Option Investor
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Daily Newsletter, Wednesday, 06/06/2001

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The Option Investor Newsletter                Wednesday 05-30-2001
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******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        06-06-2001        High      Low     Volume Advance/Decline
DJIA    11070.24 -105.60 11179.68 11059.64 1.06 bln   1217/1858 
NASDAQ   2217.73 - 15.9.  2249.72  2204.88 1.74 bln   1613/2195
S&P 100   655.07 -  7.02   662.09   654.32   totals   2830/4053
S&P 500  1270.03 - 13.54  1283.85  1269.01           41.1%/58.9%
RUS 2000  512.58 -  3.90   516.48   512.52
DJ TRANS 2898.39 - 19.03  2917.47  2896.79
VIX        22.38 +  1.16    23.13    22.02
Put/Call Ratio      0.58
******************************************************************

The Sun Rises Amid Warnings

Shares of Sun Microsystems (NASDAQ:SUNW) attempted to bolster the
Nasdaq Wednesday morning.  But another not-so-friendly piece of
guidance stymied the tech-laden index's advance.

Influential Goldman Sachs (NYSE:GS) computer hardware analyst
Laura Conigliaro issued a modestly positive report on Sun Micro,
which was enough to induce early morning buying in the tech
space.  Conigliaro suggested that Sun Micro's business is
beginning to show signs of stabilization.  What's interesting is
that Conigliaro has been bearish on shares of Sun Micro for
quite some time and her report follows the company's warning
just last week.  But, Conigliaro reported that her checks
among Sun's distributors showed signs of an up-tick.

Several hardware stocks benefited from Conigliaro's call early
Wednesday, including shares of EMC (NYSE:EMC), Dell Computer
(NASDAQ:DELL) and IBM (NYSE:IBM).

However, the Hewlett-Packard (NYSE:HWP) analyst meeting that we
addressed in Tuesday night's Market Wrap snuffed the early
morning momentum in the tech space.  Carly Fiorina, CEO of H-P,
delivered ominous guidance at the beginning of the conference
call this morning.  Fiorina reported, "While it is still early
in the quarter, May was softer than expected and [H-P] is now
addressing what is clearly becoming a global slowdown."  Fiorina
elaborated on the slowdown in European and Asian markets, which
Sun Micro addressed last week.

Now we know that H-P has been struggling for quite some time.
We can conclude that much by observing price action in its
shares - the stock is only a few points off its 52-week low.
Nevertheless, Fiorina's cautious remarks induced a combination
of profit taking and shorts pressing their bearish bets in
the tech space, which erased the majority of the hardware
sector's earlier gains.  Although, Sun Micro did manage to
finish 3.5 percent higher.

For the most part, the Nasdaq Composite (COMPX) traded alright
considering H-P's warning.  The COMPX traded in a narrow
range of only 45 points, on volume that was about in-line with
the 50-day average volume.  The index did find buyers at the
2200 level following H-P's warning, but couldn't manage to
eclipse the big retracement resistance level at 2250 that we
highlighted in Tuesday's Market Wrap.  In fact, the COMPX's
day high was 2249.  I think it would be worth while to
continue to monitor the 2250 resistance level in the coming
days for a breakout.  As well, keep an eye on support at 2200
established Wednesday.




For an ancillary support zone concerning the tech sector, I
thought I'd pass along an observation I made this morning.
The Nasdaq-100 (NDX.X) attracted buyers every time it dipped
down to the 1890 level Tuesday morning.  Each time the NDX
dipped down to 1890, I noticed that buyers stepped into each
of the big-cap Nasdaq stocks I was monitoring.  Interestingly,
I tooled around with a few retracement levels and found a fit
from the reversal day on February 15th to the NDX's relative
low.  I don't know if market makers are using this retracement
to manage risk, but I thought it would be worth mentioning.




As if H-P wasn't enough, another warning from the tech sector
was delivered after the bell.  Broadcom (NASDAQ:BRCM) warned
that its second-quarter would fall further than previous
guidance had suggested.  However, Broadcom's CEO, Henry
Nicholas, offered, "Although current demand conditions continue
to be soft, [Broadcom] is starting to see some signs of
stabilization in the business for the second-half of the year."
Broadcom's warning was issued after the after hours session
of trading closed, so we'll want to monitor the market's
reaction Thursday morning.  Recent suggestions of stabilization,
such as the Sun Micro report this morning, have been well
received by the market, so the actual warning from Broadcom
may be a moot point.  (Remember, always forward-looking.)

