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Daily Newsletter, Sunday, 04/21/2002

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The Option Investor Newsletter                   Sunday 04-21-2002
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
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MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        WE 4-19          WE 4-12           WE 4-5          WE 3-29
DOW    10257.11 + 66.29 10190.82 - 80.82 10271.64 -132.30  - 23.73 
Nasdaq  1796.83 + 40.64  1756.19 - 13.84  1770.03 - 75.32  -  6.04 
S&P-100  559.79 +  6.05   553.74 - 10.28   564.02 - 13.85  -  2.22 
S&P-500 1125.17 + 14.16  1111.01 - 11.72  1122.73 - 24.66  -  1.31 
W5000  10635.05 +129.08 10505.97 - 45.46 10551.43 -224.31  -  1.12  
RUT      517.40 +  1.94   515.46 + 17.70   497.76 -  8.70  +  4.07 
TRAN    2796.87 - 78.16  2875.03 + 96.62  2778.41 -139.55  + 40.69 
VIX       20.30 -  1.79    22.09 +   .96    21.13 +  1.81  -  0.30 
VXN       39.35 -  3.46    42.81 +  1.96    40.85 +  4.57  -  1.28 
TRIN       1.18             1.03             1.67             0.84 
TICK       -492             +460             +341             +793    
Put/Call    .79              .99              .78              .79  
******************************************************************

 
The String is Broken!  
by Jim Brown

After a string of five weeks of losses the Dow and Nasdaq finally
posted a small gain. It was nothing to write home about with only
a +66 point gain for the Dow and +40 for the Nasdaq but traders
were eager to take what they could get. After a week of earnings
with headliners missing estimates, a flood of warnings, fears of
another terrorist plane crash and a new threat at home, any positive
gain is a surprise.



 



 



 

One of the biggest surprises of the week was the Microsoft results.
Officially the company missed estimates by two cents and then 
warned for next quarter and the year. Traders however looked the 
other way and ignored the bad news and powered the stock to a gain
on Friday. This brings to mind the story of a college girl coming
home on vacation and when asked about her grades related the 
following. I have some bad news. I got a D in English and Math
and a B in PhysEd, and I am pregnant. After the mother is picked
up off the floor and revived the daughter tells her she was just
kidding about the pregnant. In relief the mother says "that's
great, a B in PhysEd! and she completely ignores the two Ds. This
is how traders reacted to the fact that Microsoft earnings were
not as bad as first thought. When the announcement included two
special items around fifteen cents each analysts recoiled in horror
that maybe Microsoft really missed earnings by seventeen cents and
not just two. Surprise, just kidding about the charges, it is only
a two cent miss and oh by the way, we are warning but its no big deal.
Great, said the relieved analysts, lets buy Microsoft tomorrow!
Merrill Lynch led the group and upgraded MSFT as a better value
at the current price.

Remember the telecom rally from Tuesday? You can forget it again.
Friday reality returned to the sector with a flurry of news events.
Qwest started the decline with profit warnings for the year which
echoed statements from BellSouth and SBC Communications. Qwest said
it was going to seek a buyer for some of its assets in an effort 
to trim expenses and raise cash. After the bell on Friday Worldcom
cut its full year 2002 earnings and revenue guidance, which dropped
WCOM stock to less than $5 in after hours. All the telecom companies
made remarks similar to the Nortel CEO on Thursday who said he
expected continued weaker spending in the sector for 2002. Needless
to say all the related companies like NT, LU, CSCO, JNPR and the
communication chip companies finished lower.

Cautious comments came from many sectors this week despite 58% of
the companies already reporting announcing results that beat the
street. The problem is still the lowered estimates they beat. Some
analysts point to this as a sign of promise but they are struggling
to paddle up stream. The freight companies, notably the package
shipping group, has been seen as a leading indicator of economic
growth. This week the UPS CFO said they saw "no significant evidence
of an economic recovery." The Consolidated Freightways (CNF) CEO
said the "business upturn remained weak." Are investors fooling
themselves that a recovery is underway because the alternative is
too frightening?

Whatever the reason the markets appeared amazingly resilient last
week. After less than stellar guidance from many companies and
warnings from many others the indexes finished with a gain. This
came after a fear of another terrorist attack was news on Thursday
with the plane crash in Milan. A -150 point Dow drop was quickly
erased with the index closing within 15 points of zero. This was
a significant event. It means there are buyers in the crowd and
those buyers were quick to pick up shares others were dumping. The
lack of a drop on the Microsoft warning shows that there are tech
buyers at this level. 

While there are buyers lurking below the bid there are no buyers
willing to push stocks higher. Volume remains very weak and we are
moving into the season where it will get even weaker. Nervous but
resilient? How much longer will the resilience last? First Call
is becoming more vocal about their doubts regarding tech companies
hitting the current +140% increase in profits for the third quarter.
Granted comparisons to 2001-Q3 should not be hard to beat but +140%
improvement? As analysts come to grips with the fact that the economy
may not be recovering as fast as they wish then estimates will start
dropping rapidly. Doubtless there are many analysts scratching their
heads and sharpening their pencils after this weeks earnings reports.
The shrinking estimates will likely begin next week and as estimates
drop so may stock prices. 

Little was said about the jump in initial jobless claims over the
last two weeks to the highest levels of the year. Analysts claim
the numbers are not relative since it contains previous filers 
whose claims expired and are now allowed to file again for extended
benefits. Still the continuing claims rose again to 3,839,000 which
indicates continued weakening unemployment. I don't need Federal
numbers to drive home the unemployment problem. I ran an ad in the
local paper for a web developer last week and got over 200 resumes.
Two years ago I was lucky to get ten for the same ad. After speaking
to many of the applicants several admitted to sending out thousands
of resumes around the country over the last several months with only
a random call or a thank you for your submission letter. Several
applicants, with 7-10 years of developer experience, had taken jobs
as waiters and laborers just to make ends meet. Others, which were
still employed said their companies were planning more cut backs
before summer. I am sure Denver is not alone in this problem and
when you multiply it nationwide you can see that the tech sector 
is having the same problem as telecom.  

This brings us back to the markets. We all know that the markets
are discounters of current and future events and investors typically
focus six months in advance. That six month focus is expecting a
+140% increase in profits for tech stocks. It is becoming increasingly
apparent that this may not happen. As it sinks into investor 
consciousness there may be a tendency to lower those bids or withdraw
them completely. The S&P is struggling to break resistance at 1130.
To its credit it is holding its ground and fighting a valiant fight.
The bounce off 1100 last week was very strong but it came to a
screeching halt at the 1130 level. If you remember what powered that
bounce it was short covering in chips and telecoms. The semiconductor
index rolled over right at 615 resistance and we all know what 
happened to telecoms this week. Neither sector is likely to provide
any help next week.

That puts us back to square one for next week. All the averages are
struggling under resistance. Dow 10300, Nasdaq 1800 and S&P 1130.
Without some strong positive news we appear stuck in this trading
range. The news for this earnings cycle is already priced into the
markets and has been unable to power us above resistance. We are
five days into the April-15th to May-15th period which historically
produces sell offs 80% of the time. The VIX closed at 20 on Friday
but the put/call ratio and the TRIN suggest it will fall farther
before it stops. My entry points for long plays continue to be
10350, 1850, 1130. You may notice I adjusted the Nasdaq number back
to 1850 to bring it more inline with the other two indexes. My 
entry points for going short are Dow 10,000, Nasdaq 1725 and S&P
1100. If the markets are going to continue to trade in a range
between those levels then attempting to make profitable trades
will be very difficult for most investors. You are left buying bounces
from the low side and selling into rallies on the top. It is easily
done only if you are an active trader and comfortable with the risk.

Despite the gain for the week the markets are still in a downtrend.
One positive week out of six does not change the trend it only
equalizes the oversold pressure. Over half of the Dow has already
announced and most of the remainder will announce next week. We can
expect more of what we got this week, mixed results with cautious
guidance. Nearly half of the S&P have already announced with another
25% due next week. After that the earnings news will dwindle and we
will begin our drift into the summer doldrums. This is the period
when we need to be especially careful about trying to force trades.
Be very patient and wait for the entry points above.  

Enter Very Passively, Exit Aggressively!

Jim Brown
Editor


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

TECH WRECK  
by Leigh Stevens

My old PaineWebber index buddy Art Cashin, who used to call me 
for the (S&P) program numbers, talked on CNBC on Friday about the 
love/hate affair that money mangers have with tech stocks. I 
thought he summed it well: On the one hand the big managers have 
no other place to put all their dollars to work, unless they 
invest in techs.  Yet, potential buyers are intimidated by the 
still-high valuations - Cisco is not cheap.  Holders of the 
stocks don't really want to sell around current levels, as they 
also have limited alternatives to putting their cash to work. 
They can't buy all small and mid cap stocks - otherwise they 
would be BIG caps.

It’s a bit of bind that leads to the blind leading the blind. 
Tech sectors go up one day and the fund lemmings follow each 
other in.  The next day, the sector tanks on news or other views 
and the same folks pull their bids or they stampede out. The 
resulting roller coaster ride is most real to individuals trying 
to trade this market, especially using index options. We feel 
like the mouse trying to stay out of the way of the elephants. 

The Dow again -- can you believe it! -- ended the week about 
where it began.  Hey, the roller coaster comes back to the same 
starting point. We will soon be out of earnings season -- its 
like having the hurricane season end in Florida.  You can get 
back to normal weather and not have the risk of being blown away. 

The market is so unchanged, as the roller coaster always comes 
back to the same starting point that my projected trading ranges 
look much the same.  There are pivot points that are key mid-point 
levels worth repeating. The concept of a pivot point being, a sort 
of key mid-point level for the expected range of an index or stock 
-- above the level, look for further upside, below it, the item is 
subject to downswings when it comes up against the pivotal level.  
So, above the pivot, this level tends to act as support, below it, 
as resistance. I've found year in and year out, that the best 
gauge of the pivot point for trading the indexes is the 21-day day 
moving average. 

Index "pivot" points: 
SPX: 1130
OEX: 566
DJX: 103.0
COMP: 1800
NDX: 1405
QQQ: 35 

I continue to note that the advance-decline figures are improving 
weekly, along with the increasing numbers of stocks going to new 
52-week highs. Small and mid cap stocks continue on a roll along 
with health care, home builders, oil services, key financials like 
some banks (e.g., JP Morgan Chase) and some insurance stocks, 
forest and paper products -- all those new houses use a lot of 
timber!

I favor the call or long side on pullbacks in the indexes as it 
continues to look like a mildly bullish posture offers the higher 
potential here. Market rallies are not falling apart quite like 
they were. There is still a lot of rotation, but money is coming 
into the market from the sidelines on balance.  

Refine a view of the shorter-term support and resistance areas 
and trade entry by studying the well-ordered price channels that 
hourly trading is tracing out over past days and weeks - very 
convenient.  There aren’t many edges in this market and this is 
one of them.  Look for hourly oversold readings when they line up 
with prices being at support; or, overbought levels that coincide 
with resistance areas on the hourly charts. 

THE CHART PARADE  -  

TECHNICAL GLICHES - 
Per my apologies on Friday's Market Monitor, the CHART 
illustrations in my Thursday night (4/18) Option Investor, Index 
Trader and Sector Trader pieces, with one exception, ALL had the 
wrong charts. The exception was the S&P 500 chart - first one - 
in the Option Investor wrap up (titled: "WHIPPY") which was the 
right one.  All charts are now correct.  It was a technical 
glitch but we have corrected the problem. 

S&P 500 (SPX):  


 


Except for the one hourly spike down, the index is hugging the 
top end of the channel -- what was resistance has become support. 
This suggests that some uptrend momentum (MO) is developing. 1110 
looks like good support and is the area to buy calls. A sharp 
break of 1110 or a close under this area suggests that the SPX is 
vulnerable to a further drop back to the 1100 area. 1130 is the 
profit objective on calls unless there is good-sized move through 
this pivot point coupled with the ability to hold this area on 
subsequent pullbacks.  


S&P 100 (OEX) hourly chart:


 


Same strategy as the S&P 500, OEX's big brother, only the levels 
are different.  

  
562-564 appears as the key resistance area currently in the 
hourly charts.  The pivot point is 566. If OEX makes it above 
566, upside potential is to 570. 550-551 looks like buying 
territory for calls, especially if the low end of the stochastic 
is seen, suggesting that OEX is in an oversold area also. A move 
to much under 550 is a bearish break of support and puts the 
index back into its bearish downtrend channel   
 

Dow (DJX) chart:


 

I'm a call buyer at 100.5-101, turning to put purchases in the 
103 area, keeping in mind the pivotal importance of 103. 


Nasdaq Composite (COMP): 


 

Most bullish of the Nasdaq stocks, showing the better picture 
that has developed in many of the smaller to mid-sized companies. 
1815 to 1830 is the resistance zone. 1750 is support and a move 
to here would fill in the upside price gap.   

Nasdaq 100 (NDX):


 


Bear strategies to play the downside appear opportune in the 
1420-1425 zone.  Buying opportunities begin at 1360 and extend 
down to 1345. The key in this zone is when the hourly stochastic 

gets down to its low end and then starts to turn up.  
We can't refine a buying strategy so well within this area 
without seeing where the stochastic is if and when NDX gets into 
this area.  But, the stochastic is approaching an oversold 
reading, so 1360 area looks pretty opportune. 

A right click on the stochastic indicator once applied to a 
chart, in Q-charts if you use it, will allow setting the Length 
to 21 for hourly work.    
 
QQQ: 


 

33 is a main support area, with 34 as a near term area to watch 
for this. Trade much under 33.5-34 starts to put the Q's back 
into the bearish downtrend channel so beware. Trade in the 35.50 
area looks like the place to turn bearish, especially with an 
overbought high reading on the stochastic. However, keep in mind 
the pivot point -- above 36 QQQ is breaking out to the upside and 
can run a bit, especially if not too overbought.  

Of course, overbought AND oversold readings and upside or 
downside crossovers of the stochastic lines should not be taken 
as automatic buy or sell points of action.  The indexes can and 
do get overbought and oversold for periods of time without price 
reversals occurring.  However, in this trading range market the 
appropriate oscillators work quite well as adjuncts to trading 
strategy.    


Long/Call Positions:
Long QQQ at 34.30 
Stop: 32.50.  
Objective: 38.00  


Leigh Stevens
Chief Market Strategist 
lstevens@OptionInvestor.com 


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

Capturing News Events

The flurry of telecom news on Friday suggests that there are
more problems ahead for the sector. Several of the components
still have value although that value is declining daily.

We are going to try and capture some of that decline with a couple
of put plays. With the summer period likely to be lackluster for
earnings improvements these two companies could decline significantly.


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

New Plays

SBC Communications - Put


 

SBC hit a new multiyear low not seen since 1997 and could continue
to drift lower over the summer. The May $30 put is very cheap at
$.30 but there may not be time to fully capture the value of the
drop. 

I would recommend the July-$30 put at $.85 and hope for a drop to
$25 in SBC stock.

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

Bellsouth - Put


 

Bellsouth also hit a new four year low and faces the same fate as
SBC. I would suggest the July $30 put at $1.30 and hope for a drop
to the $25 range.


I know everybody thinks this is not probable but look at a chart
on AT&T. Would you have expected in April 2000 for T to ever trade
under $15?



 

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

Qualcomm - put


 

The back to back warnings from SBC, BLS, WCOM, NOK and ERICY have
taken the bloom off the QCOM story. The bounce off $34 last week
quickly faded and the stock has resumed its downward trend. As
a major Nasdaq component any drop in the Nasdaq will weigh on
QCOM as well.

I like the July $35 put at $3.00. We have plenty of time and
should the $34 support level fail we could see plenty of institutional
selling.


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

Remember, these are all high risk plays and should only be made
with 100% risk capital.

Good Luck

Jim Brown    (GO PVN!)


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

Not So Great Expectations
By Eric Utley

The market's four-week slide preceding last week's earnings
reports makes a lot sense now.  Especially logical was the
retreat in the tech sector.  Let's recall some recent reports,
and think big picture here.  First, IBM (NYSE:IBM), arguably
the best bellwether for assessing information technology spending,
reported the worst drop in earnings in nearly a decade.  Then
Nokia (NYSE:NOK) said that it would sell a lot fewer cell
phones this year than previously expected.  After the confusion
settled, Microsoft (NASDAQ:MSFT) reduced expectations for this
year.  What's especially disconcerting about Nokia and Softee
is that the two are the gorillas in their respective spaces.
Some, myself included, have argued that the big dogs in each
space were worth a bullish look.  But that's been a very wrong
stance to take.

What's really telling of IT spending is the plethora of
warnings from enterprise software vendors, such as Oracle
(NASDAQ:ORCL), Siebel (NASDAQ:SEBL), and Veritas (NASDAQ:VRTS).
These are the companies that should benefit first from a
pickup in IT spending due to the way corporate managers
budget for the year, and the nature of the products sold by
these vendors.  The three aforementioned vendors, among
many others, have not seen a pickup.  Tom Siebel, chief of the
company that bears his name, said that last quarter was the
worst in his company's history.

If these biggest, best-run companies are having such a
difficult time, what lies ahead for the peripheral players,
the companies with weak management, and dwindling cash
reserves?  Judging by the outlooks offered by some of IT's
sharpest, the rebound in spending isn't even close.  Never
mind the magnitude of any forthcoming rebound, it's not even
here yet.  That doesn't bode well for the lesser competitors.
Not well at all.

