Option Investor

Daily Newsletter, Sunday, 03/10/2002

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The Option Investor Newsletter                   Sunday 03-10-2002
Copyright 2001, All rights reserved.                        1 of 5
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MARKET WRAP  (view in courier font for table alignment)
        WE 3-08          WE 3-01          WE 2-22          WE 2-15
DOW    10572.49 +203.63 10368.86 +400.71  9968.15 + 65.11  +158.80
Nasdaq  1929.67 +126.93  1802.74 + 78.20  1724.54 - 80.66  - 13.68
S&P-100  589.84 + 13.68   576.16 + 22.12   554.04 -  5.61  +  2.37
S&P-500 1164.31 + 32.53  1131.78 + 41.94  1089.84 - 14.34  +  7.96
W5000  10890.67 +330.66 10560.01 +380.72 10179.29 -136.19  + 66.16
RUT      499.85 + 21.51   478.34 + 13.27   465.07 -  4.18  +  2.58
TRAN    3010.24 +113.11  2897.13 +171.48  2725.65 + 41.42  + 24.29
VIX       21.61 -  0.52    22.13 -  2.76    24.89 +   .80  -  1.38
VXN       41.62 -  0.32    41.94 -  6.63    48.57 +  3.58  -  4.29
TRIN       0.73             0.74             1.33             1.89
TICK       +927            +1029            +1044             -128  
Put/Call    .62              .94              .90              .73   

A Stellar Week!  
by Jim Brown

How can you complain about a week that produced strong gains across
all the major indexes? It would be hard to find anything to gripe
about unless you feel the bullishness is becoming excessive. The
Nasdaq was the star of the show and gained +7% for the week but
there were no slouches. The Dow has now posted gains for four weeks
in a row totaling +828 points. Everything is coming up green but
there may be something wrong with this picture. 




Worries impacting the market and keeping it from even higher levels
continue to be the accounting concerns. GE was the latest victim.
GE was unable to break resistance at $42 for the last two days due
to concerns that their annual report filed on Friday could show
some funny numbers or excessive off sheet financing. The stock
dropped -$1.25 at 2:30 when the report was made public but there
appeared to be no smoking gun. The stock rebounded slightly but
it will probably be Monday before the real impact is known. The
report contained 30% more financial info which will take some 
time for analysts to sift.

IBM also was still feeling some selling pressure ahead of their
SEC filing on Monday. The stock jumped nearly +4 intraday after
the positive jobs report but gave back all but $1.38 as traders 
continued to be concerned about possible accounting surprises.

The big loser of the day was Biogen which dropped -4.75 on news
that a competitor (SRA) had received permission to market their
MS drug in America. Serono, has the most market share outside the
U.S. with a 38% share according to SRA. BGEN said it would review
its 2003 earnings outlook in light of the new developments but
after the SEPR disaster on Thursday they will probably be very
careful how they word any new guidance.

By far the most positive news on Friday was the February Jobs
Report. Instead of flat to mildly negative the report showed an
increase of 66,000 jobs for February. The unemployment fell to
5.5% instead of rising as expected. Will economic wonders never
cease! Do you suppose Greenspan had prior knowledge of this data
before he was openly bullish in his testimony this week? I would
not bet against it. This data supplied a concrete link between
the positive manufacturing reports of the last two weeks and
reality. Consumers, which have held up the economy even after
the September attack, could become even bigger spenders if the
job picture is improving. The positive data again caused a huge
sell off in bonds and a skyrocketing of yields. 

This bond selling is very bullish for stocks but nothing comes
without a price. The rapidly rising yields will put an end to 
the low mortgage rates and could clamp a lid on the booming
housing market. This is a primary reason for the addition of
the CTX put play this weekend. Housing has been on a huge run
fuelled by low rates and those rates are about to change.

Greenspan was so bullish (for him anyway) in his testimony this
week that analysts are now worried about what will happen at 
the next FOMC meeting. Considering it is coming soon (Mar-19th)
this will become even a bigger concern next week. Nobody expects
the Fed to raise rates on the 19th but we could easily see a 
change in the bias to neutral or even to tightening. How quickly
the party could be over. With the rebound in the U.S. being 
mirrored globally the Fed must be very careful about shooting
itself in the foot. If the global economy can be allowed to 
improve as we accelerate then future rate hikes will be less
likely to put us back into a recession. It is a thin line and
hopefully Greenspan can still walk the walk. 

All this bullish news is producing an environment where mutual
funds are being scared into the market. Most would rather have
waited several more weeks to look for an actual improvement in
earnings in the April reporting season but they are worried
the train is already pulling away from the station. Many are
looking at the +828 Dow points and hoping for another pullback
to make their entry. With every positive close those hopes are
becoming slimmer. Every broken resistance level is creating an
attitude that maybe the rally is for real and there will be no
historical April/May sell off.

While the Dow led the charge initially the rest of the troops
are gaining speed. The market breadth is improving daily and
volume remains strong. On Friday for instance the new high/lows
were strongly positive with the NYSE posting 216 new highs to 
12 new lows. The Nasdaq posted 159 to 29. This strong imbalance
is very bullish for the broader market. Advance/declines are
also continuing to be positive with the Nasdaq approaching 2:1
on Friday. The negative implications include a shrinking VIX/VXN
and a very low put/call ratio of .62. This would lead investors
to believe that the wall of worry markets like to climb has
collapsed. To put that in perspective the VIX at 21.54 is at
a level not seen since last July. That is not meant to imply
coming doom. There have been times when the market was in rally
mode that the VIX was stuck under 20 for long periods of time.
In August of 2000 the VIX dipped under 20 for two weeks with
a low of 18 while the Dow rose over 11,000. 

The main point I would stress about the VIX is not that there
is a critical level that instantly triggers a sell off but it
is an indicator of complacency that signals an impending change
in the market. The Nasdaq equivalent VXN is also tracking toward
another 52-week low. The current low was 40.69 on March-4th.
The TRIN hit an intraday low on Friday of .25 and this was only
beaten in recent months by a low of .23 in the first week of
December when the Dow spiked +400 points in two days. All of
these indicators simply point to a growing complacency in the 
market. An attitude or mindset that we can only go up from here. 

There were many traders commenting this week that it felt like the 
spring of 1999 all over again. We all know that 1999 had some 
serious advances but it also had several serious bouts of profit 
taking that lasted between 30-60 days each. The gain for the
year for the Dow was +2316 points. Much of that gain was
between March 1st, (Dow 9307) and May-14th (Dow 11106) when
the historical spring sell off began. I have mentioned this
historical spring selling several times. It normally occurs
between April-15th and May-15th as a result of either bad
earnings, which triggers the earlier dates, or simply the end
of earnings reporting (May-15th) and the beginning of the summer
doldrums. Check your charts and you will see what I mean.

Because of the continued failure of the Dow to close over 10600
and the strong resistance for the S&P at 1175 the commercial
traders are increasing their short positions every time the
markets roll over intraday. They are shorting the rallies just
like they did so successfully over the last year. Unfortunately,
or fortunately for the bulls, they are getting run over on a
daily basis. While the commercial short interest is growing 
the markets are continuing to rise. Somebody has got to be 
getting nervous. The positive jobs data and the strong market
response on Friday will undoubtedly draw more cash into equities
next week. Eventually there could be another short squeeze
like we had a week ago and that squeeze could propel us past
the current ceilings. 

I especially liked the S&P and Nasdaq on Friday. The S&P edged
a little closer to 1175 and held its ground. The Nasdaq posted
a much stronger gain than the Dow (%) based on the affirmed
guidance from INTC and SUNW. If the trend continues next week
we should definitely plan on going for the ride. Just remember
that after every big gain there is a retracement/consolidation
period. Keep your stops in place and trail them upward as any
rally continues. I would continue to buy the dips since it is 
apparent that funds are using this tactic as well. Everyone with
a charting system can see that stocks are very overbought but
they can get more overbought before the trend fails as shorts
are forced to cover. Just don't count on every trend lasting

In the last bull market I got email complaining that XYZ call 
options went from $2 to $10 and back to $2. (or worse) The 
common question was "what do I do now?" or "When will this
stock recover so I can sell for a profit again?" There is no
magic answer. I know people who held stocks bought at $250 until
they were $50 before selling for a huge loss. Nobody knows when
the current trend will end but it will end. That is the only 
sure thing. It could be two days or two months but it will end.
There is also no guarantee that it will resume before your options
expire. The key is to not give back your profits. Buy the dips, 
set stop losses, sell for a profit, repeat the process. It sounds 
easy but we all know that there is a world of experience required
to do it routinely. As the old adage goes, "Knowing the right 
decision comes from experience." "Experience comes from making 
bad decisions." Been there, done that, a lot!

My decision for next week is to stay long the market above
Dow 10450, Nasdaq 1865 and 1145 for the S&P. I will close long 
positions should those levels fail and look to buy any REBOUND
from any significant dip below them. Should the Dow fail and
the others hold their ground I would stay long. The Dow being
a much smaller basket of stocks any two or three can crater it
on any given day. Given the big gains in Dow blue chips like 
HON, BA and others, they are starting to look tired and the Dow
could easily lag the Nasdaq at any time. The Nasdaq faces strong
resistance at 1950 and the S&P at 1175. Both indexes could test
those levels on Monday. Be optimistic but be cautious.

After a long and trying period it is time to switch from "enter
patiently, exit aggressively" and go back to my favorite closing
comment. Hopefully many of my readers will remember it and act
on it! 

Sell Too Soon!

Jim Brown


Up +47 or Down -91?

Both bulls & bears might attempt claiming victory today, which of 
course means we experienced yet another volatile session. The Dow 
finished up +47 above Thursday's close but down a significant -91 
from Friday intraday highs and lower than the actual open on a 
gap. Exciting times for proper entry points these days!

(Weekly/Daily Charts: SOX)


But most retail traders don't really care. The NASDAQ is roaring 
and SOX has tacked on +25% in about five trading days or so. When 
money sucked out of bonds, gold (more on that later) and other 
safe havens it is pouring right into the good ol' sectors where 
massive gains of yesteryear were easy to glean. To me that looks 
to continue for awhile and I see no signs of the SOX stalling out 
right here, but it sure could get interesting down the road when 
it inevitably does!

(Weekly/Daily Charts: CYC)


We'd think the Morgan Stanley Cyclical index is filled with tech 
from that parabolic move it's made up the charts. Weekly charts 
show cyclicals reaching for historical highs from back in early 
1999, the start of Bubbleonia. Is business really that good?

This daily chart trend line could have been INTC, SUNW or QCOM 
from days of old. Does that look sustainable to you? I'll chase 
the upside intraday on charts like this but happily pass on the 
prospect of holding long over any close.

(Weekly/Daily Charts: XAU)


Meanwhile, gold & silver turns to lead as the XAU breaks thru 
several levels of support and does not look finished yet. I'd say 
the 57 level here will come calling and soon. Nice wedge break in 
the daily chart to issue shorts near 65 but the double top at 70 
was a sell at 68. It just occurred to me tonight that this symbol 
is not on my sector screen list and I missed an easy downside 
setup here. My bad! Like a kid in candy stores with all the juicy 
sector symbols we've seen lately... a few of them manage to 
squiggle thru the cracks on us for sure. 

(Weekly/Daily Charts: WMH)


And would you look what we have here? Wireless HOLDRS broke above 
this descending trendline, formed a nice little four-day 
consolidation and zoomed higher from there. This was one of about 
ten to fifteen sector charts I looked at last weekend for longs 
but pushed it aside in the sifting to "only" 18 long plays listed 
to track. Good looking charts, but I know this sector is full of 
dead stocks walking so dropped it from the pile. Bias kills in 
this business, as shorts are covering wildly here to let this one 
breath before the next body slam down. Still room to run higher 
and I'd play calls/long shares on this one if/when daily chart 
signals release from overbought extreme and then turn bullish once 

Smell Of Bull's Blood
While all the media keeps glowing about how strong this rally is, 
doesn't look like everyone's buying it to me. As follows:

"Austin, not that you hadn't figured this out already but S&P 500 
Commercial traders made a big move this week. Big boys have not 
been more than 7% or 8% net-short all year and this week they 
moved to -10.5% while small specs went from 38 to 45% net-long. 
This is the largest divergence seen in awhile. Take care, Russ"

My good buddy Russ Moore keeps an eye on the COT report data and 
finally found some movement in the player's positions. We'd think 
the biggest money would be covering like crazy right now and 
getting long to the teeth with all the "great news" spilling 
across the land.

Wrong... big money is selling right into every rally as they did 
today. Me too. I got short near the highs and covered near the 
close for acceptable gains. I'm also building a portfolio of April 
and May contract puts in the most oversold sectors and pray that 
the markets can thrust higher a few more times to push the VIX 
well below 21.54 where it rests tonight. Nothing like buying 
cheap, OTM put options with time value today and covering them 
down the road when the VIX hits 30+ as it most assuredly will. 

Traders who've not had the pleasure of OTM put options bought 
cheap with a basement-low VIX should really watch what happens the 
next few weeks and months. When those babies go from OTM to deep 
ITM while Vega value explodes in the process, annual salaries can 
be cleared in short order by simply sitting on our hands.

I'd say the current bear-market rally has a few more thrusts 
higher before the real fun begins. This morning's gap-up open that 
filled almost immediately is an ominous sign of exhaustion 
looming. A few more of those and I might just have to pawn some 
personal belongings just to triple-down on those May puts! Not 
saying you must do the same, but signs sure point to some fun in 
the future when gravity takes over again.

Best Trading Wishes,
Austin P

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Editor's Plays

Expiration Week!

It is that time again and there are several excellent candidates
for low price and possibly explosive expiration week plays.

These plays should be considered "lottery plays" and 100% risk.
I would not attempt to place stops on these since intraday moves
can produce wide swings.

These may have better odds than any table in Vegas but they are
still legalized gambling. Don't attempt these with anything other
than full risk capital.

With any expiration week option you run the risk of the stock
being "pinned" to the strike price. This means the battle between
option sellers and option buyers ends up a draw with an equal
pressure upward as downward. The stock gets stuck at the strike
in an effort by the option sellers to insure the options expire
worthless. However, expiration week buyers are lured to the stock
with the possibility that the upward forces on the stock will
explode it over the strike and cause a flurry of short covering
creating a very profitable option position. 

If you like the possibilities but do not want the extreme risk
of an option with only one week to go then pick an April, May or
later strike price and join the party.


TYC - $35 call

Tyco has bounced to close right at $35 on Friday. The March $35
call is only $1.15 making the play a breakeven in the $36.25 and
profitable at any number over that. 



BRL $70 Call

Barr has rebounded to stop near the $70 strike price and could
be ready to break through that barrier. 

The March $70 call is only $1.30 but you could also use the
April $70 strike for only $3.30.



PVN $5 call

Remember Providian? I profiled this several times in the $3 area
and suggested that it could be a home run. If the recession is
over and the flood of consumer bankruptcies never going to come 
to pass then PVN suddenly looks very oversold and undervalued.
The stock traded 4x average daily volume on Friday and has broken
out of four months of resistance. 

I would like to target shoot this option for about $.50 on any
dip. More conservative traders may want to buy the April $5 call
for $1.15 (it is already $.71 ITM) and hope for a rally back
into the $10 range over the next month.



JPM $35 call

There is a growing conviction in the analyst community that the 
worries about JPM and exposure to KM, ENE and GX bankruptcies that
it has been over done. The stock has rebounded significantly after
our the dip below $28. Remember, I profiled JPM as a put play at
$35 back in January and it worked out very well. I think it is
time to think about a long call and the cheap $.70 March could
be the right place at the right time. Very high risk!



As always, do your own research and be comfortable with the
downside risk before entering any of these plays.

Good Luck



Bulls Carry The Week
By Eric Utley

The bullish percent data is a truly amazing indicator.  Since
the three major markets went bull confirmed, stocks have been
bought, and bought big.

When recently asked why the bullish percent indicator works so
well, I couldn't arrive at an intelligent answer.  Think about,
a group of stocks go on buy signals and all of sudden the
market is bullish?  Logically, it doesn't make sense.  But it
doesn't have to.  It works, that's the important part.

Several readers have been asking about the historically high
levels of bullish percent readings across the major averages.
While that is a cause for concern if you're a bull, it must
be remembered that markets can stay overbought for an extended
period of time, such as the beginning of the business cycle.
The overbought way of the indicator does, however, beg risk
management in the strictest of terms.  In terms of market
bias, until we see a shift in the numbers, the bullish percent
data dictate bullishness.

Like the bullish percent data, the ARMS Index is revealing a
market that is short-term overbought.  While the 5-day reading
didn't fall in last Friday's session, some of the longer term
readings did come down a bit more.  As the blurb accompanying
the ARMS data explains, the indicator is often early in
pointing to market reversals.  That said, it can always grow
more overbought while stocks move higher.  That's the biggest
problem with oscillator-like indicators: they can always grow
more extreme.  For that reason, I don't think they should be
deferred to on a stand alone basis.

Liquidity trumps oscillators in the short-term and that's
what we have: a market driven higher by fresh cash.  The move
in the bond market last week was awesome.  It was huge.  And
I'm willing to bet that as least some of that massive chunk
of money leaving bonds is moving into stocks.  As long as the
bond market continues to sell-off such as it did last week,
stocks shouldn't have a problem growing more overbought.

In short, we have a market that is most bullish and growing
more so.  In doing so, stocks have become short-term overbought.
But, remember, they can always grow increasingly overbought.


