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Daily Newsletter, Sunday, 10/10/2004

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The Option Investor Newsletter                   Sunday 10-10-2004
Copyright 2004, All rights reserved.                        1 of 5
Redistribution in any form strictly prohibited.

Entire newsletter best viewed in COURIER 10 font for alignment

In Section One:

Wrap: Tension Building 
Futures Wrap: See Note
Index Trader Wrap:  Market Yawn – Show Me the Money
Editor's Plays: Is This How Custer Felt? 
Market Sentiment:  On Your Mark, Get Set, Go! 
Ask the Analyst: Check Clearing for the 21st Century Act
Coming Events: Earnings, Splits, Economic Events 


Posted online for subscribers at http://www.OptionInvestor.com
******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
       WE 10-08        WE 10-01         WE 9-24         WE 9-17 
DOW    10055.20 -137.45 10192.6 +145.41 10047.2 -237.22 - 28.61 
Nasdaq  1919.97 - 22.23 1942.20 + 62.72 1879.48 - 30.61 + 15.78 
S&P-100  538.47 -  4.64  543.11 +  8.74  534.37 - 11.43 +  2.45 
S&P-500 1122.14 -  9.36 1131.50 + 21.39 1110.11 - 18.47 +  4.66 
W5000  10964.52 - 94.18 11058.7 +220.40 10838.3 -155.02 + 57.00 
SOX      389.52 - 12.39  401.91 + 19.36  382.55 -  5.95 +  4.89 
RUT      575.65 -  9.38  585.03 + 19.06  565.97 -  7.20 +  3.26 
TRAN    3336.00 + 37.20 3298.80 + 96.69 3202.11 - 55.28 + 24.00 
VXO       14.95           12.55           14.14           13.55 
VXN       20.69           18.91           21.10           20.13
******************************************************************

Tension Building
by Jim Brown

Last Sunday the bulls were charging out of the gate with 
massive back to back buy programs that lifted the Dow +200
points from the Thursday lows. Traders were talking about
breaking overhead resistance and worries about an October
dip were discounted as fading dreams promoted by hopeful
bears. Amazing how a couple of negative days can quickly
bring that October tension back for the bulls. 

Dow Chart

Nasdaq Chart

SPX Chart



It all began with Thursday's drug overdose and the Dow
drop at the open. Bulls were suddenly looking at red
everywhere and the Nasdaq seven day winning streak was
in jeopardy of being stopped cold. Oil hit $53 and the
Nigerian strike was back on again. Cautious comments
about the coming Jobs report and worries about GE 
earnings begin to push the market losses deeper into 
the red. No worry, jobs will rescue us and the bears 
will be sent off to an early hibernation. Bulls woke 
Friday morning to a worse than expected Jobs report 
and oil over $53 and suddenly that glimmer of light 
at the end of the October tunnel became an onrushing
train. Worried yet?

The only material economic report on Friday was the 
Jobs report and it was not pretty. Only 96,000 jobs 
were created in September and far below the consensus
estimate of 160,000. Worse yet the October revisions 
which were expected to be +288,000, according to 
administration leaks, fell to only +236,000. Last 
months +144K number was revised to only $128,000. In
short there was no good news, at least not the kind 
of good news the president was expecting as he heads
into the second debate on Friday night. 

The labor market grew progressively tighter with total
jobs created in Q3 at 309,000 much less than the 628,000
from Q2. The BLS acknowledged that the hurricanes impacted
the numbers but only to a minor amount as Ivan hit after
the survey week for September. They admit there could be
a lingering impact from Frances and Charley but again 
it was seen to be only minor. This report created more 
questions than answers and the economic indications are
for weaker job growth ahead. The conflicting reports 
from the ISM, various regional reports, Manpower and 
Monster Indexes all suggested hiring was increasing but
they do not indicate the number of positions. They only
measure ads and number of companies hiring. 

After Friday's report analysts were left with the feeling
of inherent job weakness coming back to haunt the recovery.
The country needs to create 150,000 jobs per month just
to cover the number of new workers entering the workplace.
The spring months of Mar-May saw a bounce to +295,000 per
month on average and analysts were projecting a strong
continued economic rebound. Over the last four months
that average has dropped to barely over +100,000 per
month on average and less than breakeven rates. 

This suggests the economy may be transitioning into
a weaker pace of growth and may give us a clue why 
Bernanke broke from the Fed mantra this week. He said
in his Thursday speech that "if the economic data paused
then the Fed rate hikes would pause." Because this was
different from the current Fed policy analysts quickly
thought it might be an indication the Jobs numbers may
not be as strong as expected. Whether the Bernanke 
comment was scripted or just coincidental we will never
know but the data definitely paused. This will increase
speculation about the Fed position for the Nov-10th 
meeting. 

The unemployment rate remained at 5.4% not because more
workers found jobs but because more workers dropped out
of the workforce in frustration. In September 221,000
workers dropped out following -152,000 in August. In
a related survey -201,000 dropped out of the household
workforce in September. Those three numbers alone show
twice as many workers dropped out of the picture than
actually found jobs over the last two months. 

With the second debate on Friday night Bush was saddled
with a new handicap before the cameras even began rolling.
With the race a dead heat and Kerry poised to hammer him
on the economy just like he hammered him on Iraq last 
week the outlook does not look good. They say the market
does not care who is president only that the election
is over. That may not be exactly true. Over the last
26 incumbent elections sixteen were won by the incumbent.
Of those sixteen times the market rose the year after
the election fifteen times. For the ten times the win
went to the challenger the market fell nine times. I
am sure there are valid reasons for the extremely 
lopsided results but it clearly shows that the market
normally goes higher when the incumbent wins and dives
when the challenger wins. This trend will not be lost
on fund managers. 

This makes the debate on Friday even more critical with
the contestants running neck and neck. The statistics
show this to be the slowest recovery cycle in over 50
years and the economic tension is building. 

There are positive signs on several fronts. On Friday
the CEO of IBM tried to paint a positive picture for
techs. He predicted capital spending would increase 
in 2005 from the +6% to +7% growth they were seeing 
for 2004. Reporters were unable to ask him for his 
specifics as to why his numbers were higher than
consensus estimates of +4% to +5% for 2004. GE CEO
Jeffery Immelt said the economy continues to be very
strong and he is projecting growth for GE of +10% to 
+15% for 2005. Eight of GE's eleven divisions posted
double digit growth in Q3. Several of those divisions
grew at more than +20% for the quarter. GE raised 
estimates for the full year to the high end of their
range. 

All is not as bleak as the Jobs numbers would suggest.
The last week of earnings warning season was not as 
bad as expected and the earnings flood will begin next
week. The earnings debate is heating up with the S&P
Q3 estimates at +12.3% as of Friday and the Reuters
estimates of +15.5% to +16.5%. 

The key earnings to look for next week will begin with
INTC on Tuesday. Intel lowered estimates for the quarter
and they are not expected to miss the lowered estimates.
The key will be their guidance for Q4 business and their
progress on the inventory issue. AMD expected stronger
Q4 sales so Intel will be expected to say the same or
suffer the consequences. 

JNJ will report on Tuesday and after the CL and UN 
warnings the consumer products companies have been
under pressure. Add in the pressure on drug companies
and JNJ will be watched from all directions. On Friday
JNJ changed the warning label on its arthritis drug
Remicade to show increased rates of lymphoma. This
again pressured Pfizer as the current king of the 
hill but they adamantly insist Celebrex has no 
problems. 

Yahoo also reports on Tuesday and results will impact
Google as their key rival. With GOOG still on a vertical
ramp any negative comments in Yahoo's report is sure to
bring back the shorts. Of course you have to decide if
positive comments from Yahoo are negative for Google or
negative comments positive for Google. Is there room
enough for both to prosper?

Merrill reports on Tuesday and analysts are split on
their chances of a miss or a beat. The summer volume
slow down should have impacted trading volume but gains
from internal trading and cost cutting could help. GS
and Lehman surprised to the upside and Morgan Stanley
surprised to the downside so Merrill's results are up
for grabs. 

Another factor that will continue to haunt us is oil
prices. Oil closed at $53.31 on Friday on news that 
Nigerian workers will go on strike again on Monday. 
Depending on how much oil slows from Nigeria the price
will continue to rise. Current resistance is projected
to be $54 but the $60 whisper target continues to gain
respectability and it may turn into a self fulfilling
prophecy.  

For the week the Dow spent three days lingering in the
10200 range with one brief spike to 10270. However, by
Friday's close the Dow had erased all of its gains 
since the last Friday buy program and it is right back
at 10050 and the support from late September. There is
no harm in the pullback because the sprint higher was
artificial to begin with. Three massive asset allocation
programs over two days ran stops to the upside and forced
shorts to cover. For two days we wandered sideways while
the market looked for direction and then a sequence of
events brought us back to earth and to September support.

The Nasdaq held its gains much better than the Dow 
because of the different weighting for individual stocks
impacts the Dow more dramatically. The Nasdaq has been
supported by the SOX since the September lows and despite
the Friday swoon the SOX is still moving higher. This
will continue to support the Nasdaq until Intel reports
earnings on Tuesday. After that report all bets are 
off and we will have a new market. 

I said above that this weeks pulling back to support
was nothing to worry about. That is true as long as 
the Dow remains above 10,000 and the SPX above 1110. 
Actually 1120 is current support equating to 10050 on
the Dow but 10000/1110 is the key. The Nasdaq is well
above the equivalent Dow/SPX support and could stand
to give up another -30 points to 1890 before making a
critical break. 

Volume slowed on Thursday and Friday compared to the
4B+ days during the rally. Unfortunately most of that
volume was to the downside with a 4:1 ratio on Friday.
I view the pullback, regardless of reason, as a bout
of profit taking and positioning ahead of next weeks
earnings. Funds were handed a gift as we moved into
October and that bounce worked to the bulls advantage
and allowed those sellers that wanted out a higher 
level for their exit. There was no damage to the 
markets and we are entering the first real week of 
earnings with no real bias. We could just as easily 
go up or down and Friday's close although negative 
for the week was perfectly neutral. 

Monday has no economic reports and it is also a bank
holiday. The bond market is closed and will not be 
impacting our trading. The Nikkei is also closed and
will not be an influence on our markets. This sets 
up Monday as a low volume day while traders pass 
time waiting for the real earnings flood to begin on
Tuesday. Only seven companies report on Monday with 
several hundred reporting over the next three days.
Bottom line Monday is a setup day and a tossup for 
everyone. Once the earnings parade begins we could 
see some serious volatility but without a serious 
earnings miss by somebody that volatility could just
be churning. Expectations are low and there is a good
chance we could see some upside surprises.

One last piece of election trivia. Bush supporters
should be buying all the stocks they can afford to 
push the markets higher. Kerry supporters should be
taking every opportunity to short the market. The
incumbent party has never lost the presidency when
the Dow gains +3.3% or more in October according to
the Stock Traders Almanac. However, if the Dow loses
more than -0.5% in October the incumbent has never
won. Since 1901 there were 17 elections where the
Dow posted gains but did not reach the +3.3% level.
Of those 17 elections the incumbent lost only four
times. Conversely in the eight elections where the
Dow ended lower but with less than a -0.5% drop the
incumbents won only twice. Clearly there is a tie
between the elections and the markets and a positive
market favors the incumbent. Or to put it a different
way, the market is reacting in advance to the perceived
results of the election. The market does not depend on
the election but is an uncanny predictor of the outcome
based on the perceived ramifications to investors from  
the victorious candidate. The Dow closed September at
10078 and closed Friday at 10055, a statistical dead
heat. Before the Friday night debate the various
presidential surveys had the race at 45% Bush 46%
Kerry with those numbers exactly reversed in another 
major survey. A statistical dead heat. The market is
tracking exactly 10 days into October. Need I say more?  

Enter Very Passively, Exit Very Aggressively!

Jim Brown


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


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

 Market Yawn – Show Me the Money
By Leigh Stevens
lstevens@OptionInvestor.com 

THE BOTTOM LINE – 
More anemic job growth seen in the jobs report, coupled with 
other weak economic data of the week just ended gave the market a 
big yawn. Weaker growth, no excitement and less promise with 
equities – "give me the money!" is the cry.  A lackluster profit 
picture for growth is causing investors to pull back and continue 
to not chase stocks on rallies.     

I stand corrected – said last week: ".. the market looks headed 
still higher but watch for the ability of the S&P 100 (OEX) and 
Nasdaq 100 (NDX) to close above resistances at 546-548 and 1478 
respectively, as well as at 10,300 in the Dow 30 (INDU)." 


Dow at 10,300 - furgetibotit!!  The S&P 100 (OEX) got close to, 
but not above, 546-548 OEX resistance. The Nas 100 (NDX) stopped 
at 1474 two days running and then reversed downward in a 2-day 
swan dive.

The S&P 100 (OEX) and Nasdaq 100 (NDX) continue to be the best 
predictors of the NYSE and Nasdaq markets. Both are giving the 
most technical information about the overall trend right now – 
both stopped right at the top end of their current downtrend 
channels.  The bulls are stymied and stalled again – 

You can best see the channel below by use of a line chart, 
showing closes only. To the failure to surmount its pattern of 
lower highs on each rally, highlighted by use of trend channel 
lines in the chart below, is the minor double top and a second 
reversal at its 200-day moving average.  



Th2 200-day average must be seen in the light of its significance 
to the money manager universe.  Fund managers can tend to hold 
back buying if the key averages are stalled at this average. The 
herd mentality does the rest. 

On channel and trendlines – 

The gray upper trendline on the chart below is the most technical 
and classic way to draw these lines.  The blue dashed line below 
it, is what works in trendlines: "internal" trendlines, that 
touch the MOST number of points – 

Anyway, its clear that the more substantial reaction and sharp 
down day ending the past week, was probably the start of the more 
substantial correction that many thought was coming.  Right now 
the downside for the Nas 100 doesn't look to be more than back to 
its 1380-1400 support.  Plenty of wild cards out there also, as 
well we know.     




THE CLOSING NUMBERS – 
The S&P 500 index (SPX) was down 8.5 points to 1,122 (-0.9% 
weekly). The Dow (INDU) was off by 70 points to 10,055, for two 
triple digit down days, back to back. INDU was off 1.4% on the 
week. 

The Nasdaq Composite Index (COMP) dropped 28.5 points, to 1,919.9 
on the back of the steep loss in the Semiconductor Index (SOX), 
off by 13.8 to 389.5 on Friday. COMP fell 1.1% on a weekly basis.

The Russell 2000 (RUT) of small cap stocks fell in line with the 
Nasdaq, by 1.2%.

BACK TO THE FUTURE - 
I also said last time on oil prices – ".. Oil looks to me like 
its going to 52 next and I don't know how long the market will 
shrug this off.  Technically, both the market and oil look headed 
higher so I go with how both charts currently."

Oil hit 53 at week's end and nearly has reached 54, a price 
target based on analysis of a bull flag pattern there per my 
trader's corner article of last week – 
http://www.OptionInvestor.com/traderscorner/tc_100704_1.asp 

Here's the crude chart updated -  



The rise in crude is in one of those irrational straight up kind 
of markets, and more typical (exception: 90's bubble) of a 
commodities market move – the decline after excess valuations on 
the upside, is often sharp.  I expect the oil price rise to 
moderate soon and prices to fall back substantially in the not 
distant future. This will help stocks some and moderate their 
decline. 

FRIDAY'S TRADING ACTIVITY – 
A big negative to the market came early when the Labor Department 
said a total of only 96,000 new jobs were created in September.
The expectations for the September period I saw were expectations 
somewhere from 135 to 150,000.  150,000 is what is needed, on 
average, to provide jobs to new job seekers. 

The unemployment rate steady at 5.4 provided the only 'good' 
news. The non-farm payrolls number was highly important and it 
had a lot of focus on it – the jobs growth was very 
disappointing, the silver lining being maybe that the Fed would 
not or would not need to do any further tightening.

No upward revision to fall back on either, as July and August's 
job non-farm payroll numbers got a slight downward revision.  

Moderate GDP growth yes, but only a mediocre labor market. A 
widely held notion is that the purchasing needs of consumers 
newly hired, is what ramps up our consumer-driven economy.  No 
new workers, equals a drag on growth. 

Acting as another drag on likely and projected future economic 
growth and not requiring an economics degree to see - oil going 
up like there is no tomorrow is an accelerating worry.  

