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Daily Newsletter, Sunday, 04/23/2000

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******************************************************************
MARKET STATS FOR LAST WEEK AND PRIOR WEEKS
******************************************************************
        WE 4-20           WE 4-14            WE 4-7         WE 3-31
 DOW    10844.05 +538.28 10305.77 - 805.71 11111.48 +189.56 -190.80
 Nasdaq  3643.88 +322.59  3321.29 -1125.16  4446.45 -126.44 -390.04
 S&P-100  777.12 + 45.18   731.94 -  89.58   821.52 +  6.46 - 17.59
 S&P-500 1434.54 + 77.23  1357.31 - 159.04  1516.35 + 17.77 - 28.88
 RUT      481.84 + 28.12   453.72 -  89.27   542.99 +  3.90 - 34.93
 TRAN    2833.25 +106.21  2727.04 - 100.68  2827.72 + 64.48 + 75.09
 VIX       28.41 - 10.92    39.33 +  12.39    26.94 -   .27 +  1.40
 Put/Call            .75      .94               .37             .48
******************************************************************

What a difference a week makes!

Friday of last week was a lesson in terror for many new traders
as market makers stepped aside and ignored sell offers for many
Nasdaq stocks causing the biggest point drop in Nasdaq history.
The last day of this week was a sleeper. (yawn!) The Dow charged
off at the open and got stronger as the day progressed. After
dipping to a low of 10635 on both Tuesday and Wednesday the 
Thursday close of 10840 was confirmation of a renewed rally in
the Dow. The drop last Friday back to 10200 seems a distant memory
as money continued to flow into the old economy stocks. The tech
contingent on the Dow was no help with MSFT flat in front of 
earnings and Intel wiping out the HWP gain of +3.69 with an
identical loss. Volume was a weak 894 mln shares.

The Nasdaq finished the week with a whimper but on increasing 
strength. The Volume was VERY light with only 1.3bln shares
trading compared to well over 2 bln on a "normal" day. Still the
profit taking on Wednesday was orderly and minimal with the index
giving back only -87 points of the almost +500 points gained on
Monday and Tuesday. Thursday the Nasdaq started out higher but
quickly sold off to 3600 or -109 but then trended higher the rest
of the day. Twice it tried to go back to 3600 again but failed
each time with a higher low. The high just before the close was
only -39 and I was encouraged even though it closed negative.


 


 

The fuel for the rally continues to be earnings. The results
coming in are truly amazing. 75% of the companies reported have
beaten estimates. 56% of the S&P-500 companies have reported and
earnings are up +21.4% over last year. Not only are earnings
beating last year but are also beating estimates for this year
by +6.3%. This is over twice the average from last year of only
+2.8%. There have been substantially fewer pre-warnings and only
a few companies have announced less than expected. This is a
cruel good news bad news joke. The much stronger than anticipated
earnings only mean that the economy is much stronger and with the
Fed waiting in the wings with a May-16th meeting date the worry
of a stronger than expected rate increase is growing.

Microsoft announced earnings after the bell today and it is 
probably a good thing we have three days before the markets 
get to trade on the news. They beat the estimates of $.41 with
$.43 per share but the revenue numbers were lower than even the
reduced estimates from the Goldman Sachs from last week. Official
estimates were $5.9 bln and the GS estimate was $5.75 bln. Actual
revenue was only $5.66 bln but net profits were $2.39 bln. With
margins running 42% even after increased legal expenses and
higher employee costs it is still an incredible profit machine.
Microsoft agreed PC demand was slow this quarter but indicated
it had been getting stronger in recent weeks. Still, more bad
news Microsoft guided analysts to only single digit growth for 
next quarter.

The biotech sector was a strong contributor to the Nasdaq weakness
today. With several promising drugs removed from the market this
week and a conference call warning from AFFX, investors decided
to take profits and move into other sectors. Some of the losers
included MLNM -3, PEB -4.13, ENMD -6, HGSI -6.13, PDLI -6.44, 
DNA -6.88, INCY -9, AFFX -11, ABGX -12.25.

Money flow into equity funds amounted to $6 bln for the week ending
on Wednesday with 60% going into growth funds as reported by AMG
Data. Index funds lost money for the seventh week out of the last
nine. CNBC reported that a total of $16 bln flowed into all funds
which included bond funds and international funds.

The wall of worry is building and should provide a strong hurdle
to a market rebound. The unemployment claims for the week announced
on Thursday morning showed only 257,000 new claims for benefits.
This was the lowest number since Dec-1st, 1973 and down -9,000
from the prior week. This again is not good news for the Fed. This
news along with the stronger than expected CPI report last week 
will be combined with the Employment Cost Report and GDP numbers
next week to determine rate policy for May. Worst case we could
see a pre-meeting increase next week if either report is overly
strong. I think the pre-meeting hike concept is gaining momentum. 
Greenspan does not want to tank the market with a stronger then
expected +.50% hike at the May meeting but he may feel he can
get away with a +.25% hike next week and then another +.25% at
the May meeting. The market would react less with the two hike
scenario than a single aggressive hike.

While I was somewhat encouraged by the move off the lows by the
Nasdaq on Thursday, it was still a down day only made better by
the big Dow gains pulling it up. I struggled with my charting
program trying to find a view that would make it look more 
positive (the optimist in me) but I could not make the outcome
different. On the positive side of the ledger is the end of tax
selling. Investors who needed to sell to raise tax money should
have already sold and settled by now. The margin calls caused
by the April tax selling are now over. Most investors are probably
licking their wounds and not too anxious to rush back into battle
just yet. On the negative side there is a slowing of money into
retirement accounts and fund money still on the sidelines is
waiting on the next retest before committing funds. The Nasdaq
has resistance at 3900-4000 which will take a strong commitment
by investors to penetrate. The Dow is entering a broad zone of
resistance as well. We have negative economic events in our
immediate future and the earnings currently powering the rally
are now half over and many investors will be moving to the 
sidelines until the market stabilizes. This is not a pretty 
picture. On the other hand the Nasdaq is still terribly oversold 
and could benefit from traders who left for the holiday moving 
back into the market the first of next week. 

Unless somebody of importance goes on CNBC and says BOTTOM real
loud we are doomed to suffer the "we have to retest eventually"
mantra from every technical analyst that can find a microphone.
This may be the equivalent of a self-fulfilling prophecy. This
is only going to add to the wall of worry that the markets will
have to climb. If John Q. Investor decides to buck the analyst
and buy some of the recent high flyers while they are cheap then
the Nasdaq could slowly build support and once a new trend is 
seen the institutional money may be forced to start chasing
stocks as well which would create the beginnings of a nice rally.

I think the key here is valuations, or more correctly pricing.
Look at the prices of the recent high flyers. Many have dropped
from +$200 ranges to sub $50 levels. To the retail investor this
represents major bargains on high priced stocks. It makes no
difference to most that the PE dropped from 400 to only 200 or
that most of these stocks have no PE at all. They are $200 stocks
on sale for less than $50 and now that taxes are over the urge
to shop will begin. For the cigarette smoker it is the equivalent
of $2.50 a pack smokes now selling for $.50 simply because fewer
people bought last month. After paying $2.50 the $.50 is a bargain.
One out of three smokers will still die from them but at least
they can get their thrills cheaper temporarily. For non-smokers
insert your own analogy here, 60 watt light bulbs, Duracell-D
batteries, cans of beer or Charmin bathroom tissue. Would your
buy more next week at $.10 per item? I can hear you now, "but
these things have real value!" Yes, but how much is a D battery
or a roll of toilet paper going to be worth a year from now?
The retail investor will convince himself that his undervalued,
tech stock bargain will regain its former glory and split several
times allowing them to buy truckloads of beer, batteries or
light bulbs two or three years from now because they were smart
enough to buy the dip. Is that not what it is all about? 
Perception? If it appears to be a bargain to enough people then
they will buy and the price will go up prompting others to buy
and the greater fool theory will reign supreme again.

Remember, most current investors have never seen a dip that did
not bounce. There is no such thing as a bear market and only
those who turned their accounts into black holes of debt over
the last few weeks are now believers. Those that only lost a
couple months profits are clicking on charts every night as
they pursue the new national pastime of point and click wealth.
Try explaining to the reader who turned a $25 million account
into a $2 million account last week with margin calls that he
could not meet that there is no bear market. I doubt he will
listen long. Still he is shopping again this weekend and that
is my point. As long as the "Internet investor" has money he
will be addicted to the game and the game will go on.

The most immediate challenge will be on Thursday. The Employment
Cost Index and the GDP numbers will be announced. Two very big
economic factors to watch. More importantly Greenspan will have 
a major speech on Thursday also. What is key here is Greenspeak.
Since everyone expects a +.25% rate hike at the May meeting, if
Greenspan intends to hike more aggressively, he will have to tell
the market in advance that is his plan. The Fed never raises rates
without telegraphing those increases well in advance so the market
does not over react. Especially with the market so fragile at
this point Greenspan will have to make his plans known to avoid
disaster in an election year. Of course he will not say "I am
going to raise rates +.50% at the May meeting." That would only
accomplish the same disaster three weeks earlier. He will form
his words as only Greenspan can, in as vague but precise a context,
that it will take several days for you to decide what you heard. 
By the time all the analysts spread their version of the event,
days have passed and the pain is not as noticeable. If the Fed
raises rates +.50% and the market heads for 9000 again then they
cannot raise rates again at the next meeting. If they over react
and tighten too much then the economy can crash just as fast as
the market. Since rate increases take 6-9 months to show up in
the economy, the impact of the last six increases has yet to
be felt. They do not want to be faced with having to cut rates
by summer because they over reacted and now they have to fix it
quick. I think Greenspan would have to believe he has lost control
before raising more than +.25% and the market would react badly
to an out of control Fed. In reality the Fed is our safety net
and we know that they will keep the economic engine running at
maximum safe speed much longer than if we were in control of the
throttle. The greed factor in all of us would have us hitting
the wall at full speed and the paramedics would be picking up
pieces and trying to patch together the economy for years to
come.

The week ahead could be really rocky but what else is new?
The Microsoft revenue shortfall is going to impact both the
Nasdaq and the Dow at the open on Monday. MSFT traded down
almost -$5 in after hours on Thursday and without any new
news over the weekend Monday morning will be the same. Looks
like another good week to watch from the sidelines unless 
you are very skill full at jumping out quickly. Should we get
the proverbial retest of the Nasdaq lows of 3200 again, be
VERY CAREFUL about buying that dip. I would really want to
see a strong bounce to convince me it was not just a head fake.
Remember, Ralph Acompora, (Acomporaspan) said we could see 2900
again. Now that would be really painful but a killer buying
opportunity for those with money left. A suggestion for the
wise....have money! Historically the next real rally is not
until June so plan on being a trader not a holder on any bounce.

A good way to play the bounce without having to be right about
picking specific stocks on the spur of the moment is the QQQ.
When these crashes occur they typically have climatic dips and
then charge off again. You can't be sure that the stock you
chose beforehand is going to be one of the bouncers. By playing
the bottom with the QQQ you get the benefit of the entire
Nasdaq 100 movement. You can catch the immediate bounce and
then decide over the next several days which individual stocks
you want to move into. The QQQ has only been under 80 once
since December and that was last Friday. If we have another
market event and it dips under $80 again, it probably will not
go much farther. I would look to buy any bounce under $80 and
either buy the stock or the options. If you buy the options I 
would buy the May calls as deep ITM as you can, $10-$12, to
remove as much time premium and maximize the bounce. A bounce
would likely be back into the $87 range and you should be able
to capture $5 of the $7 move.

Normally late April and May are very choppy months and require
a much higher skill level for successful investors. Many
experienced investors simply sit out until the first of June
and save their capital for the next earnings run. There will
still be bargains and trading rallies but finding a trend
that is tradeable for more than a couple days could be a 
problem. The wild card is the recent crash and the "normal
cycle" could have been impacted by the premature drop.

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

Jim Brown
Editor


Disclosure: 
My current long positions:  VIGN, NTAP, BRCM, SCMR, ARBA, TIBX


***************************
Ballads from the Newly Poor
***************************

YESTERDAY
Music and Lyric by
THE BEATENS

Yesterday ...
Alan Greenspan seemed so far away
Now the margin calls are here to stay
Oh I believe in Yesterday

Suddenly ...
I've got half the stocks I used to have
I lay bloodied in the aftermath
Oh I believe in Yesterday

Why they took the fall,
I don't know, I couldn't say
I bought something wrong
Now I long for Yesterday

Yesterday,
All my riches seemed not far away
Now I'm glad to have a place to stay
Oh I believe in Yesterday

*********

The Day the Nasdaq Died 
(tune of American Pie)

A long, long week ago
I can still remember
how the market used to make me smile
What I'd do when I had the chance
Is get myself a cash advance
And add another tech stock to the pile.
But Alan Greenspan made me shiver
With every speech that he delivered
Bad news on the rate front
Still I'd take one more punt
 
I can't remember if I cried
When I heard about the CPI
I lost my fortune and my pride
The day the NASDAQ died
 
So bye-bye to my piece of the pie
Now I'm gettin' calls for margin
'Cause my cash account's dry
It's just two weeks
from a new all-time high
And now we're right back
where we were in July
We're right back where we were in July
 
Did you buy stocks you never heard of?
QCOM at 150 or above?
'Cos George Gilder told you so
Now do you believe in Home Depot?
Can Wal-Mart save your portfolio?
And can you teach me what's a P/E ratio?
 
Well, I know that you were leveraged too
So you can't just take a long-term view
Your broker shut you down
No more margin could be found
I never worried on the whole way up
Buying dot coms
from the back of a pickup truck
But Friday I ran out of luck
 
It was the day the NAAAASDAQ died
 
From: Andy Serwer at Fortune Magazine


***********
JIM'S PLAYS
***********

What a week! I did ok and I was only in the market two of the
four days. Maybe that is a lesson we can all learn from. I
preach it but I do not follow my own advice. When that opening
bell rings it is like a siren call and the "market" becomes
your only thought. I am sure the productivity in the U.S. would
be much higher if 44 million of us did not, in one form or
another, follow the market from bell to bell.

Two of my plays this week had all the earmarks of the Etrade
commercial on TV where the guy is up, down, up, down and he
finally jumps out his window. I went from buyers remorse to
sellers remorse and then failure to sell remorse several times.


VIGN - Covered Call

 

This play could not have worked better, in retrospect. During the
play I had some serious doubts as it occured. After buying the
stock for $42.13 at the close the previous Friday I saw it plunge
to a low of $38 on Monday and was reconsidering having to sell
calls for several months to recover the $4 loss on 9000 shares!
Fortunately the fundamentals were sound and it rebounded quickly
and soared the next day. After pausing briefly around 11:AM on
Tuesday I wrote the ATM $53 call (the strike was left over from the 
recent split) thinking the rebound from $38 to $53 was sure to
profit take soon. Instead it continued to rocket to $65 the next
day before earnings. Serious sellers remorse set in as I watched
it rocket $12 over the strike I sold. $12x9000=lots of money! I
contented myself with the $11 profit between what I paid and the
strike I sold and the $3.13 premium I received for writing the 
call. $14.13, not bad for a $40 stock and four days! VIGN announced
earnings on Wednesday and beat estimates of $.01 with $.02 on
a +505% increase in revenue. CSFB upgraded to a strong buy, $90
target, Dain Rauscher reiterated strong buy, $100, Bank America,
Advest, ING Barrings all reiterated a strong buy on Thursday. 
The stock dropped -$7.81. Do you see what I mean about never
holding over earnings????? By a miracle of fate the stock dropped
to -$.88 under strike price I sold and the options expired
worthless. Darn! I guess I will have to wait a week or two and
see if it will hit $60 again and write May calls. Please excuse
the sarcasm but I could not believe my luck. I could easily make
another $10 on this play before I get called out. 


NTAP - April $80 naked put & Apr $57 covered call

 

I know this sounds really fishy but it is too incredible to make
up. I had previously sold the APR-$80 naked put on the Friday 
dip. When NTAP dipped again on Monday I bought some stock with
the idea of writing a short APR covered call as well. I thought
NTAP at $47 was a bargain. When it rebounded on Tuesday and 
appeared to roll over I sold the $57 call, left over from a split, 
for $3.25. When the end of day spike occured and the opening 
spike the next day I was again rethinking my covered call plans.
After trading for most of two days around $63 NTAP pulled back
Thursday afternoon to just under $57 and my calls expired 
worthless allowing me to keep the stock. What a deal! With 
any Nasdaq rally NTAP should rebound again and I will write a
higher strike May call. I closed the naked put on Tuesday for
a small profit of only about $3 when it appeared to be rolling
over. If the Nasdaq rolls over early in the week I will sell
the stock and look to get back in cheaper.


EBAY - APR-$180 Naked Put 

 

I had sold the APR-$180 naked put on the Friday dip for $37.63
expecting a strong rebound after EBAY closed positive on crash
Friday. It bounded out of the gate on Monday, sank back again
with the Nasdaq and then roared off again. I closed it too soon
on Tuesday for a profit of about $15 at $22.50.


CMVT - April $100 Naked Put

 

I covered the APR-$100 naked put I had sold on the Friday dip
on Tuesday for $17.50. It did not pop as much as I had expected
but the concept is the same.


PMCS - April $180 Naked Put 

 

PMCS held $118 all day during the Friday crash and it is one 
of the Super Seven Tech stocks from last week. It rebounded
right on schedule on Monday and I closed it on Tuesday for $25.



QQQ - calls.

The lottery ticket play on the QQQ calls was a total loss.
I had purchased the APR-$100 for $1.13 and they never even
came close again. To make matters worse I tried to open a
spread position against my worthless calls at $92 and again
at $87 and both times the QQQ changed direction immediately
and I closed for another $1.00 each time. In reality my
lottery ticket play for $1.13 actually cost me about $3.50
after I attempted to repair it. Again, I should have just
closed the play and forgot it when it turned against me.


*******

New plays:

When the Nasdaq started recovering around midday on Thursday
I took a chance and sold naked puts on BRCM, SCMR, ARBA, TIBX.
The drop at the close put them all in a small loss position
and the MSFT drop at the open on Monday is likely to complicate
the problem. I set my stop loss at $5 to $10 above my sell price 
depending on the premium received. 

Normally I try to get a $40 premium or larger. Because I
was speculating on a Nasdaq bounce at the close today I only
sold 10 of each. The bounce did not happen and these will 
probably all stop out.

I am not going to go into detail on each one since the theory
is the same. 

BRCM $152.44 - May-$220 Naked Put @ $72.50

 

ARBA $69 - May-$120 Naked Put @ $54.00

 

TIBX $67.88 - May-$120 Naked Put @ $54.88

 

SCMR $64.56 - May-$120 Naked Put @ $51.50

 


If I do get stopped out I plan on staying in cash until after
the Thursday reports and speech. If the plays are still alive
I will close them not later than Wednesday to avoid the possible
Thursday drop.

I am going to watch VIGN and NTAP and depending on the market
conditions either sell the stock to avoid giving back any of
the profit already made or if market conditions permit I will
write May calls when reasonable. If possible I do want to 
let them run a little bit before choosing a strike.

Good Luck

Jim



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

Room to Grow
By  S.P. Brown

Though getting long-in-the-tooth, the current economic 
expansion just keeps going and going.  For proof, look no 
further than the current spat of quarterly earnings.  

According to the Wall Street Journal, this earnings season 
will be one of the strongest in years.  Of the 16 Dow Jones 
Industrial Average (INDU) components that have reported, only 
one has failed to beat expectations, the exception being 
Philip Morris (MO).

More impressively, though, 72 percent of the S&P 500 Index 
(SPX) companies that have reported earnings have exceeded 
analysts' expectations, compared with an average of 56 percent 
over the past six years.  In fact, First Call estimates that 
first-quarter profits will rise nearly 23 percent, exceeding 
last quarter's growth of 21.4 percent.   

Strong earnings growth hasn't been confined to the tech sector, 
either.  The Wall Street Journal went on to report that the 
all 10 major sectors of the Dow Jones US Total Market group 
have reported stronger earnings.  

Some of the notable earnings performers include basic-
materials, which is up 223 percent this quarter compared to 
the first quarter of 1999; energy, which is up 51 percent; 
utilities, which is up 27 percent; and financials, which is 
up 17 percent. 

As for technology, its earnings have increased 67 percent.  

Moreover, earnings growth has actually accelerated over the 
course of the last four quarters, confounding economists and 
forcing forecasters to revise their projections upward. 

It's unusual for earnings to remain so robust so far into 
an expansion.  Typically, earnings get their biggest kick 
immediately following a recession due to businesses increasing 
production without adding new capacity or labor.  Then, later 
on in the business cycle, earnings slow as the economy matures.

The primary reason this economy has been able to buck the 
trend for so long is technology, which has caused productivity 
and profit margins to rise and input costs to fall.  

