Option Investor

Daily Newsletter, Wednesday, 03/22/2000

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The Option Investor Newsletter                Wednesday  3-22-2000
Copyright 2000, All rights reserved.
Redistribution in any form strictly prohibited.

Posted online for subscribers at http://www.OptionInvestor.com

Also provided as a service to The Online Investor Advantage
MARKET WRAP  (view in courier font for table alignment)
       3-22-2000           High     Low     Volume Advance Decline
DOW    10866.70 -  40.60 10917.30 10789.10 1,077,120k 1,635  1,315
Nasdaq 4,864.75 + 153.07  4900.42  4736.90 1,769,316k 2,513  1,699
S&P-100  810.55 +   3.68   813.52   802.00    Totals  4,148  3,014
S&P-500 1500.64 +   6.77  1505.08  1487.33            57.9%  42.1%
$RUT     571.19 +  18.40   571.24   552.79
$TRAN   2651.65 -  16.16  2692.04  2645.97
VIX       22.99 -   0.35    23.91    22.73
Put/Call Ratio       .46

No News?? OK, Let's Rally

With the Fed behind us and no big economic news left this week, 
traders decided to make a run higher.  Despite a modest opening, 
the Nasdaq slowly began to climb.  You could tell that investors 
wanted to dip their toe in the pool before jumping in.  After 
weathering some mid-day resistance at 4835, the Nasdaq comp 
took off and traders were swimming in profits.  By 3pm EST, 
we hit 4900.42, which was the day high and backed off into the 
close.  All in all, it was a flashback of the momentum we saw 
for 6 months.  Nasdaq up, Dow down.  A scenario we have become 
used to playing.  

The question here is, did we just fall for a bear trap?  Could 
it be that the Dow needed a breather from an extended run and 
some money cycled back to the Nasdaq for the perceived value?  
If the Dow regains upside momentum tomorrow, this money could 
flow right back to the Dow.  Let's face it, the Biotechs were 
due to bounce.  The Semis were due to bounce.  Not even a weak 
earnings report by Micron could stop the inevitable bounce that 
this index and these sectors were in need of.  The Nasdaq did 
manage to close above the 10-dma which is positive, but the 
volume supporting the bounce was weak at 1.74 billion shares.  
Some of the big names looked tired too.  Yahoo was breaking 
out over $200 late in the afternoon, but just couldn't mount 
any more upside, closing back under $200.  It didn't help 
either to have Abby Joseph Cohen, chief investment strategist 
at Goldman Sachs, raise her target for the S&P 500 and DJIA, 
with no mention of an increase in her Nasdaq target.  Sounds 
to me like she is a believer in the cyclical shift this year 
and maybe some consolidation for the Nasdaq.  

Tomorrow will be interesting to see if the Nasdaq can build 
on today's close over the 10-dma and possibly push above today's 
high of 4900.  Expect that to be resistance initially.  It would 
take a 36-point move to get there as we closed at 4864.69, +153 
in one of the largest moves ever for the Nasdaq, but not out 
of line from what we have become accustomed to.  You can see 
from the chart below that a good technical picture is forming.  
And it seems that when the Nasdaq runs this year, the Russell 
2000 follows.  The RUT was up 18.40 today to 571.19, but under 
it's 10-dma, which may be proof that the coast isn't clear yet.  


As far as the DJIA, it's hard to complain that it gave back 
40-points after the mammoth 1000-point rise.  It pulled back 
intraday to 10,800 a couple times and found solid support.  
It closed down 40.64 to 10,866.70.  Volume was average at 
1.07 bln, indicating a real lack of sellers.  The S&P 500 
pushed higher to close at a record high of 1500.64, up 6.77.  
Note the solid floor for the blue chips intraday today.  We 
aren't that far from a test of 11,000.


You have to give some credit to today's recovery to the 30-yr 
bond which rallied yesterday and held the gains today.  The 
yield is sitting down at 5.97%.  With the inverted yield curve, 
it doesn't have the same punch to boost the markets, but it 
is nice to see it moving in the right direction.  I don't have 
to tell you homebuyers about the inverted curve though.  The 
gist is that Greenspan and friends keep raising short-term 
interest rates and 5 and 10-year bonds (along with mortgage 
rates) have been unable to move lower with the 30-yr.  A big 
portion of the long bond's move is based on the government's 
decision to retire some of this debt and limit new supply.  

