Option Investor
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Daily Newsletter, Thursday, 03/30/2000

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The Option Investor Newsletter         Thursday  3-30-2000
Copyright 2000, All rights reserved. 
Redistribution in any form strictly prohibited.

Posted online for subscribers at http://www.OptionInvestor.com
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MARKET WRAP  (view in courier font for table alignment)
******************************************************************
       3-30-2000           High     Low     Volume Advance Decline
DOW    10980.30 -  38.40 11144.10 10916.30 1,193,480k 1,554  1,448
Nasdaq 4,457.89 - 186.78  4683.88  4355.69 1,925,183k 1,185  3,123
S&P-100  813.81 -  13.69   831.35   807.17    Totals  2,739  4,571
S&P-500 1487.92 -  20.60  1517.38  1474.63            37.5%  62.5%
$RUT     531.57 -  11.43   545.89   524.27
$TRAN   2679.47 -  10.77  2692.94  2661.22
VIX       27.55 +   1.59    28.72    25.69
Put/Call Ratio       .47
******************************************************************

Down, Up, Down, Up

If today wasn't enough volatility for you, check your pulse 
for signs of life.  The action was fast and furious all day.  
The Nasdaq is where it was at too.  The tech-heavy index (the 
key word being heavy) opened down 100 points before staging a 
quick comeback to positive territory in the first 30 minutes 
of trading.  That should be bullish right?  Wrong, call buyers 
on the recovery got taken to the cleaners as the Nasdaq made 
an even quicker reversal and never even came close to the plus 
column for the rest of the day.  From there it was a stair-
stepping pattern down from one support level to the next.  The 
first one was 4500, which held for about an hour, then broke.  
Next up the famed 4450 support level that saved the Nasdaq 
just over a week ago.  It also held for a brief period before 
giving way to selling pressure.  From there traders were talking 
about 4400 holding up, but that support level lasted for about 
30 seconds and it was bombs away from there.  The Nasdaq started 
dropping in ten point intervals.  Finally, some signs of a 
capitulation.  It went as low as 4355 and started to stall.  
From there it was rubber band time as the Nasdaq sprung back 
towards 4500 before closing at 4457.89 or back above the key 
4450 level.  The final tally left the Nasdaq down 186.78 or 
the fifth biggest point decline in history.  Not too bad when 
you consider that it would have been the biggest decline if it 
closed 30 minutes earlier.  All in all, it was the kind of 
market that would leave you feeling drained if you had been 
playing all day.  


 

The DJIA was a different and more positive scene.  It held 
gains for most of the day and even pushed into triple-digit 
territory for awhile mid-day.  In the end there was too much 
drag from the Nasdaq to close with any gains, but it still 
proved to be the leading index of the day, only finishing down 
38.47 to 10,980.56.  This is back under 11,000, but you have 
to give credit where credit is due.  This index was building 
a nice upward trend all morning and broke above long time 
resistance of 11,100 before the buyers packed up for the 
day when they realized they were fighting an uphill battle.  
Volume was strong on both indices with the NYSE turning in 
1.2 bln and the Nasdaq at 1.9 bln.  


 

Like I said above, anyone in the market today was ready for 
vacation when it was all said and done.  The market was jittery 
and I started wondering why I had some open long positions.  
I had to rely on some old trading advice...when in doubt, get 
out.  It didn't take long for me to find my way into some QQQ 
puts either, which I closed out at the first uptick off 4355.  
That made for a nice recovery against the early long plays 
that gave me a few lumps.  Nevertheless, it may be time to 
start looking long again with today's late day bounce on 
strong volume, with a lot of large blocks buying in at the 
close.  Could we be in for one massive window dressing day 
after all?  Hey, I'd settle for not dipping another 150 on 
the Nasdaq.

The VIX has been bordering on useless lately as it isn't heavily 
weighted in tech stocks.  It finally started to push above 27 
in the final hour, but no where near the 30 level, which signals 
a major turning point.  You may have got your turning point 
this afternoon despite what the VIX is reading.  There has been 
talk that a new indicator is needed to gauge fear in tech stocks.  
Some sectors experiencing fear today included Biotech, Internet 
and High-tech.  While the winners were in areas like Insurance, 
Retail and Chemicals.

Part of the afternoon capitulation was due to Yahoo.  It was 
reported that YHOO was the target of an FTC inquiry for its 
consumer information practices to see if they comply with 
federal consumer protection laws.  This sent YHOO plummeting 
from $180 to $160 within an hour and really put fear into some 
sellers.  It did bounce back late to close at $169.31, -7.75 
and was up over a dollar after-hours too.  This might have 
been that last chance entry for the earnings run.  They are 
set to report Wednesday after the close.  

INTC had some good news after-hours, which may help spur a 
market recovery tomorrow.  There has been talk for weeks of a 
possible upside surprise for Intel's bottom line this quarter.  
That news was announced tonight when INTC said they will be 
adding $0.17 to their first quarter earnings.  Unfortunately, 
it is not based on operating performance.  Instead, the IRS 
has ended the review of INTC's 1998 taxes and determined that 
INTC is due an adjustment of $600 million dollars to be used 
in the first quarter of 2000.  That 6-mil turns into an extra 
$0.17 cents profit.  INTC closed down $4.88 to $127, but was 
up after-hours as high as $130.

Alan Greenspan did his best to calm fear today, although you 
have wonder if he was laughing inside.  He said, "The Federal 
Reserve is not 'jawboning' the stock market or targeting stock 
prices," and he went on to say "I do not believe our short-term 
monetary policy operating procedures have a significant effect 
on stock prices."  Interesting comment seeing how he has hinted 
towards a bubble in the markets and that the Fed is trying to 
curb growth in the economy.  But if it helped improve market 
sentiment today, we'll take it.  Besides, a market free-fall 
would likely help stop the current streak of interest rate 
increases.  Alan has always been market-friendly in times of 
distress.  

Tomorrow morning will start the day off with some fresh economic 
numbers.  First up, February factory orders is expected to fall 
0.9%.  Also, the release of personal income is expected and the 
expectations are for a 0.3% increase, with personal consumption 
expenditures, expected to increase by 0.8%. 

The economic numbers will probably be an after thought unless 
something is really out of line.  Most traders will be trying 
to asses today's action and if we did see the short-term 
bottom this afternoon.  It's my impression that we did, but 
tomorrow morning may have a retest of today's lows.  You will 
get those longer-term investors that will come home tonight 
and check there stocks and get scared into selling.  Assuming 
we confirm that the lows are in place, that would be the time 
to buy.  Sure the Nasdaq is getting whipped and it may stay 
that way for months, but traders will always overdue everything 
to both the downside and upside.  Today was a case for downside.  
Don't get me wrong, if the trend wants to go lower, I will jump 
back into those QQQ puts, but it feels like the sky is falling.  
Usually a contrarian view that a rally is in sight.  With the 
rebound to close over 4450 on what appeared to be some good 
institutional buying at the close, it would seem the stage is 
set for a rally.  The futures confirm that thought as they are 
currently up 4.40 at the time of this writing.  In all cases, 
keep this thought in mind...when in doubt, get out.  

Ryan Nelson
Asst. Editor 



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

Pacific Exchange Lists Five New Options
By Cindy Christ

The Pacific Exchange (PCX) announced the listing of five new
options issues this week:

CIBER Inc. (NYSE: CBR; PCX) options began trading on the
February expiration cycle on March 29. Position and exercise
limits are set at 31,500 contracts. The underlying stock is
available on the Pacific Exchange. CBR options are allocated
to lead market maker John Brown of MJT Securities, L.L.C. 

Inktomi Corporation (Nasdaq: INKT; PCX: INKT/QYK/KYQ/KAY/KFN)
options began trading on the January expiration cycle on March
29. Position and exercise limits are set at 75,000 contracts.
Inktomi options are allocated to lead market maker John Thomas
of BOTTA Trading LMM, L.L.C. 

WorldGate Communications Inc. (Nasdaq: WGAT; PCX: WAQ) options
began trading on the March expiration cycle March 29. Position
and exercise limits are set at 31,500 contracts. WAQ options
are allocated to lead market maker Ryan Sabol of Cole, Roesler
Trading Group. 

