The Option Investor Newsletter Tuesday 01-04-2005 Copyright 2005, All rights reserved. 1 of 3 Redistribution in any form strictly prohibited. In Section One: Wrap: Why Worry? Futures Markets: See Note Index Trader Wrap: Inflation is still a dirty word Market Sentiment: Q4 Hangover Posted online for subscribers at http://www.OptionInvestor.com ************************************************************ MARKET WRAP (view in courier font for table alignment) ************************************************************ 01-04-2005 High Low Volume Adv/Dcl DJIA 10630.78 - 98.70 10769.56 10605.15 2.13 bln 763/2420 NASDAQ 2107.86 - 44.30 2159.64 2100.56 2.73 bln 744/2414 S&P 100 566.77 - 5.56 574.49 565.51 Totals 1507/4834 S&P 500 1188.05 - 14.03 1205.84 1185.39 SOX 410.36 - 13.90 426.10 406.08 RUS 2000 628.54 - 11.90 643.05 627.89 DJ TRANS 3678.33 - 82.00 3768.51 3674.94 VIX 13.98 - 0.10 14.45 13.93 VXO (VIX-O)14.13 - 0.07 14.96 13.89 VXN 20.06 + 0.56 20.81 19.57 Total Volume 5,210M Total UpVol 809M Total DnVol 4,306M Total Adv 1820 Total Dcl 5547 52wk Highs 142 52wk Lows 27 TRIN 1.68 NAZTRIN 1.34 PUT/CALL 0.77 ************************************************************ Why Worry? by Jim Brown We expected a drop this week and I have reported those expectations in this commentary more than once. After two days of decline the market pundits are suggesting the market conditions have changed and the bears are coming out of the woods to feast on fresh hamburger. Who is right and has investing as we knew it changed over the last week? Dow Chart Nasdaq Chart SPX Chart Russell Chart In my opinion nothing has changed. The economy is still struggling along and the multitude of worries mentioned on stock TV this week are just a rehash of the worries the bulls trampled over the last quarter. I will try to touch on the majority of those worries but first the economics of the day. Chain Store sales fell back to mediocre at only a +0.2% rate for the week ended Jan-1st. This is a very strong shopping week and buyers failed to appear in droves but the year over year number rose to +4.6%. Only a minor increase week to week but strong gains over the prior year. Retailers can now take their Rip Van Winkle nap until next fall with only Valentines and Easter to provide any waking excitement. Factory Orders jumped only slightly more than expected at +1.2% for November. All components rose slightly with the majority of the gains probably related to last minute pre-holiday shipping and a rebuild cycle beginning for depleted year end inventories. No big excitement here. Auto sales rebounded strongly in December with red tag specials and higher than ever cash back programs. The annualized rate jumped to 18.4 million from 16.4 million in November. This turned out to be the fourth strongest year on record. Light trucks jumped +10.1% but Japanese makers Toyota, Honda and Nissan topped the leader board with even higher double digit gains as they increased their share of the market to greater than 40%. Hybrid vehicles are selling faster than they can make them as consumers try to avoid the high gas prices ahead. Economics were just like they have been for the last three months with mixed messages across all components. The biggest economic bombshell today did not come from an economic report but from the Fed minutes from the December FOMC meeting. The Fed stated that the economy was expected to continue its leisurely pace of recovery and the recovery was seen to be firmly entrenched. They cited labor markets as improving and this should continue to support consumer spending. The problems appeared in the interest rate outlook with comments that the recent depreciation of the dollar, elevated energy costs and the possibility of slowing growth as factors that could increase the risk of inflation. They still see the risks to be balanced between inflation and deflation but they are now leaning toward inflation ahead. They said the increase in inflation signals over the last few months might be a warning sign that expectations for low inflation were not as well founded as they had been last summer. Fear is creeping into the Fed outlook and they feel part of that creeping inflation is still being fueled by excessive liquidity. In Fedspeak excessive liquidity means interest rates are too low. "Some participants believed that the prolonged period of policy accommodation had generated a significant degree of liquidity that might be contributing to signs of potentially excessive risk-taking in financial markets evidenced by quite narrow credit spreads, a pickup in initial public offerings, an upturn in mergers and acquisition activity, and anecdotal reports that speculative demands were becoming apparent in the markets for single-family homes and condominiums." The bottom line for the report was a significant fear that the Fed was losing control and could begin to ramp up the rate hike cycle with more aggressive hikes. The Fed believes that energy prices will remain low, a point I would argue is in error, global growth will continue and trade deficits will diminish due to the drop in the dollar. In general they are nearly united in their view that the Goldilocks economy is returning with the exception of a greater risk for inflation. Where the Fed minutes should have painted a positive outlook for investors given the Fed's rose colored glasses it also shattered that outlook with worries that rates were going higher soon. There had been a near unanimous view that the Fed would pause at the February meeting and take a longer view of the economic picture before making any new changes. After today's report the current 2.25% rate has now been speculated to rise to as much as 4.25% by year's end. This would mean at least one hike greater than 25 points or no passes at any of the eight meetings scheduled for 2005. This sudden change from a no more hike sentiment to a full and possibly aggressive hike scenario knocked the wind out of the market this afternoon. The yield on the ten-year treasury spiked to 4.3% and the equity markets imploded. The Dow dropped -100 points on the 2:PM news to 10605 and barely rebounded to close at 10632. The Nasdaq dropped another -21 points on top of an already steep decline to -59 off the highs at 2100. The Nasdaq only managed a very weak +9 point bounce into the close. It was the worst day for the Nasdaq in five months. Also helping the decline was a downgrade on AMZN to sell at Smith Barney. Despite very strong sales this year the analyst thinks other online firms are eating away at AMZN market share and will continue to do so. Brick and mortar retailers are reporting a much faster ramp in acceptance of their online sites and the online retail space is becoming more crowded. AMZN dropped -2.38 on the news and took all the other Internet stocks with it. GOOG fell -8.21 from its all time high reached just yesterday. Another crowd favorite also took a major hit of -1.83 or -14.8% after acknowledging accounting improprieties. The company, Krispy Kreme Doughnuts, admitted it had padded sales, double shipped, disguised problems at certain stores and misreported earnings. The stock dropped to $10 but my question is why not $1? This company appears to have committed multiple counts of fraud and could be delisted very soon. Looks like the public still has a sweet tooth for KKD. Maybe they should go back and look up Boston Chicken, BOST. All the shareholders got greased when BOST finally imploded after years of being the darling of Wall Street. Depending on which sentiment indicator you want to use the 2005 year is not off to a good start. Today was the last day of the typical Santa Rally period following Christmas. Needless to say the Dow or any of the indexes for that matter did not see a visit from Santa. The Dow lost -200 points during the period after the Dec-23rd close. The Nasdaq lost -53 points, Russell -22, -28 from its high and the SOX -17 (-4%). If you were counting on Santa for your sentiment then the Santa adage is running through your mind tonight. When Santa fails to call bears will come to Broad and Wall. It would appear on the surface the door is open and the red carpet rolled out for their arrival. The other market barometers include the first five days scenario. Theoretically the first five days of January are supposed to predict the direction of the market for the year. Not looking good for that one. Then there is the January barometer, as January goes so goes the year. None of these predictors of market direction have very good records but they are all consistently prove more often right than wrong. Bah humbug! We knew the market was going to sell off once the calendar rolled over. We talked about it in this space several times. When the indexes rally as they