Option Investor
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Daily Newsletter, Wednesday, 04/19/2000

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The Option Investor Newsletter                Wednesday  4-19-2000
Copyright 2000, All rights reserved.
Redistribution in any form strictly prohibited.

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

Also provided as a service to The Online Investor Advantage
******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
       4-19-2000           High     Low     Volume Advance Decline
DOW    10675.00 -  92.40 10789.40 10632.10 1,004,728k 1,469  1,472
Nasdaq 3,706.41 -  87.16  3851.56  3698.33 1,758,154k 2,361  1,858
S&P-100  771.62 +  23.43   786.33   769.63    Totals  3,830  3,330
S&P-500 1427.47 +  40.17  1447.69  1424.26            53.5%  46.5%
$RUT     486.24 +   0.15   493.79   483.11
$TRAN   2805.43 +  35.90  2826.67  2767.58
VIX       30.24 +   0.87    30.39    28.52
Put/Call Ratio       .50
******************************************************************

Lack of Conviction Makes For A Sleepy Day

Today can be summed up with one phrase:  lack of conviction.  
That's the way it felt from the minute the markets opened this 
morning.  After two of the biggest point gains in history for the
NASDAQ, it seemed that all sights were set on the index to give us
an indication of the market's next big move.  It opened at 3832
and within an hour slid down to 3720.  With the echoes of "suckers
rally" in the back on many minds, a healthy retest looked underway.
Yet, we wouldn't be so lucky.  Instead, we got a sleeper of a day
as both the NASDAQ and the DOW flatlined.  The DOW fell 92.46 to 
10680 in a relatively uneventful session.


 

The NASDAQ slowly climbed from 3720 toward 3800 where resistance
was thwarted.  Shortly thereafter, it made its high for the day
and rolled over for the day, off 87.16 to 3706.  Not very 
exciting.  Looking at the NASDAQ's broader trend on a daily chart, 
we can see that trading has been bound in the regression channel. 
Today, it traded right up to the upper limit and backed off.


 

There were a handful of standouts for the NASDAQ.  INKT decided 
to break the trend and beat First Call estimates by $0.03 with
a $0.01 profit, their first profitable quarter ever.  This 
prompted a strong rally as INKT rose to $132.13, up $16.13.
The rest of the Internet sector pullbacked for the day.  Also
beating estimates was ITWO with earnings of $0.07 vs. $0.05 per 
share.  Their stock soared $11.88 to $108.19.  Another B2B company 
that had good upside today was CMRC, which ran up $16 to $95.50.  
The company reported after the bell today a loss of $0.09 per 
share, better than the expected loss of $0.22.  In after-hours, 
CMRC traded $98.50.  QCOM beat the Street by $0.02 and traded up 
$2.75 to $115.13, coming off a high of $125.88.

CSCO was in the news today.  As if Cisco wasn't big enough, they 
signed a multi-billion dollar marketing and sales alliance with 
SBC communications today.  The deal will allow Cisco to become the
preferred provider of networking gear for SBC's infrastructure.
Despite the agreement, both stocks remained relatively calm.  CSCO 
ended down $2.75 to $66.50 and SBC finished at $42, up $0.50.

With one of the biggest days for earnings behind us (Super Tech 
Tuesday), let's look at how some of the big names faired.  INTC 
beat the street by a similar two cents, only to be punished with 
a $10 loss to $119.  Oh, the irony of the markets.  Other notables 
included AOL beating the street by...you guessed it, two cents and
traded up $1.38 to $62.13.  Does this convince you that Wall 
Street CEOs know how to do enough to please the Street and save 
some profits for a rainy day?  