In the crude-oil futures pits, nearby oil futures ended above $53 
a barrel – latest bad news: oil-worker strikes in Nigeria and 
Norway and news of halts to tanker unloading in a Gulf of Mexico 
port. The November crude oil contract was up 64 cents to $53.3 a 
barrel in New York trading. In the past week, the price of oil 
has risen over $3 a barrel (+6.4%)!
 
You could see this picture of a static - or worst, slowing – 
economy, reflected in the Friday sell off. 

The Commerce Department reported that wholesale inventories rose 
0.9% in August, the largest increase since early this year and 
higher than the 0.8% rise forecast. Hey, if the stuff (our 
widgets) piles up in warehouses, we aren't ringing those cash 
registers!   

A kick off of the Q3 earnings season came with big Dow 30 (INDU) 
component stocks General Electric (GE) and Alcoa (AA).

GE came in at 38 cents a share, matching the average forecast, 
and the company projected a double-digit earnings growth for Q4 
and for 2005. A bullish outlook – a lowering of the tide took 
even flagship GE with it as the stock slid 0.6%. 

Alcoa (AA) had reported Thursday night and announced operating 
income of 34 cents a share on revenue of $5.98 billion, matching 
expectations – however, the company had warned in September that 
results would fall short of prior expectations because of 
restructuring costs and manufacturing shutdowns. AA end down 2%.  

BONDS and FOREX MARKETS –
U.S. bond prices rallied strongly on the jobs data, figuring that 
the Fed may keep rates at the 1.75% for Fed Funds. The benchmark 
10-year note gained 28/32 to 100 29/32, to 4.14%. 

The bond market closed early Friday ahead of the Columbus Day 
weekend and will not re-open until Tuesday.

The dollar fell in the wake of the payrolls report, with traders 
fearing that weakness in the labor market will force the Fed to 
delay further interest-rate hikes – same thinking as in the Bond 
market, different result!

UPCOMING – 
Plenty of nervousness abounds – not only the usual cast of 
worries: terrorism; rise and fall of opinion whether someone new 
moves into the white house; or, will our Saudi friends bail us 
out of 60 dollar oil (yikes!). 

But ALSO, we are hot and heavy into EARNINGS season ahead. A time 
when money managers stay plugged into the home office to get 
earnings for the stocks they've bet heavily on. I knew one that 
had consensus estimates for the stocks important to him, 
programmed into his watch. So, there will be a lot of cross 
currents ahead, but the trend looks down for a while.  

It used to be if memory serves me right, Columbus Day – hard to 
believe yes – was also a day that the NYSE took as a holiday, not 
just the more genteel bond market. This day was akin to a 
"personal day", as there were so many Italians that toiled in the 
Street of Dreams.  Times change and Nasdaq competes and one 
seemingly peculiar holiday choice goes bye bye.  

Keep in mind however, the bond market, that sometimes stabilizing 
influence (or not!), is closed on Monday. Also keep in mind that 
a lot of stock traders will take a 3-day weekend also.  This 
explains some of the volatility on Friday and may make Monday a 
low volume day and exacerbate trends – meaning potential to be 
more volatile.     


MY INDEX OUTLOOKS – 

S&P 100 Index (OEX) – Hourly chart:
Another way to look at the OEX is of course to use intraday 
intervals –I use most what is in widest use as an analytical 
tool, hourly charts.  Close of the hour, day, week and month are 
the important intervals.  

Use of the hourly chart has been very useful for traders over the 
past month.  This time frame gave a good definition the Head & 
Shoulder's Top that formed at the last significant high before 
this last one.  Moreover the rebound to, but not beyond, the old 
high of course sets up a double top.  That alone is a good 
"signal" to exit calls and go into puts – give it 1-2 days to see 
if there is another try, like there was last week.  

When the first and second highs also come back to resistance 
implied by the previously broken up (bullish) trendline – what 
was support, once broken, "becomes" a new resistance – was also 
telling. I call this in fun, a rally back to the "kiss of death" 
trendline (a name heard from a technical trader type)- was good-
bye indeed!    

 

So, you've looked in your REAR view mirror took a look at how you 
could have spotted this pattern in time – we hope! - to exit 
calls and buy puts, but what next?  Back to support. Key near 
technical support looks like 530. More major support comes the 
closer OEX gets to the 510 area - 507 is only a 38% retracement 
of the big 2003-2004 advance. 

Dow 30 (INDU) – Hourly:
I commented before on the Dow 30 (INDU) not being able to break 
out above its pattern of rally highs that fall short and under 
the peak of each prior advance, at least since the early-Sept 
high. The hourly chart of the past 6-week period shows this quite 
starkly. 

This last rally that touched, and reversed at, the extension of 
the dominant down trendline was a sure tip off to get yourself 
out of calls and into puts.  

However, not so sure that you will be the trendline right – 
cause, hey, isn't that a high that that thar trendline intersects 
and isn't that against the rules, or something?  Na, trendlines 
work when you apply 'best-fit' and draw the one that touches the 
MOST number of highs in the case of a bearish downward sloping 
one like below in the hourly INDU - 



The 10,000 area still looks like key technical support.  

Nasdaq 100 (NDX) Index  – Hourly chart:
As sometimes happens, the sharp run up was only a prelude to fast 
retracement of the ground gained a week ago Friday.  The 
volatility ahead of a weekend is again creating some fireworks.  
The Nasdaq 100 (NDX) is nearly back down to my estimate of the 
low end of the channel that NDX may be in. Stay tuned!  No bets 
on whether this suggested support will prove out.  1380 is of 
course the important area, around the prior low.  I would take 
profits on puts if 1385 was seen.  



The Index is nearing a very short-term oversold and this should 
be kept in mind.  Support may well develop around 1420 as the low 
end the upside gap from late last month. Prices often return to 
at least the start of where prices took and overnight jump, which 
is what a gap is.    

Nasdaq 100 tracking Stock (QQQ) Daily chart:
The QQQ – Nasdaq 100 tracking stock – chart is bearish still and 
is until the last big prior high at close to 38, is penetrated 
and exceeded.  A close at or above 37 would have been at least 
above the resistance trendline, but tech is still not on solid 
ground.

I had been talking about 36 as key resistance – as soon as the 
Q's broke back below that level, it was high alert! for the 
bulls, not that there are that many to be found out there.  

First and more minor support is around 35 according to the baby 
trendline, but main area to be held by the bulls is 34-34.25.  
The way the stock broke on Friday led, at first blush, into the 
idea that the market was in danger of cracking some here. 

But, the prior Friday was a big move up and that (rally) fell 
apart. It's needed usually to see the next 1-2 days of trading 
after a big move going into a weekend with nerves on the fray.

The "break-down point" was 36.25 – short the stock on rallies back to this area. 



I don't think this market is going anywhere soon but give it 
until Tuesday. And maybe until November.  October, especially in 
an election year, and this election year in particular, has a LOT 
of cross-currents.

The On Balance Volume indicator turned down on 10/6 and gave some 
forewarning for the substantial fall from Thursday high to Friday 
close.  

Good Trading Success!




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

Is This How Custer Felt?

Last week Merck lost -$25 billion in market cap in 
one day. The VIOXX news was catastrophic news for
shareholders and that was just the start. 

A class action suits are popping up all over America
and it was announced on Friday that Canada has a
national class action suit in progress. This is a
problem that will not go away and will only get 
worse. 

Initial figures showed something around 26,000 
cardiac events were caused by VIOXX and this is
just the ones during current studies. This does
not represent the cardiac events from normal 
patients like you and me. 

With tens of millions of patients taking the drug
over the last five years the numbers will grow
and could be enormous. 

The Fen-Phen drug problem several years ago cost
$17 billion and the number of total patients 
significantly less. 

The damage to Merck could take years to conclude
and could run as much as $100 billion according
to some estimates. 

The initial drop knocked MRK to $33 and investors
in denial bought the dip. One popular analyst was
suggesting investors buy the stock because it now
had a 4% dividend yield. I personally believe that
is criminal. What good is your 4% going to do if
the stock drops to $10 over the next several years?

I believe the shock value has passed and those 
hoping for a dead cat bounce will start smelling
a dead cat instead. There are 2.269 billion shares
outstanding and only 387 million have changed hands
since the initial announcement. This leaves nearly
two billion shares still hoping for a rebound and
very likely to change owners once that rebound 
fails to appear. 

This is going to be a long term play because it
may take a long time for the real damage to appear.
Until the numbers begin to firm and the numbers
of cases and suits begin to surface the real drop
may not occur. 

I am suggesting the Jan-2006 LEAP Puts to give 
us slightly more than a year for the bad news to
filter out. The $25 put is only $1.70 and the 
at the money $30 put is $3.80. I believe we could
see Merck in the teens so the $25 put is the one
I am recommending.    

Buy Jan-2006 $25 LEAP Put WMR-ME currently $1.70

Stop loss MRK at $36.00

MRK Chart



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

XMSR Call Update $28.20

The Howard Stern news knocked XMSR for a loss but 
I believe that loss is temporary and a better buying
opportunity. Sirius is burning through its cash and
the Stern ploy was a dramatic attempt to gain 
credibility in this sector. If I was Howard I would
want payment in advance before I showed up for work.

BUY JAN-$30 Call QSY-AF 
BUY JAN-$32 Call QSY-AZ 

XMSR Chart



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

MSO Put Update $16.02

With Martha now in prison the daily sound bites should
fade and along with it the stock price.    

March $15 Put MSO-OC @ $2.00 
Stop MSO @ $17.50
  
MSO Chart




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


Terrorist Insurance Update

Marathon $41.24

Marathon hit a new high at $42.60 on Thursday before
a minor bout of profit taking. With oil closing over
$53 the odds are good we are going higher. We are
closing in on the election and any terrorist event
is running out of time. So is this play. Let's
protect profits and exit on the next bounce. 

I would set a profit stop at $3.00 and a stop loss
at $2.50. 

Jan-$40 Call MRO-AH @ $1.45 currently $2.65

Marathon Chart


http://members.OptionInvestor.com/editorplays/edply_091904_1.asp
   

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

On Your Mark, Get Set, Go!
- J. Brown

Investor sentiment has taken a turn for the worst over the past 
couple of days.  Major indices turned lower Thursday and Friday 
and market internals were pretty negative.  Down volume was two 
to three times up volume the past couple of sessions.  Some 
believe this is just profit taking ahead of the Q3 earnings 
season with the Industrials under resistance.  It may be true.  

Fueling this bearish attitude in stocks was yet another new all-
time high in crude oil and a very disappointing jobs number.  
Crude oil closed over $53 a barrel with its fourth record gain in 
a row.  Meanwhile the September jobs number was a huge 
disappointment coming in well below estimates.  Everyone knew 
that the September job report was a wild card because of the 
hurricane impact so many economists were focusing on the August 
and July revisions.  Unfortunately, those were mixed with July's 
jobs numbers revised higher but the August numbers revised lower.  

On a technical note, check out the COT data below.  The small 
traders are really ramping up their short positions on the tech-
heavy NDX.  In contrast the commercials aren't moving from their 
bullish bias.  Traditionally the commercial traders tend to be on 
the right side of the trade so this is a contrarian indicator 
suggesting future strength for the NASDAQ 100. 

All right, Q3 earnings season is here!  Are you ready?  AA and GE 
started the season this past week.  GE reported on Friday with 
profits coming inline with estimates.  Yet management guided 
their Q4 numbers to the higher end of their previous guidance. 
That's pretty bullish coming from one of the world's largest and 
most diversified companies.  

Next week will be all about earnings, at least until the second 
half of the week.  The third and final presidential debate will 
take place on Wednesday night, which will leave voters less than 
three weeks to make up their minds before the election.  Thursday 
and Friday offer a number of economic reports but the big ones to 
watch are the Producer Price Index (PPI) and the Retail sales 
numbers on Friday.  

Keep an eye on these big caps and how their earnings influence 
market direction and investor sentiment.  Intel, Johnson & 
Johnson and Yahoo all report on Tuesday.  Bank of American, 
Citigroup and General Motors all report on Thursday. 



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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  9230
Current     : 10055

Moving Averages:
(Simple)

 10-dma: 10128
 50-dma: 10123 
200-dma: 10296



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  990
Current     : 1122

Moving Averages:
(Simple)

 10-dma: 1123
 50-dma: 1106
200-dma: 1119



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1301
Current     : 1430

Moving Averages:
(Simple)

 10-dma: 1433
 50-dma: 1389
200-dma: 1441



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

CBOE Market Volatility Index (VIX) = 15.05 +0.55
CBOE Mkt Volatility old VIX  (VXO) = 14.95 +0.39
Nasdaq Volatility Index (VXN)      = 20.69 +0.10


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

          Put/Call Ratio  Call Volume   Put Volume

Total          1.01        728,114       734,805
Equity Only    0.82        554,096       456,695
OEX            1.29         37,060        47,960
QQQ            1.39         81,896       114,436


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

Bullish Percent Data

           Current   Change   Status
NYSE          66.0    + 0     Bear Correction
NASDAQ-100    45.0    - 2     Bull Alert      
Dow Indust.   56.6    + 0     Bear Correction
S&P 500       64.2    - 1     Bear Correction
S&P 100       62.0    + 0     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: 1.11
10-dma: 1.03
21-dma: 1.04
55-dma: 1.15


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    1245       906
Decliners    1547      2053

New Highs     128        61
New Lows       31        52

Up Volume    419M      266M
Down Vol.   1135M     1379M

Total Vol.  1586M     1658M
M = millions


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

Commitments Of Traders Report: 10/05/04

Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the 
Chicago Mercantile Exchange and Chicago Board of Trade. COT data 
can be found at www.cftc.gov.

Small specs are the general trading public with commercials being 
financial institutions. Commercials are historically on the 
correct side of future trend changes while small specs tend 
to be wrong.  

S&P 500

Commercial traders aren't making any big bets ahead of the Q3
earnings season.  Longs and shorts have moved closer to parity
and the bearish sentiment is at it lowest level in four weeks.
Small traders are upping both their longs and their shorts but
their bullish bias is waning a bit.

Commercials   Long      Short      Net     % Of OI
09/14/04      442,049   469,982   (27,933)   (3.0%)
09/21/04      404,746   425,560   (20,814)   (2.5%)
09/28/04      404,773   434,441   (29,668)   (3.5%)
10/05/04      421,217   435,736   (14,519)   (1.7%)

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
09/14/04      167,310   126,513    40,797    13.9%
09/21/04      134,943   108,036    26,907    11.1%
09/28/04      135,317   107,173    28,144    11.6%
10/05/04      137,210   114,489    22,721     9.0%

Most bearish reading of the year:  (1,657)- 5/27/03
Most bullish reading of the year: 114,510 - 3/26/02


E-MINI S&P 500

Commercial traders have upped their positions in both longs
and shorts but clearly remain net bearish.  In contrast the
small traders have raised their positions in longs and shorts
and remain staunchly net bullish.

Commercials   Long      Short      Net     % Of OI 
09/14/04      377,643   586,139   (208,496)  (21.6%)
09/21/04      213,014   397,844   (184,830)  (30.2%)
09/28/04      226,020   420,714   (194,694)  (30.1%)
10/05/04      248,190   476,608   (228,418)  (31.5%)

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

Small Traders Long      Short      Net     % of OI
09/14/04      289,155     81,314   207,841    56.1%
09/21/04      256,315     60,275   196,040    61.9%
09/28/04      262,501     68,255   194,246    58.7%
10/05/04      308,021     80,373   227,648    58.6%

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


NASDAQ-100

We are not seeing a lot of movement in commercials' positions
so they remain net bullish on the NDX.  Meanwhile small traders
are raising positions in both longs and shorts but shorts saw
a big jump creating a large bearish bias by small traders.  This
is of course a bullish contrarian indicator.  

Commercials   Long      Short      Net     % of OI 
09/14/04       64,282     59,808     4,474    3.6%
09/21/04       54,530     30,827    23,703   27.7%
09/28/04       55,045     32,319    22,726   26.0%
10/05/04       55,640     32,872    22,768   25.7%

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
09/14/04       36,372    28,584     7,788    12.0%
09/21/04        7,417    25,821   (18,404)  (55.3%)
09/28/04       10,078    22,917   (12,839)  (38.9%)
10/05/04       12,254    30,693   (18,439)  (42.9%)

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

DOW JONES INDUSTRIAL

Investors both big and small seem rather undecided about how
to bet on the Industrials. The gap between longs and shorts 
continue to narrow, especially between small traders where it's
a dead-even.  This is the least bullish commercials have been
in weeks while it's the least bearish small traders have been
in weeks.

