Option Investor

Daily Newsletter, Wednesday, 03/07/2001

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The Option Investor Newsletter                Wednesday 03-07-2001
Copyright 2001, All rights reserved.                        1 of 1
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MARKET WRAP  (view in courier font for table alignment)
        03-07-2001        High      Low     Volume Advance/Decline
DJIA    10729.60 +138.40 10731.50 10591.90 1.13 bln   1925/1164
NASDAQ   2223.92 + 19.49  2243.75  2201.41 1.77 bln   1971/1680
S&P 100   650.72 +  5.27   652.04   645.45   totals   3896/2844
S&P 500  1261.89 +  8.09  1263.86  1253.80           57.8%/42.2%
RUS 2000  484.84 +  3.71   485.50   481.13
DJ TRANS 2990.43 + 10.00  3004.77  2978.93
VIX        26.45 -  0.99    28.17    26.32
Put/Call Ratio      0.56

Dear Abbey Keeps the Rally Rolling

Abbey Joseph Cohen gave her two-cents on the state of the stock
market today, and traders liked what they heard.  Before the
opening bell, Goldman Sachs' doyenne of stocks gave credence to
the perception stocks have bottomed, saying "we believe that
attractive equity valuation has been restored."

With that pleasant thought in mind, Cohen raised her portfolio
equity weighting to 70 percent from 65 percent, which was the
first time in nearly a year she has changed her portfolio
weightings.  Then, to add fuel to the bullish tinders, Cohen
reiterated her year-end target of 1,650 for the S&P 500 Index
(SPX) and 13,000 for the Dow Jones Industrial Average (INDU).

Not surprisingly, Cohen's perceived prognostication powers did
wonders for the broader and blue-chip markets.  The SPX closed up
8.09 points, or 0.65 percent, to 1,261.89.  With today's advance,
the SPX posted its longest winning streak in nearly six weeks.
What's more, the index is firmly removed from bear-market
territory now that its trading at only a 17 percent discount to
its March 2000 closing high of 1,527.

Doing the SPX one better, though, was the INDU.  The blue-chip
average advanced 138.38 points, or 1.31 percent, to 10,729.60,
marking the fourth consecutive advance for this Methuselah-laden
market barometer.

The INDU was propelled higher today by retailing stalwarts Home
Depot (NYSE:HD) and Walmart (NYSE:WMT) rose $2.34 and $1.15,
respectively.  Also, helping the cause were Nasdaq carpetbaggers
Intel (Nasdaq:INTC) and Microsoft (Nasdaq:MSFT), each added more
than a $1.00 apiece to their respective share price.

Of course, as we all know, Intel and Microsoft pull double-duty,
meaning this dynamic duo has a say in the new economy as well as
the old.  To that end, the Intel and Microsoft advance helped the
Nasdaq Composite Index (COMPX) to overcome a free-fall in
communications chip maker Broadcom Corp. (Nasdaq:BRCM), which
tanked $7.63 to $40.25 after cutting its quarterly earnings and
sales outlook.  Nevertheless, the COMPX finished the day up 19.49
points, or 0.88 percent, to 2,223.92 -- its third consecutive
winning session.

Technically, the picture is finally starting to improve (improve
being a relative term, of course) on the COMPX.  For the second
day in a row, the tech-heavy index was able to trade above its
downward trend started in early February.  Whether this means
anything or not is still open to interpretation.  The last time
the COMPX had such an outliner it reversed course the next day.

As for stock news, WorldCom (Nasdaq:WCOM) rose $0.50 to $17.19
after the Wall Street Journal reported the second-largest U.S.
long-distance company may be a takeover candidate. According to
the latest scuttlebutt, WorldCom CEO Bernard Ebbers might be
interested in selling the company for the right price, which is
reportedly $35 a share -- a 100 percent premium to Wednesday's
closing price.

