PG are stuck in the same short-term
trend of lower highs that many stocks are portraying.  A
breakdown under its 50-dma and it may be a put play.

INTC $32.80 -0.98 - Rising in a strong channel it looks like INTC
may be headed to test the lower edge of that channel near its 50-
dma above $30.00.

GS $93.80 -2.22 - Another broker that is showing some weakness
and bearish oscillators.  A pull back to $90 looks like a good
bet.

SNDK $80.70 -2.29 - This tech stock leader is showing some
weakness and if it breaks the $80 mark it may be a good short to
the 50-dma.


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

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

Avid Technology - AVID - cls: 48.45 chg: -1.88 stop: 51.26

See details in play list




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

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


CALLS
^^^^^

Jabil Circuit - JBL - close: 28.85 chg: -1.39 stop: 27.99

We're going to throw in the towel early on JBL.  The stock has
not yet hit our stop loss but odds are good the selling will
continue, at least for a couple of more days in JBL.  The close
under the $29.00, which should have held as support was the
clincher.  Its MACD and oscillators have turned bearish as well.
If the SOX chip index breaks the 500 mark it could be bad news
for the whole group.  FYI: JBL has not yet broken its triple-top
buy signal on its P&F chart.

Picked on November 04 at $30.11
Change since picked:     - 1.26
Earnings Date          09/18/03 (confirmed)
Average Daily Volume:      1.4 million
Chart =


---

Veritas Software -VRTS - cls: 36.56 chng: -1.54 stop: 35.90

It looks like it is finally time to pull the plug on our VRTS
play.  Rather than make a renewed assault on resistance, the stock
headed sharply lower on Friday in sympathy with the weakness in
the overall NASDAQ market.  By the end of the day, the stock had
shed more than 4%, but more importantly had taken out Monday's low
and closed below the 20-dma ($36.78).  While it is certainly
possible that the bulls will once again defend the $36 level next
week and succeed in sending the stock to new highs, the odds do
not favor that outcome with all the oscillators now pointing back
towards earth. Our recommendation is to use any strength early
next week as a better exit point, rather than a validation of
upside potential.

Picked on October 28th at    $37.27
Change since picked:          -0.71
Earnings Date               1/21/04 (unconfirmed)
Average Daily Volume =     6.18 mln
Chart =



PUTS
^^^^

Anthem, Inc. - ATH - close: 68.72 change: +0.51 stop: 69.50

What a disappointment!  We definitely got trapped by the action in
ATH last week, as Monday's drop below $66 cleanly satisfied our
entry target.  Then, after three days of testing the $65 level,
the stock began to climb strongly, moving right through what
should have been firm resistance in the $68-69 area on Friday to
trip our $69.50 stop.  While ATH did pull back slightly at the end
of the day, by then the damage had been done.  ATH may turn around
next week and head back down, but the high-odds breakdown move we
wanted to play got pushed right back in our face.  With all the
oscillators just beginning to point up, this does not appear to be
a good candidate for the "wait and hope" approach.  We'll take our
lumps and move on to the next trade candidate.

Picked on November 6th at    $67.22
Change since picked:          +1.50
Earnings Date               1/26/04 (unconfirmed)
Average Daily Volume =     1.66 mln
Chart =



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

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

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

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

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

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

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


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DISCLAIMER
**********

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Contact Support
The Option Investor Newsletter                   Sunday 11-16-2003
Sunday                                                      3 of 5


In Section Three:

Current Calls: APA, DGX, JCI, MME, PGR
New Calls: None
Current Put Plays: AZO, AMGN, NFLX
New Puts: AVID, MDC


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

Apache Corp. - APA - close: 72.31 change: +0.64 stop: 70.00*new*

Company Description:
Apache Corporation is an independent energy company that explores
for, develops and produces natural gas, crude oil and natural gas
liquids. In North America, the company's exploration and
production interests are focused in the Gulf of Mexico, the Gulf
Coast, the Permian Basin, the Anadarko Basin and the Western
Sedimentary Basin of Canada. Outside of North America, Apache has
exploration and production interests offshore western Australia,
offshore and onshore Egypt, offshore The People's Republic of
China and onshore Argentina, as well as exploration interests in
Poland.

Why we like it:
Our APA play is finally going gang-busters, now that it decisively
broke above the $70.50 resistance level.  Friday's session saw the
stock continue its rise above $72 and based on the rising volume,
it looks like a test of $73 resistance at the early October highs
could be tested as early as Monday.  Conservative traders that
bought the dip near the 50-dma may want to consider harvesting
some gains at that point due to the fact that daily oscillators
are not entering overbought territory.  Owing to the fact that the
market has been ignoring the oscillators a lot lately, we're still
going to leave the possibility out there that APA could burn right
through to new highs and take aim on the top of the broad
ascending channel, now above $76.  Aggressive traders can use the
breakout over the October high at $73.00 to add to existing
positions, looking for that run to the top of the channel, as
energy prices are clearly on the rise.  Note that our stop now
rises to $70, as there should now be firm support near $70.50,
reinforced by the 10-dma at $70.19.

Suggested Options:
Aggressive short-term traders can use the November 70 strike, but
need to be careful with only a week until November expiration.
Our preferred strike is the December 75 strike, which gives a nice
balance due to being just out of the money and having plenty of
time until expiration.  Traders looking for even more insulation
against time decay can look out to the January strike.

! Alert - November options expire next week!

BUY CALL NOV-70 APA-KN OI=2728 at $2.55 SL=1.25
BUY CALL DEC-70 APA-LN OI= 357 at $3.30 SL=1.75
BUY CALL DEC-75 APA-LO OI= 551 at $0.70 SL=0.35
BUY CALL JAN-75 APA-AO OI=2778 at $1.25 SL=0.60

Annotated Chart of APA:



Picked on November 2nd at    $69.72
Change since picked:          +2.59
Earnings Date               1/22/04 (unconfirmed)
Average Daily Volume =     1.30 mln
Chart =


---

Quest Diagnostics - DGX - close: 70.20 change: +0.74 stop: 65.50

Company Description:
Quest Diagnostics was the result of a 1996 Corning spinoff, and
currently holds the title of the world's #1 clinical laboratory.
DGX performs more than 100 million routine tests annually,
including cholesterol, HIV, pregnancy, alcohol, and pap smear
tests.  Operating laboratories throughout the US and in Brazil,
Mexico, and the UK, DGX also performs esoteric testing (complex,
low-volume tests) and clinical trials.  The company serves
doctors, hospitals, HMOs, and other labs as well as corporations,
government agencies, and prisons.

Why we like it:
Wasting no time, our DGX play pushed up through that key $70 level
at the open on Friday, triggering our play to live status.  With a
lack of strength in the rest of the market though, DGX had no
success in building on that early move and spent the remainder of
the session chopping sideways in a very narrow range.  But at the
end of the day (despite the broad market losses), DGX held above
$70 on above average volume and we'll take that as a continuation
of the breakout.  Traders that wanted to enter on strength got
their opportunity on Friday and may get another opportunity to add
to positions on a break above Friday's range early next week.  At
this point, the better entry point appears to be on a pullback
near the $68 support (former resistance) and rebound.  Once DGX
gets moving to the upside, the $75 level should be a reasonable
initial target, and then we can re-evaluate the potential for
higher levels.  Maintain stops at $65.50 for now.

Suggested Options:
Aggressive short-term traders can use the November 70 strike, but
need to be careful with only a week until November expiration.
Our preferred option is the December 70 strike, which gives a nice
balance due to being at the money and having plenty of time until
expiration.  Traders looking for even more insulation against time
decay can look out to the January strike.

! Alert - November options expire next week!

BUY CALL NOV-70 DGX-KN OI=1853 at $1.20 SL=0.60
BUY CALL DEC-70 DGX-LN OI= 968 at $2.60 SL=1.25
BUY CALL DEC-75 DGX-LO OI= 389 at $0.75 SL=0.35
BUY CALL JAN-75 DGX-AO OI= 228 at $1.30 SL=0.60

Annotated Chart of DGX:



Picked on November 13th at   $69.46
Change since picked:          +0.74
Earnings Date               1/20/04 (unconfirmed)
Average Daily Volume =        864 K
Chart =


---

Johnson Controls - JCI - cls: 107.11 chg: -0.91 stop: 104.99

Company Description:
Johnson Controls is a global market leader in automotive systems
and facility management and control. In the automotive market, it
is a major supplier of integrated seating and interior systems,
and batteries. For non- residential facilities, Johnson Controls
provides control systems and services including comfort, energy
and security management.  (source: company press release)

Why We Like It:
Currently our bullish play on JCI is a couple of weeks old and we
haven't progressed very far.  The stock is essentially where we
started after initially shooting above the $110 level it slowly
sold off to profit taking as the markets churned sideways.
Fortunately, JCI is still very much in a rising bullish trend and
the recent bounce during Wednesday's rally helped propel the
trend of higher lows.  JCI's point-and-figure chart is still in a
triple-top breakout buy signal despite the slide a week ago.
Volume does seem to be stronger on the rallies but JCI is still a
big target for harvesting gains if the broader markets continue
to slip.  Odds look good for yet another dip towards the $105
level or at least the $106 level.  Interested traders may want to
wait for a bounce before judging any new entries.  We're going to
keep our stop loss at $104.99.

We also note that JCI is a split candidate.  The company last
split its stock 2-for-1 on April 1, 1997 at the $80 level.  There
has been ample opportunity to split since and they did not.
However, shares are now trading at all-time highs and October was
the first time they broke the century mark.

Suggested Options:
Short-term traders can choose the December options while longer-
term investors may want to look at January 04 and April 04
strikes. We like the 105s and 110s.

! Alert - November options expire on Friday!

BUY CALL DEC 105 JCI-LA OI= 18 at $4.00 SL=2.00
BUY CALL DEC 110 JCI-LB OI=164 at $1.50 SL=0.75
BUY CALL DEC 115 JCI-LC OI=160 at $0.40 SL= --  riskier

Annotated chart:



Picked on October 30 at $107.07
Change since picked:     + 0.04
Earnings Date          10/22/03 (confirmed)
Average Daily Volume:      432 thousand
Chart =


---

Mid Atlantic Medical - MME - cls: 57.30 chng: -0.38 stop: 55.55

Company Description:
Mid Atlantic Medical Services is a holding company for
subsidiaries active in managed healthcare and other life and
health insurance related activities.  MME and its subsidiaries
offer a broad range of managed healthcare coverage and related
ancillary insurance and other products and deliver these services
through health maintenance organizations, a preferred provider
organization, and a life and health insurance company.  MME owns a
home healthcare company, a pharmaceutical services company and a
hospice company.  The company also owns a collections company and
maintains a partnership interest in an outpatient surgery center.

Why we like it:
Steady as she goes has been the theme for MME over the past week,
as the stock has rebounded from the $55.50 area and then reached
to just below $58 on Friday.  Doing a quick Fib retracement, we
can see the 50% retrace of the decline from the late October highs
comes in at $58.17, so a bit of consolidation near that level
isn't a great surprise.  Look for pullback entries on a rebound
from the $56.50 area, near the bottom of last Wednesday's gap.
Entries on further strength can be taken above $58.25, but this
should only be considered by more aggressive traders looking for a
quick in and out play.  We'll need further strength from UNH above
the $50 level (due to the merger linkage) if MME is going to
continue up towards our $60-61 target, at which point we would
strongly recommend taking the money off the table.  Keep stops set
at $55.55 until MME manages a close over that $58.25 level.

Suggested Options:
Aggressive short-term traders can use the November 55 strike, but
need to be careful with only a week until November expiration.
Our preferred option is the December 55 strike, which gives a nice
balance due to being in the money and having plenty of time until
expiration.  Traders looking for even more insulation against time
decay can look out to the March strike.

! Alert - November options expire next week!

BUY CALL NOV-55 MME-KK OI= 184 at $2.80 SL=1.40
BUY CALL DEC-55 MME-LK OI= 249 at $3.50 SL=1.75
BUY CALL DEC-60 MME-LL OI=1223 at $0.85 SL=0.40
BUY CALL MAR-60 MME-CL OI= 550 at $2.00 SL=1.00

Annotated Chart of MME:




Picked on November 11th at   $56.65
Change since picked:          +0.65
Earnings Date               2/04/04 (unconfirmed)
Average Daily Volume =        698 K


---

Progressive - PGR - close: 79.50 chg: +3.22 stop: 74.99 *new*

Company Description:
The Progressive group of insurance companies ranks third in the
nation for auto insurance based on premiums written, offering its
products by phone at 1-800-PROGRESSIVE, online at progressive.com
and through more than 30,000 independent insurance agencies.
(source: company press release)

Why We Like It:
Ah...finally someone pulled the trigger on PGR's bullish catapult
pattern from its point-and-figure chart.  The stock had been
creeping along sideways in a tight $2.00 range while the broader
markets churned up and down last week.  Suddenly on Friday the
stock took off after announcing its October 2003 results and they
were good.  PGR reported that net premiums written in October
2003 surged 21% from October 2002.  Net income for the month
jumped 53% against the same month a year ago.  There were a
couple of random analyst comments about the excellent results and
shares of PGR soared more than 4%.  Now the stock is just under
our first target of $80.00.  Short-term traders may want to begin
evaluating their exit plan or at least harvesting some gains.

