The Option Investor Newsletter Tuesday 08-03-2004 Copyright 2004, All rights reserved. 1 of 3 Redistribution in any form strictly prohibited. In Section One: Wrap: Fed Drains, Oil Rises, Stocks Sink Futures Markets: See Note Index Trader Wrap: The first battle of Bull Run Market Sentiment: Confidence Weakening Posted online for subscribers at http://www.OptionInvestor.com ************************************************************ MARKET WRAP (view in courier font for table alignment) ************************************************************ 08-03-2004 High Low Volume Advance/Decline DJIA 10120.24 – 58.92 10178.28 10102.84 1.60 bln 1140/1649 NASDAQ 1859.42 – 32.67 1887.57 1859.17 1.48 bln 977/2053 S&P 100 537.92 - 2.49 540.87 537.53 Totals 2117/3702 S&P 500 1099.69 - 6.93 1106.62 1099.20 RUS 2000 543.63 - 8.30 551.93 543.47 DJ TRANS 3120.54 – 13.61 3147.50 3118.85 VIX 16.03 + 0.66 16.05 15.28 VXO 15.21 + 0.59 15.44 14.80 VXN 25.08 + 0.95 25.16 24.31 Total Volume 3,366M Total UpVol 782M Total DnVol 2,518M 52wk Highs 127 52wk Lows 182 TRIN 1.59 PUT/CALL 0.73 ************************************************************ Fed Drains, Oil Rises, Stocks Sink Jonathan Levinson The Fed's open market desk allowed 6.5B in maturing repos to expire unrefunded today, draining that amount from its primary dealers' accounts. Oil was higher, continuing its explosive rally, and the net effect of these two bearish factors was widespread weakness for equities. The Nasdaq indices led strongly to the downside as the volatility indices rose across the board. The excess of weakness in the Nasdaq is a problem for the bearish oil interpretation, as the Nasdaq's 1.73% decline dwarfed the declines in the Dow (0.6%) and particularly the Dow Transports (1.0%). One would think that an oil-based equity decline would have impacted the TRANs more than the tech-laden Nasdaq. The weakness was sufficient to hinder the daily cycle upphase we've been tracking for the past two weeks, with the brunt of the damage borne by the Nasdaq. Weekly Dow Chart Last week reversed the break of the rising weekly trendline and this week appears to be testing it from beneath, so far unsuccessfully. The 9900 support level held, but resistance at 10200-10250 remains the key upside level for bulls hoping that this year's descending pattern is indeed a weekly bull flag. The weekly cycle picture has been and remains an ambiguous mess, with a rising 10-week stochastic competing with a descending Macd. With the cycle picture this uncertain, my approach is to watch the range levels while awaiting a resolution to the cycle mess- in this case, a break below 9900 should see a test of 9800 on the way to the lower descending flag support line, while a break above 10250 should see a retest of 10450-10500. With 10200-10250 being the resistance line of a possible bull flag, a strong, high volume break of that level would suggest a retest of the year highs for starters. The characteristics of the breakout, if it occurs, will tell us more. Daily Dow Chart The Dow closed just above its session low, still holding yesterday's and Friday's low and preserving the daily uptrend. The daily cycle oscillators weakened within their upphase but didn't sustain the same level of damage as seen in the Nasdaq's daily chart below. The session high (printed at the open) is at the descending resistance line, currently 10178, and that line on a 30 minute chart (not shown) is the neckline of what bulls have been eyeing as a sloping reverse head and shoulders formation projecting to an implied target roughly 250 Dow points above it. Downside support below the session low of 10102 is at 10080, below which is the former descending resistance line at 10025. Weekly Nasdaq Chart The Nasdaq remains the weakest link in last week's bounce attempt, and this week has so far perpetuated that theme. The cycle picture remains more obviously bearish than with the Dow, but the bull flag is still intact and a small bullish divergence is evident on the Macd histogram. Resistance has declined to the 1920 area while lower descending support on the flag lines up with Fibonacci support at 1760. 1840 has been support so far on the decline, and that would be the first level at which to scope for a bounce should we decline from here. Daily Nasdaq Chart The Nasdaq's 32.7 point decline left the index resting on the former descending resistance line, at the equivalent of the Dow's 10025 level noted above. The 10-day stochastic left off on a bearish kiss, and the Macd lost its recently confirmed upphase. A rollover from here would turn the entire daily cycle bounce into a bearish whipsaw, and given the low price and oscillator levels, such would suggest that the bounce has been a bear flag or some similar distribution pattern projecting to lower lows below last week's support. With all intraday cycles oversold and looking for a bounce, a drop tomorrow would have very bearish implications and set up the Nasdaq for a retest of l830 support. Weekly TNX Chart Bonds have been rising this week as equities declined, is the type of action I'd expect from defensive market action attributable to bad "external" news, such as the terrorist news from Sunday night. That said, the weekly cycle for bonds is not ambiguous as it is for equities, with yields in a weekly downphase. The ten year note yield (TNX) closed lower by 3 bps at 4.422%. Resistance above is at 4.48%, followed by 4.5%, 4.65%, 4.75% and 4.8%, while support is at 4.4%, 4.34% and 4.02%. A break of that lower support could be a bear wedge breakdown that would project an implied target back at the 2003 lows for the TNX (2003 highs for 10-year treasury bonds). In economic news, the International Council of Shopping Centers and UBS announced that same-store retail sales rose 0.2% in the last week. Chains' same-store sales were up 3.1% year-over-year, with tax breaks and back-to-school sales credited for the increase. The Commerce Department announced at 8:30AM that U.S. consumer spending declined by 0.7% in June, a downside surprise against expectations of a 0.1% decline and reportedly the largest since September 2001. However, personal incomes met expectations with a 0.2% increase in June, and the personal savings rate rose to 2% from 1.2%, the largest increase since August 2003. Notwithstanding the increase in savings, today's readings marked the slowest income growth in 14 months. The personal consumption expenditure price index, an index that the Fed emphasizes over the CPI, rose 0.1% in June, while the core PCE index excluding food and energy rose 0.2%. The core PCE index is up 1.5% since last year, and real disposable incomes were unchanged. At 10AM, the Challenger & Gray July jobs report was released, showing an increase in job cuts of 8.1% over June's reading. The 12-month average of job reductions fell from 89,886 in June to 88,590 in July, which was judged to be a weak improvement. Year- to-date layoffs are down 24% from the first 7 months in 2003, but Challenger also announced that corporations intend to hire only 26,880 employees, 30% lower than the 38,377 employees in June. Around the same time as these reports, from 8:30-10AM, news stories from the BBC and Reuters discussing Tom Ridge's Sunday terrorist warning as being old news and possibly politically motivated began circulating. Ridge responded to the allegations later, defending the data upon which the warnings had been based as "the most significant detailed pieces of information about any particular regions that we have come across in a long, long time, perhaps ever and that is why we decided to share it publicly." Of greatest significance for the financial markets in my view, the responses to the initial warning on Sunday night / Monday and to today's story that the warning might not be timely were muted- the markets neither sold off sharply yesterday nor rallied today. This is a welcome reprieve from the endless OBL/Saddam rumors and whipsaws we remember from last year, in which vague stories were credited with instant directional moves in the markets. There was some coverage of the new contract highs for front-month crude oil futures today, with the 44 level broken several times throughout the day and a session high of 44.225 amid OPEC supply concerns. While these are historic price highs, on an inflation- adjusted basis they are not. Nevertheless, the rise in oil prices