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Daily Newsletter, Wednesday, 06/13/2001

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The Option Investor Newsletter                Wednesday 06-20-2001
Copyright 2001, All rights reserved.                        1 of 1
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******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        06-20-2001        High      Low     Volume Advance/Decline
DJIA    10647.33 + 50.66 10702.07 10563.86 1.34 bln   1828/1269 
NASDAQ   2031.24 + 38.58  2032.67  1973.70 1.53 bln   1927/1816
S&P 100   634.05 +  7.39   635.74   625.48   totals   3755/3085
S&P 500  1223.14 + 10.56  1225.61  1210.07           54.9%/45.1%
RUS 2000  495.86 +  7.13   495.87   487.25
DJ TRANS 2665.30 +  4.72  2670.41  2634.39
VIX        23.86 -  1.06    25.28    23.70
Put/Call Ratio      0.56
******************************************************************

How Do You Spell Relief?

A rare catalyst surfaced Wednesday morning that inspired the
broader market averages.  The culprit: positive economic data.
The Conference Board, which is a business and economic research
organization, released its leading economic indicator index
Wednesday morning.  The Conference Board reported that its
leading index increased by 0.5 percent, while economists had
expected a rise of only 0.2 percent during the month of May.

In all, there are ten components to the Conference Board's index
of leading indicators, and six of those ten components rose
during May.  Without going into too much detail, the summation
of the Conference Board's findings suggest that economic weakness
may persist in the U.S. over the next few months, but the "U.S.
economy may be poised for some recovery" in the second-half of
2001.

The Conference Board's report adds a bit of credence to the
thesis we set forth in Monday's Market Wrap.  A hint of positive
economic data is exactly what this market needs because a
recovery in the economy will coincide with a recovery in
corporate profits, which stocks should begin discounting if, in
fact, the economy does begin to improve.  I'll elaborate on
this idea at the bottom of the column.  But, in the meantime,
let's focus on Wednesday's price action.

The Nasdaq Composite (COMPX) bounced off our 1975 support for
the second time in as many days Wednesday.  Depending upon risk
tolerance and trading style, this bounce may have offered entry
points into relatively strong tech stocks.  Although our 1975
support level held and the COMPX closed back above the
psychologically significant 2000 level, there's some serious
resistance just above current levels that we need to address.




Tuesday's opening placed the COMPX right at our 2060 resistance
level, from which it precipitously fell throughout the session.
So, we'll want to keep a skeptical eye on 2060 if the COMPX
advances up to that level during Thursday's session.  Keep in
mind that the COMPX's intraday highs for the past three
sessions - prior to Wednesday's trading - were 2048, 2046 and
2057.  In short, there's some significant resistance just above
the COMPX's current level.  Of course, if the COMPX can break
above its short-term resistance at 2060, it should advance back
up to the 2100 level.

Insofar as support concerns the COMPX, we'll want to keep a
close watch on our same levels: 2000 (psychological) and
1975 (technical).  If the COMPX does break below 1975, traders
will want to look to get short weak technology stocks (Read:
Tech/Telecom Complex).  If the COMPX does break below 1975, for
whatever reason(s), I think there's a good chance it will work
down to the 1900 area.

Nasdaq traders might also want to keep an eye on the Nasdaq-100
(NDX.X).  It, too, has some resistance just above its current
level around the 1750 area, which was Tuesday's high.  But, if
the NDX advances above 1750, coinciding with the COMPX breaking
above 2060, it would add validity to the latter advancing up to
2100.




For the third time in four days, the Dow Jones Industrial
Average (INDU) rebounded from the 10,565 area.  This development
is most encouraging, in that buyers are defending the Dow
before it can test its significant technical and psychological
support at 10,500.  But more discouraging is the fact that the
Dow can't get above the 10,700 level.  In fact, the Dow has
tested but failed to close above the 10,700 level in the last
four trading sessions.  A strong advance and subsequent
settlement above the 10,700 level would offer traders the
opportunity to get long relatively strong blue chip stocks.




Not by coincidence, the S&P 500 (SPX.X) topped out at our
1225 resistance level Wednesday afternoon.  The S&P is right on
the verge of breaking out above 1225 and that development would
certainly be a big positive for the broader market.  Watch this
index closely Thursday morning to decipher whether or not the Dow
and Nasdaq have a chance to break above their respective
resistance levels.  And like the Dow and Nasdaq, the bears could
NOT push the S&P 500 down below its significant support level at
1200 during the recent sessions.  What this may lead to is a
capitulation on the part of the shorts, who may throw in the
towel and buyback their bearish bets over the coming sessions.




