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Daily Newsletter, Thursday, 09/02/2004

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The Option Investor Newsletter                Thursday 09-02-2004
Copyright 2004, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Chip Crumbs
Futures Wrap: See Note
Index Wrap: Retailers rocked, while Intel got socked
Market Sentiment: Odds of Profit Taking


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      09-02-2004           High     Low     Volume   Adv/Dcl
DJIA    10290.28 +121.80 10301.49 10162.05 1.37 bln 2308/ 903
NASDAQ   1873.43 + 23.00  1876.24  1846.95 1.22 bln 1993/1031
S&P 100   544.15 +  5.55   544.54   538.35   Totals 4301/1934
S&P 500  1118.31 + 12.40  1119.11  1105.60
W5000   10865.46 +116.59 10873.25 10745.76
SOX       377.60 +  3.40   378.08   370.12
RUS 2000  559.78 +  7.32   559.80   551.88
DJ TRANS 3162.49 +  7.32  3162.49  3105.68
VIX        14.28 -  0.63    15.05    14.18
VXO (VIX-O)14.37 -  0.61    15.26    14.20
VXN        21.62 -  1.03    22.94    21.50
Total Volume 2,824M
Total UpVol  2,286M
Total DnVol    481M
Total Adv  4840
Total Dcl  2239
52wk Highs  217
52wk Lows    68
TRIN       0.50
NAZTRIN    1.41
PUT/CALL   0.92
************************************************************

Chip Crumbs
by Jim Brown

Don't you hate to open a bag of chips and find them settled
into a pile of crumbs at the bottom of the bag? The chip
sector may soon look like a sector of crumbs after the
news released on Thursday. Low demand has chips on the
shelf approaching their expiration date and half price
sales can't be that far off if Intel's update is any
guide.

Dow Chart – daily


Dow Chart - 60 min


Nasdaq Chart – Daily


SPX Chart – daily


SOX Chart


Advance/Decline Chart - 2 min



It was a busy day economically and as usual the answers
were as mixed as Forrest Gump's box of chocolates. The
Chain Store Sales posted only a +1.1% gain for August
compared to a +3.1% gain in July. This was the worst
showing since March of 2003. We all know the reasons
are gas prices, tougher comparisons over last year and
some say the weather. Nothing new here from the weekly
update, just more of the same. Every store group except
for drug stores posted lower sales. One report today
showed that 55% of stores reporting same store sales
for August were below plan. Not a good outlook for the
sector or the economy. Back to school sales were also
reported as slower than normal.

Jobless claims rocketed to 362,000 for the week and the
analysts were quick to blame the after effects of Hurricane
Charley on the increase. This was the first week over
350K since June 5th and was the highest level since April
10th. Offsetting the Jobless Claims news was a jump in
the Monster Employment Index to 145 from last months
134. This was particularly strange since I heard an on
air commentator yesterday saying they had seen an advance
copy and it was not pretty. It looked ok to me but
without seasonal adjustments it is tough to know what
the number should be. There is not enough history for
this index to be meaningful. Monster itself indicated
that much of the advertising was due to seasonal trends
in the Agriculture, forestry, manufacturing, mining,
transportation and warehousing sectors.

Productivity and Costs were revised down to 2.5% and
below the estimates of 2.7% for the updated report.
The revision was due to changes in the GDP and a jump
in hours worked. This was the smallest gain since the
second quarter of 2002 and far less than the +9.0%
we saw in Q3-2003. This falling productivity is not
something the Feds will be excited about but not low
enough to impact their rate hike policy. Offsetting
the drop in Productivity was a jump in Factory Orders
by +1.3%. This was slightly better than expected and
suggests the manufacturing sector is still moving
forward despite the slowdown in other sectors. This
was the third consecutive month of increases and the
largest gain since March. Autos were weakest and that
goes along with the drastic drop in auto sales which
were reported yesterday.

The Risk of Recession shot up to 32.7% in August from
only 25.7% in July. Consumer Confidence, interest rates
and weakness in the equity markets were prime factors
in the jump. This report projects the chances of a
new recession over the next six months. This was the
second strong monthly jump with the July jump from
June's 12.3% a significant move.

It appears the semiconductor sector is already in a
recession with the barrage of data out today. The
semiconductor billings were released for July and they
increased only a marginal +1%. While we have seen a
decreasing trend since March and the likelihood we
will see a drop in August the numbers still represent
a +37.9% gain over the 2003 levels. This is the highest
level attained since Q4-2000. VLSI Research would have
us believe that things are better than they appear to
be. We have been getting so much negative press on
chips over the last two weeks that it is hard to put
enough lipstick on this pig to believe that story.

After the bell today Intel released their long awaited
mid quarter update and it was not an exciting outlook.
Intel has a lot of problems and they continue to emerge
as the layers of doublespeak are peeled away. Intel
lowered its revenue expectations for the current
quarter to a range of $8.3B to $8.6B. This new midpoint
of $8.45B is well outside their previous range of $8.6B
to $9.2B with a midpoint of $8.9B. This nearly half a
billion dollar haircut was accompanied by a drop in
gross margin expectations to 58% from the prior estimate
of 60%. This goes along with the negative margin surprises
various brokers have been predicting. 60% of $9.2B is
a gross profit of $5.3B. 58% of the lowered estimate
of $8.45B is $4.9B in profits. This represents a drop
in $400 million in expected gross earnings before costs.
I doubt Intel will be standing in line for food stamps
anytime soon but this was a substantial cut in estimates
and represents a continuation of the downtrend started
several months ago.

Intel said the problem stemmed from weakness around the
globe in both corporate and retail sectors with the
larger weakness coming from the retail sector. They
also said inventory would INCREASE again instead of
dropping as they had previously forecast. This is a
major change in trend and a major slip up for Intel.
They said the 3Q drop was due to a weaker demand
picture at the low end of historical expectations.
They also said the 4Q would also be weak and set the
stage for a lowered profit forecast when they announce
3Q earnings in Oct. Intel said its primary architecture
products and flash memory products were trending below
plan. They also said they would cut capex spending for
the current quarter.

