Option Investor

Daily Newsletter, Sunday, 04/16/2000

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The Option Investor Newsletter          Sunday  04-16-2000  1 of 5
Copyright 2000, All rights reserved. 
Redistribution in any form strictly prohibited.

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

Entire newsletter best viewed in COURIER 10 font for alignment
        WE 4-14             WE 4-7          WE 3-31          WE 3-24
 DOW    10305.77 - 805.71 11111.48 +189.56 10921.92 -190.80  +517.49
 Nasdaq  3321.29 -1125.16  4446.45 -126.44  4572.89 -390.04  +164.90
 S&P-100  731.94 -  89.58   821.52 +  6.46   815.06 - 17.59  + 45.91
 S&P-500 1357.31 - 159.04  1516.35 + 17.77  1498.58 - 28.88  + 62.99
 RUT      453.72 -  89.27   542.99 +  3.90   539.09 - 34.93  -  0.76
 TRAN    2727.04 - 100.68  2827.72 + 64.48  2763.24 + 75.09  + 64.32
 VIX       39.33 +  12.39    26.94 -   .27    27.21 +  1.40  +  2.14
 Put/Call    .94               .37              .48              .42

Eyewitnesses to History

It was bad, real bad! The worst I heard was Bill Gates from MSFT. 
He lost $11.1 bln in net worth due to the drop in MSFT stock. Don't 
start feeling sorry for him, he still has gas money.

As investors today we had a birds eye view of history in the making.
The Dow was down over -720 points late in the afternoon and only
rebounded slightly to close at -617 for the worst single day point
loss ever. The next three biggest losses were -554 12/27/97, -512
8/31/98, -508 10/19/87. Yes, Friday was even bigger than the 1987
drop in terms of points. Only -5.6% today compared to -19.10% then.
All 30 of the Dow stocks were down for the day.

The Nasdaq was not any better and Friday capped off a week of days
traders would rather forget. Friday's closing drop of -355 was only 
slightly less than the -400 point deficit late in the afternoon.
That loss ended a string that started on Monday with -258, -132,
-286, -93 bringing the total for the week to -1125 or -25%. This
brought the total drop from the recent high to -35%. Friday was
the second largest volume day with 2.5 bln shares traded and the
second largest percentage drop ever. The next three biggest point
drops were -349 4/3/00, -286 4/12/00, -258, 4/10/00, two of which
were also this week. Yep, three of the top four point drop days
were this week. Volatility anyone? 



The carnage is incredible but if your 401k was turned into a 201K
this week then you are already feeling the pain. The wealth effect
Greenspan is always referring to became the debt effect this week.
The $1.4 trillion that investors made all last year was shredded
as more than $2.1 trillion was lost in the market this week alone.
Margin investors are feeling more than pain as margin call after
margin call has wiped out many over leveraged accounts. If you
think this week was bad for margin calls the don't get out of bed
on Monday. The huge losses Friday will produce record margin calls
again for investors still hanging on by their fingernails rather 
than take the loss. Market cap was bleeding at record rates.
Microsoft lost -$239 bln this week, CSCO -$167 bln, INTC -$100 bln.
This was not simply a big cap problem. For example Akamai has lost
-$25 bln from its high and now has a market cap of only $500 mln.
Down from a high of $345 AKAM is now only $64. Microstrategy had
a high of $335 and is now selling for $33.  

The brokerage community came under pressure this week and Friday
turned into a real rout. Many brokers make a substantial portion
of their profits off margin interest. Ameritrade for instance 
counts on margin interest for 25% of their total revenue. As
investors accounts are liquidated to cover falling stock prices
the brokers are exposed to margin shortfalls and then the loss
of the margin income. Thirdly, they lose the trading commissions
as accounts are closed or go quiet in the reaction to the losses.
The major brokers all took big hits on Friday. LEH -17, SCH -12,
MWD -8, MER -8. 

The surface trigger for today's sell off was blamed on the CPI
but in reality the CPI just added speed to the downward slide.
The base rate was much higher than expected at +0.7%, the highest
in a year. The core rate was also much higher at +0.4% which was
the highest in the last five years. This was twice the expected
rate and puts the projected annual inflation increase at +3.2%
which is much higher than the +1.9% rate from last year. The
inflation monster suddenly became visible and bidders quickly
evaporated as fears of a stronger than expected rate hike flared.
There was significant worry that the Fed could raise immediately
and not wait for the next meeting in May. In reality the Fed
could have pulled the trigger today except for the market crash
already in progress. Not wanting to be accused of pouring gas on
the fire there was no announcement. Greenspan spoke at a noon
luncheon and again was quiet on the markets and on economic matters
that would have fueled the fire. Financial stocks took the change
in Fed sentiment hard and many were double digit losers. AXP -12,
JPM -7, GS -12. Another reason for the drop was comments attributed
to a Fed governor on Thursday which were very bearish and set the
tone for the CPI backlash. 

Declines continued to beat advancers substantially and this string
on the Nasdaq stretched to ten days. Stocks previously immune to
major selling events are now just another symbol on the ticker.
Stocks like AOL, EBAY, YHOO, AMZN, PCLN have all lost more than 
50% of their value. Entire sectors are on the endangered species
list with major drops from their recent highs. For instance the
Semiconductor sector (SOX) lost -33%, the Internet sector (IIX)
-37% and the Biotech sector (BTK) -48% just to name a few. With
the Dow, Nasdaq and S&P all managing their biggest point losses
ever there were very few stocks untouched. To add insult to
injury Microsoft not only is on trial, lost $239 bln in market
cap but finished at a 52 week low of $74 as well. The Nasdaq
managed to drop not only -1125 points last week but also brought
the PE ratios of the Nasdaq stocks down from their stratospheric
heights. On March 10th the Nasdaq PE was a soaring 264. To put
this in perspective the ten year average PE of the Dow stocks
amounts to only 54 and the current Dow PE is even less than that.
If you are waiting for the Nasdaq PE to reach Dow levels then
you are in the wrong lifetime. This would require the Nasdaq to
drop to something like 1030 and I hope we don't see it any time
soon. Even after the historic drop this week the Nasdaq PE is 
still a lofty but more realistic 174. Compared to the S&P PE
of 28 even the Dow seems lofty. You can easily see why many 
old time analysts still feel the Nasdaq is grossly overvalued.

Not only are the big cap stocks taking a hit in their stock
prices but they are also taking a hit in their profits.
Many large companies have huge stock holding of other listed
companies. Intel for instance has over $8 bln in stock holdings
and reported $327 mln in profits from these holdings in January.
They expect to report $500 mln in this qtr. Compaq held $8.3
bln in publicly traded stocks in January and Microsoft had a
portfolio of almost $20 bln. Now if their portfolios took the
same hit that yours did then how do you think that will impact
their earnings for the current quarter when reported in July?
Most of these companies use these surplus profits to pad their
balance sheets when times are rough and they need another 
penny or two per share to keep from missing estimates. If the
correction continued there would be some negative surprises 
next quarter. Many of these large companies may warn in their 
earnings conference calls next week that the market may impact 
their next quarter profits. Do you see the circle forming here? 

Another assault on the web is taking its toll on the web 
retailers. A report from Forrester Research suggests that
as many as 25,000 etailers of the more than 30,000 currently
on the web will be bankrupt by year end. The stiff competition
by hundreds of clones in the same product category and the click 
and motar stores as well is named as the cause. Sites like
Etoys are being targeted by Toys-R-Us and general retailers
like Walmart and JC Pennys. The promise of instant riches by
selling to the masses on the Internet has put many mom and 
pop sites with several thousand dollars of capital up against
sites with tens of millions of venture capital. When it gets
right down to it how many ways can you sell books and music
anyway? Sites like Etoys, CDNow, Peapod, Webvan have seen
their stocks drop faster than they could say MasterCard or
Visa? and some are now in the low single digits. This is not
new news to investors but just another factor in the decline
of the Internet sector as a whole over the last several weeks. 

With both the major indexes dropping more than -1000 points this
week you would think the carnage would be over. There were reports
of huge numbers of OEX calls being purchased just before the close
on Friday with one transaction for 1600 contracts. The QQQ calls
were also in high demand. While almost everyone expects a rebound
soon there is still more selling to come. Greenspan said in his
speech today that the "extended leverage in the markets is all
too evident" and warned of the associated problems. The leverage
he spoke of includes the excessive use of margin. In March the
total margin debt was over $278 billion and was up +78% from 
the year before. After Friday margin users will have to pay the
piper his due. According to several brokers margin calls were
up over twice the normal rate and many investors will get that
unwelcome notice in their email this weekend. Sell stock or be
liquidated. While the -1000 point drop this week may have been
due to seasonal trends and tax selling there are repercussions
that will carry over to next week. We are likely to see a bounce
at the open on Monday followed by another bout of margin selling.
The selling could drag over the next three days as investors
decide to wire money or take the loss.

The selling this week was not the panic selling you see in 
times of economic crisis. All the portfolio managers knew that 
the April depression was coming and they simply stood aside as 
the tax selling began. With no buyers the simple act of selling
only a few shares coupled with others trying to turn stocks
into tax cash pushes prices downward. Market makers faced with
no buyers continually adjust the prices lower and lower. 
Sellers faced with bleeding stock prices are caught chasing
the bid with each modified order. Not that there was a rush
to sell this week, there just was not any buyers. The midnight 
oil will be burned this weekend as each portfolio manager tries 
to decide what to buy when faced with the large number of 
incredible choices. Still they are likely to wait until the 
margin selling stops and an upward trend is established again.

I want to congratulate Molly Evans, a new staff writer that
started this week. In her article on Thursday she extrapolated
a closing price for Friday of 3320.78 through simple technical
analysis of the Nasdaq chart. The actual closing price on Friday
was 3321.29. She missed it by only .49 and that was from 355
points and a day away. Good detective work Molly! Now can you
tell us the close in advance for next Thursday? We would all 
love to know!

This was not a week I want to repeat but it seared into my
brain once again that trying to pick the bottom is an expensive
proposition. After deciding Thursday to sit out on Friday I
did not even set the alarm clock. (The market opens at 7:30
here.) Of course once I did wake up and turn on CNBC I ran
straight to the PC and remained glued to the screen the rest
of the day. Did I break my vow to sit out and open new 
positions? You have to read Jim's Plays for the answer.

Next week should be real exciting. We have a four day week
due to the market closure on Friday and it is also an options
expiration week. Add to those factors the -1000 drop and the
expected margin selling on Monday and the word volatility
should come immediately to mind. Hopefully we can get past
the selling on Monday and get a big enough spike to send
the shorts running for cover. If volume picks up then maybe
this train wreck will stop. 

The two major indicators I follow are both screaming buy.
The VIX at 39.33 is the highest it has been since Oct-1998
and we all know what a buying opportunity we had then. The
other indicator is the TRIN or the Short Term Trading Index
also known as the Arms Index. This is calculated by 
dividing the advance/decline volume into the advance/decline
ratio. It is also called the fear or panic index. The TRIN
normally hovers around the 1.00 level and anything over 2.00
represents a strong buying opportunity. Currently the TRIN
is at 4.48. The only time it has been this high in the last
two years was in Oct-1999 and Oct-1998. Dates that will 
live in our collective memory forever. I know people who 
live by the TRIN and people who live by the VIX. When they
both line up you should buy a lottery ticket. As you can see 
by the two charts below we should currently be at the mother 
of all buying opportunities. These indicator levels and 
$3.00 will get you a cup of coffee at Starbucks but will not 
guarantee that there is not another day or two of selling
in our future. Still, don't let anybody tell you there is 
not enough fear in the markets to create a bottom. (These 
are available on Qcharts or Interquote as $TRIN and $VIX)



Trade smart, wait for the bounce, don't buy too soon.

Jim Brown

My current long positions:  see Jim's Plays

Other big losers this week:

Charles R. Schwab, chairman and co-CEO of Charles Schwab 
Corp., lost $2.6 billion on his 175.2 million shares.

Jeffrey P. Bezos, chairman and CEO of Amazon.com, lost 
$2.4 billion on his 117.5 million shares.

Michael S. Dell, Chairman and CEO, Dell Computer Corporation
lost $2.3 billion on his 306.1 million shares.

Jerry Yang, Chief Yahoo! of Yahoo!, lost $1.6 billion on 
his 45.4 million shares.

Stephen M. Case, chairman and CEO of America Online, 
lost $122.4 million on his 8.90 million shares.

Larry Ellison of Oracle lost $2.9 billion on his 
3.5 million shares.


Hi, my name is Jim and I am an option trader. Please forgive
me for I have sinned. Yep, you guessed it. I bought the dip.
I could not stand to sit and watch the Nasdaq down -400 and
the Dow -720 just knowing that there was a bounce lurking in
the numbers somewhere. I did wait until late in the day at
lows at least. After being burned several times this week I 
was very calm but very logical. Logic said a -1000 point drop
would produce a bounce so I picked several of the strongest
stocks I could find and rolled the diec. I sold DITM April naked 
puts on EBAY, CMVT, PMCS and NTAP. I bought VIGN stock at $42 
and plan to write May covered calls on it after any bounce 
on Monday/Tuesday.

EBAY $139.63 - APR $180 Naked Puts @ $37.63


Ebay struggled all day and flirted with both sides of the
line but even when the Nasdaq and Dow were down the worst
it struggled back positive again. Ebay is the category killer
of the auction world and still a potential merger partner 
for YHOO. After being written up favorably several times
recently Ebay simply refused to close under support at $139.
Any Internet stock that was positive on Friday looks like a
potential breakout prospect on any rebound by the Nasdaq.
I wrote the DITM $180 naked put to capitalize 100% on any
rebound. A breakout to $160 would net me $17 for a quick
trade. I will close on Wednesday to avoid being put unless
the market is exploding. My breakeven point is $143 and 
anything over that is profit.

NTAP $50.38 - April $80 naked put @ $26.63



Network Appliance held support all day until the final gasp
but then rebounded strongly at the close. I could see a 
breakout to $60 easy and I sold the $80 put to capture 
all of whatever it gives us next week. I will close on 
Wednesday to avoid being put. My breakeven is $53.38 and
anything over that is pure profit.

CMVT $74.19 - April $100 Naked Put @ 24.25


After being up two days in a row with the Nasdaq crashing
CMVT looked like a breakout candidate for the next rebound
day. I sold the $100 put to capture 100% of any breakout.
My breakeven is $75.75 and pure profit above that. 

PMCS $118.44 - April $180 Naked Put @ 60.00


PMCS held $118 all day and it is one of the Super Seven Tech
stocks from last week. I have played this on many times and
I think it has a good chance for a strong rebound next week.
This stock can move $20 a day and I sold the $180 put to 
capture everything it gives me. I will close on Wednesday
to avoid being put. My breakeven is $120.

VIGN $42.19 - Stock @$42.13 - Covered call planned.


I really like VIGN and after trading at $300 recently I thought 
the 3:1 split today would make the stock attractive and
affordable to anyone. It stayed positive almost all day and
finally lost only -1.75 at the close to give me a buying
opportunity. The high for the day was over $50 with the 
Nasdaq down over $200. I think this favorite Ebusiness
stock could breakout on any rebound. Once it reaches 
$50 I am going to sell the $50 May call. The call closed
today at $5.00. At today's closing price being called out
at $50 would be 61% but if I wait for the stock to reach
$50 and then sell the call for a higher price my return
should be much greater. The key, it needs to hit $50 next 
week to maximize time value. 

QQQ - calls.

My lottery ticket play of the April 100 calls for $1.00
is looking grim. The odds of the QQQ hitting $100 again
in the next four days is slim. Possible but slim. That
is why lottery plays are high risk. If the Nasdaq had
turned around today and started up again $100 would have
been in easy reach but what a difference a -355 day can 


Hopefully the selling will stop on Monday and the Nasdaq
will give us some really incredible buying opportunities
but remember - wait for the volume. There could be a
real suckers rally at the open on Monday so either wait
for volume confirmation or be ready to jump back out again
on a moments notice.

Good Luck



Week of 4/17

NEW YORK, April 14 (Reuters) - The following Standard &
Poor's 500 companies are expected to report quarterly earnings
the week of April 17-21. Reporting dates and analysts' mean
estimates are provided by First Call/Thomson Financial.