Packeteer Inc. (Nasdaq: PKTR; PCX: PDU) options will trade on
the February expiration cycle starting March 31. Position and
exercise limits are set at 22,500 contracts. PDU options are
allocated to lead market maker Matt Zahner of DRZ Derivatives,
L.L.C. 

Wink Communications Inc. (Nasdaq: WINK; PCX: UII) options will
trade on the January expiration cycle starting March 31.
Position and exercise limits are set at 22,500 contracts. UII
options are allocated to lead market maker Ron Chin of Chin
Options. 

For expiration cycles and strike prices, visit the PCX Web
site at http://www.pacificex.com


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

As of Market Close - Thursday, March 30, 2000 

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

DOW Industrials   10,850  11,250  10,980    Neutral   3.16
SPX S&P 500        1,410   1,475   1,488    BULLISH   3.21
OEX S&P 100          780     800     814    BULLISH   3.21
RUT Russell 2000     510     530     532    BULLISH   2.24
NDX NASD 100       4,000   4,150   4,250    BULLISH   2.24
MSH High Tech        975   1,000   1,041    BULLISH   2.24

XCI Hardware       1,480   1,510   1,635    BULLISH   2.24
CWX Software       1,390   1,670   1,412    Neutral   3.21
SOX Semiconductor  1,130   1,360   1,151    Neutral   3.21
NWX Networking     1,000   1,190   1,032    Neutral   3.30  **
INX Internet         770     800     821    BULLISH   3.09

BIX Banking          520     600     560    Neutral   3.16
XBD Brokerage        450     480     535    BULLISH   2.31
IUX Insurance        520     600     585    Neutral   3.16

RLX Retail           900   1,000     980    Neutral   3.16
DRG Drug             330     380     345    Neutral   3.30  **
HCX Healthcare       680     750     696    Neutral   3.30  **
XAL Airline          130     150     141    Neutral   3.10
OIX Oil & Gas        265     300     294    Neutral   3.16

 
Posture Alert    
Abby Joseph Cohen, Mark Mobius, Tiger Funds, and plain technical 
selling has all contributed to this week's correction, as the 
NASDAQ chipped in another 4% loss today on heavy selling. Most 
sectors got clobbered; however, the Networking sector lead the 
pack with a 6.66% decline. Sectors that actually closed strong 
today include Insurance (+3.35%), Oil & Gas (+2.82%), and Retail 
(+1.10%). With this most recent action, we have upped Drug & 
Healthcare to Neutral from Bearish, and have downgraded Networking 
from BULLISH to Neutral.



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

Thursday, March 30, 2000

Shorts keep on Shorting!
 
The new economy took another blow on the chin today, as the NASDAQ got 
clobbered for another -4% loss. Everybody seems to want to get in on 
the action, which started with Abby Joseph, led to Mark Mobius, and now 
to any joker who will appear on CNBC. It's always funny how the CNBC 
bears called the correction in advance of their appearance on the show! 
How about the Tiger Funds, has that situation helped this sell-off? 
Now, if you were a fund manager of a very well regarded and large hedge 
fund, would you sell your shares after CNBC is reporting the problem? 
Or would you sell weeks ago, short a bunch of technology issues, and 
then let the media help you out with a free advertising campaign? We'll 
stick to the latter scenario, which would mean that Julian Robertson & 
Co. probably locked in a stellar week and at least went out on a high 
note with his investors, even though they are probably still down on 
the year! Regardless, we have highlighted the short interest for the 
NASDAQ, and it shows that the bears are alive and well. This increase 
in shorts has been consistent with the NASDAQ's major moves upward. 
Based on what we see, the shorts keep on shorting, which means that 
this recent sell-off is becoming a good entry point!

One important gauge of sentiment is the level of short interest on the 
major exchanges. Investors who sell securities "short" borrow stock and 
sell it, betting that the stock's price will decline and that they will 
be able to buy the shares back later at a lower price for return to the 
lender. Short interest reflects the number of shares that have yet to 
be repurchased to give back to lenders. In the past, stocks that have 
heavy short interest, when combined with some sort of positive news, 
has witnessed very quick and powerful up-moves. At times, short sellers 
are forced to cover, which only helps the buying pressure, and this is 
known as a "short squeeze." 

Largest Short Positions 
Rank                     Mar.15          Feb.15         Change 
1   Dell Computer      47,048,407      42,289,313      4,759,094  
2   Oracle Corp        45,164,314      45,864,117       -699,803  
3   Cisco Systems      37,310,669      40,551,162     -3,240,493  
4   Intel              35,897,177      36,020,616       -123,439  
5   MCI Worldcom       35,580,800      35,868,699       -287,899  
6   Microsoft          33,050,557      33,141,796        -91,239  
7   Amazon.com         32,970,344      36,801,542     -3,831,198  
8   E*Trade Group      32,009,032      32,853,515       -844,483  
9   Global Crossing    29,720,627      25,140,288      4,580,339  
10  Yahoo              28,703,223      23,122,986      5,580,237  
11  Nextel Comm.       27,671,790      29,710,974     -2,039,184  
12  Excite AtHome      23,987,122      21,470,238      2,516,884  
13  Globalstar Telecm  20,150,284      18,375,663      1,774,621  
14  JDS Uniphase       19,133,105      31,306,852    -12,173,747  
15  Ameritrade         19,098,802      20,266,943     -1,168,141  
 
Other Notables:                                  
16  CMGI               17,470,056      19,937,915     -2,467,859      
17	Qualcomm           17,183,954      28,554,508    -11,370,554
18	SunMicrosystems    16,144,545      16,348,912       -204,367
19	Applied Materials   8,686,952      10,079,685     -1,392,733
20	Amgen              11,646,695      11,970,602       -323,907
21	3Com                9,044,443       9,188,174       -143,731
22	Ericcson            4,554,198       5,035,472       -481,274 
23	Comcast            13,817,993      22,081,080     -8,263,087
24	Compuware           4,159,974       6,999,964     -2,839,990
 
Largest Changes 
Rank                     Mar.15          Feb.15         Change 
1   Yahoo              28,703,223      23,122,986      5,580,237  
2   Dell Computer      47,048,407      42,289,313      4,759,094  
3   Healthn/Webmd       8,423,420       3,779,577      4,643,843  
4   Global Crossing    29,720,627      25,140,288      4,580,339  
5   Read-Rite          15,212,118      10,751,330      4,460,788  
6   ADC Telecommun     10,388,672       6,476,386      3,912,286  
7   Psinet             13,727,941      10,373,357      3,354,584  

1   Informix Corp       7,298,466      22,613,375    -15,314,909  
2   JDS Uniphase       19,133,105      31,306,852    -12,173,747  
3   Qualcomm           17,183,954      28,554,508    -11,370,554  
4   Comcast            13,817,993      22,081,080     -8,263,087  
5   Broadvision         4,627,989       9,202,497     -4,574,508  
6   Rambus              4,263,237       8,836,082     -4,572,845  
7   Conexant Systems   11,750,589      15,675,246     -3,924,657 


BULLISH Signs: 

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

Short Interest NYSE:
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.

Short Interest NASDAQ:
Short interest jumped +3.49% to 2,710,141,156 shares on March 15. This 
bearish barometer would indicate further upside potential.  

Interest Rates (5.873):
The current yield is in bullish territory.


Mixed Signs: 

Volatility Index (26.58):
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.


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      Tues        Thurs
Benchmark                        (3/24)      (3/28)      (3/30)

Overhead Resistance (830-860)     7.14         3.22       3.53

OEX Close                       832.65       821.40     813.81

Underlying Support  (800-825)     1.22         1.02       1.17
Underlying Support  (770-795)     0.82         1.37       1.52

What the Pinnacle Index is telling us:
Overhead resistance is moderate, while underlying support is still 
light. The OEX will most likely be trading range bound, however, it 
looks as if more of a pullback will occur.


