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Daily Newsletter, Tuesday, 07/25/2000

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******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        07-25-2000        High      Low     Volume Advance/Decline
DJIA    10700.00 + 14.90 10744.50 10680.20   97 mln   1452/1380
NASDAQ   4029.57 + 48.00  4034.80  3955.36 1.47 bln   1841/2143
S&P 100   802.44 +  6.61   803.81   795.83   totals   3293/3523
S&P 500  1474.47 - 15.90  1476.23  1464.29           48.3%/51.7%
RUS 2000  514.33 +  0.08   517.41   511.11
DJ TRANS 2809.32 - 10.77  2832.51  2795.86
VIX        21.67 -  0.77    22.36    21.49
Put/Call Ratio       .53
******************************************************************

Markets shine in spite of Greenspan cloud.

The markets rebounded from an early morning sell off even after
Greenspan left the door open for another rate hike in August.
Claiming it was too early to tell if the past rate hikes would
have been successful in slowing the economy completely he said
info out before the August meeting should tell them if they need
to hike interest rates again or remain on the sidelines. He did
say he felt they were coming closer to having economic growth "in
balance" and he felt the unemployment was not yet at "dangerous
levels." Even with cautious statements about the August meeting
the positive remarks from the Fed head convinced the market the
risk was minimal and it slowly pulled out of a nose dive and
back into positive territory.










The Nasdaq finally found a bottom at 3955 after dropping -334
points since the intraday high of 4289 last Monday. This bounce
off two levels of support could be simply an oversold bounce.
The last test of this level came on July 11th. The bullish
sentiment is still rampant in spite of slowing earnings.

After the bell today Compaq announced earnings in line with
estimates or $.21. CPQ traded up fractionally in after hours
to $28. Compaq did post an increase in commercial sales after
posting a -$224 mil loss for the same period last year. CPQ
did retain its worldwide market share of 13.2% despite Dell
capturing the lead in the U.S.

EBAY also announced earnings of +.04 beating estimates of only
+.03. Despite beating estimates by 33% EBAY traded down slightly
after hours.

The big winner after the bell was Nortel which posted profits
of $.18 vs estimates of $.15. Sales for the quarter grew by
a whopping $2.5 billion to $7.8 bil from 5.3 bil. The growth
was due to a leap in optical sales and NT said they will invest
$1.9 billion into its fiber business in the next 18 months.
CEO John Roth said he was excited about the results explaining
that NT had more sales in the last six months than for whole
years just recently. They also felt sales growth going forward
would be in the 30-35% range instead of the 20% current market
growth rate. NT was up almost $5 in after hours trading.

Losers included LSI Logic which posted results in line with
estimates of $.29 but under the whisper number of $.32. LSI
dropped -$7 in after hours to $41. Unfortunately this was not
the big earnings loser for the day. AFFX posted weaker than
expected results of -$.22 instead of the -$.15 analysts expected
and the stock and sector got hammered. AFFX lost -$31 to $163.

The number two appliance seller just two years ago announced
today that they were dropping out of the appliance business.
Circuit City announced the sweeping reorganization today with
a profit warning for the future. They stated that the business
had changed dramatically in just the last few months with heavy
competition from stores like Home Depot. Cutting estimates for
the third quarter in half prompted investors to drop the stock
for a -$6.88 loss. In the battle of the retailers Kmart also
lost another battle to Wal-Mart. Kmart announced they would be
closing 72 stores and holding nationwide clearance sales to
reduce inventory. KM actually closed up slightly at $7.38
after trading at a 52 wk low of $6.50 earlier this month.

JDSU goes into the S&P 500 at the close on Wednesday and Rite
Aid (RAD) comes out. This is not as simple as it seems. RAD
has a market cap of only $1.2 bil and JDSU has a cap of 100
times that at $121 billion. Since the S&P is a market cap
weighted index fund managers not only have to sell RAD at the
close tomorrow but almost every other S&P stock as well to
compensate for the huge addition. The JDSU buying is already
three times over done with over 158 million shares traded
since the announcement and Merrill Lynch estimates that only
58 million shares needed to be bought by S&P funds. This
means JDSU would likely go down were it not for the strong
earnings by NT on their optical business today. Still there
will likely be strong net sales of S&P stocks on Wednesday.

Market analysts are mixed as to market direction in the coming
weeks. Even with the bullish sentiment in the foreground there
is beginning to be some concern in the ranks. Dick McCabe,
market analyst for Merrill Lynch, said today he could see the
Dow falling to the high 9000 range in the summer doldrums period
ahead. He was cautious about his comments but his tone from
just two weeks ago was decidedly different. He also said that
historically the markets went up when it was felt the incumbent
party would win the presidential race and went down when the
incumbent party was seen losing the race. It is not party
specific but simply a changing of policy and leadership that
could rock the "status quo" boat that moved the market. With
Bush choosing Dick Cheney as his running mate today the
pressure is now on Gore to match his move.

Even with the -334 point drop on the Nasdaq in the last week
I would still caution readers to confirm market direction
before making any new long call plays. What looked like a
nice bounce off support today could just be a bear trap rally
from the oversold condition. Remember most of the big guns
have already announced earnings and the reasons to buy stocks
are decreasing every day. Investors may be resting easier with
calming remarks from Greenspan but they are likely to want to
wait until after the August meeting before making any major
investments.




With the declines beating advances on decent volume and the
VIX still hovering around 21.50 there appears to be a negative
undertow to the markets despite the bullish emotions on the
surface. This week will be the key. The week after options
expiration in July is normally a down week so extreme caution
is advised. The Nasdaq edged back to close slightly over 4000
again and the Dow closed dead on the critical 10700 level. We
are definitely poised to move but with serious overhead
resistance on the S&P, along with anticipated net sales due to
the JDSU entry, the move may not be upward. Don't get me wrong,
I would love to see a summer rally. By the way, have you heard
that term this week? Amazing how quickly sentiment changes!
In conclusion, I think the Nasdaq is too close to call for
Wednesday, with what appears to be a great bounce off support
and a strong intraday chart, we could see a strong effort to
post some gains. What is not so clear is how many sellers will
use that strength to sell into the rally and lighten up their
positions going into August. If you are in this market keep
your stops tight and don't expect every dip to bounce.

Don't fight the tape. Trade the trend!

Good luck and sell too soon.

Jim Brown
Editor


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

Drifting The Seas Of Uncertainty
By Austin Passamonte

I promise not to mention VIX or COT for the entire night!
Let's talk about fresh subjects instead.

Today's action reminded me of some sessions in March & April,
save for the 200+ point daily range back then. Stocks that
were up sharply at the open bled red towards the close and
vice versa. One can contract a case of whiplash trying to
keep up with sector rotation these days.

Analysts are diametrically opposed to near-term direction
for the markets. Some predict a sharp decline while others
feel we're on the verge of the next major rally. Who's right?
Maybe both. It wouldn't surprise me to see a retest of some
previous lows by or before late October. The mere mention of
that month can make the staunchest bulls shudder with fear.

I also believe we will enjoy a sustained rally for at least
the last two months of 2000 if not more. The key word here is
FEEL - these are all projections from the gut (or heart) on
anyone's part.

August FOMC meeting could cause the onset of either scenario.
The announcement of no further rate increase might touch off
one major upward run on the charts. Can you visualize traders
thumbing their noses at even the strictest warning statement
by the Fed following this? Who cares how vigilant they remain,
the witch will be dead for awhile!

By the same token one more increase of any amount may be the
lead brick heaped on our swayback camel's load. This remains
a nervous market that can go either way and if it just treads
water until then the buildup could be palpable. Another
increase might be viewed as overkill and rate-sensitive
issues could get dumped into one tremendous pile fast.

What are we to do? Watch the signals and take them at face
value. Don't read the market for what you project into it.
That approach never works as many of us repeatedly learned.
Prepare to play it up, down or sideways. Yes, sideways. The
luxury of options trading is our ability to create trades
that profit while markets go nowhere. Study those excellent
articles on spreads, butterflies, aztecs and other
techniques right here in OIN that can position you to win.

We're at a crossroads in the market and it's movers could sit
and ponder the choices for quite some time. Feel free to sell
them refreshments (spread strategies) while they pour over
their roadmaps. Hey, someone has to do it; might as well be you!


MARKET SENTIMENT INDICATORS
---------------------------

VIX
The CBOE Market Volatility Index measures certain S&P 100
option pricing to determine investor sentiment. Historically,
readings near 30 signal possible market bottoms while levels
near 20 indicate possible market tops.

Sat 7/22 close: 21.47       Tues 7/25 close: 21.67


CBOE Equity Put/Call Ratio
The CBOE equity put/call ratio is a contrarian-sentiment
indicator. Numbers above .75 are considered bullish, .75 to
40 neutral and bearish below .40

*************************************************************
                             Tues       Thurs         Sat
Strike/Contracts            (7/25)      (7/27)       (7/29)
*************************************************************

CBOE Total P/C Ratio         .53
Equity P/C Ratio             .46


Peak Volume (OEX)
CBOE index put/call ratio is a contrarian-sentiment indicator.
Numbers above 1.5 are considered bullish, 1.5 to .75 neutral
and bearish if below .75

**************************************************************
                      Tues         Thurs        Sat
Strike/Contracts     (7/25)        (7/27)      (7/29)
**************************************************************

All index options     2.75 *Bullish levels
OEX Put/Call Ratio    1.69


OEX Maximum Open Interest Strikes/Contracts:

Puts                  790/6,646
Calls                 805/4,059
Put/Call Ratio          1.64


OEX S/R (Support/Resistance) Ratio Index
The OEX S/R ratio is a formula to gauge possible support
or resistance based on open-interest disparity. Values
above "5" considered excessive. Divergence of numbers may
indicate future market direction.


OEX                      Tues         Thurs      Sat
Benchmark:               (7/25)       (7/27)    (7/29)

Overhead Resistance:
(840 - 820)               10.11
(815 - 800)                1.32

OEX Close:                 802

Underlying Support:
(800 - 785)                1.65
(780 - 760)                3.36


What the S/R measure indicates: Net open-interest ratios
are somewhat firm above 820 OEX level while underlying support
remains light. A large move in either direction still favors
the downside.


The OEX appears to remain range bound between 820 and 780 for
discretionary spread or directional play consideration if the
index tests either benchmark.

30-yr Bond:             5.80%

Light, Sweet
Crude, Barrel:         $27.93



200 Day Moving Average (as of 7/25)
The 200 DMA is widely considered the major benchmark for
critical support in a market.

DOW;   10,760          10,699*
NASDAQ; 3,862           4,029
NDX;    3,585           3,865
SPX      1421            1474
OEX       765             802


CBOT Commitment Of Traders Report: Friday 7/14
Biweekly COT report discloses positions held by small specs
and commercial traders of index futures contracts on the
Chicago Board Of Trade. Small specs are the general trading
public with commercials being financial institutions.
Commercials are historically on the correct side of future
trend changes while small specs are not. Extreme divergence
between each signals a possible market turn in favor of the
commercial trader's direction.


                  Small Specs    Commercials
DOW futures
Net contracts;    +326 long        +59 long
Total Open
Interest %        2.3% net-short   .4% net-long

NASDAQ 100
Net contracts;    - 689 short      - 5,578 short
Total Open
Interest %        2.6% net-long     38% net-short

S&P 500
Net contracts;    +36,908 long      -44,272 short
Total Open
Interest %        9.8% net-long    11.8% net-short


BULLISH SIGNALS

Interest rates
5.80% on the 30-year Treasury Bond may be signaling the rate
fears are over. Fed-Fund futures are pricing a 50% chance of
one or more rate hikes, .25 basis at this time.

Corporate Earnings
Last quarter earnings expected to be very strong, especially
for the tech sector. Major stalwarts in the Dow and NASDAQ
began the three-week session last week. Many issues beating
the street with a few warnings creeping in.

IPO's
Numerous IPO's have been met with positive enthusiasm.

Major Indexes Above Key Support
Most indexes remain above support and their 200 - DMAs

******

BEARISH SIGNALS

VIX
Today's close near 21.67 is getting worse. We may have seen
the market top, near term.

Energy Prices
Prices are still too high. Ultimately this affects profit
margins and inflation. August Crude closed $27.93 today.
Seasonal energy patterns typically bottom by late summer,
but heating & fuel oil expected to be very high this fall.
Prices in the low $20s would be welcome relief.

