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Daily Newsletter, Sunday, 04/14/2002

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The Option Investor Newsletter                   Sunday 04-14-2002
Copyright 2001, All rights reserved.                        1 of 5
Redistribution in any form strictly prohibited.


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Posted online for subscribers at http://www.OptionInvestor.com
******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        WE 4-12           WE 4-5          WE 3-29          WE 3-22
DOW    10190.82 - 80.82 10271.64 -132.30 10403.94 - 23.73  -179.56
Nasdaq  1756.19 - 13.84  1770.03 - 75.32  1845.35 -  6.04  - 16.91
S&P-100  553.74 - 10.28   564.02 - 13.85   577.87 -  2.22  - 11.04 
S&P-500 1111.01 - 11.72  1122.73 - 24.66  1147.39 -  1.31  - 17.46 
W5000  10505.97 - 45.46 10551.43 -224.31 10775.74 -  1.12  -127.83 
RUT      515.46 + 17.70   497.76 -  8.70   506.46 +  4.07  +  3.27 
TRAN    2875.03 + 96.62  2778.41 -139.55  2917.96 + 40.69  - 74.27 
VIX       22.09 +   .96    21.13 +  1.81    19.32 -  0.30  -  1.15 
VXN       42.81 +  1.96    40.85 +  4.57    36.28 -  1.28  -  2.70 
TRIN       1.03             1.67             0.84             1.12
TICK       +460             +341             +793             +647
Put/Call    .99              .78              .79              .66
******************************************************************

 
A Positive Finish to a Negative Week!  
by Jim Brown

The rocky week ended with a whimper and only light short covering 
provided a bounce into the green at the close. Big name news events
led by GE and IBM helped lead the Dow to its fourth consecutive 
weekly loss and the fifth weekly loss for the Nasdaq. A back to 
back triple digit gain and triple digit loss on Wed/Thr toyed 
with investors hopes and fears but the end result was the same.
The Dow edged even closer to Dow 10K again and the S&P slowly
settled toward the critical 1100 level. How are these earnings
runs supposed to work again? I forget.

 

 

 

The GE disaster on Thursday helped erase the +172 point Dow gain
from Wednesday with a -205 point loss. You have heard this before
so I will be brief but GE only took six questions on its extremely
short conference call. Analysts with lists of pointed questions
were left with a dial tone and a bad feeling about the "new GE".
Downgrades flourished and GE was still dropping at the close on
Friday. 

IBM led off the week with its earnings warning and lost nearly
-$10. After a slow recovery through Wednesday it was hit again
with news that the SEC had instituted an inquiry. IBM had a
no comment response and the stock got hit for another -$5 drop.
Surprise, the SEC announces "after the close" that the inquiry
was already closed and IBM traded up +$3 in after hours. Inquiring
minds want to know why IBM did not make the announcement since
they already knew the outcome when they made the "no comment" 
statement. Also, why did the SEC wait until after the close to
make the announcement? Those same inquiring minds are coming up
with a conspiracy theory that assumes "other" problems in the
pipeline. IBM opened up near $88 on Friday but sold off all day
to close with only a +1.41 gain. Obviously traders are not 
convinced the company has told the whole truth and nothing but
the truth.

On a side note, the CBOE is investigating unusual put option
volume on IBM the week before its warning. According to the CBOE
put volume increased +59% above normal. Of course we already
know why the volume was up since we picked it as a high odds
put candidate the week before. I had several readers email about
some serious profits gained with one person planning on buying
a Porsche. Keep up the good work guys!

With big caps under pressure investors turned to small caps for
relief. The Russell-2000 posted nearly a +18 point gain for the
week and broke out of a trading range in place since early March.
Regional banks and property investment companies were the strongest
sub-sectors in the Russell. 

The most beaten up sector for the last two weeks was the software
sector with nearly 25 earnings warnings complete with lowered
guidance. Mercury Interactive (MERQ) broke away from the pack
when they announced earnings on Thursday which beat the street
and then affirmed full year 2002 earnings. They said sales exceeded
all targets and they were continuing to cut expenses. MERQ rose
+25% or +7.30 to $36.70 on strong short covering. This powered 
the software index (GSO.x) to nearly a +5% gain for the day. Even
Microsoft gained +1.14 after a bad week. 
   
Economic reports on Friday included the PPI, which was heavily 
influenced by sharply rising energy prices, gained +1%. The core
rate rose slightly but was consistent with the recovery underway.
Those numbers should decrease for April after crude prices fell
to under $24 on Friday. Venezuela said it was going to quit 
selling oil to Cuba and place the concerns of the country ahead
of concerns of OPEC. This was seen as a prelude to raising output
to fund the country. Oil had peaked over $28 last week and the
drop back below $24 should ease the pricing pressure on companies
that are dependent on energy prices. The Dow transports soared
with a nearly a +100 point gain for the week. 

Consumer confidence fell slightly in the first April reading from
95.7 to 94.4 and could probably be tracked fairly closely to the
higher gasoline prices and falling stock market. These two areas
are the first to impact the consumer psyche. Holding up the index
was low mortgage rates which are stabilizing on the hoped the Fed 
will not rush to hike rates and stop the recovery in its tracks.
Consumers are slowly being convinced that the recovery will not
vertical but could be a rocky path over the next year. 

Bubble mania returned on Friday when the two year old JetBlue
airline with 24 planes rocketed into being as the fifth largest
U.S. airline. The IPO which gained +57% meant JetBlue now has
a market capitalization of $1.6 billion surpassing both UAL
and US Airways and nearly hitting the $1.8 billion value of
Continental Airlines. Not bad for an airline that has 108 flights
a day. They are going to use the money to buy 59 new Airbus A320s
and triple the size of their fleet by 2007. I applaud their 
success but does this seem overdone to anyone else? They are
already warning that their expenses are rising and they may not
be able to open any new cities this year. 

Next week the earnings parade in all its glory. The flood of 
companies reporting begins on Monday with BAC, C, CAL, HAND,
MER, NVLS, PFE, TXN to name a few. Check for the link on our
website for the full list by day. Everyone expects the earnings
to be a disaster but the key factor is still the guidance for
the next couple quarters. If that guidance falls flat like the
GE forecast then next week could get very bumpy. Investors want
to discount any bad news and they will be struggling to find
the silver lining in any cloud. It is all in the call and many
company officers will be having Maalox moments as they face the
analysts questions.

Despite the market drop this week the market internals have been
surprisingly strong. The new highs have been substantially beating
the new lows by a 4:1 or better margin with a couple days of better
than 5:1 this week. On Friday, a wimpy day to say the least, the
advance/decline ratios on both the Nasdaq and NYSE were positive
by 2:1. Obviously the big caps are not getting investor attention 
and funds pouring the same amount of money into $10-$30 stocks
that they would be putting into $50-$100 stocks means a lot more
shares being bought and that produces the upward pressure we have
been seeing.

The problem as I see it becomes the age old battle between the
bulls and bears. The lines are drawn, the major averages sitting
right at support, and the battle next week will decide direction.
Because the big caps have been warning it appears that things
are worse than expected. Still there have been far fewer warnings
this quarter than were expected. They have just been very high
profile. It is all going to boil down to the guidance we get next
week when several hundred companies across all sectors get their
15 min of fame. I could draw a word picture of the coming crash
or the coming rally and be equally convincing on both. The markets
are oversold after multiple weeks of drops. Still they are resting
right on support. It may take really bad news to push them down
any farther. Still, April 15th is Monday and we all know what
happens then. The taxman requires payment and stocks will be sold
to come up with the cash. How serious a problem this will be we
do not know. 

Also, remember the period between April-15th and May-15th typically
produces the spring crash. Just before that drop is when things
typically appear the rosiest. I could easier pick the winning
lotto numbers for the $200 million drawing this weekend than pick
the market direction next week with any certainty. I am leaning
down but indicators are turning bullish. The put/call ratio on
Friday closed at .99 which typically indicates a rebound soon but
the oscillators on the S&P are indicating more possible weakness.

How do we trade this scenario? Simple! We typically get all tied
up trying to pick market direction and then place our bets. Instead
I strongly suggest letting the markets tell us which way they are
going. On Tuesday I changed my entry points for going long to 
10350/1800/1130. The Dow moved to trade over 10350 briefly during
the Wednesday phantom rally but quickly failed at that level. The
S&P managed to break 1130 by one point also on Wednesday before 
heading to new lows. The Nasdaq never came close to 1800. I picked
these levels because that is where the near term resistance is 
greatest. A breakout over those levels will require conviction,
not speculation. 

I know those levels appear to be a long way above our current 
position and many people feel they will be giving up too many 
points to wait for a breakout. My feeling is I do not want to 
be long the market unless it has legs. Breaking those levels is 
proof that it has legs. If it is going to hit Nasdaq 2200 this 
month as some predict it will have to break 1800 first. I heard 
a six week target on the S&P of 1250 on Friday. If that analyst 
was right then we would benefit from a +120 point gain even if 
we wait for a move over 1130. So, my upside entry points allow
me to watch patiently for conviction and take action only when
the time is right. If you are not short this market then I would
wait for a break below 10100/1725/1100 to go short. Avoid the 
noise and let the market trade in its range and we will profit 
on a breakout to either side.

Enter Very Passively, Exit Aggressively!

Jim Brown
Editor


********************
INDEX TRADER SUMMARY
********************

INDEX TRADER WRAP; Week ending 4/12/02

Roller Coaster rides
by Leigh Stevens

I myself was not ever up for much more than "baby roller
coasters" -- you know, the ones that you could take kids on.
The big ones that terrify, I found too much for my system and 
they scared the heck out of me.  Now, you may wonder why I have 
been trading high-risk futures and options all my life. I like 
the movement and the mental challenge.  However last week, we 
got the kind of ups and downs that gave me that old familiar 
stomach in my throat kind of feeling. 

 
  
  

Just like a roller coaster, at the end we ended up about where we 
started. What's it all mean?  Well, fundamentally, as you all know, 
investors and traders are kind of NERVOUS.  Valuations, as measured 
by P/E's are still high, a result of P/E's being so far above historical 
levels at the early-2000 market peak. The market is still in the process 
of adjusting P/E's by adjusting price (mostly downward!) on individual 
stocks and sectors, relative to latest earnings and growth projections. 

Technically, although many of my overall internal market indicators are 
in oversold areas, some others are not, mostly price momentum measures, 
which I'll show graphically next. Moreover, while some of my sentiment 
indicators indicate a fairly high level of bearishness, typical of a market 
bottom, others do not, especially the current level of VIX, the widely 
followed measure of implied option volatility. 

The oversold market leads to some sharp rallies but the market is not 
oversold enough to lead to SUSTAINED rallies.  Getting to the 
overbought/oversold indicators that are not showing a "fully" oversold, 
we could point to the Weekly MACD and weekly stochastic -- tip of the hat 
to an OI subscriber who suggested that I include a look at these indicators.  

Weekly/Monthly Dow charts, with the MACD Indicator:



  
    
Focusing on the weekly upper chart, the MACD (a technical indicator of 
market momentum that also provides an measure of whether a market is 
"overbought" or "oversold") is not registering the same level of oversold 
as was the case at the late-Feb/early March bottom. 

Note however, on the lower chart, that on a MONTHLY basis the market is 
quite oversold. However, the weekly MACD will typically ALSO register at 
a low extreme, prior to SUSTAINED rallies. Note also, the inability of 
the Dow (INDU) to advance above the top end of the broad downtrend price 
channel that it is in.  

S&P 100 (OEX) and NAS 100 (NDX) Index charts with the Stochastics Indicator: 



 

The Slow Stochastic momentum indicator, another type of technical study 
supplying a measure of overbought/oversold, is registering an oversold 
reading on the S&P 100 -- it has for some weeks now, but it not yet fully 
down to the low extreme on the Nasdaq 100 (NDX), that typically precedes 
an upside reversal and sustained advance. 

Note: The numbers in parenthesis after the stochastic are standard 
"settings" - except the first number, 13 - this number is the one the User 
puts in to measure how many weeks it uses in the formula -- 13 weeks 
measures 1/4 of a year basically.  By the way, you can look up more about 
these kinds of indicators by getting a beginning book on technical analysis -- 
I wrote one myself (Essential Technical Analysis) as a challenge, because 
so many readers of my stock market column at CNBC.com wrote asking me for 
a recommendation for a good entry level book, but I found the ones on the 
market to be less than ideal.   

Contrasted to the S&P 100 (OEX), if we examine the S&P 500 (SPX) chart BELOW, 
the same indicator is not yet at the low end of its possible range and, is 
showing DOWNWARD momentum.  It's apparent that some key stocks are quite 
oversold, whereas the broad market is not, at least according to this measure 
of it. What this means  is that you get these wild ups and downs, as some 
stocks are ready to rally sharply (are "oversold"), whereas the broad market 
is not and selling pressure drags everything down again. 

S&P 500 (SPX) with the 13-week stochastic: 


  

We discussed the WHY, but what about the WHAT, as what do we do next to make 
money in the market? 

As far as strategy, my suggestion is unchanged from the other day, which is 
to attempt to trade both sides of the market (calls & puts) using the support 
and resistance levels implied by the upper and lower boundaries of the hourly 
charts.  There is still a greater propensity for the Indexes to fall, than there 
is for them to rally.  The charts of the hourly charts were pictured on Thursday 
night and are repeated below.   

However, after a further shake out ahead, it will probably be possible to catch 
a sustained move to the upside -- by sustained, I am talking about 2-3 weeks, 
so I don't mean 2-3 months either.  Otherwise, trading in the next week or two 
should be done on a short-term basis, UNLESS you are positioned in Puts and wish 
to stay that way until there is a better likelihood for a good-sized advance, 
such as WHEN the indicators do get down to an oversold extreme again. 

Dow (DJX) Daily/Hourly charts: 


 
   
The Dow option playbook would suggest that the 10,300 - 10,350 area, at the high 
end of the hourly downtrend channel, is the place to sell the DJX. (A decisive 
upside penetration of this channel, if it LASTS through the close and the next 
day's opening would be a bullish change in this downtrend channel and a place to 
exit puts and buy calls on dips potentially). 

Support is implied by the dashed green level line that touches the recent 
downswing lows in the 10,150 area and by the low end of the channel (blue) line 
intersecting in the 10,000-10,050 area currently and is suggested for those 
wanting to play a possible rebound from this area. 

The long side is probably the higher risk play, given the slams we can still 
get from earnings disappointment ahead, even though DXJ is down near the lower 
envelope line or band -- at 3% under the 21-day moving average, from which we 
have been getting some meaningful rallies in the past few months.      

S&P 500 (SPX) Daily/Hourly charts: 


 

The S&P 500 playbook would be to buy at the low end of the hourly 
downtrend channel in the 1100 area, and to short & buy puts on a rebound to the 
1120 - 1125 area, at the top of channel.  

A decisive upside penetration of this channel, if it LASTS through the close and 
the next day's opening would be a bullish change in this downtrend channel and a 
place to exit puts and buy calls on dips potentially.

The long side is probably the higher risk play, given the dumps we can still get 
from earnings disappointment ahead, even though SPX is down near the lower envelope 
line or band -- at 3.5% under the 21-day moving average, from which meaningful 
rallies have developed in recent months.      


S&P 100 (OEX) daily/hourly charts: 


  
 

Short positions and put purchases in the 560 area are suggested if OEX rebounds 
to the upper channel line. Call purchases appear warranted in the 545 area early 
in the week, for a trade. The most recent hourly chart pattern looks like a bearish 
flag and suggests there could be another good-sized downswing ahead. In fact this 
pattern suggests a low, mid to late-week could set up that was closer to the 540 
area. 

The long side is assessed as the higher risk play potentially, given the sharp 
dips that we can still get from earnings disappointment ahead, even is down near 
the lower envelope line or band -- at 4% under the 21-day moving average, from 
which meaningful rallies have developed in recent months. Of course, as with the 
other indexes, a breakout above the upper channel line that lasted through the 
close and into the next morning, would suggest a possible upside reversal.            

QQQ Daily/hourly charts: 


 

QQQ playbook - 
Shorting and put purchases in the 35 area, and buying in the 32.50 area would be 
playing the current range within the hourly downtrend channel. There is still the 
possibility that we could be seeing the formation of a double bottom on the daily 
chart. 
 
Long/Call Positions:
Long QQQ at 34.30 
Stop: 32.50.  
Objective: 38.00  

My original objective is based on the prospects for a move back 
up to the longer-term Dec.- Feb.- early-March down trendline on 
the daily charts, which would be a typical recovery type bounce.


Leigh Stevens
Chief Market Strategist 
lstevens@OptionInvestor.com 


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**************
Editor's Plays
**************

The Trend is "STILL" Your Friend, plus Russell-2000 calls.

It is time to close the QQQ puts from two weeks ago but the
DJX puts are still in the running. The QQQ hit our target of
$33.50 and the puts nearly tripled in value over the last
two weeks. 

QQQ Puts


 


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

DJX - Put


 

The Dow is looking weak and could easily break 10100 on any 
negative earnings news next week. I would continue to hold 
the May $102 DJX puts in case of a breakdown.


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

New Plays


Russell-2000 Calls


 

 

The Russell-2000 is near a new 52-week high and fund managers
faced with big cap egg on their faces are putting money into
this sector. The options on the RUT.X are too expensive and
have too little volume to play.

A better choice is the options on the iShares (IWM) which
represent the index. The May $105 calls are only $1.40 and
a 5-10 point move in the index could be very profitable. The
Ishares have just broken out into new territory and could be
ready to run. This is still a high risk play since April-15th
and next weeks earnings could sink the high flyers.


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

Quest Diagnostic


 

A reader sent me this stock for a possible put play. He has been
buying the dips and selling the peaks and felt there was a good
chance for profit taking after earnings on April-18th. I agree!
I initially thought it was the perfect candidate for a pre-earnings
put buy but after researching past earnings dates I changed my mind
and feel it is a perfect candidate for a strangle. 

Almost every earnings period produced an extreme move like the 
+10 jump in October on the chart above. The January earnings
were the most tame I could find and the stock still dropped
nearly $8 in the following three weeks. Earnings in 2001 showed
more of the October gap characteristics and they gapped both ways.

I think the drop on Friday gave us a chance to buy a cheap call
as a hedge against our directional put position. $1.40 is nothing
and a strong move in either direction could be profitable. 

Go back and look at the earnings gaps on this stock over the 
last year and then decide if this is a good risk for you. I 
like it! Extremely aggressive traders could use April options
because on Thursday there will be no time premium at all. Any
major move will be clearly reflected by Friday afternoon. I
like the May options personally since it gives me time to be
wrong and gives the stock time to move on less than market 
moving news.


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

Good Luck

Jim Brown


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

Answer: Exhaustion
By Eric Utley

Last Thursday, I posed the question if the broad sell-off marked
a short-term bottom by way of capitulation, or if it was merely
an exhaustive move lower.  My answer is that Thursday's weakness
was short-term selling exhaustion.

I think we would've have seen a strong rally Friday, in terms of
volume and price, if, in fact, Thursday marked a capitulation.
Volume was weaker day-over-day, and price action was downright
dull.  The Nasdaq-100 (NDX.X), which finished slightly better
than 2 percent higher Friday, wasn't even able to take out
Thursday's high.  Moreover, the S&P 500 (SPX.X) traded within a
10 point range.  Certainly conviction was lacking on the part
of the bulls.

When I looked at Friday's sector scorecard, I saw short covering.
The day's best performing sector was the Software Sector (GSO.X),
which finished 4.91 percent higher.  Others beaten up sectors in
tech and telecom finished substantially higher; the Wireless
Services Index (YLS.X) popped by 3.69 percent.  The price action
in these sectors was a steady grind higher, but not the type of
fear to the upside we've seen during recent short covering
rallies.  It was almost as if the shorts were thinking that it
would be a good idea to book gains ahead of the weekend, but
that there wasn't a need to rush to cover.  There was no fear to
the upside.

What's even more bearish, in my view, is the lack of fear to the
downside.  The CBOE Market Volatility Index (VIX.X) once again
imploded on the rally in stocks.  The VIX.X finished 1.07
percent lower Friday.  I'd like to see some stick in the VIX.X
during a rally.  Without some skepticism, each rally attempt
will fail.  We've seen that pattern repeat again and again since
the VIX first traded below 20 on March 21.

Other money, maybe it's smarter, is indeed fearful.  The gold
stocks and Treasuries rallied during Friday's session despite
the move higher in the broader market.  The Gold and Silver
Index (XAU.X) finished 0.94 percent higher on the day.  The
PPI didn't carry any inflationary fears with it judging by the
way bonds rallied from the opening.  The benchmark 10-Year
Treasury Yield (TNX.X) finished lower to 5.156%, its lowest
yield since March 6.  The TNX.X firmly broke down below the
5.200% level, which signaled a short-term breakout in the
Note.  The buying of bonds in conjunction with gold signals
one thing: risk aversion.  So while others fail to hedge
against potential blow-ups, such as IBM's (NYSE:IBM) last
Monday, via the options market, others are shying away from
risk via the gold and Treasury markets.

When added up, the intermediate-term view is still one of
bearishness.  Short-term rallies are possible given the
oversold nature of the market.  I'll again refer to the
extreme readings of the ARMS Index as proof of the oversold
tape.  But any forthcoming rally, be it a day or two long,
is an opportunity to get short the weakest links of the
market.

