Option Investor
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Daily Newsletter, Sunday, 03/26/2000

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The Option Investor Newsletter          Sunday  3-26-2000  1 of 4
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Redistribution in any form strictly prohibited.

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

Entire newsletter best viewed in COURIER 10 font for alignment
*******************************************************************
         WE 3-24          WE 3-17         WE 3-10         WE 3-3
DOW    11112.72 +517.49  10595.23 +666.41  9928.82 -438.38  +505.08
Nasdaq  4963.03 +164.90   4798.13 -250.49  5048.62 +133.83  +324.29
S&P-100  832.65 + 45.91    786.74 + 37.24   749.50 - 16.45  + 46.17
S&P-500 1527.46 + 62.99   1464.47 + 69.40  1395.07 - 14.10  + 75.81
RUT      574.01 -  0.76    574.77 - 29.04   603.81 +  5.93  + 41.14
TRAN    2688.15 + 64.32   2623.83 +258.54  2365.29 - 69.16  + 83.19 
VIX       25.81 +  2.14     23.67 -   .13    23.80 +  2.51  -  7.79 
Put/Ca      .42               .42              .39              .40
*******************************************************************

The Convergence Continues

Ahh, what an encouraging week we had.  And what better way to 
finish it out then by holding strong even as some took profits.
It was a broad-based market rally that saw a variety of astounding
events ranging from the post-interest rate hike rally to the 
inexplicable reaction to MU earnings shortfall.  Once again, on 
profit-taking Friday, both the NASDAQ and the Dow proved to be
resilient.  The past couple of weeks have been like stages in the 
Tour de France.  After the grueling incline we faced during 
expiration week, combined with back-to-back CPI and PPI, tired 
and waning, the market rested up over the weekend and prepared to 
face the next stage.  That next stage had an early challenge to
overcome:  Greenspan Pass.  Monday was a slow start as the NASDAQ
began to feel fatigued.  And on early Tuesday, it was involved in 
a scary pile up.  But skinned knees and all, it got back up from 
4455 and pedaled harder towards the FOMC meeting.  When it finally 
got there, the momentum was strong and the NASDAQ effortlessly 
hurdled Greenspan Pass.  Where was the Dow?  Quietly and steadily
coasting ahead of the pack, not even flinching at the FOMC's 25 
basis point hike.  The Dow's recovery of late has been vital to 
the market's health and brings back memories of last year's April
earnings run.

Two weeks ago, all we heard about was the amazing and rather 
frightening divergence between the NASDAQ and the Dow.  Had we
left those "old economy" stocks for dead, never to look back?  
Could we possibly continue on without them?  Of course not.  It
was playing out just as it had in 1999:  convergence was abound.
When we think about this it makes sense.  April earnings season
typically is that last real source of trading information for 
the broad market before the summer arrives.  Then, volume drops 
off, profits from the last nine months in the high-fliers are
taken, reallocation to more stable stocks occurs, and traders
head off to Long Island and Florida for golf and sun.  So now 
we are seeing the NASDAQ and the Dow join forces to make what 
is adding up to be an excellent earnings run.
    

       

Now, getting back to this past trading week, the Dow held a 
steady trend throughout the week, climbing 517 points from 10595
to Friday's close of 11112.  That was a 4.9% weekly advance and 
a gain of over 11% in the past two weeks.  Still, the Dow is 
down 3.3% on the year.  This catch-up game with the NASDAQ is 
the convergence in the making.  It's your turn to shine DJIA!  
Although trading was lighter than normal on Friday, the Dow 
should be applauded in that it had the strength to hold on to
its weekly gains in the face of profit-takers.  Closing down only 
7.14 points, it was relatively unchanged.  This sets a positive 
tone for the coming week as traders feel comfortable holding long
positions over the weekend.  Some noteworthy performers in the 
Dow were IBM(+5.38), HON(+3.38), and MMM(+3.88).  MSFT(-0.19) 
held up on prospects that they may settle their antitrust suit 
the government.

Naturally, the ride for the NASDAQ was a bit more volatile.  Can 
you believe that?  After trying in vain during Friday's early 
going to reach its all-time high of 5132, the NASDAQ topped out 
at 5078 and began coming off its highs.  It fell into the red 
briefly, only to find short-term support at 4900.  This bounce
was reassuring as no one really wanted to over do it.  From there,
it fought through the selling to close up 22.42, another very
bullish sign for next week.  The NASDAQ netted 164.90 points for
the week, up 3.4%.  Taking a look at the 10-day chart of the 
NASDAQ, you can see that the NASDAQ has put in double bottom at
4455, followed by two triple digit gains, and almost a third on
Thursday.  It certainly looks as if it poised for an April 
earnings rally.  


 

A potential catalyst to a continuation of this broad market 
rally will be the MSFT outcome.  MSFT formally offered an 11-hour 
settlement package to the government this weekend when the U.S.
District judge presiding over the case threatened to deliver a
verdict of his own on Tuesday if the two sides couldn't come to
terms.  Although MSFT's concessions, such as equal pricing 
practices, providing source codes to its old operating 
systems(OS), and splitting the browser from the OS, are all key 
points of contention for the government, the latest reports 
reveal skepticism among government lawyers that this case will 
be settled.  The implications of a settlement at this time would
be a great boost to the markets.  MSFT stock has been depressed
ever since the government's antitrust cloud began looming over
it.  It never really could sustain any of the advances that it 
has mounted in that time.  MSFT's recent breakout can be 
attributed to the HOPE that a settlement is near.  Now I 
emphasize hope.  Will this current stock level be sustainable if
the government balks at MSFT's recent offer?  Probably not.  
Many see this as a matter of time.  Whether the government settles
for concessions or breaks the company up, the fact that it is 
finally over may provide upside to the market as MSFT steps up 
into its traditional leadership role again.  It may be MSFT or 
micro-MSFTs, either way it will help INTC in leading both the 
NASDAQ and the Dow.    

While we are on the topic of government intervention in the 
markets, let's move to the FOMC.  Getting through the FOMC 
meeting last Tuesday was important for the markets.  As most 
had expected, they raised both the Fed Funds rate and the 
discount rate by 25 basis points, or 0.25%.  Even though this 
was the expectation, the NASDAQ slid that day to retest that 
sub-4500 level.  We see that even a slight degree of uncertainty 
can heat up the selling in today's markets.  Keep that in mind.  
So what is the Fed trying to do?  Cool down the economy or the 
stock market?  Now this debate can and will go on forever and 
Greenspan will be hailed and cursed all in the same breath.  
But, it is important to remember a few things about the great 
interest rate debate.  Aside from higher crude prices, which I 
will get to in a moment, inflation has indeed remained tame.  
Some will even say non-existent.  Productivity continues to rise 
and this seemingly higher demand in the economy continues to be 
met with ample supply.  Most importantly, it requires six to nine
months for a rate hike to actually begin affecting the economy.
Certainly, it affects borrowing and lending today, but the
macroeconomic repercussions take a little longer.  

Taking a glance at the bond market, the 30 year bond has been 
trading below 6.0%, which is really quite amazing.  It has been
rallying with the stock market and has taken this recent rate 
hike with a grain of salt.  Yet, on Thursday, the minutes from 
the February FOMC were released, revealing that some members 
were urging for a 50 basis point hike a month ago.  This did 
create a ripple in the bond market as traders felt concern 
over future FOMC action.  Bonds closed down Friday at 6.0%.  
Moderation is the key in this interest rate debate.  It would
seem that most investors and traders would agree with this mantra.
A 50-point basis point move at anytime would prove to be far too
unnerving for investors and would only further polarize the pro- 
and anti-Greenspan camps.  With this latest move, it appears that
the Fed wants to take this 8 year long skyrocketing flight and 
land it as softly and gently as possible.  Maybe even a landing
that we can sleep through, but how often does that happen?

Looking forward to the next week, there are a variety of factors 
that will be prevalent in the market.  Being the last trading 
week of the quarter, fund managers will be participating in 
"window dressing."  This is the practice of investing all or 
most of the cash that these funds have on the sidelines.  Fund 
managers do this so that they are fully invested on their 
quarter-end books.  Investors typically don't like to see their
investments in cash, especially in a bull market.  Considering 
that TrimTabs.com estimated $21.9 bln flowed into all equity 
funds over the week ending March 22nd, we could see a buying fest.  
It is these strong fund flows that underpinned the market this 
week.  Momentum plus high liquidity equals rally.

On Monday, OPEC members will be meeting to decide the fate of
global oil production as current output agreements expire at the 
end of the month.  Can you say collusion?  They are looking to 
increase the supply by 1.5 mln barrels, yet if there is a 2.0 mln
barrel increase, the price of crude may come down even more.  
Either way, it means a cheaper price at the pump.  FedEx already
announced this week that it will be adding a fuel surcharge to 
shipping prices.  Lower oil prices mean less argument for 
inflation.

Next week will be a continuation of April earnings euphoria.  
Based on the positive prospects for the likes of GE, INTC, and 
HWP, this could be the beginning of a formidable rally.  

Matt Russ
Research Analyst 


***********
JIM'S PLAYS
***********

There is no Jim's Plays article this weekend.


************
Stock News
************

Trading Volumes Drive Online Brokers Higher
By Cindy Christ

Shares in online brokers were on fire Friday, leading the
Nasdaq as the best-performing sector.

Notice of better-than-expected results from a Web-based
investment bank and an upgrade for two well-known Internet
brokers helped spark the rally, which sent the online
brokerage sector up 7.4 percent intraday.

After the close Thursday, Wit Capital Group (WITC), parent of
online investment banking group WitSoundView, said it expects
results for the first quarter ending March 31 to
"significantly" outperform analysts' estimates.

The company said that first-quarter revenues would more than
double projections, exceeding $85 million, and that it
would turn a profit for the first time.

Wit Capital said analysts expected revenues in the range of
$47.6 to $54 million. Consensus projections by First
Call/Thomson Financial projected a 5-cent loss for the
quarter, up from a loss of 67 cents a year ago.

"The issuing and trading markets for Internet and technology
stocks have been very strong in the first quarter, and our
results will reflect both market conditions and the accretive
benefits of the SoundView Technology Group merger," said Wit
SoundView co-CEO Ron Readmond.

In January, Wit Capital completed its merger with technology
-focused investment bank SoundView to provide its clients with
better access to IPOs and research.

Wit Captial Group expects to report earnings the week of April
17.

In a research alert Friday, U.S. Bancorp Piper Jaffray analyst
Stephen Franco raised his revenue and per-share earnings
outlook for Ameritrade Holding Corp. (AMTD) and E*Trade Group
on (EGRP) the strength of record trading volumes.

Trading volume on the New York Stock Exchange and Nasdaq in
March is tracking ahead of all previous records, with average
weekly volume of 8.6 billion shares, up 36.6 percent from the
last quarter, according to Robertson Stephens.

Franco rated Ameritrade a "buy" and upped his second-quarter
revenue view to a loss of 4 cents a share from a loss of 14
cents. Franco lifted his revenue outlook for Ameritrade to
$151 million from $119 million.

In addition, Franco boosted his rating on E*Trade to a "strong
buy" and raised his second-quarter earnings forecast to a loss
of 15 cents a share from a loss of 21 cents. Franco said
second-quarter earnings for the No. 2 online broker would
total $350.7 million versus the previous estimate of $296
million.

Shares in Ameritrade closed higher, up $2.31, or 10.5 percent,
at $24.25.

E*trade was among the Nasdaq's most active issues with nearly
22 million shares changing hands. EGRP jumped $4.13, or 14.8
percent, to close at $32.

In an interview with CNBC financial television, Franco said
the whole sector is primed for take-off.

"This space has been really hot now for two straight
quarters...momentum is starting to come back into the sector,"
he said.

Friday's strong performance follows a similar move in
traditional brokerages earlier this week, after a number of
the Street's biggest firms reported results that far surpassed
Wall Street estimates.

The rosy industry outlook lifted shares in online brokers
across the board.

No. 1 online broker Charles Schwab (SCH), which is up about 22
percent over the last month, jumped $3.69, or 6 percent, to
$64.94.

TD Waterhouse (TWE) added $1.38, or 6.4 percent, to $22.88.
National Discount Broker (NDB) gained $5.88, or 11.6 percent,
to $56.69. DLJ Direct (DIR) rose $1.25, or 8.7 percent, to
$15.56.


*******
Ask OIN
*******

There is no Ask the Analyst article this weekend.


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

As of Market Close - Friday, March 24, 2000 

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

DOW Industrials   10,850  11,250  11,113    Neutral   3.16
SPX S&P 500        1,410   1,475   1,527    BULLISH   3.21
OEX S&P 100          780     800     833    BULLISH   3.21
RUT Russell 2000     510     530     574    BULLISH   2.24
NDX NASD 100       4,000   4,150   4,692    BULLISH   2.24
MSH High Tech        975   1,000   1,150    BULLISH   2.24

XCI Hardware       1,480   1,510   1,770    BULLISH   2.24
CWX Software       1,430   1,670   1,610    Neutral   3.21
SOX Semiconductor  1,130   1,360   1,288    Neutral   3.21
NWX Networking     1,000   1,040   1,170    BULLISH   2.24
INX Internet         770     800     917    BULLISH   3.09

BIX Banking          520     600     580    Neutral   3.16
XBD Brokerage        450     480     582    BULLISH   2.31
IUX Insurance        520     600     572    Neutral   3.16

RLX Retail           900   1,000     933    Neutral   3.16
DRG Drug             340     380     341    Neutral   3.16
HCX Healthcare       700     750     686    BEARISH   3.24  **
XAL Airline          110     140     138    Neutral   3.10
OIX Oil & Gas        265     300     276    Neutral   3.16


Posture Alert    
The market put in some solid gains this past week, but Friday's 
fade at the end of the day brought some of the major indexes back 
below key levels. Brokerage stocks continued their stellar pace, 
as they added another +4.39% gain Friday to their already 
phenomenal week. Johnson & Johnson's hit on Friday hurt the 
Healthcare Index, which closed down -2.86%. As such, that sector 
has been downgraded to Bearish from Neutral.



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

Sunday, March 26, 2000

Red Hat, Best Buy, and More Expectations!
 
The market turned in a very stellar week, as both blue chips and 
technology stocks enjoyed solid gains. Many sectors across the board 
added to already big-gains, and many beaten up sectors found new life. 
This solid breadth across the board is extremely positive, especially 
heading into April. The earnings season will be in full effect in just 
two weeks, but we have already gotten positive news from numerous 
companies, ranging from bellwether General Electric to internet 
brokerage firm Wit Capital. This may be a sign of more good things to 
come! 