The rebound in tech-related sectors made up the move on the 
Nasdaq.  The Biotech sector jumped 10%, the Semis up 9.2%, 
and Software up over 3%.  Other sectors moving higher include 
Internet, Telecom and Transports.  The losers on the day were 
Gold, Cyclicals, and Healthcare.  The VIX is nearing the low- 
end, but holding steady at just over 23.

Speaking of the low-end, MU reported numbers low numbers last 
night.  Sometimes it is amazing the way the market will 
absolutely brutalize a stock when they disappoint those oh-so 
demanding analysts with earnings.  Remember LU last quarter when
they missed the estimates.  It sold off after-hours and opened 
down 20% the next day (making it a great LEAP play).  But today, 
investors and analysts had a change of heart.  Micron Technology
announced earnings yesterday after the bell and disappointed the 
analysts by posting quarterly earnings of $0.58 per diluted share
versus estimates of $0.74.  They missed by $0.16, that's about
21% off.  MU closed on Tuesday at $131.38 and after the report, 
it traded as low as $114 in after-hours trading.  Investors ran
for the exits and MU got fleeced.  Although quick sellers may 
have gotten a better night sleep last night, MU will probably be 
in their nightmares tonight as it opened this morning at $129, 
as if nothing even happened.  And to add insult to injury, MU 
closed today's session at $139.50.  At least three analysts came 
to MU's defense this morning, raising earnings estimates and 
price targets.  Just when you thought you had this market 
figured out, something bizarre like this happens.

Today, Microsoft teamed up with Texas Instruments to expand its
reach into the wireless arena.  The two tech behemoths have 
entered into a pact to develop enhanced software capabilities 
for wireless handheld devices, such as Palm Pilots.  This 
collaboration will involve MSFT's Windows CE operating 
system and TXN's programmable digital signal processors(DSP).  
The end result will be enhanced multimedia functions, such as 
wireless Web access, streaming audio and video, and even video-
conferencing.  MSFT and TXN said in a press release that the 
alliance will benefit software developers by allowing more 
flexibility in their software design for the variety of mobile 
Internet devices that are out on the market.  MSFT remains 
determined to grab a piece of the wireless market and establish 
itself as a premier player.  MSFT was up $0.50 at $103.25.  
TXN closed at $179.06, up $7.81.

With the earnings season getting under way again, many expected 
earnings warnings the past couple of weeks.  Yesterday, in a 
statement by GE CFO Keith Sherin, GE announced that it expects 
to "modestly exceed" analyst consensus estimates, citing 
"unusually strong momentum."  GE was rewarding nicely as it 
rocketed to $150 in Tuesday's session and then today held solidly 
to close at $150.88, up $0.38.  This is an important development 
for GE, who has been in a rut since trading at these levels in 
mid-January.  Many consider GE to be a bellweather for the broader 
market and, with the sector rotation and shift towards DOW stocks 
during the past week, GE could lead the "old economy" stocks back 
to the glory days.  Yet, don't be misled, GE is not just an old 
brick-and-mortar company.  They are creating themselves into a 
an "old economy" hybrid, developing business units that will 
provide a full-range of service for Internet-based commerce.  

So what does the future hold?  I wish I knew for certain, but 
I am anxious to see what tomorrow brings.  If the Nasdaq can 
add to today's gains on better volume and push above 4900 on a 
closing basis, there would be reason to start believing the 
recovery is for real.  After all, we are headed to earnings 
season.  But a rollover tomorrow on another day of weak volume 
may be the kiss of death for at least another week.  That would 
put us in a position to consolidate some more.  And another 
disaster like MSTR and we could be retesting 4450.  That could 
really dampen enthusiasm for the high-growth stocks.  Don't be 
fooled by whatever happens early in the day too.  The Nasdaq 
may open up after today's move, barring some bad news.  The 
bottom line for the Nasdaq will be the volume.  Enough with 
these less than 2 billion days.  Let's rally crank out some 
good volume.  Otherwise, I can't be convinced this is for real.  
On the other hand, if the DJIA picks up again on continuing 
strong volume, then 11,000 here we come.  Look for the NYSE 
tech stocks to lead the way, along with the Financials.  This 
move in the blue-chips is becoming more and more like the 
rally in fall of 1998 when the market crapped out in October 
only to quickly take off back to new highs.  In all cases, 
proceed with caution and sell too soon.

