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Daily Newsletter, Thursday, 05/03/2001

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The Option Investor Newsletter                 Thursday 05-03-2001
Copyright 2001, All rights reserved.                        1 of 2
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MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        05-03-2001        High      Low     Volume Advance/Decline
DJIA    10796.70 - 80.00 10872.30 10723.60 1.11 bln   1227/1822 
NASDAQ   2146.20 - 74.40  2183.07  2129.07 2.01 bln   1449/2346
S&P 100   647.75 -  9.58   656.19   643.16   totals   2676/4168
S&P 500  1248.58 - 18.85  1264.43  1239.88           39.1%/60.9%
RUS 2000  485.65 -  5.99   490.45   484.45
DJ TRANS 2835.51 - 32.80  2869.63  2818.52
VIX        29.50 +  1.73    30.25    29.32
Put/Call Ratio      0.72
******************************************************************

Running Scared!

Stocks have been trending up +100% a month, the Dow just broke
12000 and the Nasdaq is nearing 5000 again. DING-DING-DING!
Investors were rudely awakened from their dreams by the opening
bell today as stocks plummeted on an increasingly grim outlook
and a bigger than expected Jobless Claims report. The constant
slow rise of the indexes over the last several weeks was
interrupted by a dose of reality.






The Initial jobless claims increased to 421,000 and continuing
claims (people still out of work) rose to 2,682,000. The continued
upward trend was due a surge in layoffs in March and April. The
only good news here is an almost certainty that the Fed will
continue to cut rates until the labor conditions ease.




Ironically, the Fed has been worrying about the low unemployment
rate for two years as fuel for inflation. Lack of skilled workers
had bid up the salaries for those willing to change jobs and this
increased cost was being passed on to consumers in inflated prices.
The surge in unemployment is actually helping to slow inflation
as out of work job seekers will take less money as a new hire
than a gainfully employed person seeking only to up their salary.
While the numbers may point to a continued weakening economy you
can bet the Fed is breathing easier. The four week moving average
is at the highest level since 1992.

The NAPM services index fell by -3.2% in April to 47.1%. This is
a clear indication that the economic slowdown is spreading to more
than the manufacturing sector. The consensus estimate was 50.2%
and this was significantly below that and the lowest level in years
and is seen as a leading indicator to the economy. The combination
of the Jobless Claims and the NAPM reports indicate that the Fed
still has several cuts in their future to stop the economic fall.




So the economy may still be sliding but tech stocks are always
favored by the markets six months before the actual rebound. Not
today! Novellus CEO said today that he does not expect a recovery
in orders for semiconductors until the fourth quarter of this year,
at best. The slowdown could continue into 2002. He added that his
own checks have found semiconductor plants working at between 30%
and 80% capacity - around the world and across all product lines.
Speaking at a Merrill Lynch conference he said he did not expect
to see any uptick in orders until the fourth quarter and it would
probably take one to two quarters after that before earnings would
start to improve.

If you multiply his sentiments across all the chip makers and
PC makers then it is possible the market bounce was two quarters
premature. To emphasize that point Compaq said today that the
second half of the year was going to be very tough. Prudential
said today that PC demand was still dropping and these comments
were echoed by Compaq. He did say the global markets were stable
but said he was starting to get worried about currency volatility.

UBS Warburg downgraded Dell today based on the accelerating price
war. With PC demand still slipping, Dell has pledged to be "ruthless"
in cost cutting which would be passed on to consumers as well.
This price war was expected by UBS Warburg to possibly cut Dell's
margins in half. Compaq CEO Capellas said his company was up to
the challenge and said they will be much more aggressive in pricing.
What is shaping up to be a massive price war is sure to be great
for consumers but the manufacturers will eventually be selling
computers at breakeven or less just to maintain operating assembly
lines and avoid laying off key employees. Not good for profits and
if the demand is still dropping we could be a year away from better
profits. A funny thing about price wars, once consumers become used
to paying much lower prices it is very hard to get them to pay
increased prices for those same goods in the future.

Based on their reassessment of the sector JPM and H&Q said today
that chip stocks were pricey and had risen too far too fast with
the rebound still not in sight. Kiss that sector goodbye! With
the chip sector a leading indicator for the Nasdaq all these
negative chip stories may have investors rethinking their jump
back into tech stocks.

The Nasdaq bumped up against resistance just above 2225 on
Wednesday and pulled back -74 on the concern about the aborted
chip rebound. The Dow broke the uptrend line in place since
April 4th and pulled back to light support at 10750 from Mar-26th.
The Dow attempted to rally at the close and recovered almost half
of the day's loss. The bargain hunting rally was half hearted at
best and the bears were probably slobbering with excitement that
maybe there was still a shorting opportunity available. The S&P
gave up -20 points of hard fought ground to close at 1248 and
significantly under the 1267 resistance from earlier in the week.

The grim news about the lagging tech revival was not unexpected
but the severity of the intraday drop caught many traders off
guard. I suggested last night that many traders with profits
were deciding whether to go flat or hold over the Non-farm
Payroll report on Friday. It appears the jobless claims this
morning struck fear into those traders and they ran for cover.
If not only tech stocks but also fast food companies, service
companies, oil companies, health care companies among others
are still warning daily then maybe the bounce was premature.
With that thought traders ran for the exits and I was
surprised to see any bargain hunting bounce at the close.

What happens tomorrow? Regardless of the market drop today
the investing sentiment is still bullish. It is very possible
that the nonfarm payrolls may be worse than expected but the
market may shake off the news assured that the Fed will cut
again anyway and we will be back in rally mode. Remember,
most mutual funds and retail investors do not make money
unless the markets are moving up. The underlying sentiment
is always up even when the bears are shorting everything in
sight. The last two weeks of rally were a breath of fresh air
for investors and they will want to buy anything that does
not look like a complete disaster. Buyers that were frustrated
by missing the boat on the last bounce have been given another
chance to buy a ticket. Now that very human emotion of doubt
comes into play. Early this week those investors were begging
for a pullback to give them another buying opportunity. Today
they got the pullback but now they are thinking, "is it just
a pullback or are we going to retest 9100 again?" Their trigger
fingers are suddenly paralyzed by doubt and worry. Isn't is
amazing how we investing humans are suddenly struck dumb by
the very thing we were asking for?