Commercials   Long      Short      Net     % of OI
09/14/04       41,951    34,486    7,465       9.7%
09/21/04       30,816    27,200    3,616       6.2%
09/28/04       29,714    26,877    2,837       5.0%
10/05/04       27,498    25,772    1,726       3.2%
 
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
09/14/04        8,121    14,425   (6,304)   (27.9%)
09/21/04        4,467     6,748   (2,281)   (20.3%)
09/28/04        5,143     5,988   (  845)   ( 7.6%)
10/05/04        5,531     5,539   (    8)   ( 0.0%)

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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Check Clearing for the 21st Century Act

The other night I was watching TV and caught a news bite 
regarding some new law that is taking place later this month that 
sounds like a huge profit windfall coming for banks with regards 
to checks.  Do you know anything about it?  Banks have been 
performing very well of late, and I was wondering if you thought 
this new law has anything to do with there gains.  After all, the 
mortgage lending business isn't booming like it was, but banks 
still seem to be holding steady.

Response:

I'm somewhat familiar with this law, and yes, it should be 
profitable for banks as it relates to reduction of expenses a 
bank incurs during the check clearing process.

The new law was actually singed into on October 28, 2003, is 
called the Check Clearing for the 21st Century Act (Check 21), 
and goes into effect on October 28, 2004.

Your bank has probably already informed you about Check 21, but 
if you're like me, you throw out most of the mail stuffers and 
never read about this new law.

From what I've read, Check 21 was signed into law to help banks 
increase profits by reducing costs, and to expedite the flow of 
moneys.  

In 2003, Reserve Banks' check volume declined at about a 5%.  For 
2004, check volumes have declined at an accelerated pace compared 
to the same period last year, largely due to wider acceptance of 
credit cards.  A 2001 Federal Reserve study revealed that about 
42 billion checks were written that year in the United States, 
considerably lower than industry estimates, and those volumes are 
expected to continue to decline in coming years.

We've all heard Fed Chairman Alan Greenspan talk about how liquid 
and efficient the financial markets have become in recent years, 
and Check 21 is a law that I see furthering the efficiency of 
financial markets.

If you're like me and are used to writing a check to a retailer 
or restaurant and have become accustomed to not seeing that check 
clear for 4 or 5 days, be ready for a much faster clearing period 
so you don't accidentally overdraw your account and get hit with 
one of those hefty insufficient funds charges.

I won't go into great detail about Check 21, but in its most 
basic form, banks will be allowed (not required) to process more 
check, more quickly, via electronic process.

Today, banks physically move original paper check from the bank 
where the checks are deposited to the bank that pays them.  This 
transportation can be costly and inefficient.

When I write a check to Cabela's for the new goose call I 
purchased, Cabela's takes my check to their bank.  Their bank 
then processes the check, then mails/ships my check back to 
my bank.  My bank makes sure I have the fund available, and if I 
do, my bank then clears the check and Cabela's account is 
credited with the cash.  You can see how this transaction may 
take several days before it is finally completed.

Check 21 allows a bank to simply capture a picture of the front 
and back of a check along with the associated payment information 
and transmit this information back to the clearing bank 
electronically.

Hmmmm..... no wonder all of these banks have been advertising 
"free checking," so heavily of late.  They want us to deposit 
funds into the account that is going to be much more profitable 
for them, due to the efficiencies of Check 21.

Some industry analysts do see Check 21 as being further 
profitable for banks.  And the profits don't just come from 
reduced handling charges banks will incur as they process million 
of checks per day, but the profits should be greater in the 
reduction of overnight lending rates they pay to borrow money 
from central banks.

Most of the checks you and I write, the bank will automatically 
process those funds immediately, but in simplistic form, will 
still be cash that your bank is on the hook for until the check 
clears.  I say "your bank is on the hook," but it is really you 
that is responsible for the funds you wrote the check for.  

Still, many banks will expedite funds faster than the law 
(Expedited Funds Availability) requires, and oftentimes, a bank 
will access overnight funds, pay a short-term rate of interest to 
borrow money from the central bank, in order to meet their short-
term cash requirements.

You and I probably don't think about it, but when it takes 4 or 5 
days to actually process a check (or 10,000 checks), where a bank 
has credited its customer's account after they customer cashes a 
check, the bank may have to access overnight funds (Federal Funds 
Rate of 1.75%) until checks eventually clear.

Check 21 allows for faster clearing, thus a potential "financial 
windfall" for banks as the clearing process is shortened, thus 
reducing costs a bank may be incurring when it has to access 
overnight funds as part of its check processing business.

Of the various articles I've read on profit potential for banks, 
the Fed has said it sees banks saving upwards of $2 billion a 
year.

Earlier I said that we might write a check to a restaurant, or 
retailer.  Have you noticed a trend among restaurants to not 
accept checks any longer?  One reason restaurants have become 
less inclined to accept personal checks isn't necessarily due to 
trying to avoid the "bounced check," but the cost and time of 
processing a customer's check.  Check 21 and its electronic 
efficiencies may have restaurants ripping down the "Sorry we no 
long accept checks" sign, as funds will be processed at greater 
speed.

If you would like more information on the Check Clearing for the 
21st Century Act (Check 21), you can visit The Federal Reserve 
Boar's web page at this 
http://www.federalreserve.gov/paymentsystems/truncation/default.htm

I have placed a phone call with a regional bank mutual fund 
manager, but he was out of the office this week.  When he returns 
my call, I'll hopefully get his permission to share some of his 
insights as to what banks might be the greatest benefactors of 
Check 21.  

I've had the pleasure of interviewing three different bank-
related mutual fund mangers in years past, ranging from super-
regional fund managers, to regional bank fund managers.  The 
smaller regional fund managers are most impressive.  They find 
these little banks that are publicly traded, go visit them, and 
if there's a potential catalyst for local economic expansion, 
they'll begin accumulating that banks shares on the thought that 
loan demand will build due to a more localized economic 
expansion.  The more successful selections they make are the ones 
that get gobbled up by a larger regional bank that wants 
immediate access to that particular geographic region.  

The following is a little off topic (Check 21), but comes to mind 
as we talk about banks.  One interesting observation (that kind 
of made sense) a regional bank fund manger alerted me to was 
this; he told me a technology investor should keep an eye on 
Silicon Valley Bancshares (NASDAQ:SIVB) $38.50 -1.23% and measure 
its relative strength against the S&P Banks Index (BIX.X).  The 
fund manager's thought was that the bulk of SIVB's business is 
with technology firms and when SIVB shows relative strength vs. 
the BIX.X, then more than likely, a tech-related expansion is in 
the making or underway.  When SIVB's relative strength weakens 
versus the BIX.X, then it can be a signal for technology 
contraction.

Jeff Bailey


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

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

Symbol  Co               Date           Comment          EPS Est

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

MDC  M.D.C.Holdings       Mon, Oct 11  After the market     2.73
STLY Stanley Furniture    Mon, Oct 11  After the market     0.74
TSCO Tractor Supply       Mon, Oct 11  After the market     0.22


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

ADTN ADTRAN Inc           Tue, Oct 12  Before the bell      0.25
AMB  AMB Property         Tue, Oct 12  After the market     0.60
OZRK Bank of the Ozarks   Tue, Oct 12  After the market     0.39
CAMP CalAmp Corp          Tue, Oct 12  After the market     0.08
CACB Cascade Corp         Tue, Oct 12  Before the bell      0.24
CBH  Commerce Bancorp     Tue, Oct 12  Before the bell      0.83
XLTC Excel Technology     Tue, Oct 12  Before the bell      0.33
FAST Fastenal             Tue, Oct 12  Before the bell      0.47
GCI  Gannett              Tue, Oct 12  Before the bell      1.19
HELE Helen of Troy        Tue, Oct 12  Before the bell      0.53
INFY Infosys Technologies Tue, Oct 12  After the market     0.33
INTC Intel Corp           Tue, Oct 12  After the market     0.27
JNJ  Johnson & Johnson    Tue, Oct 12  Before the bell      0.76
LLTC Linear Technology    Tue, Oct 12  After the market     0.32
MTB  M&T Bank             Tue, Oct 12  Before the bell      1.51
PCP  Precision Castparts  Tue, Oct 12  After the market     0.82
PHG  Royal Phillips Elc   Tue, Oct 12  during the market     n/a
SONC Sonic Corp           Tue, Oct 12  After the market     0.33
STT  State Street Corp    Tue, Oct 12  Before the bell      0.65
STI  SunTrust             Tue, Oct 12  Before the bell      1.31
TZOO TravelZoo            Tue, Oct 12  Before the bell      0.08
YHOO Yahoo! Inc           Tue, Oct 12  After the market     0.09

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

ACN  Accenture            Wed, Oct 13  Before the bell      0.28
AAPL Apple Compter        Wed, Oct 13  ---- n/a -----       0.18
ASML ASML Holdings        Wed, Oct 13  During the market    0.21
CEC  CEC Entertainment    Wed, Oct 13  After the market     0.59
CCK  Crown Holdings Inc   Wed, Oct 13  After the market     0.34
HDI  Harley Davidson      Wed, Oct 13  Before the bell      0.75
HMT  Host Marriott        Wed, Oct 13  Before the bell      0.11
LRCX Lam Research         Wed, Oct 13  After the market     0.59
MOGN MGI Pharma           Wed, Oct 13  After the market     0.11
NTOP Net2Phone            Wed, Oct 13  After the market    -0.10
NVLS Novellus Systems     Wed, Oct 13  After the market     0.38
PPDI Pharma Prdt Devlopmt Wed, Oct 13  After the market     0.29
QLGC QLogic               Wed, Oct 13  After the market     0.36
SNDK SanDisk Corp         Wed, Oct 13  After the market     0.34
NYT  The New York Times   Wed, Oct 13  Before the bell      0.32


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

AOS  O.A.Smith Corp       Thr, Oct 14  Before the bell      0.01
ABT  Abbott Labs          Thr, Oct 14  Before the bell      0.53
BAC  Bank of America      Thr, Oct 14  Before the bell      0.90
C    Citigroup            Thr, Oct 14  Before the bell      0.99
CNET CNet Networks        Thr, Oct 14  After the market     0.00
CREE Cree Inc.            Thr, Oct 14  ----- n/a -----      0.28
CY   Cypress Semi         Thr, Oct 14  Before the bell      0.04
DJ   Dow Jones & Co       Thr, Oct 14  Before the bell      0.15
ETN  Eaton                Thr, Oct 14  Before the bell      1.12
ENDP Endo Pharmaceuticals Thr, Oct 14  Before the bell      0.20
FCS  Fairchild Semi       Thr, Oct 14  After the market     0.25
FITB Fifth Third Bancorp  Thr, Oct 14  Before the bell      0.80
FDC  First Data Corp      Thr, Oct 14  Before the bell      0.56
GM   General Motors       Thr, Oct 14  Before the bell      0.96
JNPR Juniper Networks     Thr, Oct 14  After the market     0.11
KEY  KeyCorp              Thr, Oct 14  Before the bell      0.59
KRI  Knight-Ridder        Thr, Oct 14  Before the bell      0.87
LEXR Lexar                Thr, Oct 14  After the market    -0.04
MRCY Mercury Computer Sys Thr, Oct 14  Before the bell      0.22
MTG  MGIG Investment      Thr, Oct 14  Before the bell      1.33
NFLX Netflix.com          Thr, Oct 14  After the market     0.32
NOK  Nokia                Thr, Oct 14  ----- n/a -----      0.15
BTU  Peabody Energy       Thr, Oct 14  Before the bell      0.62
PII  Polaris Industries   Thr, Oct 14  Before the bell      0.97
RMBS Rambus Inc.          Thr, Oct 14  After the market     0.06
LUV  Southwest Airlines   Thr, Oct 14  ----- n/a  -----     0.12
SYK  Stryker              Thr, Oct 14  After the market     0.33
SUNW Sun Microsystems     Thr, Oct 14  After the market    -0.03
SVU  SuperValue Inc.      Thr, Oct 14  ----- n/a -----      0.53
TCB  TCF Financial        Thr, Oct 14  Before the bell      0.47
UIS  Unisys               Thr, Oct 14  Before the bell      0.06
UNH  UnitedHealth         Thr, Oct 14  Before the bell      1.00
WGO  Winnebago            Thr, Oct 14  Before the bell      0.50


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

CBSS Compass Bancshares   Fri, Oct 15  ----- n/a -----      0.74
GPC  Genuine Parts        Fri, Oct 15  Before the bell      0.56
LSS  Lone Star Tech.      Fri, Oct 15  After the market     1.35
MEG  Media General        Fri, Oct 15  Before the bell      0.66
WB   Wachovia Corp        Fri, Oct 15  Before the bell      0.99



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

Symbol  Company Name              Ratio    Payable     Executable


MIK     Michaels Stores           2:1      Oct 12th    Oct 13th
NUE     Nucor Corp                2:1      Oct 15th    Oct 18th
PCBK    Pacific Continental Bank  5:4      Oct 15th    Oct 18th
RAVN    Raven Industries          2:1      Oct 15th    Oct 18th
CELG    Celgene Corp              2:1      Oct 22nd    Oct 25th
PDCO    Patterson Companies       2:1      Oct 22nd    Oct 25th
BGG     Briggs & Stratton         2:1      pending Oct 20th meeting

-----------------------------------
Economic Reports & Events This Week
-----------------------------------
Q3 Earnings are here!  Wall Street will be wading through a flood
of Q3 earnings with the likes of INTC, JNJ and YHOO on Tuesday and
BAC, C and GM on Thursday just to name some of the big caps reporting.
Monday is Columbus day so the bond market will be closed.  Wednesday
is the third and final Presidential debate.  Friday brings the PPI
index numbers.


==============================================================
                       -For-           
----------------
Monday, 10/11/04
----------------
Columbus Day - Bond Markets, Banks and Government offices closed.
Stock Market is open.

-----------------
Tuesday, 10/12/04
-----------------
Q3 Earnings reports really begin to pick up speed.

-------------------
Wednesday, 10/13/04
-------------------
Crude oil and gasoline inventories
The Third and Final Presidential Debate in AZ (9:00PM ET)

------------------
Thursday, 10/14/04
------------------
Weekly Initial Jobless Claims   Last: 335K 
Trade Balance numbers for August
Import/Export prices for September
Fed Governor Bernanke speaks in Washington
Fed Governor Geithner speaks in Atlanta

----------------
Friday, 10/15/04
----------------
Producer Price Index (PPI) for September  Last: -0.1% Est: +0.1%
NY Empire State Index for October
Retail Sales for September
Industrial Production and Capacity Utilization for September
Michigan Sentiment for October (preliminary reading)
Fed Governor Kohn speaks in Germany


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


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The Option Investor Newsletter                   Sunday 10-10-2004
Sunday                                                      2 of 5

In Section Two:

Watch List: Biotechs to Defense and more!
Dropped Calls: None
Dropped Puts: None


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

Biotechs to Defense 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.
___________________________________________________________________


Amazon.com - AMZN - close: 40.00 change: -1.15

WHAT TO WATCH: The two-day pattern in AMZN looks like a failed 
rally that bears may want to follow closely.  The P&F chart is 
already bearish with a $15.00 price target.  Now the daily chart 
almost has an H&S pattern.  A drop under $39.50 or $39.00 could 
be a decline under the "neckline".  However, there is risk here.  
Fellow Internet icon YHOO reports earnings on Tuesday.  If YHOO 
has good things to say then AMZN is likely to rally with it.  
Conversely if YHOO disappoints then AMZN falls in sympathy. 

Chart=


---

Genentech - DNA - close: 47.25 change: -0.30

WHAT TO WATCH: Biotech giant DNA recently reported earnings and 
investors sold the news.  Now the stock has broken multiple 
levels of support including its exponential 200-dma and the 
$50.00 level.  Volume has been very big on the declines and 
that's very bearish.  The only reason we don't short it now is 
that the P&F chart shows potential support at $45.00.  Watch for 
a drop under $45.00.

Chart=


---

Neuocrine Biosciences - NBIX - close: 44.78 change: -2.07

WHAT TO WATCH: Here's another biotech stocks on the escalator 
going down.  The recent bounce from $46.00 never got very far and 
NBIX found new resistance at its simple 50-dma.  Now the stock is 
cracking support at $46 and $45 on above average volume.  The P&F 
chart may have a bullish buy signal but it has reversed into a 
"high pole" warning.  We would target a drop to $40.00.  