We can't forget IBM.  Big Blue exceeded expectations and reported 
profits of $0.83 a share, but revenues were 5% lower than their 
fiscal first quarter.  As a result, investors sold shares of IBM 
which ell to $105, down $6.50.  This is just a small sampling of 
companies that have reported in the past two days.  We haven't seen 
a sell the news attitude which is typical of this time of year 
because of the markets massive decline.  It appears that companies 
with good earnings are being rewarded with a rising share price 
while others like IBM are being taken down for weak results.  
Finally, the system working the way it should!  One last earnings 
note, First Call reports that out of the S&P 500 that 187 
companies have beaten earnings, 29 missed and 2 were even-Steven 
with their estimates.   

It was a rocky day overall as many investors took some money off
the table.  Financials were sold today as preemptive interest rate 
fears may be creeping up on the market:  C down $2.50 to $59.63, 
LEH down $3.13 to $83.06, and CMB down $2.50 to $78.  Like IBM, 
other NYSE big cap tech stocks felt the pain as well as HWP(-3.25),
EMC(-2.13), and TXN(-7.00) were all lower.  

One blue chip that felt the pain in a big way was BMY.  
Bristol-Myers was a disaster today when the company announced 
they were withdrawing their application to market the 
hypertension drug Vanlev because of concern about side effects.  
They should have been concerned about the side effects this 
announcement would have on BMY's share price.  The stock was 
halted this afternoon and when it reopened, BMY had lost $30 bln,
or 28% of their market value.  BMY last traded at $50.50, down 
$14.50.  They said they're doing this in response to questions 
raised recently by the U.S. Food & Drug Administration regarding
the incidence and severity of an infrequent side effect known as
angioedema.  Vanlev had been projected as an $800 million 
dollar revenue generator in the next two year.  BMY did say 
they plan to resubmit the application next year.

It appeared that money went into those old economy stocks in a 
move to safety.  Airlines were strong as both UAL(+1.38) and 
AMR(+0.63) beat their earnings estimates.  Also on the upside 
were the Pharmaceuticals.  They did well throughout the day as 
investors sought out safehavens.  WLA(+7.00), MRK(+2.75), 
AHP(+2.75), LLY(+2.38), and PFE(+1.75) had strong buying.  This 
rotation that we have seen recently, reminiscent of this time 
last year, may be a telling sign of what's to come in May, after 
this earnings season passes.

With such a rapid recovery on Monday and Tuesday, today's lack of
conviction to the upside concerns me for the next couple of 
trading days.  Tomorrow is option expiration and the last trading
day before the long holiday weekend.  Volume should be light as 
many professionals will be beginning their vacations early.  As a 
result of thin trading, there may be more volatility.  Monday will 
be an important day as everyone has that "NASDAQ retest" in the 
back of their minds.

Matt Russ
Research Analyst


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

Global Crossing Files to Launch Tracking Stock
By Cindy Christ

Global Crossing Ltd. filed a registration statement Wednesday
with the Securities and Exchange Commission to spin-off its
GlobalCenter Web hosting unit in an Initial Public Offering.

The No. 5 U.S. long-distance provider, Global Crossing is in 
a race to complete the first international, land-based and
undersea fiber optic network.

The offering will represent about 15 to 25 percent of Global
Center's stock.

Bermuda-based Global Crossing said it would divest its
remaining interest in GlobalCenter at some time in the future.
The company said a portion of the disposal would include a
stock dividend to Global Crossing shareowners.

The company said GlobalCenter would use proceeds from the sale
to finance domestic and international expansion and for
corporate purposes and working capital. A portion of proceeds
also may be used to make strategic investments or
acquisitions.

Shares in GlobalCenter stock will be offered by an
underwriting group led by Morgan Stanley Dean Witter, Credit
Suisse First Boston and Chase H&Q, and co-managed by Bear,
Stearns & Co., Donaldson Lufkin & Jenrette, Goldman Sachs and
Salomon Smith Barney.

Shares in Global Crossing Ltd. (GBLX) traded up on the news
intraday, but backed off in late trading to close down
$0.12, or 0.42 percent, at $29.88.


****

Broadcom Posts Record Earnings and Profits
By Cindy Christ

An upbeat profit report from Broadcom Corp. failed to 
stir investor enthusiasm for the high-flying maker of
semiconductors used in broadband communications.