Away from the tech sector, J.P. Morgan Chase (NYSE:JPM) warned
on the revenue front.  The shortfall by J.P. Morgan had a
double-whammy impact on the market.  The stock is a component
of the Dow Jones Industrial Average (INDU) as well as the
KBW Bank Sector Index (BKX.X), which I've been detailing
recently.  Shares of the stock finished lower by $1.66.

The Dow is likely to see continued weakness Thursday morning
in light of the after hours news concerning Phillip Morris
(NYSE:MO).  A Los Angeles jury awarded a smoker $3 billion in
punitive damages from Phillip Morris.  Shares of Big Mo fell
$2 in after hours trading.

Going into Thursday's trading, market participants will be
awaiting guidance from chip giant Intel (NASDAQ:INTC).  The
company is scheduled to hold its mid-quarter analyst update
after the bell at 5:30 PM EST.  Keep in mind that when Intel
last reported, it forecasted a pretty wide range of revenue
estimates, between $6.2 and $6.8 billion.  The current
consensus is pegged at the lower-end of that range.  The
market will be listening for signs of improvement in the chip
business, which would give the Philadelphia Semiconductor
Index (SOX.X) and the Nasdaq the green light to advance.  But,
if the company guides lower, the two aforementioned indexes
could be poised for an extended pullback.  In either case, be
aware of the Intel call Thursday AFTER THE BELL and plan
your trades accordingly.  Also worth noting, National
Semiconductor (NYSE:NSM) will release earnings at 1:00 PM
EST, during market hours.

On a final note, those interested in learning how to use
retracement brackets to improve your trading should
consider signing up for my online seminar this Sunday, June
10th at 8:00 PM EST.  I'll show you why retracement brackets
work and how to use them to better manage risk, pick entry
and exit points and increase profits.  You can learn more
about the seminar through the link below.

Questions are welcome: eutley@sungrp.com

Eric Utley
Editor

==================================================================
Advanced Chart Reading with Retracements
Online Interactive Seminar This Sunday
==================================================================

Eric Utley, Contributing Editor for OptionInvestor and
IntradayTrader, will be presenting a two hour interactive online
seminar at 8:00 PM EST, on Sunday June 10th.  Eric will teach
attendees how to use Fibonacci retracement brackets to better
manage risk and increase profits.  The seminar will benefit
both investors and traders and Eric will incorporate current
examples in his presentation, along with requests from
attendees.

Click here for more information:
http://www.premierinvestorseminars.com/onlineseminars/eric061001.asp

==================================================================
June Online Seminar Calendar
==================================================================

You can take the following seminars without leaving the comfort
of your home or office. They are interactive and allow you to
question the presenter during the presentation.

You do not need any special software to take the seminar but you
must have a 56K Internet connection or faster for best results
and a separate phone for the audio portion.

If you are interested in these seminars please click here for
more information.

http://www.premierinvestorseminars.com/seminarcalendar.asp

Thr Jun-7 Using Volatility to Pick Stocks - John Seckinger
Sun Jun-10 Advanced Chart Reading & Retracements - Eric Utley
Sun Jun-10 Basic Technical Analysis - Austin Passamonte
Tue Jun-12 Starting with Point & Figure Charts - Jeff Bailey
Wed Jun-13 Ask the Analyst - Eric Utley
Wed Jun-13 Basic Option Strategies - Jim Brown
Thr Jun-14 Using Volatility to Pick Stocks - John Seckinger
Thr Jun-14 Basic Candlesticks - Jon Farnlof
Sun Jun-17 7 Steps to Play Picking - Eric Utley
Mon Jun-18 Zero Cost Leaps - Mark Wnetrzak, Ray Cummins
Tue Jun-19 Profiting From Failed Technical Patterns - John Seckinger
Wed Jun-20 Chart Patterns, Flags, Pennants, Wedges - Derek Baltimore
Wed Jun-20 Entry Point, Exit Point - Jim Brown
Thr Jun-21 Day-Trading for People WIth Day Jobs - Jon Farnlof
Sun Jun-24 Determining Support and Resistance - Derek Baltimore
Sun Jun-24 Ask The Analyst - Eric Utley
Tue Jun-26 Assessing Risk with Point & Figure - Jeff Bailey
Tue Jun-26 Charting, Stage Analysis - Mark Wnetrzak, Ray Cummins
Wed Jun-27 Big Cap Strategies - Jim Brown
Wed Jun-27 Conservative CC/NP - Mark Wnetrzak, Ray Cummins

Click here for a detailed explanation of each:

http://www.premierinvestorseminars.com/seminarcalendar.asp


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

SEBL - Siebel Systems $51.15 +1.82 (+5.27 this week)

Siebel Systems is a provider of eBusiness applications.  The
company's products enable organizations to sell to, market to,
and service their customers across multiple channels, including
the Web, call centers, resellers, retail, and dealer networks.
SEBL's eBusiness applications are available in
industry-specific versions designed for the pharmaceutical,
healthcare, telecommunications, insurance, energy, apparel,
automotive, and finance markets.  Through SEBL's applications,
companies can create a single source of customer information
that sales, service, and marketing professionals can use to
tailor product and service offerings to meet each of their
customer's unique needs.

