The Option Investor Newsletter Tuesday 10-12-2004 Copyright 2004, All rights reserved. 1 of 3 Redistribution in any form strictly prohibited. In Section One: Wrap: Close, But Was It Close Enough? Futures Markets: See Note Index Trader Wrap: Oil, earnings and expiration make for lively trade Market Sentiment: The Earnings Shuffle Posted online for subscribers at http://www.OptionInvestor.com ************************************************************ MARKET WRAP (view in courier font for table alignment) ************************************************************ 10-12-2004 High Low Volume Adv/Dcl DJIA 10077.18 - 4.80 10102.33 10017.15 1.62 bln 1519/1703 NASDAQ 1925.17 - 3.60 1929.98 1904.11 1.52 bln 1312/1778 S&P 100 539.22 - 0.70 540.49 536.27 Totals 2821/3481 S&P 500 1121.84 - 2.55 1124.39 1115.77 SOX 386.36 - 5.20 391.53 380.17 RUS 2000 576.71 - 0.85 578.10 570.49 DJ TRANS 3338.98 + 2.80 3330.78 3296.09 VIX 15.05 + 0.34 15.69 14.91 VXO (VIX-O)15.17 + 0.18 16.10 14.87 VXN 20.93 + 0.88 21.77 20.71 Total Volume 3,440M Total UpVol 1,166M Total DnVol 2,204M Total Adv 3155 Total Dcl 4023 52wk Highs 170 52wk Lows 120 TRIN 1.76 NAZTRIN 0.51 PUT/CALL 1.00 ************************************************************ Close, But Was It Close Enough? by Jim Brown Intel and Yahoo announced earnings after the bell and both were close to analyst's estimates. The question is were they close enough? Were they good enough to pull the markets back from the brink of disaster or did they lack enough excitement keep them from going over the cliff? Dow Chart Nasdaq Chart The morning opened with a flurry of earnings warnings and earnings from a couple of heavy weights. JNJ beat the street this morning by +2 cents at 78 cents for the quarter. JNJ saw strong sales in multiple divisions both locally and globally. Revenue rose +10.5% for the quarter and they raised their estimates for Q4. This was much needed good news for the drug industry and consumer products. They did say they saw slower growth for 2005. Merrill Lynch posted earnings that beat the street but were down from last years levels. The company said slow trading volumes contributed to the revenue decline but overall performance was very strong given the market conditions. Merrill jumped +1.48 on the news. Those two earnings releases did a lot to offset the damage done by a SEMI report saying global chip sales had fallen -29% in August on a month over month basis. Chip sales in China fell -51%, North America -31%, Japan -20%. This knocked about -10 points off the SOX at the open and cratered the tech sector. Warnings from HLIT and a SEC inquiry at AMKR also pressured chips. PHG said sales would be flat sequentially and they were also seeing price erosion for consumer electronics chips. SB downgraded SNDK to a sell citing weakening pricing and slowing manufacturing benefits. They spoke positive about FLSH in the same report. Greasing the slide was a sharp spike in oil to new highs at $54.45 before the open and once over $54 the equity market imploded. This appeared to be the point where even the strongest bulls lost their appetite for stocks. Oil was up on strikes/fires in Nigeria and a 55,000 MBpd loss of production from Norway. Bulls got a reprieve late in the day when oil suddenly fell out of sight to trade on Globex at a $52.14 low. This was -2.31 off the highs on no real news. Analysts theorized that the $54 level was simply too much for those already long to pass up and profits were taken. This same thing happened when we neared $50 the first time. We are also only three weeks away from the election and the calendar is ticking down on any risk for terrorists to impact prices before the election. When oil began its sharp drop the equity markets began a bullish run that took the Dow and Nasdaq back to positive territory. Fear of Intel and Yahoo earnings produced some profit taking prior to the close and we ended level for the day in everything but the SOX. After the bell Intel announced earnings that missed estimates by a penny but said the right things in the earnings release to send their stock higher. They earned 30 cents per share but 3.6 cents was due to a tax item and not operating earnings. Their gross margins fell to 55.7% and well below estimates of 58%. The reason for the drop was discounting to get rid of inventory and a product mix slanted to lower margins. Intel rose in after hours trading despite the miss and some cautious comments about the 4Q. They are targeting 4Q margins at 56% which is still below analysts estimates. They targeted revenue at $8.6B-$9.2B and the consensus was for $9.1B. On the conference call Andy Bryant said there was too much inventory still in the system and seasonal 4Q demand was softer than expected but they were making progress. Considering the negative expectations for Intel the fact they missed earnings slightly and guidance was only "soft" represented a positive surprise. INTC traded up +70 cents in after hours. The real question is how will it trade tomorrow? Was the soft guidance good enough to provide a continued bounce when real volume hits the tape? Yahoo actually posted better earnings even though they only matched street estimates at nine cents. They did exceed revenue estimates of $644 million with a spike to $655 million. Advertising revenue was up +10% over Q2 and Q2 was up +9.2% over Q1. They gave guidance for Q4 for $710-$760 million that straddled analysts estimates of $730 million. They also raised full year estimates slightly. YHOO only rose +50 cents in after hours and represents expectations already priced into the stock. The real impact could be to Google which rose +$2 in after hours in advance of their earnings on Thursday of next week. Google will be expected to match or beat Yahoo's performance and guidance or face the wrath of traders. On Monday American Technology Research downgraded GOOG to a SELL citing concerns about valuation and competition. Last week Jeffries also downgraded Google citing excessive valuations. ATR went so far as to suggest shorting Google at this level. However, Google got to this level over the bodies of bleeding bears so caution is definitely the key. I expect we will see further GOOG spikes on Wednesday as shorts cover on fears they will post better results than Yahoo. The economics for the day were evenly mixed with the Richmond Fed Survey moving +4 points higher and the Kansas Fed Survey dropping -2 points. The Richmond Fed rose inexplicably after New Orders fell to 8 from 13, Order Backlog to -6 from +1 and the Six Month Outlook to 23 from 28. The only major component to rise was Shipments from 18 to 22. Employment did return to positive territory but remained soft. The Kansas Fed Survey showed only a small drop in the headline number and that was repeated in the majority of the components. Again employment rose slightly and New Orders fell. Oil prices