Keep in mind that if the broader markets see strong selling again
on Monday it could pull PGR down.  We wouldn't recommend new
bullish positions at this time but a pull back and bounce in the
$77 to $78 range might be worthwhile.  We're very encouraged by
the strong volume on Friday's rally.  We will raise our stop loss
to $74.99 but tighter stops would not be a bad idea.

Suggested Options:
Short-term traders can choose from the December options while
longer-term traders can look over the February or May strikes.
We like the 75's and 80s.

! Alert - November options expire on Friday!

BUY CALL DEC 75 PGR-LO OI= 70 at $5.30 SL=3.00
BUY CALL DEC 80 PGR-LP OI= 50 at $1.85 SL=0.90
BUY CALL FEB 80 PGR-BP OI=510 at $3.40 SL=1.70
BUY CALL FEB 85 PGR-BQ OI= 51 at $1.45 SL=0.75

Annotated Chart:




Picked on November 07 at $76.25
Change since picked:     + 3.25
Earnings Date          10/22/03 (confirmed)
Average Daily Volume:      654  thousand
Chart =



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

None


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

AutoZone, Inc. - AZO - close: 91.52 change: -1.62 stop: 96.25

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

Why we like it:
One thing is certain -- AZO provided plenty of excitement over the
past week, with the sharp drop to just above $90, equally sharp
rebound through mid-week and finally a sharp drop on Friday.  It
actually looked like the stock might try to build a base up near
$93, but when support failed at the end of the day, our spirits
began to rise.  The action over the past week looks like a dead-
cat bounce and subsequent rollover below the 50-dma ($92.97).  We
would have preferred a push up closer to the $95 resistance level
for rollover entries, but those that took an entry in the $93 area
should be in good company.  We're still looking for a break below
$90 and challenge of major support in the $86-87 area, so
aggressive momentum traders can consider entering new positions on
a break below $90.  Our preferred entry at this stage would be a
failed bounce below the 50-dma, especially with the 10-dma
($94.17) falling to meet the 50-dma.  Maintain stops at $96.25
until last Monday's closing low is broken.

Suggested Options:
Aggressive short-term traders can use the November 95 strike, but
need to be careful with only a week until November expiration.
Our preferred option is the December 90 strike, which gives a nice
balance due to being closest to at the money and having plenty of
time until expiration.  Traders looking for even more insulation
against time decay can use the December 95 strike.

! Alert - November options expire next week!

BUY PUT NOV-95 AZO-WS OI=2889 at $3.60 SL=1.75
BUY PUT DEC-95 AZO-XS OI=2540 at $5.20 SL=3.25
BUY PUT DEC-90 AZO-XR OI=2063 at $2.70 SL=1.25

Annotated Chart of AZO:



Picked on November 9th at    $93.30
Change since picked:          -1.78
Earnings Date              12/22/04 (unconfirmed)
Average Daily Volume =     1.02 mln
Chart =


---

Amgen Inc - AMGN - close: 58.25 chg: -1.70 stop: 61.01 *new*

Company Description:
Founded in 1980, Amgen is a pioneer in the biotechnology
industry. Based on a history of scientific innovation, Amgen
launched the first biotechnology blockbuster products, EPOGEN.
(Epoetin alfa) and NEUPOGEN. (Filgrastim), and continues to
research, identify and develop novel therapeutics to treat
grievous illness. The Company invests heavily in research and
development, having invested 22 percent of total product sales in
R&D in 2002, among the highest reinvestment levels in the
biotechnology and pharmaceutical industries.
(source: company press release)

Why We Like It:
We've said from the start that trading biotech companies always
carries a certain amount of elevated risk.  If you're long a
biotech stock there is the constant risk of some drug trial not
performing or threat of a patent dispute. If you're short a
biotech stock then there is the threat of some incredible new
breakthrough sending the stock higher.  Aside from the constant
volatility that can be created with each day's headlines the
overall trend in AMGN is a bearish one.  The bullish run higher
that began in mid 2002 was broken late this summer.  Shares
slowly consolidated sideways but with a downward slant to the
lows.  Eventually that profit taking culminated in a sharp, high-
volume sell off after AMGN's mid-October earnings report.  Since
that report shares have consolidated under its 200-dma and now
looks ready for the next leg down.

Volume is definitely stronger on the declines, which lends the
bears confidence and adds credence to the move.  Point & figure
chart traders will note that AMGN has broken its rising bullish
support but has also already achieved its current vertical count
near $58.  We think this is one of the uncommon exceptions where
a stock will exceed its price objective.  AMGN is the largest of
the biotech firms and has numerous drugs in their pipeline.  With
so much research going on the company is constantly generating
press.  Case in point, late this week AMGN released news about a
promising treatment for kidney disease related bone loss.
Unfortunately for shareholders it was not enough to spur any new
buying.  Instead the stock was shaken after the Wall Street
Journal's "Heard on the Street" column highlighted a couple of
long-term threats to AMGN's profitability that could be making
investors "nervous".  One of the major concerns involves Medicare
reimbursements for some of AMGN's drugs.

We're encouraged by the high-volume declines and feel this is a
good spot for new entry points.  Momentum traders may want to
wait for a drop under the $58.00 mark.  If you prefer to target
shoot look for a potential failed rally under $60.00.  We are
going to lower our stop to 61.01.

Suggested Options:
The December and January 60s and 55's look tempting.

! Alert - November options expire on Friday!

BUY PUT DEC 55 YAA-XK OI= 5066 at $1.10 SL=0.55
BUY PUT DEC 60 YAA-XL OI= 5245 at $3.30 SL=1.65
BUY PUT DEC 65 YAA-XM OI= 1642 at $7.20 SL=5.00
BUY PUT JAN 60 YAA-ML OI=18712 at $4.10 SL=2.00
BUY PUT JAN 55 YAA-MK OI=18817 at $1.75 SL=0.90

Annotated Chart:




Picked on November 09 at $59.95
Change since picked:     - 1.70
Earnings Date          10/21/03 (confirmed)
Average Daily Volume:       8.8 million
Chart =


---

Netflix Inc - NFLX - close: 46.77 change: -1.73 stop: 51.01

Company Description:
Launched in 1998, Netflix is the world's largest online movie
rental service, providing more than one million subscribers with
access to a comprehensive library of more than 15,000 DVD titles.
For $19.95 a month, Netflix subscribers can rent as many DVDs as
they want, with three movies out at a time, and keep them for as
long as they like. There are no due dates and no late fees. DVDs
are delivered directly to the subscriber's address by first-class
mail from shipping centers throughout the United States. Netflix
can reach more than seventy percent of its subscribers with
generally overnight delivery. The Company also provides
background information on DVD releases, including critic reviews,
member reviews and ratings and personalized movie
recommendations.  (source: company press release)

Why We Like It: (below is the original play from Thursday)
It's really hard to find any bad news on NFLX.  Everyone I know
loves the service.  Obviously investors do to.  Shares of NFLX
have gone from $5 to $60 (+1100 percent) in just about a year's
time.  Granted earnings are doing great and expected to keep on
doing great but there appears to be some room for more profit
taking.

The stock got hammered on Nov. 6th with a big volume surge of
selling without any discernible catalyst.  The selling continued
the next day, again on extremely high volume, before finding
support above the $45 level.  Yesterday's market bounce took it
back to the $50 mark but today's action looks like a failed
rally.  Actually it looks like the bearish reversal candlestick
pattern labeled "dark cloud cover".

We're going to be aggressive and suggest put plays at current
level but with a very tight stop over the recent highs at $51.01.
Traders might want to wait and see some follow through (like a
move under $48.00) before initiating any new positions.  There is
obvious support at $45 and its simple 50-dma but NFLX could hit
$40 if the profit taking picks up speed.

Traders should note that this is an aggressive play and not for
everyone.  NFLX typically carries an EXTREMELY high amount of
short-interest and when they cover it gets painful.  The need for
good stop loss is important.  Plus, after such a strong rise from
its IPO price less than two years ago there is the remote risk of
a stock split announcement.

! Weekend Play Update:
Sure enough the "dark cloud cover" candlestick reversal pattern
has come through with additional selling in NFLX on Friday.  We'd
obviously like to see more volume on these declines but the
battle for support/resistance at the $45 level is approaching.
Remember, this is a high risk play.

Suggested Options:
We like the December 50's but the 45's could work for the
speculating trader.

! Alert - November options expire on Friday!

BUY PUT DEC 50.00 QNQ-XJ OI=1102 at $6.10 SL=3.75
BUY PUT DEC 47.50 QNQ-XS OI= 656 at $4.50 SL=2.25
BUY PUT DEC 45.00 QNQ-XI OI=1462 at $3.30 SL=1.65

Annotated chart:
Chart =




Picked on November 13 at $48.50
Change since picked:     - 1.73
Earnings Date          10/15/03 (confirmed)
Average Daily Volume:       1.7 million
Chart =



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

Avid Technology - AVID - cls: 48.45 chg: -1.88 stop: 51.26

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.  (source: company press release)

Why We Like It:
If at first you don't succeed, then try, try again.  We're going
to attempt another technical breakdown put play on small-cap
technology stock AVID.  Shares rallied from $17.50 in March to
$60 in October and broke its bullish up trend in mid-October as
traders took profits after its earnings report.  Earnings were
good and AVID raised their guidance during their conference call
but investors continue to harvest gains.  The five-week trend of
lower highs and failed rallies at its simple 50-dma has AVID
coiling for a breakdown under support at $48.00.  Meanwhile its
P&F chart is displaying a beautiful roll over from an extremely
overbought condition and its price objective is pointing to
$40.00.

Our first target is the $43.50-43.25 area, which should be the
38.2% retracement of the March-October run.  Our secondary target
will be round-number support at $40.00.  We'll start the play
with a stop at 51.26.  Momentum traders may want to use a trigger
under the $48.00 mark to open the play for them.

Suggested Option:
We like the December and March 50s and 45's.

! Alert - November options expire on Friday!

BUY PUT DEC 50 AQI-XJ OI= 482 at $3.90 SL=2.00
BUY PUT DEC 45 AQI-XI OI= 496 at $1.80 SL=0.90
BUY PUT MAR 50 AQI-OJ OI=1771 at $6.70 SL=4.50
BUY PUT MAR 45 AQI-OI OI=2098 at $4.40 SL=2.25

Annotated Chart:




Picked on November 16 at $48.45
Change since picked:     - 0.00
Earnings Date          10/16/03 (confirmed)
Average Daily Volume:       637 thousand
Chart =


---

M.D.C. Holdings - MDC - close: 64.55 change: -1.57 stop: 67.00

Company Description:
M.D.C. Holdings, Inc. is principally engaged in owning and
managing subsidiary companies that build and sell homes under the
name Richmond American Homes. The company also owns and manages
HomeAmerican Mortgage Corporation, which originates mortgage
loans primarily for MDC's home buyers. In addition, it provides
title agency services through American Home Title and Escrow
Company to MDC home buyers in Virginia, Maryland and Colorado and
offers third-party insurance products through American Home
Insurance Agency, Inc. to the company's home buyers in all of its
markets.

Why we like it:
The Housing sector has been the rally that won't die, up a
whopping 500% since the NASDAQ bubble burst.  Just since March,
the index has vaulted higher by 90%, as the housing boom has
continued to be fueled by easy money (asset inflation) and cheap
credit (low interest rates).  There are lots of sky-high Housing
stocks whose price now dwarfs that of the recent past.  The rally
looks far too mature to jump into at this altitude, but at the
same time, few of these stocks seem willing to give us a viable
short setup.  MDC is a definite exception to that rule right now,
as the stock appears to be in the midst of a 'b' distribution
pattern.  The stock got nailed for a big drop a week ago before
finding support at $64 and putting in a weak rebound.  On Friday,
that rebound failed just below the 20-dma ($66.57) and the stock
fell sharply, ending just fractionally over the critical $64
level.