Market Averages


52-week High: 11350
52-week Low :  8062
Current     : 10572

Moving Averages:

 10-dma: 10356
 50-dma:  9995
200-dma: 10024

S&P 500 ($SPX)

52-week High: 1383
52-week Low :  945
Current     : 1164

Moving Averages:

 10-dma: 1135
 50-dma: 1128
200-dma: 1150

Nasdaq-100 ($NDX)

52-week High: 2771
52-week Low : 1089
Current     : 1555

Moving Averages:

 10-dma: 1456
 50-dma: 1521
200-dma: 1567

Hardware ($GHA)

The GHA was the best performing sector in last Friday's
session.  The index finished higher by 4.96 percent, out
pacing the 4.40 percent pop in the Semiconductors (SOX.X).

Sun Micro's (NASDAQ:SUNW) news helped the stock 13.25
percent higher, second within the group only to Adaptec's
(NASDAQ:ADPT) 16.68 percent blow-up.  Other notable
performers included QLogic (NASDAQ:QLGC), Sanmina (NASDAQ:SANM),
Brocade (NASDAQ:BRCD), and McData (NASDAQ:MCDT).

52-week High: 366
52-week Low : 165
Current     : 255

Moving Averages:

 10-dma: 238
 50-dma: 256
200-dma: 260

Gold and Silver ($XAU)

It was a different day, but the story remained the same last
Friday.  The XAU earned the day's worst performing sector spot
with its 2.57 percent drop.

Sector movers included Gold Fields (NASDAQ:GOLD), Harmony
Gold (NASDAQ:HGMCY), Newmont Mining (NYSE:NEM), and Agnico
Eagle Mines (NYSE:AEM).

52-week High: 70
52-week Low : 46
Current     : 61 

Moving Averages:

 10-dma: 65
 50-dma: 61
200-dma: 57


Market Volatility

Not by surprise, the VIX fell in Friday's session as stocks
rose.  Despite last Friday's drop, the VIX didn't make a lot
of downside progress in last week's trading.  It began the week
at 22.08 and finished just below there.

The VXN was unable to close above its short-term 10-dma
in last week's trading, with emphasis on its rollover from
that point in Thursday's session.  It fell Friday in light of
the 3.20 percent pop in the Nasdaq-100 (NDX.X).

CBOE Market Volatility Index (VIX) - 21.54 -0.41
Nasdaq-100 Volatility Index  (VXN) - 41.64 -2.12


          Put/Call Ratio  Call Volume   Put Volume
Total          0.62        776,205       481,867
Equity Only    0.49        676,645       329,933
OEX            1.41         18,881        26,592
QQQ            0.48         61,820        29,383

Bullish Percent Data

           Current   Change   Status
NYSE          61      + 0     Bull Alert
NASDAQ-100    69      - 1     Bull Confirmed
DOW           77      + 0     Bull Confirmed
S&P 500       75      + 1     Bull Confirmed
S&P 100       78      + 0     Bull Confirmed

Bullish percent measures the number of stocks in an index 
currently trading on a buy signal on their point and figure 
chart.  Readings above 70 are considered overbought, and readings 
below 30 are considered oversold.

Bull Confirmed  - Aggressively long
Bull Alert      - Cautiously long
Bull Correction - Pause or pullback in upward trend
Bear Alert      - Take defensive action if long
Bear Confirmed  - High risk if long, good conditions for shorting
Bear Correction - Pause or rebound in downtrend


 5-Day Arms Index  0.88
10-Day Arms Index  0.91
21-Day Arms Index  1.07
55-Day Arms Index  1.22

Extreme readings above 1.5 are bullish, and readings below .85 
are bearish.  These signals don't occur often and tend be early, 
but when the do, they can signal significant market turning 


Market Internals

        Advancers     Decliners
NYSE      1660           1483
NASDAQ    2274           1287

        New Highs      New Lows
NYSE      216             12
NASDAQ    154             29

        Volume (in millions)
NYSE     1,418
NASDAQ   2,028


Commitments Of Traders Report: 03/05/02

Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the 
Chicago Mercantile Exchange and Chicago Board of Trade. COT data 
can be found at www.cftc.gov.

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 tend 
to be wrong.  

S&P 500

Commercial interests added a significant number of short
positions for a marked increase in the group's net short
position.  The group added more than 13,000 shorts while
reducing longs by more than 5,000 contracts.  Not by surprise,
small traders went the opposite direction in a big way.  The
group reached its most bullish position in the last year.

Commercials   Long      Short      Net     % Of OI 
02/19/02      355,905   416,664   (60,759)   (7.9%)
02/26/02      366,258   432,258   (66,000)   (8.3%)
03/05/02      361,254   445,989   (84,735)  (10.5%)

Most bearish reading of the year: (111,956) -   3/6/01
Most bullish reading of the year: ( 36,481) - 10/16/01

Small Traders Long      Short      Net     % of OI
02/19/02      130,856     63,311   67,545     34.8%
02/26/02      139,183     62,087   77,096     38.3%
03/05/02      161,711     60,941  100,770     45.3%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year: 100,770 - 3/05/02

Nasdaq commercial remained relatively inactive in the most
recent reporting period.  The group's net short position grew
by a modest amount.  Meanwhile, small traders continued their
back and forth ways, now holding a net long position.

Commercials   Long      Short      Net     % of OI 
02/19/02       33,871     35,690    (1,819)  (2.6%)
02/26/02       33,589     34,091      (502)  (0.7%)
03/05/02       33,549     35,419    (1,870)  (2.7%)

Most bearish reading of the year: (15,521) -  3/13/01
Most bullish reading of the year:   7,774  - 12/21/01

Small Traders  Long     Short      Net     % of OI
02/19/02        9,966     8,073     1,893     10.5%
02/26/02        9,517    11,416    (1,899)    (9.1%)
03/05/02       11,961    11,214       747      3.2% 

Most bearish reading of the year:  (9,877) - 12/21/01
Most bullish reading of the year:   8,460  -  3/13/01


Dow commercials reduced their net long position in the most
recent reporting period by adding more shorts than longs.
The group added 4,444 shorts and 3,714 longs.  Small traders
meanwhile weren't as convinced with their actions.  We see only
a slight increase in the group's net bearish position.

Commercials   Long      Short      Net     % of OI
02/19/02       29,606    17,953   11,653     24.5%
02/26/02       33,322    21,110   12,212     22.4%
03/05/02       37,036    25,554   11,482     18.3% 

Most bearish reading of the year: (8,322) -  1/16/01
Most bullish reading of the year: 15,135  - 10/16/01

Small Traders  Long      Short     Net     % of OI
02/19/02        4,654    10,431    (5,777)   (38.3%)
02/26/02        6,333    12,547    (6,214)   (32.9%)
03/05/02        6,589    13,057    (6,468)   (32.9%) 

Most bearish reading of the year:  (8,777) - 10/12/01
Most bullish reading of the year:   1,909  -  1/16/01



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Sector Check-Up
By Eric Utley
Several of the early performers this year have continued higher
by a significant amount.  Let's review some of our January

At the end of January, we reviewed the month's five best
performing sectors due to the historical tendency to continue
higher throughout the year.  Several of the sectors we spotted
in January had a big last week.  Here's the list of the five
with year-to-date performance through the end of January and the
end of last week.

                           YTD 01/31 (%)     YTD 03/08 (%)

Gold and Silver (XAU.X)           +12.68            +11.89
Defense         (DFI.X)            +9.16            +15.78
Health Care     (HMO.X)            +8.10             +9.25
Semiconductors  (SOX.X)            +7.03            +22.17
Airlines        (XAL.X)            +6.16            +18.95

Only the XAU is lower from its performance through January,
but only by a fractional amount.  The SOX and XAL are
significantly higher through last Friday's performance.

If you're not a believer in the January effect, I'd suggest
becoming one.  I am now.

The point and figure charts that appear in this column were
created using www.StockCharts.com.

Please send your questions and suggestions to:

Contact Support 


Bonds and Stocks

My question concerns the relationship between the bonds and
the S&P futures.  I recently bought a tape series from a
renowned guru, initials L.W.  His 15 minutes of fame were
winning a trading championship in the 1960s.  One of his
filter is to buy the S&P tomorrow when the price of the 30
year bond closes today above the highs of any of the previous
three trading days.  His rationale is that when bonds go up,
interest rates are going down and that is a signal to buy the

If I understand, your position, you say when interest rates on
the 10 year [note] go down, it indicates buying of bonds and is
negative for equities.

The two views are so opposite that I find it surprising.  I
have not tracked the relationship between bonds and the S&P
for long but from what I have seen, your view makes more sense.

I am paper trading L.W.'s system.  The results he projected are
close to 100%.  My results for most February are 2 trades, one a
winner and one a loser.

I realize that the only answer that you may be able to give is
that you think your view is the right one... - Regards, Jim  

Thanks for the great question, Jim.

The bond market is much larger and more complex than the stock
market.  To ignore the bond market, in my opinion, is dangerous
for the stock trader.

Because of its size and intricacies, I don't think the bond market
can be viewed with one particular perspective.  The bond market
-- and even the stock market -- today is much different than it
was in the 1960s.  In other words, what worked in the 1960s may
not work today.

Bonds rallied sharply last year from June to late October.  If
you bought stocks based on the rally in bonds, you were wrong.
Back in June of 2001, the market was indeed discounting lower
short-term interest rates.  But that didn't mean anything for
equity investors.  The trend in bonds was obviously higher
(yields lower) in that timeframe, while the trend in stocks was
decidedly lower.

Bonds Diverge From Stocks (June through October)



Last year, Treasuries rallied and short-term interest rates
fell.  Why, then, did stocks go down?  There was an aversion
from the risk associated with equities and instead of taking
those risks, the market opted for the safety of the bond

We've seen an inflection in that dynamic, however, starting
back in November, continuing through last Friday's session.
Now, the bond market is selling off sharply, while stocks
are rallying sharply.  The bid that was in bonds has been
lost as capital moves to stocks ahead of the economic

Clearly, L.W.'s method is wrong in the currently bond/equity
dynamic.  And has been for quite some time.  That's not to
say his particular method won't come back into fashion, but
recently it hasn't worked.  My point: viewing the relationship
between stocks and bonds with only one perspective is wrong;
you have to adopt a dynamic approach.

I choose to use the 10-year Note when monitoring the bond
market because it's now the benchmark.  Corporate borrowing
and mortgage rates, for example, are based off of the yield
of the 10-year.



I could kick myself for not "buying the dividend" on this one when
it was in the teens.  There was considerable uncertainty, mostly
political, then associated with utility deregulation.  What do you
make of it now?  How can you go wrong with a quad top breakout on
p/f? - Anonymous

Thanks for the question.

TXU is an electric utility that has been trading very well
recently.  The recent quadruple top that was alluded to was
even more impressive.

TXU traded essentially sideways from last June through January.
The consolidation can be seen on the point & figure chart,
with the end of the consolidation coming just above the
bullish support line signaled by the blue crosses on the chart.
The fact that TXU really never broke below its bullish support
line may have hinted to the recent breakout; the buyers were
still interested down around $44, why not at $50?

TXU - Point and Figure


TXU is a bit extended at current levels and I wouldn't be
chasing this rally higher.  More importantly, use this
chart as a study guide, especially in the current market
environment.  These high profile breakouts have been working
very well.  The action point in such patterns is at the
quadruple top breakout.  I've been shunning breakouts for
quite a while, but that bias of mine is no more after last
week's observations of breakouts all over the place.


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.


Major Earnings This Week...

Symbol  Company               Date           Comment      EPS Est

PC     Perez Companc          Mon, Mar 11  -----N/A-----     0.10
SASOY  Sasol Ltd ADR          Mon, Mar 11  Before the Bell    N/A
TCP    Telesp Cel Part S.A.   Mon, Mar 11  Before the Bell  -0.23
VNO    Vornado Realty Trust   Mon, Mar 11  -----N/A-----     0.97
WSM    Williams-Sonoma        Mon, Mar 11  Before the Bell   1.21

CLL    Celltech               Tue, Mar 12  -----N/A-----      N/A
CMVT   Comverse Technology    Tue, Mar 12  After the Bell    0.06
HRC    Healthsouth            Tue, Mar 12  -----N/A-----     0.22
KR     Kroger                 Tue, Mar 12  -----N/A-----     0.47
HLTH   WebMD                  Tue, Mar 12  4:00 pm ET       -0.03

ABS    Albertson`s            Wed, Mar 13  -----N/A-----     0.56
AAUK   Anglo American PLC     Wed, Mar 13  -----N/A-----      N/A
BAY    Bayer AG               Wed, Mar 13  -----N/A-----      N/A
CM     Coles Myer             Wed, Mar 13  -----N/A-----      N/A
Z      Foot Locker, Inc.      Wed, Mar 13  Before the Bell   0.28
ROST   Ross Stores            Wed, Mar 13  Before the Bell   0.62
TLB    Talbots                Wed, Mar 13  -----N/A-----     0.53
TOT    Total Fina S.A.        Wed, Mar 13  Before the Bell   1.07

ADBE   Adobe Systems          Thu, Mar 14  After the Bell    0.20
AXA    AXA                    Thu, Mar 14  -----N/A-----      N/A
BF     BASF                   Thu, Mar 14  -----N/A-----      N/A
BTH    Blyth Inc.             Thu, Mar 14  -----N/A-----     0.46
BGP    Borders Group          Thu, Mar 14  After the Bell    1.33
CTAS   Cintas                 Thu, Mar 14  Before the Bell   0.32
FDS    FactSet Research Sys   Thu, Mar 14  Before the Bell   0.27
HNZ    Heinz                  Thu, Mar 14  Before the Bell   0.57
LE     Lands` End             Thu, Mar 14  Before the Bell   1.54
ORCL   Oracle                 Thu, Mar 14  After the Bell    0.09
SCHL   Scholastic             Thu, Mar 14  After the Bell    0.31
TEK    Tektronix              Thu, Mar 14  After the Bell    0.10
TOY    Toys R Us              Thu, Mar 14  Before the Bell   1.38

Upcoming Stock Splits This Week & Next...

Symbol  Company Name              Ratio    Payable     Executable

WERN    Werner Enterprises        4:3      03/14       03/15
GNWR    Genesee & Wyoming         3:2      03/14       03/15
WLP     WellPoint Health Network  2:1      03/14       03/15
SMD     Singing Machine           3:2      03/15       03/18
ICUI    ICU Medical               3:2      03/15       03/18
ELMS    Elmers Restaurants       21:20     03/22       03/25
FELE    Franklin Electric CO      2:1      03/22       03/25

Economic Reports

As steam continues to build for the "economy is rebounding" 
engine, eyes across the country will be focused on the PPI
report this Friday and the Business Inventories report on 
Thursday.  However, don't forget to keep your ears open for
the Michigan Consumer Sentiment report at the end of the week.


Monday, 03/11/02
Wholesale Inventores(DM))Jan  Forecast:  -0.4%  Previous:   -0.6%

Tuesday, 03/12/02

Wednesday, 03/13/02
Retail Sales (BB)        Feb  Forecast:   0.7%  Previous:   -0.2%
Retail Sales ex-auto(BB) Feb  Forecast:   0.5%  Previous:    1.2%

Thursday, 03/14/02
Business Inventories(BB) Jan  Forecast:  -0.4%  Previous:   -0.4%
Initial Claims (BB)    03/09  Forecast:   375K  Previous:    376K
Export Prices ex-ag.(BB) Feb  Forecast:    N/A  Previous:    Unch
Import Prices ex-oil(AB) Feb  Forecast:    N/A  Previous:    0.1%
Current Account (BB)      Q4  Forecast:-$100.9B Previous: -$95.0B

Friday, 03/15/02
PPI (BB)                 Feb  Forecast:   0.1%  Previous:    0.1%
Core PPI (BB)            Feb  Forecast:   0.1%  Previous:   -0.1%
Industrial Production(DM)Feb  Forecast:   0.2%  Previous:   -0.1%
Capacity Utilization (DM)Feb  Forecast:  74.4%  Previous:   74.2%
Mich Sentiment-Prel.(DM) Mar  Forecast:   93.0  Previous:    90.7

DM=  During the Market
BB=  Before the Bell
AB=  After the Bell
NA=  Not Available

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The Option Investor Newsletter                   Sunday 03-10-2002
Sunday                                                      2 of 5

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IS Swing Trade Model: Saturday 3/09/2002
Selling Resistance Intraday

News & Notes:
I was fully prepared to buy calls near the open today, but not on 
that monstrous gap-up move witnessed at the bell. By then the bull 
flag patterns were blown completely away and price action opened 
right at resistance instead. Like any nimble trader would do, that 
irrational pop begged to be shorted!

Featured Markets:
[60/30-Min Chart: OEX]


We've redrawn these newly formed channels a tad to better reflect 
price action. Today's market action clearly shows the gap formed & 
filled faster than I thought it would be. Chart signals remain 
bearish but the best part of this move came & went at 10:00am like 
they so often do. Short on a break below 594.00 was where it 
should have happened.

[60/30-Min Chart: SPX]


Ditto for the bigger S&P, where a break below 1170.00 was money. 
This is one I'd personally close by the bell on Friday as price 
action came to rest on support once again. Had it broken and 
closed below the black line, holding those puts into Monday would 
have been tempting indeed!

