Option Investor
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Daily Newsletter, Tuesday, 03/14/2000

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The Option Investor Newsletter         Tuesday  3-14-2000
Copyright 2000, All rights reserved. 
Redistribution in any form strictly prohibited.

Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
       3-14-2000           High     Low     Volume Advance Decline
DOW     9811.20 - 135.90 10043.30  9811.20 1,094,060k 1,283  1,697
Nasdaq  4706.63 - 200.61  5013.49  4706.61 1,977,816k 1,503  2,780
S&P-100  730.75 -  12.25   749.00   730.71    Totals  2,786  4,477
S&P-500 1359.15 -  24.47  1395.38  1359.15            38.4%  61.6%
$RUT     572.99 -  17.15   600.45   572.56
$TRAN   2381.77 -  10.17  2420.84  2381.70
VIX       26.43 +   1.07    27.20    24.31
Put/Call Ratio       .43
*************************************************************

Biotech research proves the need for stop losses.

President Clinton presented the biotech sector with a huge going 
away present today. He announced today that he and British Prime
Minister Blair were going to suggest that biotech companies should
make public data on discoveries related to the human genome. While
just a suggestion and a well meaning initiative, investors in the 
biotech sector, which is counting on huge windfall profits from 
gene research, ran for the exits. At least that is the way it
appeared. The many biotech stocks that had been on a record run
for several weeks immediately went into a power dive. Many were
down $30, $40, $50 even $60+ dollars per share at one point.
It should be noted that the volume was light and all retail in
small lots but there was a real panic. The AMEX biotech index
went into free fall and closed down -32% from its recent high.


 

 
 

The markets opened up strong even in the face of a stronger than 
expected Retail sales report. Sales in Feb were up +1.1% with Jan
revised +.4% upward. This showed the consumer is alive and well, 
spending their children's inheritance and having fun doing it.
The joys of sales were short lived however and the biotech slide
crippled the Nasdaq and one by one all the leaders from the past
two weeks fell victim to profit taking. I had nine open positions 
from yesterday and I had all nine charts running on Qcharts
as I watched the day progress. It was as if someone was looking 
over my shoulder as the day progressed. First ARBA, up over $15
at the open and then the obligatory sell off to a reasonable level.
Things were moving fine with a nice slow uptrend when suddenly a
gap down at 11:30. Bang, I pull the trigger and out. 20 min later
another, gap down almost instantly. Out, then another and another.
All day several of the traders in the office were sending instant
messages. ALLR died! NTAP died! EMLX died! YHOO died! Unlike the
biotechs that had been moving down from the open these stocks were
doing fine and even posting gains and then suddenly double digit
drops. It was as if the day traders of the world were looking for
the only stocks holding their ground and shot them down one by
one. With leaders dropping like dead soldiers left and right the
markets never had a chance.





 

Actually, in retrospect, I am glad to see the extreme drops. We 
were due for that painful exercise called a Nasdaq correction.
No long drawn out slow leak like the Dow. -423 points, three days.
Nothing tame about the Nasdaq. I said I was glad and it is because
it is that time of the month. You know. The week that is littered
with economic reports and followed by a Fed meeting and rate hike.
We needed the correction to be sharp and swift with capitulation 
events for all stocks. Boy did we get it! When we get past these 
next five days, and it may be a struggle, we should be ready to run
into April earnings. No PPI/CPI/FED and the correction should be
over. What more could you ask for? 

If you are going to hold a correction this is the way to run it.
Record setting, attention getting and NOBODY is going to miss it.
If you are sitting around next week wondering when we are going 
to get a good entry point then give your money to your kids now.
You can't be trusted with it. Today was the second biggest point
loss in Nasdaq history and followed the fourth biggest loss
yesterday. Today was also the largest trading range in Nasdaq
history. Over 300 intraday points! This was also the first
time in history that the Nasdaq has posted back to back days
over -100 points down. The Nasdaq is now down -8.5% from the
intraday high last Friday. Only -90 points to go for a technical
-10% correction.

There were some positive events after the close today that
would have moved the market under normal circumstances.

Oracle announced earnings after the close of $.17 that beat the 
streets estimates of $.13 very easily. Profits were up +80% and
the stock was up $6.00 after hours. Good profits and a good
outlook never hurts the street. VRTY also announced profits 
of $.34 beating estimates of $.12 and was up almost +$10.00
in after hours. 

In case the earnings news was not enough the blockbuster of
the day was the announcement on CNBC that YHOO and EBAY were
in talks to merge. Incredible, YHOO, EBAY and AOL all in the
same fold. Although AOL is merging with Time Warner there 
are strong ties to YHOO and EBAY separately and together
they will dominate the Internet sector in terms of eyeballs
and profitability. EBAY soared +$23 on the news and the 
Nasdaq futures headed north to the tune of +25 points. The
futures gain was short lived.

With the Dow and Nasdaq both heading in the same direction
for a change there was money flowing back into bonds as 
investors had enough of the good market, bad market switcheroo 
and just wanted someplace to park the money until the smoke 
clears. The bond market was already volatile after the 
government announced they were going to buy back another 
$1 billion in 30 yr bonds, only the second buyback since 1930.

The S&P-500, not wanting to be left out of the news today,
managed a seldom seen total of new highs. You guessed it,
zero. Of the 500 stocks not one managed a new high today.

For tomorrow the biohazard scare should be over. There was
another press release to correct the damage of the first.
The initiative is not supposed to cover intellectual property
or patent capable secrets. The initiative is to broadcast
the raw data to allow other companies to do research as well.
Most analysts think the sell off today was very over done 
and the stocks represent a real bargain compared to their
previous highs. Analysts say just making the raw data
available will have no impact on any biotech firm. Just
having access to the billions of words of data will not
help you unless you know where to look and what you are
looking for. Then you need some method to use the data to
create a new medical process. The sell off was the equivalent
of saying CNBC has no value because all the market news is
readily available everywhere. I would like to think of it
like OIN. Everyone has access to more stock, options
symbols, charts, news and price data every day than you
could use in a lifetime but it is useless unless you know
what to do with it and when. At OIN we mine this data every
day so that our readers will have a head start. The biotech
companies could make all the raw data available they want
but the key is of course how to put the data to use in a
real medical procedure. That intellectual property will 
never go away. The second press release qualified that
patented processes were not at risk. Look for prices to
continue back up tomorrow unless another interpretation
surfaces. In reality the human genome project is being
funded in part by the government and it has always been
understood that the results would be combined with all
other results into a public database. Much ado about nothing!

Just when you would think that the continued market drop
is bound to stop any day, even in the face of the PPI/CPI,
there is another hurdle we have to cross. The Nasdaq-100
and the S&P-500 will be reweighted this Friday. Since
these indexes are weighted by market cap (number of shares
outstanding x share price) any stock buybacks by companies
in the index impacts the weighting. With the broader markets
down so far recently many companies have been aggressively
buying back stock at the cheaper prices. If a companies
weighting is impacted by buybacks then the index funds
that try to mimic the S&P and Nasdaq must sell stock
to rebalance their portfolios. Some companies have been
buying back stock so aggressively that as much as 10% of 
their float may be at risk. Not all companies will have
stock sold. CSCO for instance has more outstanding than
in the past and funds could be forced to buy CSCO stock.
The majority of transactions this Friday will be sales.
The new weighting will be made known Wednesday night and
fund managers will know what they need to do by Thursday
morning. The PPI/CPI may not be the biggest problem we
face this week. Did I mention that this is a triple 
witch options expiration week as well? Triple witch
weeks are normally volatile in the beginning and then
move to a bullish bias by Thursday. We have certainly
had the volatility lets hope we get the bullish bias
as well.

S&P futures are down -5.00 and Nasdaq futures are
back to zero at 8:25ET. Fasten your seatbelts!

Trade smart and sell too soon.

Jim Brown
Editor

Current long positions include:

IDPH, AFFX, HGSI, CRA, KSU

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**********
STOCK NEWS
**********

Excite@Home Finally Turns Vision into Reality
By  S.P. Brown

It seems everyone's talking about merging narrowband Internet 
access with broadband access, but no one's really doing 
anything about it.  That is, until yesterday when Excite@Home 
(ATHM) introduced its long-awaited portal for high-speed 
Internet access.  The new service, dubbed @Home 2000, marks the 
first new tangible offering to come from last year's merger of  
@Home Network and Excite.

The new Excite@Home high-speed service is unique in that it 
offers a broadband portal with personalization capabilities, 
full media content and always-on cable-access connectivity.  
Excite@Home plans to make @Home 2000 service available to US 
@Home subscribers the week of March 27, with prices averaging 
$40 a month per subscriber.   

Despite the overall glowing market prospects for the new 
service, Excite@Home investors have their concerns.

One, has been the proposed merger of America Online (AOL) and 
Time Warner (TWX), whose emergence as a powerful broadband 
player is seen as a threat to Excite@Home's broadband market 
dominance.   

In addition to AOL-Time Warner, many market watchers expect 
additional competition to arise from other cable operators, 
digital subscriber lines (DSL), satellites and wireless 
technologies.  

Satellites, in particular, have some analysts furrowing their 
brow.  "From a capital cost perspective, it's as cheap or 
cheaper to launch satellites than to upgrade the cable in this 
country," says Tom Moore, CEO of Internet satellite provider 
iSky.  "And we don't have to wait for the cable companies to 
make that investment."  

The biggest investor concern, though, comes from Excite@Home's 
exclusivity agreement with AT&T (T), which is set to expire in 
2002.  AT&T confirmed recently that it plans to move to an open 
network after 2002 and has even held talks with AOL for that 
company to gain access to its cable systems.   

All of these concerns has sent Excite@Home's stock into a tail-
spin, falling from a high of $94.66 last April to its current 
levels of $30 a share today.  

However, the sell-off now has some analysts wondering if many 
of these concerns are much ado about nothing.      

The fact is, AOL has done little to turn its huge dial-up 
subscriber base into broadband customers.  Last year, the ISP 
giant announced a deal with Bell Atlantic (BEL) to provide DSL 
service, but nothing has yet come of that agreement.  

On the cable front, Excite@Home is still the largest provider 
of cable broadband services in the world, with roughly 1.4 
million subscribers.  True, once AOL merges with Time-Warner, 
AOL will have access to Time-Warner's cable company Road 
Runner, but Road Runner only has half the subscriber count of 
Excite@Home.   

What's more, Excite@Home has a great first-mover advantage over 
AOL.  "This is the first convergence between the narrowband 
side of Excite and the broadband delivery side of the 
business," said Gary Arlen, president of Arlen Communications, 
a consulting and market research company. "This is about 
content that takes advantage of high-speed connections." 

As for the expiration of Excite@Home's exclusivity relationship 
expiring with AT&T, little will probably come of that, either.  
While that bond won't be exclusive come 2002, the telecom 
company remains a majority owner with 58 percent of 
Excite@Home's voting stock, so AT&T will likely continue to 
offer Excite@Home the most traffic over its cable lines. 

Furthermore, through AT&T and its other cable owners, 
Excite@Home has contracts giving it the first shot at 72 
million homes in the regions controlled by these cable partners 
worldwide, compared with AOL-Time Warner's 13 million. 

