Option Investor
Newsletter

Daily Newsletter, Tuesday, 09/07/2004

HAVING TROUBLE PRINTING?
Printer friendly version
The Option Investor Newsletter                 Tuesday 09-07-2004
Copyright 2004, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Eight Out of Ten
Futures Markets: See Note
Index Trader Wrap: Volatility Drops
Market Sentiment: Investors Breathe Relieved


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      09-07-2004           High     Low     Volume   Adv/Dcl
DJIA    10341.46 + 81.30 10363.36 10261.45 1.47 bln 2356/ 881
NASDAQ   1858.56 + 14.10  1865.45  1848.30 1.32 bln 1923/1174
S&P 100   545.00 +  3.94   546.13   541.06   Totals 4279/2055
S&P 500  1121.30 +  7.67  1124.08  1113.63 
SOX       353.76 -  4.10   362.00   351.27
RUS 2000  562.93 +  6.69   563.02   556.24
DJ TRANS 3179.95 + 38.10  3180.29  3143.01
VIX        14.07 +  0.16    14.64    14.03
VXO (VIX-O)13.58 -  0.33    14.54    13.55
VXN        21.44 +  0.38    22.15    21.19 
Total Volume 3,070M
Total UpVol  2,115M
Total DnVol    905M
Total Adv  4809
Total Dcl  2387
52wk Highs  321
52wk Lows    89
TRIN       0.93
NAZTRIN    0.97
PUT/CALL   0.86
************************************************************

Eight Out of Ten
by Jim Brown

Today's market advance stretched the recent bullish streak
of post Labor Day advances to eight of the last ten years.
Unfortunately that trend normally precedes another trend 
of September being the worst month for the Dow and SPX
since 1950. September normally begins with a gain but
ends with a loss. 

Dow Chart – Daily

 
Nasdaq Chart – Daily

 
SPX Chart – Daily

 


There were not a lot of economic reports today to distract
the market and that may have been a good thing. The August
Challenger Layoff Report showed announced layoffs rose 
+6.6% to 74,150 workers. This was the highest level in
six months and the second consecutive monthly gain. This
was still -7.2% lower than the prior August and not a
real cause for concern, yet. The increase was minimal 
and was offset by an increase in planned hiring to 
132,105 from only 26,880 in July. Challenger recently 
began collecting hiring data and there are no long term
numbers to compare with the current trend. The majority
of new job openings were in the retail sector. Challenger
data looks out over the next 90 days and that puts us
right in the middle of the holiday season. Projecting
retail jobs prior to the holidays should not surprise
anyone. 

Tomorrow we have a few more reports due out but none are
earth shaking. The biggest event for Wednesday should be
the Greenspan testimony before the House Budget Committee.
He is expected to continue the Fed's standard statement
that the economic recovery is self sustaining and the
Fed will continue to hike rates at a measured pace. They
will want to quiz him about stronger growth ahead because
it relates to future income. Because it is an election
year somebody is sure to ask some campaign oriented 
questions about deficits and social security reform. 
This testimony is not expected to be a market mover but
any time Greenspan speaks there is always a danger. In
the current context any bullish comments could also 
provide a boost now that event risk fears have passed.

Oil provided a boost to the market with a drop of more
than a dollar at the open. We spent most of the day under
$43 after OPEC made positive comments about supply. Still
we saw the price rise back to $43.30 at the close on 
short covering and disbelief anything had really changed. 

Despite the high oil prices the Transportation Index
came very close to a new post 9/11 high. The close at
3178 was very close to the June 30th close at 3204. 
This apparent logic conflict has the bears very confused. 
With oil in the U.S. budgeted in the $28-$30 range this
rally on prices $10-$15 higher than expected is causing
significant confusion. FedEx did hit a new post 9/11 high
and an all time high at 84.20 after Yellow-Roadway raised
their guidance. YELL said they were seeing a stronger
pricing environment although shipping volume was about
as expected. They raised guidance from $1.20-$1.25 to
$1.30-$1.35. FedEx had also raised guidance about two
weeks ago. This should be good news for the economy. 
If shipping companies have been able to raise prices
and recover oil losses without losing customers it
suggests business is healthy. 

Having the Dow Transports nearing a new high at the 
same time the Dow is pressing higher is also bullish
for those that see the transports as final confirmation
of a longer term Dow move. Helping this confirmation is
the soaring financial stocks. The BKX closed right at
100 and only THREE points away from an all time high. 
Further confirmation comes from the Dow Utility Index
which is also at a two year high nearing 300. 
Bullishness is breaking out all over. 

Dow Transports Chart – Weekly

 
Banking Index Chart – Daily

 

Tech stocks tried to rise after several tech stocks 
raised guidance. (Is it snowing in hell today?) Seagate
Technology (STX) said sales and earnings would be above
estimates. Seagate makes disk drives and they said the
overall demand was stronger this quarter than last. 
VRSN raised estimates and said it's recently acquired
Jamba business is performing significantly ahead of
expectations. Cisco rose after CIBC upgraded the 
company to outperform. 

Not all was rosy in tech world. Intel attracted another
downgrade and fell under $20 again. Was this analyst
in a coma all last week then the downgrade party was
in full swing? Probably just wanted his day in the
limelight. Lehman cut Intel to neutral but the sector
to negative from neutral. Chips are not out of the 
doghouse yet with Texas Instruments slipping under 
$19 in front of their mid quarter update on Wednesday
after the close. The SOX was the number one reason the
Nasdaq failed to follow the Dow materially higher. 

The SOX set another new 52-week low at 351.27 and 
barely moved off that low at the close. The SOX
continues to be the weakest link and until all the
major chip updates and profit warnings have passed
it should continue to be the Nasdaq anchor. 