The broader market averages, despite Wednesday's respite, are
still oversold.  Across the big three (COMPX, INDU and SPX)
stochastics are just starting to turn higher, out of oversold
readings.  In addition, the Arms Index (TRIN) 10-day moving
average is sticking around the 1.50 level, which is considered
oversold and is generally indicative of a market rebound.

As I opined in Monday's Market Wrap, however, the magnitude
and duration of any rally from current levels are the variables
that are rather difficult to quantify.  Our support and
resistance levels that we've been monitoring, especially in the
Nasdaq, have proven VERY reliable so far this week.  So I
would continue to urge my readers to monitor the levels that
I've set forth in this column as a general guide for measuring
risk/reward.

While the short-term favors an advance in the broader markets
especially in light of the healthy volume that accompanied
Wednesday's rally, the intermediate-term price action is
becoming increasingly difficult to gauge, at least from where
I sit.  On one hand, the corporate profit front continues to
show signs of deterioration.  But on the other hand, according
to the Conference Board's report Wednesday morning, there's
still a chance that the U.S. economy rebounds in the second
half of 2001.  That leaves us stuck in between the walls of
risk and reward, trying to balance the current corporate
profit landscape with the potential for an economic rebound
later this year.

Speaking of balancing risk versus reward, some of you may
have noticed that we introduced Jeff Bailey's Market Monitor to
the Option Investor Web site.  This is an invaluable service
provided by one of the sharpest minds in this game we call
trading.  Jeff's observations in his Market Monitor will
introduce timely, actionable ideas that will be of great benefit
to OI readers.  I highly suggest checking out the Web site
throughout the day to get into the mind of Jeff Bailey.

Questions and comments are welcome:
eutley@OptionInvestor.com

Eric Utley
Editor
www.OptionInvestor.com
****************************
Upcoming Online Seminars
****************************

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.

Thr Jun-21 Day-trading for people with day jobs - Jon Farnlof
Sun Jun-24 Determining Support and Resistance - Derek Baltimore
Tue Jun-26 Assessing Risk with Point and Figure - Jeff Bailey

Click here for a detailed explanation of each:

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


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

ADBE - Adobe Systems $45.30 +2.55 (+5.74 this week)

A long-time leader in desktop publishing software, ADBE
provides graphic design, publishing, and imaging software
for Web and print production.  Offering a line of application
software products for creating, distributing, and managing
information of all types, the company generates nearly 75% of
sales through publishing software products such as Photoshop,
Illustrator, and PageMaker.  Its Acrobat Reader, which uses
portable document format (PDF) is popping up all over the
Internet, as businesses shift from print to digital
communications.  In addition, ADBE licenses its industry
standard technologies to major hardware manufacturers,
software developers, and service providers, as well as
offering integrated software solutions to businesses of all
sizes.

One of many beneficiaries of ORCL's better that expected
earnings report Monday night, ADBE actually took the ball and
ran with it on Wednesday, vaulting through the $44 resistance
level on strong volume.  Thanks to bullish moves from several
Software stocks, the GSTI Software index tacked on nearly 5%
today, further distancing itself from the critical $200 support
level.  Given today's strong move, it appears that ADBE is
going to take another run at the $48 price ceiling - perhaps the
fourth time will be the charm.  After beating earnings estimates
by a nickel last Friday, shares of the software firm found
support near $38.50, and solid buying volume helped to push it
back above the stubborn $40 resistance level.  That, along with
positive comments from ORCL have energized the bulls, and with
the Fed scheduled to give us another interest rate cut next
Tuesday, it looks like ADBE could actually break out this time.
Support should appear first at the convergence of the 10-dma
($41.57), 30-dma ($41.80) and the 50-dma ($42.33), all of which
are back in ascent mode.  We are placing our stop at $40, and
aggressive traders can consider new positions on a dip and
bounce from any of the above-mentioned moving averages or the
$43 support level.  More conservative entries can be taken as
ADBE pushes through $46 on its way to testing the formidable $48
level.  Make sure volume remains strong and the GSO index is
moving up before taking a position.