Going forward, Excite@Home CFO Ken Goldman recently stated he 
expects the company to exceed projections that it would add 2.5 
million to 2.8 million high-speed subscriptions this year, 
which has led some analysts to believe the company could add   
6.5 million subscribers by 2002.  

Given Excite@Home's leading position in the broadband market 
and its expectations to triple its subscriber base over the 
next two years, the company's stock makes a compelling 
investment at its current low-levels.  



**************
Market Posture
**************

As of Market Close - Tuesday, March 14, 2000 

                   Key Benchmarks
Broad Market       Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************

DOW Industrials   10,700  11,250   9,811    BEARISH   2.17
SPX S&P 500        1,410   1,450   1,359    BEARISH   3.07
OEX S&P 100          765     780     731    BEARISH   3.07
RUT Russell 2000     500     520     573    BULLISH   2.24
NDX NASD 100       3,800   4,000   4,228    BULLISH   2.24
MSH High Tech      1,850   2,000   2,077    BULLISH   2.24

XCI Hardware       1,300   1,460   1,554    BULLISH   2.24
CWX Software       1,200   1,470   1,476    BULLISH   2.24
SOX Semiconductor    800     900   1,229    BULLISH   2.24
NWX Networking       940   1,000   1,091    BULLISH   2.24
INX Internet         700     800     834    BULLISH   3.09

BIX Banking          500     550     466    BEARISH  11.30
XBD Brokerage        400     450     468    BULLISH   2.31
IUX Insurance        500     550     452    BEARISH  11.30

RLX Retail           950   1,000     795    BEARISH   1.28
DRG Drug             340     380     317    BEARISH   2.18
HCX Healthcare       700     750     638    BEARISH   2.18
XAL Airline          110     140     121    Neutral   3.10
OIX Oil & Gas        280     315     272    BEARISH   1.27


Posture Alert    
Where's the flight to quality? The broad market suffered losses 
across the board today, as all major sectors felt the pain. The 
ever-strong NASDAQ is starting to show signs of fatigue, as some 
of the biggest winning sectors are starting to show a top. Sectors 
leading the loser-board Tuesday include Semiconductors (-6.56%), 
Software (-5.56%), the NASDAQ 100 (-4.50%), and the Morgan Stanley 
High Tech (-3.65%). There are no current changes in posture, 
however, several sectors may be showing a top, so keep posted for 
future downgrades.     



****************
Market Sentiment 
****************

Tuesday, March 14, 2000

An Oracle of Things to Come?

The broad market suffered significant losses Tuesday, as the NASDAQ 
posted a huge loss by giving back 200 points on heavy trading. 
Biotechnology helped lead the fall, as President Clinton and British 
Prime Minister Tony Blair advocated "unencumbered access" to human 
genome data. These comments, plus a negative article in the Wall Street 
Journal, as well as valuation concerns, helped spark huge selling 
pressure in the Biotechs (BTK), as that index closed down -13.23%.  
Now considering that the Biotech index was the second best index this 
year, it was just a matter of time before the selling pressure spread. 
It didn't take long, as other sectors began to bleed, with 
Semiconductors closing down -6.6% and Software trading lower by -5.6%. 
So, is this the start of something more significant, or just a 
continuation in the extreme volatility of 2000?

The Biotech blow-off was definitely overdone and was exaggerated to the 
bear's benefit. If you think these biotechnology companies have spent 
many years and many dollars, just to give it all away (like 
politicians' say) then think again. So strike one for the bears. Number 
two would be the fear of corporate earnings in the "new economy" 
stocks. Oracle just reported earnings after the close, which beat 
expectations handily. Their earnings of $.17 even surpassed the whisper 
number of $.16. This quarter was a blowout, and the future looks even 
brighter. So strike two against the bears. Interest rates are 
significantly off the highs, so strike three. Toss in an Ebay-Yahoo 
mega-merger, and the shorts will easily run for cover. So strike four. 
Right now, the biggest threat to the "new economy" stocks are 
inflation. With a boatload of economic data coming out the next couple 
of days, along with the Fed-meet next week, rallies will most likely be 
contained with selling pressure. During the last two trading days, we 
were not surprised to see rallies being met with heavy selling, which 
was obviously evident today. However, we should see a nice pop off the 
open tomorrow, as the Oracle earnings and the Ebay-Yahoo merger rumor 
will easily help spark some interest in the early going. However, with 
so many economic indicators out later this week, any rallies will most 
likely fail at previous levels. Now, we think Oracle presages some good 
things to come for technology investors, but this week will most likely 
continue to be trading range bound with higher highs not occurring 
until after option expiration. 

BULLISH Signs: 

Corporate Earnings:
Major corporate earnings continue to come out strong and ahead of 
analyst expectations, with Oracle being the latest to blow away 
expectations.

Cash Flow:
The cash that has been sitting on the sidelines has been put to use as 
of late, as record volumes for the major indexes have been shattered. 
With the NASDAQ surpassing volume of 2 billion shares again, this money 
is obviously flowing into technology.

Short Interest:
Short interest continues to climb as quickly as the market. The short 
interest on the NASDAQ increased another +8.51%, for a 5th consecutive 
record.

Interest Rates (6.106):
The current yield is now safely off of 52-week highs and is temporarily 
out of the danger zone.


Mixed Signs: 

Volatility Index (26.43):
The VIX continues to prove that the low 30's are an excellent 
buying opportunity, and the low 20's continue to be a great selling 
opportunity. At current levels, the VIX is within one good day of being 
in oversold territory.


BEARISH Signs:

Pre-Release Season: 
With April just around the corner, we have the beginning of pre-release 
season. Over the next 3 to 4 weeks, companies will let Wall Street know 
that their profit/sales goals are not being met, and their stocks will 
get brutally punished. The first major corporation to do just this is 
Proctor & Gamble, with it's 27 point decline.

Energy Prices:
With the rapid rise in crude oil, everything from manufacturing to 
transportation will be affected by higher costs. These higher costs 
will be felt 1-2 quarters out, and could put pressure on profit 
margins. 

Investor Expectations:
More and more investors are now expecting high double-digit growth if 
not triple-digit expansion in their portfolios. This extreme positive 
sentiment could help fuel a future selloff in technology shares.


The Power of Sentiment Analysis
It has often been said that the crowd is right during the
market trends but wrong at both ends.  Measuring and
evaluating the sentiment of the crowd, therefore, can give
savvy option traders a decided edge.

 
Pinnacle Index OEX               Friday      Tues 
Benchmark                        (3/10)      (3/14)

Overhead Resistance (790-820)    18.34       19.45
Overhead Resistance (765-785)     6.26        6.12
Overhead Resistance (740-760)     0.78        1.07

OEX Close                       749.50      730.75

Underlying Support  (700-735)     4.16        5.06

What the Pinnacle Index is telling us:
Based on Tuesday's readings, underlying support is strong (700-735), 
and gaining strength. Direct overhead is light (740-760), so a relief 
rally is very possible. However, the next two overhead resistance 
levels are heavy.


Put/Call Ratio 
                                Friday     Tues
Strike/Contracts                (3/10)    (3/14)

CBOE Total P/C Ratio             .39       .43
CBOE Equity P/C Ratio            .31       .34
OEX P/C Ratio                   1.81      1.31


Peak Open Interest (OEX)
                     Friday           Tues  
Strike/Contracts     (3/10)           (3/14)

Puts               700 / 11,436     700 / 13,210
Calls              750 /  9,088     750 /  9,247
Put/Call Ratio         1.26            1.43


Volatility Index    Major
Date                Turning Point       VIX

October 97          Bottom              54.60      
July 20, 1998       Top                 16.88         
October 8, 1998     Bottom              60.63
January 11, 1998    Top                 26.38
March 4, 1999       Bottom              28.15   
May 14, 1999        Top                 25.01 
July 16, 1999       Top                 18.13 
August  5, 1999     Bottom              32.12 
October 15, 1999    Bottom              32.06
January 28, 2000    Bottom              29.09

March 14, 2000                          26.43



Please view this in COURIER 10 font for alignment
*************************************************
CHANGES THIS WEEK

Daily Results

Index      Last     Mon     Tue    Week
Dow      9811.24   18.31 -135.89 -117.58
Nasdaq   4706.63 -141.38 -200.61 -341.99
$OEX      730.75   -6.50  -12.25  -18.75
$SPX     1359.15  -11.45  -24.47  -35.92
$RUT      572.99  -13.67  -17.15  -30.82
$TRAN    2381.77   26.65  -10.17   16.48
$VIX       26.43    1.56    1.07    2.63

Calls               Mon     Tue    Week

DELL       55.94    3.50    1.19    4.69  Immune to the downdraft
ANDW       27.50   -0.25   -0.81   -1.06  When will it breakout??
SNE       241.31  -18.25   15.81   -2.44  Is it time to bounce??
AFCI       75.63    0.44   -4.63   -4.19  Cisco rumors floating
AMD        48.63   -1.25   -2.88   -4.63  Dropped, INTC beats them
CSCO      131.75   -0.19   -4.44   -4.63  Split is next week
WCG        52.38   -3.25   -2.13   -5.38  Dropped, sector weakness
NITE       47.94   -1.38   -4.13   -5.50  More upgrades today
TIBX      131.38   -4.19   -2.63   -6.81  Ready to run??
ERICY      93.38   -3.31   -3.94   -7.25  Dropped, we'll be back
DSTM       35.31   -3.44   -4.69   -8.13  Right back to the 10-dma
YHOO      168.75   -2.25   -7.06   -9.31  Rumors of deal with EBAY
NOK       206.50   -0.88   -8.50   -9.38  Solid support at $205
BWEB       48.50   -3.88   -5.63   -9.50  Waiting on the Nasdaq
CLRN      158.00    0.50  -11.75  -11.25  New high didn't last
RRRR       76.00   -7.13   -4.88  -12.00  Due for a pullback
TXN       157.06   -9.00  -14.69  -23.69  Dropped, Semis hammered
VIGN      272.75  -23.00   -1.25  -24.25  New, B2B entry point
IDPH      105.00  -13.56  -10.75  -24.31  New, enough is enough
FDRY      174.50   -9.44  -17.25  -26.69  New, support at $170
CMVT      202.13  -23.88   -7.63  -31.50  Dropped, ugly start
EMLX      183.00  -16.00  -16.50  -32.50  Back to support level
CHKP      246.88  -11.69  -21.31  -33.00  Quick and brutal 
VERT      230.00  -19.19  -24.00  -43.19  It has gone inverted
NTAP      197.06  -13.63  -31.06  -44.69  Splitting in one week

Puts

CIEN      134.00  -15.75  -13.13  -28.88  New, closed near low
BVF        49.56   -4.38    0.69   -3.69  Big-time sector woes
PPG        46.00   -0.75    0.06   -0.69  Used as defensive play
EK         54.00    0.44   -0.44    0.00  Watching and waiting
UAL        46.81    0.31    0.25    0.56  High oil prices
DD         47.81    2.50   -0.63    1.88  More entry points today



************
WOMANS WORLD
************

Excuse Me While I Wipe The Blood Off My Hands.
By Renee White

Today was painful. I'm dripping blood from catching falling 
knives. Did you find an entry point? I did. At 4900, 4850, 4800, 
4720, etc. I found so many fake entry points, those falling 
knives cut my fingers off and I had to type with my nose.  
Someone recently asked me when I knew to sell. Well, on days 
like today when your entry point is wrong!! I hope you did better. 
Let's see now, a 200 point Nasdaq dive today, another 3 digit 
loss yesterday, a steep Dow correction, gasoline approaching 
$2.00/gal, biotech leadership sinking faster than the titanic. 
Alan, are you noticing? Pretty soon, you'll be hurting too. 

