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Daily Newsletter, Sunday, 11/28/2004

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The Option Investor Newsletter                   Sunday 11-28-2004
Copyright 2004, All rights reserved.                        1 of 5
Redistribution in any form strictly prohibited.
Entire newsletter best viewed in COURIER 10 font for alignment

In Section One:

Wrap:  New Threat Ahead
Futures Wrap: See Note
Index Trader Wrap:  SLOWING UPSIDE MOMENTUM
Editor's Plays:  Lack of Advance Worrisome
Market Sentiment: Heading Towards the Holidays
Ask the Analyst: See Note
Coming Events: Earnings, Splits, Economic Events 


Posted online for subscribers at http://www.OptionInvestor.com
******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
       WE 11-26        WE 11-19        WE 11-12        WE 11-05 
DOW    10522.23 + 65.32 10456.9 - 82.10 10539.0 +151.47 +360.07 
Nasdaq  2101.97 + 31.34 2070.63 - 14.71 2085.34 + 46.40 + 63.95 
S&P-100  562.65 +  2.96  559.69 -  6.53  566.22 +  8.32 + 17.25 
S&P-500 1182.65 + 12.31 1170.34 - 13.83 1184.17 + 18.00 + 35.97 
W5000  11635.64 +155.01 11480.6 -129.04 11609.7 +200.13 +340.64 
SOX      430.98 -  0.90  431.88 +  8.07  423.81 +  5.98 +  5.58 
RUT      631.16 + 17.71  613.44 -  8.54  621.98 + 17.69 + 20.50 
TRAN    3647.99 + 80.34 3567.65 - 60.55 3628.20 + 55.70 + 75.08 
VXO       13.35           14.60           14.05           14.36 
VXN       17.85           19.72           18.82           19.47
******************************************************************
 

 
New Threat Ahead
by Jim Brown

We knew it was coming eventually but nobody expected it
to appear so soon. A little over a week ago Greenspan
warned the G20 summit attendees that the U.S. deficit
was unsustainable and they should reconsider their U.S.
investments in our bonds and Treasury notes. There was
a knee jerk reaction and the markets sold off on the
news from their new highs just a day earlier. Traders
withdrew into their shelters and started boarding up 
the doors to defend against the coming horde of dollar 
sellers. However, the lure of a Thanksgiving rally 
brought them back out into the light of day and the 
dip was bought. The rally appeared on schedule but was
very weak and lacking in conviction. Traders were still
leery of the impact from the Greenspan comments and
waiting for the next shoe to drop. They did not have
to wait long. 

On Thursday a news item hit the wires quoting a Chinese
central bank official saying they had reduced their holdings
of U.S. dollar debt from $585 billion to only $185 billion
over the last week. The futures markets had been wildly 
bullish from the overseas market action up to that point.
The S&P futures dropped nearly -8 points on the news and 
the open for Friday looked to be in serious trouble. The 
run on the dollar had begun according to most overnight 
analysis.

After several hours had passed another news item appeared
with a disclaimer from China that the official had been
misquoted. A couple hours later another release said the
official meant they had added to their dollar debt by
a large amount. Numbers started to blur, accusations 
flew and damage control was in full swing. Before trading
began at 9:30 the entire event had been discounted and
buried under dozens of conflicting news releases. The 
market opened higher and the damage was contained. By 
the end of the day every original news item from the 
last 24 hours discussing the event had been removed from
Yahoo news. The event never happened for anyone that did
not watch it unfold in real time. 98% of traders never 
even knew it happened but the market was still skittish
and was unable to shake off the worry cloud. The markets
gave up all their intraday gains and closed flat on 
worries that the truth would surface over the weekend 
and it would not be pretty. 

Just when the stars appeared to line up for an end of 
year rally there are clouds forming on the horizon and
moving in our direction at a high rate of speed. The
dollar has been falling for months or maybe I should
say declining. If a run on the dollar began then the
entire global economy could be at risk. Other countries
currently hold between $1.8 and $3.2 trillion in U.S. 
debt depending on whose numbers you believe. The weak 
dollar is not good for these investments as their value
has been dropping steadily every day. As long as the
decline is orderly each country can manage the move
and hedge against it. If a run on the bond bank began
and countries the size of China at $200+ billion in U.S.
debt and Japan at $1.2 trillion suddenly began dumping
those bonds at the rate the Thursday report suggested
then our interest rates would rocket higher causing
severe damage to our economy in a short period of time.
It also would eliminate these nations as buyers of our
new debt. If they are liquidating then they would have
no reason to buy more. We currently average over $2 
billion in debt sales per day. If there were no buyers
the rate at auction would rise dramatically. The U.S. 
debt has always had the privilege of being a sellers 
market with 2-3 times more bids than the amount of debt
being sold. This enables the U.S. to achieve the lowest
possible interest rate on its debt. If it changed to
a buyers market where there was fewer bidders than the
amount we need to sell then buyers could set the interest
rate they want to receive, not what the U.S. wants to pay.  
 
A weak dollar is actually beneficial to U.S. companies
because it makes our products more affordable to export
and makes products coming into the U.S. more expensive.
That slows purchases and increases sales and narrows
the trade deficit. It is bad for the nations selling 
to us because it depresses their economies due to the
slower export sales to us. Without our dollars to fuel
their growth everything slows down. On Friday it was
announced that BMW and Daimler Chrysler were going to 
lose millions on their exports to the U.S. because of
the existing dollar drop was already much more severe
than anyone expected. This is the tip of the iceberg
and the market is beginning to fear that it will grow
rapidly. 

I know most investors glaze over when analysts begin
talking about the dollar, bond relationships, foreign
currency fluctuations and their impact on our equity
markets. Unfortunately these inter-market relationships
are a fact of life. We have been fortunate not to have
seen a real currency impact to the markets since the
1998 Russian default. Currency problems tend to appear
rapidly and when least expected by the investing public.
The U.S. has not been the currency in trouble for decades.
Most commodities are denominated in dollars and most
pegged currencies in the world are pegged to the dollar.
If the dollar implodes the damage is global and it could
be severe. 

I believe the specificity of the initial story out of
China on Thursday and the nearly complete eradication of
all references before the end of the day suggests it was 
closer to the truth than we would care to admit. Damage
control was immediate and thorough. Much more thorough
than just an inaccurate story would have received. We
constantly see inaccurate stories on other things that
are rebutted and discussed in print and the story is
just corrected not erased. The stories remaining on the
web cast doubt on the original numbers quoted and almost
all suggest China actually added to its U.S. debt reserves
over the last week. Considering that the China Business 
News quoted a member of the Chinese central bank's monetary
policy committee in the initial article the individual was
in a position to know the real facts. The difference 
between liquidating billions in debt or adding billions
in U.S. debt are not likely to be confused. 

In reality it does not make any difference if the story
was true or not. The threat is still real and potentially
very damaging. Even if the story was not true the effects
may be lasting. Other holders of U.S. debt may be ready
to take the Greenspan warnings to heart and there may be
real trouble ahead. 

The markets never really shook off the worry cloud on
Friday and that was just the kind of rumor that could
weigh on institutional investors for weeks to come. The
dollar reached a new all time low against the Euro at
$1.32 on Friday and the $1.30 plateau many had suggested
was a temporary bottom has now been broken. The dollar
also hit a new four year low against the Yen. Metals and
oil could be up strongly on Monday as trading resumes
after the holiday. In short it could be a very volatile
week. 

Dow Chart


Nasdaq Chart


SOX Chart


On Wednesday the Dow rebounded to 10525 and within easy
reach of the prior highs at 10600. On Friday the Dow
managed to touch 10543 intraday but collapsed into the
close right back to the 10525 level. It was a weak effort
at best and the flat close suggests a strong fear of 
weekend darkness despite two potentially bullish weeks
ahead. 

The Nasdaq Composite was a mirror to the Dow. The Nasdaq
managed to close over 2100 by a couple points on Wednesday
and after the weak intraday bounce on Friday it pulled 
back to 2100 again at the close. This produced a mixed
message of holding the high ground but unable to advance
on a normally bullish day. 

The SPX was not left out with a bounce to 1186 resistance
once again but ended up less than a point for the day. 
The SOX was the weakest index and has pulled back to 
the 430 battle ground we have seen a lot lately. The 
Russell was the only index to set a new high and close 
at a new high but with less than a two point gain
it was also weak. 

The last two trading days are historically bullish. They
fulfilled their historical trend but only barely and that
could be troublesome. We still have a bullish setup ahead
but the worries are building. Actually the magnitude of
the worries is the real problem. Investors can shake off
things like earnings because they impact individual stocks
or at most several sectors. They can shake off economic
problems because traders are always overly optimistic
about the next economic report. It is easy for them to 
convince themselves that there was an external event like
a hurricane or blizzard that impacted the last one and 
the next one will be better. The one thing they can't
escape would be a global meltdown of the dollar. That 
would impact the economy, all businesses, all sectors
and all indexes. While few actually expect a meltdown
to occur the type of news I discussed above is exactly
how it would begin. This brings the problem too close
to reality for the big money players to ignore. 

The second problem is the recent gains. We have moved
substantially off the lows for the year that occurred
in October to the highs of the year last week. Funds
that moved from a loss for the year into a profit over
the last four weeks could be worried about a sudden
dollar problem erasing those gains and no fund manager
wants to close out the year in the red. 

Next week we also have a couple of serious hurdles to
cross. Thursday is not only the Microsoft dividend date
but it is also the Intel mid quarter update. Considering
the almost daily chip sector downgrades this could be
either confirmation of a continuing problem or a positive
event if Intel were to raise guidance. The Intel CEO said
twice last week that things were looking stronger for
2005 on general IT spending. If that translates into 
improved guidance on Thursday it could go a long way 
toward easing investor worries about buying the highs.

The economics heat up with the ISM, Personal Income,
Construction Spending and the Fed Beige Book on Wednesday.
Thursday has Monster Index and Factory Orders and Friday
has the Jobs report and ISM Services. The ISM on Wed and
the Jobs on Friday have the potential to ruin any further
December gains. Nobody expects any trouble but that is
when a bad number could do the most damage. The Jobs
numbers for October blew away estimates at +337,000 but
there is a lingering feeling that it was somehow related
to the hurricane and will not be repeatable. Should the
report disappoint it may not be a disaster for equities
but it could help blunt any end of year run. 

The saving grace for all of these problems is still the
Microsoft dividend payout on December 2nd. Most estimates
suggest that nearly $20+ billion of the $32 billion gift
will find its way back into the stock market within two
weeks of payment. When coupled with the current strong
inflows it could be a substantial liquidity event that
drowns investor worries in a sea of cash. 

For next week I am not expecting any material gains 
early in the week and I think most funds getting the
Microsoft cash will want to see the Intel update on
Thursday night and the Jobs report Friday morning before
making any big bets. That leaves the early part of the 
week in limbo and we could be directionally challenged.
I would like to think that some funds will continue to
position themselves in front of the Microsoft payout 
and that would lead to an underlying bid through Wed. 
Until we actually see that happening I would be more 
cautious about going long without a significant dip. 
The Chinese debt comments may have jinxed the bullish
sentiment we had just a couple days ago and until that
sentiment returns I would be more cautious.