[60/30-Min Chart: QQQ]


The QQQ is single-handedly held higher by the SOX. It merely 
coiled beneath resistance today as chart signals released a bit 
from overbought extreme. The opening gap held up, and price action 
should continue here to the upside based purely upon that flat 
coil formed at recent highs. I'd get short a break lower or long a 
break higher but be ready to switch directions in a moment's 
notice, as fake-out moves during mixed markets are the norm 
instead of exception.

Next week is a Triple-Witch event and the early part will likely 
see wild volatility all the way. Traders playing this market right 
now should seriously be using 100% risk capital, waiting for clear 
entries and selling too soon when gains may appear. We have no 
trend, extreme chop warns of a change in direction soon but trying 
to load up on March contracts for swing trading either direction 
is not trading, it is gambling. Trade small and cautiously until 
the next market trend (not whipsaw explosion) begins.

Trade Management:
Option traders may choose listed In-The-Money (ITM) or Out-The-
Money (OTM) contracts by personal preference. They are selected 
based on volume, open interest and "Delta" values in that order. 
Our preference is usually OTM contracts except for the last few 
days of expiration when ATM or ITM contracts are preferred.

Entry triggers are points where plays are tracked when price 
action breaks above for calls or below for puts. Stops are the 
exact opposite of that. Sell targets are points to exit based on 
index levels or %gain on option contract price as noted.

*No entry targets listed mean the models are idle at that time.

New Play Targets:
         QQQ                          DJX
Mar Calls: 38 (QQQ-CL)            Mar Calls: 106 (DJV-CB)  
Long: BREAK ABOVE none            Long: BREAK ABOVE none
Stop: Break Below                 Stop: Break Below 

Mar Puts: 37 (QQQ-OK)             Mar Puts: 105 (DJV-OA) 
Long: BREAK BELOW none            Long: BREAK BELOW none
Stop: Break Above                 Stop: Break above 


         OEX                         SPX
Mar Calls: 600 (OEY-CT)           Mar Calls: 1175 (SPT-CO)
Long: BREAK ABOVE none            Long: BREAK ABOVE none
Stop: Break Below                 Stop: Break Below 

Mar Puts: 590 (OEB-OR)            Mar Puts: 1150 (SPT-OJ)
Long: BREAK BELOW none            Long: BREAK BELOW none
Stop: Break Above                 Stop: Break Above 

Open Plays:

IS Position Trade Model
Please Join Us In Sector Share!

News & Notes:
For the month of March we will combine both Sector Share and 
Position Trade models for index and sector play listings. Most of 
the sector share listings are also optionable, and we consider 
these triggers viable for options and shares alike. Call options 
are suitable for long play triggers while put options are suitable 
for short play triggers. 

From here we combine the best of both worlds in one fell swoop 
until otherwise noted!

Featured Plays:
See Sector Share Trade Model

Trade Management:
Option traders may choose listed In-The-Money (ITM) or Out-The-
Money (OTM) contracts by personal preference. They are selected 
based on volume, open interest and "Delta" values in that order. 

Entry triggers are points in the underlying symbol where plays are 
demonstrated as price action breaks above long triggers for calls or 
below short triggers for puts. Stops are the other points listed as 

*No entry targets listed means the model is idle at this time.

Sector Share Trade Model: Saturday 3/09/2002
Early Highs Don't Hold

News & Notes:
Indexes gapped open much higher at the open and never threatened 
to break above those early marks again. We opened new shorts to 
track in the oil services and energy sectors and continue to build 
a heavily short position

Featured Plays:

No new entries listed for this weekend, as tech sectors appear to 
have more upside room while "old economy" sector chart signals are 
topped out right now. We are shorting resistance, setting stops 
above there and will see what develops next!

Trade Management:
Entry triggers are points where plays are tracked when price 
action breaks above for calls or below for puts. Stops are the 
exact opposite of that. Sell targets are points to exit based on 
index levels or %gain on share price as noted.

No entry targets listed mean the model is idle at that time.

** Asterisk means symbol has listed options as well

New Play Targets (Short):
XLE **
Short: 28.00
Stop:  30.00

Short: 52.75
Stop:  55.00

Short:  97.00
Stop:  101.00

Open Long Plays:
Long: 26.75     
Stop: 28.00     
Long: 12.75     
Stop: 14.50     

Open Short Plays
XLB **          XLP **          
Short: 23.75    Short: 26.00    
Stop:  25.00    Stop:  28.00    

XLV **          XLY **          
Short: 29.00    Short: 29.90    
Stop:  31.00    Stop:  32.00    

IYD             IYK             
Short: 45.25    Short: 45.90    
Stop:  48.00    Stop:  48.00    

IYR             UTH **          
Short: 84.75    Short: 93.25    
Stop:  88.00    Stop:  98.00    

RTH **          PPH **          
Short: 98.00    Short: 98.75    
Stop: 102.00    Stop: 102.25    

DIA **[DJX]     IYM
Short: 105.90   Short: 42.00 
Stop:  110.00   Stop:  44.50

OIH **
Short: 66.50
Stop:  68.00

Short:  49.70
Stop:   52.00


Please view this in COURIER 10 font for alignment

CALLS              Mon    Tue    Wed    Thu   Week 

SII      64.53    2.81  -1.05   0.80  -0.57  -0.26  Dropped
TDW      40.80    1.53  -0.08   0.43   0.29   1.33  Profit taking
UTX      75.32    3.05  -0.30   1.10  -0.31   1.12  Wait for INDU
HON      39.85   -0.20  -1.20   0.70   0.77   0.06  Next leg up??
BA       49.40    1.29  -0.92   1.65  -1.38   1.56  Watch $50
MMM     121.50    2.69  -2.86   1.42  -0.44   1.18  Dropped
ETN      83.47    2.99  -1.58   0.49   0.04   1.13  Light volume
ACS      52.24    2.03  -0.87   0.64  -1.09   2.05  Still strong
FLIR     56.25    3.98  -1.24  -0.04  -1.42   1.89  Entry point
CREE     18.80    1.01   0.72  -0.03   0.52   1.27  Trading well
BAC      67.83    1.60  -1.35   1.65   0.28   3.03  New high
CHIR     47.49    0.90  -1.14   1.99   1.04   2.99  News pullback
DYN      30.40    2.33   0.67   0.40   1.32   4.00  Pausing
DCN      20.79    1.08  -0.33   0.16   0.66   1.69  New, cyclical
SYMC     41.95    3.87  -0.75   0.88  -1.12   4.14  New, all-time


ENZN     42.88    0.35  -1.92   3.76  -2.13   0.11  Under pressure
HGSI     22.28    0.92  -0.21   1.76  -0.91   1.72  Dropped
ABT      54.09   -0.12  -2.35   1.00  -1.67  -3.00  New, sick
CTX      59.47    2.68  -1.42   2.26  -1.52   0.83  New, too high

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Call Play of the Day:

VRTS – Veritas Software $44.41 (+5.21 last week)

See details in play list

Put Play of the Day:

ABT – Abbott Laboratories $54.09 (-3.40 last week)

See details in play list


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.


SII $64.53 (-0.26) SII pulled back in last Friday's session
on weakness in the Oil Service Sector Index (OSX.X) and
several cautious analyst comments on the group as a whole.
The pullback may be the beginning of a longer period of
consolidation.  In an attempt to avoid that risk, we're
electing to drop coverage on this play and book gains while
we still have a big move captured in the underlying.  Look
to close open positions early Monday if you haven't done
so already.

MMM $121.50 (+1.18) With the Dow Jones Industrial Average
($INDU) bumping against resistance at the 10600 mark, we're
dropping coverage on MMM for fear of an extended pullback in
the stock.  It failed to breakout late in last week's trading,
which may lead to additional profit taking if the Dow weakens
early next week.  Snug up stops on open positions to protect
against any downside risk next week and look to exit on
strength above last Friday's intraday high at the $122.80


HGSI $22.28 (+1.72) While the stock still looks weak, we've been
disappointed with the lack of downward movement in HGSI over the
past couple days, while the broader Biotech sector has seen some
more concerted profit taking.  Since we didn't get the breakdown
we were looking for, and with the sector looking like it is ready
for its next leg higher, were dropping HGSI this weekend just in
case of an unanticipated rally next week.  Remember, if the trade
isn't going with me, it's going against me!


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.

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.

If you trade options online, then you need an online broker 
offers true direct access to each option exchange
offers stop and stop loss online option orders
offers contingent option orders based on the price of the 
option or stock
offers online spread order entry for net debit or credit
offers fast option executions

PreferredTrade offers these online option trading features and 
more; call 1-888-889-9178 or click for more information.



Please read our disclaimer at:


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

Contact Support
The Option Investor Newsletter                   Sunday 03-10-2002
Sunday                                                      3 of 5

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Anything else is too slow!



DCN - Dana Corp. $20.79 (+1.69 last week)

Dana Corporation is an independent supplier of components and
systems to vehicular manufacturers and related aftermarkets.
The Company's operations are comprised of its Automotive
Systems Group, Automotive Aftermarket Group, Heavy Truck Group,
Engine Systems Group, Fluid Systems Group, and Off-Highway
Systems Group. The Company also is a provider of lease financing
services in selected markets through its wholly owned subsidiary,
Dana Credit Corporation. 

The cyclicals continued on their tear last week.  Most notably,
the Dow Jones Industrial Average (INDU), with its cyclical
exposure, continued higher.  Within the cyclical group, the
automotive stocks have been trading extremely well.  The best
and highest profile example of that trend can be seen in shares
of General Motors (NYSE:GM), the Dow component that broke out
in a very big way in last week's trading.  The component
suppliers to the automotive makers have been following trend,
not by surprise.  DCN is one stock in that group that
continued to steadily climb higher last week.  Wall Street is
warming up to the sector, including DCN, noting the recent
bullish praise.  Lehman Brothers recently raised their
price target for DCN from $18 to $23.  And just last Friday
morning, McDonald Investments raised its investment rating
from a Buy to an Aggressive Buy.  The buyers took note last
week, carrying DCN to a six month high above the $21 level.
Volume has remained very strong during the recent four week
rally.  We're looking for the recent momentum to continue into
next week's trading.  Bullish traders who like momentum plays
can look to enter new positions at current levels early in
Monday's session.  An advance past last Friday's intraday
high at the $21.04 mark would offer an entry point into
strength.  Those who prefer entering new call plays on
pullbacks might wait for DCN to retreat down back to its
10-dma at the $19.36 mark, which is in the middle of its
recent gap higher.  The lower end of that gap sits at the
$19 level, which is the site of our stop in this play

BUY CALL APR-17 DCN-DW OI=1153 at $3.90 SL=2.75 
BUY CALL APR-20*DCN-DD OI= 477 at $2.40 SL=1.25 
BUY CALL APR-22 DCN-DX OI= 205 at $1.10 SL=0.50 
BUY CALL JUL-20 DCN-GD OI= 351 at $3.10 SL=1.75 

Average Daily Volume = 891 K

SYMC - Symantec $41.95 (+4.14 last week)

Symantec Corp. provides a broad range of content and network
security solutions to individuals and enterprises. The Company
is a provider of virus protection, firewall, virtual private
network (VPN), vulnerability management, intrusion detection,
remote management technologies and security services to
consumers and enterprises around the world. The Company
currently views its business in five operating segments: Consumer
Products, Enterprise Security, Enterprise Administration,
Services and Other.

Software shares have led the revival to the tech sector.  Recent
rebounds in Microsoft (NASDAQ:MSFT) and makers of security
software have been impressive.  Symantec is one of the stronger
stocks in the security group because of its strong fundamentals.
The company recently offered guidance that calls for revenue
growth of about 17% this year and earnings growth of about 13%.
Those numbers are commanding a premium in the technology sector
because they can only get better ahead of an economic recovery.
The company hasn't suffered the same weakness in its business
lines such as its competitors in Check Point Systems (NASDAQ:CHKP)
and Internet Security Systems (NASDAQ:ISSX).  That explains
why SYMC is trading at its all-time high and its peers are
not.  We're looking for this leader to continue higher into
next week's trading after breaking out of its two year range in
last week's session.  Turn to the sentiment and action in the
Software Sector Index (GSO.X) to get a better feel of the short
direction of SYMC.  If the GSO.X powers higher early next week,
then SYMC should continue higher after its big breakout last
week.  Momentum traders can look to enter new plays into
strength on a move past the $42 level, which is the stock's
all-time high.  Such a move should induce a round of short
covering and carry the stock higher into the very short
term.  Those favoring a pullback on lighter volume can look
for a slide down to the $40 level first for a possible bounce
and rebound.  If weakness enters the GSO.X and drags SYMC
lower with it, then we may see a pullback down between the
$38 and $39 range.  A retreat down into that area would offer
traders an entry point that allows for easy risk management
with a stop below the $38 level, which is the site of our
coverage stop.

BUY CALL APR-40 SYQ-DH OI=9993 at $4.20 SL=2.75 
BUY CALL APR-42*SYQ-DV OI=1400 at $2.80 SL=1.50 
BUY CALL APR-45 SYQ-DI OI= 730 at $1.75 SL=1.00 
BUY CALL JUL-45 SYQ-GI OI= 522 at $4.10 SL=2.25 

Average Daily Volume = 1.90 mln

VRTS – Veritas Software $44.41 (+5.21 last week)

As an independent supplier of storage management software,
VRTS develops and sells products that protect against data
loss and file corruption, allowing rapid recovery after disk
or computer system failure.  The company's products provide
continuous data availability in clustered computer systems with
shared resources. This enables IT managers to work efficiently
with large file systems, making it possible to manage data
distributed on large computer network systems without harming
productivity or interrupting users.  VRTS provides products for
most popular operating systems, including UNIX and Windows NT,
as well as a full range of services to assist its customers in
planning and implementing their storage management solutions.

We normally aren't very excited about initiating new call plays
on Technology stocks where the daily Stochastics are buried so
deep in overbought territory, but this time there are other,
more powerful factors at work.  Over the past 2 weeks, the
Software sector (GSO.X) has been recovering from the lows it
posted near the $150 level.  VRTS took off like a shot after
rebounding from the $35 level pushing through resistance at both
$38 and $40 and clearing the 200-dma near $42.  The $38 and $40
levels are significant because pushing above each of those
levels produced double-top breakouts on the PnF chart, and the
current vertical count has the bulls targeting an eventual run
to the $69 level.  But before we go getting all worked up about
price targets, we need to temper our view with a bit of caution.
Daily Stochastics ARE deep in overbought, and Friday's candle
(a shooting star), which is a bearish candle pattern in an
uptrend.  Based on that setup, we definitely want to be looking
to initiate new positions on a pullback, ideally in the vicinity
of the $42-43 support level.  While VRTS will more than likely
push through resistance at both the $47 and $50 levels, it will
probably have to do a bit of consolidation first.  In order to
make room for the necessary (and likely) pullback, we're
initiating the play with our stop set at $40.

*** March contracts expire this week ***

BUY CALL MAR-40 VIV-CH OI= 6299 at $4.90 SL=3.00
BUY CALL MAR-45 VIV-CI OI= 4879 at $1.35 SL=0.75
BUY CALL APR-45*VIV-DI OI= 2722 at $3.80 SL=2.25
BUY CALL APR-50 VIV-DJ OI= 1587 at $1.85 SL=1.00
BUY CALL MAY-50 VIV-EJ OI=12563 at $2.90 SL=1.50

Average Daily Volume = 11.5 mln

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TDW - Tidewater $40.80 (+1.33 last week)

Tidewater, Inc. provides services and equipment to the offshore
energy industry through the operation of the world's largest
fleet of offshore marine service vessels. The Company is one of
the world's largest provider of offshore supply vessels and
marine support services serving the energy industry.

The Oil Service Sector Index (OSX.X) pulled back last Friday
on analyst comments and the price of oil.  Banc of America
Securities analyst Jim Wicklund said in a note to clients that
the recent run in the price of oil has been due to the growing
belief of military action against Iraq.  He noted that the
conflict had been discounted in shares of oil service stocks
and that the revelation of the event would be a sell on the
news type of reaction by the market.  Also, UBS Warburg
downgraded shares of Schlumberger and Ensco to hold ratings
on valuation concerns.  The talk combined to pressure the
OSX 2.03% lower last Friday which in turn pressured TDW for
the first time in several days.  The stock performed in line
with its sector.  The pullback was most likely profit taking
related, using the aforementioned analyst comments as the
excuse.  Volume was relatively light during the sell-off,
which helped to remove some of the downside risk we've been
writing about in the sector.  Going into next week's trading,
we'd like to see the OSX and TDW spend some time basing
before the next leg higher.  Look for the stock to pullback
further from current levels, possibly pausing around the $40
level, near the 10-dma.  After a few more days of profit
taking, we'll look to enter new plays again near support.
Until then, take gains on open plays or set very tight stops
to protect against further downside.

***March contracts expire next week***

BUY CALL MAR-35 TDW-CG OI=9152 at $6.00 SL=4.75 
BUY CALL APR-40*TDW-DH OI=1993 at $2.70 SL=1.75 
BUY CALL JUL-40 TDW-GH OI= 982 at $4.30 SL=3.25 
BUY CALL OCT-45 TDW-JI OI=  40 at $3.20 SL=2.00 

Average Daily Volume = 730 K

UTX - United Technologies $75.32 (+1.12 last week)

United Technologies Corporation, through its operating segments,
manufactures, installs and services elevators and escalators;
manufactures commercial and residential heating, ventilating and
air conditioning systems; produces commercial, general aviation
and military aircraft engines, and military and commercial
helicopters; and supplies transport helicopters. 