Some economists thought productivity gains of the past few 
years were beginning to taper off.  But according to Lehman 
Brothers (LEH) economist Ethan Harris, productivity should grow 
4.1 percent for the first quarter on a year-over-year basis, 
an increase from 3.6 percent at the end of the fourth quarter.

This just goes to show, the current 110-month expansion 
continues to re-write economic theory.   



***************
ASK THE ANALYST
***************

So, now where to?
By: Eric Utley

There are two sure things in this world, death and taxes.  You
might want to add a third item to that list, and that is
volatility.  Last Wednesday, the NASDAQ lost around 3%, and
traders called it a slow day!  It's become commonplace for the
NASDAQ to be up or down by more than 100 points in a day.  While
the volatility might not be helping your blood pressure, it
certainly provides trading opportunities.  The agile trader can
navigate through these tumultuous times, and find opportunities
everywhere.  Like Ryan talked about two weeks ago, on Terrible
Tuesday he had one of his best days in the market.  The
bottom-line, volatility is here to stay, but plenty of profits
can be taken by establishing a trading plan, and trading with
discipline.

People are used to making money in this market, it has been very
easy for the last several years to do very well.  As a result,
investor expectations are extremely high.  This only adds to
what is becoming an uncertain market.  Every day CNBC has their
guest pundits make predictions about where the market is going.
At the end of the day, the reporters sum all the guesses, and
make a hypothesis about what the market will do in the next few
days.  You may have noticed that in the past two weeks, they
have been dead wrong almost every day.  The market is unsure
about its future direction right now.  We could be in a
consolidation period right now that might last for six more
months.  But a few things are interesting to me right now, namely
earnings.  Of the companies in the S&P 500 that have reported
thus far, 70% have beat earnings estimates.  That is amazing!
Also, supply is beginning to dry up in the market.  Only a tiny
fraction of IPOs actually came public last week.  And secondary
offerings have all but dried up.  Only time will tell where we
go from here, but be on your toes, as volatility remains the name
of the game.

We have decided to bring the Ask the Analyst column to you twice
a week now.  So every Wednesday and Sunday, I will analyze a
group of stocks that you, the reader, sends in.  Ryan and I have
been talking about the recent volatility, and decided it would be
a good idea to delve into technical analysis and chart patterns
for our readers on a more frequent basis.  So please fell free to
send in any stocks you would like analyzed.  Send those requests 
to asktheanalyst@OptionInvestor.com.  Please put the symbol in 
the subject line of the e-mail. 

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

Alltel - AT

Will you please give me your opinion on Xerox and Alltel.  Do you
see improvement within short time, if not I'll take my losses and
try elsewhere!   Thanks, Bob

We're quite familiar with AT here at OI.  In fact, about a month
ago we played AT as a put.  Problems for the company began to
mount late January when investors began to question the viability
of the Information Services Division of AT.  However, investors
love the prospects for the Communications Division of AT, as seen
by the gap up on the chart in early March when Morgan Stanley
upgraded the stock to a strong buy, calling the stock an
inexpensive way to play wireless.

The stock has since filled its gap, and has been consolidating
as seen on the chart.  This is a classic chart pattern where the
stock has become "coiled" and is ready to "spring".  The wedge,
as it is commonly referred to, has developed with decreasing
volume, and the most likely move from here, is up, considering
AT's short-term trend.


 

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

LM Ericsson Telephone - ERICY

I know you've played and dropped ERICY twice in the last month
but it appears close to forming a "Head and Shoulders" pattern.
Along with a 4:1 split it appears ready to rumble.  Your
thoughts?  Thanks, Kevin

You're right Kevin, ERICY is an old favorite here.  Throughout
February and March, ERICY formed a top head-and-shoulders, a
bearish formation to say the least.  You can see what happened
when the stock broke the right shoulder line at $90, it has been 
downhill ever since.  The stock has support at $70, the level
where the stock broke out of congestion in late January.  But,
that support might not hold if ERICY can't break from its recent
downward trend.

The European telecom stocks are coming back to life, and wireless
heavyweight QCOM beat earnings estimates last week so the outlook
for ERICY is improving.  The company is scheduled to split 4:1
with a payable date of May 5th.  A 4:1 split may seem a little
odd considering the current level the stock is trading at.  But
the split is intended to align the ADR shares with the stock
traded in Sweden for accounting reasons.  Anyway, the split could
be the catalyst that breaks the recent downtrend.  One thing
that concerns me though, is the volume.  It appears that more
traders are selling on down days, than are buying on up days.  


 

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

DISCLAIMER:
This column is an information service only.  The information 
provided herein is not to be construed as an offer to buy or 
sell securities of any kind.  The Ask the Analyst picks are not 
to be considered a recommendation of any stock or option but an 
information resource to aid the investor in making an informed 
decision regarding trading in options.  It is possible at this 
or some subsequent date, the editor and staff of The Option 
Investor Newsletter may own, buy or sell securities presented.  
All investors should consult a qualified professional before 
trading in any security.  The information provided has been 
obtained from sources deemed reliable, but is not guaranteed 
as to its accuracy. 



**************
MARKET POSTURE
**************

As of Market Close - Thursday, April 20, 2000 

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

DOW Industrials   11,000  11,400  10,844    BEARISH   4.14  
SPX S&P 500        1,500   1,550   1,434    BEARISH   4.14  
OEX S&P 100          800     850     777    BEARISH   4.13  
RUT Russell 2000     550     600     482    BEARISH   4.14  
NDX NASD 100       4,000   4,500   3,505    BEARISH   4.13  
MSH High Tech      1,000   1,150     921    BEARISH   4.13  

XCI Hardware       1,600   1,700   1,460    BEARISH   4.13  
CWX Software       1,500   1,670   1,197    BEARISH   4.04
SOX Semiconductor  1,200   1,300   1,024    BEARISH   4.13  
NWX Networking     1,070   1,190     949    BEARISH   4.04
INX Internet         800     940     575    BEARISH   4.04

BIX Banking          530     620     555    Neutral   3.16
XBD Brokerage        500     580     458    BEARISH   4.14  
IUX Insurance        540     620     575    Neutral   3.16

RLX Retail           900   1,000     939    Neutral   4.13 
DRG Drug             355     380     377    Neutral   3.30
HCX Healthcare       710     760     755    Neutral   3.30
XAL Airline          130     155     146    Neutral   3.10
OIX Oil & Gas        265     300     283    Neutral   3.16
 
Posture Alert    
The battle between the "old economy" stocks versus the "new economy" 
continues, with the blue chippers closing out the week with a
victory. Volume was light, as most traders took an early start to
try and find the Easter Bunny. Sectors making moves Thursday include
Insurance (+3.62%), Internet (-3.15%), Software (-2.92%) and the
NASDAQ 100 (-2.17%). There are no current changes in posture.  



****************
MARKET SENTIMENT
****************

Sunday, April 23, 2000

Nokia, Amazon, Ebay, JDS Uniphase and More!
 
Once again, this last week felt more like a soap opera on a roller 
coaster than it did investing, as sentiment swayed from old economy 
back to new economy and then back again. The NASDAQ broke record point 
gainers back-to-back to start off the week, but then dissipated later 
to end things off. Many of the bellwethers reported solid earnings, yet 
the buy-the-rumor, sell-the-news mentality was in full effect. The 
selling pressure was apparent, as many mutual funds and money managers 
were using the earnings excitement to lighten up positions and raise 
cash. Now whether these moves are in anticipation of mutual fund 
redemptions in the future, or wanting to be on the sidelines to pick up 
bargain basement prices in the coming weeks remains to be seen. 
Regardless, we think this trend may continue.     

This week ahead will be another busy one for earnings, with many high-
tech leaders reporting. And with sentiment being so low, it will be 
interesting to see if the sell-the-news mentality continues. We stated 
before in previous letters that once earnings are over, what does this 
market have to look forward to? The summer slowdown for technology is 
around the corner, and in two weeks all eyes will be on inflation and 
the risk of higher interest rates. The media will definitely turn 
bearish again, which will only help keep traders on the sidelines, 
which in turn will nullify trading volume, which in turn will keep many 
investors to wait things out. Combine this with the Microsoft storm 
cloud (not only a bearish earnings report but also the court case), and 
the near term prospects look bleak. Regardless, longer term out, these 
next several weeks will probably look like great entry points in 
hindsight, but until then, it would be most prudent to ride things out 
until stabilization occurs.    

Below is a small list of equities (that should be reporting their 
earnings this next week) and our Pinnacle Index for those particular 
stocks. The Pinnacle Index is a proprietary product that determines 
current market sentiment and expectations for underlying equities and 
indexes, which is based upon speculation in the option markets. Also 
included are their expected earnings, the infamous whisper number (if 
available), their estimated earnings release date, as well as the 
put/call ratio for that security if available. 

What we look for are liquid stocks/options that garner a lot of 
interest from the investment community. Most of the issues are high 
tech, and are thus more aggressive. We then filter out many of the 
equities, only to show stocks with excessive optimism or pessimism. 
From a contrarian standpoint (a high number is a good indication of 
extreme optimism, and a low number is a good indication of extreme 
pessimism) you should buy when its low, and sell when its high. Last 
quarter, we highlighted some stocks with a Pinnacle Index that were 
stratospheric (as high as the upper 20's). Needless to say, these 
stocks had so much pent-up enthusiasm, that after their earnings, they 
tanked. It is the old adage, buy the rumor - sell the news. There were 
also numerous companies with a Pinnacle Index less than one. However, 
once these companies came out with their bad quarter, the stocks 
rallied due to the oversupply of pessimism.  

If your favorite stock is not listed, the most common reasons are: 1) 
there are no options traded on the underlying equity 2) lack of 
interest by option speculators in the security 3) lack of quality 
information 4) company already pre-released 5) insufficient data. Also, 
as we get closer to the heart of earnings season, the list will expand 
dramatically to reflect companies whose earnings are due out shortly.


Company*         Symbol  Pinnacle   Expected   Whisper#:  Put/Call
                         Index(PI): Earnings:             Ratio:

April 24th
Akamai Tech       AKAM     n/a        -.48       -.47       n/a
CDW Computer      CDWC     n/a         .63        .64       n/a
Corning           GLW     2.62         .51        .52       .51
Gadzoox Networks  ZOOX    1.02        -.18       -.17       n/a
Priceline         PCLN    2.31        -.06       -.04       .54
Merck             MRK     3.02         .62        .63       .72

April 25th
Ebay              EBAY    0.67         .03        .05       .55
BMC Software      BMCS    1.62         .46        .48       .43
Xerox             XRX     2.01         .26        .27       .44
Checkfree         CKFR    1.27        -.11       -.10       .60
JDS Uniphase      JDSU    0.68         .10        .11       .74
LSI Logic         LSI     1.12         .25        .29       .57
LookSmart         LOOK     n/a        -.27       -.22       n/a
Minnesota Mining  MMM     2.37        1.08       1.10       .45
Nextlink          NXLK    1.02       -1.53      -1.51      1.83
Nortel Networks   NT      0.82         .19        .22       .57
Peoplesoft        PSFT    2.08         .02        .04       .47

April 26th
Amazon.com        AMZN    0.87        -.35       -.33       .62
Earthlink         ELNK    0.95        -.42       -.41       .39
Global Crossing   GBLX    1.32        -.40       -.36       .53
Infospace         INSP    3.48        -.06       -.02       .49
Nextel Comm.      NXTL    1.41        -.84       -.83      1.14

April 27th
Electronic Data   EDS     1.04         .47        .48       .53
GTE               GTE     6.40         .83        .84       .30
Worldcom          WCOM    1.75         .43        .43       .59
Network Solutions NSOL    2.50         .15        .18       .82
Nokia             NOK     0.92         .15        .16       .82

April 28th
Ericsson          ERICY   1.11         .17        .19       .82

Now with these recent gyrations in the market, as well as many 
technology shares getting cut in half, the Pinnacle Index is unusually 
low across the board. These low sentiment indicators are more of a 
byproduct from the recent sell-off in the market, than specific 
negative sentiment towards an individual equity. Because of this, many 
of the numbers may be skewed more bearish than in previous quarters. 
Regardless, low sentiment issues that look interesting this week 
include Ebay, JDS Uniphase, Ericsson, Nortel Networks, Nokia, and 
Amazon. If these companies can meet/beat the whisper number, and have 
a positive conference call regarding future quarters, these issues 
may be in for a rally. And with Microsoft's earnings disappointment, 
these issues may get even cheaper before they report earnings. Have 
a good trading week!  


BULLISH Signs: 

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

Interest Rates (5.825):
The current yield is in bullish territory.

Volatility Index (28.31)
The VIX continues to prove that the low 30's are an excellent 
buying opportunity, and the low 20's continue to be a great selling 
opportunity.


Mixed Signs: None


BEARISH Signs:

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 
margins. 

Investor Expectations:
More and more investors are now expecting high double-digit growth if 
not triple-digit expansion in their portfolios. This extreme positive 
sentiment could help fuel a future 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                              Thurs       Tues        Thurs
Benchmark                        (4/20)      (4/25)      (4/27)
******************************************************************

Overhead Resistance (805-830)     1.65
Overhead Resistance (775-800)     1.70

OEX Close                       777.12

Underlying Support  (745-770)     1.60
Underlying Support  (715-740)     5.53

What the Pinnacle Index is telling us:
Based on Thursday, both overhead and underlying levels are light, 
indicating we can go in either direction with relative ease. In the 
most likely scenario, we will be in a trading range with the bears 
winning the short-term battle.  



Put/Call Ratio 
********************************************************************
                                Thurs      Tues       Thurs
Strike/Contracts                (4/20)    (4/25)      (4/27)
********************************************************************


CBOE Total P/C Ratio             .75
CBOE Equity P/C Ratio            .68
OEX P/C Ratio                   1.42


Peak Open Interest (OEX)
********************************************************************
                     Thurs          Tues            Thurs
Strike/Contracts     (4/20)         (4/25)          (4/27)
********************************************************************


Puts                680 / 4,808  
Calls               800 / 5,512
Put/Call Ratio         0.87


Market Volatility Index (VIX)
********************************************************************
                    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      Bottom?             39.33

April 20, 2000                          28.31



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DISCLAIMER
***********

This newsletter is a publication dedicated to the education 
of options traders. The newsletter is an information service 
only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
buy or sell securities presented. All investors should consult 
a qualified professional before trading in any security. The 
information provided has been obtained from sources deemed 
reliable but is not guaranteed as to accuracy or completeness.
The newsletter staff makes every effort to provide timely 
information to its subscribers but cannot guarantee specific 
delivery times due to factors beyond our control.

The Option Investor Newsletter                4-23-2000  
Sunday                                        2 of 5


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

For the week of April 24, 2000

Monday

None Scheduled

Tuesday

Existing Home Sales      Mar    Forecast: 4.75M   Previous: 4.75M
Consumer Confidence      Apr    Forecast: 135.0   Previous: 136.7

Wednesday

Durable Orders           Mar    Forecast:  2.0%   Previous: -2.7% 

Thursday

Employment Cost Index    Q1     Forecast:  0.9%   Previous:  1.1%
GDP                      Q1     Forecast:  6.0%   Previous:  7.3%
GDP Chain Deflator       Q1     Forecast:  2.3%   Previous:  1.9%
Initial Claims           04/22  Forecast:  260K   Previous:  257K
Help Wanted Index        Mar    Forecast:   N/A   Previous:    88

Friday

None Scheduled 


Week of May 1st

05/01 Auto Sales
05/01 Truck Sales
05/01 NAPM Index
05/01 Construction Spending
05/02 New Home Sales
05/02 Leading Indicators
05/03 NAPM Services
05/03 Factory Orders
05/03 Fed Beige Book
05/04 Productivity
05/04 Initial Claims



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

Liquidity Issues That Impact The Market
By: Mary Redmond

We all know that institutional buying and selling has a huge
impact on the market.  When you look at the volume of some 
of the stocks which have made big gains this week, you can see 
that there are huge blocks of stock being bought and sold. 
We are fortunate to have recovered at least in part from the
selloff in April, and some of this is possibly due to cash
flows to funds and spending by funds which has not yet 
showed any signs of abating for any more than one or two
weeks at a time.

Flows to U.S. equity funds have been strong and consistent
for over nine years.  Here are the flows as reported by
trimtabs:
				% gain in S&P 500
1991: 36,357  billion		24.7		
1992: 72,128  billion		4.6
1993: 91,073  billion		7.0
1994: 75,401  billion		-1.1
1995: 116,529 billion		34
1996: 173,614 billion		22.9
1997: 189,558 billion		31
1998: 149,507 billion		26.7
1999: 170,717 billion		18.4

In fact, a report of the historic monthly US equity flows 
during the 1990s has shown that only one month in a nine
year period from 1991 to 1999 showed a significant cash
outflow from equity funds.  This was August of 1998, which
probably is the worst market any young traders and investors 
remember.  The Dow hit a low near 7500 and the Nasdaq hit 
1000.  The equity mutual funds showed a net outflow of 
approximately 6.4 billion, as the money went into money
market funds.  The shock therapy may have been exaggerated
by the fact that the market had gone up without a serious
correction from 1995 to 1998.

However, the flows became positive the next month in September
of 1998, although the Dow, Nasdaq and S & P were still low.
Approximately 8.7 billion in cash went into equity funds
in September of 1998, followed by approximately 3 billion in
October of 1998.  Then the Fed started their program of cuts
in the interest rates, the markets started to go up and 
investors started to contribute aggressively, putting over
13.9 billion into the equity funds in November of 1998.

What conclusion can we draw? The fact that so far history
has shown us that investors have been loyal to their mutual
funds.  Despite the fact that online trading has become
very popular in the last couple of years, it hasn't so far
hampered the fund flows.  Also, the pattern seems indicative
that most fund investors have a basic understanding of 
market risk and are in for the long term, and usually do
not redeem except under extreme circumstances.  

In addition, over the last ten years there is a consistent
pattern of monthly flows.  The first half of the year shows
the strongest inflows, and August has historically had the
weakest flows.  January has on average taken in about 10%
of the total for the year. Here is the average percentage
that each month has taken in over the last 10 years:
Feb 8.4%, March 8.6%, April 11.1%, May 9.5%, June 7.5%, 
July 8.5%, August 5.5%, September 7.3%, October 6.7%,
November 8.9% and December 8.1%.  January, April, July and
November are consistently the strongest months. 

The past is not always predictive of what the market will
to do in the future, but people's behavior patterns are
sometimes remarkably consistent.  For example, when the 
market started to crash last week alot of people assumed 
that there must be something terrible going on and that
is when panic selling can occur.   And, fortunately for
the market, Americans have consistently made monthly cash
contributions to their funds.  As long as this money keeps
coming in, it may help to buoy the market.

The latest statistics from AMG Data for the week ending 
April 19 stated that equity funds took in 6 billion, with 
60% of the total going to growth funds.  Technology and
internet funds inflows slowed.  Large cap index funds 
started to show redemptions.  In the last several months,
investors have shown a clear pattern of mass psychology 
in terms of favoring one sector over another.  This can
change in a matter of days or weeks, so I wouldn't expect
tech funds to show slow inflows the whole year.

A couple of other factors besides fund flows influence the 
liquidity of the market.  One of these is the issuance of 
new stock through initial public offerings.  Take a look
at the dollars raised through ipos over the last 9 years.

1991:  59,786 billion
1992:  57,012 billion
1993:  99,089 billion
1994:  69,985 billion
1995:  86,770 billion
1996:  98,850 billion
1997:  132,592 billion
1998:  108,038 billion
1999:  180,303 billion

Why does this impact the market?  Most of the buyers of the
premier IPOs are institutions.  Individual investors rarely
have a chance to participate in oversubscribed ipos.  If the
funds are putting billions of dollars in to ipos, there is 
less money left over to buy stocks which are already public.
Some market analysts have suggested that the huge volume of
ipos brought out in 1999 may be affecting the market now, as
the lock up periods for insiders to sell their shares are 
starting to expire. 

Another factor is the Treasury's buyback program.  The US
Treasury announced earlier in the year that they plan to 
buy back up to 30 billion dollars of US bonds along the 
entirety of the yield curve.  That's 30 billion dollars that
is going to be injected in to the system.  It is not clear
yet how this will impact the market, but it is a factor to
take into consideration. 

Contact Support

*****

Warning: This is Not The Market Most Beginners Learn In
By; Renee White

I'm changing my style of trading.  Are you?  Trading is a little 
more complicated these days.  This is not the time when beginners 
should be practicing their new found skills if they have a bullish 
outlook.  Learning a strategy is only one tiny part of trading 
successfully.  We have been in a stress-free bull market for some 
time.  It has been a comfortable environment for new traders to 
learn in.   But beware, the market is not that healthy right now.  
A change in strategy may be in order for a sideways or downside 
market.