We also saw a drop in cash inflows according to TrimTabs
with only +$1.3B through the week ended on Wednesday and
this was down from the +$5B from the prior week. Once the
rally started to cool so did the money flows. My parting 
instructions would be to remain bullish until the trend
clearly changes. Continue buying dips in the SPX above
1165 but consider closing long positions should that 
level fail. Don't be too eager to jump in on Monday and
give the market a chance to confirm a continued up trend
before committing to large positions. 

Also, don't forget to take a minute to register for the
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************
FUTURES WRAP
************

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


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

SLOWING UPSIDE MOMENTUM
By Leigh Stevens

THE BOTTOM LINE – 
The indices, both on the Nasdaq and S&P side, are showing signs
of waning upside momentum. Of course it was a slow week but I 
also think that the appetite for stocks is sated for now and we 
are also entering the slower going of the pre-holiday season.  

After such a strong advance, it's common for the market to churn 
around with little further upside progress, which keeps the bears 
cautious. Eventually the indices should experience a steeper 
decline than the  small pullback seen to date, given this 
tendency and pattern. I think we're due for a start to a more 
significant fall soon – specifics are with the charts below.  

FRIDAY'S CLOSING NUMBERS – 
The S&P 500 Index (SPX) gained a fraction of a point to  
1,182.65. For the week, the S&P was up 1.1% however.  The Dow 
Jones Average (INDU) finished the day up 1.92 points at 10,522. 
For the week, INDU was up 6 tenths of a percent. 

The Nasdaq Composite Index (COMP) was off less than a point also, 
to 2,101.9, up 1.5% on the week.

FRIDAY'S TRADING  – 
Trading rooms of the major institutional players had few people 
around in the post-thanksgiving short session that ended at 1 pm 
Eastern. Volume was only 500 million shares on the NYSE and less 
than 700 million on the Nasdaq.
 
Intel (INTC) was the biggest decliner in both markets (-1.7%), 
after the Semiconductor Industry Association said consumer 
electronics sales in Q4 are expected to be about even with those 
of this year's third quarter, as high energy prices are holding 
back discretionary spending.
 
The biggest outside influence Friday was that the dollar 
continued to fall to new record lows versus the euro, as the 
European currency hit a high of $1.33. Weighing on the dollar 
were reports that China's central bank had cut its U.S. Treasury 
holdings, due to concerns over the eroding value of the dollar. 
Like any smart investor, they want to hedge their bets when the 
horse they're riding is falling way back. 

The dollar rebounded some later in the trading day in New York 
and the euro fell back to $1.328, after a member of the monetary 
policy committee of the Chinese central bank said his remarks at 
a Shanghai seminar had been misinterpreted in a local newspaper 
article.  

U.S. Treasuries fell slightly on the speculation that the 
plummeting dollar might prompt foreign central banks to cut their 
investments in U.S. bonds. If interest rates have to rise to lure 
bonds buyers back in this will be a distinct negative for stocks.


MY INDEX OUTLOOKS – 

S&P 500 Index (SPX) – Daily chart:

Typically after such a strong run up as seen prior to the recent 
back and forth price action, especially when accompanied by 
still-strong bullish sentiment, there is some time that goes by 
before there is a significant price pullback. The market seems to 
"hang" up there and the bulls are emboldened and the bears 
disheartened. I expect a drop, especially when my "sentiment" 
indicator this past week still showed a 1-day reading of a high 
level of bullishness. 

You would think that bulls would expect a retracement after such 
a strong advance; for example, the indices give back at least a 
quarter, to a third, even half of the prior price gains. But this 
is not the way market psychology works.  Market participants 
often expect trends that are mostly only strong in the direction 
of their bias on the market. 

The pattern we're seeing is likely that of a minor top being 
built rather than a bullish consolidation. This week should tell 
the story – if S&P 500 (SPX) resistance in the 1185-1188 area 
continues to cap rallies, support in the 1170 area will not hold.  
Next support is in the 1160 area, with major support around 1140-
1142.  Tough to call major resistance with SPX at a new multiyear 
high, but my top end upside objective would be to 1215-1220. 



We had another bearish extreme in sentiment this past Wednesday, 
albeit in a light volume day ahead of turkey day and shopping 
madness. In the theory of contrary opinion, high levels of 
bullishness sow the seeds of an opposite occurrence. Basically in 
these instances, most everyone who is going to buy stock in 
current circumstances has bought already and there are not enough 
buyers in the wings to support the market when bearish news comes 
round again.           

S&P 100 Index (OEX) – Hourly chart:

The S&P 100 (OEX), as often is the case, broken down into its 
hourly price action, shows any reversal type patterns shaping up 
the best. And it looks like a Head & Shoulders top could be 
setting up per the way I outlined in the OEX hourly chart below. 

In this scenario, OEX does not get back above 564 again and 
breaks below 560 in the next 1-2 trading sessions – if so a 
"minimum" downside objective is to 550-548.  548 offers 
significant support as the top end of a prior trading range and 
an hourly double top that OEX broke out above early this month.

If I'm reading the chart tea leaves wrong here and there is a 
move above 564, next higher resistance is at 568-569, at the 
recent top, with 573 then being key resistance at the Jan-Feb 
rally peaks.     



A bearish price/RSI divergence set up when the OEX went to a new 
high "unconfirmed" by a similar new high in the hourly RSI. This 
is less significant in the hourly chart than if it were on a 
daily chart basis, but it provides a clue to be on alert to a 
possible reversal at least short-term.   

Dow 30 Average (INDU) - Daily: 

Not much more to say this week on the Dow 30 (INDU) – if it can't 
penetrate its prior top at 10570 on a closing basis, then figure 
some likelihood of it re-testing technical support in the 10360 
area. 10200 is the lowest I see this average going on the 
downside. 

On the upside, assuming INDU does pierce 10570-10600, then the 
obvious target becomes the 10700-10750 area. We can usually  
assume that when a market keeps marching back toward a yearly 
high, that this price area is the one to watch.  



Upside momentum in the Dow is waning as can be seen by the (21-
day) stochastic model above.  Loss of upside momentum usually 
precedes a decline, as has been the case at other tops seen in 
2004 in this indicator.   

Nasdaq Composite (COMP) Index  – Daily chart:

I peg resistance in the 2115 area, then at the prior high around 
2150.  Longer-term momentum has turned up in the Nasdaq Composite 
(COMP) as seen in the 50-day average trading above the 200-day 
for the first time since it crossed below it last June.  

However it seems unlikely that there will not be a pullback 
first, say back toward support around 2050 at the 21-day average 
which is the middle point of my moving average envelopes.  



The Nasdaq 100 (NDX) should give us a better technical picture of 
the Nasdaq.  

Nasdaq 100 (NDX) Index  – Hourly:

I pointed out last week how the Nasdaq 100 (NDX) has been trading 
more or less within an hourly uptrend channel since August and I 
use to zero in on likely areas of resistance within the overall 
uptrend. 

There was a nominal new hourly closing high this past week, but 
it appears that momentum is slowing.  1590 is resistance implied 
by the top end of the channel.  This extends over the next few 
days up to 1600, an area where I favor some put purchases, 
looking for a correction of 50 points (to 1550) at that point.  

Key technical support is seen in the 1520 area, then at the 
bottom of the uptrend channel at 1505.  Given the rally from the 
1435 area up to 1587, a correction of 60-70 points would be quite 
normal.  It remains to be seen if the those waiting to buy a more 
substantial dip like this will get their opportunity!



As with the S&P 100, the Nas 100 has a even more pronounced 
bearish divergence with the RSI hourly indicator above.  I think 
that this divergence is forewarning a correction and a tradable 
downswing ahead.  

Nasdaq 100 tracking Stock (QQQ) Daily chart:

The pattern could be a bearish rising wedge in QQQ. Bullish 
momentum is regained if the Q's can break out above 39.30.  

Absent that, look for support in the 37.75 – 37.65 area to be 
tested around the steep up trendline. 36.60 looks like major 
support currently.  

40 is a next potential resistance and upside objective based on 
the hourly uptrend channel (not shown), then 41 appears on this 
basis to be major resistance    



Upside momentum is waning, as is volume.  I think it’s a matter 
of time rather than if that QQQ falls from the area of its recent 
highs.    

Good Trading Success!



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

Lack of Advance Worrisome

This is an abbreviated column this week due to the 
holiday and I will update everything again next Sunday.

Last week I suggested a position in the DIA options
for a potential year end rally fueled by the Microsoft
liquidity event. The game plan was to go long on Monday
with 1/2 position and enter another 1/2 position on any
dip to 10400. 

We never got the dip and the upward momentum was lacking.
Not a very encouraging scenario for those long. The
Thursday scare from China also did nothing to inspire
confidence. 

I am still positive about the play and I feel pretty
sure we will get to enter that second position early 
next week. Just be faithful to your stop and let it 
ride. 


Go LONG another 1/2 position with a drop to 10400.

Stop loss 10300

DIA Chart





************  
Open plays:
************  

Google Puts $179.40 

GOOG Chart



http://members.OptionInvestor.com/editorplays/edply_110704_1.asp
http://members.OptionInvestor.com/editorplays/edply_111404_1.asp

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

MRK Put $27.71   

** Stop $28.00 ** 
** Target $20.00 ** 

Jan-2006 $25 LEAP Put WMR-ME cost $1.70

Initial recommendation:
http://members.OptionInvestor.com/editorplays/edply_101004_1.asp



****************
MARKET SENTIMENT
****************
Heading Towards the Holidays
- J. Brown

 
Looking at stock prices alone one could surmise that investors 
remain favorable toward stocks.  There's been very little selling 
and most sectors continue to maintain their gains.  The good news 
for traders now is that we're moving toward December, which is 
historically the second best month of the year for stock gains.  
Not only do we have the last four-week push for the fourth 
quarter but the traditional Christmas rally or "Santa Claus 
rally" should begin soon. 

According to the Stock Trader's Almanac election year Decembers 
tend to do "well" plus we should see strength in small caps stock 
about mid-month.  This will be the early influence of the 
"January effect".  The almanac also suggests that oil stocks and 
gold stocks tend to do well in December.

Unfortunately, gains could be limited by renewed concerns over 
the U.S. dollar, the deficits and interest rates.  If you haven't 
read this weekend's market wrap I suggest you do so.  

Next week brings a ton of economic reports with the Q3 GDP 
numbers, consumer confidence, Chicago PMI, ISM index, non-farm 
payrolls, unemployment and more.  Plus, we'll hear the Intel mid-
quarter update, which could have a big affect on the direction 
for semiconductors and thus the NASDAQ.  