Poor Bernie might have become a little jaded with the telephony
long-distance business after having to pony up millions of
dollars in a margin call on WorldCom stock a few months back.
Still, this financial setback does not excuse him for suffering
from a delusion known in economic parlance as the "endowment
effect," which means the propensity to believe something is worth
more than it actually is because you own it.  If Bernie is
waiting for someone to pay $35 a share, or $100 billion, for this
commodity business, he's certainly in no hurry to sell.

Another stock making noise today was Yahoo (Nasdaq:YHOO).  The
Internet portal king traded all of seven minutes during regular
hours on Wednesday before its stock was halted after the company
announced it had backed out of an appearance at an Internet
conference.  At the time Yahoo said it would issue a post-close
press release, which it did, and the news wasn't good.

According to the press release, Yahoo has initiated an external
search for a new CEO to replace Tim Koogle, who will stay on as
chairman of the company.  Yahoo also cut its first-quarter
earnings, lowering its EPS to break-even from the $0.05 expected
from First Call.  Not surprisingly, Yahoo shares were down
sharply in after-hours trading, falling $4.38 to $18.

In more upbeat news,  Royal Dutch Petroleum (NYSE:RD), 60 percent
owner of the Royal Dutch/Shell Group, submitted a $2.2 billion
cash bid (ironically, Royal Dutch is one of the few companies
these days that can get away with offering stock) for Denver-
based oil and gas exploration firm Barrett Resources (NYSE:BRR).
Barrett finished the day up $15.69 to $61.11 while Royal Dutch
finished up $0.51 to $60.46.

As for economic news, U.S. consumer borrowing increased to $16
billion in  January, more than twice the increase of $7.2 billion
reported in December, thanks to the biggest increase in credit
card charges since August.

In other news, the Federal Reserve said that the U.S. economy
continues to expand, but at a "sluggish to modest" pace, at least
that's what the Fed said in its "Beige Book" report on regional
business activity.

Looking ahead, the next significant economic data set will be
released on Friday with the government's unemployment rate, which
is expected to come in at 4.2 percent.

As for trading tomorrow, the Yahoo brouhaha could weigh heavily on
traders minds at the open.  However, I think the impact on
trading will be short lived.  The fact is, traders have become
calloused to earnings warnings (with so many delivered over the
past two months, how could they not?).  That's not to say,
though, they are ready to jump back into tech issues with
reckless abandon, because they are not.

Yes, the chip makers, particularly the communication chip makers,
have rallied nicely this week (sans Broadcom, of course).
Comverse Technology (Nasdaq:CMVT), PMC-Sierra (Nasdaq:PMCS) and
Vitesse Semiconductor (Nasdaq:VTSS) are all trading higher from
where the begin the week.  But I wouldn't get to excited; I think
this has been a trading rally based on short covering, so I would
be leery about jumping in at this points (My apologies to you
traders looking for the chips to lead us out of the doldrums).

With that said, I would remain conservative in my long picks.
In other words, don't be too surprised if tobacco and energy stocks
continue to lead the way into the March 20th FOMC meeting.

So for the time being, don't get too speculative with those long
picks and keep those stop-losses tight.

S.P. Brown
Contributing Editor

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RIMM - Research in Motion $46.50 +4.00 (+3.25 this week)

Research in Motion Limited is a leading designer, manufacturer,
and marketer of innovative wireless solutions for the mobile
communications market.  Through development and integration of
hardware, software and services, RIMM provides solutions for
seamless access to time sensitive information including email,
messaging, and internet and intranet based applications. RIMM's
portfolio of award winning products includes the wireless
handheld product line, the wireless email solution, and wireless
computer card adapters.