There is no way to paint this update in a favorable
light and investors clobbered the stock in after hours
to a low of $19.57 and a close under $20. Several
analysts predicted a fair value based on the current
outlook at $18. Smith Barney said yesterday there was
20% downside left in Intel at 21.50 which would put it
just over $17. We have been looking for a touch of $20
in the LEAPs section for an entry on some 2006 LEAPS.
Looks like we got our wish. Odds are good we will also
hit our exit on the SMH puts at $28.

Helping push the sector lower was an after hours warning
from ALTR and IDTI. While the headline stocks warning
dropped between -7% to -10% on the news the majority
of the other chip stocks were off -4% to -5% in late
trading. As I mentioned earlier this week the closer
we get to the warning season, about two weeks away, we
would see an increase in warnings and chip and software
companies should head the list. Fairchild Semi warned
yesterday as well.

Also pressing equity prices this morning was another
jump in oil prices after Yukos said they were on the
verge of a shutdown because of frozen accounts. Crude
hit an intraday high of $45.40 before dropping to
close about a dollar lower. Those that thought the
$41.30 low on Monday was a hint of lower prices ahead
were sadly mistaken.

Everyone knows the President speaks tonight in the
biggest event in the Republican convention. After a
very slow and weak morning the market took flight at
2:PM and gave Bush a triple digit gift as an investor
warm up prior to him taking the stage. Multiple strong
buy programs fired off in quick succession and added
over 2000 issues to the A/D line and +100 points to
a sleepy market. We get buy programs all the time but
to see multiple programs in succession and in front
of the Intel update, which was expected to be negative
and tomorrow's Jobs report which could also be a disaster
suggests something fishy afoot. I am sure there are
quite a few traders who would like to know who launched
those programs and why but it is something we will never
know. I would also not only pick on just the Republicans
because there was an identical unwarranted program trade
spike at the end of the Democratic convention. That
spike rallied the Dow +155 points off its intraday lows.
Actually that spike made more sense because the low for
the day was just under 10,000 and strong support.

We all know games are played and sometimes by people
with very deep pockets and sending the President to
the podium with a triple digit gain instead of a fear
of Intel drop probably looked good to a lot of people.

The Dow explosion today launched from 10175 and ended
with a touch of 10301. This was well over several strong
resistance levels and triggered substantial short covering.
This was the highest level reached by the Dow since July
2nd. The Nasdaq rallied +23 points which by itself was
not spectacular except that it came right in front of
an almost guaranteed Intel disaster. It is amazing they
could budge it higher at all. The SPX exploded over the
strong 1111 resistance level and its 100/200dma as though
on rocket boosters. There was barely even a blip of
recognition as it crossed multiple resistance levels.

Ah yes, that was today. Tomorrow may be an entirely
different story without any artificial support and
with very strong negatives in the tech sector. We also
have that questionable Jobs report before the open and
the whisper numbers are all over the map. I have heard
the potential for a negative number as well as some
expectations for something north of 200K. This is a
huge range and given today's spike and tonight's chip
news the only thing we can guarantee is a very volatile
session.

The main thing I heard today was "the bad news is priced
in" and buyers are bargain hunting for the post convention
rally. I have to agree that I was expecting a post
convention bounce last week and the gains this week
were probably some early adopters trying to sneak into
positions but we are rapidly running out of events to
power/depress the market. Beginning next week we will
be left to wander on our own with little more than
earnings warnings to keep us company. Beware the
September winds because they blow nothing good our way.
Historically next week sees an opening rally but then
deteriorates into the normal October surprise. So if
we do get a decent Jobs report and a post convention
holiday rally be sure to wear your parachute and keep
those seatbelts fastened.

By breaking those resistance levels today we have just
about reached the upper edge of our potential range.
The Dow could have seen a further rise to 10400 if
Intel has not spoiled the party. It is always possible
that a blowout Jobs report tomorrow could resurrect
that bullish spirit but I am thinking the damage has
been done. If we do move higher it should not be much
higher and we are only setting up for the next drop.
As of tonight the Jobs report should have more bearing
on tomorrows trading than Intel and our fate will remain
unknown until 8:30 in the morning.

Enter Passively, Exit Aggressively.

Jim Brown
Editor

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

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

Retailers rocked, while Intel got socked

After reporting what many described as lackluster same store
sales for the retailers, the S&P Retail Index (RLX.X) 401.22
+2.79% lead the list of percentage index/sector gainers as the
broader S&P 500 Index (SPX.X) 1,118.31 +1.12% jolted higher by 12
points to reclaim its rising 200-day SMA (1,119.11) and come
within fractions of its WEEKLY R2.

An intra-day reversal in oil prices, where the October Crude Oil
futures contract (cl04v) settled at $44.06 after trading as high
as high as $45.40 helped fuel bullish investor sentiment to the
close.

It isn't until after the close that I realize Treasuries saw a
sharp round of selling across the major maturities, where the
benchmark 10-year yield ($TNX.X) jumped 7.1 basis points to close
out at 4.194%, where it would appear that every dollar coming out
of Treasuries found its way to stocks.

U.S. Market Watch - 09/02/04 Close



What's up with that?  Doesn't the MARKET know there's an
important tech-related mid-quarter update coming from Intel
(NASDAQ:INTC) $21.62 +0.88%?  Not to mention an important nonfarm
payroll number tomorrow morning?

While economists predict nonfarm payrolls to show a 150,000 gain,
Jim Brown alerted traders in Wednesday night's Futures Monitor
that he heard the Monster Employment Index (from job poster
Monster Worldwide (MNST)) had been leaked early and was very
weak.  CNBC's James Cramer said the same thing on Wednesday
evening.

Surprise!  The Monster Employment Index came in at 145 compared
to 134 in July.

Shares of Monster Worldwide (NASDAQ:MNST) $21.78 +5.26% jumped
$1.09, while payroll firm Paychex (NASDAQ:PAYX) $30.55 +2.75%
gained 82-cents.