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

Market Averages


DJIA ($INDU)

52-week High: 11350
52-week Low :  8062
Current     : 10191

Moving Averages:
(Simple)

 10-dma: 10259
 50-dma: 10209
200-dma:  9954



S&P 500 ($SPX)

52-week High: 1316
52-week Low :  945
Current     : 1111

Moving Averages:
(Simple)

 10-dma: 1125
 50-dma: 1127
200-dma: 1136



Nasdaq-100 ($NDX)

52-week High: 2071
52-week Low : 1089
Current     : 1352

Moving Averages:
(Simple)

 10-dma: 1383
 50-dma: 1446
200-dma: 1516



Software ($GSO)

The GSO returned to the spotlight in Friday's session, earning
the day's best performing sector spot with its 4.91 percent
snapback rally.  The sector was one of the hardest hit going
into Friday's session.  Traders concluded that the day's strength
was primarily short covering.

Leading to the upside included shares of NetIQ (NASDAQ:NTIQ),
BEA Systems (NASDAQ:BEAS), Siebel Systems (NASDAQ:SEBL),
Inktomi (NASDAQ:INKT), Cognos (NASDAQ:COGN), and E.Piphany
(NASDAQ:EPNY).

52-week High: 246
52-week Low : 112
Current     : 145

Moving Averages:
(Simple)

 10-dma: 149
 50-dma: 164
200-dma: 171


Oil Service ($OSX)

The OSX was whacked for 4.09 percent Friday.  Both the commodity
and equities came under pressure after the OPEC-friendly
President (misnomer) of Venezuela was ousted by that country's
military.  The thinking is that new supply will be coming to
market.

Losers in the sector included shares of Transocean (NYSE:RIG),
Haliburton (NYSE:HAL), Tidewater (NYSE:TDW), Weatherford
(NYSE:WFT), and Baker Hughes (NYSE:BHI).

52-week High: 136
52-week Low :  58
Current     :  93

Moving Averages:
(Simple)

 10-dma: 99
 50-dma: 94
200-dma: 85

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

Market Volatility

The VIX opened above its 50-dma last Friday, but immediately
reversed in the early going.  The fear gauge ended the day
below its 50-dma.  The strength in stocks, once again, spread
complacency among traders.  I'd like to see the VIX trade
higher in the face of a rally attempt.  If that were to
happen, over two or three days, then I think a run would have
legs.  But as long as the VIX implodes at the first sight of
strength in stocks, I remain suspect.

To a lesser extent, the same applies to the VXN.  The
primary difference is that it appears that the VXN has
entered into a clear ascending trend; that is, higher highs
and lows were set all last week.  Plus, the VXN traded above
its 50-dma three days last week.  That made sense because
the NDX lead to the downside.  It also goes to show that
maybe tech is short-term oversold.

CBOE Market Volatility Index (VIX) - 22.09 -0.24
Nasdaq-100 Volatility Index  (VXN) - 42.83 -0.84

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

          Put/Call Ratio  Call Volume   Put Volume
Total          0.99        424,241       418,653
Equity Only    0.87        359,324       314,822
OEX            0.85         17,370        14,692
QQQ            0.97          7,827         7,565
 
-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          65      + 0     Bull Confirmed
NASDAQ-100    35      - 1     Bull Correction
DOW           63      + 0     Bear Alert
S&P 500       70      - 1     Bull Confirmed
S&P 100       68      + 0     Bear Alert

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  1.62
10-Day Arms Index  1.61
21-Day Arms Index  1.34
55-Day Arms Index  1.25

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 
points.

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

Market Internals

        Advancers     Decliners
NYSE      2079           1040
NASDAQ    2322           1211

        New Highs      New Lows
NYSE      241             34
NASDAQ    244             48

        Volume (in millions)
NYSE     1,266
NASDAQ   1,360

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

Commitments Of Traders Report: 04/09/02

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

S&P commercials' net bearish position dropped by about 2,500
contracts during the most recent reporting period.  But the
group remained decidedly bearish.  Even more disconcerting
for the bulls was the revelation that the spread between
commercials and small traders remained near a one-year high.
Small traders grew slightly less bullish, but not by a lot.
The group only reduced its net bullish position by about
3,000 contracts.

Commercials   Long      Short      Net     % Of OI 
03/26/02      317,671   410,186   (92,515)  (12.7%)
04/02/02      313,294   406,337   (93,403)  (13.0%)
04/09/02      320,101   411,075   (90,974)  (12.4%)

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
03/26/02      148,111     40,409  107,702     57.1%
04/02/02      149,449     43,139  106,310     55.2%
04/09/02      151,237     47,678  103,559     52.1%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year: 107,702 - 3/26/02
 
NASDAQ-100

Nasdaq commercials grew slightly more bearish last week.  The
group added about 600 contracts to their net bearish position.
Small traders went the other direction by adding to their net
bullish position.  The position gained about 600 contracts.

Commercials   Long      Short      Net     % of OI 
03/26/02       25,275     33,880    (8,605)  (14.5%)
04/02/02       26,211     31,840    (5,629)   (9.7%)
04/09/02       28,985     35,221    (6,236)   (9.7%)

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
03/26/02       12,760     6,264     6,496     34.1% 
04/02/02       10,615     7,769     2,846     15.5%
04/09/02       11,640     8,353     3,287     16.4%

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

DOW JONES INDUSTRIAL

Dow commercials reduced their net bullish position by a small
amount during the most recent reporting period.  They did it
through adding more short than long positions.  Meanwhile,
small traders remained relatively flat.

Commercials   Long      Short      Net     % of OI
03/26/02       17,973    12,539    5,434     17.8% 
04/02/02       18,717    12,549    6,168     19.7%
04/09/02       19,393    13,445    5,948     16.7%

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
03/26/02        5,818     9,308    (3,490)   (23.1%) 
04/02/02        5,192     9,007    (3,815)   (26.9%)
04/09/02        5,459     9,340    (3,881)   (26.2%)

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

Interesting Week Ahead
By Eric Utley

Next week's trading should be exciting.  If nothing else,
April expiration lies ahead.  There's nothing quite like the
leverage of front month contracts during expiration week.
There's sure to be several 1,000% one day pops in premiums
with earnings blow-ups yet to be discovered.  I hope you find
more than a few of those gems.

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 

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

Revisiting The BTK.X At 450

I think that the 450 level is growing increasingly important to
the BTK.  I wrote about it last week in an intraday update, but
feel that it warrants further exploration.

In early February, I pointed out a short-term bottom in the
Biotechnology Index ($BTK.X) at 450.  That level is coming back
into play.  Amazingly, we've had two more observations at the
450 level since early February.  I'm convinced that institutional
traders are using that level to defend biotech shares.

The 450 level first came from an observation I made on a longer
term Point and Figure chart.  I used a 25 point box to get a
bigger view, and ran across a peculiar pattern.  What I found
was that the BTK was four columns deep into a lengthy
consolidation.  The 450 level marked the bullish support line
of that consolidation.

BTK.X - 25 Point Box

 

The 450 level was reinforced by a long-term retracement bracket,
going back to late 1999 to find the lower anchor point.  As the
chart depicts below, the 61.8 percent retracement level sits at
the 450 level.  (The trend lines reinforce the narrowing range
on the PnF chart.)

BTK.X - Weekly

 

The way that the institutions are defending the 450 level is
amazing.  The precision of buying that has taken place at that
level on three separate occasions is truly impressive.  Three
times, the BTK.X has come within a fraction of printing 450.00,
which would break the bullish support line on the PnF chart.

BTK.X - 450 Defense

 

Three times, the smartest trade in the BTK.X has been to buy
the index (or its strong components) as it approaches the 450
level.  I'll continue to condone that approach until the 450
level is broken.  But if that break comes, I think there's a
good trade lower in the group, more than 25 points worth in
the BTK.X.  The index itself is acting differently than how
it traded in early February, when it rocketed off of the 450
level.  I don't know if this difference portends a breakdown,
or if it's merely a shakeout.  In either case, I think the
importance of the 450 level makes for an easy approach to the
BTK.X.  Risk management is so easy on bullish plays near 450:
simply buy the BTK.X (or its strongest components) as close
as you can to the level.  From there, use a mental stop at
450.00.  On a print at 450.00, however, look to get short the
BTK.X (or its weakest components) for a quick trade lower.

BTK Strongest Components

Protein Design Labs  (NASDAQ:PDLI)
Vertex               (NASDAQ:VRTX)
Cephalon             (NASDAQ:CEPH)
IDEC Pharmaceuticals (NASDAQ:IDPH)
Teva Pharmaceuticals (NASDAQ:TEVA)
Gilead Sciences      (NASDAQ:GILD)
Chiron               (NASDAQ:CHIR)
Andrx                (NASDAQ:ADRX)
Amgen                (NASDAQ:AMGN)

BTK Weakest Components

Affymetrix           (NASDAQ:AFFX)
Human Genome         (NASDAQ:HGSI)
MedImmune            (NASDAQ:MEDI)
Incyte Genomics      (NASDAQ:INCY)
Genentech               (NYSE:DNA)
Celera                  (NYSE:CRA)
Abgenix              (NASDAQ:ABGX)
ICOS                 (NASDAQ:ICOS)
Myriad Genetics      (NASDAQ:MYGN)
Celgene              (NASDAQ:CELG)
Enzon                (NASDAQ:ENZN)
Biogen               (NASDAQ:BGEN)
Genzyme              (NASDAQ:GENZ)
ImClone              (NASDAQ:IMCL)

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

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


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

For alignment use Courier New 10.
*********************************

-----------------------------------------------------------------
Major Earnings This Week...
-----------------------------------------------------------------

Symbol  Company               Date           Comment      EPS Est

ACF    AmeriCredit            Mon, Apr 15  After the Bell    0.97
ARMHY  ARM Holdings Plc.      Mon, Apr 15  Before the Bell   0.05
ADP    Automatic Data Prcsing Mon, Apr 15  -----N/A-----     0.55
BAC    Bank of America        Mon, Apr 15  Before the Bell   1.34
BRE    BRE Properties         Mon, Apr 15  After the Bell    0.69
CSL    Carlisle Companies     Mon, Apr 15  After the Bell    0.39
ZNH    China Southern Airline Mon, Apr 15  -----N/A-----      N/A
C      Citigroup              Mon, Apr 15  -----N/A-----     0.78
CBCF   Citizens Banking       Mon, Apr 15  -----N/A-----     0.57
CBSS   Compass Bancshares     Mon, Apr 15  -----N/A-----     0.57
CAL    Continental Airlines   Mon, Apr 15  -----N/A-----    -1.97
DORL   Doral Financial        Mon, Apr 15  After the Bell    0.85
DOV    Dover                  Mon, Apr 15  After the Bell    0.25
ETN    Eaton                  Mon, Apr 15  Before the Bell   0.86
LLY    Eli Lilly              Mon, Apr 15  Before the Bell   0.58
ETH    Ethan Allen Interiors  Mon, Apr 15  -----N/A-----     0.57
FHR    Fairmnt Hotls & Rsrts  Mon, Apr 15  Before the Bell   0.03
FNM    Fannie Mae             Mon, Apr 15  -----N/A-----     1.47
GGG    Graco                  Mon, Apr 15  Before the Bell   0.50
HU     Hudson United Bancorp  Mon, Apr 15  Before the Bell   0.55
GMH    Hughes Electronics     Mon, Apr 15  Before the Bell  -0.13
HGSI   Human Genome Sciences  Mon, Apr 15  Before the Bell  -0.32
MHK    Mohawk Industries      Mon, Apr 15  -----N/A-----     0.67
NCF    Ntl Cmrce Fincial Corp Mon, Apr 15  After the Bell    0.37
NFB    North Fork Bancorp     Mon, Apr 15  Before the Bell   0.58
NTRS   Northern Trust         Mon, Apr 15  Before the Bell   0.57
NVLS   Novellus Systems       Mon, Apr 15  After the Bell   -0.09
PKG    Packaging Corp of Ame  Mon, Apr 15  Before the Bell   0.08
PRK    Park National          Mon, Apr 15  -----N/A-----      N/A
PBG    Pepsi Bottling Group   Mon, Apr 15  Before the Bell   0.18
PTR    PetroChina Co Limited  Mon, Apr 15  -----N/A-----      N/A
RLRN   Renaissance Lrning Inc Mon, Apr 15  After the Bell    0.18
SGR    Shaw Group The         Mon, Apr 15  Before the Bell   0.49
SWBT   Southwest Bancorp TX   Mon, Apr 15  After the Bell    0.40
FON    Sprint (FON Group)     Mon, Apr 15  After the Bell    0.30
PCS    Sprint (PCS Group)     Mon, Apr 15  After the Bell   -0.20
TIN    Temple Inland          Mon, Apr 15  After the Bell    0.36
TXN    Texas Instruments      Mon, Apr 15  After the Bell    0.00
NYT    The NY Times Company   Mon, Apr 15  Before the Bell   0.37
TMS    Thomson Multimedia     Mon, Apr 15  -----N/A-----      N/A
TSS    TSYS                   Mon, Apr 15  -----N/A-----     0.14
UIS    Unisys                 Mon, Apr 15  After the Bell    0.08

ADVS   Advent Software        Tue, Apr 16  After the Bell    0.22
AL     Alcan Inc.             Tue, Apr 16  -----N/A-----     0.31
ASD    American Standard      Tue, Apr 16  Before the Bell   0.76
ASO    AmSouth Bancorporation Tue, Apr 16  Before the Bell   0.40
ONE    Bank One               Tue, Apr 16  Before the Bell   0.66
BCC    Boise Cascade          Tue, Apr 16  Before the Bell  -0.16
BSX    Boston Scientific      Tue, Apr 16  After the Bell    0.20
BCR    C.R. Bard              Tue, Apr 16  After the Bell    0.78
CDN    Cadence Design Systems Tue, Apr 16  After the Bell    0.22
COF    Capital One Financial  Tue, Apr 16  After the Bell    0.81
CAT    Caterpillar            Tue, Apr 16  Before the Bell   0.24
CEC    CEC Entertainment      Tue, Apr 16  After the Bell    0.96
CNT    CenterPoint Prop Trust Tue, Apr 16  After the Bell    0.96
CEN    Ceridian               Tue, Apr 16  Before the Bell   0.15
CYN    City National          Tue, Apr 16  Before the Bell   0.83
CMA    Comerica               Tue, Apr 16  Before the Bell   1.19
CBSH   Commerce Bancshares    Tue, Apr 16  Before the Bell   0.71
DAL    Delta Air Lines        Tue, Apr 16  Before the Bell  -2.87
DFXI   Direct Focus           Tue, Apr 16  After the Bell    0.55
DSL    Downey Financial       Tue, Apr 16  Before the Bell   1.07
EMMS   Emmis Communications   Tue, Apr 16  Before the Bell  -0.56
ESV    ENSCO International    Tue, Apr 16  Before the Bell   0.06
FBAN   F.N.B. Corporation     Tue, Apr 16  After the Bell    0.51
FSS    Federal Signal         Tue, Apr 16  Before the Bell   0.22
FITB   Fifth Third Bancorp    Tue, Apr 16  Before the Bell   0.66
FTN    First Tennessee Ntl    Tue, Apr 16  Before the Bell   0.61
FBF    FleetBoston Financial  Tue, Apr 16  Before the Bell   0.70
GCI    Gannett                Tue, Apr 16  Before the Bell   0.91
GM     General Motors         Tue, Apr 16  Before the Bell   1.13
GNTX   Gentex                 Tue, Apr 16  Before the Bell   0.22
GPC    Genuine Parts          Tue, Apr 16  -----N/A-----     0.50
GSF    GlobalSantaFe Corp.    Tue, Apr 16  After the Bell    0.33
GSB    Golden State Bancorp   Tue, Apr 16  Before the Bell   0.85
GDW    Golden West Financial  Tue, Apr 16  -----N/A-----     1.39
GBBK   Greater Bay Bancorp    Tue, Apr 16  Before the Bell   0.51
HDI    Harley-Davidson        Tue, Apr 16  After the Bell    0.36
HDB    Hdfc Bank Limited      Tue, Apr 16  -----N/A-----      N/A
HNI    Hon Industries         Tue, Apr 16  Before the Bell   0.26
HCBK   Hudson City Bancorp    Tue, Apr 16  -----N/A-----     0.42
ITWO   i2 Technologies        Tue, Apr 16  -----N/A-----    -0.08
IEX    Idex                   Tue, Apr 16  -----N/A-----     0.37
N      Inco                   Tue, Apr 16  After the Bell    0.11
INTC   Intel                  Tue, Apr 16  After the Bell    0.15
ISSX   Internet Security Sys  Tue, Apr 16  After the Bell    0.10
IFIN   Investors Fin Srvs     Tue, Apr 16  Before the Bell   0.46
JKHY   Jack Henry & Assoc     Tue, Apr 16  Before the Bell   0.17
JNC    John Nuveen            Tue, Apr 16  Before the Bell   0.58
JNJ    Johnson & Johnson      Tue, Apr 16  -----N/A-----     0.58
JCI    Johnson Controls       Tue, Apr 16  -----N/A-----     1.16
KFT    Kraft Foods Inc.       Tue, Apr 16  After the Bell    0.44
LLTC   Linear Technology      Tue, Apr 16  After the Bell    0.15
MTB    M&T Bank               Tue, Apr 16  Before the Bell   1.20
MAN    Manpower               Tue, Apr 16  Before the Bell   0.08
MYG    Maytag                 Tue, Apr 16  Before the Bell   0.71
MEL    Mellon Financial Corp  Tue, Apr 16  Before the Bell   0.45
MLNM   Millennium Pharm       Tue, Apr 16  After the Bell   -0.24
MKSI   MKS Instruments        Tue, Apr 16  After the Bell   -0.14
MOT    Motorola               Tue, Apr 16  After the Bell   -0.12
MLI    Mueller Industries     Tue, Apr 16  Before the Bell   0.60
PH     Parker Hannifin        Tue, Apr 16  Before the Bell   0.36
PNR    Pentair                Tue, Apr 16  Before the Bell   0.38
PII    Polaris Industries     Tue, Apr 16  Before the Bell   0.47
PCH    Potlatch               Tue, Apr 16  After the Bell   -0.63
PMTC   PTC                    Tue, Apr 16  Before the Bell  -0.01
PEG    Pblic Service Ent Grp  Tue, Apr 16  During the Market 1.11
RJF    Raymond James          Tue, Apr 16  -----N/A-----     0.44
RNWK   RealNetworks           Tue, Apr 16  After the Bell    0.01
RFMD   RF Micro Devices       Tue, Apr 16  After the Bell    0.01
RHI    Robert Half Inter      Tue, Apr 16  After the Bell    0.05
COL    Rockwell Collins, Inc. Tue, Apr 16  Before the Bell   0.28
RDC    Rowan Companies        Tue, Apr 16  Before the Bell  -0.12
PHG    Royal Philips          Tue, Apr 16  Before the Bell    N/A
STT    State Street           Tue, Apr 16  Before the Bell   0.54
STN    Station Casinos        Tue, Apr 16  Before the Bell   0.17
SNV    Synovus Financial      Tue, Apr 16  -----N/A-----     0.29
TDS    Telephone Data         Tue, Apr 16  Before the Bell   0.64
TER    Teradyne               Tue, Apr 16  After the Bell   -0.41
KO     The Coca-Cola Company  Tue, Apr 16  Before the Bell   0.38
THQI   THQ Inc                Tue, Apr 16  After the Bell    0.06
TKR    Timken                 Tue, Apr 16  During the Market 0.17
USM    U.S. Cellular          Tue, Apr 16  Before the Bell   0.50
USB    US Bancorp             Tue, Apr 16  -----N/A-----     0.44
VRTS   Veritas Software       Tue, Apr 16  After the Bell    0.13
VTSS   Vitesse Semiconductor  Tue, Apr 16  After the Bell   -0.11
WM     Washington Mutual      Tue, Apr 16  After the Bell    0.98
WFC    Wells Fargo            Tue, Apr 16  Before the Bell   0.78
WABC   Westamerica Bancorp    Tue, Apr 16  -----N/A-----     0.63