BUY CALL JUL-45*AEQ-GI OI=4492 at $3.40 SL=1.75
BUY CALL JUL-50 AEQ-GJ OI=2678 at $1.40 SL=0.75
BUY CALL AUG-45 AEQ-HI OI=  72 at $4.80 SL=3.00
BUY CALL AUG-50 AEQ-HJ OI= 235 at $2.75 SL=1.50

SELL PUT JUL-45 AEQ-SI OI=5698 at $2.65 SL=4.25
(See risks of selling puts in play legend)

Average Daily Volume = 4.60 mln
http://www.premierinvestor.com/oi/profile.asp?ticker=ADBE


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

No new put plays tonight


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

GE   - call
Adjust from $46 up to $48

RATL - call
Adjust from $22 up to $23


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

No dropped calls tonight


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

RIMM $27.54 +2.25 (+0.01) It was bound to happen eventually, and
today was the day RIMM decided to bounce.  It looked like our
$27 stop was going to hold right up to the final 30 minutes of
trading.  The Technology rally picked up steam, buying volume
increased and pushed RIMM higher into the close.  While it would
have been nice to play one more move to the downside, we'll just
have to content ourselves with the gains accrued over the past
week and a half.  No matter how you slice it, RIMM goes into the
winner's column.

TLAB $16.04 -5.16 (-8.47) Bringing another put play to a very
successful close, TLAB continued in free-fall mode all day
giving up another 24% in the wake of continued bad news in the
Telecom sector.  Joining the bearish party by slashing its
earnings and revenue outlook was all investors needed to dump
the stock wholesale, pushing the volume up to nearly 5 times the
ADV.  With nearly a $15 drop since we picked TLAB, we think the
prudent course of action is to lock in those gains and look for
another winning play.


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

The Times They Are A-Changin'
By Jeffrey Canavan

Yesterday I thought that cautiously optimistic was a good way to
describe the current market sentiment, but it might be time to
remove the word cautious.

By all rights the slew of earnings warnings we received should
have sent the markets tumbling this morning, but after a brief
sell off, stocks managed to stage a small rally.  Sellers then
tried to fight back and push the markets lower, but buyers were
able to step in and save the day.

The market sentiment must be improving, because the same type of
news in February or March would have easily dropped the Nasdaq 50
points, and the VIX would have spiked up to 37. Instead the
Nasdaq finished up 38 points, and the VIX fell another point to
23.86.

I wouldn't exactly use the word bullish to describe the current
situation, but you can start to see the buyers lining up on the
sidelines waiting for something to give them a reason to buy.  At
the same time, only a fool would rush in right now and load up on
networking or telecom stocks under current conditions.

The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is rapidly fadin'
And the first one now
Will later be last
For the times they are a-changin'

- Apologies to Bob Dylan

===

VIX
Wednesday 06/20 close: 23.66


VXN
Wednesday 06/20 close: 54.52


30-yr Bonds
Wednesday 06/20 close:  5.66


Total Put/Call Ratio: .60


Equity Option Put/Call Ratio: .51


Index Option Put/Call Ratio:  1.32

===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   33.60
Current close: 42.77

Volume/Open Interest
Maximum calls: 50/93,940
Maximum puts : 40/54,266

Moving Averages
 10 DMA 44
 20 DMA 45
 50 DMA 45
200 DMA 61

===

S&P 100 Index (OEX)
52-Week High:  834.93
52-Week Low:   548.16
Current close: 634.05

Volume/Open Interest
Maximum calls: 650/4,891
Maximum puts : 600/6,346

Moving Averages
 10 DMA  638
 20 DMA  647
 50 DMA  645
200 DMA  685

===

S&P 500 (SPX)
52-Week High:  1530.01
52-Week Low:   1081.19
Current close: 1223.14

Volume / Open Interest
Maximum calls: 1275/13,024
Maximum puts : 1200/24,791

Moving Averages
 10 DMA 1237
 20 DMA 1254
 50 DMA 1245
200 DMA 1311

===

DJIA (INDU)
52-Week High:  11,518.83
52-Week Low:    9,047.56
Current close: 10,647.33

Volume / Open Interest
Maximum Calls: 114/ 6,915
Maximum Puts   108/17,707

Moving Averages:
 10 DMA 10,801
 20 DMA 10,918
 50 DMA 10,815
200 DMA 10,624

*****

CBOT Commitment Of Traders Report: Friday 06/15
Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts on the
Chicago Board Of Trade.

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

                    Small Specs               Commercials
S&P 500         (Current)  (Previous)     (Current) (Previous)
Open Interest
Net Value        +67110     +77601        -70183     -77490
Total Open
Interest %       (+25.01%)  (+33.61%)    (-9.04%)   (-10.71%)
                 net-long   net-long      net-short  net-short


                     Small Specs             Commercials
DJIA futures
Open Interest
Net Value          -4305      -4251          +6239     +5829
Total Open
interest %      (-28.76%)    (-35.39%)      (+14.44%)  (+14.71%)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100
Open Interest
Net Value         +2110      +1155         -10648    -11335
Total Open
Interest %        (+6.09%)   (+5.43%)     (-13.68%) (-18.42%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices: Commercials did lighten their net-short positions on the
S&P but not by a notable amount.