may have fallen but commodities in general continue to rise. This will continue to be a sore topic for months to come regardless of what happens to oil. The Goldman Sachs Commodity Index has risen over +103% in the last 33 months. According to one analyst a gain of more than 55% in any 30 month period has NEVER failed to produce a recession. CNBC ran a sequence of screens several times on Tuesday showing price rises in various common products like butter +50%, turkeys +38%, etc over the last year. Feedstocks are soaring and that is pushing up the cost of food across the board. Storm damage has wiped out most of the orange, grapefruit and peanut crops in the south and prices for those items and products made with those items are going even higher. Peanuts are a major staple ingredient for many products including candy, baked goods, peanut oil for frying and cooking, etc. This just a random sample but other sectors with soaring prices include building materials. The hurricane damage is expected to suck up a six month supply of building supplies like plywood, sheetrock, shingles, insulation, etc. This will raise prices for home construction across the country as supply as demand equalizes. Add in oil prices that suddenly seem cheap at $52 overnight today and the economy has a tough road ahead. I relate that paragraph above because just having Yahoo serve up +10% more ads and Intel happy about only "soft" 4Q demand is not going to send the bulls roaring back into the market for long. We may get a bounce on Wednesday but we are going to need a stronger showing of major firms with positive earnings and guidance to convince the herd. We are three weeks away from the election and the candidates are still dead even going into the last debate on Wednesday. The election is up for grabs and the market does not know which way to jump. The next round of earnings continues tomorrow with the emphasis on chips and technology. ASML, AAPL, LRCX, NTOP, NVLS, QLGC and SNDK report on Wednesday. On Thursday we get AOS, ABT, BAC, BBT, C, CY, ETN, ENDP, SSP, FITB, FDC, GM, HIB, KEY, KRI, LSTR, MRCY, MTG, NCC, NOK, BTU, PII, RDC, LUV, SVU, TRAD, UIS, UNH, WGO, CNET, CREE, FCS, JNPR, LEXR, NFLX, NMSS, RMBS, SYK, SUNW. There are some well known companies in that list but we are lacking the big name market movers like IBM, MSFT, MMM, etc. The rest of this week has a lot of smoke but the next real wave of market movers does not come until next week. Intel may have relieved some pressure from the tech sector but the small fry above could sour that picture once again. The rebound on the Dow today lifted the index away from breakdown risk at the 10000 level but we are still a long way from breaking last weeks 10250 resistance. The 10100 level has been initial resistance for three days and based on the futures overnight we should retest that again at the open. If a higher move is successful that puts us right back into the middle of our congestion range while we wait for the earnings generals next week. The Nasdaq is already in the middle of the recent range at 1930 and has +40 points of upside potential before hitting the strong 1965 resistance level. The overnight Nasdaq futures are showing a +10 point gain and again that leaves us right in the middle of our recent range. The current setup suggests the rest of the week may not see a breakout in either direction. We could be left to suffer slow torture as dozens of small companies with mixed results push the markets around like a rowboat on a stormy lake. Lots of chop but no real direction. To make matters worse this is option expiration week and we have yet to see any real option related moves. With the Intel and Yahoo volatility added to Wednesday trading that expiration volatility could appear at the open. If there were any institutions betting on a major Intel miss then they could be squeezed at the open and that could give us the last major move for the week. Thursday and Friday are not expected to be directional. Bottom line for me is look both ways before stepping off the curb tomorrow but expect traffic to slow by the end of the week. Enter Passively, Exit Aggressively. Jim Brown Editor *************** FUTURES MARKETS *************** Futures wrap is not emailed due to the excessive number of charts. It may be read on the website at this address. http://www.OptionInvestor.com/indexes/futureswrap.asp ************************Advertisement************************* Live Securities Brokerage Service with Licensed Option Principals OCO Stop & Profit Orders OneStopOption All types of Spreads and Buy Writes 888-281-9569 Auto-Trade Market Monitor Signals Personal Service and Education **Services available for Foreign Traders including Canada** http://www.OneStopOption.com ************************************************************** ***************** INDEX TRADER WRAP ***************** Oil, earnings and expiration make for lively trade Intel (NASDAQ:INTC) $20.28 -1.6% jumped to $21.00 in Tuesday evening's extended session after the chip giant said it saw stability in inventory levels and sees some upside potential into the end of the year. Yahoo! Inc. (NASDAQ:YHOO) $34.23 +0.61% also saw gains in its extended session to $34.78 after reporting quarterly results that matched Wall Street's expectations. Is this the news tech bulls have been looking for? Is the news out of INTC and YHOO as bad as bears had hoped for? It is impossible to say if investors have been "too bearish" on tech, or "too optimistic," but I expect technology sector/index traders are going to be put to the test into this week's October expiration, and should institutions turn to try and save positions they may have written calls against earlier this month, then things should liven up into the weekend. Throw in today's reversal back lower in oil prices with weekly inventory data due out tomorrow morning, and Thursday/Friday option expiration, and traders are going to probably think they grabbed hold of a tiger's tail by Friday's close. Market Snapshot / Internals - 10/12/04 Close It was looking like bulls were headed for the slaughterhouse earlier this morning as oil traded new highs for a sixth-straight session, which seemed to provide the straw to break a bull's conviction. Oils rise has been "nothing new," but equity traders, as well as economists will contemplate just how high oil might rise before having a significantly negative impact on not only the U.S. economy, but the global economy as well. But as the session wore on, November Crude Oil futures (cl04x) found selling near their DAILY R1 and settled at the lows of the session, where weekly inventory figures will be released tomorrow morning. I think I can show how we may have also seen some option expiration come into play today, and should we see a continuation of this afternoons action, equity bulls might be in for a pleasant surprise. Let's