I have been surprised how many new traders have asked me about 
trading lately.  They write about their continued losses and how 
the plays aren't working in spite of the earnings run or split 
announcement.  Still they keep trying and ask my advice on stock 
picks.  (Which I can't give, by the way.)  Many seem eager to jump 
in, in order to win back all that they have recently lost.  Don't 
get me wrong, I love hearing from new traders who have a thirst 
for knowledge.  But I don't like hearing from new traders that 
DON'T have a thirst for knowledge, that just indiscriminately 
through money at plays without a reason.  Without a willingness 
to study, read and research, it is just gambling.  Vegas would be 
much more fun with fun people around you. It scares me because 
many of these traders are playing with money they can't afford to 
lose.  We all know that is Rule #1 when trading options.  Why? 
Because ALL option traders lose money.  The ones that survive 
just win bigger than these that lose.  It's the name of the game 
and the pain of the gain.

Please, if you are new to trading and playing the game of options,
consider your market timing.  This is not the same market it was 
last November, or the November before that or even early March. 
Option books, seminars and writers excite many in the rewards of 
trading.  It is rewarding. If you survive.  The truth is, playing 
is not hard.  Keeping your profits is!  Without good money 
management, a couple of bad days can wipe out 3 months of profits 
which had tripled your original account.  Money management skills 
are something all levels of traders fight with on a continuous 
basis.  That's why we have heard of hedge funds going under, 
people getting $1million margin calls and others getting wiped 
out.  It is a constant battle.

Since most all new option traders usually start with a bullish 
sentiment, they tend start out playing calls.  If one is truly 
new to the investment world, it can takes years to understand 
market sentiment to the level that it affects your trading. 
Unfortunately   many of these traders continue to trade the same 
way, even when the market is not on their side.  There is a 
difference in losing money due to poor money management and 
losing money due to over-trading. Losing money with poor money 
management is something that tends to happen quickly.  Most of 
the time they knew better, they just got sloppy and everything 
vaporized. It's like the dog eating the sandwich you just laid 
down, when you went to answer the phone.  You feel stupid and you 
knew better.

Losing money by over-trading though, is a slow, painful process.  
It happens in little bitty increments.  It always comes after 
a big hit.  Desires to win your money back again take over your 
subconscious. Occasionally, you are rewarded not knowing how 
dangerous the compliment is.  You trade more in order to win 
again, with larger sums of money.  You feel there are buying 
opportunities everywhere, because everything is so much cheaper 
now.  You diversify your trades.  A little here, there and 
yonder.  It disappears again.  And again.  And again.  Then 
there is another win so you take a deep sigh.  You try again, 
lose or break even.  You can't keep track if you are winning more 
than you are losing.  Great news comes out on your favorite 
company.  You load up.  And then your bias allows the market to 
gobble up every red cent.   What I am saying is that most new 
traders are focusing so hard on wanting to play the game, that 
they fail to realize that the market is against them.  They may 
read caution all night long in newsletters or hear it all week 
on TV but they don't really hear.  They still think in terms of 
bullish expectations.

Personally, I think this is not the market where beginners should 
be trading.  The risk is too high.  The market is too unstable.  
How long will this last?  Who knows?  Possibly until the 
May 16th FOMC meeting. Possibly until the June FOMC meeting.  
Possibly until that first meeting we DON'T get a rate hike or 
when economic data starts pointing to signs that previous rate 
hikes are affecting peoples lives.....and the corporations that 
everyone is trading.  When the earnings get softer, the interest 
rate fears will subside. OUCH! Sounds like another bad earnings 
run waiting to happen, to me.  Gonna trade that one too?

So, what can we do?  Everyone should be reviewing their own 
risk tolerance levels right now.  Looking at the big picture, 
with a rally Monday morning or not, the outlook does not look 
bullish going forward.  Over-trading could be painful for those 
die hard bulls.  The charts all point south.  All of us want to 
repair our accounts.  There's nothing wrong with that.  But just 
make sure your repair strategy has the wind to your back.  It must 
have the same bias as the overall market to have the percentages 
in your favor.  That alone should force you to rethink your 
trading style.

For some, that may mean sitting out while studying, observing and 
paper trading.  For me, I have decided my gut is telling me to 
place trades according to the negative bias until at least 
May 16th. It may be a sideways market, but I don't expect a bull 
market.  In lieu of that, I've just started "shorting" stocks.  
It felt good to put money in my pocket again.  In the past, I 
usually played puts or just stepped aside and watched.  But the 
puts still had the evaporation effects of time and the implied 
volatility effects on entry.  Shorting the stock does not have 
that effect and it's easier for me to cut my losses at the end 
of the day whereas with options, I might just hold losing more 
with the opening gap down.  Besides, I will be one of those who 
is selling into the rallies, to free up more cash so I might as 
well play it.

In fact, if we do get that capitulation day (again) I may write 
puts that will be covered with the short stock position.  I'll 
write the puts for the premium, but use shorter term day trading 
with a negative bias (by shorting the stock) to prevent any 
disaster.  I want to make sure of the depth of the next retest.  
If it is lower still, I will not write puts because there could 
still be another leg left to come.   I have decided to use this 
negative market sentiment, to practice playing the market to the 
downside.  I'm practicing reading entry & exit points from a 
different perspective and interpreting my indicators with a 
negative bias.  For instance, I noticed my Directional Movement 
Indicator gave me some interesting "Short to Open" signals as 
the -DI crossed over the +DI .  I'm currently set at 13/30. I'm 
still playing with settings and working on a plan.  I'm cross 
referencing the level of VIX on a 5 min chart, as it hits both 
the upper & lower Bollinger Bands comparing that to the movement 
of the DM.  I'm also getting a feel for screening out the "noise" 
from exiting too early from the equity chart, by using the MACD 
histogram to indicate strength of the trend and stochastics to 
verify overbought & oversold in conjunction with the information 
of DM.  I have never used the VIX this way so for me, this is 
an enhancement to my trading style which I would have not put 
together had I not been looking for ways to trade now that I have 
a prolonged negative bias.  Like I've said before, I'm still a 
work in progress.

It doesn't matter what system you use right now to trade.  Just 
makes sure it works in this environment.  The best thing new 
traders can do right now, is learn to actually hear and filter 
market sentiment.  Adding that to your trading tools will 
certainly reap rewards for years to come.  Ignoring it gets very 
expensive.  Remember, all salmon don't make it when trying to 
swim upstream.

Contact Support



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

Nasdaq 6200, Dow 12,500 By June 1st
By: Austin Passamonte

What does the future portend? Alan Greenspan holds a special 
session apologizing for certain Fed members who recently 
"jawboned" the equity markets. Uncle Al goes on to state (in 
language we can actually comprehend for once) that after 
close and careful scrutiny he fears current Fed policy is 
dampening the markets and announces an immediate 50 basis 
point cut in interest rates.

Abbey Cohen and Mark Mobius hold a joint interview on CNBC 
and Bloomberg urging everyone to mortgage the house, raid 
their children's piggy banks and pour the proceeds into tech 
stocks. Forget entry points, every call option we purchase 
doubles and triples by markets' close for days & weeks on 
end.

There...now that is the inaugural letter I would love to begin 
my O/I writing career with! We only get one chance in life for 
a first impression and I'm thinking it'd be tough for me to 
top that one. Sadly, that's not exactly the way I see things 
in my cloudy crystal ball. 

With a history of trading commodity futures contracts behind me, 
I lack a personal market bias. Whatever the technical and 
fundamental evidence points to for a given market is the way 
I base my trades. I harbor a strong preference to trade index 
options, so it really doesn't matter to me which way the markets 
move so long as they move big. If you are a devout raging bull
I respectfully suggest you might consider the same market neutral 
approach in the near term.

Seldom have I seen a time where all indicators point in the 
same overwhelming direction for the markets as they do today. 
Let's examine the evidence...

Technicals:
Where do we begin? Pick a tool and it's probably pointing to 
the downside for either the Dow or Comp. Intraday Stochastics 
are topped out far above 80% on the Dow and the fast bar is 
crossing down into the slow on the NASDAQ. The OEX is nearing 
overbought as well. William's %R is also topped out on the Dow. 
18 day M/A are below 40 day M/A. These are all lagging 
indicators and markets can rally through them considerably, 
but it takes strong events to create the momentum thrust needed 
to do so. Where will it come from? 

We've seen a steady decay in the NASDAQ 100 over the last couple 
of trading sessions and that doesn't bode well either. If the 
generals can't lead the charge back up for more than two days, 
who will?

The number of stocks making 52-week lows is several times higher 
than issues making 52 week highs. Again, where is the underlying 
strength?
 
Fundamentals:
There isn't space enough for all of them, so let's hit the 
highlights. The media is slaughtering bullish sentiment at 
every turn. Watching Bloomberg and CNBC from 8:00am to 5:00pm 
EST every day, I've witnessed the same thing you have. 
Commentators are grilling every analyst and CEO with the same 
question: have we seen the bottom? Is the crash imminent and 
soon? What's next...will Ron Insana break into an Ameritrade 
ad and yank Stuart's head out of the copy machine to browbeat 
him about NASDAQ testing sub-3,000? That's about the only 
financial figure I haven't seen hammered to death so far. A 
self-fulfilling prophecy seems imminent to me.

In case you were wondering, newsprint isn't any better. Heck, 
the Today Show had Suzy Ormond on Friday morning telling all 
of the housewives (and husbands) to tread lightly in techs and 
stay weighted in cash and bonds. Are Oprah & Rosie up next?
  
I'm guessing there are a few traders barely clinging to life 
with margin debt. Any sleepless nights for them lately? Earnings 
season is in full bloom and this is the best we can do? Intel 
and Microsoft pretty much sum up the mood here, the market 
yawns over good news and reacts swiftly to bad. Markets that 
shrug off bullish news and drift lower are extremely bearish.

As May 16th approaches, might an analyst or two mention the 
real possibility of a .50 point rate hike by the Fed? What 
then?

Game plan:
As traders, what are we to do? Swimming with the tide is 
infinitely easier than against it. How about a market bias 
approach in harmony with the trends?

Let me share my game plan with you. I currently follow the 
OEX Skybox closely and will take their trades without question. 
(Next weekend I'll outline a money-management system for small 
accounts you can back test yourself with actual Skybox 
historical data that eliminates the possibility of total loss
with theoretical upside potential that will blow you away. I 
consider Skybox to be the greatest mechanical system I've ever 
seen, and I've looked at a bunch.)

I will examine Pinnacle Advisor's market sentiment for the OEX 
and when it shows overhead resistance building, it's time to 
consider buying more OEX OTM puts soon. I'll also check OTM 
puts for the QQQ and DJX as well and write my target choices 
down so I can pull the trigger upon first sign of market 
weakness. Any stocks listed with high sentiment index %s prior 
to earnings in this section are also put plays on earnings 
day I'm highly interested in. The only call positions I will 
take are OEX calls via the Skybox until things shake out.

What about you? Is your game plan in place? Did your trading 
account swell with cash last Friday during the plummet or have 
you vowed not to miss the express train next time. Next time 
may come sooner than you think, and I hope you'll be amply 
prepared. 
  
Trade the right directions without bias.

Current open positions: May OEX puts, May QQQ puts   



***********
OPTIONS 101
***********

Safe Investing, How Much is Enough
By: Jim Brown

After the recent Nasdaq crash we have had many emails asking
if there was any safe way to use options to maximize returns.
First, there is no safe investment. All stock and option
investing involves risk. In the current market environment
the urge to trade is the biggest challenge facing most 
investors. If you trade less the odds are in your favor.

Many investors only use a portion of their capital to 
speculate in options. This is a good idea but the problem
is what should you do with the rest of your money. If you 
are a conservative investor and could be happy with 30% to 
50% annual returns then I have a deal for you.

The current volatility has created an opportunity to
capitalize on the current high premiums yet do it fairly
safely. 

I am talking about long term covered calls using leaps.
Now before you hit that delete button, hear me out.

Many stocks on good companies are very beaten down right
now but their long term prospects are still very good.
By buying the stock and writing leaps on it you accomplish
several things. First you put that excess capital to work
as safely as possible. Second you can lock in substantial
returns and third you do not have to worry about your 
positions on a daily basis. You are freed up from the daily
terror of watching your net worth fluctuate with every
nasdaq tick. You are also protected from a serious drop in
the stock price by the substantial premiums received from
the leaps. Most premiums equal 25% to 35% of the stock price.

Look at this example:

JDSU $85.19

 


JDSU is currently trading at $85 with strong support at $75.
The odds of JDSU closing below $85 by January of 2001 are
very close to zero. If you wrote the JAN-2000-$90 leap today
you would receive $27 in premium. Without using margin if JDSU
closed over $90 the third Friday in January your return would
be 37.6% for one trade. 

Here is the calculation:

$27 premium
$ 5 gain from $85 to $90 strike
$32 profit

$32 profit / $85 stock price = 37.6% return if called out.
 
If you use margin the return will be much greater but involve
more risk. Very minimal risk but still risk.

$32 profit / $42.50 margin required = 75.2% return 
(margin interest not included in calculation but neither
is the interest on the $27 premium received either)

Do you think JDSU will close above $85 in January?

Is a 37.6% return better than what you are getting on 
idle money now?

Is a 75% return worth the $15 net margin you would have 
at risk? ($42.50 margin less $27 premium received) 

If JDSU did not close over $85 would owning JDSU with a
basis of $58 be worthwile for a long term investor?

You have to be comfortable with the concept and the risk
but unless we have a real bear market in the near future
the risk of stocks going much lower than they are now is
very minimal.

Here are some likely candidates for this concept. Most
large cap stocks have leaps but even those that don't
have options that expire in Nov/Dec and they will produce
the same type of returns.

Stock Price Strike Premium Return/Margin Return

JDSU $ 85	$90	$27	37.6%		75%
QCOM $110	$110	$29	26.3%		52%
BRCM $152	$150	$48	31.5%		63%
YHOO $123	$125	$32	26.0%		52%
ARBA $ 69	$ 70	$22	31.8%		64%

You can experiment with these and get a larger return by
increasing the strike price but you then increase your
chances of not being called out in January. That is also
not a bad deal. Using these numbers you could write leaps
on your stock every year and after three years if you still
had the stock your basis would be zero. ZERO ! Of course
the odds of you being called out for a 75% to 100% profit
during those three years is very high. 

The key to this strategy is quality stocks, with any
growth rate above zero. Even a five percent growth rate
will get you called out for a nice profit in the first
year.

Think about it. How much are you making on your idle
money? How much have you made on those marginal stock
investments in the last six months?

Good Luck

Jim Brown



*************
DAILY RESULTS
*************

Index      Last    Week
Dow     10844.05  538.28
Nasdaq   3643.88  322.59
$OEX      777.12   -5.67
$SPX     1434.54  -13.04
$RUT      481.84   28.13
$TRAN    2833.25  106.21
$VIX       28.31  -11.02

Calls              Week

BRCM      152.50   30.25  New, earnings are the big story
TIBX       67.88   19.56  Provides B2B plumbing to the big boys
ABGX       82.50   15.63  Dropped, good play but earnings Tuesday
ADBE      112.63   14.81  Shareholder meeting on Wednesday
MERQ       72.38   13.63  Wall of worry could dampen sentiment
VERT       41.63   13.63  Dropped, sell ahead of earnings
SCMR       64.56   13.56  Still risky, but recovering nicely
LXK       114.88   12.56  Dropped, earnings on Monday
AMD        78.38   12.38  New, annual shareholders meeting Thursday
RMBS      167.50   11.25  New, held support from the 200-dma
VSTR      100.94   10.94  Leading the charge in the Nasdaq rebound
ARBA       69.00    6.75  New, B2B is still the place to be
CMVT       80.06    6.13  Connecting Telecom and Internet
NXTL      110.00    5.13  Dropped, Wall Street Journal article
DHR        52.94    4.88  New, volume is increasing; a good sign
ENE        71.00    2.00  Dropped, no downside, but none up either
VOD        46.00    1.00  Dropped, quick reversal kills play
GMST       41.69    0.56  Two weeks until earnings

Puts

MCOM       27.63   -5.63  New, earnings report revealed delays
DCLK       55.44   -5.13  Government is bearing down on them
NTPA       31.50   -3.38  New, typical post-earnings depression
EK         58.50   -3.00  Looking for a move down towards $55
WY         53.50   -1.13  Flattened out, buyers are still striking
MCLD       61.38    6.75  Dropped, 3:1 split is coming
FIBR       40.00    9.56  Still unable to break above the 10-dma
DIGX       75.44   27.44  New, does it have what it takes??


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

Calls

BRCM - Broadcom
AMD  - Advanced Micro Devices
RMBS - Rambus
ARBA - Ariba
DHR  - Danaher Company

Puts

MCOM - Metricom
DIGX - Digex Inc
NTPA - Netopia Inc


***************************
PICKS WE DROPPED THIS WEEK
***************************

Remember that historically, when we drop a pick it will go up 
10 to 15% the very next week. It is part of Murphy's Law.
Just because we drop a stock as a pick does not mean we are
advocating a "sell" on any position you have. We are simply
dropping our recommendation as a new play. Existing plays
can and do continue on and are usually profitable.


CALLS

VERT $41.63 (+13.63) It's a fact, VERT is reporting earnings 
this Wednesday April 26th, after the close.  And for the number 
buffs, First Call has VerticalNet coming in at an estimate of 
-0.17 p/s versus -0.10 same quarter last year.  As we cautioned 
initially, this play was likely to be short and sweet.  Recall 
this Internet was just added to our call list on Tuesday 
evening.  As it turned out, the next two days provided excellent 
entry points off near-term support at $40 followed by upward 
moves as high as $47.44 intraday; thus giving traders lots of 
opportunity for profit.  We decided however to drop VERT this 
weekend to give ample time to plan your exit prior to the 
company's announcement.  No need to fret though, if you 
currently have open positions there's still three trading days 
to play this earnings' run.  Watch for overhead resistance at 
$48-$50 and sell too soon!

NXTL $110.00 (+5.13) Trading like a yo-yo for most of the week
has forced us to drop NXTL from our list.  After finding a 
bottom near $100, NXTL began to fly late Monday.  The flight
lasted until midday on Wednesday when traders clipped our wings
as they left for an extended holiday weekend.  On the bright
side $110 did seem to provide support on Thursday, suggesting
there may be more room to the upside.  The wireless telecom
stocks have taken it on the chin for most of the month, and
NXTL is no exception.  For the bravehearts, that want to hang
on and see if this one can find its footing again, be aware
that NXTL is scheduled to report earnings before the open on
Wednesday.  We will look for a flight that's not quite so
bumpy.  

VOD $46.00 (+1.00) Perhaps we were a bit premature in our
selection of VOD, and then again maybe not.  Whether we
were or not, we are dropping this one from the list.  With 
the strength seen in many of the stocks at the NYSE on 
Thursday, VOD just couldn't seem to get anything going.
Telecom stocks in general had a tough go of it after Tuesday.
Although the $45 area did hold up reasonably well on Thursday,
VOD closed back under its 200-dma at $48.68.  Another fly
in the ointment for this play showed most minor intraday
bounces met by increases in volume, pushing the price back
down.  A drop on light volume is one thing, moves lower with
bigger numbers is quite another.  Could we see VOD get back
on track?  Sure, but at this point the risk-reward ratio 
simply isn't on our side.  

ABGX $82.50 (+15.63) After bottoming again on Monday near the
200-dma (then at $53.25), ABGX gave us a quick, but profitable
run.  Rising as high as $98.44 on Wednesday before weakening
with the rest of the Biotech sector, ABGX looks like it is done
with its earnings run.  Although there may be more upside in
the play on Monday, earnings are scheduled for Tuesday (the
company did not specify time of day), and in order to avoid the
typical post-earnings drop, we need to be out of the play before
the announcement.  We will look for ABGX to provide us with
another opportunity after the dust settles.

LXK $114.88 (+12.56) In typical volatile fashion, LXK gave us
a couple of profitable runs last week.  The first one began
Tuesday morning and ran from below $100 to $117.81 by the close.
After such a strong run, the pullback to $107 on Wednesday was
to be expected.  The consolidation provided another entry for
the run which then pushed the printer company up to close at the
high of the day on Thursday, just below $115.  The play is now
over, and all positions should now be closed as LXK reports
earnings Monday morning.

ENE $71.00 (+2.00) Looks like ENE is out of energy.  It simply 
hasn't been able to muster any strength in the face of market 
weakness.  Unless you were able to buy the dip on Monday 
to $65 (not part of our plan), this play has been a snoozer.  
Resistance remains at $72 with intraday support around $67-$68.  
There is no reason to wait around with crossed fingers hoping for 
a market meltdown that makes EME look a bit more attractive.  Our 
capital can be better deployed elsewhere.  Thus, we're shutting 
off the light on ENE with the expectation of getting charged up 
somewhere else.