Starting in the first week of March, the Nasdaq-100 (NDX.X)
did a pretty good job of discounting the terrible first
quarter earnings reports.  From here, if things worsen on
the fundamental front, you can bet that the supposed double
bottom in the NDX will be broken.

In the meantime, the NDX Bullish Percent ($BPNDX) is in
bull confirmed status.  As such, the greatest risk is to the
upside.  In other words, bears are nervous, while bulls are
more confident.  If the IT climate worsens, we'll see the
$BPNDX reverse into bull correction, and most likely into
bear confirmed.  Until that happens, however, tech bears
should be cautious about the upside potential.

If you're bearish, and would rather shun the risk associated
with tech stocks currently, you're better off turning to the
NYSE names that have a lot more downside risk.  The S&P-100
(OEX.X) names, minus technology, would be a good place to
search out downside bets.  At 66 percent, there's plenty of
downside risk left in the NYSE big caps.

Finally, Friday's sector scorecard was so representative of
this year it was just amazing.  The best performing sector was
the HMO (HMO.X), the relatively obscure group of stocks that
is starting to attract a lot of attention.  Diametrically
opposed to health care sits telecom.  And it's no surprise that
Friday's worst performing sector was the North American
Telecom Index (XTC.X).

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

Market Averages


DJIA ($INDU)

52-week High: 11350
52-week Low :  8062
Current     : 10257

Moving Averages:
(Simple)

 10-dma: 10228
 50-dma: 10254
200-dma:  9946



S&P 500 ($SPX)

52-week High: 1316
52-week Low :  945
Current     : 1125

Moving Averages:
(Simple)

 10-dma: 1119
 50-dma: 1129
200-dma: 1133



Nasdaq-100 ($NDX)

52-week High: 2071
52-week Low : 1089
Current     : 1507

Moving Averages:
(Simple)

 10-dma: 1373
 50-dma: 1435
200-dma: 1507



HMO ($HMO)

No stranger here.  The HMO earned the day's best performing
sector spot in last Friday's session.  The index finished 2.86
percent higher for the day, and has now gone into a parabolic
rise.  The quality and ubiquity of earnings is the driving force
here.

Friday's sector leaders included Pacificare (NASDAQ:PHSY),
which blew up by 21 percent, Tenet Healthcare (NYSE:THC),
Oxford (NYSE:OHP), Wellpoint (NYSE:WLP), and Humana (NYSE:HUM).

52-week High: 587
52-week Low : 366
Current     : 586

Moving Averages:
(Simple)

 10-dma: 545
 50-dma: 503
200-dma: 445


Telecom ($XTC)

No stranger here.  The XTC resumed its role of goat Friday,
winning the worst performing sector of the day spot.  The XTC
shed 2.83 percent on another calamity at Qwest (NYSE:Q), the
Denver telco that is having, shall we call them, difficulties.
The news didn't get any better after the bell Friday, when
Worldcom (NASDAQ:WCOM) warned.  Come on, Bernie, on a Friday
night?  Really, show some class.

Leading to the downside included shares of the aforementioned
two, as well as MCI Worldcom (NASDAQ:MCIT), Nextel
(NASDAQ:NXTL), Bellsouth (NYSE:BLS), and SBC (NYSE:SBC).

52-week High: 1028
52-week Low :  534
Current     :  580

Moving Averages:
(Simple)

 10-dma: 576
 50-dma: 631
200-dma: 788

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

Market Volatility

The VIX fell back to the 20 level in Friday's session, losing
nearly 6 percent for the day.

The VXN finished fractionally lower despite the weakness in the
Nasdaq-100 (NDX.X).

CBOE Market Volatility Index (VIX) - 20.00 -1.24
Nasdaq-100 Volatility Index  (VXN) - 39.28 -0.06

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

          Put/Call Ratio  Call Volume   Put Volume
Total          0.79        765,446       607,823
Equity Only    0.66        694,446       458,104
OEX            1.12         26,554        29,628
QQQ            0.60         22,150        13,342
 
-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          66      + 0     Bull Confirmed
NASDAQ-100    45      + 0     Bull Confirmed
DOW           57      + 0     Bear Alert
S&P 500       71      + 0     Bull Confirmed
S&P 100       66      + 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  0.95
10-Day Arms Index  1.28
21-Day Arms Index  1.31
55-Day Arms Index  1.21

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      1728           1373
NASDAQ    1671           1834

        New Highs      New Lows
NYSE      179             19
NASDAQ    213             32

        Volume (in millions)
NYSE     1,190
NASDAQ   1,512

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

Commitments Of Traders Report: 04/16/02

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

The spread between S&P commercials and small traders narrowed
during the most recent reporting period.  Commercials added a
few more longs than shorts, resulting in a small reduction in the
group's net bearish position.  Meanwhile, small traders added
quite a few short positions, coming off of the group's yearly
high in bullishness.

Commercials   Long      Short      Net     % Of OI 
04/02/02      313,294   406,337   (93,403)  (13.0%)
04/09/02      320,101   411,075   (90,974)  (12.4%)
04/16/02      322,578   411,245   (88,667)  (12.1%)

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
04/02/02      149,449     43,139  106,310     55.2%
04/09/02      151,237     47,678  103,559     52.1%
04/16/02      150,529     50,424  100,105     49.8%

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 less bearish during the most recent
reporting period.  The group added a number of long positions,
while maintaining last week's short position.  Net, however, the
group is still bearish.  Small traders went in the opposite
direction by adding more shorts than longs, for a decrease in
the group's net bullish position.

Commercials   Long      Short      Net     % of OI 
04/02/02       26,211     31,840    (5,629)   (9.7%)
04/09/02       28,985     35,221    (6,236)   (9.7%)
04/16/02       32,024     35,723    (3,699)   (5.5%)

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
04/02/02       10,615     7,769     2,846     15.5%
04/09/02       11,640     8,353     3,287     16.4%
04/16/02       12,458    10,572     1,878      8.2% 

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 grew less bullish during the most recent reporting
period by reducing their number of longs and increasing their
number of shorts.  The group's net bullish position dropped by
about 1,100 contracts.  Small traders added slightly more longs
than shorts for a reduction in the group's net bearish position.

Commercials   Long      Short      Net     % of OI
04/02/02       18,717    12,549    6,168     19.7%
04/09/02       19,393    13,445    5,948     16.7%
04/16/02       19,080    14,267    4,813     14.4% 

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
04/02/02        5,192     9,007    (3,815)   (26.9%)
04/09/02        5,459     9,340    (3,881)   (26.2%)
04/16/02        5,644     9,448    (3,804)   (25.2%) 

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

Au
By Eric Utley

It sits between platinum and mercury.  It sports the atomic number
79.  It's gold.  And, baby, they're buying it.

Gold is obviously used in jewelry; its aesthetic appeal stems
from its easiness on the eyes.  The metal is also used in
electronics applications, because it's one heck of a conductor.
Some even use gold as an investment vehicle.

A full two-thirds of the world's supply comes from South
Africa.  In the U.S., 66 percent of supply comes from two
states: South Dakota and Nevada.

Romantics, like my good friend Austin Passamonte, pan for the
metal in mountain streams.  The efficacy of panning for gold
depends on the density of the metal; it's much more dense than
the "other" material found at the bottom of a river, so the
gold settles at the bottom of the pan.  Other professionals
seek out prized nuggets with metal detectors.  While most
commercial concerns extract gold from ores through a variety of
chemical processes.

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 

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

Gold and Silver (XAU.X)

A prize fighter in the corner is told
hit where it hurts, silver and gold

- U2

What does the recent rise in gold -- both the metal and
equities -- say about the state of the U.S. economy?  Through
this weekend, the XAU is higher by about 30 percent year to
date.  The metal, meanwhile, is back above $300 per ounce,
higher by about 8 percent year to day.

Historically, gold has been used as a hedge against inflation,
a defensive place to park money in times of uncertainty.  Can
we therefore conclude that the market is uncertain about
something, judging by the recent rise in gold?  I think yes.
But pinpointing exactly what the market is uncertain about is
difficult.  There's geopolitical risk in the forms of the
Middle East conflict, future terrorist attacks, even turmoil
in Latin America.  

But there may be more of an economic twist to the gold story.
My reasoning stems from the recent weakness in the dollar.
It hit a multi month lower versus most majors last week.  For
the purpose of this discussion, I will use the U.S. Dollar
Index (DX02M) to illustrate the weakness.

Money, so they say is the
root of all evil today

- Roger Waters

U.S. Dollar Index


 

Bears have been calling for a decline in the dollar for years.
But it really hasn't lost much ground versus the euro and yen,
for example, until recently.  The recent slide has been
attributed to a loss of confidence in the U.S. economy.  What's
interesting with the decline is its timing, on the eve of a
supposed economic recovery.  If the U.S. economy -- the
cornerstone for the global economy -- is on the mend, why then
are investors selling dollar-denominated assets?

A falling dollar would result in inflation, and inevitably
higher interest rates.  Obviously those two are not what the
U.S. economy needs at this point in the business cycle, when
the recovery is still very fragile.

The rise in gold and fall in the dollar is not an atypical
divergence.  Instead, the opposite moves serve as confirmation
of what the market is revealing about the future of the U.S.
economy.  The moves, right now, are revealing that things
could get worse before they get better.

Investors can protect themselves from such a development by
going along with the predominant trend in gold, which is
obviously upward.  The XAU last week traced another multi year
high at a retracement level that I've been using for several
months now.  The current risk level may not be the best way to
get into the move.  A better entry would come down around the
67 level in the XAU.

The Trend Is Your Friend


 

Options on the XAU are pretty liquid.  Spreads aren't too
bad in the contracts around the money, and open interest is
pretty good.  Of course using the equities outright can be
another way to position.

Barrick Gold       (NYSE:ABX)
Newmont Mining     (NYSE:NEM)
Anglogold           (NYSE:AU)
Freeport Mcmoran   (NYSE:FCX)
Gold Fields     (NASDAQ:GOLD)
Harmony Gold   (NASDAQ:HGMCY)
Meridian Gold      (NYSE:MDG)
Placer Dome        (NYSE:PDG)
Apex Silver Mining (AMEX:SIL)

Though there's been a big move already in the XAU, there's
plenty of upside if, indeed, the economy takes a turn for the
worst.  Some gold bugs are calling for prices to top $1000 per
ounce in the next two or three years, which I think is a little
extreme.  But another couple of hundred dollars per ounce is
not out of the question.

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

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

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

Symbol  Company               Date           Comment      EPS Est

AGN    Allergan               Mon, Apr 22  Before the Bell   0.44
ALTR   Altera Corporation     Mon, Apr 22  After the Bell    0.04
AEE    Ameren                 Mon, Apr 22  -----N/A-----     0.47
AME    AMETEK                 Mon, Apr 22  After the Bell    0.59
ACI    Arch Coal              Mon, Apr 22  Before the Bell  -0.10
ASTSF  ASE Test Limited       Mon, Apr 22  After the Bell   -0.18
ASMI   ASM International N.V. Mon, Apr 22  During the Market-0.13
AV     Avaya                  Mon, Apr 22  After the Bell   -0.08
BPC    Banco Comerc Portugue  Mon, Apr 22  After the Bell     N/A
BWA    BorgWarner, Inc.       Mon, Apr 22  -----N/A-----     1.11
BPO    Brookfield Properties  Mon, Apr 22  -----N/A-----     0.53
BG     Bunge Limited          Mon, Apr 22  Before the Bell   0.20
CNI    Canadian National Rlwy Mon, Apr 22  After the Bell    0.71
CECO   Career Education       Mon, Apr 22  After the Bell    0.21
CX     Cemex, S.A. de C.V.    Mon, Apr 22  -----N/A-----     0.62
CF     Charter One Financial  Mon, Apr 22  Before the Bell   0.62
GLW    Corning                Mon, Apr 22  After the Bell   -0.13
COX    Cox Communication      Mon, Apr 22  Before the Bell  -0.19
CSX    CSX                    Mon, Apr 22  Before the Bell   0.30
DNB    D&B                    Mon, Apr 22  After the Bell    0.45
DHI    D.R. Horton            Mon, Apr 22  Before the Bell   0.52
ELNK   EarthLink, Inc.        Mon, Apr 22  After the Bell   -0.11
EDS    Electronic Data Sys    Mon, Apr 22  After the Bell    0.71
ERICY  Ericsson LM Telephone  Mon, Apr 22  Before the Bell  -0.04
RE     Everest Reinsurance    Mon, Apr 22  After the Bell    1.34
ESA    Extended Stay America  Mon, Apr 22  After the Bell    0.08
FCNCA  First Citi BancShares  Mon, Apr 22  -----N/A-----      N/A
FISV   Fiserv                 Mon, Apr 22  After the Bell    0.32
HHS    Harte-Hanks            Mon, Apr 22  After the Bell    0.31
HIG    Hartford Finan Service Mon, Apr 22  After the Bell    1.11
HAS    Hasbro                 Mon, Apr 22  Before the Bell  -0.10
HCA    HCA Inc.               Mon, Apr 22  Before the Bell   0.72
IMNX   Immunex                Mon, Apr 22  -----N/A-----     0.05
ICBC   Independence Com Bank  Mon, Apr 22  After the Bell    0.50
KEM    Kemet                  Mon, Apr 22  After the Bell    0.01
LH     Laboratory Corp.       Mon, Apr 22  After the Bell    0.92
LEA    Lear                   Mon, Apr 22  Before the Bell   0.60
LEE    Lee Enterprises        Mon, Apr 22  -----N/A-----     0.30
LXK    Lexmark International  Mon, Apr 22  Before the Bell   0.48
LPNT   LifePoint Hospitals    Mon, Apr 22  After the Bell    0.31
LNCR   Lincare Holdings       Mon, Apr 22  After the Bell    0.39
LZ     Lubrizol               Mon, Apr 22  -----N/A-----     0.45
LU     Lucent Technologies    Mon, Apr 22  -----N/A-----    -0.17
MHP    McGraw-Hill            Mon, Apr 22  Before the Bell   0.13
MWV    MeadWestvaco           Mon, Apr 22  Before the Bell  -0.17
MEOH   Methanex               Mon, Apr 22  -----N/A-----    -0.13
MCRL   Micrel Semiconductor   Mon, Apr 22  After the Bell   -0.02
MMM    Minnesota Mine & Manu  Mon, Apr 22  Before the Bell   1.19
NBTY   NBTY                   Mon, Apr 22  -----N/A-----     0.28
NBL    Noble Affiliates       Mon, Apr 22  -----N/A-----    -0.29
BOH    Pacific Century Fin    Mon, Apr 22  Before the Bell   0.39
PPE    Park Place Entertain   Mon, Apr 22  Before the Bell   0.09
PX     Praxair Incorporated   Mon, Apr 22  Before the Bell   0.74
RYN    Rayonier               Mon, Apr 22  After the Bell    0.26
RNR    RenaissanceRe Holdings Mon, Apr 22  After the Bell    2.70
SAFC   SAFECO                 Mon, Apr 22  Before the Bell   0.36
SCVa   Scania AB ADR A        Mon, Apr 22  -----N/A-----      N/A
SXT    Sensient Tech Corp     Mon, Apr 22  Before the Bell   0.32
SLAB   Silicon Laboratories   Mon, Apr 22  After the Bell    0.01
SLG    SL Green Realty        Mon, Apr 22  After the Bell    0.78
PCU    Southern Peru Cop Corp Mon, Apr 22  -----N/A-----     0.14
STM    STMicroelectronics     Mon, Apr 22  After the Bell    0.04
TPP    Teppco                 Mon, Apr 22  Before the Bell   0.49
TUP    Tupperware             Mon, Apr 22  After the Bell    0.28
UDR    United Dominion Realty Mon, Apr 22  After the Bell    0.40
VOLVY  Volvo AB               Mon, Apr 22  -----N/A-----      N/A
VMC    Vulcan Materials       Mon, Apr 22  -----N/A-----     0.06
WRE    WA Rl Este Invst Trst  Mon, Apr 22  After the Bell    0.49
WPPGY  WPP Group PLC          Mon, Apr 22  Before the Bell    N/A