AEIS   Advanced Enrgy Indstrs Wed, Apr 17  Before the Bell  -0.32
AMD    Advanced Micro Devices Wed, Apr 17  After the Bell   -0.06
ALEX   Alexander&Baldwin      Wed, Apr 17  After the Bell     N/A
ATI    Allegheny Technologies Wed, Apr 17  Before the Bell  -0.13
ADS    Alliance Data Sys Corp Wed, Apr 17  After the Bell    0.13
ALL    Allstate               Wed, Apr 17  Before the Bell   0.58
ABK    Ambac Financial        Wed, Apr 17  Before the Bell   1.08
APH    Amphenol               Wed, Apr 17  -----N/A-----     0.39
AMR    AMR                    Wed, Apr 17  -----N/A-----    -3.52
AAPL   Apple Computer         Wed, Apr 17  After the Bell    0.10
AVX    AVX Corporation        Wed, Apr 17  Before the Bell   0.00
BK     Bank of New York       Wed, Apr 17  Before the Bell   0.51
BSG    BISYS Group            Wed, Apr 17  After the Bell    0.27
BOKF   BOK Financial          Wed, Apr 17  -----N/A-----     0.56
BRCM   Broadcom               Wed, Apr 17  After the Bell   -0.10
BOBJ   Business Objects SA    Wed, Apr 17  After the Bell    0.16
CDWC   CDW Computer Centers   Wed, Apr 17  After the Bell    0.45
CLS    Celestica              Wed, Apr 17  -----N/A-----     0.28
CD     Cendant                Wed, Apr 17  After the Bell    0.31
CERN   Cerner                 Wed, Apr 17  After the Bell    0.25
CNXT   Conexant Systems       Wed, Apr 17  After the Bell   -0.37
COTT   Cott Corp              Wed, Apr 17  After the Bell    0.09
DCN    Dana                   Wed, Apr 17  -----N/A-----     0.15
DPH    Delphi                 Wed, Apr 17  Before the Bell   0.21
XRAY   DENTSPLY International Wed, Apr 17  After the Bell    0.38
DV     DeVry                  Wed, Apr 17  After the Bell    0.25
DUK    Duke Energy            Wed, Apr 17  Before the Bell   0.41
ET     E*TRADE                Wed, Apr 17  After the Bell    0.07
ESRX   Express Scripts A      Wed, Apr 17  After the Bell    0.53
EXTR   Extreme Networks       Wed, Apr 17  After the Bell    0.02
FMBI   First Midwest Bancorp  Wed, Apr 17  Before the Bell   0.45
F      Ford Motor Company     Wed, Apr 17  Before the Bell  -0.15
GD     General Dynamics       Wed, Apr 17  Before the Bell   1.11
GENZ   Genzyme                Wed, Apr 17  -----N/A-----     0.23
HRS    Harris                 Wed, Apr 17  -----N/A-----     0.34
HI     Household Interntl     Wed, Apr 17  Before the Bell   1.04
ITW    Illinois Tool Works    Wed, Apr 17  Before the Bell   0.60
IBM    Inter Business Machine Wed, Apr 17  After the Bell    0.68
ITG    Investment Tech Grp    Wed, Apr 17  Before the Bell   0.45
JPM    J.P. Morgan Chase & Co Wed, Apr 17  Before the Bell   0.53
JEF    Jefferies Group        Wed, Apr 17  Before the Bell   0.57
KEY    KeyCorp                Wed, Apr 17  Before the Bell   0.55
KMI    Kinder Morgan          Wed, Apr 17  -----N/A-----     0.65
KMI    Kinder Morgan          Wed, Apr 17  After the Bell    0.65
LRCX   Lam Research           Wed, Apr 17  After the Bell   -0.17
LEG    Leggett & Platt        Wed, Apr 17  After the Bell    0.25
LECO   Lincoln Electric       Wed, Apr 17  Before the Bell   0.44
LIN    Linens `n Things       Wed, Apr 17  Before the Bell   0.09
MER    Merrill Lynch          Wed, Apr 17  Before the Bell   0.64
MXT    Metris Companies       Wed, Apr 17  Before the Bell   0.54
MGG    MGM MIRAGE             Wed, Apr 17  -----N/A-----     0.34
NAP    National Processing    Wed, Apr 17  Before the Bell   0.22
NYCB   New York Com Bancorp   Wed, Apr 17  Before the Bell   0.46
NXTL   Nextel Communications  Wed, Apr 17  Before the Bell  -0.40
GAS    Nicor                  Wed, Apr 17  After the Bell    0.84
NOC    Northrop Grumman       Wed, Apr 17  Before the Bell   1.08
OO     Oakley                 Wed, Apr 17  Before the Bell   0.05
ODP    Office Depot           Wed, Apr 17  Before the Bell   0.31
PFE    Pfizer                 Wed, Apr 17  -----N/A-----     0.39
PPDI   Pharm Product Develop  Wed, Apr 17  After the Bell    0.27
MO     Philip Morris          Wed, Apr 17  -----N/A-----     1.13
PLCM   Polycom Incorporated   Wed, Apr 17  After the Bell    0.17
PP     Prentiss Properties    Wed, Apr 17  After the Bell    0.85
PGR    Progressive            Wed, Apr 17  After the Bell    2.36
PFGI   Provident Finan Grp    Wed, Apr 17  Before the Bell   0.52
PSD    Puget Sound Energy     Wed, Apr 17  Before the Bell   0.25
RTN    Raytheon Co.           Wed, Apr 17  After the Bell    0.36
RETK   Retek                  Wed, Apr 17  Before the Bell   0.07
RSLN   Roslyn Bancorp         Wed, Apr 17  Before the Bell   0.38
SNDK   SanDisk                Wed, Apr 17  After the Bell   -0.26
SLB    Schlumberger           Wed, Apr 17  After the Bell    0.36
SEIC   SEI Investments        Wed, Apr 17  Before the Bell   0.30
SIB    SI Bank & Trust        Wed, Apr 17  After the Bell    0.38
SEBL   Siebel Systems         Wed, Apr 17  After the Bell    0.12
SKYF   Sky Financial Group    Wed, Apr 17  -----N/A-----     0.38
SON    Sonoco Products        Wed, Apr 17  -----N/A-----     0.36
STJ    St. Jude Medical       Wed, Apr 17  Before the Bell   0.65
SYK    Stryker                Wed, Apr 17  After the Bell    0.40
TCB    TCF Financial          Wed, Apr 17  Before the Bell   0.74
TE     TECO Energy            Wed, Apr 17  -----N/A-----     0.51
TFX    Teleflex               Wed, Apr 17  After the Bell    0.76
TLK    Telekomunikasi Indones Wed, Apr 17  -----N/A-----      N/A
TLAB   Tellabs                Wed, Apr 17  -----N/A-----     0.01
TRW    TRW                    Wed, Apr 17  Before the Bell   0.64
UB     UnionBanCal            Wed, Apr 17  After the Bell    0.67
UTX    United Technologies    Wed, Apr 17  Before the Bell   0.90
VLY    Valley National Banco  Wed, Apr 17  -----N/A-----     0.47
WFSL   Wash Federal           Wed, Apr 17  After the Bell    0.56
WBST   Webster Financial      Wed, Apr 17  Before the Bell   0.80
WHR    Whirlpool              Wed, Apr 17  Before the Bell   1.28

AFCI   Advanced Fibre Comm    Thu, Apr 18  After the Bell    0.05
AZ     ALLIANZ AG             Thu, Apr 18  -----N/A-----      N/A
AMCR   Amcor Limited          Thu, Apr 18  -----N/A-----      N/A
AXP    American Express       Thu, Apr 18  -----N/A-----     0.43
ANDW   Andrew Corporation     Thu, Apr 18  After the Bell    0.05
ATR    AptarGroup             Thu, Apr 18  After the Bell    0.44
ARB    Arbitron               Thu, Apr 18  Before the Bell   0.48
ARM    ArvinMeritor Inc.      Thu, Apr 18  Before the Bell   0.52
ASBC   Associated Banc-Corp   Thu, Apr 18  -----N/A-----     0.72
ASFC   Astoria Financial      Thu, Apr 18  Before the Bell   0.69
ATML   Atmel                  Thu, Apr 18  After the Bell   -0.07
ALV    Autoliv                Thu, Apr 18  Before the Bell   0.33
AVCT   Avocent Corporation    Thu, Apr 18  Before the Bell   0.17
AVP    Avon Products          Thu, Apr 18  Before the Bell   0.37
BXS    BancorpSouth           Thu, Apr 18  After the Bell    0.32
BKNG   Banknorth Group        Thu, Apr 18  Before the Bell   0.48
BAX    Baxter International   Thu, Apr 18  Before the Bell   0.41
BYD    Boyd Gaming            Thu, Apr 18  After the Bell    0.28
BGG    Briggs & Stratton      Thu, Apr 18  Before the Bell   1.70
BR     Burlington Resources   Thu, Apr 18  Before the Bell   0.02
ELY    Callaway Golf          Thu, Apr 18  After the Bell    0.42
POS    Catalina Marketing     Thu, Apr 18  -----N/A-----     0.38
CHRT   Chartered Semi Manu    Thu, Apr 18  After the Bell   -0.97
CAKE   Cheesecake Factory     Thu, Apr 18  After the Bell    0.20
CNF    CNF Inc.               Thu, Apr 18  Before the Bell   0.08
CCE    Coca-Cola Enterprises  Thu, Apr 18  Before the Bell  -0.02
CL     Colgate-Palmolive      Thu, Apr 18  Before the Bell   0.49
CFBX   Community First Banksh Thu, Apr 18  Before the Bell   0.47
CPQ    Compaq Computer        Thu, Apr 18  After the Bell    0.01
ED     Consolidated Edison    Thu, Apr 18  -----N/A-----     0.81
CTB    Cooper Tire & Rubber   Thu, Apr 18  Before the Bell   0.35
CPO    Corn Products Inter    Thu, Apr 18  Before the Bell   0.23
CR     Crane                  Thu, Apr 18  Before the Bell   0.35
CCK    Crown Cork & Seal      Thu, Apr 18  Before the Bell  -0.12
CY     Cypress Semiconductor  Thu, Apr 18  Before the Bell  -0.13
DLX    Deluxe                 Thu, Apr 18  Before the Bell    N/A
DL     Dial                   Thu, Apr 18  Before the Bell   0.22
DO     Diamond Ofshre Drlng   Thu, Apr 18  Before the Bell   0.16
DOL    Dole Food              Thu, Apr 18  Before the Bell   0.68
D      Dominion Resources     Thu, Apr 18  -----N/A-----     1.28
EBAY   eBay                   Thu, Apr 18  After the Bell    0.16
EMLX   Emulex                 Thu, Apr 18  After the Bell    0.13
EFX    Equifax                Thu, Apr 18  Before the Bell   0.30
FMER   FirstMerit             Thu, Apr 18  Before the Bell   0.51
FMC    FMC                    Thu, Apr 18  After the Bell    0.41
FO     Fortune Brands         Thu, Apr 18  -----N/A-----     0.55
GTW    Gateway                Thu, Apr 18  After the Bell   -0.20
GP     Georgia-Pacific        Thu, Apr 18  Before the Bell   0.27
GPT    GreenPoint Financial   Thu, Apr 18  Before the Bell   1.25
GDT    Guidant                Thu, Apr 18  After the Bell    0.47
HSY    Hershey Foods          Thu, Apr 18  -----N/A-----     0.66
HON    Honeywell              Thu, Apr 18  -----N/A-----     0.45
HBAN   Huntington Bancshares  Thu, Apr 18  Before the Bell   0.31
IDPH   Idec Pharmaceuticals   Thu, Apr 18  After the Bell    0.16
RX     IMS Health             Thu, Apr 18  After the Bell    0.20
IR     Ingersoll-Rand Co. Ltd Thu, Apr 18  Before the Bell   0.58
INET   Instinet Group Llc     Thu, Apr 18  After the Bell     N/A
IVC    Invacare               Thu, Apr 18  -----N/A-----     0.38
ESI    ITT Educational Serv   Thu, Apr 18  Before the Bell   0.25
JEC    Jacobs Engin Grp Inc.  Thu, Apr 18  Before the Bell   0.48
KLAC   KLA-Tencor             Thu, Apr 18  -----N/A-----     0.15
LIZ    Liz Claiborne          Thu, Apr 18  Before the Bell   0.45
MAR    Marriott International Thu, Apr 18  -----N/A-----     0.27
MAT    Mattel                 Thu, Apr 18  Before the Bell  -0.01
MCD    McDonald`s             Thu, Apr 18  Before the Bell   0.29
MEG    Media General          Thu, Apr 18  Before the Bell   0.21
MRK    Merck                  Thu, Apr 18  Before the Bell   0.71
MSFT   Microsoft              Thu, Apr 18  -----N/A-----     0.51
MTX    Minerals Technologies  Thu, Apr 18  After the Bell    0.65
MOLX   Molex                  Thu, Apr 18  After the Bell    0.10
NBR    Nabors Industries      Thu, Apr 18  -----N/A-----     0.26
NCC    National City          Thu, Apr 18  Before the Bell   0.60
NATI   National Instruments   Thu, Apr 18  After the Bell    0.15
NCR    NCR                    Thu, Apr 18  Before the Bell   0.03
NTIQ   NetIQ                  Thu, Apr 18  After the Bell    0.22
NOK    Nokia                  Thu, Apr 18  Before the Bell   0.15
NT     Nortel Networks        Thu, Apr 18  After the Bell   -0.14
NBP    Northern Border Partns Thu, Apr 18  After the Bell    0.61
NWAC   Northwest Airlines     Thu, Apr 18  -----N/A-----    -2.46
NVS    Novartis AG            Thu, Apr 18  -----N/A-----      N/A
NUE    Nucor                  Thu, Apr 18  Before the Bell   0.20
ONB    Old National Bancorp   Thu, Apr 18  Before the Bell   0.43
PBCT   People`s Bank          Thu, Apr 18  -----N/A-----     0.18
PBI    Pitney Bowes           Thu, Apr 18  After the Bell    0.53
PCL    Plum Creek Timber      Thu, Apr 18  After the Bell    0.21
PMCS   PMC-Sierra             Thu, Apr 18  After the Bell   -0.12
PHCC   Priority Healthcare    Thu, Apr 18  Before the Bell   0.21
PUK    Prudential PLC         Thu, Apr 18  -----N/A-----      N/A
DGX    Quest Diagnostics      Thu, Apr 18  After the Bell    0.60
QTRN   Quintiles Transnatinal Thu, Apr 18  -----N/A-----     0.14
RJR    R.J. Reynolds Tobacco  Thu, Apr 18  Before the Bell   1.76
RATL   Rational Software      Thu, Apr 18  After the Bell    0.09
RG     Rogers Communications  Thu, Apr 18  Before the Bell    N/A
TSG    Sabre Holdings Corp    Thu, Apr 18  Before the Bell   0.59
SANM   Sanmina-SCI Corp.      Thu, Apr 18  After the Bell    0.00
SAP    SAP A.G. ADS           Thu, Apr 18  -----N/A-----     0.10
SBC    SBC Communications     Thu, Apr 18  -----N/A-----     0.51
SGP    Schering-Plough        Thu, Apr 18  Before the Bell   0.41
SFA    Scientific-Atlanta     Thu, Apr 18  -----N/A-----     0.26
SCIO   Scios                  Thu, Apr 18  Before the Bell  -0.54
S      Sears Roebuck          Thu, Apr 18  Before the Bell   0.83
SHW    Sherwin-Williams       Thu, Apr 18  -----N/A-----     0.21
SIVB   Silicon Valley Bancsh  Thu, Apr 18  After the Bell    0.28
SKFR   SKF AB ADR             Thu, Apr 18  -----N/A-----      N/A
SO     Southern Company       Thu, Apr 18  Before the Bell   0.29
LUV    Southwest Airlines     Thu, Apr 18  -----N/A-----     0.03
SOV    Sovereign Bancorp      Thu, Apr 18  After the Bell    0.29
STU    Student Loan           Thu, Apr 18  After the Bell     N/A
SUNW   Sun Microsystems       Thu, Apr 18  After the Bell   -0.02
SUP    Superior Industries    Thu, Apr 18  Before the Bell   0.58
SY     Sybase                 Thu, Apr 18  After the Bell    0.21
SBL    Symbol Technologies    Thu, Apr 18  After the Bell    0.03
TXT    Textron                Thu, Apr 18  Before the Bell   0.45
MNI    The McClatchy Company  Thu, Apr 18  Before the Bell   0.49
TBL    Timberland             Thu, Apr 18  Before the Bell   0.21
TMK    Torchmark              Thu, Apr 18  Before the Bell   0.84
TQNT   TriQuint Semiconductor Thu, Apr 18  After the Bell   -0.01
UMBF   UMB Financial          Thu, Apr 18  -----N/A-----     0.81
UPC    Union Planters         Thu, Apr 18  -----N/A-----     0.90
UPS    United Parcel Service  Thu, Apr 18  Before the Bell   0.47
UNH    UnitedHealth Group     Thu, Apr 18  Before the Bell   0.85
SLM    USA Education          Thu, Apr 18  -----N/A-----     1.04
UTSI   UTStarcom              Thu, Apr 18  After the Bell    0.15
WB     Wachovia               Thu, Apr 18  -----N/A-----     0.65
WTNY   Whitney Holding        Thu, Apr 18  -----N/A-----     0.52
WL     Wilmington Trust       Thu, Apr 18  -----N/A-----     1.00
XLNX   Xilinx                 Thu, Apr 18  After the Bell    0.09
ZION   Zions Bancorp          Thu, Apr 18  After the Bell    0.89

AKS    AK Steel Holding       Fri, Apr 19  After the Bell   -0.12
LNT    Alliant Energy         Fri, Apr 19  After the Bell    0.37
ASH    Ashland                Fri, Apr 19  Before the Bell  -0.12
BLS    BellSouth              Fri, Apr 19  Before the Bell   0.56
CPS    ChoicePoint            Fri, Apr 19  Before the Bell   0.41
ELUX   Electrolux AB ADR      Fri, Apr 19  -----N/A-----     0.53
EQT    Equitable Resources    Fri, Apr 19  Before the Bell   0.84
ERIE   Erie Indemnity         Fri, Apr 19  -----N/A-----     0.58
FPL    FPL Group              Fri, Apr 19  Before the Bell   0.79
IP     International Paper    Fri, Apr 19  Before the Bell   0.07
LAB    LaBranche & Co Inc.    Fri, Apr 19  Before the Bell   0.37
TRB    Tribune                Fri, Apr 19  -----N/A-----     0.29
UST    UST Inc                Fri, Apr 19  Before the Bell   0.62
VC     Visteon                Fri, Apr 19  Before the Bell   0.00
WPO    Washington Post        Fri, Apr 19  -----N/A-----     2.24
WIT    Wipro Limited          Fri, Apr 19  Before the Bell   0.22
ZBRA   Zebra Technologies     Fri, Apr 19  Before the Bell   0.52

=================================================================
Upcoming Stock Splits This Week & Next...

Symbol  Company Name              Ratio    Payable     Executable

AMAT    Applied Materials         2:1      04/15       04/16
WRI     Weingarten Realty Invstor 3:2      04/15       04/16
CATY    Cathay Bancorp            2:1      04/16       04/17
ADSK    Autodesk                  2:1      04/17       04/18
PGR     Progressive Corp          3:1      04/19       04/20
MASB    MASSBANK                  3:2      04/19       04/20
FSBK    First South Bancorp       3:2      04/19       04/22
ONFC    Oneida Financial          3:2      04/23       04/24
DF      Dean Foods                2:1      04/23       04/24
APOL    Apollo Group              3:2      04/24       04/25
UOPX    University of Phoenix     4:3      04/24       04/25
MTH     Meritage Corp             2:1      04/25       04/26

=================================================================
Economic Reports

Earnings, earnings and more earnings.  The Q1 numbers are coming
in full bore this week and aside from the turmoil in the Mid East
these reports will take center stage.  Economic reports that 
Wall Street will be watching are largely scheduled for Tuesday.

=================================================================

Monday, 04/15/02
Buisness Inventories(BB) Feb  Forecast:   0.0%  Previous:    0.2%

Tuesday, 04/16/02
CPI (BB)                 Mar  Forecast:   0.4%  Previous:    0.2%
Core CPI (BB)            Mar  Forecast:   0.2%  Previous:    0.3%
Housing Starts (BB)      Mar  Forecast: 1.700M  Previous:  1.769M
Building Permits (BB)    Mar  Forecast: 1.685M  Previous:  1.774M
Industrial Production(DM)Mar  Forecast:   0.4%  Previous:    0.4%
Capacity Utilization (DM)Mar  Forecast:  75.0%  Previous:   74.8%

Wednesday, 04/17/02
Trade Balance (BB)       Feb  Forecast:-$28.2B  Previous: -$28.5B

Thursday, 04/18/02
Initial Claims (BB)    04/13  Forecast:    N/A  Previous:     N/A
Leading Indicators (DM)  Mar  Forecast:   0.4%  Previous:    0.0%
Philadelphia Fed (DM)    Apr  Forecast:   13.4  Previous:    11.4
Treasury Budget (AB)     Mar  Forecast:    N/A  Previous: -$50.7B

Friday, 04/19/02
None


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




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The Option Investor Newsletter                   Sunday 04-14-2002
Sunday                                                      2 of 5


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**********************
INDEX TRADER GAMEPLANS
**********************

SECTOR TRADER WRAP: Wednesday, 04/12/02

THE SECTOR BEAT 
by Leigh Stevens

There is a great improvement  that can be made to investment
or trading performance that can be done with even paying
minor attention to what stocks in which business sectors are
out or under performing the market, as measured by the
Nasdaq or NYSE Composite.

Merrill Lynch's well-known and outstanding market analyst
Bob Farrell, has made a career of sector analysis.  He says
and rightly so, that the most significant out performance of
the market averages is achieved by being in the
outperforming sectors of the market. As well, significant
improvement in option trading performance can occur if we
use sector analysis to zero on areas of the market that have
greater than average upside or downside momentum.

I have been giving considerable thought to how I can make
the Sector section of the Index Trader more useful to you
the subscriber.  It is a bit of a challenge as there are not
many active sector options.  Yet there are many widely
followed sector indexes.

There are the HOLDR's and iShares and the various types of
unit trust stocks, some of which are widely traded and offer
a means of participation certainly for participating in the
price movement and direction of various market sectors.
However, these are not generally optionable and many of you
would prefer, or would like to have, in addition, a
leveraged way to play the promising sectors either by buying
or selling calls and puts.

My approach will be to look at and analyze, on a daily
basis, important and popular sector indexes that are
noteworthy in terms of a trading opportunity, in terms of
either participation in the options of an individual stock
that is part of that index or and/or by one of the sector
trust stocks, when applicable.

The Cyclical Index ($CYC.X) -

     

My suggested play on the good upside momentum of the
cyclical stocks, typical of the early stages of an economic
recovery, is in representative cyclical stock Alcoa (AA) by
purchase of the May 40 call around current levels (.60), but
not more than 1.00.  My objective on the stock is to $42
based on the rate of current upside momentum over the next 5
weeks.

I think a next advance will cover at least as much ground as
the late-Feb. to early-March advance, which went from the
33.50 area to the 39.50 level.  The current rally began from
the $36 area. I think the next move can exceed the last, but
will assume only a rally equal to the last.


       

Alternatively, the Consumer Cyclical Trust iShare (IYC)
could be purchased around current levels, with an objective
to a new high above the May 2001 high at 63. 


 


NEW TRADE PLAYS AND GUIDELINES:

The Semiconductor Sector Index ($SOX.X) appears capable of
holding on to its current slight upward momentum and its up
trendline dating from its last downswing low. I favor the
May 570  calls if the SOX manages to hold the 560 area on
weekly closing basis.  Therefore I would monitor the SOX
level over the coming week, as it would be good to have one
more weekly close above the up trendline per the chart
below. 