Chart=


---

Boeing Co - BA - close: 50.10 change: -1.22

WHAT TO WATCH: Dow-component BA is trading lower and testing 
support at $50.00 and its simple 100-dma.  This is a pivotal 
level.  Will bulls step in to buy the dip or will it break and 
trade down toward its 200-dma's. near $46?  The P&F chart is 
bullish but the stock looks very overbought (and probably 
accounts for a lot of the weakness in the DFI defense index).  If 
BA trades under Friday's low at $49.89 aggressive traders could 
target the $46.50 region.

Chart=



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

MMM $79.26 -0.40 - MMM is throwing out a lot of conflicting 
signals but the last two sessions have painted a big bearish 
reversal.  Watch for a breakdown under $77.50 or a breakout over 
its simple 200-dma overhead.

HSIC $60.16 -1.08 - HSIC is a flu vaccine distributor for CHIR.  
HSIC had to issue an earnings warning after CHIR's news this 
week.  The oversold bounce in HSIC appears to be fading.  Look 
for a new relative low.

ADSK $48.04 -2.86 - We're keeping an eye on this one to see where 
the profit taking stalls. 

ZMH $74.21 -1.49 - ZMH has broken support at $75.00 and its 
exponential 200-dma but the low on Friday just happens to be a 
bounce off its new trend of highs lows dating back to August.

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

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


CALLS
^^^^^

None

PUTS
^^^^

None


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


OI  = Open Interest - the number of open contracts outstanding.
Last Trade @ = Indicates where the option traded last.
ITM = In the money
ATM = At the money
OTM = Out of the money
ADV = Average Daily Volume

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

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


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The Option Investor Newsletter                   Sunday 10-10-2004
Sunday                                                      3 of 5

In Section Three:

Current Calls: CMI, GDW, GIVN, IR, KMRT, LMT, OSIP, PH
New Calls: None
Current Puts: LLY, FLIR, IVGN, SEPR, WHR
New Puts: APOL

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

Cummins Inc - CMI - close: 73.30 change: -0.57 stop: 69.99     

Company Description:
Cummins Inc., a global power leader, is a corporation of 
complementary business units that design, manufacture, distribute 
and service engines and related technologies, including fuel 
systems, controls, air handling, filtration, emission solutions 
and electrical power generation systems. Headquartered in 
Columbus, Indiana, (USA) Cummins serves its customers through 
more than 680 company-owned and independent distributor locations 
in 137 countries and territories. Cummins also provides service 
through a dealer network of more than 5,000 facilities in 197 
countries and territories. With more than 24,000 employees 
worldwide, Cummins reported sales of $6.3 billion in 2003.
(source: company press release)

Why We Like It:
Traders following CMI have a few choices to make.  We're not 
suggesting any new positions given that CMI has already achieved 
our initial profit target but the stock could easily bounce again 
and surge to a new high.  We would watch potential support at the 
$72.50 region or a drop back toward $70.50-70.00.  The latter 
area is near the bottom of its rising channel.  A bounce from 
either level could be used as a new entry point for bullish 
positions.  New plays could target a move to $77.50.  We're going 
to leave our stop loss at $69.99.  Be aware that CMI has less
than two weeks left before its earnings report.

Suggested Options:
CMI has already achieved our initial profit target. We are not 
suggesting new entries at this time but see the above details 
for alternative entries.

Annotated chart:


Picked on September 19 at $70.99
Change since picked:      + 2.31
Earnings Date           10/20/04 (confirmed)
Average Daily Volume =       724 thousand
Chart =


---

Golden West Financial - GDW - cls: 114.34 chg: +0.85 stop: 109.95     

Company Description:
Headquartered in Oakland, California, Golden West is one of the 
nation's largest financial institutions with assets over $95 
billion as of August 31, 2004. The Company has one of the most 
extensive thrift branch systems in the country, with 276 savings 
branches in 10 states and lending operations in 38 states.
(source: company press release)

Why We Like It:
So far so good.  Our bullish play in GDW has bucked the recent 
turn lower in the markets and is challenging round-number 
resistance at the $115 level.  Our initial profit target is the 
$115.50-116.00 range.  With GDW this close to our target we are 
not suggesting new bullish positions at this time.  However, 
should GDW bounce from the $112 level it could be used as a new 
entry point.  Otherwise bulls may be better off waiting for a new 
breakout over resistance at $116.  The P&F chart is bullish and 
points to a $129 target so it's certainly possible.  Yet the next 
move in GDW will probably be led by the banking indices.  The BIX 
banking index is just under resistance at the 367 level.  
Meanwhile the BKX banking index is just under resistance at the 
100 level.  Bulls need to see a breakout here for GDW to move 
much higher.  Keep in mind that GDW is due to report earnings on 
October 21st. 

Suggested Options:
We are not suggesting new bullish positions at this time.

Annotated chart:


Picked on September 30 at $110.95
Change since picked:       + 3.39
Earnings Date            10/21/04 (confirmed)
Average Daily Volume =        512 thousand
Chart =


---

Given Imaging - GIVN - close: 41.78 change: -0.26 stop: 37.00

Company Description:
Given Imaging is redefining gastrointestinal diagnosis by 
developing, producing and marketing innovative, patient-friendly 
products for detecting gastrointestinal disorders. The company is 
developing a complete line of PillCam video capsules for 
detecting disorders throughout the gastrointestinal tract. The 
company's technology platform is the GivenŽ Diagnostic System, 
featuring the PillCam(TM) video capsule, a disposable, miniature 
video camera contained in a capsule which is ingested by the 
patient. The PillCam(TM)SB video capsule is the only naturally-
ingested method for direct visualization of the entire small 
intestine. It is currently marketed in the United States and in 
more than 60 other countries and has benefited more than 122,000 
patients worldwide. (source: company press release)

Why We Like It:
We're still in wait mode for GIVN.  The stock has been digesting 
its recent gains with a minor sideways consolidation.  Actually, 
this is a good thing.  GIVN has not succumbed to the market's 
Thursday-Friday downturn and is holding its position above major 
resistance at the $40.00 mark.  Broken resistance should become 
new support.  Patient traders can wait for GIVN to dip back 
toward $40.00 and consider buying the bounce.  We remain bullish 
on GIVN but plan to exit before its earnings report at the end of 
October.

Suggested Options:
We are going to suggest the November options.  Our favorites
are the 40s and 45s.

BUY CALL NOV 40 QPG-KH OI=2622 current ask $3.80
BUY CALL NOV 45 QPG-KI OI=1611 current ask $1.25

Annotated chart:



Picked on October 04 at $41.26
Change since picked:    + 0.52
Earnings Date         10/27/04 (unconfirmed)
Average Daily Volume =     247 thousand
Chart =



---

Ingersoll-Rand - IR - close: 68.95 change: -0.80 stop: 67.49

Company Description:
Ingersoll-Rand is a leading innovation and solutions provider for 
the major global markets of Climate Control, Industrial 
Solutions, Infrastructure, and Security and Safety. The company's 
diverse product portfolio encompasses such leading industrial and 
commercial brands as Schlage locks and security solutions; Thermo 
King transport temperature control equipment; Hussmann commercial 
and retail refrigeration equipment; Bobcat compact equipment; 
Club Car golf cars and utility vehicles; and Ingersoll-Rand 
industrial and construction equipment. In addition, IR offers 
products and services under many more premium brands for 
customers in industrial and commercial markets.
(source: company press release)

Why We Like It:
Traders need to be careful here.  We are still in caution mode.  
We added IR on the bullish breakout over $70.00 and its new P&F 
buy signal on Wednesday.  Yet since then the major indices have 
turned lower and IR has rolled over and back under the $70 mark.  
We still expect a bounce from $68.00 but that may depend on how 
strong or weak the Dow Industrials trade next week.  We would not 
suggest new bullish positions until IR traded back above $70.00 
or $70.50. 

Suggested Options:
We are not suggesting new bullish positions until IR trades back
above $70.

Annotated Chart:


Picked on October 06 at $70.19
Change since picked:    - 1.24
Earnings Date         10/21/04 (confirmed)
Average Daily Volume =     1.2 million 
Chart =


---


Kmart Holdings - KMRT - close: 86.99 chg: -0.76 stop: 84.99

Company Description:
Kmart Holding Corporation and its subsidiaries (together, 
"Kmart") is a mass merchandising company that offers customers 
quality products through a portfolio of exclusive brands that 
include Thalia Sodi, Jaclyn Smith, Joe Boxer, Kathy Ireland, 
Martha Stewart Everyday, Route 66 and Sesame Street.
(source: company press release)

Why We Like It:
Our aggressive call play in KMRT is not off to the strongest 
start.  We initially added the play on its bullish breakout over 
round-number, psychological resistance at $90.00.  There's 
normally a decent trading rule that suggests stocks breaking out 
past $90.00 tend to hit $100 relatively quickly.  Unfortunately 
for us the retail index has not performed that well the last few 
days with disappointing September same-store sales numbers and 
negative comments from retail giant Wal-mart.  Despite it all 
support at the $85 level in KMRT is holding and the stock is 
still working on a short-term trend of higher lows.  We are only 
suggesting bullish positions if KMRT trades back above the $90.00 
mark.  

Suggested Options:
We are not suggesting new bullish positions until KMRT trades
back above the $90 level. 

Annotated Chart:



Picked on October 04 at $90.53
Change since picked:    - 3.54
Earnings Date         08/16/04 (confirmed)
Average Daily Volume =     2.7 million 
Chart =



---

Lockheed Martin - LMT - close: 55.42 change: -0.84 stop: 53.50

Company Description:
Headquartered in Bethesda, Md., Lockheed Martin employs about 
130,000 people worldwide and is principally engaged in the 
research, design, development, manufacture and integration of 
advanced technology systems, products and services. The 
corporation reported 2003 sales of $31.8 billion.
(source: company press release)

Why We Like It:
Warning! Warning!  Shares of LMT are losing altitude.  Okay, we 
may be overreacting a bit but we don't like seeing LMT under 
$56.00 or its simple 10-dma.  We suspect it's just profit taking 
ahead of the weekend.  The DFI defense index has been hitting new 
all-time highs until the market began to see some profit taking 
during the last couple of sessions. However, we are not happy to 
see the DFI index break back below the 800 level or its simple 
21-dma.  The sector is so overbought the group could see several 
days of profit taking and the DFI's MACD indicator has produced a 
new sell signal - so we do have some cause for worry.  That's not 
to say LMT can't out perform its peers and the DFI but the $55 
level will be the test.  If LMT can bounce from $55.00 then we'd 
consider it a new entry point.  If LMT breaks under $55.00 then 
we'll consider an early exit.  

Suggested Options:
We are going to suggest the November calls although there are 
October calls available.  Our favorites are the 55s and 60s.

BUY CALL NOV 55 LMT-KK OI=1431 current ask $2.05
BUY CALL NOV 60 LMT-KL OI=1803 current ask $0.30

Annotated Chart:



Picked on October 01 at $56.01
Change since picked:    - 0.59
Earnings Date         07/27/04 (confirmed)
Average Daily Volume =     1.7 million 
Chart =


---

OSI Pharma - OSIP - close: 61.76 change: -0.24 stop: 59.99

Company Description:
OSI Pharmaceuticals is a leading biotechnology company focused on 
the discovery, development, and commercialization of high-
quality, next-generation oncology products that both extend life 
and improve the quality of life for cancer patients worldwide. 
OSI has a balanced pipeline of oncology drug candidates that 
includes both novel mechanism-based, gene-targeted therapies 
focused in the areas of signal transduction and apoptosis and a 
next-generation cytotoxic chemotherapy agent.
(source: company press release)

Why We Like It:
When you consider the beating that investors have been dishing 
out to the DRG drug index and the BTK biotech index recently you 
can see why we might be encouraged with OSIP's relative strength.  
The stock's sideways consolidation is holding above support at 
the $60.00 with minor declines on low volume.  Our last update 
suggested that we could see OSIP retest support at the $60.00 
mark.  We still believe that's a strong possibility.  Actually we 
would watch the $60.50-60.25 region for a bounce and then use 
such a rebound as a new entry point for bullish positions.  

Suggested Options:
We're going to suggest the November calls.  Our favorites are the 
60s and 65s.

BUY CALL NOV 60 GHU-KL OI=  77 current ask $5.10
BUY CALL NOV 65 GHU-KM OI= 865 current ask $2.45
BUY CALL NOV 70 GHU-KN OI=1051 current ask $1.25

Annotated Chart:



Picked on October 03 at $63.45
Change since picked:    - 1.69
Earnings Date         08/10/04 (confirmed)
Average Daily Volume =     1.6 million 
Chart =


---

Parker Hannifin - PH - close: 61.90 chg: -0.10 stop: 59.49

Company Description:
With annual sales exceeding $7 billion, Parker Hannifin is the 
world's leading diversified manufacturer of motion and control 
technologies and systems, providing precision-engineered 
solutions for a wide variety of commercial, mobile, industrial 
and aerospace markets. The company employs more than 48,000 
people in 46 countries around the world.
(source: company press release)

Why We Like It:
We first alerted readers to PH when it broke out over resistance 
at $60.00 by putting the stock on the watch list.  Two days later 
when PH rebounded strongly from its first test of support at $60 
we added it to the play list as a long.  Thursday's action looked 
like a short-term top and we expected shares to dip back to $60.  
That can still happen but we're a little bit surprised by PH's 
relative strength on Friday.  We suggest patience.  Odds are 
still good that PH can dip toward $60 and then bulls can buy the 
rebound.  If you missed the original update check out PH's P&F 
chart.  It's very bullish with a quadruple top breakout buy 
signal and an $82 target.

Suggested Options:
We are suggesting the November calls. Our favorites are the 60s
and 65s.  

BUY CALL NOV 60 PH-KL OI=1033 current ask $3.30
BUY CALL NOV 65 PH-KM OI=2208 current ask $0.90

Annotated Chart:



Picked on October 06 at $62.78
Change since picked:    - 0.88
Earnings Date         10/19/04 (confirmed)
Average Daily Volume =     719 thousand
Chart =



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

NONE

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

Eli Lilly & Co - LLY - close: 59.08 chg: -0.48 stop: 61.85*new*

Company Description:
Lilly, a leading innovation-driven corporation, is developing a 
growing portfolio of first-in-class and best-in-class 
pharmaceutical products by applying the latest research from its 
own worldwide laboratories and from collaborations with eminent 
scientific organizations. Headquartered in Indianapolis, Ind., 
Lilly provides answers -- through medicines and information -- 
for some of the world's most urgent medical needs
(source: company press release)

Why We Like It:
The weakness continues for big cap drug names like LLY.  It has 
been a tough couple of weeks for drug makers and the outlook 
doesn't seem to be improving.  First it was the Merck news.  Then 
the Chiron news.  Then the Pfizer news.  The DRG drug index is at 
new one-year lows and its about to break support from August 2003 
near 299.  If this occurs then LLY is very likely to follow the 
DRG lower, especially now that LLY has broken its own support at 
the $60.00 mark.  For the last few days we have been suggesting 
that short-term traders consider exiting/closing this play for a 
profit now that LLY has hit our initial target at $60.00 on two 
separate occasions.  Yet we are willing to keep the play open 
because the breakdown under support at $60.00 could lead to even 
more selling.  Our new target is the $58.00-56.50 region although 
the P&F chart points to a $44 target.  We will lower our stop 
loss to $61.85.  FYI: the next big risk for bears in the large 
cap drug stocks is probably bullish broker calls based on 
valuations.  Keep that in mind!

Suggested Options:
We are not suggesting new plays at this time.  LLY hit our 
initial profit target of $60.00 on two occasions.

Annotated chart:


Picked on September 22 at $63.92
Change since picked:      - 4.84
Earnings Date           07/22/04 (confirmed)
Average Daily Volume =       3.1 million 
Chart =


---


FLIR Systems - FLIR - close: 54.52 chg: -3.64 stop: 59.71*new*

Company Description:
FLIR Systems, Inc. is a world leader in the design, manufacture 
and marketing of thermal imaging and stabilized camera systems 
for a wide variety of thermography and imaging applications 
including condition monitoring, research and development, 
manufacturing process control, airborne observation and 
broadcast, search and rescue, drug interdiction, surveillance and 
reconnaissance, navigation safety, border and maritime patrol, 
environmental monitoring and ground-based security.
(source: company press release)

Why We Like It:
Target Achieved!  FLIR is performing better than we thought.  The 
stock lost another 6.25 percent on Friday with volume coming in 
very strong at more than twice the average.  Shares of FLIR broke 
through technical support at the 100-dma and historical, price 
support at $57.50 and $55.00.  This is very good news.  That 
means the next serious support level is the $50 region with its 
exponential 200-dma.  Our short-term target was $55 so we're 
suggesting short-term traders book this play and exit for a 
profit.  If you're looking for new positions look for FLIR to 
bounce a bit from here but find new resistance at $56.  We're 
going to lower our stop loss to $59.71 but more conservative 
traders may want to use Friday's high near $58.05.  

