The Option Investor Newsletter Thursday 04-05-2001 Copyright 2001, All rights reserved. 1 of 2 Redistribution in any form strictly prohibited. To view this email newsletter in HTML format with embedded charts and graphs, click here: http://www.OptionInvestor.com/htmlemail/040501_1.asp Posted online for subscribers at http://www.OptionInvestor.com ****************************************************************** MARKET WRAP (view in courier font for table alignment) ****************************************************************** 04-05-2001 High Low Volume Advance/Decline DJIA 9918.05 +402.60 9929.79 9527.21 1.33 bln 2309/749 NASDAQ 1785.00 +146.20 1785.73 1706.10 2.27 bln 2860/872 S&P 100 588.52 + 27.53 588.52 560.99 totals 3058/1621 S&P 500 1151.44 + 48.19 1151.47 1103.25 65.4%/34.6% RUS 2000 444.73 + 18.99 444.73 425.74 DJ TRANS 2751.33 + 49.50 2760.53 2700.31 VIX 34.98 - 4.09 38.18 34.39 Put/Call Ratio 0.70 ****************************************************************** Risk and Reward For nearly seven months, the shorts and put buyers in this market have been printing money - literally printing money. But those printing presses may be running out of ink as measured by the near-historic advances in the broader market averages Thursday. The reward in shorting this market, especially the Nasdaq Composite (COMPX), has far outweighed the risk in doing so over the last seven months due to a slowing in the economy and the subsequent impact on corporate earnings. However, that dynamic may soon come to an end as the returns from shorting stocks diminish. But, while the reward in shorting stocks may decline, that doesn't necessarily translate into a new bull market. What it can lend to is a bottoming process in the bear-battered Nasdaq, which now becomes a function of time. The reward in shorting the tech sector was further diminished after the bell Wednesday, when Dell Computer (NASDAQ:DELL) reaffirmed its first-quarter guidance. As a function of the new SEC Regulation Fair Disclosure (FD), Dell officials told investors late Wednesday, ahead of its analyst meeting Thursday, that it was on track to meet its consensus estimates of 17 cents per share. Dell's reassuring comments are consistent with what Micron Technology (NYSE:MU) told investors two weeks ago. The maker of dynamic random access memory (DRAM) said it was seeing inventories among PC makers clearing and an up-tick in orders. The PC and chip sectors were among the first to fall when the bear market began, and should lead the ultimate rebound. So, the news from Dell Wednesday night (and Micron two weeks ago) obviously lends credence to the formation of a bottom in the tech sector. In addition to the Dell news, a bullish analyst upgrade boosted the beleaguered Internet sector, which fueled the Nasdaq's rally Thursday. Holly Becker, of Lehman Brothers, upgraded shares of portal giant Yahoo (NASDAQ:YHOO) from a market perform to a buy rating. Let me repeat that: Yahoo was UPGRADED this morning! Upgrades in the Internet sector have been virtually nonexistent, and I feel that Becker's move this morning, while bold, marks a pivotal point for the group. Although, Becker conceded that, "...[Lehman] may be a bit early and that this may not be the absolute bottom for Yahoo's earnings or even its stock price." While that much may be true concerning Yahoo, it's important to mark Becker's upgrade on Yahoo and incorporate it into the "bigger picture" of the technology sector. Away from the technology sector, a blue chip, old economy name sent the Dow Jones Industrial Average (INDU) to a 400 point gain Thursday. Alcoa (NYSE:AA), the largest aluminum producer, reported earnings of 46 cents per share, while consensus estimates had the company pegged to earn 44 cents. While the better-than- expected numbers from Alcoa were due, in part, to cost-cutting practices, the upside surprise was welcomed nonetheless. Alcoa's earnings report sparked a rampant buying spree in the cyclicals, which powered the INDU higher. And I mention that because it's my belief that the best risk to reward, from the long side, exists in the cyclicals and financials for the intermediate-term. Concerning the financials, I feel that this group of stocks is perhaps one of the most critical variables in furthering the progress of the broader market and strengthening any rally. In fact, for the S&P 500, Dow and, indeed, the Nasdaq to sustain a prolonged rally, we need to see continued strength in the financials. Readers can measure the progress of the financial sector by monitoring the KBW Bank Sector Index (BKX.X). Within that index includes large money-center banks such as Citigroup (NYSE:C) and J.P. Morgan Chase (NYSE:JPM). Readers will note on the chart below that, despite the Fed's 150 basis point reduction in rates thus far in the cycle, the BKX is stuck in a descending trend and will need to break above roughly 865 in order to break trend. The index still has another 25 points until testing its trend, so keep a close eye on it tomorrow morning following the release of the employment report, which I'll elaborate upon below. The market will be watching the employment report very closely tomorrow because the Fed and Alan Greenspan will be watching it very closely. The expectations are for the unemployment rate to rise to 4.3 percent. If that number comes in higher-than- expected, the market may actually rally on the news, especially the finance sector, on hopes of the Fed cutting rates before its May meeting. Conversely, if the number comes in lower-than- expected, the market may meet the news favorably. As of late, the market has had the propensity to rally on bullish economic news as the expectations for an economic recovery in the latter half of calendar 2001 increase. So, if the unemployment number comes in lower, the market may perceive that as the economy turning around. And, if the economy isn't as bad as the stock market has been discounting, virtually all growth sectors of the market may rally as shorts cover their bets. For a quick take on the broader market, I'd like to point out the chart of the S&P 500. The broad market average bounced off the 1100 level for the second time Wednesday, en route to tracing a double-bottom. Whether 1100 holds remains to be seen, but the fact that buyers stepped in yesterday was encouraging. Nevertheless, the S&P 500, like the BKX, is in a severe descending trend and needs to break out above 1175 in order to break trend. That level may prove pivotal in the near-term, and traders should monitor the action as the S&P approaches 1175 in conjunction with the BKX as it approaches the aforementioned 865 level. The Nasdaq's rally was very impressive Thursday, but the COMPX failed to reach the 1800 level. And I don't think that was a coincidence. My esteemed colleague, John Seckinger, pointed out that the 1794 level marks a pivotal point for the COMPX - the day high Thursday was 1785. Of course, 1794 is very close to 1800, so the latter may suffice in this case. To digress, the point that Mr. Seckinger made was that shorts may become more fearful if the COMPX advances above 1794. If the short-infested COMPX follows-through Friday and advances above 1794, we may see the index move back into its range between 1900 and 2000. Now, I know that Jim Brown recommended not going long any calls for an extended period of time until the COMPX closes above the 2000 level. But, I think that some quick profits can be taken from the long side if the COMPX gains momentum in the form of short covering above 1794 - just remember to book 'em