Below is a small list of equities (that should be reporting their 
earnings this next week) and our Pinnacle Index for those particular 
stocks. The Pinnacle Index is a proprietary product that determines 
current market sentiment and expectations for underlying equities and 
indexes, which is based upon speculation in the option markets. Also 
included are their expected earnings, the infamous whisper number (if 
available), and their estimated earnings release date. 

What we look for are liquid stocks/options that garner a lot of 
interest from the investment community. Most of the issues are high 
tech, and are thus more aggressive. We then filter out many of the 
equities, only to show stocks with excessive optimism or pessimism. 
From a contrarian standpoint (a high number is a good indication of 
extreme optimism, and a low number is a good indication of extreme 
pessimism) you should buy when its low, and sell when its high. Last 
quarter, we highlighted some stocks with a Pinnacle Index that were 
stratospheric (as high as the upper 20's). Needless to say, these 
stocks had so much pent-up enthusiasm, that after their earnings, they 
tanked. It is the old adage, buy the rumor - sell the news. There were 
also numerous companies with a Pinnacle Index less than one. However, 
once these companies came out with their bad quarter, the stocks 
rallied due to the oversupply of pessimism.  

If your favorite stock is not listed, the most common reasons are: 1) 
there are no options traded on the underlying equity 2) lack of 
interest by option speculators in the security 3) lack of quality 
information 4) company already pre-released 5) insufficient data. Also, 
as we get closer to the heart of earnings season, the list will expand 
dramatically to reflect companies whose earnings are due out shortly.


Company          Symbol  Pinnacle   Expected   Whisper#:  Estimated
                         Index(PI): Earnings:             Date*:

Best Buy         BBY       5.61       +.73       +.75       3/28
Cableton Systems CS        9.77       +.14       +.16       3/29
ImClone Systems  IMCL      3.20       +.01       +.02       3/30
RedHat           RHAT      0.97       -.02       -.01       3/27
Walgreen         WAG       2.36       +.23       +.24       3/27

Now based upon sentiment analysis, Best Buy and Cabletron Systems are 
both highly optimistic. Not only are their whisper numbers 2 cents 
above expected, but the Pinnacle Index for both of these securities are 
great, indicating a potential let down after earnings. RedHat is 
considered a low expectation stock, and has a good chance of rallying 
should the company come-in or beat expectations.   

Now below is a quick list of short interest for these companies that 
are due to report. It is always helpful to know that if a short squeeze 
were to happen, how many shares are potentially at threat. 

                                                                               
Short Interest
             Current Month*  Previous Month  % Change  Avg Daily Volume
Best Buy        3,483,224      1,880,778       +85.2      1,913,365  
Cabletron       2,390,139      1,988,514       +20.2      3,511,025
ImClone         2,288,031      2,316,084        -1.2        756,372
Walgreen       12,030,536     10,943,202        +9.9      2,328,450          
RedHat          4,332,339      4,133,809        +4.8      1,961,746

*NYSE as of 3/15. NASDAQ as of 2/15.


BULLISH Signs: 

Corporate Earnings:
Major corporate earnings continue to come out strong and ahead of 
analyst expectations. General Electric is the latest bellwether to give 
positive comments regarding earnings.

Short Interest:
Short interest continues to climb as quickly as the market. The short 
interest on the NYSE increased +5.7% to 4,110,510,698 shares on March 
15. This bearish level would suggest further upside potential.

Interest Rates (5.984):
The current yield is in bullish territory.


Mixed Signs: 

Volatility Index (25.81):
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. Currently, it stands in the middle of its trading range.


BEARISH Signs:

Pre-Release Season: 
With April just around the corner, we have the beginning of pre-release 
season. Over the next several 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, followed by 
MicroStrategy and its 140-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
Benchmark                        (3/24)

Overhead Resistance (830-860)     7.14    

OEX Close                       832.65

Underlying Support  (800-825)     1.22 
Underlying Support  (770-795)     0.82

What the Pinnacle Index is telling us:
Based on Thursday's sentiment, we would expect some profit taking to 
occur very shortly, as the sentiment on overhead seems too bullish.


Put/Call Ratio                  Friday
Strike/Contracts                (3/24)

CBOE Total P/C Ratio             n/a
CBOE Equity P/C Ratio            n/a
OEX P/C Ratio                    n/a


Peak Open Interest (OEX)
                     Friday
Strike/Contracts     (3/24)

Puts                700 / 9,113
Calls               830 / 4,363    
Put/Call Ratio         2.08


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 24, 2000                          25.81   



*************
COMING EVENTS
*************

For the week of March 27th, 2000

Monday

Existing Home Sales     Feb     Forecast: 4.75 M  Previous: 4.59 M


Tuesday

Consumer Confidence     Mar     Forecast:  140.0  Previous:  141.8


Wednesday

New Home Sales          Feb     Forecast:  875 K  Previous:  882 K


Thursday

GDP - Final             Q4      Forecast:   6.9%  Previous:   6.9%
GDP Chain Deflator      Q4      Forecast:   2.0%  Previous:   2.0%
Initial Claims          03/25   Forecast:   270K  Previous:   266K
Help Wanted Index       Feb     Forecast:    N/A  Previous:     89


Friday

Personal Income         Feb     Forecast:   0.3%  Previous:   0.7%
PCE                     Feb     Forecast:   0.8%  Previous:   0.5%
Chicago PMI             Mar     Forecast:  56.7%  Previous:  56.7%
Factory Orders          Feb     Forecast:  -1.0%  Previous:  -1.1% 
Michigan Sentiment      Mar     Forecast:  108.0  Previous: 107.7P

Week of 04/03

04/03 Auto Sales
04/03 Truck Sales
04/03 NAPM Index
04/03 Construction Spending
04/04 Leading Indicators 
04/05 NAPM Services
04/06 Initial Claims
04/06 Wholesale Inventories
04/07 Nonfarm Payrolls
04/07 Unemployment Rate
04/07 Hourly Earnings
04/07 Average Workweek
04/07 Consumer Credit



*************
WOMAN'S WORLD
*************

Is The Treasury Trying To Counter The Fed?
By Mary Redmond
 
Two important events occurred in the last couple of weeks which
impacted interest rates.  The Federal Reserve raised short term 
rates by a quarter point and the Treasury enacted a buyback of 
approximately $1 bln worth of long term bonds.  It is possible 
that the two different departments have a different perspective 
on the current economic outlook.

First, lets take a brief look at the different types of rates.
The Federal Funds rate is the rate charged for overnight 
borrowing by banks.  The discount rate is a rate of interest that
district banks charge members.  The prime rate is the rate that 
banks charge their prime customers, and is supposed to be the 
lowest rate at which banks can profit.  Then we have money market 
fund rates, corporate bond rates, and municipal bond rates.  All 
of these are dependent to a certain degree on the rate which is
considered risk free, the 30 year Treasury rate.  It is risk free
because the government can always levy taxes for the money it 
needs.

The prime rate rose this week to 9%, the Fed Funds rate to 5.94%, 
the discount rate to 5.5%, while the 30 year bond rate dropped 
below 6%.  While we have had inverted yield curves before, it has 
not been for the same reasons.

The current budget projects that the national debt may be
eliminated by 2013.  These estimates are optimistic and many 
factors such as the rising price of medicare might impact the 
actual outcome.  However, Treasury Secretary Summers has stated 
that reducing the debt "reloads the fiscal cannon" so the 
government can respond better in more difficult times.

At the same time, Fed Chairman Greenspan seems to be chronically
perturbed that the fast rate of economic growth will somehow lead 
to inflation, and so he continues to raise short term rates.  As 
a result, the spread between the prime rate and the 30 year bond 
rate is over 3 points, which probably can not continue forever.

The inverted yield curve is not necessarily dangerous, but it 
will be interesting to watch how this drama continues since it 
is making economic history.  The one problem some market analysts 
worry about is the possibility that the Fed may feel compelled to 
raise short term rates by enough to actually cause a recession.  
This could impact the "old economy" stocks more than the "new 
economy."  The financial stocks seem to be paying more attention 
to the lowered long term rates than the increasing short term 
rates.  

At Home went up five points this week partly due to data published
that they were one of the fastest growing internet portals during 
the month of February.  I think this stock may start moving again, 
after being stagnant for months.  My strategy was to buy At Home 
Jan 02 $30 LEAPS. 

Some investors utilize the strategy of writing short term, 
out-of-the-money(OTM) calls against their LEAPS.  If this strategy 
works out, the near term calls will expire worthless which 
reduces the price of the LEAPS.  The only potential disadvantage 
is a rapid move up in the stock, which could result in the LEAP 
being called away.
 
The key is that two year LEAPS have a very slow rate of time 
decay.  The implied volatility is much lower for a leap than the
implied volatility of the near term OTM calls.  Professionals 
rarely buy near term deep OTM calls.  They sell them to amateur 
speculators.  Near-term, deep OTM calls almost always expire 
worthless.  

I also wrote April $60 covered calls for $3 against Dell which I
purchased at $58.  I think this could be an easy way to make 10%
return in a month.  Dell showed strong support even when the 
Nasdaq dropped below 4500 briefly on Tuesday.  

CMGI had a great run up to $129 on Wednesday.  I sold my shares 
then bought back in because I think it may rally in April.  The
internet stocks did not have the spotlight this week.  Perhaps 
the Barron's article about the internet stocks they think are 
headed for the e-soup kitchen before the end of the year scared 
people away from the whole sector.  The article failed to mention 
the readily available supply of venture capital in today's markets 
and the alternative methods of corporate finance available to
developmental stage companies today.

The Nextlink skew spread I put on a couple of weeks ago by buying 
the July 100 calls at 25 and selling the July 110 calls at 19 is
working out as expected, as it looks as if the stock will easily 
be above 110 in July, which should give a profit of over 75% on 
the spread.  The only disadvantage of this type of spread is the 
fact that you have to put up 30% margin in cash which can tie up 
a lot of capital.

Last week I cited a statistic from a recent study which showed a 
99% correlation between cash flows to equity funds and the 
movement of the market.  For the week ended March 22, 
approximately $13.7 bln went in to mutual funds, the largest 
amount in over 4 years.  Here is the key:  For the first 
time since the first week in January 2000, investors started 
putting money back into blue chip funds.  $2.6 bln was deposited 
to large cap growth funds, helping to stimulate the Dow.  
Aggressive growth funds got their share, with $3.2 bln going in, 
and technology funds had a healthy inflow of over $3 bln.  Let's 
hope this trend continues, as it is paramount to a healthy, well
balanced rally.  The statistics are provided from AMG Data 
Services. 
 
Contact Support



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

There is no Traders Corner article this weekend.




**********

Some Random Thoughts on Trading
By Lee Lowell

I'd like to begin by addressing some questions and giving my
thoughts on various trading activities.  Someone e-mailed me about 
the role of market makers in stock option trading.  In my opinion
(and I hope I don't offend anyone too badly), the market maker 
system in stock and stock option trading is unfair and 
inefficient.  There is no outside participation involved with the
market maker system.  Let me explain.  If you're interested in 
buying ABC stock at $100 and the current market for the stock is 
$99 bid / $101 offer, you need to wait for the market maker to 
bring his offer down to $100 before you will even get your order
filled.  Even though your $100 bid is higher than the market 
maker's $99 bid, you still will not get filled until the market 
maker brings his offer down to $100.

When I was trading commodities as a market maker in the crude oil
options pit, our method of participation was/is totally different 
than trading stocks.  If the current market for a crude oil $30 
call is $0.50 bid / $0.55 offer, you can come in with a $0.52 bid 
and have that reflected as the best market out there.  The screens
would then look like this: $0.52 bid / $0.55 offer.  You would not 
have to wait for any market maker to bring down his/her offer to 
$0.52 in order to get your fill.  No matter who you are, if you 
have the best bid or best offer, your market will be reflected on 
the screens.  The market makers don't control the whole process 
like it's done with stocks and stock options.  This ensures equal
participation by all types of traders and leads to tighter markets 
which in turn decreases the slippage and decreases the monopoly 
advantage by the market makers.

It seems that the stock market makers have a good thing going for
themselves by controlling the markets.  I believe that this won't
last for too much longer.  With the advent of the new ECN's and 
electronic matchmaking, pit trading is on its way out over the 
next few years.  Time will tell.  My only advice for any 
frustrated stock and stock option traders is to just grin and 
bear it for right now.  Set your limit orders and don't chase 
the market.  If I have given any misinformation, I do apologize 
and I welcome any e-mails to let me know otherwise.

I have been flooded by e-mails with great questions, mostly asking 
about volatility.  I would just like to sum up a few words about 
my thoughts on the volatility effect in option trading.  I just
finished reading a small paperback by Jay Kaeppel called "The Four
Biggest Mistakes in Option Trading".  He makes a great point in 
his first chapter.  Most option traders put too much emphasis on 
trying to get their timing right on which way the underlying 
contract might move.  Getting your timing right is an essential 
part in option trading success, but if you don't do volatility 
analysis too, your strategy could backfire.  Once a trader has 
determined that the stock is going to go up, they institute the 
option strategy of "any old call option will do".  That's the 
mistake right there.  Are those call options trading at high or 
low implied volatility levels?

Here's how his example goes:  Let's say your bullish on two stocks 
that just made pullbacks, and you believe they've hit a bottom.  
You want to buy call options to take advantage of your timing 
method.  What's the implied volatility of each option you're
considering?  And how does that implied volatility compare to its 
past levels?  If both stocks are trading at $50, and you believe 
both will go up the same amount, which stock should you pick?  
That's where your volatility analysis will help.  If you want to 
buy the $60 call on each one with the same expiration, look at 
the implied volatility of each and then look at the price of each.  
If one costs $2 and the other costs $4, the choice is easy.  The 
reason why one is cheaper is because its implied volatility is 
lower.  Not only will buying the cheaper one cost you less money 
to begin with, but you will profit more on your call option if 
volatility starts to turn higher.  If you bought the more 
expensive one and volatility starts to drop, you could end up 
losing money even if the underlying stock moves in the direction 
that you predicted!

I want to expand a little more on the subject of "delta".  Every 
option has a corresponding delta that is a by-product of the 
Black-Scholes trading model.  All ATM options have a delta of 
0.50,  ITM options have a delta higher than .50 and OTM options 
have a delta lower than 0.50.  The first definition of delta tells 
us the chance of our option finishing in-the-money.  When an 
option is ATM, its strike price is the same as the price of the 
underlying stock at that moment in time.  If IBM is trading at 
$100, then the $100 call is ATM.  Now this $100 call will be 
either ITM or OTM on expiration day.  Therefore, the delta of 0.50 
is telling us that there's a 50% chance that it will expire ITM 
or OTM.  The IBM $50 call is ITM to begin with and has a 
hypothetical delta of 0.85.  This tells us that the $50 call has 
an 85% of expiring ITM.  The OTM IBM $125 call has a delta of 
0.10, so there's only a 10% chance of it finishing ITM.  