Suggested Options:
All of the November puts we suggested are up significantly.  FLIR
has surpassed our initial profit target at $55 and we're 
suggesting that short-term traders exit now.  More aggressive 
players can target a drop towards $51-50.

Annotated chart:


Picked on September 29 at $59.35
Change since picked:      - 4.83
Earnings Date           10/20/04 (confirmed)
Average Daily Volume =       577 thousand
Chart =


---


Invitrogen - IVGN - close: 53.56 chg: -0.27 stop: 56.25

Company Description:
Invitrogen Corporation provides products and services that 
support academic and government research institutions and 
pharmaceutical and biotech companies worldwide in their efforts 
to improve the human condition. The company provides essential 
life science technologies for disease research, drug discovery, 
and commercial bio-production. Invitrogen's own research and 
development efforts are focused on breakthrough innovation in all 
major areas of biological discovery including functional 
genomics, proteomics, bioinformatics and cell biology -- placing 
Invitrogen's products in nearly every major laboratory in the 
world. Founded in 1987, Invitrogen is headquartered in Carlsbad, 
California and conducts business in more than 70 countries around 
the world. The company globally employs approximately 4,000 
scientists and other professionals.
(source: company press release)

Why We Like It: (original update from Thursday)
Investor expectations are already diminished for IVGN because the 
company issued an earnings warning back in July when it reported 
its Q2 numbers.  The stock managed to rally back to the bottom of 
its gap down in September but couldn't break into the gap.  Now 
shares are sinking in a trend of lower highs and lower lows as 
the BTK biotech index begins to turn lower from overbought levels 
and the DRG drug index sinks under bad news from heavy weights 
like MRK and PFE.  IVGN's breakdown under the $55 and $54 levels 
on Thursday looks like a new bearish entry point.  Short-term 
technicals like the RSI and stochastics are negative and its MACD 
is in a new sell signal.  We're going to set an initial target of 
$50.00 but we suspect that IVGN could trade lower.

WEEKEND UPDATE:
There is nothing new to report on for IVGN other than the 
company has confirmed its Q3 earnings date as October 28th.

Suggested Options:
We are going to suggest the November puts even though we do not
plan on holding over the October earnings report.

BUY PUT NOV 55 IUV-WK OI=251 current ask $3.50
BUY PUT NOV 50 IUV-WJ OI=662 current ask $1.35

Annotated Chart:


Picked on October 07 at $53.83
Change since picked:    - 0.27
Earnings Date         10/28/04 (confirmed)
Average Daily Volume =     1.5 million 
Chart =


---


Sepracor Inc - SEPR - close: 47.30 chg: -0.05 stop: 50.01*new*

Company Description:
Sepracor Inc. is a research-based pharmaceutical company 
dedicated to treating and preventing human disease through the 
discovery, development and commercialization of innovative 
pharmaceutical products that are directed toward serving unmet 
medical needs. Sepracor's drug development program has yielded an 
extensive portfolio of pharmaceutical compound candidates with a 
focus on respiratory and central nervous system disorders. 
Sepracor's corporate headquarters are located in Marlborough, 
Massachusetts. (source: company press release)

Why We Like It:
SEPR has been a test of patience for bearish traders but so far 
the short-term trend of lower highs is holding up.  Then again if 
you're bullish you could say that support at $47 is also holding 
up.  We originally added SEPR to the list as a trading range 
play.  The stock had just peaked near the top of its range and 
was turning lower.  We added it when shares broke minor support 
at $49.00.  Now after two weeks of oscillating back and forth 
between $47 and $50 SEPR looks poised for more weakness.  We have 
been targeting a drop to the 200-dma's but they're slowing 
rising.  We need to adjust our planned exit/profit target to 
$43.25-43.50.  Meanwhile we're also adjusting our stop loss to 
$50.01. 

Suggested Options:
We're suggesting the November puts.  

BUY PUT NOV 50.00 ERU-WJ OI= 195 current ask $4.10
BUY PUT NOV 47.50 ERU-WW OI=1221 current ask $2.55
BUY PUT NOV 45.00 ERU-WI OI=1669 current ask $1.45

Annotated chart:



Picked on September 22 at $48.94
Change since picked:      - 1.64
Earnings Date           07/13/04 (confirmed)
Average Daily Volume =       1.8 million 
Chart =


---

Whirlpool - WHR - close: 59.03 change: -1.27 stop: 60.55*new*

Company Description:
Whirlpool Corporation is the world's leading manufacturer and 
marketer of major home appliances, with annual sales of over $12 
billion, 68,000 employees, and nearly 50 manufacturing and 
technology research centers around the globe. The company markets 
Whirlpool, KitchenAid, Brastemp, Bauknecht, Consul and other 
major brand names to consumers in more than 170 countries.
(source: company press release)

Why We Like It: (Original play from Thursday)
We like WHR as a put candidate for its relative weakness.  The 
stock has been slowly sinking for months and after several weeks 
of consolidating sideways it looks ready for another leg down.  
That's especially true with the three-week trend of lower highs 
and the breakdown under support at $60.00.  Investors are worried 
that the rising cost of steel and raw materials are going to 
impact earnings from appliance makers like WHR.  While WHR has 
recently settled legal action with its steel supplier Ispat 
shares of WHR are still sinking.  The P&F chart on WHR is bearish 
with a $53 target.  We're only going to target a drop toward $55, 
where WHR appears to have potential long-term support.

WEEKEND UPDATE:
So far so good!  Our WHR put play is off to a strong start with a
1.89 percent decline on volume about 50 percent above the norm.  
This is a new one-year low for WHR.  Remember that we're only
targeting a drop toward $55.


Suggested Options:
We are going to suggest the November puts even though we do
not plan to hold over the October 20th earnings report.

BUY PUT NOV 60 WHR-WL OI=1731 current ask $3.80
BUY PUT NOV 55 WHR-WK OI= 289 current ask $1.30

Annotated Chart:


Picked on October 07 at $59.03
Change since picked:    - 1.12
Earnings Date         10/20/04 (confirmed)
Average Daily Volume =     854 thousand
Chart =


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

Apollo Group - APOL - close: 69.81 chg: -2.09 stop: 75.01

Company Description:
Apollo Group Inc. has been providing higher education programs to 
working adults for more than 25 years. Apollo Group Inc. operates 
through its subsidiaries The University of Phoenix Inc., 
Institute for Professional Development, The College for Financial 
Planning Institutes Corp., and Western International University 
Inc. The consolidated enrollment in its educational programs 
makes it the largest private institution of higher education in 
the United States. It offers educational programs and services at 
82 campuses and 137 learning centers in 39 states, Puerto Rico 
and Vancouver, British Columbia.
(source: company press release)

Why We Like It:
Something doesn't smell right with APOL.  The sector has been in 
plenty of high publicity trouble.  Rivals CECO and COCO have been 
decimated by scandals and APOL has had its share of bad press and 
bruises.  We have our eye on the stock, especially now after the 
company's recent earnings report.  APOL reported on October 5th 
and beat estimates by 4 cents.  Wall Street's analysts were 
almost unanimous in their positive comments that APOL turned in a 
pretty good quarter considering all the troubles the company has 
weathered recently.  A couple of analysts either reiterated their 
positive outlooks or upgraded the stock.  Yet since the earnings 
report APOL has been steadily falling on above average volume.  
That can't all be retail investors so funds have to be selling as 
well.  We recently put APOL on the watch list and suggested that 
a drop under $71 would produce a new P&F sell signal and a drop 
under $70 would break round-number, psychological support.  APOL 
broke down through both levels on Friday.  

It's also noteworthy that both the daily chart's technicals and 
the weekly chart's technicals are bearish.  Plus, the weekly 
chart shows APOL breaking down through a long-term trendline of 
support.  Meanwhile the P&F chart shows a new spread triple-
bottom breakdown sell signal with a $60 target.  We are going to 
target the $60 level over the next four to six weeks.  However, 
we're going to give APOL room to move with a wide stop at $75.01.  
A failed rally under $71.50 could also be used as an entry point.
We do expect potential support near $65.00 so short-term traders 
may want to make that their target.

Suggested Options:
We are going to suggest the November and January options with a 
preference for Januarys even though Novembers have most of the
open interest.

!Warning - there are ULG- options available but the prices 
don't seem to match up.  They could be the result of APOL's
most recent stock split.  Double-check your symbols with
your broker.

BUY PUT NOV 75 OAQ-WO OI=3417 current ask $6.60
BUY PUT NOV 70 OAQ-WN OI=5657 current ask $3.60
BUY PUT NOV 65 OAQ-WM OI=1336 current ask $1.70

BUY PUT JAN 75 OAQ-MO OI=2137 current ask $8.20
BUY PUT JAN 70 OAQ-MN OI=2423 current ask $5.50
BUY PUT JAN 65 OAQ-MM OI= 303 current ask $3.40
BUY PUT JAN 60 OAQ-ML OI= 830 current ask $2.05

Annotated Chart:


Picked on October 10 at $69.81
Change since picked:    - 0.00
Earnings Date         10/05/04 (confirmed)
Average Daily Volume =     3.3 million 
Chart =



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The Option Investor Newsletter                   Sunday 10-10-2004
Sunday                                                      4 of 5

In Section Four:

Leaps: Pause To Reflect   
Spreads and Straddles:  It's That Quickie Time Of The Month

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*****
LEAPS
*****

Pause To Reflect

After a +275 point Dow bounce, +118 point Nasdaq bounce
and +35 point Russell gain the potential for profit
taking was very good. After weathering a last minute
flurry of earnings warnings, high oil prices and weak
economic reports the market finally succumbed to its
own weight. 

Fear of October, fear of the election and growing risk
of a last minute terrorist attack took the fight out
of the bulls. Add in a weak employment report and oil
at $53 and there was no incentive to load up with longs
ahead of the weekend. 

While the last two days my look negative the minor dip
is encouraging considering the current calendar. Mutual
funds have not really impacted the market with portfolio
reshuffling and the farther we get into October the 
more likely they will buy instead of sell. 

We currently have a wide array of positions and I am 
not planning on adding any new ones unless we can get
an entry point on the index plays. The next three weeks
will be high risk until any portfolio reshuffling is
over and the election is history. I am going to be
generous on the stop losses to keep us from being 
stopped on normal October volatility. If they stops
are too wide for your comfort then as always the real
decision is up to you.


**** STRONG CAUTION ***

I would strongly caution everyone that a terrorist
event in the U.S. prior to the election could 
drastically change the market outlook. Should an
event occur I would think twice before making an
entry. I believe the market would recover quickly
but it obviously depends on the severity of any
attack. Our time is ticking away with 34 days
between us an the election. The next two weeks
will be the most dangerous.  

 

 

*******************   
New Plays
*******************   


NONE TODAY



******************************     
New Watch List Plays Triggered
******************************  


NONE THIS WEEK



****************************     
Current Portfolio: 
****************************    

Position Summary Table


****************************     
Play Updates 
****************************    

XLE - S&P Energy SPDR $36.17  ** Stop 33.90 **

With the price of oil crossing $53 the energy stocks
continue to gain. Eventually there will be some profit
taking in oil but analysts are talking more about $60
oil than $50 oil and that is a profit windfall for
most oil companies. 

2006 $32 LEAP Call WHA-AF 
2006 $35 LEAP Call WHA-AI 

Entry $33.92 on 9/20
http://members.OptionInvestor.com/leaps/Lp_091904_1.asp

XLE Chart


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

QLGC - Qlogic Corp - $29.27  ** Stop $27.50 **

What a week for Qlogic! After spiking to a new five
month high on Monday at just over $32 we then saw a
two day drop back to $29 on a Piper Jaffray downgrade.
Pipper lowered QLGC to a market perform from outperform
saying the +23% gain since they initiated coverage on
August 23rd had fully valued the stock at $32. QLGC
has earnings on Wednesday Oct-13th and they are expected
to meet or beat estimates.     

2006 $30 LEAP YIO-AF 
2006 $35 LEAP YIO-AG 

Entry $30.36 9/20
http://members.OptionInvestor.com/leaps/Lp_091904_1.asp


QLGC Chart


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

MMM - 3M Company - $79.27, ** Stop $74.00 **

Deutsche Bank said they believe MMM is on track to meet
or beat estimates for the quarter and the future is
bright for the company. They will be debt free by
year end and should generate free cash flow after
capital spending and dividends of $7 billion from
2004-2006. They reaffirmed their $105 price target.

MMM shot up to $82 on the report but then gave most
of it back on GE earnings fear. Had GE said negative
things about the manufacturing sector traders did not
want to be caught long MMM. 

I believe $78 should remain support without any material
market event to drag everyone down together. MMM reports
earnings on Oct-18th.   

The stop is $74.00 to get under the March and August 
lows. 

2006 $80 LEAP Call WMU-AP 
2006 $85 LEAP Call WMU-AQ 

1/2 Entry at $82 on 9/15
1/2 Entry at $78 on 9/27
http://members.OptionInvestor.com/leaps/Lp_080804_1.asp

MMM Chart


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


C - Citigroup $44.52        **Stop $42.00**
 
Citigroup shook off all the bad news from Japan and 
is holding in the $44.50 range as we near earnings
next Thursday. Citigroup is suing Italian regulators
over the Parmalat bankruptcy and their $600 million
in claims. Just a drop in the bucket for Citigroup
but every drop helps.   


2006 $50 LEAP Call WRV-AJ 

Entry 1/2 46.00 9/20 
Entry 1/2 45.00 9/22
http://members.OptionInvestor.com/leaps/Lp_080804_1.asp

Citigroup Chart



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

INTC - Intel Corp $20.59  **Stop $18.00**

Intel saw several positive events this week and rebounded
to near $21.60 on Thursday after holding above $21 all
week. Friday saw a break back to $20.60 after Prudential
expressed concern for the fourth quarter based on the
AMD earnings comments. Intel also won a court victory
against AMD and will not have to turn over papers critical
to an AMD antitrust challenge in Europe. 

Intel earnings are on Tuesday Oct-12th. 

Current position:
2006 $22 LEAP Call WNL-AX at $2.20 
2006 $25 LEAP Call WNL-AE at $1.45 

Entry $20.00 Sept 3rd
http://members.OptionInvestor.com/leaps/Lp_071804_1.asp

Intel Chart


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


TYC - Tyco Intl. $30.66  **Stop $28.00**

Tyco hit a new five week high on Monday at $31.84 but
faded with the general market back to $30.50 and the
prior weeks support levels. There has not been any
news items impacting the stock and the bleed was based
on general market uncertainty. TYC is still above 
support from the 200dma at $29.50 and earnings are
not until Nov-1st.  

2005 $30 LEAP Call TYC-AF cost $2.15 
2006 $30 LEAP Call WPA-AF cost $4.00 
July $25 insurance put - expired - cost $.55

Entry 5/18 $28.32
http://members.OptionInvestor.com/leaps/Lp_051604_1.asp

Tyco Chart


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


JNPR - Juniper Networks $24.34 **Stop $19.00**

Juniper saw a spike to $26 on Wednesday on news that
Verizon was raising their capital expenditure spending.
Juniper would be a big recipient of those funds. The
spike did not last with weakness in the Nasdaq on 
Thr/Fri dragging down all the networkers and chip
stocks. Wachovia downgraded JNPR on Thursday to 
market perform but it had little impact. Surprisingly
a warning from SonicWall (SWAL) on Friday took some
of the bloom off the networking sector despite comments
from Piper that the news seemed to indicate that JNPR
and CSCO were gaining market share. We are at risk to
the market rather than risks to Juniper itself. 

Juniper earnings are Thursday Oct-14th    

2006 $25 LEAP Call WBW-AE cost $3.50 current $4.70 
Insurance = Sept-$17.50 Put (expired) cost 50 cents.  

Entry $20.19 (8/16)
http://members.OptionInvestor.com/leaps/Lp_081504_1.asp

JNPR Chart


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


COP - Conoco Phillips $88.11    **Stop 80.00**

COP rose to another new high at $89.75 on Thursday but
slacked off on news its tender offer for an additional
10% of Lukoil failed. As part of the deal with Russian
officials the prior week where COP bought the Russian
government's 7.6% stake in Lukoil COP was allowed to
buy more on the open market. The tender at just under
$31 was not successful as prices jumped to just over
$31 when the offer was made. COP dropped -$2 on worries
they would escalate their bid and spend more than they
previously allocated. Rising oil prices prompted 
traders to buy the dip.  