You know, sometimes I just don't understand the math. On the one 
hand we are told that the Fed isn't attacking the stock market. 
On the other hand, I hear the concern over the wealth effect 
caused by the market. By reasonable deduction, that means the 
Nasdaq. I'm in the camp that doesn't understand the problem with 
the wealth effect. To me, and I'm obviously not an economist, if 
they wanted to curb the rapid growth in the Nasdaq, why haven't 
they raised margin requirements? High margin debt is scary on days 
like this and I feel sorry for people who will be learning what a 
margin call is all about. But for those who can buy & then sell 
stock at a profit, pocket the proceeds and do it over again, is 
just good at business. If the government spent $10 on something 
and made $1.00 profit selling it, wouldn't they be bragging how 
well they managed money?  Just like intellectual property must be 
protected, so should a clever man's ability to buy & sell goods, 
services or stocks. The real concern should be the easy 
availability of borrowed funds to buy stocks at risk for a sharp 
correction. Sure, high oil prices cut into profit margins and 
attempts at raising prices might be seen. But the other edge of 
the coin is the neutralizing effect on prices by the internet.  
A margin rate adjustment would do more to curb the stock market 
buying frenzy. All this talk about 2 or 3 more rate hikes, in 
lieu of all the technical damage and high oil prices, sure doesn't 
add up in my book. High consumer spending should be good, as long 
as it isn't mostly by borrowed money. Anyway, back to trading. 

Last week, I unloaded the balance of my March options. With the 
FOMC meeting scheduled next Tuesday, option expiration Friday this 
week and a slue of economic numbers due this week, it was a crisis 
waiting to happen. I hope no one was still holding their March 
options, hoping to ride them through this Friday. One of my 
personal rules for trading involves unloading any option that is 
not performing as expected or that appears weak, one month or 
absolutely no later than 3 weeks, before expiration. Three weeks 
is the absolute cut off on anything that was borderline at one 
month. With options that are performing really well, I take 
profits the week before expiration week on any signs of weakness. 
Sometimes, I sell off part (or most) of my position if it is 
still strong and hold on to the balance, to see if I can get a 
little more out. If I am holding several strike prices that are 
all performing strongly and still have inflated premiums, I sell 
the riskiest ones first. By the end of last week, I had unwound 
all March options, except for those I planned to exercise. 

I believe it was the 3rd week of February when I wrote about 
possibly getting another opportunity to enter with a VIX around 
30 and a sharp market sell-off right before the next FOMC meeting, 
which would make it this week. So in anticipation of another 
entry point, I cashed out last week and slept late Monday. Imagine 
my shock when I finally got enough coffee to make my brain work. 
By that time, the recovery was in progress. I did not jump in to 
buy because the whole thing seemed so bizarre to me and I was not 
anticipating a sharp correction until later mid week or so. When 
it sold off into the close yesterday, I was glad I had not bought 
in. 

Today though, I got faked out. When the market gapped up at the 
open, I  identified some support levels on Nasdaq that I didn't 
think I would be lucky enough to see again. I could not watch the 
markets closely today but I thought, if I saw 4900 I would be 
lucky. I also noticed the 4847 range and the 4800 area. I entered 
some cheap option prices, just in case there was a sell-off while 
I was attending to other business. Sure enough, after 4900, I had 
bought several things, as I did after the 4850 dip, and the 4800 
dip. I had gotten filled all the way down. Ugghhh!! Some were down 
20-30% before I came back to realize how "lucky" I had been to get 
filled. OUCH! Talk about catching falling knives!!! I certainly 
wasn't expecting to get everything filled. I looked at the VIX 
hoping it confirmed a good entry, but it just seemed to be sitting 
in a range today, oblivious to the carnage, and nowhere close 
enough to 30. I do expect that to change tomorrow, when it may 
approach 30 for us, before rebounding (back down) later in the 
week. 

I had been away from trading most of the day so when I returned 
to see all my purchases, I was faced with exiting decisions or 
risking further losses by holding. That was a really hard decision 
for this trader. Normally, bad entries require getting out 
quickly. But since quick was 3 hours earlier when I wasn't around, 
I was left with consequences to deal with. For right or for wrong, 
this is how I thought it through. 

First of all, I recalled the reason I set cheap prices to enter 
my trades. The trades I entered were either pre-split, split-run 
candidates or QQQ options. All were April expirations with one 
June. I expected weakness this week, just not this soon, and I 
expected to be a buyer on that weakness, again, just not this 
soon. A major sell-off now makes an April earnings run 
potentially stronger. I expect strength to return to the broader 
market either the end of this week, but no later than next 
Wednesday. I am expecting their split runs to accelerate into 
April earnings. Since April and January earnings are the ones I 
play the strongest, exiting now needs to be careful. I still 
agreed with all the reasons I entered the plays and my market 
sentiment. My thoughts turned to looking at individual charts. 
Several plays seemed to be sitting on their new found support, 
trying to hold where they were  late in the day. I thought, if 
I exit now, and a relief rally occurs tomorrow as I expect, that 
may be a bigger loss than necessary. 

For the most part, I held, but things looked really weak going 
into the close. This proved to be a very expensive day for me to 
not watch the market carefully! After the bell, Oracle's surprise 
earnings and YHOO's potential deal, made me feel tomorrow may firm 
up. If I am really lucky, the VIX will spike on up towards 30 and 
confirm entry and the market will rapidly rebound. My purchases 
won't look as bad and my entry point may prove to be not as bad 
as I think now. Only time will tell. The other scenario is that 
the weakness in the morning continues and I will have to make a 
decision to eat my losses. If so, I may get a better entry by 
Friday if a rebound doesn't occur tomorrow. I'm just not 
convinced though, that this play is over yet. 

In the meantime, I've done all the damage I can do for the day. 
I think I'll go soak my wounds and see if I can get some stitches. 
Tomorrow's another day and I'll either feel worse, or a whole lot 
better. 

Renee White
Contact Support



**************
TRADERS CORNER
**************

Preparation Tips for New Traders
By Janar Wasito

Since I have been rounding out my trading strategy arsenal, I 
have been neglecting some of the fundamental disciplines that 
new traders need to be aware of. So, as I sit here on Sunday 
morning, I am just going to chronicle what I am doing to give 
you a sense of what you need to do each weekend, and several 
times a week to be a successful options trader. The most 
important point is that you cannot just "wing it." Like 
everything else in life -- school, sports, relationships -- 
you get what you "pay for" in time and effort. Here is what 
I've been doing, and am doing:

- Last night, I looked at the newsletter, read the market wrap, 
market sentiment, and market posture segment. I also read 
through the naked put and call section and entered each symbol 
into my quote software. Next to each naked put selection, I 
entered the support level.

- I have been reading, which I consider to be an essential 
discipline to develop the background skills you need to be 
successful. My book of the moment is The Millionaire Mind by 
Tom Stanley, which goes into the lifestyle, attitude, and 
personal qualities of financially successful people. I 
especially appreciate the emphasis on religious faith, sports,
and accepting/ managing risk.

- I picked up my copy of the San Jose Mercury News, which does 
an excellent job of covering the local technology sector. I 
subscribed to it last week, and also subscribed to a number 
of other periodicals (Investors Business Daily, Red Herring, 
Wired) which give me important background information.

- I printed out the entire newsletter this morning. On the back 
of the Market Wrap Section, I scribble my plan for the week. 
Sell LT Stock & Implement a Covered Strangle strategy with VRSN 
in one account. Use the newsletter call picks to build some bull 
put spreads. Review the Naked Puts and consider committing a 
certain amount of capital to that strategy. Be Prepared To Buy 
LEAPs/ LT Options (as part of a calendar spread operation) 
in another account on a few stocks I like. Execute a covered 
strangle strategy in another account where I already own some 
VRSN LT Options.

A word of caution: This is just meant as an example of what I 
am doing. The beginning option trader should probably focus on 
one strategy with a certain amount of capital (a small % of 
total assets, maybe 10%) in one brokerage account. For example, 
most beginning traders will focus on trading straight calls. 
The best thing to do is to put all the underlying stock symbols 
for those straight calls in your quote software. Then also put 
in the call options you want to trade. When the stock hits the 
price you have predetermined as an entry point in non market 
hours, then consider buying the call option. This can be done 
automatically with a broker like Preferred Trade, but use 
caution at first, both in how many automatic orders you set up, 
and in the amount of capital you put in.

- As I go through the newsletter, I scribble in the margins. 
Next to Jim's note about the economic reports in the upcoming 
weeks, I scribble, "Entry Points?" Next to the next paragraph, 
I scribble notes about the VIX and the Put Call Ratio. I enter 
alerts on the VIX at key levels.

Here is where my military background really pays off. Marines 
are obsessive compulsive about preparing for every possible 
contingency. If the enemy shows up at point X, then I will 
shoot that artillery mission; if he shows up at point Y, then 
I shoot another one. I actually play a video game simulating 
combat in WWII fairly often. Similar scenarios each time. Every 
maneuver is a risk/ reward calculation. Having done that as a 
professional 
for 4 years with real bullets and mortar shells, it is kind of 
interesting to me to see how realistic the game can be. Trading 
is a lot like military planning. As Jim notes, you plan for an 
up market, a down market, and everything in between. Marine 
officers are trained to never send a Marine where they can send 
a bomb or artillery shell, and they are trained to be paranoid 
about every eventuality. By the time I've gone through this 
thought process, I am ready to face the market. My sports 
background is also really beneficial. Having played football 
for 5 years, boxed, and coached football for 2 years really 
helps. You come into the game with a plan, and a lot of practice. 
On game day, things happen that you never dreamed of, but if you 
have enough plays ready, you can adapt to the situation. Is luck 
involved in warfare, sports, and trading? Absolutely. But success 
is where preparation and luck meet.

- As I read through the Market Sentiment section, I note the 
high Put Call Ratio on the QQQ. Like a good fire support 
coordinator, I put price alerts at 220, 210, 200. Where will 
support hold?

There's a story of a Marine fire support coordinator in Desert 
Storm who just knew that the enemy would concentrate at a certain 
spot -- he read his map, over and over. He set up an artillery 
target on the grid. Sure enough, the Iraqis concentrated there. 
He pulled the trigger on the mission, destroying several hundred 
vehicles. When I was on active duty, we did a joint exercise with 
the Kuwaitis in 1994. They have these huge parks in the desert, 
a square mile or more. One park, we dubbed, "Artillery World," 
the other "Tank World." Literally, there are tanks stacked 2 and 
3 high on top of each other, each with different types of entry 
exit wounds. The Marine officer who shot that mission went by the 
call sign, Evil One.