How can we use delta in our options trading?  That depends on your
degree of risk, speculation, and how much money you can afford.  
If you're going to take the super speculative route, then buying 
far OTM options with low deltas are for you.  You will probably 
lose 19 times out of 20, but if you hit a big one, you could be 
set for life.  If you're looking for an option which will closely 
mimic the moves of the underlying stock and that has smaller time 
decay, you should buy an ITM option.  This will cost less than 
buying 100 shares of the stock outright, plus you'll get the 
almost the same amount of movement that the stock makes.  Which 
brings us to the second definition of delta.

The delta of an option will also tell you how much the option 
price should move up or down in accordance with the underlying's
movement.  A delta of 0.80 tells us that for every $1 move in the
underlying, the option price will move $0.80.  If IBM moves from 
$100 to $101, a call option with an 0.80 delta will see its price 
move from $2 to approximately $2.75.  And if IBM moves from $100 
to $98, then this same call option will most likely go from $2 to 
$0.50.  

So I'd say that having a good grasp of how to interpret implied
volatility and knowing the delta of each option can give you a 
good advantage when trading options.  Not only will you be 
informed of whether you're buying an expensive or cheap option 
(based on past implied volatility levels), but you'll also know 
how much your option will react in conjunction with the moves in 
the underlying.

Good luck.

Contact Support



LAST WEEKS CHANGE FOR THIS WEEKS PICKS:
***************************************

Daily Results

Index      Last    Week
Dow     11112.72  517.49
Nasdaq   4963.03  164.90
$OEX      832.65   45.91
$SPX     1527.46   62.99
$RUT      574.01   -0.76
$TRAN    2688.15   64.32
$VIX       25.81    2.14

Calls              Week

YHOO      194.00   22.88  Entering last leg of the earnings run
EXDS      173.31   22.06  Trending with the Internets
NOK       221.75   21.88  Two weeks until the 4:1 split
SNDK      132.56   15.56  New, needs another split already
NT        141.25   12.50  Capitalizing on the new frontier
IBM       121.50   11.50  Entering breakout mode on Friday
SCH        64.94    9.94  A new $100 price target
ALTR       95.88    9.63  New, let the earnings run begin
ERICY     102.81    9.25  New, Board Of Directors meet Friday
INTC      139.06    9.19  Another solid week for this blue-chip
MFNX       98.06    8.19  New, taking advantage of fiberoptics
NITE       59.06    7.31  Online brokers are back in the spotlight
AOL        71.00    6.63  Takes the award for momentum this week
BAC        54.63    4.63  The Financials are back in play
HWP       142.38    4.38  Consolidating for the next move
RNWK       72.31    4.00  New, bullish short-term triangle play
SEG        71.00    2.25  Teetering near breakout, pushed by VRTS
XRX        26.81    1.00  Dropped, turned on us mid-week
IDPH      119.00    0.06  Dropped, time to take your profits
DELL       56.44    0.00  Even-steven, but poised to go higher
RATL       86.75   -1.75  More patience is required
BMCS       52.81   -2.25  Nearing the bottom of the channel
MRVC      127.00   -5.88  Dropped, better opportunities
CHKP      218.50  -17.00  Dropped, Friday rollover sealed fate

Puts

PSIX       37.81  -11.94  New, acquisition angers investors
CKFR       61.19   -9.00  Nearing support, but no signs of life
ISLD       76.00   -6.63  Weak-handed buyers losing the battle
GTW        56.25   -2.69  New, possible earnings shortfall
CPQ        28.63   -2.56  Writing is on the wall for earnings
RHAT       60.50   -2.38  Little interest ahead of earnings
FON        59.25   -0.56  Entry point or exit time??
EK         57.13   -0.31  Dropped, it's too busy piddling around



STOCKS ADDED TO THE PICK LIST
*****************************

Calls

ALTR  - Altera Corp 
SNDK  - SanDisk Corp. 
MFNX  - Metromedia Fiber Network
ERICY - LM Ericsson Telephone Company 
RNWK  - Real Networks, Inc.


Puts

PSIX - Psinet Inc. 
GTW  - Gateway Inc. 


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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 
reliable but is not guaranteed as to accuracy or completeness.
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              3-26-2000  
Sunday                        2 of 4


***************************
PICKS WE DROPPED THIS WEEK
***************************

Remember that historically, when we drop a pick it will go up 
10 to 15% the very next week. It is part of Murphy's Law.
Just because we drop a stock as a pick does not mean we are
advocating a "sell" on any position you have. We are simply
dropping our recommendation as a new play. Existing plays
can and do continue on and are usually profitable.


CALLS

IDPH $119.00 (+0.06) After the $15.66 (13.5%) gain on Wednesday, 
there was lots of optimism IDPH would again make a charge for 
overhead resistance at $136.31.  But that wasn't to be the case 
despite the continued surges on the Nasdaq.  Instead IDPH 
couldn't hold the 30-dma level and proceeded to slip lower on 
Friday.  The momentum for this Biotech to recover to its full 
potential in the near-term seems to have dissipated.  IDPH is 
just too comfortable at the $120 level for us to keep it as a 
viable call play, but we did enjoy the ride up from $100. 

CHKP $218.50 (-17.00) Just like we said, CHKP was rolling over
late Thursday.  On Friday morning the software company dropped
near the $210 support level, and bounced once again.  CHKP did
penetrate $230, but was unable to sustain any further momentum.
We are closing the books on this one due to the lack of any 
follow-through buying.  Early Friday afternoon CHKP rolled over
and finished the day down -$0.50.  It closed just above $215,
an intraday support level, and could go either way from here.
Not much news this week to help move the stock but the rally in
the Nasdaq has left our play waiting at the alter.  We did very
well in the early going with CHKP, gaining over 43%, however
it's now time to move on.       

MRVC $127.00 (-5.88) Traders seem to have lost interest in MRVC 
this week.  After rebounding nicely from Tuesday's low, the 
stock has become range bound between 120 and 135.  MRVC has lost 
momentum as volume has dried up and the stock drifts along.
Some traders are suggesting that the Semi's may come under 
pressure next week with the announcement by IBM Friday.  IBM is
introducing a family of chips that will transfer TV sets into
fully interactive appliances with Internet capabilities.  We 
don't want to wait around to see what becomes of the IBM
announcement, there are other opportunities that await.

XRX $26.81 (+1.00) Every now and then, a play goes immediately 
in the wrong direction right from the start.  After moving up 
Tuesday and closing near its high on strong volume, we were 
looking for a breakout over $30.  Breakdown is more like it.  
It proved to be a continued level of resistance instead of a new 
level of support.  Murphy is alive and well even in a bullish 
trend.  There is no news to explain the movement, just continued 
descent on declining volume since picked.  While XRX looks to 
be turning itself around, investors aren't ready to embrace 
the issue yet despite their renewed vigor in the inexpensive 
printer market.


PUTS

EK $57.13 +0.88 (-0.31) We warned EK that any move upward and 
that would be it.  It was looking promising on Wednesday when 
EK was able to drop to $55.75.  With EK testing support it was
the perfect setting for a breakdown and some profits.  However 
our patience has run out.  It looks like EK has resorted to 
the same old story of piddling around the $56-58 range.  Until 
they can make a clean break with some backing, we have no desire 
to watch and wait for EK anymore.  It's time to move on to more 
exciting plays!  



STOCK SPLIT CANDIDATES 
***********************

Current Split Candidates:
 
YHOO - Yahoo!
IBM  - International Business Machines
INTC - Intel Corp
NT   - Nortel Corporations
SNDK - Sandisk
HWP  - Hewlett Packard
 
 
Split candidates that are not current plays:
 
EMC  - EMC Corp.
PHCM - Phone.com
FDRY - Foundry Networks
EBAY - EBay.com


STOCKS WITH UPCOMING SPLITS 
****************************

We don't list all splits available, only those we 
feel may have play possibilities. 

Symbol - Stock          Splits/Date  
KCP  - Kenneth Cole     3:2 03-27-00 ex-date 03-28 
LLTC - Linear Tech      2:1 03-27-00 ex-date 03-28
IQIQ - ViaLink          2:1 03-27-00 ex-date 03-28
SMTL - Semitool Inc     2:1 03-28-00 ex-date 03-29
USIX - USinterworking   3:2 03-28-00 ex-date 03-29
SRNA - SERENA Software  3:2 03-29-00 ex-date 03-30
JBL  - Jabil Circuit    2:1 03-30-00 ex-date 03-31
CRGN - CuraGen Corp     2:1 03-30-00 ex-date 03-31
COVD - Covad Comm       3:2 03-31-00 ex-date 04-03
QSFT - Quest Software   2:1 03-31-00 ex-date 04-03
ARBA - Ariba            2:1 03-31-00 ex-date 04-03
VERT - VerticalNet      2:1 03-31-00 ex-date 04-03
RADS - Radiant Systems  3:2 03-31-00 ex-date 04-03
RMD  - ResMed Inc       2:1 03-31-00 ex-date 04-03
CMVT - Comverse Tech    2:1 04-03-00 ex-date 04-04
ENGA - Engage Tech      2:1 04-03-00 ex-date 04-04
ASGN - On Assignment    2:1 04-03-00 ex-date 04-04
RDBK - Redback Networks 2:1 04-03-00 ex-date 04-04   
ADRX - AndrxCorp        2:1 04-03-00 ex-date 04-04
GRDN - Guardian Tech    2:1 04-03-00 ex-date 04-04
NYFX - NYFIX Inc        3:2 04-04-00 ex-date 04-05
CTCI - CT Comm          2:1 04-05-00 ex-date 04-06
VITR - Vitria Tech      2:1 04-05-00 ex-date 04-06
NAVI - NaviSite         2:1 04-05-00 ex-date 04-06
UTCI - Uniroyal Tech    2:1 04-05-00 ex-date 04-06
SBL  - Symbol Tech      3:2 04-05-00 ex-date 04-06
ABGX - Abgenix          2:1 04-06-00 ex-date 04-07
RIMG - Rimage Corp      3:2 04-07-00 ex-date 04-10
PWR  - Quanta Services  3:2 04-07-00 ex-date 04-10
LINK - Interlink Elec   3:2 04-07-00 ex-date 04-10
WDR  - Waddell & Reed   3:2 04-07-00 ex-date 04-10
HDI  - Harley Davidson  2:1 04-07-00 ex-date 04-10
DLK  - Datalink.net     2:1 04-10-00 ex-date 04-11
CELG - Celgene Corp     3:1 04-11-00 ex-date 04-12
MKTY - Mechanical Tech  3:1 04-12-00 ex-date 04-13
FNSR - Finisar Corp     3:1 04-12-00 ex-date 04-13
VIGN - Vignette Corp    3:1 04-13-00 ex-date 04-14
MFNX - Metromedia Fiber 2:1 04-17-00 ex-date 04-18
MLNM - Millenium Pharm  2:1 04-18-00 ex-date 04-19
CMRC - Commerce One     2:1 04-19-00 ex-date 04-20
AHAA - Alpha Industries 2:1 04-19-00 ex-date 04-20
CLAC - ClickAction Inc  2:1 04-20-00 ex-date 04-24
ELNT - Elantec Semi     2:1 04-21-00 ex-date 04-24
KSS  - Kohls Corp       2:1 04-24-00 ex-date 04-25
MCLD - McLeodUSA        3:1 04-24-00 ex-date 04-25
APH  - Amphenol Corp    2:1 04-25-00 ex-date 04-26
HH   - Hooper Holmes    2:1 04-26-00 ex-date 04-27
GE   - General Elec     3:1 04-26-00 shareholder mtg
SFO  - Sonic Foundry    2:1 04-28-00 ex-date 05-01
CYSV - Cysive Inc       2:1 05-08-00 ex-date 05-09
AXP  - American Exprs   3:1 05-10-00 ex-date 05-11
ALKS - Alkermes         2:1 05-12-00 ex-date 05-15
SIVB - Silicon Valley   2:1 05-15-00 ex-date 05-16
CMOS - Credence Systems 2:1 05-17-00 ex-date 05-18
SNE  - Sony Corp        2:1 05-19-00 ex-date 05-22
CXR  - Cox Radio        3:1 05-19-00 ex-date 05-22
AEG  - AEGON N.V.       2:1 05-30-00 ex-date 05-31
MOT  - Motorola         3:1 06-01-00 ex-date 06-02
MEDI - Medimmune        3:1 06-02-00 ex-date 06-05
NXTL - Nextel Comm      2:1 06-06-00 ex-date 06-07
CMB  - Chase Manhattan  3:2 06-09-00 ex-date 06-12 
ANEN - Anaren Micro     3:2 06-09-00 ex-date 06-12
AA   - Alcoa            2:1 06-09-00 ex-date 06-12
RMBS - Rambus           4:1 06-14-00 ex-date 06-15
NXLK - Nextlink         2:1 06-15-00 ex-date 06-16
EXDS - Exodus Comm      2:1 06-20-00 ex-date 06-21

For a complete list of all the coming splits check out the
"split calendar" on the side of the online edition newsletter
page.



********************
THE PLAYS OF THE DAY 
********************

With all the great plays each week we can never decide
on just one so take your pick. 


Call plays of the day:
**********************

IBM - Int'l Business Machines $121.50 (+11.50)

See details in sector list

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

****

AOL - America Online Inc. $71.00 (+6.63)(+5.63)

See details in sector list

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


Put play of the day:
********************

CPQ - Compaq Computer Corp. $28.69 (-1.56)

See details in put list

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


*************
DEFINITIONS
*************

SL  = Suggested stop loss. Sell if bid breaks this price.
OI  = Open Interest - the number of open contracts outstanding.
TP/P= True premium or Time premium
RRR = Risk/Reward/Ratio
ITM = In the money
ATM = At the money
OTM = Out of the money
ADV = Average Daily Volume
MTD = Move to double - amount stock must move to double option price
                         in one week. ONE WEEK MOVE ONLY !

Numbers within ( ) are the amount of change for the week.
Numbers within ( ) may be designated with PxW, like P3W, prior 3
weeks

The options with a "*" by the strike price are our choices from the 
group. If the stock moves as expected we feel they have the best 
chance to substantially increase or double in price with the best
risk/reward ratio compared to the other options for the same stock.
You must determine if they fit your risk profile for time and price.

Analysts ratings: 1-2-3-4-5 
Analysts who follow each stock rate it and these rating are 
accumulated and displayed as follows;

Position 1 = number of analysts recommending "strong buy"
Position 2 = number of analysts recommending "moderate buy"
Position 3 = number of analysts recommending "hold" or "neutral"
Position 4 = number of analysts recommending "moderate sell"
Position 5 = number of analysts recommending "strong sell" 

Example rating 5-3-1-0-0 would be 5 "strong buys", 3 "moderate buys",
1 "hold" recommendation.

