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Daily Newsletter, Tuesday, 05/01/2001

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The Option Investor Newsletter                  Tuesday 05-01-2001
Copyright 2001, All rights reserved.                        1 of 2
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******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        05-01-2001        High      Low     Volume Advance/Decline
DJIA    10898.34 +163.30 10904.20 10731.40 1.17 bln   1872/1174 
NASDAQ   2168.24 + 52.00  2168.42  2088.61 1.92 bln   2365/1510
S&P 100   655.55 + 10.08   655.56   642.93   totals   4237/2684
S&P 500  1266.44 + 16.98  1266.47  1243.55           61.2%/38.8%
RUS 2000  490.47 +  5.15   490.48   482.79
DJ TRANS 2814.63 - 12.41  2827.94  2798.37
VIX        27.59 -  0.60    29.55    27.59
Put/Call Ratio      0.64
******************************************************************

Turnaround Tuesday!

The rally, which pulled a brief disappearing act yesterday
afternoon, came roaring back with a vengeance today with the Dow
adding +160 and trading within two points of Monday's high. The
Nasdaq actually beat yesterday's high by eight points and closed
at the today's high. Advancers beat decliners on both exchanges
and volume increased as the day came to a close.






Confidence in the market appears to be growing with each point
gained. Portfolio managers are beginning to lose some of their
skepticism and are beginning to put some money to work in the
more speculative issues. The concept expressed today was basically
expectations now reflect reality. The pie in the sky growth targets
from last year have finally fallen to realistic levels as each
company/sector have pretty much disclosed all their sins. There
are still earnings warnings but the major players have already
announced. Also rumblings from some chip companies have investors
actually thinking positively again.

Manufacturing held its ground in April with a reading of 43.2%
which was up only slightly from March.



This was the third month up in a row from the January low of 41.2%.
Any number under 50 represents a contraction in manufacturing and
the number today was actually under the consensus of 44%. Traders
however cheered the 41.2% as evidence that the Fed may still be
forced to cut rates by another -.50% at the May-15th meeting and
at least one more cut after that. This may be wishful thinking by
some since a rebounding stock market and a rebounding economy may
force them to be more patient. Construction spending has risen for
five months and while residential building has slowed business
building is exploding. There may be a lot of "see throughs" in
our future and with massive layoffs and downsizing in every
newscast there may be a lot of excess inventory soon.

Proctor & Gamble rallied for over +4.00 as shorts covered after
PG beat their earnings estimates on lower than expected revenue.
Surprise! Many traders had been selling PG since its high of $77
back in February due to the softening economy. When PG surprised
to the upside they were caught expecting a miss instead. PG is
a Dow component and a major contributor to the index today.

Microsoft rallied to close over $70 for the first time since Nov
27th even after announcing news that the current Windows-2000
IIS-5.0 server software was very hacker friendly. They also
announced a patch to fix the problem. They also announced
alliances with several other companies including Citigroup.
Citigroup will offer its "c2it" online money transfer system
to users of the MSN network of Web services. This will allow
users to send money by email. Microsoft is now struggling against
resistance created last November when it was not able to break
much over the $70 level.




Rambus was dealt a blow by a Federal judge today when he threw
out all but three claims against Infineon Technologies. The
judge also said he would hear arguments why he should not throw
out all the claims. One of the claims was the "clearly knew"
claim that would have produced the most damage. RMBS said IFX
clearly knew and willfully violated their patents over the last
seven years. By throwing out that claim the RMBS case is weaker
but RMBS still says their case is strong and they will prevail.
RMBS fell to a 52-week low of $15.70 on the news. The SOX
initially sold off on this news to 640 but recovered strong
to lead the Nasdaq higher at the close.

The news from IBM was also instrumental to the tech rally.
IBM said it will team up with CSCO to jointly develop new,
advanced networking systems. IBM beat out Intel on this project
and also unveiled an entirely new series of networking chips
and hardware and software tools for advanced communication
and "customized" chips. BRCM and AMCC are also fighting for
market share in this arena but IBM appears to be gaining the
most ground. IBM networking chip sales tripled in the first
quarter despite the economic downturn. IBM broke out of a
period of consolidation following their outstanding earnings
and gap up gains. This was the highest close for IBM since
Sept-27th.




Dell was one of the few tech stocks that did not post gains
and continued its two week decline. Rumors were floating that
Dell would cut even more jobs to preserve profits amid falling
computer prices. The price war is in full swing and profits
for all the PC makers are shrinking fast. Dell is just the one
on the bubble this week. The other PC makers, GTW, CPQ, HWP
were either down or had minimal gains.

The biggest (old) news today was the $1.35 trillion tax cut
approval. I will not go into the politics here but don't
expect to get a windfall return anytime soon. I still believe
it is a good thing and the current administration is calling
it the most tax relief in a generation. It will be almost half
a generation (11 years) before all this money actually gets cut
from our taxes but it is a start. Add this tax cut to the current
Fed rate cuts and we could see another boom over the next 18
months. That is good news to investors and as you can see by
the markets preparing to test resistance again there is plenty
of positive sentiment.

The Dow posted a strong +160 point day, mostly on the backs
of IBM, PG and MSFT but then who is counting... The up trend
line from April 4th is still intact and the dip yesterday
came right back to the trend and bounced. This is very
positive but we are only 106 points away from the magic 11000
level. As I reported last week the Dow has come within ten
points of 11,000 eleven times since September of 2000 without
closing over it. There is significant resistance there.

The S&P also closed right at resistance of 1266 where it
failed yesterday. It appears poised to breakout and make
a run for a new relative high. There are many analysts who
are calling the current S&P formation a bullish head and
shoulders and a breakout here could run over 1350 without
any outside interference. We will see...




The Nasdaq is preparing to bump up against previous resistance
at 2200 again and I think we have a good chance of breaking
out. 2250 would be the next resistance level but if portfolio
managers start playing with real money and not just trickling
in a few bucks here and there, we could see a real rally any
day. We are still heading into the summer doldrums and once
the Fed excitement wears off we may struggle for future gains.
With the FOMC meeting only nine sessions away there is still
a good chance of a rally into the meeting and then a "sell
the news" event even if they cut 50 basis points as expected.
Only time will tell.

For those currently out of the market the risk/reward ratio
appears skewed towards risk. With the markets up strongly
many traders are concerned that stocks are too pricey already
and are waiting for a pull back. The risk to them is possible
profit taking soon. Others are afraid stocks will not pull
back and their risk is lost potential instead of lost profits.
Either way investors are only sure of one thing. Failure to
participate in the eventual rally could be expensive. They
are faced with biting the bullet and jumping in now or
waiting another thousand points and doing the shoulda,
woulda, coulda excuse thing. Anybody need a bullet?

Enter passively, exit aggressively!