quick. There are plenty of reasons to be bullish after the 10 percent gain in the Dow and 8.9 percent advance in the Nasdaq Thursday, but I'd like to put Thursday's action in perspective. We've seen these types of moves in the broader market averages since the dawn of the great bear market. That is, time and time again, the market has confounded its participants by displaying rallies of historic proportions. But, I'd like to remind readers that violent, massive rallies are common characteristics of bear markets. The market, as measured by the Dow, S&P and COMPX were deeply oversold going into Thursday morning and the Alcoa earnings report, bullish comments from Dell and the Yahoo upgrade combined to induce fear in the shorts. That fear, in turn, induced short covering (buying). But, when there's fear, to the upside, amongst shorts, the real buyers can't be too far behind. And that's why I suggested that the risk in shorting stocks is increasing, while the potential reward is decreasing and the bottoming process, which has historically taken time, may soon begin. Furthermore, as we were reminded after the close Thursday, earnings continue to deteriorate in corporate America. Sycamore Networks (NASDAQ:SCMR) and Extreme Networks (NASDAQ:EXTR) both issued profit warnings, which reinforced the difficult telecom dynamic that is still plaguing much of the tech sector. I'm very certain that we'll continue to hear of profit warnings within select tech sectors, but the impact of such warnings is the variable. That is, has all the bad news already been discounted into the share prices of such tech giants as, for example, Cisco Systems (NASDAQ:CSCO)? We must remember that the market is an efficient discounting mechanism, and is forward-looking. I'm not trying to discount the very much enjoyable rally in the broader market averages Thursday. Indeed, I believe that money can be made from the long side IF the aforementioned metrics line up as I described with the BKX, S&P 500 and the COMPX. There are several reasons to start getting bullish on the market, as Dick Arms recently pointed out. His ARMS Index, or TRIN, is flashing bullish signals which have historically portended market bottoms. The 10-day moving average of the ARMS Index recently rose above 1.5 and EVERY time in the last 20 years it has reached these levels, the market staged a major reversal. Typically, when the ARMS Index rises above 1.5, the market had reached its nadir within 4 to 20 days. When Mr. Arms first opined concerning the spike above 1.5, he said that the market would most likely retest its lows and that's exactly why I pointed out the double-bottom in the S&P 500 Wednesday - that could've very well been the retest. Eric Utley Assistant Editor *************************ADVERTISEMENT********************* Why put all your risk into one stock when you can play the index instead? Learn how to invest in the OEX, QQQ, and SPX. Get intraday market updates, plays, education and daily commentaries by those who know. Sign up for a two week free trial and see for yourself at IndexSkybox.com: http://www.sungrp.com/tracking.asp?campaignid=1996 ************************************************************ **************** MARKET SENTIMENT **************** One Of These Days By Austin Passamonte Reminds us exactly of March & April 2000 again. One stretch we saw the broad indexes plunge beyond belief and no bullish hope existed. Suddenly the next session arrived to race away in the opposite direction and bullish hope renews again. Up and down, back and forth, wash, rinse, repeat. The past again becomes the present. Will this day be different? Only time will tell. Plenty of market analysts have called a bottom over the past few weeks and 1,000s of index points lower until today. This one does have the makings of a key reversal that could linger into the future, as did Thursday March 22nd when we began our last bullish reversal & trek up the charts from there. By now everyone knows what happened since then. Market Sentiment would love, cherish and adore any sustained rally that would gradually trend up the charts for months and years to follow. Please mark us down for markets that gently pull back every Monday (late morning preferred) and rally right up into Friday where we can simply exit with massive profits. O.K., modest profits would do fine. That is our personal fantasy; what's yours? Fantasy & reality are often world's apart and we must remain cautious not to confuse the two. There are so many bearish pitfalls ahead that it seems very dubious we can put our claws under a pillow and expect the Rally Fairy to leave us lots of new trading capital in return. Can we conquer further terrible news? Will multiple big-cap warnings be shrugged off as investors look ahead? Will seasonal weakness for equities in general and tech stocks in particular negate this year? Will the Fed be moved to lower interest rates further as stocks rally in anticipation? Only time will tell. Bulls All rallies begin from the depths of depravity with no hope for anyone to ever buy stocks again. The past several sessions have sure hinted of that. They also start as short covering and erupt into all-out buying from there. History's second-largest point gain rally in the Dow today was anything but bearish. The largest point gain ever last March was followed by a 10% index ascent the next few sessions before reversing from there. This time that would take us to 10,800+ in mirror fashion. Nasdaq techs are beginning to catch some bids and the SOX is trying valiantly to close above 525 resistance level. In all fairness to each, both daily chart signals are turning bullish. Investor & trader sentiment is desperate to change as the herd is sick to death of selling. Stripped to its barest denominator, market action is nothing more than human emotion quantified. There is no rhyme, reason and certainly no logic to this behavior. "Equity markets priced to perfection" is the biggest oxymoron we know! Bears The list is still longer here, at least for now. Prevailing trend is decidedly down. Tons of overhead resistance remains although some was penetrated today. Plenty of sellers stand ready to dump at a moment's notice given prime reason to do so. Approaching tax season is one of many catalysts. Pre-warn season will lead us into "non" earnings season and business outlook going forward. We can be sure a few large caps will 'fess with up dismal news this month. If recent history is any guide, they won't be met with hugs & kisses at that time. Technical chart studies are still bearish. We are poised for a pullback in the broad indexes after just one session considering we covered several day's worth of upside ground. It will take less effort to push prices down than drive them up from here. Part of today's action can be attributed to buyers rallying the rumored possibility of an interim rate cut any day now. It's been widely speculated that weak economic numbers could spur the Fed into moving forward tomorrow, so bulls rallied into that today. How will the actual data be interpreted? Emotion could drive justification in either direction, but we must ask ourselves if the Fed would feel quite moved to cut rates further in the face of a powerful rally in equities? Can you see Greenspan doing that? We are trying real hard but that image just doesn't manage to appear for us. Bottom Line We can only assume there will be further weakness unless strength is proven otherwise. It does little good to form a mid-range bias these days; one session at a time is adventure enough. Our best