Option Investor

Daily Newsletter, Tuesday, 01/30/2001

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The Option Investor Newsletter                  Tuesday 01-30-2001
Copyright 2001, All rights reserved.                        1 of 2
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MARKET WRAP  (view in courier font for table alignment)
        01-30-2001        High      Low     Volume Advance/Decline
DJIA    10881.20 +179.00 10900.80 10683.00 1.14 bln   1865/1238
NASDAQ   2838.35 +  0.01  2861.71  2817.13 2.07 bln   2162/1638
S&P 100   718.46 +  6.91   719.74   708.76   totals   4027/2876
S&P 500  1373.73 +  9.55  1375.68  1356.20           58.3%/41.7%
RUS 2000  511.66 +  3.75   511.67   506.82
DJ TRANS 3058.78 + 57.45  3062.01  2997.41
VIX        25.20 +  0.27    26.22    24.82
Put/Call Ratio      0.64


If you were watching the Dow today you would have thought the
Fed meeting was yesterday. With a high of exactly 10900 and a
gain of +198 the Dow, you would have thought traders were
celebrating a -.75% rate cut. The euphoria was due to comments
from several Fed watchers that the Fed could actually cut rates
more than the expected 50 basis points. Unfortunately the
excitement has not rubbed off on the Nasdaq. After trading in
a very tight 45 point range the Nasdaq finally closed positive,
okay only a +.01 but it counts.

The Dow was up strongly but volume was mediocre at only 1.1
billion. The Nasdaq did manage to trade over two billion shares
without going anywhere. This no loss profit taking is boring
but much better than the alternative. The Dow was boosted by
NYSE:PG which beat estimates by a penny and AT&T closed at a
three month high. Only five Dow stocks lost ground and those
included NYSE:BA -.31, Nasdaq:INTC -.06, Nyse:MCD -.70,
Nasdaq:MSFT -1.13 and Nyse:WMT -.43. The biggest gainers were
Nyse:MMM +4.11, PG +4.25 and Nyse:DD +2.25. The excitement was
of course based on expectation of a strong rate cut on Wednesday.

While most traders feel the worst earnings are behind us there
were several bombs after the close. Nasdaq:AMZN announced their
earnings which were in line with the already reduced expectations
but then warned that revenue would be down not only for next
quarter but for the year. Amazon is also closing two of their
new distribution centers and laying off 1300 employees. They
still are projecting the fourth quarter of 2001 as their first
profitable quarter but analysts are skeptical. Projecting ultimate
profitability to be only in the range of 10% of revenue it may
cause investors to rethink AMZN as a buy and hold. There are
so many other great stocks that are growing +50% to +100% per
year and are making huge profits. Why would you want to own
a ten percent gainer?

Nasdaq:ADBE warned after the bell that conditions in the last
month had deteriorated drastically and economic weakness was
impacting all product segments. They had previously said
business was strong but that appears to have changed. ADBE
lost -$10 in after hours.

NYSE:NOK was the last of the three largest cell phone handset
manufacturers to lower projections going forward. Nokia had
been viewed as the bright spot in the business but the warnings
this morning knocked over -$3 off the price before bargain
hunters stepped in. Down only -1.71 at the close to $35.26,
analysts were calling this a buying opportunity for long term
investors. The damage is done and the downside is limited to
around $30. That may be but $30 is better than $35 in my book.
Sales growth of 35% is still projected by Nokia.

Another after the bell warning came from Nasdaq:AMAT which had
just broken out today to a three month high of $53.94. We even
looked at it as a play tonight but with the SOX.X up +37% for
the year we felt any post Fed depression could cause a chip
sector drop and profit taking in AMAT. After closing at 52.44
AMAT traded as low as 47.19 in after hours but rallied to $51
later in the session.

NYSE:SCH, Schwab asked employees who do not have customer
contact to start taking off on Fridays. When first announced
SCH took a big drop when it was misreported as all employees.
When questioned Schwab said online trading was slowing and
commission revenue was dropping. This cost cutting measure
was voluntary and needed.

NYSE:CCU also warned that earnings would be about -$.12 less
than analysts estimates of $.63 for this quarter. Contrary to
what you have been reading not everything was negative. There
were some positive surprises with Nasdaq:AFCI beating the street
by eight cents, Nasdaq:PSFT beat by four cents and Nyse:HAL by
two cents.

It is all up to the Fed! That was the hue and cry all day long
with analysts pondering and forecasting everything from no cut
to cutting a full point. Take my word for it, neither of those
extremes will apply. We are pretty well locked into a 50 basis
point cut. Greenspan has gone on record saying the economy is
threatening to fall into a recession without an immediate jump
start by the Fed. A -.25% cut would be seen as too little too
late. A giant rate cut of 75 points or more would cause a knee
jerk reaction to "what does the Fed know that we don't." The
markets would likely tank while all the chicken littles ran
in circles claiming the sky was falling. So, ignoring either
end of the spectrum we are expecting a 50 basis point cut.
The bad news, it is already priced into the market. After the
Dow gains today it is definitely priced into the Dow. At 10900
it is bumping against upper resistance and due for profit
taking. The huge gains since the Jan 3rd surprise rate cut
have yet to be digested. Since the Jan lows the SOX is up
+37%, BTK +27%, IIX +22%, NWX +23%, and XTC +32% for example.

I am not going to dwell anymore on all the Fed pros and cons
since you have heard them for several weeks now. The possibility
of a sell the news event probably doubled with the big Dow
gain today. However, it has been quite some time since we
have had a full 1.00% rate cut in a single month. 1982 was
the last time. This is the wild card. Stocks go up when the
Fed cuts rates aggressively and 1.00% in a single month
definitely qualifies. They just don't have to go up the
same day. I would be very careful about buying any huge
spike after the announcement and would look for a buying
opportunity a day or two later. If we get another big move
in the morning, buying puts on the announcement could be a
good plan.

Enter passively, exit aggressively!

Jim Brown

Spring Options Workshop and Bootcamp
April 5th-9th, Denver Colorado

OptionInvestor is proud to announce our third annual Spring
option workshop in Denver Colorado. This power packed five-day
event is structured to fully educate you on advanced option
strategies and will make you a better and more profitable trader.

If you attended the March Denver Expo last year and thought it
was the best function you had ever attended... You haven't seen
anything yet! Great food, entertainment, education and just
plain fun in sunny Denver. The biggest complaint in March was
the massive weight gain experienced by the attendees from the
gourmet menu. We know how to put on a function. Ask anyone who
came last March!

We guarantee the speaker lineup to be second to none. In the
October seminar not only did we have Jim Brown and over 15 of
the OIN staff but Steve Nison, the father of modern candlestick
charting. Also, Dick Arms, creator of the Arms Index or the Trin
Indicator, Gregory Spear, author of the Spear Report, Stan Kim,
founder of the Snail Trader System and Jim Crimmins, president
of TradersAccounting.com. We promise the lineup this April will
exceed your expectations again!

This is not a beginner seminar but if you feel the need to brush
up on the basic trading strategies then we have an optional boot
camp the day before the four day seminar begins. If you have
traded options before and you are comfortable with the basic
strategies then this seminar will take you to a new trading
level. If you have been trading options for sometime and are
ready to broaden your knowledge and improve your trading results
in all kinds of markets then this is for you. Meet and interact
in a small group setting with the writers you have seen in
OptionInvestor for the last four years.

We are starting the seminar with an optional one day boot camp
which will cover all the basic strategies, calls, puts, leaps,
covered calls, naked puts, spreads, straddles, etc. This will
help investors not familiar with all the basic strategies get
up to speed before the intensive education and the advanced
material in the main seminar. The boot camp will be 8 hrs of
personal instruction by the OIN staff.

The main seminar will begin with a reception, dinner and
entertainment on Thursday night and continue non-stop until
noon on Monday. We mean non-stop. We don't quit until you do
and many optional sessions last until 10:PM or later.

The detailed schedule will be posted in about two weeks. There
will not be individual breakout sessions during the day. Each
topic will be covered in 1-2 hr general sessions taught by one
or more OptionInvestor staff and presented on three giant screens.
In the evening we will offer five of our popular chalk talk
sessions for that personal question and answer interaction.

The list of instructors is led by Jim Brown and will include
many OIN staff with outstanding guest speakers during lunch
and dinner each day. The Spring Denver Expo seminars fill up
fast and seating is limited! SIGN UP NOW or risk missing out
on this opportunity.

Unlike other seminars with only two or three instructors, you
will get in-depth knowledge from many different instructors
who are experts in their field.

The cost for the four-day workshop, April 6th to 9th is only
$2995 (spouse only $1495). This includes breakfast, lunch and
supper each day. All course materials, a CD of all the
presentations and a professional video package of the entire
seminar so you can review the material at home in the comfort
of your living room.  There is also a $500 discount if you
have attended a prior OIN seminar.

This is not a prepackaged presentation that gets repeated over
and over with stale information. This is a one-time production
and everything is fresh, live and as current as we can make it.
The videos will have your real time questions and answers and
not some from a prior class. Where else can you get intensive
yet personalized options education like this?

Do not delay as seating is very limited.
We guarantee you will not be disappointed!

You can pay for your education one bad trade at a time or you
can invest less money one time to learn how to do it right.

Click here for more info:


If you have not been to one of our Denver Expo seminars before
here are some comments from previous attendees:

The words herein are totally inadequate to express what I am
feeling about you and all the OptionInvestor organization. But
this medium is all I have. Thank you more than these few simple
words can say.

