The Option Investor Newsletter Tuesday 11-09-2004 Copyright 2004, All rights reserved. 1 of 3 Redistribution in any form strictly prohibited. In Section One: Wrap: Tension Mounting Futures Markets: See Note Index Trader Wrap: NASDAQ-100 Tracker gets new address December 1 Market Sentiment: Fed Waiting Posted online for subscribers at http://www.OptionInvestor.com ************************************************************ MARKET WRAP (view in courier font for table alignment) ************************************************************ 11-09-2004 High Low Volume Adv/Dcl DJIA 10386.37 - 4.90 10427.81 10368.59 1.83 bln 1812/1409 NASDAQ 2043.33 + 4.10 2049.77 2034.41 1.76 bln 1740/1372 S&P 100 556.90 - 0.40 559.45 556.06 Totals 3552/2781 S&P 500 1164.08 - 0.81 1168.97 1162.48 SOX 415.80 - 2.80 419.52 413.79 RUS 2000 606.64 + 4.56 607.00 601.27 DJ TRANS 3587.71 + 5.70 3599.37 3576.59 VIX 13.61 - 0.19 13.96 12.89 VXO (VIX-O)13.64 - 0.28 14.18 13.49 VXN 19.19 - 0.03 19.50 18.84 Total Volume 3,895M Total UpVol 1,854M Total DnVol 1,958M Total Adv 4023 Total Dcl 3189 52wk Highs 449 52wk Lows 63 TRIN 1.10 NAZTRIN 1.46 PUT/CALL 0.68 ************************************************************ Tension Mounting by Jim Brown After three days of trading at the highs but seeing no forward motion there are quite a few traders beginning to worry that the bounce is failing. The Dow continues to spike over 10400 but cannot seem to hold the high ground. The SPX has posted three lower highs on its attempts to break 1168. Is this a breakout waiting to happen or a breakdown in progress? Dow Chart Nasdaq Chart Economically there were no reports to add to the high excitement from Friday's Jobs Report. The Job Opening and Labor Turnover Survey (JOLTS) showed no real change in hiring. However this report covered the September time frame and was trumped by the later period Jobs Report for October. However, because this jobs data comes from a different survey the lack of confirmation from JOLTS does cause some concern. This less positive picture showed an increase in separations that were not matched by increased hiring trends. The Richmond Fed Manufacturing Survey showed a slowing of manufacturing in the region to the slowest pace since July. At 14 the headline number still indicates growth but well below the 22 posted in September. The order backlog was -5 and only a minuscule improvement from the -6 in September. New orders at +3 fell from +8 to move very close to negative as well. Shipments fell to a three month low at 14 from a six month high of 22 in September. However, the six month outlook jumped to 35 from 21. Amazing that all the production indicators can fall substantially but the outlook was raised. There was no hiring in the region and the avg workweek fell. Wholesale Trade rose less than expected at +0.5% and well below the +0.9% from last month. Inventories also rose +0.5% and less than the +1.1% in August. This was the first time in five months that inventory expansion failed to keep pace with sales. Inventory to sales remains at 1.15 as it has for the last four months. The inventory component fell but is not expected to be a drag on GDP until 2005. There seems to be a common theme in the various reports that 2005 could be an economic challenge. While the economics were mixed to weak most investors were not focused on the boring reports. If anything they were focused on the FOMC meeting tomorrow and the lack of a breakout after such a great post election start. There is a 100% chance of a 25-point rate hike that will bump the rate to 2.0%. The outlook statement is more of a key than the rate hike unless they bump it up +50 points. Because of the strong jobs report there is some concern the Fed could raise the stakes with their statement or even vote for a 50 point hike tomorrow. Almost nobody expects more than 25 points but there is always the fear. The next meeting is on Dec-14th and there is an 81% chance of another hike to 2.25% at that meeting. There are two meetings in Q1-2005, Feb-1st and Mar-22nd. There is nearly a 100% chance of a hike in February and a 25% chance of a hike in March. If jobs remain strong that could put us back to 2.75% in March. Almost everyone expects the hikes to quit in 2.50-3.00% range and all eyes will be on the statement to see if this expectation has changed. The fear of the Fed in light of the blowout jobs report has put the bulls back in the corral. The major indexes all screeched to a stop at critical resistance and have failed to continue the monster bounce. In all fairness they have failed to sell off as well but worry is beginning to weigh on the indexes. SPX Chart – Daily SPX Chart – Weekly The most visible is the SPX which finally broke the 50% bear market retracement level at 1161. Unfortunately it came to a dead stop immediately after it crossed that level. Beginning on Friday the SPX has now tried three times to break through 1170 to no avail. There have been two lower highs below 1170 but 1162.50 has held as solid support. Considering the very strong gains and the critical levels reached this is a very good sign. 1172-1176 was the resistance high for all of 2002 and this is very strong resistance. When taken together the 1160-1175 range is the highly visible line in the sand that must be crossed for the rally to continue and both sides know it. This would be the key level to predict a failure if a failure was in the cards. The Dow is facing a much smaller battle at 10400-10420 and compared to the last two months of Dow declines the Dow is doing a very good job of holding the high ground. The Dow has run nearly +700 points since the 9708 lows back on Oct-25th. +700 points in nine trading days is a very strong run that leads to very overbought conditions. Those conditions appear to have led to a consolidation in place instead of a profit taking dip. The Nasdaq is facing a task similar to the Dow at 2050. This is the resistance high from late April and June and while decent resistance it is not as critical as the SPX is currently facing. The Nasdaq is actually showing more of an uptrend over the last three days than the Dow/SPX. The Nasdaq is not being supported by the SOX with that index hovering in a flat line around 415 and not showing any indications of moving higher. No uptrend help there but 410 is strong support that should keep the Nasdaq from imploding. SOX Chart Russell Chart The Nasdaq is gaining significant uptrend support from the Russell. The Russell closed at an all time high today at 606.64. This is above the 2000 bull market highs and should be a clear sign the rally is still alive. This high was only a quarter of a point over the prior record so it is not a resounding breakout. Still it is a clear sign mutual funds are moving into the market while we wait on the Fed. TrimTabs.com said today that $2.4 billion came into U.S. equity funds for the first week in November. $1B flowed into global funds and a whopping $3.6 billion was added to exchange traded funds. The +$7B in new cash helped produce our post election rally and we are still seeing new cash flows hitting the small caps. At least it was today. After the bell Cisco reported earnings inline with estimates at +0.21 cents and said inventory problems were beginning to ease. This should have been good news but Cisco's outlook was less than exciting and revenue was slightly lighter than expected. Orders trailed shipments and Cisco said competition was growing. They said revenues would increase only +1% to +3% over last quarter but that was below current analyst estimates. Cisco only managed to report inline with estimates due to better than expected cost savings and continuing stock buybacks. Cisco said there was a growing impact by low cost Asian competitors. Despite the cautious comments and outlook Cisco still generated $1.5B in cash for the quarter and raised their cash account to $17.7 billion. That is nearly -$2 billion lower than last quarter due to the aggressive share buy back program. Margins are continuing to fall as a result of more sales in the lower priced products. The company cut orders to suppliers for Q4 by -$106 million because of their reduced outlook. Cisco also announced they were increasing their current share buyback program by $10 billion. They must really expect Q4 to be a strong challenge and need to drop the outstanding shares by a bunch. Most analysts and