SE     7-Eleven               Tue, Apr 23  Before the Bell   0.00
ABGX   Abgenix                Tue, Apr 23  After the Bell   -0.32
ACS    Affiliated Comp Srv    Tue, Apr 23  -----N/A-----     0.46
AFL    AFLAC                  Tue, Apr 23  -----N/A-----     0.35
AGRa   Agere Systems          Tue, Apr 23  Before the Bell  -0.16
APD    Air Products & Chem    Tue, Apr 23  Before the Bell   0.54
AKZOY  Akzo Nobel ADR         Tue, Apr 23  -----N/A-----      N/A
ALD    Allied Capital         Tue, Apr 23  Before the Bell   0.55
AMZN   Amazon.com             Tue, Apr 23  After the Bell   -0.09
DOX    Amdocs Limited         Tue, Apr 23  After the Bell    0.37
AMX    America Movil, S.A.    Tue, Apr 23  After the Bell    0.13
AMTD   Ameritrade Holding     Tue, Apr 23  Before the Bell   0.02
AHS    AMN Healthcare Service Tue, Apr 23  After the Bell    0.21
AXE    Anixter International  Tue, Apr 23  -----N/A-----     0.21
AMCC   Aplied Micro Circ Corp Tue, Apr 23  After the Bell   -0.06
ADM    Arch Dniels Mdlnd Comp Tue, Apr 23  Before the Bell   0.18
AGY    Argosy Gaming          Tue, Apr 23  Before the Bell   0.82
AWE    AT&T Wireless Services Tue, Apr 23  Before the Bell  -0.03
AN     AutoNation             Tue, Apr 23  Before the Bell   0.21
AVY    Avery Dennison         Tue, Apr 23  During the Market 0.64
AVT    Avnet                  Tue, Apr 23  -----N/A-----    -0.01
BHI    Baker Hughes           Tue, Apr 23  Before the Bell   0.21
BIO    Bio-Rad Laboratories A Tue, Apr 23  After the Bell    0.55
EAT    Brinker International  Tue, Apr 23  Before the Bell   0.40
BNI    Brlington Nrth Snta Fe Tue, Apr 23  Before the Bell   0.46
CACI   CACI International     Tue, Apr 23  Before the Bell   0.33
CBM    Cambrex                Tue, Apr 23  After the Bell    0.52
CAH    Cardinal Health        Tue, Apr 23  -----N/A-----     0.70
CDX    Catellus Development   Tue, Apr 23  After the Bell     N/A
CTX    Centex Corporation     Tue, Apr 23  Before the Bell   1.80
CEY    Certegy                Tue, Apr 23  Before the Bell   0.22
GIB    CGI Group              Tue, Apr 23  Before the Bell    N/A
CHKP   Check Point Sftwr Tech Tue, Apr 23  After the Bell    0.24
CKFR   CheckFree              Tue, Apr 23  After the Bell    0.02
CHH    Choice Hotels Intl     Tue, Apr 23  Before the Bell   0.18
COH    Coach                  Tue, Apr 23  Before the Bell   0.28
CGNX   Cognex                 Tue, Apr 23  -----N/A-----    -0.06
CBE    Cooper Industries      Tue, Apr 23  Before the Bell   0.52
CCR    Countrywide Credit Ind Tue, Apr 23  Before the Bell   1.30
CYMI   Cymer                  Tue, Apr 23  After the Bell   -0.02
DASTY  Dassault Systemes SA   Tue, Apr 23  -----N/A-----     0.22
DT     Deutsche Telekom       Tue, Apr 23  Before the Bell    N/A
DP     Diagnostic Products    Tue, Apr 23  Before the Bell   0.35
DBD    Diebold                Tue, Apr 23  Before the Bell   0.37
DPL    DPL                    Tue, Apr 23  After the Bell    0.45
DD     DuPont                 Tue, Apr 23  Before the Bell   0.56
ECL    Ecolab                 Tue, Apr 23  Before the Bell   0.36
EW     Edwards Lifesciences   Tue, Apr 23  After the Bell    0.32
EXC    Exelon Corporation     Tue, Apr 23  -----N/A-----     0.91
EXPE   Expedia                Tue, Apr 23  After the Bell    0.26
XOM    Exxon Mobil Corp       Tue, Apr 23  -----N/A-----     0.39
FIC    Fair Isaac &Co         Tue, Apr 23  After the Bell    0.58
FCS    Fairchild Semi Intl    Tue, Apr 23  After the Bell   -0.03
FEIC   FEI Company            Tue, Apr 23  -----N/A-----     0.21
FOE    Ferro                  Tue, Apr 23  Before the Bell   0.20
FLS    Flowserve              Tue, Apr 23  Before the Bell   0.28
FTI    Fmc Technologies, Inc. Tue, Apr 23  After the Bell    0.07
FRX    Forest Laboratories    Tue, Apr 23  Before the Bell   0.48
FRE    Freddie Mac            Tue, Apr 23  -----N/A-----     1.19
GMT    GATX                   Tue, Apr 23  -----N/A-----     0.32
G      Gillette               Tue, Apr 23  During the Market 0.19
DA     Groupe Danone          Tue, Apr 23  During the Market  N/A
HSC    Harsco Corporation     Tue, Apr 23  Before the Bell   0.37
HCP    Health Care Property   Tue, Apr 23  Before the Bell   0.77
HMA    Health Man Asoc, Inc   Tue, Apr 23  Before the Bell   0.27
HLT    Hilton Hotels Corp     Tue, Apr 23  Before the Bell   0.05
HLYW   Hollywood Enter        Tue, Apr 23  Before the Bell   0.29
ROOM   Htl Reservations Ntwrk Tue, Apr 23  Before the Bell   0.24
HUBb   Hubbell                Tue, Apr 23  During the Market 0.32
ICOS   ICOS                   Tue, Apr 23  After the Bell   -0.61
IMN    Imation                Tue, Apr 23  Before the Bell    N/A
IMO    Imperial Oil Limited   Tue, Apr 23  -----N/A-----      N/A
IFX    Infineon Tech AG       Tue, Apr 23  Before the Bell    N/A
IDTI   Integrated Device Tech Tue, Apr 23  After the Bell   -0.07
IGT    Intl Gaming Tech       Tue, Apr 23  -----N/A-----     0.79
IPCR   IPC Holdings           Tue, Apr 23  After the Bell    0.87
KELYA  Kelly Services         Tue, Apr 23  Before the Bell  -0.02
KMB    Kimberly Clark         Tue, Apr 23  Before the Bell   0.83
LLL    L-3 Comm Hldgs         Tue, Apr 23  Before the Bell   0.69
LSCC   Lattice Semiconductor  Tue, Apr 23  Before the Bell   0.04
LVLT   Level 3 Communications Tue, Apr 23  Before the Bell  -1.14
LRY    Liberty Property Trust Tue, Apr 23  -----N/A-----     0.84
LNC    Lincoln National       Tue, Apr 23  Before the Bell   0.93
LMT    Lockheed Martin        Tue, Apr 23  -----N/A-----     0.47
MRO    Marathon Oil Corp.     Tue, Apr 23  Before the Bell   0.19
MXO    Maxtor                 Tue, Apr 23  After the Bell   -0.17
MDU    MDU Resources          Tue, Apr 23  Before the Bell   0.26
MEDQ   Medquist               Tue, Apr 23  Before the Bell   0.32
MGM    Metro-Goldwyn-Mayer    Tue, Apr 23  Before the Bell  -0.36
MON    Monsanto Co.           Tue, Apr 23  Before the Bell   0.31
NSCN   Netscreen Tech Inc.    Tue, Apr 23  After the Bell    0.01
NEU    Neuberger Berman       Tue, Apr 23  Before the Bell   0.48
NI     NiSource               Tue, Apr 23  Before the Bell   0.92
NU     Northeast Utilities    Tue, Apr 23  Before the Bell   0.27
NRG    NRG Energy             Tue, Apr 23  -----N/A-----    -0.14
ORLY   O`Reilly Automotive    Tue, Apr 23  After the Bell    0.31
OI     Owens Illinois         Tue, Apr 23  After the Bell    0.40
PEP    Pepsico                Tue, Apr 23  Before the Bell   0.37
PCZ    Petro-Canada           Tue, Apr 23  -----N/A-----      N/A
PHA    Pharmacia Corporation  Tue, Apr 23  Before the Bell   0.37
PNW    Pinnacle West          Tue, Apr 23  -----N/A-----     0.63
PDG    Placer Dome            Tue, Apr 23  After the Bell    0.09
PNM    PNM Resources          Tue, Apr 23  After the Bell    0.65
PPP    Pogo Producing         Tue, Apr 23  -----N/A-----     0.09
PHM    Pulte Homes Inc.       Tue, Apr 23  Before the Bell   0.92
QLTI   QLT                    Tue, Apr 23  After the Bell    0.07
RSH    Radio Shack Corp       Tue, Apr 23  Before the Bell   0.29
RGIS   Regis Corporation      Tue, Apr 23  Before the Bell   0.38
RGS    RGS Energy Group       Tue, Apr 23  -----N/A-----      N/A
ROK    Rockwell Automation    Tue, Apr 23  Before the Bell   0.18
STOSY  Santos ADR             Tue, Apr 23  -----N/A-----      N/A
SRE    Sempra Energy          Tue, Apr 23  Before the Bell   0.65
SRA    Serono S.A.            Tue, Apr 23  Before the Bell   0.11
SIAL   Sigma-Aldrich          Tue, Apr 23  After the Bell    0.55
SSCC   Smurfit-Stone Contain  Tue, Apr 23  Before the Bell   0.05
SNA    Snap-On                Tue, Apr 23  Before the Bell   0.44
SNRA   Sonera Group plc       Tue, Apr 23  Before the Bell    N/A
SAH    Sonic Automotive       Tue, Apr 23  Before the Bell   0.46
SPW    SPX                    Tue, Apr 23  Before the Bell   1.61
SEO    STORA ENSO CORP        Tue, Apr 23  Before the Bell    N/A
STK    Storage Technology     Tue, Apr 23  After the Bell    0.02
SWMAY  Swedish Match          Tue, Apr 23  Before the Bell    N/A
TECUA  Tecumseh Products      Tue, Apr 23  -----N/A-----     0.55
TMCS   Ticketmaster           Tue, Apr 23  After the Bell    0.11
TRI    Triad Hospitals        Tue, Apr 23  After the Bell    0.39
USTR   United Stationers      Tue, Apr 23  After the Bell    0.73
VSEA   Varian Semiconductor   Tue, Apr 23  After the Bell   -0.34
VZ     Verizon Communications Tue, Apr 23  Before the Bell   0.72
VFC    VF                     Tue, Apr 23  -----N/A-----     0.57
WDR    Waddell&Reed Financial Tue, Apr 23  Before the Bell   0.34
WAT    Waters Corporation     Tue, Apr 23  Before the Bell   0.28
WFT    Weatherford            Tue, Apr 23  After the Bell    0.36
WSTC   West Corporation       Tue, Apr 23  After the Bell    0.32
WWY    Wm. Wrigley Jr.        Tue, Apr 23  -----N/A-----     0.40
WPS    WPS Resources          Tue, Apr 23  -----N/A-----     0.91
XMSR   XM Satelite Rdio Hldgs Tue, Apr 23  Before the Bell  -1.58
YRK    York International     Tue, Apr 23  After the Bell    0.17

ABB    ABB Ltd.               Wed, Apr 24  -----N/A-----      N/A
ABY    Abitibi-Consolidated   Wed, Apr 24  -----N/A-----      N/A
ADO    Adecco SA              Wed, Apr 24  -----N/A-----      N/A
ASX    Adv Semi Engineering   Wed, Apr 24  Before the Bell  -0.01
AMG    Affiliated Manag Grp   Wed, Apr 24  Before the Bell   1.07
AFFX   Affymetrix             Wed, Apr 24  After the Bell   -0.02
ALFA   Alfa                   Wed, Apr 24  Before the Bell   0.42
AHC    Amerada Hess           Wed, Apr 24  -----N/A-----     1.11
AEP    American Elctric Power Wed, Apr 24  Before the Bell   0.59
AVZ    AMVESCAP PLC           Wed, Apr 24  Before the Bell   0.27
BUD    Anheuser-Busch         Wed, Apr 24  -----N/A-----     0.49
AOL    AOL Time Warner        Wed, Apr 24  After the Bell    0.14
APPB   Applebee`s Intl        Wed, Apr 24  After the Bell    0.51
T      AT&T                   Wed, Apr 24  Before the Bell   0.04
ACAI   Atl Cst Arlnes Holding Wed, Apr 24  -----N/A-----     0.31
ACLS   Axcelis Technologies   Wed, Apr 24  After the Bell   -0.21
BARZ   BARRA                  Wed, Apr 24  Before the Bell   0.50
BCE    BCE                    Wed, Apr 24  Before the Bell   0.23
BZH    Beazer Homes USA       Wed, Apr 24  After the Bell    2.26
BDX    Becton Dickinson       Wed, Apr 24  After the Bell    0.50
BLC    Belo                   Wed, Apr 24  Before the Bell   0.10
BGEN   Biogen                 Wed, Apr 24  Before the Bell   0.47
BJS    BJ Services            Wed, Apr 24  Before the Bell   0.24
BBI    Blockbuster            Wed, Apr 24  Before the Bell   0.28
BPL    Buckeye Partners       Wed, Apr 24  -----N/A-----     0.65
CBT    Cabot                  Wed, Apr 24  After the Bell    0.39
CHIR   Chiron                 Wed, Apr 24  After the Bell    0.22
CTXS   Citrix Systems         Wed, Apr 24  After the Bell    0.15
CYH    Commun Health Systms   Wed, Apr 24  After the Bell    0.24
CVG    Convergys Corporation  Wed, Apr 24  -----N/A-----     0.35
CVD    Covance                Wed, Apr 24  After the Bell    0.18
CFR    Cullen/Frost Bankers   Wed, Apr 24  Before the Bell   0.51
CYTC   CYTYC                  Wed, Apr 24  After the Bell    0.14
DRYR   Dreyer`s Grand Ice Crm Wed, Apr 24  Before the Bell   0.05
DST    DST Systems            Wed, Apr 24  After the Bell    0.45
DTE    DTE Energy             Wed, Apr 24  Before the Bell   1.13
DRE    Duke Realty Corp       Wed, Apr 24  -----N/A-----     0.65
ESS    Essex Property Trust   Wed, Apr 24  After the Bell    1.11
FII    Federated Investors B  Wed, Apr 24  During the Market 0.44
FR     Frst Ind Realty Trust  Wed, Apr 24  After the Bell    0.91
FE     FirstEnergy            Wed, Apr 24  -----N/A-----     0.40
FLA    Florida East Coast     Wed, Apr 24  Before the Bell    N/A
FBN    Furniture Brands Intl  Wed, Apr 24  After the Bell    0.52
GBL    Gabelli Asset Manag    Wed, Apr 24  -----N/A-----     0.51
IT     Gartner                Wed, Apr 24  Before the Bell   0.05
GETY   Getty Images           Wed, Apr 24  -----N/A-----     0.04
GSK    GlaxoSmithKline        Wed, Apr 24  Before the Bell   0.53
GR     Goodrich Corporation   Wed, Apr 24  Before the Bell   0.66
GT     Goodyear Tire & Rubber Wed, Apr 24  Before the Bell  -0.32
GXP    Great Plains Energy    Wed, Apr 24  After the Bell     N/A
TV     Grupo Televisa, S.A.   Wed, Apr 24  After the Bell     N/A
HAR    Harman Intl Ind        Wed, Apr 24  -----N/A-----     0.40
HP     Helmerich & Payne      Wed, Apr 24  -----N/A-----     0.22
NDE    IndyMac Bancorp Inc.   Wed, Apr 24  Before the Bell   0.58
ICST   Integrated Circuit Sys Wed, Apr 24  -----N/A-----     0.16
ISIL   Intersil               Wed, Apr 24  After the Bell    0.13
ITT    ITT Industries         Wed, Apr 24  -----N/A-----     0.72
KEA    Keane                  Wed, Apr 24  Before the Bell   0.09
KMG    Kerr-McGee             Wed, Apr 24  -----N/A-----     0.12
KRI    Knight-Ridder          Wed, Apr 24  Before the Bell   0.59
LSI    LSI Logic              Wed, Apr 24  After the Bell   -0.14
LUX    Luxottica Group        Wed, Apr 24  -----N/A-----      N/A
MACR   Macromedia             Wed, Apr 24  After the Bell   -0.14
MANH   Manhattan Associates   Wed, Apr 24  After the Bell    0.18
MTD    Mettler Toledo Intl    Wed, Apr 24  After the Bell    0.41
MTGNY  Modern Times Group     Wed, Apr 24  Before the Bell    N/A
MCO    Moody`s                Wed, Apr 24  Before the Bell   0.35
MCL    Moore Corporation      Wed, Apr 24  After the Bell    0.09
MUR    Murphy Oil             Wed, Apr 24  After the Bell    0.03
NE     Noble Drilling         Wed, Apr 24  -----N/A-----     0.39
NRD    NORANDA INC            Wed, Apr 24  Before the Bell    N/A
NSC    Norfolk Southern       Wed, Apr 24  -----N/A-----     0.23
NCX    Nova Chemical          Wed, Apr 24  Before the Bell  -0.87
NST    NSTAR                  Wed, Apr 24  -----N/A-----     0.66
PTEN   Patterson-UTI Energy   Wed, Apr 24  Before the Bell   0.05
PAS    PepsiAmericas          Wed, Apr 24  Before the Bell   0.15
PD     Phelps Dodge           Wed, Apr 24  Before the Bell  -0.98
PXD    Pioneer Natural Resrc  Wed, Apr 24  Before the Bell   0.03
PMI    PMI Group              Wed, Apr 24  -----N/A-----     1.85
POT    Potash Corp of Saskatc Wed, Apr 24  -----N/A-----     0.26
PPL    PPL Corporation        Wed, Apr 24  Before the Bell   1.09
PGN    Progress Energy        Wed, Apr 24  Before the Bell   0.76
PRHC   Province Healthcare    Wed, Apr 24  After the Bell    0.35
PTZ    Pulitzer Inc.          Wed, Apr 24  Before the Bell   0.33
QCOM   Qualcomm               Wed, Apr 24  After the Bell    0.20
RDN    Radian Group           Wed, Apr 24  After the Bell    1.05
REY    Reynolds&Reynolds      Wed, Apr 24  During the Market 0.37
RCL    Royal Caribbean        Wed, Apr 24  Before the Bell   0.26
R      Ryder System           Wed, Apr 24  -----N/A-----     0.18
RYL    Ryland Group           Wed, Apr 24  Before the Bell   1.16
SANYY  Sanyo Electric         Wed, Apr 24  -----N/A-----      N/A
SLE    Sara Lee               Wed, Apr 24  Before the Bell   0.31
SAY    Satyam Comp Serv Lim   Wed, Apr 24  -----N/A-----     0.15
SEE    Sealed Air             Wed, Apr 24  Before the Bell   0.54
SVM    ServiceMaster          Wed, Apr 24  -----N/A-----     0.10
JOE    St. Joe Company        Wed, Apr 24  Before the Bell    N/A
SWK    Stanley Works          Wed, Apr 24  Before the Bell   0.56
SUN    Sunoco                 Wed, Apr 24  Before the Bell  -1.37
SYMC   Symantec               Wed, Apr 24  After the Bell    0.35
SYY    Sysco                  Wed, Apr 24  Before the Bell   0.23
TLTOB  Tele2 AB               Wed, Apr 24  -----N/A-----      N/A
TMO    Thermo Electron        Wed, Apr 24  After the Bell    0.19
URI    United Rentals         Wed, Apr 24  -----N/A-----     0.08
USAI   USA Networks           Wed, Apr 24  Before the Bell   0.02
VVC    Vectren                Wed, Apr 24  Before the Bell   0.73
VRTX   Vertex Pharmaceuticals Wed, Apr 24  After the Bell   -0.28
WY     Weyerhaeuser           Wed, Apr 24  Before the Bell   0.16
WYE    Wyeth                  Wed, Apr 24  Before the Bell   0.65
XEL    Xcel Energy            Wed, Apr 24  -----N/A-----     0.33
XRX    Xerox                  Wed, Apr 24  Before the Bell  -0.01
YCC    Yankee Candle          Wed, Apr 24  -----N/A-----     0.12