COT Report
Latest updated figures show small spec traders heavily
long S&P 500 contracts while commercial traderss continue to
build five-year extreme short position. Widening divergence
in NASDAQ 100 futures market with commercials becoming heavily
net-short. Divergence suggests possible market turn in favor
of commercials soon. Updated this Friday

Seasonal Tendency The last two years have seen weeks following
expiration Friday result in market decline through fall. Broad
market strength from here will be vital to prevent history from
repeating.



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

As of Market Close - Tuesday, July 25, 2000

                                  Key Benchmarks
Broad Market           Last     Support/Resistance   Alert
****************************************************************

DOW Industrials      10,699      10,550  10,950
SPX S&P 500           1,474       1,435   1,520
OEX S&P 100             802         775     822
RUT Russell 2000        514         500     550
NDX NASD 100          3,865       3,580   4,100
MSH High Tech         1,034         985   1,100

XCI Hardware          1,530       1,440   1,600
CWX Software          1,176       1,160   1,360
SOX Semiconductor     1,104       1,060   1,281
NWX Networking        1,324       1,250   1,400
INX Internet            549         470     605

BIX Banking             560         540     580
XBD Brokerage           586         500     590
IUX Insurance           661         610     675       **

RLX Retail              897         860     960
DRG Drug                392         385     430
HCX Healthcare          809         800     880
XAL Airline             170         156     178
OIX Oil & Gas           274         264     308

Insurance (IUX) broke our 660 level and next resistance
appears to be the April 1999 highs.  We've seen some indexes
move from resistance toward support in a matter of days.  Trade
within your means and do not over-leverage.

Upward Resistance Revisions (IUX from 660)



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

What's My Probability?
By Lee Lowell

I got lots of e-mails regarding my last article which included a
segment on "probability of profit".  It's a tool that will help
give you an idea of how successful your strategy may or may not
be.  A probability calculator will calculate for you the chances
of the underlying stock hitting a certain point by expiration.
These calculations are based on real mathematical and statistical
theories and not some guru's "best advice".  These are your true
odds of where the stock might end up by expiration day using the
formulas inherent in the Nobel Prize winning Black-Scholes model.

Your probability of profit is very dependent upon the volatility
figure that must be incorporated into the calculation.  The
volatility figure can be either the "implied volatility" of the
options, or your own guess of "future volatility".  It's hard to
say which form of volatility you should use but I lean towards
using implied volatility because it is a number which is a
consensus of all the market participants.  You could even use an
average of the implied and your own guess to give yourself a
mixture of numbers.

The calculations themselves are pretty complex and not worth
putting into text here.  If you have a probability calculator you
don't have to even worry about the calculations because it's all
done for you.  It just tells you the chances of stock XYZ being at
price ABC on expiration day.  As I mentioned last week, most
option-buying strategies will fall into a range of 20-35%, and in
some cases even lower than that.  When you buy an out-of-the-
money option, your chances of success begin to get very low, like
less than 10%.  On the flipside, option-selling strategies can
give chances of success close to 90%.  This is where a majority of
the slow steady money can be made.  You don't even have to sell
naked options to achieve this percentage.  The key is to trade
credit spreads.  It can be credit spreads on the indexes or on
any individual stock.  In most cases, you should concentrate on
selling out-of-the-money credit spreads on stocks or indexes with
higher than average volatility.

One key factor in determining whether you'll achieve a higher
probability of success, is to sell these credit spreads when
volatility is on the high side.  I've talked about this many times
in the past.  Check your option chains and volatility charts to
see what level of volatility your stock is trading at compared to
its past.  Don't sell options when volatility is making new lows.
This is because you won't get enough bang for your buck, and
because sooner or later the volatility will start turning back up
towards its natural range.  If this happens, option prices tend
to get more expensive even though the stock might have not moved
anywhere.  Your short options will most likely start to move
against you in this case.  If you want to sell credit spreads on
the OEX, take a look at a chart of the VIX.  This is a barometer
that is talked about extensively on this website.  The VIX is not
only used to signal a possible turning point in the direction of
the market in general, but it is also an indicator of how cheap or
expensive the OEX options are.  Right now the VIX is hovering near
its lows of 22.  This means that options are very cheap at the
moment.  So this might not be the most opportune time to sell
credit spreads.

The great thing about credit spreads is that you always know how
much you have at risk and how much your potential reward may be.
The maximum risk is calculated by taking the difference between
the strike prices of the trade and subtracting the credit.  Here's
an example:  YHOO is trading at $132 1/2, the August $120/$115 put
credit spread is trading for roughly $1.  To figure out your
risk/reward, just take the difference between the strikes
(120-115)=5 and then subtract the premium received (1)= $4.  To
put it in actual dollar terms, just multiply by 100.  So your
total risk is $400 and your total reward is $100.  This is
assuming you are doing just 1 spread.  If you are doing 5 spreads,
just multiply all the dollar figures by 5.  In this case, risk
would be $2000 and reward would be $500.  Using the actual numbers
above, my probability calculator says that this spread has about a
76% chance of staying above my break-even price of $119.00 using
25 days left to expiration and 57% volatility.  To figure out your
break-even price, just subtract the premium received from the
strike price of the sold option.  In this case that is ($120-$1)
=$119.  Of course you could use further out-of-the-money options,
but the credit you receive will be less, but your probability of
profit is higher.  We could sell the August YHOO $110/$105 put
spread for $.50 and our probability of keeping this credit moves
up to 83.5%.  It's all about trade-offs.  Do you want more premium
or a higher probability of success?  You decide.

The credit spreads don't have to be one sided.  You can sell dual
credit spreads on both the puts and calls.  If you find a stock
that is stuck in a trading range; you can sell a put credit spread
and a call credit spread at the same time using the same
expiration month.  These could be potentially good trades during
the summer doldrums when stocks can't really seem to make up their
minds of which way to move.  If your long-term bias is to the
upside, you might just want to stick with selling put credit
spreads because these will expire worthless as long as the stock
keeps going up.  Check the charts for support and resistance
levels.  This will give you another idea of which strikes to set
your spreads at.

It all sounds pretty good, doesn't it?  But of course there are
always the drawbacks.  Sorry.  It's really not that bad.
Sometimes you may sell a credit spread and the stock will start
to move through your short strike.  That's okay because you know
what your maximum loss can be at anytime.  You have 3 choices.
You can either wait it out and hopefully the stock will turn
around and go the other way, you can close it out for a small
loss, or close it out and roll the spread to farther out strikes.
If you've picked the right strikes and checked your support and
resistance levels, most likely the adverse move will only be
temporary and the stock will start to move in your favor.

The other potential drawback of course, is that no matter what
kind of great odds you have by selling credit spreads (e.g. 90%),
you never know what might happen to the stock.  There could be a
takeover announcement or a huge earnings warning.  Either one of
these events can cause large movements in either direction of the
stock and possibly shoot through your short option very quickly.
The best ways to get around these potential dangers is to sell
spreads with one to two months before expiration, which gives
less time for the premiums to go higher in case of an unexpected
event, and to possibly concentrate on selling spreads on the
indexes (SPX, OEX), which are not prone to the huge gaps that can
affect any individual stock.

Lastly, just remember that your probability of profit is the
figure you get at the exact time that you put on your trade.  It
will be constantly changing when the market conditions change.
It may move higher or lower depending on the price of the stock,
days to expiration, and whether volatility has moved up or down.
Check it every now and again and see if you're still comfortable
with the probability.  You can always close it out at anytime and
of course you will always know exactly how much you can make or
lose no matter what happens.

Good luck.

Contact Support


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Slower fund flows continue
By Mary Redmond

Many market analysts have claimed that the younger generation
of investors hasn't experienced a bear market of any prolonged
duration.  However, it is worth noting that the Nasdaq crash
which occurred this spring was slightly worse in percentages
lost than the crash of October 1987.  In October of 1987, the
Dow dropped from 2662 to 1677, a loss of approximately 37%.
From the high of over 5000 in March to the low of just above
3000 in May the Nasdaq lost 40% of its value this year.  The
main difference is the fact that the markets have started to
recuperate faster.

The intensity and severity of this recent Nasdaq crash will very
likely have an impact on investors' behavior in the coming months.
When people lose money the way they lost in March and April they
are not likely to forget anytime soon.  Investors and traders may
be more liable to take profits at the first sign of a market
downturn rather than ignore the warnings signs.

It is likely that we may have a lower level of liquidity in the
next couple of weeks, although the situation will probably not
be as severe as the situation in April of this year.  The four
week moving average of cash into equity funds has slowed from
the level seen in May and June.  On the second week of May, the
four week moving average of cash to equity funds was in the
range of $6.5 billion.  In addition, during the second week of
May the moving average of cash out of money market funds was in
the range of $10 billion.  On the second week of June, the four
week moving average of cash to equity funds was approximately
$5 billion, and the moving average out of money market funds was
approximately $3.5 billion.  The four week moving average of cash
into equity funds is currently $2.5 billion, and approximately
$3.5 billion into money market funds.

The percentage change in these numbers is significant.  From
June to July the average cash flow to equity funds has decreased
50%.  In addition, the number of ipos priced to start trading in
the next few weeks has increased.  Over $7 billion in new stock
has been priced to hit the market next week.  However, some of
the ipos which have been priced will probably not trade.  Goldman
Sachs plans to have a secondary stock offering of approximately
$3.6 billion next week, which is enough to draw significant
liquidity out of the market.  Today's ipos included BLUE which
rose over 100% and raised $150 million, EVOK which raised $56
million, and ILND which raised $60 million.

The weekly fund flows of the last several months are much lower
than those seen earlier in the year.  In January and February
of 2000, approximately $10 billion per week was deposited into
equity funds.  This helped to propel the Nasdaq to 5000.  But
perhaps more significant is the fact that during 1999 and early
2000 over $300 billion in new stock was issued through ipos and
secondary offerings.  This works out to approximately $25 billion
per month, or $6.5 billion per week.  During the months of June
and July we have not yet seen this level of new stock issuances,
as the level of investor selectivity remains high.  If this lower
level of new stock issuance remains for the rest of the year, it
may help to provide a stimulus to the market, as less investor
cash would be drawn away from the markets and into ipos.

One of the most common concerns among options traders is finding
a brokerage firm which will accept stop loss orders on options.
The primary reason most brokerage firms do not accept stop loss
orders on options is concerns about liability.  Most brokerage
firms and investment banks earn the largest amount of revenue
from investment banking, institutional trading and retail and
institutional sales, as well as margin loans.  Option trading
represents a relatively small source of revenue to most brokerage
firms and a huge potential liability.

Option exchanges generally do not accept stop loss orders.  The
orders are triggered when a stock or option reaches a certain
price, and at that point the order will become a market order to
sell on the bid.  This could present a problem in a severe market
crash if there are a huge number of sell orders and no bidders.
A stop loss order entered at 20 could be sold at 10 in a severe
downturn.  It is very difficult for a brokerage firm to guarantee
a customer fair pricing on an option stop loss order, which can
open the floodgates to huge numbers of complaints.

It will be interesting to see if this situation changes.  In the
last few years, more brokerage firms have started accepting
option stop loss orders.  More people are becoming interested in
option trading as a profession, and catering to option traders
may represent a more lucrative opportunity for more brokerage
firms.  In addition, the exchanges are becoming more proficient
at processing the huge volume of orders on the Nasdaq and NYSE.
It is also possible that at some point we may have after hours
option trading, although it is not likely to happen in the next
few years.

Contact Support


******

Want a Speculative Play?  Try a Takeover Candidate
By Scott Martindale

Hot tip anyone?  Man, you can find them everywhere.  Friends who
know I trade are regularly bringing up the hot stock that their
brother-in-law's broker is pushing, or the can't-miss electronic
widget company their cousin works for that is "absolutely gonna
fly this year."  Sometimes there's a false rumor intentionally
started in a chatroom or message board to try to run up a stock
a few dollars for a quick gain.  But occasionally a rumor or hot
tip has genuine merit, and the rewards of being in the play can
be enormous, with minimal downside if you play it smart.

Favorite speculative plays of options traders include rumors of
better-than-expected earnings, splits, spinoffs, and takeovers/
mergers.  Takeovers are probably the most speculative since they
can fall apart quickly even if the rumors are true, but they can
also be the most exciting.  Many traders and investors alike will
often get into a stock purely as a takeover play.  After all, if
you have ever seen a stock react after a takeover announcement,
it is amazing just how profitable it can be.

Usually the acquiring company sells off a bit while the acquired
company soars, depending of course on the purchase price.  For
high-potential, low-profit tech companies, the purchase price may
be substantially higher than the current market price, although
it may remain quite volatile if the deal is a stock-swap
arrangement.  Even old economy companies trading at or below book
value can receive buyout offers substantially above current
market price.  For instance, when United Airlines (UAL) made
their bid for U.S. Airways (U) in May, United immediately dropped
15%, while U.S. Airways jumped 100%.