RISKS of SELLING PUTS:
The risk of selling naked puts is always the possibility
of a catastrophic event that drops the stock below the 
strike price and could result in the stock being PUT to you.
Always protect yourself with a "buy to cover" limit order
to take you out before this can happen.



***********
CALLS PLAYS
***********
Hardware
***********

INTC - Intel Corporation $139.06 (+9.19)(+9.69)

Intel Corporation designs, develops, manufactures and markets 
computer components and related products at various levels of 
integration. Intel's principal components consist of silicon-
based semiconductors etched with complex patterns of transistors. 
The Company's major products include microprocessors, chipsets, 
embedded processors and micro-controllers, flash memory products, 
graphics products, network and communications products, systems 
management software, conferencing products and digital imaging 
products.  Intel sells its products to original equipment 
manufacturers (OEMs) of computer systems and peripherals; PC 
users (including individuals, large and small businesses and 
Internet service providers) who buy Intel's PC enhancements, 
business communications products and networking products.

Once again, INTC had some profit-taking on Friday, and rightfully 
so.  Traders took some money off the table to fund their weekend 
fun.  Yet, this advance is far from over.  INTC really has stepped 
up to take on a leadership role for both the NASDAQ and the Dow.  
In the news, INTC agreed to pay $450 mln for Basis Communications, 
making this the 14th acquisition in the communication industry 
in approximately a year for INTC.  In doing so, INTC has created 
for itself a major inroad to the digital subscriber line(DSL) 
market, and this acquisition could provide closer relations with
Alcatel, the world's leading supplier of asymmetric-DSL(ADSL) 
equipment.  Basis itself has ties with Alcatel's Microelectronics, 
the chip division of Alcatel.  This most recent move shows INTC's
growing interest in the networking realm.  And in addition to last
week's acquisition of Denmark's GIGA A/S, manufacturer of network
components used for optical networking and directing internet
traffic, INTC is innovatively expanding its presence into one of
the fastest growing technology sectors.  We shall see in the 
coming quarters how nimble this chip giant really has become.

As for this recent tear that INTC has been on, we feel that the
mild pullbacks of the last two days certainly are good entry 
points into a bullish run.  Friday's close under its short-term 
support of $140 may result in a slight pullback next week to 
a firmer support level of $135.  So watch to see the market's 
sentiment next week, which is the final trading week of the 
quarter, and let's see if INTC re-establishes its $140 support
or allows for sweeter entries in the mid-$130's.    

BUY CALL APR-135*INQ-DG OI=11867 at $12.75 SL=10.00
BUY CALL APR-140 INQ-DH OI= 6273 at $ 9.38 SL= 7.00
BUY CALL APR-145 INQ-DI OI= 4195 at $ 6.88 SL= 4.50
BUY CALL MAY-150 INQ-EJ OI= 2545 at $ 7.88 SL= 5.50

Picked on Mar 19th at    $129.88   P/E = 66
Change since picked        +9.19   52-week high=$145.38
Analysts Ratings     20-13-6-0-0   52-week low =$ 50.13
Last earnings 01/00    est= 0.63   actual= 0.69
Next earnings 04-12    est= 0.68   versus= 0.57
Average Daily Volume = 26.03 mln

/charts/charts.asp?symbol=INTC

****

HWP - Hewlett Packard $142.38 (+4.38)(-8.94)

As the #2 computer company worldwide, HWP provides computers,
imaging and printing peripherals, software, and computer-related
services.  Taking full advantage of the tremendous international
growth, more than half of the company's sales come from outside
the U.S.  HWP is in the process of restructuring itself as an
Internet specialist, providing Web hardware, software, and
support to corporate customers.  In pursuit of that goal, the
company recently spun off its test and measurement and medical
electronics businesses as Agilent Technologies (A).

At first blush, it wasn't the most stellar week for HWP.  As the
major indices marched significantly higher, the computer maker
struggled to tack on a paltry $4.38.  While buyers weren't able
to push through resistance at $150, it was encouraging to see
support hold at $140.  With volume dropping south of 3 million
shares over the past 3 days, there just hasn't been enough
conviction to get HWP moving higher.  After the strong bounce at
$124 a little over a week ago, HWP was due to take a break in
preparation for earnings season.  Anticipation of solid earnings,
reinforced by positive comments from the company (see below) is
keeping investors from rushing to sell.  Although earnings are
not scheduled until mid-May, HWP is a split candidate at these
levels (above $140), and with nearly 5 million shares authorized
and only 1 million outstanding, an announcement could come with
earnings or anytime beforehand.  With solid support at $140, 
any return to this level would make for a nice entry, but more
conservative investors may want to wait for a convincing
break above resistance at $150.  Breaking out of this
consolidation will require a resurgence in buying volume, so
wait for confirmation from this indicator before opening new
positions

On March 16th, HWP confirmed that it is on track to make its
revenue growth goals of 12-15 percent and said that its stock
is undervalued due to confusion about how the recent spinoff
of Agilent should figure into the valuations.  Speaking on
Friday, CEO Carly Fiorina reiterated the above statement,
attributing the growth to improvements in its Internet
operations, and software and computer sales.

BUY CALL APR-140*HWP-DH OI=2180 at $11.88 SL= 8.75
BUY CALL APR-145 HWP-DI OI=2255 at $ 8.38 SL= 6.00
BUY CALL APR-150 HWP-DJ OI=1867 at $ 6.75 SL= 4.75
BUY CALL MAY-145 HWP-EI OI= 219 at $13.50 SL=10.00
BUY CALL MAY-150 HWP-EJ OI=1000 at $11.13 SL= 8.25

SELL PUT APR-130 HWP-PF OI=1300 at $ 2.88 SL= 4.50
(See risks of selling puts in play legend)

Picked on Mar 16th at   $133.00     P/E = 51
Change since picked       +9.38     52-week high=$155.50
Analysts Ratings    10-12-7-0-0     52-week low =$ 65.13
Last earnings 02/00   est= 0.77     actual= 0.80
Next earnings 05-17   est= 0.82     versus= 0.88
Average Daily Volume = 3.64 mln

/charts/charts.asp?symbol=HWP

****

DELL - Dell Computer $56.44 (+0.00)(+5.19)(+5.00)

Dell Computer is the world's #1 direct-sale computer vendor and 
one of the world's top PC makers.  Therefore it's understandable 
that the company designs, develops, manufactures, markets, 
services, and supports a variety of computer systems including 
desktops, notebooks, workstations, network servers, and storage 
products.  Dell's clients include the government, corporations, 
the medical and education industries, as well as the individual 
consumer.  Founder Michael Dell is still the CEO and maintains 
a 14% stake in the company.

Dell's future shines brighter as time marches on.  Many analysts 
are expecting the company to report an upside surprise in early 
May resulting from higher profit margins and sales derived from 
new appliance servers.  This opinion in itself is sustaining the 
stock's powerful momentum.  Plus the re-calibrated EPS numbers 
put DELL in a more realistic light.  This means "the stock 
could be perceived as cheap relative to other category leader 
technology stocks" according analyst Ashok Kumar of Piper 
Jaffray.  Also the company's new Internet Partners Division, a 
group focused on providing solutions for ISPs, ASPs, and Web 
hosting firms, is giving analysts and investors confidence this 
box-maker is evolving with the times and finding ways to offset 
sluggish PC sales.  Accordingly 31 out of 33 analysts following 
the stock maintain either a Buy or Strong Buy recommendation.  
And yes, this is the stock that dived to a low of $31.38 in 
February following a devastating 4Q.  This week DELL 
accomplished a couple of things.  On Monday the stock set 
another 52-week record at $59.06, before edging higher to 
$59.69 in Wednesday's session.  However this current level is 
proving to be fierce resistance so conservatively, you may want 
to wait for a move through this mark.  Let's not mis-interpret 
the sentiment.  DELL is strong and we're expecting a challenge 
of $60.  Currently it has firmly tethered a near-term support 
level at $57 and $58.  It's just that some of you may not want 
to ride in a tight consolidation channel waiting for a potential 
breakout.  

For those following this momentum play you know there was a slew 
of analysts' comments at the beginning of March.  Well, here's 
another one to add to the list.  Piper Jaffray once again 
reiterated their Strong Buy rating and $65 price target this 
week.  In company news, Dell announced a price reduction on 
select units of its Precision Workstation.  According to Dave 
DuPont, senior marketing manager, Dell Precision Workstations, 
"The inherent advantages of Dell's direct model, combined with 
our ability to pass along component cost savings, enable us to 
offer the newest R-DRAM workstations at prices lower than most 
of our competitors' recent S-DRAM-based workstations".

BUY CALL APR-50*DLQ-DJ OI=21757 at $8.88 SL=6.25
BUY CALL APR-55 DLQ-DK OI=15755 at $5.25 SL=3.25
BUY CALL APR-60 DLQ-DL OI=21387 at $2.63 SL=1.25
BUY CALL MAY-60 DLQ-EL OI=14175 at $4.50 SL=2.75
BUY CALL MAY-65 DLQ-EM OI= 5341 at $2.75 SL=1.25

Picked on March 9th at   $50.44    P/E = 93
Change since picked       +6.00    52-week high=$59.69
Analysts Ratings    14-17-2-0-0    52-week low =$31.38
Last earnings 12/99   est= 0.15    actual= 0.16
Next earnings 05-18   est= 0.16    versus= 0.16
Average daily volume = 34.0 mln

/charts/charts.asp?symbol=DELL

****

IBM - Int'l Business Machines $121.50 (+11.50)

IBM is the world's leading provider of computer hardware with 
products ranging from PCs and notebooks to mainframes and 
network servers.  "Big Blue" also makes computer software and 
stands only behind the giant, Microsoft (MSFT) in ranking. 
Currently IBM is expanding its technology focus to include 
the vast opportunities of Internet business.

What we've got here is a news-driven momentum play that perhaps 
can muster enough endurance to make charge into earnings too! 
It's generally understood the recovering market has a direct 
impact on momentum, but the whirlwind of good news' events 
surrounding IBM is a major influence for this play (see below 
for details).  Right now let's take a look at the play from a 
technical standpoint.  First, the stock's steady pattern of 
higher-lows this month is a bullish indication that it can run 
strong in the short-term.  Then after IBM held levels above 
$110, which was a mark of stubborn resistance, we jumped on the 
bandwagon.  As the week progressed we noted the opportunities 
for entry points at lows near the 50-dma ($112.58).  On Friday 
IBM made a charge and gave us further confirmation it was on the 
upward track.  IBM conquered the technical challenge at the 200-
dma and crushed the opposition at $115.  Here's where the more 
conservative made their entrance.  Intraday support clearly 
established itself at $118 and $120 on Friday, but don't open 
new positions at this level without upward confirmation.  
Overall our expectation is for IBM to power higher on momentum 
aided of course by a rallying market and more positive news 
events.  Tentatively IBM is scheduled to report in about three 
weeks on April 17th.

IBM demonstrated to investors this week that it won't be left 
out of Internet business.  The company announced it's forming 
partnerships with other big players like Cisco, Nokia, and Intel 
to design and develop product & services to link wireless phones 
and computers to the Internet.  Analysts commented that this 
strategic move positions IBM to be the "glue" holding the 
endeavor together.  And in the B2B arena, IBM is teaming with 
CommerceQuest to deliver five e-marketplaces to customers in a 
broad range of industries with 60 more in the pipeline.  There's 
no doubt either that IBM is a leader in hardware as they 
continue to forge ahead with new developments.  On Tuesday they 
announced a new memory-chip that can send twice as much data to 
a microprocessor than currently exists.  Plus, they've just 
joined forces with TDK to develop more solutions for the award-
winning ThinkPad family and will soon release a wide collection 
of servers within their Netfinity line.  And on Friday, IBM 
announced the development of a next-generation system-on-a-chip 
for television set-top boxes to bring the Internet into the 
living room.  

BUY CALL APR-115 IBM-DC OI=11328 at $8.75 SL=6.00
BUY CALL APR-120*IBM-DD OI=23801 at $5.88 SL=4.00
BUY CALL APR-125 IBM-DE OI=13395 at $3.75 SL=2.00
BUY CALL MAY-120 IBM-ED OI= 3495 at $9.00 SL=6.25
BUY CALL MAY-125 IBM-EE OI=  462 at $6.88 SL=5.00

Picked on March 21st at $113.50    P/E = 29
Change since picked       +8.00    52-week high=$139.19
Analysts Ratings     14-9-3-0-0    52-week low =$ 81.50
Last earnings 12/99   est= 1.06    actual= 1.12
Next earnings 04-21   est= 0.78    versus= 0.78
Average Daily Volume = 7.15 mln

/charts/charts.asp?symbol=IBM

****

SEG - Seagate Technology $71.00 (+2.25)(+4.50)

Seagate is a leading provider of technologies and products
that enable people to store, access, and manage information.
Seagate is the world's largest manufacturer of disk drives.
The company sells its products mainly to manufacturers such
as Compaq.  Seagate continues to drive new solutions for the
enterprise and Internet markets, where the demand for storage
is ever increasing.  The company continues to expand through 
investment and acquisition.  Seagate owns about 128 mln shares
of the data storage giant Veritas, adding roughly $100 per 
share to the stock.

Disk drives are in high demand and so are shares of SEG.  The
company continues to benefit from a rejuvenated PC sector.  SEG
has also benefited from the rotation out of the second tier 
tech stocks.  Traders are moving money into the larger tech 
names that have led the market higher, as end-of-the-month 
window dressing concludes next week.  Earnings are fast 
approaching and we should see momentum pick up as traders 
anticipate good numbers from the PC sector.  On Friday, SEG 
managed to edge above resistance at $70, to close at an all-
time high of $71.  The only resistance keeping SEG from moving 
higher is at $73, an intraday high reached two weeks ago.  The 
stock now has strong support just below at previous resistance 
of $70.  New entry into the play can be found near the 5-dma, 
as the stock rolls along.

The VRTS position has provided additional lift to shares of
Seagate.  Last week, Warburg Dillon Read raised the price 
target on Veritas to $200 a share, from $130.  As VRTS shares 
continue to plow higher, so goes SEG.