Wow, what a seminar! In my 25 years of investing I have attended
many instructional conferences, but I have never, never experienced
one like your Options Expo. The instructors were absolutely tops.
Subjects, generally were on target. Especially for me, the Skybox,
index funds/options and the early morning strategies and trading
were particularly great. The attention to the many details and
nuances were especially evident, and I guess most of the credit
that area goes to your great support team.

Now, the real challenge is to apply and implement the powerful
knowledge I was exposed to.

Sincerely and warmly,
Kevin Hughes, Denver


Jim & Staff,

I am sitting in the hotel room after a great 3 days in your
seminar. I can't tell you how pleased I am and want to thank
each of you for a job well done. Having been responsible for
events like this, albeit on a much smaller scale, I can recognize
all the hard work that went into the seminar. Each member of the
staff is to be congratulated!! The seminar confirmed my belief
that the OIN staff really cares about the success of their
subscribers. Jim, you all should be proud of the work you do to
enrich the lives of so many people. It is one thing to amass a
personal wealth. It is a much higher calling to help others meet
their goals in life. I was very impressed that you were emotional
in your closing remarks. You have so much to be proud of -- helping
people fish all over the world! Thanks again and I look forward
to attending another seminar in the future.

My best regards,
Jim Boettcher
Austin, Texas


I must say, that your seminar was outstanding!!! Sign me up for
next year. It is rare that a person of your position would share
so generously your knowledge of his trade. I hope that I will be
able to put into place much of what you taught. Every aspect of
the seminar was first class, from the hotel, to the food, the
instructors and the luncheon speakers. One of the biggest
surprises was your generosity in handing out material, and gifts.

Two weeks ago I attended a competing option seminar in Chicago
and all I got from the was coffee at the morning break, No
handouts, no food and half of the final day was promoting their
web site and additional classes. I must say your seminar far
exceeds what I got from them.

Sincerely yours,
Mike Lillis


Please pass on my thanks to the entire OIN group for a fabulous
EXPO. The seminar far surpassed any expectation that I would have
fathomed, had I attempted to! OIN has the right attitude and the
obvious ability to be a leader and I look forward to many years
of positive experiences with you folks.

Kind regards,
Gwen Richardson



I described this event to my friends as a life changing event!
(options aside) ,the quality of people, dedication, sacrifice
of their time (the second 40+ hours a week they don't have to
work but do) they do this because they care, wanting to help
others change their life dramatically (My wife thinks I was
oxygen deprived up there !) I came back a different person for
those who know me that says a lot. Now for the options side
I have to admit there was so much info to absorb, most of it
came to me on the 2000+- mile ride home it all started to fall
into place I feel Very confident (yes Jim this can be bad but
I know this now!) Notice the patience here guys! that's one
change I have a plan to stick to !

Allan O'Neill


Need we say more? If you want to learn how to be a better trader,
making more and losing less then you should come to this seminar.
We guarantee you will not be disappointed!

For more info:


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Full Basis-Point Cut
By Austin Passamonte

You've heard it here first: It's possible Greenspan and co. might
just go a wee bit further than 50-basis cut tomorrow. Fed-Fund
futures hint at a slight chance of an additional 25-basis point cut
between now and the March 20th meeting. CNBC first mentioned this
around 8:30am EST today and only several dozen times after that.
Could it be any correlation to the Dow blowing up on its cyclical
backs late in the afternoon?

Market Sentiment wields its share of index-moving power as well.
Shucks, if spreading rumor is all it takes to push the pile, we
say the FOMC will announce a full-point cut tomorrow! Now if all
of our loyal followers (both of you) just spread the word, no
telling where the Nasdaq 100 will go from here!

In all seriousness and strictly personal opinion, we happen to
feel that CNBC did its viewers a great disservice today. Every
anchor with no exception mentioned the possibility of a .75-point
cut tomorrow afternoon. Of course these statements were followed
by caveats and disclaimers but by then the seed of hope had long
since been planted in retail trader's minds.

The market expects .50-basis cut and has in all probability
priced that in. Any chance we have to support current levels and
rally from here is founded on realized expectation. CNBC on its
own raised the bar of expectation and likewise odds to disappoint
as well. If any of today's Dow activity was reflected by these
lofty hopes, what happens when a generous and almost unheard of a
second monthly .50-basis is realized instead? Breakout above
11,000 for the Dow? 3,000+ for Nasdaq?

Spreading these rumors assured market bulls cannot win. Say we
get our almost certain .50-point cut tomorrow. What then? Well,
another leg up may be in the offing for the Dow and perhaps
Nasdaq heading in. Some of that assuredly in hope of .75-point
cut also sure to be trumpeted again. A .50-point cut will
disappoint and .75 that would have pleasantly surprised is now
somewhat hoped for and/or expected instead. How can bulls win? A
1.00-basis cut?

At 2:15pm rumor becomes news and 105 minutes of trading remains
until the bell afterwards.

Shall we weigh the evidence? First of all, Nasdaq markets cannot
even mount much of a rally in anticipation of any cut and that's
before AMAT and ARBA warned. What will drive them higher after

Earnings (or lack thereof) season winds to a close soon as well.
Will that propel markets up? What do index charts prove usually
happens right after earnings season ends?

Daily-chart stochastic signals are now at or buried in oversold
extreme zones. They could remain pinned up there for some time as
price levels rocket to the moon but relief must occur before
long. A pullback is inevitable, just a matter of when and how

The VIX and VXN haven't bottomed yet but are trading near bearish
reversal levels. A break of 22.00 by the VIX would be a clear
warning that things are getting toppy.

Front-month Eurodollar futures contract posted all-time contract
highs today and gold prices were up sharply as well. These are
defensive moves in what should be an offensive time.

Big money is at record level shorts over in the CME as chronicled
this weekend. The fact that they are even more bearish than
before the first rate-cut and knowledge of this one ahead shows
how they feel about our future direction ahead.

Try as we might, we cannot think of one compelling reason for
market levels to move far higher and stay there. Our great
preference would be for all markets to gently pullback every
Monday morning about 10:00am EST to let us enter call plays and
then rally straight up until Friday noon. Then we could sell for
500% gains and begin the long & arduous weekend ahead. Repeat
steps one and two the following week and there ever aft.

Would that arrangement suit you? We could sell Thursdays at noon
for 400% gains instead and take 3 1/2 days off. Take your pick
and we'll do our best to make it happen. Heaven knows CNBC is
trying to as well.


Tuesday 01/30 close: 24.99

Tuesday 01/30 close: 62.50

30-yr Bonds
Tuesday 01/30 close: 5.61%

Support/Resistance Indicator
The Index Support/Resistance(S/R)Ratio is a formula used to
gauge possible support or resistance based on open-interest
disparity. Ratio listed is percentage of calls to puts or
puts to calls respectively.

Support is factored from dividing puts by calls at strike
levels beneath index closing price. Resistance is factored
from dividing calls by puts at strike levels above current
closing price.

  (Open Interest)       Calls        Puts          Ratio
S&P 100 Index (OEX)
755 - 740                6,768          282        24.00
735 - 720                7,608        1,314         5.79

OEX close: 718.46

715 - 700                8,112        7,577          .93
695 - 680                3,521        6,970         1.98

Maximum calls: 740/3,290
Maximum puts : 650/4,731

Moving Averages
 10 DMA  708
 20 DMA  697
 50 DMA  701
200 DMA  758

NASDAQ 100 Index (NDX/QQQ)
 76 - 74                19,116         3,203         5.97
 73 - 71                26,365         1,377        19.15
 70 - 68                76,897         8,270         9.30

QQQ(NDX)close: 66.75


 65 - 63                46,222        46,576         1.01
 62 - 60                25,801        58,116         2.25
 59 - 57                11,353        11,581         1.02

Maximum calls: 70/57,995
Maximum puts : 60/44,368

Moving Averages
 10 DMA 66
 20 DMA 62
 50 DMA 64
200 DMA 83

S&P 500 (SPX)
1450                    9,355           310         30.18
1425                   18,111         4,735          3.82
1400                   15,576         1,806          8.62

SPX close: 1373.73

1350                   13,519         9,984           .74
1325                   11,816        12,800          1.08
1300                    3,264        12,973          3.97

Maximum calls: 1425/18,111
Maximum puts : 1300/12,973

Moving Averages
 10 DMA 1353
 20 DMA 1334
 50 DMA 1334
200 DMA 1417


CBOT Commitment Of Traders Report: Friday 01/26
Weekly 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

                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          +426      +1909         -7528     -8322

Total Open
interest %       (+5.66%)  (+20.07%)     (-30.35%)  (-34.26%)
                 net-long  net-long      net-short  net-short

Open Interest
Net Value         +1262      +1131         -4061     -4045
Total Open
Interest %       (+8.36%)   (+6.51%)      (-5.90%)   (-6.39%)
                 net-long   net-long      net-short  net-short

S&P 500
Open Interest
Net Value         +69952    +69254         -91053    -89836
Total Open
Interest %       (+37.54%)  (+37.35%)     (-12.11%)  (-11.84%)
                 net-long   net-long      net-short  net-short

What COT Data Tells Us
Indices: The disparity between Commercials and Small Specs
remains intact on the S&P 500.  Small Specs have reduced their
net-long positions on the DJIA while Commercials are showing a
modest reduction in DJIA net-short positions

Interest Rates: Commercials are moderately short T-Bond and
T-Note futures. (mildly Bearish)

Currencies: Commercials continue to build heavily short Euro
futures while small specs build net long. Small specs are betting
on interest rate reduction while commercials remain skeptical.