probably most investors would rather see them spend $10 billion on acquisitions that would grow them out of their rut. The current earnings cycle is nearly over with Dell and HPQ the only two major techs left to report. Dell reports on Thursday and HPQ reports next Tuesday. The running total for the 90% of the S&P that have reported is +15.1% earnings growth and +11.9% revenue growth. It the remaining 10% of the S&P reports inline the total for the quarter will be +16.7% earnings growth. Crude Oil Chart The Cisco earnings tonight tanked the futures but the dip was brief. They rebounded after Cisco said revenue could rise slightly and it appeared to be a case of expectations being worse than even the lukewarm results. This suggests we could have yet another mixed session at the open as we await the Fed statement at 2:15. Oil prices have imploded with a $47.17 print overnight and a nearly -$2 drop intraday. The falling oil prices should be helping equities but stocks could not break out of their range today. With Cisco behind us and the Fed almost a footnote we could see the bids begin to pick up again. I remain bullish on the market but fully aware we could see profit taking at any time. However, the last two days would have been prime opportunities for sellers to appear and they were conspicuously absent. I still advocate buying the dips and should a breakout over SPX 1170 appear I would not hesitate to go long there as well. The official target for the year-end is SPX 1250 but what happens if we get there early is still a guess. Mutual funds are very worried but it is not about the weak dollar, oil prices, trade deficit or rising interest rates. They are worried they will miss the rally and get beaten by somebody else in the great returns race. We are facing true performance anxiety and I believe that will provide the eventual end of year rally. I believe it is a breakout waiting to happen and funds will not allow us to breakdown. So far this year most funds are just barely positive and they need to collectively juice the tape to produce gains everyone can feel good about advertising. 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************************* SEE WARREN BUFFETT'S LATEST DISCLOSED STOCK PORTFOLIO Now you can follow the investment master's actual moves. To get a FREE report that details Warren Buffett's strategy and reveals his most recently disclosed, ACTUAL stock picks, Click HERE! http://www.bigmoneywatch.com/default.asp?aid=626 ************************************************************** ***************** INDEX TRADER WRAP ***************** NASDAQ-100 Tracker gets new address December 1 The AMEX-listed NASDAQ-100 Tracker (AMEX:QQQ) $37.92 -0.21% will get a change of address beginning December 1, 2004, when the "triple-Qs" move their official listing to the NASDAQ. John Jacobs, CEO of NASDAQ Financial Product Services said the move is a win for NASDAQ because "we list all the companies in the NASDAQ-100, so the ETF will trade side-by-side with its component stocks." The AMEX will continue to trade the QQQ on the basis of unlisted trading privileges or UTP. The move will not only boost the NASDAQ's trading revenue, but also the AMEX's bottom line because it will net the exchange additional revenue in market data fees. Since its inception, the QQQ's daily trade volume has increased to 100 million per day from just 6.9 million in 1999 and currently represents roughly $22.1 billion in assets. The Qs are the second-largest ETF behind the S&P 500 SPDRs (AMEX:SPY) $116.88. When the Qs move to their NASDAQ listing, the symbol will change to NASDAQ:QQQQ. I've been trying out some nicknames, but "the Qs" will probably hold. "Quad-q" sounded good, "QQ-squared" a bit long, and while "4-Q" is short and to the point, that nickname is just too similar to 4-H (a program of the US Dept. of Agriculture). NASDAQ-100 Tracker (QQQ) Chart - Daily Intervals While I'm still not sure the QQQ ever traded $39.00 on January 20th (I think its a lasting bad tick, with $38.75 the recent high) I've placed a conventional retracement on the QQQ's chart and overlaid our MONTHLY Pivot analysis levels. Near-term support after this impressive run looks to be $37.69-$37.73. The QQQ seemed to go into a "funk" back in February, and for some bullish % perspective, I went back an looked at various bullish % cycles we've been moving through and the QQQ achieved "bear confirmed" status on February 23. After that, we see the 50-day SMA suddenly became a point of resistance and the QQQ closed below that intermediate-term simple moving average for more than 5 sessions. I also went back to March 2003, and during the massive bull run from $25.00, the QQQ would violated the 50-day SMA on pullbacks, but always had a hard time closing below that intermediate-term SMA. I've talked about the "3 strike rule" to trend, where after a trader draws three trends (up or down) and a security breaks our third-trend, its time to call it quits for the losing trend. It's probably just a coincidence, but the day after the NASDAQ- 100 Bullish % ($BPNDX) achieved "bull confirmed" status, my third trend (a cheater's trend) was broken to the upside. With the NASDAQ-100 Bullish % ($BPNDX) now achieving "bull confirmed" status, the point and figure chart's bullish vertical count of $45, which was established in November of 2002 looks to be back in play. A quick review of the Stock Trader's Almanac notes of historically bullish seasonality for the QQQ from October to January has shown an average gain of 13.9%. From the September 30 close of $35.14, a historical bullish target of $40.02 could be derive. The Stock Trader's Almanac also covers a longer period from October to June and an average gain of 18.9%. From a $35.14 benchmark, an additional upside target of $41.71 can be assessed. Hey! That might just mark end of the second leg of this bull market. A couple of investors asked "why does this type of historical bullishness occur?" I'm not certain, but my explanation in the past has been that company's establish annual budgets, and as the end of the year draws near, it becomes a "use it, or lose it" play for many managers. I remember when I was working for Mobil oil, we'd have big battles between the Rocky Mountain/California Offshore team and our friends that shared the mid-continent office space, for who got their hands on the leftover budget funds in the fourth quarter. Remember our discussion regarding productivity and new jobs (Ask the Analyst "Economics 101). Should the rate of worker productivity ease and companies start hiring back more workers; we should see capital expenditures and budgets increase. This would be more of a "fundamental" reason behind the major indices recent gains. Market Snapshot / Internals - 11/09/04 Close It was a mixed trade for the majors today. Those little small- caps of the Russell-2000 Index ($RUT.X) held tough didn't they? Shoot! I messed up this morning's 11:00 AM update, but when we fixed it, that's messed up the 01:00 PM Update when I tried to show this chart of the Russell 2000 iShares Growth (AMEX:IWO) $62.85 +1.19%, and forward trade guidance. iShares Russell 2000 Growth (AMEX:IWO) - Daily Intervals After establishing a partial bullish position in the IWO yesterday (Monday), I wanted to use some of the same retracement tools and techniques we've discussed in recent updates. The BLUE retracement on the IWO is conventional use of retracement where I've anchored the 0% at the recent Augusts lows and 100% at the recent April 2004 52-week high of $65.00. Now, my PINK retracement is anchored at the October 29 close, and I'm dragging its 100% retracement higher to $67.74, which would approximate a 12.9% historical average gain for seasonal bullishness that runs from November to the end of May. What this allows us to do is begin to look for areas that we might then add to our partial bullish position. Bulls like that "overlap" at $60.00 and right now, I'd view a "zone of resistance" from $62.52 to $62.96, which will be a next level to test for strength. Bulls can add to positions on any pullback near $60, or strength above $63.00. U.S. Market Watch - 11/09/04 Close Oil settled at its lowest price since September 22, and I wanted to quickly update traders and investors (not just oil/energy traders) on the Continuous Oil Contract ($WTIC) from Stockcharts.com. I also wanted to let investors know about