Jim Brown
Editor


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

A Pivotal Point: Technically & Figuratively
By Bill Kaeiser

Hey folks!  The time has come for a change and while we will
greatly miss Austin Passamonte and all of his contributions to OI,
the show must go on.  Austin will be dedicating his time and
effort to IndexSkybox, but OI will continue to provide market
insight and of course, the COT Report and its implications to
the general market "feel."

We want you to feel comfortable with the evolving format, thus,
we will be making subtle and not-so-subtle changes.  Since the
COT Report is released on Friday evenings, we have not had any
change since Sunday's Market Sentiment.  It is attached at the
bottom for your resource needs.

At first glance this morning, the markets looked quite flat.
Just another boring day of consolidation trading.  But to our
pleasant surprise, as the day progressed we found ourselves
becoming more and more "comfortable" with the recent
sustainability, especially as the Nasdaq towed the line at
2100.  Can we say it now?  Do we have a trend on the Nasdaq?
Well, while the market pundits and players on the Street
talk about the "bottom," one thing is for certain: the Nasdaq
bucked the Trader's Almanac historical claim that the latter
half of April is dismal.  We have a trading rally, how long
it will last, we don't know, but the chart shows that we
definitely have a trend.  The Nasdaq has an ascending wedge
with immediate resistance at the recent high of 2202.  There's
the action point which is rapidly approaching.  A break of
trend may bring back the 2000 test.  A confirmation of this
bullish wedge as a breakout could be met overhead near 2250
and 2300.  The Nasdaq has come a long way, don't entirely write
off those pesky bears!  Not that there's anything wrong with
being a bear.




The S&P 500 didn't disappoint today either.  Investor sentiment
has shifted from fear of further downside to not wanting to miss
the next big rally.  Will we have a rally of previous years'
proportions?  We very well could, but we can't forget the painful
lessons of last year: blown trades, blown-up accounts, and
general stress, myself included.  Today, the SPX.X closed smack dab
on resistance at 1265, leaving us at a key inflection point.  The
answer to the previous question may only be days away.  Support
lies at approximately 1200, which would be a 38.2% retracement
of April's rally (not shown).




Leaving best for last, the Dow ($INDU) has been on fire.  With
buyers stepping in yesterday at 10712, the Dow began another
march toward 10900.  What an encouraging sign: investors seeing
entry points on hard and fast sell-offs.  No one wants to miss
out on this move and it's happening right before our eyes.  It
was pretty much a continual ascent today for the Dow 30, closing
just near its highs at 10895.  The ol' index has resistance right
at 10900, where sellers whacked it yesterday.  That's the
immediate challenge and then, of course, the psychological level
of 11000.  Support below at 10700 is the site of both current
longs defending positions as well as new longs.  10500 is more
solid, longer term support.




Well, that's it for my first session of Market Sentiment and I
hope you all stayed tuned as we stay plugged into the markets.
We are at a pivotal point technically and as earnings reports
begin to fade away, the talk will shift to the Fed meeting on
May 15th.  25 basis points or 50 basis point?  We shall see in
coming sessions.

Until we meet again,

Bill K.

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

CBOT Commitment Of Traders Report: Friday 04/27
Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts on the
Chicago Board Of Trade.

Small specs are the general trading public with commercials being
financial institutions. Commercials are historically on the
correct side of future trend changes while small specs are not.
Extreme divergence between each signals a possible market turn in
favor of the commercial trader's direction.

                    Small Specs               Commercials
S&P 500         (Current)  (Previous)    (Current)  (Previous)
Open Interest
Net Value        +57298     +56586         -61741     -57843
Total Open
Interest %      (+26.22%)  (+26.57%)      (-8.52%)   (-8.08%)
                net-long   net-long       net-short  net-short

DJIA futures
Open Interest
Net Value         -3478      -3031          +5051      +6200
Total Open
interest %      (-25.97%)  (-20.21%)      (+16.58%)  (+20.88%)
                net-short  net-short      net-long   net-long

NASDAQ 100
Open Interest
Net Value         +2520      +3168         -10299      -7462
Total Open
Interest %      (+11.28%)  (+12.12%)      (-16.11%)  (-10.48%)
                net-long   net-long       net-short  net-short


What COT Data Tells Us
**********************
Indices: Commercials are maintaining their net-short positions on
the S&P while increasing shorts on the NASDAQ 100.

Data compiled as of Tuesday 04/23 by the CFTC.


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

Please visit this link for Market Posture:

http://www.OptionInvestor.com/marketposture/050101_1.asp


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

Backspreads And Ratio Spreads
By Lee Lowell

As we continue our strategy session for this week, we're going to
discuss two more spread positions that are comprised of unequal
amounts of options.  The "backspread" consists of more long
options than short, and the "ratio spread" consists of more
short options than long.  Some of you may not be able to
initiate the ratio spreads due to your broker's policies on
naked short options, but we will talk about how to get around
this little problem.

Let's first give the background on each strategy and see how to
set them up.  The backspread is an options spread strategy in
which you buy more options than you sell and is executed within
the same expiration month.  This usually occurs in a 1x2 or a
2x3 ratio.  Since you are long extra options, you want to see
LARGE movement in the underlying stock or index.  The backspread
is NOT a strategy to use in a quiet market.  The backspread can
either be a call backspread or a put backspread, therefore you
have to form an opinion on market direction.  The backspread is
also classified as a type of "volatility" spread, whereas you
want to take advantage of the "skew" characteristics of each
option.  (If you recall, skew refers to the different implied
volatilities of each option.)

There a few ways to decide on which strikes to use for a
backspread.  But even before you pick the strikes, just know
that you should ALWAYS initiate a backspread for a credit into
your account.  This is the buffer you have in case your market
prediction of direction does not pan out.  Since you will be
taking in a credit and using the skew to your advantage, you
need to find options that present those qualities.  In the case
of a call backspread, you need to look for a "reverse" type of
skew where the lower strikes trade at a higher implied volatility
than the higher strikes.  And in the case of initiating a put
backspread, you want a "forward" skew in which the higher strikes
trade at a higher implied volatility than the lower strikes.  You
want to see these characteristics because you are selling the more
expensive strike (on dollar and IV terms) and buying the less
expensive strikes (on dollar and IV terms).  Most data vendors
nowadays have implied volatility data included with their option
chains.

We'll start with the put backspread.  In this scenario, you are
predicting large downside movement in the stock or index.  But
since we will execute this trade for a credit, we'll have the
chance to keep some money if the stock goes screaming higher.
Let's take some real numbers for Yahoo! and see what the scenario
looks like.

(Illustrative purposes only!)

We think Yahoo's life as an Internet portal is about to end so we
want to bet on a large downside move.  You want to pick a month
that will give it some time to mature, so we think October is a
fair choice.  The only other thing to be aware of with backspreads
is that you'll want to exit the trade when there's at least 30
days left to its life.  This is because if the underlying stock or
index does not move in the given time, you will start to lose
money quickly.  Exiting with a month left still gives your long
options some time value, so therefore you can sell out for
hopefully not too big of a loss.