did in the fourth quarter the money managers are just holding their breath hoping to get to the new year before everybody pulls the rip cord on their profit parachute. Remember this table from last Thursday? Index Low 12/30 Gain Dow 9708 10800 +11.2% from October low Nasd 1899 2178 +14.6% from October low $SPX 1090 1213 +11.2% from October low Nasd 1750 2178 +24.4% from August low TRAN 2959 3807 +28.6% from August low $RUT 516 653 +26% from August low UTIL 260 336 +29.2% from May low Since August the Russell was up +26%, the Nasdaq +24%. There were huge amounts of profit to be taken and the managers are doing that this week. Whenever the market takes a sudden and unexpected (by the uninformed) drop the talking heads on TV scramble to find the reason. Today we were told it was weakness in China, unemployment in Germany, spiking oil prices, sudden inflation fears and last but not least new Fed fears. Obviously it was not oil since it fell over -$2 on Monday and the market still tanked. Today it rebounded to erase those losses but is still trading in exactly the same range it has been trading for the last five weeks. Today the oil worry is only smoke. It will eventually bite us but not today. The Fed outlook was blamed but there was really nothing in the outlook that was different than any prior outlook. The optimistic analysts had convinced themselves into believing their own dreams that the Fed was done. The Fed has never even hinted that it might pause. Every comment has always been "accommodation will continue to be removed at a measured pace." No change there. Some analysts blamed the drop on a lack of fund flows. The $31B of expected money had failed to appear. This is also smoke. The money does not appear the first two days of the year. The majority appears over the second and third weeks of January. TrimTabs said today they were still expecting $2.5B to $3B PER DAY over the next two weeks. No change there. Are you starting to get the picture? Nothing has changed and the current drop is just profit taking. Even Ralph Acampora came out again today and affirmed his Dow 13K forecast. Nobody expects a blowout market but they do expect the markets to move higher over the next two quarters. Where to from here? The Nasdaq has been literally slammed as funds took profit in techs. The index dropped back to 2100 today and decent support. It could stop there or it could drop all the way back to 2050 but it will stop. When the rebound starts it is likely to be sharp and on very strong volume. Be prepared. The volume today was very strong and weighted heavily to the downside. On the NYSE the down volume was 9:1 over up volume with over 2B shares traded. Despite the beating on the Nasdaq the down volume was only 4:1 over up volume. The NYSE volume was drastically stronger because the majority of energy stocks are on the NYSE. Of the 350 energy stocks I cover in my Oil Crisis Report there are only 36 listed on the Nasdaq. When you think about which sector had the biggest gains the last six months it all makes sense. The funds are taking profits in energy and tech. Crude was up nearly +$2 today but energy stocks were down. This is clearly a buying opportunity in the making. For the rest of the week I would look for a bounce but possible not before even deeper support levels are tested. SPX 1175-1180, Nasdaq 2050 and Dow 10450 would be my worst case support levels. I believe we will bounce before then but these corrections nearly always get overdone as traders react to the negative news in the press. The Nasdaq normally corrects about -5% in January and even if you count from Monday's high of 2191 to today's close at 2109 it is only -3.7%. There could be some weakness remaining but once the selling stops don't try to short the bounce. Managers will not be under any pressure to buy until the real money flows hit next week but they are generating a lot of cash from these two days of selling. If somebody steps on the trip wire we could change directions very quickly. Watch the up volume. If we get a reversal in the volume from 9:1 negative to 4:1 or 5:1 positive then we have seen the bottom. Pick your entry targets now. If you have no target you will probably miss the bulls eye. Jim Brown Editor ************************************** Option Investor End of Year Renewal Special ************************************** Lock in Your Subscription Rate Now! If you have not signed up yet for the 2004 end of year special then your time is running out. Lock in your subscription price for all of 2005 now and protect yourself from any coming rate hikes. https://secure.sungrp.com/05renewal/ *************** FUTURES MARKETS *************** Futures wrap is not emailed due to the excessive number of charts. It may be read on the website at this address. http://www.OptionInvestor.com/indexes/futureswrap.asp ************************Advertisement************************* SEE WARREN BUFFETT'S LATEST DISCLOSED STOCK PORTFOLIO Now you can follow the investment master's actual moves. To get a FREE report that details Warren Buffett's strategy and reveals his most recently disclosed, ACTUAL stock picks, Click HERE! http://www.bigmoneywatch.com/default.asp?aid=626 ************************************************************** ***************** INDEX TRADER WRAP ***************** Inflation is still a dirty word Call the FCC, cover the kid's ears, and press the sell button as the word "inflation" and thought of a proactive Fed still on the alert for threats to a steady pace of economic growth found Treasuries and stocks under heavy selling pressure on Tuesday. Earlier this morning the European Union's statistics office said consumer prices rose 2.3% in December after a 2.2% increase in November, which sparked some fears of inflation overseas. And while the dollar regained some lost ground against the euro in this morning's trade, as cash flowed back to U.S. assets, the dollar surged against a weighted basket of 6 major currencies as the session progressed, with the U.S. Dollar Index (dx00y) 82.52 +1.50% jumping 1.22 points as I type (04:45 PM EST) after the release of the December 14 FOMC minutes. A word count would reveal the word "inflation" was used 21 times, compared to 15 times in the November 10 minutes. Some notes from the December 14 meeting that traders and investors might want to be cognizant of were.... "The FOMC’s decision in November to raise the intended federal funds rate 25 basis points and its attendant public statement were apparently anticipated by the market, so that the reaction was muted. Subsequently, higher-than-expected inflation data, remarks by the Chairman that were viewed as pointing to future rate increases, and the depreciation of the dollar all led market participants to price in a somewhat steeper path for future policy. The upward revision in policy expectations prompted modest increases in shorter-term Treasury coupon security yields. The yield on the ten-year Treasury note, however, was unchanged on net. Yields on both investment-grade and speculative-grade corporate bonds edged lower. The value of the dollar relative to other major currencies declined." With that bit of Fed history being revealed, with was the following commentary that spooked investors, and more than likely had profitable bulls further locking in gains, as Treasuries and stocks extended losses from the 02:00 hour. "With some economic slack persisting and longer-term inflation expectations well-anchored, inflation was anticipated to remain subdued. A number of participants cited the recent depreciation of the dollar on foreign exchange markets, elevated energy costs, and the possibility of a slowing in underlying productivity growth as factors tending to boost the upside risks to their inflation outlook, though, on net, they saw the risks to stable underlying inflation as still balanced." If I (Jeff Bailey) were to give a trader's translation to the above paragraph, I'd pick out the NEGATIVES (reason to take further profits in a declining session), and read the FOMC, even if inaccurate, or way out of context as, "Economic slack combined with the dollar's weakness and still high energy prices, combined with slowing productivity, will have the Fed continuing its path of raising rates as inflation could become a major problem!" If you would like to read the full release of the FOMC December 14, minutes, you can do so by clicking this http://www.federalreserve.gov/fomc/minutes/20041214.htm U.S. Market Watch / Internals - 01/04/05 Close A jump in November factory orders, which was released at 10:00 AM EST received a buy program premium and had the majors lifting to their best levels of the session. But that buy program premium may have been out of politeness as I was bearishly surprised to see