Put/Call Ratio                  Friday     Tues       Thurs
Strike/Contracts                (3/24)    (3/28)      (3/30)

CBOE Total P/C Ratio             n/a        .43        .46
CBOE Equity P/C Ratio            n/a        .38        .39
OEX P/C Ratio                    n/a       1.47       1.79


Peak Open Interest (OEX)
                     Friday           Tues            Thurs
Strike/Contracts     (3/24)           (3/28)          (3/30)

Puts                700 / 9,113     720 / 8,654     720 / 7,972
Calls               830 / 4,363     830 / 4,637     880 / 5,841
Put/Call Ratio         2.08            1.87            1.36


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 30, 2000                          27.55   



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

Daily Results

Index     Last     Mon     Tue     Wed     Thu    Week
Dow    10980.25  -86.87  -89.74   82.61  -38.47 -132.47
Nasdaq  4457.89   -4.47 -124.56 -189.22 -186.78 -505.03
$OEX     813.81   -2.48   -8.77    6.10  -13.69  -18.84
$SPX    1487.92   -3.60  -16.13    0.79  -20.60  -39.54
$RUT     531.57   -0.36  -14.61  -16.04  -11.43  -42.44
$TRAN   2679.47  -20.34   13.16    9.27  -10.77   -8.68
$VIX      27.55    0.94   -0.17   -0.62    1.59    1.74

Calls               Mon     Tue     Wed     Thu    Week

KSS       99.56   -0.18   -1.25   -0.75    3.69    3.00  New
IBM      122.50    6.25   -4.50   -3.00    3.50    1.00  Strong
PCS       64.63    0.88   -1.82    1.32   -0.25    0.13  New
T         57.81    1.56   -0.81    1.13   -2.44   -0.94  Spin-off
QCOM     145.22    2.94    5.88    2.69  -12.28   -0.78  Choppy
BAC       50.81   -0.50   -0.56   -1.56   -1.31   -3.94  Bottomed
DELL      52.19    1.44   -2.00   -2.06   -1.63   -4.25  Dropped
BMCS      48.06    2.19   -2.81   -0.94   -3.19   -4.75  Dropped
SCH       59.00   -5.50    0.13   -0.69   -0.44   -5.94  Holding
AOL       65.00    2.50   -2.44   -4.19   -3.13   -6.38  Ready 
MFNX      90.44    1.44    1.63   -6.38   -4.31   -7.63  Set stops
NITE      49.00   -2.06   -2.00   -4.50   -1.50  -10.06  Dropped
INTC     127.00    3.63   -7.00   -3.81   -4.88  -12.06  Tax gain
HWP      130.75    3.81   -5.38   -6.81   -4.25  -11.63  Holding
NOK      206.00    5.50   -3.69   -7.25  -12.00  -17.13  Puzzling
ERICY     85.50   -3.19   -1.63   -7.88   -4.63  -17.31  Dropped
RATL      69.25    3.19   -3.06  -12.00   -5.63  -17.50  Dropped
NT       124.00    1.81   -2.50   -6.44  -11.38  -18.50  Dropped
ALTR      76.38   -2.38   -5.81   -2.81   -8.50  -19.50  Dropped
SNDK     108.06   12.50  -13.44  -13.69   -9.88  -24.50  Dropped
YHOO     169.50    6.75   -5.75  -17.94   -7.56  -24.50  Recovered
EXDS     144.00   -5.50   -5.56  -10.19   -8.06  -29.31  Bouncing
EBAY     207.13   -3.94  -16.00  -24.81    8.13  -36.63  New
CHKP     169.50  -13.56   -6.69  -40.75   12.00  -49.00  New

Puts

RHAT      40.25   -3.88   -6.50   -6.00   -3.88  -20.25  Dropped
ISLD      60.06    0.06   -4.44   -6.63   -4.94  -15.94  Sinking
PSIX      34.06    1.06   -0.94   -0.06   -3.81   -3.75  Roll over
AT        64.25   -2.56   -3.88    2.75    0.00   -3.69  Spprt=$61 
GTW       53.31   -0.25   -1.38    0.06   -1.38   -2.94  Downtrend
CPQ       26.81    0.56   -0.94   -0.31   -1.69   -1.75  Shortfall

For more information on this play, visit www.OptionInvestor.com
(See risks of selling puts in play legend)



PICKS WE DROPPED
****************

When we drop a pick it doesn't mean we are recommending a sell
on that play. Many dropped picks go on to be very profitable.
We drop a pick because something happened to change its
profile. News, price, direction, etc. We drop it because we
don't want anyone else starting a new play at that time. 
We have hundreds of new readers with each issue who are
unfamiliar with the previous history for that pick and we
want them to look at any current pick as a valid play.


CALLS:
*****

RATL $69.25 -5.63 (-17.50) Remember Tuesday when we said a close
below the $86 area and it may be time to step aside.  It's time.
Actually, it was time on Wednesday as RATL plummeted to close at
$74.88.  It didn't get any better today as the software company
dropped another 13%.  Today, RATL announced that their Rational
Suite won Software Development magazine's Jolt Product 
Excellence Award in the "Design and Management Tools" category
at the 10th Annual Jolt Productivity awards.  It may have won 
industry awards, but RATL didn't win any awards with investors 
the past two days.  There was no company specific news as far as
earnings or any other announcements, just selling pressure that 
seemed to feed on itself, as RATL dropped the past two sessions.  
The fundamentals for the company haven't changed, but for now its
time to go.

SNDK $108.06 -9.88 (-24.50) Tuesday's decline was not a bump in
the road, it was the earth beginning to open-up and swallow our
play.  SNDK cut through several areas of technical support like
they weren't even there.  SNDK hit the $110 area in the early 
minutes of trading today, which held on several different 
attempts lower during the session today.  SNDK made the headlines
in a round about way earlier when Seagate announced it would go
private.  SNDK is one of the holdings that Seagate will sell back
to Veritas Software as part of the SEG deal.  The selling began
Tuesday as part of the "Abby Effect", which woke up the bears,
and as a famous broadcaster says, you know the "rest of the
story."  SNDK could become be a great call play in the near
future.  For our immediate future, we will look elsewhere. 

ALTR $76.38 -8.50 (-19.50)  An overall downward spiral for 
Internet stocks is clearly making mince meat out of this 
earnings play.  As a result of the broad tech correction, ALTR 
shed over 20% during the past four trading sessions and today it 
slid under the 50-dma of $79.78.  A descent of this magnitude
may take some time to recover and time is not something which we
have an abundance.  Recall that the company is confirmed to
report in just two weeks on April 12th, after the bell.  So while 
we had a great sense of optimism for a strong run into earnings, 
we're not going to fight the markets.  ALTR is officially dropped 
from our call list tonight.          

DELL $52.19 -1.63 (-4.25)  While two reputable analysts came 
forward with positive comments about this direct seller of PCs 
today, we cannot ignore the stock's sinking share price amidst 
the NASDAQ correction.  Andy Neff of Bear, Stearns & Co 
reiterated a Buy rating and upped the price target to $80 from 
$70 citing that " near-term business trends appear on track" and 
the appointment of James Schneider to CFO should " provide an 
update on the company's initiatives to capture the growth of the 
Internet".  CSFB's Michael Kwatinetz also viewed Schneider's 
promotion as "a strong positive" and believes Dell is "on track."
He expects the company to meet their $7.1 bln revenue forecast 
and $0.16 EPS estimate.  The analyst reiterated his Strong Buy 
recommendation.  Yet, Dell is heading further south as the 
negative pressure builds against the techs.  As of today, the 
stock is hovering at old resistance and is now just a smidgen 
above the 30-dma ($49.56).  This environment is just not 
practical (or profitable!) for a momentum play.  The past couple 
of weeks provided us with upward movement and gainful 
opportunities, but now it's time to get out the life boats and 
jump ship.  Dell is expected to report earnings around May 11th.

ERICY $85.50 -4.63 (-17.31)  Ericsson said Wednesday that it had
won a contract in China valued at over $630 mln to develop a cell
phone network.  The agreement was signed in association with 
Guandong Mobile Communications Co. and the development of their
GSM network.  The agreement is the largest to date in the
development of the new network in China.  We thought the news
would give a lift to shares of ERICY, but it didn't.  In fact,
the stock dropped like a rock yesterday en route to a plunge
through major support of $90 today.  The concerns surrounding 
earnings that we mentioned Tuesday and weakness in the telecom
sector have proved to be detrimental to our ERICY play.
Stockholders are expected to approve a 4-for-1 split tomorrow at
the company's annual meeting, which we expected to provide a
boost to the stock.  If the announcement of a $630 mln contract
and an upcoming stock split doesn't help to move a stock higher
we don't want anything to do with it.  In light of the tech
sell-off and weakness in the European telecom stocks, it's time
to move on.