- I read through the Market Posture section. The tech sectors 
are pegged to the right, the old economy sectors and indexes to 
the left. I note that these are often contrarian indicators. By 
the time the techs are all pegged to max over bought, it is often 
time to rest. I make a mental note to close more positions that 
have profits in them.

- By the time I get to the recommended call list, I have an 
overall sense of the market and my strategy. I will be looking 
for good picks for April earnings or split runs. I can't possibly 
keep track of the 27 call targets on the list. Sometimes, I enter 
them all in my quote sheet, but then don't go the extra step of 
paring down the list. I end up in paralysis by analysis mode 
during the trading week as all those symbols hit their entry 
targets, but I don't know enough about each play to make an 
effective decision. My first screen is do I know something about 
these companies? I ultimately want to cut this list down to about 
12 stocks that I really want to play.

- Throughout this all, I am emailing other traders. One trader 
from our group recommends an article on the effect of a George 
Gilder recommendation on a stock. I am discussing the relative 
merits of spread vs. naked put trading. I am corresponding with 
other members of our local club about which stocks look good 
right now. Some of my best trading ideas come from other local 
group members

- I cut down the recommended call list to 10 that I know well, 
and I go to those play descriptions.

- On each play description, I am, first and foremost, looking 
for an entry point. For example, I look at CHKP. The write up 
recommends two -- 263, 275. I split the difference and note 267, 
both putting that in the comment next to the stop, and adding 
an alert at that price. Then I take the recommended call play 
(KGEDP, Apr 280), and enter it (or its spread equivalent) into 
my quote sheet for rapid action if the market, sector, and stock 
all cooperate to give me a good entry point. On reading CMVT's 
description, I note that support is at 230, and that there is 
a split on 4/4. Split runs are great trading opportunities, 
especially if you have a general earnings up trend backing up 
the move.

As I go through this process, I reject trades for a variety of 
reasons. I look at the options, and reject trades if there is 
not the volatility profile that I am looking for. This will 
vary by strategy.

- By the time I finish going through the call section, I end up 
with 9 targets of opportunity. Next to each, I have noted the 
support level, split or earnings dates. Below, in another section 
of my quote software, I have my plays lined up just like artillery
targets on a fire support list. The market is a battlefield, and
my map is the quote software which gives me a picture of the 
market, sector, and stock.

- Now, I am ready to tackle the naked put section. In a quick 
scan, I check off 14 that I know. I am in or have been in many 
of these plays, which is a head start to understanding the 
company. It is a double edged sword, though, since stocks don't 
remain hot forever, and yesterday's screamer can also fall out 
of the sky quickly. I download the excel file from the Naked 
Put section, and use the sort feature to rank the plays by % 
Return. I have already decided against selling current month 
puts because there is only one week left, but I will use the 
support levels, and change the codes on the options to April 
codes. This week and next week will be prime time to hunt for 
good entry points on these plays. Next, I cut my initial list 
of 14 down to 8 based on the volatilities -- I want to be well 
paid for taking this type of risk. Since I am not completely 
comfortable with the Naked Put strategy, I add a lower strike 
put to each recommended naked put so that I have the option of 
creating a spread; alternatively, I would use a stop to buy back 
the put if the stock moved against me. But the real safety lies 
in a good entry point, regardless of the strategy, so I go to 
the list of 8 stocks, and eliminate all of the rest. I add alerts 
at each of the recommended support levels. I make sure to label 
everything clearly so that in the heat of battle, I can go to 
the right contract to buy or sell. I don't want to get hung up 
looking up an option symbol when the stock is where I want it 
to be. After the whole process is done, I end up with 16 stocks 
with plays on each of them set up so that I can right click on 
the option symbols and jump directly to my broker.

The entire process has taken me a little over 3 hours. Over 
preparation? As Henry V said before the battle of Agincourt (at 
least according to Shakespeare), "All things are ready if our 
minds be so." Now, off for a bike ride in Golden Gate Park. 
Strong body, strong mind.

Contact Support



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:
*****

AMD $48.63 -2.88 (-4.38) The storm clouds overhead from last
week continued to drench our chip play.  Actually compared to
some of the stocks at the Nasdaq today, AMD held up pretty well.
The news concerning Intel stealing Microsoft X-Box deal from
AMD may be more than the company can overcome in the near 
near future.  AMD closed near its low of the day which again is
similar to many stocks at the Nasdaq today.  The one technical
factor that many of those same stocks don't have to contend with
is a big gap that may now get filled.  AMD has a gap between $42
and $46 from earlier in the month.  With the recent Microsoft
news knocking the stuffing out of our play, and the technical
picture beginning to look a bit bleak, we will stand aside for
and let this one go for the time being.

TXN $157.06 -14.69 (-23.69) Several of the fundamental reasons 
we liked TXN have not changed.  They are on schedule to report
better than expected earnings.  The potential hype surrounding
an expected split announcement could still come into play and
continued strong sales haven't changed much in the past two days.
The one thing that has changed is the price of TXN stock and the
short-term trend.  Could TXN reverse course and trade higher?  
Of course.  The chip sector gave back about 6.5% of recent gains
today, while TXN lost over 8.0%.  The volume today was heavy as
well, and the areas of any major support for TXN don't show up
until near $144.  The drop today in Nasdaq stocks not only
dropped the price of the stocks, but it really knocked the 
momentum out from underneath TXN.  A drop in price is one thing,
while getting the wind knocked out of a play is another.  For 
now we will stand aside and let TXN and the chip sector catch
is breath.

ERICY $93.38 -3.94 (-7.25) Today was a rough day for the markets
as a whole and not many stocks were spared.  ERICY was not an 
exception.  Last week, after ERICY dropped below the $100, it 
tried in vain to recover above that level.  The last two days
of market selling proved too overwhelming for ERICY to sustain
an attempt at $100.  ERICY moved down sharply in the final two
hours of trading and closed well below its 10-dma.  With 
earnings on April 28th and the pending split off in May, ERICY
seems to have stalled on us.  It's time to take our profit and 
move on to other plays.  

CMVT $202.13 -7.63 (-31.50) This post-announcement depression 
is worse than we thought, not even Prozac looks like it will 
help.  The last two days of selling and the jitters that are 
being felt throughout the market really took their toll on 
CMVT.  Rather than retesting the $240 resistance, CMVT was hit
hard yesterday, falling $23.88.  And today was not much better
as the short term support of $210 was violated.  This violation
doesn't give us much hope and we area dropping this play.

WCG $52.50 -2.13 (-5.38) The Williams family has decided to take 
another day off to digest the recent run-up.  The fact is that 
with the on again, off again, back on again state of affairs with 
Deutsche Telekom, U.S. West, and Qwest, there's too much sector 
pressure on WCG right now, and not enough momentum to break out 
of the current range.  Besides that, closing near the low of the 
day below what we though would provide strong support ($53) is a 
no-no since it's now significantly enough below its 10-dma of 
$54.77 to boot it from the list.  When Williams can roll its 
sleeves up and get back to work, we'll be glad to take it to 
dinner at the end of the day (see the commercial to understand 
the reference).


PUTS:
*****

No dropped put plays tonight.


********************
PLAY UPDATES - CALLS
********************

RRRR $76.00 -4.88 (-12.00) It's looking kind of ugly, but we'll
give RRRR a couple more days to redeem itself.  The need for
profit-taking was just waiting for a catalyst, and the weakness
on the NASDAQ was just what investors were waiting for.  After
the rapid run as high as $94.75 last week, some air needed to
come out of RRRR's balloon before it burst.  Volume is still
above the ADV, but down from the 2 million plus share days seen
recently.  Recall that RRRR tends to build support at roughly $5
increments, so we would like to see the $75 level provide some
relief from this week's decline.  The 10-dma has now moved up to
$74.69 and should help out, but we are concerned with the fact
that the stock closed just fractionally above its daily low.
The increase in volume in the last 90 minutes as RRRR gave up
almost $6 is not encouraging.  If you rode the wave last week
your stops should have taken you out of the play.  Wait for
market sentiment to improve and buyers to return before
initiating new positions.  A bounce near support is buyable,
but a more conservative approach would be to wait for buying
interest to push RRRR back up through $80 first.

SNE $241.31 +15.81 (-2.44) It took a little longer than expected,
but SNE finally found some support yesterday at $218, near the
lows posted in early January.  With the gap up today, SNE has
now moved and closed above the lows seen last week.  Perhaps
attempting to prop up the share price after the debacle over
the PlayStation2 release, J.P. Morgan reiterated that SNE will
be splitting their shares 2-for-1 on May 25th.  JPM will be
handling the split of the ADR, but the announcement does little
other than repeat the original announcement from December.  
The decline after the release of the new game unit was not
unexpected (similar to the decline that we are so familiar with
after a company announces an anticipated split), but the negative
press only served to exacerbate the decline.  Now that SNE has
declined almost $100 from its highs only 2 weeks ago, buyers
should be stepping back in at these more attractive levels.
SNE will likely run into some resistance near $250, and more
conservative players may want to wait for a close above this
level before playing.  Volume remains on the heavy side, but
use caution; as an ADR, SNE usually gaps at the open, reducing
the effectiveness of stops. 

NTAP $197.06 -31.06 (-39.81) We are hanging onto NTAP for a 
couple of different reasons.  If you had a position in this
split run, we certainly hope you either had your stops in place
or were able to pull the trigger as NTAP fell out of bed today.
Yesterday NTAP held up reasonably well as traders reacted or
over-reacted to the news out of Asia.  NTAP did drop -$16 to
$220, and did come back to close about in the middle of the 
range.  Today with the Nasdaq dropping, NTAP fell to -35 for 
the session, before coming back to close down almost 14% at
$197.06.  We keeping NTAP on our list for several reasons.
NTAP fell to an area of support near $190 and has solid support
down near $183.  Could we see follow though selling?  Absolutely?
However with over 4.2 million shares traded today, we may have
seen or be near a bottom.  We still have time for an earnings
run to develop and could see some bargain hunters enter at any
time.  Remember a lot of folks liked this one at when it was
here the last time, not to mention the investors that liked
NTAP last week when it was trading near $250.  Before entering
a new play confirm not only the direction, but the volume 
behind the move, prior to placing your order.

CHKP $246.88 -21.31 (-33.00) Sell-off's or profit-taking can 
obviously be quick and brutal.  So why are we keeping CHKP on
our play list?  Remember that channel we mentioned last week?
Remember when we said it was way above the channel?  It's not 
anymore.  The decline at the Nasdaq and the tumble experienced
by CHKP brought the Internet security company not only back 
into its, but right to the bottom of the channel, which could be 
providing a great buying opportunity.  We aren't suggesting you
run out and jump head long into a new play, but we would look
for CHKP to begin to bounce from the current levels.  With the
Biotech sector getting hit hard, traders may look to some of
the recent winners in other sectors as a place to put their
money.  At this point we believe CHKP could be one of the places
they may look.  The bottom of the channel is seen near $242, 
while CHKP has support at $235.  