Energies: Commercials are net-long crude & oil products at one
year extremes. These producers are hedgers and almost always take
the opposite side of expected market action to lock-in production
prices. They expect lower prices from here (Bearish)

Metals: Commercials are moving to net-long in Gold, Silver and
Copper from short positions. This has happened quickly and they
expect higher precious metals soon. (Bullish)

COT/CRB: This commodity index measures the entire spectrum of
commodities in overall bullish or bearish outlook.  It is now at
a one-year high for commercial bullishness, meaning the outlook
for commodities is long-term positive while equities as a mirror
are considered long-term negative.

Data compiled as of Tuesday 01/23 by the CFTC.


Please visit this link for Market Posture:



Welcome To The Real World
By David Popper

Machines hate me.  One summer between my sophomore and junior
years in college, I worked in the machine room at Florida
Power and Light.  My job was to assist in the running of the
bill stuffing machine.  The bill stuffing machine was a long
machine that resembled an assembly line.  The bills and any
inserts were pulled down by suction cups, merged at the end
and inserted into envelopes.  Anyway, that was the plan.  The
suction cups had to be adjusted constantly.  Something always
went wrong.  The supervisor was named Fred.  Fred had been
supervisor of the machine room for 20 years.  He was not fond
of summer interns.

On the day that I arrived he said "welcome to the real world
college boy."  He gave me a brief 5 minute orientation and then
put me on the most complicated machine in the place explaining
that college boys should be smart enough to figure it out.  As
I said, machines do not like me.  Naturally, the machine broke
down in every conceivable fashion--and often.  Each time it broke,
Fred would swoop down, fix the machine and say, "welcome to the
real world, college boy."  I followed procedures exactly and it
still broke down.  Here came Fred barreling down the hall to fix
the machine and get another crack at me.

After I explained that I followed all procedures exactly, Fred
unknowingly said something profound.  He said, "sometimes even
when you do everything right, the machine will still break down.
Welcome to the real world."  This bears repeating.  Sometimes
when you do everything right, things still do not work out.
Welcome to the real world.  Welcome to the stock market.

In the market, it is not a question of if things break down, it
is a question of when and a question of what you are going to do
about it when the breakdown occurs.  The whole reason newsletters
exist is to help predict the market as it exists today and make
recommendations as to how to proceed. You can conduct some of
analysis yourself.

First, understand that there are 3 types of risks to owning any
stock.  These risks are:

1.  Market Risk
2.  Sector Risk
3.  Stock Risk

By analyzing the above, you can improve your odds of success.
Below I will briefly discuss each risk.

1.  Market Risk.  It is generally known that most stocks follow
the general trend of the market. There are many ways to discern
the general market direction.  Some talk about news driven events
and technical charts of the general averages.  Others discuss
support and resistance levels of general averages, the volatility
index, the positions of the commercial traders (who are usually
correct), and other general items.  These items are all important.
Probably the most important item is market liquidity.  The Fed
controls market liquidity.  The maxim "don't fight the Fed" is
historically correct.  Now the bond market is anticipating at
least another 100 to 150 basis points in rate cuts this year.  This
causes the smart money to anticipate better earnings in the
second half of this year.  This is why stocks like Intel (NASDAQ:
INTC) are rising in spite of being in the middle of a slowing
business cycle. The prospect of rate cuts changes the sentiment
in the market and will cause support for the market.  Once this
bottom is established, fund managers, who are underexposed to the
tech sectors, will be compelled to enter the fray or risk falling
behind their competition.  This is how rallies are born.  In short,
the general market is looking good, even if short term profit
taking emerges from time to time.

2.  Sector Risk.  Typically stocks perform similarly to other
stocks in its sector.  You will often hear people explaining that
one stock may be up or down because it is trading in sympathy
a related stock.  This is normal.  This is not to say that
superior stocks in a sector will not outperform sector laggards.
It simply means that momentum in a sector will affect a stock's
performance.  One way this information is helpful is to notice
which sectors have performed the best after a serious market

3.  Stock Risk.  As mentioned before, in each sector there will
be stars and there will be laggards. In my opinion, it is safer
to trade the most established stocks in the sector.  Some people
call these stocks the "gorillas" of the sector.  Even gorillas can
suffer a bad event and suffer a severe drop. Therefore, if you are
to trade individual stocks, it is good to be aware of its
quarterly reporting date, analyst meetings, participation in
conferences, and dates of stock splits.  These events can infuse
momentum into a stock.

Understanding these concepts and trading accordingly can
certainly increase your odds of success, but it doesn't
guarantee success.  Sometimes even when you do everything
right it can still come out wrong.  Welcome to the real world.
Next time, let's talk about what to do when things go wrong.


Ultra-Deep ITM Covered Call Play: How'd It Turn Out?
By Scott Martindale

Deep in-the-money (ITM) covered calls have been discussed lately
in this newsletter as a relatively safe play in an uncertain
environment.  This has led me to my subject for today, which is to
do a post-mortem on the ultra-deep ITM play I wrote about last
August (and which intrigued many readers).

To review, I used the up-and-coming powerhouse Juniper Networks
(NASDAQ:JNPR) as an example.  Here is what I wrote:

"Today [Aug 29th, 2000], JNPR closed around $195.  You could sell
the Jan 97.5 calls for $102.38.  If you buy 1000 shares of the
stock on 50% margin, you put up $97,500, but when you sell the Jan
97.5 calls you take in $102,375, for a net CREDIT to your account
of $4,875.  Of course, if you use up that increased buying power,
you'll pay margin interest of about $3,250 for five months.  So
when you're called out in January at 97.5, you'll lose $97,500 on
the stock sale on top of paying the $3,250 margin interest, but
you've taken in $102,375 in call premium for a small net gain of
$1,625, but your rate of return is infinite and you've increased
your buying power from $195,000 to $204,750."

"But some readers wondered about selling other calls, such as Jan
70's, or even 2003 LEAPS for bigger premiums.  Regarding the 2003
LEAPS, no LEAPS are offered on JNPR.  Be even if they were, I
couldn't imagine tying myself to a trade like this that long.  I'd
be fairly comfortable betting on this company to stay above $97.50
over the next five months, but not clear 'til 2003 -- who knows
what could happen?" [Indeed!]

"Regarding the Jan 70's, if your intention is only to build your
buying power with a margin loan at 8% interest and you don't care
about making any money on this play itself, then even deeper ITM
might be a good route.  You could sell 10 Jan 70 calls for $127.63
and have an extra $30,125 in your account (extra $60,250 buying
power), but end up losing $625 upon expiration.  With so much
extra cash, you could choose to employ only part of the extra
margin and leave yourself a cushion.  If you sell the Jan 80's,
you'll nearly break even upon January expiration, but you've
increased your available cash by $20,625.  The Jan 97.5's in the
example give the most profit while still increasing buying power.
Another strategy is to sell deep ITM calls on only a portion of
your shares - say, enough to cancel out the margin loan - and then
sell more calls at a higher strike after the stock rises."

"Of course, the deeper ITM's have the advantage of giving you more
breathing room for a major stock correction, along with a greater
increase in buying power.  But remember, you will still get a
margin call if you use up all your buying power, the stock drops,
and your account equity is below the maintenance level!"

Okay, now let's take a look at what actually happened.  Unless you
have been living in a cave, you know that the market took a
serious drop and we had a genuine scare over the five-month term
of this play.  In fact, JNPR dropped as low as $89.63 on Dec 21st
before closing on Jan 19th expiration at about $134.  Someone in
this play may have chosen to close it out as it dropped below
various support points, particularly when it passed through $100.
But those who wrote the Jan 70 or Jan 80 call still had some
breathing room even after such a catastrophic drop.

However, margin maintenance is another story.  If you were
aggressive and used up your buying power, either you closed out
those other plays or you had a margin call.  To simplify the
analysis, let's say you used up all your buying power for straight
options purchases (puts and calls) for which you get no equity
credit in your margin account.  Assuming a 35% margin maintenance
level, you would have had to pony up funds once the stock dropped
below $166.  Of course, you could do that by closing options
positions or by sending in cash.  Closing the JNPR covered call
play would have meant buying back the sold calls and then selling
the shares.

Despite the scare, the New Year brought a good recovery that saw
JNPR close on Jan expiration at $134 -- significantly less than
the $195 price at which we started this play back in August but
still well above any of the sold strikes I discussed.  That's the
beauty of this strategy.  The stock can sell off in an almost
unimaginable way, and yet the call is still assigned.  Of course,
because the stock dropped below the full margin maintenance limit
of $166, you would have needed to manage the account to make sure
that you were using only the current level of available buying

Now that the tech sector has corrected a bit, I feel stronger
about this as a viable strategy.  I would consider buying a
favorite stock on the start of a recovery from technical weakness,
and sell the ultra-deep ITM covered call a bit later into

On another subject, what can we expect from tomorrow's market as
we anxiously await the latest decree from Lord Greenspan?  Even if
we get 50 basis points, there may be some short-term weakness.  So
for me, I'm taking a cautious approach into the announcement,
closing out some bullish plays in a wait-and-see mode, but keeping
others. I finally got that pop from Portal Software (NASDAQ:PRSF)
that I've been looking for ever since I took the loss on my shares
at the end of the year and bought Feb 10 calls.  Today the stock
hit a double from the $7.25 price at which I bought calls for
$1.00, so I went ahead and closed them at $4.75.  [If only they
would all work like that.]  I think there will be more good news
as well as volatility in PRSF going forward, so I'll be looking
for other entry points for calls.

