Option Investor
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Daily Newsletter, Wednesday, 04/25/2001

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The Option Investor Newsletter                Wednesday 04-25-2001
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******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        04-25-2001        High      Low     Volume Advance/Decline
DJIA    10625.20 +170.90 10639.20 10444.10 1.17 bln   2069/993 	
NASDAQ   2059.81 + 43.20  2066.97  2000.83 1.97 bln   2374/1513
S&P 100   635.59 +  9.85   637.55   624.68   totals   4443/2506
S&P 500  1228.75 + 19.28  1232.36  1207.38           63.9%/36.1%
RUS 2000  472.74 + 10.39   472.75   461.99
DJ TRANS 2761.96 -  2.68  2781.97  2733.93
VIX        31.27 -  1.19    33.41    31.02
Put/Call Ratio      0.58
******************************************************************

Bears Losing Their Resolve?

If you walked away from the markets in disgust after the lunch
hour today, you were in for a shock when you saw the closing
numbers.  All the major indices were stuck in a narrow range for
the first 4 hours of the day, but the bulls must have eaten
their Wheaties for lunch judging by the ensuing buying frenzy.

After the nip and tuck battle between the bulls and bears this
morning, a buy program went into effect at about 1:20pm ET,
quickly lifting the DJIA through intraday resistance near 10525.
That's when the real buyers started to show up, extending the
rally throughout most of the afternoon.  By the closing bell the
DJIA managed to post a gain of +170, ending the day at 10625,
once again above the critical 200-dma.  Volume was solid on the
NYSE, coming in at 1.37 billion shares, increasing in the
afternoon session.  Internals were encouraging too, with
advancers solidly beating decliners by a 2 to 1 ratio.




Bringing Tuesday's decline to an abrupt end, we had housing
numbers for the month of March out at 10am ET, and bulls took
solace in the surprisingly strong numbers.  New Home Sales were
expected to show a decline due to the weakening economy actually
surged to a record high of 1.02 million in March.  Proving it
wasn't a fluke, Existing Home Sales showed a corresponding
surge, rising 4.8% in March to 5.44 million.

The effect could be clearly seen in housing related stocks, as
Home Depot (NYSE:HD) edged higher by $1.00 to once again flirt
with its 200-dma.  More good news in the sector came from
home-builder Centex Corp. (NYSE:CTX) when they posted earnings
this morning.  Blowing away the $1.45 estimates with actual
results of $1.73 per share, the company followed it up by
projecting 2002 earnings to be significantly above current
estimates.

Even Durable Goods Orders showed an unexpected rise before the
open this morning, with a 3% increase versus the expected rise
of 0.5%.  The numbers were skewed to the upside by the
Transportation sector as Boeing (NYSE:BA) led the charge here
with orders for 38 aircraft, the largest gain since November.
Ex transports, orders fell 1.8%, with the decline continuing to
be led by the electronics sector, followed by metals and
machinery.  The important measure for the report is that the
"core" component, made up of non-defense capital goods, minus
aircraft, fell 0.7%.  This is the 5th decline in the last 6
months.  Economic recovery?  Nope, not yet.

Tobacco stocks were on the move again today, primarily motivated
by two factors.  The Washington Post reported this morning that
the Justice Department may soon drop its lawsuit against the
tobacco industry owing to reports that the Bush administration
has not allocated nearly enough funds to continue this costly
legal battle.  Coupled with that, the sector was lifted by some
positive press from Credit Suisse First Boston, pointing to a
possible near term price increase on cigarettes by industry
heavyweight Phillip Morris (NYSE:MO).  The entire sector rallied
on the news, and by the closing bell MO had tacked on a
respectable $2.75 gain.  Sure enough, the company confirmed just
before the close that they are raising wholesale prices by about
14 cents per pack.

So what happened in our beloved Technology sector?  UBS Warburg
was out this morning, downgrading the Telecom Equipment stocks.
All of the big boys, Ciena (NASDAQ:CIEN), Cisco Systems
(NASDAQ:CSCO), Juniper Networks (NASDAQ:JNPR), Nortel Networks
(NYSE:NT), ADC Telecom (NASDAQ:ADCT) were downgraded from Buy to
Hold.  While the firm sees little downside from here, they can't
justify Buy ratings in a poor telecom capital spending
environment.

Despite negative news and earnings continuing to come out of the
Technology sector, the NASDAQ managed to shake off its blues in
the afternoon session, posting it's best performance since last
Thursday.  After once again testing the 2000 support level,
buyers took their cue from the DJIA and rallied to close at
2059.  Consistent with the price action, volume was respectable
at 1.94 billion shares, and a 2 to 1 advance decline ratio here
too.




Big gainers in Technology included the Biotechs, Internet Stocks
and Semiconductors, all of which had been leading the profit
taking earlier in the week.  Lifting the Biotechs were the likes
of Abgenix (NASDAQ:ABGX) with much narrower than expected losses
last night and Genzyme General (NASDAQ:GENZ), announcing a
2-for-1 stock split to cap off their recent run to new all time
highs.  This helped the AMEX Biotechnology Index to post a 5.24%
gain.  Of course that good fortune could change tomorrow, as
Affymetrix (NASDAQ:AFFX) disappointed the street after the close
tonight, posting a wider than expected loss and guiding estimates
downward.