guess? Another failed rally & customary short-side bonanza may lie dead ahead. How far and from what price heights? Only time will tell. Trade the daily trend as it develops and think twice about holding profitable plays over any close! ******* VIX Thursday 04/05 close: 34.98 VXN Thursday 04/05 close: 76.29 30-yr Bonds Thursday 04/05 close: 5.53% 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. A reading above 10.00 is considered viable resistance or support respectively within that general strike price range. Thursday (04/05/2001) (Open Interest) Calls Puts Ratio S&P 100 Index (OEX) Resistance: 625 - 610 10,581 2,043 5.18 605 - 590 13,902 6,305 2.20 OEX close: 588.52 Support: 585 - 570 6,486 11,502 1.77 565 - 550 2,224 10,269 4.62 Maximum calls: 600/ 7,016 Maximum puts : 500/10,221 Moving Averages 10 DMA 583 20 DMA 589 50 DMA 642 200 DMA 727 NASDAQ 100 Index (NDX/QQQ) Resistance: 47 - 45 239,193 66,190 3.61 44 - 42 166,696 101,812 1.64 41 - 39 244,057 121,017 2.02 QQQ(NDX)close: 37.43 Support: 36 - 34 61,632 96,796 1.57 33 - 31 3,576 47,913 13.40 30 - 28 2,486 14,984 6.03 Maximum calls: 45/150,079 Maximum puts : 43/72,912 Moving Averages 10 DMA 38 20 DMA 40 50 DMA 49 200 DMA 74 S&P 500 (SPX) Resistance: 1225 8,343 8,418 0.99 1200 10,724 14,134 0.76 1175 9,477 6,946 1.36 SPX close: 1151.46 Support: 1125 5,704 15,463 2.71 1100 3,635 22,335 6.14 1075 372 15,954 42.89 Maximum calls: 1275/24,634 Maximum puts : 1100/22,335 Moving Averages 10 DMA 1144 20 DMA 1154 50 DMA 1244 200 DMA 1370 ********** COT DATA: No changes this session as we await Friday's new report released at/after 4:00pm EST. Full updates will be provided then. ************** MARKET POSTURE ************** Please visit this link for Market Posture: http://www.OptionInvestor.com/marketposture/040501_1.asp ************** TRADERS CORNER ************** Beating The Bid/Ask Spread, Part II By Austin Passamonte On our last visit together here, we left off discussing how bid/ask spreads move about. It is a perilous and often confusing game, to say the least. Standard option trading suggests we buy at "bid" and sell at "ask" as retail traders. Anytime someone enters a market order of 20 contracts or less via electronic execution they do get instant fills at prevailing bid or ask right then. If we went in right now as fast market conditions dictate, buying at ask is the only choice. Likewise, if we trade thin or less liquid markets we are forced to pay ask prices as well. Also, some high volume & large open interest targets have very narrow bid/ask spreads. There is little point trying to split offers in the QQQ for example now that it has minuscule spreads. Being listed to trade on the Pacific and Chicago exchanges in addition to AMEX have done wonders for narrowing the gap. When it comes to the OEX and SPX, we do have great room for improvement. Listings on other exchanges in addition to the CBOE has been mentioned as a future possibility, but for now they can have spreads that widen & narrow without warning. For fictitious example, an SPX 1100 contract could have a bid/ask spread of 8.70 - 10.80 to begin a new trading session. Fair value may actually be 9.00 - 10.00 but the market makers are trying to trap buyers & sellers trying to get in or out at the open for better prices to the MM on both sides. Once all those market orders are adversely filled in the opening minutes, the spread narrows to 9.00 - 10.00 where it originally intended to be. To attract buyers & sellers, the bid ask will move on either end as market action and index futures prices fluctuate. If market action is going up, market makers might back off the bid while leaving the ask price in place at the same time. This is an attempt to get spooked put players out at less than "fair value" prices while holding calls back until forced to advance them. Likewise, the reverse is true with markets moving down. Bid prices on calls will move down faster than ask prices as MMs attempt to balance their books, get delta neutral and pocket any bid/ask spreads along the way. That is their game. They don't really care about you & me sitting here in our underwear (too much information?) at home trying to beat them at their own game. Bid/ask spreads are also influenced by orders coming in to buy or sell. Market makers are obligated to make the market where none exists, but buyers and sellers accomplish this task for them in a liquid market. If the spread is bid 9.00 ask 10.00 and we place a buy limit order for 9.50, the market maker will usually let our offer stand as best offer to the sellers. A liquid market will have someone on the other side dying to exit who is more than happy to fill our offer to buy. Therefore, we just made/saved $50 per contract in that instance. Fast markets? Forget it! Just get in. Today there were only two viable call-play entries all session: one at the open and the second near lunchtime. Buying the open for aggressive day traders meant hitting the first "ask" on our selected targets that emerged. By the time we even think about where to split the bid those prices are long gone. Later, the second entry was yet another story: Using the big index (S&P 500) demonstrates this example repeated in so many of its components today. Prices gapped up without pause. Decent gains for those who hit the ask soon as it appeared. Notice the bullish reversal in stochastic signals at 11:40 am and a lesser one near 2:00pm. Both of these came during relatively quiet price action as "bullish coils" clearly formed. What were option prices like? The April 1175 call (SPT-DO) had a bid/ask spread of 9.00/10.00 to 9.50/10.50 to 10.00/11.00 while trades went off between 10.00 and 10.50 at that time. Had we simply bought 20 contracts at "ask" it would have been $21,000 plus cost, but a buy-limit order for 10.00 would have filled for $20,000 instead. Now $1,000 difference means little in the greater scheme of things, but take a few trades like this and it soon adds up to real money. Note the second entry sees price action trading between 11.00 and 12.00 for hours before the index took off at the end. A second chance to enter during quiet periods and shave a few dollars in the process from cost. This allows us to lower our stop loss price by that exact amount with same dollar risk as buying at ask would entail. High sale price of the day was 16.00, which offered plenty of space for a +/- 20% day trade while following the session's trend and chart signal study. One session, one rally, two examples. Early morning action mandates buy at ask while later in the session we are able to place our order close to bid and fill as price action undulates up and down. A few ticks of the chart can see the ask at 10.00 become the prevailing bid within a flash, not to mention all those sellers who bought earlier in the day just itching to exit at that price. Next week we'll pick up where we left off next week to tidy up odds & ends about working the spread when time and conditions dictate. Enjoy yourself until then and trade the daily trend! Best Trading Wishes, austinp@OptionInvestor.com ************************Advertisement************************* What will your strategy be for 2001? The VRTrader.com Annual Forecast Model Your road map to the 2001 market! Forecast is prepared by Mark Leibovit, the #1 market timer in the nation. Mark is Chief Market Strategist for VRTrader.com, a Premier Investor Network website, a technical consultant and former 'Elf' on Louis Rukeyser's Wall Street Week for 7 years. His Annual Forecast Model has been subscribed to by Wall Street's most elite. Mark