Option Investor
Newsletter

Daily Newsletter, Sunday, 04/02/2000

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*******************************************************************
        WE 3-31          WE 3-24          WE 3-17           WE 3-10
DOW    10921.92 -190.80 11112.72 +517.49 10595.23 +666.41   -438.38
Nasdaq  4572.89 -390.04  4963.03 +164.90  4798.13 -250.49   +133.83
S&P-100  815.06 - 17.59   832.65 + 45.91   786.74 + 37.24   - 16.45
S&P-500 1498.58 - 28.88  1527.46 + 62.99  1464.47 + 69.40   - 14.10
RUT      539.09 - 34.93   574.01 -  0.76   574.77 - 29.04   +  5.93
TRAN    2763.24 + 75.09  2688.15 + 64.32  2623.83 +258.54   - 69.16
VIX       27.21 +  1.40    25.81 +  2.14    23.67 -   .13   +  2.51
Put/Call    .48              .42              .42               .39
*******************************************************************

A Day Trader's Dream

If you're a trader who lives for bi-polar manic behavior, 
Friday must have seemed like a dream come true.  Both the 
Nasdaq Composite Index (COMPX) and Dow Jones Industrial Average 
(INDU) experienced triple-digit intraday price swings, so 
could have been trading in both old-economy and new-
economy stocks.  

Needless to say, the COMPX was the more volatile of the two 
market barometers.  The tech-laden index finished the day up 
114.70 points, or 2.6 percent, to 4,572.59.  However, it was 
far from a straight shot.  After trading as high as 4,559.62 
shortly after the opening bell, the COMPX declined steadily to 
trade as low as 4,381 around 11:00 am EST.  By noon, though, 
the index had regained its footing and soared to a high of 
4,606 before some final hour selling clipped off 34 points.  

However, the COMPX's end-of-the-week run wasn't enough to off-
set the heavy selling pressure it endured through the last week 
of March.  When the pluses and minuses are tallied, the COMPX 
comes out decidedly in the minus column.  For the week, the 
index tanked 390 points, or 7.8 percent, recording its biggest 
one-week point drop ever, which puts it 9.4 percent off its 
5048.10 high set on March 10th.

Year-to-date, though, the COMPX is up 12.3 percent, putting it  
far ahead of the other major indices.  

It has been a circulatory trip to the top, to say the least.  
During the past three months, the COMPX endured four 
corrections, or drops of more than 10 percent from its previous 
high, including two in March.  But if the COMPX has proven 
anything, it's resilient, for each time the index dropped, it 
just as quickly recovered.   

As for the old-economy representative, the INDU finished Friday 
down 58.33 points, or 0.5 percent, to 10,921.92.  But unlike 
the COMPX, which had to rally from morning selling pressure to 
log its gain, the INDU spent most of the day in the black.  In 
fact, as late as 3:00 pm EST, the average was up nearly 128 
points, but strong selling pressure in the likes of Walmart (WMT), 
International Business Machines (IBM) and Home Depot (HD) sent 
the blue-chip average plummeting nearly 190 points in the 
final hour.   

For the week, the INDU gave up roughly 200 points, or 1.7 
percent of its value  

Like the COMPX, the INDU has had a quarter marked by volatile 
mood swings.  After climbing to an all-time closing high of 
11,722.98 on January 14, the INDU tumbled nearly 20 percent in 
late February and early March before making a Lazurus-like 
recovery to trade near 11,000 level, where it currently 
resides.   

However, despite logging a nearly 1,000 points gain in March, 
the blue-chip index is still down more than 5 percent year-to-
date.  The loss is due in no small part to the average's worst 
performer, Procter & Gamble (PG), which is off 48 percent for 
the quarter.  

Turning to Friday stock trading, the B2B e-commerce issues were 
definitely the headline grabbers of the day.  Ariba (ARBA) lost 
$10.38 to $209.63, Commerce One (CMRC) tumbled $24.06 to 
$149.25 and I2 Technologies (ITWO) dropped $6.88 to $122.13.  
This lead B2B triumvirate fell victim to a bearish report 
issued by Prudential Securities that lowered the 12-month 
target for the all three companys.    

But the B2B guys weren't the only Internet losers.  Drkoop.com 
(KOOP) fell $2.56 to $3.69 after auditors said they had serious 
doubts about the ability of the online healthcare site to stay 
in business.  PricewaterhouseCoopers reported that DrKoop has 
sustained losses and negative cash flows from operations since 
its inception. 

Another big Internet loser was online auctioneer eBay (EBAY), 
which plummeted $31.13 to $176.  In an SEC filing Thursday, the 
company said the Justice Department subpoenaed documents last 
week related to an investigation into allegations of commission 
price-fixing by Sotheby's and Christie's.

Bucking the trend was Yahoo! (YHOO), which gained $4.88 to 
$174.75.  However, the Internet portal still finished the week 
over $20 in the red.  The company reported last week that it 
was being investigated by the Federal Trade Commission over the 
manner in which it gathers consumer information.  

Other Friday winners include leading electronic bill payment 
systems company, CheckFree (CKFR), which moved up $9.50 to 
$70.50 after Lehman Brothers (LEH) restarted coverage of the 
company with a "buy" rating and a $150 share price target. 

Shares of Net2Phone (NTOP) gained $3.75 to $59.13 after a group 
of telecoms led by AT&T (T) announced they would buy a 39 
percent voting stake in the Internet telephony company for 
about $1.4 billion, or $75 a share.  For its part, AT&T fell 
$0.69 to $57.06. 

Friday's IPO du jour was web-switching products maker 
ArrowPoint Communications (ARPT), which shot up $84.49 to 
$118.49 after selling 5 million shares to the public at $34 per 
share.  High projected demand for the company's products and 
exposure to Internet infrastructure companies made ArrowPoint 
one of the hottest IPOs in recent weeks, in spite of the fact 
the company will be butting heads with the likes of Cisco 
Systems (CSCO). 

And speaking of Cisco, the company's shares closed the week up  
$3.69 to $77.31.  The Internet routing and switching giant had 
quite a week, overtaking Microsoft (MSFT) to become the world's 
most valuable company. 

The 30-year Treasury also closed the quarter on an up note. 
The bellwether bond rose 16/32 to 105 25/32 on Friday, causing 
the bond's yield to fall to 5.84 percent.  Over the past 
quarter, the 30-year Treasury has risen 10.3 percent, marking 
its best quarterly performance in over a decade.  

In Friday's economic news, The Commerce Department reported 
consumer spending increased 1 percent in February after rising 
0.6 percent in January.  Moreover, incomes rose 0.4 percent in 
February following a 0.7 percent rise a month earlier.  The 
report suggests first-quarter consumption - which accounts for 
two-thirds of US economic output - is on a pace to be the 
strongest in almost 15 years. 

As for next week's Economic data, Monday brings news from the 
National Association of Purchasing Managers.  This survey of 
purchasing managers will give insight into the costs of 
production in the manufacturing sector.  

The most important data set for the week, though, will be 
released on Friday, when the Labor Department releases its 
report on non-farm payrolls, the unemployment rate, growth in 
hourly earnings, and the average hours in the workweek.  The 
consensus among economists is for 400,000 jobs to be added.

Of course, starting a new quarter can only mean one thing, a 
whole new batch of earnings reports to digest.  Big players 
releasing quarterly earnings this week include Yahoo (YHOO), 
which is scheduled to release on Wednesday, and General 
Electric (GE) and Alcoa (AA), both of which are scheduled to 
release on Thursday. 

Analysts are expecting earnings for the January to March period 
to be decidedly positive because few companies have pre-
announced negative earnings.  In fact, the number of negative 
pre-announcements on first-quarter earnings currently stands at 
125, well below the final total of 379 for the first-quarter of 
1999.

What's more, the proportion of companies beating estimates in 
last year's fourth quarter was higher than normal, and that 
trend appears to be continuing.  According to First Call, early 
reports show 14 percent of reporting companies coming in above 
expectations.  

Despite the anticipated bullish earnings reports, technicians 
foresee the COMPX settling into a trading range in the near-
term between 4300 and 5000, with Thursday's low of 4355 
providing a key support level and the 4675 to 4710 range 
providing upside resistance. 

Over on the INDU, investor appetite for value could intensify 
next week based on one significant contrarian indication.  Last 
week, after 2 years of dreadful returns, renowned value 
investor Julian Robertson closed shop.  Over that time span, 
Robertson saw his Tiger Funds, which had substantial leveraged 
positions in the likes of XTRA (XTR), United Asset Management 
(UAM) and US Air (U) shrink in value from $23 billion in assets 
to $6 billion. 

Whether Robertson turns out to be the the ultimate contrarian 
value signal remains to be seen.  Nevertheless, seeing how 
miserable last week was for equities, this week will likely be 
better.  After all, there was a bunch of managers busily 
selling their losers last week in order to spruce up their end-
of-quarter statements.  These folks are now sitting on a horde 
of cash that needs to be put to work.  

Whether that money gets cycled into old or new economy stocks 
remains to be seen.  One thing is for certain, though, after 
witnessing the brutal sell-off in speculative tech issues over 
the past few weeks, investor sentiment has definitely turned to  
high-quality growth.  

S.P. Brown
Senior Writer



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

When In Doubt, Get Out.
By Ryan Nelson

That was the theme for the week, and it left us on the sidelines 
for the most part.  This market is really having a tough time 
making up it's mind relative to the direction it wants to go.  
Some bulls are trying to kick start these stocks ahead of 
what should be a fantastic earnings season, but the bears appear 
to have the upper hand when it comes to sentiment.  The Nasdaq 
has been ailing and you would be hard pressed to find an 
analyst willing to back the case for higher prices.  Where is 
Joe Battapaglia when you need him?  (long time bull, for those 
of you who are new to the markets).  The DJIA may be where the 
action is, but when will this index make a solid close over 
the 11,100 level?  Not to mention, summer is around the corner 
and most money managers are already dusting off those suitcases 
in advance of their annual trip to Long Island.  Here they will 
spend their time on the beach, not trading stocks.  You have 
to wonder if some or most of this action is profit-taking ahead 
of the summer doldrums.

Before we jump to the charts, let me say that we had a great 
time getting to meet everyone at the seminars this past week.  
It helps to put a face to all the correspondence we've had 
with you for the past year.  And it allows us to better tailor 
our newsletter to your needs and trading styles.  Thanks for 
the support and, on behalf of the entire staff, we look forward 
to seeing you at a seminar in your area soon or back in Denver 
next year.

Also, we will have a full staff back in the office next week so 
send in more symbols as we will have time to analyze more plays.

----------------------------

Digital Microwave - DMIC

I would appreciate your opinion on Digital Microwave
Corporation (DMIC).
Thanks... Glen

Funny you should ask.  We had this on our short list to add 
as a put play this weekend in the newsletter, but passed for 
a few reasons.  

We like the looks of the breakdown below $40 recently as the 
stock showed no strength as it fell.  It has also continued to 
move lower on decent volume.  The reason we left it off though 
is the wild swings it has seen the past few sessions.  Down 
to $33, up to $38, down to $33, up to $37, down to $31, and 
back to $33.  This is indicative of indecision among traders
of where DMIC is headed.  Therefore, I would not play it 
either way until it establishes a trend again.   


 

----------------------------

Ariba - ARBA

Please discuss Ariba.  I keep thinking it has found a bottom 
and started a rally.  Then as soon as I'm in, it goes down again.    
Thank you, Margaret Parks

What an incredible run Ariba has had.  In both directions too!  
I know how you feel, it is extremely difficult to decipher 
when a bottom has taken place.  I usually look for that one 
massive capitulation day before buying.  I must have thought it 
was on Friday because I went long after it cratered down to 
$180.  This happened after Prudential downgraded most of the 
B2B sector, including ARBA.  But as you can see on the charts, 
ARBA has support at $180.  What impressed me the most was the 
quick rebound.  In fact, it was so quick that I closed out my 
position later that day as I had already reached my goal for 
the play.  Who knows, by Monday I could be kicking myself for 
not holding a bit longer.

The B2Bs will likely comeback to the spot light, but when is 
a tough question.  If you play this group with options, try 
to keep it to the quick plays.  More consolidation may be in 
order for this sector.


 

----------------------------

Good Luck to all and don't forget to send in the symbols for 
any stock you want analyzed.  Send those requests to 
Contact Support.  Please put the symbol in 
the subject line of the e-mail. 

----------------------------

DISCLAIMER:
This column 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 Ask the Analyst 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 its accuracy.



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

As of Market Close - Friday, March 31, 2000 

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

DOW Industrials   10,850  11,250  10,922    Neutral   3.16
SPX S&P 500        1,410   1,475   1,499    BULLISH   3.21
OEX S&P 100          780     800     815    BULLISH   3.21
RUT Russell 2000     510     530     539    BULLISH   2.24
NDX NASD 100       4,000   4,150   4,398    BULLISH   2.24
MSH High Tech        975   1,000   1,062    BULLISH   2.24

XCI Hardware       1,480   1,510   1,662    BULLISH   2.24
CWX Software       1,390   1,670   1,442    Neutral   3.21
SOX Semiconductor  1,130   1,360   1,182    Neutral   3.21
NWX Networking     1,000   1,190   1,056    Neutral   3.30
INX Internet         770     800     824    BULLISH   3.09

BIX Banking          520     600     575    Neutral   3.16
XBD Brokerage        450     480     537    BULLISH   2.31
IUX Insurance        520     600     590    Neutral   3.16

RLX Retail           900   1,000     954    Neutral   3.16
DRG Drug             330     380     347    Neutral   3.30
HCX Healthcare       680     750     700    Neutral   3.30
XAL Airline          130     150     145    Neutral   3.10
OIX Oil & Gas        265     300     293    Neutral   3.16

 
Posture Alert    
Friday's trading capped off a volatile month, as all indexes 
gyrated in a fashion that made bull and bears queasy. Sectors that 
outperformed Friday include the NASDAQ 100 (+3.47%), Airlines 
(+2.98%), and Banking (+2.71%). Sectors getting hit include Retail 
(-2.66%), and the Dow (-.53%). For the month of March, leaders 
include Airlines (+24%), Insurance (+23%), Brokerage (+19%), and 
Banking (+18.5%), There are no current changes in posture.



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

Sunday, April 2, 2000

Yahooooo!
 
The month of March ended in volatile fashion, which was only the way is 
should have ended. The NASDAQ, which has gone through the 3rd, or is it 
the 4th correction this year, rebounded as mutual funds ended the 
quarter. Many thought that window dressing was prevalent this week, but 
with so many different stories to talk about, you can never know the 
true reason for weakness in technology shares. Here at Pinnacle, we 
thought there were numerous entry points reached on Thursday, as CNBC 
was touting every bearish statistic possible. Not only were they 
touting the bear statistics, but also they tried to get every bear to 
come on live television. This is usually the sign of a good entry 
point. Regardless, the month is over, and many of the leading sectors 
were locked in a trading range motion, while some beaten up sectors 
rebounded sharply. To truly have made money in March, you had to trade 
technology shares, as many whipped violently back and forth, or you had 
to be long some of the sectors listed below:

Airlines   +24% 
Insurance  +23%
Brokerage  +19%
Banking    +18%
Oil & Gas  +16%
Retail     +14%
S&P 100    +10%

Now last week, there was only one real good sentiment stock to play. 
Not only was it the highest expectation stock last Sunday, but Pinnacle 
revisited it Tuesday before earnings, which showed the same expectation 
level. That stock was Cabletron Systems. It not only had the highest 
Pinnacle Index, but was also registering bullish figures off the 
charts. This was a good indication of a possible pullback. Well, we got 
it, as the stock fell from 51 to 28 in a matter of two days. The April 
50 put was going for 3  Monday, and traded around 22 on Thursday. 
Pretty good return for those of you who had played it! Anyway, the main 
earnings season is still several weeks away, but there are a few 
companies who are expected to report this week, including Yahoo. 
Hopefully, the sentiment, which happens to be the third piece to the 
puzzle (after fundamental and technical analysis), will help some of 
you! 

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*:

Yahoo             YHOO     2.55      +.09       +.11       4/5
Circuit City      CC       2.42      +.78       +.79       4/6
Ask Jeeves        ASKJ     0.95      -.74       -.70       4/3    


Short Interest:       3/15            2/15
Yahoo              28,703,223     23,122,986
Circuit City        2,452,493      1,087,722
Ask Jeeves          1,284,903      1,284,073

Based on the above sentiment, Ask Jeeves would be considered a low 
expectation stock, with Yahoo and Circuit City both being average. 
However, considering the wide following of Yahoo, we do believe that 
this expectation level is low, and would not be surprised to see a 
rally. However, bullishness comes into significant play at the 200 
level, so we would doubt that Yahoo will move above this benchmark. 
Have a good trading week.


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 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 (5.846):
The current yield is in bullish territory.

Volatility Index (27.21):
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.


Mixed Signs: None

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                        (3/31)

Overhead Resistance (830-860)     4.20    

OEX Close                       815.06

Underlying Support  (800-825)     1.01 
Underlying Support  (770-795)     1.52

What the Pinnacle Index is telling us:
Based on Friday's sentiment, overhead is still moderately heavy, while 
support is light. We would expect a trading range market leaning 
towards the bearish side.



Put/Call Ratio                  Friday
Strike/Contracts                (3/31)

CBOE Total P/C Ratio             .48
CBOE Equity P/C Ratio            .35
OEX P/C Ratio                    .79


Peak Open Interest (OEX)
                     Friday 
Strike/Contracts     (3/31) 

Puts                600 / 7,509
Calls               830 / 6,037    
Put/Call Ratio         1.24


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 31, 2000                          27.21   



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

For the week of April 3, 2000

Monday

Auto Sales               Mar    Forecast:   7.3   Previous:   7.6
Truck Sales              Mar    Forecast:   7.8   Previous:   8.4
NAPM Index               Mar    Forecast:  56.5%  Previous:  56.9%
Construction Spending    Feb    Forecast:   0.2%  Previous:   2.7%

Tuesday

Leading Indicators       Feb    Forecast:  -0.1%  Previous:   0.3%

Wednesday

NAPM Services            Mar    Forecast:   N/A   Previous:  58.0%

Thursday

Initial Claims           04/01  Forecast:   270K  Previous:  268K
Wholesale Inventories    Feb    Forecast:   0.6%  Previous:  0.7%

Friday

Nonfarm Payrolls         Mar    Forecast:   375K  Previous:   43K
Unemployment Rate        Mar    Forecast:   4.0%  Previous:  4.1%
Hourly Earnings          Mar    Forecast:   0.3%  Previous:  0.3%
Average Workweek         Mar    Forecast:   34.5  Previous:  34.5
Consumer Credit          Feb    Forecast:  $10.0B Previous: $17.0B  


Week of 4/10

04/12 Export Prices ex-ag.
04/12 Import Prices ex-oil
04/13 Retail Sales
04/13 Retail Sales ex-auto
04/13 PPI
04/13 Core PPI
04/13 Initial Claims
04/14 CPI
04/14 Core CPI
04/14 Business Inventories
04/14 Industrial Production
04/14 Capacity Utilization
04/14 Michigan Sentiment



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

Bullish Call Spreads
By: Mary Redmond

Bullish call spreads can sometimes be a way to profit from an 
anticipated rise in a security without as much risk as the 
outright purchase of a call.

It is generally best to follow the trading pattern of a 
particular stock before initiating a spread of any type.  
Once you have a good idea of the fundamentals of a company, 
the way the company responds to good and bad news in the 
market, and its key support and resistance points, you are 
in a better position to judge where the price will be on 
expiration date.

For instance, if XYZ stock were 125 you could look at the 100 
and 110 calls for the expiring month and one or two months 
ahead.  The 100 calls would probably be more expensive than 
the 110 calls.  If the 100 calls and the 110 calls were not 
yet 10 points apart in value there might be a possibility for 
a spread. 

To be more specific, assume  XYZ is 125.  If the May 100 calls 
were 35 and the May 110 calls were 30 there could be a 
potential spread.  You could buy the 100 calls at 35 and sell 
the 110 calls at 30.  If XYZ stayed above 110 by expiration 
the profit would equal the difference between the two strike 
prices, 10 points.  Since you paid 5 points and made 5 points 
your profit would be 100%.

The potential loss in this case is limited to the amount you
paid for the spread or 5 points.  If XYZ really tanked and
closed below 100 on the expiration date you would lose 5 
points.

One of the difficulties of trading options is that the market 
makers often make it difficult to obtain optimal pricing, and 
in spreads it can really make a difference.  I used a very 
simplistic example above (XYZ 100 calls at 35), but when you 
look at option quotes on Nasdaq stocks there is usually at 
least a point difference in options which are a month or
more away from expiration, and sometimes as much as two 
points.  A real life quote (as opposed to theoretical) for
this would probably be something like XYZ 100 calls 35 bid
36 7/8 ask.  

I have found sometimes if I put in a bid 1/8 point below the
ask on a Nasdaq option I will be filled, but sometimes it
takes a few minutes.  In certain circumstances you are at 
the mercy of the market makers.  This is particularly 
pronounced when trading LEAPS as they are usually not as
liquid as short term options.  If you really want the thing
right away you probably have to pay the ask.

This is where the difference between New York Stock Exchange
and Nasdaq exists as far as execution.  Even now-a-days in the
world of ECNs and giant market cap companies on the Nasdaq,
I still think there is superior execution on the NYSE because
you are dealing with specialists, not market makers.

Specialists are required by the exchange to maintain an
orderly market in their stock.  This means they use their 
own judgement to open a stock if there is a severe imbalance
between buy and sell orders, and constantly match buy
and sell orders during the day.  If you put in an order
for a NYSE stock between the bid and ask you have a much
better chance of execution than on the Nasdaq.  

In addition, the New York Stock Exchange is more heavily
regulated than the Nasdaq markets.  The NYSE sets trading
stops and curbs if there is a severe sell off or imbalance.
There are no trading curbs on the Nasdaq, it's essentially
a free for all.

There was a marked decrease in the amount of cash flows
to equity funds this week as compared to the prior week.
Trimtabs estimated that approximately 5.1 billion dollars
went into equity funds this week, as opposed to 18.5
billion the prior week.  AMG Data Services estimated that
the cash flows were only 1.1 billion.  No technical 
indicator is ever completely accurate, but periods of 
high cash flows to equity tech funds usually show
a rise in the Nasdaq.  

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


Spreads Are Boring-Unless You Leg In and Get Infinite Returns
By Lynda Schuepp

Trading spreads is like watching grass grow, unless the grass 
is growing at a foot a minute.  I got paid $250 to make a 
potential of $40,000.  Is anyone listening now?  

Two weeks is a long time to be gone, hope you all remember me.  
I just got back from Denver after a week of skiing at Vail with 
my family.  I sent them home and stayed another week to attend 
the OIN Expo.  I want to say Hi; to all the terrific people I 
met out there.  Anyone who didn't attend the OIN Expo really 
missed out.  Fortunately for you, there'll be another next year.  
My recommendation-don't miss it.  It was the best seminar I ever 
attended.  

Now back to the topic of making infinite returns on spreads.  
First, I'd like to provide some insight into why investors 
choose spreads for a portion of their portfolio.  I am asked, 
if you are bullish, why not just buy the call or sell the put.  
My answer is this:  I love to buy calls and sell puts, just not 
on the major part of my portfolio.  Let's say you are starting 
out with a portfolio of $30,000.00 and you understand the risks 
of option trading, you might be willing (not happily) to lose 
the entire amount.  You also might have determined you would be 
willing to lose up to 10% on any one trade.  With this kind of 
risk you should expect large returns.  Let's say after 2 years 
you have grown your $30,000.00 into a million dollars (it has 
been done by some of our readers).  Now I ask that same person, 
"Are you willing to still risk 10% or $100,000.00 in every trade 
you make?"  The response typically is "No, I don't want to lose 
my million dollars."  Enter stage left -"Spread Trading".

Let me share with you a spread that I put on GE that might 
light a fire under you Spread Nay-Sayers.  If I'm lazy or busy 
with life, I'll put on both legs of a spread at the same time.  
The risk and reward is easy to quantify and the expected returns 
are fairly predictable, assuming you buy enough time. I will use 
the example of a bull call spread, where you buy a lower priced 
strike and sell a higher priced strike.  I personally like to 
buy the lower strike call "in-the-money" to avoid paying a lot 
of money for time-value and sell the higher strike call "out-of-
the-money" to obtain a nice wide spread, which is the maximum 
profit (less the cost to get in).  I particularly like to do 
this with leaps.  There are two things I particularly like about 
leap spreads.   First, you have a lot of time to be right and 
secondly, the volatility or "sleep at night indicator" is 
considerably less because of all that time value.  Time Value 
decays exponentially in the last 30 days and particularly in the 
last week.    

Most people say leaps are too expensive. For example, my long 
leg on GE cost me 29-3/4!  That was almost $30,000 on ten 
contracts.  I purchased the Jan02 140 calls at 29-3/4 on March 
15th.  I had been watching GE since the beginning of the year.  
At the end of January, after a descent from about 160 to 135, 
GE formed a doji candlestick.   This is a very popular trend-
reversal sign but I never trust doji's at bottoms, as they are 
much less reliable than at a tops.  I always wait for confirmation.  
If the doji is at a bottom I wait for major confirmation.  I 
didn't get that major confirmation until the middle of March.  
This is where patience pays off.  Because I was planning to 
buy the leap with a longer time horizon, I decided to wait 
until the faster moving average (10 day) crossed back up above 
the 50 day.  

On March 15th, one of my favorite Japanese Candlesticks patterns 
emerged (A Bullish Engulfing Pattern) which engulfed 5 days!  
This pattern has always proven to be a very strong one particularly, 
when it engulfs 3 or more days.  With three of my favorite 
indicators all positive (candles, volume, moving average cross-
over), I bought the Jan02 140 calls near the close of the day at 
the high.  

Because of the strong indications that a reversal was in play, I 
decided to wait before writing the short OTM call until GE hit 
resistance.  The first level of resistance was at about 155 set 
back on January 13th, and the second was 160 set on December 27th.  
Six days later GE blew past the first level of resistance of 155 
and closed at 160, the second level of resistance!  After a Tower 
Top Candlestick pattern, fear and greed come in and battle it out.  
Because I'm not the only person who realizes 160 is a key 
resistance level, I decided to wait it out and see if the bulls 
or the bears would win.  If GE moved down below 155 (support) I 
would lock in my profits.

GE moved up to a high of 164 7/8 (a new high) on very big volume.  
The next two days the bears won and GE moved down to the first 
level of support (155).  After it's nosebleed ascent, I thought 
I was pushing it (fear entering) so I decided to lock in my 
profits and write the Jan02 180 call in case GE continued lower.  
I could have written the April 160 calls for about 3 1/4 but the 
JAN02 180 calls were trading at about 30. At that price, my basis 
would be negative.  I would actually cover my cost (29-3/4) and 
take home $250, free and clear.  My maximum profit potential 
would be $40,000 or the spread itself (40 points) times my 10 
contracts.  

I'll probably wake up Monday and find GE gap open above 160, but 
you know what? I don't care.  This is a sweet deal, and now I can 
spend my time finding more exciting short-term plays.

Here's where I need you to help me out, because I'm having trouble 
with the math.  If the spread cost me nothing, my return would be 
infinite but because I actually got paid $250 for putting on the 
spread, and I have no further risk, how would I calculate this 
rate of return?



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

Friday March 31, 2000 AM - Too darn early 
Harrison Frolick

Well, howdy sports fans.  Run out of expletives for the market 
yet? Should have a slight bounce today.  Got up early and decided 
to do some catching up on reading.  I have been really busy with 
my other businesses as of late and believe it or not, was not 
able to look at any of my portfolios since Monday.  Oye, not as 
bad as I thought.  Anyone else get any margin calls?

While the market is a concern, what I am most concerned about is
our illustrious Federal Government and there interpolation of the
numbers from the economy.  In all my years of study of
Capitalism, I have never seen as large of a disconnect from the
Feds view and what is actually going on as is occurring now.

Lets look at some of the facts and I am going for the short 
version here as the whole thing is not as complicated as most 
would like to make it.  The economy is growing far faster than 
the Feds would like.  Mind you, that the number that they would 
like is completely arbitrary.  Lets face it, the economy has been
on a tear since the tax reductions of the early 80's kicked in and
there has been virtually no inflation.  Zippo nada, unless we 
include tobacco which is a non-starter anyway and the artificially 
controlled price of oil.  This is in spite of what the boneheads 
in Washington have done, not because of it.

While the Feds have played lip service to understanding the new 
"Paradigm" in the economy, their recent actions prove that they do 
not have a clue.  As an investor, you need to be aware of this as 
they could screw up your plans royally for a very nice retirement
in short order.

Most of you very bright option investors already have a pretty 
good handle on the reason why the economy has done what it has 
done, which is why you are reading this instead of the Wall Street 
whatever and getting your fingers black.  It is the computer!  
Moore's law is responsible for the current economy, not anyone 
in the Federal Government.  Just to jog your memory, Moore's Law 
states that the available computers will double in speed every 
18 months.  That is a 100 percent improvement compounded mind you, 
every 18 months. This has been going on since 1946 or so.  Take 
a look at these sites if you want to see a graph and learn Moore 
(how often will I get a chance to make a pun like that),
www.tolearn.net/marketing/moores_law.htm. and also  
http://riccistreet.net/gizmos/toolkit/moore.htm.

Here is a great example of Moore's Law in action.
 
If a digital cell-phone was made with vacuum tubes instead of 
transistors, it would occupy a building larger than the 
Washington Monument.  Try putting that in your pocket!

(Thanks to Doug Anderson for the info and the sites!)  

If you go to the site as Doug says, the numbers are so big and 
small that he can only chuckle.  I would have to agree with him!
What is not funny is the Feds inability to grasp the situation.
My problem is that is that these guys are supposed to be smart, 
and have the average citizens best interest at heart, but I fear
that they are truly catering to a  very, very select few special
interests or they don't get it.  Either scenario is truly scary.

What is the big deal about Moore's Law?   It means that any 
process involving a computer (name one that doesn't), is 
improving at a 100% clip every 18 months compounded.  
I admit not all of this is translated directly into monetary 
improvements but, one heck of a lot of it is.

So the next time you check your email, just remember that only 20 
years ago it would have taken about 15 people and millions of 
dollars of computing power and several hours to do what you just
did in 30 seconds for about .001 of a cent.

Now here is the tough one!  Try and figure out why the Feds can't 
figure out the impact of Moore's Law on the economy on their own?
Let me know will you?

Happy Trading!




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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              4-2-2000
Sunday                        2 of 4


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

Daily Results

Index      Last    Week
Dow     10921.92 -190.80
Nasdaq   4572.89 -390.04
$OEX      815.06  -17.59
$SPX     1498.58  -28.88
$RUT      539.09  -34.93
$TRAN    2763.24   75.09
$VIX       27.21    1.40

Calls              Week

BBY        86.00    8.06  New, the answer is in the earnings
LGTO       44.63    7.63  New, swimming upstream against  market
KSS       102.50    5.94  Beating earnings and their peers
QCOM      149.31    3.31  Settlement with Motorola is official
PCS        65.50    1.00  Another all-time high on Friday
NOK       222.00    0.25  4:1 split coming ex-div on the 10th
MFNX       96.75   -1.31  Nice recovery, now time for split run
BAC        52.44   -2.19  Holding well versus market and sector
T          56.31   -2.44  Drifting lower, but IPO later this month
IBM       118.00   -3.50  Will Big Blue lead the DJIA higher??
AOL        67.44   -3.56  Entry point for the earnings run
INTC      131.94   -7.13  IRS coughs up $600 gain for Intel
SEG        62.50   -8.50  New, VRTS deal offers new angles
SCH        56.81   -8.69  Dropped, broke the current uptrend
GMST       86.00   -8.75  New, entry at $80 was a gift
HWP       132.88   -9.50  Late day sell-off offers entry points
INKT      195.00  -21.81  New, infrastructure play 
YHOO      171.38  -22.63  Close up ahead of earnings
EXDS      140.50  -32.81  Time for a recovery this week
CHKP      171.06  -47.44  Added to Goldman's recommended list
EBAY      176.00  -67.75  Dropped, bad news prevents opening plays

Puts

ISLD       60.94  -15.06  Dropped, time to take profits
IIJI       69.75  -12.25  New, Mark Mobius comments still hurting
AT         63.25   -4.69  Rollover from resistance has begun
PSIX       34.03   -3.75  Be careful of a bottom forming at $33
GTW        52.97   -3.22  Investors fear earnings and revenues
CPQ        27.00   -1.94  Lifetime put candidate status



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

Calls

INKT - Inktomi
LGTO - Legato Systems Inc
GMST - Gemstar International
SEG  - Seagate Technology, Inc
BBY  - Best Buy Co. Inc


Puts

IIJI - Internet Initiative Japan Inc 


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

EBAY $176.00 -31.13 (-69.01) We said yesterday to watch for
momentum to carry EBAY higher into Friday.  Well, momentum didn't
carry through as the stock gapped down this morning by $7, amid a
Department of Justice auction probe.  The investigation is not
about EBAY, it is about Butterfield & Butterfield, a fine art
auction house acquired by EBAY last year.  The Justice Department
last week subpoenaed documents related to a price-fixing scheme,
in an investigation that began in 1997.  After the gap down this
morning EBAY moved sharply lower on heavy volume and closed near
its day low.  More bad news broke late Friday as the Wall Street
Journal reported that merger talks between Yahoo and EBAY had
ended.  The Journal reported that the two companies were close 
to reaching an agreement but could not finalize the details.  
In light of the federal investigation and merger talks ending, 
EBAY dropped 15%, and no one should have entered this play. 

SCH $56.81 -2.19 (-7.63) Our SCH play broke down today as the
stock fell through its crucial $59 support level.  SCH traded
lower in spite of several positive announcements Friday.  The
company announced today that it had partnered with Dow Jones (DJ)
to offer financial news in China.  Also on Friday, Bear Sterns
raised the 12-month price target on Schwab to $80 from $65.  The
good news didn't provide any relief to SCH as the stock fell
along with the weakness in the e-finance sector.  The broader
finance sector showed solid gains today while the online brokers
were down.  SCH dropped below its 10-dma today, which has proved
to be a point of support during the recent run.  In light of the 
breakdown today, and continued weakness in the e-finance stocks 
we have decided its time to exit our SCH play.


PUTS

ISLD $60.94 (-15.06) We've had fun bobbing in the stormy
NASDAQ seas with ISLD, managing to ride it from a crest near $82
to a trough below $55.  Buffeted by the NASDAQ  this week, ISLD
has had 7 consecutive down days and, if it's pattern holds true,
is due to bounce.  Not only that, but it is sitting on major
support at $60, and if the NASDAQ recovers next week, ISLD will
likely go along for the ride.  For now, we'll drop ISLD in favor
of better plays.



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

Current split candidates 

YHOO - Yahoo!
INTC - Intel Corp.
HWP  - Hewlett Packard
QCOM - QualComm
INKT - InkTomi
CHKP - CheckPoint Software

Split candidates that aren't current plays 

TXN  - Texas Instruments
EMC  - EMC Corp.
PHCM - Phone.com
FDRY - Foundry Networks


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

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

Symbol - Stock          Splits/Date  
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
MU   - Micron Tech      2:1 05-01-00 ex-date 05-02
BALT - Baltimore Tech   5:1 05-10-00 ex-date 05-11
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
MSA  - Mine Safety App. 3:1 05-24-00 ex-date 05-25
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:
**********************

MFNX - Metromedia Fiber Network $96.75 (-1.25)(+10.00)

See details in sector list

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

****

AOL - America Online Inc. $67.44 (-3.56)(+6.63)(+5.63)

See details in sector list

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


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

CPQ - Compaq Computer Corp. $26.75 (-1.94)(-1.56)(-0.75)

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
***********

SEG - Seagate Technology, Inc. $62.50 (-8.50)

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.  Through investment activities Seagate has
acquired 128 mln shares of VERITAS Software (VRTS).

Traders have been using SEG as a cheaper way to play VRTS.  After
the announcement last week, traders will be watching SEG and VRTS
even closer.  Seagate, VERITAS Software, and an investor group
led by Silver Lake Partners announced a $20 bln transaction on 
Wednesday.  In the deal, VERITAS Software will acquire all of the
VRTS shares currently held by Seagate.  The investor group will
then acquire the Seagate operating business for cash.  Essentially,
VERITAS is buying Seagate and turning them private.  SEG
stockholders will receive 0.467 shares of VRTS common stock and
$5 cash for each share of SEG stock.  Seagate executives have
expressed frustration with the lagging price of the stock.  They
see the deal as a way to unlock shareholder value.  During a
difficult time for disk-drive makers, SEG is attempting to grow
their core business with this large cash infusion.  Analysts feel
this is a win/win situation for both SEG and VRTS shareholders.
Analysts say that VRTS should be a core holding as a result of
its strength in management, growth potential and enhanced market
position through the transaction.  The deal gives SEG shares a
value of $77.50, a significant premium over the closing price on
Friday.  What's interesting is that the deal is not affected by
any subsequent moves in the stock prices due to the structure of
the agreement.  VRTS took a hit last week with the rest of the
tech sector and dragged SEG down with it.  Once the arbitrageurs
are done selling VRTS and the tech sector regains footing, SEG
could move much higher.  We're looking for VRTS to turnaround and
carry SEG higher.  Watch the action in VRTS before entering into
the play, look for SEG to bounce off support at $60 and confirm
with direction in VRTS.

Good news for VRTS is good news for SEG.  Salomon Smith Barney
upgraded VERITAS to a Buy from Outperform on Thursday.  The 
brokerage house maintained its $200 price target on VRTS.  Also
of note, VRTS was added to the S&P 500 last week.  With all 
the portfolio rebalancing taking place last week, some big
institutions may begin adding VRTS.  

BUY CALL APR-60*SEG-DL OI=3403 at $6.00 SL=4.00
BUY CALL APR-65 SEG-DM OI=3403 at $3.88 SL=2.00
BUY CALL APR-70 SEG-DN OI=4306 at $2.75 SL=1.25
BUY CALL MAY-65 SEG-EM OI= 150 at $6.25 SL=4.25

Picked on April 2nd at   $62.50    P/E = 15
Change since picked       +0.00    52-week high=$75.44
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

****

IBM - Int'l Business Machines $118.00 (-3.50)(+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.