Broadcom (BRCM) shares fell nearly 10 percent to $142.25
Wednesday after the Irvine, Calif.-based company posted record
revenues and profits on soaring demand for its core products,
including chips used in networking gear, cable modems and
digital set-top boxes.

For first quarter 2000, Broadcom booked revenues of $191.3
million, up 91 percent from $100 million a year ago.

Net income including a one-time, $2.9 million acquisition
charge, totaled $41.8 million, or 17 cents per share, compared
to $15.7 million, or 7 cents per share, last year.

Results reflect Broadcom's 2-for-1 stock split on Feb. 11.

The consensus estimate among analysts polled by First
Call/Thomson Financial was 16 cents per share.

Market watchers said investors were disappointed the
company didn't match unofficial "whisper" numbers projecting
higher earnings of 18 cents per share.

During the quarter, Broadcom completed acquisitions of
BlueSteel Networks, Digital Furnace Corp. and Stellar
Semiconductor, accounting for each under the pooling of
interests accounting method. The three companies' financial
results were consolidated with Broadcom's.

"The quarter demonstrated that we are solidly on strategic
course, realizing very healthy revenues and profits from our
suite of core products, while aggressively preparing for and
pursuing new areas of growth," said Dr. Henry T. Nicholas III,
Broadcom president and CEO, in a statement.

The company said it reached a milestone by shipping its
250,000th Very High-Speed Digital Subscriber Line or VDSL
transceiver chip. Customers including US West are using
Broadcom's VDSL chips to offer consumers high-speed,
integrated Internet, voice and data services.

After the report, three brokerages upgraded their investment
outlook on Broadcom shares.

WR Hambrecht + Co. raised its rating on Broadcom to "strong
buy" from "buy." e-Network Technologies analyst Jim Liang
cited Broadcom's success in the Ethernet, cable modem, and
cable set-top boxes markets, the company's product roadmap for
emerging broadband markets, and its recent share weakness as
reasons for the upgrade.

"We believe the business momentum at the company is
accelerating, and the recent share weakness has created an
excellent opportunity for investors," Liang said.

Gerard Klauer raised its view on Broadcom shares to Buy, and
Credit Suisse First Boston reinstated the company with a Buy
recommendation.



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

LXK - Lexmark $109.00 -9.00 (+6.69 this week)

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.

Most Recent Write-Up

Continuing to vacillate all day yesterday, LXK gave us a clear 
buy signal this morning as the price began to surge in late-
morning trading, backed up by increasing volume.  This move 
closely coincided with the company's announcement of price 
reductions across their entire line of inkjet printers.  This 
may be indicating that LXK is poised to take more market share 
from Hewlett Packard, or the move may be the beginning of our 
earnings run.  With the health in the NASDAQ improving the 
past 2 days, and earnings less than a week away (before the 
open on April 24th), the printer company looks like it may be 
ready to run even further.  Today saw a price increase of more 
than 17.5% on volume nearly 50% over the ADV, and we are now 
approaching resistance at $120.  Any weakness could provide 
another entry near support at $110, while continued buying 
that breaks resistance is also buyable.  For those with open 
positions, keep in mind that the NASDAQ has retraced almost 
500 points of last week's losses, so protect those profits by 
moving up your stops.

Comments

"Hmmm, I want to play LXK as an earnings run, but it was up 
$17.69 on Tuesday.  Sounds too spiky, better pass."  If this 
was your thinking, you may have your chance on Thursday.  LXK 
gave back $9.00 today and is scheduled to report Monday so 
this is the last chance to play.  It showed a strong bottom 
this afternoon despite the market retreat.  Look for a rebound 
in the broad markets first, but LXK may be poised for one 
final dash towards earnings.