has been dramatic in the past year. More expensive oil, with its inelastic demand, means less available money in the hands of consumers, corporations and government. Weekly chart of Crude oil At midday, GM reported a decline of 3.4% in July sales, while Ford reported a drop of 6.8%. BMW lost 4.4%, Mazda -12.2%. Daimler-Chrysler reported a gain of 2%, Toyota a gain of 13.7%, Nissan +31% for its best month ever, Suzuki +27%, Honda +0.1%, Acura +8.1% and Porsche a gain of 6%. TYC bucked the downward market trend after reporting Q3 earnings of 43 cents per share, up from 27 cents in Q3 2003. Excluding one-time items, the company earned 45 cents per share, beating estimates of 42 cents. Revenue rose 11% to $10.5B, beating estimates of $10.3B. The company raised its 2004 forecast to $1.61-$1.63 per share, above estimates of $1.59 per share. For the day, the stock closed higher by .58% at 31.42. Chipmaker VSH got hit after announcing earnings of 22 cents per share, missing by two pennies but announcing that it does not expect to see improvements in earnings or revenues until Q4. The 22 cents it earned this quarter represent an improvement of 20% in revenues to $646.7M. The stock closed lower by 15.52% at 13.45. Tomorrow's session is rich with implications. The indices spent the entire day declining to close at their lows. While the action can be characterized as a merely corrective intraday pullback for the Dow and SPX, the action damaged the daily cycle upphase on the Nasdaq, and the 1.73% drop is sufficiently large to qualify as impulsive. In particular, the gains of the past 3 sessions were reversed on the Nasdaq, leaving only last week's double bottom support between current levels and new lows for the year. With that said, it's worth noting that the daily cycle upphase, even on the Nasdaq, is not yet over and should, all other things being equal, continue for at least another week. It's possible that the Fed's substantial repo drain, announced at 10AM amidst the furor over the possibility that the Sunday terror alert might be a dud, could have been a miscalculation by the Fed's open market desk in an attempt to mitigate a possibly large relief rally. That's pure speculation on my part, but if the Fed makes a large repo announcement tomorrow, it will appear more likely. In any event, the Nasdaq is at a level where it needs to bounce to avoid kicking off a new daily cycle downphase from a much lower price and oscillator high. A bounce will preserve the bullish daily cycle outlook, and we'll watch for confirmation in the form of today's high being exceeded. No bounce, and the bulls will have fumbled the ball very close to their endzone. *************** 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 ************************Advertisement************************* Live Securities Brokerage Service with Licensed Option Principals OCO Stop & Profit Orders OneStopOption All types of Spreads and Buy Writes 888-281-9569 Auto-Trade Market Monitor Signals Personal Service and Education **Services available for Foreign Traders including Canada** http://www.OneStopOption.com ************************************************************** ***************** INDEX TRADER WRAP ***************** The first battle of Bull Run The major indices ended lower, where today's declines mark the end to a "bull run" of five straight sessions of gains, where a 0.7% decline in June personal spending kept buyers on the sidelines. In June of 1861, despite their acceptance of slavery, Delaware, Kentucky, Maryland and Missouri did not join the Confederacy. Although divided in their loyalties, a combination of political maneuvering and Union military pressure kept these four states from seceding. Then, in July of 1861, public outcry pushed General-in-Chief Winfield Scott to advance on the South, before adequately training his untried troops. General Scott ordered General Irvin McDowell to advance on Confederate troops stationed in Manassas Junction, Virginia. On July 21, McDowell attacked and was initially successful (for 5-days?), but the introduction of Confederate reinforcements resulted in a Southern victory and a chaotic retreat toward Washington by federal troops. Today's bullish retreat would certainly not be considered chaotic with the Dow Industrials (INDU) 10,120 -0.57% falling 59 points, but tech bulls seemed to be more eager to "retreat" with no shoes or socks (read SOX.X) on their hooves with the Semiconductor Index (SOX.X) 402.96 -3.76% looking eager to be the first equity- based index in our WEEKLY Pivot Matrix to get a trade at WEEKLY S1 (397.31). U.S. Market Watch - 08/03/04 Close My "sentiment" indices had the Securities Broker/Dealer Index (XBD.X) 118.03 -1.34% and S&P Retail Index (RLX.X) 378.90 -1.66% rather tightlipped to sound a further bullish "charge!" on their trumpets, while 5-day percentage loser and the Disk Drive Index (DDX.X) 93.65 -3.29%, Health Provider Index (RXH.X) 343.85 -1.77% and Airline Index (XAL.X) 44.17 -2.32% left the battlefield looking tattered and torn. Aside from the Cyclical Index (CYC.X) 683.04 -1.10%, recent 5-day percentage gainers showed some relative strength, or held onto fractional gains by the close. Treasuries finished at their highs of the session, where ahead of next Tuesday's FOMC meeting, traders begin to contemplate whether or not the Fed will raise its target for fed funds to 1.50% from 1.25%, where higher oil/gasoline prices, which some say creates an "artificial tax" on consumers, has the Fed holding steady at 1.25%. Market Snapshot / Internals - 08/03/04 Close I may have jinxed today's attempt for bulls to stand their ground when reviewing the chart of the NYSE Composite ($NYA.X) at 01:00 PM EDT (see intra-day update) and while the stronger NYSE Composite (read General Irvin McDowell) found fractional gains, the weaker NASDAQ Composite (COMPX) and troops with 4 or 5- letters stitched to their lapels, were running from the battle field. Eighty-nine generals showed up at the NYSE today (read new 52- week highs), while 42 troops (read new 52-week lows) were sent to the infirmary. While the NASDAQ's 10-day NH/NL ratio reversed up to 22% on its point and figure chart, it looks to have been carryover from the prior three sessions, where today's 38 new highs are nearly half of yesterday's 65, while today's casualties and 100 new lows grow for a third-straight session. In essence, the "generals" at the NASDAQ are in desperate need of supporting troops, or their numbers will most likely dwindle from here. "The Generals" - 33-most heavily weighted OEX components Software giant Microsoft (NASDAQ:MSFT) $28.07 -1.57% and energy giant Exxon/Mobil (NYSE:XOM) $46.89 +1.39% traded places at the #2 and #3 most heavily weighted OEX component slots. In the context of "generals" equating to market caps size, even a general needs a supporting staff if they're to win the battle. In today's 01:00 intra-day update, I noted some near-term resistance in the NYSE Composite ($NYA.X) at the 6,436 level, and at up until the final 5-minutes of trade, the small-caps of the Russell-2000 Index ($RUT.X) 543.63 -1.5% were struggling to hold a near-term level of retracement support. Russell-2000 Index ($RUT.X) - Daily Intervals Just looking at the Russell-2000 Index ($RUT.X) 543.63 -1.5% gives us a weaker major index of small cap stocks to compare to the STRONGER NYSE Composite ($NYA.X), where similar conventional use of retracement (gives us levels as reference points) as well as similarly drawn trends (as used on the NYSE Comp.). My observation is that the RUT.X is WEAKER than the NYSE Composite, not only at old downward trend (solid red), but the RUT.X was not able to challenge its 38.2% retracement (March highs and May low retracement) as we witness in the NYSE Composite. Weakness tends to lead weakness. Please note that the NASDAQ-100 Index (NDX.X) 1,379.14 -1.93% and its Tracking Stock (AMEX:QQQ) $34.23 -2.08% did show greater weakness than the Russell-2000 Index ($RUT.X) last week, when the NDX.X briefly pierced below its May low of 1,372.46. Also note the Semiconductor Index (SOX.X) 402.96 -3.76% traded below its May low (432.97) on July 14th. Pivot Analysis Matrix - In the context of "generals" and "troops," I'd consider the "troops" to be depicted by the NDX/QQQ and SOX.X at this point. Certainly some troops can become generals in the military, but when we look at