The stop was raised to $80. 

Current position:
Jan-2006 $75 LEAP Call YRO-AO at $6.70

Entry $73.30 August 30th   
http://members.OptionInvestor.com/leaps/Lp_082904_1.asp

COP Chart




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


NWS - News Corp $32.50 **Stop 29.00**

Investors dumped NWS on the Australian exchange after
the company agreed to major concessions to get approval
to move to the U.S. and the NYSE as its primary 
exchange in November. Once the move is completed 
many Australian funds will no longer be able to invest
in the U.S. stock. With the last major block removed
those funds started unloading stock despite assurances
from S&P that they would make the move in gradual 
increments. NWS is a major component in the S&P-ASX200
index similar to our Dow. 

The move to the U.S. now seems assured and once the
final approval is gained in November the U.S. price
should begin to climb. NWS will not be put into the
S&P-500 immediately but funds will begin to take
positions to avoid having to shuffle portfolios 
drastically when that inclusion takes place. 
 
Current position: 
2006 $40 LEAP Call WLN-AH at $3.83 currently $1.55

Initial play description:
http://members.OptionInvestor.com/editorplays/edply_041104_1.asp
http://members.OptionInvestor.com/editorplays/edply_041804_1.asp


NWS Chart



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

UPL - Ultra Petroleum $50.64  **Stop $44.00**

UPL continued to move higher with a new all time high
at $53.60 on Wednesday but profit taking hit the next
day knocking it back to $50. Rising oil did not help
and UPL closed the week jut under $51. Considering the
ramp this stock has seen a kiss of the uptrend resistance
was a good excuse to take profits. 

Nothing has changed with UPL and all dips will continue
to be bought until oil prices quit rising. Once that
happens the sell cycle could be sharp.   

JAN-2006 $45 LEAP Call WSS-AI 
JAN-2006 $50 LEAP Call WSS-AJ 

Entry $45.50 9/21
http://members.OptionInvestor.com/leaps/Lp_090504_1.asp

UPL Chart


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

EBAY - EBAY $92.66      ** Stop $84.00 **

EBAY set a new all time high on Wednesday at $96.78
but it was followed by profit taking as the market
gave up its grip on the high ground. No change in
EBAY fundamentals and one broker reiterated their
price target of $135. 

There is strong support between the current level
and our stop at $84. Short of a serious market melt
down we should be safe. 

Earnings are Oct-20th

2006 $ 90 LEAP Call YRL-AR 
2006 $100 LEAP Call YRL-AT 

Entry $90.00 on 9/22
http://members.OptionInvestor.com/leaps/Lp_072504_1.asp

EBAY Chart



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

MER - Merrill Lynch $50.97   ** Stop $46.00 **
               
Merrill performed rather well considering the weakness
in several financial stocks. Merrill reports on Oct-12th
and one analyst said there was a chance they could miss
estimates but the price refused to budge on the news.

Bernstein and Co. said the quarter was rough on brokers
with low volume and few deals. Goldman and Lehman both
surprised to the upside in September and there are
still those that think Merrill will as well.    

2006 $50 LEAP Call WZM-AJ 
2006 $55 LEAP Call WZM-AK 

Entry $51.00 on 9/20
http://members.OptionInvestor.com/leaps/Lp_071804_1.asp

MER Chart



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

Proctor & Gamble $53.44  ** Stop $51.00 **

Nice rebound with the market on Monday to a two week
high but the market weakness late in the week pulled
PG back to support at the 200dma at $53. Drug fears
hit every stock even remotely related to drugs and
PG was guilty by association. 

Procter & Gamble on Friday said its experimental 
testosterone skin patch significantly improved 
sexual desire in naturally post-menopausal women 
in a late-stage clinical trial. They said there 
are 40 million women eligible for the treatment.  

Investors are still cautious in fear PG will join
the warning party. Earnings are not due until Oct-27th.

Jan-2006 $55 LEAP Call WPG-AK @ $4.20 
Jan-2006 $57 LEAP Call WPG-AY @ $3.00 

Entry $54.08 (9/26)
http://members.OptionInvestor.com/leaps/Lp_092604_1.asp

PG Chart: 


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

RIMM - Research in Motion $75.70  ** Stop $69.00 **

RIMM is holding the high ground at $76 and has 
avoided the tech sell off of the last couple days.
RIMMs growth is spectacular and not expected to 
slow and it appears investors are not letting go
of a winner. RIMM is at risk if the profit taking
continues as many funds may have significant 
profits at risk. This time last year RIMM was
under $20.  

On Thursday RIMM announced a BlackBerry solution
for Federal Government clients.  

RIMM announced earnings on Sept-30th.

2006 $80 LEAP Call WLJ-AP @ $16.50 now $14.20
2006 $90 LEAP Call WLJ-AR @ $13.20 now $10.60
Sell 2006 $120 LEAP Put WLJ-MD @ $46.70 now $48.10

Entry $77.00 (9/28)
http://members.OptionInvestor.com/leaps/Lp_092604_1.asp

RIMM Chart  


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

BA  $50.10  Boeing Aerospace   ** Stop $48.00 **

Boeing suffered a significant setback on Friday when
the government announced they were not going ahead with
the $23.5 billion tanker deal. The tanker scandal was
thought to be history but the reopening of the bidding
on the tankers now lets Airbus back into the game. This
may be the death knell for this play as the news caused
a break of support at $51. We bought the dip last week
when BA hit our entry at $51 and the rebound was looking
good until Friday. 

2006 $55 LEAP Call WBO-AK @ $4.70 
2006 $60 LEAP Call WBO-AL @ $3.00 

Entry $52 (9/28)
http://members.OptionInvestor.com/leaps/Lp_092604_1.asp

Boeing Chart


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

OXY - Occidental Petroleum $58.15  ** Stop $54.00 **

OXY sprinted to a new high at 59.42 on Thursday but
eased Friday on profit taking to $58. With oil 
continuing to rise I remain confident of the OXY
play into the election. 

The oil stocks are extremely overbought but as long
as oil rises oil stocks will continue to gain ground.
With targets now at $60 a barrel we could see $65
on OXY before the election.   

Prudential said on Friday Occidental Petroleum "delivers
the lowest finding, development and acquisition costs 
in the sector," which may "translate into further profit
margin advantages in the future."

Earnings are Oct-21st

2006 $50 LEAP Calls WXY-AJ @ $8.60 
2006 $55 LEAP Calls WXY-AK @ $5.60 
2006 $60 LEAP Calls WXY-AL @ $3.50 

Entry $55.50 (9/28)
http://members.OptionInvestor.com/leaps/Lp_082904_1.asp

OXY Chart


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

SYMC - Symantec - $54.95   ** Stop $50.00 **

The SYMC breakout to a new high at $57.82 on Wednesday
was knocked for a loss on Friday after SonicWall
warned. SYMC was hit for a -$2 loss back to $55 and
initial support. SYMC has plenty of profit on the
table and funds could be tempted to put some of it
in the bank. I am leaving the stop low at $50 to
stay under the very strong support at $51-$52.  

Earnings are Oct-20th 

2006 $50 LEAP Call YAG-AJ @ $10.70 now $13.50
2006 $55 LEAP Call YAG-AK @ $8.00 now $10.70
2006 $60 LEAP Call YAG-AL @ $5.70 now $8.00

Entry $53.00 on 9/27
http://members.OptionInvestor.com/leaps/Lp_080804_1.asp

SYMC Chart



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

XMSR - XM Satellite Radio $28.20  ** Stop $22.50 **

Everything was going according to plan until Sirius
announced Howard Stern was moving to Sirius in 2006
for a whopping $100 million dollars. SIRI soared
and XMSR fell but XMSR may be the eventual winner.

SIRI is on track to burn nearly $300 million in cash
in 2004 alone and signing Howard for 2006 may be a
last gasp move to head off the XMSR gains. According
to analysts SIRI will have to attract one million
new listeners just to pay Howard. When they are 
having trouble just conserving enough cash to pay
their own bills this may be one leap too far. SIRI
is on track to run out of cash somewhere in November
2006 based on current subscriber/cash burn rates.

SIRI jumped to $4.25 on the Stern news but fell back
on Friday after it was announced they were selling
$200 million in unsecured convertible notes. I would
not touch those with your money.

I view the dip in XMSR as a continued buying opportunity
given the much stronger balance sheet and subscriber
base. Who knows, Howard may end up on XMSR as the
survivor before it is all over.  

Current position:
2006 JAN-$30 LEAP Call YLX-AF @ $6.60 
2006 JAN-$32 LEAP Call YLX-AZ @ $5.60
2006 JAN-$35 LEAP Call YLX-AG @ $4.60 

Entry $29.15 on 10/4
http://members.OptionInvestor.com/leaps/Lp_100304_1.asp

XMSR Chart



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

PFE - Pfizer $29.75    ** Stop $27.00 **

What a week for Pfizer. I am not going to restate all
the pros and cons here tonight but Pfizer was hit for
a loss on Thursday after negative comments about COX-2
inhibitors were made in print. The New England Journal
of Medicine slammed all COX-2 products as "potentially
dangerous" despite reams of evidence to the contrary.

I have written about Pfizer and Celebrex several times
this week and I believe they will emerge the victor
and a highly profitable one at that. The Thursday
drop to $28.60 was immediately bought and bounced
nearly +$2 before a closing sell program on Friday
pushed it back under $30. I still believe this is a
buying opportunity and we will be well rewarded. 

2006 JAN $30 CALL LEAP WPE-AF 
2006 JAN $32 CALL LEAP WPE-AB 

Entry $30.96 10/4 
http://members.OptionInvestor.com/leaps/Lp_100304_1.asp
 
PFE Chart


****************************    
LEAPS Watch List
****************************    

Coming back to us? 

Two weeks ago I listed the index entries below in hopes
a pullback would trigger an entry at the October lows. 
Unfortunately October roared out of the gate and we
were left standing at the train station. 

The market drop on Friday brought the Dow back into 
range but the SMH, QQQ and IWM targets are still several
days away should the selling continue. 

Because we already have a large leaps portfolio I
am not going to raise the entries to force a trade.
I may adjust them slightly but at this point I would
be just as happy not to see those lows again. 


***********************   
Dropped Entries 
***********************   


None


***********************   
New Watch List Entries 
***********************    


No new entries 


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


SMH  $30.66 Semiconductor Holders **Target $29.00**

This target may still be out of reach but just in 
case Intel develop foot and mouth disease on Tuesday
I am raising it to $29. $28-$28.50 is strong support
and I would really like to get this entry on a dip.  

Buy 2006 $30 LEAP Call YRH-AF 
Buy 2006 $35 LEAP Call YRH-AG 
Sell 2006 $55 LEAP Put YRH-MA 

SMH Chart



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

DIA  $100.65 Dow Diamonds Trust **Target 99.00**

No magic here. This is simply a long play designed
to capitalize on any Dow rebound from a sub 10000
test over the next two weeks. 

The odds are not as good as they were last week for
a retest of 9900 but they still exist.  

Options are a tossup as there are several strange
strikes. They go in four point increments rather
than five or one as in the QQQ. 

They also seem expensive but the difference between
a 104 and 108 strike is only 400 Dow points. With
many estimates of Dow 12500 by end of 2005 there 
is plenty of room for profit. The DIA options move
$1 for every 100 Dow points if they are in the money.

For instance a move to Dow 12500 (DIA 125) would
put the $108 leap call 17 points in the money or
$17. That would be four times the current $3.60 
price.

These prices should drop significantly if we get
an entry at $99.
 
Buy 2006 $100 LEAP Call YGF-AV currently $7.40
Buy 2006 $104 LEAP Call YGF-AZ currently $5.30
Buy 2006 $108 LEAP Call YGF-AD currently $3.60
Buy 2006 $112 LEAP Call YGF-AH currently $2.40

DIA Chart


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

QQQ  $35.59 Nasdaq 100 Tracking Stock  
Target $34.50


The Nasdaq 100 tracking stock has strong support at $34
but it still managed to break to just below $33 on the
August dip. I would like to get a long entry at $34 but
after last week I have raised it to $34.50. The real
difference in premiums over the next year will be very
slight.  

If we do get a move down we will be ready and if not 
then we can reevaluate again next week. The QQQ has 
traded as high as $120 back in 2000 but I doubt we will
see that again this decade.

The QQQ has strong resistance at 38, 42 and 49. I think
everybody reading this would be very happy to see $49 
or even $42 again over the next year. 

Buy 2006 $35 LEAP Call YWZ-AI currently $4.60
Buy 2006 $37 LEAP Call YWZ-AD currently $3.50

These prices should drop about 1.00 with a dip to $34
and 1.25 with a dip to $33.  

QQQ Chart

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

IWM  $114.70 Russell-2000 Index Ishares
Target 1/2 111.00
Target 1/2 108.00

I am actually beginning to think we may have a
possibility of getting this entry. I raised it
slightly with the first half at $111 and only
-3 points from our current level.  

This is a strong play for me because I believe the
small caps will lead any post election rally. If
we rebound from our current 114 then we will have
missed this opportunity. 

There are one-point increments on the IWM LEAPS
so pick the lowest strike you can afford when the
entry point is hit. Since the IWM has to move four
points to hit our first entry point the current price
on the options will change drastically. I would estimate
the 115 to be around $11 and the 120 to be around $8.
An at the money option is around $12 so if we assume
the minimum level reached in 2005 is 120 the 120
strike at a 108 entry would probably double in value.
($7 to $14)

2006 $110 LEAP Call WOI-AF est 12.00 at $108
2006 $115 LEAP Call WOI-AK est 9.50 at $108
2006 $120 LEAP Call WOI-AP est 7.00 at $108

IWM Russell Chart




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

It's That Quickie Time Of The Month

By Mike Parnos

Giving news to the market is like giving nuclear weapons to a 
country that believes in reincarnation.  It can be very 
explosive, to say the least.  It's like giving a directional 
trader hope that a losing will come back a winner in his next 
life.  It just encourages stupidity and irresponsible action.

Fortunately, the recent market chaos has moved in both 
directions.  This week, we saw the market move to the higher end 
of our trading ranges and then reverse.  The news?  Oil prices, 
the jobs number and Bush being a lousy debater.  The bottom line 
is that, going into the last week, our positions are in very good 
shape.  But, there are still four trading days remaining and 
anything can happen.

It's that time of the month that causes a stirring in our loins.  
The vision of "quickie" dollar signs are getting us all excited.  
Last month, our "hypothetical" quickies worked out pretty well.  
This month, the market seems a bit more volatile.  Let's hope it 
takes a rest and consolidates for a week before it over-reacts to 
some other bit of news in one direction or another.  Also, it's 
earnings season, so be prepared for surprises, both good and bad.

Remember, the premiums on the Quickies listed below are based on 
Friday's closing prices and that you should be able to negotiate 
a little from the bid/ask spreads.  Be careful, don't bet the 
rent money, and have your exit planned -- just in case.
_________________________________________________________________

October Quickie #1 - RUT Iron Condor - 575.65
Sell 10 RUT Oct. 560 puts
Buy 10 RUT Oct. 540 puts
Credit of about: $.90 ($900)

Sell 10 RUT Oct. 590 calls
Buy 10 RUT Oct. 610 calls
Credit of about: $.70 ($700)

Total net credit and potential profit of about: $1.60 ($1,600).  
Maximum profit range of 560 to 590.  Maintenance required: 
$20,000.

October Quickie #2 - OEX  Siamese Condor - 538.47
Sell 10 Oct. OEX 540 calls
Sell 10 Oct. OEX 540 puts
Credit of about: $6.85 ($6,850)

Buy 10 Oct. OEX 510 puts
Buy 10 Oct. OEX 560 calls
Debit of about: $.40 ($400)

Total net credit of $6.45 ($6,450).  The closer OEX closes to 
540, the more we make.  Our profit range is 533.55 to 546.45.  
Maintenance required: $20,000.