This is clearly an aggressive play, as we're looking to pick a
top in a stock with a bullish PnF chart, in a group that has been
very strong lately.  We're not looking for a major slide, but MDC
does appear vulnerable to a pullback to $60 near the 50-dma
($60.54) or even as low as $58.  The initial drop from $70 to $64
gives us the first leg of the decline, and when the current
consolidation breaks to the downside, we can expect a
corresponding $6 decline to the $58 area.  Use a trigger of $64
and enter on the initial break, using a stop at $67.  That stop
is above last week's highs, as well as the 20-dma and should not
be challenged if this pattern of weakness has any further
downside in store.  Traders looking for a bargain entry may be
able to get aboard on a failed rally in the $65-66 area, but only
AFTER our trigger has been satisfied.  Conservative traders may
want to harvest gains near $60, but we're looking to go for the
gusto and hold all the way down to $58.

Suggested Options:
Aggressive short-term traders can use the November 65 Put, but
need to be careful with only a week until November expiration.
Our preferred strike is the December 65 strike, which gives a
nice balance due to being at the money and having plenty of time
until expiration.

! Alert - November options expire in two weeks!

BUY PUT NOV-65 MDC-WM OI=142 at $1.55 SL=0.75
BUY PUT DEC-65 MDC-XM OI=104 at $3.30 SL=1.75
BUY PUT DEC-60 MDC-XL OI=178 at $1.40 SL=0.75

Annotated Chart of MDC:



Picked on November 16th at   $64.55
Change since picked:          +0.00
Earnings Date                1/8/04 (unconfirmed)
Average Daily Volume =        231 K
Chart =



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The Option Investor Newsletter                   Sunday 11-16-2003
Sunday                                                      4 of 5


In Section Four:

Leaps: Are We Having Fun Yet?
Traders Corner: Let's Tweak Again Like We Did Last Summer


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LEAPS
*****

Are We Having Fun Yet?
By Mark Phillips
mphillips@OptionInvestor.com

This makes 2 weeks in a row that I have struggled to find
something interesting to cover in this column.  Here's the problem
-- nothing is happening!  Oh sure, there are some individual
issues that are moving up and down according to specific news
items, but looking at the big picture and the broad market is just
marking time.  Two weeks ago, the DOW managed a whopping 8 point
advance.  This past week, it gave that back enroute to a 41 point
loss.

"So what", I can hear you saying.  "We don't care where things end
up, so long as there's a good tradable range."  Lotsa luck on that
account!  For the past 10 days, the DOW has traded in a whopping
184 point range and smooth trending moves in that zone have been
few and far between.  Now I understand that intraday traders can
consistently make hay out of the kind of movement we're seeing,
although they do have to revert to scalp mode.  But that does us
absolutely no good here, where we're looking for strong
directional movement over time to help us grow our accounts.

The markets HAVE been moving erratically higher for some months
now, so why haven't we taken a chunk of it?  Mostly disbelief on
my part, along with a big dose of an unfavorable risk-reward
dynamic.  According to the falling VIX and the bullish percents,
risks were tilted against a long-term bullish position back in
June.  Since then, the scales have barely budged, but with the VIX
continuing to fall lower, I'd argue that risks to bulls in long-
term positions has increased.

The major factor contributing to the falling VIX levels is the
contracting range in the market.  A few months back, I ridiculed
the notion that the VIX could fall into the 12-15 range due to the
degree to which the intraday, intraweek and intramonth ranges
would have to fall in order to justify such low volatility ranges.
I used data from the OEX and VIX from the 1992-1994 timeframe to
bolster my case, noting how tight the range in the OEX was for
entire years back then, which allowed the VIX to remain so low.
For all of 1993, the total range of the OEX was only 15% of its
starting value and in 1994 it was only 10% of its starting value.

At the time, I noted that the total range of the OEX for the prior
2 months (although tight compared to what we're accustomed to) was
a fairly decent 5.5%.  At the time, the VIX was holding right near
20.  So where are we now?  First off, we need to make the
transition to the SPX, as that is what the VIX is based on now,
but the comparison in percentage terms should still be valid.
Over the past month, the SPX has been in the range of 1018-1063
for a 4.3% range.  Extend the time period to 2 months and the
range expands to 7.2% as we have the late September foray down to
the 990 area to factor in.  How about extending the time period
out to 5 months to mid-June?  Now the SPX ranges from a low of 960
to a high of 1063 for a total of just over 100 points and a total
percentage move of 10.3%.

Putting this in perspective, the first week of the rebound off the
March lows saw the SPX span a 9.9% range.  It's no wonder the VIX
continues to languish, with the continued lackluster trading range
in the overall market.  Looking back at the OEX/VIX action (or
lack thereof) in 1993-1994, we can see that if the ranges continue
to contract, we can expect to see the VIX continue to fall.  1993
had a total range of 15% and in the past five months we've seen
the SPX confined to a range of just over 10%.  To be sure, we're
on track for a wider range than 1993, but not by a whole lot and
that seems to be reflected in the VIX, which is trolling along at
multi-year lows, telling us that if the range in the SPX continues
to contract, we can look forward to lower VIX levels ahead.  It's
as simple as that.

So just what does this have to do with what we can expect going
forward in the markets?  Quite honestly, I don't know that it
tells us anything.  The markets have been rising on a sea of
liquidity in the face of a tepid recovery at best.  GDP growth at
7.2%?  You've got to be kidding me!  That report stunk so bad, I
had to open the windows in my office.  And if you're looking at
the "improved" employment picture as signs that we're on the road
to recovery, I fear you'll be misled there as well.  We've lately
been seeing the jobless claims dropping steadily below the 400K
mark.  That's good, but a sign of economic recovery?  I don't
think so.  It takes net job creation in order to keep pace with
population growth.  So long as jobs are being eliminated, that
isn't going to happen.  Besides that, the government statistics
are a joke of an incomplete picture, designed to show things in
the most favorable light possible.  What happens to job-seekers
that run out of employment benefits and/or quit searching for work
out of frustration.  What about those laid off engineers that are
now working an unskilled labor job to help pay the bills?  Where
do these groups of displaced workers show up in the employment
report?  They don't and therefore we have a more favorable report
than is reality.  The other interesting note is that the makeup of
the jobs that are being filled is on the lower end of the skills
spectrum as the higher paying and more skilled jobs continue to
move overseas.  We're a consumer-driven economy and if we don't
continue to fund the consumer spending machine, we've got
problems.

That leaves it all up to the business community to finally get
with the program and give us some capital spending and robust
growth on that front.  I've been listening to the same conference
calls you have, and I must say I'm not hearing the signs of
confident optimism that would lead me to think we're in the
process of turning the corner.  We're still very much in a bear
market rally (albeit a powerful one) that I feel is very close to
running out of steam.  When it does finally tip over (which might
be as late as early next year), then we'll see some angry bears
looking for retribution for allowing the bulls to romp throughout
2003.

My efforts are focused on dredging up some bearish trade
candidates that will allow us to take positions before the broad-
based decline gets underway.  Then when it does get started, it
should act as a sledge-hammer to drive some of these relatively
weak stocks sharply lower.  It's a tedious process in this market
environment, and it has forced me to dust off some tools (some of
them proprietary) that I haven't used in quite some time.
Hopefully in the months ahead, we'll find that it has been worth
the effort!

We actually had some excitement in the Portfolio this week, with
WMT finally being exposed to some heavy selling in the wake of its
disappointing earnings report.  Let's move on to the specific
plays and see what other signs of life can be found.

Portfolio:

WMT - Finally!  Our conviction appears to have been rewarded last
week, with WMT announcing earnings BELOW expectations and being
severely punished for the gaffe.  Thursday's session saw the stock
gapping down sharply and trading as low as $55.40.  Friday's
showing wasn't much better, with a drop as low as $54.50, before
closing right at $55.  It would be surprising to see the stock
proceed much lower without at least a token bounce attempt from
the $53-54 area, but that bounce should now be short-lived after
some of the negative comments from management in the conference
call about margin pressures.  WMT is supposed to be the 800-lb
gorilla in the discount retail world.  What does it say when even
they are feeling pricing pressures?  A rebound back to the bottom
of the gap, perhaps as high as $56.50-57.00 is now the best shot
for new entries into the play.  Our ultimate target remains a drop
into the $48-50 area and we can breathe a bit easier this week, as
we lower our stop to $58.50, just above the top of the post-
earnings gap.  One note of interest is the performance of our
listed LEAPS.  Note that even with WMT's price well below where we
initiated the play, our LEAPS prices are very near breakeven.  Say
hello to falling volatility, which has taken a bite out of those
premiums.

Watch List:

QQQ - An entire week of rally attempts and the NASDAQ just
couldn't get its act together to push to 2000.  A look at the
hourly chart now shows a semblance of a H&S top formation.  I view
this as a potential topping formation, but not one that I'm going
to put a lot of emphasis on.  If it breaks, it only portends a
drop to about 1830, or about $33.25 on the QQQ.  That may make for
a nice swing trade, but it isn't nearly enough to justify a LEAPS
play.  The QQQ came to rest on Friday just above the bottom of its
rising channel ($34.85) and then there's the supportive 50-dma at
$34.55.  I'm actually hesitant to play the breakdown from this
pattern, due to the fact that breakdowns have shown absolutely no
follow-through for months.  But I'll leave the lower trigger in
place for those who choose to take it.  That lower trigger is now
at $34.50, just below the 50-dma.  My desired entry for the play
is still a foray into the $36.50-37.00 area and subsequent
rejection as the COMPX is knocked back from its first attempt on
the 2000 level.

SMH - What can I say here?  the SMH is still firmly entrenched in
its uptrend and despite Friday's drop, shows no sign of reversing
course.  It is right up against strong resistance in the $44-46
area, but until it breaks below the bottom of its steeper 3-month
channel near $40, there's no incentive to play it to the short
side.  And with price right into strong resistance, there's no
future in a long-term bullish play unless there is some
fundamental catalyst (that has been glaringly absent throughout
the earnings reports I've paid attention to) showing that robust
demand-driven growth is coming back.  I'm still very much looking
forward to playing the downside in the SMH when the time is right,
but for now, the sidelines is the prudent place to be.

NEM - The price of gold knocked on the door of $400 on Friday,
with an intraday high of $399.50 on the December futures contract.
So it should come as no surprise that NEM had another strong week,
closing above $44 for the first time since late 1997.  It's too
bad we haven't been able to achieve a viable entry point into the
play, but we certainly don't want to chase it higher.  There's a
correction coming and we'll take advantage of it when it arrives.
I've heard several comments pointing to a likely buying
opportunity for gold and gold shares in December, so we'll watch
for that as an early Christmas present.  In the meantime, we'll
keep our entry strategy unchanged.  Look for god to come back near
its 200-dma over time and we'll look for NEM to come back into
strong support near $40 and preferable down to the $38 area to
give us that entry point.

SBUX - Just like our NEM play, SBUX is nowhere near an entry
point, having charged above $32 and just now starting to show the
first hints of a potential pullback.  There's no need to get
aggressive with this one -- it either comes back to give us the
entry we want in the $29-30 area or we accept that it wasn't meant
to be.

DJX - What does it say about the DOW that with all that supposedly
bullish economic data in the past two weeks that the buyers
couldn't mount a paltry 200-point rally to get it up to the 10,000
level?  It tells me that while there may not be a strong desire to
sell, neither is there any gas in the tank to drive this market
higher.  There certainly hasn't been much of consequence in the
litany of conference calls that would confirm full bull ahead into
the holiday season.  I still expect the DJX to stumble drunkenly
higher until reaching that $100 level and then we'll see what
excitement is in store.  Maintain the entry point as a failed
foray into the $99.50-100.00 area, which we will then manage with
a broad stop at $104.  Our principle downside target will be $90,
although if things pick up steam, lower levels are certainly
possible.

Radar Screen:

AIG - Although it has stubbornly held up for months, shares of AIG
look to be losing strength, especially relative to the rest of the
market.  Now solidly below the 100-dma, AIG is fast approaching
its 200-dma just below $57.  Our last attempt to play the downside
in AIG met with failure, primarily because it was too early in the
bull cycle and the stock was lifted with the rest of the Financial
complex.  Now insurance and financial stocks appear to have run
their course and I believe it is time to start picking off some of
the weaklings.  AIG seems to qualify and I think failed rally
attempts below $62 should provide an attractive risk reward setup.
The PnF chart is still technically bullish until the stock trades
$57, but then we'll likely see a rebound off the bullish support
line.  Ideally we'll see the PnF Sell signal, add the play to our
Watch List and then enter on the next failed rebound.

AMGN - AMGN has certainly been losing strength lately, having come
sharply off of its summer highs.  Over the past few weeks, James
and I have been "fighting" over whether to play the downside in
the stock, with him being the proponent, and me the dissenter.  My
big concern has been the strength of the $58 support level, with
even stronger support at $55.  But based on Friday's action, the
stock appears headed lower.  The bearish price target from the PnF
chart is only $57, so I'm hesitant to game a downside play right
now.  But with the Biotechs weakening and AMGN now below all its
moving averages, perhaps we can take a piece of this decline
before it completely runs its course.  But we want to get in on a
failed rebound, not on further weakness.  Looking at the daily
chart, that should correspond to a failed rally in the $62 area.
But I'd really like to see the 50-dma ($64.32) cross under the
200-dma ($62.72) before getting aggressive with a downside play
here.