I painted this word picture to make one point. Traders
everywhere will be poised over their mouse tomorrow just
hoping for some sign that the market is going to rebound
again. Just some sign that they can hang their hope on
before pressing the buy button. If they get that in the
morning then we may be headed back up that yellow brick
road once again. If they see weakness they may become
frustrated once again and pull back into their shell and
wait for the lows to be retested. Let's hope for a vote
of confidence by portfolio managers at the open and
not a case of bears seeing their shadows again for six
more weeks of sell off.

Enter passively, exit aggressively!

Jim Brown
Editor





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

Ripe For A Pullback
By Bill Kaeiser

Okay, round 2!  I'm feeling well-rested and ready to battle the
charts again.  Format is changing, but never fear, only a little.
Below, you will find the major indices in bold with a brief
technical commentary and then, of course, key charts.  Within,
support and resistance levels are listed and discussed.  Enter
at your own risk!

NASDAQ & QQQ
Wednesday's rollover from 2232 and today's subsequent sell off
broke our trendline from early April.  The chart below is
basically the same as Tuesday with the addition of the retracement
bracket.  Support lies at 2000 still, the 38.2% retracement.
A pullback to this level wouldn't surprise me in the least bit.
It's part of the consolidation process after a 37% gain in the
tech index since April 4th.  Traders have big gains and wouldn't
be unhappy with a little take back from the first quarter.  While
a pullback is expected, the Nasdaq's relative strength lately
has been surprising.  Some of that fund cash was put to work, but
if those managers have learned anything in the past year, it's
that they must think more like traders than previously.  Can't
sit and watch a 75% winner take you to even, can you Janus?
The Nasdaq has resistance in the 2250 area, with Wednesday's
high being 2232.  I had to throw in a chart of the QQQs as well
because it is a perfect example of how market makers trade the
levels.  QQQ resistance is $49.50 and support is $43.43.  That's
not a coincidence.  I'd be a big buyer if we hit those 50% levels.






SPX & OEX
Resistance on the S&P 500 at 1273 was a pivotal point.  The levels
don't lie.  Previous resistance remained strong and traders used
that to take down recent profits.  Tuesday's chart showed the
double bottom near 1100 and upon further review, the SPX.X is
looking like a reverse head-and-shoulders(H&S).  The neckline
lies at 1270.  The price objective of such a breakout from this
formation is 1440, see the chart for the calculation.  Last time
the SPX.X traded there was early November 2000 and just happens
to be a resistance level.  Uncanny!  However, let's not start
being too long-term focused, I live to be myopic!  So in the
near-term, we are ripe for a pullback.  I mentioned on Tuesday
that the 38.2% retracement of April's rally sits right at 1200.
We are looking for support there.  The OEX.X, the S&P 100, has
resistance overhead at 660, with underlying support at 625 and
then 605.




DOW 30
It was the "10 9 Declination," as my colleagues around the office
have been preaching.  Scribbled across every whiteboard and email,
how could we be mistaken?  10900 on the INDU, indeed, proved to
be the pivot for the pullback.  It is a tough level.  With that
resistance overhead, 11000 isn't even a concern yet.  Today's low
on the INDU was 10723, as buyers stepped up once again wanting to
get their piece of the action.  From there, the Dow 30 rallied
back and clawed its way to finish at 10796.  With that said, we
continue to see short-term support at the 10725 area.  Whether
the INDU takes another run at 10900 level depends on tomorrow
morning's Employment Report.  Remember though, it's not the news
that's important, it's how the market reacts that's important.
Traders will be taking this data and applying it to expectations
of the Fed's next move on May 15th.  The market expects Non-Farm
Payrolls to add 25,000 jobs.




That's a wrap.  Another one down.  The new beast known as Market
Sentiment is taking shape.  Once we get a hold of that new COT
report due out Friday, I will offer some interpretation of the
data in a commentary format on Sundays.  I welcome comments and
compliments, however, I've never been big on complaints.  I just
read the charts.  Until Sunday, watch those levels.

Until we meet again,

Bill K.


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

Please visit this link for Market Posture:

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TRADERS CORNER
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The Roth IRA Silver Lining
By Rob Presley

In the fourth quarter of 1999, I left my job with a prominent
mutual fund reporting agency, bound for the endless wealth and
autonomy of my fellow computer brethren.  Armed with my "extensive"
knowledge of the financial markets and recently acquired
programming abilities, I was certain that I possessed a unique
set of qualities that would soon entitle me to the elusive pot
of gold so artfully insinuated by the woman who sold me the
programming classes.

Ah, isn't na´vetÚ a beautiful thing?  Perhaps in one's children
but, certainly not when in accordance with career decisions!
Unfortunately, I was about to learn an even harder lesson.  And in
the end, this one would cost quite a bit more than those
programming classes long rolled over into the second mortgage.

I've often heard that those of us directly involved in the markets
on a daily basis have horrible credit, make hasty investment
decisions, and all too frequently ignore the resources we have so
close at hand.  Needless to say, these are caveats that only apply
to the other guys!  As one of the many market gurus to show up to
the Technology party several years ago, I knew where to invest my
assets - Technology.

Alright, so I was 60% invested in tech.  This obviously flew in
the face of all that I had learned regarding diversification but I
was primarily in mutual funds - inherent diversification, right?
Hardly!  I watched my glowing brilliance become beyond impressive
over the course of the next several months as my nest egg ballooned
from $40,000 to well over $80,000.  And I never sold a damn share
of any of those funds!

Virtually anyone who has been alive over the course of the last
two years knows what happened then.  Assets were sliced in half.
My word, what a painful experience!  I mitigate my incredulous
stupidity with reassuring anecdotes like, "I'm there for the long-
term," or "It'll come back."  Well, here is my latest attempt at
cathartic mitigation of my past ignorance.  It's time to convert
that Traditional IRA to a Roth IRA - I'm all about silver linings!
You be the judge, but I think this one is pretty good.

Back in 1999 I looked into the whole Roth thing and it did sound
pretty good.  That was the last year that you could convert your
entire IRA account to a Roth IRA and spread the applicable taxes
over the course of the next four years.  Fortunately, I opted for
the regular IRA because I didn't feel comfortable saddling myself
with a $3,000 tax bill for the next 4 years.  Hindsight, especially
if I apply the blinders, has proven me quite the smart guy.  When
the Dot Bomb burst, I was one of the first on the chopping block
and was laid off shortly thereafter.