SOX Chart – Weekly

 

The Nasdaq has topped at 1865 and refuses to move 
higher. Each attempt runs out of steam once it moves
over 1860. Until this trend changes the Dow should
find it hard to maintain an advance despite the help
from the transports and utilities. 

The Dow has downtrend resistance at 10350-10360 from
the February highs and that is almost exactly where it
failed this morning. It should be tough to move over
this level without any help from techs. The calendar
ahead is tough and any weak supporting index will make
it even tougher. 

So far the September roadmap is still intact. We are
only seven days down the path but hugging the center
line. Septembers normally start with a bullish bounce
but earnings warnings end up dragging it down. For
tomorrow we are going to start out with a warning from
McKesson. MCK said it would earn between 75-80 cents
for the first half. Since they earned 53 cents in Q1
that means they will post 22-27 cents in Q2. Analysts
were expecting 50 cents. Confusing analysts was an
affirmation of full year guidance of $2.20-$2.35 with
no explanation. Considering the 50% drop in Q2 earnings
one analyst called the full year affirmation laughable.
That affirmation was the only thing that kept MCK from
being crushed after the close. It did fall from $31.86
to $29.50 in after hours.

The technical viewpoint is mixed today. The Dow failed
at the downtrend resistance but is still over both the
100 and 200 day averages. We are extended and approaching
some very high risk levels. The SPX closed at 1121 and
only +3 points above its average close for the year at
1118. It is also above its averages at 1110-1113 with
resistance at 1125. On the bullish side a break of 1125
could easily run to much stronger resistance at 1140-1145. 

For the rest of the week my bias is neutral. We could
wander higher in the absence of any material earnings
warnings because the real warning season does not begin
for another week or so. We could also slowly decline 
in anticipation of those warnings and the Fed meeting 
on the 21st. We opened September as expected according
to the historical trend. This week is where that trend
begins to weaken IF we follow the historical norm. Given
the strength in transports despite the high oil we may
not be in a true historical cycle. The election could
be skewing the outlook as well. Keep your eye on the
trend and follow closely. Changes in direction could
come quickly.  

Enter Passively, Exit Aggressively. 

Jim Brown
Editor


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

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


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

Volatility Drops
Jonathan Levinson

The Dow and SPX made it above Friday's on an intraday basis while 
the Nasdaq tried but failed.  The strength in the Dow and S&P 
generated some extreme volatility readings, with the VXO plunging 
to 13.65 in the early afternoon before a weak bounce that saw the 
VXO close near its lows of 13.58.  Bonds rallied throughout their 
session, while equities fell from their highs from 1:30PM and 
struggled to hold their opening gains.

Volume was slightly stronger than on Friday for the NDX, while it 
declined for the Dow and SPX.  The bifurcation noted in the 
weekend Futures Wrap and by both Keene Little and myself in the 
Market Monitor continued, with the Dow and SPX behaving less 
bearishly than the NDX. 


Daily Pivots (generated with a pivot algorithm and unverified):




Daily NDX candles



The NDX respected the lower rising trendline connecting the lows 
from the August bottom, plunging sharply intraday on the break 
below 1380, only to bounce sharply to close higher by .73% for 
the day.  The end of session bounce left us with the candlestick 
version of perfect indecision, being a doji star.  While the 
sharp bounce from the lower rising trendline is bullish, the NDX 
nevertheless respected a pattern of lower highs, failing to break 
Friday's high even on an intraday basis.  That action confirms 
what has so far been a slow daily cycle rollover over the past 
week, and the daily chart suggests a complex top being formed.  
This assessment also coincides with what the SPX-VXO chart below 
appears to suggest, but we won't know until the 1360 level is 
broken on a closing basis.  So far, the daily cycle downphase for 
the NDX has been weak/sideways, which on its own could prove to 
be bullish, but only if we see the cycle reverse to the upside 
with a higher closing high above 1400.  That has yet to occur.


20 day 30 minute chart of the QQQ 



The primary NDX trading vehicle, the QQQ, shows the lower high 
below Friday's peak, both price- and oscillator-wise.  Once 
again, this action coincides with the daily cycle downphase 
within which the 30 minute candles are trading.  The way to 
understand this cycle picture is using an image of larger and 
smaller pipes:  the daily cycle is a wide pipe within which a 
narrower pipe (the 30 minute cycle) flows.  The 30 minute cycle 
can oscillate whichever way it wants, but with only rare 
exception, it should not exceed the limits of the daily cycle.  
With the daily cycle rolling over, we should continue to see the 
30 minute cycle making lower highs and, below 34.10, a pattern of 
lower lows until the daily cycle bottoms.  That should 
approximately 2 weeks from now, based on the action of the daily 
cycle oscillators over the past few months.  A sustained break 
above 34.80 would likely stop the daily cycle downphase, and 
shortly thereafter, replace it with an upphase, but as we saw 
today, that level feels like it's a long way away.


2-day 100-tick chart of the QQQ



The short cycle is represented by the narrow 10 period Keltner 
channel (in red), which oscillates within the 30 minute channel 
(35 period orange Keltner channel).  It was in a sharp upswing as 
of the close, but with 30 minute cycle resistance at 34.45, it 
will take a strong open to turn the 30 minute channel back up.  A 
break above today's high of 34.58 would do it, while a failure 
will find support at 34.30, followed by 34.20 and 34.05-.10 QQQ.