TW     21st Century Insurance Thu, Apr 25  -----N/A-----     0.10
ADPT   Adaptec                Thu, Apr 25  -----N/A-----     0.08
RKY    Adolph Coors           Thu, Apr 25  -----N/A-----     0.48
ATE    Advantest Corp         Thu, Apr 25  Before the Bell    N/A
AES    AES Corporation        Thu, Apr 25  Before the Bell   0.26
AET    Aetna                  Thu, Apr 25  Before the Bell   0.03
AG     AGCO                   Thu, Apr 25  -----N/A-----     0.10
ATG    AGL Resources          Thu, Apr 25  -----N/A-----     0.87
ACV    Alberto-Culver         Thu, Apr 25  During the Market 0.54
ALA    Alcatel                Thu, Apr 25  Before the Bell  -0.24
ALE    Allete                 Thu, Apr 25  Before the Bell   0.50
AT     Alltel Corporation     Thu, Apr 25  Before the Bell   0.77
AIG    American Intl Group    Thu, Apr 25  -----N/A-----     0.81
ABC    AmerisourceBergen      Thu, Apr 25  Before the Bell   0.75
AMGN   Amgen                  Thu, Apr 25  -----N/A-----     0.32
APC    Anadarko Petroleum     Thu, Apr 25  Before the Bell   0.39
APA    Apache                 Thu, Apr 25  Before the Bell   0.48
ABI    Applied Biosystems     Thu, Apr 25  Before the Bell   0.22
ARW    Arrow Electronics      Thu, Apr 25  -----N/A-----     0.00
AZN    AstraZeneca PLC        Thu, Apr 25  -----N/A-----     0.47
ANZ    Australia&New Zelnd    Thu, Apr 25  After the Bell     N/A
BLL    Ball                   Thu, Apr 25  Before the Bell   0.45
BCH    Banco de Chile         Thu, Apr 25  -----N/A-----     0.29
SAN    Banco Santiago         Thu, Apr 25  -----N/A-----     0.49
BOL    Bausch & Lomb          Thu, Apr 25  Before the Bell   0.21
BMS    Bemis                  Thu, Apr 25  Before the Bell   0.65
BVF    Biovail Corporation    Thu, Apr 25  Before the Bell   0.30
BDK    Black & Decker         Thu, Apr 25  Before the Bell   0.33
BMY    Bristol-Myers Squibb   Thu, Apr 25  Before the Bell   0.43
BC     Brunswick              Thu, Apr 25  Before the Bell   0.10
CCMP   Cabot Microelectronics Thu, Apr 25  Before the Bell   0.35
CP     Canadian Pacific Rlwy  Thu, Apr 25  After the Bell    0.25
CWG    CanWest Global Comm    Thu, Apr 25  -----N/A-----      N/A
CRA    Celera Genomics        Thu, Apr 25  Before the Bell  -0.49
CELG   Celgene                Thu, Apr 25  Before the Bell  -0.01
CTL    CenturyTelephone Entpr Thu, Apr 25  Before the Bell   0.48
CVX    ChevronTexaco Corp.    Thu, Apr 25  Before the Bell   0.70
CINF   Cincinnati Financial   Thu, Apr 25  Before the Bell   0.40
CIN    Cinergy                Thu, Apr 25  -----N/A-----     0.59
CNH    CNH Global N.V.        Thu, Apr 25  -----N/A-----    -0.25
KOF    Coca-Cola FEMSA, S.A.  Thu, Apr 25  Before the Bell   0.36
COLM   Columbia Sportswear    Thu, Apr 25  After the Bell    0.17
CTC    Comp de Telecom Chile  Thu, Apr 25  After the Bell    0.05
COC    Conoco                 Thu, Apr 25  Before the Bell   0.20
CNX    CONSOL Energy          Thu, Apr 25  Before the Bell   0.09
COCO   Corinthian Colleges    Thu, Apr 25  Before the Bell   0.42
CUM    Cummins Inc.           Thu, Apr 25  -----N/A-----    -0.79
DLTR   Dollar Tree Stores     Thu, Apr 25  After the Bell    0.13
DOW    Dow Chemical           Thu, Apr 25  Before the Bell   0.09
EMN    Eastman Chemical       Thu, Apr 25  After the Bell    0.33
EK    Eastman Kodak           Thu, Apr 25  Before the Bell   0.10
EEP    Enbridge Energy Part   Thu, Apr 25  After the Bell    0.34
ECA    EnCana Corporation     Thu, Apr 25  -----N/A-----     0.29
ELE    Endesa, S.A.           Thu, Apr 25  Before the Bell    N/A
ENDP   Endo Pharm Hldngs Inc. Thu, Apr 25  Before the Bell  -0.02
ENR    Energizer Holdings     Thu, Apr 25  Before the Bell   0.09
ETR    Entergy                Thu, Apr 25  -----N/A-----     0.75
ENZN   Enzon                  Thu, Apr 25  After the Bell    0.26
EXLT   EXULT                  Thu, Apr 25  After the Bell   -0.07
FMX    FEMSA                  Thu, Apr 25  -----N/A-----     0.66
FNF    Fidelity National Fin  Thu, Apr 25  Before the Bell   0.92
FAF    First American Fin     Thu, Apr 25  Before the Bell   0.55
FLEX   Flextronics            Thu, Apr 25  -----N/A-----     0.12
BEN    Franklin Resources     Thu, Apr 25  After the Bell    0.47
GLK    Great Lakes Chemical   Thu, Apr 25  After the Bell    0.00
HR     Healthcare Realty Trst Thu, Apr 25  After the Bell    0.67
IDA    Idacorp Holding        Thu, Apr 25  Before the Bell   0.65
IKN    Ikon Office Solutions  Thu, Apr 25  Before the Bell   0.20
IGL    IMC Global             Thu, Apr 25  Before the Bell   0.03
IM     Ingram Micro           Thu, Apr 25  -----N/A-----     0.06
IDCO   Interactive Data Corp  Thu, Apr 25  -----N/A-----     0.18
IFF    Intl Flvrs & Frgrnces  Thu, Apr 25  Before the Bell   0.44
IRF    International Rect     Thu, Apr 25  After the Bell    0.19
IVGN   Invitrogen             Thu, Apr 25  After the Bell    0.41
SFI    iStar Financial Inc.   Thu, Apr 25  -----N/A-----      N/A
JDSU   JDS Uniphase           Thu, Apr 25  After the Bell   -0.02
JBLU   Jetblue Airways Corp   Thu, Apr 25  Before the Bell    N/A
K      Kellogg                Thu, Apr 25  Before the Bell   0.35
KEG    Key Energy Services    Thu, Apr 25  Before the Bell   0.01
KSE    KeySpan Corporation    Thu, Apr 25  Before the Bell   1.50
LPX    Louisiana-Pacific      Thu, Apr 25  Before the Bell  -0.03
LYO    Lyondell Chemical      Thu, Apr 25  Before the Bell  -0.35
MLM    Martin Marietta Mat    Thu, Apr 25  -----N/A-----    -0.18
MEDI   MedImmune              Thu, Apr 25  Before the Bell   0.29
MENT   Mentor Graphics        Thu, Apr 25  After the Bell    0.09
MCHP   Microchip Technology   Thu, Apr 25  After the Bell    0.19
NFG    National Fuel Gas      Thu, Apr 25  After the Bell    0.70
NHP    Nationwide Health Prop Thu, Apr 25  Before the Bell   0.49
NIPNY  NEC (ADR)              Thu, Apr 25  -----N/A-----      N/A
NFX    Newfield Exploration   Thu, Apr 25  Before the Bell   0.36
OXY    Occidental Petroleum   Thu, Apr 25  Before the Bell   0.19
OEI    Ocean Energy           Thu, Apr 25  Before the Bell   0.09
ORI    Old Republic Int       Thu, Apr 25  -----N/A-----     0.72
IX     Orix                   Thu, Apr 25  Before the Bell    N/A
OVER   Overture Services, Inc Thu, Apr 25  After the Bell    0.33
POC    P & O Princess Cruises Thu, Apr 25  -----N/A-----     0.06
PTV    Pactiv                 Thu, Apr 25  After the Bell    0.23
PSFT   PeopleSoft             Thu, Apr 25  -----N/A-----     0.14
PKI    PerkinElmer            Thu, Apr 25  Before the Bell   0.00
P      Phillips Petroleum     Thu, Apr 25  During the Market-0.04
POM    Potomac Electric       Thu, Apr 25  After the Bell    0.34
PDE    Pride International    Thu, Apr 25  After the Bell   -0.01
PL     Protective Life        Thu, Apr 25  -----N/A-----     0.60
DSS    Quantum-DLT & Storage  Thu, Apr 25  After the Bell   -0.07
IQW    Quebecor World         Thu, Apr 25  -----N/A-----     0.26
RDA    Reader`s Digest Asoc   Thu, Apr 25  Before the Bell   0.16
O      Realty Income Corp     Thu, Apr 25  -----N/A-----     0.68
RBK    Reebok International   Thu, Apr 25  Before the Bell   0.56
RGA    Reinsurance Grp of Am  Thu, Apr 25  After the Bell    0.64
RESP   Respironics            Thu, Apr 25  -----N/A-----     0.36
RAD    Rite Aid Corporation   Thu, Apr 25  -----N/A-----    -0.11
SCG    SCANA                  Thu, Apr 25  Before the Bell   0.73
SMG    Scotts                 Thu, Apr 25  Before the Bell   1.71
SCRI   SICOR                  Thu, Apr 25  Before the Bell   0.17
SI     Siemens                Thu, Apr 25  Before the Bell    N/A
SNE    Sony                   Thu, Apr 25  Before the Bell    N/A
SPC    St. Paul Companies     Thu, Apr 25  Before the Bell   0.76
SFG    StanCorp Financial Grp Thu, Apr 25  Before the Bell   0.94
SBUX   Starbucks              Thu, Apr 25  After the Bell    0.10
HOT    Starwood Hotels&Resrt  Thu, Apr 25  Before the Bell   0.05
STE    Steris                 Thu, Apr 25  Before the Bell   0.23
SV     Stilwell Financial     Thu, Apr 25  -----N/A-----     0.42
SU     Suncor Energy          Thu, Apr 25  -----N/A-----      N/A
SLVN   Sylvan Learning Syst   Thu, Apr 25  Before the Bell   0.13
TTEC   TeleTech Holdings      Thu, Apr 25  After the Bell    0.09
PZB    The Pittston Company   Thu, Apr 25  -----N/A-----     0.19
TDW    Tidewater              Thu, Apr 25  Before the Bell   0.47
TTN    Titan                  Thu, Apr 25  After the Bell    0.10
TRH    Transatlantic Hldngs   Thu, Apr 25  Before the Bell   1.04
TXU    TXU Corp.              Thu, Apr 25  Before the Bell   1.01
TYC    Tyco International     Thu, Apr 25  Before the Bell   0.63
UL     Unilever PLC           Thu, Apr 25  Before the Bell    N/A
UNP    Union Pacific          Thu, Apr 25  Before the Bell   0.83
UCL    Unocal                 Thu, Apr 25  Before the Bell   0.15
UPM    UPM-Kymmene Group      Thu, Apr 25  Before the Bell    N/A
VCI    Valassis               Thu, Apr 25  Before the Bell   0.61
VAR    Varian Medical         Thu, Apr 25  After the Bell    0.31
VARI   Varian, Inc.           Thu, Apr 25  Before the Bell   0.34
VRSN   VeriSign               Thu, Apr 25  After the Bell    0.20
VIAb   Viacom                 Thu, Apr 25  Before the Bell   0.16
VVI    Viad                   Thu, Apr 25  Before the Bell   0.19
DIS    Walt Disney            Thu, Apr 25  After the Bell    0.10
WLP    WellPoint Health Net   Thu, Apr 25  Before the Bell   0.94
WDC    Western Digital        Thu, Apr 25  After the Bell    0.08
WMB    Williams Companies     Thu, Apr 25  Before the Bell   0.41
WIN    Winn-Dixie Stores      Thu, Apr 25  After the Bell    0.28
WCOM   WrldCm Inc.-WrldCm Grp Thu, Apr 25  -----N/A-----     0.17
XTO    XTO Energy             Thu, Apr 25  Before the Bell   0.41
ZMH    Zimmer Inc.            Thu, Apr 25  Before the Bell   0.25

BNN    Brascan Corporation    Fri, Apr 26  -----N/A-----      N/A
CAJ    Canon                  Fri, Apr 26  Before the Bell    N/A
CFB    Commercial Federal     Fri, Apr 26  Before the Bell   0.59
BVN    Comp Minas Buenavent   Fri, Apr 26  -----N/A-----     0.37
CEG    Cnstelation Enrgy Grp  Fri, Apr 26  Before the Bell   0.46
EAS    Energy East            Fri, Apr 26  After the Bell    0.89
HIT    Hitachi Limited        Fri, Apr 26  -----N/A-----      N/A
HMC    Honda Motor            Fri, Apr 26  Before the Bell    N/A
KIM    Kimco Realty           Fri, Apr 26  Before the Bell   0.75
MC     Matsushita Electric    Fri, Apr 26  Before the Bell    N/A
MIR    Mirant Corporation     Fri, Apr 26  During the Market 0.30
NOI    National-Oilwell       Fri, Apr 26  Before the Bell   0.28
PGL    Peoples Energy         Fri, Apr 26  Before the Bell   1.50
PIO    Pioneer Corporation    Fri, Apr 26  -----N/A-----      N/A
TCP    Tele Celar Particip    Fri, Apr 26  After the Bell   -0.31
TRP    TransCanada Pipelines  Fri, Apr 26  -----N/A-----     0.24
TRN    Trinity Industries     Fri, Apr 26  After the Bell   -0.20
UN     Unilever N.V.          Fri, Apr 26  -----N/A-----      N/A
VAL    Valspar                Fri, Apr 26  -----N/A-----     0.63
VRC    Varco                  Fri, Apr 26  Before the Bell   0.22
WCI    Wci Communities, Inc.  Fri, Apr 26  -----N/A-----     0.41

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

Symbol  Company Name              Ratio    Payable     Executable

FSBK    First South Bancorp       3:2      04/19       04/22
PGR     Progressive               3:1      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
DCOM    Dime Community Bank       3:2      04/24       04/25
MTH     Meritage Corp             2:1      04/25       04/26
PRHC    Province Healthcare       3:2      04/29       04/30
CUB     Cubic Corp                3:1      04/29       04/30
OPTN    Option Care               5:4      04/30       05/01
PFCB    P.F. Changs               2:1      04/30       05/01
DRI     Darden Restaurants        3:2      05/01       05/02
ABM     ABM Industries            2:1      05/03       05/06

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

Wall Street moves full swing into the second big week of earnings
and they will continue to steal the spotlight from the economic
reports.  However, analysts will probably be watching the 
Wednesday home sales #s and the Fed's Beige Book report, plus
the Employment Cost index on Thursday.