Here is the scenario.  Now that my IRA is around the $20,000 mark,
my tax bill for converting the account has been cut in half.  All
back patting aside, I'm well aware that my paper loss of 50% is a
far cry from what I'm taking from the tax man.  And the fact that
the full tax amount is due at the end of the tax year in which the
conversion of the account took place has not escaped me either.

There is an alternative to moving the entire account, though.
Take those assets that have declined most precipitously and move
them into your new Roth account.  In other words, take all of your
under water technology holdings, whether they be stocks or funds,
and capitalize on the much lower cost basis at the point of
conversion.  The tax bill isn't due until you file next year and
there is a good chance that a retroactive Bush tax cut could pad
the bill some too.

I remain convinced that the current valuations of many core
technology companies are still well beneath fair levels and
therefore, the sector will rebound.  Because any gains or losses
on these particular investments won't be realized, I'm not
actually losing any money and I am getting the tax benefit.

The original value of the IRA was $40,000.  Taxes would have been
approximately 30%, or $12,000.  Had I utilized the payment option
over 4 years, I would be paying about $3,000 per year.  Let's
convert the full $20,000 value of the current portfolio.  Tax is
half the original amount- $6,000.  I'm not willing to fork that
over just yet so, I'll just wade through a few of the hardest hit
and move those.

In retrospect, I paid too much for my tech funds and I'm quite
thankful that my time horizon is significantly longer than it is
for my taxable account.  And while it's never my goal to lose money,
current valuations present an opportunity that has not been
available for quite some time.  I've also learned over the last
couple of years that although Retirement accounts are meant to be
long-term investments, profit realization is an integral part and
your assets must be actively managed regardless of the account type.
The lesson has the potential to be expensive, but I'm going to do
whatever I can to continue to defer my tuition.





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:
*****

BRCM $43.79 -4.57 (+5.53) It's been a fun ride up on Broadcom
as this former high flyer regained some of its old momentum.
However, profit taking on the Nasdaq and the semiconductor sector
occurred today, and BRCM fell hard and fast.  The SOX.X has
been unable to penetrate stiff resistance at the 680 level,
and without further strength in the SOX.X, BRCM may very well
suffer.  As the stock closed below our stop level of $44, we
are dropping it tonight.

EMC $40.09 -3.91 (+0.91) EMC's run through $45 was promising in
yesterday's session, but unfortunately, the trading didn't offer
us a productive entry.  It was the strong profit taking that
tipped the scales and took us out of the EMC play today.  Fellow
stock, SNDK, also saw the same type of performance as the NASDAQ
continued to play havoc with investors' technology portfolios.


PUTS:
*****

No dropped puts tonight





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The Option Investor Newsletter                 Thursday 05-03-2001
Copyright 2001, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.

To view this email newsletter in HTML format with embedded
charts and graphs, click here:
http://www.OptionInvestor.com/htmlemail/050301_2.asp





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

RE $63.30 +1.30 (-0.94) It appeared as if RE had lost momentum
and might even close below our stop level of $62 today, however,
right at the close RE surged up $1.30 past its 5 dma of $63.24
with strong volume.  This coincided with a surge in the insurance
sector over its 200 dma of 746.72 near the close.  This is
particularly impressive considering that the insurance sector has
suffered over the last two days after Cigna reported that their
costs had been rising and enrollment had been falling.  However,
speculation regarding a possible takeover of Independent Insurance
hit the news today, and helped the sector regain momentum.  As a
defensive stock, RE may climb upon additional weakness in the
technology sector, and a break above the 50 dma of $64 with
heavy volume would be a good entry point.  If RE can clear this
level, it would be well positioned to resume its upward channel
toward the next resistance level at $65.  Monitor other stocks
in the property and casualty insurance sectors like PGR and CB,
and keep closing stops set at $62.

AOL $50.65 -0.96 (+0.66) The climb's been steady and sure;
although a bit painstaking.  Today, AOL stumbled along with the
likes of VIA.B and GMST as the uncertainty over negotiations
between Hollywood writers and producers continues to worry
investors.  Overall, it's been a topsy-turvy week despite a
ratings boost to BUY from Raymond James & Associates.  The share
price rolled along a narrow pipeline with support holding firm
at the previous $50 resistance.   Playing the spread however,
provided traders with profitable opportunities as the share
price tottered back and forth with the major indexes.  Momentum
traders might find entries on a visible break through $52 amid
heavy volume, locking in gains as AOL approaches the $55 to $58
area.  Keep CLOSING stops in place at the $50 mark.

AEOS $37.99 -1.21 (+0.38) After spiking as high as $39.96 on
Tuesday, which corresponded to a move in RLX.X above the 910
level, AEOS has once again fallen back from the nearly
impenetrable resistance level of $40.  Considering the overall
weakness in the major indexes, AEOS held up well on Thursday,
and closed above the 10 dma of $36.88.  In addition, RLX.X was
able to close at the 900 level, which bodes well for this play
moving forward.  AEOS is going to need additional momentum and
strong volume to penetrate the $40 level, which has eluded the
stock for years.  However, a strong bullish wedge has been
forming with resistance at $40, and a favorable employment report
on Friday might just provide enough momentum to break the $40
level.  The stronger the resistance eludes the stock, the
stronger the momentum will be once it breaks out, and a true
breakout could bring AEOS to a new all time high.  Conservative
traders might want to wait for strong volume to propel the stock
above $40 before taking positions.  Alternatively, traders could
take positions upon a move above $38.50, if RLX.X is exhibiting
strength.  We are setting closing stops at $37, so be prepared
to exit positions if AEOS closes below this level.

C $51.00 +0.40 (+0.09) The past couple of days have been slow but
steady gainers for our call play in C.  This can be seen as good
news however, as shares of the leading financial services
provider and major DOW component have moved higher in the face of
weakness in the NYSE.  News that the company would be selling
$2.5 billion in notes was well received, as the stock moved
fractionally higher yesterday.  Citibank is one of the first
companies to take advantage of the lower interest rates, which
make up a great part of the cost of doing business in the
Financial sector.  Today, C held firmly, posting a positive day
on what was a down day for the broader markets.  Aggressive
traders may buy bounces off the 5, 10 and 50-dma at $50.41,
$49.74 and $50.17 respectively along with support at $50 and our
closing stop price of $49.  Conservative traders will be waiting
for C to take out its 200-dma at $51.57 on volume before jumping
in, confirming upward momentum using AMEX's Banking Index (BIX).