  


One sector that rebounded on Friday was the Telecoms
($XTC.X) Index, that has touched the low end of its
downtrend channel, which should offer support for a rebound
back up possibly to the 642 area, to test the 50-day moving
average.


 

One of the better recent recovery rallies that has been
going on in this sector is Level 3 Communications (LVLT),
which has broken out above its multimonth downtrend line and
is rebounding from the area of its 50-day moving average.
Upside potential in the stock looks like it is to the 5.5
area, at a minimum, in the next 6 weeks.  The stock is cheap
enough to play outright or, alternatively, purchase could be
made of the June 5 Calls -- symbol and price shown in the
chart below:




Momentum play - 

The Airline Index ($XAL.X) has had very strong momentum and
has is rebounding from the area of both its 50-day moving
average and its up trendline. Friday's upside acceleration
took it above it's 50-day moving average.  One way to
participate in the strength of this sector is by choosing a
representative airline stock in XAL for an option play.

 


I favor Southwest Airlines (symbol: LUV - chart below) and
it’s a luv of a stock and business model.  LUV is rebounding
off the low end of its probable uptrend channel. The Sept.
20 calls are quite cheap, especially as I consider upside
potential to be back up to the top end of the price channel,
which, by Sept. will be up in the $24 area.  At a minimum, I
project an upside target to at least $22, in a retest of the
prior high.


 



OPEN SHORTS/PUT PLAYS:

RTH (AMEX: Retail sector trust stock)
SHORT at 99.00 
Objective: 90; Stop: 102 
Time frame: 3-6 weeks.

 


XAU (PHLX Gold & Silver Index)
Bought May 65 puts at 1.80  
Stop: 4/12 note - Remove stop, risk to no value on the
Option Still recommended -- also, May 60 Puts - around
current levels
Objective: XAU to 60.50, where it has support

 


Sector: XLB (Basic Industrial Sector SPDR) at 23.75
Stop: 24.50

Sector: XLP (Consumer Staples SPDR) at 26.00
Stop: 26.25

Sector: IYD (US Chemical Index iShares) at 45.25
Stop: 46.60

Sector: IYE (US Energy Index iShares) at 49.70
Stop: 52.00 


 

OPEN LONG or CALL POSITIONS:

UTH - Utilities Holders trust (AMEX) 
Long at 95.25 
Stop: 91.00
Objective: 105

Yes, this is a yawn, but sock some away in your IRA


RISK to REWARD guidelines:  
Determining an objective is important, even if it is a moving 
target, as this is the reward potential.   Determining reward 
potential is critical to establishing whether a stop that makes 
“sense” (e.g., a sell stop that was placed under a key support 
level) would, if triggered, result in a dollar loss that is in 
proportion to profit potential; e.g., 1/3 of it.  (On occasion, 
when the purchase price of call or put is equal to 1/3 or less of 
the estimated reward potential, there may not be a specific exit 
suggestion, as the cost of the option is equal to the amount that 
is being risked.)   


Leigh Stevens
Chief Market Strategist
lstevens@OptionInvestor.com


***********************************************************
DAILY RESULTS
***********************************************************

Please view this in COURIER 10 font for alignment
*************************************************

CALLS              Mon    Tue    Wed    Thu   Week

COF      62.45    1.30   0.24   1.40  -2.12   0.99  Dropped, EPS
THC      70.00    1.26   0.73   0.86   0.33   1.94  Tight stops!!
UNH      76.80   -0.36   0.22   0.66   0.40  -0.64  Dropped, stop
WLP      66.50    0.60   0.38   0.79  -0.47   0.48  Dropped, ptk
HIG      68.62    0.02   0.61  -0.44  -0.86  -0.50  Entry point!
AZO      70.17    1.56  -0.24   0.52   0.43   1.61  Watch $72
KKD      40.63   -0.54   0.15   0.69   0.15   1.06  Working well
VRTS     35.87    1.49  -2.36   0.28  -1.53   0.74  New, covering
TKTX     41.36   -2.00   0.43   0.50   1.57   3.29  New, strength
RYL     101.80    4.76   0.95  -1.14  -2.41   7.16  New, breakout


PUTS

TMPW     29.10    0.82  -0.75  -0.23  -1.91  -2.71  Broke down
GNSS     22.00   -0.37  -0.94  -0.11  -0.53  -1.07  Entry 10-dma
CDWC     49.41    0.07  -0.16   1.21  -2.02  -0.17  Dropped, RS
VRSN     25.32    0.58  -0.92  -0.29   0.29   0.97  Dropped, break
RETK     25.94    0.26  -0.05   0.12  -2.15   0.30  Dropped, pop
SGP      28.62   -0.32  -0.97  -0.79  -0.27  -0.49  Rolled over
BRCM     34.14    1.30  -1.10   0.52   0.19  -1.54  Dropped, close
WPI      24.15   -0.10   0.10   0.58  -0.78  -0.05  Biding time
HGSI     18.20   -1.47  -0.70   0.42  -0.07  -0.85  Dropped, EPS
ENZN     39.69   -1.37  -2.12   2.52  -1.64  -1.68  Weaker Biotech
GS       83.00   -0.09  -1.46  -0.11  -3.25  -3.15  Tight stops!
AAII     31.50    0.05   1.05   0.32   1.00   0.70  New, rollover
OVER     23.50    1.13   0.04  -0.35  -3.89  -3.32  New, .bearish


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

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

VRTS - Veritas Software $35.87 (+0.76 last week)

See details in play list




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

OVER - Overture Services $23.50 (-3.32 last week)

See details in play list





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

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


CALLS
^^^^^
COF $62.45 (+0.99) COF is set to report earnings Tuesday
morning, so we're dropping coverage on the play ahead of
the report.  Traders need to be out of positions by the end
of trading Monday, that way avoiding the risk that comes with
holding a position over its earnings report.  The stock might
get another shot at breaking above the $65 level next Monday
if the broader market rallies.  Use such a move to exit
plays.


WLP $66.50 (+0.48) WLP fell lower for the second straight
session in last Friday's trading.  The stock pulled back in
sympathy with its sector, which could lead to continued
downside in next week's trading.  We're looking to get out of
the play ahead of any further weakness, although judging by
volume it looks like the pullback is only profit taking
related.  Use a bounce at the open in Monday's trading to
exit plays.

UNH $76.80 (-0.64) All good things must come to an end.  While
our UNH play has been good to us over the past couple weeks,
there is no arguing with that big red candle on Friday.  The
bulls clearly decided to take profits and with a 2.5% decline
and a violation of our stop at $76.90, it is clear that it is
time to go.  For those still holding positions in the play, use
any sort of rebound from the $76 level next week to manage a
more graceful exit.


PUTS
^^^^
CDWC $49.41 (-0.17) CDWC just refuses to breakdown.  The
stock's trading range has been profitable, but its failure to
breakdown is worrisome from a bearish perspective.  We're
choosing to drop the play this weekend ahead of any potential
short covering rally next week.  Have tight stops in place on
open positions or look to exit plays on weakness early next
week.

RETK $25.94 (+0.30) RETK bolted higher out of the gates in
Friday's session and never looked back.  The stock closed out
the week very strongly after rebounding from its 50-dma again.
With the close just off of our stop at the $26 level, we're
dropping coverage of the play.  Look for any weakness early
next week to exit plays.

BRCM $34.15 (+1.55) With weakness continuing to dominate the
Semiconductor sector (SOX.X), the overwhelming question is
whether it can rebound from support near the $545 level or if
another breakdown is in the offing.  Earnings season moves into
full swing next week, but it certainly isn't looking like there
will be a wealth of good news this time around.  BRCM has been
having a hard time as well, unable to make up its mind whether
to go up or down.  So it essentially spent the week drifting
sideways, caught between hopes for good news from its earnings
report (due out on Wednesday) and concerns about potential
landmines from other chip companies.  Due to its lack of
performance, we're going to drop BRCM tonight to make room for
more attractive plays.

HGSI $18.20 (-0.85) As we mentioned on Thursday, HGSI has
earnings Monday morning, so this play is a drop this weekend.
Even without the pending release of earnings, we might have
contemplated a drop this weekend with the stock moving and
closing above the $18 resistance level.  It's still below the
level of our stop, but looking stronger with daily Stochastics
now on the rise.  At any rate, all positions in this play should
now be closed, as we focus our energies on the next winning play.

VRSN $25.32 (+0.97) While VRSN has given us a small move to the
downside, the stock's unwillingness to break support and the
significant (more than 5%) rebound on Friday, has us pulling in
our claws on the play.  Our $25.75 stop remains intact, but it
looks like that will be broken with any amount of bullish action
next week.  Rather than wait for that to occur, we're moving VRSN
to the drop list this weekend in order to focus our attention on
higher-odds candidates.


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

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

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

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

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

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

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




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The Option Investor Newsletter                   Sunday 04-14-2002
Sunday                                                      3 of 5


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

TKTX - Transkaryotic Therapies $41.36 (+3.29 last week)

Transkaryotic Therapies, Inc. is a biopharmaceutical company
developing protein- and cell-based therapeutics for the
treatment of a wide range of human diseases. Based on three
proprietary development platforms: Gene-Activated proteins,
Niche Protein products, and Gene Therapy, the Company is
building a broad and renewable product pipeline. 

We like exploiting divergences in individual stocks from their
sectors.  We found one in the biotech sector last week.  The
AMEX Biotechnology Sector Index (BTK.X) was pummeled last week
before rebounding in Friday's session.  The group was hit on
weakness in the broader technology sector, but it looks like
next week that the shorts may decide to cover, carrying the
sector higher.  One stock that should benefit from any strength
in the broader biotech sector is TKTX.  It has shown a marked
divergence from its sector in the last several weeks, trading
only $5 away from its yearly high.  The same cannot be said
for the majority of stocks in the group.  The stock finished
strongly last week, above its short term resistance and the
10-dma.  It could be in for a run to the recent highs up
around the $46 mark with the several week pullback that has
run its course.  Momentum traders can look for strength in the
BTK early next week and consider taking entries on strength
above the Friday high at $41.36, which is where the stock
closed.  Intraday pullbacks can be looked into for entry
points down around the $40.25 level, or lower near the $39.25
mark.  Our stop is initially in place at $39.

BUY CALL MAY-40 UFT-EH OI=  5 at $3.80 SL=2.25 
BUY CALL MAY-45*UFT-EI OI=  7 at $1.65 SL=1.00 
BUY CALL JUL-40 UFT-GH OI=122 at $5.90 SL=4.00 
BUY CALL JUL-45 UFT-GI OI=320 at $3.70 SL=2.25 

Average Daily Volume = 436 K



RYL - The Ryland Group $101.80 (+7.16 last week)

The Ryland Group is a homebuilder and mortgage-finance company
that has built more than 175,000 homes.  Additionally, the
Ryland Mortgage Company (RMC) has provided mortgage financing
and related services for more than 155,000 homebuyers.
Currently, Ryland homes are available in more than 260
communities in 21 markets across the United States.

The sector that just refuses to die, Home Construction ($DJUSHB)
is like the Energizer Bunny.  It keeps going and going... The
fledgling weakness that appeared in early March, has been
delayed for awhile due to the fact that the Housing numbers keep
coming in strong.  And with the likelihood of interest rate
increases in the near-term dissipating due to continued weakness
in the market, the mortgage industry should continue strong for a
while longer.  The renewed strength over the past couple weeks
has propelled the DJUSHB index to a new relative strength high vs.
the S&P 500.  Leading the charge higher in the past week has been
RYL, which broke out to a new all-time high on Friday, following
Monday's push through the $96 resistance level from early March.
And when the stock prints $102, we'll have a fresh double-top
breakout on the PnF chart to boot.  Investors seem to be
gravitating to the stock's exhibition of strength and it looks
likely that the buying spree will continue into the company's
earnings report on April 24th.  A dip to the $95-96 support level
would make for a great entry, but we're unlikely to get that
fortunate.  So we would look for a dip and bounce in the $97-98
intraday support area for initiating new positions.  Given the
huge move on Friday, we are initiating coverage with a wide stop,
starting at $95.  Traders that enter on a breakout over $102 will
need to play with a tighter stop, probably near $97.

*** April contracts expire next week ***

BUY CALL APR-100*RYL-DT OI=387 at $2.90 SL=1.50
BUY CALL APR-105 RYL-DA OI= 38 at $0.75 SL=0.25
BUY CALL MAY-100 RYL-ET OI= 43 at $6.00 SL=4.00
BUY CALL MAY-105 RYL-EA OI= 36 at $3.50 SL=1.75

Average Daily Volume = 550 K


VRTS - Veritas Software $35.87 (+0.76 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.

Speed demons, start your engines!  If a quick short covering
rally ahead of earnings sounds like your kind of play, then read
on.  Driven down by the recent weakness in the Software sector
and poor price action in several of the Storage-related stocks,
shares of VRTS found support right at the February lows near $33.
Then short-covering seems to have propelled the stock higher for
an 8.33% gain on Friday.  That has the daily Stochastics turning
up out of oversold, and it looks like we could see some more
short-covering ahead of the company's earnings report.  But this
play isn't for the faint of heart, or those that can't watch the
intraday action unfold.  VRTS reports earnings on Tuesday after
the close, so it is a quick 2-day play, where we'll be dropping
coverage on Tuesday.  But for those that can handle the short
time-frame, the odds favor a significant rise into earnings.
Since we're looking to play on short-covering, we only want to
enter on strength.  Consider new positions as VRTS rallies through
near-term resistance at $36.50, so long as volume supports the
move.  We are initiating coverage with our stop set rather tight
at $34.

*** April contracts expire next week ***

BUY CALL APR-35*VIV-DG OI=4094 at $2.45 SL=1.25
BUY CALL APR-40 VIV-DH OI=7008 at $0.55 SL=0.25
BUY CALL MAY-35 VIV-EG OI=3917 at $4.10 SL=2.50
BUY CALL MAY-40 VIV-EH OI=3211 at $1.85 SL=1.00

Average Daily Volume = 11.7 mln


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


THC - Tenet Healthcare $70.00 (+1.94 last week)

Tenet Healthcare Corporation (Tenet) is the second largest
investor-owned healthcare services company in the United States.
As of May 31, 2001, Tenet's subsidiaries and affiliates owned or
operated 111 general hospitals with 27,277 licensed beds and
related healthcare facilities serving urban and rural
communities in 17 states, and held investments in other
healthcare companies. 

THC pulled back in Friday's trading on more active volume.  The
stock's weakness came on the hells of a pullback in the broader
HMO group.  The HMO Index (HMO.X) finished fractionally lower
late last week.  This type of pullback is normal in the upward
trend as it came on sector weakness.  If THC had diverged from
its sector we would have been more concerned with its weakness.
The stock closed very close to our coverage stop last week, so
we may be stopped out of plays next week.  Traders with open
positions holding some good gains in this play should look to
tighten up stops early next week to protect gains.  A stop below
last Friday's intraday low at the $69.95 mark would be a good
spot to the manage the downside.  Those who've been waiting for
a more extended pullback to get into this play may very get just
that in next week's trading.  Even though we may get stopped out
of this play, readers might look for a deeper pullback in the
HMO to pressure this strong stock back to a support entry point.
The 10-dma below at $69 might provide support during any
pullback and be used as an entry point.

***April contracts expire next week*** 

BUY CALL APR-65 THC-DM OI=3555 at $5.30 SL=3.75 
BUY CALL MAY-65*THC-EM OI=3351 at $5.80 SL=4.00 
BUY CALL MAY-70 THC-EN OI=3053 at $2.10 SL=1.00 

Average Daily Volume = 2.06 mln
 


HIG - Hartford Financial Services $68.62 (-0.50 last week)

Hartford Financial Services Group, Inc. (the Hartford) is a
diversified insurance and financial services company. The Hartford
is a provider of investment products, individual life, group life
and group disability insurance products, as well as property and
casualty insurance products in the United States. It writes
insurance and reinsurance in the United States and
internationally, and is organized into two major operations: Life
and Property & Casualty.

HIG continued pulling back into last Friday's session when the
stock rebounded just 5 cents off of the $68 level.  That was the
move we were looking for ahead of the company's earnings report.
The earnings run should begin going into next week's trading and
the pullback last week provided a favorable entry going into next
week's trading.  Traders who did take that entry on the rebound
from the $68 level can look to manage the play with a tight stop
just below there.  Going into next week, we need to confirm the
rebound potential of the play by looking for an advance past the
10-dma at $68.75.  The stock closed near that level last week,
so we'll want to see the bulls gain some confidence with a move
back above the 10-dma.  From there, we'll look for the breakout
above the $70 level.  Momentum and breakout traders can use a move
above the $70 level as an entry point during next week's trading,
just make sure that the market is support that type of strategy.
Use tight trailing stops on a break above $70.  The company reports
a week from Monday, so we've got five more days to play.

***April contracts expire next week*** 

BUY CALL APR-70 HIG-DN OI=1279 at $0.40 SL=0.00 
BUY CALL MAY-70*HIG-EN OI= 200 at $1.65 SL=1.00 
BUY CALL JUN-70 HIG-FN OI= 420 at $2.25 SL=1.75 

Average Daily Volume = 857 K



KKD - Krispy Kreme Doughnut $40.63 (+1.06 last week)

Krispy Kreme Doughnuts, Inc. (Krispy Kreme) is a branded specialty
retailer of premium quality doughnuts. Krispy Kreme is a
vertically integrated company structured to support and profit
from the high volume production and sale of high quality doughnut
products. The Company's business is driven by two complementary
business units: Store Operations, both company and franchise; and
KKM&D.

Dow Jones Newswire reported late last Friday that KKD's Vice
Chairman had filed to sell more than 300 million shares of
stock.  The stock traded only 300 shares in the after hours
market, which were are a slightly lower price than the close
last Friday.  It's difficult to say how the announcement will
impact the stock, if at all, next week judging by the lack of
response in the after hours.  But it's something to keep in mind
going into Monday's session.  In Friday's action, KKD continued
climbing after breaking above the $40 level in Thursday's
trading.  The stock worked higher into the end of the session,
finishing the day just off of its daily highs.  The steady
buying during intraday action was encouraging and portends
further short covering in the week ahead.  Aside from the insider
sale report, the biggest variable that remains in this play is the
action of the broader market.  During a rally in the broader
market, the shorts will grow more nervous and be more inclined to
cover the stock, resulting in higher prices.  For new entry points,
intraday pullbacks to the $40 level can be used for entries on a
bounce, or a breakout above last Friday's high at the $40.73 in an
advancing market.

***April contracts expire next week*** 

BUY CALL APR-40 KKD-DH OI=3815 at $1.00 SL=0.50 
BUY CALL MAY-40*KKD-EH OI=2687 at $2.20 SL=1.00 
BUY CALL MAY-45 KKD-EI OI=2955 at $0.45 SL=0.00 
BUY CALL AUG-45 KKD-HI OI=3551 at $1.75 SL=0.75 

Average Daily Volume = 593 K



AZO - AutoZone, Inc. $70.17 (+1.61 last week)

AutoZone is a retailer of automotive parts and accessories,
primarily focusing on do-it-yourself customers.  Each of its
more than 2900 stores in 42 states and Mexico carries an
extensive product line for cars, vans and light trucks,
including new and re-manufactured automotive hard parts,
maintenance items and accessories.  Approximately half of its
domestic stores also have a commercial sales program, which
provides commercial credit and prompt delivery of parts and
other products to local repair garages, dealers and service
stations.

If relative strength is the name of the game, then AZO looks
like a winner.  It has been increasing in strength relative to
the broad market, as has the Retail index (RLX.X) recently.  In
fact, the RLX is threatening to break out above the $980 level
and AZO (not to be outdone) is trying to make a run at the $72
resistance level.  While AZO showed some early weakness on
Friday, the strength in the RLX was too much for the bears, and
the stock rebounded from the $69.50 level to hold its ground
above the $70 level.  There is no arguing with the caution signs
being flashed by the daily Stochastics, which is threatening to
roll down out of overbought territory, and that is the reason
that we only want to play this one on a breakout above the $72
level.  That breakout will give us a triple-top breakout on the
PnF chart and will likely have the bulls targeting a move to at
least the $75 resistance level.  Look for continued strength in
the RLX index to accompany that breakout, confirming that we're
on the right side of the trade.  Keep stops set at $68.

*** April contracts expire next week ***

BUY CALL APR-70 AZO-DN OI= 871 at $1.30 SL=0.75
BUY CALL MAY-70*AZO-EN OI= 235 at $2.80 SL=1.50
BUY CALL MAY-75 AZO-EO OI= 155 at $0.90 SL=0.25
BUY CALL JUN-75 AZO-FO OI=1079 at $2.10 SL=1.00

Average Daily Volume = 973 K




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

OVER - Overture Services $23.50 (-3.32 last week)

Overture Services, Inc. is engaged in the provision of pay-for
performance search services on the Internet. Overture operates
an online marketplace that introduces consumers and businesses
that search the Internet to advertisers that provide products,
services and information. Advertisers participating in the
Company's marketplace include retail merchants, wholesale and
service businesses and manufacturers.

Investors weren't too happy with Yahoo's earnings report last
week.  High valuations were to blame.  OVER's high P/E could
come into play next week as Internet investors continue to
fear the slowing growth and expensive nature of the sector.
The Internet Index (INX.X) was one of the poorest performing
sectors last week before rebounding on short covering in last
Friday's session.  The INX.X finished 3.29% higher in last
Friday's session, but not even the strength in the broader
group could help OVER.  The stock continued lower after
Thursday's big sell-off.  But it failed to take out Thursday's
low.  That left a big inside day set up in the stock, which
now looks poised to continue lower.  Volume remained very
active during Friday's weakness, which reinforced that the
stock was under heavy selling pressure.  We'll be looking for
that volume to return early next week when OVER breaks down
below its low from last Thursday.  Watch for a decline below
the $23 level for an entry point into further weakness below
current levels.  Use the INX for confirmation of sector
sentiment.  Rollovers from the $25 level may also be used to
gain entry points.  Our stop is initially in place at $25.50.

