The Option Investor Newsletter Tuesday 11-16-2004 Copyright 2004, All rights reserved. 1 of 3 Redistribution in any form strictly prohibited. In Section One: Wrap: Finally, A Pause To Reload Futures Markets: See Note Index Trader Wrap: H-Pow! Market Sentiment: No Surprises Posted online for subscribers at http://www.OptionInvestor.com ************************************************************ MARKET WRAP (view in courier font for table alignment) ************************************************************ 11-16-2004 High Low Volume Adv/Dcl DJIA 10487.65 - 62.60 10549.79 10477.95 1.73 bln 1243/1999 NASDAQ 2078.62 - 15.50 2087.30 2073.35 1.91 bln 1158/1937 S&P 100 562.26 - 3.83 566.09 562.19 Totals 2401/3936 S&P 500 1175.43 - 8.38 1183.81 1175.32 SOX 427.38 - 1.96 431.00 422.57 RUS 2000 617.89 - 5.97 623.86 617.80 DJ TRANS 3572.19 - 39.30 3611.96 3570.45 VIX 13.21 - 0.17 13.67 13.20 VXO (VIX-O)14.00 - 0.21 14.69 13.79 VXN 18.60 + 0.10 18.95 18.52 Total Volume 3,961M Total UpVol 1,297M Total DnVol 2,592M Total Adv 2804 Total Dcl 4457 52wk Highs 414 52wk Lows 65 TRIN 1.58 NAZTRIN 0.72 PUT/CALL 0.71 ************************************************************ Finally, A Pause To Reload by Jim Brown After three weeks of a sustained uptrend the market finally decided to take a day off and rest its weary legs. The surge to new highs has been relentless and those not already long have been wringing their hands in anguish over the thought of having to go long at new highs with no profit taking for a safer entry. Those fears have been calmed after today and now all they need is confirmation of new upward movement to hook them with the promise of higher highs. Dow Chart Nasdaq Chart SPX Chart The morning dip was blamed on a higher than expected inflation reading from the Producer Price Index. The PPI may have been blamed but they could just as easily blamed it on the moon or sunspots. The market was very extended and just needed to rest and the PPI was the best excuse market reporters could find. The PPI did jump +1.7% and well over expectations for +0.5%. This was the largest gain in fourteen years and produced a form of sticker shock for those not paying attention. Those pausing for a minute to look under the hood saw that it was directly related to the spike in oil and the hurricane and those factors causing the bounce are already abating. Oil spiked to $55 on pre election terrorist fears and speculative excess and that is already fading as expected. The impact to the PPI from fuel was enormous at +4.12% and distorted the headline number significantly. Another component causing trouble was food which was driven higher by produce and feed shortages caused by the hurricane damage and supply disruption. Individually vegetables jumped +34.2%, gas +17.3% and fuel oil +17.9%. The headline number got all the attention but ex-food/energy it was a tame +0.3%. Lots of smoke but the fire is already out. This was a slam dunk for traders and should have never caused more than a momentary blip for news dissemination. Instead they looked at the calendar and saw the Consumer Price Index due out tomorrow and took a pass on new positions until that news is out on the consumer level. The Chain Store Sales fell -0.4% for the week ended Nov-13th and that makes four of the last five weeks the index has fallen. Last weeks +1.3% jump turned out to be an anomaly and could not be continued. Sales on a year over year basis have been running on about a +3% clip and that trend continued. The ICSC is projecting holiday sales of +3% to +4% for both November and December. If oil does continue lower, something we cannot count on, then consumers will feel a pressure release that could lead to more spending. The November NAHB Housing Index was flat at 71 with October and that is also the 12-month high. Builders continue to be positive despite a minimal drop in traffic to 50 from 52. It is fall and weather does diminish idle shoppers. Those that really want to buy a new home are not deterred. The string of months at 50 or higher reached seven months and the longest string since the late 1990s. The expectations component is holding at 80 and very optimistic. Maybe too optimistic in light of the current uncertainty and the Fed rate hike process. For Wednesday we have the CPI, Residential Construction, Industrial Production, Mortgage Applications and Oil and Gas Inventories. Short of a disaster that is not energy related in the CPI I doubt that will be a factor for the market. The oil inventories could either send prices sharply lower or reverse the current drop and could be the most important release. After the bell tonight HPQ reported earnings that beat the street by +4 cents and raised their estimates for the first half of 2005. Not only did they have their best printer quarter ever, HPQ said they strengthened their competitive position with significant new offerings in storage, blade servers, imaging, printing and digital entertainment. HPQ said it had record revenues in every division and every region that helped push profits up +26%. Shares of HPQ jumped +10% in after hours trading. HPQ raised estimates for both revenue and earnings for the first half of 2005. Network Appliance (NTAP) also announced earnings that beat the street by +2 cents and raised guidance for the current quarter and full year. NTAP said there was rising strength in all product lines and all geographies. They especially saw strength in Japan and from the Federal Government which was spending heavily in homeland defense applications requiring massive amounts of data. NTAP projected revenue in the current quarter to grow +35% to +38% year over year. NTAP soared nearly +10% in after hours trading. Unfortunately the good news from HPQ and NTAP did not cross over to the broader market. Futures ceased their closing drop on the news but failed to move higher but they do have a positive bias. Several challenges still need to be overcome. Intel was downgraded today from a buy to hold at Wedbush Morgan and it was downgraded on Monday to underperform from buy at First Albany. On Friday Wells Fargo initiated coverage with a SELL. While the tech analyst bears were ganging up on Intel the stock continued to set new three month highs and closed only three cents below those highs. Intel may not be able to hold the SOX up all by itself but it is definitely bucking the downgrade trend. The SOX tried to hold the higher ground today above 430 but could not maintain traction. The SOX only lost -1.96 so it was still a good performance. Having HPQ and NTAP both beat and raise estimates tonight the potential for a new SOX high tomorrow is pretty good. Ironically HPQ made a specific note of strong Intel server sales. Guess those Intel bears will be road kill again. In order for that new SOX high to hold the investing public will have to overcome caution from the Goldman Sachs CIO survey released today. Goldman found that CIOs were more upbeat about 2005 but 2004 was not going to end with a bang. The 2004 IT growth was likely to end up between +3% and +4% according to the survey. Actually that is much higher than previous estimates but it is still lackluster. More bad news was the prospect for only +2% to +4% growth for 2005. This is also better than prior estimates at +1.9% but still lackluster. It is considered a recovery year and historically there was substantially stronger double digit growth in past recoveries. Analysts and traders could not decide to be excited or worried about the improved forecast. Goldman said Dell, HPQ, NTAP, EMC, MSFT and SYMC were gaining market share