***********************************************
PLAY UPDATES - CALLS - CONTINUED IN SECTION TWO
***********************************************


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DISCLAIMER
**********
This newsletter is a publication dedicated to the education 
of options traders. The newsletter is an information service 
only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
buy or sell securities presented. All investors should consult 
a qualified professional before trading in any security. The 
information provided has been obtained from sources deemed 
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The newsletter staff makes every effort to provide timely 
information to its subscribers but cannot guarantee specific 
delivery times due to factors beyond our control.
The Option Investor Newsletter         Tuesday  3-14-2000
Copyright 2000, All rights reserved. 
Redistribution in any form strictly prohibited.


********************************
PLAY UPDATES - CALLS - CONTINUED
********************************

AFCI $75.63 -4.63 (-4.19) The wide intraday swings are still in 
full force.  AFCI experienced spreads of 10+ pts during past two 
days.  There's not any "official" news regarding the scuttlebutt 
about a potential buyout of AFCI by CSCO, but again it may 
account for the topsy-turvy movement and volume spikes.  This 
volatile momentum play continues to provide lots of room for 
entries and exits.  Although in consideration of the present 
market conditions, it'd be wise to wait for an upward bounce 
off the 5-dma (currently at $77.09) before opening new call 
positions.  If the stock dives the next stop is the $68 to $72 
vicinity just below the 10-dma ($72.13).  Aspect Communications 
announced yesterday it signed a new multi-year contract with 
France Telecom to provide its UMC1000 Multi-Service Access 
Platform.  The terms also allow for joint development of 
products if the need arises.  This award was well received by 
John Schofield, AFC's president and CEO, who boosted that 
"France Telecom has been a key, strategic AFC customer since 
1995" and "this contract exemplifies AFC's new sales strategy 
of focusing on select markets and customers".

CSCO $131.75 -4.44 (-4.63) This is a tough stock to knock down, 
but it took a couple of whollaps as the Nasdaq toppled over 200 
pts.  Let's not panic, no one is throwing in the towel!  However 
we need to be aware of time.  CSCO's 2:1 stock split is quickly 
approaching and is set to go ex-div next week on Thursday, March 
23rd.  So essentially there's only six trading sessions left to 
profit from this split play.  The downdraft placed CSCO at a 
firm support level, however any further decline should raise 
concern.  Conservatively wait for a move through $134 and $135.  
On Monday, IBM announced that CSCO along with the likes of 
Motorola (MOT), Intel (INTC), and Nokia (NOK) will team to 
design and develop products & services to link wireless phones 
and computers to the Internet.  The objective is to combine 
existing technology instead of trying to re-invent the wheel.  
In other news, Equant NV, the world's largest data-
communications network, announced CSCO provided the equipment 
it needed to bring the first IP network that can carry both 
voice and data communications using Internet Technology.  

DELL $55.94 +1.19 (+4.69) A slew of upgrades pushed DELL to new 
highs in the past two sessions.  The confident sentiment drove 
up the share price over 13% in very heavy trading.  We couldn't 
have asked for a better performance from this news-driven 
momentum play.  First on Monday, Andrew Neff of Bear Stearns 
cited a "strengthening corporate market" as Dell "captures 
growth of the Internet".  He lifted his rating to a Buy from an 
Attractive and upped the price target to $70-$80 from $55-$65. 
Banc of America also raised its rating to a Strong Buy from a 
Buy.  Their analyst, Kurt King, remarked that "with estimates 
lower and the current quarter looking solid, Dell looks ready to 
get back on its old path of consistently meeting or beating 
estimates".  He raised DELL's price target 38.5%, from $52 to 
$72.  And Robertson Stephen's Daniel Niles surely wasn't going 
to be left on the sidelines Monday.  He also raised his 
recommendation to a Strong Buy from a Buy mentioning that the 
company has seen "a continuing acceleration in its business 
following a tough fourth quarter".   Considering we just added 
DELL to our call list on Thursday, the timing couldn't have been 
better.  These stimulants are just what drives a momentum driven 
play to buck the trend of the broad markets.  Again today, 
another analyst firm went to the plate for DELL despite the upset 
Nasdaq.  Jimmy Johnson at AG Edwards upgraded the stock to a Buy 
from an Accumulate and upped the price target to $70 from $65.  
Looking for an entry?  Near-term support is at $55-$56 and is a 
good entrance if DELL continues to stretch into newer territory.  
But on a pullback look for upward bounces off the 5-dma ($51.88) 
to get into the play.  

YHOO $168.75 -7.06 (-9.31) The game isn't over yet!  YHOO managed 
to maintain bearings at the 30-dma support level ($168 to $170) 
despite the nasty sentiment on the Nasdaq.  Plus it's important 
to note that while volume levels were respectable, they did taper 
off on the decline.  On Monday, those that jumped into this 
earnings' run play on a bounce off the 5-dma saw profitability 
by this morning's session.  YHOO charged towards Thursday's 
intraday resistance of $185 and nearly made it ($183.53)!  
Unfortunately YHOO was tackled hard, although it's now at a 
prime entry level at the near 10-dma (169.72).  No matter though, 
for those who play a bit more on the side of caution, it'd be 
safer to watch for upward confirmation and better market sentiment 
before opening any new positions.   Recall we've got plenty of 
time to get into this earnings' play.  Yahoo! is confirmed to 
report in a few weeks on April 4th, after the bell.  In the 
news yesterday, Yahoo! unveiled the newest member of its global 
network.  Yahoo! Argentina, an Internet guide, is the 22nd World 
property in one of Latin America's most competitive markets.  

ANDW $27.50 -0.81 (-1.06) ANDW's trading pattern today took its
lead from the NASDAQ which posted its second biggest point loss
in history.  After an initial rally in the market's first two
hours, everything seemed to hit the floor.  With a busy week
ahead for economic data, the selling jitters are understandable.
ANDW held up relatively well at its short term support of 
$27.50.  Volatility has become the standard in today's market
and something with which traders must live.  When we added 
this play, we recommended April contracts for a reason.  More 
time to weather these downdrafts and take part in the earnings 
run.  Overall market sentiment tomorrow is what we will watch 
the next couple days.

DSTM $35.31 -4.69 (-8.13) DSTM, which established a short-term
support yesterday at $40, succumbed to the market-wide sell-off
today.  Few stocks were spared.  Even though, DSTM bucked the 
trend of most stocks and actually had some buying in the final
two hours of trading.  It hit a low today at $32 and began a
steady climb back to close above its 10-dma of $35.  During a 
day that had very little good news, this was a bit of a glimmer.
The market's move tomorrow will be key in DSTM's attempt to get
back to $40.  Watch to see what the overall market sentiment
is tomorrow and chose entry points that suit your risk levels.

VERT $230.00 -24.00 (-43.19) UGGHHH!!  VERT has gone inverted.  
It's not the company folks; it's the market.  What could we 
expect if the NASDAQ dumps 200 points?  Not only did VERT fail 
to hold its 5 and 10-dma (currently $257.68 and $248.65, 
respectively), it couldn't hold historical support around $240.  
We hope you kept your stops set.  The only blessing is that 
volume was slightly less than the ADV, and older support at $225 
held as VERT bounced back $5 into the close.  If $225 can't hold, 
stand aside until you see a firm bounce.  The next support is at 
$195-$200.  Legg Mason initiated coverage today with a Buy rating 
and target of $380, which did nothing for the issue.  Remember 
that we're playing VERT for its 2:1 split run into the ex-date 
of March 31st.  Remember too to watch the NASDAQ for signs of 
recovery before taking a position.

NOK $206.50 -8.50 (-8.50) Much as we try, we can't fight the 
market.  $205 has now been tested on three occasions since 
Mar 8th.  It was also a previous level of resistance back in 
February on two occasions, and we think it makes a great entry 
point.  Since it held today through a technology meltdown, we 
think the worst is over.  If anything concerns us though, it's 
that the highs are getting lower.  It needs to pull out of the 
spiral soon.  With a 4:1 split coming in early April, that 
could be the catalyst and we wouldn't expect NOK to remain at 
these levels for long.  Consider it as a buying opportunity.  
Shareholder split approval is scheduled for March 22nd, and we'd 
look for the split within two weeks after that.  Yesterday, 
CSFB reiterated their Strong Buy rating and price target of $225.  
They are still winning equipment contracts and forming new 
alliances daily on a worldwide basis.

NITE $47.94 -4.13 (-1.63) Monday, NITE, benefited from an upgrade 
from Deutsche Banc and announced that it would form a joint 
venture with Japan's third-largest brokerage, Nikko Securities Co 
Ltd.  Today, it helped dig a crater along with the rest of the 
market.  Fortunately, NITE also escaped disaster by bouncing 
firmly at yesterday's open and again near today's close at 
$47.50.  Volume was right at the ADV, with no bias in either 
direction.  With today as ugly as it was and NITE in the 
sweetspot of online trading, we think the worst is over.  Besides 
that, they stand to profit handsomely from the surge in trading 
volume this year, a fact that the Street woke up to last Friday.  
Upgrades have followed, the most recent from DB Alex Brown who 
upgraded the issue to a strong Buy, citing that the rumored union 
of Goldman Sachs and Charles Schwab would be good for NITE as the 
leading market maker.  Blessed be the 5-dma of $47.98, for it 
offers strong support and makes a good entry target.  The 10-dma 
is only $0.50 behind at $47.48.

TIBX $131.38 -2.63 (-6.81) For those confirming the track was 
safe to drive, you'd have found an oil slick so far this week.  
The lack of volume too is a clue that this race to earnings and 
a probable split announcement has yet to start.  No to worry 
though; there's still time.  While $125 looked like good support, 
$127 has held up well so far this week.  Remember that the 
earnings announcement date of March 23rd is the driver of this 
play, where we also expect a split announcement.  There is 
already an item on the April 11th shareholder meeting agenda to 
increase the shares from 300 mln to 1.2 bln shares.  Can you say 
3:1?  Sure, we knew you could.  Technically, the 10-dma ($127.43) 
further solidifies the previous two days support level.  Looks 
like a shootable target to us.  Confirm market direction first.  
Tomorrow could make a great entry if we get a strong "v" bottom 
rebound on the NASDAQ.  OK, get ready to start your engines.

EMLX $183.00 -16.50 (-32.50) If the 15% drop the past two days
wasn't taxing enough, we're going to jog your memory a bit.
Remember the $180 level that provided resistance for our play
shortly after we added it last month.  It almost seemed like it
was no time at all and EMLX broke through that level and went
on to new highs near $224.  That same $180 level came into play
today.  Today EMLX did make a low at $172, but the impressive
part of the picture is that it came back into its upward channel
and closed just above the key level at $180.  This play could
still go either way, and we may see another test of today's low,
but the fact that EMLX was able to return inside its channel is
definitely a plus in our book.  On Monday EMLX announced it would
join Microsoft, EMC and other top tech leaders at Microsoft's
summit 2000 for the unveiling of the new Microsoft Solutions
Center(MPSC).  That makes for a great looking press release,
but doesn't necessarily keep traders from selling.  Remember
that just because we've kept EMLX on our play list doesn't mean
we are suggesting you go out and buy calls at the open tomorrow.
We do believe that perhaps the selling was over done and we could
see a bounce or a resumption of the long term trend.  