so few 52-week high highs, especially at the NYSE. Even Google (NASDAQ:GOOG) $194.50 -4.05% was unable to best Monday's all-time high in early morning trade. Note today's number of new highs at the big board versus a greater number at the NASDAQ. This is a change, or some DIVERGENCE from the past, with the number of new highs at the NASDAQ suddenly outnumbering those at the NYSE. What have we been observing in recent months and weeks? The NYSE has "always" posted a greater number of new highs by the close. I just looked at yesterday's internals from last night's wrap and see that at 10:00 AM EST, the NASDAQ new highs were slightly better than that found at the NSYE, but by the close, the more institutionally held NYSE-listed stocks pressed their new highs further above. I've always felt the NYSE was more institutionally HELD, while the NASDAQ is institutionally TRADED. While the bullish % indications we track each morning in the 09:00 AM EST update only track the percentage of stocks giving reversing higher point and figure buy signals, or reversing lower point and figure sell signals, I'll make a BEARISH note here that the number of new highs among 1, 2 and 3-lettered stocks starts to wane. I'll build on this in a minute, and something I looked at last week, but had forgotten about until late this afternoon as it relates to a chart we had built on the NYSE Composite ($NYA.X) 7,090.52 -1.24% a couple of months ago. Volumes were heavy, not "brisk" today, and selling was BROAD, as if bulls were poised to throw out the New Year's baby with the bathwater. The NASDAQ Composite (COMPX) 2,107.86 -2.05% suffered its worst single-session decline in 5-months. U.S. Market Watch - 01/04/05 Close Dollar selling "usually translates" to foreign capital at least moving into Treasuries. Nope.... not today, and over the past 5 and 20-day's, we would have seen a net outflow of capital from the shorter-dated 5-year yield ($FVX.X) with jumped 7.7 basis points to 3.705%. Corporate bonds didn't find much buying as a quick review of the Beetle's Balanced Benchmark had the iShares GS $ Invest (AMEX:LQD) $111.62 -0.56% down 63 cents. "Junk Bonds" as depicted by the Pacholder High Yield (NYSE:PHF) $9.75 -0.81%, despite its $0.075 per month dividend was also weak. Hmmmm.... the FOMC notes mentioned all bond asset classes in their notes, how the markets treated each asset class, despite the FOMC's inflation-threatening thoughts that dollar weakness and still high energy prices might have on the economy going forward. So if their is dollar strength (money coming back to the U.S. = demand) yet Treasuries, corporate bonds, junk bonds and equities were weak, where in the heck is the money going? Likely answer: To the sidelines! Earlier in the wrap I said I wanted to build on the NYSE NH/NL observations as well as its bullish % ($BPNYA) readings. Here's a chart we constructed a couple of months ago, when the NYSE looked poised to break out to all-time highs. Target selling and profit taking? Or sudden realization that "inflation" is a problem? My thoughts are that "inflation thoughts" were used as an excuse to take more profits, and kept would-be buyers on the sidelines. NYSE Composite ($NYA.X) Chart - Daily Intervals A sharp 2-day decline after the NYSE Comp. had achieved 100% of our fitted 38.2% retracement and a narrow "zone" from 7,258-7,273 smells/looks like target selling and profit taking. Add in a notably fewer number of new highs on the NYSE and important near- term support from 7057-7,092 is identified. I benchmarked the 12/14/04 date of the most recent FOMC meeting. The above chart was displayed in the 11/04/04 Index Trader Wrap. As time has passed from that wrap, the current bullish vertical count from the point and figure chart (20-point box size), which has been fully constructed, hints at a longer-term bullish price objective of 7,540, which would be negated with a trade at 7,080. Russell 2000 Growth iShares (AMEX:IWO) Chart - Daily Intervals Index trading was "tough" in 2004 and it could be tough again in 2005. Today, traders may have been stopped out in their final 1/2 bullish position from a seasonally bullish trade we had set up back in late October. When reviewing the trade, one has to at least give thought that "target selling" and perhaps "tax gain selling" is playing a role in the markets right now. Today's close "two levels below" after closes right at $67.74 in late December, would be a signal for weakness based on tests we derived back in the October 31, 2004 Ask the Analyst column titled "Best 6 months starts in November." Pivot Matrix - All equity-based indices in our WEEKLY Pivot matrix traded and CLOSED below their WEEKLY S2. I've quickly gone back to earlier last year (2004), and it was for the WEEK of 03/08-03/12 that all of the equity-based indices traded below their WEEKLY S2. I'll post the 03/08-03/12 to 03/22-03/26 set of WEEKLY Pivots in tonight's Market Monitor when I'm done here, and try to the ranges, and levels of trade the following week, to try and ascertain further SIMILARITY or DIVERGENCE for the weeks ahead. However, based on one of last night's observations of a lower trade in the MONTHLY Pivot matrix, which was DIVERGENCE to early January of last year, I would have to be more BEARISH, if not more cautious in my bullish thoughts currently. Jeff Bailey **************** MARKET SENTIMENT **************** Q4 Hangover - J. Brown I've got one word for the first two trading days of 2005 - yuck! Market pundits blame it on profit taking after the very strong fourth quarter rally. Correct or not the market technicals have been very bearish both Monday and Tuesday. Today declining stocks outnumbered advancers about 11-to-3 on the NYSE and more than 3-to-1 on the NASDAQ. New highs have evaporated and down volume outweighed up volume by 9-to-1 on the NYSE and more than 4-to-1 on the NASDAQ. Yucky seems like an appropriate description. The talking heads on TV pointed out that last quarter's winners seem to be this week's losers as investors do some profit taking. Yet one guest on CNBC today was more encouraging. Biderman from TrimTabs, who watches mutual fund money inflows and outflows, said almost all the new money coming into the market this week (about $1 billion a day) has been going into global equity funds. He suggested that investors were putting money to work overseas to avoid the continuing decline in the U.S. dollar. He went on to say that if inflows into foreign funds have reached these heights that it could be a top. Thus the U.S. dollar could turnaround soon and U.S. stocks are likely to do well in the second half of January. He went on to remind viewers that there is a lot of money on the sidelines and January, a seasonally bullish time of year for stocks, could see some $60 billion in inflows for the month. Let's hope he's right. Normally the first two trading days of January are bullish as part of the seven-day post-Christmas rally. Plus, the first five days of January tend to be bullish due to the new inflow of money into retirement accounts but if all this money is going into global funds then the early January barometer (the first five days) could turn bearish. As I mentioned last week some traders look at the first five days of January as an early barometer for the month. Let's hope stocks rebound soon. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10868 52-week Low : 9708 Current : 10630 Moving Averages: (Simple) 10-dma: 10780 50-dma: 10489 200-dma: 10264 S&P 500 ($SPX) 52-week High: 1216 52-week Low : 1060 Current : 1188 Moving Averages: (Simple) 10-dma: 1207 50-dma: 1178 200-dma: 1129 Nasdaq-100 ($NDX) 52-week High: 1635 52-week Low : 1301 Current : 1571 Moving Averages: (Simple) 10-dma: 1611 50-dma: 1568 200-dma: 1461 ----------------------------------------------------------------- CBOE Market Volatility Index (VIX) = 13.98 -0.10 CBOE Mkt Volatility old VIX (VXO) = 14.13 -0.07 Nasdaq Volatility Index (VXN) = 20.06 +0.56 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.78 1,071,868 831,280 Equity Only 0.60 823,299 494,997 OEX 0.99 33,587 33,327 QQQQ 2.33 53,555 124,869 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 76.2 - 1 Bear Correction NASDAQ-100 80.0 + 0 Bull Confirmed Dow Indust. 