FDC $66.13 -0.97 (-0.27) Since making a new all-time closing high
on Monday, shares of electronic transaction giant FDC have been
in consolidation mode.  Moving sideways in weak to average
trading volume, the range has been narrow, with support below at
$66 and resistance overhead at $68.  Yesterday, on positive
retail news from its check acceptance division Telecheck, the
stock managed to buck the NYSE downtrend, ending the day up
fractionally on average volume.  Today however, FDC pulled back,
retreating 1.45 percent.  The good news is, the stock bounced
strongly off its 10-dma at $65.64.  Another successful test of
this level, along with our closing stop price of $65 may allow
higher risk players to take a position.  Just make sure that
rivals FISV and PAYX are also heading higher.  For the more
cautious, wait for FDC to move back above the $67 on volume
before making a play.  From there, the stock should be poised to
once again challenge $68.

LAB $38.40 -0.20 (+2.91) After the heavy volume break through its
50 and 100-dma on Tuesday, a healthy pause may not only provide
the strength necessary to move higher, but also give traders a
potential opportunity to make a play.  Trading in the past couple
of session has been narrow and on dramatically decreased volume.
Fans of candlestick charting will note the two doji star
formations, signifying indecision.  The proverbial spring is
coiling in this play, suggesting that the next move could be a
strong one.  Moving average support below is strong, with the 5,
10, 50 and 100-dma at $37.43, $36.06, 36.88 and $36.63, allowing
aggressive players to take a position.  Just be aware that we are
tightening our closing stop, from $36 to $37.  For an entry on
strength, conservative traders will be watching for a break above
formidable resistance at $39 on volume for an entry point.  In
both cases, correlate entries with movement in competitors NITE
and SCH.

BRCD $46.14 -3.80 (+10.52) Triggered by negative economic
reports this morning, the profit takers showed up early and
stuck around for most of the day.  Storage stocks took it on the
chin, but BRCD managed to hold its ground above the $45 support
level.  A mild bounce at the close indicates that the buyers
have not given up on either the stock or the sector.  So was the
mild closing bounce an entry point?  Only time will tell, but
the prudent approach was to wait for the Employment numbers
tomorrow morning and see how they move the market.  Our stop is
still at $45, so we need to see BRCD hold above this level to
keep our play alive and kicking.  A bounce near this level
tomorrow morning looks good for new entries, although more
conservative traders may want to wait for buying volume to push
the stock back above $48 before taking a position.  One
encouraging point was the fact that selling volume was less than
the ADV, while the volume on yesterday's buying frenzy was well
over double the ADV.  Clearly the bulls are still in charge, but
their dominant position could be in danger if the NASDAQ can't
hold its ground tomorrow.  Remember that earnings are set for
May 15th, the same day as we will get the interest rate verdict
from the FOMC.

LLY $85.32 -1.08 (+2.52) Profit taking hit the Drug sector
today, but it was fairly mild and orderly.  A significant
contributor to the weakness could have been the selling that
took place in the HMO sector after CI reported dismal earnings
last night.  After falling back to the $84.50 level early in the
day, LLY saw buyers gradually return.  As the major indices
vacillated near their lows of the day, buying volume in LLY
gradually increased, propelling the stock back up to recover
half its intraday losses.  Volume seems to confirm that today's
action was simple profit taking as it came in at only two-thirds
the ADV, significantly less than yesterday's 3 million shares.
The stock is continuing to hold above the upper channel line
that it broke above on Monday, and support seems to be
strengthening near $84, the location of our stop.  Aggressive
entries can still be considered on a bounce between $84-85, so
long as the Pharmaceutical index (DRG.X) continues to maintain
its emerging uptrend.  A good sign at this juncture would be if
we saw the DRG.X move up through resistance near $397.

SEBL $45.99 -1.91 (+0.29) The recent uptrend was due for a pause
and negative economic reports this morning were the catalyst.
It was quite encouraging to see SEBL keep its losses small as
selling seemed to hit every sub-sector of the Technology market.
Not only was the magnitude of the loss small, but it came on
fairly weak volume as well; only two-thirds of the ADV.  One
factor helping the stock to remain afloat today was Goldman
Sachs analyst Rick Sherlund stating that the Software sector
would likely be the first to recover in the downtrodden
Technology world.  Sure enough, our short-term trendline
(currently at $45) held up as support as the sellers failed to
break through our stop at the same level.  Aggressive traders
might have taken a position near the close today, as buying
volume began to pick up, the more prudent strategy would have
been to wait for confirmation of returning strength after the
opening bell tomorrow.  Conservative entries still look best on
a break through the $48 resistance level, preferably on
continued strong buying volume.  Remember to keep an eye on the
GSTI Software index (GSO.X) to gauge sentiment in the sector.
If it can move through the $238 resistance level, SEBL will
likely continue to set new recent highs.


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

IDPH $45.10 -1.44 (-4.35) While it appeared last week that the
biotech sector was beginning to exhibit strength, today's trading
told a different story, as BTK.X rolled over from 564 to lose
almost 5% in a broad market sell-off.  After plunging from $50
to the $46 level earlier in the week, IDPH opened with a gap
down, and spent the entire day consolidating within a half a
point above and below strong support at $45.  If $45 fails, the
next support level is $42.50.  Below that, we could be looking
at a free fall, as support is light underneath $40 until the
$35 level is reached.  With additional weakness in the broad
market indexes and BTK.X, this is a real possibility.  Traders
should wait to assess the market's reaction to the employment
report on Friday before taking positions.  An aggressive entry
point could be another roll over from $46.50.  Alternatively,
wait for a break below $45 with heavy volume before taking
positions if you are a more conservative trader.  We are moving
closing stops to $49 in light of market action.

TBL $48.51 +0.51 (+1.46) Day traders could have picked up a
point on Wednesday from TBL's rollover from $48 to $47.  While
the stock seemed to exhibit strength today amid a weak market,
the long term trend line established in January is still intact,
and it would take a strong break and close above $50 to reverse
this pattern.  At this point, TBL is positioned to rollover
upon a failed rally from $48.50, which would be an excellent
entry point.  For more conservative traders, a fall below $48
with heavy volume would most likely lead to the next support
level of $47.  A break and close below $45.50 would be a very
bearish indicator, and another conservative entry point.  Put
players should try to time their entry points to coincide with
overall market and sector weakness.  Continue to monitor the
specialty apparel footwear sector, like NKE and RBK, and keep
closing stops at $50.