Investors looking for companies in the Technology sector that
have weathered the current economic weakness better than most,
would be hard-pressed to not look favorably on SEBL.  Although
revenue growth has slowed and earnings have dropped, the company
has given investors what they crave, notably reasonable guidance
going forward in an uncertain market.  Investors have rewarded
the company by pushing the stock up for more than 100% gain in
the past 2 months and the daily chart continues to look
favorable.  SEBL has been posting higher highs and higher lows
since the April lows, allowing investors to profit from buying
the dips.  After confirming support at $43 a little over a week
ago, SEBL has been gradually heading higher and daily
Stochastics are once again pointed towards the sky.  Intraday
support at $50 and $48 should provide support on short-term
pullbacks, allowing aggressive investors to enter the play.  We
have more significant support near $46, confirmed by the 30-dma
(currently $46.94), and a drop below this level would be a
significant technical failure for the stock.  Accordingly, we
are giving our play some room to move by placing our stop at
$46.  More conservative players will want to wait for continued
buying volume to push the stock through today's highs near $52
before taking a position.  Expect mild resistance at $53.50, and
then $55.50, before the bulls take a shot at the $60 level.
Along with historical resistance, it is the site of the 62%
retracement of the drop from the January highs as well as the
38% retracement from the all-time highs of last November.

***June contracts expire next week***

BUY CALL JUN-50*SGW-FJ OI=11637 at $3.30 SL=1.75
BUY CALL JUN-55 SGW-FK OI= 9272 at $1.10 SL=0.50
BUY CALL JUL-50 SGW-GJ OI=  938 at $6.50 SL=4.50
BUY CALL JUL-55 SGW-GK OI= 2562 at $4.10 SL=2.50
BUY CALL JUL-60 SGW-GL OI= 5640 at $2.45 SL=1.25

SELL PUT JUN-50 SGW-RJ OI= 4689 at $1.80 SL=3.50
(See risks of selling puts in play legend)

Average Daily Volume = 18.4 mln
http://www.premierinvestor.com/oi/profile.asp?ticker=SEBL


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

No new puts today


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

No Stop Adjustmets Tonight!


************
DROPPED CALL
************

XOM $89.40 -2.15 (+0.45) Well, we expected yesterday's crude oil
and gasoline inventory report to exert some downward pressure on
XOM today, and were looking for it to deliver us a nice entry
point near our $90 stop.  Unfortunately, this level didn't hold
as support, and we have another failed breakout in the stock.
It's a busted play and rather than wait and hope, we'll remove
it from our radar screen to make room for healthier plays.


***********
DROPPED PUT
***********

ISSX $53.78 +5.12 (+5.76) No matter how you slice it, ISSX
showed incredible relative strength today.  With the NASDAQ flat
to down all day, our play charged higher from the open and never
looked back, posting better than a 10% gain.  Adding to the
move's strength was volume that more than doubled the ADV.
Merrill Lynch helped the bulls case today too, starting coverage
of the stock with an Accumulate rating, and with our busted stop
clear down at $50, we have no choice but to drop coverage of the
stock.


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

Follow the sectors
By Mary Redmond

Most savvy traders realize that they need to pay very close
attention to the movement in a particular sector when trading
a stock.  In addition, it is also important to monitor the
action of the various sectors when trading an index, or shares
of an index, like the QQQ or DIA.

For example, the QQQ can be a good trading vehicle, as the
shares are highly liquid which makes execution easy.  There
are several sectors which comprise the Nasdaq 100, including
software, GSO.X, networking NWX.X, biotechnology BTK.X and
semiconductors SOX.X.  Over the last several weeks, the
semiconductor sector and biotech sectors seem to have had the
most significant influence on the Nasdaq, as they have both
made significant gains in relatively short period of time.

Specifically, the semiconductor sector is often regarded as
the sector which seems to have the most influence on the Nasdaq.
The SOX.X is perhaps a leading barometer of the overall health
of the technology stocks traded on the exchanges, as their
cycle tends to lead the tech cycle.  On a long term chart of
the SOX.X, you can see how the series of higher lows last
year led to a serious fall which started last August, and
predicated the rapid drop in the Nasdaq.  The reasoning for
this is easy to understand, as chips are an integral part of
almost every piece of technological equipment we use today.