No matter which way the market goes tomorrow afternoon, increased
market volatility is likely.  Today, the VIX closed around 25,
which is about mid-range.  My point is that option prices might be
more reasonably priced before the Fed announcement than they will
be later in the week.  But which direction to buy?  Maybe
straddles and strangles are the way to go.  I'll be looking at QQQ
and OEX strangles tomorrow morning.

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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.


ENE $78.50 -2.27 (-1.50) The unexpected drop in natural gas
prices has dampened our play on Enron, as the stock lost
significant strength on heavy selling Tuesday.  While the
stock may be a good long term investment, it could suffer
additional weakness in the short term.  In addition, the market
did not react well to the news that Enron is issuing a $1.5
billion convertible debt offering.  So, as a precautionary
measure, we are dropping ENE tonight.

AFFX $67.94 -4.94 (-2.56) The biotech index sold off today
on profit taking as money rotated into Dow stocks.  It is unclear
whether this is the start of a lasting rotation out of this
sector, or a one day phenomenon.  However, AFFX closed below
our stop price of $68, and as a result we are dropping it

BRCD $98.50 -6.44 (+9.88) Goldman Sachs analyst, Laura
Conigliaro stepped up to the microphone to end our BRCD play
today.  Stating that the company was not likely to deliver the
same upside surprises seen in the past was not what investors
wanted to hear.  The response was swift, with our play taking
more than a 10% haircut on the news, helped along by several
block trades shortly after the Goldman call.  Although the stock
firmed in the afternoon, such a sharp move, which also gapped
right through our stop, is not conducive to profitable call
plays.  We'll take our lumps on this one and move to the

INCY $28.31 -1.56 (-2.31) Biotechs have begun weakening ahead of
the FOMC meeting, and are at a critical juncture.  If the
current support on the BTK.X at 640 can't hold, things could get
ugly in the sector in a hurry.  Although this issue isn't
resolved yet, our play on INCY is definitely over.  After
breaking out over the 7-month descending trendline late last
week, the bulls ran out of steam, and it looks like breaking
below our $29 stop late today is just the bears' opening volley.
Stochastics are rolling over, and the chart is looking weak, so
it is time to leave this laggard behind and search out healthier

ITWO $55.56 -2.00 (-1.69) Ahead of the FOMC meeting, traders have
stepped aside and with that, volume has been light.  On Monday,
ITWO traded in a tight range, closing up fractionally on half the
ADV.  This minor advance came despite fellow B2B company Ariba
acquiring AGIL, a move that could put the two giants in direct
competition.   The stock has been met with resistance at the
5-dma ($57.37) and with today's close, down ITWO has also fallen
below 10-dma ($55.83) support.  With that, the stock now teeters
perilously just above our stop price of $55.  With added risk in
the competitive landscape and a violation of its recent uptrend,
we are dropping coverage of this play.


IDTI $48.19 +2.38 (+1.38) Friday's opening dip in shares of IDTI
seems to have been the bottom for the stock in the near term.
The negative sentiment from the PMCS' earnings release and
conference call dissipated amazingly quickly, and IDTI has
marched higher this week.  Although it couldn't hold onto all
its gains, the stock managed to break through our $49 stop
earlier today, and closed with a 5% gain.  Improving sentiment
seems to be foreshadowing a continued upward move, so it is time
for us to bid farewell to IDTI.  Take advantage of any weakness
tomorrow to get out of any open positions at a better level.

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The Option Investor Newsletter                  Tuesday 01-30-2001
Copyright 2001, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.

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RATL $54.88 -0.13 (+4.95) What a breakout! Rational burst out of
its bullish wedge pattern on Monday morning with a clean move
above $52.50.  From there it was smooth sailing up to $55, at
which point profit taking ensued.  On Tuesday Rational pulled
back to support at $53 before consolidating at $54.50 for the
afternoon.  Strength in the mid cap index (MDY) helped as old
resistance became new support.  Depending on the Nasdaq's
reaction to the FOMC meeting, Rational may very well clear heavy
resistance at $55, which could potentially position the stock
to sail all the way up to $60.  A pullback to support at $53
could be an entry point, as well as a break above $55.  Watch
the software index for signs of strength before initiating
positions, and keep stops at $50.

EMC $78.75 -1.14 (-0.31) Like so many other stocks in the
Technology sector, EMC seems to be taking a wait-and-see
attitude ahead of tomorrow's interest rate decision from the
Fed.  The bulls have been battling with the bears at the
200-dma (currently $80.09) for over a week, and positive
reception of the Fed's interest rate decision tomorrow could
be just the catalyst needed to tip the balance in favor of the
bulls.  With a solid earnings report in their hip pocket, and
pronouncements of continuing strong demand-driven growth, the
company certainly looks appealing to investors right now.  The
battle at the $80 level will be pivotal in the near term.  If
the bulls can push decisively through that level and crest $81,
that looks like a great time for conservative investors to
initiate new positions.  More aggressive traders may want to
target shoot intraday dips to achieve a better entry point.
Just make sure the bounce occurs above our $75 stop and
confirm positive movement on the NASDAQ before playing.  If
the Technology sector can't rally after the interest rate
announcement, EMC will likely have a hard time continuing to
move higher.

FLEX $39.81 +0.00 (+0.81) The bulls are holding their ground
ahead of the Fed's interest rate decision tomorrow, and FLEX is
looking strong.  Positive reception of the expected 50 basis
point interest rate reduction could easily push the stock
through its $40 resistance level, giving conservative traders a
nice entry point.  Although there may be buying ahead of the
news, prudent investors will want to wait until after Uncle Alan
speaks to gauge how the news is received by the markets.  A
reactionary dip near the $36-37 level could give more aggressive
traders a better entry point, but they will want to make sure
they don't catch a falling knife.  Once it is clear that the
buyers are showing up in volume, feel free to initiate new
positions on the upward bounce.  Keep in mind that our stop is
still in place at $36, and a drop through this level will spell
the end of our play.  Other contract manufacturers like CLS and
JBL are likewise attempting to break above resistance, so
monitor these stocks as well to confirm positive sentiment in
the sector.

GS $118.63 +2.71 (+3.93) Like Technology stocks, the Financials
seem to be in a holding pattern ahead of the FOMC meeting.
Although it seems a foregone conclusion that we'll get a 0.50%
rate cut, what is far less certain is how investors will react
to it.  Will they cheer and bid stocks higher, or will they sell
the news?  This uncertainty can be clearly seen in our GS play
as the stock has yet to muster enough strength to break above
the $120 resistance level.  The latest pullback may give the
bulls the springboard they need to finally crest this level and
charge to new highs.  Even during the recent weakness, the
ascending trendline (now at $115) has continued to provide
support, and barring a major selloff after the FOMC meeting,
should continue to do so.  Consider intraday pullbacks to this
level (also the site of our raised stop) to be an attractive
entry point, but don't fight the broader market.  If Financials
sell off after the announcement, then that will be your clue to
stand aside from the play.  If the reception is positive
however, a break above $120 will be a good time for conservative
investors to open new positions, as it will be a confirmation
that the bulls are in control.

MSFT $63.38 -1.13 (-0.62) The strength in the NASDAQ and
continued interest in tech stocks kept MSFT on track this week.
MSFT traded confidently above $63 and $64 on respectable volume;
firming the near-term support as we move forward with this play.
A nice pop to $64.75 today also edge the near-term resistance
higher; although the 200-dma ($65.75) continues to suppress a
big breakout.  A pullback to the 10-dma level, near our $61
stop, offers a nice entry in an advancing market if you can
handle a bit more risk.  In the news on Monday, Microsoft filed
final appeal papers in its antitrust case saying its practices
were lawful and the trial court judge was biased and his order
to split the company in two unjustified.  Bill Gates commented
that Microsoft is " very optimistic this controversy will be
resolved by a ruling of this appeals court" and should be closed
within a few months.  Pacific Crest also initiated a Buy
recommendation on MSFT, but offered no further comments.

JPM $55.98 +0.86 (+1.79) Positive breadth and an expected 50-
point basis cut from the Fed tomorrow keep most stocks on the
plus side this week; although the somber forecast from Cisco
Systems was a dark cloud amid the sunny marketplace.  JPM
investors were bullish and continued to bid up the share price.
Near-term support effectively rose from the respectable $52
level to $55 and $55.50 giving further evidence that the steady
momentum can successfully penetrate the overhead resistance at
$59.19.  We've raised our stop to $54 from $53 in an effort to
trace the 10-dma line, which is currently serving as bottom
support on the climb.  It came across the wire today, that
Automaker DaimlerChrysler hired Deutsche Bank AG and JP Morgan
Chase to advise them on ways of heading off a possible takeover

BGEN $66.63 -2.06 (+0.50) We mentioned in Sunday's write-up that
BGEN looked ready to make a move out of its range.  On Monday,
the stock broke through, gaining $2.56 or 3.88 percent to close
above resistance at $68.  However, the light volume, about 70
percent of ADV, had us questioning the validity of the rally.
With that in mind, we adjusted our stop price from $64 up to $65.
Today, BGEN gave back most of yesterday's gains, retreating 3
percent on less than 85% of ADV, as all eyes are on the Fed
tomorrow.  It appears that the stock has broken out of its old
range only to find a new, higher range, with support below at
$65.50 and resistance overhead, just above the $69 level.  A
bounce off support could allow for an aggressive entry but keep
in mind our stop price just below.  For an entry on strength,
look BGEN to break back above its 5-dma at $66.85 before taking a
position, correlating entries with Merrill Lynch's Biotech HOLDR

COHR $52.13 +2.13 (-0.13) A tentative day for most fiber optic
stocks translated into a day of sideways movement for shares of
COHR on Monday.  With no material news to move the sector one way
or the other, traders stepped onto the sidelines in anticipation
of results from Wednesday's impending FOMC meeting.  For the day,
COHR retreated $2.25 or 4.31 percent on average volume, closing
right on the psychological $50 level.  Today the stock gained
back 4.25 percent on almost 140% of ADV, a sign of latent
strength that could assert itself in the near future.  With its
uptrend still firmly intact, pullbacks to the 5-dma at $51.36
could allow aggressive traders to make a play.  There is also
support at the 10-dma and our stop price of $48.  For an entry on
strength, look for COHR to break above strong resistance at $54
on volume before jumping in, confirming upward momentum with a
rallying NASDAQ.  From there, the stock would be poised to
challenge formidable overhead resistance from the 200-dma at $55.