The abundant reports of new alliances and products coupled with 
a strong earnings' outlook is sustaining IBM's uptrend.  The 
stock's price level is currently the highest it's been since 
September 1999.  This in itself is bringing IBM attention.  The 
news on Monday that IBM signed a seven-year pact with Qwest 
Communications International to jointly build 28 new Internet 
date centers for Web management drove up the share price by 
5.8%.  Plus MSDW's upgrade to an Outperform from Neutral and a 
$140 price target gave it a boost.  There were also other 
positive events to keep IBM on track this week (see update 
below), but the massive tech-shedding hindered its progress.  
But we've still got earnings coming up in a couple weeks.  IBM 
is tentatively reporting around April 18th (to be confirmed) and 
the whispers are positive suggesting the company will easily 
beat the Street's estimate.  As it turned out, the $118 and 
$122 range established as near-term support.  The first 
challenge is for IBM to tackle $124 and $125 then make a valiant 
charge for $130 again.  This move would provide definitive 
confirmation.

Also at center stage this week was news that IBM found a way to 
make a mainframe act like hundreds of smaller computer servers.  
This is leading-edge technology will cut into Sun Microsystems' 
sales since many companies that use IBM mainframes often turn to 
SUNW for the server end of the business.  IBM announced too a 
product alliance with Microsoft to sell a lower-cost appliance 
server.  For Microsoft, this product launch marks its debut into 
a market that is expected to have cumulative revenues of $30+ 
bln by the end of 2004.

BUY CALL APR-115*IBM-DC OI=10404 at $7.88 SL=5.75
BUY CALL APR-120 IBM-DD OI=22860 at $5.25 SL=3.25
BUY CALL APR-125 IBM-DE OI=14522 at $3.25 SL=1.50
BUY CALL MAY-120 IBM-ED OI= 4762 at $8.00 SL=5.75
BUY CALL MAY-125 IBM-EE OI= 1441 at $5.88 SL=4.00

Picked on March 21st at $113.50    P/E = 29
Change since picked       +4.50    52-week high=$139.19
Analysts Ratings    12-11-3-0-0    52-week low =$ 81.50
Last earnings 12/99   est= 1.06    actual= 1.12
Next earnings 04-18   est= 0.78    versus= 0.78
Average Daily Volume = 7.64 mln
/charts/charts.asp?symbol=IBM

****

HWP - Hewlett Packard $132.88 (-9.50)(+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).

Continuing to fight an uphill battle all week, HWP finally
managed to find support Thursday at the $130 level.  The third
bounce at this level seems to have done the trick, as buyers
got the upper hand for most of the day on Friday.  Moving as
high as $137.50 on average volume, fear of darkness set in near
the end of the day, dragging HWP back down below $133 at the
close.  Earnings season should start to lend some support to
the sector this week, although HWP doesn't report until mid-May.
Comments from the company two weeks ago that revenues and
earnings should be strong, seem to have fallen on deaf ears.
With the triple onslaught this week of bearish comments from
Abby Joseph Cohen and Mark Mobius, followed by the announcement
that Tiger Management would be closing down its family of funds,
it's a wonder the damage wasn't worse.  If HWP can get some
momentum going and close above the $140 resistance level, we'll
be back in that much-ballyhooed split territory again, giving
investors one more reason to buy.  An additional bounce near
the $130 support level would provide for an attractive entry,
although more conservative players may want to wait for prices
to move through $140 as an indication that the move is for real.

On Friday, HWP stated that it expects its China personal
computer revenues to grow 30% this year, spurred by the prospect
of China's entry into the WTO and the continued Internet boom.
In the news on Thursday, HWP steamrolled Compaq in February
retail PC sales, grabbing 42.3 percent of the market.  Climbing
from 35.4 percent in January, this is yet another black eye for
poor Compaq and yet another area where HWP can shine.

BUY CALL APR-130 HWP-DF OI= 447 at $ 8.88 SL=6.25
BUY CALL APR-135*HWP-DG OI= 647 at $ 6.25 SL=4.25
BUY CALL APR-140 HWP-DH OI=2463 at $ 4.13 SL=2.50
BUY CALL MAY-135 HWP-EG OI= 219 at $10.88 SL=8.00
BUY CALL MAY-140 HWP-EH OI=1000 at $ 8.88 SL=6.25

SELL PUT APR-125 HWP-PE OI= 691 at $ 3.50 SL=5.50
(See risks of selling puts in play legend)

Picked on Mar 16th at   $133.00     P/E = 45
Change since picked       -0.12     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 = 3.73 mln
/charts/charts.asp?symbol=HWP


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

INTC - Intel Corporation $131.94 (-7.13)(+9.19)

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.

Well, it was probably the most volatile week ever for the NASDAQ
and INTC saw a lot of price swings.  These swings offered good
opportunities to enter into call positions but given the overall
market outlook at those times, fear sometimes got the best of
us.  You ask yourself, "How low can it go?" and begin to second 
guess yourself and you get gun-shy.  These are the perils of 
being a trader.  Can you pull the trigger when fear and 
opportunity butt heads?  INTC traded as low as $123.06 on Thursday
only to bounce back strongly to close at $127.  That low was
screaming, "Pull the trigger!"  And then on top of this rebound
with heavy volume, the IRS announced after the close that INTC
will receive a windfall of $600 mln from taxes that it paid and 
did not owe.  The proceeds of $0.17 per share will be credited to 
this quarter's earnings due out April 18th.  Technically, things
did get a little scary with the NASDAQ sell-off.  Thursday's 
heavy selling got the best of INTC as it accelerated toward $120.
Support is solid at $120 but fortunately, INTC never tested it.
Friday was much more positive as INTC traded above $130 for most
of the day.  Looking forward, INTC will run into resistance at
$135 and should find support at $130 and below that, $128.25.  

Hopefully next week will be a more normal trading week as the 
second quarter gets underway.  Monday will be a day to assess 
the direction for the rest of the week.  Earnings season will be 
in full swing and investors will be concentrating on picking the
winners.  INTC has potential to be one of them.  Watch for the 
overall market direction and how INTC is positioned.  Choose 
entry points that are suited to your risk levels and keep in 
mind key technical levels.     

BUY CALL APR-130 INQ-DF OI=16784 at $8.88 SL=6.75
BUY CALL APR-135*INQ-DG OI=12909 at $6.50 SL=4.75
BUY CALL APR-140 INQ-DH OI=18722 at $4.50 SL=2.75
BUY CALL MAY-140 INQ-EH OI= 3995 at $7.88 SL=6.00

Picked on Mar 19th at    $129.88    P/E = 62
Change since picked        +2.06    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 04-18    est= 0.68    versus= 0.57
Average Daily Volume = 26.03 mln
/charts/charts.asp?symbol=INTC


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

EXDS - Exodus Communications $140.50 (-32.81)(+22.06)(-5.75)

Exodus provides Internet system and network management 
solutions for companies with mission-critical Internet 
operations.  The company offers sophisticated systems along
with technology professional services to provide optimal 
performance for customers' Web sites.  Exodus has a long
list of customers, including:  EBAY, YHOO, SUNW, and AMAT.  
The company continues to expand its business through 
acquisitions and expansion overseas.  EXDS operates global
data centers in Tokyo, London, and Frankfurt.

Whew, what a week.  The end-of-the-quarter window dressing we
talked about last week turned into a window washing.  The
influential Internet analyst Henry Blodget released a report on
Friday that may have indirectly put pressure on EXDS.  Blodget
warned investors to avoid stocks that are losing market share, 
particularly those in the business-to-consumer space.  The
analyst went on to say that the infrastructure and business-to-
business sectors remain attractive including EXDS which is one of
Blodget's core holdings in the Merrill Lynch Internet portfolio.
Some traders are still mulling over the announcement last week
that IBM and Qwest will join forces to run 28 Web hosting centers.  
Citing that Exodus will face intensified competition in the next
few years.  Another source of bad news Friday was in the comments
made by famed PaineWebber analyst Ed Kerschner.  He said in a
report that some investors are indiscriminately using new measures
to justify the valuations of the high-flying tech stocks.
According to Kerschner, some of the "new economy" stocks could
fall an additional 50%.  With all the negative comments
surrounding the tech sector and bearish predictions coming from
analysts, we're sitting tight with EXDS for several reasons.  The
end-of-quarter portfolio re-balancing that was so detrimental last
week may prove to be a positive after all.  After locking in some
big gains for the quarter, some traders feel that money managers
might move back into the tech names that have led the markets
higher.  Another reason that EXDS remains attractive is due to
the upcoming earnings season, which many analysts believe to be
spectacular.  EXDS is now positioned above a major support level
of $136.  From here, aggressive traders may look to enter the play
as the stock bounces off support while conservative traders might
wait for EXDS to regain momentum and move above $150.

We'll be watching EXDS closely this week as the Internet blue 
chip Yahoo will be reporting earnings.  YHOO has the propensity 
of carrying Net stocks higher.  We expect traders to anticipate 
good numbers from YHOO and provide a lift to the Net sector.      

BUY CALL APR-140*QED-DH OI= 686 at $13.50 SL=10.00
BUY CALL APR-145 QED-DI OI= 389 at $11.38 SL= 8.50
BUY CALL APR-150 OED-DJ OI=2260 at $ 9.25 SL= 6.50
BUY CALL MAY-150 OED-EJ OI= 301 at $17.13 SL=12.25

Picked on Mar 19th at   $151.25    P/E = N/A
Change since picked      -10.75    52-week high=$179.63
Analysts Ratings    18-11-0-0-0    52-week low =$ 12.13
Last earnings 10/99   est=-0.21    actual=-0.25
Next earnings 04-21   est=-0.24    versus=-0.14
Average Daily Volume = 5.23 mln
/charts/charts.asp?symbol=EXDS

****

MFNX - Metromedia Fiber Network $96.75 (-1.25)(+10.00)

Metromedia Fiber Network is leading the revolution unleashing
the power of fiber optics in major metropolitan areas by
delivering the next generation of broadband optical networks 
to carriers, ISPs, content providers and enterprise users.  
With extensive fiber optic networks, MFNX is changing the way 
people think about bandwidth, enabling the explosive growth of 
data communications and the Internet.

No news appears to be good news for our play in MFNX as the stock
bolted back above its 10-dma on Friday back into the ascending
channel that has carried the stock higher.  The stock regained
lost ground on healthy volume too.  We're looking for MFNX to
regain momentum after Friday's good showing.  We would like to see
a move back above the ever-important $100 level.  If the NASDAQ
can follow through from Friday's impressive rally, we could see
MFNX really pick-up speed.  We're now about two weeks away from
MFNX splitting 2-for-1.  The Board of Directors announced a split
back on March 2nd, making it payable on April 17th.  Traders 
should start focusing on the split within the next few weeks and 
carry shares of MFNX higher.  A split-run generally starts
between a week and two weeks before the actual pay-date.  Although
the pay-date is still a few weeks away, we could very well see
traders regain interest in MFNX as we approach that date.  For 
the aggressive trader, you might look for MFNX to bounce off weak
support at $90 for entry into the play.  While traders looking
for less risk might want to wait for MFNX to climb back above 
$100 before buying any calls.  On the downside, should MFNX
breakdown the stock has minor support at $90, and major support
at the $85 level.

Many of the telecom stocks were up Friday, which helped MFNX to
move higher.  WCOM and SBC both made substantial gains Friday as
traders moved money back into the sector.  MFNX also benefited
from the announcement from AT&T of a $1.4 bln investment in
the Internet telephone service provider Net2Phone (NTOP).

BUY CALL APR- 95*QFN-DS OI= 510 at $ 9.63 SL=6.50
BUY CALL APR-100 QFN-DT OI=1099 at $ 7.38 SL=5.25
BUY CALL APR-105 QFN-DA OI= 146 at $ 5.63 SL=3.50
BUY CALL MAY-10O QFN-ET OI= 760 at $12.00 SL=9.00

Picked on Mar 26th at    $98.06    P/E = N/A
Change since picked       -1.31    52-week high=$103.75
Analysts Ratings      3-2-0-0-0    52-week low =$ 21.13
Last earnings 03/00   est=-0.28    actual=-0.28
Next earnings 05-00   est=-0.52    versus=-0.03
Average Daily Volume = 2.42 mln
/charts/charts.asp?symbol=MFNX

****

AOL - America Online Inc. $67.44 (-3.56)(+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.

Last week we thanked our editors and staff for providing us
with such a great play.  This week, we look to Abby Joseph Cohen 
for credit.  The Goldman Sachs investment strategist started
the ball rolling on Tuesday, with her headline announcement
concerning a suggested re-allocation of assets in investors
portfolios.  If you entered this play at the high of the day and
week at $74.63, late Monday, you probably aren't pleased with
Abby's comments.  However if you've been with us from the start,
in our play on AOL, we've had numerous opportunities' to jump on
board.  Cohen's comments triggered selling in the Tech issues at
Nasdaq.  The subsequent snowball effect hopefully forced traders
with established long positions to take some money off the table
somewhere along the lines.  Again, proof that the use of a well
placed trailing stop is always prudent.  The damage for the week
came in just over 15%, as buyers stepped in late Thursday, when
AOL hit the $63 level.  Buying bounces off support, normally
produces favorable results, but with overall investor sentiment
so negative this week, any attempts to do so proved to be futile.
Investors continued to buy shares of AOL on Friday, bidding the
price back up to $68.38.  The obvious question that now comes to
mind is, will there be more selling next week?  Perhaps, but the
the volume as AOL bounced of $63, was stronger than it was going
down, which leads us to believe AOL is be setting up to continue
higher.  As we said in a previous update, the selling was not
caused by an earnings warning or bad news in AOL itself, it was
a change in market sentiment or sector rotation.  If Friday's
rotation back into Internet and tech issues continues next week,
we will be back in the drivers seat.  If not, it could be another
long week.  Technical support for AOL, is found at $66, $64 and
$63.  Check the pulse of the Nasdaq and the Internet index prior
to entering a new position.

On Friday, a consortium led by AT&T, agreed to buy 39% of IDT 
Corp's, Net2Phone's voting stock for $1.4 billion.  IDT's CEO,
Howard Jonas said in an interview, that AOL had also agreed in
principle to boost its stake in Net2Phone to 7%, from 5%.  IDT
is an international long-distance company, and heavily involved
in the Internet-telephone market.    
    
BUY CALL APR-60 AOO-DL OI=61799 at $8.88 SL=6.75
BUY CALL APR-65*AOO-DM OI=61115 at $5.38 SL=3.50
BUY CALL APR-70 AOO-DN OI=50589 at $2.94 SL=1.50
BUY CALL MAY-65 AOO-EM OI= 4146 at $7.38 SL=5.75
BUY CALL MAY-70 AOO-EN OI= 7174 at $5.00 SL=3.25

SELL PUT APR-65 AOO-PM OI=31887 at $2.50 SL=4.00
(See risks of selling puts in play legend)

Picked on Mar 19th at    $64.38    PE = 165
Change since picked       +3.06    52-week high=$95.81
Analysts Ratings    24-13-3-0-0    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 = 27.5 mln
/charts/charts.asp?symbol=AOL

****

YHOO - Yahoo! Inc $171.38 (-22.63)(+22.87)(-6.94)(P4W +6.72)   

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.

This week investors were just vicious when it came to the 
Internets and it all started with Abby Joseph Cohen admonition 
of the equity markets.  The momentum built from there.  YHOO 
faired well at first with a push above $205 on Monday and 
strength near the 5-dma on Tuesday.  But no tech stock was to be 
excused from the carnage that came forth on the Nasdaq.  Besides 
the dissolving market, the announcement on Thursday that the FTC 
was inquiring into Yahoo!'s consumer information practices to 
determine if they comply with consumer protection laws sent 
shares into a downward spiral.  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 either.  
But this powerhouse was the first to snap back in late afternoon 
trading as buyers came in off the sidelines.  YHOO recaptured 
$9.06 from a daily low of $160.25 on very respectable volume 
levels.  Friday's volume was intensified and there was a wide 
spread of 17+ points with upward bounces off the $160 mark to 
play.  However time is shutting the door on us.  We're now 
entering the tail end of the earnings' play with just three days 
until the company reports.  Yahoo! is announcing on April 5th, 
after the bell.  So if you have any open call positions, 
remember it'd wise to get out before the end of trading on 
Wednesday.  OIN never recommends holding over the report date 
because the possible gains are not worth the added risk.  In 
YHOO's case particularly, since it's known for a deep post-
earnings' sell-off.  The more aggressive players may consider 
buying some puts!  If all the stars are in alignment, it's also 
a possibility that Yahoo! could announce another stock split 
around its earnings' release even though the share price 
didn't hold above $200 recently.  If this is the case, we 
could reenter the play after all the smoke has cleared. 

A couple of weeks ago it appeared Yahoo! was moving closer to a 
possible acquisition of eBay or at least an alliance.  But the 
merger talks have ended between the two Internet companies. 
Neither company would comment on the situation.  Yahoo! did 
however recently take a minority stake in Net2Phone (NTOP), an 
Internet telephone service provider, through a $150 mln stock 
swap deal.  

BUY CALL APR-165*YUU-DM OI=3488 at $18.50 SL=14.50
BUY CALL APR-170 YUU-DN OI=5861 at $16.00 SL=12.50
BUY CALL APR-175 YUU-DO OI=7009 at $13.88 SL=10.50
BUY CALL APR-180 YUU-DP OI=8982 at $12.13 SL= 9.00

Picked on March 12th at $178.06    P/E = 1680
Change since picked       -6.68    52-week high=$250.06
Analysts Ratings    14-14-4-0-0    52-week low =$ 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 = 8.77 mln
/charts/charts.asp?symbol=YHOO


*********
SOFTWARE
*********

INKT - Inktomi $195.00 (-21.81)

Hidden behind the scenes of many of the world's largest portal
sites is INKT, providing scalable software applications designed
to enhance the performance and intelligence of large-scale
networks.  Its applications fall into two broad categories,
network products and portal services.  Traffic Server is a
large-scale network caching application licensed to Internet
Service Providers (America Online) and corporations to
mitigate capacity constraints in high-traffic network routes.
Current portal service applications include search, shopping
and directory services, which are offered to Web site customers
and Internet portals such as Yahoo!.

Looking like it may be leading the recovery in the Internet
sector, INKT found support at $170, closing solidly above the
30-dma ($177) on Friday.  Add to that the bullish Hammer candle
pattern on Friday, and we have a positive technical picture.
Technical strength is nice, but how about the added incentive
of earnings on April 20th.  Not enough?  All righty then, we'll
throw in the possibility of a split.  Typical split range for
INKT is above $150, (yes, they just split 2-for-1 on December
30th), but there are enough shares currently authorized to do
an encore.  The past two days have been positive, posting gains
on volume more than 50% over the ADV.  INKT found some
resistance at $185 on Friday, but managed to break through and
close above it.  If this level can now transform itself into
support, INKT could be set to make a run at the $200 resistance
(both psychological and technical) level.  Hopefully, Friday's
strong run into the close is indicative of improving sentiment
in the sector.  Look to enter new positions on continuing
strength or another bounce at the intraday support levels of
$185 or $180.  Keep in mind that this is another volatile
internet, and large intraday price swings are not uncommon.