CLRN $158.00 -11.75 (-11.25) Many times the way a stock trades
almost gives it a personality of its own.  CLRN went along
with the scare in Asia early yesterday, but seemed to be saying
enough is enough and rallied back only to be met by selling
early Monday afternoon.  Today it CLRN shot up at the open and
equaled it's all time high, only to get stepped on again.  The 
selling this time appeared to be profit-taking, as the volume
was fairly light.  The area between $165 and $170 provided
support surprisingly well until late in the day, when the selling
in the Nasdaq picked up and traders holding CLRN would no longer
hang on.  CLRN is pointing south tonight.  However we are keeping
the communications company on our list for a couple of reasons.
CLRN closed just above support at $150.  The last thirty minutes
of the session CLRN saw over 290K shares change hands.  The total
volume for the day, came in at about 710K shares.  Has CLRN put
in a bottom?  Time will tell, but we would look for the $150 
area to provide support should we see any follow through selling.
Before entering a new play on a bounce from here or from the
$150 area, check the volume supporting the move.  CLRN acts like
a stock that really wanted to continue its trend, but could no
longer ignore the action in the broader markets.

BWEB $48.50 -5.63 (-9.50) We mentioned Sunday BWEB was all about
speed.  The 16% decline the past two days has come swiftly but
with no volume supporting the move down.  Volume so far this
week has only been 1.5 million shares which is what the software
company was averaging each day on its climb to new highs.  Don't
get us wrong, a drop in price is still a loss in anyone's book,
but at this point in time we will view the current decline as a
buying opportunity.  Until the Nasdaq or BWEB proves the decline
the past two days is a change of trend, rather than a correction
we will patiently wait for an opportunity to buy calls in BWEB.
There has been no company specific news out this week to change
our mind on the overall picture for BWEB, just a bit of profit
taking.  So how do we play this one?  Be patient.  There is
the potential for more volatility, with the release of more 
economic data.  Although we believe BWEB could be getting ready
to bounce, it can't go it alone with the Nasdaq in correction
mode.  BWEB has solid support near $45.  If we get a bounce,
and an entry point, be prepared to sell too soon, as it could
be a head fake, if it isn't supported by solid gains in the
Nasdaq as well. 



*******************
PLAY UPDATES - PUTS
*******************

EK $54.00 -0.44 (+0.00) Looking at EK's day, it appears
they're lingering around waiting for something.  Some might 
say nothing is coming and EK has bottomed out.  Especially 
comparing the market loss today and EK's small one.  We still 
have about 4 weeks until actual earnings are announced on 
April 16th and are still waiting for a possible warning of 
profits.  If so, EK will continue lower.  Look to jump in 
anywhere around the 10-dma of $57 or watch to see support,
$53.75, broken with strong volume.  EK is lacking momentum 
right now so any strong news should revitalize them.  A 
resurgence in the Nasdaq will leave EK as a forgotten stock 
once again and back to breaking new 52-week lows.

PPG $46.00 +0.06 (-0.69) Battling the continuing negative
sentiment in the broad markets, PPG is trying valiantly to
move higher.  Posting slightly higher lows this week, resistance
is still firm at $47.  It will be hard to break either the
resistance or support (near $45) without more volume, coming in
today at a measly 60% of the ADV.  PPG could be building a base
here, but only time will tell.  Likely catalysts for the next
move will be the PPI/CPI reports due out later this week.  If
they come in better than expected, PPG could finally get some
life injected, but any up move should be muted with interest
rate fears coming back to the forefront as the FED is expected
to get the next hike out of the way early next week.  Whichever
way PPG investors decide to jump, increases in volume will be
necessary to drive the price very far.  Still running into firm
resistance at the 10-dma (currently at $47), look to open new
positions as PPG rolls over.  Use volume, market, and sector
direction to confirm the move before jumping on board.

UAL $46.81 +0.19 (-0.38) Finally flattening out, UAL is
indicating that it may be near a bottom.  Volume has really
dried up, posting less than half its ADV today.  While there
is no longer a flood of sellers, neither is there a rush to buy.
Still trading at multi-year lows, the company is attempting to
boost its lagging occupancy rates.  Yesterday, UAL launched an
Internet fare sale on select itineraries to and from Denver for
customers who purchase their tickets at the company's website.
The fundamental problems are still intact though; record high 
prices for crude oil, and weakness in the Transports.  Barring 
a reversal in the sector, look for UAL to continue to be under
pressure.  The 10-dma ($47.81) is still providing credible 
resistance and we would look to open new positions as UAL rolls 
over near this level.  A drop through support near $45-46 could 
open the door to test the next support level near $40.

DD $47.81 -0.63 (+1.88) We saw some great entry points in the
early going today as DD traded up to $49.94.  At midday, DD 
began selling off with the rest of the market and closed just 
slightly above the low of the day.  With the NASDAQ posting its
second largest point drop ever, there was a mild rotation into
less volatile, "old economy" stocks.  Yet, the continued selling
pressure in DD is a good sign for our put play.  Take advantage
of the sporadic buying and pick your entry points.  Watch as 
DD may retest short-term support of $45.06, a new 52-week low
set on Monday, March 13th.

BVF $49.56 +0.69 (-0.69) Ok so it's been one of those weeks
where what was supposed to go up, went down, and vice-versa.
Shares of BVF did drop on Monday, just like we had planned.
Today with the broad markets deteriorating all around it, 
believe it or not, BVF did find a few buyers.  Part of the
enthusiasm today could have come from Monday's announcement
that Biovail had been granted final approval of its generic
Adalat CC, for immediate marketing in the United States.  The 
only problem as we see it at this point was the light volume.
Volume today was only 606K.  Although we will reserve judgement
for now, trend reversals are normally not started on average
volume.  We also mentioned BVF could bounce up to the $52-$54
area and provide a good entry point for this play.  BVF was
getting a bit oversold, at this point we will view any further
bounces, followed by further weakness as an opportunity to buy
puts.  Biovail could also see more selling with the Andrx
Pharmaceutical court decision, and the recent debt tender offer
made by the company.  Be patient and wait for further weakness
to enter a new play.



**************
NEW CALL PLAYS 
**************

VIGN - Vignette Corporation $272.75 -1.25 (-24.25 this week)

VIGN provides Internet Relationship Management (IRM) software
products and services, a category of enterprise solutions
designed to enable businesses to build sustainable online
customer relationships, increase returns on internet-related
investments and capitalize on internet business opportunities.
VIGN's clients come from diverse sectors and include financial
services, health, education and government, media, retail,
technology and telecommunications.

Even the vaunted B2B Internet stocks have had a rough week, but
VIGN has actually held up fairly well.  Although shedding almost
$30 from its 52-week high set last Friday, support at $270 has
been successfully tested several times.  Unlike the punishment
that has been meted out to many stocks this week, the decline
in VIGN looks like simple profit-taking.  Showing good strength
relative to the tech sector in general, VIGN is still over $5
above its 10-dma ($267.63).  After moving up more than $100 over
the past month, VIGN was due for a short break.  The weakness
over the past 2 days is providing us with an attractive entry,
before the next leg up.  Earnings are over a month away, but as
earnings season kicks into full swing, expect the B2B segment
in general, and VIGN specifically, to benefit from the continuing
influx of cash.  So what is the real meat of the play?  Aside
from the strong growth being posted and frequent press releases,
we are looking at the Special Shareholder meeting that occurs
today.  The topic?  You guessed it - a vote on increasing the
number of authorized shares.  Call us crazy, but we are looking
for a split announcement following the meeting.  Not for the
faint-hearted, VIGN is a volatile Internet and $30 daily price
swings are not uncommon.  Evaluate your risk tolerance before
playing and then hold on for an exciting ride.

Not content to sit on its laurels, VIGN is targeting growth in
India, calling that country the "top Asian market".  The company
expects India's mushrooming Internet firms to account for the
largest share of its Asian sales this year.  Allan Bagley, the
firm's Asia-Pacific region director, says VIGN will soon set 
up a sales and support office in India to capitalize on the
explosion of Internet-based businesses.  Bagley went on to say
that alliances in east and south-east Asia last year have 
allowed VIGN's customer base in the region to grow to 35-40 
customers, a figure he hopes to double in 2000.

BUY CALL APR-270 GGV-DN OI=526 at $41.75 SL=32.50
BUY CALL APR-280*QVG-DP OI=341 at $37.13 SL=29.00
BUY CALL APR-290 QVG-DR OI=195 at $34.13 SL=26.50
BUY CALL APR-300 QVG-DT OI=129 at $30.38 SL=23.75

SELL PUT MAR-260 GGV-OL OI=153 at $ 5.38 SL= 7.25
(See risks of selling puts in play legend)

Picked on Mar 14th at   $272.75     P/E = N/A
Change since picked       +0.00     52-week high=$302.00
Analysts Ratings     13-2-0-0-0     52-week low =$ 21.00
Last earnings 01/00   est=-0.08     actual=-0.05
Next earnings 04-25   est=-0.06     versus=-0.18
Average Daily Volume = 1.25 mln
/charts/charts.asp?symbol=VIGN


IDPH - IDEC Pharmaceuticals $105.00 -10.75 (-24.31 this week)

IDPH researches and develops therapies for the treatment of 
cancer and autoimmune and inflammatory diseases. IDEC was the 
first-ever to received FDA approval of a monoclonal antibody, 
called Rituxan, that is now the most widely used treatment of 
non-Hodgkin's lymphomas in the U.S. The company has two other 
anti-cancer drugs in the approval process and five more are in 
the pipeline. 

Does a dead cat bounce?  Well we're betting it can (and please, 
don't try this at home!).  The genomics sectors recently saw 
huge gains only to get the rug abruptly pulled out from under 
them today.  Granted a correction is typical following stocks 
that appreciate very quickly, but today's panic sell is quite 
honestly, an overreaction.  The frantic sellers were responding 
to President Clinton and British Prime Minister Blair's 
discussion over the inevitable moral question (or is really 
about money?).  Who owns the information spawned by the human 
genome project?  According to the nations' leaders, the human 
gene date belongs in the public domain rather than private 
enterprises.  This news sent a shock of terror through the veins 
of biotech investors who are of course thinking about the oodles 
of future revenue forfeited to government entities.  Our play is 
this...we figure investors will come back to their senses after 
an emotional day at the markets.  Then once they regain 
composure they'll realize a buying opportunity is at hand.  
Recall Biotechs is still the hottest sector out there and many 
traders have made a mint in genomics this year alone.  Let's 
look at it from another perspective too.  We all know that, 
for the most part, a healthy correction will follow a sharp 
increase.  Well the inverse is also true.  Therefore, we're 
anticipating the dead cat will indeed bounce!  Also, IDPH is 
much more than the genomics project.  They have real products 
making money right now.  Look for IDPH to come back to life and 
then pick your entry according to your risk portfolio. 