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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  9585
Current     : 10522

Moving Averages:
(Simple)

 10-dma: 10518
 50-dma: 10179 
200-dma: 10242 



S&P 500 ($SPX)

52-week High: 1188
52-week Low : 1031
Current     : 1182

Moving Averages:
(Simple)

 10-dma: 1179
 50-dma: 1136
200-dma: 1122



Nasdaq-100 ($NDX)

52-week High: 1581
52-week Low : 1301
Current     : 1578

Moving Averages:
(Simple)

 10-dma: 1556
 50-dma: 1471
200-dma: 1440



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

CBOE Market Volatility Index (VIX) = 12.79 +0.07
CBOE Mkt Volatility old VIX  (VXO) = 13.55 +0.58
Nasdaq Volatility Index (VXN)      = 17.94 +0.06 


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.73        324,971       238,429
Equity Only    0.58        282,314       163,473
OEX            0.00          0,000         0,000
QQQ            2.15         15,605        33,645


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

Bullish Percent Data

           Current   Change   Status
NYSE          73.5    + 0.5   Bear Correction
NASDAQ-100    75.0    + 0     Bull Confirmed
Dow Indust.   66.6    + 0     Bull Confirmed
S&P 500       73.0    + 0     Bull Confirmed
S&P 100       72.0    + 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: 0.87
10-dma: 0.96
21-dma: 0.95
55-dma: 1.09


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    1526      1646
Decliners    1080      1186

New Highs     269       127
New Lows        5         8

Up Volume    380M      407M
Down Vol.    226M      240M

Total Vol.   616M      664M
M = millions


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

Commitments Of Traders Report: 11/16/04

**The CFTC.GOV website has not updated the data since 11/16/04.
  We'll check again on Tuesday. 


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

For the first time in weeks the commercials are making a move.  
They upped their short positions days before the recent decline.
Meanwhile small traders remain marginally net bullish.

Commercials   Long      Short      Net     % Of OI
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%)
11/16/04      452,149   468,048   (15,899)   (1.7%)

Most bearish reading of the year: (111,956) -  3/06/02
Most bullish reading of the year:   23,977  - 12/09/03

Small Traders Long      Short      Net     % of OI
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%
11/16/04      166,862   156,751    10,111     3.1%

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 also piled on the shorts in the e-minis
to produce the most bearish reading in weeks.  Small traders
also put more money to work but remained strongly net bullish.


Commercials   Long      Short      Net     % Of OI 
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%)
11/16/04      371,282   796,279   (424,997)  (36.4%)

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
10/26/04      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%
11/16/04      445,737     70,169   375,568    72.8%

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


NASDAQ-100

Commercials added to both their longs and their shorts but
saw no change in their bullish bias for the NDX.  Small traders
pared back some of their shorts but remained strong net bearish.


Commercials   Long      Short      Net     % of OI 
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%
11/16/04       55,737     33,683    22,054   24.6%

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
10/26/04       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%)
11/16/04       10,533    37,660   (27,127)  (56.2%)

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

Given the latest data as of 11/16/04 it looks like commercials
were beginning to bet on a pull back.  There was a reduction
in longs and an increase in shorts to create the first bearish
reading in weeks.  Small traders also increased their bearish
bias.

Commercials   Long      Short      Net     % of OI
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%
11/16/04       22,004    23,744   (1,740)     (3.8%)
 
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
10/26/04        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%)
11/16/04        5,937     6,533    ( 596)   ( 4.7%)

Most bearish reading of the year: (12,106) -  3/09/04
Most bullish reading of the year:   8,523  -  8/26/03



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***************
ASK THE ANALYST
***************

Editor's note:   Jeff Bailey is away for the Thanksgiving holiday
and will continue his Ask the Analyst column next week.


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

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

*This is not a complete list.  We only try and highlight the 
more significant earnings reports.


Symbol  Co               Date           Comment          EPS Est

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

DCI   Donaldson           Mon, Nov 29  After the market     0.33
LXU   LSB Industries      Mon, Nov 29  ----- n/a -----      n/a
NPSN  NASPERS Ltd         Mon, Nov 29  Before the bell      n/a
OSIP  OSI Pharmaceuticals Mon, Nov 29  Before the bell     -1.17
PTNR  Partner Comm.       Mon, Nov 29  Before the bell      n/a
SMTC  Semtech             Mon, Nov 29  After the market     0.19


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

ADEX  ADE Corp            Tue, Nov 30  After the market     0.39
AMWD  American Woodmark   Tue, Nov 30  Before the bell      0.60
AGL   Angelica Corp       Tue, Nov 30  After the market     0.28
BTH   Blyth Inc.          Tue, Nov 30  ----- n/a -----      0.72
CHS   Chico's FAS         Tue, Nov 30  After the market     0.38
CPRT  Copart              Tue, Nov 30  After the market     0.21
EAG   Eagle Broadband     Tue, Nov 30  After the market     n/a
FGP   Ferrellgas Ptrnrs   Tue, Nov 30  Before the bell     -0.64
JTX   Jackson Hewitt      Tue, Nov 30  After the market    -0.32
OVTI  Omnivision Tech     Tue, Nov 30  After the market     0.24
SFD   Smithfield Foods    Tue, Nov 30  Before the bell      0.52
UNFI  United Natrl Foods  Tue, Nov 30  Before the bell      0.23


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

CMVT  Comverse Technology Wed, Dec 01  After the market     0.07
CMOS  Credence Systems    Wed, Dec 01  After the market    -0.18
DG    Dollar General Corp Wed, Dec 01  Before the bell      0.25
DDN   Dynamex             Wed, Dec 01  After the market     0.25
NMGa  Neimen Marcus       Wed, Dec 01  After the market     1.45
PLL   Pall Corp           Wed, Dec 01  After the market     0.21
SNPS  Synopsys            Wed, Dec 01  After the market     0.03
SYNO  Synovis Life Tech.  Wed, Dec 01  Before the bell      0.04
ULCM  Ulticom             Wed, Dec 01  After the market     0.09
VRNT  Verint Systems      Wed, Dec 01  After the market     0.21



------------------------- THURSDAY -----------------------------

ABS   Albertson's         Thr, Dec 02  Before the bell      0.33
ASTT  ASAT Holdings Ltd   Thr, Dec 02  ----- n/a -----     -0.07
BCM   Canadn. Imperl. Bnk Thr, Dec 02  ----- n/a -----      1.14
CAO   CSK Auto            Thr, Dec 02  After the market     0.32
DLM   Del Monte Foods     Thr, Dec 02  Before the bell      0.21
KWD   Kellwood Co         Thr, Dec 02  After the market     1.00
MBG   Mandalay Resort     Thr, Dec 02  After the market     0.87
NX    Quanex              Thr, Dec 02  ----- n/a -----      1.10
RWY   Rent-Way Inc.       Thr, Dec 02  After the market     0.06
SOFO  Sonic Foundry       Thr, Dec 02  Before the bell      n/a
ULTE  Ultimate Electrncs  Thr, Dec 02  ----- n/a -----     -0.53


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

FLE   Fleetwood Enterpr.  Fri, Dec 03  After the market     0.16
KIRK  Kirklands Inc.      Fri, Dec 03  Before the bell     -0.15
SVC   Stewart & Stevenson Fri, Dec 03  Before the bell      0.24


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

Symbol  Company Name              Ratio    Payable     Executable

TASR    TASER Intl. Inc           2:1      Nov 29th    Nov 30th
MSL     MidSouth Bancorp          5:4      Nov 30th    Dec 01th
SYMC    Symantec                  2:1      Nov 30th    Dec 01th
RYL     Ryland Group Inc.         2:1      Nov 30th    Dec 01th
ANNB    Annapolis Bancorp         4:3      Dec  3rd    Dec  6th
CAKE    Cheesecake Factory        3:2      Dec  8th    Dec  9th

-----------------------------------
Economic Reports & Events This Week
-----------------------------------

This is a very busy week for economic data.  Tuesday brings the 
Q3 GDP numbers, Consumer confidence and Chicago PMI.  Wednesday
has the ISM index, Fed's Biege book and more.  Friday brings
the big event with the November jobs report. 

==============================================================
                       -For-           
----------------
Monday, 11/29/04
----------------
none..

-----------------
Tuesday, 11/30/04
-----------------
Q3 GDP numbers - preliminary reading  Last: 3.7%  Est: 3.7%
Q3 Chain Deflator preliminary         Last: 1.3%  Est: 1.3%
Consumer Confidence for November      Last: 92.8  Est: 96.8
Chicago PMI for November              Last: 68.5  Est: 61.0

-------------------
Wednesday, 12/01/04
-------------------
ISM Index for November
Fed's Biege Book
Personal Spending for October
Personal Income for October
Construction Spending for October
Auto Sales for November 
Truck Sales for November

------------------
Thursday, 12/02/04
------------------
Weekly Initial Jobless Claims
Factory Orders for October
Federal Reserve Governor Bernanke speaks on Monetary Policy

----------------
Friday, 12/03/04
----------------
Non Farm Payrolls for November       Last: 337K   Est: 200K
Unemployment Rate for November
ISM Services for November 
Hourly Earnings for November
Average Workweek for November
Federal Reserve Governor Mcteer speaks on outsourcing.


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**********

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The Option Investor Newsletter                   Sunday 11-28-2004
Sunday                                                      2 of 5

In Section Two:

Watch List: A few more momentum candidates
Dropped Calls: None
Dropped Puts: None


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

TITLE:  A few more momentum candidates

___________________________________________________________________

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.
___________________________________________________________________


Total S.a. - TOT - close: 110.16 change: +1.35

WHAT TO WATCH: TOT is an overseas oil company that is enjoying 
the same strength in its stock price as its U.S. rivals.  TOT 
broke out over resistance at $105 level in early November and now 
shares are breaking its current trading range at $109.  This 
could be a bullish entry point.  The P&F chart is very bullish 
with a $140 price target. 




---

Unilever N.V. - UN - close: 63.30 change: +0.70

WHAT TO WATCH: UN is another foreign company that is breaking 
out.  Shares rallied through technical resistance at its 100-dma 
and the exponential 200-dma in the first half of November.  Now, 
after two weeks of consolidating, UN is pushing higher again.  A 
move over $64 would clear the gap down from July but we'd watch 
the 200-dma as overhead resistance. 




---

Black & Decker - BDK - close: 84.82 change: +0.67

WHAT TO WATCH: BDK is another momentum trading candidate.  After 
its gap higher in July the stock has been consistently stair-
stepping higher.  It has now created a rising channel with the 
bottom of the channel near its 30-dma.  BDK is bouncing from the 
bottom of its channel again.  More conservative traders may want 
to wait for a move over $86.00 before initiating positions.  




---

Phelps Dodge - PD - close: 100.26 change: +1.55

WHAT TO WATCH: The already strong PD could get even stronger as 
investors begin to worry again about the U.S. dollar and 
inflation.  With commodity prices in copper trading near multi-
year highs it's no surprise to see PD at a new all-time high over 
round-number resistance at $100.  Shares look a little extended 
here so we'll watch for a dip back towards $96.  The bullish P&F 
chart points to $138. 





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

OSIP $50.49 +1.08 - OSIP has bounced back from Wednesday's 
breakdown.  Watch to see if shares bounce back toward $55, which 
should be resistance. 

MGG $58.80 +0.73 - If you're a momentum trader then MGG might be 
a candidate for you.  Shares just bounced from its rising 21-dma 
again, which just happened to coincide with the $56 level of 
support. 

TXI $58.50 +1.10 - TXI continues to edge higher.  Friday's 1.9 
percent rally burst through resistance at $58.00.  This could be 
an entry point. 

RYL $105.98 +0.95 - RYL has been consolidating sideways for two 
week over the $100 level.  Now shares are hitting new all-time 
highs.  If the market dips we'd watch RYL for a pull back toward 
$102.50 and consider a bounce as a bullish entry point.


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

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


CALLS
^^^^^
None

PUTS
^^^^

None


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


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

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

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


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reveals his most recently disclosed, ACTUAL stock picks, Click HERE!
 
 
http://www.bigmoneywatch.com/default.asp?aid=626
 
**************************************************************

 

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

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


**************************************************************
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The Option Investor Newsletter                   Sunday 11-28-2004
Sunday                                                      3 of 5

In Section Three:

Current Calls: COP, DER, EBAY, EOG, FDX, FLR, IBM, MUR, 
   OSK, PTR, QCOM, SLB, SUN
New Calls: None
Current Puts: FRX
New Puts: None

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before a big price jump? 
 