Daily SPX candles



The SPX continues to trade bullishly, with today's higher high 
and nominally higher low sufficient to pin the 10-day stochastic 
in overbought territory, in what is becoming a bullish trending 
move.  There is no downphase on the SPX yet, with rising channel 
support up to 1114 currently.  Today's range is within the 
interminable 1122-1136 range we remember from earlier this year, 
and unless bulls can rocket their way through this stiff overhead 
resistance, it very likely that there will be at least a 
consolidative pullback before making the attempt on descending 
resistance at 1134.  


20 day 30 minute chart of the SPY



The only suggestion of trouble in paradise is the bearish 
oscillator divergence against today's higher high for the S&P 500 
Depository Receipts (SPY). 112.30 held as intraday support, but 
the lower oscillator highs against the touch of 113.13 mandates 
caution.  Generally, bearish divergences are followed by 
impulsive declines, and while a break of today's high would 
disarm that signal, bulls with open positions will want to be 
quick on their stops in the event that the 112.30-.40 level is 
broken at tomorrow's open.  112 should provide firmer support, 
but that bearish divergence is troublesome, and a 30 minute cycle 
downphase from here would provide it with a strong challenge.


Daily SPX-VXO comparison chart



I've correlated the VXO lows over the past 6 months with the SPX 
highs in this chart.  In every case, these moves below 14 have 
proven to be excellent exit points from long positions.  While I 
have been bullish on the daily cycle upphase still in progress, 
that cycle is now toppy, just as the VXO is printing extreme 
bottomy readings.  While nothing guarantees that the SPX won't 
extend its upside trending move and possibly drag the NDX along 
with it, the current readings dictate caution for bulls and lower 
highs as possibly entry points for bears.


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

Investors Breathe Relieved
- J. Brown

The day after the Labor Day holiday is traditionally positive.  
This year the odds were probably even higher for a rally as 
investors heave a sigh of relief.  Not only did the Olympics pass 
uneventful but the DNC and RNC also survived without terrorist 
incident.  Now that the summer's major targets are in the rear 
view mirror investors can focus on the Presidential election and 
the upcoming forth quarter.  Of course we have to survive the 
upcoming Q3 earnings season and before that the corporate 
earnings warning session, which begins in just a couple of weeks.  

Stocks were mostly positive on Tuesday as Wall Street money 
managers return to work.  Boosting the urge to buy stocks was a 
significant dip in crude oil prices.  However, the heaviest 
anchor on stocks today was the semiconductor sector.  The SOX was 
red compared to its fellow tech sectors in the green.  Tugging on 
the already weak SOX were negative comments from Lehman Brothers 
who downgraded their outlook on the semiconductor sector and 
ASML, INTC, and NSM.  Investors were already cautious on chip 
stocks after Intel's mid-quarter update last week but it could 
get worse.  After the bell tonight TriQuint Semiconductor (TQNT) 
issued an earnings warning for the third quarter during their 
mid-quarter update.  Traders are likely to fear the worst for 
Texas Instruments (TXN) who reports their mid-quarter update 
tomorrow.  

Overall the session was positive with advancing stocks 
outnumbering decliners 20-to-7 on the NSYE and 19-to-11 on the 
NASDAQ.  Up volume outweighed down volume on both exchanges.  Yet 
I believe the real test is whether or not stocks can keep this 
momentum alive.  Traders are giving the VIX/VXO a wary eye as 
both volatility indices are near their lows, which typically 
signifies a short-term top.  If we close up for the week I'll be 
impressed.  

Tomorrow brings the Federal Reserve's Beige Book report and Alan 
Greenspan testifies before the House Budget committee.  


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  9230
Current     : 10341

Moving Averages:
(Simple)

 10-dma: 10200
 50-dma: 10123
200-dma: 10267



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  990
Current     : 1121

Moving Averages:
(Simple)

 10-dma: 1107
 50-dma: 1100
200-dma: 1113



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1301
Current     : 1381

Moving Averages:
(Simple)

 10-dma: 1379
 50-dma: 1392
200-dma: 1440



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

CBOE Market Volatility Index (VIX) = 14.07 +0.16
CBOE Mkt Volatility old VIX  (VXO) = 13.58 -0.33
Nasdaq Volatility Index (VXN)      = 21.44 +0.38


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.86        591,019       507,845
Equity Only    0.70        418,271       292,067
OEX            0.88         46,239        40,673
QQQ            2.26         18,530        41,949


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

Bullish Percent Data

           Current   Change   Status
NYSE          58.1    + 1     Bear Confirmed
NASDAQ-100    38.0    + 0     Bull Alert      
Dow Indust.   56.6    + 3     Bear Correction***
S&P 500       56.0    + 2     Bear Correction
S&P 100       55.0    + 1     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: 1.06
10-dma: 1.23
21-dma: 1.09
55-dma: 1.28


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    2073      1900
Decliners     746      1119

New Highs     166        63
New Lows       19        31

Up Volume   1075M      838M
Down Vol.    372M      441M

Total Vol.  1465M     1309M
M = millions


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

Commitments Of Traders Report: 08/31/04

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

The latest data shows commercial traders reducing their short
positions just a tad.  They remain net bearish by only by a 
small margin.  Retail traders have upped both their longs and
shorts and the net result has been a reduction in their 
bullish enthusiasm.

Commercials   Long      Short      Net     % Of OI
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%)
08/31/04      406,637   416,778   (10,141)   (1.2%)

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
08/10/04      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%
08/31/04      144,120   114,343    29,777    11.5%

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

Wow!  We're seeing some action in the e-minis.  Commercial
traders or "smart money" has really upped their shorts while
reducing their longs.  This has produced the most bearish 
reading in a long time.  Without missing a cue the retail
traders have upped their longs to produce the most bullish 
reading in a while.  

