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Daily Newsletter, Sunday, 06/10/2001

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The Option Investor Newsletter                   Sunday 06-10-2001
Copyright 2001, All rights reserved.                        1 of 5
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******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        WE 6-08          WE 6-01          WE 5-18          WE 5-11
DOW    10977.00 - 13.41 10990.41 + 78.47 11005.37 -296.37  +480.43
Nasdaq  2215.10 + 65.66  2149.44 + 38.95  2251.03 + 52.15  + 91.45
S&P-100  651.92 +  2.31   649.61 +  3.38   658.29 - 10.09  + 22.95
S&P-500 1264.96 +  4.28  1260.67 +  4.85  1277.89 - 14.07  + 46.29
W5000  11736.70 + 65.13 11671.40 + 61.20 11849.89 - 73.63  +432.18
RUT      511.64 +  9.92   501.72 +  5.22   508.62 +  2.34  + 18.92
TRAN    2882.09 -  4.96  2887.05 - 58.85  2929.20 - 49.75  + 99.39
VIX       21.41 -  2.55    23.96 -  2.00    23.15 -  1.11  -  3.22
Put/Call    .54              .53              .62              .47
******************************************************************

Jinxed By Juniper

Following Intel's (NASDAQ:INTC) guidance late Thursday, the
tech bulls were poised to carry the Nasdaq higher into the
weekend.  But that was before the bomb Juniper Networks
(NASDAQ:JNPR) dropped Friday morning.

The networking equipment maker issued a terrible warning.  Juniper
officials guided revenues for the second quarter down to a
range of $200 - $210 million, while previous guidance had called
for between $300 - $330 million.  What's more, officials lowered
earnings estimates to a range of 8 to 9 cents, while First
Call previously had earnings per share (EPS) estimates pegged at
24 cents.  In conjunction with its lowered guidance, Juniper
issued comments that read like a very familiar book: "Challenging
service provider and global carrier business...capacity absorption
cycle."  In short, business is bad for the networking equipment
makers.

Something that struck me as rather peculiar about the Juniper
warning is that its company officials denied that their shortfall
had anything to do with losing market share to Cisco Systems
(NASDAQ:CSCO).  Interestingly, I've read A LOT of research
reports recently that suggested that Cisco is gaining market
share from Juniper in the core router market, and winning many
contracts in the OC-192 space - a high-end, optical router
technology.  If Cisco is, in fact, taking market share from
Juniper, and in light of the demise of other competitors such
as Nortel Networks (NYSE:NT) and Lucent (NYSE:LU), shares of
Cisco may be an interesting investment idea currently despite
the terrible telecom environment.

To digress, the Juniper warning did snuff all of the excitement
over Intel's (NASDAQ:INTC) guidance Thursday evening.  It's
simply amazing how quickly market psychology can shift in the
current environment.  One day, warnings are shrugged off like
that of Broadcom's (NASDAQ:BRCM), in favor of comments about
a possible stabilization in the second-half of the year.  The
next day, stocks get blown up on a warning ala Juniper.

Neither the Nasdaq Composite (COMPX) nor the Philadelphia
Semiconductor Index (SOX.X) were able to breakout above their
respective resistance levels that we've been monitoring this
week.  On the part of the SOX, it never got the chance Friday
to break above the 700 level.  And the COMPX wasn't able to
fully reject its bearish head-and-shoulders (H&S) top.

Last Tuesday, I suggested that the neckline of the COMPX's
H&S was horizontal at the 2100 level.  I was wrong.  I think
the H&S appears more like an ascending pattern now, with the
neckline currently around the 2100 support level that
we've been monitoring.  While the current position of the
neckline coincidentally coincides with our initial level, viewing
the H&S as an ascending pattern does lower the bearish price
objective of the pattern.  On Tuesday, I calculated the
bearish price objective to be around 1870.  But the ascending
neckline lowers that level by about 50 points to 1825.

The ONLY reason I'm going to great lengths to dissect the
COMPX's H&S is because I know for a fact that many, many market
participants are monitoring the very same levels we are.  And
for some uncanny reason, these technical patterns of price
(H&S) tend to become a self-fulfilling prophecy, so I want
my readers to be informed.

Nevertheless, I think it's prudent to suggest that 2100 marks
the proverbial line in the sand for the COMPX and should be
monitored closely going into next week's trading, although it's
still another 115 points lower.  Should the COMPX decidedly
break below that level next week, the path of least resistance
may shift back to the downside.  Conversely, if the H&S it to
be rejected next week, we need to see the COMPX advance above
its relative highs Thursday around 2265.  If the COMPX can
advance to the 2280 - 2300 range, perhaps we could quit
worrying about its H&S.




The Juniper warning is likely to carry over the weekend as
traders worry about who's next to warn.  Of the company's
that haven't pre-announced yet, those most likely to warn
include Dell Computer (NASDAQ:DELL), JDS Uniphase (NASDAQ:JDSU)
and Motorola (NYSE:MOT), according to analysts.  Of course,
market psychology could quickly shift again next week if we
hear continued remarks about a rebound or, at the very least,
a stabilization in the second-half of the year.  But the
concern over tech fundamentals may lead to a rotation back
into other sectors, such as finance, energy, cyclical and
retail, among others.  A rotation back into those sectors
would carry the Dow Jones Industrial Average (INDU) higher.

The Dow settled below the 11,000 level Friday for the first
time in about a week.  Part of the Dow's weakness may have
stemmed from the computer glitch on the New York Stock
Exchange (NYSE).  Around 10:00 a.m. EST, a computer problem
caused trading in about 1700 stocks to halt.  Most trading
resumed about one-and-a-half hours later, but several
issues, such as IBM (NYSE:IBM) remained halted for the
majority of the day.  When trading did finally resume, it
seemed like any bids that were in the Dow earlier dried up,
as the remaining bulls called it an early weekend.

They say, "Never sell a dull market," but participants
didn't heed that advice and took the Dow lower as soon as
the NYSE re-opened.  That event, ironically, may have
foreshadowed continued weakness in the Dow next week if
the thesis of rotation into non-tech names doesn't hold.
Furthermore, there's the distinct possibility that warnings
from non-tech firms will surface next week, which could
damage the Dow.  Although the it's difficult to give much
credence to such a light volume day (723 million on the
NYSE), the Dow's settlement below 11,000 is a bit
disconcerting.



My causes for concern in the market currently are twofold:
The first being the ominous price action (Dow below 11,000
and COMPX H&S).  The second, is the continued deterioration
in fundamentals, especially in the tech sector.  But the
third variable, which in all honesty I can't gauge, is
psychology, which recently has proven more powerful than
price and fundamentals.  In the tech sector, there
appears to be a growing tendency to buy the dips.  As my
colleague, Matt Russ, opined before he departed the OI
team, "Buying dips is back in style, baby!"  Over the past
several weeks, each pullback in the Nasdaq has been met
with buying.  And if this pattern holds, we could see
buyers emerge around the middle of next week, depending
upon the news on the corporate profit front.

In addition, the economic front is full next week, as
opposed to the last week's lack of data.  The first big
release next week is May's retail sales report, due Wednesday
morning, before the market open.  The consensus is expecting
a pretty bleak report, with sales expected to rise only 0.2
percent.  Thursday, the Commerce Department will report
April inventories in conjunction with the release of the
producer price index (PPI), released by the Labor Department.
And Friday will bring production numbers along with the
consumer price index (CPI).  Keep in mind that we're about
two weeks away from the Federal Reserve's next meeting.
That event could begin to buoy the market as participants
keep their faith and dollars invested with Greenspan.

If you haven't already, you can still sign up for my online
seminar for Sunday, June 10th at 8:00 p.m. EST.  Just follow
the link below and I hope to see ya' there!

***Editor's Note

Jim will be back next week to deliver his excellent insights.

Eric Utley
Editor
www.OptionInvestor.com

==================================================================
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 p.m. 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

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

Clustered
By Austin Passamonte

That may aptly describe this week's market action and the charts
we're about to look at. Writers who usually scribe this column
have all caught summer fever so you're stuck with me & my
cluttered graphics once more. Just like M&M candies, everything is
color coded so let's see if Fibanocci values, moving averages,
trend lines and chart patterns have anything to tell us about
these crazy markets and future direction:

(Daily chart: )



First up, a snapshot of the SPX. We see the big index has spent
four straight sessions riding down its long-term descending
trendline from January's high. Prices broke below this mark early
on Friday but recovered into the close.

Three of the past sessions 62% retracement from recent highs to
lows held support but closed below on Friday. Very interesting.
Actual price level values in the data box are skewed but the color
code allows us to identify various moving average values. Note the
50-DMA (blue) quickly rising towards 50% Fib retracement in the
low 1230's area, a level that may be the next stop on a further
decline.

Lastly, we have a clear Head & Shoulders bearish reversal pattern
denoted by green lettering and fuchsia trendline that every
technician in the entire free world is now watching. More than a
few stop orders would be triggered each direction on a break below
the neckline near the 1250 area.

(Daily chart: QQQ)



The NDX/QQQ market has been fairly quiet lately considering it is
a mere fraction of its historical self. See where 38% retrace of
recent lows to highs and 10 & 20 DMAs convergence have held
support the last four sessions? A break below there finds next
level of support at the 50-DMA near 44.70 area which happens to be
the neckline zone of this bearish head & shoulders pattern.

(Daily chart: Dow)



The Dow closed below its 10 & 20 DMAs for the first time in five
sessions and lost its grip on the venerable 11,000 level. Next
stop if things head south would logically be 10,800 area at 75%
retrace (light gray line) and finally 10,650 zone where 50 & 200
DMAs now converge. Just below that rests the 62% retrace so a few
different strong arms hold a safety net below. And we may soon see
them called upon for help.

(Daily chart: OEX)



The smaller S&P looks just like big brother at top. Price action
is wedged between 62% retrace of resistance and long-term
descending trendline for support, a measure that broke on Friday
but closed precisely at the mark.

A good guess would be that the OEX tests 640 area soon, the 50%
retracement level and neckline zone of its head & shoulders
pattern as well. We did spot that right away, didn't we? Shoulders
are both near 660 area which of course is the 62% Fib retrace
zone.

(Daily chart: SOX)



The SOX has been stepped on by its 200 DMA to halt a three session
advance. Tough to grade this one, although several measures of
support lie just below near the 635 - 640 area.

(Daily chart: BTK)



Biotechs find support and resistance pinching in and may be stuck
for a bit before a significant break either way. The trend is
decidedly up and looks to continue unless otherwise thwarted.

Most of the retracement brackets and trendlines above were drawn
weeks ago without being touched since. And some curmudgeons still
cling to the mantra that technical analysis holds no merit. May we
ask what does? Analyst "expert" opinions, fundamental research and
news releases to guide us safely forward? Please!

Oscillators, Etc.
For those of us who follow the study, stochastic action across all
weekly charts is currently within overbought extremes and the Dow,
OEX and SPX posted bearish reversals after this week. Daily chart
stochastic values are rolling over in bearish fashion as well to
warn of further price decay from here.

Index option put/call ratios are high. While equity option ratios
are considered a contrarian indicator index options are more of a
leading indicator. Used primarily by institutions, a major shift
in sentiment often precludes the next market move. A reading of
2.26 index put to call options on Friday (88,792 puts to 39,215
calls) suggests smarter money is lining up for the downside.

VIX, VXN and QQV readings continue to trade in the lower end of
their spectrum even after a weak session like today. That in
itself is not a bullish sign as traders remain complacent in spite
of faltering market action, or at least behavior that is less than
strong.

Bottom Line?
From a technical standpoint it is pretty tough to key on any real
evidence that the broad markets can base from here and rally into
the summer in a sustained move. More volatility is expected going
forward into next week, a triple-witch expiration event. The
historical bias is bullish from Monday through Friday but the
following Monday historically sees a decline from there. Will the
next six-plus sessions pay attention to history and probability?
Only time will tell.

These are some of the chart tools an average person like myself
can & should use to gauge near and mid-term market direction with
better than 50% odds of probability to occur. If we can learn to
tilt the odds of probability slightly in our favor and use proper
account management techniques to save us when we're wrong, all of
us can prosper over time.

Trade The Right Direction With Care!

===

VIX
Friday 06/08 close: 21.41


VXN
Thursday 06/07 close: 52.79


30-yr Bonds
Thursday 06/07 close: 5.67%


Total Put/Call Ratio: .72


Equity Option Put/Call Ratio: .57


Index Option Put/Call Ratio:  2.26

===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   33.60
Current close: 47.35

Volume/Open Interest
Maximum calls: 50/99,264
Maximum puts : 45/79,278

Moving Averages
 10 DMA 47
 20 DMA 47
 50 DMA 44
200 DMA 63

===

S&P 100 Index (OEX)
52-Week High:  834.93
52-Week Low:   548.16
Current close: 651.92

Volume/Open Interest
Maximum calls: 660/5,550
Maximum puts : 640/4,502

Moving Averages
 10 DMA  654
 20 DMA  657
 50 DMA  634
200 DMA  693

===

S&P 500 (SPX)
52-Week High:  1530.01
52-Week Low:   1081.19
Current close: 1264.96

Volume / Open Interest
Maximum calls: 1250/42,400
Maximum puts : 1250/46,019

Moving Averages
 10 DMA 1270
 20 DMA 1273
 50 DMA 1229
200 DMA 1323

===

DJIA (INDU)
52-Week High:  11,518.83
52-Week Low:    9,047.56
Current close: 10,977.00

Volume / Open Interest
Maximum Calls: 100/51,291
Maximum Puts   100/73,247

Moving Averages:
 10 DMA 11,034
 20 DMA 11,064
 50 DMA 10,633
200 DMA 10,642

===

CBOT Commitment Of Traders Report: Friday 06/08
Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts on the
Chicago Board Of Trade.

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

                    Small Specs               Commercials
S&P 500         (Current)  (Previous)     (Current) (Previous)
Net Position       +77,601    +70242       -77,490   -68,496
Total Open
Interest %       (+33.61%)  (+33.61%)      (-10.71   (-9.48%)
                 net-long   net-long      net-short  net-short


                     Small Specs             Commercials
DJIA futures
Net Position       -4251      -4226        +5829      +5812
Total Open
interest %        (+35.39)   (-30.65%)      (+14.71)  (+16.24%)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100
UNAVAILABLE UNTIL 6/12
Open Interest
Net Value         +2912      +444         -11508     -9946

Total Open
Interest %        (+14.80%)   (+2.24%)     (-18.82%) (-14.87%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices: Almost no perceptible change across the all-important S&P
and thinly-traded Dow futures markets. Current data is
unretrievable for the ND01 contracts until Tuesday 6/12 but we can
assume it is relatively unchanged based on the first two markets,
being the thinnest volume and least-traded contract of these
three.

Gold: Commercials backed off their five-year historical short and
may be poised to begin accumulating again soon.

5/08: 17,247 contracts net-long
5/15: 13,915 contracts net-short
5/22: 65,250 contracts net-short
5/29: 68,443 contracts net-short
6/05: 42,314 contracts net-short

These recent moves are volatile in an otherwise quiet market. Many
felt that the latest move was merely a technical short-squeeze and
retail rally, while the real move in gold could begin this summer
if the economy remains weak and inflation pressures build.

Data compiled as of Tuesday 06/05 by the CFTC.


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

Please visit this link for Market Posture:

http://www.OptionInvestor.com/marketposture/061001_1.asp


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***************
ASK THE ANALYST
***************

Penalty Box
By Eric Utley

I think Juniper (NASDAQ:JNPR) is going to spend some time in
the box this weekend with the Avs' enforcer Rob Blake.  The
penalty: holding...the Nasdaq back.

It's a big weekend here in Denver and we're all cheerin'
hard for Ray Borque, baby!

Don't forget to sign up for my online seminar Sunday night
at 8:00 p.m EST.  There's still a few slots available.  See
ya' then!

http://www.premierinvestorseminars.com/onlineseminars/eric061001.asp

Send your stock requests to Contact Support.
Please put the symbol of your requests in the subject line of
the e-mail.

----------------------------

NVDIA - NVDA

Can you please comment on NVDA and its future. - Thanks, Sunil

Thanks again, Sunil.

I haven't checked, but I think shares of NVIDIA (NASDAQ:NVDA)
have to be one of the best performing within the Nasdaq-100
this year.  Of course, the stock was only recently added to that
index.  Nevertheless, the stock's performance has been most
inspiring.

The company makes graphics processing chips for desktop
applications as well as video games.  Earnings estimates have
been steady, if not increasing in some instances, which is a
rarity among tech companies currently.  Concerning the video
game market I will opine that the fact Microsoft (NASDAQ:MSFT)
is entering that space says a lot in my estimation.

Insofar as NVIDIA's technicals are concerned, the stock
recently ramped up to the $100 level, which can be a very
psychological price magnet.  If the stock's pullback from
Friday carries over into next week's trading, it will have
traced a double-top at the $100 level, which may present some
trouble in the near-term.  Conversely, if NVIDIA solidly
breaks out above that level, I'd expect it to trade up to
$110 or $120 in the short-term.  As Jesse Livermore once
observed, once psychological levels such as $100 are
cleared, stocks tend to keep moving beyond those points.




----------------------------

Office Depot - ODP

Office Depot has risen during the past year and is viewed as a
good turn around candidate by some.  I bought some leaps recently
and the price deteriorated substantially during the past month
since I bought.  Would you comment on it from a technical
perspective? - Thanks, Larry

Thanks for the question, Larry.

Before I get to your request, Larry, I thought I'd point out that
the deterioration in your leaps is most likely a function of the
decline in the Volatility Index (VIX.X), which has been getting
whacked during the past month.  Less fear in the market translates
into lower premiums for options contracts, which is obviously an
adverse development for those long volatility.