This sector, as well as the others, can be useful to short
term traders as well as longer term investors.  On a daily
basis, the SOX.X frequently leads the Nasdaq up or down, and
traders who follow this trend are at an advantage.

As an example, lets take a look at what happened on Tuesday,
which was a very important day for both the Nasdaq and the
semiconductor sector.  This is because Xilinx, a leading
semiconductor stock, reported that their earnings would be
on target with the previously stated forecasts, and that
the inventory buildup in some semiconductor equipment had
started to decline.

This was all investors needed to hear.  Everyone knows by now
that things are bad in the economy.  We are in an economic
contraction, and various sectors of our economy are in a
recession.  Investors expect to hear that things are bad.
For months now, we have been hearing, "Things are bad, they
are getting worse, and no one knows when they will get better."

Now, we have had a few companies say "Ok, things are bad, but
at least they aren't getting any worse and it looks like they
might be getting a little better."  It seems like this was all
we needed to hear.

For day traders, it was fairly obvious that the odds favored
an upside move on Tuesday.  The stochastic oscillators were
giving strong upward signals.  The futures were higher, and
the QQQs opened on the upside.   Tuesday was one of the few
days in which traders who bought at the open could have taken
a profit later on.




However, for those who prefer to hone their skills, and take
less risk, lets look and see what the charts told us during
the day.

The QQQ quickly moved up from its open at $46.30, as the SOX.X
moved up from 606 to 639.

Around 10:20 the Dow was lagging the Nasdaq, and actually was
actually down slightly for the day.

At 10:25 traders who bought the QQQ at the open could have taken
a half a point profit when QQQ traded at $47.15.  However,
it looked like the index might not have had sufficient strength
to rally for the rest of the day.  This is the point at which the
action of the SOX.X came in.

At 10:15 the SOX.X was 636, and by 10:25 the SOX.X had jumped
up to 643.  The Nasdaq followed, and by 10:40 the QQQ had jumped
up to $47.68.




It is important to note that the tick.nq had dropped to -100
around 10:30, after opening on the plus side.  While this is
not an extraordinarily low level for the tick, on a strong
day in the market, the Nasdaq often rebounds from any negative
tick.




A similar situation occurred on Wednesday, whereby the action
of the Nasdaq and the QQQs followed the action of the SOX.X.

While the Nasdaq opened higher on Wednesday, by 11:30 the QQQ
had dropped to $47.19.  The SOX.X had dropped to 635 at that
point.  The tick.nq had reached a low point of -350.

However, the SOX.X promptly rebounded to 647, and the QQQ
followed, rising to $47.75 by 11:45.

The more technical indicators a day trader uses, the more
precise and profitable the trades are likely to be. Individual
stocks also respond very strongly to the movement in the sector,
and sometimes have a delayed response, whereby the sector moves
first and the stock follows.   This phenomenon can be useful
to long term investors as well as short term day traders
and scalpers.


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


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

NEWP - Newport Corp. $32.58 -0.57 (+0.50 this week)

Newport is a global supplier of test, measurement and automation
systems and subsystems that enable manufacturers of fiber-optic
components, semiconductor capital equipment and aerospace
products to automate manufacturing processes, enhance product
performance and improve manufacturing yields.  The key Fiber
Optics and Photonics division offers a broad line of automated
manufacturing systems that address a spectrum of applications in
the fiber-optic component manufacturing process; from pre-test
to assembly and packaging, to final device testing and burn-in.

Most Recent Write-Up

NEWP got left behind in the rally in the Networking index (NWX.X)
today, keeping it a prime candidate on the put list.  Sure it
managed to eke out a gain today, but it wasn't very impressive in
the face of the strong sector-wide move.  That's just what we
want to see in our put plays -- pick on the weakling in the
sector.  Over the past week, the lows have been getting lower,
and resistance at $35 is looking stronger on a daily basis.  We
are keeping our stop at $35 and aggressive traders can target
new entries at this level or at the $34 intraday resistance
level.  Conservative traders will want to wait for more weakness
to materialize before playing; a drop through the $31 support
level on increasing volume will be just the ticket.  Keep an eye
on the NWX index, as weakness there will likely renew selling
pressure in NEWP.

Comments

Shares of Newport appear to be forming a classic long-liquidation
'b' pattern, which is clearly displayed on its daily chart.  The
stock has been coiling this week on decreasing volume and is
poised to break lower.  Look for a breakdown below the aggressive
ascending support line, which is most easily mapped on the
30-minute chart.  Conversely, considering fading any advance
up to resistance at the $34 level, which has produced sellers
on four separate occasions very recently.