Commercials   Long      Short      Net     % Of OI 
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%)
08/31/04      372,071   543,100   (171,029)  (18.7%)

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

Small Traders Long      Short      Net     % of OI
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%
08/31/04      258,624     77,036   181,588    54.0%

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 appear to be happy to sit still in the
NDX futures but small traders have increased their long 
positions.

Commercials   Long      Short      Net     % of OI 
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%
08/31/04       48,167     43,411     4,756    5.2%

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

Small Traders  Long     Short      Net     % of OI
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%
08/31/04       14,635    10,572     4,063    16.1%

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

Traders don't seem very willing to change their bets on 
the Industrials.  Neither the commercials or the small traders
are shifting any money around.

Commercials   Long      Short      Net     % of OI
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%
08/31/04       29,143    24,147    4,996       9.3%

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

Small Traders  Long      Short     Net     % of OI
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%)
08/31/04        4,929     7,122   (2,193)   (18.2%)

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 09-07-2004
Copyright 2004, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: MHK
Dropped Puts: None
Call Play Updates: AHC, BOL, DGX, FMC, FO, PD, RAI, TDS, ZBRA 	
New Calls Plays: None
Put Play Updates: IRF, IVGN, LXK, MSTR, 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:
*****

Mohawk Industries - MHK - cls: 81.30 chg: +2.25 stop: 76.25     

Exit point alert!  We can't see any news but shares of MHK soared 
today adding 2.84 percent on above average volume.  It's possible 
the stock is trading higher on strength in the homebuilder 
industry but we're not sure.  What we are sure of is that MHK has 
exceeded our short-term target and we're going to close the play 
for a profit.  Readers can choose to follow our lead or leave the 
play open if you think MHK still has some momentum left.  If you 
choose to leave the play open be sure to tighten your stop in 
such a manner to protect your gains.  

Picked on August 24th at $75.51
Change since picked:     + 5.79
Earnings Date          07/21/04 (confirmed)
Average Daily Volume =      397 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
********************

Amerada Hess - AHC - close: 81.88 chg: -0.40 stop: 79.00      

AHC dipped this morning at the open but spent most of the session 
trading between $81.50 and $82.00.  The move is likely a reaction 
to the drop in crude oil prices, which slipped back under the 
$43.00 a barrel mark.  The OIX and OSX indices were two of the 
four sector indices that closed lower today.  In the news there 
was word out that the Oasis Group, a group of oil companies of 
which AHC owns an 8.2 percent stake, is making progress and is in 
the late stages of negotiations with the Libyan government to 
begin drilling again.  Also in the news was an article about the 
recently failed coup attempt in Equatorial Guinea and how the 
ensuing investigation may bring up bribery charges on oil 
companies doing business in that country.  

Picked on August 31st at $80.50
Change since picked:     + 1.38
Earnings Date          07/28/04 (confirmed)
Average Daily Volume =      1.0 million 
Chart =


---

Bausch Lomb - BOL - close: 67.22 change: +0.84 stop: 64.75     

BOL continues its climb higher with short-term support at the 
simple 10-dma but progress is slow.  The stock is still under the 
$68.00 mark and shares traded in choppy action despite a somewhat 
narrow range today.  The relatively strong volume suggests there 
is distribution going on and that means we're near a top and 
should consider exiting.  However, looking more closely at the 
intraday chart a large portion of the volume came in on the late 
afternoon rebound higher, which would be bullish.  No change in 
our strategy but we remain cautious.

Picked on September 01 at $66.51
Change since picked:      + 0.71
Earnings Date           07/29/04 (confirmed)
Average Daily Volume =       397 thousand
Chart =


---

Quest Diagnostic - DGX - close: 86.15 chg: -0.16 stop: 84.50*new*

DGX reaffirmed its Q3 forecasts of $1.25-1.30 a share but said 
the results do not reflect any potential impact from the recent 
hurricanes in Florida (-Reuters).  Investors did not find the 
news inspiring and DGX inched down 16 cents toward the $86.00 
level.  Today's lack of participation in the market's rally is 
not good news.  We are already cautious on our bullish plays and 
we're going to raise the stop on DGX to $84.50.  

Picked on August 31st at $85.60
Change since picked:     + 0.55
Earnings Date          07/22/04 (confirmed)
Average Daily Volume =      578 thousand
Chart =


---

F M C Corp - FMC - close: 46.75 change: +0.40 stop: 44.90     

FMC is still trying to creep higher and today's higher low 
doesn't hurt but we're not impressed.  Given the generally 
positive market environment on Tuesday FMC should have rallied 
more strongly.  Stay sharp and keep your stops alive.  FMC is 
relatively close to rising support at its simple 10-dma.  Shares 
should launch higher again soon or we're going to grow impatient.

Picked on August 24 at $45.87
Change since picked:   + 0.88
Earnings Date        07/27/04 (confirmed)
Average Daily Volume =    265 thousand
Chart =


---

Fortune Brands - FO - close: 74.00 change: -0.40 stop: 72.99     

Heads up!  It's time to be inching toward the exits in FO.  The 
stock only lost 40 cents today but the move painted a small 
engulfing bearish candlestick. The failed rally at the $75.00 
mark while the major indices were trading higher is not the kind 
of action we want to see in a call play.  We're going to give FO 
a chance to bounce from the $73 level one more time but we're 
only suggesting new bullish positions on a breakout over $75.