RIMM was taken down from a high of over $120 in October to
a low of $34.75 last week.  However, RIMM's chart indicates that
this week may have been an important turning point for RIMM,
as well as other companies in the handheld mobile communications
devices market, like PALM and HAND.  Last December, RIMM reported
earnings which exceeded analyst's expectations, as well as
a 160% increase in revenues from the year ago quarter.  The
company received a round of applause and upgrades from many
Wall Street firms, including US Bancorp Piper Jaffray and CE
Unterberg Towbin.  Since then, additional excellent news has
been released.  RIMM recently announced a contract with the
US military for providing secure wireless access to the
government's defense message system.  This follows a strategic
alliance between QCOM and RIMM, as well as several other
contracts.  In addition, the market research firm Gartner
Dataquest cited a study which indicates that, while the PC
and wireless markets may be slowing, the market for handheld
broadband devices is growing by leaps and bounds.  This week,
Vaultus closed an additional round of financing, raising $32
million in a private deal with RIMM, China Industrial Development
Partners and @ventures.  Investors interpreted this as additional
indication of the handheld communication devices market
opportunity.  RIMM's chart shows a very strong pivot point at
the $35 level on March 1.  After vaulting to $45 on March 2,
RIMM consolidated to a new higher low at $40 on Monday.  RIMM held
up beautifully in today's market, and closed with a very bullish
candlestick pattern.  RIMM is now poised to clear $47.50, which
could be a possible entry level, if it coincides with overall
market strength and sector strength.  Aggressive traders could
consider taking a position on a pullback to support at $45.
Watch others in the market like PALM for an indication of sector
strength, and set stops at $42.50.

***March contracts expire next week***

BUY CALL MAR-45*RUL-CI OI=586 at $4.38 SL=2.50
BUY CALL MAR-50 RUL-CJ OI=795 at $2.06 SL=1.00
BUY CALL APR-45 RUL-DI OI=137 at $8.13 SL=5.75
BUY CALL APR-50 RUL-DJ OI=196 at $5.88 SL=4.00



HI - Household International, Inc. $61.50 +1.63 (+2.09 last week)

Headquartered in Prospect Heights, Illinois, a suburb of Chicago,
through its subsidiaries, Household International is a leading
provider of consumer finance, credit card, auto finance and
credit insurance products in the United States, United Kingdom
and Canada.  In the United States, Household operates under the
two oldest and most recognized names in consumer finance - HFC
and Beneficial.  Household is also one of the nation's largest
issuers of private-label and general purpose credit cards,
including the The GM Card and the AFL-CIO's Union Privilege card.

A rock-solid earnings history, analyst support and strong
technicals have landed HI on our low volatility call play list.
While the Banking sector has had to contend with commercial loan
defaults, both real and imagined, analysts have been more bullish
in the consumer credit space for diversification reasons.  While
large banks make fewer loans of greater amounts, commercial
creditors make many small loans, which not only add up to large
numbers, but at a much lower level of risk.  HI's record of
stable returns and consistent growth has made this stock
attractive, with some analysts calling the stock undervalued
relative to its peers.  Today's advance of 2.72 percent on 150%
of ADV resulted in a break through resistance at $60, putting
the stock at a new all-time high.  A bullish surge above today's
intra-day high of $62 could provide an entry on strength for
conservative traders while aggressive dip buyers may target
support at $60, the 5-dma at $59.65 and our stop price of $59.
Correlate entries with movement in competitors BAC and CMB before
making a play.

***March contracts expire next week***

BUY CALL MAR-55 HI-CK OI= 456 at $6.90 SL=5.00
BUY CALL MAR-60*HI-CL OI= 813 at $2.70 SL=1.25
BUY CALL MAR-65 HI-CM OI= 527 at $0.50 SL=0.00
BUY CALL APR-60 HI-DL OI=3423 at $4.70 SL=3.00
BUY CALL APR-65 HI-DM OI= 678 at $2.50 SL=1.25



WM - call play
Adjust from $50 up to $51.75

DORL - call play
Adjust from $27 up to $28

PPG - call play
Adjust from $52 up to $53.50

ELY - call play
Adjust from $23.75 up to $25.50

PLAB - call play
Adjust from $34 up to $35

UBS - call play
Adjust from $153 up to $158

BRCM - put play
Adjust from $52 down to $46


MERQ $50.48 +2.11 (+1.98) Brokerage firm CE Unterberg lowered
their 12-month price target on MERQ from $100 to $50 today,
citing that macro concerns, a slowdown in information technology
spending and company-specific issues were putting pressure on the
stock, while maintaining their Buy rating.  But shares of the
network management software maker moved higher in sympathy with
the NASDAQ and the Software sector, as tracked by Merrill Lynch's
Software HOLDR (SWH).  In doing so, MERQ gained 4.36 percent on
1.4 times the ADV and in doing so, close above its 5-dma near the
psychological $50 level. This move caused our stop price of $49
to be tripped, thereby taking MERQ off our put play list.