is presently ranked #1 timer in the nation by TIMER DIGEST and #2 on AmericasBestTimers.com. Order your today! click here: http://www.sungrp.com/tracking.asp?campaignid=1982 ************************************************************** PICKS WE DROPPED **************** When we drop a pick it doesn't mean we are recommending a sell on that play. Many dropped picks go on to be very profitable. We drop a pick because something happened to change its profile. News, price, direction, etc. We drop it because we don't want anyone else starting a new play at that time. We have hundreds of new readers with each issue who are unfamiliar with the previous history for that pick and we want them to look at any current pick as a valid play. CALLS: ***** No dropped calls tonight. PUTS: ***** DPMI $43.53 +6.02 (+4.36) After finally breaking below $40 on Wednesday, DPMI dropped as low as $37, which offered put players excellent profits. However, a strong rally in the semiconductor sector lit up a fire under almost every chip stock in the market, and DPMI was no exception. It is too soon to determine if this is a key reversal day, or if the SOX.X will experience further obstacles in the weeks ahead. DPMI is not likely to respond as quickly as some of the other chip stocks to further rallies, as its business cycle lags the semiconductor industry by several quarters. Nonetheless, the stock closed above our stop level of $43, and we are dropping it tonight. OPWV $19.80 +4.91 (+0.83) After falling below $16 on Tuesday, OPWV formed a new 52-week low at $13.51. On Wednesday, another attempt to rally past $16.50 failed, and OPWV collapsed again. However, the triple digit rally in all of the major indexes stimulated buying in OPWV, and the stock closed up on heavy volume. OPWV closed above our stop level of $18, and we will take our profits and move on to other plays at this point. SONS $17.88 +5.00 (-2.06) It's to our dismay that the lucrative downtrend reversed in today's market revival. But no complaints from here! The wake of earnings' warnings and analyst downgrades fueled the fiery drop to yesterday's new all-time low at $12 and lined many traders with gold. But all good things must come to an end. It's certainly possible that the bulls may not be able to take SONS through the $20 resistance; however, the odds of taking this risk in the wake of a possible market recovery just doesn't make sense. The revised closing stop to $16 should have safeguarded existing profits and capital. GS $86.00 +8.47 (+0.90) The Bulls lit up the markets today! The bullish activity kept the door shut on our new put play, it's always better to have missed the downdraft than to get caught in such a powerful reversal! The strong upside action easily took GS through our $82 protective stop at the close, with GS finishing up 11% on almost twice the ADV. ADBE $34.90 +5.38 (-0.07) Have the Software stocks finally found bottom? Perhaps, but it will be some time before we see that this sector has truly reversed course. For the time being though, ADBE bounced sharply with the rest of the Technology sector this morning and never looked back. After breaking solidly through the 5-month descending trendline and our stop at $33, the stock continued climbing right into the close. The only negative comment we can make is that volume was weak at only 75% of the ADV. With the sharp upward move through resistance and improvements in the overall sector, there is no choice but to move ADBE to the drop list tonight. VRTS $47.16 +7.71 (+0.92) Another Software play comes to an end, as the whole sector went on a joyride with the bulls today. Gaining nearly 14% on the day, it should come as no surprise that the rising tide affected our VRTS play as well, launching itself up the charts by nearly 20%. Needless to say, our stop was toast by the middle of the trading session and the bulls just kept charging forward, pushing the stock up to close very near the high of the day. VRTS was a great play, putting some fat profits in our pockets over the past couple weeks. It is with a heavy heart (and wallet) that we bid this play farewell. AETH $11.25 +1.50 (-1.75) The best part about closing out a successful play is in taking the profits. There is a time to sow and a time to reap. With AETH having fallen almost 50 percent since we picked this put play, this is clearly a good time to lock in our substantial gains. Having recently tightened our closing stop price to $11, today's rally of almost 17 percent, while only on average volume, put the stock above this level. AETH also managed to close above its 5-dma at $10.86, and while the 10-dma still looms overhead at $12.73, we are dropping coverage of this play and exiting on a high note. CMVT $53.28 +7.46 (-5.61) In sympathy with a weak NASDAQ yesterday, shares of the wireless software maker continued lower, fall $2.87 or 5.89 percent yesterday on high volume, clocking in at 2.63 times the ADV. Today, on the heels of a strong market, CMVT surged, gaining over 14 percent on higher than average volume. Gapping up at the open, this move put the stock back above its 5-dma at $36.53. Now above our tightened stop at $52, we are closing out this play. ISSX $26.31 +4.63 (-1.05) It appears that for now, ISSX has found a bottom at the $19.75 level. Since the steep sell-off on Tuesday, the stock has managed to hold this support level. Despite a down day for the NASDAQ on Wednesday, ISSX managed to not only hold its ground, but finish the day up $1.58 or 7.85 percent on 2.65 times the ADV. This strength carried over into today, when the stock rallied over 21 percent on 175% of ADV. This move could likely be attributed to a good day for the markets overall along with a news item that hackers had broken into a Federal computer system. Closing above our stop price of $23, we are cutting this play loose. ************************Advertisement************************* Tired of waiting on trades to execute? Does your broker offer Stop Losses on Options? Trade instantly with Stop Losses at PreferredTrade Inc. Stop Losses based on the option price or the stock price. Move your trading into the next millennium with PreferredTrade. 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The Option Investor Newsletter Thursday 04-05-2001 Copyright 2001, All rights reserved. 2 of 2 Redistribution in any form strictly prohibited. To view this email newsletter in HTML format with embedded charts and graphs, click here: http://www.OptionInvestor.com/htmlemail/040501_2.asp ************************Advertisement************************* Tired of waiting on trades to execute? Does your broker offer Stop Losses on Options? Trade instantly with Stop Losses at PreferredTrade Inc. Stop Losses based on the option price or the stock price. Move your trading into the next millennium with PreferredTrade. Anything else is too slow! http://www.sungrp.com/tracking.asp?campaignid=2009 ************************************************************** ******************** PLAY UPDATES - CALLS ******************** AGIL $13.88 +2.44 (+2.85) It looks like we got on this one just in time, as the Software sector is showing definite signs of life. AGIL gave us a preview of this reversal over the past couple days and the bulls took off running this morning. The Software index (GSO.X) launched off of solid support for a nearly 14% gain, and AGIL added to its own recent gains by more than 21%, ending the day just below the high of the day on more than double its average daily volume. The Stochastics oscillator is in a sharp ascent, now above the oversold