BUY CALL MAY-105 LXK-EA OI=  6 at $11.63 SL= 7.25 low OI
BUY CALL MAY-110 LXK-EB OI= 21 at $ 9.13 SL= 5.75 low OI
BUY CALL MAY-115*LXK-EC OI=166 at $ 7.00 SL= 4.50
BUY CALL JUL-110 LXK-GB OI= 35 at $21.75 SL=15.00

Picked on Apr 6th at    $111.25     P/E = 45
Change since picked       -2.25     52-week high=$135.88
Analysts Ratings      6-4-1-0-0     52-week low =$ 49.50
Last earnings 01/00   est= 0.68     actual= 0.73
Next earnings 04-24   est= 0.58     versus= 0.48
Average Daily Volume = 1.12 mln
/charts/charts.asp?symbol=LXK



*****************************************
BIG CAP COVERED CALLS & NAKED PUT SECTION
*****************************************

Earnings Up! Market Down!

While companies continued to post record earnings, concerns over
future revenues and extreme valuations drove the markets lower.

This week's rally was amazing but today investors took a break to
reconsider the stunning recovery.  Fortunately, the retreat was
orderly in fashion and stability appears to have returned to the
market.  Our goal is to continue to take advantage of quality
companies with more attractive valuations but we will also target
those issues that have technically superior technical indications.
With the favorable response to our recent reader inquiry, we will
now list mid-cap issues along with bearish plays when they are
favorable.

Summary of Previous Picks:

Covered Calls: (Margin would double the listed Monthly Return)

Stock  Strike Strike Cost   Current Profit  Monthly
Symbol Month  Price  Basis  Price   (Loss)  Return

SUNW    APR    80    77.00   88.75  $3.00   7.4%
ASYT    APR    40    37.18   44.00  $2.82   6.2%
PCLE    APR    25    23.47   24.63  $1.17   5.1% Split 2 -1
CY      APR    45    42.93   49.69  $2.07   4.9%
AFCI    APR    55    49.75   49.56 -$0.19   0.0%
AMAT    APR    95    91.94   91.50 -$0.44   0.0%
PHTN    APR    70    66.50   64.50 -$2.00   0.0%

INSUA   MAY    35    32.19   35.06  $2.81   7.2%
AMD     MAY    60    55.25   75.25  $4.75   5.9%
PVN     MAY    85    80.38   85.00  $4.63   4.7%
CGNX    MAY    55    51.34   54.06  $2.72   4.4%
CSCO    MAY    68    62.88   66.13  $3.25   3.6%
IMNX    MAY    50    46.56   40.75 -$5.81   0.0%

Positions Closed:

SPYG, ISSX, NXTV, PUMA, PHCM, MANU, ZIXI, DITC, YHOO,
NEON, TGNT.   


Naked Puts:

Stock  Strike Strike Cost   Current Profit  Monthly
Symbol Month  Price  Basis  Price   (Loss)  Return

AMAT    APR    85    83.44   91.50  $1.56  12.3%
ASYT    APR    35    33.38   44.00  $1.63  11.5%
SUNW    APR    70    68.94   88.75  $1.06  10.7%
AFCI    APR    45    42.63   49.56  $2.38  10.1%
MU      APR    85    82.25  117.00  $2.75   8.9%
CY      APR    40    39.00   49.69  $1.00   8.7%
PCLE    APR    22    22.03   24.63  $0.47   7.6% Split 2 -1
CSCO    APR    60    59.44   66.13  $0.56   6.2%
MANU    APR    35    34.44   36.00  $0.56   6.0%
AMD     APR    50    49.56   75.25  $0.44   5.9%
AFCI    APR    45    43.81   49.56  $1.19   5.9% 
MNMD    APR   100    99.25  117.75  $0.75   5.2%
PHTN    APR    65    63.94   64.50  $0.56   3.0% 
AMAT    APR    80    79.38   91.50  $0.63   2.3%
IBM     APR   110   108.44  105.00 -$3.44   0.0%
IMNX    APR    45    44.44   40.75 -$3.69   0.0%
ISSX    APR    90    86.38   80.75 -$5.62   0.0%
NT      APR   115   112.62  106.44 -$6.18   0.0%
IMNX    APR    51    49.83   40.75 -$8.42   0.0% Split 3 - 1
KSU     APR    75    73.87   64.69 -$9.18   0.0%
QCOM    APR   130   128.37  114.75 -$13.62  0.0%