***June contracts expire next week***

BUY PUT JUN-35*NZZ-RG OI=1250 at $3.80 SL=2.50
BUY PUT JUN-30 NZZ-RF OI= 473 at $1.25 SL=0.50
BUY PUT JUL-30 NZZ-SF OI= 167 at $3.50 SL=1.75

Average Daily Volume = 3.75 mln
http://www.premierinvestor.com/oi/profile.asp?ticker=NEWP


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

Batten-down the hatches as the warning season begins...
By Ray Cummins

Industrial stocks retreated today on weakness in the technology
segment after Hewlett-Packard issued some cautious remarks about
future revenues.  The popular Dow component said it has become
concerned regarding third-quarter profits and that it sees the
economic slowdown becoming global.  The company also announced
it must cut expenses further to match consensus estimates for
the upcoming quarter.  The news weighed heavily on other stocks
in the computer hardware group with Dell (NASDAQ:DELL), Gateway
(NYSE:GTW) and Compaq (NYSE:CPQ) among the losers.  Elsewhere on
the Dow, J.P. Morgan Chase (NYSE:JPM), Alcoa (NYSE:AA), United
Technologies (NYSE:UTX), Philip Morris (NYSE:MO) and Coca-Cola
(NYSE:KO) moved lower while shares of Procter & Gamble (NYSE:PG)
and McDonald's (NYSE:MCD) limited its downside.  Lehman Brothers
upgraded PG to a "buy" rating, saying the cyclical issue offers
a good trading opportunity ahead of its June 15 outlook meeting.
McDonald's was also among the upside movers after analysts said
a favorable Internal Revenue Service ruling on REITs could spark
speculation that McDonald's may unlock value by spinning off its
multi-billion dollar real estate portfolio.  On the NASDAQ, chip
shares headed higher on strength in Intel (NASDAQ:INTC), which
closed near $30 on speculation ahead of its mid-quarter update.
A Merrill Lynch analyst said a view of the bellwether's inventory
levels in the supply chain suggests that "things may not be as
lean as many investors think."  Salomon Smith Barney analyst Jon
Joseph also reiterated comfort with his above-consensus numbers
for Intel's second quarter number.  Select software and Internet
issues edged higher due to solid performances by Citrix Systems
(NASDAQ:CTXS) and Priceline.com (NASDAQ:PCLN).  Citrix announced
it expects revenue for the second quarter and full year to be 5%
higher than previously forecast and Priceline was bolstered by
news that two Hong Kong-based investors had raised their stakes
in the company.  Networking stocks enjoyed a small rally on the
heels of Sun Microsystems (NASDAQ:SUNW).  Sun shares climbed amid
positive comments from Goldman Sachs' Laura Conigliaro, who said
that the worst part is probably over for the company and recent
checks indicate their U.S. business is stabilizing.  Weakness in
the energy and financial industries hurt the broader market with
natural gas, oil, oil service, utility and brokerage shares among
the worst performers.


Summary of Previous Candidates:

Covered Calls: (Margin not used in calculations)

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

IMCL    JUN    40    37.85  54.84    $2.15   5.8%

Naked Puts:

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

RMD     JUN    50    49.20  53.25    $0.80   9.0%
KKD     JUN    40    38.75  69.32    $1.25   9.0%
KKD     JUN    50    49.05  69.32    $0.95   8.5%
KKD     JUN    50    49.35  69.32    $0.65   8.3%
THQI    JUN    40    39.25  51.05    $0.75   7.5%
NVLS    JUN    40    39.20  53.01    $0.80   7.1%
IMCL    JUN    35    34.35  54.84    $0.65   6.9%
ENZN    JUN    50    48.85  76.56    $1.15   6.8%
FCEL    JUN    60    59.05  81.79    $0.95   5.7%
APWR    JUN    35    34.30  50.90    $0.70   5.5%
PDII    JUN    80    79.30  87.70    $0.70   5.4% Close?

Positions Closed: ADVP, CMVT (both currently positive).

Sell Strangles:

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

HGSI    JUN    45p   44.00  75.31    $1.00   7.6%
HGSI    JUN    80c   81.30  75.31    $1.30   9.7% Ready to Cover?

NVDA    JUN    55p   53.65  94.02    $1.35   7.4%
NVDA    JUN   115c  116.25  94.02    $1.25   6.9%

BGEN    JUN    55p   54.25  63.27    $0.75   7.2%
BGEN    JUN    65c   65.65  63.27    $0.65   6.3% Key Moment!