It was impressive that the Chip stocks could shake off
yesterday's dismal earnings report from Applied Micro Circuits
(NASDAQ:AMCC) to launch the Philadelphia Semiconductor index
(SOX.X) to a gain of more than 3%.  Big gainers in the sector
included Micron Technology (NYSE:MU) +2.68, Novellus Systems
(NASDAQ:NVLS) +2.48, KLA-Tencor (NASDAQ:KLAC) +2.27 and Xilinx
(NASDAQ:XLNX) +2.12.

Once again, we had a slew of earnings out after the close.
There were notable disappointments to be sure.  Chief among
them were Qualcomm (NASDAQ:QCOM) and New Focus (NASDAQ:NUFO).
While QCOM met estimates, they followed it up by revising
guidance downwards and then stating their "hope" that they would
see an improvement in 2002.  Investors didn't buy it, smacking
the stock down for more than an $8 loss in the extended session.
NUFO missed expectations by 2 cents and was similarly punished,
losing more than $2 or 13% in the after hours session.

Looking at the broader earnings picture, it is actually rather
encouraging to see the results that are coming in.  Of the 150
companies announcing results today, the vast majority have
either met or exceeded estimates, with only 27 missing
estimates.  While this looks good on the surface, we need to
keep in mind that most of these estimates have been revised
sharply lower in advance of the actual report.  But investors
seem to be pleased with what they are seeing from the current
batch of earnings, and don't seem very worried about the future.
Bulls rejoice!  Well, maybe...

The economic calendar is fairly light for the remainder of the
week, with the Employment Cost Index (ECI), due out tomorrow
before the open.  Estimates are for a gain of 1.1%, and it is
unlikely to have a significant impact on the broader markets.
Then on Friday, we get the revised Michigan Sentiment for April.
The preliminary report 2 weeks ago indicates consumer sentiment
is still falling and we should get confirmation of that on
Friday.

Where do we go from here?  Honestly, I don't know.  My bias is
still to the downside over the near-term, but as you can see
from the above charts, the bulls are stubbornly defending the
upward trend that began in early April, despite a series of
earnings disappointments.  They know the Fed is in hyperactive
rate cutting mode, and with the consensus on CNBC being that
the "bottom" is in, they are increasingly willing to buy.  Throw
in the fact that the bears are not selling every rally, and you
can see the bulls getting confident again.

Keep in mind that historically, the markets weaken after April
earnings, and our next gift from the Fed is still 3 weeks away.
We still haven't finished filling the gaps from last week.  The
NASDAQ needs to fill the gap down to 1925 and the DJIA really
needs to fill the post-rate cut gap down to 10,350 before we
will be clear to really run to the upside.  Play the long side,
as long as it lasts, but be ready to scoop up your profits and
step aside if the bears rumble back into town.

Determine your exit strategy before opening that trade!

Mark Phillips
Research Analyst





*************
NEW CALL PLAY
*************

BRCM - Broadcom $38.07 +4.05 (-0.62 this week)

Broadcom Inc. is the leading provider of highly integrated
silicon solutions that enable broadband communication and
networking of voice, video and data services.  Using proprietary
technologies and advanced design methodologies, Broadcom designs
develops and supplies complete system on a chip solutions and
related applications for digital cable set top boxes and cable
modems, high speed local and metropolitan optical networks,
carrier access, satellite, DSL, and network processing.

As a former superstar high flyer in the chip sector, as well as
one of the top performing stocks of 2000, Broadcom took a long
hard fall from its 52-week high of $274 last August to its 52-
week low of $20.88 on April 4th.  However, Broadcom has formed a
new upward channel since that point, and with a little help from
the semiconductor sector, this high speed chip maker may be
ready to move at high speed again.  BRCM reported earnings on
April 18th of 9 cents per share, in line with the analysts
expectations, with gross revenues of $318 million, slightly
lower-than-expected.  The company management stated that the
company was well positioned to perform better as the economy
started to improve.  The same day, Intel reported earnings and
gave an more optimistic outlook for the chip sector going
forward than they had stated in the last two quarters.  While
semiconductor analysts continue to wrangle regarding the
actual recovery in the sector, the action of the SOX.X speaks
louder than words.  Since its low level of 455, SOX.X has staged
an impressive recovery, and has held onto its gains nicely even
after its somewhat overextended run following the rate cut.  SOX.X
stayed above its 50-dma of 591, and appears poised to possibly
move above the 650 level again.  Traders must be careful to
monitor SOX.X while playing Broadcom, as this is a risky play
for aggressive traders only.  Consider taking positions at
current levels if SOX.X is strong, along with others in the
sector like INTC and AMCC.  A strong move above BRCM's 50-dma
of $41.40 with heavy volume would be a more conservative entry
point.  We are setting a tight stop at $35, so close positions if
BRCM closes below this level.