INSUA   MAY    30    29.06   35.06  $0.94   8.7%
PVN     MAY    70    68.75   85.00  $1.25   5.2%
CGNX    MAY    45    44.25   54.06  $0.75   4.8%

Positions Closed:

PHCM, SPYG, SFE, ZIXI, MFNX, IBIS, PUMA, TGNT, NEON.   


Naked Calls:

Stock  Strike Strike Cost   Current Profit  Monthly
Symbol Month  Price  Basis  Price   (Loss)  Return

MERQ    APR    110   110.94   70.63  $0.94  22.1%
AAPL    APR    140   140.94  121.13  $0.94  13.0%


NEW PICKS 

We list favorable "in-the-money" covered write and "out-of-the-
money" naked put candidates that offer conservative entry points 
into technically bullish charts, with reasonable monthly returns. 
The positions that we find favorable (and will track every week) 
will be marked by asterisks. Do not enter these trades unless you
fully understand the strategy and various methods of manipulating
the position should the stock price drop, or rise, and in the 
event you decide you want to keep the issue.

****

AHP - American Home Products  $59.12  *** New Trading Range! ***

AHP is engaged in the discovery, development, manufacture,
distribution and sale of a diversified line of products in three
business segments: Pharmaceuticals,Consumer Health Care and
Agricultural products.  AHP's product line includes Advil,
Robitussin, Dimetapp, and Centrum, as well as vaccines and
oncology therapies.  Principal agricultural products are
herbicides, insecticides,fungicides and plant growth regulators.

Today American Home Products reported higher first-quarter profit,
boosted by sales of drugs such as the hormone-replacement Premarin
and the antidepressant Effexor.  Revenue rose 17% to $3.33 billion
and the growth stemmed from their pharmaceutical business, new
biotechnology products and existing women's health care and
neuroscience products.  Investors took notice and the break above
a recent resistance area on increasing volume suggests the bullish
trend has further upside.  Our cost basis near the bottom of the
March-April consolidation should provide a reasonable margin for
any near-term decline.

American Home Products (AHP) $91.94

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call MAY 55   AHP EK  3387      6.38    52.75     4.3% ***

Sell Put  MAY 50   AHP QJ  325       0.88    49.12     5.8% ***
Sell Put  MAY 55   AHP QK  186       2.19    52.81    10.2%

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

****

BRKS - Brooks Automation  $85.83  *** Earnings Rally! ***

Brooks Automation is a supplier of tool and factory hardware
and software automation solutions for the global semiconductor,
data storage and flat panel display manufacturing industries.
Brooks has developed comprehensive product lines that encompass
automation modules, complete handling systems and integrated
software and controls for its targeted markets.  Brooks has also
developed a suite of factory automation software solutions, which
they market in conjunction with factory automation hardware to
customers in the United States, Japan, South Korea, Taiwan,
Singapore, and Europe.  Their automation solutions are designed
to optimize equipment and factory productivity.

Brooks Automation began to rally back in early January and this
week the stock broke to a new high on anticipation of the upcoming
earnings report.  Brooks will announce quarterly results on or
about next Wednesday and Credit Suisse First Boston believes the
company will outperform expectations.  They have recently changed
their recommendation to "strong buy".  Our outlook is much the
same from a technical point of view and the conservative cost
basis offers a favorable entry point on this bullish issue.

