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Chart 1:	Options trades on the S&P 500 index modulated volume. September - October, 2005.

Chart 2:	S&P 500 Index A/D Issues Ratio

In Table 1 - a ''Table of Trade Motivators'' - we show the motivating factors that led us to take the above trades.

Table 1: Table of Trade Motivators

Date	Trading Decision	Indicator	Description
10/5-6/2005		High PVO* (buying VMA surge)	On October 5 and 6, 2005 we noted a high-magnitude buying volume surge. The (2/20) PVO was 15.6% and 15.1% respectively, indicating that that the average volume was more then 15% higher than it had been for the previous 20 trading days.
10/10/2005		Extremely Bearish sentiment**	On October 10, 2005 we noted extremely low market sentiment readings. The S&P 500 advance/decline (A/D) issues and A/D volume ratios reached critical levels of 0.09 and 0.14, respectively. This revealed an extremely bearish market sentiment.
10/20/2005		High PVO* (buying VMA surge)	On October 20, 2005 we noted a high-magnitude buying volume surge. The (2/20) PVO was 17.9%, indicating that that the average volume over the past 2 trading days was 17.9% higher than it had been for the previous 20 trading days.
10/21/2005	Point A: Buy Calls	High PVO* (buying VMA surge)	On October 21, 2005 we noted a high-magnitude buying volume surge. The (2/20) PVO was 13.8%, indicating that that the average volume over the past 2 trading days was 13.8% higher than it had been for the previous 20 trading days.
* High PVO (Percentage Volume Oscillator) values indicate volume surges. As a rule, significant volume surges point to coming market reversals. ** Extremely bearish/bullish sentiment indicates that the market is oversold (or overbought) and thus prone to trend reversals.

Below we list in detail the actual trades made, along with the netted returns achieved.

Table 2: Details of the trades

For this “Best trade”, A trade (Buy Calls) is opened
in order to close it later with profit if the index moves in our favor.

In choosing the options for these trades, the following criteria were used:

• We chose options with at least two months left until expiry;
• We chose the cheapest available in-the-money options