To get ideas for takeover candidates, watch the news, investment
advisory websites, message boards, chatrooms, and various
investment newsletters.  A number of newsletters put takeover
candidates in their recommended lists, or publish "Takeover
Portfolios" which highlight value-priced companies with a strong
product.  Often a flurry of takeovers occur within a sector, so
when one merger or takeover is announced, others within the
sector may soon follow.

Some recent takeover/merger activities have occurred in
communications equipment, web-hosting, and brokerage.  For
example JDS Uniphase (JDSU) recently completed a takeover of ETEK
Dynamics, and then announced its intention to acquire SDL (SDLI).
Both ETEK and SDL soared.  Short-term options on these stocks
paid off big time.  Last month, ADC Telecommunications (ADCT)
completed its takeover of Pairgain Technologies (PAIR).  As an
all-stock transaction, the shares of each company moved little
when it was announced in February, but both climbed about 90% by
the time the deal was completed.  Longer-term options purchased
before the announcement worked out well, but February plays,
although still profitable, had lower returns.  Also, Ciena (CIEN)
has become a perennial subject of takeover speculation.

An interesting price pattern occured in VoiceStream Wireless
(VSTR) in advance of the large German phone carrier Deutsche
Telekom (DT) announcing Monday it will buy VSTR for nearly $51
billion, or $195/share.  VoiceStream soared from a low of $113 in
late June to as high as $161 on Thursday's open amid the
speculation, but began to fall off a bit from there.  Then upon
Monday's announcement, DT fell as one might expect, but amazingly
VSTR shares fell over $21 to $128!  Spec investors were shocked.
Analysts believed Deutsched Telekom paid perhaps 50% too much for
their entrance into the U.S. market. (Lehman even downgraded DT.)
Others thought the deal would get squelched by regulators.
Whatever the reasons, the lesson is that you don't always get what
you expect in this complex market, so take profits when you have
them.

In the web-hosting arena, Exodus (EXDS) failed to come to a deal
with Global Crossing (GBLX) for their GlobalCenter web-hosting
unit, and then rumors came out that they were pursuing Digex
(DIGX) instead, sending Digex shares soaring.  Other Application
Service Provider (ASP) firms such as Usinternetworking (USIX) and
Citrix Systems (CTXS) began to climb for a short time
on speculation that they, too, might be takeover targets,
especially given their depressed prices.

When Swiss banking powerhouse UBS announced a cash offer for
Paine Webber, it not only sent Paine Webber through the roof, but
started speculation that other investment firms might be targets.
One current rumor speculates that Charles Schwab (SCH) might get
a bid from Goldman Sachs (GS) in the $55-$60 range.

How should you approach an exciting takeover speculation?  The
best way is to play only a company you like anyway, both for its
market potential as well as its current technical picture.  If
it's also an OIN recommendation, so much the better, but in any
case look for charts that show a lot of near-term upside
potential.  Track the stocks you like from a technical
perspective, and get in when it looks like some accumulation has
begun.

On the other hand, if you're playing the takeover rumor
exclusively, it's like a lottery ticket, so you should only use a
small percentage of your portfolio.  Out-of-the money calls allow
you to profit from a big gap up on the announcement without
risking a lot of cash, and buying more than one contract lets you
lock in some gains along the way without having to completely
exit the play.  Also, be sure you buy enough time to allow the
corporate wheels to turn.  Generally, current month options are
not wise unless you are planning to play the rumor for only a
couple of days (stick to your plan!).  As we have all painfully
learned at one time or another, time value erodes rapidly.
Getting in too early is no sin if you're buying the stock, but
buying the option too early (or with too little time) can ruin a
good idea.

Sometimes lottery tickets pay off, but don't get greedy.  As OIN
constantly reminds us, take some profits off the table as the
stock runs up.  Even if the stock is running on the rumor prior
to any acknowledgement or formal announcement, you might want to
lock in some gains or set sell stops, but leave something in play
for the anticipated announcement.  If the deal falls apart or
just looks too dicey, look out below!

Contact Support



*************
SECTOR TRADER
*************

Waiting For a Volatility Change is Like Watching Paint Dry.
By Buzz Lynn
Contact Support

Statistics and probability tell us we are in for a volatility
change - we just don't know when.  In the meantime, we have some
long plays that haven't performed that well this week.  Earnings
season is coming to an end.  Once a company reports, unless it
has had a true surprise, there is no reason for the price to move
up.  Furthermore, if the stock has made a nice run into earnings,
there is likely to be a selloff as investors take the profit.
Now imagine this happening to a majority of the stocks comprising
a particular HOLDER.  You guessed it.  The sum of smaller parts
equals a lesser whole and the value falls in line with average of
the components.  Ouch!  That said, following some earnings
surprises - some negative - we're dropping a bunch of plays
tonight that we had previously listed in bullish light.  It's too
early to go negative or bearish though.  We need to see the
direction establish first.  Until then, boring as it may be, we
stick with buying cheap volatility in hedged positions.
Surprisingly, we found one sector with freshly sharpened bullish
horns and are adding it as a call play tonight.  Read on for a
fresh Semiconductor (SMH) play!

Have questions about the various strategies?  Send 'em in!


Index             Last    Mon    Tue    Wed    Thu    Fri    Week

QQQ NASDAQ-100    96.13  -2.50   1.25   0.00   0.00   0.00  -1.25
HHH Internet     113.31  -5.63   1.44   0.00   0.00   0.00  -4.19
BBH Biiotech.    173.50  -6.00  -8.50   0.00   0.00   0.00 -14.50
PPH Pharm.        97.06   3.69  -3.38   0.00   0.00   0.00   0.31
TTH Telecom.      72.88  -1.56   0.31   0.00   0.00   0.00  -1.25
IAH I-net Arch.   98.19  -4.38   2.38   0.00   0.00   0.00  -2.00
IIH I-net Infr.   60.88  -2.38  -0.44   0.00   0.00   0.00  -2.81
BHH B2B           46.94  -2.50   0.44   0.00   0.00   0.00  -2.06
BDH Broadband     96.75  -2.75   1.81   0.00   0.00   0.00  -0.94
SMH Semicon.      92.81  -0.38   3.56   0.00   0.00   0.00   3.19
RKH Reg. Banks    98.69   0.25  -0.19   0.00   0.00   0.00   0.06
UTH Utilities     93.69   0.00  -0.06   0.00   0.00   0.00  -0.06

**************
Updates
**************

QQQ - NASDAQ 100 $96.13 +1.25 (-1.25 this week) Well, so much for
$96 support.  NASDAQ got whacked yesterday closing at $94.50.
Fortunately there was a small recovery today, but not enough in
our opinion to undo the damage done yesterday.  It's just one
man's opinion, but Greenspan's repeat of previous testimony in
the Senate today seemed to have a smoothing effect on investors'
ruffled feathers.  While NASDAQ staged a recovery back over $96
into the close, strong support still remains in the $92-$93 range
as evidenced by this morning's amateur hour bounce off $93.81.
It helps too that NT beat estimates by $0.03 and raised revenue
estimates going forward and could keep the opticals (JDSU, GLW)
alive for one more day.  That might give a few of us a chance to
escape the BDH play (see below).  The fact is, on the theory that
old support becomes new resistance in a declining market, this
close back over $96 may be short-lived.  We'll have to wait and
see.  All that is the long way of saying that QQQ remains
rangebound with a slight downward bias.  So let's get to the
plays

Long Straddle:

This is our attempt to capture an increase in the time value on
an expected reversal of volatility to the upside.  It is also our
best rendition of what it's like to watch paint dry.  You can't
really see it happen, but you know it does because you see the
end result.  Same with a long straddle, which is the simultaneous
purchase of a put and a call at the same strike price.  As noted
Sunday, our desire is to see a big breakaway from the strike
price - big enough to cover the cost of both the put and call,
and give us profit in the process.  We profit by having the
volatility increase the time value of both the put and the call
as the VIX moves back up from its historical support level of 20
to 30.  It really hasn't budged since our write-up Sunday.
Remember, in order for this play to be profitable, we should
anticipate a big move in the market in either direction, options
must currently be cheap, and we must give ourselves enough time
to be right - about 30 days - without having time value in our
option evaporate while we wait for the volatility to re-inflate.
Thus, we need a minimum of 90 days, preferably 120, to be right.
The total price of the position may fall slightly during the hold
period while we patiently wait for volatility to spike.  However,
that the VIX is at the low end of the scale tells us that further
volatility decay is unlikely.  If it doesn't work out and the VIX
remains flat for the next 30 days (historically unlikely), we'll
exit the play with at least 60 days of premium left until
expiration.

Straddle:
BUY CALL DEC- 96 QVQ-LR OI= 981 at $12.50
BUY PUT  DEC- 96 QVQ-XR OI=4875 at $10.25
Net Debit = $22.75 or less

BUY CALL DEC- 98 QVQ-LT OI=1829 at $11.50
BUY PUT  DEC- 98 QVQ-XT OI=  80 at $11.25
Net Debit = $22.75 or less

Strangle:
BUY CALL DEC-100 QVO-LV OI=4667 at $10.38
BUY PUT  DEC- 94 QVQ-XP OI=1525 at $ 9.25
Net Debit = $19.63 or less


Covered Call:

Sorry folks, this covered call is no longer high on our strategy
list for two reasons.  First, remember we are looking to buy
cheap time premiums, not sell them.  Second, further decline
undermines the value of our long position.  While this strategy
can still work for those who currently own QQQ with a smaller
basis.  Doing a buy/write for an entry now seems too risky,
especially if you have to buy back at an inflated premium.

Calendar Spread:

If this is so much like a covered call, how come we are keeping
it?  Because the underlying long-term option also inflates as
volatility rises.  Not only that, but on any decline in the
overall market, delta (change in option premium for every $1
change in the issue) will not change as much with the long term
option price as much as the underlying issue.  While volatility
is still low, the underlying long-term strike is also cheap.
That said, consider legging into this position by buying a deep
ITM call on a dip and selling the near term call on any rebound.
Not an awesome play right now, but still good for those who like
to sell and collect premiums.  Strong support at $92-$93.  Mild
support at $96, however, this may turn to resistance on any
market weakness.

BUY  CALL DEC- 90 QVQ-LP OI= 1440 at $15.75

SELL CALL AUG- 96 QVQ-HR OI= 2550 at $ 5.00, ND = 10.75 or less
SELL CALL AUG- 98 QVQ-HT OI= 1462 at $ 4.00, ND = 11.75 or less
SELL CALL AUG-100 QVO-HV OI= 6652 at $ 3.13, ND = 12.63 or less

Long Calls/Puts

Still a tough way to earn a buck.  But if you are correct, this
can be a profitable strategy.  Just be sure to use stop loss
orders religiously so you are not wishing you used one should the
play move against you.  $96 support is followed by $92-$93;
resistance could become $96, but we'll have to wait for tomorrow
to make that discovery.  Trade range, but be quick on the draw.

At Support:
BUY CALL AUG-93 QVQ-HO OI= 1055 at $6.75 SL=4.75
BUY CALL AUG-96 QVQ-HR OI= 2850 at $5.00 SL=3.00
BUY CALL AUG-98 QVQ-HT OI= 1462 at $4.00 SL=2.50

At Resistance:
BUY PUT  AUG-98 QVQ-TT OI= 3866 at $5.63 SL=3.75
BUY PUT  AUG-96 QVQ-TR OI= 3206 at $4.63 SL=3.00
BUY PUT  AUG-93 QVQ-TO OI=10893 at $3.25 SL=1.50

Average Daily Volume = 24.77 mln


-----

IAH - Internet Architecture $98.19 +2.38 (-2.00 this week) Not
the strongest recovery we've seen.  However, given that $97 did
not hold as support, but $96 did, we think the bounce is pretty
good.  It helps that IAH recovered back over its 5 and 10-dma of
$98.10 and $97.43, respectively.  This is a strong example of
what we mean when we note that "old resistance equals new
support."  Check out previous highs of $96+ on June 19th and
20th, then again on July 13.  Investors have since been unwilling
to let it stay below those levels.  In short, the bounce happened
and held.  CSCO, SUNW, and JNPR shouldered most of the weight
today, though there were others in the green too.  With CSCO yet
to report earnings on August 8th, there may still be some upside.
Look for continued support at $96-$97 as long as the market
doesn't suffer a meltdown.