Picked on August 29th at $74.08
Change since picked:     - 0.08
Earnings Date          07/23/04 (confirmed)
Average Daily Volume =      636 thousand
Chart =


---

Phelps Dodge - PD - close: 84.14 chg: +2.09 stop: 79.95 *new*

PD was a strong performer today with a 2.5 percent rally to 
"breakout" over the $84.00 level.  The move followed a similar 
rally of more than 2 percent in copper prices.  This is a new 
four-month high for PD and the stock looks poised for more gains 
this week.  We're going to raise our stop loss to $79.95.  

Picked on August 26th at $82.10
Change since picked:     + 2.04
Earnings Date          07/27/04 (confirmed)
Average Daily Volume =      2.1 million 
Chart =


---

Reynolds American - RAI - cls: 76.05 chg: +0.45 stop: 71.95     

RAI turns in another positive day but this time the stock ends at 
a new closing high.  Traders bought the dip at the $75.00 level 
this morning and drove shares higher throughout the session.  RAI 
is nearing the bottom of our initial target range at $77.50-
80.00.  Short-term traders can prepare to exit.  Given RAI's 
relative strength we're going to aim for the upper end of the 
range.  

Picked on August 19 at $72.88
Change since picked:   + 3.17
Earnings Date        08/02/04 (confirmed)
Average Daily Volume =    1.2 million 
Chart =


--

Telephone & Data Sys - TDS - cls: 80.25 change: +0.96 stop: 75.95

Volume remains pretty light but we're encouraged to see TDS close 
above round-number, psychological resistance at the $80.00 mark.  
This is good news and the move certainly strengthens the three-
day old MACD buy signal.  Keep your ears open tomorrow for any 
news.  TDS will be presenting at the Morgan Stanley 
communications conference tomorrow.  The move over $80.00 could 
be used as a new bullish entry point.  

Picked on August 24th at $78.05
Change since picked:     + 2.20
Earnings Date          07/21/04 (confirmed)
Average Daily Volume =      195 thousand
Chart =


---

Zebra Tech. - ZBRA - close: 57.75 chg: -0.35 stop: 57.00*new*

It's time to wave the yellow caution flag on ZBRA.  Today's early 
gap higher and slow fade into the close is not good news.  ZBRA 
should have been trading higher and nearing our exit range at 
$59.50-60.00 with the market in a bullish mood.  Today's lack of 
participation in the market rally has us on edge and ready to 
exit.  The stock should bounce from its simple 10-dma near 
$57.25.  However, if it doesn't we want out.  Our new stop is 
$57.00.  We are not suggesting new bullish plays.

Picked on August 25th at $56.18
Change since picked:     + 1.52
Earnings Date          07/28/04 (confirmed)
Average Daily Volume =      419 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
*******************

Intl Rectifier - IRF - close: 31.79 chg: -0.39 stop: 35.01

Our recently added put play in IRF is off to a decent start.  The 
SOX semiconductor index bucked the market's uptrend today and 
closed with a 1.14 percent loss.  Shares of IRF under performed 
with a 1.2 percent loss.  More importantly IRF closed under what 
looks like minor support at the $32.00 level.  This looks like an 
entry point for puts.

Picked on September 5th at $32.18 	
Change since picked:       - 0.39
Earnings Date            07/29/04 (confirmed)
Average Daily Volume =        1.3 million 
Chart =


---

Invitrogen - IVGN - close: 50.16 change: -0.48 stop: 51.51

The BTK biotech index managed a meager bounce of less than 3 
points today while shares of IVGN churned sideways above the 
$50.00 mark.  We were expecting the day after Labor Day to be 
bullish so we're encouraged to see IVGN in the red.  We remain 
un-triggered and wait for IVGN to hit $48.95 to open the play.

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 =


---

Lexmark Intl - LXK - close: 81.96 chg: -4.14 stop: 86.01*new*

The LXK put play is off to a strong start.  LXK dropped 4.8 
percent on huge volume after announcing a printer recall.  The 
company is voluntarily recalling about 40,000 laser printers due 
to a shock hazard.  The machines were sold under the Lexmark, IBM 
and Dell brand names.  Investors were obviously not happy to hear 
the news but one analyst suggested that the move today may be 
overdue since the volume of printers is less than 1 percent of 
its Q3 sales.  We'll have to see if LXK produces any sort of 
oversold bounce tomorrow.  Readers looking for new positions may 
want to wait and see if LXK bounces and then rolls over under the 
$84.00 level.  We're going to lower our stop to $86.01.

Picked on September 5th at $86.10
Change since picked:       - 4.14
Earnings Date            07/19/04 (confirmed)
Average Daily Volume =        1.2 million 
Chart =


---

MicroStrategy - MSTR - close: 34.59 chg: +1.29 stop: 36.01

Perfect!  MSTR rallied back into the $34.50-35.00 range we 
mentioned on Sunday as a potential entry point for bearish plays. 
Now we just need to see MSTR roll over under $35.00 at the top of 
its descending channel.   Keep an eye on the GSO software index, 
which is still struggling under resistance at the 135 level.  
Keep an ear open for any news tomorrow when MSTR presents at a 
technology conference.

Picked on September 5th at $33.30
Change since picked:       + 1.29
Earnings Date            07/27/04 (confirmed)
Average Daily Volume =        376 thousand
Chart =


---

SPX Corp - SPW - close: 36.49 change: +0.40 stop: 37.51

SPW produced some volatility today after announcing that its 
controller and Chief Accounting Officer would resign effective 
September 24th.  The abrupt departure of a major executive 
normally sends a stock lower but somehow SPW has avoided such a 
knee jerk reaction.  Actually, we're growing a little weary of 
waiting for SPW to break support at the $36.00 level and hit our 
trigger at $35.75.  The stock's ability to shrug off bad news is 
affecting our bearish bias.  If we don't see some weakness in the 
next few days we'll drop this play unopened.