Which strikes to pick?  In most backspreads, the option sold will
be in-the-money and the options bought will be either at-the-money
or slightly out-of-the-money.  For our Yahoo! example, we will
purchase 2 Oct '01 $20 puts at $4.10 and sell 1 Oct '01 $35 put at
$15.20 for an overall initial $700 credit.  This is with Yahoo!
trading at $21/share.  Here's the risk graph at 3 different time
intervals:

This is the P&L graph on 5/1, the day we initiated the spread:




Halfway through on 8/01:



And here is the graph at expiration in October:



You can see how as time progresses we will lose money if Yahoo!
does not make its intended move.  What's nice about this put
backspread is that if Yahoo! drops big, we will make unlimited up
to Yahoo! dropping to $0/share or we can keep our initial $700
credit if Yahoo! powers higher above $36/share.  From the graph at
expiration we can see our break-even points are $11.88 on the
downside and $28.13 on the upside.  The position has the same
structure as a straddle except that we're capped on an upmove by
Yahoo!.  What makes this better than a straddle in one respect is
that we get to take in an initial premium whereas with a straddle,
you have to shell out money from your account.  There is a chance
of loss with a backspread as can be seen by the graph, but the
only reason why you would initiate a backspread is because you
expect large movement.  If the large movement occurs, you're
golden.

Just in case you were wondering about the volatility skew in this
example - the Yahoo! options had a relatively flat skew.  This
means that the options we bought and sold were trading at very
similar IV.  The $20 put was purchased at about 90% IV and the
$35 put was sold at about 88% IV.  That's not our ideal, but I
used this example just to illustrate how the spread works.  If the
skews had been more favorable, we would've ended up with a larger
initial credit.  Having a simple software program where you can
see the actual strategies with P&L graphs really helps you see
where the money will come and go.  Even if you know in your head
what your breakeven points are and what the max loss and max gain
may be, it's still nice to see it on a graph.

We used a put backspread in this example but a call backspread is
used in the same manner.  If you are bullish on the market,
sometimes a call backspread is preferable to an outright call
purchase due to the favorable (hopefully) skew pattern, and the
chance to make money if you are totally wrong on your market
prediction.

I've run out of time for this week, so I will get to the ratio
spreads in the next session.

Good luck.


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

Are You Ready to Rumble?
By Scott Martindale

C'mon, belly on up to the bar.  Who's buying this round?  After a
nice April rally into option expiration day followed by a less-
than-expected pullback, players appear to be back in a buying
mood.  As you might recall from my article last week, I unloaded
some positions and allowed myself to be called out on expiration
Friday, April 20th, in anticipation of a pullback, retrenchment,
consolidation, or whatever you like to call it.  I thought we
might see 1900 on Nasdaq and perhaps 10,000 on the Dow.  I guess
not.  It appears that the rapid emergence from the depths of doom
and gloom on April 4th (capitulation?) was sufficient to bring
back the long-term investors. I admit that I've started
accumulating again -- at somewhat higher prices than I had hoped.

However, the broader markets still appear to be short-term
overbought. The CBOE put/call ratio has retreated from the high
near 1.0 that we saw before the recent rally, but it started
inching up again today to near 0.60.  When the Dow ran up near the
close to almost 10,900 (+160 on the day) and the SPX peeked over
1265 (+16.5 on the day), I started thinking short-term pullback.
And since I held no short positions but a lot of long positions, I
went ahead and bought a few OEX puts just to give myself some
profit exposure to a possible pullback.

Nevertheless, I like what I'm seeing, particularly the pervasive
green across my tech watchlist.  To paraphrase the old Saturday
Night Live character Chico Escuela, the markets "been bery, bery
good to us" during the month of April, with the Nasdaq up 15%
and the S&P 500 up 7.7%.  Even the XAU gold & silver index was up
over 15% for the month.  The top performing sectors included
software and semiconductors.  Microsoft (NASDAQ: MSFT) was
surprisingly strong, up over 23%.  PeopleSoft (NASDAQ: PSFT) and
Mercury Interactive (NASDAQ: MERQ) were both up 58%, and Seibel
Systems (NASDAQ: SEBL) gained nearly 68%.  In semiconductors, RF
Micro Devices (NASDAQ: RFMD) was up over 150% for the month!
QLogic (NASDAQ: QLGC) gained 90%, PMC-Sierra (NASDAQ: PMCS) was up
about 68% and personal favorite Applied Micro Circuits (NASDAQ:
AMCC) rose 58%.  Even the ol' plow horse Intel (NASDAQ: INTC) was
up 19% for the month of April.

Last year, April 4th provided that nerve-shattering day in which
the Nasdaq plunged over 600 points before rallying back to only a
small loss for the day.  Likewise, this year we found the depths
of gloom occurring on April 4th.  Fortunately, the rest of last
month behaved quite differently from April of 2000, which if I
must remind you, got pretty ugly.  I'll take months like April
2001 anytime, with a big dip providing a buying opportunity
followed by a strong rally.

Amazingly, today's tech leadership was not in semiconductors,
software (except Microsoft), or biotech, but included networkers
and even Internet stocks!  Leaders included the likes of both CMGI
Inc. (NASDAQ: CMGI), which was near the top of the Nasdaq
percentage gainers (up 38.8% today), and Big Blue IBM (NYSE: IBM),
which eclipsed its high for the year and is closing in on $120.
The VIX is down below 28.  Can this rally sustain long enough to
drive down the VIX to below 20 again?

Continuing with my affinity toward the deeply oversold optical
networking sector, I have held my JDS Uniphase (NASDAQ: JDSU)
shares since accepting assignment in March.  Yes, I regretted not
selling or writing covered calls when the technicals peaked out on
April 20th, but I suppose I was unloading too many other names and
I wanted to let JDSU run some more.  Nevertheless, JDSU pulled
back so quickly that by April 26th its short-term technicals were
looking like it was poised to rally again as the stock dipped near
$18, so I sold May 20 naked puts.  Today, that play looks pretty
good.

Let's look at the various sectors that I have been reviewing over
the past several months, and see how far the individual names have
come since the April 4th capitulation.  First, that basket of
techs I arbitrarily identified, which seems to have the greatest
gains when the Nasdaq rallies:

BEA Systems (NASDAQ: BEAS) up 97% since April 4th
Human Genome Sciences (NASDAQ: HGSI) up 68%
Juniper Networks (NASDAQ: JNPR) up 116%
Mercury Interactive (NASDAQ: MERQ) up 127%
Ballard Power (NASDAQ: BLDP) up 50%

How about power generation and natural gas distribution?
Calpine (NYSE: CPN) up 13% since April 4th
AES Corp. (NYSE: AES) up 3%
Dynegy (NYSE: DYN) up 18%
EOG Resources (NYSE: EOG) up 16%
Enron (NYSE: ENE) up 16%

Alternative power plays?
Capstone Turbine (NASDAQ: CPST) up 27%
Plug Power (NASDAQ: PLUG) up 78%

Networkers and fiber optics?
JDS Uniphase up 42% since April 4th
Corning (NYSE: GLW) up 18%
Ciena (NASDAQ: CIEN) up 67%
Extreme Networks (NASDAQ: EXTR) up 158%
Cisco Systems (NASDAQ: CSCO) up 30%

Superconductors?
American Superconductor (NASDAQ: AMSC) up 39% since April 4th
Superconductor Technologies (NASDAQ: SCON) up 48%

And how about those "tech bargains" listed by Red Herring?
Autodesk (NASDAQ: ADSK) up 36% since April 4th
Comverse Technology (NASDAQ: CMVT) up 51%
EMC (NYSE: EMC) up 56%
Linear Technology (NASDAQ: LLTC) up 47%
Network Appliance (NASDAQ: NTAP) up 108%

Will they sustain this rate of advance?  Probably not.  But I'll
be looking to buy or write puts on dips for several of them.