in terms of IT budgets with SUNW and CA losing ground. The markets opened weak on not only the PPI but on numbers from Wal-Mart that failed to impress. Earnings were inline with estimates but profits failed to meet Wal-Mart's hopes. They blamed the slippage on high gas prices and budgets experiencing an energy crisis. They did say sales were ramping up nicely into the holidays and they are expecting same store sales growth between +2% and +4%. WMT lost -81 cents for the day but the results impacted the entire retail sector. The Dow could not find a bid at the open and fell from yesterday's 10550 close to 10480 before any dip buyers appeared. Once they did appear they were unable to return it to its previous glory but they were successful in holding the index to barely more than a 25 point range around 10500 the rest of the day. Considering the massive gains of nearly +850 points over the last three weeks the minor -62 point loss was only a drop in the bucket. Should we really break the trend and move lower we should find initial support in the 10470 range with very strong support back at 10400. With the HPQ/NTAP news after the bell I would be really surprised to see a continued dip but anything is possible given the huge gains. The Nasdaq dropped -15 points to 2075 and found very decent support all afternoon. With the tech news after the bell spiking Dell, NTAP, SUNW, INTC, the SMH and many others in after hours I suspect the Nasdaq will open higher without a new pre open disaster. Should we move lower there is very strong support in the 2040 range but a drop of that magnitude would call into question the future of the current rally. If you look at the charts above you will see that the Dow and Nasdaq failed exactly where they should have failed after the strong run. While they may not just catapult over that resistance tomorrow or even this week I believe they will stay in close proximity for the next attack. There are a lot of traders waiting for a strong pull back that may never come and I would be very surprised if it appeared this week. If you watched the market gain hundreds of points without you over the last two weeks would you want to face that possibility again as we near Thanksgiving week? Historically the holiday week is bullish and traders hoping for entries before that week are quickly running out of time. They will have to act quick on any remaining weakness and hope there is not a bigger problem lurking in our future. This is option expiration week and the first two days have not been exciting. Those short and hoping for a continued pull back to cover are probably more nervous than a cat in a room full of rocking chairs tonight. The earnings have given the futures an upward bias and a positive CPI before the open could reawaken the bulls. Those waiting for Nasdaq 2050 to enter long positions could be waiting a long time. Shifting gears slightly I am starting to see more negative press about possible market direction once we get to January. While I agree the direction for 2005 could be a challenge I don't think wasting time worrying about it now is a worthwhile effort. Remember, those fund managers still behind the curve need to capture some performance over the next six weeks and they will be providing the market momentum for the rest of us. Plus, retail investors have awakened from their sleep with newspapers touting the current rally. Money is pouring into funds and that money has to be put to work. TrimTabs said $1.8 billion flowed into the SPY on Monday alone. So far this month $6B has flowed into US Equity funds and $4.6B into ETFs. This is the biggest influx of cash since March. Unless the spigot suddenly runs dry tomorrow that inflow should continue through the Thanksgiving rally. Also helping this flow of cash is the continued low price of oil. Oil closed at $46.10 today and while still above the 100 day average at $45.50 those hoping for a rebound at that support should be getting worried. That worry could lead to further shifting of money from oil to equities. If you are bullish on the market you should be looking for a low CPI tomorrow, higher industrial production and a sharp rise in oil inventories at 10:30. Those three things should erase any lingering doubts traders might have about being out of the market ahead of Thanksgiving. Buy the dips until the trend changes. 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************************* Quit paying fees for limit orders or minimum equity * No hidden fees for limit orders or balances * $1.50 /contract (10+ contracts) or $14.95 minimum. * Zero minimum deposit required to open an account * Free streaming quotes and Dow Jones news Go to http://www.optionsxpress.com/marketing.asp?source=oinvest34 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ************************************************************** ***************** INDEX TRADER WRAP ***************** H-Pow! Broader market declines had the look of profit taking in Tuesday's session, where despite a lower trade in oil, inflationary woes at the producer level had the major indices and bulk of sectors all relinquishing a portion of recent week's gains. But that might have been the extent to profit taking among computer-related technology after Dow component Hewlett-Packard (NYSE:HPQ) $19.68 surged to $21.14 in its extended session after handily beating its own lowered expectations. "After a challenging third quarter I am pleased with the progress we made in the fourth quarter," HP Chairman and Chief Executive Carly Fiorina said on a Tuesday evening conference call. Specifically, she said that the supply issues that caused a dramatic shortfall during third quarter had been solved. "This issue is now behind us," Ms. Fiorina said. She said HP shipped a record number of standard Intel servers during the quarter, with unit shipments rising 18% in the fourth quarter. The Palo Alto, California-based company reported net income for its fiscal fourth quarter ended October 31 of $1.09 billion, or 37 cents per share, compared with $862 million, or 28 cents per share, a year earlier. Revenue rose to $21.4 billion from $19.9 billion. Excluding items, HP posted a profit of 41 cents per share, compared with its previous forecast for a per-share profit of 35 cents to 39 cents. Shares of Intel (NASDAQ:INTC) $23.84 +0.29% rose to $24.08 in Tuesday's extended session. The NASDAQ-100 Tracker (AMEX:QQQ) $38.59 gained 12 cents to $38.71, while the Semiconductor HOLDRs (AMEX:SMH) $33.53 -0.29% rose 35 cents to $33.88, just 10-cents shy of their WEEKLY R2 in the evening session. U.S. Market Watch - 11/16/04 Close Hewlett-Packard (NYSE:HPQ) is a component of several indices in our U.S. Market Watch, and would be the 32nd-largest weighted stock in the S&P 100 Index (OEX.X). With just 35 components in the Morgan Stanley High Tech 35 Index (MSH.X) and just 30 component in the AMEX Computer Technology Index (XCI.X), tomorrow's price action in HPQ could be an index mover. Maybe that little spat of buying this afternoon that had the SOX.X briefly bidding into positive territory was some good old fashioned buying if "smart money" knew of HP's earnings. AMEX Computer Tech (XCI) - 10-point box size While the XCI tends to shadow the percentage moves in the Morgan Stanley High Tech 35 Index (MSH.X), the conventional 10-point box chart of the XCI.X provides a very good test for additional strength near-term. A "low pole warning" is similar to that discussed previously in the MSH (conventional 5-point box) where the test for strength is a trade at 720, which would unleash a triple