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

************************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 09-07-2004
Copyright 2004, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Watch List: Insurance to health care and more!
Spreads & Straddles: A Post-Holiday Rally!
Premium Selling Plays: Naked Puts & Calls


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

Insurance to health care 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.
___________________________________________________________________


InfoSpace Inc - INSP - close: 41.50 change: +2.24

WHAT TO WATCH: We've had INSP on the watch list before.  The 
stock has painted an inverse or reverse head-and-shoulders 
pattern.  We tried to play INSP long on the original breakout but 
shares failed to hold above the $40.00 level.  Now INSP is back 
above the $40.00 mark and hitting new four-month highs.  This 
looks like a bullish entry point and the H&S target would be the 
$49-50 region.  Watch for a dip back toward $40 as an entry point 
or go long over $42.00.  Expect some resistance near $45.

Chart=


---

American Intl Group - AIG - close: 72.66 change: +0.90

WHAT TO WATCH: AIG added another 1.25% today proving the bounce 
from the $70.00 level and its simple 200-dma isn't over yet.  We 
like AIG's P&F chart too with a strong rebound from P&F support 
and a new "buy" signal.  The IUX insurance index is doing 
relatively well and insurance stocks are bouncing because 
hurricane Frances was less destructive than expected.  Watch for 
a dip in AIG toward the $71 region and consider buying a bounce.

Chart=


---

United Health Group - UNH - close: 68.18 change: +1.14

WHAT TO WATCH: A few days ago we alerted our MarketMonitor 
readers to the breakout in UNH over resistance at $66.00.  Since 
then shares have seen a steady walk higher with minor support at 
the 10-dma.  Now the stock is nearing its all-time highs from 
April near $68.50.  Readers can watch for a breakout over 
resistance or look for a dip back toward $66.00-66.50 and 
consider buying a bounce.  

Chart=


---

Zimmer Holdings - ZMH - close: 77.02 change: +2.28

WHAT TO WATCH: The rally in ZMH continues.  Shares broke out over 
the $75.00 level and its 40-dma and exponential 200-dma last 
week.  Now the stock has broken through its simple 50 and 200-
dma's near the $77 level.  This looks like an aggressive bullish 
entry.  We say aggressive because ZMH is short-term overbought.  
Plus, we see additional resistance at the $80.00 level, which is 
both the bottom of the recent gap down and host to its simple 
100-dma.  A move over $78.00 would produce a new P&F buy signal. 

Chart=



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

CME $144.51 +7.51 - CME surged today as it broke through 
resistance at the $140 mark.

MBT $145.20 +4.45 - MBT is looking very overbought with a 25-
point rally in the last week.  Shares have broken through 
resistance at the $140 level. 

IMCL $52.30 -1.23 - IMCL still looks like a bearish candidate.  
Watch for a new low under $51 or $50.

AMZN $38.51 -0.23 - AMZN also looks like a bearish candidate but 
watch for a new low under $37.85. 



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

A Post-Holiday Rally!
By Ray Cummins

U.S. equities soared higher Tuesday amid falling oil prices and
favorable news from the retail segment.

The Dow Jones industrial average closed up 82 points at 10,342,
with General Electric (NYSE:GE) bolstering the blue-chip segment
as several Wall Street firms forecast better prospects for the
industrial conglomerate.  The NASDAQ composite index gained 14
points to finish at 1,858, despite further selling pressure in
semiconductor shares.  The broader Standard & Poor's 500 index
was up 7 points at 1,121 on gains in homebuilding, casino, home
furnishing, brokerage, automobile, airline, life insurance, and
consumer finance stocks.  Advancing issues outpaced decliners by
2 to 1 on the New York Stock Exchange, where volume came to 1.2
billion shares.  NASDAQ breadth was roughly 3 to 2 on volume of
1.3 billion shares.  In the bond market, treasury prices climbed
with the 10-year note up 13/32, while its yield fell to 4.24%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 09/06/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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    65.04  68.74  SEP  55.0  60.0  0.40   59.60   0.40   Open
FPL    67.73  69.04  SEP  60.0  65.0  0.45   64.55   0.45   Open
MCO    67.33  69.63  SEP  60.0  65.0  0.65   64.35   0.65   Open
BSTE   44.14  48.41  SEP  35.0  40.0  0.55   39.45   0.55   Open
ISCA   53.40  52.76  SEP  45.0  50.0  0.55   49.45   0.55   Open
LEND   33.89  39.10  SEP  25.0  30.0  0.60   29.40   0.60   Open
PIXR   69.93  78.43  SEP  60.0  65.0  0.45   64.55   0.45   Open
PD     80.77  82.05  SEP  65.0  70.0  0.40   69.60   0.40   Open
RYL    86.01  89.02  SEP  75.0  80.0  0.65   79.35   0.65   Open
FRO    40.05  39.46  SEP  30.0  35.0  0.60   34.40   0.60   Open
NIHD   37.59  37.90  SEP  33.4  35.0  0.20   34.80   0.20   Open
NCEN   53.10  55.65  SEP  45.0  50.0  0.60   49.40   0.60   Open
SEPR   49.35  50.02  SEP  42.5  45.0  0.30   44.70   0.30   Open
GILD   69.39  70.32  SEP  60.0  65.0  0.55   64.45   0.55   Open
PCU    43.29  44.54  SEP  35.0  40.0  0.50   39.50   0.50   Open
MUR    75.51  77.29  OCT  65.0  70.0  0.70   69.30   0.70   Open
RYL    88.15  89.02  OCT  75.0  80.0  0.75   79.25   0.75   Open