PUTS

MCLD $61.38 (+6.75) The rally we saw early last week in MCLD
faded into the weekend as the stock fell to broad market
weakness.  The stock seems to lack direction and conviction, its
just drifting along with the rest of the market.  The stock found
strong support early last week at the $50 level, a support level
that was established nearly 5 months ago.  Nonetheless, the stock
doesn't appear to have much downside left, there is too much risk
to continue to hold our put position.  The company will be
splitting its stocks 3-for-1 next week, Tuesday, April 25th.
Even though the split will put the stock in the low 30's range,
which could be seen as a negative, we don't want to hand around
to see any sort of split run.  We'll split, and look for better
opportunities elsewhere.



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


****************************
SEE DISCLAIMER IN SECTION ONE
The Option Investor Newsletter              4-23-2000  
Sunday                                      3 of 5



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

Current Split Candidates
 
AMD  - Advanced Micro Devices
ADBE - Adobe Inc.


Split candidates that are not current plays
 
INKT - Inktomi Inc.
EMC  - EMC Corporation
CHKP - Check Point Software 
SDLI - SDL Incorporated
BRCM - Broadcom


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

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

Symbol - Stock          Splits/Date  
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
CYSV - Cysive Inc       2:1 05-08-00 ex-date 05-09
ZOMX - Zomax Inc        2:1 05-08-00 ex-date 05-09
BALT - Baltimore Tech   5:1 05-10-00 ex-date 05-11
AXP  - American Exprs   3:1 05-10-00 ex-date 05-11
SYK  - Stryker Corp     2:1 05-12-00 ex-date 05-15
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
ACLNF- A.C.L.N. Ltd     5:4 05-18-00 ex-date 05-19
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
AES  - AES Corp         2:1 06-01-00 ex-date 06-02
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
AAPL - Apple Computer   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
page.



********************
THE PLAYS OF THE DAY 
********************

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


Call play of the day:
**********************

TIBX - Tibco $67.88 (+19.56)

See details in sector list

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



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

NTPA - Netopia $31.50 (-3.38)

See details in sector list

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

****

MCOM - Metricom $27.63 (-5.63)

See details in sector list

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



*************
DEFINITIONS
*************

SL  = Suggested stop loss. Sell if bid breaks this price.
OI  = Open Interest - the number of open contracts outstanding.
TP/P= True premium or Time premium
RRR = Risk/Reward/Ratio
ITM = In the money
ATM = At the money
OTM = Out of the money
ADV = Average Daily Volume
MTD = Move to double - amount stock must move to double option price
                         in one week. ONE WEEK MOVE ONLY !

Numbers within ( ) are the amount of change for the week.
Numbers within ( ) may be designated with PxW, like P3W, prior 3
weeks

The options with a "*" by the strike price are our choices from the 
group. If the stock moves as expected we feel they have the best 
chance to substantially increase or double in price with the best
risk/reward ratio compared to the other options for the same stock.
You must determine if they fit your risk profile for time and price.

Analysts ratings: 1-2-3-4-5 
Analysts who follow each stock rate it and these rating are 
accumulated and displayed as follows;

Position 1 = number of analysts recommending "strong buy"
Position 2 = number of analysts recommending "moderate buy"
Position 3 = number of analysts recommending "hold" or "neutral"
Position 4 = number of analysts recommending "moderate sell"
Position 5 = number of analysts recommending "strong sell" 

Example rating 5-3-1-0-0 would be 5 "strong buys", 3 "moderate buys",
1 "hold" recommendation.

RISKS of SELLING PUTS:
The risk of selling naked puts is always the possibility
of a catastrophic event that drops the stock below the 
strike price and could result in the stock being PUT to you.
Always protect yourself with a "buy to cover" limit order
to take you out before this can happen.



**********
CALL PLAYS
**********

********
HARDWARE
********

SCMR - Sycamore Networks $64.56 (+13.56)(-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.  

Recall from last week that we picked SCMR as a rock-bottom 
turnaround play from $49, where we expected a rebound.  SCMR 
delivered by rising as high as $78.50 on Tuesday.  It was and 
still is a risky play that paid off.  That's just the kind of 
performance you'd expect from an optical networking company that 
some analysts refer to as "the next Cisco".  However, SCMR was 
unable to escape the market pullbacks on Wednesday and Thursday.  
Technically though, both pullbacks came on decreasing volume 
(just 10% over the ADV on Thursday), which says sellers weren't 
serious and/or buyers were absent.  Just as we noted last Sunday, 
strong support is at $60, and SCMR bounced off $60.50 intraday to 
close at over $64, a fair amount over its 5-dma of $62.85.  It 
rose while the rest of the market was moving down - a good show 
of relative strength.  Unfortunately, SCMR is having trouble 
breaking over its 10-dma, currently at $75.00.  The next 
historical level of resistance is $78, a level that provided 
previous support in January.  Though SCMR is in crummy technical 
shape, it is still on many fund managers' shopping lists because 
it is a quality company and has the ability to deliver profits on 
short-term trades.  While it is possible that SCMR could retest 
its lows ($49) should the market decide to test the downside 
again, we would consider any intraday dip buyable on a normal 
day.  Just be sure to wait for the bounce.  If you want to target 
shoot, $60 is appropriate in our opinion.  Otherwise, you may 
want to wait for a move back over $70, backed up by strong 
volume.  Earnings runs have been an exception rather than a rule 
this quarter, and with a May 18th report date, it's not likely to 
materialize for this play.

News has been sparse and largely overshadowed by the general 
market conditions.  However, SCMR did announce that Global NAP (a 
competitive local exchange carrier) will deploy Sycamore 
equipment to further scale its Internet backbone for higher 
bandwidth.  Global NAP handles Internet dial-up calls for 
Mindspring/Earthlink, MSN, WebTV, Netcom, Prodigy, and Ziplink.

BUY CALL MAY-60 SMZ-EL OI=235 at $13.13 SL= 9.75
BUY CALL MAY-65 SMZ-EM OI= 76 at $10.63 SL= 7.50
BUY CALL MAY-70*SMZ-EN OI=136 at $ 8.75 SL= 6.00
BUY CALL JUN-65 SMZ-FM OI= 48 at $14.50 SL=10.75
BUY CALL JUN-70 SMZ-FN OI= 78 at $12.75 SL= 9.50

SELL PUT MAY-60 SMZ-QL OI= 83 at $ 7.38 SL=10.25
(See risks in the Naked Put section)

Picked on Apr 16th at    $51.00     P/E = N/A
Change since picked      +13.56     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 = 2.40 mln
/charts/charts.asp?symbol=SCMR


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

AMD - Advanced Micro Devices $78.38 (+12.38)

Advanced Micro Devices is a leading semiconductor manufacture.  
They ranked #2 in the microprocessor market, standing only 
behind Intel (INTC).  Their integrated circuits are primarily 
used for computers, telecommunications equipment, and data and 
networking devices.  The company has operations in the US, 
Germany, and throughout Asia.  

We begin our coverage of AMD in expectation of a split 
announcement at the shareholders' meeting scheduled for this 
Thursday April 27th.  The company is asking shareholders to 
increase the number of authorized shares to 7.25 mln.  With only 
152 mln shares outstanding, that'll give the BoD plenty of room 
for a 2:1 stock split.  And it's about time!  The last stock 
dividend was eons ago in 1983!  This month we took note of the 
bullish signs indicating AMD could power higher in the near-
term.  First AMD broke through its imaginary ceiling at $60 
trading on moderate to strong volume.  Then the company rocked 
the Street with blowout earnings on April 12th.  Expectations 
were as high as $0.57 cents, but AMD reported a whopping $1.15 
p/s!  The reaction the following day was spectacular.  Investors 
bid up the share price 10.9% to $71.50 and volume was at an 
impressive 15.1 mln, nearly triple the ADV.  However the 
definitive confirmation came in this Wednesday's session.  AMD 
cracked the recent high of $79.18, edging the opposition a 
fraction higher at $79.25.  Importantly it held these higher 
levels through the week.  Near-term support is now clearly 
established at $75 and $77.  Look for respectable volume of at 
least six to seven mln shares being exchanged or better at 10+ 
mln shares, which historically substantiated a solid breakout.  
Assuming all the ducks are in line, $75 should serve as a solid 
entry point.  Take a look at a 10-day chart and it's easy to see 
the positive bounces off this mark in the last two trading 
sessions. As a whole this week the chip sector was sizzling with 
leaders like TXN, LSCC, VTSS, CY, and INTC all reporting better-
than-expected earnings.  This obviously created an excellent 
environment for AMD to stretch higher.  However we expect the 
upcoming shareholders' meeting to sustain the momentum and drive 
AMD into new territory.

Recently Deutche Banc Alex Brown upped its rating for AMD to 
a Buy from a Market Perform and issued a price target price 
of $125.  Prudential and Wit Soundview also came forward 
with upgrades lifting the stock to a Strong Buy and Buy, 
respectively.  And as a gentle reminder - please remember it's 
essential you confirm overall market direction before opening 
new positions, especially considering the topsy-turvy broad 
markets. 

BUY CALL MAY-75 AMD-EO OI=2289 at $10.00 SL=7.00
BUY CALL MAY-80*AMD-EP OI=2874 at $ 7.50 SL=5.25
BUY CALL MAY-85 AMD-EQ OI=1319 at $ 5.88 SL=4.00
BUY CALL MAY-90 AMD-ER OI=1896 at $ 4.25 SL=2.50

Picked on April 21st at  $78.38    P/E = 55
Change since picked       +0.00    52-week high=$79.25
Analysts Ratings     7-10-6-0-0    52-week low =$15.63
Last earnings 03/00   est= 0.46    actual= 1.15
Next earnings 07-14   est= 1.09    versus=-1.10
Average Daily Volume = 5.23 mln
/charts/charts.asp?symbol=AMD

*****

RMBS - Rambus Inc. $167.50 (+11.25)

Rambus Inc. develops and licenses high bandwidth chip connection 
technologies to enhance the performance of computers, consumer 
electronics and communications products.  Current Rambus-based
computers supported by Intel chipsets include Dell, Compaq,
Hewlett-Packard, and IBM PCs and workstations.  Sony's
PlayStation(r) video game system uses Rambus memory. Providers
of Rambus-based integrated circuits include the world's leading
DRAM, ASIC and PC controller manufacturers. Currently, eight of
the world's top-10 semiconductor companies license Rambus
technology.

Rambus has certainly taken the path of least resistance since
the middle of March.  In the last six weeks, RMBS has dropped
72%.  Many investors and analysts believe there was no reason
RMBS should ever have been selling for $471, while others suggest
the company's stock is a screaming Buy at current levels.  
Screaming Buy or not, we do believe one of our latest additions
presents a very good opportunity at this time.  The company
has several issues to tackle.  The one thing that really matters
is whether or not they can get a substantial amount of their
memory(DRAM) business going into personal computers.  Drew Peck,
an analyst at SG Cowen recently said he wouldn't have a good
bearing on that for 6 to 9 months.  Peck reiterated his neutral
rating on RMBS.  The following day, Warburg Dillion Read's Seth
Dickson, reiterated his Strong Buy rating on RMBS and set a $350
price target.  Another analyst points to the lack of market share
as a potential problem for RMBS.  According to Billy C. Bowden,
an analyst at Amerifirst Securities, the excitement surrounding
the company would be justified if it had a bigger share in the
market place.  Last year it had revenue of $43.4 million in a 
$18.2 billion industry.  Our take on the situation?  There's 
nothing new here.  All of this information was in the market
place when Rambus soared to from just over $100 in the middle
of February to its high on March 14th.  Was the buying a bit
overzealous? Perhaps, but so was the sell-off.  During the
carnage a week ago, RMBS hit $133 when investors came to the
rescue.  This past week the chip developer managed to continue
its bounce with the $150 level providing support, even with the
Nasdaq drifting lower Wednesday and Thursday.  If sentiment is
negative next week, a bounce off the $150 area could provide a
good entry point.  If traders come back prepared to buy stock,
any further moves higher could also be considered.  A move
through $178-$180, accompanied by strong volume and RMBS could
be back on track.

Earlier this month RMBS did report earnings that were in line
with street estimates.  The company did receive some negative
press and saw pressure on the stock, as the report was not in
accordance with generally accepted accounting principles.
Investors should also keep in mind, in March, RMBS did announce
a 4-for-1 split of the company's stock, set for June 16th.

BUY CALL MAY-160 BYQ-EL OI= 84 at $33.63 SL=24.50
BUY CALL MAY-165 BYQ-EM OI= 36 at $30.88 SL=22.50
BUY CALL MAY-170*BYQ-EN OI= 64 at $27.00 SL=19.50
BUY CALL MAY-175 BYQ-EO OI=738 at $26.63 SL=19.25
BUY CALL AUG-175 BYQ-HO OI=137 at $47.13 SL=34.25

SELL PUT MAY-150 BNQ-QJ OI=251 at $17.75 SL=24.50
(See risks of selling puts in play legend)

Picked on Apr 23rd at   $167.50    PE = N/A
Change since picked       +0.00    52 week high=$471.00
Analysts Ratings      1-1-2-0-0    52 week low =$ 51.50
Last earnings 04/00   est= 0.14    actual= 0.15 
Next earnings 07-12   est= 0.16    versus= 0.08
Average daily volume = 3.04 mln
/charts/charts.asp?symbol=RMBS

*****

BRCM - Broadcom, Inc. $152.50 (+30.25)

Broadcom Corporation is a provider of highly integrated, silicon 
solutions that enable broadband digital transmission of voice, 
data and video content to and throughout the home and within the 
business enterprise.  In other words, they make communications 
chips with integrated software.  Broadcom's products enable the 
high-speed transmission of voice, data and video content over 
existing communications infrastructures, most of which were not 
originally intended for digital transmission.  Broadcom designs, 
develops and supplies integrated circuits for some of the most 
significant broadband communications markets, including the 
markets for cable set-top boxes, cable modems, high-speed office 
networks, home networking, digital subscriber line, direct 
satellite broadcast and terrestrial digital broadcast.

The big story here is earnings.  Though they beat street 
estimates of $0.16 by only a penny (a "must" to get an inkling of 
respect on Wall Street), revenue was up 91% over the same quarter 
last year while net income was up 167%.  That means margins are 
increasing.  Even better is that the company has no debt and 
sports a return on equity of over 31%.  They dominate the cable 
set-top box chip market and are ramping up in the wireless 
networking and DSL markets where there could be big incremental 
growth opportunities.  While the volume appears to be descending 
since the Tuesday earnings announcement, it was still 
substantially (+18%) over the ADV of 3.8 mln shares on Thursday, 
and the price has remained fairly stable since with multiple 
intraday tests of support at $143.  The only dip to $141 came at 
Thursday's close.  Thus a post earnings consolidations seems to 
have taken place without an actual post-earnings depression.  So 
why make the play?  Friday's closing volume showed big spikes 
with an accompanying $6 price increase.  There were 30 block 
trades that day indicating that institutions were hungry for the 
issue.  So long as the market holds and doesn't do a submarine 
imitation (dive for the bottom), BRCM could see the trend 
continue.  Near-term resistance is at $158-$160.  Those figures 
are from pre-selloff bottoms.  Some words of caution though -- 
this is a volatile issue with HUGE time premiums and still trades 
under its 10-dma ($160) and 50-dma ($199.95).  With volume 
trending down and a market that could easily move south, BRCM may 
be getting low on fuel.  Please consider waiting for a dip to 
support (low $140's) before taking a position.  If things get 
really ugly, rock bottom support and the 200-dma is way down at 
$114, so make sure you see the bounce before getting in, and use 
stop orders to protect the downside.

Helping out the sentiment on Thursday was a PaineWebber upgrade 
to Buy from Attractive and a new price target of $230.  Even 
better, while W.R. Hambrecht initiated coverage with a Buy rating 
and a price target of $295 in late March, they upped it to a 
Strong Buy on Wednesday after earnings.  Also, if you are 
thinking "split candidate", you might be right.  While their last 
one (2:1) in early January was announced at well over $250, the 
previous 2:1 split announcement on 1/26/1999 occurred at $126.  
Here we are.  Not only that, but there is a shareholder meeting 
scheduled on April 27th with an agenda item to increase the 
authorized shares from 400 mln to 800 mln.  Put it down as a 
split candidate.

BUY CALL MAY-145*RDW-EI OI= 264 at $25.38 SL=17.75
BUY CALL MAY-150 RDW-EJ OI=2048 at $23.00 SL=16.00
BUY CALL MAY-155 RDU-EK OI= 202 at $20.75 SL=15.00
BUY CALL AUG-150 RDW-HJ OI= 211 at $38.13 SL=27.00
BUY CALL AUG-155 RDU-HK OI= 137 at $35.00 SL=24.50

SELL PUT MAY-115 RDW-QC OI= 226 at $ 5.13 SL=7.25
(See risks of selling puts in play legend)

Picked on Apr 18th at   $152.50     P/E = 395
Change since picked       +0.00     52-week high=$253.00
Analysts Ratings     7-15-1-0-0     52-week low =$ 29.00
Last earnings 04/00   est= 0.16     actual= 0.17 surprise=6% 
Next earnings 07-18   est= 0.17     versus= 0.09
Average Daily Volume = 3.80 mln
/charts/charts.asp?symbol=BRCM


********
INTERNET
********

MERQ - Mercury Interactive Corp. $72.38 (+13.63)(-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
applications.  Mercury Interactive is headquartered in Sunnyvale,
California and has more than 40 offices worldwide.

Looking for a top rebounding candidate?  We'd like to nominate
MERQ.  Mercury fell to $53 early Monday morning and finished the
session with gain of about $18.  For the balance of the week
our play seemed to simply need to catch its breath.  Traders
taking advantage of the move were well rewarded.  So if you
chose to sit this one out, have you missed your chance?  That
would certainly not appear to be the case.  This is a stock that
lost nearly two-thirds of its market cap in a month, and could
be beginning to pick up steam towards its recovery.  As we 
mentioned in Tuesday's update, a pullback to the $71 area would
not have been out of line.  Thursday's bounce off $69.81 could
be setting up to provide us with another entry point for our
play.  The one bug-a-boo at this point, could be the overall
investor sentiment when traders return to work next week.  Many
analysts and market pundits continue to flood the airwaves
concerning a retest of the recent Nasdaq lows.  If that's the
case, then stand back and wait for opportunity's to buy calls.
However with so many folks concerned about another move lower,
we may have the perfect "wall of worry" being built before our
very eyes.  As for MERQ, the company has just completed its 
best quarter in the history of the company, and received five
reiterations and upgrades of a Buy or Strong Buy from analysts.
The news is positive as well.  On Wednesday, Mercury and
Loudcloud Inc, an Internet infrastructure service provider, 
announced an alliance to deliver Internet business stress testing
and performance monitoring services.  Not a big deal, but a plus
for both companies going forward.  Upward momentum through the
$75 level could be considered a good entry point.  A bounce of 
$70 could be considered as well.  At that level keep your
stops close, as there isn't much in the way of support until
the $65 area.

On Thursday, Deutsche Banc Alex Brown's Chief Global Economist
and Investment Strategist Dr. Ed Yardeni said he remains bullish
on the markets, based on multi-disciplinary analysis.  Yardeni
recommends that investors focus on companies with strong
fundamentals, visible earnings growth and attractively valued
shares.  Included in his list of favorites?  MERQ.
  
BUY CALL MAY-65 RQB-EM OI=1283 at $15.50 SL=11.25
BUY CALL MAY-70 RQB-EN OI=  68 at $13.00 SL= 9.75
BUY CALL MAY-75*RQB-EO OI= 455 at $10.50 SL= 7.88
BUY CALL MAY-80 RQB-EP OI= 359 at $ 8.50 SL= 6.00
BUY CALL JUL-70 RQB-GN OI=  49 at $17.75 SL=12.75

SELL PUT MAY-65 RQB-QM OI=  51 at $ 6.13 SL= 8.50
(See risks of selling puts in play legend)

Picked on Apr 16th at    $58.75    PE = 165
Change since picked      +13.63    52 week high=$134.50
Analysts Ratings     10-3-1-0-0    52 week low =$ 11.38
Last earnings 04/00   est= 0.11    actual= 0.10 
Next earnings 07-13   est= 0.12    versus= 0.09
Average daily volume = 1.53 mln
/charts/charts.asp?symbol=MERQ

*****

ARBA - Ariba, Inc. $69.00 (+6.75)

A leading provider of Intranet and Internet based B2B e-commerce
solutions, ARBA enables organizations to automate the procurement
cycle through the company's Operating Resource Management System
(Ariba ORMS).  The recently launched Ariba.com network is a
global B2B e-commerce network that enables buyers and suppliers
of operating resources to automate transactions on the Internet.
Among the company's more notable customers are DuPont, Federal
Express, Chevron and Hewlett Packard.