Naked Calls:

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

CMVT    JUN    70    70.65  67.32    $0.65  10.3% Upgrade = Close?
EXFO    JUN    50    50.75  28.25    $0.75  10.2%
CIEN    JUN    70    70.40  59.48    $0.40   7.0%

Credit Spreads:

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

LEH   $76.75   $71.65  JUN60p/65p  $0.70   $64.30  $0.70  Alert
MER   $69.98   $65.53  JUN55p/60p  $0.60   $59.40  $0.60  Alert
BAC   $58.61   $59.69  JUN50p/55p  $0.65   $54.35  $0.65  Open
BRL   $64.60   $75.45  JUN55p/60p  $0.75   $59.25  $0.75  Open
FNM   $79.81   $82.30  JUN70p/75p  $0.50   $74.50  $0.50  Open
BBY   $54.29   $58.76  JUN65c/60C  $0.70   $60.70  $0.70  Alert

Debit Straddles:

Stock  Pick   Last   Position  Debit  Value  Target  Status

NUE   $49.80 $54.00 JUN50c/50p $3.90  $3.90  $4.90   Closed*
FLR   $60.54 $52.80 JUN60c/60p $5.40  $7.40  $6.48   Closed*

On Tuesday, June 5, the Nucor (NYSE:NUE) straddle traded for
a credit of $6.45 when the stock was near $56.50, the high of
the day.  The Fluor (NYSE:FLR) straddle reached a credit of
$7.40 at the close today.  Both positions have surpassed our
targets and will be shown closed.


New Candidates:

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

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

BULLISH PLAYS - Covered Calls, Naked Puts, & Combinations

***************
ADVS - Advent Software  $67.58  *** Technicals Only! ***

Advent Software (NASDAQ:ADVS) is a provider of unique Enterprise
Investment Management solutions that automate and integrate
a number if mission-critical functions of investment management
organizations through software products, services and data
integration.  The company's solutions enable organizations of
all sizes to run their business more effectively, enhance client
service and performance as well as improve productivity and
communication throughout their organization.  Advent Office, its
suite of integrated products, addresses the demand to automate
the entire range of investment management functions.

There is little news to explain the recent rally in ADVS shares
but the technical outlook for the issue is obvious.  Advent has
recently completed a "double-bottom" formation and the rally has
been supported by heavy volume.  The neckline at $55 is now a
strong technical support area as the stock makes a run for a new,
all-time high.  Traders who want to profit from that movement may
speculate on the future activity of ADVS with these positions.

ADVS - Advent Software  $67.58

PLAY (sell naked put):

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

Sell Put  JUL 55   UIV SK  0         1.20    53.80     5.3% ***
Sell Put  JUL 60   UIV SL  20        2.20    57.80     7.0%
Sell Put  JUL 65   UIV SM  5         4.00    61.00     9.7%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=ADVS

*****

HGSI - Human Genome Sciences  $75.31  *** Genome Leader! ***

Human Genome Sciences (NASDAQ:HGSI) researches and develops novel
compounds for treating and diagnosing human diseases based on the
discovery and understanding of the medical usefulness of genes.
The company has used automated, high speed technology to discover
the sequences of chemicals in genes and generate a collection of
partial human gene sequences.  HGSI believes its large collection
includes most of the genes responsible for producing proteins in
the human body.  The company also possesses one of the largest
databases of the genes of humans and microbes, which they refer
to as its genomic database and it has created a range of product
opportunities based on its genomic database.  The company intends
to focus primarily on the research and development of proteins
for the treatment of human disease.

Speculation on new developments in "genome discovery" have pushed
stocks in the Diagnostic Substances group higher over the past few
sessions and HGSI is now trading at a 6-month high.  The bullish
activity began after company's new protein Albutropin was cleared
for testing in human clinical trials by the U.S. FDA.  Albutropin
is a new kind of protein that fuses the human growth-protein gene
to another gene called Albumin in order to extend the life of the
compound in the body.  The unique protein design requires less
frequent injections, lower doses and offers potentially improved
side effects.  Analysts say the news is extremely positive for
HGSI and the whole series of products the company has in early
development.

Investors apparently agree with the optimistic outlook and we will
use the target position to establish a favorable cost basis in the
issue.

HGSI - Human Genome Sciences  $75.31

PLAY (sell naked put):

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

Sell Put  JUL 55   HHA SK  1164      1.05    53.95     4.5%
Sell Put  JUL 60   HHA SL  1996      1.80    58.20     7.4% ***
Sell Put  JUL 65   HHA SM  266       2.90    62.10     8.8%
Sell Put  JUL 70   HHA SN  254       4.50    65.50    10.6%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=HGSI

*****

LNCR - Lincare Holdings  $65.40  *** Split Rally! ***

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 shares have rallied over the last two sessions as
investors continue to buy into the issue prior to the record
date for the company's upcoming stock split.  Lincare's Board
of Directors recently declared a two-for-one common stock split,
payable on June 22, to shareholders of record on June 7, 2001.
The stock split will be effected as a dividend distribution of
one additional share of common stock for each share of common
stock outstanding.  John P. Byrnes, Lincare's Chief Executive
said the split is intended to increase the trading volume and
liquidity of LNCR common shares.  He also noted that Lincare's
long-term shareholders have enjoyed compounded annual rates of
return in excess of 35% per year over their nine-year history
as a public company and that favorable demographics along with
a commitment to clinical excellence and high quality customer
service will drive future growth in their core businesses.