BUY CALL APR-70*SEG-DN OI=3404 at $7.13 SL=5.00
BUY CALL APR-75 SEG-DO OI=6320 at $4.75 SL=3.00
BUY CALL APR-80 SEG-DP OI=2331 at $3.00 SL=1.50
BUY CALL JUN-75 SEG-FO OI=1231 at $9.13 SL=6.25

Picked on Mar 19th at    $68.75     P/E = 17
Change since picked       +2.25     52-week high=$73.75
Analysts Ratings      4-6-4-0-0     52-week low =$25.13
Last earnings 10/99    est=0.09     actual=0.14
Next earnings 04-13    est=0.13     versus=0.49
Average Daily Volume = 2.68 mln

/charts/charts.asp?symbol=SEG


*************
SEMICONDUCTOR
*************

SNDK - SanDisk Corp. $132.56 (+15.56)

Formerly SunDisk, SanDisk was founded in 1988.  SNDK is the
largest supplier of flash data storage products.  They design,
develop, and market flash memory data storage products used in
a wide variety of electronic systems.  Flash memory storage
devices are integrated circuits that retain data, when the power
is off.  Their products are sold worldwide through numerous OEM's
(original equipment manufacturers) and distributors.  SNDK has
sales offices in Europe, Asia and the United States.  Exports
account for about 55% of their sales.  SNDK goes head to head in
the marketplace some big names, the likes of which include IBM,
Sony and Toshiba.

As with many of the tech stocks it's been a volatile two weeks
for one of our latest additions to the play list.  So what sets
this one apart from the rest?  SNDK split 2-for-1 about one month
ago.  Not only was their no post split depression, the flash 
memory company surged ahead to surpass its pre-split 
levels over the next two weeks.  The point here, is that for a
company not to suffer a bit of a depression after the split of
its stock, shows that investors were intent on getting in on a
hot stock.  It took only 11 trading sessions for investors to bid
the price of the SNDK back above pre-split levels.  Profit-taking 
set in after SNDK made a new 52-week high.  Almost immediately,
Merrill Lynch, one of the five brokerage companies that follow
the company came to the rescue, upgrading SNDK to a Near-term Buy,
with a price target of $200.  Their reason?  Flash memory demand
is outpacing supply.  Merrill raised EPS estimates from $0.70 to
$0.81 and revenue projections from $465 million to $505 million.
All this just in time for the Nasdaq to begin its third mini-
correction so far this year.  Cautious investor sentiment kept 
a lid on the price of SNDK stock until last Tuesday, when it 
bounced off the $105 level.  On that day over 3.0 million shares
were traded, as SNDK made its way back to close at $130, which to
us indicates a near term bottom may be in place.  Technically, 
SNDK has been able to bounce of its 10-dma in each of the last
three sessions and closed Friday with a respectable gain of 
$4.69.  We are anticipating further upward momentum for SNDK, 
but a pullback to support near $125 may provide a good place to 
target shoot an entry as well.

It's perhaps a little early to have a big effect on our play, but
Friday, SanDisk filed SEC forms for their annual stockholders 
meeting to be held May 11th.  On the agenda is an amendment to
increase the authorized shares of the company's stock from 125
million to 400 million.  That's right another stock split is 
in the works, which could garner a bit of attention for our 
new play. 

BUY CALL APR-120*SWF-DD OI=627 at $23.38 SL=16.95
BUY CALL APR-130 SWF-DF OI=256 at $19.25 SL=14.00
BUY CALL APR-140 SWF-DH OI=138 at $13.88 SL=10.50
BUY CALL MAY-130 SWF-EF OI= 36 at $26.13 SL=19.00

SELL PUT APR-120 SWF-PD OI=216 at $ 8.75 SL=11.75
(See risks of selling puts in play legend)

Picked on Mar 26th at   $132.56    PE = 308
Change since picked       +0.00    52-week high=$169.63
Analysts Ratings      3-2-0-0-0    52-week low =$  8.50
Last earnings 01/00   est= 0.22    actual= 0.30 
Next earnings 04-19   est= 0.17    versus= 0.08
Average daily volume = 1.23 mln

/charts/charts.asp?symbol=SNDK

****

ALTR - Altera Corp $95.88 (+9.63)

Altera is a leading designer and manufacturer of programmable 
logic devices (PLDs).  These devices are gaining popularity over 
custom logic chips because they allow for customers to customize 
the chips via Altera's software program.  This saves lots of 
time and money for the manufacturer.  Altera sells about 90% 
of its product through distributors to a clientele of over 
13,000 communications, computer, and industrial equipment 
manufacturers. 

Erratic, explosive, and downright unnerving pretty much sums up 
this month's trading so far, but the earnings' play on ALTR 
should provide us with some equanimity.  Like the rest of the 
tech stocks, ALTR's share price boomeranged amidst the chaos and 
sharp volatility of the broad markets.  Now it appears to have 
settled into a steady uptrend.  Coming off relative support at 
$85 and $87, ALTR increased its share price by over 11% this 
week.  We expect ALTR to continue to climb ahead of its earnings 
scheduled for April 12th, after the bell.  The analysts are also 
bullish on the stock.  Many have recently boosted ratings, price 
targets, and fiscal estimates.  We've also got the possibility 
of a split.  ALTR announced its last 2:1 split (May 1999) when 
the share price was at $78.25.  The trigger event was an 
earnings' report just a week prior.  So we have ALTR trading 
above the historical split-level, earnings just around the bend, 
and just enough shares to eek out a 2:1 stock split (400 mln 
authorized and 199 mln issued) so there's a chance.  But for now 
let's focus on an earnings' play.  The 5-dma ($90) is a fair 
gauge for entries so look for upward bounces off this indicator.  
Although intraday support on Friday was a bit higher at $94 and 
$95.  Therefore it's possible this level may evolve as near-term 
support over the next few days.  Let's also be aware of ALTR's 
double-whammy resistance level.  Breaking through this 
opposition may be tough.  First there's the 52-week record high 
at $99.25, but also looming above is that ominous force field 
to contend with at the $100 mark.  Despite the pessimistic tone 
of the latter fundamentals, OIN is optimistic ALTR will make 
headway over the next two weeks.  For those particularly 
interested in the earnings' numbers, the company is holding 
its conference call at 5pm EST on April 12th.

As we mentioned earlier in the write-up many analysts are 
bullish on ALTR.  This list includes the likes of Chase H&Q who 
initiated coverage with a Buy rating and addition to its "focus 
list" late in February.  Then on March 3rd, Merrill Lynch upped 
its rating to a Long-Term Buy from Accumulate and issued a price 
target of $110.  Analyst Eric Rothdeutsch also raised fiscal 
estimates for 2000 and 2001 citing Merrill Lynch believes 
"Altera has built sufficient product momentum with its mid-range 
product offering - primarily the FLEX 10KA & 10KE families - to 
propel company performance over the next few quarters".  SG 
Cowen raised ALTR's EPS outlook too and reiterated a Buy.  
Prudential additionally stepped in with a Strong Buy upgrade 
from an Accumulate.  After this slew of assuring remarks, David 
Wu of ABN Amro reiterated his Buy recommendation and upped 
ALTR's price target to $155 from $100 just a few days later.  
More recently, Warburg Dillon Reed upgraded the stock to a 
Strong Buy and raised its price target to $114 from $90 "on 
prospects for strong revenue growth propelled by strong product 
cycle and robust demand".  Last but certainly not least, CSFB 
pumped up its price target up to $95 from $80 citing "better 
sales than expected in both January and February, and 
indications are that March will be another strong month".  

BUY CALL APR- 90 LTQ-DR OI=1116 at $10.50 SL= 7.50
BUY CALL APR- 95*LTQ-DS OI= 306 at $ 8.13 SL= 5.75
BUY CALL APR-100 LTQ-ST OI= 839 at $ 6.00 SL= 4.00
BUY CALL MAY- 90 LTQ-ER OI=   0 at $13.88 SL=10.50 Wait for OI!
BUY CALL MAY- 95 LTQ-ES OI=  30 at $11.38 SL= 8.50

Picked on March 26th at  $95.88    P/E = 89
Change since picked       +0.00    52-week high=$99.25
Analysts Ratings    14-10-3-0-0    52-week low =$28.75
Last earnings 12/99   est= 0.30    actual= 0.31
Next earnings 04-12   est= 0.34    versus= 0.23
Average Daily Volume = 3.56 mln 

/charts/charts.asp?symbol=ALTR



******** 
Internet
********

YHOO - Yahoo! Inc $194.00 (+22.88)(-6.94)(+20.06)   

Yahoo! Inc is a global Internet media company that offers 
an online guide to web navigation, a branded network of 
comprehensive information, communication services, and 
shopping access to millions of users daily.  Over 32 mln users 
visit the Web site each month.  Yahoo! operates in the black 
with the bulk of its revenues derived from advertisements 
commissioned by its list of about 3800 clients.

Yahoo! Yahoo! Yahoo! the spring is sprung.  This is just what we 
expected to happen.  As we've seen before, YHOO typically makes 
a strong run ahead of it earnings.  Time is still in our favor 
too.  We've got seven trading sessions before the announcement, 
which is confirmed for Wednesday April 5th, after the bell.  But 
be aware that YHOO is known for its deep sell-off following the 
earnings' report so be out of your call positions before then. 
There's no need to add risk to an already volatile mover!
Early entries are certainly rewarding if you have the financial 
portfolio and stomach for HIGH-RISK Internet plays.  Before 
Tuesday, YHOO offered a multitude of entries below $180.  At one 
point, a downward spike dropped the stock to $156!  YHOO went 
full-steam ahead after the Nasdaq shook off the last of its "Fed 
Meeting" jitters.  It easily moved through the ominous $200 
level and cleared the path of psychological opposition.  But 
what about current entries?  Buys at intraday support of $195 
are sensible, but it'd be even nicer if we could catch a dip 
near the rising 5-dma (now at $189.19).  If on the other hand 
YHOO explodes, there's usually enough of a daily spread for the 
very aggressive to get in on the climb.  Besides the earnings' 
momentum there is also speculation about another split, for a 
couple of reasons.  First of all, YHOO is a split-candidate at 
the $200 price level.  And more importantly, Yahoo! announced 
this week it will vote to increase the number of authorized 
shares from 900 mln to 5 bln at the upcoming shareholders' 
meeting on May 12th.  Besides guarantees, what else could 
we ask for to pump up the share price? 

As usual Yahoo! is always "wheeling and dealing" to better 
position itself as an Internet powerhouse.  On Wednesday they 
announced a co-branded marketing blitz with beverage giant, 
Pepsi-Cola.  Through an on-line and offline program called Pepsi 
Stuff.com, consumers can earn points and discounts online from 
an under-the-cap logo on Pepsi and Mountain Dew bottles.  The 
five-month promotion is expected to launch in August 2000.  
Yahoo! also acquired Arthas.com, a Web-based person-to-person 
electronic commerce payment service company.  This addition will 
enhance Yahoo!'s current commerce offerings to its 120 mln 
individual users.  Terms of the agreement weren't disclosed.  
There was also a deal with Palm to bundle Yahoo! services on 
the hand-held computers.

BUY CALL APR-190*YUU-DR OI= 7154 at $21.00 SL=16.25
BUY CALL APR-195 YUU-DS OI= 2219 at $18.38 SL=14.25
BUY CALL APR-200 YUU-DT OI=18342 at $16.38 SL=12.75
BUY CALL APR-210 YUU-DB OI= 2974 at $12.88 SL= 9.75
BUY CALL MAY-195 YUU-ES OI=  118 at $24.75 SL=19.25
BUY CALL MAY-210 YHX-EB OI=  333 at $18.88 SL=14.75

Picked on March 12th at $178.06    P/E = 1883
Change since picked      +15.94    52-week high=$250.06
Analysts Ratings    14-13-4-0-0    52-week low =$ 55.00
Last earnings 12/99   est= 0.15    actual= 0.19
Next earnings 04-05   est= 0.09    versus= 0.03
Average Daily Volume = 8.45 mln

/charts/charts.asp?symbol=YHOO

****

RATL - Rational Software Corp. $86.75 (-1.75)(+1.56)

Rational Software is an e-development company.  Rational's 
e-development solution helps organizations overcome the
e-software paradox by accelerating time to market while 
improving quality.  Their integrated solution simplifies the 
process of acquiring, deploying and supporting a comprehensive 
software development platform.  Rational generates almost 40% 
of it's revenues from process consulting, training, and related 
services.  47 of Fortune e-50 companies use Rational's 
e-development solutions.  

More patience required.  RATL started off like house on fire, on
Monday, but quickly turned south by late morning.  As the Nasdaq
went this week, so went RATL.  Like many of the tech stocks, you
could overlay an intraday chart of the composite index versus
your favorite issue, and see very little difference.  It really
appeared as though RATL was running on all cylinders Thursday, as
buying interest picked up late in the day, on good volume.  RATL
provided us with several good entry points mid-week, and traders
that entered late Wednesday or early Thursday found the run-up to
$94 provided the opportunity to sell too soon.  Friday's decline
once again proved the importance of trailing stops, as RATL fell
$5.50 in the first 10 minutes of trading.  RATL ended Friday's
session with a loss of about 7.0%, but did close near intraday 
support and its 10-dma at $86.67.  Now, this is where the 
patience comes in.  As we've said many times before stocks rarely
go straight up or down, and with volatility comes opportunity.  A
bounce from current levels would provide a great entry point for
new plays.  If we see profit-taking in the Nasdaq early next week,
be patient, as RATL very well could continue to follow the trend
of the major index.  On a decline there are several areas where
RATL could find buyers step in including, $83 and $80.  Our plan
now for our play, is play the cards we are dealt.  If RATL begins
the week with a solid bounce then great.  If we see selling, it
won't cost a thing to stand aside, be patient, and wait for a
better entry point, as having patience could pay-off handsomely.

Last Monday, Rational announced the industry's first Unified
Modeling Language(UML)-based data modeling and analysis solutions.
Rational Rose Data Modeler, allows business analysts, developers
and data modelers to work together in one common methodology and
notation to build higher quality e-business software in less time.

BUY CALL APR-80 RAQ-DP OI=  71 at $16.00 SL=11.50
BUY CALL APR-85*RAQ-DQ OI= 245 at $13.13 SL= 9.75
BUY CALL APR-90 RAQ-DR OI=1238 at $10.38 SL= 7.00
BUY CALL APR-95 RAQ-DS OI=  65 at $ 8.38 SL= 6.00
BUY CALL MAY-90 RAQ-ER OI=  18 at $15.75 SL=11.25 low OI

SELL PUT APR-80 RAQ-PP OI= 820 at $ 4.25 SL= 6.50
(See risks of selling puts in play legend)

Picked on Mar 19th at    $88.50    PE = 81
Change since picked       -1.75    52 week high=$105.00
Analysts Ratings      8-1-1-0-0    52 week low =$ 21.88
Last earnings 01/00   est= 0.25    actual= 0.27 
Next earnings 04-19   est= 0.31    versus= 0.23
Average daily volume = 1.06 mln

/charts/charts.asp?symbol=RATL

****

AOL - America Online Inc. $71.00 (+6.63)(+5.63)

Founded in 1985 America Online says they are the world's leader
in interactive services, Web brands, Internet technologies and 
e-commerce services.  They operate two world-wide Internet 
services AOL, with more than 21 million members and CompuServe
with more than 2.5 million members.  Through its strategic
alliance with Sun Microsystems, the company develops and offers
business operating in the Net Economy easy to deploy, end-to-end
e-commerce and enterprise solutions under the alliance iPlanet
brand.  Their other leading Internet brands include ICQ, AOL
Instant Messenger, Digital City and the Netscape Netcenter.