Ryan Nelson
Asst. Editor


Warner-Lambert Pulls Diabetes Drug
By Cindy Christ

If you or I suddenly lost more than $400 million in annual
income, it likely would have a material impact on our

But we are not corporate behemoths, to whom such a sum is
little more than a drop in the ocean.

That explains why Wall Street yawned Wednesday after Warner-
Lambert announced it would comply with the Food & Drug
Administration's request to pull its diabetes drug Rezulin
from the market.

The FDA made the request after 63 deaths, 90 liver failures
and 7 liver transplants were linked to the drug since its
introduction in 1997.

"When considered as a whole, the pre-marketing clinical data
and post-marketing safety data from Rezulin as compared to
similar, alternative diabetes drugs indicate that continued
use of Rezulin now poses an unacceptable risk to patients,"
said Dr. Janet Woodcock, Director of the FDA's Center for Drug
Evaluation and Research.

The administration said that two newer drugs, Avandia made by
SmithKline Beecham Plc and Eli Lilly's Actos, offer diabetes
sufferers a safer alternative.

"Data to date show that Avandia and Actos, both approved in
the past year, offer the same benefits as Rezulin without the
same risk," the FDA said in a statement.

Shares in New Jersey-based Warner-Lambert, whose merger with
Pfizer (PFE) will create the world's second-largest
pharmaceutical company after its completion in early summer,
slid 1.5 percent, closing down $1.38 at $93.63.

Pfizer (PFE) also traded lower, down $1.06, or 2.9 percent, at

UK-based SmithKline Beecham (SBH) was up $0.44, or 0.65
percent, at $67.44 in New York, and Eli Lilly (LLY) added
$1.88, or 3 percent, to $63.56.

Analysts said that Warner-Lambert's loss would be SmithKline's
and Lilly's gain, but the estimated $400 million drop in sales
would impact its bottom line by just a penny or two.

Gruntal & Co. pharmaceutical analyst Jeffrey Kraws said the
loss will have very little impact on the firm's prospects, and
lowered his 2000 earnings view by 2 cents, to $2.47 from

Analysts estimate that after the Warner-Lambert/Pfizer merger,
the combined company would have sales of $31 billion in 2000
and plenty of other drugs in the pipeline to pick up the

"So if they lose the $400 million Rezulin would have brought
in, it's hardly a major event," said Brown Bothers Harriman
analyst Mike Krensavage in an interview with Reuters.

Severe liver toxicity has been known to occur with Rezulin
since 1997, yet the drug saw tremendous use as the only
treatment that restored the body's sensitivity to insulin,
reducing the number of insulin injections a diabetes patient
would need.

Mounting evidence of severe liver problems in some users
prompted the FDA to strengthen labeling requirements and
recommend limiting the drug to users not helped by other

In the last two years, Rezulin sales totaled about $1.3
billion. But since 1999, the controversial drug has steadily
lost market share to Actos and Avandia amid growing safety
concerns, leading some experts to suggest that if Warner
hadn't pulled Rezulin, its sales would have dried up anyway.

Public Citizen, a Washington, D.C.-based advocacy group, has
asked the U.S. government to launch a criminal investigation
of Warner-Lambert, alleging the company neglected to report
safety data.

Despite the controversy, Warner-Lambert maintains Rezulin's
effectiveness in treating type 2 diabetes.

"the company continues to believe that the benefits of the
drug outweigh its associated risks," Warner-Lambert said in a

"However, repeated media reports sensationalizing the risks
associated with Rezulin therapy have created an environment in
which patients and physicians are simply unable to make well
-informed decisions regarding the safety and efficacy of
Rezulin," the company said.