SGR $57.30 -0.50 (-0.20) Shares of energy infrastructure provider
Shaw have been in slow-descent mode since peaking in mid-to-late
April.  While the stock usually moves closely with the Energy
sector, the recent divergence has revealed SGR to be more of a
leading indicator.  With energy-related stocks now heading lower,
SGR continues to drift southward.  There has been a distinct lack
of news from the company so far this week, so technical factors
could take center stage in trading the stock.  The 5 and 10-dma,
now at $57.72 and $58.82 respectively, which provided the support
for SGR's April rally, have now acted as formidable resistance in
the stock's decline as of late.  Aggressive traders may look for
failed rallies above these levels as potential entry points, but
make sure that SGR stays below our closing stop price of $59.
Strong selling pressure leading to a bearish plunge below $56
could allow conservative traders to enter, provided that sector
sisters MLI and KMT are also showing weakness.

AMAT $52.60 -2.09 (-1.29) Semiconductor stocks were on the
chopping block again today, especially after Tucker Anthony
Sutro issued a series of downgrades for the Semiconductor
Equipment Manufacturers this morning.  Leading the downgrade
list was our play, AMAT, which dropped from Market Perform to
an Underperform rating.  Prompting the downgrade was the
perception that the industry slump will be longer and deeper
than originally expected.  That was enough to push the stock
below $53, but the $52 level is still providing support due to
stubborn bulls.  The fact that the stock couldn't really recover
into the close prompts us to lower our stop to $54, just above
the gap down open this morning.  Aggressive traders will want to
target shoot new entries on any intraday strength, so long as
this resistance level remains intact.  The more conservative
approach will still be to wait for a drop through the $52
support level, confirmed by continuing weakness on the
Semiconductor index (SOX.X).  Don't forget, earnings are set to
be released on May 15th, the same day as the FOMC announces its
next move on interest rates.





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

AGGRESSIVE:

MO - Philip Morris Companies Inc. $51.60 +0.59 (+0.63 this week)

With 2000 underlying operating revenues of $80.3 billion,
($88.3 billion assuming Philip Morris owned Nabisco for all
of 2000) the Philip Morris family of companies is the world's
largest producer and marketer of consumer packaged goods.
Philip Morris Companies Inc. has five principal operating
companies :  Kraft Foods Inc., Miller Brewing Company,
Philip Morris International Inc., Philip Morris Incorporated,
and Philip Morris Capital Corporation.

Just over a year ago last May, MO hit a 52-week low of $22.81,
but since last October, the stock has been on a tear and has
formed one of the strongest charts on the exchanges from a
purely technical viewpoint.  After recovering from a brief
dip below the 50 day moving average in March, MO has resumed
its strong upward trend, reaching a 52-week high of $52.35 on
Tuesday.  After years of suffering with seemingly endless
litigation, as well as the stigma of being an old economy
stock in a new economy world, MO is back with a vengeance.
This week, the company announced news which is likely to
propel the shares even further in the coming weeks.  On
Wednesday, Philip Morris announced that they had filed a
registration statement for an IPO of their Kraft subsidiary.
Kraft Foods plans to issue 280 million shares in a huge IPO
offering expected to raise $7.3 to $9.5 billion, which would
make it the second largest IPO in U.S history.  This should
result in a windfall cash profit to MO, which will be used
to pay off the Kraft Foods debt.  In addition, MO will retain
97.7% voting rights by owning all of the class B shares to be
issued.  Over 13 major investment banks are expected to
participate in the offering, which is expected to be completed
by the end of the second quarter, which is the end of June.
MO's firm, steady chart and exciting IPO news should attract
retail and institutional investors to the stock in the weeks
ahead.  Traders can take positions at the current levels, or
at a break above $52 on heavy volume of over the daily average
of 7.6 million.  A pullback to support at the 5 dma of $51.2
would be a more aggressive entry point.  Monitor others like
RJR, and set a liberal closing stop at $49 as we want to give
MO some space to work higher into the IPO of Kraft.

BUY CALL MAY-47.5 MO-EW OI= 4213 at $4.60 SL=2.75
BUY CALL MAY-50  *MO-EJ OI=17264 at $2.55 SL=1.25
BUY CALL JUN-47.5 MO-FW OI= 8713 at $5.50 SL=3.50
BUY CALL JUN-50   MO-FJ OI=26065 at $3.70 SL=1.75

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


STOR - StorageNetworks Inc $13.87 +0.89 (+3.93 this week)

StorageNetworks is a provider of storage management services and
developer of storage management technology.  It operates in two
distinct business segments: managed storage services and
professional services, which assist customers in assessing their
data storage needs and designing appropriate data storage
systems.  Most of StorageNetworks' sales come from monthly fees,
as well as consulting and related data storage services.  The
company is currently expanding its network, which currently
includes more than 20 data centers in 11 US metropolitan areas
and one in the UK.

In recent months, the share price has been regaining ground as
the company met earnings expectations and the outlook grows
stronger.  But yesterday's storage deal with Ford Motors was the
catalyst that launched STOR upward almost 50% on five times the
ADV in the past two sessions!  The Buy recommendation by Thomas
Weisal partners was a nice touch, too.  But let's not mince
words when it comes to our play on STOR.  It's AGRRESSIVE.  We
took notice of the inverse head-and-shoulders formation and
importantly, the convincing break above the $13.50 neckline amid
today's bullish action.  These technical developments set this
low-priced stock up for a big rally, if all comes to fruition
over the short-term.  In consideration of the risky nature of
the play, we're keeping a tight leash on STOR.  We've set our
CLOSING stop at $12.50, which is above the 5, 10, 30 and 50
DMAs.  Volatile intraday trading could however, provide
aggressive entry points in the lower $10 and $11 range;
especially for the target shooters.  A high-volume move through
$14 and $15 unmistakably gives the green light to jump into the
play, with stops in place of course!  The upside momentum might
find some resistance around the $17 level, although the real
challenge is at $20.  Take a look at a chart covering the last
three to four months for visual confirmation.  It's also
important to note that STOR's recent charge is in direct
divergence with the broad technology sector; therefore, pay
particular attention to the stock's minute subtleties as you
trade.