Shares of Office Depot (NYSE:ODP) have indeed had a nice run since
late 2000, when the stock bounced off the $6 level, en route to
tracing a double bottom.  The stock traded as high as $10.65 in
late April before pulling back during the month of May.  It
makes sense that the stock would pullback after having a nice
run over the previous five months.

However, I did discover some serious resistance on Office Depot's
point & figure chart.  The stock faces some major supply at its
descending trend line currently at the $11.50 level.  It will be
a real challenge to get through that level, but if it does, the
stock could see its bullish price objective of $18.50 over the
intermediate- or longer-terms.  That bullish price objective, by
the way, was generated when Office Depot advanced from $6.50 up
to $10.00 earlier this year.





The $11.50 level on the point & figure chart coincides with some
serious resistance on the daily chart, which is not a coincidence.
Judging by the retracement levels of Office Depot's advance, it
should begin to find support right around its current levels,
maybe falling as low as $8.25.  But if the stock falls below that
level, I'd start to think that something was wrong.




----------------------------

Taro Pharmaceutical Industries - TARO

I've been rubbing my eyes and checking and double checking.  Is
TARO's chart for real?  Look at their progress!  Could you try
and give some insight on a good entry point, beside about on
year ago. - Thanks, Bert

I've got to say, Bert, that's one helluva of trend in shares of
Taro Pharma (NASDAQ:TARO).  Thanks for the great request!

Your request is a difficult one, Bert.  Picking an entry point
for a stock with a trend such as Taro's is increasingly difficult
because it makes measuring and managing risk all the more
difficult.  So, let's make a few observations.

The first thing that stuck out to me on Taro's daily chart is
the fact that its trend has accelerated to the upside, in near
parabolic fashion.  For one, I don't like to see a stock's
trend accelerate much past a 45 degree angle.  And the blue
trend line below roughly represents a 45 degree angle as far
as Taro's trend is concerned.  Since its last bounce off that
line, Taro's trend has most certainly accelerated.  Risk
becomes increasingly difficult to quantify at this point in
the trend.




One might look to Taro's moving averages for possible entry
points on a pullback.  Perhaps the 40-dma, where there is some
consistency of buying on pullbacks to that level.  Another
tool you might use, Bert, is a retracement bracket.  On the
chart below, I've laid a retracement over Taro's recent bounce
off of its ascending trend line, using the $43 level as an
anchor point.  This is a fairly aggressive retracement, however,
and should be used in conjunction with a shorter time frame.




We can also turn to the point & figure charts for some more
help.  The chart looks like a stair-step pattern higher, and
there's not a real obvious level of demand.  But, a level that
is likely to attract buyers again is around the $63 - $64 range,
which coincides nicely with the retracement level on the
chart above.





----------------------------

DISCLAIMER:
This column is an information service only.  The information
provided herein is not to be construed as an offer to buy or
sell securities of any kind.  The Ask the Analyst picks are not
to be considered a recommendation of any stock or option but an
information resource to aid the investor in making an informed
decision regarding trading in options.  It is possible at this
or some subsequent date, the editor and staff of The Option
Investor Newsletter may own, buy or sell securities presented.
All investors should consult a qualified professional before
trading in any security.  The information provided has been
obtained from sources deemed reliable, but is not guaranteed
as to its accuracy.


*************
COMING EVENTS
*************

For the week of June 11th, 2001

Monday
======
None Scheduled


Tuesday
=======
None Scheduled


Wednesday
=========
Export Prices ex-ag    May    Forecast:    NA   Previous:    0.0%
Import Prices ex-oil   May    Forecast:    NA   Previous:   -0.5%
Retail Sales           May    Forecast:  0.3%   Previous:    1.1%
Retail Sales ex-auto   May    Forecast:  0.4%   Previous:    0.8%


Thursday
========
Initial Claims         6/9    Forecast:  425K   Previous:   432K
PPI                    May    Forecast:  0.3%   Previous:   0.3%
Core PPI               May    Forecast:  0.2%   Previous:   0.2%
Business Investories   Apr    Forecast: -0.1%   Previous:  -0.3%


Friday
======
CPI                    May    Forecast:  0.4%   Previous:   0.3%
Core CPI               May    Forecast:  0.2%   Previous:   0.2%
Industrial Prod.       May    Forecast: -0.3%   Previous:  -0.3%
Capacity Utilization   May    Forecast: 78.0%   Previous:  78.5%
Mich Sentiment-prel    Jun    Forecast:    NA   Previous:  92.0%



Week of June 18th
=================
Jun 19  Housing Starts
Jun 19  Building Permits
Jun 20  Leading Indicators
Jun 20  Treasury Budget
Jun 21  Initial Claims
Jun 21  Trade Balance
Jun 21  Current Account
Jun 21  Philadelphia Fed


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The Option Investor Newsletter                   Sunday 06-10-2001
Sunday                                                      2 of 5

To view this email newsletter in HTML format with embedded
charts and graphs, click here:
http://www.OptionInvestor.com/htmlemail/1077_2.asp


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

Naked Calls for the Chicken-Hearted
By Buzz Lynn

When we visited last week we talked about bullish put credit
spreads as a way to sell naked puts with a security blanket.
This week, we will visit its twin, but mirror-image sibling,
the bearish call credit spread.

Remember the premise last week on making put credit spreads
work.  We sell a put and want time decay to work on the other
guy.  Ideally, the option expires worthless to the buyer right
into our account as the underlying directional bias is up
(bullish) or at least stays even.  If we are wrong, our
security blanket comes in the form of a lower strike long put
to hedge the short higher strike put.  While it is still
possible to lose money on the position, the potential loss is
known before we enter the position, and we are generally
protected from wiping out the account on unforeseen negative
events.

See last week's article at:
http://members.OptionInvestor.com/options101/060301_1.asp

A bear call credit spread is the same; only we are looking for
bearish price action of the underlying stock to help make the
time decay work in our favor.  In expectation of a downward
move, we sell a call for a premium and let time decay go to
work on the buyer.  Just in case we are wrong and prices
unexpectedly rise, we will protect ourselves by simultaneously
purchasing a higher priced strike call for less money.  Even
after the long purchase, we are left with a net credit in the
account and we know our maximum loss in the worst-case melt-up.

Ideally the position expires worthless and we keep the premium
for having taken the risk.

The strategy is to sell calls at the high.  Let us use SMH, or
the Semiconductor HOLDR as an example.  Generally speaking, SMH
and the SOX have similar chart patterns, even though their
components are strikingly different.  But in the world of
indexes, semiconductors are semiconductors no matter how you
slice them.  If we look at a SOX chart, we will see two
occasions in the last three months where the index went to
roughly 700 and rolled over. Corresponding numbers for the SMH
would be about $54.

So figuring that SMH should roll over at about $54. that might
make further weakness a high probability outcome.  If we
believe $54 is a top, we would sell ATM ($55 in this case)
calls.  Since there is not much time premium left in the JUN
strikes, we will move out to JUL strikes and sell the JUL-55
call for a current bid of $2.  But to hedge our position, we
would simultaneously buy the JUL-60 call for $0.85 just in
case we are wrong and SMH becomes the next rocket ship to the
moon.  After all, who wants to sell naked JUL-55 calls and
have to cover at $75 on a monster gap up?  Not me!

Ice cubes would sooner form in the Sahara, but that is why we
hedge.  After all, an enterprising desert-dweller could have
discovered electric generators and compact freezers today with
plans to roll out ice-cubes tomorrow.  Again that is why we
hedge - to quantify and minimize risks of unexpected turn of
events.

Anyway, the upshot is a net credit of $1.15 per share
($2 - $0.85) immediately in the account.  You can increase the
credit slightly if you are adroit at legging in or squeezing
the market maker for a few extra nickels by splitting the bid
and ask on each leg of the position.  Realistically, this
could be increased to $1.35 to $1.40 by performing the latter.
But let us stick with conservative numbers.  The bottom line
is that we stand to keep the whole $1.15 upon expiration in
the best-case scenario.  The worst case is that we lose $3.85.
How did we come up with that?  Follow along.

On expiration, we have three possible outcomes.  First, SMH
is less than $55 and we keep the whole $1.15 - the most
probable if history is to repeat itself and we are correct in
our judgment of the price about to fall.

Second, SMH can close between our strike prices of $55 and $60.
At $55.50, we are "forced" to buy at $55.50 and sell at $55 for
a $0.50 loss.  However, we have taken in a credit already for
$1.15, which still leaves us with a $0.65 profit even if we
get "called out"!  The math, if SMH closed exactly at $56.15,
would put us at break even. . .buy at $56.15, sell at $55 for
$1.15 loss, but with an initial credit of $1.15, we are at
break even.

Since we run out of credits at $1.15, every cent above $56.15
results in a corresponding penny loss to the account.  Say that
SMH closes at $58.  We are "forced" to buy at $58, sell at $55
for a $3 loss.  Offsetting with the $1.15 credit puts our
actual loss to the account at $1.85.  (In reality, our broker
will do all the math and we will not generally be forced to buy
shares and resell them for a loss - the difference just
disappears from the account.  But check with your broker for
details as each can vary).

Third, and this is how we come up with the maximum loss of
$3.85, say SMH closed at $62.50.  Are we forced to buy at
$62.50 and sell at $55 for a $7.50 gross loss, but a net loss
of $6.35 considering our initial $1.15 credit?  No way.
Because we hedged and bought the $60 strike call, we have the
right to buy SMH at $60!  We do not have to pay $62.50.  Thus,
we buy at $60, sell at $55, credit $1.15, and we have a
maximum loss of $3.85.  Even if SMH goes to $100 overnight,
our hedge is in the right to buy SMH at $60 and minimize our
loss at $3.85.

While losing $3.85 is no fun, it sure beats losing more, and
allows us to keep heart palpitations to a minimum even though
the trade has gone a zillion dollars in the other direction.
Preferably, we close the trade for less than maximum loss if
it goes against us by buying back the short and selling back
the long calls.  I set an arbitrary number to exit when the
underlying hits my breakeven - $56.15 in the above example.
At that point, I will be pretty sure the trade is going
against me and exit for a smaller than maximum loss.  But we
all get to choose based on our own risk profiles.

Now that we have gone through this process, this is not a
no-brainer recommendation to put on this trade first thing
Monday.  In my opinion, this trade does not offer enough
credit reward to justify the downside risk.  I like at least
$1.75 - ideally $2.50 - for every $5 in strike difference.
That means I can gain $2.50 or lose $2.50.  My chance of gain
is about 67% based on the Black Shoals pricing model.  How
does that work?  Please do not e-mail me for an explanation.
I have no idea, but I know it works.  You can type
Black-Scholes into any search engine and come up with more
than you could ever want to know on the subject.  The point
is that the more credit you can get, the more you minimize
the potential loss by default.

There you have it!  A great way to take advantage of time
decay in your favor rather than let it fritter away while
playing a directional move or running in place.  For those
who want to sell short with a safety net, here is another
arrow for your quiver.

Now, you too can get the time decay of naked calls and
keep your heart rate low in the process!


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

Fuel Cells: The Promise of Power
By Derek Baltimore

Living through California's power crisis last year was a
challenging and humbling experience for those on the West Coast.
With summer heating up and air conditioners starting blow, the
worst may be yet to come. Considering the climate in the Golden
State, the drain on power supplies and production capacity will
be tested again as the mercury rises in the coming months.
Despite today's age of technological advancements, the fact that
we are still vulnerable to power outages and dependent on poorly
managed, deregulated and inefficient power grids boggles the
mind. The situation begs the question, is there another way? Is
there a reliable, efficient and clean alternative to the power
grid system that is in place today?

There are some fuel cell companies out there that would answer,
"yes", to that question. Fuel cell technology has been around
since the 60s, but has only recently made advancements that
produce affordable and commercially viable products.

So what is a fuel cell? A fuel cell is a device that converts the
energy of a fuel (hydrogen, natural gas, methanol, gasoline, etc.)
and an oxidant (air or oxygen) into useable electricity. Fuel cell
construction generally consists of a fuel electrode (anode) and an
oxidant electrode (cathode) separated by an ion conducting
membrane. How does a fuel cell work? When hydrogen gas is
introduced into the system, the catalyst surface of the membrane
splits hydrogen gas molecules into protons and electrons. The
protons pass through the membrane to react with oxygen in the air
(forming water). The energy is then created when the membrane
blocks the electrons and forces them to travel around it, which
creates a source of DC electricity. A fuel cell stack is
comprised of numerous individual cells stacked together to
provide the required power. With no moving parts and little
noise, the result is an efficient and ideal source of power.
And unlike nuclear or fossil fuel power, the only by products
are heat and water, making fuel cells environmentally friendly.

If fuel cells can successfully tap into the $200 billion dollar a
year U.S. electricity market, substantial new technologies and
products could emerge from just a small slice of the pie.  Savvy
investors have been hovering around fuel cell stocks for some
time. Besides a spike in the sector late last year, as well as a
nice bump recently upon the revealing of President Bush's energy
plan, investors have yet to see substantial trading gains.

With 90+ degree days now upon us, and the focus on California's
energy crisis again in the forefront, now may be the right time
to take advantage of these companies. We want to review a few
names that could prove rewarding for traders with slightly
longer trade horizons (1-3 months). While these stocks are
cheap by no fundamental measure, just like the biotech group,
their vow of change could easily drive prices substantially
higher in the coming months.

Capstone (Nasdaq: CPST) is one of the leaders in fuel cell
technology. Their flagship product, the Capstone MicroTurbine
power generation system, is about the size of a refrigerator
and generates enough power (30 kilowatts) to power a small
business.

Chart of CPST (Daily)



Capstone was recently downgraded by Merrill Lynch and removed
from its techfolio, and the firm's opinion is reflected in the
current stock price. The decline since the downgrade occurred
(6/4) has been muted, due to the severity of the pull back from
highs set 5/29. Despite the 20+% retracement in June, the trend
line from April is still intact so long as the stock does not
close below the $29.50 level.  Also of note for traders bullish
on the sector is the declining volume trend seen in the pullback.
Since setting an intraday high of $38.25 on 5/29, CPST has only
surpassed its 30-day average volume trend in one trading day
(6/4).

The stock garnered plenty of press when the power crisis hit
California in the early January, and was the focus of attention
as natural gas and oil prices peaked last fall. Shares are now
hovering at the 50-day moving average having tested the $20
lows set in December last year. Holding support of the April
trendline will give institutional traders reason to add to their
positions in this company, and despite a weak-looking short-term
chart, the stock should have legs as the dog days of summer
linger.

The first ever fuel cell system to power a home was introduced by
Plug Power (Nasdaq: PLUG) earlier this year. The residential
unit, called HomeGen 7000, generates 7 kilowatts, and is referred
to as a mini home power plant.

The Homegen 7000 is about the size of a central air conditioning
system and is similarly installed just outside the home. Although
this product hasn't hit the consumer market (expected by mid
2002), Plug Power has formed an alliance with GE Microgen. This
joint venture called GE Fuel Cell Systems LLC, is building a
network of qualified regional distributors to market, install and
service the HomeGen 7000.

With backing from GE, PLUG should gain traction quickly in a
residential market yet to be dominated by a major player. Shares
of PLUG have plunged from $150 a year ago to near $30.00 today,
however like CPST, this could be an amazing buying opportunity
for investors who believe this technology will be embraced by
eager energy consumers.

Chart of Plug (Daily)



Based on the chart above, we can see that the downgrade of CPST,
coupled with overall weakness in the group since the end of May
has pressured shares. Note the nice rounded saucer bottom on the
daily chart, and the ascending volume trend seen in the May
bull-run. With a market cap of just over $1 billion, this stock
will fall under the radar for institutional players, with the
exception of those of the small-cap variety. With no earnings
projected in the near future, a trade in PLUG is an idea based
purely on promise and momentum, with a boatload of volatility
thrown in for good measure.  Long-term players, however, should
feel confident that PLUG is one of the leaders in the sector and
backed by an industrial giant.

Because of the fabulous run in May, these two names in the
alternative energy group have seen their share prices decline.
Depending on your time horizon and risk profile, one could argue
that entry prices near current levels could prove extremely
rewarding to those willing to buy the promise their products
deliver. These companies represent a definitive solution to a
real problem hitting the consumer's pocketbook in the new
millennium. As the summer approaches and air conditioners begin
to hum, investors should once again flock to the alternative
energy group. Those willing to look past the dismal headlines in
many of the semiconductor and networking stocks can put together
a portfolio of companies on the cutting edge of energy
technology, that should reap substantial rewards down the road.

Option Investor Traders Corner contributed by www.stockbottom.com


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index instead?

Learn how to invest in the OEX, QQQ, and SPX.  Get intraday
market updates, plays, education and daily commentaries by
those who know.

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********************
THE PLAYS OF THE DAY
********************

Call Play of the Day:
*********************

CEFT - Concord EFS Inc $52.61 (+2.11 last week)

See details in sector list




Put Play of the Day:
********************

RIMM - Research in Motion $32.82 (-2.87 last week)

See details in sector list




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**************************
PICKS WE DROPPED THIS WEEK
**************************

Remember that historically, when we drop a pick it will go up
10 to 15% the very next week. It is part of Murphy's Law.
Just because we drop a stock as a pick does not mean we are
advocating a "sell" on any position you have. We are simply
dropping our recommendation as a new play. Existing plays
can and do continue on and are usually profitable.


CALLS

AMGN $67.45 (-1.13) Biotech stocks generally were lower Friday,
with some of the sector's leading companies trading down.  AMGN,
GENZ, BGEN and HGSI all demonstrated weakness.  The failure of
the Biotech Index to hold its relative support near the 650
level further emphasizes the deteriorating sentiment amongst the
related issues.  It's likely the biotechs could be due for a
pullback over the near-term in light of the strong gains in
recent weeks.  Therefore, notwithstanding the fractional close
above our $67 stop, we're dropping cover this weekend.

