Consumer Confidence Drops!

We
were in the serious profit-taking mode
, prior to the release
of the Conference Board’s index of consumer
confidence. That report indicated that confidence fell for the fifth consecutive
month in November and pushed to fresh 7-year lows. Even as layoffs by big
business were being cut back, the Conference Board’s report indicates Americans
continued to worry about their buying power and life getting back to normal post
September 11.

The
National Association of Realtors quickly followed with its release of October
existing homes sales, which seemed to show that home buying bounced back after
falling hard in September. While I doubt the Conference Board’s report was a
primary catalyst for today’s sell off, it clearly gave investors an excuse to
take profits without feeling that they’d miss the boat, should the rally
continue. Most traders here on the floor seemed to share that sentiment, taking
profits on longs, but no loading up on the short side.

On
the option-trading front, Enron

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options continue to be among the most active on CBOE, AMEX and Pacific option
exchanges. We won’t beat a dead horse (or would dying be a better phrase?) about
whether investors should focus on some of the option strategies one could apply
to take advantage of the volatility surrounding ENE and its suitor, Dynergy

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.
However, when you can own ENE for around $4 and sell 1-year out (January 2002)
$5 calls for $1.70, you have to like the odds!