The news flow from UTX remained relatively quiet last week as
the stock continued to trade off of the action in the Dow
Jones Industrial Average ($INDU).  The stock continues to
trade well versus its index, noting last Friday's out performance
by about 40 basis points.  The consolidation towards the end of
last week in UTX helped to work off some of the stock's
overbought nature.  Daily oscillators have been buried in
overbought for several weeks, but such is the case in a trending
market, where oscillators don't work as well.  Still, we need to
be cognizant of the downside risk that remains.  UTX did work
off some of its overbought nature last week, but it could be due
for more of a pullback.  But that's where the Dow comes into
play.  As long as the Dow continues to work higher, UTX should
continue along its trend higher.  If the Dow breaks out above
the 10,700 level next week, that should translate into UTX
taking out its relative highs up around the $77 level.
Confirmation of a resumption of trend will be had if UTX clears
the $78 level on active volume.  Such a move can be used as an
entry point in an advancing market.  On the other hand, if the
Dow pauses during next week's trading, we'll be looking for
UTX to spend more time trading sideways, possibly pulling back
a bit further to find short-term support.  One level to focus
on for dip entry points is near the ascending 10-dma at the
$73.81 level.  If the stock dips below that level on an intraday
basis, we'll be watching for the buyers to emerge once again
near the $72.50 area.

***March contracts expire in two weeks***

BUY CALL MAR-75 UTX-CO OI=1686 at $1.40 SL=0.75 
BUY CALL APR-75*UTX-DO OI=1167 at $3.30 SL=1.75 
BUY CALL APR-80 UTX-DP OI=1141 at $1.30 SL=0.75 
BUY CALL MAY-80 UTX-EP OI= 605 at $2.15 SL=1.00 

Average Daily Volume = 2.21 mln

HON - Honeywell $39.85 (+0.06 last week)

Honeywell International Inc. is a diversified technology and
manufacturing company, serving customers worldwide with
aerospace products and services, control technologies for
buildings, homes and industry, automotive products, power
generation systems, specialty chemicals, fibers, plastics and
electronic and advanced materials. 

When it was all said and done, HON finished 6 cents higher in
last week's trading.  The stock essentially moved sideways
for the week, while the Dow Jones Industrial Average (INDU)
finished higher.  HON's under performance relative to its
index may be a cause for concern.  But we need to take into
account that the stock had a big run ahead of the Dow, starting
back on the stock's breakout above the $35 level.  In the
days following HON's breakout and subsequent continuation
higher, the Dow spent the time trading sideways.  So we may
have witnessed the Dow play catch up to the upside with HON
in last week's session.  The week of rest and relaxation for
HON may have been the necessary step ahead of the stock's next
leg higher.  In the last two days of trading, the stock was
pinned at the $40 level, unable to breakout from its grip.
A sharp move above that level early next week may inspire the
buyers to carry HON higher into the short term.  Traders can
look for a breakout above last Friday's intraday high at the
$40.42 level on heavy volume as a possible entry point into
strength.  Make sure that the Dow is supporting breakouts in
its components before entering new plays on a breakout attempt
in HON.  Confirmation of a breakout attempt will come on an
advance past the $41 level, which should bring more buyers into
the stock.  If HON pulls back next week into its recently
established consolidation, then look for bounces between the
$38 and $39 levels, with tight stops just below the $38 short
term support area.

***March contracts expire in two weeks***

BUY CALL MAR-37 HON-CU OI=3682 at $2.70 SL=1.75 
BUY CALL APR-37 HON-DU OI=2936 at $3.70 SL=2.25 
BUY CALL APR-40*HON-DH OI=5024 at $2.10 SL=1.00 
BUY CALL APR-42 HON-DV OI= 898 at $1.05 SL=0.50 

Average Daily Volume = 3.65 mln

ETN - Eaton Corp. $83.47 (+1.13 last week)

Eaton Corporation, incorporated in 1916, is a global diversified
industrial manufacturer. Eaton is in the business of fluid power
systems, electrical power quality and controls, automotive air
management and fuel economy, and intelligent truck components for
fuel economy and safety. The Company segments its business as
Automotive, Fluid Power, Industrial and Commercial, Controls,
and Truck.

ETN pulled back in Friday's session, going against the trend in
the broader market.  Despite the relative under performance on
the part of ETN, we think that last Friday's weakness was
related to profit taking more than anything else.  The stock
has averaged well over 500 thousand shares per day in trading
volume for the last two weeks.  Yet, the last two days of
trading have seen only 325 thousand shares cross the tape in
each day.  The low volume combined with inactive price reveal
consolidation and strengthen the argument that it's been under
profit taking mode.  Whether or not the profit taking continues
into next week's trading remains to be seen.  Much of ETN's
short term price direction will be dependent on the action in
the broader markets.  The two key averages to monitor when
trading this stock are the Dow Jones Industrial Average ($INDU)
for its cyclical weighting and the S&P 500 (SPX) for its
broad market nature.  If both averages continue higher into
next week's trading, then ETN should follow suit.  A breakout
above the $85 level in ETN should come on strength in the INDU
and SPX.  Watch for that development early next week, possibly
in Monday's session.  However, if the profit takers continue
to have their way, ETN may remain in its recent range.  If
that's the case, turn to intraday weakness for entry
opportunities.  Watch for bounces from between the $82 platform
level and the $83.50 short term support level.  Entries in
that range will allow traders to manage downside risk with
tight stops.

BUY CALL APR-80*ETN-DP OI=2275 at $5.00 SL=3.50 
BUY CALL APR-85 ETM-DQ OI=  42 at $2.40 SL=1.25 
BUY CALL JUL-85 ETM-GQ OI= 107 at $4.10 SL=2.50 
BUY CALL JUL-90 ETM-GG OI=  28 at $2.20 SL=1.25 

Average Daily Volume = 375 K

CREE - Cree Inc. $18.80 (+1.27 last week)

Cree, Inc. develops and manufactures compound semiconductor
materials and electronic devices made from commercialize silicon
carbide (SiC) and gallium nitride (GaN). The Company operates
its business in two segments: the Cree segment, which consists
of its SiC based products; and the UltraRF segment, which
consists of radio frequency (RF) transistors and amplifiers on a
silicon platform. 

Tech shares continued higher in last Friday's session, dragging
CREE along for the ride.  The world's largest chip maker Intel
(NASDAQ:INTC) told investors late Thursday night that it had
narrowed its guidance and that its quarter was going along as
previously expected.  The company also said that its margins
would be higher than previously guided.  Intel's comments helped
the Philadelphia Semiconductor Sector Index (SOX.X) higher by
4.40% in last Friday's session to the 640 level.  It was a six
month high for the SOX.  That strength spilled over into CREE
as the stock tacked on another 3.52% in the session.  CREE's
strength as been impressive last week, but finding favorable
entries into the play has been difficult around all of the gaps
higher.  Friday would've been very difficult to get a good
entry into the play.  With that lesson, we're continuing to
look for entries near support ahead of any gaps higher going
into next week's trading.  CREE pulled back late last Friday
towards its ascending support line, where traders can look for
a bounce from early next week.  Intraday dips down into the
area between $18.00 and $18.50 might offer traders a tight
spot to pick up new call play.  Entries taken near that
support line can target the psychologically significant $20
level to the upside in the coming week.  While a breakout
above $20 may offer a quick pop higher, the risk in entering
a play into strength was made present in last Friday's
session.  Continue using the SOX as a guide when planning
entries and exits into CREE positions.  Look for the SOX to
pullback on profit taking early next week, which may pressure
CREE back down to our entry zone.

***March contracts expire next week***

BUY CALL MAR-17 CVO-CW OI=1374 at $1.70 SL=0.75 
BUY CALL APR-17 CVO-DW OI= 366 at $2.80 SL=1.25 
BUY CALL APR-20*CVO-DD OI= 423 at $1.60 SL=0.75 
BUY CALL JUN-20 CVO-FD OI= 418 at $2.60 SL=1.25 

Average Daily Volume = 2.33 mln

CHIR - Chiron $47.49 (+2.99 last week)

Chiron Corporation is a biotechnology company that applies
leading scientific approaches to discover and develop innovative
healthcare products to prevent and treat cancer and infection.
The Company brings products to the global healthcare market
through collaborations with major healthcare companies and
through three growing businesses: biopharmaceuticals, vaccines,
and blood testing.

Swiss biotech firm Serono (NYSE:SRA) announced last Friday
morning that it had won U.S. Food and Drug Administration
(FDA) approval to market its multiple sclerosis drug.  The
news adversely impacted several companies within the
Biotechnology Sector (BTK.X), most notably Biogen (NASDAQ:BGEN).
BGEN finished more than 8% lower on the news.  Initially,
traders punished CHIR based on the Serono approval.  But the
Serono approval won't have any impact on Chiron, which is
what investors woke up to as CHIR rebounded from a big gap
lower in last Friday's session.  The stock attracted buyers
down around the $46 level and proceeded to trade as high as
the $48 level, nearly closing the gap from Thursday's close.
Although the sentiment was reversed in the stock last Friday
and CHIR finished fractionally lower, we need to be on the
lookout for weakness going into next week's session.  The
reason we're keeping the play on the list is because we may
find a favorable entry opportunity early next week if the
sentiment reverses.  Traders can look for intraday weakness
down around the $46 area as that appears where the buyers
are currently parked.  A move back down to that mark on
relatively light volume would offer traders with a low
risk potentially high rewarding entry point.  Make sure to
confirm the sentiment and direction in the BTK before
entering on weakness.  Look for a bounce in the BTK in
conjunction with a rebound in CHIR.  If the sentiment
reverses quickly early next week, look for CHIR to climb
back above the $48 level and watch for the breakout above
the $49 mark on heavy volume and in an advancing BTK market.

***March contracts expire next week***

BUY CALL MAR-47 CIQ-CT OI=1626 at $1.00 SL=0.50 
BUY CALL APR-47*CIQ-DT OI=1070 at $2.45 SL=1.25 
BUY CALL APR-50 CIQ-DJ OI= 886 at $1.30 SL=0.75 
BUY CALL JUL-50 CIQ-GJ OI=1229 at $3.40 SL=1.75 

Average Daily Volume = 1.90 mln

ACS – Affiliated Computer Services, Inc. $52.24 (+2.05 last week)

ACS is a global Fortune 1000 company that delivers comprehensive
business process outsourcing and information technology
outsourcing solutions, as well as system integration services,
to both commercial and federal government clients.  

It was an exciting week for shares of ACS as well as the broad
market.  While the DJIA continued to bang its head on the 10,600
resistance level, the NASDAQ continued to recover, moving
through several resistance levels to help the S&P500 challenge
the 1175 resistance level on Friday.  Through it all, shares of
ACS consolidated in the $51-52.75 area, with one brief dip for
solid entries down at the $50 level.  Continued hopes for robust
economic recovery are running headlong into the next wave of
accounting concerns.  Be that as it may, shares of ACS are
looking strong and like they are ready to blast through
resistance yet again.  We can continue to jockey into new
positions on renewed bounces off the $50-51 support area, keeping
our stop in place at $49.50.  Momentum traders will want to wait
for ACS to push through the $52.75 level (recent intraday highs)
before taking a position.  Coming in conjunction with the broad
market averages pushing through resistance will just make the
bullish case that much stronger.  If the averages fail at
resistance again next week though, our play could be in trouble.
So make sure to monitor their progress as they continue to chew
away at overhead supply.

*** March contracts expire this week ***

BUY CALL MAR-52 ACS-CT OI= 531 at $1.25 SL=0.50
BUY CALL APR-52 ACS-DT OI= 571 at $2.70 SL=1.25
BUY CALL APR-55 ACS-DK OI=1918 at $1.85 SL=1.00
BUY CALL JUL-55 ACS-GK OI= 345 at $4.00 SL=2.50
BUY CALL JUL-57 ACS-GA OI= 524 at $2.90 SL=1.50

Average Daily Volume = 846 K

BA – Boeing $49.40 (+1.56 last week)

One of the world's major aerospace firms, BA operates in three
principal segments: commercial airplanes, military aircraft and
missiles, and space and communications.  Commercial airplanes
operations involves the development, production and marketing
of commercial jet aircraft, principally to the commercial
airline industry.  The Military Aircraft and Missiles division
is involved in the research, development, production,
modification and support of military aircraft, including
transport and attack aircraft.  The Space and Communications
segment is involved in the research, development, production,
modification and support of space systems, rocket engines and
battle management systems.

Buyers and sellers of BA have fought to a standstill near the
$49 level over the past several days, and that should come as
no surprise, as that is the 50% retracement level of the stock's
decline between May and September of last year.  Driving the
action on Friday were two different news developments, one good
and one bad.  The good news came out Thursday night after the
close, as it was announced that the U.S. Army had chosen a
contractor team of BA and SAIC to lead development of a 16-month
$154 million weapons development project.  Keeping the bears
hungry though, was Friday's announcement that the company will
be taking a $1.9 billion charge due to new accounting rules.
Thursday's news gave the stock an early gain, but those gains
were capped near the $49.75 level throughout the day due to the
accounting-related news.  While it looks like the stock may be
close to topping out over the near term, there is no denying that
the uptrend is still intact and there could still be some bullish
gas in the tank.  Entry points are the same as on Thursday.
Dip-buyers will want to target new entries on a renewed bounce
from the $47.50-48.00 area, while momentum traders will want to
see the stock power through the $50 resistance level before
taking a position.  Our stop remains at $47.50.

*** March contracts expire this week ***

BUY CALL MAR-47 BA-CW OI=1517 at $2.15 SL=1.00
BUY CALL MAR-50 BA-CJ OI= 713 at $0.65 SL=0.00
BUY CALL APR-47 BA-DW OI=1609 at $3.30 SL=1.75
BUY CALL APR-50*BA-DJ OI=3741 at $1.95 SL=1.00
BUY CALL MAY-50 BA-EJ OI=6371 at $2.50 SL=1.25

Average Daily Volume = 3.47 mln

BAC – Bank of America Corp. $67.83 (+3.03 last week)

Providing a diversified range of banking and certain
non-banking financial products and services, BAC's operations
consist of Consumer Banking, Commercial Banking, Global
Corporate and Investment Banking, and Principal Investing and
Asset Management.  Consumer Banking targets individuals and
small businesses, while Commercial Banking targets businesses
with annual revenues up to $500 million.  Global Corporate
and Investment Banking provides investment banking, trade
finance, treasury management, leasing and financial advisory
services.  Principal Investing includes direct equity
investments in businesses and general partnership funds, while
the Asset Management businesses are split into three branches;
Private Bank, Banc of America Capital Management and Banc of
America Investment Services.

Profit taking in the broad markets hasn't done much to slow down
the ascent of the Banking index (BIX.X), as it pushed to yet
another 6-month closing high on Friday.  In fact, the BIX is
rapidly approaching the $680 resistance level, which has turned
back every major rally since the middle of 1999.  Shares of BAC
have been riding this bullish trend once again over the past few
weeks, pushing through to new 2-year highs on Friday after last
week's breakout over the $65 resistance level.  While the profit
taking in the broad market has certainly kept the stock's advance
contained, there is little to indicate that the run is over, as
volume remains solidly above the ADV.  We actually would have
expected more weakness in the face of the broad market's
inability to advance through resistance this week, and that lack
of weakness bodes well for our play as we head into expiration
week, which normally has a positive bias.  We're raising our stop
this weekend to $64.75, and will want to target new positions on
intraday dips that to either the $66.50 level, or $65, the site of
the stock's recent breakout.  Momentum traders that want to buy
the breakout over the recent highs at $68.25 will want to play
with caution, as there is no doubt that BAC is becoming
overextended and could be due for some consolidation,
particularly if the BIX has trouble again with the $680 level.

BUY CALL APR-65*BAC-DM OI= 6282 at $4.50 SL=2.75
BUY CALL APR-70 BAC-DN OI=11278 at $1.45 SL=0.75
BUY CALL MAY-65 BAC-EM OI=28657 at $5.10 SL=3.00
BUY CALL MAY-70 BAC-EN OI=26764 at $2.05 SL=1.00

Average Daily Volume = 5.57 mln

DYN – Dynegy, Inc. $30.40 (+4.00 last week)

Dynegy is a provider of energy and communications solutions to
customers in North America, the United Kingdom and Continental
Europe.  The company's expertise extends across the entire
convergence value chain, from broadband, power generation and
wholesale to direct commercial and industrial marketing and
trading of power, natural gas and coal.  Additionally, the
company is involved in the transmission and distribution of
electricity and natural gas and provides retail service to
electric and gas consumers.  In the more esoteric realm, DYN
is also involved in the trading of emission allowances and
weather derivatives.

Utility and Energy stocks have been pummeled into the dirt
with the meltdown at Enron, and are only now starting to recover
from their lows.  The DJ Utility sector (UTY.X) began to rebound
a couple weeks ago, after confirming support near the $304 level.
Like the UTY index, shares of DYN have moved sharply higher in
the past 2 weeks, moving from support to resistance in one cycle
of the daily Stochastics.  With daily Stochastics now buried in
overbought territory and the broad markets struggling with
overhead resistance, it should have come as no surprise that DYN
gave back a little ground on Friday.  Truth be told, we would
have liked a little more weakness to give us a solid entry point
into the play.  But with intraday oscillators entering oversold
territory, we may have to settle for an entry as DYN bounces from
the $29-30 area.  Should that level fail to support the stock,
we'll be looking for a rebound from the $27-28 area (the site of
the recent breakout) to provide solid entries into the play.
With the way volume had been ramping up through Thursday, it was
really encouraging to see Friday's selling occur on rather light
volume.  Momentum traders can take new positions if DYN blasts
through the $31.30 level, but only if volume increases above the
levels seen on Friday.  Keep stops liberal, currently $26.75.