S&P Retail Index (RLX.X) - Daily Intervals



I swore I was having problems with my QCharts charting software
this morning when the RLX.X ticked 394.00 at the open.  As the
RLX.X reached its QCharts WEEKLY R1 of 396.17 and seemed to be
capped at that level from 10:05 AM through 01:00 PM EDT, I was
typing up a day trade short in Dollar Tree (NASDAQ:DLTR) $24.84
+5.03% as DLTR was finding some resistance at $24.20.
Fortunately I saw oil slipping back below $44.75 and didn't post
the trade profile in the Market Monitor.

But when the RLX.X took out its WEEKLY R1, I scrambled for a long
and Wal-Mart (NYSE:WMT) $53.02 +0.74% seemed attractive at $52.39
on thought it might try and play catch up after trading as high
as $53.18 just after the open.  Wal-Mart has been a VERY WEAK
retailer, but when the tide is rising, a lot of boats will lift.

And while the retailers were rock'n, Intel (NASDAQ:INTC) $21.62
+0.88% got socked lower in tonight's after-hours session, where
last tick is $19.98 after the chip-giant gave investors a
disappointing mid-quarter update.

Here's a longer-term look at Intel (NASDAQ:INTC) that I want to
share tonight.  The stock looks TERRIBLE from the bullish
perspective, but with Dorsey Wright and Associates' Semiconductor
Bullish % (BPSEMI) at such deeply oversold levels of bullish %,
this is THE STOCK among chips to be monitoring in the weeks to
come.

The stocks at a 52-week low, the news is NOT GOOD, and RISK for
BEARS is very high.

Here's a chart I put together several months ago using the
"fitted retracement" technique.  I've been monitoring this chart
from time-to-time and trying to get a feel for the sector
bellwether, in combination with the Semiconductor Bullish %
(BPSEMI) from Dorsey Wright.

Intel (INTC) Chart - WEEKLY Intervals



The BLUE retracement levels was derived by anchoring retracement
at a low, then "fitting" its 38.2% retracement at a sharp rebound
high weekly close of $20.88, where the resulting BLUE levels are
just that.  Results.  I think of that as the "bullish"
retracement and it is interesting how INTC amazingly achieved a
little more that 100% at $33.70.  Things were certainly bullish
back then as Dorsey/Wright's Semiconductor BULLISH % (BPSEMI) had
skyrocketed to 88% bullish and BULLS had a VERY HIGH degree of
risk.  Very strong back then, but HIGH level of bullish RISK.

The PINK retracement was derived by anchoring retracement at a
high, then "fitting" its 38.2% ($28.92) at what seems to have
been an important level.  The resulting PINK levels are just
that.  Results.

You can't call a bottom in Intel (INTC) at this point, but
continue to make some observations from the bullish % indications
when have recently been as low as 6%.  VERY WEAK internals, but
also at a level where BEARISH RISK is VERY high.

It has always been my opinion that the SOX.X goes nowhere without
Intel (INTC) leading the advance.

Next week I will be out of the office the entire week, but I'd be
checking in on Intel (INTC) from time-to-time.

Watch WEEKLY volume levels.  Often times a "bottom" will be found
on CLIMACTIC volume.  Intel looked to have found a bottom in that
$22.57-$23.33 zone as upward trend was being tested and WEEKLY
volume spiked to 602 million shares.  So far this week, volume is
a more modest 256.5 million.  Who knows how many shares it will
trade tomorrow.

It doesn't matter if you're BULLISH or BEARISH on Intel (INTC)
right now.  Do you think Intel can get a close above $20.88
tomorrow?

If it does, will it be a bullish surprise?  Most MARKET
participants were expecting a poor mid-quarter update.  Now we've
got it.

There's an old market saying that all the bad news comes out at
the bottom.  Intel is closer to a bottom tonight than it has been
this year.

Watch that 10-week SMA (50-day SMA equivalent).  Note how INTC
traded around that 50-day SMA in late 2002 and then early 2003.
Get a feel for it.  Say it.  Above it, then below it, then above
it to the moon.

I've also overlaid the bullish % inflection points from Dorsey
Wright's Semiconductor Bullish % (BPSEMI) on Intel's chart.  This
gives us a feel and observation of SECTOR risk as well as various
cycles of strength and weakness and how Intel traded within those
cycles.

Market Snapshot / Internals - 09/02/04 Close



I was ready for some equity weakness as oil moved above the
$45.00 level and had upside (for bearishness) alerts set on my
TRIN at 1.00 and the VIX.X above its DAILY Pivot of 15.00, but
other than just after the open, neither alert was triggered.

Internals improved throughout the session, but I think we can see
how they stalled a bit at the a/d line during the mid-point of
the session.  But as crude oil slipped back below this week's
WEEKLY Pivot, sentiment just seemed to improve.

Pivot Matrix -



Last tick in after-hours trade for the QQQ was $34.49, and
tomorrow morning, semiconductors and the QQQ will most likely be
an active trade.

Early correlative support for the NDX/QQQ is marked at DAILY S1
and WEEKLY Pivot.

The Semiconductor HOLDRs (AMEX:SMH) closed at $29.99 and last
tick was $28.80 in after-hours.  To get some idea of where the
SOX.X might open based on the SMH after-hour trade, according to
QCharts' WEEKLY Pivot levels for the SMH its WEEKLY Pivot is
$30.23, WEEKLY S1 is $29.49, and WEEKLY S2 is $28.73, so it would
appear the SOX.X might open somewhere between its WEEKLY S2 and
DAILY S2.  If violated to the downside, then next risk level
lower is MONTHLY S1.

OK, keep and eye on Intel (NASDAQ:INTC) and perhaps that fitted
retracement weekly bar chart shown.  Sometimes it is useful to
use a different technique like that shown with INTC, then combine
it with the pivot level for the SOX.X to get a feel and
observation for things.

