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Daily Newsletter, Sunday, 06/17/2001

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The Option Investor Newsletter                   Sunday 06-17-2001
Copyright 2001, All rights reserved.                        1 of 5
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******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
       WE 06-15          WE 6-08          WE 6-01          WE 5-18
DOW    10623.64 -353.36 10977.00 - 13.41 10990.41 + 78.47  -296.37
Nasdaq  2028.43 -186.67  2215.10 + 65.66  2149.44 + 38.95  + 52.15
S&P-100  626.63 - 25.29   651.92 +  2.31   649.61 +  3.38  - 10.09
S&P-500 1214.36 - 50.60  1264.96 +  4.28  1260.67 +  4.85  - 14.07
W5000  11238.00 -498.70 11736.70 + 65.13 11671.40 + 61.20  - 73.63
RUT      495.13 - 16.51   511.64 +  9.92   501.72 +  5.22  +  2.34
TRAN    2693.62 -188.47  2882.09 -  4.96  2887.05 - 58.85  - 49.75
VIX       26.33 +  4.92    21.41 -  2.55    23.96 -  2.00  -  1.11
Put/Call    .73              .54              .53              .62
******************************************************************

Weakening Fundamentals

I guess it was inevitable. The VIX readings near 20 were very
indicative of a reversal of direction in the markets. Combine
this factor with a handful of earnings warnings from former tech
titans and end-of-quarter selling by major fund managers and you
have the makings for a scenario that plays out exactly as did the
previous 5 sessions. Adding fuel to the argument for a 50 basis
point cut, instead of just 25 at the upcoming FOMC meeting later
this month, were some weaker-than-expected economic reports,
though some of the non-inflationary data were better than
expected. Did I mention that the technical readings of the NDX,
COMPX, and INDU, among others, also shows numbers which are
firmly planted in bearish territory? It is UGLY with a capital
U. It seems that the markets have given those who believed that
we would snapback from recent economic and corporate weakness a
healthy dose of reality.

How bad is it? Let's start with the technicals. After getting
pummeled to the tune of 8.4% in the five sessions ending 6/15,
led by stories of weakening profits, order flow and building
inventories from the likes of JDS Uniphase, Nokia and Nortel
Networks pushed the Nasdaq Composite firmly below the 50-dma
(2106), at one point breaching the psychologically-important
2000-level.




Bulls (any left?) will make a table pounding argument that
significant work was accomplished by closing back north of this
benchmark, and I will give some credence to this. Unfortunately,
the erratic nature of market action on triple witching Fridays
really clouds one's ability to read true reaction of those in
the market, considering the volume spikes and volatility that
accompanies these quarterly events. I had discussed the 2032
-2016 levels as being important to close above in the COMPX,
and we did manage to get this done. However, in order to fulfill
the head and shoulders pattern that is playing out on the daily
chart, we will need to fill the gap between 1923 and 2079, levels
we have yet to visit. Others would conclude that the bottom of
the pattern resides down at the 1825-1865 level, and this may
well be the case. The bottom line is this: No technician or
shorter-term market strategist would tell you that we go higher
near term when looking at the chart of the Nasdaq. Ah yes, the
bears are certainly back in full control, but this by no means
says that traders cannot make money in this type of environment.
Conversely, as traders, these are the times when some of the best
profits can be achieved. You just have to be willing to turn off
the eternal optimism bred in each of us and TRADE THE TREND.

For the week, the Dow Jones Industrial Average declined 353
points, or 3.2%, to 10623. The unexpected blocking of the
proposed GE / Honeywell merger by European antitrust regulators
put the nail in the coffin of an index already teetering on the
crucial 11,000 mark, a level that has plagued the old school
Dow 30 more or less since October 2000. This index too shows a
very bearish technical snapshot, with MACD readings turning
south, planted firmly in negative territory, and a settlement
Friday below the all-important 200-dma at 10,632. A very
impressive 150-point turn around was seen after a decline of
120 points early into the session, yet another case for those
in the bull camp, but again, hard to judge due to options and
futures expiration taking place. Support is likely to come into
play in the DJIA near the 10,450-10,500 range. Oh, and the
closing at 10,623 also lands the Dow at a negative 1.51% return
for 2001, after being up a modest 5.11% year to date back on
5/29.




Looking to the economic picture for some guidance, Friday's benign
CPI data could be the green light for the FOMC to again slash near
term interest rates by 1/2 of a point. The headline CPI rose 0.4
percent in May. Excluding food and energy the index posted a benign
0.1 percent increase, the smallest since December, even with an
outsized increase of 0.5 percent in a huge component like shelter,
accounting for 30 percent of the CPI. Ah yes, those higher prices
you are paying at the pump don't count, do they? We believe the
Cleveland Federal Reserve's calculation of the median CPI tells a
better tale, which rose by 0.3% in May, and its six-month trend is
up by an annualized 3.9%. Those higher prices you're paying are
real, believe it. To that end, while we may get more aggressive
actions by the FOMC than were previously expected, it's not clear
there will be much breathing room between the time a recovery takes
hold and the time the Fed has to start raising rates.




The yield on the two-year Treasury note slipped decisively below
4 percent for the first time since the Asian scare in the fall of
1998. Sparking the rally in treasuries was a horrendous report on
industrial production, which fell 0.8 percent in May. It was
eighth consecutive monthly decline, putting the level of output
4.5 percent below that in September. Even in 1990-1991 recession,
manufacturing output didn't fall so consistently without a bounce.
For the week, Treasuries rallied across the board, signaling the
expectation that the Fed will cut rates aggressively in its
meeting this month. The yield on the benchmark 10-year Treasury
note plunged to yield 5.24% Friday from 5.35% one week ago, and
the 30-year bond went to 5.67% from 5.74%. The aforementioned
fed-sensitive two-year note finished the week at 3.97% from 4.15
% a week earlier.

Next week will see a lightened economic calendar to give further
guidance, with only housing starts, LEI and the treasury budget
statement slated for release. Also, as was the case this week,
much attention will be paid to the weekly unemployment claims
figure, which comes out on Thursday.

The lack of data on the economic front coupled with the
likelihood of continued earnings warnings from tech land should
make for lower prices near term. Monday should be a better gauge
than Friday, and continued selling on heavy participation would
dictate a testing of key support points, if not recent lows, is in
the cards. The fact that Oracle reports quarterly earnings should
also make for interesting market action.





Influential analyst Rick Sherlund of Goldman Sachs recently asked
a plethora of software company CEOs at a summit in California when
they expected software sales would begin to pick up. According to
his recent bearish report on the group, nobody in the mix even
hinted at the 3rd quarter. One peek at the GSO.X (GSTI Software
Index) and one can see the danger in being long stocks in the
sector. Should Oracle be able to provide a report as upbeat as CEO
"megabucks" Larry Ellison hinted at on CNBC Thursday evening, it
could buoy the markets from the deep short term oversold
conditions. However, expect selling to occur into any rally, and
when this column is written next week, I expect the tech-riddled
Nasdaq to have a 1900 handle on it, likely between the 1923 and
1961 levels. Without a pre-meeting fed cut (almost no chance), or
a blowout quarter from ORCL (zero chance), there is simply no
catalyst to take us higher. I wish the news were better. Not to
leave without a bullish spin, a closing north of 2044 and
obviously the 2100 mark would turn the tides, if at least
momentarily. Unfortunately, the path of least resistance does not
go in this direction.

Make sure to check out Eric Utley's Online Seminar this
weekend.  You can still sign up through the link below.

Derek E. Baltimore
Contributing Editor
www.OptionInvestor.com

==================================================================
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-17 7 Steps to Play Picking - Eric Utley
Mon Jun-18 Zero Cost Leaps - Mark Wnetrzak, Ray Cummins
Wed Jun-20 Entry Point, Exit Point - Jim Brown
Thr Jun-21 Day-Trading for People With Day Jobs - Jon Farnlof
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
****************

Northern Exposure
By Russ Moore

"OH, Canada!" The neighbor to the north sent the markets a couple
of warnings surprises and that had investors on their heels.
First we had JDS Uniphase with Nortel Networks following closely
behind. Both companies painted gloomy pictures for the coming
quarters. In addition, McDonald's took a further bite out of the
market as it to warned early Friday morning.

The DOW closed the session with a decline of 0.6 percent after
seeing both red and green during the day. The NASDAQ had slipped
below the 2,000 mark but did manage to show some improvement
later on and ended the day off 0.8 percent, and above that
critical level. The NDX held losses to a minimum dropping 0.6
percent.

Triple witching Friday led to an increase in volume as 1.77
billion shares traded hands on the DOW while 2.0 billion shares
cleared on the NASDAQ. Market breadth was mixed as winners
escaped with a narrow victory on the DOW at 16/14 while losers
outpaced winners on the NASDAQ with a 13/8 margin.

Financials remained in a funk as the BIX (S&P banking index)
ended on the downside for its' eighth straight session. Gold and
drug stocks also lost some ground. Sectors on the upside
included the chips and biotechs.

Economic data included the CPI along with industrial production
and capacity utilization. Inflation fears were eased somewhat as
the CPI came out inline with expectations. The second piece of
information was not as encouraging with over-capacity continuing
to plague the high-sector coming in at 70.3, the lowest level in
25 years. If that wasn't enough, U.S. energy, mines, and factory
output fell 0.8 percent, the first time in 19 years the level
has fallen eighth months in succession. The U.S has never avoided
a recession when output numbers have remained weak over this
period of time.

On Thursday we talked about the "windows" offering significant
support levels. You'll notice on Friday that the SPX fell to
1,203 before bouncing. First level support based on the window
would have been 1,200. The next level of support on this index
should be 1,192. The NASDAQ dropped to 1,992 before recovering
and we had listed 1,995 as our window support. The secondary
support level should come in around the 1,941 mark.

Not much in the way of economic news this week other than the
May housing starts due on Tuesday.

Following last week's performance investors are probably seeing
their anxiety levels on the rise. Short of flashing a "No
Warnings" sign on the big board, investors are likely in store
for further negativity over the near-term.

===

VIX
Friday 06/15 close: 26.33


VXN
Friday 06/15 close: 60.55


30-yr Bonds
Friday 06/15 close: 5.63%


Total Put/Call Ratio: .92


Equity Option Put/Call Ratio: .87


Index Option Put/Call Ratio:  1.12

===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   33.60
Current close: 42.605

Volume/Open Interest
Maximum calls: 50/85,690
Maximum puts : 45/46,238

Moving Averages
 10 DMA 45
 20 DMA 46
 50 DMA 45
200 DMA 62

===

S&P 100 Index (OEX)
52-Week High:  834.93
52-Week Low:   548.16
Current close: 626.63

Volume/Open Interest
Maximum calls: 650/3,744
Maximum puts : 600/5,657

Moving Averages
 10 DMA  647
 20 DMA  653
 50 DMA  642
200 DMA  688

===

S&P 500 (SPX)
52-Week High:  1530.01
52-Week Low:   1081.19
Current close: 1214.36

Volume / Open Interest
Maximum calls: 1250/11,371
Maximum puts : 1250/17,967

Moving Averages
 10 DMA 1254
 20 DMA 1287
 50 DMA 1240
200 DMA 1315

===

DJIA (INDU)
52-Week High:  11,518.83
52-Week Low:    9,047.56
Current close: 10,623.64

Volume / Open Interest
Maximum Calls: 114/ 5,934
Maximum Puts   108/14,601

Moving Averages:
 10 DMA 10,943
 20 DMA 11,018
 50 DMA 10,768
200 DMA 10,632

*****

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.


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

Please visit this link for Market Posture:

http://www.OptionInvestor.com/marketposture/061701_1.asp


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

Market Raider
By Eric Utley

Last week, I think the bears took a cue from this summer's latest
action/adventure film and raided to the point of excess.  There's
no denying that last week's price action was ugly indeed.  Maybe
pop culture's new action hero, Lara Croft, can inspire and
embolden the bulls over the weekend.  At the very least, the film
may provide a good distraction this weekend and help us traders
clear our collective conscience.  I'm no film critic, but I am
an expert on seeking and enjoying entertainment at the cinema and
I would suggest my readers do something to erase the memory of
last week's trading.  Unless, of course, you were short last
week.  And if that was the case, well done!

I'm firmly dedicated to deciphering this market - It's one of
the most difficult in history.  And with the help from my
astute colleagues, Jeff Bailey and Jeffrey Cananvan, among
others, we are going to find the way, so stay tuned!

I'd also like to send out a very happy Father's Day to all of
those great dads in the world.  I'm not a father yet.  (Heck,
I've yet to gain the ability to maintain a serious relationship
with a woman.)  But, I do very much appreciate all that dads
do.

Thank you, dad, and I love ya'.

Finally, before we get started with this weekend's reviews,
I'd like to remind my readers that I will be presenting an
Online Seminar Sunday night at 8:00 p.m. Eastern Standard
Time.  The topic is 7 Steps to Play Picking and will encompass
more of the Top-Down Approach of viewing the market and will
be highly interactive - I hope to take A LOT of questions
from attendees.  There's still time to sign up, and you can
do so via the following link:

http://www.premierinvestorseminars.com/onlineseminars/matteric061701.asp

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

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

Small Cap Biotech

This is the first time asking for your opinion.  What do you think
of VGIN and TGX.  My research shows signals that these companies
are going to make descent moves.  Thanks in advance for any
consideration you may give me. - Martin

Well I'm certainly glad that you decided to write in with a
request, Martin, and I thank you for it.