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


CALL-CREDIT SPREADS

Stock  Pick   Last    Mon  L/C   S/C  Credit   CB    G/L   Status

PDCO   73.40  73.31   SEP  85.0  80.0  0.55   80.55  0.55   Open
CDWC   59.25  58.29   SEP  65.0  60.0  0.45   60.45  0.45   Open
DNA    44.23  49.90   SEP  52.5  50.0  0.35   50.35  0.35   Open?
EASI   43.53  46.02   SEP  55.0  50.0  0.40   50.40  0.40   Open
VLO    64.36  66.20   SEP  75.0  70.0  0.60   70.60  0.60   Open
FD     44.60  45.28   SEP  50.0  47.5  0.30   47.80  0.30   Open
PHS    32.42  32.40   SEP  37.5  35.0  0.30   35.30  0.30   Open
OSTK   31.03  31.43   SEP  40.0  35.0  0.60   35.60  0.60   Open
AMZN   39.90  38.74   SEP  45.0  42.5  0.30   42.80  0.30   Open
CHIR   43.41  42.58   SEP  47.5  45.0  0.30   45.30  0.30   Open
RIMM   60.22  62.36   SEP  70.0  67.5  0.20   67.70  0.20   Open
AZO    74.06  75.69   OCT  85.0  80.0  0.55   80.55  0.55   Open
 
L/C = Long Call S/C = Short Call CB = Cost Basis G/L = Gain/Loss

Genentech (NYSE:DNA) remains on the early-exit list.  Briggs &
Stratton (NYSE:BGG), Guidant (NYSE:GDT), Kmart (NASDAQ:KMRT) and
Vimple Communications (NYSE:VIP) have previously been closed in
order to limit potential losses.


DEBIT STRADDLES

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

DITC    17.97  21.84   SEP   17.5   17.5    3.00    5.50    Open?
CAH     45.79  47.35   SEP   45.0   45.0    3.00    3.40    Open

Our recent straddle in Ditech (NASDAQ:DITC) was the "big winner"
in August as the issue jumped over $4 on a strong earnings report
and the announcement of two additional customers in Asia.  The
earnings date for Cardinal Health (NYSE:CAH) was published in
error by more than one financial information provider (my source
was RightLine, which has since revised its expected date to 9/7),
but the IR department at CAH reportedly said "no date has been
set."  Many traders believe the quarterly report will be released
in the next two weeks -- only time will tell.
      
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
NEW POSITIONS
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The Spreads/Straddles editor is on a brief hiatus with his family
and will return later in the week.  New option-trading candidates
will be published in next Sunday's edition of the newsletter.

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

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 09/06/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

IVX      SEP    16.00   15.64   19.85    0.36   5.52%   2.30%
MCIP     SEP    15.00   14.30   17.25    0.70   8.50%   4.90%
PAAS     SEP    12.50   12.05   14.64    0.45   6.87%   3.73%
UTHR     SEP    25.00   24.70   30.77    0.30   3.01%   1.21%
AMED     SEP    25.00   24.25   25.76    0.75   6.54%   3.09%
PHM      SEP    50.00   49.25   59.86    0.75   3.32%   1.52%
KOSP     SEP    30.00   29.25   37.31    0.75   5.48%   2.56%
GLBCE    SEP    12.50   11.90   16.04    0.60  11.90%   5.04%
ECLP     SEP    12.50   12.10   14.53    0.40   6.90%   3.31%
OMM      SEP    12.50   12.10   13.15    0.40   6.51%   3.31%
CNCT     SEP    25.00   24.10   25.43    0.90   7.11%   3.73%
TOY      SEP    15.00   14.45   16.53    0.55   7.51%   3.81%
ACF      SEP    20.00   19.25   20.50    0.75   7.16%   3.90%
PLMO     SEP    30.00   29.45   32.20    0.55   5.05%   1.87%
ION      SEP    25.00   24.50   27.23    0.50   4.17%   2.04%
ESLT     SEP    20.00   19.20   19.78    0.58   5.77%   4.17%
WBSN     SEP    35.00   33.75   38.03    1.25   8.46%   3.70%
NTMD     SEP    12.50   12.15   18.50    0.35   8.12%   2.88%
UTHR     SEP    25.00   24.30   30.77    0.70   7.30%   2.88%
CNCT     SEP    25.00   24.30   25.43    0.70   6.65%   2.88%
DDS      SEP    20.00   19.50   19.85    0.35   4.42%   2.56%
MEE      SEP    22.50   22.00   28.36    0.50   5.93%   2.27%
FOSL     SEP    25.00   24.35   28.64    0.65   5.95%   2.67%
HUM      SEP    17.50   17.10   19.27    0.40   5.34%   2.34%
SCSC     SEP    50.00   49.40   60.99    0.60   3.30%   1.21%
JOSB     SEP    24.00   23.52   28.17    0.48   5.27%   2.04%
ECLP     SEP    12.50   12.20   14.53    0.30   6.57%   2.46%
WBSN     SEP    35.00   34.05   38.03    0.95   7.44%   2.79%
ARO      SEP    30.00   29.05   30.82    0.95   7.67%   3.27%
MW       SEP    25.00   24.60   29.29    0.40   4.22%   1.63%
TOL      SEP    40.00   39.05   45.14    0.95   6.19%   2.43%
SEAC     SEP    15.00   14.40   15.52    0.60  12.11%   4.17%
CLHB     SEP    10.00    9.60   10.93    0.40  10.87%   4.17%
NTMD     SEP    15.00   14.65   18.50    0.35   8.62%   2.39%
ESLT     SEP    20.00   19.20   19.78    0.58   7.69%   4.17%
MYGN     SEP    15.00   14.55   16.23    0.45   8.06%   3.09%
NAVR     SEP    12.50   12.15   14.67    0.35   9.14%   2.88%
IVX      SEP    18.00   17.56   19.85    0.44   7.02%   2.51%
UTHR     SEP    25.00   24.40   30.77    0.60   8.89%   2.46%
AAPL     SEP    30.00   29.50   35.23    0.50   5.37%   1.69%
ARO      SEP    30.00   29.50   30.82    0.50   5.51%   1.69%
SONO     SEP    22.50   22.05   25.33    0.45   6.40%   2.04%
ESLT     SEP    20.00   19.30   19.78    0.48   7.49%   3.63%
MEE      SEP    25.00   24.45   28.36    0.55   7.13%   2.25%
SRDX     SEP    22.50   21.90   24.11    0.60   8.40%   2.74%
IVX      SEP    18.00   17.52   19.85    0.48   8.94%   2.74%
BSTE     SEP    45.00   44.45   48.41    0.55   4.16%   1.24%
FCN      SEP    17.50   17.05   18.34    0.45   7.56%   2.64%
PSRC     SEP    20.00   19.35   22.81    0.65  16.45%   3.36%
MYGN     SEP    15.00   14.70   16.23    0.30   8.01%   2.04%
LCAV     SEP    22.50   21.95   24.45    0.55  10.09%   2.51%
ATI      SEP    17.50   17.10   19.18    0.40   9.15%   2.34%
LNG      SEP    15.00   14.70   20.84    0.30   9.15%   2.04%
DITC     SEP    20.00   19.55   21.83    0.45   9.32%   2.30%
ICOS     SEP    25.00   24.60   25.47    0.40   6.46%   1.63%
WNC      SEP    25.00   24.60   28.10    0.40   6.62%   1.63%
BEIQ     SEP    25.00   24.70   27.12    0.30   5.32%   1.21%
DITC     SEP    20.00   19.55   21.83    0.45  10.09%   2.30%
SHFL     SEP    30.00   29.35   32.22    0.65  10.20%   2.21%
ATI      SEP    17.50   17.20   19.18    0.30   7.78%   1.74%
SNDA     SEP    20.00   19.70   21.70    0.30   7.46%   1.52%
GMR      SEP    25.00   24.65   28.28    0.35   6.58%   1.42%
AAPL     SEP    32.50   32.05   35.23    0.45   6.20%   1.40%
SONO     SEP    22.50   22.10   25.33    0.40   8.03%   1.81%