NT $124.00 -11.38 (-18.50)  Nortel said today that it had raised
its ownership in joint ventures with Germany's DaimlerChrysler
and France's Aerospatiale-Matra to give the company more leverage
to expand into Europe's Internet market.  Traders didn't like the
news one bit, and along with the high-tech sell-off, pushed NT
sharply lower this afternoon.  The stock actually gapped down $8
this morning as traders couldn't sell NT fast enough.  NT drifted 
all the way to $120 today, only to bounce slightly higher at the 
close.  Networking equipment stocks didn't benefit any from the
Cabletron Systems's(CS) announcement.  The Amex Networking Index 
fell 6.7% today, led by a 43% drop in CS.  The company warned 
analysts of losses for the first quarter in their report 
Wednesday evening.  NT is now precariously positioned at support 
of $120.  We feel there is too much downside risk to continue to 
hold any call positions after the gap down this morning and the 
bad news from CS.

BMCS $48.06 -3.19 (-4.75)  It looked like BMCS was going to hold 
its $52 support but in the final hour and a half, BMCS blew right 
through that level.  This down move violated the lower boundary 
of the trading channel that it had maintained throughout the week.
Most importantly, during the final twenty minutes of trading when
institutional money came in to buy, BMCS did not recover from the 
sell-off like other issues.  Earnings are not until April 27 and 
it doesn't appear that we will hear any good news, if there is 
any, until then.  With BMCS moving to the basement, it's time to 
cut our losses and follow that institutional money.  

NITE $49.00 -1.50 (-10.06)  As we noted in Tuesday's write-up, 
online brokers did not participate in the financial sector rally 
following Abby's comments on Tuesday, and we suggested waiting 
for the market to fill its sails again before taking a position.  
Good thing.  Both the 5-dma (then $55.75) and 10-dma (then 
$52.07) were violated.  Even at the 10-dma, the bounce (if you 
could call it that) had no volume to back it up.  Despite a short 
lived attempt to get back in the ascending channel early this 
morning, the effort failed and NITE closed well under the bottom 
channel line.  With earnings scheduled for April 19, an earnings 
run could ensue from here.  But we're not willing to wait given 
the establishment of a new trend to the downside.


PUTS:
*****

RHAT $40.25 -3.88 (-20.25) Even with all the carnage in the
markets today, RHAT managed to find a modicum of support at $40.
The volume that surfaced each time the stock approached this
level would seem to indicate a major support level.  This is
confirmed by the October lows, which were put in just below $40
when the recovery began.  If the NASDAQ manages to move higher, 
the updraft will likely carry RHAT along for the ride.  With all 
the profits on the table, we'll bid farewell to RHAT and take our 
money and run.


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PLAY UPDATES - CALLS
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INTC $127.00 -4.88 (-12.06)  While trading in a $10 range today, 
INTC gave investors quite a scare, and quite a bounce.  Going as
low as $123.06, INTC made an about-face in the final hour of 
trading.  We watched grimly as major indices were brought down 
to particularly nerve-racking levels, but when institutional 
money finally stepped in, INTC was one of the beneficiaries as it 
recovered almost $4.  But the big news came after the close.
The IRS decided that INTC would be able to reverse $600 mln of
previously accrued taxes which will give the company a windfall
of $0.17 per share for the current quarter.  Consensus earnings
estimates are $0.69.  INTC traded up in after hours to as high
as $129.50 on the news.  This recent downdraft in the market has 
affected INTC as it came off its high of $145.38, yet today's
late session buying spree brought some relief.  Tomorrow will be
essential in determining which way this market will go so watch 
carefully and pick entries based on individual risk levels.    

AOL $65.00 -3.13 (-6.38) If you had a position and didn't take
some money off the table or get stopped out, then the 13% decline
from Monday's high has got to be weighing heavily on your mind.
On Wednesday there seemed to be no question as to how investors
viewed AOL.  AOL accompanied the Internet index lower for both
days.  After today, AOL may, and we emphasize may, be setting up
to provide us with another buying opportunity.  With the idea of
not trying to catch a falling knife in the back of our mind, we
did see buyers enter the market late in the day as AOL hit $63.
Could this be it for the decline in AOL?  Possibly.  The next
strong area of support is found at the $60 level.  Keep in mind
that this is not an AOL issue, rather a broad market sentiment 
that has pushed our play and the NASDAQ lower so far this week. 
Traders can certainly try their hand at these levels, while 
conservative types may choose to wait until AOL clears the $66.50 
area with good volume supporting the move.  Again, we realize a 
decline is a decline, and a loss is a loss, but the volume has 
been light all week in AOL, averaging only about two-thirds the 
norm.  As we've said before, with volatility comes opportunity, 
and we could be seeing a very good opportunity right now. 

BAC $50.69 -1.31 (-3.94) Okay, we aren't going to give you the
"if you liked BAC at higher prices, you'll love it at this
price" speech.  We do believe however that BAC probably put in 
a bottom earlier this month and could continue to move higher
over the long term.  Narrowing our time scale a bit, BAC may 
have been due for a bit of profit taking after it's run up to
$55.19.  How much profit taking is anybody's guess, as buying
intraday dips so far this week has proved hazardous.  However,
keep in mind the overall sentiment in the markets so far this
week has been negative.  Could we see more profit taking in BAC?
Sure.  The next levels of support are found at $50 and $48 and
a bounce off either, accompanied by good volume could provide a 
good entry for a new play.  We would caution here that it may 
be a good idea to check investor sentiment in the broader market
before jumping into a play.  The one real fly in the ointment
earlier today was when the Dow was turning in a good performance
and the banking sector was struggling.  For BAC to get back on 
track, we may need to see the psychology in the broader markets
improve, as well as the whole banking sector.  The positive side 
to our play came today after the initial decline to $51.25, which 
was an intraday support level.  For most of the session, BAC 
traded in narrow $0.25 range as it appeared to be putting in a 
bottom.  BAC only fell late in the day as the major indices fell 
apart.  A move back through $51.50 with good volume may provide  
good entries for this new play.

HWP $130.75 -4.25 (-11.63)  Saved from the drop-heap by the
narrowest of margins, HWP is sitting just above the critical
$130 support level.  The consolidation that was building above
$140 just couldn't hold out against the downdraft in the NASDAQ
over the past 2 days.  Fortunately, the losses over the past 2
days have come on average volume, indicating there is not a mad 
rush for the exits.  HWP bounced twice at the day's lows, $130.13,
which is right at support and backed by the 50-dma at $129.44.  
Continued selling through this level would be a bad sign and 
would force us to question the viability of our play.  If the 
NASDAQ can put its house in order and move up from here, HWP 
should follow suit as we enter the April earnings season.  HWP 
doesn't report until mid-May, but if buyers can push the stock 
back above $140 (the stock's historical split range), we could 
get a split announcement to help propel the computer maker higher.
In the news today, HWP steamrolled Compaq in February retail PC 
sales, grabbing 42.3% of the market.  Climbing from 35.4%
in January, this is yet another black eye for poor Compaq and yet 
another area where HWP can shine.  Look to enter new positions if
HWP can bounce from current levels and push through resistance at 
$133.

T $57.81 -2.44 (-0.94)  For those of you just tuning in, T
announced on Tuesday the IPO terms for the AT&T Wireless Group.
T is looking to raise more than $11.5 bln by selling 360 mln 
shares of a tracking stock of its wireless voice and data 
operations.  T set an estimated price of $26-32 per share, and 
after the offering, T will retain between 82 and 85% interest in 
the group.  Tentatively scheduled for April 26th, the IPO will 
occur in close proximity to earnings (April 25th).  The 
confluence of these two events should allow the Telecom giant
to push higher as the dates approach.  T has pretty solid 
resistance at $60, followed by $62 and $64.  As T moved up to 
test the $60 level on both Tuesday and Wednesday, the overall 
market weakness was too much and T pulled back, only to bounce at
the $57 support level.  Closing just a fraction above the 10-dma
($57.63), T has stronger support at $55.  Look to enter new 
positions on a bounce from current levels or $55, if we should get 
so lucky.  Otherwise, take the conservative approach and wait for 
buyers to prove their enthusiasm for the spin-off by bidding the 
price through the $60 resistance level.