region, and looks like it could continue significantly higher if the bears will continue their hibernation a bit longer. The stock is now sitting right at resistance near $14, and conservative traders will want to see it clear $14.50 on solid volume before initiating new positions. Our stop has now moved up to $12, and aggressive entries can be considerer on any temporary weakness that produces a bounce above this level tomorrow. Keep an eye on the GSO.X index for confirmation that the bulls want to keep charging ahead. Weakness in the overall sector will be a preview that AGIL is running out of buying interest. EQT $73.60 +1.89 (+4.60) EQT maintains its strong up-trend, as it continues to make new all-time highs. Yesterday, the stock gained $1.12 or 1.59 percent on over twice the ADV. The company announced that it would be hosting a conference call before the market open on April 20th in which it's first quarter financial results will be discussed. As a company that has consistently beat Street expectations, even in the face of a slowing economy, this was enough to attract investor interest. Today EQT added another 2.64 percent to its gains on 2.6 times the ADV in sympathy with the rising markets. With the 5-dma (now at $70.83) providing support for its recent rise, bounces off this level as well as our closing stop price, moved up from $70 to $71, could provide aggressive traders with an entry point. Support may also be found at $72.30, but confirm with volume. An entry on strength for conservative traders may be gained on a break above $74. Confirm direction with movement in peers DVN and SRE. AEP $47.54 -0.07 (+0.54) The utility sector sold off a little today, but remained above the converged 50 and 10-dma of 360.73. In a similar pattern, AEP did not participate in the broad market rally, but sold off only slightly, maintaining the pattern of higher lows established at the end of March. Tomorrow will be key to today's huge move in the markets, as investors may pull out of technology stocks at the slightest sign of weakness. While utilities are traditionally considered a defensive sector, UTY.X and AEP have not been showing a reverse pattern of the general markets over the last few weeks, and have been moving primarily on the increased awareness of the shortage of energy. We are really looking for a breakout above $48 in AEP on heavy volume. This would be an entry point for conservative traders, particularly if UTY.X has broken above the 374 level. More aggressive traders could take positions at current level, if others in the sector like DUK and SO are rallying. We are keeping stops at the 50 dma of $46, so close positions if AEP closes below this level. ******************* PLAY UPDATES - PUTS ******************* MRX $45.00 +1.80 (+0.18) It is decision time. Will the rebound in Drug stocks continue into the weekend, or are we being presented with another entry point for puts? The broad market recovered from its deeply oversold condition today, and the DRG.X index launched higher as well, ending at the high of the day, right at resistance and just below the 3-month descending trendline. For its part, MRX retraced a small portion of its gains at the close, to end the day right at the $45 resistance level (also the location of the 2-month descending trendline). Our stop is still sitting at $46, and a return of the bears tomorrow could produce an attractive entry point for aggressive investors as the stock weakens. The more conservative approach will be to target new entries as the stock falls below the $43 support level, accompanied by selling in the broader Drug sector. Even though the price rise was impressive, volume was only average, hinting that there was a lack of conviction in the rally. AMGN $56.81 +1.81 (-2.57) Considering the enthusiasm in the markets today, AMGN's performance was lukewarm at best. BTK.X rallied to 451, which does not break the series of lower highs the index established several weeks ago. We need to see BTK.X clear the 500 level before real bullish momentum can begin in the biotech stocks. In the meantime, AMGN is poised to roll over from current levels just under the 10-dma of $57.89 to support at $55. AMGN confirmed that their first quarter earnings would be released on April 26th, which gives traders plenty of additional time. Consider taking positions on a failed rally from current levels, which would confirm a pattern of lower highs starting at the $60 level, if the BTK.X is rolling over. Alternatively, a drop below $55 on heavy volume would be a more conservative entry point. We are keeping stops at $58, so close positions if AMGN closes below this point. PMCS $22.52 +3.40 (-2.22) We started our put play on shares of chipmaker PMCS yesterday based on fundamental weakness in it's sector, as measured by the Philadelphia Semiconductor Index (SOX), along with a strong downtrend. For the past couple of weeks, the 5-dma (now at $21.86) has acted as formidable resistance. Today's gain of almost 18 percent and break above this moving average may have the some bears questioning themselves, but there are a number of things to consider. Resistance at $23 held firmly today, and as long as this level (which also happens to be our closing stop price) holds, the sellers are still in control. As well, volume was light today, less than 60 percent of ADV, suggesting a lack of conviction on the part of the buyers. A move back below its 5-dma would allow conservative traders to enter on weakness while another unsuccessful attempt to take out the $23 level would give higher risk players a chance to jump in. Before making a play, make sure the competitor BRCM is also heading lower. NSM $24.45 +2.28 (+2.30) The Semiconductor Index (SOX.X) rose from the depths of yesterday's 453.85 level and broke to the upside of the critical 500 mark in today's major market resurgence. But let's face it, no one's sure if this is just another bear trap - an awesome concept for put players! Therefore, we must precede with caution and try to walk the tightrope. Before taking additional positions; particularly in light of the combined sector and market strength today, confirm the weakness. The very enterprising traders might find high- risk entry opportunities if NSM rolls over from its current level and play the downside a couple points as it approaches the near-term support at $21 and $22. Exit aggressively. Although caution is stressed, take a look at a daily chart. The strong volume at 1.86 times the ADV failed to generate enough bullish momentum to shatter the upper resistance at the 5-dma ($24.37). In an effort to precede with caution, but at the same time walk the perilous tightrope, we're keeping our CLOSING stop at the $27 level to allow room for NSM to operate amid the market eruption. XLNX $33.25 +2.88 (-1.88) The chip stocks rallied with the broader market as evidence by the sharp rise in the semiconductor index. However, XLNX specific performance was less than stellar; and that bodes well going forward with this put play. The raging bulls ignited a buying spree and XLNX climbed over 14% intraday, but two major elements stymied the run. The previous support at $35, bolstered by the 10-dma ($37.11), turned strong resistance and XLNX did an about face in the last hours of trading. And second, volume speaks for itself. Overall trading activity was average on the climb, but on the late day decline the volume became quite spunky, topping 400 K. These are good indicators that XLNX could once again trade below the $30 level in a declining market. Until a definitive downtrend