The FDA is urging Rezulin users to contact their doctors to
discuss alternative treatments.


CKFR - Checkfree Holdings Corporation $65.43 -0.56 (-4.75)

CheckFree Corporation is the leading provider of financial 
e-commerce services and products.  Founded as an electronic 
payments processor in 1981, CheckFree launched the first fully 
integrated electronic billing and payment solution, CheckFree 
E-Bill, in March of 1997.  Today, CheckFree services enable 
three million consumers to receive and pay bills over the 
Internet or electronically.  CheckFree's Investment Services 
division provides a range of investment management services to 
help more than 255 institutions provide portfolio management 
and reporting services to their clients.  CheckFree clients 
manage over 820,000 portfolios totaling more than $400 billion 
in assets.  Software and services provided by CheckFree's 
Compliance and Financial Service division are used to process 
more than two-thirds of the nation's six billion Automated 
Clearing House (ACH) payments.  In addition, nearly 400 banks 
and businesses use reconciliation products and services the 
division provides.
Most Recent Write-Up

So far so good.  The negative trend continues for CKFR.  
On Monday, CKFR opened just above its close on St. Patty's Day 
and that was as high as it would be.  It quickly fell out of bed 
with a hangover and traded as low as $59.31, on volume of 2.1 mln 
shares, almost twice the ADV.  Tuesday morning, CKFR got a bounce 
at $59 and regained some ground with the market's post-interest 
rate hike rally.  Tomorrow will be a telling session to see if we 
get follow through on the NASDAQ's triple digit gain.  These 
levels for CKFR may represent good entry points, as we will be 
looking for a retest of the $59 level.  Target shoot for entries 
based on personal risk levels and watch to see if CKFR follows the 
broader market trend.


Well today, the NASDAQ posted another triple digit gain of 153
points.  And what did CKFR do?  It rolled over, falling $0.56.
The combination of CKFR's already established downtrend and its
inability to move up with the NASDAQ sets the stage for a 
possible dip to the $59 level.  With the NASDAQ bumping into
4900 and staggering away quietly today, we will be watching it
closely to see which way it feels like going tomorrow.  Will we
get another rotation between the DOW and NASDAQ?  We'll have to 
see, but if NASDAQ goes south tomorrow, don't expect CKFR to 

BUY PUT APR-65 FCQ-PM OI=22 at $7.63 SL=5.50
BUY PUT APR-60 FCQ-PL OI=21 at $5.13 SL=3.25

Average Daily Volume = 1.42 mln


The key phrase is "Extreme Volatility"...

You just got to love it - or at least sell the over-priced
option premiums it creates.  If you bought calls or puts and
didn't sell quickly, you may even hate it.  The summary list
reflects that our candidates did fairly well in March (100%
profitable) even with the recent whipsaw corrections.  Only
when the market corrects sharply can one appreciate the true
value of a conservative covered write (or deep OTM naked put).
The current high-volatility conditions do offer the potential
for tremendous profit, but at great risk.  We prefer to focus
on a high probability of a reasonable profit with low risk
and reduced potential for loss.

Summary of Previous Picks: 

NOTE:  MARCH prices as of Friday's close

Covered Calls: (Margin would double the listed Monthly Return)

Stock  Strike Strike Cost   Current Profit  Monthly
Symbol Month  Price  Basis  Price   (Loss)  Return