YHOO $169.50 -7.75 (-24.50) The announcement that the FTC is 
inquiring into Yahoo!'s consumer information practices to 
determine if they comply with consumer protection laws sent 
shares into a downward spiral this afternoon.  The disclosure in 
a 10-K filing that they could be also be subject to almost $250 
mln in employer payroll taxes certainly didn't help matters in a 
market that's been frantically shedding richly-valued tech 
stocks.  During the last 30 minutes of trading today, YHOO 
recovered $9.06 from its daily low of $160.25.  This positive 
move on intensified volume prompted us to keep YHOO as we enter 
the tail end of the play.  Yahoo! is reporting next Wednesday 
April 5th, after the bell, so time is precious.  Keep this in 
mind as you plan your closing strategy.  To avoid the added risk 
of a post-earnings sell-off consider being out of all your call 
positions.  On the courtroom floor, Yahoo! faces a lawsuit from 
Sega, Nintendo, and Electronic Arts who allege the company 
knowingly sells illegal and counterfeit game products on its 
site.  They are seeking an injunction on sales and auctions as 
well as compensation for losses caused by these sales.

QCOM $145.22 -12.28 (-0.78)  Not even QCOM could escape the 
selling pressure on the NASDAQ today.  The rising share price 
got knocked down a notch on slightly better than average volume.  
It hit a low of $139.25 before resurfacing above the 10-dma 
($145.17) in the last minutes of trading.  This move back to 
near-term support ($145 and $150) is an extremely bullish sign 
amidst such combustible times.  Yesterday, QCOM managed to tack 
on a couple of points while many of its Internet buddies were 
losing ground fast.  A likely conclusion of its CDMA property 
disputes with Motorola was a key factor.  Plus, analyst Tim Luke 
of Lehman Brothers raised his price target on QCOM to $180 from 
$160 and reiterated a Buy rating on that sentiment.  The evening 
before, ABN Amro also repeated a Hold recommendation.  We're 
anticipating the momentum that broke QCOM out of its three-month 
channel will maintain its potency in the short-term.  However, 
with such volatile markets, you may want to watch for QCOM to 
trade consistently above $153 before choosing an entry. Qualcomm
is reporting in about three weeks on April 18th, after the 
bell.  The stock is also a split-candidate above $160. 


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

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Copyright 2000, All rights reserved. 
Redistribution in any form strictly prohibited.


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

IBM $122.50 +3.50 (+1.00)  Good news once again pumped up IBM 
this week.  At center stage was the innovative announcement that 
it found a way to make a mainframe act like hundreds of smaller 
computer servers.  This is a break through that will cut into 
Sun Microsystems' sales since many companies that use IBM 
mainframes often turn to SUNW for the server end of the 
business.  On Wednesday, IBM and Microsoft announced their 
effort to collaborate and sell a lower-cost appliance server is
now ready to make its debut.  This product launch marks MSFT's 
entry into a market that is expected to have cumulative revenues 
of $30+ bln by the end of 2004.  This is just the kind of news
that a momentum play needs to maintain its stamina.  Plus, IBM is 
heading into earnings next month which should also help accelerate 
the uptrend in the near-term.  The company is expected to report
earnings around April 18th.  Looking at this week's chart, $119 
and $122 represent a more stable support level however, $125 and 
$126 should evolve as the next tier.  Upward bounces off the 
current position at the 5-dma ($122.30) and through $125 will 
give the conservatives better confirmation that IBM is poised to 
make its charge.  Monday's intraday high at $128.25 still serves 
as the first line of resistance before the ultimate challenge at
$139.19, its 52-week high. 

MFNX $90.44 -4.31 (-7.56)  Not much news over the last couple of
days for MFNX.  Investors are still digesting the announcement
last Tuesday when MFNX entered into an agreement with LU to
build a new high-speed network for delivery of video over the
Internet.  In spite of the good news earlier this week, MFNX has 
suffered from overall market weakness.  It has been a bad week
for the four-letter stocks no matter how good the outlook remains
for a company.  In the face of the NASDAQ sell-off, MFNX found
solid support at the $90 level today.  In the last few minutes of 
carnage Thursday, MFNX did slip to $86.88, but it managed to move
back to support.  The $90 level is critical support for our MFNX
play, below here we don't see much help until $80.  We want to 
proceed with caution before entering into any new positions with
MFNX.  Aggressive traders might look for a bounce off support at
$90 before entering into the play.  A more conservative trader
might wait for MFNX to regain momentum and move back above $100.
Look for volume to pick-up on any move higher as confirmation
that MFNX has regained momentum.  For those of you currently
holding positions in MFNX, you might want to add a trailing stop
below support at $90.

SCH $58.44 -1.00 (-5.94)  Given the harsh environment for stocks
this week, our SCH play has held up relatively well.  The
e-finance sector was down 5.3% Thursday while Schwab lost only
1%.  There has been some interesting news on SCH in the last few
days.  Thursday, TheStreet.com announced the results of their
Online Broker Survey 2000.  Nearly 10,000 customers participated
in the survey.  Schwab ranked #3, behind Datek and Fidelity.  If
you watched the Academy Awards, you may have seen the Schwab
commercial featuring Sally Field parodying her famous Oscar
acceptance speech within the company's ongoing "Smarter Investors" 
campaign.  Viewers ranked Schwab's commercial the third best
commercial during the Oscars.  But enough with the fun stuff,
getting back to our play in SCH, the stock has been rolling off
support at $59 for the last two days.  However, SCH dipped below 
support today right at the close of the market.  The stock is
still above the 10-dma which is now providing support.  Should
SCH fall below the 10-day, we have major support at the $55
level.  Volume has declined as SCH has moved lower this week,
which is somewhat of a positive sign.  We're looking for momentum
to regain in the e-finance sector, as many of the online brokers
begin reporting earnings in the coming weeks.  A breakout above
$60 combined with healthy volume would provide a good point to
look for entry into our SCH play. 

EXDS $144.00 -8.06 (-29.00)  The end-of-the-quarter window
dressing we mentioned last Tuesday has turned against us as
traders and institutions took profits from the high-flying tech
stocks.  Many traders are suggesting that the institutions are
rebalancing their portfolios for the quarter ending tomorrow.
The same people believe that many of the institutions will move
back into the market leading tech stocks next week, especially
with earnings season fast approaching.  Traders are also 
suggesting that the high margin levels in the equity markets
have contributed to the recent downfall in tech stocks.  Margin
clerks have been selling stocks like EXDS to meet account
requirements.  It appears that the selling may have subsided
based upon the whiplash in the NASDAQ today, as it rebounded
by 100 points in the last half-hour of trading.  The recent
decline in EXDS may have provided a good entry point for an
upcoming earnings run.  Be cautious though, as the stock broke
through major support today at $150.  The stock bottomed at
$136.50 today, which has proved to be strong support over the
last two weeks.  We want to watch EXDS closely at these levels,
the last time that EXDS bottomed at support of $136 it quickly
rebounded to make an all-time high.  Another bounce off support
at $136 may provide a good entry point if you can take on more
risk.  A strong move back above $150 might provide an entry point
for traders looking for less risk.  Set a stop near support at 
$136, below that level EXDS has no support until $120.

NOK $206.00 -12.00 (-17.13)  Other than an oversupply of splits and 
split announcements starting last month, we can find no 
fundamental reason why NOK hasn't had a strong split run.  Since 
NOK has run nowhere into its April 7th 4:1 split date, you might 
think we're nuts for keeping it.  Technically, it violated its 5-
dma and 10-dma in the last two days of trading.  Blame the 
negative market and a rumor that Orange Plc., a British wireless 
carrier, would return large amounts of faulty WAP phones 
("absolutely no foundation", says NOK) on today's drop.  Here's 
the good news.  NOK has been trading in an ascending channel 
since December 15.  Today, NOK broke through the bottom of the 
channel, nearly touched the 50-dma of $201.68, then moved back up 
to close $2 above the lower channel line, coincidentally, the 
opening price.  That's a bullish technical.  If you are still 
looking for historical support, $200 and $205 offer good numbers.  
With six trading days remaining until the split, any technology 
recovery should drive the price again, but no guarantees for this 
puzzling performer.