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

Monday, 04/22/02
None

Tuesday, 04/23/02
None

Wednesday, 04/24/02
Durable Orders (BB)      Mar  Forecast:   0.5%  Previous:    1.8%
New Home Sales (DM)      Mar  Forecast:   880K  Previous:    875K
Fed’s Beige Book (AB)

Thursday, 04/25/02
Initial Claims (BB)    04/20  Forecast:   425K  Previous:    445K
Employment Cost Index(BB) Q1  Forecast:   0.9%  Previous:    0.9%
Help Wanted Index (DM)   Mar  Forecast:    N/A  Previous:      51
Existing Home Sales (DM) Mar  Forecast:  5.60M  Previous:   5.88M

Friday, 04/26/02
GDP-Adv. (BB)             Q1  Forecast:   5.0%  Previous:    1.7%
Chain Deflator-Adv. (BB)  Q1  Forecast:   1.5%  Previous:   -0.1%
Mich Sentiment-Rev. (DM) Apr  Forecast:   95.0  Previous:    94.4


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 04-21-2002
Sunday                                                      2 of 5

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

THE SECTOR BEAT - 4/21
by Leigh Stevens

ONE TO WATCH --

The Pharmaceutical sector index ($DRG.X) appears to be at the low 
end of a trading range and some of the stocks in this sector may 
be nearing a bottom.  



  


One that is interesting which I studied based on a Subscriber 
suggestion is Merck & Co. (MRK), which has call options that 
could be played and are relatively cheap.  On a weekly closing 
basis, Merck has completed a 50% retracement of its big multiyear 
run up into its late-2000 top.  The fact that MRK is also a Dow 
stock would tend to generate more buying interest if it begins to 
reverse to the upside. This stock is on my watch list for a 
specific call recommendation later this week after further study.



 

Based on the Point & Figure chart Merck appears to have completed 
a possible double bottom. A move above $62, or to above 
resistance implied by the P&F down trendline, would be a bullish 
break out and suggest upside follow through and momentum. 



 

NEW TRADE PLAYS and GUIDELINES:

NONE


RECENT TRADE REITERATION  - 

I suggested on the Thursday Sector Trader purchase of the Gold and 
silver Index ($XAU.X) puts based on the top pattern that is 
forming. On the weekly chart, XAU has completed a 62% retracement 
of the last big decline in the precious metals index.  
Retracements of this amount have a significant tendency to 
coincide with price and trend reversals, once completed.  

XAU daily chart: 


 


XAU Weekly chart: 


 

LONG/CALL TRADES, PREVIOUSLY RECOMMENDED:

>> XAU (PHLX Gold & Silver Index)
Reiterated purchase of the May 65 puts for Friday 4/19
Trade was from 1.20 to .65 
STOP: Exit puts if XAU moves to new closing high above 72.33
Objective: XAU to 60.50, where it has support

This trade is based on the above chart pattern that appears as a 
possible top.  Moreover, on the weekly chart, XAU has completed a 
62% retracement of the last big decline, which is a supporting 
factor to the possible top pattern that is being seen on the 
daily chart.   

>> Internet Sector index ($INX.X) - 4/17 Sector Trader suggestion:
OPTION play: $INX sector stock, JNPR (Juniper Networks)
Buying the May 15 Call (JUX EC) at 4/18 opening was suggested.  
4/18 open: .35; JNPR objective: to $18

>> Telecom ($XTC.X) index - 4/15 Sector Trader suggestion:
OPTION play: Sector stock, Level 3 Communications (LVLT)-
1)June 5 Call (HGY FA) suggested: 4/16 open: .60
2)LVLT outright purchase, with stock under $5, also suggested: 
4/6 open: 4.16; Objective on LVLT stock: to 5.5/6.

>> Semiconductor Index ($SOX.X) - 4/15 Sector Trader suggestion:
Most active OTM May 650 calls (SOW EJ): 4/16 opening: 14.30
NOTE: May 650 call closed at 4.60 on 4/12.
Individual Semiconductor stocks were a better play 

>> Cyclical sector ($CYC.X) - 4/15 Sector Trader suggestion:
1.) iShares Cyclical Trust (IYC)  - 4/16 open: 56.95
Objective: new high above 63.00
2.) OPTION play: CYC Sector stock, - Alcoa (AA) 
May 40 calls (AA EH) - 4/16 open: .60   

>> Airline sector ($XAL.X) - 4/15 Sector Trader suggestion:
OPTION PLAY: XAL sector stock Southwest Airlines (LUV) 
Sept. 20 (LUV ID) call suggested - 4/16 open: 1.25  
OBJECTIVE: $22 near-term in the stock; $24, longer-term. 

>> Utilities Index - Holders trust shares (AMEX: UTH) 
Long at 95.25 
Stop: 91.00; Longer-term objective: 105 

OPEN SHORTS/PUT PLAYS:

>> RTH (AMEX: Retail sector trust stock)
SHORT at 99.00 
Objective: 90; Stop: 102 
4/17 NOTE: This HOLDR still looks like it is forming a top

>> XAU (PHLX Gold & Silver Index)
Bought May 65 puts at 1.80; also, recommended May 60 Puts  
STOP: Exit puts if XAU moves to new closing high above 72.33
Objective: XAU to 60.50, where it has support

LIQUIDATIONS:

Short IYE (US Energy Index iShares) at 49.70
Stopped out at 50.00, for a .30 loss before commission


NOTE: 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

AZO      75.34    0.74   1.10   1.24   2.09   4.41  Pause at $75
TKTX     40.88   -1.92   1.31  -1.50   2.17  -0.48  Ready to break
RYL      99.50   -0.95  -1.25  -0.35  -1.50  -2.30  Ready to fly
PNRA     66.74   -0.87   1.23  -2.06   0.66  -1.87  Break above 70
GENZ     40.88    1.22   0.86  -2.24  -0.13  -1.22  Dropped, BTK
TMX      38.90    0.62   1.31   0.44  -0.55   0.92  Entry point
AET      44.42   -0.25   0.69   0.56   0.58   2.87  Running higher
LH      100.60    1.20   0.23   0.67   1.75   4.35  Good bye $100
HI       62.44   -0.62   2.04   1.18   0.50   4.34  New, big buyers
ACDO     62.78   -0.56   1.80  -1.50   2.16   3.78  New, group

PUTS

WPI      24.60   -0.03   0.55  -0.27   0.40   0.45  Dropped, slow
OVER     24.00    0.40   0.18  -0.40   0.28   0.50  Next leg lower
JDEC     12.26   -1.70  -0.42  -0.50   0.29  -2.08  Rolling at 200
MU       29.50   -0.36   1.41   0.13  -1.24   0.44  Lousy chips
IGT      53.75    1.45  -2.50  -0.20  -1.65  -3.15  Ticking lower
MXIM     54.92    0.72   2.12   0.13  -1.10  -0.97  10-dma support
VRSN     24.84    0.58   0.55  -0.34  -1.27   0.50  Trending down
EBAY     54.39    1.19   0.79  -1.15  -1.89   0.31  Entry point
NVDA     36.91    1.48   1.66   0.47  -0.67  -0.23  New, reversal
BGEN     43.49    1.06  -1.24  -0.73   0.50  -1.83  New, 3 yr low


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

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

ACDO – Accredo Health, Inc. $62.78 (+3.78 last week)

See details in play list




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

NVDA – NVIDIA Corporation $36.92 (+0.24 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
^^^^^

GENZ $40.88 (-1.22) Following the surprise earnings release last
week, we were impressed with the stock's ability to hold the
$40.50 support level, so we bent our normal rules and gave the
stock a second chance.  But Friday's action was not encouraging
with the sharp selloff from the $42.50 level.  With price
weakness in the stock, daily Stochastics in full bearish roll and
the BTK index looking weak, we're going to pull in our horns on
this one.  Use any rebound from support next week to exit open
positions, not to initiate new ones.


PUTS
^^^^

WPI $24.60 (+0.45) Despite the fact that WPI is weak relative to
its sector, we have simply lost patience with the stock and its
refusal to break down.  It has now spent the past 2 weeks stuck
between $24-25 and rather than continue to wait for it to get
moving, we're going to remove it from our radar screen this
weekend.  There are better opportunities out there and that's
where we want to focus our attention.


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

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


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

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or any Premier Investor Network newsletter please contact:

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The Option Investor Newsletter                   Sunday 04-21-2002
Sunday                                                      3 of 5


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

HI - Household Int'l $62.44 (+4.34 last week)

Household International, Inc. is principally a non-operating
holding company. Household's subsidiaries primarily provide
middle-market consumers with several types of loan products in
the United States, the United Kingdom and Canada. The Company
offers real estate secured loans, auto finance loans, MasterCard
and Visa credit cards, private-label credit cards, tax refund
anticipation loans, retail installment sales finance loans and
other types of unsecured loans, as well as credit and specialty
insurance.

Credit concerns have seemed to ease in recent months.  The
prospects for a rebounding economy cleaning up the financial
system has helped some of the beaten down consumer finance
stocks.  Last year's recession increased the risk of debt
defaults by consumers, which in turn pressured the lenders in
the group.  HI was one such stock that was especially hard hit.
Shorts were pressing these stocks lower, but those bearish
traders have recently covered their positions as the outlook
for HI has improved.  So much so, in fact, that the bulls are
warming up to the prospects for this company going forward.
That much was reflected recently when the stock cruised past
its 200-dma early in the week.  Institutions are coming into
the stock with volume, driving price higher in the process.
We're looking for that institutional accumulation to continue
over the short term.  The breakout above the $62 level last
Friday should bring more big buyers into this stock early
next week.  Look for a momentum based move to carry HI above
its Friday high at the $62.56 level.  Confirm the move with
volume and sector reference.  Use a pullback to the $60 range
to enter on weakness.  Our stop is initially in place at the
$59.40 level.

BUY CALL MAY-60*HI-EL OI=2832 at $3.60 SL=2.00 
BUY CALL MAY-65 HI-EM OI= 864 at $0.90 SL=0.50 
BUY CALL JUL-60 HI-GL OI=1925 at $5.20 SL=3.25 
BUY CALL JUL-65 HI-GM OI=2348 at $2.45 SL=1.25 

Average Daily Volume = 1.75 mln
 

ACDO - Accredo Health, Inc. $62.78 (+3.78 last week)

Accredo Health provides specialized contract pharmacy services
on behalf of biopharmaceutical manufacturers to patients with
chronic diseases.  The company's services help simplify the
difficult and often challenging medication process for patients
with a chronic disease and help ensure that patients receive
and take their medication as prescribed.  ACDO's services
benefit the manufacturers by accelerating patient acceptance of
new drugs, facilitating patient compliance with the prescribed
treatment and capturing valuable clinical information about a
new drug's effectiveness.

The seemingly unstoppable advance of the Health Care index
(HMO.X) has been incredible and there is no sector of the market
that has performed better, especially in the past 2 weeks.  After
clearing the $540 resistance level, the HMO index rocketed higher
last week on the heels of more strong earnings reports, closing
at new all-time highs on Friday.  Most stocks in the sector have
already broken out on heavy volume and we're looking for ACDO to
repeat that pattern as it approaches the release of earnings on
April 29th.  Given the huge move in the HMO index last week, we
would expect to see some profit taking in the group next week,
and that should give us an attractive entry in ACDO.  But with
the stock's breakout on Friday above the $62 resistance level, it
might just continue to run.  Target new positions on a pullback
near the $62 level or even the $60 support level, also the site
of the recent ascending trendline.  Alternatively, entries on a
rally through $63.25 (the high on Friday) will work for momentum
traders.  We are initially placing our stop at $58, which
provided the launch point for last week's rally.

BUY CALL MAY-60 DZU-EL OI=539 at $4.90 SL=3.00
BUY CALL MAY-65*DZU-EM OI=251 at $2.10 SL=1.00
BUY CALL AUG-65 DZU-HM OI=589 at $5.80 SL=4.00
BUY CALL AUG-70 DZU-HN OI= 10 at $3.70 SL=2.25

Average Daily Volume = 662 K



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and clicking on the link to the book on its home page.

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

TKTX - Transkaryotic Therapies $40.88 (-0.48 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. 

First things first.  TKTX announced last Friday that it
would report its fiscal first quarter financial results on
Thursday, May 2, after the close of trading.  The company
is expected to record a loss of 54 cents per share, on
revenues of $5.5 million.  The expected loss is about 20
cents better than the loss during the quarter in the year
ago period.  Now, back to the price action.  TKTX came oh
so very close to breaking out in last Friday's session
when it tested short term resistance up around the $41.60
level.  The stock's intraday high for the day was $41.64.
The Biotechnology Sector Index (BTK.X) prevented the stock
from breaking out, as the BTK traded poorly relative the
broader market all day.  All we need is for the BTK.X to get
its legs, which in turn should allow TKTX to breakout above
its short term resistance.  We like the gain in relative
strength of TKTX, and we equally like the fact that the
stock didn't give back all of Thursday's rally during
Friday's session.  Last week's back and forth pattern saw
the stock rally one day, then give it all back in the next
trading session.  We like that TKTX didn't give it all
back Friday.  That hopefully portends a breakout into next
week's session, but we need that BTK to get moving higher.
Look for a resumption of the upward trend in the BTK, then
look for a breakout in TKTX.  Traders can use the $42 level
to define a breakout.  Otherwise, if the stock pulls back
again, look for another bounce from the 50-dma at the $39.76
level.

BUY CALL MAY-40 UFT-EH OI=  8 at $3.60 SL=2.25 
BUY CALL MAY-45*UFT-EI OI= 19 at $1.40 SL=1.00 
BUY CALL JUL-40 UFT-GH OI=122 at $5.60 SL=4.00 
BUY CALL JUL-45 UFT-GI OI=325 at $3.50 SL=2.25 

Average Daily Volume = 436 K



PNRA - Panera Bread Company $66.74 (-1.87 this week)

Panera Bread Company, through its wholly owned subsidiary Panera,
LLC, operates bakery-cafes under the names Panera Bread and Saint
Louis Bread Company. As of December 29, 2001, the Company had 100
Company-operated bakery-cafes (including two specialty bakery-
cafes), ten bakery-cafes operated as a joint venture through a
90%-owned indirect subsidiary (for a total of 110 Company-owned
bakery-cafes) and 259 franchise-operated bakery-cafes (including
one specialty bakery-cafe).

PNRA pulled back in today's session after the rebound from
yesterday.  The stock traded up to the $68.20 level in the
early going, but then rolled over throughout the day.  Volume
was very low in trading, revealing a lack of convition on the
part of traders and investors.  What Friday's pullback did do
though was to help remove some of the oversold natue of the
stock.  Since trading up to just below the $70 level a week
ago, PNRA spent the last several sessions churning just below the
$70 level on declining volume.  This type of consolidation on
lower trading activity is healthy, and should eventually lead to
another breakout above short term highs.  Traders looking to
get new entries into this play can look for intraday pullbacks to
support between the $65 and $66 levels.  Just make sure to wait
for a bounce before pulling the trigger.  Also, we'd like to see
the broader market gain some traction to help this play along.
Although PNRA has moved counter to the trend in the market this
year, we still would like to have the help of broader buying to
push this one higher.  Momentum traders who would rather wait for
a clear sign of strength to emerge can sit on the sidelines for
a breakout above the $70 resistance level.  Such a move should
bring in another round of short covering and lead to an
explosive rally.

BUY CALL MAY-65 UPA-EM OI=224 at $4.40 SL=2.75 
BUY CALL MAY-70*UPA-EN OI=504 at $2.05 SL=1.00 
BUY CALL AUG-70 UPA-HN OI= 73 at $5.20 SL=3.00 
BUY CALL AUG-75 UPA-HO OI=  8 at $3.40 SL=2.00 

Average Daily Volume = 410 K



LH - Laboratory Corp. $100.60 (+4.35 last week)

Laboratory Corporation of America Holdings (LCAH) is an
independent clinical laboratory company. Through a national
network of laboratories, LCAH offers more than 4,000 different
clinical laboratory tests, which are used by the medical
profession in routine testing, patient diagnosis, and in the
monitoring and treatment of disease. Since its founding in 1971,
the Company has grown into a network of 24 primary testing
facilities and approximately 1,200 service sites consisting of
branches, patient service centers and STAT laboratories, serving
clients in 50 states. 

That was quick!  The $100 level came to LH in last Friday's
session as the stock continued higher on strength in the
broader health care sector.  The Morgan Stanley Healthcare
Provider Index (RXH.X), as noted by Jeff Bailey in the Market
Monitor Friday, exploded to a multi year high.  For the week,
the index gained more than 4.5 percent, boosting the momentum
in LH.  With the stock piercing the $100 level last week, we
expect a small pullback to consolidate the recent gains.  A
move back down to the 10-dma near the $97 level would be very
nice indeed, but we may not get it if the momentum types pile
into this stock next week.  The momentum crowd likes high
priced stocks because they can move quickly in absolute dollar
terms, so it's very likely that we see a continuation of trend
into next week's trading.  LH is trading an an all time high,
so we don't have anything from historical trading to reference
for potential resistance levels.  Instead we're better off
using psychological levels to determine potential exit points.
The first level to look for a possible exit is at the $105
mark.  Above there, we'll reference the $110 level as a potential
resistance level.  If we do get a further upside move early
next week, then we can start to look for the $100 level to
offer support on the way back down.  Bounces from there could be
used as entry points on intraday pullbacks.

