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Daily Newsletter, Tuesday, 06/22/2004

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The Option Investor Newsletter                 Tuesday 06-22-2004
Copyright 2004, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Stalemate!
Futures Markets: See Note
Index Trader Wrap: Bulls defended where they had to....
Market Sentiment: Still Range Bound As Volatility Sinks


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      06-22-2004           High     Low     Volume   Adv/Dcl
DJIA    10395.07 + 23.60 10401.18 10307.25 1.72 bln 1711/1481
NASDAQ   1994.15 + 19.77  1994.87  1964.53 1.71 bln 1766/1355
S&P 100   553.47 +  1.11   553.95   548.83   Totals 3477/2836
S&P 500  1134.41 +  4.11  1135.05  1124.37
W5000   11032.13 + 41.26 11035.68 10933.20
SOX       466.69 + 15.65   466.70   450.77
RUS 2000  571.89 +  3.15   571.95   563.88
DJ TRANS 3077.83 + 12.59  3078.14  3042.28
VIX        14.31 -  0.95    15.64    14.31
VXO (VIX-O)14.10 -  0.53    15.54    14.02
VXN        19.29 -  0.44    19.90    18.72
Total Volume 3,712M
Total UpVol  2,441M
Total DnVol  1,144M
Total Adv  3900
Total Dcl  3275
52wk Highs  154
52wk Lows   119
TRIN       0.67
NAZTRIN    0.55
PUT/CALL   0.81
************************************************************

Stalemate!
by Jim Brown

In a repeat performance of recent weeks the markets nearly
made a complete round trip from resistance to support and
back again over the last two days. The Dow, which topped
at 10430 on Friday and Monday retreated to exactly the low
of 10307 marking the bottom of the recent range that was
made on the 14th. We then saw an end of day rally that
returned us back to near the Monday highs. We are at a
stalemate where the bulls and bears are evenly matched
as long as we are within this range. Attempts to breakout
on either side are met with firm support and resistance.


Chart of the Dow Industrials:



Chart of the NASDAQ Composite:


Chart of the SOX semiconductor index:


The morning was uneventful with no material economic
reports and nothing to stimulate traders in either
direction. The Dow took a slight hit after a Wal-Mart
suit was upgraded to class action on sex discrimination
action. WMT dropped -$1 on the news but recovered slightly
at the close. Chain Store Sales only rose +0.1% last week
and continued their summer doldrums. The small drop in
gas prices should eventually see those dollars make their
way back into retailer cash drawers but it could be a
long dull summer for retailers.

It was not a slow spring for PalmOne. The company reported
earnings at 32 cents which more than doubled street numbers
at 13 cents. The stock soared on the news gaining +37% on
the day. Sounds like they might have under estimated their
sales. On purpose or on accident? If the rest of the tech
stocks followed suit for the 2Q earnings we would not be
worried about the Nasdaq breaking 2000 but 3000 instead.
Unfortunately we all know that will not be the case. GS
and MWD also reported blowout earnings with GS reporting
$2.31 per share with estimates of only $1.95. MWD reported
$1.10 per share with estimates of $1.06. Earnings for
Wednesday morning include FDX with estimates of $1.33
per share and WOR at $0.76 per share. Earnings after the
close include ARRO, BBBY, CDIC, COGN, MLHR, MU, OVTI.

The Nasdaq got help from the SOX after the index rebounded
from support at 450 but that rally ran into trouble early
in the afternoon. It was a technical bounce more than a
fundamental rebound and sellers were still waiting just
over 460. After a brief selling attempt the SOX rallied
once again to a new three day high and led the Nasdaq
back over its 1980 resistance. The SOX has tested 450
support for three days without failing and chip buyers
became convinced that a bottom had formed. The SOX gained
+3.5% for the day.

Traders watching the election surveys today saw their
worst fears confirmed. The election is a toss up with a
prior strong point for Bush swinging to Kerry's favor.
The terror factor swung in favor of Kerry at 48% to Bush
at 47% for those voters that expressed an opinion. What
this means is the majority of voters now feel Kerry would
be better at dealing with terrorist threats than Bush.
This has long been a Bush strong point and one that helped
him maintain a lead over the challenger. This makes the
election a real tossup and adds more confusion to the
investing future.

The clock is slowly ticking down to the June 30th event
horizon and volume is ticking down with it. Monday's
volume barely broke 3.0B across all markets and ranked
as one of the slowest days of the year. Tuesday's rebound
from the bottom of our recent range produced a slightly
stronger day as buyers forced shorts to cover as volatility
increased. The events facing us are the Fed meeting, Iraq
turnover, end of quarter and the Russell shuffle. The
following week sees a resumption of the major economic
reports and the beginning of earnings season. Add in the
July-4th holiday and the reasons not to trade over the
next eight days outweigh the reasons to be in the market.
I have covered all of these events before so I will not
elaborate but suffice to say the cloud on the horizon
has kept most traders on the sidelines but that may be
changing.

The market is not producing anything notable to discuss
and is following my game plan for the week exactly. I
expected a continued range bound environment until after
the FOMC meeting and then a possible uptick into the
holiday weekend. So far so good but stay tuned.

The range is clearly defined from 10300-10430 on the Dow
with a possible expansion of 100 points in either direction
if a suitable news event appears. The Dow managed to cross
that entire range in just the last two days. The rebound
at the close today was nearly +100 points off the bottom
but still could not muster enough excitement to break the
10400 resistance level and closed at 10395.

The Nasdaq range is 1965 to 2000 and we saw most of that
on Tuesday as well. As I mentioned above the +3.5% gain
in the SOX brought the Nasdaq back from 1965 to close at
1994 and near the high of the day. The Russell also helped
to power the Nasdaq with a rebound off the 564 lows and
support at 565 to close at resistance at 572. This +8
point jump off the morning lows was very strong and was
partially due to the rebound in the SOX. Many of the chip
stocks are big fish in the Russell pond and the three
indexes are very interrelated.

The markets appear evenly mixed between the "doom and
gloom" crowd expecting the worst from the next ten days
and the "fears priced in" crowd. Those that feel the
worst case scenarios have already been taken into account
are using the dips to the bottom of the range as buying
opportunities. Neither crowd has been able to break the
range but I am going to give the nod to the bullish
possibilities. I think the large amount of money waiting
on the sidelines is getting nervous that a rally might
break out without them. The last two times we saw an
end of day rally it was on strong volume compared to
the low volume gravity induced sell offs.

This puts the risk on the side of the sellers more than
the buyers. With the various events so over analyzed I
think anybody that wants to sell has probably already
sold and buyers are becoming immune to the news. That
news will increase as the day draws near but short of
a real surprise I think there is a potential for a post
Fed/Iraq rally into the holiday weekend and then again
post holiday. Buyers are deciding that the risk may not
be so great and maybe they should nibble at long positions
in advance just in case.

I am far from expecting a blowout but you never can tell
when the buying urge will hit. Just like every tick below
our range increases fear of a breakdown, every tick above
our range increases the fear of missing the rally train.
We still have very strong resistance from 10400-10575 but
that would more than double our current 130 point range.
It may be a tough road but buying support appears to be
building. I really liked the strength of the afternoon
rebound despite the end of day stall.

There are no material economic reports on Wednesday with
only Mortgage Applications and Mass Layoffs slated. The
calendar picks up some on Thursday with Jobless Claims,
Durable Goods, Help Wanted and New Home Sales. Friday
sees GDP, Sentiment and Existing Home Sales. These
reports will ratchet up the interest level for traders
but should not be market movers. The two of greatest
interest will be Durable Goods and GDP. The GDP is the
final for Q1 and is expected to be +4.4%.

I am having technical problems tonight so I am going
to cut this short. While I still think the possibility
for a continued range bound market is strong I think we
are starting to see the potential to begin testing the
upper range and a higher high. I have shifted back to a
"buy the dip" mode and suggest you do the same. Should
we see a Dow move over 10430 we could see an acceleration
of buying that just might overcome the resistance areas
to the 10500 level. That would be my next pause point
and one that should contain the markets until the 30th
baring any spectacular news events.