                                       QTR  YR AGO  EST EPS
4/17 Alcan Aluminium Ltd.    (NYSE:AL)     Q1   0.16     0.70
4/17 Archer-Daniels-Midland  (NYSE:ADM)    Q3   0.02     0.17
4/17 BankAmerica Corp.       (NYSE:BAC)    Q1   1.08     1.24
4/17 Bank Of New York Co.    (NYSE:BK)     Q1   0.41     0.45
4/17 Briggs & Stratton Corp. (NYSE:BGG)    Q3   1.79     1.92
4/17 Comerica Inc.           (NYSE:CMA)    Q1   0.98     1.09
4/17 Crown Cork & Seal Compa (NYSE:CCK)    Q1   0.20     0.17
4/17 Dover Corp.             (NYSE:DOV)    Q1   0.32     0.54
4/17 Eastman Kodak Co.       (NYSE:EK)     Q1   0.80     0.93
4/17 Eaton Corp.             (NYSE:ETN)    Q1   1.17     1.64
4/17 First Data Corp.        (NYSE:FDC)    Q1   0.32     0.37
4/17 Ford Motor Co.          (NYSE:F)      Q1   1.46     1.58
4/17 Johnson Controls, Inc.  (NYSE:JCI)    Q2   0.70     0.89
4/17 Lilly (Eli) & Co        (NYSE:LLY)    Q1   0.53     0.61
4/17 Merrill Lynch & Co.     (NYSE:MER)    Q1   1.44     1.77
4/17 Millipore Corp.         (NYSE:MIL)    Q1   0.25     0.42
4/17 Northern Trust Corp.    (NASDAQ:NTRS) Q1   0.41     0.47
4/17 Sears, Roebuck And Co.  (NYSE:S)      Q1   0.38     0.65
4/17 Texas Instruments       (NYSE:TXN)    Q1   0.33     0.53
4/17 U.S. Bancorp            (NYSE:USB)    Q1   0.51     0.53
4/17 Vulcan Materials Co.    (NYSE:VMC)    Q1   0.26     0.27
4/18 ALZA Corp.              (NYSE:AZA)    Q1   0.28     0.29
4/18 AmSouth Bancorporation  (NYSE:ASO)    Q1   0.35     0.40
4/18 America Online Inc.     (NYSE:AOL)    Q3   0.05     0.09
4/18 Automatic Data Processi (NYSE:AUD)    Q3   0.36     0.41
4/18 Bank One Corp.          (NYSE:ONE)    Q1   0.88     0.60
4/18 Becton, Dickinson, & Co (NYSE:BDX)    Q2   0.40     0.41
4/18 Boston Scientific Corp. (NYSE:BSX)    Q1   0.25     0.23
4/18 Caterpillar Inc.        (NYSE:CAT)    Q1   0.57     0.58
4/18 Cendant Corp.           (NYSE:CD)     Q1   0.21     0.23
4/18 Coca-Cola Enterprises   (NYSE:CCE)    Q1  (0.15)   (0.08)
4/18 Dana Corp               (NYSE:DCN)    Q1   1.00     1.01
4/18 Delta Air Lines, Inc.   (NYSE:DAL)    Q3   1.32     1.10
4/18 Dun & Bradstreet Corp.  (NYSE:DNB)    Q1   0.36     0.36
4/18 EMC Corp                (NYSE:EMC)    Q1   0.20     0.29
4/18 FirstEnergy Corp.       (NYSE:FE)     Q1   0.60     0.62
4/18 Freeport-McMoRan Copper (NYSE:FCX)    Q1   0.11     0.12
4/18 Genuine Parts Co.       (NYSE:GPC)    Q1   0.48     0.50
4/18 Inco Ltd (US$)          (NYSE:N)      Q1  (0.13)    0.45
4/18 Intel Corp.             (NASDAQ:INTC) Q1   0.57     0.69
4/18 International Business  (NYSE:IBM)    Q1   0.78     0.78
4/18 Johnson & Johnson       (NYSE:JNJ)    Q1   0.80     0.91
4/18 Mallinckrodt Inc.       (NYSE:MKG)    Q3   0.75     0.75
4/18 Maytag Co.              (NYSE:MYG)    Q1   0.95     0.85
4/18 McGraw-Hill, Inc.       (NYSE:MHP)    Q1   0.12     0.14
4/18 Mellon Financial Corp.  (NYSE:MEL)    Q1   0.44     0.49
4/18 Milacron Inc.           (NYSE:MZ)     Q1   0.40     0.37
4/18 Molex Inc.              (NASDAQ:MOLX) Q3   0.23     0.29
4/18 NICOR, Inc.             (NYSE:GAS)    Q1   0.82     0.82
4/18 Paine Webber Group      (NYSE:PWJ)    Q1   1.01     1.09
4/18 Parametric Technology   (NASDAQ:PMTC) Q2   0.16     0.00
4/18 Parker Hannifin Corp.   (NYSE:PH)     Q3   0.70     0.88
4/18 Philip Morris, Inc.     (NYSE:MO)     Q1   0.80     0.89
4/18 Pitney Bowes Inc.       (NYSE:PBI)    Q1   0.52     0.57
4/18 Progressive Corp, Ohio  (NYSE:PGR)    Q1   1.39     0.15
4/18 Public Service Enterp   (NYSE:PEG)    Q1   0.85     1.02
4/18 Qualcomm                (NASDAQ:QCOM) Q2   0.10     0.24
4/18 Southern Co.            (NYSE:SO)     Q1   0.32     0.36
4/18 Southwest Airlines Co.  (NYSE:LUV)    Q1   0.18     0.16
4/18 Sprint                  (NYSE:FON)    Q1   0.47     0.47
4/18 Sprint PCS              (NYSE:PCS)    Q1  (0.71)   (0.58)
4/18 St. Jude Medical, Inc.  (NYSE:STJ)    Q1   0.40     0.43
4/18 State Street Corp       (NYSE:STT)    Q1   0.74     0.87
4/18 Tellabs, Inc.           (NASDAQ:TLAB) Q1   0.25     0.26
4/18 Teradyne Inc.           (NYSE:TER)    Q1   0.10     0.52
4/18 Timken Co.              (NYSE:TKR)    Q1   0.27     0.29
4/18 Tyco International Ltd. (NYSE:TYC)    Q2   0.35     0.50
4/18 US Airways Group Inc.   (NYSE:U)      Q1   0.49    (1.39)
4/18 Washington Mutual       (NYSE:WM)     Q1   0.79     0.81
4/18 Wells Fargo Inc.        (NYSE:WFC)    Q1   0.53     0.60
4/18 Weyerhaeuser Co.        (NYSE:WY)     Q1   0.51     0.92
4/18 Whirlpool Corp.         (NYSE:WHR)    Q1   1.15     1.36
4/19 ALLTEL Corp.            (NYSE:AT)     Q1   0.59     0.66
4/19 AMR Corp.               (NYSE:AMR)    Q1  (0.01)    0.40
4/19 American Home Products  (NYSE:AHP)    Q1   0.49     0.51
4/19 Apple Computer, Inc.    (NASDAQ:AAPL) Q2   0.60     0.81
4/19 Avon Products, Inc.     (NYSE:AVP)    Q1   0.28     0.30
4/19 Bard (C.R), Inc.        (NYSE:BCR)    Q1   0.51     0.60
4/19 Boeing Company          (NYSE:BA)     Q1   0.50     0.35
4/19 Ceridian Corp.          (NYSE:CEN)    Q1   0.28     0.22
4/19 Chase Manhattan Corp.   (NYSE:CMB)    Q1   1.32     1.55
4/19 Citrix Systems Inc      (NASDAQ:CTXS) Q1   0.15     0.19
4/19 Coca Cola Co.           (NYSE:KO)     Q1   0.29     0.21
4/19 Colgate-Palmolive Co.   (NYSE:CL)     Q1   0.32     0.37
4/19 Conexant                (NASDAQ:CNXT) Q2   0.04     0.19
4/19 Cooper Tire & Rubber Co (NYSE:CTB)    Q1   0.41     0.35
4/19 Danaher Corp.           (NYSE:DHR)    Q1   0.39     0.46
4/19 Enron Oil & Gas         (NYSE:EOG)    Q1  (0.09)    0.26
4/19 Equifax, Inc.           (NYSE:EFX)    Q1   0.31     0.31
4/19 FMC Corp.               (NYSE:FMC)    Q1   0.92     1.04
4/19 General Dynamics Corp.  (NYSE:GD)     Q1   0.78     0.88
4/19 Georgia Pacific Group   (NYSE:GP)     Q1   0.57     1.02
4/19 Household International (NYSE:HI)     Q1   0.65     0.77
4/19 ITT Industries          (NYSE:IIN)    Q1   0.45     0.55
4/19 Illinois Tool Works     (NYSE:ITW)    Q1   0.62     0.70
4/19 Ingersoll-Rand Co.      (NYSE:IR)     Q1   0.73     0.82
4/19 Jostens, Inc.           (NYSE:JOS)    Q1   0.23     0.26
4/19 Liz Claiborne, Inc.     (NYSE:LIZ)    Q1   0.70     0.78
4/19 Lucent Technologies     (NYSE:LU)     Q2   0.17     0.22
4/19 Mattel Inc.             (NYSE:MAT)    Q1   0.02    (0.03)
4/19 Mead Corporation (The)  (NYSE:MEA)    Q1   0.22     0.27
4/19 Meredith Corp.          (NYSE:MDP)    Q3   0.41     0.47
4/19 Nabisco Group Holdings  (NYSE:NGH)    Q1    --       --
4/19 New Century Energies    (NYSE:NCE)    Q1   0.88     0.89
4/19 Occidental Petroleum Co (NYSE:OXY)    Q1  (0.20)    0.63
4/19 Owens-Illinois Inc.     (NYSE:OI)     Q1   0.41     0.36
4/19 PepsiCo, Inc.           (NYSE:PEP)    Q1   0.25     0.28
4/19 Placer Dome Inc. (US$)  (NYSE:PDG)    Q1   0.03     0.08
4/19 Raytheon Corp. (B)      (NYSE:RTN.B)  Q1   0.71     0.24
4/19 Regions Financial Corp  (NASDAQ:RGBK) Q1   0.57     0.58
4/19 Rohm & Haas Co.         (NYSE:ROH)    Q1   0.61     0.62
4/19 Southtrust Corp.        (NASDAQ:SOTR) Q1   0.62     0.70
4/19 Stanley Works (The)     (NYSE:SWK)    Q1   0.48     0.51
4/19 Sysco Corp              (NYSE:SYY)    Q3   0.22     0.29
4/19 TRW, Inc.               (NYSE:TRW)    Q1   0.85     1.21
4/19 Textron, Inc.           (NYSE:TXT)    Q1   0.93     1.03
4/19 USX-Marathon Group      (NYSE:MRO)    Q1  (0.04)    0.66
4/19 United Technologies     (NYSE:UTX)    Q1   0.63     0.72
4/19 Wachovia Corp.          (NYSE:WB)     Q1   1.18     1.30
4/19 Warner- Lambert         (NYSE:WLA)    Q1   0.45     0.56
4/19 Winn-Dixie Stores Inc.  (NYSE:WIN)    Q3   0.40     0.22
4/20 Allstate Corp.          (NYSE:ALL)    Q1   0.81     0.64
4/20 Amgen                   (NASDAQ:AMGN) Q1   0.23     0.25
4/20 Andrew Corp.            (NASDAQ:ANDW) Q2   0.09     0.16
4/20 Baxter International    (NYSE:BAX)    Q1   0.61     0.64
4/20 BellSouth Corp.         (NYSE:BLS)    Q1   0.46     0.51
4/20 Black & Decker Corp.    (NYSE:BDK)    Q1   0.44     0.49
4/20 Bristol-Myers Squibb    (NYSE:BMY)    Q1   0.53     0.60
4/20 Brunswick Corp.         (NYSE:BC)     Q1   0.62     0.65
4/20 Burlington Resources    (NYSE:BR)     Q1   0.00     0.37
4/20 CMS Energy              (NYSE:CMS)    Q1   0.80     0.67
4/20 Central & South West Co (NYSE:CSR)    Q1   0.21     0.20
4/20 Consolidated Edison Co. (NYSE:ED)     Q1   0.76     0.84
4/20 Cooper Industries, Inc. (NYSE:CBE)    Q1   0.80     0.87
4/20 Coors (Adolph) Co.      (NYSE:RKY)    Q1   0.32     0.37
4/20 Crane Co.               (NYSE:CR)     Q1   0.49     0.42
4/20 Deluxe Corp.            (NYSE:DLX)    Q1   0.59     0.61
4/20 Duke Energy Co.         (NYSE:DUK)    Q1   0.83     0.89
4/20 Ecolab Inc.             (NYSE:ECL)    Q1   0.26     0.29
4/20 Edison International    (NYSE:EIX)    Q1   0.40     0.30
4/20 Fort James Corporation  (NYSE:FJ)     Q1   0.53     0.44
4/20 Fortune Brands Inc.     (NYSE:FO)     Q1   0.32     0.41
4/20 Franklin Resources, Inc (NYSE:BEN)    Q2   0.44     0.55
4/20 Gillette Co.            (NYSE:G)      Q1   0.24     0.22
4/20 Helmerich & Payne, Inc. (NYSE:HP)     Q2   0.15     0.26
4/20 Houghton Mifflin Co.    (NYSE:HTN)    Q1  (1.29)   (1.47)
4/20 Intl Flavors & Frag     (NYSE:IFF)    Q1   0.46     0.48
4/20 Keycorp                 (NYSE:KEY)    Q1   0.57     0.54
4/20 Knight Ridder           (NYSE:KRI)    Q1   0.65     0.73
4/20 Leggett & Platt Inc.    (NYSE:LEG)    Q1   0.33     0.38
4/20 McDonald's Corp.        (NYSE:MCD)    Q1   0.29     0.32
4/20 Microsoft Corp.         (NASDAQ:MSFT) Q3   0.35     0.41
4/20 Mirage Resorts Inc.     (NYSE:MIR)    Q1   0.28     0.24
4/20 Nucor Corp.             (NYSE:NUE)    Q1   0.32     0.96
4/20 PPG Industries, Inc.    (NYSE:PPG)    Q1   0.81     0.92
4/20 Peoples Energy Corp.    (NYSE:PGL)    Q2   1.56     1.58
4/20 Praxair Inc.            (NYSE:PX)     Q1   0.58     0.68
4/20 Quaker Oats Co.         (NYSE:OAT)    Q1   0.51     0.60
4/20 Quintiles Transnational (NASDAQ:QTRN) Q1   0.31     0.32
4/20 Ryder System Inc.       (NYSE:R)      Q1   0.31     0.32
4/20 Schering-Plough Corp.   (NYSE:SGP)    Q1   0.36     0.42
4/20 Sigma Aldrich Corp.     (NASDAQ:SIAL) Q1   0.44     0.44
4/20 Silicon Graphics, Inc.  (NYSE:SGI)    Q3  (0.23)   (0.07)
4/20 Sunoco, Inc.            (NYSE:SUN)    Q1   0.13     0.54
4/20 Times Mirror Co.        (NYSE:TMC)    Q1   0.60     0.75
4/20 Torchmark Corp.         (NYSE:TMK)    Q1   0.62     0.68
4/20 UST, Inc.               (NYSE:UST)    Q1   0.60     0.63
4/20 Union Pacific Corp      (NYSE:UNP)    Q1   0.52     0.70
4/20 Union Planters Corp.    (NYSE:UPC)    Q1   0.63     0.71

Copyright 2000, Reuters News Service

Stock News

Ford Announces Shareholder Value Plan
By: Matt Paolucci

Ford Motor Co. (F) said Friday it will spin off its Visteon
parts operation later this year and offer shareholders new
shares as part of a plan to boost the automaker's stock value.

Visteon makes a variety of automotive parts, including chassis
and steering systems, climate control systems, energy
management systems, interiors, rear-seat entertainment
systems, bumpers and glass parts.

In addition to the 100-percent spin off of the $19 billion
unit, the world's No. 2 automaker plans to offer each
shareholder the chance to exchange their shares for new shares
and the option to take $20 in cash or the equivalent in stock.
Visteon is well positioned to capitalize on key industry
trends. The company is recognized as a leader in the areas
where the industry is moving, such as systems integration and

The plan will allow common and Class B shareholders to
increase their equity in the company by electing to receive
additional Ford common shares. For example, if a Ford share is
worth $60 before the exchange, shareholders will receive
shares worth $40 and the option to take the cash or share

The long-awaited move by Ford to spin off its parts operation
is designed to unlock shareholder value and give the world's
No. 3 auto supplier more freedom to capture non-Ford business.

"This innovative and unprecedented Value Enhancement Plan
reflects our confidence in the outlook for our business and an
absolute commitment to rewarding our shareholders," said Ford
Motor Company Chairman Bill Ford. "We believe independence for
Visteon will result in it being a stronger competitor and is
in the best long-term interest of both Visteon employees and
Ford Motor Company shareholders."

"These pioneering actions will allow us to immediately reward
our shareholders and accelerate our transformation into a
leading consumer-focused company," Ford CEO and President Jac
Nasser said.

The record and effective dates as well as other details
regarding the plan will be included in a proxy statement,
which the company expects to mail to shareholders in the early
summer. The Visteon spin-off also is expected in the summer.

Ford also plans to adjust its dividend so that those
shareholders choosing to receive the stock instead of cash
ill receive about the same amount of annual dividends. The
moves are subject to U.S. Securities and Exchange Commission

But Standard & Poor's and Moody's Investors Service reacted to
the news by downgrading Ford's long-term corporate and debt
ratings over concerns about the large outlay of cash as part
of the share-exchange program. The ratings services continue
to rate the company as stable, but worry about its liquidity
being eroded by the plan.

Some analysts feel a share buyback would have been an easier
way to boost shareholder value. "Let's be clear, Ford is
'swinging for the fences' by uncorking its $10 billion
shareholder value initiative," said Gary Lapidus of Goldman
Sachs. He also dismissed concerns about Ford hurting its cash
pile as he expects Ford to have $18 billion on its balance
sheet at the end of the year.

Ford hasn't had a large buyback since 1989, partly because it
could dilute the voting strength of the Ford family's Class B
shares, analysts said.

Advising Ford on the shareholder plan and spin off is Goldman
Sachs & Co.


There is no Ask the Analyst article this weekend.

Market Posture

As of Market Close - Friday, April 14, 2000 

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

DOW Industrials   10,850  11,250  10,306    BEARISH   4.14  **
SPX S&P 500        1,410   1,475   1,357    BEARISH   4.14  **
OEX S&P 100          780     800     732    BEARISH   4.13  
RUT Russell 2000     470     580     454    BEARISH   4.14  **
NDX NASD 100       3,800   4,700   3,208    BEARISH   4.13  
MSH High Tech        900   1,150     822    BEARISH   4.13  

XCI Hardware       1,480   1,510   1,337    BEARISH   4.13  
CWX Software       1,450   1,670   1,081    BEARISH   4.04
SOX Semiconductor  1,050   1,360     892    BEARISH   4.13  
NWX Networking     1,070   1,190     851    BEARISH   4.04
INX Internet         800     940     528    BEARISH   4.04

BIX Banking          520     615     537    Neutral   3.16
XBD Brokerage        450     580     421    BEARISH   4.14  **
IUX Insurance        520     620     555    Neutral   3.16

RLX Retail           900   1,000     907    Neutral   4.13 
DRG Drug             330     380     359    Neutral   3.30
HCX Healthcare       680     760     718    Neutral   3.30
XAL Airline          130     160     141    Neutral   3.10
OIX Oil & Gas        265     300     285    Neutral   3.16
Posture Alert    
Friday's catastrophe will eventually turn into someone else's
treasure; however, at the moment investors are left in the
dust to figure out the brutal losses incurred during this
past week. Losers for Friday were led by Brokerage (-12.73%),
Semiconductors (-11.64%), Software (-10.10%), and the NASDAQ
100 (-9.73%). Sectors that ripped through support levels, and
thus were downgraded to Bearish from Neutral, include Brokerage,
Russell 2000, the Dow, and S&P 500 Indexes.

Market Sentiment 

Sunday, April 16, 2000

Is Capitulation Just Around the Corner?
The market took a bath this week, and no matter what sector you were 
in, you obviously felt the pain. Or as our beloved President would say: 
"Iya feeyal yor pain." Sorry, couldn't resist that, but the market just 
lost $2 trillion on Friday alone. Regardless, sector after sector is 
now having a fire sale, and the million-dollar question is whether to 
buy-sell-or hold. 

Recently, we talked about the complacent sentiment in the bulls' camp, 
and it was obviously reflected Friday, as traders shied away from any 
significant investments. If an investor had $100,000 in new money from 
a CD that just rolled over, odds are; they might have put $20,000 in 
the market on Friday, with the remainder waiting it out until a 
reversal occurs, and that is for an optimistic investor. With all of 
the turmoil in the market, and with so many quality stocks getting 
torched, most people did nothing except watch everything drop, or cry. 
This complacency is killing this market at the moment. If you have 10 
traders, we would rather have all 10 of them be bearish, or all 10 of 
them be bullish, but not all 10 stuck right in the middle. This is the 
type of complacency that we have been referring to. From a sentiment 
standpoint, we need a majority of these people to jump in the bearish 
camp! Once this happens, you will see a bottom put in.

It is always amazing to see how quick sentiment can change. Now 
granted, we have had numerous interest-rate hikes over the last year, 
and the markets were already expecting another. Did Friday's CPI really 
change that much in the marketplace? Did it justify this sell-off, or 
was it spin control by the bears. Will slightly higher interest rates 
slow down the growth of the biggest technology revolution in history, 
the Internet? How about the growth in the telecommunications industry? 
I guess the Biotechnology sector will now stop trying to find a cure 
for AIDS or cancer now that we had a poor CPI! And since when did the 
stock market look for Greenspan to stop the bleeding in the market? He 
usually starts a sell-off, not stops one. Greenspan's stockmarket risk 
speech and his 100-year flood quote will probably be spun by the bears 
all weekend long, but did these comments change anything? By now, you 
should get our point, and that is there will be some good entry points 
in the upcoming weeks. Option expiration is just days away, and we are 
going to be in for a wild ride as traders clear out positions. This 
roller coaster is just beginning, and we have yet to see the throw-in-
the-towel capitulation that many are looking for, but it is close, so 
be prepared! 

Corporate earnings could be a white knight for this market (in terms of 
stopping the bleeding and putting in a bottom), and this next week will 
be critical with so many bellwethers due to report. So far, however, 
earnings have not helped the carnage felt by the bulls, and if one of 
the major companies whiff on earnings this week, the pain will 
continue. But just imagine the potential short squeeze, if IBM, Intel, 
Microsoft, Texas Instruments, EMC, Qualcomm, Apple, and AOL beat 
expectations and talk about the rosy future like Sun Microsystems did. 
It could be pretty powerful! Regardless, here is a quick list of 
companies reporting (estimated dates), and their whisper numbers. The 
Pinnacle Index has been left off this week due to a lack of credible 
statistics due to the major sell-off (everything is now low 
expectation). If anything major changes, like this last week with 
Advanced Micro Devices, we will alert you on Tuesday's letter. 

Company          Symbol    Expected    Whisper#:  

April 17th
Doubleclick       DCLK      -.11        -.09
Novellus Systems  NVLS       .37         .40
Xircom            XIRC       .39         .41 

April 18th
America Online    AOL        .09         .11
IBM               IBM        .77         .84
Inktomi           INKT      -.02         .00
Intel             INTC       .69         .71
Texas Instruments TXN        .53         .57
Qualcomm          QCOM       .24         .25
RealNetworks      RNWK       .04         .05
Sprint PCS        PCS       -.57        -.57
Tellabs           TLAB       .26         .28
EMC Corp          EMC        .29         .32

April 19th        
Apple Computer    AAPL       .80         .86
Atmel             ATML       .18         .20
Citrix Systems    CTXS       .19         .20

April 20th
Microsoft         MSFT       .41         .45
Xilinx            XLNX       .21         .22


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.

Interest Rates (5.782):
The current yield is in bullish territory.

Volatility Index (39.33)
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 

Mixed Signs: None

Liquidity Crunch:
With the fear of inflation, and the most likely scenario of several 
more rate hikes, liquidity in the marketplace will become a more 
significant issue and put more pressure on equities.

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. 
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 

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 sell-off 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                        (4/14)      

Overhead Resistance (765-800)     0.53
Overhead Resistance (735-760)     0.28

OEX Close                       731.94
Underlying Support  (700-735)    18.30

What the Pinnacle Index is telling us:
Based on Friday's sentiment, new support is overwhelmingly strong, and 
both overhead resistance levels are light. This would indicate the 
potential for a powerful relief rally this week.  

Put/Call Ratio                  Friday    
Strike/Contracts                (4/14)    

CBOE Total P/C Ratio             .91
CBOE Equity P/C Ratio            .77
OEX P/C Ratio                   1.40

Peak Open Interest (OEX)      
Strike/Contracts                (4/14)          

Puts                          700 /  8,755    
Calls                         845 / 18,490
Put/Call Ratio                   0.47

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 14, 2000                          39.33*****

*****= Levels not seen since October of 1998. October 8, 1998, the VIX 
hit a high of 60.63 before retracing back.   


For the week of April 17, 2000


None Scheduled


Housing Starts           Mar    Forecast: 1.740M  Previous: 1.781M
Building Permits         Mar    Forecast:  N/A    Previous: 1.631M


Trade Balance            Feb    Forecast:-$28.5B  Previous:-$28.0B    


Initial Claims           04/15  Forecast:   265K  Previous:   264K
Philadelphia Fed         Apr    Forecast:   20.0  Previous:   25.0
Treasury Budget          Mar    Forecast:-$23.0B  Previous:-$41.7B 


None Scheduled 
Markets Closed in Observance of Good Friday

Week of April 24th

04/25 Existing Home Sales
04/25 Consumer Confidence
04/26 Durable Orders
04/27 Employment Cost Index
04/27 GDP
04/27 GDP Chain Deflator
04/27 Initial Claims 
04/27 Help Wanted Index
04/28 Personal Income
04/28 PCE
04/28 Chicago PMI
04/28 Michigan Sentiment

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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 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
buy or sell securities presented. All investors should consult 
a qualified professional before trading in any security. The 
information provided has been obtained from sources deemed 
reliable but is not guaranteed as to accuracy or completeness.
The newsletter staff makes every effort to provide timely 
information to its subscribers but cannot guarantee specific 
delivery times due to factors beyond our control.

The Option Investor Newsletter              04-16-2000  
Sunday                        2 of 5


Memories of the October 1987 Crash and
Using Volume To Decide Upside Breakouts Part II 
By: Renee White

All jokes aside this time.  This has been bad. Very, very bad.  
When I first started writing for OI, I mentioned that I had a 
Series 7 license (Brokers License) in 1987, during a temporary 
diversion from medicine. I've always been interested in both 
fields.  Today (Friday), I had flashbacks of the feelings felt 
on that disturbing day in mid October of the 1987 crash. Gosh, 
do I ever remember that awful feeling! 