GENZ - Now here's a Biotechnology stock that's got some room to
fall.  GENZ traded in a rising channel for more than a year before
finally breaking down in late October.  In hindsight, we had a
hint of that breakdown as the stock was confined to the lower half
of that channel throughout August, September and most of October.
But now that the breakdown is complete, the high odds continuation
entry to the downside will be on a rally failure below the bottom
of the channel (currently $49).  Realistically, I think we'll be
lucky to see a failed bounce to the 50-dma at $47.71.  We
certainly don't want to chase GENZ lower, with the stock just
above the PnF bullish support line at $42, conveniently just below
the 200-dma ($42.50).  But the PnF chart IS on a Sell signal, with
a target of $33.  Now that gives us an attractive risk-reward
dynamic if we can get an entry anywhere near the bottom of that
broken channel.

MEL - Looking for another relative weakling in the Financial
arena?  Shares of MEL got smacked hard in late October and it
looks like the first rebound attempt is failing now.  The stock is
definitely weak and selling volume is once again on the rise, but
this one will definitely be a slow mover.  The fly in the ointment
here is that the PnF chart is still on a Buy signal, although
within an overall multi-year declining trend.  Our optimum entry
into the play will come on a failed rebound in the $31-32 area,
where we can set a stop just above the PnF bearish resistance line
($34) and then target a downside move to major support in the $21-
22 area.

Closing Thoughts:

Well, with much diligent searching, I think I managed to dredge up
a few Radar Screen candidates this week that are technically
favorable, as well as in line with my big picture view -- which is
down, in case you missed that!  GRIN  I'm not ready to put them on
the Watch List just yet, but I suspect one or two of them might
find their way there in the next couple weeks.  The market
environment is as treacherous as I've ever seen it and I suspect
it could turn and run strongly in either direction, given the
right catalyst.  That means we pick our plays (and entries) very
careful, religiously use stops and let the price action shake out
where it may.  If we have any clue what we're doing, that ought to
be enough to keep our equity curve on the rise.

Have a great week!

Mark


LEAPS Portfolio

Current Open Plays

SYMBOL OPENED     LEAPS    SYMBOL  ENTRY   CURRENT  CHANGE  STOP

Calls:
None

Puts:
WMT    10/03/03  '05 $ 55  ZWT-MK  $ 5.10  $ 5.20  + 1.96%  $58.50
                 '06 $ 55  WWT-MK  $ 7.20  $ 6.90  - 4.17%  $58.50


LEAPS Watchlist

Current Possibles

SYMBOL  SINCE    TARGET PRICE  TARGETED LEAP  SYMBOL

CALLS:
NEM    10/05/03   $37-38, $40  JAN-2005 $ 35  ZIE-AG
                            CC JAN-2005 $ 30  ZIE-AF
                               JAN-2006 $ 35  WIE-AG
                            CC JAN-2006 $ 30  WIE-AF
SBUX   10/12/03   $29-30       JAN-2005 $ 30  ZIE-AG
                            CC JAN-2005 $ 25  ZIE-AF
                               JAN-2006 $ 30  WIE-AG
                            CC JAN-2006 $ 25  WIE-AF
QCOM   11/16/03   $42-43       JAN-2005 $ 45  ZLU-AI
                            CC JAN-2005 $ 40  ZLU-AH
                               JAN-2006 $ 45  WLU-AI
                            CC JAN-2006 $ 40  WLU-AH



PUTS:
QQQ    08/10/03  $36.50-37.00  JAN-2005 $ 32  ZWQ-MF
                 $34.50        JAN-2006 $ 32  WD -MF
SMH    08/24/03  HOLD          JAN-2005 $ 35  ZTO-MG
                               JAN-2006 $ 35  YRH-MG
DJX    11/02/03  $99.50-100.00 DEC-2004 $ 96  YDK-XR
                               JUN-2005 $ 96  ZDK-RR


New Portfolio Plays

None


New Watchlist Plays

QCOM - Qualcomm Inc. $47.40  **Call Play**

Just as promised last week, QCOM is making a move to the Watch
List this weekend, but not without reservations.  From a
fundamental perspective, the stock is still overvalued but it's
been awhile since that was an important consideration.  With the
revenue and earnings stream looking solid, it's no great surprise
to see the way the stock has continued moving up over the past 6
months.  That said, my expectations are for a pullback in the
NASDAQ, and that should surely affect QCOM negatively.  My hope is
that it will create enough of a pullback to give us a solid entry,
but not enough to generate a PnF Sell signal.  QCOM is currently
on a PnF Buy signal with a $67 price target.  If we can get into
the play in the low $40s, then that makes for an attractive entry
point.  However, if the stock trades down to hit $40, then we'll
have a fresh PnF Sell signal on our hands, which will negate the
current bullish price objective.  So let's see if we can thread
the needle with an entry target of $42-43.  That should be just
above strong support, yet close enough to where we'd like to place
our stop ($39) to make the risk manageable.  Note that if that
entry point is reached, it will be a violation of both the 50-dma
and the bottom of the ascending channel, both of which are
currently near $44.50.  Traders willing to take a bit more risk to
make sure they get an entry might want to use an entry target in
the $44-45 area.  While the $67 target would be a welcome gift, I
just don't have that much confidence in the play.  I think a more
realistic target is the strong resistance in the $60-62 area,
which still gives us a very favorable risk-reward ratio.

BUY LEAP JAN-2005 $45 ZLU-AI
BUY LEAP JAN-2005 $40 ZLU-AH **Covered Call**
BUY LEAP JAN-2006 $45 WLU-AI
BUY LEAP JAN-2006 $40 WLU-AH **Covered Call**


Drops

None


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

Let's Tweak Again Like We Did Last Summer
By Mike Parnos, Investing With Attitude

An education never hurt anybody who was willing to learn after he
got it.  Education should be an ongoing function of life.  I'm
constantly learning.  Wouldn't have it any other way.  Some people
are afraid to open their minds.  They're not worried about what
might find its way into an open mind, but rather what might fall
out.

Let's Trap Some Premium
In option trading, there are only so many strategies out there.
Nobody is going to suddenly come up with a better mousetrap.  We
might use a different kind of cheese now and then, but the traps
are basically the same.  Let the mice beware.

Another Look Before We Boogie
Based on reader emails and suggestions, I've taken another look at
our CS Boogie strategy.  We may be able to make it a little easier
on ourselves when we initiate the spread.  Originally, we
generated $6.70 credit on a 15-point spread (in Thursday's
column).  Then, if things went against us, we were going to wait
until it would cost $13.40 to close the spread and make the
adjustment.

It was brought to my attention that, with only a 15-point spread,
waiting for a reverse move to cost $13.40 to close was
unreasonable.  The OEX would have to go much too far into the
money before we made our adjustment.

The Tweak
So, I propose we expand the entry spread to 25-points.  We can
accomplish a few things by using a 25-point spread as opposed to a
15-point spread.

Instead of using an in-the-money short strike to generate the
appropriate amount of credit, we can use an at-the-money or an
out-of-the-money.  How does this benefit us?  The wider spread
makes it easier to get a sufficient initial credit.  Plus, it
doesn't require any movement to put us into a profitable position.

A 25-point spread would require additional maintenance.  However,
since we're only trading a few contracts, the additional
maintenance should be a major obstacle in putting on the CS Boogie
strategy.

The New Position
Based on the above "tweak" and Friday's OEX closing price of
519.01, our projected revised position would look like this:
Sell 2 December OEX 520 calls @ $9.00
Buy 2 December OEX 545 calls @ $1.55
Total credit and potential maximum profit of $7.45 ($1,490).
Exposure $17.55 ($3,510).  Maintenance $25.00 ($5,000).

As a matter of fact, let's make this "hypothetical" educational
position and official CPTI Portfolio position for December.
_____________________________________________________________

NOVEMBER QUICKIE IDEAS

SPX Iron Condor – 1050.35
Sell 10 contracts of Nov. SPX 1030 puts and buy 10 contracts of
Nov. 1015 SPX puts for a credit of about $1.10.  Then, sell 10
contracts of Nov. SPX 1070 calls and buy 10 contracts of Nov. 1085
calls for a credit of about $.90.  Total credit of about $2.00.
Can the SPX stay in a 40-point range for a week?  Stay tuned . . .

QQQ Lottery Strangle -- $35.03
Buy 10 contracts of Nov. QQQ $34 puts for $.15 and buy 10
contracts of Nov. $36 calls for $.15.  Total risk of $.30 ($300).
If the market goes nuts in either direction next week, there's a
chance to double or triple our little risk.  Money is always
welcome.  Put it in your rhinoplasty, enhancement or liposuction
fund.  Before long, we won't even recognize you.

IBM Siamese Condor -- $90.25
Sell 10 contracts of Nov. IBM $90 puts and sell 10 contracts of
Nov. $90 calls for $1.75.  Buy corresponding protective $100 calls
and $80 puts for $.10.  Your net credit is $1.65.  Look at the
chart.  There seems to be nice support above $88 and resistance
near $92.  Maybe the market makers will cooperate and have IBM
finish darn close to $90.  Wouldn't that be nice?  Bailout points
are $91.65 and $88.35.

MMM Lottery Put -- $78.53
If you want to bet $.15 on a longshot, look at the MMM chart.  It
doesn't seem to want to go through $80.  If it breaks below $78,
it could go all the way to $75, perhaps lower.  So, buy 10
contracts of the MMM Nov. $75 puts at $.15 for a total risk of
$150.  On Monday you may even be able to get it for a dime.

LOW Siamese Condor -- $58.63
This one is a little iffy and risky.  It's trading in a narrow
range between $57 and $60.  Sell 10 contracts of the Nov. LOW $60
puts and Nov. LOW $60 calls for about $3.00.  Then buy the
corresponding protective $50 puts and $70 calls for a total of
$.10-.15.  Net credit of $2.90.  Bailout points of $57.10 and
$62.90.
_____________________________________________________________

Those Friendly Reminders
November is a standard four-week option cycle.  The premiums
quoted on the above educational trades are based on Friday's
closing bid/ask prices.  On Monday the premiums may be different
due to market movement and/or the additional two days of time
erosion.  In a few instances, when the bid/ask spread is wide, we
figure you may be able to shave off a nickel here and there.  Be
careful.  If a stock gaps up or down, it may change the entire
dynamic of the trade.  Don't skydive without a parachute.  Just
because you have a pulse and evidence of brain activity doesn't
mean you a trader.  And make sure you know the intricacies of a
strategy before you trade.
__________________________________________________________

NOVEMBER POSITIONS
Position #1 – SPX Iron Condor – Trading @ 1050.35
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 two
weeks left, anything can happen.  A pullback would be nice.

Position #2 – AFCI Iron Condor – Position closed for $700 loss.
Que sera, sera.

Position #3 – OEX Iron Condor (By Request) – 519.01
We sold 10 contracts of the OEX November 490 puts and bought 10
contracts of the OEX November 480 puts for a credit of about $.90.
Then, sold 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 - $126.30
Sell 10 contracts of the BBH November $130 puts and 10 contracts
of the BBH November $130 calls for about $8.50.  Then, buy 10
contracts of BBH November $140 calls and 10 contracts of the BBH
November $120 puts for about $2.40.  The net credit should be
about $6.10.  Our profit range is $123.90 to $136.10 and those are
also our exit parameters.  The closer BBH finishes to $130, the
more we can make.

Position #5 – QQQ Put Calendar Spread – Trading @ $35.03
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 @ $519.01
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.

QQQ ITM Strangle – Ongoing Long Term -- $35.03
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,
but, again, a pullback would be nice.
_____________________________________________________________

Cannibals really are terrible folk.  Sometimes they pass their
best friends.
_____________________________________________________________

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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The Option Investor Newsletter                   Sunday 11-16-2003
Sunday                                                      5 of 5


In Section Five:

Covered Calls: Covered-Call Fundamentals
Naked Puts: Q&A With The Editor
Spreads/Straddles/Combos: The Dreaded "Pause In The Rally" Arrives!

Updated In The Site Tonight:
Market Posture: Markets Close Lower


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

Trading Basics: Covered-Call Fundamentals
By Mark Wnetrzak

One of our readers submitted an excellent question about option
exercise and assignment with covered-calls.


Attn: mark@OptionInvestor.com
Subject: Covered Calls -- Examples at Expiration

Mark,

A quick question...

Using a current pick from this month, TLAB, I purchased the stock
at $7.97 and the Nov-7.50 call at $0.75.  I set my stock stop for
$7.22 and was stopped out two weeks ago.  I still own the Nov-7.50
call currently at (ask) $0.45.