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**************************************************************





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

ConocoPhillips - COP - close: 90.36 change: +0.47 stop: 84.99

Company Description:
ConocoPhillips is an integrated petroleum company with interests 
around the world. Headquartered in Houston, the company had 
approximately 35,800 employees, $89 billion of assets, and $129 
billion of annualized revenues as of Sept. 30, 2004.
 (source: company press release)

Why We Like It:
This past week was a positive one for oil giant COP.  Shares 
broke out from its two-week trading range between $86-88 and 
powered through round-number, psychological resistance at the 
$90.00 mark.  The move follows a breakout in the OIX oil sector 
index, which coincided with a rebound in crude prices.  We're 
feeling encouraged here with the technical breakout on its daily 
chart.  The P&F chart is also very bullish with a triangle 
breakout pointing to a $125 target.  We are targeting a move 
toward $100 by year-end or the January options expiration.

Editor's note: We have a lot of energy and oil-related stocks
on the play list as bullish candidates.  We are not suggesting
you play all of them.  Individual traders should make sure 
they're not over exposed to any one sector.  Find which stocks 
you like best and make your pick.

Suggested Options:
We are going to suggest the December and January calls.  Our 
favorites are the January's.

BUY CALL DEC 85 COP-LQ OI=1400 current ask $5.90
BUY CALL DEC 90 COP-LR OI=3128 current ask $1.80
BUY CALL DEC 95 COP-LS OI=1513 current ask $0.30

BUY CALL JAN 85 COP-AQ OI=3320 current ask $6.70
BUY CALL JAN 90 COP-AR OI=5104 current ask $3.10
BUY CALL JAN 95 COP-AS OI=1162 current ask $1.00

Annotated chart:



Picked on November 03 at $85.50
Change since picked:     + 4.86
Earnings Date          10/27/04 (confirmed)
Average Daily Volume =      3.0 million 




---

Danaher - DHR - close: 57.90 change: -0.50 stop: 55.95 

Company Description:
Danaher, a leading industrial company, designs, manufactures and 
markets innovative products, services and technologies with 
strong brand names and significant market positions.
(source: company press release)

Why We Like It:
DHR has been able to hold off any serious selling but the 
momentum in its up trend is fading.  We continue to suggest 
short-term traders do some profit taking of their own.  A 
breakdown under $57.50 would be a suggesting that DHR will retest 
support at the $55-56 levels.  Technicals are already turning 
bearish.  We're going to hold on to DHR a couple of more days to 
see if shares can bounce instead of breakdown.  This close to our 
target at $60.00 we are not suggesting new bullish positions. 

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

Annotated chart:
 

Picked on October 27 at $54.99
Change since picked:    + 2.89
Earnings Date         10/21/04 (confirmed)
Average Daily Volume =     1.3 million 



---

eBay Inc. - EBAY - close: 111.50 chg: -0.21 stop: 104.99      

Company Description:
eBay is The World's Online Marketplace®. Founded in 1995, eBay 
created a powerful platform for the sale of goods and services by 
a passionate community of individuals and businesses. On any 
given day, there are millions of items across thousands of 
categories for sale on eBay. eBay enables trade on a local, 
national and international basis with customized sites in markets 
around the world. Through an array of services, such as its 
payment solution provider PayPal, eBay is enabling global e-
commerce for an ever- growing online community.
(source: company press release)

Why We Like It:
The EBAY momentum train continues.  Investors bought the recent 
dip towards $106 on the same day and now shares are breaking out 
over resistance at $111. EBAY is expected to do pretty big 
business during the holidays and as one of the tech traders' 
favorites we're expecting it to remain a leader in the market.  
Readers can time their entries based on their own risk profile. A 
dip back to $108 might be a good spot to look for a bounce, 
assuming any dip occurs.  The bullish P&F chart points to a $125 
target. We set $110 as our short-term target and $120 as our end-
of-year target.  Short-term traders may want to do some profit 
taking is EBAY trades back under $110.

Suggested Options:
We are going to suggest the December or January calls.

BUY CALL DEC 105 XBA-LA OI= 8791 current ask $ 8.00
BUY CALL DEC 110 XBA-LB OI=21997 current ask $ 4.50
BUY CALL DEC 115 XBA-LC OI=14471 current ask $ 2.00

BUY CALL JAN 105 XBA-AA OI= 7196 current ask $10.30
BUY CALL JAN 110 XBA-AB OI=12340 current ask $ 7.00
BUY CALL JAN 115 XBA-AC OI=12667 current ask $ 4.60
BUY CALL JAN 120 XBA-AD OI=12699 current ask $ 2.80

Annotated chart
  

Picked on November 80 at $103.69 
Change since picked:      + 7.81
Earnings Date           10/20/04 (confirmed)
Average Daily Volume =      10.4 million 



---

EOG Resources - EOG - close: 75.83 change: +0.36 stop: 69.85     

Company Description:
EOG Resources, Inc. is one of the largest independent (non-
integrated) oil and natural gas companies in the United States 
with substantial proved reserves in the United States, Canada, 
offshore Trinidad and, to a lesser extent, the U.K. North Sea
(source: company press release)

Why We Like It:
EOG has been a big leader for the oil stocks this past week.  
Shares have rallied from its breakout over round-number 
resistance at $70.00 to push through additional round-number 
resistance at $75.00.  Shares look short-term overbought and the 
stock has already exceeded our short-term target.  Traders may 
want to seriously consider doing some profit taking especially 
with the large jump in option values since we picked this play.  
Readers can always re-evaluate a potential entry on a dip.  Our 
year-end target at $80.00 is unchanged.  Watch for a bounce from 
$72.50 if EOG does hit some profit taking.  

Suggested Options:
We are going to suggest the December and January calls. Between
the two we'd pick the Januarys.

BUY CALL DEC 65 EOG-LM OI= 363 current ask $11.50 
BUY CALL DEC 70 EOG-LN OI=4455 current ask $ 6.70
BUY CALL DEC 75 EOG-LO OI=1879 current ask $ 2.80

BUY CALL JAN 65 EOG-AM OI=2899 current ask $12.00
BUY CALL JAN 70 EOG-AN OI=4076 current ask $ 7.60
BUY CALL JAN 75 EOG-AO OI=1334 current ask $ 4.20

Annotated Chart:


Picked on November 14 at $ 68.37
Change since picked:      + 7.46
Earnings Date           10/26/04 (confirmed)
Average Daily Volume =       1.1 million    




---

Fedex Corp - FDX - close: 95.71 change: +0.00 stop: 93.95*new*

Company Description:
FedEx Corp. provides customers and businesses worldwide with a 
broad portfolio of transportation, e-commerce and business 
services. With annual revenues of $26 billion, the company offers 
integrated business applications through operating companies 
competing collectively and managed collaboratively, under the 
respected FedEx brand. Consistently ranked among the world's most 
admired and trusted employers, FedEx inspires its more than 
240,000 employees and contractors to remain "absolutely, 
positively" focused on safety, the highest ethical and 
professional standards and the needs of their customers and 
communities. (source: company press release)

Why We Like It:
Believe it or not FDX, as extended and overbought as it is, 
managed to hit another new all-time high.  The technicals look 
very vulnerable here but as long as traders keep buying the dip 
we'll be all right.  Short-term traders should strongly consider 
doing some profit taking here.  FDX is up more than six points 
from our entry point.  We're going to raise our stop loss to 
$93.95 as the $94 level should be the first level of support. 
More aggressive traders will to ride out the bumps may want to 
leave a wider stop.  Our year-end target remains the $99-100 
region.

Suggested Options:
We are not suggesting new positions at this time.  Wait for the
dip.

Annotated Chart:


Picked on October 21 at $89.45 
Change since picked:    + 6.26
Earnings Date         09/22/04 (confirmed)
Average Daily Volume =     1.5 million 



---

Fluor Corp - FLR - close: 52.45 change: +0.54 stop: 48.51*new*

Company Description:
Fluor Corporation provides services on a global basis in the 
fields of engineering, procurement, construction, operations, 
maintenance and project management. Headquartered in Aliso Viejo, 
Calif., Fluor is a FORTUNE 500 company with revenues of nearly $9 
billion in 2003. (source: company press release)

Why We Like It:
Wow!  When we said FLR would move quickly we didn't know how 
quick.  Shares took off the next day following the November 22nd 
breakout over resistance at $48.00.  Volume was incredibly high 
as FLR broke through round-number, psychological resistance at 
$50.00.  Last Wednesday at least one brokerage downgraded the 
stock on valuation but shares rebounded as traders bought the dip 
toward $50.00.  Now the stock, as short-term overbought as it 
looks, is still poised to trade higher.  We're not suggesting new 
positions here and traders can prepare to exit at FLR nears the 
$55 level.  We're raising our stop loss to $48.51. 

Suggested Options:
We're not suggesting new bullish positions at current levels but
readers could watch for another bounce from $50.00 if it occurs.

Annotated chart:


Picked on November 22 at $48.51
Change since picked:     + 3.94
Earnings Date          10/27/04 (confirmed)
Average Daily Volume =      521 thousand   




---

Intl Business Mach. - IBM - close: 94.72 chg: -0.74 stop: 89.99 

Company Description:
IBM is the world's largest information technology company, with 
80 years of leadership in helping businesses innovate. Drawing on 
resources from across IBM and IBM Business partners, IBM offers a 
wide range of services, solutions and technologies that enable 
customers, large and small, to take full advantage of the new era 
of e-business. (source: company press release)

Why We Like It:
This could be a turning point for IBM at least short-term.  
Shares have been consolidating sideways the past two weeks as the 
stock digests its early November gains.  We've been expecting a 
pull back in IBM for the last six sessions but it hasn't 
materialized.  Now shares are nearing support at $94 again and 
its technicals have turned bearish.  This could be the last 
chance for short-term traders to do some profit taking before IBM 
dips into the $90-92 range.  Those readers looking for new 
positions can watch for the dip and then evaluate new entries on 
a bounce.  Our year-end/mid-January target remains the $99-100 
region.

Suggested Options:
We are not suggesting bullish positions at this time.  Readers
may consider doing some profit taking as we wait for the dip
to finish.

Annotated chart:


Picked on October 27 at $90.00
Change since picked:    + 4.72
Earnings Date         10/18/04 (confirmed)
Average Daily Volume =     4.7 million 



---

Murphy Oil - MUR - close: 85.51 change: +0.44 stop: 79.85

Company Description:
The Company, headquartered in El Dorado, Arkansas, was originally 
incorporated in Louisiana in 1950 as Murphy Corporation. It was 
reincorporated in Delaware in 1964, at which time it adopted the 
name Murphy Oil Corporation. But, the Company's roots go back to 
a lumber and banking business in South Arkansas and, more 
directly, to 1907, when the first oil production was established 
in the Caddo Field in North Louisiana. Thereafter, oil and gas 
were important phases of the business. 
(source: company website)

Why We Like It:
So far so good.  MUR has also been a leader in the oil sector's 
rally higher.  After three weeks of consolidating between $77.50 
and $82.00 shares broke out on rising volume. The momentum 
carried MUR up and through round-number resistance at $85 and 
almost past $86.  Our short-term target has been the September-
October resistance level at $87.  Traders who took the 
alternative entry on the dip towards $77.50 two weeks ago may 
want to strongly consider doing some profit taking here.   We're 
going to watch for a dip in the $83-84 region.  Bulls looking for 
new positions can watch for the bounce.  The bullish P&F chart 
points to a $103 target.  