*** March contracts expire this week ***

BUY CALL MAR-30 DYN-CF OI=6717 at $1.20 SL=0.50
BUY CALL APR-30*DYN-DF OI=2092 at $2.60 SL=1.25
BUY CALL APR-35 DYN-DG OI=  71 at $0.80 SL=0.25
BUY CALL JUN-35 DYN-FG OI=3022 at $1.80 SL=1.00

Average Daily Volume = 4.17 mln

FLIR – FLIR Systems $56.25 (+1.89 last week)

FLIR is engaged in the design, manufacture and marketing of
thermal imaging and stabilized camera systems for a wide variety
of commercial, industrial and government applications.  The
company's products are divided into two categories, which
include the thermography products and imaging products.  In the
Thermography division, FLIR manufactures products that are sold
to commercial, industrial, research and machine vision customers.
For industrial customers, FLIR has developed thermography
systems that feature accurate temperature measurement, storage
and analysis.  The Imaging division caters to military, law
enforcement, surveillance and security customers.

Proving that no sector is immune from a bit of profit taking, the
Defense index (DFI.X) has seen a bit of selling in the past
couple sessions.  That should come as no surprise to our readers,
as we've been pointing out that a bit of consolidation was likely
following the DFI's surge to new all-time highs on Wednesday.  Our
FLIR play has a habit of consolidating for 3-5 days before going
on to shoot higher.  Well Friday's session was the 4th day of
consolidation, and what a day it was.  The early dip gave us a
great entry point, as the stock rebounded right from the $53
level, the site of our stop.  After the initial bounce, things
were rather quiet until after the lunch hour, when buyers showed
their interest driving FLIR higher throughout the afternoon and
actually turning a $3 intraday loss into a fractional gain.
Traders that bought the dip are certainly smiling tonight.  The
stock is just about due for its next big upward move, at least if
recent history is a reliable guide.  Use intraday dips near the
$54-55 area to initiate new positions, and then consider taking
profits on the next large upward day.  Then it will be time to
repeat the process, buying the consolidation and selling the
surge higher.  Keep stops in place at $53.

*** March contracts expire this week ***

BUY CALL MAR-55*FFQ-CK OI=218 at $2.70 SL=1.25
BUY CALL MAR-60 FFQ-CL OI=270 at $0.60 SL=0.25
BUY CALL APR-55 FFQ-DK OI=200 at $5.20 SL=3.25
BUY CALL APR-60 FFQ-DL OI=258 at $2.95 SL=1.50
BUY CALL JUL-60 FFQ-GL OI=360 at $6.40 SL=4.50

Average Daily Volume = 407 K


ABT – Abbott Laboratories $54.09 (-3.40 last week)

Abbott Laboratories is engaged in the discovery, development,
manufacture and sale of healthcare products and services.
ABT's pharmaceuticals and hospital products (accounting for
more than 40% of sales) include antibiotics, synthetic hormones,
and drugs such as Norvir, which is used to treat HIV.  Its
products are sold directly to retailers, wholesalers,
healthcare facilities, laboratories, and government agencies
throughout the world.  

Give a stock 6 solid weeks of banging its head on the same
resistance level while the broad markets are in rally mode, and
it ought to be able to get the job done, right?  And if it can't,
that should tell us we've got a candidate for a breakdown.  Well,
ABT has been trying like mad to push through the $58 resistance
level since mid-January, and hasn't been able to pull it off.
Then in the past week, ABT has been acting like it wants to break
down, and in a big way, dropping right to the $54 support level on
solid volume, and showing very little in the way of a desire to
bounce.  Perhaps it has something to do with the fact that most of
the medical device makers have been left out of the recent rally.
Could it be that this sector of the market is falling out of favor
due to money finding its way to higher risk areas like technology?
Whatever the root cause, it looks like an attractive put right
now, and we're more than willing to take advantage of the shift.
With ABT sitting right on major support, we would prefer a bit of
a bounce before taking a position, so that we can take advantage
of the failed rally.  Solid entries should materialize on a
rollover from the $56 level.  Traders that would prefer to trade
a breakdown will want to wait for ABT to violate the $53.50 level
before taking a position.  We are initiating coverage with our
stop at $56.75.

BUY PUT APR-30 ABT-PK OI=3178 at $2.30 SL=1.25
BUY PUT APR-30 ABT-PJ OI=2235 at $0.55 SL=0.25

Average Daily Volume = 3.17 mln

CTX – Centex Corporation $59.47 (+0.83 last week)

The top home builder in the U.S., CTX operates in 20 states and
Washington DC, as well as in Latin America and the UK.  The
company builds almost 19,000 homes a hear with an average price
tag of $190,000 for both first-time and move-up buyers.  The
company has subsidiaries that offer home security systems and
pest-control services, as well as construction contracting for
hospital, school, office building and hotel projects.  Rounding
out the picture, CTX has interests in land development, mortgage
banking, commercial real estate, and construction supply

There's no arguing with the incredible resilience of the housing
market, especially after the market selloff in September.
Measured by the DJUSHB index, the sector is up nearly 100% since
the September lows, as one home builder after another has
announced record profits.  But it looks like the party is coming
to an end.  With all the good news factored into stock prices and
money beginning to flow into riskier areas of the market, this
looks like an area of potential weakness over the near term.  CTX
just recently traced a new all-time high near $63, and given that
fact, this play carries more risk as we are attempting to pick a
top.  But following that high, the stock has been seeing a fair
amount of selling (roughly 50% above the ADV), and that is never
a healthy sign for a stock that is looking to move higher.  The
daily Stochastics are just rolling down out of overbought
territory, and despite UBS Warburg raising their estimates for
the stock, it looks like the near-term direction is down.  Use a
failed rally in the $61-62 area to establish new positions or
wait for the stock to drop below the $58 level on continued heavy
volume before playing.  We are initiating the play with our stop
set at $62.50.

BUY PUT APR-60 CTX-PL OI= 115 at $3.90 SL=2.50
BUY PUT APR-55 CTX-PK OI=1415 at $1.85 SL=1.00

Average Daily Volume = 952 K

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offers true direct access to each option exchange
offers stop and stop loss online option orders
offers contingent option orders based on the price of the 
option or stock
offers online spread order entry for net debit or credit
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more; call 1-888-889-9178 or click for more information.



Please read our disclaimer at:


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

Contact Support
The Option Investor Newsletter                   Sunday 03-10-2002
Sunday                                                      4 of 5

Tired of waiting on trades to execute?
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ENZN – Enzon, Inc. $42.88 (+0.11 last week)

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

For the most part, Biotech traders would have done better
staying in bed on Friday, as the movement in the Biotech sector
(BTK.X) was hardly worth mentioning, moving to the upside by a
measly 0.4%.  It appears that the BTK is consolidating a bit
after its stellar upside run on Wednesday.  After pulling back
quite a bit on Thursday, ENZN posted an almost perfectly balanced
doji candle pattern on Friday, reinforcing the fact that
indecision reigns right now.  Resistance is holding firm near the
$45.50 level, and we have intraday support building near the $42
level.  That makes our action plan that much easier to manage.
Target new positions on failed rallies below the $45.50 level, or
wait for the $42 support level to fail before taking the plunge.
Remember, that the real critical support level that we need to
watch is $40.  Conservative players will want to see this level
give way before playing.  We've got the setup for a nice failed
rally in the making right now, as price has been drifting
sideways, while daily Stochastics have been recovering from
oversold territory.  Making an even more bearish case, each of
the past 3 upward cycles on the daily Stochs have failed at
successively lower levels, and we are nearing the point where
the next one is likely to fail.  For now, keep stops in place at

*** March contracts expire this week ***

BUY PUT MAR-45*QYZ-OI OI=682 at $2.90 SL=1.50
BUY PUT APR-45 QYZ-PI OI=230 at $4.70 SL=2.75
BUY PUT APR-40 QYZ-PH OI=425 at $2.45 SL=1.25

Average Daily Volume = 1.26 mln

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Deja Vu Again?  Or Is It Vuja De?
By Mark Phillips
Contact Support

With apologies to Robin Williams, Vuja De is a strange
unexplainable feeling that somehow none of this has happened
before.  The markets have managed to all see-saw themselves right
up to resistance, just like they have a dozen times over the past
2 years.  The big question is whether this is another bear market
rally, or the beginning of something new.

I'm by no means an authority, but my gut tells me we're in for
another failed rally.  Simply put, I don't believe we are in for
a strong recovery.  Sure, signs are there that the bottom is in
for both the market and the economy, but I'm still seated in the
'not convinced' section.  Over the past several months, the market
has priced in a robust recovery and valuations of stocks are
actually more ridiculously high (on an aggregate basis) than they
were in March of 2000.  Either earnings need to increase
dramatically over the course of the year, or prices need to come
down.  I guess there is a third alternative -- we can all agree
that the emperor is actually sporting a fine new set of threads,
even while we are staring at his fully exposed pasty white skin.

The looming problem that is going to be brought into full view
very soon is the fallout from the Enron disaster.  Companies do
not want to be perceived as secretive or dishonest in their
accounting practices, so they will likely be taking extra steps
to disclose anything that might be questionable.  Will these
disclosures be minor ripples that investors can ignore, or will
they be waves of such proportion as to start the next flood of
selling?  I sure don't know, but to me this is the biggest risk
to the bulls right now, as the economy is clearly on the mend.
What I wouldn't give for an accounting structure for publicly
held companies where a profit is a profit and a loss is a loss!

As I sit here watching the closing numbers for the markets, I see
all the major indices at or near major levels of resistance.  For
the DOW, we ended the week just slightly below the 10,600 level
for the 5th day in a row.  Then there is the NASDAQ-100, which
capped off a powerful 6-day move to the upside by rallying right
to the 200-dma and significant resistance near 1560.  Not only
that, but there is even more resistance between 1600-1735, all of
which needs to be cleared if the NDX is going to break out of its
pattern of descending highs that has been in place for the past 2

And in the middle we have the S&P500 or SPX.  In between the DJIA
and the NASDAQ, the SPX has components of each and therefore its
performance is a hybrid of the two.  Just like it did in December
and January, the SPX has rallied right to the 1175 resistance
level, just below the 62% retracement of the May-September
decline, which sits at 1182.  But like the other two indices, it
hasn't been able to break out either.

All three indices have weekly Stochastics pointed northward, so
we aren't in trouble yet.  But with the VIX still slumming around
below 22, we could be in trouble once those weekly oscillators top
out again.  Believe me, that event will have me eyeing some
distant-month index puts for a low-stress position trade to the
downside.  And that is completely independent of the individual
plays we deal with here every week.

Speaking of which, let's get to it, shall we?  Last week, I added
new call plays to the portfolio on BBH and IBM, but shied away
from BRCM due to my expectation that it was a false rally.  And
due to my belief that a recovery in the Brokerage sector is likely
to be tepid at best, I just dropped our GS Watch List play, rather
than take an entry in the low $80s.  Looking at current results,
my crystal ball needs to be replaced, or at least cleaned.  While
we do have slight gains in both of the new plays, clearly I should
have added both BRCM and GS to the Portfolio, when my entry
targets were reached.  GS is almost $10 above our entry trigger
and BRCM is higher by more than $11.  That's where the action was
over the past week, Semiconductors and Financial stocks.  And I
missed it.  My apologies to you, but hopefully this goes to show
that NOBODY is infallible.  That is why I try so hard to educate,
rather than just provide the 'Play of the Week'.  If you are
equipped to choose and act on your own trades without me or
anyone else to help you with the decision process, you are that
much closer to controlling your own financial future.

Here's the quick rundown on the current residents of the Watch
List.  It bothers me no end that I waited patiently for BRCM to
come back to the $31-32 area and then when it did, I didn't
believe the bounce was for real.  Emotion and logic mix like oil
and water.  I really think I've missed it for this cycle.  If
you happened to get into the play on your own, CONGRATULATIONS!
I'm going to raise our entry target to $36-37 in hopes that we
can get an entry on the next downward cycle on the daily chart,
but I'm not willing to chase the stock higher at this point.

The move back up to the $41 level for GE doesn't really grab my
attention, as I expect it to once again fail and roll lower.
We'll still look for entry near the $36 level.  And our new play
on LUV is shaping up nicely, having fallen into the entry target
zone between $19-20, it looks like it could set us up for an
entry as early as next week.

Speaking of setups, EK is getting awfully close as well.  I held
my fire as the stock rocketed through the $34 level, and I see
the current weakness as the prelude to a fall.  This daily cycle
has just about bottomed, and when EK rolls over from a lower high
with both daily and weekly Stochastics rolling down out of
overbought, we'll have a nice clean entry signal.

Believe it or not, that's all we currently have on the Watch List.
Oh, you're wondering what happened to our JNJ play?  Moved to
the Portfolio based on the dip and bounce on Tuesday.  My
apologies for not communicating via the Market Monitor over the
past week, but I've been away from my computer during the day for
most of the week and have been making any trading/writing
decisions after the closing bell.  Why didn't any of you tell me
that pulling a muscle in your back makes it almost impossible to
sit in front of the computer?  Next week should be different...at
least that's what my new assistants, Vicodin and Soma are telling
me!  Along those lines, if I've made any simple errors this
weekend in my writing, please forgive me.  I'm sure it's just
the medication talking, and hopefully I'll be back to myself next

Finally we have a new Watch List play.  I've been watching and
waiting and based on the recent action, I think shares of
Medtronic (NYSE:MDT) will make for a nice addition to our
portfolio.  Check out the new play write-up below for details.
Given the positive action in the Utility sector over the past
couple weeks, I really wanted to add Dynegy (NYSE:DYN) to the
Watch List, but alas, there are no LEAPS available on the stock.
As proof that every cloud has a silver lining, news came out on
Friday that the CBOE will begin to trade LEAPS on DYN beginning
on Monday.  So look for DYN to move onto the Watch List next week.
For those that want to get a head-start on their research, we'll
be looking to initiate positions on a bounce from the $27 level,
the site of the stock's most recent breakout.

And that's where we sit this weekend.  Major markets banging into
formidable resistance, but the bears are unable to pry the bulls'
hooves loose.  The VIX is moving lower day-by-day, and closed out
the week at 21.54.  The closer we get to the 20 level, the closer
the bears get to having a big selling party.  If you are
initiating new longs here, please pay attention to the VIX.  I
would seriously consider aggressively tightening stops or even
harvesting profits on any long plays if the VIX dips below the 20
level.  But until we see evidence to the contrary, the bulls have
the ball.  Let's run with the bulls!

Have a great week!

Mark Phillips

LEAPS Portfolio

Current Open Plays


BBH    03/03/02  '03 $120  OEE-AD  $16.60  $19.10  +15.06%  $110
                 '04 $120  KBB-AD  $26.20  $27.90  + 6.49%  $110
IBM    03/03/02  '03 $110  VIB-AB  $ 9.80  $10.50  + 7.14%  $95
                 '04 $110  LIB-AB  $17.00  $19.00  +11.76%  $95
JNJ    03/05/02  '03 $ 60  VJN-AL  $ 5.90  $ 7.20  +22.03%  $59
                 '04 $ 60  LJN-AL  $ 9.20  $11.00  +19.57%  $59


LEAPS Watchlist

Current Possibles


GE     08/12/01  $36           JAN-2003 $ 40  VGE-AH
                            CC JAN-2003 $ 30  VGE-AF
                               JAN-2004 $ 40  LGR-AH
                            CC JAN-2004 $ 30  LGR-AF
BRCM   10/28/01  $36-37        JAN-2003 $ 40  OGJ-AH
                            CC JAN-2003 $ 35  OGJ-AG
                               JAN-2004 $ 40  LGJ-AH
                            CC JAN-2004 $ 35  LGJ-AG
LUV    12/09/01  $19-20        JAN-2003 $ 20  VUV-AD
                            CC JAN-2003 $ 15  VUV-AC
                               JAN-2004 $ 20  LOV-AD
                            CC JAN-2004 $ 15  LOV-AC
MDT    03/10/02  $40-42        JAN-2003 $ 45  VKD-AI
                            CC JAN-2003 $ 40  VKD-AH
                               JAN-2004 $ 45  LKD-AI
                            CC JAN-2004 $ 40  LKD-AH


EK     01/27/02  $34-35, $32   JAN-2003 $ 30  VEK-MF
                               JAN-2004 $ 30  LEK-MF

New Portfolio Plays

JNJ - Johnson & Johnson $61.31

It doesn't matter whether you classify it as a Drug stock or a
Consumer stock, if you are looking at the price chart, you've got
to classify JNJ as a winning stock.  Throughout the past year,
the stock has been posting a series of higher highs and higher
lows, and as I pointed out last week, I really messed up by not
taking a position on the rebound from the vicinity of $54 in
early February.  But moving forward, the breakout over the $60
level looks like a serious move and that was confirmed by the dip
to $61 (that triggered our entry) followed by a solid move up to
the $64 level.  Make no mistake, the daily and weekly Stochs ARE
overbought, but they aren't showing any signs of weakness.  In
fact the last time the daily Stochs were in oversold was that
missed entry point near $54 in early February.  The thing that
really pushed me over the edge, making me willing to take the
entry with the current overbought readings is what I saw on the
PnF chart.  On that chart, the current vertical column of X's was
giving a price target of $77 when I took the entry.  That column
has now grown, and the target has also grown, now giving a reading
of $83.  That means our play has plenty of upside potential, and
all we need to do is ride it higher.  It won't be an exciting play,
but it should be a rather consistent performer.  Our stop is
initially in place at $59, and latecomers can target entries on a
dip and bounce above the $60 level.