It was encouraging to see stocks like INKT show strength at the
end of the week after the puzzling comments from Mark Mobius on
Wednesday where he called for 50-90% pullback in Internet stocks.
He may know emerging markets, but how does that make him an
authority on Internet stocks?  Investors seem to have drawn the
same conclusion, but this next week will really be the key.

BUY CALL APR-190 KAY-DR OI=320 at $22.13 SL=16.50
BUY CALL APR-200*KAY-DT OI=972 at $17.00 SL=12.75
BUY CALL APR-210 KAY-DB OI=332 at $12.25 SL= 9.25
BUY CALL MAY-200 KAY-ET OI=872 at $25.75 SL=19.25
BUY CALL MAY-210 KAY-EB OI=164 at $21.38 SL=16.00

SELL PUT APR-165 KAY-PM OI=133 at $ 4.75 SL= 6.75
(See risks of selling puts in play legend)

Picked on Apr 2nd at    $195.00     P/E = N/A
Change since picked       +0.00     52-week high=$241.50
Analysts Ratings     8-10-1-0-0     52-week low =$ 42.75
Last earnings 01/00   est=-0.04     actual=-0.02
Next earnings 04-18   est=-0.02     versus=-0.05
Average Daily Volume = 2.59 mln
/charts/charts.asp?symbol=INKT

****

LGTO - Legato Systems Inc $44.63 (+7.38)

Legato Systems is a developer, manufacturer, and seller of 
network storage management software.  Their products are 
designed to work with a wide range of storage, client, and 
server hardware.  The company also offers related consulting 
services and is moving into the storage area network market 
by way of acquisitions. 

The volume spiked as buyers rushed in Monday afternoon to buy 
shares of LGTO while sellers clearly didn't want to "Leggo their 
Legato".  The contest drove share prices up $8.44, or 22.7% and 
trading volume nearly reached triple its ADV.  Monday was pretty 
good day in the markets, although it's conceivable that the 
selection of OnDemand business-to-business (B2B) personalized 
portal by Legato had some influence in LGTO's breakout.  The 
portal called PartnerNet optimizes channel partnership and sales 
performance giving Legato's partners and 1,000+ sales force a 
distinctive edge.  We watched the activity and volume among the 
call options rise as the stock firmed on Tuesday.  Actually LGTO 
lost a couple of dollars by day's end, but only after trying to 
crack resistance at the 200-dma (now at $46.82).  The rest of 
the week proved to be topsy-turvy amid a torrid market.  To add 
insult to an already injured stock (trying to make a bold 
recovery from last quarter!) the implied volatility was worsened 
on news that Legato may again report lower-than-expected 
earnings forecasts.  Costs due to an increased sales staff and 
unusually high legal fees needed to defend itself against a 
dozen or so shareholder suits filed earlier this year have 
effected the company's overall numbers.  But despite this thorn 
thrust in its side on Tuesday, LGTO established a strong base at 
$41 just above the 10-dma ($40.48) throughout the week.  And 
according to David Breiner of Prudential Volpe Technology Group 
"they may miss some of the estimates that are out there" but "I 
don't think the business is fundamentally broken".  We're 
anticipating LGTO can do even better under more bullish market 
conditions.  Dips to near-term support at $41 can be used for 
entries, but if you prefer less risk look for LGTO to make a 
move through $47 on strong volume before opening any positions 
on this momentum.  The company is reporting earnings April 19th, 
after the bell.

On Thursday, Jim Mendelson at Wit SoundView upgraded LGTO 
to a Buy from a Hold and issued a $65 price target.

BUY CALL APR-40*EQN-DH OI=2041 at $7.63 SL=5.25
BUY CALL APR-45 EQN-DI OI=3854 at $4.50 SL=2.75
BUY CALL APR-50 EQN-DJ OI=2006 at $2.75 SL=1.25
BUY CALL MAY-45 EQN-EI OI= 457 at $7.13 SL=5.00
BUY CALL MAY-50 EQN-EJ OI= 151 at $5.13 SL=3.00

Picked on April 2nd at   $44.63    P/E = 91
Change since picked       +0.00    52-week high=$102.25
Analysts Ratings      7-7-6-0-0    52-week low =$ 11.44
Last earnings 12/99   est= 0.19    actual= 0.11
Next earnings 04-19   est= 0.10    versus= 0.10
Average Daily Volume = 4.74 mln
/charts/charts.asp?symbol=LGTO

****

CHKP - Check Point Software $171.06 (-47.44)

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.

Looking healthy early on Friday, CHKP fell sick for the rest 
of the day, giving up a $16 intraday gain.  Barely closing
positive, CHKP did give us a sign of life at the close, moving
up almost $5 in the final 10 minutes.  Volume was strong both
early and late in the day, with muted interest for the bulk of
the session.  By the closing bell, the network security firm
had seen volume well over double its ADV and managed to post
a close over the $170 resistance level.  Friday's action
strengthened the indications from earlier in the week that
CHKP may have arrested the decline that began in early March.
After losing almost 50% from its high of $295, it is about
time we saw some life return.  Support is strong at the
$155-157 level, and $170 may provide support going forward.
With earnings moving into full swing next week, and CHKP
reporting on April 18th, the stock could be ready to run.
CHKP becomes a split candidate over $200, and a strong run
could put it in this range well before earnings, a likely time
to make the announcement.  We will run into major resistance
at $188, reinforced by the 50-dma at $189, but this should fall
easily if the NASDAQ can get healthy again.  We need to see
support hold at $170, and if it does, look to enter new
positions on the bounce.  A failure at this level will confirm
it as resistance, and we will need to look for an entry as
CHKP bounces at $155.  This play is not for the faint-hearted
as CHKP can easily run $30 in a day.  Take your Dramamine
before playing.

On Friday, we finally got some encouraging news for CHKP, as
Goldman Sachs added the Internet security software maker to
its recommended purchase list.  Analysts at the firm raised
2000 earnings estimates from $1.56 to $161 a share and 2001
estimates from $2.02 to $2.12

BUY CALL APR-170*YKE-DN OI=233 at $24.75 SL=18.50
BUY CALL APR-175 YKE-DO OI= 30 at $22.75 SL=17.00 low OI
BUY CALL APR-180 YKE-DP OI=134 at $21.00 SL=15.75
BUY CALL MAY-175 YKE-EO OI=  6 at $34.75 SL=26.00 low OI
BUY CALL MAY-180 YKE-EP OI= 99 at $32.25 SL=24.25

SELL PUT APR-150 YKE-PJ OI=175 at $11.00 SL=14.75
(See risks of selling puts in play legend)

Picked on Mar 30th at   $169.50     P/E = 146
Change since picked       +1.56     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 = 1.11 mln
/charts/charts.asp?symbol=CHKP


*******
Telecom
*******

T - AT&T $56.31 (-2.44)

With over 90 million customers, AT&T is the US's #1 Telecom
company.  The services offered by the company include long
distance, wireless phone service, Internet access, and local
and international phone services for businesses.  In an attempt
to dominate the domestic cable TV market, T will become the #1
US cable operator with its planned purchase of MediaOne.

As we anticipate the largest IPO in US history, T has given us
another tidbit to chew on.  Putting the finishing touches on
its Internet strategy, the Telecom giant put its money to work
today, investing in the Internet telephony race (see news
below).  The 360 million share IPO of T's wireless business 
was priced this past week between $26-32 per share, and is
expected to raise up to $11.5 billion.  After the IPO, T will
retain between 82-85% of the economic interest in the AT&T
Wireless Group.  Finding support near $45 in late February, T
has been moving higher, most recently establishing support
between $55-56.  News of the IPO terms and date (April 26)
propelled T up to the $60 resistance level this week, but the
broad market weakness yanked the price back down to earth.
Friday's action was not very encouraging as T lost over $2,
closing very near its low of the session.  The only bright
spot was the fact that volume was a "measly" 8.4 million
shares vs. the norm of 11.2 million.  Another positive factor
for our play is earnings, with T set to report on April 25th,
the day before the above-mentioned IPO.  Use caution going
forward as we need to see support hold at $56 before jumping
blindly into this play.  More conservative players may want
to wait for enthusiasm (and volume) to push the share price
through resistance at $60.

With a $725 million investment in Internet telephone player
Net2Phone today, T is putting together the final pieces of an
Internet strategy aimed directly at the formidable rival created
by the America Online and Time Warner merger.  This gives T 
a leg into internet telephony, a technology that is widely
regarded as a worthy rival to traditional phone networks.
Although the quality of Internet phone calls has not yet
reached that of traditional phones, the approach is appealing
due to its ability to allow phone calls without a dedicated
copper phone line between the calling parties.

BUY CALL APR-55*T-DK OI=64735 at $3.25 SL=1.75
BUY CALL APR-60 T-DL OI=44522 at $1.19 SL=0.00
BUY CALL MAY-55 T-EK OI= 6232 at $5.13 SL=3.00
BUY CALL MAY-60 T-EL OI=17987 at $2.94 SL=1.50

Picked on Mar 28th at     $59.94     P/E = 52
Change since picked        -3.63     52-week high=$63.00
Analysts Ratings      16-8-7-0-0     52-week low =$41.50
Last earnings 01/00    est= 0.56     actual= 0.57
Next earnings 04-25    est= 0.42     versus= 0.61
Average Daily Volume = 11.20 mln
/charts/charts.asp?symbol=T

****

QCOM - Qualcomm Inc $149.31 (+3.31)

Qualcomm develops and manufactures communications technologies 
and products. It's best known for its CDMA (code division 
multiple access) technology which is the industry standard for 
mobile communications.  This technology and is used in cellular 
phones, wireless telephone system equipment, and satellite 
ground stations.  Qualcomm also provides the trucking industry 
with a monitoring system call OnmiTRACS and is currently in a 
joint venture to develop a low-earth-orbit satellite 
communication system called Globalstar.  They are also the #2 
supplier of digital cell phones following Nokia.  Their largest 
competitor is Motorola.

After an astounding performance in 1999, QCOM is again making 
the headlines.  The stock's recent break out its tight channel 
and an upcoming earnings' report is the basis for this play.  
For three months the stock oscillated between $125 and $145, but 
just a few days before the Nasdaq's butchering QCOM broke free 
of its bindings.  Now QCOM appears to be on the move again.  The 
converged DMAs have now caught up to the stock's rising price 
and are in the proximity of $149 and $151.  This week QCOM 
clearly signaled to us that this run is no head-fake.  It ran 
like a true bull peaking at $162.56 on Wednesday.  It's likely 
the conclusion of a three-year battle with Motorola over patents 
covering QCOM's wireless communications technology was a key 
factor.  Both sides have agreed to a three-year moratorium on 
patent-infringement suits; however, Motorola will now make 
royalty payments for use of the CDMA technology.  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.  
And the evening before, ABN Amro also repeated a Hold 
recommendation.  Thursday was a different story and even QCOM 
couldn't escape the selling pressure.  But just like a trooper, 
QCOM resurfaced unscathed before the trading day was out giving 
us confidence that it can maintain its momentum in the short-
term.  Upward bounces off the current level are fair entries 
into this HIGH-RISK and VOLATILE Internet play while intraday 
dips to firmer support at $140 and $145 would be a gift.  
Although caution must be advised.  If QCOM reversed there's a 
long way to fall so know you're personal risk level!

There's another factor besides the sheer momentum that propelled 
it out of its three-month channel and an upcoming earnings' 
announcement on April 18th after the bell to drive up the share 
pirce. QCOM is a split-candidate above the $160 mark!  And 
there's no doubt Qualcomm has plenty of shares for another stock 
split - 3.6 bln authorized and only 660 mln outstanding.  After 
a long stretch without any analysts' sentiment, Salomon Smith 
Barney raised its rating on QCOM to a Buy from an Outperform.  
Alex Cena also issued a $200 price target up from $150.

BUY CALL APR-150 AUA-DJ OI=15798 at $10.75 SL=8.00
BUY CALL APR-155*AUA-DK OI= 6452 at $ 8.63 SL=6.00
BUY CALL APR-160 AUA-DL OI=13269 at $ 6.75 SL=4.75
BUY CALL APR-165 AUA-DM OI= 6641 at $ 5.25 SL=3.25
BUY CALL MAY-160 AUA-EL OI= 2573 at $12.63 SL=9.50
BUY CALL MAY-165 AUA-EM OI= 1049 at $10.88 SL=8.25

Picked on March 28th at $154.81    P/E = 36
Change since picked       -5.50    52-week high=$200.00
Analysts Ratings      7-7-6-0-0    52-week low =$ 14.76
Last earnings 12/99   est= 0.24    actual= 0.25
Next earnings 04-18   est= 0.24    versus= 0.10
Average Daily Volume = 19.8 mln
/charts/charts.asp?symbol=QCOM


******************************************
CALLS - TELECOM CONTINUED IN SECTION THREE
******************************************

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****************************
SEE DISCLAIMER IN SECTION ONE
The Option Investor Newsletter          4-2-2000
Sunday                        3 of 4


*******************
TELECOM - CONTINUED
*******************

NOK - Nokia $222.00 (+0.25)(+21.88)(-15.13)(-5.00) 

Finnish Phone Firm, Nokia is the world's number one maker of 
wireless cellular phones, ahead of Motorola, Ericsson and 
Kyocera.  In addition they make wireless networking equipment, 
PC monitors and workstations, digital satellite and cable 
network systems, and set-top boxes.  However mobile phones 
make up 80% of their $19.8 bln in annual sales.  

This will be the final week for NOK on our play list.  Why's 
that?  Veterans will recall that we never recommend holding over 
a split since prices fall 7 out of 10 times following the split.  
NOK splits 4:1 on April 7th and begins split adjusted trading 
on Monday, April 10th.  So you should plan to exit this play 
by Friday.  Technically, NOK is fine shape.  Thursday, a 
particularly ugly day for technology issues, NOK descended 
through its lower channel boundary to touch and bounce solidly 
off its 50-dma (then $201.70), then close back over the lower 
channel line - a bullish sign.  If you caught it into Thursday's 
close, you'd have had a textbook entry.  Friday, NOK continued 
its rebound into the center of the channel on volume of 4.6 mln 
shares, 22% greater than the ADV.  If the market cooperates and 
a last minute split run materializes, NOK would find resistance 
at $233, but could see as much as $240 (the top of the trading 
channel) by Friday.  Current support is tough to find in light of 
the recent technology selloff, but can be found at $205 and $215.  
The 10-dma is $218.05.  The 5-dma is $220.98.  Target shoot to 
your level of comfort.  Otherwise confirm bounce off support 
with the overall tone of the market before making your entry.  
Earnings are tentatively set for May 2nd and are not a part 
of the play.

No news last week that will move the issue.  The play is based 
solely on a split run.

BUY CALL APR-210 NZY-DB OI=3905 at $18.00 SL=13.00
BUY CALL APR-220*NZY-DD OI=7684 at $12.00 SL= 9.00
BUY CALL APR-230 NZY-DF OI=3984 at $ 8.88 SL= 6.25

Picked on Mar 09th at   $214.63     P/E = 94
Change since picked      + 7.38     52-week high=$233.38
Analysts Ratings     17-8-1-0-0     52-week low =$ 67.69
Last earnings 02/00   est= 0.67     actual= 0.72
Next earnings 05-02   est=-0.61     versus= 0.48
Average Daily Volume = 3.67 mln
/charts/charts.asp?symbol=NOK

****

PCS - Sprint PCS $65.50 (+1.00)(+6.88)

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.  

Since we just added the play on Thursday, forgive us for the 
partial repeat of information.  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.  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 tentatively announces 
earnings on April 18.  In addition to high visibility in the 
sector, we will also use an earnings run as a catalyst for a 
bullish move.  Technically, PCS survived last week's selloff, 
maintaining nice support at $63, $64 and $65.  The lows have been 
getting higher.  Friday's close was at a new high.  Resistance 
still holds at $66.  Yes, the ascending wedge is short (only five 
days so far), but technical convergence of the wedge could happen 
on Tuesday, putting PCS into breakout mode.  The key will be a 
volume increase once PCS clears $66.  Though it didn't gain much 
on the week, we remain impressed that PCS didn't falter as others 
dropped like flies.  Volume remains weak too indicating nobody is 
itching to pull the "sell" trigger.   Target shoot to your 
comfort level, or wait for the volume-backed break above $66.  
Look for an earnings run and wireless hype to move PCS up in 
April. 

News is sparse, however, W.R. Hambrecht on Tuesday rated 
PCS a Buy and named a price target of $85.  Also last week, PCS 
participated with Samsung, and Qualcomm to complete the first 
3rd generation CDMA voice call.

BUY CALL APR-60 PCS-DL OI=1105 at $7.25 SL=5.00
BUY CALL APR-65*PCS-DM OI= 854 at $4.00 SL=2.50
BUY CALL APR-70 PCS-DN OI= 274 at $2.00 SL=1.00
BUY CALL MAY-65 PCS-EM OI= 146 at $5.75 SL=3.75
BUY CALL MAY-70 PCS-EN OI= 129 at $4.00 SL=2.50

Picked on Mar 30th at    $64.63     P/E = N/A
Change since picked       +0.88     52-week high=$66.94
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 = 3.28 mln
/charts/charts.asp?symbol=PCS


*************
Miscellaneous
*************

GMST - Gemstar International $86.00 (-8.75)

Gemstar International Group makes video-recording systems.
They develop, market and license proprietary technologies 
and systems under the "VCR Plus+" name.  Their VCR Plus+
system lets users program VCR's simply with one-to eight-digit
codes published in TV listings worldwide.  Gemstar's primary
source of revenues are from licensing fees paid by consumer
electronics manufacturers and publications for the licensing of
the VCR Plus+ technology and the right to print the PlusCode 
Numbers.  Gemstar has signed long-term renewals of license 
agreements with Sony Corp, and Thomson Consumer Electronics.

What makes Gemstar so attractive at this time?  We'll give you
a clue.  Its stock dropped about 24% in four days.  With the 
tech and Nasdaq stocks coming under fire this past week, GMST
dropped from its high on Monday at $100.88, to a low on Friday
at $76.88.  Can you say over-done?  Not only do we believe the
decline in price was over extended, we really see very little
fundamental reason why it should have happened in the first 
place.  Friday, we believe investors saw the same thing we did,
as they bid the price back up to $86, with GMST ending the day
with a gain of over 7.0%.  That said, what makes GMST special?
Well, lets start off with a show of hands of those with at least
one television in their home?  Chances are if you aren't using
Gemstar's interactive programming at this time, you probably will
be in the near future.  Much of the recent strength in GMST has
come on the heels of increased optimism for more sales of its
interactive programming guide.  These devices, which help people
find the shows they want to watch on television, are expected to
play an increasing role in the way we watch TV.  The proposed
merger between GMST and TV Guide was approved last month by their
respective shareholders and is scheduled to close as soon as it
receives regulatory approval, which is expected to be in the
second quarter.  The combined entity will be a major force with
the interactive program guide.  GMST is a stock that has risen
six-fold, and split twice in the last year.  Technically the
recent decline has left us with somewhat of a "V" bottom.
A retracement could find support between $78 and $80.  However
the momentum going into the close on Friday, suggests GMST
should continue to move higher, as the volume picked up late 
in the day as well. 

Although it's old news, it's certainly worth keeping in mind.
GMST's Chief Executive, Henry Yuen said in an interview last
month, he would consider splitting the company's stock again.
Besides being the company's chairman, Yuen is the second largest
shareholder.  Although the company has a ways to go, Yuen said
"if we are solidly over $100, we would consider splitting again".  