BUY CALL MAY-35*RCQ-EG OI=10608 at $6.60 SL=4.50
BUY CALL MAY-40 RCQ-EH OI= 5591 at $4.30 SL=2.75
BUY CALL JUN-35 RCQ-FQ OI=    7 at $8.20 SL=5.75
BUY CALL JUN-40 RCQ-FH OI=  178 at $5.90 SL=4.00

http://www.premierinvesor.com/oi/profile.asp?ticker=BRCM


WMT - Walmart $50.67 +0.57 (-1.38 this week)

Walmart Stores Inc. operates more than 2,600 stores and 475 SAM's
clubs in the United States.  Internationally, the company operates
more than 1000 units.  Walmart employs more than 962,000 associates
in the U.S. and more than 282,000 internationally.  In 2000, the
company raised and donated more than $190 million for charitable
organizations.

As one of the largest retailers in the U.S. and a key
component of the Dow Average, Walmart is well positioned to
begin a strong earnings run into its scheduled earnings release
date of May 15th.  While the retail sector (RLX.X) sold off
somewhat yesterday, it rebounded again today to cross the 50-dma
of 852.  RLX.X also remains one of the few indexes in which the
50-dma is above the 200-dma of 839.40.  Since January, WMT's
stock formed a neutral wedge from a high of over $58 in
January to a low of $45.18 on March 23rd.  The pinnacle of
the wedge was found at $50.55, just above WMT's 50-dma of
$50.17.  Today, WMT made a clear break out of this wedge to
the upside and is on the verge of poking its head through the
200-dma of $51.  In the last few days, WMT has also been lifted
by a lower-than-expected loss reported by Amazon, as well as
today's report on new home sales.  Analysts interpreted this
report as indicative of the beginning of an economic recovery.
Traders could take positions at current levels, or possibly upon
a pullback to support at $50.50.  Watch other retailers like HD,
as well as RLX.X, and set stops at $50.  We will close positions
if WMT closes below this level.

BUY CALL MAY-50*WMT-EJ OI= 7855 at $2.60 SL=1.25
BUY CALL MAY-55 WMT-EK OI=19771 at $0.65 SL=0.00
BUY CALL JUN-50 WMT-FJ OI= 5172 at $3.80 SL=2.50
BUY CALL JUN-55 WMT-FK OI=15364 at $1.65 SL=0.75

http://www.premierinvestor.com/oi/profile.asp?ticker=WMT


************
NEW PUT PLAY
************

No new puts tonight.


*****************
STOP-LOSS UPDATES
*****************

AA - call play
Adjust from $38.50 up to $39.50

TBH - put play
Adjust from $49 down to $48


*************
DROPPED CALLS
*************

No dropped calls tonight.


************
DROPPED PUTS
************

PDLI $55.99 +5.15 (+1.09) PDLI offered the opportunity for
aggressive put players to profit from the sell off in the
biotechnology index we experienced over the last few days, as
the stock dropped to a low of $48.60 yesterday.  However, the
strong surge in the biotech index today, coupled with an
initiation of coverage of PDLI by CSFB have put an end to our
put play.  BTK.X rose 5.24% today and crossed its 50-dma of 512.
It remains to be seen if this was an oversold relief rally or
the beginning of a real upward trend.  Nonetheless, PDLI closed
above our stop level of $54, and thus
we are dropping coverage tonight.

IMCL $39.70 +3.01 (+0.23)  Imclone suffered along with most of
its peers in the biotech sector during the sell off which took
place following the surprise rate cut last week.  However, good
news which was released yesterday, along with the rally in the
broad indexes has brought an end to our put play in Imclone.
On Tuesday, Imclone announced that they had received a patent
enrollment milestone in its agreement with Merck for Imclone's
investigational cancer vaccine candidate BEC2.  In addition,
BTK.X rose over 5% today, and crossed its 50-dma, which is not
a good sign for biotech bears.  As Imclone closed above our
stop level of $38, we are dropping coverage tonight.

ABT $45.51 +1.08 (+0.42) Investors seemed to finally shrug off
the litigation concerns and bid ABT higher right out of the gate
this morning.  Our $45 stop fell to the buyers within the first
30 minutes of trading and was never tested again, helped by the
broad market strength.  While the ascent lost its momentum just
below the $46 level, and only came on volume half the daily
average, the premise of our play appears to be broken.  We'll
stick with our discipline and boot ABT off the playlist tonight.

IVGN $63.47 +2.43 (+0.13) Biotechs got a lift right from the
opening bell this morning following the well-received earnings
report from ABGX.  Further boosting the sector was news that
GENZ would be splitting its shares 2-for-1, and our IVGN play
couldn't help but join the party.  Tacking on better than $2,
the stock rallied right through our $63 stop at the open.  The
stock traded both north and south of our stop for much of the
day, but in the end, broad market and sector strength gave the
victory to the bulls.  It's time to jettison IVGN and go in
search of new plays.

DIGL $39.38 +4.45 (-0.54) Unexpected market strength today
across the broader sectors created a bit of short covering in
many issues.  For this exact reason, our DIGL put play was
extremely short-lived.  Today's $4.45 gain was an almost 13%
move.  DIGL's finish was even more surprising: it closed at the
high of the day.  Resistance at $40 is likely to be a challenge,
especially if traders come back to sell tomorrow.  A pullback
after a 13% gain is not out of the question.  Our stop of $38
was overtaken in the final 20 minutes of the session.  If you
still have positions, use the $40 level as a proxy for continued
strength or weakness.  Unforunately, this play did not go our
way, as we may have been a day early.  We are dropping it tonight
even as the stock trades down $1 from its NY close in after-hours.