73.3 + 0 Bull Confirmed S&P 500 77.2 - 1 Bull Confirmed S&P 100 78.0 + 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: 1.44 10-dma: 1.04 21-dma: 1.07 55-dma: 1.01 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 636 741 Decliners 2221 2340 New Highs 53 57 New Lows 15 12 Up Volume 228M 530M Down Vol. 1853M 2175M Total Vol. 2146M 2718M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 12/21/04 Weekly COT report discloses positions held by small specs and commercial traders of index futures contracts at the Chicago Mercantile Exchange and Chicago Board of Trade. COT data can be found at www.cftc.gov. Small specs are the general trading public with commercials being financial institutions. Commercials are historically on the correct side of future trend changes while small specs tend to be wrong. S&P 500 Commercial traders are growing more bearish while small traders are naturally moving the other direction and growing more bullish. Commercials Long Short Net % Of OI 11/30/04 462,394 491,813 (29,419) (3.0%) 12/07/04 450,072 498,057 (47,985) (5.0%) 12/14/04 502,471 540,494 (38,023) (3.6%) 12/21/04 455,238 502,538 (47,300) (4.9%) 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 11/30/04 176,031 148,876 27,155 8.3% 12/07/04 187,707 135,776 51,931 16.0% 12/14/04 201,428 164,111 37,371 10.2% 12/21/04 157,015 106,205 50,810 19.2% Most bearish reading of the year: (1,657)- 5/27/03 Most bullish reading of the year: 114,510 - 3/26/02 E-MINI S&P 500 There has been a dramatic reduction in open positions for both longs and shorts for both the commercial traders and small traders. The net result has produced an increase in bearishness for professionals and an increase in bullishness for small traders. Commercials Long Short Net % Of OI 11/30/04 439,074 855,440 (416,366) (32.2%) 12/07/04 470,553 805,234 (334,681) (26.2%) 12/14/04 556,980 899,616 (342,636) (23.5%) 12/21/04 279,694 554,818 (275,124) (32.9%) Most bearish reading of the year: (436,367) - 11/23/04 Most bullish reading of the year: 133,299 - 09/02/03 Small Traders Long Short Net % of OI 11/30/04 386,665 67,926 318,739 70.1% 12/07/04 311,838 66,496 245,342 64.8% 12/14/04 398,915 137,598 261,317 48.7% 12/21/04 227,047 66,140 160,907 54.8% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Hmm... we are seeing a dramatic reversal for both commercial and small traders. Commercials have significantly cut their long positions reversing their bullishness into bearishness for the NDX. Small traders have drastically reduced their short positions to flip-flop them from net bearish to net bullish. Commercials Long Short Net % of OI 11/30/04 56,629 30,571 26,058 29.8% 12/07/04 57,621 34,313 23,308 25.4% 12/14/04 73,554 50,286 23,268 18.7% 12/21/04 30,614 45,158 (14,544) (19.1%) Most bearish reading of the year: (21,858) - 08/26/03 Most bullish reading of the year: 26,058 - 11/30/04 Small Traders Long Short Net % of OI 11/23/04 11,153 39,712 (28,559) (56.1%) 11/30/04 9,902 44,779 (34,877) (63.7%) 12/07/04 15,489 49,064 (33,575) (52.0%) 12/14/04 26,781 58,159 (31,378) (36.9%) 12/21/04 20,840 9,109 11,731 39.1% Most bearish reading of the year: (34,877) - 11/30/04 Most bullish reading of the year: 19,088 - 01/21/02 DOW JONES INDUSTRIAL Commercial traders have suddenly become a lot more bearish on the Dow Industrials. Meanwhile small traders have significantly cut their positions on both sides of the trade. Commercials Long Short Net % of OI 11/30/04 22,622 25,411 (2,789) (5.8%) 12/07/04 25,523 27,351 (1,828) (3.4%) 12/14/04 36,960 38,566 (1,606) (2.1%) 12/21/04 24,850 31,920 (7,070) (12.4%) 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 11/30/04 5,739 8,536 (2,797) (19.6%) 12/07/04 5,274 9,507 (4,233) (28.6%) 12/14/04 13,445 19,089 (5,644) (17.3%) 12/21/04 5,637 6,961 (1,324) (10.5%) Most bearish reading of the year: (12,106) - 3/09/04 Most bullish reading of the year: 8,523 - 8/26/03 ************************Advertisement************************* Insiders are Buying these 6 Rocket Stocks. In the last few weeks, we have pinpointed insider buying on six stocks that have the potential to deliver stratospheric gains. 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The Option Investor Newsletter Tuesday 01-04-2005 Copyright 2005, All rights reserved. 2 of 3 Redistribution in any form strictly prohibited. In Section Two: Dropped Calls: ACL, BIIB, CTX Dropped Puts: None Call Play Updates: BBOX, BDK, COF, ETR, FRE, FSH, JCI, MHK, RAI, UTX, WFMI, ZBRA New Calls Plays: None Put Play Updates: None New Put Plays: ADBE, CAI, FDX **************** PICKS WE DROPPED **************** When we drop a pick it doesn't mean we are recommending a sell on that play. Many dropped picks go on to be very profitable. We drop a pick because something happened to change its profile. News, price, direction, etc. We drop it because we don't want anyone else starting a new play at that time. We have hundreds of new readers with each issue who are unfamiliar with the previous history for that pick and we want them to look at any current pick as a valid play. CALLS: ***** Alcon Inc - ACL - close: 77.57 chg: -1.28 stop: 77.85 The drug sector has not escaped the pull back in the stock market and shares of ACL have broken down under support at the $78.00 level. We have been stopped out at $77.85. Picked on December 22 at $ 81.74 Change since picked: - 4.17 Earnings Date 02/09/05 (unconfirmed) Average Daily Volume = 773 thousand Chart = --- Biogen Idec - BIIB - close: 64.76 change: -1.53 stop: 64.49 Biotech stocks have been hit pretty hard the last two sessions during the current market sell-off. BIIB is no exception especially with today's 2.3 percent decline. Technicals are turning sour and shares are testing support near $64.00. Unfortunately that means BIIB has broken through the $65 level and its 21-dma while hitting our stop loss at $64.49. In the news BIIB announced it will present at the JPMorgan Healthcare Conference in California on January 11th. Picked on December 9 at $ 65.25 Change since picked: - 0.49 Earnings Date 01/26/05 (unconfirmed) Average Daily Volume = 3.5 million Chart = --- Centex - CTX - close: 55.60 change: -3.05 stop: 55.90 Homebuilders were one of the hardest hit sectors on Tuesday with a 4.17 percent drop in the DJUSHB home construction index. CTX fared even worse with a 5.2 percent decline on heavy volume. The selling paused near round-number support at $55 but CTX has broken the three-week old support near the $56.00 level and shares hit our stop loss at $55.90. Technicals have turned south with a new MACD sell signal. Picked on December 28 at $ 58.84 Change since picked: - 3.24 Earnings Date 01/18/05 (unconfirmed) Average Daily Volume = 1.4 million Chart = PUTS: ***** None ************************Advertisement************************* Trade Smarter Using the latest Insider Trades Is the CEO selling off? Has a key insider loaded up on shares before a big price jump? Find out now. Get your free download of Real Time insider trades: http://www.realtimeinsider.com/default.asp?aid=637 ************************************************************** ******************** PLAY UPDATES - CALLS ******************** Black Box - BBOX - close: 47.63 change: +0.23 stop: 43.99 BBOX has not escaped the market's pull back this year but shares are holding up better than most tech stocks. This is probably due to the positive analyst comments that came out on Monday. BBOX had its price target raised from $52 to $59. Also in the news BBOX announced it would report earnings on February 1st. Right now, considering the tech sector weakness, we would expect BBOX to dip further. Readers looking for bullish positions can wait for the bounce. If BBOX breaks the $45 level we may exit early. Picked on December 22 at $ 46.15 Change since picked: + 1.48 Earnings Date 02/01/05 (confirmed) Average Daily Volume = 128 thousand Chart = --- Black & Decker - BDK - close: 86.60 chg: -1.15 stop: 84.49 As expected BDK has continued to pull back after its failed rally at the $90 level. Now we just need to see shares bounce from rising technical support at the 40-dma. Readers can choose to buy the bounce above $85.00 or wait for the breakout over $90.00. Picked on December 22 at $ 87.01 Change since picked: - 0.41 Earnings Date 01/24/05 (unconfirmed) Average Daily Volume = 656 thousand Chart = --- Capital One Financial - COF - cls: 82.25 chg: -1.55 stop: 79.50 Financial stocks, like most of the market, have also pulled back the first two trading days in January. COF has broken its 10-dma but is testing the $82 level, which was support in late December. Still we would not be surprised to see the consolidation continue and see COF trade to the $80 level. The trick is to watch for the bounce from support at $80.00. We are not suggesting new bullish positions until we see the bounce. Picked on December 12 at $ 81.12 Change since picked: + 1.13 Earnings Date 01/19/05 (unconfirmed) Average Daily Volume = 1.4 million Chart = --- Entergy Corp - ETR - close: 65.94 chg: -0.51 stop: 64.95 Danger! Bulls should be very careful here and cautious traders can be eyeing the exits. ETR has broken through its rising simple 50-dma, which has been a technical level of support for weeks. Its technical picture has worsened with a new MACD sell signal. We would strongly consider exiting