I remember sitting at my desk, frozen, trying to assimilate 
information quickly.  Trying to make sense of things in the 
middle of a panic, is not something most people do well.  I 
actually worked for a firm that did estate planning, so my 
investment customers were small in comparison.  During the 
panic, I went down the elevators to a first floor brokerage 
firm.  As soon as the elevator doors opened, I saw this huge 
crowd outside their doors, staring inside, looking for quotes, 
help, direction, or at least someone with more answers than 
questions. All they could really do is find comfort in others, 
with the same concerns and fears.  Everyone knew they were in 
trouble. Everyone knew it was too late to do anything.  There 
was a loud quiet hush, to the panic.

At that time, we did not have computers with instantaneous data 
before our eyes.  There was no CNBC.  Most of us relied upon 
phones to get information.  The internet did not exist.  Phone 
lines were jammed and phones were literally taken off the hook 
as everyone tried to figure out how to find their footing.  No 
one had time to answer anyone's questions, including professional 
to professional.  No one had the answers.  No one knew what to 
say, much less what to do.  No one!

Panic got most people nowhere.  With phones not being answered, 
retail brokers were lucky to take care of their own accounts, 
then their biggest customers.  The little guy, the one who can 
least afford the damage, always seems to get lost in the crowd.  
It was very sad because these people turned to you, who they 
trusted, to protect their interest.  They never even considered 
that in a worse case scenario, you would be helpless too.  I 
remember clearly, how sick I felt in the pit of my stomach.  Part 
of that discomfort was due to the investment I had made just 2 
weeks earlier, with a chunk of my Aunt's money.  My Aunt was not 
"market savvy".  I knew that she would not understand that it was 
not my poor decision, but a major stock market event.  For years, 
it tore at my heart, knowing I was part of her loss and knowing 
she did not fully understand.  I had tried to convince her to 
diversify the investment, but she was more interested in getting 
a commission price break from a lump sum in one thing.  Back then, 
commissions were very high and it took time to recover from a big 
commission hit.  The commission charges influenced her investment 
decision against my recommendation for diversification.  She was 
hit twice, once with the commission and then with the crash. 

I was never able to gather the strength to discuss what happened, 
even 10 years later, before her death.  I always felt so guilty 
that I couldn't protect her investment, or the investments of many 
who looked up to me.  No matter what, people do not understand the 
risks involved, until they face it head on and feel their own 
pain.  The inability to help others, led me to loose interest in 
the markets, for almost 8 years.  It was because of the emotional 
effects of October 1987, that I decided I did not want to invest 
other people's money any more.  If I got back in, it would be for 
my own account and risk alone.  I'm not going to discuss risk 
management now.  All levels of traders get hit in this environment 
and hind site is a perfect 20/20.  From here, we must decide to 
either go on or exit.  This crash will wash many out of the 
system again.  Some will never return although others will 
gradually trickle back in.  Regardless, their trading style will 
be different due to the latest lessons learned.  I suspect this 
will affect our rebound to a larger degree than many expect and 
it could prove more delayed then many ever dreamed. 

So, after a sell-off, when do we know it is safe to buy?  Are 
we feeling the flutter of death here, or is it the flutter of 
life?  Technicians look for support levels to hold as a key 
indicator that a bottom is close for both the  broader markets 
and leading companies.  A capitulating downside slide on major 
volume is what tends to get the attention.  The question becomes, 
"When will it end?"  After support has been broken on several 
levels, the concern becomes, "Which level of support will 
finally hold?"  Buyers of dips are now scared to risk again, 
still hurting from the last support that did not hold.  At some 
point, sellers see the equities they've kept, as now too cheap 
to sell.  Everyone seems to stop, wait and watch, everyone else.  
With buyers and sellers drying up, the market stagnates and volume 
quiets down.  Some nibble, only to run again when the first person 
sneezes.  Rolling consolidation occurs as head fakes and bear 
traps gobble up the brave trying to out smart the crowd.  When 
trying to decide if you want to buy now, ask yourself this,  Would 
you want to be the front soldier first to come up on the enemy? Or 
would you rather wait, watch and understand their patterns? Dead 
Hero or Live Trader?

Eventually and slowly, the bravest begin to test the market and 
things inch up, working their way back through the bear trap 
resistance levels. This is a tough time to trade options because 
on one hand, you're hit with time decay in a jittery market slow 
to recover and on the other hand, jumping in to a short-term 
rally may cause you to over-pay due to implied volatility.  
Trading the equity does not have this problem and a safer play 
on the bounce.  One could day-trade a liquid option, but it's 
still risky.  There's too many people financially hurting this 
time.  In fact, I am really curious how our foreign readers are 
handling the pain and how it is affecting their own markets.

As memories of a sell-off fade during consolidation, average 
daily volume returns.  Then, as interest continues and resistance 
levels broken to the upside, volume begins to pick up.  Breaking 
resistance levels on higher than average volume returns you to a 
buyable uptrend and a more comfortable entry for option traders.  
Watch for confirmation of continued upside, as the equity takes 
out the previous day's high on stronger than average volume.  
Recall all the comments you have read in the OIN Call Section, 
telling you to wait for the stock to hit a certain price on 
strong volume before you enter.  This is to protect your upside 
chances, using volume to assist profits, instead of risking your 
money bumping your head against a double or triple top which then 
breaks down to the downside.  When breaking out to the upside from
specific trading patterns,(triangles, head-and-shoulders, downward 
trendlines, etc.) a large increase in volume provides a strong buy 
signal.  Also, volume usually decreases inside of triangles, so 
waiting on confirmation of the side of the breakout, will increase 
your odds of success.  I personally like trading triangles and I 
expect a lot of these patterns in the months ahead, due to the 
recent carnage.

When a stock price starts an uptrend and maintains it, usually the
average daily volume increases because it starts attracting more 
and more investors.  Again, these volume figures are posted in 
newspapers and web sites.  When the volume has increased for 
several days and is exceptionally high for one or two days, the 
attention of the price gains accompanying this volume should 
sustain the uptrend for a while. Pistolese writes of three volume 
characteristics of uptrends are: the volume of trading increased 
as the uptrend started, the volume fluctuated as the uptrend 
continued, and in spite of the fluctuations, the volume of 
trading was generally higher than average while uptrending.  And 
I'll add to that: if the start of the uptrend is not accompanied 
by increased volume while taking out the previous days high, you 
may be seeing a failed rally attempt. 

Times like these, I can't stress enough that anyone who wants to 
trade options successfully MUST learn basic technical analysis.  
It is easy, like Show-N-Tell. Check out Clifford Pistolese's 
introductory book, Using Technical Analysis in the OI bookstore. 
Pistolese feels the larger the increase in volume, the greater 
the price rise potential from the breakout.  He thinks the best 
time to buy a stock is just after it has made a high volume 
breakout to the upside of a bottom formation.  He says the 
combination of an upside price breakout and a large increase in 
volume, represents a strong buy signal.  When the volume (on the 
equity) has increased for several days, or has been exceptionally 
high for one or two days, there is a higher probability that the 
uptrend can sustain itself. 

Uptrend? I don't know about you, but that feels like a very 
distant memory! Like Jim said, "Don't buy too soon". There's no 
hurry this time.  And to make things worse, Thursday is expiration 
Friday. Everything is weird this year!!

Contact Support


What is the real value of "value investing?"
By: Mary Redmond

Since Saturday is April 15, many people who invested in the
market last year had heavy capital gains taxes to pay this 
week.  This may have impacted the market this week and last 
week, partly because of the decreased liquidity which comes
from tax bills.  In addition, when the Nasdaq crashed last
week many investors got margin calls.  If an individual gets
a margin call and also has to have cash to pay taxes, one of
the methods of raising the cash can be selling his or her
mutual funds.  A lot of weak hands were shaken out of the
market in the last month, and a lot of them won't be back
anytime soon.   Hopefully the worst of this may be over and
the services which track fund flows reported statistics
for the week ending April 12th that the money is starting to
come back in.

On the investment company institute's web site it was 
reported that retail money market funds decreased by
3.73 billion to 1.014 trillion for the week ending 
April 12th.  Assets of institutional money market funds
increased by 2.64 billion to 705 billion.  Total money
market mutual fund assets were 1.719 trillion for the
week ending April 12.  There's a lot of cash out there!
AMG Data services reported that equity funds took in 
8.4 billion for the week ending April 12, and over
4 billion went in to large cap growth funds.  1.8
billion went into aggressive growth fund, and tech
funds took in 922 million.  Let's hope those fund
managers start to put it to work.

For investors to start to buy again aggressively we may need 
a strong catalyst.  However, everything in the market today 
moves at warp speed considering that the Dow went from 11700 
to under 10,000 to back over 11300 again in less than four 

This brings up the topic which has been over-discussed in 
the media lately of growth vs. value investing. Growth and 
value are classifications of some mutual funds. Recently 
there has been such incredible divergence in performance 
between the Dow and Nasdaq and the "old economy" and "new 
economy" stocks that some individuals have started to believe 
that a stock can be classified as either a "growth" stock 
or a "value" stock.

The value of a stock is usually considered to be the 
shareholders equity.  It makes no difference what industry
the company is in, if it makes tires or optical networking
equipment.  If the company's earnings are growing and
the profit margins are high enough that the return on 
shareholders equity is high then it is likely that the
value of the company will grow.  If the company has to
spend most of it's earnings on upgrading its equipment
then it will have less left over to reinvest back in the
company.  Over the long run, if a company cannot grow
its shareholders equity, the shareholders will actually
lose because the purchasing power of money declines over

Momentum investors often scoff at returns of 50% a year
when you can make 50% in a day or a week if you are 
right.  There really is no better strategy, only one
which is more suitable for the person implementing it.
However, there are a couple of important points to consider.
Momentum players make alot more money quickly if their 
strategy and timing are accurate.  Momentum investors can also 
hedge their bets by going long and short simultaneously.
However, long term investors sometimes win when it comes
time to pay taxes. 

You can use a Texas Instruments BA35 solar calculator to 
calculate present value and future value if you know the 
rate of interest you can expect to receive.  For example,
say you start with 100,000 and you make a 50% annual return
on your investment.  You can plug in the numbers.  
PV= 100,000. %i=50. N=5 CPT FV.  After five years the 
100,000 turns into 759,375.

Now suppose you sold and paid 39% capital gains taxes
every year.  After five years you would have only 
approximately 378,486.  That's quite a difference.  One
of the most important factors to consider in long term vs. 
short term stock investing is the magic of compound interest
with out any capital gains taxes eating into your profits.
This is the reason some of the richest people are the
long term holders. 

Contact Support


Is Your Portfolio Half Empty or Half Full?
By: Lynda Schuepp

I'm reminded of a Bobby Darren song, "When the shark bites, 
with his teeth dear, scarlet billows start to spread".  I guess
old "Mack the Knife" was back in town on Friday.  Regardless 
of how you look at Friday, your portfolio ain't what is used 
to be.  No one escaped Mack's knife, unless you were fortuitous
enough to be in "all cash" and not have an IRA, yeah right?    

First, most of you readers know that I like to hedge my 
positions by having a long and short side (spreads).   This 
strategy allows me to be able to buy back the short side if 
and when the market dips.  Unfortunately for me, I covered most 
of my short legs earlier in the week.  I thought I was a genius 
for selling my OEX 810 puts on Tuesday for a 3-point profit.  
Even smarter for buying back my short calls on PUMA, GE, IMNX and
QCOM, right?  I got a measly 2 or 3 points off of each.  

The real douser this week was some "dead in the water" April 740 
OEX puts.  I bought them for 24 back on March 8th.  I left for 
vacation and the Denver seminar with what I thought was some 
good blue-chip portfolio insurance.  During the week while skiing 
at Vail, the S&P climbed straight up from 750 to 846.  In case 
your thinking, what an idiot, no stops in place?  You're right!  
I actually believed that I was effectively hedging my blue chip
positions.  My OEX puts tanked from 24 to 1.  

Then, I was able to justify my position by noting that the OEX 
had formed a tower top, one of my favorite candlestick patterns, 
if you attended one of my chalk talks in Denver.  Sure enough, 
the tower came back down on April 4th.  My puts were worth 10 
(for about a minute).  If I could have sold them at that point, 
my loss would only have been 14 points instead of 23.  Only 14 
points, listen to me.  I never should have stayed in this 
trade.  Greed not brains kept me from pulling the trigger that 
day.  I told myself, the recovery was too fast, we would go back 
again and test these lows, my only hope was that would happen 
before expiration.  Well it did just that on Friday.

On April 4th the OEX got to a low of 770 and the puts were then 
worth 10.  Friday at 9:45 the OEX was down to 742 and my puts 
were only worth 8-1/4.  Time value was evaporating by the minute 
so I decided that if I could get 10 today I would be lucky.  
The OEX seemed to be bottoming out around 750 for a whole hour 
during lunch.  My fear was that the Wall Street crowd would come 
back from lunch and see all these bargains and drive the market 
back up.  Vix was up around 38 and you probably know the old 
saying, "When VIX is high, it's time to buy, when VIX is low, 
it's time to go".  I knew I was not the only person who knew 
this so I figured we were putting in a short-term bottom. I 
really didn't think the VIX would go higher, another big mistake.
Better get what I can for these puts, because I might not get 
another chance like this before expiration.  Right?  I sold the 
puts for an average price of 9-1/4.  Well, the rest is history.   
The puts got as high as 25-1/2.  So now I'm stuck with the long 
side of all my leaps and no short legs to offset them.  Real 
smart!  The rest of the day I shorted some stocks and made a 
weeks pay, but I lost a year's pay by not keeping myself hedged.   
CNBC presented a Warburg Dillon Reed study that showed the 
recovery time after corrections.  The Bear market of 1973-74 
corrected 59% and took 48 months to get back to the previous 
highs.  The October '87 crash was a correction of 35% and took 
20 months to fully recover.  The 1989-90 correction of 33% took 
7 months to get back and it's highs.  The July to October 1998 
29% slide took only 2 months to get back.  So my prediction, 
probably more wishing and hoping, is that the Nasdaq will fully
correct back in a about a month.  Being the optimist that I am, 
I see my portfolio as half full.  Let's hope we won't have to 
wait too long for Mack to leave town.    

Contact Support


Bulls Make Money, Bears Make Money
By: Molly Evans

It's a shame that my writing tenure here with OIN will be cut 
so short.  Since having drawn the line in the sand for the NAS 
to stop at 3320 on Thursday night, I'm now moving on to CNBC 
to be a market technician and commentator.  *laughing*  Just 
kidding!  But hey!  Wasn't that a pretty neat illustration of 
how even the most basic of technical analysis is at least a 
flashlight in a raging storm?

A couple of you wrote asking about that chart and pointing to 
the "other" undrawn trendline.  That is a less positive trend 
and I don't like that one!  Of course you are correct and I 
should indeed have drawn that one in.  This is for all of you 
wondering about it.


There, don't like this one do you?  No!  Not if you're sitting 
on calls or other bullish positions.  Feh!  What's another 350 
points anyway?  We, the well rounded players know that we can 
be adept at trading both sides of the market.  Play the market, 
don't let it play you.  As one of my very nice fellow readers 
commented, "Good traders know that money can be made in an up 
or down market.  You just have to know when to make the turn 
within a day or two.  So why is everyone looking for a bottom?  
Who cares?  When a stock rolls over, it goes down quicker than 
it goes up.  Well placed short positions pay big bucks fast."  
Well spoken and concise!  As I am still relatively new to actual 
options trading, I've not had a bear market to play this side.  
Heck, I've never seen down!  But...I kinda like it!  I had the 
good fortune to pick up a small treasure trove of Citgroup puts 
when the Dow was up 200 on Wednesday.  There was "C" sitting up 
there all fat and happy at it's all time high while the Nasdaq 
was plunging and all the pundits saying the Dow was the workhorse 
now.  Yeah!  Ripe for the pickin' if you ask me.  Cheap puts 
become fairly expensive puts in this market and I walked off 
with a 233% gain in two days.  Cool!  Of course, everyone is a 
genius in a bear market right?  Oh...well, something like that.

Alright, where to now?  We finished on the low of the day and 
that's not good.  Surely Mr. and Mrs. Margin are knocking on 
people's doors again so soon and we'll likely have the 
ramifications of that to deal with on Monday. On the other 
hand, we're still in earnings season and fundamentally things 
have been looking very positive in the tech sector.  We can 
look forward to a huge slate of numbers coming in from some 
of the big dudes.  SUN Microsystems was a bull Friday after 
their great story, as was PMC Sierra though it finished down 
on the day.  It was a real war there.  So, do you wait for 
the bounce and then jump on the moving train?  Do you sit it 
out until a solid trend is established again?  I don't know 
of course but five days of carnage is begging for a relief 
rally.  I have to believe that the next week is going to end 
up.  I stepped a toe in the water by buying a small sample of 
calls and selling out my short positions but it seems that I'm 
always a little early to the party.  Whatever you decide for 
Monday, I think you should go out and enjoy the weekend.  You 
notice that the Dow is down 7% and the NAS is down 26% for the 
week and yet, the birds are still singing and the sun is shining 
even warmer now?  Amazing how that works. 

Contact Support


Daily Results

Index      Last     Week
Dow     10305.77  -805.71
Nasdaq   3321.29 -1125.16
$OEX      731.94   -89.06
$SPX     1357.31  -128.66
$RUT      453.72   -89.26
$TRAN    2727.04  -100.68
$VIX       39.33    12.39

Calls               Week

VSTR       90.00     3.63  New, nice base between $84 and $88
CMVT       73.94     1.63  New, actually showed gains last week
GMST       41.25     1.31  New, one of Friday's star performers
ENE        69.00    -0.94  Has been redirecting its energies
VIGN       42.25    -1.75  New, sprint to Wednesday's earnings
WLA       101.50    -2.50  Bounced off $98.50 with strong volume
MERQ       58.75    -3.13  New, attracted buyers after losing 32%
CL         55.75    -3.56  Dropped, pure panic on Friday
UAL        59.00    -3.88  Dropped, from merely good to plain ugly
LTD        44.19    -4.56  Dropped, no respect for retailers
SDLI      143.00    -9.25  New, a $34 move up intraday on Friday
AMAT       80.31   -11.56  Dropped, semis got hurt in the brawl
LXK       102.31   -17.19  Watch for a repeat bounce at $97
INTC      110.50   -26.31  Dropped, earnings Tuesday after bell
ADBE       97.81   -27.19  Looking for a reversal of fortune
DISH       42.81   -30.06  Dropped, they all are broken
HWP       123.00   -33.00  Dropped, say good bye to this hero
ABGX       66.88   -36.13  Earnings set for April 25th
NXTL      104.88   -37.56  A 7% decline on Friday and $100 support
SEBL       86.56   -40.25  A quick run before earnings Tuesday?
SCMR       59.75   -64.50  New, one of best positioned optical co.


FIBR       30.44   -39.81  Brutal is the term that comes to mind
ICGE       38.97   -33.72  Dropped, profit on cliff diving
IIJI       33.00   -33.50  Dropped, take the money an run
CNXT       46.09   -31.63  A 12% drop Thursday and 15% drop Friday
MCLD       54.63   -25.38  Bleed along with rest of telecom sector
LVLT       73.38   -16.75  Dropped, nearing a bottom, bye-bye
LU         52.63    -7.69  Dropped, didn't get kicked around
KO         47.00     1.38  Dropped, it has fizzled out



GMST - Gemstar
SCMR - Sycamore
SDLI - SDL Incorporated
CMVT - Comverse Technology
MERQ - Mercury Interactive
VSTR - VoiceStream
VIGN - Vignette


No new puts today


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.


INTC $110.50 (-26.31) Whoa!  Let's just take a breather for a 
moment.  Okay, the carnage was ugly on Friday and the entire week 
for that matter.  It really changed the way investors and traders
think.  With very little green on the screen Friday, INTC felt 
the pain of this unprecedented sell-off.  Call holders across the 
board got hurt.  And although the stock fell out of bed this week, 
the Semiconductor Index($SOX) is one of the few bright spots in 
the market.  At this level, INTC doesn't look too bad for an
entry, yet we must drop this call play due to earnings on Tuesday
after the bell.  Any existing call positions could rebound on
Monday or Tuesday with a relief rally.  Remember that the NASDAQ
was down over 1000 points last week, that's 25%.  Just be sure 
to exit your positions by the close on Tuesday as we do not hold 
over earnings announcements.     

CL $55.75 (-3.56) Trepidation?  No, it was more like pure panic 
on Friday.  CL's share price dropped just like every other 
stock trading on the NYSE.  While CL manage quite well under 
the horrific circumstances, the play is over.  Plus the stock's 
precarious position just above the 200-dma is a bearish sign.  
If you take a look at a three-month chart you can visually 
confirm the imminent danger of a further technical slide. 

UAL $59.00 (-3.87) UAL was "just merely good" Thursday, but
turned into just plain ugly Friday.  Airline stocks went into
freefall Friday as investors tried to salvage recent gains.
After a short-term gain of 30 to 50%, traders looked for reasons
to sell the airline sector.  If the terrible market conditions
weren't enough, investors worried as negotiation talks between
UAL and their pilots commenced.  Issues in the negotiations
include wages and benefits, along with United's ability to form
alliances with other carriers that use smaller regional jets on
more routes.  The fear surrounding negotiations and turbulent
market conditions combined to push UAL below its 10-dma.  The
10-day is a critical level that has provided major support for
UAL during its recent uptrend.  In light of the sector weakness
and broken trendline, it's time to use the parachute and bail.