BUY CALL APR-100*IDK-DT OI=42 at $18.13 SL=14.25
BUY CALL APR-105 IDK-DA OI=66 at $16.13 SL=12.50
BUY CALL APR-110 IDK-DB OI=35 at $13.63 SL=11.00
BUY CALL APR-115 IDK-DC OI=52 at $11.88 SL= 9.50
BUY CALL APR-120 IDK-DD OI=56 at $10.13 SL= 7.50

Picked on March 14th at $105.00    P/E = 122
Change since picked       +0.00    52-week high=$173.00
Analysts Ratings      6-5-1-0-0    52-week low =$ 21.25
Last earnings 12/99   est= 0.15    actual= 0.15
Next earnings 04-20   est= 0.12    versus= 0.10
Average Daily Volume = 1.16 mln
/charts/charts.asp?symbol=IDPH


FDRY - Foundry Networks $174.50 -17.25 (-26.69 this week)

Foundry Networks, Inc. is a leader in high performance end-to-end 
switching solutions including Internet routers, Layer 3 switches 
and Internet Traffic Management systems for Layer 4-7 switching.  
Foundry products are installed in the world's largest ISPs 
including AOL, MindSpring, AT&T WorldNet, MSN, and Cable & 
Wireless.  Foundry products are also installed in large 
enterprise, entertainment, pharmaceutical and manufacturing 
companies as well as search engines, e-commerce sites, 
universities and government organizations.  Simply described, 
they sell optical switching and routing devices, and aim 
directly as Cisco's heart of electrons.

FDRY bolted out of the gate from $120 on February 24th on DB Alex 
Brown's upgrade to Strong Buy and traded over 3 mln shares - more 
than three times the ADV.  All good things must come to an end, 
and come to an end it did last Friday as FDRY topped out at an 
all-time trading high of $212.  Two trading days later (today) we 
think we have an entry.  FDRY pulled back to $165 intraday today, 
its previous level of resistance following the breakout.  That 
also represents a current dip significantly below the 10-dma of 
$172.38.  The close $2 above the 10-dma figure creates a long 
tail pattern on today's candlestick chart, and makes a bullish 
statement despite today's loss.  Should the market decide to run 
into the end of the week (it's always darkest just before the 
dawn), we expect FDRY to emerge a winner as it could easily take 
out old highs.  Earnings are bit off though, tentatively 
scheduled for April 24th.  One area to watch out for is the 
expiration of the lockup period on March 25th.  82% of the 
114 mln outstanding become available to trade.  With only 10 mln 
shares in float, there's a double edged sword - it makes for big
moves when the volume is up, but new shares will push the price 
down from the flood of new supply.  You'll want to lighten your 
position or get out by next Thursday or Friday.  This could be a 
quickie, and if you shy from volatility, you may want to check 
out a more conservative play.

News is scarce, and without many analysts following the company, 
downgrades are unlikely.  Keep your eyes open for news out of 
left field, especially if CNBC starts talking about expiring 
lockups.  That may get current investors taking profits again.  
Note that May strikes are not available, and June strikes are 
very expensive.  Thus we've listed neither.

BUY CALL APR-170 QQ-DN OI=113 at $26.50 SL=20.50
BUY CALL APR-175*QQ-DO OI=  5 at $22.25 SL=17.50
BUY CALL APR-180 QQ-DP OI= 97 at $20.38 SL=16.00

Picked on Mar 14th at  $174.50     P/E = 959
Change since picked      +0.00     52-week high=$212.00
Analysts Ratings     2-1-0-0-0     52-week low =$ 54.00
Last earnings 01/00  est= 0.06     actual= 0.11 surprise=83%
Next earnings 04-24  est= 0.09     versus= N/A
Average Daily Volume =   852 K
/charts/charts.asp?symbol=FDRY



*************
NEW PUT PLAYS 
*************

CIEN - CIENA Corporation $134.00 -13.13 (-28.88 this week)

Helping to satisfy our insatiable demand for bandwidth, CIEN
makes dense-wavelength division multiplexing (DWDM) systems for
use with long-distance fiber-optic communications networks.
CIEN offers optical transport, intelligent switching and multi-
service delivery systems that enable service providers to
deliver and manage high-bandwidth services to their customers.
The company's MultiWave DWDM systems allow optical fiber to
carry up to 40 times more data and voice information without
requiring more lines.  CIEN's customers include long-distance
carrier, competitive local exchange carriers (CLECs), Internet
service providers and wholesale carriers.

It's one thing to have a little profit-taking, but this is
getting downright ugly.  Tagging a new 52-week high ($189) just
9 trading days ago, CIEN has since given up 29% of its value
and looks to be headed even lower.  Stair-stepping down over the
past 2 weeks, volume picks up on the down days and drops on the
up days; ugly for a call, but beautiful for a put.  With volume
today 20% over the ADV and CIEN closing at $134, the low of the
day and now well below the 10-dma ($161.50), look for the
weakness to continue.  On the agenda for the shareholder meeting
on Thursday is a vote to increase the authorized shares from 360
to 460 million.  With only 140 million shares outstanding and the
significant run-up in price during the month of February, expect
a split announcement to be forthcoming.  Unless it is scheduled
in the next few weeks though, it will be unlikely to provide
much support.  Resistance is forming near $152, and a test of
this level followed by a move south would make for a good entry.
The nearest support under today's close is found in the vicinity
of $121-123.  The best entry will come with a rollover near
resistance, but new positions can also be considered as CIEN
breaks down below $130.  Conservative players may want to wait
for the outcome of the shareholder meeting before opening new
positions - anticipation of a split could give shares a lift,
giving us a better entry point.

BUY PUT APR-135 UEE-PG OI=165 at $18.00 SL=14.00
BUY PUT APR-130*UEE-PF OI=282 at $15.25 SL=12.00
BUY PUT APR-125 UEE-PE OI=170 at $12.75 SL=10.25

Average Daily Volume = 5.14 mln
/charts/charts.asp?symbol=CIEN


**********************
PLAY OF THE DAY - CALL
**********************

NITE - Knight/Trimark Group, Inc. $47.94 -4.13 (-5.50 this week)

Knight/Trimark, headquartered in Jersey City, NJ, is the parent 
company of Knight Securities, Trimark Securities and Knight 
Financial Products (formerly Arbitrade, LLC). Knight is the 
largest wholesale market maker in U.S. equity securities, and 
advertise with the tagline "where the trade gets done". The 
four-year old Knight/Trimark Group, as the largest destination 
for on-line trade executions, is the unseen "processing power" 
behind the explosive growth in on-line securities trading. 
 
Most Recent Write-Up

Monday, NITE, benefited from an upgrade from Deutsche Banc and 
announced that it would form a joint venture with Japan's 
third-largest brokerage, Nikko Securities Co Ltd.  Today, it 
helped dig a crater along with the rest of the market.  
Fortunately, NITE also escaped disaster by bouncing firmly at 
yesterday's open and again near today's close at $47.50.  Volume 
was right at the ADV, with no bias in either direction.  With 
today as ugly as it was and NITE in the sweetspot of online 
trading, we think the worst is over.  Besides that, they stand 
to profit handsomely from the surge in trading volume this year, 
a fact that the Street woke up to last Friday.  Upgrades have 
followed, the most recent from DB Alex Brown who upgraded the 
issue to a strong Buy, citing that the rumored union of Goldman 
Sachs and Charles Schwab would be good for NITE as the leading 
market maker.  Blessed be the 5-dma of $47.98, for it offers 
strong support and makes a good entry target.  The 10-dma is 
only $0.50 behind at $47.48.

Comments

Today's sell-off affected just about everyone.  Yesterday
NITE found a resistance level at $54.75.  The selling that
occurred today established a mild support at $48.  In after
hours trading, NITE was up $1.31 at $49.25 on volume of 
90,000 shares.  Today's late upgrade should power the stock 
in a market rebound tomorrow.

BUY CALL APR-50 QTN-DJ OI=5060 at $4.88 SL= 3.00 
BUY CALL APR-55*QTN-DK OI=4102 at $3.00 SL= 1.50
BUY CALL APR-60 TNW-DL OI=4195 at $2.00 SL= 1.00
BUY CALL JUL-60 TNW-GL OI=2538 at $6.00 SL= 4.25 

Picked on Mar 12th at   $49.56     P/E = 31
Change since picked      -1.63     52-week high=$81.63
Analysts Ratings     4-4-0-1-0     52-week low =$21.19
Last earnings 01/00  est= 0.34     actual= 0.54 surprise=59%
Next earnings 04-19  est= 0.60     versus= 0.34
Average Daily Volume = 3.45 mln
/charts/charts.asp?symbol=NITE


************************
COMBOS/SPREADS/STRADDLES
************************

Bio-techs Plunge As The Nasdaq Tumbles..

Monday, March 13

Technology stocks plummeted today after market weakness overseas
prompted a sell-off in the high-flying Internet sector.  The
Nasdaq lost 141 points to close at 4907 and the S&P 500 index was
down 11 points at 1383.  While the Nasdaq suffered, the Dow posted
a modest gain, up 18 points to 9947.  Volume on the Big Board was
995 million shares, with declines beating advances 1,849 to 1,192.
There were 37 stocks at new highs and 226 at new lows. In the bond 
market, the benchmark 30-year Treasury rose 4/32, bid at 101 1/32,
where it yielded 6.16%.


Sunday's new plays (positions/opening prices/strategy):

Electro Sci.  ESIO   APR45P/APR50P   $1.25   credit   bull-put
MyPoint.com   MYPT   APR50C/APR55C   $3.75   debit    bull-call
Sportsline    SPLN   APR40C/APR50C   $7.00   debit    bull-call
Epitope       EPTO   JUL7C/APR15C    $6.50   debit    diagonal
National CS.  NLCS   JUL50C/JUL50P   $9.62   debit    straddle

The precipitous opening drop provided a number of excellent entry
opportunities for the new bullish plays.  The question is whether
the discounted prices will prove to be timely with regard to the
current technology consolidation.  The NLCS straddle debit was
based on a multiple contract order that was filled during the
morning session.


Portfolio plays:

Equity futures were an obvious precursor to the negative opening
this morning and steep losses in overseas markets, which were
triggered by a drop in Japan's gross domestic product along with
predictions that a pro-independence candidate in Taiwan might win
the upcoming presidential election, sent a ripple of fear through
U.S. investors.  After a brief reaction to foreign issues, the
Dow industrials rebounded as bargain hunters returned to many of
the recent under-performing sectors.  The tech-driven Nasdaq was
unable to make a recovery but analysts said it was too early to
determine whether this is the start of a significant correction.
Drug, oil and cyclical issues were also weak while many of the
bio-tech, Internet and semiconductor stocks that have led the
Nasdaq's recent charge, were among the biggest losers.  Friday's
upcoming triple expiration of options on stocks, stock indexes
and futures added to the volatility during the session.
 
Our portfolio had a number of falling issues but the majority of
positions remain profitable.  A few of the bullish credit spreads
are candidates for early exit but only if you believe the sell-off
will continue through the end of the week.  There are two issues
that should be monitored for potential closing trades.  KLA Tencor
(KLAC) and Level 3 (LVLT) both ended $7 lower and while neither
position is in danger, the potential for large price movements is
inherent in both stocks.  The logical move for KLAC is to close
the position with a favorable debit of $0.38, a $0.50 profit in
one week.  The LVLT play is trading at break-even but the current
chart pattern is more foreboding as the stock finished below the
bullish 10-day trend line.  If you plan to remain in the issue,
watch it closely for continued downward movement.  The next major
support level is at the sold strike and the 30 DMA.  A close below
this price would signal a significant change in character and may
result in position losses.