Jeff Bailey

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


Odds of Profit Taking
- J. Brown

It has certainly been an interesting market this week.  The rally
on Thursday seemed to catch most traders off guard.  Everyone was
waiting for Intel's mid-quarter update and the expectations
weren't very high.  After all most of Wall Street's largest firms
had already warned that they expected bad news from Intel.  Yet
despite this concern stocks charged higher and the Industrials
and the S&P 500 broke through their simple 100 and 200-dma's.
This was a very bullish technical breakout today and the NASDAQ
closed at new four-week highs and the Dow closed at new seven-
week highs.  29 of the 30 Dow components closed in the green and
only the OSX oil services index and the XAU gold& silver index
closed lower showing just how widespread the rally was today.

Looking across the two-dozen or so major sector indices it's an
interesting picture.  For most the rally from the August lows is
easily three maybe four weeks old already.  Yet while some
sectors are starting to look tired others appear to be catching
their second wind.

As most of you continue to look below this column at the various
sentiment indicators I'd like to draw your attention to the
bullish percent data.  We've haven't discussed this much lately
because most of the indices were stuck in "bear confirmed"
status.  Yet in the last few days we've seen the NASDAQ-100 index
(NDX) bounce into a "bull alert" status.  Meanwhile the S&P 100
and the S&P 500 have bounced into a "bear correction".  Now the
question here should be whether or not the bear "correction" is
merely a pause or rebound in the downtrend or the precursor to
growing into a new "bull alert".  I'm not sure we can draw any
short-term conclusions today but it might make you pause if
you're considering new bearish positions.

Now why would we be considering new bearish positions? After all
the major indices just broke out to new highs over their major
moving averages?  One could point to the volatility indices.  The
rally in stocks has sent the volatility indices toward their
lows, which is a dangerous spot to be considering new bullish
plays.  Of course the VIX/VXO are not the besting timing/entry
point indicators and only offer us clues that a turnaround could
be in the short-term future.  Yet what a coincidence that Intel's
mid-quarter update just happens to be the necessary catalyst to
spark a potential bearish turnaround.  Yes, if you haven't read
tonight's market wrap yet Intel, as predicted, disappointed and
was punished with an 8 percent drop in after hours trading.  This
is going to seriously hurt the SOX, which will then weigh on the
NASDAQ.  Odds of any profit taking after this week's rally ahead
of the long Labor Day weekend just skyrocketed.

Not only do investors have to deal with the Intel fallout but
Wall Street will be digesting President Bush's speech tonight
while anticipating the jobs report after the open on Friday.  At
the same time Hurricane Frances is rushing towards the east coast
in what could be the most expensive storm to hit the U.S. in
history!

Yes, the odds of profit taking on Friday are almost guaranteed!


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  9233
Current     : 10290

Moving Averages:
(Simple)

 10-dma: 10158
 50-dma: 10127
200-dma: 10261



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  983
Current     : 1118

Moving Averages:
(Simple)

 10-dma: 1103
 50-dma: 1101
200-dma: 1112



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1280
Current     : 1398

Moving Averages:
(Simple)

 10-dma: 1378
 50-dma: 1397
200-dma: 1440



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

CBOE Market Volatility Index (VIX) = 14.28 –0.63
CBOE Mkt Volatility old VIX  (VXO) = 14.37 -0.61
Nasdaq Volatility Index (VXN)      = 21.62 -1.03


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.92        537,742       493,922
Equity Only    0.72        404,787       293,349
OEX            1.35         21,078        28,456
QQQ            3.07         20,488        62,869


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

Bullish Percent Data

           Current   Change   Status
NYSE          56.9    + 1.5   Bear Confirmed
NASDAQ-100    36.0    + 4     Bull Alert *****
Dow Indust.   53.3    + 6     Bear Confirmed
S&P 500       54.4    + 3     Bear Correction***
S&P 100       54.0    + 5     Bear Correction***


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

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


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

 5-dma: 1.24
10-dma: 1.09
21-dma: 1.23
55-dma: 1.27


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    2091      1985
Decliners     702       978

New Highs     139        57
New Lows       10        22

Up Volume   1129M      936M
Down Vol.    202M      239M

Total Vol.  1355M     1199M
M = millions


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

Commitments Of Traders Report: 08/24/04

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 have upped both their longs and shorts but remain
net bearish. Small traders have upped their shorts and pared
back their longs a bit but remain net bullish.

Commercials   Long      Short      Net     % Of OI
08/03/04      401,619   419,429   (17,810)   (2.2%)
08/10/04      397,576   419,734   (22,158)   (2.7%)
08/17/04      398,472   416,109   (17,637)   (2.2%)
08/24/04      402,599   420,478   (17,879)   (2.2%)

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
08/03/04      128,510    88,833    39,677    18.3%
08/10/04      135,689    93,897    41,792    18.2%
08/17/04      138,550    97,792    40,758    17.2%
08/24/04      135,151   100,351    34,800    14.7%

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 longs and increased
their shorts, which could be bad news for the S&P 500.  In
lockstep mirror-like fashion small traders are moving the
opposite direction than the "smart money".

Commercials   Long      Short      Net     % Of OI
08/03/04      340,053   428,736   ( 88,683)  (11.5%)
08/10/04      369,547   441,055   ( 71,508)  ( 8.8%)
08/17/04      404,065   457,372   ( 53,307)  ( 6.2%)
08/24/04      392,065   473,911   ( 81,846)  ( 9.4%)

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
08/03/04      195,105     68,717   126,388    47.9%
08/10/04      179,940     89,239    90,701    33.7%
08/17/04      192,939     92,361   100,578    35.3%
08/24/04      211,995     76,184   135,811    47.1%

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 have added to both their shorts and longs
but the end result was an increase in bullish sentiment on
the NDX.  Small traders are also bullish but have cut their
enthusiasm in half.  In essence small traders are beginning
to turn bearish, which in a contrarian sense is bullish.
Confused yet?