Ending the near free-fall that began in early March, ARBA made
a quick visit to the underbelly of its 200-dma (now at $66.75)
before rebounding last week.  After announcing better than
expected earnings on April 12th, ARBA dropped to major support
near $50, propelled by the twin demons of post-earnings
depression and weakness in the previously high-flying Internets.
Even with the decline in the NASDAQ, which took the index below
the 3650 support level again on Thursday, ARBA managed to hold
its own and began to develop intraday support at $65.  Volume
has been very strong over the past two weeks, but appears to
be dropping back to more normal levels.  Providing evidence that
the worst may be over for ARBA, declines in price are now coming
on reduced volume and the recoveries are seeing stronger volume.
Below $65, stronger support is seen at $60 and a bounce near
this level would provide a nice entry point.  All we need now
is convincing strength in the Internet sector and ARBA looks
like it is poised for a nice recovery.  Target shooting intraday
dips is risky, but may provide the best entry.  For the more
cautious Internet investor (isn't that an oxymoron?), waiting
for ARBA to break through resistance near $75 may make the most
sense.

In a B2B special issue of the Wall Street Journal on Thursday,
James Pickrel, Senior Analyst with Chase H&Q stated that ARBA is
a Buy-rated stock.  He called the company "a great case study in
taking a core capability and a strong management team and then
building on that to expand the opportunity".  Also on Thursday,
ARBA and Intelligroup announced a strategic Application Service
Provider (ASP) alliance to offer scalable e-commerce
applications targeted to the business needs of companies with
market capitalization under $1 billion.

BUY CALL MAY-65*IUR-EM OI= 344 at $13.38 SL=10.00
BUY CALL MAY-70 IUR-EN OI= 580 at $10.75 SL= 8.00
BUY CALL MAY-75 IUR-EO OI=1613 at $ 8.88 SL= 6.25
BUY CALL MAY-80 IUR-EP OI= 780 at $ 7.38 SL= 5.25

SELL PUT MAY-55 IRU-QK OI= 724 at $ 3.50 SL=5.50
(See risks of selling puts in play legend)

Picked on Apr 23rd at    $69.00     P/E = N/A
Change since picked       +0.00     52-week high=$183.34
Analysts Ratings     9-13-1-0-0     52-week low =$ 15.25
Last earnings 04/00   est=-0.08     actual=-0.06
Next earnings 07-12   est=-0.08     versus=-0.12
Average Daily Volume = 5.16 mln
/charts/charts.asp?symbol=ARBA

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

ADBE - Adobe Systems Inc. $112.63 (+14.81)(-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.

The strong demand for ADBE's products puts it in a good position.
As the Internet grows, so will the demand for the company's
products.  With customers upgrading to new versions of ADBE
products, revenues should continue to expand.  In ADBE's most
recent quarter, the company reported $282 mln in revenues, and
earned 51 cents per share, making it a relative value among
Internet stocks.  ADBE's strong fundamentals helped to buoy the
stock during the recent horror show that left many tech stocks
paralyzed.  Investors capitalized last week by picking up
bargains in the Net stocks.  Many of the strong software stocks
surged last week including ADBE.  There appears to be a dichotomy
forming in the tech sector, investors are slowly accumulating the
top tier tech names, and avoiding the second tier stocks like
they were the plague.  We feel that ADBE will continue to benefit
from the recent market divergence in tech stocks, as investors
move money into those companies with strong fundamentals.  ADBE's
chart has held up relatively well as the stock continues to roll
higher.  ADBE has support just below at $110 and resistance above
at $115.  Watch for the stock to move above resistance on heavy
volume for an entry point.  If your feeling a little more
aggressive, look for the stock to bounce off support and target
shoot to your risk level.

ADBE will hold its Annual Shareholder Meeting this week, on
Wednesday, April 26th.  Investors are voting on the proposal to
increase the amount of authorized shares to 500 mln from 200 mln.
The increased number of shares is a prelude to a stock split.
The announcement of a split could push ADBE above its resistance
levels, positioning the stock to retest its all-time highs.

BUY CALL MAY-110 AXX-EB OI= 286 at $13.13 SL=9.75
BUY CALL MAY-115*AXX-EC OI=2119 at $10.88 SL=8.25
BUY CALL MAY-120 AXX-ED OI= 423 at $ 8.75 SL=6.00
BUY CALL MAY-125 AXX-EE OI= 163 at $ 6.88 SL=5.00

SELL PUT MAY-100 AEQ-QT OI= 131 at $ 5.38 SL=7.50
(See risks of selling puts in play legend)

Picked on Apr 11th at   $119.50    P/E = 58
Change since picked       -6.88    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
/charts/charts.asp?symbol=ADBE

*****

TIBX - Tibco Software $67.88 (+19.56)

Headquartered in Palo Alto, California, TIBCO Software Inc. is a 
leading provider of real-time infrastructure software for e-
business.  TIBCO's products and services enable computer 
applications and platforms to communicate efficiently across 
networks.  The TIB/ActiveEnterprise(TM) product suite facilitates 
the distribution of information and integration of business 
processes by connecting applications to a network through its 
patented technology.  (That's code for B2B enabler.)  TIB 
technology was first used to "digitize" Wall Street and has been 
adopted in diverse industries, including manufacturing, energy, 
telecommunications, and electronic commerce.  TIBCO Software's 
global client base includes Cisco, Yahoo!, NEC, 3Com, Sun 
Microsystems, SAP, Philips, AT&T and AOL/Netscape.  Reuter's owns 
62.5%, while Cisco owns 7.2%.

Ever notice that plumbers are some of the highest paid workmen in 
the world?  It's a job nobody else wants to do.  Such is the case 
with TIBX, who provides the B2B software plumbing that operates 
Ariba's, MySAP.com's, and AltaVista's systems.  Recently, Aether 
Systems, SingleSourceIT (a private group boasting relationships 
with Ingram Micro, HWP, CPQ, ORCL and IBM), and Delta Airlines 
announced they would be deploying TIBX software to run their own 
exchanges too.  Technically, volume driven by fund and 
institutional money remained at roughly double the ADV for most 
of the week, making for impressive gains off Monday's low.  When 
we last updated TIBX, we noted strong support at $45 with 
intraday support at $53 and $57.  With all the buying activity, 
the only dip TIBX took was to $56 late on Wednesday.  So to those 
target shooters aiming at $57, congratulations on a good entry -- 
even more so if you sold at the top ($72.50) on Thursday.  
Anyway, technically TIBX is looking really strong compared to the 
overall market.  Intraday support now rests at $62 with the 10-
dma of $61.06 and a 5-dma of $57.89.  Any of these could be 
retested, but based on Thursday's close of $67 and some after 
hour trades near $70, it's not likely to get to those moving 
averages unless the market turns to retest recent lows.  If the 
market has found a low, the next technical Holy Grail to the 
upside is the 50-dma of $95, but expect some mild resistance at 
$82.  Target shoot to your level of comfort, or wait until TIBX 
moves over $73 and is backed by volume.  That would be just over 
the Thursday's intraday high.

From a company press release reported by PRNewswire, TIBX 
announced on Wednesday it has partnered with Computer Sciences 
Corporation (CSC) to provide Saturn Corporation, a wholly owned 
subsidiary of General Motors (GM), with the real-time, e-business 
integration infrastructure for its Next Generation Retail System.  
Another week, another deal; that's all we ask!  Just a reminder 
too that in the prior week, shareholders voted to increase the 
outstanding shares from 300 mln to 1.2 bln.  It becomes a split 
candidate again once the price gets back over $100.  Earnings are 
not until June and won't affect the play.

BUY CALL MAY-65 PAV-EM OI= 57 at $13.13 SL= 9.75
BUY CALL MAY-70*PAV-EN OI=291 at $10.75 SL= 8.00
BUY CALL AUG-70 PAV-HN OI=439 at $20.75 SL=15.00
BUY CALL AUG-80 PAV-HP OI= 84 at $17.88 SL=13.00 expensive

SELL PUT MAY-50 PAV-QJ OI=112 at $ 2.75 SL= 4.50
(See risks in Naked Put Section)

Picked on Apr 18th at    $61.25     P/E = N/A
Change since picked       +6.63     52-week high=$147.00
Analysts Ratings      3-0-0-0-0     52-week low =$  6.56
Last earnings 03/00   est= 0.00     actual= 0.01 
Next earnings 06-19   est= 0.00     versus= N/A
Average Daily Volume = 1.50 mln
/charts/charts.asp?symbol=TIBX


*******
TELECOM
*******

CMVT - Comverse Technology Inc. $80.06 (+6.13)(-15.31)

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 telecommunications
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.

As telephone companies around the world face increased
competition through deregulation, there is an increasing emphasis
on promoting and providing additional services to customers.
Around 300 telecom providers have selected CMVT to enable
enhanced services, including more than 150 operators in the red
hot digital wireless market.  CMVT's systems enable network
providers to offer their customers services such as wireless,
wireline, and IP telephony, areas that are providing massive
revenue growth for the telecom companies.  Recently, CMVT has
turned its focus to the emerging Wireless Internet sector.  The
company is involved in the development and deployment of an open
Internet based mobile wireless network.  It is expected that by
2003, 700 mln people will access the Internet through wireless
devices.  As the market grows, CMVT is positioning itself to take
full advantage of the boom ahead.  The stock showed continued
strength early last week, as the investors found bargains in the
tech sector.  CMVT lost ground Friday, as the stock drifted lower
into the weekend on very light volume.  The stock established
strong support last Friday at $80.  Watch for a bounce off that
level, or wait for the stock to clear resistance at $85 as an
entry point.

ULCM is a subsidiary of CMVT that provides software for voice,
data, and mobile telecom services.  The stock began trading a few
weeks ago, when CMVT brought the subsidiary public.  The two
stocks trade in unison, watch the action in UCLM as confirmation.

BUY CALL MAY-75 CQV-EO OI=  8 at $14.25 SL=10.50 low OI
BUY CALL MAY-80*CQZ-EP OI=293 at $12.00 SL= 9.00
BUY CALL MAY-85 CQZ-EQ OI=127 at $ 9.63 SL= 6.50
BUY CALL MAY-90 CQZ-ER OI=229 at $ 8.00 SL= 5.75

SELL PUT MAY-70 CQV-QO OI=  4 at $ 7.75 SL=10.25
(See risks of selling puts in play legend)

Picked on Apr 16th at    $73.94    P/E = 69
Change since picked       +6.13    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
/charts/charts.asp?symbol=CMVT

*****

VSTR - VoiceStream Wireless $100.94 (+10.94)(-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.

So far, so good.  Our play in VSTR got off to a great start, 
on Monday and finished the week with a gain of 12%.  As we
mentioned last week, the current trend in the wireless business
is one of consolidation.  The news surrounding recent mergers
of wireless operations between Bellsouth and SBC, Verizon and 
Bell Atlantic and GTE and VOD have kept analysts and traders
buzzing.  This week four analysts pointed to a potential deal
between VSTR and Powertel(PTEL).  VoiceStream needs to fill out
its nationwide mobile telecommunications network to compete
in the market place, and a deal between the two companies could
do just that.  Others suggest VSTR could end up being an 
acquisition target in the consolidating market place.  Until 
recently, the popularity of the wireless business in the U.S.,
among consumers and investors have helped keep the industry
and stock prices moving higher.  The profit taking which turned
into all out selling provided us with a very good opportunity
last week.  As the sentiment softened somewhat on Wednesday and
Thursday, VSTR held its own quite well.  From its low on Monday
to its high Wednesday VSTR moved about 36%.  Although the volume
was very light, the support found near the $98 level, is a plus,
as the Nasdaq and VSTR drifted lower on Thursday.  So we sit at
somewhat of a crossroads.  If broad market sentiment is positive
early next week, VSTR should continue to make up some lost ground.
If not, bounces of $98 and $93 may provide a suitable entry point
as well.  Confirm any bounce with volume prior to placing an
order.  A retest of the Nasdaq's recent lows could make things
tricky.
  
Most of the brokerage firms following VSTR have the company
rated as a Strong Buy.  On Wednesday analyst Michael Rollins
at Salomon Smith Barney reiterated his Buy rating of VoiceStream.
His 18-month price target came in at $165.00 per share. 
     
BUY CALL MAY- 95 UVT-ES OI= 47 at $16.13 SL=11.75
BUY CALL MAY-100*UVT-ET OI=335 at $13.88 SL=10.50
BUY CALL MAY-105 UVT-EA OI=105 at $11.63 SL= 8.25
BUY CALL MAY-110 UVT-EB OI= 56 at $ 9.75 SL= 6.75
BUY CALL AUG-105 UVT-HA OI=155 at $22.38 SL=16.25

SELL PUT MAY- 95 UVT-QS OI=171 at $ 9.13 SL=12.00
(See risks of selling puts in play legend)

Picked on Apr 16th at    $90.00    P/E = N/A
Change since picked      +10.94    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=-1.12    versus=-0.81
Average daily volume = 2.23 mln
/charts/charts.asp?symbol=VSTR


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



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




The Option Investor Newsletter               4-23-2000  
Sunday                                       4 of 5


*****************
CALLS - CONTINUED
*****************

****
MISC
****

GMST - Gemstar Int'l Group $41.69 (+0.56)(-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. 

We're playing GMST on its near-term recovery potential.  Last 
Friday, this gem sparkled in a collapsing market.  Remember the 
Nasdaq was DOWN 355.49 points!  While many other techs were 
still languishing amid the fury of the broad markets, GMST's 
performance implied it was ready to begin its recovery.  Coming 
off a month-long decline that reduced its share price by 65%, it 
appeared the stock hit a bottom at $37.56 during intraday 
trading.  Unfortunately on Monday this week, GMST was blind-
sided by news that its takeover target, TV Guide's (TVGIA), 1Q 
earnings fell 93% due to expenses related to the upcoming 
acquisition.  Despite the rallying markets, GMST lost $2.25 by 
the close.  On the bright side, this downdraft to a mere 
fraction from Friday's bottom provided the more aggressive 
traders with a prime entry points.  As the week progressed, GMST 
established a pattern of higher-lows and made valiant attempts 
to crack the strong opposition at $48.  This is a great sign, 
but technically it'd be even better to see it move through $50 
on 2X or 3X the ADV.  If you're considering an entry into this 
recovery play, intraday support is firming at $42 and $43, but 
stronger at $40.  First-quarter earnings may help generate some 
momentum in the near-term.  The company is expected to report 
in a couple weeks around May 12th.  In the meantime, pay close 
attention to the broad markets to foreshadow the stock's 
ultimate direction. 

Recently concerns about potential antitrust problems of 
Gemstar's merger with TV Guide (TVGIA) has been circulating.  
Last week the companies squelched the rumors with an 
announcement that their merger was on track and still expected 
to close by the 2Q.  GMST also received a rating boost from 
analyst Alan Gould at Gerard Klauer Mattison & Co.  He 
reiterated his Buy rating and issued a $110 target price. 

BUY CALL MAY-35 QLF-EG OI=208 at $10.75 SL=8.00
BUY CALL MAY-40*QLF-EH OI=461 at $ 6.75 SL=4.75
BUY CALL MAY-45 QLF-EI OI=684 at $ 4.50 SL=2.75

Picked on April 16th at  $41.13    P/E = 99
Change since picked       +0.56    52-week high=$107.44
Analysts Ratings      8-0-0-0-0    52-week low =$ 22.50
Last earnings 12/99   est= 0.10    actual= 0.13
Next earnings 05-12   est= 0.14    versus= 0.12
Average Daily Volume = 2.86 mln
/charts/charts.asp?symbol=GMST

*****

DHR - Danaher Corp. $52.94 (+4.88)

Danaher Corporation operates in two business areas: Process/
Environmental Controls and Tools and Components.  The company's 
Tools and Components segment produces and distributes general 
purpose mechanics' hand tools and automotive specialty tools.  
Among the household names they are responsible for are Sears' 
Craftsman line, Allen wrenches, and NAPA hand tools.  The 
Process Controls division, led by Veeder-Root, makes leak 
detection systems for underground storage tanks, as well as
sensors, switches, measurement devices, and communications and
power protection products.

One of the many victims of the selloff in NYSE stocks, DHR
found solid support near $37 in early March, and has been moving
higher since then on the changing sentiment in the broader
markets.  As the DJIA recovered, DHR managed to get back over
its 200-dma (now at $49.25) and after a brief retest a week ago,
looks like it will use this average as support going forward.
Three out of four days last week, the stock saw strong gains
and Thursday's close near the high of the day is encouraging.
Light volume permeated the markets on Thursday and DHR was no
exception, trading just over 300,000 shares.  The intraday
volume picture is much rosier though, as volume ramped up and
DHR gained over $1 in the final 90 minutes.  This late-day
move pushed the stock above the $52 resistance level and
hopefully buyers will continue to propel shares higher next
week.  Look for an intraday dip near support at either $52
or $51 to provide for a better entry, but continuing strength
is also buyable.  DHR tends to follow the trend of the DJIA,
so confirm market strength before jumping on board.

News has been rather sparse for DHR, so lets focus on the
latest earnings.  They were released last Wednesday, and
although stronger than expected, keep an eye out for the
typical post-earnings depression.  Investors have been
exceptionally fickle during this earnings season, and you
don't want to get caught on the wrong side of changing
sentiment.

BUY CALL MAY-50 DHR-EJ OI=  0 at $3.38 SL=1.50 Wait for OI!
BUY CALL MAY-55 DHR-EK OI=  0 at $1.25 SL=0.00 High Risk!
BUY CALL JUN-50*DHR-FJ OI=149 at $5.13 SL=3.00
BUY CALL JUN-55 DHR-FK OI=320 at $2.13 SL=1.00

Picked on Apr 23rd at  $52.94     P/E = 28
Change since picked     +0.00     52-week high=$69.00
Analysts Ratings    6-5-1-0-0     52-week low =$36.44
Last earnings 04/00 est= 0.46     actual= 0.49
Next earnings 07-19 est= 0.52     versus= 0.45
Average Daily Volume =  478 K
/charts/charts.asp?symbol=DHR


*****
LEAPS
*****

By: Mark Phillips
Contact Support

Have you regained your balance yet?  The wild swings of the past
weeks have left even the most seasoned investor feeling a bit
woozy, but hopefully things are ready to calm down...at least a
little.  We are past the hump of Tax Day selling, but the
specter of more interest rate hikes is keeping investors jumpy.
After the past three weeks, investors embraced the pause
provided by the Easter weekend and left early to lick their
wounds.  The VIX has come off the extreme levels seen a week
ago and is now resting at "only" 28.41.  It seems like a
lifetime ago that we were looking at moves this "high" as
buying opportunities.  Speaking of buying opportunities, did
you take advantage of any that were presented over the past
week?  CSCO at $56, QCOM at $100, NXTL at $100, NT at $89, and
EMC at $108, are just some of the bargains we were presented
with recently.  After our binge last week where we added 4 new
LEAP plays, we are taking a brief rest to digest what is on
our plate before moving forward.  As such, there are no new
LEAPS this week, but on the bright side, there are no drops
either.  It is unlikely that the turbulence we have seen is
over yet, so choose your plays and entry points carefully.
Remember that the coming months are typically quiet as
investors head off for vacation.  Take advantage of any
strength provided by the current earnings cycle to take
profits on your winners so you can be ready with cash when
the next attractive entry point appears.