BUY LEAP JAN-2003 $60 VJN-AL $5.90
BUY LEAP JAN-2004 $60 LJN-AL $9.20

New Watchlist Plays

MDT - Medtronic, Inc. $44.56  **Call Play**

With the economy apparently on the mend, there are numerous
sectors and stocks that have taken off like a shot from a gun in
recent weeks.  Many of those stocks have had gains fueled at
least in part by short-covering.  One area that has not really
participated in the rebound is the Medical Device Makers group,
and I expect to see renewed life in this group over the
intermediate term.  My favorite play in this area is MDT, whose
primary products center on various devices and products for
Cardiac and Vascular treatments.  With the demand for such
treatments continuing to rise, I'm looking at the recent
weakness in the stock as a lack of buyers, not necessarily
heavy selling.  Note how the stock has had a lot of volume
lately, centered around the $44 level.  I think we could get
one more move down, likely to the $42 or even the $40 level.
Those levels have consistently provided support over the past
year, and I expect the pattern to hold.  Observant readers will
take notice of the fact that although the weekly Stochastics
are bottoming in oversold territory, the monthly is just starting
its decline from overbought.  If you're wondering what I'm
thinking, here it is.  MDT is a stock that hasn't seen its
monthly Stochastics make a complete trip to oversold (excepting
September of last year, which was driven by extreme, external
events) since 1989!  So I'm willing to rely just on the daily and
weekly charts for this play.  Look for the daily Stochastics to
return to oversold territory and drag the price down to one of
our two price targets before the recovery gets underway.  Take
note of the PnF chart, which although currently in a column of
O's, has a price target of $76, which was created by the most
recent column of X's.  Take advantage of the near term weakness
to initiate new positions for what looks to be a long term
recovery about to get underway.  We'll initially place our stop
at $38, the reaction lows in mid-September.

BUY LEAP JAN-2003 $40 VKD-AH  For Covered Call
BUY LEAP JAN-2004 $40 LKD-AH  For Covered Call



If you trade options online, then you need an online broker 
offers true direct access to each option exchange
offers stop and stop loss online option orders
offers contingent option orders based on the price of the 
option or stock
offers online spread order entry for net debit or credit
offers fast option executions

PreferredTrade offers these online option trading features and 
more; call 1-888-889-9178 or click for more information.



Please read our disclaimer at:


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

Contact Support
The Option Investor Newsletter                   Sunday 03-10-2002
Sunday                                                      5 of 5

Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.

Anything else is too slow!


Option Pricing Concepts: Q&A with the Covered-Calls Editor
By Mark Wnetrzak

One of our readers asked about the use of volatility analysis
and probability calculators to identify favorable positions
and another reader wants to know which strategy he should use
as a beginning options trader.

Hello Mark,

I noticed from past articles that you focus mostly on technical
analysis in selecting stocks for covered-calls.  I know you look
for high premiums in the options to sell but what do you think
about the use of volatility/probability analysis or pricing
models with regard to eventual outcome of the play?


First, some information about volatility in stocks and options:
A stock's volatility, usually referred to as historical volatility,
is determined by mathematical formulas that use the issue's recent
price activity (closing or high and low values).  For example, one
of the basic volatility calculations uses past closing prices for
a specific stock to determine the annualized standard deviation of
the instrument.  For example, a historical volatility of 50 means
that the stock has a 68% probability (one sigma) of trading within
50% of its average targeted move within one year.  An option's
volatility usually refers to its implied volatility.  This is an
estimate or assumption produced by an option pricing model based
on factors such as relative strike price, time to expiration,
intrinsic value, risk-free interest rate, and the dividend issued
with ownership of the underlying stock.

Pricing models use a projection of a stock's future volatility
in calculating option prices.  These formulas do not include an
issue's directional trend or price momentum.  Thus, if all other
factors are the same (stock and strike price, time to expiration,
and dividend issued), two different issues that have the same
forecast volatility will have similar option prices.  It doesn't
matter whether one has remained relatively close to a specific
price (a trading range) while the other has moved steadily in one
direction.  That's why it is so important to have a fundamental
understanding of technical analysis and basic market trends when
selecting an issue; because an option trader can greatly improve
his or her success in situations where directional trends are not
incorporated into an option's pricing.

As far as probability calculators, I do use them to supplement my
trade analysis but I do not rely on them as a primary component
of the decision-making process in evaluating a specific position.
The reason is simple: probability calculators cannot "factor-in"
future potential or upcoming events.  With regard to that type of
analysis, I do favor the use of a Monte Carlo style simulation; a
mathematical process that "models" an event such as a potential
market character or movement.  The Monte Carlo style calculator
uses a model and then runs repeated randomly generated instances
of the situation to get a prediction as to how the process might
behave.  This type of simulation is appropriate when a formula
cannot be used, which is often the case in real-life situations.
As you might expect, the resultant probability percentages (the
chance that the stock will exceed the target price at the end of
the time period) are the same as the results found in many option
pricing software programs.  These probabilities are insufficient,
however, for an option trader that needs to make decisions during
the time period.  A Monte Carlo style simulation can give you the
probabilities of the stock ever reaching the target at any time
during the life of the position.  One of the most popular products
of this type is available from Larry McMillan and most traders
agree that it is a useful, low cost tool for probability analysis.

Forwarded to Covered-Calls editor:

Dear OIN,

I am new reader with very little experience in options but I
have been relatively successful with buying and selling stocks.
I noticed you have a section for "covered" calls and I have been
told that is a very conservative strategy.  I also like the fact
that I get money for selling the options but are there any other
ways I could trade options with low risk and good profits?  I do
plan to subscribe to your newsletter and would appreciate any
thoughts or suggestions on this subject.


Hello GD,

The first step in developing a practical method for participating
in the market is to determine your comfort threshold and stress
level.  Think about the unique emotional effects of your trading
activities and managing an investment portfolio.  Are you usually
a cautious person or do you feel comfortable traveling at warp
speed?  How will a specific type of trading affect you mentally?
Can you handle the volatility of "day-trading" options or are you
likely to be happier with more conservative, longer-term positions.
After you have identified the appropriate trading attitude, it is
also important to decide what type of market activity or movement
is most favorable to your personal style and portfolio outlook.
Some traders prefer strategies that profit from trending markets
such as those characterized by a sustained advance or decline.
Techniques that benefit from this type of movement include put or
call buying and high potential spreads or combinations.  Another
tactic might be to focus on changes in volatility.  Traders using
this approach buy or sell "premium" in an attempt to profit from
transitions in market character.  Some utilize neutral positions
such as calendar or ratio spreads when the technical outlook for
the underlying issue is range-bound or static.  Regardless of the
method you prefer, each category of price action demands a unique
type of trading system.  The key to success is to specialize in a
specific kind of market activity and utilize trading strategies
that perform well in that particular environment.

Investors generally use covered-calls to generate monthly income,
collecting the premium for the sale of an option against a stock
position in his or her portfolio.  This conservative strategy can
be used effectively on all type of stocks as long as the outlook,
fundamental or technical, for the issue is favorable.  One of the
advantages to this approach is that it allows novice investors to
learn successful trend-trading techniques with a small margin of
safety while managing the combined position for upside profit and
downside risk.  This underlying basis for this strategy is a high
probability of limited profit.  The major advantage to a novice
trader is the technique is easy to use and the resultant position
is more conservative than outright stock ownership.  In writing an
option on the stock, the investor has insured the issue against a
future drop in value.  Regrettably, the downside risk in ownership
is not eliminated, only reduced.  In addition, the actual cost of
opportunity loss or potential upside movement can be substantial.
There are other, more subtle benefits and disadvantages but these
are the most common reasons that investors choose (or avoid) this

Trade Wisely!

Note:  Margin not used in calculations.

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

CRGN   17.44  17.75   MAR  17.50  1.15  *$  1.21  10.8%
BSML    5.22   5.83   MAR   5.00  0.65  *$  0.43  10.6%
IMCL   27.28  26.62   MAR  25.00  3.30  *$  1.02   9.2%
MACR   15.61  20.50   MAR  15.00  1.50  *$  0.89   9.1%
AVII   10.50  10.17   MAR  10.00  1.45  *$  0.95   9.1%
LTXX   23.72  27.28   MAR  22.50  1.90  *$  0.68   6.8%
CANI    5.93   7.86   MAR   5.00  1.20  *$  0.27   6.4%
MACR   18.85  20.50   MAR  17.50  1.85  *$  0.50   6.4%
IMCL   18.44  26.62   MAR  12.50  6.60  *$  0.66   6.3%
ATVI   26.71  32.30   MAR  25.00  2.70  *$  0.99   6.0%
OI     15.10  15.50   MAR  15.00  0.50  *$  0.40   6.0%
UTHR   11.20  12.20   MAR  10.00  1.70  *$  0.50   5.9%
OSIS   22.82  25.00   MAR  20.00  3.80  *$  0.98   5.8%
XMSR   13.98  13.60   MAR  12.50  2.25  *$  0.77   5.7%
AVII   11.22  10.17   MAR  10.00  1.70  *$  0.48   5.7%
PECS   28.55  25.00   MAR  25.00  5.00   $  1.45   5.4%
DCTM   20.39  23.29   MAR  17.50  3.90  *$  1.01   5.3%
WNC    10.86  10.80   MAR  10.00  1.20  *$  0.34   5.1%
ACF    25.30  34.60   MAR  22.50  3.30  *$  0.50   4.9%
GT     25.14  28.08   MAR  25.00  0.95  *$  0.81   4.8%
FFIV   22.66  22.75   MAR  20.00  3.30  *$  0.64   4.8%
FDP    17.61  18.65   MAR  17.50  0.65  *$  0.54   4.6%
HAL    16.27  17.25   MAR  15.00  1.85  *$  0.58   4.5%
IBI    20.17  19.70   MAR  20.00  0.75   $  0.28   3.1%
VPHM   19.50  16.09   MAR  17.50  3.00   $ -0.41   0.0%

NXTP    6.05   8.53   APR   5.00  1.50  *$  0.45   6.1%

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


When the Markets rally like they have...every day seems like
Christmas.  Just don't forget to give yourself some presents!
Even the two positions we closed early have rallied into
positive territory - Murphy's Law is alive and well!  Time
to evaluate any issues that are acting weaker than expected.
F5 Networks (NASDAQ:FFIV) continues to move laterally and
really didn't benefit from the recent Market strength.  Keep
a close watch on the issue.  Both AVI BioPharma (NASDAQ:AVII)
and Pec Solutions (NASDAQ:PECS) continue to act worrisome and
taking a break-even exit may be prudent in the long run.  We
will show Pec Solutions closed in the name of money management.
However, BioPharma remains above its 150-dma and we will use
that indicator as an exit signal.  Wabash National (NYSE:WNC)
has pulled back after reporting earnings on Tuesday and is now
moving towards its 30-dma which coincides with the August high.
Long-term buying support is near the 150-dma at $9.  ViroPharma 
(NASDAQ:VPHM) will be shown closed next week in light of the
stock's ongoing horrid action.

Note: AmeriCredit Corp. (NYSE:ACF) will be removed from the
summary list as it rallied too quickly (gapped up) to offer a
reasonable entry point.

Positions Closed: Packeteer (NASDAQ:PKTR), Inrange Technologies
(NASDAQ:INRG) - both positive and offering a second chance to


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

ATVI   32.30  APR 30.00   AQV DF  4.00 452   28.30   42    4.4%
GMST   22.59  APR 20.00   QLF DD  4.10 1651  18.49   42    5.9%
ICST   23.78  APR 22.50   IUY DX  3.00 1140  20.78   42    6.0%
MANU   19.42  APR 17.50   ZUQ DM  3.40 887   16.02   42    6.7%
PVN     5.71  APR  5.00   PVN DA  1.05 4310   4.66   42    5.3%
SIPX   11.15  APR 10.00   UQX DB  1.90 3      9.25   42    5.9%
SYXI   11.26  APR 10.00   USX DB  1.85 105    9.41   42    4.5%

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

MANU   19.42  APR 17.50   ZUQ DM  3.40 887   16.02   42    6.7%
ICST   23.78  APR 22.50   IUY DX  3.00 1140  20.78   42    6.0%
GMST   22.59  APR 20.00   QLF DD  4.10 1651  18.49   42    5.9%
SIPX   11.15  APR 10.00   UQX DB  1.90 3      9.25   42    5.9%
PVN     5.71  APR  5.00   PVN DA  1.05 4310   4.66   42    5.3%
SYXI   11.26  APR 10.00   USX DB  1.85 105    9.41   42    4.5%
ATVI   32.30  APR 30.00   AQV DF  4.00 452   28.30   42    4.4%

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).

ATVI - Activision  $32.30  *** Blue Sky Territory! ***

Activision (NASDAQ:ATVI) is an international publisher, developer
and distributor of interactive entertainment and leisure products.
The company's products span a wide range of genres and target 
markets.  In addition to its genre and market diversity, ATVI
publishes, develops and distributes products for a variety of 
game platforms and operating systems, including PCs, the Sony 
PlayStation and PlayStation 2, the Nintendo N64 console systems,
and the Nintendo Game Boy hand-held devices.  The company is also 
currently focusing on the development of products for Microsoft
Xbox and Nintendo GameCube console systems and Nintendo Game Boy 
Advance hand-held device.  In January, Activision reported net 
earnings of $39.1 million, nearly double the year-earlier period,
and raised guidance for the rest of fiscal 2002 and all of fiscal
2003.  Analysts agree with the company's positive future and we
simply favor the bullish break-out to a new all-time high.  The
stock jumped after the recent earnings report and after a lateral
consolidation (and a test of support), has resumed its up-trend.
A reasonable entry point for those who agree with the bullish
outlook for the issue.

APR 30.00 AQV DF LB=4.00 OI=452 CB=28.30 DE=42 TY=4.4%

GMST - Gemstar  $22.59  *** On The Mend? ***

Gemstar-TV Guide (NASDAQ:GMST) is a global media and technology
company focused on developing, licensing and providing products
and services that simplify and enhance consumer entertainment. 
The company was formed on July 12, 2000 through the merger of 
Gemstar International, a technology company focused on consumer 
entertainment, and TV Guide, a provider of television information
and guidance in the United States.  Many of the company's products
have a special emphasis on television-oriented technologies and 
services, in particular, program guidance products including those
marketed under the TV Guide name.  Gemstar rallied in February 
after an administrative judge decided to drop closing arguments in
a key patent battle over the company's interactive TV guides (a 
decision is expected by March 21).  The stock was further boosted
by a report from Goldman Sachs, which said the stock was oversold.
Even in a worst-case scenario, Goldman doesn’t believe a setback
in the case would undermine Gemstar's overall patent position, 
nor would it likely materially affect its existing licensing
agreements.  Traders can speculate on the near-term performance 
of the issue with this conservative position.

APR 20.00 QLF DD LB=4.10 OI=1651 CB=18.49 DE=42 TY=5.9%

ICST - Integrated Circuit Systems  $23.78  *** Trading Range ***

Integrated Circuit Sys. (NASDAQ:ICST) is engaged in the business
of designing and marketing custom application specific integrated
circuits (ASICs) for various industrial customers.  The company's 
business is divided into two categories: Core and Non-Core Segments.
The Core segment supplies a broad line of timing products for use 
in PC motherboard and peripheral applications.  The Non-Core segment
sells mixed-signal (analog/digital) integrated circuits customized 
to the specific requirements of a broad range of customers and 
applications.  In mid February, ICST reiterated its revenue and
earnings guidance as the company said it is on track to meet stated
targets of 28% to 33% revenue growth.  We simply favor the long-term
trading range (2-year chart) with buying support near our cost basis.  

APR 22.50 IUY DX LB=3.00 OI=1140 CB=20.78 DE=42 TY=6.0%

MANU - Manugistics  $19.42  *** Losing Less Is More ***

Manugistics Group (NASDAQ:MANU) is a global provider of Enterprise
Profit Optimization solutions, which is a category of solutions for
enterprise management.  Manugistics is also a provider of solutions
for supply chain management, pricing and revenue optimization and
electronic marketplaces.  The company's solutions help companies 
lower operating costs, increase revenues, enhance profitability and 
accelerate revenue and earnings growth.  MANU's products are grouped
in four categories: Manugistics NetWORKS intelligent engines, Manu-
gistics NetWORKS collaborative applications, Manugistics WebConnect
integration platform and Manugistics NetWORKS Marketplace platform.
On Monday, March 4, Manugistics trimmed its forecasted loss for the
fiscal 4th-quarter for the second time, which spiked its shares
by $3. The company's CEO said they are continuing to see improved
business spending and positive market momentum.  We simply favor 
the bullish technical indications and our conservative position 
offers a method to participate in the future movement of the issue
with relatively low risk.   