quickly review a 10-minute interval chart of the November Crude Oil futures (cl04x), which trades down 17 cents at $52.34, as Wednesday's trade is already underway. As I looked at this chart, it also looked very similar to the Market Volatility Index (VIX.X) 15.05 +2.31%, which also closed back at its session low, but still above its 200-pd SMA and WEEKLY Pivot. The reason I mention oil and the VIX.X, is that options market makers, as well as institutions may have to make some quick decisions regarding any October expiration call/put hedges as we are just days away from October expiration. November Crude Oil futures (cl04x) - 10-minute intervals On Wednesday of last week, November Crude Oil futures (cl04z) were trading at their WEEKLY R2 of $51.59, yet the SPX was trading higher (than it is today 1,122) at 1,140 and the NASDAQ- 100 was trading higher (than it is today 1,1,435) at 1,470. When we review the Pivot Matrix later tonight, understand where oil IS, and where it WAS. Bottom line as I see it. An important near-term SUPPORT level for oil is probably $51.60-$52.00. Think of this as a PSYCHOLOGICAL level of BULLISH EQUITY PSYCHOLOGY RESISTANCE. In essence ... should we see a break much BELOW oil $52, market psychology could get a boost. I'll try and explain how this might play into option expiration. Imagine that you sold OUT-THE-MONEY calls (naked or covered) on October expiration last week, with the thought that rising oil above $52 would put a lid on equity gains. Heck, imagine that you sold IN-THE-MONEY calls at October "Max Pain" Theory levels. (bottom of 10/07/04 Index Trader Wrap). For some, you DON'T have to imagine doing any of the above. But many an options market maker may have, and oil, along with the VIX.X may be a trader's best friend into Friday's close. Now oil is acting a little "funny" into tomorrow's weekly inventory data, where the last two weeks we have seen modest builds, not draws in inventory. And while Intel's (INTC) quarterly earnings were nothing to write home about, the stock traded up in after-hours. U.S. Market Watch - 10/12/04 Close I've updated some of the longer-term 200-day SMAs (red) for the major indices, as well as some sectors we've reviewed in recent sessions. BIG Tech as depicted by the Morgan Stanley High Tech 35 (MSH.X) 450.74 -0.78% closed just about right on its 21-day SMA (pink) at 450.78. For you Pivot Matrix followers, the MHS.X WEEKLY Pivot from QCharts is 458, where not too unlike the Semiconductor Index (SOX.X), the MSH.X did see trade at its WEEKLY S1 (447.59) today. Pivot Matrix - Main points I would want to take note of. The SOX.X traded correlative MONTHLY Pivot/WEEKLY S1 support of 380 and held that level PRIOR to the Intel (INTC) data. Was there a pre-determined "bullish semiconductors" trade, or was it simply October "Max Pain" theory of 380 that got the attention. One could say both. Now.... NDX/QQQ session low (bold pink) came fractions from their respective WEEKLY S1s. OK, that makes some sense with the SOX.X trade. Session lows came close to their October "Max Pain" values of 1,400 and $35. Let's keep NDX 1,400 in mind with the thought of "where we've been" in just the past week of trade. Remember, the NDX was just recently trading ABOVE MONTHLY R1 (bold pink). See where I've marked the VIX.X and WEEKLY Pivot? The VIX.X traded as high as 15.69 today, but NOT UNLIKE OIL, closed at its lows of the session. Now, here's where I make a tie to the November Crude Oil futures (cl04x) chart. Here's the VIX.X using the same 10-minute intervals. I would make special note of the 200-pd SMA and its WEEKLY Pivot. Go back and take a quick refresher of the November Oil contract, just in case oil gets volatile tomorrow. Market Volatility Index (VIX.X) Chart - 10-minute intervals I'm showing the VIX.X chart with QCharts' DAILY Pivot levels overlaid. I have drawn the WEEKLY S1, WEEKLY Piv and WEEKLY R1 on the chart (solid pink). Note the rising 200-pd SMA near WEEKLY Pivot. One thought tomorrow is that a DECLINE IN OIL below its WEEKLY Pivot (say $52.00), could influence option trade into expiration. IF SO, then VIX.X could break back under WEEKLY Pivot, and depict put selling, and call buying. Why do I bring this up now you might ask? Late Thursday evening in the Market Monitor (October 8 MM archive at bottom of the archive) I made some notes of things in the NDX.X that I would monitor into this week's expiration. I showed the following chart of the e-mini NASDAQ-100 futures (nq04z), which an options market maker will use to hedge his/her option- related activity. In those notes, I discussed just "how" I came up with the following chart, but I want you to focus on the YELLOW zones. I think traders should also be able to use the Pivot Matrix Levels in the Pivot Matrix to also see similar levels, and how the VIX.X can play into things. Bottom line: As it stands tonight (08:17:41 PM EDT) it looks like NASDAQ could bid BIG tomorrow. Dec. e-mini NASDAQ-100 futures - Daily Intervals I think the NASDAQ-100 will rally from the opening tick to its WEEKLY R1, and then hang out there until the 10:30 AM EDT release of weekly crude oil inventories. From my prior market monitor notes mentioned earlier in the wrap, WKLY R1 is going to be a formidable challenge, where further clues to strength could come from the VIX.X, or the VXN.X. However, since we track just the VIX.X in the Pivot Matrix, I think it should suffice. Jeff Bailey **************** MARKET SENTIMENT **************** The Earnings Shuffle - J. Brown If you just look at the closing numbers then Tuesday turned out to be a non-event. However, you would be missing the excitement of the long slow climb back toward breakeven today. I'm being sarcastic. The major indices were just shy of break even and the climb was anything but exciting. Volume has been relatively low the past two sessions. Most investors were sitting on the sidelines waiting for this afternoon's earnings announcements. Throughout the session oil remained the focus, not earnings. November oil futures hit $54 a barrel before declining to $52.50. The pull back was probably the only thing giving stocks a boost today. Overall the markets were mixed with a negative bias. Internals showed 5 losers for every 4 winners on the NYSE and 17 decliners for every 12 winners on the NASDAQ. Down volume was almost twice as strong as up volume on the NYSE and about a third better on the NASDAQ. It was interesting to hear of SG Cowen's note to clients to avoid semiconductor stocks just hours before Intel reported earnings after the close. Intel missed the estimate by a penny but investors seem to be interpreting the call as bullish with higher revenues and lower inventories. Meanwhile YHOO's earnings were inline but sales were strong and the company gave a bullish bias towards the fourth quarter. Now the question is whether any of this positive spin will still be around tomorrow to influence technology shares on Wednesday. Tomorrow's big events are as follows. Wall Street will be interested to hear the latest crude oil and gasoline inventory numbers. Major earnings on Wednesday include AAPL, ASML, HDI, LRCX, NVLS, QLGC, and SNDK but none of them are real market movers. Wednesday night will be the third and final presidential debate but most pundits expect the two candidates to merely play to their base of core voters. I would keep an eye on some of the technology stocks. Looking at the sector specific indices (GHA.X, GSO.X, SOX.X, etc.) they've all painted a decent bounce from today's lows that could see some follow through tomorrow. Meanwhile the OIX oil index has turned south and broken through the bottom of its narrow rising channel. The OSX oil services index did the same yesterday and is seeing some additional profit taking today. Don't be surprised to see more selling tomorrow as traders rush to lock in gains in these overbought sectors. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10753 52-week Low : 9230 Current : 10077 Moving Averages: (Simple) 10-dma: 10138 50-dma: 10120 200-dma: 10294 S&P 500 ($SPX) 52-week High: 1163 52-week Low : 990 Current : 1121 Moving Averages: (Simple) 10-dma: 1127 50-dma: 1107 200-dma: 1119 Nasdaq-100 ($NDX) 52-week High: 1559 52-week Low : 1301 Current : 1435 Moving Averages: (Simple) 10-dma: 1443 50-dma: 1390 200-dma: 1441 ----------------------------------------------------------------- CBOE Market Volatility Index (VIX) = 15.05 +0.34 CBOE Mkt Volatility old VIX (VXO) = 15.17 +0.18 Nasdaq Volatility Index (VXN) = 20.93 +0.88 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 1.00 773,793 773,814 Equity Only 0.90 569,940 512,918 OEX 1.13 36,034 40,651 QQQ 2.65 50,568 133,835 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 65.7 - 0.25 Bear Correction NASDAQ-100 45.0 - 0 Bull Alert Dow Indust. 56.6 + 0 Bear Correction S&P 500 64.2 - 0 Bear Correction S&P 100 61.0 - 1 Bear Correction Bullish percent measures the number of stocks in an index currently trading on a buy signal on their point and figure chart. Readings above 70 are considered overbought, and readings below 30 are considered oversold. Bull Confirmed - Aggressively long Bull Alert - Cautiously long Bull Correction - Pause or pullback in upward trend Bear Alert - Take defensive action if long Bear Confirmed - High risk if long, good conditions for shorting Bear Correction - Pause or rebound in downtrend ----------------------------------------------------------------- 5-dma: 1.31 10-dma: 0.99 21-dma: 1.11 55-dma: 1.13 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 1281 1273 Decliners 1521 1717 New Highs 82 70 New Lows 27 34 Up Volume 526M 605M Down Vol. 1070M 856M Total Vol. 1613M 1503M 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 ************************Advertisement************************* Full Service Brokers Man Financial announces the formation of the OneStopOption Brokerage Group, addressing the demand for personalized, experienced service for both securities* and futures trading within the same firm. Licensed Option Principals Andrew Aronson and Alan Knuckman specialize in live assistance of stock*, option* and futures traders. 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The Option Investor Newsletter Tuesday 10-12-2004 Copyright 2004, All rights reserved. 2 of 3 Redistribution in any form strictly prohibited. In Section Two: Dropped Calls: None Dropped Puts: LLY Call Play Updates: CMI, GDW, GIVN, IR, KMRT, LMT, OSIP, PH New Calls Plays: None Put Play Updates: APOL, FLIR, IVGN, SEPR, WHR New Put Plays: None **************** PICKS WE DROPPED **************** When we drop a pick it doesn't mean we are recommending a sell on that play. Many dropped picks go on to be very profitable. We drop a pick because something happened to change its profile. News, price, direction, etc. We drop it because we don't want anyone else starting a new play at that time. We have hundreds of new readers with each issue who are unfamiliar with the previous history for that pick and we want them to look at any current pick as a valid play. CALLS: ***** None PUTS: ***** Eli Lilly & Co - LLY - close: 57.15 chg: -1.85 stop: 61.85 A new downgrade to "market perform" sent shares of LLY gapping lower on Tuesday. LLY ended the session down 3.13 percent on huge volume. Looking at the action on the intraday chart we suspect that LLY will trade lower tomorrow as well. However, our initial target was the $60 level and our secondary target was the $58.00-56.50 region. We've hit both and we're calling it quits. We'd rather exit now for a profit than see LLY bounce back to $60 again, which it could since shares are so oversold. Keep in mind that just because we're closing the play doesn't mean you have too. You choose whether to let LLY run or book profits now but we would tighten our stop loss. Picked on September 22 at $63.92 Change since picked: - 6.77 Earnings Date 07/22/04 (confirmed) Average Daily Volume = 3.1 million Chart = ************************Advertisement************************* Full Service Brokers Man Financial announces the formation of the OneStopOption Brokerage Group, addressing the demand for personalized, experienced service for both securities* and futures trading within the same firm. Licensed Option Principals Andrew Aronson and Alan Knuckman specialize in live assistance of stock*, option* and futures traders. The combination of the proven Man Financial global presence and the convenience of one group for all trading needs provide customers with the tools needed for success. Live Broker and Online Trading Available 888-281-9569 http://www.OneStopOption.com ************************************************************** ******************** PLAY UPDATES - CALLS ******************** Cummins Inc - CMI - close: 74.10 change: +0.10 stop: 69.99 We're not making a lot of progress in CMI but then shares aren't slipping much either. Buyers seem to be defending CMI near the $73 level so we're not complaining. Plus, volume has been pretty light on the consolidation so that's a positive development. We have already achieved our initial target a few days ago and we're not suggesting new plays but more aggressive players looking for new positions might want to consider a move over $74.50 or $75 as entry point. In the news CMI announced that its BoD had declared a quarterly cash dividend of 30 cents per share payable on December 1st, 2004. Picked on September 19 at $70.99 Change since picked: + 3.11 Earnings Date 10/20/04 (confirmed) Average Daily Volume = 724 thousand Chart = --- Golden West Financial - GDW - cls: 114.99 chg: -0.01 stop: 111.65*new* Oh we're so close! Yesterday GDW hit a high of $115.39 and today its high was $115.35. Our target range/exit point has been the $115.50-116.00 range given current overhead