We'd like to thank our editor, our assistant editor, the research
staff and everyone else that made this play possible.  Our play
in AOL may not have been nominated for an Oscar, but it very
well could come in as one of the top plays of the month.  The
folks that should be receiving the accolades are the nearly 2.0
million new members that have signed up with AOL since December.
Late Tuesday AOL reinforced the perception that its momentum
remains strong by announcing its membership has exceeded 22.0 
million, marking a nearly 10% rise since the December.  News of
the increase in membership drove the price of AOL $4.50 higher
on Wednesday.  The move was supported by strong volume at 35.5
million shares.  Also in line for a pat on the back, is Merrill
Lynch analyst, Henry Blodget.  Blodget said in a statement 
released Wednesday, that he was raising his subscriber estimate
for the AOL service to 22.1 million, which is up 300,000 from
previous estimates.  Blodget has earned the respect of investors
on Wall Street, so when he speaks people do pay attention.  News
that company officials from Walt Disney had been lobbying members
of the U.S. House and Senate concerning the upcoming merger
between AOL and Time Warner didn't seem to derail buyers.  An
article on Forbes.com correctly termed the Disney move "petty 
politics" as they are trying to influence Congress regarding the
government's approval of the $350 billion merger.  In a nutshell,
Disney is worried that the AOL-Time Warner merger could stifle
diversity on the Internet, thereby blocking all its competitors
from access to its online subscribers and the 12.6 million
households with Time-Warner.  It's simply not going to happen
and investors were smart enough realize it, and continued to
buy stock in AOL.  Technically AOL has good support back near its
100-dma at $69.17, and near $68.  AOL has seen about 21% added 
to the price of its stock in the past two weeks.  Next week, we
could see more.  If we do see a pullback, have your stops in 
place, as we believe it would only be temporary and would present
a chance to enter new plays for less. 

On Thursday AOL announced it has agreed with Universal Pictures
on a partnership to promote movies and sell tickets online.  It's
the latest in deals connecting the Internet giant with players
outside the virtual world.  Last week AOL announced a marketing
and product development deal with Sears.  They have also joined
forces with Wal-Mart, Circuit City and Blockbuster in recent 
months. 
    
BUY CALL APR-60 AOO-DL OI=65348 at $12.88 SL=9.75
BUY CALL APR-65 AOO-DM OI=38894 at $ 8.75 SL=6.25
BUY CALL APR-70*AOO-DN OI=45679 at $ 5.25 SL=3.25
BUY CALL APR-75 AOO-DO OI=55233 at $ 3.00 SL=1.50
BUY CALL JUL-75 AOO-GO OI=22861 at $ 8.38 SL=6.00

SELL PUT APR-65 AOO-PM OI=31887 at $ 1.19 SL=2.50
(See risks of selling puts in play legend)

Picked on Mar 19th at    $64.38    PE = 173
Change since picked       +6.63    52 week high=$95.81
Analysts Ratings    25-13-3-0-0    52 week low =$38.47
Last earnings 01/00   est= 0.08    actual= 0.09 
Next earnings 04-18   est= 0.09    versus= 0.05
Average daily volume = 27.2 mln

/charts/charts.asp?symbol=AOL


*******************************************
CALLS - INTERNET CONTINUED IN SECTION THREE
*******************************************

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****************************
SEE DISCLAIMER IN SECTION ONE




The Option Investor Newsletter             3-26-2000
Sunday                        4 of 4


*************
COVERED CALLS
*************

Technical Analysis: Consolidation to Climax...

This week we continue the saga of technical patterns and the
methods used to forecast future prices of stocks and other
market instruments.  Today's narrative begins a brief overview of
trends and the manner in which they can be used to help identify
play candidates (such as Covered-Call and Naked-Put positions).
We will also include some hints for timing your entry and exit
transactions.

The most basic component used in the examination of a trend is a
trend-line.  These lines are drawn on charts to help reflect the
direction of a market and identify support and resistance levels.
They are also used to establish the simplest form of buy and sell
signals.  If a trend-line is penetrated by a sustained movement,
a significant change of character will often follow.  When a
second set of lines can be drawn above or below and parallel to
the primary track, the resulting area between the lines is called
a channel.  If a chart reflects a pattern of successively higher
highs (and higher lows) then a classic bullish trend is occurring.
However, a significant move through either boundary generally
signals a change in character or a new trend.

History suggests that most stocks spend more time in congestion
and reversal patterns rather than in well-defined trends.  When an
issue is not trending, it is sometimes described as "range-bound"
or "bracketed."  If a bullish issue becomes mired in a range for a
lengthy period, volume will dwindle as investors become less
optimistic about its future prospects.  Technicians draw lines to
illustrate these areas, marking the upper and lower boundaries of
a bracket.  The idea is to identify potential changes in character
and the entry points from which to initiate new positions.  When a
boundary is broken in a sustained movement, the best approach is
to simply follow the trend.  Experienced traders will often place
buy orders at levels where they will be filled as the issue moves
outside the current range.  After the stock breaks out of a range,
identifying the new trend is relatively easy and it is important
for an investor to recognize these historical chart patterns that
precede major turning points or reversals.

After the primary trend has been reestablished, there is often a
rapid acceleration in the upward price movement.  The activity is
usually related to the covering of short positions and late-comers
that attempt to join the rally.  This surge in buying will often
cause a vertical climax that suddenly reverses with equal vigor.
The pattern becomes obvious as investors scramble to exit the
falling issue and it often resembles the silhouette of a tall
building or a shape similar to a craggy narrow mountain.  Climax
formations can be very dangerous to inexperienced traders and the
event generally results in losses for all but the initial
participants in the movement.  Those who open new positions in an
untimely manner usually forfeit their brief profits and
occasionally incur substantial losses.

Here is one example of a classic trading range break-out followed
by a climax and further consolidation.  Without looking at a
current chart, where do you think the stock is now?


 

Next time; A simple method for success with trends.


SUMMARY OF PREVIOUS PICKS

NOTE: Using Margin doubles the listed Monthly Return! 

Stock  Price  Last   Call  Strike Price   Profit  Monthly
Symbol Picked Price  Month Sold   Picked  /Loss   Return

RAMP   21.09  22.94   APR  17.50  6.00  *$  2.41  13.9%
BYND    5.75   5.19   APR   5.00  1.38  *$  0.63  12.5%
IARC   27.63  22.06   APR  22.50  7.75   $  2.18   7.9%
RMII   10.13  10.00   APR   7.50  3.25  *$  0.62   7.8%
FSII   22.88  22.50   APR  20.00  4.75  *$  1.87   7.5%
BIDS    7.13   7.06   APR   5.00  2.63  *$  0.50   6.9%
SCUR   22.88  20.69   APR  17.50  6.50  *$  1.12   5.9%
COB    14.13  12.56   APR  10.00  5.00  *$  0.87   5.9%
AND    12.75  11.56   APR  10.00  3.38  *$  0.63   5.8%
TLXN   25.75  20.81   APR  20.00  7.13  *$  1.38   5.4% 
POSS   12.56  13.00   APR  10.00  3.25  *$  0.69   5.4%
EPTO   14.00  13.00   APR  10.00  4.75  *$  0.75   5.0%
EPTO   16.94  13.00   APR  12.50  5.25  *$  0.81   5.0%
IGEN   28.25  29.50   APR  22.50  6.88  *$  1.13   4.6%
MPPP   29.25  24.69   APR  20.00 10.25  *$  1.00   4.6%
MUEI   14.50  16.00   APR  12.50  2.81  *$  0.81   4.3%
AND    16.13  11.56   APR  12.50  4.75   $  0.18   1.0%
ESCM   17.50  13.00   APR  15.00  4.38   $ -0.12   0.0%
TERA    8.81   6.25   APR   7.50  2.00   $ -0.56   0.0%
THDO   15.75   9.75   APR  12.50  4.25   $ -1.75   0.0%

*$ = Stock price is above the sold striking price.

Comments:

Even though 3do Company (THDO) had a great quarter in January 
and has been announcing new products, it gets hammered when
its competitors Acclaim (AKLM) and Interplay (IPLY) warn about
the next quarter?  The stock has fallen all the way to its 150
dma and a support area near $9.00 on heavy volume.  Not a good
sign.  The April $12.50 call can be bought back for about $0.50
which would allow one to exit on any rally or roll down.  Keep 
an eye on Telxon (TLXN).  It warned that next quarter's revenues
could fall short (up to 10%) of expectations.  It closed Friday
at its 50 dma but looks to go lower towards stronger support 
near $17.00.  Esc Medical's (ESCM) correction is nearing its
50 dma with the next support level around $10.00.  Tera Computer
is still suffering from the Cray acquisition announcement but
has been holding near its 150 dma.  Information Architects (IARC)
and Andrea (AND) appear to be ending their correction cycles.



NEW PICKS


Sequenced by Company

Stock  Last  Call  Strike Option  Last Open  Cost  Return Return
Symbol Price Month Price  Symbol  Bid  Intr  Basis Called Unchanged

CBSI   25.75  APR  22.50  CQQ DX  4.38  245  21.37  5.3%   5.3%
CRCL   27.63  APR  22.50  HQA DX  6.25  0    21.38  5.2%   5.2%
CYCH   14.38  APR  12.50  KBQ DV  2.69  757  11.69  6.9%   6.9%
CYOE   12.06  APR  10.00  QTO DB  2.69  1883  9.37  6.7%   6.7%
ELIX   26.00  APR  20.00  XQQ DD  6.88  40   19.12  4.6%   4.6%
TRMB   24.75  APR  20.00  TRQ DD  5.63  24   19.12  4.6%   4.6%
VANS   16.13  APR  15.00  VQG DC  1.75  13   14.38  4.3%   4.3%


Sequenced by Return Called (& Not Called)

Stock  Last  Call  Strike Option  Last Open  Cost  Return Return
Symbol Price Month Price  Symbol  Bid  Intr  Basis Called Unchanged

CYCH   14.38  APR  12.50  KBQ DV  2.69  757  11.69  6.9%   6.9%
CYOE   12.06  APR  10.00  QTO DB  2.69  1883  9.37  6.7%   6.7%
CBSI   25.75  APR  22.50  CQQ DX  4.38  245  21.37  5.3%   5.3%
CRCL   27.63  APR  22.50  HQA DX  6.25  0    21.38  5.2%   5.2%
ELIX   26.00  APR  20.00  XQQ DD  6.88  40   19.12  4.6%   4.6%
TRMB   24.75  APR  20.00  TRQ DD  5.63  24   19.12  4.6%   4.6%
VANS   16.13  APR  15.00  VQG DC  1.75  13   14.38  4.3%   4.3%


Company Descriptions

OI-Open Interest, CB-Cost Basis or break-even point, RC-Return 
Called, RNC-Return Not Called (Stock unchanged)

****

CBSI - Complete Bus. Solutions  $25.75  *** $35 Price Target ***

Complete Business Solutions provides Information Technology (IT)
services to large and mid-size organizations.  These services 
include data warehousing solutions, electronic commerce solutions
and network services to support enterprise wide applications.  
CBSI plans to increase its e-business transformation capabilities,
the expansion of its offshore development centers in India, the 
development of new customer solutions and consulting offerings, 
employee recruitment and training programs, and acquisitions.
With increasing revenues, new contracts, an infusion of growth
capital, and several upgrades, CBSI has already made a new 52
week intraday high.  With a new price target of $35 and firming
technicals, blue sky territory is on the horizon.

APR 22.50 CQQ DX Bid=4.38 OI=245 CB=21.37 RC=5.3% RNC=5.3%

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

****

CRCL - Circle International  $27.63  *** Breakout! ***

Circle International is a global transportation, supply chain 
management and information services company.  Circle provides 
complete logistics solutions for clients worldwide, including 
air and ocean freight forwarding, customs brokerage, materials 
management, warehousing, trade facilitation and procurement, 
and integrated supply chain management services.  In January,
Circle reported net income increased 22% for the 4th quarter,
showing progress with its strategic growth initiatives.  New
contracts with GM and Delphi, and a partnership with French/
European transportation and logistics company MORY S.A., bode
well for the future.  Circle has been range bound for about 
a year until Friday when it gapped above resistance with news
it will be added to the S&P SmallCap 600 index.  The question
is, will the rally continue?

APR 22.50 HQA DX Bid=6.25 OI=0 CB=21.38 RC=5.2% RNC=5.2%

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

****

CYCH - CyberCash  $14.38  *** Electronic Payments Surge ***

CyberCash is a leading provider of Internet payment services and 
electronic payment technologies, for both e-commerce and brick-
and-mortar markets.  CyberCash offers the broadest reach in the 
payment industry with a comprehensive distribution network that 
includes direct and indirect sales as well as several marketing 
partnerships.  CyberCash recently reported a huge surge in 
electronic payments for February, which showed a tripling of
transactions in a month that is usually slower than others and
demonstrates the phenomenal growth of Internet payment processing.
A partnership with First Data Corp. should make it easier than 
ever for Internet businesses to obtain merchant accounts and
payment processing services.  CyberCash has broken out of its
recent base on heavy volume suggesting further upside potential.
We favor the technical support provided by the November high.

APR 12.50 KBQ DV Bid=2.69 OI=757 CB=11.69 RC=6.9% RNC=6.9%

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

****

CYOE - Coyote Network Systems  $12.06  *** Breakout! ***

Coyote Network Systems provides telecommunications products,
international long distance services and network services.
Their products include the DSS Switch and the Carrier IP
Gateway.  They also provide network integration and customer
support services.  Coyote's new plan is to deliver applications
to the desktop using a simple telephony-based Internet appliance
over their own branded network.  On Thursday, Coyote announced 
it has entered into an exclusive agreement with e-tel corporation 
to deliver standards-based Voice over Internet Protocol (VoIP) 
technology directly to smart-card enabled screen phones.   In 
the near future, Coyote could be called Quentra Networks as it
seeks a name change.  The future looks bright and investors 
appear to agree as they have pushed Coyote's stock to a new
52 week high. 