ORCL    MAR     70   68.25   79.81  $1.75    8.7%
SCMR    MAR     95   89.31  144.50  $5.69    6.5%
FNSR    MAR    110  106.43  124.63  $3.57    6.4%
INKT    MAR    125  119.63  231.63  $5.37    5.9%
BOUT    MAR     80   78.63   89.06  $1.38    5.9%
LWIN    MAR     80   75.63   90.50  $4.37    5.9%
NEON    MAR     55   52.00   82.25  $3.00    5.8%
INSP    MAR    145  135.56  209.50  $9.44    5.7%
CRA     MAR    130  124.62  130.00  $5.38    5.7%
ITVU    MAR    105   98.25  127.63  $6.75    5.6%
SMTC    MAR     55   52.75   64.00  $2.25    5.6%
CHINA   MAR     95   90.12  112.00  $4.88    5.5%
TIBX    MAR     65   61.79  119.63  $3.20    5.3% Split 3 - 1
FIBR    MAR     55   51.75  111.63  $3.25    5.2%
ENTU    MAR     65   61.88  110.00  $3.12    5.1%
PUMA    MAR     95   91.50  171.50  $3.50    5.1%
IMNX    MAR    130  122.50  173.88  $7.50    5.0%
CLRS    MAR     90   87.87  124.75  $2.13    4.6%
MUSE    MAR     87   82.50  153.50  $4.50    4.5% Split 2 - 1
DITC    MAR     62   58.94   96.50  $3.07    4.3% Split 2 - 1
BVSN    MAR     56   54.54   76.50  $1.46    3.5% Split 3 - 1

AFCI    APR     55   49.75   76.75  $5.25    7.3%
ISSX    APR    105   96.19  128.81  $8.82    6.3%
ASYT    APR     40   37.18   53.63  $2.82    6.2%
DITC    APR     90   83.38   98.06  $6.63    5.5%
TGNT    APR     80   75.25   82.44  $4.75    5.2%
NXTV    APR    125  117.71  159.81  $7.29    5.1%
PUMA    APR    135  125.75  146.63  $9.25    5.1%
NEON    APR     65   61.22   65.31  $3.78    5.1%

Naked Puts:

Stock  Strike Strike Cost   Current Profit  Monthly
Symbol Month  Price  Basis  Price   (Loss)  Return

BOUT    MAR     80   78.06   89.06  $1.94   23.5%
ORCL    MAR     70   68.69   79.81  $1.31   20.6%
DITC    MAR     87   86.00   96.50  $1.00   14.1%
SCMR    MAR     85   81.50  144.50  $3.50   13.3%
BVSN    MAR     53   52.08   76.50  $1.25   10.9% Split 3 - 1
NEON    MAR     50   48.44   82.25  $1.56   10.9%
FNSR    MAR     95   93.31  124.63  $1.69   10.8%
CRA     MAR    120  117.19  130.00  $2.81   10.3%
PUMA    MAR     90   87.87  171.50  $2.13   10.1%
MUSE    MAR     82   80.19  153.50  $2.32    9.9% Split 2 - 1
ENTU    MAR     60   58.31  110.00  $1.69    9.8%
CHINA   MAR     85   82.62  112.00  $2.38    9.3%
INSP    MAR    130  125.37  209.50  $4.63    9.3%
LWIN    MAR     70   68.19   90.50  $1.81    9.1%
ITVU    MAR    105  102.94  127.63  $2.06    8.9%
TIBX    MAR     58   56.83  119.63  $1.50    8.5% Split 3 - 1
CLRS    MAR     80   79.06  124.75  $0.94    7.4%
HLIT    MAR     95   92.50  116.88  $2.50    7.4%
IMNX    MAR    165  163.25  173.88  $1.75    7.3%
INKT    MAR    110  108.37  231.63  $1.63    7.3%
VRSN    MAR    185  182.25  202.13  $2.75    7.1%
INSP    MAR    180  178.19  209.50  $1.81    7.0%
MRVC    MAR     70   69.06  132.88  $0.94    5.9%
PROX    MAR     80   78.50  148.94  $1.50    5.2%

ASYT    APR     35   33.38   53.63  $1.63   11.5%
AFCI    APR     45   42.63   76.75  $2.38   10.1%
NXTV    APR    115  110.63  159.81  $4.38    9.9%
NEON    APR     55   52.94   65.31  $2.06    9.0%
ISSX    APR     90   86.38  128.81  $3.63    9.0%
MU      APR     85   82.25  141.00  $2.75    8.9%
TGNT    APR     70   67.94   82.44  $2.06    8.4%
INKT    APR    140  136.00  217.25  $4.00    7.6%
PUMA    APR    120  115.63  146.63  $4.38    7.4%
IMNX    APR     51   49.83   66.88  $1.83    7.4% Split 3 - 1
SFE     APR     60   58.00   90.00  $1.42    6.3% Split 3 - 1
AFCI    APR     45   43.81   76.75  $1.19    5.9%


We list favorable "in-the-money" covered write and "out-of-the-
money" naked put candidates that offer conservative entry points 
into technically bullish charts, with reasonable monthly returns. 