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BRCM - Broadcom Corporation $40.25 -7.63 (-6.06 this week)

Broadcom Corporation is a provider of highly integrated silicon
solutions that enable broadband digital transmission of voice,
video and data to and throughout the home and within the business
enterprise.  These integrated circuits permit the cost-effective
delivery of high-speed, high-bandwidth networking using existing
communications infrastructures that were not originally designed
for the transmission of broadband digital content.

Most Recent Write-Up

Strength in the Chip sector recently has helped to lift the
NASDAQ higher.  A rash of earnings warnings yesterday from
Semiconductor companies across the board did not cause the
customary sell-offs and in fact, stocks such as XLNX, CY, LSI,
VTSS, and TQNT advanced in the face of their warnings.  This
rallying on bad news was enough for bring out the bulls, who were
more than happy to assume that the worst has been priced into the
Semiconductor stocks.  Earnings shortfalls, falling sales and
inventory build-ups all add up to a negative picture.  While it
can be argued that the market looks ahead, these problems added
to an uncertain economy mean the lack of visibility ahead.  That
being said, BRCM has been weak relative to its peers, even in the
recent bounce.  Every time the stock has reached a level of
support, it has fallen below on increased selling volume.
Negative comments and ratings by Banc of America Securities,
Merrill Lynch, Solomon Smith Barney, WR Hambrecht and most
recently SG Cowen have also provided a drag on the stock price.
What's more, the company has been under legal pressure, as a Wall
Street Journal article published last week questioned the
legitimacy of recent insider stock sales.  Failed rallies above
resistance at $50 and our stop price of $52 could allow
aggressive traders to take a position while a break below the
5-dma at $47.71 would allow the more risk averse to make a play.
As always, correlate entries with movement in the Philadelphia
Semiconductor Index (SOX) as well as the NASDSAQ 100 (QQQ).


In a late Tuesday night warning, BRCM stated that it expects
a revenue shortfall in the coming quarter.  COMS, one of BRCM's
largest customer, terminated a contract and it has caused some
trouble for the communication chip company.  Quick to follow were
a slew of downgrades from the Street and the stock gapped down,
sliding throughout the day.  We are looking for the selling to
continue.  A break below $40 on good volume would warrant an entry
into this put play.  Any short-lived bounces to resistance at
$42.50 or $45, accompanied by a rollover, would also provide
entry opportunities.

***March contracts expire next week***

BUY PUT MAR-45 RCQ-OI OI=2463 at $6.50 SL=4.75
BUY PUT MAR-40*RCQ-OH OI=1867 at $3.63 SL=1.75
BUY PUT APR-45 RCQ-PI OI= 345 at $9.88 SL=7.50
BUY PUT APR-40 RCQ-PH OI= 687 at $7.00 SL=5.25



Abby talks the talk, will the market walk the walk?