BUY CALL MAY-10   OSU-EB OI=1142 at $4.40 SL=2.75
BUY CALL MAY-12.5*OSU-EV OI= 956 at $2.60 SL=1.25
BUY CALL MAY-15   OSU-EC OI= 796 at $1.30 SL=0.75
BUY CALL JUN-12.5 OSU-FV OI= 178 at $3.50 SL=1.75
BUY CALL JUN-15   OSU-FC OI=  74 at $2.45 SL=1.25
BUY CALL JUN-17.5 OSU-FW OI=  86 at $1.65 SL=0.75

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


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

AGGRESSIVE:

GMST - Gemstar-TV Guide $40.51 -2.60 (-0.60 this week)

Gemstar-TV Guide International develops, markets and licenses
proprietary technologies and systems that simplify and enhance
consumers' interaction with electronics products and other
platforms that deliver video, programming information and other
data.  The company's first proprietary system, VCR Plus+, is
currently incorporated into virtually every major brand of VCR
sold worldwide.  The company has also developed and acquired a
large portfolio of technologies and intellectual property to
implement interactive program guides (Gemstar Guide Technology),
which enable consumers to navigate through, sort, select and
record television programming.

After more than doubling in value in the month of April, it
appears that shares of digital media provider GMST may now be due
for a breather.  A strong market for tech stocks recently, along
with bullish news from the company, helped to drive the stock
strongly higher last month.  The company launched an online
version of its TV Guide as part of its Internet strategy.  As
well, GMST won a major customer in signing a 10-year agreement
with Congeco Cable.  A deal with NewCorp, which became the
company's largest shareholder with a 17 percent stake, was also
well-received.  Despite this however, the technicals suggest that
a pull-back is not only necessary, but likely.  This past week
has found GMST struggling to break and stay above its 100-dma,
now at $42.66.  This major moving average has acted as formidable
resistance, keeping a lid on the stock price since late last
year.  Today's fall of over 6 percent also put GMST below its 5
and 10-dma, at $41.87 and $40.55 respectively.  Rollovers as the
stock approaches moving average resistance may allow aggressive
traders to take a position, but confirm with selling volume.
Horizontal resistance may also be found at $41, $42.50 and our
closing stop price of $43.  Conservative traders may target a
break below psychological support at $40 for an entry on weakness.
Track sector sentiment by keeping an eye on other digital media
issues such as SFA and WINK.

BUY PUT MAY-40*QLF-QH OI=1875 at $3.20 SL=1.75
BUY PUT MAY-35 QLF-QG OI=3565 at $1.30 SL=0.75

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


JNPR - Juniper Networks $60.82 -4.29 (+5.80 this week)

As a provider of Internet infrastructure solutions, JNPR serves
Internet service providers and other telecommunications service
providers, helping them to meet the demands resulting from the
rapid growth of the Internet.  The company delivers next
generation Internet backbone routers that are specifically
designed for service provider networks.  The routers provided
by the company combine the features of the JUNOS Internet
Software, high performance ASIC-based packet forwarding
technology and Internet-optimized architecture into a
purpose-built solution for service providers.

The Networking sector has been one of the leaders throughout the
recent NASDAQ rally, but it is looking a little long in the
tooth as evidenced by the strong pullback in today's session.
After coming right up to resistance at 495 (also the site of
the 8-month descending trendline), the Networking index (NWX.X)
pulled back for more than a 5% loss today.  Mirroring the broad
sector, JNPR fell back too, losing more than 6.5% on slightly
less than average volume.  Resistance seems to be solidifying in
the $68 area, with bearish divergence beginning to appear on the
daily Stochastics oscillator.  Ending the day right on the
one-month ascending trendline, JNPR hasn't yet completely broken
down, but it is very close.  Falling below $60 will complete the
technical violation and open the door for conservative traders
to take a position.  Those that can take on a little more risk
will want to target failed intraday rallies as their opportunity
to enter the play.  While solid resistance sits near $68, we
want to limit our risk by focusing on the intraday resistance
between $63-64 created by today's gap down open.  Place stops at
$64 and confirm weakness in JNPR by watching for more weakness
on the NWX.X.

BUY PUT APR-65 JUX-QM OI= 7211 at $8.00 SL=5.75
BUY PUT APR-60*JUX-QL OI=14761 at $5.10 SL=3.00
BUY PUT APR-55 JUX-QK OI= 5998 at $3.70 SL=2.25
BUY PUT APR-50 JUX-QJ OI= 8678 at $2.20 SL=1.00

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


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

IDPH - Idec Pharmaceuticals Corp. $45.10 -1.44 (-4.35 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.

Most Recent Write-Up

While it appeared last week that the biotech sector was beginning
to exhibit strength, today's trading told a different story, as
BTK.X rolled over from 564 to lose almost 5% in a broad market
sell-off.  After plunging from $50 to the $46 level earlier in
the week, IDPH opened with a gap down, and spent the entire day
consolidating within a half a point above and below strong
support at $45.  If $45 fails, the next support level is $42.50.
Below that, we could be looking at a free fall, as support is
light underneath $40 until the $35 level is reached.  With
additional weakness in the broad market indexes and BTK.X, this
is a real possibility.  Traders should wait to assess the
market's reaction to the employment report on Friday before
taking positions.  An aggressive entry point could be another
rollover from $46.50.  Alternatively, wait for a break below $45
with heavy volume before taking positions if you are a more
conservative trader.  We are moving closing stops to $49 in light
of market action.

Comments

The broader biotech sector, as measured by the Biotechnology
Index (BTK.X), recently rolled over near the high of its
descending channel around the 575 area.  That rollover is
gaining momentum to the downside and it looks as if the BTK
could make its way towards the 500 level.  For its part, IDPH
traded poorly Thursday and traders could look to enter new put
positions on a break below $45 early Friday.  Those who would
prefer entering on weakness might look to take new positions
if IDPH takes out its intraday low Thursday of $44.45.

BUY PUT MAY-50 IDK-QJ OI=561 at $6.30 SL=4.25
BUY PUT MAY-45*IDK-QI OI=492 at $3.30 SL=1.75

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





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

Fear And Profit-Taking Stalls The Technology Rally!

Stocks tumbled today after an increase in jobless claims and new
indications of slowing growth rekindled fears the U.S. economy is
headed for a recession.