PalmOne (NASDAQ:PLMO), which is currently profitable, Possis
Medical (NASDAQ:POSS) and Kyphon (NASDAQ:KYPH), have previously
been closed to limit losses.


NAKED CALLS

Stock   Strike  Strike  Break  Current   Gain    Max    Simple
Symbol  Month   Price   Even    Price   (Loss)  Yield   Yield

CRDN     SEP    40.00   40.50   41.58   (1.08)  0.00%   0.00%
SWIR     SEP    35.00   35.60   16.49    0.60   7.40%   1.69%
AVID     SEP    50.00   50.50   43.44    0.50   3.56%   0.99%
USPI     SEP    37.50   38.05   36.29    0.55   3.90%   1.45%
BDY      SEP    25.00   25.75   24.82    0.75   7.42%   2.91%
DRIV     SEP    30.00   30.30   24.15    0.30   4.51%   0.99%
SINA     SEP    30.00   30.35   20.83    0.35   5.84%   1.15%
ERES     SEP    22.50   22.80   19.54    0.30   6.66%   1.32%
MRVL     SEP    25.00   25.40   22.87    0.40   8.22%   1.57%
ICUI     SEP    30.00   30.65   27.30    0.65   7.56%   2.12%
SWIR     SEP    30.00   30.30   16.49    0.30   5.90%   0.99%
UPL      SEP    45.00   45.40   43.30    0.40   4.90%   0.88%
MCHP     SEP    30.00   30.65   25.26    0.65   6.97%   2.12%
EYET     SEP    45.00   45.75   34.00    0.75  10.85%   1.64%
CMX      SEP    30.00   30.45   28.92    0.45   4.86%   1.48%
IDXC     SEP    30.00   30.30   29.71    0.30   3.95%   0.99%
BRCM     SEP    32.50   32.90   25.98    0.40   5.76%   1.22%
ELAB     SEP    30.00   30.55   25.21    0.55   8.34%   1.80%
MRVL     SEP    25.00   25.35   22.87    0.35   5.80%   1.38%
RSTI     SEP    30.00   30.65   28.01    0.65  10.87%   2.12%
ASKJ     SEP    30.00   30.35   24.11    0.35   7.04%   1.15%
PSFT     SEP    20.00   20.35   17.68    0.35  11.10%   1.72%
PLMO     SEP    40.00   40.25   32.20    0.25   6.23%   0.62%
RECN     SEP    35.00   35.50   34.09    0.50   7.42%   1.41%
ASTE     SEP    17.50   17.95   17.50    0.45  12.48%   2.51%

The "watch" list position in Ceradyne (NASDAQ:CRDN) should have
been closed by conservative traders.  Bradley Pharma (NYSE:BDY),
IDX Systems (NASDAQ:IDXC), United Surgical (NASDAQ:USPI), and
Ultra Petroleum (NYSE:UPL) are possible "early-exit" candidates.
Dick's Sporting Goods (NYSE:DKS) has previously been closed to
limit potential losses.

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

The "Premium-Selling" editor is on a brief hiatus with his family
and will return later in the week.  New option-trading candidates
will be published in next Sunday's edition of the newsletter.

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

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




DISCLAIMER

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 "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives