Option Investor
Newsletter

Daily Newsletter, Sunday, 04/09/2000

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The Option Investor Newsletter          Sunday  4-9-2000  1 of 5
Copyright 2000, All rights reserved. 
Redistribution in any form strictly prohibited.

Posted online for subscribers at www.OptionInvestor.com

Entire newsletter best viewed in COURIER 10 font for alignment
******************************************************************
MARKET STATS FOR LAST WEEK AND PRIOR WEEKS
******************************************************************
        WE 4-7            WE 3-31          WE 3-24         WE 3-17
 DOW    11111.48 +189.56 10921.92 -190.80 11112.72 +517.49 +666.41
 Nasdaq  4446.45 -126.44  4572.89 -390.04  4963.03 +164.90 -250.49
 S&P-100  821.52 +  6.46   815.06 - 17.59   832.65 + 45.91 + 37.24
 S&P-500 1516.35 + 17.77  1498.58 - 28.88  1527.46 + 62.99 + 69.40
 RUT      542.99 +  3.90   539.09 - 34.93   574.01 -  0.76 - 29.04
 TRAN    2827.72 + 64.48  2763.24 + 75.09  2688.15 + 64.32 +258.54
 VIX       26.94 -   .27    27.21 +  1.40    25.81 +  2.14 -   .13
 Put/Call    .37              .48              .42             .42 
 ******************************************************************

Lots of jobs but they missed the whisper number!

Now that is one whisper number I am glad we missed! The March Jobs
report showed 416,000 new jobs were created in March but that was
far less than the 600,000 whisper number and tech stocks celebrated
by continuing their rally. The unemployment number remained steady
at 4.1% instead of dropping to 3.9% as some feared. The only negative
news was the rise in average hourly wages of +0.4% for the third
month in a row. The market ignored this news and brushed aside any
concerns over higher inflation. Compared with the market volatility
earlier in the week, Friday was a sleeper.


 

(Qcharts had incomplete data for the Nasdaq on Saturday)


 


After a historic week in the markets Friday was a very slow news
day. When deciding what to write about this weekend I was faced
with General Janet Reno and the Cuban crisis or Phillip Morris and
the 187th liability suit against tobacco. Given the choices this
will not be your normal market wrap and more like an Options 101.
If you want tobacco news try www.yahoo.com.

What a week! The highest volatility ever in the markets the largest
volume ever on both the Dow and Nasdaq on Tuesday. Friday, normally
a clean up or clear out day, logged the sixth lightest volume day
of the year on the Nasdaq at 1.5bln and only 892mln on the NYSE.
Fortunes were lost this week. I have heard numbers from readers 
that would cause some people to start looking for a high window.
Several traders lost literally millions of dollars. The highest I
heard was $12mln. That would be really painful. Still the markets
came right back, again, and those that sold at the bottom are 
licking their wounds. Eventually there will be a drop that will
not come back and numbers I heard this week will be small potatoes
compared to the real money that may be lost then. 

With this backdrop to the current earnings cycle there may not be 
much stability in the market. The markets are becoming increasingly 
reactive to bad news. Earnings warnings, comments by politicians,
economic reports and world news is combining to create an environment
that is very difficult to trade and sometimes downright impossible.
The intraday swings for stocks that previously were measured in 
$2 to $4 ranges are now measured in $5 to $10 ranges. Internet and
networking stocks can move $25 to $50 intraday. This is great if
you are on the right side of the trade but very painful if you 
are caught betting the other way.

Will the old market volatility ever return? I doubt it. The higher
we go the bigger the swings. Short of dropping back to a Nasdaq
at 2500 and a recession we are stuck with high volatility. The 
only method for trading these swings is successful entry points.
Successful entry points require patience and perseverance. If you
are going to whine every time a stock runs away from you then you
need to focus on longer term options like leaps. Entry points
for leaps are much less important. I did not say "unimportant"
just less important. If you are trading shorter term options I
suggest you target several different stocks each day and pick a
price where you would be very happy to enter a trade. If you get
your price on one stock a day you should be highly profitable in
the long run. I know the thought of not making a trade tomorrow 
causes lost sleep from some readers but rushing into multiple
trades simply means you will lose more than you win. If your
average win is 50% and your average loss is 25% and half of your
trades are winners then you will be ok. If your ratios are 
different then maybe you should consider reducing the number of
losing trades. (You do that with patience) Most successful 
professional traders will tell you that they are only right 30%
to 40% of the time. Yes, you read that correctly. One noted trader
who makes documented gains of over $100mln per year only averages
a 38% win/loss ratio. Only one out of three trades is a winner
but he makes over $100mln a year. His secret is recognizing a
loser early and cutting his losses. 

The point I am trying to make here is simply we need to adapt
to the market because we have zero chance of the market adapting
to us. If you are rushing into the market the morning after a
newsletter to place trades on newsletter picks then you are 
going to lose money. NEVER buy options the morning after a 
newsletter. I believe that entry points only come once each
week for every stock. The odds of an entry point coming at the 
open on the morning after a newsletter are only about 20%. 

Entry points are comprised of many things. Market movement,
sector movement, economic news and stock movement. When you
buy a call option on a stock you want that stock to act like
a helium balloon and rise out of sight in the clouds. News
events and sector movement are like pin holes in that balloon.
Helium is leaking out as fast as it is going in. In a perfect
environment the news would all be good and investor sentiment
for the sector would be gushing bullishness. Would your balloon
be going up in that environment? What if your balloon was in
an elevator going down? You could fill that balloon with helium
until it was about to burst and if the elevator (market) was
going down, the balloon would go down as well. In a bad market
your stock may drop slower than the rest of the sector but it
will still drop. 99% of all stocks dropped last Tuesday but
many have rebounded $20-$30-$40 dollars since then. Our challenge
is to wait for the right entry point and only ride up elevators.
Sounds simple but it is not. We are our own worst enemy when
it comes to opening trades. Our emotion gets in the way. We
want to pick winners and we convince ourselves that the play
is a winner based on our personal bias. 

There are readers who believe that XYZ stock is a buy regardless
of what the chart looks like. Would you enter a play with a bad
chart just because of which company it was? Don't say no so 
quickly. What if I said the chart was Dell or QCOM or JDSU?
Would that change your thought process? At our recent seminar
I showed the attendees a chart of Dell Computer and asked if
they would buy Dell based on that chart. About 85% said yes.
Later I showed them three other charts without names and asked
them if they would buy those stocks based on the charts. Only
about 5% said yes. There was no name so the decision had to 
be based solely on the chart. 95% said no. The point here?
They were all charts of Dell only from a different time
perspective.

We are all subject to different emotional prejudices. The
bias we bring to the trade will determine our success or
failure. Have you ever made trade after bad trade on the 
same stock because you kept convincing yourself that it was
going to move up again any minute? I have. I have tried to
force trades on stocks that were winners last week simply
because we are biased by our previous wins. Just because a
stock moved in one direction yesterday or last week does not
mean it has to move that way again today or tomorrow or ever.
We all know how to make those stocks rocket again, quit
playing them. I tried to force several trades on Juniper
during the seminar last week because I had made a ton of money
on it the week before. I was reading "between the lines" on
the JNPR chart and applying my bias to the trade. Guess what?
I lost every trade on JNPR last week at the seminar. This 
week I had deleted it from my daily watch list and it rose 
+$85. My bias from several losing trades last week caused me
to ignore it this week. 

Our market bias causes the same problem. I launched about a
dozen trades on the very bottom of the big drop on Tuesday.
On Thursday I was very profitable and almost every play was a 
long way from my stop losses. When the Nasdaq and Dow appeared 
to be rolling over Thursday afternoon I closed all my positions
for a nice profit because I "thought" the market was going
to move down again. At today's close those positions would
have been worth more than double what I closed them for. Am
I unhappy? Sure, but the profit I made for two days in the
market was more than I made working full time the first
twenty years of my adult life. Would I do it again given the
same circumstances? You bet! Experience has taught me to 
take what the market gives me and fight as hard as I can to 
keep from giving it back. When I find that crystal ball that
will tell me when intraday dips are just dips then I will 
hold my positions until five minutes before expiration but
until then I will take profits when offered. 

Entry points, the original topic here, will be increasingly
more important as volatility increases. I am still out of the
market and will stay out of the market until this cycle runs
its course. I will study stock charts every night and load
up my Qcharts for the next morning but until I am confident
the Nasdaq is going to continue the current rally past tax day
I will just watch. After a big win it is a common problem for 
traders to race back into the market and give back their gains 
due to improper timing. Janar has talked about this many times.
If you trade just to trade then you are going to find it
harder and harder to have more wins than losses. Last year
in mid April the Nasdaq tanked and started a down trend that
lasted until mid June. With three minor corrections and one
-28% heart attack in the last three months there may not be 
a repeat performance this year. Still, with taxes due next 
week and most traders still invested I want to err on the side 
of caution. I have had a dozen or so traders email me and ask 
about selling calls next week in front of the crash or buying 
puts on the QQQ. This shows me that I am not the only one that 
is expecting another market event. The contrarian view of 
course is a rally over that wall of worry as traders on the 
sidelines rush to buy stocks if the crash does not come on 
schedule. This unknown is what keeps us on our toes. If there 
was a big read X on April 17th on every calendar you bought 
saying "tax crash day" I bet calls would be cheap the day 
before. So, here I am standing on the sidelines at the 
Indy-500 trying to decide if I should jump into a car as it 
races by at 200MPH or hope for a wreck like we had last 
Tuesday and a yellow caution flag saying BUY - BUY - BUY!  

The Dow seems to be echoing my concern. It is earnings season
but it cannot make any progress. To be fair it is consolidating
from a very good run of over +1000 points from two weeks ago
but now that the Nasdaq is moving up again you would think 
the Dow would follow. At 4446 the Nasdaq is only -150 points
from the beginning of some overhead resistance at 4600-4800.
With Yahoo having already announced the Internet parade is
lacking a leader and thus one less Nasdaq sector will be 
offering support. The biotechs are up about +25% in three
days and are due for a rest. Chalk up another weak link.
Financial stocks are trending back down after Greenspan 
indicated that rate increases are here to stay and the market
might even ignore stronger increases, hint, hint. Greenspan 
appears to be steadfast in his rate increase policy and the 
age old adage about "don't fight the Fed" is going to become 
more true with each passing rate increase. Just to further 
cloud the issue we have Import/Export prices, PPI and CPI 
next week and traders are worried a strong report could prompt 
the Fed to raise rates between meetings. The strong wage 
increases three months in a row are sure to be weighing on 
Greenspan as well. Tuesday Fed Gov Laurence Myers speaks on
monetary policy and Wednesday Greenspan speaks on his favorite
topic, "The Future of the Securities Markets" to the Senate
Banking Committee. I may be missing the boat if the market
charges off again next week but I just want to be sure it is 
not the Titanic.  

The Nasdaq volume has declined for three days straight and
finished as the sixth lightest for the year. This is not
a good sign considering the earnings rush next week. The 
Nasdaq is up over 700 points from the Tuesday low and we
could see some profit taking any day. Remember, profit
taking by others is a good entry point for smart traders.

Buy the dips but only when the rebound starts.

Trade smart, sell too soon.

Jim Brown
Editor



Disclosure: 
My current long positions:  none, sold too soon
My current short positions: none

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***********
Jim's Plays
***********


As I have mentioned earlier this week and in the market wrap
today I aggressively bought the dip on Tuesday. In reality I
actually "sold" the dip by selling some deep in the money
naked puts. This is the same thing as buying calls except 
the premium decay works for you not against you. 

My personal preference is to sell deep in the money and 
capture the intrinsic value decay as well as the stock price
moves up. I am constantly asked how I can justify the "huge
risk" by selling deep in the money. People have a hard time
understanding that my risk is exactly the same, or less, than
buying straight calls.

If you buy calls on a stock for $20 and set your stop loss
at $15 then your risk is $5 per contract. Would it make a 
difference if you bought $10 calls and set your stop loss
at $5.00? How about buying $50 calls and setting your stop
loss at $45? See my point? It is all the same risk, $5.

The same is true if I sell naked puts $10 out of the money,
say $140 puts on a $150 stock. If I set my stop loss at $15
then my maximum loss is $5. If I sell $50 in the money or
a $200 naked put for say $50 and set my stop loss for $55
then I still only lose $5.  This is exactly the same risk
as the out of the money play, $5. 

When you buy calls the premium decay works against you.
When you sell puts the premium decay works for you. The 
longer you have the position the less time value. The 
stock can stay perfectly flat and you still make money.

When we are experiencing strong runs by the market leaders
selling naked puts is the equivalent of buying the stock
for 25% margin. You get the benefit of the big gains almost
dollar for dollar because the delta on deep in the money is
almost 1.0.

These were the stocks and strikes I sold on Tuesday:

Stock Strike/Premium/Friday
EBAY 200 - 54.97 - 26.00
AMAT  95 - 10.00 -  1.06 did not sell deep enough!
AMCC 160 - 58.13 - 25.50
EMC  130 - 16.09 -  1.50
QCOM 160 - 30.08 - 13.75
DISH  80 - 19.25 - 10.13
SUNW 100 - 22.25 -  6.38
TERN 210 - 40.35 - 39.00
ARBA 125 - 26.57 - 25.25
EXDS 150 - 50.00 - 16.13

I added these on Wednesday morning

ITWO 130 - 32.81 - 10.38
PMCS 210 - 45.81 - 27.38
VIGN 200 - 42.00 - 19.38

As I stated in the market wrap above I closed all of them
way too early on the Nasdaq dip on Thursday. Had I kept
them I could have doubled my profits. Hindsight is 20:20
unfortunately. If I can ever get my foresight to 20:20 I
will raise the price on the newsletter and it will still 
be worth it!

This week I am going to try my hardest to follow the market.
If it looks like we are going to roll over I am going to sell 
calls on high priced stocks that have announced earnings 
already, buy puts on the QQQ and the OEX. If the market 
appears to be moving up I may try to leg into some call
spreads for free so I can capture some upside with zero
downside. 

I am not going to sell naked puts because of the possibility
of a dip by April 17th. 

This week may try the patience of Job but I am determined
not to give back a large chunk of my profit trying to 
force trades.

Good Luck

Jim



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

Time To Look at Optical Cable Corp?
By Matt Paolucci

Shares of Optical Cable Corp. (OCCF) are down more than 50
percent from their 52-week high of $67.38 reached just a month
ago, currently trading at $33. Surprisingly, the decline has
occurred while the company has been racking up orders for its
cable products.

Optical Cable manufactures and markets a broad range of fiber
optic cables for "high bandwidth" transmission of data, video,
and audio communications over moderate distances, typically
ten miles or less. OCCF's cables can be used both indoors and
outdoors and utilize a tight-buffer coating process that
protects the optical fiber.

Earlier this week, OCCF announced record orders booked in
March amounted to $6.0 million, outpacing its previous record
of $5.8 million set back in June of 1997. In the last five
months, measuring from November to March, orders booked
increased 36 percent, from 860 to 1,170.

"We continued to see momentum build on order input throughout
March, up 30 percent versus the $4.6 million reported for
February. The order input is strengthening and broadening out
from a more diverse customer base with increasing order
frequency," Robert Kopstein, President and Chief Executive
Officer, said.

Kopstein added, "Historically, we have realized in excess of
100 percent of order input. Since most orders are booked upon
shipping within 2-3 weeks, this strong order input should be
reflected as stronger sales for March and April."

The Company said it has been expecting a ramping up of
business for the last two quarters, noting that as Y2K
concerns have wound down and new budgets started to appear for
2000, spending for communications items designed to improve
efficiency were very strong.

The Company's revenues and profitability are also looking
better. For its most recent quarter, ending January, net sales
for the first quarter of fiscal 2000 increased a modest 4.6
percent to $11.3 million from $10.9 million in the same period
last year. But net income surged 40 percent to $2.0 million,
or $0.054 per share, versus $1.45 million, or $0.038 per share
in the year ago period.

What's even more encouraging were comments uttered by Kopstein
last month regarding the future of OCCF, saying, "We could be
50 times, 60 times bigger than we are today." The Company also
said it expected sales growth of 20 percent for fiscal 2000.

Wall Street still has no coverage on the stock. OCCF may be
undiscovered now, but don't count on that for very long. With
Wall Street's love for anything optical, it is bound to show
up on analysts' radar screens soon.

One note of caution: With only about 2 million shares in the
float, the stock can be volatile. But when you consider net
profit margins of 17 percent, no debt and accelerating order
flow, Optical Cable offers investors an opportunity to own a
piece of a fast-growing industry at a substantial discount to
the overall sector.



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

How Did You Fare This Week?
By Ryan Nelson

The answer might be different than you think.  For example, 
after taking a beating on Monday and early Tuesday, I asked 
myself one question.  What am I doing watching my long plays 
slowly bleed to death in this failing market?  That was early 
enough on Tuesday that I closed everything out before it got 
really ugly.  I took the small losses and sat in cash waiting 
to strike when the time was right.  You all know how this 
story ends.  The market cratered early afternoon to a point 
when the Dow and Nasdaq where down over 500 points.  At that 
point, I headed for the hot list on Q-charts and looked for 
stocks that were the most beaten.  ISSX, BRCM and PILT stood 
out the most to me and I loaded up.  Not to mention, a boat 
load of QQQ calls as well.  Needless to say, Tuesday was one 
of my greatest days in the market.  Doubling or tripling those 
plays by the end of the day.  Was that the answer you expected 
to the title question listed above?

If you had similar success, congratulations to you.  But there 
are others out there who may have bought high and sold low.  
Today we are going to review how you could have been prepared 
to strike when the time was right for what some consider a 
year's worth of profit in one day.

The reason I went long calls on Monday is because the week 
before saw the biggest one-week decline for the Nasdaq.  It was 
down 390 points.  Traders were screaming for a relief rally and 
were poised to buy.  Insteasd, the Nasdaq dropped another 300+ 
on Monday.  Now those same traders were selling everything they 
owned.  Why the sudden change?  Are we not still oversold and 
due for a bounce?  By Tuesday, you had margin call selling and 
panic from longer-term investors really start to kick in.  This 
is the kind of entry points you wait months for.  In truth, I 
haven't seen such beautiful entries in a year and a half.  So 
when the momentum to the downside started losing steam and the 
sellers were finally exhausted, it was time to buy.

The key that most people forget was the market was in need of 
a bounce on Monday.  By Tuesday, you had stocks down 30-50% 
that day.  Unless the world is going to end with a violent -2000 
Nasdaq day on Wednesday, the downside from here was limited.  
Those who kept a cool head and were prepared with cash on hand 
for just such a day, well...let's just say you have to be 
pleased with the outcome.  Take the rest of the year off and 
enjoy your profits.  Believe me, as an ex-broker, we had clients 
we never heard from until days like this.  They would call in, 
buy up all they could, call back the next day after the bounce, 
sell it all, and head back to their yacht for the year.  One 
day's work for a year's worth of profit.  That is exactly why 
these dips can only go so low.  There is way too much cash 
ready to be injected at a moment's notice.  These are the 
real market-savy investors of the world.  Patience, patience, 
patience, and then strike when the fire is hot.  

The suckers are the ones that laughed and said, "no way ARBA 
ever gets back to $100" and bought at $300 last month, only to 
cough up their shares at $100 on Tuesday in a margin call.  
Smart money quietly walks away with their shares.  And where 
does smart money reside?  Yep, yachts, mansions, castles...you 
name it.  So who do you want to be?  Let's look at some charts 
and see if we can't further our progression to in the future 
be lumped in the smart money, market-savy category.


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

Nasdaq 100 Tracking - Stock

OK, let's start with my mistake.  I got to admit, I felt like 
a rookie here, but I will come clean with the story.  Tuesday 
morning I had closed out everything and begin to wait for a 
bottom to start a buying spree.  I had a feeling it was going 
to get ugly and I wanted to be prepared.  So when the Nasdaq 
was trading down towards 4000, I thought "pyschological level, 
round number, gotta bounce".  So I bought some calls to test 
the water as soon as it hit 4000.  What a mistake!  It didn't 
even think about bouncing.  It fell to 3900 in five minutes 
after I bought.  If you learn anything about trading, remember 
for it to show some signs of bottoming before you jump in.  

I decided to hold this position based on the fact that the 
Nasdaq was still overdue for a bounce.  Besides the increasing 
volatility was keeping my contracts a float.  To keep a long 
story short, I weathered the quick downdraft, set a limit at 
double what I paid and was filled by the end of the day.  Life 
is good when your mistakes turn into doubles.  Unfortunately, 
that usually doesn't happen.  Are you starting to understand 
why this was such a big day and a once a year opportunity?

Let me say one more thing.  These events are becoming more rare 
because investors realize the buying opportunity gold mine it 
presents and are always anxious to buy the dips.  I am hoping 
for a retest of last week's lows, but it is unlikey that it 
will be so dramatic because everyone will be ready this time.  

(note: Q-charts was experiencing some difficulty and didn't 
show Friday's results)

 

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

ISS Group - ISSX

This was the most successful play I had on Tuesday and I want 
to show you what attracted me to it.  I had never played ISSX 
myself, although we do play it in the newsletter from time to 
time so I was comfortable with the stock.  

The attraction was the low float which caused the big intraday 
dip.  Stocks with less shares outstanding are subject to more 
pronounced moves.  I couldn't resist buying April 80 calls when 
the stock was at $73.  I closed the position later that day 
with the stock at $88 and the options at $12.50.


 

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

Xcelera - XLA

Please give me your view of Xclera (XLA). Thank You

This is one of the more volatile stocks in the Nasdaq.  It 
had a wildly successful year, with one stock split after 
another.  In fact, on Friday they held a shareholder meeting 
to increase the authorized shares for their next split later 
this month.  

I am bearish on XLA here though.  It sunk as low as $80 on 
Tuesday and sprung right back to where it currently stands at 
$158.  My feeling is XLA was overdone on the sell-off and now 
overdone on the recovery.  Not to mention it has run back into 
resistance here.  

This column is obviously not here to tell you what to do with 
your stock, but you can see from the chart why it may struggle 
in the short-term.  With that said, split runs sometimes have 
a mind of there own.  If you catch the right move, XLA can be 
a very profitable play due to the big swings.  Just make sure 
you identify the trend first.  I will be looking for a put play 
entry if it rolls over from here.  It is stocks like this that 
have had incredible moves up in the past year and the valuations 
are now suspect.  Use caution if you are going to play this 
stock.  Stop losses are mandatory. 


 

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

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, April 7, 2000 

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

DOW Industrials   10,850  11,250  11,111    Neutral   3.16
SPX S&P 500        1,410   1,475   1,516    BULLISH   3.21
OEX S&P 100          780     800     822    BULLISH   3.21
RUT Russell 2000     470     580     543    Neutral   4.04
NDX NASD 100       3,800   4,700   4,292    Neutral   4.04
MSH High Tech        900   1,150   1,077    Neutral   4.04

XCI Hardware       1,480   1,510   1,683    BULLISH   2.24
CWX Software       1,450   1,670   1,425    BEARISH   4.04
SOX Semiconductor  1,050   1,360   1,223    Neutral   4.07 **
NWX Networking     1,070   1,190   1,055    BEARISH   4.04
INX Internet         800     940     770    BEARISH   4.04

BIX Banking          520     615     565    Neutral   3.16
XBD Brokerage        450     580     498    Neutral   4.04
IUX Insurance        520     620     577    Neutral   3.16

RLX Retail           900   1,000     997    Neutral   3.16
DRG Drug             330     380     360    Neutral   3.30
HCX Healthcare       680     760     728    Neutral   3.30
XAL Airline          130     160     149    Neutral   3.10
OIX Oil & Gas        265     300     287    Neutral   3.16

 
Posture Alert    
This last week was witness to the biggest NASDAQ drop, the biggest 
intra-day swing, the biggest reversal, and the biggest gainer, 
which we got on Friday! Sectors that were the benefactors of 
once-again-confident investors included Semiconductors (+5.77%), 
Networking (+5.53%), the NASDAQ 100 (+5.01%), and Software (+4.64%). 
Losers Friday included Brokerage (-2.99%), Banking (-2.43%), and 
Oil & Gas (-2.27%). With Friday's action, we have upped 
Semiconductors to Neutral from Bearish.



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

Sunday, April 9, 2000

Great Expectations!

This last week was about as exciting as you can get. For the NASDAQ, we 
witnessed the biggest down day, the biggest inter-day swing, the 
biggest reversal, and then the biggest point gainer to end out the 
week. Hopefully, many of you caught the entry points that were given, 
because you will be a happy camper this weekend. Either way, earnings 
season is now under way, with Motorola on deck and ready to step up to 
the plate.  

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), their estimated earnings release date, as well as the 
put/call ratio for that security if available. 

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#:  Put/Call
                         Index(PI): Earnings:             Ratio:

April 10th
Adtran            ADTN     1.60      +.35       +.38       .31
Ariba             ARBA     1.10      -.07       -.06       n/a
Biogen            BGEN     1.20      +.43       +.45       .85
Motorola          MOT      1.76      +.60       +.61       .72

April 12th
Advanced Micro    AMD      7.50      +.45       +.48       .48
Altera            ALTR     1.42      +.34       +.36       .93
Checkpoint Soft.  CHKP     2.23      +.35       +.37       .55
Genentech         DNA      3.29      +.26       +.28       n/a

April 13th
Ameritrade        AMTD     2.94      -.03       -.02       .29
Iomega            IOM      4.02      +.02       +.03       .28
KLA-Tencor        KLAC     1.37      +.31       +.35       .92
Juniper Networks  JNPR     1.92      +.03       +.05       .75
PMC-Sierra        PMCS     1.55      +.16       +.17       .48
Sun Microsystems  SUNW     2.66      +.22       +.23       .76
Gateway Computer  GTW      2.18      +.41       +.42       .54
*=Estimated earnings dates
       
Now with the exception of Advanced Micro Devices and Iomega, the 
Pinnacle Index is extremely low across the board. We view this as a 
result from this last Monday/Tuesday's dramatic selloff, where many 
investors may have purchased protective puts on the way down to hedge 
themselves. Due to the major capitulation that occurred, our Pinnacle 
Index may be skewed to one side, which is why we also showed the 
put/call ratio this week. Regardless, if these companies meet or beat 
the whisper number and have a positive conference call, the sentiment 
seems to be indicating a potential rally for many of these securities. 
We will update any major changes in Tuesday's letter, because the last 
several trading days leading to an earnings event can be the best gauge 
of sentiment. 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 (5.708):
The current yield is in bullish territory.


Mixed Signs: 

Volatility Index (26.94)
The VIX continues to prove that the low 30's are an excellent 
buying opportunity, and the low 20's continue to be a great selling 
opportunity.


BEARISH Signs:

IPO Dilution:
With so many IPO's hitting the market, there seems to be dilution 
occurring where shares of finally freed up to sell by insiders. $58.6 
billion of stock was freed up for trading in March, $67.3 billion this 
month, and $118.3 billion in May. This is too much stock for the system 
to handle. 


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, and most recently, Tellabs.
 
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)     9.83

OEX Close                       821.52

Underlying Support  (800-825)     1.25
Underlying Support  (770-795)     2.17

What the Pinnacle Index is telling us:
Based on Friday's figures, overhead continues to remain significant. It 
is doubtful that the OEX will significantly break into this level by 
April expiration, unless the put buyers come rushing into this level.  



Put/Call Ratio                  Friday
Strike/Contracts                (4/7) 

CBOE Total P/C Ratio             .37
CBOE Equity P/C Ratio            .32
OEX P/C Ratio                    .71


Peak Open Interest (OEX)
                     Friday
Strike/Contracts     (4/7)

Puts                800 /  9,650     
Calls               830 / 11,175
Put/Call Ratio         0.86


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

April 7, 2000                           26.94



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

For the week of April 10, 2000

Monday

None Scheduled

Tuesday

None Scheduled

Wednesday

Export Prices ex-ag.     Mar    Forecast:  N/A    Previous:  0.5%
Import Prices ex-oil     Mar    Forecast:  N/A    Previous:  0.3%

Thursday

Retail Sales             Mar    Forecast:  0.3%   Previous:  1.1%
Retail Sales ex-auto     Mar    Forecast:  0.6%   Previous:  1.0%
PPI                      Mar    Forecast:  0.6%   Previous:  1.0%
Core PPI                 Mar    Forecast:  0.1%   Previous:  0.3%
Initial Claims           04/08  Forecast:  265K   Previous:  260K

Friday

CPI                      Mar    Forecast:  0.5%   Previous:  0.5%
Core CPI                 Mar    Forecast:  0.2%   Previous:  0.2%
Business Inventories     Feb    Forecast:  0.5%   Previous:  0.5% 
Industrial Production    Mar    Forecast:  0.4%   Previous:  0.3%
Capacity Utilization     Mar    Forecast: 81.8%   Previous: 81.7%
Michigan Sentiment       Apr    Forecast: 107.1   Previous: 107.1


Week of April 17th

04/18 Housing Starts
04/18 Building Permits
04/19 Trade Balance
04/20 Initial Claims
04/20 Philadelphia Fed
04/20 Treasury Budget


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DISCLAIMER
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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 
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The newsletter staff makes every effort to provide timely 
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delivery times due to factors beyond our control.

The Option Investor Newsletter              4-9-2000  
Sunday                        2 of 5


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

IRA Trading - Leaping Thru The Sell-Offs
By: Renee White

The  most frequently asked question I get from readers involves 
information regarding trading in IRA accounts. It seems that 
many people are unaware that this is a possibility. Unfortunately, 
I about mistaken information given to them by their brokerage 
firms. Many of the things they are told, have been flat out 
wrong. Perhaps the new employees have never worked anyplace 
else and do not know that rules vary. The bottom line for 
trading options and Leaps in your IRA account is that it is up 
to the descretion of the individual brokerage firm. It depends 
on just how much liability they have agreed to accept with their 
own business practices. Each firm is different. Some only allow 
Leaps. Others allow long calls and puts, or anything that does 
not require the use of a margin account. Covered Calls are 
commonly used in IRAs.

Before I go any further, I want to stress to everyone that 
trading options in your IRA is dangerous and risky. Yes there 
are conservative strategies, but they are conservative for 
options. Options in general are considered risky investments 
and are not suitable investments for everyone to attempt. One's 
risk profile must be well understood as well as a strong thorough 
understanding of option trading and the markets in general, to 
be successful. Please understand this: I am not recommending 
that anyone trade options in their IRAs and I certainly do not 
believe or recommend that beginners learn how to trade options 
using IRA money. This is just careless and basically a really 
dumb thing to do. Don't learn how to trade with IRA money. No 
one can learn options without losing money and IRA money is 
not easily replaceable, if at all. Many people immediately 
think of using IRA money because they see money just sitting 
there and they don't have other money available to risk. But 
this is exactly the opposite from what one should be thinking. 
DO NOT trade options with money you can not afford to lose. Why? 
Because option traders do lose money and it doesn't always come 
back. In an IRA, you can not replace it. It is not a place to 
learn. I'm sorry to stress this so much, but I don't want to be 
misunderstood. This is not a rocommendation.

Now before I get 100 emails asking me who allows this, let me 
say that I am in the process of setting up new IRA accounts, 
while I try some new firms. I have used Fidelity and Wall Street 
Access, but I am still looking for something better. Fiding firms 
that allow option trading in an IRA are harder to find even when 
not looking for perfecton. You just have to look around. Every 
trader's needs are different. You will have to call and ask 
questions that are pertinent to your own situation. I have 
George Fontanill's book, Trade Options Online (see OI bookstore), 
which has an excellent section in the back that not only reviews 
online brokers for option traders but also gives their phone 
numbers and addresses. I find this valuable because getting 
a list of firms that cater to options traders, is difficult 
in general. It's a great reference book and the review section 
makes an easy phone list to call from. 

I have changed the way I trade my accounts through the years. 
Many years ago, I traded only options in my personal account 
and held no equities. That changed after I went through several 
bad months with bad economic data which affected the markets. 
I started exercising some of my winners, in order to hold 
equities in the account. Since then, my account has been more 
resilient. During big sell-off periods, these long positions 
did not vaporize like the decaying time premium of short term 
options. It also kept me from investing in options with 100% 
of my money. I've only exited one position from a declining 
stock I had exercised, which was Compact Computers. This has 
given me an extra opportunity for growth, a cushion, a form 
of taking some money off the table while still playing with 
it...all mostly from stock that I got "for free" which was 
paid for by other contracts I chose to sell. 

Last year though, when things got to rocking with Y2K, I was 
going nuts. I was ferverishly trading several accounts in my 
IRA and my personal accounts. Some positions were duplicated, 
others completely different. Splits here, there and yonder, 
earnings runs, end of year buying frenzy, exercises and QCOM 
race horses. Slow transactons, executions and page loadings 
in my IRA, constantly caused palpitations and angina. By the 
end of the year, I was worn out keeping up with several accounts 
and exhausted remembering to be more conservative in my IRA. 
Something had to give because I was beginning to lose money 
in my IRA accounts, while I played with the personal one and 
vice versa.

Although I am still hunting for the perfect firm for my IRA, 
I am happy with the changes I've made. I exercised a lot of 
options over the last 9 months to hold long stock positions, 
but instead of using the balance to feverishly continue trading, 
I keep only a small portion for short term trades and use the 
rest to buy Leaps in a multitude of companies  to diversify my 
stock portfolio. Now I keep a list of positions I want to buy 
during the next big market sell-off. I buy as much time as I 
can afford and I choose stocks with good financials, good 
earnings and great market sentiment and interest. I love to 
buy Leaps on companies with split histories to my favor, 
especially if I can catch them approaching split range before 
a sell-off. Sometimes I buy slightly ITM, while other times I 
buy slightly OTM depending on the trade and my time horizon. 
Usually the longest Leaps are OTM. Choosing the strike price 
centers around knowing the movement of the equity in general. 
The first time I went shopping to load up on Leaps was during 
the October '99 sell-off, before the November FOMC meeting. 
The month had already been bad, so the premiums really got 
cheap during the fear of the Fed. Those positions were really 
fat and juicey by the end of December. In the past, I had bought 
Leaps here and there, but I had never bought so many at one time 
diversifying out to so many different positions before. 

There are different ways to play Leaps. It is up to you to 
decide if you want to hold till January '01 or 02 expiration 
to exercise, allowing you to ride out the dips and rallies. 
Some buy at dips in order to sell on market highs during 
rallies. Some set stop losses, others hold. Some use them as 
leverage and trade against them. The Leaps I have bought during 
major dips have held up well through the next dip. I have 
continued to load with positions on every major sell-off and 
in fact I keep cash sitting in reserve for these events. Only 
occassionally do I chose to place shorter term trades now, with 
positions I feel have a high probability of going up. I don't 
want to baby-sit that account anymore because my routine bills 
are paid out of my personal account. This allows for a better 
use of my time. Profits from those short term trades go into 
the cash pool, waiting on the next big dipper.

This small adjustment to my IRA has been a very healthy change. 
The higher delta of the long term Leaps helps move these 
positions nicely. Entering the positions when implied volatility 
is deflated, also has proven to show nice rewards during recovery. 
Even with the huge sell-off this week, it did not show the damage 
that my short term personal account did. These Leaps just kept 
on going. What a comfort! Sweating bullets in multiple accounts 
is just not worth it to me. 

I am still recovering in my personal account, from the sell-off 
this week. The shock has now passed but I'm still licking my 
wounds. Luckily, I am only 3 points OTM on about 60 contracts 
of QQQ while the other 40 are now all ITM. If my fingers don't 
get uncrossed, I may just sneak by this next week with only mild 
scars from the last 2 weeks. That is my opinion as of today. 
Next week is another story and still unknown. I am still nursing 
those positions with the eye of a hawk, highest risk and highest 
concentration. But these IRA Leaps just keep on performing, with 
small hiccups. They aren't as wild and crazy, but there movement 
is consistent. I may add them to my personal account starting 
with the next sell-off. With the long time premium in your favor, 
market sell-offs are not as worrisome, while giving you nice 
flexibility with higer delta movement. It seems to be a great 
blending of owning the stock and playing the option, slower 
motion with greater appreciation potential. The long term capital 
gains will feel good too.

In April, I will re-evaluate all my IRA Leap positions. Any 
that have not moved up nicely from their purchase price, will 
get sold right before their earnings. Why? Because I want to 
sell when their implied volatility is the highest, during their 
earnings run (or a split run). The potential downdraft of the 
April post-earnings depression, which bleeds into a typically 
weak period in the markets from May through September, will be 
shrinking the premiums with lower I.V. Also, July is when the 
January '03 options start coming out. Anything I want to sell 
should be done now, so cash is available for longer term Leap 
purchases during the summer slowdown or next correction. Also, 
this gives me an opportunity to roll-out profitable Jan '01 
positions and buy further out.

There are some people who only trade with Leaps. That's not a 
bad plan. I could see buying on the sell-offs with low implied 
volatility, then selling right before earnings or right before 
a stock split to capture the inflated premiums to your favor. 
Also, on those that are held, one can always sell short term 
covered calls against them to generate extra income. Read up 
on calendar spreads if you want to know more about that. I don't 
routinely do calendars only because I don't have enough time to 
do everything. But I will do them during the summer slow season,
 along with covered calls against the equities. 

For several months I have wanted to discuss Leaps in an IRA, but 
I have always been afraid that people who should not trade options 
in their IRA would run there with the glassy-eyed dreams of 
riches all new options traders begin with. Learning with money 
that is not meant to be at risk, with money you can't afford to 
lose is not a long term goal, but a short term exit. Many people 
plan on making tons of money trading options but few are around 
several years later. It's just not that easy. Learning how to 
trade in an IRA is not wise. Hopefully, with the big hit over 
the last few weeks, people will think twice before considering 
it. It should be left to experienced traders and then, only if 
your risk tolerance is appropriate and your understanding of 
the markets and options, is sound. For me it became a wonderful 
investment tool allowing for more flexibility than I have time 
to do.


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

Making Money On The Downside
By: Mary Redmond

Sometimes you can make even more money on the downside of
a bad market than you can in a rising market.  The reason
for this is that downside selloffs have a tendency to be 
faster and more severe than the gains which can be made on 
the upside.  If you look at a chart of the Dow or the Nasdaq
over a period of time you usually see a long period of 
rising prices followed by a quick, intense sell off.  This
week was an example.  The Nasdaq lost over 1500 points in
only a couple of weeks. 

Some people feel the easiest way to make money while the
market or a stock is dropping is by buying puts.  This can
be highly profitable if you are accurate in your timing.
For example, if a stock or index drops below a key support
level this is usually indicative that a larger drop will
follow.  If you are long a stock and it drops below a key
support level you can buy a put to help offset the loss.

There are others ways to profit on the downside also.  For
example, if you buy a call and sell the stock short you
are creating what is known as a synthetic put.  Before
put options were listed traders used synthetic puts to
make money in a down market.  This can give you a certain
amount of protection if the stock rises and the opportunity
to profit greatly if the stock drops.

Another method is to buy a convertible bond and sell the
stock short.  In this situation you are protected from both
downside and upside risk.  You can profit if the stock
drops dramatically and you don't have the element of time
decay which exists in option strategies.  It is important
to determine if the bond has call features before 	
implementing this strategy.

A safer method for relatively longer term investing is to
hold onto cash until the market crashes and you can buy
your favorite stocks at bargain basement prices.  When
everyone is running scared there can be buying opportunities
of a lifetime.

If you are expecting a particular stock to drop you can also
put on a put debit spread.  This means you buy a put and 
sell a put with a lower strike price.  For example, if XYZ
stock was 100, you could buy a 95 put and sell a 85 put if
the two options were not yet 10 points apart in price.  The
maximum potential gain would be 10 points, the maximum 
potential loss would be the cost of initiating the spread. 

I had sold my two year leaps on At Home at 17 when the stock
went up to 38 last Wednesday for a 5 point profit.  I did
not have any open short term option positions this week, 
only NT, Dell and cash.  I had written a covered call on Dell.
I didn't mind taking a small loss on NT.  I thought
the Nasdaq could recuperate later in the month.  I wasn't
completely prepared for the carnage which occurred on Tuesday,
but then how could anyone really be prepared?

I grabbed Qualcomm at 127 on Tuesday during the severe
capitulation, and it closed at 146 1/2.  I also took 
advantage of the drop to buy back some of the covered calls
I had written for a fraction of the price I wrote them at.
Then on Wednesday I loaded up on leaps.   I bought CMGI
Jan 01 100 leaps for 2500.  I also bought more Nextlink
options, NT stock and Qwest leaps.  I think there were 
great opportunities this week as I saw alot of high
quality stocks being thrown out in the garbage.  

Some people think that puts can provide a significant amount
of protection on their stock positions.  Sometimes this can
be true; if you buy a stock and a put you have some downside
protection.  However, if the stock has been very volatile
the call and put options will both have high premiums, as 
the premiums refect the volatility of the underlying security.
If you buy a volatile stock and a put you can end up paying
so much for the put that the stock has to practically
skyrocket to make up for the loss on the put.

According to AMG Data Services, mutual funds showed a net
cash outflow for the first time in months.  For the week
ending March 5 technology funds experienced a net outflow
of approximately 756 million, versus average weekly inflows
of over 2 billion which have been occuring this year.  Is 
it any surprise that the technology stocks crashed?  Large
cap funds saw an inflow of about 766 million.  The total net
was an outflow of approximately 271 million.  Since liquidity
is a key short term technical indicator we might be in 
for a choppy market if this continues.

I have heard some market analysts say that they believe
this is the start of a trend, and people have been so scared
out of the technology sector that they will not put money
into tech funds for a very long time.  This seems unlikely.
I think this may be a temporary event, partly related to heavy
1999 tax bills.  Americans have shown that they have a 
love affair with technology funds for a very long time, and
during active periods, mutual funds have shown cash inflows
of up to 50 billion dollars per month.  No one knows for 
sure, but it seems that patterns over a longer period of
time are more indicative than one or two week blips.  


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

Is VIX a Vixen?
By: Lynda Schuepp

Webster's defines vixen as "a shrew ill-tempered woman" 
and she showed up in the market this week.  When the 
market started dropping on Tuesday, I was ready.  On my 
desk, I keep two beanie babies given to me by my daughter- 
Snort and Curly.  To you non-Beanie Mom's-that's a bear 
and a bull.  They are my constant companions during the 
day when I do battle.  Normally old Snort, the bull, sits 
on top of my monitor, but today it was time for Curly, the 
bear to have his ride. 

Volatility plays such a large part in options pricing, I 
felt I should share some of my volatility plays from 
Tuesday.  When the sharp fall in prices hit my screen, I 
knew I wanted some of this action.   I was watching the 
QQQ's and when they dropped under 100 I was ready to buy 
puts and calls.  Call me a chicken but I wasn't sure 
which end would be the real winner, but I knew one of them 
would put some food on the table this week.   I bought the 
April 100 calls on the QQQ's (yes calls) for 6-3/8 points 
when the QQQ's were at 101 and bailed out at the end of the 
day for 7 when the QQQ's were only at 99 3/4.   The "At 
the money" calls had a delta of .56.   They shouldn't have 
moved but instead moved up 5/8!   What was going on here?   

Enter stage left--the diva of option traders, Lady VIX.  
After the big drop in the QQQ's and then its subsequent run 
up, implied volatility got pumped into the options pricing.  
VIX went from 26.5 to 35.  Once the QQQ's looked like they 
would run into resistance at 100, I sold my calls.  I have 
found that the option's pricing is usually somewhat laggard 
in a fast market.  The VIX had dropped but the Implied 
volatility had risen, so I decided to get out because I 
really was siding with Curley (the bear) going forward.   
Just to show you how much volatility changed the option's 
price, the April 100 calls, now 6 points in the money, are 
only selling at 8-3/4.  The QQQ's went up 6 points and the 
option only went up 1-3/4. 
 
During this same roller-coaster period I shorted the QQQ's 
(no up tick needed) because I couldn't get fast fills on the 
options.  I rode them down for a 6-point gain and got out at 
the first bullish candle on my 10-minute charts.  I also 
bought the April 105 puts when the QQQ's were trading at 
100 9/16 for 8-3/4.  I sold them later for 11.  They went as 
high as 16-7/8 but I was afraid of a volatility crush, 
leaving me holding the bag with overpriced options.  In a 
fast market the options makers spread the bid ask so far 
apart you can drive a Mack truck through it.  While I am 
not an advocate of buying overpriced options, there are 
times when the price will become even more overpriced.  
Tuesday was one of those days.  Another volatility play I 
did on Tuesday was to buy back calls I had written against 
some positions for some nice tidy profits.    

In my article last week, I wrote about a leap spread on GE 
that I legged into and was into the trade for nothing.  
Many readers wrote and asked would I have to wait until 
Jan 02 to profit?  Well here's your answer: NO, NO, NO.  
On Tuesday, I bought back my GE Jan 02 180 leaps I had 
originally sold at 30 the previous week, for a profit of 
5 points.  On Friday I sold them back again for 29 3/4.  I 
pocketed 5 points, and the spread is still worth 18 points 
if I wanted to sell it!  I am often asked why I just don't 
sell the profitable long leg and move on instead of writing 
the second short leg.  If I had sold the long leg I would 
have made 16 points total.  Granted, I would have the 16 
points to put into other trades, but when I am very bullish 
about a stock and I can stay in the trade for free and have 
the ability to have some short-term action, I opt for the 
later.  By putting on the second leg, I made 5 points, with 
a potential to make 40 points (180 - 140), have no money in 
the trade and the spread is now worth 18 points.   I have 
free money to do a volatility play on this spread whenever 
the opportunity arises and I think we will see another test 
of the lows this coming week.  Friday's gain on weak volume 
says to me, the vixen will return, and if so, I'm ready. 



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

When in Doubt, Run in Circles, Scream and Shout
By: Janar Wasito

"When in Doubt, Run in Circles, Scream and Shout" -- that is 
a phrase that is handed down from one generation of Marines to 
another through the hands of drill instructors who run the 
stress indoctrination training which recruits and officer 
candidates face to earn the title, Marine. It describes what 
Drill Instructors love to do in order to assess how individuals 
pampered by a liberal society will react under stress. At the 
end of the day, the Marines don't care about your GPA or your 
family, they want to know if you will act spasmodically under 
stress -- if you will spas out, as in, "that candidate was a 
spas, he would have gotten his whole platoon killed." Drill 
Instructors, and eventually fellow candidates love seeing the 
weak go -- it makes those who remain stronger. The Marines want
an individual who will sit at the bottom of a foxhole with a 
radio and calmly call in artillery fire and close air support 
on the enemy as he breaks through the wire.

Run in Circles, Scream and Shout -- the phrase came back to me 
again and again this past week. How did you trade Black Monday & 
Blacker Tuesday? I stuck to my plan, I didn't have a trade in my 
calender spread strategy, and I didn't do a thing. And here is 
the only statistic that counts. Since March 20, the first day 
of the April Options Cycle when I started my Calender Spread 
Strategy in size, I am up 19%, and the NASDAQ is down 8%. I
have beat the tech index by 26%, and I plan on widening that 
lead. I know exactly how I am going to do it. I have a plan. I 
haven't had any margin calls due to naked puts. I haven't even 
traded that much -- basically only selling OTM Calls at market, 
sector, and stock tops; buying them back at the bottoms; and 
using the proceeds to buy more LEAPs.

Here's the Frag Plan:

Situation: Abby Cohen said it was going to be a good, not a 
great year. Well, it already was a great year by early March, 
so... The market, especially the techs, got way ahead of 
themselves because of

1. End of Millennium artificial liquidity
2. NASDAQ Momentum carrying over from 1999
3. Individuals buying tech funds and stocks (with lots of margin) 
due to #2

Therefore, my major assumption is that the next 6 months or so 
will be basically range bound, perhaps between NASDAQ 4000 and 
5000. The trend will be sideways to up, with very large swings. 
Individual stocks will significantly outperform the market and 
their sector.

Mission: Dominate the NASDAQ by executing a calendar spread 
strategy.

Execution:
1. Use Gorilla Game analysis to select Gorilla Technology Stocks 
capable of outperforming the NASDAQ (ie, the market, for me), 
and their sector (Semis, Biotechs, Networking, Internet, Computer 
Software). Look for repeat split candidates in the OIN Call 
Section.

2. Buy LEAPs with 50% intrinsic and 50% time value on these 
stocks when the market dips (VIX over 28, NASDAQ & sectors 
hitting lower bollinger bands)

3. Sell Current Month (ie, 10 - 30 Day) Calls against the 
LEAPs when the market, sector, and stock get over bought (VIX 
under 22, NASDAQ & sectors hitting upper bollinger bands). Calls 
sold should be 10 - 20% OTM, and should be worth 5 - 10% of the 
value of the LEAP holdings in the stock.

4. Buy back the short calls on the dips (#3), reinvest the 
positive cash flow into more LEAPs.

5. If the short calls go in the money, buy them back at 
expiration (Thus PM); immediately sell the next month OTM 
Calls.

Admin & Logistics:
I have a Excel Spreadsheet, imbedded with real time quote feeds, 
to calculate my criteria for #3 above. I am imbedding all of my 
key criteria for decision making into the spreadsheet. I pull 
the trigger when I have the trade I want in my sights.

Command & Control:
As always, Preferred provides almost instantaneous execution. 
Big kudos to their professionalism. My other brokers are chosen 
for speed also.

Every Friday afternoon, I take a technique out of Marine Corps 
operations and write a quick situation report. Here's what it 
looks like:

Gain in Value of LEAPs since start of April Cycle: $______
% Gain in LEAPs: 7.26%
Cash Flow from ST Options Sold: $______
% Gain from ST Options Sold: 11.78%
NASDAQ Performance during Cycle: -8%
Total Performance of Calendar Spread Strategy During Cycle: 19%
% Beating NASDAQ: 26.60%
NASDAQ 4446.22
NASDAQ 10 Day SMA: 4472
VIX 26.99
NAS TRIN: .47

At the end of a crazy week, the calendar spread strategy is up, 
both for the week, and for the April Cycle. At +___k, we are 
almost back up to last Friday (+__k). However, the gain in Cash 
Flow from ST Calls Sold is +__k, thus exceeding our target 
of +__k. The total of gain in LEAPs + cash flow from ST Calls 
Sold puts us over where we were last Friday.

During the April Options Expiry Cycle, the NASDAQ is down -8%, 
and lots of margined, weak players have been shaken out of the 
market. During the same period, the calendar spread strategy is 
up 19%. Over this period, we are beating the NASDAQ by 26.60%. 
This is due to the portfolio of LT Options outperforming the 
NASDAQ, and the cash flow from sale of ST Options.

The NASDAQ is just below its 10 day simple moving average. The 
VIX is off of its high of 30, where it stayed for 3 days this 
week. The NASDAQ TRIN is .47, which is a low reading indicating 
a strong close. After 3 days of recovery from the Tuesday sell 
off, it is uncertain where the market is headed next week. End 
of SitRep.

That is pretty much it. I have written two rough drafts of 
papers that are approaching 40 pages each. I have started to 
catch up on a semester's worth of classes. I bought a new road 
bike, and I am riding it across the Golden Gate instead of 
watching Joe Kiernan hype something. CNBC is designed to make 
the greatest number of traders make the wrong decision at the 
wrong time. Michael Lewis writes in Liar's Poker that in every 
market there is a fool. If you don't know who it is, look around, 
it might be you. I would submit that the overactive day trader 
of options reacting to every gust of wind is the fool in the 
options market. Thanks. You are driving up the volatility, 
which, from time to time, I sell at opportune moments. I know.
Last year, I was that fool. Net net, I did not make money between 
February and October because I over traded, followed every shadow 
of a rumor, etc. Not this year.

In the final stage of the Marine Corps known distance rifle 
qualification course, Marines have 10 minutes to take 10 shots 
at a man sized target at 500 meters. This encourages patience, 
discipline, attention to good fundamentals like proper 
marksmanship posture, good sight picture, etc. Look at the 
flags on the poles at 200 and 300 meters to make sure that the
shot is taken when wind dies down. BRASS: Breath.... Relax... 
Aim... Steady Squeeeze. Pow. There is my shot. 50 shots -- 40 
at the 200 & 300, 10 at the 500 -- 5 points each. Perhaps the 
best thing I did in the Marines to earn the respect of those 
I served with was to shoot the high score when my Company was 
on the range. Marines wear three classes of marksmanship badges, 
so your once a year rifle qualification is there for everyone 
to see for 12 months. This ethos pervades everything that Marines 
do, from leading a platoon of trucks, to flying an attack jet... 
to trading options. I sit there in front of my spreadsheet, and 
I want to make a trade, but the numbers don't line up, and I 
keep saying, not my trade, not my trade, not my trade. Wait for 
the wind to die down, wait for the right moment, breath, relax, 
aim, steady squeeze...

So, make the right trades now, and the money will be in your 
account for a long time to come. Make the wrong trades, and it 
may be a long time before you get an option account running 
again. Be patient. have a plan. Execute your plan.


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

An Osmotic Tech 150% Review
By: Harrison Frolick

Before I forget, in my last soap box article I said "I am 
convinced that if the price of admission to the Super Bowl were 
3 neurons that worked, that you would not see anyone there with 
a US Government ID."  I was not referring to anyone in the 
Military.  Only the Fed Reserve Board, and certain individuals 
in the Executive Branch and the Judicial Branch. Glad that I 
could get that cleared up!  By the way, thanks for the bazillion 
emails.

For those of you that missed the 150% challenge, go to the side 
bar and click on Traders Corner and read the 150% challenge.  
This is my do or die challenge to myself to see if I can make 
150% return in one year using options starting with $25,000.  
I bummed the 25k off one of my partners.  He said he wants his 
money back eventually too. What is up with that?  Well so far 
I must say that I am not dead yet but, definitely bruised.  
Now I kind of wish that I was a cat.

Well, I did the first two trades on Friday March 24, 2000.  Did 
I pick a great time to try this out or what?  Well, we can all 
learn from my mistakes too.  Plan on learning a lot...arghh...
Who's idea was this?

I picked up 5 contracts of RBF JT's at 30 3/8.  These are the 
MERQ October 100 calls.  The last trade was around 25 but, the 
current ask is $20 1/8.  I also picked up 500 shares of DSLN 
at 23 3/16 with the ask at 19 1/2.  Can everyone say crater?  
The following Monday after the trades, everything was copecetic.  
Tuesday through Friday morning I was on various planes and in 
Ft. Worth dodging tornadoes, literally.  For those of you in 
that area, we had reservations at Rinatas (spelling?) but, 
decided to go elsewhere that night.  Good thing, as it was 
wiped out that evening.  Anyway, I was unable to look at a ticker 
during market hours at all.  Needless to say that I probably 
would have bailed on both of these plays.  However, I did get 
into them with an idea we were in for a bumpy ride.  That is 
why I got Octobers and did not use up all of my margin on the 
stock purchase.  Although my definition of bumpy did not 
include a giant sink hole in the middle of the road!  As I 
always say, this too shall pass.  

Here is the plan with my picks.  Sell the RBF's at a profit.  
Sell calls on DSLN when it gets to $25 or so.  How is that?  
Yea I know, some help I am but, that is really the plan!  
Really!

I did pick up some MERQ the stock at $61 on Tuesday and sold 
out at 84 1/2.  Going to use the money for some AKAM options. 

Does anyone have any horror stories about margin calls?  I am 
looking for some material.  If you have one, please send it to 
me.  I have a doozy that happened to one of my partners.  I 
wish that I could warn everyone about these royal boneheads 
but, I don't want Jim to get into trouble.  All I can say is 
that they are in Great Neck, NY. 

Thank goodness the market came back!  I have to cut this short 
if I want to make this in the Sunday Edition as I am off early 
Saturday morning.  I have some stuff up my sleeve for next week.  
I should have some material from one on one interviews with a 
couple of executives from some pretty neat companies.   They 
might help you get a handle on this "New" economy that so many 
people just don't get!  Remember, it is Ok to make money!

Happy Trading!...Who is John Galt?

Contact SupportHarrison




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

Daily Results

Index      Last    Week
Dow     11111.48  189.56
Nasdaq   4446.45 -126.38
$OEX      821.52    2.13
$SPX     1516.35   13.89
$RUT      542.99    3.90
$TRAN    2827.72   64.48
$VIX       26.94   -0.27

Calls              Week

CHKP      196.47   25.41  Great comeback, earnings are Wednesday
MEDX       72.63   22.38  Nearly 85% off its highs on Tuesday dip
HWP       154.00   21.63  Breakout higher contrary to the markets
AMAT      114.88   20.63  Fueled by high Semiconductor demand
LXK       119.50   13.75  Let the earnings run begin
WLA       103.94    6.13  Managed to hold its own this week
SUNW       98.81    5.13  Remember, get out before Thursday
IBM       123.13    5.13  Only seven trading days before earnings
INTC      136.81    4.88  Increasing spending to increase profits
KSS       106.19    3.69  Split run with pullbacks to the 10-dma
CL         59.31    2.94  Solid "old economy" play
EXDS      141.63    1.13  Take profits and run after last week
HYSL       33.50    1.00  New, time to catch the recovery
PCAR       46.88   -3.13  Dropped, reason we rarely play Trucking
NXTL      142.44   -5.81  Tow firms reiterate Buy rating
DISH       72.88   -6.13  Finally back above $70 resistance
SILK      102.69   -7.31  New, leverage play on recovering KANA
INKT      180.88  -14.13  Steadily climbing ahead of earnings
NXLK      107.25  -16.44  Showing solid support near $100

Puts

FIBR       70.25  -42.00  Losses on all kinds of levels
FDRY      120.13  -23.63  New, looks bad but possible earnings run
ICGE       72.69  -17.63  Daily highs still getting lower
LVLT       90.13  -15.63  No signs of a bounce coming yet
IIJI       66.50   -3.25  Weak, but needs to breakdown again
LU         59.75   -1.50  "Burn me twice, it's my fault"
KO         46.19   -0.75  The stock is taking a breather



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

Calls

HYSL - Hyperion Software Corp 
SILK - Silknet Software Inc. 

Puts

FDRY - Foundry Networks 
LU   - Lucent Technologies 
FIBR - Osicom Technologies 



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

PCAR $46.89 (-3.13) The strength we saw at Thursday's close
carried through to Friday as PCAR gapped slightly higher at the
open.  The momentum didn't last long though as the stock quickly
retraced the gap and sold off sharply in the first hour of
trading.  In fact, PCAR hit an intraday high of $50.75 at the
open and was sold down to $47.50 within an hour.  PCAR diverged
from the broader market for the rest of the day as traders moved
money from the briefly popular value stocks back into the
technology sector.  The momentum that we saw earlier in the week
disappeared as quickly as it appeared as traders evacuated the
trucking sector.  Stocks like OshKosh Truck (OTRKB) and Federal
Signal (FSS) were hammered Friday.  While the renewed interest in
the tech stocks bodes well for our other plays, it spells trouble
for PCAR.  Although the stock did managed to bounce from its low
of the day at $46, we don't want to stand around to get run over
by PCAR should the rotation continue.

EXDS $141.63 (+1.13) Hosting and network providers received
positive comments from Lehman Brothers analyst Bill Garrahan
Friday morning.  Garrahan said, "Exponential growth in bandwidth,
increased Net users and usage, and increased richness in
applications over the next several years are ingredients for 
a tremendous opportunity for Internet e-commerce network
providers."  On the heels of the positive remarks, EXDS gapped
higher by $3 Friday morning.  However, by mid-morning EXDS began
to drift lower as traders quickly forgot about the positive
comments from Lehman.  The participation in EXDS Friday was
anemic with only 3.9 mln shares trading, versus an ADV of 5.7
mln.  Net stocks showed substantial gains Friday as the Goldman
Sachs Internet Index ($GIN) gained 4.7%.  While the rest of tech
stocks shined, EXDS slid down to support at $140, filling its
early morning gap.  We said last Thursday to wait for EXDS to
break through resistance at $140.  Although the stock moved above
that level Friday, it came with little conviction.  While the
long-term prospects for EXDS remain promising, the lack of action
Friday has prompted us to move on.  We'll take our profits after
a tumultuous week and run.


PUTS

No dropped puts this newsletter.



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

Current Split Candidates

INKT - Inktomi
CHKP - CheckPoint Software
HWP  - Hewlett Packard
INTC - Intel Corporation

Split Candidates that are not current plays
 
TXN  - Texas Instruments
EMC  - EMC Corporation
PHCM - Phone.com


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

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

Symbol - Stock          Splits/Date  
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
TRAC - Track Data Corp  3:2 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
COGN - Cognos Inc       2:1 04-27-00 ex-date 04-28
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
KPN  - KPN Telecom      2:1 06-02-00 ex-date 06-05
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:
**********************

SUNW - Sun Microsystems $98.81 (+5.13)

See details in sector list

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

****

HWP - Hewlett Packard $154.50 (+21.63)(-9.50)(+4.38)(-8.94)

See details in sector list

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


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

ICGE - Internet Capital Group Inc. $72.69 (-17.63)

See details in put list

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


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


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



The Option Investor Newsletter          4-9-2000
Sunday                        3 of 5


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

IBM - Int'l Business Machines $123.13 (+5.13)(-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.

Our play is for IBM to continue marching higher in the short-
term powered by more good news, a reasonable market environment, 
and a strong outlook for first-quarter earnings.  The company is 
confirmed to report on April 18th, after the bell.  That leaves 
us with seven more days to profit from IBM's momentum.  Near-
term support developed a pattern of higher highs and is now 
clearly established at $122.  For those who like the technicals, 
the 5 and 10 DMA indicators are comparative and provide a good 
entry devise into this play.  This week's performance also 
proved IBM is not range bound between $118 and $122; although 
resistance is strong around $128.  On Thursday, the stock just 
missed cracking the stubborn opposition ($128.25) set on March 
27th, but got stopped out at $128.13 early in the session.  Once 
IBM moves through this force field then it faces the 52-week 
high at $139.13.  Volume is respectable, but a sharp spike on a 
breakout would certainly help this predicament.

Again this week the news surrounding IBM was abundant.  Early on 
they announced a leading-edge development process to make 
microchips up to 30 percent faster, which ultimately will make 
for faster Internet access and more powerful wireless devices.  
According to Bijan Davari, VP of IBM Microelectronics' 
Semiconductor Research & Development Center, this new process 
"is an absolutely essential process without which you couldn't 
continue making both the Internet and its devices more powerful 
and capable".  Overseas IBM Japan won a 10-year $1 bln computer- 
outsourcing contract from major life insurer, Mitsui Mutual Life 
Insurance.  The company also snagged a three-year $250 mln 
equipment contract with ABB's Engineering and Technology Group 
and on Friday, announced it entered into an 11-year $200 mln 
partnership with Canada's Irving Oil.

***April contracts expire in two weeks***

BUY CALL APR-120*IBM-DD OI=19143 at $7.13 SL=5.00
BUY CALL APR-125 IBM-DE OI=15445 at $4.63 SL=2.75
BUY CALL APR-130 IBM-DF OI=16089 at $2.63 SL=1.25
BUY CALL MAY-125 IBM-EE OI= 1902 at $7.63 SL=5.25
BUY CALL MAY-130 IBM-EF OI= 2176 at $5.63 SL=3.50

Picked on March 21st at $113.50    P/E = 30
Change since picked       +9.63    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 = 7.98 mln
/charts/charts.asp?symbol=IBM

****

HWP - Hewlett Packard $154.50 (+21.63)(-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).

All hail the conquering hero!  Very few stocks held up as well
as HWP during the turbulent week we just saw.  Already sitting
on very solid support at $130 before the Tuesday panic, HWP led
the charge as the markets recovered, closing over $138 with
volume of almost 5 million shares.  Although that looked good,
it was nothing compared to the heroics we have seen from the
computer company since then.  Adding over $20 for the week, HWP
has broken through resistance at $140 and $150 on strong volume
and looks like it is ready to challenge its all-time high of
$155.50.  Now that the stock has built some momentum, and is
solidly above the $140 level, the likelihood of a split
announcement is increasing.  With more than enough shares
authorized, this event could come to pass any time between now
and earnings which are currently set for mid-May.  After
pronouncements from the company that revenue and earning growth
is on target and news that they have left poor Compaq in the
dust, HWP should continue on its charge higher.  Look for new
entries to appear as HWP tests support at $150.  The 10-dma is
now sitting at Continued strength could produce a break to new
highs as early as Monday, and this event could be used for a
more conservative entry.

Hungry for more?  On Friday, HWP set the terms for the remainder
of its Agilent (A) spinoff.  With a record date of May 2, the
company will distribute its 84% stake in A on June 2nd.  In the
terms of the spinoff, the holder of each share of HWP will
receive a distribution of 0.37 shares of A.

***April contracts expire in two weeks***

BUY CALL APR-150*HWP-DJ OI=1854 at $ 8.25 SL=5.75
BUY CALL APR-155 HWP-DK OI=1281 at $ 5.63 SL=3.50
BUY CALL APR-160 HWP-DL OI= 372 at $ 3.75 SL=2.25
BUY CALL MAY-155 HWP-EK OI= 427 at $11.88 SL=9.00
BUY CALL MAY-160 HWP-EL OI= 408 at $ 9.25 SL=6.50

SELL PUT APR-145 HWP-PI OI= 514 at $ 2.75 SL=4.50
(See risks of selling puts in play legend)

Picked on Mar 16th at   $133.00     P/E = 51
Change since picked      +21.50     52-week high=$155.50
Analysts Ratings    10-11-7-0-0     52-week low =$ 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 = 3.86 mln
/charts/charts.asp?symbol=HWP

****

LXK - Lexmark International $119.50 (+13.75)(-19.06)

Wrapping its arms around the entire life-cycle of printers, LXK
develops and manufactures a broad range of laser, inkjet and dot
matrix printers for the office and home markets.  The company is
also the exclusive source for new print cartridges for the laser
and inkjet printers it manufactures.  Additionally, LXK provides
supplies for IBM printers and offers after-market laser
cartridges for the large installed base of a range of laser
printers sold by other manufacturers.

Getting its correction out of the way early proved to be a boon
to LXK as the markets melted down on Tuesday.  After running as
high as $135.88 a couple weeks ago, investors decided it was
time to take some profit off the table.  By the time Tuesday's
debacle arrived, LXK had already shaken out most of the weak
hands and was trading down at $106.  With a slight hiccup to
$99, the printer company hitched up the wagon and headed to
town.  Ending the day Tuesday fractionally above Monday's close,
LXK has been marching steadily higher ever since.  With volume
oscillating around the daily average, investors have been
gradually bidding the price higher, with Friday's gain of $8.25
looking particularly impressive.  Now sitting just above the
30-dma ($119.19) and with the 10-dma turning up, LXK could be
ready to take a run at new highs as earnings approach on April
24th.  In Thursday's write-up we mentioned that the two primary
obstacles to the stock running to new highs were breaking
through the 30-dma and the 50-dma ($114.75).  Obviously these
have both been accomplished, and if buyers are still waiting in
the wings, resistance at $120 and $125 could fall in short
order.  Temper your enthusiasm with caution though.  LXK has
had 6 up days in a row, and a bit of consolidation would not be
out of the question.  Look for a bounce near the 50-dma to
trigger your entry as the stock readies itself for a run into
earnings.  For those with a more cautious nature, breaking
through Friday's high at $120.50 would be a good signal that
LXK is ready to run.

News has been sparse on LXK, with the most recent item of note
being the rating given by Prudential.  On March 17th, the firm
began coverage with an Accumulate rating.

***April Strikes expire in 2 weeks***

BUY CALL APR-115*LXK-DC OI= 91 at $ 8.00 SL=5.75
BUY CALL APR-120 LXK-DD OI=473 at $ 5.25 SL=3.25
BUY CALL MAY-120 LXK-ED OI=137 at $10.50 SL=7.50
BUY CALL MAY-125 LXK-EE OI=166 at $ 5.25 SL=3.25

Picked on Apr 6th at    $111.25     P/E = 48
Change since picked       +8.25     52-week high=$135.88
Analysts Ratings      6-4-1-0-0     52-week low =$ 49.50
Last earnings 01/00   est= 0.68     actual= 0.73
Next earnings 04-24   est= 0.58     versus= 0.48
Average Daily Volume = 1.14 mln
/charts/charts.asp?symbol=LXK



*********
BIO-TECH
*********

MEDX - Medarex Inc. $72.63 (+22.38)

Medarex is a biopharmaceutical company developing monoclonal 
antibody-based therapeutics (drugs) to fight cancer and other 
life-threatening and debilitating diseases.  The company has 
developed a broad platform of patented technologies for antibody 
discovery and development, including the HuMAb-Mouse system for 
the creation of high affinity human antibodies.  Yes, their claim 
to fame is that they've engineered a mouse with a human immune 
system!  Medarex's HuMAb-Mouse technology is a transgenic mouse 
system that creates high affinity, fully human antibodies instead 
of mouse antibodies.  Using standard laboratory techniques, 
scientists can produce these fully human antibodies in a matter 
of months.  Medarex creates and develops human antibodies for 
itself and others, offering a full range of antibody development 
capabilities, including pre-clinical and clinical manufacturing 
services. 

Giving new meaning to "the mouse that roared", MEDX has 
genetically engineered those fuzzy critters with the immune 
system of humans.  The mouse has taken the biotech sector by 
storm because for the first time, research can be conducted for 
human results without subjecting humans to the risks.  But the 
real story is in the technical picture.  Following a top at $206 
early last month, MEDX shrank 85% in value by falling to $33.25 
in Tuesday's major sell-off.  It's been moving up swiftly ever 
since.  While we were looking for a pullback to $65, 
unfortunately, it gapped up to $70 at the opening Friday and 
continued up to $77.75 during amateur hour, but never came back 
to support at $65 for the ideal entry we'd outlined.  No matter, 
for those with an itchy trigger finger and a bent for risk, a 
$67 entry one hour from the close might have worked.  With an 
overdone sell-off as indicated by the stochastic, the recovery 
has been strong and we expect it to continue as long as the 
Biotech sector and markets cooperate.  Intraday support comes at 
$65, $67 and $70.  Otherwise, you may be better served waiting 
for a move over Friday's high of $77.75, backed by strong volume 
before taking a position.  Earnings have been "confirmed" with 
the company for "the first week in May" before the bell.

A big part of the Biotech recovery was sparked when President 
Clinton clarified and apologized last week for his comments a few 
weeks earlier, when he stated that the results of gene mapping 
should be shared with all.  Not so he says now, clarifying that 
proprietary research is patentable and can be commercially 
utilized by its holders.  Whew!  Other than that, no news.

***April contracts expire in two weeks***

BUY CALL APR-65*MZU-DM OI=264 at $12.00 SL= 9.00
BUY CALL APR-70 MZU-DN OI=301 at $10.75 SL= 8.00
BUY CALL APR-75 MZU-DO OI=241 at $ 8.00 SL= 5.75
BUY CALL MAY-70 MZU-EN OI=270 at $17.25 SL=12.50
BUY CALL MAY-75 MZU-EO OI= 44 at $15.13 SL=11.00

SELL PUT APR-60 MZU-PL OI=152 at $ 2.88 SL= 4.75
(See risks of selling puts in play legend)

Picked on Apr 06th at    $68.00     P/E = N/A
Change since picked       +4.63     52-week high=$206.00
Analysts Ratings      1-7-1-0-0     52-week low =$  2.88
Last earnings 02/00    est= N/A     actual= N/A
Next earnings 05-15    est= N/A     versus= N/A
Average Daily Volume = 1.5 mln
/charts/charts.asp?symbol=MEDX



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

INTC - Intel Corporation $136.81 (+4.88)(-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.

INTC survived its day of probation with a surging gain of $7 on
Friday.  The chip stocks were the attraction Friday as traders
threw money at them.  On the day, the Semiconductor Index($SOX)
soared almost 6%.  Driving the sector was a keynote speech by 
Intel Senior VP Sean Maloney at Spring Internet World 2000.  Mr. 
Maloney stressed that they are seeing strong demand in a wide 
spectrum of networking products and an interest in its e-commerce 
capabilities.  INTC currently is expanding its New Economy 
presence to both the networking and internet arenas.  He addressed 
the importance of cost controls as we go forward into the 21st 
century.  Interestingly enough, CMP Media reported on Saturday 
that Intel is expected to increase its capital spending this year 
to $7 bln from its original projection of $5 bln.  Yes, those are
billions!  This move will allow INTC to accelerate its processing 
and to add needed capacity for growing demand.  And along with 
earnings on April 18th, traders may be pushing the buy buttons in
a preemptive run to the numbers.  Many feel that INTC's earnings 
will drive the NASDAQ higher.  Looking at the technicals, the 
stock conquered the 50-dma at $133.13 and never looked back.  For 
most of Friday's session, INTC built an intraday base at $135 and
spiked up smartly to close at the high of the day.

Trading patterns have been very choppy the last couple weeks.  
With the NASDAQ in a trading range and the potential retest of
lows in the back of traders' minds, it has become difficult to
determine when the sellers will step back into the game.  Next 
week, earnings are going to influence the market.  Watch for the
market trend on Monday and see if we get a slight pullback after
Friday's late rally.  Enter positions based on personal risk 
levels.

***April contracts expire in two weeks***

BUY CALL APR-130*INQ-DF OI=22372 at $10.63 SL=8.25
BUY CALL APR-135 INQ-DG OI=13929 at $ 7.50 SL=5.75
BUY CALL APR-140 INQ-DH OI=18405 at $ 5.00 SL=3.25
BUY CALL MAY-140 INQ-EH OI= 4415 at $ 9.50 SL=7.00

Picked on Mar 19th at    $129.88    P/E = 62
Change since picked        +6.93    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

****

AMAT - Applied Materials $114.88 (+20.63)

Applied Materials is the world's #1 maker of complex
manufacturing equipment used in semiconductor factories.  Its
machines have a big share in most industry segments, including
deposition (layering film on wafers), etching (removing excess
material during patterning), and ion implantation (altering
electrical characteristics of certain areas of wafer coating).
Applied Materials also makes metrology systems and inspection
equipment.  Their customers include Advanced Micro Devices,
Intel, Lucent, and Motorola.  

After a heart-stopping week, the Semiconductor stocks lifted the
market from the mire.  While investors remain gun shy on buying
other tech stocks, they have accumulated the semi's aggressively.
The strong fundamentals and prospects for stellar earnings have
attracted traders to the group recently.  Further proof of strong
earnings came late last week when the Semiconductor Industry
Association (SIA) reported worldwide sales of semiconductors rose
33.4% in February to $14.6 bln from $10.9 bln a year ago.  The
SIA projects another good year for the industry as continued
expansion of communications networks and the Internet will
provide growth for all chip sectors.  The action in the semi's
should intensify next week as earnings season kicks into full
swing.  Although AMAT's earnings are still a month away the stock
could benefit from positive reports from companies like KLAC,
slated to report next week.  From here, we can look for a couple
of possible entry points into AMAT.  The stock closed strongly
Friday, nestled near $115, its 52-week high.  That level is the
only resistance preventing AMAT from moving higher.  Watch for a
strong move above $115 on heavy volume as a possible entry point.
AMAT has made quite an advance in the past week and some profit
taking may lie ahead.  If that happens, the stock has major
support at $110 and may bounce from that level providing a
possible entry.  Volume has been especially strong lately,
confirm any pullbacks with light volume as a sign of profit
taking.  Whatever transpires, choose an entry point that is
suitable for your risk level.

Dutch semiconductor equipment maker ASM International (ASMI) said
Friday it had set the issue price for its secondary offering of
5 mln shares.  ASMI is offering 3.5 mln shares and AMAT is
supplying the other 1.5 mln.  Through investment activities, AMAT
acquired shares of ASMI.  Payment and delivery of the shares is
on April 12th, and may provide further fire to the flame of AMAT.

***April contracts expire in two weeks***

BUY CALL APR-110*ANC-DB OI=5257 at $ 9.50 SL=6.50
BUY CALL APR-115 ANC-DC OI=1509 at $ 6.75 SL=4.75
BUY CALL APR-120 ANC-DD OI=1242 at $ 4.50 SL=2.75
BUY CALL MAY-120 ANC-ED OI= 530 at $11.13 SL=8.25

Picked on Apr 4th at     $98.13    P/E = 70
Change since picked      +16.75    52-week high=$115.00
Analysts Ratings    14-15-2-0-0    52-week low =$ 24.19
Last earnings 01/00    est=0.38    actual=0.40
Next earnings 05-10    est=0.54    versus=0.18
Average Daily Volume = 8.13 mln
/charts/charts.asp?symbol=AMAT



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

SUNW - Sun Microsystems $98.81 (+5.13)

Since its inception in 1982, a singular vision -- "The Network 
Is The Computer(TM)" -- has propelled Sun Microsystems to its 
position as a leading provider of industrial-strength hardware, 
software and services that power the Internet and allow 
companies worldwide to "dot.com" their businesses.  OK, they 
make servers, but the above is what branding is all about.  
With $13 billion in annual revenues, Sun can be found in more 
than 170 countries. 

Here's a conservative big-cap technology stock that we can play 
for an earnings run.  When's the date?  Thursday, April 13th, 
after the bell.  So plan to be out of the play by then since we 
never recommend holding over earnings.  Don't look now, but 
SUNW is also a split candidate following its most recent 2:1 
in December of 1999.  However, don't expect that to figure 
prominently in the play since SUNW does not have enough shares 
authorized to effect the split, nor is there a shareholders 
meeting planned (as of this writing) with an agenda item to do 
so.  Technically, we are looking for a big SUNW rise.  Here's 
why.  A week ago Friday and last Monday, SUNW was bumping its 
head on $96 resistance just before the slide into Tuesday's black 
hole from which SUNW powered out all week.  Friday afternoon, 
SUNW began bumping its head on $96 again, only this time it broke 
through on a surge of volume in the final hour of trade.  The 
breakthrough of resistance was confirmed by volume on an 
otherwise slow afternoon, which is a reason to get excited in our 
book.  It's a graphical representation of traders saying to 
themselves, "Yep, there's $96+; all market systems GO; I'm in."  
As long as the market cooperates, earnings could drive this play 
hard on Monday.  Support is $96; next resistance is mild at $100, 
then stronger at $105; blue sky at $108.  Target shoot at support 
or wait for the breakout over resistance levels before taking a 
position.

In the news,  Bear Stearns noted at an analyst conference that 
they see SUNW's server business growing at 25% in FY2000.  
However Michael Dell notes that while SUNW is DELL's only 
meaningful competitor in the server business, their hype is now 
greater than their ability to deliver.  Time will tell.  
Meanwhile, SUNW, feeling emboldened by Judge Jackson's Microsoft 
ruling, is considering a private anti-trust suit against 
Microsoft.  While traders may like that in the short run, 
vengeance has never made a good long-term success strategy.

***April contracts expire in two weeks***

BUY CALL APR- 95*SUX-DS OI= 8605 at $ 8.13 SL=5.75
BUY CALL APR-100 SUX-DJ OI=15946 at $ 5.50 SL=3.50
BUY CALL MAY-100 SUX-EJ OI= 8768 at $ 9.50 SL=6.50
BUY CALL MAY-105 SUX-EA OI= 2462 at $ 7.38 SL=5.25

SELL PUT APR- 90 SUX-PR OI= 8846 at $ 2.19 SL=3.75
(See risks of selling puts in play legend)

Picked on Apr 04th at     $90.00     P/E = 117
Change since picked        +8.81     52-week high=$106.75
Analysts Ratings      9-11-1-0-0     52-week low =$ 24.88
Last earnings 01/00    est= 0.20     actual= 0.21  surprise=5%
Next earnings 04-13    est= 0.22     versus= 0.18
Average Daily Volume = 15.37 mln
/charts/charts.asp?symbol=SUNW



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

CHKP - Check Point Software $196.47 (+25.41)(-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.

Welcome back to the new economy.  After a brief hiatus, wherein
every bear came out of hibernation to proclaim the end of the
sky high Internets with their excessive valuations, CHKP came
roaring back to remind everyone that business is still taking
place on the Internet and security software hasn't lost its
luster.  Although the short-term pain was severe, a quick glance
at a chart shows CHKP trading over $25 above where it began the
week.  As a sort of trial by fire, the turbulence this week
served to separate the strong from the weak.  The latter had
a hard time recovering with the rest of the market, while the
former came back even stronger, attracting the cash shaken out
of the weaker issues.  With earnings season now in full swing,
and CHKP reporting on Wednesday before the open, look for the
beginning of the week to produce more upside.  Last Tuesday's
drop provided a successful test of the 100-dma, and Friday's
strong gain on healthy volume brings CHKP solidly above the
50-dma ($191.25).  The next area of resistance will be the
all-important $200 level, followed by $210 and $220.  The fuse
on this play is getting short as we do not want to hold over
the earnings announcement.  Since the announcement comes
Wednesday morning, we will be dropping CHKP on Tuesday, so
start planning your exit now.  You will want to be out of all
open positions before the close on Tuesday to avoid the usual
post-earnings depression.  Given the proximity of earnings
and the strong run in the tail end of last week, we are not
recommending new positions; if you have open positions,
congratulations on a great entry, and keep those stops set.

Aside from the confirmation of the earnings announcement, there
has been little in the way of news for CHKP.  On Thursday, the
stock did get an additional boost from a Sands Brothers upgrade
from Neutral to Strong Buy.

***April contracts expire in two weeks***

BUY CALL APR-190 YKE-DR OI=160 at $21.75 SL=16.25
BUY CALL APR-200*YKE-DT OI=617 at $18.50 SL=13.50
BUY CALL MAY-200 YKE-ET OI=315 at $36.50 SL=27.25
BUY CALL MAY-210 YKE-EB OI= 62 at $32.50 SL=24.25

SELL PUT APR-170 YKE-PN OI=285 at $ 7.88 SL=10.50
(See risks of selling puts in play legend)

Picked on Mar 30th at   $169.50     P/E = 146
Change since picked      +26.97     52-week high=$295.00
Analysts Ratings     12-4-0-0-0     52-week low =$ 14.88
Last earnings 01/00   est= 0.65     actual= 0.70
Next earnings 04-12   est= 0.35     versus= 0.25
Average Daily Volume = 1.31 mln
/charts/charts.asp?symbol=CHKP

****

INKT - Inktomi $180.88 (-14.13)(-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!.

Cautiously gathering its forces after the bloodbath on Tuesday,
INKT is steadily marching higher as investors wade back into
the shallow end of the Internet pool.  Contrary to the opinion
of many of bears on CNBC, the reign of the Internet sector is
not over; some of the weaker hands just needed to be shaken out.
Yahoo! was not the typical white night for the sector,
announcing good, but not stellar earnings on Wednesday.  After
a brief period of indecision, investors stepped in and gingerly
pushed many of the stronger Internet stocks back to where they
began this tumultuous week.  Friday was particularly encouraging
for INKT as it broke above the $170 resistance level, and closed
just above the 10-dma ($180.25) on volume 30% over the daily
average.  This came on a relatively light volume day for the
market as a whole.  Earnings season is in full swing, and INKT
reports on April 18th.  If the markets can stay healthy and we
don't get Greenspammed, look for the stock to continue higher.
The next challenge will come in the form of resistance at $190
and then $200.  Consider target-shooting intraday dips to get 
a better entry, but stay vigilant as to the overall market
direction.  As we have seen, even leaders such as INKT can get
caught in a downdraft.

Still rather light on the news front, INKT continues to spread
its tentacles throughout the industry.  iXL Enterprises is
spinning out its infrastructure firm AppGenesys with funding
assistance from investors such as INKT.  The new firm will
develop and deploy Internet applications as well as perform
Web hosting services.

***April Strikes expire in 2 weeks***

BUY CALL APR-180*KAY-DP OI= 565 at $14.00 SL=10.50
BUY CALL APR-185 KAY-DQ OI= 255 at $12.00 SL= 9.00
BUY CALL APR-190 KAY-DR OI= 549 at $ 9.75 SL= 6.75
BUY CALL MAY-180 KAY-EP OI=1145 at $24.13 SL=18.00
BUY CALL MAY-190 KAY-ER OI= 142 at $19.50 SL=14.25

SELL PUT APR-160 KAY-PL OI= 919 at $ 4.63 SL= 6.50
(See risks of selling puts in play legend)

Picked on Apr 2nd at    $195.00     P/E = N/A
Change since picked      -14.13     52-week high=$241.50
Analysts Ratings     8-10-1-0-0     52-week low =$ 42.00
Last earnings 01/00   est=-0.04     actual=-0.02
Next earnings 04-18   est=-0.02     versus=-0.05
Average Daily Volume = 2.79 mln
/charts/charts.asp?symbol=INKT

****

HYSL - Hyperion Software Corp $33.50 (+1.00)

Hyperion Solutions makes analytic application software that 
transforms  financial, customer, and e-business information into 
better customer relationships, increased revenues and higher 
profits.  The company is the result of a difficult merger in 
1998 of Hyperion Software and Arbor Software.  Big business 
clients include ABN Amro and SBC Communications.