the EIA's update to what it sees as average energy prices for heating oil, propane and crude as it would relate to the "tax" on consumers. Remember! Tomorrow morning we'll get the EIA's weekly inventory figures. According to Bloomberg, the median estimate of energy analysts is for crude oil inventories to increase by 2 million barrels. Distillate inventories (of which heating oil and diesel fuel are derived) are expected to rise by 400,000 barrels, the first increase in eight weeks. The U.S. Department of Energy raised its forecast for winter heating oil, propane and crude oil prices in the U.S. from its outlook a month ago. Heating oil expenses for a typical Northeastern home this winter are now expected to average about 37% above last winter, up from the EIA's previous projection of a 29% increase. Residential heating oil prices are now seen averaging $1.88 a gallon from October to March. Households using propane for heat are now seen paying about 26% more this winter, compared with the EIA's projection last month of 22% higher winter expenses. Winter costs for natural gas-heated homes are expected to be around 15% higher than last winter. Meanwhile, the Energy Department's statistics branch raised its projected fourth-quarter price for U.S. benchmark West Texas Intermediate crude oil by $5 to $51.09 a barrel. That's about $20 a barrel above the oil price in the same period last year. OK.... the "one number" we can perhaps key on is the EIA's average price of $51.09. Let's use that as a psychological benchmark. But let's tie that number back in with our point and figure chart that we've been tracking. Now, tonight I'm going to look at the conventional 25-cent box size. Get a little more detailed than the 50-cent box size we last reviewed in Wednesday's Index Trader Wrap. Oil - Light Crude - Continuous Contract ($WTIC) - $0.25 box Same "yellow zone" and oil's trade pretty much as we predicted. Isn't it? See where I mark the EIA's average quarterly price of $51.09. I point to a lot of the same price levels we've discussed in the 50-cent box charts, but I want to take the EIA's estimates of $51.09 (say $51.00) a little further. If the EIA's mid-point, or average price for the quarter is $51.00 and we've already seen a high of $55.50, then I've got to think the "low end" of the quarter's range is about $45.50. Oil traders will probably use the EIA's estimates to try and position themselves around, and if the quarter's "low end" of the range is $45.50, then we might be alert for some type of support at that level. The way I see the point and figure chart that darned 50-cent box size chart we looked at last Wednesday would have $45.50 as the bullish support trend, while my 25-cent chart above has support a little lower at $44.50. I would think economists, and equity/bond market fundamentalists are also plugging in some of the EIA's quarterly energy estimates too. Point here is that equity bulls that are monitoring oil prices along with their trades, they should be cognizant of some oil support from $44.50-$45.50. Commodity traders are VERY supply/demand oriented. Do you see how recent "sell signals" (O below a prior column of O) has found selling on "bounce" back. This is a sign of net longs being a little more aggressive with their selling into rallies. It will last until a sense of equilibrium is found, or a shift in demand is seen. First sign of meaningful strength on the 25-cent box scale is $49.75. My "trouble" level for equities, if not MARKET psychology would still be $52.00 or above. The $52.00 level is the "oh no, here we go again" level. Pivot Matrix - The Semiconductor Index (SOX.X) 415.80 -0.67% did see trade lower at its WEEKLY Pivot. While the QQQ didn't find any pivot resistance, I would only note that last week's high of $38.16 did find sellers unwilling to flinch. With the FOMC announcing its decision on interest rates, and then issuing a brief statement, I'm setting a "downside alert" below the BIX.X's DAILY S2. The BIX.X traded in a very tight range, so I'll cut this interest rate sensitive group some slack where we still have WEEKLY Pivot and DAILY S2 correlation. I haven't had a chance to look at any of Cisco Systems' (NASDAQ:CSCO) $19.75 -1.10% quarterly results, but last tick in after-hours was $19.24, and with the SOX.X trading WEEKLY Pivot today, we might expect some "tech weakness" at tomorrow's open. Jeff Bailey **************** MARKET SENTIMENT **************** Fed Waiting - J. Brown Given the previous week's gains it's no surprise to see stocks pause ahead of Wednesday's FOMC meeting on interest rates. Stocks got a chance to rest while investors wait for what is widely expected to be a 25 basis-point increase in interest rates to 2 percent. Despite the two-day stall in the bull run I would still look for a short-term dip before we move higher into any fourth quarter rally. The short-term sentiment indicators like the ARMS index or TRIN's moving averages remain in near bearish reversal levels as do the volatility indices. Fortunately, the longer-term bullish percent data that turned positive late last week remains positive today. The feeling on the street seems to be pretty positive especially for the fourth quarter. One analyst commented that the street had pushed back most of its worries into the summer of 2005. Looking ahead to tomorrow I don't expect a lot of trading ahead of the FOMC meeting and its decision on rates that normally hits early afternoon. Of course it's unclear how Wall Street will interpret the news that both Attorney General John Ashcroft and Commerce Secretary Don Evans both resigned from the President's cabinet, especially since the rumor mill had been expecting some resignations. Odds are this won't have much of an affect on stocks but the Cisco earnings news will. CSCO reported earnings that were in-line with analysts' estimates at 21 cents a share but the company missed the revenue and gross margin estimates. This is likely to have a negative affect on tech stocks, especially the networkers unless it looks like Nortel and Juniper are somehow taking market share. Considering the market's need to see some consolidation it may be a good thing that CSCO effectively "missed". There are a lot of investors waiting for a dip and CSCO's earnings could be the spark to ignite a decent round of profit taking. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10753 52-week Low : 9585 Current : 10386 Moving Averages: (Simple) 10-dma: 10174 50-dma: 10124 200-dma: 10245 S&P 500 ($SPX) 52-week High: 1170 52-week Low : 1031 Current : 1164 Moving Averages: (Simple) 10-dma: 1144 50-dma: 1122 200-dma: 1119 Nasdaq-100 ($NDX) 52-week High: 1559 52-week Low : 1301 Current : 1527 Moving Averages: (Simple) 10-dma: 1503 50-dma: 1438 200-dma: 1437 ----------------------------------------------------------------- CBOE Market Volatility Index (VIX) = 13.61 -0.19 CBOE Mkt Volatility old VIX (VXO) = 13.64 -0.28 Nasdaq Volatility Index (VXN) = 19.19 -0.03 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.68 878,274 596,088 Equity Only 0.53 756,787 401,731 OEX 1.18 24,943 29,628 QQQ 1.56 17,762 27,821 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 68.5 + 0.5 Bear Correction NASDAQ-100 63.0 + 1 Bull Confirmed Dow Indust. 