Current Plays

SYMBOL  SINCE     LEAPS         SYMBOL   PICKED   CURRENT  RETURN

EMC    11/07/99  JAN-2001 $ 80  ZOH-AP   $15.38   $60.50   293.37%
                 JAN-2002 $ 90  WUE-AR   $19.00   $63.88   236.21%
GPS    11/07/99  JAN-2001 $ 40  ZGS-AH   $ 5.75   $ 7.63    32.70%
                 JAN-2002 $ 45  WGS-AI   $ 7.88   $10.38    31.73%
IBM    11/07/99  JAN-2001 $100  ZIB-AT   $13.63   $19.63    44.02%
                 JAN-2002 $110  WIB-AB   $16.50   $25.25    53.03%
CSCO   11/14/99  JAN-2001 $ 40  ZCY-AH   $ 9.56   $31.00   224.27%
                 JAN-2002 $ 45  WIV-AI   $11.00   $33.63   205.73%
GE     11/21/99  JAN-2001 $150  ZGR-AU   $16.25   $30.13    85.42%
                 JAN-2002 $150  WGE-AU   $25.50   $42.38    66.20%
NT     11/28/99  JAN-2001 $ 75  ZOO-AO   $22.25   $41.38    85.98%
                 JAN-2002 $ 75  WNT-AO   $30.25   $54.25    79.33%
VOD    12/05/99  JAN-2001 $ 50  ZAT-AJ   $10.75   $ 8.63   -19.72%
                 JAN-2002 $ 50  WHV-AJ   $15.00   $14.00   - 6.67%
TXN    12/12/99  JAN-2001 $110  ZTN-AB   $22.25   $51.25   130.34%
                 JAN-2002 $120  WGZ-AD   $28.50   $59.25   107.89%
NXTL   12/19/99  JAN-2001 $ 90  ZFU-AR   $23.50   $43.25    84.04%
                 JAN-2002 $100  WFU-AT   $27.25   $44.25    62.39%
SUNW   12/19/99  JAN-2001 $ 80  ZJX-AP   $17.63   $25.00    41.80%
                 JAN-2002 $ 90  WJX-AR   $22.00   $31.38    42.64%
CY     01/16/00  JAN-2001 $ 40  ZSY-AH   $ 9.13   $20.13   120.48%
                 JAN-2002 $ 40  WSY-AH   $12.63   $25.13    98.97%
ERICY  01/30/00  JAN-2001 $ 65  ZYD-AM   $19.75   $26.13    32.30%
                 JAN-2002 $ 65  WRY-AM   $27.00   $36.50    35.19%
NSM    02/27/00  JAN-2001 $ 70  ZUN-AN   $18.50   $14.00   -24.32%
                 JAN-2002 $ 70  WUN-AN   $24.25   $22.13   - 8.72%
AOL    03/12/00  JAN-2001 $ 60  ZKS-AL   $14.00   $13.25   - 5.36%
                 JAN-2002 $ 65  WAN-AM   $18.63   $18.50   - 0.70%
AXP    03/12/00  JAN-2001 $130  ZXP-AF   $21.75   $29.63    36.23%
                 JAN-2002 $140  WXP-AH   $28.00   $36.50    30.36%
WM     03/19/00  JAN-2001 $ 25  ZWI-AE   $ 5.00   $ 4.75   - 5.00%
                 JAN-2002 $ 30  WWI-AF   $ 5.38   $ 6.38    18.59%
QCOM   03/26/00  JAN-2001 $150  YQO-AJ   $39.25   $17.75   -54.78%
                 JAN-2002 $160  XQO-AL   $52.88   $29.00   -45.16%
AMD    04/16/00  JAN-2001 $ 70  ZVV-AN   $17.50   $25.38    45.03%
                 JAN-2002 $ 70  WVV-AN   $26.00   $35.00    34.62%
CMGI   04/16/00  JAN-2001 $ 50  ZB -AJ   $21.50   $23.38     8.74%
                 JAN-2002 $ 55  WCK-AK   $27.75   $30.88    11.28%
JDSU   04/16/00  JAN-2001 $ 80  XJU-AP   $27.50   $30.75    11.82%
                 JAN-2002 $ 80  YJU-AP   $39.63   $44.38    11.99%
VSTR   04/16/00  JAN-2001 $ 90  ZTB-AR   $23.88   $34.50    44.47%
                 JAN-2002 $ 90  WWP-AR   $35.00   $46.13    31.80%

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

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

Leap of the Week

CY - Cypress Semiconductor $48.63

Looking for a less expensive way to play the Semiconductors?
CY could be the solution.  Even in the midst of the wild selling
on the NASDAQ, CY has shown excellent relative strength as it
bounces every time it touches the 50-dma (currently at $46.63).
Unlike the SOX Semiconductor Index, which is nearly 10% below
its own 50-dma, CY is not posting lower lows.  With growth in
the Semiconductor industry expected to continue to be strong,
CY is carving out its own niche by making strategic
acquisitions and continuing to introduce cutting-edge products.
Just this past week, the company introduced a new memory
product that is capable of keeping pace with today's high
performance DSPs.  The stock is finding good support at the
50-dma and hasn't violated it on a closing basis since the
current uptrend began in mid-December.  Volume continues to
be an excellent indicator of the near-term direction of CY as
positive moves are accompanied by increasing volume.  The
company released strong earnings this past Tuesday and part
of the weakness on Wednesday and Thursday can probably be
attributed to a slight post-earnings depression.  Look for
continued sector weakness to pull CY down to the 50-dma,
providing an attractive entry point for this winning play.

BUY LEAP JAN-2001 $50.00 ZSY-AJ at $15.25
BUY LEAP JAN-2002 $55.00 WSY-AK at $19.50


New Plays

None

Drops

None



*********
PUT PLAYS
*********

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.

****

DCLK - DoubleClick Inc. $55.44 (-5.13)

DoubleClick is an online advertising firm that offers targeted 
ad delivery using its patented DART technology, a dynamic analysis
tool that collects information on audience behavior and uses
that data to target ad placement.  DART also measures Web traffic
and ad effectiveness.  DoubleClick delivers ads to more than
1,300 sites in its network, including AltaVista and US News
Online.  Doubleclick is expanding its business through merger 
and acquisition.  The company recently acquired software 
firm NetGravity and information provider Abacus Direct.

In a poll conducted by Business Week recently, 57% of the
respondents agreed that the government should pass laws now
for how personal information can be collected and used on the
Internet.  In fact, the first Federal Internet Privacy law, the
Children's Online Privacy Protection Act, took effect last
Friday, April 21st.  The recent government intervention spells
trouble for DCLK.  And it could get worse.  Kevin Ryan, President
of DCLK is scheduled to speak in a session at the US Capitol
next week, Wednesday, April 26th.  Not only does DCLK have to
contend with the debate surround online privacy, the stock has
suffered from a widespread weakness in the Internet group.  In
fact, all of the Internet advertising stocks have suffered
greatly over the past month, including 24/7 (TFSM) and Engage
(ENGA).  While the government intervention is bad for business,
its good for a put play.  The chart for DCLK is getting worse by
the day, the stock is well below its descending 10-dma, at levels
not seen since last fall.  The stock enjoyed a brief rally early
last week, but continued its losing ways as the broader market
weakened.  The stock will find resistance at its 10-day, look for
a bump against that a level as a possible entry point.
Additionally, DCLK established support at $54 and again at $52
last week.  Watch closely for a breakdown below its various
support levels, as the stock could precipitously fall from
there.

BUY PUT MAY-60 TDU-QL OI=1573 at $10.50 SL=7.25
BUY PUT MAY-55*TDU-QK OI= 243 at $ 7.50 SL=5.25

Average Daily Volume = 4.35 mln
/charts/charts.asp?symbol=DCLK

*****

WY - Weyerhaeuser Co $53.50 (-1.13)

Weyerhaeuser is the third-largest U.S. forestry company with 
operations and offices worldwide.  The company primarily grows 
and harvests timber on about 5.7 million acres in the southern 
US and Pacific Northwest with cutting rights on about 33.5 
million acres in Canada.  They also manufacture and sell other 
forest products including pulp, paper, newsprint, and various 
types of boards.  Weyerhaeuser has grown through acquisitions 
and is involved in real estate construction and development.

WY is a plain and simple post-earnings decline play.  On Tuesday 
morning, the company reported that 1Q profits more than doubled.  
The numbers came in at $1.04 p/s versus the lower consensus 
estimate of $0.92.  Weyerhaeuser attributed the significant 
increase to soaring pulp prices, recent acquisitions, and the 
strong paper and housing markets.  Despite the great news and 
rallying broad markets that day, WY added another $1.50 loss 
(2.8%) to its already shrinking share price.  All in all, this 
stock hasn't performed well in the millennium.  It's fallen from 
a peak of $74.50 at the beginning of January to a low of $47.44 
in mid-February.  More recently, there's been no apparent 
interest in an environment where the present sentiment is for 
investors to look at these type of "old economy" stocks as an 
alternative to the cut-down techs.  This makes for a good 
background, however the basis of the play is primarily focused 
on the fact that many stocks slide after announcing earnings, no 
matter how good the news.  And to that end, look for WY to stay 
below $55 and move toward bottom support at $48 and $50.  Since 
we added WY to our put list on Tuesday evening, it's done just 
that.  The stock continued to establish its pattern of lower-
highs and edged itself below $53 during intraday trading.  WY is 
now finding opposition at $52.50, so conservatively look for a 
breakout under this level.  Entries? They can still be found 
intraday on downward bounces off the $55 mark.  In the news last 
week, Weyerhaeuser was named as one of the possible buyers for 
Fletcher Challenge's forestry division.  The New Zealand-based 
division is being sold off for $2.5 bln in cash plus assumed 
debt.  Both companies have decline comment; yet shares of 
Fletcher Challenge have been soaring in New Zealand hinting a 
deal may be close.

BUY PUT MAY-55*WY-QK OI=105 at $3.50 SL=1.75
BUY PUT MAY-50 WY-QJ OI=  5 at $1.63 SL=0.75 low OI

Average Daily Volume = 1.54 mln
/charts/charts.asp?symbol=WY

*****

FIBR - Osicom Technologies $40.00 (+9.56)(-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.

Ok, so we will give FIBR a bounce this $10 bounce this week.
Actually from its low on Monday it was more like a bounce of
$15.75.  Truth is, depending on where you draw your trendline,
it could bounce all the way up to between $65 and $75 and really
not disturb its current slope south.  Was the selling over-done?
Probably so.  But, little if anything has changed that would
suggest an immediate turnaround for Osicom.  The company 
continued to loose money in its most recent quarter.  The IPO
of its Sorrento Networks Unit, that was announced in December,
has apparently been put on hold, and who could blame them.  On
Wednesday Sorrento did announce major enhancements to its GigaMUX
(TM)Metro Dense Wave Division Multiplexing product.  The new
feature will enable speeds of 10 Gigabits per second across 64
wavelengths, giving metro service providers an ultra-scalable
carrier-class terabit optical platform.  The press release from
Sorrento is a nice plus for the company, but enough to turn
things around?  For us to drop this one from our list of puts,
we are going to need to see more than a $15 bounce in a stock
that has fallen $123.  The volume did pick up a little for FIBR
on its way back up, suggesting a near term bottom may have been
put in.  Technically, if buyers continue to come to the rescue,
the $45 area could prove to be a tough nut to crack, while the
$50-$51 mark could be even tougher.  With many of the analysts
talking about a retest of recent lows in the Nasdaq, we would
look for FIBR to join in, should the sentiment in turn sour in
the broad markets. 
 
BUY PUT MAY-45*QFW-QI OI=24 at $13.25 SL=10.00
BUY PUT MAY-40 QFW-QH OI=27 at $ 9.88 SL= 7.00
BUY PUT MAY-35 QFW-QG OI=50 at $ 7.13 SL= 5.00

Average Daily Volume = 476 K
/charts/charts.asp?symbol=FIBR

*****

EK - Eastman Kodak $58.50 (-3.00)

Holding status in our minds as a household name, EK develops,
manufactures and markets a wide range of consumer and commercial
imaging products such as film, photographic paper, processing
services, cameras and projectors.  The company also operates in
the Health Imaging market segment, providing medical films,
chemicals and processing equipment, which are used to capture,
store and process images and information for customers in the
healthcare industry.

Even the rising tide of strength on the DJIA was insufficient to
float EK's little boat.  The steady climb on the "old economy"
index could only halt the slide of the most recognizable photo
company.  After a brief earnings run, assisted by a flight from
tech stocks to value-oriented companies, EK fell to support near
$59 on Tuesday and Wednesday.  On Thursday, when the NASDAQ was
weak and value companies were in favor, EK fell through this
support level and bounced repeatedly at $58, a level which is
beginning to look like support.  This also happens to be the
intersection of the 30-dma and 50-dma.  Volume was low on
Thursday, but there was an increase in the final hour as EK
recovered slightly into the close.  Looking at an intraday
chart, EK is displaying a pattern of dropping to consolidate
at a support level, trying to move up and then breaking down
through that support.  If the pattern holds, look for EK to
move up to resistance near $59 and roll over.  This is a good
trigger for opening new positions, although we wouldn't rule
out a continued decline from Thursday's close.  If EK breaks
through the moving averages mentioned above they will likely
begin to act as resistance, helping to propel the stock towards
its next major support level near $54.  One final note - the
open interest on the May-55 Puts is over 3000 contracts,
indicating the strength of this level as support.

BUY PUT MAY-65 EK-QM OI=  77 at $6.38 SL=4.25
BUY PUT MAY-60*EK-QL OI= 518 at $3.38 SL=1.75

Average Daily Volume = 1.79 mln
/charts/charts.asp?symbol=EK

*****

DIGX - Digex Inc. $75.44 (+27.44)

Digex hosts Web sites and Web-based applications for more than
550 businesses and institutions.  The company also provides
consulting and enterprise services, such as firewall management
and Web site activity reporting.  Digex clients include Forbes,
J. Crew, and Nissan.  Among the company's technology partners are
Cisco Systems, Intel, and Sun Microsystems.  Digex operates two
data centers that house more than 1,300 company-owned and managed
servers.  The company is a publicly traded subsidiary of
Intermedia Communications (ICIX), which controls 98% of Digex's
voting power.

There are now two types of tech stocks, those that will make it,
and those that won't.  Lately, investors are fearing that DIGX
will fall into the latter group.  Competition in the Web-hosting
market is increasing at a rapid pace.  DIGX competes with the
likes of EXDS, the premier Net infrastructure company, and IBM,
who recently joined forces with Qwest to create a nationwide
network of Internet data centers.  Even though business is
booming in the Web-hosting arena, increasing competition means
decreasing profit margins.  In DIGX's case, it could be greater
losses.  Investors have been down right cruel to companies that
continue to lose money like DIGX.  And it looks like the selling
could continue.  We mentioned in the company description above
that ICIX controls 98% of DIGX.  That number fell recently, when
ICIX sold 10 mln shares of DIGX stock.  The ongoing divestiture by
ICIX has investors questioning the future of DIGX.  Traders are
worried that the insiders are selling because business is getting
tougher for DIGX.  We're going to take the cue from the insiders
at ICIX, and look for DIGX to continue its slide.  The stock
enjoyed a relief rally early last week, but faded into the
holiday weekend.  DIGX has major overhead resistance at $80 
and some support at $70.  An aggressive trader might target 
shoot as DIGX bumps against its 10-dma or resistance at $80.  
A breakdown below $70 on heavy volume may provide a more
conservative entry point.  Watch for open interest to increase
before entering the play.

BUY PUT MAY-75*UOM-QO OI=3 at $14.13 SL=10.50 low OI
BUY PUT MAY-70 UOM-QN OI=2 at $10.88 SL= 7.50 low OI

Average Daily Volume = 959 K
/charts/charts.asp?symbol=DIGX

*****

NTPA - Netopia, Inc. $31.50 (-3.38)

Netopia provides a veritable cornucopia of internet connectivity
solutions for small and mid-sized businesses.  From high-speed
internet access gear, such as cable, T1, ISDN, and traditional
modem connections to creating and hosting e-commerce Web sites
and providing real-time collaborations software such as Timbuktu
Pro, NTPA has a little bit of everything.  Through its StarNet
subsidiary, the company develops technology for transmitting
voice over DSL lines.

After announcing strong earnings on Tuesday after the close,
NTPA began to suffer the usual post-earnings depression we are
so familiar with.  Unable to break through resistance at $43,
the decline began at the open on Wednesday; after opening at
$42.63, shares of the company slid downhill for the remainder
of the week, aided by the lack of interest in the tech-heavy
NASDAQ.  Adding to the negative sentiment for the stock going
forward, Thursday's close at $31.50 is below the low posted on
the previous Friday.  This puts NTPA right at support and
should we see further weakness next week, look for a decline to
the next support levels at $26 and then $18.50.  With the NASDAQ
closing below the important 3650 level on Thursday, and the
Internets showing weakness, second-tier stocks like NTPA are
likely candidates for continued selling.  In the absence of
strength in the tech sector, revenue growth and industry
alliances appear insufficient to lift NTPA out of its doldrums
that began in early March.  Although NTPA saw below average
volume on Thursday, this was more likely due to the lack of
NASDAQ volume than the possibility of a bottom forming.  Selling
volume picked up throughout the afternoon as the price continued
to drop.  Resistance is forming near $34.50, and a rebound to
this level would provide a nice entry as sellers return and push
the price lower.

BUY PUT MAY-35*NQD-QG OI=14 at $6.13 SL=4.00
BUY PUT MAY-30 NQD-QF OI= 0 at $4.38 SL=2.50 Wait for OI!

Average Daily Volume = 412 K
/charts/charts.asp?symbol=NTPA

*****

MCOM - Metricom $27.63 (-5.63)

Metricom is a leading provider of wide area mobile data 
communications solutions.  It designs, develops and markets 
wireless network products and services that provide low-cost, 
high performance, easy-to-use data communications that can be 
used in a broad range of personal computer and industrial 
applications.  The Company's networks take advantage of Federal
Communications Commission ("FCC") regulations that permit 
license-free, spread spectrum operation in the 902 to 928 MHz 
frequency band.  Metricom's primary service, Ricochet, provides 
users of portable and desktop computers and hand-held computing 
devices with fast, reliable, portable, wireless access to the 
Internet, private intranets, local area networks ("LANs"), 
e-mail and on-line services for a low, flat monthly subscription 
fee that permits unlimited usage.  Did we mention that Paul 
Allen's Vulcan Venture made a $600 mln investment along with WCOM 
for a 48% and 37% ownership, respectively

We last played MCOM as a put just two months ago when it traded 
at $86.  We should have shorted it in perpetuity!  Yes, their 
losses were narrower than the Street expected by a country mile 
(-$1.15 act vs. -$2.03 est).  However, in their efforts to roll 
out the service in 46 cites by the end of 2001, they have 
announced delays in zoning approvals and utility negotiations in 
one of their larger markets, namely New York.  They have also 
announced that they face a potential component shortage from 
vendors, which would help explain why they just inked a new deal 
with NSM as a chip supplier.  While the MCOM's Ricochet service 
concept (unlimited usage mobile ISP) is a good one in our 
opinion, the slow rollout will delay revenues and thus profits.  
The Street didn't tolerate that concept very well as MCOM lost 
over $6 on Thursday following the announcement.  Not only does 
that part of the story stink, MCOM has been in a technical 
descending channel since February.  Channel support and 
historical support are both at the $22-$23 level.  Resistance is 
up around $38, but we don't think that very likely right now 
given the earnings news.  It has already violated every average 
on the trading screen.  There is still more room to fall, 
especially in a market downdraft.  Look for the post earnings 
depression and fallout to help it along.  It's not all bad news.  
Their CFO bought 200,000 shares in March when the price was 
higher.  However, we'll bet that Pacific crest wishes they hadn't 
issued that Strong Buy rating back on April 4th at $46.  Nor can 
Lehman Bros. be happy about their Buy rating issued on April 
11th.  With Paul Allen and MCIWorldcom owning over 80% of the 
operation though, this could be a long-term winner. . .just not 
right now.  Consider your entry if the price falls below $27 or 
bounces down from $36.  Watch out for the low OI.

BUY PUT MAY-30*MQM-QF OI= 2 at $5.75 SL=3.75 low OI
BUY PUT MAY-25 MQM-QE OI= 0 at $3.88 SL=2.25 Wait for OI!

Average Daily Volume = 1.5 mln
/charts/charts.asp?symbol=MCOM



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

The Option Investor Newsletter               4-23-2000  
Sunday                                       5 of 5


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

Market Terms: After Hours Trading...

Trading stocks "after-hours" has become a popular activity for
those investors who thrive on volatility.  Traders often use the
technique to participate in news-driven events that occur after
the market is closed for the day.  Earnings and merger/takeover
announcements are some of the most common corporate activities
that transpire outside of the customary trading session and now
aggressive investors have a means to speculate on those events
before the general public begins to trade.  Obviously the profits
can be substantial during the volatile periods surrounding major
news but the risks are equally extreme and while the concept of
trading after hours seems attractive, it includes its own array
of problems.  Before you engage in this endeavor it is important
to understand the mechanics of the system and the methods that
skilled traders use to be successful.

In simple terms, "after-hours" trading means that investors are
able to buy and sell stocks before and after normal trading hours.
The New York Stock Exchange is open for trading from 9:30 a.m. to
4:00 p.m. (EST) but investors looking for bargains can now buy or
sell stocks on electronic networks as late as 8:00 p.m. (EST) and
up to an hour before the market reopens the next day.  There have
also been discussions about extended trading hours at the NYSE and
for Nasdaq issues but no firm plans exist at present.

The privilege of after hours trading was previously limited to
professionals and institutions but with the recent growth of
electronic trading, the public now has the same ability.  Even
before the systems were in place, brokerages could in principle
trade whenever they wanted however, the methods of matching
individual orders were very inefficient.  The development of
electronic trading networks made it possible for institutions to
trade stocks without routing the transactions to the floors of the
exchanges and it wasn't long before someone decided they could
avoid the exchanges completely through the use of these networks.

One of the oldest and best-known ECN's is Instinet, a network
operated by Reuters that helps buyers and sellers match their
orders.  Another is Island ECN, a relatively new network that has
also applied to the SEC to become a primary stock exchange.  Now
it is possible to trade virtually at all hours with other people
or institutions connected into the same ECN.  Most systems are
based on computerized trade-matching and the majority of these
networks function as "crossing" markets.  That is, your order is
filled only if it corresponds with another opposing order.  The
obvious problem with this concept is liquidity.  Until the major
exchanges begin 24 hour trading, or everyone uses the same ECN,
the potential number of trading partners will be limited.

For professional traders, the relative absence of a liquid market
presents a number of opportunities.  With most of the ECNs, there
is no common reporting structure thus, prices and volumes on one
network might be significantly different from those on another.
Since only a limited number of traders have access to multiple
ECNs, there is a substantial potential for arbitrage; buying in
one place at one price and selling the same issue simultaneously
on another network for a profit.  The end result of this market
manipulation is widened spreads, irregular trading, and a greater
probability that the average investor will lose money in an
"after-hours" transaction.