Question: At expiration, what happen to the option if the stock
price is over the strike price (TLAB is current at $7.72) and I
do not have any stock to cover the expiring option?

I have been a reader of OIN for years and finally understand the
power covered calls and compounding money.  Thanks for the helpful
articles.

Bscoot

p.s. I attended the first workshop in Denver way back in 1999, and
have been "hooked" even since.


Hello Bscoot!

Thank you for the kind words and OIN loyalty!  Generally, when a
trader decides to "exit" a covered-call position, he or she will
buy back (to close) the sold calls and sell the stock.  With some
brokerages, this can be done as a combination order to buy back
the calls and sell the stock for a net credit.  Remember, when
a call is sold, you have granted the "buyer" the right to buy the
underlying security from you (at any time with American options)
at the strike price.  At expiration, the option will either be
exercised (called out) or expire.  So, if the stock is trading
above the striking price at expiration, the call will most likely
be exercised.  If your option is exercised, stock will be sold at
the strike price and posted as a short position in your portfolio.

If the option is exercised early and you are assigned, it's very
important to be notified by your broker in a timely manner so that
you can use the flexibility of options to eliminate or offset the
obligation without undue losses.  Again, you could simply buy-back
the calls prior to them being exercised to eliminate the obligation
and close the position.

When your broker informs you of a call option assignment, there are
a number of alternatives available.  The method you select will
depend on several factors including the current outlook for the
underlying issue and the amount of uncommitted funds you have
available to apply to future transactions.  As you might expect,
the broker looks upon the assignment of short calls in the same
manner as a pending stock purchase.  You have three days before
funds are required for the actual settlement, thus there is ample
time to study the situation and determine the best response.  The
easiest course of action is to purchase the stock that has been
assigned and replace that which is short in your portfolio.

There are other, more advanced, adjustment techniques depending on
your available capital, and experience level, and these include
offsetting trades and various combination positions.

Regards,

Mark W.
OIN


SUMMARY OF PREVIOUS CANDIDATES
*****

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

Note:  Margin not used in calculations.

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

AKAM    10.30   10.97  NOV 10.00  0.75    0.45*  10.2%
SGMO     5.10    5.00  NOV  5.00  0.55    0.45    8.6%
IDTI    17.60   18.21  NOV 17.50  0.65    0.55*   7.0%
FFIV    25.49   25.07  NOV 25.00  1.25    0.76*   6.8%
MONE     5.14    5.40  NOV  5.00  0.40    0.26*   6.0%
TMM      3.44    3.30  NOV  2.50  1.10    0.16*   5.9%
PLUG     5.91    5.58  NOV  5.00  1.15    0.24*   5.5%
TLAB     7.53    8.15  NOV  7.50  0.30    0.27*   5.4%
ITMN    20.03   19.88  NOV 20.00  0.85    0.70    5.3%
ALGN    15.60   16.88  NOV 15.00  1.60    1.01*   5.2%
CMOS    16.31   15.34  NOV 15.00  1.80    0.49*   4.9%
PUMA     5.54    6.78  NOV  5.00  0.85    0.31*   4.8%
GSS      5.49    5.90  NOV  5.00  0.70    0.21*   4.8%
CMNT     9.22   10.74  NOV  7.50  2.10    0.38*   4.6%
OXGN    10.51    9.79  NOV 10.00  1.10    0.38    4.4%
VECO    25.67   26.27  NOV 25.00  1.85    1.18*   4.3%
EMBT    12.90   15.79  NOV 12.50  0.75    0.35*   4.2%
BRCD     6.33    7.63  NOV  6.00  0.65    0.32*   4.1%
CDN     15.39   16.10  NOV 15.00  0.80    0.41*   4.1%
CRYP    10.84   11.58  NOV 10.00  1.20    0.36*   4.1%
SSTI    11.21   13.05  NOV 10.00  1.65    0.44*   4.0%
BVSN     5.31    4.91  NOV  5.00  0.65    0.25    3.9%
TLAB     7.83    8.15  NOV  7.50  0.70    0.37*   3.8%
AFFX    25.63   24.54  NOV 25.00  1.30    0.21    1.2%
RTEC    26.15   24.21  NOV 25.00  1.95    0.01    0.1%
QSFT    14.90   14.33  NOV 15.00  0.55   -0.02    0.0%
ACN     25.05   24.35  NOV 25.00  0.55   -0.15    0.0%
XOMA     7.83    6.87  NOV  7.50  0.80   -0.16    0.0%
EMIS     7.90    6.91  NOV  7.50  0.80   -0.19    0.0%
VSAT    22.98   21.02  NOV 22.50  1.15   -0.81    0.0%
SEAC    15.57   13.19  NOV 15.00  1.50   -0.88    0.0%

*   Stock price is above the sold striking price.

Comments:

If the major averages continue to weaken, a defensive posture
could be in order.  As there is only one week left for the
November option series, it is time to reassess all positions.
A bullish stock will tend to consolidate near the "top" of a
support area while a "weak" stock tends to move to, and usually
through, the bottom of a support area.  Currently on the list
(non-inclusive) for an early exit or adjustment are:  Credence
Systems (NASDAQ:CMOS), Quest Software (NASDAQ:QSFT), Broadvision
(NASDAQ:BVSN), Rudolph Technologies (NASDAQ:RTEC), Xoma (NASDAQ:
XOMA), and Seachange (NASDAQ:SEAC).  Emisphere (NASDAQ:EMIS)
and Viasat (NASDAQ:VSAT) could also be considered for an exit,
depending on your outlook.  As for Infineon (NYSE:IFX), the
gap-lower open on Monday this week offered no chance nor any
incentive to enter the play as listed, and therefore it is not
in the above summary.

Positions Previously Closed: Alkermes (NASDAQ:ALKS) and Ibis
Technology (NASDAQ:IBIS), which is this month's Murphy's Law
candidate as the rebound continues!


NEW CANDIDATES
*********

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

ARIA    7.70  DEC  7.50  UAQ LU  0.80  199    6.90  35   7.6%
AVII    4.99  DEC  5.00  QVI LA  0.40  2870   4.59  35   7.6%
GSS     5.90  DEC  5.00  GSS LA  1.25  269    4.65  35   6.5%
BRCD    7.63  DEC  7.00  BQB LJ  1.00  6164   6.63  35   4.8%
MMR    16.30  DEC 15.00  MMR LC  2.00  125   14.30  35   4.3%
CLHB    6.12  DEC  5.00  QPB LA  1.35  329    4.77  35   4.2%
TIVO    9.02  DEC  7.50  TUK LU  1.85  579    7.17  35   4.0%


Company Descriptions

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

*****
ARIA - Ariad  $7.70  *** New Drug Speculation: Part I ***

Ariad Pharmaceuticals (NASDAQ:ARIA) is engaged in the discovery
and development of breakthrough medicines that regulate cell
signaling with small molecules.  The company is developing a
comprehensive approach to the treatment of cancer.  It is
mainly focused on a series of product candidates for targeted
indications: AP23573, which is in Phase I development, to treat
solid tumors and other malignancies; AP23464, which is intended
to block the spread of cancer and to treat certain forms of
leukemia, and AP23841, which is intended to treat cancer that
has spread to bone, as well as to treat primary bone cancers,
such as osteogenic sarcomas.  Ariad has rallied to a multi-year
high on positive news and investors who believe the bullish
trend will continue can profit on that outcome with this play.

DEC-7.50 UAQ LU LB=0.80 OI=199 CB=6.90 DE=35 TY=7.6%


*****
AVII - AVI BioPharma  $4.99  *** Drug Speculation: Part II ***

AVI BioPharma (NASDAQ:AVII) is a biopharmaceutical company
developing therapeutic products based on two distinct core
technologies, its Neugene antisense and its Avicine cancer
vaccine.  The company's principal products will target
life-threatening diseases, with initial applications in
cardiovascular disease, pancreatic cancer, polycystic kidney
disease, drug metabolism and viruses.  A patent estate,
including 74 issued patents and 110 applications pending,
protects their technologies.  Each of its lead product
candidates, Resten-NG and Avicine, will address a large
worldwide market.  AVI announced the cancellation of a
proposed share sale and it appears investors were pleased
with the news.  The stock has been trading around $5 for
several months and this position allows speculators to
profit from that trend.  Due diligence is a must!

DEC-5.00 QVI LA LB=0.40 OI=2870 CB=4.59 DE=35 TY=7.6%


*****
GSS - Golden Star  $5.90  *** Gold Hedge ***

Golden Star Resources (AMEX:GSS) is an international gold mining
and exploration company producing gold in Ghana in West Africa.
Through its various subsidiaries and joint ventures the company
owns a controlling interest in four gold properties in Ghana:
the Bogoso property, the Prestea property, the Wassa property
and the Prestea underground property.  Bogoso and Prestea are
adjoining properties and both are owned by Golden's 90%-owned
subsidiary, Bogoso Gold Ltd.  These two properties function as
a single operation referred to as Bogoso/Prestea.  The company
also holds other active exploration properties in Suriname and
Ghana through its 73%-owned subsidiary, Guyanor Ressources S.A.
In addition, Golden has interests in several gold exploration
properties in French Guyana.  Golden Star rallied to a new
high this week and the heavy-volume rally suggests further
upside activity in the future.  Traders interested in a broad
market hedge can speculate on gold prices with this position
in GSS.

DEC-5.00 GSS LA LB=1.25 OI=269 CB=4.65 DE=35 TY=6.5%


*****
BRCD - Brocade  $7.63  *** Recovery Mode! ***

Brocade Communications Systems (NASDAQ:BRCD) develops, markets,
sells and supports data storage networking products and services.
Brocade offers a line of intelligent storage networking products
and SAN management software that enables companies to implement
highly available, scalable, manageable and secure environments
for data storage applications.  Their products and services are
marketed, sold and supported worldwide to end users through
distribution partners, including OEM partners, value-added
distributors, systems integrators and VARs.  Brocade is stock
that has been forging a Stage I base for about a year and
this position offers a conservative method for investors to
speculate on the company's future.

DEC-7.00 BQB LJ LB=1.00 OI=6164 CB=6.63 DE=35 TY=4.8%


*****
MMR - McMoRan  $16.30  *** Oil Hedge ***

McMoRan Exploration (NYSE:MMR) is engaged in the exploration,
development and production of oil and gas offshore in the Gulf
of Mexico and onshore in the Gulf Coast region.  The company
has rights to explore on over 400,000 gross acres, which is
one of the largest exploration acreages held by any independent
company in the Gulf of Mexico.  In November, shares of McMoRan
rallied sharply after it said it found hydrocarbons at an
exploratory well in the Gulf of Mexico.  We simply favor the
bullish break-out on increasing volume and the current upside
momentum in the oil and gas industry.  This position offers
excellent reward potential at the risk of owning MMR stock.

DEC-15.00 MMR LC LB=2.00 OI=125 CB=14.30 DE=35 TY=4.3%


*****
CLHB - Clean Harbors  $6.12  *** Bottom-Fishing! ***

Clean Harbors (NASDAQ:CLHB) through its subsidiaries, is managed
in two segments, Technical Services and Site Services, which
provide a wide range of environmental services and solutions.
Following the 2002 acquisition of Safety Kleen Services, they
became a provider of environmental services and an operator of
hazardous waste treatment facilities in North America.  The
company has a network of 52 active hazardous waste management
properties.  Services offered at these properties include
incineration at five facilities, nine commercial landfills,
12 wastewater treatment operations, 23 transportation, storage
and disposal facilities and six locations specializing in
polychlorinated biphenyls management.  Investors cheered the
company's earnings report on Friday as the stock surged almost
$2.  Traders who believe that Clean Harbors has seen its low
for the year can target-shoot an entry point in this rebounding
issue.

DEC-5.00 QPB LA LB=1.35 OI=329 CB=4.77 DE=35 TY=4.2%


*****
TIVO - TiVo  $9.02  *** Trading Range? ***

TiVo (NASDAQ:TIVO) is a provider of television services for
digital video recorders (DVRs), a growing consumer electronics
category.  Its subscription-based TiVo Service provides consumers
with a way to record, watch and control television.  It also
offers advertisers, content creators and television networks a
platform for promotions, content delivery and audience research.
The company's revenues come from three different sources.  It
receives revenues from providing the TiVo Service to consumers
and from providing advertising and research services to media
and consumer product marketers.  TiVi receives licensing and
engineering professional services revenues from companies that
create products providing DVR functionality as well as from the
sale of DVR hardware.  TiVo appears to have broken the down-trend
from the July high and is moving into a lateral trading range.
This position offers investors a reasonable entry point from
which to speculate on the company's future.  Earnings are due
on November 20.