AMAT $80.31 (-11.56) In the past month AMAT received 4 upgrades
from the omnipotent Wall Street analysts.  In the past week AMAT
was downgraded by the omniscient market.  The once beloved Semi's
didn't stand a chance in Friday's market massacre.  We warned
last Thursday that AMAT was positioned at a key technical level
in its current uptrend.  Well the uptrend is no longer as AMAT
failed to make a higher low and fell through the key support
level of $89.  The massive growth in areas like wireless and
optical networking, which are producing huge gains for the
Semi's, hasn't stopped no matter what the market is doing.  In
fact, it appears that the semiconductor equipment stocks have
another two to three years growth in their infamously cyclical
industry.  However, for the time being the momentum has left 
the Semi's and so must we.  

DISH $42.81 (-30.06) See what happens when you let a bull run
around too long near the DISHes?  It looks like they all got
broken, as DISH gave up over $30 this week, crashing through
every conceivable level of support.  The carnage that overtook
the broader markets this week accelerated the losses of DISH
investors as darkness approached on Friday, and the issue
closed near the low of the day at major support.  While we
doubt DISH can fall much further, today's action puts the issue
at the level where it consolidated from December, 1999 to
mid-February of this year.  It appears unlikely that it will
move higher in the near term, so we'll go home and let someone
else pick up the pieces.

HWP $123.00 (-31.50) Our conquering hero from last week must
have had one too many celebratory drinks, as it fell out of its
chariot and was trampled by the retreating troops.  HWP was
doing all right up until today; although it had lost all of its
gains from the week before, it was still holding support at
$130.  Then came today's looting and pillaging and HWP was
knocked down repeatedly, falling below $121 before finding any
support to lean on.  A mild recovery allowed the computer
company to move off its lows near the close, but with volume
approaching double the ADV, we've had enough of HWP's drunken

LTD $44.19 (-4.56) So much for retailers getting respect on Wall 
Street during the shift into "old economy" stocks.  The woodshed 
keeper was indiscriminant and spared nobody on Friday.  While LTD 
may have closed near support on Friday, it's not going to get as 
much attention if investors get their wallets out to go bargain 
shopping for tech stocks in coming weeks, thus we're moving on.  
This play would have likely worked out better if the market were 
not in panic mode.  However, as it is, we're sending this soft 
goods retail giant back to the closet with fresh mothballs - too 
many holes in the fabric right now.


IIJI $33.00 (-33.50) To say this put play was lucrative is quite 
an understatement.  IIJI lost $36.75, or 52.7% of its share 
price since we added it two weeks ago.  The current level is 
mere points from its IPO days in August 1999.  Honestly we can't 
ask for more out of a play than that.  Remember, greed will get 
you every time!  So with that in mind, deposit the hefty profits 
into your pockets and close up shop.

LVLT $73.38 (-16.75) This Internet gave us a good downturn for 
our money, but now it's time to exit.  LVLT is now very likely 
near its bottom or close to it.  If you look back to October 
and November of last year you can see how the trading levels 
between $70 and $80 served as strong support.  We're taking an 
OIN mantra to heart and "selling too soon".  We don't want to 
get caught in an updraft and give back any profits.  

KO $47.00 (+0.81) In what was a tumultuous market for every other
stock Friday, KO held up relatively well, which bodes poorly for
our put play.  In a wicked twist of fate, KO was the best
performing stock in the Dow Jones on Friday, or should I say the
least losing stock?  KO fell through its $47 support level early
Friday morning as it gapped down by $1, but managed to bounce
from its session lows and trade flat for the rest of the day.
CEO Douglas Daft told reporters Friday that the company is going
to look to creative minds in the entertainment and technology
industries for marketing alliances.  Keeping with its new
decentralized approach KO plans to form many new alliances in
hopes to boost sales and lift the stock.  Daft also pledged to
develop new beverage products that will appeal to specific local
markets.  Those comments from Daft most likely prevented KO from
going down the drain Friday and we are dropping it.  

LU $53.00 (-6.75) We realize that it's not polite to arrive
late, and leave early, but its time to go.  LU was one of the
few stocks that didn't get kicked around on Friday.  It did
loose $0.50 for the day, but going into the final thirty 
minutes, was actually trading higher.  Shareholders of Lucent
should be pleased to see that the company may actually be
putting in a short-term bottom.  Whether it turns out to be a
bottom or not, we are dropping our play.  They are scheduled 
to report earnings, Wednesday before the open.  The volume
picked up on Friday to 20.8 million shares.  This indicates
that at least for now there are some folks doing some bottom
fishing.  Considering the week many investors had, we will 
put our profits in the bank, and move on.  

ICGE $38.97 (-33.72) Ever wonder what it's like to fall off a 
cliff?  If you don't want to experience this yourself (you 
probably get only one chance anyway), check out the chart on 
ICGE.  It went from a near term high of $150 to a low of $35.38 
intraday in just one month.  It sunk lower than we ever imagined 
making for a heavenly put play.  But we think its halo is about 
to disappear.  We've probably hit a market bottom or are at least 
very close.  With the doji star on Friday's chart, it may be that 
ICGE has taken all the pain it can stand and is ready for a 
breather or even reversal.  We've wrung enough profit out of it 
in the last two weeks and aren't going to wait around for the 
last dollar.  Congratulations to all those who profited on this 
play, but it's time to close positions and move on.

Tired of waiting on trades to execute? 
Does your broker offer Stop Losses on Options?  

Trade instantly with Stop Losses at Preferred Capital Markets
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with Preferred Capital

Anything else is too slow!



The Option Investor Newsletter          04-16-2000  
Sunday                        3 of 5


Current Split Candidates
ADBE - Adobe 
VSTR - Voice Stream
SEBL - Seibel Systems
SDLI - SDL Incorporated
Split candidates that are not current plays
BRCM - Broadcom
TXN  - Texas Instruments
INKT - Inktomi


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

Symbol - Stock          Splits/Date  
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
AMK  - Am Tech Ceramics 2:1 05-15-00 ex-date 05-16 
SIVB - Silicon Valley   2:1 05-15-00 ex-date 05-16
CMOS - Credence Systems 2:1 05-17-00 ex-date 05-18
RI   - Ruby Tuesday     2:1 05-19-00 ex-date 05-22
SNE  - Sony Corp        2:1 05-19-00 ex-date 05-22
CXR  - Cox Radio        3:1 05-19-00 ex-date 05-22
PAYX - Paychex          3:2 05-22-00 ex-date 05-23
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
LMGA - Liberty Media Grp2:1 06-09-00 ex-date 06-12
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
JNPR - Juniper Networks 2:1 06-15-00 ex-date 06-16
NXLK - Nextlink         2:1 06-15-00 ex-date 06-16
EXDS - Exodus Comm      2:1 06-20-00 ex-date 06-21
XETA - Xeta Corp        2:1 07-17-00 ex-date 07-18

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


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

Call plays of the day:

SDLI - SDL, Inc. $143.00 (-40.00)

See details in sector list

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


VIGN - Vignette Corporation $42.25 (-24.69)

See details in sector list

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


ADBE - Adobe Systems Inc. $97.81 (-27.19)

See details in sector list

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


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

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.

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.


LXK - Lexmark International $102.31 (-17.19)(13.75)

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.

What's this, a tech stock that actually moved higher for more
than an hour on Friday?  LXK did exactly that.  Finding a bottom
at $97 near the midpoint of the trading day, the stock marched
higher for the balance of the day.  Although the move was
tenuous and slow, it came on increasing volume and it is
encouraging to see any stock that was able to buck the overall
market trend in the afternoon.  On the surface, you might
think the printer company had a bad day, as the numbers show a
loss of $2.69, but one glance at an intraday chart shows LXK
closing above the bottom of the ugly gap down from Friday's
open.  The $100 level, reinforced by the 100-dma ($100.88) is
holding up well as support and could provide a launching point
for a recovery next week.  The action in LXK over the past week
has been orderly, as volume has remained below the ADV.  This
is a far cry from the many stocks that have seen volume as high
as 3-5 times the ADV while giving up large portions of their
market capitalization.  Earnings, confirmed for April 24th, are
rapidly approaching and could provide the catalyst needed for
our play to move higher.  A repeat of the bounce near $97 on
Monday could provide an attractive entry, but use volume as
your indication that the bounce is for real.  More cautious
players will wait for LXK to move back through $105 before
playing; remember that this level acted as support for most of
last week and could be resistance in the week ahead.  Be sure
to check the direction of the overall markets before playing;
last week should be all the evidence you need that even the best
stocks will get caught in a strong market-wide downdraft.

News continues to be tame on LXK, with several product-related
announcements last week.  On Wednesday, the company announced
the first solution for printing in multiple languages from
SAP's mySAP.com application using a single printer.  Now,
instead of maintaining a separate printer for each language or
dialect, customers can save money by using a single Lexmark
Optra T printer for all supported character sets.  The company
also announced that its Optra printers are certified to work
with Macro 4's Output Management software, allowing enterprise
customers to improve the appearance of business documents and
enhance decision making.

BUY CALL MAY-100*LXK-ET OI= 30 at $10.75 SL= 8.00
BUY CALL MAY-105 LXK-EA OI=  7 at $ 8.00 SL= 5.75 low OI
BUY CALL MAY-110 LXK-EB OI= 16 at $ 5.88 SL= 3.75 low OI
BUY CALL JUL-105 LXK-GA OI=350 at $16.13 SL=12.50
BUY CALL JUL-110 LXK-GB OI= 29 at $12.75 SL=10.25

Picked on Apr 6th at    $111.25     P/E = 45
Change since picked       -8.94     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 = 1.12 mln


SDLI - SDL, Inc. $143.00 (-40.00)

SDL was the first company in the world to successfully 
commercialize the integration of multiple lasers on a single 
semiconductor chip, and ever since has been a leader in 
integrating lasers with other optical or optoelectronic elements 
such as lenses, mirrors and light amplifiers.  They make the 
optical parts that enable other companies like Cisco, Lucent, 
Nortel, Ciena, and even competitors like JDS Uniphase to produce 
a finished product.  They hold more than 125 patents from which 
over 200 products are manufactured by their more than 1000 
employees.  In a nutshell, laser device design, semiconductor 
wafer technology development, device fabrication and component 
assembly, system integration and quality assurance are at the 
core of a day's work.

This will be a really short relative strength/turnaround and 
earnings play.  Yes, SDLI got clobbered like everyone else, but 
it also refused to drop below $118 in Friday's carnage.  That was 
the same level as the first major dip two weeks ago.  The point 
here is that as the overall market sold off lower, SDLI remained 
stable leading us to believe that it will one of the first to 
experience recovery on an overall market reversal.  Need more 
evidence?  The low of $118 on Friday morning was met with a 
investors rushing to get a piece of the next hour's move up to 
$152.  Did you get that?  A $34 move up intraday on Friday!  
While we weren't so lucky as to see it close there, the end of 
day selloff wasn't nearly as harsh on SDLI.  Why might that be?  
As a leader in optical communications revolution along with JDSU 
and GLW, SDLI is well run and growing like a weed.  At least 
investors haven't lost sight of that as SDLI moves into its 
earnings date of Wednesday, Apr 19th after the bell.  That leaves 
just three trading days to take advantage of what we hope will be 
an earnings run coupled with a market recovery.  SDLI has closing 
support around $142, and intraday panic support around $120.  
Just don't play it if the market is in panic mode.  Mild 
resistance is at $147, but any recovery should handily push it 
through.  That became evident near the close when SDLI moved up 
$13 on increasing volume.  No target to shoot here.  You'll just 
need to wait to see a bounce before taking a position.

With huge time premium, aggressive traders can consider selling 
deep ITM puts to minimize theta decay and take advantage of big 
delta moves should the opportunity arise.  It can be tricky, so 
if you aren't familiar with this strategy, pass it up in favor of 
something simpler.  Sadly, these are traded on the American 
Exchange only - notoriously known for slow executions and big 
spreads, making it all the more treacherous.  Experts only on 
this one.

BUY CALL MAY-130*YAL-EF OI=  6 at $33.75 SL=23.00
BUY CALL MAY-140 YAL-EH OI=  0 at $31.50 SL=22.00 Wait for OI!
BUY CALL MAY-150 YAL-EJ OI= 52 at $27.00 SL=18.00

SELL PUT APR-155 YAL-PK OI=497 at $23.75 SL=33.00
SELL PUT MAY-130 YAL-QF OI= 47 at $21.25 SL=30.00
(See risks of selling puts in play legend)

Picked on Apr 16th at   $143.00     P/E = 411
Change since picked       +0.00     52-week high=$244.75
Analysts Ratings     13-7-0-0-0     52-week low =$ 19.88
Last earnings 01/00   est= 0.26     actual= 0.31  surprise=19%
Next earnings 04-19   est= 0.16     versus= 0.08
Average Daily Volume = 1.7 mln


VIGN - Vignette Corporation $42.25 (-24.69)

VIGN provides Internet Relationship Management (IRM) software
products and services, a category of enterprise solutions
designed to enable businesses to build sustainable online
customer relationships, increase returns on internet-related
investments and capitalize on internet business opportunities.
VIGN's clients come from diverse sectors and include financial
services, health, education and government, media, retail,
technology and telecommunications.

Put on your running shoes, because this one will be a sprint.
Earnings for this Internet software firm are confirmed for
Wednesday after the close, so we will close our play on VIGN
Tuesday night.  So why are we adding such a short play?  Shares
of the company were severely beaten up over the past few weeks,
so much so that when the 3-for-1 split occurred this past
Friday, there was virtually no drop in share price.  In light
of the surrounding market weakness, this is very encouraging.
Support at $40 is holding firm and if the broad markets can
regain their feet early next week, look for VIGN to benefit
from the improving sentiment.  Another encouraging point for
our play is that even though the NASDAQ dropped significantly
lower this week, VIGN did not approach the lows seen during the
sell-off on Tuesday, the 4th of April.  Volume has been heavy
over the past 2 weeks, but it is encouraging to see the price
begin to stabilize while the volume is dropping to somewhat more
sedate levels.  Before you run out and jump into this play on
Monday, exercise some caution; the markets have yet to signal
they are done falling and VIGN was still moving down when the
final bell rang on Friday.  Look for a bounce near the $40 level
to trigger your entry, and confirm the move with increasing
volume.  If you want to be more cautious, wait for prices to
push through resistance near $50.  Keep in mind that this is a
volatile Internet stock and with earnings so close, this will 
be a very quick play.

VIGN has been busy over the past week, announcing one alliance
after another.  Tuesday saw the announcement of a new product
offering from NetGenesis which is tightly integrated with
VIGN's e-business applications.  The product, NetInstrument 
for Vignette, links the online customer behavioral data from
NetAnalysis with the dynamic, personalized content from VIGN's
e-business platform.  On Wednesday, PSW Technologies announced
that it has developed a comprehensive e-commerce application
which utilizes VIGN's V5 eBusiness platform COM interface for
content management, lifecycle personalization, and cache
management.  There is more along these lines, but in the
interest of brevity, we'll simply say VIGN looks strong going

BUY CALL MAY-40*UOJ-EH OI=147 at $9.50 SL=6.75
BUY CALL MAY-45 UOJ-EI OI=  9 at $7.25 SL=5.00
BUY CALL MAY-50 UOJ-EJ OI=104 at $5.63 SL=3.50
BUY CALL MAY-55 UOJ-EK OI= 14 at $4.63 SL=2.75

SELL PUT APR-40 UOJ-PH OI=  0 at $3.25 SL=5.25
(See risks of selling puts in play legend)

Picked on Apr 16th at    $42.25     P/E = N/A
Change since picked       +0.00     52-week high=$302.00
Analysts Ratings     13-4-0-0-0     52-week low =$ 21.00
Last earnings 01/00   est=-0.08     actual=-0.05
Next earnings 04-19   est=-0.06     versus=-0.18
Average Daily Volume = 1.88 mln


MERQ - Mercury Interactive Corp. $58.75 (-27.81)

Mercury Interactive Corp. is the leading provider of Web
performance management solutions that help e-businesses deliver
a positive user experience.  Mercury Interactive solutions enable
its customers to turn Web application performance, scalability
and user experience into competitive advantage. The company's
performance management products and hosted services are open 
and integrated to best test and monitor business-critical Web

When do you break the rules about not entering a play with 
earnings just announced?  How about when the company receives 
five reiterations of a Buy or Strong Buy within 24 hours after
reporting the strongest growth in the company's history.  That's
the case with one of our latest additions to our list.  MERQ
reported fist-quarter revenues rose 61% over the first quarter
of 1999.  Net income increased 98%, compared to the same period
a year earlier.  The driving force behind the growth was 
business-to-business e-commerce.  A look at the chart shows
MERQ did participate in the selling going on in the broad market
the this week losing about 32% of its market value.  What we
observed on Friday that was encouraging, was in the after lunch
traders began to nibble at MERQ.  Mercury did finish the session
with a loss of $3.13, but did attract buyers when many were
falling to their worst levels of the session.  The volume has
been picking up as well, which is another plus for this play.
MERQ announced last week that IBM will begin to use some of its
products.  A spokesman at IBM gave MERQ high marks, saying their
products provide a more predictable, stable environment for Web
users.  Depending on the sentiment in the markets next week
we would look for MERQ to get back on track.  We realize
that no man or company is an island, but if investor psychology
improves, we would seek opportunities to buy calls in MERQ.  
Intraday support is found near $53, with the 200-dma sitting 
at $50.13.

Before MERQ announced earnings, analysts at Prudential reiterated
a Strong Buy rating on the company and raised their price target
to $135.  Chases and Hambrecht also raised their target for MERQ
from $100 to $140 and reiterated a Strong Buy rating after an
upbeat presentation at an analyst rating.

BUY CALL MAY-50 RQB-EJ OI= 15 at $17.00 SL=12.25
BUY CALL MAY-55 RQB-EK OI=  0 at $14.25 SL=10.75 Wait for OI!
BUY CALL MAY-60 RQB-EL OI=  0 at $10.75 SL= 8.00 Wait for OI!
BUY CALL MAY-65*RQB-EM OI=654 at $ 8.75 SL= 6.25
BUY CALL JUL-60 RQB-GL OI=129 at $14.50 SL=10.75

SELL PUT APR-50 RQB-PJ OI= 97 at $ 2.19 SL= 3.75
(See risks of selling puts in play legend)

Picked on Apr 16th at    $58.75    PE = 134
Change since picked       +0.00    52-week high=$134.50
Analysts Ratings     10-2-1-0-0    52-week low =$ 10.50
Last earnings 04/00   est= 0.11    actual= 0.10 
Next earnings 07-13   est= 0.12    versus= 0.09
Average daily volume = 1.46 mln


ADBE - Adobe Systems Inc. $97.81 (-27.19)

Adobe Systems is a leader in desktop publishing software, the
company's Acrobat Reader is popping up all over the Internet as
users clamor to display portable document format (PDF) documents
on the Web.  Three of Adobe's products, Photoshop, Illustrator,
and Page Maker generate about 60% of its sales.  The company also
markets print technology to OEMs and has stakes in a string of
technology firms whose products complement its own offerings.
Adobe is hoping a restructuring effort and the introduction of
its InDesign publishing package will spur sales and accelerate
its product growth track record.

Technology is clearly oversold.  We're looking for a reversal of
fortune in the next few days, with a focus on stocks that have
shown relative strength recently, such as ADBE.  With the
exception of last Friday, ADBE has held up relatively well
considering the recent market conditions.  The stock hit a
trading range low on Terrible Tuesday, two weeks ago.  Even with
Friday's debacle, ADBE didn't trace a new low in its recent
range.  The stock is trading in a pattern we like to see, higher
highs and higher lows.  Financially, ADBE is in a strong
position.  ADBE is not one of those cash burning Net companies
made famous by Barron's a month ago.  The company has amassed
around $600 mln in cash, generates over $1 bln in sales annually,
and has zero debt.  If this market is going to turn around,
stocks like ADBE are going to lead the way.  Investors are
wanting companies with good fundamentals, still growing, and
selling at a reasonable value.  ADBE has all three of the
aforementioned qualities.  Friday's capitulation selling pushed
ADBE below $100, and may have provided traders with a chance to
pick up some good growth for a cheap price.  Although the stock
is still within its ascending channel, it is hovering above key
technical levels.  From here, an aggressive trader might watch
for ADBE to breakout above $100, while a more conservative trader
might wait for a breakout above resistance at $105.  If the
rampant selling continues, ADBE will most likely find support at
$90.  The last time the stock hit that level, it rebounded by 
more than $10.

ADBE has everything going its way right now.  Two weeks ago, 
the company raised growth targets.  The Board of Directors is
expected to announce a stock split at its upcoming shareholder
meeting.  The company continues to grow its product line, and
increase profitability.  But this market has lost all compassion,
use caution before entering into the play, and confirm direction
in the NASDAQ. 

BUY CALL MAY- 95*AEQ-EZ OI= 43 at $12.88 SL=9.50
BUY CALL MAY-100 AEQ-ET OI= 74 at $10.63 SL=7.25
BUY CALL MAY-105 AXX-EA OI= 59 at $ 8.50 SL=6.00
BUY CALL MAY-110 AXX-EB OI=245 at $ 7.00 SL=5.00

Picked on Apr 11th at   $119.50    P/E = 48
Change since picked      -21.69    52-week high=$125.00
Analysts Ratings      4-7-3-0-0    52-week low =$ 27.50
Last earnings 02/00    est=0.43    actual=0.47
Next earnings 06-15    est=0.47    versus=0.35
Average Daily Volume = 2.41 mln


SEBL - Siebel Systems $86.56 (-40.25)

Providing sales automation and customer service software through
its main product, Siebel Sales Enterprise, SEBL offers its
customers the ability to access client information and decision-
making support across a corporation's global computer network.
The company's e-commerce applications deliver the first entirely
Web-based, enterprise class family of sales, marketing and
customer service applications.  Among the company's heavyweight
clientele are Lucent Technologies, Glaxo Wellcome, and
Prudential Insurance.