Stocks moved higher again today amid optimism over new economic
data and positive comments from a well-known analyst.  Industrial
issues rallied on strength in energy shares while the NASDAQ saw
unexpected buying pressure in the software group.  The enthusiasm
began with a report from the Federal Reserve that suggested the
recent economic expansion in the U.S. remains intact though it
has obviously lost much of the momentum it once displayed.  The
latest Beige Book summary of national economic activity reported
there was no sign of widespread pricing pressures, except among
energy sectors, and it also reflected some signs of easing in the
labor market.  Goldman Sachs strategist Abby Joseph Cohen added
to the spirited sentiment, announcing a revised "bullish" outlook
for equities in her model portfolio.  The popular stock market
guru raised her recommended equity exposure to 70%, saying she's
increasingly confident that a "too-gloomy" consensus scenario is
priced into equities.  Cohen went on to suggest that many of the
imbalances identified during the past year have now been largely
redressed and "attractive" equity valuations have been restored.
Her year-end (2001) target price levels for the S&P 500 Index and
the Dow Industrials were 1,650 and 13,000 respectively, roughly a
31% increase for the broad market and a 22% gain for the Dow from
current levels.  The upbeat comments were widely celebrated and
a number of industrial sectors moved higher after Cohen said she
favored energy-related stocks, some economically sensitive issues
and those offering "good value," including blue-chip technology,
consumer cyclicals and basic materials.  The analyst also advised
clients to slightly overweight financial service stocks, as the
sector accounts for a significant portion of the S&P 500 Index.
In closing, Abby noted that our economy still benefits from a
number of favorable long-term trends; the world's most productive
work force, well-managed companies, mild inflation and a large
federal surplus.  From an investor's viewpoint, we can only hope
those attributes translate to higher stock prices in the future.

Good Luck!

Summary of Previous Picks:

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

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

INTU    MAR    35    33.25  46.44    $1.75   7.0%
ERTS    MAR    45    42.88  54.63    $2.12   5.0%
UHS     MAR    85    83.15  86.45    $1.85   4.2% Testing support

Positions closed: CCMP - Murphy's Law candidate?

Naked Puts:

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

INTU    MAR    30    29.38  46.44    $0.62  10.0%
NVDA    MAR    40    39.25  52.13    $0.75   8.3%
BRKS    MAR    30    29.31  38.31    $0.69   8.3%
ERTS    MAR    40    39.12  54.63    $0.88   8.0%
CCMP    MAR    60    58.87  71.47    $1.13   7.7% Exit on rally!
HGSI    MAR    40    39.56  51.94    $0.44   7.3%
UHS     MAR    80    79.15  86.45    $0.85   6.0%
SEIC    MAR    38    36.97  41.00    $0.53   5.3% Adj 2-1 split
AEOS    MAR    30    29.29  27.69   -$1.60   0.0% Adj 3-2 split

AEOS shares sold-off after a downgrade by J.P. Morgan on concerns
about near-term business trends.  In a research note, the analyst
blamed slow mall traffic due to the sluggish U.S. economy and
unseasonable weather, as well as a late catalog mailing.  However,
other analysts say the company is on track and we don't believe
the near term profit-taking should necessarily prohibit traders
from rolling down and out to a lower, post-split strike or, in the
event of assignment, recovering losses (and possibly profiting)
from a future covered-call position.  Of course, if your long-term
outlook is negative, exiting the position now may be prudent.

Positions closed: DIGL

Sell Strangles:

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

CEPH    MAR    50    48.56  56.00    $1.44  14.9%
CEPH    MAR    60    61.75  56.00    $1.75  17.7%

CERN    MAR    45    44.19  45.56    $0.81   8.9% Key moment!
CERN    MAR    65    66.19  45.56    $1.19  10.5%

MUSE    MAR    40    38.94  43.19    $1.06   7.8% Key moment!
MUSE    MAR    95    96.06  43.19    $1.06   7.8%

PLMD    MAR    30    29.25  37.63    $0.75  16.8%
PLMD    MAR    50    50.69  37.63    $0.69  15.5%

Naked Calls:

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

BEAS    MAR    80    80.94  36.94    $0.94   8.3%
CMVT    MAR   110   110.56  83.69    $0.56   6.8%
CIEN    MAR   100   100.44  75.31    $0.44   6.0%

Credit Spreads:

Stock  Pick    Last     Position   Credit    C/B    G/L   Status

NBR   $62.30   $62.29  MAR50p/55p  $0.60   $54.40  $0.60   Open
NOC   $94.82   $96.32  MAR85p/90p  $0.75   $89.25  $0.75   Open
WPI   $55.98   $54.16  MAR45p/50p  $0.60   $49.40  $0.60   Alert
IVGN  $75.00   $72.19  MAR65p/70p  $0.75   $69.25  $0.75   Alert

Debit Straddles:

The "rolling stock" position in FAST reached its near term apex
on Friday, March 2.  The MAR-$60 call option did not achieve our
closing target of $3.00, offered only as high as $2.50 on the
bid side.  With the downside credit of $5 for the MAR-$60 Put,
the overall position has provided a potential profit of $7.50; a
35% return for adept traders.  For those who chose to remain in
the position, the combined straddle value has since reached the
cut-loss point of $3.30 (60%) and readers who have not exited
the play should consider that alternative to preserve capital.