CELG $32.85 (+2.11) Biotechnology stocks fell for the third
straight session Friday.  The pullback across the sector was
measured by the Biotech Index (BTK.X), which saw its level drop
to 637.  In despite of the CELG's close above our $32 protective
stop, the overall weakness now portends we exit the play on a
profitable note.  CELG posted strong gains in its recent climb
from the lower $20 range, offering lucrative opportunities for
option traders.


PUTS

No dropped puts this weekend


***********
DEFINITIONS
***********

SL  = Suggested stop loss. Sell if bid breaks this price.
OI  = Open Interest - the number of open contracts outstanding.
ITM = In the money
ATM = At the money
OTM = Out of the money
ADV = Average Daily Volume

The options with a "*" by the strike price are our choices from the
group. If the stock moves as expected we feel they have the best
chance to substantially increase or double in price with the best
risk/reward ratio compared to the other options for the same stock.
You must determine if they fit your risk profile for time and price.

Analysts ratings: 1-2-3-4-5
Analysts who follow each stock rate it and these rating are
accumulated and displayed as follows;

Position 1 = number of analysts recommending "strong buy"
Position 2 = number of analysts recommending "moderate buy"
Position 3 = number of analysts recommending "hold" or "neutral"
Position 4 = number of analysts recommending "moderate sell"
Position 5 = number of analysts recommending "strong sell"

Example rating 5-3-1-0-0 would be 5 "strong buys", 3 "moderate buys",
1 "hold" recommendation.

RISKS of SELLING PUTS:
The risk of selling naked puts is always the possibility
of a catastrophic event that drops the stock below the
strike price and could result in the stock being PUT to you.
Always protect yourself with a "buy to cover" limit order
to take you out before this can happen.


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

PIXR - Pixar Inc $44.70 (+2.90 last week)

Pixar Animation Studios is a digital animation studio with the
capabilities to create animated feature films and related
products.  The Company's objective is to create, develop and
produce computer-animated feature films that appeal to audiences
of all ages. The Company created and produced its first three
films, Toy Story, A Bug's Life and Toy Story 2, which were
marketed and distributed by The Walt Disney Company.

Pixar's "animated" earnings results on May 10th exhilarated
shareholders and analysts alike.  The profit margin was lower
with $8.3 mln versus $26.4 mln in the same period last year;
however, it was the stunning $0.16 p/s earnings and a raised
outlook that sent shares reeling.  Analysts were only expecting
a mere profit of $0.12 p/s for the 2Q.  Keep in mind that same
quarter last year, Pixar's "Toy Story" was still in theaters and
raking in the dough.  The latest March quarter was instead
fueled by video sales of its productions, pay-per-view revenue
from "A Bug's Life", and various ancillary royalties from
Pixar's films.  The following day PIXR soared over 9%, bursting
through the $37 bondage level.  Prudential Securities was there
with a Strong Buy recommendation, too.  Recent media surrounding
the company's highly-anticipated Walt Disney Pictures release of
Pixar's "Monsters, Inc" is played into the stock's current
momentum run through the $42 level.  The film is a comedy with
an all-star voice cast set in the world of things that go bump
in the night and will be released nationwide on November 2nd,
2001.  More specifically, it's the sector strength that is
driving the share price to new all-time highs.  Related issues
like FOX, ATVI, and MVSN are also faring quite well.  The bigger
fish such as VIA.B and MGN aren't making significant gains, but
are holding their respective support levels under the current
market conditions.  You might consider jumping into a run as
PIXR clears the $45 obstacle in an advancing market.  Intraday
volume over 200 K signals buyers are present, but be prepared
with stop losses.  We've set a tight stop at $42 and will exit
if PIXR fails keep a position above this mark on a close.

BUY CALL JUL-35 PQJ-GG OI=212 at $9.80 SL=7.00
BUY CALL JUL-40 PQJ-GH OI=212 at $5.30 SL=3.25
BUY CALL JUL-45*PQJ-GI OI=110 at $2.10 SL=1.00

Average Daily Volume = 212 K
http://www.premierinvestor.com/oi/profile.asp?ticker=PIXR


MUSE - Micromuse $45.09 (+6.68 last week)

Making software that monitors and manages the elements of an
information technology infrastructure, MUSE sells its products
directly and through distribution partners such as Cisco
Systems.  Its Netcool suite collects and consolidates network
data and events.  Netcool includes a desktop tool that
customizes network information and allows operators to
automatically resolve service problems with reporting in
multiple formats such as 3-D charts and spreadsheets.  Major
customers include AOL, Cellular One, and Charles Schwab.

To view the company's press releases and earnings report, an
investor would be hard-pressed to determine that MUSE is
operating in a contracting economy.  Revenue growth remains on
track north of 100%, while earnings continue to increase, and
it seems nearly every press release contains a reference to a
new product, application for an existing product or adoption
of its Netcool suite by another customer.  Investors have
continued to reward this type of performance, with shares
commanding a hefty 200+ PE ratio.  After finding bottom in
early April near $23, MUSE has been posting a series of higher
lows while running into stubborn resistance near $50-51.  If
that sounds like a bullish wedge to you, congratulations!  The
ascending trendline is currently resting at $41, a convenient
location to place our stop.  Even with the rest of the Tech
sector under pressure on Friday, MUSE managed to post a gain,
albeit on rather light volume.  Target pullbacks to support
near $43, or our $41 stop for new aggressive entries.
Alternatively, wait for a solid push through the $47 level
before taking a position.  Keep a sharp eye out as MUSE
approaches the $51 level; there are likely to be eager bears
lying in wait.

BUY CALL JUL-45 QVM-GI OI=506 at $6.20 SL=4.25
BUY CALL JUL-50*QVM-GJ OI=446 at $4.00 SL=2.50
BUY CALL JUL-55 QVM-GK OI=205 at $2.65 SL=1.25
BUY CALL OCT-50 QVM-JJ OI=778 at $8.30 SL=6.00
BUY CALL OCT-55 QVM-JK OI=234 at $6.80 SL=4.75
BUY CALL OCT-60 UZQ-JL OI=411 at $5.20 SL=3.25

SELL PUT JUL-40 QVM-SH OI=210 at $3.30 SL=5.25
(See risks of selling puts in play legend)

Average Daily Volume = 4.08 mln
http://www.premierinvestor.com/oi/profile.asp?ticker=MUSE


*************************ADVERTISEMENT*********************
Why put all your risk into one stock when you can play the
index instead?

Learn how to invest in the OEX, QQQ, and SPX.  Get intraday
market updates, plays, education and daily commentaries by
those who know.

Sign up for a two week free trial and see for yourself at
IndexSkybox.com:
http://www.sungrp.com/tracking.asp?campaignid=2206
************************************************************


**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html


**************************************************************
ADVERTISING INFORMATION

For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support

The Option Investor Newsletter                   Sunday 06-10-2001
Sunday                                                      3 of 5

To view this email newsletter in HTML format with embedded
charts and graphs, click here:
http://www.OptionInvestor.com/htmlemail/1077_3.asp


*************************ADVERTISEMENT*********************
Why put all your risk into one stock when you can play the
index instead?

Learn how to invest in the OEX, QQQ, and SPX.  Get intraday
market updates, plays, education and daily commentaries by
those who know.

Sign up for a two week free trial and see for yourself at
IndexSkybox.com:
http://www.IndexSkybox.com
************************************************************


******************
CURRENT CALL PLAYS
******************

NOVN - Noven Pharmaceuticals Inc $35.64 (+3.58 last week)

Noven Pharmaceuticals develops advanced transdermal and
transmucosal drug delivery systems and technologies.  Their
principle products are for use in hormone replacement therapy.
Noven's first commercial success was an estrogen patch for the
treatment of menopausal symptoms marketed under the brand name
Vivelle in the US and Canada.  Noven holds over 20 additional US
patents relating to its products and technologies.

Unlike the strong pullback in May, which stymied NOVN's
advances, the stock is currently demonstrating a much greater
level of endurance.  As the NASDAQ tested its relative support
(2200) and the broader sector experienced three consecutive
sessions of downside trading last week, NOVN held its higher
price levels.  The $35 and $35.50 support, well above our $33.50
closing stop, kept the share price afloat amid the market
adversity.  Please however, proceed with caution.  The Biotech
Index (BTK.X) broke 650 and is teetering at the 637 level.  It'd
be much to our advantage to see the BTK.X rally in an advancing
marketplace; although the sector may indeed be due for a healthy
pullback over the short-term.  Therefore at this point in the
play, NOVN must buck the trend and push the upper limits on its
merits alone.  A conservative approach dictates waiting for the
big breakout through $37 before adding new positions.

BUY CALL JUL-30 NPQ-GF OI=  63 at $7.30 SL=5.25
BUY CALL JUL-35*NPQ-GG OI= 644 at $4.00 SL=2.50
BUY CALL JUL-40 NPQ-GH OI=1956 at $2.05 SL=1.00

Average Daily Volume = 459 K
http://www.premierinvestor.net/oi/profile.asp?ticker=NOVN


CEFT - Concord EFS Inc $52.61 (+2.11 last week)

Concord is a vertically integrated electronic transaction
processor. Primary activities include Payment Services, providing
credit, debit, check authorization, and EBT processing services
to supermarkets, gas stations, and other selected retail
segments; and Network Services, providing gateway processing, ATM
driving, and debit card processing to the financial services
industry, plus coast-to-coast network access under the STARsm,
MAC and Cash Station brands.  From their early beginnings as a
point of sale equipment manufacturer to our position today as the
nation's leader in ATM driving, network access, and online debit
transactions.

Three times was a charm last week!  That is, three new 52-week
highs!  CEFT made a bold move through the $51 resistance late in
Thursday session and confirmed its bullish disposition above the
$52 level on Friday.  As a result of the renewed interest in
CEFT, we raised our closing stop to $50 to protect against
profit mongers taking cash off the table.  The outlook is
promising going forward as the share price treads into higher
territory.  Sector mates FDC and PAYX may offer some guidance as
you plan your entries/exits, but nevertheless, consider taking
profits as CEFT approaches the intermediate term near $55 and
$56.  A pullback to the previous resistance ($51) might offer
the aggressive types a lower entry into a subsequent upswing,
but make sure there's a solid bounce before jumping into that
riskier scenario.  Another dramatic spike in volume (like the
one we saw on Thursday) coupled with more good news would
certainly be welcome.  On Thursday, the company had announced
that Citizens Financial Group, a $30.9 bln financial services
company, signed a long-term contract for its processing
services.  The record to beat stands at $53.08, Friday's
intraday peak.

BUY CALL JUL-45 EQF-GI OI= 51 at $8.50 SL=6.00
BUY CALL JUL-50*EQF-GJ OI=192 at $4.50 SL=2.75
BUY CALL JUL-55 EQF-GK OI=618 at $1.85 SL=0.75

Average Daily Volume = 3.81 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=CEFT


PSFT - PeopleSoft Inc $44.98 (+3.06 last week)

PeopleSoft provides a family of enterprise application software
products for use throughout large and medium-sized
organizations. Its enterprise resource planning (ERP) software
addresses such tasks as accounting, manufacturing, and supply
chain management; but its services such as consulting and
maintenance accounts for more than 65% of sales.  PeopleSoft
currently ranks as the #3 seller of applications that tie
together customers' global back-office operations, following Sap
and Oracle, respectively.  As a result of its acquisition of The
Vantive Corporation, PeopleSoft claims a distant second spot in
the fast-growing customer relationship management (CRM) software
sector dominated by Siebel Systems (SEBL).

A list of distinguished speakers and a dynamic presentation of
its Web-based CRM software at the PeopleSoft Leadership Summit
in Las Vegas last week sent shares of PSFT rocketing through the
formidable resistance at $45.  Now that the first line is
cracked, PSFT is free to challenge the 52-week high of $53.87.
The unveiling of its Internet sales and customer service
offering, which it expects to ship to customers at the end of
June, also resulted JP Morgan raised its price target for PSFT
to $48 from $37.  In a research note, they commented that "though
Siebel Systems has a commanding lead (in the CRM market) that
doesn't look threatened, PeopleSoft can now be much more
aggressive in its installed base and cross-sell more".  Earlier
in the week, Goldman Sach analyst Steven Kaly reiterated the
stock's position on its Recommend List, too.  The outlook
appears solid going forward with this play; not only on the
basis of the stock's own credibility, but also across the
sector.  This week, PSFT's rival, Sapphire (SAP), is kicking off
its own analysts show on Tuesday.  The German software giant
intends to tout initiatives centered on high-profile software
segments such as marketplaces, corporate portals, customer
relationship management and supply-chain automation.  A bullish
reception should have a positive impact on shares of PSFT, ORCL
and SEBL.  As we prepare to play PSFT, let's look for $45 to
serve as a firm launching pad for its future advances.  Don't
misunderstand, an entry at the lower levels, say near our $42
closing stop, is always an option for the enterprising traders
who are looking to play the current spread.  On the upside, the
psychological $50 level may pose a threat, but it's the 52-week
high ($53.87) that'll be the real challenge over the short-term.
Exit aggressively.

BUY CALL JUL-40 PQO-GH OI=4484 at $7.90 SL=5.75
BUY CALL JUL-45*PQO-GI OI=1611 at $4.80 SL=3.00
BUY CALL JUL-50 PQO-GJ OI=2627 at $2.70 SL=1.25

Average Daily Volume = 6.65 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=PSFT


BRCD - Brocade Communications $45.09 (+6.29 last week)

Brocade Communications is a provider of Fibre Channel switching
solutions for Storage Area Networks (SANs), which apply the
benefits of a networked approach to the connection of computer
storage systems and servers.  The company's family of SilkWorm
switches enables companies to cost-effectively manage growth in
their storage capacity requirements and improve the performance
between their servers and storage systems.  This provides the
ability of increasing the size and scope of a company's SAN,
while allowing them to operate data-intensive applications,
such as data backup and restore, and disaster recovery on the
SAN.

Despite the JNPR-induced weakness on Friday, BRCD had a pretty
decent week, tacking on a respectable 16% gain.  While volume is
still waffling below the ADV, it is encouraging to see higher
volume on the rally days than on those days where the stock is
giving back a little ground.  Since Memorial day, BRCD has
established a new, if tenuous uptrend line, which currently
rests just above our $42 stop.  Investors desperately want to
believe that the worst is behind for Storage stocks (as well as
the overall Technology sector) and ignored a good bit of bad
news sprinkled throughout the week (mainly in the Semiconductor
sector), to push our play as high as the $48 resistance level
before pulling back on Friday.  With the price currently above
the 30-dma ($44.00) and the 10-dma ($41.98), both of which have
offered support in the past few days, BRCD looks like it is
headed higher.  Even the daily Stochastics is cooperating,
halfway between its extremes, but still pointing towards the
sky.  Aggressive entries still await on a bounce from the
ascending trendline, or possibly from intraday support at $44.
More conservative traders will let BRCD prove itself by surging
through the $48 level before taking the plunge.  Either way,
keep a sharp eye out for profit taking as our play approaches
the $51-52 level, and then again near $54.

BUY CALL JUL-45*UBF-GI OI=10645 at $5.70 SL=3.75
BUY CALL JUL-50 UBF-GJ OI= 2600 at $3.90 SL=2.50
BUY CALL JUL-55 UBZ-GK OI= 4803 at $2.45 SL=1.25
BUY CALL OCT-50 UBF-JJ OI= 1457 at $7.80 SL=5.50
BUY CALL OCT-55 UBZ-JK OI=  210 at $6.30 SL=4.25

SELL PUT JUL-40 UBF-SH OI= 1214 at $2.95 SL=5.00
(See risks of selling puts in play legend)

Average Daily Volume = 14.4 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=BRCD


CB - Chubb Corporation $76.38 (+2.03 last week)

Chubb Corporation, incorporated in June 1967, is a holding
company with subsidiaries principally engaged in the property and
casualty insurance business. The Company presently underwrites
most forms of property and casualty insurance. The Company's
Property and Casualty Insurance Group writes non-participating
policies. Several members of the Property and Casualty Insurance
Group also write participating policies, particularly in the
workers' compensation class of business, under which dividends
are paid to the policyholders.

Once again finding support at its 10-week ascending trendline
(also the site of the 30-dma), the Insurance index (IUX.X)
managed to eke out a slight gain for the week as the bulls
struggle to decisively gain the upper hand.  In order to really
pull it off, they'll have to put together a solid rally through
the $778-780 level.  Despite a lack of support from the broader
sector, CB managed to work its way right up to the $76.50
resistance level, begging for an excuse to break out.  We've
still got the makings of a bullish wedge, with the daily lows
still conforming to the uptrend line that has been in place
since early May.  This pattern has grown so tight, that it
should resolve itself in the next couple days, likely in favor
of the bulls.  The only unknown is whether the IUX, and to a
lesser degree the broad market, will be able to return to rally
mode next week.  we've got the 10-dma ($75.48) crossing up
through the 200-dma ($75.27), and either of these moving
averages could act as support on an intraday pullback.
Aggressive traders will want to target new entries on a bounce
at either of these levels or a strong bounce from our $74 stop
level.  Barring this pullback, look to enter the play as CB
rallies through its recent intraday highs near $77.50.