here because if the sell-off continues the recent failure in the $69 region is going to look like a double-top formation. However, there is still a chance that ETR can bounce from the $65 level. We are not suggesting new plays at this time. Picked on December 21 at $ 67.62 Change since picked: - 1.68 Earnings Date 01/31/05 (unconfirmed) Average Daily Volume = 1.1 million Chart = --- Freddie Mac - FRE - close: 71.85 chg: -1.14 close: 69.49*new* No surprises here. FRE has pulled back with the market. We would not suggest new bullish positions at this time. Readers can be patient and look for FRE to retest the $70 region has support. Then when traders buy the dip we can jump in on the bounce. We are raising our stop loss to $69.49. Picked on December 21 at $ 71.80 Change since picked: + 0.05 Earnings Date 00/00/05 (unconfirmed) Average Daily Volume = 2.8 million Chart = --- Fisher Scientific - FSH - cls: 60.72 chg: -0.41 stop: 57.95 This is a crucial test of support for FSH. The stock has spent the last two weeks digesting its December gains and breakout over long-term resistance in the $60-61 region. Now FSH is testing the $60 level as support as we thought it would. Readers can wait for the bounce before considering new positions. More conservative traders may want to wait for a new high since the technical indicators have turned bearish with a new MACD Sell signal. Picked on December 21 at $ 61.70 Change since picked: - 0.98 Earnings Date 02/02/05 (unconfirmed) Average Daily Volume = 1.3 million Chart = --- Johnson Controls Inc - JCI - cls: 61.98 chg: -0.81 stop: 60.49 JCI is pulling back as expected. In Monday's newsletter we suggested that readers watch for JCI to pull back toward its 40- dma and the $62 level and that's exactly what shares have done. The question now is whether or not JCI bounces here or will the stock continue lower and bounce from support near its 50-dma and the $61 level. We obviously don't know and the answer depends on the broader market indices at this time. The up trend in JCI remains but technical indicators are turning south after being overbought. More conservative traders may want to put a stop loss under $61.00. More aggressive traders may want to widen their stop and put it under round-number support at $60.00. Picked on December 29 at $ 63.51 Change since picked: - 1.53 Earnings Date 01/19/05 (unconfirmed) Average Daily Volume = 669 thousand Chart = --- Mohawk Industries - MHK - close: 88.75 chg: -1.05 stop: 87.95 As a flooring company MHK can sometimes trade in response to moves in the home building sector. The homebuilders got hit pretty hard this week with a four-percent decline on Tuesday. Fortunately, MHK managed to hold its decline at the $88 level of support and its 50-dma. This is an important test of support for MHK and if shares break the $88 level it will break the six-week trend of higher lows and probably hit our stop loss at $87.95. We would not suggest new bullish plays at this time. Picked on December 14 at $ 91.00 Change since picked: - 2.25 Earnings Date 02/15/05 (confirmed) Average Daily Volume = 319 thousand Chart = --- Reynolds American - RAI - close: 77.75 change: -0.75 stop: 75.99 Tobacco has not been very defensive this year with shares of the major tobacco players sliding lower with the rest of the market in 2005. Now that RAI has fallen five sessions in a row the stock is overdue for a bounce. Readers can wait for the dip and bounce near $76.50-77.00 or wait for the rebound back over the $80 level before considering new bullish positions. Picked on December 22 at $ 80.11 Change since picked: - 2.36 Earnings Date 01/24/05 (unconfirmed) Average Daily Volume = 1.0 million Chart = --- United Tech. - UTX - close: 101.81 change: -1.19 stop: 99.95 No surprises here with UTX. The Dow-component has continued to sell-off with the declines in the DJIA. We would not suggest new bullish positions at this time. Readers can wait for UTX to pull back toward the $100 level and then look for the bounce. Picked on December 1 at $100.15 Change since picked: + 1.66 Earnings Date 10/20/04 (confirmed) Average Daily Volume = 1.8 million Chart = --- Whole Foods - WFMI - close: 93.58 chg: -0.13 stop: 91.49 We remain untriggered in WFMI as we wait for shares to hit our entry point at $97.51. However, aggressive traders may want to look for a bounce from the $92 level as a high-risk entry point. Picked on January xx at $ xx.xx <-- see TRIGGER Change since picked: +00.00 Earnings Date 02/09/05 (unconfirmed) Average Daily Volume = 880 thousand Chart = -- Zebra Technologies - ZBRA - close: 54.47 chg: -1.04 stop: 52.99 ZBRA was not able to outrun the bears this week and shares fell lower with the rest of the pack. Now the stock is bouncing ever so slightly this afternoon after shares tested support near $54 and its simple 40, 50 and 200-dma's. Aggressive traders can buy this bounce if it continues tomorrow. The rest of us will probably feel more comfortable waiting for ZBRA to trade back over $56 before considering new positions. Picked on December 15 at $ 55.21 Change since picked: - 0.74 Earnings Date 02/09/05 (unconfirmed) Average Daily Volume = 709 thousand Chart = ************** NEW CALL PLAYS ************** None ************************Advertisement************************* SEE WARREN BUFFETT'S LATEST DISCLOSED STOCK PORTFOLIO Now you can follow the investment master's actual moves. To get a FREE report that details Warren Buffett's strategy and reveals his most recently disclosed, ACTUAL stock picks, Click HERE! http://www.bigmoneywatch.com/default.asp?aid=626 ************************************************************** ******************* PLAY UPDATES - PUTS ******************* None ************* NEW PUT PLAYS ************* Adobe Systems - ADBE - close: 60.06 change: -1.63 stop: 62.26 Company Description: Adobe is the world's leading provider of software solutions to create, manage and deliver high-impact, reliable digital content. (source: company press release) Why We Like It: We like ADBE because like the GSO software index shares of ADBE are overbought and look poised for some profit taking. Both the GSO and ADBE have broken their rising channels. Plus, ADBE has a huge bearish divergence on its MACD indicator. Now after four weeks of consolidating sideways between $59.50 and $64 shares of ADBE looks ready to turn lower with today's test of support at its 50-dma and the $60.00 mark. However, while we like the rising volume we want to see some confirmation before we (hypothetically) buy puts. ADBE has tested support near $59.25- 59.50 before. So we'll use a TRIGGER at $58.99 with a quick, short-term target of $55.00 and/or its 100-dma near $54.50. We have a short-term time horizon of just a couple of weeks. Coincidentally a pull back to $55 would be a 38.2 percent retracement of the July to December rally. Suggested Options: This is a short-term play. We're going to suggest the January and February puts. BUY PUT JAN 60 AEQ-ML OI=3954 current ask $1.55 BUY PUT FEB 60 AEQ-NL OI= 198 current ask $2.45 Annotated chart: Picked on January xx at $ xx.xx <-- see TRIGGER Change since picked: - 0.00 Earnings Date 03/17/05 (unconfirmed) Average Daily Volume = 2.3 million Chart = --- CACI Intl - CAI - close: 62.92 change: -2.80 stop: 66.01 Company Description: CACI International Inc provides the IT and network solutions needed to prevail in today's new era of defense, intelligence, and e-government. From systems integration and managed network solutions to knowledge management, engineering, simulation, and information assurance, we deliver the IT applications and infrastructures our federal customers use to improve communications and collaboration, secure the integrity of information systems and networks, enhance data collection and analysis, and increase efficiency and mission effectiveness. Our solutions lead the transformation of defense and intelligence, assure homeland security, enhance decision-making, and help government to work smarter, faster, and more responsively. (source: company press release) Why We Like It: CAI is another tech stock that is taking a hit as investors rotate out of their Q4 winners. Today's 4.2 percent decline in CAI was helped along by a downgrade to "out perform" but the high-volume sell-off began on Monday. Technical traders will notice that CAI has a bearish divergence in its MACD indicator. We are going to use a TRIGGER at $61.95 to open the play. If the play is opened we'll target a drop toward $55.00 which would be a 50 percent Fibonacci retracement of its August to December rally. However, we do have to note that the top of the October gap higher could prove to be support near $58. This is a short-term play. We want to be out before CAI reports earnings on or around Jan. 19th. Suggested