the pivot matrix and correlations into tomorrow's trade, correlative support levels for NDX/QQQ and SOX.X are largely found at WEEKLY S1, while the INDU, SPX, OEX and BIX.X are at WEEKLY Pivots. Jeff Bailey **************** MARKET SENTIMENT **************** Confidence Weakening - J. Brown It's amazing how things can change so quickly. Last week traders were excited over the possibility of a bounce. Now that bounce is fading over record high crude oil prices and disappointing economic data. The record close for crude oil is probably the page one story. Crude closed at $44.15 for the first time ever after OPEC said the cartel was virtually helpless to influence the rise in oil because almost all its members are pumping at capacity. Saudia Arabia is probably the only member of OPEC who has any excess capacity left and that's down to 800,000 to 1 million barrels a day. Then there's the terror-impact on oil prices. Some speculate that there is a $15 "risk" premium built into the price of oil already. The recent terror warning this Sunday has only heightened investors' fears about interruptions in the global oil supply. This morning's personal spending data was also disappointing and impacted the retail sector. Spending dropped 0.7 percent, which was significantly more than expected. Economists were looking for a drop of just 0.1 percent. I'll give you one guess on what could be impacting consumer-spending habits. Yes, oil prices and how it impacts consumers' wallets at the pump. Now we cannot lay all the blame on high gasoline prices but it's a big influence. A spike in planned corporate layoffs also fueled concerns that this Friday's non-farm payrolls report for July may come in weaker than expected. If jobs don't pick up it's going to be another bat for the Democrats to beat President Bush with as we near the polls. The rest of the week will be influenced by economic data. Wednesday brings the factory orders for June, the ISM Services index for July and crude oil and gasoline inventory data. Thursday brings the weekly initial jobless claims and the natural gas inventories. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10753 52-week Low : 8997 Current : 10120 Moving Averages: (Simple) 10-dma: 10076 50-dma: 10205 200-dma: 10228 S&P 500 ($SPX) 52-week High: 1163 52-week Low : 960 Current : 1099 Moving Averages: (Simple) 10-dma: 1095 50-dma: 1112 200-dma: 1107 Nasdaq-100 ($NDX) 52-week High: 1559 52-week Low : 1204 Current : 1379 Moving Averages: (Simple) 10-dma: 1389 50-dma: 1429 200-dma: 1446 ----------------------------------------------------------------- CBOE Market Volatility Index (VIX) = 16.03 +0.66 CBOE Mkt Volatility old VIX (VXO) = 15.21 +0.59 Nasdaq Volatility Index (VXN) = 25.08 +0.95 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.73 544,250 344,652 Equity Only 0.54 396,065 215,231 OEX 1.15 16,835 19,299 QQQ 0.77 20,665 15,915 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 59.8 + 0 Bear Confirmed NASDAQ-100 34.0 + 1 Bear Confirmed Dow Indust. 53.3 + 0 Bear Confirmed S&P 500 53.6 + 0 Bear Confirmed S&P 100 54.0 - 1 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: 1.14 10-dma: 1.19 21-dma: 1.33 55-dma: 1.18 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 1140 977 Decliners 1649 2053 New Highs 62 40 New Lows 44 81 Up Volume 516M 211M Down Vol. 1074M 1226M Total Vol. 1602M 1479M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 07/27/04 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 Commercials are turning a bit more bearish with a decrease in long positions and a small increase in shorts. Small traders are naturally turning a bit more bullish with a decrease in shorts. Commercials Long Short Net % Of OI 07/06/04 402,952 416,526 (13,574) (1.7%) 07/13/04 407,166 416,869 ( 9,703) (1.2%) 07/22/04 404,828 419,017 (14,189) (1.7%) 07/27/04 397,354 422,914 (25,560) (3.1%) 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 07/06/04 132,423 90,748 41,675 18.7% 07/13/04 133,935 95,787 38,148 16.6% 07/22/04 138,123 94,990 43,133 15.5% 07/27/04 135,136 90,433 44,703 19.8% 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 Commercial traders have decreased their bearishness by upping their long contacts by about 20K. Small traders are hedging their bets a bit by reducing their bullish positions. Commercials Long Short Net % Of OI 07/06/04 287,442 423,583 (136,141) (19.1%) 07/13/04 265,142 427,017 (161,875) (23.4%) 07/22/04 309,972 428,240 (118,268) (16.0%) 07/27/04 337,615 429,477 ( 91,862) (12.0%) 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 07/06/04 219,321 58,567 160,754 57.8% 07/13/04 225,410 57,699 167,711 59.2% 07/22/04 212,078 62,416 149,662 54.5% 07/27/04 186,211 68,930 117,281 46.0% 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 are still hovering around the same level of cautious bullishness for the last three weeks. Small traders have moved from bearish to less bearish to neutral in the last three weeks (thus a bullish progression in sentiment). Commercials Long Short Net % of OI 07/06/04 42,245 37,343 4,902 6.2% 07/13/04 44,211 37,007 7,204 8.9% 07/22/04 45,069 37,975 7,094 8.5% 07/27/04 43,042 35,935 7,107 9.0% 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 07/06/04 9,345 16,527 (7,182) (27.8%) 07/13/04 7,847 15,243 (7,396) (32.0%) 07/22/04 9,398 11,776 (2,378) (11.2%) 07/27/04 14,543 14,518 25 0.0% 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 The bullish sentiment from the commercial traders dipped a tad this past week with an increase in their short positions. Meanwhile small traders have significantly adjusted their positions to be less bearish. Commercials Long Short Net % of OI 07/06/04 27,214 20,775 6,439 13.4% 07/13/04 27,773 20,573 7,200 14.9% 07/22/04 27,957 20,389 7,568 15.7% 07/27/04 27,577 21,427 6,150 12.5% Most bearish reading of the year: (8,322) - 1/16/01 Most bullish reading of the year: 15,135 - 10/16/01 Small Traders Long Short Net % of OI 07/06/04 5,969 8,227 (2,258) (15.9%) 07/13/04 5,292 9,068 (3,776) (26.3%) 07/22/04 4,857 7,297 (2,440) (20.1%) 07/27/04 5,310 6,099 ( 789) ( 6.9%) Most bearish reading of the year: (12,106) - 3/09/04 Most bullish reading of the year: 8,523 - 8/26/03 ************************Advertisement************************* Full Service Brokers Man Financial announces the formation of the OneStopOption Brokerage Group, addressing the demand for personalized, experienced service for both securities* and futures trading within the same firm. Licensed Option Principals Andrew Aronson and Alan Knuckman specialize in live assistance of stock*, option* and futures traders. The combination of the proven Man Financial global presence and the convenience of one group for all trading needs provide customers with the tools needed for success. Live Broker and Online Trading Available 888-281-9569 http://www.OneStopOption.com ************************************************************** ****************** FREE TRIAL READERS ****************** If you like the results you have been receiving we would welcome you as a permanent subscriber. The monthly subscription price is $49.95. The quarterly price is $129.95 which is $20 off the monthly rate. We would like to have you as a subscriber. You may subscribe at any time but your subscription will not start until your free trial is over. To subscribe you may go to our website at www.OptionInvestor.com and click on "subscribe" to use our secure credit card server or you may simply send an email to "Contact Support" with your credit card information,(number, exp date, name) or you may call us at 303-797-0200 and give us the information over the phone. You may also fax the information to: 303-797-1333 ********** DISCLAIMER ********** Please read our disclaimer at: http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html ************************************************************** ADVERTISING INFORMATION For more information on advertising in OptionInvestor Newsletter, or any Premier Investor Network newsletter please contact: Contact Support