This financial software company recently experienced a 64% price 
move in less than a month!  Now it's time to take advantage 
of the reversal.  It appears that at the beginning of March when 
the Nasdaq toppled from its 5000+ peak, HYSL followed the trend 
like a true disciple.  Overlap a Nasdaq chart (COMPX) and you 
can see the correlation.  The main divergence came when HYSL 
didn't respond to any positive upswings in the broad market, 
that is until now.  Coming off an all-time high at $65 on March 
10th, it plummeted to the depths of $23.44.  This Wednesday HYSL 
began its ascent out of the gutter.  This three-day uptrend is 
also supported by the RSI (relative strength index), a momentum 
oscillator that calls trend reversals.  A positive move through 
the 10-dma ($31.16) was also a good sign that we're in the thick 
of a potential momentum run.  Plus earnings are in a couple of 
weeks which may spice up the play as well.  The company is 
confirmed to report on April 25th, after the bell.  Watch for 
trading volume to remain strong.  Consider entries on upward 
bounces off the current price level.

News is generally scarce for this company, but on Thursday 
Hyperion Solutions reinforced its commitment to open standards 
for enterprise-wide business analysis.  They joined the XBRL 
(eXtensible Business Reporting Language) Project Committee, a 
coalition of more than 30 finance, accounting, software, and 
government organizations.  This coalition will provide 
interested parties with a free XML-based standard for preparing, 
formatting, distributing, and analyzing financial reports. 

***April contracts expire in two weeks***

BUY CALL APR-30 WQE-DF OI= 56 at $4.88 SL=3.00
BUY CALL APR-35 WQE-DG OI=305 at $2.50 SL=1.25
BUY CALL APR-40 WQE-DH OI=593 at $0.81 SL=0.00 High Risk!
BUY CALL MAY-35*WQE-EG OI=268 at $4.75 SL=3.00
BUY CALL MAY-40 WQE-EH OI=245 at $3.38 SL=1.75

Picked on April 9th at  $33.50    P/E = 47
Change since picked      +0.00    52-week high=$65.00
Analysts Ratings     2-3-5-0-0    52-week low =$ 9.88
Last earnings 12/99  est= 0.20    actual= 0.22
Next earnings 04-25  est= 0.24    versus= 0.08
Average Daily Volume =   731 K
/charts/charts.asp?symbol=HYSL

****

SILK - Silknet Software Inc. $102.69 (-7.31)

When you make software that Microsoft wants to use, you must be
doing something right.  That's where Silknet Software, a maker of
customer service software, finds itself.  The company's eBusiness
System, eService, and eCommerce brand products enable businesses
to leap onto the Internet and perform marketing, sales,
e-commerce, and customer service.  In addition to Microsoft,
Silknet's customer list includes 3Com, Bank of America, and
Compaq.  Internet investment powerhouse CMGI owns 19% of SILK's
stock.  Silknet has agreed to be acquired by e-mail management
software company Kana Communications (KANA).

Silknet has its eagle eye on the customers.  Silknet helps
e-businesses collect customer information online and make maximum
use of that data.  SILK provides tools that use the Web to bridge
multiple customer relationship management (CRM) applications.
Analysts believe that an end-to-end Web-CRM approach carries
enormous potential.  SILK is positioned to take advantage of the
increased demand for business services on the Web, at least Kana
Communications (KANA) believes so.  KANA, a leading provider of
online customer service, and SILK announced a merger last
February.  The combined entity will connect customers and
partners, increase revenues, and decrease costs.  The companies
expect to close the transaction during this quarter.  Under the
terms of the agreement, each share of SILK will be exchanged for
0.83 shares of KANA on a pre-split basis.  KANA has fallen from
its highs in the last month, but now looks positioned to rebound.
KANA was upgraded last week by Wit SoundView from buy to strong
buy.  As KANA regains footing and moves higher SILK is sure to
follow.  This is a leverage play based on the ratio of the 
buyout.  SILK should move $1.60 to every $1 KANA moves.  SILK is 
firmly above $100 as momentum has returned to the stock.  The 
stock has formed an ascending triangle and looks ready to 
breakout.  Watch for SILK to make a substantial move with above 
average volume.  Confirm direction in KANA before entering a new 
position and set a trailing stop in case of a breakdown.

Jay Wood, founder and CEO of SILK will be honored as the New
Economy Person of the Year at the Private Equity Forum on May 9th.
"Receiving the award is a great honor, not only for me, but for
the entire Silknet family," said Wood.  Just when we heard the
last of the old economy/new economy stuff, now there's an award?

***April contracts expire in two weeks***

BUY CALL APR-100*ULI-DT OI=61 at $11.63 SL=8.50
BUY CALL APR-105 ULI-DA OI=26 at $ 8.88 SL=6.25
BUY CALL APR-110 ULI-DB OI=24 at $ 7.00 SL=5.00
BUY CALL MAY-110 ULI-EB OI=10 at $13.63 SL=9.75

Picked on Apr 9th at   $102.69    P/E = n/a
Change since picked      +0.00    52-week high=$285.00
Analysts Ratings     1-6-0-0-0    52-week low =$ 15.63
Last earnings 12/99  est=-0.28    actual=-0.20
Next earnings 04-24  est=-0.26    versus= n/a
Average Daily Volume  =  222 K
/charts/charts.asp?symbol=SILK



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

NXLK -  Nextlink Communications $107.25 (-16.44)

Nextlink Communications is a competitive local-exchange carrier
(CLEC).  The company builds fiber-optic rings in cities to
provide local and long-distance phone service, e-mail, and other
Internet services primarily to small businesses.  NXLK provides
services in 38 major US markets, including New York, Los Angeles,
and Chicago.  NXLK is also adding local multipoint distribution
service (LMDS) fixed wireless licenses to its portfolio of
communications services.  The company has agreed to buy Internet
access provider Concentric (CNCX).  NXLK was founded by cell
phone pioneer Craig McCaw, who owns 35% of the company.

The recent shifts in wireless businesses offers some attractive
opportunities for traders.  SBC and Bell South (BLS) said last
week they will merge their wireless assets to form a new wireless
services company.  Also last week, Bell Atlantic (BEL), GTE, and
Vodafone (VOD) said they planned an IPO for their three-way joint
venture called Verizon.  The recent consolidation seen in the
telecom services sector bodes well for NXLK and other emerging
communications companies.  NXLK is attractive because it
encompasses two of the hottest buzz words in the stock market
today: wireless and Internet.  NXLK has become the nation's
largest holder of broadband fixed wireless spectrum, with FCC
licenses covering the 30 largest US cities.  The company built
broadband networks in 19 states to provide businesses with high-
speed Internet access and additional services such as Web hosting
and support.  NXLK has positioned itself to capitalize on the
explosive growth of wireless applications and the demand for
high-speed Internet access.  Analysts expect strong investor
interest to continue to drive the valuations of telecom stocks
higher.  After the meltdown last week, analysts feel NXLK is
trading at an attractive level.  The stock rebounded sharply 
last Thursday and continued its climb into Friday's trading.  
NXLK has resistance at $110 and support at $105.  Watch for 
the stock to move above $110 on heavy volume as a sign that 
momentum has returned to the stock.  A bounce from support at 
$105 may provide an intraday entry point.

NXLK showed continued strength relative to the broader telecom
sector on Friday.  NXLK's competitors such as GTE and BEL fell
victim to profit taking.  NXLK ended with a modest gain in light
of sector weakness.  Watch for the strength to continue as
investor bid shares of the telecom stocks higher.

***April contracts expire in two weeks***

BUY CALL APR-105 QNF-DA OI= 84 at $8.13 SL=5.75
BUY CALL APR-110*QNF-DB OI=382 at $5.75 SL=3.50
BUY CALL APR-115 QNF-DC OI=121 at $4.13 SL=2.50
BUY CALL MAY-115 QNF-EC OI=201 at $9.63 SL=6.50

SELL PUT APR-100 QNF-PT OI=731 at $3.13 SL=5.00
(See risks of selling puts in play legend)

Picked on Apr 6th at    $105.44    P/E = n/a
Change since picked       +1.81    52-week high=$132.50
Analysts Ratings     14-2-3-0-0    52-week low =$ 26.00
Last earnings 12/99   est=-1.49    actual=-1.34
Next earnings 05-01   est=-1.56    versus=-1.09
Average Daily Volume = 1.49 mln
/charts/charts.asp?symbol=NXLK

****

NXTL - Nextel Communications $142.44 (-5.81)

Nextel communications provides digital and analog wireless
communications services throughout the United States.  Nextel's
4-in-1 business solution integrates guaranteed all-digital
cellular service, text/numeric paging capabilities, digital two-
way radio and wireless Internet services.  Customers can now use
the same phone number no matter where they are, whether it's
across town, in another country, or around the world.  With
headquarters in Reston, Virginia, Nextel serves 96 of the top
100 markets in the United States.  

Closing near the high of the day is plus for most any stock.  A 
close near the high, with a gain of 12.5%, is even a better way
to begin a new play.  Traders entering our new play on Friday
had a tidy profit in their account depending on their entry
point.  As we said Thursday, the mid week sell-off in NXTL was
completely over done.  The bounce late Thursday off the $120 area
appeared to provide investors with a great opportunity.  The
follow-through buying on Friday was a welcome sight.  Earlier
in the week the wireless merger between SBC Communications and
BellSouth, kept the industry in the limelight.  Analysts at two
firms reiterated their Buy rating on NXTL.  However we believe
traders began shopping for bargains late Thursday, and had NXTL
at the top of their list.  From its high on March 10th, to its
low, NXTL had given back about 28%.  Take the recent sentiment
towards the wireless industry, throw in fear based selling, with
declines approaching 30%, and you have all the ingredients for
an exceptional opportunity.  Friday, Bloomberg news reported a
bill was drafted after more than two years of negotiations
between industry and the government, setting tax calculations
for wireless phone calls using the rate for the address from
which a customer most often makes calls.  A similar bill has been
introduced in the Senate, which if passed could benefit all
wireless phone companies.  While the headlines concerning the
bills in the legislature will not keep NXTL moving higher, they
do lend a support for investor sentiment.  So where do we do
from here?  Most indications are point north.  Our wireless
play closed back above its 50-dma Friday, which sits at $135.19.
A move through its 10-dma at $142.68 with conviction, would
suggest continued moves higher.  A bounce off support at $135
would also present another buying opportunity.
  
The SBC Communications-BellSouth deal wasn't the only merger
of the week in the wireless industry.  On Monday, giants Bell
Atlantic and Vodaphone cemented their joint venture, creating
what will ultimately be a 23 million-customer mobile phone
company.  The company will be dubbed "Verizon Wireless" taking
its name of the new company created by the pending merger of
Bell Atlantic and GTE.
  
***April contracts expire in two weeks***

BUY CALL APR-140*FZC-DH OI=645 at $ 9.00 SL= 6.25
BUY CALL APR-145 FZC-DI OI=323 at $ 6.75 SL= 4.75
BUY CALL MAY-140 FZC-EH OI=852 at $15.63 SL=11.25
BUY CALL MAY-145 FZC-EI OI=129 at $13.25 SL=10.00

SELL PUT APR-135 FZC-PG OI=793 at $ 3.88 SL= 5.75
(See risks of selling puts in play legend)

Picked on Apr 6th at    $126.56    PE = N/A
Change since picked      +15.88    52 week high=$165.88
Analysts Ratings     12-7-3-1-0    52 week low =$ 33.00
Last earnings 02/00   est=-0.99    actual=-0.85 
Next earnings 04-26   est=-0.81    versus=-1.37
Average daily volume = 4.39 mln
/charts/charts.asp?symbol=NXTL


*******************************
CALLS CONTINUED IN SECTION FOUR
*******************************

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





The Option Investor Newsletter             4-9-2000
Sunday                        4 of 5

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

CL - Colgate-Palmolive Co $59.31 (+2.94)

Colgate-Palmolive manufactures and markets a wide variety of 
products for the consumer.  They have two distinct business 
segments: oral and personal care products and pet nutrition.  
CL is the #1 seller of toothpaste - everyone brushes!  And 
their Hill's Science Diet brand is a leading premium pet food 
worldwide.  Almost 70% of their total sales revenue come from 
foreign accounts.

As many traders consider the benefits of portfolio 
diversification and rotate some holdings out of the high-flying 
techs, CL is a solid "old-economy" pick.  This consumer stock 
offers a low P/E and a good financial record for the long-term 
investor.  Since mid-March CL has seen a steady increase in its 
share price; although amid the recent tech shedding the stock 
emerged from the invisible constraint of its comfort zone at 
$55.  Despite the torrent of wide swings on the DOW, CL firmed 
at $59 and $60 this week.  On one hand it's demonstrating it 
can hold the higher price level, but on the other, resistance at 
$60 is proving quite formidable.  Conservatively wait for a 
definitive move through this mark on strong volume.  Trading 
volume was moderate this week so look for at least a return to 
2.25 mln or better.  Once CL makes a charge, the next challenge 
is at $6.75, the 52-week record high.  Upcoming earnings may 
also give CL the boost it needs.  The company is confirmed to 
report on April 19th, before the bell, and is expected to 
announce solid earnings.

In recent company news, Colgate-Palmolive filed with the SEC to 
sell as much as $800 mln of Debt Securities.  The proceeds will 
be used for general corporate purposes.  The S&P also raised the 
company's Senior Unsecured Rating to an A-plus from a Single-A.

***April contracts expire in two weeks***

BUY CALL APR-50 CL-DJ OI=2263 at $9.75 SL=6.75
BUY CALL APR-55 CL-DK OI= 796 at $5.00 SL=3.00
BUY CALL APR-60 CL-DL OI= 438 at $1.88 SL=1.00
BUY CALL MAY-60*CL-EL OI= 631 at $3.75 SL=2.00
BUY CALL MAY-65 CL-EM OI= 537 at $2.06 SL=1.00

Picked on April 4th at   $60.69    P/E = 40
Change since picked       -1.38    52-week high=$66.75
Analysts Ratings     3-10-5-0-0    52-week low =$40.50
Last earnings 12/99   est= 0.40    actual= 0.41
Next earnings 04-19   est= 0.37    versus= 0.32
Average Daily Volume = 2.25 mln
Chart =
 /charts/charts.asp?symbol=CL


****

DISH - Echostar Communications $72.88 (-6.13)(+2.88)

Serving up multimedia to the masses, DISH and its subsidiaries
deliver direct-to-home satellite television products and
services.  With four satellites, its DISH Network has the
capacity to provide over 300 channels of digital video, audio,
and data services.  The company offers direct broadcast
satellite (DBS) TV dishes and integrated receivers that
receive programming for about 3 million DISH Network
subscribers.  Echostar also provides satellite delivery of
local network stations in a few large markets and has partnered
with Microsoft to provide WebTV access through its DBS system.

Did you grab that entry point?  The weakness on Wednesday,
following black Tuesday served up two delicious entries - one
at the open and the other near the close.  Thursday and Friday
were similarly kind, as DISH paused occasionally to allow
investors to load up their plates before the next course of
gains.  As the NASDAQ surged toward the close on Friday,
investors grabbed themselves another helping, as DISH tacked on
nearly $3.  Moving above the $70 resistance level, DISH is now
sitting on the north side of the 10-dma (currently $71.38).  If
the markets can stay on the upside next week, look for DISH to
challenge its next resistance levels at $75 and $80.  Although
volume was about 20% below average on Friday, this is likely
symptomatic of the markets (Friday was a light volume day),
rather than of any weakness in DISH.  As earnings season
continues, look for the (hopefully) rising tide to serve up even
more gains.  DISH doesn't report until mid-May, so don't look
for that event to enter into the equation in the near future.
The health of our play will be predicated on continued strength,
and a pullback to the $70 area is buyable so long as it is
followed by a bounce.  A more cautious approach would be to wait
for a breakout above $75, confirmed by strong volume - if this
happens, feel free to help yourself to another serving.

Thursday's introduction of DISHLink, should garner positive
attention for the company in the weeks ahead.  DISHLink is
an affordable and convenient system for delivering broadband
content and video channels to the office desktop, and will
be demonstrated at the Sands Expo Center in Las Vegas from
April 10-13.

***April contracts expire in two weeks***

BUY CALL APR-70*HSW-DN OI=1690 at $6.88 SL=4.75
BUY CALL APR-75 HSW-DO OI=1966 at $4.00 SL=2.50
BUY CALL APR-80 HSW-DP OI=1403 at $2.69 SL=1.25
BUY CALL MAY-75 HSW-EO OI=1218 at $8.38 SL=6.00
BUY CALL MAY-80 HSW-EP OI= 169 at $6.38 SL=4.25

SELL PUT APR-65 HSW-PM OI= 226 at $2.06 SL=3.50
(See risks of selling puts in play legend)

Picked on Apr 04th at    $68.38     P/E = N/A
Change since picked       +4.50     52-week high=$81.25
Analysts Ratings      9-6-1-0-0     52-week low =$ 9.72
Last earnings 02/00   est=-0.55     actual=-0.97
Next earnings 05-15   est=-0.35     versus=-0.29
Average Daily Volume = 2.20 mln
Chart =
 /charts/charts.asp?symbol=DISH

****

KSS - Kohl's Corp. $106.19 (+3.69)(+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. 
 
No indecision here.  With many of the stocks at the NYSE taking
Friday off for any early weekend, Kohl's continued its move up
the charts.  KSS made another new high at $106.69, closing with
a gain of about 2.2%.  It was a rocky week for our retail play.
The drop on Wednesday to $95.13, and the subsequent bounce, did
provide several good entry points.  If you jumped in on the way
back up, your were rewarded handsomely for your efforts.  The
strength seen late this week came on the heels of the a favorable
retail sales report released Thursday morning.  Overall retailers
showed mixed results for March.  JC Penny and Target showed a
decline in their numbers, while Sears posted a gain of 3.8%.  
Our current favorite came in with an impressive performance,
reporting an increase of 6.8% in same-store sales.  Total sales
for the five week period ending April 3rd jumped 34.4%.  Analysts
were quick to point out the industry's mixed results were because
the Easter holiday comes three weeks later this year.  If that's
the case, we would look for Kohl's to have an outstanding April.
The positive sales report and the upcoming 2-for-1 split on April
25th could provide the momentum for Kohl's to continue to making
new highs.  The volume has been a bit light however, averaging
about 830K the past three sessions.  For the trend to remain
intact, we will need to see new buyers come to the table.  With
Friday's close in the upper end of its range, we would look for
higher prices next week.  If traders take profits early in the
week, $104, $102 or the 10-dma at $100.38 may be levels to target
shoot for new plays.

Chat rooms are questioning location of several of Kohl's new 
stores.  As we've said in the past KSS is not as well known as
many of their competitors.  They have recently got Wall Street's
attention, and competed very well in the market place.  The 38
year old company, will complete the Grand Opening of 19 new
stores Friday April 14th.

***April contracts expire in two weeks***

BUY CALL APR-100*KSS-DT OI=2565 at $ 8.63 SL=6.00
BUY CALL APR-105 KSS-DA OI= 188 at $ 6.00 SL=4.00
BUY CALL APR-110 KSS-DB OI= 244 at $ 3.75 SL=2.00
BUY CALL MAY-100 KSS-ET OI=  16 at $11.63 SL=8.50 low OI
BUY CALL MAY-105 KSS-EA OI= 172 at $10.38 SL=7.50

SELL PUT APR- 95 KSS-PS OI=734 at  $ 2.13 SL=3.75
(See risks of selling puts in play legend)

Picked on Mar 30th at    $99.56    P/E = 69
Change since picked       +6.63    52-week high=$106.69
Analysts Ratings      7-5-4-0-0    52-week low =$ 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 = 1.03 mln
Chart =
 /charts/charts.asp?symbol=KSS

****

WLA - Warner-Lambert Co. $103.94 (+6.25) 

Warner-Lambert has undergone a dramatic business transformation
during the last decade, a transformation marked by dynamic sales
and profit growth.  The introduction of breakthrough health care
and consumer products has helped lead the company's rise in
prominence.  To foster future growth WLA is expanding its role
in medical care by developing innovative pharmaceuticals.  They
also are striving to further bolster their position as a leader
in over-the-counter health care products.  WLA finds its top
competition coming from Bristol-Myers Squibb, Gillette and Merck.

It isn't that we are getting impatient, but since adding WLA,
it's been a bit of a struggle.  Actually the results could have
been worse.  Industry news this week could have put a real crimp
in our play, but WLA has managed to hold its own.  Analysts at
Paine Webber downgraded BMY, yet raised their price target for
the drug maker, which put a cloud over the whole drug sector on
Wednesday.  The analyst cited the Presidential campaign, and
decreasing chances of a major Medicare benefit this year, as the
reason for the downgrade in BMY.  WLA fell about 2.7% on the news,
however the volume was light.  Thursday's obstacle appeared in
the form of news from the government.  The Medicaid program will
revise the drug-pricing system used to reimburse doctors and
health-care providers for medicines.  A nationwide investigation
by state and federal agencies has revealed "a pattern of 
misrepresentations by some drug manufacturers of the average
wholesale prices", according to a letter signed by officials of
the national Medicaid fraud-control organization.  Analysts say
the revision of the Medicaid pricing system could hurt WLA and
other drugmakers.  WLA finished Thursday's session with a small
gain, and tacked on another 1.0% on Friday.  As we said, all
things considered WLA has held up well.  Our play could be at
a crossroads, however the damage this week has been minimal and
the volume light.  Technically, support is found at $101 and at
its 10-dma at $99.14.  The trend is still our friend, and would
look at further advances as an opportunity to buy calls.

