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by 11/1/2000 8:59 AM
Stocks quoted in this article:
The shares of Ford Motor (F - 26-1/8) have been dragged modestly higher this week by the rally in the broader market. It appears that option speculators believe the stock could motor even higher. Among the November and December option series on F, the November 27-1/2 call saw the brunt of the volume. Over 3,800 contracts changed hands on this out-of-the-money option yesterday, with about 3,100 contracts translating into new open interest. From a technical perspective, F remains in a trading range that has seen the security oscillate between 23 and 28 for the past two months.
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by 11/1/2000 8:56 AM
Stocks quoted in this article:
The Nasdaq-100 Trust (QQQ - 81-45/64) began trading in March 1999. This is significant because today's turn of the calendar page to November means the QQQ begins trading today in its 21st month. As a result, the monthly closes in the QQQ can now be totaled to arrive at a 20-month moving average. We commonly use the 20-month trendline as a line of demarcation between a bull and bear market. The 20-month will reside at approximately 78, meaning the QQQ has been able to muscle back above this level after violating it on numerous occasions in October. It is also interesting to note that during October, the QQQ never failed to make a weekly close above 78.
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by 11/1/2000 8:51 AM
Stocks quoted in this article:
Earlier this morning, it was announced that Covad Communication's (COVD - 5-9/32) Chief Executive, Chairman, and President Robert E. Knowling resigned, effective immediately.

The company, which provides dedicated high-speed digital communications services to the Internet, had its initial offering in January 1999 with 7.8 million shares priced at $18 each (17.55 million sharers at $8.00 split adjusted). After peaking at over 66 this past March, the shares have been unable to thwart their decline in price. On October 17, the company announced third-quarter earnings of a loss of $1.22 per share, falling short of Street estimates by four cents per share. Since its initial offering, the company has yet to turn a profit.

Options investors are maintaining a bullish stance on COVD, as there are currently 13,623 open puts versus 36,477 open calls for options with up to three month until expiration. Option activity over the past several days has diminished considerably, as open interest changes have been minimal. With a 30-day historical volatility of over 300 percent on the stock, the implied volatilities on the options seem underpriced with both put and call options holding under 150 percent with no skew toward either view. Remember, "cheap" can become "cheaper" and these options might not represent bargains, just a lack of interest.

Short interest on the shares ballooned by 425 percent to over 16.5 millions shares over the past month. The change of a high-ranking official represents a "fundamental" change. We must now wait to see how the investing public views it. <
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by 10/31/2000 3:45 PM
Stocks quoted in this article:
JDS Uniphase (JDSU – 81-3/8) is a manufacturer of subsystems and equipment for fiber-optic telecommunications and semiconductor wafer inspection and analysis. This technology bellwether has had a rough go of late, dropping nearly 38 percent from its intraday high of 128 on August 22. JDSU's decline has been steady, contained by the tandem of its downtrending 10-day and 20-day moving averages.

On the options front today, call speculators have been active. In fact, the out-of-the-money November 85 call is one of the most-active options on the PHLX with over 2,800 contracts traded. Most of the volume crossed the tape soon after the open today at the ask price, indicating possible purchases. However, with open interest of over 8,600 contracts, a speculator may have been covering a short position. In either case, it appears that the buyer is calling a short-term bottom for JDSU.

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by 10/31/2000 2:50 PM
Stocks quoted in this article:
AutoZone (AZO – 26-3/4) shares are seeing some unusual option activity today. Volume on the March 30 call is 7,260 contracts and is the most-active option traded on the CBOE so far today. The stock has rallied over 26 percent since September 20. Most of today's call activity at the March 30 strike has been large block volume going off either at or near the ask price.

On a weekly chart, AZO has has made a series of lower lows since January 1999. However, AZO has tended to find support at the 20 area on numerous occasions since late 1998, and this is the area from which it is rallying once again. <
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