top buy signal and break the bearish resistance trend. There's an old point and figure saying that "the first test of bullish support trend can be painful for a bear" (see March 2003 trade at 470) and the same can be true that "the first test of bearish resistance can be painful for a bull." Will bears defend the 720 level, or is the second leg of the bull market simply to powerful to deny? From a risk/reward basis, you can be certain that bears will be trying to leverage off the 720 level with a stop so near. If they turn to cover at 720, that's where the power of a triple top buy signal is often found as demand (X) can build. In early September (9), Dorsey/Wright and Associate's Computers Bullish % (BPCOMP) reversed up to "bull alert" status at 24% and remains bull alert at 46%. It would currently take a reading of 72% for this sector to achieve "bull confirmed" status. In February (2) of this year, this sector bullish % reversed lower to "bear alert" and in March (3) fell further to "bear confirmed" at 56%. Here's a quick look at the XCI's bar chart with conventional retracement overlaid. Computer Technology Index (XCI.X) - Daily Intervals This week's WEEKLY R2 would line up nicely with that 720 level noted in the PnF chart as the big test for bulls to break through. Buyers seemed very eager to snap up "big tech" on that recent one-day dip to 50% retracement of 686.25 as if to say, "the gig is up!" Applied Materials (NASDAQ:AMAT) $16.76 -0.11% quarterly earnings are slated for release tomorrow evening. But let's not forget about tomorrow morning's weekly crude oil inventory report. I need to get you this week's Pivot Levels. In today's Market Monitor, (12:20 and 12:28 PM EST) I ran through the 30-minute interval chart as well as $1, $0.50 and $0.25 box size point and figure charts of the Continuous Crude Oil Contract ($WTIC). While I (Jeff Bailey) am not ignoring, or being complacent about the October PPI data, let's realized that the Commerce Department noted that energy price gains were largely responsible for the PPI increase in October. Here's a 30-minute interval chart of the December Crude Oil futures (cl04z) that we look at from time to time with QCharts' weekly pivot levels turned on. December Crude Oil futures (cl04z) - 30-minute intervals As time has passed and oil prices have fallen, the I want to make sure we're all alert that we're now nearing that bullish support trend on the $0.25-box chart of Stockcharts.com's $WTIC point and figure chart. Now, the first sign of meaningful strength (demand) in the $0.25 box chart would be a trade at $48.25 at this point. With that said, it is notable that December Crude Futures (cl04z) haven't seen the light of day above a WEEKLY Pivot just over two weeks. Monday's low caught a bid at WEEKLY S2 $45.43, but a unison break of WEEKLY S2 and the $45.00 level should pave the way for a test of the current bearish vertical count. Believe me. Traders and investors may have shrugged their shoulders at today's PPI data, fully knowing that oil prices have fallen from their October highs, but a resurgence in oil, especially much above $52 would most likely cap recent broader market equity gains in fast order. Market Snapshot / Internals - 11/16/04 Close The only comments I would have on today's internals is that there was stock hitting bids, BIG bids as the TRIN was on the rise pretty much throughout the session. At the mid-point of today's session I thought volume levels were "average" or slightly below what we've been seeing. I was surprised by the final tally at the NASDAQ where a rather quiet session finds 1.9 billion traded. It is that volume at the NASDAQ combined with rising TRIN suggesting to me that there were some big bids taking in some stocks on today's weakness. Pivot Matrix - In tonight's extended session, the QQQ after-hours highs comes at tomorrow's DAILY R1. Probably just a coincidence, but may hint that sellers will try and hold firm into tomorrow morning's 10:30 AM EST release of crude oil inventories, and at this point, why flinch with AMAT slated to release tomorrow, where there's some hope of a knee-jerk reaction lower on Thursday. Today's high on the QQQ came twice. Once early in the morning, then later in the afternoon. If bears do flinch and don't like what HPQ had to say, that $38.68 intra-day double topping action might find some buyers. Tentative morning resistance in the SPX is present at DAILY Pivot and WEEKLY Pivot. A quick check of the S&P Depository Receipts (AMEX:SPY) $117.88 -0.71% has last tick in tonight's extended session at $117.98, a couple of cents shy of its DAILY Pivot. The QQQ did briefly penetrate its WEEKLY Pivot ($38.35) by 3 cents, but unless the market knows of anything "worse" at AMAT, which HPQ's quarterly earnings may have reversed, the QQQ should stay firm at or above WEEKLY Pivot in my opinion. Jeff Bailey **************** MARKET SENTIMENT **************** No Surprises - J. Brown Okay the big jump in wholesale prices was a surprise but was the pull back really a surprise? I hope not. We've been looking for a dip for days now. If not for the rise in inflation via the PPI index stocks may not have dipped at all. The news was probably just the excuse traders needed to do some much needed profit taking. Even with the excuse to sell the weakness was not very deep. I would hope for more profit taking tomorrow but a positive earnings report from tech heavy-weight Hewlett-Packard (HPQ) after the bell on Tuesday could spoil that. The company came in above estimates and offered a positive outlook on the fourth quarter. Normally this would put a bid under tech stocks, especially hardware stocks tomorrow. Of course tomorrow brings a parade of economic data. First and foremost is the Consumer Price Index or CPI. If the CPI comes in way above expectations it could/should weigh on the markets. Wednesday also brings the industrial production and capacity utilization numbers. Plus, Wall Street will be digesting the latest housing starts and building permits data. Another pivotal piece of evidence for the tech sector and specifically the semiconductor sector will be Applied Material's (AMAT) earnings. Wall Street is looking for 26 cents a share from the planet's largest chip equipment maker. AMAT's results and guidance could have a big affect on the SOX and thus indirectly on the NASDAQ. FYI: the COT data at the bottom of this report has been updated for the latest data available on 11/09/04. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10753 52-week Low : 9585 Current : 10487 Moving Averages: (Simple) 10-dma: 10404 50-dma: 10148 200-dma: 10244 S&P 500 ($SPX) 52-week High: 1170 52-week Low : 1031 Current : 1175 Moving Averages: (Simple) 10-dma: 1167 50-dma: 1128 200-dma: 1120 Nasdaq-100 ($NDX) 52-week High: 1559 52-week Low : 1301 Current : 1548 Moving Averages: (Simple) 10-dma: 1532 50-dma: 1455 200-dma: 1438 ----------------------------------------------------------------- CBOE Market Volatility Index (VIX) = 13.21 -0.17 CBOE Mkt Volatility old VIX (VXO) = 14.00 -0.21 Nasdaq Volatility Index (VXN) = 18.60 +0.10 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.71 1,007,709 713,584 Equity Only 0.59 801,638 474,116 OEX 1.62 30,248 49,147 QQQ 0.60 80,552 48,923 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 71.5 + 1 Bear Correction NASDAQ-100 71.0 + 2 Bull Confirmed Dow Indust. 