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

PSIX $34.06 -3.81 (-3.75)  Did we not say PSIX is setting a trend
for themselves?  Bullish investors always come out fighting when
the bell rings in the morning only to get beat down as the day
progresses.  This morning PSIX was as high as $37.63.  You've 
got to love these premiums.  Following along with every other
day this week, PSIX hit that high and then rolled over, only 
today they kept going right through support.  This should be 
a solid breakthrough because we saw a lot of volume backing 
the drop.  We should see support of $27.31 come into view.  
Resistance at $38 should be used as a guideline when trying to 
enter positions.  But make sure that PSIX stays true to this 
trend and does reverse.  In the case it doesn't, protect your
investment with stops.  PSIX and Incescent announced their
agreement in which PSIX will provide ISP services while Incescent
will handle marketing.  PSIX also announced they have finished 
the exchange offer for their 10.5% senior notes that are due
2006. 

GTW $53.31 -1.38 (-2.94) GTW closed for the third day in a row 
below its 200-dma.  For investors looking for Gateway to turn
around, this is not a good sign.  One interesting development in 
GTW is that during the last three days, buyers have tried to step 
in early in the session, only to be met at the door by "Papa 
Bear".  Technically, the trend is intact and headed lower, with 
little support until $52 and then near $50.  Analysts and 
investors are concerned that GTW will miss the boat when earnings 
are announced on April 13th.  Until this week, the hardware sector 
had fared pretty well, while GTW had been getting clobbered.  
There has been little news out this week to help prop up GTW, 
although we did see some light buying this afternoon as GTW 
bounced off $52.63.  Further bounces up to the $54.50 area, 
followed by weakness could provide another good entry point for 
our play.  The volume today was a little better than average at 
2.6 mln shares, but not the type that would indicate a 
capitulation for a stock putting in a bottom.  If you have a 
position in GTW, move your stops down.

ISLD $60.06 -4.94 (-15.94)  Having enough trouble keeping its
head above water in calm seas, the tropical storm that hit the
NASDAQ the past 3 days has ISLD completely submerged and
breathing through a snorkel.  If the cycle of 5-7 down days
followed by 2-3 up days remains intact, we could be due for a
bounce.  In the "who cares" department, ISLD and Digital River
(DRIV) announced a strategic partnership yesterday, creating a
joint e-commerce solution for Application Service Providers
(ASPs).  If the news had any effect on the price, it didn't last
long, as ISLD very quickly resumed its descent from earlier in
the week.  Gapping down this morning, it looked like ISLD might
find support near $60, but the markets had other ideas, pushing
the stock as low as $54.88 before it hit bottom.  With a sharp
bounce, ISLD managed to claw its way back to the surface and
closed just above $60.  Whether this level acts as support or
resistance will likely be dependent on the direction of the
overall market.  Since it is due to bounce based on its pattern
over the past few weeks, tighten up your stops so that you keep
your profits.  Use a rollover near the $65 resistance level to
trigger new entries as ISLD prepares to dive again.  

AT $64.25 +0.00 (-3.75)  In the news Wednesday, Universal
Underwriters Acceptance Corp. (UUAC) announced they had signed a
long-term renewal of its remote outsourcing agreement with
ALLTEL.  UUAC is one of the largest insurance companies in the
world, headquartered in Switzerland.  The company is a leading
provider of sub-prime lending for car loans.  We noted in our
write-up Tuesday that AT is divided into two operating divisions,
communications and information services.  The agreement with
UUAC was with the information services division of AT, the
division that continues to be problematic for the company.  The 
announcement gave shares of AT a boost yesterday, a boost that
might prove to be artificial noting the weak volume.  We still
remain skeptical about the company's future and the ultimate fate
of the ailing information services division.  After yesterday's
brief rally the stock fell to support at $64 today.  Watch for
the stock to fall through support as a new entry point.  Look for
selling to continue as the stock approaches its 52-week low of
$55.88.  The only level preventing AT from moving lower is minor 
support just below at $61.

CPQ $27.00 -1.50 (-1.69) Poor Compaq -- nothing is going right 
for this company.  Today from CNET news, it was reported that 
Compaq lost market share in January to now #1 Hewlett Packard. 
Not only is DELL eating their lunch in the PC business, now HP is 
too.  However, the reason we're playing CPQ as a put in the first 
place is an expected earnings shortfall.  The HP news only helps 
that cause, and provides all the more reason why we think CPQ 
will have to warn at least two weeks prior to their earnings date 
of April 25.  However, given the market's current weakness, we're 
surprised to see CPQ holding up unusually well compared to its 
peers.  That could portend a bottoming out.  While the story 
looks good, CPQ is nearing historical support at $24-$25.  You 
may want to be prepared to exit if CPQ follows the industry on 
any technology turnaround.


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

PCS - Sprint PCS $64.63 -0.25 (+0.13 this week)

Sprint PCS operates the largest all-digital, all-PCS nationwide 
wireless network (read that CDMA) in the United States, already 
serving 5.7 mln customers in most major metropolitan areas 
including more than 4,000 cities and communities across the 
country.  Sprint PCS has licensed PCS coverage of nearly 270 
million people in all 50 states, Puerto Rico and the U.S. Virgin 
Islands. 

First, the big picture - AT&T is doing an IPO on its wireless 
division on April 26th, and a Sprint shareholder meeting will 
take place on April 28 to approve the merger with MCI WorldCom.  
How the PCS shares will be treated then is unclear.  However, the 
point of bringing this up is that wireless carriers in our 
opinion are going to heat up in April.  Looking at candidates, we 
find that PCS will tentatively announce earnings on April 18.  
Can you say earnings run?  Technically, PCS has survived the 
recent selloff, maintaining nice support at $63.  Even over the 
last three days, the lows have been edging higher as the 
resistance holds firm at $66.  Though it hasn't gained much on 
the week, others around it were dropping like flies.  We're 
impressed that PCS has kept its head above water so well.  In 
short, as soon as the technology stocks regain their footing, PCS 
could be the first out of the gate.  Today, PCS closed nearly 
right on its 5-dma of $64.59.  The 10-dma of $62.41 also offers 
good support.  Even if we repeat the last four days (please, 
NO!), $60 should be the rock bottom.  With volume really light, 
only two thirds the ADV of 3.2 mln shares, nobody appears in a 
hurry to unload either.  Target shoot to your comfort level and 
look for an earnings run and wireless hype to move PCS up in 
April. 

News is contained above; however, W.R. Hambrecht on Tuesday rated 
PCS a Buy rating and price target of $85.

BUY CALL APR-60*PCS-DL OI=1108 at $6.50 SL=4.50
BUY CALL APR-65 PCS-DM OI= 853 at $3.88 SL=2.25
BUY CALL APR-70 PCS-DN OI= 161 at $1.75 SL=1.00
BUY CALL MAY-65 PCS-EM OI= 131 at $5.75 SL=3.25
BUY CALL MAY-70 PCS-EN OI= 119 at $3.75 SL=2.25

Picked on Mar 30th at    $64.63     P/E = N/A
Change since picked       +0.00     52-week high=$66.44
Analysts Ratings     5-10-7-0-0     52-week low =$20.75
Last earnings 02/00   est=-1.45     actual=-0.75 surprise=93%
Next earnings 04-18   est=-0.57     versus=-0.70
Average Daily Volume = 3.24 mln
/charts/charts.asp?symbol=PCS

****

CHKP - Check Point Software $169.50 +12.00 (-49.00 this week)

Check Point provides Internet security.  The company provides
secure enterprise networking solutions that enable customers
to implement centralized policy-based management with enterprise-
wide distributed deployment.  Simply put, CHKP has benefited
from rising demand for its virtual private networks software
which lets remote workers, business allies and customers
securely access corporate computer networks.