resistance at $116. Conservative traders may want to consider just exiting now. We're going to raise our stop loss to $111.65. We are not suggesting new bullish positions this close to our target. Picked on September 30 at $110.95 Change since picked: + 4.04 Earnings Date 10/21/04 (confirmed) Average Daily Volume = 512 thousand Chart = --- Given Imaging - GIVN - close: 44.07 change: +1.87 stop: 39.90*new* Ah! Now we're seeing some progress. GIVN has spent the last few days consolidating sideways after the bullish breakout over the $40.00 level. Today's 4.4 percent rally is very encouraging because it was fueled by more than three times the average volume. Remember that our profit target/exit range is the $47.50-50.00 region but we want to see GIVN get there before its late October earnings report. We are raising our stop loss to $39.90. If you're wondering there was no discernable news to account for the spike higher today. Picked on October 04 at $41.26 Change since picked: + 2.81 Earnings Date 10/27/04 (unconfirmed) Average Daily Volume = 247 thousand Chart = --- Ingersoll-Rand - IR - close: 68.89 change: -0.35 stop: 67.49 Decisions, decisions. We immediately turned cautious on IR when the bullish breakout over $70.00 reversed on us. But we kept the play open because IR had minor support at $68 and felt shares could bounce. Thus far it looks like that today's dip to $68.22 wasn't low enough and IR could actually test the $68 level soon. So...do we decide to exit now and try to keep our losses to a minimum or do we stick it out and see if IR bounces from $68? At the moment we're going to stick it out but we're not suggesting any new bullish plays until IR trades back above $70.00 or $70.50. Picked on October 06 at $70.19 Change since picked: - 1.30 Earnings Date 10/21/04 (confirmed) Average Daily Volume = 1.2 million Chart = --- Kmart Holdings - KMRT - close: 86.98 chg: -1.17 stop: 84.99 KMRT, like a number of stocks in the market, is just marking time. Shares are one-cent worse off today than they were on Friday. What are investors waiting for? That's a good question. We're willing to hold on to KMRT if it keeps building this trend of higher lows but if shares trade under $85.85 again we may get worried. In the news today KMRT did some debt shuffling to the tune of $200 million and in the end reduced its expenses. Picked on October 04 at $90.53 Change since picked: - 3.55 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 This is it! LMT is at a pivotal level. The stock should bounce from the $55.00 level. If not we're going to consider an early exit. Meanwhile in the news LMT has asked the Air Force to review four deals that LMT lost to rival Boeing (BA), including a $4 billion deal to upgrade the electronics in the military's aging C-130 cargo plane fleet. Stay on top of your stop losses if LMT trades near $55.00. More conservative types may want to wait for any rebound to clear the $56 mark before opening new positions. 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: 62.99 change: +0.04 stop: 59.99 OSIP is still trapped in no man's land. The stock has bounced higher this week but the rally failed near $64.50 near OSIP's simple 100-dma. We are encouraged by the minor trend of higher lows there seemed to be some negative comments circling over OSIP's earnings estimates after the closing bell. Look for OSIP to bounce from the $62.00 level, otherwise wait for OSIP to trade over $64.58 before considering new positions. Picked on October 03 at $63.45 Change since picked: - 0.46 Earnings Date 08/10/04 (confirmed) Average Daily Volume = 1.6 million Chart = --- Parker Hannifin - PH - close: 62.31 chg: +0.26 stop: 59.49 News out on Monday that PH was buying refrigeration/AC parts maker Sporlan Valve Co. was not enough to spark any sort of movement in shares of PH. The stock appears to be consolidating the breakout over $60.00. We'd still buy a bounce from $60 if shares dipped but now we're looking for a new move higher over $63.00. Picked on October 06 at $62.78 Change since picked: - 0.47 Earnings Date 10/19/04 (confirmed) Average Daily Volume = 719 thousand Chart = ************** NEW CALL PLAYS ************** None ************************Advertisement************************* Live Securities Brokerage Service with Licensed Option Principals OCO Stop & Profit Orders OneStopOption All types of Spreads and Buy Writes 888-281-9569 Auto-Trade Market Monitor Signals Personal Service and Education **Services available for Foreign Traders including Canada** http://www.OneStopOption.com ************************************************************** ******************* PLAY UPDATES - PUTS ******************* Apollo Group - APOL - close: 68.06 chg: -1.22 stop: 73.01*new* So far so good. APOL continues to sink after breaking down under its October lows and round-number, psychological support at $70.00. We're also encouraged by the stronger than average volume on the recent declines suggesting some real selling pressure. It's not too late to consider positions but patient traders might want to wait for another bounce/failed rally back to $70 as an entry point. We are going to lower our stop to $73.01. Picked on October 10 at $69.81 Change since picked: - 1.75 Earnings Date 10/05/04 (confirmed) Average Daily Volume = 3.3 million Chart = --- FLIR Systems - FLIR - close: 54.10 chg: -1.62 stop: 58.01*new* Good news! FLIR continues to show weakness after failing near the $56.00 mark (as expected). Since we've already hit our initial target we still suggest short-term traders consider exiting now for a profit. More aggressive types can keep the play open and target a drop toward $52-50. We are going to EXIT if FLIR hits $51.50. Meanwhile we are lowering the stop loss to $58.01. Picked on September 29 at $59.35 Change since picked: - 5.25 Earnings Date 10/20/04 (confirmed) Average Daily Volume = 577 thousand Chart = --- Invitrogen - IVGN - close: 53.54 chg: -0.10 stop: 56.25 Hmm... we're not seeing a lot of progress in our IVGN put play. The stock is struggling with minor resistance at $54 but it's not very convincing. We're going to give IVGN a couple of more days. If we don't see some downward momentum we may exit early. Picked on October 07 at $53.83 Change since picked: - 0.29 Earnings Date 10/28/04 (confirmed) Average Daily Volume = 1.5 million Chart = --- Sepracor Inc - SEPR - close: 47.26 chg: -0.55 stop: 50.01 SEPR continues to slowly fade under a trend of lower highs. This type of pattern usually produces a more significant breakdown. We're still targeting the 200-dma's near $43.50. No change in plan although more conservative traders may want to consider a tighter stop loss. Picked on September 22 at $48.94 Change since picked: - 1.68 Earnings Date 07/13/04 (confirmed) Average Daily Volume = 1.8 million Chart = --- Whirlpool - WHR - close: 58.79 change: +0.29 stop: 60.55 WHR appears to be digesting the recent declines with a bounce back toward overhead resistance. This may be another entry point for bearish positions. Watch to see if the $59.00 mark holds or will WHR retest the $60 level before turning lower again. No change in our strategy or stop loss. Picked on October 07 at $59.03 Change since picked: - 0.24 Earnings Date 10/20/04 (confirmed) Average Daily Volume = 854 thousand Chart = ************* NEW PUT PLAYS ************* None ************************Advertisement************************* No time to follow the Market Monitor? Tired of missing good Trades because you stepped away from your computer? OneStopOption Group can follow the Market Monitor for you. You choose the number of contracts, we take care of the rest!! 