Gold: Commercials continued to lessen their net-short positions
dropping 32,000 contracts since May 29. Inflation concerns may
usher in a new wave of buyers and it looks like the Commercials
are thinking along those lines.

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
6/12  36,544 contracts net-short

Data compiled as of Tuesday 06/12 by the CFTC.


**********************
PLAY OF THE DAY - CALL
**********************

RATL - Rational Software $26.95 +1.80 (+2.96 this week)

Rational Software provides a platform for software development
that speeds time-to-market while improving software quality.
This integrated full life-cycle solution combines software
engineering best practices, market-leading tools, and
professional services.  Ninety of the Fortune 100 build
software with the Rational solution.

Most Recent Write-Up

The software sector has been trading relatively well recently
and may lead any rally attempt in the Nasdaq.  That premise
was given credence Tuesday, following Oracle's positive
earnings report.  The broader software sector, as measured
by the Software Index (GSO.X), has, for the most part, been
trading sideways for the past two months.  The general price
action in RATL has followed a similar pattern.  However, both
the GSO and RATL bounced off key support levels Monday.  For its
part, the GSO attracted buyers at the 200 level, while bulls
charged into RATL at the $22.50 level.  If RATL's pattern
of relatively higher lows continues, the stock could very
easily make its way up to the $28 level in the short-term.  For
this to happen, we'd like to see the GSO advance above the 215
level.  If the GSO rallies above 215 early Wednesday, traders
might consider entering RATL call plays at current levels and
targeting the $29 level on the upside.  Alternatively, for those
with a little more patience, consider waiting for RATL to
breakout above the $29 level, which is significant because of
the supply on the point & figure chart at that level.  Although
$29 is still $4 away from its current level, we wanted to pick
up coverage on RATL earlier in an attempt to better prepare for
any breakout that might occur.  Initially, we are setting stops
at $22, which is just beneath RATL's rebound point Monday at
$22.50 and should protect against any whipsaws.

Comments

The software sector powered higher Wednesday, carrying RATL along
for the advance.  Both RATL and the software sector (GSO.X) are
close to breaking out in big ways.  Watch for the GSO to advance
above 225 early Thursday, which may allow for entries into RATL at
its current level.  The stock faces significant resistance at $29,
so any advance above that level would offer a breakout entry
point in the coming days.

BUY CALL JUL-22.5 RAQ-GR OI= 204 at $5.90 SL=4.00
BUY CALL JUL-25.0*RAQ-GE OI=1172 at $4.10 SL=2.50
BUY CALL JUL-30.0 RAQ-GF OI=1606 at $1.80 SL=1.00
BUY CALL AUG-25.0 RAQ-HE OI=  52 at $5.10 SL=3.00
BUY CALL AUG-30.0 RAQ-HF OI= 134 at $2.75 SL=1.25

Average Daily Volume = 5.52 mln
http://www.premierinvestor.com/oi/profile.asp?ticker=RATL