BUY CALL JUL-75*CB-GO OI=577 at $3.40 SL=1.75
BUY CALL JUL-80 CB-GP OI=321 at $1.25 SL=0.50
BUY CALL JUL-75 CB-JO OI=452 at $6.00 SL=4.00
BUY CALL JUL-80 CB-JP OI=145 at $3.30 SL=1.75

SELL PUT JUL-75 CB-SO OI= 38 at $2.00 SL=3.75
(See risks of selling puts in play legend)

Average Daily Volume = 1.02 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=CB


IMCL - Imclone Systems $53.30 (+0.21 last week)

Engaged in the research and development of novel cancer
treatments, IMCL focuses on growth factor inhibitors,
therapeutic cancer vaccines and angiogenesis inhibitors.  The
company's lead product candidate, IMC-C225, is a therapeutic
monoclonal antibody that inhibits stimulation of a receptor for
growth factors upon which certain tumors depend.  Phase I/II
clinical trials have been promising.  The lead candidate for
angiogenesis inhibition, IMC-1C11 is an antibody that binds
selectively and with high affinity to KDR, a principal
Vascular Endothelial Growth Factor (VEGF) receptor, thus
inhibiting angiogenesis.

With the Biotechnology index (BTK.X) weakening over the past
few days, IMCL was bound to suffer a bout of profit taking, and
broad-based market weakness was all the excuse traders needed
on Friday.  IMCL had been rallying consistently ever since
breaking above the $50 level a little over a week ago, so a
little pullback was to be expected.  Unfortunately, the BTK
index fell back below the critical $640 level at the close and
IMCL got knocked back for a 5% loss.  The only saving grace
was the fact that volume remained below the ADV.  With our $52
stop just a short hop from Friday's close, our play could be in
serious jeopardy, particularly if the BTK fails to regain its
footing (and the $640 level) on Monday.  The 10-dma (currently
$51.97) provided support on the last pullback in late May, and
we are hoping it will do so again.  Consider new positions on a
bounce between $52-53, but only if buying volume is robust and
the BTK is moving in the positive direction.  Otherwise, wait
for the bulls to clearly regain control and push IMCL through
the recent highs near $56 before playing.

BUY CALL JUL-50 QCI-GJ OI=1457 at $6.90 SL=5.00
BUY CALL JUL-55*QCI-GK OI=1118 at $4.30 SL=2.75
BUY CALL JUL-60 QCI-GL OI=2942 at $2.50 SL=1.25
BUY CALL AUG-55 QCI-HK OI= 800 at $6.00 SL=4.00
BUY CALL AUG-60 QCI-HL OI=1067 at $4.00 SL=2.50
BUY CALL AUG-65 QCI-HM OI=1581 at $2.60 SL=1.25

SELL PUT JUN-50 QCI-SJ OI= 216 at $3.20 SL=5.25
(See risks of selling puts in play legend)

Average Daily Volume = 1.49 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=IMCL


PDLI - Protein Design Labs $84.69 (+6.44 last week)

Pursuing the prevention and treatment of disease through the
development of humanized monoclonal antibodies, PDLI has
fundamental patents that cover many such antibodies.  Eleven
companies have licenses under these patents for humanized
antibodies that they have developed.  PDLI has licensed certain
rights to its first humanized antibody product, Zenapax, to
Hoffman-La Roche and its affiliates, which market Zenapax for
the prevention of kidney transplant rejection.  In addition to
testing Zenapax for the treatment of autoimmune disease, the
company has several other humanized antibodies in clinical
development for autoimmune and inflammatory conditions, asthma
and cancer.

All things considered, things looked pretty good on Friday for
our PDLI play.  With a surprise 90 minute trading halt on the
NYSE and a shocking earnings warning from JNPR, the Technology
sector never really got out of reverse.  The bearish sentiment
continued to weigh on the Biotech index (BTK.X), and this
filtered down to PDLI.  Although the stock fell to $83.45 before
finding buying support, it was encouraging to see there wasn't a
rush for the exits with volume coming in at only about
two-thirds of the ADV.  The final hour recovery managed to boost
PDLI above the $84 stop level, keeping our play alive to fight
another day.  It didn't really make for a good aggressive entry
point though, as there was just no conviction (read:volume) on a
summer Friday.  The real technical damage took place on the BTK,
with this index falling below the $640 support level at the
close, and potentially negating the breakout through this level
earlier in the week.  So while we can still consider new entries
on a bounce near the $84 level, we really only want to do so if
the BTK can recover its footing and buying volume in PDLI looks
solid.  The more conservative approach might make the most sense
for now, waiting for the bulls to once again crest the $86 level
before playing.  The next obstacle after that will be the
formidable $91 resistance level, also the site of the 50%
retracement of the loss that began in early November of last
year.

BUY CALL JUL- 85*RPV-GQ OI=178 at $ 9.20 SL=6.25
BUY CALL JUL- 90 RPV-GR OI=190 at $ 7.00 SL=4.00
BUY CALL JUL- 95 RPV-GS OI=402 at $ 5.10 SL=3.00
BUY CALL AUG- 90 RPV-HR OI=355 at $10.00 SL=7.00
BUY CALL AUG- 95 RPV-HS OI=794 at $ 8.40 SL=6.00
BUY CALL AUG-100 RPV-HT OI=652 at $ 6.70 SL=4.75

SELL PUT JUL-75 RPV-SP OI=  23 at $ 5.90 SL=8.50
(See risks of selling puts in play legend)

Average Daily Volume = 1.76 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=PDLI


QCOM - Qualcomm, Inc. $61.24 (-0.35 last week)

Based on its proprietary CDMA technology, QCOM is engaged in
developing and delivering digital wireless communications
services.  The company's business areas include integrated
CDMA chipsets and system software and technology licensing.
QCOM owns patents that are essential to all of the CDMA
wireless telecommunications standards that have been adopted
or proposed for adoption by the worldwide standards-setting
bodies.  Currently, QCOM has licensed its CDMA patent portfolio
to more than 80 telecommunications equipment manufacturers
around the world.

Isn't that the way it always works?  Just when it looks like
an old favorite is poised to get moving higher, along comes a
negative bit of news to keep it under pressure.  In this case,
the culprit was JNPR, issuing a depressingly honest earnings
warning and virtually all stocks related to the communication
sector came under selling pressure.  Our CDMA hero, QCOM, wasn't
immune from the abuse and gave up nearly $4 by the closing
bell, erasing all its progress throughout the rest of the week.
It was almost as though investors forgot about all the positive
developments on the CDMA front in recent weeks and decided to
head for the hills.  The volume was thankfully light, coming in
at a mere third of the ADV, and making a case for the bulls to
once again charge to the rescue on Monday.  Before you run out
to scoop up all the calls you can afford though, take a moment
to notice that the stock is now perilously close to our $60
stop.  While aggressive traders can target shoot new entries on
a dip near this level, they will only want to do so if the dip
is met with eager buyers who are willing to push through strong
volume.  The daily Stochastics oscillator rolled over with the
big red candle posted on Friday, and it appears the most prudent
course of action will be to wait for the buyers to push through
the $65 resistance level before taking a position.

BUY CALL JUL-60*AAO-GL OI= 6722 at $6.80 SL=4.75
BUY CALL JUL-65 AAO-GM OI= 6773 at $4.30 SL=2.75
BUY CALL JUL-70 AAF-GN OI=13032 at $2.55 SL=1.25
BUY CALL OCT-65 AAO-JM OI= 3799 at $9.30 SL=6.50
BUY CALL OCT-70 AAO-JN OI=12068 at $7.30 SL=5.25
BUY CALL OCT-75 AAF-JO OI= 4709 at $5.30 SL=3.25

SELL PUT JUL-60 AAO-SL OI= 7535 at $4.80 SL=6.75
(See risks of selling puts in play legend)

Average Daily Volume = 16.2 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=QCOM


SEBL - Siebel Systems $48.61 (+2.73 last 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.

A low volume pullback is just what aggressive players were
looking for to afford them entry into our SEBL play.  Sure
enough, that's what they got, as the market reacted negatively
to the devastating earnings warning from JNPR Friday morning.
The $52 level served as resistance and our play pulled back on
anemic volume to logical support near $48, right on the 10-dma
(currently $48.25).  SEBL continues to attract investors due
to its consistently accurate guidance in an environment filled
with corporate CEOs who cannot reliably forecast their business
in either the short or long term.  The reward for this
consistency is seen in the daily chart, which boasts a series
of higher lows over the past 2 months.  While there could be a
bit more weakness early next week, look for SEBL to find solid
support near the converging 10-dma and the 30-dma ($47.47).  If
those two fail, we have the 38% retracement level of the
January-March decline resting at $46 and likely to provide
significant support.  Consider new entries on a bounce from
any of these levels, but wait for buying volume to appear before
taking the plunge.  More conservative entries will be found as
SEBL rallies through the $52 resistance level and the bulls set
their sights on $55, a likely point for the bears to try to
regain control.

BUY CALL JUL-45 SGW-GI OI= 457 at $7.70 SL=5.50
BUY CALL JUL-50*SGW-GJ OI=1492 at $4.90 SL=3.00
BUY CALL JUL-55 SGW-GK OI=3137 at $2.95 SL=1.50
BUY CALL AUG-50 SGW-HJ OI=8504 at $6.10 SL=4.00
BUY CALL AUG-55 SGW-HK OI=8817 at $4.10 SL=2.50
BUY CALL AUG-60 SGW-HL OI=6061 at $2.70 SL=1.25

SELL PUT JUL-45 SGW-SI OI=1478 at $3.50 SL=5.50
(See risks of selling puts in play legend)

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


VRSN - VeriSign, Inc. $55.66 (-0.58 last week)

VeriSign is the leading provider of Internet trust services
and digital certificate solutions needed by Web sites,
enterprises and individuals in order to conduct secure
electronic commerce and communications over IP networks.  VRSN
has used its secure online infrastructure to issue over 100,000
of its Website digital certificates and over 3.5 million of its
digital certificates for individuals.  The company also offers
the VeriSign Onsite service, which allows an organization to
leverage the company's trusted service infrastructure to develop
and deploy customized digital certificate services for use by an
organization's employees, customers and business partners.  To
date, over 300 enterprises have subscribed to the OnSite service
and VRSN has strategic relationships with industry leaders
including Cisco, Microsoft ,RSA, Security Dynamics, and VISA.

Just when it looked like the bulls were going to finally push
VRSN through the $59 resistance level, along comes JNPR with a
devastating earnings warning, keeping the NASDAQ underwater all
day on Friday.  The net result of the week's trading was that
our play managed to vacillate between $54-59 on relatively light
volume.  The bulls wanted to rally the stock, but every time
they got started down that road, along came another tech company
with an earnings confession.  All told, the technology sector
(and our play to boot) held up rather well on Friday, especially
when you consider the uncertainty created by the unexpected
trading halt on the NYSE.  Friday's selling snatched back the
lion's share of Thursday's gains, placing the Internet security
firm's share price just below both the 10-dma ($56.79) and the
30-dma ($56.96).  This could be throwing a wet blanket on the
daily Stochastics oscillator's attempt to break out of oversold
territory, and further weakness next week could be enough to
break our stop, currently resting at $53.  There was strong
buying interest near the $54 level all week and the 38%
retracement of the gains posted since early April rests at
$52.30.  Aggressive traders can consider new positions on a
dip and bounce near either of these levels, but only if followed
by strong buying volume.  The more prudent approach right now
appears to be waiting for the buyers to firmly gain control and
push the stock above $59 before taking a position.

BUY CALL JUL-55*QVR-GK OI= 202 at $6.60 SL=4.50
BUY CALL JUL-60 QVR-GL OI=1773 at $4.40 SL=2.75
BUY CALL JUL-65 QVR-GM OI= 268 at $2.85 SL=1.50
BUY CALL SEP-60 QVR-IL OI=1470 at $8.00 SL=5.75
BUY CALL SEP-65 QVR-IM OI= 707 at $6.30 SL=4.25
BUY CALL SEP-70 XVR-IN OI= 341 at $4.90 SL=3.00

SELL PUT JUL-50 QVR-SJ OI= 158 at $3.20 SL=5.25
(See risks of selling puts in play legend)

Average Daily Volume = 8.81 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=VRSN


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The Option Investor Newsletter                   Sunday 06-10-2001
Sunday                                                      4 of 5

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index instead?

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market updates, plays, education and daily commentaries by
those who know.

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

RIMM - Research in Motion $32.82 (-2.87 last week)

Research in Motion designs, builds and markets wireless
solutions for the mobile communications market.  Through
development and integration of hardware, software and services,
RIMM provides solutions for seamless access to time-sensitive
information including e-mail, messaging, Internet and
Intranet-based applications.  RIMM's portfolio of products
includes the RIM Wireless Handheld product line, the
BlackBerry wireless email solution, wireless personal computer
card adapters, embedded radio modems and software development
tools.  The company's technology also enables a broad array of
third party developers and manufacturers in North America and
around the world to enhance their products and services with
wireless connectivity.

With its always-on Blackberry wireless email solution, RIMM may
be at the cutting edge of where the next generation of personal
communication devices is headed, but in the here-and-now, the
stock is having problems.  After once again failing to crest the
$40 resistance level last week, damaging rumors surfaced,
stating that its sales to AOL were in jeopardy due a recent
price hike.  Showing the unsettled nature of the Technology
market, investors fled the stock, delivering a more than $5
intraday loss on more than double the ADV.  Although the rumors
were refuted on Thursday, the mild recovery was completely
swamped on Friday as RIMM once again gave up nearly 9%, this
time in response to the brutally honest warning from JNPR.  Up
until Friday, RIMM had been gradually working higher in a
bullish wedge, but by the time the week drew to a close, the
stock was solidly below the ascending trendline (currently $34),
and the daily Stochastics are now pointing south.  Intraday
resistance should turn back any intraday rallies at either the
$35, $36 or $37, providing for aggressive entry points.
Conservative players can enter the play as RIMM continues to
decline below the $32 level.  Place stops at $37.

BUY PUT JUL-35*RUL-SG OI= 170 at $5.80 SL=3.75
BUY PUT JUL-30 RUL-SF OI=1170 at $3.30 SL=1.75
BUY PUT JUL-25 RUL-SE OI= 269 at $1.50 SL=0.75

Average Daily Volume = 4.44 mln
http://www.premierinvestor.com/oi/profile.asp?ticker=RIMM


TLAB - Tellabs Inc $30.92 (-4.04 last week)

Tellabs designs, manufactures, markets and services optical
networking, next-generation switching and broadband access
solutions.  Its TITAN cross-connect system, which helps connect
incoming and outgoing digital and fiber-optic lines, accounts
for more than 60% of sales.  Tellabs makes the CABLESPAN
universal telephony distribution system, which lets cable
systems transmit voice, video, and data.  Tellabs also offers
the MartisDXX access and transport network system, and the FOCUS
system, which lets carriers build fiber-optic backbone networks.
The Company also provides professional services that support its
solutions.

It hasn't been a bed of roses for the networking stocks of late
and it doesn't look like it's time to pop the champagne anytime
soon.  In particular, the reduced spending by the telecoms and
the minefield of earnings' woes continue to pound the daylights
out of companies like TLAB, GLW, NTAP, and FNSR.  Although TLAB
is diversified with its broad range of services, it's not immune
to the sector sentiment.  Just take a look at a one-year chart
of the Networking Index (NWX.X)!  The NWX.X was trading above
1000 in October, falling to the wayside of 800 by December and
plummeting sub-600 in February.  Getting a beating behind the
woodshed is an understatement!  This month the NWX.X is hovering
between 420 and 440.  Another break of 420 invites traders to
play the downside of TLAB as it sinks lower with the broader
sector.  Ultimately, a slide through Friday's new 52-week low in
accord with a descending sector and market signals momentum
players to jump on this put play.  To protect against a short-
term rally, we've set a closing stop at the $34 level.

BUY PUT JUL-40 TEQ-SH OI=3305 at $9.60 SL=6.50
BUY PUT JUL-35 TEQ-SG OI=2015 at $5.50 SL=3.50
BUY PUT JUL-30*TEQ-SF OI= 880 at $2.40 SL=1.25

Average Daily Volume = 7.16 mln
http://www.premierinvestor.com/oi/profile.asp?ticker=TLAB


*****************
CURRENT PUT PLAYS
*****************

ELNT - Elantec Semiconductor $31.00 (-2.00 last week)

Elantec is engaged in the design, manufacturing and marketing
of high performance analog integrated circuits, primarily for
the video, optical storage, and DSL markets.  The company
offers approximately 150 products such as amplifiers, drivers,
faders, transceivers and multiplexers, most of which are
available in multiple packaging configurations.  ELNT targets
high growth commercial markets in which advances in digital
technology are driving increasing demand for high speed, high
precision and low power consumption analog circuits.

There sure was a lot of news from the Semiconductor sector this
past week.  From BRCM to INTC, bearish news was repeatedly
interpreted with a bullish bias, helping our ELNT to regain some
lost ground by late Thursday.  Before the opening bell rang on
Friday though, JNPR was throwing cold water on the partiers with
a dismal earnings warning and our play spent all day in the red,
dropping back to the $31 level at the close.  The Semiconductor
index (SOX.X) helped with the downward move, as it reversed from
the $700 resistance level.  While it was nice to see the bears
back in control (at least in our play), it is hard to put too
much stock in the days action, as it came on a paltry 171,000
shares, not even 20% of the ADV.  This puts us right back where
we were when we began coverage of ELNT earlier in the week,
looking for a drop below the $30 (actually $30.50) support
level.  If the bears can ramp up the selling volume and push
below this level, it should make for a nice conservative entry.
Otherwise, we'll need to keep our eyes peeled for another failed
rally below our $33 stop level.  Continue to monitor the SOX
index, as weakness there is likely to pave the way for a
technical breakdown in shares of ELNT as they head down towards
the $25 level.

BUY PUT JUL-30*UET-SF OI=5 at $3.20 SL=1.50
BUY PUT JUL-25 UET-SE OI=0 at $1.25 SL=0.50  Wait for OI!!

Average Daily Volume = 976 K
http://www.premierinvestor.com/oi/profile.asp?ticker=ELNT


NEWP - Newport Corp. $32.13 (+0.05 last 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.