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The Option Investor Newsletter Tuesday 10-12-2004 Copyright 2004, All rights reserved. 3 of 3 Redistribution in any form strictly prohibited. In Section Three: Watch List: Defense to Communication stocks and more! Spreads & Straddles: Stocks Slump Amid Concerns Over Rising Energy Costs Premium Selling Plays: Naked Puts & Calls ********** WATCH LIST ********** Defense to Communication stocks 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. ___________________________________________________________________ General Dynamic - GD - close: 101.40 change: +1.33 WHAT TO WATCH: Defense stocks are a mixed bunch these days but overall the sector has been pretty strong. GD is one of the bellwethers in the group and shares look ready to trade higher. Candlestick traders will note the current three-day pattern looks like a bullish reversal. Plus, we're encouraged with the bounce back over the $100-101 level. Currently GD has a very bullish quadruple-top breakout buy signal on its P&F chart with a $119 target. Unfortunately we would not hold over the October 20th earnings report. Short-term traders may want to use today's rebound as an entry point. Chart= --- QUALCOMM - QCOM - close: 41.54 change: +0.33 WHAT TO WATCH: QCOM is holding up pretty well with the sideways consolidation for most of the month of October. We would watch this relative strength leader for a dip and bounce from $40.00 or a new high over $42.00. Either could be used as a bullish entry point for new plays. The P&F chart is very bullish with a $66 target. Meanwhile earnings are not expected until the first week of November. Chart= --- Research In Motion - RIMM - close: 76.97 change: +0.83 WHAT TO WATCH: It may look like a sideways consolidation in RIMM over the last four weeks but we see a slight uptrend of higher lows. Oscillators are mixed but the P&F chart is bullish with an $87 target. Plus, earnings were just two weeks ago and expectations are positive for the fourth quarter. Aggressive traders may want to take another look at today's bounce from $75. Otherwise we'd watch for a new high over $80. Chart= --- Bear Stearns - BSC - close: 92.88 change: +0.88 WHAT TO WATCH: The XBD broker-dealer index has not been the best performer lately and is still trading under major resistance. Yet you can't deny that BSC has been out performing its peers. The stock has spent the last several days consolidating gains from a breakout to new highs. Now the stock is bouncing from the $91.50 level and today's session painted a bullish engulfing candlestick. This looks like an entry point to go long. Chart= ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- MEDI $26.73 +0.51 - MEDI is seeing some follow through on yesterday's breakout over the top of its trading range. HSIC $59.68 -0.60 - The tug-of-war continues with the breakdown under $60 but the bounce from $58. ************************Advertisement************************* Live Securities Brokerage Service with Licensed Option Principals OCO Stop & Profit Orders OneStopOption All types of Spreads and Buy Writes 888-281-9569 Auto-Trade Market Monitor Signals Personal Service and Education **Services available for Foreign Traders including Canada** http://www.OneStopOption.com ************************************************************** ******************* SPREADS & STRADDLES ******************* Stocks Slump Amid Concerns Over Rising Energy Costs By Ray Cummins The major equity averages drifted lower Tuesday after crude oil set another record high during the session. Crude futures hit $54 per barrel for the first time in history on renewed supply concerns, however the price of "black gold" eventually retreated as traders were reluctant to continue buying the commodity ahead of the upcoming inventory reports. The Dow Jones Industrial Average finished 4 points lower at 10,077, with only Johnson & Johnson (NYSE:JNJ), American International Group (NYSE:AIG), Merck (NYSE:MRK) and Verizon (NYSE:VZ) enjoying gains. The NASDAQ fell 3 points to 1,925 amid ongoing selling pressure in the semiconductor sector, which slumped on a cautious outlook from consumer electronics stalwart Philips Electronics (NYSE:PHG). The Standard & Poor's 500 Index slipped 2 points to 1,121, with gold and automobile shares among the notable losers. Declining issues paced advancers 17 to 15 on the New York Stock Exchange, where volume came to 1.32 billion shares. Losing stocks ousted winning issues by nearly 3 to 2 on the technology exchange, with volume near 1.48 billion shares. Treasury prices rose as equity values declined. The 10-year note ended up 8/32, while its yield fell to 4.10%. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SUMMARY OF CURRENT POSITIONS - AS OF 10/10/04 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 CLOSED 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 Special Tuesday Note: As previously mentioned, the bullish spread on Cabot Micro (NASDAQ:CCMP) was an "early-exit" candidate on any further downside activity and Tuesday's slump left no doubt about the status of the position. 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 CLOSED 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 Special Tuesday Note: The rally in Netease.com (NASDAQ:NTES) has forced an early departure from the position for a small loss. Cerner (NASDAQ:CERN) is an "early-exit" candidate on any further upside activity. Although currently profitable, the position in Lexmark (NYSE:LXK) has previously been closed to limit potential losses. 