60.0 + 0 Bear Correction S&P 500 69.2 + 0.8 Bull Confirmed S&P 100 69.0 + 0 Bull Confirmed Bullish percent measures the number of stocks in an index currently trading on a buy signal on their point and figure chart. Readings above 70 are considered overbought, and readings below 30 are considered oversold. Bull Confirmed - Aggressively long Bull Alert - Cautiously long Bull Correction - Pause or pullback in upward trend Bear Alert - Take defensive action if long Bear Confirmed - High risk if long, good conditions for shorting Bear Correction - Pause or rebound in downtrend ----------------------------------------------------------------- 5-dma: 0.86 10-dma: 0.83 21-dma: 0.97 55-dma: 1.04 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 1589 1690 Decliners 1220 1324 New Highs 167 123 New Lows 11 21 Up Volume 987M 784M Down Vol. 810M 882M Total Vol. 1821M 1700M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 11/02/04 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 Considering the fact that the latest data was taken as of election day, Nov. 2nd, it's no surprise to see both commercials and small traders hedging their bets. The next round of data should be more informative. Commercials Long Short Net % Of OI 10/12/04 423,472 436,780 (13,308) (1.5%) 10/19/04 432,945 441,041 ( 8,096) (0.9%) 10/26/04 441,263 445,992 ( 4,729) (0.4%) 11/02/04 446,192 441,676 ( 4,516) (0.4%) 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 10/12/04 139,175 113,903 25,272 9.9% 10/19/04 147,148 124,827 22,321 8.2% 10/26/04 138,201 121,275 16,926 6.5% 11/02/04 136,290 132,040 4,250 1.5% Most bearish reading of the year: (1,657)- 5/27/03 Most bullish reading of the year: 114,510 - 3/26/02 E-MINI S&P 500 E-mini traders are not as humble as the larger S&P futures traders. Commercials remain bearish and small traders have pushed their bullish bias to new multi-week levels. Just remember, this data is post-election. Commercials Long Short Net % Of OI 10/12/04 258,457 517,805 (259,348) (33.4%) 10/19/04 264,860 531,541 (266,681) (33.4%) 10/26/04 276,128 509,552 (233,424) (29.7%) 11/02/04 307,053 580,081 (273,028) (30.7%) Most bearish reading of the year: (354,835) - 06/17/03 Most bullish reading of the year: 133,299 - 09/02/03 Small Traders Long Short Net % of OI 10/12/04 309,720 62,502 247,218 66.4% 10/19/04 353,903 66,027 287,876 68.5% 10/26/04 345,908 64,061 281,847 68.7% 11/02/04 395,029 63,746 331,283 72.2% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Just as small traders pushed their bullish S&P bias to multi- week extremes; they've done the opposite on the NDX with a new multi-week bearish extreme and a new low for the year. Commercials Long Short Net % of OI 10/12/04 52,572 32,775 19,797 23.2% 10/19/04 52,630 31,940 20,690 24.4% 10/26/04 53,233 31,323 21,910 26.2% 11/02/04 53,002 31,231 21,771 25.0% Most bearish reading of the year: (21,858) - 08/26/03 Most bullish reading of the year: 25,160 - 06/01/04 Small Traders Long Short Net % of OI 10/12/04 8,756 24,400 (15,644) (47.2%) 10/19/04 10,462 25,243 (14,781) (41.3%) 10/26/04 10,521 25,388 (14,867) (42.8%) 11/02/04 8,886 36,621 (27,735) (61.3%) Most bearish reading of the year: (27,735) - 11/02/04 Most bullish reading of the year: 19,088 - 01/21/02 DOW JONES INDUSTRIAL Neither commercials nor small traders seem willing to place any big bets but both are somewhat bullish on the Industrials. Commercials Long Short Net % of OI 10/12/04 24,150 22,849 1,301 2.7% 10/19/04 25,385 24,213 1,172 2.3% 10/26/04 25,707 24,855 852 1.6% 11/02/04 25,319 24,261 1,058 2.0% 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 10/12/04 8,814 9,167 ( 353) ( 1.9%) 10/19/04 8,327 6,015 2,312 16.1% 10/26/04 8,405 6,336 2,069 14.3% 11/02/04 7,952 6,306 1,261 8.8% Most bearish reading of the year: (12,106) - 3/09/04 Most bullish reading of the year: 8,523 - 8/26/03 ************************Advertisement************************* Insiders are Buying these 6 Rocket Stocks. In the last few weeks, we have pinpointed insider buying on six stocks that have the potential to deliver stratospheric gains. 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The Option Investor Newsletter Tuesday 11-09-2004 Copyright 2004, All rights reserved. 2 of 3 Redistribution in any form strictly prohibited. In Section Two: Dropped Calls: TOT Dropped Puts: None Call Play Updates: COP, DHR, EBAY, FDX, GDW, GS, IBM, ITT, ITW, LEH, OSK, SLB, New Calls Plays: None Put Play Updates: APOL 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: ***** Total S.A. - TOT - close: 106.22 change: -0.18 stop: 105.00 Per our suggestion on Sunday we are closing TOT ahead of tomorrow's earnings report. Readers still interested in playing this French oil conglomerate can watch for a bounce from the $106 level tomorrow. Picked on November 03 at $106.09 Change since picked: + 0.13 Earnings Date 00/00/00 (unconfirmed) Average Daily Volume = 672 thousand Chart = PUTS: ***** None ************************Advertisement************************* Trade Smarter Using the latest Insider Trades Is the CEO selling off? Has a key insider loaded up on shares before a big price jump? Find out now. Get your free download of Real Time insider trades: http://www.realtimeinsider.com/default.asp?aid=637 ************************************************************** ******************** PLAY UPDATES - CALLS ******************** ConocoPhillips - COP - close: 86.49 change: -0.28 stop: 81.99 Crude oil prices continue to slide and yesterday's drop under technical support at the 50-dma may have sparked some profit taking in oil stocks. COP slipped lower on Monday and is now testing the $86 level as minor support. This dip may actually be the entry point patient traders have been waiting for. Yet we can still wait another day or two. COP may slip further and test the $85 region and/or its simple 40-dma. Watch for the bounce and then consider bullish positions. In the news COP announced its annual analyst meeting would be held November 17th. Picked on November 03 at $85.50 Change since picked: + 0.99 Earnings Date 10/27/04 (confirmed) Average Daily Volume = 3.0 million Chart = --- Danaher - DHR - close: 57.15 change: -0.24 stop: 52.99 There is nothing new to report for DHR. The stock is holding up pretty well with very little profit taking. If shares do continue to consolidate lower watch for a bounce form the simple 10-dma near $56.00. In the news DHR announced that it would present at the Baird Industrial conference on November 10th. Picked on October 27 at $54.99 Change since picked: + 2.16 Earnings Date 10/21/04 (confirmed) Average Daily Volume = 1.3 million Chart = --- eBay Inc. - EBAY - close: 104.47 chg: +0.78 stop: 95.00 Our newly added EBAY managed to out perform the major indices today but we wouldn't get too excited. The best strategy is probably to wait and watch for a dip back toward the $100-101 levels. That is where we would be eyeing a bounce to go long. Momentum players can ignore this suggestion and buy the new high. No change in our stop just yet. Picked on November 80 at $103.69 Change since picked: + 0.78 Earnings Date 10/20/04 (confirmed) Average Daily Volume = 10.4 million Chart = --- Fedex Corp - FDX - close: 92.62 change: -0.70 stop: 87.49*new* The Dow Jones Transportation index eked out its fifth gain in a row and its eleventh gain in the last twelve sessions. Needless to say the sector is somewhat overbought here. Watch the TRAN for a pull back toward the 3500 level. In turn that can probably translate into a dip back toward $90.00 for FDX. We would watch a bounce from $90.00 as a new bullish entry point. In the meantime we're raising our stop loss to $87.49. Picked on October 21 at $89.45 Change since picked: + 3.07 Earnings Date 09/22/04 (confirmed) Average Daily Volume = 1.5 million Chart = --- Golden West Financial - GDW - cls: 117.49 chg: +0.00 stop: 113.75 The banking indices traded relatively flat today but retain their bullish postures. Likewise shares of GDW look ready to breakout but have not yet mustered enough momentum to do so just yet. We remain untriggered as we wait for GDW to breakout over resistance at $118.00 and hit our entry point at $118.15. Picked on November xx at $ xx.xx <-- see TRIGGER Change since picked: + 0.00 Earnings Date 10/21/04 (confirmed) Average Daily Volume = 583 thousand Chart = --- Goldman Sachs - GS - close: 100.87 change: +0.66 stop: 94.50 We have been anticipating some profit taking in the overbought XBD broker-dealer index and shares of GS but both have been slow fail. That's probably a bullish sign if there is a distinct lack of sellers. However, we suggest patience. Odds are good that both the XBD index and GS will see some consolidation and we can buy the dip. On Sunday we suggested watching for a move into the $97-98 range. That means short-term traders can do some profit taking now and then re-enter again. Picked on October 27 at $96.10 Change since picked: + 4.77 Earnings Date 09/21/04 (confirmed) Average Daily Volume = 3.2 million Chart = --- Intl Business Mach. - IBM - close: 93.37 chg: +0.00 stop: 87.00 Big Blue continues to lead stocks higher but even the leaders took a breather today. IBM closed unchanged after testing resistance near $94 for the third day in a row. We're very encouraged by IBM's strength and the lack of sellers this week following last week's gains. Yet we don't suggest new positions right here. Watch for a potential dip and then buy the bounce. We would watch for a dip into the $91.50-92.00 range as the next entry point. No change in our long-term plan. Short-term