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

A Roller-Coaster Ride To Next Week's FED Meeting...
By Ray Cummins

The stock market rallied late in the session today as investors
began to look for favorably priced issues in the wake of the
recent sell-off.  The Dow got off to a great start but erased a
sizable gain by mid-morning as traders lost their enthusiasm amid
the latest round of revenue warnings.  Despite the positive data
from the Index of Leading Economic Indicators, which rose at its
fastest pace in 18 months, concerns over future corporate profits
continued to weigh on investors and the major indices soon moved
into the red.  Shares of networking, semiconductor, telecom and
hardware companies led the NASDAQ lower as news of additional
shortfalls were made public.  Tellabs (NASDAQ: TLAB) followed the
trend in telecom equipment-makers by issuing a new profit warning
and the continuous outflow of lower revenue forecasts by leading
communications companies has done little to help the outlook for
technology stocks.  In the communications-chip segment, Goldman
Sachs trimmed its earnings estimates on a number of companies to
to reflect continued deterioration in demand and a belief that
companies will experience another decline in sequential revenue
in the third quarter.  Analyst Nathaniel Cohn said in a research
note that, "Inventory levels remain high, and the downturn will
cut deeper and last longer than current estimates suggest."  The
outlook from Lehman Brothers' analyst Dan Niles was also negative
as he lowered earnings-per-share estimates on both Advanced Micro
Devices (NYSE:AMD) and Intel (NASDAQ:INTC), due to deterioration
in demand for PCs, a more "brutal" processor pricing environment
and a steeper fall in flash pricing.  Niles said he also remains
negative on personal computer companies and semiconductor issues
and believes there is still downside risk to estimates and stock
prices.  The leader in electronics manufacturing services, Jabil
Circuit (NYSE:JBL) continued to sag after posting a third-quarter
profit of $0.16 a share, which matched analyst expectations.  The
company also warned that it now sees a profit from operations of
$0.13 to $0.15 per share in its fourth quarter, well short of the
consensus estimates of $0.19 a share.  Analysts at Lehman Brothers
were strangely optimistic about the report and issued some upbeat
comments on the EMS industry.  The brokerage indicated it believes
business trends will improve greatly in 2002 and that JBL's shares
appear attractive at current levels.  On the Dow, shares of Philip
Morris Companies (NYSE:MO), Caterpillar (NYSE:CAT) and General
Electric (NYSE:GE) led the recovery while Boeing (NYSE:BA), Home
Depot (NYSE:HD), United Technologies (NYSE:UTX), Minnesota Mining
(NYSE:MMM) and Honeywell (NYSE:HON) limited its gains.  MMM was
the catalyst for downside movement among the conglomerates after
ABN AMRO downgraded the company on valuation concerns and a lack
of earnings momentum due to weakness in Europe and Asia.  In the
broader market, brokerage stocks were slightly higher amid news
that Bear Stearns (NYSE:BSC) reported a profit of $1.18 a share in
its second quarter, up 53% from last year's quarter.  The numbers
easily beat the consensus estimates of $1.09 per share and Bear
Stearns attributed the positive results to a record quarter in its
fixed-income division, which offset weakness in the equity and
investment banking units.  Among other S&P 500 sectors, utility,
gold, airline and natural gas shares moved lower while new buying
interest was seen in biotechnology, drug, financial, paper and
chemical issues.

Summary of Previous Candidates:

NOTE:  JUNE prices as of Friday's Expiration


Covered Calls: (Margin not used in calculations)

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

IMCL    JUN    40    37.85  47.68    $2.15   5.8%
MSCC    JUN    55    54.33  52.35   -$1.98   0.0%

Naked Puts:

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

RMD     JUN    50    49.20  51.98    $0.80   9.0%
KKD     JUN    20    19.38  38.06    $0.62   8.9% Adj 2-1 split
KKD     JUN    25    24.53  38.06    $0.47   8.4%      "
KKD     JUN    25    24.68  38.06    $0.32   8.2%      "
THQI    JUN    40    39.25  54.93    $0.75   7.5%
NVLS    JUN    40    39.20  51.21    $0.80   7.1%
IMCL    JUN    35    34.35  47.68    $0.65   6.9%
ENZN    JUN    50    48.85  68.08    $1.15   6.8%
FCEL    JUN    60    59.05  64.08    $0.95   5.7%
APWR    JUN    35    34.30  43.86    $0.70   5.5%
MSCC    JUN    55    54.45  52.35   -$2.10   0.0% Hmmm?!?

HON     JUL    32.5  31.50  37.04    $1.00   8.7% Merger Mania
HGSI    JUL    60    58.20  65.50    $1.80   7.4% 150 dma bounce
MANU    JUL    30    29.25  38.17    $0.75   5.8% Looking strong
ADVS    JUL    55    53.80  66.25    $1.20   5.3% Next leg up?

Positions Closed: ADVP and CMVT both won the Murphy's law contest
for June as both actually ended positive, PDII.

Sell Strangles:

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

HGSI    JUN    45    44.00  65.10    $1.00   7.6%
HGSI    JUN    80    81.30  65.10    $1.30   9.7%

NVDA    JUN    55    53.65  95.05    $1.35   7.4%
NVDA    JUN   115   116.25  95.05    $1.25   6.9%

BGEN    JUN    55    54.25  64.93    $0.75   7.2%
BGEN    JUN    65    65.65  64.93    $0.65   6.3%

MU      JUL    32.5  31.75  36.84    $0.75   6.9% Watch closely -
MU      JUL    50    50.70  36.84    $0.70   6.5% at Support!

Naked Calls:

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

CMVT    JUN    70    70.65  59.93    $0.65  10.3%
EXFO    JUN    50    50.75  23.01    $0.75  10.2%
CIEN    JUN    70    70.40  40.14    $0.40   7.0%

FCEL    JUL    42.5  43.30  26.97    $0.80   8.8% Adj 2-1 split
DIGL    JUL    60    60.65  29.50    $0.65   5.9%

Credit Spreads:

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

BAC   $58.61   $58.02  JUN50p/55p  $0.65   $54.35  $0.65  Expired
BRL   $64.60   $71.40  JUN55p/60p  $0.75   $59.25  $0.75  Expired
FNM   $79.81   $80.66  JUN70p/75p  $0.50   $74.50  $0.50  Expired
BBY   $54.29   $56.74  JUN65c/60c  $0.70   $60.70  $0.70  Expired

LNCR  $65.40   $66.76  JUL50p/55p  $0.60   $54.40  $0.60  Open
THC   $48.50   $51.83  JUL40p/45P  $0.60   $44.40  $0.60  Open
JPM   $46.84   $45.60  JUL55c/50c  $0.75   $50.75  $0.75  Open
RJR   $56.46   $54.81  JUL65c/60c  $0.65   $60.65  $0.65  Open
TM    $66.50   $68.95  JUL75c/70c  $0.65   $70.65  $0.65  ALERT!