63.3 + 0 Bull Confirmed S&P 500 72.2 + 1 Bull Confirmed S&P 100 72.0 + 1 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: 0.98 10-dma: 0.93 21-dma: 0.94 55-dma: 1.00 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 1042 1130 Decliners 1788 1899 New Highs 197 130 New Lows 13 14 Up Volume 458M 790M Down Vol. 1248M 1062M Total Vol. 1734M 1885M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 11/09/04 Weekly COT report discloses positions held by small specs and commercial traders of index futures contracts at the Chicago Mercantile Exchange and Chicago Board of Trade. COT data can be found at www.cftc.gov. Small specs are the general trading public with commercials being financial institutions. Commercials are historically on the correct side of future trend changes while small specs tend to be wrong. S&P 500 The difference between longs and shorts on the commercial side continues to narrow suggesting no bias one way or the other. Small traders are also somewhat neutral with a mild bullish bias. Commercials Long Short Net % Of OI 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%) 11/09/04 447,779 449,171 ( 1,392) (0.1%) 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 10/19/04 147,148 124,827 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% 11/09/04 148,415 136,325 12,090 4.2% 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 Commercials traders appear to be trying to capitalize on the S&P's overbought status. Short positions soared and the latest data is one of the most bearish readings of the year. As is usually the case the small traders is on the opposite side of the play with one of the most bullish readings of the year. Commercials Long Short Net % Of OI 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%) 11/09/04 337,164 672,903 (335,739) (33.2%) 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 10/19/04 353,903 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% 11/09/04 392,253 58,999 333,254 73.8% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Commercial traders remain bullish on the NASDAQ. Meanwhile small traders upped their positions on both longs and shorts but hit a new bearish extreme as far as net short positions. Commercials Long Short Net % of OI 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% 11/09/04 54,509 33,016 21,493 24.5% 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 10/19/04 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%) 11/09/04 10,213 38,251 (28,038) (57.8%) Most bearish reading of the year: (28,038) - 11/09/04 Most bullish reading of the year: 19,088 - 01/21/02 DOW JONES INDUSTRIAL Not much action in the commercials as they remain evenly divided between longs and shorts. The same can be said for small traders this past week with a split between bulls and the bears. Commercials Long Short Net % of OI 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% 11/09/04 22,863 22,463 400 0.8% 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% 11/09/04 6,165 6,483 ( 318) ( 2.5%) 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 11-16-2004 Copyright 2004, All rights reserved. 2 of 3 Redistribution in any form strictly prohibited. In Section Two: Dropped Calls: None Dropped Puts: None Call Play Updates: COP, DHR, EBAY, EOG, FDX, GDW, IBM, LEH, MUR, OSK, QCOM, SLB, New Calls Plays: None Put Play Updates: MXIM New Put Plays: None **************** PICKS WE DROPPED **************** When we drop a pick it doesn't mean we are recommending a sell on that play. Many dropped picks go on to be very profitable. We drop a pick because something happened to change its profile. News, price, direction, etc. We drop it because we don't want anyone else starting a new play at that time. We have hundreds of new readers with each issue who are unfamiliar with the previous history for that pick and we want them to look at any current pick as a valid play. CALLS: ***** None PUTS: ***** None ************************Advertisement************************* Quit paying fees for limit orders or minimum equity * No hidden fees for limit orders or balances * $1.50 /contract (10+ contracts) or $14.95 minimum. * Zero minimum deposit required to open an account * Free streaming quotes and Dow Jones news Go to http://www.optionsxpress.com/marketing.asp?source=oinvest34 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ************************************************************** ******************** PLAY UPDATES - CALLS ******************** ConocoPhillips - COP - close: 86.13 change: -0.37 stop: 81.99 Another drop on crude prices appeared to weigh on energy stocks. December crude oil contracts have been falling for three weeks in a row and the commodity is now testing its simple 100-dma. Given the length of the profit taking in crude one could argue it's time for a bounce. Meanwhile the oil sector has seen some profit taking this week and COP is slipping towards short-term support at $86.00. Readers can watch for a bounce from $86 or if the selling continues look for a bounce from $85.00 as a new bullish entry point. We are keeping an eye on the technicals as COP's MACD has reversed back into a sell signal. Picked on November 03 at $85.50 Change since picked: + 0.63 Earnings Date 10/27/04 (confirmed) Average Daily Volume = 3.0 million Chart = --- Danaher - DHR - close: 57.03 change: -0.16 stop: 53.99 We've been expecting some profit taking in DHR so it's no surprise to see some this week. The stock has been overbought so the minor pull back is already pushing the MACD indicator toward a new sell signal. We've been suggesting that readers do their own profit taking and then watch for a bounce once the pull back is over. Right now the $55-56 levels should act as support for DHR. In the news DHR announced a transition plan for Senior VP of finance Daniel Comas to succeed CFO Patrick Allender who is planning on retirement in the next couple of years. Picked on October 27 at $54.99 Change since picked: + 2.04 Earnings Date 10/21/04 (confirmed) Average Daily Volume = 1.3 million Chart = --- eBay Inc. - EBAY - close: 107.92 chg: -1.50 stop: 99.99 We've been expecting some profit taking in EBAY so Tuesday's decline was not a surprise. Furthermore we don't believe the dip is over and would look for EBAY to test its simple 10-dma near $105. Fortunately, volume has been low on the pull back and that's what we want to see a pause in the buying rather than an uptick in the selling. It's not too late to do some profit taking of your own if you didn't do so on Friday or Monday. Picked on November 80 at $103.69 Change since picked: + 4.23 Earnings Date 10/20/04 (confirmed) Average Daily Volume = 10.4 million Chart = --- EOG Resources - EOG - close: 67.01 change: -0.49 stop: 63.99 As part of the oil group EOG has seen some profit taking this week as well. Readers can look for a dip toward $65.00 and/or its simple 50-dma. We would then consider a bounce above $65 as a new bullish entry point. Picked on November 14 at $ 68.37 Change since picked: - 1.36 Earnings Date 10/26/04 (confirmed) Average Daily Volume = 1.1 million Chart = --- Fedex Corp - FDX - close: 93.74 change: -1.22 stop: 89.99 No surprises here. We've been warning that the Transports and FDX were looking overbought and due for some profit taking. The question now is when/where will it stop. The first level of support would be the simple 10-dma just over $92.50 but we don't believe that will stall the selling. It would be bullish to see FDX consolidate sideways around the $92 level but we're expecting a pull back toward $90, thus our suggestions the past few days to take some money off the table. We're holding FDX because our end-of-year target is the $100 region. Picked on October 21 at $89.45 Change since picked: + 4.29 Earnings Date 09/22/04 (confirmed) Average Daily Volume = 1.5 million