APR 17.50 ZUQ DM LB=3.40 OI=887 CB=16.02 DE=42 TY=6.7%

PVN - Providian  $5.71  *** Bottom Fishing! ***

Providian Financial (NYSE:PVN) provides credit card loans, card-
holder service and deposit products.  PVN operates through the 
following businesses: Integrated Card, Global E-Commerce, Inter-
national and First Select.  The Integrated Card business offers 
credit card loans generated primarily through Visa and MasterCard
credit cards.  The Global E-Commerce business consists of online
sites which offer credit applications, banking, and a marketplace.
The International business offers credit cards, cardholder service
products and retail deposits in the United Kingdom and Argentine.
The First Select business purchases and services distressed credit
card assets from other issuers.  In early February, Merrill Lynch 
raised its rating on Providian to a "buy" from "neutral," based on
the surprisingly good shape of the company's balance sheet.  The 
company recently sold its U.K. credit card business and its 
Argentine operations as it restructures and reduces debt.  If the
economy really is on the mend, Providian should benefit as its
customers were harder hit than most by the recession.  The stock
has formed a six-month base and this position offers a reasonable
entry point for investors who want to speculate on the company's

APR 5.00 PVN DA LB=1.05 OI=4310 CB=4.66 DE=42 TY=5.3%

SIPX - Sipex  $11.15  *** Bottom-Fishing Part II ***

Sipex (NASDAQ:SIPX) is a semiconductor company that designs, 
manufactures and markets precision, high performance, high 
value-added analog integrated circuits.  Virtually all of Sipex 
products are components.  Sipex offers a broad range of high 
performance, high value-added analog integrated circuits.  The
company's products are broken down generally into the following 
categories: networking products, power management products, 
electroluminescent products, and data converter products.  In 
the 4th-quarter of 2000, Sipex adopted an end-of-life strategy 
for the discontinuance of its line of assembled and ASSP products,
which were supplied principally to commercial customers.  In 
February, Sipex reported a lower 4th-quarter net loss as it cut
costs even though revenues fell some 14%.  The company recently
announced that it is providing an additional $1.2 million in 
reserve for returns from distributors, which will cause the
company to slightly lower last years revenues.  With the bad
news out of the way and the economic news brightening, this
positions offers a favorable way to speculate on the company's
future share value.

APR 10.00 UQX DB LB=1.90 OI=3 CB=9.25 DE=42 TY=5.9%

SYXI - IXYS Corp.  $11.26  *** Bullish Technicals! ***

IXYS Corp. (NASDAQ:SYXI) is engaged in the design, development, 
manufacture and marketing of high power, high performance power
semiconductors.  The company's power semiconductor products have 
historically been divided into two primary categories, power 
metal oxide semiconductor (MOS) transistors and bipolar products.
IXYS sells gallium arsenide products, which has become a primary 
product category.  IXYS also sells ICs that have applications 
associated with power management, and high speed, high density 
SRAM products.  There's little news to explain the recent bullish
activity in SYXI but this week, the issue moved above the current
trading range amid continued buying pressure and excellent volume.
Regardless of the reason, SYXI appears to have broken its down-
trend and those who favor the recent strength in the semiconductor
sector can use this position to speculate conservatively on the
current bullish momentum in the industry.

APR 10.00 USX DB LB=1.85 OI=105 CB=9.41 DE=42 TY=4.5%



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

DCTM   23.29  APR 22.50   QDC DX  2.85 150   20.44   42    7.3%
STEL   18.03  APR 17.50   URU DW  2.10 0     15.93   42    7.1%
HPLA   17.18  APR 15.00   QHP DC  3.50 132   13.68   42    7.0%
NPRO   11.06  APR 10.00   NYQ DB  1.80 578    9.26   42    5.8%
ANAD   13.84  APR 12.50   AUZ DV  2.15 329   11.69   42    5.0%
AHAA   20.30  APR 17.50   GAK DW  3.80 88    16.50   42    4.4%


Market Terms & Concepts: The "Triple Witching" Day Approaches!
By Ray Cummins

One of the most unique terms heard in discussions among option
traders is "triple-witching" but many of our new readers do not
understand the phrase or why there is volatility associated with
the simultaneous expiration of stock, stock index and futures

Triple-witching day occurs every quarter on the third Friday
of March, June, September and December, when investors rush to
unwind their positions in stock, index and futures options, all
of which are expiring on the same day.  The final 60 minutes of
that trading session is also known as the "triple-witching" hour
and it often produces some major price swings as institutional
investors buy and sell both the derivatives and the underlying
securities.  For those who are unaware of the volatile activity
that can occur during these sessions, triple-witching can seem
like a trader's worst nightmare.

Most professional traders use options to enhance their portfolio
returns or decrease the risk of their investments losing value
over time.  There are basically three types of options: equity
options, index options, and Futures options (on commodities and
currencies).  These instruments are available to the public but
the most common index option and futures traders in the market
are institutions (insurance companies, banks, and brokerages)
that need to protect large positions in stocks and mutual funds.
The portfolios for these types of investors generally include
positions in many different instruments.  By diversifying their
stock holdings, they hedge the risk of loss if one issue drops
in value.  The gains on other components in the portfolio are
used to offset such a loss.  The problem with this practice is
the lack of protection for a market-wide or across-the-board
loss, in which the majority of the securities in a portfolio
are affected by a major downturn.  This is where index options
are most useful.  Institutions purchase put option contracts on
the indexes whose composition resembles the mix of stocks in
their portfolio.  The options contract provides the necessary
downside protection without exposing the stock portfolio to
excessive risk and is used as a hedge against the loss of
inventory value.  In addition to the institutional "insurance"
buyers, speculators and other position traders will attempt to
profit by taking outright long or short positions in futures
contracts.  This type of activity helps maintain a mechanism of
risk transfer for investments in farming, industry, and other
financial instruments.

On the triple-witching day, contract market-makers are required
to "square" their positions; the must deliver stock or receive
stock as per the option contract they own or have sold.  This
process is very complex however, it is much simpler than in the
past due to the advent of electronic stock and option exchanges.
Computerized trading systems originated in the early 1980s, when 
personal computers began to offer access to trading information
in real time.  Clearly, this technology has made the market more
efficient; portfolio managers, institutional traders and retail
investors are able utilize the very latest information.  Hedgers, 
arbitrageurs, and speculators can trade with the most up-to-date
prices and forecasts.  The reaction time to market-influencing
news and events has been reduced to mere seconds.  In addition,
computers allow brokers and institutional traders manage their
portfolios effectively.  Using today's technology, fund managers
can compose complex profit strategies that are less affected by
market unknowns.  They can engineer scenarios that limit downside
risk with precise options management and portfolio manipulation.
The design and implementation of these complex schemes is often
called "winding" a position and as with any systematic approach,
the potential success of these trading programs may be enhanced
or weakened by the market cycle and changing economic conditions.
Because options expire on a regular basis, portfolio managers are
required to make periodic adjustments and close or cover specific
positions as conditions dictate.  When an equity or index option
is closed or covered, it is generally described as "unwinding" a
position.  Thus, triple-witching sessions will almost always have
substantially increased volatility and transaction volume because
institutional traders must exit or adjust very large positions in
expectation of options expiration.  For retail traders, the key
is to understand that the market will be influenced briefly in a
variety of ways that can favor short-term strategies, but the
activity has few, if any, lasting results.

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.


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

INVN   40.10  43.19   MAR  35.00  0.85  *$  0.85  15.7%
AMZN   12.52  16.35   MAR  10.00  0.50  *$  0.50  14.5%
HAL    16.49  17.25   MAR  15.00  0.50  *$  0.50  12.9%
HAL    13.95  17.25   MAR  12.50  0.70  *$  0.70  12.6%
ASW    10.81   8.52   MAR   5.00  0.35  *$  0.35  12.1%
OSIS   22.06  25.00   MAR  17.50  0.70  *$  0.70  11.9%
PPD    26.30  26.45   MAR  20.00  0.45  *$  0.45  11.4%
PLMD   20.76  22.83   MAR  17.50  0.40  *$  0.40  10.7%
DDS    18.70  22.80   MAR  15.00  0.30  *$  0.30  10.7%
MU     36.29  38.16   MAR  32.50  0.55  *$  0.55  10.6%
FFIV   23.15  22.75   MAR  17.50  0.45  *$  0.45  10.0%
SLAB   30.90  35.89   MAR  25.00  0.30  *$  0.30   9.6%
PPD    26.11  26.45   MAR  17.50  0.45  *$  0.45   8.9%
OCLR   27.25  27.00   MAR  25.00  0.55  *$  0.55   8.7%
ACN    27.45  29.89   MAR  22.50  0.50  *$  0.50   8.6%
MANH   29.80  36.77   MAR  22.50  0.65  *$  0.65   8.5%
PSUN   25.21  25.31   MAR  22.50  0.30  *$  0.30   8.5%
MDR    14.14  14.69   MAR  12.50  0.25  *$  0.25   8.5%
TER    32.70  39.20   MAR  27.50  0.60  *$  0.60   8.0%
TXN    30.29  35.71   MAR  27.50  0.85  *$  0.85   7.3%
FTI    17.64  20.30   MAR  15.00  0.30  *$  0.30   7.2%
OII    23.79  26.34   MAR  22.50  0.55  *$  0.55   7.1%
DDS    17.40  22.80   MAR  15.00  0.30  *$  0.30   7.0%
MU     34.90  38.16   MAR  27.50  0.60  *$  0.60   6.9%
PLMD   20.75  22.83   MAR  15.00  0.25  *$  0.25   6.4%
LUX    18.13  18.81   MAR  17.50  0.30  *$  0.30   6.3%
SANG   19.75  22.37   MAR  17.50  0.25  *$  0.25   6.1%
FST    26.24  27.03   MAR  25.00  0.25  *$  0.25   5.7%
AMAT   47.98  53.53   MAR  40.00  0.30  *$  0.30   5.7%
AMAT   47.20  53.53   MAR  40.00  0.60  *$  0.60   5.5%
TER    37.55  39.20   MAR  32.50  0.25  *$  0.25   5.3%

DCN    19.10  20.79   APR  15.00  0.55  *$  0.55   7.8%

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


The broad-market rally continues to provide a bit of call-buying
regret as most of our positions have rallied strongly.  Monitor
closely any positions that are acting weaker than expected as
we close in on expiration.  The lone issue on our watch list
is A.C.L.N. Limited (NYSE:ASW), which dropped on Friday after
three board members resigned.  Did anyone take the safe route?
(by closing the position for a break-even exit at $0.25)

Positions Closed:

PMC Sierra (NASDAQ:PMCS) - positive (Murphy's Law again!)


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

ACN    29.89  APR 25.00   ACN PE  0.85 2347  24.15   42    7.8%
IDTI   35.99  APR 27.50   ITQ PY  0.65 121   26.85   42    6.0%
LRCX   28.88  APR 25.00   LMQ PE  0.65 658   24.35   42    5.7%
MLNM   23.66  APR 17.50   QMN PW  0.40 204   17.10   42    5.6%
MRVL   41.38  APR 30.00   UVM PF  0.70 106   29.30   42    5.6%
MU     38.16  APR 30.00    MU PF  0.75 6974  29.25   42    6.5%
PLMD   22.83  APR 17.50    PM PW  0.50 46    17.00   42    7.1%
TER    39.20  APR 32.50   TER PZ  0.95 692   31.55   42    6.9%

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

ACN    29.89  APR 25.00   ACN PE  0.85 2347  24.15   42    7.8%
PLMD   22.83  APR 17.50    PM PW  0.50 46    17.00   42    7.1%
TER    39.20  APR 32.50   TER PZ  0.95 692   31.55   42    6.9%
MU     38.16  APR 30.00    MU PF  0.75 6974  29.25   42    6.5%
IDTI   35.99  APR 27.50   ITQ PY  0.65 121   26.85   42    6.0%
LRCX   28.88  APR 25.00   LMQ PE  0.65 658   24.35   42    5.7%
MLNM   23.66  APR 17.50   QMN PW  0.40 204   17.10   42    5.6%
MRVL   41.38  APR 30.00   UVM PF  0.70 106   29.30   42    5.6%

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).

ACN - Accenture  $29.89  *** Technology Solutions! ***

Accenture (NYSE:ACN) is a management and technology consulting
organization with more than 75,000 employees based in more than
110 offices in 47 countries delivering a wide range of consulting,
technology and outsourcing services.  The company provides a range
of management and technology consulting services and solutions to
the communications, high technology, and media and entertainment
industries.  The company offers services that help its clients
stay ahead of major technology and industry trends, including the
proliferation of new wireless devices, next-generation networks,
digital content services, Web-enabled platforms and the industry
restructuring brought about by the convergence of these growing
technologies.  Accenture works with clients of all sizes and has
extensive relationships with the world's leading companies and
governments.  To be successful, you must stay ahead of the trends
in technology and ACN provides the information and guidance to
help companies do that in today's complex industrial environment.
Friday's rally to a new "all-time" high suggests further upside
potential and investors who want to establish a conservative cost
basis in this unique company should consider this position.

APR 25.00 ACN PE LB=0.85 OI=2347 CB=24.15 DE=42 TY=7.8%

IDTI - Integrated Device Technology  $35.99  *** On The Move! ***

Integrated Device Technology (NASDAQ:IDTI) designs, develops,
manufactures and markets a broad range of high-performance
semiconductor products.  Applications for the company's products
include: data networking and telecommunications equipment, such
as routers, hubs, switches, cellular base stations and other
devices; storage area networks; other networked peripherals and
servers; and personal computers.  IDT fabricates substantially
all of its semiconductor wafers using advanced (CMOS) process
technology in the company's own fabrication facilities.  The
company assembles or packages the majority of its products in
facilities that it owns in Malaysia and the Philippines, where
it also conducts product test operations.  Shares of Integrated
Device Technology have been "on the move" since the company said
"it now believes the third quarter represented a low point in
revenue."  The communications technology company said it expects
fourth quarter revenue to be "flat to slightly up" and analysts
at CIBC World Markets agree with the outlook, having recently
issued an upgrade on the issue.  This position offers favorable
risk-reward for traders who believe the chip segment will lead
the recovery in the technology group.

APR 27.50 ITQ PY LB=0.65 OI=121 CB=26.85 DE=42 TY=6.0%

LRCX - Lam Research  $28.88  *** Chip-Equipment Specialist! ***

Lam Research Corporation (NASDAQ:LRCX) designs, manufactures,
markets and services semiconductor processing equipment used in
the fabrication of integrated circuits.  The company's products
are currently used in the front-end of the wafer processing
manufacturing cycle: etch, CMP, and post-CMP clean.  Lam's unique
family of etch systems incorporates plasma technologies designed
to meet both current and future needs.  The company offers both
200-milimeter and 300-milimeter Teres CMP integrated polishing
and cleaning systems with Linear Planarization Technology (LPT),
which uses a high-speed belt instead of the rotating table used
in conventional polishers.  The company also provides the Synergy
Integra, which incorporates advanced cleaning technology with a
platform that integrates polisher and cleaner.  LRCX was one of
the best performers in the chip segment Friday and the current
upside momentum should bring about a test of its 52-week highs
near $32.  Traders who think the rally will easily carry it past
the previous resistance can speculate on that outcome with this

APR 25.00 LMQ PE LB=0.65 OI=658 CB=24.35 DE=42 TY=5.7%

MLNM - Millineum Pharma  $23.66  *** Bottom-Fishing Only! ***

Millennium Pharmaceuticals (NASDAQ:MLNM) incorporates large-scale
genetics, genomics, high-throughput screening and informatics in
an integrated science and technology platform.  Millennium applies
this technology platform primarily in discovering and developing
proprietary therapeutic and diagnostic human healthcare products
and services. Since inception, substantially all of the company's
revenues have been derived from its strategic alliances.  Their
business is built around three primary areas of focus: technology,
therapeutics and predictive medicine.  Millennium is one of the
ancient giants in the "Genomics" business but the fading craze
for gene-mappers has left many stocks in the group struggling to
stay above single-digit share values.  The selling pressure in a
few of these issues appears to be coming to an end and based on
the buying support near the cost basis of this position, traders
can speculate on the future movement of the stock with relatively
low risk.

APR 17.50 QMN PW LB=0.40 OI=204 CB=17.10 DE=42 TY=5.6%

MRVL - Marvel Technology  $41.38  *** On The Rebound! ***

Marvell Technology Group (NASDAQ:MRVL) designs, develops and
markets integrated circuits using proprietary communications
mixed-signal and digital signal processing technology for
communications-related markets.  The company's products provide
the critical interface between analog signals and the digital
information used in computing and communications systems and
enables its customers to store and transmit digital information
reliably and at high speeds.  The company also develops a range
of high performance communications internetworking and switching
products for the broadband communications market.  Marvel has
recently been inundated with upgrades, based on its "marvelous"
outlook, which includes a new growth cycle.  Investors who are
bullish on the company's future can establish a low risk basis
in the issue with this position.

APR 30.00 UVM PF LB=0.70 OI=106 CB=29.30 DE=42 TY=5.6%

MU - Micron Technology  $38.16  *** Entry Point! ***

Micron Technology (NYSE:MU) and its subsidiaries are principally
engaged in the design, development, manufacturing and marketing
of semiconductor memory products.  The company offers products
that include dynamic random access memory, synchronous dynamic
random access memory, double data rate dynamic access memory,
legacy dynamic random access memory products, static random
access memory products and Flash products.  Dynamic random
access memory (DRAM) is the Company's primary semiconductor
memory product.  DRAMs are high-density, low-cost-per-bit,
random access memory components that store digital information
and provide high-speed storage and retrieval of data and DRAMs
are a widely used semiconductor memory component in computer
systems.  DRAM sales represented approximately 87%, 94% and 95%
of the company's net sales in 2001, 2000 and 1999, respectively.
Micron has been a popular position in our portfolio over the
past few weeks and Friday's rally in the chip sector has ensured
its leadership in the technology group.  The current technical
outlook for Micron is bullish and our position offers a great
entry point on this long-term portfolio issue.