APR 10.00 QTO DB Bid=2.69 OI=1883 CB=9.37 RC=6.7% RNC=6.7%

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

****

ELIX - Electric Lightwave  $26.00  *** On The Move! ***

Electric Lightwave is a leading integrated communications provider
of enhanced data services, frame relay, ATM and Internet access to
bandwidth intensive businesses and the growing e-commerce market. 
The company provides long-distance and data services nationwide. 
In its full-service markets, the company offers businesses local 
and long-distance telephone service and high-speed broadband via 
its fiber optic networks.  Electric recently settled its dispute 
with US West and completed two more segments of its $131 million 
long haul route.  The post earnings dip during the first part of
March was short indeed.  Reporting strong growth (revenues up 85%
for the year), Electric Lightwave's goal of a profitable year 
2000 looks within reach.  The stock has made a new all-time high
and shows no sign of stopping.  The last few runs have climbed 
about $7 before consolidating.  We prefer to remain conservative
with a cost basis below support.

APR 20.00 XQQ DD Bid=6.88 OI=40 CB=19.12 RC=4.6% RNC=4.6%

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

****

TRMB - Trimble Navigation  $24.75  *** Forget the Compass! ***

Trimble designs and develops innovative products enabled by GPS 
technology, which determine precise geographic location.  These
products are for unique applications including surveying, mapping,
mobile positioning, commercial avionics, military systems, etc.
Trimble's products utilize substantial amounts of proprietary 
software and firmware and Trimble now holds more than 250 U.S. 
patents on GPS and related technology, with over 200 additional 
patents pending.  Trimble returned to profitability this year
and beat expectations though sales were hindered because of
shortages of component parts, which the company is aggressively
trying to rectify.  The recent 'Strong Buy' recommendations, 
new contracts, and leading-edge products suggest a bright future.

APR 20.00 TRQ DD Bid=5.63 OI=24 CB=19.12 RC=4.6% RNC=4.6%

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

****

VANS - VANS Inc.  $16.13  *** An Earnings Double! ***

Vans is a branded lifestyle company for the youth market.  Vans
reaches its 10 to 24 year-old target consumers through the
sponsorship of Core Sports (skateboarding, snowboarding, etc.),
and through major entertainment events and venues.  They operate
128 stores worldwide and design, market and distribute active
lifestyle footwear, clothing and accessories.  VANS has been 
climbing for over a year and shows no sign of stopping.  This
week's earnings report shows why: a 49% increase in net sales,
with earnings more than doubling, beating the street estimates
by two cents.  We favor the support of the recent lateral
consolidation area in the event of post earnings blues.

APR 15.00 VQG DC Bid=1.75 OI=13 CB=14.38 RC=4.3% RNC=4.3%

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



*********************
BIG CAP COVERED CALLS
*********************

Naked Put Percentage List

DISCLAIMER:  Before entering any of the positions listed below, 
you need to understand your risk tolerance.  Selling puts can 
be a High-Risk endeavor depending on the strike you choose to 
sell.  For a greater return, you run a higher risk of being 
exercised.  Therefore, please consider other strikes than the 
ones listed below if you aren't comfortable with the one we 
choose.  We are gearing these towards higher-risk players.  In 
any case, you can always select a lower strike with a lower 
return if it better meets your suitability.


Stock  Stock   Strike Option   Option Margin Percent Support
Symbol Price   Price  Symbol   Price  At 25% Return  Level  

A      120.00   120     A-PD   12.25   3000   41%     115
AFCI    82.88    80   AQF-PP    7.25   2072   35%      80
AFCI    82.88    75   AQF-PO    5.38   2072   26%      80
AMCC   150.00   140   AZV-PH   10.88   3750   29%     140
AMCC   150.00   130   AZV-PF    7.13   3750   19%     140
ASDV    90.00    85   QCI-PQ    8.25   2250   37%      85
BEAS   105.75   100   BUC-PT    6.25   2644   24%     100
BLDP   105.00   100   DFQ-PT    6.25   2625   24%     100
BRCD   164.50   160   UBZ-PL   14.00   4113   34%     160
BRCM   233.00   230   RDU-PF   17.75   5825   30%     230
CIEN   162.38   150   UEE-PJ    9.25   4060   23%     155
DITC   109.00   105   PUI-PA   12.00   2725   44%     100
EXDS   173.38   170   QED-PN   15.25   4335   35%     170
EXDS   173.38   165   QED-PM   12.88   4335   30%     170
IMNX    67.00    65   QUV-PM    6.13   1675   37%      65
JNPR   269.00   260   JUY-PL   20.13   6725   30%     260
JNPR   269.00   250   JUY-PJ   16.25   6725   24%     260
KLAC    89.31    80   CKV-PP    4.63   2233   21%      86
MSTR   129.00   110   EUU-PB   10.75   3225   33%     120
NTAP   101.00  97.5   ULM-PU    5.25   2525   21%      90
NVDA    93.19    90   UVA-PR    9.50   2330   41%      90
PCLN    90.00    85   PUZ-PQ    5.63   2250   25%      90
PEB    100.00   100    BE-PT    8.50   2500   34%     100
PHCM   154.50   150   UMN-PJ   15.38   3863   40%     140
PHCM   154.50   140   UMN-PH   11.00   3863   28%     140
PMCS   231.31   230   SAR-PF   23.88   5783   41%     225
PMCS   231.31   220   SZI-PD   18.75   5783   32%     225
PUMA    71.50  72.5   YCQ-PV    8.50   1788   48%      70
RIMM   147.75   130   RUP-DF   12.88   3694   35%     130
SCMR   149.69   140   QSM-PH    9.63   3742   26%     140
SDLI   218.94   200   QZL-PT   14.18   5474   26%     200
SEBL   144.50   140   SGW-PH   10.88   3613   30%     140
SNDK   132.56   130   SWF-PF   16.25   3314   49%     126
SONE   100.50   100   QFB-PT    9.88   2513   39%     100
VIGN   224.94   200   GGV-PT   12.00   5624   21%     200
VRTS   162.56   160   VUQ-PL   13.75   4064   34%     158

You can download a spreadsheet version of this information by
clicking here:

http://www.OptionInvestor.com/downloads/hpmar-26.xls


AFCI

 

AGGRESSIVE   SELL PUT APR-80 AQF-PP at $7.25 = 35%  
MODERATE     SELL PUT APR-75 AQF-PO at $5.38 = 26%
CONSERVATIVE SELL PUT APR-70 AQF-PN at $3.75 = 18%
 

JNPR

 

AGGRESSIVE   SELL PUT APR-260 JUY-PL at $20.13 = 30%
MODERATE     SELL PUT APR-250 JUY-PJ at $16.25 = 24%
CONSERVATIVE SELL PUT APR-240 JUY-PH at $12.25 = 18%


VIGN

 

AGGRESSIVE   SELL PUT APR-220 GGV-PD at $20.88 = 37%    
MODERATE     SELL PUT APR-210 GGV-PB at $16.00 = 28%
CONSERVATIVE SELL PUT APR-200 GGV-PT at $12.00 = 21%



***********************
CONSERVATIVE NAKED PUTS
***********************

Option Trading Strategies: The Correct Approach...

Each week we receive a number of E-mails concerning our approach
to profitable option trading.  The majority of questions relate
to the methods that are used to determine a specific strategy and
how a particular candidate is selected for a position.  In most
cases, we include a brief description of the play and its merits
but this summary rarely reveals the in-depth analysis behind the
recommendation.  Before you can begin to understand the procedure
that an option strategist must go through in order to arrive at a
position, you must be familiar with the most common approaches to
successful derivatives trading.  This narrative examines the two
basic methods for participating in the options market; Hedging and
Speculating.

As you begin to trade options on a regular basis, the first task
that must be completed is identifying your risk/reward attitude
and trading style.  Should you be a Speculator or is it better for
you to utilize hedged positions?  Regrettably, there is no simple
answer to that question.  A trader's comfort level and portfolio
outlook; the intended character and consistency of returns, will
determine the type of strategies that are most appropriate for a
specific individual.  The amount of experience and trading capital
are also factors that one would use in making the determination as
to whether to be a hedger or a speculator.

Traders who speculate generally make money when they are correct
about the outlook for a particular instrument and the period in
which the expected movement occurs.  The most common techniques
for speculators include buying and selling individual options and
occasionally, directional (vertical - price) spreads.  The goal
in these strategies is to achieve large returns however, with the
potential for significant gains there is also higher risk.  The
success of the speculator hinges on the fact that his losses will
be relatively small and the infrequent large profits will be able
to overcome these losses.

In contrast, a Hedger will attempt to initiate positions that have
a higher degree of success but with lower returns and reduced risk.
Typical hedging strategies include straddles, strangles, calendar
and diagonal spreads, and delta-neutral positions.  Conservative
traders would also consider Covered-Calls and other stock/option
combinations as hedge techniques.  The primary characteristic of
hedged positions is they provide a more consistent rate of return
with smaller potential losses.  Most of the common techniques
require far less management and are therefore more attractive to
novice traders.  The stress level is also greatly reduced but as
with any limited-risk position, the likelihood of a substantial
profit is virtually eliminated.

Regardless of the type of trading you choose to participate in,
the most important concern is suitability and comfort.  If, after
analyzing the markets and available option strategies, you don't
feel the strategy is appropriate for you or the current market
conditions, then don't make the trade.   Trading beyond your means;
too large a position or potential risk can also lead to emotional
discomfort and bad decisions.  In addition, always make sure you
completely understand the technique being used and the general
characteristics of the strategy.  If you are trading speculative
positions, realize that large percentage draw-downs are inherent
to that approach and to be successful, you must have the necessary
capital to offset intermediate losses.  One final suggestion; be
flexible!  Adjust your trading plan to current market conditions.
The major benefit of option trading is that you can modify your
strategies to fit the existing character and future outlook of the
market, including volatility levels and historical patterns.  Only
in that manner can you expect to succeed consistently, on a
long-term basis.


                      *** WARNING!!! ***
Occasionally a company will experience catastrophic news causing
a severe drop in the stock price. This may cause a devastatingly
large loss which may wipe out all of your smaller gains. There is
one very important rule; Don't sell naked puts on stocks that you
don't want to own! It is also important that you consider using
trading STOPS on naked option positions to help limit losses when
the stock price drops. Many professional traders suggest closing
the position when the stock price falls below the sold strike or
using a buy-to-close STOP at a price that is no more than twice
the original premium from the sold option.


SUMMARY OF PREVIOUS PICKS 
*****

Stock  Price  Last   Put   Strike Price   Profit  Monthly
Symbol Picked Price  Month Sold   Picked  /Loss   Return

CYOE   10.75  12.06   APR   7.50  0.44  *$  0.44  14.8%
SPNW   20.75  15.50   APR  15.00  0.75  *$  0.75  13.3%
CONV   12.81  11.50   APR  10.00  0.56  *$  0.56  13.0%
RSLC   23.88  22.69   APR  17.50  0.69  *$  0.69  11.0%
MADGF  14.25  11.00   APR  10.00  0.50  *$  0.50  10.8%
PCMS   23.19  20.00   APR  15.00  0.81  *$  0.81  10.8%
ZONA   10.88   8.00   APR   7.50  0.38  *$  0.38  10.7%
MCRE   25.06  27.81   APR  15.00  0.69  *$  0.69  10.5%
INSO   16.06  15.00   APR  10.00  0.44  *$  0.44  10.5%
ISIP   24.00  17.31   APR  15.00  0.75  *$  0.75   9.8%
SCUR   26.50  20.69   APR  17.50  0.75  *$  0.75   9.0%
NUHC   17.56  22.88   APR  12.50  0.31  *$  0.31   7.1%
OXGN   23.50  22.31   APR  17.50  0.50  *$  0.50   7.0%
CDT    34.31  32.06   APR  25.00  0.56  *$  0.56   6.6%

*$ = Stock price is above the sold striking price.

The Barron's article on "cash burn" rates has knocked down a
few stocks including Secure Computing (SCUR) and Shopnow.Com
(SPNW).  Keep an eye on those issues as they test support.
Isis Pharma (ISIP) and Zonagen (ZONA) continue to consolidate
but they may move lower if the Bio-tech sector falters again.
 

NEW PICKS
*********

Sequenced by Company
*****

Stock  Last  Put   Strike Option  Last  Open  Cost   ROI Opt
Symbol Price Month Price  Symbol  Bid   Intr  Basis  Expired

AMTD   24.25  APR  20.00  TQA PD  0.75  1243  19.25   12.1%
EGRP   32.00  APR  25.00  QGR PE  0.50  4503  24.50    7.2%
MLT    30.00  APR  22.50  MLT PX  0.44  220   22.06    6.8%
PMRY   19.50  APR  17.50  PBQ PW  0.63  5     16.87    9.8%
SEM    17.81  APR  15.00  SEM PC  0.31  0     14.69    6.7%
SVGI   30.06  APR  22.50  VQQ PX  0.38  54    22.12    5.9%
TLCM   32.44  APR  22.50  TMU PX  0.44  111   22.06    6.4%


Sequenced by ROI  
******

Stock  Last  Put   Strike Option  Last  Open  Cost   ROI Opt
Symbol Price Month Price  Symbol  Bid   Intr  Basis  Expired

AMTD   24.25  APR  20.00  TQA PD  0.75  1243  19.25   12.1%
PMRY   19.50  APR  17.50  PBQ PW  0.63  5     16.87    9.8%
EGRP   32.00  APR  25.00  QGR PE  0.50  4503  24.50    7.2%
MLT    30.00  APR  22.50  MLT PX  0.44  220   22.06    6.8%
SEM    17.81  APR  15.00  SEM PC  0.31  0     14.69    6.7%
TLCM   32.44  APR  22.50  TMU PX  0.44  111   22.06    6.4%
SVGI   30.06  APR  22.50  VQQ PX  0.38  54    22.12    5.9%


Company Descriptions

OI-Open Interest
CB-Cost Basis or break-even point 
ROI-Return On Investment 

****

AMTD - Ameritrade  $24.25  *** Hot Sector! ***

Ameritrade is a provider of online discount brokerage services.
They provide technology-based brokerage services to investors
through a variety of mediums including the Internet.  Their main
services appeal to a broad market of self-directed investors who
are value conscious.  The company uses its low-cost platform to
offer brokerage services at prices that are significantly below
those offered by its major competitors.  The brokerage group is
on the move with quarterly revenues expected to exceed estimates.
U.S. Bancorp Piper Jaffray analyst Stephen Franco upgraded both
Ameritrade and E*Trade Group based on strength from unprecedented
trading volumes.  Friday's technical breakout above the recent 
resistance near $21 suggests a new trend is beginning.