Suggested Options:
We are going to suggest the January calls.

BUY CALL JAN 75 MUR-AO OI=1465 current ask $11.70
BUY CALL JAN 80 MUR-AP OI= 469 current ask $ 7.40
BUY CALL JAN 85 MUR-AQ OI= 414 current ask $ 4.20
BUY CALL JAN 90 MUR-AR OI= 733 current ask $ 2.00

Annotated Chart:


Picked on November 22 at $ 82.25
Change since picked:      + 3.26
Earnings Date           10/26/04 (confirmed)
Average Daily Volume =       500 thousand   




---

Oshkosh Truck - OSK - close: 64.06 change: +0.79 stop: 59.00*new*

Company Description:
Oshkosh Truck Corporation is a leading manufacturer of specialty 
trucks and truck bodies for the defense, fire and emergency, 
concrete placement and refuse hauling markets. Oshkosh Truck is a 
Fortune 1000 company with products marketed under the Oshkosh®, 
Pierce®, McNeilus®, Medtec®, Geesink, Norba and Jerr-Dan® brand 
names. The company is headquartered in Oshkosh, Wis., and had 
annual sales of $2.3 billion in fiscal 2004. (source: company 
press release)

Why We Like It:
OSK is flexing its relative-strength muscles here.  The bullish 
Thanksgiving week has pushed shares from the bottom of its 
trading range at $62 through the top of the range at $64.  
The question on Monday is whether or not OSK will see any 
follow through.  After three weeks of consolidating sideways 
it could be time for the next leg higher.  The bullish P&F 
chart points to an $83 target.  We're going to raise our 
stop to $59.00.

Suggested Options:
We're suggesting the January calls.

BUY CALL JAN 60 OSK-AL OI=2607 current ask $5.20
BUY CALL JAN 65 OSK-AM OI=  78 current ask $2.15

Annotated Chart:


Picked on November 07 at $ 62.16
Change since picked:      + 1.90
Earnings Date           10/28/04 (confirmed)
Average Daily Volume =       205 thousand   



---

PetroChina Co - PTR - close: 56.30 change: -0.22 stop: 52.49

Company Description:
Based in Beijing, the PetroChina Company Limited is a wide 
reaching oil company involved in the exploration, production and 
sale of oil and natural gas. 

Why We Like It:
PTR continues to rally with the strength in oil stocks.  The 
recent breakout over resistance at $55.00 was fueled by very 
strong volume that suggests further strength to come.  We think 
PTR can trade to $60, potentially higher.  The P&F chart points 
to a $61 target.  Readers can watch for a dip toward the $56 or 
$55 level and then consider a bounce as a new entry point.  

Suggested Options:
The December strikes have the most open interest and they should
work but we're going to suggest the March calls.

BUY CALL MAR 50 PTR-CJ OI=1222 current ask $7.50
BUY CALL MAR 55 PTR-CK OI=1250 current ask $3.70
BUY CALL MAR 60 PTR-CL OI=1033 current ask $1.30

Annotated Chart:


Picked on November 17 at $55.18
Change since picked:     + 1.12
Earnings Date          00/00/04 (confirmed)
Average Daily Volume =      288 thousand




---

Qualcomm - QCOM - close: 41.40 change: -0.26 stop: 37.99

Company Description:
QUALCOMM Incorporated (www.qualcomm.com) is a leader in 
developing and delivering innovative digital wireless 
communications products and services based on the Company's CDMA 
digital technology. Headquartered in San Diego, Calif., QUALCOMM 
is included in the S&P 500 Index and is a 2003 FORTUNE 500® 
company. (source: company press release)

Why We Like It:
No complaints from us yet.  QCOM continues to slowly rebound from 
a test of its long-term support at its rising 100-dma.  
Technicals are positive and its MACD is in a new buy signal even 
though its P&F chart is currently bearish.  QCOM has been 
flirting on either side of round-number support-resistance at $40 
lately but the stock looks ready now to break through the $42 
region.  Readers can use an entry point over $42 or a bounce from 
$40 again. 

Suggested Options:
We are going to suggest the January calls.

BUY CALL JAN 37.50 AAO-AU OI=22175 current ask $4.80
BUY CALL JAN 40.00 AAO-AH OI=24566 current ask $2.95
BUY CALL JAN 42.50 AAO-AV OI=17870 current ask $1.55
BUY CALL JAN 45.00 AAO-AI OI=11575 current ask $0.75

Annotated Chart:



Picked on November 15 at $ 40.51
Change since picked:      + 0.89
Earnings Date           11/03/04 (confirmed)
Average Daily Volume =      13.9 million    



---


Schlumberger - SLB - close: 67.08 change: -0.08 stop: 61.99

Company Description:
Schlumberger is the world's leading oilfield services company 
supplying technology, project management and information 
solutions that optimize performance for customers working in the 
oil and gas industry. The company employs more than 50,000 people 
of over 140 nationalities working in 100 countries, and comprises 
two business segments. Schlumberger supplies a wide range of 
products and services from formation evaluation through 
directional drilling, well cementing and stimulation, well 
completions and productivity to consulting, software, information 
management and IT infrastructure services that support core 
industry operational processes. WesternGeco, jointly owned with 
Baker Hughes, is the world's largest seismic company and provides 
advanced acquisition and data processing services. In 2003, 
Schlumberger operating revenue was $10.12 billion.
(source: company press release)

Why We Like It:
SLB continues to rebound off its long-term rising trendline of 
support.  We're encouraged by the move through round-number 
resistance at $65 and its simple 50-dma but the stock is now 
challenging resistance at $68.00.  Readers can probably watch for 
a dip back toward $65.00-65.50 again and buy the bounce.  We're 
still looking for a run towards $70.00.

Suggested Options:
We are going to suggest the December and/or January calls.

BUY CALL DEC 60 SLB-LL OI=2653 current ask $7.40
BUY CALL DEC 65 SLB-LM OI=4867 current ask $3.00
BUY CALL DEC 70 SLB-LN OI=3763 current ask $0.50

BUY CALL JAN 60 SLB-AL OI=8675 current ask $7.80
BUY CALL JAN 65 SLB-AM OI=16773 current ask $3.80
BUY CALL JAN 70 SLB-AN OI=14641 current ask $1.35

Annotated Chart:


Picked on November 12 at $ 65.05
Change since picked:      + 2.03
Earnings Date           10/22/04 (confirmed)
Average Daily Volume =       3.9 million    



---

Sunoco Inc - SUN - close: 82.82 change: +1.28 stop: 75.95*new*

Company Description:
Sunoco, Inc., headquartered in Philadelphia, PA, is a leading 
manufacturer and marketer of petroleum and petrochemical 
products. With 890,000 barrels per day of refining capacity, over 
4,800 retail sites selling gasoline and convenience items, over 
4,500 miles of crude oil and refined product owned and operated 
pipelines and 37 product terminals, Sunoco is one of the largest 
independent refiner-marketers in the United States. Sunoco is a 
significant manufacturer of petrochemicals with annual sales of 
approximately five billion pounds, largely chemical intermediates 
used to make fibers, plastics, film and resins. Utilizing a 
unique, patented technology, Sunoco also manufactures two million 
tons annually of high-quality metallurgical-grade coke for use in 
the steel industry. (source: company press release)

Why We Like It:
SUN has been a very cooperative bullish candidate.  Shares broke 
out over resistance at $77, $78 and $80.  Technicals look very 
bullish and its P&F chart points to a $117 target. Yet now the 
challenge is timing.  SUN looks a little overbought here.  Short-
term traders may want to strongly consider doing some profit 
taking, especially considering the rise in option values since we 
picked this play.  We'll watch for a dip back to $80.00 as the 
next bullish entry point.  We're also raising our stop loss to 
$75.95. 

Suggested Options:
We are going to suggest the January options since we plan to 
hold SUN through the end of the year.

BUY CALL JAN 75 SUN-AO OI= 717 current ask $9.40
BUY CALL JAN 80 SUN-AP OI= 572 current ask $5.70
BUY CALL JAN 85 SUN-AQ OI= 168 current ask $2.80

Annotated Chart:


Picked on November 18 at $78.25
Change since picked:     + 4.57
Earnings Date          10/21/04 (confirmed)
Average Daily Volume =      1.2 million 



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

None

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

Forest Labs - FRX - close: 38.71 change: +0.61 stop: 42.01

Company Description:
Forest has well-established franchises in therapeutic areas of 
the central nervous, cardiovascular and respiratory systems, and 
we are always exploring new product opportunities that address a 
range of health conditions. Our principal brands include 
Lexapro®(escitalopram oxalate), Namenda®(memantine HCl) and 
Benicar®(olmesartan medoxomil). (source: company press release)

Why We Like It:
No surprises here.  Last Monday FRX gapped down under critical 
support at $40.00 when the stock was downgraded to a "sell" 
rating.  We expected an oversold bounce and that's what we've 
seen.  Friday saw FRX start out strong but the rally faded.  
There was news out that the FDA had approved FRX's Combunox pain 
medication.  Yet even with the positive news there was consistent 
selling at the $38.80 mark.  We see additional short-term 
resistance at $39.25 near the bottom of the gap down and then 
again at $40.00.  Watch for the failed rally and/or a drop under 
$38.00 as a new bearish entry point.  

Suggested Options:
We are going to suggest the January puts.  

BUY PUT JAN 35 FRX-MG OI=3080 current ask $1.05
BUY PUT JAN 40 FRX-MH OI=4822 current ask $3.10
BUY PUT JAN 45 FRX-MI OI=7446 current ask $6.90

Annotated Chart:


Picked on November 22 at $39.07
Change since picked:     - 0.36
Earnings Date          10/18/04 (confirmed)
Average Daily Volume =      2.8 million 



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

None


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The Option Investor Newsletter                   Sunday 11-28-2004
Sunday                                                      4 of 5

In Section Four:

Leaps:    Oil Fire Takes Hold Again
Spreads and Straddles:  

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*****
LEAPS
*****

Oil Fire Takes Hold Again

This is a very abbreviated column this weekend due 
to the holiday. The regular column will return next
Sunday. 

I made a major mistake last week in dropping UPL
at $50.20. The stock caught fire with the resurgence
of $50 oil and roared off to a +10% gain to near $55.
Fortunately COP and the XLE broke out to a new high
so I don't feel too bad about taking a profit on UPL.

LLL was triggered on the watch list at $71 for a
breakout entry. 

Unfortunately I did not have a breakout entry in
place for Nucor Steel and the news from Nissan on
Friday that they had to close three plants for four
days due to a lack of steel sent all the steel stocks
several dollars higher. 

STM dipped to $20.01 with our dip entry trigger at 
$20.00. I am going to take it at Friday's close at
$20.10 instead of waiting on the chance for that 
additional penny. 

INTC has a stop at $22 and closed at $23.26 after
the strong downgrade this week. Their update is on
Thursday and I am not going to close before I hear
the news. It could easily turn around. Our entry 
was $20 so we have room. 