Position Closed:  LEH, MER (expired positive too, darn it!)

Debit Straddles:

Stock  Position   Debit  Target  Value   Status

NUE   JUN50c/50p  $3.90  $4.90  $4.90+   Closed - Target hit - 6/5
FLR   JUN60c/60p  $5.40  $6.48  $6.48+   Closed - Target hit - 6/6

IDPH  JUL70c/70p $11.00 $13.75  $9.20    Open

******************************************************************
                       - 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:

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

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

BULLISH PLAYS - Covered Calls, Naked Puts, & Combinations

***************
EBAY - eBay  $69.50  *** Pure Internet! ***

eBay (NASDAQ:EBAY) is a dynamic pricing online trading platform
located at www.ebay.com.  eBay developed a Web-based community
in which buyers and sellers are brought together in an efficient
format to buy and sell items, such as collectibles, automobiles,
high-end or premium art items, jewelry, consumer electronics and
a host of practical and miscellaneous items.  The eBay dynamic
pricing (auction-style) format permits sellers to list items for
sale, buyers to bid on items of interest and all eBay users to
browse through listed items.  eBay's service is fully automated,
topically arranged and easy to use.  Through its wholly owned
and partially owned subsidiaries and affiliates, the company
operates trading platforms in the United States, Germany, the
United Kingdom, Australia, Japan, Canada, France, Austria, Italy
and South Korea.  eBay expects to expand its online trading to
include Spain, the Netherlands, Belgium, Portugal, Sweden and
Brazil.

EBAY has been one of the few issues to effectively weather the
recent technology sell-off and it appears the stock is trying
to bring the Internet group back into favor with investors.
Shares of the auction giant rallied today on the heels of an
upgrade from Merrill Lynch.  The brokerage elevated EBAY's
second quarter earnings estimates and said it saw room for more
upside beyond official forecasts.  Merrill's Internet analyst
Henry Blodget said in a research report that, "overall, we are
expecting another strong quarter" and he estimating EBAY will
show second quarter revenues of $168 million, up about 10% from
the first quarter.  The company's CEO, Meg Whitman also recently
said that Ebay hasn't seen any major effects on its business from
the slowing economy and is nearly "recession proof."  That is a
very bullish statement, but apparently investors agree with the
positive outlook and you can attempt to profit from future upside
activity with these bullish positions.

EBAY - eBay  $69.50

PLAY (sell naked put):

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

Sell Put  JUL 55   QXB SK  3382      1.10    53.90     7.4% ***
Sell Put  JUL 60   QXB SL  3975      2.05    57.95    10.2%
Sell Put  JUL 65   QXB SM  2830      3.50    61.50    13.2%

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

*****

ELN - Elan  $65.00  *** On The Move! ***

Elan Corporation (NYSE:ELN) is a worldwide pharmaceutical and
biotechnology company focused mainly on the development and
commercialization of products.  Elan focuses on drug delivery
systems and has expanded its therapeutic focus through the
development and commercialization of new pharmaceutical products
for the selected target markets of neurology, pain management
and oncology.  Elan currently conducts its operations through
two primary business units: Elan Pharmaceuticals (EP) and Elan
Pharmaceutical Technologies (EPT).  EP is engaged primarily in
the discovery, development and marketing of therapeutic products
for neurological disorders and pain management, as well as new
diagnostic services for neurological disorders.  EP's principal
research and development activities focus on Alzheimer's disease,
acute pain management, epilepsy, multiple sclerosis, Parkinson's
disease, dystonias and other neurological disorders.  EPT is
engaged in the development, licensing and marketing of drug
delivery products and technologies.

Drug stocks were "on the move" today and although there is not
much news on the company, this issue was recently highlighted by
The Street.com's Gary B. Smith in his technical analysis column.
We agree with a bullish outlook for the stock and although it is
certainly overbought in the near-term, a pullback would offer an
excellent entry opportunity in the issue.  Spread traders should
target a higher credit initially, to allow for some consolidation
in the issue.