Well, How do you like that?  After gradually working it's way
higher throughout the week, NEWP bumped into the $34 resistance
level late Thursday afternoon, providing aggressive traders with
the entry point they so patiently waited for.  Of course, INTC's
well-received mid-quarter update may have been cause for a bit
of heartburn.  That is until JNPR dashed all bullish hopes
Friday morning before the open with their dismal earnings
warning, firmly pushing the Networking index (NWX.X) into a
downtrend for the entire day.  NEWP ended the day with a more
than 5% loss, once again coming to rest on the $32 support level
and reinvigorating the bears.  Although encouraging (at least
for those of us in puts), the selling volume was nothing to
write home about, barely reaching a third of the ADV.  All
things considered, the damage could (and likely should) have
been worse, and therein lies the rub.  NEWP is looking like it
may be running out of downside pressure, and we need to be on
the lookout for a bullish reversal next week.  As the old adage
states, "Never short a dull market" and looking at the daily
chart for NEWP, there is no arguing that it is dull.  While we
can still target aggressive entries on failed rallies in the
$34-35 range, the more prudent course of action may be to wait
for the $32 support level or even $30 to fall victim to a
bearish selling party.  Keep stops set at $35 and watch the
NWX for guidance.

BUY PUT JUL-35*NZZ-SG OI= 169 at $6.10 SL=4.00
BUY PUT JUL-30 NZZ-SF OI= 195 at $3.50 SL=1.75
BUY PUT JUL-25 NZZ-SE OI= 261 at $1.70 SL=0.75

Average Daily Volume = 3.57 mln
http://www.premierinvestor.com/oi/profile.asp?ticker=NEWP


EPG - El Paso Natural Gas Co $57.00 (-2.85 last week)

El Paso Natural Gas, formerly El Paso Energy Corp, is a global
energy company originally founded in 1928 in El Paso, Texas. For
many years, the Company served as a regional pipeline company
conducting business mainly in the western United States.  In the
past five years however, it now has operations that span the
wholesale energy value chain, from natural gas production and
extraction to power generation. The Company's growth during this
period was accomplished through a series of strategic
acquisitions, transactions, and internal growth initiatives.

We initiated coverage Thursday evening on EPG on the basis of
its weakening state amid the pullback in energy issues.  Major
refiners like CHV, TX and ENE are all effectively getting cut
back to their lower support level, but EPG's inclination towards
further declines provides the potential for gains.  The stock's
violation of the historical $57 support and its continued
trading under the 10-dma line demonstrate its technical
weakness.  The pattern of lower-lows and lower-highs suggests
EPG could move lower; however, it appears the $56 level may be
firming.  Let's be patient for a high-volume (2+ mln intraday)
decline through Thursday $55.82 before initiating new plays.
There's always an entry from the upper resistance at $57;
although if EPG fails to break the bottom support your profit
potential is slim.  A bullish close above the 10-dma, at the $59
mark, and we'll exit the play.

BUY PUT JUL-60*EPG-SL OI=6754 at $4.50 SL=2.75
BUY PUT JUL-55 EPG-SK OI=1089 at $2.00 SL=1.00
BUY PUT JUL-50 EPG-SJ OI= 351 at $0.70 SL=0.00

Average Daily Volume = 2.75 mln
http://www.premierinvestor.com/oi/profile.asp?ticker=EPG


AIG - American Intl Group Inc $80.76 (+0.67 last week)

American Intl Group is a holding company that through its
subsidiaries provides a variety of insurance and insurance-
related activities in the US and overseas.  AIG's primary
activities include writing property, casualty, and life
insurance, as well as providing a broad range of financial
services and asset management.

The Insurance Index (IUX.X) measured the sector's recent
popularity amongst investors as it rose to levels topping 770.
The widening oscillations at this higher support were a
pertinent factor that prompted us to add AIG to our call list
last weekend.  The company's announcement earlier in May of its
$23 bln stock acquisition of the #3 US life insurer, American
General Corp, and a downgrade by Prudential also tested the
stock's price level.  So far, the $80 support is buoying AIG as
the IUX.X bobs at the 765 level.  AIG remains on our put list in
hopes $80 will tumble when the inevitable coil springs.  In the
event of its breakdown, it's not unthinkable for AIG to return
to March/April lows near $75.  The 52-week record low isn't that
far away at $72.64.  Under the current conditions, look to take
the path of least resistance.  An entry amid a high-volume
decline through $80 in contrast to taking an entry on a rollover
poses less risk.  Continue to monitor SPC, CB and PGR and the
IUX.X for evidence of a sector-wide breakdown.  We've revised our
closing stop to $82 from $83.

BUY PUT JUL-85 AIG-SQ OI= 13 at $4.90 SL=3.00
BUY PUT JUL-80*AIG-SP OI=478 at $1.95 SL=1.00
BUY PUT JUL-75 AIG-SO OI=179 at $0.80 SL=0.00

Average Daily Volume = 4.99 mln
http://www.premierinvestor.com/oi/profile.asp?ticker=AIG


NETE - Netegrity Inc $37.73 (+4.00 last week)

Netegrity  is a provider of software and services that manage and
control user access to Web-based e-commerce applications.  The
company's SiteMinder product is a directory-enabled secure user
management system, which is used to build and manage what is
commonly known as a portal.  Netegrity also offers professional
services that support its software product offerings.

On news that Netegrity was placed in the leadership position for
the second year in a row by Gartner, one of the most respected
authorities in the access management space, shares of NETE
surged last Tuesday.  The 21% spike on 1.7 times the normal
volume propelled NETE off its $31 low to the upper ranges of $38
and $39.  Our initial objective was to ride the decline on the
backfill after NETE went topside of $43 and $45, completing the
head-and-shoulders formation.  This scenario presented the ideal
entry in terms of risk and reward; but as can typically be the
case, the best laid plans don't always come to fruition in the
order we expect.  On Friday, a strong wave of selling in early
trading took NETE from  $39.76 to 35.26; but unfortunately, the
bullish cavalry returned it to the $37 level.  Although the
rollover was at the $40 level versus the upper resistance of
$43, it presented a viable and tradable opportunity.  Aggressive
traders might find these intraday fluctuations profitable next
week, too.  If you're more interested in buying into definitive
weakness look for a breakdown of the $35 level, locking in gains
as NETE approaches last Monday's $31 bottom.  A bearish market
coupled with declines in other software issues like AGIL, ADBE,
BEAS, and CHKP invites calamity and should create some downside
action for NETE.  Be prepared for OI to drop coverage if NETE
closes above the $44 level.

BUY PUT JUL-45 UPN-SI OI= 6 at $9.90 SL=7.00
BUY PUT JUL-40*UPN-SH OI= 0 at $6.40 SL=4.50  Wait for OI!!
BUY PUT JUL-35 UPN-SG OI=11 at $3.70 SL=2.00

Average Daily Volume = 1.41 mln
http://www.premierinvestor.com/oi/profile.asp?ticker=NETE


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*****
LEAPS
*****

Make Way For The 2004 LEAPS!
By Mark Phillips
Contact Support

That's right, they are starting to appear.  Those stocks that
are on Cycle 1 have had their 2004 LEAPS released, and taking
positions with these options gives us fully 31 months to be
right!  If you aren't familiar with the process by which new
LEAPS are issued, please follow the link below to my article
from last year, "The New 2003 LEAPS".

<http://members.OptionInvestor.com/archive/leaps/053100_1.asp>

While a little bit dated, the essential facts remain the same as
they were a year ago.  While we are on the subject of
housekeeping, let's cover the essential changes to our play
lists for the week before we delve into the more intriguing
aspects of where we are going.

Genzyme Corp. (NASDAQ:GENZ) delivered its 2-for-1 split, which
means that the LEAPS in our portfolio changed their symbols and
our cost basis changed.  Additionally, it is looking like the
Biotechs may be getting a bit top-heavy after their recent
advance, so we are really tightening up our stop on the play.
We want to make sure we preserve our profits in the event of a
downturn in the sector.  A drop below the recent breakout near
$54 could portend a more substantial drop, and we would prefer
to lock in our profits in that case.

It seems we just can't quite get it right on Verisign
(NASDAQ:VRSN) and Siebel Systems (NASDAQ:SEBL), with the
respective stock prices dancing just out of reach of our entry
targets before beginning their next leg upwards.  Although we
could be falling into the trap of chasing these stocks higher,
I think we can inch those targets up just a bit without unduly
increasing our risk.  Following its own bearish news a couple
weeks ago, EMC Corp. (NYSE:EMC) has fallen back into the $30-35
range once again, so we'll take advantage of the weakness by
reducing our entry target.  See the Watch List for the
revisions.

One other issue that deserves some attention is the action of
some of our laggard plays.  Due to the dramatic decline in the
VIX over the past couple months, we've seen option premiums
decline significantly, even though the stocks have been moving
up.  We dropped Wal-Mart (NYSE:WMT) this weekend, and although
the stock advanced significantly from where we initiated the
play, volatility collapse negated all of those gains.  A similar
problem is plaguing Clorox (NYSE:CLX), which is up significantly
since early March, but the LEAP premiums are stuck in neutral.

There are 3 other plays that just don't seem to have any life in
them.  Sprint Corp. (NYSE:FON), Nordstrom (NYSE:JWN) and Nextel
Communications (NASDAQ:NXTL) can't seem to find any buyers to
push their shares higher, while at the same time, decreasing
volatility is reducing the premiums.  We are keeping our stops
in place at current levels, but would recommend using rallies to
exit open positions.  It doesn't appear that these stocks are
finding any buying interest even when the markets are in rally
mode, and we will be better served by redeploying our cash in
more lively plays.

Judging by the email I received last week, it seems I struck a
positive chord with my attempt to clarify our Entry strategy.
Thanks to all of you that wrote to me, voicing your approval.
It seems there are still a couple points that need
clarification, however.  So let's take the remainder of our time
here together to finalize that discussion so that next week we
can focus on exit strategy.

While I utilized hourly charts for demonstration purposes,
entries are always taken based on a closing basis on the daily
charts, at least as far as the LEAPS Portfolio is concerned.
Hourly charts are great for fine-tuning that entry, and vigilant
traders can improve their entry point by taking action mid-day
when it is clear that the stock in question is solidly in rally
mode and has handily cleared our entry target price.

The chart below shows the action in BRCM last week, which
provided our entry.  Although we took the entry provided on
Tuesday, an even stronger setup materialized on Thursday due to
the more favorable volume picture.




So where are we and what do we expect going forward?  That's a
real good question.  The markets seem to be digesting a lot of
bad news without succumbing to a big selloff.  And we are likely
to see more bad news as earnings warnings are likely to increase
in frequency over the next couple weeks.  The fact that
investors continue to hit the buy button is a good sign,
possibly signaling that we don't need to retest the April lows.
I see signs of strength on numerous individual equity charts,
but the charts of the major indices have bearish chart patterns
scattered throughout.  Additionally, it seems that critical
support levels are holding up nicely 10,800 on the DJIA, 2100
on the COMPX and 1250 on the S&P500.

Simply put, we have mixed signals and that is no great surprise,
as history would seem to indicate range-bound trading during the
summer months.  The one factor that keeps me cautious is that
pesky VIX.  Have you noticed that it is now down at 21.41?  That
is awful close to the sub-20 level and indicates there isn't
much fear in the market.  That is just the sort of setup that
whets the appetite of the hungry bear.  We all know that the VIX
can very easily stay under 20 for weeks and months at a time, so
we are taking advantage of near-term weakness in quality stocks
to establish positions for the recovery that is bound to occur,
whether this summer, late fall, or early next year.  In short, I
expect more near-term weakness, which should be followed by a
significant recovery as it becomes clear that the economy is on
the mend.

Well I'm out of time again, but I think we are making great
strides towards having a LEAPS section that will benefit all
involved.  As always, don't hesitate to write with any questions
that arise.  Next week, we'll take on the issue of exit points
and that should leave us ready to tackle the markets together
for the remainder of the year.

Take your entries when they are offered, but don't force plays
or chase stocks higher.  Patience is still a virtue and one
that is likely to be handsomely rewarded in the months ahead.

See you next week!

Mark Phillips
Contact Support


LEAPS Portfolio

Current Open Plays

SYMBOL OPENED     LEAPS    SYMBOL  ENTRY   CURRENT  CHANGE  STOP

CLX    03/13/01  '02 $ 35  CLX-AG  $ 3.50  $ 3.80    8.57%  $ 33
                 '03 $ 35  VUT-AG  $ 6.10  $ 6.50    6.56%  $ 33
GENZ   03/23/01  '02 $42.5 GZQ-AV  $12.50  $17.50   40.00%  $ 54
                 '03 $ 45  OZG-AI  $13.88  $21.30   53.46%  $ 54
SWS    03/22/01  '02 $ 18  YWF-AT  $ 4.10  $ 5.40   31.71%  $ 20
                 '03 $ 20  VWZ-AD  $ 5.00  $ 6.40   28.00%  $ 20
WM     03/22/01  '02 $33.8 BWT-AY  $ 4.00  $ 5.30   32.50%  $ 32
                 '03 $33.8 OBN-AY  $ 6.13  $ 7.70   25.61%  $ 32
JWN    03/30/01  '02 $ 20  JWN-AD  $ 1.65  $ 1.80    9.09%  $17.50
                 '03 $ 20  VNZ-AD  $ 3.30  $ 3.40    3.03%  $17.50
GS     04/05/01  '02 $ 90  GS -AR  $14.00  $16.80   20.00%  $ 91
                 '03 $ 90  VSD-AR  $20.50  $25.90   26.34%  $ 91
FON    04/09/01  '02 $ 25  WO -AE  $ 2.80  $ 1.45  -48.21%  $ 19
                 '03 $ 25  VN -AE  $ 4.40  $ 3.40  -22.73%  $ 19
DELL   04/27/01  '02 $ 25  WDQ-AE  $ 6.20  $ 4.90  -20.97%  $ 23
                 '03 $ 25  VDL-AE  $ 9.00  $ 8.00  -11.11%  $ 23
ADBE   05/16/01  '02 $ 40  AEQ-AH  $11.00  $10.00  - 9.09%  $ 37
                 '03 $ 40  VAE-AH  $14.60  $15.80    8.22%  $ 37
AOL    05/16/01  '02 $ 55  AOO-AJ  $ 9.60  $ 8.10  -15.63%  $ 48
                 '03 $ 55  VAN-AJ  $14.60  $12.60  -13.70%  $ 48
NXTL   05/25/01  '02 $ 20  WFU-AD  $ 3.40  $ 2.25  -33.82%  $ 15
                 '03 $ 20  VFU-AD  $ 5.80  $ 4.40  -24.14%  $ 15
LRCX   06/01/01  '02 $ 30  WMJ-AF  $ 6.60  $ 8.40   27.27%  $ 25
                 '03 $ 30  VPC-AF  $10.30  $12.60   22.33%  $ 25
QCOM  06/01/01   '02 $ 65  AAO-AM  $13.00  $12.60  - 3.08%  $ 55
                 '03 $ 70  VLM-AN  $18.70  $18.70    0.00%  $ 55
BRCD  06/05/01   '02 $ 45  UBF-AI  $10.70  $12.40   15.89%  $ 35
                 '03 $ 45  OMW-AI  $18.40  $19.30    4.89%  $ 35
BRCM  06/05/01   '02 $ 40  WGJ-AH  $ 9.70  $ 9.40  - 3.09%  $ 30
                 '03 $ 40  OGJ-AH  $14.00  $15.20    8.57%  $ 30
TXN  06/07/01    '02 $ 40  TXN-AH  $ 6.30  $ 5.90  - 6.35%  $ 30
                 '03 $ 40  VXT-AH  $10.90  $10.20  - 6.42%  $ 30



LEAPS Watchlist

Current Possibles

SYMBOL  SINCE    TARGET PRICE  TARGETED LEAP  SYMBOL

GE     03/25/01  $50-51        JAN-2002 $ 53  WGE-AX
                               JAN-2003 $ 55  VGE-AK
EMC    04/22/01  $31-32        JAN-2002 $ 45  EMC-AI
                               JAN-2003 $ 45  VUE-AI
SEBL   04/22/01  $43-44        JAN-2002 $ 45  YDS-AI
                               JAN-2003 $ 45  OIE-AI
VRSN   04/29/01  $53-54        JAN-2002 $ 50  YXO-AJ
                               JAN-2003 $ 55  OVX-AL
CPN    06/10/01  $43-44        JAN-2002 $ 45  CPN-AI
                               JAN-2003 $ 50  OLB-AJ
                               JAN-2004 $ 50  LZC-AJ


New Portfolio Plays

BRCD - Brocade Communications $43.49

After dipping into the mid-$30s following the Memorial day
weekend, BRCD found the support of buyers who appeared just as
the daily Stochastics dipped into oversold territory.  The low
point of that decline coincided nicely with the 50% retracement
of the gains posted since the April lows.  While there are still
going to be shocking earnings warnings in the Technology sector
such as that received from JNPR on Friday, investors are voting
with their wallets that the worst may be behind, at least for
leading stocks such as BRCD.  Tuesday saw a stellar day for our
play, as BRCD began the day just below $40 and rallied strongly
throughout the day, satisfying our entry target by closing
solidly above the $41 level.  As we head into the heart of
earnings warning season, we want to give our new play some
wiggle room, so we are starting out with our stop at $35.  Any
repeated bounces near our original entry target should provide
attractive entry opportunities for those that missed their
chance last week.