Here are a few stop updates. 

FDX 92.00
XLE 35.50
TYC 32.50
COP 85.50
QQQ 38.00
DIA 103.50
ADBE 57.00
JNPR 26.50
SYMC 59.50
XMSR 34.50



If you have any comments or suggestions about the
leaps section please email them to:

leaps @ OptionInvestor.com  


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

STM at $20.11 from last week


*******************   
Dropped Plays
*******************   

None

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


LLL - Level 3 triggered at $71.00 


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

Position Summary Table



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

More Upside?  Check Your Calendar (Spreads)
By Mike Parnos

Occasionally Couch Potato Trading Institute students will have an 
opinion.  Or, more likely, they heard someone else’s opinion and 
now it’s their own.  A few CPTI rebels have torn themselves away 
from a ThighMaster infomercial long enough to request a way of 
playing a direction with limited risk and desirable upside.  
Although contrary to our usual trading strategies,  such an 
animal exists. As much as we encourage neutrality in our trading, 
there will always be a few students who buck the trend.  At the 
CPTI we feel an obligation to teach them how they can cover their 
assets, before they kiss them goodbye.

A “calendar spread” is the purchase of a long-term option on a 
stock/index and the subsequent sale of a short-term option on the 
same stock/index.  There are a number of “calendar spread” 
variations.  The following example, will explain a popular 
version – the “horizontal calendar spread.” Horizontal means that 
the long-term option and short-term options are at the same 
strike price.  A “diagonal calendar spread” simply means that 
both the long-term option and the short- term option are at 
different strike prices.  

It’s a powerful strategy that allows you to control a large 
amount of money while risking a relatively small amount of money.  
It uses the passage of time and the erosion of premium to put 
profits in your account – if you pick the right direction.  Note:  
The "horizontal" calendar spread is in no way related to the 
"horizontal mambo," but the success of one could certainly 
inspire the participation in the other.

Many analysts are predicting continued upward movement of the 
market for the next few months.  If you have a bullish view, a 
calendar spread can help you play that opinion with a defined 
risk and a reasonable amount of time to be right.

The Scenario
The OEX is trading at about 562.65.  We like the OEX options 
because of its liquidity, and strike price availability.  Plus, 
they're somewhat negotiation friendly on their bid/ask spreads.

1)  Buy 10 Feb. $570 strike calls for $9.80 ($9,800)
2)  Sell 10 Dec. $570 strike calls for $2.70 ($2,700)
Total cost: $7.10 ($7,100)

What If #1 . . .
What if the OEX is 569.75 at Dec. expiration?  
This is the ideal situation.  We guessed right, but the OEX 
didn't go too far.  The Dec. 570 call will expire worthless.  The 
Feb. 570 call will have moved up about $7.00.   Let's calculate 
the new value of our Feb. 570 call.

a)  The average delta for the Feb. 570 call while it moved up 
would be about .47.  The increase of $7.00 would represent about 
an increase in the option's price of about $3.30.  So, add $3.30 
to the $9.80 that we paid for the option giving us $13.10.

b)  Now, we have to take into consideration the time value that 
will be lost during the three weeks until December expiration.  
For that, we look at the "theta" -- which should give us the 
approximate amount of daily erosion of time value from our Feb. 
570 call.  The theta is .08, so we're going to lose about $1.70 
(21 days to expiration X $.08).  That reduces the value of our 
Feb. 570 call to about $11.40 ($13.10 - $1.70)

c)  We're not done quite yet.  Our play was a success, but we're 
now going to "sell" our Feb. 570 call.  We've been doing our 
calculations with the "ask" price.  Since we're going to sell the 
option, we need to subtract about $.50 for our friends(?) the 
market makers.  That will leave us with a value of about $10.90 
($11.40 - $.50).

d)  When all is said and done, our Feb. 570 call is now worth 
about $10.90.  We paid a total of $7.10 to establish this spread.  
That leaves a healthy profit of $3.80 on a risk of $7.10.   
That's a return on risk of over 53%.

What If #2 . . .
What if the OEX ends up right back where it started?  Let's 
calculate again.

a)  The December 570 call will expire worthless.
b)  The February 570 call will experience the same time erosion 
of $1.70.
c)  We will still have to make the same $.50 adjustment because 
we'd be selling the option.

Our final tally goes like this:  $9.80 less $1.70 less $.50 = 
$7.60.  Our price for entering the trade was $7.10.  Even though 
the OEX did not move up as we anticipated, we are still about 
$.50 ahead of the game. 

What If #3 . . .
What if the OEX goes the wrong direction?  This is not rocket 
science.  You just have to summon up all the self-discipline you 
can muster, admit that you guessed wrong and unwind the position.  
To close your position prior to December expiration you'll have 
to buy back the December 570 call before you can sell your 
February 570 call.  As always, the preservation of your trading 
capital is your primary concern.

What If #4 . . .
What if the OEX moves through 570 before December expiration?  As 
the OEX gets close to 570, you need to start paying attention to 
the deltas of both positions.   When the delta of the December 
570 call moves past the delta of the February 570 call, it's time 
to close the entire position (both options).  Don't worry.  If 
that happens, you'll still come away with a very nice profit.


One last note:  If the position is profitable, some traders are 
tempted (at expiration) to just sell a call for January against 
the February 570 call.  Expiration is a good time to evaluate 
your position.  Take your profits first --  then evaluate.  You 
don't want to risk what you've already made.  You worked hard for 
those profits.  Don't just "let it ride."

Look at the chart.  Will another move require it to penetrate a 
resistance level to be profitable?  How much of a move has the 
OEX already made?  How much strength is left?  If another 
position makes sense, then establish a brand new position.

When you're scouting for calendar spreads, make sure to allow 
room for the underlying to move (before it reaches the short 
strike).  As you can see from our discussion above, it's the 
appreciation of the underlying that provides the bulk of the 
profits.   
____________________________________________________________

DECEMBER CPTI POSITIONS
December Position #1 -- SPX Iron Condor (Part 1) - 1182.65
This bull-put spread still gives us about a 45-point cushion on 
the downside with the short strike near a support level.  

We sold 20 December SPX 1125 puts and bought 20 December SPX 1120 
puts for a credit of $.50 ($1,000).   Maintenance: $10,000.  When 
you're looking for your new position, the concept of getting much 
your profit from negotiating the bid/ask spread still applies. 
(see the Thursday, Nov. 18 column).

This position is just the bull-put portion of a potential Iron 
Condor.  We're going to wait until the smoke clears a little 
before looking for bear-call spread possibilities.  When the time 
comes to put on the bear call spread, as long as we create a 5-
point spread, there will be no additional maintenance 
requirement.

December Position #2 -- SPX Sure Thing (Almost) Credit Spread - 1182.65

We sold two SPX December 1165 puts and bought two SPX December 
1140 puts for a $6.90 credit ($1,380).

Here we go again.  We saw an opportunity to sell the 1165 puts 
and buy the 1140 puts for a credit of $6.90.  We're still in a 
bullish trend and want to position ourselves to take advantage of 
it.  A quick reminder -- only do this strategy if you have a LOT 
of maintenance available.  You might need it.

CPTI Position #3 -- SPX Iron Condor  (Part 1) - 1181.76
I've become very conservative -- even more so after our 
unpleasant experience in the November cycle.  I saw an 
opportunity to put some serious distance between a bull put 
spread and where the SPX was trading.   With the SPX at 1179, I 
noticed the January 1100/1090 bull put spread would yield about 
$.70.  Being still somewhat bullish for the next few months, I 
was willing to go out to January.  I like that almost 80-point 
cushion and I'm willing to wait the eight weeks.  When the 
opportunity presents itself, we can always add the other side of 
the condor.

We sold 15 SPX January 1100 puts and bought 15 SPX January 1090 
puts for a credit of about $.70 ($1,050).  Maintenance: $15,000
___________________________________________________________
ONGOING POSITIONS
QQQ ITM Strangle - Ongoing Long Term -- $39.21
We bought 10 contracts of the 2005 QQQ $39 puts and 10 contracts 
of the 2005 QQQ $29 calls for a total debit of $14,300. We make 
money by selling near term puts and calls every month. Here's 
what we've done so far: Oct. $33 puts and Oct. $34 calls - credit 
of $1,900. Nov. $34 puts and calls - credit of $1,150. Dec. $34 
puts and calls - credit of $1,500. Jan. $34 puts and calls – 
credit of $850. Feb. $34 calls and $36 puts - credit of $750. 
Mar. $34 calls and $37 puts - credit of $1,150. Apr. $34 calls 
and $37 puts - credit of $750. May $34 calls and $37 puts – 
credit of $800. June $34 calls and $37 puts -- total net credit 
of $750. We rolled out to the July $34 calls ($.20 credit) and 
$37 puts ($.60 credit) and took in a credit of $.80 ($800). We 
rolled to the August $34 calls and $37 puts, taking in a credit 
of $900. We rolled to the Sept. $34 calls and $37 puts, yielding 
$.45 or $450 for the cycle. For October we took in $.45 ($450) 
rollout. We rolled to the November. $34 calls and $37 puts for 
$.70 ($700).  Last week we rolled in the December $34 calls and 
$37 puts for a total of $.50 ($500).  New total: $13,400.
Note: We haven't included the proceeds from this long term QQQ 
ITM Strangle in our profit calculations. It's a bonus! And it's a 
great conservative cash flow generating strategy. 

ZERO-PLUS Strategy. OEX - 562.65
In my Feb. 8th column, I outlined a strategy based on an initial 
investment of $100,000. $74,000 was spent on zero coupon bonds 
maturing in about seven years at a value of $100,000. The 
principal $100,000 investment is guaranteed. We're trading the 
remaining $26,000 to generate a "risk free" return on the 
original investment. We own 3 OEX December 2006 540 calls @ $81 
(x 300 = $24,300). Our cash position as of August expiration was 
$8,390. In September we added another $975 for a total of $9,365. 
In October we added $650 for a new total of $10,675. 

Zero-Plus Position For December
Prior to expiration, we bought back our Nov. 555 calls and rolled 
it to six contracts of the January 580 calls for a credit of 
about $100.  We also put on five contracts of a December 540/530 
bull-put spread for an $.80 credit ($400). 
 

Happy Trading! 
Remember the CPTI credo: May our remote batteries and self-
discipline last forever, but mierde happens. Be prepared! In 
trading, as in life, it's not the cards we're dealt. It's how we 
play them. 

Mike Parnos, Your Options Therapist and CPTI Master Strategist 

 

Couch Potato Trading Institute Disclaimer
All results reported in this section are hypothetical. While the 
numbers represented here may have been achieved or beaten by our 
readers, we make no representation that any individual investor 
achieved these exact results. The tracking for the plays listed 
in this section uses closing prices for the day the newsletter is 
published and it is not meant to imply that any reader actually 
received those prices or participated in these recommendations. 
The portfolio represented here is hypothetical and for investment 
education purposes only. It is only an illustration of what type 
of gains a knowledgeable investor might receive utilizing these 
strategies. 



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

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


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The Option Investor Newsletter                   Sunday 11-28-2004
Sunday                                                      5 of 5

In Section Five:


Spreads and Straddles:  A Festive Holiday Week!
Premium-Selling Plays: Naked Puts and Calls


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

A Festive Holiday Week!
By Ray Cummins

Despite Friday's lackluster session, stocks finished Thanksgiving 
week with a bullish bias as investors demonstrated their optimism
about the holiday shopping season and the upcoming jobs report.
 