Positions closed: SDS - profit target ($1.25) met in 1 day.
ASFC - stop loss.

New Candidates:

This following group of plays is simply a list of candidates to
supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
are suitable for your skill level, risk-reward tolerance and
portfolio outlook.  In addition, we recommend that you avoid any
strategy or technique in which you are not completely comfortable
with the potential loss, the necessary adjustments and the common
entry-exit strategies.  (We monitor the positions marked with ***).


BULLISH PLAYS - Covered Calls, Naked Puts, & Combinations

ERTS - Electronic Arts  $54.63  *** New trading Range? ***

Electronic Arts (NASDAQ:ERTS) operates in two principal business
segments: EA Core and EA.com.  Through EA Core, the company makes,
markets and distributes interactive entertainment software for a
variety of hardware platforms.  EA.com represents Electronic Arts'
online and e-Commerce business.  EA.com's online business includes
subscription revenues collected for Internet game play on their
web-sites, sales of Internet-based games and sales of Electronic
Arts products sold through EA.com websites.

In late January, Electronic Arts reported quarterly earnings that
were less than outstanding, but investors chose instead to focus
on the company's future outlook.  The CEO believes ERTS will be
profitable next year and the recent purchase of gaming web site
Pogo.com, should increase their paying subscribers to help meet
that financial target.  The video game Internet site earns revenue
from both advertising and monthly subscription fees and analysts
say that EA.com needs about 600k-700k more subscribers to meet its
goals, equivalent to nearly 5% of pogo.com's registered users.
That's an optimistic target, considering the recent slump in the
economy but investors who want to own a great stock in the Computer
Software segment can achieve a favorable cost basis in the issue
with these conservative positions.

ERTS - Electronic Arts  $54.63

PLAY (sell covered call or naked put):

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

Sell Call APR 45   EZQ DI  12       11.63    43.00     3.2% ***
Sell Call APR 50   EZQ DJ  24        8.50    46.13     5.8%

Sell Put  APR 45   EZQ PI  997       2.19    42.81    10.5% ***
Sell Put  APR 50   EZQ PJ  99        3.75    46.25    12.4%



HAL - Halliburton  $44.88  *** Hot Sector! ***

Halliburton (NYSE:HAL) provides a variety of services, equipment,
maintenance, engineering and construction to energy, industrial
and governmental customers.  The company offers its products and
services through three business segments: the Energy Services
Group, which provides discrete services, products and integrated
solutions to customers in the exploration, development and also
production of oil and gas; the Engineering and Construction Group,
which provides services to energy and industrial customers and
government entities worldwide; and the Dresser Equipment Group,
which designs, manufactures and markets engineered products and
systems, primarily for the energy industry.  The Dresser Group
has recently been divested to Odyssey Investment Partners and
First Reserve for $1.55 billion in cash.

Stocks in the Oil Service sector are performing very well and
Halliburton is one of the top companies in the industry.  In late
January, Halliburton posted a quarterly profit of $123 million,
or $0.28 a share, which compares to $76 million, or $0.17 a share,
earned a year ago.  Analysts expected Halliburton to earn $0.26 a
share in the December quarter.  Halliburton said its quarterly
profit jumped 62% amid strength in the company's energy services
group operations and the outlook for additional increases in
earnings for those segments remains very positive as oil field
and production activity is expected to accelerate in the coming

Traders who favor the outlook for the company and its share value
can speculate on the future movement of the issue with this
conservative combination position.