Friday Shire Pharmaceuticals Group did lend support for WLA and
the drug sector.  The company announced a new study of its
Alzheimer's disease treatment Reminyl, shows the drug can help
patients function in daily life by boosting their memories and
sense of direction.  A five-month study showed patients taking
the drug scored "significantly better" in memory, language,
orientation and cognitive tests.

***April contracts expire in two weeks***

BUY CALL APR- 95 WLA-DS OI=6673 at $ 9.50 SL=6.50
BUY CALL APR-100*WLA-DV OI=4931 at $ 5.25 SL=3.25
BUY CALL APR-105 WLA-DA OI=1034 at $ 2.25 SL=1.00
BUY CALL JUL-100 WLA-GV OI=1645 at $11.13 SL=8.25
BUY CALL JUL-105 WLA-GA OI=4053 at $ 8.75 SL=6.25

SELL PUT APR-100 WLA-PV OI= 411 at $ 1.13 SL=2.50
(See risks of selling puts in play legend)

Picked on Apr 04th at   $105.50    PE = 53
Change since picked       -1.56    52 week high=$106.75
Analysts Ratings     12-4-8-0-0    52 week low =$ 60.81
Last earnings 01/00   est= 0.52    actual= 0.55 
Next earnings 04-19   est= 0.56    versus= 0.45
Average daily volume = 3.73 mln
Chart =
 /charts/charts.asp?symbol=WLA


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

You want capitulation?  It doesn't get much better than what we
saw this past week.  Remember last week, we weren't convinced
that the drop to 4350 was the end of the decline, as the VIX was
not confirming a market bottom.  Well this past Tuesday, we got
the mother of all LEAPS buying opportunities, as the VIX leaped
to the north side of 35 and several of our current plays (NT,
TXN, NSM, ERICY) dropped to their respective 100-dmas.  As the
VIX began rolling over, and the broad markets began a swift
recovery from the selloff, those of you that were vigilant
were presented with some delicious entry points.  We are now in
the midst of April earnings and with enthusiasm up, this is not
the optimum time to be buying LEAPS; unless you are presented
with the incredible values found last Tuesday.  The VIX has now
dropped into the mid-20's again, closing the week at 26.94.
Don't rush out to buy at these current levels; instead, use the
excitement of earnings to take profits on your winners ahead of
the summer doldrums.  That way you'll be flush with cash as more
attractive entry points present themselves over the months
ahead.  As if the turmoil in the markets and the approach of the
summer vacation lull wasn't enough, we still have the FED
rattling its rate-hike saber and bemoaning the imminent (How
soon is imminent?) arrival of rampant inflation.  With all of
this uncertainty, make sure you protect your profits and only
enter new positions when presented with an attractive entry
point.  As Jim Brown frequently reminds us, trade only when
it is profitable to do so.

Current Plays

SYMBOL  SINCE     LEAPS         SYMBOL   PICKED   CURRENT  RETURN

EMC    11/07/99  JAN-2001 $ 80  ZOH-AP   $15.38   $71.50   365.04%
                 JAN-2002 $ 90  WUE-AR   $19.00   $74.50   292.11%
GPS    11/07/99  JAN-2001 $ 40  ZGS-AH   $ 5.75   $12.63   119.57%
                 JAN-2002 $ 45  WGS-AI   $ 7.88   $15.00    90.48%
IBM    11/07/99  JAN-2001 $100  ZIB-AT   $13.63   $34.13   150.46%
                 JAN-2002 $110  WIB-AB   $16.50   $38.13   131.06%
CSCO   11/14/99  JAN-2001 $ 40  ZCY-AH   $ 9.56   $39.13   309.26%
                 JAN-2002 $ 90  WIV-AI   $11.00   $40.50   268.18%
GE     11/21/99  JAN-2001 $150  ZGR-AU   $16.25   $29.00    78.46%
                 JAN-2002 $150  WGE-AU   $25.50   $42.25    65.69%
NT     11/28/99  JAN-2001 $ 75  ZOO-AO   $22.25   $60.75   173.03%
                 JAN-2002 $ 75  WNT-AO   $30.25   $70.63   133.47%
VOD    12/05/99  JAN-2001 $ 50  ZAT-AJ   $10.75   $15.88    47.67%
                 JAN-2002 $ 50  WHV-AJ   $15.00   $21.75    45.00%
TXN    12/12/99  JAN-2001 $110  ZTN-AB   $22.25   $69.50   212.36%
                 JAN-2002 $120  WGZ-AD   $28.50   $76.13   167.11%
NXTL   12/19/99  JAN-2001 $ 90  ZFU-AR   $23.50   $63.00   168.09%
                 JAN-2002 $100  WFU-AT   $27.25   $67.75   148.62%
SUNW   12/19/99  JAN-2001 $ 80  ZJX-AP   $17.63   $33.75    91.49%
                 JAN-2002 $ 90  WJX-AR   $22.00   $38.75    76.14%
CY     01/16/00  JAN-2001 $ 40  ZSY-AH   $ 9.13   $25.75   182.19%
                 JAN-2002 $ 40  WSY-AH   $12.63   $30.50   141.58%
ERICY  01/30/00  JAN-2001 $ 65  ZYD-AM   $19.75   $35.50    79.75%
                 JAN-2002 $ 65  WRY-AM   $27.00   $43.75    62.04%
MSFT   01/30/00  JAN-2001 $100  ZMF-AT   $17.63   $11.63   -34.04%
                 JAN-2002 $110  WMF-AB   $21.63   $17.25   -20.23%
NSM    02/27/00  JAN-2001 $ 70  ZUN-AN   $18.50   $17.25     8.11%
                 JAN-2002 $ 70  WUN-AN   $24.25   $20.00    26.69%
AOL    03/12/00  JAN-2001 $ 60  ZKS-AL   $14.00   $19.13    36.61%
                 JAN-2002 $ 65  WAN-AM   $18.63   $24.25    30.20%
AXP    03/12/00  JAN-2001 $130  ZXP-AF   $21.75   $28.63    31.61%
                 JAN-2002 $140  WXP-AH   $28.00   $35.63    27.23%
WM     03/19/00  JAN-2001 $ 25  ZWI-AE   $ 5.00   $ 5.63    12.50%
                 JAN-2002 $ 30  WWI-AF   $ 5.38   $ 6.00    11.63%
QCOM   03/26/00  JAN-2001 $150  YQO-AJ   $39.25   $41.88     6.69%
                 JAN-2002 $160  XQO-AL   $52.88   $56.25     6.38%

        
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

WM - Washington Mutual $26.38

Although it won't give you the stellar gains of EMC or QCOM,
WM is an inexpensive way to play the recovery in the Financial
sector.  With the Jan-2002 $30 LEAP trading at a mere $6, this
one is affordable for all but the smallest accounts.  Bottoming
out near $22, WM headed higher with the rest of the Financials
in mid-March.  The last week has seen a weakening of the sector
and hence WM becomes our L.O.W.  It has been encouraging to see
the drop in volume that has accompanied the falling price.
Caught between resistance at the 200-dma ($29.13) and support
between $25-26 (the 100-dma is at $25.50), WM may be worth
playing for some quick profits.  Look for a bounce near support,
confirmed by increasing volume to trigger your entry.  The move
up will likely be signaled by a move in the entire Banking
group, so use the sector as confirmation on both your entry
and exit points on WM.

BUY LEAP JAN-2001 $30.00 ZWI-AE at $5.63
BUY LEAP JAN-2002 $30.00 WWI-AF at $6.00
Chart =
 /charts/charts.asp?symbol=WM


New Plays

No new plays this week.


Drops

LU $59.75 Tossed about in the stormy markets, LU appears to
have no rudder, no sails, and no captain.  As if that wasn't
bad enough, the ship is taking on water.  After the storm on
Tuesday, LU couldn't make any headway and slipped further from
view, closing below $60 for the first time in six weeks.  As the
NASDAQ charged to new highs last month, it looked like LU might
be finding its way higher, but recent action proves it was just
caught in the currents of the market.  LU did manage to fight
its way to the low $70's before the tide turned, and cast the
stock adrift.  As the summer doldrums approach, we are taking to
the lifeboats; a more seaworthy craft is bound to come by soon.



*****************
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.

****

IIJI - Internet Initiative Japan Inc $66.50 (-3.25)(-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. 

IIJI defined Internet volatility this week.  On Monday, IIJI 
easily shed $8.63, or 12.4% and slipped through the historical 
support level at $65.  If that wasn't enough, the momentum 
snowballed on Tuesday.  IIJI gave us the big upset we were hoping 
for and dived another 9.2% to bottom support at $50!  Recall in 
the prior week, IIJI's downtrend got a shot of adrenaline from 
Goldman Sach's Abby Joseph Cohen remarks concerning trimming 
stock holdings and Templeton Fund's Mark Mobius' warning that 
many Internets are overvalued and due for a 50-90% corrections.  
While this huge drop to bottom support was welcome, it came 
quick.  Therefore it wasn't unusual to see an initial bounce off 
this level.  However we warned of an impending rebound because 
investors could see the massive drop as a prime buying 
opportunity.  In fact on Wednesday, some bargain hunters started 
nibbling, but the higher share prices couldn't hold up even with 
the markets in rally mode.  Currently IIJI is still below the 
10-dma ($67.50) and in the near vicinity of higher support at 
$65.  Although this position is not reproachable, we do need to 
see downward movement from here.  A convincing slide through the 
5-dma (now at $61.88) would certainly improve our confidence in 
this put play.  Friday's close on the intraday low did however 
provide optimism for the near-term.  Plus the MACD, MOM, and 
Stochastic technicals are still in the red zone.

***April contracts expire in two weeks***

BUY PUT APR-70*IUJ-PN OI= 48 at $7.63 SL=5.25
BUY PUT APR-65 IUJ-PM OI=130 at $4.75 SL=2.75

Average Daily Volume = 393 K
Chart =
 /charts/charts.asp?symbol=IIJI

****

LVLT - Level3 Communications Inc $90.13 (-15.63)

Level3 Communications is a global telecommunications and 
information services company that is building an international 
fiber-optic network based on internet protocol (IP).  Their 
focus is primarily on the business market.  Services include 
local, long distance, and data transmission as well as other 
enhanced services. Currently they serve 20 cities in the US and 
Europe.  LVLT also has its hands in the coal mining business.    

The widespread market decline earlier in the week pummeled 
LVLT's share price by 15%.  While telecom and high-flying 
Internets suffered sharp pullbacks, many are now snapping back 
and recovering nicely.  LVLT is not.  It appears it doesn't have 
the vitality to lift it back up above its previously steadfast 
support of $100.  On Thursday, there wasn't even a sign of 
recognition from investors when Banc of America Securities 
reiterated its Strong Buy recommendation.  Plus the Nasdaq was 
in rally mode and LVLT simply continued to rollover.  Now that's 
a bearish sentiment.  The 5 and 10 DMA measurements are also in 
our favor.  LVLT is well below $96.54 and $103.07, respectively.  
The 200-dma ($78.66) indicator may however pose opposition as 
it's in the proximity of historical support at $80 and $83.  
On Friday, LVLT did manage a small gain and traded above $90 
for a short time, but couldn't maintain any upward momentum.  
Technically the MACD, MOM, and Stochastic are pointing south and 
LVLT is clearly establishing a pattern of lower-highs.  Still 
it's always a good idea to keep trailing stops in place for 
protection.  Entries into this technical-momentum play?  
Downward bounces off $90 are reasonable yet the more 
conservative will wait a definitive move through $87 and/or $85.  
Let's also keep any eye on the approaching earnings' date of 
April 18th.  The company is now confirmed to report before the 
bell.  As an FYI note, LVLT is a split-candidate above $80.  
Simply be aware of potential investor exuberance as this date 
approaches. 

***April contracts expire in two weeks***

BUY PUT APR-100 QHN-PT OI= 632 at $13.50 SL=10.00
BUY PUT APR- 95*QHN-PS OI=2049 at $ 9.75 SL= 6.75

Average Daily Volume = 2.92 mln
Chart =
 /charts/charts.asp?symbol=LVLT

****

ICGE - Internet Capital Group Inc. $72.69 (-17.63)

Like a little CMGI, Internet Capital Group is an Internet 
company actively engaged in business-to-business e-commerce 
through a network of partner companies.  It provides operational 
assistance, capital support, industry expertise, and a strategic 
network of business relationships intended to maximize the 
long-term market potential of more than 60 business-to-business 
e-commerce partner companies.  Headquartered in Wayne, Pa., 
Internet Capital Group also has offices in San Francisco, 
Boston, Seattle and London. 

Not even Robbie Stevens' Friday morning upgrade from Buy to 
Strong Buy and a price target of $250 could get their "favorite 
pick in the B2B space" to move up.  ICGE lost $1.19 on Friday 
while the rest of the NASDAQ gained 178 points.  And that's just 
the tip of iceberg.  Multiply that by five days of similar 
performance and you have relative strength weakness.  
Technically, ICGE was on a downhill course before Tuesday's major 
sell-off.  It's last gasp came at $80 just before the black 
vortex sucked it to under $56.  While the rest of the market has 
come back roughly 700 points since, ICGE can't hold its head 
above $80, a critical level of support/resistance as far back as 
November and early December.  Not only that, but volume remains 
high compared to the ADV.  Sellers are showing up on any 
strength.  Intraday support is just under $72, however, the daily 
highs are getting lower, which tells us that ICGE could keep 
sliding even while times are good.  And with any market weakness, 
it could completely lose its footing down to the next level of 
support at $60.

***April contracts expire in two weeks***

BUY PUT APR-75*EUG-PO OI= 64 at $ 7.63 SL=5.50
BUY PUT APR-70 EUG-PN OI=346 at $ 4.88 SL=3.00
BUY PUT MAY-75 EUG-QO OI= 55 at $12.50 SL=9.25
BUY PUT MAY-70 EUG-QN OI=103 at $ 9.50 SL=6.50

Average Daily Volume = 3.95 mln
Chart =
 /charts/charts.asp?symbol=ICGE

****

KO - The Coca-Cola Company $46.19 (-0.75)

The Coca-Cola Company is the largest manufacturer, distributor
and marketer of soft drink concentrates and syrups in the world.
The company's products include all of the Coca-Cola brand drinks,
Minute Maid, Sprite, Barq's root beer, and Powerade among others.
It sells more than 160 brands of beverages in some 200 nations.
About two-thirds of its sales come from outside the US.  The
company commands 51% of the global soft-drink market.  Coca-cola
claims that its products account for a mere 2% of global daily
fluid intake -- for now.

Would you like a Coke with that bitter pill?  Investors have been
swallowing a lot of bitter news from KO over the past year.  Most
recently, executives lowered the long-term earnings per share
growth rate to 15% from 20%.  The high bar for earnings growth
was established a decade ago by Robert Gouizetta, Coke's famed
and accomplished CEO.  After Gouizetta's tragic passing away,
Douglas Ivester took the reigns of KO in late 1997 and problems
mounted.  The company faced a product contamination scare in
Europe and a discrimination lawsuit in the US.  After poor
results, this February Ivester resigned as CEO from the
beleaguered soft drink behemoth.  Company officials recently
announced a complete restructuring of operations, including 5,200
job cuts.  Coke's Indian unit said Friday that as a part of the
company's streamlining efforts they will take a $400 mln charge
in the first quarter of 2000.  The recent announcements and
continued selling pressure has KO precariously hovering above 
its 52-week low.  After hitting a low of $42.88 a month ago, KO
enjoyed a brief relief rally.  The stock now looks poised to
retest its low in light of the recent developments.  We mentioned
last Thursday that KO might rally after its sharp decline.  Well
it didn't exactly rally, but the stock did manage to edge higher
Friday.  KO is finding resistance at its descending 10-dma,
currently at $47, and support at $45.  Watch for selling to
resume if support fails, where the stock could retest its 
52-week low.

Goldman Sachs analysts lowered their 2000 and 2001 earnings per
share estimates last week.  Goldman said they lowered Coke's 2000
estimates to $1.43 a share from $1.45.  They rate shares of KO as
a Market-performer.  While PaineWebber maintains its Buy rating
on KO and said the stock may "take a breather."

***April contracts expire in two weeks***

BUY PUT APR-50 KO-PJ OI=3255 at $4.13 SL=2.50
BUY PUT APR-45 KO-PI OI=5572 at $1.00 SL=0.00 High Risk!
BUY PUT MAY-45*KO-QI OI=6456 at $2.00 SL=1.00

Average Daily Volume = 5.13 mln
Chart =
 /charts/charts.asp?symbol=KO

****

FDRY - Foundry Networks $120.13 (-23.63)

Foundry Networks is a leader in high performance end-to-end 
switching and routing solutions including Internet routers, 
Layer 3 switches and Internet Traffic Management switches.  
Their products are installed in the world's largest ISPs 
including AOL, MindSpring, AT&T WorldNet, MSN, and Cable & 
Wireless.  Foundry products are also installed in large 
enterprise, entertainment, pharmaceutical and manufacturing 
companies as well as search engines, e-commerce sites, 
universities and government organizations.  

Here's a case of relative weakness compared to others in the 
switch/router/network equipment sector.  FDRY has been in a 
downtrend anyway since early March when it reached a closing 
high over $207.  While it has returned from a sell-off low of 
$90, FDRY doesn't appear to be able to hold $120, a previous 
level of support.  This is especially troubling when compared 
to say Cisco, an issue that barely hiccuped last week (Tuesday 
afternoon excepted).  Despite the announcement that they would 
have new products to compete with the fastest products currently 
available from Cisco and Juniper, investors have barely noticed.  
Instead, FDRY is again knocking on short-term resistance at 
the 10-dma of roughly $129, which also happens to be the level 
from which it fell beginning Monday.  If the market rolls over, 
and we think that's possible given the 700 point NASDAQ rally, 
FDRY could easily find itself at $100 again.  That's a level of 
resistance found in November before the breakout, which became 
support in January, and gain on Wednesday.  We think any move 
down from $129 should make a good entry, or if you want more 
confirmation, consider waiting for a move under $120 with stepped 
up volume.  This will be representation that sellers are in 
control and moving the issue down.  However, if it breaks out 
over $130 with volume, forget it and move on to another play.  
One item that could trip up this play is if daytraders decide 
to use it for an earnings run vehicle over the next four days 
until it reports earnings on Thursday, April 13th.  (confirmed 
with IR)  The company has reported upside surprises the last 
two quarters and could do so again.  Judging by the total open 
interests of April puts and calls, they are about even.  That 
tells us that the expectation of future performance is really 
low, and that the worst expectation is already priced in.  Any 
good news might be met with buying activity, thus moving the 
price up.  Take this analysis with a grain of salt though because 
there are statistically too few contracts open or traded to give 
the analysis full credibility (it's just another indicator).  
It looks like a loser to us, but tread carefully.

***April contracts expire in two weeks***

BUY PUT APR-125*OQ-PE OI=285 at $13.75 SL=10.25
BUY PUT APR-120 OQ-PD OI=139 at $10.75 SL= 8.00

Average Daily Volume = 1.05 mln.
Chart =
 /charts/charts.asp?symbol=FDRY

****

LU - Lucent Technologies $59.75 (-1.50)

Lucent Technologies designs and delivers the systems, software, 
silicon and services for next-generation communications networks 
for service providers and enterprises.  Backed by the research 
and development of Bell Labs, Lucent focuses on high-growth 
areas such as optical and wireless networks; Internet 
infrastructure; communications software; communications 
semiconductors and optoelectronics; Web-based enterprise 
solutions that link private and public networks; and 
professional network design and consulting services.

Look out below, may have been what traders were uttering as
they walked off the trading floor on Friday.  Since the first
of March traders have been unkind to the communications company.
Lucent announced early in the month it intends to spin-off 
their Enterprising Networking division, Pbx, Systimax Cabling
Unit, into a separate company.  On the news LU jumped about $15,
back to the $75 level.  Investors still smarting after Lucent's
poor first quarter performance, took the surge in price as an
opportunity to get out.  At this point it seems as though the
old cliche of "burn me once, it's your fault, burn me twice, its
my fault" is alive and well.  Investors are simply gun-shy when
considering an investment in LU stock.  They are schedule to
report second quarter results April 19th, and it seems there may
be no earnings run in sight, unless it's a run south.  Friday 
investors ran alright, ran for cover, as Lucent lost 3.5%, with
12.5 million shares changing hands.  On Tuesday, the low was 
$55.75 and if Friday's trade is any indication of things to come,
we may see that level again soon.  On Monday analysts at Dresdner
Kleinwort Benson initiated coverage of Lucent with a Buy rating,
but to no avail.  Until they can redeem themselves, with solid
earnings it could be an uphill battle.  One look at the chart
shows how tall that hill may be.  A bounce back to the $61 to
$62 area followed by further weakness may provide a good entry
point for our new play.  Otherwise further selling would be a
chance to jump on board.

***April contracts expire in two weeks***

BUY PUT APR-65 LU-PM OI=17862 at $6.25 SL=4.25
BUY PUT APR-60*LU-PL OI=21673 at $2.88 SL=1.50
BUY PUT MAY-60 LU-QL OI= 6529 at $4.50 SL=2.75

Average daily volume = 22.2 mln
Chart =
 /charts/charts.asp?symbol=LU

****

FIBR - Osicom Technologies $70.25 (-42.00)

Osicom is a Santa Monica, California-based business which
designs, manufactures and markets integrated networking and
bandwidth aggregation products for enhancing the performance 
of data and telecommunications networks.  The Company's 
products are deployed to telephone companies, ISPs and
corporate/campus environments to provide transport within 
and access to their networks.  They also market remote access 
servers and make embedded networking chips.  Their competition 
comes from Cisco Systems, Lucent and Nortel Networks.