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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:
*****

AXP $42.25 -0.19 (-1.49) Recent coverage and hopes of another
rate cut couldn't generate enough enthusiasm to take AXP through
the $44 resistance this week.  The stock's overall strength
above the converged 5 & 10 DMAs, at our $42 closing stop, does
indicate a breakout could be on the horizon.  However, with
fickle investors returning to the high-growth tech issues, the
odds of an upward explosion are diminished.  We've decided to
drop coverage in lieu of other opportunities.


PUTS:
*****

VRTS $66.11 +6.50 (+6.96) A strong rally in the software sector,
as well as the broad indexes stimulated buying in VRTS, and
the stock pushed through its 10-dma of $60 shortly after the
open.  While VRTS offered put players some opportunity last week
with a drop to $55.25 on Thursday, the bullish sentiment in the
sector overwhelmed the bears.  The stock has now broken its
pattern of lower highs, and, as it has closed above our stop
level of $62, we are forced to drop the play tonight.


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The Option Investor Newsletter                  Tuesday 05-01-2001
Copyright 2001, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.

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

BRCM $41.96 +0.40 (+3.70) Bullish statements made by BRCM's
CEO Henry Nicholas at an analyst conference in California on
Monday lit a fire under the stock, and BRCM burst through
resistance at the 50-dma of $38.35 on Monday morning, and never
looked back.  Nicholas stated that large data networking vendors
and telecom firms continue to burn through excess inventories,
and that demand could return in the fourth quarter.  In addition,
BRCM introduced a new high performance chip for servers,
workstations, desktop, and mobile PCs.  Going forward, it is
critical that the SOX.X keeps its technical strength, and ideally
we would like to see the SOX stay above the 650 level.  Traders
can take positions at current levels, or possibly at a pullback
to $40.  Monitor others in the sector like PMCS and VTSS, and move
the closing stop to $40.

AEOS $38.95 +1.73 (+1.34) A dip to $36.30 this morning
turned out to be an excellent entry point for aggressive traders,
as AEOS rebounded with the retail sector later in the day.
AEOS is now encountering very heavy resistance at the $40 level,
which it may be able to cross with some inspiration and
strength from RLX.X.  Considering the fact that RLX.X closed
above the 900 level, it seems likely that AEOS might have a shot
at clearing the $40 level with heavy volume, which could be an
excellent entry point.  Alternatively, wait for another pullback
to $38.50 before entering, but be sure to confirm that others in
the specialty apparel retail sector are performing well, such
as GPS, ANN and LTD.  We are setting closing stops tight at
$37, so traders should end the position if AEOS closes below
this level.

RE $63.09 -0.76 (-1.15) While RE experienced a pullback amid
the furor in the technology sector today, the insurance index,
IUX.X, moved above its 200-dma of 746 in a sign of formidable
technical strength.  RE is not a momentum stock, so traders will
have to be more patient than usual.  Consider taking a position
at a move above the 50-dma of $64, particularly if others in
the insurance sector, like ALL and CB are rallying.  We are
continuing to keep stops tight at $62, so close the position
if RE closes below this level.

AA $41.50 +0.10 (-0.49) A day of rest for the NYSE on Monday
resulted in a day of rest for Alcoa, as shares of the leading
aluminum producer pulled back 1.41 percent on 83% of the average
daily volume in a consolidation effort.  Continuing its sideways
movement, AA ended the today with a fractional gain on decreased
trading volume.  Connecting the highs and lows for this month, an
upward trending regression channel can be discerned, with trading
in the past few sessions putting the stock close to the bottom of
the range, while creating more room for potential upside.  AA has
found support recently at $41, with the 10-dma just below at
$40.72.  Bounces off these levels along with support at our
closing stop price of $40 may allow aggressive traders to take a
position, but confirm with volume.  For an entry on strength,
wait for AA to take out $42 with conviction before jumping in,
making sure that industry rivals AL and PY are also moving
higher.

C $50.40 +1.25 (-0.51) With a soft day for Old Economy stocks to
start the week, C's Monday morning attempt to take out the
200-dma ($51.56) was foiled.  Opening near that last major moving
average of resistance yesterday, the stock spent the rest of the
day heading lower to close down $1.76 or 3.46 percent on 82% of
ADV.  An alliance with Microsoft today, in which the two
companies will create a service to make transfers of money via
email possible, helped to boost C's stock today, with shares of
the financial services provider gaining back 2.54 percent of
yesterday's losses.  Volume continued to be on the light side, as
just over 70% of the ADV traded hands.  Intra-day bounces off
support from the 100-dma at $50.15, the psychological $50 level,
the 5-dma at $49.85, the 10-dma at $49.62 along with our closing
stop price of $49 may allow higher risk players to take a
position.  For the more risk averse, wait for a break above the
200-dma before jumping in.  Track sector sympathy using AMEX's
Banking Index (BIX).

FDC $67.00 -0.44 (+0.60) We initiated coverage on our call play
in FDC yesterday based on strong fundamentals leading to
technical strength, allowing the stock to break out to a new
all-time high.  On the fundamental side, FDC recently posted a
well-received earnings report, along with positive comments from
Merrill Lynch to its credit.  Analyst Steve McClellan called the
stock reasonably valued and praised its long-term growth
prospects.  Yesterday FDC advanced $1.04 or 1.57 percent and in
doing so, cleared resistance at $66.50.  We mentioned that we
would have liked to see more volume, notice that despite today's
fractional pullback, the $66.50 level acted as support.
Aggressive traders may look for continued bounces off this point,
along with $66, the 5-dma at 66.12, the 10-dma at $65.35, and our
closing stop price of $65, as potential entry points.  With the
stock making an new intra-day all-time high today, conservative
traders may look for a break above $68 on volume before making a
play, but only if sector sisters FISV and PAYX confirm bullish
sentiment.