Wednesday, May 2

Technology stocks extended their recent rally today on strength
in Internet and networking issues.  The NASDAQ finished 52 points
higher at 2,220, its highest closing level since early March.  The
Dow retreated after hitting resistance at 10,900, closing down 22
points at 10,876.  The broader market S&P 500 index was unchanged
at 1267.  Trading volume on the Big Board hit 1.34 billion shares
with advances and declines finishing at similar levels.  On the
NASDAQ, volume was extreme with 2.57 billion shares exchanged and
winners beating losers 12-to-7.  In the bond market, the 30-year
Treasury rose 16/32, pushing its yield down to 5.69%.


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

Cisco     (NASDAQ:CSCO)   OCT20C/MAY20C   $2.60   debit  calendar
Net. Appl.(NASDAQ:NTAP)   JAN02-30/M30C   $6.50   debit  calendar
Nextel    (NASDAQ:NXTL)   JAN02-22/M22C   $3.95   debit  calendar

Today's rally made it almost impossible to achieve the target
prices in our new positions.  The Nextel spread finally offered
a good entry opportunity late in the session but Network Appliance
and Cisco traded higher at the open and did not retreat throughout
the day.  With today's market strength, traders began to buy-in
without regard to the price of an issue (so they won't miss the
rally).  That's often a sign of too much bullish market sentiment
and usually precedes a correction.  Only you can decide when and
what price a new position should be initiated in your portfolio.


Portfolio Plays:

The NASDAQ rallied today with networking stocks extending recent
gains on renewed strength in Cisco Systems (NASDAQ:CSCO).  The
communications networking bellwether jumped to $20 after Morgan
Stanley said positive data on networking spending is becoming
evident.  Internet stocks also advanced and semiconductor issues
received a boost after news of an optimistic note from Goldman
Sachs, which said stocks have probably seen their lows.  Stocks
in the wireless telecom sector rallied after Bear Stearns said
industry fundamentals are intact and concerns about subscriber
growth are overdone.  The rotation to technology issues weighed
heavily on the Dow and weakness in the oil segment toppled the
broader markets.  Oil and oil service stocks came under selling
pressure after an unexpected increase in crude stockpiles.  The
American Petroleum Institute reported crude supplies rose 8.28
million barrels last week to 322 million barrels, their highest
level since August 1999, when crude prices were at $6 to $7 per
barrel.  Exxon-Mobil (NYSE:XOM) was one of the biggest losers on
the blue-chip average, falling to $86.  Shares of Philip Morris
also led the industrial index lower while International Business
Machines (NYSE:IBM), Microsoft (NASDAQ:MSFT) and AT&T (NYSE:T)
were among the weaker technology components.

Our portfolio experienced some bullish activity in a number of
technology issues and the most significant moves were seen in
small-cap stocks.  Sprint (NYSE:FON) was an unexpected leader in
telecom group, closing at a recent high near $20 and Earthlink
(NASDAQ:ELNK) climbed to its highest price in 9 months at $13.06.
The bullish calendar spread offered a $1.40 closing credit (a 40%
gain in 6 weeks) during today's session.  Our new synthetic play
in Ariba (NASDAQ:ARBA) benefited from the upside activity and the
position achieved an $0.85 credit in just three days.  That is a
very favorable early-exit profit based on the collateral required
for the sold (short) Put at $7.50.  Infospace (NASDAQ:INSP) was
another low-risk speculation issue and today's impulsive rally
provided a closing credit of $0.70 (a 100% gain) in the recent
time-selling position.  Visx (NYSE:EYE) climbed above $22 during
the session as speculation about a potential buyout continued to
attract investors and the SEP-$30 call was offered at $1.25; a
$0.30 gain for traders were looking for an early exit after last
Friday's retreat.  On the downside, Unitedhealth Group (NYSE:UNH)
dropped over $2 amid weakness in the healthcare sector and those
of you participating in the bullish synthetic position should
monitor the issue for a close below near-term support at $60.


Thursday, May 3

Stocks tumbled today after an increase in jobless claims and new
indications of slowing growth rekindled fears the U.S. economy is
headed for a recession.  The NASDAQ ended down 74 points at 2,146
and the Dow was down 80 points at 10,796.  The S&P 500 index was
down 18 points at 1,248.  Trading volume on the NYSE reached 1.10
billion shares with declines beating advances 9 to 6.  Activity
on the NASDAQ was average at 1.99 billion shares exchanged with
winners beating losers 23 to 14.  In the bond market, the 30-year
Treasury rose 29/32, pushing its yield down to 5.64%.


Portfolio Plays:

Technology stocks slumped today as investors moved to lock-in
profits after a string of bullish sessions.  Industrial issues
also retreated as the selling pressure spread to the broader
market.  The NASDAQ was hammered from the open and technology
losses extended as the session progressed with the majority of
selling in Internet and networking shares.  Computer hardware
stocks also declined and semiconductor shares slid lower after
Novellus Systems' (NASDAQ:NVLS) CEO Richard Hill said he thinks
the earliest that chip-equipment companies will see an up-tick
in demand is the fourth quarter of 2001.  Communications chip
companies were weak with Vitesse Semi (NASDAQ:VTSS) leading the
segment lower after announcing it will reduce its work force by
12%.  The Dow succumbed to downward movement in its technology
components and pushing the blue-chip average lower were shares
of Intel (NASDAQ:INTC), SBC Communications (NYSE:SBC), Hewlett
Packard (NYSE:HWP) and International Business Machines (NYSE:IBM).
International Paper (NYSE:IP) and Caterpillar (NYSE:CAT) were
among the weaker industrial issues.  The broader market was also
a sea of red with biotechnology, financial, gold, major drug and
cyclical stocks generally consolidating.