As was the case with just about every four-letter stock, SEBL
had a rough week, falling from the lofty heights above $125 to
Friday's close at $86.56.  This has shares of the company just
above the low set on Black Tuesday ($80) and we need to see this
level hold as support going forward.  Selling volume was heavy
again on Friday and picked up as the price rolled over mid-day
and gave up an additional $10 by the close.  Some life finally
appeared in the last 15 minutes of trading as SEBL bounced at
$85 and moved a little higher before the carnage ended with the
ringing of the final bell.  There isn't a lot of time left in
this play as earnings will be released on Tuesday after the
close.  Consistent with our policy of not holding over earnings,
we will be dropping SEBL on Tuesday, but make sure you exit any
open positions before the close on Tuesday.  SEBL looks like it
may be putting in a bottom here, but any move higher will be
difficult if the broad markets can't get moving in a northerly
direction.  Look for a move higher from current levels to signal
your entry into the play, but make sure it has the conviction of
increasing volume.  Resistance will likely materialize near $90
and $92 and then again at the century mark.  Keep an eye on
these levels, as a strong move through them could be the
indication we need that SEBL is ready to run.

Continuing to form powerful alliances, SEBL announced a global
distribution agreement with Lawson Software on Monday.  In the
terms of the alliance, Lawson will integrate and sell its new
line of enterprise applications with SEBL's comprehensive suite
of e-business applications for sales, marketing and customer
service.  Friday witnessed an alliance between SEBL and Howard
Systems International, wherein SEBL's eBusiness solutions can
be integrated at any point within the lifecycle of a project.

BUY CALL MAY- 85*SGW-EQ OI=404 at $17.75 SL=12.75
BUY CALL MAY- 90 SGW-ER OI=344 at $15.50 SL=11.25
BUY CALL MAY- 95 SGW-ES OI=123 at $13.50 SL=10.25
BUY CALL MAY-100 SGW-ET OI=617 at $12.00 SL= 9.00

SELL PUT MAY- 75 SGW-QO OI=195 at $ 9.75 SL=13.00
(See risks of selling puts in play legend)

Picked on Apr 11th at   $113.00     P/E = 199
Change since picked      -26.44     52-week high=$175.13
Analysts Ratings     13-5-0-0-1     52-week low =$ 16.50
Last earnings 01/00   est= 0.15     actual= 0.19
Next earnings 04-18   est= 0.14     versus= 0.10
Average Daily Volume = 4.04 mln


CMVT - Comverse Technology Inc. $73.94 (-18.56)

Comverse Technology has become an all-star in voice messaging.
The #1 voice mail firm makes enhanced telecommunications systems
that let telecom providers offer call answering, voice/fax mail,
and other services.  The company also makes telecom software 
for information processing applications.  CMVT's customers 
include AT&T, Deutsche Telekom, and Compaq.  Interestingly, 
Israel accounts for more than half of the company's sales.  
Comverse has been buying complementary companies to expand 
its product and geographical reach.  Recently, CMVT took its 
telecom network software subsidiary, Ulticom (ULCM), public.

It took something special to make a tech stock move higher last
Friday.  CMVT was one of the very few TMT (telecom-media-tech)
stocks to actual show substantial gains.  Money managers are
beginning to concede that tech stocks got ahead of themselves 
and valuations are catching up with fundamentals.  CMVT's
fundamentals could be the reason the stock didn't succumb to
Friday's selling.  The company has consistent EPS growth of 30%
and a forward looking P/E of 52.  CMVT's competitors sport much
higher multiples, such as CIEN, trading at a lofty 2400 times
earnings.  Although earnings are a month away for CMVT, we could
be seeing the beginnings of a run.  CMVT has a tendency to start
an earnings run about a month before reporting.  The company has
managed to beat estimates in the past five quarters, this time
around should be no different noting CMVT's ever-rising profit
margins.  The recent market panic put CMVT on sale, and late 
last week investors went shopping.  After bottoming at $65 last
Wednesday, CMVT smartly rebounded Thursday and edged higher
Friday on more than double its ADV.  CMVT established support at
$70 last week, but found resistance at $75.  Should the broad
market continue its losing ways and drag CMVT down, the stock
will most likely find support at $70 and again at $65.  Consider
your risk level before entering into the play, look for a bounce
off support or wait for CMVT to clear its various resistance
levels.  Use caution before entering into the play, the recent
market conditions leave very little room for error.  Watch for
volume to continue to be heavy, and confirm market direction
before initiating a position.

CMVT spun off its software subsidiary, Ulticom (ULCM) on April
5th.  The IPO was priced at $13 and subsequently popped to $34.
The broad tech weakness quickly deflated ULCM after its offering.
CMVT will retain an 82% stake in the company.

BUY CALL MAY-70 CQV-DN OI=139 at $8.38 SL=6.00
BUY CALL MAY-75 CQV-D0 OI=445 at $6.13 SL=4.00
BUY CALL MAY-80*CQV-DP OI=247 at $4.00 SL=2.50

SELL PUT APR-65 CQV-PM OI=466 at $2.75 SL=4.00
(See risks of selling puts in play legend)

Picked on Apr 16th at    $73.94    P/E = 69
Change since picked       +0.00    52-week high=$123.88
Analysts Ratings     10-3-0-0-0    52-week low =$ 25.75
Last earnings 01/00    est=0.28    actual=0.30
Next earnings 05-08    est=0.34    versus=0.24
Average Daily Volume = 1.47 mln


NXTL - Nextel Communications $104.88 (-37.56)(-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.    

A 7% percent decline on Friday, and a 30% drop in the past two 
weeks pretty much sums up the damage done to this play.  The 
picture isn't pretty, but it doesn't tell the story.  Our aim
is not to try to convince traders that the damage wasn't really
that bad, or that if investors liked Nextel between $150 and
$165 last month, they ought to love it now.  For investors that
bought NXTL or any other stocks that have fallen out of favor,
the pain and losses are very real.  We choose to point out how
the stock has traded in the past few sessions.  Wednesday was
the only day this week that NXTL just plain fell flat on its
face, seeing very few buyers come in and try to bid the price.
higher.  The scorecard that day produced a loss of -$17.56 and
suggested there may be more ahead.  Thursday's drop to $104
found buyers come to the aid of the communications company,
bidding the stock $13 higher late in the day, only to succumb
to selling in the broader markets.  Friday, NXTL fell to the
century mark in the first 90 minutes of trading and tried once
again to move higher.  Even late in the day, when the carnage
in the major indices began to increase, buyers were clicking on
the buy button at the $100 level once again.  The point we are
trying to make, is unlike many of the tech stocks, people do
seem to be willing to step in and test the waters, even with the
negative sentiment in the broad market.  NXTL has traded like a
stock trying to find a bottom, rather than one where investors
are saying just get me out.  A day or two of improved psychology,
and this one could fly.  Support?  Well the 200-dma now sits at
$94.19, although as you've undoubtedly noticed, sometimes moving
averages and support don't just magically stop the momentum
behind a move.  We believe this play still has great potential,
but it can't go it alone.  If traders return Monday in a more
positive frame of mind, we would look for NXTL to make up some
lost ground.

Recent research reports have been positive for Nextel, with
a price target of $200, and suggesting a solid first-quarter.
Analyst's have also suggested buying on weakness.  Tuesday,
the latest comments came from Timothy Burke at Edward Jones.
Burke initiated coverage of the communications company with
a new Buy rating.   

BUY CALL MAY-100*FQC-ET OI=554 at $14.75 SL=10.75
BUY CALL MAY-105 FQC-EA OI=532 at $12.25 SL= 9.25
BUY CALL MAY-110 FQC-EB OI=716 at $10.00 SL= 7.00
BUY CALL MAY-115 FZC-EC OI=123 at $ 8.38 SL= 5.75
BUY CALL AUG-110 FQC-HB OI=536 at $19.38 SL=13.75

SELL PUT APR-100 FQC-PT OI= 19 at $ 3.50 SL= 5.50
(See risks of selling puts in play legend)

Picked on Apr 6th at    $126.56    PE = N/A
Change since picked      -21.69    52 week high=$165.88
Analysts Ratings     12-9-3-1-0    52 week low =$ 33.00
Last earnings 02/00   est=-0.99    actual=-0.85 
Next earnings 04-26   est=-0.84    versus=-1.37
Average daily volume = 4.43 mln


VSTR - VoiceStream Wireless $90.00 (-36.00)

Based in Bellevue, Wash., VoiceStream Wireless is a leading
provider of wireless communications services in the United
States.  VoiceStream Wireless with Cook Inlet Region Inc., has
licenses to provide service to over 193 million people with
operating systems from New York to Hawaii.  With licenses in 19
of the top 25 markets VoiceStream is one of the major providers
of telecommunications services in the country.  VoiceStream is
the largest provider of personal communications service using
the globally dominant GSM technology in the United States.

Shareholders of VSTR refused to participate in the Friday's
debacle.  Why would investors buy shares of a company that just
a week earlier reported earnings that were not only in the red,
but produced results that were below analysts estimates?  Good
question, but here's our take on the situation.  March 23rd
VSTR was approaching its 52 week high and closed at $155.
Wednesday's low at $81.75, marked a decline of about 48% in 3
weeks.  At that time investors put on the brakes and jumped in
with both feet, with over 7.0 million shares changing hands.
It's certainly not written in stone that VSTR will continue to
hold onto the gains made the past two sessions.  However in
light of Friday's action, the session was encouraging.  The 
current trend in the telecom industry is towards consolidation.
Our new play is an attractive takeover candidate.  Rumors have
been circulating for some time, on a potential suitor, although
there's no confirmation that any discussions are actually taking
place.  For better or worse these rumors seem to keep VSTR
in the limelight.  With the company experiencing strong revenue
and subscriber growth, analysts have are focusing on the top
line rather than the red ink, currently flowing out of the
company.  Thursday, analysts at Raymond James Financial raised
their rating from a Buy to a Strong Buy.  Wednesday, Perry Walter
at Robinson-Humphrey reiterated a Buy rating on VSTR, with a 
12-month price target of $180.  For the past three days, VSTR
has been forming a nice base between $84 and $88.  Going into
the final half-hour of trading on Friday, our new play was
gaining momentum.  Unless the wheels totally fall off next week,
we would look for chance to buy calls on further upward moves.
A bounce off the $83-$84 are could also provide an attractive
entry point.

The FCC recently approved the VoiceStream's purchase of Aerial
Communications.  At that time analysts initiated support for 
the company as well.  The merger with Aerial, suggests VSTR has 
taken more than its fair share of market growth.  As we said 
above, rather than concentrate on earnings, investors and 
analysts alike are more concerned with growth and revenues.  
BUY CALL MAY- 85 UVT-EQ OI= 66 at $15.00 SL=11.00
BUY CALL MAY- 90*UVT-ER OI=131 at $12.88 SL= 9.50
BUY CALL MAY- 95 UVT-ES OI= 45 at $10.63 SL= 7.50
BUY CALL MAY-100 UVT-ET OI=306 at $ 9.00 SL= 6.25
BUY CALL AUG-100 UVT-HT OI= 44 at $14.50 SL=10.75

SELL PUT MAY- 80 UVT-QP OI=410 at $ 6.75 SL= 9.75
(See risks of selling puts in play legend)

Picked on Apr 16th at    $90.00    P/E = N/A
Change since picked       +0.00    52-week high=$159.38
Analysts Ratings     14-4-4-0-0    52-week low =$ 16.38
Last earnings 03/00   est=-1.21    actual=-1.58
Next earnings 05-08   est=-1.15    versus=-0.81
Average daily volume = 2.15 mln


SCMR - Sycamore Networks $51.00 (-64.50)

A growing thorn in Cisco's side (but still small by comparison), 
Sycamore Networks develops and markets intelligent optical 
networking products that transport voice and data traffic over 
wavelengths of light.  The Company combines significant 
experience in data networking with expertise in optics to develop 
intelligent optical networking solutions for network service 
providers.  Sycamore's products are based on a common software 
foundation, enabling concentration on the delivery of services 
and end-to-end optical networking.  Sycamore's products and 
product plans include optical transport, access and switching 
systems and end-to-end optical network management solutions.  

First of all folks, understand that this play was risky even 
before the recent selloff thanks to its inherent volatility.  
However, as far as upstart optical networking companies go, SCMR 
is one of the best positioned to take on the Nortels, Ciscos and 
Lucents of the world.  When a name pops up as the next Cisco, 
these guys (and gals) at SCMR get the most votes.  So why pick a 
stock that traded to its lowest price ever since going public 
last October?  We don't like to try and pick a bottom, but we'll 
make an exception in this case.  Frankly, we think this baby has 
been thrown out with the bath water as SCMR has some of the best 
technology available, and a capable management staff able to 
handle the growth.  SCMR had strong support at $60.  That was 
very nearly the low of this company's trading range in its first 
two days as a public company, but it was broken Friday in the 
worst point selloff in history.  Assuming all the blood has been 
squeezed out of the market turnip, we just don't think SCMR is 
going any lower than $49, it's worst Friday print.  In our 
opinion, the current level is buyable.  To be fair though, SCMR 
is in terrible technical shape and has violated every moving DMA 
known to man.  But it is precisely this reason that we think 
makes it a bottom fishing opportunity.  Could it go any lower?  
You bet.  As we said, this is a risky play and the market could 
see more pain from foreign market reaction to our market last 
Friday, and margin call selling on Monday.  The flip side is the 
high reward.  The point of adding it this weekend is to get it on 
your watch list for a possible entry on what we think will be a 
strong rebound.  Watch for a market and stock recovery before 
taking a position, then use a stop loss to protect your downside.  
Many fingers have been lost trying to call a turnaround on this 
and many other issues.  Note the low or no OI on the listed 
strikes.  These are new strikes as of Friday and are expensive.  
You may want consider naked puts at this level too (equally 

Hmmm.  Bet Lehman Bros. wishes they hadn't given Sycamore that 
year end price target of $200 along with the upgrade to Buy on 
Mar 30th when SCMR was trading at $125.  "Our new revenue 
forecasts nearly double as compared to our last projections, 
published in February 2000, before the release of December 
quarter earnings", they noted.  Oh well, it made sense at the 
time - other than price, the logic was well founded.

BUY CALL MAY-60*SMZ-EL OI= 2 at $ 9.63 SL= 6.50 low OI
BUY CALL MAY-65 SMZ-EM OI= 0 at $ 7.50 SL= 5.25
BUY CALL JUN-60 SMZ-FL OI= 0 at $10.50 SL= 7.50
BUY CALL JUN-65 SMZ-FM OI= 0 at $ 9.00 SL= 6.25

SELL PUT MAY-60 SMZ-QL OI=14 at $16.50 SL=21.00
(See risks of selling puts in play legend)

Picked on Apr 16th at    $51.00     P/E = N/A
Change since picked       +0.00     52-week high=$199.50
Analysts Ratings      5-3-0-0-0     52-week low =$ 48.94
Last earnings 02/00   est= 0.00     actual= 0.01  
Next earnings 05-18   est= 0.01     versus= N/A
Average Daily Volume = 2.20 mln


ABGX - Abgenix Inc. $66.88 (-36.13)

Operating in the biopharmaceutical field, Abgenix develops and
intends to commercialize antibody therapeutic products for the
treatment of a variety of disease conditions including
transplant related diseases, inflammatory and autoimmune
disorders, and cancer.  Harnessing the power of the mouse,
ABGX has developed XenoMouse technology, a proprietary
technology which the company believes enables quick generation
of fully human antibody product candidates using mice.  Current
internal product development programs have yielded four
antibody product candidates, with ABX-CBL being the current
front runner.

The combination of a split on April 7th and the broad market
meltdown the past 2 weeks has served to bring ABGX down to very
attractive levels.  Unable to buck the trend of the overall 
markets, ABGX showed weak relative strength this past week.
Tagging a low of $67.25 Tuesday morning, ABGX refused to touch
this level again until the last 30 minutes of trading on Friday.
Although it is not encouraging to see a close at the low of the
day, especially on increasing volume, we like the way the stock
held support at $70 all week.  After its plunge to the 200-dma
(then at $50) on April 4th, the stock had a brief run into its
split and then declined back near the $70 support level.  It 
is encouraging because ABGX never challenged the lows set on
Terrible Tuesday.  Although volume levels are still well above
the daily average, they are steadily declining and this looks
like a bottom for the stock.  Of course, finding a bottom is one
thing, while moving higher is quite different in this market
environment.  Even with earnings set for April 25th, ABGX will
have a hard time posting significant gains in the week ahead 
if the broad markets can't halt their slide.  Risk takers 
can nibble at a bounce from current levels if confirmed by
increasing volume, but watch out for a head fake.  A more
conservative strategy would be to wait for buyers to push 
the share price back above $70 on convincing volume.

On Friday, Prudential initiated coverage on ABGX with an
Accumulate rating.  

BUY CALL MAY-70*AZG-EN OI=10 at $10.38 SL= 7.50 low OI
BUY CALL MAY-75 AZG-EO OI= 3 at $ 8.25 SL= 6.00 low OI
BUY CALL MAY-80 AZG-EP OI= 0 at $ 6.50 SL= 4.50 Wait for OI!
BUY CALL JUL-70 AZG-GN OI= 0 at $16.13 SL=11.50 Wait for OI!
BUY CALL JUL-75 AZG-GO OI= 0 at $15.63 SL=11.25 Wait for OI!

Picked on Apr 13th at  $81.06     P/E = N/A
Change since picked    -14.19     52-week high=$206.50
Analysts Ratings    2-0-0-0-0     52-week low =$  6.41
Last earnings 01/00 est=-0.06     actual=-0.05
Next earnings 04-25 est=-0.11     versus=-0.22
Average Daily Volume =  675 K


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The Option Investor Newsletter             04-16-2000  
Sunday                        4 of 5


WLA - Warner-Lambert Co. $101.50 (-2.44)(+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.

Remember the sentence from Thursday's update, "If investor 
psychology turns more negative, then stand aside and wait for an 
entry point."  To say investor psychology turned more negative,
is an understatement.  WLA opened $2.50 lower on Friday, and
fell another $6.00 before a few brave souls stepped in bidding
the price back up to close at $101.50.  Why do feel WLA still has
potential as a call play?  Let's examine where we've been.  For
the week WLA lost -$2.44, which is just over 2%.  Compared to
the losses elsewhere in the market-place, 2% is minimal.  Could
it continue lower?  Absolutely.  So make sure you see the 
bounce first.  The drug company is scheduled to report quarterly 
results Wednesday morning before the open.  Although time is 
running out on our play, we may see a move to repair the recent 
damage.  If investors return with shopping lists in hand, then 
WLA may be near the top.  WLA and the drug sector have held
up reasonably well this week.  If after the long weekend, calmer
heads prevail, traders may come back buying stocks that they
had confidence in, prior to the sell-off.  If Friday was just
a warm-up, then stand back and look for cover.  A good argument
could be made for either scenario.  We did see the volume pick up
late Friday as WLA bounced off its low at $98.50, which would
normally indicate a short-term bottom and a move to higher prices.
We also saw penetration the $100 level that has provided solid
support.  Closing back over that level is definitely a plus.
If we do see the bounce continue remember to exit this play
by the close of business on Tuesday.
Warner-Lambert's Board of Directors declared a regular second 
quarter dividend on Friday.  The dividend of $0.24 a share is 
payable May 12, 2000 to stockholders of record April 24th.  WLA
has paid a dividend every year since 1926, ranking it among
Standard & Poor's select list of companies with an unbroken
record of dividends paid for at least 50 years.

BUY CALL MAY- 95 WLA-ES OI=315 at $11.38 SL=8.50
BUY CALL MAY-100 WLA-EV OI=417 at $ 7.75 SL=5.75
BUY CALL MAY-105*WLA-EA OI=518 at $ 4.75 SL=3.00
BUY CALL MAY-110 WLA-EB OI=641 at $ 2.69 SL=1.25

SELL PUT MAY- 95 WLA-QV OI= 84 at $ 3.13 SL=5.00
(See risks of selling puts in play legend)

Picked on Apr 04th at   $105.50    PE = 52
Change since picked       -4.00    52 week high=$109.88
Analysts Ratings     12-4-8-0-0    52 week low =$ 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


ENE - Enron Corp. $69.75 (-0.94)

For four years running, Fortune magazine has named Enron the 
"Most Innovative Company in America" and last year named them one 
of the "100 Best Companies to Work for in America."  This 
worldwide energy giant isn't into just power generation.  They 
also are the number 1 buyer and seller of wholesale gas, the top 
wholesale power marketer in the U.S., and operate 32,000 miles of 
gas pipelines.  Not only that, they run far flung operations 
including paper, coal, chemicals, engineering and construction, 
and the emerging jewel, a fiber-optic bandwidth development and 
marketing business.

ENE has been redirecting its energies.  ENE offered up an 8% 
earnings surprise when they announced earnings of $0.03 more than 
the Street estimates last week.  That's no big deal for a tech 
company with a low float.  But for an energy company with over 
700 mln shares outstanding, that means another $21 mln in profits 
that the Street didn't expect.  That's a big number.  Investors 
were impressed and actually moved the price up for two days 
following the numbers...no post earnings depression.  While we 
originally thought $71 might make an intraday support level at 
which to target shoot, the only thing worth shooting was our 
theory, thanks to a gap down to $70 at the open followed by an 
ugly day in the market.  It looked like the 5-dma, 10-dma, and 
50-dma might hold, but only the 50-dma (now $68.97) did by the 
end of the day.  In fact, after reaching the low of $66, ENE 
recovered $3 in the final 15 minutes before the close - a great 
recovery and excellent show of relative strength.  Assuming we've 
reached a market bottom (obviously confirm that first), $68 
should hold as support.  We wouldn't be surprised to see Friday's 
late rebound continue, which could propel ENE back over its 10-
dma of $69.90 in a hurry.  We think the best entry will be off of 
a bounce from $68 or a move back over $72 (backed by volume), a 
level of resistance that began forming in January and had been 
broken only a few times since.  $74 is the next resistance, then 
a breakout over $78.