APR 30.00 MU PF LB=0.75 OI=6974 CB=29.25 DE=42 TY=6.5%

PLMD - PolyMedica  $22.83  *** Entry Point! ***

PolyMedica (NASDAQ:PLMD) is a provider of direct-to-consumer
specialty medical products and services, conducting business in
the Chronic Care, Professional Products and Consumer Healthcare
markets.  PolyMedica sells diabetes supplies and related products
through its Chronic Care segment and provides direct-to-consumer
prescription respiratory supplies to Medicare-eligible seniors
suffering from chronic obstructive pulmonary disease (COPD) and
also markets, manufactures and distributes a line of prescription
urological and suppository products with its Professional Products
segment.  PolyMedica's products for urinary health are distributed
mainly to food and drug retailers as well as mass merchandisers
nationwide through its Consumer Healthcare segment.  Shares of
PLMD were hammered late last year after the company announced it
was under investigation by the Securities and Exchange Commission
in connection with accounting matters, financial reports, other
public disclosures and sales of the company's securities.  Now it
appears the company's share value is "on the mend" and investors
who want to speculate on the future of its stock should consider
the conservative cost basis in position.

APR 17.50 PM PW LB=0.50 OI=46 CB=17.00 DE=42 TY=7.1%

TER - Teradyne  $39.20  *** Chip Rally Continues! ***

Teradyne (NYSE:TER) is a maker of automatic test equipment
and related software for the electronics and communications
industries.  Products include systems to test and inspect
semiconductors; circuit boards; high-speed voice and data
communication, and software.  Teradyne is also a manufacturer
of back-planes and associated connectors used in performance
electronic systems.  Semiconductor and chip-equipment stocks
have been among the best performing technology groups during
the recent market sell-off and based on Friday's rally, the
group is going to lead any future recovery in the technology
industry.  TER appears to be one the stronger issues in the
chip-equipment sector and investors who wouldn't mind owning
the issue at a discounted basis can speculate on the future
performance of the company's share value with this position.

APR 32.50 TER PZ LB=0.95 OI=692 CB=31.55 DE=42 TY=6.9%



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

IBIS   12.55  APR 10.00   UIB PB  0.50 200    9.50   42   12.0%
ISIL   36.65  APR 30.00   UFH PF  1.15 3890  28.85   42    9.1%
RMBS    9.41  APR  7.50   BNQ PU  0.25 307    7.25   42    8.5%
BRCM   44.16  APR 35.00   RCQ PG  1.15 2048  33.85   42    8.3%
TTWO   21.09  APR 15.00   TUO PC  0.50 265   14.50   42    7.7%
SNDK   20.65  APR 17.50   SWQ PW  0.60 293   16.90   42    7.6%
CPN    13.25  APR  7.50   CPN PU  0.25 16607  7.25   42    6.2%
SLAB   35.89  APR 25.00   QFJ PE  0.55 619   24.45   42    5.2%
TEK    26.29  APR 25.00   TEK PE  0.70 4     24.30   42    5.1%


Stocks Rally On Optimistic Economic Outlook
By Ray Cummins

                         - MARKET RECAP -
Friday, March 8

The major U.S. equity averages ended the week on a bullish note
today after robust employment data generated new optimism about
the potential for an economic recovery.

The Dow Jones Industrial Average finished up 47 points at 10,572
after posting an eight-month high early in the session.  Strength
was seen in technology related companies such as Hewlett-Packard
(NYSE:HWP) and Microsoft (NASDAQ:MSFT) but financial issues like
American Express (NYSE:AXP) and J.P. Morgan Chase (NYSE:JPM) also
shouldered much of the bullish burden.  The upside activity among
hi-tech shares helped the NASDAQ gain a whopping 48 points to end
at 1,929, its best close since late January.  The broader market
S&P 500 stock index rose 6 points to 1,164 on aggressive buying
in airline, brokerage and retail shares.  Trading volume totaled
1.41 billion on the NYSE and 2.06 billion on the NASDAQ.  Market
breadth was marginally positive on the NYSE, with winners pacing
losers 17 to 15.  Investor optimism was much more pronounced on
the technology exchange where gaining issues drubbed the losers
23 to 13.  Bond prices moved lower, extending the sharp declines
from the previous session as the 10-year note slipped 3/4 point,
or $7.50 for each $1,000 invested, while its yield rose to 5.32%.
The 30-year bond was down 3/4 point to yield 5.71%.  On the fund
flow front, all equity funds got a $3.2 billion infusion during
the week ending March 6 compared with inflows of $8.6 billion in
the prior week, according to Trim Tabs.

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

Cree Inc.  (NSDQ:CREE)  MAR15C/15P  $2.25  debit   straddle
Genesis    (NSDQ:GNSS)  MAR25C/25P  $3.90  debit   straddle
Nrg Energy (NYSE:NRG)   JUN12C/12P  $1.90  debit   straddle
SEI Inv.   (NSDQ:SEIC)  MAR40C/40P  $2.40  debit   straddle
Storagetek (NYSE:STK)   MAR20C/20P  $1.50  debit   straddle
Cigna      (NYSE:CI)    MA100C/85P  $1.50  credit  strangle

The recent market activity has provided some great opportunities
for straddle traders and our portfolio enjoyed a number of new
winners in that category.  Positions in Cree Incorporated, SEI
Investments and Genesis Microchip offered favorable short-term
gains and the neutral "premium-selling" play in Cigna is also
performing much as expected after some initial volatility early
in the week.  In addition, debit straddles in Storagetek and Nrg
Energy were available at (or near) the target entry prices and
both positions have an excellent probability of profit in the
coming sessions.

Portfolio Activity:

The broad recovery in share values has been a pleasant surprise
for the majority of investors and the robust upside activity has
also done wonders for the Spreads-Combos portfolio.  Previously
struggling positions in United Airlines (NYSE:UAL), Providian
(NYSE:PVN) and Sandisk (NASDAQ:SNDK) roared back to life in the
wake of renewed buying pressure while winning plays in Tidewater
(NYSE:TDW), Goodyear (NYSE:GT) and ImClone Systems (NASDAQ:IMCL)
extended their profits.  The straddles group also performed very
well with new winners emerging in Waste Management (NYSE:WMI),
Fomento Economico (NYSE:FMX) and Applera (NYSE:CRA), while plays
in Schering Plough (NYSE:SGP) and Credence Systems (NASDAQ:CMOS)
achieved additional gains.  The list of this month's winners in
the straddle category now includes Agilent Technologies (NYSE:A),
BEA Software (NASDAQ:BEAS), J.P. Morgan Chase (NYSE:JPM), Qlogic 
In the credit spreads group, all of the current positions are at
maximum profit and time-selling plays in Pactiv (NYSE:PTV) and
Dupont (NYSE:DD) are trading in a favorable range.  Overall, it
has been another great month for option traders and despite the
potential for a near-term retreat, the future for equity prices
looks brighter than it has in a long time!

Questions & comments on spreads/combos to Contact Support

Option premiums have increased slightly in recent sessions, but
the current conditions still favor option buying strategies and
we have some great straddle candidates for traders who like to
participate in short-term speculation plays.  These stocks 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.
These plays will not be posted in the monthly portfolio summary.

AXP - American Express  $40.47  *** Financial Sector Activity ***

American Express Company (NYSE:AXP) is engaged in providing a
range of travel-related services, financial advisory services
and international banking services throughout the world.  Their
Travel Related Services' products and services include, among
others, Charge Cards, Cardmember lending products, Travelers
Cheques and corporate and consumer travel services.  American
Express Financial Advisors' services and products include a wide
range of financial planning and advice, investment advisory
services and a variety of products, including insurance and
annuities, investment certificates and mutual funds. American
Express Bank products and services include providing financial
institution, corporate and private banking, personal financial
services and global trading.

PLAY (speculative - neutral/debit straddle):

BUY  CALL  MAR-40  AXP-CH  OI=1993  A=$1.05
BUY  PUT   MAR-40  AXP-OH  OI=813   A=$0.55

Note:  The Delta or "hedge ratio" in the position suggests that
we should buy 1 call for every 2 puts (1:2 ratio) to maintain
a neutral outlook.  However, any downward movement in the issue
on Monday should allow both sides of the position to be bought
at similar prices.

CRUS - Cirrus Logic  $19.64  *** Technology Sector Activity! ***

Cirrus Logic (NASDAQ:CRUS) is a supplier of high-performance
analog and DSP chip solutions for consumer entertainment
electronics that allow people to see, hear, connect and enjoy
digital entertainment.  Building on its leading position in
audio integrated circuits and its rich mixed-signal patent
portfolio, the company targets mainstream audio, video and
Internet entertainment applications in the growing consumer
entertainment market.  Cirrus Logic operates from headquarters
in Austin, Texas, and major sites located in Fremont and El
Dorado Hills, California; Broomfield and Boulder, Colorado;
as well as offices in Europe, Japan and Asia.

PLAY (speculative - neutral/debit straddle):

BUY  CALL  MAR-20  CUQ-CD  OI=1453  A=$0.70
BUY  PUT   MAR-20  CUQ-OD  OI=90    A=$0.95

EOG - EOG Resources  $38.96  *** Oil Industry Volatility! ***

EOG Resources (NYSE:EOG) explores for, develops, produces and
markets natural gas and crude oil primarily in producing basins
in the United States, as well as in Canada and Trinidad and, to
a lesser extent, selected other international areas.  EOG's main
operations are all natural gas and crude oil exploration and
production related.  The company's North American operations are
divided into eight autonomous groups, Midland, Texas, division;
Denver, Colorado, division; Tyler, Texas, division; Pittsburgh, 
Pennsylvania, division; Corpus Christi, Texas, division; Calgary, 
Canada division, Mid-Continent division; Houston, Texas/Offshore
PLAY (speculative - neutral/debit straddle):

BUY  CALL  MAR-40 EOG-CH  OI=287  A=$0.50
BUY  PUT   MAR-40 EOG-OH  OI=220  A=$1.55

Note:  The Delta or "hedge ratio" in the position suggests that
we should buy 2 calls for every put (2:1 ratio) to maintain a
neutral outlook.  Since this issue is at a "key" moment and often
makes large, unexpected moves, traders should enter both sides
of the straddle simultaneously (net-debit order) and ensure a
neutral outlook with the appropriate ratio of call/put options.

IWOV - Interwoven  $7.70  *** Cheap Speculation! ***

Interwoven (NASDAQ:IWOV) provides software products and services
that help businesses and other organizations manage the content
of their Websites.  Interwoven operates in the Internet industry
engaged in Web content management.  The company's main software
product, TeamSite, is designed to help customers build, maintain
and extend large Websites that are essential to their businesses.
Using TeamSite, the company's customers can manage Web content,
control the versions of their Websites, manage site contribution
and content approval processes, and develop unique e-business
applications.  In addition to TeamSite, Interwoven's primary
products are OpenDeploy and Metatagger.

PLAY (very speculative - neutral/debit straddle):

BUY  CALL  MAR-7.50  IUW-CU  OI=794  A=$0.50
BUY  PUT   MAR-7.50  IUW-OU  OI=741  A=$0.40

VRTS - Veritas Software  $44.41  *** Probability Play! ***

Veritas Software Corporation (NASDAQ:VRTS) is a supplier of data
availability software products.  Its products are designed to
enable continuous productivity for various computing environments
ranging from the desktop computer to the large enterprise data
center, including storage area networks.  The company offers a
wide range of data availability software products to manage the
growth of available data and the increasing complexity and size
of networked environments that its customers face.  Its products
allow businesses to improve the management of their data, to
protect their data and to increase the availability of data.
Veritas develops products for operating systems, including all
versions of UNIX, Windows NT and Linux.  Its software solutions
are used by customers across a broad spectrum of industries,
including many global corporations and e-commerce businesses.
The company also provides a full range of services to assist its
customers in planning and implementing their data availability

PLAY (speculative - neutral/debit straddle):

BUY  CALL  MAR-45  VIV-CI  OI=4879  A=$1.35
BUY  PUT   MAR-45  VIV-OI  OI=2082  A=$1.95

WMS - WMS Industries  $17.71  *** Break-Out Underway? ***

WMS Industries (NYSE:WMS) is a designer, manufacturer and seller
of video and mechanical reel spinning gaming machines and VLTs
(video lottery terminals).  The company seeks to develop gaming
machines that offer high entertainment value and generate greater
revenues for casinos and other gaming machine operators than
traditional slot machines.  The company's unique gaming machines
incorporate secondary bonus rounds, advanced graphics, digital
sound and engaging game themes, some of which include popular
songs and recognized trademarks.  The company's gaming machines
are installed in all of the major gaming jurisdictions in the
United States, and in numerous foreign jurisdictions.

PLAY (very speculative - neutral/debit straddle):

BUY  CALL  MAR-17.50  WMS-CW  OI=99  A=$0.55
BUY  PUT   MAR-17.50  WMS-OW  OI=69  A=$0.35

                     - INDEX OPTION SPREADS -

As a trader, you may be familiar with options on individual stocks
where you have the right to buy (call option) or the right to sell
(put option) a particular stock at some predetermined price within
some predetermined time.  The buyer has the rights and the seller
the obligations.  With index options the basic ideas are the same.
Index options allow you to make investment decisions on a specific
industry group or on the market as a whole.  Spread strategies can
be made with index options similar to those made with individual
stock options and professional traders also employ index spreads
in neutral and directional strategies, both for portfolio hedging
and speculation.

MNX - CBOE Mini NDX Index  $155.51  *** Speculation Only! ***

The CBOE Mini-NDX Index (CBOE:MNX) is based on 1/10th the value of
the Nasdaq-100 Index (NDX).  The Nasdaq-100 Index is a modified,
capitalization-weighted index composed of 100 of the largest non 
financial securities listed on the NASDAQ Stock Market.  The index
was created in 1985 with a base value set to 250 on February 1 of
that year. After reaching a level of nearly 800 on December 31,
1993, the index level was halved on January 3, 1994.  For more
information on the MNX, visit the CBOE online at www.cboe.com.

The MNX is a very popular index among professional traders and
the premiums and liquidity are perfect for traders who want to
speculate on the movement of technology stocks.  In this case,
the index meets our criteria for a favorable straddle; cheap
option premiums, a history of adequate price movement and the
potential for volatility in the stock or its industry.  This
selection process provides the foremost combination of low risk
and potentially high reward but, as with any position, it must
be evaluated for portfolio suitability and reviewed with regard
to your strategic approach and trading style.

PLAY (speculative - neutral/debit straddle):

BUY  CALL  MAR-155  MQX-CK  OI=23345  A=$3.40
BUY  PUT   MAR-155  MQX-OK  OI=21583  A=$2.90

                        - SPREADS/COMBOS -
ADVS - Advent Software  $62.17  *** Hot Stock! ***

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

There's not much news on ADVS to explain Friday's continued rally
but the technical indications suggest the issue has successfully
completed a recent consolidation and is poised for future gains.
In addition, the fundamental outlook for the company is excellent
and the Application Software group is performing very well; both
factors that lead us to a bullish position in the issue.  Traders
should target a higher premium in the spread initially, to allow
for a pullback in the issue and increase the return on investment
in the position.

PLAY (conservative - bullish/credit spread):

BUY  PUT  APR-50  UIV-PJ  OI=57  A=$0.65
SELL PUT  APR-55  UIV-PK  OI=67  B=$1.15

MRX - Medicis Pharmaceutical  $53.98  *** Sinking Ship? ***

Medicis Pharmaceutical (NYSE:MRX) is a specialty pharmaceutical
company that focuses primarily on the treatment of dermatological
conditions.  Medicis offers prescription products and a range of
over-the-counter (OTC) products.  Medicis develops and markets
products for major segments within dermatology, including acne
and fungal infections, rosacea, hyperpigmentation, photoaging,
psoriasis, eczema, skin and skin-structure infections, seborrheic
dermatitis, head lice and cosmesis (a technique for improvement
in the texture and appearance of skin).  The company's primary
products include prescription brands DYNACIN (minocycline HCl),
LOPROX (ciclopirox), LUSTRA, LUSTRA-AF & ALUSTRA (hydroquinone),
PLEXION and PLEXION TS (sodium sulfacetamide/sulfur), TRIAZ
(benzoyl peroxide), OVIDE (malathion) and a prescription product
indicated in the treatment of Urea Cycle Disorder.  The company's
primary over-the-counter brand is ESOTERICA.

This position was discovered with one of our primary scan/sort
techniques; identifying potentially bearish patterns on issues
with bullish options activity.  In this case, there is little
news on Medicis to explain the recent slump in its share value
but the technical indications suggest the issue is mired in a
steady downtrend and could experience further selling pressure
if it breaks support near the current price.  In addition, the
premiums for the (OTM) 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 a bearish credit spread.

PLAY (conservative - bearish/credit spread):

BUY  CALL  APR-65  MRX-DM  OI=170  A=$0.25
SELL CALL  APR-60  MRX-DL  OI=145  B=$0.75


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Tech takes the spotlight on the watch list this weekend. Two more 
breakout possibles going into next week.

To Read The Rest of The OptionInvestor.com Market Watch Click Here


More movement in technology shares results in breakouts above 
resistance. Plus, gold reverses its recent trend with a breakdown.

To Read The Rest of The OptionInvestor.com Market Posture Click Here


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