Commercials   Long      Short      Net     % of OI
08/03/04       42,771     36,863     5,908    7.4%
08/10/04       43,968     38,351     5,617    6.8%
08/17/04       44,743     41,535     3,208    3.7%
08/24/04       48,624     43,222     5,402    5.8%

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
08/03/04        8,995    13,901    (4,906)  (21.4%)
08/10/04       10,081    10,858    (  777)  ( 3.7%)
08/17/04       12,256     8,352     3,904    18.9%
08/24/04       11,666    10,068     1,598     7.3%

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

Commercial traders remain bullish but have pared back their
longs a bit. Meanwhile small traders remain bearish but have also
hedged their enthusiasm a bit.

Commercials   Long      Short      Net     % of OI
08/03/04       30,118    25,029    5,089       9.2%
08/10/04       30,634    22,994    7,640      14.2%
08/17/04       30,271    22,809    7,462      14.1%
08/24/04       28,919    23,658    5,261      10.1%

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
08/03/04        4,325     5,212   (  887)   ( 9.3%)
08/10/04        6,450     8,488   (2,038)   (13.6%)
08/17/04        4,388     7,089   (2,701)   (23.5%)
08/24/04        5,052     7,214   (2,162)   (17.6%)

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                 Thursday 09-02-2004
Copyright 2004, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: None	
Dropped Puts: None
Call Play Updates: AHC, BOL, DGX, FMC, FO, MHK, PD, RAI, TDS, ZBRA
New Calls Plays: Editor’s Note
Put Play Updates: IVGN, SPW
New Put Plays: None


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

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


CALLS:
*****

None


PUTS:
*****

None


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

Amerada Hess - AHC - close: 82.48 chg: +1.06 stop: 77.00

Our recently added call play in AHC is off to a good start.
Wednesday saw some follow through to Tuesday's breakout and
shares gapped above the $82.00 level on Thursday after CSFB
upgraded the stock and the oil sector.  We're certainly
encouraged and the buy signal on its MACD indicator is gaining
strength.  No change in stop loss at this time but more
conservative traders can probably edge theirs closer to $80.

Picked on August 31st at $80.50
Change since picked:     + 1.98
Earnings Date          07/28/04 (confirmed)
Average Daily Volume =      1.0 million
Chart =


---

Bausch Lomb - BOL - close: 67.87 change: +1.22 stop: 64.75*new*

After a week of consolidating between $65 and $66 shares of BOL
finally broke out to the upside of its trading range. BOL hit our
trigger to go long at $66.51 on Wednesday and today's 1.8 percent
rally was a nice follow through on the move.  Shares looked
poised for a strong run and we're going to raise our stop loss to
$64.75.  If BOL dips on profit taking look for a bounce from $66.

Picked on September 01 at $66.51
Change since picked:      + 1.30
Earnings Date           07/29/04 (confirmed)
Average Daily Volume =       397 thousand
Chart =


---

Quest Diagnostic - DGX - close: 86.82 chg: +0.07 stop: 82.00

Our recently added call play in DGX is also doing well.  The
stock experienced some follow through from Tuesday's breakout and
traders bought the early dip to $86.00 Thursday morning.  It's
probably not too late to pick an entry and target the $90.00
level.  However, watch for a potential dip on Friday and look for
the bounce.

Picked on August 31st at $85.60
Change since picked:     + 1.22
Earnings Date          07/22/04 (confirmed)
Average Daily Volume =      578 thousand
Chart =


---

F M C Corp - FMC - close: 46.85 change: +1.04 stop: 42.00

FMC is looking pretty good here with a close over minor
resistance at $46.50.  Traders bought the recent dip to $45.00
and its simple 10-dma has been offering short-term support.  We
haven't seen much volume this week but that's to be expected.
Should we see a dip tomorrow ahead of the long weekend look for
support near $45.50-45.75.

Picked on August 24 at $45.87
Change since picked:   + 0.98
Earnings Date        07/27/04 (confirmed)
Average Daily Volume =    265 thousand
Chart =


---

Fortune Brands - FO - close: 74.41 change: +0.98 stop: 71.50

It's about time.  We were starting to grow frustrated with the
lack of follow through on FO's breakout several days ago.  Shares
are finally hitting new relative highs as of Thursday but still
under the $75.00 mark.  We're still suggesting that more
conservative traders may want to wait for FO to trade above
$75.00 before considering positions.  If shares dip tomorrow
ahead of the weekend look for a bounce from $73.00.

Picked on August 29th at $74.08
Change since picked:     + 0.33
Earnings Date          07/23/04 (confirmed)
Average Daily Volume =      636 thousand
Chart =


---

Mohawk Industries - MHK - close: 78.94 change: +0.46 stop: 74.95

Up, up and away!  MHK continues to run and is nearing round-
number, psychological resistance at the $80.00 mark.  Short-term
traders may want to consider exiting near $80 for a profit.  We
may choose to do so as well.  It wouldn't surprise us to see some
profit taking ahead of the long weekend so keep that in mind.
Yesterday we raised the stop loss to $74.95.

Picked on August 24th at $75.51
Change since picked:     + 3.43
Earnings Date          07/21/04 (confirmed)
Average Daily Volume =      397 thousand
Chart =


---

Phelps Dodge - PD - close: 82.20 chg: +0.45 stop: 77.00

Copper prices actually saw some profit taking today but we're
seeing a bounce in shares of PD.  The stock has been
consolidating the last three sessions but traders stepped in to
buy the dip to $80.00 this morning.  This looks like a new entry
point for bullish positions but be patient as the market might
see some weakness ahead of the weekend.

Picked on August 26th at $82.10
Change since picked:     + 0.10
Earnings Date          07/27/04 (confirmed)
Average Daily Volume =      2.1 million
Chart =


---

Reynolds American - RAI - cls: 75.77 chg: +0.72 stop: 71.95

Hmm... RAI is climbing to new highs over the $75.00 level.
That's the good news.  The bad news is that tobacco companies
lost an appeal to delay the upcoming racketeering case that
begins on September 21st.  Yet the news does not appear to have
any effect on shares of RAI.  A Reuters article suggested that
the trial could lead to credit rating downgrades for the industry
but RAI has already seen its credit rating reduced by Moody's and
it hasn't affected the stock price.  We're encouraged by the
strength in shares of RAI and the trend is still very bullish but
if you're looking at significant profits feel free to take some
home.  Remember that our initial target was the $77.50-80.00
range.