The Option Investor Newsletter Tuesday 08-03-2004 Copyright 2004, All rights reserved. 2 of 3 Redistribution in any form strictly prohibited. In Section Two: Dropped Calls: None Dropped Puts: CEPH Call Play Updates: ADSK, CCMP, ETN, FDX, HUG, IMO, IR, SYMC, TXT New Calls Plays: None Put Play Updates: MGA New Put Plays: AMZN, EBAY, CAT **************** 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: ***** Cephalon - CEPH - close: 49.78 change: -0.57 stop: 52.01 Time's up. According to our plan we hypothetically closed this play at Tuesday's closing bell to avoid any earnings surprises. CEPH reported earnings after the bell that were in-line with expectations of 39 cents a share. Revenues for the quarter did rise more than 40% and came in above analysts' estimates. The stock has been trading in a very volatile $6.00 range in after hours markets but as of the time of this update the stock was down more than $1.00. Picked on July 15 at $ 49.87 Change since picked: - 0.09 Earnings Date 08/03/04 (confirmed) Average Daily Volume: 969 thousand Chart = PUTS: ***** None ************************Advertisement************************* Full Service Brokers Man Financial announces the formation of the OneStopOption Brokerage Group, addressing the demand for personalized, experienced service for both securities* and futures trading within the same firm. Licensed Option Principals Andrew Aronson and Alan Knuckman specialize in live assistance of stock*, option* and futures traders. The combination of the proven Man Financial global presence and the convenience of one group for all trading needs provide customers with the tools needed for success. Live Broker and Online Trading Available 888-281-9569 http://www.OneStopOption.com ************************************************************** ******************** PLAY UPDATES - CALLS ******************** Autodesk - ADSK - close: 39.96 change: +0.47 stop: 36.99 The good news here is that traders bought the dip toward $39.00 on Monday and ADSK rallied back above the $40 level Tuesday morning. The bad news is that ADSK couldn't hold its gains as the broader market turned lower. ADSK, a software maker, did out perform the NASDAQ's 1.7 percent loss and the GSO software index's 1.86 percent loss. We're still bullish on the stock but readers may want to wait for ADSK to trade back above $40.40 before consider new positions. Picked on July 30 at $ 40.05 Change since picked: - 0.09 Earnings Date 08/19/04 (unconfirmed) Average Daily Volume: 2.1 million Chart = --- Cabot Micro - CCMP - close: 33.18 change: -1.88 stop: 31.75 Ouch! The 3.76 percent decline in the Semiconductor Index (SOX) really undercut confidence in the chip sector. Investors decided to do some profit taking in CCMP and the stock slipped more than five percent. The $33 level is pivotal as both the simple 10-dma and the 100-dma, both possible technical support, converge together. The drop back under the $34 level does look somewhat ominous as CCMP's short-term technicals (RSI and Stochastics) turn negative from overbought levels. We would be extra careful about new positions and wait for the bounce. Picked on August 1st at $35.46 Change since picked: - 2.28 Earnings Date 07/22/04 (confirmed) Average Daily Volume = 935 thousand Chart = -- Eaton Corp - ETN - close: 65.00 change: -0.41 stop: 61.99 It's been a decent couple of days for ETN. Shares broke out above the $65.00 level of potential resistance on Monday. ETN saw some follow through on the move Tuesday morning before slipping backwards as the market turned sour. We're actually encouraged that ETN closed at $65.00 and not under it on Tuesday even though we suspect it will slip lower tomorrow. Readers can look for another bounce above the $64 level as a potential entry point for bullish positions. Picked on July 29 at $ 64.98 Change since picked: + 0.02 Earnings Date 07/15/04 (confirmed) Average Daily Volume: 925 thousand Chart = --- Fedex Corp - FDX - close: 81.81 change: -0.64 stop: 79.00 The Dow Jones Transportation index has actually done okay with decent bounce the last several days in spite of the new record highs in crude oil. Likewise shares of FDX have rebounded from the $80 region to breakout over month-old resistance at $82.00. At least that was yesterday. Tuesday saw FDX reverse Monday's gains and slip back under the $82 level. We're not making a prediction but FDX could once again fade back to the $80 region before bouncing. More aggressive traders might want to use the dip as an entry point. Picked on July 20 at $ 82.81 Change since picked: - 1.00 Earnings Date 06/23/04 (confirmed) Average Daily Volume: 1.1 million Chart = --- Hughes Supply - HUG - close: 60.00 change: -1.72 stop: 57.75*new* Ouch! HUG's 2.78 percent drop today erased the previous four days of gains. There isn't any specific catalyst for the drop other than market weakness and the disappointing consumer spending numbers. The fact that HUG closed at $60.00 and not under it is a good sign but tomorrow could be a challenge. We're going to raise our stop loss to $57.75. We would not suggest new entries until HUG traded back above $60.50 or $61.00 depending on your risk profile. Picked on July 15 at $ 60.51 Change since picked: - 0.51 Earnings Date 08/24/04 (unconfirmed) Average Daily Volume: 288 thousand Chart = -- Imperial Oil - IMO - close: 49.91 change: +0.69 stop: 46.75 Oil and energy stocks were one of the few pockets of strength today as the broader market tumbled. Fueling the move was crude prices, which closed at new all-time highs above $44 a barrel. Shares of IMO continues to build on their recent breakout. While we suggested a possible alternative on a dip to $48 the momentum entry over $50.00 may be our only play. Of course you don't have to take the momentum entry and exercise patience for a possible dip. Picked on August 1st at $49.49 Change since picked: + 0.42 Earnings Date 07/22/04 (confirmed) Average Daily Volume = 55 thousand Chart = --- Ingersoll-Rand - IR - close: 68.17 chg: +0.01 stop: 66.99 We are still in limbo with IR. The stock needs to breakout over resistance at $70.00 and hit our trigger at $70.01 before we're officially "long" the stock. The only challenge we see to buying this dip is the weakness in the Industrials. If the Dow sinks lower then IR may be inclined to test its simple 200-dma, which lately hasn't held up very well as support. Picked on July 29 at $ xx.xx <-- see TRIGGER Change since picked: + 0.00 Earnings Date 07/22/04 (confirmed) Average Daily Volume: 1.3 million Chart = --- Symantec - SYMC - close: 45.43 change: -1.01 stop: 42.45 The drop in the NASDAQ and the 1.86 percent drop in the GSO software index both weighed heavily on SYMC as traders sought to sell their recent winners. SYMC slipped more than two percent. While the stock did hold above minor support at the $45 level and its simple 100-dma candlestick traders might note the bearish engulfing candlestick pattern created today. We would be cautious here as short-term technicals like the RSI and stochastics are hinting at a bearish turnaround. We would expect a dip back to the $44.00 region. More aggressive traders can look to buy a bounce there. Picked on July 27 at $ 44.91 Change since picked: + 0.52 Earnings Date 07/21/04 (confirmed) Average Daily Volume: 5.4 million Chart = --- Textron - TXT - close: 62.51 change: +0.21 stop: 58.49 *new* TXT continues to look strong and has not allowed the terror warning, record crude prices or market weakness to derail its rally. However, should TXT produce a dip readers can look for a bounce in the $60.50-61.00 range as an entry point for new positions. There is no change in our strategy but we are raising our stop loss to $58.49. Picked on July 26th at $60.72 Change since picked: + 1.79 Earnings Date 07/22/04 (confirmed) Average Daily Volume = 622 thousand Chart = ************** NEW CALL PLAYS ************** None ************************Advertisement************************* Live Securities Brokerage Service with Licensed Option Principals OCO Stop & Profit Orders OneStopOption All types of Spreads and Buy Writes 888-281-9569 Auto-Trade Market Monitor Signals Personal Service and Education **Services available for Foreign Traders including Canada** http://www.OneStopOption.com ************************************************************** ******************* PLAY UPDATES - PUTS ******************* Magna Intl - MGA - close: 80.40 change: -0.18 stop: 82.01 MGA continues to oscillate around the $80.00 region as investors wait for the company's earnings report due out Thursday morning. It is interesting that MGA's rally attempt today failed at the $81.00 level, the fourth such failed rally at $81.00 in the last couple of weeks. We are not suggesting new plays and want to remind readers