resumes, keep to the sidelines. Of course, those with an aggressive nature may portend taking entries if XLNX moves to the underside of the 5-dma ($32.66) on strong volume. A challenge of yesterday's intraday low at $29.97 coupled with the SOX.X trading back under the critical 500 level is however, better confirmation. ************************Advertisement************************* Tired of waiting on trades to execute? Does your broker offer Stop Losses on Options? Trade instantly with Stop Losses at PreferredTrade Inc. Stop Losses based on the option price or the stock price. Move your trading into the next millennium with PreferredTrade. Anything else is too slow! http://www.sungrp.com/tracking.asp?campaignid=2019 ************************************************************** ************** NEW CALL PLAYS ************** AGGRESSIVE: WCOM - Worldcom Inc. $19.06 +1.63 (+0.50 this week) Worldcom is a preeminent telecommunications company for the digital generation, operating in more than 65 countries with 2000 revenues of approximately $40 billion. Worldcom provides the innovative technology and services which are the foundation for the twenty first century. Of all of the sectors which have been battered over the last twelve months, none have taken it as hard as the telecom sector. The slowing of the telecom earnings growth combined with a serious problem in the credit markets demolished almost every stock in the long distance, wireless, and CLEC areas. However, over the last few weeks, WCOM has been basing, from a low of $15 established on March 14, and forming a nice, steady upward channel while the rest of the market was being trashed. A higher low at $16 was formed on March 22, and this week, it looks like WCOM has made an important break through. During the calamity in the indexes which occurred on Wednesday, WCOM managed to maintain this pattern with a higher low at $17, which did not fail even when the Nasdaq dropped below 1650. On Thursday, WCOM burst through its 50 dma of $18 with heavy volume and a bullish candlestick pattern which usually predicates strong action in the short term. WCOM's next task will be to clear resistance at the $20 level, which might happen with a little help from the telecom sector. As one of the premier profitable communications companies, WCOM might be first on the hungry investors' shopping lists in the day to come, provided that investors are convinced the rally we experienced today will continue. Traders can take positions at current levels, if the telecom sector is showing strength. A break above $20 with strong volume would be an entry point for conservative traders. Watch others like SBC and Q, and stop the play if WCOM closes below $17.50. BUY CALL APR-15 JQD-DC OI= 9567 at $4.38 SL=2.50 BUY CALL APR-20 LDQ-DD OI=44638 at $0.75 SL=0.00 BUY CALL MAY-15*LDQ-EE OI= 7385 at $4.75 SL=3.00 BUY CALL MAY-20 LDQ-EE OI= 2455 at $0.38 SL=0.00 http://www.premierinvestor.net/oi/profile.asp?ticker=WCOM ************* NEW PUT PLAYS ************* AGGRESSIVE: UNH - UnitedHealth Group $60.00 +0.14 (+0.74 this week) Providing a broad range of resources to help people improve their health through all stages of life, UNH forms and operates markets for the exchange of health and well being services. The company's Health Care Services segment consists of the UnitedHealthcare and Ovations businesses. Ovations is a business dedicated to advancing the health and well-being goals of Americans over the age of 50. Additionally, the company's Ingenix business operates in the field of health care data and information, analysis and application. Soaring with the rest of the Health Care sector, UNH was one of the darling stocks of the year 2000, but the bulls have recently lost their conviction. Since the beginning of the year, the stock has been stuck in a broad trading range between $63 at the upper end and $50 at the lower extreme. Rallying again over the past 2 weeks, UNH is starting to show weakness right at the upper end of its range. Adding to the bearish outlook is the fact that the highs since the first of the year have been gradually getting lower, and if the action today is any indication, the stock is just beginning its next trip down. Daily Stochastics is flattening out in the overbought zone, the upper Bollinger band is declining (now at $61.71), and after opening at the high of the day, UNH fell steadily on heavy volume (75% above the ADV), ending just fractionally above the low of the day. Finally, while the Healthcare Payor Index (HMO.X), of which UNH is a component, has been in rally mode for the past couple weeks, it is reaching its 2-month descending trendline, right at the $435 resistance level. It will take a hard-charging herd of bulls to break through this resistance. Aggressive traders will look for an intraday rally to provide attractive entry points. A rollover near the $61 level looks like just the ticket. The more conservative approach will be to jump onboard as the rollover picks up steam, pushing the stock below the $59.50 level on increasing volume. Watch the HMO.X for confirmation of developing sector weakness, and place stops just above resistance, at $62. BUY PUT APR-65 UHB-PM OI= 3 at $5.70 SL=3.75 BUY PUT APR-60*UNH-PL OI=1086 at $2.20 SL=1.00 BUY PUT APR-55 UNH-PK OI=1243 at $0.70 SL=0.00 BUY PUT MAY-60 UNH-QL OI= 173 at $3.60 SL=1.75 BUY PUT MAY-55 UNH-QK OI= 647 at $1.70 SL=0.75 http://www.premierinvestor.net/oi/profile.asp?ticker=UNH HGSI - Human Genome Sciences Inc $44.31 +5.13 (-1.69) Human Genome Sciences researches and develops proprietary pharmaceutical and diagnostic products to discover and ultimately, cure disease based on the understanding of human and microbial genes. HGS is one of the few genome sciences companies involved in developing gene-based therapeutics. The company possesses one of the largest databases of the genes of humans and microbes, which they refer to as its genomic database. The firm licenses a proprietary database of genes and partial gene sequences to such pharmaceutical giants as GlaxoSmithKline and Merck. The oversold conditions and emerging bulls in today's market arena saw HGSI rally into resistance, but the fact remains that it was nonetheless, abruptly halted by the 10-DMA technical. We're initiating coverage on this biopharmaceutical on the expectation that shares of HGSI will roll over and garner lucrative profits. Today's bullish volatility resulted in less expensive put contracts and thus, a prime buying opportunity - IF and ONLY IF you're an aggressive trader with the risk portfolio to match. If the Biotech Index (BTK.X) remains under the 450 level and HGSI crumbles under the pressure of a declining market, you might look for entries as HGSI moves through the 5-dma ($42.28) on intraday volume above 300 K. Lock in gains aggressively - there's bottom support at $38 and $40. Using a completely different illustration, an intraday rally could see HGSI riding higher into the proximity of the 30-dma, just above our closing stop at the $46 mark. In this scenario, the adventurous might jump into the play if HGSI becomes a victim of profit taking and reverses. Bottom line, so to speak, is to put as many advantages in your corner in an effort to create the highest probability of success. A declining market, faltering biotech sector, and HGSI rolling over at the various levels of resistance provides the best confirmation to indicate that expectations are in the money. And, look for additional dissent from the analysts. Earlier in the week, Lehman Brothers cut its price target on HGSI by 46%, from $93 to $50. Other pharmaceutical companies, Imclone Systems (IMCL), Genetech (DNA) also lost their footings after Lehman Brothers made significant cuts to their estimates as well. BUY PUT APR-50 HHA-PJ OI=2357 at $7.75 SL=5.50 BUY PUT APR-45*HHA-PI OI=1872 at $4.50 SL=2.75 BUY PUT APR-40 HHA-PH OI=1592 at $2.38 SL=1.25 BUY PUT APR-35 HHA-PG OI=1549 at $1.00 SL=0.00 http://www.premierinvestor.net/oi/profile.asp?ticker=HGSI CIEN - Ciena Corporation $38.69 +3.69 (-3.06 this week) Helping to satisfy the insatiable demand for bandwidth, Ciena 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 slowing economy has hit the Networking sector especially hard in light of the ripple effect that has been going on. As a majority of companies in the Networking space rely heavily on the spending of Telecom companies, cutbacks in capital expenditures on the part of their bread and butter customer base has resulted in weaker than expected revenues along with lack of earnings visibility going forward. This problem is compounded by the high inventory levels on hand, which force the Networkers to sell their once high margin products at discount prices. What's more, the detonation of the dotcom space has resulted in their customers unable to pay for equipment already delivered. All these fundamental elements have marked themselves technically on the charts. Connecting the highs and lows for CIEN since last October reveals that the stock has been trading in a fairly wide downward trending regression channel. In fact, recent weakness has resulted in a break below this downtrend channel suggesting that CIEN may steepen its decline. Today's gain of over 10 percent on twice the ADV on the surface was impressive. However, the stock was unable to close above $40 resistance, volume was light compared to the recent selling that has been going on, and CIEN ended the day below its 5-dma at $38.71. A rollover on another attempt at breaking $40 could allow higher risk players to take a position, but confirm with volume and make sure that CIEN continues to close below our stop price of $41. Conservative traders may want to wait for a break below $37.75 before entering, confirming weakness CIEN with a falling AMEX Networking Index (NWX). BUY PUT APR-40*EUQ-PH OI=9547 at $5.25 SL=3.25 BUY PUT APR-35 EUQ-PG OI=2356 at $2.88 SL=1.50 http://www.premierinvestor.net/oi/profile.asp?ticker=CIEN GMST - Gemstar-TV Guide Int'l $28.50 +5.13 (-0.25 this week) Gemstar-TV Guide International develops, markets and licenses proprietary technologies and systems that simplify and enhance consumers' interaction with electronics products and other platforms that deliver video, programming information and other data. The company's first proprietary system, VCR Plus+, is currently incorporated into virtually every major brand of VCR sold worldwide. The company has also developed and acquired a large portfolio of technologies and intellectual property to implement interactive program guides (Gemstar Guide Technology), which enable consumers to navigate through, sort, select and record television programming. We are adding GMST on to our aggressive put play list, for reasons both fundamental and technical. While shares of the media firm enjoyed a rally of almost 22 percent today on over twice the average daily volume, there are a number of finer points to consider. Sector sympathy usually plays an important role in stock price movement and as such, peers such as SFA and TIVO have been weak for the month of March. Connecting the highs and lows since that time reveals that today's bounce only served to put GMST near the top of its downtrend channel. As well, despite positive comments and upgrades from analysts, the stock has shown negative divergence, moving lower on increasing volume. UBS Warburg initiated coverage today with a Strong Buy rating, while Gerard Klauer Mattison upgraded the stock from a Buy to an Outperform rating. While strong buying volume in over the past couple of days may give the bulls something to cheer about, this move may be a bounce from an extremely oversold condition. With GMST's downtrend still intact, a failed rally above resistance at $30, reinforced by the 10-dma at $29.11, may provide higher-risk players with an attractive entry point. In an effort to limit our downside risk, we are placing a closing stop at the $30 level. For the more risk averse, we suggest waiting for the sellers to return, taking GMST below $27 on volume before jumping in. BUY PUT APR-30*QLF-PF OI=2533 at $4.13 SL=2.50 BUY PUT APR-25 QLF-PE OI=1217 at $1.75 SL=1.00 http://www.premierinvestor.net/oi/profile.asp?ticker=GMST ********************* PLAY OF THE DAY - PUT ********************* AMGN - Amgen $56.81 +1.81 (-3.38 this week) Amgen is a global biotechnology company that discovers, develops manufactures, and markets human therapeutics based on advances in cellular and molecular biology. The company manufactures and markets four human therapeutic products, Epogen, Neupogen, Infergen, and Stemgen. Amgen uses wholesale distributors of pharmaceutical products as the principal means of distributing the company's products to hospitals, pharmacies and clinics. Most Recent Write-Up Considering the enthusiasm in the markets today, AMGN's performance was lukewarm at best. BTK.X rallied to 451, which does not break the series of lower highs the index established several weeks ago. We need to see BTK.X clear the 500 level before real bullish momentum can begin in the biotech stocks. In the meantime, AMGN is poised to roll over from current levels just under the 10-dma of $57.89 to support at $55. AMGN confirmed that their first quarter earnings would be released on April 26th, which gives traders plenty of additional time. Consider taking positions on a failed rally from current levels, which would confirm a pattern of lower highs starting at the $60 level, if the BTK.X is rolling over. Alternatively, a drop below $55 on heavy volume would be a more conservative entry point. We are keeping stops at $58, so close positions if AMGN closes below this point. Comments AMGN bounced higher Thursday, on what appeared to be a combination of short covering and market-related buying. The stock remains technically weak and could rollover in Friday's session should the biotech sector weaken. The general lack of a catalyst in the biotech sector and the rally to resistance, as measured by the Biotechnology Index (BTK.X), could provide a favorable put play in terms of risk to reward in AMGN. If AMGN advances early Friday, watch for a rollover near the $58 level, which is the site of our protective, upside stop. Conversely, consider entering new put positions if AMGN falls below the $56 level. BUY PUT APR-60*YAA-PL OI=7176 at $5.25 SL=3.25 BUY PUT APR-55 YAA-PK OI=5912 at $2.75 SL=1.25 http://www.premierinvestor.net/oi/profile.asp?ticker=AMGN ************************Advertisement************************* Tired of waiting on trades to execute? Does your broker offer Stop Losses on Options? Trade instantly with Stop Losses at PreferredTrade Inc. Stop Losses based on the option price or the stock price. Move your trading into the next millennium with PreferredTrade. Anything else is too slow! http://www.sungrp.com/tracking.asp?campaignid=2026 ************************************************************** ************************ COMBOS/SPREADS/STRADDLES ************************ Order Execution: A Priority for Success By Ray Cummins The recent article about LIFFE's (London International Financial Futures and Options Exchange) sophisticated electronic trading