BUY LEAP JAN-2002 $45.00 UBF-AI $10.70
BUY LEAP JAN-2003 $45.00 OMW-AI $18.40

BRCM - Broadcom Corp. $37.56

Earnings warnings were flying fast and furious in the
Semiconductor sector last week, and BRCM took the opportunity
to issue their own warning on Thursday.  Stating that sales
continue to be weak and that they would fall short of earnings
estimates for the second quarter, the company also gave
investors a glimmer of hope with the statement that revenue
would bottom out in the second quarter and then begin to
improve.  While hardly a glowing report, it was enough to keep
the buyers showing up, handing the stock a nearly $5 gain on the
day.  Fortunately, we were already in the play due to the solid
rally on Tuesday that pushed BRCM right through our entry target
at $36.  We could be early to this party, especially with
earnings warning season upon us, but with the Semiconductor
index (SOX.X) rallying sharply for most of the week despite all
the poor news, we are willing to place our bet and hold on for
the much-anticipated recovery.  We don't want to get whipsawed
out of our position on mild near-term weakness, so we are
starting out with a wide stop, clear down at $30.  If you missed
the entry last week, look for a dip near the $36 level to
provide entry, but make sure the bounce is fueled by solid
volume and the SOX continues its winning ways.

BUY LEAP JAN-2002 $40.00 WGJ-AH $ 9.70
BUY LEAP JAN-2003 $40.00 OGJ-AH $14.00

TXN - Texas Instruments $39.39

Believe it or not, we got our entry on another of our
Semiconductor plays, despite the warnings that were being issued
in the sector last week.  Leading up to INTC's mid-quarter
update Thursday night, TXN had a stellar day, gaining more than
10% on strong volume.  Unfortunately that was our entry day as
the stock plowed right through our $36-37 entry target, forcing
us to take our position at the high of the day.  As expected,
the stock fell back somewhat on Friday following a dismal
earnings warning from JNPR.  While the worst isn't over yet,
repeated comments from other Semiconductor companies is still
pointing towards hope for a 2nd half recovery.  Analysts
continue to be divided, providing further proof that nobody
REALLY knows what the future holds.  But we set our desired
entry point, and it was satisfied.  Barring any blowout negative
news, the series of recent interest rate cuts should help to get
the tech sector firing on all cylinders again TXN will be one of
those in the Semiconductor area leading the recovery.  Until we
see more positive movement, we want to give TXN some room to
move, so we are starting out with our stop at the $30 level.

BUY LEAP JAN-2002 $40.00 TXN-AH $ 6.30
BUY LEAP JAN-2003 $40.00 VXT-AH $10.90


New Watchlist Plays

CPN - Calpine Corp. $45.80

It was only a couple weeks ago that we removed CPN from our
Watch List due to concerns about valuation and a possible steep
decline in price.  Sure enough, sellers appeared in force,
driving the stock down as low as $42 last week before the stock
appeared to hit bottom.  The fundamental catalyst for the drop
was likely fears that the Federal government would step in to
implement rate caps to alleviate the high power costs in the
state of California.  Investors seem to have decided that event
is unlikely and began to bid the stock higher, even on Friday
when the broader market was in decline.  The fact remains that
natural gas prices are high, likely to remain so, and that this
fuel is the preferred one for power generation due to
environmental concerns.  Add to that the fact that CPN has
impressive resources in terms of generation facilities, natural
gas reserves, and pipelines and transmission systems for
delivering natural gas and electricity to its customers, and you
can see that the company is well positioned to remain quite
profitable, especially as we head into the peak demand summer
months.  On Friday, CPN crested its 200-dma ($45.48), albeit on
rather mild volume.  We are looking for one more mild pullback
before the stock really gets moving.  Target entries on a bounce
from the $43-44 area, and once filled, place a tight stop at$42.

BUY LEAP JAN-2002 $45.00 CPN-AI
BUY LEAP JAN-2003 $50.00 OLB-AJ
BUY LEAP JAN-2004 $50.00 LZC-AJ



Drops

WMT $50.99 Even though the Retail index (RLX.X) found support
and began to recover on Monday, WMT continued to deteriorate
throughout the week.  With a close under our $51 stop on Monday,
we have no choice but to drop the play.  WMT is a perfect
example of the negative effect both time decay and a drop in
volatility can have, even on LEAPS.  Note in the Track Record
file that even though the stock moved up more than $3 while we
were in the play, the '02 LEAP lost 7% and the '03 LEAP barely
managed to hold at even.  '02 LEAPS are now starting to see more
a more significant effect from the passage of time, and for WMT,
this effect was exacerbated by declining volatility with the VIX
falling from 35 to 21 during the life of the play.


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The Option Investor Newsletter                   Sunday 06-10-2001
Sunday                                                      5 of 5

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*************
COVERED CALLS
*************

Option Trading Basics: Q&A with the Covered-calls Editor
By Mark Wnetrzak

Today's question concerns our approach to the strategy of writing
covered-calls and the general guidelines for using this section.


Dear OIN,

I learned of your service through John Dessauer's Investor's World.
I am interested in writing covered-calls.  My problem in writing
covered-calls has been research and finding the correct company.
Can your service help me to accomplish this?  In general, what
kind of percent of profit do you shoot for.  Also, I have a margin
account with Charles Schwab.  Do you recommend using margin money
on short plays?

KJ


My response:

In this section, we use a two-pronged approach to find a variety of
covered-call candidates to supplement your search for profitable
trading positions: technical scans and option scans.  I personally
scan through hundreds of charts each week looking for technically
strong stocks with favorable option premiums.  I then sort through
several "over-priced" option lists, looking for stocks with favor-
able technicals.  The strategy we use in selecting these positions
is based on a conservative covered-write using the "total return"
concept that Lawrence McMillan adeptly describes in his original
book, "Options: As a Strategic Investment."  With this conservative
approach, an investor considers the covered write as a single entity
and is not interested so much in stock ownership or bullish movement,
but in obtaining a consistent (monthly) return on investment.  Based
on this approach, our target is generally in the range of 3%-6% per
month (6%-12% on margin), and in all but a few cases, the stock is
called away or sold after one strike period.  Of course, it is still
good advice not to purchase an issue you wouldn't mind owning, as
there is always that possibility with a covered-write.  We favor a
short-term approach, which isn't predicated on forecasting a stock's
(or the market's) directional movement.  Still, whether the covered
write strategy is applied short-term or longer term, it requires a
neutral to slightly bullish outlook on the underlying equity and the
overall market.   Obviously, covered-calls do hedge against downside
movement, but they are not a remedy for protracted bearish activity.
We simply prefer the higher probability of making a consistent (low)
return.

Some investors prefer to strive for higher potential returns with
an aggressive outlook, writing "out-of-the-money" calls on stocks in
their portfolios.  These (OTM) positions offer greater rewards but
also have less downside protection.  The maximum potential profit of
an OTM position, while greater than that of an "in-the-money" (ITM)
position, will always require an increase in price by the underlying
stock.  Thus, by utilizing an OTM option, the success of the overall
position depends more on the movement of the stock price and less on
the benefits of writing the call.  Since the premium generated from
the sale of the call is much smaller, the overall position will be
more susceptible to loss if the stock's price declines.  ITM plays
are plainly more conservative, offering less risk but also smaller
reward potential.  Though our strategy is less aggressive, there is
risk of loss in all trading.

Our primary goal in this section is to provide positions that make
acceptable returns while still receiving an above-average amount of
downside protection.  If you decide to use OTM calls, concentrate
on the "return not called."  This is the return on investment that
one would achieve even if the stock price were unchanged when the
sold option expires.  You can compare potential plays more fairly
using this approach since no assumption is made about the price
movement in the underlying issue.  The approach you take depends on
your personal preference and risk-reward tolerance.  Some investors
split the difference, preferring to write a combination of both OTM
and ITM calls.

As far as fundamental research, we are only able to do a cursory
search of the latest news.  As with all recommendations, it remains
your responsibility to perform due diligence and thoroughly research
any issue you are interested in.  Regarding the use of margin: it is
an effective tool that increases leverage but it also has drawbacks.
The key is to manage your portfolio capital efficiently but without
undue downside risk.

Regards,

Mark W.
OIN


SUMMARY OF PREVIOUS CANDIDATES
*****
Note:  Margin not used in calculations.

Stock  Price  Last   Call  Strike Price   Gain   Potential
Symbol Picked Price  Month Sold   Picked  /Loss  Mon. Yield

GENE   13.44  15.03   JUN  12.50  1.75  *$  0.81  15.1%
NPIX   10.00  12.70   JUN  10.00  1.15  *$  1.15  11.3%
CYGN    7.79   9.38   JUN   7.50  0.75  *$  0.46   9.9%
OSUR   10.24  11.21   JUN  10.00  1.00  *$  0.76   8.9%
VOXX   10.09  10.45   JUN  10.00  0.95  *$  0.86   8.2%
OPTV   13.87  15.02   JUN  12.50  1.80  *$  0.43   7.7%
STOR   19.27  18.59   JUN  15.00  5.40  *$  1.13   7.1%
APHT   20.00  21.59   JUN  17.50  3.50  *$  1.00   6.6%
SPWX   15.70  14.10   JUN  12.50  3.90  *$  0.70   6.4%
FNSR   20.98  15.10   JUN  15.00  7.00  *$  1.02   6.3%
ABMD   25.60  23.75   JUN  22.50  4.00  *$  0.90   6.3%
ALXN   26.02  22.52   JUN  22.50  4.40  *$  0.88   6.2%
MCDTA  31.95  29.75   JUN  25.00  7.90  *$  0.95   6.0%
CELG   22.99  32.85   JUN  20.00  4.00  *$  1.01   5.8%
STLW   13.01  11.58   JUN  10.00  3.50  *$  0.49   5.6%
WEBX   16.20  16.80   JUN  12.50  4.30  *$  0.60   5.5%
NUAN   16.50  17.21   JUN  12.50  4.30  *$  0.30   5.3%
SBYN   15.28  16.05   JUN  12.50  3.20  *$  0.42   5.3%
MEDX   26.30  29.85   JUN  22.50  4.80  *$  1.00   5.1%
PGNX   20.16  19.26   JUN  17.50  3.20  *$  0.54   4.8%
NEM    20.98  21.42   JUN  20.00  2.00  *$  1.02   4.7%
AFCI   17.70  20.72   JUN  15.00  3.40  *$  0.70   4.3%
HPOW   13.74  11.93   JUN  12.50  1.65   $ -0.16   0.0%

BTX     8.50   7.85   JUL   7.50  1.90  *$  0.90   8.5%
ROS     5.49   5.46   JUL   5.00  1.05  *$  0.56   7.8%
MCAF   11.90  14.56   JUL  10.00  2.70  *$  0.80   5.4%
MRVC   12.35   9.93   JUL  10.00  3.20   $  0.78   4.7%

*$ = Stock price is above the sold striking price.

Comments:

One week to go (June expiration) and Juniper (NASDAQ:JNPR) had
to ruin Intel's (NASDAQ:INTC) party.  Time to re-evaluate your
positions during this time of Market weakness.  Storagenetworks
(NASDAQ:STOR) could be a candidate for an early exit if it falls
below its 50 dma on a closing basis.  The technicals have weak-
ened and the next support area is around $12.50.  Finisar (NASDAQ:
FNSR) continues to weaken though this week's rally provided a
reasonable exit.  The short-term double-top looks ominous.  Time
to bid Alexion Pharmaceuticals (NASDAQ:ALXN) adieu?  The company
reported rather discouraging early results of its Phase I study
on its psoriasis treatment.  A test of the April low appears
likely.  H Power (NASDAQ:HPOW) looks a bit worrisome - consider
an early exit on further weakness.  Many of the stocks in the
summary appear to be entering consolidation phases or are failing
to move above their May highs.  Time to monitor your positions
closely as they test support and defend your capital as need be.

Positions Closed:

Aremissoft (NASDAQ:AREM)

******************************************************************
                       - UPCOMING SEMINAR -
******************************************************************
On June 27, Mark Wnetrzak (Covered-calls) and Ray Cummins (Naked
Puts) will be conducting an instructional seminar for new traders
who are interested in the fundamentals of their approach to these
conservative strategies.

The general topics of discussion will be:

- How to earn monthly income through stock ownership
- How to reduce the effects of downside market moves
- How to purchase new portfolio stocks at a discount

You can take the seminar without leaving the comfort of your home
or office.  It is interactive and you can ask questions after the
presentation.  You do not need any special software to attend
the presentation but you must have a 56K Internet connection or
faster for best results and a separate phone to listen to the
audio portion.

If you are interested in this seminar, please click here for more
information:

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

**************
NEW CANDIDATES
**************

Sequenced by Company
*****
Stock  Last  Call Strike  Option  Last Open  Cost   Days  Target
Symbol Price Mon. Price   Symbol  Bid  Int.  Basis  Exp.  Yield

AMLN   14.42  JUL 12.50   AQM GV  3.00 973   11.42   42    6.8%
GNSL    5.40  JUL  5.00   UNU GA  0.90 305    4.50   42    8.0%
LEXG   11.66  JUL 10.00   EIU GB  2.45 70     9.21   42    6.2%
MCAF   14.56  JUL 12.50   CFU GV  2.90 38    11.66   42    5.2%
OCPI   14.86  JUL 12.50   UHY GV  3.30 21    11.56   42    5.9%
TIVO    8.40  JUL  7.50   TUK GU  1.55 132    6.85   42    6.9%
VLNC    9.06  JUL  7.50   VHQ GU  2.15 49     6.91   42    6.2%

Sequenced by Target Yield (monthly basis)
*****
Stock  Last  Call Strike  Option  Last Open  Cost   Days  Target
Symbol Price Mon. Price   Symbol  Bid  Int.  Basis  Exp.  Yield

GNSL    5.40  JUL  5.00   UNU GA  0.90 305    4.50   42    8.0%
TIVO    8.40  JUL  7.50   TUK GU  1.55 132    6.85   42    6.9%
AMLN   14.42  JUL 12.50   AQM GV  3.00 973   11.42   42    6.8%
LEXG   11.66  JUL 10.00   EIU GB  2.45 70     9.21   42    6.2%
VLNC    9.06  JUL  7.50   VHQ GU  2.15 49     6.91   42    6.2%
OCPI   14.86  JUL 12.50   UHY GV  3.30 21    11.56   42    5.9%
MCAF   14.56  JUL 12.50   CFU GV  2.90 38    11.66   42    5.2%


Company Descriptions

LB-Last Bid price, OI-Open Interest, CB-Cost Basis or break-even
point, DE-Days to Expiry, TY-Target Yield (monthly basis).

*****
AMLN - Amylin Pharmaceuticals  $14.42  *** Drug Speculation! ***

Amylin Pharmaceuticals (NASDAQ:AMLN) is engaged in the discovery
and development of potential drug candidates for the treatment of
metabolic disorders.  The company pioneered research of a hormone
called amylin and is also developing Symlin, a synthetic analog of
the human hormone amylin for the treatment of people with diabetes
who use insulin.  The company's second drug candidate, synthetic
exendin-4, which is a naturally occurring peptide derived from the
salivary secretions of the Gila monster is now in Phase II studies.
The company is also evaluating another drug in for potential use
in the treatment of metabolic disorders relating to cardiovascular
disease.  Amylin shares have rallied on expectation of positive
information from recent clinical tests.  Amylin also announced
that its wholly owned subsidiary, Amylin Europe, Ltd has submitted
Marketing Authorization Applications for SYMLIN(TM) (pramlintide
acetate) to the European Agency for the Evaluation of Medicinal
Products (EMEA) under the centralized European Community procedure
for the authorization of medicinal products.  Investors appear to
favor the news and the relatively stable support area near $10
provides a reasonable risk-reward outlook in this position.

JUL 12.50 AQM GV LB=3.00 OI=973 CB=11.42 DE=42 TY=6.8%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=AMLN
*****
GNSL - Genomic Solutions  $5.40  *** Cheap Speculation! ***

Genomic Solutions (NASDAQ:GNSL) designs, develops, manufactures,
markets and sells instruments, software, consumables and services
used to determine the activity level of genes and to isolate,
identify and characterize proteins.  The company's products and
systems enable researchers to perform complex, high volume experi-
ments at a lower cost and in less time than traditional techniques.
As a result, Genomic Solutions products and systems facilitate more
rapid and less expensive drug discovery.  GNSL recently announced
that components of its GeneTAC(TM) Biochip System have been pur-
chased by a prestigious research organization in India, through
Genomic Solutions' distribution partner, PerkinElmer Life Sciences.
In any case, there is no recent news to explain the high volume
surge on Friday.  The move above the May high is bullish and this
play offers a reasonable entry point for small-cap speculators.

JUL 5.00 UNU GA LB=0.90 OI=305 CB=4.50 DE=42 TY=8.0%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=GNSL
*****
LEXG - Lexicon Genetics  $11.66  *** Gene Speculation ***

Lexicon Genetics (NASDAQ:LEXG) is a drug discovery company of the
post-genome era, using gene knockout technology to define the
functions of genes for the discovery of pharmaceutical products.
Lexicon is using this technology to fuel drug discovery programs
in cancer, cardiovascular disease, immune disorders, neurological
disease, diabetes and obesity.  Lexicon has established drug
discovery alliances and functional genomics collaborations with
leading pharmaceutical and biotechnology companies, research
institutes and academic institutions throughout the world to
commercialize its technology and further develop its discoveries.
A team of scientists at the University of Massachusetts Medical
School working in collaboration with scientists at LEXG, have
reported discovering the function of a gene called Ini-1, a new
tumor suppressor gene related to head and neck cancer.  These
type of discoveries are fueling investor interest in the genomic
industry and the future drugs it may offer.  This play offers a
reasonable cost basis from which to speculate on the company's
next discovery.