that we'll exit on Wednesday afternoon's close to avoid any earnings surprises. Picked on July 15 at $ 81.53 Change since picked: - 1.13 Earnings Date 08/05/04 (confirmed) Average Daily Volume: 182 thousand Chart = ************* NEW PUT PLAYS ************* Amazon.com - AMZN - close: 37.61 change: -0.69 stop: 40.01 Company Description: Amazon.com, a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth's Biggest Selection. Amazon.com seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. Amazon.com and other sellers offer millions of unique new, refurbished and used items in categories such as health and personal care, jewelry and watches, gourmet food, sports and outdoors, apparel and accessories, books, music, DVDs, electronics and office, kids and baby, and home and garden. (source: company press release) Why We Like It: Normally we don't like to play puts on a stock that's this oversold and AMZN is definitely oversold down more than 17 points from its June highs. Yet the stock has not shown any signs of an oversold bounce even when the Industrials and NASDAQ were bouncing last week. The current trend of lower highs and lower lows looks ready to breakdown under minor support at $37.50. Now that the major indices look ready to roll over again the P/E compression could hit richly valued stocks like AMZN harder than most. Traders can choose to go short/buy puts on a drop through today's low at $37.23 or look for a bounce/failed rally under the $40.00 level and its simple 10-dma. The Point & Figure chart is very bearish with a new spread triple-bottom breakdown sell signal and a $21 price target. We feel that a target in the $32.50-30.00 region is more reasonable. We are going to start the play now with a stop loss at $40.01. Suggested Options: Short-term traders have a choice between August and September puts. We prefer the September 35s and 40s. BUY PUT AUG 35.00 ZQN-TG OI= 5173 Current Ask $0.75 BUY PUT AUG 37.50 ZQN-TU OI=10521 Current Ask $1.60 BUY PUT AUG 40.00 ZQN-TH OI=13533 Current Ask $3.20 BUY PUT SEP 35.00 ZQN-UG OI= 4955 Current Ask $1.55 BUY PUT SEP 37.50 ZQN-UU OI= 4482 Current Ask $2.60 BUY PUT SEP 40.00 ZQN-UH OI= 3314 Current Ask $4.00 Annotated chart: Picked on August 3rd at $37.61 Change since picked: - 0.00 Earnings Date 07/22/04 (confirmed) Average Daily Volume = 8.3 million --- eBay Inc - EBAY - close: 77.08 change: -2.07 stop: 80.35 Company Description: eBay is The World's Online Marketplace.. Founded in 1995, eBay created a powerful platform for the sale of goods and services by a passionate community of individuals and businesses. On any given day, there are millions of items across thousands of categories for sale on eBay. eBay enables trade on a local, national and international basis with customized sites in markets around the world. Through an array of services, such as its payment solution provider PayPal, eBay is enabling global e- commerce for an ever growing online community. (source: company press release) Why We Like It: Why are we playing puts on EBAY? After all the Internet auction giant continues to grow revenues like gang-busters and is arguably the best Internet stock to survive the dotcom bubble bursting. Our number one reason is probably the hard to quantify issue of investor confidence. Confidence in EBAY is wavering. Yes, business is great but the company actually guided under analyst estimates for the current quarter when they announced earnings on July 21st. The number two is its momentum, the bearish kind of momentum. The stock dipped to $71.45 after its earnings report but traders bought the dip and/or shorts covered so much that EBAY actually closed positive on the session after its report. Then as EBAY began to fade the market turned around and stocks turned in an oversold bounce after a dismal performance in July. EBAY participated in the bounce but it couldn't breakout over technical resistance at its simple 100-dma or psychological resistance at the $80.00 mark. Tuesday's early morning attempt to breakout over $80.00 again failed and the stock actually broke down under its simple 10-dma by the close. Yes, shares are still oversold but lo and behold the bounce back to $80.00 just happened to be a 38.2% Fibonacci retracement of the June to July drop. With short-term technicals like RSI and stochastics turning lower again we suspect EBAY will retest the $71.50 range and/or its simple 200-dma (currently at $70.90). We're going to start the play with a stop loss over the recent high. ! Alert: It's been dangerous to short/buy puts on EBAY for years and this is no exception. We feel this is slightly more aggressive considering that EBAY's P&F chart is still in a bullish buy signal. Suggested Options: Short-term traders can choose from the August or September puts. We like the September 80s and 75s. BUY PUT AUG 75 XBA-TO OI= 25681 Current Ask $1.50 BUY PUT AUG 80 XBA-TP OI= 15675 Current Ask $4.20 BUY PUT SEP 75 XBA-UO OI= 3135 Current Ask $3.00 BUY PUT SEP 80 XBA-UP OI= 1162 Current Ask $5.60 Annotated chart: Picked on August 3rd at $77.08 Change since picked: - 0.00 Earnings Date 07/21/04 (confirmed) Average Daily Volume = 9.1 million --- Caterpillar - CAT - close: 71.68 change: -1.42 stop: 74.25 Company Description: For more than 75 years, Caterpillar has been building the world's infrastructure and, in partnership with our independent dealers, is driving positive and sustainable change on every continent. Caterpillar is a technology leader and the world's largest maker of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. (source: company press release) Why We Like It: We like CAT as a put candidate for a multiple reasons. Number one it's a Dow-component and with the Dow looking ready to test the 10,000 level again CAT is likely to trade lower with it (if not overshoot it to the downside). Secondly we like CAT as a put because investor reaction to its earnings report has not been positive. Yes, the company raised its 2004 earnings outlook but traders weren't happy with the earnings miss and the stock gapped down on the news. Now shares of CAT have been stuck in a trading range the last several sessions and it looks ready to breakdown from this trading range to new relative lows. Furthermore its P&F chart has broken rising support and has also produced a spread triple-bottom breakdown sell signal with a $64 target. We want to use a TRIGGER at $70.75 to open the play. That means CAT has to break support at the $71.00 level and we'll be able to catch the breakdown. We thought there might be some round-number support at the $70.00 level but that doesn't seem to be the case when you look at how shares reacted to this level last summer. We'll target a drop to $65.00. Our initial stop loss will be $74.25, just over the recent high. Suggested Options: We like the August puts because there is more liquidity and open interest. Yet we like the September puts more because we get more time. BUY PUT AUG 75 CAT-TO OI=6018 current ask $3.80 BUY PUT AUG 70 CAT-TN OI=8009 current ask $1.00 BUY PUT SEP 75 CAT-UO OI= 447 current ask $4.70 BUY PUT SEP 70 CAT-UN OI=1657 current ask $2.05 Annotated chart: Picked on August xxx at $xx.xx <-- see TRIGGER Change since picked: - 0.00 Earnings Date 07/22/04 (confirmed) Average Daily Volume = 2.4 million ************************Advertisement************************* No time to follow the Market Monitor? Tired of missing good Trades because you stepped away from your computer? OneStopOption Group can follow the Market Monitor for you. You choose the number of contracts, we take care of the rest!! Trade Stock Options, Stocks and ALL Futures with the same Group. Call us 888 281-9569 to see if you qualify to have us rebate your subscription cost. http://www.OneStopOption.com ************************************************************** ********** DISCLAIMER ********** Please read our disclaimer at: http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html ************************************************************** ADVERTISING INFORMATION For more information on advertising in OptionInvestor Newsletter, or any Premier Investor Network newsletter please contact: Contact Support