Following a 2-for-1 split in late January, CHKP ran straight up,
peaking at $295 in early March.  Since then, it has been a quick
and painful decline for those without stop losses.  After losing
nearly 50% of its value from a mere three weeks ago, CHKP
bottomed at $155 late yesterday and cautiously moved up from
there today.  Retesting support between $155-157 several times
today, the NASDAQ recovery in the last hour managed to propel
CHKP up for a nice gain on more than triple the average daily
volume.  The abrupt halt to the decline, coupled with earnings
which are only 3 weeks away (April 18th), makes this look like
an attractive entry point going forward.  Support looks strong
at $155, followed by $150, with the first resistance found at
$170.  Major overhead resistance sits at $188, which also is the 
50-dma.  Use a bounce from support to trigger an entry into the 
play.  More conservative players will want to wait for CHKP to 
burst through resistance at the $170 level before playing.  For 
the uninitiated, CHKP is a volatile internet so fasten your 
seatbelt and hold on for a wild ride.

Normally prolific on the news announcement front with frequent
alliances and product announcements, CHKP has been rather quiet
of late.  The only item of note is the expansion of CHKP into
the Latin American market through a distribution alliance with
Intrusion.com and Uniao Digital.

BUY CALL APR-165 YKE-DM OI= 25 at $25.13 SL=18.75
BUY CALL APR-170*YKE-DN OI=115 at $23.50 SL=17.50
BUY CALL APR-175 YKE-DO OI= 16 at $21.25 SL=16.00
BUY CALL APR-180 YKE-DP OI=157 at $19.13 SL=13.75
BUY CALL MAY-175 YKE-EO OI=  0 at $32.50 SL=24.50 Wait for OI!
BUY CALL MAY-180 YKE-EP OI= 89 at $30.75 SL=23.00

SELL PUT APR-150 YKE-PJ OI=140 at $12.13 SL=17.00
(See risks of selling puts in play legend)

Picked on Mar 30th at   $169.50     P/E = 136
Change since picked       +0.00     52-week high=$295.00
Analysts Ratings      9-5-2-0-0     52-week low =$ 11.50
Last earnings 01/00   est= 0.65     actual= 0.70
Next earnings 04-18   est= 0.35     versus= 0.25
Average Daily Volume = 1.06 mln
/charts/charts.asp?symbol=CHKP

****

KSS - Kohl's Corp. $99.56 +3.69 (+3.00 this week)

Kohl's is in the retail business.  They operate almost 300 
department stores primarily in the Midwest and the Mid-Atlantic
states, although they are continuing to expand farther west.
They are a family focused department store, with a goal to
offer customers the best value in any given market.  Kohl's
offers brand name merchandise at attractive prices.  The company
emphasizes apparel and shoes for men, women and children.  They
also carry a wide variety of other soft goods.  Kohl's stores
are typically located in strip shopping centers, regional malls
and as free standing units.  Their compete with J.C Penney, Sears
and Target. 

Their name may not be as familiar as the competition, but their
stock has certainly performed better than most of their peers.
Kohl's is fast becoming a company to be reckoned with, in more 
ways than one.  On Tuesday, Kohl's CEO, R. Lawrence Montgomery,
announced the Grand Opening of 19 for new stores on Friday, April
14th.  That marks 297 stores in 25 states.  Not a big deal by
some standards, but KSS has certainly began to get the attention
of their competition and the investing public.  After trading in
a $15 range for most of 1999, KSS broke through the $70 mark
earlier this month after announcing better than expected earnings
and a 2-for-1 split of the company's stock.  The split is not
scheduled until April 25th, but the recent excitement around the
retailer drove the price to a new high of $101.25 last Friday.
After experiencing some profit taking the first three sessions
of the week, KSS began to gather momentum again today.  With the
NASDAQ dragging the Dow and many of the NYSE stocks lower today,
KSS gained 3.8%.  Call it sector rotation, call it whatever you
want.  We are calling it a great opportunity to buy calls.  
Volume the past two days has been solid, with just over 1.2 
million shares being traded each day.  On Wednesday as sellers 
were trying to take profits, the 10-dma at $94.33 held, and
buyers entered the arena once again.  Technically, KSS has 
support at $97.50 and back at its 10-dma.   The analysts were a
bit slow to jump on board, as the most recent upgrade came
from Merrill Lynch on March 16th.  Daniel Barry raised his
rating of KSS from an accumulate to a buy at that time.  
Depending on the mood of traders tomorrow, KSS could challenge
its high early in the day.  If not look for a bounce off support
to enter this new play.

Other news from analysts that follow Kohl's came from Deutsche
Banc Alex Brown analyst Joe Grillo.  Grillo has a strong buy
rating on KSS, and noted the retailer's expansion appears to be
on track, and new store productivity continues to improve.

BUY CALL APR-90  KSS-DR OI=169 at $12.25 SL=9.25
BUY CALL APR-95  KSS-DS OI=255 at $ 8.75 SL=6.00
BUY CALL APR-100 KSS-DT OI=116 at $ 6.00 SL=4.00
BUY CALL MAY-95  KSS-ES OI= 28 at $12.25 SL=9.25
BUY CALL MAY-100 KSS-ET OI=  4 at $ 9.63 SL=6.50

SELL PUT APR-90  KSS-PR OI=224 at $2.00  SL=3.75
(See risks of selling puts in play legend)

Picked on Mar 30th at  $99.56    P/E = 65
Change since picked     +0.00    52-week high=$101.25
Analysts Ratings    7-5-4-0-0    52-week low =$ 61.50
Last earnings 03/99  est=0.69    actual=0.72
Next earnings 06-06  est=0.26    versus=0.24
Average Daily Volume =  951 K
/charts/charts.asp?symbol=KSS

****

EBAY- eBay Inc. $207.13 +8.13 (-37.88 this week)

eBay is the electronic middleman to the world.  The company
pioneered online person-to-person trading by developing a
Web-based community in which buyers and sellers are brought
together in an auction format to trade personal items.  The
company provides an online auction service that has become a
cyber-forum for selling nearly 3,000 categories of merchandise,
from Beanie Babies to fine antiques.  eBay boasts about 10 mln
registered users.  The firm generates revenue by taking a
percentage of each sale, and has raised its profile by buying
traditional auction house Butterfield & Butterfield.  It has also
entered the business-to-business auction market by launching
eBayBusiness Exchange.  

The online super-seller may be up for auction.  For the past
month, it has been widely reported that EBAY and Yahoo have
been talking about a merger.  The price tag for EBAY has been
estimated to be as high as $35 bln.  Analysts have suggested
that a merger would bring significant benefits for both
companies.  EBAY needs to grow their audience to accelerate their
auction business and Yahoo needs a partner that will add eyeballs
for a longer time, allowing the search engine to connect anybody
to anything and generate larger advertising revenues.  Many 
companies have tried to enter into the Internet auction business,
including Yahoo.  EBAY is the sole reason that the many of these
companies have failed.  Additionally, EBAY has failed to establish
a dominant presence in international markets.  Yahoo's growing
audience outside the U.S. would help EBAY establish a dominant
position in Europe and Asia.  If a merger doesn't go through,
many analysts believe a strategic alliance will be formed
between the two companies.  Traders have welcomed the idea of a
mega-merger between the two companies, as shares of EBAY have
steadily climbed higher over the past month.  The stock hit an
all-time high Monday of $255, only to sell-off throughout the
week with the rest of the tech sector.  However, EBAY showed
impressive strength today, as traders bought the stock heavily
into the close.  We're looking for momentum to return to the
stock as traders look for an announcement about the possible
merger with Yahoo, and earnings season gets under way.
Throughout the week, EBAY has found solid support at the
psychological level of $200.  Look for the stock to continue its
momentum through today's close.  Watch for EBAY to move through
minor resistance at $210, which may provide a good entry point.
Once EBAY clears resistance at $210, the next bump in the road
is minor resistance at $230, after that we find major resistance
at $240.  Wait for the stock to gain steam and volume to pick-up,
once that happens we could be in for ride.

Further proof that merger talks are ongoing came Tuesday when
PaineWebber analyst Sara Farley raised her price target on EBAY
to $285 from $225.  The analyst cited higher growth and cash
flow assumptions.  Farley went on to say that EBAY has,
"articulated several new initiatives that should expand the
company's reach significantly."