Enter Passively, Exit Aggressively.

Jim Brown
Editor


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

Futures wrap is not emailed due to the excessive number of charts.
It may be read on the website at this address.
http://www.OptionInvestor.com/indexes/futureswrap.asp


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

Bulls defended where they had to....

If I were to sum up today's session, it would be that bulls
defended some rather important near-term levels of support, not
only in the pivot matrix, but other areas as well.

The stage was set for some towel throwing early as the Dow
Industrials (INDU) 10,395 +0.22% was faltering below its WEEKLY
S1 (10,336), the S&P 500 Index (SPX.X) 1,134.41 +0.36% at its
WEEKLY S1 (1,125.09), the S&P 100 Index (OEX.X) 553.47 +0.20%
below its WEEKLY S1 (549.92).

And while the NASDAQ-100 Tracker (AMEX:QQQ) $36.65 +1.38% was
sinking a penny below its WEEKLY S1 ($36.03) and undercutting
yesterday's lows, it was the Semiconductor Index (SOX.X) 466.42
+3.47% that seemed to return a bullish favor that the QQQ had
been providing the last three sessions, where the SOX.X had been
struggling to hold near its longer-term upward trend.

U.S. Market Watch - 06/22/04 Close



In last night's Index Trader Wrap we reviewed charts of both the
Semiconductor Index (SOX.X) where today's slight gap higher at
the open to 452.02, never did find a re-test of its MONTHLY
Pivot.  There was a time at mid-session where despite the SOX.X
trying to lead higher, the major indices seemed relatively
clueless that the weaker SOX.X was actually showing some muster.
Eventually, somebody got a sniff of the smelling salts and the
major indices snapped back from their lows to post gains by the
close.

No doubt the early weakness in Goldman Sachs (NYSE:GS) $90.60
+2.03% and Morgan Stanley (NYSE:MWD) $52.15 +1.75% had the look
of "who cares, they're headed lower" as the Securities
Broker/Dealer Index (XBD.X) 124.60 +1.40% looked to falter in the
early going.

And while the XBD.X gains relatively marginal in today's session,
I do think it helped return a bid to the financials, with the S&P
Banks Index (BIX.X) 348.95 +0.17% holding a close above its
WEEKLY Pivot.  (Will show a BIX.X chart later in wrap)

And while we look at charts with their WEEKLY/MONTHLY pivots,
we've also looked at some with conventional retracement and
trend.  It is tonight that I see the very broad NYSE Composite's
($NYA.X) 6,553.81 +0.13% session low came not only at a
previously broken downward trend, but the 50% retracement, which
marks the midpoint of the March to May declines. See Thursday
evening's Index Trader Wrap at this
http://members.OptionInvestor.com/Itrader/marketwrap/iw_061704_1.ASP

Market Snapshot / Internals - 06/22/04 Close



I've made a slight modification to the market snapshot at the
NH/NL indications, where each night (not during the day) I will
post both the 5-day NH/NL ratio as well as the daily percentage
change, as well as the 10-day NH/NL ratio and daily percentage
change.

I think we can see how the NYSE saw more of a "buy on close"
trade imbalance as a sudden expansion of NH vs. NL was found in
the final hour of trade.  However, when reviewing the NYSE
Composite chart shown in Thursday's Index Trader Wrap, try to
envision the possible implication of the NH/NL indications at our
"cheater's trend" and 61.8% retracement of 6,574.

Hmmmm.... I'm just thinking about this as I type, but did you
notice in today's 01:00 PM intra-day update, when I quickly
listed the SOX.X components that were leading the SOX.X gains,
that all those mentioned (5) had 3-letters in their stock symbols
and are stocks listed on the NYSE?

Perhaps the SOX.X isn't just important to the NASDAQ.

As I continue to monitor the NH/NL indications, it still appears
there's a bit of an oil and water trade going on between the NYSE
and NASDAQ (mix oil and water together, and oil rises) where the
NYSE looks to be the oil at this point.

We have noted "lags" where these shorter-term (5-day) and
intermediate-term (10-day) NH/NL indications will lag price
movement, but as the NYSE Composite (NYA.X) looks to be trying to
find some potentially pivotal (a 50% retracement) support, the
question remains.... "Will the NASDAQ end up pulling the NYSE
lower, or will the NYSE take control and lead the way higher?"

NYSE Composite ($NYA.X) Chart - Daily Intervals



There are 3-points of support present in the NYSE Composite
($NYA.X) chart as I have it drawn up (same chart as last
Thursday).  The 21-day SMA, the 50% retracement, and that solid
red downward trend.  Bulls defended where they had to.

Pivot Matrix -



A quick review of the Pivot Matrix would show that the QQQ was
perhaps the "index" that pegged a support level and WEEKLY S1 in
today's trade.  The NDX.X didn't quite see a trade at my
calculated WEEKLY S1, but was within fractions.  Suddenly, the
SOX.X shows a little strength in the WEEKLY Matrix as it doesn't
see a leading lower trade (for a change) in the WEEKLY pivot
matrix, where it becomes more obvious now, that MONTHLY S1 is the
KEY level of support for the SOX.X.

My thoughts on the Broker/Dealer Index (XBD.X) is this, and I
have to pose a couple of questions to myself.

If I were short a bunch of brokers, I would have been hopeful in
the early morning trade, but when the "flush" move lower didn't
come, I'd have to say that I would have turned to lock in gains
on some bearish positions (hindsight being 20/20, but a review of
what may have happened today).

If the declines aren't over for the brokers, then the S&P Banks
Index (BIX.X) 348.95 +0.17% will be utilized by traders as a
potential "differentiator" between a brokerage "dead cat bounce,"
or a bottom found, that now has legs.

Note the BIX.X has NOT seen trade at MONTHLY Pivot, or its WEEKLY
S1.  No other equity-based index in our matrix can make such a
claim!

NASDAQ-100 Tracker (QQQ) Chart - Daily Intervals



On a daily interval bar chart, the QQQ would be a "so what" type
of trade today, but I do think a "failure" move would be seen on
a break back below the DAILY Pivot and correlative MONTHLY Pivot.

One reason for this is that the NASDAQ NH/NL indications still
lack any sign of bullish leadership.  A second reason is
something I touched on in last night's Index Trader Wrap, and
then discussed in today's 11:00 AM EDT wrap.  Not that we see
some pickup in volume today for the QQQ.  For every buyer there's
a seller, and the opposite is true.

Here's that QQQ chart with the volume at price study I showed
this morning, where I would have to think a "failure move" would
be best defined back below the DAILY Pivot.

A pickup in QQQ volume may have certainly been bullish buying as
the SOX.X didn't break below MONTHLY S1, but bulls may have
defended when they had too, as the QQQ looked set to enter that
volume void.

NASDAQ-100 Tracker (QQQ) Volume at Price Chart - 120-min Int.



Here's an updated volume at price chart (volume at price is on
the left of the chart, where black bars reflect concentration of
volume).  In the 11:00 Update, I had captured that screen just
prior to the QQQ trading its session low.  Again, bulls defended
where they had to, just as the QQQ looked to enter a volume void,
where the QQQ could have easily faltered and picked up steam to
the downside.  The QQQ didn't, and the SOX.X action had to have
kept buyers interested.

Dow Industrials (INDU) Chart - 30-minute chart



Other than strength among the SOX.X in today's session, it is
this intra-day look at the INDU, where I think bulls stepped up
to the place, and snatch victory from the jaws of potential
defeat.

Why?  The INDU has been a strong major index, almost ignoring
some of the weak antics of the SOX.X on a psychological note.
Had bears been able to get the INDU to "crack" just a little,
today's trade could have been different.

It wasn't... and bulls defended when they had to.

Jeff Bailey


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

Still Range Bound As Volatility Sinks
- J. Brown

It would seem that Wall Street has accepted the fact that stocks
are due to remain range bound until June 30th.  On that magical
day the FOMC will declare they are raising rates by 25 basis
points while the reigns of power shift from the coalition to a
strong and able-bodied new Iraqi government.  Oh sorry... I must
have been daydreaming while the market churned sideways - boring
most of us to sleep.  Yes, those two events will occur minus the
able-bodied Iraq government and yes stocks look set to trade
sideways until the 30th but will they move after that date?
Let's hope so.  Immediately following June 30th is the June
employment report due out on Friday, July 2nd.  Plus, we'll be
that much closer to the Q2 earnings season.