FDRY $22.25 +0.63 (+0.00) Comments yesterday from Cisco CEO John
Chambers had an effect on the entire Networking sector.  Saying
that meeting estimates for the upcoming quarter would be
"challenging", shares of FDRY in sympathy slipped $1.25 or 5.46
percent.  The good news is, volume on the pullback was low, only
83% of ADV, suggesting the shaking out of some weak heads.  Today
the stock reclaimed 2.89 percent on 84% of ADV, a good sign
considering the low trading volume on the market today.  With
firm moving average support below from the 5 and 10-dma at $21.93
and $20.26 respectively, aggressive traders may target these
levels for an entry, confirming bounces with volume and keeping
in mind our stop price at $20.  If the buyers return in force,
carrying FDRY above its recent high of $23.25, this would allow
conservative traders to take a position, provided that the AMEX
Networking Index (NWX) is also moving higher.

MERQ $95.75 -1.25 (+0.81) Shares of MERQ got a little boost in
Monday's trading post-Superbowl, as it advanced $2.06 of a little
over 2 percent on news that it was monitor web site performance
for some high profile dotcoms who were fortunate enough to afford
ad time at the event, giving the company some much needed
visibility.  However, volume was light ahead of the Fed, less
than 70 percent.  Today, some minor profit taking resulted in
MERQ giving back 1.29% of yesterday's gains on low volume.  At
this point, there is moving average support from the 5 and 10-dma
at $94.58 and $92.61 and horizontal support at $95, $93 and our
stop price of $90.  Aggressive traders may look for entries if
MERQ approaches these support levels but make sure the stock
closes above our stop price.  If a post-Fed rally ensures
tomorrow, lifting MERQ past the psychological $100 on volume,
this could be the signal for conservative traders to enter.  Just
make sure that rivals BMCS and RATL are also showing strength.

QCOM $85.69 -1.13 (+4.69) Building on last week's gains, QCOM
came storming out of the gates on Monday trading as it powered
through its 50-dma, closing up $5.81 or over 7 percent on
stronger than average volume, no simple feat considering the low
volume in NASDAQ trading.  The stock was likely helped by
positive comments from JP Morgan H and Q, who re-iterated their
Long Term Buy rating.  Today, on news from wireless handset maker
Nokia that the company was lowering its outlook going forward
resulted in an inside day of trading for QCOM.  Despite backing
off 1.3%, selling volume was light and support from the 50-dma at
$82.66 was firm.  Another test of this level could allow higher
risk players to make a play but confirm with volume.  There is
also support at $85, the 5-dma near $80 and the 10-dma near $77.
Just make sure our stop price of $76 continues to hold.  A safer
play would be to wait for QCOM to take out formidable resistance
at $87 with conviction before pulling the trigger, but only if
the NASDAQ is also moving in the same direction.

PPRO $27.45 +1.86 (+1.95) Yesterday we added PPRO on our call
play list based on strong moving average support, positive
analyst coverage and high relative strength in comparison to the
market.  The stock rallied $3.81 or almost 15 percent on over
150% of ADV on Monday, thanks to bullish comments from Lehman
Brothers and a Strong Buy rating.  Today, shares of PPRO gave
back 6.34 percent on a round of pre-Fed profit taking, but the
down volume was less than yesterday's up volume.  If the stock
tests support at $27, the 5-dma at $26.61, and our stop price of
$25, this could give aggressive traders an entry, provided that
bounces are backed by volume.  A pullback to $24, where the
10-dma currently resides, is also a possible high-risk entry but
only if PPRO moves back above our stop price before the market
close.  If the buyers return, taking the stock back above the $28
level, this could allow more cautious traders to take a position,
but only if Merrill Lynch's B2B HOLDR (BHH) confirm that the
entire sector is moving definitively higher.

RIMM $70.44 -4.06 (+0.13) A string of good news from the company,
a more hospitable environment of lower interest rates and break
through its 50-dma landed RIMM on our call play list yesterday,
as it gained $2.94 or over 4 percent.  However, in the light
trading environment so far this week, the stock pulled back
today, giving up 5.45 percent on 77% of ADV, despite a
co-marketing deal with wireless software maker AvantGo and
coverage initiated by JP Morgan H and Q with a Long Term Buy
rating.  Closing below the 5-dma at $70.57 and the 50-dma at
$72.55, if buying volume returns, allowing RIMM to rally back
above moving average resistance, this would allow traders to make
an entry on strength.  The stock may also make a temporary
retreat and test its 10-dma at $66.   A pullback to this level
would be a highly aggressive play and we would only recommend
doing so if RIMM ends the day back above our stop price of $68.
Support at $70 and $66 offer addition aggressive, yet less risky
entries.  Correlate entries with trading in competitors HAND and

RMBS $51.88 +1.00 (+2.75) Trading volume so far this week for
shares of RMBS has been anemic.  This is no surprise considering
that many traders have stepped onto the sidelines in anticipation
for tomorrow's FOMC results.  Despite the low volume, direction
for the stock price has been positive.  On Monday RMBS advanced
$1.75 or 3.56 percent on less than 40% of ADV.  Today the stock
added another 1.97 percent on slightly increased volume, 48% of
ADV.  Ending Tuesday trading with a doji candlestick formation,
the uncertainty ahead of the Fed is almost palpable.  Successful
tests of moving average support from the 5 and 10-dma at $51.15
and $49.21 along with horizontal support at $50 and our stop
price of $48 could allow for aggressive entries if bounces are on
volume.  A break through minor resistance at $52 could mean a
quick trip back up to test more formidable resistance at $54,
allowing for two potential entry points for the more risk averse.
To further minimize risk, confirm sector sympathy with the
Philadelphia Semiconductor Index when making a play.

UBS $175.15 +2.51 (+2.70) Slow and steady continues to be the
name of the game when trading UBS.  There is a reason why the
option prices on such a high-dollar stock are so low, because
light volume trading in a narrow range has dramatically deflated
volatility, which makes for a more attractive and leveraged play.
It appears now that the stock may be getting ready to move
strongly higher.  Today shares of UBS gained 1.45% on 37% of ADV.
For those who have been following this call play, this is
actually quite an exciting day.  With support from a converged 5
and 10-dma just above the $173.25 level, a pullback here as well
as to support at $175 could offer traders one last chance to
enter this one on a dip.  At this point UBS looks poised to take
out strong overhead resistance at $176.  A break above this level
could lead to a strong move up, with traders of this play
benefiting from an increased stock price as well as inflating
premiums.  Look to more heavily-traded rivals BSC, LEH, MWD for
guidance in stock price movement when considering a play.


SPW $106.79 -2.23 (-2.21) On Monday, SPW announced that they
plan to raise $400 million through an offering of 20 year liquid
yield note options.  SPW gapped down over 4 points on this news
Monday morning, and closed below the gap price, which is a
bearish signal.  On Tuesday, SPW rolled over from $107.5
three times before closing down.  This is a very weak stock,
and it is highly likely to break below the next support level
at $106, to $104, and then major support at $101.  Monday's sell
off occurred on nearly double the average daily volume, and
Tuesday's occurred on nearly four times the daily volume.
A good entry level could be a failed attempt to rally above
$106.50.  More conservative put players might want to wait for
a fall below support at $104, which could lead SPW to its next
support level at $101.  Watch the capital goods sector for an
indication of sector strength, and move stops down to $109.

NKE $53.02 +0.35 (-0.13) Nike's five day chart pattern consists
of a series of sharp and spiky rollovers from $54.44 and $53.
Today, a strong market did little to change Nike's pattern, as
the stock rolled over from $54.44 in the morning, and could not
stage a rally past $53 in the afternoon.  News released from
Reuters 3000 data that Nike is overvalued compared to competitor
Adidas may have stimulated selling, however, the primary reason
for the weakness is most probably news that Nike's next quarter
earnings will probably be flat from the year ago quarter.
Traders can take positions on a roll over from $53, or at a break
below strong support at $51.77.  More conservative put players
might want to wait for a break below the 50 dma of $50.55.  Set
stops at $54.