BUY CALL APR-200 XBA-DT OI= 922 at $23.88 SL=16.00
BUY CALL APR-210*XBA-DB OI= 881 at $18.88 SL=13.75
BUY CALL APR-220 XBA-DD OI=3036 at $15.00 SL=11.00
BUY CALL MAY-220 XBA-ED OI= 224 at $27.00 SL=18.00

Picked on Mar 30th  at  $207.13    P/E = 1990
Change since picked       +0.00    52-week high=$255.00
Analyst Ratings     12-10-5-0-0    52-week low =$ 70.25
Last earnings 01/00    est=0.02    actual=0.04
Next earnings 04-24    est=0.03    versus=0.05
Average daily volume = 3.05 mln
/charts/charts.asp?symbol=EBAY



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

There are no new puts tonight.

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

INTC - Intel Corporation $127.00 -4.88 (-12.06 this week)

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.

Most Recent Write-up

While trading in a $10 range today, INTC gave investors quite 
a scare, and quite a bounce.  Going as low as $123.06, INTC 
made an about-face in the final hour of trading.  We watched 
grimly as major indices were brought down to particularly 
nerve-racking levels, but when institutional money finally 
stepped in, INTC was one of the beneficiaries as it recovered 
almost $4.  But the big news came after the close.  The IRS 
decided that INTC would be able to reverse $600 mln of previously 
accrued taxes which will give the company a windfall of $0.17 
per share for the current quarter.  Consensus earnings estimates 
are $0.69.  INTC traded up in after hours to as high as $129.50 
on the news.  This recent downdraft in the market has affected 
INTC as it came off its high of $145.38, yet today's late session 
buying spree brought some relief.  Tomorrow will be essential 
in determining which way this market will go so watch carefully 
and pick entries based on individual risk levels.    

Comments

The after-hours news listed above should put buyers back into 
the stock tomorrow.  Not to mention, the rumors of a positive 
operating quarter continue to be heard.  This should bring 
them back to the forefront.  Any entry under $130 would appear 
buyable once market direction is confirmed to the upside.

BUY CALL APR-125 INQ-DE OI= 7588 at $9.00 SL=6.75
BUY CALL APR-130*INQ-DF OI=13664 at $6.88 SL=4.75
BUY CALL APR-135 INQ-DG OI=11609 at $4.75 SL=2.50
BUY CALL MAY-135 INQ-EG OI= 1678 at $7.63 SL=5.00

Picked on Mar 19th at    $129.88   P/E = 66
Change since picked        -2.88   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



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

Soaring Economy Spurs Inflation Fears..

Investors were rattled by a report that the U.S. economy rose to
an annual growth rate of 7.3% in the final three months of 1999,
the strongest performance in 15 years.

****

There will be no "New Plays" today as the Spreads Section editor
is unavailable for research.  Fortunately, the recent volatility
in the broad market has given us a perfect opportunity to discuss
one of the lesser-used techniques in retail option trading:

Spreads with Indexes...

As a trader, you may be familiar with options on individual stocks
where you have the right to buy (call option) or the right to sell
(put option) a particular stock at some predetermined price within
a predetermined period.  The buyer has the rights and the seller
the obligations.  With index options the basic ideas are the same.
Index options allow you to make investment decisions on a specific
market industry or the market as a whole.  Spread strategies can
be constructed with index options similar to those with individual
stock options.  Experienced brokers employ index spreads in hedge
and income strategies and today we will discuss one of the more
conservative techniques available to retail traders.

Indexes...

Stock indexes are simply portfolios composed of numerous, assorted
company's shares.  Different indexes have different values because
of the composite shares' performance and the way they are weighted
in the index.  The S&P 500 Index for example, is a value weighted
combination of 500 different companies, representing approximately
80% of the value of all the shares traded on the New York Stock
Exchange.  Each company's weight in the index is determined by its
relative market importance and their values are then computed by
multiplying each company's number of outstanding shares of common
stock by the share's current cash market price.  These values then
are summed and compared to a 1941-1943 base period to determine
the final cash value.  The cash market values of the S&P 500 Index
represent the interaction between a market-wide rate of return
and the average growth rate in earnings (and dividends) and will
accurately reflect the overall market supply and demand factors.


S&P 100 Index Options...

A stock index option is an option on an index of common stocks.
The S&P 100 Index option, also known as the OEX, was the first
stock index option and has been the most popular.  The S&P 100
index is a capitalization-weighted index of 100 stocks from a
broad range of industries.  Similar to the other broad indices,
the component stocks are weighted according to the total market
value of their outstanding shares.  The impact of a component's
price change is proportional to the issue's total market value,
which is the share price times the number of shares outstanding.

There a number of differences inherent in index options, the most
obvious being the method of delivery upon exercise.  Obviously,
delivery of all the stocks represented in a stock index (when an
index option expires) would be very difficult since each stock has
a different weight in the index.  Consequently index options are
settled in cash, at option expiration.  Cash settlement means that
when the option buyer exercises the option at expiration, the
buyer receives (from the seller) the difference between the stock
index value and the strike price the option.  Most options, such
as the S&P 100 options are American style options.  That means
the option contract may be exercised at any time between the date
of purchase and the expiration date.  As with equity options, the
expiration of most index options occurs on Saturday, after the
third Friday of the expiration period.  Rotation cycles are also
similar as most index options have expirations for the current
month and the next three consecutive months.  Some index options
possess expirations for the current month and a following month
plus the next one or two expirations in one of the standard
options cycles.

Spread Trading...

The majority of experienced traders use options to speculate on
the movement of stocks and indexes.  The appealing feature of
option ownership is leverage with limited risk.  If a trader
correctly predicts the market direction and takes the appropriate
position, he can expect to make a profit.  Unfortunately, that
technique historically has a low probability of success.  The
reason is, over short periods of time (while the trader is
waiting for the option to rise in value), the position is at risk
from a variety of changes in the market.  One method that many
traders use to overcome that problem is spreading.  The basic
technique involves buying and selling simultaneous but opposing
positions in different option series.  The most common strategies
are used to reduce the cost (and the risk) of a position while
providing a higher probability of a limited return.

One of the most popular types of spread trading is the "credit"
spread.  The credit spread allows options traders to have time
decay work in their favor while maintaining a manageable level
of risk.  To initiate a credit spread, an investor would simply
buy an option and write an option that expire at the same time
but have different strike prices.  The written option is closer
to the money than the purchased option, and thus has a higher
premium.  The trader will receive a net credit and that is the
maximum profit available in the position.  The objective is for
both options to expire worthless, allowing the trader to retain
the initial credit.

Normally, a credit spread investor trades front-month options
only, as the time decay evaporates most noticeably in the final
few weeks before expiration.  The rapid time erosion benefits
credit spreads, assuming no change in the other variables that
affect option pricing.  One of the most attractive versions of
the credit spread is the "deep-out-of-the-money" position as it
has a very high probability of success.  Traders often utilize
simultaneous (OTM) bull and bear credit spreads to participate
in a popular neutral strategy known as the "Long Island Condor."
The technique is often used with index options and is a limited
risk, limited profit strategy.  Of course a favorable outcome is
for the index value to finish the expiration period between the
sold strikes of both positions.  In that case, all options expire
worthless and the trader is left with the original credit as
profit.

For OTM credit spread trades, we favor the actively traded S&P
100 Index options as they contain much more premium than options
on individual stocks and the broad range of issues provides an
underlying instrument less prone to huge, gapping moves.  Studies
have shown that this method of spread trading can be successful
in over 80% of the potential positions.  The reason is simple,
the strategy has a very high probability of a profitable outcome.

Probability of profit is determined by measuring the area under
a log normal distribution created by the volatility of the stock
or index.  That standard deviation under the distribution bell
curve is then converted into a probability.  In layman's terms,
probability is applying what you know about history to determine
the potential outcome of a future event.  With simultaneous (OTM)
credit-spreads, we are simply concerned with the probability of
the underlying instrument finishing the expiration period in a
given range.  If we construct our plays and positions based on
known patterns in volatility and pricing, the probability of
success can be increased dramatically.  In fact, that's the key
to successful option trading - using the knowledge of volatility
to analyze the potential for profit and evaluating it with regard
to the risk inherent in the position.

In the next installment, we will discuss the techniques used to
calculate expected ranges and probabilities and the most common
methods for selecting a favorable position.  Until then, you can
find more information about this strategy (and many others) in
the popular titles in the OIN bookstore.

Good Luck!



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

DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

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