Until then traders are playing the range.  The Industrials
bounced from the bottom of their range near 10,300 toward the top
of the range in the 10,400-10,440 area.  The NASDAQ rebounded
from the bottom of its range near 1965 back toward the 2000
level.  Actually the NASDAQ completed an inverse or reverse head-
and-shoulders pattern in the last day and a half.  That's bullish
for stocks.  The bad news is that it has already reached its
target of 1995.

Meanwhile Wal-Mart (WMT) weighed on the Industrials and the
retail stocks after a San Francisco judge certified what is to
become the largest class-action suit ever in America.  The suit
alleges that WMT systematically discriminated against women in
pay and promotions.  Over 1 million women are listed in the class
action suit.

On the earnings front both Morgan Stanley (MWD) and Goldman Sachs
(GS) beat estimates this morning when they reported earnings this
morning.  Normally these stocks tend to sell off after their
report despite good news but since both were already trading near
two-week lows investors actually responded with a rally.  Both
MWD and GS painted bullish engulfing candlesticks and that bodes
well for tomorrow.

It was interesting to see strong gains in Lucent (LU) and JDS
Uniphase (JDSU).  I thought the 5.4% gain in LU to $3.71 and the
11.8% gain in JDSU to $3.58 was just speculative buying until
news came out that SBC had issued plans to spend $4B to $6
billion on a new fiber optic network over the next five years.

Overall the market internals were bullish.  Advancing stocks
outnumbered decliners 5 to 4 on the NYSE and 17 to 13 on the
NASDAQ.  Up volume was more than double down volume while overall
volume was stronger than it has been in days.

We continue to trade without any major economic reports due out
tomorrow and that leaves investors stewing in negative Iraq news.
Maybe Fedex (FDX) can jump start stocks when it announces
earnings tomorrow morning.  Estimates are for $1.34 per share.

On Thursday look for the initial jobless claims, durable goods
orders, help wanted index and the New Home sales numbers.

Let me issue a MAJOR caution here.  All the volatility indices
(VIX, VXO, VXN) took a dive today.  The VIX/VXO are near their
multi-month lows while the VXN hit a new all-time low.  This is a
SERIOUS red flag and if I had to bet I'd look for stocks to fail
at resistance tomorrow.


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  8871
Current     : 10395

Moving Averages:
(Simple)

 10-dma: 10386
 50-dma: 10254
200-dma: 10134



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  962
Current     : 1134

Moving Averages:
(Simple)

 10-dma: 1133
 50-dma: 1119
200-dma: 1094



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1180
Current     : 1474

Moving Averages:
(Simple)

 10-dma: 1472
 50-dma: 1447
200-dma: 1437



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

CBOE Market Volatility Index (VIX) = 14.31 -0.95
CBOE Mkt Volatility old VIX  (VXO) = 14.21 -0.42
Nasdaq Volatility Index (VXN)      = 19.29 -0.44


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.81        761,243       620,003
Equity Only    0.69        623,543       431,825
OEX            1.35         19,776        26,726
QQQ            0.78        125,697        97,673


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

Bullish Percent Data

           Current   Change   Status
NYSE          66.1    + 1     Bear Confirmed
NASDAQ-100    41.0    + 0     BULL ALERT
Dow Indust.   70.0    + 0     Bear Confirmed
S&P 500       64.0    + 1     Bear Confirmed
S&P 100       63.0    + 0     Bear Confirmed



Bullish percent measures the number of stocks in an index
currently trading on a buy signal on their point and figure
chart.  Readings above 70 are considered overbought, and readings
below 30 are considered oversold.

Bull Confirmed  - Aggressively long
Bull Alert      - Cautiously long
Bull Correction - Pause or pullback in upward trend
Bear Alert      - Take defensive action if long
Bear Confirmed  - High risk if long, good conditions for shorting
Bear Correction - Pause or rebound in downtrend


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

 5-dma: 1.05
10-dma: 1.01
21-dma: 0.91
55-dma: 1.03


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    1536      1733
Decliners    1247      1321

New Highs     103        48
New Lows       30        37

Up Volume   1103M     1112M
Down Vol.    576M      472M

Total Vol.  1713M     1651M
M = millions


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

Commitments Of Traders Report: 06/08/04

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 remain net bearish but they have added to
their long positions.  Small traders have also added to their
long positions but it's the jump in their shorts that is most
noteworthy.


Commercials   Long      Short      Net     % Of OI
05/25/04      400,713   420,764   (20,051)   (2.4%)
06/01/04      406,665   421,681   (15,016)   (1.8%)
06/08/04      397,294   452,904   (55,610)   (6.5%)
06/15/04      428,905   444,197   (15,292)   (1.8%)

Most bearish reading of the year: (111,956) -  3/06/02
Most bullish reading of the year:   23,977  - 12/09/03

Small Traders Long      Short      Net     % of OI
05/25/04      136,086    79,060    57,026    26.5%
06/01/04      137,100    79,583    57,517    26.5%
06/08/04      158,373    92,794    65,579    26.1%
06/15/04      169,595   115,336    54,259    19.0%

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... what are commercial traders trying to tell us.  Their
short positions have grown steadily over the past four weeks.
Likewise the small traders' long positions have grown each
week for the last four weeks.


Commercials   Long      Short      Net     % Of OI
05/25/04      353,722   336,406     17,316     2.5%
06/01/04      325,865   325,274        591     0.0%
06/08/04      367,191   409,246    (42,055)   (5.4%)
06/15/04      440,867   522,546    (81,679)   (8.5%)

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

Small Traders Long      Short      Net     % of OI
05/25/04       91,515    100,759   ( 9,244)  ( 4.8%)
06/01/04      111,484     90,625    20,859    10.3%
06/08/04      140,191     84,649    55,542    24.7%
06/15/04      216,759    147,247    69,512    19.1%

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


NASDAQ-100

Commercial traders remain bullish on the NASDAQ but their
confidence is waning.  Likewise small traders are staying
true to their nature and doing the opposite with a decrease
in shorts.


Commercials   Long      Short      Net     % of OI
05/25/04       59,891     37,630    22,261   22.8%
06/01/04       59,944     34,784    25,160   26.6%
06/08/04       64,747     41,178    23,569   22.3%
06/15/04       78,542     54,341    24,201   18.2%

Most bearish reading of the year: (21,858)  - 08/26/03
Most bullish reading of the year:  25,160   - 06/01/04

Small Traders  Long     Short      Net     % of OI
05/25/04       10,184    20,653   (10,469)  (33.9%)
06/01/04        9,755    30,025   (20,270)  (51.0%)
06/08/04        9,716    29,594   (19,878)  (50.6%)
06/15/04       15,794    35,880   (20,086)  (38.9%)

Most bearish reading of the year: (20,270) - 06/01/04
Most bullish reading of the year:  19,088  - 01/21/02

DOW JONES INDUSTRIAL

Hmm.. we have some interesting moves here.  Commercial traders
have gone from net bearish to net bullish while small traders
have oved from net bullish to net bearish on the Dow Jones.
You know who normally wins these conflicts - it's the
commercials.