ELN - Elan  $65.00

PLAY (conservative - bullish/credit spread):

BUY  PUT  JUL-55  ELN-SK  OI=1072  A=$0.30
SELL PUT  JUL-60  ELN-SL  OI=1180  B=$0.70
INITIAL NET CREDIT TARGET=$0.50-$0.65  PROFIT(max)=11%

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

*****

GE - General Electric  $50.77  *** Honeywell Merger! ***

General Electric (NYSE:GE) is one of the largest, diversified
industrial corporations in the world. GE's products include major
appliances; lighting products; industrial automation products;
medical diagnostic imaging equipment; electric motors, electrical
distribution and control equipment; locomotives; power generation
and delivery products; nuclear power support services and fuel
assemblies; commercial and military aircraft jet engines; and
engineered materials.  GE's services include product services;
electrical product supplies; electrical apparatus installation,
engineering, repair and rebuilding services; and computer-related
information services.  Through the National Broadcasting Company,
GE delivers network services, operates television stations, and
provides cable, Internet and multimedia programming and other
distribution services.  Through General Electric Capital Services,
GE offers a broad array of financial and other services.

The ongoing speculation over the potential Honeywell-General
Electric merger was more subdued today after the European
antitrust enforcers recommended to formally block GE's bid to
acquire the popular conglomerate.  In a draft decision prepared
earlier this week, the European Commission's Merger Task Force
deemed insufficient GE's latest proposals to secure antitrust
approval and confirmed that the proposed $41 billion acquisition
won't be allowed to go through in its current form.  The draft
decision means that the number of scenarios under which the deal
could be approved is diminishing and also suggests the EUC is
unlikely to change its mind about the merger.  Under the terms
of the agreement, GE and HON could mutually agree to terminate
the pact with no penalty and since the two companies are on good
terms, investors see that as the most likely outcome.  Shares of
GE have moved higher amid optimism over that outlook and traders
who want to speculate on the continued recovery in the company's
stock price should consider this position.

GE - General Electric  $50.77

PLAY (speculative - bullish/credit spread):

BUY  PUT  JUL-45.00  GE-SI  OI=7481   A=$0.40
SELL PUT  JUL-47.50  GE-SW  OI=16269  B=$0.75
INITIAL NET CREDIT TARGET=$0.40-$0.45  PROFIT(max)=19%

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

*****

LNCR - Lincare Holdings  $66.76  *** Split Rally Continues! ***

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

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

That's a very optimistic outlook and traders who want to profit
from any additional upside activity in LNCR shares can do so in
a conservative manner with this bullish combination.

LNCR - Lincare Holdings  $66.76

PLAY (conservative - bullish/credit spread):

BUY  PUT  JUL-55  LQN-SK  OI=64   A=$0.55
SELL PUT  JUL-60  LQN-SL  OI=431  B=$1.20
INITIAL NET CREDIT TARGET=$0.70-$0.75  PROFIT(max)=16%

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

*****

PDLI - Protein Design Labs  $85.70  ***A Big Day! ***

Protein Design Labs (NASDAQ:PDLI) is engaged in the development
of humanized monoclonal antibodies for both the prevention and
treatment of disease.  The company has licensed certain rights
to its first humanized antibody product, Zenapax, to Hoffmann-La
Roche and its affiliates (Roche), which markets Zenapax for the
prevention of kidney transplant rejection.  The company is also
testing Zenapax for the treatment of autoimmune disease.  In
addition, the company has several other humanized antibodies in
clinical development for autoimmune and inflammatory conditions,
asthma and cancer.  The company has fundamental patents in the
United States, Europe and Japan, that cover a number of humanized
antibodies. Eleven companies have licenses under these patents for
humanized antibodies that they have developed.  The company also
receives royalties on sales of the three humanized antibodies
developed by other companies that are currently being marketed.

PDLI was another big mover in the biotechnology group today and
lacking any recent news on the company, the recent technical
indications are likely a major reason for the bullish activity.
PDLI continues to surge upward and has completed what appears to
be a short-term "head-n-shoulders" bottom.  The move above the
150-dma and JAN high is bullish, though the stock will need to
work through resistance from $80 to $100.  Watch for a move above
the JUN high to confirm the bullish change of character and a
break below the 150-dma to signal a potential failure.