BUY CALL AUG- 95 IAH-HS OI=40 at $5.50 SL=3.50
BUY CALL AUG-100 IAH-HT OI=49 at $2.81 SL=1.25
BUY CALL AUG-105 IAH-HA OI=66 at $1.25 SL=0.50

Average Daily Volume = 44 K


**************
New Play
**************

SMH - Semiconductors $92.81 +3.56 (+3.19 this week)  Pure and
simple, we have Morgan Stanley's Mark Edelstone to thank for
sparking a complete sentiment change in the semiconductor
business.  What changed his mind?  Widespread positive earnings
surprises, anticipated uptick in seasonal demand for PC
components and the notion the investors have been too negative on
digital signal processors (DSPs).  The fact is TXN's results were
pretty good.  Edelstone notes that favorite stocks are ALTR,
ATML, CY, INTC, LSI, MCHP, MU, NVDA, TXN, STM, and XLNX.  Yes,
some of these are in SMH, which also had a great day technically.
Look for support at $90.  Aggressive traders can consider
entering at this level, which is historical support too (roughly
$92).  It also closed near its high today, but look out for a
weak market tone.  If the markets head south, SMH won't keep its
head above water very long.

BUY CALL AUG- 90 SMH-HR OI=  8 at $6.50 SL=3.50, LOW OI
BUY CALL AUG- 95 SMH-HS OI= 46 at $3.88 SL=2.50
BUY CALL AUG-100 SMH-HT OI=112 at $2.19 SL=1.00

Average Daily Volume = 271 K


**************
Drops
**************

BBH - Biotech $173.50 -8.50 (-14.50 this week) BOOM!!  So much
for that trading range of $180-$190.  BBH dropped significantly
below support of $180 in a steady decline today.  The explosion
sound you heard was 19 of the 20 underlying issues detonating on
news that AFFX losses were $0.07 wider than expected when they
reported last night.  AFFX gapped down $14 this morning at the
open and closed down nearly $32 for the day.  Oh, the humanity!
On its own, that wouldn't bring the whole index down except that
AFFX's news affected the whole sector.  Bye bye $187, then $180
support, so by bye BBH.

-----

HHH - Internet $113.31 +1.44 (-4.19 this week) We noted Sunday
that many companies, including PCLN would report this week.  So
far it's been nothing to write home about and AMZN reports
tomorrow.  Unfortunately, there has been no dip buying
opportunity either on any bounce up from $115.  There is nothing
left to ignite this sector.  Technically, though today displays a
nice candlestick formation, failure to get back over $115, plus
the close under every dma known to mankind (womankind too), we
don't expect great things going forward.  Thus the long play is
over.  But it isn't ugly enough to go short or buy puts yet.

-----

BDH - Broadband $96.75 +1.81 (-0.94 this week) We were wrong
about support at $96.  Turns out it was more like $94 from where
BDH had a nice bounce back up.  Yet it still couldn't get back
over its 10-dma.  Nonetheless, NT reported excellent earnings
tonight and is trading up $4 after the announcement, which should
carry over nicely into BDH tomorrow since NT makes up a huge
chunk of the index. JDSU reports tomorrow also and should have
stellar earnings to match.  Nonetheless, with the optical
superstars having made such a strong run, consider using any
strength tomorrow to exit this play since the big players will
have all reported.  While the think the long-term future of this
sector is bright (no pun intended), post earnings selloff is
likely to get the better of it.  Thus, we are dropping it
tonight.

**************
No Play
**************

BBH
BDH
HHH
PPH
IIH
BHH
TTH
RKH
UTH



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

Index      Last     Mon    Tue   Week
Dow    10699.97  -48.79  14.85 -33.94
Nasdaq  4029.57 -113.33  48.00 -65.33
$OEX     802.44   -8.72   6.61  -2.11
$SPX    1474.47  -15.90  10.18  -5.72
$RUT     514.33   -8.45   0.08  -8.37
$TRAN   2809.32   11.67 -10.77   0.90
$VIX      21.67    1.05  -0.77   0.28

Calls

AMCC     171.81   -1.31  13.38  12.06  New, tagged an all-time high
ATON     155.38   14.63  -3.00  11.63  New, who said Net is dead?
LEH      121.09    0.85   3.44   4.29  New, M & A hopeful
CMTN      85.50    0.31   0.81   1.13  Stagnant?  Hopefully not!
NT        82.50    0.25   0.50   0.75  Dropped, stellar earnings
COF       54.31   -1.88   0.38  -1.50  Following the script
DISH      43.25   -2.88   1.19  -1.69  Earnings next Tuesday 8/1
PVN      100.00   -3.94   1.56  -2.38  Levels not seen since 11/99
ARBA     123.81  -10.25   7.06  -3.19  Beautiful intraday chart
NTAP     106.19   -6.56   3.38  -3.19  New, refuses to be rangebound
MRVC      71.19    0.88  -5.19  -4.31  Dropped, Thursday earnings
SCMR     133.88   -5.06   0.19  -4.88  Looking for renewed interest
CRA      104.81   -0.31  -5.19  -5.50  Dropped, Thursday earnings
GSPN     125.00  -10.66   1.72  -8.94  Dropped, broke support
VRTX     109.88   -5.00  -5.31 -10.31  Dropped, earnings today
HGSI     144.88   -2.44 -15.19 -17.63  AFFX disappoints the sector

Puts

CMRC      49.00   -2.69  -1.69  -4.38  Not too shabby to start
FON       40.69   -0.88  -1.88  -2.76  Nobody wants FON!
GTW       60.38   -4.25   1.75  -2.50  Sales forecasts look weaker
ELON      37.63   -2.94   1.56  -1.38  The downtrend continues
IP        34.19    0.00  -0.56  -0.56  Waiting for downward volume
CMOS      48.59    0.50   1.41   1.91  Semis getting mixed news
RFMD      84.75    0.88   8.50   9.38  Post-split announcement



PICKS WE DROPPED
****************
When we drop a pick it doesn't mean we are recommending a sell
on that play. Many dropped picks go on to be very profitable.
We drop a pick because something happened to change its
profile. News, price, direction, etc. We drop it because we
don't want anyone else starting a new play at that time.
We have hundreds of new readers with each issue who are
unfamiliar with the previous history for that pick and we
want them to look at any current pick as a valid play.


CALLS:
*****

CRA $104.81 -5.19 (-7.19)  On Monday, the stock came out of the
gate running.  After bouncing off $110 support, CRA moved up
strongly despite the market moving down, rocketing as high as
$118.56 in less than 3 hours.  Despite the brief momentum
driving this stock, it was not strong enough to escape the
gravity of the market.  By mid-day, CRA began selling off to
close right at $110 support.  The stock opened down today along
with the other biotechs on news of AFFX's sub-par earnings
announcement on Monday.  This caused a broad sell-off in biotech
sector.  With earnings coming up on Thursday, July 27th, before
the bell, be sure to exit the play by Wednesday's close, as we
do not recommend holding positions over an earnings announcement.
We are dropping coverage tonight.

GSPN $125.00 +1.72 (-8.94)  As there has been little news for
GSPN the past few weeks, the stock has moved based partly on its
technicals and partly with the broader market.  During this time,
the stock behaved as well as could be, finding support at levels
where support was expected, providing traders with numerous entry
points on this profitable play.  On Monday, things took a turn.
Moving down $10.64, or 7.94%, GSPN succumbed to the weight of the
NASDAQ downdraft.  In doing so, GSPN broke through the once-strong
support level of $127.50.  Despite the low volume of the sell-off
(only about half of ADV), this is a violation of a key technical
support level.  Today, GSPN tried to move back up, but found
resistance at the $127.50 area.  With strong support now acting
as resistance and the stock riding the 5-dma down, we are closing
this play.

MRVC $71.19 -5.19 (-4.31) Rather than "I think I can" MRVC's
chant seems to have changed to "I thought I could."  The stock
has been trying to break through the $80 resistance level for
the past week, and today the bulls finally gave up.  The bears
dominated today's session after turning back one last push
towards resistance at the open, and the result was a drop
through support at $74.  Finally finding support near $70, the
stock could be firming, but with earnings out Thursday after
the close, time is rapidly running out.  Renewed bounces at the
$68-70 level are buyable, but with the short fuse on our play,
make sure that buying volume is confirming the bounce.  There
just isn't enough time left for a slow recovery as we need to
have all open positions closed before the closing bell on
Thursday.  The other item to watch for is JDSU's earnings
tomorrow after the close.  This stock will likely drive the
whole Optical sector, so to play it safe, you may want to exit
any open positions before the close tomorrow.

NT $82.50 +1.00 (+1.50) Showing amazing strength, right up to
the end, NT has been a great sleeper play.  Moving steadily
higher for the past several weeks, yet being kind enough to
pause occasionally for new entry points, our play has provided
numerous profit opportunities.  Even the difficult market
conditions over the past week couldn't do any serious damage
other than give us one last entry point.  The past 2 days have
seen the stock trying valiantly to break out above the $84
level, but alas, it wasn't to be.  The company announced
blowout earnings today after the closing bell, and the stock
was trading sharply higher (as high as $89) in the after-hours
session.  In line with our usual practice, all positions
should now be closed in order to avoid the typical
post-announcement decline.  As good as NT has been to us, we'll
keep it on our radar screen for another play in the near future.

VRTX $109.88 -5.31 (-10.31) By the time you read this VRTX will
have already reported its numbers to the burning ears on the
Street.  The company came in with a profitable $0.43 p/s
compared with same quarter last year of -$0.43.  Last week, the
stock's inability to truly breakout left us in a precarious
position.  The more risk-oriented aggressively used the target
shooting method to play the intraday spreads; however, most of
us were left playing the "wait & see" game.  Unfortunately, by
mid-day in Monday's session, VRTX slipped under firmer support
at $115 and didn't recover ahead of the report.  In Sunday's
write-up we stressed the importance of closing out all call
positions no later than today due to the earnings' release.
Therefore, it should be no surprise that VRTX is on our drop list
tonight.  Next month Vertex Pharmaceuticals is splitting its
stock 2 for 1.  The paydate is set for August 23rd.



PUTS:
*****

No dropped puts today.


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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                  Tuesday 07-25-2000
Copyright 2000, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.

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********************
PLAY UPDATES - CALLS
********************

CMTN $85.50 +0.81 (+1.13)  Stagnant?  Hopefully not!  CMTN was
relatively motionless on Monday as the overall market awaited
the outcome of Alan Greenspan's comments to Congress.  However,
despite the NASDAQ selloff late Monday, CMTN did manage to
hold its ground after a $6.50 swing.  Today, the stock jumped up
in early trading on a positive NASDAQ bounce, rallying through the
50-dma of $86.88 to a day high of $88.50.  The low of $84.50 broke
through support levels of the 100-dma of $86.50, and closed just
below this level at $85.50.  Although the stock appears to be
turning into positive territory, give the stock a chance to
convincingly break through $90 before considering any new call
plays.  A drive below $85 may be a good entry point, but wait for
a strong volume move before opening any new positions.  If it does
not reach these levels by later in the week, we might consider
putting this play on the backburner.  CMTN announced today that it
has locked in a deal with WEBAccess International, a
building-centric DSL provider.  This $13 mln deployment of the
concentrators marks the first major deployment of CMTN's OnPrem
product line, and probably attributed to much of the volume and
rise in the stock today.  With earnings behind it, however, the
luster of this stock may be rubbed out for the moment, but keep
your eyes peeled for moves through the key levels!

HGSI $144.88 -15.19 (-17.63) The Biotech sector was hit with a
round of profit taking Monday afternoon.  The group whipsawed to
the downside Tuesday on the heels of a disappointing earnings
report from AFFX.  Needless to say, our HGSI shed some weight
early this week.  Yet, despite the recent volatility in the
Biotech sector, the long-term outlook remains up-beat.  Gruntal
Drug analyst David Saks reiterated HGSI as his top pick within
the sector Monday, citing the growing demand for the company's
products.  For our purposes, Saks' positive remarks might
rekindle HGSI's momentum going into the company's earnings
announcement in early August.  We have not yet received a
confirmed date, when we do we'll notify ASAP.  The sharp sell-off
Tuesday might provide an entry point if a run transpires.  The
stock did fall past several support levels Tuesday, as such,
we'll watch for a quick rebound in the coming days.  A bounce off
current levels might provide an entry for the aggressive traders,
while a conservative trader might wait for HGSI to rally back
above the $150 level.  Make sure to confirm sector direction
before entering the play!