With the incredible advancements in trading technology, it's only
natural that the public would demand equal access to information
and techniques used by professionals.  Regrettably, we may not be
ready to assume the obligations and that come with that ability.
In fact, expanded market hours may not be the blessing that some
expect, only another hazard in today's stressful life. 

Good Luck!


SUMMARY OF PREVIOUS PICKS
*****
NOTE: Using Margin doubles the listed Monthly Return! 

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

RAMP   21.09  20.19   APR  17.50  6.00  *$  2.41  13.9%
R      24.63  22.19   APR  20.00  5.50  *$  0.87   9.9%
PAIR   19.44  21.69   APR  15.00  4.88  *$  0.44   6.6%
FSI    15.63  16.31   APR  15.00  1.25  *$  0.62   6.2%
PRGS   23.44  20.13   APR  20.00  4.25  *$  0.81   6.1%
INSUA  33.06  33.56   APR  30.00  3.88  *$  0.82   6.1%
CRCL   27.63  26.63   APR  22.50  6.25  *$  1.12   5.7%
ELIX   26.00  20.00   APR  20.00  6.88   $  0.88   5.0%
TRMB   24.75  25.19   APR  20.00  5.63  *$  0.88   5.0%
R      22.69  22.19   APR  17.50  5.75  *$  0.56   4.8%
VANS   16.13  14.88   APR  15.00  1.75   $  0.50   3.8%
PXD    10.50   9.56   APR  10.00  1.13   $  0.19   2.9%
COB    14.13   9.31   APR  10.00  5.00   $  0.18   1.2%
MUEI   14.50  11.00   APR  12.50  2.81   $ -0.69   0.0%
POSS   12.56   8.50   APR  10.00  3.25   $ -0.81   0.0%

MATK   15.50  16.63   MAY  12.50  4.13  *$  1.13   7.2%
UGLY    7.50   8.00   MAY   7.50  0.50  *$  0.50   6.2%
ANET   10.56  10.44   MAY   7.50  3.63  *$  0.57   6.0%
PSSI    9.13   8.22   MAY   7.50  2.19  *$  0.56   5.8%
APC    35.81  38.34   MAY  35.00  2.88  *$  2.07   5.5%
LPNT   16.38  17.00   MAY  15.00  2.25  *$  0.87   5.4%
CAR    20.81  23.13   MAY  20.00  1.94  *$  1.13   5.2%
PIR    10.50  10.81   MAY  10.00  1.00  *$  0.50   4.6%
NUHC   22.13  17.13   MAY  17.50  6.00   $  1.00   3.8%
MRL    26.88  24.75   MAY  25.00  3.25   $  1.12   3.4%
DGX    44.50  53.63   MAY  40.00  6.00  *$  1.50   3.4%
BSX    21.75  24.31   MAY  20.00  2.50  *$  0.75   3.4%
CNJ     8.13   6.25   MAY   7.50  1.50   $ -0.38   0.0%

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

Comments:

This week's recovery offered a small reprieve with many of our
portfolio issues showing new signs of life.  A number of the 
positions that were previously closed have future potential but
the broad market technicals are still fairly bearish and it
remains to be seen if the downtrend has ended.  For small-cap
issues, the outlook is slightly more favorable as the Russell
2000 is nearing support and the hammer candlestick on a weekly
chart could mean we are going to move sideways at the very least.
Keep your fingers crossed and a close watch on your exit points.

Positions Closed:

THDO, IARC, ESCM, BYND, RMII, CRAY, MPPP, MAIL, SCUR, CYOE, CYCH,
AND (2), EPTO (2), FSII, IGEN, TLXN, BIDS, CBSI, .



NEW PICKS
*********

Sequenced by Company
*****

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

ACF    17.63  MAY  15.00  ACF EC  3.13 170  14.50   3.4%   3.4%
BBBY   39.06  MAY  32.50  BHQ EZ  8.25 240  30.81   5.5%   5.5%
IM     18.88  MAY  17.50   IM EW  2.25 539  16.63   5.2%   5.2%
MATK   16.63  MAY  12.50  KQT EV  4.75 23   11.88   5.2%   5.2%
SPGLA   7.81  MAY   7.50  SQE EU  1.19 350   6.62  13.3%  13.3%
SPLH   12.06  MAY  10.00  QRX EB  2.69 50    9.37   6.7%   6.7%
WWFE   15.63  MAY  12.50  UWF EV  3.88 35   11.75   6.4%   6.4%


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

SPGLA   7.81  MAY   7.50  SQE EU  1.19 350   6.62  13.3%  13.3%
SPLH   12.06  MAY  10.00  QRX EB  2.69 50    9.37   6.7%   6.7%
WWFE   15.63  MAY  12.50  UWF EV  3.88 35   11.75   6.4%   6.4%
BBBY   39.06  MAY  32.50  BHQ EZ  8.25 240  30.81   5.5%   5.5%
IM     18.88  MAY  17.50   IM EW  2.25 539  16.63   5.2%   5.2%
MATK   16.63  MAY  12.50  KQT EV  4.75 23   11.88   5.2%   5.2%
ACF    17.63  MAY  15.00  ACF EC  3.13 170  14.50   3.4%   3.4%


Company Descriptions

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


*****

ACF - AmeriCredit $17.63  *** Trading Range Breakout? ***

AmeriCredit is a national consumer finance company specializing
in purchasing and servicing automobile loans.  Using its branch
network and strategic alliances with select auto groups and
banks, AmeriCredit purchases loans made by franchised and select
independent dealers to consumers who are typically unable to
obtain financing from traditional sources.  Their history of
improving asset quality and strong financial performance in a
rapidly growing market can be attributed to its use of technology
and sophisticated risk management techniques.  Last week, ACF 
announced a record 66% increase in net income and a 41% increase
in EPS, due to record loan origination volume and increases in 
loan pricing during the quarter.  AmeriCredit has traded in a
range from $11 to $18 over the last two years.  The latest rally
off the March low has been supported by heavy volume suggesting
a new high is likely - market permitting.  We remain conservative
and favor an entry point near the 150 dma.

MAY 15.00 ACF EC Bid=3.13 OI=170 CB=14.50 RC=3.4% RNC=3.4%

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

*****

BBBY - Bed Bath & Beyond  $39.06  *** Breakout! ***

Bed Bath & Beyond sells domestics merchandise and home furnishings
through 189 stores.  Their merchandise includes bed linens and 
related services, bath items, kitchen textiles, kitchen items, 
basic housewares, and home furnishings.  BBBY's end-of-March rally
was due to posting a fourth quarter EPS of $0.34 vs $0.24, beating
estimates by $0.04.  This performance reflects the addition of new
superstores and higher same store sales and led CS First Boston to
initiate coverage with a new Buy.  The stock broke out above its
stage III top, suggesting a new up-trend is likely.  We favor a
cost basis below technical support.

MAY 32.50 BHQ EZ Bid=8.25 OI=240 CB=30.81 RC=5.5% RNC=5.5%

Chart =
 /charts/charts.asp?symbol=BBBY
*****
IM - Ingram Micro  $18.88  *** Stage II Breakout? ***

Ingram Micro is the world's largest wholesale provider of technology 
products and services.  Ingram Micro's key business units deliver
fulfillment and distribution, product acquisition and selection,
supply-chain automation and programs, as well as eProcurement.
Ingram Micro has been ranked No. 41 on the prestigious Fortune
500 list, the highest ranking by a Southern California company
for revenue in 1999.  On Monday, Ingram announced it was selected
as the fulfillment engine for 3Com Corp.'s business-to-consumer 
e-commerce Web site, Buy Direct.  Ingram has now broken above a
stage I basing formation on heavy volume with the first test of 
resistance expected near $23.  The first level of technical 
support starts around $15.50 and earnings are due Wednesday.  

MAY 17.50 IM EW Bid=2.25 OI=539 CB=16.63 RC=5.2% RNC=5.2%

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

*****

MATK - Martek Biosciences  $16.63  *** Long-term Play ***

Martek develops, manufactures and sells products from microalgae. 
The company's products include: specialty, nutritional oils for 
infant formula, nutritional supplements and food ingredients; 
high value reagents and technologies to visualize molecular 
interactions for drug discovery and development and; new, powerful
fluorescent markers for diagnostics, rapid miniaturized screening,
and gene and protein detection.  Martek gained attention after a 
favorable article on its infant formula nutrients in Developmental
Medicine & Child Neurology.  A new license agreement with Abott
Labs (ABT) relating to the use of long-chain polyunsaturated fatty
acids in infant formula quickly followed.  Recently, a new patent 
establishes Martek as the one of the first companies with ability 
to identify and use valuable genes in algae.  The technicals remain
bullish as the stock continues a stage II climb off of last year's
double-bottom formation.

MAY 12.50 KQT EV Bid=4.75 OI=23 CB=11.88 RC=5.2% RNC=5.2%

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

*****

SPGLA - Spiegel $7.81  *** Stage I Base ***

Spiegel is an international specialty retailer that offers
merchandise and credit services through a merchandising segment
and a bankcard segment. It's merchandising operations are
comprised of it's Eddie Bauer, Spiegel and Newport News
subsidiaries, which distribute apparel, home furnishings and other 
merchandise through catalogs, e-commerce sites and retail stores.
Their bankcard business markets various MasterCard and Visa
programs nationwide through First Consumers National Bank (FCNB).
Spiegel reported a strong fourth quarter with earnings increasing
80%.  The company is gaining the attention of analysts with new 
coverage and Eddie Bauer has opened several new stores.  The 
stock has been in accumulation since the beginning of the year 
forming a typical stage I base.  A reasonable entry point for 
those with a long-term bullish outlook.

MAY 7.50 SQE EU Bid=1.19 OI=350 CB=6.62 RC=13.3% RNC=13.3%

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

*****

SPLH - Splash Technology $12.06  *** Speculative ***

Splash Technology develops, produces and markets color servers 
that provide an integrated link between desktop computers and 
digital color laser copiers and large format printers, enabling 
such devices to provide high quality, high speed, networked color
printing.  These hybrid systems support multiple uses including 
image scanning, image manipulation, printing and photocopying.
Last week SPLH reported record 1st quarter earnings, posting an
EPS of $0.15 vs. 1999's EPS of $0.13.  Sales increased 47% over 
last year and Splash's CEO announced they are raising their 
revenue growth target for the year from 25% to 30%.  Splash's
correction appears to be ending, and the technicals suggest a
continued sideways trend is probable.  A reasonable entry point
for conservative investors with a long-term outlook.

MAY 10.00 QRX EB Bid=2.69 OI=50 CB=9.37 RC=6.7% RNC=6.7%

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

*****

WWFE - World Wrestling  $15.63  *** Down, but not Pinned! ***

World Wrestling Federation Entertainment is engaged in the
development, production and marketing of television programming
and live events, and the licensing and sale of branded consumer
products featuring the World Wresting Federation brand.  The
hype, the noise...is it real?  Does it matter?  No, just show
us the money!  NBC is ponying up $30 million to help finance 
WWFE's football league, the XFL.  This I just have to see...
hmmm, maybe that's the idea?  USA cable has jumped off the
ropes with a lawsuit in a full body slam to stop Viacom and 
CBS's attempt to lure WWFE's highly rated programming to the
CBS-owned TNN cable channel. On the positive side, the WWF has
announced new distribution agreements with the largest "pay"
television systems in Germany and France.  The stock appears to
be forming the right-shoulder of a H-N-S bottom formation, which
has bullish implications.  We favor a cost basis below the March
low and swear it is real! Honest.

MAY 12.50 UWF EV Bid=3.88 OI=35 CB=11.75 RC=6.4% RNC=6.4%

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



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

Will return next weekend!



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

Stock Buying Basics: Fundamental Analysis...

Last weeks article on "old economy" stocks prompted a number of
readers to question the value of fundamentals-based investing.
From today's perspective, the present is much different from the
past.  Markets are now computerized, block traders dominate the
exchanges and individual investors are largely ignored.  They
have been replaced by huge mutual funds to which they have given
their life savings.  Most people believe that to be successful,
you must make decisions differently these days.  They regard the
strategies of the past as relics for historians with little or
no valuable insight concerning the market's current performance.
In reality, not much has really changed and the "Black Friday"
sell-off has prompted a number of experts to review the basics
of value investing.

Warren Buffett of Berkshire Hathaway explains the concept best,
"Evaluating securities and businesses for investment purposes
has always involved a mixture of qualitative and quantitative
factors."  At one extreme, the analyst exclusively oriented to
qualitative factors would say, "Buy the right company (with the
right prospects, inherent industry conditions, management, etc.)
and the price will take care of itself."  On the other hand, the
quantitative spokesman would say, "Buy at the right price, and
the company (and stock) will take care of itself."  In the world
of the stock market, money can be made with either approach and
a combination of both may offer the best balance in a portfolio.

The first step in examining the fundamental factors in a company
(net asset value, working capital, price-to-earnings ration, debt
to equity ratio etc.) is to identify the minimum criteria that
determines a favorable characteristic in each specific category.
A well known expert on fundamental analysis, Benjamin Graham made
the following list of attributes of an undervalued stock.  In his
list, criteria 1 through 5 measure risk;  while 6 and 7 establish
financial soundness; and 8 through 10 show a history of stable
earnings.  Any company that meets 7 out of the 10 criteria is
considered undervalued and a potential candidate for a long-term
portfolio holding.

1. An earnings-to-price yield (reverse of P/E ratio) double the
   current AAA bond yield.  If the AAA bond yield is 6%, the
   earnings yield should be 12%.
2. A price-to-earnings ratio that is 40% of the highest average
   P/E ratio achieved by the shares in the most recent 5 years.
3. A dividend yield of 2/3 the AAA bond yield. Stocks that lack
   either a dividend or current profits are eliminated here.
4. A stock price that is 2/3 the tangible book value per share.
5. A stock price that is 2/3 the net current asset value or the
   net quick liquidation value.
6. Total debt that is lower than the tangible book value.
7. A current ratio of 2 or more. This is a measure of liquidity,
   or a company's ability to pay its debts from income.
8. Total debt of no more than the net quick liquidation value.
9. Earnings that have doubled in the most recent 10 years.
10.Earnings that have declined no more than 5% in 2 of the past
   10 years.

Some of the criteria in Graham's list are more important to
certain types of investors than others.  Depending on a trader's
risk/reward attitude (income, safety, growth), he can select
those elements that best achieve future goals and give heavier
weighting to those valuation attributes that primarily define
his investing style.

Good Luck!

                      *** WARNING!!! ***
Occasionally a company will experience catastrophic news causing
a severe drop in the stock price. This may cause a devastatingly
large loss which may wipe out all of your smaller gains. There is
one very important rule; Don't sell naked puts on stocks that you
don't want to own! It is also important that you consider using
trading STOPS on naked option positions to help limit losses when
the stock price drops. Many professional traders suggest closing
the position when the stock price falls below the sold strike or
using a buy-to-close STOP at a price that is no more than twice
the original premium from the sold option.


SUMMARY OF PREVIOUS PICKS 
*****

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

PAIR   19.44  21.69   APR  15.00  0.56  *$  0.56  27.3%
UPR    14.50  16.81   APR  12.50  0.56  *$  0.56  18.6%
BELM   16.44  15.50   APR  12.50  0.25  *$  0.25  15.3%
ADLT   18.75  17.25   APR  12.50  0.44  *$  0.44  15.2%
TLCM   30.25  24.31   APR  22.50  0.50  *$  0.50  11.1%
SEM    17.81  17.88   APR  15.00  0.31  *$  0.31   7.3%
NUHC   17.56  17.13   APR  12.50  0.31  *$  0.31   7.1%
TLCM   32.44  24.31   APR  22.50  0.44  *$  0.44   6.9%
CDT    34.31  28.25   APR  25.00  0.56  *$  0.56   6.6%
SVGI   30.06  25.63   APR  22.50  0.38  *$  0.38   6.5%
MLT    30.00  21.19   APR  22.50  0.44   $ -0.87   0.0%

ANLY    9.81  11.13   MAY   7.50  0.38  *$  0.38  14.1%
PPDI   15.56  16.56   MAY  12.50  0.56  *$  0.56  13.1%
LPNT   16.38  17.00   MAY  15.00  0.81  *$  0.81  11.8%
KR     19.06  17.69   MAY  17.50  0.75  *$  0.75   9.6%
RDC    26.69  27.63   MAY  22.50  0.63  *$  0.63   7.7%
CQ     19.75  22.06   MAY  15.00  0.38  *$  0.38   7.6%
SUPX   30.06  28.00   MAY  17.50  0.69  *$  0.69   7.5%
CYBX   23.81  20.75   MAY  17.50  0.50  *$  0.50   6.9%
VTS    28.06  22.75   MAY  20.00  0.56  *$  0.56   6.6%
VANS   17.06  14.88   MAY  15.00  0.56   $  0.44   6.0%
AFWY   20.06  18.25   MAY  17.50  0.38  *$  0.38   5.7%

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

Comments:

This week the "Bear" rested and although it isn't clear if he is
done shredding the market, there are some signs of a new bottom
forming.  Regrettably, the damage was severe but a number of the
previously closed positions recovered under the guise of Murphy's
Law.  Issues such as Coyote Network (CYOE) rebounded sharply
from oversold conditions and many other stocks are beginning to 
follow that pattern.  As we move into the next expiration cycle,
keep your fingers crossed and a watchful eye on your exit points.

Positions Closed:

MADGF, SPNW, INSO, SCUR, PCMS, MCRE, AMTD, EGRP (2), ZONA, ISIP,
CYOE (2), CONV, GADZ, RSLC, PMRY, OXGN, CD. 



NEW PICKS
*********

Sequenced by Company
*****

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

ACF    17.63  MAY  15.00  ACF QC  0.75  122  14.25  14.5%
BBBY   39.06  MAY  27.50  BHQ QY  0.50  178  27.00   6.0%
JAKK   23.75  MAY  20.00  UFF QD  0.88  0    19.12  13.3%
LYNX   20.88  MAY  12.50  ULX QV  0.50  5    12.00  10.7%
OCR    14.31  MAY  12.50  OCR QV  0.50  105  12.00  11.3%
PAIR   21.69  MAY  17.50  PQG QW  0.50  883  17.00  10.0%
TOS    32.06  MAY  30.00  TOS QF  0.75  48   29.25   6.5%


Sequenced by ROI  
******

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

ACF    17.63  MAY  15.00  ACF QC  0.75  122  14.25  14.5%
JAKK   23.75  MAY  20.00  UFF QD  0.88  0    19.12  13.3%
OCR    14.31  MAY  12.50  OCR QV  0.50  105  12.00  11.3%
LYNX   20.88  MAY  12.50  ULX QV  0.50  5    12.00  10.7%
PAIR   21.69  MAY  17.50  PQG QW  0.50  883  17.00  10.0%
TOS    32.06  MAY  30.00  TOS QF  0.75  48   29.25   6.5%
BBBY   39.06  MAY  27.50  BHQ QY  0.50  178  27.00   6.0%


Company Descriptions

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


*****

ACF - AmeriCredit $17.63  *** Trading Range Breakout? ***

AmeriCredit is a national consumer finance company specializing
in purchasing and servicing automobile loans.  Using its branch
network and strategic alliances with select auto groups and
banks, AmeriCredit purchases loans made by franchised and select
independent dealers to consumers who are typically unable to
obtain financing from traditional sources.  Their history of
improving asset quality and strong financial performance in a
rapidly growing market can be attributed to its use of technology
and sophisticated risk management techniques.  Last week, ACF 
announced a record 66% increase in net income and a 41% increase
in EPS, due to record loan origination volume and increases in 
loan pricing during the quarter.  AmeriCredit has traded in a
range from $11 to $18 over the last two years.  The latest rally
off the March low has been supported by heavy volume suggesting
a new high is likely - market permitting.  We remain conservative
and favor an entry point near the 150 dma.

MAY 15.00 ACF QC Bid=0.75 OI=122 CB=14.25 ROI=14.5%

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

*****

BBBY - Bed Bath & Beyond  $39.06  *** Breakout? ***

Bed Bath & Beyond sells domestics merchandise and home furnishings
through 189 stores.  Their merchandise includes bed linens and 
related services, bath items, kitchen textiles, kitchen items, 
basic housewares, and home furnishings.  BBBY's end of March rally
was due to posting a fourth quarter EPS of $0.34 vs $0.24, beating
estimates by $0.04.  This performance reflects the addition of new 
superstores and higher same store sales and led CS First Boston to
initiate coverage with a new Buy.  The stock recently broke above
its stage III top, suggesting a new uptrend is likely.  We favor a
cost basis below technical support.