Picked on August 19 at $72.88
Change since picked:   + 2.89
Earnings Date        08/02/04 (confirmed)
Average Daily Volume =    1.2 million
Chart =


--

Telephone & Data Sys - TDS - cls: 79.70 change: +0.25 stop: 75.95

No sooner did we complain about the lack of action in shares of
TDS that the stock took off on Wednesday to breakout through the
top of its trading range.  Shares saw some follow through today
and challenged resistance at the $80.00 mark.  This close to
$80.00 we wouldn't suggest new entry points.  Readers can
probably wait for a dip and bounce from $78.00 or buy a breakout
over $80.00 instead.  Remember that this is a higher-risk play
due to the low stock and option volume.  Yesterday we raised our
stop loss to $75.95.


Picked on August 24th at $78.05
Change since picked:     + 1.65
Earnings Date          07/21/04 (confirmed)
Average Daily Volume =      195 thousand
Chart =


---

Zebra Tech. - ZBRA - close: 58.86 chg: +0.40 stop: 54.99

We are pleased to see that there has been zero post-split
depression in shares of ZBRA.  The stock continues to climb and
is within striking distance of our profit target near $60.00.
Readers can prepare to exit.  A climb into the $59.50-60.00 range
sounds like a good place to jump ship and cash out.  We are not
suggesting new entries at this time.

Picked on August 25th at $56.18
Change since picked:     + 2.68
Earnings Date          07/28/04 (confirmed)
Average Daily Volume =      419 thousand
Chart =



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

PLAY EDITOR'S NOTE:

Traders have a lot to consider tonight and tomorrow.  Volume
has been extremely light this week and it has exaggerated
moves both up and down.  We're encouraged to see the markets
mostly higher but odds of some profit taking ahead of the
long Labor Day weekend have certainly grown.  Those odds
jumped dramatically after Intel's disappointing mid-quarter
update and negative news from ALTR and IDTI.  As if that was
not enough to contend with investors will also need to absorb
President Bush's speech tonight, the non-farm payrolls (jobs)
number tomorrow, and hurricane Frances charging toward the
east coast, which some have suggested could be the most
costliest storm on record.  Considering all the factors
tonight we're not going to add any new plays and will be
closing watching how stocks react to the parade of news and
where they close on Friday afternoon.


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

Invitrogen - IVGN - close: 49.89 change: +0.26 stop: 51.51

Believe it or not we're doing okay in IVGN - not because we're up
or down in the stock.  Currently we remain un-triggered in IVGN
but we're poised to capture any breakdown should the market turn
red.  IVGN's lack of participation in the market's rally this
week is very encouraging if you're a bear.  Keep an eye on the
$49.00 level and our trigger to buy puts at $48.95.

Picked on September xth at $xx.xx <-- see TRIGGER
Change since picked:       - 0.00
Earnings Date            07/21/04 (confirmed)
Average Daily Volume =        1.3 million
Chart =


---

SPX Corp - SPW - close: 37.00 change: +0.80 stop: 38.26

Uh-oh!  This could be a turning point in shares of SPW.  The
stock bounced sharply from the $36.00 and challenged the simple
21-dma but did not break its trend of lower highs.  We remain
untriggered and still wait for SPW to break support at the $36.00
level.  However, if SPW trades above $37.50 we'll probably close
the play un-opened.

Picked on August xxth at $xx.xx <-- see TRIGGER
Change since picked:     - 0.00
Earnings Date          08/02/04 (confirmed)
Average Daily Volume =      814 thousand
Chart =




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

None


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**********

Please read our disclaimer at:
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The Option Investor Newsletter                 Thursday 09-02-2004
Copyright 2004, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Watch List: Metals to Biotech and more!
Combos/Straddles: When The Market Moves – So Do We!

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

Metals to Biotech and more!

___________________________________________________________________

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.
___________________________________________________________________


Nucor - NUE - close: 80.79 change: +2.39

WHAT TO WATCH: Traders have bought the dip back to $78.00 and now
NUE is back above the $80.00 level and its simple 10, 21, 40 and
50-dma's.  Short-term technicals have turned bullish as well and
its MACD is hinting at a new "buy" signal soon.  Aggressive
traders can target a quick run towards $85.00 but confirm
direction.  NUE could still see some profit taking ahead of the
weekend.

Chart=


---

Research In Motion - RIMM - close: 63.21 change: +2.51

WHAT TO WATCH: RIMM continues to be volatile.  The most recent
bounce from $60.00 looks tempting as a bullish entry point but
the stock has resistance near $64.00.  If RIMM can breakout above
$64 then traders can target a run toward $70 or the highs near
$71.  If not then look for a new low under $59.50 and target a
drop back to $53.  The P&F chart is currently bullish with an $87
target.

Chart=


---

Gilead Sciences - GILD - close: 71.30 change: +0.30

WHAT TO WATCH: GILD has broken out to new all-time highs above
resistance at the $70.00 level in what has been a very bullish
rebound from the $55.00 region.  The stock is overbought and due
for some profit taking.  If shares dip on Friday look for support
near $67.50 then wait for the rebound back above $70.00.  The P&F
chart is bullish and points to an $88.00 target.

Chart=


---

OSI Pharmaceuticals - OSIP - close: 61.40 change: +1.16

WHAT TO WATCH: The BTK biotech index rallied through its 200-dma
like the Industrials and this helped lead OSIP through its simple
50-dma.  Unfortunately, OSIP still has resistance at the $62.00
level.  Readers can watch for a breakout over $62.00 and target a
run towards $70.00.  The P&F chart is bullish and has produced a
new triple-top breakout buy signal with an $85 target.

Chart=



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

ITT $80.74 +0.44 -  ITT still looks bullish over the $80.00 mark
but if it dips look for a bounce from $79.00.

KBH $70.36 -0.16 - Bulls can look for a breakout over 70.75-71.00
as a potential entry point.