BUY CALL MAY- 90 LH-ER OI= 186 at $11.70 SL=8.75 
BUY CALL MAY- 95*LH-ES OI=1556 at $ 7.50 SL=5.50 
BUY CALL MAY-100 LH-ET OI= 393 at $ 4.20 SL=2.25 
BUY CALL AUG-100 LH-HT OI= 311 at $ 7.50 SL=5.75 

Average Daily Volume = 627 K
 


AET - Aetna $44.42 (+2.87 last week)

Aetna Inc., incorporated in December 1982, is a health benefits
company whose business operations are conducted in the Health
Care, Group Insurance and Large Case Pensions segments. On
December 13, 2000, the Company was spun off, with the remaining
entity merged into a subsidiary of ING Groep N.V. The Health
Care segment consists of health and dental benefit products
including health maintenance organization, point-of-service,
preferred provider organization and indemnity products, and
group insurance products including life, disability and long
term care insurance products.

The bull market is alive and well.  Not exactly.  If you define
the market by the major market averages such as the S&P 500,
or Dow Jones Industrial Average (INDU), you're probably still
in the bear camp.  But if you define the market using the
health care sector, then you're probably more bullish than
ever.  The Health Maintenance Organization Index (HMO.X) blew
up last week, culminating with a near parabolic move in the
latter part of last week's trading.  The index traded towards
the 600 level in last Friday's session.  The bullishness in
the HMO.X spread into AET, as the stock continued along its
momentum run.  We're playing this stock ahead of its earnings
report next Thursday, looking for the trend to continue into
the official announcement.  Bullish traders looking to get in
ahead of the earnings run can hope for an intraday pullback to
support for a favorable entry point.  Traders can dial down to
a short time frame chart to get a better feel of the ascending
trend line that has been in place since earlier this year.
Using that trend line as a reference point, traders can look to
gain entries on intraday pullbacks to between the $43.75 to
$44 level.  If the broader group pulls back on profit taking,
AET could fall as low as the $41.75 to $42 support area, where
bulls can look to get aggressive with new call positions.

BUY CALL MAY-40*AET-EH OI=2723 at $5.20 SL=3.75 
BUY CALL MAY-45 AET-EI OI= 667 at $1.70 SL=1.00 
BUY CALL JUL-40 AET-GH OI=3728 at $6.10 SL=4.75 
BUY CALL JUL-45 AET-GI OI=  60 at $2.80 SL=1.75 

Average Daily Volume = 857 K



TMX - Telefonos De Mexico $38.90 (+0.92 last week)

Teléfonos de México, S.A. de C.V. and its subsidiaries (TELMEX)
provide telecommunications services. TELMEX obtains its revenues
primarily from telecommunications services, including domestic
and international long-distance and local telephone services,
data transmission and Internet services as well as the
interconnection of domestic long-distance operators', cellular
telephone companies' and local service operators' networks with
the TELMEX local network.

The North American Telecom Index (XTC.X) took a turn for the
worse late last week after more bearish news came out from some
of the bigger names in the group.  Qwest Communications was one
such company that guided lower and announced more job cuts.
That news weighed on the telecom group to the tune of more than
3 percent in Friday's session.  The sector weakness in turn
weighed on TMX, which fell back down to its converged 10 and
50 day moving averages.  Those two levels finished Friday right
around the $38.90, which is where the stock finished trading.
As perverse as it may sound, we actually liked the pullback in
TMX late last week in conjunction with its sector.  The stock
remains one of the strongest in the group, and the recent
pullback served to remove some of the short term downside risk
in the stock.  All we need is for the next round of short
covering to come into the telecom sector to get TMX moving
back towards its yearly highs.  Taking entries near the $39
level in next week's trading would allow traders to take
positions with limited downside risk and favorable upside risk.
Tight stops can be used on bounces from the $39 level.  While
the upside over the next three or four weeks could be up
around the $42 to $43 level.  

BUY CALL MAY-35 TMX-EG OI=3725 at $4.20 SL=3.00 
BUY CALL MAY-37*TMX-EU OI= 383 at $2.15 SL=1.00 
BUY CALL AUG-37 TMX-HU OI= 617 at $3.30 SL=1.25 
BUY CALL AUG-40 TMX-HH OI=5722 at $1.95 SL=0.50 

Average Daily Volume = 1.75 mln


AZO - AutoZone, Inc. $74.58 (+4.41 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.

Following AZO's mid-week breakout over the $72 resistance level
(triple-top), a bit of consolidation on expiration Friday was to
be expected.  In fact, it should come as no surprise that the
stock closed just below $75 due to the normal funny business that
can occur around expiration events.  Note that Friday's candle
gives us an inside day on AZO, so we'll want to watch the levels
associated with Thursday's range next week.  Thursday's low was
$73.50 and the high was $76.00.  Whichever way AZO breaks out of
this consolidation pattern will likely be the way to play.
Aggressive traders can still look to initiate new positions on a
bounce from above the $73.50 level, or else target a breakout over
$76.  Volume will be key on a breakout move, so make sure it is
strong again before playing.  Likewise, if buying a bounce from
support, we will want to see the decline preceding the bounce
come on comparatively light volume.  Due to the inside day setup,
we are moving our stop up to $73.25, just below Thursday's low.

BUY CALL MAY-70 AZO-EN OI= 313 at $5.90 SL=4.00
BUY CALL MAY-75*AZO-EO OI= 422 at $2.55 SL=1.25
BUY CALL JUN-75 AZO-FO OI=1329 at $4.00 SL=2.50
BUY CALL JUN-80 AZO-FP OI=1264 at $1.90 SL=1.00

Average Daily Volume = 984 K


RYL - The Ryland Group $99.50 (-2.30 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.

As the consolidation in shares of RYL continues, the $97 level
keeps attracting buyers, who are looking for the stock to lead
the Home Construction sector ($DJUSHB) higher.  Rebounding from
support on Thursday afternoon, the stock gave us a brief dip near
that level again Friday morning before going on to post a solid
gain by the closing bell.  It is interesting to note that the
stock closed just below the $100 level on expiration Friday.
That's not likely to be a coincidence, now is it?  We're still
waiting for the DJUSHB index to push back through resistance
($363), but given the strength in RYL, it looks like that could
come early next week.  We want to keep using the consolidation
range to establish new positions, either on a renewed bounce
from support, or a breakout over resistance.  Near resistance is
$100, but a true breakout will occur on a trade above the recent
highs at $102.25.  We're leaving our stop in place at $96.75.
Make a note of the fact that the company is set to release Q1
earnings on Wednesday after the close, and we'll want to have
all positions closed by that time.

BUY CALL MAY-100*RYL-ET OI= 77 at $4.10 SL=2.50
BUY CALL MAY-105 RYL-EA OI= 64 at $2.10 SL=1.00
BUY CALL MAY-100 RYL-GT OI= 59 at $8.40 SL=6.00
BUY CALL MAY-105 RYL-GA OI= 11 at $6.10 SL=4.00

Average Daily Volume = 564 K



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

BGEN - Biogen, Inc. $43.50 (-1.82 last week)

Biogen is a biopharmaceutical company primarily engaged in the
business of developing, manufacturing and marketing drugs for
human healthcare.  BGEN currently derives revenues from sales
of its Avonex product for the treatment of relapsing forms of
multiple sclerosis and from royalties on worldwide sales by
the company's licensees of a number of other patented products.
Other products include certain forms of alpha interferon,
hepatitis B vaccines and hepatitis B diagnostic test kits.  In
order to maintain its leadership role in the industry, BGEN
continues to have an active research and development program.

Since rolling over from the $540 level late last month, the 
Biotechnology index (BTK.X) has been showing a lot of internal
weakness as the impact of the FDA's more restrictive drug
approval policy hits home with investors.  It seems the list of
Biotech companies with recent drug or earnings disappointments
is growing by the day, and we see the BTK index beginning another
bearish rollover, this time from the $495 area.  Showing up on
the new 52-week low list again on Friday, BGEN broke below the
$44 support level and looks like it could fall significantly
further once it prints $43.  That will give us another
double-bottom breakdown on the PnF chart and set the stage for
the next leg down.  Note that the current bearish price target
is $40 and a drop near that level would not be out of the
question ahead of the company's earnings report, due out
Wednesday morning before the opening bell.  Given the short
amount of time to play ahead of the earnings report, we should
emphasize that it is only for those that have the freedom to
watch intraday market action.  BGEN has been repeatedly pushed
lower by its descending trendline (now at $45.50) over the past
month and given that this is also the site of recent intraday
resistance, a failed rally near this level would make for a very
nice entry point.  Alternatively, targeting a breakdown below
the $43 level will work for momentum traders.  We are
initiating coverage with our stop set at $47.

BUY PUT MAY-45*BGQ-QI OI=3379 at $3.30 SL=1.75
BUY PUT MAY-40 BGQ-QH OI=2465 at $1.15 SL=0.50

Average Daily Volume = 3.24 mln


NVDA - NVIDIA Corporation $36.92 (+0.24 last week)

NVIDIA Corporation designs, develops and markets 3D graphics
processors, graphics processing units and related software that
set the standard for performance, quality and features for
every type of desktop personal computer user.  Used in a wide
variety of application including games, the Internet and
industrial design, the company's products were the first to
incorporate a 128-bit multi-texturing graphics architecture.
This design approach delivers to users a highly immersive,
interactive 3D experience with compelling visual quality and
stunning effects at real-time frame rates.  NVDA sells its
products to major PC manufacturers such as Compaq, Dell,
Gateway, Hewlett-Packard and IBM.

If every cloud has a silver lining, does that mean that every
silver lining comes with a cloud?  MSFT's earnings report
Thursday night prompted a flurry of discussion as investors and
analysts alike strove to determine whether or not the report was
better or worse than estimates.  While that argument appears to
have been resolved in favor of the bulls, the one gloomy note
pertained to the company's Xbox sales.  MSFT lowered its expected
shipments of the gaming console from 4.5-6.0 mln units to the
3.5-4.0 mln range.  This was largely seen as a concession that
the console is struggling in the face of cheaper and
more-established competition.  NVDA makes the graphics chips for
the Xbox, and was hit hard on Friday for an almost 7% loss.  The
rollover from the $40 resistance level marks just the latest
price rejection from the steeply descending trendline that began
with the top in early March.  The sharp drop on Friday dragged
the daily Stochastics into a premature bearish rollover and next
week should see the $36 support level tested and more than
likely, broken.  We want to use a failed intraday rally near
resistance, first at $38.50 and then near $40, for initiating
new positions.  That is, unless the bears take control first
thing on Monday, and in that case, we'll want to initiate new
positions on a volume-backed drop below $35.50.  Keep a sharp eye
on the Semiconductor index (SOX.X), which is sitting right on the
$580 support level.  If that level gives way and NVDA's $34
support level (bottom of the early October gap) fails to hold,
then it's a pretty good bet that NVDA will soon be challenging
its September lows near $23.  Set stops initially at $40.50.

BUY PUT MAY-40 RVU-QH OI=2570 at $5.10 SL=3.00
BUY PUT MAY-35*RVU-QG OI=2662 at $2.55 SL=1.25

Average Daily Volume = 10.9 mln



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The Option Investor Newsletter                   Sunday 04-21-2002
Sunday                                                      4 of 5



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

OVER - Overture Services $24.00 (+0.50 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.

OVER's sideways trading continued into last Friday's session.
The stock's increasingly narrow range portends a breakout in
one direction or another next week.  The intraday highs and
lows from day to day last week tightened, revealing indecision
on the part of traders and investors.  The lack of commitment
from either side revealed a situation in which market
participants are on hold before putting more capital to work.
From a sector standpoint, OVER didn't respond to the movement
in its group last week.  The Internet Index (INX.X) staged a
good rebound from last week's relative low, but pulled back
in Thursday's and Friday's sessions.  However, the INX.X did
trace an inside day in Friday's session, so traders will want
to keep an eye on the movement of the sector early next week.
A move in the INX.X above the 107.40 level would be a breakout
to the upside, while a decline below the 103.54 level would be
a breakdown to the downside.  Movement in the INX.X may be
the catalyst to get OVER moving in either direction.  In
looking for new entry points, traders can use intraday
rollovers from the 10-dma, now just above the $25 level.  The
10-dma continued falling in Friday's session, so the pressure
from that moving average may lead to a breakdown next week.
Trend traders can continue looking for a breakdown below the
$23 level on heavy volume.

BUY PUT MAY-25*GUO-QE OI= 999 at $4.00 SL=2.25
BUY PUT MAY-22 GUO-QX OI=1424 at $2.60 SL=1.75

Average Daily Volume = 1.25 mln



JDEC - J.D. Edwards & Company $12.26 (-2.08 last week)

J.D. Edwards is a provider of agile, collaborative solutions for
the connected economy. The Company delivers integrated,
collaborative software for supply chain management (planning and
execution) procurement and customer relationship management, in
addition to workforce management and other functional support.
Its enterprise software is designed to help organizations manage
and execute internal business functions, such as manufacturing,
finance, distribution/logistics and other core operational
processes. 

JDEC continued consolidating its recent sell-off in last Friday's
session.  Volume was a little more active during Friday's
session than what we observed in Thursday's, but that increased
activity may have been associated with options expiration.  The
positive development in last Friday's session is that we saw the
sellers return at the 200-dma.  That moving average now stands at
the $12.43 mark and is beginning to rollover.  JDEC's inability
to get back above its 200-dma may be the catalyst to inspire
further institutional selling in the stock, which should lead to
another breakdown after last week's consolidation.  Traders
looking to play it tight can watch for rollovers from the 200-dma
early next week, using stops just above that level.  One point to
reference for a tight stop is last Friday's intraday high at the
$12.50 level.  A move above $12.50 could take JDEC back up to
the $13 mark, however, but that level may be another good point
to look for a rollover after an intraday short covering rally.
Our coverage stop remains relatively tight just above the $13
mark at $13.05.  To the downside, a breakdown below the relative
low at the $11.50 level can be used as an entry point, but only
if the broader Software Sector (GSO.X) is weakening.  The GSO.X
traded well last Friday because of the boost from Microsoft,
but it's still relatively weak versus the rest of the mark.  A
return of the descending trend in the GSO.X should be enough to
breakdown JDEC in next week's trading.

BUY PUT MAY-15 QJD-QC OI=131 at $3.20 SL=1.75
BUY PUT MAY-12*QJD-QV OI=670 at $1.50 SL=0.75

Average Daily Volume = 1.30 mln


 
MU - Micron $29.50 (+0.44 last week)

Micron Technology, Inc. and its subsidiaries are principally
engaged in the design, development, manufacturing and marketing
of semiconductor memory products. The Company offers products
that include dynamic random access memory, synchronous dynamic
random access memory, double data rate dynamic access memory,
legacy dynamic random access memory products, static random 
access memory products and Flash products. 

The nonsense coming from Wall Street last Friday, following
Microsoft's earnings miss, resulted in MU finding a bid late
in the week.  The stock gapped higher in last Friday's session,
but that was about the only action for the day.  The stock
traded in an incredibly tight trading range for the day.  Its
day high was traced at the $30.20 level, while the day low was
set at the $29.46 level.  Needless to say, MU traced an inside
day in last Friday's session.  The tepid trading could lead to
a big move in next week's trading, especially if the Semiconductor
Sector Index (SOX.X) continues losing ground.  The SOX.X traded
poorly in last Friday's session, and that doesn't bode well for
MU.  Traders looking to gain new entries in this play should be
thankful for last Friday's pop.  Intraday rollovers in Monday's
session just below the $30.50 level can be used to get into new
put positions.  Play such an entry with a tight stop, as a move
above that level would signal a breakout to the upside from
last Friday's inside day.  Momentum fans can continue waiting for
a breakdown below the $28 level.  A breakdown to the downside of
last Friday's inside day on a decline below the $28.60 level
could portend an ultimate breakdown below the $28 level, and
possibly offer traders an early entry into that move.  

BUY PUT MAY-32 MU-QS OI= 6659 at $4.10 SL=2.00
BUY PUT MAY-30*MU-QF OI=10216 at $2.55 SL=1.25

Average Daily Volume = 8.07 mln


EBAY – eBay, Inc. $54.39 (+0.31 last week)

After developing a Web-based community in which buyers and
sellers are brought together in an efficient format, EBAY has
emerged as the dominant online auction site.  The eBay dynamic
pricing format permits sellers to list items for sale, buyers to
bid on items of interest and all eBay users to browse through
listed items.  Items listed on eBay include collectibles,
automobiles, art objects, jewelry, consumer electronics and a
host of practical and miscellaneous items.  Although based in
the United States, through its subsidiaries, EBAY also operates
trading platforms in Germany, the United Kingdom, Australia,
Japan, Canada, France, Austria, Italy and South Korea.

When we added EBAY to the put list Thursday night following the
company's earnings release, we were hoping for a rebound to give
us a solid entry into the play and Friday's price action gave us
just that.  After the early weakness drove the stock down to test
the $52 support level, solid buying interest came in, driving
EBAY as high as $55 before it began to weaken in the final half
hour of trading.  That weakness could be an early entry signal,
but prudent traders are waiting until next week to take a
position.  Resistance is solid at the $55 level, also the site of
the declining 20-dma (currently $54.95).  Firmer resistance
resides at $56, the highs from earlier in the month, along with
the 50% retracement of the fall rally.  Despite the fact that
buying volume was heavy on Friday, the daily Stochastics are in
full bearish roll.  Look to initiate new positions on a rollover
from one of the resistance levels listed above, placing a nice
tight stop at $56.  A push through that level would indicate that
the bulls are serious and we don't want to get caught in a
stampede.  Alternatively, look for a drop back through the $54
support level before initiating new positions.  The critical
support level remains at $51-52, and a print of $50 will likely
have fresh selling coming into the stock.