The Dow Jones Industrial Average ended the week 65 points higher
at 10,522, while the NASDAQ Composite added 31 points during the
same period, closing at 2,101 on Friday.  The S&P 500 index rose
a total of 12 points during the week, finishing near 2004 highs
at 1,182.  Volume was light during the holiday-shortened session.
Only a half million shares traded on the NYSE, and NASDAQ volume
was slightly higher at 665 million.  Advancing issues outnumbered
decliners by nearly 2 to 1 on the Big Board, while breadth on the
technology exchange was roughly 3 to 2 in favor of market bulls.
The dollar's weakness continued to weigh on the bond market.  The
benchmark 10-year note fell 12/32 as its yield climbed to 4.24%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 11/26/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

VIP    40.50  39.22  DEC  35.0  36.7  0.23   36.43   0.23   Open
WLP   113.90 122.22  DEC 100.0 105.0  0.50  104.50   0.50   Open
CECO   35.00  38.31  DEC  25.0  30.0  0.60   29.40   0.60   Open
PJC    48.95  45.57  DEC  40.0  45.0  0.60   44.40   0.60  Closed
EYET   45.64  41.00  DEC  30.0  35.0  0.45   34.55   0.45   Open
XMSR   36.13  37.61  DEC  30.0  32.5  0.25   32.25   0.25   Open
OIH    84.45  87.00  DEC  75.0  80.0  0.60   79.40   0.60   Open
DWA    39.58  38.20  DEC  30.0  35.0  0.50   34.50   0.50   Open
DRIV   38.31  42.53  DEC  30.0  35.0  0.35   34.65   0.35   Open
NBR    52.72  52.75  DEC  47.5  50.0  0.40   49.60   0.40   Open

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

The bullish spread in Piper Jaffray Companies (NYSE:PJC), although
currently profitable, has previously been closed to limit losses.
 

CALL-CREDIT SPREADS

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

SEPR   45.44  45.91   DEC  55.0  50.0  1.00   51.00  1.00   Open
TTWO   33.24  33.49   DEC  40.0  37.5  0.30   37.80  0.30   Open
ERTS   46.97  47.76   DEC  55.0  50.0  0.65   50.65  0.65   Open
GM     39.97  39.23   DEC  45.0  42.5  0.30   42.80  0.30   Open
BSX    34.70  34.32   DEC  40.0  37.5  0.30   37.80  0.30   Open
MXIM   42.50  42.20   DEC  50.0  45.0  0.70   45.70  0.70   Open
BIIB   58.31  58.43   DEC  70.0  65.0  0.50   65.50  0.50   Open
INSP   49.17  45.25   DEC  65.0  60.0  0.40   60.40  0.40   Open
AMZN   38.55  39.09   DEC  45.0  42.5  0.30   42.80  0.30   Open
OSIP   58.16  50.49   DEC  70.0  65.0  0.55   65.55  0.55   Open
LXK    84.82  85.49   DEC  95.0  90.0  0.45   90.45  0.45   Open
MBT   135.99 136.33   DEC 155.0 150.0  0.55  150.55  0.55   Open

L/C = Long Call S/C = Short Call CB = Cost Basis G/L = Gain/Loss


DEBIT STRADDLES

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

DE      69.26  73.14   DEC   70.0   70.0    4.50   4.25     Open


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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.

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

NUE - Nucor  $54.05  *** Hot Sector! ***

Nucor (NYSE:NU) is engaged in the manufacture and sale of steel
and steel products.  The company organizes its business into two
segments: steel mills and steel products.  Principal products
from the steel mills segment are hot- and cold-rolled steel,
produced to customer orders.  In addition, other hot-rolled
and cold-rolled steel are manufactured in standard sizes and
inventories are maintained. Principal products from the steel
products segment are steel joists and joist girders, deck, cold
finished steel, steel fasteners, metal building systems and
light gauge steel framing.  Steel products are sold to general
contractors and fabricators throughout the United States.

NUE - Nucor  $54.05

PLAY (less conservative - bullish/credit spread):

BUY  PUT  DEC-45.00  NUE-XI  OI=1156  ASK=$0.20
SELL PUT  DEC-50.00  NUE-XJ  OI=2448  BID=$0.60
INITIAL NET-CREDIT TARGET=$0.45-$0.50
POTENTIAL PROFIT(max)=9% B/E=$49.55


__________________________________________________________________

MRVL - Marvell Technology  $31.53  *** Uptrend Intact! ***

Marvell Technology Group (NASDAQ:MRVL) is a global semiconductor
provider of high-performance analog, mixed signal and digital
signal processing integrated circuits.  Marvell offers its
customers a range of integrated circuit solutions using its
communications mixed-signal processing and digital signal
processing technologies.  The company applies its analog,
mixed signal, digital signal processing and complex digital
design technologies in a variety of applications.  Marvell's
product portfolio consists of storage, switching, transceivers,
wireless, personal computers connectivity, communications
controllers, gatways and power management products.

MRVL - Marvell Technology  $31.53

PLAY (conservative - bullish/credit spread):

BUY  PUT  JAN-25.00  UVM-ME  OI=91  ASK=$0.45
SELL PUT  JAN-27.50  UVM-MY  OI=56  BID=$0.80
INITIAL NET-CREDIT TARGET=$0.40-$0.50
POTENTIAL PROFIT(max)=19% B/E=$27.10



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

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.

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

TASR - TASER International  $47.00  *** Premium-Selling Only! ***

TASER International (NASDAQ:TASR) develops and sells less-lethal
self-defense devices.  The company's primary product lines are
the ADVANCED TASER and the TASER X26.  The TASER X26 introduced
to the market a new "shaped pulse" technology, and a new smaller
form factor.  At the close of 2003, TASER had more than 4,300
United States law enforcement agencies deploying one of its
TASER brand weapon platforms, with another 506 agencies either
completed or in the process of implementing a full deployment
of one weapon for each patrol or line officer.

TASR - TASER International  $47.00

PLAY (speculative - bearish/credit spread):

BUY  CALL  DEC-57.50  QUR-LY  OI=5185  ASK=$0.70
SELL CALL  DEC-55.00  QUR-LK  OI=9846  BID=$1.00
INITIAL NET-CREDIT TARGET=$0.30-$0.35
POTENTIAL PROFIT(max)=14% B/E=$55.30


__________________________________________________________________

SINA - SINA Corporation  $37.93  *** In A Trading Range? ***

SINA Corporation (NASDAQ:SINA) is an online media company and
value-added information services provider in China and for
Chinese communities worldwide.  The company provides an array
of services to its customers including region-focused online
portals, mobile value-added services, search and directory,
interest-based and community-building channels, free and
premium e-mail, online games, virtual Internet service provider,
classifieds, fee-based services, e-commerce and enterprise
e-solutions.  SINA provides its services through five major
business lines including SINA.com, SINA Mobile, SINA Online,
SINA.net and SINA E-Commerce.

SINA - SINA Corporation  $37.93

PLAY (conservative - bearish/credit spread):

BUY  CALL  JAN-50.00  NOQ-AJ  OI=71   ASK=$0.50
SELL CALL  JAN-45.00  NOQ-AI  OI=167  BID=$1.05
INITIAL NET-CREDIT TARGET=$0.60-$0.65
POTENTIAL PROFIT(max)=14% B/E=$65.55



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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.
_________________________________________________________________

TK - Teekay Shipping  $54.45  *** A Reader's Play! ***

Teekay Shipping (NYSE:TK) provides international crude oil
and petroleum product transportation services through its spot
tanker fleet, including its fleet of aframax-size oil tankers
and its fixed-rate fleet, including its shuttle tankers.  TK's
tankers provide transportation services to oil companies, oil
traders and government agencies worldwide.  It is divided into
four key areas: Teekay Tanker Services, Teekay Navion Shuttle
Tankers, Teekay Gas & Offshore and Teekay Marine Services.  In
April 2004, the firm acquired Naviera F. Tapias S.A. (Tapias),
an independent owner and operator of liquefied natural gas
carriers and crude oil tankers in Spain.  It also established
a 50/50 joint venture with Tapias that will pursue new business
in the oil and gas shipping sectors.

TK - Teekay Shipping  $54.45

PLAY (speculative - neutral/debit straddle):

BUY CALL  DEC-55.00  TK-LK  OI=1591  ASK=$1.70
BUY PUT   DEC-55.00  TK-XK  OI=204   ASK=$2.15
INITIAL NET-DEBIT TARGET=$3.65-$3.75
INITIAL TARGET PROFIT=$1.60-$2.25





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*****************************************
PREMIUM-SELLING PLAYS: NAKED PUTS & CALLS
*****************************************

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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 11/26/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

MYGN     DEC    17.50   17.05   18.74    0.45   5.52%   2.64%
VTIV     DEC    17.50   17.05   19.04    0.45   5.46%   2.64%
IFLO     DEC    15.00   14.55   19.31    0.45   6.89%   3.09%
SEAC     DEC    17.50   16.95   16.59   (0.36)  0.00%   0.00% *
ADLR     DEC    12.50   12.10   13.92    0.40   6.88%   3.31%
UTHR     DEC    25.00   24.05   45.51    0.95   9.03%   3.95%
RIGL     DEC    20.00   19.70   24.40    0.30   4.02%   1.52%
NFLD     DEC    15.00   14.45   17.49    0.55   8.24%   3.81%
RMBS     DEC    17.50   16.75   22.17    0.75   9.88%   4.48%
AGIX     DEC    20.00   19.60   24.71    0.40   4.83%   2.04%
ATI      DEC    20.00   19.35   22.93    0.65   7.37%   3.36%
MRVL     DEC    25.00   24.60   31.53    0.40   5.17%   1.63%
ELN      DEC    22.50   22.15   27.96    0.35   4.93%   1.58%
TSRA     DEC    25.00   24.35   37.75    0.65   7.97%   2.67%
VTS      DEC    20.00   19.65   23.64    0.35   4.84%   1.78%
ERICY    DEC    30.00   29.60   33.11    0.40   3.44%   1.35%
RMBS     DEC    17.50   16.95   22.17    0.55  10.12%   3.24%
TSRA     DEC    30.00   29.65   37.75    0.35   4.12%   1.18%
NCRX     DEC    25.00   24.25   28.06    0.75   8.18%   3.09%
IFLO     DEC    17.50   17.00   19.31    0.50   7.38%   2.94%
NTGR     DEC    15.00   14.60   16.29    0.40   6.54%   2.74%
ENZ      DEC    17.50   17.05   18.47    0.45   6.32%   2.64%
CECO     DEC    30.00   29.30   38.31    0.70   7.67%   2.39%
CRA      DEC    12.50   12.20   13.67    0.30   6.11%   2.46%
DDS      DEC    22.50   22.25   26.69    0.25   4.06%   1.12%
SRNA     DEC    20.00   19.60   20.55    0.40   5.87%   2.04%
RAE      DEC     7.50    7.25    9.20    0.25  10.80%   3.45%
FXEN     DEC     7.50    7.05   10.15    0.45  17.57%   6.38%
NVDA     DEC    17.50   17.10   19.86    0.40   6.91%   2.34%
IDCC     DEC    17.50   16.85   20.63    0.65  11.05%   3.86%
MCIP     DEC    17.50   17.05   19.21    0.45   7.70%   2.64%
PLMO     DEC    30.00   29.60   36.93    0.40   5.49%   1.35%
TINY     DEC    12.50   12.15   14.80    0.35   9.97%   2.88%
IDCC     DEC    17.50   17.20   20.63    0.30   6.57%   1.74%
ADLR     DEC    12.50   12.25   13.92    0.25   6.86%   2.04%
NANO     DEC    15.00   14.70   16.44    0.30   6.80%   2.04%
ISRG     DEC    30.00   29.50   35.47    0.50   6.08%   1.69%
DHB      DEC    17.50   17.20   20.46    0.30   6.59%   1.74%
AMED     DEC    30.00   29.35   33.27    0.65   7.53%   2.21%
HNT      DEC    25.00   24.60   27.34    0.40   5.37%   1.63%
  
The position in Seachange International (NASDAQ:SEAC) has been
closed to limit potential losses.
  