Brooks Automation (BRKS) $91.94

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call MAY 70   BQE EN  19       18.50    66.88     4.7% ***

Sell Put  MAY 60   BQE QL  0         1.06    58.94     5.9% ***
Sell Put  MAY 65   BQE QM  50        2.00    63.00    10.6%
Sell Put  MAY 70   BQE QN  56        3.00    67.00    14.0%

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

****

CHKP - Check Point Software  $161.00  *** Bullish Forecast! ***

Check Point Software Technologies is a leader in Internet
security.  Their Secure Virtual Network (SVN) architecture
provides the infrastructure that enables secure and reliable
Internet communications.  SVN secures business-to-business (B2B)
communications between networks, systems, applications and users
across the Internet, intranets and extranets.  Check Point's Open
Platform for Security (OPSEC) provides the basis for integration
and interoperability with solutions from over 200 leading
industry partners, icluding Dell, Microsoft, IBM, Nokia,
and others.

The report is in and for the past quarter, Check Point's earnings
per share grew 67% to $0.40 a share on sales that jumped 79%.  For
the full year, the company earned $2.33 a share on revenues of
$219 million.    The CEO was extremely optimistic saying he expects
the company to post a 45% rise in earnings per share this year and
more than a 50% increase in sales.  That's an incredibly bullish
statement but the company certainly has future upside potential.
In this case, we are simply playing to the recent volatility and
the overpriced option premiums.  While we consider Check Point to
be one of the better companies in the industry, we don't believe
it will recover to the recent valuations in just one month.

Check Point Software (CHKP) $91.94

Note:  Naked Call Recommendation!

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call MAY 270  KGE EN  45        3.25   273.25     9.3% ***
Sell Call MAY 260  KGE EL  26        3.88   263.88    10.9%
Sell Call MAY 250  KGE EJ  102       4.75   254.75    13.0%

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

****

CMTN - Copper Mountain Networks  $78.25  *** Awesome Earnings! ***

Copper Mountain Networks develops and markets a comprehensive
family of DSL solutions that enable high-speed networking over
existing copper facilities.  Their mission is to enable carriers
and other service providers to offer a full range of high
performance, cost-effective data and voice services over DSL
that are easy to deploy, use, and manage.  Copper Mountain
markets its products directly to telecom service providers and,
to a lesser extent, through strategic original equipment
manufacturers and distributors.

This is another Cinderella story based on incredible earnings.
Yesterday, Copper Mountain Networks reported a 26-fold increase
in first-quarter profit, as demand for high-speed Internet access
soared.  The company announced revenue of $60 million and earnings
of $0.20 a share, compared with $0.01 a share, a year ago.  First
Call's survey of analysts suggested profits of only $0.12 and with
the blowout, the stock went wild!  Of course the question now is
whether the move can be sustained.  Our target is a move to the
recent congestion area near $90.  Breaking that level, you might
consider closing the position (or buying the stock to cover).

Copper Mountain Networks (CMTN) $91.94

Note:  Naked Call Recommendation!

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call MAY 115  KUA EC  56        2.19   117.19    12.4% ***
Sell Call MAY 110  KUA EB  32        2.75   112.75    15.2%
Sell Call MAY 105  KUA EA  111       3.50   108.50    18.5%

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

****

CY - Cypress Semiconductor  $49.69  *** Own This One! ***

Cypress Semiconductor designs, develops, manufactures and markets
a broad line of high performance digital and mixed signal
integrated circuits for a range of markets including data
communications, telecommunications, computers and instrumentation
systems.  Cypress' memory products division offers static random
access memories and multi-chip modules.  The non-memory products
include programmable logic products and programming software,
data communication products, computer products, including clocks
and Universal Serial Bus micro-controllers, and non-volatile
memory products.

Earlier this week, Cypress became the latest in a group of chip
companies to report strong earnings for the quarter.  CY topped
First Call estimates by a penny Tuesday with operating profits
of $0.41 per share.  The company reported record sales of $264
million for the first quarter, up 20% sequentially, and up 66%
from the first quarter a year ago.  Cypress added that it had
record bookings of $322.8 million based strong demand from the
communications market and the CEO suggested the company will
enjoy another excellent quarter at growth rates well in excess
of the industry.  Sounds like a great company to own and the
chart supports the fundamental outlook.