BUY PUT MAY-55 QXB-QK OI=4512 at $3.30 SL=1.75
BUY PUT MAY-50*QXB-QJ OI=3798 at $1.50 SL=0.75
BUY PUT MAY-45 QXB-QI OI=2103 at $0.60 SL=0.25

Average Daily Volume = 5.49 mln


IGT – International Game Tech. $53.75 (-3.15 last week)

IGT is a manufacturer of computerized casino gaming products
and an operator of proprietary gaming systems.  The company
serves the casino gaming industry in the United States as well
as manufacturing gaming products in the United Kingdom and
through a third party manufacturer in Japan.  IGT provides
gaming products in every significant legalized gaming
jurisdiction in the world.

Still grinding lower, shares of IGT have yet to stage anything
approaching a sustained rebound, even though the stock is sitting
right on solid support at $53-54.  This is also the location of
the 50% retracement ($53.82) of the fall rally, so it is no great
surprise to see some consolidation in this area.  IGT has been
pressured by its descending trendline (currently $56.25) over the
past 6 weeks and will likely continue in this trend, with the
recent breakdown under the 200-dma (now up at $58.06).  It is
hard to believe that IGT was one of the strongest stocks over the
past year, given its recent weakness, but we'll take it.  Note
that the stock's strength relative to the Dow Jones Casinos index
($DJUSCA) broke to a new 52-week low on Friday and looks to have
a lot more downside to come.  The best entries will come on a
failed rally near the descending trendline, but we may have to
settle for an entry near $55, where the stock has been finding
intraday resistance over the past 2 days.  If you're looking to
play the breakdown, you'll want to wait for the $53 support level
to give way first.  Selling volume has been heavy since IGT broke
its 200-dma, and momentum traders will want to see continued
heavy volume if they're going to consider new entries as IGT
pushes to new recent lows.  We're keeping our stop at $57.

BUY PUT MAY-55*IGT-QK OI=586 at $3.40 SL=1.75
BUY PUT MAY-50 IGT-QJ OI=275 at $1.40 SL=0.75

Average Daily Volume = 1.17 mln


MXIM – Maxim Integrated Products $54.92 (+0.97 last week)

MXIM designs, develops, manufactures and markets a broad range
of linear and mixed-signal integrated circuits, commonly
referred to as analog circuits.  The company also provides a
range of high-frequency design processes and capabilities that
can be used in custom design.  MXIM's objective is to develop
and market both proprietary and industry-standard analog
integrated circuits that meet the increasingly stringent
quality standards demanded by customers.

It looks like we caught MXIM right at its inflection point last
week at the $58 level.  Since then the stock has been pressured
lower by weakness in the overall Semiconductor sector (SOX.X).
Speaking of the SOX, it is interesting to note that it is once
again resting on the descending trendline ($581) that it broke
above earlier in the week on the positive earnings news from
select Chip companies.  This will be a key level for the SOX and
it will likely be challenged early next week depending on how the
next batch of Chip earnings come out.  Monday afternoon, we have
SLAB and STM, with LSCC and FCS on Tuesday.  Note that the big
names in the space have already reported, so the impact of those
left to report may be less significant.  So watch the action on
the SOX for an indication of how to play MXIM.  A breakdown will
likely have the stock pushing below the $54.50 support level (the
bottom of Tuesday's gap).  Following its rollover from $58, MXIM
has now filled that gap and with strength in the SOX, we could
make an argument for another bounce, if it weren't for the solid
rollover in the daily Stochastics that portends more price
weakness.  Look to initiate new positions on a failed rally near
the $56 level or possibly as high as $57 (the current level of
the descending trendline).  Otherwise, consider new positions on
a drop below support at $54.65.  Lower stops to $57.

BUY PUT MAY-55*XIQ-QK OI=3980 at $3.80 SL=2.25
BUY PUT MAY-50 XIQ-QJ OI=6933 at $1.90 SL=1.00

Average Daily Volume = 5.57 mln


VRSN – VeriSign, Inc. $24.53 (-0.79 last week)

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

Continuing its persistent grind lower, VRSN can't seem to get out
of its own way.  The descending trendline that has been pressuring
the stock since last May is showing no sign of letting up.  In
fact, the original trendline is being replaced by one with an even
steeper slope, currently resting at $28.  VRSN's price action has
been so weak that it couldn't even get close to that level on its
latest failed rally attempt, topping out at $27.40 last week
before turning tail and heading south again.  Daily Stochastics
are once again in full bearish roll and it looks like the bears
are intent on testing the $22-23 support level over the near term.
The stock has been tracing out a potential Head & Shoulders
pattern within the overall downtrend over the past 3 months and a
break of the $22 level would complete that pattern in favor of
the bears.  The intraday rollover near the $25 level on Friday
provided acceptable entries, although we would prefer to see a
failed rally near the $25.50-26.00 area, so that we can better
control risk.  At any rate, use a failed rally below resistance
to initiate new positions.  Keep in mind that VRSN is set to
report earnings next Thursday after the close, and we'll want to
have all positions closed by that time.  Lower stops to $27.50.

BUY PUT MAY-25*QVR-QE OI= 883 at $2.65 SL=1.25
BUY PUT MAY-22 QVR-QX OI=2979 at $1.35 SL=0.75

Average Daily Volume = 8.39 mln



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*****
LEAPS
*****

Earnings Excitement!
By Mark Phillips
mphillips@OptionInvestor.com

The issue of earnings, both how the estimates are derived and
then how to determine the quality of earnings remains an issue
of confusion.  Not only individual investors, but Wall Street
professionals are often stymied by corporate earnings statements
and this fact is borne out by the wild gyrations in the price of
MSFT following its earnings report Thursday night.

Initially deemed to be negative, the after-hours session on
Thursday saw Mr. Softee trading down as low as $52.  But that
situation was promptly reversed by the opening bell on Friday,
with MSFT reclaiming the $57 level as support and advancing
throughout the day on heavy volume - that is until the news came
out about the "credible threats" to banks in the Northeast.  You
see, it turns out that what was initially deemed to be a miss on
the earnings front was actually an upside surprise.  I'm not a
forensic accountant, so I don't even pretend to be able to
interpret the frequently perplexing earnings reports issued by
corporate America.  But I think MSFT provides a powerful example
of the problems that exist in the way that earnings are currently
reported.  I applaud any effort to clear up this muddy water and
it appears that the process is underway.  Investors are demanding
it.

All right, I'll get off my soapbox now.  For a week filled with
earnings and some significant intraday volatility, the markets
sure didn't go very far.  Take a look at the results below and
you can see what I mean:

Index             Close 4/12          Close 4/19     Change
DOW               10190               10257          +67
S&P 500           1111                1125           +14
Nasdaq-100        1351                1385           +34

Slight gains across the board, but certainly not impressive.  The
only progress that was made in this continued rangebound action
is that each of the indices moved from the lower bound of the
month-long descending channels, to the upper edge.  So while the
weekly trend was slightly positive, the prevailing trend is still
down, and this is borne out additionally by the weekly
Stochastics on all three indices, which are still in bearish
decline.  I think I'll refrain from growing any horns for awhile
longer.

Despite all the confusion, I like the chart of MSFT so much, I
bought the company.  (Apologies to the late Victor Kiam, who
used that ad slogan after he bought Remington.)  In all
seriousness, I actually thought about buying some MSFT LEAPS
Friday morning following the positive price action.  I restrained
the urge, but have added the stock to the Watch List this weekend
and just might go fishing for a position next week.

So let's take a quick look through the Portfolio and Watch List
and update each of the plays.

Portfolio:

JNJ - Still looking strong in the wake of the company's earnings
report on Monday and with the PnF chart still giving us the
thumbs up (bullish target of $83), buying the dips continues to
look attractive for new entries.  Moderate support at
$62.75-63.50, with $62 shaping up as strong support.

LUV - Investors got quite a scare on Thursday with the plane
crash in Milan.  But once it was labeled a tragic accident rather
than an act of terror, the Airline stocks recovered back near
unchanged by Friday's close.  While a bit below our entry from
last week, traders that took advantage of this week's dip nabbed
a solid entry with good risk/reward.

EK - Well, we never said this one was going to be exciting.  After
failing again at the $34.50 resistance level (also 200-dma) on
Monday, EK has been slowly drifting back to the $33 support level.
What I really want to see to give me confidence in this play is
for that gap from 2 weeks ago to get filled.  Then we can honestly
say that the downward trend has re-asserted itself.

Watch List:

DYN - Still waiting for that entry point near $27, but the chart
pattern is starting to look encouraging.  While the weekly
Stochastics has been heading back towards oversold territory, the
daily chart has been building a slightly descending wedge on light
volume, which ought to give us a bullish breakout over the next
couple weeks.  Continue to monitor the $27 support level, as I
would expect any bullish move to commence with a successful test
of that level.

PG - The sharp plunge in the DJIA on Thursday had it looking like
the stock might give us a dip and bounce near the mid-line of the
ascending channel, but not quite.  As quick as it dropped, the
stock reversed back upwards, only trading down to just below $88
in the process.  That attractive entry will come, but it isn't
here yet.  Perhaps the action surrounding the company's earnings
report on April 30th will provide us with a solid entry.  Continue
to look for a rebound from the $86-87 area in conjunction with
the daily Stochastics emerging from oversold territory.  But watch
out for the weekly Stochs.  This longer-term oscillator has been
tracing out a series of higher lows while price has been tracking
along in the ascending channel.  If this pattern is broken before
we get a solid entry, then all bets are off and we'll be standing
aside, pending a rebound from the lower edge of the channel,
currently near $82.

MDT - What can I say?  Too stingy on the entry point earlier in
the month and it appears the stock has gotten started without us.
Last week saw MDT push through the $46.50 resistance level and it
is now testing $48.  With daily Stochastics now in overbought, we
want to target the next pullback into oversold, which should
coincide with a bounce near the $45-46 area.  We have altered the
entry target and recommended strikes accordingly.

WMT - The ascending channel is now toast, with the lower channel
line now acting as resistance.  We need to wait for the weekly
Stochastics to drop into oversold territory again before
contemplating new entries now.  I think that will likely occur
near the $54-55 area, but I'm leaving WMT on HOLD this weekend,
as we certainly won't get that entry setup next week.  I'll
continue to reassess entry strategy on a weekly basis.  For
those wondering why I've left the play on the Watch List, my
primary motivation is for a solid play in the Retail sector when
the economy shows definitive signs of bottoming.  WMT is still
the dominant player in this area.

BRCM - Well earnings didn't provide the catalyst (either to the
upside or downside) that we might have expected, and I'm really
not sure what to expect over the near term.  Leaving the play on
HOLD seems the best course of action as we slog through the
remainder of the earnings season.  But I'm going to go against my
better judgment and return the play to active status with an
entry target at the $34-35 level.  The bottom of last Monday's
gap is at $34.78 and a dip and bounce from that level with daily
Stochastics turning up would provide a solid entry point, given
that the weekly Stochastics are just starting their return back
towards overbought territory.

KBH - Last on the list, our pending put play on this (the only
one with LEAPS available) Home Construction stock remains on hold
this weekend.  The Home Construction index ($DJUSHB) remains
mired in a tight 2-week consolidation pattern and at the same
time, our play is wandering between $45-47 on rather tepid volume.
I feel the upside is rather limited from this point on, now that
KBH has achieved its vertical count of $47, but that doesn't mean
a decline is imminent.  I want to see some price weakness drag
the weekly Stochastics into bearish decline before contemplating
new positions.  Fundamentally, I still really like the downside
for the stock, as I think the current housing bubble is due to
pop eventually.  The big question is when.

That does it for the listed plays this week.  If it sounds like
I am cautious about initiating new positions, you're right.  I
consider this to be a very tenuous market, susceptible to
significant declines on the slightest whim.  Proof of that came
on Thursday when investors feared the plane crash in Milan might
be a terrorist act.  The bounce back was encouraging, but the
decline should provide a stark reminder of what can happen when
the market makers pull their bids for stocks.

The thing that I still find rather unsettling about this market
is the abject lack of fear.  Looking at the tepid gains for the
broad market averages, doesn't it seem strange that the VIX
closed right on 20.00 again on Friday?  That's nearly a 10% drop
in the VIX while the OEX crept higher by a mere 6 points or 1.1%.
I know the percentages don't normally track, but with the broad
markets caught in a descending primary trend, it just doesn't
make sense for the VIX to continue heading lower.  Unless of
course, investors have factored in the 'reality' that the worst
is behind for the economy and business as a whole.  Look out
below if they are wrong, as proof of further weakness could see
a retest of the September lows in short order.

Please make sure that your investments are balanced to take that
possibility into account!  At the bare minimum, take some
preventive action to keep from suffering a major loss.  I
recently wrote an Options 101 piece on the Collaring strategy
for applying the concept of insurance to profitable long
positions.  If you missed it the first time around, I strongly
recommend that you read it (click here) and put the strategy to
good use.

See you Monday!

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  $ 7.70  +30.51%  $61
                 '04 $ 60  LJN-AL  $ 9.20  $11.30  +22.83%  $61
LUV    04/12/02  '03 $ 20  VUV-AD  $ 2.10  $ 1.90  - 9.52%  $17.25
                 '04 $ 20  LOV-AD  $ 3.90  $ 3.70  - 5.13%  $17.25


Puts:
EK     04/12/02  '03 $ 30  VEK-MF  $ 2.70  $ 2.70  + 0.00%  $36
                 '04 $ 30  LEK-MF  $ 3.90  $ 4.20  + 7.14%  $36


LEAPS Watchlist

Current Possibles

SYMBOL  SINCE    TARGET PRICE  TARGETED LEAP  SYMBOL

CALLS:
BRCM   10/28/01  $34-35        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  $45-46        JAN-2003 $ 50  VKD-AJ
                            CC JAN-2003 $ 45  VKD-AI
                               JAN-2004 $ 50  LKD-AJ
                            CC JAN-2004 $ 45  LKD-AI
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
MSFT   04/21/02                JAN-2003 $ 60  VMF-AL
                            CC JAN-2003 $ 55  VMF-AK
                               JAN-2004 $ 60  LMF-AL
                            CC JAN-2004 $ 55  LMF-AK

PUTS:

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



New Portfolio Plays

None

New Watchlist Plays

MSFT - Microsoft Corp. $57.20  **Call Play**

Whether MSFT's earnings report was positive or negative last
week, it seems clear to me from the huge volume that propped
the stock up on Friday that there is some serious money that
is willing to support the stock just below $55.  I don't often
delve very deep into fundamental analysis, as deep study in this
area tends to put me to sleep.  But I do recognize it as a
necessary analysis step.  What I see on the fundamental front is
that in a weak economy, MSFT's business hasn't shrunk very much
and I would expect it to expand significantly if the fabled
economic recovery ever arrives.  But I'm a technician at heart,
as I really believe that the charts (and associated indicators)
tell us everything we need to know about a given stock.  And I
like what I see in the MSFT chart.  While the daily (and shorter)
timeframes are looking a bit weak right now, that weekly chart
is screaming at me to buy right now.  Since its highs near $120
in late 1999, MSFT has fallen into a broad consolidation pattern
over the past 28 months, and what grabs my attention is the fact
that last week's lows marked the third higher low on the weekly
chart.  Weekly Stochastics are just emerging from oversold, and
we have bullish Stochastics divergence (lower price low, but
higher Stochastic low) between the February lows and the lows of
the past couple weeks.  This stock looks like it is ready to
rally, but the PnF chart has not yet borne this out.  Before it
is back on a buy signal, we'll need to see price hit the $59
level to give us the next double-top breakout.  Traders that want
to see confirmation of that event before playing will want to see
a print of $59 and then a pullback and bounce in the $55-56 area.
I like the risk/reward scenario provided by the ascending
trendline, currently resting at $52.50.  Our initial entry target
is set at $55-56, with our initial stop set at $52.  As a side
note, I would look for MSFT's ascent up the chart to be a gradual
one, in 2 steps forward, 1 step back fashion.  For that reason, I
think it would make a good candidate for players that are
interested in selling covered calls against the long LEAP.

BUY LEAP JAN-2003 $60 VMF-AL
BUY LEAP JAN-2003 $55 VMF-AK  For Covered Call
BUY LEAP JAN-2004 $60 LMF-AL
BUY LEAP JAN-2004 $55 LMF-AK  For Covered Call


Drops

None


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

Full Bag Of Clubs
Austin Passamonte

Watching pro golfers playing thru their season from spring to 
fall, it amazes me how adaptable they are to ever-changing 
conditions. Each golf bag the caddies drag behind them are 
stuffed full of a vast tool array and legal limit of clubs, plus 
or minus one more [grin]. 

Pro golfers are prepared for whatever the future holds for them. 
Long courses with wide fairways and straight lies are one 
scenario. Short courses with challenging angles and obstructions 
are another. Fast greens that are rock hard or slow greens baby 
soft, sometimes to the point of soggy will come their way as 
well. Seldom if ever are all fifteen of the club selection they 
tote used on any given weekend, but over the course of a year and 
several years we can bet the varied tool kit is invaluable.

Such is the case for option traders. Plenty of people got rich in 
1998 and 1999 buying calls while the same or others got rich in 
2002 and 2001 playing puts. Of the two periods mentioned, years 
2000 and 2001 offered far greater potential for profit as 
irrational markets collapsed far more quickly than they rose. But 
most traders back then had never played a short course with tight 
turns: they only knew of long, wide fairways where the driving 
was easy. Miss a shot back then and call players could simply 
whack it with a big iron and get right back in the game. The late 
1990s were a course for hitting drivers and wedges.