The Spreads Portfolio ended the session with mixed results as a
number of bullish positions were negatively affected by the new
downward trend while bearish spreads and premium-selling plays
flourished.  There were also a few winners among select sectors,
even as the broader market moved lower.  Progressive (NYSE:PGR)
and Liz Claiborne (NYSE:LIZ) ended the session higher and Cirrus
Logic (NASDAQ:CRUS) rallied almost $4 to a recent trading range
near $20.  Our original bullish calendar spread in the issue is
long at $30 (in September) and we will plan to sell the JUN-$30
Call as the stock moves higher, to lower our cost basis in the
position.  Among the bearish plays, Minnesota Mining (NYSE:MMM)
appears comfortable at its current price (well below our short
option at $125) and the rebound in Biochem Pharma (NASDAQ:BCHE)
has stalled near short-term resistance at $34.  Our selection
of premium-selling issues, Chiron (NASDAQ:CHIR), Shire Pharma
(NASDAQ:SHPGY) and Veeco (NASDAQ:VECO) are currently mired in
the middle of their respective ranges.  Today's consolidation
also provided some excellent entry points in our new calendar
spreads and traders who had the patience to avoid chasing the
rally were rewarded with excellent opening prices for those
positions.

Questions & comments on spreads/combos to Contact Support

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

MER - Merrill Lynch  $66.00  *** Reader's Request! ***

Merrill Lynch (NYSE:MER) is a holding company that, through its
subsidiaries and affiliates, provides investment, financing,
advisory, insurance and related products and services on a global
basis.  Merrill Lynch provides these products and services to a
wide array of clients, including individual investors, small
businesses, corporations, governments, governmental agencies and
financial institutions.  Merrill Lynch has three major business
segments, the Corporate and Institutional Client Group, the
Private Client Group and Merrill Lynch Investment Managers.  The
company provides financial services worldwide through various
subsidiaries and affiliates that frequently participate in the
facilitation and consummation of a single transaction.  Merrill
Lynch has organized its operations outside the United States into
five regions, Europe, Middle East and Africa; Japan; Asia Pacific
and Australia; Canada, and Latin America.

One of our readers requested some suggestions for bullish option
plays in this issue, based on the recent recovery in brokerage
stocks and the potential for additional upside activity in the
banking and financial services industry.  Indeed lower interest
rates typically mean good news for brokers because when lending
and borrowing rates fall, business improves and the spotlight has
recently been on the major players in this group, including MER,
as the company posted favorable quarterly earnings.  Despite the
slumping stock market, Merrill beat consensus estimates of $0.90
a share by two pennies and the company held onto its position as
the top global underwriter of debt and equity services, with an
increased market share of 13%.  Traders who believe the sector
will continue to rebound in the coming weeks can profit from that
outcome with these bullish positions.

PLAY (conservative - bullish/credit spread):

BUY  PUT  MAY-55  MER-QK  OI= A=$0.30
SELL PUT  MAY-60  MER-QL  OI= B=$0.80
INITIAL NET CREDIT TARGET=$0.60-$0.65  PROFIT(max)=14% B/E=$59.40

- or -

PLAY (speculative - bullish/synthetic position):

BUY  CALL  JUN-80  JMR-FP  OI=162  A=$0.75
SELL PUT   JUN-50  MER-RJ  OI=192  B=$0.55
INITIAL NET CREDIT TARGET=$0.00-$0.10 TARGET PROFIT=$0.75-$1.00

Note:  Using options, the position is similar to being long the
stock.  The collateral requirement for the sold (short) put is
approximately $1,400 per contract.

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

******************************************************************
                   - STRADDLES AND STRANGLES -
******************************************************************

ICOS - ICOS Corporation  $56.00  *** A Big Mover! ***

ICOS (NASDAQ:ICOS) is a product-driven company that has expertise
in both protein-based and small molecule therapeutics.  The
company combines its capabilities in molecular, cellular and
structural biology, high-throughput drug screening, medicinal
chemistry and genomics to develop products with commercial
potential.  The company is evaluating Cialis, a small molecule
compound that inhibits the phosphodiesterase type five enzyme
for the treatment of male erectile dysfunction and female sexual
dysfunction.  The company is also evaluating Pafase, a recombinant
human serum protein, for the treatment of sepsis and other unique
diseases characterized by higher instances of platelet-activating
factors.

ICOS has been active in recent sessions amid speculation over a
new inhibitor (PDE5) in development by Lilly ICOS LLC to treat
erectile dysfunction.  After taking the product, men reported an
improved ability to achieve erections even 24 hours and there were
no treatment-related serious adverse events.  Hmmm, that's a very
unique drug and one that will certainly garner more attention when
the results are presented for the first time at the Annual Meeting
of the American Urological Association in June.  Technically, this
position meets our basic criteria for a favorable straddle; cheap
option premiums, a history of adequate price movement and future
events or activities that may generate volatility in the issue
or its industry.  This selection process provides the foremost
combination of low risk and potentially high reward and traders
who want to speculate on continued volatility in ICOS can profit
from that outcome with this neutral-outlook position.

PLAY (speculative - neutral/debit straddle):

BUY  CALL  MAY-55  IIQ-EK  OI=48   A=$3.00
BUY  PUT   MAY-55  IIQ-QK  OI=117  A=$1.85
INITIAL NET DEBIT TARGET=$4.75 TARGET PROFIT=20%

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

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

LNCR - Lincare  $55.01  *** Trading Range? ***

Lincare Holdings (NASDAQ:LNCR) is one of the nation's largest
providers of oxygen and other respiratory therapy services to
patients in the home.  The company's customers typically suffer
from chronic obstructive pulmonary disease, such as emphysema,
chronic bronchitis or asthma, and require supplemental oxygen
or other respiratory therapy services in order to alleviate the
symptoms and discomfort of respiratory dysfunction.  Lincare
currently serves over 225,000 customers in 42 states through 429
operating centers.

Lincare has been active in recent sessions as stocks in the
healthcare group declined over concerns of current valuations
versus future earnings growth.  Shares of Lincare moved lower
in sympathy with other companies in the sector but despite the
recent slump, a number of analysts see favorable revenues for
many specialized health care service providers including LNCR.
Investors apparently agree with that outlook as they quickly
pushed the share value back to a previous trading range near
$50 and those who believe it will remain near that price for
the next two weeks can attempt to profit with this speculative
premium-selling position.  As with any position, current news
and market sentiment will have an effect on the issue, so
review the play thoroughly and make your own decision about
its future outcome.

PLAY (speculative - neutral/credit strangle):

SELL CALL  MAY-60  LQN-EL  OI=355   B=$1.00
SELL PUT   MAY-50  LQN-QJ  OI=4030  B=$0.90
INITIAL NET CREDIT TARGET=$2.00-$2.20 PROFIT(max)=12%
UPSIDE B/E=$62.00 DOWNSIDE B/E=$38.00

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

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





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**********

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Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

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