BUY PUT MAY-25*GUO-QE OI=627 at $4.70 SL=2.25
BUY PUT MAY-22 GUO-QX OI=463 at $3.30 SL=1.75

Average Daily Volume = 1.25 mln


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


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

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


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

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

Contact Support
The Option Investor Newsletter                   Sunday 04-14-2002
Sunday                                                      4 of 5


************************Advertisement*************************
If you trade options online, then you need an online broker that:
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

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more; call 1-888-889-9178 or click for more information.

http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
**************************************************************


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

ENZN - Enzon $39.69 (-1.68 last week)

Enzon, Inc. 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 the Company's PEG
technology to improve the delivery, safety and efficacy of
proteins and small molecules with known therapeutic efficacy.

ENZN can't seem to get out of its own way.  The stock once
again rolled from its 10-dma in last Friday's session.  The
day trades alone offered by this stock on rollovers from the
10-dma have been very fruitful.  The stock is diverging from
its sector in a big way.  The AMEX Biotechnology Sector
Index (BTK.X) finished nearly 3% higher in last Friday's
trade, which ENZN could only manage a fractional loss.  The
weakness that the stock is displaying clearly reveals that the
sellers remain in full control, which is a very good sign for
those of us on the bearish side of this stock.  Additionally,
the repeated failures at the 10-dma reinforce that a big
seller lurks at higher prices.  Traders looking to take
advantage of the weakness in this stock can continue looking
for rollovers from the 10-day next week.  That level currently
sits overhead at the $41.47 mark.  Those who favor trading
breakdowns can look for weakness in the BTK to pressure ENZN
below its relative lows.  A decline below the $38.50 level can
be used to enter plays on a breakdown.


***April contracts expire next week*** 

BUY PUT APR-40 QYZ-PH OI= 457 at $1.70 SL=1.00
BUY PUT MAY-35*QYZ-QG OI=2239 at $1.60 SL=0.75

Average Daily Volume = 1.25 mln



GNSS - Genesis Microchip $22.00 (-1.07 last week)

Genesis Microchip designs, develops and markets integrated
circuits that receive and process digital video and graphic
images.  Its integrated circuits are typically located inside a
display device and process images for viewing on that display.
The company also supplies reference boards and designs that
incorporate its proprietary integrated circuits.  GNSS is
focused on developing and marketing image-processing solutions
and targets the flat-panel computer monitor and other potential
mass markets.

Friday's action in shares of GNSS is a good measure of the degree
to which this stock has fallen out of favor with investors.  With
the Semiconductor index (SOX.X) rebounding mildly, you could see
the lack of interest in shares of GNSS, which couldn't even
challenge it month-long descending trendline near $22.50.  While
a test of that resistance could come next week, it isn't likely
to be resolved in favor of the bulls unless the SOX can advance
above the $570 resistance level and GNSS sees stronger buying
volume.  For the record, Friday's volume came in a 2 mln shares,
only about 40% of the ADV.  So long as the SOX continues to lose
strength relative to the broad market and GNSS continues to lose
strength relative to the SOX, we've got a winning put play on our
hands, where all we have to do is fade each failed rally.
Entries on rollovers near resistance have been working so far,
and we see no reason to expect that they won't continue to do so.
Use a rollover at the trendline or even up near $23 to initiate
new positions, and keep stops in place at $23.50.

*** April contracts expire next week ***

BUY PUT APR-22 QFE-PX OI=1276 at $1.45 SL=0.75
BUY PUT MAY-22 QFE-QX OI= 198 at $3.10 SL=1.50
BUY PUT MAY-20*QFE-QD OI= 128 at $1.85 SL=1.00

Average Daily Volume = 4.78 mln


GS - Goldman Sachs Group $83.00 (-3.15 last week)

The Goldman Sachs Group is a global investment banking and
securities firm that provides a wide range of services worldwide
to a substantial and diversified client base that includes
corporations, financial institutions, governments and high
net-worth individuals. The company provides investment banking,
which includes financial advisory and underwriting, and trading
and principal investments, which includes fixed income, currency
and commodities, equities and principal investments.  GS
recently completed the acquisition of Spear, Leeds & Kellog,
which is engaged in securities clearing, execution and market
making, both floor-based and off-floor.

After the severe beating Brokerage stocks took on Thursday (due
to the pending legal action against the analyst community), a bit
of a rebound was to be expected and that is exactly what
transpired on Friday.  Following along with the Brokerage sector
(XBD.X), GS caught a bid right from the open and moved up as high
as $83 on Friday.  Despite the fact that volume was heavy again,
we certainly like the trade setup that the stock is currently
giving us.  That's right, it's an inside day and for those that
like to trade this chart pattern, the entry parameters are easy
to see.  A drop below Thursday's low ($80.35) can be used to
trigger new put plays, while a rally through Thursday's high
($84.10) will be grounds for closing the play.  Accordingly, we
are lowering our stop to $84.10 this weekend.  Alternatively, we
can consider new entries on a rollover from the vicinity of $84,
especially if accompanied by increasing volume and weakness in
the XBD.  Isn't it interesting to note the proximity of Thursday's
high ($84.10) to the 38% retracement of the fall rally ($84.14).
Clearly this has become a pivotal point for GS, and the stock's
behavior near that level will determine the fate of our play.

*** April contracts expire next week ***

BUY PUT APR-85*GS-PQ OI=9209 at $3.00 SL=1.50
BUY PUT MAY-85 GS-QQ OI= 444 at $4.80 SL=3.00
BUY PUT MAY-80 GS-QP OI= 551 at $2.70 SL=1.25

Average Daily Volume = 3.14 mln


SGP - Schering-Plough Corp. $28.62 (-0.49 last week)

Schering-Plough is a holding company that, through its
subsidiaries, is engaged in the discovery, development,
manufacturing and marketing of pharmaceutical products
worldwide.  The company has three principal product lines;
prescription products, animal health products, and over the
counter (OTC) health care products.  At the head of SGP's
prescription drug roster is Claritin, the world's top
antihistamine.  The company's OTC brand names include Afrin
(nasal sprays), Dr. Scholl's (foot care), and Coppertone and
Bain de Soleil (sun care).

A slight rebound in the normally defensive Pharmaceutical
index (DRG.X) on Friday wasn't enough to inspire the bulls in
SGP.  While the DRG moved fractionally higher, SGP moved lower
again, spending the entire day below the $29 level.  Our play
continues to weaken relative to the DRG index, which is itself
looking particularly weak and vulnerable to a significant drop
if the $361 support level gives way.  Weak stock in a weak
sector -- it's a thing of bearish beauty.  The increasing
stinginess of the FDA to grant drug approvals is weighing
heavily on both the DRG index as well as the more speculative
Biotech sector.  As long as bearish sentiment prevails, down is
the path of least resistance.  The only problem we see with our
SGP play is the fact that the company announces earnings Thursday
morning, giving us only a scant few days to play.  The best
entries will come from a failed rally near the $29.25-29.75
resistance zone, although we certainly can't rule out the
possibility of fresh entry points if SGP takes a nose-dive and
breaks below the $27.70 support level from last week.  We are
leaving our stop in place at $30.

*** April contracts expire next week ***

BUY PUT APR-30*SGP-PF OI=5549 at $1.70 SL=0.75
BUY PUT MAY-30 SGP-QF OI=5969 at $2.35 SL=1.25
BUY PUT MAY-27 SGP-QY OI=5039 at $1.05 SL=0.50

Average Daily Volume = 7.00 mln


TMPW - TMP Worldwide $29.10 (-2.71 last week)

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

Bullish traders that were looking for the Jobs report last week
to revive their ailing TMPW stock were sorely disappointed, as
the release of the numbers seemed to be the excuse to break
another support level.  TMPW quickly fell below the $31 level
and now appears to be solidifying that level as resistance.  Even
a slightly positive market on Friday couldn't get the stock going
and it fell sharply right at the open.  Finally finding support
near $28, TMPW managed to claw its way back by the closing bell,
trimming its loss to "only" 2.47%.  But that doesn't change the
fact that it was another down day.  And the rebound from the $28
level was to be expected, as this is an area (actually $27-28)
that has provided support four times over the past year.  But
judging from the ugliness on the PnF chart (recent double-bottom
breakdown and a vertical count that yields a price target of $18),
the current support level is likely to be temporary.  Use failed
intraday rallies near $30 or even $31 (the new level of our stop)
to initiate new positions.  Alternatively, wait for the $27
support level (actually closer to $26.75) to give way on continued
heavy volume before entering.  Note that the company is presenting
at the SunTrust Robinson Humphrey Institutional Conference on
Monday, and comments made there could have a significant impact on
the stock.

*** April contracts expire next week ***

BUY PUT APR-30 BSQ-PF OI=2007 at $1.70 SL=0.75
BUY PUT MAY-30*BSQ-QF OI=  55 at $3.20 SL=1.50
BUY PUT MAY-25 BSQ-QE OI= 160 at $1.15 SL=0.50

Average Daily Volume = 3.00 mln


WPI - Watson Pharmaceuticals $24.15 (-0.05 last week)

Focused on niche pharmaceutical products that are hard to make,
WPI is engaged in the development, production, marketing and
distribution of both generic and branded drugs.  The company's
branded drugs are primarily in dermatology (acne medication),
women's health (contraceptives and hormone regulation), and
general products (antihypertensives and antipsychotics).  WPI
offers generic versions of hormone replacement therapies Estrace
and Ogen, analgesics Vicodin and Lortab, and ulcer drugs Zantac
and Carafate.  The company is also engaged in the development
of advanced drug delivery systems, primarily designed to enhance
the therapeutic benefits of pharmaceutical products.

Let a stock break down to new all-time lows and it is amazing the
lack of buying interest that exists for that stock.  That is
precisely the situation with shares of WPI.  After breaking below
$27 2 weeks ago, the stock has continued to drift lower, finally
finding a temporary floor near the $24 level last week.  But with
the Biotechnology index (BTK.X) looking like it wants to drop
below the $450 level, there just isn't much bullish interest in
WPI.  Even a 2.65% bounce in the BTK on Friday only translated
into a 0.6% advance for the stock and the bulls couldn't even
manage to push through the weak $24.50 resistance level.  If the
BTK does in fact break down, WPI could really feel the pain, as
one of the weaker stocks in this weak sector.  We can continue to
use failed rallies below resistance (first at $24.50, then $25,
and finally $25.50) to initiate new positions, in advance of the
expected breakdown.  We're leaving our stop in place at $26 as
that is a formidable resistance level now.  Traders looking to
enter on the next violation of support will want to wait for a
drop through Thursday's lows ($23) before taking a position.

*** April contracts expire next week ***

BUY PUT APR-25 WPI-PE OI= 787 at $1.45 SL=0.75
BUY PUT MAY-25 WPI-QE OI=2103 at $2.20 SL=1.00
BUY PUT MAY-22*WPI-QX OI= 494 at $1.20 SL=0.50

Average Daily Volume = 844 K


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*****
LEAPS
*****

The Trend Is Your Friend!
By Mark Phillips
mphillips@OptionInvestor.com

As proof that we must pay attention to the dominant trend, the
broad markets continued their decline last week.  Despite a
mid-week attempt to fight the trend, all of the major indices
finished in the red.  And that shouldn't come as any surprise,
with the weekly Stochastics of every one of them still pointing
south on the latest leg of the persistent bear market.

I still feel there is substantial downside remaining, but the
proof of that will come from the current earnings season, which
kicks into high gear next week.  With all of the major indices
resting on tenuous support levels, and the VIX still down at 22,
we are sitting on a volatile mixture that only needs one spark to
set it off.  If we're going to play the long side, we need to
very carefully select those stocks that are exhibiting relative
strength, and that is a big part of why we are taking a bullish
position this week in shares of Southwest Airlines (NYSE:LUV).  

Of course, playing the downside is challenging as well, because
short-covering can rear its ugly head in a bear market, taking out
stops in a heartbeat.  That's what transpired on both Wednesday
and Friday and the action was a bit exciting for those that were
involved.  So, we need to carefully consider our downside plays,
taking those risks into account.  EK has been lounging on the
Watch List for awhile now, and the upgrade last week provided us
with a solid bearish entry point on a stock that I think is
destined to break the $20 level later this year.

An observant subscriber this week brought the price action in KBH
to my attention, and the bullish action is hard to ignore.
Specifically, the stock completed a bullish triangle formation
on the PnF chart, and actually managed to touch the $47 level.
This is actually very interesting in light of the PnF chart, as
it marks the achievement of the bullish target that was generated
back in November.  The question now, is how much upside remains
in the stock.  I continue to believe that the good news has
already been factored into the Housing sector and we should see
substantial weakness in the months ahead.  That being said, there
is an increased risk with trying to play the downside in a stock
and sector that are trading near their highs and showing solid
strength.

So I'm putting the play on HOLD this weekend, pending future
price action.  In order to actually take a position, here's what
we need to see.  A drop in price and then a run back up to the
$46-47 level, while the stock and the Housing sector give up some
of their relative strength.  Then a subsequent rollover from that
area with declining relative strength would be our trigger to take
a new position.  I do not see any explosive upside to the stock,
so it will be fairly easy to manage risk with a tight stop, once
we do take a position.  But for now, we need to be patient and
allow the price action to unfold.

The plays that we put on HOLD last week, BRCM and WMT haven't done
anything that would cause me to change their status.  BRCM has
vacillated between the $31-35 area and we definitely want to wait
for the company's earnings on Wednesday before making a decision
as to moving it back to active status.  After falling out of its
ascending channel, shares of WMT have battled back into that
channel, but appear to be finding resistance near the $61.50 area.
That is the top of the gap from 2 weeks ago, and I would expect
some price weakness over the next week.  At any rate, this is not
a time to be considering new bullish positions.  If we are going
to play this one to the upside, we need to see more work done on
building support in the $59-60 area before playing.  For now, WMT
remains on HOLD.

Still looking good to me is our DYN Watch List play, which
continues to vacillate between the $27-30 area.  I'm waiting for
a dip back to the $27 area that coincides with both the weekly
and daily Stochastics turning back up in unison.  That will give
us a solid bullish entry, where we can benefit from the recovery
in the overall Utility sector.  While there hasn't been anything
approaching a solid entry in the past few weeks, I do like the
fact that price action has remained rather stable, as the weekly
oscillator has been working its way back to where we will have a
solid bullish actionable point.  Patience will be rewarded on
this one.

PG has been downright amazing in its ability to push through the
upper edge of its year-long ascending channel, but I don't expect
it to last in the near term.  A reversion to the mean is expected,
and that would put the stock back in the $86-87 area.  I'm
raising the entry target slightly due to the ascent of the
channel, but otherwise, our strategy remains unchanged.

Another of our plays that has shown some impressive strength of
late is the MDT play.  With Health Care stocks continuing to
perform well, MDT absolutely refused to break below the $43 level
over the past several weeks.  With the weekly Stochastics now
firmly in ascent mode and the price action looking more positive,
I want to make sure that we don't miss this one.  So the entry
target moves up to the $44-45 area.  We want to take advantage of
any dip and bounce in this area to initiate our position.

As living proof that stop losses are there for a reason, I'm
thanking my Technical Analysis skills that we exited IBM when we
did.  Rumors of an earnings warning were indeed warranted, and
the violation of the $100 level the week before last was a
screaming signal that all was not right with Big Blue.  The
warning last week slammed the stock down to the $83 level, it's
lowest level since late 2000.  And if conditions continue to
deteriorate, even the $80 level is suspect as a support level.
Just as a point of interest, I pulled up a PnF chart on IBM, and
the triple-bottom breakdown now gives a bearish target of $70!
So bottom fishers beware, IBM is not where I would be fishing
for bullish plays right now!

Along the same lines, remember my trepidation about keeping GE on
our Watch List a few weeks back?  Those concerns were validated
on Thursday following the company's earnings report.  Following
the report, where the company met its numbers, investors dumped
the stock in droves, driving it below $33.50 for the first time
since September 24th.  Coming back to the PnF chart, we can see
that the bearish target is $28, and it looks to me like that
target will be achieved.

And that brings me back to the topic of the broad markets.  If
market leaders like IBM and GE are being taken to the cleaners,
is it any surprise that the broad markets are struggling?  We've
talked a lot about the VIX over the past several weeks,
emphasizing that a VIX in the teens is a strong bearish sign.
Well, it looks like we are getting another confirming data point,
as the markets are falling and the VIX is rising, just as it
always does.  Throw in a few dozen more prominent earnings
disappointments over the next few weeks, and we could really see
some fireworks in the broad market averages.

I really think this earnings season will be pivotal for the
intermediate term action in the markets, and that is the primary
reason why I haven't listed any new Watch List plays this weekend.
I want to see how the reporting period goes before suggesting new
play candidates.  Take advantage of the intervening time to do
your own research, and I'll do the same.  I'd be willing to bet
we'll have some fresh candidates to consider over the next 2
weeks.

For those of you that are still fans of Technology, take a look
at the usual list of bullish suspects.  Biotechs, Semiconductors,
Software.  There's nary a bullish chart to be found.  And don't
even get me started on anything in the Telecom arena.  There is
a lot more pain to be felt here as well.  Bottom fishing in any
of these sectors is a recipe for disaster in my opinion, unless
you have a VERY long time horizon.

Reading the tea leaves (or lunar cycles, if you prefer), not to
mention dozens of charts, tells me that we are in for some
significant market weakness in the months ahead.  The recovery
continues to be pushed back and what little signs of economic
recovery were seen in recent months appears to have been little
more than inventory rebuilding.  Play defense and take advantage
of the downside, particularly in the Technology arena.  

Forgive me if I seem overly bearish, but I'm doing my level best
to paint the markets for you the way I see them.  Valuations are
still way out of whack, and need to drop significantly if we are
going to have a sustained bull market again.  The time for
wanton bullish speculation will come again, but it isn't here
right now.  We are still in a bear market, no matter what the
talking heads on stock-TV prattle on about.  To quote a wise man,
"Trade what you observe, not what you believe!"

See you next week!

Mark



LEAPS Portfolio

Current Open Plays

SYMBOL OPENED     LEAPS    SYMBOL  ENTRY   CURRENT  CHANGE  STOP

Calls:
JNJ    03/05/02  '03 $ 60  VJN-AL  $ 5.90  $ 6.70  +13.56%  $61
                 '04 $ 60  LJN-AL  $ 9.20  $10.40  +13.04%  $61
LUV    04/12/02  '03 $ 20  VUV-AD  $ 2.10  $ 2.10  + 0.00%  $17.25
                 '04 $ 20  LOV-AD  $ 3.90  $ 3.90  + 0.00%  $17.25


Puts:
EK     04/12/02  '03 $ 30  VEK-MF  $ 2.70  $ 2.70  + 0.00%  $36
                 '04 $ 30  LEK-MF  $ 3.90  $ 3.90  + 0.00%  $36


LEAPS Watchlist

Current Possibles

SYMBOL  SINCE    TARGET PRICE  TARGETED LEAP  SYMBOL

CALLS:
BRCM   10/28/01  HOLD          JAN-2003 $ 40  OGJ-AH
                            CC JAN-2003 $ 35  OGJ-AG
                               JAN-2004 $ 40  LGJ-AH
                            CC JAN-2004 $ 35  LGJ-AG
MDT    03/10/02  $44-45        JAN-2003 $ 45  VKD-AI
                            CC JAN-2003 $ 40  VKD-AH
                               JAN-2004 $ 45  LKD-AI
                            CC JAN-2004 $ 40  LKD-AH
DYN    03/17/02  $27           JAN-2003 $ 30  ONO-AF
                            CC JAN-2003 $ 25  ONO-AE
                               JAN-2004 $ 30  KYK-AF
                            CC JAN-2004 $ 25  KYK-AE
PG     03/31/02  $86-87        JAN-2003 $ 90  VPG-AR
                            CC JAN-2003 $ 85  VPG-AQ
                               JAN-2004 $ 90  LPR-AR
                            CC JAN-2004 $ 85  LPR-AQ
WMT    03/31/02  HOLD          JAN-2003 $ 65  VWT-AM
                            CC JAN-2003 $ 60  VWT-AL
                               JAN-2004 $ 65  LWT-AM
                            CC JAN-2004 $ 60  LWT-AL


PUTS:

KBH    03/31/02  HOLD          JAN-2003 $ 45  OHK-MI
                               JAN-2004 $ 45  KXC-MI



New Portfolio Plays

LUV - Southwest Airlines $19.26 ** Call Play **

Getting ready to soar again, (or at least ascend steadily),
shares of LUV have been gliding along just above the $18 level
for 3 weeks now.  Friday's 5% rebound that took the stock up
through the 20-dma ($18.91), was enough to get my interest in
taking a position.  The weekly chart provides a nice
confirmation, with Stochastics turning up from just above
oversold territory and the unexpected gift of bullish divergence.
Note the higher low in price and the lower low in Stochastics.
While not quite a lead-pipe lock, this is just one more factor
in our favor.  Speaking of positive factors, did you notice the
Dow Jones Transports ($TRAN) rebounded from the $2720 level last
week and look like they could be on the road to recovery as well.
And then there is the Airline sector (XAL.X), which held at
support near $95 and also is showing signs of improvement.  With
price action in both the stock and its sector improving and the
busy summer travel season ahead of us, I like LUV's prospects over
the intermediate term, and risk is certainly easy to manage with
a stop at $17.25, just below major support from the January lows.
Take note of the fact that LUV held above the 200-dma throughout
the recent weakness, which I take to be another positive sign.
Another interesting observation is that LUV hasn't given a sell
signal on the PnF chart since the September lows.  Watch for
continued strength in the XAL and for LUV to push back above the
$20 level to confirm the improving conditions.  The print at $20
will put the stock back into a column of X's, but we'll need to
see $23 before it has a fresh buy signal.  The current vertical
count defines our bullish target as $25.