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

Bullying The Biotechs: PDLI Trade

When we are picking call and put plays we have to consider many
different factors.  The first way I always start is to look
at the action of a particular sector.  This can begin with the
movement of the broad sector, for instance, financials, and then
narrow down further.  For example, if the banking index is
strong, it is likely that the major money center banks are
rallying, but the savings and loans may be rallying even more.
If there is a weak link in a sector, it can ruin a play.  Then,
we try to identify bullish and bearish chart patterns, and
also monitor the news which is released on a particular stock
and sector.

In the last several weeks, one of the best sectors to find put
plays has been biotechnology.  This index has been stuck in
a heavy downward trend since last October, and the downward
trend accelerated when the index dropped below its converged 50
and 200-dmas in early February.




Many biotech stocks spent last year soaring to phenomenal heights
which even surpassed those of the internet stocks during their
peaks.  This trend seemed to start with the initial awareness that
diseases could potentially be eradicated through genomics research.
The entire human genetic sequence was decoded for the first time,
and individuals began to consider the potential implications.

However, the severe credit crunch and lack of available
financing through the capital markets gave investors a more
realistic view of the situation.  Many biotechnology companies
have huge cash burn rates due to the expense of getting a
product through the FDA approval process and to the market.

As an example, PDLI was one of our more successful put plays
from the last week.  A weekly chart of the stock displays
the phenomenal run up which occurred last year, and the
subsequent bearish wedge which occurred since last fall.




This is one of the most difficult trading environments that we
have experienced in a long time.  For example, at this point, a
case could be made that there is no clearly defined trend.  We
are in a transition from a bear market to what most analysts
think will eventually turn into a bull market.  While short
sellers made huge profits during last fall and winter, it is
becoming increasingly risky to take short positions here with
the volatility indicators on the Nasdaq rising to new all-time
heights, and an aggressive rate cutting program by the Fed.
For example, the VXN moved up to 83 on Wednesday, which is a new
all-time high.  Where is this coming from?  Perhaps there is
huge volume and demand for puts from individuals and institutions
who may be buying Nasdaq stocks but want to hedge their positions.




In addition, we have to consider the fact that the liquidity
of the market is starting to improve after months of fund
redemption.  Last week was the first week in several in which
money market funds experienced a net outflow, and the four
week moving average of cash to equity funds is starting to
move to the positive zone.

This is why it is important to monitor as many technical
indicators as possible nowadays, and to enter and exit positions
quickly.  For example, short selling can be dangerous when
there is a possibility of an unanticipated rate cut from the
Fed.  However, after last week's surprise cut, and subsequent
huge run up, it seemed highly probable that there would be
a sell off following this.

The chart of PDLI showed a slight gain following the surprise rate
cut, and then a subsequent failed rally from the $60 level.  This
occurred at the same time as the volatility indicators took a
precipitous dive down from their previous ranges.  The VXN.X moved
down to 68 from 80, a retracement level of over 84%, and the VIX.X
moved to the 28 level from over 40.

Also, the biotech sector faltered after the Fed rate cut.  The
following Friday it made a critical drop below its 50-dma of 512.
The major indexes held up fairly well in the morning and then
started to drop in the afternoon.  Traders could have sold PDLI
short on Friday afternoon, but that would have required holding
over the weekend, which can be risky.

On Monday and Tuesday PDLI offered another opportunity for
profits within falling market indexes.  One clear indication
that Monday and Tuesday would be difficult days was found in
the action of bond yields.  The TNX.X (10-year T-note) dropped
from 53 on Friday to 51.85 by Monday morning.  At this point,
the Nasdaq and Dow were both falling, and the Biotech index
seemed to have very little support, if any.




However, by Tuesday afternoon, the VXN.X had risen to a very
high level of over 80.  This could have given a warning to
short traders that it might be time to take a profit.  The
Nasdaq Tick (tick.nq) also reached a value of -500, which can
indicate that the Nasdaq could rebound in the short-term future.

This type of analysis of the PDLI put trade goes to show just
how many technical indicators can be aggregated into making a
sound trading decision and building your trading instinct.





*********************
PLAY OF THE DAY - PUT
*********************

HDI - Harley Davidson, Inc. $44.35 +1.12 (-0.40 this week)

Harley Davidson is best known for its popular line of touring,
custom and performance motorcycles.  The Motorcycle and Related
Products division designs, and sells the popular line of
motorcycles, as well as a complete line of motorcycle parts,
accessories and general merchandise.  HDI's other segment,
Financial Services, engages in the business of financing and
servicing wholesale inventory receivables and consumer retail
installment sales contracts (primarily motorcycles).

Most Recent Write-Up

After trading to a new yearly high north of $50 in
mid-September, shares of HDI have been posting lower lows for
several months now.  After posting earnings a penny ahead of
estimates 2 weeks ago, the stock rallied right up to the
descending trendline late last week and promptly rolled over.
Following what has become an all too familiar pattern, the stock
began its current downward move 2 days after Bear Stearns
initiated coverage with a Buy rating.  The weakness in the broad
markets this week is having its effect on HDI as it has now
fallen back through the critical 200-dma (currently at $43.91).
The nagging question in the back of investors' minds has to be
whether consumers will continue to pay the premium price that
HDI's products traditionally command in the marketplace.  If
the Consumer Confidence numbers this morning are any
indications, the verdict is likely to be no, and this will
affect the company's sales going forward.  Daily Stochastics
have now fallen out of overbought territory and are pointing to
a retest of support in the $40 area.  Note the gap between
$39-40 that was left after the company announced earnings on
April 10th.  Aggressive entries can be taken on any intraday
bounce that fails to penetrate the $45 resistance level, and
this is where we are placing our stop.  A drop through the
$42.50 level will be the trigger for conservative traders to
take a position, and an increase in selling volume will give
us the confirmation that we are on the right side of the trend.