Interestingly, one of my readers sent me a note last week
concerning the favorable price action in many small biotechnology
stocks.  The reader suggested that these stocks have been the
best thing since the Internet bubble.  I'll be honest and
concede that I don't have much experience trading nor researching
these small biotech concerns.  But hopefully with a little help
from the reader that I've been conversing with, we can shed a
some light on this particular area of the market in an attempt
to take some profits before the game is over.  The charts
below of these two particular stocks reinforce just how "fun" it
has been in this particular area of the market.  (Very impressive
price action indeed!)

Both of these companies are rather small with market caps
around $300 million.  For its part, Theragenics (NYSE:TGX) is
a proprietor of a product used to treat prostate cancer.  And
Visible Genetics (NASDAQ:VGIN) sells systems that are used
in the sequencing of deoxyribonucleic acid (DNA).

I acknowledge that according to the indicators you follow,
Martin, that both of these stocks are ready to make good
moves.  But I would argue that both of these stocks have
already experienced substantial advances.  And from where I
sit, between the walls of risk and reward, I would be
thinking entries on pullbacks if I were going to buy either
of these stocks.

Thereagenics - TGX

On the weekly chart of Theraganics, I've laid a retracement
bracket over its descent from its high around $16.50 to its
low of about $4.  The stock stopped right around its 50
percent retracement level last week, around the $10 level,
which may provide support, thus an entry point, going
forward.  In addition, I think the $8.75 level is significant
and should provide solid support.  Not only is $8.75 the site
of the 61.8 percent retracement level, it is also the area
from which TGX broke down in September of 2000.  And oftentimes,
these historical pivot points morph into support.




The other possible way to trade TGX is to buy the stock on an
advance back above $12, which roughly marks the 38.2 percent
retracement bracket.  But, I don't know if the stock has a lot
of upside above that level because the bullish price objective
on TGX's point & figure chart lies at $16.75.  Of course, in
terms of percent return, that would be a nice move.  But I
wouldn't expect the stock to double over the intermediate-term
from current levels in similar fashion to its double from late
March.




Visible Genetics - VGIN

On the Visible Genetics chart, I've laid a similar retracement
bracket over its descent from roughly $35, down to the $12
level.  Note that the stock ran right up to its 50 percent
retracement bracket, at which point it began pulling back last
week on profit taking, as measured by the relatively light
volume on which it declined.  Visible Genetics' bullish price
objective, according to its point & figure chart is $22, which
is where it closed last Friday.  So it may be prudent to keep
that price in the back of your mind.

Again with Visible Genetics, I'd be more inclined to enter on a
pullback due to its current risk/reward dynamic.  But an advance
above the $23.50 level may offer momentum types the opportunity
to profit up to the $26 area.




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

Boeing - BA

I have been waiting to buy Boeing for a longer term position.
The stock looks bullish as the 50-dma has risen above the 200-
dma and it sits above both of them.  It is also holding very
well with the recent correction.  However, the chart looks to
be in a head-and-shoulders pattern.  What are your thoughts
on BA?  What is a good entry point? - Regards, Irene

Thanks for the great question, Irene!

I think we can make a couple of intelligent observations on
the Boeing (NYSE:BA) chart.  To begin with, the stock has
had one heckuva run, dating back to last summer when the
rally in the cyclical stocks really began to pick-up steam.
Shares of Boeing more than doubled from their relative lows
traced last year, and that's a big move for such a big
company.

I like its consolidation on the weekly chart, and I think it
makes sense for the stock to trade sideways to further digest
its gains.  In fact, I would be especially encouraged if
Boeing can maintain its range between roughly $60 to $70.  My
only real cause for concern on Boeing's weekly chart is the
potential for a double-top near $70.  That's where it rolled
over in early May, and I don't like that Boeing didn't trace a
higher relative high.

In terms of entry points, I think entering on a pullback down to
$60 makes sense, as that is the current site of Boeing's
ascending support line on its point & figure chart.  The
retracement bracket I've laid over Boeing's big advance,
beginning last summer, can be used to measure risk and determine
the site of a stop-loss, assuming entry on a pullback.




On the daily chart below, I can see how someone could argue that
Boeing has traced a head-and-shoulders (H&S) top.  But, I think
it would have to be considered a very, very aggressive ascending
pattern.  As such, I wouldn't give it much credence.

Boeing's 50 day moving average did recently crossover the 200
day in bullish fashion.  What's more, the 50 day was the site
that provided support last week.  This pattern may continue
going forward, and traders could look for a bounce off this
level as it helps to define risk.  But if the 50 day gives way
in the short-term, I think Boeing might make its way down to
its $60 support level, which is reinforced by a new retracement
bracket I've laid over the stock's most recent substantial
advance.  I think the 50 percent retracement level at $60
reinforces the demand level at $60 on the point & figure chart,
which makes that price all the more enticing for an entry
point on a pullback.




Of course, Boeing could trade sideways, and never touch the
$60 level.  If that happens, it could make the process of
determining an entry point for investment purposes all the more
difficult.  If the stock does trade sideways, the best strategy
might be to key off of the Dow and its direction.  Another
possible scenario is that Boeing resumes its advance and breaks
out above the $70 level over the intermediate-term.  (I don't
see that happening in the next month or two, but I've been wrong
before.)  If it's your style to enter on breakouts, I would
suggest to confirm any breakout with excessive volume.  The
stock's average daily volume is around 3.4 million shares, so
I would define excessive volume as anything over 5.5 to 6
million shares traded.

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

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 18, 2001

Monday
======
NAHB Housing Market    Jun     Forecast:  N/A   Previous:      57


Tuesday
=======
Housing Starts         May     Forecast: 1.60M  Previous:  1.609M
Building Permits       May     Forecast:   N/A  Previous:  1.587M


Wednesday
=========
Oil/Gas Inventories    Q1      Forecast:   N/A  Previous: 316.2MB
Leading Indicators     May     Forecast:  0.2%  Previous:    0.1%
Treasury Budget        May     Forecast:   N/A  Previous:  189.8B
MBA Mortgage App       6/15    Forecast:   N/A  Previous:   553.3


Thursday
========
Jobless Claims         6/16    Forecast:   N/A  Previous: 428,000
Initial Claims         6/16    Forecast:  430K  Previous:    428K
Trade Balance          Apr     Forecast:-30.9B  Previous:  -31.2B
Current Account        Q1      Forecast:-106.0B Previous: -115.3B
Philadelphia Fed       Jun     Forecast:  -10.0 Previous:    -8.8


Friday
======
SEMI Book-to-Bill Ratio May    Forecast:   N/A  Previous:    0.42
ECRI Wkly Leadng Index 6/15    Forecast:   N/A  Previous:     N/A



Week of June 25th
=================
Jun 25 Existing Home Sales
Jun 26 Durable Orders
Jun 26 Consumer Confidence
Jun 26 New Home Sales
Jun 27 Oil/Gas Inventories
Jun 27 FOMC Meeting
Jun 27 MBA Mortgage App Survey
Jun 28 Agricultural Prices
Jun 28 FOMC Minutes
Jun 28 Initial Claims
Jun 28 Help Wanted Index
Jun 28 Online Help Wanted Index
Jun 29 GDP - Final
Jun 29 Chain Deflator - Final
Jun 29 Chicago PMI
Jun 29 Mich Sentiment - Rev


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**********

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


**************************************************************
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The Option Investor Newsletter                   Sunday 06-17-2001
Sunday                                                      2 of 5

To view this email newsletter in HTML format with embedded
charts and graphs, click here:
http://www.OptionInvestor.com/htmlemail/4046_2.asp


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

Waiting for the Perfect Wave
By Robert Ogilvie

Sometimes trading can be very addictive.  We often find a reason
to trade even though the market environment isn't conducive to
our strategy.  With so many technical indicators at our disposal,
the allure to trade can make the worst looking chart seem
appealing.

Picture yourself sitting on you surfboard waiting for the next set
to come in.  As with trading, you have to know your limitations.
Sometimes the seas are flat and sometimes the waves are too big
for most surfers. When the waves are flat, there isn't much to do
but sit on your board.  When the waves are huge, it may be best
to stay out of the water altogether.  You have to be patient
enough for the perfect set of waves for your skill level.

The market has its waves.  It can be either flat or rough too.
When the market is too flat, it may be best to just stay out
and wait for direction.  If too volatile, stay away.  The markets
volatility can kill just like the big water.  Waiting for the
right trend can improve your chances.  I have read that in a bear
market, 3 out of 4 stocks move down.  So trying to catch the
winning bullish trade is far more difficult.  The famous phrase
"the trend is your friend."  Look at the market, then the sector
and then the stock.  A security's technical chart is a lot like a
weather map for a surfer.  Sector's moving up in relative
strength rating can give a clue where the money is going.
Although the surf isn't up in your area, somewhere in the world
the waves are perfect.  As with the waters, even in turbulent
times, there are still some good stocks to buy.  Finding them is
the tricky part.  There is just more risk of falling off your
board and becoming fish food.

Waiting for the right set of waves (market trend) can be boring.
However, you may have a better ride.  It is not uncommon to miss
the first couple of waves (the bottom) and quit before the waves
change (the top).  The important thing is that you had fun in
the middle.  For now, I'm going to sit out of the water.

Robert John Ogilvie
robert.ogilvie@verizon.net

Neither Cutter & Company, Inc. nor Robert J. Ogilvie makes any
representation as to the accuracy, reliability or completeness of
any charts, formulas, and /or research opinions presented herein.
This article is intended solely for educational purposes. Nothing
herein should be construed as an offer or solicitation to buy or
sell any securities. Cutter and Company is a Member of the NASD,
MSRB, and SIPC. Please read the Option Investor disclaimer:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html.


*************************ADVERTISEMENT*********************
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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.

Sign up for a two week free trial and see for yourself at
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************************************************************


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

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

TEVA - Teva Pharmaceutical Inds. $65.88 (+4.98 last week)

See details in sector list




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

QLGC - QLogic Corporation $52.11 (-4.20 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

No dropped calls this weekend


PUTS

ELNT $25.16 (-5.84) Welcome to the end of another
picture-perfect play.  Recall our $25 price target when we
began coverage of ELNT?  In textbook fashion, the stock rolled
over near $30 early last week and ended the week fractionally
above our $25 target.  While the Semiconductor stocks could
fall further next week, prudent risk management dictates that
we book our gains and close the play.  With the fundamentals
of the Chip sector continuing to look dismal, it seems likely
we'll revisit ELNT again in the near future.

NEWP $23.50 (-8.63) Fans of Point and Figure charting already
know why NEWP is on the drop list this weekend.  When the stock
first began to weaken near $45, the chart gave us a bearish
price target of $25.  With the rash of abysmal news to help it
along last week, NEWP crashed right through the target, and
we've seen a more than $11 drop in the stock since we began
coverage just over 2 weeks ago.  While the outlook for
Networking stocks is still abysmal and NEWP could still fall
further, we are more than happy to book our gains and search
for the next winning play.

PMCS $27.66 (-7.04) While we may be a bit premature in pulling
the plug on PMCS, the beating that Networking stocks took last
week at the hands of LU, NT and JDSU has us suspicious of a
possible bounce and recovery next week.  Since all those that
participated in the play during its short life should be
sitting on profits, we are going to take this opportunity to
recommend taking profits and closing out the play on a high
note.  The outlook for the Networking sector is still terrible,
so rest assured that PMCS is likely to grace this section again
in the near future.

SFA $42.17 (-11.97) Shares of SFA advanced Friday on what may
have been short covering or dip buying.  Whatever the reason,
SFA's modest rally Friday was somewhat of a cause for concern
in light of the terrible price action in the broader
markets.  The stock came quite close to hitting its most
recent bearish objective last Thursday, during its dip down
to $38.60.  That fact may buoy the stock in the near-term,
which is why we're dropping coverage on SFA this weekend in
an attempt to preserve our gains.

MWD $57.52 (-7.06) While we celebrated the technical break
down in MWD last week, below the $60 support level, we're
dropping coverage on this put play going into next week's
trading.  We'd like to hold the play longer because it
would appear that MWD has further downside.  However, next
week is filled with earnings reports from big brokers,
starting with Goldman Sachs Tuesday.  Although MWD doesn't
report next week, the numbers from its competitors are
sure to move the stock and we're choosing to minimize our
risk by dropping the play early in the week.


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

QCOM - Qualcomm, Inc. $49.35 (-11.89 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.

After a dismal week in the Wireless sector, thanks to Nokia's
earnings warning, QCOM looks like it is ready for another quick
run to the upside.  Giving up more than 20% during the course
of the week, QCOM hit $48.50 at its low on Friday before finding
some mild buying interest.  A quick look a the Point and Figure
chart shows that $48 was the bearish target generated by the
decline that began a week ago Friday.  With this target
achieved, it looks like the stock could be due for an oversold
bounce.  The fact that the bullish percent on the NASDAQ-100
fell into oversold on Friday with a reading of 26, further
stacks the deck in favor of the bulls near-term.  There isn't
much in terms of overhead resistance until $55, but that is
the location of the 38% retracement of the recent decline, so it
looks like a good bullish target to shoot for.  Aggressive
traders can target entries in the $48-49 range, while more
conservative players will want to wait for a move through
Friday's $50 intraday resistance level before jumping into new
positions.  Should the decline continue below $48 before giving
us our bounce, we'll be out of the play in a flash with our stop
set at $47.  Watch the overall NASDAQ for signs of life, as this
will help to confirm that we are on the right side of the trade.