FIBR has traveled a rocky path so far this month.  In just the
last 5 sessions, FIBR has lost about 38% of it market cap.  While
admittedly the NYSE and Nasdaq saw a steep sell-off earlier this
week, many of the tech stocks have rebounded.  Not FIBR, it just
keeps losing ground.  Unfortunately there seems to be little for
investors to look forward to, which is keeping pressure on the
optical and network technology company.  In late March, FIBR 
reported fiscal fourth-quarter results.  On the bright side
revenues and gross margins did increase.  The bottom line showed
a loss of $4.9 million or -$0.44 per share.  At that time they
also announced a management buyout of its Far East division,
which reported a loss of $9.8 million in the fourth quarter.
Osicom recorded a loss of an estimated $3.6 million on the sale
of the division.  We realize the word "loss" just keeps creeping
into this play, and for now that appears to be what lies ahead
for FIBR.  Estimates for the current quarter are for the losses
to improve, to about -0.14.  The one broker following the company
must be a die-hard, as they do have the company listed as a
Strong Buy.  FIBR has initial support near $64 and then not again
until the $60 level.  With the decline this week so steep, FIBR
could see a bounce back to its 5-dma at $81.39, so be cautious. 

***April contracts expire in two weeks***

BUY PUT APR-80*QFW-PP OI=238 at $16.63 SL=12.00
BUY PUT MAY-75 QFW-QO OI=  6 at $18.38 SL=13.00 low OI
BUY PUT MAY-65 QFW-QM OI= 13 at $12.13 SL= 9.00 low OI

Average Daily Volume = 392 K
Chart =
 /charts/charts.asp?symbol=FIBR


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

The Option Investor Newsletter             4-9-2000  
Sunday                        5 of 5


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

Technical Analysis: When is a trend at an end?

Today we continue our discussion of fundamental technical analysis
with an evaluation of the most common reversal signals.  For those
traders who study chart formations, it is not necessary to know
the cause of a market condition, rather it is only important to
understand there is a relationship between the historical pricing
of an issue and its future potential.  While there are no simple
maxims or directives which will absolutely prevent loss and ensure
profits, we can use the knowledge of basic patterns and formations
to maximize our trading success.

Just as all good things must end, so too will trends invariably
wither and fade away, generally to be replaced by a new direction
or character.  Unfortunately, trying to identify every unique
situation in which these changes tend to occur is impossible.  We
can however become familiar with the basic formations that often
precede the change.  First are the common reversal patterns such
as multiple tops and bottoms as well as head-n-shoulders patterns.
The presence of an exhaustion gap, climax pattern or an island
formation may also signal a trend reversal and break-outs from
channels or through trend-lines can provide early indications of
a character change.  The decision points with classic patterns are
clearly defined but the most difficult assessment comes when the
issue achieves a new high, then retraces slightly before continuing
upward, but fails to penetrate the previous level.  Is it simply a
prolonged consolidation or the beginning of a correction?  While
we can't possibly know the answer, the key is to be aware that the
trend may be coming to an end.
 
In the stock market, success is based on profit and loss.  To be
successful, you must learn to remain in a position while it is
profitable and get out when the trade begins to lose its potential.
Identifying a technical change in character is one method that can
help you reduce the losses that occur when a position is held past
the point of maximum potential.  The first step is to evaluate the
primary trend and its boundaries.  As long as the trend is intact;
the issue remains above a trend-line or short-term moving average,
no action is taken.  When the issue penetrates the trend-line, a
new set of lines is drawn on a parallel, horizontal axis with the
upper line at the current high (failed rally point) and the lower
line at the recent minor low.  The new boundaries will define a
box pattern or channel and when the issue closes below the channel,
it should be sold (or the associated call-option position closed).

Here is an example:





It's a very simple system that anyone can use.  When the market
fails to make a new high, the trend is in jeopardy.  A move below
the lower boundary (the recent minor low) indicates that a major
change in character is occurring.  Unexpected news or earnings
data is often the cause of this type of reaction and if the issue
fails to close above the previous support area, a new downtrend is
likely to follow.  Occasionally, the issue may recover and attempt
to remain in the channel.  If the trend begins to move sideways in
an indecisive fashion, a trading range will emerge.  At that point
you must monitor the issue for a breach of the boundaries of the
prevailing trend.  A key test will occur when the price approaches
the extreme channel limits - where buyers and sellers get nervous.
A continuation pattern or a significant correction will eventually
emerge and that outcome will determine the new primary trend for
the issue.

With any technical trading system, correctly placed entry and exit
STOPS are mandatory.  Using this technique, the exit strategy for
investors is quite simple.  A stop is placed below the recent
minor low, allowing for a small amount of retracement in the event
of a short-term market correction.  For traders, the task is more
difficult as the goal is to maximize profits and also avoid being
in the position during stagnant periods.  Experienced technicians
would suggest a STOP below the trend-line and near the top of the
last area of congestion.  That location affords the highest level
of profit and yet prevents any significant loss.

Next week, we will evaluate another successful system for position
management.

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  18.50   APR  17.50  6.00  *$  2.41  13.9%
PXD    10.50   9.88   APR  10.00  1.13   $  0.51   7.9%
BIDS    7.13   5.63   APR   5.00  2.63  *$  0.50   6.9%
FSI    15.63  16.00   APR  15.00  1.25  *$  0.62   6.2%
PRGS   23.44  21.00   APR  20.00  4.25  *$  0.81   6.1%
COB    14.13  12.19   APR  10.00  5.00  *$  0.87   5.9%
AND    12.75  10.88   APR  10.00  3.38  *$  0.63   5.8%
CRCL   27.63  26.63   APR  22.50  6.25  *$  1.12   5.7%
EPTO   14.00  11.00   APR  10.00  4.75  *$  0.75   5.0%
ELIX   26.00  24.25   APR  20.00  6.88  *$  0.88   5.0%
TRMB   24.75  24.31   APR  20.00  5.63  *$  0.88   5.0%
R      22.69  24.63   APR  17.50  5.75  *$  0.56   4.8%
VANS   16.13  17.06   APR  15.00  1.75  *$  0.62   4.7%
POSS   12.56   9.88   APR  10.00  3.25   $  0.57   4.4%
MUEI   14.50  12.88   APR  12.50  2.81  *$  0.81   4.3%
IGEN   28.25  22.00   APR  22.50  6.88   $  0.63   2.6%
TLXN   25.75  19.00   APR  20.00  7.13   $  0.38   1.5%
MAIL   17.25  14.19   APR  15.00  3.00   $ -0.06   0.0%
FSII   22.88  18.00   APR  20.00  4.75   $ -0.13   0.0%
CYCH   14.38  11.25   APR  12.50  2.69   $ -0.44   0.0%
SCUR   22.88  15.88   APR  17.50  6.50   $ -0.50   0.0%
AND    16.13  10.88   APR  12.50  4.75   $ -0.50   0.0%
MPPP   29.25  18.38   APR  20.00 10.25   $ -0.62   0.0%
EPTO   16.94  11.00   APR  12.50  5.25   $ -0.69   0.0%
CYOE   12.06   8.56   APR  10.00  2.69   $ -0.81   0.0%
CRAY    8.81   5.94   APR   7.50  2.00   $ -0.84   0.0% New Ticker
CBSI   25.75  20.25   APR  22.50  4.38   $ -1.12   0.0%

NUHC   22.13  20.06   MAY  17.50  6.00  *$  1.37   5.3%
CNJ     8.13   6.56   MAY   7.50  1.50   $ -0.07   0.0%

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

Comments:

Tera Computer is now called Cray (CRAY) as it completed the sale 
from SGI.  Several of the above issues are testing support areas:
150 dma's; previous lows; long term trend-lines.  Closing below
a technical support area increases the probability for further
downside movement and when this occurs, exiting the position is
the most viable way to preserve capital.  In the Summary Section,
we will exit a position when the underlying issue penetrates and
remains below one or more of these areas (on a closing basis).

Positions Closed:

3do Company (THDO), Information Architects (IARC), Esc Medical
(ESCM), Beyond.Com (BYND), Rmi.Net (RMII).


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

INSUA  33.06  APR  30.00  ISQ DF  3.88 57   29.18  2.8%   2.8%
PAIR   19.44  APR  15.00  PQG DC  4.88 903  14.57  3.0%   3.0%
R      24.63  APR  20.00    R DD  5.50 687  19.13  4.5%   4.5%

ANET   10.56  MAY   7.50  QTE EU  3.63 10    6.93  8.2%   8.2%
MATK   15.50  MAY  12.50  KQT EV  4.13 20   11.37  9.9%   9.9%
MRL    26.88  MAY  25.00  MRL EE  3.25 417  23.63  5.8%   5.8%
PSSI    9.13  MAY   7.50  PYQ EU  2.19 1107  6.94  8.1%   8.1%

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

R      24.63  APR  20.00    R DD  5.50 687  19.13  4.5%   4.5%
PAIR   19.44  APR  15.00  PQG DC  4.88 903  14.57  3.0%   3.0%
INSUA  33.06  APR  30.00  ISQ DF  3.88 57   29.18  2.8%   2.8%

MATK   15.50  MAY  12.50  KQT EV  4.13 20   11.37  9.9%   9.9%
ANET   10.56  MAY   7.50  QTE EU  3.63 10    6.93  8.2%   8.2%
PSSI    9.13  MAY   7.50  PYQ EU  2.19 1107  6.94  8.1%   8.1%
MRL    26.88  MAY  25.00  MRL EE  3.25 417  23.63  5.8%   5.8%


Company Descriptions

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

****

INSUA - Insituform Technologies  $33.06   *** Technicals Only***

Insituform Technologies is a worldwide provider of technologies
and services for rehabilitating municipal sewers, water mains and
industrial pipes without digging and disruption.  Since 1971,
Insituform has rehabilitated more than 7,500 miles of underground
piping systems for cities and industrial plants throughout the
world.  Insituform's methods allow them to repair and rehabilitate
pipelines from inside the pipe, allowing for the repair of pipeline
in difficult-to-access areas, as well as saving the expense of 
excavation.  Insituform has had record operating income for seven
consecutive quarters and investors have noticed.  The stock has
been climbing since early 1998 and shows no sign of stopping.  A
reasonable entry point on a bullish issue for those with a long 
term outlook.

APR 30.00 ISQ DF Bid=3.88 OI=57 CB=29.18 RC=2.8% RNC=2.8%

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

****

PAIR - PairGain  $19.44  *** Conservative Speculation ***

PairGain is the leader in the design, manufacture, marketing and
sale of DSL networking systems.  Service providers and private
network operators worldwide use PairGain's products to deploy
DSL-based services such as high-speed Internet access, remote LAN
access and enterprise LAN extension.  More than 1.7 million
PairGain DSL nodes are installed in over 100 countries.  PairGain
recently introduced its StarGazer4.0 Element Management System,
which enables its customers to remotely configure DSL line
profiles, monitor equipment performance in real time and easily
identify any system failures, all from one integrated system. 
In February, PairGain agreed to be acquired by ADC Telecom (ADCT)
where each common share of PAIR will be converted into 0.43 of a 
common share of ADCT with a fixed exchange ratio.  The transaction,
subject to approval, is expected to close before August.  New 
option interest and the inflated premiums caused by speculative 
call-buyers offer a short-term conservative entry point.

APR 15.00 PQG DC Bid=4.88 OI=903 CB=14.57 RC=3.0% RNC=3.0%

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

****

R - Ryder System  $24.63  *** Restructuring ***

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.  This week's correction did 
little to hinder Ryder, which rebounded quickly.  Thursday's
announcement that Ryder is combining the Company's two European
business units, helped the stock take out the March high.  The
move on heavy volume suggests the January high will soon be
breached, as investors cheer Ryder's global restructuring.

APR 20.00 R DD Bid=5.50 OI=687 CB=19.13 RC=4.5% RNC=4.5%

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

****

ANET - ACT Networks  $10.56  *** Asian Expansion ***

ACT Networks develops, manufactures, and markets multi-services
access products that enable the convergence of voice, video and
data onto one managed network.  Service providers and enterprise
customers use ACT Networks' products to build converged networks
that are bandwidth efficient, cost-effective and easy to manage.
The company's most significant product offerings are NetPerformer
and ServiceXchange.  Though last quarter was disappointing, new
distribution agreements with Sumitomo (in Japan), as well as LAN
Systems, Cisco's largest second tier distributor in Australia,
bode well for the future.  ANET's Netperformer was just selected
by China and could lead to a very productive spring build season.
The issue recently corrected, but with Friday's volume supported 
rebound off support (November - February consolidation area),
ANET has confirmed a six month trendline and moved back above
its 150 dma.  Earnings are due near the end of April. 

MAY 7.50 QTE EU Bid=3.63 OI=10 CB=6.93 RC=8.2% RNC=8.2%

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

****

MATK - Martek Biosciences  $15.50  *** New Infant Formula? ***

Martek develops, manufactures and sells products from microalgae. 
The company's products include: specialty, nutritional oils for 
infant formula, nutritional supplements and food ingredients; 
high value reagents and technologies to visualize molecular 
interactions for drug discovery and development and; new, powerful
fluorescent markers for diagnostics, rapid miniaturized screening,
and gene and protein detection.  Those investors that picked up a
March issue of Developmental Medicine & Child Neurology, and read
about the study that demonstrated a significant improvement in
the mental development of term infants fed formula supplemented 
with two essential nutrients produced by Martek, were able to
ride the rocket ship up.  The stock quickly came back to earth 
with the general biotech selloff, but the future still looks 
bright.  On Tuesday, Abbott Labs (ABT) signed a non-exclusive 
license agreement for Martek's technology relating to the use 
of long-chain polyunsaturated fatty acids in infant formulas.
This caused another jump (much more modest) in price and the
recent speculation has inflated the option premiums.  We favor
a cost basis near long term support on a potentially hot issue.
Research thoroughly!

MAY 12.50 KQT EV Bid=4.13 OI=20 CB=11.37 RC=9.9% RNC=9.9%

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

****

MRL - Marine Drilling  $26.88  *** Oil Service Sector ***

Marine Drilling Companies is engaged in offshore contract
drilling of oil and gas wells for independent and major oil and
gas companies.  Operations are conducted in the U.S. Gulf of
Mexico and internationally.  They own and operate a fleet of 18
offshore drilling rigs.  The oil service sector is heating up 
with profitability expected in the second half of the year,
as independent and national oil firms ramp up oil and gas 
exploration and production spending.  Marine Drilling is one 
of the few expected to turn in a first quarter profit with the 
company capitalizing on the strength of the Gulf of Mexico market
where it is the fourth largest rig operator.  The position offers 
favorable speculation with a reasonable cost basis supported by
several upgrades and a bullish chart.  Earnings are due near the
end of April.

MAY 25.00 MRL EE Bid=3.25 OI=417 CB=23.63 RC=5.8% RNC=5.8%

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

****

PSSI - PSS World Medical  $9.13  *** What's Up? ***

PSS World Medical is a specialty marketer and distributor of
medical products to physicians, alternate-site imaging centers,
long-term care providers, home care providers, and hospitals
through 111 service centers to customers in all 50 states and
three European countries. Back in January, PSS announced that 
it has engaged DLJ Securities to advise its Board in considering
various strategic alternatives to maximize shareholder value, 
including alternatives which may involve the entire Company or
its separate operating divisions.  This was after the PSS missed
earnings and was subsequently downgraded.  The stock dropped 
nearly a third and has been languishing around $6.75.  Until 
Wednesday anyway...then a 50% rise in price with no news?  PSS
said they wouldn't comment further on any strategic alternative
"until it is completed."  Is the tape telling us something the
company isn't?

MAY 7.50 PYQ EU Bid=2.19 OI=1107 CB=6.94 RC=8.1% RNC=8.1%

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


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

Naked Put Percentage List

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


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

A      122.00   120     A-PD    6.13   3050   20%     115
AFFX   131.13   130   FIQ-PF   13.75   3278   42%     125
CHKP   196.48   175   YKE-PO   14.13   4912   29%     175
CIEN   132.50   120   EUQ-PD    4.88   3313   15%     115
CMGI    93.75    90   GCD-PR    5.00   2344   21%      90
CMRC   140.00   130   RJC-PF    6.25   3500   18%     125
CMVT    89.25    85   CQZ-PQ    5.38   2231   24%      85
DIGL    71.00    65   DGU-PM    3.75   1775   21%      65
ELON    65.00    55   EUL-PK    3.63   1625   22%      55
ENTU    75.13    65   QYE-PM    3.00   1878   16%      65
ETEK   219.50   210   FNY-PB   10.13   5488   18%     200
EXDS   141.63   130   QED-PF    5.38   3541   15%     130
GMST    69.06    65   GST-PM    2.88   1727   17%      65
INKT   180.88   170   KAY-PN    8.13   4522   18%     165
ITWO   136.94   125   QYJ-PC    7.50   3424   22%     120
JDSU   121.88   115   UCQ-PC    5.25   3047   17%     110
NEWP   134.00   125   NZZ-PE    6.75   3350   20%     115
NTAP    79.94    75   NUL-PO    4.25   1999   21%      70
PDLI   111.00    95   PQI-PS    6.25   2775   23%     100
PHCM   140.25   135   UMN-PG    7.50   3506   21%     135
PMCS   194.75   180   SZI-PP    9.63   4869   20%     180
RIMM    99.56    90   RUL-PR    5.13   2489   21%      90
RMBS   246.56   220   BYQ-PD   14.63   6164   24%     220
SCMR   115.50   110   QSM-PB    7.13   2888   25%     110
SDLI   183.00   165   YAL-PM    9.63   4575   21%     165
SEBL   126.81   115   SGW-PB    3.88   3170   12%     110
SEPR    80.50    75   ERQ-PO    4.75   2013   24%      75
SNDK   116.00   105   SWF-PA    4.25   2900   15%     105
SONE    72.25    65   QFB-PM    4.75   1806   26%      65
TERN   179.50   165   YGT-PM   10.13   4488   23%     165
VIGN   200.94   180   GVV-PP    9.00   5024   18%     180
VRTS   126.25   120   VUQ-PD    7.75   3156   25%     120

To download a spreadsheet version of this chart please click here:

http://www.OptionInvestor.com/downloads/hpapr-09.xls

CMGI

 
AGGRESSIVE   SELL PUT APR-95 GCD-PS at $7.38 = 31%  
MODERATE     SELL PUT APR-90 GCD-PR at $5.00 = 21%
CONSERVATIVE SELL PUT APR-85 GCD-PQ at $2.88 = 12%
 

RIMM


AGGRESSIVE   SELL PUT APR-95 RUL-PS at $7.25 = 29%
MODERATE     SELL PUT APR-90 RUL-PR at $5.13 = 21%
CONSERVATIVE SELL PUT APR-85 RUL-PQ at $3.88 = 16%


ETEK

 
AGGRESSIVE   SELL PUT APR-220 FNY-PD at $15.00 = 27%    
MODERATE     SELL PUT APR-210 FNY-PB at $10.13 = 18%
CONSERVATIVE SELL PUT APR-200 FNY-PT at $ 6.25 = 11%



**********************
COSERVATIVE NAKED PUTS
**********************

Hope, Greed, and Fear...

To be a successful investor, it is necessary to have a fundamental
understanding of the philosophy that drives the stock market.  The
psychology of human nature is the biggest single factor you must
comprehend if you expect to trade profitably on a consistent basis.
This emotional ingredient has absolutely nothing to do with the
state of the economy, but it does have an overwhelming affect on
the movement of stocks and other financial instruments.

Emotions such as hope, greed and fear have significant effects on
the way everyone trades and in a public market, that is a major
factor in stock valuation.  When humans reach extreme levels of
emotion (ecstasy and despondency), they often act without logic
or control and the concept of money management is lost in the
passion of the moment.  Since the stock market is significantly
influenced by the public's attitude, a widespread panic can
trigger selling by millions of investors.  If this occurs in a
brief period, the market can move violently in one direction and
also reverse dramatically; precisely what we experienced last
week.  

There is debate concerning the accurate description of Tuesday's
move but most traders felt it was simply an overdue correction
rather than a market crash.  The differences are subtle but a
correction is generally a sharp, and yet not extremely deep,
downswing.  This often occurs when the market has been surging for
some time and the feeling begins to grow that stocks are becoming
overpriced.  Since Wall Street tends to follow a herd mentality,
that enthusiasm suddenly can turn to pessimism and fear.  A crash
is a much more severe downturn, driven by financial crisis and
often triggered by negative economic or international news.  Its
foundation begins when greed-based ecstasy reaches a zenith and
after the selling begins, only a significant event can reverse the
trend.  Once the movement achieves momentum, the results can be
catastrophic.  Only when panic and misery reach disturbing levels
will the selling stop and the crash come to an end.

The most famous one-day stock market crash occurred during the
Great Depression of 1929.  Its effect was so devastating that
some brokers were reported to have thrown themselves out of
office windows.  Interestingly, the causes of the event are very
similar to the conditions that plague our current market.  In the
depression era, traders were often margined to maximum levels.
When the market optimism wavered in the late 1920's, investors
were subjected to massive debt liquidations and the unexpected
crash quickly became a reality.  A decade ago, the stock market
suffered another major collapse.  It lost more than $1 trillion
between August 25 and October 19, 1987.  On Black Monday, the
market experienced its second-worst, one-day fall in history.
Once again the conditions were comparable as institutional fund
managers, who had leveraged their accounts to extremes,
unknowingly thought the new market safety limits (trading curbs)
would prevent a financial catastrophe.  Unfortunately, no one
considered the effects of everyone trying to sell at once.