PDLI - Protein Design Labs  $85.70

PLAY (sell naked put):

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

Sell Put  JUL 65   PQI SM  493       1.00    64.00     5.6% ***
Sell Put  JUL 70   PQI SN  1301      1.85    68.15     9.2%
Sell Put  JUL 75   RPV SO  533       3.00    72.00    11.4%
Sell Put  JUL 80   RPV SP  45        4.80    75.20    14.6%

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

*****

RETK - Retek  $42.70  *** Technicals Only! ***

Retek (NASDAQ:RETK) provides advanced application software to
help retailers create, manage and fulfill consumer demand.  The
company's software solutions enable retailers to use the Internet
to communicate and collaborate efficiently with their suppliers,
distributors, wholesalers, logistics providers, transportation
companies, consolidators and manufacturers.  Advanced predictive
capabilities provide accurate forecasts of consumer demand, and
integration between planning and execution functions enables
retailers to respond more rapidly to changes in either supply or
demand.  The company is primarily focused on retailers with sales
of $500 million and above.

Stocks in the application software group are performing well and
RETK has some of the best technical indications in the sector.
The issue continues to demonstrate exceptional strength while the
broader market has corrected.  The stock has broken out above the
JAN and DEC highs on heavy volume (which now becomes support) and
is working through the resistance area near the OCT high.  The
stock has not violated its 30-dma since the APR low and the
bullish chart pattern suggests further upside potential.

RETK - Retek  $42.70

PLAY (conservative - bullish/credit spread):

BUY  PUT  JUL-30  QRD-SF  OI=244  A=$0.35
SELL PUT  JUL-35  QRD-SG  OI=152  B=$0.80
INITIAL NET CREDIT TARGET=$0.55-$0.60  PROFIT(max)=12%

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

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

BEARISH PLAYS - Naked Calls & Combinations

***************
ENZN - Enzon  $61.20  *** Elevator Going Down! ***

Enzon (NASDAQ:ENZN) is a biopharmaceutical company that develops
and commercializes enhanced therapeutics for life-threatening
diseases through the application of its two proprietary platform
technologies: polyethylene glycol (PEG) and single-chain antibody
(SCA).  The company applies its PEG technology to improve the
delivery, safety and efficacy of proteins and small molecules
with known therapeutic efficacy.  The company applies its single
chain antibody technology to discover and produce antibody-like
molecules that offer many of the therapeutic benefits of other
monoclonal antibodies, while addressing some of their limitations.

There is little recent news to explain the drop in ENZN's share
value but some of the bearish activity may be due to the recent
announcement that the company intends to make a private offering
of $400 million of convertible subordinated notes due in 2008,
with an option to issue an additional $60 million of notes.
That will likely dilute the issue somewhat because at the option
of the holder, the notes will be convertible into shares of ENZN
common stock, under certain circumstances, at a share price to be
determined in the future.  Enzon said it aims to use the proceeds
of the sale for general corporate purposes, including research and
development and possible future acquisitions, but it appears that
investors are not in favor of the company's plans.  Traders who
agree that the near-term outlook is very negative can profit from
future downside movement with these bearish positions.

ENZN - Enzon  $61.20

PLAY (aggressive - sell naked call):

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

Sell Call JUL 65   QYZ GM  327       3.30    68.30    14.0%
Sell Call JUL 70   QYZ GN  667       1.80    71.80    10.4%
Sell Call JUL 75   QYZ GO  2211      0.80    75.80     6.2% ***

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

*****

IBM - Intl. Bus. Machines  $113.09  *** Rumors of a Warning! ***

International Business Machines (NYSE:IBM) uses its advanced
information technology to provide customer solutions.  The
company operates using several segments that create value by
offering a variety of solutions, including, either singularly
or in combination, technologies, systems, products, services,
software and financing.  Organizationally, the company's three
hardware product segments are comprised of Technology, Personal
Systems and Enterprise Systems.  IBM's other major operations
consist of a Global Services segment, a Software segment, a
Global Financing segment and an Enterprise Investments segment.

IBM has been a popular "rumor stock" on the trading floor during
recent sessions and insiders say the company may announce a
potential shortfall in earnings during the next few days.  The
speculation appears to have worried some investors as the issue
was down today even as IBM reported that the European Commission
cleared the acquisition of Informix's database business, which
is expected to add to Old Blue's influence in the application
software industry.  Despite the bullish activity in the broader
market, IBM finished the session on a bearish note and the drop
was on heavy volume, suggesting that further selling may occur.
With the recent resistance area near $120, this play offers a
reasonable risk-reward outlook for traders who want to speculate
on the future movement in IBM's share value.

IBM - Intl. Bus. Machines  $113.09

PLAY (conservative - bearish/credit spread):

BUY  CALL  JUL-130  IBM-GF  OI=17081  A=$0.65
SELL CALL  JUL-125  IBM-GE  OI=42277  B=$1.20
INITIAL NET CREDIT TARGET=$0.65-$0.70  PROFIT(max)=15%

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


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