BUY CALL JUL-45 AAO-GI OI= 495 at $7.60 SL=5.25
BUY CALL JUL-50*AAO-GJ OI=2401 at $4.90 SL=3.00
BUY CALL JUL-55 AAF-GK OI=3170 at $2.80 SL=1.50
BUY CALL OCT-50 AAO-JJ OI=1562 at $9.00 SL=6.25
BUY CALL OCT-55 AAO-JK OI=2628 at $6.90 SL=5.00
BUY CALL OCT-60 AAF-JL OI=3018 at $5.20 SL=3.25

SELL PUT JUL-45 AAO-SI OI=9655 at $2.70 SL=4.50
(See risks of selling puts in play legend)

Average Daily Volume = 14.9 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=QCOM


FFIV - F5 Networks $15.01 (+4.22 last week)

F5 Networks is a provider of integrated Internet traffic and
content management solutions designed to improve the
availability and performance of mission-critical Internet-based
servers and applications.  The company's products monitor and
manage local and geographically dispersed servers and
intelligently direct traffic to the server best able to handle
a user's request.  FFIV's content management products enable
network managers to increase access to content by capturing and
storing it at points between production servers and end users,
while ensuring that newly published or updated files and
applications are replicated uniformly across all target servers.

If finding a Technology stock with a positive trend these days
is difficult, then FFIV's chart must be an actual miracle.
While still just a shadow of its former self, the stock has
made tremendous progress in the past week, gaining nearly 40%
while the NASDAQ had its worst week of the year.  Volume has
been supporting the move too, still running close to double the
ADV after 4 days of stellar gains.  The company's announcement
of interoperability between FFIV's BIG-IP controller and ORCL's
new Oracle9i server seems to have been the catalyst to get the
move started on Tuesday, but since then the rally has taken on
a life of its own, allowing the stock to crest the $15 level by
the close of trading on Friday.  FFIV is quickly approaching its
January highs near $17.50, and this seems a good target to focus
on for the week ahead.  Aggressive entries will likely prove the
most fruitful, so target intraday dips near the $14 level for
new positions.  Since the stock is already getting a bit
overextended, a pullback seems healthy before we see it take a
serious run at the $17.50 level.  But we don't want to let it
weaken too much, hence our stop at the $13.50 level.  If the
stock were to close below that level, it would be an indication
that the bulls are losing their grip and would have us making a
quick exit from the play.

BUY CALL JUL-12.5 FLK-GV OI=194 at $3.40 SL=1.50
BUY CALL JUL-15.0*FLK-GC OI=463 at $1.90 SL=1.00
BUY CALL JUL-17.5 FLK-GW OI=252 at $1.05 SL=0.50
BUY CALL OCT-15.0 FLK-JC OI=199 at $3.70 SL=2.25
BUY CALL OCT-17.5 FLK-JW OI=153 at $2.80 SL=1.50

SELL PUT JUL-12.5 FLK-SV OI=247 at $0.70 SL=1.50
(See risks of selling puts in play legend)

Average Daily Volume = 438 K
http://www.premierinvestor.net/oi/profile.asp?ticker=FFIV


*************************ADVERTISEMENT*********************
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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.

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


**************************************************************
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The Option Investor Newsletter                   Sunday 06-17-2001
Sunday                                                      3 of 5

To view this email newsletter in HTML format with embedded
charts and graphs, click here:
http://www.OptionInvestor.com/htmlemail/4046_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
******************

TEVA - Teva Pharmaceutical Inds. $65.88 (+4.98 last week)

Producing drugs in all major therapeutic categories, TEVA is a
fully integrated global pharmaceutical company.  In the area of
proprietary drugs, TEVA has focused on products for the central
nervous system disorders, primarily the development of Copaxone,
a treatment for relapsing-remitting multiple sclerosis.  Through
its U.S.-based subsidiary, the company manufactures 137 generic
products in 210 generic forms, which are distributed and sold in
the United States.  TEVA also manufactures over 270 generic
products, which are sold primarily in the Netherlands, the
United Kingdom and Hungary.

Stocks posting gains last week were rare, and that makes
TEVA's performance all the more impressive.  After bolting
through the 200-dma on Tuesday, the bulls never looked back,
pushing the stock through the $63.50 resistance level on Friday
and holding above the $65 level at the bell, giving TEVA its
highest close of the year.  Volume was robust, to say the least,
as it easily doubled the ADV.  With daily Stochastics entering
overbought territory and the price running into the upper
Bollinger band, we need to determine a likely upside target for
our play.  According to the Point and Figure chart, the recent
breakout forecasts a bullish target of $72, meaning that the
bulls still have some room to run.  We'll likely have one or
two pullbacks along the way, providing opportunities for
aggressive traders to get onboard.  A dip and bounce near the
$63.50 level seems a likely price level for initiating new
positions in this manner.  Conservative entries can still be
considered if TEVA continues to defy gravity.  Wait for a move
through the $67 level before taking action and make sure that
volume remains robust.  Resistance will likely await the bulls
near $69 before they take a run at $72 and a pullback there may
provide additional entry opportunities.

BUY CALL JUL-65*TVQ-GM OI=343 at $3.70 SL=2.25
BUY CALL JUL-70 TVQ-GN OI=  0 at $1.50 SL=0.75  Wait for OI!
BUY CALL SEP-65 TVQ-IM OI=283 at $6.10 SL=4.00
BUY CALL SEP-70 TVQ-IN OI=327 at $3.70 SL=2.25

SELL PUT JUL-60 TVQ-SL OI=710 at $0.70 SL=1.50
(See risks of selling puts in play legend)

Average Daily Volume = 1.16 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=TEVA


GE - General Electric $48.81 (+0.67 last week)

As one of the largest and most diversified industrial companies
in the world, GE's products include major appliances, lighting
products, industrial automation equipment, medical diagnostic
equipment, electrical distribution and control equipment and
power generation and delivery products.  Additionally, GE
provides commercial and military aircraft jet engines,
locomotives and nuclear power support services.  Through the
National Broadcasting Company (NBC), GE delivers network
television services, operates television stations and provides
cable, Internet and multimedia programming and distribution
services.

While the media circus over the European Commission's steadfast
objection to the GE-Honeywell merger continues, shares of the
industrial giant have solidified their position above the $48
level on huge volume.  While volume fell off somewhat on Friday,
it was still well over double the ADV, indicating the level of
arbitrage that needed to be unwound as the deal apparently fell
apart.  Another indication of the robust action in GE can be
seen in the July $50 options.  3 days ago the open interest in
this particular option was a 'mere' 28,000 contracts and 7 days
ago it was meandering around south of 5000 contracts.  A quick
look at the listed options below shows OI is now north of 57,000
and that's quite a move for just over a week.  While this kind
of open interest can frequently portend a formidable resistance
level, it seems clear that there are a lot of traders that think
GE will move decisively through the $50 level before July
expiration.  Support seems to be firming up at the $48 level,
with further support resting at $47 (also the site of the 38%
retracement of the stock's gains since the March lows) and then
$46, the location of our stop.  Aggressive traders can consider
new positions on a dip AND bounce near either of these levels,
while more conservative players will want to wait for GE to
clear $50 on continued solid volume before getting their feet
wet.

BUY CALL JUL-47.5 GE-GW OI= 3794 at $2.95 SL=1.50
BUY CALL JUL-50.0*GE-GJ OI=57067 at $1.55 SL=0.75
BUY CALL SEP-47.5 GE-IW OI= 7396 at $4.40 SL=2.50
BUY CALL SEP-50.0 GE-IJ OI=27521 at $2.90 SL=1.50
BUY CALL SEP-55.0 GE-IK OI=26095 at $1.20 SL=0.50

SELL PUT JUL-45.0 GE-SI OI= 8660 at $0.70 SL=1.50
(See risks of selling puts in play legend)

Average Daily Volume = 21.9 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=GE


CB - Chubb Corporation $79.00 (+2.62 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.

While the bulls spent most of the day on Friday in full retreat
in the broader market, Insurance stocks managed to find some
bids and march higher, helping the Insurance index (IUX.X) to
bounce at its 200-dma ($758) and post a small gain.  CB led the
sector higher once again, solidly clearing the $78.50 level and
closing at $79 for the first time this year.  While there is
some formidable resistance near $80, the strong volume of
Friday's session (40% over the ADV) makes a convincing case for
the bulls' ability to continue to push the stock higher.
Resistance at $76.50 has acted as support for the past 3 days,
prompting us to raise our stop to $76.  Both the daily
Stochastics and RSI are once again in overbought territory, so
we could see some brief pullbacks before the bulls are able to
crest the $80 level (actually $80.30, which is the site of the
61% retracement of the decline between December and late March).
Look for aggressive entries on a bounce near $76.50, but make
sure the IUX index is maintaining its positive posture.  A
decisive move through $81 will give the all clear for
conservative traders to enter the play and clear the way for
CB to work towards its next serious obstacle, the $85 resistance
level.

BUY CALL JUL-75 CB-GO OI=651 at $5.00 SL=3.00
BUY CALL JUL-80*CB-GP OI=341 at $2.00 SL=1.00
BUY CALL JUL-85 CB-GQ OI=155 at $0.65 SL=0.00
BUY CALL OCT-80 CB-JP OI=162 at $4.60 SL=2.75

SELL PUT JUL-75 CB-SO OI= 35 at $1.00 SL=2.00
(See risks of selling puts in play legend)

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


IDPH - IDEC Pharmaceuticals $73.00 (+1.34 last week)

IDPH researches and develops therapies for the treatment of
cancer and autoimmune and inflammatory diseases.  IDEC was the
first-ever to received FDA approval of a monoclonal antibody,
called Rituxan, that is now the most widely used treatment of
non-Hodgkin's lymphomas in the U.S.  The company has two other
anti-cancer drugs in the approval process and five more are in
the pipeline.

While the NASDAQ suffered another decline the Biotech index
managed to close the day in the green.  The BTK.X closed up
14.92 points or 2.57%.  Leading the way was PDLI +5.19%, MEDI
was up 4.29%, GILD was up 5.15% and our play IDPH was up 3.76%.
The rest of the biotech group failed to participate in Friday's
rally and news on the whole group has been quite since we
launched this play on Thursday.  IDPH is demonstrating some
pretty wide intraday ranges and aggressive players who tried
to target shoot IDPH near $68 were rewarded on Friday's morning
dip.  The strong close over $70 is encouraging but IDPH does
have significant resistant at the $75 mark.  The stock has
failed to hold this level five times since last December.
If you're looking to trade IDPH keep you eye on the BTK.X
as well.  Hopefully, it has found support at the 570 level
where it had bounced twice this last week.  We are going to
move our stop loss on IDPH up to $67 which is a little over
Thursday's low for the day.  Traders who are already in
the play may want to set theirs tighter but be aware that
intraday volatility could swing you out.

BUY CALL JUL-65 IHD-GM OI=3469 at $11.10 SL=8.00
BUY CALL JUL-70*IHD-GN OI=6684 at $ 7.70 SL=4.75
BUY CALL JUL-75 IHD-GO OI= 300 at $ 5.10 SL=3.00
BUY CALL JUL-80 IHD-GP OI=3218 at $ 3.30 SL=1.50

Average Daily Volume = 3.98 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=IDPH


MSFT - Microsoft Corp $68.02 -0.88 (-5.17 this week)

Microsoft is the #1 software company in the world.  They
develop, manufacture, license, and support a broad range of
software products including Windows operating systems, server
applications, the popular MS Office suite, and a Web Browser.
CEO and co-founder, Bill Gates still owns 15% of Microsoft.

Our overbought comments about MSFT last Monday came very
true to the dismay of tech bulls everywhere.  Ending a very
negative week with the NASDAQ, the GSO.X Software index both
down significantly MSFT had little hope of withstanding the
market's slide.  Throughout the week news of a trademark
fiasco over MSFT's soon to be released XBOX video game system
couldn't have helped but by Friday the software giant had
settled with the original trademark owner so the name X-BOX
is now MSFT's.  Boastful comments by software competitor
ORACLE's Larry Ellison on Thursday could have added extra
emphasis to the selling we saw at the end of the week.
We are currently at the crucial decision point for our play
on MSFT.  Friday's trading saw the stock trade under our stop
of $67 but our instructions were to end the play if it closed
under 67.  This had been a previous area of support throughout
late April and the middle of May.  Aggressive traders may
see this as the perfect entry point but we would be concerned
with the stock just under its 50 dma of 68.14.  Look for the
stock to move higher before making any bets and if you do be
sure to follow it with a close stop loss.  The NASDAQ and the
GSO are both sitting just above support levels and if they
break down then MSFT is likely to go down with them.

BUY CALL JUL-65 MSQ-GM OI=20415 at $5.90 SL=3.50
BUY CALL JUL-70*MSQ-GN OI=52565 at $2.95 SL=1.50
BUY CALL OCT-70 MSQ-JN OI=10705 at $6.50 SL=3.75

Average Daily Volume = 43.9 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=MSFT


*************************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=2207
************************************************************


**********
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 06-17-2001
Sunday                                                      4 of 5

To view this email newsletter in HTML format with embedded
charts and graphs, click here:
http://www.OptionInvestor.com/htmlemail/4046_4.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
************************************************************


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

TMPW - TMP Worldwide $55.61 (-6.79 last week)

TMP Worldwide is a recruitment advertising agency and executive
search and selection firm.  The company has built Monster.com
into one of the Internet's leading career destination portals.
In addition to offering these career solutions, TMPW is a yellow
page advertising agency.  The company has more than 60,000
clients, including over 90 of the Fortune 100 and over 480 of
the Fortune 500.

Despite record traffic levels on its Monster.com site, shares
of TMPW are coming under significant selling pressure.  Things
were looking up for investors in the recruitment and placement
firm last month as the stock moved above the 200-dma.  But with
last week's weakness, the stock is once again below that
important level, now at $57.74.  While there is some support
near $55, the sharp increase in selling volume (to 75% over the
ADV) the past two days, and the daily Stochastics racing towards
oversold territory portend a lower price target in the near
future.  The bullish support line on the point and figure chart
rests at $51, and with historical support resting at $50-51,
this seems like a reasonable downside target to shoot for.
Given the market's oversold condition, we could get a mild
bounce early next week, providing for aggressive entry points
as the stock rolls over near $59-60.  While a drop through the
$55 support level may provide entries for more conservative
traders, stay on your toes, as TMPW is likely to find buyers
once it reaches our price target.  Set stops at $60.