BUY CALL APR-80 GST-DP OI= 429 at $10.75 SL=8.00
BUY CALL APR-85*GST-DQ OI= 238 at $ 7.88 SL=5.75
BUY CALL APR-90 GST-DR OI= 447 at $ 5.25 SL=3.25
BUY CALL APR-95 GST-DS OI=2152 at $ 3.88 SL=2.25
BUY CALL MAY-85 GST-EQ OI=7868 at $11.63 SL=8.75

SELL PUT APR-80 GST-PP OI=2266 at $ 3.75 SL=5.75
(See risks of selling puts in play legend)

Picked on Apr 2nd at     $83.00    PE = 205
Change since picked       +0.00    52 week high=$107.44
Analysts Ratings      7-0-0-0-0    52 week low =$ 18.00
Last earnings 02/00   est= 0.10    actual= 0.13 
Next earnings 05-10   est= 0.14    versus= 0.12
Average daily volume = 2.34 mln
/charts/charts.asp?symbol=GMST

****

BBY - Best Buy Co. Inc. $86.00 (+8.06)

When you get 360 stores in 40 states and have $12.5 bln, in 
annual sales, you can offer customers the best buy too.  Best Buy 
sells home electronics, appliances, music, home office products 
and entertainment software through its stores averaging about 
45,000 square feet.  While ahead of rival Circuit City in sales, 
CC has more stores.  However, Microsoft was impressed enough to 
make a $200 mln investment in BBY last December, then 
representing a 2% interest.  Chairman Richard Schulze owns 17% 
of the company.

The answer is "beat the whisper".  The question is, how were 
earnings?  Last Tuesday, BBY reported a 51% increase in profits 
over the Q4 of last year on strong digital product sales and cost 
cutting.  They earned $0.78 vs. estimates of $0.74.  Same store 
sales were up 11% over a year ago.  Earnings are forecast to grow 
25% this year.  When you are the biggest, you can also be first 
to sell the cool new products.  For instance, BBY is one of only 
three retailers to currently carry HandSpring products (PALM 
competitor).  Technically, BBY has been moving up the chart 
following earnings, as investors take new positions in the issue.  
BBY has set new highs the last four days in a row even as the 
rest of the market tumbled into the basement.  Relative strength 
has been excellent.  $80, $81, and on Friday $84 have acted as 
support since the earnings news broke.  Even with over 100 mln 
shares in float, BBY moved up $1 in the last 15 minutes of 
Friday's trading.  The trend looks strong as BBY breaks into blue 
sky, but we'd suggest waiting for a slight pullback after four 
solid days of gains.  It may come as early as Monday morning 
after amateur hour, so be on the lookout for an entry.  While the 
5-dma provided good support last week after the news, it's still 
lagging back at $82.11.  Though it may be possible to tag it, the 
market tone will be more telling of a good entry than the price 
hitting the nearest average.  Enter at your own level of risk 
tolerance.  Are you a bit more conservative?  Perhaps a move over 
$86.50 on increased volume would provide the best entry.  One 
more thing -- BBY is again entering split range at $90.  That was 
the price at the last announcement on February 22nd, 1999 when 
they announced a 2:1.  There is a reported Board meeting on April 
14 from which the announcement could be made.  Since there are 
400 mln shares authorized with 204 mln outstanding, they will 
need shareholder approval for another 2:1.  However a 3:2 is 
possible without shareholder approval if the Board of Directors 
declares it.  Keep your play focused on that date.

Based on earnings, Moody's has put BBY's Ba1 credit rating up 
for review.  While not a guaranty, it's a positive step.  Also 
interesting is that Micron (MU) recently reached an agreement 
with BBY to place kiosks in all BBY stores.  Just so you know 
too, there was a rumor two weeks ago that BBY may be a takeout 
target.  If the rumors resurface, don't bet on it given the 
renewed interest following earnings.

BUY CALL APR-80 BBY-DP OI= 984 at $9.00 SL=6.25
BUY CALL APR-85 BBY-DQ OI= 178 at $6.00 SL=4.00
BUY CALL APR-90*BBY-DR OI=1347 at $3.88 SL=2.00
BUY CALL MAY-85 BBY-EQ OI=  71 at $9.25 SL=6.25
BUY CALL MAY-90 BBY-ER OI=  67 at $7.00 SL=5.00

Picked on Apr 02nd at    $86.00     P/E = 52
Change since picked       +0.00     52-week high=$86.25
Analysts Ratings     5-10-7-0-0     52-week low =$40.50
Last earnings 04/00   est= 0.74     actual= 0.78 surprise=5%
Next earnings 06-27   est= 0.29     versus=0.27
Average Daily Volume = 2.19 mln
/charts/charts.asp?symbol=BBY

****

BAC - Bank of America, $52.44 (-2.19)(+4.63)

Bank of America is one of the largest holding companies in
the U.S. and offers a wide array of banking and financial
services.  They have over 11,500 branches in 47 states and
almost 40 countries.  BAC is the nations first coast-to-coast
bank.  They provide services throughout the Mid-Atlantic, the
Mid-west and the South.  BAC offers consumer, commercial, and
global corporate banking, which include commercial real-estate
investment and brokerage services, insurance and mutual funds.

Investors began to shop for bargains late Thursday and BAC was on
their shopping list.  At this point it appears as though another
near term bottom may have been put it.  Profit taking during the
week drove shares of BAC down to $50.44.  Why do we think that
level produced a bottom?  Thursday in the last hour of trading,
BAC saw about 1.8 million shares change hands.  As BAC made its
low, almost 700K shares were traded in a 15 minute period.  About
200K would be average for that time frame, depending on the 
volatility of the day.  Traders continued nibbling on BAC Friday
morning, and by the end of the day, the holding company had added
another $1.63 to the price of its stock.  So we've bounced off
the $50 area and find BAC heading higher.  The volume on the move
back up has been nothing to write home about, but at this point
we will take what we can get.  The $52 area should be the tell
tale sign, as it provided good support during the session on
Friday.  A break below that level and we could see another trip
south.  A bounce off that level and BAC may be back on track.
Speaking of on track, money manager Elaine Garzarelli, said in
an interview this week, she disagreed a bit with Abby Joseph
Cohen's comments on moving 5% out of stock portfolio's into cash.
Rather raising that kind of cash, Garzarelli said she would be
putting money into beaten-down groups, that are significantly
down from their highs.  Any guesses as to what was included in
her group of picks?  Yep, BAC.  Garzarelli said BAC and several
of the financials are an "extremely good value."  We couldn't 
agree more, and that's why we would look for opportunities next
week to buy calls in BAC. 

A federal appeals court gave Bank of America a shot in the arm
on Friday.  The court said BAC, Wells Fargo & Co. and other
banks can continue to charge non-customers to use automated
teller machines in San Francisco and Santa Monica, California.
The appeals court upheld a preliminary injunction granted in
November, which temporarily bars cities from enforcing 
ordinances banning the fees.
 
BUY CALL APR-45 BAC-DI OI= 2138 at $7.88 SL=5.75
BUY CALL APR-50*BAC-DJ OI= 4957 at $3.63 SL=1.75
BUY CALL APR-55 BAC-DK OI= 5299 at $1.06 SL=0.00
BUY CALL MAY-50 BAC-EJ OI=20340 at $4.88 SL=3.00
BUY CALL MAY-55 BAC-EK OI=10328 at $2.19 SL=1.00

Picked on Mar 23rd at    $54.19    PE = 12
Change since picked       -1.75    52 week high=$76.38
Analysts Ratings    13-13-4-0-0    52 week low =$42.31
Last earnings 01/00   est= 1.24    actual= 1.23 
Next earnings 04-17   est= 1.24    versus= 1.08
Average daily volume = 6.52 mln
/charts/charts.asp?symbol=BAC

****

KSS - Kohl's Corp. $102.50 (+5.94)

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. 

Like we said, their stores and their stock perform's better than
most of their peers.  Actually on Friday, KSS outperformed many
of the stocks not only in the retail sector, but at the NYSE.
KSS was one of only 61 stocks making a new high at the NYSE.
With the retail sector was giving back 2.5% of its recent gains,
our new play hit $104.25 before ending the day with a gain of 
about 3.0%.  The volume was impressive as well with 1.89 million
shares traded.  What makes Kohl's so attractive to investors?
Probably the same thing that makes them attractive to their
customers.  What they do, they do very well.  They provide a
good selection of merchandise, take care of the customer and do
it in a cost effective manner, which all falls to the bottom
line, in the form of profits and earnings.  Earnings growth has
exceeded 30% per year, for the last four years.  Not many
retailers can make that kind of claim.  With the recent weakness
in the tech stocks, investors have turned to company's that 
provide growth and earnings, and Kohl's provides both.  Analysts
had earlier concerns about first quarter earnings and the costs
associated with recent expansion, as the company is in the 
process of opening 19 new stores.  KSS came in well ahead of
estimates and announced a 2-for-1 split, putting to rest most
analysts concerns.  We could expect to see more analysts jump
on the bandwagon in the next week, as KSS has already surpassed
many of the price targets of $90 to $95 per share, and has seen
only 2 upgrades or reiterations in the last month.  According
to some technical indicators, KSS could be getting a bit over-
extended, however we wouldn't expect to see a large pullback
at this time.  $102, $100 and its 5-dma at $97.88 could all
provide support if profit taking does set in.  For now KSS is
pointing higher, and we expect the overall trend to continue.

As we mentioned earlier, many of the analysts that follow the
Kohl's seem to be ignoring its recent strength.  The last 
analyst to come out with a comment was Daniel Barry, from
Merrill Lynch, and that was in the middle of March.  Barry
raised KSS from a near term Accumulate to a near term Buy
rating.  At that time his projected 12-month target for Kohl's
was $108.00.  With KSS hitting another new high on Friday,
more analyst may come forward and support the company in the
coming days.

BUY CALL APR- 95*KSS-DS OI=255 at $10.88 SL=8.25
BUY CALL APR-100 KSS-DT OI=118 at $ 7.63 SL=5.25
BUY CALL APR-105 KSS-DA OI=233 at $ 5.25 SL=3.25
BUY CALL MAY-100 KSS-ET OI=  4 at $11.50 SL=8.50 low OI
BUY CALL MAY-105 KSS-EA OI=  5 at $ 9.00 SL=6.25 low OI

SELL PUT APR- 95 KSS-PS OI=198 at $ 3.63 SL=5.50
(See risks of selling puts in play legend)

Picked on Mar 30th at  $99.56    P/E = 67
Change since picked     +2.94    52-week high=$104.25
Analysts Ratings    7-5-4-0-0    52-week low =$ 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 =  962 K
/charts/charts.asp?symbol=KSS



**********************
LEAPS by Mark Phillips
**********************

Where are the leaders?  After its second run above the 5000
level, the NASDAQ had another brutal week, having to dip below
its 50-dma before finding support near 4350.  A quick look at
the charts of many of our favorite LEAP plays (EMC, NT, TXN)
shows a similar pattern, as the 50-dma is either being
challenged or violated.  Normally, we would be screaming "Entry
Point" by now, but are exercising caution due to the number of
our strong momentum plays that are having a hard time finding
support.  We are sitting on the verge of the April earnings
cycle, which normally drives investors into a frenzy of buying
activity.  This time things may be different, as even Yahoo!,
the poster child for momentum stocks, has failed to have an
earnings run.  After the current earnings cycle, fund managers
will be taking profits so they can enjoy their vacations, and
we don't want to be left holding the bag.  Even the VIX has not
yet confirmed that a bottom is here, as the huge decline on
Thursday only produced a high of 28.72, and the indicator
closed the week at 27.21.  We have had huge runs in the past
few months in plays like EMC, CSCO, TXN, NT, and NXTL, so take
advantage of any runup in the next few weeks to lock in profits
before the summer doldrums.  If you are looking for candidates
that may provide strength beyond April earnings, consider stocks
that have scheduled events like splits (GE, TXN).  Exercise
caution in the week ahead; better to be in cash than watching
your profits melt away.


Current Plays

SYMBOL  SINCE     LEAPS         SYMBOL   PICKED   CURRENT  RETURN

EMC    11/07/99  JAN-2001 $ 80  ZOH-AP   $15.38   $54.00   251.22%
                 JAN-2002 $ 90  WUE-AR   $19.00   $57.38   201.97%
GPS    11/07/99  JAN-2001 $ 40  ZGS-AH   $ 5.75   $15.88   176.09%
                 JAN-2002 $ 45  WGS-AI   $ 7.88   $18.38   133.33%
IBM    11/07/99  JAN-2001 $100  ZIB-AT   $13.63   $30.13   121.10%
                 JAN-2002 $110  WIB-AB   $16.50   $34.75   110.61%
LU     11/14/99  JAN-2001 $ 80  ZEU-AP   $12.88   $ 6.00   -53.40%
                 JAN-2002 $ 90  WEU-AR   $16.13   $10.38   -35.66%
CSCO   11/14/99  JAN-2001 $ 40  ZCY-AH   $ 9.56   $41.00   328.87%
                 JAN-2002 $ 90  WIV-AI   $11.00   $42.00   281.82%
GE     11/21/99  JAN-2001 $150  ZGR-AU   $16.25   $27.13    66.92%
                 JAN-2002 $150  WGE-AU   $25.50   $39.63    55.39%
NT     11/28/99  JAN-2001 $ 75  ZOO-AO   $22.25   $60.63   172.47%
                 JAN-2002 $ 75  WNT-AO   $30.25   $70.38   132.64%
VOD    12/05/99  JAN-2001 $ 50  ZAT-AJ   $10.75   $14.75    37.21%
                 JAN-2002 $ 50  WHV-AJ   $15.00   $20.38    35.83%
TXN    12/12/99  JAN-2001 $110  ZTN-AB   $22.25   $62.88   182.58%
                 JAN-2002 $120  WGZ-AD   $28.50   $69.38   143.42%
NXTL   12/19/99  JAN-2001 $ 90  ZFU-AR   $23.50   $69.00   193.62%
                 JAN-2002 $100  WFU-AT   $27.25   $73.13   168.35%
SUNW   12/19/99  JAN-2001 $ 80  ZJX-AP   $17.63   $28.50    61.70%
                 JAN-2002 $ 90  WJX-AR   $22.00   $33.75    53.41%
LU     01/09/00  JAN-2001 $ 50  ZEU-AJ   $13.63   $18.00    32.11%
CY     01/16/00  JAN-2001 $ 40  ZSY-AH   $ 9.13   $19.38   112.33%
                 JAN-2002 $ 40  WSY-AH   $12.63   $24.25    92.08%
ERICY  01/30/00  JAN-2001 $ 65  ZYD-AM   $19.75   $38.50    94.94%
                 JAN-2002 $ 65  WRY-AM   $27.00   $46.88    73.61%
MSFT   01/30/00  JAN-2001 $100  ZMF-AT   $17.63   $22.13    25.51%
                 JAN-2002 $110  WMF-AB   $21.63   $27.63    27.75%
NSM    02/27/00  JAN-2001 $ 70  ZUN-AN   $18.50   $15.00   -18.92%
                 JAN-2002 $ 70  WUN-AN   $24.25   $22.63   - 6.72%
AOL    03/12/00  JAN-2001 $ 60  ZKS-AL   $14.00   $21.63    32.14%
                 JAN-2002 $ 65  WAN-AM   $18.63   $23.75    27.52%
AXP    03/12/00  JAN-2001 $130  ZXP-AF   $21.75   $36.13    66.09%
                 JAN-2002 $140  WXP-AH   $28.00   $42.38    51.34%
WM     03/19/00  JAN-2001 $ 25  ZWI-AE   $ 5.00   $ 5.75    15.00%
                 JAN-2002 $ 30  WWI-AF   $ 5.38   $ 6.25    16.28%
QCOM   03/26/00  JAN-2001 $150  YQO-AJ   $39.25   $40.88     4.14%
                 JAN-2002 $160  XQO-AL   $52.88   $54.88     3.78%

        
To review the play description on any of our current plays, 
go to the LEAPS section for the date the play was added.

Option Selection: Notice that many of our LEAP plays have moved
considerably since initially being picked.  The listed options
may therefore be deep in the money and very expensive.  When 
entering a new position, look to buy LEAPS according to your 
suitability level, but note that we typically initiate strikes 
that are slightly out of the money from the stock's current 
price.
 

Leap of the Week

GPS - Gap Inc. $49.81

Not our typical pick for Leap of the Week, GPS is one of the
few stocks showing stability in the midst of the violent storm
in the market.  Building strong support between $41-42, GPS has
started moving higher over the past month and is dragging the
200-dma ($42.41) into a modest uptrend.  Aided by improving
health across the Retail sector, GPS is using its 10-dma at
$48 as support and looks ready to challenge resistance near
$50.  The long tail on Friday's candlestick is very encouraging,
as buyers moved in to help the retailer close near the high of
the day.  Eight major retailers settled federal class-action
lawsuits on Tuesday, and the good news appears to have had a
buoyant effect on their stocks.  GPS' suit is still pending,
but when it settles, the stock could get an additional boost.
GPS has support at $46, and a pullback to this level would
provide for a nice entry.

BUY LEAP JAN-2001 $50.00 ZGS-AJ at $10.63
BUY LEAP JAN-2002 $55.00 WGS-AK at $14.13

/charts/charts.asp?symbol=GPS


New Plays

No new plays this week.


Drops

CS $29.38 If you haven't noticed, what the company has to say
with its earnings announcement is often far more important than
the actual numbers.  CS beat estimates by a penny on Wednesday,
but comments from the company related to its spin-off plans
didn't sit well with analysts or investors.  Stating that the
spinoff of four of its business units will take longer than
expected really ruffled some feathers at Goldman Sachs.  The
brokerage house cut earnings estimates from 15 cents down to
only a penny, and dropped revenue estimates from $397 million
to $305 million.  CS investors responded by lopping over 40%
off the share price on Thursday, and this dead cat barely
bounced at all.  Lehmann Bros. came out on Friday to reiterate
their Buy rating, saying the sharp decline "was unwarranted
and the recent volatility provides a buying opportunity".  At
any rate, CS doesn't hold much appeal right now, so we are
dropping it this weekend.

MOT $146.00 Plummeting through the 50-dma without so much as a
"how do you do", MOT also sliced through support at $148 before
finding its feet near the 100-dma ($142.75).  Normally we'd be
looking at this as a gift of an entry point, but right now are
not convinced of the strength of the market heading into
earnings.  With little in the way of positive sentiment to
carry it higher, we prefer to take our profits off the table
and look for conditions to improve.



*****************
PUTS, PUTS, PUTS
*****************

Put plays can be very profitable but have a larger risk than call 
plays. When a stock is falling the entire investment community 
(except the shorts) is hoping it will reverse and start back up. 
The company management is also doing everything they can to shore 
up their stock price. The company issues press releases, brokers 
talk it up, analysts try to put a positive spin on everything. 
Then of course there is the death knell, the "buy recommendation" 
simply because the price has dropped to some level that analysts 
feel attractive again. Buyers who like the stock wait until it 
appears a bottom has been reached and then jump on it in a feeding 
frenzy. They may already have a large position and are averaging 
down. Many factors can stop a free falling stock in mid drop.