The Option Investor Newsletter Tuesday 08-03-2004 Copyright 2004, All rights reserved. 3 of 3 Redistribution in any form strictly prohibited. In Section Three: Watch List: AZO, QCOM, ATH, OXY Spreads & Straddles: Bears Rout Bulls As Oil Soars To Record Highs! Premium Selling Plays: Naked Puts & Calls ********** WATCH LIST ********** AutoZone - AZO - close: 75.26 change: -2.29 WHAT TO WATCH: This seriously looks like a bearish entry point in AZO. The stock had managed to trade above its simple 21-dma and was challenging resistance at the $78.00 mark on Monday. Tuesday's 2.95% drop was a sharp reversal and its short-term technicals immediately turned south with it. Readers might want to use a trigger under the recent low at $74.84 and target a drop to $67.50. The bearish P&F chart points to a $59 target. --- QUALCOMM - QCOM - close: 70.97 change: -1.09 WHAT TO WATCH: We're putting QCOM on the watch list as a bullish candidate. The stock has been holding up pretty well. Aggressive traders might want to consider a bounce from $70.00 as an entry point. The rest of us are probably better off waiting for QCOM to break the month-long trend of lower highs and push through overhead resistance in the $73.50 region. The P&F chart is bullish and points to a $90.00 target. --- Anthem - ATH - close: 81.36 change: -0.94 WHAT TO WATCH: Health insurance company Anthem saw its stock drop sharply as questions arose about its proposed merger with WLP. The drop continued after ATH reported earnings. Now the oversold bounce is fading under its simple 200-dma. Readers might want to consider bearish positions if ATH breaks down under the $80.00 level or its July low of $79.30. The P&F chart looks very bearish with a breakdown under support ant a $66 target. --- Occidental Petroleum - OXY - close: 49.97 change: +0.57 WHAT TO WATCH: There are plenty of stocks in the oil/energy sector at or near new highs but many of them look too overbought to play safely. Fortunately, OXY is not one of them. The stock has a more gradual climb and is nearing resistance in the $50.00- 50.50 range. Bulls could use a breakout over $50.50 as an entry point. The P&F chart is extremely bullish with a $90 target. We'd be more realistic with a short-term target of $55. ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- GDW $108.68 +0.52 - GDW's rally is starting to pick up a little bit of steam. We're still waiting for the breakout over $110. WFMI $78.68 -2.11 - Here we go! WFMI has broken down through round-number support at the $80.00 level after yesterday's failed rally at the simple 100-dma. The next stop is likely the 200-dma near $75. ************************Advertisement************************* Live Securities Brokerage Service with Licensed Option Principals OCO Stop & Profit Orders OneStopOption All types of Spreads and Buy Writes 888-281-9569 Auto-Trade Market Monitor Signals Personal Service and Education **Services available for Foreign Traders including Canada** http://www.OneStopOption.com ************************************************************** ******************* SPREADS & STRADDLES ******************* Bears Rout Bulls As Oil Soars To Record Highs! By Ray Cummins Stocks retreated Tuesday as crude futures rose above $44 and investors assimilated a sizable decline in consumer spending. The Dow Jones Industrial Average closed down 58 points at 10,120, with Alcoa (NYSE:AA), Home Depot (NYSE:HD), Intel (NASDAQ:INTC) and Microsoft (NASDAQ:MSFT) leading the blue chip decliners. The NASDAQ Composite Index fell 32 points to 1,859 amid a drop in semiconductor shares after A.G. Edwards downgraded several chip-makers. The S&P 500 slid 7 points to 1,099 with retailers among the worst performers after the Commerce Department said consumer spending declined 0.7% in June, the biggest drop since September 2001. In the broader market, decliners outpaced advancers by a 6 to 5 margin on the New York Stock Exchange and 2 to 1 on the NASDAQ. About 1.3 billion shares traded on the Big Board, while more than 1.5 billion shares were crossed on the technology exchange. Treasury prices enjoyed a small lift from the economic data with the benchmark 10-year note adding 7/32 to yield 4.42%. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SUMMARY OF CURRENT POSITIONS - AS OF 08/01/04 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 Mon L/P S/P Credit CB G/L Status FRE 63.57 64.31 AUG 55.0 60.0 0.55 59.45 0.55 Open POT 98.08 96.69 AUG 85.0 90.0 0.60 89.40 0.60 Open UOPX 89.09 86.17 AUG 75.0 80.0 0.60 79.40 0.60 Open FAST 54.74 62.38 AUG 45.0 50.0 0.60 49.40 0.60 Open PD 79.00 77.94 AUG 65.0 70.0 0.60 69.40 0.60 Open AAPL 32.30 32.34 AUG 27.5 30.0 0.30 29.70 0.30 Open FSH 58.66 58.20 AUG 50.0 55.0 0.65 54.35 0.65 Open L/P = Long Put S/P = Short Put CB = Cost Basis G/L = Gain/Loss Special Tuesday Note: Shares of University of Phoenix Online (NASDAQ:UOPX) fell sharply on Monday after industry competitor Corinthian Colleges (NASDAQ:COCO) warned of a shortfall in its financial results. UOPX is now slightly below our sold (put) strike at $80 and conservative traders should consider closing the position to preserve capital. Positions in Gilead Sciences (NASDAQ:GILD), which is currently profitable, Anthem (NYSE:ATH) and Wellpoint Health (NYSE:WLP) have previously been closed to limit losses. CALL-CREDIT SPREADS Stock Pick Last Mon L/C S/C Credit CB G/L Status LLTC 36.74 39.10 AUG 42.5 40.0 0.30 40.30 0.30 Open XLNX 31.53 29.43 AUG 37.5 35.0 0.25 35.25 0.25 Open MERQ 46.17 36.56 AUG 55.0 50.0 0.65 50.65 0.65 Open SMH 34.58 32.90 AUG 42.5 40.0 0.30 40.30 0.30 Open TLB 33.04 30.80 AUG 40.0 35.0 0.60 35.60 0.60 Open VAR 77.24 69.01 AUG 90.0 85.0 0.50 85.50 0.50 Open KLAC 43.33 41.23 AUG 50.0 47.5 0.25 47.75 0.25 Open NVLS 29.23 27.01 AUG 35.0 32.5 0.20 32.70 0.20 Open BZH 90.65 93.40 AUG 105.0 100.0 0.45 100.45 0.45 Open LLY 64.67 63.72 AUG 75.0 70.0 0.65 70.65 0.65 Open L/C = Long Call S/C = Short Call CB = Cost Basis G/L = Gain/Loss Linear Technologies (NASDAQ:LLTC) will be a candidate for early exit on any move above $40. DEBIT STRADDLES Stock Pick Last Exp. Long Long Initial Max Play Symbol Price Price Month Call Put Debit Value Status DVN 69.40 70.40 AUG 70.00 70.00 5.00 4.80 Open TBL 60.26 58.04 AUG 60.00 60.00 4.75 5.00 Open Timberland (NYSE:TBL) enjoyed a brief surge in volatility on 7/22, plunging to a low near $56.25 during the session. The move may have offered a break-even exit using only the bearish portion of the straddle, however I was not available to monitor trading in the TBL options so the play will remain open in the summary. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BJS - BJ Services $49.60 *** A New Multi-Year High! *** BJ Services (NYSE:BJS) is a provider of pressure pumping and other oilfield services serving the petroleum industry worldwide. The company's pressure pumping services consist of cementing and stimulation services, and are used in the completion of new oil and natural gas wells and in remedial work on existing wells, both onshore and offshore. BJ's other oilfield services include completion tools, completion fluids and casing and tubular services provided to the oil and natural gas exploration and production industry, commissioning and inspection services provided to refineries, pipelines and offshore platforms and production chemical services. BJS - BJ Services $49.60 PLAY (less conservative - bullish/credit spread): BUY PUT AUG-45.00 BJS-TI OI=311 ASK=$0.25 SELL PUT AUG-47.50 BJS-TW OI=1525 BID=$0.55 INITIAL NET-CREDIT TARGET=$0.35-$0.40 POTENTIAL PROFIT(max)=16% B/E=$47.15 __________________________________________________________________ RTP - Rio Tinto $105.00 *** Natural Resources In Demand! *** Rio Tinto plc (NYSE:RTP), and Rio Tinto Limited, operate as a single business organization engaged in discovering, mining and processing the Earth's mineral resources. Its major products include aluminum, copper, diamonds, energy products (coal and uranium), gold, industrial minerals (borax, titanium dioxide, salt and talc) and iron ore. Its activities are represented in Australia and North America, with significant businesses in South America, Asia, Europe and southern Africa. RTP - Rio Tinto $105.00 PLAY (less conservative - bullish/credit spread): BUY PUT AUG-95.00 RTP-TS OI=71 ASK=$0.30 SELL PUT AUG-100.00 RTP-TP OI=22 BID=$0.75 INITIAL NET-CREDIT TARGET=$0.50-$0.60 POTENTIAL PROFIT(max)=11% B/E=$99.50 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ DIGE - Digene $33.08 *** Downtrend Intact! *** Digene (NASDAQ:DIGE) develops, manufactures and sells proprietary gene-based testing systems for