The positions that we find favorable (and will track every week) 
will be marked by asterisks. Do not enter these trades unless you
fully understand the strategy and various methods of manipulating
the position should the stock price drop, or rise, and in the 
event you decide you want to keep the issue.


CY - Cypress Semiconductor  $53.31  *** Hot Sector ***

Cypress Semiconductor designs, develops, manufactures and markets
a broad line of high-performance digital and mixed-signal
integrated circuits for a range of markets including data
communications, telecommunications, computers and instrumentation
systems.  They offer over 425 products through their two business
units, Memory Products and Non-Memory Products.  Cypress' memory
products division offers static random access memories (RAMs) and
multi-chip modules.  Non-Memory Products include programmable
logic products and programming software, programmable skew
clocking, data communication products, computer products,
including clocks and Universal Serial Bus micro controllers, and
nonvolatile memory products.

The chip sector has been on the move in recent months and even
the Micron earnings shortfall failed to stem the bullish trend.
Cypress is one of the newcomers to the mid-cap semiconductor
group and last week's upgrades are just beginning to have a real
effect on the share value of the issue.  Credit Suisse First
Boston raised its price target on Cypress to $57 after reporting
that the company is on track to beat the first quarter earnings
estimates.  Warburg Dillon Read also recently raised the Cypress
earnings and price target after a positive meeting with company 
management.  The target was raised to $60 based on a strong March
quarter.  Cypress is also currently benefiting from broad-based
growth across several areas of its communications-rich product
mix. We favor the opportunity to own it at a discounted price.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call APR 45   CY DI   1047     10.38    42.93     4.9% ***

Sell Put  APR 40   CY PH   269       1.00    39.00     8.7% ***
Sell Put  APR 45   CY PI   221       2.19    42.81    14.6%

Chart =


IBIS - Ibis Technology  $108.63 *** Leading-Edge Technology ***

Ibis Technology is the leading manufacturer of high current 
oxygen implanters and leading supplier of SIMOX (Separation by
IMplantation of OXygen) wafers to semiconductor manufacturers.
SIMOX wafers are state-of-the-art silicon-on-insulator wafers,
which enable the production of integrated circuits with
significant advantages over circuits constructed on conventional
bulk silicon or epitaxial wafers.  These advantages include
substantially reduced power consumption, more efficient low
voltage operation and significantly improved speed.  These
characteristics make SIMOX-SOI wafers well suited for many com-
mercial applications, including wireless communications devices
such as cellular phones, portable and desktop computers,
automotive electronics, telecom access networks and optical

Ibis is another "hot" company in the chip sector and the group is
expected to continue to outperform the overall market in the next
few months.  Analysts have issued a number of new upgrades in the
sector and as earnings come out for the first quarter, there will
be an influx of money into this bullish technology industry.  The
technical strength of IBIS is obvious and the recent move into
triple digits suggests the trend is intact and will continue.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Put  APR 80   UIB PP  251      1.06     78.94     4.7%
Sell Put  APR 85   UIB PQ  358      1.75     83.25     7.6% ***
Sell Put  APR 90   UIB PR  305      2.94     87.06    10.7%

Chart =


NT - Nortel Networks  $134.00  *** Optical Dominance! ***

Nortel Networks is a leading global supplier of data and
telephony network solutions and services.  They operate in two
segments: carrier and enterprise.  Its business consists of the
design, development, manufacture, marketing, sale, financing,
installation, servicing and support of data and telephony networks
for carrier and enterprise customers.  Customers include public
and private institutions; local, long-distance, personal
communications services and cellular mobile communications
companies; cable television companies; Internet service providers
and utilities.  Nortel Networks has a presence in over 150
countries worldwide.  Nortel has recently increased its optical
network capability through several significant acquisitions.