MER $51.76 +0.49 - Expectations aren't very high for Wall
Street's third quarter but MER looks bullish if it can breakout
over $52.00.

GS $91.06 +1.87 - The same story applies to GS but watch for a
move over $92 and/or its simple 100 and exponential 200-dma.

EBAY $89.55 +1.92 - After a virtual non-stop run from $72 will
EBAY finally see some profit taking under resistance at $90?


SEMICONDUCTORS:  Keep an eye on the whole group.  As investors
react to Intel's disappointing update we'll see where traders
buy the dip on which stocks.

INTC, AMAT, AMD, KLAC, MXIM, XLNX, LLTC, LRCX, NVDA, NVLS, QLGC


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****************
Combos/Straddles
****************

When The Market Moves – So Do We!

By Mike Parnos

I was talking to a fellow trader recently – a woman I had never met in
person.  We were getting along quite nicely on the phone.  She seemed
to like me.  She asked cautiously, “You’re not like Ted Bundy, are
you?”

I assured her, “No, not like Ted Bundy.  More like Al Bundy.”  Hmmm . .
 I can’t understand why she hung up soon after.   Oh well . . .
____________________________________________________________

A Jinx?
Last Sunday we discussed the “Sure Thing” strategy.  Well, we must have
jinxed out position because the market took off skyward – with a
vengeance.  The result was that we had to adjust our “Sure Thing”
1105/1130 bear call spread.

Let’s take a look at the adjustment process.  Anyone with a hat-size IQ
can place an order.  It’s the adjustments where the trading skill lies.
__________________________________________________________

A Quick Review
The “Sure Thing” strategy involves the establishment of an out-of-the-
money 25-point SPX credit spread, taking in about $7 of premium.  If
SPX moves further away from the short strikes, the options expire
worthless and the premium is kept.  If the market reverses and violates
the short strike price, the original credit spread will have to be
closed when the cost to close it reaches $14.

Then, you establish a credit spread going in the opposite direction,
trading enough contracts and bringing in enough premium to replenish
what it cost to close out the original spread.
___________________________________________________________

The Position
We sold 3 September SPX 1105 calls and bought 3 September SPX 1130
calls for a credit of about $7.00 ($2,100).  We took in $2,100.

Today (Thursday), the SPX took off, leading us to believe that the
downtrend may, at least temporarily, be over.  The size of the move
could very well be the beginning of an uptrend.

Step One
When the SPX reached about 1112, we bought back the Sept. 1105 call and
sold the 1125 call for a total of $13.90.  The total cost was $4,170.
That brings up the question, “Where do we go to make up the $4,170?”

Step Two
We are going to put on a new trade – a bull put spread, because we
believe SPX will continue upward.  But, which month?  What strikes?
Let’s analyze it further.  The SPX is at 1112.  There are about two
weeks left to September expiration.  When we look at the put side of
the option chain, we find the following:

                    Bid        Ask
Sept. 1110 put     $9.10      $9.80
Sept. 1085 put     $3.10      $3.50
The “natural” premium credit is $5.60, plus we can probably shave a
total of another $.40 off the bid/ask spreads to create a credit of
$6.00.

Now, remember that we have to replenish $4,170.  We determine how many
contracts we have to trade by dividing $600 ($6 x 100) into $4,170.
That means we will have to trade 7 contracts of the Sept. 1110/1085
bull put spread to cover our $4,170.  That’s not bad.  But, we have
another choice.  Maintenance $17,500.

The Other Choice
Let’s look at a few of the October alternatives.

                  Bid         Ask
Oct. 1105 put    14.80       16.40
Oct. 1080 put     7.50        8.70

Oct. 1110 put    16.80       18.40
Oct. 1080 put     7.50        8.70

a) The “natural” premium credit on the 1105/1080 bull put spread is
$6.10, plus we can probably shave a total of another $.90 off the
bid/ask spreads to create a credit of about $7.00.    One benefit of
going to this Oct. spread is that you will only have to trade six
contracts (6 contracts X $7 = $4,200) to replenish the $4,170.  Another
benefit is that, with the SPX trading at 1112, your short put (1105) is
seven points out of the money.  So, you have a little cushion.  The
negative is that you have to wait four additional weeks for the
position to resolve itself.   The new maintenance figure is $15,000
($2,500 x 6 contracts).

b) The “natural” premium credit on the 1110/1080 bull put spread is
$8.10, plus we can probably shave a total of another $.90 off the
bid/ask spreads to create a credit of about $9.00.    One benefit of
going to this Oct. spread is that you will only have to trade five
contracts (5 contracts X $9 = $4,500) to replenish the $4,170 – and you
will have taken in another $300 in premium.  With the SPX trading at
1112, your short put (1110) is only one point out of the money.  So,
the cushion is negligible.  Again, the negative is that you have to
wait four additional weeks for the position to resolve itself.
Another concern is that we now have a 30 point spread.  The maintenance
required is now $15,000 ($3,000 x 5 contracts).  Note:  There are no
October 1085, 1090 or 1095 strike prices offered on the SPX at this
time.  That limited our choices.

A Lot Of Choices – Difficult To Decide
Obviously, there are a variety of choices.  Do I want to wait to
October expiration?  Do I want to use more maintenance?  Do I want to
take in additional premium?  Do I want the additional cushion?  No
decision is right or wrong.  It’s a matter of personal preference.

Our Adjusted Position
I decided to try and take advantage of the upward momentum of the
market now and go for the September choice.   Our new position is seven
contracts of the September 1110/1085 bull-put spread.  The market
continued up to 1118.  If it remains above 1110, we’ll all live happily
ever after.  If not, we’ll do an about-face and go through the
adjustment process all over again.  If our account is willing, sooner
or later we’ll be right.

Will things change?  Of course.  Change is inevitable, except from
vending machines.    __________________________________________________________

SEPTEMBER CPTI POSITIONS
September Position #1 – SPX Iron Condor – 1118.31
The SPX has become our favorite index.  The premiums are respectable.
The spreads are wide enough to do a little shaving, and we can create
some huge trading ranges for safety purposes.