Comments

HDI traded higher today along with the broader market.  While
it wasn't what we wanted to see, we are looking to gain entry
into this put play.  HDI's advance was market-related and given
its current position, there is a good risk to reward opportunity.
A rollover from resistance overhead at $45 with a tight stop
just above would offer a low risk entry point.  Further weakness
below $44 would allow entry and retracement toward $43.  More
conservative traders may choose to wait until HDI breaks $43.

BUY PUT MAY-45*HDI-QI OI=2633 at $2.60 SL=1.25
BUY PUT MAY-40 HDI-QH OI=6372 at $0.85 SL=0.00  High Risk!
BUY PUT JUN-40 HDI-RH OI= 110 at $1.55 SL=0.75

http://www.premierinvestor.com/oi/profile.asp?ticker=HDI


*****************************************
BIG CAP COVERED CALLS & NAKED PUT SECTION
*****************************************

A Dull Market (yawn) Leads To A Late Rally...
By Ray Cummins

Buying pressure returned to the market today with pharmaceutical
and tobacco components boosting the Dow to a triple-digit gain.
Technology issues traded in a mixed fashion during much of the
session before Internet and chip stocks spurred a rally in the
NASDAQ.  Analysts say the fact that consumer confidence has
stabilized may be the cause of today's optimistic activity and
it is apparent most investors are hoping for a rebound in the
economy during the latter half of 2001.  Traders in the bullish
camp received a boost from the National Association of Realtors,
which said U.S. sales of existing homes rose 4.8% in March, well
above Wall Street's expectations and the second-highest rate on
record of sales of existing homes, due to lower mortgage rates.

The Commerce Department also contributed to the upbeat attitude,
reporting that sales of new homes rose 4.2% to a record annual
rate of 1.021 million units.  Even with the positive news, most
experts were hesitant to identify the recent lows as a "bottom"
and that leaves investors to individually weigh the Fed's four
interest-rate cuts against lagging corporate profit growth.  On
the Dow, today's frontrunners included General Electric (NYSE:GE),
SBC Communications (NYSE:SBC), Honeywell (NYSE:HON), Walt Disney
(NYSE:DIS) and Home Depot (NYSE:HD).  Among NASDAQ stocks, the
Networking sector sagged after a slew of company downgrades from
UBS Warburg.  Analysts at the firm suggested the group is at risk
from further worsening of telecom capital spending in the coming
year and should be avoided in the near-term.

At the same time, Internet issues moved higher in the wake of a
recovery in shares of online retailer Amazon.com (NASDAQ:AMZN).
The company posted a first-quarter of $0.21 a share late Tuesday,
$0.03 better than the consensus and Amazon officials said the
company was on track to reach operating profitability in the
fourth quarter.  In the broader markets, pharmaceutical stocks
rallied amid a surplus of positive quarterly reports while bank
issues retreated on news of a sector downgrade from J.P. Morgan.
Biotechnology, retail, insurance, oil service and consumer
products also climbed, but airline, cyclical and utility stocks
generally consolidated.


Summary of Previous Candidates:

NOTE:  APRIL prices as of Friday's Expiration

Covered Calls: (Margin not used in calculations)

Stock  Strike Strike Cost   Current  Gain  Potential
Symbol Month  Price  Basis  Price   (Loss) Mon. Yield

NVLS    APR    40    37.56  53.08    $2.44   5.3%
PDII    APR    50    48.75  70.97    $1.25   4.9%
NVDA    APR    45    42.81  86.71    $2.19   4.2%
ERTS    APR    45    43.00  56.79    $2.00   3.2%

April Positions closed: SNPS

Naked Puts:

Stock  Strike Strike Cost   Current  Gain  Potential
Symbol Month  Price  Basis  Price   (Loss) Mon. Yield

JNPR    APR    30    29.05  65.35    $0.95  33.8%
VRSN    APR    35    34.35  50.92    $0.65  23.3%
COHR    APR    35    34.40  43.25    $0.60  17.6%
VSTR    APR    70    68.56 104.06    $1.44  13.7%
PDII    APR    45    44.19  70.97    $0.81  12.5%
ERTS    APR    45    42.81  56.79    $2.19  10.5%
VSTR    APR    80    79.40 104.06    $0.60   9.8%
NVLS    APR    35    33.81  53.08    $1.19   9.3%
NVDA    APR    40    38.75  86.71    $1.25   8.1%
NVDA    APR    40    38.94  86.71    $1.06   8.1%
MU      APR    30    29.38  46.54    $0.62   5.5%