DEC-7.50 TUK LU LB=1.85 OI=579 CB=7.17 DE=35 TY=4.0%


*****


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

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

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

IBIS   13.70  DEC 12.50  UIB LV  1.95  205   11.75  35   5.5%
AKAM   10.97  DEC 10.00  UMU LB  1.50  1420   9.47  35   4.9%
PRTL   10.60  DEC 10.00  PWU LB  1.10  215    9.50  35   4.6%
LTXX   15.97  DEC 15.00  UXT LC  1.70  72    14.27  35   4.4%
NPSP   28.12  DEC 25.00  QKK LE  4.30  174   23.82  35   4.3%
VIRL   10.18  DEC 10.00  UVB LB  0.65  130    9.53  35   4.3%
PXLW   13.24  DEC 12.50  PUO LV  1.30  62    11.94  35   4.1%
APHT    6.12  DEC  5.00  HQY LA  1.30  495    4.82  35   3.2%



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

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

This week's question concerns adjustment strategies with naked
put positions.


Attn: Naked-Puts Editor
Subject: CYD Position

After seeing the naked put play on CYD (China Yuchai Intl.) keep
showing up in that [naked puts] section, I did the position.

Any salvage ideas?

Thinking of rolling down to DEC-$20 [puts] and increasing [the
number of] contracts or just leaving.  Can't find any news...

Thanks for your writing of this section of OI.  I am a 4 yr.
subscriber and I love to sell time!

BM


Hello BM,

You are correct in that China Yuchai International (NYSE:CYD) has
been listed as a candidate in the Naked-Puts section a number of
times over the last few weeks and up to this point, it had been
a very successful selection for bullish traders.  However, the
recent bout of profit-taking affected many of the "high-flyers"
and CYD is no exception.  As far as "salvage ideas," which to me
means closing or adjusting a losing position prior to expiration:
That kind of thinking is definitely the key to success with high
probability/low profit strategies such as writing out-of-the-money
"naked" puts.  There are no big winners to offset the big losers,
so there simply can't be any big losers.  Obviously, a "gapping"
issue may wipe-out a portion of previous gains and there is nothing
you can do about it but at the same time, you must try to manage
the remaining positions effectively or there will be no portfolio
profits to offset the (rare) catastrophic losers.

Both of the methods you mentioned are viable methods for limiting
losses with short (uncovered) option positions, provided they are
implemented correctly, in a timely manner.  In fact, a trader has
many different alternatives when the underlying issue moves beyond
the sold strike however in most cases, the appropriate action must
be taken prior to that event, when the stock undergoes a technical
change in character, such as "breaking-out" of a trading range or
closing below a moving average.  Most methods for taking profits
and preventing losses, as well as making position adjustments such
as rolling down and out to new options, fit into two categories: a
pre-arranged target gain or loss limit; or a technical exit based
on the chart indications of the issue.  The first technique, using
a mechanical or mental closing stop to terminate a play or initiate
a roll-out trade, is simple as long as you adhere to the initially
established limits.  The alternate method, a technicals-based exit,
is more difficult.  However, there are many different indicators
that can help establish an acceptable exit point; moving averages,
trend-lines, previous highs/lows, oscillators, etc., and with this
type of loss-limiting system, you simply exit the position after a
violation of a pre-determined level.  In addition, the closing or
adjustment transaction should be based on the existing market and
sector conditions as well as the current outlook for the underlying
issue and the ratio of potential gain to additional risk.

Writing "naked" options is a very popular strategy and there are
a few ways to limit potential losses or even capitalize on a
reversal (or transition) to a bearish trend with uncovered puts.
The three most common methods to exit or cover a losing position
include: a "buy-to-close" stop order, based on either the option
or stock price; a "roll-out" to a longer-term option, possibly to
a lower strike price as well; and "shorting" the underlying issue
to cover the sold option.  The first method is relatively simple,
however it requires knowledge of option pricing and an effective
floor-broker or trading platform to limit slippage.  The second
technique is popular among long-term investors who sell options
only on stocks they wouldn't mind owning (a cardinal rule!), but
the strategy requires the commitment of collateral for extended
periods and the downside risk may increase if the primary market
trend changes for the worse (consider the 2000-2002 timeframe).
The last method: covering (by shorting the stock) the sold option
as the underlying issues moves below the short strike, is perhaps
the most popular technique among experienced traders.  Indeed,
it may be the best method for bailing out on an issue in which
the trend or technical character has changed significantly due
to unexpected news or events.  To initiate this strategy, place
place an order to short the underlying stock, in an equivalent
number of shares, any time the issue trades (preferably closes)
below technical support or a well-established trend-line, support
area, or moving average on substantial volume.  Of course, there
are more precise signals available but this technique is based on
the assumption that once a reversal has occurred, the stock will
continue to move in that direction until a new catalyst emerges.
"Shorting to cover" can be a difficult technique to perform when
emotion enters the formula but the strategy works well after you
become experienced at it.  The key to success is initiating the
trade at known support levels or after obvious reversal signals,
otherwise you are simply speculating about the stock's next move.

The outstanding principle that many traders fail to adhere to is
the need to outline a basic exit strategy, before initiating any
position, to eliminate emotional decisions.  This plan should be
simple enough to implement while monitoring a portfolio of plays
in a volatile market.  In addition, these exit-adjustment rules
should apply across a wide range of situations and be designed to
compensate for one's weaknesses and inadequacies.  To be effective
in the long run, they must be designed to help maintain discipline
on a general basis and at the same time, offer a timely memory aid
for difficult situations.  Utilizing this type of system addresses
a number of problems, but the biggest obstacle it removes is the
need for "judgment under fire."  In short, a sound exit strategy
will help you avoid exposing your portfolio to excessive losses
and that's important because the science of successful trading is
far less dependent on making profits but rather on avoiding undue
outflows.

Good Luck!


SUMMARY OF PREVIOUS CANDIDATES
*****

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

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

CYD     29.90   28.80  NOV 25.00  0.65    0.65*   3.9%  12.2%
PMCS    22.12   21.30  NOV 20.00  0.40    0.40*   4.4%  12.2%
ONXX    24.76   24.36  NOV 20.00  0.50    0.50*   2.8%   9.6%
ESPR    23.02   22.87  NOV 20.00  0.60    0.60*   3.4%   9.6%
ONXX    25.93   24.36  NOV 20.00  0.60    0.60*   2.7%   9.0%
XMSR    19.10   22.89  NOV 17.50  0.85    0.85*   3.7%   8.9%
CYD     27.57   28.80  NOV 22.50  0.50    0.50*   2.5%   8.4%
ESPR    23.87   22.87  NOV 20.00  0.35    0.35*   2.6%   8.4%
FCEL    14.35   16.13  NOV 12.50  0.50    0.50*   3.0%   8.2%
XMSR    20.25   22.89  NOV 17.50  0.30    0.30*   2.5%   7.7%
AFCI    26.70   23.85  NOV 22.50  0.60    0.60*   2.4%   7.4%
PHTN    40.90   39.63  NOV 37.50  0.45    0.45*   2.6%   7.3%
ECLG    25.25   24.14  NOV 22.50  0.25    0.25*   2.4%   7.1%
PXLW    12.10   13.24  NOV 10.00  0.30    0.30*   2.2%   7.1%
INSP    26.05   25.46  NOV 22.50  0.35    0.35*   2.3%   7.0%
CELL    28.65   24.57  NOV 23.38  0.30    0.30*   1.9%   6.7%
FFIV    25.01   25.07  NOV 22.50  0.35    0.35*   2.3%   6.5%
MTZ     12.81   12.00  NOV 10.00  0.25    0.25*   1.9%   6.4%
NWAC    12.18   12.95  NOV 10.00  0.25    0.25*   1.9%   6.2%
SCUR    14.09   15.27  NOV 12.50  0.30    0.30*   2.1%   6.0%
ALGN    15.21   16.88  NOV 12.50  0.25    0.25*   1.8%   6.0%
FCS     20.04   23.00  NOV 17.50  0.40    0.40*   2.0%   5.9%
SCRI    25.49   26.81  NOV 22.50  0.40    0.40*   2.0%   5.7%
MCD     26.01   25.68  NOV 25.00  0.25    0.25*   2.2%   5.6%
AVCT    36.00   38.00  NOV 32.50  0.75    0.75*   2.1%   5.6%
FCS     22.60   23.00  NOV 20.00  0.25    0.25*   1.8%   5.4%
CNX     21.88   21.63  NOV 20.00  0.55    0.55*   2.0%   5.4%
ERES    46.78   41.20  NOV 40.00  0.30    0.30*   1.6%   5.3%
IDXC    24.30   23.90  NOV 20.00  0.35    0.35*   1.5%   5.3%
SCHN    36.92   43.60  NOV 30.00  0.40    0.40*   1.5%   5.3%
CY      20.44   21.47  NOV 17.50  0.40    0.40*   1.7%   5.1%
RTEC    27.18   24.21  NOV 25.00  0.45   -0.34    0.0%   0.0%
CYD     36.45   28.80  NOV 30.00  0.25   -0.95    0.0%   0.0%

*  Stock price is above the sold striking price.

Comments:

Stocks ended on a negative note Friday as the early bullish bias
gave way to broad-based selling pressure amid valuation concerns.
The downbeat activity, even among the best performing sectors as
of late, suggests a continuation of the recent "range-bound"
trading pattern in the coming weeks.  With that outlook in mind,
traders are advised to initiate new positions only in the most
technically favorable issues and to pay considerable attention to
current portfolio plays.  China Yuchai (NYSE:CYD); at the $25 and
$30 strikes, eResearch Technologies (NASDAQ:ERES), Brightpoint
(NASDAQ:CELL), Rudolph Technologies (NASDAQ:RTEC), and Advanced
Fibre (NASDAQ:AFCI) are candidates for early exit.  In addition,
the profitable position in Palm (NASDAQ:PALM) has been removed
from the portfolio due to the complex share value adjustments in
the wake of the company's merger with Handspring (NASDAQ:HAND),
which produced PalmOne (NASDAQ:PLMO), and also the spin-off of
PalmSource (NASDAQ:PSRC).

Previously Closed Positions: CV Therapeutics (NASDAQ:CVTX),
which is currently profitable.


WARNING: THE RISK IN SELLING NAKED OPTIONS IS SUBSTANTIAL!
*****

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


MARGIN REQUIREMENTS

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

For more information on margin requirements, please refer to:

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


MONTHLY YIELD: MAXIMUM & SIMPLE

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


NEW CANDIDATES
*********

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

RDWR   23.46  DEC 20.00  AUD XD 0.65 0    19.35  35   2.9%   8.6%
APPX   32.29  DEC 25.00  AQO XE 0.55 1023 24.45  35   2.0%   6.8%
SWIR   18.75  DEC 15.00  IYQ XC 0.30 140  14.70  35   1.8%   6.4%
FFIV   25.07  DEC 22.50  FLK XX 0.55 415  21.95  35   2.2%   6.0%
ECLG   24.14  DEC 20.00  EGU XD 0.40 30   19.60  35   1.8%   5.9%
PDII   25.97  DEC 22.50  PKU XX 0.45 12   22.05  35   1.8%   5.3%


Company Descriptions

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

*****
RDWR - Radware  $23.46  *** Favorable Earnings! ***

Radware (NASDAQ:RDWR) is dedicated to providing Intelligent
Application Switching, guaranteeing the best operation and
servicing of IP applications and enterprise traffic across the
Internet.  Radware aligns application needs with the network
infrastructure to seamlessly allocate resources, optimize
application operations and extend security, ensuring the
integrity of critical business processes.  Radware's unique
solutions address the needs of corporate enterprises, service
providers, and e-commerce business through one or more of their
award winning products including: Web Server Director (WSD),
Cache Server Director (CSD), Content Inspection Director (CID),
FireProof, LinkProof, Peer Director, CertainT 100.  The firm's
comprehensive suite of products service end-to-end application
operations, providing robust and scalable network traffic
assurance.  This week, Radware reported record revenues of $14
million for the third quarter of 2003, an increase of over 25%
from the third quarter of 2002, and a sequential increase of 6%
over the previous period.  Net profit for the third quarter of
2003 was $1.9 million or $0.10 per diluted share, compared to
a year-ago net loss of $0.4 million.  Investors who like the
fundamental outlook for Radware should consider this position.

DEC-20.00 AUD XD LB=0.65 OI=0 CB=19.35 DE=35 TY=2.9% MY=8.6%


*****
APPX - American Pharma Partners  $32.29  *** Bottom Fishing! ***

American Pharmaceutical Partners (NASDAQ:APPX) is a specialty
drug company that develops, manufactures and markets injectable
pharmaceutical products, focusing on the oncology, anti-infective
and critical care markets.  The company is one of the largest
producers of injectables, with more than 130 generic products in
more than 350 dosages and formulations.  American Pharmaceutical
has been in the news recently with a number of lawsuits concerning
the drug Abraxane.  More specifically, the complaints alleges that
APPX officials made materially false and misleading statements
about the product and its potential.  Regardless of the ongoing
litigation, APPX appears to be poised for further upside movement
and speculative traders can profit from that outcome with this
position.