MAY 27.50 BHQ QY Bid=0.50 OI=178 CB=27.00 ROI=6.0%

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

*****

JAKK - Jakks Pacific  $23.75  *** Toys Are Fun! ***

Jakks Pacific designs, develops, produces and markets toys and
related products.  Their principal products are action figures
and accessories featuring licensed characters, principally from
the World Wrestling Federation; Road Champs die-cast collectible
and toy vehicles and Remco toy vehicles and role-play toys and
accessories; Child Guidance infant and pre-school electronic
toys; and fashion and mini dolls and related accessories.  Jakks
customers include toy and retail chain stores, department stores,
toy specialty stores and wholesalers.  The Road Champs products
are also sold to smaller hobby shops, specialty retailers and
corporate accounts, among others.  The company's five largest
buyers are Toys 'R Us, Wal-Mart, Kay-Bee Toys, Kmart, and Target.
Jakks has a broad niche in the industry and distributes proven
product lines.  The company also has an immaculate balance sheet.

MAY 20.00 UFF QD Bid=0.88 OI=0 CB=19.12 ROI=13.3%

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

*****

LYNX - Lynx Therapeutics  $20.88  *** Bottom Fishing! ***

Lynx Therapeutics develops unique, proprietary technologies
aimed at handling and/or analyzing, simultaneously, the DNA
molecules or fragments in complex biological samples.  Their
applications include the identification of genes differentially
expressed between samples, characterization of gene expression
within a sample, and a highly efficient means for genotyping
groups of genetic markers or nucleotide polymorphisms (SNPs),
simultaneously, against very large numbers of genomes.  Lynx's
technologies have already started to generate revenue for the
company through service agreements with a number of large drug
companies.  Lynx's shares, as well as those of other biotechs,
took a hit in March when President Bill Clinton and British
Prime Minister Tony Blair said scientists worldwide should have
free access to research on the mapping of human genes.  Then the
broad market correction took its toll and now most of the issues
are back where they began.  Fortunately, our cost basis is near
a long-term technical base.

MAY 12.50 ULX QV Bid=0.50 OI=5 CB=12.00 ROI=10.7%

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

*****

OCR - Omnicare  $14.31  *** Retail Drugs! ***

Omnicare is a provider of pharmacy services to long-term care
institutions such as skilled nursing facilities, assisted living
communities and other institutional health care facilities.  The
company's Pharmacy Services segment provides distribution of
pharmaceuticals, related pharmacy consulting, data management
services and medical supplies to long-term care facilities.  The
CRO Services segment provides comprehensive product development
services globally to client companies in the pharmaceutical,
biotechnology, medical devices and diagnostics industries.
Recent upgrades from CIBC World Markets and CSFB have boosted the
gains in the bullish trend.  The question is whether the issue
can move through the resistance area near $14.  In any case, the
probabilities favor a continuation of the current up-trend.

MAY 12.50 OCR QV Bid=0.50 OI=105 CB=12.00 ROI=11.3%

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

*****

PAIR - PairGain  $21.69  *** ADCT Merger Play ***

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

MAY 17.50 PQG QW Bid=0.50 OI=883 CB=17.00 ROI=10.0%

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

*****

TOS - Tosco  $32.06  *** Oil Sector Hedge ***

Tosco Corporation (Tosco) is an independent refiner and marketer
of petroleum products.  Tosco, through five major facilities
consisting of eight refineries, processes crude oil, feedstocks
and blendstocks into various petroleum products, chiefly light
transportation fuels (gasoline, diesel, and jet fuel) and heating
oil.  Tosco sells unbranded refined petroleum products to wholesale
purchasers.  Their wholesale sales of gasoline and distillates are
made to large end users, retailers, and independent marketers that
serve unbranded markets, including retail, industrial, commercial,
agricultural and governmental classes of trade.  Tosco also engages
in commercial activities related to refining, distribution, and
marketing businesses.  Tosco also operates convenience stores in
its retail system, which includes more than 5,000 retail marketing
locations operating under the BP, Exxon, 76 and Circle K names.
Simply a conservative issue with a favorable chart in a bullish
industry group.

MAY 30.00 TOS QF Bid=0.75 OI=48 CB=29.25 ROI=6.5%

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



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

Title: Blue-Chips Save The Day!
By: Ray Cummins

Wednesday, April 19

Equity markets consolidated today, led by a decline in technology
bellwethers.  The Nasdaq Composite took a much-needed breather,
closing down 87 points at 3706.  The Dow Industrials dropped in
sympathy, losing 92 points to end at 10,674.  The S&P 500 index
fell 14 points to 1427.  Nasdaq trading volume hit 1.75 billion
shares with advances outpacing declines 2-to-1.  Volume on the
NYSE was relatively light at 1 billion shares with declines ahead
of advances 1,479 to 1,472.  The 30-year U.S. Treasury bond edged
up 28/32, pushing the yield down to 5.85%.  The 10-year note rose
14/32, to yield 5.99%.


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

Johnson & Johnson  JNJ   LJAN85/MAY85C  $7.50   debit  LEAPS/CC's
Sepracor           SEPR  LJAN60/MAY90C  $28.00  debit  LEAPS/CC's
Landry's Seafood   LNY   OCT7C/MAY7C    $0.75   debit  calendar

Our new LEAPS/CC's positions were less than cooperative during the
docile morning session.  Sepracor dropped slightly before moving
to a higher trading range and the target price was unavailable.
Johnson & Johnson traded in a relatively small range and the
neutral spread did not benefit from the movement.  Once again, the
opening price was higher than our target entry.  Landry's was the
most favorable issue of the group with our bullish calendar spread
offering an opening debit of $0.75 in the first hour of trading.


Portfolio plays:

Investors lost interest in equities after two days of gains as
worries about the future revenues of America's leading companies
overshadowed a number of upbeat earnings reports.  Stocks that
propelled the market higher during the recent recovery succumbed
to profit-taking while those that announced poor revenues were
sold in droves.  The Dow industrials languished amid declines in
Intel (INTC), International Business Machines (IBM) and Hewlett
Packard (HWP) and the light trading volume exaggerated both the
volatility and the size of the downside moves.  The trend also
shifted from computer and Internet stocks to drug and biotech
issues after favorable profit reports from the industry-leading
companies.  In the broad market, healthcare, trucking and footwear 
issues moved higher, while semiconductor, retail and hardware
issues slumped.  Transportation stocks also rallied after several
airlines reported betted-than-expected quarterly results.  From a
technical standpoint, most analysts had expected stocks to retreat
much more significantly and the prevalent belief is the markets
will eventually fall back to retest last week's lows before moving
higher.
 
In our portfolio we had some exciting news.  Apple Computer (APPL)
reported a second quarter profit of $0.88 per share, beating First
Call estimates by $0.07.  Company officials also announced a 2 for
1 stock split and with the morning momentum, the stock hit a high
of $130, providing a profitable exit opportunity for those of you
in the bullish debit spread.  Of course our spread position was
closed last week for a small loss but it was nice to see Murphy's
Law in action.  Boston Communications Group (BCGI) climbed 36% to
$9.88 after reporting a first quarter profit of $0.06 per share,
which beat the estimates by $0.03.  The bullish diagonal spread
has offered a number of favorable profit opportunities and today's
rally pushed the overall return to a 400% return in three months.

Of the plays that remain open, our calendar spreads have provided
the best returns and the leaders in that section continue to be
Abbott Labs (ABT) and Halliburton (HAL).  Both positions traded in
profitable ranges during the session and we expect them to return
favorable closing premiums through Thursday's option expiration.
As you might expect, the Straddles group has also performed above
expectations and the newest winner in that section is MasTec (MTZ).
The new debit straddle provided a second exit opportunity today
with the position credit reaching $15.50.  The initial cost of the
straddle was 13.00.  If you haven't closed the Ubid (UBID) play,
consider exiting the straddle before the stock recovers from the
recent sell-off.  The current credit for the straddle offers a 50%
profit for just one month in the position.


Thursday, April 20
  
Classic "old-economy" issues rose to the occasion today, posting
impressive gains on strong earnings and bullish forecasts.  The
Dow Jones Industrial Average rose 169 points to close at 10,844.
In the background for most of the session, technology stocks fell
driving the Nasdaq Composite 62 points lower to 3643.  The S&P 500
Index recovered 7 points to end at 1434.  Trading volume was light
on the first day of Passover with 1.42 billion shares exchanged on
the Nasdaq.  Big Board trading was also thin at 894 million shares.
Twenty-two of the 30 Dow stocks moved higher and breadth on the
New York Stock Exchange was positive, with advances edging declines
4-to-3.  Nasdaq declines outpaced advances 2085 to 2032.  The bond
market closed early with the 30-year Treasury up 9/32, bid at 105
28/32, pushing its yield down to 5.82%.  It was the bond market's
third straight gain, aided by the government's repurchase of over
$2 billion of outstanding bonds.

Industrial stocks enjoyed a nice rally today, erasing much of last
Friday's devastating loss.  A slew of bullish earnings reports
lifted blue-chips higher while profit-taking weighed on technology
stocks.  Thursday's gains in the Dow were boosted by earnings news
from McDonald's (MCD), United Technologies (UTX) and Boeing (BA).
Revenues and future forecasts continue to be upbeat with most of
the companies in the S&P 500 exceeding expectations.  The earnings
driven recovery has helped temper the bearish near-term outlook in
the industrial average and a number of technical indicators are
now favorable.  For the Nasdaq Composite Index, the story is quite
different.  After climbing more than 470 points early in the week,
the technology industry lost 150 (combined) points on Wednesday and
Thursday.  The market's most popular issues led the way with Cisco
(CSCO), Intel (INTC), and Oracle (ORCL) all moving lower.  With
today's continued slump, many analysts are again suggesting the
Nasdaq will retest its recent lows before beginning any sustained
recovery.

Today's option expiration marks the end of a very active month in
the Spreads Section.  While the majority of our positions survived
the recent correction to eventually profit, many of those plays
were closed early to protect small gains or prevent significant
losses.  The greatest number or early exits came in the long-term
portfolios; diagonal spreads and LEAPS/CC's however, we were also
quick to exit any spreads that advanced into profitable territory.
While this is generally not our approach for the more conservative
positions, it was the most prudent method to use during the first
few days of the record-setting slide.  It is interesting to note
that after all of the volatility, the Credit Spreads section had
only one issue that finished outside of the maximum profit range.
Of course that portfolio was also a target for early-exits so the
profits were very limited.  The calendar spreads section finished
in top form with each of this month's positions offering positive
returns.  Even the Legato (LGTO) disparity play provided a target
profit of 20%.  (Regrettably, that issue also became the biggest
loser in the Diagonal Spreads portfolio).

Although we failed to accept the bearish trend until its latent
stages, the section offered a number of plays that profited from
the downward movement.  In fact, there were no losing positions in
the call-credit portfolio and the incredible volatility produced
a 100% success rate in our Straddles section.  Unfortunately, the
majority of bullish debit positions came under attack at one point
or another and very few of these plays were held to expiration.
Those that went the distance (AMD and XRX are two examples) were
simply too far above the sold strike to have a serious chance of
loss.  Plays that have been in the portfolio for a longer period
of time also fell victim to the hatchet.  At some point, without
any necessary adjustments, a daily narrative of the underlying
issue's performance is simply not a valuable service.  For that
reason, it was a good time to close many of the those positions.
Most of the plays that remain in the portfolio are relatively new
and having survived last week's carnage, they have demonstrated
an ability to weather the worst of storms.  Lets hope that trend
continues as the market strives to remain above recent lows in the
coming weeks.  As always, a complete summary of monthly positions
will be posted in Tuesday's edition of the OIN.

Questions & comments on spreads/combos to Click here to email Ray Cummins
******************************************************************
				- NEW PLAYS -
******************************************************************
MGA - Magna International  $46.00  *** Cheap Speculation! ***

Magna International and its subsidiaries design, engineer and
manufacture a diversified range of automotive parts, components,
assemblies, modules and systems.  They company engineers and
assembles complete vehicles primarily for delivery to North
American, European, South American and Asian original equipment
manufacturers of car and light trucks.  These products include
exterior decorative systems, interior products including seats,
instrument and door panel systems and sound insulation, stamped
and welded metal parts and assemblies.  They also make sun-roofs,
electro-mechanical devices and assemblies, engine, power-train,
fueling and cooling components, a variety of plastic parts,
including body panels and fascias and a variety of drive-train
components as well as complete vehicle engineering and assembly.

Magna started moving higher in late March when Credit Suisse
First Boston started coverage on the auto parts company with a
"buy" rating and a price target of $52 per share.  In the report,
Credit Suisse analysts said that among the buy-rated names, Magna
International is trading at tangible book value, a key downside
support price, and should have several quarters of solid earnings
growth.  J.P. Morgan recently backed the recommendation with its
own "buy" rating.  Another popular analyst commented that Magna
is Daimler Chrysler's biggest supplier, and he sees the company
as critical to the automotive giant as it roles out new models
over the next couple of years.

That sounds like a favorable recommendation and with the bullish
technicals, this position offers an excellent risk versus reward
outlook.


PLAY (conservative - bullish/calendar spread):

BUY  CALL  AUG-55  MGW-HK  OI=0   A=$1.75
SELL CALL  MAY-55  MGW-EK  OI=30  B=$0.50
INITIAL NET DEBIT TARGET=$1.12 TARGET ROI=50%

A less neutral and more bullish type of calendar spread is when
the underlying issue is some distance below the strike price of
the options.  This position is speculative with low initial cost
and large potential profits.  Two favorable outcomes can occur:
the stock rallies in the short-term and the position is closed
for a profit as time value erosion in the short option produces
a net gain or; the underlying stock consolidates, allowing the
sold option to expire and then eventually rallies above the long
option strike price.

It is generally best to establish this type of spread at least
2 - 3 months before the long option expires, capitalizing on the
ability to sell another option against the longer-term position.
That is the basic idea in this spread play; selling time value
in the options when they are overpriced (high implied volatility)
and buying it back (if necessary) when they return to intrinsic
value.  Ideally, the spreader would like to have the stock finish
just below the sold strike when the near-term option expires. If
the short options are in-the-money at expiration, he will have
to buy them back to preserve the long-term position.

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

*****

RCOT - Recoton  $9.44  *** Going Down? ***  

Recoton is a marketer, developer and manufacturer of consumer
electronics products for aftermarket use.  Their Video and
Computer Game Business consists of STD Holding and its Hong Kong
and Chinese subsidiaries, including its manufacturing operations,
which produce video and computer game accessories as well as
products for other Recoton segments.  InterAct Accessories, the
company's distributor of computer and video game accessories in
the United States, also utilizes those products.  Recoton Audio
and its United States and European subsidiaries, primarily sell
home and mobile audio products.  Their Accessories Business
consists of Recoton, Christie Design, a research and development
subsidiary, Recoton Far East, a Hong Kong distributor, AAMP of
Florida, a distributor of car audio installation products, and
Recoton Canada, a distributor of all of the company's products.

There's not much news on this issue but a review of their recent
earnings report shows the company's major weakness.  For the
fourth quarter of 1999, net sales totaled $250,374,000, up from
$245,502,000 in 1998 - almost no gain at all.  For the 1999 year,
the company reported a loss of $28,030,000, or $2.39 per share,
compared to net income of $4,330,000, or $.36 per share, in 1998.
That's certainly not the most favorable report and it may be the
cause of the recent decline in share value.  Regardless of the
reason, the chart is technically unhealthy and the probability
of the issue reaching our maximum profit price of $12.50 appears
to be a highly unlikely outcome.


PLAY (aggressive - bearish/credit spread):

BUY  CALL  MAY-15.00  ROQ-EC  OI=56   A=$0.62
SELL CALL  MAY-12.50  ROQ-EV  OI=237  B=$1.12
INITIAL NET CREDIT TARGET=$0.75 ROI(max)=42%

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

*****

OMC - Omnicom Group  $83.56  *** Trading Range! ***

Omnicom Group, through its wholly and partially-owned companies,
provides corporate communications services to clients worldwide
on a global, pan-regional, national and local basis.  Omnicom's
operations cover the major regions of North America, the United
Kingdom, Germany, France, the remainder of Continental Europe,
Latin America, the Far East, Australia, the Middle East and
Africa.  The corporate communications services offered by the
company include advertising in various media such as television,
radio, newspaper, magazines, outdoor and the internet, as well as
public relations, specialty advertising, direct response and
promotional marketing, strategic media planning, buying, along
with Internet and digital media development.

Omnicom has a number of successful subsidiaries and it appears
they all have favorable fundamental outlooks.  Unfortunately,
the upcoming earnings has not generated any rally in the share
value and without a major upside surprise, the issue will likely
continue lower in the short-term.  In any case, the recent area
of resistance near $100 should protect our position through the
May expiration.


PLAY (conservative - bearish/credit spread):

BUY  CALL  MAY-105  OMC-EA  OI=10  A=$1.75
SELL CALL  MAY-100  OMC-ET  OI=25  B=$2.43
INITIAL NET CREDIT TARGET=$0.81 ROI(max)=19%

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

*****

UCL - Unocal  $30.18  *** Oil Sector ***

Unocal Corporation is an independent oil and gas exploration and
production company, with major activities in Asia and the United
States Gulf of Mexico.  Unocal is also a producer of geothermal
energy in Asia, a provider of electrical power and a manufacturer
and marketer of nitrogen-based fertilizers, petroleum coke,
graphites and specialty minerals.  Their other activities include
project development, ownership in proprietary and common carrier
pipelines, the marketing and trading of hydrocarbon commodities
and real estate.

The oil sector has performed well in the past few months and
the trend is expected to continue through the Summer.  Unocal
reports earnings next week and the expectations are favorable.
Our position is that the oil sector offers a unique hedge against
daily swings in the broad-market and we will continue to offer
positions in this industry to offset the volatility in blue-chip
and technology issues.

This play is based primarily on the current price or trading
range of the underlying issue and the recent technical history
or trend in both the stock and its industry.  Current news and
market sentiment will have an effect on these issues.  Please
review the issue thoroughly and make your own decision about
the future outcome of the position.

PLAY (conservative - bullish/debit spread):

BUY  CALL  MAY-25.00  UCL-EE  OI=330   A=$6.00
SELL CALL  MAY-27.50  UCL-EY  OI=3186  B=$3.88
INITIAL NET DEBIT TARGET=$1.88-$2.00 ROI(max)=25%

Chart =
/charts/charts.asp?symbol=UCL
******************************************************************
INDEX OPTION SPREADS...
******************************************************************
As a trader, you may be familiar with options on individual stocks
where you have the right to buy (call option) or the right to sell
(put option) a particular stock at some predetermined price within
some predetermined time.  The buyer has the rights and the seller
the obligations.  With index options the basic ideas are the same.
Index options allow you to make investment decisions on a specific
market industry or on the market as a whole. Spread strategies can
be made with index options similar to those made with individual
stock options.  Many professional traders employ index spreads as a
hedge strategy.  We favor debit positions on the SPX for momentum
and hedge or longer-term plays and OTM credit spreads on the OEX
when the risk/reward is favorable.  Low ROI disparity spreads will
be listed (when available) for the conservative index trader.
*******************************************************************
OEX - S&P 100 Index  $777.12     *** OTM Credit-Spreads ***

The Standard & Poor's 100 Index is a capitalization-weighted index
of 100 stocks from a broad range of industries. The component
stocks are weighted according to the total market value of their
outstanding shares. The impact of a component's price change is
proportional to the issue's total market value, which is the share
price times the number of shares outstanding. 

OBSERVATIONS:

For OTM credit spread trades, we like to use the actively-traded
S&P 100 Index options because they contain much more premium than
options on individual stocks and provide an underlying instrument
less prone to huge, gapping moves.  Review the 'Market Sentiment' 
section for specific technical information on the S&P 100 Index.
 
Aggressive/Credit-Spread Strangle

PLAY (bearish/low ROI):
BUY  CALL  MAY - 835  OEX-EG  OI=326   A=$2.88
SELL CALL  MAY - 830  OEX-EF  OI=2070  B=$3.50
NET CREDIT TARGET=$0.75 ROI=17%

PLAY (bullish/low ROI):
BUY  PUT  MAY - 720  OEZ-QD  OI=1311  A=$6.00
SELL PUT  MAY - 725  OEZ-QE  OI=1340  B=$6.62
NET CREDIT TARGET=$0.75 ROI=17%

COMBINED NET CREDIT TARGET=$1.50 COMBINED ROI=34%
UPSIDE BREAK-EVEN = $831.50 DOWNSIDE BREAK-EVEN = $723.50

By combining two credit spread positions, you can participate
in a popular neutral strategy known as the Long Iron Condor. It
is often used with range-bound positions and is a limited risk,
limited profit strategy that gives you a wide range for success.
The play is based solely on the current price and trading range
of the underlying issue and the recent technical trend. Current
news and market sentiment will have an effect on this position
so review the underlying issue and make your own decision about
the future outcome of the stock price.

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



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

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

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

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Option Investor Inc
PO Box 630350
Littleton, CO 80163

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