JUL 10.00 EIU GB LB=2.45 OI=70 CB=9.21 DE=42 TY=6.2%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=LEXG
*****
MCAF - McAfee.com  $14.56  *** It's A Deal! ***

McAfee.com (NASDAQ:MCAF), a majority-owned subsidiary of Network
Associates (NASDAQ:NETA), is a consumer security Application
Service Provider (ASP).  The company delivers software benefits
through an Internet browser, virtually eliminating the need to
install, configure and manage the technology on a local PC or
network.  McAfee.com hosts software application services on its
vast technology infrastructure and provides these services to
users online.  McAfee.com has signed up more than 920,000 paid
subscribers and regularly has more than 800,000 visitors each
day.  McAfee.com's shares have exploded over the last few weeks
after the company announced a strategic alliance with Microsoft
(NASDAQ:MSFT).  McAfee.com will supply security services for
Microsoft's planned set of online services, called HailStorm.
The high-volume breakout is still going strong and the stock
has firmly moved above its 150-dma with no near-term resistance
until the $18 range.  We still favor a conservative entry point
closer to technical support.

JUL 12.50 CFU GV LB=2.90 OI=38 CB=11.66 DE=42 TY=5.2%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=MCAF
*****
OCPI - Optical Comm. Products  $14.86  *** Technicals Only ***

Optical Communication Products (NASDAQ:OCPI) designs, manufactures
and sells a comprehensive line of high-performance, highly reliable
fiber optic subsystems and modules for metropolitan area networks
and high-speed premises networks.  OCP's subsystems and modules
include optical transmitters, receivers, transceivers and trans-
ponders that convert electronic signals into optical signals and
back to electronic signals, enabling high-speed communication of
voice and data traffic over public and private fiber optic networks.
The last news on OCP was on May 25, when the company's three top
executives announced they each plan to sell about 10 percent of
their individual holdings.  The stock dipped a few days later only
to rally on high volume and make a new near-term high.  We simply
favor the bullish reaction to the news and the technical support
area near the sold strike price.

JUL 12.50 UHY GV LB=3.30 OI=21 CB=11.56 DE=42 TY=5.9%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=OCPI
*****
TIVO - Tivo  $8.40  *** On The Rebound! ***

TiVo (NASDAQ:TIVO) is a creator of personal television.  The TiVo
Service lets consumers take control of their television viewing
by allowing them to watch what they want, when they want it.  As
part of TiVo's easy-to-use service and unique technology, viewers
can time-shift their favorite television shows and create a custom
television line-up for viewing at anytime.  With TiVo's Thumbs Up,
Thumbs Down buttons, viewers can teach TiVo what shows they like
and dislike.  Using these preferences, TiVo automatically records
programs the viewer may want to see. TiVo also enables consumers
to pause, rewind, instant replay and playback in slow motion any
live television broadcast.  TiVo has also developed a technology
that serves as a platform for new and interactive entertainment
content and services.  Interactive TV is becoming a popular mode
of entertainment and investors are moving back into the group in
anticipation of future upside activity.  TIVO shares have moved
up in response to the renewed interest and our cost basis offers
a reasonable entry point in the issue.

JUL 7.50 TUK GU LB=1.55 OI=132 CB=6.85 DE=42 TY=6.9%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=TIVO
*****
VLNC - Valence  $9.06  *** Earnings Rally? ***

Valence Technology designs, develops, manufactures and markets
rechargeable lithium polymer batteries for portable communication
devices, also known as mobile communication products, including
notebook computers, personal digital assistants or PDAs, handheld
personal computers, or HPCs, and cellular telephones.  The company
received its first purchase order for commercial grade lithium
polymer batteries in 1999 and currently has purchase orders for
almost $20 million of batteries.  Valence will report quarterly
earnings on Monday, June 11, and traders are betting the outcome
will be favorable.  Our conservative position offers some downside
protection in the event of any post-earnings consolidation.

JUL 7.50 VHQ GU LB=2.15 OI=49 CB=6.91 DE=42 TY=6.2%

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


************************************
SUPPLEMENTAL COVERED CALL CANDIDATES
************************************

The following group of issues is a list of additional 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
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary.

Sequenced by Target Yield (monthly basis)
*****
Stock  Last  Call Strike  Option  Last Open  Cost   Days  Target
Symbol Price Mon. Price   Symbol  Bid  Int.  Basis  Exp.  Yield

LYNX    8.19  JUL  7.50   ULX GU  1.55 36     6.64   42    9.4%
FIBR   15.00  JUL 12.50   QFW GV  3.60 360   11.40   42    7.0%
OPTV   15.02  JUL 12.50   OUZ GV  3.60 22    11.42   42    6.8%
ACTN   22.50  JUL 22.50   QNC GX  1.90 65    20.60   42    6.7%
NTIQ   29.80  JUL 25.00   CQT GE  6.60 588   23.20   42    5.6%

*************************ADVERTISEMENT*********************
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************************************************************

*****************
NAKED PUT SECTION
*****************

Trading 101: A Strategy for Long-term Success
By Ray Cummins

When it comes to constructing a profitable arsenal of trading
techniques, no single method or procedure will work for every
market participant.  Each trader has his (or her) own needs and
requirements.  Issues and concerns that may be important to one
person can be of very little significance for another.  The only
principle that applies to everyone is that traders must identify
their strengths and limitations and structure their approach to
the market accordingly.

One of the initial stages in creating a successful trading plan
is assessing your financial situation.  The easiest way to begin
this process is to define your objectives and constraints.  That
means establishing a target portfolio return and risk tolerance
level.  Time is an important factor in this regard as it can be
both ally and enemy.  With short-term strategies, it is more
difficult to recover from substantial losses but the returns are
generally higher.  Positions with a longer-term outlook have a
greater chance for success, however they usually produce lower
relative profits.  In addition, the longer the time horizon, the
more risk the entire portfolio can tolerate as there is ample
opportunity to recover from unexpected losses.  Regardless of the
methods you choose, an acceptable risk-reward profile should be
established before any strategy is initiated.  The overall level
of downside potential must be proportionate to the size of the
portfolio and its primary purpose.  The fundamental question is,
"How much do you expect to earn on a monthly (percentage) basis
and is your trading capital sufficient to absorb the occasional
draw-downs necessary to yield that amount?"  By combining your
profit objective with the appropriate risk tolerance, a set of
primary guidelines can be established for your trading system.

In order to determine the appropriate trading strategy, you must
identify the potential for profit with each individual technique.
In most cases, it is relatively easy to estimate the returns you
can expect from a particular approach through the use of trading
models and historical results.  You can also examine the returns
from similar techniques and calculate the maximum profit and the
break-even points for a specific position with scenario analysis.
A number of inexpensive software products are available for this
type of research and there are also some (free) web-based models
that provide basic option pricing and volatility analysis.  These
tools can help you determine an expected overall return for your
portfolio, based on how much capital you devote to each position.
Of course, the amount of risk exposure you are willing to endure
should play an important role when you select specific strategies
for your option trading arsenal.  There is a definite trade-off
between risk and reward and most people do best with techniques
that are low cost and offer a reasonable probability of a high
(potential) reward.  That reason is, one winning play can offset
a number of losing positions.  In contrast, low risk strategies
are often limited profit as well, and although the probability
of loss is remote, the amount of downside potential is too great
to warrant the risk.

The process of developing a profitable approach to trading in the
market is dynamic and constantly changing.  For that reason, the
the final step in the procedure can also be the most difficult.
This phase involves measuring and comparing the success of your
trading tactics to other popular systems and current benchmarks.
If the results are favorable, only small alterations are needed
to maintain the integrity of the system and adapt it to current
conditions.  However, if your current strategies are not yielding
the returns necessary to achieve portfolio targets, you may need
to conduct additional analysis and make some adjustments to bring
the system up to a minimal level of performance.  If a thorough
overhaul of the process fails to yield noticeable improvements,
it may be time to consider another approach altogether.

Good Luck!


                      *** WARNING!!! ***
Occasionally a company will experience catastrophic news causing
a severe drop in the stock price. This may cause a devastatingly
large loss which may wipe out all of your smaller gains. There is
one very important rule; Don't sell naked puts on stocks that you
don't want to own! It is also important that you consider using
trading STOPS on naked option positions to help limit losses when
the stock price drops. Many professional traders suggest closing
the position when the stock price falls below the sold strike or
using a buy-to-close STOP at a price that is no more than twice
the original premium from the sold option.


SUMMARY OF PREVIOUS CANDIDATES
*****

Stock  Price  Last   Call  Strike Price   Gain   Potential
Symbol Picked Price  Month Sold   Picked  /Loss  Mon. Yield

AMLN   10.85  14.42   JUN  10.00  0.60  *$  0.60  22.3%
FIBR   13.33  15.00   JUN  10.00  0.35  *$  0.35  17.6%
GENE   13.60  15.03   JUN  10.00  0.35  *$  0.35  17.3%
IDCC   13.99  14.33   JUN  12.50  0.35  *$  0.35  17.0%
PRST   12.97  14.95   JUN  12.50  0.40  *$  0.40  17.0%
EXEL   15.97  17.04   JUN  12.50  0.70  *$  0.70  15.6%
DTHK    8.74   7.90   JUN   7.50  0.25  *$  0.25  15.1%
AMZN   16.95  15.70   JUN  12.50  0.25  *$  0.25  14.9%
MCAF   12.02  14.56   JUN  10.00  0.30  *$  0.30  14.8%
VIGN   10.02   9.42   JUN   7.50  0.30  *$  0.30  14.2%
SEAC   20.37  21.89   JUN  17.50  0.50  *$  0.50  13.2%
SBSE   23.79  20.05   JUN  20.00  0.65  *$  0.65  11.1%
PLUG   32.78  28.14   JUN  25.00  0.35  *$  0.35  11.0%
STOR   21.93  18.59   JUN  15.00  0.45  *$  0.45  10.1%
ILUM   32.01  31.08   JUN  25.00  0.65  *$  0.65  10.0%
NMTC   22.22  23.16   JUN  17.50  0.45  *$  0.45  10.0%
SMTC   31.70  31.81   JUN  25.00  0.60  *$  0.60   9.4%
NFLD   13.50  13.59   JUN  10.00  0.30  *$  0.30   8.7%
AVCI   13.59   9.24   JUN   7.50  0.30  *$  0.30   8.6%
TSAI   12.03  12.85   JUN  10.00  0.30  *$  0.30   8.5%
PLUG   35.40  28.14   JUN  25.00  0.40  *$  0.40   8.1%
GLGC   21.05  26.05   JUN  17.50  0.50  *$  0.50   7.8%
APCC   16.83  15.87   JUN  15.00  0.45  *$  0.45   7.3%
PDG    11.05  10.99   JUN  10.00  0.30  *$  0.30   7.1%
GNSS   20.45  33.49   JUN  15.00  0.35  *$  0.35   6.9%
OO     26.00  21.80   JUN  22.50  0.35   $ -0.35   0.0%

MRVC   10.50   9.93   JUL   7.50  0.35  *$  0.35   8.9%
DMRC   18.06  19.36   JUL  15.00  0.65  *$  0.65   8.4%
AVGN   21.25  21.25   JUL  15.00  0.45  *$  0.45   5.9%

*$ = Stock price is above the sold striking price.

Comments:

One week to go for the June expiration and all is not well - at
least that is what Juniper (NASDAQ:JNPR) said.  Time to evaluate
your outlook on any issues you may end up owning next Saturday.
The rally this week in Sbs Technologies (NASDAQ:SBSE) and Semtech
(NASDAQ:SMTC) offered reasonable exits; we will show the positions
closed.  Oakley's (NYSE:OO) decline this week is worrisome and we
will use any future rally to exit the position.  Many of the above
issues are testing their support areas and should be monitored
closely.  As the broader market weakens, a more defensive posture
may prevent a raid on one's capital.

Positions Closed:

Sawtek (NASDAQ:SAWS)


******************************************************************
                       - UPCOMING SEMINAR -
******************************************************************
On June 27, Mark Wnetrzak (Covered-calls) and Ray Cummins (Naked
Puts) will be conducting an instructional seminar for new traders
who are interested in the fundamentals of their approach to these
conservative strategies.

The general topics of discussion will be:

- How to earn monthly income through stock ownership
- How to reduce the effects of downside market moves
- How to purchase new portfolio stocks at a discount

You can take the seminar without leaving the comfort of your home
or office.  It is interactive and you can ask questions after the
presentation.  You do not need any special software to attend
the presentation but you must have a 56K Internet connection or
faster for best results and a separate phone to listen to the
audio portion.

If you are interested in this seminar, please click here for more
information:

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

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

NEW CANDIDATES
*********

Sequenced by Company
*****
Stock  Last  Call Strike  Option  Last Open  Cost   Days  Target
Symbol Price Mon. Price   Symbol  Bid  Int.  Basis  Exp.  Yield

ACTN   22.50  JUL 20.00   QNC SD  0.95 0     19.05   42    9.2%
GNSS   33.49  JUL 25.00   QFE SE  0.60 213   24.40   42    6.0%
ICIX   17.71  JUL 15.00   QIX SC  0.60 140   14.40   42    8.7%
MDCC   22.61  JUL 17.50   MCQ SW  0.80 10    16.70   42   10.9%
PXLW   30.66  JUL 22.50   PUO SX  0.65 178   21.85   42    6.9%
SCIO   27.03  JUL 20.00   UIO SD  0.60 622   19.40   42    7.2%
UIS    12.94  JUL 12.50   UIS SV  0.65 3593  11.85   42    8.7%

Sequenced by Target Yield (monthly basis)
******
Stock  Last  Call Strike  Option  Last Open  Cost   Days  Target
Symbol Price Mon. Price   Symbol  Bid  Int.  Basis  Exp.  Yield

MDCC   22.61  JUL 17.50   MCQ SW  0.80 10    16.70   42   10.9%
ACTN   22.50  JUL 20.00   QNC SD  0.95 0     19.05   42    9.2%
ICIX   17.71  JUL 15.00   QIX SC  0.60 140   14.40   42    8.7%
UIS    12.94  JUL 12.50   UIS SV  0.65 3593  11.85   42    8.7%
SCIO   27.03  JUL 20.00   UIO SD  0.60 622   19.40   42    7.2%
PXLW   30.66  JUL 22.50   PUO SX  0.65 178   21.85   42    6.9%
GNSS   33.49  JUL 25.00   QFE SE  0.60 213   24.40   42    6.0%


Company Descriptions

LB-Last Bid price, OI-Open Interest, CB-Cost Basis or break-even
point, DE-Days to Expiry, TY-Target Yield (monthly basis).

*****
ACTN - Action Performance  $22.50  *** Motor-sports Mania! ***

Action Performance Companies (NASDAQ:ACTN) designs and markets
licensed motor-sports products, including die-cast scaled replicas
of motor-sports vehicles, apparel and souvenirs.  The company also
develops promotional programs for sponsors of motor-sports that
feature the company's die-cast replicas or other products that are
intended to increase brand awareness of the products or services
of the corporate sponsors.  The company markets its products to
specialty retailers throughout the world, directly or through its
wholesale and dealer distributor network, to a range of racing
enthusiasts through its Racing Collectables Club of America, and
through mobile track-side souvenir stores and promotional programs
for corporate sponsors.  ACTN is "on the move" and investors who
want a piece of the "action" can establish a discounted cost basis
in the issue with this position.

JUL 20.00 QNC SD LB=0.95 OI=0 CB=19.05 DE=42 TY=9.2%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=ACTN
*****
GNSS - Genesis Microchip  $33.49  *** Chip Sector Favorite! ***

Genesis Microchip (NASDAQ:GNSS) designs, develops and markets
integrated circuits that manipulate and process digital video and
graphic images.  The company also supplies reference boards and
designs that incorporate its proprietary integrated circuits.  The
company is focused on developing and marketing image processing
solutions and is currently targeting the flat panel monitor market.
In addition to product sales, the company derives revenues from
providing design services which help its customers to develop
products that include its chips in their designs or to accelerate
the development of its products to meet customer demand.  In May,
Genesis posted fourth quarter earnings that topped expectations,
and forecast current quarter revenue would grow to $20 million,
above the analysts' consensus estimates for the upcoming period.
Investors have moved back into the issue since the announcement
and with the recent focus on LCD and flat-panel technology, GNSS
is once again a favorable stock in the semiconductor sector.

JUL 25.00 QFE SE LB=0.60 OI=213 CB=24.40 DE=42 TY=6.0%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=GNSS
*****
ICIX - Intermedia Communications  $17.71  *** Upcoming Merger ***

Intermedia Communications (NASDAQ:ICIX) operates in two business
segments, the Integrated Communications Services segment and its
Digex segment.  The Integrated Communications Services segment
provides integrated data and voice communications services,
including enterprise data solutions (frame relay and Asynchronous
Transfer Mode (ATM)), Internet connectivity, private line data,
local and long distance and systems integration services to many
business and government customers throughout the United States.
Digex provides managed Website and application hosting services to
businesses operating mission-critical, multi-functional Websites.
WorldCom (NASDAQ:WCOM) is in the process of acquiring Intermedia
Communications and the company's shareholders are expected to vote
on the transaction later this month.  If approved, the transaction
should close by July 1, 2001 and this position offers a favorable
way to speculate on that outcome.

JUL 15.00 QIX SC LB=0.60 OI=140 CB=14.40 DE=42 TY=8.7%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=ICIX
*****
MDCC - Molecular Devices  $22.61  *** Bottom Fishing! ***

Molecular Devices (NASDAQ:MDCC) is a developer of high-performance
bioanalytical measurement systems that accelerate and improve drug
discovery and other life sciences research.  The company's systems
enable pharmaceutical and biotechnology firms to leverage advances
in genomics and combinatorial chemistry by facilitating the high
throughput and cost effective identification and evaluation of drug
candidates.  The company's systems are fundamental tools for drug
discovery and life sciences research, and its MAXline series of
microplate readers and its FLIPR Cell Analysis systems are market
share leaders in their respective markets.  MDCC shares tumbled in
April after the company announced flat operating income and said
customers may have delayed orders for its lab equipment due to
economic conditions.  Analysts were quick to downgrade the shares,
but the outlook isn't that bad and with the stock price at a more
reasonable level, this position offers an acceptable cost basis
from which to speculate on the company's future.