DEC-25.00 AQO XE LB=0.55 OI=1023 CB=24.45 DE=35 TY=2.0% MY=6.8%


*****
SWIR - Sierra Wireless  $18.75  *** Bullish Industry! ***

Sierra Wireless (NASDAQ:SWIR) is a leader in delivering highly
differentiated wireless solutions that enable our customers to
improve their productivity and lifestyle.  Sierra Wireless
develops and markets AirCard, the industry-leading wireless PC
card line for portable computers; embedded modules for OEM
wireless applications; the MP line of rugged vehicle-mounted
connectivity solutions and Voq, a line of professional phones
with secure, easy-to-use, products for mobile professionals.
Shares of SWIR traded near 2-year highs this week, despite the
completion of a previously announced offering of $4.6 million
of its common stock at a price of $16.25 per share.  Traders who
share the optimism of the offering participants can establish a
conservative entry price in the issue with this position.

DEC-15.00 IYQ XC LB=0.30 OI=140 CB=14.70 DE=35 TY=1.8% MY=6.4%


*****
FFIV - F5 Networks  $25.07  *** Uptrend Intact! ***

F5 Networks Inc. (NASDAQ:FFIV) provides integrated products and
services to manage, control and optimize Internet traffic.  FFIV's
core products, the BIG-IP Controller, the 3-DNS Controller and the
BIG-IP Link Controller, help manage traffic to servers and network
devices in a way that maximizes availability and throughput.  The
company's iControl Architecture integrates its products and also
allows its customers to integrate them with other third-party
products.  FFIV's solutions address many elements required for
successful Internet and Intranet business applications, including
high availability, high performance, intelligent load balancing,
fault tolerance, security and streamlined manageability.  FFIV
spiked to a two-year high in late October after the firm said it
returned to profitability in the fourth quarter due to an increase
in sales across all product lines.  Net income was $1.4 million,
or 5 cents a share, which exceeded the company's previous guidance
and the consensus estimate of 3 cents a share.  The technical
indications suggest a neutral to bullish bias in the near-term and
this position offers traders a way to profit from upside movement
in the issue with relatively low risk.

DEC-22.50 FLK XX LB=0.55 OI=415 CB=21.95 DE=35 TY=2.2% MY=6.0%


*****
ECLG - eCollege.com  $24.14  *** Entry Point? ***

eCollege.com (NASDAQ:ECLG) is a provider of technology, products
and services that enable colleges, universities, primary and high
schools, grade schools and corporations to offer online classes
for distance, on-campus and hybrid learning.  The firm's unique
technology enables it's customers to reach students who wish to
take courses at convenient times and locations via the Internet.
Its customers can also use its technology to supplement on-campus
courses with an online environment.  In addition, the company
offers services to assist in the development of online programs,
including online course and campus design, development, management
and hosting, as well as ongoing administration, faculty and student
support.  eCollege is a leader in the development of e-learning
solutions for post-secondary education programs and the company's
stock price reflects that fact.  Investors who believe the trend
towards this type of curriculum will continue can profit from that
outcome with this position.

DEC-20.00 EGU XD LB=0.40 OI=30 CB=19.60 DE=35 TY=1.8% MY=5.9%


*****
PDII - PDI Incorporated  $25.97  *** Consolidation Complete? ***

PDI (NASDAQ:PDII) is an innovative healthcare sales and marketing
provider to biopharmaceutical and medical devices companies and
and the diagnostics industry.  Its three business units offer
service and product-based capabilities for companies seeking to
maximize profitable brand sales growth.  The three units include
PDI Pharmaceutical Products, PDI Sales and Marketing Services,
and PDI Medical Devices and Diagnostics.  Shares of PDII rallied
in early July when the company announced that full-year earnings
would likely exceed analysts' consensus estimates, due to new
business contracts awarded to its sales unit and expectations of
a solid performance from its hypertension drug Lotensin.  The
upside momentum has carried the stock to a higher trading range
over the past three months and investors who believe the bullish
trend will continue should consider this position.

DEC-22.50 PKU XX LB=0.45 OI=12 CB=22.05 DE=35 TY=1.8% MY=5.3%


*****


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

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

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

OIIM   23.95  DEC 22.50  XQQ XX 1.00 0    21.50  35   4.0%   9.5%
XMSR   22.89  DEC 20.00  QSY XD 0.70 1884 19.30  35   3.2%   8.7%
NTPA   12.67  DEC 10.00  NQD XB 0.25 26    9.75  35   2.2%   7.8%
TLAB    8.15  DEC  7.50  TEQ XU 0.25 2733  7.25  35   3.0%   7.6%
SII    39.07  DEC 37.50  SII XU 0.70 60    6.80  35   8.9%   7.1%
TRR    20.44  DEC 20.00  TRR XD 0.60 0    19.40  35   2.7%   6.3%
GNSS   18.10  DEC 15.00  QFE XC 0.30 873  14.70  35   1.8%   5.9%
MRVL   43.99  DEC 37.50  UVM XU 0.70 824  36.80  35   1.7%   5.2%
MIK    48.00  DEC 42.50  MIK XV 0.80 2693 41.70  35   1.7%   4.8%
NPSP   18.12  DEC 22.50  QKK XX 0.60 775  21.90  35   2.4%   4.3%


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


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

The Dreaded "Pause In The Rally" Arrives!
By Ray Cummins

U.S. equities retreated Friday amid mediocre earnings reports and
concerns that the economic recovery may be slower than expected.

The Dow Jones industrial average slid 69 points to 9,768, despite
gains in blue-chip drug companies.  The NASDAQ Composite fell 37
points as computer chip-makers and biotechnology stocks succumbed
to profit-taking.  The broader Standard & Poor's 500 Index slipped
8 points to 1,050 as brokerage, airline, automobile, homebuilding,
hotel, and aerospace issues moved lower.  Trading was moderate,
with about 1.3 billion shares changing hands on the New York Stock
Exchange and 1.8 billion shares crossed on the NASDAQ.  Declining
issues outpaced advancing stocks more than 3 to 2 on both the Big
Board and the technology exchange.  U.S. bond prices recovered as
equity values slumped.  The 10-yr note finished up 19/32 while its
yield fell to 4.22%.

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

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


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

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

AET     62.76   59.86  NOV   50  55   0.55  54.45  $0.55   Open
MXIM    44.82   52.12  NOV   35  40   0.50  39.50  $0.50   Open
PHS     54.50   58.10  NOV   45  47   0.30  47.20  $0.30   Open
PIXR    71.56   70.40  NOV   60  65   0.70  64.30  $0.70   Open
COH     31.43   37.70  NOV   27  30   0.35  29.65  $0.35   Open
CYMI    44.99   46.38  NOV   35  40   0.65  39.35  $0.65   Open
SAP     36.00   38.28  NOV   30  32   0.30  32.20  $0.30   Open
ICOS    45.42   45.40  NOV   35  40   0.50  39.50  $0.50   Open
SINA    42.00   34.43  NOV   30  35   0.45  34.55 ($0.12) Closed
SMH     38.55   42.31  NOV   32  35   0.20  34.80  $0.20   Open
BBY     58.31   57.38  NOV   50  55   0.40  54.60  $0.40   Open
CTX     97.50   99.02  NOV   85  90   0.40  89.60  $0.40   Open
VSEA    48.40   48.44  NOV   40  45   0.45  44.55  $0.45   Open
LNCR    41.05   43.85  DEC   35  37   0.30  37.20  $0.30   Open
MGAM    41.45   42.80  DEC   30  35   0.45  34.55  $0.45   Open
PLMD    31.35   31.42  DEC   27  30   0.30  29.70  $0.30   Open

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

Sina Corporation (NASDAQ:SINA), which has been on the "watch"
list for a few weeks, became an exit candidate during Friday's
session.


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

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

CA      23.50   22.86   NOV   30  27   0.35  27.85  $0.35   Open
MTG     53.79   51.40   NOV   65  60   0.55  60.55  $0.55   Open
BJS     32.50   33.75   NOV   37  35   0.30  35.30  $0.30   Open
CEPH    45.77   46.68   NOV   55  50   0.55  50.55  $0.55   Open
HDI     47.26   46.61   NOV   55  50   0.50  50.50  $0.50   Open
SEPR    26.98   24.61   NOV   35  32   0.25  32.75  $0.25   Open
AMZN    54.51   52.45   NOV   65  60   0.50  60.50  $0.50   Open
OEX    511.25  519.01   NOV  540 535   0.45 535.45  $0.45   Open
EBAY    55.93   54.38   NOV   65  60   0.50  60.50  $0.50   Open
FNM     71.69   69.55   NOV   80  75   0.50  75.50  $0.50   Open
KSS     56.07   51.80   NOV   65  60   0.40  60.40  $0.40   Open
NBIX    46.88   49.32   NOV   55  50   0.50  50.50  $0.50  Closed
AIG     58.28   58.31   DEC   65  60   0.90  60.90  $0.90   Open
BJS     32.18   33.75   DEC   37  35   0.30  35.30  $0.30   Open
SNPS    30.85   30.28   DEC   37  35   0.25  35.25  $0.25   Open

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

As mentioned last week, Neurocrine Biosciences (NASDAQ:NBIX) was
a candidate for early exit and conservative traders should have
closed the bearish position during Thursday's session.  Mercury
Interactive (NASDAQ:MERQ), which has previously been closed to
limit losses, is now profitable.


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

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

LLTC    40.77  42.40   NOV   35  37   2.20   37.20  0.30   Open
QCOM    47.49  47.40   NOV   42  45   2.25   44.75  0.25   Open
VLO     44.00  44.41   DEC   37  40   2.20   39.70  0.30   Open

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

CV Therapeutics (NASDAQ:CVTX) was crushed by investors recently
after the U.S. Food and Drug Administration said it would grant
conditional approval for the company's angina drug Ranexa, but
also indicated that it wants "additional clinical information"
before it issues final marketing clearance.  The announcement was
totally unexpected and with little hope of a near-term rebound,
the position has previously been closed to limit losses.


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

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

NPSP    25.45  28.12  NOV   35  30   4.40   30.40  0.60   Open
IACI    37.34  32.62  NOV   42  40   2.25   40.25  0.25   Open
LTR     38.99  43.40  NOV   45  40   4.40   40.60 (1.90) Closed

As mentioned last week, the recent upside activity in Cablevision
(NYSE:CVC) suggested an early exit in the position and it has been
closed to limit losses.  The speculative play in Loews (NYSE:LTR)
quickly became a poor candidate with Monday's sharp rebound after
an optimistic Barron's article and traders who opened the spread
should have exited no later than Tuesday afternoon.  The portfolio
summary reflects the loss on that date.


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

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

XING     9.13   9.04   DEC     12      7     0.10    0.30   Open
JNPR    16.63  17.75   NOV     19     14    (0.20)   1.00  Closed
LRCX    24.38  29.75   DEC     30     20     0.15    2.20   Open?
PHTN    32.40  39.63   JAN     40     25     0.00    3.40   Open?
IDCC    19.00  19.86   JAN     25     15     0.20    0.20   Open

Lam Research (NASDAQ:LRCX) and Photon Dynamic (NASDAQ:PHTN) have
provided outstanding profits for speculative traders.


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

No Open Positions


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

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

PRU     36.41  36.90   DEC-37C   NOV-37C  (0.20)   0.40    Open?
SCRI    20.52  26.81   FEB-22C   DEC-25C   1.40    2.10    Open
GPRO    26.77  29.00   FEB-30C   NOV-30C   1.95    2.25    Open

Traders in the Prudential (NYSE:PRU) position can close the play
for a favorable gain.  Sicor (NASDAQ:SCRI) has previously been
adjusted to a diagonal spread and that position is reflected in
the summary.  The Microsoft (NASDAQ:MSFT) spread, which offered
a number of profitable opportunities, has previously been closed.


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

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

ZMH     55.52  63.80   DEC    55    55     5.20   10.25   Closed
PCLN    30.45  17.90   NOV    30    30     4.90   11.90   Closed
ADVP    49.05  55.07   NOV    50    50     3.40    6.20    Open?
TM      59.45  62.20   NOV    60    60     3.40    4.25   Closed
DIGE    35.10  37.44   NOV    35    35     4.50    6.00   Closed
PLCE    30.10  29.81   NOV    30    30     3.00    3.20   Closed
RMBS    24.79  25.00   NOV    25    25     2.50    2.35    Open?
KDE     25.00  29.43   NOV    25    25     1.70    4.30   Closed
URBN    35.07  36.04   NOV    35    35     2.70    2.80   Closed

There were two more big winners in the straddle portfolio this
week: AdvancePCS (NASDAQ:ADVP) and 4Kids Entertainment (NYSE:KDE).
Priceline.com (NASDAQ:PCLN) exceeded all expectations, providing
over a 100% gain in the wake of the company's mediocre earnings.
Zimmer Holdings (NYSE:ZMH) traded lower this week, so the play
was closed to lock-in profits.  The position in Toyota Motors
(NYSE:TM) achieved a small short-term gain and the straddle in
Engineered Support Systems (NASDAQ:EASI), which has previously
been closed, offered traders a number of lucrative opportunities.
Triad Hospitals (NYSE:TRI), which has never achieved profits on a
simultaneous order basis, has previously been closed to preserve
capital.