BUY PUT JUL-60 BSQ-SL OI=620 at $7.60 SL=5.25
BUY PUT JUL-55*BSQ-SK OI=539 at $4.80 SL=3.00
BUY PUT JUL-50 BSQ-SJ OI=140 at $2.60 SL=1.25

Average Daily Volume = 2.67 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=TMPW


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

QLGC - QLogic Corporation $52.11 (-4.20 last week)

Somebody has to make the equipment that lets your computer talk
to all its peripheral equipment, and QLGC does it well.  A
leading designer and supplier of semiconductor and board-level
input/output (I/O) management products, QLGC has been providing
SCSI-based connectivity solutions to this market sector for over
12 years.  QLGC's I/O products provide a high performance
interface between computer systems and their attached data
storage peripherals, such as hard disk and tape drives,
removable disk drives and RAID (redundant array of independent
disks) subsystems.  The company is also the market share leader
in Fibre Channel host bus adapters, a market segment that is
receiving tremendous attention from investors.

As hope for a second-half recovery dims in the midst of another
round of dismal earnings warnings, one Technology sector after
another is being taken out and shot.  Over the past 2 weeks, it
has been the Networkers and Semiconductors that have taken the
brunt of the selling, but we are now starting to see chinks in
the armor of the Storage stocks.  QLGC is a perfect example of
the pending weakness, as it ran into a brick wall near $60 and
has already begun its slide.  Confirming the significance of
this resistance level is the Point and Figure chart, which shows
price being turned back at the bearish resistance line, right at
$60.  In Friday's selling frenzy, the bears drove the price
below $49 before allowing the stock to come up for air in the
afternoon, closing just above $52.  The daily Stochastics are
still pointed down, and have a ways to go before reaching
oversold and selling volume is already robust, coming in 35%
above the ADV on Friday.  There is some support near $50, which
we will need to see decisively broken, in order for QLGC to
really challenge the $47 support level.  According to the Point
and Figure chart, this will just be a waypoint in the stock's
overall decline, with a calculated bearish target of $37.
Aggressive traders will want to wait for a bounce to provide
better entries; target the $55-56 level.  More conservative
players will wait for QLGC to drop back under the $50 level
before playing.  Keep stops set at $57.

BUY PUT JUL-55 QLC-SK OI=227 at $7.60 SL=5.25
BUY PUT JUL-50*QLC-SJ OI=478 at $5.10 SL=3.00
BUY PUT JUL-45 QLC-SI OI=619 at $3.10 SL=1.50

Average Daily Volume = 5.87 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=QLGC


RIMM - Research in Motion $27.53 (-5.29 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.

An earnings warning from handset-maker Nokia last week helped
to solidify RIMM's breakdown, pushing the stock decisively below
the 50-dma (then at $31.53).  Since then, the $31 level has
emerged as solid resistance, and the stock has continued to
deteriorate, spending all day Friday below $28.  This is
significant, because RIMM is now trading below where it was
prior to the Fed's surprise interest rate cut in mid-April.
Daily stochastics are once again entering the oversold region,
but as we witnessed earlier this year, can remain in this area
for weeks at a time as price continues to weaken.  Turning to
the Point and Figure chart, we can see that the bearish price
target generated by the most recent decline is $16, very close
to the lows posted in early April.  While that may seem a long
way off, the point is clear that RIMM is headed lower.  There
will more than likely be intraday bounces, providing aggressive
entries in the days ahead.  For now, target failed rallies at
$28 and then $30, while placing stops at $31.  More conservative
entries will materialize as the selling intensifies, pushing
RIMM below the $26 level, also the site of the 61% retracement
of the stock's gains during April and May.

BUY PUT JUL-30 RUL-SF OI=1262 at $5.60 SL=3.50
BUY PUT JUL-25*RUL-SE OI= 423 at $2.80 SL=1.50

Average Daily Volume = 4.68 mln
http://www.premierinvestor.net/oi/profile.asp?ticker=RIMM


SRNA - Serena Software $27.75 (-2.72 last week)

Serena Software is a provider of eBusiness software change
management (SCM) solutions.  The company's products and
services are used to manage and control software change for
organizations whose business operations are d3ependent on
managing information technology (IT).  SRNA's product
offerings support the industry standard IBM mainframe
platforms, including MVS, and are marketed under the brand
name Full Cycle mainframe.  This product suite automates the
software application life cycle and creates an IT environment
that facilitates concurrent development efforts by separate
programming teams, improves process consistency, enhances
software integrity and protects valuable software assets.

Software stocks seemed to be running in place on Friday, with
the Computer Software index (GSO.X) ending the day with a 1
point gain.  Reflecting this indecision, SRNA crept higher
throughout the day (after gapping down to $25 at the open),
eking out a fractional gain.  The stock still closed under the
$28 resistance level (previous support), and with daily
Stochastics making a beeline for oversold territory, it will
likely take an act of Congress (or a surprise interest rate
cut) to reverse the trend mid-stroke.  With SRNA's failure to
crest the 200-dma, the bears have come out of the woodwork,
driving the price down, as volume continues to rise.
Conservative traders will want to wait for a solid move below
$25 before taking a position, as sellers may have to work a bit
to break this support level.  The next target after that will
be the congestion zone between $20-21.  More aggressive entries
will appear on failed rallies near the $28 level or even $30.
The point and figure chart predicts even more downside, with a
tentative bearish price target of $17.  Keep stops set at $31,
as a close above the 200-dma would clearly violate our bearish
trend.

BUY PUT JUL-30*NHU-SF OI=68 at $4.40 SL=2.75
BUY PUT JUL-25 NHU-SE OI=23 at $1.80 SL=1.00

Average Daily Volume = 582 K
http://www.premierinvestor.net/oi/profile.asp?ticker=SRNA


NETE - Netegrity Inc $32.85 +1.71 (-4.88 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.

Friday morning saw the selling on NETE continue and our original
objective of $31 was exceeded as the stock hit a low of 29.60
intraday.  However, as we noted, buyers appeared to step in at
the $30 level which has been significant support for several weeks
now. An article from TheStandard.com naming NETE a "safe
investment bet" probably didn't help out our put play but then we
had already captured the lion's share of the sell-off from heavy
resistance at $40.  As noted in our recent update, OI has a new
stop loss at $35.  New put players should probably wait to see
if NETE might rally up to the 34 or 35 level and rollover again.
A simpler strategy may be to just wait for the stock to close
under support of $30 but considering that buyers stepped in at
the $30 level this Friday on above average volume this could be
some time before a break below 30 might occur.  That would
probably depend on the overall market and the NASDAQ.  All in
all, only very active traders should try and buy puts on NETE
at this time and we'll monitor it's activity for another entry
point.

BUY PUT JUL-35 UPN-SG OI=16 at $5.40 SL=2.75
BUY PUT JUL-30*UPN-SF OI=49 at $2.85 SL=1.25

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


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 just keeps getting better - or worse.  Guess it depends on
whether you're a stock owner or a put owner.  Nortel's bad news
is just salt in the painful telecom wound.  TLAB gapped down on
Friday with a low of the day at 23.60.  The stock hasn't seen
levels this low since October of 1998 just before the big
NASDAQ bubble took off.  As we noted in our Thursday update it's
hard to really pound the table on new put positions because the
stock is so oversold.  Everyone, stock owners to put buyers,
have got to ask themselves "where is the bottom?".  While shares
short data is hard to come by on a timely basis any significant
bump in TLAB could produce a short covering rally.  We suggest
you protect your profits with a tight stop loss.  Officially,
we're going to lower our stop to $26.  Be extremely careful
on any new positions and definitely trade with tight stops.

BUY PUT JUL-30*TEQ-SF OI=5430 at $6.30 SL=4.00
BUY PUT JUL-25 TEQ-SE OI= 891 at $2.60 SL=1.00

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


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*****
LEAPS
*****

Do As I Say, Not As I Do!
By Mark Phillips
Contact Support

Long-time readers will remember my continuing admonishments for
the past 2 months to avoid the impulse to chase stocks higher in
the current environment.  Sadly, I neglected to follow my own
advice, and as you can see by the two new Portfolio plays this
week, I got burned.

Remember the cartoons where one of the characters is shown with
a little angel on one shoulder and a little devil on the other?
Picture me with a little bull on one shoulder and a little bear
on the other.  Having both voices constantly whispering to you
helps to maintain balance when making investment decisions.
Care to listen to a typical conversation?

First the bull speaks. "Look at those charts!  The market is
going to put in a V-bottom recovery and leave you behind.  What
are you doing with all that cash in your account?  Don't fight
the Fed, the bear market is dead."  And so on, and so forth...

The little bear makes his points just as eloquently.
"Second-half recovery?  You've got to be kidding me.  Look at
the rate of contraction that is still going on.  PE ratios are
still sky-high.  Don't buy here or you'll be the greater fool in
the greater fool theory.  Don't chase these stocks higher.  The
buyers are going to dry up going into the summer, so wait for
the inevitable weakness before opening more long-term
positions."  You get the idea...

Does this sound at all familiar?  As long as both voices keep
whispering, we have enough balance to keep us from doing
anything foolish.  I didn't think to check until the middle of
last week, but when I looked in the mirror, I found that my
little bull had bound and gagged the little bear and had a
megaphone up to my ear shouting at the top of his lungs to buy
everything in sight.  I quickly corrected that situation, but
alas, the damage had been done.

Of course, this is a fictional exchange, and I really don't see
little creatures cavorting on my shoulders.  But I think it
helps to describe what we've all been going through in recent
weeks.  Look at the new Portfolio plays this week, and you can
see how I got fooled.  I started out with entry targets on
Siebel Systems (NASDAQ:SEBL) and Verisign (NASDAQ:VRSN) at
$32-33 and $42-44 respectively.  With each little rally on the
NASDAQ, the stocks would move further away from my conservative
targets, which I would subsequently edge higher.  The next
round of profit taking would halt just above the revised entry
target, denying me entry into the play and I would watch in
frustration as the next little rally left me behind.  This
frustration, accompanied by fear of missing the move altogether,
served to goad me into raising those entry targets too far.
Ask yourself this question?  Do you think I'd be more excited
right now if I had left those targets where they started and
stubbornly refused to play the market's game?

I went through this explanation because as we all know, trading
is almost entirely a psychological exercise.  If we understand
the emotions that drive the market and our own trading behavior,
it will inevitably make us better (and more profitable traders).
So learn from my mistakes and make those entry points come to
you!

So what else happened in the Portfolio this week?  A LOT!!
We've got a total of 6 drops, one of which is from the
Watchlist.  Except for the Nextel Communications (NASDAQ:NXTL)
drop, the series of drops is in my mind, a powerful confirmation
that we are going in the right direction with our rigid
stop-loss approach.  I'm particularly gratified by our exits
from Genzyme General (NASDAQ:GENZ) and Qualcomm (NASDAQ:QCOM),
even though the latter play handed us a nominal loss of 25%.
Look how much worse it would have been if we hadn't gotten out
when our stop was violated.

Ever since the April 18th surprise interest rate cut, I've been
expecting the markets to correct to fill the gaps left from that
day's euphoric trading.  Prompted by last week's round of
earnings warnings and the apparently defunct General Electric
(NYSE:GE) and Honeywell (NYSE:HON) merger, it looks like we are
getting close to filling those gaps.  At 2028, the NASDAQ
Composite is only 100 points from closing its gap and the DJIA
is quickly closing in on the bottom of its own gap near 10,300.
I would consider it very encouraging to see these gaps get
filled and then watch the major indices return to a more sedate
upward trend.

Our good friend, the CBOE Volatility Index (VIX) is starting to
behave more rationally as well.  After reaching a low of 21.22
two weeks ago, the VIX has reversed course, actually moving as
high as 28.69 on Friday.  With its close on Friday at 26.33, I
am hopeful that it will once again fall into its typical range
of 20-30, as it will prove to be a more useful tool in that case.

I promised last week to speak on the issue of exit points, and
so I will.  But I will need to forgo much of the discussion
until next week due to my long-winded discussion of the
developments that overtook the LEAPS portfolio this past week.

In short, you can see from the plays we have dropped so far,
that using a trailing stop on our Portfolio plays has served us
quite well.  Each time the stock moves higher, we ratchet that
stop up to just below the most recent support level.  We could
have done much better by more aggressively tightening our stops
on winning plays, but it seemed counter-productive to do so on
plays with such a long time horizon.  I am looking to become
more proactive in managing the levels of our stops from here on
out, and the way in which we allowed the market to take us out
of our GENZ play is a good example of what I am trying to
accomplish.

Some of our stops may seem to be too loose for many of you,
especially on profitable plays such as Washington Mutual
(NYSE:WM).  If you are more comfortable doing so, feel free to
tighten your own stops even further, ensuring that you keep the
gains that have accrued to date.  You may get out of the play
prematurely, but there is no rule that says you can't re-enter
the play on the next pullback.  Our job here is to educate you
on how to manage your own plays first, and I think the live
Portfolio is a great start towards achieving that goal.  Just
remember, that you will never go broke taking profits when they
are offered.