That's a very optimistic outlook and traders who want to profit
from any additional upside activity in LNCR shares can do so in
a conservative manner with this bullish combination.  Target a
higher premium initially, to allow for a brief consolidation in
the issue.

LNCR - Lincare Holdings  $65.40

PLAY (very conservative - bullish/credit spread):

BUY  PUT  JUL-50  LQN-SJ  OI=17  A=$0.50
SELL PUT  JUL-55  LQN-SK  OI=12  B=$0.90
INITIAL NET CREDIT TARGET=$0.55-$0.60  PROFIT(max)=12%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=LNCR

*****

MANU - Manugistics  $41.30  *** Own This One! ***

Manugistics Group (NASDAQ:MANU) is a worldwide provider of smart
supply chain optimization solutions for enterprises and evolving
eBusiness trading networks.  Its solutions, which include client
assessment, software, consulting services for implementation and
solution support, can be optimized to the unique supply chain
requirements of companies.  The company's solutions provide its
clients with the business intelligence to participate in various
forms of trading relationships, from traditional linear supply
chains to eBusiness trading networks.  Their newest generation
of proven solutions help enable businesses to work in concert
with their trading partners via the Internet, expanding their
supply chains to eBusiness trading networks.  These solutions
assist customers in anticipating trading requirements in both
fixed and dynamic environments to anticipate and meet the needs
of customers, thereby maximizing client satisfaction.

Manugistics received some positive news about one of its major
products this week from Delta Airlines (NYSE:DAL).  Delta said
they are seeing significant benefits from Manugistics NetWORKS
Airline Revenue Optimizer, a unique revenue optimization system
developed for the passenger airline industry.  Since last year,
the solution has helped the airline increase passenger revenues
while providing visibility into future demand.  Delta's VP of
revenue management commented that "Delta has seen a significant
upside in our revenues since the introduction of The Phoenix
System" and improved revenue management coupled with stronger
demand were cited in Delta's annual report as contributing to
an 11% increase in North American passenger revenues.  In other
news, MANU announced today it is acquiring SpaceWorks, which
makes software that lets manufacturers share their inventory,
planning and purchasing details with suppliers over the Internet.
MANU said it was acquiring SpaceWorks for its order management
technology, which lets companies receive and process customer
orders on the Web.

Manugistics has always been one of our favorite companies in the
Application Software group and investors who want to establish
a discounted cost basis in the issue should consider these
positions.

MANU - Manugistics  $41.30

PLAY (sell naked put):

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

Sell Put  JUL 30   ZUQ SF  305       0.75    29.25     5.8% ***
Sell Put  JUL 32.5 ZUQ ST  2071      1.15    31.35     8.4%
Sell Put  JUL 35   ZUQ SG  96        1.75    33.25    10.1%
Sell Put  JUL 37.5 ZUQ SU  40        2.55    34.95    11.5%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=MANU

*****

MSCC - Microsemi  $63.23  *** On The Move! ***

Microsemi (NASDAQ:MSCC) is a designer, manufacturer and marketer
of analog, mixed-signal and discrete semiconductors. Microsemi's
semiconductors manage and regulate power, protect against any
transient voltage spikes and transmit, receive and amplify
signals.  MSCC's products include individual components, as well
as complete circuit solutions that enhance its customers' end
products by providing battery optimization, reducing size or
protecting circuits.  The company's commercial products are used
in dynamic high growth mobile connectivity applications as well
as mobile phones and hand-held Internet devices, and broadband
communications applications such as base stations, wireless LAN,
cable and fiber optic systems.

Microsemi has been "on the move" since the company's board of
directors announced that it has approved a 2-for-1 stock split
of Microsemi's common stock, to be accomplished by way of a
stock dividend.  The upcoming split is subject to stockholder
approval to increase the number of authorized shares of MSCC's
common stock by 80 million shares and the announcement of the
official record and pay dates will likely occur in the near
future.  In addition, Standard & Poor's recently reported it
will replace Silicon Valley Group (NASDAQ:SVGI) in the S&P
SmallCap 600 Index with Microsemi after the close of trading
on a date to be announced.