Options: This is a short-term play so we're suggesting the January or February puts. BUY PUT JAN 65 CAI-MM OI=121 current ask $3.40 BUY PUT JAN 60 CAI-ML OI= 62 current ask $1.05 BUY PUT FEB 65 CAI-NM OI= 10 current ask $4.40 BUY PUT FEB 60 CAI-NL OI= 30 current ask $2.05 Annotated chart: Picked on January xx at $ xx.xx <-- see TRIGGER Change since picked: - 0.00 Earnings Date 01/19/05 (unconfirmed) Average Daily Volume = 348 thousand Chart = --- Fedex Corp - FDX - close: 95.66 change: -1.74 stop: 97.51 Company Description: FedEx Corp. provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $27 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 250,000 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: If investors are taking profits out of their Q4 winners then FDX is likely to be a big target. Actually the whole Dow Transportation sector in general would be a big target for profit taking but FDX could see its own bout of selling without additional weakness from the sector index. Technicals are bearish and volume has been rising on FDX's pull back. Currently shares are testing support at $95.00 and its 50-dma. We will use a TRIGGER at $94.95 to open the play to catch the breakdown. Our short-term target is round-number support at $90.00 and its 100- dma. Suggested Options: We are going to suggest the January and February puts but our preference would be February's. BUY PUT JAN 95 FDX-MS OI=3049 current ask $1.30 BUY PUT JAN 90 FDX-MR OI=1943 current ask $0.30 BUY PUT FEB 95 FDX-NS OI= 288 current ask $2.30 BUY PUT FEB 90 FDX-NR OI= 338 current ask $0.75 Annotated chart: Picked on January xx at $ xx.xx <-- see TRIGGER Change since picked: - 0.00 Earnings Date 03/17/05 (unconfirmed) Average Daily Volume = 1.6 million Chart = ************************Advertisement************************* Get your FREE weekly charts of the NASDAQ! Hot Stix’ stock market report reveals simple, powerful strategies for profiting from the QQQ - whether down or up! http://www.hotstix.com/public/weekly.asp?aid=755 ************************************************************** ********** DISCLAIMER ********** Please read our disclaimer at: http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html ************************************************************** ADVERTISING INFORMATION For more information on advertising in OptionInvestor Newsletter, or any Premier Investor Network newsletter please contact: Contact Support
The Option Investor Newsletter Tuesday 01-04-2005 Copyright 2005, All rights reserved. 3 of 3 Redistribution in any form strictly prohibited. In Section Three: Watch List: Breakdowns and potential breakdowns Spreads & Straddles: Off To A Rough Start... Premium Selling Plays: Naked Puts & Calls ********** WATCH LIST ********** Breakdowns and potential breakdowns ___________________________________________________________________ How to use this watch list: Readers can use the candidates below as a springboard for their own research. Many are in the process of breaking support or resistance or in the process of starting new trends or extending old ones. With your own due diligence these could be strong potential plays. ___________________________________________________________________ Research In Motion - RIMM - close: 76.86 change: -2.39 WHAT TO WATCH: We came very close to adding RIMM to the play list as a put candidate tonight. The high volume breakdown under round-number support at $80.00 yesterday and today's follow through breakdown through its 100-dma looks pretty tempting if you're a bear. The next level of support looks like the $72 level and it would take much to hit $70 or even its 200-dma's under the $70 level. The P&F chart has already reversed into a sell signal with a $69 target. Chart= --- KLA-Tencor - KLAC - close: 43.83 change: -1.47 WHAT TO WATCH: Weakness in the semiconductor sector helped push KLAC to a 3.2 percent decline on big volume. Shares broke support near $45 and its 200-dma near $44. This looks like an entry point for a quick drop towards $40.00. The P&F chart is bearish but it's falling backwards into a high-pole warning. Chart= --- Aetna Inc - AET - close: 120.65 change: -2.14 WHAT TO WATCH: If investors are taking profits from their Q4 winners than AET is walking around with a big target. Shares look vulnerable to $110 and maybe the $100 region if the market keeps dropping. Consider using a trigger under $119.50 and target a drop towards $110 first. Chart= --- Textron - TXT - close: 70.80 change: -1.52 WHAT TO WATCH: TXT is another stock that looks weak after several weeks of consolidating sideways. Shares have already broken its 50-dma and a drop under round-number support at $70.00 could be used as a trigger to open bearish plays. We would target the $65-66 region, which is probably where bulls will try and defend it. Chart= ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- ERTS $59.14 -1.74 - We considered adding ERTS to the play list as a short candidate tonight. The MACD is in a sell signal and the stock looks very overbought. A trigger under $59.00 with a short-term target at $55.00 support could work well. IGW $51.30 -1.60 - Readers may want to consider shorting the Goldman Sachs semiconductor Ishares with today's breakdown under its 50-dma on rising volume. ************************Advertisement************************* Insiders are Buying these 6 Rocket Stocks. In the last few weeks, we have pinpointed insider buying on six stocks that have the potential to deliver stratospheric gains. Click here for our SPECIAL REPORT on these 6 stocks insiders are buying and why you should too. http://www.insidermoves.com/default.asp?aid=618 ************************************************************** ******************* SPREADS & STRADDLES ******************* Off To A Rough Start... By Ray Cummins Stocks retreated again Tuesday on concerns about inflation and oil prices. Despite data suggesting economic growth remained on track, the equity markets plunged as investors worried that a weak dollar, rising energy costs, and a slowdown in productivity may lead to higher prices. The Dow Jones Industrial Average closed 98 points lower at 10,630, with Alcoa (NYSE:AA) leading the way on fears China's demand for metal will slow. The NASDAQ Composite slid 43 points to 2,108, as semiconductor and Internet stocks dropped sharply. The S&P 500 index slumped 13 points to 1,189, with airlines, homebuilding, retail and financial shares among the most obvious losers. Volume on the NYSE was 1.7 billion, with decliners leading advancers by a 3 to 1 margin. Breadth on the technology exchange was similar with 2.7 billion shares changing hands. In the bond market, the 10-year note declined 18/32 while its yield rose to 4.28%. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SUMMARY OF CURRENT POSITIONS - AS OF 01/04/05 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 MRVL 31.53 32.78 JAN 25.0 27.5 0.40 27.10 0.40 Open CFC 33.21 36.22 JAN 27.5 30.0 0.30 29.70 0.30 Open EBAY 112.20 111.31 JAN 95.0 100.0 0.60 99.40 0.60 Open LEND 46.85 47.45 JAN 35.0 40.0 0.50 39.50 0.50 Open LEN 50.11 53.43 JAN 42.5 45.0 0.30 44.70 0.30 Open PHM 59.65 60.84 JAN 50.0 55.0 0.75 54.25 0.75 Open MRVL 34.89 32.78 JAN 27.5 30.0 0.30 29.70 0.30 Open VRTS 27.38 27.77 JAN 22.5 25.0 0.45 24.55 0.45 Open ERTS 61.71 59.14 JAN 55.0 57.5 0.35 57.15 0.35 Open PENN 59.87 58.49 JAN 50.0 55.0 0.50 54.50 0.50 Open NVT 47.90 42.70 JAN 40.0 45.0 0.55 44.45 (1.75) Closed YHOO 37.90 36.58 JAN 32.5 35.0 0.30 34.70 0.30 Open L/P = Long Put S/P = Short Put CB = Cost Basis G/L = Gain/Loss Navteq (NYSE:NVT) was closed after Tuesday's slump. A number of portfolio issues are potential "early-exit" candidates after the widespread market decline. CALL-CREDIT SPREADS Stock Pick Last Mon L/C S/C Credit CB G/L Status SINA 37.93 30.50 JAN 50.0 45.0 0.60 45.60 0.60 Open LLY 53.33 55.50 JAN 65.0 60.0 0.65 60.65 0.65 Open NVLS 26.94 26.12 JAN 32.5 30.0 0.35 30.35 0.35 Open CCU 33.15 32.55 JAN 40.0 35.0 0.50 35.50 0.50 Open UVN 29.06 28.30 JAN 35.0 30.0 0.80 30.80 0.80 Open ADI 36.42 35.40 JAN 45.0 40.0 0.50 40.50 0.50 Open KOSP 35.13 35.72 JAN 45.0 40.0 0.55 40.55 0.55 Open TTWO 33.45 33.90 JAN 40.0 37.5 0.30 37.80 0.30 Open MSTR 56.22 56.83 JAN 70.0 65.0 0.65 65.65 0.65 Open ABC 57.09 57.69 JAN 65.0 60.0 0.45 60.45 0.45 Open RIMM 83.49 76.86 JAN 100.0 95.0 0.45 95.45 0.45 Open PKZ 32.99 35.24 JAN 40.0 35.0 0.85 35.85 0.85 Open UHS 44.51 43.72 JAN 50.0 45.0 0.60 45.60 0.85 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 BZH 144.85 136.78 JAN 145.0 145.0 12.00 11.25 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ANF - Abercrombie & Fitch $47.28 *** Bullish Retailer! *** Abercrombie & Fitch (NYSE:ANF), through its many subsidiaries, is primarily engaged in the