Have a profitable 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  $ 3.40  - 2.86%  $ 33
                 '03 $ 35  VUT-AG  $ 6.10  $ 6.10    0.00%  $ 33
WM     03/22/01  '02 $33.8 BWT-AY  $ 4.00  $ 6.00   50.00%  $ 32
                 '03 $33.8 OBN-AY  $ 6.13  $ 8.50   38.66%  $ 32
JWN    03/30/01  '02 $ 20  JWN-AD  $ 1.65  $ 1.55  - 6.06%  $17.50
                 '03 $ 20  VNZ-AD  $ 3.30  $ 3.00  - 9.09%  $17.50
FON    04/09/01  '02 $ 25  FON-AE  $ 2.80  $ 1.00  -62.50%  $ 19
                 '03 $ 25  VN -AE  $ 4.40  $ 2.75  -37.50%  $ 19
DELL   04/27/01  '02 $ 25  DLQ-AE  $ 6.20  $ 4.10  -35.48%  $ 23
                 '03 $ 25  VDL-AE  $ 9.00  $ 7.00  -22.22%  $ 23
ADBE   05/16/01  '02 $ 40  AEQ-AH  $11.00  $ 8.20  -25.45%  $ 37
                 '03 $ 40  VAE-AH  $14.60  $13.60  - 6.85%  $ 37
AOL    05/16/01  '02 $ 55  AOO-AJ  $ 9.60  $ 7.50  -21.88%  $ 48
                 '03 $ 55  VAN-AJ  $14.60  $13.00  -10.96%  $ 48
LRCX   06/01/01  '02 $ 30  WMJ-AF  $ 6.60  $ 5.80  -12.12%  $ 25
                 '03 $ 30  VPC-AF  $10.30  $10.10  - 1.94%  $ 25
BRCD  06/05/01   '02 $ 45  UBF-AI  $10.70  $ 9.30  -13.08%  $ 35
                 '03 $ 45  OMW-AI  $18.40  $15.50  -15.76%  $ 35
BRCM  06/05/01   '02 $ 40  RCQ-AH  $ 9.70  $ 6.60  -31.96%  $ 30
                 '03 $ 40  OGJ-AH  $14.00  $11.50  -17.86%  $ 30
TXN  06/07/01    '02 $ 40  TXN-AH  $ 6.30  $ 3.20  -49.21%  $ 30
                 '03 $ 40  VXT-AH  $10.90  $ 6.90  -36.70%  $ 30
SEBL 06/12/01    '02 $ 45  SGW-AI  $13.00  $ 8.60  -33.85%  $ 34
                 '03 $ 45  OIE-AI  $18.40  $13.80  -25.00%  $ 34
VRSN 06/12/01    '02 $ 50  YXO-AJ  $17.10  $13.40  -21.64%  $ 42
                 '03 $ 55  OVX-AL  $20.40  $17.50  -14.22%  $ 42



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  $21-22        JAN-2002 $ 25  EMC-AI
                               JAN-2003 $ 25  VUE-AI
IBM    06/17/01  $100-102      JAN-2002 $105  IBM-AA
                               JAN-2003 $110  VIB-AB
                               JAN-2004 $110  LIB-AB
MRK    06/17/01  $65-66        JAN-2002 $ 70  MRK-AN
                               JAN-2003 $ 70  VMK-AN
                               JAN-2004 $ 70  LMK-AN


New Portfolio Plays

SEBL - Siebel Systems $48.73

Providing further proof that the market seeks to humiliate as
many investors as possible, SEBL gave us what looked to be an
ideal entry point on Tuesday, following the Nokia earnings
warning.  The stock dipped to $43.75 in the morning and rallied
throughout the day on respectable volume.  Then came the selling
frenzy of the next two days, dropping SEBL into the $39-40 range
and putting our play well underwater before I even got a chance
to tell you about the entry.  The bounce on Friday, although
small in magnitude, occurred at the 50% retracement of the
stock's recent gains and came on heavy volume, giving me hope
that the play could still be a strong performer for us.  Broad
market weakness has been fed by a steady stream of earnings
warnings, indicating that the second-half recovery simply will
not appear.  This, more than any other factor is the culprit
behind SEBL's losses last week.  We want to give SEBL a chance
to prove itself, so we are setting a wide stop at $34, just
below the 61% retracement level.  A close below this level will
prove that I was premature in playing SEBL and push it
decisively out of the Portfolio.  Barring such an unfortunate
development, aggressive entries can still be taken on a renewed
round of buying near current levels as the daily Stochastics
oscillator reverses direction and emerges from oversold
territory.

BUY LEAP JAN-2002 $45.00 SGW-AI $13.00
BUY LEAP JAN-2003 $45.00 OIE-AI $18.40

VRSN - Verisign $58.00

Same song, different verse.  VRSN spent 2 weeks consolidating
above the $52 support level before giving us a strong surge of
buying on Tuesday to usher us into the play.  That rally turned
out to be a head-fake, as the stock succumbed to broad-based
selling pressure for the remainder of the week, falling to end
the week perched just above the $50 level.  There wasn't any
company-specific bad news, just general fears centered on
revised expectations of a more protracted economic recovery.
Like our SEBL play, VRSN has us now trying to decide whether to
ride this dip out, or just take our punishment now.  I'm
inclined to let it ride, but in order to avoid being stopped out
right at the bottom of the current decline, I'm setting a fairly
wide stop at $42, just below the 61% retracement of VRSN's
recent gains.  Buyers could resurface again next week, but given
the fact that warnings are still flowing, we could be facing a
bit more weakness before we see the bottom of this current
decline.  Aggressive traders that were lucky enough to miss the
entry I took last week may want to target new positions on a dip
into the $43-44 area.

BUY LEAP JAN-2002 $50.00 YXO-AJ $17.10
BUY LEAP JAN-2003 $55.00 OVX-AL $19.40

New Watchlist Plays

IBM - International Business Machines Corp. $113.60

With one quick look at a daily chart of IBM, most readers will
be convinced I have taken leave of my senses.  But stick with me
here, and I think you'll see the light.  IBM has once again
moved into a trading range between $112-120, and I fully expect
that range to be broken to the downside.  Remember the
excitement that propelled IBM up to these levels a couple months
ago?  First a surprise interest rate cut, and then the company's
refusal to miss earnings, and without revising estimates
downwards!  With economic conditions continuing to deteriorate
around the world, my gut tells me they won't be so lucky this
time around, and I want to be in position to take strike when
the opportunity is ripe.  We don't want to enter the position
anywhere close to current levels.  Rather, we are targeting a
drop to the $100-102 level, where the stock has solid support.
No matter how well run, the company is still a Technology
powerhouse, and with weakness in the sector continuing to
worsen, we could get just what we're asking for.  If filled, we
will place a tight stop at $98, as a drop through that level
will be a strong indication that conditions are continuing to
worsen.

BUY LEAP JAN-2002 $105.00 IBM-AA
BUY LEAP JAN-2003 $110.00 VIB-AB
BUY LEAP JAN-2004 $110.00 LIB-AB

MRK - Merck & Co. $73.75

Even a cocktail of MRK's most potent drugs wouldn't be enough to
rescue our economy from the failure of the vaunted second-half
recovery to appear.  But that very same failure may be just what
we need to gain an attractive entry into one of the strongest
Pharmaceutical plays in the market.  Please don't construe this
as a recommendation to go out and enter the play next week.
This is just advance notice of what we will be looking for in
the weeks ahead.  The Pharmaceutical index (DRG.X) can't seem to
find its way back to the uptrend with both hands, and MRK has
been locked in a persistent downtrend since the first of the
year.  Earnings have continued to be solid, keeping MRK from
really tanking, but broad market weakness may be just the
catalyst to drive the stock down for one more dip before its
defensive nature really comes into play.  We want to target
entries on a dip into the $65-66 area, and will follow it up
with a stop at the $61 level.  This will give us a fairly low
risk entry in a defensive stock that clearly has the potential
for a $20-30 move to the upside.

BUY LEAP JAN-2002 $70.00 MRK-AN
BUY LEAP JAN-2003 $70.00 VMK-AN
BUY LEAP JAN-2004 $70.00 LMK-AN


Drops

CPN $43.00 Last week we moved CPN onto the Watch List in
anticipation of the stock rebounding through the summer months
as power demands increased.  While that may in fact occur,
natural gas prices are once again on the downswing, contrary
to our expectations, and the mild bounce in shares of CPN has
all but disappeared.  California's Attorney General is now
threatening to take legal action against the 'evil' power
generators, and this factor may become dominant in the weeks
and months ahead.  Rather than risk an entry into a play that
is likely to be influenced by the decisions of the court system,
we are opting to just remove the play from our radar screen.

GENZ $53.77 Every once in awhile, I get it right.  My concerns
about Biotech weakness were proven correct as the Biotech index
(BTK.X) continued to fall last week after failing to hold above
the $640 level.  Fortunately we raised our stop on GENZ to the
$54 level last week, meaning we were out of the play on Monday
with most of our gains intact.  GENZ is still one of the
strongest Biotechs in the market with a solid pipeline of
products and consistent growth, both in terms of revenues and
profits.  But in the near-term, the stock has gotten a bit
pricey for a long-term position.  Now that we've locked in our
gains, we can look at the stock objectively.  We still like the
long-term growth prospects for GENZ, but we'd prefer to enter
the stock at a later date when the valuation isn't so extended.
We'll keep our eye on the stock for indications that we can make
another profitable play in the months ahead.

SWS $19.87 The disappointing weakness in the Brokerage sector
finally got the best of our SWS play, triggering our $20 stop
in the middle of last week.  Decreasing trading volume is
hitting all the major brokerages, and the selling pressure hit
our play as well.  This is still a very dicey market
environment, so I'm quite happy to have been able to close out
this play for a modest gain.

GS $89.16 Financial stocks will need to participate if the
broader market is going to advance, and the recent action in
the Brokerage index (XBD.X) is not encouraging.  Monday saw the
$94 support level give way, but the bounce on Tuesday gave us
hope of new life.  Those hopes were dashed on Wednesday, and
confirmed on Thursday as SCH revealed how much trading volume
had declined in recent months.  GS followed the XBD index lower,
reaching a temporary bottom at $87 before seeing any buying
interest.  While the sector could find support and recover from
here, we are best served by adhering to our stop loss rules and
exiting the play.  We may revisit this stock in the future, but
we want to see conditions improve before we do.  As a side note,
the effect of time decay is starting to show up between the '02
and '03 LEAPS.  Note from the Track Record list on the website
that while we closed the '03 position for par, the '02 LEAP
suffered a 10% loss.  See, there is a reward for buying more
time.

NXTL $14.79 This has been a dismal play and I, for one, am glad
to get rid of it.  As though the market knew we had taken a
position, NXTL promptly reversed and headed lower after we
entered the play.  But the magnitude of the drop in our LEAP
premium cannot be accounted for simply by a $2 drop in the
stock's price.  Despite relatively low volatility in the stock
when we initiated the play, a drop in this measure of option
pricing has had a disastrous effect on our premiums, handing us
our worst defeat since redesigning the LEAPS column.  This is
proof positive that when a stock is cheap and lifeless, it is
that way for a reason.

QCOM $54.22 Just one short week ago, I was looking favorably on
our new QCOM position, looking fondly on its chances to scale
the $70 resistance level with the continued positive
developments in the Wireless sector.  Then Nokia came along on
Tuesday, issued a devastating earnings warning and turned the
sector into mince meat.  Initially holding above our $55 stop,
QCOM looked like it might be able to hold its ground, but alas,
it wasn't to be.  Our stop was wiped out on Wednesday, and it is
a good thing we had it where we did.  By the end of the week,
QCOM was trading well south of $50 and without some positive
sector news soon, it wouldn't surprise me to see a retest of the
April lows.


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The Option Investor Newsletter                   Sunday 06-17-2001
Sunday                                                      5 of 5

To view this email newsletter in HTML format with embedded
charts and graphs, click here:
http://www.OptionInvestor.com/htmlemail/4046_5.asp

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

Option Trading Basics: Covered-Call Strategies and Adjustments
By Mark Wnetrzak

We recently received an excellent question regarding potential
adjustments for "in-the-money" covered-calls and the strategies
for maintaining upside potential with downside protection.


Dear OIN,

A few months ago, when sentiments on IBM and the market were poor,
I sold some covered calls on IBM (JUL-$100 for $7 premium).  Since
then, IBM has gone up quite a bit.  I have a significant amount of
gain if it gets called away, which I can offset with losses (for
tax purposes).  But, with the recent bullish sentiment on IBM, I
would like to continue owning the stock.  Should I sell JUL-$110
Puts, so that the stock will be assigned if IBM closes below $110
on expiration in July?  But, then I wouldn't be assigned the stock
if IBM closes above $110.  Or can you suggest another strategy?

Thanks
KS


Regarding "in-the-money" covered-calls and potential adjustments:

You do not have to let the stock be called away - the choice is up
to you, until the stock is actually assigned.

Generally, you have several choices:

  - Do nothing, get called out and accept the original profit you
      established when you sold the calls.

  - Close the position early if the call is near parity (evaluate
      extra commissions versus an increased annualized return).

  - Roll the call forward, or forward and up to establish a new
      cost basis and maximum profit in the overall position.

If you decide to close the position early, a "net-credit" order
could be used to ensure a proper exit.  You would place an order to
sell the stock and buy-to-close the calls for a specific net-credit;
a price which is reasonably close to parity.

Generally, your calls won't trade at parity (lose their time value)
until a few days before expiration.  With deep-in-the-money calls,
the time value can disappear well before expiration, so be careful.
As long as there is time premium left in the calls, there is little
risk of early assignment (and you are earning additional premium by
staying with the original position).  Once the option trades near
parity or a discount, there is a significant probability of exercise
by arbitrageurs (floor traders who don't pay commissions).  It is at
this time you would want to roll forward.  You would repurchase the
sold calls and write longer-term calls with the same or different
strike prices, depending on your outlook for the underlying issue.
If you are bullish, you would roll up - buying back the short calls
and selling new calls at a higher strike, thus increasing the profit
potential.  The catch (and there is always a catch) is that you give
up downside protection.  When one rolls up, a debit is incurred and
this is usually considered negative (because you are putting more
money on the table).  A defensive move would be to roll down to a
lower striking price, in expectation of a falling share price.  The
problem with that approach is the strategy of writing covered calls
only offers limited downside protection, and if you become bearish
on the underlying issue, it may be wiser to simply sell the stock.