Chart = --- Golden West Fncl - GDW - cls: 120.00 chg: -1.01 stop: 114.99 Shares of GDW pulled back a bit with the financials in some overdue profit taking. It would be bullish to see GDW hold here at the $120 level but we would look for a pull back to support at $118.00. A bounce from $118 would be the next bullish entry point. No change in our strategy. Picked on November 10 at $118.15 Change since picked: + 1.85 Earnings Date 10/21/04 (confirmed) Average Daily Volume = 583 thousand Chart = --- Intl Business Mach. - IBM - close: 94.89 chg: -1.03 stop: 89.99 IBM is showing exceptional strength this week resisting any profit taking on Monday and only sliding one percent in today's pull back. We remain very bullish on IBM and continue to target $99-100 by year's end but the stock is very overbought and due for a significant dip. Readers looking for bullish entry points can wait for a dip toward the $92-93 range. Picked on October 27 at $90.00 Change since picked: + 4.89 Earnings Date 10/18/04 (confirmed) Average Daily Volume = 4.7 million Chart = --- Lehman Brothers - LEH - close: 82.98 chg: -1.49 stop: 79.95 Some overdue profit taking in the XBD broker-dealer index was more than echoed in shares of LEH. The stock under performed its peers with a 1.76 percent drop. We are not excited to see the MACD signal produce a new sell reading but we've been expecting some consolidation. Readers can watch for LEH to pull back toward the $82 level, which should act as support. Picked on October 26 at $80.60 Change since picked: + 2.38 Earnings Date 09/21/04 (confirmed) Average Daily Volume = 2.0 million Chart = --- Murphy Oil - MUR - close: 78.42 change: -0.51 stop: 77.49 There's a reason we used a trigger on MUR. We were encouraged by the potential bottom and the upturn in shares but wanted to see some confirmation of the new leg higher. Fortunately, we're still sitting on the sidelines as the stock experiences two days of profit taking. Aggressive traders can watch for another bounce from support near $77.50. We are still waiting for MUR to trade over $82 and hit our TRIGGER at $82.25. Picked on November xx at $ xx.xx <-- see TRIGGER Change since picked: + 0.00 Earnings Date 10/26/04 (confirmed) Average Daily Volume = 500 thousand Chart = --- Oshkosh Truck - OSK - close: 62.95 change: -0.34 stop: 57.00 It's the same story here on OSK. Shares experienced some profit taking but remain overbought and vulnerable for more. The technicals are beginning to weaken. We'd watch for a pull back toward $60 and buy the bounce as a new entry point. Picked on November 07 at $ 62.16 Change since picked: + 0.79 Earnings Date 10/28/04 (confirmed) Average Daily Volume = 205 thousand Chart = --- Qualcomm - QCOM - close: 39.64 change: -0.55 stop: 37.50 Monday's opening spike higher was enough to hit our TRIGGER to go long at $40.51. Unfortunately, QCOM couldn't hold its gains and fell back under its simple 50-dma. Today's profit taking pulled QCOM for a 1.36 percent loss and back under the $40.00 mark. We would expect QCOM to retest support at its simple 100-dma near $38.00. Just remember that our stop loss is at $37.50. We would not suggest new bullish positions until QCOM traded back over $40.50. Picked on November 15 at $ 40.51 Change since picked: - 0.87 Earnings Date 11/03/04 (confirmed) Average Daily Volume = 13.9 million Chart = --- Schlumberger - SLB - close: 64.10 change: +0.37 stop: 61.00 SLB is another oil play that has been slipping as crude oil slides lower. We still expect the group to turn higher but it looks like SLB could retest support at the $62.00 level before bouncing again. Be patient with your entries and wait for SLB to trade back over $65 again. Picked on November 12 at $ 65.05 Change since picked: - 0.95 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 ******************* Maxim Integrated - MXIM - close: 42.52 chg: -0.72 stop: 45.51 The SOX was giving us a scare yesterday as the semiconductor index broke out over the 425 level and pushed through technical resistance at its exponential 200-dma. This sent shares of MXIM over the $43 level, which we felt was the first line of defense for the bears. We still suggest caution given the SOX's strength but MXIM turned lower today giving bears a boost of confidence. We would not suggest new bearish positions until MXIM traded back under the $42 level. Picked on November 10 at $42.04 Change since picked: + 0.48 Earnings Date 10/05/04 (confirmed) Average Daily Volume = 6.0 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 11-16-2004 Copyright 2004, All rights reserved. 3 of 3 Redistribution in any form strictly prohibited. In Section Three: Watch List: Another list of breakout and breakdowns. Spreads & Straddles: Stocks Stumble On Inflation Concerns! Premium Selling Plays: Naked Puts & Calls ********** WATCH LIST ********** Another list of breakout and breakdowns. ___________________________________________________________________ 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. ___________________________________________________________________ Avid Technology - AVID - close: 56.90 change: +0.17 WHAT TO WATCH: The recent surge in shares of AVID pushed the stock through major resistance at $55.00. Chart readers will note the move followed a two-week consolidation and was fueled by very strong volume. This looks like a bullish entry point and the P&F chart confirms the breakout. The P&F currently points to a $70 target. We would watch for a pull back toward $55 and buy a bounce with a $60 target. Chart= --- Caterpillar - CAT - close: 89.88 change: +0.19 WHAT TO WATCH: CAT has surprised us the past couple of days. Shares have been resistant to profit taking. Yet one can see that the momentum is beginning to wane. We like CAT's breakout over $85 and believe the trend will continue but we'd like to buy a dip. Watch for a pull back into the $85-86 range and then wait for the bounce to begin. Chart= --- The Corporate Executive Board Co - EXBD - cls: 67.64 chg: +2.56 WHAT TO WATCH: We had been hoping that the very strong EXBD would pull back toward the bottom of its rising channel or even round- number support at $60.00 so we could jump on this band wagon. Unfortunately, we've had no such luck. The consolidation between $62 and $65 has blossomed into another breakout to new all-time highs. Technical traders will also note the rising volume supporting the rally. We're watching for a pull back (again). Chart= --- Zebra Technology - ZBRA - close: 48.48 change: -3.57 WHAT TO WATCH: ZBRA broke its long-term, two-year up trend in late October when shares fell through their simple 100-dma and then the $55.00 level. After bouncing from its 200-dma the bounce failed again under the 100-dma, which is not uncommon. Yet now the stock is selling on sharply on big volume. Technical traders aren't supposed to care about the story behind the stock's movement and instead focus on the pattern. Right now that pattern is screaming trend change. Watch for a failed rally under $52.00 as a new bearish entry point. Yet be aware that the P&F chart only points to a $45 (bearish) target. Chart= ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- RKY $72.62 +0.99 - Watch for a pull back toward round-number support at $70.00 and consider a bounce. MBT $139.00 -3.50 - Nimble traders may want to keep an eye on MBT. Shares are nearing trading range support near $138-137. A breakdown here could lead toward a drop to $130-125. NAV $40.60 +0.05 - NAV is resisting any profit taking and clutching to its recent breakout over resistance at $40.00 and its simple 200-dma. ITT $84.07 -0.82 - ITT is seeing some profit taking as expected. We'll watch for a bounce from $82.00. ITW $94.35 -1.20 - ITW is seeing some profit taking as expected. We'll watch for a bounce from $90 or the 200-dma. ************************Advertisement************************* Quit paying fees for limit orders or minimum equity * No hidden fees for limit orders or balances * $1.50 /contract (10+ contracts) or $14.95 minimum. * Zero minimum deposit required to open an account * Free streaming quotes and Dow Jones news Go to http://www.optionsxpress.com/marketing.asp?source=oinvest34 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ************************************************************** ******************* SPREADS & STRADDLES ******************* Stocks Stumble On Inflation Concerns! By Ray Cummins Equity values retreated Tuesday after a government report said wholesale prices surged in October. U.S. producer prices increased 1.7% with most of the inflation in finished goods coming from food and energy. The core rate, which excludes food and energy, increased a more moderate 0.3%. Disappointment over Wal-Mart's (NYSE:WMT) quarterly sales also weighed on investors and they decided to take profits after the recent rally. The Dow Jones Industrial Average finished down 62 points at 10,487 while the NASDAQ Composite Index fell 15 points to 2,078. The broader S&P 500 Index dropped 8 points to 1,175. There were nearly two losers for every winner on the New York Stock Exchange and breadth was similar on the NASDAQ. Trading volume was 1.35 billion on the Big Board and 1.88 billion on the the technology exchange. Treasury prices closed lower amid new inflation worries. The benchmark 10-year note ended 6/32 lower at 100 10/32, while its yield rose to 4.21%. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SUMMARY OF CURRENT POSITIONS - AS OF 11/14/04 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 98.55 NOV 80.0 85.0 0.65 84.35 0.65 Open BTU 60.07 68.46 NOV 50.0 55.0 0.60 54.40 0.60 Open MRVL 28.84 30.80 NOV 22.5 25.0 0.35 24.65 0.35 Open COST 44.69 49.12 NOV 40.0 42.5 0.30 42.20 0.30 Open NEM 46.25 49.65 NOV 40.0 42.5 0.30 42.20 0.30 Open INSP 47.25 55.83 NOV 35.0 40.0 0.85 39.15 0.85 Open BG 41.96 48.35 NOV 35.0 40.0 0.50 39.50 0.50 Open ADBE 53.57 58.97 NOV 45.0 50.0 0.50 49.50 0.50 Open VRNT 37.73 39.33 NOV 30.0 35.0 0.55 34.45 0.55 Open OSTK 52.63 60.20 NOV 40.0 45.0 0.60 44.40 0.60 Open MDC 76.00 79.35 NOV 65.0 70.0 0.50 69.50 0.50 Open SPF 53.90 58.41 NOV 45.0 50.0 0.60 49.40 0.60 Open NEM 47.52 49.65 NOV 42.5 45.0 0.35 44.65 0.35 Open PD 87.54 97.69 NOV 75.0 80.0 0.50 79.50 0.50 Open EBAY 100.66 109.89 NOV 90.0 95.0 0.60 94.40 0.60 Open CTX 53.55 55.69 NOV 45.0 50.0 0.50 49.50 0.50 Open PIXR 84.45 86.54 NOV 75.0 80.0 1.00 79.00 1.00 Open S 45.88 46.01 NOV 40.0 42.5 0.35 42.15 0.35 Open VIP 121.49 119.00 DEC 105.0 110.0 0.70 109.30 0.70 Open WLP 113.90 117.64 DEC 100.0 105.0 0.50 104.50 0.50 Open L/P = Long Put S/P = Short Put CB = Cost Basis G/L = Gain/Loss Although currently profitable, positions in Pacificare Health Systems (NYSE:PHS), Celgene (NASDAQ:CELG) and Guitar Center (NASDAQ:GTRC) have previously been closed to limit potential losses. CALL-CREDIT SPREADS Stock Pick Last Mon L/C S/C Credit CB G/L Status AMZN 40.47 40.46 NOV 50.0 45.0 0.65 45.65 0.65 Open CHIR 37.98 31.95 NOV 45.0 42.5 0.30 42.80 0.30 Open FLIR 54.52 60.70 NOV 65.0 60.0 0.70 60.70 (0.00) Open? BIIB 59.82 59.04 NOV 70.0 65.0 0.65 65.65 0.65 Open IFIN 36.50 40.70 NOV 42.5 40.0 0.30 40.30 (0.40) Open? TTWO 32.55 34.62 NOV 37.5 35.0 0.30 35.30 0.30 Open QCOM 39.50 40.20 NOV 45.0 42.5 0.30 42.80 0.30 Open SEPR 45.44 46.80 DEC 55.0 50.0 1.00 51.00 1.00 Open TTWO 33.24 34.62 DEC 40.0 37.5 0.30 37.80 0.30 Open INTU 43.14 43.48 NOV 47.5 45.0 0.30 45.30 0.30 Open RIMM 77.75 83.00 NOV 95.0 90.0 0.50 90.50 0.50 Open ERTS 46.97 47.59 DEC 55.0 50.0 0.65 50.65 0.65 Open GM 39.97 40.21 DEC 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 Investors Financial (NASDAQ:IFIN) became an early-exit candidate on Friday and Flir Systems (NASDAQ:FLIR), Sepracor (NASDAQ:SEPR) and Take-Two Interactive (NASDAQ:TTWO) are on the "watch" list. Positions in Aetna (NYSE:AET), Beazer Homes (NYSE:BZH), Hartford Insurance (NYSE:HIG), Cigna (NYSE:CI), Chubb (NYSE:CB), Mercury Interactive (NASDAQ:MERQ), Microchip (NASDAQ:MCHP), J.C. Penney (NYSE:JCP), SPX Corp. (NYSE:SPW), Pediatrix Medical (NYSE:PDX), and Express Scripts (NASDAQ:ESRX) have previously been closed. DEBIT STRADDLES Stock Pick Last Exp. Long Long Initial Max Play Symbol Price Price Month Call Put Debit Value Status NTES 40.00 51.94 NOV 40.0 40.0 5.00 12.00 Open? NEW 55.15 64.00 NOV 55.0 55.0 4.70 9.10 Open? SBUX 54.51 55.30 NOV 55.0 55.0 2.50 2.25 Open? Straddles in Netease.com (NASDAQ:NTES) and New Century Finance (NYSE:NEW) have provided large profits, thus conservative traders should consider "locking-in" gains. The Starbucks (NASDAQ:SBUX) straddle is a candidate for "capital preservation" as the brief post-earnings retreat did not result in a profitable outcome. Traders who remained in the j2Communications (NASDAQ:JCOM) play were rewarded with a big move in the stock on Friday, resulting in a favorable profit for the neutral-outlook position. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ EYET - Eyetech Pharmaceuticals $45.64 *** Premium-Selling! *** Eyetech Pharmaceuticals (NASDAQ:EYET) is a biopharmaceutical firm that specializes in the development and commercialization of novel therapeutics to treat diseases of the eye. Its initial focus is on diseases affecting the back of the eye, particularly the retina. The company's most advanced product candidate is Macugen, which it is developing for wet age-related macular degeneration (AMD) and diabetic macular degeneration (DME). EYET - Eyetech Pharmaceuticals $45.64 PLAY (conservative - bullish/credit spread): BUY PUT DEC-30.00 QUJ-XF OI=1344 ASK=$0.35 SELL PUT DEC-35.00 QUJ-XG OI=1707 BID=$0.70 INITIAL NET-CREDIT TARGET=$0.45-$0.55 POTENTIAL PROFIT(max)=9% B/E=$34.55 __________________________________________________________________ XMSR - XM Satellite Radio $36.13 *** New All-Time High! *** XM Satellite Radio (NASDAQ:XMSR) is America's #1 satellite radio service with over 1 million subscribers. Broadcasting live daily from Washington, DC, New York City and Nashville, Tennessee at the Country Music Hall of Fame, XM provides its loyal listeners with over 100 digital channels of choice: 70 music channels, more than 35 of them commercial-free, from hip hop to opera, classical to country, bluegrass to blues; and 31 channels of premiere sports, talk, comedy, kid's and entertainment programming. Compact and stylish XM satellite radio receivers for the home, the car, the computer and even a "boom-box" for on the go are available from retailers nationwide. XMSR - XM Satellite Radio $36.13 PLAY (conservative - bullish/credit spread): BUY PUT DEC-30.00 QSY-XF OI=1589 ASK=$0.15 SELL PUT DEC-32.50 QSY-XZ OI=1099 BID=$0.35 INITIAL NET-CREDIT TARGET=$0.25-$0.30 POTENTIAL PROFIT(max)=11% B/E=$32.25 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 $58.31 *** Stuck In A Trading Range? *** Biogen Idec (NASDAQ:BIIB) is a biopharmaceutical company engaged in the research, development, manufacture and commercialization of targeted therapies for the treatment of cancer and autoimmune and inflammatory diseases. The firm's lead products are Avonex, for the treatment of relapsing multiple sclerosis; Rituxan and Zevalin, both of which treat B-cell non-Hodgkin's lymphomas; and Amevive, for the treatment of adult patients with severe chronic