purchase, distribution and sale of men's, women's and kids' casual apparel. The company's retail activities are conducted under the Abercrombie & Fitch and Abercrombie trade names through retail stores, a catalogue, a magazine/catalogue and a web-site, all bearing some form of the Abercrombie name. Retail activities are also conducted under the Hollister Co. trade name through retail stores and a lifestyle web-site. Merchandise is targeted to appeal to customers in specialty markets who have distinctive consumer characteristics. The company is a specialty retailer of casual, classic American sportswear, targeted to men and women approximately 15 to 50 years of age and kids up to 14 years of age. ANF - Abercrombie & Fitch $47.28 PLAY (less conservative - bullish/credit spread): BUY PUT JAN-42.50 ANF-MV OI=1321 ASK=$0.30 SELL PUT JAN-45.00 ANF-MI OI=2527 BID=$0.60 INITIAL NET-CREDIT TARGET=$0.35-$0.40 POTENTIAL PROFIT(max)=15% B/E=$44.65 __________________________________________________________________ KMRT - Kmart $101.35 *** In A Comfort Zone? *** Kmart Corporation (NASDAQ:KMRT) is a discount retailer operating through Kmart stores and Supercenters across the U.S., Puerto Rico, the United States Virgin Islands and Guam, and through an e-commerce shopping site, www.kmart.com. Its Kmart Supercenters combine a full grocery, deli and bakery, along with the general merchandise selection of a Kmart discount store. The brands the company markets include Martha Stewart, JOE BOXER, Jaclyn Smith, Sesame Street and Thalia Sodi, among others. KMRT - Kmart $101.35 PLAY (conservative - bullish/credit spread): BUY PUT JAN-90.00 KTQ-MR OI=3256 ASK=$0.25 SELL PUT JAN-95.00 KTQ-MS OI=3394 BID=$0.70 INITIAL NET-CREDIT TARGET=$0.50-$0.60 POTENTIAL PROFIT(max)=11% B/E=$94.50 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BEARISH PLAYS - CREDIT SPREADS All of these positions are favorable candidates for "bear-call" credit spreads, based on the current price or trading range of the underlying issue and its recent technical history or trend. The probability of profit from these positions may be higher than other plays in the same strategy, due to disparities in option pricing. However, current news and market sentiment will have an effect on these issues, so review each play individually and make your own decision about its future outcome. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ JNPR - Juniper Networks $25.80 *** Profit-Taking Underway! *** Juniper Networks (NASDAQ:JNPR) transforms the entire business of networking by converting a commodity: bandwidth, into a dependable, secure, and highly valuable corporate asset. Founded in 1996 to meet the stringent demands of service providers, Juniper Networks is now relied upon by the world's leading network operators, such as government agencies, research and education institutions, and information-intensive enterprises as the foundation for stable, uncompromising networks. JNPR - Juniper Networks $25.80 PLAY (less conservative - bearish/credit spread): BUY CALL JAN-30.00 JUX-AF OI=32187 ASK=$0.20 SELL CALL JAN-27.50 JUX-AY OI=7557 BID=$0.50 INITIAL NET-CREDIT TARGET=$0.35-$0.40 POTENTIAL PROFIT(max)=15% B/E=$27.85 __________________________________________________________________ DNA - Genentech $51.75 *** Downgrade = Sell-Off! *** Genentech (NYSE:DNA) is a biotechnology firm using human genetic information to discover, develop, manufacture and commercialize biotherapeutics for significant unmet medical needs. The company manufactures and commercializes biotechnology products directly in the United States. The company also licenses other products to various partners and its development efforts, including those of its collaborative firms, cover a range of medical conditions, including cancer, respiratory disorders, cardiovascular diseases, endocrine disorders and inflammatory and immune problems. DNA - Genetech $51.75 PLAY (less conservative - bearish/credit spread): BUY CALL JAN-57.50 DNA-AY OI=3272 ASK=$0.30 SELL CALL JAN-55.00 DNA-AK OI=12070 BID=$0.55 INITIAL NET-CREDIT TARGET=$0.30-$0.35 POTENTIAL PROFIT(max)=14% B/E=$55.30 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ STRADDLES AND STRANGLES ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Based on analysis of the historical option pricing and technical background, these positions meet the fundamental criteria for favorable volatility-based plays. _________________________________________________________________ No straddles or strangles today... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEE DISCLAIMER - SECTION 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ***************************************** PREMIUM-SELLING PLAYS: NAKED PUTS & CALLS ***************************************** All of these issues have robust option premiums and favorable technical indications. However, current news and events, as well as market sentiment, will have an effect on these stocks so review each position thoroughly and make your own decision about its outcome. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SUMMARY OF CURRENT POSITIONS - AS OF 01/04/05 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 VISG JAN 7.50 7.10 8.74 0.40 7.51% 5.63% RHAT JAN 12.50 12.05 12.63 0.45 6.06% 3.73% NCRX JAN 25.00 24.40 30.79 0.60 4.78% 2.46% NTGR JAN 15.00 14.65 16.30 0.35 4.58% 2.39% RMBS JAN 17.50 17.10 21.48 0.40 4.87% 2.34% TLCV JAN 10.00 9.65 10.09 0.35 6.91% 3.63% WITS JAN 15.00 14.55 17.06 0.45 5.38% 3.09% IDCC JAN 17.50 16.95 20.72 0.55 6.62% 3.24% NVTL JAN 17.50 17.20 16.20 (1.00) 0.00% 0.00% * MSO JAN 17.50 17.05 28.77 0.45 5.62% 2.64% MSO JAN 20.00 19.60 28.77 0.40 5.28% 2.04% ACF JAN 22.50 21.65 23.70 0.85 6.54% 3.93% USNA JAN 30.00 29.00 33.55 1.00 6.12% 3.45% DHB JAN 15.00 14.35 16.53 0.65 10.38% 4.53% MOGN JAN 25.00 24.05 26.05 0.95 7.47% 3.95% GTOP JAN 12.50 12.05 16.15 0.45 8.45% 3.73% CMVT JAN 22.50 22.05 22.81 0.45 3.93% 2.04% RMBS JAN 20.00 19.35 21.48 0.65 8.12% 3.36% IDCC JAN 17.50 17.05 20.72 0.45 6.77% 2.64% NFLD JAN 17.50 17.05 22.54 0.45 6.15% 2.64% NCRX JAN 25.00 24.55 30.79 0.45 4.60% 1.83% RMBS JAN 20.00 19.45 21.48 0.55 7.18% 2.83% NKTR JAN 17.50 17.05 19.23 0.45 5.64% 2.66% ALXN JAN 20.00 19.65 23.44 0.35 4.51% 1.78% AMLN JAN 20.00 19.65 22.83 0.35 4.07% 1.78% SWFT JAN 20.00 19.65 20.43 0.35 4.60% 1.78% NEOL JAN 10.00 9.70 12.16 0.30 10.31% 3.09% ARBA JAN 15.00 14.70 14.74 0.04 0.75% 2.04% KFX JAN 12.50 12.20 13.06 0.30 7.80% 2.46% NAVR JAN 15.00 14.50 17.74 0.50 8.94% 3.45% IDCC JAN 17.50 17.25 20.72 0.25 5.28% 1.45% NTGR JAN 15.00 14.60 16.30 0.40 7.61% 2.74% CTIC JAN 7.50 7.00 7.51 0.50 16.41% 7.14% FXEN JAN 10.00 9.30 12.90 0.70 20.65% 7.53% NTMD JAN 22.50 22.25 24.78 0.25 4.52% 1.12% ELN JAN 25.00 24.45 27.40 0.55 7.06% 2.25% VRX JAN 25.00 24.55 25.45 0.45 5.78% 1.83% JUPM JAN 20.00 19.65 21.86 0.35 6.81% 1.78% IDCC JAN 20.00 19.75 20.72 0.25 4.84% 1.27% MOGN JAN 25.00 24.75 26.05 0.25 3.59% 1.01% MSO JAN 25.00 24.60 28.77 0.40 7.12% 1.63% The position in Novatel (NASDAQ:NVTL) should have been closed during Monday's sell-off. Adolor (NASDAQ:ADLR) was closed after its stock price declined sharply on reports that an advanced trial of a key gastrointestinal drug failed to meet initial goals. A number of portfolio issues are "early-exit" candidates after the widespread market decline. NAKED CALLS Stock Strike Strike Break Current Gain Max Simple Symbol Month Price Even Price (Loss) Yield Yield XLNX JAN 32.50 33.00 28.44 0.50 3.96% 1.52% SCSS JAN 17.50 18.05 17.15 0.55 7.68% 3.05% PLAY JAN 35.00 36.05 24.11 1.05 12.22% 2.91% AFCO JAN 22.50 22.80 20.61 0.30 3.92% 1.32% SYMC JAN 32.50 33.00 25.41 0.50 6.06% 1.52% PDII JAN 30.00 30.30 21.00 0.30 4.64% 0.99% AGIX JAN 30.00 30.30 18.24 0.30 5.80% 0.99% EPIX JAN 20.00 20.45 16.91 0.45 8.03% 2.20% SWIR JAN 20.00 20.50 15.68 0.50 8.74% 2.44% CTAS JAN 45.00 45.45 42.55 0.45 3.30% 0.99% SPW JAN 42.50 42.90 39.00 0.40 3.47% 0.93% ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 ALVR 13.49 JAN 12.50 QBY-MY 0.35 467 12.15 18 4.9% 12.4% JUPM 21.86 JAN 20.00 EUU-MD 0.40 133 19.60 18 3.4% 9.3% NFLD 22.54 JAN 20.00 DHQ-MD 0.35 957 19.65 18 3.0% 8.7% BCSI 19.48 JAN 17.50 IYU-MW 0.30 495 17.20 18 2.9% 8.3% HLEX 15.99 JAN 15.00 HUE-MC 0.25 20 14.75 18 2.9% 7.5% FLML 19.60 JAN 17.50 FLU-MW 0.25 1395 17.25 18 2.4% 7.1% SONC 31.44 JAN 30.00 ZSQ-MF 0.35 108 29.65 18 2.0% 5.1% 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. _________________________________________________________________ ALVR - Alvarion $13.49 *** Trading Range? *** Alvarion (NASDAQ:ALVR) is a provider of wireless broadband connectivity infrastructure. The company's solutions are used by telecom carriers and service providers worldwide. Its products are used to provide broadband data and voice services, for subscribers in the