APR 20.00 TQA PD Bid=0.75 OI=1243 CB=19.25 ROI=12.1%

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

****

EGRP - E*trade Group  $32.00  *** Big Rally! ***

E*TRADE Group is a provider of online investing services and has
established a popular destination for self-directed investors.
The company offers automated order placement and execution, along
with a suite of products and services that can be personalized,
including portfolio tracking, charting and quote applications,
real-time market commentary and analysis, and other information
services.  E*trade provides these services 24 hours a day, seven
days a week by means of the Internet, touch-tone telephone, online
service providers and direct modem access.  E*trade's proprietary
transaction-enabling technology supports automated, easy-to-use
and cost-effective services that empower its customers to control
their investment decisions and financial transactions.  Same story,
different stock, and the Friday rally signals a new trading range
for this bullish issue.

APR 25.00 QGR PE Bid=0.50 OI=4503 CB=24.50 ROI=7.2%

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

****

MLT - Mitel  $30.00  *** Spin-off Speculation! ***

Mitel Corporation is a global designer, manufacturer and marketer
of networked systems and specialty chips for the communications
industry.  Their communications products are primarily customer
premises-based communications systems that are used in networks
that enable businesses to communicate between branch offices,
mobile workers and teleworkers.  Mitel Semiconductor manufactures
products for communications, ASICs, home gateway, wireless access,
WAN Internetworking, and the optical and medical industry.  Mitel
also provides foundry services to third parties on a contract
basis.  Mitel has surged recently on strength in the semiconductor
group and rumors suggest the company will sell its communications
business to acquisition-hungry Alcatel or Cisco.  The new interest
should help the issue remain above our cost basis.

APR 22.50 MLT PX Bid=0.44 OI=220 CB=22.06 ROI=6.8%

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

****

PMRY - Pomeroy Computer  $19.50  *** New Trading Range? ***

Pomeroy Computer Resources sells and leases desktop computer
equipment including hardware, software and related products, and
provides information technology (IT) services that support such
computer products.  Pomeroy's products segment is primarily engaged
in the sale, distribution and leasing of computers, hardware,
software and related products.  The company offers products from
an array of manufacturers including Compaq, Hewlett-Packard, IBM,
Microsoft, Nortel Networks, Novell and 3Com.  Pomeroy's services
segment offers life cycle services, internetworking services and
customer support services.  The company provides the products and
services primarily to large and medium-sized corporate, healthcare,
governmental, financial and educational customers.  Not much news
but the breakout is obvious and the technical support at the cost
basis provides a margin of downside protection.

APR 17.50 PBQ PW Bid=0.63 OI=5 CB=16.87 ROI=9.8%

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

****

SEM - General Semiconductor  $17.81  *** Own This One! ***

General Semiconductor operates primarily in the discrete segment
of the semiconductor industry.  General designs and manufactures
discrete semiconductors, including power rectifiers, transient
voltage suppressers, small signal transistors and small signal
diodes.  The company makes these products in a variety of packages
including axial, bridge, power and surface mount systems.  Their
products condition current and voltage, protect electrical surges
from power surges, amplify and switch small electrical signals,
and regulate voltage levels in circuits.  General's products are
essential components of most electronic devices and systems, and
are used throughout a wide range of industries, including the
computer, automotive, telecommunications and consumer electronics
industries.  A solid company in a favorable group with excellent
future potential.

APR 15.00 SEM PC Bid=0.31 OI=0 CB=14.69 ROI=6.7%

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

****

SVGI - Silicon Valley Group  $30.06  *** On The Move! ***

Silicon Valley Group is a multi-product manufacturer of automated
wafer processing equipment for the semiconductor industry.  The
company designs, manufactures and markets sophisticated equipment
used in the primary stages of semiconductor manufacturing.  SVG's
products include photoresist processing equipment, oxidation,
diffusion, atmospheric and low-pressure chemical vapor deposition
processing systems, photolithography exposure tools and precision
optical components and systems.  Recently named by Goldman Sacks
to a select group of chip companies based on new opportunities in
Korea and Taiwan.  Also a target of growth-hunting institutions
and based on Friday's volume, they may have picked a winner.

APR 22.50 VQQ PX Bid=0.38 OI=54 CB=22.12 ROI=5.9%

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

****

TLCM - TelCom Semiconductor  $32.44  *** More Chips Please! ***

TelCom Semiconductor designs, develops, manufactures and markets
a diversified portfolio of high-performance analog integrated
circuits for a wide variety of applications in the industrial,
wireless communications, computing, networking and medical markets.
Their products comprise four principal product families: Power
management such as MOSFET drivers, low dropout regulators, DC to
DC converters, and CMOS voltage detectors;  data converter systems
which include data acquisition and analog to digital converters;
thermal management and control information; and linear products
such as amplifiers, voltage references and comparators that act
as linear building blocks in a wide range of electronic systems.
Once again, a solid company with excellent growth potential and
a technically bullish chart pattern.

APR 22.50 TMU PX Bid=0.44 OI=111 CB=22.06 ROI=6.4%

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



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

Is It Time For A Breather?

Friday, March 24

Technology stocks rallied Friday, driving the broad market to a
new all-time high.  The Nasdaq continued to move higher, rising
22 points to 4963.  The S&P 500 index set its fourth straight
record high at 1527.  Profit-taking plagued the Dow after early
morning gains and the average finished down 7 points at 11,112.
Breadth on the NYSE was positive with advances beating declines
1,504 to 1,440 on volume of 1.03 billion shares.  The 30-year
Treasury fell 1 7/32, bid at 103 15/32, where it yielded 5.99%.


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

Northern Trust  NTRS   APR55P/APR60P  $0.81  credit  bull-put
Summit Bancorp  SUB    JUL20C/APR27C  $6.25  debit   diagonal
Bank One        ONE    JAN20C/APR27C  $7.88  debit   LEAPS/CC's

ONE opened higher but eventually fell with the banking group.  Our
target debit was unavailable (on a simultaneous order basis).  SUB
also moved up during the early part of the session but succumbed
to profit-taking in the closing hour.  NTRS was hardest hit with a
big drop at mid-session.  The position traded as high as $1.00 and
our target credit was easily achieved.


Portfolio plays:

The market continued its record run Friday as investors poured
new money into the mega-cap leaders.  According to AMG Data,
first quarter inflows to equity funds exceeded $100 billion, a
a new record.  New highs on the S&P 500 and the recent bullish
activity in both the Dow and Nasdaq suggest the upward trend will
continue through the month of April.  Our portfolio enjoyed a
number of big winners in various sectors and the majority of
issues closed positive.  MetroMedia Fiber Networks again led
the technology group with a $5 gain to end near $98.  Our new
diagonal position is at maximum profit above $80.  Brokerages
also enjoyed significant rallies and E*trade was our top issue
in the sector, up $4 to a recent high near $32.  The biggest
surprise of the day was Silicon Valley Group (SVGI) which rose
$2.50 to close near $30.  Our bullish spread position is worth
$6.25, up from an initial investment of $3.88.

Navistar (NAV) has performed very well since inception into the
spreads portfolio earlier this month.  Our calendar spread has
returned $0.88 on $2.00 invested and the bullish diagonal spread
is profitable.  Kroger (KR) is another new time-spread issue that
has rallied favorably in the last week.  Our speculation position
traded at a small profit on Friday and the potential for future
gains is excellent.  Our plan is to monitor the volatile issue for
a sustained move through the current resistance level near $18 and
if it occurs, we will make the appropriate upside adjustment.  The
short-term rebound in Marketing Services Group (MSGI) has provided
a favorable exit opportunity in our bullish diagonal position.
Based on the technical outlook, it may be best to forego potential
future returns in exchange for the current (guaranteed) profit.

Upcoming earnings have been a major influence on the current
outlook and the reports coming out for the quarter include
robust projections from all forecasting sources.  Unfortunately
that hasn't been the case in all sectors and two of our recent
bullish issues fell victim to revised (downward) estimates.
Telxon (TLNX) announced Thursday evening that it now has lower
revenue expectations for the fiscal 2000 fourth quarter.  Telxon
expects that its fiscal fourth quarter revenues, previously
anticipated to be in the range of $100 million, could fall short
of its earlier estimate by up to 10%.  The news resulted in a
moderate sell-off during Friday's session and those of you who
were interested in downside protection may have rolled to the
May-$20 call for a small ($1.12) credit.  There were no series
below the $20 strike; the alternative was to close the position.

Take-Two Interactive Software (TTWO) fell in sympathy to other
issues in their industry group as competitors Acclaim (AKLM)
and Interplay (IPLY) warned about the upcoming quarter?  The
issue has been on our hit list since reversing direction to a
recent support area (near $14) and Thursday's failure to rally
with technology stocks was a potentially bearish signal.  The
loss from a closing transaction was unattractive so we rolled
both positions down to the MAY-$12.50 series for a break-even
exit.  Of course the issue must remain at or above the current
support level (near $11) to produce that result.


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


******************************************************************
                         - New Plays -

The number of requests for credit spreads continues to amaze me.
Fortunately, there are always some excellent candidates for the
strategy.  The following plays are based on well-known companies
in favorable technology industries.  Each position is evaluated
for probability of profit using the current price and trading
range of the stock and the recent technical history or trend.
Current news and market sentiment will have an effect on these
issues.  Please review each play individually and make your own
decision about the future outcome of the position.

****

JBL - Jabil Circuit  $82.31  *** Post-Earnings Split Run? ***

Jabil Circuit is an electronic manufacturing services provider
for international electronics companies in the communications,
personal computer, peripheral, consumer and automotive markets.
Jabil offers circuit and board design from schematic, mechanical
and production design, prototype assembly, volume board assembly
and system assembly services.

Last week the electronics manufacturer announced record revenue
for the quarter and was promptly rewarded with a slew of upgrades.
Jabil posted a profit of $0.37 per share during the period, up
from the year-ago return of $0.27 per share.  Revenue during the
quarter rose 50% percent to $837.6 million.  Analysts at Lehman
Brothers immediately repeated their "buy" recommendation based on
positive growth prospects for the fiscal year 2001.  Other firms
also increased their future price targets and earnings estimates.
Credit Suisse First Boston raised its price target to $95 and SG
Cowen raised its 12 to 18 month price target to $122 from $115.
Of course, the upcoming stock split may also have an effect on
Jabil's performance in the short-term.  The date of record for
the stock split was March 23 and the distribution date will be
March 30.

The recent technical support near the cost basis should provide
ample downside margin for this moderately aggressive position.


PLAY (aggressive - bullish/credit spread):

BUY  PUT  APR-65  JBL-PM  OI=304  A=$1.38
SELL PUT  APR-70  JBL-PN  OI=242  B=$2.06
INITIAL NET CREDIT TARGET=$0.75-0.81 ROI(max)=19%

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

****

NVDA - Nvidia  $93.19  *** Consolidation Pattern? ***

The computing industry recognizes Nvidia as the global leader in
advanced graphics processing technology for mainstream platforms,
awarding the company the most awards in the history of the PC
industry.  The unmatched breadth of the Nvidia product family
enables gripping multimedia experiences for the entire desktop
computer market from workstations to internet-enabled appliances.
In use by large corporations, small and medium-sized businesses,
and home-based consumers, Nvidia products are the solutions of
choice for the top PC OEMs, add-in card designers, and system
builders worldwide.  Their graphics processors deliver superior
performance and crisp visual quality for PC based applications
such as manufacturing, science, e-business, entertainment, and
education.

Nvidia has been in the news recently with a number of positive
announcements.  Early in March, the company was selected by
Standard & Poor's to replace MidAmerican Energy Holdings in the
S&P MidCap 400.  As the change took place, Nvidia skyrocketed!
The stock continued to rise after the company announced that it
will design and manufacture 3D graphics and a multimedia system
for Microsoft's highly anticipated "X-Box" game console.  Now
the issue has begun to consolidate but additional deals with
Microsoft and a new pact with Hewlett Packard should eventually
revive the trend.  The big question is how far the stock price
will fall before investors move in for the long-term.  Lets hope
it's not much further.


PLAY (conservative - bullish/credit spread):

BUY  PUT  APR-55  UVA-PK  OI=27  A=$0.93
SELL PUT  APR-65  UVA-PM  OI=54  B=$2.06
INITIAL NET CREDIT TARGET=$1.25 ROI(max)=14%

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

****

TTN - Titan Corporation  $53.25  *** Up, Up, And Away! ***

Titan is an incubator of technology-based commercial businesses,
offering innovative technical solutions.  Three of Titan's four
core businesses develop and deploy communications and information
technology solutions and services.  In addition, Titan markets
the leading technology for the electronic pasteurization of food
products and is continually identifying promising technologies
suitable for commercialization.

Titan is a very complex organization with a number of potential
subsidiaries that could experience significant growth.  Most
analysts consider Titan a value play, whereby the sum of the
pieces, tracked separately, and valued independently, are worth
many times more then when consolidated as part of a mini holding
company.  If that sounds confusing, you are not alone.  In this
case we will simply base the position on TTN's its recent bullish
performance, the favorable technical outlook and the solid support
near the cost basis.


PLAY (conservative - bullish/credit spread):

BUY  PUT   APR-35  TTN-PG  OI=346  A=$0.62
SELL PUT   APR-40  TTN-PH  OI=356  B=$1.12
INITIAL NET CREDIT TARGET=$0.56-$0.62 ROI(max)=14%

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


******************************************************************
                         - STRADDLES -

Profitable debit straddles are relatively simple to uncover and
there are three rules to identifying favorable conditions for a
straddle purchase.  First, the trader should select options that
are undervalued (cheap). Next, the underlying security must have
the potential to move (high or low) enough to make the straddle
profitable.  Finally, the underlying stock should have a history
of multiple movements through a sufficient range in the required
amount of time to justify the overall risk/reward of the position.

****

UBID - Ubid Incorporated  $31.44  *** Waiting For Direction ***

uBid operates an online auction for excess merchandise, offering
closeout and refurbished products to consumers and businesses.
The company's Internet auctions feature a rotating selection of
brand name computer, consumer electronics and housewares, and
recreation products which typically sell at significant discounts
to prices found at traditional retailers.  uBid currently runs
auctions every day, offering on the average over 1,000 total items
in each of its auctions.  The company obtains merchandise directly
from manufacturers and indirectly through other vendors, such as
retailers, distributors and Fortune 1000 companies.  Currently,
the merchandise is sourced from over 150 vendors.

Based on analysis of the historical option pricing and technical
background, this position meets the fundamental criteria for
favorable straddles.  As with any recommendation, the play should
be evaluated for portfolio suitability and reviewed with regard to
your strategic approach and trading style.


PLAY (conservative - neutral/debit straddle):

BUY  CALL  JUL-30  UBD-GF  OI=182  A=$6.38
BUY  PUT   JUL-30  UBD-SF  OI=194  A=$4.62
INITIAL NET DEBIT TARGET=$10.50-$10.75 INITIAL ROI TARGET=25%

A longer time frame (October) is also available at an attractive
price.  You will have to decide whether the additional potential
is worth the cost.

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


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*****************************
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*****************************

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