ADBE $52.75 -1.25 (-5.31) Off to a good start in today's
session, ADBE gave us a nice conservative entry, as the stock
fell below $53 this afternoon.  While it actually traded a
little lower this morning during amateur hour, prudent investors
waited for the rollover this afternoon.  If not for a late day
buying spurt, the stock would have closed very near the days'
low.  Those that bought the stock late in the day are likely
already experiencing buyers' remorse though.  ADBE gave a fresh
pot of honey to the bears after the closing bell, issuing an
intra-quarter update on business in its first quarter.  The
company stated that it is experiencing a slowdown (where have we
heard that before?) in some geographic market areas, primarily
the United States.  If that sounds bad to you, then you aren't
alone.  Apparently investors decided they didn't like the sound
of it either and they sold the stock vigorously in the extended
session, dropping the stock near the $42-43 level before buyers
began to emerge.  Normally we are suspicious of after-hours
trading, but ADBE has already traded more than 1.1 million
shares since the regular close, so it looks like an ugly open
(at least for the bulls) tomorrow.  Until we see how the stock
trades tomorrow, we are keeping our stop in place at $58.  If
you are already in the play, you may want to consider locking
in some profits on the opening dip, especially if buyers start
to emerge and drive shares higher.  Any rollover from the
initial bounce tomorrow looks good for new entries, but make
sure that the selling volume is driving the price lower before

WFII $37.81 -1.19 (-0.19) Investors continued to shun WFII in
spite of the glowing sentiment shining on the marketplace.
The negative technicals also provide evidence of further
declines.  This week the overhead resistance was effectively
lowered from the $40 level to $38.  Accordingly, this downward
pressure narrowed the stock's primary trading range because as
of now, WFII continues to teeter on the $37 support.  Although
WFII is failing to breakdown below this level, it still remains
below the 5, 10 & 50 DMAs, which is a bearish indication.
However a slide under the 30-DMA, currently at $36.97, would of
course provides better confirmation.  Our protective stop remains
above at $41 to allow some room for more aggressive
rollover opportunities.  In other words, if traders step in to
take WFII upwards and WFII falls victim to a bull trap at $40-
$41, then we have a prime opportunity to profit from a high-
volume decline.  If this type of scenario transpires, consider
taking profits as WFII approaches the immediate support at $37.
A convincing break through the underlying support at $35 would
be a signal for the more conservative traders to consider taking
put positions.  In light of the bull market conditions, it's a
very good idea to keep stops tight.

PWER $44.88 +0.20 (-0.13) Shares of PWER haven't been showing
much spark lately as so far this week, it has been trading in a
tight range, moving sideways with a complete lack of conviction.
On Monday the stock edged lower, falling fractionally on 80
percent of ADV.  Today was more of the same sideways action, as
the stock gained fractionally on half the ADV.  With little news
to move the company's stock, sector sympathy and the stock's own
technicals will likely play an increased role in how PWER moves.
Resistance from the 5 and 10-dma, converged at the $45.80 level,
should be formidable but just above, the 50-dma at $47.67 should
also exert significant downward pressure on the stock.  We are
moving our stop price down from $50 to $48.  Failed rallies above
these levels could give aggressive traders an early entry.  A
break below the $44 level on volume would allow the less
aggressive an entry on weakness.  In either case, make sure that
sector sympathy is on your side by keeping a close watch on
rivals BLDP and FCEL.

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NITE - Knight Trading Group Inc. $24.31 +1.63 (+3.06 this week)

Knight Trading Group is the leading market maker in equity
securities listed on the Nasdaq, the OTCBB of the NASD, and
the over-the-counter market for New York Stock Exchange (NYSE)
and American Stock Exchange (AMEX) listed securities.  Knight
is also a leading market maker in options on individual equities,
equity indexes and fixed income instruments in the U.S and
Europe.  The firm also maintains an asset management business
for institutional investors and high net worth individuals
through its Deephaven Capital Management subsidiary.

Nite hit a 52-week low of $13.25 on January 3, and has made
a dramatic recovery since the Fed's first rate cut.  Nite
reported quarterly earnings which were lower than the year ago
quarter, but slightly higher than the consensus expectations
on January 19.  Nite's poor performance during the fourth
quarter of 2000 was attributed to low volume on the Nasdaq,
as investors sought the safety of defensive stocks during the
worst year in history for the Nasdaq composite.  However,
despite a weak quarter, Nite managed to post a year over year
increase in net income of 23%, and revenues of 40%.  Investors
are now ignoring yesterday's bad news, and focusing on Nite's
bright future.  As the leading Nasdaq market maker in over
7500 stocks, Nite's fortunes are tied to the trading volume
on the exchanges.  While two billion share days on the Nasdaq
were almost unheard of eighteen months ago, they are the norm
right now, and, with most analysts expecting a strong recovery
in the broad markets with the Fed in an easing mode, Nite is
poised to profit beautifully.  In particular, strength in the
brokerage stocks, as well as the ability of the Nasdaq to
hold above key support levels in the face of this week's
earnings warnings has helped Nite to maintain a smooth upward
channel.  After breaking through the 50 dma of $21.06 last
week, Nite has made a clean break above prior resistance at
the 5 dma of $22.50, and $24.  Tuesday's volume of almost double
the average daily volume indicates strong buying.  Traders can
take positions at current levels, or at a pullback to support
at $23.69.  Ideally, we are looking for a break above the 200
dma of $27, and conservative traders may want to wait for this.
Watch the broker dealer sector as well as the investment
management sector for strength, and set stops at $21.

BUY CALL FEB-22.5 QTN-BX OI=2102 at $2.88 SL=1.50
BUY CALL FEB-25  *QTN-BE OI=2862 at $1.50 SL=0.75
BUY CALL MAR-22.5 QTN-CX OI= 656 at $3.88 SL=2.50
BUY CALL MAR-25   QTN-CE OI= 881 at $2.69 SL=1.25


CIEN - CIENA Corporation $98.00 +3.88 (+7.44 this week)

Helping to satisfy our insatiable demand for bandwidth, CIEN
makes dense-wavelength division multiplexing (DWDM) systems for
use with long-distance fiber-optic communications networks.
CIEN offers optical transport, intelligent switching and multi-
service delivery systems that enable service providers to
deliver and manage high-bandwidth services to their customers.
The company's MultiWave DWDM systems allow optical fiber to
carry up to 40 times more data and voice information without
requiring more lines.  CIEN's customers include long-distance
carrier, competitive local exchange carriers (CLECs), Internet
service providers and wholesale carriers.

The Networking sector has digested an amazing amount of bad
news in the past week, with negative comments coming out from
the likes of GLW and PMCS last week, and even CSCO yesterday.
Despite this rash of bad news, CIEN continues to fight off the
bears and head higher.  The PMCS-related selloff seemed to run
out of steam near $82 right at the open last Friday, and CIEN
began an immediate recovery, climbing back over the 200-dma
(then at $87.13), then the 50-dma (then $90), and finally
clearing the descending trendline today near $94.  Of course,
positive analyst comments never heard, and that is just what our
play got when Gruntal & Company initiated coverage of the stock
today with an Outperform rating.  While volume has been light in
recent days, we would attribute that to anticipation of the
Fed's interest rate decision due out tomorrow.  As long as
investors greet the decision with open arms, CEIN looks poised
to continue its rally, with its first test of major resistance
at $103-105.  If the bulls are truly back in charge, the
trendline should now begin to act as support, and we would look
at any bounce near that level as a good aggressive entry point.
Even more aggressive would be a bounce from the 50-dma, but we
need to wait for the bounce, and strong confirming volume before
playing.  Alternatively, you might choose to wait for a decisive
move over $105 before jumping into the play.  Additional
confirmation for new entries can be found by monitoring the
Networking Index (NWX.X).  If it breaks down, it will make it
that much harder for CIEN, but if it pushes above its 50-dma
(now at 824) and then resistance near 865, then the CIEN bulls
are likely to keep charging forward.

BUY CALL FEB- 95 UEE-BS OI=1617 at $10.63 SL=7.75
BUY CALL FEB-100*UEE-BT OI=3510 at $ 8.13 SL=5.75
BUY CALL FEB-105 UEE-BA OI=1487 at $ 6.13 SL=4.00
BUY CALL APR-100 UEE-CT OI= 238 at $13.00 SL=9.75
BUY CALL APR-105 UEE-CA OI=  84 at $10.88 SL=8.00
BUY CALL APR-110 UEE-CB OI= 377 at $ 9.13 SL=6.25

SELL PUT FEB- 85 UEE-NQ OI=1515 at $ 3.38 SL=5.25
(See risks of selling puts in play legend)


MUSE - Micromuse Inc $83.97 -2.78 (+5.91 this week)

Founded as a network management solutions reseller, Micromuse
today is a leading provider of real-time fault and service-
level management software.  Its Netcool suite helps
telecommunications and Internet service providers ensure the
uptime of network-based customer services and applications.  The
company's software is used in the OSS and NOC centers of many of
the world's leading service providers such as AOL, Cellular One,
and Charles Schwab.

Does a fast moving and volatile Internet piqued your trading
interest?  MUSE is a stellar performer in the NASDAQ; especially
during strong technology rallies.  The stock split 2:1 twice in
2000 and has seen almost 53% gains over the past year!  And at
the moment, MUSE is on the rise again.  Two weeks ago on January
18th, Micromuse reported 1Q earnings that beat expectations by
25% citing strong Internet-related sales.  Pro forma earnings
came in at $0.10 p/s blowing away the consensus estimate of
$0.08.  The following day, the analysts couldn't say enough good
things about the company.  Three influential firms: Bear
Stearns, Janney Montgomery Scott and First Albany came forward
and reiterated Buy recommendations.  The combination of solid 1Q
earnings, positive analysts' comments and a dynamic marketplace,
MUSE rose to the occasion and shattered stifling resistance of
the 200-dma line ($68.03).  After it cleared that suppressive
obstacle and broke out, the momentum powered MUSE through $80
and closed the gap it fell victim to in November 2000.  Today's
spike to $88.75 offers further evidence that the momentum is
continuing to maintain its vitality and can effectively
challenge $90 over the near-term.  In consideration of this
Internet's volatile trading nature, we've set our protective
stop at $73 to allow for wide swings in price.  If you haven't
gotten the hint yet, MUSE is a very HIGH-RISK play and not for
everyone's portfolio.  Entries into subsequent momentum might be
found near the 5-dma ($80.97) if your style is to buy into high-
volume strength at the higher trading levels.  For those looking
to enter on deep dips intraday or outright pullbacks, consider
entries near the trailing 10-dma ($76.69).