Commercials   Long      Short      Net     % of OI
05/25/04       23,578    24,632   (1,045)     (2.2%)
06/01/04       23,397    24,393   (  996)     (2.0%)
06/08/04       24,636    25,821   (1,185)     (2.3%)
06/15/04       30,438    24,766    5,672      10.3%

Most bearish reading of the year: (8,322) -  1/16/01
Most bullish reading of the year: 15,135  - 10/16/01

Small Traders  Long      Short     Net     % of OI
05/25/04        9,623     6,614    3,009     18.5%
06/01/04        9,000     6,021    2,979     19.8%
06/08/04        8,325     6,431    1,894     12.8%
06/15/04       13,942    20,953   (7,011)   (20.1%)

Most bearish reading of the year: (12,106) -  3/09/04
Most bullish reading of the year:   8,523  -  8/26/03

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


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The Option Investor Newsletter                  Tuesday 06-22-2004
Copyright 2004, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: ZMH
Dropped Puts: None
Call Play Updates: EASI, ETN, GDW, PD, AHC, DHR, MERQ
New Calls Plays: None
Put Play Updates: CCMP, KSS, MO, OMC, SLAB, OSIP
New Put Plays: INSP


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

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


CALLS:
*****

Zimmer Holdings - ZMH - close: 85.28 chg: -0.72 stop: 84.95

It's time to let go of ZMH.  Shares of the medical device maker
have finally slipped under their simple 21-dma and came within 9
cents of our stop this afternoon.  There was no discernable cause
for the weakness except maybe ZMH was trading down in sympathy
with rival STJ today.  The P&F chart for ZMH is still bullish and
the stock could still rebound from the $85.00 level but we're
going to exit and look for new plays elsewhere.  Keep an eye on
ZMH for a possible bounce from its 40 or 50-dma's.

Picked on May 27 at $ 85.20
Change since picked: + 0.08
Earnings Date      04/26/04 (confirmed)
Average Daily Volume:   1.2 million
Chart =



PUTS:
*****

None


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Financial global presence and the convenience of one group for
all trading needs provide customers with the tools needed for
success.

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

Engineered Support Sys - EASI - cls: 57.34 chg: -0.73 stop: 54.50

Wow!  EASI started the week off with a bang.  Shares gapped open
at $57.50 and ran straight for resistance at the $60 mark on
Monday.  Unfortunately the stock market was trading lower on
Monday and EASI's gains faded into the close.  We're encouraged
to see that EASI is holding on to most of its gains with only 73
cents in profit taking today.  It's also noteworthy that EASI
churned sideways in a $1.00 range all session.  This is a tough
spot to consider new positions.  We'd rather buy a bounce from
$55.50-56.00.  Otherwise it doesn't make a lot of sense with a
$60-62 target.  We'll leave our stop loss at $54.50.

Picked on June 20 at $ 56.22
Change since picked:  + 1.12
Earnings Date       05/25/04 (confirmed)
Average Daily Volume:    297 thousand
Chart =


---

Eaton Corp - ETN - close: 62.32 chg: +0.78 stop: 59.95

We have good news to report on ETN.  The stock's trend of higher
lows has blossomed into a more confident breakout above
resistance at $62.00.  Even though the stock looks a little
overbought up five weeks in a row this does look like an entry
point for new bullish positions.  In the news ETN issued a press
release stating the company bought Walterscheid, a German
manufacturer of hydraulic tube connectors and fittings, from the
English GKN manufacturer.  ETN paid $48 million and the deal is
expected to be completed in the third quarter following
regulatory approval.

Picked on June 18 at $ 62.05
Change since picked:  + 0.27
Earnings Date       04/14/04 (confirmed)
Average Daily Volume:    1.0 million
Chart =


---

Golden West Fncl - GDW - close: 108.50 chg: +0.49 stop: 107.00

GDW continues to inch ever closer to our entry point at $110.01
but thus far we remain untriggered.  More aggressive traders
could see the move over $108.50 as a potential entry point or
wait for a rally through $109.00.  We prefer to wait for a ramp
up through psychological round-number resistance at $110.  Keep
an eye on the banking indices.  Both the BIX and BKX have been
churning sideways, like GDW, for the past few weeks.

Picked on June xx at $xxx.xx <-- See TRIGGER
Change since picked:  + 0.00
Earnings Date       07/20/04 (confirmed)
Average Daily Volume:    694 thousand
Chart =


---

Phelps Dodge - PD - close: 74.32 chg: +1.01 stop: 69.95 *new*

The momentum continues for the rally in Phelps Dodge.  Shares of
the copper miner are up three days in a row on better than
average volume.  PD actually gapped down this morning and drifted
to the $72.00 level before traders bought the dip and sent it to
a new closing high for the month.  We admit it is a little bit
odd to see PD charging higher while copper prices seem to
struggle the past couple of days.  Currently PD is under
technical resistance at its simple 100-dma.  This is a tough spot
to consider new plays if you missed the dip to $72 this morning.
With the 100-dma and possible resistance at $75.00 overhead bulls
looking for new positions might do best to hope for another dip
in a day or two. We're going to raise our stop loss to $69.95.

Picked on June 20 at $ 71.68
Change since picked:  + 2.64
Earnings Date       04/28/04 (confirmed)
Average Daily Volume:    2.6 million
Chart =


---

Amerada Hess Corp. - AHC - cls: 75.73 chng: +1.40 stop:
71.75*new*

We had to wait a few days, but AHC delivered on its bullish
promise today after a couple of days of consolidation above $74.
We were looking for some strong continuation of the rally from
early last week and we got it today with price tearing through
the $75 ceiling and then ending at the highs of the day on solid
volume.  While crude oil caught a minor bounce off its 50-dma,
the read strength seemed to come from the Oil Services sector
(OSX.), gaining better than 1.1%.  In truth though, this is all
about the technicals on AHC, and now that we have the strong
breakout over the top of the continuation flag, we can look for
more upside action ahead.  Note that next resistance should be
found near the $78 level before a stronger rally pushes price
towards the low $80s.  A drop back to test support in the $73-74
area can be used now for a continuation entry, while aggressive
momentum traders can still consider chasing the stock higher
above today's high.  Raise stops to $71.75, which is above the
top of last Thursday's gap as well as the 20-dma ($71.82).

Picked on June 17th at       $74.15
Change since picked:          +1.58
Earnings Date               4/28/04 (confirmed)
Average Daily Volume =     1.08 mln
Chart =


---

Danaher Corp. - DHR - close 49.62 change: +0.24 stop: 47.00

Wasting no time, our new bullish play on DHR shot higher right
out of the gate on Monday, setting fresh all-time highs.  That
wasn't enough for the bulls and they sent DHR up to another fresh
high today and it looks like we could see the $50 level later
this week.  DHR won't move rapidly, but it does appear to be on a
steady trend move.  If we view the consolidation of the past
couple weeks as a continuation flag, then we ought to see this
leg of the rally continue up near the $53 level before running
out of steam.  Given the strength of this week's breakout, a
near-term pullback into the $48.50-49.00 looks like an excellent
entry point.  Momentum traders that are still on the sidelines
should wait for a solid move over psychological resistance at $50
before chasing the stock higher.  We'll maintain our stop at $47
for now.

Picked on June 20th at       $48.74
Change since picked:          +0.88
Earnings Date               4/22/04 (confirmed)
Average Daily Volume =     1.59 mln
Chart =


---

Mercury Interact. - MERQ - cls: 49.51 chng: +1.14 stp: 47.50*new*

Didn't we suggest that last week's consolidation in shares of
MERQ looked an awful lot like a bull flag?  The bulls certainly
made a powerful case for that interpretation today as the stock
blasted through the top of the pattern and rallied strongly all
the way to test the early June highs near $49.50.  Whether buying
the dip near $48 or the breakout over the top of the bull flag
pattern, bullish traders got a solid entry point into this one
and the stock appears poised for a breakout over $50.  The final
entry point will come on a breakout over that resistance level
enroute to a move towards our initial target at $52.  With a firm
bottom put in just above the 20-dma ($48.03) last week, we're
raising our stop to $47.50 tonight.

Picked on June 6th at        $47.56
Change since picked:          +1.95
Earnings Date               4/22/04 (confirmed)
Average Daily Volume =     2.15 mln
Chart =



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

None


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

Cabot Micro. - CCMP - close: 28.82 chg: +0.87 stop: 30.00

Hang on to your seat belt.  Over the weekend we outlined in our
chart the expectation for SNDK to bounce back toward the $29.00-
29.50 levels before rolling over again.  That is exactly what is
happening now.  The oversold bounce is sending it right toward
technical resistance at its simple 40-dma (currently at $29.50).
That means traders looking for new positions can be watching and
waiting for that failed rally under $29.50.  Until then we would
not suggest new positions.  Conservative traders need to be
diligent with their stops.  We're going to leave ours at $30.00
for now.  Remember that CCMP is due to present tomorrow at one of
the many growth stock conferences this week.