AOL $51.96 +1.46 (+1.97) Are we on the brink of the big breakout
through $55?  Now that the $50 resistance is conquered and AOL
is trading confidently at the higher levels, we're looking for
AOL to move into January's trading zone of $55 to $58.  Take
note that Monday's monumental eradication of $50 occurred on 1.2
times the ADV; therefore, watch the intraday volume levels to
signal another bullish kick off.  We upped our CLOSING stop
twice this week.  Going forward into tomorrow's session, we have
it set firmly at $50 and will drop coverage if AOL fails to
maintain its position above this mark on the close.  More
adventurous entries however, might be found in that area on
strong bounces off the 5-dma or 10-dma lines at $49.39 and
$50.29, respectively.  Make sure the market is advancing and the
bulls are in control before taking on additional positions.

BRCD $42.96 +4.97 (+7.34) Tech bulls continued to hit the buy
button today, propelling BRCD upwards for a stellar 13%
performance.  Storage stocks continued to shine today doing
their part in helping the broad markets continuing their
advance.  Helping to boost shares of BRCD today was ABN Amro
initiating coverage of the stock with a Buy rating.  After
trading flat during most of the morning, the stock shot out of
the gate after the noon hour, charging through the $40
resistance level and tacking on nearly an additional $3 by the
closing bell.  Volume?  You bet!  It's starting to strengthen
again, coming in slightly above the ADV today.  This was the
successful breakout from the bullish wedge formation, and $40
should now serve as support.  Accordingly, our stop is moving
up to $39 tonight.  Resistance is looming just overhead, first
at $43 (also the site of the upper Bollinger band) and then
$45.  Intraday dips to support will provide the best entry
points, but momentum players can still play upside moves above
the $43 level so long as it is confirmed by strong buying
volume.

LLY $85.63 +0.63 (+2.83) After breaking above its recent
ascending channel yesterday, LLY held its ground throughout the
morning session, mirroring the broad market action.  As traders
returned from lunch, they were clearly in a buying mood, and
they launched the stock higher right into the close.  When the
dust settled, our play had cleared the $85 level and is now
sitting at its highest level since January 4th.  Positive news
on the development front helped with the stock's rise as well.
Clinical trials of Cialis, otherwise known as IC351, a possible
next-generation Viagra, showed positive efficacy for as much as
24 hours after taking the drug.  LLY once again outperformed the
broad Pharmaceutical index (DRG.X) which fell fractionally on
the day.  So where do we go from here?  Support this morning
materialized near $84.50, and this should continue to support
the stock going forward.  Aggressive traders can consider new
positions on a bounce near this support level, while more
conservative traders will want to wait for the stock to clear
the $86 level on continued strong volume before taking the
plunge.  Keep an eye out for profit taking though, as there is
significant overhead resistance sitting between $87-91  So long
as the DRG index doesn't lose its footing, LLY should continue
to work higher as investors increasingly focus on the Fed's
anticipated rate cut in mid-May.  Move stops up to $84.


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

TBL $48.04 -1.28 (+0.99) While the rest of the market was
rallying, TBL acted like a wallflower, with an uninspiring roll
over from its 200-dma at $49.50.  From that point, TBL fell
to its next major support level at $48, and did not respond
even when RLX.X burst through resistance at 900 at the close.
Going forward, the path of least resistance is undeniably down
for TBL.  A drop below $48 with volume would very likely lead
to $47.50, and could be a good entry point.  The next major
support levels are found at the even numbers of $47, and $45.
Ideally, an entry point could be found with weakness in the
sector, RLX.X, as well as others like NKE, as puts are always
more difficult in a rising market.  We are moving closing stops
to the $50 level.

SGR $58.00 +1.00 (+0.50) Throughout most of the month of April,
the 5 and 10-dma provided the support upon which the stock
rallied strongly, gaining 40 percent in the space of three weeks.
However, recent weakness has put the stock below these two
short-term moving averages.  In doing so, it appears that what
was once firm support has become formidable resistance.
Yesterday, in sympathy with other Old Economy issues, SGR fell
fractionally to start off the week, and while the pullback seemed
minor, the volume was strong, almost twice the ADV, suggesting
that there was no lack of sellers in the stock.  Today, the stock
managed to move up 1.75 percent on 1.27 times the ADV.  The 5 and
10-dma (now at $58.64 and $59.31 respectively) continued to act
effectively as a lid on the stock price and as long as this is
the case, higher risk players may buy failed rallies off these
resistance levels.  Just make sure that SGR continues to close
below our stop price of $59.  For an entry on weakness, a break
below $57 on volume correlated with downside in peers MLI and KMT
could offer an attractive entry.


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

AGGRESSIVE:

LAB - LaBranche & Co., Inc. $38.70 +2.70 (+3.21 this week)

Founded in 1924, LaBranche & Co Inc. operates primarily as a New
York Stock Exchange Specialist firm.  It is one of the oldest and
largest NYSE Specialists, in terms of capital, number of stocks
and dollar and share volume traded.  As a Specialist, the role of
LaBranche is to ensure that the market for each of the stocks it
represents remains fair and orderly.  LaBranche accomplishes this
by connecting buyers to sellers, helping to find the best
available bids and offers.  In addition, LaBranche adds
liquidity, reduces volatility and stabilizes prices by committing
capital when buyers or sellers outnumber each other.

Uncertainty over the decimalization of the NYSE earlier in the
year did not help shares of market specialist firm LaBranche.
Hitting a peak of just over $50 in mid-February, the stock had
moved steadily lower until early April, as it approached its
earnings date.  The company reported early last week, posting an
increase in revenues of 24 percent and a gain of 8 percent in
year-over-year earnings per share.  The CEO commented these were
solid numbers considering the weak economic environment.  It
appears that traders agree, as the stock has since continued to
move ever higher.  News that the NASDAQ will be going public has
also sparked investor interest in market making firms, and the
recent pickup in trading volume after an extended period of
uncertainty could lead to higher than expected profits for the
next quarter.  Today LAB rallied strongly, gaining 7.5 percent.
While the volume was only average, the price action was decidedly
bullish.  In one fell swoop, the stock surpassed its last two
lines of moving average resistance, the 100-dma at $36.34 and the
50-dma at $37.19.  Aggressive traders may look for these two
levels to act as support going forward.  Look for horizontal at
$38, $37 and $36.  Additional moving average support may be found
at the 5 and 10-dma at $35.82 and $35.67 respectively but in
buying such a dip, make sure that LAB closes above our protective
stop price of $36.  Closing near its highs today, conservative
traders may look for a break above $39 before jumping in, but
only if rivals NITE and SCH are moving in the same direction.

BUY CALL MAY-30 LAB-EF OI=146 at $9.10 SL=6.25
BUY CALL MAY-35*LAB-EG OI=107 at $4.80 SL=3.00
BUY CALL MAY-40 LAB-EH OI=748 at $1.90 SL=1.00
BUY CALL JUN-35 LAB-EG OI=  0 at $5.90 SL=4.00  Wait for OI!!
BUY CALL JUN-40 LAB-FH OI=  5 at $3.40 SL=1.75

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


EMC - EMC Corp $41.94 +2.34 (+2.76 this week)

EMC maintains the dominant market share (+40%) of the data
storage market.  The company manufactures and supports a wide
range of hardware and software products, but primarily focuses
on redundant array of independent disks (RAID) memory systems
that banks, manufacturers, Internet providers, retailers, and
government agencies use to store and retrieve data.  Other EMC
products manage remote data and share information across
networks of different computers.