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ GIVN - Given Imaging $44.07 *** New 2004 High! *** Given Imaging (NASDAQ:GIVN) is an Israeli company established to develop, produce and market a platform technology for diagnostics and therapy of the gastrointestinal (GI) tract. The company was founded to commercialize a minimally invasive, disposable imaging capsule for diagnosing small intestine disorders and diseases. Given has submitted more than 20 patents worldwide for the tech- nologies employed in the Given Diagnostic Imaging System, and for new capsules to be developed using the basic technological plat- form. Future generations of the Given Diagnostic Imaging System will be developed to capture images of the rest of the upper GI tract and the large intestine. GIVN - Given Imaging $44.07 PLAY (less conservative - bullish/credit spread): BUY PUT NOV-35.00 QPG-WG OI=4508 ASK=$0.40 SELL PUT NOV-40.00 QPG-WH OI=542 BID=$1.05 INITIAL NET-CREDIT TARGET=$0.70-$0.75 POTENTIAL PROFIT(max)=16% B/E=$39.30 __________________________________________________________________ INSP - InfoSpace $47.25 *** Earnings Speculation! *** InfoSpace (NASDAQ:INSP) develops and delivers a wireless and Internet platform of software and application services to a range of customers that span each of its wireline, merchant and wireless business units. Many of the company's products and application services are offered to its customers, which, in turn, offer these products and application services to their customers as their own solutions. InfoSpace provides its services across multiple platforms, including personal computers and non-PC devices. Earnings are due on 10/28/04. INSP - InfoSpace $47.25 PLAY (less conservative - bullish/credit spread): BUY PUT NOV-35.00 IOU-WG OI=187 ASK=$0.55 SELL PUT NOV-40.00 IOU-WH OI=460 BID=$1.40 INITIAL NET-CREDIT TARGET=$0.80-$0.95 POTENTIAL PROFIT(max)=19% B/E=$39.20 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BIIB - Biogen Idec $59.82 *** In A Trading Range? *** Biogen Idec (NASDAQ:BIIB) develops, makes and commercializes a range of novel therapies. The company currently has four major commercial products: Avonex, for the treatment of relapsing multiple sclerosis, Rituxan and Zevalin, both of which treat certain B-cell non-Hodgkin's lymphomas, also referred to as B-cell NHLs, and Amevive, for the treatment of adult patients with moderate-to-severe chronic plaque psoriasis who are also andidates for systemic therapy or phototherapy. The company receives revenues from royalties on sales by its licensees of a number of products covered under patents that it controls including sales of Rituxan outside the United States. BIIB - Biogen Idec $59.82 PLAY (conservative - bearish/credit spread): BUY CALL NOV-70.00 IHD-KN OI=337 ASK=$0.30 SELL CALL NOV-65.00 IHD-KM OI=4188 BID=$0.90 INITIAL NET-CREDIT TARGET=$0.65-$0.75 POTENTIAL PROFIT(max)=15% B/E=$65.65 __________________________________________________________________ MCHP - Microchip Technology $27.56 *** Sector Slump! *** Microchip Technology (NASDAQ:MCHP) develops and manufactures specialized semiconductor products used by its customers for embedded control applications. The company's product portfolio consists of the PIC micro field-reprogrammable (Flash) reduced instruction set computer microcontrollers that serve embedded control applications, along with linear and mixed-signal, power management and thermal management devices. The firm also offers microperipheral products, including interface devices, serial electrically erasable programmable read only memory and its application-specific standard products. MCHP - Microchip Technology $27.56 PLAY (conservative - bearish/credit spread): BUY CALL NOV-35.00 QMT-KG OI=43 ASK=$0.15 SELL CALL NOV-30.00 QMT-KF OI=1207 BID=$0.75 INITIAL NET-CREDIT TARGET=$0.65-$0.70 POTENTIAL PROFIT(max)=15% B/E=$30.65 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. _________________________________________________________________ RMBS - Rambus $15.23 *** Cheap Speculation! *** Rambus (NASDAQ:RMBS) creates a range of chip-to-chip interface technologies that enhance the performance and cost-effectiveness of its customers' semiconductor and system products. The firm's interface solutions can be grouped into two major categories, memory interfaces and logic interfaces. Their Memory interface solutions provide an interface between memory chips and logic chips. Logic interface solutions provide an interface between two logic chips. Both of these advanced chip-to-chip interface solutions increase the data transfer rate between semiconductor chips, improving performance and reducing systems costs. The company's earnings report is due on 10/14/04. RMBS - Rambus $15.23 PLAY (very speculative - neutral/debit straddle): BUY CALL OCT-15.00 BNQ-JC OI=5130 ASK=$0.75 BUY PUT OCT-15.00 BNQ-VC OI=4493 ASK=$0.45 INITIAL NET-DEBIT TARGET=$1.10-$1.15 INITIAL TARGET PROFIT=$0.35-$0.60 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEE DISCLAIMER - SECTION 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ***************************************** PREMIUM-SELLING PLAYS: NAKED PUTS & CALLS ***************************************** All of these issues have robust option premiums and favorable technical indications. However, current news and events, as well as market sentiment, will have an effect on these stocks so review each position thoroughly and make your own decision about its outcome. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SUMMARY OF CURRENT POSITIONS - AS OF 10/10/04 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 ENER 16.13 NOV 15.00 EQI-WC 0.60 10 14.40 38 3.3% 8.1% DRIV 30.02 NOV 25.00 DQI-WE 0.65 7 24.35 38 2.1% 6.8% WEBX 24.72 NOV 20.00 UWB-WD 0.40 5124 19.60 38 1.6% 5.8% SNDA 32.81 NOV 25.00 QKU-WE 0.50 201 24.50 38 1.6% 5.7% CCBI 23.97 NOV 22.50 FVU-WX 0.60 28 21.90 38 2.2% 5.5% CNCT 26.77 NOV 22.50 UXU-WX 0.40 40 22.10 38 1.4% 4.7% PLMD 32.73 NOV 30.00 PM-WF 0.45 23 29.55 38 1.2% 3.3% 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. _________________________________________________________________ ENER - Energy Conversion Devices $16.13 *** Oil Alternative *** Energy Conversion Devices (NASDAQ:ENER) is a technology, product development and manufacturing company engaged in the invention, engineering, development and commercialization of new materials, products and production technology in the fields of alternative energy technology and information technology. The company has developed materials that permit them to design and commercialize products, such as thin-film solar cell (photovoltaic) products, nickel metal hydride (NiMH) batteries, and phase-change memory devices. ENER - Energy Conversion Devices $16.13 NOV 15.00 EQI-WC LB=0.60 OI=10 CB=14.40 DE=38 TY=3.3% MY=8.1% _________________________________________________________________ DRIV - Digital River $30.02 *** Next Leg Up? *** Digital River (NASDAQ:DRIV) is a provider of electronic commerce outsourcing solutions. As an application service provider, the company enables its clients to access its proprietary electronic commerce system over the Internet. The firm's hi-tech platform allows it to provide a suite of electronic commerce services, including Web commerce development and hosting, transaction processing, fraud screening, digital delivery, integration to physical fulfillment and customer service. Digital River also provides analytical marketing and merchandising services