SCMR $133.88 +0.19 (-4.88) SCMR announced Monday that it had
introduced a new program that will enable service providers to
quickly deploy revenue generating optical networking solutions.
Despite the positive press release, SCMR fell along with the
broader Tech sector Monday.  The heavy selling in the broader
markets pushed SCMR below its 10-dma.  The stock did recoup some
of its losses, and edged into positive territory Tuesday.  The
blowout profit report from NT after the bell Tuesday might
provide the catalyst to re-ignite momentum in the Fiber Optic
sector once again.  Although SCMR's confirmed earnings report is
scheduled for August 24th, the impressive numbers posted by NT
might set the stage for an earnings run for our play.  SCMR did
slide going into the close Tuesday, so we'll want to wait for
the stock to reverse its course.  If SCMR rallies Wednesday
morning, an aggressive entry might be found near the 10-day,
currently at $136.88.  A more conservative entry might be
provided if SCMR rallies above resistance at $140 on healthy
volume.

ARBA $123.81 +7.06 (-1.00)  The consolidation continues.  Monday
saw the stock move down in sympathy with the NASDAQ, shedding
$8.06, or 6.46%, on about average volume.  Despite the sell-off
which saw the stock finish below its 10-dma, ARBA firmly held
support at the $110-112 area, bouncing at $113.25.  Today, we find
ARBA still riding the coat tails of the NASDAQ, making back
almost all of yesterday's losses and closing just above its
current 10-dma at $123.44.  Currently, there is support for ARBA
at $120 and below that at $117.  Resistance lies just above $125
which also happens to be its 5-dma.  In the news today, ARBA and
IBM jointly announced the first complete solution to enable
suppliers to participate in B2B E-commerce.  The new product also
uses networking solutions from CSCO and provides integrated,
plug-and-play solutions for suppliers, allowing participants to
generate B2B transactions rapidly for a low up-front cost.
According to ARBA, this new product is the first of a number of
them to be offered under the Ariba SupplierLive program.

COF $54.31 +0.38 (-1.50) Like it was following our script, COF
peeled back from the upper Bollinger band yesterday to give us
an entry point.  Losing nearly $2 on volume 50% above the ADV
took the stock right to the support level we pointed out on
Sunday.  Both yesterday and today, the stock bounced just above
$53, a historical support level that is sandwiched between the
5-dma ($54.56) and the 10-dma ($52.75).  Getting a boost from
the Financial sector today, COF looks like it may be ready to
resume the upward move that began in early July.  The one issue
that concerns us is the fact that yesterday's decline came on
very strong volume, while today's small recovery came on fairly
weak volume, 30% below the ADV.  At this point, we need to see
a resumption of buying volume before opening new positions.  If
it strengthens, consider new entries on a renewed bounce from
the $53 support level, although market nervousness could give
us an intraday dip to stronger support near $50.  In either
case, let volume be your guide and don't try to catch the
falling knife.

PVN $100.00 +1.56 (-2.38) This creditor had a heck of a day on
Monday.  PVN spiked up to $103.50, a level not seen since last
November.  Of course, traders took advantage of the peaking share
price and raked in some profits.  PVN held firm at $97.50 on the
decline and rebounded off this mark, which was right in-line with
the 5-dma line, and provided us with a solid entry point into this
momentum play.  Today, the buyers were back and PVN settled in at
a near-term support level at $100; however, the volume was only
moderate.  The strong earnings report may be a thing of the past,
however, PVN is currently a split-candidate.  With this in mind,
look for volume moves off $100 to hint at another momentum-driven
run up.

DISH $43.25 +1.19 (-1.69)  While appearing rangebound, DISH is
providing very nice intraday trading opportunities.  The 200-dma,
currently at $45.55, is no doubt blocking the stock's upward
progress.  We mentioned earlier that this technical line poses
quite the opposition.  We still anticipate that DISH can move
through $45 and $46 ahead of its upcoming earnings report.  But
of course, it's always best to wait for the confirmation before
beginning new positions.  If you want to get in earlier, then
upward bounces off the current level, which is also paralleling
the 5-dma ($43.26), are considered reasonable entries.  Echostar
is set to report earnings next week on Tuesday, August 1st,
BEFORE the bell.



*******************
PLAY UPDATES - PUTS
*******************

GTW $60.38 +1.75 (-2.50) The threat of slowing PC sales was
confirmed Monday morning after two research firms reported their
second-quarter data.  IDC and Dataquest both reported that sales
of desktop computers had significantly slowed over the past three
months.  Rival box maker DELL received negative comments from
UBS Warburg Monday morning.   When coupled with the slowing sales
figures, it sent a tremor through the Hardware sector.  GTW bounced
just below $62 during the first half of trading, but finally
gave way into the close.  The stock plunged in the final hour of
trading, en route to dipping below the $59 level.  The PC makers
enjoyed a bit of reprieve Tuesday ahead of CPQ's report.  GTW
bounced higher at the open, but ran into resistance at $62.  The
stock subsequently rolled over near the close of trading and fell
below the $61 level.  Depending upon how traders view the CPQ
report, GTW could fall under selling pressure again Wednesday.
Signs of weakness in the PC sector might warrant entry at current
levels.  For a more conservative entry point, wait for GTW to fall
below $61 before engaging.

CMOS $48.63 +1.44 (+1.94) SG Cowen crashed our put party early
Monday morning by gracing the Semiconductor sector with positive
comments.  The brokerage firm reiterated its ratings on several
capital equipment stocks including CMOS.  Our play gapped higher
on the news Monday morning, but showed signs of weakness going
into the close.  However, the stock gapped higher again Tuesday
morning, and benefited from a burst of buying near the close
of trading.  Despite the late-day rally, CMOS's recent rise early
this week might provide a good entry if the Semis fall under
pressure again.  If the stock's rally continues, CMOS will face
formidable resistance near $50.  An aggressive trader might look
for an entry if CMOS fails to rally above that level.  Fellow
chip equipment maker LRCX will report results after the close
Wednesday, which might set the tone for the Chip sector.  If the
selling resumes, you might consider entering the play if CMOS
falls below support at $48.  A more conservative entry might be
found if the sellers return in force and CMOS falls beneath the
$46 level.

RFMD $84.75 +8.50 (+9.38)  After taking a beating, RFMD is
desperately trying to make a comeback.  On Monday, the stock
attempted to break resistance at $80, but failed, selling off with
the rest of its sector on a weak day.  Finding support at $75,
RFMD managed to hang on to a $0.88 gain on average volume while
the NASDAQ got hammered.  Today, RFMD moved up strongly on bullish
comments by the company regarding the 2001 outlook, along with an
announcement of a 2-for-1 stock split.  According to the CEO
David Norbury, "We are on target for our fiscal 2001 plan and
currently project another record year of revenue and earnings."
Along with an up market, this was enough to bring the buyers in
force.  However, it is interesting to note that despite the strong
move up today, RFMD couldn't break resistance at $85 which also
happens to be its 10-dma.  For those watching the downward
regression channel, the top is currently near the $90 area.  Keep
an eye on this level and make sure resistance holds before
entering for a possible post-split announcement slump.

IP $34.19 -0.56 (-0.56) Not exactly the most exciting play, IP
has failed to provide us with a meaningful move either up or
down.  The price has become trapped between the 100-dma ($36.25)
on the upside and support at $34, also the site of the 50-dma.
Since the company ran up before earnings (announced on July
11th), the company has seen its trading volume dry up to the
point that the past 2 days have seen less than half the daily
average number of shares trade hands.  With earnings winding
down, and IP only meeting estimates, there is little incentive
for buyers in the near future.  The DJIA is having a hard time
moving higher and if it continues to weaken, IP will likely go
along for the ride.  With the stock closing just fractionally
above support, IP looks like it may be ready to break lower, but
wait for selling volume to push shares below this level before
initiating new positions.  You may be able to get a better entry
if the stock gets an intraday bounce up to resistance, but make
the sellers confirm the rollover before jumping into the play.

CMRC $49.00 -1.69 (-4.38) Not too shabby for two days of
trading. Monday offered great entries into CMRC's post-earnings
decline.  Initially you could've got in at $54, then
opportunities became readily available in the $52 and $53 range
for the better part of the session.  Today, CMRC progressively
moved lower and established a short-term support at $49, while
taking dips to an intraday low at $47.13.  The last-minute sell-
off on increasing volume is a good sign that CMRC may move
towards the firmer support at $45, but expect some resistance
here.  If it penetrates this first level of support, then the
share price could go for broke and land on $40.  Nevertheless,
keep the stops rather tight to protect your profits - assuming
you haven't already collected and are now waiting on the
sidelines looking for another entry.  If you are, be aware that
there is some news, which may or may not rattle some cages.  DLJ
Securities came forward today and reiterate its Buy rating for
CMRC.  Likely, this recommendation was in response to the
company's new partnership with General Electric (GE).  Together
they plan to create a formidable B2B exchange to compete with
the IBM and Ariba (ARBA) alliance.

ELON $37.63 +1.56 (-1.38) The downtrend cycle continues!  As of
last week, ELON violated the last supporting technical line -
the 200-dma ($41.45) after reporting decent quarterly earnings.
Currently ELON is headed toward historical support at $30!
Today's intraday low at $35.25 is the new mark to penetrate in
the coming days.  It's definitely bearish that ELON is
developing a pattern of lower-highs too.  This week $38.50 is
serving as the overhead resistance.  So look for downward moves
off this level as potential entry points.


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**************
NEW CALL PLAYS
**************

AMCC - Applied Micro Circuits $171.81 +13.38 (+12.06 this week)

Fulfilling the need for speed, AMCC is a global provider of
high-performance, high-bandwidth integrated circuits used to
control the high-speed flow of transmissions through fiber-optic
telephone networks.  Communications products, used in LANs and
WANs, account for 55% of the company's sales.  The company's
chips are also used in automated test equipment, high-speed
computing, HDTV, and military applications.  The company which
is growing through acquisitions, has a top-flite client list,
including Nortel, Raytheon, Alcatel, Cisco, 3Com and Lucent.

It's hard to keep a good stock down, and with blowout earnings
fueling the stock and positive analyst comments about the
Semiconductor sector (see below), AMCC looks like it has plenty
of room to run.  Leading off the July earnings season, the
stock was driven nearly $20 higher in the week leading up to
its report, and investors were so pleased, AMCC gapped up over
$20 the next day.  Proving how strong the stock is, buyers
have continued to support the stock throughout earnings season,
tagging a new all-time high of $174 today.  Underscoring
investors' appetite for AMCC is the fact that since we last
played the stock in late May and early June, the ADV has
increased by over 25%, and now sits over 5 mln shares.
After consolidating its post-earnings gains, the stock really
got running again with today's strong double-digit gain, and
based on apparently improving sentiment in the sector, the stock
could still have some significant upside.  The 5-dma (currently
at $159.56) has been providing support over the past couple
weeks and conveniently sits right at the support created by the
stock's prior high from late March.  Below current levels, AMCC
has intraday support at $165 and $162, with firmer support at
$155.  Look for a volume-backed bounce from support and then
feel free to jump aboard.

News has been sparse for AMCC since July 12th, when the
company reported earnings that beat estimates by 4 cents
accompanied by a year-over-year revenue growth rate of over
130%.  This morning, Morgan Stanley Dean Witter semiconductor
analyst Mark Edelstone came out strongly positive on the whole
sector, saying "investor sentiment should improve significantly
and immediately."  Look for this change in sentiment to lift
the strongest stocks first, and AMCC is definitely in that
club.

BUY CALL AUG-170 AZV-HN OI= 413 at $16.38 SL=11.75
BUY CALL AUG-175*AZV-HO OI= 274 at $13.75 SL=10.25
BUY CALL AUG-180 AZV-HP OI= 710 at $11.50 SL= 8.50
BUY CALL SEP-175 AZV-IO OI=   1 at $22.13 SL=16.50
BUY CALL SEP-180 AZV-IP OI=  11 at $19.63 SL=14.25

SELL PUT AUG-160 AZV-TL OI= 182 at $ 9.25 SL=12.25
(See risks of selling puts in play legend)

Picked on July 25th at  $171.81     P/E = 434
Change since picked       +0.00     52-week high=$174.00
Analysts Ratings     12-2-0-0-0     52-week low =$ 19.88
Last earnings 07/00   est= 0.17     actual= 0.21
Next earnings 10-11   est= 0.23     versus= 0.08
Average Daily Volume = 5.30 mln



ATON - Alteon Websystems $155.38 -3.00 (+11.81 this week)

In the race for faster communication, Alteon makes products to
speed up the servers that feed data into networks and Web sites.
The company offers Gigabit Ethernet server switches, and the
controlling operating system to manage server "farms", or servers
that handle large amounts of data.  Alteon sells it gear to
manufacturers, service providers, and content publishers.