plaque psoriasis who are also candidates for systemic therapy or phototherapy. The company also receives revenues from royalties on sales by its licensees of a number of products covered under patents that it controls. BIIB - Biogen Idec $58.31 PLAY (conservative - bearish/credit spread): BUY CALL DEC-70.00 IHD-LN OI=1388 ASK=$0.20 SELL CALL DEC-65.00 IHD-LM OI=6461 BID=$0.65 INITIAL NET-CREDIT TARGET=$0.50-$0.55 POTENTIAL PROFIT(max)=11% B/E=$65.50 __________________________________________________________________ INSP - InfoSpace $49.17 *** Consolidation Underway! *** 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. INSP - InfoSpace $49.17 PLAY (very conservative - bearish/credit spread): BUY CALL DEC-65.00 IOU-LM OI=1100 ASK=$0.25 SELL CALL DEC-60.00 IOU-LL OI=423 BID=$0.55 INITIAL NET-CREDIT TARGET=$0.40-$0.45 POTENTIAL PROFIT(max)=8% B/E=$60.40 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 11/14/04 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 15.60 0.40 5.95% 3.31% NCRX NOV 25.00 24.30 27.85 0.70 5.52% 2.88% ANF NOV 32.50 32.10 44.68 0.40 2.78% 1.25% STTX NOV 25.00 24.60 27.40 0.40 3.89% 1.63% SNDA NOV 22.50 21.85 38.69 0.65 7.78% 2.97% IDBE NOV 12.50 12.15 18.58 0.35 6.44% 2.88% BVF NOV 17.50 17.05 17.10 0.05 0.60% 2.64% USG NOV 17.50 16.90 31.59 0.60 6.84% 3.55% SNDA NOV 25.00 24.50 38.69 0.50 5.67% 2.04% WEBX NOV 20.00 19.60 25.06 0.40 5.75% 2.04% ENER NOV 15.00 14.40 17.95 0.60 8.11% 4.17% DRIV NOV 25.00 24.35 38.70 0.65 6.81% 2.67% PLMD NOV 30.00 29.55 34.75 0.45 3.33% 1.52% CNCT NOV 22.50 22.10 29.92 0.40 4.68% 1.81% CCBI NOV 22.50 21.90 23.86 0.60 5.51% 2.74% EYET NOV 35.00 34.45 42.71 0.55 5.17% 1.60% USG NOV 17.50 17.15 31.59 0.35 6.12% 2.04% RIGL NOV 22.50 21.85 28.10 0.65 8.14% 2.97% MCD NOV 27.50 27.15 30.50 0.35 2.99% 1.29% FARO NOV 20.00 19.60 24.26 0.40 5.67% 2.04% NOVN NOV 20.00 19.60 22.80 0.40 4.88% 2.04% VRSN NOV 20.00 19.65 30.26 0.35 4.40% 1.78% SSNC NOV 20.00 19.55 22.99 0.45 5.71% 2.30% CKFR NOV 30.00 29.40 34.55 0.60 4.91% 2.04% OSTK NOV 35.00 34.60 60.20 0.40 4.10% 1.16% GBBK NOV 30.00 29.40 31.24 0.60 5.01% 2.04% KRON NOV 45.00 44.50 49.44 0.50 3.10% 1.12% MRVL NOV 23.75 23.35 30.80 0.40 5.59% 1.71% AGIX NOV 20.00 19.70 35.05 0.30 4.50% 1.52% AFCO NOV 20.00 19.55 23.22 0.45 6.68% 2.30% TSRA NOV 25.00 24.70 33.24 0.30 4.18% 1.21% SRDX NOV 25.00 24.50 29.52 0.50 5.79% 2.04% ELN NOV 22.50 22.05 30.01 0.45 6.53% 2.04% XMSR NOV 30.00 29.45 33.88 0.55 5.48% 1.87% ENDP NOV 20.00 19.55 21.73 0.45 6.72% 2.30% LNG NOV 20.00 19.45 44.35 0.55 8.61% 2.83% USG NOV 20.00 19.50 31.59 0.50 8.45% 2.56% EDS NOV 20.00 19.65 21.87 0.35 5.49% 1.78% MANT NOV 17.50 17.05 23.73 0.45 9.65% 2.64% NTMD NOV 17.50 17.25 19.73 0.25 6.12% 1.45% A NOV 22.50 22.10 22.58 0.40 5.86% 1.81% SCHN NOV 26.60 26.15 34.05 0.45 5.81% 1.72% CYTC NOV 25.00 24.60 26.98 0.40 5.27% 1.63% USG NOV 20.00 19.70 31.59 0.30 6.65% 1.52% TSRA NOV 22.50 22.30 33.24 0.20 5.12% 0.90% FARO NOV 22.50 22.10 24.26 0.40 7.61% 1.81% NTAP NOV 22.50 22.15 25.30 0.35 6.52% 1.58% VAR NOV 37.50 37.15 40.67 0.35 3.87% 0.94% DOX NOV 22.50 22.25 26.81 0.25 5.00% 1.12% ROST NOV 25.00 24.70 27.99 0.30 4.78% 1.21% JNPR NOV 25.00 24.70 28.50 0.30 4.89% 1.21% LNG NOV 22.50 22.15 44.35 0.35 8.04% 1.58% SFNT NOV 30.00 29.60 35.59 0.40 6.06% 1.35% ELN NOV 22.50 22.25 30.01 0.25 5.96% 1.12% YHOO NOV 35.00 34.60 37.80 0.40 5.30% 1.16% XMSR NOV 30.00 29.65 33.88 0.35 5.65% 1.18% SHPGY NOV 27.50 27.15 29.51 0.35 5.67% 1.29% MRVL NOV 25.00 24.65 30.80 0.35 7.34% 1.42% ANF NOV 35.00 34.55 44.68 0.45 6.35% 1.30% USG NOV 25.00 24.70 31.59 0.30 8.75% 1.21% DDS NOV 22.50 22.00 25.00 0.50 14.05% 2.27% RDEN NOV 22.50 22.25 25.00 0.25 7.08% 1.12% USPI NOV 35.00 34.60 37.76 0.40 7.21% 1.16% RIGL NOV 22.50 22.20 28.10 0.30 9.75% 1.35% ELN NOV 22.50 22.15 30.01 0.35 13.38% 1.58% VTIV NOV 17.50 17.00 19.40 0.50 17.33% 2.94% NTMD NOV 20.00 19.60 19.73 0.13 5.49% 2.04% MYGN DEC 17.50 17.05 19.71 0.45 5.52% 2.64% VTIV DEC 17.50 17.05 19.40 0.45 5.46% 2.64% IFLO DEC 15.00 14.55 18.99 0.45 6.89% 3.09% SEAC DEC 17.50 16.95 19.51 0.55 7.02% 3.24% ADLR DEC 12.50 12.10 14.13 0.40 6.88% 3.31% UTHR DEC 25.00 24.05 36.97 0.95 9.03% 3.95% RIGL DEC 20.00 19.70 28.10 0.30 4.02% 1.52% NFLD DEC 15.00 14.45 16.60 0.55 8.24% 3.81% Although currently profitable, positions in Palomar Medical (NASDAQ:PMTI) and Energy Conversion Devices (NASDAQ:ENER); at $17.50, as well as Ditech Communications (NASDAQ:DITC) and Telular (NASDAQ:WRLS) have previously been closed to limit potential losses. Nitromed (NASDAQ:NTMD) is among the most obvious "early-exit" candidate in the portfolio. NAKED CALLS Stock Strike Strike Break Current Gain Max Simple Symbol Month Price Even Price (Loss) Yield Yield BRCM NOV 35.00 35.35 29.33 0.35 4.44% 0.99% LLTC NOV 40.00 40.60 38.05 0.60 3.74% 1.48% SINA NOV 35.00 35.35 37.50 (2.15) 0.00% 0.99% * IVX NOV 20.00 20.75 14.92 0.75 9.51% 3.61% PLMO NOV 40.00 40.45 36.30 0.45 5.62% 1.11% SLXP NOV 20.00 20.65 17.94 0.65 8.83% 3.15% AOC NOV 25.00 25.25 20.66 0.25 3.93% 0.99% CVH NOV 50.00 50.60 47.48 0.60 4.46% 1.19% DSPG NOV 22.50 22.85 22.70 0.15 2.67% 1.53% RNR NOV 50.00 50.65 49.65 0.65 3.51% 1.28% GIVN NOV 40.00 40.45 29.94 0.45 5.86% 1.11% ARW NOV 25.00 25.40 24.50 0.40 5.82% 1.57% TACT NOV 30.00 30.50 22.00 0.50 10.16% 1.64% NVTL NOV 25.00 25.20 20.16 0.20 6.99% 0.79% ASKJ NOV 30.00 30.35 25.65 0.35 8.26% 1.15% LSS NOV 30.00 30.20 28.77 0.20 6.51% 0.66% DITC NOV 25.00 25.25 17.46 0.25 8.20% 0.99% DISH NOV 32.50 32.90 32.45 0.40 6.30% 1.22% PTP NOV 30.00 30.60 29.68 0.60 13.28% 1.96% LEND NOV 40.00 40.55 39.44 0.55 9.31% 1.36% UVN NOV 30.00 30.25 29.93 0.25 5.54% 0.83% MNST DEC 30.00 30.60 28.51 0.60 4.91% 1.96% FOSL DEC 30.00 30.50 28.21 0.50 4.16% 1.64% SLAB DEC 35.00 35.55 31.38 0.55 4.84% 1.55% Positions in Americredit (NYSE:ACF), Cabot (NYSE:CBT), Ii-Vi (NASDAQ:IIVI), Lam Research (NASDAQ:LRCX), Hyperion Solutions (NASDAQ:HYSL), UCI Inc. (NASDAQ:UICI), U.S. Steel (NYSE:X), and United Surgical (NASDAQ:USPI) have previously been closed to limit potential losses. Sina Corp (NASDAQ:SINA) is an exit candidate after Thursday bullish activity. A number of issues remain on the "watch" list for the last week of the November options expiration. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 RMBS 21.47 DEC 17.50 BNQ-XW 0.55 1207 16.95 32 3.1% 10.1% NCRX 28.40 DEC 25.00 QNY-XE 0.75 14K+ 24.25 32 2.9% 8.2% CECO 36.71 DEC 30.00 CUY-XF 0.70 2458 29.30 32 2.3% 7.7% IFLO 19.26 DEC 17.50 QIF-XW 0.50 50 17.00 32 2.8% 7.4% NTGR 15.98 DEC 15.00 TUD-XC 0.40 234 14.60 32 2.6% 6.5% ENZ 18.64 DEC 17.50 ENZ-XW 0.45 62 17.05 32 2.5% 6.3% CRA 13.56 DEC 12.50 CRA-XV 0.30 378 12.20 32 2.3% 6.1% TSRA 38.64 DEC 30.00 TJQ-XF 0.35 459 29.65 32 1.1% 4.1% 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. _________________________________________________________________ RMBS - Rambus $21.47 *** Rally In Progress! *** 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. Memory interfaces provide an interface between memory chips and logic chips. Logic interface solutions provide an interface between two logic chips. These advanced chip-to-chip interface solutions increase the data transfer rate between semiconductor chips, improving performance and reducing systems costs. RMBS - Rambus $21.47 DEC 17.50 BNQ-XW LB=0.55 OI=1207 CB=16.95 DE=32 TY=3.1% MY=10.1% _________________________________________________________________ NCRX - NeighborCare $28.40 *** A Healthy Stock! *** NeighborCare (NASDAQ:NCRX), formerly Genesis Health Ventures, is a provider of institutional pharmacy services in the United States. The company provides pharmacy services for beds