Investors are excited about Nortel's aggressive moves in the
optical market and most analysts suggest the company should
continue its buying binge to keep an edge over competitors in
the hotly contested industry.  This week the world's #2 network
equipment supplier announced a deal worth $1.43 billion to buy
CoreTek for its optical filter and laser technology.  That deal
and other recent purchases all fit into Nortel's plan to offer a
start-to-finish optical network where traffic can enter, travel
and exit a network without costly, time-consuming regeneration
to electronic signals.  

Obviously demand is soaring for optical network equipment that
can transport voice, data and video traffic at high speeds and
Nortel is one of the leaders in the industry.  Recent reports
from research firms including Warburg Dillon Read, Ryan Hankin
Kent, and Dell'Oro rank Nortel #1 for optical equipment sales
and that bodes well for the fundamental future of the issue.
Our plays however, are based strictly on the bullish technical
indications and the opportunity to participate in the new trend
with a conservative position.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Put  APR 110  NTV PB  1803     1.63    108.38     5.3%
Sell Put  APR 115  NTV PC  1006     2.38    112.62     6.5% ***
Sell Put  APR 120  NTV PD  1122     3.75    116.25     8.8%

Chart =


PCLE - Pinnacle Systems  $58.06  *** Split Run! ***

Pinnacle Systems designs, manufactures, markets, and supports
computer-based video post-production products to serve the
broadcast, desktop and consumer markets.  Their products use real
time video processing and editing technologies to apply a variety
of video post-production and on-air functions to multiple streams
of live or recorded video material.  These editing applications
include the addition of special effects, graphics and titles.  To
address the broadcast market, they offer high performance,
specialized Windows NT-based solutions for high-end, production
and broadcast on-air applications.  For the desktop market, they
provide real time video manipulation and editing tools to support
non-linear, computer-based, editing environments.  To address the
consumer market, they offer low cost, easy to use video editing
solutions that allow consumers to edit their home videos using a
personal computer, camcorder and VCR.

Last quarter, Pinnacle's net sales were a record for the tenth
consecutive quarter.  They increased 60% over the same quarter
last year and 24% sequentially.  Their net income increased in
line with sales but the big news was the announcement of a 2-for-1
split - effective March 24.  Several new products and contracts
over the last few months suggest that Pinnacle will continue with
its string of sequentially increasing sales and income.

The technicals remain strong as Pinnacle continues to climb into
blue sky territory, something the stock has been doing for the
last three years.  We favor the technical support provided by
the December high and a cost basis that offers a reasonable
entry point into a stage II issue.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call APR 50   PUC DJ  76       11.13    46.94     6.6% ***

Sell Put  APR 45   PUC PI  110      0.94     44.06     7.6% ***
Sell Put  APR 50   PUC PJ  0        2.31     47.69    13.4%

Chart =


PHCM - Phone.com  $150.88  *** Sector Upgrade! ***

Phone.com is a leading provider of software which enables the
delivery of Internet-based services to mass-market wireless
telephones.  Their software products enable the delivery of
Internet-based services to mass-market wireless telephones.
Products include: UP.Link Server Suite, a product that network
operators use to connect their subscribers' mass-market wireless
telephones to Internet services; UP.Browser, a browser that is
embedded in mass-market wireless telephones and enables wireless
subscribers to access Internet services; UP.Smart, a suite of
software applications that delivers personal digital assistant
features to smartphones; and UP.SDK, a software development kit
that Internet content providers and third-party developers use to
create WML-compliant applications.