Not your typical post-earnings sell-off poster child.  ATON has
been powering higher after absolutely blowing away consensus
estimates for its fiscal fourth quarter results, which it
reported late last week.  ATON surpassed analysts' profit
predictions by a stunning 466%!  Who said the Net was dead?
ATON surged into profitability a full three-quarters ahead of
schedule.  The company's impressive results stem from the ever-
increasing demand for its products such as Web switches,
adapters, and traffic management software for Internet data
centers.  In conjunction with the stellar profit report, ATON
said it had acquired privately-held Pharsalia Technologies for
$221 mln in stock.  Pharsalia will bring its innovative content
delivery products to ATON to further address Web switching and
Web hosting needs.  Along with the upside profit surprise,
analysts applauded the acquisition.  Moreover, just before
announcing blowout earnings and the acquisition, ATON revealed
its new Webworking Services for next-generation e-Business
infrastructure.  Many on Wall Street feel that ATON is emerging
as a franchise player in the Internet infrastructure arena, and
have mentioned the company in the same breath with such Tech
heavyweights as Juniper and Redback.  The positive outlook,
fueled by spectacular earnings has pushed ATON to record highs.
Additionally, for a little kicker, the stock is trading well into
split territory with plenty of shares to authorize a 2-for-1.
ATON pulled back Tuesday on moderate profit taking.  The stock
bounced off support at $150 to finish the day strongly.  Look for
entry Wednesday morning if ATON's rally resumes and the stock
clears resistance at $160, its 52-week high.  A bounce off $150
might provide an entry on early morning weakness.

The Wall Street crowd was caught completely off-guard by ATON's
stunning fourth-quarter results.  Immediately after the report,
Salomon reiterated its Buy High rating and established a price
target ranging between $170 and $210.  Robertson Stephens
followed suit by reiterating its Buy rating as well.  Along with
the praise, several analysts appropriately revised their profit
targets upward.

BUY CALL AUG-150*UAO-HW OI=199 at $19.25 SL=14.00
BUY CALL AUG-155 UVY-HK OI=  1 at $17.00 SL=12.25
BUY CALL AUG-160 UVY-HL OI=  2 at $14.63 SL=10.75
BUY CALL SEP-155 UVY-IK OI=753 at $27.25 SL=19.75
BUY CALL SEP-160 UVY-IL OI= 60 at $22.25 SL=16.00

SELL PUT AUG-140 UAO-TU OI= 46 at $ 9.13 SL=12.00
(See risks of selling puts in play legend)

Picked on July 25th at  $155.38    P/E = N/A
Change since picked       +0.00    52-week high=$160.56
Analysts Ratings      5-3-0-0-0    52-week low =$ 41.00
Last earnings 06/00   est= 0.03    actual=  0.16
Next earnings 08-18   est= 0.05    versus= -0.45
Average Daily Volume   =  946 K



LEH - Lehman Brothers Holdings $121.09 +3.44 (+4.28 this week)

Lehman Brothers is a global investment firm that services high
net-worth institutional investors.  They provide a vast array of
trading and financing services and are the lead underwriter of
global equity and fixed-income securities.  The firm is also
leading the charge into online bond offerings in the U.S.
They're regionally headquartered in New York, London, and Tokyo.

Mergers & Acquisitions, oh my!  Most of the firms in the banking
and investment industry have merged together in recent years,
with the exception of two independents:  Bear Stearns and Lehman
Brothers.  This puts both of them under scrutiny as potential
takeover targets.  And so we have it, scuttlebutt on the Street
once again about whom will be next.  All in all, LEH has been
advancing quite well this month.  First breaking the
psychological century mark on July 11th and "officially" setting
itself up as a split-candidate.  This week the M&A talk gave LEH
the boost it needed to jump out of the $110 and $115 range.  And
today, with others in its sector also strengthening, LEH closed
strong above $120.  The stock-specific momentum coupled with the
overall market conditions prompted us to add LEH to our call
list tonight.  Near-term support is developing at $118 and $120,
but dips back to the 5-dma ($115.21) could also be used for
entries into this technical and news-driven momentum play.
However, watch for a bit of profit taking over the next few
sessions.  In all its glory, LEH set its second consecutive 52-
week high ($121.75) today during intraday trading and this may
trigger some traders to take some cash off the table.  Earnings
for Lehman Brothers aren't expected until mid-September.

Riddell Sports announced today that it hired Lehman Brothers to
advise it on strategic business options, which may include a
merger or sale of the company.  The company wants to boost its
stock price and improve business performance.

BUY CALL AUG-110 LEH-HB OI=1488 at $13.63 SL=10.25
BUY CALL AUG-115*LEH-HC OI= 609 at $ 7.88 SL= 5.75
BUY CALL AUG-120 LEH-HD OI= 645 at $ 7.00 SL= 5.00
BUY CALL AUG-125 LEH-HE OI=   0 at $ 4.88 SL= 3.00  Wait for OI
BUY CALL SEP-125 LEH-IE OI=   0 at $ 8.13 SL= 5.75  Wait for OI
BUY CALL OCT-120 LEH-JD OI=2158 at $12.88 SL= 9.75

Picked on July 25th at  $121.09    P/E = 11
Change since picked       +0.00    52-week high=$121.75
Analysts Ratings      3-6-1-0-0    52-week low =$ 47.56
Last earnings 06/00   est= 2.43    actual= 2.78
Next earnings 09-25   est= 2.14    versus= 2.20
Average Daily Volume = 1.24 mln



NTAP - Network Appliance $106.19 +3.38 (-3.19 this week)

As indicated by its name, NTAP pioneered the concept of the
network appliance, an extension of the industry trend toward
specialized devices that perform a specific function in the
network.  NTAP designs, manufactures, markets and supports
high performance network-attached data storage and access
devices.  These products, including the company's NetApp file
servers provide fast, simple, reliable and cost-effective file
service for data-intensive network environments.  The company
is also embracing online business through its NetCache Web
caching appliances, which are designed to ease Internet
bandwidth demands by storing information physically closer to
users.

Investors in NTAP haven't yet figured out that the broader
markets are rangebound.  Internet infrastructure stocks seem to
be back in favor, with the likes of EMC and Nortel Networks
posting very strong earnings and revenue growth.  NTAP's tenuous
recovery that began in late May, really got a shot in the arm a
couple weeks ago as earnings season got underway and the NASDAQ
finally powered through 4200 for the first time since early
April.  After moving up nearly 40% between July 10-20, NTAP was
due for a pullback, and we got just that in the past 2 days.
The stock pulled back yesterday to support near $100, and
confirmed this support level early this morning as it bounced
just above $100 before moving up for a gain of $3.38 on the
day.  Volume was a bit light at only about 75% of the ADV, but
the heavier volume was definitely on the buy vs. the sell side.
Confirming support near $100 is the 10-dma, which currently sits
at $101.31.  Below $100, the stock has support at $95 and then
much stronger support at $89-90, confirmed by the 30-dma at
$88.25.  With the impressive strength demonstrated in a
rangebound market and earnings currently scheduled for August
17th, look for NTAP to continue higher.  Consider initiating
new positions on a volume-backed bounce from support, but wait
for the bounce.  In this uncertain market environment, it won't
pay to blindly try to catch a falling knife.

Continuing to strengthen its client base, NTAP added Gig.com and
Doubleclick (DCLK) to its stable of customers today.  Gig.com
selected NTAP network storage solutions to power its new digital
music Internet infrastructure and content management system.
DCLK announced their selection of NTAP network storage solutions
to help support its data management needs for both its UNIX and
Windows NT application environments.  DCLK will use the NTAP
storage appliances to ensure scalability, reliability, high
performance, and increased availability for its critical-data
infrastructure.

BUY CALL AUG-105 ULM-HA OI=475 at $10.13 SL= 7.00
BUY CALL AUG-110*ULM-HB OI=680 at $ 7.63 SL= 5.25
BUY CALL AUG-115 ULM-HC OI=384 at $ 6.00 SL= 4.00
BUY CALL SEP-110 ULM-IB OI=  0 at $12.50 SL= 9.50
BUY CALL SEP-115 ULM-IC OI=312 at $10.38 SL= 7.25

SELL PUT AUG-100 ULM-TT OI=250 at $ 5.75 SL= 8.00
(See risks of selling puts in play legend)

Picked on July 25th at  $106.19     P/E = 483
Change since picked       +0.00     52-week high=$124.00
Analysts Ratings     16-4-0-0-0     52-week low =$ 12.44
Last earnings 05/00   est= 0.06     actual= 0.07
Next earnings 08-17   est= 0.07     versus= 0.04
Average Daily Volume = 5.14 mln




*************
NEW PUT PLAYS
*************

FON - Sprint Corporation $40.69 -1.88 (-2.75 this week)

Sprint is the #1 non-Baby Bell local service phone company, with
more than 8 mln lines in 18 U.S. states.  The company is also one
of the premier providers of long distance service.  Sprint also
distributes telecom equipment, publishes directories, and has
controlling interests in EarthLink and Call-Net.  WorldCom's
agreement to buy Sprint, which faced opposition from antitrust
regulators at the DOJ, has been terminated.

Nobody wants FON.  After the Justice Department axed the WCOM
merger, investors hung up on FON.  To no avail, FON beat analysts'
forecasts when the company reported its second-quarter results
last week.  But, investors were less than impressed with the
report.  Coupled with the bitter pill of government intervention,
FON has faced increasingly stiff competition in the long-distance
market.  While the company has less of a stake in long-distance
services, it has hurt nonetheless.  The entrance of major
European telecom providers into the U.S. market has taken market
share from FON, which has essentially rubbed salt into the WCOM
wound.  After the DOJ forbid the merger, it was speculated that
FON would be bought by either Deutsche Telekom (DT) or BellSouth
(BLS).  Of course, DT recently bid for VoiceStream, and analysts
say a takeover by BLS is unlikely at best.  The poor outlook for
FON is prevalent in the host of analyst comments recently.  The
notorious Salomon Smith Barney Telecom analyst Jack Grubman cut
his rating on FON to a Neutral from a Buy.  Grubman cited FON's
valuation, and said there were better alternatives in the Telecom
sector.  PaineWebber analyst Eric Strumingher also cut his price
target to $48 from $58.  Strumingher cited, "The reduced
probability that Sprint is acquired in the near-term."  The
combination of analyst cuts and the merger break have sent FON to
new 52-week lows.  Volume has been swelling recently as
institutions have been selling with fervor.  FON does not have
any near-term support below its current levels, only its intra-
day low of $40.25.  With that said, consider entry at current
levels if the selling resumes and FON falls below $40.  Confirm
a continued decline with heavy volume.  An aggressive trader
might look for entry if FON rallies out of relief and bumps into
resistance at $41 or higher at $42, then subsequently rolls over.

BUY PUT AUG-45*FON-TI OI=3635 at $5.38 SL=3.50
BUY PUT AUG-40 FON-TH OI=1218 at $2.00 SL=1.00

Average Daily Volume = 3.35 mln




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

PVN - Providian Financial Bancorp $100.00 +1.56 (-2.38 this week)

Providian Financial Corporation provides consumer lending
products such as home loans, credit cards, and other fee-based
products. The Company mainly issues secured credit cards to
customers with not-so-perfect credit histories and charges a
high fee and high interest rates. With the use of direct-mail,
phone solicitations and online advertising, Providian has been
able to attract more than 12 mln customers.  The company has
operations in the U.S. and the U.K.

Most Recent Write-Up

This creditor had a heck of a day on Monday.  PVN spiked up to
$103.50, a level not seen since last November.  Of course, traders
took advantage of the peaking share price and raked in some
profits.  PVN held firm at $97.50 on the decline and rebounded off
this mark, which was right in-line with the 5-dma line, and
provided us with a solid entry point into this momentum play.
Today, the buyers were back and PVN settled in at a near-term
support level at $100; however, the volume was only moderate.
The strong earnings report may be a thing of the past, however,
PVN is currently a split-candidate.  With this in mind, look for
volume moves off $100 to hint at another momentum-driven run up.

Comments

Closing right at the key psychological level of $100, we are
looking to see PVN continue its upward.  The trend today was
steady after Monday's selloff provided a beautiful entry at the
$98 area.  Monday's selling appears to have shaken out some of
the weaker hands, so watch for PVN to hold over $100.  Bounces
from this level would offer good entries.  Financials are
beginning to show life and investors may turn to them as a safe
haven from the tech selling.