In the crash of 1929, the emotional buying climax occurred well
in advance of Black Sunday; in 1987, it started about two months
prior to the crisis.  In this most recent case, the final mania
reached extremes a few weeks ago.  It's obvious that we chose to
overlook the historical trends.  After the event, analysts were
quick to point out this fact; markets that reach euphoric levels
such as those achieved in recent weeks generally end with forced
selling.  The current attitude of bullish, carefree investing;
buying stocks and fund shares month after month, regardless of
what the market does, is certainly part of the problem.  The
concern now is whether we can find a healthy balance between the
incredible growth that is occurring in our economy and the share
values that dominate the equity markets it supports.

The most important factor to be aware of is the power of human
nature on the movement of stocks and other investment vehicles.
When you understand the changes produced by emotional factors,
then you can begin to discern the broader technical movements in
the market.  Hopefully we will learn from history's previous lessons
and remain guarded against human emotional excesses, thus
avoiding their damaging effects on our investments.  With caution
and diligence, we can recognize the signs of an impending major
correction and take action to avert potentially devastating losses.
Of course that's an ambitious goal, but it is one we should all
strive to achieve.

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   11.00   8.56   APR   7.50  0.38  *$  0.38  21.3%
UPR    14.50  16.19   APR  12.50  0.56  *$  0.56  18.6%
ADLT   18.75  20.50   APR  12.50  0.44  *$  0.44  15.2%
CYOE   10.75   8.56   APR   7.50  0.44  *$  0.44  14.8%
CONV   12.81  11.63   APR  10.00  0.56  *$  0.56  13.0%
CD     18.69  17.81   APR  17.50  0.56  *$  0.56  11.8%
TLCM   30.25  30.63   APR  22.50  0.50  *$  0.50  11.1%
RSLC   23.88  20.06   APR  17.50  0.69  *$  0.69  11.0%
PCMS   23.19  15.00   APR  15.00  0.81   $  0.81  10.8%
ZONA   10.88   7.56   APR   7.50  0.38  *$  0.38  10.7%
MCRE   25.06  18.00   APR  15.00  0.69  *$  0.69  10.5%
INSO   16.06  10.00   APR  10.00  0.44   $  0.44  10.5%
ISIP   24.00  15.56   APR  15.00  0.75  *$  0.75   9.8%
MLT    30.00  24.38   APR  22.50  0.44  *$  0.44   7.4%
SEM    17.81  19.75   APR  15.00  0.31  *$  0.31   7.3%
NUHC   17.56  20.06   APR  12.50  0.31  *$  0.31   7.1%
OXGN   23.50  19.50   APR  17.50  0.50  *$  0.50   7.0%
TLCM   32.44  30.63   APR  22.50  0.44  *$  0.44   6.9%
CDT    34.31  33.13   APR  25.00  0.56  *$  0.56   6.6%
SVGI   30.06  29.25   APR  22.50  0.38  *$  0.38   6.5%
EGRP   30.13  24.56   APR  25.00  0.56   $  0.12   2.3%
EGRP   32.00  24.56   APR  25.00  0.50   $  0.06   0.9%
PMRY   19.50  16.63   APR  17.50  0.63   $ -0.24   0.0%
AMTD   24.25  18.75   APR  20.00  0.75   $ -0.50   0.0%
SCUR   26.50  15.88   APR  17.50  0.75   $ -0.87   0.0%

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

Comments:

Legato (LGTO) was kind enough to revise their earnings before 
the Market opened on Monday, which precluded the opening of any
bullish positions.  Several of the above issues are testing
support areas: 150 dma's; previous lows; long term trend-lines.
Closing below a technical support area increases the probability
for further downside movement and when this occurs, exiting the
position is the most viable way to preserve capital.  In the
Summary Section, we will exit a position when the underlying
issue penetrates and remains below one or more of these areas
(on a closing basis).

Positions Closed:

Madge Networks (MADGF), Shopnow.Com (SPNW). 



NEW PICKS
*********


Sequenced by Company
*****

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

BELM   16.44  APR  12.50  QBL PV  0.25  58   12.25   7.1%
GADZ   24.00  APR  20.00  EQK PD  0.38  30   19.62   6.4%
PAIR   19.44  APR  15.00  PQG PC  0.56  3728 14.44  12.6%

CYBX   23.81  MAY  17.50  QAJ QW  0.50  3    17.00   9.5%
SUPX   30.06  MAY  17.50  TXQ QW  0.69  0    16.81  10.3%
VANS   17.06  MAY  15.00  VQG QC  0.56  0    14.44  10.5%
VTS    28.06  MAY  20.00  VTS QD  0.56  11   19.44   9.1%

Sequenced by ROI  
******

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

PAIR   19.44  APR  15.00  PQG PC  0.56  3728 14.44  12.6%
BELM   16.44  APR  12.50  QBL PV  0.25  58   12.25   7.1%
GADZ   24.00  APR  20.00  EQK PD  0.38  30   19.62   6.4%

VANS   17.06  MAY  15.00  VQG QC  0.56  0    14.44  10.5%
SUPX   30.06  MAY  17.50  TXQ QW  0.69  0    16.81  10.3%
CYBX   23.81  MAY  17.50  QAJ QW  0.50  3    17.00   9.5%
VTS    28.06  MAY  20.00  VTS QD  0.56  11   19.44   9.1%


Company Descriptions

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

****

BELM - Bell Microproducts  $16.44  *** Own This One! ***

Bell Microproducts distributes a select group of semiconductor and
computer products to original equipment manufacturers.  Products
include memory, logic, microprocessor, peripherals, disk, tape and
optical drives, drive controllers, monitors, computers and board
products.  The company also provides a variety of manufacturing
services to its customers, including the building of products to
customer specifications, as well as certain types of components
and subsystem testing services, systems integration and disk drive
formatting and testing, and the packaging of electronic components.
Bell recently announced that it intends to acquire Hammer Storage,
a leading manufacturer of digital storage sub-systems.  Hammer has
among the largest and most sophisticated storage solution install
base in the entertainment industry.  Bell plans to integrate the
new company into its recently acquired Rorke Data division.  Rorke
Data provides leading edge Fibre Channel and storage area network
solutions to vertical markets.  Earnings are due April 19.

APR 12.50 QBL PV Bid=0.25 OI=58 CB=12.25 ROI=7.1%

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

****

GADZ - Gadzooks  $24.00  *** On The Move! ***

Gadzooks is a mall-based specialty retailer of casual apparel and
related accessories for young men and women, principally between
the ages of 13 and 19.  The Gadzooks concept focuses on providing
fashionable casual apparel and accessories to both male and female
teenage customers.  Each Gadzooks outlet store carries thousands
of products including woven and knit tops, jeans, shorts, junior
dresses, swimwear, T-shirts, footwear, sunglasses, jewelry and
other accessory items.  The company's merchandise includes high
visibility names and popular fashions and branded clothing items.
Gadzooks recently announced that sales for March were up 18% over
last year and company officials were extremely pleased with the
consistent performance of their major product categories.  Sales
increases were also strong in each of their geographic regions,
and a 50-store expansion program began with the opening of three
new outlets in March.

APR 20.00 EQK PD Bid=0.38 OI=30 CB=19.62 ROI=6.4%

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

****

PAIR - PairGain  $19.44  *** Conservative Speculation ***

PairGain is the leader in the design, manufacture, marketing and
sale of DSL networking systems.  Service providers and private
network operators worldwide use PairGain's products to deploy
DSL-based services such as high-speed Internet access, remote LAN
access and enterprise LAN extension.  More than 1.7 million
PairGain DSL nodes are installed in over 100 countries.  PairGain
recently introduced its StarGazer4.0 Element Management System,
which enables its customers to remotely configure DSL line
profiles, monitor equipment performance in real time and easily
identify any system failures, all from one integrated system. 
In February, PairGain agreed to be acquired by ADC Telecom (ADCT)
where each common share of PAIR will be converted into 0.43 of a 
common share of ADCT with a fixed exchange ratio.  The transaction,
subject to approval, is expected to close before August.  New 
option interest and the inflated premiums caused by speculative 
call-buyers offer a short-term conservative entry point.

APR 15.00 PQG PC Bid=0.56 OI=3728 CB=14.44 ROI=12.6%

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

****

CYBX - Cyberonics  $23.81  *** New Epilepsy Treatment! ***

Cyberonics designs, develops, manufactures and markets the
NeuroCybernetic Prosthesis, or NCP System, a medical implant for
the treatment of epilepsy and other debilitating neurological
disorders.  The company has approval to market the NCP System in
the U.S. as adjunctive therapy for seizures in specific patients.
The CYBX mission is to help improve the lives of people touched by
epilepsy and other disorders which over time prove to be treatable
with VNS.  Their priorities are sales growth in epilepsy and the
development of new treatments for depression and obesity.  Last
week the company reported preliminary results for the quarter with
net sales increasing almost 75%.  The company achieved virtually
all of their sales and marketing objectives and their share value
is finally responding to the news.

MAY 17.50 QAJ QW Bid=0.50 OI=3 CB=17.00 ROI=9.5%

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

****

SUPX - Supertex  $30.06  *** Hot Sector! ***

Supertex is a technology-based producer of high voltage analog
and mixed signal semiconductor components.  They design, develop,
manufacture and market integrated circuits utilizing state of the
art high voltage DMOS, HVCMOS and HVBiCMOS analog and mixed
signal technologies.  With respect to its DMOS transistor
products, they have maintained an established position in key
products for telecommunication and automatic test equipment
industries.  Their products are used in the flat panel display,
printer, medical ultrasound imaging, telephone, telecommunications
and instrumentation industries.  This a solid company in a great
sector but the issue is due for a correction.  We will position
our entry for the downside movement.  Earnings are in mid-April.

MAY 17.50 TXQ QW Bid=0.69 OI=0 CB=16.81 ROI=10.3%

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

****

VANS - VANS Inc.  $17.06  *** Retail is Booming! ***

Vans is a branded lifestyle company for the youth market.  Vans
reaches its 10 to 24 year-old target consumers through the
sponsorship of Core Sports (skateboarding, snowboarding, etc.),
and through major entertainment events and venues.  They operate
128 stores worldwide and design, market and distribute active
lifestyle footwear, clothing and accessories.  VANS has been 
climbing for over a year and shows no sign of stopping.  Last
month's earnings report shows why: a 49% increase in net sales,
with earnings more than doubling, beating the street estimates
by two cents.  The solid technical support of the recent lateral
consolidation pattern suggests this position offers a favorable
risk/reward outlook.

MAY 15.00 VQG QC Bid=0.56 OI=0 CB=14.44 ROI=10.5%

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

****

VTS - Veritas DGC  $28.06  *** Oil Sector - Hedge Play! ***

Veritas provides seismic data acquisition and processing, client
data sales and exploration and development information services to
the petroleum industry.  The company acquires seismic data in land,
marsh, and tidal/marine environments, and processes data acquired
by its own crews and crews of other operators.  When performing
geophysical services under contract for oil and gas companies, the
company may be employed to acquire and/or process geophysical data.
Veritas also acquires and processes geophysical data for its own
account, preserving its work product in a data library for later
licensing on a non-exclusive basis.  VTS rallied in late March
after the stock was added to the S&P 600.  Its future performance
is based in large part on the performance of the oil industry.

MAY 20.00 VTS QD Bid=0.56 OI=11 CB=19.44 ROI=9.1%

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


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

The Roller-Coaster Ride Continues...

Friday, April 7

Technology stocks surged today as benign economic data and upbeat
earnings forecasts boosted investor confidence.  The Nasdaq rose
178 points, its biggest ever point gain, to close at 4446.  The
S&P 500 Index added 15 points to 1516 while the Dow Industrials
posted slim losses, falling to 11,111.  Volume on the NYSE was
moderate with 895 million shares exchanged.  Advancing issues led
declines 1,518 to 1,397.  The 30-year Treasury bond soared 1 9/32,
bid at 107 24/32, where it yielded 5.69%.


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

Teradyne      TER    APR70P/APR75P   $0.50   credit   bull-put
Tellabs       TLAB   APR70C/APR65C   $0.43   credit   bear-call
Abbott Labs   ABT    MAY40C/APR40C   $0.93   debit   calendar

Teradyne was active in early trading, dropping to $94.38 during
the morning session.  A five-contract position at $0.50 credit
was observed near 10:00 AM.  Tellabs was also active but the
options premiums were less favorable.  Abbott offered an entry
at the suggested debit but the issue eventually fell to recent
lows with the slump in the Dow.


Portfolio plays:

Technology stocks enjoyed impressive gains as investors continued
to rotate money into technically oversold issues.  Benign economic
data spurred the market higher in early trading and most sectors
continued to recover with traders focused on the positive outlook
for first-quarter earnings.  Bargain-hunting Fund Managers also
participated in the shopping spree, buying the top performers in a
variety of bullish industries.  Chip companies and biotechnology
stocks posted the strongest gains but telecom and computer stocks
also advanced significantly.  In the broader market, healthcare,
investment banking and metals issues slumped and the industrials
fell amid weakness in financial stocks.  Oil issues also slid lower
as crude prices fell to 3-month low amid expectations that supply
from OPEC nations will grow.  In economic news, analysts said that
while the employment report was tame, it has not readily changed
the outlook for interest rates.
  
Our portfolio enjoyed a number of big winners and the leading
issue was Qualcomm (QCOM) with a $13 rally to finish near $152.
The move capped a great recovery to the top of a recent range and
any further upside activity should propel the issue clear of a
current resistance area at $155.  Nvidia (NVDA) continued its
recovery, rising $7 through a psychologically significant level to
close at $103.  Our bullish credit spread is profitable above $65.
Sun Microsystems (SUNW) rallied $6 to $98.81 on strength in the
computer hardware group.  Our new credit-spread strangle achieves
maximum return if the issue finishes the expiration period between
$80 and $110.  A break above $105 will be our exit signal on the
bullish portion of the play.  American Online (AOL) is moving up
again and today the stock finished just below our sold strike (at
$70) in the LEAPS/CC's position.  Fortunately, the position has no
upside risk and technically, the issue has another resistance area
to work through at $75.  A number of Diversified Electronics and
Semiconductor issues made favorable moves; Advanced Micro Devices
(AMD), American Power Conversion (APCC), Electro Scientific (ESIO)
and Helix (HELX) all participated in the rally.  In the small-cap
group, Silicon Valley Group (SVGI) led the way with a $2.62 gain
to $29.  Network Associates (NETA) climbed $2 to end near $29 and
both of our LEAPS/CC"s positions are once again profitable.  Plan
to roll the aggressive spread down to $30 if the new rally fails
near the current price.  Telxon (TLXN) finally demonstrated some
strength with a solid rebound off the previous support area near
$17.  Maybe there IS hope for that issue...

All in all, the week wasn't so bad, just a brief heart palpitation
to keep you interested.  Hopefully the worst is behind us and we
can get back to what we do best - conservative option trading in
a bullish environment.

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

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

WLA - Warner Lambert  $103.94  *** Drug Sector - Hedge Play! ***

Warner-Lambert operates in three main segments, Pharmaceuticals,
Consumer Health Care products and Confectionery products.  Their
principal products are within its Pharmaceutical segment, which
manufactures and sells pharmaceuticals under such trademarks as
Parke-Davis and Geodecke.  Among these products are analgesics,
anesthetics, anti-convulsants, anti-infectives, anti-virals,
cardiovascular drugs and oral contraceptives.  This segment also
produces capsules used by other pharmaceutical companies.  The
Consumer Health Care segment consists of over-the-counter health
care products including Rolaids, Lubriderm, Rosin, Neosporin,
Sudafed, Sinutab, Benadryl, Tucks, Listerine, Efferdent, Nix and
Borax, shaving products (Schick and Wilkinson Sword) and pet care
products (Tetra and Whisper). The Confectionery products include
chewing gum, breath mints and cough tablets under trademarks such
as Chiclets, Dentyne, Bubblicious, Certs, Halls and Celestial
Seasonings.

When technology shares falter, drug stocks become attractive and
that's exactly what happened last week.  Pharmaceutical companies
rallied as investors fled from speculative issues amid a sweeping
technology sell-off.  The price has been favorable for many of the
stocks in the group, but the opportunity cost of being out of the
Nasdaq has been more than most investors could tolerate.  Now the
drug companies are reaching new highs and quarterly earnings for
the large group are expected to be 13%-18% higher.  Conservative
investors are also being lured by the safety of the sector and
Warner Lambert is one of the leading issues in the industry.


PLAY (conservative - bullish/debit spread):

BUY  CALL  MAY-85  WLA-EQ  OI=48   A=$19.75
SELL CALL  MAY-95  WLA-ES  OI=343  B=$11.12
INITIAL NET DEBIT TARGET=$8.50 ROI(max)=17% B/E=$93.50

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

****

AAPL - Apple Computer  $131.75  *** Earnings Rally? ***

Apple designs, manufactures and markets personal computers and
related personal computing and communicating solutions for sale
primarily to education, creative, consumer and business customers.
The majority of the company's net sales are derived from the sale
of personal computers from its Apple Macintosh line of computers
and related software and peripherals.  Their subsidiary FileMaker
makes database software.  The company manages its business on a
geographic basis.  Geographic segments include the Americas,
Europe, Japan and Asia Pacific.  Each operating segment provides
similar hardware and software products and similar services.

Apple has been on the move since mid-1999 and the company is well
known for sleek, low-cost computers, and most recently, their new
focus on providing a range of products and services for the World
Wide Web.  Apple has released many unique products and teamed-up
with some industry leading content partners to increase their
market share in real-time information and streaming media.  Now
the question is whether that activity will translate to higher
sales and earnings.  The quarterly report is due on April 19 and
with any speculative rally, this issue will be far above our
maximum profit range at expiration.


PLAY (aggressive - bullish/debit spread):

BUY  CALL  APR-110  AAQ-DX  OI=1766  A=$23.00
SELL CALL  APR-120  QAA-DD  OI=1776  B=$14.25
INITIAL NET DEBIT TARGET=$8.50-$8.62 ROI(max)=16% B/E=$118.62

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

******************************************************************
     - TECHNICALS ONLY -

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.

****

CA - Computer Associates  $61.61  *** Trading Range? ***

Computer Associates supplies systems management, information
management and business management software products for use on
a variety of hardware platforms.  With the company's independence
from hardware manufacturers, Computer Associates has been able to
offer products for use on most of the existing major computer
operating systems.  They offer over 500 products, many of which
provide tools to measure and improve computer hardware and
software performance and programmer productivity.  The company's
solutions, including Unicenter TNG and Jasmine, help clients use
the latest technologies while preserving their investment in
hardware, software and staff expertise.  Their software products
are generally used in a broad range of industries, businesses and
applications but CA does not transfer title to products to its
clients.  Their products are licensed on a right-to-use basis
pursuant to specific agreements.

This play is simply based on the previous range-bound pattern in
CA.  The most recent technical history exhibits the volatility
from the Nasdaq sell-off but a brisk change in character (in the
current rally) is pushing the issue above a reasonably stable
area of support.  The prior resistance near $70 should provide
plenty of opposition as the stock moves back into its old trading
range.  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-75  CA-DO  OI=3253  A=$0.43
SELL CALL  APR-70  CA-DN  OI=2672  B=$0.88
INITIAL NET CREDIT TARGET=$0.43-$0.50 ROI(max)=10%

- and - 

BUY  PUT  APR-50  CA-PJ  OI=2556  A=$0.31
SELL PUT  APR-55  CA-PK  OI=2078  B=$0.68
INITIAL NET CREDIT TARGET=$0.43-$0.50 ROI(max)=10%

COMBINED ROI(max)=20% UPSIDE B/E=$71.00 DOWNSIDE B/E=$54.00

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


****

VNWK - Visual Networks  $57.50  *** Reader's Request! ***

Visual Networks designs, manufactures and sells wide-area-network
service level management systems for multiplexed technologies
such as frame relays, ATM and IP/Internet.  WAN services are
typically used to interconnect the computing facilities of
geographically dispersed sites within an enterprise or from one
enterprise to another.  The company's Visual UpTime offers WAN
access and software for performance monitoring, troubleshooting
and network planning.  The Visual UpTime system is designed to
scale up to 45,000 circuits on a single managed network.  Visual
UpTime systems are used on over 25,000 WAN circuits in over 425
subscriber frame relay networks.  In response to the growing WAN
provider market, Visual Networks has developed relationships with
major Frame Relay service providers such as AT&T, Sprint/United
Management Company, MCI Telecom, Ameritech, and Bell Atlantic
Network Integration.

One of our faithful readers pointed out this failing issue and
asked if there were any potential spread plays that benefit from
its recent volatility.  Unfortunately, I couldn't find any unique
positions in the front-month options but based on the new trend
and the current support/resistance levels, this play may be less
aggressive than it appears at first glance.  For those of you who
are concerned about the potential for an oversold bounce, there
is a much more conservative position available at the $75 strike.
A close above the collar (upper neckline) at $68 will signal that
a change in character has occurred.


PLAY (aggressive - bearish/credit spread):

BUY  CALL  APR-80  QVN-DP  OI=139  A=$1.18
SELL CALL  APR-70  QVN-DN  OI=502  B=$2.43
INITIAL NET CREDIT TARGET=$1.38-$1.50 ROI(max)=17% 

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

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