in long-term care facilities in the U.S. and the District of Columbia. Its pharmacy operations consist of 62 institutional pharmacies, 32 community-based professional retail pharmacies and 20 on-site pharmacies, which are located in customers' facilities and serve only customers of that facility. In addition, NeighborCare operates 16 home infusion, respiratory and medical equipment distribution centers. NCRX - NeighborCare $28.40 DEC 25.00 QNY-XE LB=0.75 OI=14268 CB=24.25 DE=32 TY=2.9% MY=8.2% _________________________________________________________________ CECO - Career Education $36.71 *** On The Rebound! *** Career Education (NASDAQ:CECO) is a provider of private, for-profit, post-secondary education, with 82 campuses throughout the United States, Canada, France, the United Kingdom and the United Arab Emirates. The company also offers online education through its Online Education Group, which includes American InterContinental University Online and Colorado Technical University Online. The company's schools offer degree and diploma programs within its core curricula of business studies, culinary arts, information technology, visual communication and health education. CECO - Career Education $36.71 DEC 30.00 CUY-XF LB=0.70 OI=2458 CB=29.30 DE=32 TY=2.3% MY=7.7% _________________________________________________________________ IFLO - I-Flow $19.26 *** The Rally Continues! *** 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 $19.26 DEC 17.50 QIF-XW LB=0.50 OI=50 CB=17.00 DE=32 TY=2.8% MY=7.4% _________________________________________________________________ NTGR - Netgear $15.98 *** Entry Point? *** NetGear (NASDAQ:NTGR) designs, develops and markets branded networking products that address the specific needs of small business and home users. The firm supplies products that meet the ease-of-use, quality, reliability, performance and affordability requirements of these users. Its diverse suite of approximately 100 products enables users to share Internet access, peripherals, files, digital multimedia content and applications among multiple personal computers and popular Internet-enabled devices. NTGR - Netgear $15.98 DEC 15.00 TUD-XC LB=0.40 OI=234 CB=14.60 DE=32 TY=2.6% MY=6.5% _________________________________________________________________ ENZ - Enzo Biochem $18.64 *** Technicals Only! *** Enzo Biochem (NYSE:ENZ) is a life sciences and biotechnology company focused on harnessing genetic processes to develop research tools, diagnostics and therapeutics. Enzo provides diagnostic services to the medical community and has focused on developing technologies for detecting and identifying genes and for modifying gene expression. These technologies are generally applicable to the diagnosis of infectious and other diseases, and form the basis for a diverse portfolio of over 300 products marketed to the biomedical and pharmaceutical research markets. ENZ - Enzo Biochem $18.64 DEC 17.50 ENZ-XW LB=0.45 OI=62 CB=17.05 DE=32 TY=2.5% MY=6.3% _________________________________________________________________ CRA - Celera Genomics $13.56 *** Bottom-Fishing! *** Celera Genomics (NYSE:CRA) is a business is engaged in the discovery and development of targeted therapeutics for cancer, autoimmune, and inflammatory diseases. The firm is leveraging its proteomic, bioinformatic, and genomic capabilities to identify and validate existing drug targets, and to discover and develop small molecule therapeutics. The company expects to use these capabilities, along with its molecular and cell biology, medicinal and computational chemistry, pharmacology, and other drug development technologies to optimize the potency, selectivity, and physical properties of new drug candidates. CRA - Celera Genomics $13.56 DEC 12.50 CRA-XV LB=0.30 OI=378 CB=12.20 DE=32 TY=2.3% MY=6.1% _________________________________________________________________ TSRA - Tessera Technologies $38.64 *** New All-Time High! *** Tessera Technologies develops semiconductor-packaging technology that meets the ongoing demand for miniaturization and increased performance of electronic products. It licenses its technology to customers, enabling them to produce semiconductors that are smaller and faster and incorporate more features. These chips are utilized in electronics products, including digital cameras, MP3 players, personal computers, personal digital assistants, video game consoles and wireless phones. The firm's technology enables multiple semiconductors to be stacked vertically in a single three-dimensional, multi-chip package that occupies almost the same circuit board area as a chip-scale package. TSRA - Tessera Technologies $38.64 DEC 30.00 TJQ-XF LB=0.35 OI=459 CB=29.65 DE=32 TY=1.1% MY=4.1% 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BOBJ - Business Objects $22.13 *** Profit-Taking Continues! *** Business Objects S.A. (NASDAQ:BOBJ) develops, sells and supports business intelligence software for client/server environments, intranets, extranets and the Internet. The three main markets for BI are enterprise, extranet and analytic applications. For enterprise, Business Objects products provide employees with information to make better business decisions. Deployments can range from small workgroups to enterprise deployments. Extranet products allow organizations to build stronger relationships by linking customers, partners and suppliers via the world-wide web, and for analytic applications, products offer packaged practice analytics, alerts driven by business rules and workflow for specific business users. BOBJ - Business Objects $22.13 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL DEC 25 BBQ-LE 365 0.40 25.40 6.0% 1.6% _________________________________________________________________ ENZN - Enzon Pharmaceuticals $14.86 *** Speculation Only! *** Enzon Pharmaceuticals (NASDAQ:ENZN) is a biopharmaceutical firm that is focused on the discovery, development, manufacture and commercialization of pharmaceutical products in three areas of therapeutic focus: oncology and haematology; transplantation, and infectious disease. Enzon has developed or acquired four human therapeutic products that are marketed by the company: ABELCET (amphotericin B lipid complex injection), ONCASPAR (pegaspargase), ADAGEN (pegademase bovine injection), and DEPOCYT (cytarabine liposome injection). ENZN - Enzon Pharmaceuticals $14.86 "SPECULATIVE" PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL DEC 20 QYZ-LD 187 0.55 20.55 14.8% 2.7% _________________________________________________________________ TACT - TransAct Technologies $20.36 *** Next Leg Down? *** TransAct Technologies (NASDAQ:TACT) designs, develops, makes and markets transaction-based printers under the Ithaca and Magnetec brand names. In addition, the firm markets related consumables, spare parts and service. Its printers are used worldwide to provide transaction records, such as receipts, tickets, coupons, register journals and other documents. The company focuses on two markets: point-of-sale and banking and gaming and lottery. TransAct offers an array of products utilizing inkjet, thermal and impact printing technology for applications requiring up to 60 character columns. TACT - TransAct Technologies $20.36 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL DEC 25 TUF-LE 452 0.40 25.40 8.5% 1.6% ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEE DISCLAIMER - SECTION 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ************************Advertisement************************* Get your FREE weekly charts of the NASDAQ! 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