****

PSIX - Psinet Inc. $34.06 (-3.75)(-11.94)

Headquartered in Herndon, Va., PSINet is an Internet Super 
Carrier offering global e-commerce infrastructure and a full 
suite of retail and wholesale Internet services through 
wholly-owned PSINet subsidiaries. Services are provided on 
PSINet-owned and operated fiber, satellite, Web hosting and 
switching facilities providing direct access in more than 800
metropolitan areas in 27 countries on five continents. 

The trend that PSIX was following changed on Friday.  When 
the market opened shares rallied up to $36 following along with 
the Nasdaq.  However those bullish investors did get beaten 
down when the market dropped.  About an hour before the close, 
PSIX was up to $36 again.  So we are a little hesitant to see 
what PSIX will do from here.  The bearish sentiment has been 
strong and hopefully it can use that strength to resume the old 
trend.  But if this is a short-term reversal, we will be ready 
to exit PSIX in a hurry.  The Nasdaq will be a key player in 
deciding PSIX's fate.  The bottom line here is that the selling 
that seems from the recent acquistion announcement may be 
coming to an end and you know how fast an Internet play can 
reverse on you.    

BUY PUT APR-40*SQP-PH OI=1989 at $7.88 SL=5.75
BUY PUT APR-35 SQP-PG OI= 884 at $4.38 SL=2.75 

Average Daily Volume = 8.41 mln
/charts/charts.asp?symbol=PSIX

****

GTW - Gateway Inc. $53.03 (-3.22)(-2.69)

Gateway has grown from a two-person startup in an Iowa farmhouse
to a $8.6 billion, fortune 250 company that employs 20,000 people
around the world.  They are the #2 direct marketer of PC's in the
United States.  Their products are delivered quickly and directly
to computer users, who place orders over the phone or at the 
company Web site.  GTW makes both desktop and portable PCs, 
PCTV's, and servers.  They also sell component add-ons such as 
CD-ROM drives and offer Internet access at Gateway.net.  They are
second only to Dell, but find competition from IBM and Micron 
Technology.

After a falling to support at $52, in the first two hours of
trading Friday morning, it began to appear as though our play
in Gateway may be coming to an end.  Buyers gradually bid the 
price of the hardware company back to $54.44 but not with the
a lot of enthusiasm.  Apparently those same buyers weren't so
sure of their earlier moves, as GTW fell about $1.31 in the last
fifteen minutes of the session, with fairly good volume behind
the move.  GTW joined the Dow and many of the NYSE stocks in a 
late day decline.  For whatever reason, it appeared as though
traders didn't want to go into the weekend long.  The hardware
index had a tough go of it this past week, and GTW did its
part to help pull the sector lower, although GTW has been on
the skids for some time now.  We would like to tell you GTW
will continue lower and those with put positions will continue
to profit.  Although it really appeared GTW was trying to find a
bottom on Friday, a new week could bring more selling.  Gateway
did announce late Thursday evening that it is buying a 7.6% stake
in top Latino online community, Quepasa.com.  GTW will spend $10
million in cash for its alliance with Quepasa.com, in an attempt
to bring computers and the Internet to the U.S. Latino community.
Last October, Gateway became the first U.S. PC maker to launch a
major marketing and service program in Spanish as well.  The
alliance with Quepasa.com may be a great move in the long term for
Gateway, but for now our play is focused on company's declining
stock price, and the chances of lower revenues and earnings.  At
most signs still point south.  A bounce back to the $54 level,
followed by weakness could once again signal an entry point for
this play.

BUY PUT APR-60 GTW-PL OI=5173 at $8.75 SL=6.50
BUY PUT APR-55*GTW-PK OI=4392 at $5.50 SL=3.75

Average daily volume = 2.36 mln
/charts/charts.asp?symbol=GTW

****

AT - Alltel Corporation $63.25 (-4.75)

Alltel is a customer-focused information technology company that
offers telecommunications services to 8.5 mln customers in 25 US
states, mainly in the Southeast and the Midwest.  The company 
provides local phone service over nearly 2 mln local lines in
rural areas, and has gained approval to offer competitive local
access.  Alltel's cellular operations serve about 5 mln
customers.  Alltel also offers long-distance service to more
than 500,000 customers, as well as Internet access and paging
services.  The company operates in two principal areas, 
communications and information services.

Although some telecom stocks showed renewed strength on Friday, 
ALLTEL stumbled lower.  The situation we described last Tuesday
is continuing to unfold, as the information services division of
AT remains intact.  Investors have been pleading with management
to cut their losses with the money losing division, and focus
on the communications business.  Although the company has
explored its options, it has yet to find any reasonable offers.
We'll continue to monitor the story from AT as company officials
debate about the future of the company.  Now switching gears, a
new development in our AT play has surfaced over the past week.
By now, we all know about the mega-offering coming from AT&T in
the coming month.  The wireless tracking stock slated for an IPO
at the end of April.  The highly anticipated IPO is the biggest
in history, expecting to raise somewhere between $9.3 and $11.5
bln.  Many money managers are expected to sell some of their 
existing telecom positions to make way for the behemoth.  AT may
fall under additional pressure due to the IPO.  Now we have two
angles for our put play, the Ma Bell IPO and the dichotomy of AT.
The stock is still above support at $61, and finding overhead
resistance at the declining 10-dma.  Look for AT to bump against
resistance and fade lower.  If the stock drops below support, it
could be positioned to retest its low of $55.88

Watch for volume to pick-up as money managers sell AT to make room
for the AT&T IPO.  Friday's volume was anemic, look for selling to
increase as confirmation.  The stock has moved lower, settling
into a declining channel, set your stops just above the 10-day,
as it has provided significant resistance.

BUY PUT APR-65*AT-PM OI=173 at $3.75 SL=2.50
BUY PUT APR-60 AT-PL OI=439 at $1.38 SL=0.75

Average Daily Volume = 1.38 mln
/charts/charts.asp?symbol=AT

****

CPQ - Compaq Computer Corp. $26.75 (-1.94)(-1.56)(-0.75)

Compaq, a Fortune Global 100 company, is the second largest 
computer company in the world and the largest global supplier of 
computer systems.  Compaq develops and markets hardware, 
software, solutions, and services, including enterprise computing 
solutions, fault-tolerant business-critical solutions, enterprise 
and network storage solutions, commercial desktop and portable 
products and consumer PCs.  Compaq products are sold and 
supported in more than 100 countries through a network of 
authorized Compaq marketing partners and online. 

Short and simple, we're looking for an earnings warning from CPQ.  
Aside from the warning rumors floating around two weeks ago, CPQ 
is still heavily dependent on its retailer network from which it 
derives a big chunk of its revenue.  Making matters worse, HP 
overtook CPQ in market share in January, while DELL continues to 
eat CPQ's lunch with the direct sales model DELL perfected.  
While everyone knows of DELL's success, HP's recent share gain 
doesn't make CPQ look good considering they've been telling 
analyst's of a coming turnaround in revenue and profitability.  
Earnings are scheduled for release on April 25, which gives CPQ 
about two weeks to announce before they go into their quiet 
period.  Technically, CPQ has been slowly eroding value since it 
hit the top of its channel at $32 the week before last.  Now as 
it approaches $24 to $25 again, support could emerge.  The 
decreasing volume supports that notion.  Most of the sellers have 
been shaken out by now.  The good news for the play is that even 
on Friday's NASDAQ (tech) recovery, CPQ couldn't break back above 
$27.13 resistance and looks like its' rolling over again.  
Confirm that after amateur hour and consider failure to break out 
over $27.13, or a break below $26 as a good entry...the latter 
especially if backed up by a volume increase.

BUY PUT APR-35 CPQ-PG OI= 3128 at $8.50 SL=6.00
BUY PUT APR-30*CPQ-PF OI=31843 at $4.13 SL=2.50
BUY PUT APR-25 CPQ-PE OI=21051 at $1.19 SL=0.00 High Risk!

Average Daily Volume = 23.34 mln
/charts/charts.asp?symbol=CPQ

****

IIJI - Internet Initiative Japan Inc $69.75 (-12.25)

IIJI offers a range of Internet access and Internet-related 
services primarily to large corporations and other ISPs in 
Japan.  The company has one of the largest Internet backbone 
networks (A-Bone) which connect eight Asia/Pacific countries 
and also leases networks that connect Japan and the US. 

The slicing and dicing amongst the Internets kicked IIJI's 
downtrend back into high gear.  First it was the ominous 
comments by Goldman Sach's equity strategist Abby Joseph Cohen 
who suggested trimming current stock holdings.  Then the 
emerging markets guru Mark Mobius of the Templeton Fund shook 
up investors even more on Wednesday with a warning that many 
Internets (including foreign issues) are overvalued and due for 
further corrections of between 50%-90%.  IIJI just couldn't 
hack the bearish sentiment.  Even though stronger stocks in the 
sector showed some sign of life late Thursday, IIJI didn't snap 
back.  Instead it continued to roll over.  There wasn't even a 
glimmer of hope in Friday's session either.  The stock sold-off 
another $3.50 bringing the week's losses to almost 15%.  The 
next level of any support is at $65, followed by a bigger upset 
down to $50.  Basically what we've got here is a technical 
momentum play.  The first line of resistance to crack is $67.13, 
Friday's daily low.  After that it could get real ugly for IIJI.  
Investors haven't seen share prices this depressed since 
November 1999.  Take a look at a six-month chart for visual 
confirmation and also take note of the 5-dma line.  This 
technical indicator is currently hovering at $$74.25 and marks 
a good entry point on a bounce.  There really isn't any company 
specific news to effect the current slide.

BUY PUT APR-80*IUJ-PP OI=135 at $12.25 SL=9.25
BUY PUT APR-75 IUJ-PO OI= 44 at $ 8.88 SL=6.25

Average Daily Volume = 387 K
/charts/charts.asp?symbol=IIJI


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*******************************
CALLS CONTINUED IN SECTION FOUR
*******************************
SEE DISCLAIMER IN SECTION ONE





The Option Investor Newsletter             4-2-2000
Sunday                        4 of 4


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

Position Management: Time For A Quick Review...

With the recent volatility in the market, now is a good time to
revisit the particularly complex and often philosophical subject
of "When to sell."  Most experienced traders are aware of an old
adage, "It is harder to sell than to buy."  Exiting a position is
more difficult because you are forced to make a decision about an
issue that you already own and previously considered attractive.
When emotion enters the equation, your judgment becomes clouded
and the alternatives appear limited.  In addition, when a trader
focuses on the performance of a single issue, anxiety increases
exponentially.  A decision must be made: "Do you keep the stock,
trade it, or dump it?"  What if the technical outlook becomes
ambiguous?  When you trade without a well-developed plan it's
amazing how confusing the situation can become, and once you are
committed, you are playing by somebody else's rules.  A system of
structured and pre-planned moves is the only solution.  Each and
every day, you have to make a decision: "Take the profit? Take the
loss? Or let it run?"  It doesn't matter which exit system is used,
the key is that all the decisions are made in advance.  You don't
want to create a battle plan in the middle of a campaign.  After
you take a position, you should know exactly what you would do in
any circumstances that may develop.

Professional traders utilize various mechanical systems and exit
strategies to manage their positions.  The primary goal of every
trader is to limit losses and maximize profits.  The question is,
"How far do you let the position run before eroding your profits?"
Setting up rules before you enter a position will help to control
your emotions and improve consistency with exit decisions.  Most
methods for taking profits (and preventing losses) fit into one
of two categories: A pre-arranged goal, such as 25% or a trailing
stop, which is moved up as the stock advances.  Writing covered
calls sets up a pre-arranged goal, determined by which strike a 
trader sells.  There are many different methods using technical 
analysis to establish the stop loss level; trend-lines, previous 
lows, moving averages, etc.  With a stop-loss system, you take 
profits (or limit losses) after a violation of a pre-established 
level.  Traders may decide to combine both a profit goal of 30% 
with a trailing stop-loss as there is no guarantee the first goal
will be met.  Covered call writers will buy back the calls and 
sell the stock (or roll down), after a loss-cut point is violated.
 
Opening a new position is easier because you can pick and choose
from thousands of candidates.  There is no reason to buy unless
you are completely satisfied; identifying the perfect combination
of sound fundamentals, bullish indicators and favorable market
conditions.  You can search through charts for the perfect pattern
and perform extensive due-diligence until the number of reasons to
buy becomes overwhelming.  The choice of ownership is yours to
make and timing is not a constraint or limitation.  "Buy today,
tomorrow, or next month...maybe never."  The entry position is
simply that important!  It deserves your best analysis and
judgment.  The issue should be one you want to own and the price
and upside potential must be technically favorable, with minimal
downside risk.  Of course, correctly timing the purchase requires
a thorough knowledge of charting techniques and market trends.
The entire process is something you must completely understand
because a successful exit is by and large the product of a proper
entry.

Good Luck!


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  20.13   APR  17.50  6.00  *$  2.41  13.9%
CYCH   14.38  13.50   APR  12.50  2.69  *$  0.81   7.5%
FSII   22.88  20.50   APR  20.00  4.75  *$  1.87   7.5%
CYOE   12.06  11.00   APR  10.00  2.69  *$  0.63   7.3%
BIDS    7.13   5.94   APR   5.00  2.63  *$  0.50   6.9%
COB    14.13  11.75   APR  10.00  5.00  *$  0.87   5.9%
AND    12.75  11.19   APR  10.00  3.38  *$  0.63   5.8%
CRCL   27.63  26.00   APR  22.50  6.25  *$  1.12   5.7%
CBSI   25.75  22.38   APR  22.50  4.38   $  1.01   5.1%
ELIX   26.00  23.88   APR  20.00  6.88  *$  0.88   5.0%
TRMB   24.75  25.75   APR  20.00  5.63  *$  0.88   5.0%
POSS   12.56   9.94   APR  10.00  3.25   $  0.63   4.9%
VANS   16.13  16.13   APR  15.00  1.75  *$  0.62   4.7%
IGEN   28.25  25.00   APR  22.50  6.88  *$  1.13   4.6%
MPPP   29.25  21.00   APR  20.00 10.25  *$  1.00   4.6%
MUEI   14.50  14.00   APR  12.50  2.81  *$  0.81   4.3%
SCUR   22.88  17.00   APR  17.50  6.50   $  0.62   3.3%
RMII   10.13   7.13   APR   7.50  3.25   $  0.25   3.2%
EPTO   14.00   9.38   APR  10.00  4.75   $  0.13   0.9%
AND    16.13  11.19   APR  12.50  4.75   $ -0.19   0.0%
BYND    5.75   4.28   APR   5.00  1.38   $ -0.09   0.0%
TERA    8.81   6.44   APR   7.50  2.00   $ -0.37   0.0%
TLXN   25.75  17.56   APR  20.00  7.13   $ -1.06   0.0%
ESCM   17.50  11.63   APR  15.00  4.38   $ -1.49   0.0%
IARC   27.63  17.38   APR  22.50  7.75   $ -2.50   0.0%
THDO   15.75   9.69   APR  12.50  4.25   $ -1.81   0.0%
EPTO   16.94   9.38   APR  12.50  5.25   $ -2.31   0.0%

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

Comments:

Remember, selling covered calls is a neutral to bullish strategy
and although it offers protection against bearish moves, it isn't
a panacea.  Loss-cut points provide unemotional exits at pre-
determined areas where probability begins to favor further
downside movement.  Determining whether to exit or roll down
depends on an individual's risk/reward tolerance and long term
outlook for the underlying equity.  Some stocks to consider
exiting with further downside movement: Epitope (EPTO) breaking
its 150 dma; 3do Comp. (THDO) moving below $9.00; Information
Architects (IARC) below $15 though Friday's bullish close (a
candlestick hammer) suggests a short-term bottom; Esc Medical
(ESCM) closing below the February low as it suffers post-earnings
selling; Telxon (TLXN) breaking below its 150 dma.  Beyond.Com
(BYND) has broken below the February low on increasing volume
suggesting further downside potential.  Rmi.Net (RMII) missed
earnings and although revenues doubled, investors have fled the
issue.  Evaluate the long term outlook verses exiting now for a
small loss.


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

FSI    15.63  APR  15.00  FSI DC  1.25 674  14.38  4.3%   4.3%
MAIL   17.25  APR  15.00  UMA DC  3.00 795  14.25  5.3%   5.3%
PRGS   23.44  APR  20.00  RGQ DD  4.25 46   19.19  4.2%   4.2%
PXD    10.50  APR  10.00  PXD DB  1.13 650   9.37  6.7%   6.7%
R      22.69  APR  17.50    R DW  5.75 187  16.94  3.3%   3.3%

CNJ     8.13  MAY   7.50  CNJ EU  1.50 25    6.63 13.1%  13.1%
NUHC   22.13  MAY  17.50  NTQ EW  6.00 5    16.13  8.5%   8.5%

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

PXD    10.50  APR  10.00  PXD DB  1.13 650   9.37  6.7%   6.7%
MAIL   17.25  APR  15.00  UMA DC  3.00 795  14.25  5.3%   5.3%
FSI    15.63  APR  15.00  FSI DC  1.25 674  14.38  4.3%   4.3%
PRGS   23.44  APR  20.00  RGQ DD  4.25 46   19.19  4.2%   4.2%
R      22.69  APR  17.50    R DW  5.75 187  16.94  3.3%   3.3%

CNJ     8.13  MAY   7.50  CNJ EU  1.50 25    6.63 13.1%  13.1%
NUHC   22.13  MAY  17.50  NTQ EW  6.00 5    16.13  8.5%   8.5%


Company Descriptions

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

****

FSI - Freedom Securities $15.63  *** On the Move ***

Freedom Securities is a full-service, regionally focused retail
brokerage and investment banking firm.  Their three main areas of
focus are its full-service retail brokerage operations, its equity
capital markets activities, and its asset management operations.
Retail operations involve Freedom Securities acting as a broker
or dealer for individual clients in the purchase and/or sale of
equity securities, fixed income securities, mutual funds,
insurance products, options and U.S. government and municipal
securities.  After a year of acquisitions, Freedom Securities 
is on the move.  The recent uptrend started after FSI reported
record revenues in January and has moved the stock above its near
term resistance at $14.00, which now becomes support.  FSI is one
of the few stocks that pay dividends, recently paying $0.05 a
share in February. 

APR 15.00 FSI DC Bid=1.25 OI=674 CB=14.38 RC=4.3% RNC=4.3%

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

****

MAIL - Mail.com $17.25  *** Breakout Coming? ***

Mail.com provides online messaging services, feature-rich e-mail
and Internet fax services to businesses, ISPs, Web sites and also
directly to consumers through their Mail.com website.  Mail.com
recently expanded its range of operations with the formation of
World.com, a conglomeration of some of the world's leading
Internet domain properties, including USA.com, Asia.com,
Europe.com, India.com, lawyer.com and doctor.com, among many
others, making a collaborative network of major Web properties
which will serve the worldwide business-to-business (B2B) and
business-to-consumer (B2C) marketplaces.  Mail.com appears to 
be doing everything right as it recently reported record revenues
that had increased 750%.  The company continues to chalk up new
contracts and partnerships, most recently with Net2Phone (NTOP).
Mail.com offers reasonable speculation as it is set to expand 
into Asia.  Both Prudential and First Analysis Securities have
initiated coverage on Mail with "strong buy" recommendations.