Quickie Position #3 - SPX Iron Condor - 1122.14
Sell 10 SPX Oct. 1105 puts
Buy 10 SPX Oct. 1090 puts
Credit of about: $$1.10 ($1,100)

Sell 10 Oct. SPX  1140 calls
Buy 10 Oct. SPX 1155 calls
Credit of about: $.95 ($950)

Total net credit and profit potential of $2.05 ($2,050).  Maximum 
profit range of 1105 to 1140.  Maintenance requirement: $15,000.
_________________________________________________________________


OCTOBER CPTI "HYPOTHETICAL" POSITIONS
October Position #1 - SPX Iron Condor - 1122.14
We sold 10 SPX October 1160 calls and bought 10 SPX October 1175 
calls for a net credit of about $1.75 ($1,750).  Then we sold 10 
SPX October 1075 puts and bought 10 SPX October 1060 puts for a 
credit of about $1.30 ($1,300).  Total net credit of appx. $3.05 
($3,050).  Maximum profit range is 1075 to 1160.  Maintenance is 
$15,000.
 
Position #2 -- RUT Iron Condor - 575.65
We sold 10 RUT Oct. 610 calls and bought 10 RUT Oct. 620 calls 
for a credit of about $.65 ($650).  Then we sold 10 RUT Oct 530 
puts and bought 10 RUT Oct 520 puts for a credit of about $.55 
($550).  Total net credit of about $1.20 ($1,200).  Maximum 
profit range is 530 to 610.  Maintenance is $10,000.  

Position #3 - OEX Iron Condor - 538.47
We sold 10 OEX October 520 puts and bought 10 OEX October 510 
puts
for a credit of about $.70 ($700).  Then we sold 10 OEX October 
565 calls
and bought 10 OEX October 575 calls for a credit of about $.50 
($500).   Total net credit of about $1.20 ($1,200).  Maximum 
profit range is 520 to 565.  Maintenance is $10,000.  

Position #4 - BBH Iron Condor - $136.80
We sold 10 BBH October $150 calls and bought 10 BBH October $160 
calls for a credit of about $.95 ($950).  Then we sold 10 BBH 
October $135 puts and bought 10 BBH October $125 puts for a 
credit of about $.55 ($550).  Total net credit of about $1.50 
($1,500).  Maximum profit range is $135 to $150.  Maintenance is 
$10,000.  Be careful, it's getting close to the bottom of the 
range.

Position #5 -- SPX "Sure Thing" Strategy - 1122.14
Formerly called the "Credit Spread Boogie."  The market seems to 
be in an uptrend since mid-August.  Let's go with the flow until 
the market tells us otherwise.  We sold 3 SPX 1120 October puts 
and bought 3 SPX 1095 October puts for a net credit of about 
$6.50 ($1,950).  The initial maintenance was $7,500.

When the SPX traded in the low 1100s, it was time for an 
adjustment.  We closed out the original bull put spread for 
$13.20 ($3,960).  We then opened a seven-contract position of a 
1115/1140 bear call spread, taking in $6.35 ($4,445).  That means 
we've taken in some extra premium.  Our new profit potential is 
$2,435 -- if SPX closes below 1115.  This one's going to be 
exciting. 

ANOTHER POSITION ADJUSTMENT:  Well, I said it was going to be 
exciting.  This is one of those times where we are "tested" -- at 
least our brokerage account is going to be tested as we are in 
the midst of getting whipsawed.  The market did an about face and 
took off.   What did it take off?  It disrobed -- shedding its 
bearish persona and looking up.   

So we unwound our 1115/1140 7-contract bear call position at 
$13.80 ($9,660).  We then put on a November 14-contract 1120/1095 
bull put spread (coincidentally, right back where we started) at 
$7.00 ($9,800).  The maintenance is getting pricey at $35,000.  
That's why this strategy is not for everyone.  Our potential 
profit is still $2,435.  
____________________________________________________________

ONGOING POSITIONS
QQQ ITM Strangle – Ongoing Long Term -- $35.58
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.  We rolled to the Sept. $34 calls and $37 puts, yielding 
$.45 or $450 for the cycle. For October we were again limited to 
a $.45 ($450) rollout.  We rolled to the Sept. $34 calls and $37 
puts for a total of $.70 ($700). Our new total credit is now 
$12,900. 

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 conservative cash flow generating strategy.  

ZERO-PLUS Strategy.  OEX – 538.47
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 August expiration was 
$8,390.  In September we added another $975 for a new total of 
$9,365.

New Zero Plus Positions For October  
Not a lot of credit available this month.  October bull put 
spread 520/510 for credit of $.65 x 5 contracts = $325.  October 
bear call spread 565/575 for another credit of $.65 x 5 contracts 
= $325.  If all goes well, we'll be able to add $650 to our cash 
position.
_________________________________________________________________

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, Options Therapist and 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.


**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html


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The Option Investor Newsletter                   Sunday 10-10-2004
Sunday                                                      5 of 5


In Section Five:

Spreads and Straddles:  Crude Continues Climb -- Labor Data 
Disappoints!
Premium-Selling Plays: Naked Puts and Calls


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

 Crude Continues Climb -- Labor Data Disappoints!
By Ray Cummins

The major equity averages drifted lower Friday amid pessimistic 
jobs data and record oil prices.

The U.S. Department of Labor reported that 96,000 new jobs were
created in September, far less than the consensus estimate of
150,000 expected by analysts.  At the same time, the price for
a barrel of oil reached $53, adding to worries of renewed slump
in equity values during the fourth quarter.  The Dow industrial
average slid 70 points to 10,055 with General Electric (NYSE:GE)
and Alcoa (NYSE:AA) both moving lower after reporting "in-line"
third-quarter earnings.  The NASDAQ composite index retreated 28
points to 1,919 with networking, computer hardware and software,
and semiconductor stocks among the worst performers.  The broad
Standard & Poor's 500 index closed down 8 points at 1,122 with
homebuilder, biotechnology, and brokerage shares enduring the
most selling pressure.  For the week, the Dow dropped 1.35%, the
S&P 500 fell 0.83% and the NASDAQ slid 1.14%.  Declining issues
outpaced advancers 5 to 4 on the New York Stock Exchange, where
volume came to 1.3 billion shares.  Losers trounced winners by
more than 2 to 1 on the technology exchange, on volume of 1.67
billion shares.  Treasury prices rebounded with the 10-year note
closing up 29/32, while its yield fell to 4.13%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 10/08/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

MUR    75.51  84.61  OCT  65.0  70.0  0.70   69.30   0.70   Open
RYL    88.15  87.33  OCT  75.0  80.0  0.75   79.25   0.75   Open
GIVN   38.72  41.78  OCT  30.0  35.0  0.70   34.30   0.70   Open
MBT   140.75 145.98  OCT 120.0 125.0  0.50  124.50   0.50   Open
COGN   34.58  36.02  OCT  30.0  32.5  0.30   32.20   0.30   Open
SCSC   66.22  71.32  OCT  55.0  60.0  0.50   59.50   0.50   Open
CCMP   38.29  34.69  OCT  30.0  35.0  0.75   34.25   0.44   Open?
ONXX   41.99  42.73  OCT  30.0  35.0  0.50   34.50   0.50   Open
AHC    83.99  91.57  OCT  75.0  80.0  0.55   79.45   0.55   Open
CELG   59.39  61.04  OCT  50.0  55.0  0.55   54.45   0.55   Open
GDT    64.02  62.93  OCT  55.0  60.0  0.65   59.35   0.65   Open
PD     90.48  96.01  OCT  80.0  85.0  0.50   84.50   0.50   Open
RTP   104.28 110.62  OCT  95.0 100.0  0.55   99.45   0.55   Open
PETD   43.63  42.38  OCT  35.0  40.0  0.45   39.55   0.45   Open
RIMM   76.98  75.71  OCT  60.0  65.0  0.40   64.60   0.40   Open
BSC    94.16  92.49  NOV  80.0  85.0  0.65   84.35   0.65   Open
PHS    37.23  38.30  NOV  30.0  32.5  0.35   32.15   0.35   Open
BTU    60.07  60.65  NOV  50.0  55.0  0.60   54.40   0.60   Open
MRVL   28.84  28.38  NOV  22.5  25.0  0.35   24.65   0.35   Open

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

As noted Tuesday, the bullish position in Pulte Homes (NYSE:PHM)
was closed to limit losses.  The other spread in the homebuilders
sector, Ryland (NYSE:RYL), has more room for a downside move but
we will be watching the issue closely in the coming week.  Cabot
Micro (NASDAQ:CCMP) is an "early-exit" candidate on any further
bearish activity.


CALL-CREDIT SPREADS

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

AZO    74.06  77.10   OCT  85.0  80.0  0.55   80.55  0.55   Open
MXIM   40.94  42.89   OCT  50.0  45.0  0.50   45.50  0.50   Open?
PLMO   32.30  30.60   OCT  45.0  40.0  0.55   40.55  0.55   Open
LEN    46.75  43.70   OCT  55.0  50.0  0.60   50.60  0.60   Open
NTES   35.51  39.08   OCT  45.0  40.0  0.60   40.60  0.60   Open?
NBIX   50.65  44.78   OCT  60.0  55.0  0.55   55.55  0.55   Open
SSP    49.66  49.70   OCT  52.5  50.0  0.50   50.50  0.50   Open
APOL   78.35  69.81   OCT  90.0  85.0  0.25   85.25  0.25   Open
STJ    70.73  72.63   OCT  80.0  75.0  0.55   75.55  0.55   Open
APOL   72.00  69.81   OCT  85.0  80.0  0.45   80.45  0.45   Open
PRX    37.80  35.03   OCT  45.0  40.0  0.60   40.60  0.60   Open
CERN   42.99  45.02   OCT  50.0  45.0  0.50   45.50  0.48   Open?
IMCL   50.35  51.30   OCT  60.0  55.0  0.40   55.40  0.40   Open?
LLTC   35.71  36.86   OCT  40.0  37.5  0.30   37.80  0.30   Open?
AMZN   40.47  40.00   NOV  50.0  45.0  0.65   45.65  0.65   Open
PDX    55.00  55.55   NOV  65.0  60.0  0.60   60.60  0.60   Open
BZH   103.14 101.67   NOV 115.0 110.0  1.10  111.10  1.10   Open
CHIR   37.98  35.63   NOV  45.0  42.5  0.30   42.80  0.30   Open
 
L/C = Long Call S/C = Short Call CB = Cost Basis G/L = Gain/Loss

Although currently profitable, the recent position in Lexmark
(NYSE:LXK) has previously been closed to limit potential losses.
Cerner (NASDAQ:CERN) is the most obvious "early-exit" candidate,
however it remains in a near-term trading range along with other
"watch-list" positions such as: ImClone (NASDAQ:IMCL), Linear
Technology (NASDAQ:LLTC), Maxim Integrated (NASDAQ:MXIM), and
Netease.com (NASDAQ:NTES).


DEBIT STRADDLES

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

QLGC    29.12  29.27   OCT   30.0   30.0    2.40    2.35    Open
MDC     74.96  67.40   OCT   75.0   75.0    3.50    8.00    Open?

Our new straddle in MDC Holdings (NYSE:MDC) was a "big winner"
this week when share values in the home construction segment
plummeted after Pulte Homes (NYSE:PHM) posted disappointing
earnings.


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

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

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

BULLISH PLAYS - CREDIT SPREADS

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

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

COST - Costco  $44.69  *** Favorable Earnings! ***

Costco Wholesale (NASDAQ:COST) operates membership warehouses
that offer members very low prices on a limited selection of
nationally branded and selected private label products in a
wide range of merchandise categories.  Costco operates nearly
400 warehouse clubs, most of which are in the United States,
while others are in Canada, the United Kingdom, Korea, Taiwan
and Japan.  The company also operates, through a 50%-owned
joint venture, similar retail warehouses in Mexico.

COST - Costco  $44.69

PLAY (conservative - bullish/credit spread):

BUY  PUT  NOV-40.00  PRQ-WH  OI=1264  ASK=$0.20
SELL PUT  NOV-42.50  PRQ-WV  OI=484   BID=$0.45
INITIAL NET-CREDIT TARGET=$0.30-$0.35
POTENTIAL PROFIT(max)=14% B/E=$42.20


__________________________________________________________________

NEM - Newmont Mining  $46.25  *** All That Glitters... ***

Newmont Mining (NYSE:NEM) and its affiliates and subsidiaries
predominantly operate in a single industry, engaged in worldwide
gold production, exploration for gold and acquisition of gold
properties.  Newmont also has base metal operations engaged in
copper and zinc production.  The company has operations in the
United States, Australia, Peru, Indonesia, Canada, Uzbekistan,
Turkey, Bolivia, New Zealand and Mexico.  Newmont also has a
merchant banking unit that is engaged in portfolio management
(providing in-house investment banking and advisory services),
and management of Newmont's equity portfolio, royalty portfolio
and downstream gold refining and distribution business.

NEM - Newmont Mining  $46.25

PLAY (conservative - bullish/credit spread):

BUY  PUT  NOV-40.00  NEM-WH  OI=1264  ASK=$0.25
SELL PUT  NOV-42.50  NEM-WV  OI=1957  BID=$0.50
INITIAL NET-CREDIT TARGET=$0.30-$0.35
POTENTIAL PROFIT(max)=14% B/E=$42.20



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

BEARISH PLAYS - CREDIT SPREADS

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

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

FLIR - FLIR Systems  $54.52  *** Earnings Speculation! ***

FLIR Systems (NASDAQ:FLIR) designs, manufactures and markets
thermal imaging systems and infrared camera systems that offer
a variety of applications in the commercial, industrial and
government markets.  The company's business is organized into
two divisions, thermography and imaging.  The thermography
division produces systems that provide precise temperature
measurement capabilities and are used for commercial and
industrial applications.  The imaging division produces a
variety of systems that are used in such applications as
long-range surveillance, reconnaissance, search and rescue,
security, force protection, targeting and law enforcement.
Quarterly earnings are due on or about October 20, 2004.

FLIR - FLIR Systems  $54.52

PLAY (less conservative - bearish/credit spread):

BUY  CALL  NOV-65.00  FFQ-KM  OI=96  ASK=$0.40
SELL CALL  NOV-60.00  FFQ-KL  OI=62  BID=$1.05
INITIAL NET-CREDIT TARGET=$0.70-$0.75
POTENTIAL PROFIT(max)=16% B/E=$60.70


__________________________________________________________________

MERQ - Mercury Interactive  $37.97  *** Revenge Play! ***

Mercury Interactive (NASDAQ:MERQ) is a provider of integrated
performance management solutions that enable businesses to test
and monitor their Web-based applications.  Its software products
and hosted services help Global 2004 companies enhance the user
experience by improving performance, availability, reliability
and scalability in their Web-based applications.  Its many hosted
services provide its customers with a cost-effective solution that
quickly meets business needs without dedicating significant time
and internal resources.  Its integrated performance management
solutions enable customers to more quickly identify and correct
problems before users experience them.  The company also provides
outsourced load testing and Web performance monitoring services
that complement its software products.

MERQ - Mercury Interactive  $37.97

PLAY (conservative - bearish/credit spread):

BUY  CALL  NOV-45.00  RQB-KI  OI=132  ASK=$0.40
SELL CALL  NOV-42.50  RQB-KS  OI=206  BID=$0.70
INITIAL NET-CREDIT TARGET=$0.35-$0.40
POTENTIAL PROFIT(max)=16% B/E=$42.85



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
STRADDLES AND STRANGLES
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

ETN - Eaton  $64.82  *** Earnings Speculation! ***

Eaton (NYSE:ETN) is a diversified industrial manufacturer engaged
in the design and manufacture of fluid power systems; electrical
power quality, distribution and control; automotive engine air
management and powertrain controls for fuel economy; and also
intelligent drivetrain systems for fuel economy and safety in
trucks.  The principal markets for the company's Fluid Power,
Automotive and Truck segments are OEMs and aftermarket customers
of aerospace products and systems, off-highway agricultural and
construction vehicles, industrial equipment, passenger cars and
heavy-, medium-, and light-duty trucks.  The principal markets
for the Electrical segment are their industrial, construction,
commercial, automotive and government customers.  Earnings are
due on or about 10/14/04.