There were a number of opportunities to roll long-term calendar
and diagonal plays to April options and we made some favorable
adjustments.  Here is a summary of the positions that were moved
to April along with the transition credit and the new cost-basis.

Stock          Ticker    Position      Credit   C/B

Duramed         DRMD   JUN5C/APR10C    $0.68   $3.25 
Key Energy      KEG    JUL7C/APR10C    $0.50   $0.93
Marketing Svcs. MSGI   MAY12C/APR20C   $2.00   $3.75 
Organogenesis   ORG    JUN10C/APR15C   $0.75   $3.38 
Theragenics     TGX    JUN10C/APR15C   $0.75   $3.25

Marketing Services was the only position that required a downward
adjustment to protect gains and limit losses.  There was activity
in the debit spreads portfolio as we chose to close the Tupperware
(TUP) spread.  The recent (bearish) chart pattern suggested the
issue was no longer in a recovery mode and the play was in danger
of significant loss.  The closing credit was $1.00.


Tuesday, March 14

The possibility of free access to research on human gene mapping
floored the high-flying biotechnology sector, leading the Nasdaq
to a dramatic sell-off.  The composite of technology stocks fell
200 points to 4,706 and the Dow Jones Industrial Average skidded
lost 135 points to 9,811.  The S&P 500 Index slumped 24 points to
finish at 1,359.  On the New York Stock Exchange, decliners beat
advances 4 to 3 on 1.09 billion shares traded.  There were 39
stocks at new highs and 152 at new lows.  The 30-year Treasury
bond climbed over a point higher, with the price up 1-2/32 and
the yield falling to 6.09%.


Portfolio plays:

The market fell victim to fear and profit-taking as selling in
bio-technology stocks prompted investors market-wide to exit in
droves.  The genome companies fell on worries their proprietary
information may be made public and the frenzied activity spread
into other sectors, pummeling the technology group for a second
consecutive day.  Our portfolio was no different as the majority
of momentum issues fell in broad sector downdrafts.  Within the
technology industry; computer software, chip and Internet issues
were the hardest hit.  In the overall market, cyclicals, drugs,
precious metals, utilities and brokerage shares all lost ground.
Small-cap stocks in the Russell 2000 index were also hammered by
the dumping of biotech issues and a number of bullish diagonal
positions fell victim to the news that President Clinton and
British Prime Minister Tony Blair wanted unencumbered access to
human genome data.  Voicestream (VSTR) was the only surprise of
the session and with the Murphy's Law reversal, the position may
finish the expiration period profitable.  The recently closed
debit spread profits with the stock above $127.

The adjustments in long-term positions continued today as recent
high-flying issues came back to earth in the technology sell-off.
The broad correction presented a number of excellent opportunities
to transition to April options.  Here is a summary of the adjusted
positions along with the transition credit and the new cost-basis.

Stock           Ticker     Position      Credit    C/B

Cabletron        CS     JAN15C/APR40C   -$13.50   $17.75 
E-spire          ESPI   JUN5C/APR10C     $0.50    $3.88
Medtronics       MDT    JAN37C/APR45C    $1.50    $4.75 
Network Assoc.   NETA   JAN15C/APR25C    $1.00    $6.88 
P-Coms           PCMS   MAY7C/APR17C    -$1.75    $6.00
Premier Tech.    PTEK   JAN5C/APR10C     $1.00    $3.25 
Silicon Group    SVGI   JUN17C/APR25C   -$1.00    $3.88
Vodaphone        VOD    JAN45C/APR55C    $2.25    $7.50

Cabletron, P-Coms and Silicon Valley Group all incurred debits as
the positions were rolled forward and up to higher strike prices.

With the triple-witching of stocks and options coming up on Friday
and the economic reports to evaluate later this week, the markets
will be volatile and difficult to predict.  Hopefully, the brief
consolidation in technology issues will be met with renewed buying
and we can continue to participate in the market movement with a
simple and straight-forward, bullish bias.

Questions & comments on spreads/combos to Click here to email Ray Cummins


*********
NEW PLAYS
*********

NAV - Navistar  $26.25  *** The Rumors Are Back! ***

Navistar International is a holding company with the Navistar
International Transportation as its principal operating
subsidiary.  Navistar has major industry segments: manufacturing
and financial services.  Manufacturing operations are responsible
for the manufacture and marketing of medium and heavy trucks,
including school buses, mid-range diesel engines and service
parts primarily in the United States and Canada, as well as in
Mexico, Brazil and other selected export markets.  The financial
services operations consist of Navistar Financial Corporation,
its domestic insurance subsidiary and their foreign finance and
insurance subsidiaries.  NFC's primary business is the retail and
wholesale financing of equipment sold by their manufacturing
operations and its dealers within the United States.  They also
manage the provision of commercial physical damage and liability
insurance.  Navistar recently returned to the roots of its proud
heritage by changing the name of its principal operating company
to International Truck and Engine Corporation.

Navistar gained attention this week as news of a stalled European
merger revived take-over talk involving the American truck-maker.
Swedish truck and bus maker Volvo said on Tuesday it would again
evaluate acquisition alternatives in Europe, North America and
Asia, following the failed merger with rival auto-maker Scania.
The European Union on Tuesday blocked Volvo's planned acquisition
of the company saying concessions made already were insufficient
to address concerns the merger would give Volvo a virtual monopoly
for heavy trucks in Sweden and a dominant position in the Nordic
region.  The Financial Times reported that Volvo will now attempt
to re-launch its commercial vehicles strategy and is considering
various options to expand its global presence in trucks and buses.
The British newspaper also said that a number of investment
bankers believed Volvo was considering an approach to Navistar.

Implied volatility and volume in options has picked up recently
and there are a number of favorable speculation positions.  With
analysts suggesting the stock is undervalued (low P/E and solid
earnings), these two plays have excellent risk/reward potential.


PLAY (very conservative - bullish/diagonal spread):

BUY  CALL JUL-25 NAV-GE OI=1    A=$13.25
SELL CALL APR-35 NAV-DG OI=1283 B=$4.25
INITIAL NET DEBIT TARGET=$8.88 INITIAL TARGET ROI=12%

-or-

PLAY (conservative - bullish/calendar spread):

BUY  CALL JUL-45 NAV-GI OI=143 A=$3.25
SELL CALL APR-45 NAV-DI OI=777 B=$1.12
INITIAL NET DEBIT TARGET=$2.00 TARGET ROI=50%


The basic premise in a calendar spread is simple; time erodes
the value of the near-term option at a faster rate than it will
the far-term option.  The bullish calendar spread is used when
the underlying issue is some distance below the strike price of
the options.  This position is speculative with low initial cost
and large potential profits.  Two favorable outcomes can occur:
the stock rallies in the short-term and the position is closed
for a profit as time value erosion in the short option produces
a net gain or; the underlying stock consolidates, allowing the
sold option to expire and then eventually rallies above the long
option strike price.

It is generally best to establish this type of spread at least
2 - 3 months before the long option expires, capitalizing on the
ability to sell another option against the longer-term position.
That is the basic idea in this spread play; selling time value
in the options when they are overpriced (high implied volatility)
and buying it back (if necessary) when they return to intrinsic
value.

Chart =
/charts/charts.asp?symbol=NAV

****

NETA - Network Associates  $32.31  *** LEAPS/CC's ***

Networks Associates provides and develops network security and
management software.  The company's Net Tools is a collection of
products designed to protect enterprises from network security
threats.  McAfee Total Virus Defense is a product that provides
virus protection at the client, server and Internet gateway.  PGP
Total Network Security combines security products with encryption
software and management tools.  Sniffer Total Network Visibility
provides network fault and performance management, and Total
Service Desk provides network management and help desk technology.
NAI Labs is the division of NETA that performs research in the
network security technology area focused on researching viruses
and security threats, as well as other scientific, mathematical, 
cryptographic and technological issues that reside outside the
product development pathway.  NETA also offers professional
services, educational services and technical support.

NETA is one of our all-time favorite LEAPS issues and today the
stock jumped $2 after McAfee, a Network Associates business, said
that its Enterprise SecureCast anti-virus technology has been
granted a patent relating to their proprietary system for keeping
anti-virus software continuously updated over the Internet.  With
NETA's technology, the customer's network is automatically kept
up-to-date and immunized against even the newest computer viruses
being detected by the company's scientists and engineers.  Using
the world-wide-web to distribute anti-virus updates is the best
method to provide computer protection and NETA's technology is
expected to become the preferred method for updating anti-virus
software.

Pacific Crest Securities added to the positive news, upgrading the
security software maker from a "market perform" to a "buy" and it
appears the majority of investors agree.  Today's move placed the
issue above a recent trading range and the technicals are bullish.
However, we are going to protect the downside initially with a
conservative position.  Keep in mind, if the short options are
in-the-money at expiration, you must buy them back to preserve the
long-term option.  In addition, the opening spread has no initial, 
upside risk.


PLAY (conservative - bullish/diagonal spread):

BUY  CALL JAN01-15 ZNE-AC OI=2356 A=$19.38
SELL CALL APR00-30 CQM-DF OI=914  B=$5.00
INITIAL NET DEBIT TARGET=$14.00-$14.12 TARGET ROI=100%

Chart =
/charts/charts.asp?symbol=NETA

****

BILL - Billing Concepts  $8.31  *** Technicals Only! ***

Billing Concepts conducts operations in three principal segments: 
Software, Internet and Transaction Processing Services.  Through
its Aptis Software division, the company develops, licenses, and
supports billing and customer care systems for telecommunications
providers and Internet Service Providers.  The company's Internet 
division provides Internet-based instant loan approval products
to the financial services industry and is developing a new site
focused on the credit union industry.  In addition, the company
also has a minority stake in Princeton eCom, a privately held
company specializing in electronic bill presentment and payment
via the Internet.  The Transaction Processing Services segment
provides third-party billing clearinghouse and other information
management services to the communications industry.

This conservative play is for our small portfolio "covered-call"
investors and the outlook is simply based on the recent bullish
break-out in the underlying issue.  From a long-term viewpoint,
it would appear that this is a low-risk entry point on a stock
that has finally turned the corner and may eventually resume the
position it once held in the teens to mid-twenties.  Only time
will tell!


PLAY (conservative - bullish/covered-combo):

BUY STOCK - BILL  LAST=$8.31
SELL CALL APR-7.50 QBI-DU OI=147 A=$1.56
SELL PUT  APR-7.50 QBI-PU OI=10  B=$0.81
COMBINED COST BASIS TARGET=$6.62 COMBINED ROI=25% (margin)

As you might expect, this position has been evaluated for
probability of profit using the current price and technical
history of the stock.  News and market sentiment will have an
effect on the underlying issue so review the play thoroughly
and make your own decision about the future outcome of the
position.

Chart =
/charts/charts.asp?symbol=BILL


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************
See Disclaimer in section one
************

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