Strong coverage by ABN Amro incited a nice breakout rally that
put EMC topside of the $40 level.  On the day, EMC gained an
impressive 5.9% and closed smack on its daily high.  Analyst
Bill Shoppe cited his increasing confidence that the storage
spending slowdown was bottoming and that the worst news was
already factored into EMC's valuation.  In addition to the
upgrade, Shoppe raised EPS and revenue forecasts for 2002 and
noted the company's long-term fundamentals, dominant market
share, and competitive advantage in a growing market.  If the
NASDAQ resumes its strong uptrend and penetrates the 2200 level,
EMC should continue to make gains over the short-term.  As you
plan your entry and exit strategy, you may want to keep an eye
the trading activity of SanDisk Corporation (SNDK) to further
reference computer storage sentiment.  We're keeping our
protective stop in-line with the supportive 5 & 10 DMAs
technicals, which are trailing the $39 level.  If EMC should
fail to CLOSE above $39, we'll exit the play without another
thought.  At this point, be careful of speculation and wait for
EMC to define the uptrend.  A definitive move through $42,
backed by intraday volume above 500 K, provides reasonable
confirmation that the momentum is building.  The more
conservative approach is therefore to buy into strength and to
take profits as EMC contends with the upper resistance near $45.
You can always jump back into subsequent momentum waves.

BUY CALL MAY-35 EMC-EG OI=12133 at $7.80 SL=5.75
BUY CALL MAY-40*EMC-EH OI=21478 at $4.00 SL=2.50
BUY CALL MAY-45 EMC-EI OI=16514 at $1.55 SL=0.75
BUY CALL JUN-40 EMC-FH OI=  916 at $5.50 SL=3.50
BUY CALL JUN-45 EMC-FI OI= 1331 at $2.85 SL=1.50

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


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

AGGRESSIVE:

IDPH - Idec Pharmaceuticals Corp. $47.51 -1.69 (-1.94 this week)

Idec Pharmaceuticals focuses on the commercialization and
development of targeted therapies for the treatment of cancer
and autoimmune diseases.  Idec's antibody products act chiefly
through immune system mechanisms, exerting their effect by
binding to specific, readily targeted immune cells in the
patient's blood or lymphatic systems.

Despite the fact that the broad markets have been rallying,
and the biotech sector seems to have broken its persistent
downward trend for the time being, IDPH has sold off since
reporting its earnings, and is now poised to sell off further.
While IDPH reported earnings which were slightly better than
the analysts' expectations on April 19, the company also
reported news which disturbed investors regarding a possible
delay in one of their drugs scheduled for FDA approval.
IDPH reported that its cancer drug, Zevalin, which was
expected to be approved by mid to late summer, would now most
likely stay in the FDA approval process until the fourth
quarter, or possibly longer.  Several analysts re-stated their
earnings expectations downward, as Zevalin was expected to be
a substantial money maker for IDPH.  After this news was
reported, IDPH dropped below its 200 dma of $53.70, with a big
gap downward the following day.  After hitting a low of $42.63
on April 24, IDPH managed to rally with the overall markets,
but hit a tough level of resistance this week at $51 and
retreated.  The pattern exhibited by IDPH on Monday and Tuesday
is particularly bearish, considering the strong overall market
environment.  IDPH rolled over from $51 on Monday, and made a
drop from $50 to $46.44 on Tuesday, with a failed rally attempt
at the close.  A roll over from $47.50 is likely, and would be
an excellent entry point for aggressive put players, particularly
if BTK.X is experiencing a pullback.  The next major support
level is the 50 dma at $46, and a break below this with heavy
volume would be a more conservative entry point.  Monitor
others like BGEN and MLNM, and set stops at $50.  We will end
the play if IDPH closes above $50.

BUY PUT MAY-50*IDK-QJ OI=556 at $5.30 SL=3.00
BUY PUT MAY-45 IDK-QI OI=260 at $2.80 SL=1.50

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


AMAT - Applied Materials $55.04 +0.44 (+1.15 this week)

Applied Materials develops, manufactures, markets and services
semiconductor wafer fabrication equipment and related spare
parts for the worldwide semiconductor industry.  Many of
AMAT's products are single-wafer systems designed with two or
more process chambers attached to a base platform.  The
platform feeds a wafer to each chamber, allowing the
simultaneous processing of several wafers to enable high
manufacturing productivity and precise control of the process.
These platforms support chemical vapor deposition, physical
vapor deposition, etch and rapid thermal processing
technologies.

The Semiconductor sector has been leading the recent recovery on
the NASDAQ, but it is currently looking a little tired.  While
we know that the Semiconductors tend to lead any recovery in
technology stocks, but that doesn't mean the law of gravity has
been repealed.  AMAT moved up sharply with the Semiconductor
index (SOX.X) but ran out of steam after the Fed reduced
interest rates on April 18th.  Since then the stock has been
consolidating its recent gains, but appears poised for a
downward move.  The SOX is running into resistance near 685,
while AMAT is being pressured by its own 200-dma, currently
sitting at $54.65.  While the stock did managed to close above
this level today, it wasn't very convincing as it closed well
off its highs for the day.  We are looking for a rollover in the
SOX to further pressure shares of AMAT and any bearish news in
the sector could be just the catalyst for that event.  Earnings
for our play are scheduled for May 15th, and as the bulls
euphoria begins to fade ahead of the report, we wouldn't be at
all surprised to see AMAT drop to retest support in the $47-48
area.  Resistance looms overhead near $56.50, and aggressive
traders will want to target new entries on failed rallies near
this level.  More conservative players will want to see the
weakness intensify and push AMAT below the $52 support level
before stepping into new positions.  We are starting the play
with our stop at $57.

BUY PUT MAY-60 ANQ-QL OI=3000 at $7.20 SL=5.00
BUY PUT MAY-55*ANQ-QK OI=5326 at $4.40 SL=2.75
BUY PUT MAY-50 ANQ-QJ OI=6388 at $2.30 SL=1.25

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


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

TBL - Timberland Co. $48.04 -1.28 (+0.99 this week)

Timberland is a global leader in the design, engineering and
marketing of premium quality footwear, apparel and accessories
for consumers who value the outdoors and their time in it.
Timberland products offer quality workmanship and detailing
and are built to withstand the elements of nature.  The company's
products can be found in leading department and specialty
stores as well as Timberland retail stores throughout North
America, Europe, Asian, Latin America and the Middle East.