BUY LEAP JAN-2003 $20 VUV-AD $2.10
BUY LEAP JAN-2004 $20 LOV-AD $3.90


EK - Eastman Kodak $33.51 ** Put Play **

It has been a rather dull and uneventful road for our EK Watch
List play over the past many weeks, but things finally got
interesting last week when Salomon Smith Barney analyst Jonathan
Rosenzweig upgraded the stock to Outperform from Neutral.
Rosenzweig based his upgrade on signs that the retail film sales
environment may be getting better.  Along with his upgrade, he
issued a new price target of $36.  Consider me unimpressed.
Long-time readers know the disdain with which I view just about
every pronouncement from the analyst community, and this one is
no different.  Just because more film is selling, doesn't mean
that EK is doing the selling.  Stiff competition from the likes
of Fuji and Agfa (as I mentioned in my original Watch List
writeup on the stock) is eating EK's lunch.  Rosenzweig goes on
in the text of the news release to reiterate my concerns about
the stock.  From the Dow Jones Newswires on Tuesday, "However,
he remained concerned about the long-term secular outlook, citing
the consumer switch from film cameras to digital cameras and the
intense competition in the film-pricing environment".  Hmmmm.  So
what is the basis for the upgrade?  I just don't see it.  At any
rate, the noise created from the upgrade gave EK a short-term
boost and by Thursday, it was already starting to fade.  This
looks to me like a solid entry, even though the weekly Stochastics
are trying to stage a short-term bullish reversal.  That one looks
destined to fail in the currently weak market environment, and we
ought to get confirmation of the stock's weakness when the company
releases its earnings on April 25th.  Note that the daily
Stochastics is topping out in overbought, and as it rolls lower,
price weakness should prevail, especially with the heavy weight
of the 200-dma capping the rally last week.  Cautious traders may
want to wait until after the earnings announcement to initiate
new positions, as the unexpected could happen, giving us one more
pop higher before the long summer decline commences.  We are
initiating the play with our stop set at $36.

BUY LEAP JAN-2003 $30 VEK-MF $2.70
BUY LEAP JAN-2004 $30 LEK-MF $3.90


New Watchlist Plays

None


Drops

None



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

Breakout Rallies All Around Us!
Austin Passamonte

Part-time traders haven’t had it this good in months if not 
years: opportunity for massive gains surrounds us today and the 
prospects for wealth are looking better all the time.

(Daily Chart: IBM)

 

I clearly recall the very first day IBM broke above $120 back in 
December. James Cramer of TheStreet.com fame was on CNBC 
literally pounding on the table that night roaring that "Beamer" 
was not expensive here and heading to $150 next. I wrote within 
these pages that IBM would see $85 again before $150 and two 
different readers blasted me with email response. But that market 
call was no clairvoyance on my part. Fact is, IBM was overbought 
at $120 on both weekly and daily charts via stochastic values. 
You could have (and perhaps did) reach the same conclusion as me 
about IBM being a total & complete pig of a stock at $120+ merely 
by taking one quick glance at these simple charts. Cramer and 
millions of others scoffed at such simple study, went long and 
got crushed by the weight of this 800lb gorilla shedding 200 of 
those points in gap-down fashion.


(Weekly Chart: IBM)



Think that daily chart of IBM was a lucky guess? Here is the 
exact-same template expanded to weekly view. Notice where the 
four warning signs in blue scrunch together? That's right... 
exactly where no upside buying and all defensive moves should 
have been taking place. What if we’d bought some April, May or 
June IBM 110 or 100 put options on the last bearish stochastic 
alignment back in early March? They probably cost a buck or two 
back then and should be fetching $1,500 to $2,500 apiece 
respectively as we speak. How’s that for decent buy & hold gains 
via part-time trading efforts?

Who knows... maybe that was just an anomaly, a low-odds hit at 
random. Probably doesn't work on any other examples, some might 
scoff.

(Weekly Chart: GE)


 

Biggest corporation in the world is not exempt to the universal 
market laws of overbought and oversold extremes. Mighty General 
Electric flashed, make that screamed seven clear sell signals 
since August of year 2000 until now. But guess what the public 
was steered towards doing each time? You guessed it... CNBCers 
were all razzed up by Bubblevision TV gushing over Jack Welch the 
genius, GE the best-run company ever and how strong it was 
pressing new recent highs. Every single time this tired mantra 
was repeated. Every single time the hapless public waded in and 
bought this bloated beast and every single time it crashed thru 
the floor with those momentum players aboard.

(Daily Chart: GE)


 

Here's the daily chart view in compressed window showing those 
last three sell signals listed. If you & I had merely exited 
longs up there or better yet loaded up on distant month puts and 
rode it down to oversold extremes, what would our trading 
accounts look like now? Pretty darn good, I'd have to say! GE was 
a strong sell at $42 in early March and April to June puts might 
have worked out quite well for buy & hold traders. How well? Why 
don't we plot them on charts and see?  

(Daily Chart: GE)


 

Looks like out part-time, buy & hold option traders could have 
played GE to the downside with May 37.5 puts @1.00 or April 37.5 
puts @0.50 on May 18th, plenty of time to spot Moby Dick about to 
roll over from those harpoons to come. Assuming we might use 
$1,500 to invest with right here, we could have played 10 April 
contracts for $500 and 10 May contracts for $1,000 each, now 
couldn't we? Stops could be -50% of purchase or better yet, we 
decided the entire $1,500 would be our risk on this trade. What 
happened next?

Today our 10 April contracts would fetch $4,000 and the ten May 
contracts $4,200 or a total of $8,200 on our $1,500 risked. By my 
simple calculations that would be +547% return on cost. Is that 
the math you come up with too? Sometimes trading really is simple 
as that.

Massive Opportunity Still Exists!
All around me I hear traders grumbling about no good trades 
available, markets stink right now, etc. A certain publicly-
traded stock player's website run by an ex-hedge fund manager and 
frequent host on CNBC is currently engaged in a whining contest 
over how those weaklings there cannot make any money these days. 
Sorry, they may be selling that idea but I'm not a buyer, and 
neither should you be. We have moving targets all around us and 
massive rallies taking place several times a week. What rallies, 
you ask? South-bound rallies like the two examples depicted 
above. 

By no means should you think these examples are isolated or 
behind us. My weekend scan of the Dow shows three or four high-
odds candidates ready to roll towards massive gain just like 
these. The NDX has another half-dozen or so and the SPX probably 
contains a dozen or two in the higher-volume category itself.

Part-time traders, opportunity abounds. All you have to do is set 
up some simple chart combinations like this, play puts in 
overbought extreme and calls in oversold extreme when the 
reversal move begins. set your predetermined level of loss,
diversify across a few different symbols, go on about your life 
and let time and gravity take over from there. Pretend these are 
the go-go years of 1998 thru 1999 and buy puts on every failed 
rally. Keep doing that for the rest of this year (and possibly 
far beyond) every time weekly and daily chart signals go 
overbought in unison. 

Forget about waiting for the recovery rally fantasy and play the 
bubble deflation rally we're enjoying right now. It might even 
get better: we could easily see indexes wash out to new recent 
lows well before the end of this year. Rejoice in the fact that 
we are option traders who can equally profit both ways. Repeat 
this process over and over until you can no longer count your 
money and are forced to weigh it for a total instead!

Best Trading Wishes,
Austin Passamonte


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The Option Investor Newsletter                   Sunday 04-14-2002
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*************
COVERED CALLS
*************

Trading Covered-Calls: Some Comments From A Long-Time Reader
By Mark Wnetrzak

One of the OIN's veterans offered some interesting observations
on the newsletter and its staff, as well as the unique way he
uses the candidates in this section.


Mark,

I have been a long-term subscriber to OI (about 3 years).  Every
day I learn something from the writers.  Your articles have been
especially rewarding on covered-calls.  I (my portfolio) have
performed very well using your suggestions, among others, i.e.,
naked-put strategies etc.  I have two daughters ages 9 and 10,
whom we "home school" and as part of their education, I am
teaching them how to "day trade", trade options, go long and
short etc.  They have Roth IRAs (both are employed at my medical
practice) and are responsible for writing calls in their account.
They read the Covered-calls section in the OI, look at the charts
and make decision on which stock to buy and which option to sell.
This is all part of their financial education.  I review the
information with them and provide advice.

So far, they are up almost 10% in their Roth.  They are doing the
same in their educational IRA's...not bad for a couple of 9 and 11
year-olds.  I thought I would share how much you and OI writers
have had an influence on my financial life.  

Thank You

I read in the Sunday addition that you have available a covered
call calculator in excel.  May I request a copy?

MS


Thanks to MS for a wonderful story and some very kind comments.
All of us at the OIN take pride in working for a great company
that offers some of the best stock/option research products at
a reasonable price.  Regarding the calculator, we are now in the
process of posting the program on the website and I will publish
the link in this section when it is available.
 
On a less positive note, the market has been rather difficult in
recent weeks and the deluge of conflicting outlooks and forecasts
has demonstrated why each of us must work hard to overcome our
emotions and think independently.  At the same time, it is also
important to reflect on our past failures and use that knowledge
to avoid the same mistakes in the future.  Here are some of the
most important concepts I have learned in my trading experiences:

1.  Trading demands foresight, flexibility, patience, common sense
    and above all, sound judgment in a timely manner.

2.  Trade with a plan, and know your limits before you open any
    position!  Predetermine each potential entry and exit target.

3.  Manage your losses successfully, and profits will soon follow!

4.  Buy on weakness, and add to your position as the rebound above
    a trend-line (or moving average) confirms the upside potential.

5.  Sell on strength, and close out winning positions at the first
    sign of hesitation.  Protect your profits with trailing stops.

6.  Distribute risk with portfolio diversity, and avoid financial
    uncertainty with hedged positions.  

7.  Don't be influenced by outside forces, including friendly
    advice.  Ignore the crowd and think for yourself!
   
8.  When hope becomes a major part of your outlook, it's time for
    a break.  Fall back, take inventory, define your motives and
    try again .
 
9.  Don't over-trade!  In addition, be careful not to increase
    your trading after a string of winners - savor your success!

10. Whenever you expect something to occur, remember that the
    market is famous for doing the unexpected.

Trade Wisely!


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

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

ELON   18.00  18.26   APR  17.50  1.45  *$  0.95   8.3%
PRCS    5.43   5.60   APR   5.00  0.85  *$  0.42   8.0%
CTLM   12.96  12.51   APR  12.50  1.20  *$  0.74   6.8%
MANU   19.42  17.57   APR  17.50  3.40  *$  1.48   6.7%
NXTP    6.05   5.18   APR   5.00  1.50  *$  0.45   6.1%
ENDO   17.98  17.20   APR  17.50  1.25   $  0.47   6.1%
SMMX   20.65  20.98   APR  20.00  1.45  *$  0.80   6.0%
PDE    15.46  15.47   APR  15.00  0.85  *$  0.39   5.8%
RSTO   12.69  10.48   APR  10.00  3.30  *$  0.61   5.6%
OVTI   11.03  12.18   APR  10.00  1.40  *$  0.37   5.6%
SCIO   31.36  32.14   APR  30.00  2.80  *$  1.44   5.5%
EMKR    9.15   9.10   APR   7.50  2.00  *$  0.35   5.3%
PVN     5.71   7.69   APR   5.00  1.05  *$  0.34   5.3%
SIPX   11.15   9.92   APR  10.00  1.90   $  0.67   5.2%
ENTG   15.01  16.45   APR  15.00  0.70  *$  0.69   5.2%
CANI    8.61   9.53   APR   7.50  1.45  *$  0.34   5.2%
ASMI   26.11  25.55   APR  25.00  1.95  *$  0.84   5.0%
SYXI   11.26  11.23   APR  10.00  1.85  *$  0.59   4.5%
GSPN   14.09  12.54   APR  12.50  2.20  *$  0.61   4.5%
AEIS   32.59  33.85   APR  30.00  4.00  *$  1.41   4.3%
HOFF   11.38  10.62   APR  10.00  1.75  *$  0.37   4.2%
TMCS   29.58  28.45   APR  27.50  2.85  *$  0.77   4.2%
ATVI   32.30  29.85   APR  30.00  4.00   $  1.55   4.0%
ENDO   18.40  17.20   APR  17.50  1.75   $  0.55   2.9%
REV     5.70   4.76   APR   5.00  1.00   $  0.06   1.1%
MERX   17.66  16.53   APR  17.50  1.00   $ -0.13   0.0%
TERN    8.48   6.70   APR   7.50  1.35   $ -0.43   0.0%

BSML    5.37   5.98   MAY   5.00  0.90  *$  0.53   7.4%
PRCS    5.39   5.60   MAY   5.00  0.80  *$  0.41   6.5%
NFLD    8.19   7.79   MAY   7.50  1.30  *$  0.61   6.4%
CCK     8.85  11.04   MAY   7.50  1.80  *$  0.45   4.6%
EMKR    9.10   9.10   MAY   7.50  2.05  *$  0.45   4.6%

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

Comments:

I am considering going to Cedar Point, Michigan this summer.
With the recent up-and-down motion in the major averages, I
keep thinking of the roller-coasters at the popular amusement
park.  However, as long as the "ride" stays above the sold
strike, covered-call writers really don't mind the gyrations.
With a heavy dose of earnings due next week, now is not the
time to be complacent.  Echelon (NASDAQ:ELON) sure is acting 
a bit worrisome after posting a 119% increase in revenues for
the year.  Time to go or will the 50-dma provide support?  A
few other stocks to consider exiting or adjusting are Nextel 
Partners (NASDAQ:NXTP) and Revlon (NYSE:REV), as they continue
to fade.  Restoration Hardware (NASDAQ:RSTO), Sipex (NASDAQ:
SIPX), and GlobeSpan (NASDAQ:GSPN), appear to be signaling a 
reversal with Friday's rally, but that may only last until 
Monday.  Monitor Merix (NASDAQ:MERX) closely as it tests the 
bottom of its trading range.  Lastly, Terayon (NASDAQ:TERN) 
appears to have made a successful test of support.  Still,
exiting early or adjusting the cost basis may be prudent, 
depending on your long-term outlook.

Positions Closed: Gemstar-TV Guide (NASDAQ:GMST), Integrated 
Circuit (NASDAQ:ICST), Zomax (NASDAQ:ZOMX), J.D. Edwards 
(NASDAQ:JDEC).



NEW CANDIDATES
*********

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

CYGN    5.79  APR  5.00   YNQ EA  1.05 139    4.74   35    4.8%
IDCC   10.99  APR 10.00   DAQ EB  1.45 229    9.54   35    4.2%
IMCO   15.99  APR 15.00   IQZ EC  1.75 577   14.24   35    4.6%
NPRO    8.85  APR  7.50   NYQ EU  1.90 500    6.95   35    6.9%
PDLI   17.37  APR 15.00   PQI EC  3.20 395   14.17   35    5.1%
PLUG   10.26  APR 10.00   PQL EB  0.80 90     9.46   35    5.0%
PWAV   14.24  APR 12.50   VFQ EV  2.40 178   11.84   35    4.8%

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

NPRO    8.85  APR  7.50   NYQ EU  1.90 500    6.95   35    6.9%
PDLI   17.37  APR 15.00   PQI EC  3.20 395   14.17   35    5.1%
PLUG   10.26  APR 10.00   PQL EB  0.80 90     9.46   35    5.0%
CYGN    5.79  APR  5.00   YNQ EA  1.05 139    4.74   35    4.8%
PWAV   14.24  APR 12.50   VFQ EV  2.40 178   11.84   35    4.8%
IMCO   15.99  APR 15.00   IQZ EC  1.75 577   14.24   35    4.6%
IDCC   10.99  APR 10.00   DAQ EB  1.45 229    9.54   35    4.2%


Company Descriptions

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

*****
CYGN - Cygnus  $5.79  *** Break-Out! ***

Cygnus (NASDAQ:CYGN) develops and manufactures diagnostic medical
devices, utilizing proprietary technologies to satisfy unmet needs
cost-effectively.  The company's first such device is the Gluco-
Watch biographera, a frequent, automatic and non-invasive glucose 
monitoring device.  The system is comprised of two components: a
durable component known as the biographer, and a consumable com-
ponent known as the AutoSensor.  The durable GlucoWatch biographer
is worn like a wristwatch and displays and stores current and past
glucose levels and trend data.  The AutoSensor, after calibration 
with a standard blood glucose monitor, is attached to the back of
the biographer and automatically extracts and measures glucose 
levels through intact skin every 20 minutes.  Cygnus recently
announced that it has received supplemental pre-market approval
from the FDA for the GlucoWatch® G2(TM) Biographer, which adds
several enhancements to the first-generation GlucoWatch Biographer.
The company says it is on plan to initiate U.S. sales of the first-
generation GlucoWatch Biographer in the next few weeks and believes
the second-generation GlucoWatch Biographer could be introduced 
later in the year.  (So much for sticking yourself with a needle!)
We simply favor the break-out on heavy volume that suggests further
upside potential.  Target-shoot a lower net-debit to increase the
potential yield as the stock is likely to consolidate next week.

APR 5.00 YNQ EA LB=1.05 OI=139 CB=4.74 DE=35 TY=4.8%


*****
IDCC - Interdigital Comm.  $10.99  *** Trading Range? ***

Interdigital (NASDAQ:IDCC) specializes in the design and develop-
ment of technology content and system solutions for advanced 
digital wireless communications applications.  Over the course of
its nearly 30-year history, the company has amassed a substantial
and significant library of systems experience, know-how and patents
related to digital wireless technology around the world.  IDCC
markets its technologies and solutions capabilities primarily to 
telecommunications equipment producers and related suppliers.  Its
inventions are embedded into products targeted for the following
applications: mobile phones, personal digital assistants, mobile 
computing devices, base stations and other infrastructure equipment,
and other terminal-end wireless devices.  Not much news out on 
Interdigital.  This position is based on the current short-term
technical trading range between $9 and $12 that offers a reasonable
(speculative) position in the stock.  At the beginning of the month
the stock rallied above its 150-dma on heavy volume, which now
offers support near $10.  A logical stop-loss signal would be a
move below the trend-line connecting the February-March lows.

APR 10.00 DAQ EB LB=1.45 OI=229 CB=9.54 DE=35 TY=4.2%


*****
IMCO - Impco Technologies  $15.99  *** On The Move! ***

Impco Technologies (NASDAQ:IMCO) is a designer, manufacturer and
supplier of advanced systems that store gaseous fuels and monitor
and control the pressure and flow of those fuels for use in fuel
cells and internal combustion engines.  The company conducts
business through two operating divisions: its Quantum division
and its Gaseous Fuel Products division (which includes its
International Operations segment).  The Quantum division develops
and manufactures cost-effective and efficient gaseous fuel storage,
fuel delivery and electronic control systems for OEM passenger and
fleet vehicles.  The Gaseous Fuel Products division is a supplier
of components and systems that allow internal combustion engines
to operate on clean burning gaseous fuels, primarily propane and
natural gas, and complete engine packages operating on these fuels.
IMCO has established a relatively stable support area near our
cost basis and the strong move this week suggests further upside
potential.

APR 15.00 IQZ EC LB=1.75 OI=577 CB=14.24 DE=35 TY=4.6%


*****
NPRO - NaPro BioTherapeutics  $8.85  *** Bottom-Fishing! ***

NaPro BioTherapeutics (NASDAQ:NPRO) is a biopharmaceutical company
focused on the development, production and licensing of complex 
natural product pharmaceuticals, as well as on the development and
licensing of novel genetic technologies for applications in human
therapeutics and diagnostics, pharmacogenomics and agribiotechnology.
The company's lead product is paclitaxel, a naturally occurring
chemotherapeutic anti-cancer agent found in certain species of yew,
or Taxus, trees.  In addition to its efforts with paclitaxel and 
genetics, the company is working on several types of compounds that
have displayed activity as anti-cancer agents.  The company is 
actively engaged in evaluating the in-licensing or purchase of
potential new products and/or technologies, whether or not those
products or technologies are derived from natural products.
NaPro reported earnings on April 1st (no laughing please), showing
a loss of $0.36 per share, on sales of $5,750,000.  Essentially,
NaPro is awaiting its first U.S. drug approval for injectable
paclitaxel as it is ready for "a prompt introduction of the 
product," according to the company's CEO.  The company has made
a substantial investment in facilities, biomass and the human 
capital associated with increasing their production capacity 
into the U.S. market.  Favorable speculation with a cost basis
near long-term support.  Due Diligence is a must with this one!

APR 7.50 NYQ EU LB=1.90 OI=500 CB=6.95 DE=35 TY=6.9%


*****
PDLI - Protein Design Labs  $17.37  *** Bottom Fishing: Part II ***

Protein Design Labs (NASDAQ:PDLI) is engaged in the development
of humanized monoclonal antibodies for the prevention and treat-
ment of disease.  The company has licensed certain rights to its 
humanized antibody product, Zenapax, to Hoffmann-La Roche, Inc. 
and its affiliates, which markets it for the prevention of kidney
transplant rejection.  Protein Design is also testing Zenapax for
the treatment of autoimmune disease.  In addition, the company 
has several other humanized antibodies in clinical development 
for autoimmune and inflammatory conditions, asthma and cancer.
In March, Protein Design announced that its drug Zenapax failed
to meet testing targets in psoriasis patients but apparently,
the "bad" news was already priced-in.  In fact, a Morgan Stanley
analyst increased the brokerage house's recommendation on the 
stock to "overweight," as he sees a "strong calendar of news 
flow to support share price appreciation."  We simply favor the
recent bullish technical signals and Friday's rally back above
the 30-dma.  An acceptable risk/reward outlook for speculators.