to assist clients in increasing Web page view traffic to, and sales through, their Web commerce systems. DRIV - Digital River $30.02 NOV 25.00 DQI-WE LB=0.65 OI=7 CB=24.35 DE=38 TY=2.1% MY=6.8% _________________________________________________________________ WEBX - WebEx Communications $24.72 *** Earnings Speculation! *** WebEx Communications (NASDAQ:WEBX) develops and sells services that allow end users to conduct meetings and share software applications, documents, presentations and other content on the Internet using a web browser. Integrated telephony and web-based audio and video services are also available using standard devices such as telephones, computer Web cameras and microphones. The company's communications services provide a range of features that build on the real-time functionality and capabilities of their unique WebEx MediaTone Network. WEBX - WebEx Communications $24.72 NOV 20.00 UWB-WD LB=0.40 OI=5124 CB=19.60 DE=38 TY=1.6% MY=5.8% _________________________________________________________________ SNDA - Shanda Interactive Ent. $32.81 *** 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. $32.81 NOV 25.00 QKU-WE LB=0.50 OI=201 CB=24.50 DE=38 TY=1.6% MY=5.7% _________________________________________________________________ CCBI - Commercial Capital Bancorp $23.97 *** Own This One! *** Commercial Capital Bancorp (NASDAQ:CCBI) is a diversified financial services holding company that provides a variety of lending and deposit products and services to middle-market commercial businesses, income property real estate investors, related real estate service companies and professionals. Commercial Capital conducts its operations through Commercial Capital Bank, FSB (the Bank), a federally chartered savings bank, Commercial Capital Mortgage, a commercial mortgage banking company and ComCap Financial Services, a registered broker dealer. CCBI - Commercial Capital Bancorp $23.97 NOV 22.50 FVU-WX LB=0.60 OI=28 CB=21.90 DE=38 TY=2.2% MY=5.5% _________________________________________________________________ CNCT - Connetics $26.77 *** In A Trading Range? *** Connetics (NASDAQ:CNCT) is a specialty pharmaceutical company focusing on the treatment of dermatological conditions. It markets two pharmaceutical products: OLUX Foam and Luxíq Foam. The company has a binding purchase agreement with Roche to acquire exclusive United States rights to Soriatane-brand acitretin, an approved oral medicine for the treatment of severe psoriasis in adults. Soriatane, a once-a-day oral retinoid approved in the United States, is used for the treatment of severe psoriasis in adults. CNCT - Connetics $26.77 NOV 22.50 UXU-WX LB=0.40 OI=40 CB=22.10 DE=38 TY=1.4% MY=4.7% _________________________________________________________________ PLMD - PolyMedica $32.73 *** Target-Shoot An Entry! *** PolyMedica (NASDAQ:PLMD) is engaged in the business of buying and growing medical product and pharmaceutical businesses. The company, through its segments; Liberty Diabetes, is a provider of diabetes testing supplies to Medicare-eligible seniors, and also provides a simple and reliable way for its customers to obtain their supplies and medications; Liberty Respiratory segment, provides direct-to-consumer respiratory medications to Medicare-eligible seniors; and through its Pharmaceuticals segment, sells prescription medications directly to its Liberty Diabetes and Liberty Respiratory customers, and also makes and sells to distributors prescription and over-the-counter urology products. PLMD - PolyMedica $32.73 NOV 30.00 PM-WF LB=0.45 OI=23 CB=29.55 DE=38 TY=1.2% MY=3.3% 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ IVX - IVAX Corporation $18.26 *** Drug Speculation! *** IVAX Corporation (NYSE:IVX) is a multinational company engaged in the research, development, manufacture and marketing of pharmaceutical products. The company manufactures and/or sells several brand name pharmaceutical products and a variety of brand equivalent and over-the-counter pharmaceutical products, primarily in the United States, Europe and Latin America. It also has subsidiaries throughout the world that specialize in the development, manufacture and marketing of respiratory drugs, primarily for asthma, delivered by metered-dose and dry-powder inhalers. IVX - IVAX Corporation $18.26 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL NOV 20 IVX-KD 7366 0.75 20.75 9.5% 3.6% _________________________________________________________________ PLMO - palmOne $29.82 *** Pure Premium-Selling! *** palmOne (NASDAQ:PLMO) develops, builds and sells Palm-branded, hand-held devices, accessories and the Palm operating system (Palm OS). The company was historically organized into two operating segments: the Solutions Group and PalmSource. The Solutions Group develops and markets hand-held devices and accessories to provide the user with a simple, elegant and useful productivity tool. PalmSource developed and licensed the Palm OS and related software, which is referred to as the Palm platform. The Palm platform is the foundation for Palm devices, as well as for devices manufactured by third-party licensees. PLMO - palmOne $29.82 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 UPY-KH 3865 0.45 40.45 5.6% 1.1% _________________________________________________________________ SLXP - Salix Pharmaceuticals $18.03 ** Pure Premium-Selling! ** Salix Pharmaceuticals (NASDAQ:SLXP) is a specialty pharmaceutical company engaged in acquiring, developing and commercializing prescription drugs used in the treatment of a wide variety of gastrointestinal diseases that affect the digestive tract. The company's four products are balsalazide disodium, which it sells in the United States under the brand name Colazal; three dosage strengths of azathioprine, a FDA-approved product licensed by the company under the brand name Azasan; rifaximin, for the treatment of travelers diarrhea, and a granulated formulation of mesalamine, to expand the range of treatment options for ulcerative colitis. SLXP - Salix Pharmaceuticals $18.03 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL NOV 20 PQN-KD 466 0.65 20.65 8.8% 3.1% ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEE DISCLAIMER - SECTION 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ************************Advertisement************************* Full Service Brokers Man Financial announces the formation of the OneStopOption Brokerage Group, addressing the demand for personalized, experienced service for both securities* and futures trading within the same firm. Licensed Option Principals Andrew Aronson and Alan Knuckman specialize in live assistance of stock*, option* and futures traders. The combination of the proven Man Financial global presence and the convenience of one group for all trading needs provide customers with the tools needed for success. 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