BUY CALL FEB-75 UZQ-BO OI=452 at $13.63 SL=10.25
BUY CALL FEB-80 UZQ-BP OI=395 at $10.38 SL= 7.25
BUY CALL FEB-85*UZQ-BQ OI=157 at $ 7.25 SL= 5.00
BUY CALL MAR-80 UZQ-CP OI= 25 at $15.50 SL=11.25
BUY CALL MAR-85 UZQ-CQ OI=  1 at $13.13 SL= 9.75
BUY CALL MAR-90 UZQ-CR OI= 20 at $10.63 SL= 7.50


CTXS - Citrix Systems, Inc. $36.63 +2.50 (+2.75 this week)

Founded in 1989, Citrix Systems is a global leader in application
server software and services that offer "Digital Independence,"
the ability to run any application on any device over any
connection, wireless to Web, so that now, everything can compute.
Citrix technology enables organizations to provide access to
server-based applications from a wide variety of client devices
and platforms.  Since these applications are installed, updated
and maintained on central servers instead of each client, the
cost and complexity of administration are significantly reduced.

As the fortunes of Citrix Systems are intimately connected with
that of Microsoft's, it's no surprise that shares of CTXS have
been strong lately, on the heels of renewed investor interest in
Gates and Co.  Reporting earnings two weeks ago, the company beat
the Street by a penny but raised their guidance going forward,
due to corporations ramping up their adoption of the Windows 2000
platform.  As a result, Lehman Brothers re-iterated their Strong
Buy rating on the stock, raising their price target to $40 and
calling the stock undervalued.  As well, UBS Warburg upgraded
CTXS from a Buy to a Strong Buy rating.  Since then, the stock
has rallied well above all its major moving averages in an
upward-trending regression channel.  After spending last week in
consolidation mode, the stock broke out today closing up 7.33
percent on almost 160% of ADV.  This move is especially
significant considering the uncertainty and light volume on the
NASDAQ today.  At this point, look for bounces off support at
$36, $35, the 5-dma at $34.50 and the 10-dma near $34 as
potential aggressive entry points.  We are placing a protective
stop at $32.  A close below this level would be our signal to
exit this play.  If buying volume remains strong tomorrow,
carrying CTXS above today's high of $37.18, this could be a
signal for conservative traders to jump in for a possible quick
move up to $40.  Use Merrill Lynch's Software HOLDR (SWH) as a
benchmark in measuring sector sentiment.

BUY CALL FEB-30 XSQ-BF OI=1576 at $7.25 SL=5.00
BUY CALL FEB-35*XSQ-BG OI=3572 at $3.25 SL=1.50
BUY CALL FEB-40 XSQ-BH OI=4832 at $1.06 SL=0.00
BUY CALL MAR-35 XSQ-CG OI=3277 at $4.75 SL=3.00
BUY CALL MAR-40 XSQ-CH OI=2759 at $2.50 SL=1.25




MEDI - MedImmune Inc. $41.56 -2.88 (-2.44 this week)

MedImmune is a biotechnology company that currently has six
products on the market and a portfolio of diverse products in
the pipeline.  They develop and market products that address
medical needs in areas such as infectious diseases,
transplantation medicine, autoimmune diseases and cancer.
Currently, their leading drugs Synagis, RespiGam, and CytoGam
are sold primarily in the US.

A significant breakdown in share price after the company
announced very respectable earnings last Thursday, January 25th
piqued our interest in MEDI.  The stock's price collapse was
quite conspicuous; especially in light of the vigorous growth
within the biotech niche of late.  For instance, take a look at
charts of the company's rivals such as Biogen (BGEN), Millennium
Pharmaceuticals (MLNM) or Human Genome (HGSI) for visual
confirmation of MEDI divergence from the sector's strong
uptrend.  Even a Buy reiteration and $75 price target from Dain
Rauscher Wessels couldn't launch MEDI back through its previous
support at the $45 level.  And it's no laughing matter when a
stock slides under a relatively firm level of bottom support on
1.4 to 1.9 times the ADV!  The developing trend line is
currently finding the $41 mark a point of contention on the
descent, so the more risk-adverse should look for a convincing
breakdown below that level before beginning new plays.  If
you're interested in trading a spread, you might consider
looking for an aggressive entry following a heavy-volume
rollover from the 5- or 10-dma line at $44.05 and $45.55,
respectively; then lock in gains as MEDI approaches $41 on the
decline to reduce the risk of getting caught in a technical
bounce.  A bullish close above $45 and we'll quickly exit the
play and move on to other lucrative trading opportunities.
Remember, time is money!

BUY PUT FEB-50 MEQ-NJ OI=134 at $9.25 SL=6.25
BUY PUT FEB-45*MEQ-NI OI=357 at $5.13 SL=3.00
BUY PUT FEB-40 MEQ-NH OI=406 at $2.25 SL=1.00


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BGEN - Biogen, Inc. $66.63 -2.06 (+0.50 this week)

Biogen, Inc., winner of the 1998 U.S. National Medal of
Technology, is a biopharmaceutical company principally engaged in
discovering and developing drugs for human healthcare through
genetic engineering.  Headquartered in Cambridge, MA, the
Company's revenues are generated from worldwide sales of Avonex
for treatment of relapsing forms of multiple sclerosis, and from
the worldwide sales by licensees of a number of products,
including alpha interferon and hepatitis B vaccines and
diagnostic products.  Biogen's research and development
activities are focused on novel products for multiple sclerosis,
inflammatory, respiratory, kidney and cardiovascular diseases and
in developmental biology and gene therapy.

Most Recent Write-Up

We mentioned in Sunday's write-up that BGEN looked ready to make
a move out of its range.  On Monday, the stock broke through,
gaining $2.56 or 3.88 percent to close above resistance at $68.
However, the light volume, about 70 percent of ADV, had us
questioning the validity of the rally.  With that in mind, we
adjusted our stop price from $64 up to $65.  Today, BGEN gave back
most of yesterday's gains, retreating 3 percent on less than 85%
of ADV, as all eyes are on the Fed tomorrow.  It appears that the
stock has broken out of its old range only to find a new, higher
range, with support below at $65.50 and resistance overhead, just
above the $69 level.  A bounce off support could allow for an
aggressive entry but keep in mind our stop price just below.  For
an entry on strength, look BGEN to break back above its 5-dma at
$66.85 before taking a position, correlating entries with Merrill
Lynch's Biotech HOLDR(BBH).


With the Fed decision on interest rates at center stage tomorrow,
uncertainty will likely surround tech and financial stocks which
have both run-up nicely.  Because of this run-up into what is
expected to be a 50-basis point rate cut, we are likely to see a
brief "sell the news."  BGEN is a play on the rotation that has
been occurring rather quickly these days.  Sell the financials and
techs, and buy the pharmas and biotechs.  Look for entry on any
pullbacks to $65.50 or $64.50 accompanied by a bounce.  Buyers have
been supporting these levels the past three sessions.  A break
above $69 would also attract some buyers.  $70 will be the magic
number for resistance.

BUY CALL FEB-60 BGQ-BL OI=2032 at $7.88 SL=6.25
BUY CALL FEB-65*BGQ-BM OI=2495 at $4.13 SL=2.50
BUY CALL FEB-70 BGQ-BN OI=2329 at $1.75 SL=1.00
BUY CALL MAR-65 BGQ-CM OI= 169 at $6.50 SL=4.75
BUY CALL MAR-70 BGQ-CN OI= 511 at $4.00 SL=2.50


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Old Economy Issues Lead The Way!

Blue-chip stocks posted big gains today as investors speculated
on the outcome of the Federal Reserve meeting.

Monday, January 29

Stocks edged higher today as investors speculated on the outcome
of the upcoming Federal Reserve meeting.  The NASDAQ finished up
57 points at 2,838 and the Dow ended up 42 points at 10,702.  The
S&P 500 index was up 9 points at 1,364.  Trading volume on the
NYSE was thin at 1.03 billion shares, with winners beating losers
1,974 to 1,175.  Activity on the NASDAQ was also light at 1.95
billion, with advances beating declines 2,326 to 1,572.  In the
bond market, the 30-year Treasury fell 25/32, pushing its yield
up to 5.69%.

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

AES Corp.   (NYSE:AES)     FEB65C/F50P   $0.25   debit   synthetic
North Fork  (NYSE:NFB)     MAR25C/M25P   $2.10   debit   straddle
Tri-Cont.   (NYSE:TY)      MAR22C/M22P   $1.20   debit   straddle
Digene      (NASDAQ:DIGE) FEB50C/F45C $0.50   credit  bear-call
Varian      (NASDAQ:VARI) FEB30P/F35P $0.81   credit  bull-put
Atrix       (NASDAQ:ATRX) MAY25C/F25C $2.50   debit   calendar

Most of our new plays provided favorable entry prices in today's
session.  Although the AES position was not offered at our target
credit, we noticed a few traders buying call options to speculate
on the outcome of the earnings report and potential plant opening
in California.  We did not achieve the suggested debit in the TY
straddle but because there were two new positions opened by OIN
traders, we will track the play at the higher cost basis.  Our
initial target exit is $1.50 credit.