APR 15.00 UMA DC Bid=3.00 OI=795 CB=14.25 RC=5.3% RNC=5.3%

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

****

PRGS - Progress Software $23.44  *** Trading Range ***

Progress Software develops, markets, and distributes application
development, deployment and management technology and Internet
and Intranet enabling technologies to business, industry and
government worldwide.  They also provide consulting, education
and support to their customers through their worldwide
professional services organization.  Their recent release of
AppsAlive!, a new initiative from their ASPEN 2000 program, gives
its Independent Software Vendors (ISVs) a jump-start in getting
their ASP applications deployed on the Web, and simultaneously
enables end users to test-drive these ASP applications online at
no charge.  Progress Software's post split sell-off appears to 
have created a trading range from $20 to $25.  Last quarter
showed a 22% increase in earnings as the company continues to
expand its global presence, recently opening new subsidiaries 
in Colombia and South Africa.  

APR 20.00 RGQ DD Bid=4.25 OI=46 CB=19.19 RC=4.2% RNC=4.2%

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

****

PXD - Pioneer Natural Resources $10.50  *** On The Move! ***

Pioneer Natural Resources is one of the largest independent
exploration and production companies in the United States
with three domestic and two international divisions.  Their
Hugoton field in southwest Kansas is one of the largest producing
gas fields in the continental United States.  Pioneer currently
has exploratory operations underway in the Gulf of Mexico and
South Africa.  In February, Pioneer's first well drilled on new 
Neuquen Basin acreage in Argentina, acquired late last year, 
was a discovery.  A strong rally ensued taking the stock up to
the January high.  On Wednesday, Pioneer announced that the 
Aconcagua appraisal well, in the Gulf of Mexico, was successful
and confirmed the deep offshore discovery made in March 1999.  
This led Dain Rauscher Wessels to initiate coverage on Pioneer
with a buy recommendation.  Investors jumped on board Thursday
pushing Pioneer's price above the January high, confirming a 
bullish "double-bottom" pattern.

APR 10.00 PXD DB Bid=1.13 OI=650 CB=9.37 RC=6.7% RNC=6.7%

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

****

R - Ryder System  $22.69  *** New Qualcomm Alliance ***

Ryder System provides a continuum of leading-edge logistics and 
transportation solutions and services to local, regional and
multi-national businesses.  Ryder's product offerings range from 
full-service leasing, commercial rental and programmed maintenance 
of trucks, tractors, trailers and special-use vehicles to integrated
services such as dedicated contract carriage (buses) and carrier 
management.  Additionally, Ryder offers overarching supply chain 
consulting and lead logistics management services which support 
clients' entire supply chains, from inbound raw materials through 
distribution of finished goods.  Can a strategic alliance with 
Qualcomm (QCOM) help Ryder become more efficient with the OmniTRACS
System?  Investors sure think so as they pushed Ryder's stock
above its 150 dma on heavy volume.  Ryder has been in a year-long
base and now appears ready for an upside resolution.  We favor
speculating with a conservative bias.

APR 17.50 R DW Bid=5.75 OI=187 CB=16.94 RC=3.3% RNC=3.3%

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

****

CNJ - Cole National  $8.13  *** What's Up? ***

Cole National is a provider of eyewear products, optometric 
services and personalized gifts through two operating units: 
Cole Vision and Things Remembered.  Cole Vision, including 
Pearle and Licensed Brands, is one of the largest optical retail 
companies in the world.  Things Remembered operates the only 
nationwide chain of personalized gift stores.  The vision side
of the company has been suffering from intense competition and
is completely reorganizing with Pearle and Licensed Brands to
be managed as independent business units.  Cole is looking to 
the future as it expects to break-even or post a small loss
in the first quarter of 2000.  Investors have jumped on board
over the last few days pushing the stock above its 150 dma.
For speculators who favor a cost basis at support.

MAY 7.50 CNJ EU Bid=1.50 OI=25 CB=6.63 RC=13.1% RNC=13.1%

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

****

NUHC - Nu Horizons Electronics  $22.13  *** Solid Sector! ***

Nu Horizons Electronics is engaged in the distribution of high
technology active and passive electronic components.  They are
also an export distributor of electronic equipment and a contract
assembler of circuit boards and related electromechanical devices
for various original equipment manufacturers.  Active and passive
components distributed by Nu Horizons include memory chips,
microprocessors, digital and linear circuits, microwave, RF and
fiber optic components, transistors and diodes, capacitors,
resistors and related networks.  A favorable news release by 
Individual Investor's senior analyst Luciano Siracusano on March
20, resulted in another new high for Nu Horizons.  He states that
Nu Horizons is an attractively valued earnings play with nice 
exposure to some rapidly growing markets.  We favor the bullish
technicals and a cost basis below the 50 dma. 

MAY 17.50 NTQ EW Bid=6.00 OI=5 CB=16.13 RC=8.5% RNC=8.5%

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



******************
BIG CAP NAKED PUTS
******************

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      103.88   100     A-PT    6.00   2597   23%     100
AFFX   148.44   130   FIQ-PF    7.88   3711   21%     145
AMCC   150.00   140   AZV-PH   19.50   3750   52%     130
AMCC   150.00   130   AZV-PF    7.75   3750   21%     130
BRCD   179.06   160   GUF-PL    6.63   4477   15%     160
CHKP   171.06   160   YKE-PL   14.50   4277   34%     170
CIEN   126.25   120   EUQ-PD    8.00   3156   25%     120
CMRC   148.00   135   RJC-PG    9.00   3700   24%     135
EXDS   140.31   130   QED-PF    7.50   3508   21%     130
EXDS   140.31   125   QED-PE    5.50   3508   16%     130
FDRY   141.00   130    OQ-PF    7.13   3525   20%     130
IMNX    63.44    55   QUV-PK    2.69   1586   17%      55
INKT   195.00   180   KAY-PP   10.38   4875   21%     180
INSP   145.25   140   OHY-PH   13.88   3631   38%     150
ITWO   122.00   115   QYJ-PC   10.13   3050   33%     115
JNPR   262.31   250   JUY-PJ   15.75   6558   24%     230
JNPR   262.31   240   JUY-PH   11.38   6558   17%     230
KLAC    84.25    80   CKV-PP    5.13   2106   24%      75
NEWP   135.00   120   QNW-PZ   10.38   3375   31%     120
PCLN    80.00    85   PUZ-PO    4.25   2000   21%      75
PDLI    79.44    75   PQI-PO    7.75   1986   39%      75
PEB     96.31    90   BVE-PR    5.50   2408   23%      90
PHCM   163.06   155   UMN-PK   10.38   4077   25%     150
PHCM   163.06   150   UMN-PJ    8.38   4077   21%     150
PMCS   203.66   190   SZI-PR   13.88   5092   27%     185
PMCS   203.66   185   SZI-PQ   11.75   5092   23%     185
QLGC   135.31   115   QLC-PC    6.88   3383   20%     115
RIMM   106.50   100   RUL-PT    7.88   2663   30%     105
SCMR   129.00   120   QSM-PD    6.75   3225   21%     120
SDLI   212.97   190   QZL-PR   10.00   5324   19%     175
SEBL   119.38   110   SGW-PB    6.13   2985   21%     110
SNDK   122.56   110   SWF-PB    7.13   3064   23%     115
VIGN   160.25   160   UOJ-PL   21.38   4006   53%     160
VRTS   132.00   120   VUQ-PD    7.88   3300   24%     130

To download a spreadsheet version of the above chart, please click
here:
http://www.OptionInvestor.com/downloads/hpapr-02.xls


CMRC

 

AGGRESSIVE   SELL PUT APR-140 RJC-PH at $10.75 = 29%  
MODERATE     SELL PUT APR-135 RJC-PG at $ 9.00 = 24%
CONSERVATIVE SELL PUT APR-130 RJC-PF at $ 7.13 = 19%
 

PDLI

 

VERY AGGRESSIVE SELL PUT APR-85 PQI-PQ at $15.38 = 77%
AGGRESSIVE      SELL PUT APR-80 PQI-PP at $12.25 = 62%
MODERATE        SELL PUT APR-75 PQI-PO at $ 7.75 = 39%


PHCM

 

AGGRESSIVE   SELL PUT APR-155 UMN-PK at $10.38 = 25%    
MODERATE     SELL PUT APR-150 UMN-PJ at $ 8.38 = 21%
CONSERVATIVE SELL PUT APR-145 UMN-PI at $ 6.25 = 15%


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

Position Management: The Review Continues...
 
Our recent discussion on historical trends and pricing patterns
has generated some thought-provoking suggestions and techniques
for taking profits.  While there are a number of successful entry
and exit systems, this week's narrative summarizes the most
commonly used method for position management:

Sell-Stops...
 
Learning to correctly manage portfolio positions; maximizing gains
while limiting losses, is one of the most important aspects of
successful investing.  There is a good reason why the majority of
investors lose money in the market.  Most of them have yet to
learn the #1 secret of profitable trading; the market will do
whatever is necessary to prevent the uneducated masses from making
money while repeatedly rewarding the astute professional minority.
 
The first thing an investor should realize is that they must never
hold any position without a protective Sell-Stop.  The majority of
market professionals use protective trailing stops but the retail
trader is far less proficient in this practice.  Using Sell-Stops
eliminates the risk of emotional or reaction-based judgments in
difficult situations and removes fear, hope and greed from the
entire equation.  The consistent use of this technique provides a
mechanical and disciplined method for achieving profit.  Allowing
the market to make the exit decision is much more precise than
relying on our complex human intuition.
 
The proper placement of Sell-Stops requires a thorough knowledge
of chart analysis and basic market trends or cycles.  The primary
price support areas and short-term (18 - 40 dma) moving averages
are the main indicators that determine the initial target exits.
After a trend had been established with the stock price above the
moving average, the Sell-Stop is simply adjusted higher with each
successive rally.  As long as the stock price remains above its
rising moving average, the trend is intact.  As the moving average
begins to level, the effects of short-term weakness become more
apparent and the consolidation period begins.  When the issue
enters this high-risk area, the complexity of decision-making
increases exponentially.  Rather than try to discern the small
differences between a healthy dip and a full-scale reversal, a
successful trader will focus on the positioning of the Sell-Stop.
A quick review of the trend-lines and regression channels will
provide the necessary information for a timely and accurate
adjustment.  In this manner, the profit potential is maintained
without the possibility of losing previous gains.
 
Even with the most successful positions, the time to take profits
will eventually arrive.  The use of disciplined, proven techniques
can help avoid the confusion that occurs when hard-earned money is
at stake and make the whole experience less intimidating, possibly
even enjoyable.  Remember, taking profits is a good thing! 

Good Luck!


                      *** 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  11.00   APR   7.50  0.44  *$  0.44  14.8%
AMTD   24.25  20.88   APR  20.00  0.75  *$  0.75  13.1%
CONV   12.81  10.88   APR  10.00  0.56  *$  0.56  13.0%
RSLC   23.88  24.00   APR  17.50  0.69  *$  0.69  11.0%
PCMS   23.19  18.50   APR  15.00  0.81  *$  0.81  10.8%
ZONA   10.88   8.56   APR   7.50  0.38  *$  0.38  10.7%
PMRY   19.50  18.38   APR  17.50  0.63  *$  0.63  10.6%
MCRE   25.06  21.25   APR  15.00  0.69  *$  0.69  10.5%
INSO   16.06  13.50   APR  10.00  0.44  *$  0.44  10.5%
EGRP   32.00  30.13   APR  25.00  0.50  *$  0.50   7.9%
MLT    30.00  24.56   APR  22.50  0.44  *$  0.44   7.4%
SEM    17.81  17.25   APR  15.00  0.31  *$  0.31   7.3%
NUHC   17.56  22.13   APR  12.50  0.31  *$  0.31   7.1%
OXGN   23.50  21.13   APR  17.50  0.50  *$  0.50   7.0%
TLCM   32.44  30.25   APR  22.50  0.44  *$  0.44   6.9%
SPNW   20.75  14.63   APR  15.00  0.75   $  0.38   6.7%
CDT    34.31  33.94   APR  25.00  0.56  *$  0.56   6.6%
SVGI   30.06  27.50   APR  22.50  0.38  *$  0.38   6.5%
SCUR   26.50  17.00   APR  17.50  0.75   $  0.25   3.0%
ISIP   24.00  14.06   APR  15.00  0.75   $ -0.19   0.0%
MADGF  14.25   8.50   APR  10.00  0.50   $ -1.00   0.0%

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


Comments:

Madge Networks (MADGF) and Isis Pharma (ISIP) are testing their
respective 150 dma's.  A move below that support area could be a
potential exit signal.  Shopnow.Com (SPNW) appears to have made
a successful test of the February low - but only time will tell.
Secure Computing is still suffering from the bearish outlook of
the recent "Barrons" article.


NEW PICKS
*********

Sequenced by Company
*****

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

ADLT   18.75  APR  12.50  LQY PV  0.44  30   12.06  10.5%
CD     18.69  APR  17.50   CD PW  0.56  3216 16.94   8.2%
CYOE   11.00  APR   7.50  QTO PU  0.38  576   7.13  14.6%
EGRP   30.13  APR  25.00  QGR PE  0.56  4981 24.44   7.5%
LGTO   44.63  APR  30.00  EQN PF  0.38  766  29.62   4.1%
TLCM   30.25  APR  22.50  TMU PX  0.50  118  22.00   7.6%
UPR    14.50  APR  12.50  UPR PV  0.56  415  11.94  12.8%


Sequenced by ROI  
******

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

CYOE   11.00  APR   7.50  QTO PU  0.38  576   7.13  14.6%
UPR    14.50  APR  12.50  UPR PV  0.56  415  11.94  12.8%
ADLT   18.75  APR  12.50  LQY PV  0.44  30   12.06  10.5%
CD     18.69  APR  17.50   CD PW  0.56  3216 16.94   8.2%
TLCM   30.25  APR  22.50  TMU PX  0.50  118  22.00   7.6%
EGRP   30.13  APR  25.00  QGR PE  0.56  4981 24.44   7.5%
LGTO   44.63  APR  30.00  EQN PF  0.38  766  29.62   4.1%


Company Descriptions

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

****

ADLT - Advanced Lighting Technologies  $18.75  *** What's Up? ***

Advanced Lighting Technologies designs, manufactures, and markets
a broad range of metal halide products including lamps, materials
used in the production of lamps, and other components for
lighting systems as well as complete metal halide lighting
systems.  Their materials and components are used in the
manufacture of its own lighting systems for sale to end-users and
are sold to third-party manufacturers for use in the production
of their metal halide products.  They also design, manufacture,
and sell thin film deposition equipment for the lighting,
ophthalmics and optics industries.  Shares of ADLT's stock soared
recently after they unveiled a new fiber optic telecom unit.  The
move will allow ADLT to streamline their R&D, manufacturing and
marketing programs and General Electric (GE) agreed with the plan,
increasing its stake in the company by $20 million.  This play is
somewhat speculative so do your homework!

APR 12.50 LQY PV Bid=0.44 OI=30 CB=12.06 ROI=10.5%

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

****

CD - Cendant  $18.69  *** Own This One! ***

Cendant is a global provider of consumer and business services.
Their core competencies include building franchise systems,
providing outsourcing solutions and direct marketing.  As a
franchiser, Cendant is among the world's leading franchisers of
hotels, rental car agencies, tax preparation services and real
estate brokerage offices.  Cendant is the world's largest
vacation exchange service, a major provider of mortgage services
to consumers, and the global leader in employee relocation.  In
direct marketing, Cendant provides access to insurance, travel,
shopping, auto, and other services primarily to customers of its
affinity partners.  Cendant has made a number of moves in the
last few months to establish its Internet holdings and Lehman
Brothers recently offered a "buy" rating with a target of $30.

APR 17.50 CD PW Bid=0.56 OI=3216 CB=16.94 ROI=8.2%

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

****

CYOE - Coyote Network Systems  $11.00  *** New Entry Point? ***

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.  In March, Coyote announced it
had 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.   CYOE
plans to acquire Group Long Distance (GLDI) and in the future,
the company may be called Quentra Networks as it is seeking a
name change.  Even with the recent consolidation, the technical
character suggests a resumption of the bullish trend.

APR 7.50 QTO PU Bid=0.38 OI=576 CB=7.13 ROI=14.6%

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

****

EGRP - E*trade Group  $30.13  *** Second Try! ***

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'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.  The brokerage group is on the move with
quarterly revenues expected to exceed estimates.  Analysts have
upgraded the sector based on strength from unprecedented trading
volumes.  Friday's technical recovery demonstrates strength in
the issue and support exists near the cost-basis.  We suggest you
try to target-shoot a higher premium on a daily pull-back.

APR 25.00 QGR PE Bid=0.56 OI=4981 CB=24.44 ROI=7.5%

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

****

LGTO - Legato Systems  $44.63  *** On The Rebound! ***

Legato develops, markets and supports advanced enterprise-strength
storage management software for the network computing market.  The
company maintains offices throughout the United States and around
the globe.  The core elements of their storage solutions include
scalability, heterogeneity, performance, ease of use and central
administration.  Legato's storage management solutions have been
designed for both network administrators and end users, and can be
accessed through a number of graphical user interfaces, including
Windows, Windows NT and Motif.  The company is recovering from
January's earnings debacle and with the rally in data storage
issues, analysts are starting to take notice.  The demand for
storage will increase with the demand for bandwidth and Legato's
product offerings are well suited to meet emerging needs in the
area of data security and information management.  An aggressive
position is available at the APR-$35 strike.

APR 30.00 EQN PF Bid=0.38 OI=766 CB=29.62 ROI=4.1%

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

****

TLCM - TelCom Semiconductor  $30.25  *** Chip Sector ***

TelCom Semiconductor designs, develops and markets a diversified
portfolio of high-performance analog and mixed-signal integrated
circuits for a wide variety of applications in the wireless
communications, networking, computer, and industrial markets.
Analog integrated circuits are used to measure or control certain
variables that have an infinite number of values or states such
as light, temperature, pressure, weight or speed, and are required
to interface between digital electronics systems and a variety of
every day applications.  TelCom offers a diversified portfolio of
analog and mixed-signal integrated circuit products for a wide
range of market applications.  A new web site, new agreements and
3 million shares placed at $25.  Somebody obviously thinks it is
worth more than $22.

APR 22.50 TMU PX Bid=0.50 OI=118 CB=22.00 ROI=7.6%

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

****

UPR - Union Pacific Resources  $14.50  *** Oil Sector! ***

Union Pacific Resources Group is engaged in the exploration for
and development and production of natural gas, natural gas
liquids and crude oil in the United States and Canada.  UPR is
also engaged in the hard minerals business through joint ventures
and royalty interests in several coal and trona (natural soda
ash) mines. Union Pacific has facilities across the United States
as well as international operations in Canada, Guatemala, and
Venezuela.  Merrill Lynch recently issued a bullish report on a
number energy exploration and production companies, saying they
should benefit from higher oil and natural gas prices.  Solomon
Smith Barney backed the bullish outlook with a new "buy" rating
on UPR and with earnings due after the April expiration, this is
relatively conservative "Speculation Only" position.

APR 12.50 UPR PV Bid=0.56 OI=415 CB=11.94 ROI=12.8%

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



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

A Great Way To End The Week!