Picked on June 13 at $ 29.46
Change since picked:  - 0.64
Earnings Date       04/22/04 (confirmed)
Average Daily Volume:    3.7 million
Chart =


---

Kohl's Corp - KSS - close: 44.70 change: -0.29 stop: 47.45*new*

Don't we wish all stocks were this cooperative.  KSS is down nine
days in a row.  The stock has broken through multiple levels of
support, albeit many were minor in strength.  We were expecting
the $45 level to act as support but it appears the simple 50-dma
and the $44.00 mark is where bulls are stepping into defend the
stock.  Technical players may note that KSS has retraced about
50% of its May-through-June advance.  We think the combination of
being down 9 days in row, hitting the 50% retracement and
technical support are setting KSS for an overdue bounce.
Tuesday's candlestick even looks like a mini-hammer, which can be
suggestive of a reversal in trend.  We are going to suggest that
short-term players consider taking some profits now.  We're also
going to look for a bounce back to the $46.00-46.25 region.  In
the mean time we're going to lower our stop loss to breakeven at
$47.45.

Picked on June 06 at $ 47.45
Change since picked:  - 2.75
Earnings Date       05/13/04 (confirmed)
Average Daily Volume:    3.7 million
Chart =


---

Altria Group - MO - close: 47.83 change: +0.09 stop: 49.50

While the day started out better with shares of MO dropping near
the $47 level, the dip was bought and the stock ended the day
smack in the middle of the consolidation zone that has governed
its action for the past week.  On one hand, we can look at the
failure to drop and view that as a bullish factor, while on the
other hand, we can say that even with the bullish tone to the
daily oscillators, it appears bearish that price hasn't been able
to crack above dual resistance at the 10-dma ($47.95) and 20-dma
($47.94).  While we need to keep our eyes open for a credible
rebound, for the time being, rollovers near the $48 level or even
$48.50 (at the top of last week's gap) look viable for bearish
entries.  Maintain stops at $49.50 for now.

Picked on June 15th at        $47.55
Change since picked:           +0.28
Earnings Date                7/20/04 (unconfirmed)
Average Daily Volume =      6.67 mln
Chart =


---

Omnicom Group - OMC - close: 75.77 change: -0.73 stop: 80.50

If there was any question about the validity of the H&S patterns
in OMC that we talked about over the weekend, those doubts should
have been erased over the past couple sessions.  Continuing with
last week's break of the $77.50 short-term neckline, OMC has kept
falling this week, coming to rest on the longer-term neckline
near $76.50 yesterday and smashing through that barrier today.
That confirms the longer-term H&S pattern, giving us a longer-
term downside target of $65.  With the continuation of the
current breakdown below $76, our PnF picture has become decidedly
more bearish, with the downside target now $69.  Of course, we
know from the initial writeup that the $75 level is likely to
present initial support, so we should be expecting a bounce from
that area in the next couple days.  That will set up the next
likely entry point in the vicinity of strong resistance near $78-
79.  Until the $75 level is broken, we'll stick with our stop at
$80.50.

Picked on June 20th at        $77.14
Change since picked:           -1.37
Earnings Date                4/27/04 (confirmed)
Average Daily Volume =      1.12 mln
Chart =


---

Silicon Labs. - SLAB - close: 44.60 change: +1.02 stop: 48.50

We barely had time to let the ink dry on our initial play writeup
before SLAB was breaking down below key support yesterday.  That
break really saw some significant follow-through too, with the
stock falling below $43 before today's rebound in the
Semiconductor sector (SOX.X), which gave the stock quite a
rebound.  Beginning well in the hole this morning, SLAB managed a
2.3% gain on the session and it happened on strong volume too.
Despite the strength of the rebound, we're still looking for the
downtrend to continue, with key support broken and the PnF chart
growing more bearish by the day.  The downside price target has
now fallen to $34.  Look for this rebound to stall out near key
resistance in the $46-47 area, and then enter on the rollover.
With potential support at $42 and our target down at $40,
momentum entries below today's low do not seem advisable.
Maintain stops at $48.50.

Picked on June 20th at        $44.99
Change since picked:           -0.39
Earnings Date                4/26/04 (confirmed)
Average Daily Volume =      1.13 mln
Chart =


---

OSI Pharma - OSIP - close: 66.25 chg: +1.61 stop: 70.01

For the Star Trek fans out there it's time to go to YELLOW ALERT!
Shares of OSIP climbed higher today (+2.45%) after rumors began
to surface that Genentech (DNA) might consider buying OSIP.  The
two companies already have a marketing deal for OSIP's Tarceva
drug but skeptics said the two companies might not be a match.
For starters they have very different corporate cultures and both
are headquartered on opposite coasts, which can strain any such
merger.  Then there's the little problem of price.  OSIP is a lot
more expensive now in the $60s than three months ago in the $40s.
Fortunately for the bears the rally faded once it hit the
combined 10 and 50-dma's.  The idea of OSIP being an acquisition
target remains a risk and adds one more to the pile on why we
feel this is an aggressive play.  No change in our stop.

Picked on June 20 at $ 65.63
Change since picked:  + 0.62
Earnings Date       05/11/04 (confirmed)
Average Daily Volume:    4.4 million
Chart =



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

Infospace, Inc. - INSP - close: 33.83 change: +1.57 stop: 36.00

Company Description:
Infospace, Inc. is a diversified technology and services company
that consists of two principal businesses, Search and Directory
and Mobile.  Its Search and Directory properties are designed
primarily to enable Internet users to locate information,
merchants, individuals and products online.  Its Mobile division
develops applications, tools and infrastructure that enable
wireless carriers and information, entertainment and media
companies to develop and deliver mobile data services across
multiple devices.  It previously operated a third business,
Payment Solutions, which offered products and services focused
primarily on the e-commerce and mail order/telephone order
segment of the United States credit card transaction processing
market.  In April 2004, the Company sold its Payment Solutions
business to Lightbridge, Inc., a provider of technology services
and software that manage customer transactions.  Infospace has
facilities in the United States, the Netherlands and the United
Kingdom.

Why we like it:
Shares of INSP have come a long ways since having to do that 10-
for-1 reverse split back in the fall of 2002 and since then the
stock has vaulted from the $5 level to as high as $45 earlier
this year.  That seems a bit too far, too fast and the chart is
sending us that message loud and clear.  Price action has left a
near-perfect H&S pattern in its wake over the past several
months.  The pattern itself is perfectly symmetric, with the
shoulders evenly spaced and topping out near $40, while the head
almost touched $46.  Today's strong rebound from the neckline at
$32 could be interpreted as a bullish entry point if we didn't
have the very clear bearish PnF chart, with a downside target of
$17.  That gives us a strong indication that this rebound will
fail and when it does, we ought to see a major breakdown under
that $32 neckline.

Looking at the daily chart, we can see major overhead resistance
at the 20-dma ($35.47), 100-dma ($35.28) and 50-dma ($35.91).
That means we should see this rebound stall out below that level
and then continue down through the neckline on the next bearish
thrust.  While a rollover entry near that resistance may look
attractive, we're going to make the stock prove itself first by
breaking that neckline.  We'll use a $32 entry trigger and
traders can choose their entry point from there.  Momentum
entries on the initial break and rollover entries on a failed
rebound below $34.50.  There will be some support found near the
$30 level, which is just over the 200-dma ($29.44) and then again
near the $28 level at the site of the March lows.  We're going to
go for the gusto though and target a decline down to the bottom
of th4e January gap at $25.  Set stops initially at $36, just
over the cluster of moving averages.

Suggested Options:
Aggressive traders will want to use the July 30 Put while those
with a more conservative approach will want to use the July 35
strike.  Traders looking for more insulation against time decay
may want to consider the October strike, or the August strike
(not listed) when they have some open interest.  Our preferred
option is the July 35 strike, as it is currently in the money.