CCMP    MAY    35    34.00  62.00    $1.00   7.1%
FCEL    MAY    40    39.20  54.61    $0.80   6.6%
NVDA    MAY    45    43.95  80.06    $1.05   6.5%
MUSE    MAY    25    24.35  43.00    $0.65   6.2%
GS      MAY    80    79.00  92.82    $1.00   4.8%

April Positions closed: SNPS (Rallied - Murphy's law)

Sell Strangles:

Stock  Strike Strike Cost   Current  Gain  Potential
Symbol Month  Price  Basis  Price   (Loss) Mon. Yield

GMST    APR   $30    put position covered/closed.
GMST    APR    60    60.69  41.57    $0.69   6.2%

JNPR    APR    30    29.06  65.35    $0.94   8.3%
JNPR    APR    80    80.88  65.35    $0.88   7.8%

VECO    APR    30    28.75  55.20    $1.25  13.3%
VECO    APR    55    56.00  55.20    $0.80   8.8%

GENZ    APR    70    69.35 101.79    $0.65   6.6%
GENZ    APR   100    call position covered/closed

IBM     APR    80    79.40 114.83    $0.60   9.2%
IBM     APR   110    call position covered/closed

AMAT    MAY    38    36.60  53.18    $0.90   7.9%
AMAT    MAY    70    70.70  53.18    $0.70   6.3%

Naked Calls:

Stock  Strike Strike Cost   Current  Gain  Potential
Symbol Month  Price  Basis  Price   (Loss) Mon. Yield

BGEN    APR    70    70.50  64.54    $0.50   7.8%
WWCA    APR    50    50.62  45.05    $0.62   6.0%
CHKP    APR   110   111.25  75.10    $1.25   5.7%
PDII    APR    85    85.62  70.97    $0.62   5.6%

SII     MAY    85    86.40  77.99    $1.40   6.3%

April Positions covered/closed: GENZ

Credit Spreads:

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

EMR   $66.31   $65.34  APR80c/75c  $0.75   $80.75  $0.75  Expired
SII   $74.80   $74.50  APR90c/85c  $0.80   $90.80  $0.80  Expired
LEN   $39.04   $43.22  APR30p/35p  $0.80   $34.20  $0.80  Expired
NOC   $89.50   $94.00  APR80p/85p  $0.50   $84.50  $0.50  Expired

UTX   $72.85   $76.45  MAY85c/80c  $1.00   $81.00  $1.00  Open

April Positions closed: HAL, NBL, MMM

Debit Straddles:

Stock  Pick    Last     Position   Debit  Value   G/L    Status

AC    $45.85   $47.03  MAY 45c/45p $4.30  $3.30  $-1.00   Open?

Are you still holding the AC debit straddle?  A 25% target is
$5.38.  An exit on the call side during last Friday's (April 20)
rally, for around $4.50, would have left the put side as pure
profit.  An exit today on the put side was available for $1.00.
Just some food for thought...


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

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

NVDA - Nvidia  $80.06  *** Up, Up and Away! ***

Nvidia (NAADAQ:NVDA) designs, develops and markets 3D graphics
processors, graphics processing units and related software that
set the standard for performance, quality and features for every
type of personal computer user, from professional workstations to
low-cost PCs.  The company's 3D graphics processors are used in a
wide variety of applications including games, the Internet and
industrial design.  Its graphics processors were the first to
incorporate a 128-bit multi-texturing graphics architecture
designed to deliver to users of its products a highly immersive,
interactive 3D experience with compelling visual quality, with
realistic imagery and motion, stunning effects, and complex object
and scene interaction at real-time frame rates.  The company sells
its products to major OEMs such as Compaq, Dell, Gateway, Hewlett
Packard, IBM, micronpc.com, NEC, Packard Bell and Sony and add-in
board manufacturers such as ASUStek, Creative Labs, Elsa, Guillemot
and Leadtek.

Nvidia continues to amaze traders and analysts alike with its
incredible upside momentum and today's move simply confirmed the
fact that buyers are still comfortable with the issue's price.
Of course, every trend must come to an end and if the company's
earnings report, due May 15, is less than stellar, investors may
use the opportunity to take profits.  Our target positions offer
a reasonable downside margin if that occurs.

NVDA - Nvidia  $80.06

PLAY (sell covered call or naked put):

Action    Month &  Option  Open     Closing  Cost     Target
Req'd     Strike   Symbol  Int.     Price    Basis    Mon. Yield

Sell Call MAY 60   RVU EL  210      22.30    57.76     5.1% ***
Sell Call MAY 65   RVU EM  451      18.50    61.56     7.4%
Sell Call MAY 70   RVU EN  898      14.90    65.16     9.8%

- or -

Sell Put  MAY 45   UVA QI  805       0.65    44.35     5.2% ***
Sell Put  MAY 50   UVA QJ  1977      1.15    48.85     8.9%
Sell Put  MAY 55   UVA QK  3365      1.65    53.35    12.4%
Sell Put  MAY 60   RVU QL  4373      2.35    57.65    16.9%



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

PDII - Professional Detailing  $75.30  *** Earnings Rally? ***

Professional Detailing (NASDAQ:PDII) is a unique contract sales
organization providing customized product detailing programs and
other marketing and promotional services to the United States
pharmaceutical industry.  The company has designed programs that
promote more than 90 different products, including prescription
medications Imitrex, Flonase, Prilosec, Wellbutrin and Cardura,
as well as a number of OTC (over-the-counter) products such as
Bayer Aspirin, Pepcid AC and Monistat 5, to hospitals, pharmacies
and physicians in more than 20 different specialties.  The company
is engaged by its clients on a contractual basis to design and
implements product detailing programs for both prescription and
OTC pharmaceutical products.