traders may want to take profits now and re-enter on the dip. Picked on October 27 at $90.00 Change since picked: + 3.37 Earnings Date 10/18/04 (confirmed) Average Daily Volume = 4.7 million Chart = --- ITT Industries - ITT - close: 83.99 chg: -0.84 stop: 81.50 As expected we're starting to see a little bit of profit taking. No change in our strategy. We still plan to exit at $85.90 but ITT may dip back to $82.00 before making another rebound. Readers looking for entry points can wait for the dip to end. Picked on November 03 at $81.51 Change since picked: + 2.48 Earnings Date 10/21/04 (confirmed) Average Daily Volume = 460 thousand Chart = --- Illinois Tool Works - ITW - close: 94.44 chg: -0.21 stop: 89.99 ITW is struggling under the $95.00 level now following Friday's failed rally under $96.00. We want to reiterate our suggestion that more conservative traders do some profit taking now. One can always re-enter on a bounce from $93.00, which is where we're looking for any profit taking to end. Our exit point at $96.00 hasn't changed. We are not suggesting new positions at current levels. Picked on October 27 at $90.89 Change since picked: + 3.55 Earnings Date 10/19/04 (confirmed) Average Daily Volume = 1.2 million Chart = --- Lehman Brothers - LEH - close: 83.04 chg: -0.38 stop: 79.95 If you read the GS update then you know that we've been looking for some profit taking in the XBD broker-dealer index to bring the group back from overbought levels. There should be plenty of investors waiting to buy the dip and launch the sector into the next leg higher. Just as LEH helped lead the group higher it could be leading the group lower into the suggested dip. The stock is down three days in a row now and nearing support. Watch for a bounce from $82.00 as a new bullish entry point. Picked on October 26 at $80.60 Change since picked: + 2.44 Earnings Date 09/21/04 (confirmed) Average Daily Volume = 2.0 million Chart = --- Oshkosh Truck - OSK - close: 62.08 change: -0.24 stop: 57.00 Tuesday's early morning rally was met with some selling but traders defended the stock above the $61.50 level. We're still willing to open new positions here but we'd suggest waiting for a pull back toward the $60.25-61.00 range. The $60.00 level should be new support. No change in our strategy or our stop loss. Picked on November 07 at $ 62.16 Change since picked: - 0.08 Earnings Date 10/28/04 (confirmed) Average Daily Volume = 205 thousand Chart = --- Schlumberger - SLB - close: 62.63 change: +0.18 stop: 61.00 It would appear that the oil service stocks are struggling under the recent dip in crude oil prices. Shares of SLB have turned lower and are trading near their simple 200-dma while they remain above the exponential 200-dma. Short-term technicals look weak but we still see some momentum indicators suggesting SLB can bounce from this new low above $60.00. Aggressive traders may want to consider long positions over $64.00. We are still untriggered and waiting for SLB to hit our entry point at $65.05. If SLB breaks down under $60.00 we may jump into some (hypothetical) put positions. Picked on November xx at $ xx.xx <-- see TRIGGER Change since picked: + 0.00 Earnings Date 10/22/04 (confirmed) Average Daily Volume = 3.9 million Chart = ************** NEW CALL PLAYS ************** None ************************Advertisement************************* SEE WARREN BUFFETT'S LATEST DISCLOSED STOCK PORTFOLIO Now you can follow the investment master's actual moves. To get a FREE report that details Warren Buffett's strategy and reveals his most recently disclosed, ACTUAL stock picks, Click HERE! http://www.bigmoneywatch.com/default.asp?aid=626 ************************************************************** ******************* PLAY UPDATES - PUTS ******************* Apollo Group - APOL - close: 66.51 chg: -0.63 stop: 68.51 Ouch! We knew APOL was looking oversold at less than $63.00 but we weren't expecting an oversold bounce back to resistance at $68.50. That's exactly what happened. Friday's move over $65.00 put us on the defensive and Monday's follow through could have been a short-term panic by some shorts. We suggested that new readers looking for positions watch for a failed rally and that's exactly what APOL has produced. We're going to leave our stop alone since the downtrend remains intact. Our target near $60.00 remains. Picked on October 10 at $69.81 Change since picked: - 3.30 Earnings Date 10/05/04 (confirmed) Average Daily Volume = 3.3 million Chart = ************* NEW PUT PLAYS ************* None ************************Advertisement************************* Get your FREE weekly charts of the NASDAQ! Hot Stix’ stock market report reveals simple, powerful strategies for profiting from the QQQ - whether down or up! http://www.hotstix.com/public/weekly.asp?aid=755 ************************************************************** ********** DISCLAIMER ********** Please read our disclaimer at: http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html ************************************************************** ADVERTISING INFORMATION For more information on advertising in OptionInvestor Newsletter, or any Premier Investor Network newsletter please contact: Contact Support
The Option Investor Newsletter Tuesday 11-09-2004 Copyright 2004, All rights reserved. 3 of 3 Redistribution in any form strictly prohibited. In Section Three: Watch List: Healthcare to Conglomerates and more! Spreads & Straddles: A Market On Hold... Premium Selling Plays: Naked Puts & Calls ********** WATCH LIST ********** Healthcare to Conglomerates 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. ___________________________________________________________________ Sierra Health Services - SIE - close: 52.03 change: +1.45 WHAT TO WATCH: The three-week rally in SIE isn't slowing down and shares have broken through resistance at the $50.00 mark. These are new all-time highs and SIE's P&F chart is bullish with a $68 target. We would keep an eye on SIE for a pull back toward the $50.00 level, which should now act as support. Chart= --- Guidant Corp - GDT - close: 66.10 change: +0.56 WHAT TO WATCH: Guidant has spent that last several weeks consolidating between $62 and $68 and some of its momentum indicators suggest it could be close to breaking out over the $68 level. Of course there is additional resistance near $70 but the P&F chart is bullish with a $96 (long-term) target. We would definitely wait for the move over $68 or $70 before considering any positions. Chart= --- Chicago Mercantile Exchange - CME - close: 191.11 change: +3.72 WHAT TO WATCH: The momentum train in CME is not slowing down either. Shares have run from $120 to $190 less than 3 1/2 months and from $160 to $190 since October 26th. We're not suggesting any positions here but odds are growing that CME will announce a stock split. If this is too much volatility for a directional play consider an option-spread strategy. Chart= --- Loews Corp - LTR - close: 63.88 change: +0.10 WHAT TO WATCH: The momentum in LTR the past three weeks has been impressive. The stock broke through resistance at $60.00 and again near $63.00 to hit new three-year highs. Watch this one for a pull back and consider buying a bounce over $60.00. The P&F chart shows a new spread triple-top breakout buy signal with an $81 target. Chart= ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- BA $52.51 +0.64 - We continue to think BA looks like a bullish candidate here, especially with today's move over $52.00 and the 50-dma. LLL $68.65 -0.35 - LLL seems to be struggling under resistance at the $70.00 level. Watch for shares to consolidate back toward round-number support near $65.00 and consider a bounce. CAH $50.29 +1.28 - The rebound continues in shares of CAH. The stock is following yesterday's breakout over $48.50 and its simple 100-dma with a move over round-number resistance at $50.00. STJ $76.91 +0.28 - Watch STJ for a breakout over resistance at $79-80.00. ************************Advertisement************************* Insiders are Buying these 6 Rocket Stocks. In the last few weeks, we have pinpointed insider buying on six stocks that have the potential to deliver stratospheric gains. Click here for our SPECIAL REPORT on these 6 stocks insiders are buying and why you should too. http://www.insidermoves.com/default.asp?aid=618 ************************************************************** ******************* SPREADS & STRADDLES ******************* A Market On Hold... By Ray Cummins Stocks traded in a small range Tuesday as investors awaited the Federal Reserve's upcoming decision on interest rates. The Fed is widely expected to raise rates at Wednesday's meeting, but the real question is what the FOMC will say about the future outlook for the economy. With no clear direction in that regard, the major equity averages were destined to end the session nearly unchanged. The Dow Jones industrial average slumped 4 points to 10,386, while the NASDAQ added 4 points to close at 2,043. The Standard & Poor's 500 index finished where it started at 1,164. Big board volume was 1.46 billion, with winners outpacing losers 6 to 5. NASDAQ breadth was roughly 3 to 2 in favor of advancers, on trading volume of 1.68 billion. There was little activity in the treasury market. The benchmark 10-year note ended up 1/32, with its yield at 4.21%. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SUMMARY OF CURRENT POSITIONS - AS OF 11/07/04 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 BSC 94.16 96.63 NOV 80.0 85.0 0.65 84.35 0.65 Open BTU 60.07 65.27 NOV 50.0 55.0 0.60 54.40 0.60 Open MRVL 28.84 28.22 NOV 22.5 25.0 0.35 24.65 0.35 Open COST 44.69 49.55 NOV 40.0 42.5 0.30 42.20 0.30 Open NEM 46.25 49.05 NOV 40.0 42.5 0.30 42.20 0.30 Open INSP 47.25 53.64 NOV 35.0 40.0 0.85 39.15 0.85 Open BG 41.96 49.34 NOV 35.0 40.0 0.50 39.50 0.50 Open ADBE 53.57 58.48 NOV 45.0 50.0 0.50 49.50 0.50 Open VRNT 37.73 38.62 NOV 30.0 35.0 0.55 34.45 0.55 Open GTRC 47.81 44.44 NOV 40.0 45.0 0.45 44.55 (0.11) Closed OSTK 52.63 58.40 NOV 40.0 45.0 0.60 44.40 0.60 Open MDC 76.00 76.69 NOV 65.0 70.0 0.50 69.50 0.50 Open SPF 53.90 55.75 NOV 45.0 50.0 0.60 49.40 0.60 Open NEM 47.52 49.05 NOV 42.5 45.0 0.35 44.65 0.35 Open PD 87.54 92.69 NOV 75.0 80.0 0.50 79.50 0.50 Open EBAY 100.66 99.68 NOV 90.0 95.0 0.60 94.40 0.60 Open CTX 53.55 52.65 NOV 45.0 50.0 0.50 49.50 0.50 Open L/P = Long Put S/P = Short Put CB = Cost Basis G/L = Gain/Loss Although both are currently profitable, positions in Pacificare Health Systems (NYSE:PHS) and Celgene (NASDAQ:CELG) have previously been closed to limit potential losses. Guitar Center (NASDAQ:GTRC) is also a candidate for early exit after the recent consolidation in its stock price. CALL-CREDIT SPREADS Stock Pick Last Mon L/C S/C Credit CB G/L Status AMZN 40.47 36.56 NOV 50.0 45.0 0.65 45.65 0.65 Open PDX 55.00 61.50 NOV 65.0 60.0 0.60 60.60 (0.90) Closed CHIR 37.98 32.48 NOV 45.0 42.5 0.30 42.80 0.30 Open FLIR 54.52 57.74 NOV 65.0 60.0 0.70 60.70 0.70 Open BIIB 59.82 60.86 NOV 70.0 65.0 0.65 65.65 0.65 Open IFIN 36.50 39.04 NOV 42.5 40.0 0.30 40.30 0.30 Open TTWO 32.55 34.76 NOV 37.5 35.0 0.30 35.30 0.30 Open? SPW 37.40 42.50 NOV 42.5 40.0 0.30 40.30 (2.20) Closed QCOM 39.50 38.27 NOV 45.0 42.5 0.30 42.80 0.30 Open ESRX 64.01 72.00 DEC 75.0 70.0 0.60 70.60 (1.40) Closed JCP 34.59 39.12 DEC 40.0 37.5 0.35 37.85 (1.27) Closed SEPR 45.44 48.20 DEC 55.0 50.0 1.00 51.00 1.00 Open TTWO 33.24 34.76 DEC 40.0 37.5 0.30 37.80 0.30 Open L/C = Long Call S/C = Short Call CB = Cost Basis G/L = Gain/Loss Positions in J.C. Penney (NYSE:JCP), SPX Corp. (NYSE:SPW), and Pediatrix Medical (NYSE:PDX) should have been closed earlier in the week for smaller-than-published losses. Positions in Aetna (NYSE:AET), Beazer Homes (NYSE:BZH), Hartford Insurance (NYSE:HIG), Cigna (NYSE:CI), Chubb (NYSE:CB), Mercury Interactive (NASDAQ:MERQ) and Microchip (NASDAQ:MCHP) have previously been closed. Take-Two Interactive Software (NASDAQ:TTWO) is a candidate for early-exit on any move above $35.50. Investors Financial (NASDAQ:IFIN) and Sepracor (NASDAQ:SEPR) are on the "watch" list. DEBIT STRADDLES Stock Pick Last Exp. Long Long Initial Max Play Symbol Price Price Month Call Put Debit Value Status NTES 40.00 48.76 NOV 40.0 40.0 5.00 10.50 Open? NEW 55.15 59.12 NOV 55.0 55.0 4.70 6.00 Open The speculative straddle in Netease.com (NASDAQ:NTES) has easily exceeded all possible profit goals and the position should be closed to "lock-in" gains. New Century Finance (NYSE:NEW) has already provided a favorable early-exit profit for conservative traders. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ VIP - Vimpel-Communications $121.49 *** New All-Time High! *** Vimpel-Communications (NYSE:VIP) is a provider of wireless telecommunications services in Russia, operating under the Bee Line GSM brand name. The company offers wireless services, such as voice telephony service, value-added services using short message system, unstructured supplementary services data, wireless application protocol, general packet radio service, maintenance management system technologies, interconnections with other networks and access to national and international roaming service. VimpelCom offers services to subscribers under two types of payment plans: contract plans and prepaid plans. VIP - Vimpel-Communications $121.49 PLAY (less conservative - bullish/credit spread): BUY PUT DEC-105.00 VIP-XA OI=29 ASK=$0.95 SELL PUT DEC-110.00 VIP-XB OI=30 BID=$1.60 INITIAL NET-CREDIT TARGET=$0.70-$0.75 POTENTIAL PROFIT(max)=16% B/E=$109.30 __________________________________________________________________ WLP - WellPoint Health $113.90 *** Anthem Deal Approved! *** WellPoint Health Networks (NYSE:WLP) is a managed healthcare company with nearly 15 million medical members and almost 50 million specialty members. Through its subsidiaries, the firm offers network-based managed care plans to the large and small employer, individual, Medicaid and senior markets. Its managed care plans include preferred provider organizations, health maintenance organizations, point-of-service plans, other hybrid plans and traditional indemnity plans. In addition, WellPoint offers managed care services, including underwriting, actuarial services, networking, medical management and claims processing. It also provides pharmacy benefits management, dental, vision, life insurance, preventive care, disability insurance, COBRA, behavioral health, and flexible benefits account administration. WLP - WellPoint Health $113.90 PLAY (conservative - bullish/credit spread): BUY PUT DEC-100.00 WLP-XT OI=121 ASK=$0.65 SELL PUT DEC-105.00 WLP-XA OI=32 BID=$1.10 INITIAL NET-CREDIT TARGET=$0.50-$0.55 POTENTIAL PROFIT(max)=11% B/E=$104.50 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BEARISH PLAYS - CREDIT SPREADS All of these positions are favorable candidates for "bear-call" credit spreads, based on the current price or trading range of the underlying issue and its recent technical history or trend. The probability of profit from these positions may be higher than other plays in the same strategy, due to disparities in option pricing. However, current news and market sentiment will have an effect on these issues, so review each play individually and make your own decision about its future outcome. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ERTS - Electronic Arts $46.97 *** In A Trading Range? *** Electronic Arts (NASDAQ:ERTS) develops, markets, publishes and distributes interactive software games that are playable by consumers on platforms, including home videogame machines, such as the Sony PlayStation 2, Microsoft Xbox, Nintendo GameCube and Sony PlayStation consoles; personal computers (PCs); handheld game machines, such as the Game Boy Advance, and online, over the Internet and other online networks. The products designed to play on consoles and handhelds, are published under license from the manufacturers of these platforms, such as Sony for the PlayStation and PlayStation 2, Microsoft for the Xbox and also Nintendo for the Nintendo GameCube and Game Boy Advance. The company pays a fee to the console manufacturers for the right to publish products on their platforms. ERTS - Electronic Arts $46.97 PLAY (conservative - bearish/credit spread): BUY CALL DEC-55.00 EZQ-LK OI=5245 ASK=$0.15 SELL CALL DEC-50.00 EZQ-LJ OI=4301 BID=$0.75 INITIAL NET-CREDIT TARGET=$0.65-$0.70 POTENTIAL PROFIT(max)=15% B/E=$50.65 __________________________________________________________________ GM - General Motors $39.97 *** Downtrend Intact! *** General Motors (NYSE:GM) participates in the automotive industry through various activities. The company designs, manufactures and/or markets vehicles, primarily in North America, under the following nameplates: Chevrolet, Pontiac, GMC, Oldsmobile, Buick, Cadillac, Saturn and Hummer. The company offers vehicles to its international customers under the following nameplates: Opel, Vauxhall, Holden, Saab, Buick, Chevrolet, GMC and Cadillac. GM's Financing and Insurance Operations primarily relate to General Motors Acceptance Corporation, which provides consumer vehicle financing, automotive dealership and other commercial financing, residential and commercial mortgage services, automobile service contracts, personal automobile insurance coverage and selected commercial insurance coverage. GM - General Motors $39.97 PLAY (conservative - bearish/credit spread): BUY CALL DEC-45.00 GM-LI OI=12990 ASK=$0.15 SELL CALL DEC-42.50 GM-LV OI=13830 BID=$0.40 INITIAL NET-CREDIT TARGET=$0.30-$0.35 POTENTIAL PROFIT(max)=14% B/E=$42.80 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ STRADDLES AND STRANGLES ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Based on analysis of the historical option pricing and technical background, these positions meet the fundamental criteria for favorable volatility-based plays. _________________________________________________________________ No straddles or strangles today... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEE DISCLAIMER - SECTION 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ***************************************** PREMIUM-SELLING PLAYS: NAKED PUTS & CALLS ***************************************** All of these issues have robust option premiums and favorable technical indications. However, current news and events, as well as market sentiment, will have an effect on these stocks so review each position thoroughly and make your own decision about its outcome. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SUMMARY OF CURRENT POSITIONS - AS OF 11/07/04 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 SIMG NOV 12.50 12.10 14.18 0.40 5.95% 3.31% NCRX NOV 25.00 24.30 26.26 0.70 5.52% 2.88% ANF NOV 32.50 32.10 42.67 0.40 2.78% 1.25% STTX NOV 25.00 24.60 26.18 0.40 3.89% 1.63% SNDA NOV 22.50 21.85 30.50 0.65 7.78% 2.97% IDBE NOV 12.50 12.15 17.11 0.35 6.44% 2.88% BVF NOV 17.50 17.05 17.36 0.31 3.72% 2.64% USG NOV 17.50 16.90 28.80 0.60 6.84% 3.55% SNDA NOV 25.00 24.50 30.50 0.50 5.67% 2.04% WEBX NOV 20.00 19.60 23.63 0.40 5.75% 2.04% ENER NOV 15.00 14.40 17.94 0.60 8.11% 4.17% DRIV NOV 25.00 24.35 33.48 0.65 6.81% 2.67% PLMD NOV 30.00 29.55 35.05 0.45 3.33% 1.52% CNCT NOV 22.50 22.10 27.42 0.40 4.68% 1.81% CCBI NOV 22.50 21.90 22.01 0.11 1.01% 2.74% EYET NOV 35.00 34.45 42.48 0.55 5.17% 1.60% USG NOV 17.50 17.15 28.80 0.35 6.12% 2.04% RIGL NOV 22.50 21.85 26.00 0.65 8.14% 2.97% MCD NOV 27.50 27.15 30.06 0.35 2.99% 1.29% FARO NOV 20.00 19.60 24.86 0.40 5.67% 2.04% NOVN NOV 20.00 19.60 23.87 0.40 4.88% 2.04% VRSN NOV 20.00 19.65 27.53 0.35 4.40% 1.78% SSNC NOV 20.00 19.55 22.00 0.45 5.71% 2.30% CKFR NOV 30.00 29.40 31.66 0.60 4.91% 2.04% OSTK NOV 35.00 34.60 58.40 0.40 4.10% 1.16% GBBK NOV 30.00 29.40 31.12 0.60 5.01% 2.04% KRON NOV 45.00 44.50 49.56 0.50 3.10% 1.12% DITC NOV 20.00 19.70 17.15 (2.55) 0.00% 0.00% * MRVL NOV 23.75 23.35 28.22 0.40 5.59% 1.71% AGIX NOV 20.00 19.70 32.57 0.30 4.50% 1.52% AFCO NOV 20.00 19.55 23.69 0.45 6.68% 2.30% TSRA NOV 25.00 24.70 31.00 0.30 4.18% 1.21% SRDX NOV 25.00 24.50 27.96 0.50 5.79% 2.04% ELN NOV 22.50 22.05 27.88 0.45 6.53% 2.04% XMSR NOV 30.00 29.45 33.93 0.55 5.48% 1.87% ENDP NOV 20.00 19.55 20.89 0.45 6.72% 2.30% LNG NOV 20.00 19.45 26.68 0.55 8.61% 2.83% USG NOV 20.00 19.50 28.80 0.50 8.45% 2.56% EDS NOV 20.00 19.65 20.85 0.35 5.49% 1.78% MANT NOV 17.50 17.05 22.50 0.45 9.65% 2.64% NTMD NOV 17.50 17.25 25.68 0.25 6.12% 1.45% A NOV 22.50 22.10 25.21 0.40 5.86% 1.81% SCHN NOV 26.60 26.15 31.96 0.45 5.81% 1.72% CYTC NOV 25.00 24.60 25.69 0.40 5.27% 1.63% USG NOV 20.00 19.70 28.80 0.30 6.65% 1.52% TSRA NOV 22.50 22.30 31.00 0.20 5.12% 0.90% FARO NOV 22.50 22.10 24.86 0.40 7.61% 1.81% NTAP NOV 22.50 22.15 25.69 0.35 6.52% 1.58% VAR NOV 37.50 37.15 39.98 0.35 3.87% 0.94% DOX NOV 22.50 22.25 26.00 0.25 5.00% 1.12% ROST NOV 25.00 24.70 27.25 0.30 4.78% 1.21% JNPR NOV 25.00 24.70 27.84 0.30 4.89% 1.21% LNG NOV 22.50 22.15 26.68 0.35 8.04% 1.58% SFNT NOV 30.00 29.60 33.00 0.40 6.06% 1.35% ELN NOV 22.50 22.25 27.88 0.25 5.96% 1.12% YHOO NOV 35.00 34.60 36.35 0.40 5.30% 1.16% XMSR NOV 30.00 29.65 33.93 0.35 5.65% 1.18% SHPGY NOV 27.50 27.15 28.51 0.35 5.67% 1.29% MRVL NOV 25.00 24.65 28.22 0.35 7.34% 1.42% ANF NOV 35.00 34.55 42.67 0.45 6.35% 1.30% Ditech (NASDAQ:DITC) was moved to our "bearish" candidate list on Tuesday, and conservative traders should have closed the position for a smaller than published loss. Although currently profitable, positions in Palomar Medical (NASDAQ:PMTI), Energy Conversion Devices (NASDAQ:ENER); at the $17.50 strike, and Telular (NASDAQ:WRLS) 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 BRCM NOV 35.00 35.35 28.15 0.35 4.44% 0.99% LLTC NOV 40.00 40.60 38.28 0.60 3.74% 1.48% SINA NOV 35.00 35.35 32.94 0.35 4.56% 0.99% IVX NOV 20.00 20.75 14.21 0.75 9.51% 3.61% PLMO NOV 40.00 40.45 32.80 0.45 5.62% 1.11% SLXP NOV 20.00 20.65 15.88 0.65 8.83% 3.15% AOC NOV 25.00 25.25 20.60 0.25 3.93% 0.99% CVH NOV 50.00 50.60 44.01 0.60 4.46% 1.19% ACF NOV 20.00 20.70 20.02 0.68 8.07% 3.38% DSPG NOV 22.50 22.85 21.16 0.35 6.23% 1.53% RNR NOV 50.00 50.65 47.86 0.65 3.51% 1.28% X NOV 40.00 40.25 40.41 (0.16) 0.00% 0.00% GIVN NOV 40.00 40.45 30.12 0.45 5.86% 1.11% ARW NOV 25.00 25.40 24.57 0.40 5.82% 1.57% TACT NOV 30.00 30.50 24.97 0.50 10.16% 1.64% NVTL NOV 25.00 25.20 20.13 0.20 6.99% 0.79% CBT NOV 35.00 35.50 35.00 0.50 5.76% 1.41% ASKJ NOV 30.00 30.35 25.87 0.35 8.26% 1.15% LSS NOV 30.00 30.20 26.55 0.20 6.51% 0.66% DITC NOV 25.00 25.25 17.15 0.25 8.20% 0.99% DISH NOV 32.50 32.90 30.30 0.40 6.30% 1.22% Positions in Ii-Vi (NASDAQ:IIVI), Lam Research (NASDAQ:LRCX), Hyperion Solutions (NASDAQ:HYSL), UCI Inc. (NASDAQ:UICI), and United Surgical (NASDAQ:USPI) have previously been closed to limit potential losses. Among the "watch" list issues are: Arrow Electronics (NYSE:ARW), Americredit (NYSE:ACF), Cabot (NYSE:CBT), DSP Group (NASDAQ:DSPG), and U.S. Steel (NYSE:X). ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 UTHR 36.28 DEC 25.00 FUH-XE 0.95 2383 24.05 39 3.1% 9.0% NFLD 17.24 DEC 15.00 DHQ-XC 0.55 210 14.45 39 3.0% 8.2% SEAC 19.90 DEC 17.50 UEG-XW 0.55 48 16.95 39 2.5% 7.0% IFLO 17.26 DEC 15.00 QIF-XC 0.45 98 14.55 39 2.4% 6.9% ADLR 13.94 DEC 12.50 UAH-XV 0.40 4 12.10 39 2.6% 6.9% VTIV 19.20 DEC 17.50 QBP-XW 0.45 14 17.05 39 2.1% 5.5% MYGN 19.32 DEC 17.50 GSQ-XW 0.45 44 17.05 39 2.1% 5.5% RIGL 27.60 DEC 20.00 QRG-XD 0.30 35 19.70 39 1.2% 4.0% 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. _________________________________________________________________ UTHR - United Therapeutics $36.28 *** Remodulin Speculation *** United Therapeutics (NASDAQ:UTHR) is a biotechnology company focused on the development and commercialization of therapeutics to treat chronic and life-threatening diseases in 3 therapeutic areas: cardiovascular medicine, infectious disease and oncology. It has 5 therapeutic platforms: Prostacyclin analogs are stable synthetic forms of a molecule that has effects on blood-vessel health and function; Remodulin has been approved in the United States for the treatment of pulmonary arterial hypertension in patients with New York Heart Association Class II-IV symptoms; Immunotherapeutic monoclonal antibodies are antibodies that activate patients' immune systems to treat cancer; Glycobiology anti-viral agents are a class of small molecules that may be effective as an oral therapy for hepatitis C or other infections, and Telemedicine involves portable digital devices that enable physicians to remotely monitor patients' bodily measurements. UTHR - United Therapeutics $36.28 DEC 25.00 FUH-XE LB=0.95 OI=2383 CB=24.05 DE=39 TY=3.1% MY=9.0% _________________________________________________________________ NFLD - Northfield Labs $17.24 *** Rally Mode! *** Northfield Laboratories (NASDAQ:NFLD) is engaged in the production of a safe and effective alternative to transfused blood for use in the treatment of acute blood loss. Its PolyHeme blood substitute product is a solution of chemically modified hemoglobin derived from human blood. PolyHeme simultaneously restores lost blood volume and hemoglobin levels and is designed for rapid, massive infusion. PolyHeme requires no cross-matching and is therefore immediately available and