BUY CALL AUG- 95 PVN-HS OI=  97 at $7.13 SL=5.25
BUY CALL AUG-100 PVN-HT OI= 370 at $4.88 SL=3.25
BUY CALL AUG-105*PVN-HA OI=2792 at $2.75 SL=1.25
BUY CALL SEP-105 PVN-IA OI= 131 at $5.00 SL=3.25
BUY CALL SEP-110 PVN-IB OI= 332 at $3.63 SL=1.75

Picked on July 23rd at  $102.38    P/E = 27
Change since picked       -2.38    52-week high=$118.50
Analysts Ratings     16-7-2-0-0    52-week low =$ 58.13
Last earnings 06/00   est= 1.25    actual= 1.29
Next earnings 10-19   est= 1.34    versus= 1.04
Average Daily Volume = 1.04 mln



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No obligation! No invoices! And nothing to cancel!
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*****************************************************************

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

Inflation fears give way to bargain hunting...

Monday, July 24

Stocks closed lower today amid worries over weaker-than-expected
corporate earnings reports.  The Dow Industrials ended down 48
points at 10,685 and the Nasdaq Composite Index finished 111
points lower at 3981.  The S&P 500 Index closed down 15 points
at 1464.  Trading volume on the NYSE hit 873 million shares with
declines beating advances 1,751 to 1,106.  Trading activity on
the Nasdaq Index was average at 1.45 billion shares exchanged.
Technology declines beat advances almost 2 to 1.  In the bond
market, the 30-year Treasury fell 13/32, pushing its yield up to
5.81%.


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

Bed-Bath-Beyond   BBBY   AUG32P/AUG35P  $0.43  credit  bull-put
Pall Corporation  PLL    AUG22C/AUG17P  $1.62  credit  strangle
Sun Microsystems  SUNW   OCT125C/OC85P  $0.12  debit   synthetic
Voicestream       VSTR   AUG160C/A165C  $2.00  debit   bull-call
Voicestream       VSTR     AUG120-NP    $2.00  credit  naked-put

Our new plays were an exciting group during the Monday meltdown.
Bed, Bath and Beyond moved down sharply with the broader markets
on speculation that the summer slump is beginning.  A test of the
support at $36 will be the first indication of the strength of
the issue.  Pall Corp. traded in a small range and the target
credit was within 1/8 of the quoted price late in the day.  Sun
Microsystems opened higher but eventually slumped with other
technology stocks.  The suggested position traded at a credit in
the afternoon session.  The big surprise was Voicestream.  On
Sunday, Deutsche Telekom (DT) said it would acquire the company
for $50.7 billion in cash and stocks.  VoiceStream had run up in
the days leading up to the announcement and investors slammed the
issue for a $20 loss.  With the bearish analysts' comments before
the market on Monday and the stock's opening slide, it was very
speculative to continue with a bullish play.  However, we will
track the issue based on the recommended position.


Portfolio Plays:

The market slumped today with the Nasdaq falling precipitously
as investors worried over the outlook for technology companies.
Weakness in major telecom and computer hardware stocks pulled
the hi-tech composite lower.  The Dow industrials also declined
amid concerns over inflation and the economy.  Analysts noted
that traders were unwilling to open bullish positions ahead of
the employment cost index and the second quarter GDP, due out
later this week.  The employment cost index is likely to garner
the most attention since the Federal Reserve has often pointed
to wage-level inflation as a key source of price pressures.  In
addition, investors are looking for hints from FOMC Chairman
Alan Greenspan as he finishes the second leg of his semi-annual
address to Congress.  The Fed chief is expected to clarify his
previous comments when he speaks Tuesday before the House
Banking Committee on Tuesday.  In the broader market; trucking,
drugs and airline issues rallied while oil service, hardware and
jewelry stocks consolidated.

The major concerns for the market continue to be over earnings
and unfortunately, a number of bellwether technology stocks have
yet to report quarterly numbers.  Until these results are known,
investors will continue to be cautious.  Our portfolio only has
a few remaining issues in the technology group and we believe
they are top-tier companies.  The positions currently on the
watch-list include Advanced Fibre (AFCI), which is testing the
bottom of a recent trading range near $44, and American Online
(AOL) which has retreated from the pre-earnings rally into a
previous congestion area.  Both of these plays will be closed if
recoveries do not occur in the next few sessions.


Tuesday, July 25

The market managed a partial recovery today, rebounding from the
recent slump on Greenspan's outlook for a balanced economy.  The
Dow Jones industrial average advanced 14 points to 10,699 while
the broader Standard & Poor's 500 Index was up 10 points to 1,474.
The technology-heavy Nasdaq composite gained 48 points to 4,029,
recovering almost half of Monday's 113-point loss.  Volume on the
NYSE hit 966 million shares, with advances beating declines 1,452
to 1,386.  Trading volume on the Nasdaq reached 1.4 billion shares
with declines beating advances 2,150 to 1,846.  The 30-year U.S.
Treasury bond was up 3/32, with the yield falling to 5.81%.


Portfolio Plays:

The market rebounded today on strength in bellwether issues as
traders went on a bargain-hunting spree.  Inside the technology
group, semiconductor stocks led the rally and computer hardware
companies also moved higher.  The broader market enjoyed gains
in finance and brokerage issues, gold and utility stocks.  The
pre-market report of stronger-than-expected economic numbers
limited investor optimism.  June existing home sales rose 2.8%
to a 5.23 million rate, much higher than the 5.01 million rate
expected by a survey of economists.  Experts say mortgage demand
has been very strong in recent months and home sales have been
soft only because of the lack of inventory.  They also believe
that home sales and spending in general will continue to rise,
and that suggests an increase in rates in the near future.  To
further complicate the outlook, Federal Reserve Chairman Alan
Greenspan testified about the future of the economy before the
House Banking Committee.  His remarks were similar to Thursday's
speech before the Senate Banking Committee, and he offered no
other clues concerning the potential for an interest rate hike
at the August meeting of the FOMC.

Our Spreads portfolio enjoyed a number of bullish surprises in
today's session.  Sun Microsystems rallied almost $9 amid a slew
of favorable announcements including the acquisition of Gridware,
a privately owned maker of resource management software.  SUNW,
the largest maker of computers that serve up Web pages, reported
that when combined with Sun's new Solaris Operating Environment,
Gridware software will help Sun's customers reduce their costs
while delivering products to market in less time.  After just one
day, our synthetic long position has profited $2.50.  Interstate
Bakeries (IBC) jumped $1.31 to $17.75 after the baking firm said
it will acquire 15.5 million of its shares from Ralston Purina,
reducing Ralston's stake in IBC to 29.5%.  The purchase price will
be an average of the stock's closing price in the 20 days prior to
July 31.  The companies also amended their shareholder agreement,
changing it so Ralston is no longer required to reduce its stake
in IBC to less than 20% by September 30.  Our bullish diagonal
position is now at maximum profit and should be closed to lock-in
gains.  Secure Computing (SCUR) rallied $1.38 on strength in the
Internet Security sector.  This position had created some concern
earlier in the month but as expected, the earnings were favorable
and the issue rebounded.  The bullish debit position provided a
$0.43 profit (on $2.68 invested) in today's session and that may
be enough to warrant exiting the play.

On the downside, both of our Reader's Request plays in the Retail
sector have endured losses in recent sessions.  Today, Bed, Bath
and Beyond (BBBY) added $0.38 but American Eagle Outfitters (AEOS)
slumped $0.75 on weakness in the flagging retail industry.  The
group slipped again today after restructuring announcements from
Circuit City and Kmart hurt the sector.  Circuit City (CC) tumbled
after reporting it was pushing appliances out of the stores to
make room for the more profitable electronics products and Kmart
(KM) moved lower after announcing it will take a pre-tax charge of
over $750 million to cover earnings shortfalls and the costs of
closing 72 stores.  Kmart also said it will miss second-quarter
and full-year earnings.  Our bullish debit position in AEOS is now
in danger of a loss and if the issue fails to rebound from the
recent support area near $14, we will consider closing the play.
BBBY has an upcoming split to generate interest in the issue and
with our cost basis is below the current share value, we expect
a recovery to occur.


Summary of Monthly Positions (for July, 2000):

******************************************************************
    - CREDIT SPREAD SUMMARY -
******************************************************************
Stock   Pick     Last     Position    Credit  Cost    G/L   Status

AFCI   $54.81   $47.00   AUG42P/45P   $0.38  $1.62  ($1.25)  Open
AFM    $75.00   $71.38   JUL60P/65P   $0.43  $0.00   $0.43  Closed
ALTR  $119.94  $110.00   AUG90P/95P   $0.62  $1.25  ($0.62)  Open
ASWX   $67.75   $74.69   JUL45P/55P   $0.75  $0.00   $0.75  Closed
CSCO   $69.50   $68.00   AUG55P/60P   $0.62   New     Play   Open
CVTX   $55.62   $78.50   JUL35P/40P   $0.75  $0.00   $0.75  Closed
EXDS   $46.38   $55.88   JUL30P/32P   $0.38  $0.00   $0.38  Closed
IBM   $109.56  $114.75   JUL95/100P   $0.43  $0.00   $0.43  Closed
IBM   $109.56  $114.75  JUL125C/120C  $0.56  $0.00   $0.56  Closed
IRF    $64.50   $61.88   AUG45P/50P   $0.88   New     Play   Open
MACR  $101.00   $79.06   JUL65P/70P   $0.62  $0.25   $0.38  Closed
MO     $25.50   $25.38   AUG27C/30C   $0.43   New     Play   Open
NMSS  $105.50  $122.88   JUL80P/85P   $0.50  $0.00   $0.50  Closed
NTAP   $85.31  $109.38   JUL60P/65P   $0.62  $0.12   $0.50  Closed
NTAP   $94.56  $109.38   AUG70P/75P   $0.68  $0.43   $0.25   Open
PLT   $115.50  $140.25   JUL90P/95P   $0.25  $0.00   $0.25  Closed
SANG   $27.81   $22.00   JUL35C/30C   $0.62  $0.00   $0.62  Closed
SEE    $53.81   $50.75   JUL65C/60C   $0.43  $0.00   $0.43  Closed
TEK    $64.00   $65.06   JUL45P/50P   $0.38  $0.00   $0.38  Closed
VITR   $62.62   $54.94   JUL45P/50P   $0.50  $0.00   $0.50  Closed
VRTA   $82.00   $83.63   AUG55P/60P   $0.75  $0.75   $0.00   Open
YHOO  $116.50  $138.31  JUL145/J140C  $0.43  $0.00   $0.43  Closed

Note: Some of these positions were closed early to protect profits
or prevent (limit) potential losses.

A credit spread is profitable if the cost to close the position
is less than the initial premium received for the spread.  However,
because we track the plays based on the current closing cost/value,
the gains for credit spreads will rarely be reflected until the
play is closed.
******************************************************************
- CALENDAR SPREAD SUMMARY -
******************************************************************
Stock  Pick    Last     Position     Debit   Value    G/L   Status

CIT   $20.00  $19.88  AUG22C/JUL22C  $0.56   $0.43  ($0.12) Closed
CMX    $8.93   $8.93  DEC10C/AUG10C  $0.75   $0.62  ($0.12)  Open
COMS  $57.19  $68.00  AUG60C/JUL60C  $2.31   $2.75   $0.43  Closed
GMGC   $6.50   $6.78   NOV7C/AUG7C   $0.50   $1.00   $0.50   Open
K     $29.81  $27.69  SEP30C/AUG30C  $0.56   $0.38  ($0.18)  Open
LNY    $7.06   $7.69   OCT7C/AUG7C   $0.18   $0.25   $0.06   Open
NUHC  $26.31  $26.19  OCT30C/JUL30C  $2.38   $3.12   $0.75  Closed
PSSI  $10.31   $7.00  NOV12C/AUG12C  $0.50   $0.25  ($0.25)  Open
RHAT  $23.38  $25.31  SEP30C/JUL30C  $2.00   $2.50   $0.50  Closed

Note: A number of these positions were closed early to protect
profits or prevent (limit) potential losses.