last mile of connectivity, for feeding cellular networks and for private networks. With the firm's product offerings, it provides integrated wireless broadband solutions, addressing different markets and frequency bands, designed to address various business models of carriers and service providers. ALVR - Alvarion $13.49 JAN 12.50 QBY-MY LB=0.35 OI=467 CB=12.15 DE=18 TY=4.9% MY=12.4% _________________________________________________________________ JUPM - Jupitermedia $21.86 *** Entry Point? *** Jupitermedia (NASDAQ:JUPM) is a global provider of original online information, images, research and events for information technology, business and creative professionals. The company operates four major interrelated and complementary businesses. JupiterWeb is its online media business. JupiterImages is its online images business. JupiterResearch is the firm's market research and consulting business. JupiterEvents is an offline conference and trade show business. JUPM - Jupitermedia $21.86 JAN 20.00 EUU-MD LB=0.40 OI=133 CB=19.60 DE=18 TY=3.4% MY=9.3% _________________________________________________________________ NFLD - Northfield Labs $22.54 *** Rally Mode! *** Northfield Laboratories (NASDAQ:NFLD) is engaged in the production of a safe and effective alternative to transfused blood for use in the treatment of acute blood loss. Its PolyHeme blood substitute product is a solution of chemically modified hemoglobin derived from human blood. PolyHeme simultaneously restores lost blood volume and hemoglobin levels and is designed for rapid, massive infusion. PolyHeme requires no cross-matching and is therefore immediately available and compatible with all blood types. It has an extended shelf life compared to blood. Northfield Labs purchases indated and outdated blood from The American Red Cross and Blood Centers of America for use as the starting material for PolyHeme. It uses a proprietary process of separation, filtration and chemical modification to produce PolyHeme. NFLD - Northfield Labs $22.54 JAN 20.00 DHQ-MD LB=0.35 OI=957 CB=19.65 DE=18 TY=3.0% MY=8.7% _________________________________________________________________ BCSI - Blue Coat Systems $19.48 *** Bottom-Fishing Only! *** Blue Coat Systems (NASDAQ:BCSI) designs, develops, markets and supports proxy appliances. Based on Blue Coat SGOS, a custom, object-based operating system with integrated caching, these proxy appliances leverage existing authentication systems to enable flexible policy enforcement down to the individual user. The Blue Coat ProxySG appliances combine proxy support of most Web protocols with integrated uniform resource locator (URL) filtering, content security, Web-virus scanning, instant messaging control, peer-to-peer control and streaming control. BCSI - Blue Coat Systems $19.48 JAN 17.50 IYU-MW LB=0.30 OI=495 CB=17.20 DE=18 TY=2.9% MY=8.3% _________________________________________________________________ HLEX - HealthExtras $15.99 *** Uptrend Intact! *** HealthExtras (NASDAQ:HLEX) is a provider of pharmacy benefit management services and supplemental benefit programs. The company's PBM clients include managed-care organizations, self-insured employers and third-party administrators who contract with HealthExtras to cost-effectively administer the prescription drug component of their overall health benefit plans. The supplemental benefits segment generates revenue from the sale of membership programs that provide insurance and other benefits. Individual customers are the major purchasers of the firm's supplemental benefit programs. The PBM segment, which operates under the brand name Catalyst Rx, generates the majority of the company's revenues. HLEX - HealthExtras $15.99 JAN 15.00 HUE-MC LB=0.25 OI=20 CB=14.75 DE=18 TY=2.9% MY=7.5% _________________________________________________________________ FLML - Flamel Technologies $19.60 *** More Bottom-Fishing! *** Flamel Technologies (NASDAQ:FLML) is a biopharmaceutical company engaged mainly in the development of two polymer-based delivery technologies for medical applications. The company's Micro-pump technology is a multi-particulate technology for oral ingestion of small molecule drugs with applications in controlled release, tastemasking and bioavailability enhancement. The company has three major products based on its Micropump technology: Asacard, a controlled-release formulation of aspirin for the treatment of cardiovascular disease; Metformin XL, a controlled-release form of Metformin that is in development for use for the treatment of Type II diabetes, and Genvir, a controlled-release acyclovir for the treatment of genital herpes. In addition, FLML has developed new herbicide delivery systems and has patented a biomaterial, ColCys. FLML - Flamel Technologies $19.60 JAN 17.50 FLU-MW LB=0.25 OI=1395 CB=17.25 DE=18 TY=2.4% MY=7.1% _________________________________________________________________ SONC - Sonic $31.44 *** Solid Earnings! *** Sonic (NASDAQ:SONC) operates drive-in restaurants in the United States. The company currently has nearly 3,000 Sonic Drive-Ins in operation, consisting of over 500 Partner Drive-Ins and about 2,300 Franchise Drive-Ins, principally in the southern two-thirds of the United States. Partner Drive-Ins are owned and operated by either a limited liability company or a general partnership. Sonic owns a majority interest, typically at least 60%, and the supervisor and manager of the drive-in own a minority interest in each Partner Drive-In limited liability company or general partnership. Franchise Drive-Ins are owned and operated by its franchisees. SONC - Sonic $31.44 JAN 30.00 ZSQ-MF LB=0.35 OI=108 CB=29.65 DE=18 TY=2.0% MY=5.1% ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ CELG - Celgene $25.17 *** Next Leg Down? *** Celgene (NASDAQ:CELG) is an integrated biopharmaceutical firm engaged in the discovery, development and commercialization of therapies designed to treat cancer and immunological diseases through regulation of cellular, genomic and proteomic targets. Celgene has built a discovery, development and commercialization platform for drug- and cell-based therapies that allows it to both create and retain significant value within its therapeutic franchise areas of cancer and immune/inflammatory diseases. CELG - Celgene $25.17 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL JAN 27.5 LQH-AY 11K+ 0.35 27.85 7.3% 1.3% _________________________________________________________________ FHRX - First Horizon Pharma $20.95 *** Premium-Selling Only! *** First Horizon Pharmaceutical (NASDAQ:FHRX) is a specialty pharmaceutical company that markets and sells brand name prescription products. Its primary products are Sular, Nitrolingual, Prenate, Tanafed, Robinul and Ponstel. Most of these products treat recurring or chronic conditions or disorders, which results in repeated use over an extended period of time. They focus on two therapeutic categories, which are cardiology and women's health/pediatric. First Horizon markets its products to high-prescribing primary care physicians, cardiologists, obstetricians, gynecologists and pediatricians. FHRX - First Horizon Pharma $20.95 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL JAN 22.5 FUF-AX 206 0.25 22.75 6.0% 1.1% _________________________________________________________________ MACR - Macromedia $27.47 *** Trend Reversal? *** Macromedia (NASDAQ:MACR) is an independent software company providing software that empowers designers, developers and business users to create and deliver effective user experiences on the Internet, fixed media and wireless and digital devices. The company's integrated family of technologies enables the development of Internet solutions, including Websites, rich media content and Internet applications across multiple platforms and devices. MACR - Macromedia $27.47 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL JAN 30 MRQ-AF 1763 0.35 30.35 6.7% 1.2% ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEE DISCLAIMER - SECTION 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ************************Advertisement************************* Get your FREE weekly charts of the NASDAQ! Hot Stix’ stock market report reveals simple, powerful strategies for profiting from the QQQ - whether down or up! http://www.hotstix.com/public/weekly.asp?aid=755 ************************************************************** ********** DISCLAIMER ********** Please read our disclaimer at: http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html ************************************************************** ADVERTISING INFORMATION For more information on advertising in OptionInvestor Newsletter, or any Premier Investor Network newsletter please contact: Contact Support
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