BUY PUT JUL-35*IOU-SG OI= 290 last traded @ $2.65
BUY PUT JUL-30 IOU-SF OI= 936 last traded @ $0.70
BUY PUT OCT-30 IOU-VF OI=1319 last traded @ $3.00

Annotated Chart of INSP:



Picked on June 22nd at        $33.83
Change since picked:           +0.00
Earnings Date                7/28/04 (unconfirmed)
Average Daily Volume =      1.08 mln
Chart =



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**********

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The Option Investor Newsletter                  Tuesday 06-22-2004
Copyright 2004, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Watch List: Another mixed bag of candidates.
Spreads & Straddles: Technology Shares Lead The Way...
Premium Selling Plays: Naked Puts & Calls


**********
WATCH LIST
**********

Another mixed bag of candidates.

___________________________________________________________________

How to use this watch list:
  Readers can use the candidates below as a springboard for their
  own research.  Many are in the process of breaking support or
  resistance or in the process of starting new trends or
  extending old ones.  With your own due diligence these could be
  strong potential plays.
___________________________________________________________________


Ball Corp - BLL - close: 70.86 change: +0.56

WHAT TO WATCH: Both bulls and bears may want to keep an eye on
BLL.  Bulls can appreciate the recent move through round-number
resistance at $70.00.  Bulls can also watch for a breakout above
resistance in the $71.00-71.50 range.  Meanwhile bears will
notice that BLL is up 6 out of the last 7 weeks and overdue for
some profit taking.  If BLL trades back under $69.00 it may
indicate that the stock has produced a very big double-top
pattern.

Chart=


---

Valero Energy - VLO - close: 71.43 change: +1.24

WHAT TO WATCH: Investors can't seem to get enough of these oil
refiners.  Everyone knows that refiners have more business than
they can process and margins have been improving.  Of course
bears will suggest that the profit picture is already built into
the share price.  Traders recently bought the dip to $70.00 and
bullish investors might want to consider a breakout over $72.00
as an entry point.  Be careful with your stops.  VLO is
overbought and past its P&F price objective.

Chart=


---

Waters Corp - WAT - close: 44.95 change: +0.85

WHAT TO WATCH: We mentioned WAT in the MarketMonitor this
afternoon.  Investors have been buying dips to its 40 or 50-dma
for the last several months.  WAT is giving bulls another chance
to buy at technical support and they're taking it.  For the last
several days WAT has been consolidating above new support at
$44.00.  Now that it has found the 40-dma again traders are
buying the stock.  Consider a move above today's high (45.05) as
a trigger to go long.  We'd probably target $49.50-50.00.  Use a
tight stop.

Chart=


---

Exelon Corp - EXC - close: 33.14 change: -0.19

WHAT TO WATCH: Shares of this electric utility have painted a
reverse head-and-shoulders pattern.  A move through the neckline
in the $33.50-33.75 range should lead to a rally toward the
$36.00 region.  This might work better as a covered call
candidate.  EXC's P&F chart is bullish and points to a $40
target.

Chart=



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

AVP $45.63 +1.26 - AVP soared on strong volume today with a
bounce from the bottom of its rising channel.  Bulls can target a
move to the top of the channel currently near $48.  Be careful,
AVP is long-term overbought.

DE $69.06 +0.74 - DE continues to consolidate into a tighter
range suggesting an upside breakout.  Target $74-75.

HAR $88.43 +0.45 - Traders bought the dip to HAR's 10-dma and the
$86 level.  The stock remains very overbought so use a tight stop
if you go long.  The $90 level remains resistance.

EBAY $87.21 +1.40 - EBAY continues to fight its recent
consolidation.  Investors jumped in on a dip to the 40-dma and
the $84.00 level.  Tuesday's action has produced a bullish
engulfing pattern suggesting a potential change in direction
(from down to up).


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Personal Service and Education


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*******************
SPREADS & STRADDLES
*******************

Technology Shares Lead The Way...
By Ray Cummins

The major equity averages climbed higher Tuesday, despite some
early weakness in blue-chip issues, as strength in the hi-tech
segment bolstered the broader equity markets.

The Dow Jones Industrial Average added 23 points to finish at
10,395, with industrial cyclical stocks among the big winners.
The technology-laden NASDAQ Index jumped 19 points, closing at
1,994 amid renewed buying pressure in hardware and internet
shares.  The broader Standard & Poor's 500 Index rose 4 points
to 1,134, despite losses in the retail, broadcasting, and steel
sectors.  Volume was moderate with 1.4 billion shares traded on
the New York Stock Exchange and 1.6 billion shares swapped on
the NASDAQ.  Advancing stocks outnumbered decliners by a small
margin on both the Big Board and the technology exchange.  The
bond market saw prices slump with the 10-year note down 5/32,
while its yield climbed to 4.70%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 06/20/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.


PUT-CREDIT SPREADS

Stock   Pick   Last   Month L/P  S/P Credit   CB     G/L   Status

AMZN    50.95  49.60   JUL   42  45   0.30   44.70   0.30   Open
YHOO    31.87  32.07   JUL   25  27   0.30   27.20   0.30   Open
CFC     69.15  71.15   JUL   60  63   0.35   63.03   0.35   Open
QCOM    69.86  66.49   JUL   60  65   0.45   64.55   0.45   Open
SWIR    33.83  33.05   JUL   25  30   0.90   29.10   0.90   Open
CTSH    24.25  24.51   JUL   20  22   0.27   22.23   0.27   Open
NUE     69.54  72.47   JUL   60  65   0.75   64.25   0.75   Open
SII     53.26  54.33   JUL   47  50   0.30   49.70   0.30   Open

L/P = Long Put  S/P = Short Put  CB = Cost Basis  G/L = Gain/Loss


CALL-CREDIT SPREADS

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

APPX    34.03  31.97   JUL   45  40   0.50   40.50   0.50   Open
GENZ    41.93  43.87   JUL   48  45   0.30   45.30   0.30   Open
INSP    34.71  33.23   JUL   45  40   0.65   40.65   0.65   Open
WMS     28.75  26.15   JUL   35  30   0.65   30.65   0.65   Open
GS      90.21  89.18   JUL  100  95   0.70   95.70   0.70   Open
SYMC    42.42  40.01   JUL   50  45   0.65   45.65   0.65   Open

L/C = Long Call  S/C = Short Call  CB = Cost Basis  G/L = Gain/Loss

As noted last week, the recent bullish activity in the Oil Service
Holdrs (AMEX:OIH) has signaled our exit in the bearish position.


DEBIT STRADDLES

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

GRMN    32.60  31.93   JUL    35    30     2.15    2.35    Open?
SNDK    22.90  20.37   JUL    22    22     3.40    3.60    Open
GDT     56.02  57.01   JUL    55    55     4.80    4.50    Open

Companhia Vale Do Rio Doce (NYSE:RIO) reached our profit target
in only one week and Sandisk (NASDAQ:SNDK) has achieved a small
profit.  The Krispy Kreme (NYSE:KKD) straddle has been closed to
preserve capital.  Garmin (NASDAQ:GRMN) will be a candidate for
"early-exit" in the coming weeks.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
NEW POSITIONS
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

BULLISH PLAYS - CREDIT SPREADS

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

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

MXIM - Maxim Integrated  $51.62  *** Chip Sector Strength? ***

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

MXIM - Maxim Integrated  $51.62

PLAY (moderately aggressive - bullish/credit spread):

BUY  PUT  JUL-45.00  XIQ-SI  OI=2313  ASK=$0.15
SELL PUT  JUL-50.00  XIQ-SJ  OI=2276  BID=$0.85
INITIAL NET-CREDIT TARGET=$0.70-$0.75
POTENTIAL PROFIT(max)=16% B/E=$49.30


__________________________________________________________________

RJR - R.J. Reynolds  $65.90  *** Rally Mode! ***

R.J. Reynolds Tobacco Holdings (NYSE:RJR) is a holding company
that operates through its subsidiaries R. J. Reynolds Tobacco
Company (RJR Tobacco) and Santa Fe Natural Tobacco Company.
RJR Tobacco is a cigarette manufacturer that primarily operates
in the United States.  RJR Tobacco's largest selling cigarette
brands are Camel, Winston, Salem and Doral.  Those brands, and
its other brands, including Vantage, More and Now, are made in
a variety of styles and marketed in the United States to meet
a range of adult smoker preferences.