compatible with all blood types. It has an extended shelf life compared to blood. Northfield Labs purchases indated and outdated blood from The American Red Cross and Blood Centers of America for use as the starting material for PolyHeme. It uses a proprietary process of separation, filtration and chemical modification to produce PolyHeme. NFLD - Northfield Labs $17.24 DEC 15.00 DHQ-XC LB=0.55 OI=210 CB=14.45 DE=39 TY=3.0% MY=8.2% _________________________________________________________________ SEAC - SeaChange International $19.90 *** New 2004 High *** SeaChange International (NASDAQ:SEAC) is a developer, builder, and marketer of video storage systems that automate the management and distribution of long-form video streams, such as movies or other feature presentations, and short-form video streams, such as advertisements. The company's digital video systems provide storage and retrieval capabilities, multichannel content delivery and highly-automated information and order processing. SEAC - SeaChange International $19.90 DEC 17.50 UEG-XW LB=0.55 OI=48 CB=16.95 DE=39 TY=2.5% MY=7.0% _________________________________________________________________ IFLO - I-Flow $17.26 *** Medicare Coverage For PainBuster! *** I-Flow (NASDAQ:IFLO) manufactures a line of compact, portable infusion pumps, catheters and pain kits that inject medication directly to the wound site, and administer local anesthetics, chemotherapies, antibiotics, diagnostic agents, nutritional supplements and other medications. I-Flow sells and ships its products throughout the United States, Canada, Europe, Asia, Mexico, Brazil, Australia, New Zealand and the Middle East. Through InfuSystem, a wholly owned subsidiary, I-Flow is also engaged in the rental of infusion pumps on a month-to-month basis for the treatment of cancer. IFLO - I-Flow $17.26 DEC 15.00 QIF-XC LB=0.45 OI=98 CB=14.55 DE=39 TY=2.4% MY=6.9% _________________________________________________________________ ADLR - Adolor $13.94 *** Bottom-Fishing! *** Adolor (NASDAQ:ADLR) is a biopharmaceutical firm specializing in the discovery, development and commercialization of prescription pain management products. Entereg (alvimopan), its lead product candidate, is being developed to manage postoperative ileus, a gastrointestinal side effect. Entereg is being evaluated as an oral dosage form for patients undergoing certain types of major abdominal surgery. It is also being developed to manage opioid bowel dysfunction, which can negatively impact the quality of life of patients using opioid analgesic products. Entereg is also being evaluated as a treatment for chronic constipation. The company's next product candidate is a sterile lidocaine patch in clinical development for treating postoperative incisional pain. ADLR - Adolor $13.94 DEC 12.50 UAH-XV LB=0.40 OI=4 CB=12.10 DE=39 TY=2.6% MY=6.9% _________________________________________________________________ VTIV - Ventiv Health $19.20 *** Next Leg Up? *** Ventiv Health (NASDAQ:VTIV) is a provider of outsourced sales and marketing solutions for the pharmaceutical, biotechnology and life sciences industries. The company offers a range of services, using a consultative partnership that identifies strategic goals and applies targeted, tailored solutions. The company's portfolio of offerings includes integrated sales force recruitment, training and management; standalone sales force recruitment and regulatory compliance services; product, sample and literature fulfillment; product/brand management; brand/portfolio analytics and forecasting, and strategic and tactical planning. VTIV - Ventiv Health $19.20 DEC 17.50 QBP-XW LB=0.45 OI=14 CB=17.05 DE=39 TY=2.1% MY=5.5% _________________________________________________________________ MYGN - Myriad Genetics $19.32 *** Favorable Earnings? *** Myriad Genetics (NASDAQ:MYGN) is a biopharmaceutical company focused on the development of novel therapeutic products and the development and marketing of predictive medicine products. The company's researchers have made important discoveries in the fields of cancer, Alzheimer's disease, viral diseases (such as HIV), depression and obesity. Flurizan, the company's lead therapeutic candidate for the treatment of prostate cancer, is in a large, multi-center human clinical trial. Myriad is also conducting a Phase I human clinical trial for the evaluation of Flurizan for the treatment of Alzheimer's disease. MYGN - Myriad Genetics $19.32 DEC 17.50 GSQ-XW LB=0.45 OI=44 CB=17.05 DE=39 TY=2.1% MY=5.5% _________________________________________________________________ RIGL - Rigel Pharmaceuticals $27.60 *** Drug Speculation *** Rigel Pharmaceuticals (NASDAQ:RIGL) is engaged in the discovery and development of a range of small molecule product candidates for unmet medical needs. The company is developing a portfolio of product candidates and plans to take these candidates through Phase II clinical trials, after which, it will seek partners for completion of clinical trials, regulatory approval and marketing. The company currently has three initial development programs: allergy/asthma, hepatitis C and rheumatoid arthritis. RIGL - Rigel Pharmaceuticals $27.60 DEC 20.00 QRG-XD LB=0.30 OI=35 CB=19.70 DE=39 TY=1.2% MY=4.0% 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ FOSL - Fossil $27.76 *** Sales Warning = Sell-Off! *** Fossil (NASDAQ:FOSL) designs, develops, markets and distributes contemporary, fashion watches and accessories. The company's brands in its line of fashion watches include Fossil (which it developed), Relic, Zodiac, Burberry, Diesel, DKNY and Emporio Armani. It offers a range of accessories including small leather goods, belts, handbags and sunglasses under the Fossil and Relic brands, jewelry under the Fossil and Emporio Armani brands and Fossil brand apparel. FOSL - Fossil $27.76 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL DEC 30 FUA-LF 205 0.50 30.50 4.2% 1.6% _________________________________________________________________ MNST - Monster Worldwide $27.81 *** Premium-Selling Only! *** Monster Worldwide (NASDAQ:MNST), formerly known as TMP Worldwide, is a global provider of career solutions. The company, through its flagship Interactive product, Monster (www.monster.com), is engaged in online career management. Monster Worldwide is also a worldwide recruitment advertising agency through its Advertising & Communications division and a yellow pages advertising agency through its Directional Marketing division. MNST - Monster Worldwide $27.81 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL DEC 30 BSQ-LF 7660 0.60 30.60 4.9% 2.0% _________________________________________________________________ SLAB - Silicon Laboratories $30.94 *** New Trading Range? *** Silicon Labs (NASDAQ:SLAB) designs and develops proprietary, analog-intensive, mixed-signal integrated circuits for use in a range of applications. The firm groups its products into two major categories: mobile handset products and broad-based, mixed-signal products. Its mobile handset products include the Aero transceivers and radio frequency synthesizers. Its broad based, mixed-signal products include silicon Direct Access Arrangement, ISOmodem, ProSLIC, digital subscriber line analog front end, clock chips, SiPHY, optical transceivers and clock and data recovery ICs, general purpose RF Synthesizers for non handset applications, as well as the Cygnal microcontroller family of products. SLAB - Silicon Laboratories $30.94 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL DEC 35 QFJ-LG 1526 0.55 35.55 4.8% 1.5% ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEE DISCLAIMER - SECTION 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ************************Advertisement************************* Get your FREE weekly charts of the NASDAQ! Hot Stix’ stock market report reveals simple, powerful strategies for profiting from the QQQ - whether down or up! http://www.hotstix.com/public/weekly.asp?aid=755 ************************************************************** ********** DISCLAIMER ********** Please read our disclaimer at: http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html ************************************************************** ADVERTISING INFORMATION For more information on advertising in OptionInvestor Newsletter, or any Premier Investor Network newsletter please contact: Contact Support
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