Nothing in the news on Friday (except the market itself) that 
will move the price.  However, the weekly upgrades are worth 
noting.  Salomon Smith Barney issued a Buy rating and a price 
target of $100, while First Union upgraded from Buy to Strong Buy 
and issued a price of target of $90.  Dain Rauscher last week did 
the same with a price target of $97.  

BUY CALL MAY-65 ENE-EM OI= 201 at $7.50 SL=5.25
BUY CALL MAY-70*ENE-EN OI= 316 at $5.13 SL=3.00
BUY CALL MAY-75 ENE-EO OI=1439 at $3.25 SL=1.75
BUY CALL JUL-70 ENE-GN OI=1038 at $8.63 SL=6.00
BUY CALL JUL-75 ENE-GO OI=1421 at $6.63 SL=4.75

SELL PUT MAY-65 ENE-QM OI= 454 at $2.88 SL=4.50
(See risks of selling puts in play legend)

Picked on Apr 13th at   $73.81     P/E = 54
Change since picked      -4.06     52-week high=$78.06
Analysts Ratings     7-6-4-0-1     52-week low =$30.50
Last earnings 04/00  est= 0.37     actual= 0.40  surprise=+8%
Next earnings 07-12  est= 0.31     versus= 0.27
Average Daily Volume = 3.1 mln


GMST - Gemstar Int'l Group $41.13 (-29.94)

Gemstar is the developer of VCR Plus+, an application that lets 
TV buffs record programs using a simple code.  The technology 
is widespread and essentially all TV and VCR makers are licensed 
to integrate it into their products.  Nearly 41% of the company 
is owned by CEO and founder Henry Yuen, Director Thomas Lau, 
and Thomson Multimedia. 

Gainers were few and far in between on Friday, but GMST was one 
of the star performers.  Coming off a month-long descent that 
vanquished 65% of its share price, it appears GMST may have 
finally hit bottom.  Bouncing off an intraday low of $37.56 at 
Friday's open, the stock pushed upwards to $46.50 before finally 
settling at $41.13 with a $1.31 gain.  That's not too shabby a 
performance for a stock trading in a collapsing market - NASDAQ 
DOWN 355.49 points!  It's likely other stocks who've suffered 
great declines will eventually start to recover too, but GMST 
is hinting it wants to be first in line.  Technically the first 
goal is to move through the 5-dma (currently at $49.35).  
Although the more aggressive may consider a definitive break 
above $45 an entry point into this recovery play.  Analyst Alan 
Gould at Gerard Klauer Mattison & Co also has high hopes for 
GMST's recovery.  On Thursday he came forward with a $110 price 
target and a reiteration of his Buy rating.  Bewitching hour for 
Gemstar's first-quarter earnings is quickly approaching next 
month and this event may help generate excitement too.  The 
company is expected to report around May 10th.

Recently concerns about potential antitrust problems of 
Gemstar's merger with TV Guide (TVGIA) have been circulating.  
On Wednesday, the companies squelched rumors and announced that 
their merger was on track and still expected to close by the 2Q.  
In other news, the BoD authorized Gemstar to repurchase up to 
$150 mln in shares of its common stock over the next 12 months.

BUY CALL MAY-35 QLF-EG OI=202 at $9.88 SL=7.00
BUY CALL MAY-40 QLF-EH OI=422 at $8.38 SL=6.00
BUY CALL MAY-45*QLF-EI OI=400 at $6.50 SL=4.50

Picked on April 16th at  $41.13    P/E = 97
Change since picked       +0.00    52-week high=$107.44
Analysts Ratings      7-0-0-0-0    52-week low =$ 20.88
Last earnings 12/99   est= 0.10    actual= 0.13
Next earnings 05-12   est= 0.14    versus= 0.12
Average Daily Volume = 2.64 mln


By: Mark Phillips

With so many buying opportunities, this is the kind of market
the prudent investor may wait years for.  Having the leverage
and time-decay insulation of LEAPS gives us the ability to
maximize our returns as the market recovers.  It is doubtful
any of you missed the carnage over the past 2 weeks; many of
you likely tried to buy one or more of the dips.  If you were
really disciplined though, you are being presented with a rare
LEAPS buying opportunity.  Our old standby, the VIX has really
taken off, tagging 41.53 near the end of the day Friday, and
closing the week at 39.40.  So much for the low 30's, but you
can see why we are so excited this weekend.  After standing
aside from adding new plays the past 2 weeks, we're ready to
go on a buying spree.  Normally, our appetite is sated by
adding one or two new plays, but this week we gobbled up four
before pushing back from the table.  We've been cautioning
about the normal drop that occurs in the weeks and months
following April earnings, but with the huge decline in equity
prices over the past few weeks, it is hard to conceive of
prices dropping much further.  With so many current plays
consolidating at major support, some below their respective
100-dmas, any one of a dozen could be featured as Leap of the
Week.  It seemed more productive to take this opportunity
provided by the market weakness to add as many new plays as we
could cram into this weekend's newsletter.  With that in mind,
sit down at the table, tuck in your napkin, and get ready for
a tasty meal.

Current Plays


EMC    11/07/99  JAN-2001 $ 80  ZOH-AP   $15.38   $42.63   177.24%
                 JAN-2002 $ 90  WUE-AR   $19.00   $47.13   148.03%
GPS    11/07/99  JAN-2001 $ 40  ZGS-AH   $ 5.75   $ 6.88    19.57%
                 JAN-2002 $ 45  WGS-AI   $ 7.88   $ 9.38    19.05%
IBM    11/07/99  JAN-2001 $100  ZIB-AT   $13.63   $20.00    46.79%
                 JAN-2002 $110  WIB-AB   $16.50   $25.13    52.27%
CSCO   11/14/99  JAN-2001 $ 40  ZCY-AH   $ 9.56   $24.50   156.28%
                 JAN-2002 $ 90  WIV-AI   $11.00   $27.25   147.73%
GE     11/21/99  JAN-2001 $150  ZGR-AU   $16.25   $22.25    36.92%
                 JAN-2002 $150  WGE-AU   $25.50   $33.75    32.35%
NT     11/28/99  JAN-2001 $ 75  ZOO-AO   $22.25   $33.25    49.44%
                 JAN-2002 $ 75  WNT-AO   $30.25   $42.63    40.91%
VOD    12/05/99  JAN-2001 $ 50  ZAT-AJ   $10.75   $ 9.25   -13.95%
                 JAN-2002 $ 50  WHV-AJ   $15.00   $14.38   - 4.17%
TXN    12/12/99  JAN-2001 $110  ZTN-AB   $22.25   $41.25    85.39%
                 JAN-2002 $120  WGZ-AD   $28.50   $48.88    71.49%
NXTL   12/19/99  JAN-2001 $ 90  ZFU-AR   $23.50   $33.38    42.02%
                 JAN-2002 $100  WFU-AT   $27.25   $39.25    44.04%
SUNW   12/19/99  JAN-2001 $ 80  ZJX-AP   $17.63   $18.63     5.67%
                 JAN-2002 $ 90  WJX-AR   $22.00   $25.13    14.20%
CY     01/16/00  JAN-2001 $ 40  ZSY-AH   $ 9.13   $17.00    86.30%
                 JAN-2002 $ 40  WSY-AH   $12.63   $21.63    71.29%
ERICY  01/30/00  JAN-2001 $ 65  ZYD-AM   $19.75   $21.50     8.86%
                 JAN-2002 $ 65  WRY-AM   $27.00   $29.38     8.80%
NSM    02/27/00  JAN-2001 $ 70  ZUN-AN   $18.50   $10.13   -45.27%
                 JAN-2002 $ 70  WUN-AN   $24.25   $17.50   -27.84%
AOL    03/12/00  JAN-2001 $ 60  ZKS-AL   $14.00   $10.25   -26.79%
                 JAN-2002 $ 65  WAN-AM   $18.63   $15.50   -16.78%
AXP    03/12/00  JAN-2001 $130  ZXP-AF   $21.75   $25.00    14.94%
                 JAN-2002 $140  WXP-AH   $28.00   $31.88    13.84%
WM     03/19/00  JAN-2001 $ 25  ZWI-AE   $ 5.00   $ 4.38   -12.50%
                 JAN-2002 $ 30  WWI-AF   $ 5.38   $ 5.00   - 6.98%
QCOM   03/26/00  JAN-2001 $150  YQO-AJ   $39.25   $16.38   -58.28%
                 JAN-2002 $160  XQO-AL   $52.88   $28.13   -46.81%

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 

New Plays

AMD - Advanced Micro Devices $66.00

It's amazing what a difference a year can make.  Last year, AMD
had been relegated to also-ran status as Intel ruled the roost.
This year it is AMD's turn to crow as it recently posted
earnings of $1.15 per share vs. estimates of only $0.46 and a
loss of -$0.88 in the year-ago period.  Add in upgrades from the
likes of Prudential (Accumulate to Strong Buy), DB Alex Brown
(Market Perform to Buy), and Wit SoundView (Hold to Buy), and it
is easy to see why AMD is one of the few tech stocks that is
currently trading north of its 30-dma ($58.50).  As the markets
find their bearings, look for winners like AMD to lead the
charge higher.  Consider entries near current levels or if you
have a nervous stomach, wait for a convincing break through
resistance at $71.

BUY LEAP JAN-2001 $70.00 ZVV-AN at $17.50
BUY LEAP JAN-2002 $70.00 WVV-AN at $26.00


CMGI - CMGI Inc. $52.06

It's been a rough year for CMGI so far, but we think things are
about ready to turn around.  After trading north of $160 in
early January, CMGI investors have watched their position melt
away to less than one-third of its Y2K value.  Now sitting just
above major support at $50, CMGI looks like a bargain,
especially for us LEAPS players.  As one of the last stocks to
report earnings (currently scheduled for early June), CMGI won't
have that impetus to drive its stock either higher or lower in
the near term, and investors should be able to focus on the
strength of the company once the dust settles from the stampede
of the past 2 weeks.  Well below its 200-dma, we think CMGI is
a value at current levels, but wait for the market to confirm it
is done bucking before stepping into the corral.

BUY LEAP JAN-2001 $50.00 ZB -AJ at $21.50
BUY LEAP JAN-2002 $55.00 WCK-AK at $27.75


JDSU - JDSU Inc. $79.63

It's been on our radar screen ever since the announcement in
March that the CBOE was adding LEAPS on JDSU.  We just weren't
convinced that the stock was done correcting yet.  Well, we're
off the fence and think JDSU is presenting us with quite a deal.
Further declines are possible if the broad markets can't find
their feet, but $77, (the low from Friday), looks like strong
support.  Does anyone believe that the optical market is any
less hot than it was 6 weeks ago?  As testimony to the strength
of the stock, JDSU is trading significantly above its 195-dma
at$66.25.  (Sorry, but not quite enough trading history yet for
a 200-dma.)  Look to enter new positions on a renewed bounce
near $77 as long as the broader markets are able to halt their
slide.  Keep in mind the general weakness seen on Friday, as
another downdraft could provide an even better entry for
patient investors.

BUY LEAP JAN-2001 $80.00 XJU-AP at $27.50
BUY LEAP JAN-2002 $80.00 YJU-AP at $39.63


VSTR - Voicestream Wireless $90.00

Practically stopping on a dime, VSTR looks like it has arrested
its decline which began on March 24th.  Investors have been
returning the past couple days, voting with their wallets and
reminding us that the wireless market is not going to roll over
for something as minor as "possible inflation".  Building a good
base just below $83, VSTR actually moved higher Friday
afternoon, as investors bid the shares up over $5 in the final
hour.  The $83-85 level looks like good support, and we would
consider another bounce here to be a great entry point.
Friday's close puts the stock just a fraction below the 200-dma,
and indecision next week could create some resistance at this
level.  If you want to play it a little more carefully, wait
for buying volume to push the price solidly above $90 before

BUY LEAP JAN-2001 $90.00 ZTB-AR at $23.88
BUY LEAP JAN-2002 $90.00 WWP-AR at $35.00


MSFT $74.13 All right, it's time to throw in the towel on this
play.  It was bad enough with the slings and arrows tossed at
MSFT by the Department of Justice, but add in an analyst
downgrade here and a market meltdown there, and you have a
recipe for the largest software company in the world to fall
to new 52-week lows.  Although the argument could be made for
a great entry point, we have doubts as to the veracity of any
recovery while the clouds of litigation concerns hang over
MSFT's head.  Eventually the stock will make its way back onto
our playlist, but for now there are too many other great plays
with more upside potential.


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.


CNXT - Conexant Systems Inc $46.09 (-31.59)

Conexant is the world's largest provider of modem chips and 
other integrated circuits (ICs) for communications electronics. 
With more than 30 years of experience in developing 
communications technology, the company draws upon its expertise 
in mixed-signal processing to deliver integrated systems and 
semiconductor products for a broad range of communications 
applications.  The company aligns its business into five product 
platforms: Network Access, Wireless Communications, Digital 
Infotainment, Personal Imaging, and Personal Computing.  About 
half of Conexant's $1.5 bln in revenue come from sales in the 
Asia/Pacific region.

Investors shook their fists on news of Conexant's fourth 
acquisition this year.  On Wednesday, the company announced it 
agreed to buy Canada's Philsar Semiconductor for as much as 
$213.8 mln in stock in an effort to boost its line of wireless 
products.  All in all, it will put out between 2.685 and 3 mln 
shares of common stock for the closely held Philsar.  In 
response, CNXT dived almost instantaneously below the 
established support of $70 losing $9.25, or 12.5% by the finish.  
The onslaught continued for the rest of the week.  Thursday saw 
a 12.2% drop followed by another 15.3% on Friday.  Of course the 
stormy markets are indeed the underlying force pummeling the 
share price.  However, Conexant announcements couldn't be more 
ill-timed considering investor sentiment and overall market 
conditions.  On Thursday, they announced that for an undisclosed 
amount Conexant is also adding Applied Telecom, a leading 
supplier of telecommunications software and hardware products to 
its corporate family.  Charles Boucher, analyst at Bear, 
Stearns, & Co, cheered CNXT on with a Buy reiteration.  And 
perhaps the acquisitions are good investments for the company, 
but the wrath of unhappy investors continued to make its mark. 
The 200-dma is now just a dot in the rear-view mirror at $59.07 
and below is a dark abyss.  $60 was an older support level, but 
now with that gone we're looking at the $40 level of October 
1999.  While CNXT has more room to fall, it'd be a good idea to 
keep stops in place to protect against impending buyers coming 
in off the sidelines.  Additionally we don't anticipate the 
company's earnings to trigger much excitement, but be aware they 
are reporting on Wednesday, after the bell.

BUY PUT MAY-55 QXN-QK OI=499 at $15.38 SL=11.25
BUY PUT MAY-50*QXN-QJ OI= 71 at $11.50 SL= 8.50

Average Daily Volume = 6.89 mln


MCLD - McLeodUSA Inc. $54.63 (-25.38)

McLeodUsa is a facilities-based CLEC (competitive local-exchange
carrier).  The company provides telecommunications services,
including local and long-distance phone service and Internet
access.  It operates more than 616,000 local access lines,
serving about 261,000 business and residential customers in 12
US states in the Midwest and Rocky Mountains.  MCLD plans to add
PCS wireless service to its offerings; it owns 27 PCS licenses.
Founder and CEO Clark McLeod and his Wife, Mary, own 13% of the

The only positive stemming from last Friday's bloodletting was
owning a put.  The NASDAQ Telecommunications Index ($IXTC) lost
10% Friday.  The weak telecom sector isn't helping MCLD's cause,
neither is the pending merger between US West (USW) and Qwest
(Q).  The combined entity would create stiff competition for
MCLD.  USW and Q already have a stronghold in the local markets,
where MCLD is losing.  USW said Friday that it has reached an
agreement on crucial issues of the merger with state attorney
generals.  While the merger is still a long way from being
approved, it appears likely that it will go through, which spells
trouble for MCLD.  MCLD's key competitors, such as GTE, SBC, BLS,
Q, and USW are either merging or forming strategic alliances,
while MCLD is left in the dust.  Not only does MCLD continue to
lose market share, the company is sinking further into to debt.
MCLD added $1 bln of debt last week, to pay for their recent
acquisition of SPLT.  Standard and Poor's gave MCLD a
sub-investment grade credit rating, citing its weak near-term
cash flows resulting from expansion into 10 additional markets.
Given the current interest rate environment, rising debt levels
are not a good thing.  The uncertain future surrounding MCLD has
driven its stock price lower.  The stock gapped down $1 Friday,
and sank lower throughout the day.  Volume continues to remain
heavy as institutions run from MCLD.  The stock has major support
at $50, if it breaks that level, it could very easily fall to
$40.  Watch for the heavy volume to continue, a move below $50
may provide an excellent entry into the play.  We're still
waiting for the new May strikes to be added.  Wait for open
interest to increase before buying the newly issued contracts.  
And remember, any put buying at this point should be considered 

BUY PUT MAY-65*QMD-QM OI=622 at $14.00 SL=10.50 
BUY PUT MAY-60 QMD-QL OI=  2 at $10.50 SL= 7.25 low OI 

Average Daily Volume = 1.67 mln


FIBR - Osicom Technologies $30.44 (-39.81)(-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, Internet Service Providers 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 top competition comes
from Cisco Systems, Lucent and Nortel Networks.

Brutal is the term that comes to mind for those that are or have
been long.  For those with the insight to buy puts, profitable
best describes their trading account.  That pretty much sums up
the past month for those involved in FIBR.  A look at the chart
since the March 6th high at $149.75, shows a decline that would
put fear in the heart of the most savvy investor.  A 79.6% decline
in five weeks.  We thought FIBR could produce a nice put play,
but a drop of almost $40 in a week, even caught this writer by
surprise.  As we said Thursday, Osicom seems to be "attempting
to put in a bottom."  FIBR hit $27.50 before bouncing up about
$3 into the close.  Investors in FIBR have seen ten consecutive
days of lower closes, with no buyers in sight.  In December the
company said it planned an IPO for its Sorrento Networks unit.
Sorrento makes equipment that increases the capacity of fiber 
optic networks.  Analyst Joe Gladue, at Chapman Co. said this
week, the decline in telecommunications and computer related
shares may lead the company to delay the public offering.  He
went on to say much of the price rise earlier this year, was due
to enthusiasm for the spin-off.  The company has never set a
timetable for Sorrento's IPO.  So how do we play this one?  If
you have open positions, move your stops down.  Resistance is
near $35 and again at $40.  A bounce up to those levels followed
by weakness could provide good entry points.  The next area of
major support is not found until $18.  It's almost hard to
believe it could continue to drop that far, but who would have
thought FIBR would be trading near $30 back on March 6th.
BUY PUT MAY-35 QFW-QG OI= 41 at $11.50 SL=8.50
BUY PUT MAY-30*QFW-QF OI=171 at $ 8.63 SL=6.00

Average Daily Volume = 446 K

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The Option Investor Newsletter             04-16-2000  
Sunday                        5 of 5


Technical Analysis: A gift from the Orient...
By: Mark Wnetrzak

With the growing interest in Candlestick charting techniques, we
have decided to begin a new series on the subject.  If you haven't
used this unique method of analysis, they next few articles will
familiarize you with one of the most profitable and easy-to-learn
systems for the study of historical price movements.

There are a number of reasons for the recent popularity of this
ancient process of pattern analysis.  First, candlestick charts
are relatively simple to interpret and they are flexible.  The
techniques are useful to all types of investors, from novice to
expert.  Candlestick charts can be used alone or in combination
with other kinds of technical analysis.  In fact, that's one of
the most important characteristics of the technique; it can be
utilized in addition to, but not instead of, other profitable
systems.  For experienced traders, candlestick charting provides
an extra dimension of analysis and many suggest the practice may
even become the standard as it benefits from the advantages of a
more precise system.

It is interesting that in our technologically advanced market,
candlestick analysis is a relatively unknown technique.  The
Japanese have used a combination of both Eastern and Western
systems for many years but Americans have yet to embrace the
ancient method.  For those who are unfamiliar with its unique
background, this tried and tested approach enjoys a centuries-old
tradition in the Orient.  Many of the pattern descriptions are
are strange and colorful.  Formations such as the "hanging man",
"morning star" and "doji", are frequently identified in daily
analysis and those charming titles could never be discerned from
a simple bar chart.  Fortunately, the (price) data required to
create a candlestick chart is exactly the same that we use now;
the open, high, low, and close.  The benefit is that any common
indicators related to bar charting, such as moving averages and
trend-lines can be employed with candlestick charts.  The real
bonus is that candlestick charts can convey signals not available
from simple bar charts.  In fact, there are a number of patterns
that provide much better "leading" signals than the traditional
charting techniques.  Through the use of candlestick analysis, a
trader has the ability to merge a rare, time-honored method of
pattern study with a modern evaluation of trends and formations,
to create a powerful and comprehensive forecasting system.

One of the few limitations in candlestick charting is that most
patterns require a closing price.  As with other "end-of-day"
systems, you may need to wait for the final trade to get a valid
signal.  Of course this aspect is also a problem with many forms
of technical analysis including those based on bar charts.  The
opening price is also important in candlestick analysis and in
many cases, one can use short-term patterns to initiate a position
during the session, rather than waiting for the close of the day.
Candlestick formations also provide numerous other useful trading
signals but they can not predict price targets.  Obviously, there
are many other methods to forecast these objectives such as prior
support or resistance levels.  In common practice, most traders
begin their trades based on a specific signal and they remain in
that position until an exit pattern becomes apparent.  As with any
system, these signals should always be viewed in context with the
other indications related to the instrument being evaluated.