RJR - R.J. Reynolds  $65.90

PLAY (less conservative - bullish/credit spread):

BUY  PUT  JUL-55.00  RJR-SK  OI=33038  ASK=$0.50
SELL PUT  JUL-60.00  RJR-SL  OI=27141  BID=$1.05
INITIAL NET-CREDIT TARGET=$0.60-$0.65
POTENTIAL PROFIT(max)=14% B/E=$59.40



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

BEARISH PLAYS - CREDIT SPREADS

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

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

FRX - Forest Labs  $56.32  *** Sell-Off In Progress! ***

Forest Laboratories (NYSE:FRX) develops, manufactures and sells
both branded and generic forms of ethical drug products that
require a physician's prescription, as well as non-prescription
pharmaceutical products sold over-the-counter.  The company's
most important U.S. products consist of branded ethical drug
specialties marketed directly, or "detailed," to physicians by
its Forest Pharmaceuticals, Therapeutics and Specialty sales
forces.  The company's many products include those developed by
Forest and those acquired from other pharmaceutical companies
and integrated into Forest's marketing and distribution systems.

FRX - Forest Labs  $56.32

PLAY (less conservative - bearish/credit spread):

BUY  CALL  JUL-65.00  FHA-GM  OI=587   ASK=$0.15
SELL CALL  JUL-60.00  FHA-GL  OI=1590  BID=$0.70
INITIAL NET-CREDIT TARGET=$0.60-$0.65
POTENTIAL PROFIT(max)=14% B/E=$60.60



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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.
__________________________________________________________________

No straddles or strangles today...

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

SEE DISCLAIMER - SECTION 1

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


*****************************************
PREMIUM-SELLING PLAYS: NAKED PUTS & CALLS
*****************************************

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

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 06/20/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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


MONTHLY YIELD FOR UNCOVERED OPTIONS: MAXIMUM & SIMPLE

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

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

NAKED PUTS

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

CVTX     JUL    15    14.60   15.97    0.40   5.63%   2.74%
DITC     JUL    17    16.80   23.06    0.70   8.40%   4.17%
SYNA     JUL    17    16.85   20.38    0.65   7.48%   3.86%
PTIE     JUL     7     7.15    8.84    0.35   9.89%   4.90%
BCC      JUL    35    34.25   37.73    0.75   5.12%   2.19%
JILL     JUL    20    19.45   23.11    0.55   6.72%   2.83%
LSS      JUL    20    19.50   25.61    0.50   6.07%   2.56%
OI       JUL    15    14.65   16.17    0.35   5.64%   2.39%
NVTL     JUL    15    14.65   21.20    0.35   7.34%   2.39%
PDII     JUL    25    24.70   30.49    0.30   3.91%   1.21%
RSAS     JUL    17    17.05   20.73    0.45   6.22%   2.64%
STLD     JUL    25    24.45   27.25    0.55   5.33%   2.25%
UPL      JUL    30    29.55   35.20    0.45   4.14%   1.52%
USG      JUL    15    14.15   16.28    0.85  13.32%   6.01%
ATI      JUL    12    12.20   15.10    0.30   7.44%   2.46%
BJS      JUL    42    41.70   45.11    0.80   4.75%   1.92%
LCAV     JUL    25    24.35   28.28    0.65   6.85%   2.67%
NCRX     JUL    27    26.80   31.88    0.70   7.30%   2.61%
NVTL     JUL    17    17.05   21.20    0.45   8.97%   2.64%
SSYS     JUL    22    22.20   27.02    0.30   4.41%   1.35%
SWIR     JUL    30    28.85   33.05    1.15  10.66%   3.99%
SYNA     JUL    17    16.90   20.38    0.60   8.98%   3.55%
YHOO     JUL    30    29.20   32.07    0.80   6.80%   2.74%


NAKED CALLS

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

ASKJ     JUL    45    45.55   35.55    0.55   6.50%   1.21%
AMLN     JUL    25    25.35   22.09    0.35   5.29%   1.38%
ICOS     JUL    30    30.45   27.34    0.45   5.26%   1.48%
OIIM     JUL    17    17.80   15.85    0.30   5.50%   1.69%
INSP     JUL    40    40.50   33.23    0.50   6.88%   1.23%
RHAT     JUL    25    25.60   20.10    0.60   9.08%   2.34%
XMSR     JUL    27    27.75   22.83    0.25   4.34%   0.90%


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
NEW POSITIONS
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

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

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

NEW NAKED-PUT CANDIDATES

Stock   Strike Strike  Cost    Stock   Option    Max.   Simple
Symbol  Month  Price   Basis   Price   Price    Yield   Yield

BRCM     JUL   40.00   39.30   44.85    0.70    6.43%   1.78%
CSGP     JUL   40.00   39.60   43.11    0.40    3.49%   1.01%
DHB      JUL   12.50   12.20   14.27    0.30    8.97%   2.46%
DY       JUL   25.00   24.65   26.27    0.35    4.63%   1.42%
ERES     JUL   22.50   22.20   25.25    0.30    4.97%   1.35%
FWHT     JUL   20.00   19.60   21.74    0.40    6.89%   2.04%
GVHR     JUL   22.50   22.20   25.50    0.30    5.07%   1.35%
IMH      JUL   20.00   19.75   21.77    0.25    4.41%   1.27%
NVTL     JUL   17.50   16.90   22.23    0.60   15.07%   3.55%
PLMO     JUL   25.00   24.55   29.36    0.45    7.28%   1.83%
USG      JUL   15.00   14.70   16.51    0.30    7.05%   2.04%

__________________________________________________________________

BRCM - Broadcom  $44.85  *** New 2004 High! ***

Broadcom (NASDAQ:BRCM) is a leading provider of highly integrated
silicon solutions that enable broadband communications and the
networking of voice, video and data services.  Using proprietary
technologies and advanced design methodologies, Broadcom designs,
develops and supplies complete system-on-a-chip solutions and
related hardware and software applications for all broadband
communications markets.  Their diverse product portfolio includes
solutions for digital cable and satellite set-top boxes; cable
and DSL modems and residential gateways; high-speed transmission
and switching for local, metropolitan, wide area and storage
networking; home and wireless networking; cellular and terrestrial
wireless communications; Voice over Internet Protocol (VoIP)
gateway and telephony systems; broadband network processors; and
SystemI/O(TM) server solutions.

BRCM - Broadcom  $44.85

PLAY (sell naked put):

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

SELL PUT  JUL 40    RCQ SS    2194  0.70  39.30   6.4%   1.8%


__________________________________________________________________

CSGP - CoStar Group  $43.11  *** A Big Day! ***

CoStar Group (NASDAQ:CSGP) is a provider of information services
to the commercial real estate industry in the United States and
United Kingdom.  The company delivers content to customers via
an integrated suite of online service offerings that includes
information about space available for lease, comparable sales
information, tenant information, information about properties
for sale, information for clients' Websites, information about
industry professionals and business relationships, analytic
information, data integration, property marketing, tools for
contact and property information and industry news.

CSGP - CoStar Group  $43.11

PLAY (sell naked put):

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

SELL PUT  JUL 40    CQY SH      0    0.40  39.60   3.5%   1.0% TS


__________________________________________________________________

DHB - DHB Industries  $14.27  *** Bullet-Proof Stock? ***

DHB Industries (NYSE:DHB) is a holding company consisting of two
major divisions: DHB Armor Group and DHB Sports Group.  The Armor
Group includes both Point Blank Body Armor and Protective Apparel
Corporation of America.  The Armor Group principally manufactures
three basic types of body armor: concealable armor, which is worn
beneath the user's clothing and designed to protect against less
serious weapons; tactical armor, which is worn externally and is
designed to protect against more serious threats, and modular
concealable/tactical armor, which allows the wearer to customize
the armor for either concealed or tactical use.