APR 15.00 PQI EC LB=3.20 OI=395 CB=14.17 DE=35 TY=5.1%


*****
PLUG - Plug Power  $10.26  *** Trading Range: Part II ***

Plug Power (NASDAQ:PLUG) is a designer and developer of on-site,
energy generation systems utilizing proton exchange membrane fuel
cells for stationary applications.  The company's goal is to 
manufacture reliable, efficient and safe fuel cell systems at 
affordable cost for mass-market consumption.  Plug is focusing 
its efforts on overall system design, component and subsystem
integration, assembly, as well as quality control processes.  The
company was formed as a joint venture between Edison Development 
Corp., a DTE Energy Company, and Mechanical Technology, Inc.  The
company intends to manufacture residential and small commercial 
stationary systems that will be sold globally through a joint 
venture with GE MicroGen, Inc.  DTE Energy Technologies will
distribute these systems in Michigan, Illinois, Ohio and Indiana.
This position offers a favorable cost basis from which to specu-
late on Plug Power's future.  The stock has been forging a Stage
I base for almost a year with a strong support area near $9.

APR 10.00 PQL EB LB=0.80 OI=90 CB=9.46 DE=35 TY=5.0%


*****
PWAV - Powerwave Technologies  $14.24  *** Earnings Rally ***

Powerwave Technologies (NASDAQ:PWAV) designs, manufactures and 
markets ultra-linear radio frequency (RF) power amplifiers for 
use in the wireless communications market.  Powerwave manu-
factures both single- and multi-carrier RF power amplifiers 
for a variety of frequency ranges and transmission protocols.  
Single-carrier RF power amplifiers (SCPA) typically amplify a 
specific radio channel.  Multi-carrier RF power amplifiers (MCPA)
are capable of amplifying several radio channels at one time by 
integrating the functions of several SCPA units and cavity 
filters within a single MCPA unit.  Powerwave's products are 
currently being utilized in wireless networks operating in the 
800 to 1,000 megahertz (MHz), 1,800 to 2,000 MHz and over 2,000 
MHz frequency ranges.  On Friday, JP Morgan raised its rating on 
Powerwave to "buy" from "market perform" after the company posted
higher-than-expected first quarter revenues the day before.  PWAV
reported 1st-quarter earnings of $2.7 million, or 5 cents a share,
on sales of $104.1 million.  The company noted strength in demand
for its high-powered multi-carrier products.  Nothing like a high
volume rally to get the attention of Wall Street.  We simply
favor the new bullish momentum and the historical support area
near our cost basis.
     
APR 12.50 VFQ EV LB=2.40 OI=178 CB=11.84 DE=35 TY=4.8%


*****

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

The following group of issues is a list of additional candidates
to supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary. 

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

SIRI    5.10  APR  5.00   QXO EA  0.60 247    4.50   35    9.7%
EDSN   12.98  APR 12.50   USD EV  1.55 1020  11.43   35    8.1%
NTPA    5.00  APR  5.00   NQD EA  0.40 0      4.60   35    7.6%
GERN    7.74  APR  7.50   GQD EU  0.75 37     6.99   35    6.3%
MIPS    7.94  APR  7.50   MUP EU  0.95 0      6.99   35    6.3%
ASGN   20.13  APR 20.00   UHV ED  1.15 0     18.98   35    4.7%
SHFL   22.81  APR 22.50   SFQ EX  1.40 63    21.41   35    4.4%
BEAV   13.00  APR 12.50   BQV EV  1.10 30    11.90   35    4.4%
ISLE   20.67  APR 20.00   QEP ED  1.60 133   19.07   35    4.2%


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

Option Trading 101: Position Adjustments With Naked Puts
By Ray Cummins

The recent downturn in the market has produced a number of new
requests for information on position adjustment strategies.


Hello Ray,

In the past, I have been a relatively successful trader with your
naked-put plays but the recent activity of the market has left me
with some positions I would rather not admit to.  My problem is
that I can't seem to get out of a trade when it goes "bad" and
now I need help to rescue a play.  The issue is DCTM (Documentum)
and my sold put is at $22.50 with a credit of $0.70.  Since the
stock is no longer in a bullish trend, I should probably get out
of the position completely but it seems like there is support at
$20 and that may help the stock rebound in the future.  Based on
the chart and my cost basis, what would you do?

Thanks,

TL

       
Regarding Position Adjustment Strategies:

Unfortunately, advice is the one thing I can't give, but that's
not necessarily a bad thing because I don't know where the stock
is going any more than you do.  The outlook for equities has been
"bearish" for some time and there is little indication the overall
trend will change in the near future.  That is one of the reasons
it is so important to sell puts ONLY on issues you wouldn't mind
owning.

At this point, there are no magic answers to your situation.  Any
action relative to an exit or roll-out strategy should have been
initiated when the issue moved through the sold strike price.  Now
the alternatives are based simply on your outlook for the stock.
The most obvious choices currently are: close the put for a loss,
roll down to a lower strike and/or forward to a future expiration
date, or plan to accept assignment of the underlying shares in
anticipation of future upside potential (which may also include
writing covered-calls).  Of course there are other, more complex
adjustment strategies but they usually include too much downside
risk to warrant their use.
  
As far as simple roll-outs (forward/downward adjustments) in a
bullish (short) put position: You can't wait until the stock is
well below the sold option's strike price and you will generally
need to move to a future expiration date to achieve a lower cost
basis.  I usually try to go to the next month out, so that I can
sell the highest relative premium and not commit to a long-term
position.  If you do not want to take a loss in the near term,
roll-out as far as necessary to achieve a credit in the trade.
However, I caution against using this technique on all but the
most high quality (portfolio) issues, as you can quickly run out
of downside margin if the stock declines further.  When the issue
has moved well below the sold strike, this technique is not viable
(you have waited too long to act) and another form of loss control
is necessary.  Most importantly, you should understand that the
success of a limited risk strategy such as selling naked puts is
based (in the long run) on limiting losses to a minimum.  There
are never any big winners to offset the big losers, so there can't
be any big losers.  Occasionally, a gapping issue will wipe out a
large portion of your gains and there is nothing you can do about
it.  But, at the same time, you must attempt to manage every other
play in your portfolio effectively or there will be no profits to
offset the rare (catastrophic) losers.

In all cases, you must realize that high probability/low profit
techniques such as writing (OTM) naked puts are not without their
disadvantages, nor are they immune to the market's corrections.
Strategies of this type, as well as most option trading techniques,
need to have a specific exit point or "cut loss" point in case the
market/stock/sector turns in the opposite direction from which you
are anticipating.  Indeed, position management is a very important
part of being a profitable trader and the degree to which this act
is accomplished often determines the overall success of a trader's
portfolio in the long run.

One thing to consider: not all strategies are for everyone.  You
might do better with option "buying" strategies (limited risk and
unlimited profit).  "Target-shooting" discounted entries on a wide
range of issues is a very profitable technique for many traders.
In addition, time-selling strategies (Covered-calls on LEAPS for
example) have a larger margin for error when it comes to making
adjustments in plays that have "gone bad."  I suggest you consider
other ways to participate in the options market and not limit
yourself to one particular method, simply because it seems like
the easiest approach.

Good Luck!
 

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


SUMMARY OF PREVIOUS CANDIDATES
*****

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

JDAS   31.88  32.29   APR  30.00  0.95  *$  0.95  11.6%
CBST   20.63  17.49   APR  17.50  0.55   $  0.54  10.3%
MATK   31.69  31.75   APR  30.00  0.50  *$  0.50   9.5%
IDTI   33.24  30.23   APR  30.00  0.70  *$  0.70   9.4%
PDE    15.90  15.47   APR  15.00  0.35  *$  0.35   8.7%
MSO    19.97  19.45   APR  17.50  0.60  *$  0.60   8.5%
NOVN   22.39  21.18   APR  20.00  0.70  *$  0.70   8.4%
MANH   35.29  35.59   APR  30.00  0.35  *$  0.35   8.3%
TER    39.43  36.80   APR  35.00  0.65  *$  0.65   7.9%
DCN    19.10  21.64   APR  15.00  0.55  *$  0.55   7.8%
FTI    19.93  19.69   APR  17.50  0.30  *$  0.30   7.4%
SYXI   12.05  11.23   APR  10.00  0.25  *$  0.25   7.2%
PLMD   22.83  37.95   APR  17.50  0.50  *$  0.50   7.1%
TER    39.20  36.80   APR  32.50  0.95  *$  0.95   6.9%
OSIS   25.20  24.00   APR  20.00  0.25  *$  0.25   6.8%
ATVI   28.58  29.85   APR  25.00  0.25  *$  0.25   6.7%
MLNM   25.12  22.17   APR  20.00  0.40  *$  0.40   6.4%
TXN    34.09  31.80   APR  30.00  0.75  *$  0.75   6.3%
IDTI   35.99  30.23   APR  27.50  0.65  *$  0.65   6.0%
LRCX   28.88  26.20   APR  25.00  0.65  *$  0.65   5.7%
MLNM   23.66  22.17   APR  17.50  0.40  *$  0.40   5.6%
MRVL   41.38  39.22   APR  30.00  0.70  *$  0.70   5.6%
PLMD   25.95  37.95   APR  20.00  0.35  *$  0.35   5.5%
SNDK   21.10  20.20   APR  17.50  0.25  *$  0.25   5.3%
MRVL   38.60  39.22   APR  27.50  0.50  *$  0.50   5.3%
SKX    19.20  21.90   APR  17.50  0.30  *$  0.30   5.2%
VARI   35.40  34.32   APR  30.00  0.55  *$  0.55   5.1%
AVCT   26.79  24.51   APR  25.00  0.50   $  0.01   0.2%
ENDO   19.71  17.20   APR  17.50  0.30   $  0.00   0.0%
VARI   36.78  34.32   APR  35.00  0.40   $ -0.28   0.0%
ACN    29.89  22.52   APR  25.00  0.85   $ -1.63   0.0%

IMCO   14.22  15.99   MAY  12.50  0.50  *$  0.50   8.1%
SNDK   20.37  20.20   MAY  17.50  0.65  *$  0.65   7.9%
VECO   33.97  35.97   MAY  30.00  1.00  *$  1.00   6.8%
MARY   21.50  21.53   MAY  17.50  0.40  *$  0.40   5.8%

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

Comments:

Another week, another series of unforgiving profit reports
and economic events to erode the value of equities.  The
quarterly earnings season started off with a "bang" as a
number of mainstream technology companies reported flagging
sales and issued mediocre revenues forecasts.  Our portfolio
was not immune to the activity as Accenture (NYSE:ACN) fell
victim to the "sell now, ask questions later" mentality.
Even before the world's largest consulting firm announced
that net profits were down 87% due to investment losses, and
said it was cautious on the economic recovery, its stock was
already plunging.  Traders who exited the position early in
the week avoided large losses but that won't be any comfort
to investors holding the issue for the long-term.  Shares of
Micron Technology (NYSE:MU) and Varian (NASDAQ:VARI) slumped
below recent support areas, prompting early exits in those
positions and Avocent (NASDAQ:AVCT), Cubist Pharmaceuticals
(NASDAQ:CBST), Endocare (NASDAQ:ENDO), Integrated Device
Technology (NASDAQ:IDTI), Texas Instruments (NYSE:TXN) and
Lam Research (NASDAQ:LRCX) are testing the lower limits of
previous trading ranges.  In the current market, any close
below near-term technical support levels should be seen as
a potential "early-exit" signal.
 
Positions Closed: Gemstar (NASDAQ:GMST), Aspen Technologies
(NASDAQ:AZPN), Alexion Pharmaceuticals (NASDAQ:ALXN), Micron
(NYSE:MU), Genta (NASDAQ:GNTA), FreeMarkets (NASDAQ:FMKT),
and Documentum (NASDAQ:DCTM).


NEW CANDIDATES
*********

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

ADPT   14.57  APR 12.50   APQ QV  0.40 529   12.10   35    8.4%
EAGL   17.00  APR 15.00   UQV QC  0.45 0     14.55   35    7.4%
ENER   24.24  APR 22.50   EQI QX  0.75 45    21.75   35    7.5%
LNCR   31.28  APR 30.00   LQN QF  0.80 1312  29.20   35    5.8%
OATS   10.63  APR 10.00   QOQ QB  0.45 10     9.55   35    9.6%
RMCI   25.45  APR 20.00   UHU QD  0.40 12    19.60   35    6.3%
TOL    27.58  APR 25.00   TOL QE  0.65 542   24.35   35    6.2%
VECO   35.97  APR 30.00   QVC QF  0.45 60    29.55   35    4.4%
WFR     8.60  APR  7.50   WFR QU  0.30 0      7.20   35    9.9%

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

WFR     8.60  APR  7.50   WFR QU  0.30 0      7.20   35    9.9%
OATS   10.63  APR 10.00   QOQ QB  0.45 10     9.55   35    9.6%
ADPT   14.57  APR 12.50   APQ QV  0.40 529   12.10   35    8.4%
ENER   24.24  APR 22.50   EQI QX  0.75 45    21.75   35    7.5%
EAGL   17.00  APR 15.00   UQV QC  0.45 0     14.55   35    7.4%
RMCI   25.45  APR 20.00   UHU QD  0.40 12    19.60   35    6.3%
TOL    27.58  APR 25.00   TOL QE  0.65 542   24.35   35    6.2%
LNCR   31.28  APR 30.00   LQN QF  0.80 1312  29.20   35    5.8%
VECO   35.97  APR 30.00   QVC QF  0.45 60    29.55   35    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).

*****
ADPT - Adaptec  $14.57  *** On The Rebound! ***

Adaptec (NASDAQ:ADPT) provides storage access solutions that
reliably move, manage and protect critical data and digital
content.  The company's storage solutions are found in high
performance networks, servers, workstations and desktops from
the leading manufacturers, and are sold through OEM and other
distribution channels to Internet service providers, large
enterprises, medium and small businesses and consumers.  The
company currently operates in three primary segments: Storage
Solutions, Desktop Solutions and Storage Networking.  Bear
Stearns started Adaptec with an "attractive" rating on Friday
and from a technical viewpoint, the issue appears to be "on
the rebound."  Traders can establish a conservative cost basis
in the issue with this position.  Earnings are due 4/25/02.

APR 12.50 APQ QV LB=0.40 OI=529 CB=12.10 DE=35 TY=8.4%


*****
EAGL - EGL Inc.  $17.00  *** Improving Fundamentals! ***

EGL, Inc. (NASDAQ:EAGL) is a global transportation, supply
chain management and information services company dedicated to
providing flexible logistics solutions on a price competitive
basis.  The company's services include airfreight and ocean
freight forwarding, customs brokerage, pick-up and delivery
service, materials management, warehousing, trade facilitation,
procurement and integrated logistics and supply chain management
services.  The company provides value-added services in addition
to those generally provided by traditional airfreight forwarders,
ocean freight forwarders and customs brokers.  These services are
designed to provide global logistics solutions for customers in
order to streamline their supply chain, reduce their inventories,
improve their logistics information and provide them with more
efficient and effective domestic and international distribution
strategies in order to enhance their profitability.  CSFB raised
its rating on airfreight services provider EGL Inc. to a "buy"
this week due to cost-cutting efforts and improving fundamentals.
Our outlook is also bullish and investors can establish a low
risk entry point in the issue with this position.

APR 15.00 UQV QC LB=0.45 OI=0 CB=14.55 DE=35 TY=7.4%


*****
ENER - Energy Conversion Devices  $24.24  *** 6-Month High! ***

Energy Conversion Devices (NASDAQ:ENER) is a technology and
manufacturing company engaged in the invention, engineering,
development and commercialization of new materials, products
and production technology.  The company has established a role
in the development of proprietary materials, products and
production technology based on its atomically engineered
amorphous and disordered materials, using chemical and
structural disorder to provide extra degrees of freedom that
result in the ability to make many new materials.  ECD develops
ovonic materials that allow it to design and commercialize new
products such as nickel metal hydride batteries, thin-film
solar cell products and phase-change optical memory media.  The
company has enabling proprietary technologies in the fields of
alternative energy technology comprised of energy storage and
energy generation, as well as in information technology.  ENER
shares traded at a 6-month high on Friday and despite the lack
of major (public) news, this issues appears poised for future
upside activity.

APR 22.50 EQI QX LB=0.75 OI=45 CB=21.75 DE=35 TY=7.5%


*****
LNCR - Lincare Holdings  $31.28  *** Strong Sector! ***

Lincare Holdings (NASDAQ:LNCR) together with its subsidiaries,
is a provider of oxygen and other respiratory therapy services
to patients in the home.  Lincare's customers typically suffer
from chronic obstructive pulmonary disease, such as emphysema,
chronic bronchitis or asthma, and require supplemental oxygen
or other respiratory therapy services in order to alleviate the
symptoms and discomfort of respiratory dysfunction.  Besides
providing oxygen and respiratory therapy services to patients
in the home, Lincare also offers a variety of infusion therapies
in certain geographic markets.  In addition, Lincare supplies
home medical equipment, such as hospital beds, wheelchairs and
other supplies that may be required by patients.  LNCR has been
"on the move" in recent sessions in conjunction with a rally in
the Specialized Health Services segment.  Traders who believe
the bullish activity will continue can profit from that outcome
with this position.

APR 30.00 LQN QF LB=0.80 OI=1312 CB=29.20 DE=35 TY=5.8%


*****
OATS - Wild Oats Markets  $10.63  *** What's Up? OATS! ***

Wild Oats Markets (NASDAQ:OATS) owns and operates natural foods
supermarkets in North America.  The company operates over 100
natural food stores, including two small vitamin stores, in 23
states and British Columbia, Canada, under several brand names,
including Wild Oats Market, which is now nationwide, Henry's
Marketplace, in Southern California, Nature's Fresh and Nature's
Northwest, in metropolitan Portland, Oregon, Sun Harvest Market,
in Texas, and Capers Community Market, in British Columbia,
Canada.  The company is dedicated to providing a broad selection
of natural and gourmet foods, as well as related products at
competitive prices and their stores feature natural alternatives
for virtually every food category in conventional supermarkets.
There is no news to explain the recent volume-supported rally in
OATS but some investors are speculating that "short-covering" is
responsible for some of the late-week buying pressure.  Traders
who like speculative plays on low priced stocks should consider
this position.

APR 10.00 QOQ QB LB=0.45 OI=10 CB=9.55 DE=35 TY=9.6%


*****
RMCI - Right Management Consultants  $25.45  *** Earnings Due! ***

Right Management Consultants (NASDAQ:RMCI) is an international
career management and organizational consulting company.  The
company's operations are structured into five geographic groups
that provide management oversight to over 200 service locations
worldwide.  Operations are divided into two lines of business,
career transition services and organizational consulting.  Their
career transition services are divided into two main categories,
individual outplacement services and group outplacement services.
The company also provides organizational consulting services that
assist organizations and employees in the areas of leadership
development, organizational performance and talent management.
RMCI's quarterly earnings are due in two weeks and traders who
believe the company will continue to have strong demand for its
career transition services can speculate on the results of the
announcement with this position.

APR 20.00 UHU QD LB=0.40 OI=12 CB=19.60 DE=35 TY=6.3%


*****
TOL - Toll Brothers  $27.58  *** Housing & Construction ***

Toll Brothers (NYSE:TOL) designs, builds, markets and arranges
financing for single-family detached and attached homes in
middle-income and high-income residential communities catering
to move-up, empty-nester and age-qualified homebuyers in the
United States.  The communities generally are located on land
the company has either developed or acquired fully developed
and, in some cases, improved.  The company operates its own
land development, architectural, engineering, mortgage, title,
security monitoring, landscape, cable television, broadband
Internet access, lumber distribution, house component assembly
and manufacturing operations.  Toll also owns and operates golf
courses in some of its master-planned communities.  Stocks in
the Residential Construction segment are performing very well
and traders who think the trend will continue can profit from
that outcome with this position.

APR 25.00 TOL QE LB=0.65 OI=542 CB=24.35 DE=35 TY=6.2%


*****
VECO - Veeco Instruments  $35.97  *** Next Leg Up! ***

Veeco Instruments (NASDAQ:VECO) designs, manufactures, sells and
services a broad line of equipment used by manufacturers in the
optical telecommunications, data storage, semiconductor and
research industries.  These various industries produce computer
integrated circuits, personal computers, hard drives, network
servers, fiber optic networks, digital cameras, TV set-top boxes
and personal digital assistants.  The company's Process Equipment
products precisely deposit or remove (etch) various materials in
the manufacturing of advanced thin film magnetic heads for the
data storage industry and optical telecommunications components.
Veeco's Metrology equipment is used to provide critical surface
measurements on semiconductor devices, thin film magnetic heads
and disks used in hard drives and in optical telecommunications
and research applications.  VECO shares have moved up and out of
a previous trading range and the issue appears ready to test the
yearly highs near $40.  Traders should "target-shoot" a higher
premium to increase the profit potential of the position.