JUL 17.50 MCQ SW LB=0.80 OI=10 CB=16.70 DE=42 TY=10.9%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=MDCC
*****
PXLW - Pixelworks  $30.66  *** Entry Point? ***

Pixelworks (NASDAQ:PXLW) designs and develops "system-on-a-chip"
solutions that enable the visual display of broadband content
through a wide variety of electronic devices.  Broadband content
includes a combination of video and data delivered to users at
high speeds.  Enhancing access to broadband information has
typically been associated with increasing bandwidth over the
"last mile."  The company is focused on the "last meter," where
the information is processed and displayed.  In the last meter,
there is an increasing requirement to process large amounts of
data delivered using a multitude of broadcast and Web protocols.
The company's system-on-a-chip solutions open up the last meter
by interpreting and optimizing video, computer graphics, and Web
information for display on a wide variety of devices.  Drew Peck
of SG Cowen Securities says the best stocks in the semiconductor
industry are those that possess "intellectual property" that is
end-product specific.  Pixelworks is one of those companies and
with the increasing demand for flat panel displays, their shares
may become very popular in the future.

JUL 22.50 PUO SX LB=0.65 OI=178 CB=21.85 DE=42 TY=6.9%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=PXLW
*****
SCIO - Scios  $27.03  *** New Drug Approval? ***

Scios (NASDAQ:SCIO) is a biopharmaceutical company engaged in
the discovery, development, and commercialization of novel
human therapeutics based upon its capabilities in both protein-
based and small-molecule drug discovery and development.  The
company focuses its proprietary research and development
efforts primarily in the areas of cardiorenal and inflammatory
disorders, and Alzheimer's disease.  The company has research
and development collaborations with Chiron Corporation, DuPont
Pharmaceuticals Company, Eli Lilly, GenVec, Kaken Pharmaceutical
and Novo Nordisk A/S.  Scios also operates a Psychiatric Sales
and Marketing Division, which provides operating cash that funds
the other activities of the company, principally research and
development efforts.  Investors continue to believe that Scios'
experimental drug Natrecor will become by mid-summer, the first
new treatment in more than a decade for acute congestive heart
failure.  Based on last week's bullish indications, short-term
traders are also optimistic on this outcome and we will attempt
to profit from the upside activity with this position.

JUL 20.00 UIO SD LB=0.60 OI=622 CB=19.40 DE=42 TY=7.2%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=SCIO
*****
UIS - Unisys  $12.94  *** More Bottom Fishing! ***

Unisys (NYSE:UIS) is a leading, worldwide information services
and technology company.  Unisys provides services, systems and
solutions (its Unisys e-@ction Solutions) that help customers
apply information technology to seize the current opportunities
and overcome the challenges of the internet economy.  Unisys
provides its services and technology to commercial businesses
and governments throughout most of the world.  Unisys has two
business segments, Services and Technology.  There is little to
report on UIS beyond their recent venture with United Airlines
and Roadway in a new transportation company.  Integres Global
is a joint effort by the three companies to capture a share of
the lucrative cargo market, which is currently fragmented among
various freight forwarders.  The renewed interest in the issue
may be the reason for the recent bullish activity and we think
the risk-reward outlook in this position is favorable.

JUL 12.50 UIS SV LB=0.65 OI=3593 CB=11.85 DE=42 TY=8.7%

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

*********************************
SUPPLEMENTAL NAKED PUT CANDIDATES
*********************************

The following group of issues is a list of additional 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
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary.

Sequenced by Target Yield (monthly basis)
******
Stock  Last  Call Strike  Option  Last Open  Cost   Days  Target
Symbol Price Mon. Price   Symbol  Bid  Int.  Basis  Exp.  Yield

NUAN   17.21  JUL 12.50   DUN SV  0.65 120   11.85   42   11.5%
NMTC   23.16  JUL 17.50   QEK SW  0.70 14    16.80   42    9.5%
MU     43.32  JUL 35.00    MU SG  0.95 11398 34.05   42    6.9%
NTIQ   29.80  JUL 20.00   CQT SD  0.60 738   19.40   42    6.6%
LTXX   31.38  JUL 25.00   UXT SE  0.60 23    24.40   42    6.3%


SEE DISCLAIMER IN SECTION ONE
*****************************


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

Friday, June 8

U.S. stocks ended lower today after a lackluster session that saw
trading on the NYSE stopped for over an hour due to problems in
the exchange's new computer software.  A slew of profit warnings
weighed on both technology and industrial issues, dragging all
the major indices into the red.  The NASDAQ closed down 48 points
at 2,215 and the Dow was 113 points lower at 10,977.  The S&P 500
index dropped 12 points to 1,264.  Trading volume on the NYSE was
a light 723 million shares, with declines outpacing advances 17
to 12.  Activity on the NASDAQ was subdued with just 1.4 billion
shares exchanged.  Technology losers topped winners 21 to 15.  In
the U.S. bond market, the 30-year Treasury fell 7/32, pushing its
yield up to 5.74%.


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

Accredo Health  (NASDAQ:ACDO)  JUL25P/30P  $0.55  credit  bull-put
General Motors  (NYSE:GM)      JUL50P/55P  $0.50  credit  bull-put
eBay Inc.       (NASDAQ:EBAY)  JUL85C/45P  $1.50  credit  strangle

All of our new combination positions were available at acceptable
opening prices.


Market Activity:

Today's session started poorly and never recovered as stocks were
dragged lower by profit warnings from 3com Corp. (NASDAQ:COMS) and
Juniper Networks (NASDAQ:JNPR) and traders became disgruntled over
problems with the electronic data system at the New York Stock
Exchange.  A glitch in the software brought trading to a halt for
over an hour on the floor of the NYSE and concerns over the correct
pricing of stocks continued to affect a number of Big Board issues
until early afternoon.  The clearing delays did little to assuage
nervous investors who were already looking for an exit from many
of the popular technology stocks.  A slump in the networking group
started the decline after Juniper revised its quarterly estimates,
saying it now expects pro forma earnings of only $0.09 per share.
Analysts expected the company to earn $0.24 per share.  Meanwhile,
3Com said fourth-quarter revenues will fall short of expectations
and gross margins will be negative due to inventory problems and
restructuring charges.  Handspring (NASDAQ:HAND) and Transwitch
(NASDAQ:TXCC) also lowered their quarterly profit forecasts and
continued worries over increasing weakness in Asia and Europe
were simply too much for the technology index to overcome.  The
NASDAQ 100 had only 9 bullish issues during the downbeat session.
On the Dow, all but five stocks declined and Honeywell (NYSE:HON)
was the biggest loser, falling to $46 on anxiety over the EUC's
approval of their merger with General Electric (NYSE:GE).  News
reports suggested that a meeting between GE chairman Jack Welch
and the European Competition Commissioner on the proposed buyout
of Honeywell International has been delayed.  DuPont (NYSE:DD)
was in the headlines after announcing it will definitely sell its
pharmaceuticals business to Bristol-Myers Squibb (NYSE:BMY) for
$7.8 billion in cash, freeing up money to repay debt, invest in
new opportunities and repurchase its own stock.  In the broader
market, precious metals, waste management, construction, retail,
textile manufacturing and utilities were the only sectors that
experienced buying pressure.


Portfolio Activity:

There was little bullish activity in the Spreads portfolio today
as stocks moved lower in almost every major industry group.  In
the technology sectors, computer hardware, networking, Internet
and wireless telecom issues were among the worst performers and
and in the industrial segments, banks and transportation stocks
continued their recent slump.  Although the selling pressure was
relatively widespread, only a few of the issues in the Spreads
section experienced significant movement and there were no major
adjustments made in the portfolio plays.  Our new position in
Willamette (NYSE:WLL) was in the news after the company said the
shareholders vote on rival groups of directors was too close to
call, but their hostile suitor, Weyerhauser claimed victory for
its effort to empanel its slate on the Willamette board.  The
news boosted speculation about the success of Weyerhauser's bid
to take over its Northwest rival and its ability to bring WLL
officials back to the bargaining table.  Willamette has opposed
Weyerhaeuser's offer of $50 a share, calling the price too low
to deserve serious consideration.  Weyerhaeuser representatives
said that based on the number of proxies the company submitted
for Thursday's vote, "It appears that its three nominees to the
board were elected to replace three Willamette directors up for
re-election."  In contrast, Willamette officials said preliminary
tallies were too close to call and the final vote total won't be
known for two to three weeks.  Apparently, Weyerhaeuser would be
willing to increase its $50 per share offer if Willamette would
agree to further negotiations, but analysts and investors don't
think the recently declared victory will bring Willamette to the
table in the near future.  The whole scene is similar to daytime
soap-opera and because there is no consensus on the outcome, the
share value of WLL is likely to remain near $50 for the next few
weeks.  Since our position is short at that strike, any delays
are favorable and it will be interesting to see how this unique
situation is finally resolved.

Questions & comments on spreads/combos to Contact Support
******************************************************************
                       - UPCOMING SEMINAR -
******************************************************************
On June 18, I will be conducting an instructional seminar for new
traders who are interested in the fundamentals of "time-selling"
strategies.

The general topics of discussion will be:

- Increasing portfolio returns with long-term options (LEAPS)
- Reducing the cost of these options with covered-calls
- Learning to sell time (and potential) for a profit

You can take the seminar without leaving the comfort of your home
or office.  It is interactive and you can ask questions after the
presentation.  You do not need any special software to attend
the presentation but you must have a 56K Internet connection or
faster for best results and a separate phone to listen to the
audio portion.

If you are interested in this seminar, please click here for more
information:

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

******************************************************************
                        - STRADDLEMANIA -

With option volatility at historically low levels and only one
week remaining until the June expiration, it's a great time to
participate in (debit) straddle strategies.  Rather than provide
extensive research on a few positions, we have decided to offer
a selection of potentially favorable candidates, based solely on
analysis of historical option pricing and technical indications.
We tried this approach last month and received some encouraging
comments concerning the larger assortment of candidates.  All of
these stocks have statistically undervalued options as well as
the potential to move high or low enough to make the straddles
profitable.  In addition, most of the underlying issues have a
history of multiple movements through a sufficient range in the
required amount of time to justify the overall risk-reward of
the position.  As with any recommendation, each play should be
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and trading style.  Also, current news
and market sentiment will have an effect on these positions so
analyze each play individually and make your own decision about
its future outcome.  These issues will not be included in the
monthly portfolio.

******************************************************************
JBL - Jabil Circuit  $30.51  *** Earnings Play! ***

Jabil Circuit (NASDAQ:JBL) is a leading provider of electronic
manufacturing services.  The company designs and manufactures
electronic circuit board assemblies and systems for original
equipment manufacturers (OEMs) in the communications, computer
peripherals and personal computer, automotive and consumer
products industries.  The company serves its OEM customers with
dedicated work cell business units that combine high volume,
highly automated continuous flow manufacturing with advanced
electronic design and design for manufacturability technologies.
Its work cell business units are capable of providing integrated
design and engineering services, component selection, sourcing
and procurement, automated assembly, design and implementation
of product testing, parallel global production, systems assembly
and direct order fulfillment, repair and warranty services.  The
company's earnings are due June 19.

PLAY (speculative - neutral/debit straddle):

BUY  CALL  JUN-30  JBL-FF  OI=3757  A=$1.55
BUY  PUT   JUN-30  JBL-RF  OI=7471  A=$1.05
INITIAL NET DEBIT TARGET=$2.40-$2.50 TARGET PROFIT=35%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=JBIL
******************************************************************
BRCD - Brocade Communications  $45.90  *** Big Mover! ***

Brocade Communications Systems (NASDAQ:BRCD) is a provider of
storage area networking infrastructure solutions.  The Brocade
family of hardware and software products provides the networking
foundation for storage area networks, which bring a networking
model to storage environments.  Using Brocade's Fibre Channel
fabric switches and software, customers can connect servers with
external storage devices through a SAN, creating a reliable and
scalable environment for data-intensive storage applications.
Brocade products are sold through original equipment partners,
system integrators and resellers.

PLAY (speculative - neutral/debit straddle):

BUY  CALL  JUN-45  UBF-FI  OI=5480  A=$2.20
BUY  PUT   JUN-45  UBF-RI  OI=3714  A=$2.15
INITIAL NET DEBIT TARGET=$4.25 TARGET PROFIT=35%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=BRCD
******************************************************************
CKFR - CheckFree  $34.35  *** Lots Of Room Below! ***

CheckFree (NASDAQ:CKFR) is a major provider of electronic billing
and payment services.  The company operates its business through
three independent, inter-related divisions: Electronic Commerce,
Investment Services, and Software. CheckFree's E-Commerce business
provides services that allow consumers to receive electronic bills
through the Internet; pay any bill, electronic or paper to anyone;
and perform customary transactions, including balance inquiries,
transfers between accounts and on-line statement reconciliations.
The Investment Services business offers portfolio accounting and
performance measurement services to investment advisors, brokerage
firms, banks and insurance companies and also financial planning
application software to financial planners.  The Software segment
provides electronic commerce and financial applications software
and services for businesses and financial institutions.

PLAY (speculative - neutral/debit straddle):

BUY  CALL  JUN-35  FCQ-FG  OI=20  A=$1.20
BUY  PUT   JUN-35  FCQ-RG  OI=97  A=$1.65
INITIAL NET DEBIT TARGET=$2.75 TARGET PROFIT=25%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=CKFR
******************************************************************
BMC - BMC Software  $27.53  *** Rolling Stock! ***

BMC Software (NYSE:BMC) is an independent systems software vendor,
delivering comprehensive systems management solutions.  BMC is a
provider of software solutions that enhance the availability,
performance and recoverability of its customers' business-critical
applications to help them better manage their businesses.  The
company's portfolio of systems management solutions allows its
customers to manage the various components and technologies within
their information technology systems from end-to-end, from legacy
databases and applications on large mainframes to customer-facing
Web portals and exchanges.  BMC's products empower its customers
in this global economic environment where speed, time-to-value and
value over time are critical.  Their solutions are offered in five
broad categories: Patrol, Enterprise Data Availability, Service
Management, Incontrol and Recovery and Storage Management.

PLAY (speculative - neutral/debit straddle):

BUY  CALL  JUN-27.50  BMC-FY  OI=90  A=$1.00
BUY  PUT   JUN-27.50  BMC-RY  OI=0   A=$1.10
INITIAL NET DEBIT TARGET=$1.95-$2.00 TARGET PROFIT=20%

Note: Traders who are concerned about the low Open Interest in
the Put options might consider a ratio of (3) JUN-$25 Puts for
every JUN-$27.50 Call as an alternative.

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=BMC
******************************************************************
TARO - Taro Pharmaceutical  $70.43  *** Speculators Only! ***

Taro Pharmaceutical Industries  (NASDAQ:TARO) began operations as
a manufacturer of solid dosage form products, but an agreement
with American Home Products in 1954 allowed the company to expand
operations to include sterile products.  The xompany entered the
steroid market following an agreement with the Schering in 1955.
In 1957, an agreement with Endo Laboratories provided Taro with
products such as Percodan and Coumadin, which Taro continues to
manufacture and sell in Israel today.

PLAY (very speculative - neutral/debit straddle):

BUY  CALL  JUN-70  QTT-FN  OI=204  A=$3.60
BUY  PUT   JUN-70  QTT-RN  OI=46   A=$3.20
INITIAL NET DEBIT TARGET=$6.50 TARGET PROFIT=???

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=TARO
******************************************************************
MRK - Merck  $74.22  *** Low Risk - Low Reward! ***

Merck (NYSE:MRK) is a research-driven pharmaceutical company that
discovers, develops, manufactures and markets a broad range of
human and animal health products, directly and through its joint
ventures, and provides pharmaceutical benefit services through
Merck-Medco Managed Care (Merck-Medco).  The company's operations
are principally managed on a products and services basis and are
comprised of two reportable segments, Merck Pharmaceutical, which
includes products marketed either directly or through other joint
ventures, and Merck-Medco.  Merck Pharmaceutical products consist
of therapeutic agents, sold by prescription, for the treatment of
human disorders.  Merck-Medco revenues come from the filling and
management of prescriptions and health management programs.

PLAY (conservative - neutral/debit straddle):

BUY  CALL  JUN-75  MRK-FO  OI=3673  A=$0.80
BUY  PUT   JUN-75  MRK-RO  OI=3022  A=$1.55
INITIAL NET DEBIT TARGET=$2.25 TARGET PROFIT=20%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=MRK
******************************************************************
KOSP - KOS Pharmaceuticals  $35.60  *** Ultra-rally Mode! ***

KOS Pharmaceuticals (NASDAQ:KOSP) is a fully integrated specialty
pharmaceutical company engaged in the development of proprietary
prescription products for the treatment of chronic cardiovascular
and respiratory diseases.  KOSP manufactures its lead product,
Niaspan, and markets such products directly through its specialty
sales force.  Additionally, the company markets two complementary
anti-hypertensive products, Mavik and Tarka, through a unique
co-promotion alliance with Knoll Pharmaceutical Company.  The
company's cardiovascular products under development consist of
controlled-release, once-a-day, oral dosage formulations.  The
company's respiratory products under development consist of
aerosolized inhalation formulations to be used primarily with the
company's proprietary inhalation devices.

PLAY (speculative - neutral/debit straddle):

BUY  CALL  JUN-35  KQW-FG  OI=200  A=$2.00
BUY  PUT   JUN-35  KQW-RG  OI=40   A=$1.45
INITIAL NET DEBIT TARGET=$3.25-$3.30  TARGET PROFIT=35%

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

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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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