ETN - Eaton  $64.82

PLAY (very speculative - neutral/debit straddle):

BUY CALL  OCT-65.00  ETN-JM  OI=809  ASK=$1.00
BUY PUT   OCT-65.00  ETN-VM  OI=46   ASK=$1.15
INITIAL NET-DEBIT TARGET=$2.00-$2.05
INITIAL TARGET PROFIT=$0.65-$0.90





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~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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 10/08/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

OS       OCT    15.00   14.60   17.23    0.40   7.19%   2.74%
FHRX     OCT    17.50   17.05   21.21    0.45   6.31%   2.64%
SNDK     OCT    22.50   22.00   30.20    0.50   5.86%   2.27%
SSYS     OCT    25.00   24.45   30.99    0.55   5.91%   2.25%
JNPR     OCT    22.50   22.00   24.35    0.50   5.73%   2.27%
CREE     OCT    22.50   22.15   29.34    0.35   5.28%   1.58%
FFIV     OCT    22.50   22.20   31.02    0.30   4.45%   1.35%
AMZN     OCT    37.50   37.00   40.00    0.50   3.96%   1.35%
ASKJ     OCT    25.00   24.45   32.58    0.55   7.42%   2.25%
USNA     OCT    30.00   29.30   33.15    0.70   6.10%   2.39%
YHOO     OCT    30.00   29.40   34.17    0.60   5.51%   2.04%
CELL     OCT    15.00   14.50   16.27    0.50   8.28%   3.45%
CREE     OCT    25.00   24.35   29.34    0.65   7.26%   2.67%
CLHB     OCT    10.00    9.75   11.68    0.25   7.98%   2.56%
PDII     OCT    25.00   24.45   27.60    0.55   6.98%   2.25%
GILD     OCT    35.00   34.35   37.80    0.65   5.61%   1.89%
BOBJ     OCT    20.00   19.65   23.65    0.35   5.73%   1.78%
ASTE     OCT    17.50   16.95   18.80    0.55   9.55%   3.24%
LCAV     OCT    25.00   24.35   26.85    0.65   7.97%   2.67%
ALO      OCT    17.50   17.10   17.12    0.02   0.36%   2.34%
FHRX     OCT    17.50   17.20   21.21    0.30   6.33%   1.74%
GNSS     OCT    12.50   12.20   14.25    0.30   8.02%   2.46%
COGN     OCT    32.50   31.90   36.02    0.60   6.15%   1.88%
PSFT     OCT    17.50   17.20   21.95    0.30   6.15%   1.74%
LF       OCT    20.00   19.75   19.90    0.15   2.67%   1.27%
ATYT     OCT    15.00   14.75   17.04    0.25   5.90%   1.69%
YHOO     OCT    30.00   29.50   34.17    0.50   6.01%   1.69%
AGIX     OCT    12.50   11.75   29.65    0.75  21.96%   6.38%
DHB      OCT    12.00   11.60   14.24    0.40  14.91%   3.45%
INTV     OCT    10.00   9.70    11.21    0.30  12.10%   3.09%
NVTL     OCT    22.50   21.95   23.04    0.55  10.37%   2.51%
SFL      OCT    20.00   19.55   24.25    0.45   9.47%   2.30%
FHRX     OCT    17.50   17.15   21.21    0.35   8.94%   2.04%
PAAS     OCT    15.00   14.75   17.57    0.25   7.04%   1.69%
BLUD     OCT    20.00   19.75   26.97    0.25   6.52%   1.27%
AAPL     OCT    35.00   34.35   39.06    0.65   9.07%   1.89%
RIGL     OCT    22.50   21.85   25.14    0.65  13.86%   2.97%
CMTL     OCT    25.00   24.65   26.92    0.35   6.90%   1.42%
NABI     OCT    12.50   12.25   13.14    0.25   9.59%   2.04%
CREE     OCT    25.00   24.70   29.34    0.30   6.67%   1.21%
STLD     OCT    35.00   34.65   39.02    0.35   4.99%   1.01%
OMM      OCT    15.00   14.75   17.15    0.25   7.89%   1.69%
SNDK     OCT    27.50   27.10   30.20    0.40   9.70%   1.48%
WRLS     NOV     7.50    7.20   10.45    0.30   7.65%   4.17%
OSTK     OCT    35.00   34.60   39.55    0.40   7.74%   1.16%
SIMG     NOV    12.50   12.10   13.29    0.40   5.95%   3.31%
NVTL     OCT    22.50   22.25   23.04    0.25   7.11%   1.12%
RIGL     OCT    22.50   22.20   25.14    0.30   9.26%   1.35%
SYNA     OCT    20.00   19.80   22.82    0.20   6.50%   1.01%
YHOO     OCT    32.50   32.10   34.17    0.40   7.88%   1.25%

Alopharma (NYSE:ALO), Leapfrog (NYSE:LF), Novatel (NASDAQ:NVTL)
and Nabi Biopharmaceuticals (NASDAQ:NABI) are the most obvious
issues on the "watch" list.  Plays on American Pharmaceutical
Partners (NASDAQ:APPX) and Navarre (NASDAQ:NAVR), which is now
at the "break-even" point, have previously been closed to limit
potential losses.


NAKED CALLS

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

ESIO     OCT    22.50   23.00   16.97    0.50   6.99%   2.17%
LNCR     OCT    32.50   33.30   30.35    0.80   7.12%   2.40%
ADTN     OCT    30.00   30.30   20.41    0.30   3.79%   0.99%
DIGE     OCT    30.00   30.35   25.54    0.35   6.05%   1.15%
CTB      OCT    22.50   22.85   19.93    0.35   4.25%   1.53%
MDCO     OCT    30.00   30.80   23.51    0.80   8.33%   2.60%
CECO     OCT    40.00   40.50   26.75    0.50   6.34%   1.23%
CPRT     OCT    20.00   20.35   18.85    0.35   6.97%   1.72%
FLML     OCT    17.50   17.80   15.76    0.30  10.47%   1.69%
SSNC     OCT    20.00   20.35   20.22    0.13   2.85%   1.72%
USPI     OCT    35.00   35.65   33.10    0.65   6.36%   1.82%
BDY      OCT    22.50   22.90   19.00    0.40   7.63%   1.75%
PLMO     OCT    35.00   35.90   30.60    0.90  11.25%   2.51%
XLNX     OCT    30.00   30.25   27.63    0.25   4.46%   0.83%
APPX     OCT    30.00   30.50   26.51    0.50   8.60%   1.64%
CYMI     OCT    30.00   30.40   28.85    0.40   6.78%   1.32%
TASR     OCT    45.00   45.35   37.43    0.35   8.19%   0.77%
ALD      OCT    25.00   25.25   24.78    0.25   6.46%   0.99%
CYBX     OCT    20.00   20.40   18.66    0.40  14.93%   1.96%

Positions in Mercury Interactive (NASDAQ:MERQ) and Storage
Technology (NYSE:STK), along with Altera (NASDAQ:ALTR) and
SS&C Technologies (NASDAQ:SSNC), both of which are currently
profitable, have previously been closed to limit potential
losses.  Cymer (NASDAQ:CYMI) remains on the "watch" list.

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

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

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

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

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

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

NEW NAKED-PUT CANDIDATES

Stock  Last    Option    Option Last Open Cost  Days Simple  Max
Symbol Price   Series    Symbol Bid  Int. Basis Exp. Yield  Yield

PMTI   23.08  NOV 20.00  HKQ-WD 0.85  355 19.15  40   3.4%   9.2%
SNDA   28.52  NOV 22.50  QKU-WX 0.65   28 21.85  40   2.3%   7.8%
USG    19.05  NOV 17.50  USG-WW 0.60 4511 16.90  40   2.7%   6.8%
IDBE   14.53  NOV 12.50  QQ-WV  0.35 2400 12.15  40   2.2%   6.4%
NCRX   26.75  NOV 25.00  QNY-WE 0.70  162 24.30  40   2.2%   5.5%
BVF    19.36  NOV 17.50  BVF-WW 0.45 1452 17.05  40   2.0%   5.4%
STTX   29.30  NOV 25.00  SFU-WE 0.40    5 24.60  40   1.2%   3.9%
ANF    36.57  NOV 32.50  ANF-WZ 0.40 3873 32.10  40   0.9%   2.8%

Abbreviations:

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

PMTI - Palomar Medical  $23.08  *** New Sales Plan! ***

Palomar Medical Technologies (NASDAQ:PMTI) is a researcher and
developer of light-based systems for hair removal and other
cosmetic procedures.  The company researches, develops, makes,
markets, sells and services light-based products that perform
procedures addressing medical and cosmetic concerns.  Palomar
offers a range of products based on its technologies including
hair removal; non-invasive treatment of facial and leg veins and
other benign vascular lesions, such as rosacea, spider veins,
port wine stains and hemangiomas; removal of benign pigmented
lesions, such as age and sun spots; tattoo removal; treatment
for acne; pseudofolliculitis barbae, and other skin treatments.

PMTI - Palomar Medical  $23.08

NOV 20.00 HKQ-WD LB=0.85 OI=355 CB=19.15 DE=40 TY=3.4% MY=9.2%


_________________________________________________________________

SNDA - Shanda Interactive Ent.  $28.52  *** Premium-Selling! ***

Shanda Interactive Entertainment (NASDAQ:SNDA) is an operator of
online games in China.  The games, licensed from third parties,
as well as developed in-house by the company, include The Legend
of Mir II and The World of Legend.  The company's commercially
launched games have approximately 1.4 million peak concurrent
users and 931,570 average concurrent users.  Shanda also provides
multiplayer online games, including role-playing games and casual
online games, which allow thousands of users to interact in a
virtual world by assuming ongoing roles or characters with many
different features.

SNDA - Shanda Interactive Ent.  $28.52

NOV 22.50 QKU-WX LB=0.65 OI=28 CB=21.85 DE=40 TY=2.3% MY=7.8%


_________________________________________________________________

USG - USG Corporation  $19.05  *** Asbestos Legislation? ***

USG Corporation (NYSE:USG) is engaged in the manufacture and
distribution of building materials.  Its business operations
are organized into three operating segments: North American
Gypsum, Worldwide Ceilings and Building Products Distribution.
North American Gypsum manufactures and markets gypsum sheetrock
and related products in the United States, Canada and Mexico.
Worldwide Ceilings manufactures and markets ceiling tile in the
United States and ceiling grid in the United States, Canada,
Europe and Asia.  Building Products Distribution distributes
gypsum wallboard, drywall metal, joint compound and other
building products throughout the United States.
  
USG - USG Corporation  $19.05

NOV 17.50 USG-WW LB=0.60 OI=4511 CB=16.90 DE=40 TY=2.7% MY=6.8%


_________________________________________________________________

IDBE - ID Biomedical  $14.53  *** SARS Vaccine Grant! ***

ID Biomedical (NASDAQ:IDBE) is a biotechnology firm focused on
the development of subunit vaccines, including those based on
its Proteosome protein intranasal adjuvant/delivery technology.
The technology potentially serves as both a vaccine adjuvant
(stimulant of immune responses) and mucosal delivery system
that may enhance a vaccine's effectiveness and/or ease of use.
The company is developing subunit vaccines for the prevention
of a number of different diseases.

IDBE - ID Biomedical  $14.53

NOV 12.50 QQ-WV LB=0.35 OI=2400 CB=12.15 DE=40 TY=2.2% MY=6.4%


_________________________________________________________________

NCRX - NeighborCare  $26.75  *** Omnicare Merger Target! ***

NeighborCare (NASDAQ:NCRX) is a provider of institutional
pharmacy services in the United States.  These pharmacy
operations consist of a number of institutional pharmacies,
community-based professional retail pharmacies and on-site
pharmacies, which are located in customers' facilities and
serve only customers of that facility.  In addition, the
company operates home infusion, respiratory and medical
equipment distribution centers.

NCRX - NeighborCare  $26.75

NOV 25.00 QNY-WE LB=0.70 OI=162 CB=24.30 DE=40 TY=2.2% MY=5.5%


_________________________________________________________________

BVF - Biovail  $19.36  *** Bottom-Fishing! ***

Biovail Corporation (NYSE:BVF) is a pharmaceutical company
engaged in the development, manufacture, marketing, licensing
and distribution of pharmaceutical products for the treatment
of chronic medical conditions primarily in North America.
The company's primary focus is on therapeutic areas, such as
cardiovascular disease, central nervous system disorders and
pain management.  Other areas of interest include Type II
diabetes, antiviral medicine and select niche therapeutic
categories with identified potential.  Its current portfolio
of cardiovascular therapeutic products in the United States
includes Cardizem LA, Cardizem CD, Tiazac, Vasotec, Vaseretic,
Teveten, Teveten HCT, Isordil and other generic pharmaceutical
products.

BVF - Biovail  $19.36

NOV 17.50 BVF-WW LB=0.45 OI=1452 CB=17.05 DE=40 TY=2.0% MY=5.4%


_________________________________________________________________

STTX - Steel Technologies  $29.30  *** Strong Sector! ***

Steel Technologies (NASDAQ:STTX) is an intermediate steel
processor engaged in the business of processing flat rolled
steel to specified close tolerances in response to orders
from industrial customers who require steel of precise type,
thickness, width, temper, finish and shape for specific
purposes.  Its principal products are cold-rolled strip and
sheet, cold-rolled one-pass strip, high-carbon and alloy
strip and sheet, hot-rolled strip and sheet, high-strength
low-alloy strip and sheet, hot-rolled pickle and oil and
coated strip and sheet, hot-rolled pickled and oiled sheet,
tin plate, blanking and cut-to-length processing of coil
steel and fabrication and welding of steel sheets and plates.

STTX - Steel Technologies  $29.30

NOV 25.00 SFU-WE LB=0.40 OI=5 CB=24.60 DE=40 TY=1.2% MY=3.9%


_________________________________________________________________

ANF - Abercrombie & Fitch  $36.57  *** Target-Shoot An Entry! ***

Abercrombie & Fitch (NYSE:ANF), through its subsidiaries, is a
specialty retailer that operates stores selling casual apparel,
personal care and other accessories for men, women and kids
under the Abercrombie & Fitch, abercrombie and Hollister brands.
The company's stores and point-of-sale marketing are designed
to convey the principal elements and personality of each brand.
The store design, furniture, fixtures and music are all carefully
planned and coordinated to create a shopping experience that is
consistent with the Abercrombie & Fitch, abercrombie or Hollister
lifestyle.  The company maintains a uniform appearance throughout
its store base in terms of merchandise display and location on
the selling floor.

NOV 32.50 ANF-WZ LB=0.40 OI=3873 CB=32.10 DE=40 TY=0.9% MY=2.8% TS



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

BEARISH PLAYS - NAKED CALLS

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

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

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

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

BRCM - Broadcom  $28.25  *** Sector Slump! ***

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

BRCM - Broadcom  $28.25

PLAY (sell naked call):

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

SELL CALL  NOV 35    RCQ-KG    9504   0.35  35.35   4.4%   1.0%


_________________________________________________________________

LLTC - Linear Technology  $36.86  *** In A Trading Range? ***

Linear Technology (NASDAQ:LLTC) designs, manufactures and sells
a broad line of standard high-performance linear integrated
circuits (ICs).  Applications for the company's products include
telecommunications, cellular telephones, networking products,
optical switches, notebook and desktop computers, computer
peripherals, video/multimedia, industrial instrumentation,
security monitoring devices, high-end consumer products, digital
cameras and MP3 players, complex medical devices, automotive
electronics, factory automation, process control and military
and space systems.

LLTC - Linear Technology  $36.86

PLAY (sell naked call):

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

SELL CALL  NOV 40    LLQ-KH    3410   0.60  40.60   3.7%   1.5%


_________________________________________________________________

LRCX - Lam Research  $21.62  *** Prudential Downgrade! ***

Lam Research (NASDAQ:LRCX) designs, manufactures, markets and
services semiconductor processing equipment for the fabrication
of integrated circuits for the worldwide semiconductor industry.
Semiconductor wafers are subjected to a series of process steps
that result in the simultaneous creation of many individual ICs.
The cmpany's etch and chemical mechanical planarization products
selectively remove portions of various films from the wafer to
create semiconductors.  Lam Research leverages its expertise in
these areas to also develop intellectual property for integrated
processing solutions.

LRCX - Lam Research  $21.62

PLAY (sell naked call):

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

SELL CALL  NOV 25    LMQ-KE     623   0.40  25.40   5.4%   1.6%


_________________________________________________________________

SINA - SINA Corporation  $27.46  *** Premium-Selling Only! ***

SINA Corporation (NASDAQ:SINA), formerly known as SINA.com, is an
online media company and value-added information service provider
for China and the global Chinese communities.  With a branded
network of localized Websites targeting China and overseas Chinese,
the company provides an array of services to its users including
region-focused online portals, search, directory, interest-based
and community-building channels, free and premium e-mail, wireless
short messaging, online games, virtual Internet service provider,
classified listings, e-commerce, e-learning, and enterprise
e-solutions.  SINA generates revenue through advertising, various
fee-based services, e-commerce and enterprise services.

SINA - SINA Corporation  $27.46

PLAY (sell naked call):

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

SELL CALL  NOV 35    NOQ-KG    970    0.35  35.35   4.6%   1.0%

 

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