NAKED CALLS

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

MNST     DEC    30.00   30.60   27.45    0.60   4.91%   1.96%
FOSL     DEC    30.00   30.50   27.90    0.50   4.16%   1.64%
SLAB     DEC    35.00   35.55   30.11    0.55   4.84%   1.55%
APPX     DEC    35.00   35.60   29.80    0.60   7.73%   1.69%
DIGE     DEC    25.00   25.30   23.85    0.30   6.05%   1.19%
MDCO     DEC    30.00   30.35   25.16    0.35   5.01%   1.15%
BOBJ     DEC    25.00   25.40   23.44    0.40   5.96%   1.57%
ENZN     DEC    20.00   20.55   14.18    0.55  14.84%   2.68%
TACT     DEC    25.00   25.40   22.16    0.40   8.50%   1.57%
AMLN     DEC    25.00   25.25   20.92    0.25   5.35%   0.99%
ATMI     DEC    25.00   25.40   23.40    0.40   5.74%   1.57%
CELG     DEC    30.00   30.45   27.39    0.45   6.31%   1.48%
JBLU     DEC    25.00   25.30   23.65    0.30   4.99%   1.19%
AGIX     DEC    30.00   30.35   24.71    0.35   8.24%   1.15%
JUPM     DEC    20.00   20.20   16.00    0.20   6.98%   0.99%

There was no position available in Connetics (NASDAQ:CNCT) due
to the "gap" down in the underlying issue on the day after the
play was published.  Digene (NASDAQ:DIGE) is now on the "watch"
list.

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

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

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

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

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

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

NEW NAKED-PUT CANDIDATES

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

DUSA   13.58  DEC 12.50  FDU-XV 0.25   90 12.25  20   3.1%   8.3%
CTMI   13.52  DEC 12.50  QPQ-XV 0.25  157 12.25  20   3.1%   8.2%
RMBS   22.17  DEC 20.00  BNQ-XD 0.35   54 19.65  20   2.7%   7.6%
ZEUS   22.10  DEC 20.00  SBQ-XD 0.30  143 19.70  20   2.3%   6.5%
MCIP   19.21  DEC 17.50  MCI-XW 0.25 7338 17.25  20   2.2%   6.1%
PAAS   18.65  DEC 17.50  USP-XW 0.25 1360 17.25  20   2.2%   5.8%
UTHR   45.50  DEC 40.00  FUH-XH 0.40  682 39.60  20   1.5%   4.6%
ELAB   25.37  DEC 22.50  ESQ-XX 0.20  236 22.30  20   1.4%   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.
_________________________________________________________________

DUSA - DUSA Pharmaceuticals  $13.58  *** Break-Out Coming? ***

DUSA Pharmaceuticals (NASDAQ:DUSA) is a pharmaceutical company
developing drugs in combination with light devices to treat or
detect a range of conditions in processes known as photodynamic
therapy or photodetection.  The company is engaged primarily in
the research, development and marketing of its initial drug,
Levulan brand of aminolevulinic acid HCl, for use in a range of
medical conditions.  When the company uses Levulan and follows
it with exposure to light to treat a medical condition, it is
known as Levulan photodynamic therapy.  When it uses Levulan and
follows it with exposure to light to detect medical conditions,
it is known as Levulan photodetection.

DUSA - DUSA Pharmaceuticals  $13.58

DEC 12.50 FDU-XV LB=0.25 OI=90 CB=12.25 DE=20 TY=3.1% MY=8.3%


_________________________________________________________________

CTMI - CTI Molecular Imaging  $13.52  *** Upgrade = Rally! ***

CTI Molecular Imaging (NASDAQ:CTMI) offers healthcare providers
a line of the products and services necessary to incorporate the
benefits of positron emission tomography into their clinical
settings.  CTI manufactures and distributes a line of PET and
PET/computed tomography scanners through CTI PET Systems, which
are marketed as ECAT scanners, and, through its subsidiary, CTI
Services, as REVEAL scanners.  CTI manufactures the detection
materials utilized in PET scanners including its lutetium oxide
technology.  It has a nationwide network for the production and
distribution of the highly specialized radioactive pharmaceuticals
used in PET imaging.

DEC 12.50 QPQ-XV LB=0.25 OI=157 CB=12.25 DE=20 TY=3.1% MY=8.2%


_________________________________________________________________

RMBS - Rambus  $22.17  *** Entry Point? ***

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  $22.17

DEC 20.00 BNQ-XD LB=0.35 OI=54 CB=19.65 DE=20 TY=2.7% MY=7.6%


_________________________________________________________________

ZEUS - Olympic Steel  $22.10  *** Sector Rally! ***

Olympic Steel (NASDAQ:ZEUS) is a North American steel service
center with 49 years of experience in specialized processing
and distribution of large volumes of carbon, coated carbon and
stainless steel, flat-rolled sheet and coil and plate products
from 12 facilities in eight midwestern and eastern states.  The
company operates as an intermediary between steel producers and
manufacturers that require processed steel for their operations.
Olympic Steel purchases flat-rolled steel typically from steel
producers and responds to its customers' needs by processing
steel to customer specifications and by providing critical
inventory and just-in-time delivery services.

ZEUS - Olympic Steel  $22.10

DEC 20.00 SBQ-XD LB=0.30 OI=143 CB=19.70 DE=20 TY=2.3% MY=6.5%


_________________________________________________________________

MCIP - MCI Inc.  $19.21  *** Uptrend Intact! ***

MCI, Inc. (NASDAQ:MCIP) whose predecessor was WorldCom, is a
global communication company, providing a range of communication
services in over 200 countries on six continents.  It operates
a communications network that is composed of over 100,000 route
miles of network connections linking metropolitan centers and
various regions across North America, Europe, Asia, Latin America,
the Middle East, Africa and Australia.  The company also owns an
Internet protocol backbone and is a carrier of international voice
traffic.  The company operates primarily through three business
units: Business Markets, Mass Markets and International.

MCIP - MCI Inc.  $19.21

DEC 17.50 MCI-XW LB=0.25 OI=7338 CB=17.25 DE=20 TY=2.2% MY=6.1%


_________________________________________________________________

PAAS - Pan American Silver  $18.65  *** Precious Metals Hedge ***

Pan American Silver (NASDAQ:PAAS) is principally engaged in the
exploration for, and the acquisition, development and operation
of, silver properties primarily in Peru, Mexico, Bolivia and
Argentina, with a secondary focus on the United States and the
Americas.  Pan American's main products and sources of revenue
are silver-rich zinc, lead and copper concentrates.  It markets
silver-rich pyrite stockpiles from the Quiruvilca, Huaron and La
Colorada mines in Peru.

PAAS - Pan American Silver  $18.65

DEC 17.50 USP-XW LB=0.25 OI=1360 CB=17.25 DE=20 TY=2.2% MY=5.8%


_________________________________________________________________

UTHR - United Therapeutics  $45.50  *** Rally In Progress! ***

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  $45.50

DEC 40.00 FUH-XH LB=0.40 OI=682 CB=39.60 DE=20 TY=1.5% MY=4.6%


_________________________________________________________________

ELAB - Eon Labs  $25.37  *** Target-Shoot An Entry! ***

Eon Labs (NASDAQ:ELAB) is a generic pharmaceutical firm engaged
in developing, licensing, manufacturing, and marketing a range
of prescription pharmaceutical products primarily in the United
States.  The company focuses primarily on drugs in a broad range
of solid oral dosage forms, using both immediate and sustained
release delivery, in tablet, multiple layer tablet, film-coated
tablet and capsule forms.  Eon Labs obtains new generic products
primarily through internal product development and from strategic
licensing or co-development arrangements with Hexal AG, as well
as with other companies.

ELAB - Eon Labs  $25.37

DEC 22.50 ESQ-XX LB=0.20 OI=236 CB=22.30 DE=20 TY=1.4% 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.

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

CYBX - Cyberonics  $19.20  *** In A Trading Range? ***

Cyberonics (NASDAQ:CYBX) designs, develops, manufactures and
markets the Cyberonics VNS (Vagus Nerve Stimulation) Therapy
System, an implantable medical device for the treatment of
epilepsy and other debilitating chronic disorders.  The VNS
Therapy System consists of the VNS Therapy Pulse Generator,
the Bipolar Lead, the programming wand and software and the
tunneling tool.  The company has been approved by the Food and
Drug Administration to market the VNS Therapy System in the
United States, as an adjunctive therapy for reducing the
frequency of seizures in patients over 12 years of age with
partial onset seizures that are refractory or resistant to
drugs.  Cyberonics has also received regulatory approval to
sell the VNS Therapy System in Canada, Europe, Australia and
other countries in Eastern Asia for the treatment of refractory
epilepsy and without patient age or seizure type limitation.

CYBX - Cyberonics  $19.20

"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 22.5  QAJ-LX    1826   0.35  22.85  11.3%   1.5%


_________________________________________________________________

PLAB - Photronics  $17.95  *** Earnings Speculation! ***

Photronics (NASDAQ:PLAB) is manufactures photomasks, which are
precision photographic quartz plates containing microscopic
images of electronic circuits.  Photomasks are a key element in
the manufacture of semiconductors and are used as masters to
transfer circuit patterns onto semiconductor wafers during the
fabrication of integrated circuits and, to a lesser extent,
other types of electrical components.  The company's photomasks
are manufactured in accordance with circuit designs provided on
a confidential basis by its customers.  The company primarily
sells its products to semiconductor manufacturers.  Earnings
are due on or about 12/7/04.

PLAB - Photronics  $17.95

"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    PQF-LD     439   0.30  20.30   8.4%   1.5%


_________________________________________________________________

SNIC - Sonic Solutions  $18.94  *** Consolidation In Progress ***

Sonic Solutions (NASDAQ:SNIC) develops and sells computer-based
tools for creating digital audio and video titles in the compact
disc, audio and digital video disc, video formats and in related
formats; for recording files on CD recordable or DVD recordable
discs in the CD-read only memory and DVD-ROM formats, and for
backing up the information contained on hard discs attached to
computers.  Sonic divides its business into three categories:
professional audio and video products and services, desktop
products, and technology products, which are sold under the
trade names of AuthorScript and Primo SDK.

SNIC - Sonic Solutions  $18.94

PLAY (sell naked call):

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

SELL CALL  DEC 20    QNI-LD     534   0.35  20.35   7.8%   1.7%




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