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Have You Seen This Woman?

October 05, 2006

"The bedfellows politics made are never strange. It only seems that way to those who have not watched the courtship." -- Marcel Achard

Dear Fellow Options Trader,

Regarding what inspired me to borrow the above quote, nope, I'm not even going to go there -- I'm too disgusted to even print the name of that congressman from Florida. And for all of you who need something to offset stories of perverted congressmen or school shootings, I offer two stories that made me smile this week.

First, just in case you missed this one, a German plastic surgeon who was cheated out of payment by several women has given pictures of their enlarged breasts to police, in the hope the photos will help trace them. I kid you not -- I have quite the imagination and sense of humor, but I couldn't possibly come up with anything this bizarre!

The plastic surgeon from Cologne, Germany, said that after the operations the women just bolted! One woman supposedly went out for "fresh air" after her 8,000-euro ($10,000) breast-enlargement surgery. "She never came back and never paid," Michael Koenig told a newspaper in a quote that was picked up by Reuters. He also noted that they'd used fake names.

Dr. Koenig says he's changed his practices and in the future will demand payment in advance. To try to recoup some of his losses, the good doctor sent a photo of this particular customer's bare chest to a German newspaper, which -- you're reading this right -- published a five-column spread of the thief and her "stolen goods."

Now how's that for a memorable "wanted" poster?

CLOWN'S CANDIDACY NO JOKE

Think that was bizarre? No doubt you do, but I've got another one just as outlandish -- unless you've been to Berkeley, Calif., and then you already know that's the epicenter of strange -- for this universe anyway!

Some guy who allegedly graduated from the University of California at Berkeley (or Cal, as "true blues" know it) is running for mayor of Alameda. The fact that he's not run for elected position before isn't what's strange. After all, we are talking about a state that has "The Terminator" as its governor!

No, what's strange about this story is that 41-year-old Kenneth Kahn is a clown. That's his profession. "People ask me, 'Do we really want to elect a clown for mayor of the city?'" Kahn told the Associated Press. "I say, 'That's an excellent question!"

Mr. Kahn's sister, a teacher, says her brother's candidacy is "a mockery of our system." I say, hey, it's the left coast; comedians don't even bother using stories about California in their routines anymore as it seems too easy.

And here's the strangest part of the story (he said in his best Paul Harvey voice) -- it's a three-way race, so this clown actually has a chance!

DID INSIDERS OUT THEMSELVES?

OK, just one more quick trip down the loony highway -- there are too many crazy stories out there this week to limit this list to only two!

My friend Dylan Ratigan was kind enough to have me as a guest on his CNBC show "On the Money" this week. We spoke of Harrah's Entertainment (HET) and the suspicious call activity ahead of this week's $15 billion private equity takeover (see this week's Options Insider article for details).

I mentioned to Dylan and his viewers that it did appear to me, as somewhat of a forensic specialist for call and put option trading activity, that someone had prior knowledge of the deal and bought calls to make a huge, leveraged profit of up to $50 million. And it also seems that the person(s) who made these short-term call purchases may have also leaked the news to The Wall Street Journal!

I say that because the WSJ broke the story Monday morning (Oct. 2), with virtually the same facts that came out hours later when the two private equity firms actually made their bid. Someone wanted to make sure the news got out, and being a suspicious man (not to mention one who's seen this type of thing countless times before), I would start my list of the usual suspects with the buyers of those calls.

But here's the strangest part of this story. On Wednesday an academician whose name I cannot remember was bantering on CNBC with Mr. Ratigan about what I called "insider trading patterns" in Harrah's options. The academician said that, as far as the credit spreads were concerned (that is, the prices of bonds for the debt of Harrah's), these were "big boys who understand risk and really don't need to be protected."

I shook my head. Then Dylan hit back with the question, "Don't you think the person who buys something for $60 and sees an immediate profit of $900 took advantage of the seller? Don't you think they should be protected?"

I certainly do, but clearly there's a disconnect between what folks who lecture about finance and those of us who are actual practitioners feel is fair. I'm just grateful that technology has advanced to the point where I can track the nefarious actions of traders acting on "inside" or advance knowledge so that I don't get run over by them.

And, more often than not, following closely behind their greed helps nice folks like us make a dollar here and there as well. And for that, I say "God bless capitalism!"

TURNING UP THE 'HEAT'

Speaking of tracking the actions of those who make trades on advance knowledge, I apologize for touching base with you so late in the week, but I've had a lot of exciting things going on -- most notably with HeatSeeker, our proprietary program that tracks unusual option trading activity.

Yes, the "system that never sleeps" has been getting a tune-up this week. And while I'd love to think that the current way the system runs is perfect, I am also a realist. We're giving the system more juice and speed and seeing what happens. I'm very excited about the testing so far, and look forward to sharing the next round of trade recommendations with you soon. I hope that you'll be pleased with the new enhancements, too!

Good luck trading and remember -- pigs get fat, but hogs get slaughtered, so don't be a hog.


Jon "Doctor J" Najarian
Editor
ChangeWave Options Trader


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