Portfolio Plays:

Technology stocks led the market higher today as traders ignored
profit warnings and focused instead on the upcoming meeting of
the Federal Reserve.  Internet and telecom shares rallied while
semiconductor and computer stocks recovered from early losses to
close with small gains.  On the Dow, Hewlett-Packard (NYSE:HWP)
jumped almost 10% after saying it plans to eliminate 1,770 jobs
as the company implements an overhaul of its marketing and sales
operations.  The slowing economy also prompted massive layoffs at
Daimler Chrysler (NYSE:DCX), which announced it is reducing its
work force by 20%.  Xerox (NYSE:XRX) offered a similar outlook,
saying it will slash thousands of jobs in the first quarter and
more positions later in the year.  Even with the bad news, most
investors continue to look past the short-term difficulties amid
optimism that future interest rate cuts will revive the economy.
As the broader market segments moved higher late in the session,
all major groups participated in the rally with transportation,
retail and financial stocks leading the way.  Our portfolio saw
a number of favorable moves in both technology and industrial
issues.  Qualcomm (NASDAQ:QCOM) was the big-cap winner, up almost
$6 to $86 on continued momentum from its recent bullish earnings
report.  Portal Software (NASDAQ:PRSF) was the leader in lower
priced stocks, rising $2.50 to $13 and our bullish collar is at
maximum profit.  Avant! (NASDAQ:AVNT) enjoyed a surprise upside
move, up $2 to $25 and traders who entered the synthetic position
were offered an early-exit profit of $0.88.  That's a favorable
closing return considering the mediocre performance of the stock
over the past few sessions.  Household International (NYSE:HI)
continued to rally, ending $1.60 higher at $59.10 and our target
profit (near $1.75) has been achieved.  Another industrial issue,
NS group (NYSE:NSS) rose $0.70 to $10.95 and the overall credit
for the synthetic position moved above our exit target to $1.70.
On the downside, Lennar (NYSE:LEN) corporation's recent technical
recovery has failed near $38 and with the short-term (30) Moving
Average rolling over, we are going to start looking for an early
exit opportunity in the bullish credit spread.

Tuesday, January 30

Blue-chip stocks posted big gains today as investors speculated
on the outcome of the Federal Reserve meeting.  The Dow ended up
179 points at 10,881 while the NASDAQ remained almost unchanged
at 2,838.  The S&P 500 index was up 9 points at 1,373.  Trading
volume on the NYSE reached 1.14 billion shares, with advancing
issues outpacing declining issues 1,874 to 1,238.  Activity on
the NASDAQ was average with 2 billion shares traded.  Technology
advances beat declines 2,161 to 1,648.  In the bond market, the
30-year Treasury rose 1 14/32, pushing its yield down to 5.59%.

Portfolio Plays:

Industrial stocks rallied today, driving the Dow Average to a
triple-digit gain on strength in the consumer products segment.
The most vigorous upside activity was seen in shares of Procter
& Gamble (NYSE:PG) after the conglomerate posted a second quarter
profit of $0.93 per share in its fourth quarter, a penny ahead of
the consensus number.  PG also said it expects earnings growth for
the third quarter to be in line with analysts' estimates.  Among
the Dow's other bullish movers were AT&T (NYSE:T), Eastman Kodak
(NYSE:EK), General Electric (NYSE:GE), and J.P. Morgan (NYSE:JPM).
At the same time, the NASDAQ spent most of the session near the
day's previous close, unable to make much headway with investors
unwilling to open new positions ahead of the FOMC meeting.  The
semiconductor group provided the best performance while Internet
and computer hardware issues generally retreated.  In the broader
market, paper, gold, chemical and oil service issues thrived while
financial, biotechnology and utility stocks consolidated overall.
Despite the slump in technology shares, our portfolio experienced
a number of winners in the group.  AT&T (NYSE:T) rebounded $1.30.
after announcing a loss of $1.7 billion this quarter, most of it
attributed to problems with Excite@Home (NASDAQ:ATHM).  Experts
say the decision by the nation's largest long-distance provider
to become a cable and wireless company, is the main cause of its
decline in share value.  Regardless of its past problems, today's
recovery to $25 puts the stock at a perfect price for our LEAPS
with Covered-calls position.  Other NASDAQ issues that enjoyed
bullish activity included International Rectifier (NASDAQ:IRF),
Molex (NASDAQ:MOLX), Portal Software (NASDAQ:PRSF), Ericsson

Among industrial shares, Atlantic Airlines (NYSE:ACAI) and HSBC
Corporation (NYSE:HBC) moved lower against the overall trend and
we will watch these issues closely in the coming sessions.  Aflac
(NYSE:AFL) also slumped after reporting fourth quarter earnings
that were merely in line with consensus estimates and that bodes
well for our bearish credit spread.  Another position in that
category, Union Carbide (NYSE:UK) continued to rally even as the
company reported fourth quarter results that fell sharply from a
year ago because of high raw material and energy costs.  Our sold
strike at $55 may eventually be tested but for now the issue has
not demonstrated any ability to trade above that price.   Our new
synthetic position in AES Corporation (NYSE:AES) was active today
after the company provided an earnings estimate for fiscal 2001
that wasn't in line with what analysts have been expecting.  In
the international power company's fourth quarter earnings report,
AES announced that although next year's earnings will be slightly
below the consensus expectation of $1.91, they project earnings
to grow at an average rate of 25% to 30% over the next five years.
There were no traders in our speculative position after the news.
On another subject, our remaining (February) debit straddles are
beginning to feel the effects of eroding time value and those of
you who have yet to close profitable positions should do so in a
timely manner, before they expire.  In addition, many of the less
productive plays are approaching our standard cut-loss point; a
closing value of 50% or less, and those positions should also be
considered candidates for early exit.

Questions & comments on spreads/combos to Contact Support
                           - NEW PLAYS -
FRX - Forest Laboratories  $65.75  *** New Alzheimer Drug? ***

Forest Laboratories (NYSE:FRX) develops, manufactures and sells
both branded and generic forms of ethical drug products that
require a physician's prescription, as well as non-prescription
pharmaceutical products sold over the counter.  Forest's most
important United States products consist of branded ethical drug
specialties marketed directly, or detailed, to physicians by the
company's Forest Pharmaceuticals, Forest Therapeutics and Forest
Specialty Sales sales forces.  Their products include Celexa,
Forest's SSRI for the treatment of depression; the respiratory
products Aerobid, Aerochamber and Tessalon; Tiazac, a once-daily
diltiazem for the treatment of hypertension and angina; Infasurf,
a lung surfactant for the treatment and prevention of respiratory
distress syndrome in premature infants, and Cervidil, used for
the initiation or continuation of cervical ripening.

Shares in Forest Laboratories rallied today after the drug-maker
said it would begin Phase III studies of an experimental treatment
for Alzheimer's disease earlier than expected, and seek marketing
approval for the drug by the end of the year.  Forest Labs said it
decided to conduct new studies of its Alzheimer's drug, Memantine,
after a meeting with officials of the U.S. FDA to review results
of studies among patients with moderately severe to severe forms
of the degenerative neurological disease.  The company also gave
updates on two other medicines in development, including positive
news about its hypertension drug Tiazac.  The new product has won
a patent that may help it resist generic rivals.  Forest's Tiazac
is a blood-pressure treatment licensed from Toronto-based drug
maker Biovail and that company won a new patent on the medicine,
which has been listed in the FDA's "Orange Book."  When a patent
for a currently marketed drug lands in the Orange Book, the FDA
typically refuses to approve knockoff versions of the medicine
for up to 30 months, thus any generic equivalents to Tiazac are
likely to be significantly delayed in reaching the market.

Today's news was favorable and buyers moved back into the stock,
driving it up and out of a recent consolidation area.  Now the
issue is poised for future gains and we will speculate on that
movement with this conservative position.

PLAY (conservative - bullish/credit spread):

BUY  PUT  FEB-57.50  FRX-NP  OI=45   A=$0.70
SELL PUT  FEB-60.00  FRX-NL  OI=245  B=$1.00
INITIAL NET CREDIT TARGET=$0.40-$0.50  ROI(max)=19% B/E=$59.60

                   - STRADDLES & STRANGLES -
JP - Jefferson Pilot  $67.50  *** Earnings Play! ***

Jefferson-Pilot (NYSE:JP) is a holding company engaged in the
business of writing life and accident and disability insurance
policies; writing annuity policies and selling other investment
products; operating radio and television facilities; and also
producing sports programming.  The company's main subsidiaries,
which are wholly-owned are: Jefferson-Pilot Life Insurance (JP
Life), Jefferson Pilot Financial Insurance (JPFIC), Jefferson
Pilot Life America Insurance (JPLA), Alexander Hamilton Life
Insurance Company of America (AH Life), Guarantee Life Insurance
(GLIC), Jefferson Pilot Securities Corporation, a full service
NASD registered broker, and Jefferson-Pilot Communications (JPCC).

This issue meets our criteria for a speculative debit-strangle;
cheap options, a history of adequate price movement and future
events or activities (FOMC meeting and quarterly earnings) that
may generate volatility in the stock or its sector.  This simple
selection process provides the foremost combination of low risk
and potentially high reward.  As with any strategy, it should be
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and trading style.

PLAY (very speculative - neutral/debit strangle):

BUY  CALL  FEB-70  JP-BN  OI=40  A=$0.55
BUY  PUT   FEB-65  JP-NM  OI=39  A=$0.70


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