Wireless Data and Communications stocks received a boost this
week after a Robertson Stephens Senior Analyst reiterated "Buy"
ratings on a number of stocks in the group.  The report said that
Phone.com has seen significant momentum during the first calendar
quarter and is expected to announce another solid earnings report.
The revenues will be supplemented by the recent acquisition of
Onebox, a company that intends to capture a chunk of the emerging
wireless Internet market with updated technology geared for mobile
phones.  Their new software service will allow people who use
mobile phones to check a central email box, check voice mail, and
respond to email with a voice message.  Analysts say the products
from Phone.com's new company will provide a powerful combination
for wireless communications carriers and that's just what they
need to become a leader in the industry.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call APR 120  UMN DD  189      36.38   114.51     4.9% ***
Sell Call APR 125  UMN DE  54       33.13   117.76     6.2%

Sell Put  APR 100  UMN PT  165       1.81    98.19     5.7%
Sell Put  APR 105  UMN PA  233       2.44   102.56     7.6% ***
Sell Put  APR 110  UMN PB  123       3.38   106.62    10.2%
Sell Put  APR 115  UMN PC  112       4.63   110.38    13.5%
Sell Put  APR 120  UMN PD  745       5.50   114.50    15.6%
Sell Put  APR 125  UMN PE  134       7.38   117.63    17.9%

Chart =


PHTN - Photon Dynamics  $88.25   *** Own This One! ***

Photon Dynamics is a supplier of array test, inspection and repair
systems for the flat panel display (FPD) industry.  Their systems
are used to control, monitor and refine the manufacturing process
to increase the yield of FPDs, to reduce materials loss, to
transition new FPD designs from research and development to
commercial production and to assist in the rapid start-up of new
FPD manufacturing facilities.  They offer a variety of products to
inspect almost all commercially produced FPDs.  These include
Array Test Systems, Flat Panel Inspection Systems, and Array
Repair Systems.  Last year, Photon finalized its acquisition of CR
Technology, a leading innovator of quality assurance and process
control vision and x-ray inspection systems for semiconductor and
electronics manufacturers.

Photon is simply another hi-tech issue that has grown with the
incredible expansion in the semiconductor group.  Now the share
value is once again at a new all-time high and the trend has been
supported by heavy institutional buying in the past few months.
Analysts have been bullish on the issue since late last year and
the most recent brokerage opinion was outstanding.  Wit Soundview
analyst Michael O'Brien issued a "strong buy" rating on the stock
based on increased estimates for fiscal year 2000 earnings.  Now
the question is, "where to from here"?  The technical outlook is
is positive but we will approach the position from a conservative
viewpoint with a deep-in-the-money cost basis.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call APR 70   PDU DN  0        21.75    66.50     5.3% ***

Sell Put  APR 65   PDU PM  0        1.06     63.94     5.7% ***
Sell Put  APR 70   PDU PN  0        2.06     67.94    10.6%

Chart =


YHOO - Yahoo  $197.18  *** On The Move! ***

Yahoo! is an Internet media company that offers a network of
branded World Wide Web programming that provides broadcast
media, personal communications and direct services. Yahoo!
provides guides to online content, Web search capabilities,
aggregated third party content, mail and community and
personalization features.  Yahoo! incorporates reference
materials including real-time news, stock quotes, corporate
earnings reports, mutual fund holdings, stock investing
commentary, sports scores and commentary, weather and
entertainment industry gossip, and organizes hypertext links
to Websites featuring current events and issues of interest,
such as elections, holidays and political issues.  Yahoo! also
offers includes Yellow Pages, maps, driving directions
and classifieds listings and the opportunity for members to
purchase goods and services such as books, music and videos,
as well as other services such as automotive services,
mortgages and brokerage services.

There is not much to say about this Internet giant except that
it has finally found its technical footing and appears well on
the way to an attempt at a new all-time high.  Tuesday's break
above the recent resistance level near $180 signals a change in
character and the developing trend may carry the issue well into
the $220 range.  With a number of new contracts and a move into
the wireless delivery of web products, Yahoo will remain the King
of Internet companies.  Our conservative positions simply offer
a choice of favorable entries into this widely popular stock.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call APR 175  YUU DO  6985     32.13   165.07     6.1% ***
Sell Call APR 180  YUU DP  9027     29.13   168.07     7.2%

Sell Put  APR 150  YMM PJ  5717      3.13   146.88     7.4%
Sell Put  APR 155  YUU PK  2465      4.25   150.75     9.9% ***
Sell Put  APR 160  YUU PL  2735      5.13   154.87    11.1%
Sell Put  APR 165  YUU PM  2434      6.63   158.37    12.6%

Chart =

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