Before you make a decision, you need to evaluate each risk-reward
scenario and choose the alternative that fits your outlook for IBM.
Larry McMillan's book, Options: As a Strategic Investment, does an
excellent job explaining the various adjustment strategies involved
with covered calls.  His book is available in the OIN bookstore,
and it is well worth reading.

Regards,

Mark
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

NPIX   10.00  10.87   JUN  10.00  1.15  *$  1.15  11.3%
CYGN    7.79   8.66   JUN   7.50  0.75  *$  0.46   9.9%
OSUR   10.24  10.29   JUN  10.00  1.00  *$  0.76   8.9%
OPTV   13.87  13.33   JUN  12.50  1.80  *$  0.43   7.7%
STOR   19.27  16.90   JUN  15.00  5.40  *$  1.13   7.1%
APHT   20.00  19.74   JUN  17.50  3.50  *$  1.00   6.6%
ABMD   25.60  22.60   JUN  22.50  4.00  *$  0.90   6.3%
CELG   22.99  30.90   JUN  20.00  4.00  *$  1.01   5.8%
SPWX   15.70  12.41   JUN  12.50  3.90   $  0.61   5.6%
WEBX   16.20  20.31   JUN  12.50  4.30  *$  0.60   5.5%
NUAN   16.50  13.78   JUN  12.50  4.30  *$  0.30   5.3%
VOXX   10.09   9.70   JUN  10.00  0.95   $  0.56   5.3%
SBYN   15.28  13.61   JUN  12.50  3.20  *$  0.42   5.3%
MEDX   26.30  28.03   JUN  22.50  4.80  *$  1.00   5.1%
PGNX   20.16  18.02   JUN  17.50  3.20  *$  0.54   4.8%
NEM    20.98  21.89   JUN  20.00  2.00  *$  1.02   4.7%
AFCI   17.70  20.06   JUN  15.00  3.40  *$  0.70   4.3%
STLW   13.01   9.80   JUN  10.00  3.50   $  0.29   3.3%
GENE   13.44  11.80   JUN  12.50  1.75   $  0.11   2.0%
MCDTA  31.95  19.62   JUN  25.00  7.90   $ -4.43   0.0%

BTX     8.50   7.85   JUL   7.50  1.90  *$  0.90   8.5%
ROS     5.49   5.45   JUL   5.00  1.05  *$  0.56   7.8%
AMLN   14.42  12.60   JUL  12.50  3.00  *$  1.08   6.8%
LEXG   11.66   9.98   JUL  10.00  2.45   $  0.77   6.1%
MCAF   11.90  11.75   JUL  10.00  2.70  *$  0.80   5.4%
MCAF   14.56  11.75   JUL  12.50  2.90   $  0.09   0.6%
GNSL    5.40   4.33   JUL   5.00  0.90   $ -0.17   0.0%
OCPI   14.86  11.14   JUL  12.50  3.30   $ -0.42   0.0%
TIVO    8.40   6.30   JUL   7.50  1.55   $ -0.55   0.0%
MRVC   12.35   8.19   JUL  10.00  3.20   $ -0.96   0.0%
VLNC    9.06   5.91   JUL   7.50  2.15   $ -1.00   0.0%

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

Comments:

Thanks Nortel (NYSE:NT) and Jds Uniphase (NASDAQ:JSDU); Not!  Time
to reduce exposure and limit losses as the market takes a turn for
the worse.  At least Storagenetworks (NASDAQ:STOR) was kind enough
to stay above its 50-dma until today and even managed to close
above the sold strike.  The same can't be said for McData Class A
(NASDAQ:MCDTA), which violated a short-term "head-n-shoulders" top
(what hasn't) on Thursday.  A move to $15 and a test of the yearly
low appears likely.  If you plan to hold SpeechWorks (NASDAQ:SPWX),
consider rolling forward and down to the JUL-$10 call, though that
may not be enough protection if a test towards $6 ensues.  Audiovox
(NASDAQ:VOXX) may test the April low near $8 and some of you may
end up retaining Abiomed (NASDAQ:ABMD), not that you want it.  It
is at a "key" moment.  Stratos Lightwave (NASDAQ:STLW) and Genome
Therapeutics (NASDAQ:GENE) may be candidates for rolling forward
and/or down, depending on your long-term outlook.  As for the July
plays, it may be wise to exit the positions that have weakened in
the current bearish environment.  Though they may recover (5 weeks
until expiration), consider the effect on your portfolio if they
get worse.

Positions Closed:

Aremissoft (NASDAQ:AREM),  Finisar (NASDAQ:FNSR), Alexion Pharma-
ceuticals (NASDAQ:ALXN), H Power (NASDAQ:HPOW)

******************************************************************
                       - 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

CCRD    8.60  JUL  7.50   UCD GU  1.60 43     7.00   35    6.2%
CWST   10.92  JUL 10.00   KWQ GB  1.40 0      9.52   35    4.4%
ORCH    5.65  JUL  5.00   UOH GA  0.95 361    4.70   35    5.5%
TCNO    9.25  JUL  7.50   TQY GU  2.10 30     7.15   35    4.3%
WCNX   31.50  JUL 30.00   NBU GF  2.90 334   28.60   35    4.3%
WEBX   20.31  JUL 17.50   UWB GW  4.00 130   16.31   35    6.3%
Z      15.54  JUL 15.00     Z GC  1.30 500   14.24   35    4.6%

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

WEBX   20.31  JUL 17.50   UWB GW  4.00 130   16.31   35    6.3%
CCRD    8.60  JUL  7.50   UCD GU  1.60 43     7.00   35    6.2%
ORCH    5.65  JUL  5.00   UOH GA  0.95 361    4.70   35    5.5%
Z      15.54  JUL 15.00     Z GC  1.30 500   14.24   35    4.6%
CWST   10.92  JUL 10.00   KWQ GB  1.40 0      9.52   35    4.4%
TCNO    9.25  JUL  7.50   TQY GU  2.10 30     7.15   35    4.3%
WCNX   31.50  JUL 30.00   NBU GF  2.90 334   28.60   35    4.3%


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).

*****
CCRD - Concord Communications  $8.60  *** Stage I Base ***

Concord Communications (NASDAQ:CCRD) is the market leader in
automating technology management of the internet infrastructure.
With its eHealth solution set, Concord offers the only solution
to combine real time information with historical context for
integrated management across systems, applications and networks.
Concord recently announced their eROI(TM) tool which is their
new methodology and calculation engine for projecting savings
customers could realize by automating their technology management
with Concord's eHealth Suite(TM).  At the end of May, Banc of
America Securities initiated coverage and the stock responded
by rallying above a recent consolidation area.  Concord is now
forging a Stage I base on improving technicals and this position
offers a favorable cost basis in the issue.

JUL 7.50 UCD GU LB=1.60 OI=43 CB=7.00 DE=35 TY=6.2%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=CCRD
*****
CWST - Casella Waste Systems  $10.92  *** Technicals Only ***

Casella Waste Systems (NASDAQ:CWST), headquartered in Rutland,
Vermont, provides collection, transfer, disposal, recycling and
related services primarily in the northeastern United States.
The Waste Management industry has been one of the few strong
sectors and with earnings due on June 27, Casella continues to
rally higher.  The technicals continue to improve as the stock
is working up through its resistance area.  The rally this year
(beginning at the December low) has broken a long-term downtrend
and signals a change of character.  Reasonable speculation for
those who are bullish on the sector and the company's future.

JUL 10.00 KWQ GB LB=1.40 OI=0 CB=9.52 DE=35 TY=4.4%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=CWST
*****
ORCH - Orchid BioSciences  $5.65  *** Cheap Speculation! ***

Orchid BioSciences (NASDAQ:ORCH) is a leading provider of products,
services and technologies for single nucleotide polymorphism (SNP)
scoring and genetic diversity analyses.  ORCH has developed SNP-IT
(TM), its proprietary SNP analysis technology and markets SNPstream®
instruments and SNPware(TM) consumables that rapidly generate highly
accurate, cost effective SNP information.  The company recently
finalized its offering to sell 5.95 million newly issued shares to
a select group of new and existing shareholders.  We simply favor
the strong support near $4.50 and the signs of heavy accumulation.
The stock has been rather volatile recently so try "target shooting"
a lower net-debit to improve the cost basis in the issue.

JUL 5.00 UOH GA LB=0.95 OI=361 CB=4.70 DE=35 TY=5.5%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=ORCH
*****
TCNO - Tecnomatix Technologies  $9.25  *** Rally Mode! ***

Tecnomatix Tech. (NASDAQ:TCNO) is the world's leading provider
of manufacturing process management software for the electronics,
automotive, aerospace and heavy-equipment industries. Tecnomatix
applications run on an open platform, providing a collaborative
environment for authoring, simulating and managing manufacturing
processes across the extended enterprise and to suppliers.  The
stock has rallied off the April low and moved above the January
high which completed a "double-bottom" formation.  With several
new contracts over the last few months, investors may be also
anticipating favorable earnings.  We favor the bullish move but
also prefer an entry point closer to technical support.

JUL 7.50 TQY GU LB=2.10 OI=30 CB=7.15 DE=35 TY=4.3%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=TCNO
*****
WCNX - Waste Connections  $31.50  *** Next Leg Up? ***

Waste Connections (NASDAQ:WCNX) is a regional, integrated, solid
waste services company that provides solid waste collection,
transfer, disposal and recycling services in secondary markets
of the Western U.S.  WCNX serves more than 700,000 commercial,
industrial and residential customers.  Here is another entry
into the Waste Management industry that is showing improving
technical strength.  The stock appears ready to resolve its
recent consolidation phase with an upside break-out as it forms
an ascending triangle.  This play offers reasonable speculation on
a bullish stock.

JUL 30.00 NBU GF LB=2.90 OI=334 CB=28.60 DE=35 TY=4.3%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=WCNX
*****
WEBX - WebEx Communications  $20.31  *** What's Up! ***

WebEx Communications (NASDAQ:WEBX) is the leader in Internet
infrastructure for real-time business communications.  WebEx
provides Web-based carrier-class communication services using
its multimedia switching platform deployed over a global network.
WebEx's services enable end-users to share presentations,
documents, applications, voice, and video spontaneously in a
seamless environment.  In April, WebEx reported record 1st-quarter
results with revenues up 568% from last year, and 32% sequentially.
WebEx exceeded analysts' expectations for the third consecutive
quarter as their strong growth has continued with record bookings.
The stock rallied on the last FED cut and pulled back sharply on
no news.  Now the stock has again rallied on heavy volume?  Maybe
it's because John Corcoran, the Internet and new media analyst at
CIBC World Markets, told TSC that he favored the company.  We just
like the recent technical indications.

JUL 17.50 UWB GW LB=4.00 OI=130 CB=16.31 DE=35 TY=6.3%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=WEBX
*****
Z - Venator Group  $15.54  *** Break-out! ***

Venator (NYSE:Z) is primarily a mall-based specialty athletic
retailer that operates approximately 3,600 retail stores in 14
countries in North America, Europe and Australia.  Through its
specialty retail stores, including Foot Locker, Lady Foot Locker,
Kids Foot Locker and Champs Sports, as well as its direct-to-
customer channel Footlocker.com/Eastbay, the Company is the
leading provider of athletic footwear and apparel.  Venator
rallied sharply Friday after the company said it sees 2nd-quarter
earnings in line with previous company forecasts and plans to
open 1,000 new stores over the next several years.  We favor the
upside volume-supported resolution to its recent consolidation
phase.  You might try targeting a slightly lower cost basis to
compensate for any profit-taking on Monday.

JUL 15.00 Z GC LB=1.30 OI=500 CB=14.24 DE=35 TY=4.6%

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

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

PCLN    8.08  JUL  7.50   PUZ GU  1.25 8420   6.83   35    8.5%
CLCI   10.00  JUL 10.00   QAZ GB  0.65 281    9.35   35    6.0%
BORL   13.40  JUL 12.50   BLQ GV  1.55 685   11.85   35    4.8%
ULCM   28.25  JUL 22.50   UUL GX  6.90 74    21.35   35    4.7%
HOLL    5.69  JUL  5.00   BGU GA  0.90 0      4.79   35    3.8%
EXPE   35.54  JUL 30.00   UED GF  6.70 2081  28.84   35    3.5%


*************************ADVERTISEMENT*********************
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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.

Sign up for a two week free trial and see for yourself at
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*****************
NAKED PUT SECTION
*****************

Trading Basics: Managing Emotions for Consistent Profits
By Ray Cummins

The majority of articles regarding trading techniques deal with
strategies that are used to profit from specific conditions or
the analysis used to identify those situations.  However, the
psychological aspect of trading is also important and learning
to control your emotions is the key to achieving consistent
profits in the stock market.

A person who understands the mechanical nature of trading but
can't control his emotions is destined to fail as a trader.
One of the best ways to overcome a reaction-based mentality is
to establish a plan of attack before you begin to trade.  This
method allows you take control of your feelings and eliminate
the possibility of an impulsive action.  Any experienced trader
will tell you that the easiest way to protect a position from
emotional decisions is through the use of profit targets and
stop-limits.  This week's decline in share values provides an
excellent catalyst to discuss trading stops and today we will
review some of the basic uses of this unique tool.