HAL - Halliburton  $44.88

PLAY (conservative - bullish/credit spread):

BUY  PUT  APR-35  HAL-PG  OI=2843  A=0.25
SELL PUT  APR-40  HAL-PH  OI=1993  B=0.80
INITIAL NET CREDIT TARGET=$0.65-$0.75  ROI(max)=15%



NBL - Noble Affiliates  $50.11  *** New High! ***

Noble Affiliates (NYSE:NBL) is principally engaged, through its
subsidiaries, in the exploration, production and marketing of oil
and gas.  The company's wholly owned subsidiary, Samedan, directly
or through various arrangements with other companies, investigates
potential oil and gas properties, seeks to acquire exploration
rights in areas of interest and conducts exploration activities.
Exploration activities include geophysical/geological evaluation
and exploratory drilling on properties for which the company has
exploration rights.  Samedan has exploration, exploitation and
production operations both domestically and internationally.  The
domestic areas consist of offshore in the Gulf of Mexico and
California; the Gulf Coast Region; the Mid-Continent Region; and
the Rocky Mountain Region.  The international areas of operations
include Argentina, China, Denmark, Ecuador, Equatorial Guinea, the
Mediterranean Sea, the North Sea and the United Kingdom.

Among global drillers, Noble Affiliates is one of the best and
with the renewed activity in the industry, stocks in the group
have rallied over the past few sessions.  NBL has benefited from
the bullish momentum, rising to a new all-time high on increasing
volume.  The move provides a great example of the strength in the
sector and this position offers a great way to speculate on the
future share value performance of one of its leading companies.

NBL - Noble Affiliates  $50.11

PLAY (moderately aggressive - bullish/credit spread):

BUY  PUT  APR-40  NBL-PH  OI=10  A=0.45
SELL PUT  APR-45  NBL-PI  OI=20  B=1.15
INITIAL NET CREDIT TARGET=$0.80-$0.90  ROI(max)=20%



SNPS - Synopsys  $61.88  *** Rally Underway! ***

Synopsys (NASDAQ:SNPS) is a global supplier of electronic design
automation software to the electronics industry.  The company's
products are used by designers of integrated circuits, including
system-on-a-chip ICs, and the electronic products that use such
ICs to automate significant portions of their chip design process.
ICs are distinguished by the speed at which they run, their area,
the amount of power they consume and the cost of production.  The
company's products offer its customers the opportunity to design
ICs that are optimized for speed, area, power consumption and
production cost, while reducing overall design time.  The company
also provides consulting services to assist customers with their
IC designs, as well as training and support services.

The recent rally in SNPS shares began after the company reported
quarterly earnings in late February, and outlined its outlook for
the future.  The company's CEO said that orders continued to be
strong, with key products gaining momentum, and their subscription
license model has also started paying significant dividends.  The
company's next generation physical synthesis products are also
performing very well and with a successful deployment across a
broad range of customers, a positive affect on revenues will soon
follow.  Investors appear to agree with the optimism as they have
pushed the issue up 25% since the earnings announcement.  Traders
who favor the bullish outlook for the issue can speculate on the
future movement of the stock with these conservative positions.

SNPS - Synopsys  $61.88

PLAY (sell covered call or naked put):

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

Sell Call APR 55   YPQ DK  73        9.25    52.63     3.1% ***

Sell Put  APR 50   YPQ PJ  121       1.06    48.94     5.3% ***
Sell Put  APR 55   YPQ PK  36        2.31    52.69     7.9%


Neutral Plays - Straddles & Strangles

TWTC - Time Warner Telecom  $71.31  *** Probability Play! ***

Time Warner Telecom (NASDAQ:TWTC) is a fiber facilities-based
integrated communications provider offering local business "last
mile" broadband connections for data, high-speed Internet access,
local voice and long distance services.  TWTC serves customers in
21 metropolitan markets in the United States and their customers
principally are telecommunications-intensive business end-users,
long distance carriers, Internet service providers wireless
communications companies and governmental entities.  The company
offers switched services in 20 of its 21 service areas and its
fiber optic networks span 8,872 route miles, contain 332,263
fiber miles, and provide service to 5,566 buildings.