Regardless of the reason for the activity, MSCC shares are a
HOT item and traders who want to participate in the bullish
movement may attempt to profit with these short-term positions.

MSCC - Microsemi  $63.23

PLAY (sell covered call or naked put):

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

Sell Call JUN 55   QMS FK  135       8.90    54.33     4.2% ***
Sell Call JUN 60   QMS FL  142       5.10    58.13    10.9%
Sell Call JUL 55   QMS GK  6        11.50    51.73     4.4%
Sell Call JUL 60   QMS GL  36        8.50    54.73     6.7%

Sell Put  JUN 55   QMS RK  72        0.55    54.45    10.6% ***
Sell Put  JUN 60   QMS RL  4         1.55    58.45    22.2%
Sell Put  JUL 50   QMS SJ  10        1.70    48.30     8.2%
Sell Put  JUL 55   QMS SK  4         2.90    52.10    10.0%
Sell Put  JUL 60   QMS SL  5         4.70    55.30    12.1%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=MSCC

*****

THC - Tenet Healthcare  $48.50  *** New Trading Range! ***

Tenet Healthcare (NYSE:THC) is the second-largest investor-owned
healthcare services company in the United States.  Tenet's many
subsidiaries and affiliates own or operate over 100 hospitals
with more than 25,000 licensed beds and other related healthcare
facilities serving urban and rural communities in 17 states, and
they also hold investments in other healthcare companies.  The
company's general hospitals offer an array of medical services
and serve as the anchors for its regional healthcare delivery
networks.  These regional delivery networks, designed to provide
a full spectrum of care throughout a community or region, may
include a variety of types of ancillary services.

Shares of Tenet rallied to a new, all-time high today on strength
in the Health Services sector.  Traders say the move was expected
as THC was due to break-out of a recent trading and news that the
company was beginning to show operating profits from some of its
hospitals in Pennsylvania simply added to the optimism.  The new
report prompted praise within the health-care community that the
company could so quickly turn around a group of hospitals that
had previously been losing up to $1 million a day.  In addition,
Goldman Sachs recently started coverage of a number of hospital
chains and placed Tenet on the "recommended for purchase" list,
citing prospects for solid earnings growth.  The Goldman analyst
said Tenet, the second largest hospital chain, offers investors
a compelling risk/return tradeoff given the company's operational
momentum, its strong free cash flow and the potential for EPS
out-performance and positive revisions to earnings.

THC - Tenet Healthcare  $48.50

PLAY (very conservative - bullish/credit spread):

BUY  PUT  JUL-40  THC-SH  OI=0    A=$0.25
SELL PUT  JUL-45  THC-SI  OI=205  B=$0.70
INITIAL NET CREDIT TARGET=$0.55-$0.60  PROFIT(max)=12%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=THC
***************

BEARISH PLAYS - Naked Calls & Combinations

***************
JPM - J.P. Morgan  $46.84  *** Bearish Outlook! ***

J.P. Morgan Chase (NYSE:JPM) conducts business in two broad
spheres of activity: global financial services, provided to
business enterprises, institutions, and affluent individual
investors; and retail banking.  Global financial services,
provided under the J.P. Morgan brand, encompass: Investment
Banking, Global Markets, Treasury and Securities Services,
Asset Management, Private Banking, Private Equity, and also
E-finance.  Retail and commercial banking, provided under the
Chase brand, includes: Regional Consumer and Small Business
Banking, Card-member Services, Home Finance, Diversified
Consumer Lending, Community Development, and Commercial
Banking.

Shares of J.P. Morgan slumped today after the #2 U.S. bank
holding company said it expected trading revenues for the
second, third and fourth quarters to be substantially lower
than the first-quarter due to seasonal patterns and market
conditions.  Indeed, meager share values continue to plague
three of the company's key businesses; trading, investment
banking, and JPM's private investment portfolio.  The drop
in new stock offerings and mergers mean less banking fees,
while lower market volatility means the company doesn't make
as much money on trading commissions.  In addition, their
investment portfolio is also taking a hit as write-downs of
expenditures in private companies have more than offset gains
from its publicly held issues in the first two months of the
second quarter.

Traders who think the downward trend will continue can profit
from that outcome with this bearish combination.

JPM - J.P. Morgan  $46.84

PLAY (conservative - bearish/credit spread):

BUY  CALL  JUL-55  JPM-GK  OI=2234  A=$0.20
SELL CALL  JUL-50  JPM-GJ  OI=4172  B=$0.85
INITIAL NET CREDIT TARGET=$0.70-$0.75  PROFIT(max)=16%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=JPM


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