APR 30.00 QVC QF LB=0.45 OI=60 CB=29.55 DE=35 TY=4.4%


*****
WFR - MEMC Electronic Materials  $8.60  *** Rally Mode! ***

MEMC Electronic Materials (NYSE:WFR) is a worldwide producer
of silicon wafers for the semiconductor device industry.  MEMC
operates manufacturing facilities, directly or through joint
ventures, in Europe, Japan, Malaysia, South Korea, Taiwan and
the United States.  The company sells silicon wafers to all of
the world's largest manufacturers of semiconductors, including
the world's largest foundries as well as the major memory,
microprocessor and application specific integrated circuit
manufacturers.  MEMC also provides test/monitor wafers, which
are used by its customers for testing semiconductor fabrication
lines and processes.  The most recent upside activity in WFR
appears to be based on the selection of Nabeel Gareeb, a past
COO of International Rectifier (NYSE:IRF) to the position of
company president and CEO.  Regardless of the reason, WFR is in
"rally mode" and traders who want to establish a discounted cost
basis in the issue should consider this position.

APR 7.50 WFR QU LB=0.30 OI=0 CB=7.20 DE=35 TY=9.9%


*****

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

The following group of issues is a list of additional candidates
to supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary. 

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

PRCS    5.60  APR  5.00   FGU QA  0.25 5      4.75   35   11.5%
TUNE   13.25  APR 10.00   TUF QB  0.40 100    9.60   35   11.4%
CCK    11.04  APR 10.00   CCK QB  0.50 1567   9.50   35   11.2%
RFMD   18.34  APR 15.00   RFZ QC  0.50 1479  14.50   35    9.7%
OSIS   24.00  APR 20.00   UOJ QD  0.70 39    19.30   35    9.7%
JDAS   32.29  APR 30.00   QAH QF  1.30 42    28.70   35    9.5%
SNDK   20.20  APR 17.50   SWQ QW  0.65 24    16.85   35    9.4%
CCRD   20.31  APR 17.50   UCD QW  0.60 25    16.90   35    8.8%
AM     17.93  APR 17.50    AM QW  0.70 526   16.80   35    8.2%
FCEL   16.49  APR 15.00   FQG QC  0.50 109   14.50   35    7.8%
TER    36.80  APR 30.00   TER QF  0.65 46    29.35   35    6.6%



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




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

******************************************************************
                         - MARKET RECAP -
******************************************************************
Friday, April 12

The downtrodden technology segment led the market higher today
but the bullish activity did little to offset three weeks of
steady declines.

The NASDAQ Composite rallied 30 points to finish at 1,756 amid
a rebound in software and Internet shares.  Telecom issues also
traded higher after Thursday's hammering on widespread concerns
that the industry won't recover in 2002.  Blue-chip technology
shares were upbeat with AT&T (NYSE:T), International Business
Machines (NYSE:IBM) and Microsoft (NASDAQ:MSFT) leading the Dow
higher.  The popular industrial average gained 14 points to end
at 10,190 with additional support from Home Depot (NYSE:HD),
Merck (NYSE:MRK), J.P. Morgan (NYSE:JPM) and Disney (NYSE:DIS).
The upward bias was limited in the broader market by weak oil
stocks but selective buying was seen in airline, biotechnology,
retail and brokerage issues.  Investors also were also worried
about mediocre economic data which included a weak retail sales
report, a decline in consumer sentiment and a spike in wholesale
inflation.  Trading volume totaled 1.14 billion on the Big Board
and 1.55 billion on the technology exchange.  Market breadth was
positive as winners doubled losers on both the NASDAQ and the
NYSE.  On the fund flow front, Trim Tabs estimated that equity
funds had inflows of $600 million over the week ending April 10
compared with inflows of $1.0 billion during the prior week.


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

Emulex      (NSDQ:EMLX)  APR30C/30P  $3.90  debit  straddle
Millennium  (NSDQ:MLNM)  APR20C/20P  $2.30  debit  straddle
Netw. App.  (NYSE:NET)   APR22C/22P  $2.35  debit  straddle
Sap AG Ads  (NYSE:SAP)   APR35C/35P  $2.50  debit  straddle
Sci. Atla.  (NYSE:SFA)   APR20C/20P  $2.35  debit  straddle
Sabre Grp.  (NYSE:TSG)   APR45C/45P  $2.30  debit  straddle

Straddle traders enjoyed another great week of market volatility
and our portfolio benefited from the extreme movements as well.
Of the six positions listed in last week's edition, five have
already offered profitable trading opportunities.  In addition,
the one issue that did not move enough to produce a straddle
profit (on a simultaneous order basis) traded in a range greater
than the overall cost of the position for two consecutive days.


Portfolio Activity:

With one week until the April option expiration, most traders
are holding their breath to see if the major equity averages
will break below near-term support.  A move beyond 1080 on the
S&P 500-stock index could start another wave of selling as that
level is seen as the last outpost for market bulls.  A similar
situation exists on the NASDAQ, however the downside margin is
much smaller as the most recent technical support exists near
1700; slightly below the current price.  Despite the foreboding
outlook, the bearish activity has been a windfall to volatility
traders, especially those who bought premium on technology
issues.  Our recent debit straddles on the Mini-NDX (CBOE:MNX)
and the NASDAQ 100 Trust (AMEX:QQQ) have been very profitable
and last week's delta-neutral positions performed even better
than expected.  Surprisingly, our straddles on broader-market
stocks such as J.P. Morgan Chase (NYSE:JPM), CVS Corporation
(NYSE:CVS) and Abercrombie & Fitch (NYSE:ANF) have not been as
productive but there is lots of potential for movement in the
current earnings reporting season.  One of the more successful
straddle sectors in recent weeks has been the Utilities group
and indeed, both of our new positions in that category, Mirant
(NYSE:MIR) and Reliant Resources (NYSE:RRI) have now achieved
their respective near-term profit targets.

There was little activity among the remaining positions in the
Spreads/Combos portfolio this week but one event came as an
unpleasant surprise.  XM Satellite Radio (NASDAQ:XMSR) slumped
below $12 after the Washington-based satellite radio company
priced a public offering of 13 million shares of its Class A
common stock at $11.50 each.  The company expects the deal to
close Monday, raising proceeds of $154 million for marketing
expenses, systems, and other general corporate purposes.  The
proceeds will also fund the company's daily operations into the
latter half of the first quarter of 2003, thus ending concerns
over liquidity and cash-on-hand.  While it's fortunate that the
company has new funding, the offering virtually traps the price
of its stock near $12 in the near-term, so it is likely we will
own the issue at expiration.  Another struggling stock in our
group of synthetic positions: St. Jude Medical (NYSE:STJ) has
been on a roller-coaster ride over the past few sessions.  The
issue traded at a recent high Wednesday before retreating to a
monthly low at Friday's close.  Although the issue is slightly
oversold, there is very little support below the current price
so it will need to be monitored closely for signs of further
downside activity.  On a more positive note, all of the credit
spreads are "in the black" again and the only issue previously
on the watch-list, Advent Software (NASDAQ:ADVS) appears to be
in a short-term bullish trend.  Traders who are not confident
about a continued rebound in the technology segment should use
any upward bias this week to exit (or adjust) the position.

Questions & comments on spreads/combos to Contact Support
******************************************************************
                - READER'S WRITE: E-MAIL REPLIES -

I would like to publicly offer my thanks to all the readers who
sent words of encouragement and congratulations during my recent
hiatus from the market.  My wife and I have been blessed with a
healthy, happy baby girl and those of you who are parents know
there is nothing more important than a new child.  Fortunately,
things have progressed very well in my household but during my
absence there were some excellent E-mail questions submitted by
the OIN's diligent readers.  Here is one of those inquiries:

To: comments@OptionInvestor.com
Subject: A Request

Hi,

I would like to see more conservative calendar spreads in your 
selection. I am a conservative investor who likes this strategy
and would appreciate if you include at least one pick of this
type every week.

Best Regards,

AA


Hello AA,

I am also in favor of conservative calendar spreads and since
the option premium levels have increased ever so slightly over
the past few sessions, I might be able to find some viable
"time-selling" plays in the near future.

Thanks for your interest!

Ray

******************************************************************
                          - NEW PLAYS -

As most of you know, statistical volatility for the major stock
averages is at an incredibly low level (15%).  In addition, the
implied volatility in equity options is also at historic lows,
so there are few favorable "premium selling" opportunities for
calendar-spread traders.  However, three issues emerged in a sort
for stocks with disparities in front-month option premiums and
each issue is a viable candidate for the popular "time-selling"
strategy.

******************************************************************
TRMS - Trimeris  $39.74  *** Reader's Request! ***

Trimeris (NAASDAQ:TRMS) is engaged in discovery and development
of a unique class of antiviral therapeutics called viral fusion
inhibitors (FIs).  Trimeris' most advanced product candidates,
T-20 and T-1249, are for the treatment of human immunodeficiency
virus, type I-HIV.  T-20 is a first-generation FI that prevents
HIV from entering and infecting cells.  T-1249 is a rationally
designed second-generation FI in an earlier stage of development.
Through its study and knowledge of the HIV fusion process, the
company has developed a proprietary technology platform aimed at
discovering compounds that identify potential fusion targets in
certain viruses that rely on fusion to penetrate host cells.
Using its proprietary viral fusion platform technology, the
company has identified and filed patent applications disclosing
numerous discrete peptide sequences that appear to inhibit fusion
for several viruses.

In this case, the underlying issue is some distance below the
strike price of the options, providing a speculative calendar
spread with low initial cost and large potential gains.  Two
profitable outcomes can occur: the share value rallies in the
short-term and the spread is closed for a profit as time-value
erosion in the short option produces a net gain or; the stock
consolidates, allowing the sold (call) option to expire and
then eventually rallies above the long options' strike price,
thus producing a positive return.  The cost basis of the long
(call) option can also be reduced through the sale of near-term
calls prior to the position's expiration in October.

PLAY (speculative - bullish/calendar spread):

BUY  CALL  OCT-45  RQM-JI  OI=120  A=$5.30
SELL CALL  MAY-45  RQM-EI  OI=538  B=$2.30
INITIAL NET DEBIT TARGET=$2.75-$2.90  TARGET PROFIT=50%


******************************************************************
EDSN - Edison Schools  $12.98  *** Reader's Request! ***

Edison Schools (NASDAQ:EDSN) is a private operator of public
schools serving students from kindergarten through grade 12.
Edison's team of educators and scholars has developed a solid,
research-backed curriculum and school design.  The company's
model offers public school authorities, who face widespread
concern about disappointing student achievement, the benefits
of a large private sector company with national support systems.
The company opened its first four schools in August 1995, and
has grown in every subsequent year.  In the 2001-2002 school
year, the company expects to enroll 75,000 students in over 130
schools located in 22 states and the District of Columbia.

Here is a low risk "bottom-fishing" candidate for traders who
utilize calendar spreads.  Technically, the issue appears to
have established a relatively solid support area near $12 and
the potential for a long-term recovery in share value (due to
improvements in company fundamentals) is excellent.  Also, the
premium disparities in the near-term options provide a great
risk-reward outlook for speculative traders who are bullish on
the issue.
 
PLAY (speculative - bullish/calendar spread):

BUY  CALL  SEP-15  USD-IC  OI=408  A=$1.65
SELL CALL  MAY-15  USD-EC  OI=117  B=$0.50
INITIAL NET DEBIT TARGET=$1.00  TARGET PROFIT=50%


******************************************************************
MXT - Metris Companies  $20.36  *** The Bearish Version! ***

Metris Companies (NYSE:MXT) along with its many subsidiaries,
is an information-based direct marketer and provider of consumer
lending products and enhancement services, primarily to moderate
income consumers.  The company's consumer lending products are
primarily unsecured and secured credit cards issued by one of its
subsidiaries, Direct Merchants Bank, National Association.  Its
customers and business prospects include individuals for whom
credit bureau information is available and persons identified
through other third-party sources including customer lists and
databases.  The company operates in two major business segments,
Consumer Lending Products and Enhancement Services, which include
debt waiver programs, membership clubs, extended service plans
and third-party insurance offered to its credit card customers,
as well as customers of third parties and the broad market.

When combined with the favorable option-premium disparities and
the overall technical outlook for the company's common stock, the
upcoming earnings announcement provides an excellent opportunity
for traders who have a near-term bearish outlook for the issue.
Metris Companies will report its quarterly results on April 17
and those who think there is potential for downward movement in
its share value should consider this position.  Traders with a
more conservative, longer-term perspective may want to use the
July options.

PLAY (speculative - bearish/calendar spread):

BUY  PUT  MAY-17.50  MXT-QW  OI=959   A=$1.25
SELL PUT  APR-17.50  MXT-PW  OI=2367  B=$0.40
INITIAL NET DEBIT TARGET=$0.75-$0.80  TARGET PROFIT=20%-25%

- or -

PLAY (more conservative - bearish/calendar spread):

BUY  PUT  JUL-17.50  MXT-SW  OI=3428  A=$2.15
SELL PUT  APR-17.50  MXT-PW  OI=2367  B=$0.40
INITIAL NET DEBIT TARGET=$1.60-$1.65  TARGET PROFIT=50%


******************************************************************
AMAT - Applied Materials  $50.60  *** Split Play! ***

Applied Materials (NASDAQ:AMAT) develops, manufactures, markets
and services semiconductor wafer fabrication equipment and
related spare parts for the worldwide semiconductor industry.
Customers for these products include wafer manufacturers and
semiconductor integrated circuit manufacturers.  Many of AMAT's
products are single-wafer systems designed with two or more
process chambers attached to a base platform.  The platform
feeds a wafer to each chamber, allowing the simultaneous
processing of several wafers to enable high manufacturing
productivity and precise control of the process.  Applied
manufactures systems that perform: chemical vapor deposition,
physical vapor deposition, electroplating, ion implantation,
etch, rapid thermal processing, chemical mechanical polishing,
metrology and wafer/reticle inspection.  Applied sells most of
its single-wafer, multi-chamber systems based on four main
platforms: the Centura, the Endura, the Endura SL and the
Producer.

Last month, Applied Materials' Board of Directors approved a
two-for-one stock split of the company's common stock in the
form of a 100% stock dividend.  New shares resulting from the
split are expected to be distributed on or about April 16, to
stockholders of record as of April 1, 2002.  That gives us one
day to initiate this bullish spread and traders who wouldn't
mind owning AMAT at a (post-split) cost basis near $21 should
consider this position.

PLAY (conservative - bullish/credit spread):

BUY  PUT  MAY-40.00  ANQ-QH  OI=562   A=$0.80
SELL PUT  MAY-42.50  ANQ-QV  OI=1802  B=$1.05
INITIAL NET CREDIT TARGET=$0.30-$0.35  PROFIT(max)=14%


******************************************************************
LLY - Eli Lilly  $73.42  *** Earnings Due! ***

Eli Lilly & Company (NYSE:LLY) discovers, develops, manufactures
and sells pharmaceutical products.  Lilly offers neuroscience
products, endocrine products, anti-infectives, oncology products,
animal health products and cardiovascular agents.  The company
manufactures and distributes its products through owned or leased
facilities in the U.S., Puerto Rico and 26 other countries.  The
company's products are sold in approximately 160 countries.  Eli
Lilly directs its research efforts primarily toward the search
for products to diagnose, prevent and treat human diseases.  The
company also conducts research to find products to treat diseases
in animals, and also to increase the efficiency of animal food
production.

Lilly's quarterly earnings are due Monday and based on the recent
activity in its stock, there is little positive expectation for
the announcement.  Although the company's fundamental outlook is
excellent, a technical assessment of the issue suggests there is
pessimism about the near-term performance of its share value and
only a significant event or development will change its character
in the near-term.  Since the earnings report is due before the
opening bell, the position may not be available at the suggested
credit and it may need to be reevaluated, based on any unexpected
news.
 
PLAY (conservative - bearish/credit spread):

BUY  CALL  MAY-85  LLY-EQ  OI=491   A=$0.20
SELL CALL  MAY-80  LLY-EP  OI=1167  B=$0.75
INITIAL NET CREDIT TARGET=$0.60-$0.70  PROFIT(max)=14%


******************************************************************
OIH - Oil Service Holders Trust  $63.00  *** Rolling Over? ***

The Oil Service Holders Trust (AMEX:OIH) is a unique instrument
that represents an investor’s ownership in the stock of specified
companies in the oil service sector.  HOLDRS allow investors to
own a diversified group of stocks in a single investment that is
highly transparent, liquid and efficient.  Each HOLDR is a fixed
basket of 20 stocks (except the Telebras HOLDR, which holds 12
companies).  They work operate much like ADRs; American Depositary
Receipts, which allow U.S. investors to purchase foreign-owned
companies on the U.S. exchanges in dollar denominated amounts.  In
just the same way, the investor actually owns the shares of each
underlying company, receives dividends, proxies, and annual reports
from each.  The HOLDRs are not managed, and once the companies and
amounts have been determined they are fixed, no companies will be
substituted.  In this way, the HOLDRs differ somewhat from Spiders
(SPDRs), or Standard & Poor Depositary Receipts and other exchange
traded funds, which will add and delete stocks on a regular basis,
usually in conjunction with an index that they are tracking.

A complete description of this issue, including the companies that
make up each HOLDRS' particular industry, sector or group can be
found here:

http://www.holdrs.com/holdrs/main/index.asp?Action=Definition

Traders who participate in credit-spreads often utilize options
on sectors or industry groups as they provide an instrument less
prone to large "gapping" moves.  From a technical viewpoint, the
oil service segment is showing signs of a "failed rally and the
solid resistance area near our sold strike at $70 suggests there
is little chance of the issue exceeding that price in the coming
month.  Traders who agree with a neutral-to-bearish outlook for
this industry group can profit from that type of activity with
this low-risk position.  Target a higher premium initially to
allow for a brief recovery rally in the oil service sector.

PLAY (conservative - bearish/credit spread):

BUY  CALL  MAY-75  OIH-EO  OI=101   A=$0.40
SELL CALL  MAY-70  OIH-EN  OI=1274  B=$0.90
INITIAL NET CREDIT TARGET=$0.55-$0.65  PROFIT(max)=12%


******************************************************************
                  - "EXPIRATION WEEK" STRADDLES -
******************************************************************
DGX - Quest Diagnostics  $85.88  *** Earnings Play! ***

Quest Diagnostics (NYSE:DGX) is a provider of diagnostic testing
and related services for the healthcare industry.  The company
offers a broad range of clinical laboratory testing services
used by physicians in the detection, diagnosis, evaluation,
monitoring, treatment of diseases and other medical conditions.
The company is engaged in clinical laboratory testing and other
esoteric testing, including molecular diagnostics, as well as
anatomic pathology services and testing for drugs of abuse.  The
company has a network of principal laboratories in metropolitan
areas throughout the U.S., as well as several joint-venture
laboratories and over 150 smaller rapid-response laboratories
and 1,300 patient service centers.  The company also operates an
esoteric testing laboratory and development facility, known as
Nichols Institute, located in San Juan Capistrano, California,
as well as laboratory facilities in Mexico City, Mexico and near
London, England.  The company's quarterly earnings are due 4/18.

PLAY (very speculative - neutral/debit straddle):

BUY  CALL  APR-85  DGX-DQ  OI=282  A=$2.00
BUY  PUT   APR-85  DGX-PQ  OI=55   A=$1.10
INITIAL NET DEBIT TARGET=$2.90-$3.00  TARGET PROFIT=15-25%


******************************************************************
XLTC - Excel Technology  $22.09  *** Earnings Play! ***

Excel Technology (NASDAQ:XLTC) designs, develops, manufactures
and markets laser systems and electro-optical components for
industry, science, and medicine.  The company's laser beam is
so concentrated and powerful that it can produce power densities
millions of times more intense than that found on the surface of
the sun and is capable of cutting, welding and marking industrial
products, yet it can be precisely controlled and directed and is
capable of performing delicate surgery on humans.  The company is
pursuing the construction of new facilities and an increase in
engineering staff to significantly broaden their automation and
systems applications, as well as their R&D and manufacturing
capabilities so they can effectively address increasingly complex
customer requirements.  The company's quarterly earnings are due
on 4/16/02.

PLAY (very speculative - neutral/debit straddle):

BUY  CALL  APR-22.50  XNQ-DX  OI=98  A=$0.50
BUY  PUT   APR-22.50  XNQ-PX  OI=71  A=$0.95
INITIAL NET DEBIT TARGET=$1.25-$1.35  TARGET PROFIT=15-25%


******************************************************************
ADVNB - Advanta  $12.44  *** Probability Play! ***

Advanta (NASDAQ:ADVNB) is a financial services company that has
been providing financial products and solutions since 1951.  The
company's lending business consists of Advanta Business Cards,
an issuer of MasterCard business credit cards.  In addition to
Advanta Business Cards, the company has various venture capital
investments.  The company operates two depository institutions:
Advanta Bank and Advanta National Bank.  The company primarily
funds and operates its business credit card business through
Advanta Bank.  The company also owns two insurance companies,
Advanta Life Insurance Company and Advanta Insurance Company,
through which it offers specialty credit-related insurance and
related products to its existing customers.

Option-trading guru Larry McMillan recently recommended this
stock as a straddle candidate and indeed, the issue meets the
fundamental criteria for the strategy: inexpensive premiums,
a history of adequate stock 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 (conservative - neutral/debit straddle):

BUY  CALL  JUL-12.50  ABQ-GV  OI=130  A=$0.90
BUY  PUT   JUL-12.50  ABQ-SV  OI=35   A=$1.00
INITIAL NET DEBIT TARGET=$1.75-$1.80  TARGET PROFIT=50-70%


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



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************
MARKET WATCH
************

We're sticking with what's been working.  A strong health care and 
weak financial stock make their way onto the list

To Read The Rest of The OptionInvestor.com Market Watch Click Here
http://members.OptionInvestor.com/watchlist/041402.asp


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

Two major breakdowns occurred in the major market averages.  Several 
sectors were on the move also.


To Read The Rest of The OptionInvestor.com Market Posture Click Here
http://www.OptionInvestor.com/marketposture/041402_1.asp


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DISCLAIMER
**********

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