Stop-loss orders are simply a method to follow the movement in a
stock or other instrument while insuring some profit (or limited
loss) if the primary trend changes character.  In most cases, we
recommend taking profits when the position produces the target
return and stops are an excellent way to remove the emotional or
"reactive" trading that often occurs in volatile markets.  When
the technical outlook for the instrument changes or a correction
becomes likely, one may tighten the stop (closer than usual) to
guarantee a reasonable profit (if stopped out) and still allow
for a greater gains and a possible resumption of the trend.  Of
course, some movements can occur so quickly that the order will
not be filled at the desired price.  The problem of volatility
is further compounded by the improper use of the stop-loss order.
In most cases, a simple STOP order is the best method to limit
losses or protect profits.  The basic guidelines for establishing
protective stops suggest that the initial or opening limit should
be placed at a point where important technical support is evident.
Most often, this will be a relatively small range reflecting the
bottom of a basing pattern or trend-line established prior to
entering the position.  An important objective of this initial
stop-loss limit is to preserve capital if the play goes badly and
yet provide every opportunity for the position to achieve its
potential.

If the primary trend is directional, the placement of the first
stop will differ, depending on your overall risk-reward tolerance.
One should also take into account the historical volatility of the
issue when setting the initial loss limit.  On a bullish stock you
might trail the stop loss slightly below the previous day's low to
lock-in profits (or preserve capital) if the trend falters.  With
highly volatile instruments, this can be quite difficult as they
often fluctuate by large amounts.  As the move progresses in your
favor, the stop-loss price can be advanced more aggressively.  To
assist in placing these stops, we use generally use trend-lines,
minor lows, and support/resistance areas.

While these principles work well with the majority of situations,
there will always be those cases when even the most common rules
do not seem to apply.  In particularly fast-moving markets where
straight line advances make the placement of protective stops
difficult, an arbitrary buy or sell "at the market" might be more
advisable.  There are also "progressive" stop order systems for
traders who wish to fine tune the limit-setting process to allow
for brief periods of technical consolidation.  Regardless of the
manner in which you determine the placement of stops, there is one
fundamental principle of protective limits that remains inviolate.
Protective stops under long positions should never be moved down,
nor should protective stops over short issues ever be adjusted
higher.  That would defeat the purpose of establishing a loss-limit
when the position was initiated.

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  12.60   JUN  10.00  0.60  *$  0.60  22.3%
FIBR   13.33  13.96   JUN  10.00  0.35  *$  0.35  17.6%
GENE   13.60  11.80   JUN  10.00  0.35  *$  0.35  17.3%
IDCC   13.99  13.13   JUN  12.50  0.35  *$  0.35  17.0%
PRST   12.97  12.56   JUN  12.50  0.40  *$  0.40  17.0%
EXEL   15.97  16.98   JUN  12.50  0.70  *$  0.70  15.6%
DTHK    8.74   7.82   JUN   7.50  0.25  *$  0.25  15.1%
MCAF   12.02  11.75   JUN  10.00  0.30  *$  0.30  14.8%
AMZN   16.95  12.49   JUN  12.50  0.25   $  0.24  14.3%
VIGN   10.02   7.68   JUN   7.50  0.30  *$  0.30  14.2%
SEAC   20.37  19.66   JUN  17.50  0.50  *$  0.50  13.2%
STOR   21.93  16.90   JUN  15.00  0.45  *$  0.45  10.1%
ILUM   32.01  29.30   JUN  25.00  0.65  *$  0.65  10.0%
NMTC   22.22  22.80   JUN  17.50  0.45  *$  0.45  10.0%
NFLD   13.50  13.15   JUN  10.00  0.30  *$  0.30   8.7%
TSAI   12.03  12.02   JUN  10.00  0.30  *$  0.30   8.5%
GLGC   21.05  22.24   JUN  17.50  0.50  *$  0.50   7.8%
PDG    11.05  11.12   JUN  10.00  0.30  *$  0.30   7.1%
GNSS   20.45  32.15   JUN  15.00  0.35  *$  0.35   6.9%
APCC   16.83  14.29   JUN  15.00  0.45   $ -0.26   0.0%
AVCI   13.59   6.84   JUN   7.50  0.30   $ -0.36   0.0%
PLUG   35.40  22.63   JUN  25.00  0.40   $ -1.97   0.0%
PLUG   32.78  22.63   JUN  25.00  0.35   $ -2.02   0.0%

MDCC   22.61  20.36   JUL  17.50  0.80  *$  0.80  10.9%
ACTN   22.50  22.30   JUL  20.00  0.95  *$  0.95   9.2%
MRVC   10.50   8.19   JUL   7.50  0.35  *$  0.35   8.9%
ICIX   17.71  15.00   JUL  15.00  0.60   $  0.60   8.7%
DMRC   18.06  22.95   JUL  15.00  0.65  *$  0.65   8.4%
SCIO   27.03  23.40   JUL  20.00  0.60  *$  0.60   7.2%
PXLW   30.66  27.30   JUL  22.50  0.65  *$  0.65   6.9%
GNSS   33.49  32.15   JUL  25.00  0.60  *$  0.60   6.0%
AVGN   21.25  19.14   JUL  15.00  0.45  *$  0.45   5.9%
UIS    12.94  12.25   JUL  12.50  0.65   $  0.40   5.4%

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

Comments:

Don't be the captain of a sinking ship!  Companies are starting
to warn about their quarterly earnings as the stealth recession
festers.  Definitely a time to exercise strict money management!
Amazon.com (NASDAQ:AMZN) appears to have consummated a near-term
"double-top."  Can a test of the April low be far behind?  Keep
that in mind if you end up owning it.  Presstek (NASDAQ:PRST)
also closed near the strike and the stock may be in your account
on Monday.  The move below its 150-dma is not necessarily a good
thing.  Both of the alternative power companies, American Power
Conversion (NASDAQ:APCC) and Plug Power (NASDAQ:PLUG) continued
to slide this week and may test recent lows.  Is your long-term
outlook still bullish?  Avici Systems (NASDAQ:AVCI), has acted
horrid over the past few days and closed at a new low on Friday.
Is it time to cut losses and prevent further bloodshed?  As far
as July positions, Intermedia Communications (NASDAQ:ICIX) is
down in sympathy with its potential parent; Worldcom (NASDAQ:WCOM),
and we'll exit the play in the interest of capital preservation.
The same goes for MRV Communications (NASDAQ:MRVC) as it is also
an exit candidate on further weakness.  Pixelworks (NASDAQ:PXLW)
is looking "toppy" as the technicals have begun to deteriorate;
monitor the position closely.

Positions Closed:

Sawtek (NASDAQ:SAWS), Sbs Technologies (NASDAQ:SBSE), Semtech
(NASDAQ:SMTC) - a Murphy's Law candidate, Oakley's (NYSE:OO)

******************************************************************
                       - 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

ALKS   34.65  JUL 30.00   QAL SF  1.00 41    29.00   35    8.5%
AMLN   12.60  JUL 10.00   AQM SB  0.40 120    9.60   35   11.9%
CBST   34.50  JUL 30.00   UTU SF  1.35 1050  28.65   35   11.0%
DMRC   22.95  JUL 20.00   DQT SD  0.70 0     19.30   35    8.8%
HCR    27.20  JUL 25.00   HCR SE  0.65 0     24.35   35    6.1%
NSM    26.91  JUL 22.50   NSM SX  0.55 2519  21.95   35    6.9%
PRHC   30.87  JUL 25.00   PUH SE  0.40 11    24.60   35    5.1%

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

AMLN   12.60  JUL 10.00   AQM SB  0.40 120    9.60   35   11.9%
CBST   34.50  JUL 30.00   UTU SF  1.35 1050  28.65   35   11.0%
DMRC   22.95  JUL 20.00   DQT SD  0.70 0     19.30   35    8.8%
ALKS   34.65  JUL 30.00   QAL SF  1.00 41    29.00   35    8.5%
NSM    26.91  JUL 22.50   NSM SX  0.55 2519  21.95   35    6.9%
HCR    27.20  JUL 25.00   HCR SE  0.65 0     24.35   35    6.1%
PRHC   30.87  JUL 25.00   PUH SE  0.40 11    24.60   35    5.1%


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).

*****
ALKS - Alkermes  $34.65  *** Breathe and Be Well! ***

Alkermes (NASDAQ:ALKS) is developing product candidates, with
partners and on its own, based on its independent drug delivery
technologies in several areas of focus.  These methods include
controlled, sustained release of injectable drugs lasting days
to several weeks, utilizing the company's unique technologies;
the development of pharmaceutical products based on pulmonary
drug delivery technologies using Alkermes' advanced inhalation
research technology; the delivery of drugs into the brain past
the blood-brain barrier, and oral delivery of drugs utilizing
the company's RingCap technology and dose-sipping technology.
ALKS is working on a number of products based on sophisticated
drug delivery technologies and analysts are bullish on the issue
because the company has products that are approaching commercial
distribution and in the late stages of development.  Investors
appear to agree with the positive outlook as they have pushed
the company's share value to a 6-month high on increasing volume.

JUL 30.00 QAL SF LB=1.00 OI=41 CB=29.00 DE=35 TY=8.5%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=ALKS
*****
AMLN - Amylin Pharmaceuticals  $12.60  *** 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 rallied in late May on optimism over the
company's presentation of new information from recent clinical
tests.  Now the issue is consolidating but Amylin is scheduled to
provide data on its current products at a number of meetings in the
near future and most analysts are optimistic about the company's
upside potential.  In addition, the relatively solid support area
near $10 provides a reasonable risk-reward outlook in this position.

JUL 10.00 AQM SB LB=0.40 OI=120 CB=9.60 DE=35 TY=11.9%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=AMLN
*****
CBST - Cubist Pharma  $34.50  *** Technicals Only! ***

Cubist Pharmaceuticals (NASDAQ:CBST) is a specialty pharmaceutical
company focused on the research, development and commercialization
of novel antimicrobial drugs to combat serious and life-threatening
bacterial and fungal infections.  Cidecin, the company's lead drug
product candidate and the first in a new class of anti-microbial
candidates, called lipopeptides, has demonstrated the ability, in
vitro, to kill virtually all significant Gram-positive bacteria,
including those that have become resistant to current therapies.
Cubist expanded its product pipeline by announcing the development
of an oral formulation of daptomycin, and by acquiring the global
rights to research, develop, manufacture and sell oral ceftriaxone,
an orally active version of Rocephin, an intravenous antibiotic.
CBST is another issue that emerged in our search for technically
favorable stocks in the drug development industry and the recent
buying pressure suggests there is additional upside potential in
its share value.  Of course, due diligence is a prerequisite on any
speculative issue!

JUL 30.00 UTU SF LB=1.35 OI=1050 CB=28.65 DE=35 TY=11.0%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=CBST
*****
DMRC - Digimarc  $22.95   *** New Trading Range? ***

Digimarc (NASDAQ:DMRC) provides a patented digital watermarking
technology that allows an invisible digital code to be embedded
in the printed or digital versions of media content, such as
commercial and consumer photographs, movies, music, magazine
advertisements, catalogs, product packages, and other valuable
documents, including financial instruments, passports and event
tickets.  The company's products are grouped along three primary
lines of business: Secure Documents, Media Commerce and Digimarc
MediaBridge.  Each product line offers systems generally including
embedder software, which is used to place Digimarc's watermarks
into content, and reader technology, which is incorporated into
digital devices to detect, read and respond to the embedded code.
Digimarc recently received another patent for digital watermarking
technology, underscoring the company's leadership in developing
and providing watermarking solutions for video, as well as audio
and image applications.  Analysts say that DMRC has a very unique
product in a growing industry and investors can use this position
to can establish a favorable cost basis in the issue.

JUL 20.00 DQT SD LB=0.70 OI=0 CB=19.30 DE=35 TY=8.8%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=DMRC
*****
HCR - Manor Care  $27.20  *** Entry Point! ***

Manor Care (NYSE:HCR) is a provider of a wide range of healthcare
services, including skilled nursing, assisted living, sub-acute
medical and rehabilitation care, rehabilitation therapy, home
healthcare, hospice care and management services for sub-acute
care and rehabilitation therapy.  The most significant portion of
the company's business is the segment that provides long-term care,
including skilled nursing and assisted living.  Shares of Manor
Care reached a 2-year high on Friday and with the recent strength
in the Healthcare Services sector, the future upside potential is
excellent.  Investors who want to own a solid company in the group
can use this position to establish an acceptable cost basis in the
issue.

JUL 25.00 HCR SE LB=0.65 OI=0 CB=24.35 DE=35 TY=6.1%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=HCR
*****
NSM - National Semiconductor  $26.91  *** Chip Sector ***

National Semiconductor (NYSE:NSM) designs, develops, manufactures
and markets semiconductor products, including microprocessors for
the personal computer industry, and analog, mixed-signal and other
integrated circuits for applications in a variety of markets,
including the information appliances, personal systems, wireless
communications, flat-panel and CRT display, power management, local
and wide area networks, automotive, consumer and military aerospace
markets.  The company is organized by various product line business
units that are grouped to form three operating segments that include
the Analog Group, the Information Appliance Group and the Network
Products Group.  It's hard to find any technology issues that have
avoided the recent sell-off, but National Semiconductor appears to
be holding up better than most.  Investors who want to speculate on
the eventual rebound in the semiconductor industry should consider
this conservative position.