One thing you can be sure of, this method of analysis can not be
learned overnight.  There are a number of different patterns to
identify and each of them are subject to the interpretation of the
user.  With diligence and study, you will discover which formations
work best for your style of trading and the market in which you
participate.  At the very least, the ability to discern common
patterns should enhance your ability to initiate and profit from
a wide variety of portfolio positions.

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  17.19   APR  17.50  6.00   $  2.10  12.1%
R      24.63  21.63   APR  20.00  5.50  *$  0.87   9.9%
PAIR   19.44  18.88   APR  15.00  4.88  *$  0.44   6.6%
PRGS   23.44  21.00   APR  20.00  4.25  *$  0.81   6.1%
INSUA  33.06  36.00   APR  30.00  3.88  *$  0.82   6.1%
PXD    10.50   9.75   APR  10.00  1.13   $  0.38   5.9%
CRCL   27.63  26.81   APR  22.50  6.25  *$  1.12   5.7%
POSS   12.56  10.00   APR  10.00  3.25   $  0.69   5.4%
R      22.69  21.63   APR  17.50  5.75  *$  0.56   4.8%
VANS   16.13  15.50   APR  15.00  1.75  *$  0.62   4.7%
FSI    15.63  14.75   APR  15.00  1.25   $  0.37   3.7%
ELIX   26.00  19.56   APR  20.00  6.88   $  0.44   2.5%
COB    14.13   8.81   APR  10.00  5.00   $ -0.32   0.0%
TRMB   24.75  18.44   APR  20.00  5.63   $ -0.68   0.0% Time to go?
MUEI   14.50  10.75   APR  12.50  2.81   $ -0.94   0.0% No Lower!

MATK   15.50  12.88   MAY  12.50  4.13  *$  1.13   7.2%
ANET   10.56   8.00   MAY   7.50  3.63  *$  0.57   6.0%
PSSI    9.13   7.81   MAY   7.50  2.19  *$  0.56   5.8%
CNJ     8.13   6.44   MAY   7.50  1.50   $ -0.19   0.0%
MRL    26.88  22.31   MAY  25.00  3.25   $ -1.32   0.0% 150dma ?
NUHC   22.13  14.88   MAY  17.50  6.00   $ -1.25   0.0% 150dma ?

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


The carnage is getting worse and the bearish technicals suggest
there is little probability of a quick turnaround.  Many issues
are down by more than half and trying to recoup losses could be
a long and potentially "endless" process.  Exiting the position,
though painful (Root Canal?), may offer the only recourse to
stem the outflow of capital and allow an investor to be ready for
more favorable conditions in the future.

Positions Closed:



NOTE:   We will continue to list the most favorable positions
(regardless of the market condition) identified in our research.
But considering the market uncertainty, waiting for a confirmed
bottom and the return of a neutral to slightly bullish outlook
may increase the probability of success.

Sequenced by Company

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

APC    35.81  MAY  35.00  APC EG  2.88 1566 32.93  6.3%   6.3%
BSX    21.75  MAY  20.00  BSX ED  2.50 3789 19.25  3.9%   3.9%
CAR    20.81  MAY  20.00  CAR ED  1.94 184  18.87  6.0%   6.0%
DGX    44.50  MAY  40.00  DGX EH  6.00 0    38.50  3.9%   3.9%
LPNT   16.38  MAY  15.00  PUN EC  2.25 5    14.13  6.2%   6.2%
PIR    10.50  MAY  10.00  PIR EB  1.00 143   9.50  5.3%   5.3%
UGLY    7.50  MAY   7.50  QRD EU  0.50 0     7.00  7.1%   7.1%

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

UGLY    7.50  MAY   7.50  QRD EU  0.50 0     7.00  7.1%   7.1%
APC    35.81  MAY  35.00  APC EG  2.88 1566 32.93  6.3%   6.3%
LPNT   16.38  MAY  15.00  PUN EC  2.25 5    14.13  6.2%   6.2%
CAR    20.81  MAY  20.00  CAR ED  1.94 184  18.87  6.0%   6.0%
PIR    10.50  MAY  10.00  PIR EB  1.00 143   9.50  5.3%   5.3%
BSX    21.75  MAY  20.00  BSX ED  2.50 3789 19.25  3.9%   3.9%
DGX    44.50  MAY  40.00  DGX EH  6.00 0    38.50  3.9%   3.9%

Company Descriptions

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


APC - Anadarko Petroleum $35.81  *** Oil Service Sector ***

Anadarko Petroleum is an independent oil and gas exploration and
production company.  Most of their proven reserves are located in
the  midwestern United States, offshore in the Gulf of Mexico and
in Alaska.  Anadarko also owns and operates gas gathering systems
in its U.S. core producing areas.  This week Anadarko announced oil
had been found at its Marco Polo prospect south of Louisiana, in 
which it has 100% interest.  Anadarko also recently announced the 
acquisition of Union Pacific Resources which it said should add at
least 30% to cash flow and about 15% to earnings this year.  APC
has continued its uptrend even with the Market falling around it.
The technicals remain bullish and we favor a cost basis within the
middle of Anadarko's trading range.

MAY 35.00 APC EG Bid=2.88 OI=1566 CB=32.93 RC=6.3% RNC=6.3%

Chart =


BSX - Boston Scientific $21.75  *** Stage I Base ***

Boston Scientific develops, manufactures and markets minimally
invasive medical devices.  Its product lines include vascular
products that are employed in procedures affecting the heart and
systems that carry blood, as well as nonvascular products that
are employed in procedures affecting other systems and organs.
In March Boston Scientific received FDA approval to market their
NIRŪ with SOX(TM) over-the-wire coronary stent system for the
treatment of coronary artery disease, and immediately began
shipment of this product.  Net sales for all products for the
fiscal year ending 12/31/99 rose 27% to $2.84 billion.  Boston
Scientific has been in a stage I base since October and our play
offers a reasonable entry point into an improving sector.
Earnings are due Tuesday.

MAY 20.00 BSX ED Bid=2.50 OI=3789 CB=19.25 RC=3.9% RNC=3.9%

Chart =


CAR - Carter-Wallace $20.81  ***What's Up? ***

Carter-Wallace manufactures and sells a line of consumer health
care products such as deodorants, toothpaste, cough and cold
products, and pet supplies.  Carter's products include Arrid
antiperspirants and deodorants, First Response pregnancy test
kits, Pearl Drops tooth polish, and other consumer health care
products.  A favorable study on ASTELIN Nasal Spray, manufactured
by Wallace Labs, a division of Carter-Wallace, reported in March,
could bode well for the future.  The company announced this week
that it increased its regular quarterly cash dividend from $0.06 
to $0.08 per share, payable on May 30, 2000 to shareholders of 
record on May 3, 2000.  Does this explain the jump in price last
week?  We favor a cost basis near a price that Carter-Wallace
has traded at for over a year.  Mind your stop loss point if the
trend is broken.

MAY 20.00 CAR ED Bid=1.94 OI=184 CB=18.87 RC=6.0% RNC=6.0%

Chart =


DGX - Quest Diagnostics $44.50  *** Beating Estimates! ***

Quest Diagnostics is one of the largest clinical laboratory
testing companies in the United States.  It offers a broad range
of clinical laboratory testing services used by physicians in the
detection, diagnosis, evaluation, monitoring and treatment of
diseases and other medical conditions.  These tests range from
the routine (such as blood cholesterol tests) to highly complex
(such as molecular diagnostics testing).  Through its Nichols
Institute, it performs esoteric tests in endocrinology, genetics,
immunology, microbiology, molecular biology, oncology, serology,
special chemistry and toxicology.  Quest Diagnostics said that it
expects first-quarter earnings to be about 50% above analysts'
estimates and year earnings to be about 20% above estimates.
Growth in earnings reflects better than anticipated clinical
testing volume, improved revenue per order and accelerated
realization of net synergies associated with its acquisition of
SmithKline Beecham Clinical Laboratories last year.  What can we
say, an absolutely beautiful chart in horrid Market conditions.
Breaking the strong trend-line (Oct. - Jan. - Mar. lows) should
signal any change of character.

MAY 40.00 DGX EH Bid=6.00 OI=0 CB=38.50 RC=3.9% RNC=3.9%

Chart =


LPNT - LifePoint Hospitals  $16.38  *** New Coverage ***

LifePoint Hospitals is comprised of 23 general, acute care
hospitals and related health care entities.  In 21 of its 23
markets, LifePoint's hospital is the only hospital in the
community.  All but seven of LifePoint's hospitals are located
in states that have certificate of need laws, which laws may have
the effect of limiting the development of competing facilities.
With increasing revenue LifePoint is drawing the attention of
several analysts resulting in upgrades and new coverage.  The
Rural Hospital sector is strong and LifePoint's chart is a case
in point.  The ascending triangle (from January) is very bullish
as investors continue to buy at higher and higher prices.  In
any case, it is wise to have a stop-loss point established.

MAY 15.00 PUN EC Bid=2.25 OI=5 CB=14.13 RC=6.2% RNC=6.2%

Chart =


PIR - Pier 1 Imports  $10.50  *** Trying for a New High! ***

Pier 1 Imports is an international specialty retailer of imported
decorative home furnishings, gifts and related items.  Pier 1
operates over 750 stores in the United States and Canada and
supports nine franchised stores in nine states.  They also
operates stores in the United Kingdom and supply merchandise
and licenses the Pier 1 name to Sears in Mexico and Puerto Rico.
Pier 1's fourth quarter 1999 same store sales rose 9.1%, leading
to a 26% increase in per share profits, 9% ahead of consensus
estimates.  Operating expenses fell 2.22% as a percentage of
sales, and expenses are being further reduced as a result of a
new three-year shipping contract at significantly lower rates.
We favor a cost basis near the 50 dma as Pier 1 tries to break
above last year's high.

MAY 10.00 PIR EB Bid=1.00 OI=143 CB=9.50 RC=5.3% RNC=5.3%

Chart =


UGLY - Ugly Duckling  $7.50  *** Speculation Only! ***

Ugly Duckling is one of the largest and fastest growing used car 
sales company focused exclusively on the sub-prime market.  The 
company underwrites, finances and services sub-prime contracts 
generated at its 75 Ugly Duckling dealerships, located in 11 
metropolitan areas in eight states.  Ugly Duckling, which just
announced the completion of its exchange offer, has been in a
stage I base for over a year.  Last quarters earnings showed a
41% increase in revenues and a 16% increase in loan originations.
With this quarter's earnings due next week (April 19), this issue
is for speculators who maintain a disciplined stop-loss system.

MAY 7.50 QRD EU Bid=0.50 OI=0 CB=7.00 RC=7.1% RNC=7.1%

Chart =


Naked Put Percentage List
By: Matt Russ

In addition to our regular Disclaimer, now at the bottom of this 
page, I would like to include a few words of clarification and 
caution.  This is the last week before expiration.  It also is a
shorter trading week as the markets will be closed on Good Friday.
That means quicker time decay.  Yet, at the same time it means 
in order to achieve attractive returns, some of the suggested 
puts are closer to At-The-Money or above their primary support 
levels.  You may choose to look at strikes that are lower.  In 
many cases, there may not be any lower put strikes since exchanges 
have not create them for April expiration.  Therefore, we have 
listed some May puts with those lower strikes.  The current market
condition has been extremely volatile and extra caution should be

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

AMAT   80.31     80   ANC-PP    4.75   2008   24%      76
BEAS   58.63     55   BRQ-PK    3.38   1466   23%      52
BRCM  122.25    120   RDW-PD   11.75   3056   38%     114
CHKP  149.63    145   YKE-PI    8.88   3741   24%     140
CIEN   88.00     85   EUQ-PQ    5.75   2200   26%      80
CMVT   74.19     70   CQV-PN    4.25   1855   23%      63
CREE   89.00     85   CQR-PQ    5.50   2225   25%      78
CSCO   57.00     55   CWY-PK    2.56   1425   18%      50
EBAY  139.63    130   QXB-PF    6.63   3491   19%     133
HGSI   62.75     60   HQI-PL    3.63   1569   23%      55
INCY   76.00     70   IPQ-PN    3.88   1900   20%      71
INKT  100.81     95   KYQ-PS    5.50   2520   22%      91
INTC  110.38    105   INQ-PA    4.13   2760   15%     103
ITWO   78.06     70   QYJ-PN    4.25   1952   22%      69
JDSU   79.63     75   XXZ-PO    4.00   1991   20%      75
LSI    50.63     50   LSI-PJ    3.50   1266   28%      50
MEDI  137.50    140   MEQ-PH   10.25   3438   30%     130
MERQ   58.44  52.50   RQB-PX    3.00   1461   21%      50
MLNM  112.94    110   QMN-PB    5.50   2824   19%     110
MUSE   74.88     70   QVM-PN    3.13   1872   17%      69
NEWP   88.00 May-75   QNW-QO    3.88   2200   18%      75
NSOL  104.56    100   JNU-PT    5.13   2614   20%     100
NXTL  105.25    100   FQC-PT    3.50   2631   13%     100
NXTV   80.56     75   NUX-PO    4.25   2014   21%      75
PDLI   75.44 May-65   PQI-QM    5.25   1886   28%      71
PMCS  118.44    110   SDL-PB    7.38   2961   25%     100
PWAV  114.00    110   VFQ-PB    7.50   2850   26%     102
QCOM  105.00    100   AAF-PT    5.25   2625   20%     100
QLGC   62.50     55   QLC-PK    3.00   1563   19%      55
SUNW   77.00     75   SUX-PO    4.75   1925   25%      75
TERN   94.00     90   TUN-PR    5.75   2350   24%      90
VIGN   42.19     40   UOJ-PH    3.25   1055   31%      39
VRTS   80.75     75   VUQ-PY    5.25   2019   26%      71
YHOO  116.00    110   YMM-PB    4.25   2900   15%     110

To download an excel spreadsheet version of this list, click 
here:  http://www.OptionInvestor.com/downloads/hpapr-16.xls




AGGRESSIVE   SELL PUT APR-75 QYJ-PO at $6.38 = 33%  
MODERATE     SELL PUT APR-70 QYJ-PN at $4.25 = 22%




There are no strikes in April below $70.
AGGRESSIVE   SELL PUT APR-75 IPQ-PO at $6.25 = 33%
MODERATE     SELL PUT APR-70 IPQ-PN at $3.88 = 20%




AGGRESSIVE   SELL PUT APR-52.50 LSI-PX at $4.88 = 39%    
MODERATE     SELL PUT APR-50    LSI-PJ at $3.50 = 28%

DISCLAIMER:  Before entering any of the positions listed above, 
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 Buying Basics: Blue-Chip or Technology...

There has been a lot of discussion recently about the "rotation"
in the market.  Unfortunately, there were no "safe havens" during
the past week.  Before the slide began, investors were basically
divided between the slow-moving "old economy," represented by the
Dow, and the technologically advanced "new economy" that is the
foundation of the Nasdaq.  Although the groups have a number of
fundamental differences, many analysts believe that in time the
diverse markets will merge into one.  After today's sell-off, the
big question is, "where will they meet?"

At some point in almost every session we hear a remark concerning
one or another of the most common stock types.  In recent weeks,
the consumer-products group has been identified as a favorable
sector for conservative investors.  For those of you who are new
to investing, the basic categories of stocks include Blue-Chips,
Growth stocks or Income issues, Cyclicals, Defensive stocks and
Speculative issues.

Blue Chip stocks are historically the best long-term investments.
These companies are well established, high quality issues such as
General Electric (GE) or International Business Machines (IBM).
They generally pay good dividends and are considered "bellwethers"
of the market.  Growth stocks are those companies which have a
high probability of capital appreciation.  They retain most of
their earnings and usually don't pay dividends.  Their capital is
plowed back into the company for future expansion and acquisition
or research.  Stocks in this group might include Cisco (CSCO) or
Sun Microsystems (SUNW).  Income stocks are conservative issues
that have yields comparable with corporate bonds.  These companies
can pay competitive returns because their products or services are
superior to others in the industry.  Banks and insurance companies
are often the leaders in this group.

Most of the recent discussion has centered on defensive stocks and
cyclical issues.  Defensive or safety stocks are those which
remain stable even in declining markets.  This group generally
includes utilities, drug manufacturers, and consumer non-durables
or food companies.  They retain their value in recessions as their
products are always in demand, regardless of the economic climate.
Cyclical companies are easy to identify.  Their earnings fluctuate
with the changes in a particular business or industry cycle.  When
economic conditions are favorable, the company's stock and earnings
rise. As the cycle ends, the company's revenues and stock value

In the past, speculative stocks were generally identified by P/E
ratios.  Issues were considered aggressive when they had price to
earnings ratios in the multiples of 50 to 100.  Of course many of
Internet stocks have P/E's well into the hundreds, or at least
they did before last week.  Analysts had previously suggested this
basic fundamental indicator might no longer be an accurate measure
for gauging investment risk.  Based on the recent market demise,
it appears they were somewhat premature in that assessment.  With
the new "low-tech" attitude, many experts expect "old-economy"
stocks to make attractive buys as the market roils.  In light of
this new outlook, conservative investors would do well to consider
the less flashy groups; pharmaceuticals, financials, transports,
consumer products, and basic-materials.  There may even be room
for an attractive, income producing utility.

Unfortunately, these classic groups won't attract much investor
attention until something catastrophic occurs in the new economy
of high technology.  Would the recent correction be classified as
catastrophic?  Only if you missed last year's incredible run!
Regardless of when and where the sell-off ends, most analysts
believe the technology group will eventually learn to coexist with
the older stocks of the market.  No one will deny the importance
of blue-chip companies allying with leaders in the Computing and
Information Technology industries to improve productivity.  Some
experts foresee the World Wide Web boosting output on industrial
assembly lines, enabling manufacturers and retailers to retain
higher profits without raising prices.  The end product is win-win;
a high growth economy devoid of inflation.

In any case, all we can hope for now is a reasonably soft landing
for the broad market and a future climate where technology issues
and old economy war-horses can exist in profitable harmony.  That
is certainly a tall order, but one in which we can all be sure to

                      *** 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.


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

PAIR   19.44  18.88   APR  15.00  0.56  *$  0.56  27.3%
UPR    14.50  15.75   APR  12.50  0.56  *$  0.56  18.6%
BELM   16.44  12.50   APR  12.50  0.25   $  0.25  15.3%
TLCM   30.25  22.88   APR  22.50  0.50  *$  0.50  11.1%
SEM    17.81  15.88   APR  15.00  0.31  *$  0.31   7.3%
NUHC   17.56  14.88   APR  12.50  0.31  *$  0.31   7.1%
TLCM   32.44  22.88   APR  22.50  0.44  *$  0.44   6.9%
CDT    34.31  25.88   APR  25.00  0.56  *$  0.56   6.6%
SVGI   30.06  23.50   APR  22.50  0.38  *$  0.38   6.5%
ADLT   18.75  12.00   APR  12.50  0.44   $ -0.06   0.0% No Lower!
OXGN   23.50  16.38   APR  17.50  0.50   $ -0.62   0.0% No Lower!
CD     18.69  15.88   APR  17.50  0.56   $ -1.06   0.0% No Lower!
MLT    30.00  19.75   APR  22.50  0.44   $ -2.31   0.0% No Lower!

VANS   17.06  15.50   MAY  15.00  0.56  *$  0.56   7.6%
SUPX   30.06  23.25   MAY  17.50  0.69  *$  0.69   7.5%
CYBX   23.81  23.81   MAY  17.50  0.50  *$  0.50   6.9%
VTS    28.06  21.44   MAY  20.00  0.56  *$  0.56   6.6%

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


The Bear continues to lay waste across the stock landscape and
the selling storm is sparing few, if any, issues.  Many of the 
closed positions have violated long-term technical support areas
and though exiting the position is a painful task, it does halt the
out-flow of money and allows you to participate in future trades.

Positions Closed:



NOTE:   We will continue to list the most favorable positions
(regardless of the market condition) identified in our research.
But considering the market uncertainty, waiting for a confirmed
bottom and the return of a neutral to slightly bullish outlook
may increase the probability of success.

Sequenced by Company

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

AFWY   20.06  MAY  17.50  FQD QW  0.38  0    17.12    6.5% 
ANLY    9.81  MAY   7.50  AQJ QU  0.38  0     7.12   16.2% 
CQ     19.75  MAY  15.00   CQ QC  0.38  0    14.62    8.8% 
KR     19.06  MAY  17.50   KR QW  0.75  170  16.75   11.0% 
LPNT   16.38  MAY  15.00  PUN QC  0.81  50   14.19   13.5% 
PPDI   15.56  MAY  12.50  PJQ QV  0.56  10   11.94   15.0% 
RDC    26.69  MAY  22.50  RDC QX  0.63  0    21.87    8.9% 

Sequenced by ROI  

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

ANLY    9.81  MAY   7.50  AQJ QU  0.38  0     7.12   16.2% 
PPDI   15.56  MAY  12.50  PJQ QV  0.56  10   11.94   15.0% 
LPNT   16.38  MAY  15.00  PUN QC  0.81  50   14.19   13.5% 
KR     19.06  MAY  17.50   KR QW  0.75  170  16.75   11.0% 
RDC    26.69  MAY  22.50  RDC QX  0.63  0    21.87    8.9% 
CQ     19.75  MAY  15.00   CQ QC  0.38  0    14.62    8.8% 
AFWY   20.06  MAY  17.50  FQD QW  0.38  0    17.12    6.5% 

Company Descriptions

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


AFWY - American Freightways  $20.06  *** Transport Sector ***

American Freightways is a scheduled, for-hire carrier of general
commodities, serving Mid-Atlantic, Midwestern, Southeastern and
Southwestern states.  American Freightways also provides service
to the ten provinces of Canada through an exclusive alliance with
Day & Ross, to the Mexican market with Autolineas Mexicanas, and
to Puerto Rico in a partnership with X-PRESS Freight Forwarders.
American recently expanded its coverage to include the state of
Alaska, the Hawaiian Islands and Guam.  Last week, Deutsche Banc
Alex Brown raised its rating on AFWY to "strong buy," based on
accelerated revenue growth in the latest quarter and new service
initiatives that are leading to tonnage growth and pricing gains.
The chart appears technically healthy and the sector is recovering
from a recent slump.