The calendar (or time spread) is profitable if the value of the
position exceeds the initial debit (or cost-basis) at the end of
the expiration period for the long position.  However, because we
track the plays based on the current closing cost/value, the gains
for time spreads will rarely be reflected until the play closes.
Each month, as we sell a new option against the long position, the
net cost should decline or the position value should increase.
******************************************************************
                   - COVERED-CALLS WITH LEAPS -
******************************************************************
Stock  Pick    Last     Position     Debit   Value    G/L   Status

AET  $64.06   $57.25  JAN65C/AUG70C  $5.75   $4.88  ($0.88) Closed
CS   $25.43   $30.38  JAN15C/AUG25C  $6.50   $9.50   $3.00  Closed
JNJ  $81.50   $92.25  JAN85C/AUG95C  $8.00  $11.50   $3.50  Closed
MDT  $39.38   $50.50  JAN37C/JUL50C  $0.62  $15.75  $15.12  Closed
ONE  $28.56   $33.06  JAN20C/JUL25C  $4.62   $5.12   $0.50  Closed
SEPR $84.00  $129.81  JAN60C/JUL100 $28.75  $43.00  $14.25  Closed
TX   $58.00   $49.81  JAN45C/AUG55C  $9.12   $8.50  ($0.62) Closed
TX   $58.00   $49.81  JAN60C/AUG60C  $1.75   $2.38   $0.62  Closed
VOD  $49.25   $44.81  JAN45C/JUL45C  $2.00   $4.12   $2.12  Closed

A Covered-Calls with LEAPS play is profitable if the value of the
position exceeds the initial debit (or cost-basis) at the end of
the expiration period for the long position.  However, because we
track the plays based on the current closing cost/value, the gains
for time spreads will rarely be reflected until the play closes.
Each month, as we sell a new option against the long position, the
net cost should decline or the position value should increase.
******************************************************************
  - DIAGONAL SPREAD SUMMARY -
******************************************************************
Stock  Pick    Last     Position     Debit   Value    G/L   Status

ADAC  $18.25  $17.13  AUG17C/JUL20C  $1.50   $2.12   $0.62  Closed
ALL   $24.88  $24.75  OCT20C/AUG25C  $4.00   $3.88  ($0.12)  Open
CNC    $6.93   $8.13   AUG5C/JUL7C   $1.62   $2.43   $0.81  Closed
CYTO   $8.50   $7.81   AUG7C/JUL10C  $1.56   $2.12   $0.56  Closed
EMLX  $69.50  $60.50  AUG50C/JUL65C $13.50  $14.38   $0.88  Closed
FNV   $15.31  $15.25   JAN7C/AUG12C  $4.38   $4.00  ($0.38)  Open
IBC   $15.25  $15.75  OCT12C/AUG15C  $1.38   $2.12   $0.75   Open
IMNX  $44.69  $57.75  SEP35C/JUL45C  $8.88   $9.62   $0.75  Closed
ISSI  $35.31  $29.25  OCT25C/JUL35C  $8.75   $9.50   $0.75  Closed
MAIL   $7.06   $8.63   NOV5C/AUG7C   $2.18   $2.50   $0.31   Open
NGH   $19.68  $25.13  SEP15C/JUL22C  $5.75   $7.25   $1.50  Closed
PBY    $7.50   $5.81   OCT5C/JUL7C   $1.62   $1.50  ($0.12) Closed
PSFT  $18.38  $21.88  SEP20C/AUG22C  $2.38   $2.25  ($0.12)  Open
TMO   $21.56  $22.44  SEP20C/AUG22C  $1.12   $1.88   $0.75   Open
TX    $55.00  $49.81  OCT40C/AUG55C  $8.38  $10.50   $2.12  Closed

Note: The majority of these positions were closed early to protect
profits or prevent (limit) potential losses.

The diagonal spread is profitable if the value of the position
exceeds the initial debit (or cost-basis) at the expiration of
the long position.  However, because we track the plays based on
the current closing cost/value, the gains for diagonal spreads
will rarely be reflected until the play closes.  Each month, as
we sell a new option against the long position, the net cost
should decline or the position value should increase.
******************************************************************
      - DEBIT SPREADS -
******************************************************************
Stock  Pick    Last     Position    Debit   Value    G/L   Status

AEOS  $16.12  $15.75   AUG12C/15C   $2.00   $1.50  ($0.50)  Open
AOL   $62.06  $57.63   AUG50C/55C   $4.31   $3.62  ($0.68)  Open
CVG   $48.75  $51.44   JUL35C/45C   $8.25   $9.88   $1.62  Closed
FVCX  $10.12   $7.47    JUL5C/7C    $2.12   $2.43   $0.31  Closed
HYSL  $32.31  $26.75  JUL30CC/25NP $25.62  $26.75   $1.12  Closed
PWJ   $49.18  $68.88   JUL40C/45C   $4.00   $5.00   $1.00  Closed
SCUR  $18.68  $18.25   AUG15C/20C   $2.68   $2.50  ($0.18)  Open

A debit-spread is profitable if the value of the position exceeds
the initial cost of the spread when the play is closed.  However,
because we track plays based on the current cost/value, potential
gains may not be reflected until both positions are closed.
******************************************************************
    - CREDIT STRANGLES -
******************************************************************
Stock   Pick     Last      Position    Credit  Cost   G/L   Status

JNPR  $119.00  $160.81   JUL175C/J82P  $4.50  $0.00  $4.50  Closed
UIS    $24.62    $9.94    JUL35C/20P   $1.38  $3.25 ($1.88) Closed
TVGIA  $34.93   $45.62    JUL45C/45P   $0.75  $0.62  $0.12  Closed

Note: The Juniper position finished at maximum profit but in our
personal portfolio, the short call was "covered" with stock prior
to the expiration.  Our position is the AUG-150CC at a cost basis
of $142.50.

Credit strangles are profitable if both positions remain OTM until
expiration.  The cost-to-close price can be used to compare the
initial opening credit to the current spread value.
******************************************************************
      - DEBIT STRADDLES -
******************************************************************
Stock  Pick     Last    Position     Debit    M/V     C/V   Status

AGE   $45.25   $46.06   NOV45C/45P   $7.12   $7.00   $7.00   Open
AEG   $40.25   $38.31   AUG40C/40P   $6.50   $6.38   $3.00  Closed
ICCI  $15.00   $15.75   AUG15C/15P   $3.93   $5.25   $2.06  Closed
JNY   $30.00   $25.25   AUG30C/30P   $7.12   $8.50   $5.00  Closed
LII   $11.75   $13.94   SEP12C/10P   $0.81   $2.50   $2.00  Closed
NITE  $29.69   $30.88   OCT30C/30P  $10.12  $11.12   $9.00   Open
NOVN  $30.12   $28.88   AUG30C/30P   $5.25   $6.62   $4.50  Closed

          M/V = Maximum Value  C/V = Current Value

A debit-straddle is profitable when the value of the position
exceeds the initial cost.
******************************************************************
Note: We trade the Spreads portfolio just as we would trade our
personal account and the ongoing narrative is a service we provide
to help novice traders understand how various positions might be
opened and closed.  It is not intended to substitute for your own
trading techniques nor does it replace your duty to manage the
positions in your portfolio.  We post a list of the current plays
after each expiration period and the summary is a reasonable
representation of the positions offered during the month.

Questions & comments on spreads/combos to Contact Support
******************************************************************
                         - NEW PLAYS -
******************************************************************
Sipex Corporation  $31.19  *** Awesome Earnings! ***

Sipex designs, manufactures, and markets high performance analog
integrated circuits. Sipex sells its products across the analog
semiconductor market and has targeted high-growth sectors that it
believes are especially compatible with its design and process
capabilities.  Applications for the company's products include
telecommunications, cellular telephones, networking products,
computers, computer peripherals, notebook and desktop computers,
industrial instrumentation, aerospace, and military.  Sipex's
products have been incorporated into a broad range of electronic
systems and products by more than 4,500 customers worldwide.

Sipex shares rallied last week after the integrated-circuit maker
said it had second-quarter profits of $0.12 a share, beating the
$0.10 average estimate of analysts.  The company reported record
revenue of $31 million for the second quarter, an increase of 39%
over the revenue for the same quarter of 1999.  The numbers set a
company record and improvements continued in operating income and
net income.  Gross margins also improved over the prior quarter
as SIPX began to realize the benefits of higher utilization.  The
growth of the company's order booking continued at record levels
and the demand has been broad-based across all their markets and
geographic regions.

Based on the recent performance, SIPX appears to be on track for
excellent growth in the future and this position offers favorable
speculation for those who are bullish on the issue.


PLAY (aggressive - bullish/debit spread combination):

BUY   CALL  SEP-35  UQX-IG  OI=29  A=$2.93
SELL  CALL  SEP-40  UQX-IH  OI=16  B=$1.50
SELL  PUT   SEP-25  UQX-UE  OI=6   B=$1.18
DEBIT SPREAD COST BASIS TARGET=$1.25
OVERALL NET DEBIT TARGET=$0.00 ROI=50% (based on collateral)

We received a number of positive comments about the debit-spread
combination strategy in Sunday's section.  In simple terms, the
play is nothing more than a sold (short) Put and a bullish, debit
spread.  The position is actually somewhat aggressive, based on
a bullish outlook for both components, but we use OTM options to
reduce the potential risk.  The premium from the sold put is used
to finance the purchase of the debit spread.  In this case, the
collateral requirement for the naked put is approximately $750 per
contract.

Chart =

******************************************************************
QLGC - QLogic Corporation  $83.69  *** Rebounding Sector! ***

QLogic is a leading designer and supplier of semiconductor and
board level input/output and enclosure management products.  The
company has been designing and marketing SCSI-based products for
over 12 years and is a leading supplier of connectivity solutions
to this market sector.  QLogic's I/O products provide a high
performance interface between computer systems and their attached
data storage peripherals, such as hard disk and tape drives,
removable disk drives and redundant array of independent disks.
QLogic provides complete I/O technology solutions by designing
and marketing single chip controller and adapter board products
for both sides of the computer/peripheral device inter-link.  In
addition, the company provides enclosure management products that
monitor and communicate management information related to other
components that are critical to system and storage subsystem
reliability and availability.

The semiconductor sector bounced back today and QLogic was on the
move again after last week's report of record earnings.  Qlogic
posted record revenues of $68 million for its first quarter, up
58% compared to the same quarter a year ago.  First quarter net
income grew 83% to $21 million, or $0.27 per share, and SG Cowen
applauded the positive announcement with a "Strong Buy" rating,
based on strong growth in the fiber channel industry.  We simply
favor the bullish outlook for the sector and this issue.


PLAY (conservative - bullish/credit spread):

BUY  PUT  AUG-60  QLC-TL  OI=85   A=$0.75
SELL PUT  AUG-65  QLC-TM  OI=109  B=$1.31
INITIAL NET CREDIT TARGET=$0.75  ROI(max)=16% B/E=$64.25

Chart =

******************************************************************
HWP - Hewlett Packard  $115.38  *** Bearish Technicals! ***

Hewlett-Packard Company is a global provider of computing and
imaging solutions and services for business and the home.  HWP's
major businesses include Imaging and Printing Systems, Computing
Systems and Information Technology Services.  Their Imaging and
Printing Systems provides laser and inkjet printers, copiers,
scanners, all-in-one devices, personal color copiers and faxes,
digital senders, wide- and large-format printers, print servers,
network-management software, networking solutions, digital
photography products, imaging and printing supplies, imaging and
software solutions, and related professional and other consulting
services.  Computing Systems provides computing systems for the
enterprise, commercial and consumer markets.  HWP's IT Services
provides consulting, education, design and installation services,
ongoing support and maintenance, proactive services like mission
critical support, outsourcing and utility computing capabilities.

The recent slump in retail personal computer sales has hurt a
number of the industry's top companies including Hewlett Packard.
Growth in shipments of personal computers in the second quarter
has slowed to half what it was in the same period a year ago,
which could signal a cooling off of sales growth in both U.S. and
European markets.  In addition, the U.S. market growth was well
below the worldwide rate, with unit shipments expanding only 7.2%
over the year-ago quarter.  Hewlett-Packard has generally enjoyed
strong sales of retail desktops in the United States and posted a
34% growth rate over the last year.  However, one analyst noted
that sales will decline unless the company offers consumers and
businesses next-generation computers that are even more powerful
and stylish than the systems that are currently on the market.

Since the news of slowing demand became public, the company's
share value has fallen substantially and based on the negative
short-term outlook, we are going to pursue a conservative spread
with a bearish perspective.


PLAY (conservative - bearish/credit spread):

BUY  CALL  AUG-155  HWF-HK  OI=1317  A=$1.50
SELL CALL  AUG-150  HWF-HJ  OI=1580  B=$2.25
INITIAL NET CREDIT TARGET=$0.88  ROI(max)=21% B/E=$150.88

Chart =



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