JUL 22.50 NSM SX LB=0.55 OI=2519 CB=21.95 DE=35 TY=6.9%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=NSM
*****
PRHC - Province Health  $30.87  *** Low Risk - Low Reward! ***

Province Healthcare (NASDAQ:PHRC) owns and operates acute care
hospitals located in non-urban markets in nine states.  The
company owns general and acute care hospitals and offers a wide
range of inpatient and outpatient medical services, as well as
specialty services, including rehabilitation and home healthcare.
Province targets hospitals for acquisition that are the sole or a
principal provider of healthcare in the non-urban communities that
they serve. Following the acquisition of a hospital, the company
implements a number of systematic policies and procedures designed
to improve the hospital's operating and financial performance.
The Health Services segment has performed well over the past few
months and with the recent decline in technology issues, stocks in
the group continue to be attractive for conservative investors.
Target-shoot a premium of $0.50 - $0.60 in this play initially, to
establish a higher monthly profit.

JUL 25.00 PUH SE LB=0.40 OI=11 CB=24.60 DE=35 TY=5.1%

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

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

WCNX   31.50  JUL 30.00   NBU SF  1.30 20    28.70   35    9.1%
LTXX   27.00  JUL 22.50   UXT SX  0.60 826   21.90   35    7.6%
TER    40.22  JUL 32.50   TER SZ  0.75 396   31.75   35    7.1%
MCHP   26.25  JUL 22.50   QMT SX  0.60 99    21.90   35    7.1%
MANU   33.50  JUL 20.00   ZUQ SD  0.50 1050  19.50   35    6.0%
INTC   27.68  JUL 22.50    NQ SQ  0.40 14757 22.10   35    5.5%


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

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

 No Conviction In The Recovery!

The recently battered equity markets staged a late-session rally
today, but the brief buying surge was not enough to propel the
major averages to a positive close.


Friday, June 15, 2001

The recently battered equity markets staged a late-session rally
today, but the brief buying surge was not enough to propel the
major averages to a positive close.  The NASDAQ ended 15 points
lower at 2,028 on weakness in networking issues.  The Dow closed
down 66 points at 10,623 amid concerns over profits at McDonalds
(NYSE:MCD) and rumors that Microsoft (NASDAQ:MSFT) will issue an
earnings warning in the coming week.  The S&P 500 index finished
5 points lower at 1,214 on overall market weakness.  Activity on
the Big Board was heavy due to the triple-witching expiration of
options on stocks, indexes and futures.  Over 1.5 billion shares
were traded with declines topping advances by 15 to 14.  Activity
on the NASDAQ was heavy with over 2 billion shares changing hands
on the technology exchange.  NASDAQ losers beat winners 21 to 16.
In the bond market, the 30-year Treasury rose 15/32, pushing its
yield down to 5.67%.


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

Inv. Tech.  (NYSE:ITG)    JUL60C/JUL55C  $0.75  credit  bear-call
Cisco Sys.  (NASDAQ:CSCO) OCT15P/JUL15P  $0.90  debit   calendar
Vodaphone   (NYSE:VOD)    JUL22C/JUL22P  $2.50  debit   straddle

All of new combination positions offered acceptable entry prices
during today's volatile session.


Monthly Portfolio Summary:

Despite the recent market slump, the Spreads portfolio enjoyed
another excellent month with the majority of positions expiring
profitable.  The Credit Spreads section offered the most winners
on a percentage basis with successful plays in Christopher &
Banks (NASDAQ:CHBS), Electronic Data Services (NYSE:EDS), Kohl's
(NYSE:KSS), Mellon (NYSE:MEL), Microsoft (NASDAQ:MSFT), Optimal
Robotics (NASDAQ:OPMR), Rudolph Tech. (NASDAQ:RTEC), State Street
(NYSE:STT) and our adjustments in Total Fina Elf (NYSE:TOT) and
Watson Pharmaceuticals (NYSE:WPI) also ended with a favorable
outcome.  The bullish positions in American Express (NYSE:AXP)
and PepsiCo (NYSE:PEP) were rolled forward (and down) to July
options and Stone Energy (NYSE:SGY) was closed for a small loss.
The Calendar Spreads portfolio offered a number of profitable
positions during the month of June and that's rather surprising
considering the historically low Implied Volatility in equity
options.  A.G. Edwards (NYSE:AGE), Alexion (NASDAQ:ALXN), John
Hancock Financial (NYSE:JHF) and Cisco Systems (NASDAQ:CSCO)
were the most outstanding plays in the section and National City
(NYSE:NCC) and Sinclair Broadcasting (NYSE:SBGI) also provided
excellent opportunities to lower the cost basis of longer-term
options.  Both SBGI and NCC finished the expiration period just
a few cents from where they began, offering another chance to
exchange potential for profit in the conservative, time-selling
positions.  MRV Communications (NASDAQ:MRVC) did not perform as
well as expected but as we noted early in the month, the issue
provided a number of break-even exit opportunities.  There were
no new Covered-calls with LEAPS positions, however we did offer
a few conservative collars.  Only one of those plays expired in
June; Stratos Lightwave (NASDAQ:STLW), and the position finished
slightly below the overall cost basis at $10.

The synthetic position was a popular strategy again this month
and favorable profits were achieved in Mellon (NSYE:MEL), Costco
(NASDAQ:COST) and Providian (NYSE:PVN).  Shire Pharmaceutical
(NASDAQ:SHPGY) also provided a reasonable gain early in June and
a credit of $0.40 is currently available in the speculative play.
The bullish combination in Watchguard (NASDAQ:WGRD) expired with
the original premium and PepsiCo (NYSE:PEP) is trading above the
sold Put with a small credit in the synthetic position.  In the
debit straddles group, Union Pacific (NYSE:UNP) and Penn National
Gaming (NASDAQ:PENN) were the big winners while Norfolk Southern
(NYSE:NSC) offered an acceptable return.  In addition, the (July)
straddle in Sony (NYSE:SNY) reached the downside break-even point
again today as the issue dipped to $70.  Both of our candidates
in the Credit Strangles category; Linear Technology (NASDAQ:LLTC)
and Novellus (NASDAQ:NVLS) expired at maximum profit.


Upcoming Changes:

After almost three years of producing this section, the extreme
demands of daily research and tracking for the portfolio have
taken a toll on my personal life (both family and church) and
I have decided to make some changes.  Starting next week, the
Spreads/Combos section will no longer be offered on Tuesday or
Thursday.  The Wednesday "Big-Cap" section will be the primary
venue for combination positions during the week (along with the
current strategies) and I will also provide a limited selection
of spread and straddle candidates in the Saturday edition.  The
tracking for the portfolio will continue on a weekly (static)
basis, similar to that used in my other sections with position
adjustments and commentary as time permits.  I am sorry that I
can not continue to provide play candidates on a daily basis to
the many dedicated readers, but we all come to that point in
our lives where priorities change and difficult decisions must
be made.  I hope I can to live up to your expectations with the
remaining products and if you have any questions about current
plays, please send them to me at:

Questions & comments on spreads/combos to Contact Support
******************************************************************
                 JOIN ME AT THE 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

******************************************************************
                           - NEW PLAYS -
******************************************************************
CLCI - Cadiz  $10.00  *** Cheap Speculation! ***

Cadiz (NASDAQ:CLCI) has created an integrated and complementary
portfolio of assets encompassing landholdings with high quality
groundwater resources and/or storage potential and also prime
agricultural properties located throughout central and southern
California, with secure and reliable water rights.  These assets
also may include technologies for water conservation, reclamation,
production and conveyance.  The company's wholly owned subsidiary,
Sun World International and its many businesses, is a developer,
grower, packer and marketer of proprietary fruits and vegetables
in California, specializing in high value permanent crops.  Sun
World also adds valuable water rights to the company's existing
water resource management operations.

CLCI is an excellent candidate for a calendar spread, especially
for new traders who don't want to risk much while they learn the
fundamentals of time-selling strategies.  The technical history
suggests the resistance for CLCI's share value is near $10 (our
sold strike) and the recent volatility has produced a favorable
premium disparity in front-month options.  In addition, there is
a good possibility of an increase in the overall volatility as
the current premiums are below the historical average.  Traders
who are interested in low cost speculation plays with relatively
little downside potential should consider this position.

PLAY (conservative - neutral/calendar spread):

BUY  CALL  JAN-10  QAZ-AB  OI=9    A=$1.75
SELL CALL  JUL-10  QAZ-GB  OI=281  B=$0.65
INITIAL NET DEBIT TARGET=$1.00  TARGET ROI=50%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=CLCI
******************************************************************
TEVA - Teva Pharmaceutical  $65.88  *** On The Move! **

Teva Pharmaceutical Industries (NASDAQ:TEVA) is an integrated
global pharmaceutical company producing drugs in all the major
therapeutic categories.  In the area of proprietary drugs, Teva
has focused on products for central nervous system disorders,
primarily the development of Teva's first global branded drug,
Copaxone, a treatment for relapsing/remitting multiple sclerosis.
Teva also possesses significant manufacturing operations for
active pharmaceutical ingredients (API).  Teva Pharmaceuticals
USA is a generic drug company in the United States.  The company
manufactures 137 generic products in 210 generic forms, which
are distributed and sold in the United States together with 15
additional generic products in 29 dosage forms manufactured by
third parties.  Teva manufactures over 270 generic products in
600 dosage forms, which are sold primarily in the Netherlands,
the United Kingdom and Hungary.

Generic drug-makers have become popular again and TEVA is one
of the leaders in the industry.  Although the competition is
fierce, Teva has recently made inroads into the market with the
approval of antidepressant fluoxetine, the generic version of Eli
Lilly's Prozac.  The company received tentative approval from the
U.S. Food and Drug Administration in early June and the stock has
been "on the move" since the news.  That announcement came just a
few days after the company said the FDA issued final approval for
over-the-counter sales of its generic version of Pepcid AC.  Teva
said it expects to launch the Merck-developed drug very soon and
the company will have six months to market the product without
competition.  Annual sales of the brand in the United States are
expected to be over $100 million and that is certainly part of
the reason for the recent bullish activity in the issue.

PLAY (conservative - bullish/credit spread):

BUY  PUT  JUL-55  TVQ-SK  OI=225  A=$0.40
SELL PUT  JUL-60  TVQ-SL  OI=720  B=$0.85
INITIAL NET CREDIT TARGET=$0.55-$0.60  PROFIT(max)=12%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=TEVA
******************************************************************
COF - Capital One Financial  $60.25  *** Bearish Financials! ***

Capital One Financial (NYSE:COF) is a financial holding company
whose subsidiaries provide a variety of products and services to
consumers using its proprietary information-based strategy.  The
company's principal subsidiary, Capital One, a limited-purpose
credit card bank, offers credit products.  Capital One, F.S.B.,
a federally chartered savings bank, offers consumer lending and
deposit products. Capital One Services Inc., another subsidiary
of the company, provides various operating, administrative and
other services to the company and its subsidiaries.  Capital One
business consists of both lending and non-lending activities and
its lending activities consist primarily of credit card products,
but also include other consumer lending activities; unsecured
installment lending and automobile financing.  Its non-lending
business activities consist mainly of its deposit-taking business
and various non-lending new business initiatives.

Stocks in the Credit Services group have struggled recently and
COF came up on the top of our list of issues with "failed rally"
characteristics and favorable premiums in a call-credit spread.
Indeed, the prices for the "out-of-the-money" call options are
slightly inflated and the potential for a successful (technical)
recovery is significantly affected by the resistance at the sold
strike price; a perfect condition for this strategy.

PLAY (aggressive - bearish/credit spread):

BUY  CALL  JUL-70  COF-GN  OI=328  A=$0.50
SELL CALL  JUL-65  COF-GM  OI=398  B=$1.30
INITIAL NET CREDIT TARGET=$0.90-$1.00  PROFIT(max)=22%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=COF
******************************************************************
                         - STRADDLES -

Although option premiums have increased in recent sessions, the
current conditions still favor option buying strategies and we
have two more straddle candidates.  Both of these issues have
statistically undervalued options and the potential to move high
or low enough to make the straddles profitable.  In addition, 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 also
reviewed with regard to your strategic approach and trading style.

******************************************************************
GD - General Dynamics  $74.35  *** Probability Play! ***

General Dynamics (NYSE:GD) is engaged primarily in the businesses
of shipbuilding, marine systems, business aviation, information
systems, and land and amphibious combat systems.  Each of these
businesses involves design, manufacturing and program management
expertise, advanced technology, and integration of many complex
systems.  The primary customers for the company's businesses are
the United States military, the armed forces of allied nations,
other government organizations and a diverse base of corporate
and industrial buyers.

PLAY (conservative - neutral/debit straddle):

BUY  CALL  AUG-75  GD-HO  OI=1000  A=$3.00
BUY  PUT   AUG-75  GD-TO  OI=29    A=$3.50
INITIAL NET DEBIT TARGET=$6.30-$6.50 TARGET PROFIT=25%

http://www.OptionInvestor.com/charts/jun01/charts.asp?symbol=GD
******************************************************************
AAS - AmeriSource  $59.20  *** Health Sector Volatility ***

AmeriSource Health (NYSE:AAS) is a holding company and primarily
all of its operations are conducted through its direct wholly
owned subsidiary, AmeriSource Corporation.  The company is a
leading wholesale distributor of pharmaceutical products and
related healthcare solutions in the United States.  It provides
services to health systems (hospitals and acute care facilities),
alternate site customers (mail order facilities, nursing homes,
clinics and non-acute care facilities), independent community
pharmacies and chain drugstores.  The company's broad range of
solutions are designed to enhance the efficiency and overall
effectiveness its customers' operations, allowing improvement in
the delivery of healthcare to patients and consumers.

PLAY (speculative - neutral/debit straddle):

BUY  CALL  JUL-60  AAS-GL  OI=624  A=$1.55
BUY  PUT   JUL-60  AAS-SL  OI=91   A=$2.40
INITIAL NET DEBIT TARGET=$3.75-$3.95  TARGET PROFIT=20%

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


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