We sold 10 Sept. SPX 1015 puts and bought 10 September SPX 995 puts for
a credit of about: $1.10 ($1,100).  Then we sold 10 September SPX 1140
calls and bought 10 September SPX 1160 calls for a credit of about
$1.40 ($1,400).  Total credit and potential profit of $2,500.  Maximum
profit range: 1015 to 1140.  That’s a 125-point range.  It is going to
require $20,000 in maintenance.  The return on risk will be about
14.3%.

September Position #2 – RUT Iron Condor – 559.78
The RUT gave us a big scare in August.  A lot of traders rolled out
their 520 short puts when the price was violated a week ago.  It was
the prudent thing to do.  The huge bounce could not have been
predicted.  Those that held had a 50/50 chance of success.  They rolled
the dice and they won.

We sold 10 RUT September 500 puts and bought 10 RUT September 490 puts
for a credit of about: $1.00 ($1,000).  Then we sold 10 RUT September
580 calls and bought 10 RUT September 590 puts
Credit of about $1.00 ($1,150).   Total credit and profit potential of
$2,000.  It’s a nice size maximum profit range of 500 to 580.  The
maintenance requirement is only $10,000.  The return on risk will
depend on what premium you take in.  If you take in $2,000, the return
on risk will be 25%.

September Position #3 – SPX “Sure Thing” – 1118.31
In this August cycle, our Credit Spread Boogie play is going to be 100%
profitable.  It may have taken two months to make this money, but it
was well worth it.  So, let’s do it again.

We sold 3 September SPX 1105 calls and bought 3 September SPX 1130
calls for a credit of about $7.00 ($2,100).  This is based on the
feeling that, despite the recent bounce, the downtrend will continue.
We’ve taken in $2,100.  We’re going to remain in this position until it
costs $14.00 to unwind it.  That will be an indication that the trend
has likely changed and we will then reposition ourselves in the
opposite direction – playing enough contracts to replenish what we
spent to close out the original spread.  The initial maintenance
requirement is $7,500.  However, keep some of your powder dry.  If we
have to shift positions, we will need additional maintenance dollars
for the additional contracts.

Adjustment Made:  See explanation in text of today’s article.

September Position #4 – OEX Iron Condor – 544.15
This position is in response to some requests for an OEX play.

We sold 10 September OEX 505 puts and bought 10 September OEX 495 puts
for a credit of about: $.65 ($650).  Then we sold 10 September OEX 555
calls and bought 10 September OEX 565 calls for a credit of about $.75
($750).

Total net credit of about $1.40 ($1,400).  Maximum profit range: 505 to
555.  Potential return on risk of about 16%.  It’s been a long time
since I’ve traded the OEX in a condor.  I don’t remember how generous
they are in shaving the bid/ask spreads.  Good luck.

ONGOING POSITIONS
QQQ ITM Strangle – Ongoing Long Term -- $34.78
We bought 10 contracts of the 2005 QQQ $39 puts and 10 contracts of the
2005 QQQ $29 calls for a total debit of $14,300.   We make money by
selling near term puts and calls every month.  Here’s what we’ve done
so far:  Oct. $33 puts and Oct. $34 calls – credit of $1,900. Nov. $34
puts and calls – credit of $1,150. Dec. $34 puts and calls – credit of
$1,500.  Jan. $34 puts and calls – credit of $850.  Feb. $34 calls and
$36 puts – credit of $750. Mar. $34 calls and $37 puts – credit of
$1,150. Apr. $34 calls and $37 puts – credit of $750.  May $34 calls
and $37 puts – credit of $800.
June $34 calls and $37 puts -- total net credit of $750.  We rolled out
to the July $34 calls ($.20 credit) and $37 puts ($.60 credit) and took
in a credit of $.80 ($800).  We rolled to the August $34 calls and $37
puts, taking in a credit of $900.  For the September cycle, we rolled
to the Sept. $34 calls and $37 puts, only yielding $.45 or $450 for the
cycle. Our new total credit is now $11,750.

Note:  We haven’t included the proceeds from this long term QQQ ITM
Strangle in our profit calculations.  It’s a bonus!  And it’s a great
cash flow generating strategy.

ZERO-PLUS Strategy.  OEX – 544.15
In my Feb. 8th column, I outlined a strategy based on an initial
investment of $100,000.  $74,000 was spent on zero coupon bonds
maturing in seven years at a value of $100,000.  The principal $100,000
investment is guaranteed.  We’re trading the remaining $26,000 to
generate a “risk free” return on the original investment.
Our current position:  We own 3 OEX December 2006 540 calls @ $81 (x
300 = $24,300).  Our cash position as of May expiration was $4,390 plus
unused $1,700 = $6,090.  From the June option cycle, we are able to
officially add $1,175 to our cash position – that now stands at $6,265
As of July expiration we had a total of $7,440.  We now add the $950
for the August expiration for a new total of $8,390.

New Zero Plus Positions For September
September bull put spread 505/495 for credit of $.75 x 5 contracts =
$375.  Short 555 call for credit of $1.20 x 5 = $600.  If all goes
well, we’ll be able to add $975 to our cash position as we wait for the
market to move up – hopefully in this lifetime.
__________________________________________________________

Happy Trading!
Remember the CPTI credo: May our remote batteries and self-discipline
last forever, but mierde happens. Be prepared! In trading, as in life,
it's not the cards we're dealt. It's how we play them.

Mike Parnos, CPTI Master Strategist



Couch Potato Trading Institute Disclaimer
All results reported in this section are hypothetical. While the
numbers represented here may have been achieved or beaten by our
readers, we make no representation that any individual investor
achieved these exact results. The tracking for the plays listed in this
section uses closing prices for the day the newsletter is published and
it is not meant to imply that any reader actually received those prices
or participated in these recommendations. The portfolio represented
here is hypothetical and for investment education purposes only. It is
only an illustration of what type of gains a knowledgeable investor
might receive utilizing these strategies.


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