Wednesday, March 29

Technology stocks plummeted today while blue-chip issues rallied
as fund managers adjusted their portfolios for the end of the
first quarter.  The Dow Jones Industrial Average rose 82 points
to 11,018 on strength in General Electric (GE), which moved up $8
during the session.  The technology-driven Nasdaq Composite fell
189 points to 4,644, the third largest decline on record.  The
S&P 500 Index, balanced by the two opposing trends, closed almost
unchanged at 1,508.  Declines led advances 2-to-1 on the Nasdaq
while advances were slightly ahead on the NYSE.  Volume was heavy
in both markets.  The 30-year Treasury rose 1/32, with the yield
down to 5.97%.


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

Qualcomm        QCOM   APR130C/A140C   $8.25   debit   bull-call
Legato          LGTO   MAY30C/APR40C   $8.25   debit   diagonal
Legato          LGTO   JUN50C/MAY50C   $2.62   debit   calendar
Bank Of Tokyo   MBK    MAY12C/MAY15C   $0.00   debit   bull-call

Qualcomm opened higher but fell to a mid-morning low near $152,
allowing a brief but favorable entry opportunity.  Of course the
question now is whether it can continue to oppose the bearish
trend in technology issues.  Legato moved in the other direction,
falling quickly at the open to a low near $40.  Once again the
period for entry was fleeting but prices at or near the target
debits were observed on both positions.  MBK was less cooperative
with a higher than suggested debit.  As the stock climbed during
session, the position followed and we were unable to enter the
spread for less than $1.50 debit.  We will monitor the position
for a new opportunity on Thursday.


Portfolio plays:

Industrial stocks enjoyed modest gains today as investors moved
funds away from high-flying technology issues into areas of the
old economy.  The rotation was blatant and obvious with many of
the classic stocks becoming safe havens from the uncertainty of
recent Nasdaq profit-taking.  A well-known fund manager said the
current volatility in the sector could be the start of a global
sell-off for the group.  His remarks about lofty valuations for
technology issues followed by a day a note of caution sounded by
Goldman Sachs strategist Abby Cohen.  With the momentum already
building, there was little time to avoid the onslaught and many
of the marquee companies suffered significant losses.  Investors
continued to sell for profits from recent big gains, driving the
technology index to correction levels and for now, the bottom is
nowhere in sight.  With analysts lining up to take their shot at
the Nasdaq and the horrid technical condition of the group, the
question is, "When will the selling end?"

With the attitude of impending doom and gloom in almost every
technology sector, we used the morning session to adjust (and
exit) a number of the potentially bearish issues.  Our goal was
simply to limit losses or protect current gains and in the case
of favorable long-term positions, increase the downside margin
for profit.  In the Credit Spread Section, the obvious candidate
was Electro Scientific (ESIO) and if you didn't close the spread
for a profit last week, today's move below the 30 DMA certainly
garnered your attention.  The options were; a closing debit near
the original debit or, a roll-out to attempt to profit from the
potential downward move.  Either method is much better than a
significant loss but if you intend to hold until the end, watch
for a break through support at the bottom of the current range
near $52-$53.  That would be the final nail in the coffin.  The
other credit-spread issues are still well above their recent
support levels, but they will require close attention if the
correction in technology issues continues.

Most of the plays in the Diagonal Spread Portfolio have already
been adjusted for maximum downside protection but we did notice
a few issues with bearish implications.  P-Coms (PCMS) offered
the easiest decision with a favorable early-exit return of $1.50
profit.  The Cirrus (CRUS) and Cadence (CDN) positions also offer
closing profits.  The only viable adjustment for Andrew (ANDW)
was a transition to the MAY-$22.50 series.  The new cost basis
for the JUL15C/MAY22C position is $6.50.  Espire (ESPI) has now
broken below a recent trading range and with earnings due Friday,
it may be time to hedge our bets.  In this case, there are no
options at $7.50 in May so the alternatives are limited; close
the play or hope for better-than-expected earnings and a change
in technical character.  It's your call (and you already know our 
approach to these situations).  One other issue bears attention
as it has the potential to inflict large losses.  The Theragenics
(TGX) spread is short at $15 with the stock trading near the
neckline of a head-n-shoulders top formation.  A move down to the
MAY-$12.50 options would yield a $1.50 credit and reduce the
break-even basis to $11.75.

Our LEAPS/CC's plays have enjoyed an incredible run in past weeks
and the new positions in American Online (AOL) and Bank One (ONE)
are performing above expectations.  Our previous plan to roll the
AOL position up and forward appeared to be a great move until
today's closing sell-off.  The debit for our adjustment to MAY-$70
options seemed favorable at $1.00 but with the current drubbing
of technology issues, we may have been a bit premature.  Another
issue that has succumbed to the new "lo-tech" attitude is Premier
Technologies (PTEK).  In this case, we also decided to move out
and down to the MAY-$7.50 series.  The $0.75 credit reduces our
cost basis to break-even at the sold strike of $7.50.

The majority of Debit Spread positions are near maximum profit and
can be closed for favorable returns.  Obviously the decision to
exit early for smaller gains is a personal one and should be made
based on your individual risk/reward outlook.  The only issue that
has a potentially large downside risk is RMI Net (RMII) and the
bearish technicals suggest that a loss-limiting departure may be
the safest move.  The current closing credit is $3.25.  The
remaining technology-based plays are correctly positioned to ride
out any potential storm and with luck, the foundering Nasdaq will
soon recover and return to its bullish ways.


Thursday, March 30

The sell-off in technology issues continued today with the Nasdaq
posting its fifth biggest point loss ever.  Concerns over soaring
valuations in the sector led the index 186 points lower to 4457.
The bearish activity dragged the Dow industrials lower with the
average closing down 38 points at 10,980.  The S&P 500 Index was
also down 20 points to 1487.  Volume on the NYSE hit 1.18 billion
shares with advances beating declines 1,563 to 1,451 on the Big
Board.  Bonds benefited from a flight to quality and the 30-year
Treasury was up 1 12/32, bid at 105 6/32, where it yielded 5.87%.


Portfolio Plays:

The Nasdaq recorded its third straight triple-digit loss today as
investors continued to take profits in the leading technology
issues.  The force of bearish momentum was significant with the
composite index breaking through a number of key support levels,
including its 50-day moving average.  The blame for this week's
sell-off lies squarely on comments from some well-known analysts.
First, Goldman Sachs strategist Abby Cohen rocked the market by
lowering her equity exposure.  Then emerging market expert Mark
Mobius finished the job, calling for a 50% to 90% decline in
Internet stocks.  Fund managers suggest the recent activity is
related mostly to end-of-quarter selling but almost all of them
expect further declines in the technology group.  Mutual fund
flows are also expected to slow in April, further exacerbating
the potential for share value deterioration.  Biotechnology and
Internet stocks are seen as particularly weak, with their recent
inflated levels and speculative nature while classic issues are
once again considered the best investment for the long term.

Just when we thought everything was under control, the technology
index attempted to set a new record for the biggest one-day loss.
Fortunately, investor sanity resurfaced and the panicked exodus
slowed to an orderly departure.  Even with the late recovery, the
Spreads Portfolio endured a number of unfavorable moves.  In the
LEAPS/CC's Section, Cabletron Systems (CS) fell to $30 after the
company beat quarterly estimates but failed to achieve targets
for its most important division.  In addition, Cabletron's split
into four separate entities is going to take longer than expected,
a situation that could temporarily dampen financial results and
hamper the company's ability to focus on its business.  The loss
was extreme but our position still traded at a profit during the
session.  Espire (ESPI) however, was a different story.  Recall
that we had the opportunity to close the play near break-even or
hope for better-than-expected earnings.  Well it appears there was
good reason for the recent decline.  Today company officials said
Espire expects to post an EBITDA loss of about $35 million for the
fourth quarter and has also failed to comply with certain credit
agreements.  The stock closed near $9.50 but it is sure to open
at much lower levels tomorrow.  That certainly says something for
keeping losses at a minimum!  Of course there were numerous other
stocks that continued lower but most are moving in sympathy with
the broad technology sector and they still have the potential for
a significant recovery when the group eventually rebounds.  Lets
hope that occurs soon!

There were some pleasant surprises in the portfolio today.  The
new position in Legato (LGTO) enjoyed some profitable moments as
the issue reached a midday high above $45.  The bullish calendar
spread traded at $3.25 credit, a $0.62 profit in just one day.
Advanced Micro Devices (AMD) rose over $5 to a new high near $60
on news the company will not sell its Network Products Division.
Company officials said growing demand for the product lines in
its Network Products division led them to this decision and most
analysts applauded the move.  Philip Morris (MO) rallied over $2
after a newspaper report suggested that a bill making the rounds
in the Florida Legislature could protect tobacco companies from
huge punitive-damage awards.  The bill, which may be introduced
as early as Thursday, would bar a lump sum punitive damage award
in a class-action suit brought in Florida.  The bill's aim is not
to protecting the tobacco companies, but at keeping the flow of
settlement payments flowing to the state.  Regardless of the
reason, tobacco companies would benefit tremendously from any
limitation on damage awards and investors took notice.  Both of
our bullish calendar spreads benefited from the upside activity
and the early-exit profits were favorable.


Friday, March 31

Technology stocks recovered today as momentum from bargain-hunting
buyers eventually erupted into a significant rally.  The Nasdaq
climbed 114 points to 4,572.  Late selling in blue chips took the
Dow 58 points lower by the end of the session, with the average
closing at 10,921.  The S&P 500 gained 10 points to 1,498.  On the
NYSE, advancing issues led declines 20-11, with 1.2 billion shares
traded.  In the bond market, the 30-year Treasury was up 19/32,
bid at 105 24/32, where it yielded 5.83%.


Portfolio Plays:

Technology stocks enjoyed a modest recovery today as investors
vied for recently oversold issues with enthusiasm.  In contrast,
blue-chip issues ended the session lower as the interest in old
old economy stocks faded.  By most accounts it was a favorable
session with Banks, Biotechs and Transports surging along with
high quality technology issues in a show of broad strength.  A
few analysts said the rally was based mostly on the effect of
quarterly window dressing but the successful test of technical
lows indicated the potential for new bullish trend.  Volatility
was also scrutinized with both markets enduring triple-digit
swings during the session.  Looking back, the first quarter has
seen unprecedented market movement with a majority of the biggest
"all-time" losses and gains occurring in both the Dow and the
Nasdaq.  Fortunately (for option traders), the volatility is
expected to continue well into the second quarter.

The majority of issues in our portfolio participated in the rally
and the incredible resurgence of technology stocks was surprising.
Favorable moves in stocks such as Applied Power Conversion (APCC),
Electro Scientific (ESIO), MetroMedia Fiber (MFNX), Nvidia (NVDA),
Northern Trust (NTRS) and Titan (TTN) revitalized the outlook for
the Spreads Section.  A number of mid-cap stocks also enjoyed big
rallies.  American Online (AOL), Computer Associates (CA), and
Legato (LGTO) traded higher in bullish sessions and lower priced
issues such as E*Trade Group (EGRP), Network Associates (NETA) and
Silicon Valley Group (SVGI) benefited from the broad technology
recovery.  With most of our positions comfortably back in positive
territory, the key will be to identify those issues that fail to
profit from the current trend and remove them from the portfolio.
Positions that are questionable include: Duramed (DRMD), and of
course, Epitope (EPTO).  All of the remaining spread and straddle
positions have excellent potential for eventual profit and we plan
to manage them with an iron fist in the upcoming weeks.  With any
luck, today's rebound in the technology group will continue and we
can resume our conservative (and previously successful) approach
to spread trading.

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


******************************************************************
				- NEW PLAYS -

The "Index Spreads" article from Thursday's section generated a
number of favorable E-mail replies and for those of you who wish
to try the Credit-Spread Strangle, there are two new candidates;
one in the OEX and another in Sun Microsystems (SUNW).  With the
recent character change in many Nasdaq issues, I have decided to
offer some bearish positions to appease the weekly influx of
credit-spread requests.

These plays are based on the current price or trading range of
the underlying issue and the recent technical history or trend.
The probability of profit from these positions is also higher
than other plays in the same strategy based on disparities in
option pricing.  Current news and market sentiment will have an
effect on these issues.  Review each play individually and make
your own decision about the future outcome of the position.

****

CAMP - California Amplifier  $31.00  *** Going Down? ***

California Amplifier designs, manufactures and markets a broad
line of amplifiers, down-converters, antennas and integrated
products.  These products are used in the reception, conversion
and amplification of microwave signals used in conjunction with
the reception of video and audio data transmitted from satellites
or earth-based transmitters using microwave signals.  The company
operates in three business segments: Satellite Products, Wireless
Products, and Antenna Products.  CAMP also designs, manufactures
and markets two-way voice and data transceivers used for wireless
communications between fixed locations.  In addition, the company
markets MultiCipher, a broadband analog scrambling system that
decodes all channels transmitted simultaneously, and a broad line
of antenna products used in Global Positioning Satellite systems
for vehicle and asset tracking, surveying and marine and airborne
navigation.

CAMP has recorded substantial losses in the last few days and
the recent drop below the 50-day moving average line was a very
bearish signal.  The stock is now mired in downward momentum
fueled by selling pressure and the trend is unlikely to reverse
soon.  With the lack of interest by investors, the stock has
begun to show significant weakness and the change in character
appears to have long-term potential.  A test of the 30 DMA will
be the first indication of its technical strength.


PLAY (very aggressive - bearish/credit spread):

BUY  CALL  APR-45  UMP-DI  OI=560  A=$1.31
SELL CALL  APR-40  UMP-DH  OI=683  B=$2.25
INITIAL NET CREDIT TARGET=$1.06 ROI(max)=27%


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

****

IRF - International Rectifier  $38.12  *** Rolling Over? ***

International Rectifier is a major worldwide supplier of power
semiconductors used for power conversion.  Through its Hexfet
product line, the company is a market leader in power MOSFETs,
which are used in anti-lock braking and fuel injection systems,
disk drives, printers, video cameras, power tools, electronic
lighting ballasts, industrial test equipment, telephone networks
and modems, and satellites.  Power MOSFETs and IGBTs serve the
switch function in power conversion to provide an even, usable
flow of power for electronic equipment.  The company's Hexfet
power MOSFET products and IGBT transistors comprised 70% of
fiscal 1998 sales.  Major customers include Delco, Ford, IBM,
Phillips, Motorola and Arrow Electronics.  IR has manufacturing
facilities in North America, Europe, and Asia, and markets its
products through sales staff, representatives and distributors.

On Thursday, IRF fell below its short-term moving average on a
reversal in retail buying momentum.  A continued bearish trend
from this point will signal a change in character.  With respect
to a longer-tem outlook, IRF is at a key moment.  The stock price
is in close proximity to the 50 DMA and a break above or below
this line on strong volume would indicate the beginning of a new
trend.  Watch this one closely for signs of recovery, especially
if the Semiconductor sector begins to rally.


PLAY (very aggressive - bearish/credit spread):

BUY  CALL  APR-50  IRF-DJ  OI=480  A=$0.62
SELL CALL  APR-45  IRF-DI  OI=726  B=$1.50
INITIAL NET CREDIT TARGET=$1.00 ROI(max)=25%

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

****

TQNT - Triquent  $73.50  *** You Can't Get There From Here! ***

TriQuint Semiconductor designs, develops, manufactures, and
markets a broad range of high performance analog and mixed signal
integrated circuits for communications markets.  The company's
products are used in a variety of communications systems including
cellular phones and pagers, fiber optic telecom equipment,
satellite communications systems, high performance data networking
products and aerospace applications.  The company also uses its
proprietary gallium arsenide technology to enable products to
overcome the performance barriers of silicon devices in a variety
of applications.

TQNT has also endured significant losses in recent weeks, moving
lower on heavy volume.  The issue is now trading well below an
intermediate moving average.  Obviously the stock is becoming
oversold in the current downtrend but the potential for a reversal
to the sold strike price is slim.  Any upside movement would be
tested first by the recent bearish (price) trend-line, then the
moving averages and finally the neckline of the brief "double-top"
formation near $100.  A tall order indeed!


PLAY (conservative - bearish/credit spread):

BUY  CALL  APR-115  TNN-DC  OI=173  A=$1.43
SELL CALL  APR-110  TNN-DB  OI=270  B=$2.00
INITIAL NET CREDIT TARGET=$0.62 ROI(max)=14%

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

****

SUNW - Sun Microsystems  $93.69  *** Trading Range? ***

Sun Microsystems is a worldwide provider of products, services
and support solutions for building and maintaining network
computing environments.  Sun sells scalable computer systems,
high-speed microprocessors and high performance software for
operating network computing equipment and storage products.  They
also provide support, education and professional services.  The
company's products are used for many demanding commercial and
technical applications in various industries including telecom,
manufacturing, financial services, education, retail, government,
energy and healthcare.

This play is simply based on the recent technical consolidation
pattern in SUNW.  The price history exhibits a reasonably stable
range of support and resistance and a review of the volatility
trends and option premiums suggests this is a favorable position
for those who like to speculate with limited risk.


PLAY (aggressive - neutral/credit-spread strangle):

BUY  CALL  APR-115  SUX-DC  OI=6788   A=$1.18
SELL CALL  APR-110  SUX-DB  OI=13368  B=$1.75
INITIAL NET CREDIT TARGET=$0.62 ROI(max)=14%

- and - 

BUY  PUT  APR-75.00  SUX-PO  OI=63278  A=$1.06
SELL PUT  APR-80.00  SUX-PP  OI=5059   B=$1.62
INITIAL NET CREDIT TARGET=$0.62 ROI(max)=14%

COMBINED ROI(max)=28% UPSIDE B/E=$116.25 DOWNSIDE B/E=$78.75

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


******************************************************************
INDEX OPTION SPREADS...
******************************************************************
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
some predetermined time.  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 made with index options similar to those made with individual
stock options.  Many professional traders employ index spreads as
an income strategy.  We favor debit spread on the SPX for momentum
and hedge or longer-term plays and OTM credit spreads on the OEX
when the risk/reward is favorable.  Low ROI disparity spreads will
also be listed (when available) for the conservative index trader.

****

OEX - S&P 100 Index  $815.06   *** OTM Credit-Spreads ***

The Standard & Poor's 100 Index is a capitalization-weighted index
of 100 stocks from a broad range of industries. 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. 

OBSERVATIONS:

For OTM credit spread trades, we like to use the actively-traded
S&P 100 Index options because they contain much more premium than
options on individual stocks and provide an underlying instrument
less prone to huge, gapping moves.  Review the 'Market Sentiment'
section for specific technical information on the S&P 100 Index.
 
PLAY (bearish/low ROI):
BUY  CALL  APR-865  OEX-DM  OI=1038  A=$3.75
SELL CALL  APR-860  OEX-DL  OI=3691  B=$4.25
NET CREDIT TARGET=$0.56 ROI=12%

PLAY (bullish/low ROI):
BUY  PUT  APR-755  OEZ-PK  OI=1741  A=$3.25
SELL PUT  APR-760  OEZ-PL  OI=4264  B=$3.62
NET CREDIT TARGET=$0.43 ROI=9%

By combining two credit spread positions, you can participate
in a popular neutral strategy known as the Long Iron Condor. It
is often used with range-bound positions and is a limited risk,
limited profit strategy that gives you a wide range for success.

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


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


DISCLAIMER

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