MAY 17.50 FQD QW Bid=0.38 OI=0 CB=17.12 ROI=6.5% 

Chart =


ANLY - Analysts International  $9.81  *** Calling The Bottom! ***

Analysts International provides a full range of computer software
services to computer users, computer manufacturers and software
developers throughout the United States, Canada and the U.K.  The
company's product solutions include custom software development
and remediation services; supplemental IT and software engineering
staffing; maintenance of legacy systems; help desk services; and
single source staffing of programmers and software professionals
through their Managed Services Group.  The recent acquisition of
a majority stake in Sequoia, an Internet professional services
organization that provides strategic eBusiness solutions, should
help ANLY's strategy to become the preferred partner for companies
seeking to design and build effective eBusiness operations.  This
is simply a bottom-fishing play on a potentially bullish issue.

MAY 7.50 AQJ QU Bid=0.38 OI=0 CB=7.12 ROI=16.2% 

Chart =


CQ - Comsat $19.75  *** Stage I Base ***

Comsat is a satellite communications service provider.  Comsat
provides satellite capacity for telephone, data, Internet, video
and audio communications, satellite telecommunications services
for maritime, aeronautical and land mobile applications.  They
also operate an integrated group of telecommunications companies
that provide individualized digital network solutions and value
added services to business clients and carriers in select markets.
Comsat Labs provides technical consulting services and develops
advanced communications technologies and products for satellite
access and networking applications.  Comsat recently unveiled
linkway.IP, a new addition to a family of broadband satellite
networking products.  The Internet Protocol-based product is
designed for Internet Service Providers to connect local points
of presence and for corporations to connect offices over an IP
network regionally or globally.  This industry group has also
been in a recent slump and the probability of owning the issue
at $15 appears to be low.

MAY 15.00 CQ QC Bid=0.38 OI=0 CB=14.62 ROI=8.8% 

Chart =


KR - The Kroger Company  $19.06  *** Own This One! ***

Kroger is engaged in the retail food business and is one of the
largest supermarket operators in the United States.  The company
manufactures and processes food for retail sale in supermarkets
across America.  Kroger operates supermarkets in the Midwest and
South.  Dillon Companies operates supermarkets operating under
the names King Soopers, Dillon Food Stores, Fry's Food Stores,
City Market, Gerbes Supermarkets, and Sav-Mor.  In addition, the
company operates convenience stores under the trade names of Kwik
Shop, Quik Stop Markets, Tom Thumb Food Stores, Turkey Hill Minit
Markets, Loaf 'N Jug, and Mini-Mart.  The company also owns 26
manufacturing plants.  Kroger recently announced a stock buy-back
and received an upgrade from Bear Stearns.  Options activity has
been significant and the premiums offer a favorable cost basis.

MAY 17.50 KR QW Bid=0.75 OI=170 CB=16.75 ROI=11.0% 

Chart =


LPNT - LifePoint Hospitals  $16.38  *** New Coverage! ***

LifePoint Hospitals is comprised of 23 general, acute care
hospitals and related health care entities.  In 21 of its 23
markets, LifePoint's hospital is the only hospital in the
community.  All but seven of LifePoint's hospitals are located
in states that have certificate of need laws, which laws may have
the effect of limiting the development of competing facilities.
With increasing revenue LifePoint is drawing the attention of
several analysts resulting in upgrades and new coverage.  The
Rural Hospital sector is strong and LifePoint's chart is a case
in point.  The ascending triangle (from January) is very bullish
as investors continue to buy at higher and higher prices.  In any
case, it is wise to have a stop loss point established.

MAY 15.00 PUN QC Bid=0.81 OI=50 CB=14.19 ROI=13.5% 

Chart =


PPDI - Pharma. Product Development  $15.56  *** Earnings Due! ***

Pharmaceutical Product Development and its subsidiaries provide
a broad range of research and development and consulting services
in the life and discovery sciences segments.  The company's life
sciences subsidiary, is the fourth largest contract research
organization in the world, providing product development resources
on a global basis to complement the research and development
activities of companies in the pharmaceutical and biotechnology
industries.  The Company's discovery sciences subsidiary focuses
on the new product segment of the pharmaceutical research and
development outsourcing market.  Earnings are due next week and
the fundamental outlook is favorable.  The technical support near
our cost basis should provide the necessary margin for any future

MAY 12.50 PJQ QV Bid=0.56 OI=10 CB=11.94 ROI=15.0% 

Chart =


RDC - Rowan Companies  $26.69  *** Oil Sector Hedge ***

Rowan Companies is in the business of contract drilling of oil
and gas wells.  Rowan's offshore operations consist mainly of
contract drilling services using mobile rigs as well as heavy
duty cantilever jack-up rigs.  Onshore operations consist of
drilling equipment, personnel and camps available on a contract
basis for exploration and development.  Rowan also owns Era
Aviation, which provides aircraft services and LeTourneau, a
mini steel mill, a heavy equipment manufacturing plant and a
marine rig construction yard.  The company also operates a
marine group that designs and builds mobile offshore jack-up
drilling rigs.  Rowan just reported favorable earnings and a
positive outlook based on expected improvement in the company's
financial performance.  We simply favor the diversification of
an Oil-Services sector play.

MAY 22.50 RDC QX Bid=0.63 OI=0 CB=21.87 ROI=8.9% 

Chart =


Capitulation? Not Hardly!
By: Ray Cummins

First, I must apologize for the omission of Thursday's "Spreads"
section.  One of the fallacies of the technology age; timely and
accurate electronic mail was the culprit and unfortunately, I did
not discover the problem until well after the publishing deadline.
In any case, our new candidates included short-term, volatility
positions in Gillette (G), Maytag (MYG) and Ethan Allen (ETH).
While each of the plays benefited from Friday's active session,
the brisk, bearish trend offered little opportunity to participate
in any of the positions.

Wednesday, April 12

Technology stocks were pummeled today and the panic spread to
blue-chip issues as investors fled the equity market in a broad
selling spree.  The Nasdaq dropped 286 points to 3,769 and the
Dow Jones Industrial Average lost 161 points to end at 11,125.
The S&P 500 index fell 33 points to 1,467.  Volume on the NYSE
hit 1.15 billion shares.  Advances beat declines 1,516 to 1,447.
The 30-year bond fell 23/32 with the yield at 5.82%.

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

Ryder         R      MAY15C/APR22C   $6.88   debit   diagonal
Novellus      NVLS   APR70C/APR65C   $0.50   credit  bear-call
Halliburton   HAL    MAY40C/APR40C   $1.93   debit   calendar

Ryder traded in a relatively small range for most of the session
and the initial debit was slightly above our target.  Novellus
opened almost $3 higher, providing a favorable entry opportunity
in the bearish credit position.  Halliburton required persistence
as the target debit was unavailable until late in the afternoon.

Portfolio plays:
Investors fled from technology shares today and the down-draft
affected all the major averages.  Concerns over profit warnings
and future revenues were seen as the cause of a sell-off that
eventually turned into a panic.  As the session came to an end
it was apparent there would be no rebound and market-makers were
left with only sell orders as investors took cash off the table.
By the time it was over, the Nasdaq composite had fallen to its
first close below 4,000 since January.  Today's bearish activity
also affected the blue-chip market, bringing the Dow industrials
down 200 points in less than an hour.  

Earnings dominated the scene for most of the trading day, with
classic, old economy stocks surging during the morning session.
Financial stocks performed well even as the broad market pulled
back, and Paper stocks were also stronger after the sector beat
Wall Street's earnings targets.  Unfortunately, as the sell-off
gained momentum and trading volume climbed, sectors that moved
higher in early trading eventually fell to profit-taking.  At
current levels, both the Nasdaq and the Dow are negative for the
year 2000.

The one concern that seems to be absent from trading discussions
is inflation.  That subject may become a primary market topic in
the coming days.  Federal Reserve Chairman Alan Greenspan is due
to address the Senate Banking Committee on the future of the
economy and the securities markets.  To add to the interest rate
speculation, Federal Reserve Governor Laurence Meyer said the
risk of overheating in the booming U.S. economy is unacceptably
high, leaving no doubt the central bank is bent on further rises
in key interest rates.  New inflation data will also be announced
early Thursday, with the Producer Price Index report expected
before the opening bell.

Our portfolio again suffered the wrath of the technology decline.
Fortunately, many of our new positions are in the quality groups
such as major drugs, financials and consumer products.  Abbott
Labs (ABT) rose $1.56 to $38 and our new calendar spread moved
into profitable territory, yielding a $1.12 credit.  Blue-chip
Warner Lambert (WLA) achieved a new closing high at $108.12.  Our
bullish debit spread profits above $95.  Proctor & Gamble (PG)
rallied $3 to close just below $70, almost $10 above the maximum
profit price.  The spread is trading at $1.38 credit and should be
closed to protect profits.  Kroger (KR) climbed to a yearly high
near $21.50 and the recent diagonal adjustment appears to be in
good shape.  The current profit is favorable at $1 and this play
may be considered an early-exit candidate.  Bank One (ONE) and
Summit Bancorp (SUB) also participated in the bullish, financial
sector activity.  The recent rally in Summit has provided an
excellent premium for the move to May options.  To protect the
downside, we will transition to the $25 series for a credit of

There were a number of significant moves in leading technology
issues.  Of course the stock that interested us most was a recent
bullish selection, Apple Computer (AAPL).  As we noted on Tuesday,
the support level near $118 was our key exit signal and the price
was violated almost immediately.  We had two possible plans for
exit but with the rapid movement, the only alternative was to
close the long position and wait for an opportunity to buy-back
the short option.  The decline that followed was amazing as APPL
fell to a low near $104.  As with any (losing) exit trade, the
goal should simply be to break-even or limit losses as much as
practical.  In this case, we were not able to recover the entire
cost of the position but we did achieve a fair closing credit
($7.00) during the volatile session.  For those of you remaining
in the position, the previous support (at $118-$119) will become
new resistance and the success or failure at that level should be
used to determine your future trades.  With luck, Murphy's Law
will enter the picture and AAPL will finish just above our sold
strike at $120.

With the Nasdaq's recent change in character, it may be time to
evaluate the technical health of some of your long-term positions.
Of course you should always consider an early exit in those plays
that can be closed for favorable profits.  In our LEAPS section
that includes Medtronics (MDT) and Vodaphone (VOD).  Regrettably,
we missed the turn in both directions on American Online (AOL).
Now the issue is threatening a bearish relapse and we can barely
escape with a small loss, as opposed to a recent potential profit.
Based on the current outlook, that may be the best action.  Other
issues that have our attention are Sun Micro (SUNW) and Computer
Associates (CA).  These stocks are being used in credit-spread
strangles and the issues are now testing the lower boundaries of
profit.  In both cases, we plan to take possession of the stock
(if assigned) and write covered-calls to recover any losses.

Thursday, April 13

Technology stocks plummeted again today as investors fled the
besieged group for a fourth consecutive session.  The Nasdaq fell
significantly in the final hour of trading to end 92 points lower
at 3676.  The Dow industrials didn't help matters, dropping over
200 points to 10,923.  The S&P 500 slid another 26 points to 1440.
Volume on the NYSE hit 1 billion shares.  Declines beat advances
1,712 to 1,263.  Nasdaq volume was heavy at 1.9 billion shares,
with declines leading advances by a 2-to-1 margin.  In the bond
market, the 30-year Treasury rose 10/32, bid at 106 12/32, where
it yielded 5.79%.

Portfolio plays:

A precarious morning rally by technology stocks evaporated in the
afternoon session as weakness in industrial issues spread to the
broader market.  Equities as a whole came under pressure after a
rise in wholesale inflation raised new fears about the economy.
Traders were optimistic as the day began with positive earnings
from a number of leading technology companies helping to support
the shaky group.  Advanced Micro Devices, a leading computer chip
manufacturer far exceeded analysts quarterly estimates, posting a
record $1.15 per share, nearly twice the consensus forecast.  The
announcement boosted the semiconductor sector but there were still
signs of fear in the broader technology group.  The majority of
leading Nasdaq issues eventually fell lower as nervousness in the
market continued to avert any rallies.

Now investors are becoming scared of the technology group, which
last year posted the sharpest gains of any index in the history of
the market.  This year, the Nasdaq has dropped more than 20% from
its peak in early March, with the deep correction exhibiting early
signs of a bear market.  Analysts say the sell-off is based on a
belief that many of the new companies enjoy undeserved valuations.
Some experts suggest that technology stocks could see their share
prices trimmed another 25% before they are in line with their
earnings potential.

For most investors, the rotation to blue-chip issues offered a
safe haven from the demise of the high-flying technology sector.
After today's second consecutive sell-off, that option appears to
have limited potential.  Finance and Consumer Products stocks have
been the market leaders but today, those issues were weighed down
by the latest government report on inflation.  The U.S. Labor
Department's Producer Price Index indicated that wholesale prices
rose unexpectedly in March, led by the biggest jump in energy
costs in almost ten years.  Some traders looked to blame the Fed
for its lack of success in fighting inflation and many see their
actions as detrimental to both the economy and the market.  In
defense of the current FOMC policy, Federal Reserve Chairman Alan
Greenspan dismissed charges the Fed has tried to drive the stock
market lower by boosting interest rates.

The majority of issues in our portfolio fell during the bearish
session.  There were a few positive moves with Kellog (K), Helix
(HELX) and Vodaphone (VOD) enjoying small rallies but overall, the
day offered little reason for happiness.  Fortunately, most of our
bullish positions have been closed to protect profits or limit
losses.  With the trend decidedly bearish, the best we can hope
for is consolidation rather than correction and if the fear and
worry subsides, we may even see some bullish activity near the end
of the expiration period.

Black Friday, April 13

Stocks plummeted today after an unfavorable inflation report
drove nervous investors from the equity market.  The announcement
sent the Nasdaq tumbling and left the Dow Industrial Average with
its biggest point loss on record.  The Nasdaq slid 355 points and
the Dow fell 617 points.  The S&P 500 index took the brunt of both
declines, losing 83 points to close at 1357.  Nasdaq volume was
heavy at 2.5 billion shares with declines beating advances 3-to-1.
Trading on the NYSE was also active at 1.2 billion shares and
declines led advances 2-to-1.  In the bond market, the 30-year
Treasury rose 6/32, bid at 106 14/32, where it yielded 5.78%.

Portfolio plays:

Equity markets continued lower today and the falling share values
prompted further margin calls and accelerated the selling pressure.
The Nasdaq continued a recent bearish trend, moving below a number
of significant levels including the index's 200-day moving average.
In its current condition the Nasdaq is oversold, but traders are
not convinced the index has reached a bottom.  Analysts believe
that many technology stocks remain vulnerable, particularly the
high-flying semiconductor group, which has avoided much of the
recent carnage.  Friday's activity had conviction and the selling
spread to all the major markets in afternoon trade.  The declines
in technology issues weighed heavily on blue-chips, dragging the
Dow Industrial Average to its biggest point loss on record.  All
30 components ended in the red, with financial issues leading the
way down.  The free-fall began after the release of stronger than
expected CPI data.  The report indicated that consumer inflation
rose 0.7% in March, the largest gain in almost a year.  Outside
the volatile energy and food categories, the core inflation rate
also rose by 0.4%, the strongest increase in five years.  It now
appears the Federal Reserve Board will be forced to raise interest
rates more aggressively than previously expected.  On the S&P 500,
gold mining and gaming stocks advanced while investment banking,
retail, healthcare and the majority of other sectors were slashed
in value.  With most issues closing near session lows, the outlook
for stocks is bleak in the near future.

After today's brutal treatment, the portfolio was left with few
bullish positions.  Those that survived the consolidation earlier
in the month have been closed to protect profits or limit losses.
Of course the bearish positions are performing well but that fact
does not alleviate the monetary pain suffered in the most recent
correction.  Looking back, it's apparent that we chose to ignore
the ominous indications, quietly joining the herd for the trip to
the slaughter-house.  Fortunately, many of the positions provided
favorable profits early in the expiration period and for those of
you who were wise enough to seize them, we commend your sensible
judgment.  From this point, we must simply press-on and endeavor
to rebuild our shrunken portfolio with a new group of profitable

Questions & comments on spreads/combos to ray@OptionInvestor.com

                         - STRADDLES -

This week we received a number of requests for conservative debit
straddles.  Unfortunately, with the recent market volatility, the
number of theoretically favorable candidates is quite low.  That
is not to suggest that you can't make money in the strategy, it
just means you cannot focus entirely on historical volatility as
a method of analysis.  In today's search, we have identified a
number of favorable candidates.

Profitable debit straddles are relatively simple to uncover and
there are three rules to identifying favorable conditions for a
straddle purchase.  First, the trader should select options that
are undervalued (cheap). Next, the underlying security must have
the potential to move (high or low) enough to make the straddle
profitable.  Finally, the underlying stock should have a history
of multiple movements through a sufficient range in the required
amount of time to justify the overall risk/reward of the position.
Based on analysis of the historical option pricing and technical
background, these positions meet the fundamental criteria for
favorable straddles.  As with any recommendation, the play should
be evaluated for portfolio suitability and reviewed with regard to
your strategic approach and trading style.  As you have come to
expect, 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 theoretical
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.

Good Luck!


JNY - Jones Apparel Group  $30.00

Jones Apparel Group is a leading designer and marketer of women's
sportswear, suits, dresses and jeanswear.  The company pursues a
multi-brand strategy by marketing its products under several
nationally known brands, including Jones New York, Evan-Picone
and Rena Rowan, and the licensed brands Lauren by Ralph Lauren
and Ralph by Ralph Lauren.  Jones Apparel primarily contracts for
the manufacture of its products through a worldwide network of
quality manufacturers.  The company has capitalized on its
nationally known brand names by entering into licenses for the
Jones New York brand name and the Evan-Picone brand name with
select manufacturers of apparel and accessories.  The company's
brands cover a broad array of categories for both the women's
and men's markets.  Within those brands, various classifications
include career and casual sportswear, jeanswear, dresses, suits,
and a combination of all components termed lifestyle collection.

PLAY (conservative - neutral/debit straddle):

BUY  CALL  AUG-30  JNY-HF  OI=433  A=$3.62
BUY  PUT   AUG-30  JNY-TF  OI=130  A=$3.50

Chart =


LIPO - Liposome  $16.50

Liposome is a biopharmaceutical company engaged in the discovery,
development, manufacturing and marketing of proprietary lipid and
liposome-based pharmaceuticals, primarily for the treatment of
cancer and other related life-threatening illnesses.  Their main
products include ABELCET (Amphotericin B Lipid Complex Injection),
a treatment for systemic fungal infections such as candidiasis,
aspergillosis and cryptococcal meningitis and EVACET, liposomal
doxorubicin (formerly TLC D-99), a treatment for metastatic breast
cancer.  Other products are currently in clinical testing.

This position has a twist!  Liposome shareholders are considering
a merger with Elan Corporation (ELN).  The vote is currently in
progress and consummation of the transaction remains subject to
Liposome stockholder and regulatory approvals and satisfaction or
waiver of customary closing conditions.  Upon completion of the
merger, stockholders would receive 0.3850 of an Elan ADS plus one
contingent value right for each share of Liposome common stock
that they own.  This position may require additional transactions
and certainly suggests further research.  Our position involves
to opposing ITM options.  There is also an aggressive position in
the May options, for those who want to speculate on the outcome
of the vote.

PLAY (conservative - neutral/debit straddle):

BUY  CALL  AUG-15.00  LPQ-HC  OI=81  A=$3.25
BUY  PUT   AUG-17.50  LPQ-TW  OI=52  A=$2.88

Chart =


MTZ - Mastec  $73.00

Mastec is one of the preeminent builders of internal and external
voice, video, data, Internet and other computer and communications
networks for leading telecommunications service providers, cable
television operators, corporations and power companies.  Mastec
designs, installs, constructs and maintains aerial, underground
and buried copper, coaxial and fiber optic cable networks as well
as wireless antenna networks.  The company also provides external
network services to the electric power industry that are similar
to the services it provides to telecommunications customers.
Mastec also designs, installs and maintains integrated local and
wide area networks and provides systems integration and other
value added services for corporate customers and organizations
with multiple locations.

PLAY (conservative - neutral/debit straddle):

BUY  CALL  JUL-75  MTZ-GO  OI=7   A=$6.75
BUY  PUT   JUL-70  MTZ-SN  OI=19  A=$6.62

Note this is a strangle purchase (different strikes) as opposed
to a straddle purchase.  We often use this strategy when the
stock price is between two option strikes.

Chart =


AEG - Aegon N.V.  $80.50

AEGON N.V. is an international insurer with a major presence in
five key countries: the Netherlands, the USA, the United Kingdom,
Hungary and Spain.  The majority of AEGON's core business is life
insurance, pension and related savings and investment products.
With these products, the company has the edge in markets that are
large, growing and international.  The remaining portion of the
company's business is in health insurance, property and casualty
insurance and banking.

PLAY (conservative - neutral/debit straddle):

BUY  CALL  JUL-80  AEG-GP  OI=21  A=$7.00
BUY  PUT   JUL-80  AEG-SP  OI=50  A=$6.25

Chart =

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