Cypress (CY) $91.94

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call MAY 45   CY EI   339       7.63    42.06     7.1% ***

Sell Put  MAY 40   CY QH   738       1.44    38.56    12.6% ***
Sell Put  MAY 45   CY QI   298       3.13    41.87    17.3%

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

****

ITWO - i2 Technologies  $108.19  *** On The Rebound! ***

i2 Technologies is a leading provider of intelligent eBusiness
solutions.  TradeMatrix, i2's dynamic Internet marketplace,
provides a digital trading network facilitated by i2's advanced
optimization and execution capabilities.  TradeMatrix offers a
wide range of hosted services, enabling a company's customers,
partners, suppliers, and service providers to conduct business
together in real time, and to make more profitable decisions
by effectively managing all their business processes including
procurement, fulfillment, product development, and customer care.

Simply another great earnings report and a big recovery rally from
the recent technology drubbing.  This week i2 Technologies, the
leading provider of eBusiness solutions, reported record quarterly
results as revenues grew to $186 million, 58% above first quarter
1999 revenues, and net income exceeded $12 million.  The company
earned $0.07 per share in the first quarter, compared to a loss of
$0.01 a year ago.  The results demonstrate the strength of the B2B
market and i2's position as a leading service provider but they
can't reverse the damage to the potential valuation of technology
issues.  In this case, we really like the issue and believe it is
due for further upside movement.  We will use the bullish trend to
increase the premiums in the sold options at the current resistance
level near $175.

i2 Technologies (ITWO) $91.94

Note:  Naked Call Recommendation!

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call MAY 185  QYI EQ  25        2.25   187.25     9.5% ***
Sell Call MAY 180  QYI EP  110       2.44   182.44    10.3%
Sell Call MAY 175  QYI EO  137       2.69   177.69    11.2%
Sell Call MAY 170  QYI EN  240       3.00   173.00    12.3%

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

****

SEPR - Sepracor  $91.50  *** On The Move! ***

Sepracor is a specialty pharmaceutical company that develops
improved versions of widely prescribed pharmaceutical compounds.
Their Improved Chemical Entities development program identifies
existing, widely prescribed drugs that might be replaced by
improved single-isomer or active-metabolite forms of such drugs.
Sepracor then seeks to develop ICEs that offer benefits over the
parent drugs, such as reduced side effects, improved therapeutic
efficacy or effectiveness for new indications.  Sepracor has also
licensed or is developing ICEs intended to treat a broad range of
indications in areas including respiratory, gastroenterology and
psychiatry/neurology.  Sepracor's ICEs include a large number of
well known drugs such as Fexofenadine, Fluoxetine and Bupropion.

Sepracor has performed well even with the recent market decline
and over the past two days, the drug-developer rose $22 with
other leaders in the biotechnology sector.  The issue has been in 
recovery mode since the Federal Trade Commission approved a drug
licensing deal between Eli Lilly (LLY) and Sepracor.  Last week,
Lilly announced the FTC has closed its investigation and given
approval for the agreement between the two companies.  Under the
agreement, Lilly will exclusively develop and commercialize the
product Fluoxetine, an improved version of the antidepressant
drug Prozac.  On completion of the deal, Sepracor is expected to
receive an up-front payment and license fee for $20 million, and
up to $70 million in additional milestone payments based on the
progression of the drug through development.  That's a significant
revenue enhancement and the recent trading activity suggests that
investors are bullish on the issue.  While we favor the recent
rally, our position offers a more conservative entry at a lower
cost basis.

Sepracor (SEPR) $91.94

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call MAY 75   ERQ EO  202      20.75    70.75     6.1% ***
Sell Call MAY 80   ERQ EP  58       17.38    74.12     8.0%

Sell Put  MAY 65   ERQ QM  331       1.75    63.25     8.8% ***
Sell Put  MAY 70   ERQ QN  372       2.50    67.50    12.2%
Sell Put  MAY 75   ERQ QO  23        3.88    71.12    16.4%

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


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