PDII is a unique issue, having fallen precipitously from highs
near $100 earlier in the year to a comfortable range near $55
and more recently, the stock has rallied out of its short-term
base on increasing volume.  Analysts at WR Hambrecht & Company
say the stock will easily outperform its peer group (Healthcare
Technology & Pharmaceutical Services) over the next year and
Merrill Lynch recently started coverage on the issue with a
favorable rating.  The company is due to announce earnings in
the next two weeks and traders who favor the outlook for the issue
can speculate on its activity with these conservative positions.

PDII - Professional Detailing  $75.30

PLAY (sell covered call or naked put):

Action    Month &  Option  Open     Closing  Cost     Target
Req'd     Strike   Symbol  Int.     Price    Basis    Mon. Yield

Sell Call MAY 65   PKU EM  4        13.00    62.30     5.7% ***
Sell Call MAY 70   PKU EN  427       9.90    65.40     9.3%

- or -

Sell Put  MAY 55   PKU QK  5         0.65    54.35     5.5% ***
Sell Put  MAY 60   PKU QL  40        1.55    58.45    12.3%
Sell Put  MAY 65   PKU QM  20        2.90    62.10    16.9%



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

VSTR - Voicestream  $106.11   *** DT Merger Approved! ***

VoiceStream Wireless (NASDAQ:VSTR) is a nationwide provider of
personal communications service 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 million subscribers.  VoiceStream has licenses
in 23 of the 25 largest markets in the United States and it also
holds 49.9% minority interests in two joint ventures controlled
by Cook Inlet Region and Cook Inlet Holdings.  Subsidiaries of
these joint ventures are qualified to obtain service licenses
that VoiceStream cannot obtain directly.

Shares of VSTR moved higher today after Deutsche Telekom AG, the
telecommunications giant partly owned by the German government,
won approval from U.S. communications regulators to acquire the
company.  Despite concerns raised by some U.S. lawmakers about
the implications of the German government's 44% direct stake in
Deutsche Telekom on U.S. national security and competition, the
U.S. Federal Communications Commission approved the $26 billion
sale of Voicestream without any major conditions.  The FCC also
approved VSTR's $2.2 billion purchase of regional U.S. wireless
operator Powertel (NASDAQ:PTEL) which will be included in the
deal with Deutsche Telekom.

Today's bullish activity was excellent, considering the potential
for profit-taking and traders who think the trend will continue
can establish a conservative cost basis in the issue with these
conservative (OTM) positions.

VSTR - Voicestream  $106.11

PLAY (sell naked put):

Action    Month &  Option  Open     Closing  Cost     Target
Req'd     Strike   Symbol  Int.     Price    Basis    Mon. Yield

Sell Put  MAY 85   UVH QQ  3116      0.90    84.10     5.4% ***
Sell Put  MAY 90   UVH QR  1101      1.40    88.60     6.7%
Sell Put  MAY 95   UVH QS  942       2.25    92.75     8.9%



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

Neutral Plays - Strangles

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

CHIR - Chiron  $43.79  *** Probability Play! ***

Chiron (NASDAQ:CHIR) is a biotechnology company that applies
leading scientific approaches to discover and develop innovative
healthcare products to prevent and treat cancer and infection.
The company brings products to the global healthcare market by
collaborating with major healthcare companies and through three
expanding business ventures: biopharmaceuticals, vaccines, and
blood testing.  Chiron acquired PathoGenesis, a biotechnology
company developing drugs to treat infectious diseases including
serious lung infections, where there is significant need for
improved therapy.  The company also established an alliance with
Novartis AG, a life sciences company headquartered in Basel,
Switzerland.

Readers continue to request premium-selling positions and this
issue often surfaces on a list of candidates with a relatively
stable trading range and robust option prices.  Today was the
reason for much of the recent speculation as the company posted
its quarterly earnings.  Chiron's profit of $38 million, or $0.19
per share exceeded consensus estimates by $0.02, even though the
earnings fell below last year's results of $40 million, or $0.21
per share.  Sales totaled $169 million, up 7% compared with the
year-ago total and the firm's total pro-forma quarterly revenue
rose to $240 million, compared to $217 million in the year-ago
quarter.  Chiron reiterated an earlier forecast for earnings of
$0.85 per share in 2001, a penny below consensus estimates, and
shares of the biotechnology leader rose almost $1 in after-hours
trading.  We continue to favor the stock for a bullish position
and will attempt to sell "out-of-the-money" options for credit,
using the earned income to offset any losses on the downside.
If the price of the stock rallies through the resistance area
near $48 on a rally, we will purchase the underlying shares, or
an offsetting position, to cover the sold (short) options.