screening, monitoring and diagnosis of human diseases. Its primary focus is in women's cancers and infectious diseases. The firm has applied its proprietary Hybrid Capture technology to develop a unique diagnostic test for human papillomavirus, which is the primary cause of cervical cancer and is found in greater than 99% of all cervical cancer cases. In addition to its HPV Test, the company's product portfolio includes gene-based tests for detecting chlamydia, gonorrhea, hepatitis B virus and cytomegalovirus. DIGE - Digene $33.08 PLAY (less conservative - bearish/credit spread): BUY CALL AUG-40.00 QDG-HH OI=572 ASK=$0.25 SELL CALL AUG-35.00 QDG-HG OI=351 BID=$0.80 INITIAL NET-CREDIT TARGET=$0.60-$0.70 POTENTIAL PROFIT(max)=14% B/E=$35.60 __________________________________________________________________ SRCL - Stericycle $48.00 *** Profit-Taking Underway! *** Stericycle (NASDAQ:SRCL) is a regulated medical waste management company, serving customers in the United States, Canada, Puerto Rico and Mexico. Stericycle's many services and operations are comprised of collection, treatment, transportation, disposal and recycling, together with related training and education programs, consulting services and product sales. Stericycle has a fully integrated, nationwide medical waste management network and the company uses this network to provide medical waste collection, transportation and treatment and related consulting, training and education services and products. SRCL - Stericycle $48.00 PLAY (conservative - bearish/credit spread): BUY CALL AUG-55.00 URL-HK OI=191 ASK=$0.15 SELL CALL AUG-50.00 URL-HJ OI=1323 BID=$0.50 INITIAL NET-CREDIT TARGET=$0.40-$0.45 POTENTIAL PROFIT(max)=8% B/E=$50.40 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 08/01/04 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 NFI AUG 30.00 29.20 40.11 0.80 5.99% 2.74% NVTL AUG 20.00 19.50 22.97 0.50 5.77% 2.56% CBST AUG 10.00 9.65 10.38 0.35 6.43% 3.63% TASR AUG 30.00 29.15 31.29 0.85 5.67% 2.92% PETD AUG 25.00 24.35 26.61 0.65 4.86% 2.67% CRDN JUL 35.00 34.55 38.25 0.45 9.24% 1.30% CRDN JUL 35.00 34.70 38.25 0.30 7.43% 0.86% NFI AUG 30.00 29.40 40.11 0.60 4.68% 2.04% NVTL AUG 20.00 19.50 22.97 0.50 6.11% 2.56% TASR AUG 30.00 29.30 31.29 0.70 4.93% 2.39% EYET AUG 35.00 34.45 37.10 0.55 3.92% 1.60% SCHN AUG 30.00 29.00 30.93 1.00 6.53% 3.45% FRO AUG 30.00 29.30 38.35 0.70 4.97% 2.39% GIVN AUG 30.00 29.45 34.44 0.55 4.21% 1.87% ATI AUG 15.00 14.50 20.05 0.50 7.89% 3.45% BEIQ AUG 25.00 24.00 24.01 0.01 0.08% 4.17% ESIO AUG 25.00 24.20 25.75 0.80 6.43% 3.31% AMHC AUG 25.00 24.25 27.23 0.75 5.98% 3.09% VTS AUG 22.50 21.85 24.63 0.65 5.72% 2.97% OSTK AUG 30.00 29.40 35.07 0.60 5.60% 2.04% KWK AUG 30.00 29.50 31.67 0.50 4.09% 1.69% ATI AUG 15.00 14.75 20.05 0.25 4.68% 1.69% EYET AUG 30.00 29.55 37.10 0.45 3.85% 1.52% ERES AUG 22.50 22.15 24.91 0.35 4.50% 1.58% CTSH AUG 22.50 22.05 27.55 0.45 4.61% 2.04% TECH AUG 40.00 38.75 39.80 1.05 5.27% 3.23% ELN AUG 20.00 19.70 20.55 0.30 4.31% 1.52% FARO AUG 20.00 19.65 23.53 0.35 5.77% 1.78% STLD AUG 30.00 29.60 32.75 0.40 3.50% 1.35% SRDX AUG 20.00 19.50 23.92 0.50 7.27% 2.56% NFI AUG 35.00 33.85 40.11 1.15 9.90% 3.40% ISG AUG 30.00 29.05 32.73 0.95 7.59% 3.27% LCAV AUG 25.00 24.35 26.09 0.65 6.54% 2.67% DHB AUG 12.50 12.15 15.21 0.35 8.54% 2.88% MSO AUG 10.00 9.65 11.29 0.35 9.88% 3.63% EENC AUG 12.50 12.25 13.59 0.25 4.83% 2.04% BLUD AUG 20.00 19.50 20.26 0.50 6.68% 2.56% ERES AUG 25.00 24.40 24.91 0.51 5.92% 2.46% IDCC AUG 17.50 17.05 19.24 0.45 6.72% 2.64% JNPR AUG 22.50 21.95 22.96 0.55 6.37% 2.51% NFI AUG 35.00 34.25 40.11 0.75 7.63% 2.19% JCOM AUG 25.00 24.45 25.51 0.55 5.80% 2.25% LCAV AUG 25.00 24.75 26.09 0.25 3.16% 1.01% CERN AUG 35.00 34.35 45.00 0.65 6.54% 1.89% VLCCF AUG 25.00 24.35 32.39 0.65 8.65% 2.67% Special Tuesday Note: A number of issues are on the early exit list and the most obvious candidates are: TASR, ERES and TECH. In addition, BLUD, JCOM, JNPR, ELN, KWK, ESIO, SCHN, CBST and VLCCF are the primary stocks on the "watch" list. Multimedia Games (NASDAQ:MGAM), Gen-Probe (NASDAQ:GPRO), Carrier Access (NASDAQ:CACS) and Aeroflex (NASDAQ:ARXX) have previously been closed to limit potential losses. NAKED CALLS Stock Strike Strike Break Current Gain Max Simple Symbol Month Price Even Price (Loss) Yield Yield SLAB AUG 50.00 51.00 35.29 1.00 5.30% 1.96% SINA AUG 40.00 40.85 28.34 0.85 7.85% 2.08% ATRS AUG 30.00 30.85 25.11 0.85 6.52% 2.76% MRVL AUG 27.50 27.85 23.22 0.35 3.98% 1.26% MACR AUG 25.00 25.40 20.20 0.40 4.55% 1.57% ISIL AUG 20.00 20.45 18.36 0.45 5.72% 2.20% FLML AUG 25.00 25.50 18.85 0.50 8.15% 1.96% OTEX AUG 30.00 30.65 25.34 0.65 6.12% 2.12% TELK AUG 25.00 25.45 19.76 0.45 5.60% 1.77% ASKJ AUG 40.00 40.50 29.08 0.50 5.97% 1.23% DRIV AUG 30.00 30.85 28.10 0.85 7.92% 2.76% SINA AUG 35.00 35.45 28.34 0.45 6.42% 1.27% BSX AUG 40.00 40.50 38.26 0.50 3.58% 1.23% ICUI AUG 30.00 30.80 27.80 0.80 8.64% 2.60% WMGI AUG 35.00 35.65 27.63 0.65 5.46% 1.82% LSCP AUG 30.00 30.70 19.07 0.70 11.15% 2.28% ERICY AUG 30.00 30.65 26.71 0.65 8.01% 2.12% NTES AUG 40.00 40.45 37.25 0.45 6.31% 1.11% There was no viable position in Eon Labs (NASDAQ:ELAB), due to the "gap-down" opening on the day after the play was listed. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 Last Option Option Last Open Cost Days Simple Max Symbol Price Series Symbol Bid Int. Basis Exp. Yield Yield KYPH 27.30 AUG 25.00 QYQ-TE 0.65 125 24.35 17 4.8% 12.5% KWK 32.33 AUG 30.00 KWK-TF 0.65 418 29.35 17 4.0% 10.3% NFI 42.40 AUG 30.00 NFI-UF 0.45 2534 29.55 17 2.7% 9.0% KIND 24.25 AUG 22.50 QND-TX 0.40 29 22.10 17 3.2% 8.6% TOY 16.43 AUG 15.00 TOY-TC 0.25 5046 14.75 17 3.0% 8.3% ODSY 18.59 AUG 17.50 UPE-TW 0.25 1705 17.25 17 2.6% 6.8% AH 37.19 AUG 35.00 AH-TG 0.40 708 34.60 17 2.1% 5.5% BR 38.49 AUG 37.50 BR-TU 0.40 1041 37.10 17 1.9% 4.8% Abbreviations: 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 with margin), TS-Target Shoot. __________________________________________________________________ KYPH - Kyphon $27.30 *** Earnings Speculation! *** Kyphon (NASDAQ:KYPH) develops medical devices to restore spinal anatomy using minimally invasive technology. The firm's initial marketing focus is on surgeons who repair spine fractures caused by osteoporosis. Kyphon's first commercial products, comprising its KyphX instruments, utilize its proprietary balloon technology. Surgeons use those tools to help repair fractures during minimally invasive spine surgeries. Its instruments have also been used in open surgical procedures. The firm sells various instruments for use in spine fracture procedures including: Bone Access Systems, Inflatable Bone Tamps, Inflation Syringes, Bone Filler Devices and Bone Biopsy Devices. Quarterly earnings are due on 8/4. KYPH - Kyphon $27.30 AUG 25.00 QYQ-TE LB=0.65 OI=125 CB=24.35 DE=17 TY=4.8% MY=12.5% __________________________________________________________________ KWK - Quicksilver Resources $32.33 *** Oil Sector Rally! *** Quicksilver Resources (NYSE:KWK) is an independent oil and gas company engaged in the acquisition, development, exploration, production and sale of natural gas, crude oil and natural gas liquids, as well as the marketing, processing and transmission of natural gas. Quicksilver sells natural gas and crude oil to a variety of customers, including utilities, oil/gas companies or their affiliates, industrial companies, large trading and energy marketing companies, refineries and other users of petroleum products. KWK - Quicksilver Resources $32.33 AUG 30.00 KWK-TF LB=0.65 OI=418 CB=29.35 DE=17 TY=4.0% MY=10.3% __________________________________________________________________ NFI - NovaStar Financial $42.40 *** Premium-Selling Only! *** NovaStar Financial (NYSE:NFI) is a specialty finance firm that originates, invests in and services residential nonconforming loans. NFI operates through three separate but inter-related units: mortgage lending and loan servicing, mortgage portfolio management and branch operations. The company offers a range of mortgage loan products to borrowers (nonconforming borrowers) that do not satisfy the credit, collateral, documentation or other underwriting standards prescribed by conventional mortgage lenders and loan buyers, including government-sponsored entities such as Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac). NFI - NovaStar Financial $42.40 AUG 30.00 NFI-UF LB=0.45 OI=2534 CB=29.55 DE=17 