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

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 investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
are suitable for your skill level, risk-reward tolerance, and
portfolio outlook.  In addition, we recommend that you avoid any
strategy or technique in which you are not completely comfortable
with the potential loss, the necessary adjustments and the common
entry-exit strategies.

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

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

*****
ANPI - Angiotech Pharmaceuticals  $48.77  *** Technicals Only! ***

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.  Angiotech's goal
is to develop other products to enhance the performance of medical
devices and biomaterials through the use of pharmatherapeutics.  In
September 2002, the company and Cohesion Technologies agreed to a
merger in which Cohesion will merge with a wholly owned subsidiary
of Angiotech, with Cohesion continuing as a wholly owned subsidiary
of the company.

ANPI - Angiotech Pharma  $48.77

PLAY (very conservative - bullish/credit spread):

BUY  PUT  DEC-35.00  AUJ-XG  OI=1886  ASK=$0.35
SELL PUT  DEC-40.00  AUJ-XH  OI=1997  BID=$0.70
INITIAL NET-CREDIT TARGET=$0.40-$0.50
POTENTIAL PROFIT(max)=8% B/E=$39.60


*****
PFE - Pfizer  $34.08  *** Rally Mode! ***

Pfizer (NYSE:PFE) is a research-based, global pharmaceutical firm
that discovers, develops, manufactures and markets prescription
medicines for humans and animals, as well as consumer products.
The company operates in two business segments: Pharmaceuticals
and Consumer Products.  The Pharmaceuticals segment includes
prescription pharmaceuticals for treating cardiovascular diseases,
infectious diseases, central nervous system disorders, diabetes,
urogenital conditions, allergies, arthritis and other disorders;
products for livestock and companion animals, and the manufacture
of empty soft-gelatin capsules.  The Consumer Products segment
includes self-medications for oral care, upper respiratory health,
eye care, skin care, gastrointestinal health and other products.

PFE - Pfizer  $34.08

PLAY (conservative - bullish/credit spread):

BUY  PUT  DEC-30.00  PFE-XF  OI=26705  ASK=$0.10
SELL PUT  DEC-32.50  PFE-XB  OI=18337  BID=$0.35
INITIAL NET-CREDIT TARGET=$0.25-$0.35
POTENTIAL PROFIT(max)=11% B/E=$32.25


*****
PHS - PacifiCare Health Systems  $58.10  *** Strong Sector! ***

PacifiCare Health Systems (NYSE:PHS) is one of the nation's
largest consumer health organizations with over 3 million health
plan members and approximately 9 million specialty plan members
nationwide.  PacifiCare offers individuals, employers and Medicare
beneficiaries a variety of consumer-driven health care and life
insurance products.  Currently, more than 99% of PacifiCare's
commercial health plan members are enrolled in plans that have
received Excellent Accreditation by the National Committee for
Quality Assurance.  PacifiCare's specialty operations include
behavioral health, dental and vision, and complete pharmacy and
medical management through its subsidiary, Prescription Solutions.

PHS - PacifiCare Health Systems  $58.10

PLAY (conservative - bullish/credit spread):

BUY  PUT  DEC-47.50  PHS-XS  OI=122   ASK=$0.60
SELL PUT  DEC-50.00  PHS-XJ  OI=1510  BID=$0.80
INITIAL NET-CREDIT TARGET=$0.25-$0.30
POTENTIAL PROFIT(max)=11% B/E=$49.75


*****
SII - Smith International  $39.07  *** New Trading Range? ***

Smith International (NYSE:SII) is a worldwide supplier of premium
products and services to the oil & gas exploration and production
industry, the petrochemical industry and other industrial markets.
The firm provides a comprehensive line of technologically advanced
products and engineering services, including various drilling and
completion fluid systems, solids control, waste management services,
production chemicals, three-cone and diamond drill bits, turbines,
fishing services, drilling tools, underreamers, casing exit and
multilateral systems, packers and liner hangers.  The firm also
offers supply chain management solutions through an large North
American branch network providing pipe, valves, fittings, mill,
safety and other maintenance products.

SII - Smith International  $39.07

PLAY (moderately aggressive - bullish/credit spread):

BUY  PUT  DEC-35.00  SII-XG  OI=210  ASK=$0.25
SELL PUT  DEC-37.50  SII-XU  OI=60   BID=$0.70
INITIAL NET-CREDIT TARGET=$0.45-$0.50
POTENTIAL PROFIT(max)=21% B/E=$37.05


*****
CCMP - Cabot Microelectronics  $54.16  *** Downtrend Resumes? ***

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

CCMP - Cabot Microelectronics  $54.16

PLAY (conservative - bearish/credit spread):

BUY  CALL  DEC-65.00  UKR-LM  OI=212  ASK=$0.35
SELL CALL  DEC-60.00  UKR-LL  OI=262  BID=$0.85
INITIAL NET-CREDIT TARGET=$0.55-$0.65
POTENTIAL PROFIT(max)=12% B/E=$60.55


*****
KKD - Krispy Kreme  $41.85  *** Stuck In A Trading Range? ***

Krispy Kreme Doughnuts (NYSE:KKD) is a branded specialty retailer
of doughnuts.  The company has established Krispy Kreme as a
consumer brand.  Krispy Kreme's principal business is owning and
franchising doughnut stores where it makes and markets over 20
varieties of doughnuts, including its Hot Original Glazed.  Each
of its stores is a doughnut factory with the capacity to produce
from 4,000 dozen to over 10,000 dozen doughnuts daily.  Their
business is driven by two complementary business units: its
Company and franchise stores (collectively, Store Operations)
and Krispy Kreme Manufacturing and Distribution (KKM&D).  Its
principal source of revenue is the sale of doughnuts produced
and distributed by Store Operations.

KKD - Krispy Kreme  $41.85

PLAY (less conservative - bearish/credit spread):

BUY  CALL  DEC-50.00  KKD-LJ  OI=796   ASK=$0.25
SELL CALL  DEC-45.00  KKD-LI  OI=1835  BID=$0.90
INITIAL NET-CREDIT TARGET=$0.65-$0.75
POTENTIAL PROFIT(max)=15% B/E=$45.65


*****
SNPS - Synopsys  $30.28  *** Same Play -- Different Week! ***

Synopsys (NASDAQ:SNPS) is a global supplier of electronic design
automation software to the electronics industry.  The company
offers customers a comprehensive suite of products used in the
logic synthesis and functional verification phases of chip design,
including a broad array of reusable design building blocks.  It
also offers a set of physical synthesis and design products and
a number of physical verification products.  The company offers
its customers products required to design a chip from concept to
the point at which it goes to the manufacturer for fabrication,
as well as an array of design building blocks.  It also offers a
range of professional services, including turnkey design services,
design assistance and methodology consulting.  The company is
organized into four product development groups: Integrated Circuit
Implementation, Verification Technology, Nanometer Analysis and
Test and Intellectual Property and Design Services.  Earnings are
due on 12/03/03.

SNPS - Synopsys  $30.28

PLAY (conservative - bearish/credit spread):

BUY  CALL  DEC-37.50  YPQ-LU  OI=874   ASK=$0.25
SELL CALL  DEC-35.00  YPQ-LG  OI=5998  BID=$0.50
INITIAL NET-CREDIT TARGET=$0.30-$0.40
POTENTIAL PROFIT(max)=14% B/E=$35.30


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

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

*****
CTMI - CTI Molecular Imaging  $16.08  *** Earnings Speculation! ***

CTI Molecular Imaging (NASDAQ:CTMI) is a provider of positron
emission tomography imaging equipment and related products used
in the detection and treatment of cancer, cardiac disease and
neurological disorders.  The company provides a complete and
integrated product line for positron emission tomography (PET),
including scanners, cyclotrons, radiopharmaceuticals, detector
materials and support services.  The firm's products and services
can be broadly classified into four principal categories: PET and
PET/CT scanners; detector material products; radiopharmaceuticals,
and other PET products and services.  The firm manufactures and
distributes a broad line of sophisticated PET and PET/CT scanners
through CTI PET Systems, which the firm markets as ECAT scanners.
The company manufactures the detection materials utilized in PET
scanners including its proprietary LSO technology.  Earnings are
due on 11/18/03.

CTMI - CTI Molecular Imaging  $16.08

PLAY (speculative - bearish/debit spread):

BUY  PUT  NOV-20.00  QPQ-XD  OI=135  ASK=$4.10
SELL PUT  NOV-17.50  QPQ-XW  OI=97   BID=$1.85
INITIAL NET-DEBIT TARGET=$2.15-$2.20
POTENTIAL PROFIT(max)=14% B/E=$17.80


*****
ADRX - Andrx Corporation  $21.66  *** Drug Stocks Are Hot! ***

Andrx Corporation (NASDAQ:ADRX) is a specialty pharmaceutical
company engaged in the formulation and commercialization of oral
controlled-release generic and brand pharmaceuticals utilizing
its proprietary drug delivery technologies.  It manufactures and
sells bioequivalent versions of Cardizem CD, Dilacor XR, Ventolin,
Glucophage, K-Dur and Naprelan.  In its own brand program, Andrx
sells and markets Altocor, its first internally developed brand
product, as well as brand products it has acquired or licensed
from third parties.  It also distributes pharmaceutical products
manufactured by third parties, primarily generics, to independent
pharmacies, pharmacy chains, pharmacy buying groups and, to a
lesser extent, physicians' offices.

ADRX - Andrx Corporation  $21.66

PLAY (conservative - bullish/debit spread):

BUY  CALL  DEC-17.50  QAX-LW  OI=1503  ASK=$4.50
SELL CALL  DEC-20.00  QAX-LD  OI=4139  BID=$2.25
INITIAL NET-DEBIT TARGET=$2.15-$2.20
POTENTIAL PROFIT(max)=14% B/E=$19.70


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

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

*****
ACS - Affiliated Computer  $46.86  *** Aggressive Accounting? ***

Affiliated Computer Services (NYSE:ACS) is a global company
delivering comprehensive business process outsourcing and
information technology outsourcing solutions to commercial and
government clients.  The company is organized into commercial,
state and local government and the federal government segments.
Within the commercial segment, ACS also provides technology
outsourcing, business process outsourcing and systems integration
services to clients in such industries as insurance, utilities,
manufacturing, financial institutions, telecommunications,
healthcare, retail and transportation.  In the state and local
government segment, the company is a business process outsourcing
provider to state & local governments.  In the federal government
segment, ACS provides systems integration services, business
process outsourcing and technology outsourcing to a variety of
federal agencies.

ACS - Affiliated Computer  $46.86

PLAY (speculative - bearish/calendar spread):

BUY  PUT  DEC-45.00  ACS-XI  OI=524   ASK=$1.10
SELL PUT  NOV-45.00  ACS-WI  OI=4888  BID=$0.30
INITIAL NET DEBIT TARGET=$0.70-$0.75
INITIAL TARGET PROFIT=$0.35-$0.60


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

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

*****
VIP - Vimpel Communications  $65.11  *** Earnings Play! ***

Vimpel Communications (NYSE:VIP) is an established provider of
telecommunications services in Russia, operating under the Bee
Line family of brand names.  VimpelCom's license portfolio covers
approximately 92% of Russia's population (134 million people),
including the City of Moscow and the Moscow Region.  VimpelCom
introduced two digital cellular communications standards to Russia
and built a dual band GSM-900/1800 cellular network.  The company
also led the development and emergence of the mass consumer market
for wireless communications in Russia by introducing a prepaid
product solution.  VimpelCom offers various technologies, such as
wireless application protocol and BeeOnline, a multi-access web
portal that provides a multitude of wireless information and
entertainment services, including location-based features.  The
company's quarterly earnings report is due 11/19/03.

VIP - Vimpel Communications  $65.11

PLAY (very speculative - neutral/debit straddle):

BUY CALL  NOV-65.00  VIP-KM  OI=283  ASK=$1.35
BUY PUT   NOV-65.00  VIP-WM  OI=353  ASK=$1.25
INITIAL NET-DEBIT TARGET=$2.40-$2.50
INITIAL TARGET PROFIT=$0.80-$1.25


*****


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