CHIR - Chiron  $43.79

PLAY (aggressive - neutral/credit strangle):

Action    Month &  Option  Open     Closing  Cost     Target
Req'd     Strike   Symbol  Int.     Price    Basis    Mon. Yield

Sell Put  MAY 37.5 CIQ QU  111       0.95    36.55    10.3% ***
Sell Call MAY 50   CIQ EJ  1918      0.95    50.95    10.3% ***

- or -

Sell Put  MAY 40   CIQ QH  389       1.60    38.40    13.8%
Sell Call MAY 47.5 CIQ ET  1525      1.65    49.15    14.1%



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

XLNX - Xilinx  $46.15  *** Trading Range? ***

Xilinx (NASDAQ:XLNX) designs, develops and markets programmable
logic solutions, including advanced integrated circuits, software
design tools, predefined system functions delivered as cores of
logic and field engineering support.  The company's programmable
logic devices (PLDs) include field programmable gate arrays and
complex programmable logic devices.  These devices are standard
products that customers program to perform logic functions.  The
company's products are designed to provide high integration and
quick time-to-market for electronic equipment manufacturers,
primarily in the telecommunications, networking, computing,
industrial and consumer markets.  The company offers complete
software design tool solutions, which enable their customers to
implement their design specifications into its PLDs.

Last week's "premium-selling" play in AMAT generated a favorable
comment, so we decided to look for another issue in the group that
meets our basic criteria for positions in that category.  XLNX is
also one of our favorite issues in the semiconductor sector and
today's bullish activity suggests buyers are still interested in
the stock and they are comfortable with the current price.  The
company has already announced earnings for the quarter and there
is little potential for unexpected news or upcoming events that
will significantly affect the price of the stock.  As with any
recommendation, the position should be carefully evaluated for
portfolio suitability and reviewed with regard to your strategic
approach and personal trading style.

XLNX - Xilinx  $46.15

PLAY (aggressive - neutral/credit strangle):

Action    Month &  Option  Open     Closing  Cost     Target
Req'd     Strike   Symbol  Int.     Price    Basis    Mon. Yield

Sell Put  MAY 30   XLQ QF  12197     0.45    29.55     6.1% ***
Sell Call MAY 60   XLW EL  882       0.55    60.55     7.4% ***

- or -

Sell Put  MAY 35   XLQ QG  5615      0.90    34.10    11.7%
Sell Call MAY 55   XLW EK  1558      1.25    56.25    15.2%

 

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

BEARISH PLAYS - Naked Calls

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

CHKP - Check Point Software  $64.29  *** Cautious Outlook! ***

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.

Check Point Software Technologies reported its quarterly earnings
yesterday and the results were excellent, but the company's stock
fell sharply amid investor worries about sluggish U.S. technology
spending.  Check Point said earnings rose to $83 million, or $0.32
a share in the quarter, from $34 million, or $0.13 per share, in
the year-ago period.  Revenues rose 86%, to $145 million from $78
million last year, however a J.P. Morgan analyst said he and many
other analysts were expecting the company to generate $147 million
in revenue.  In addition, the company's CEO commented that while
he believed revenues were on target, he did see a hesitance on the
part of customers to commit to new orders; a sign of slowdown in
spending by information technology by U.S. companies.  Actually,
the news was particularly impressive considering the many software
companies that have disappointed recently but management conceded
visibility was limited and there was little optimism for the near
future.

Technically, the overall CHKP price trend remains bearish and the
market's reaction is a great example of what can happen when a
company's stock is priced for perfection.  Traders who believe
there is little potential for a significant upward move can profit
from that outcome with these bearish positions.

CHKP - Check Point Software  $64.29

PLAY (aggressive - sell naked call):

Action    Month &  Option  Open     Closing  Cost     Target
Req'd     Strike   Symbol  Int.     Price    Basis    Mon. Yield

Sell Call MAY 80   KEQ EP  1951      1.95    81.95    17.4%
Sell Call MAY 85   KEQ EQ  3870      1.10    86.10    10.4%
Sell Call MAY 90   KEQ ER  1243      0.65    90.65     6.4% ***



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

CIEN - Ciena  $57.54   *** No Buying Support! ***

Ciena (NASDAQ:CIEN) is engaged in providing unique products for
the intelligent optical networking equipment market.  The company
offers a comprehensive portfolio of products for communications
service providers worldwide.  Ciena's many customers include long
distance carriers, competitive local exchange carriers, Internet
service providers and wholesale carriers.  Ciena offers optical
transport and intelligent optical switching systems that enable
service providers to provision, manage and deliver high-bandwidth
services to their customers.

While we still believe that Ciena is one of the top companies in
the optical networking industry, its share value may not be able
to successfully oppose the near-term selling pressure that will
likely occur if the technology group continues to correct.  CIEN's
recovery rally ended abruptly at a solid resistance area near $70
and the renewed downward trend was driven by heavy volume.  With
the heavy overhead supply between the current price and our cost
basis, the share value has little chance of reaching our target
strike in the next few weeks.  Consider covering the sold (short)
position on any heavy-volume rally above $80.

CIEN - Ciena  $57.54

PLAY (aggressive - sell naked call):

Action    Month &  Option  Open     Closing  Cost     Target
Req'd     Strike   Symbol  Int.     Price    Basis    Mon. Yield

Sell Call MAY 80   UEE EP  2929      1.55    81.55    15.7%
Sell Call MAY 85   UEE EQ  1348      1.00    86.00    10.6%
Sell Call MAY 90   UEE ER  1943      0.60    90.60     6.6% ***

 

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





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