Most Recent Write-Up

While the rest of the market was rallying, TBL acted like a
wallflower, with an uninspiring rollover from its 200-dma at
$49.50.  From that point, TBL fell to its next major support
level at $48, and did not respond even when RLX.X burst through
resistance at 900 at the close.  Going forward, the path of
least resistance is undeniably down for TBL.  A drop below $48
with volume would very likely lead to $47.50, and could be a
good entry point.  The next major support levels are found at
the even numbers of $47, and $45.  Ideally, an entry point
could be found with weakness in the sector, RLX.X, as well as
others like NKE, as puts are always more difficult in a
rising market.  We are moving closing stops to the $50 level.

Comments

Our play on TBL is purely technical, as shares have steadily
rolled lower since the beginning of the year.  Monday's advance
up to its descending trend line gave us the entry point into
TBL, and Tuesday's rollover at $49.50 gave us confirmation.
At this point, traders can either look to enter new put
positions on an advance up to the $48.50 level or on a breakdown
below $48, depending upon individual risk preferences.  Although
TBL is not a fast mover, we're looking for low risk, steady
profits from the play and ideally would like to see the stock
work its way back down to the $43 - 44 range.

BUY PUT MAY-50*TBL-QJ OI= 22 at $3.70 SL=2.00
BUY PUT MAY-45 TBL-QI OI=106 at $1.35 SL=0.75

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


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

U.S. Economy Set For Rebound!

Confidence in the stock market grew today after the NAPM said
the worst declines for the industrial sector may now be over
and it probably will recover later this year.

Monday, April 30

The broader market ended lower today as investors took profits
after a series of recent advances.  The Dow ended down 75 points
at 10,734.97 and the S&P 500 index was down 4 points to 1,249.
Technology stocks advanced however, pushing the NASDAQ 40 points
higher to 2,116.  Volume on the NSYE reached 1.22 billion shares
with advances beating declines 17 to 13.  On the NASDAQ, trading
was very light at 1.4 billion shares exchanged and rising issues
outpaced falling issues 12 to 7.  In the U.S. treasury market,
the 30-year bond rose 6/32, pushing its yield down to 5.79%.


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

Biochem  (NASDAQ:BCHE)   MAY37C/35C   $0.75   credit   bear-call
Lowe's   (NYSE:LOW)      MAY50P/55P   $0.30   credit   bull-put
Ariba    (NASDAQ:ARBA)   AUG12C/A7P   $0.25   debit    synthetic
British  (NYSE:BAB)      JUL50C/50P   $7.30   debit    straddle
British  (NYSE:BAB)      JUL60C/40P   $1.15   debit    strangle
Veeco    (NASDAQ:VECO)   MAY60C/40P   $2.00   credit   strangle

Biochem was the early surprise in Monday's session after merger
partner Shire Pharmaceuticals announced the date for completion
of the merger review has been extended to 11 May 2001, or such
other date as the parties may agree to.  The Investment Canada
Act approval remains the only major outstanding condition to be
met to make the merger effective and the issue was bolstered by
the news.  The first trade of the day was a 5-contract spread at
$0.75 credit, well above our initial target.  The bullish market
activity didn't help our entry opportunities in Lowe's and Ariba
but both plays were viable considering the current upside bias.
We chose the debit strangle in the BAB position but the straddle
was also offered an acceptable entry price.  The Veeco strangle
was available near the suggested target early in the session.


Portfolio Plays:

I was unable to monitor the market today but based on the closing
prices, there was no significant activity in the Spreads section.
Human Genome Sciences (NASDAQ:HGSI), PMC Sierra (NASDAQ:PMCS) and
Intel (NASDAQ:INTC) led the technology group while Liz Claiborne
(NYSE:LIZ) and United Health (NYSE:UNH) were the strongest issues
in the industrial category.  Our bearish positions in Minnesota
Mining (NYSE:MMM) and Total Fina Elf (NYSE:TOT) remain profitable
and the small rally in LSI Logic (NYSE:LSI) provided a favorable
early-exit credit ($0.50) in our recent time-selling play.  The
only position that proved interesting was the Chiron (NASDAQ:CHIR)
credit strangle, as the issue moved to the top of a recent range
near $48.  Our upside break-even is near $51.50, but there is no
reason to let this position become a loser with the additional
resistance level at $55.  If the stock continues to rally, the
easiest move would be to roll the short MAY-$50 Call to a higher
strike price ($55) in June for a small credit.  We will monitor
the issue and its option prices for potential adjustments during
the coming sessions.


Tuesday, May 1

Confidence in the stock market grew today after the NAPM said
the worst declines for the industrial sector may now be over
and it probably will rebound later this year.  The Dow ended up
163 points at 10,898 and the NASDAQ closed 52 points higher at
2,168.  The S&P 500 index finished up 17 points at 1,266.  On
the Big Board, volume was a moderate 1.16 billion shares with
advances beating declines 18-to-11.  Trading activity on the
NASDAQ was below average with 1.90 billion shares exchanged.
Technology winners outpaced losers 23-to-15.  In the U.S. bond
market, the 30-year Treasury rose 22/32, pushing its yield down
to 5.73%.


Portfolio Plays:

Stocks rallied today as industrial issues recovered from recent
selling pressure and technology shares continued to build on
Monday's gains.  The Dow Jones Average enjoyed a triple-digit
advance on strength in traditional large-cap stocks.  Procter &
Gamble (NYSE:PG) was a strong performer after posting favorable
quarterly profits and announcing it's comfortable with estimates
and sales growth expectations in the low single digits.  Other
blue-chips that moved higher included Boeing (NYSE:BA), Philip
Morris (NYSE:MO), Walt Disney (NYSE:DIS) and Coca-Cola (NYSE:KO).
On the NASDAQ, Internet, networking and software shares rallied
while semiconductor companies continued to struggle.  Microsoft
(NASDAQ:MSFT) was a big winner after UBS Warburg's Ed Kerschner
added the company to the Global Technology Strategy focus list.
Kerschner told clients that Microsoft is poised to benefit from
its perception as a software leader and a survivor and is also
benefiting from new product cycles.  In broader market sectors,
chemical issues rallied on strength in Dow Chemical (NYSE:DOW).
The company informed investors it will slash its global labor
force by almost 10% to achieve cost synergies from its merger
with Union Carbide.  Retail, gold and consumer products stocks
also moved higher while natural gas, oil, transportation, paper
and biotechnology issues generally declined.