DHB - DHB Industries  $14.27

"AGGRESSIVE" PLAY (sell naked put):

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

SELL PUT  JUL 12.5   DHB SV    489    0.30  12.20   9.0%   2.5%


__________________________________________________________________

DY - Dycom Industries  $26.23  *** New Rally Underway? ***

Dycom Industries (NYSE:DY) is a provider of specialty contracting
services, including engineering, construction, installation and
maintenance services, to telecommunications providers throughout
the United States.  It provides a range of telecommunications
infrastructure services including the engineering, placement and
maintenance of aerial, underground and buried fiber-optic, coaxial
and copper cable systems owned by local and long distance carriers
and cable television multiple system operators.

DY - Dycom Industries  $26.23

PLAY (sell naked put):

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

SELL PUT  JUL 25     DY SE      30    0.35  24.65   4.6%   1.4%


__________________________________________________________________

ERES - eResearch Technology  $25.25  *** New 2004 High! ***

eResearch Technology (NASDAQ:ERES) is a provider of technology and
services that enable the pharmaceutical, biotechnology and medical
device industries to collect, interpret and distribute cardiac
safety and clinical data more efficiently.  The company offers a
range of products and services, including Diagnostics Technology
and Services and Clinical Research Technology.  Their Diagnostics
Technology and Services include centralized diagnostic services
and clinical research operations, including clinical trial and
data management services.  Their Clinical Research Technology and
Services include the developing, marketing and support of clinical
research technology and services.

ERES - eResearch Technology  $25.25

PLAY (sell naked put):

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

SELL PUT  JUL 22.5  UDB SX    270    0.30  22.20   5.0%   1.4%


__________________________________________________________________

FWHT - FindWhat.com  $21.74  *** Next Leg Up? ***

FindWhat.com (NASDAQ:FWHT) operates online marketplaces that
connect the consumers and businesses that are most likely to
purchase specific goods and services with the advertisers that
provide those goods and services.  Online advertisers determine
the per-click fee they will pay for their advertisements, which
FindWhat.com and its private-label partners such as Terra Lycos's
Lycos.com and HotBot distribute to millions of Internet users.
Their network includes hundreds of distribution partners, such as
CNET's Search.com, Excite, Webcrawler, NBCi, MetaCrawler, Dogpile,
Go2Net and Microsoft Internet Explorer Autosearch.

FWHT - FindWhat.com  $21.74

PLAY (sell naked put):

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

SELL PUT  JUL 20    HFQ SD    163    0.40   19.60   6.9%   2.0%


__________________________________________________________________

GVHR - Gevity HR  $25.50  *** In A Trading Range? ***

Gevity HR (NASDAQ:GVHR) is a provider of human capital management
solutions to clients across the United States.  The company offers
its clients, which are typically small to medium-sized businesses
with between five and 100 employees, products and services that
provide a complete solution for human resources outsourcing needs.
Its many products include assistance with employee recruiting,
performance management, training and development, benefits
administration, payroll administration, governmental compliance,
risk management, unemployment administration and health, welfare
and retirement benefits.

GVHR - Gevity HR  $25.50

PLAY (sell naked put):

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

SELL PUT  JUL 22.5  HWU SX     10    0.30  22.20   5.1%   1.4%


__________________________________________________________________

IMH - Impac Mortgage  $21.76  *** Diversify With A REIT! ***

Impac Mortgage Holdings (NYSE:IMH), along with its wholly owned
subsidiaries, IMH Assets, Impac Warehouse Lending Group, Impac
Multifamily Capital, Impac Funding, Impac Secured Assets, and
Novelle Financial Services, operates as a mortgage real estate
investment trust (REIT) that is engaged in the acquisition,
origination, sales and investments of non-conforming Alt-A
mortgages, small-balance, multi-family mortgages and sub-prime
(B/C) mortgages.  Impac also provides warehouse and repurchase
financing to originators of mortgages.

IMH - Impac Mortgage  $21.76

PLAY (sell naked put):

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

SELL PUT  JUL 20    IMH SD    884    0.25  19.75   4.4%   1.3% TS


__________________________________________________________________

NVTL - Novatel Wireless  $22.23  *** "Premium-Selling" Only! ***

Novatel Wireless (NASDAQ:NVTL) is a provider of wireless data
access solutions, including wireless data modems and software,
for use with portable personal computers (PCs) and with handheld
computing devices.  The company delivers comprehensive solutions
that help businesses and consumers to access personal, corporate
and public information through e-mail, enterprise networks and
the Internet.  Novatel also offers wireless data modems as well
as custom software and hardware engineering services and systems
integration services to its customers to facilitate use of its
products.

NVTL - Novatel Wireless  $22.23

"SPECULATIVE" PLAY (sell naked put):

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

SELL PUT  JUL 17.5  NVU SW    103    0.60  16.90  15.1%   3.6%


__________________________________________________________________

PLMO - palmOne  $29.36  *** Up, Up & Away! ***

palmOne (NASDAQ:PLMO), formerly Palm, develops, designs and sells
Palm-branded, hand-held devices, accessories and the operating
system Palm OS.  The company was historically organized into two
operating segments: the Solutions Group and PalmSource.  Now the
Solutions Group develops and markets hand-held devices and other
accessories to provide the user with a simple, elegant and useful
productivity tool.  PalmSource developed and licensed the Palm OS
and related software, which is referred to as the Palm platform.
The Palm platform is the foundation for Palm devices, as well as
for devices manufactured by other third-party licensees.

PLMO - palmOne  $29.36

PLAY (sell naked put):

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

SELL PUT  JUL 25    UPY SE     97    0.45  24.55   7.3%   1.8%


__________________________________________________________________

USG - USG Corp.  $16.55  *** Asbestos Fund Deal? ***

USG Corporation (NYSE:USG) produces a range of products for use
in new residential, new non-residential and repair and remodel
construction, as well as products used in certain industrial
processes.  Its operations are organized into three operating
segments: North American Gypsum, which manufactures Sheetrock
brand gypsum wallboard and related products in the United States,
Canada and Mexico; Worldwide Ceilings, which manufactures ceiling
tile in the United States and ceiling grid in the United States,
Canada, Europe and the Asia-Pacific region, and Building Products
Distribution, which distributes gypsum wallboard, drywall metal,
ceiling products, joint compound and other building products
throughout the United States.

USG - USG Corp.  $16.55

PLAY (sell naked put):

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

SELL PUT  JUL 15    USG SC    2531   0.30  14.70   7.0%   2.0%



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

BEARISH PLAYS - NAKED CALLS

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

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

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

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

AGIX - AtheroGenics  $18.41  *** New Downtrend Underway! ***

AtheroGenics (NASDAQ:AGIX) is a research-based pharmaceutical
company.  The company is focused on the discovery, development
and commercialization of novel drugs for the treatment of
chronic inflammatory diseases, including atherosclerosis,
rheumatoid arthritis, organ transplant rejection and asthma.
AtheroGenics has developed a proprietary vascular protectant
technology platform to discover drugs to treat these types of
diseases.  Based on its v-protectant technology platform, the
company has advanced three major drug candidates into clinical
development and is pursuing a number of other programs.

AGIX - AtheroGenics  $18.41

PLAY (sell naked call):

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

SELL CALL  JUL 20    AUB GD    450    0.45  20.45   9.2%   2.2%


__________________________________________________________________

LEND - Accredited Home Lenders  $27.90  ** In A Trading Range? **

Accredited Home Lenders Holding (NASDAQ:LEND) is engaged in the
business of making mortgage loans to borrowers across the United
States.  The company's business includes originating, selling and
servicing first and junior-lien mortgage loans primarily secured
by single-family (one- to four-family) residences.  Accredited
Home focuses on borrowers who do not meet conforming underwriting
guidelines because of higher loan-to-value ratios, the nature or
absence of income documentation, limited credit histories, high
levels of consumer debt or past credit difficulties.

LEND - Accredited Home Lenders  $27.90

PLAY (sell naked call):

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

SELL CALL  JUL 30    QFW GF    235    0.50  30.50   6.6%   1.6%



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

SEE DISCLAIMER - SECTION 1

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


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