Time Warner Telecom is an active issue with robust option prices
and a reasonably stable trading pattern.  Traders who participate
in premium-selling positions can use the recent volatility and
the inflated premiums to initiate a neutral-outlook play with an
excellent credit.  The probability of the stock reaching our sold
option strikes in 7 trading days is an acceptable risk, based on
the favorable reward.  Of course, there is always the possibility
of a significant change in the technical outlook, so monitor the
play on a regular basis.

TWTC - Time Warner Telecom  $71.31

PLAY (aggressive - neutral/credit strangle):

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

Sell Put  MAR 60   TTU OL  2570      0.75    59.25    14.1% ***
Sell Call MAR 80   TTU CP  898       0.69    80.69    11.4% ***



CHKP - Check Point Software  $70.00  *** Trading Range! ***

Check Point Software Technologies (NASDAQ:CHKP) develops, markets
and supports Internet security solutions for enterprise networks
and service providers including Virtual Private Networks (VPNs),
firewalls, intranet and extranet security and Managed Service
Providers.  The company delivers solutions that enable secure,
reliable and manageable business-to-business communications over
any Internet Protocol network-including the Internet, intranets
and extranets.  Check Point products also include traffic control
and quality of service along with IP address management.  Check
Point products are fully integrated as a part of the company's
Secure Virtual Network architecture and provide centralized
management, distributed deployment, and comprehensive policy
administration.  The capabilities of Check Point's products can
be also extended with the Open Platform for Security, enabling
integration with best of breed hardware, security applications
and enterprise software applications.

We like this issue for a bearish, premium-selling play because
it has a relatively well-defined trading range and excellent
option premiums.  In addition, the recent selling pressure has
come on heavy volume and any ensuing rally will have to propel
the issue beyond resistance at its short-term (30-day) moving
average near $80.  With the heavy overhead supply near $100, the
share value has little chance of reaching our target strikes in
the next month.

CHKP - Check Point Software  $70.00

PLAY (aggressive - sell naked call):

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

Sell Call APR 100  EXK DT  819       2.31   102.31     9.8%
Sell Call APR 103  EXK DO  121       1.94   104.94     8.4%
Sell Call APR 106  EXK DU  469       1.62   107.62     7.2%
Sell Call APR 110  EXK DB  436       1.25   111.25     5.7% ***



VSTR - VoiceStream Wireless  $99.50  *** Technicals Only! ***

VoiceStream Wireless Corp. (VoiceStream) is a national provider
of personal communications service in the United States using GSM
wireless technology.  VoiceStream, together with joint ventures in
which it holds interests, has licenses to provide service to over
220 million people and operating systems from New York to Hawaii,
serving approximately 3.3 million subscribers.  VoiceStream also
has licenses in 23 of the 25 largest markets in the United States.
In addition, VoiceStream holds 49% minority interests in two joint
ventures controlled by Cook Inlet Region, Cook Inlet/VS GSM IV PCS
Holdings, and Cook Inlet/VS GSM V PCS Holdings.  Subsidiaries of
these joint ventures are qualified to obtain block licenses that
VoiceStream cannot obtain directly.

This play is simply based on the current price or trading range
of the underlying stock and its recent technical history.  The
near-term movement in VSTR has formed a "V" bottom and is showing
signs of failing as it nears resistance at $105.  The 30-dma will
be the first test (near $103) with the 50-dma at $107 proving to
be a tougher challenge.  The top of the current price channel
suggests $110 would be the maximum upside potential.  If the stock
moves through the resistance area near $118 on heavy volume, we
will close the sold (short) call or buy the stock to cover the

VSTR - VoiceStream Wireless  $99.50

PLAY (aggressive - sell naked call):

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

Sell Call MAR 105  UVT CA  1181      1.50   106.50    14.2%
Sell Call MAR 110  UVT CB  221       0.50   110.50     5.7% ***

Sell Call APR 115  UVT DC  984       2.75   117.75     7.0%
Sell Call APR 120  UVT DD  88        1.56   121.56     5.0%


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