The Spreads Portfolio enjoyed a number of bullish surprises in
today's session with most of the favorable activity coming from
the technology group.  Our new position in Ariba (NASDAQ:ARBA)
performed very well as the issue rallied over 10% on news the
company has extended its strategic alliance with International
Business Machines (NYSE:IBM).  IBM will use Ariba's products in
its WebSphere integration software and separately, Ariba also
made an agreement with BEA Systems (NASDAQ:BEAS) in which BEA's
WebLogic server will be the core infrastructure for Ariba's new
e-business products.  Traders who entered the bullish synthetic
position yesterday achieved a $0.50 profit in just one session.
Among the stocks in our telecom section, AT&T (NYSE:T) rallied
after announcing it will increase high-speed web access fees by
$6 per month.  The rate increase will affect most of AT&T's 1.3
million broadband customers and the additional revenue should
eventually bolster the company's bottom-line.  Spread positions
in WorldCom (NASDAQ:WCOM), Earthlink (NASDAQ:ELNK) and Sprint
(NYSE:FON) also profited from strength in the group.  InfoSpace
climbed to the sold strike at $5 in our bullish, time-selling
play and the spread is offering a $0.25 gain on $0.35 invested.
Among big-cap industrial issues, Lehman Brothers (NYSE:LEH) and
Progressive (NYSE:PGR) advanced and Active Power (NASDAQ:ACPW)
rallied to a new high near $25.  All of the bullish positions
in these issues are expected to finish at maximum profit.  The
only stocks on our "watch-list" are Chiron (NASDAQ:CHIR) and
Biochem (NASDAQ:BCHE) as the current bullish trends may boost
these issues to our sold (short) strikes in the coming sessions.

Questions & comments on spreads/combos to Contact Support

******************************************************************
                          - NEW PLAYS -

One of our readers asked for some new Covered-Calls with LEAPS
candidates in the technology group.  Here are three issues for
your review, based on the current price of the underlying stock
and its options, and its recent technical history or trend.
Please review each play individually and make your own decision
about the future outcome of the position.

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

NXTL - Nextel  $17.70  *** Growth Potential? ***

Nextel Communications (NASDAQ:NXTL) provides an array of digital
wireless communications services throughout the United States.
The company offers a differentiated, integrated package of unique
digital wireless communications services under the Nextel brand
name, primarily to business users.  The company's digital mobile
network utilizes a single transmission technology.  This digital
technology, developed by Motorola, is commonly referred to as the
integrated Digital Enhanced Network, or iDEN, technology.

Nextel reported its quarterly financial results today and though
their earnings per share were less than outstanding, investors
chose instead to focus on the company's revenues and subscriber
growth.  Nextel, the nation's largest independent mobile-phone
operator, lost $0.56 a share, slightly better than the company's
loss of $0.59 a share in the first quarter of 2000.  Revenue grew
48% to $1.7 billion, from $1.2 billion a year ago and despite the
company's recent spending cuts, Nextel continued to show solid
subscriber growth.  The company added 695,400 new customers
during the quarter, bringing its subscriber base is 8.3 million.
The company CEO says Nextel is on target to reach its goal of 2
million new subscribers and over $7 billion in revenue for 2001.

Traders who believe that Nextel's subscriber growth and rising
market share will turn the company around can speculate on that
outcome with this bullish, time-selling position.

PLAY (conservative - bullish/calendar spread):

BUY  CALL  JAN02-22.50  WFU-AT  OI=848   A=$4.50
SELL CALL  MAY01-22.50  FQC-ET  OI=1261  B=$0.40
INITIAL NET DEBIT TARGET=$3.90-$4.00  TARGET GAIN=100%

http://www.OptionInvestor.com/charts/may01/charts.asp?symbol=NXTL

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

NTAP - Network Appliance  $23.95  *** A Recovery In Sight? ***

Network Appliance (NASDAQ:NTAP) designs, manufactures, markets
and supports high performance network attached data storage and
access devices which provide fast, reliable and cost-effective
file service and content delivery solutions for data-intensive
network environments.  The company pioneered the concept of the
network appliance, an extension of the industry trend toward
specialized devices that perform a specific function in the
network, similar to the development of the router for network
communications.  The company's Internet caching solutions and
file servers deliver fast, simple, reliable and cost-effective
access to network-stored data and enable simultaneous shared file
services for UNIX, Windows NT, and the World Wide Web.

The recent slump in earnings among technology companies has been
primarily due to a drop in a demand and NTAP's rapidly growing
quarterly revenues have also succumbed to the drought.  Network
Appliance warned in early April that its fourth quarter would not
grow the expected 10%, but would instead fall an unbelievable 20%
to 25%.  The company CEO said that business "went absolutely dead
in the February/March time frame" and that its customers in the
Internet industry were buying absolutely nothing.  However, he
showed signs of confidence today at the J.P. Morgan Technology
Conference, noting there are new indications that large customers
are starting to put together project plans for the second half of
2001.  Network Appliance's first quarter started Monday, so the
company won't benefit from any increase in the next three months
but the CEO expects technology-sector sales to add to revenue in
the third and fourth quarters.  That's a very optimistic outlook
considering the projections for demand in the networking segment,
but there are signs from other industries that economic growth is
beginning to recover.

Traders can use this limited-risk position to attempt to profit
from a long-term rebound in the value of NTAP shares.

PLAY (conservative - bullish/calendar spread):

BUY  CALL  JAN02-30  YYE-AF  OI=701   A=$7.00
SELL CALL  MAY01-30  NUL-EF  OI=6998  B=$0.90
INITIAL NET DEBIT TARGET=$5.90-$6.00  TARGET GAIN=100%

http://www.OptionInvestor.com/charts/may01/charts.asp?symbol=NTAP

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

CSCO - Cisco Systems  $17.69  *** Bottom Fishing! ***

Cisco Systems (NASDAQ:CSCO) and its subsidiaries are engaged in
networking for the Internet.  The company's hardware, software
and service offerings are used to create Internet solutions so
that individuals, companies and countries have seamless access
to information, regardless of differences in time and place.
Cisco solutions provide a competitive advantage to customers
through more efficient and timely exchange of information, which
in turn leads to cost savings, process efficiencies and closer
relationships with their customers, prospects, business partners,
suppliers and employees.  These solutions form the networking
foundation for companies, universities, utilities and government
agencies worldwide.

Shares of technology stocks have rebounded during the past few
weeks from precipitous losses earlier in the year on increasing
optimism about the U.S. economic outlook.  Recent spending data
along with strong U.S. growth statistics have made a recession
seem less likely and today's report from the National Association
of Purchasing Management furthered the optimistic outlook for a
rebound in industrial growth.  The NAPM said its key gauge of
manufacturing edged up to 43.2 in April from 43.1 in March, the
third straight month of gains.  The NAPM also said a bounce in
new orders and shrinking inventories of unsold goods helped the
closely-watched index move higher and it was "encouraging" that
price pressures were moderating while the pace at which firms
were working off a buildup of inventories had increased.  Cisco
has been besieged by the decelerating economy as its products
are used in a number of different industries and the potential
for a recovery in its share value is closely tied to the growth
of the industrial segment.  Those of you who believe the worst
is over can attempt to profit from the future performance of a
networking and communications bellwether with this conservative
calendar spread.

PLAY (conservative - bullish/calendar spread):

BUY  CALL  OCT-20  CYQ-JD  OI=13474  A=$2.95
SELL CALL  MAY-20  CYQ-ED  OI=83563  B=$0.55
INITIAL NET DEBIT TARGET=$2.25-$2.30  TARGET GAIN=75%

http://www.OptionInvestor.com/charts/may01/charts.asp?symbol=CSCO

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


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