platform prompted one of our readers to question the methods of order execution used here in the United States. In many respects, the mechanics of the two systems are very similar but there are some significant differences in the way the "market" is displayed and the manner in which orders are processed by exchange members. Much like the American exchanges, the open outcry process at LIFFE continues to be a popular feature of London's financial markets providing the public with the colorful image of traders competing for the best price. In the classic method, an order to buy or sell an options contract is telephoned from the broker's office to a representative at the exchange. A runner then delivers the order to the appropriate area on the exchange floor where a trader, through the use of hand signals, offers the position to other participants in the pit. When a transaction occurs, the details of the deal are recorded on an order slip and confirmed with the parties involved. In addition, every trade is entered into the price recording system by an official clerk. In today's modern exchanges, the pit-trading method is supplemented by an electronic screen-based trading system. At the London Options Exchange, the mechanism is called LIFFE CONNECT and the market in this system is order-driven rather than quote-driven; the prices displayed on the trading screens representing firm buy and sell orders instead of indicative quotes. The floor trading methods used in the United States are somewhat different, depending on the specific rules of the institution to which your trade is routed. Options are traded on four exchanges: the American Exchange (AMEX), Chicago Board of Options Exchange (CBOE), Philadelphia Exchange (PHLX) and Pacific Exchange (PCX). A new "off-floor" electronic trading facility, the International Securities Exchange (ISE) has also begun to trade listed options but for the purposes of comparison, we will examine the oldest and largest option exchange in America, the CBOE. Similar to the procedure at LIFFE, most option classes listed at the CBOE are traded in an open outcry market. Traders called "market-makers" are the nucleus of the CBOE system, providing liquidity in option trading by risking their own capital for personal accounts. They take the opposite side of public orders which are presented by floor brokers, who act as agents for the various member accounts. This differs from the trading environment on many other exchanges where "specialists" are allowed to accept orders from the public, to manage the public order book and to deal for their own accounts in the same securities. Competition is the essence of the system that allows market-makers, floor brokers and order book officials (CBOE employees who maintain the public customer limit order book and have no personal financial interest in any trades that occur) to facilitate the execution of customer orders. The CBOE has also recently introduced a modified trading system in all equity option classes combining the strengths of the market-maker with those of the specialist in one entity, the designated primary market-maker, or DPM. The DPM is an exchange appointed organization, obligated to provide the highest degree of accountability to public traders by functioning as both market-maker (liquidity provider) and floor broker in these assignments while also operating the public limit order book. Despite the highly evolved systems used by option exchanges in the United States, the efficient execution of orders continues to be a problem for public traders. Orders from retail participants are often routed to a specific exchange that may not necessarily offer the best price for a particular trade. In addition, any brokerage that is a principal in the issue being traded may choose to take the opposing side in a position, effectively competing against the public customer. There are a number of reasons a brokerage would execute a trade as a principal, rather than going into the open market to "fill" it but on most occasions, it is because they are carrying excess inventory in the issue or acting as a market-maker. For most traders, it is best to use an independent agent; a broker who doesn't carry inventory and can route orders to any exchange. Unlike the discount broker, an independent agent is paid to search for the best exchange prices and provide quality customer service in all facets of the trading process. In most cases, traders are looking for simple and efficient order execution and with the many advances in direct order-entry technology, there is no reason to accept inferior services from brokerages who use a "middleman" to complete their transactions. Readers often ask which brokers are favored among OIN writers and in my opinion, there are few firms who can compete with the price and service combination offered by Preferred Capital Markets. As many of you know, the company's stock and equity-option segment; Preferred Trade, is a self-clearing firm with ample experience in electronic trading and a dedicated group of professionals that offers education and assistance to traders at a reasonable price. The company is a leader in automated options executions and they have achieved remarkable advances in order-entry software through their extensive experience with clearing for floor traders. Using the basic trading platform, option orders can be routed directly to any exchange and the program can automatically search for the best price. In addition, Preferred offers trading stops based on the stock or option price and also order-canceling and contingency orders. Experienced professionals, not clerks or assistants are available before, during, and after market hours and the company's proven electronic order software is supported by floor brokers to guarantee the best executions. (Novice traders mistakenly believe they will save money with discount brokerages without knowledge of the allowances they sacrifice on execution.) Preferred's unique software delivers accurate confirmations and their professional staff helps you deal with the complexities of derivatives trading, all at a cost comparable to the so-called "bargain" brokers. For traders who want the exclusive service afforded by a personal agent, the company offers Preferred Trade Plus; a program headed by retail option specialists (and popular OIN contributors) Andrew Aronson and Alan Knuckman. Based in Chicago, this combination of the company's trading execution platform and assistance rendered by experienced option principals can provide both experienced and novice market players with the tools needed to succeed. Traders can work one-on-one with licensed option principals to develop a personal strategy, establish portfolio objectives, and identify specific goals based on account size, market experience, and risk tolerance. Andrew and Alan use their expertise to customize a program of education and implementation of specific strategies and they teach proper (stop and limit) order placement and money management to help prevent expensive mistakes. They also analyze and interpret market news and information from the trading floor to ensure the best possible guidance concerning a specific trade or portfolio position. The combination of a disciplined trading plan, superior order-entry and execution technology, and expert instruction can help anyone succeed in today's difficult markets and with unequaled levels of service at very competitive prices, Preferred Trade may be the consummate online brokerage. 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