TY=2.7% MY=9.0% __________________________________________________________________ KIND - Kindred Healthcare $24.25 *** Bottom-Fishing! *** Kindred Healthcare (NASDAQ:KIND) is a healthcare services firm that operates hospitals, nursing centers and institutional pharmacies. During 2003, the company was organized into three operating divisions: the hospital division, the health services division and the pharmacy division. The hospital division primarily operates long-term acute care hospitals while the health services division operates nursing centers and a rehabilitation therapy business. The pharmacy division provides institutional pharmacy services to nursing centers and other healthcare providers. KIND - Kindred Healthcare $24.25 AUG 22.50 QND-TX LB=0.40 OI=29 CB=22.10 DE=17 TY=3.2% MY=8.6% __________________________________________________________________ TOY - Toys R Us $16.43 *** Entry Point? *** Toys R Us (NYSE:TOY) is a retailer of toys, baby products and children's apparel. As of January 31, 2004, the firm operated 1,501 retail stores worldwide. These consisted of 927 locations in the United States, 685 toy stores (including four Geoffrey stores), 198 specialty baby-juvenile stores; Babies R Us, and 44 children's clothing stores under the name Kids R Us. Toys R Us also sells merchandise on its Internet sites: www.toysrus.com, www.babiesrus.com, www.imaginarium.com, www.sportsrus.com and www.personalizedbyrus.com. TOY - Toys R Us $16.43 AUG 15.00 TOY-TC LB=0.25 OI=5046 CB=14.75 DE=17 TY=3.0% MY=8.3% __________________________________________________________________ ODSY - Odyssey HealthCare $18.59 *** On The Rebound? *** Odyssey HealthCare (NASDAQ:ODSY) provides hospice care, with a goal of improving the quality of life of terminally ill patients and their families. Hospice services focus on palliative care for patients with life-limiting illnesses, which is directed at managing pain and other discomforting symptoms and addressing the psychosocial and spiritual needs of patients and their families. The company provides for all medical, psychosocial care and certain other support services associated with the patient's terminal illness. ODSY - Odyssey HealthCare $18.59 AUG 17.50 UPE-TW LB=0.25 OI=1705 CB=17.25 DE=17 TY=2.6% MY=6.8% __________________________________________________________________ AH - Armor Holdings $37.19 *** Recent Volatility = Premium! *** Armor Holdings (NYSE:AH) is a manufacturer and provider of security products, vehicle armoring systems and security risk management services. The company is organized and operated under three business segments: Armor Holdings Products, and Armor Mobile Security. The company's Armor Holdings Products Division manufactures and sells a wide range of branded law enforcement equipment such as concealable and tactical body armor, hard armor, duty gear, less-lethal munitions, anti-riot products, police batons, emergency lighting products, forensic products, firearms accessories and weapon maintenance products. The Armor Mobile Security Division manufactures and installs ballistic and blast protected armoring systems for military vehicles, commercial vehicles, military aircraft and missile components. Quarterly earnings are due May 10, 2004. AH - Armor Holdings $37.19 AUG 35.00 AH-TG LB=0.40 OI=708 CB=34.60 DE=17 TY=2.1% MY=5.5% __________________________________________________________________ BR - Burlington Resources $38.49 *** Strong Sector! *** Burlington Resources (NYSE:BR) is a holding company that is engaged, through its principal subsidiaries, Burlington Resources Oil & Gas Company LP, The Louisiana Land and Exploration Company, Burlington Resources Canada, Canadian Hunter Exploration and their affiliated companies, in the exploration for and the development, production and marketing of crude oil, NGLs (natural gas liquids) and natural gas. The company's asset base is dominated by North American natural gas properties and its extensive North American lease holdings extend from the Gulf of Mexico to the Mackenzie Delta region in the Northwest Territories of the Canadian Arctic and Alaska's north slope. The company also has operations in the Northwest European Shelf, North Africa, Latin America, the Far East and West Africa. BR - Burlington Resources $38.49 AUG 37.50 BR-TU LB=0.40 OI=1041 CB=37.10 DE=17 TY=1.9% MY=4.8% ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ MRVL - Marvell Technology $22.30 *** Earnings Speculation! *** Marvell (NASDAQ:MRVL) designs, develops and markets integrated circuits utilizing proprietary communications mixed-signal and digital signal processing technology for communications-related markets. Marvell offers its customers a wide range of integrated circuit solutions using proprietary communications mixed-signal processing and digital signal processing technologies. Marvell's product groups include: storage products, consisting of a variety of read channel, system-on-chip and preamplifier products; and broadband communications products, consisting of a variety of transceiver products, switching products, internetworking products and wireless LAN products. Earnings are due 8/19/04. MRVL - Marvell Technology $22.30 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL AUG 25 UVM-HE 5739 0.30 25.30 8.2% 1.2% _________________________________________________________________ MXIM - Maxim Integrated $46.75 *** Stuck In A Range! *** 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. Maxim also provides a range of high-frequency design processes and unique capabilities that can be used in custom design. The analog IC market is highly fragmented and characterized by many diverse applications, a great number of product variations and, as to many circuit types, relatively long product life cycles. The company's objective is to develop and market both proprietary and industry-standard analog integrated circuits that meet the increasingly stringent quality standards demanded by customers. MXIM - Maxim Integrated $46.75 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL AUG 50 XIQ-HJ 8296 0.45 50.45 5.1% 0.9% _________________________________________________________________ YHOO - Yahoo! $29.15 *** Internet Shares Slump! *** Yahoo! (NASDAQ:YHOO) is a worldwide Internet business and consumer services company that offers a comprehensive branded network of properties and services to more than 200 million individuals worldwide. The company offers an online navigational guide to the Internet via its www.yahoo.com Website, which is a guide in terms of traffic, advertising and household and business user reach. Through Yahoo! Enterprise Solutions, the firm also provides many business services designed to enhance the productivity and Web presence of its clients. Yahoo! has offices in the United States, Europe, Asia, Latin America, Australia and Canada. YHOO - Yahoo! $29.15 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL AUG 32.5 YHQ-HZ 22286 0.25 32.75 5.2% 0.8% ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEE DISCLAIMER - SECTION 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ************************Advertisement************************* Full Service Brokers Man Financial announces the formation of the OneStopOption Brokerage Group, addressing the demand for personalized, experienced service for both securities* and futures trading within the same firm. Licensed Option Principals Andrew Aronson and Alan Knuckman specialize in live assistance of stock*, option* and futures traders. The combination of the proven Man Financial global presence and the convenience of one group for all trading needs provide customers with the tools needed for success. Live Broker and Online Trading Available 888-281-9569 http://www.OneStopOption.com ************************************************************** ********** DISCLAIMER ********** Please read our disclaimer at: http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html ************************************************************** ADVERTISING INFORMATION For more information on advertising in OptionInvestor Newsletter, or any Premier Investor Network newsletter please contact: Contact Support
Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.
Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.
To ensure you continue to receive email from Option Investor please add "firstname.lastname@example.org"
Option Investor Inc