When 2000 and 2001 came along, we were playing shorter courses 
with much tougher lies. Bias bulls who brought their big driver 
and one-iron to the game got slaughtered when playing calls that 
sailed deep into the woods. Those who hit some plays with 3 irons 
and 5 woods managed to rack up some exceptionally nice scores 
playing courses that ate up those bias bulls. Not enough clubs in 
the bag saw them miss the cut if not drop out of our circuit all 
together.

You may ask what all this drivel of golf analogy has to do with 
making money next week and beyond. Simple answer is the game has 
changed. One day this week I was busy trying to scalp a few 
points off the market when CNBC reflected back one year on what 
the markets did that day. My head snapped around when they noted 
the Nasda1 was up +148 points and the S&P 500 up +46 points FOR 
THE DAY!

Here I am trying to scrape together +10 index points profit last 
week when a year ago the total range was many times that. Do you 
recall the last time NDX had a +100 index point move? Not too 
many of them lately, is there. How many SPX sessions break a 40-
point intraday range? Count them on one hand this year so far. Is 
it a revelation to any of us that what worked before does not 
work right now? It really shouldn’t be.

Back in the years of wide range swings and volatility it was 
somewhat easy to make money, I mean big money trading index 
options intraday or day to day all the time. That does not work 
right now and has not worked to a consistent basis for months. 
Will short-term trading index options return to glory in days 
ahead? I for one sure hope so, but we are not enjoying those 
conditions right now. What is our reaction to that reality? Do we 
continue to buy calls & puts on every market move and hang on 
while they go up in value a little or down a lot? I suggest we 
must temper our expectations from what used to exist before to 
what exists these past few months instead.

Option trading existed before the bubble began and will exist 
long after the bubble finishes deflating, which hasn’t ended yet. 
But successful option trading will always be in a state of flux 
as to the approach and expectations that are realistic at any 
given time. Years ago I could take a small account balance and 
jack it up several hundred percent on expiration week alone. That 
has not been possible lately. A few big moves may flash here & 
there, but the consistency of daily profits to the extent of what 
we saw before does not exist right now.

The good news is we still have ample opportunity for gain. Jeff 
and Eric continue to demonstrate that in Market Monitor each 
week. We’ve seen these guys pick winning trade after winning 
trade, just not on a wild intraday basis. Some of them hit nice 
gains in a day or two while other plays take a week or three for 
maturation. That is more the reality of current option trading 
that exists and we must either accept as visible fact or fritter 
option trading accounts away to zilch in denial. Right or right?

(Weekly/Daily Charts: SOX)


 

These days we focus on weekly/daily charts a lot more to gauge 
directional bias because moves are slower than before. This 
template shows how the SOX/SMH offered an excellent short entry 
two days ago and frankly still appears young in the downside move 
tonight. We should be eyeing that 540 to 525 area as a very 
viable target ahead, and SOX or SMH puts played from here must be 
given more time to work than the old days. 

With that in mind, we must have enough time premium to avoid 
rapid decay or offset time decay with bear-put debit spreads. We 
must play smaller percentage of capital risked because of 
sideways chop and volatile days threatening our stops on a 
moment’s notice. The game has changed, so we must change 
accordingly.

(Weekly/Daily Charts: OIH)


 

Oil Services HOLDRs have formed a very clear roll from 64 to 70 
range the past several weeks. Indications are that it may roll 
right back down in predictable fashion to support real soon. 
While most tech addicts are wondering if has-beens like SUNW and 
WCOM are good buys down here (they aren’t) savvy traders can be 
playing markets on the move with 65-strike puts and 70-strike 
calls each time this puppy rolls until that ceases to work. With 
a six-point range and this near a pivot, we can use a 2.00 point 
stop on either side of the channel for a 3/1 reward-risk setup.

(Weekly/Daily Charts: XAL)


 

Dow Transport index has rallied strong since September lows 
mostly on the back of Airline Index. This market is now poised 
for a directional decision soon. Caught in a wedge from 2001 
range, the apex is nearly reached and will break soon. Nearing 
support and stochastics in bearish mode, we could play the DTX 
put options right now while anticipating a break lower. We could 
wait until the break is confirmed, or we could wait for the 
bounce from support or below and back into these patterns for new 
call plays.

The point is we must expand our time and preferred market 
horizons out to encompass today’s market conditions. Watching 
every little blip on dead techs destined for bankruptcy is not a 
good use of our capital, unless we are shorting them to zero. 
Meanwhile we have healthcare, defense and other issues like MO 
and KO posting new highs every other day on incredible runs. 

We’re still playing golf, but the course is much different today 
than yesteryear. Fairways are tight with sharp dog-leg turns. 
Water & woods lay hazardously all around. Greens are dry, fast 
and unforgiving. There is still money to be made in this game, 
but a big driver and low iron will not get it done. Seven irons 
and lob wedges are the clubs of choice right now, and putting for 
dough on those smaller, methodical gains are the only way up our 
leader board this year. Respect the conditions you are playing in 
or spend all your time chasing lost balls in the woods, one or 
the other!

Best Trading Wishes,
Austin Passamonte


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Sunday                                                      5 of 5



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

Position Selection: A Simple Approach To Technical Analysis
By Mark Wnetrzak

One of the most common questions we receive from new readers
concerns the type of analysis we use to select the plays for
this section.


Attn: Mark (Covered-calls Editor),

I'm new to the OIN (through the Premier Investor Network trial)
but I have noticed that you seem to have a very simple approach
to evaluating stocks.  Based on statements from recent portfolio
summary commentaries: "Many of the above issues have begun a
consolidation phase but remain within their respective trading
ranges"..."signaling a reversal with Friday's rally"..."appears
to have made a successful test of support" -- your method of
technical analysis is far less complex than most I've seen.
Could you please explain some of the fundamental things you
look for in stock charts and how they are used to help you
determine when to buy a particular stock.

Thank You

HU
 

Concerning Fundamental Charting Techniques:

Technical analysis is usually defined as the use of market data
including price, volume and buying pressure along with charts
and computer programs to forecast price trends of stocks, bonds,
commodities and market indexes.  A technician understands basic
fundamental valuation but focuses instead on the historical
behavior of the market, industry groups and individual stocks.
The goal is to use their price movements, trends, and patterns
to predict future direction and changes in character.
 
Technical analysis makes three basic assumptions.  First, that
market related data such as price, volume and buying pressure
will indicate the true value of a given security or financial
instrument.  Second, that market prices historically exhibit
trends or patterns and third, that history eventually repeats
itself.  These assumptions can be combined with the study of
price and volume charts to provide investors the information
they need to formulate profitable trading strategies because
the technical indicators that lead to buy or sell signals are
contained in various chart formations and patterns.
 
The most common chart patterns or indicators are the "trend"
and "trading range."  Trends are categorized as up-trends or
downtrends while trading ranges are defined by support and
resistance levels.  It is important for an investor to be able
to identify these trends or trading ranges and recognize the
historical chart patterns that signal major turning points or
reversals.

The first step in pattern analysis is to draw the trend-lines.
Since two points define a line, the basic requirement for all
trend-lines is that there be at least two points connected but
most analysts require a minimum of three points to confirm and
justify the trend.  After the trend-line is established, its
character can be determined.  Up-trends are evidenced by a
series of trading sessions with successively higher highs and
higher lows while downtrends are just the opposite; a series of
trading sessions which exhibit lower highs and lower lows.  For
many traders, a trend-line is the primary technical indicator
used to identify buy and sell signals.

Another general classification of price patterns is the trading
range.  A trading range occurs when the price of the instrument
remains between a clearly established high and low value.  The
upper boundary is known as resistance while the lower is termed
support.  A resistance level is established when there are more
investors who are willing to sell, rather than buy, at a given
price because they believe the security is overvalued at that
level.  A support level will occur when investors feel the stock
is cheap or undervalued at a given price and they can't afford
not to own it.  From a technician's point of view, a support area
is where it is most advantageous to initiate a new long position.
A logical exit signal is near by (a violation of the support area)
and the position has room to run (to resistance).  

Trading ranges can also occur as part of an up-trend or downtrend.
These patterns are often called "continuations" since the general
direction of the overall trend is not changed.  Another type of
buying signal can occur in the transition or "reversal" from a
downtrend to an up-trend.  A key reversal occurs when the daily
price range has a high that is above the previous day's high and
a low that is below the previous day's low.  It is often referred
to as an "outside trading-range" day (engulfing candlestick) and 
most traders agree that this "short-term" pattern (a close above 
previous day's final price) is a bullish signal.  If the key 
reversal occurs near a bottom in the long-term price cycle, a 
trend reversal is likely in progress and the opportunity can be
used to initiate long stock positions with relatively low downside
risk.  

Trade Patiently!



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

MERX   17.66  18.42   APR  17.50  1.00  *$  0.84  11.0%
ENDO   17.98  17.50   APR  17.50  1.25   $  0.77  10.0%
ELON   18.00  17.55   APR  17.50  1.45  *$  0.95   8.3%
PRCS    5.43   5.41   APR   5.00  0.85  *$  0.42   8.0%
CTLM   12.96  13.86   APR  12.50  1.20  *$  0.74   6.8%
MANU   19.42  17.91   APR  17.50  3.40  *$  1.48   6.7%
NXTP    6.05   5.59   APR   5.00  1.50  *$  0.45   6.1%
SMMX   20.65  21.62   APR  20.00  1.45  *$  0.80   6.0%
SIPX   11.15  10.50   APR  10.00  1.90  *$  0.75   5.9%
PDE    15.46  17.77   APR  15.00  0.85  *$  0.39   5.8%
RSTO   12.69  11.19   APR  10.00  3.30  *$  0.61   5.6%
OVTI   11.03  12.66   APR  10.00  1.40  *$  0.37   5.6%
SCIO   31.36  32.40   APR  30.00  2.80  *$  1.44   5.5%
EMKR    9.15   9.69   APR   7.50  2.00  *$  0.35   5.3%
PVN     5.71   8.28   APR   5.00  1.05  *$  0.34   5.3%
ENTG   15.01  15.83   APR  15.00  0.70  *$  0.69   5.2%
CANI    8.61  10.00   APR   7.50  1.45  *$  0.34   5.2%
ASMI   26.11  26.58   APR  25.00  1.95  *$  0.84   5.0%
SYXI   11.26  11.58   APR  10.00  1.85  *$  0.59   4.5%
ENDO   18.40  17.50   APR  17.50  1.75   $  0.85   4.4%
ATVI   32.30  31.45   APR  30.00  4.00  *$  1.70   4.4%
AEIS   32.59  36.71   APR  30.00  4.00  *$  1.41   4.3%
HOFF   11.38  10.21   APR  10.00  1.75  *$  0.37   4.2%
REV     5.70   4.90   APR   5.00  1.00   $  0.20   3.7%
GSPN   14.09  12.20   APR  12.50  2.20   $  0.31   2.3%
TMCS   29.58  26.97   APR  27.50  2.85   $  0.24   1.3%
TERN    8.48   6.55   APR   7.50  1.35   $ -0.58   0.0%

BSML    5.37   5.20   MAY   5.00  0.90  *$  0.53   7.4%
NPRO    8.85   8.20   MAY   7.50  1.90  *$  0.55   6.9%
PRCS    5.39   5.41   MAY   5.00  0.80  *$  0.41   6.5%
NFLD    8.19   8.67   MAY   7.50  1.30  *$  0.61   6.4%
PDLI   17.37  19.72   MAY  15.00  3.20  *$  0.83   5.1%
PLUG   10.26  10.83   MAY  10.00  0.80  *$  0.54   5.0%
PWAV   14.24  14.42   MAY  12.50  2.40  *$  0.66   4.8%
CYGN    5.79   5.60   MAY   5.00  1.05  *$  0.26   4.8%
IMCO   15.99  15.25   MAY  15.00  1.75  *$  0.76   4.6%
CCK     8.85  10.50   MAY   7.50  1.80  *$  0.45   4.6%
EMKR    9.10   9.69   MAY   7.50  2.05  *$  0.45   4.6%
IDCC   10.99  12.61   MAY  10.00  1.45  *$  0.46   4.2%

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

Comments:

Hmmm, the Russell-2000 is flirting with last year's highs at the
expense of the DOW, NASDAQ, and SP-500.  Will the small-caps be
able to lead higher or will they be pulled down by the weight of
the big-caps?  The roller-coaster ride continues.  It is time to
re-evaluate any April issues you may own on Monday (by not closing
the position on Friday).  Generally, you can expect to retain the 
stock as long as it closes less than a $0.25 above the sold call.
Remember, if you don't want to own the stock after expiration, 
closing the position before the end of trading on Friday is the
only way to guarantee you won't own the stock.  Echelon (NASDAQ:
ELON) and Horizon Offshore (NASDAQ:HOFF) are examples of a couple
of stocks that probably won't be called away.  Buying back the
calls at parity and selling the stock (on Friday) might have been
a prudent move.  It's all about risk-reward tolerance - the cost
of extra commissions verses safety.  

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

ACRT   19.90  MAY 17.50   QAC EW  3.10 155   16.80   28    4.5%
AMLN   10.71  MAY 10.00   AQM EB  1.15 305    9.56   28    5.0%
QUIK    5.03  MAY  5.00   QIL EA  0.30 10     4.73   28    6.2%
SAPE    5.40  MAY  5.00   QPE EA  0.65 40     4.75   28    5.7%
TUNE   15.21  MAY 12.50   TUF EV  3.40 425   11.81   28    6.3%
WGRD    5.89  MAY  5.00   RUH EA  1.20 100    4.69   28    7.2%
ZIXI    6.08  MAY  5.00   HQU EA  1.35 669    4.73   28    6.2%

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

WGRD    5.89  MAY  5.00   RUH EA  1.20 100    4.69   28    7.2%
TUNE   15.21  MAY 12.50   TUF EV  3.40 425   11.81   28    6.3%
QUIK    5.03  MAY  5.00   QIL EA  0.30 10     4.73   28    6.2%
ZIXI    6.08  MAY  5.00   HQU EA  1.35 669    4.73   28    6.2%
SAPE    5.40  MAY  5.00   QPE EA  0.65 40     4.75   28    5.7%
AMLN   10.71  MAY 10.00   AQM EB  1.15 305    9.56   28    5.0%
ACRT   19.90  MAY 17.50   QAC EW  3.10 155   16.80   28    4.5%


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).

*****
ACRT - Actrade  $19.90  *** On The Move ***

Actrade Financial Technologies (NASDAQ:ACRT) is a provider of
electronic payment technologies that deliver financial solutions
for commercial trade.  The company's leading product is the 
Electronic Trade Acceptance Draft (E-TAD) Program.  E-TAD tech-
nology provides online credit, payment, settlement and integration
solutions.  Through E-TAD, buyers can pay for purchases with terms
up to six months, while suppliers receive immediate payment.  E-TAD
facilitates commercial trade by providing a secure, streamlined 
payment solution for both offline and online purchases. ACRT's
International Merchandise Trade division represents various manu-
facturers by buying and re-selling their products in international 
markets through the application of specialized trade finance tech-
niques.  A week ago, Actrade said Georgia Federal Court granted a
$4.6 million judgment, plus interest, attorneys' fees and expenses,
in favor of the company.  Maybe a delayed reaction explains this
week's rally on little news?  Investors appear to be expecting
good news on April 30, when Actrade reports earnings  We simply
favor the support area near our cost basis.

MAY 17.50 QAC EW LB=3.10 OI=155 CB=16.80 DE=28 TY=4.5%


*****
AMLN - Amylin Pharmaceuticals  $10.71  *** Drug Speculation ***

Amylin Pharmaceuticals (NASDAQ:AMLN) is engaged in the discovery,
development and commercialization of potential drug candidates for
the treatment of diabetes and other metabolic disorders.  The 
company's lead drug candidate, SYMLIN(TM) (pramlintide acetate),
is targeted as a treatment for people with diabetes who use 
insulin.  Amylin has also submitted Marketing Authorization 
Applications for SYMLIN in Europe and is working with the EMEA
and Swiss Regulatory Authorities in their review.  The company's
second diabetes drug candidate, AC2993, is targeted for the 
treatment of type 2 diabetes and is currently in Phase 3 develop-
ment.  A long-acting release formulation of AC2993, or AC2993 LAR,
is in Phase 1 development.  The company's third drug candidate, 
AC3056, is currently in Phase 1 evaluation as a potential treat-
ment for metabolic disorders relating to cardiovascular disease.
The stock continues to "step up" and this position offers a 
favorable entry point from which to speculate on the company's
drug pipe-line.

MAY 10.00 AQM EB LB=1.15 OI=305 CB=9.56 DE=28 TY=5.0%


*****
QUIK - QuickLogic  $5.03  *** Bottom Fishing: Part I ***

QuickLogic (NASDAQ:QUIK) develops, markets and supports advanced
field programmable gate array and embedded standard product (ESP)
semiconductors and the software tools that enable design engineers
to use the company's products.  QuickLogic introduced ESPs, a new
class of semiconductor devices, in 1998, to address the design 
community's demand for a solution that bridges the gap between 
existing application-specific IC options and the goal of system-
on-a-chip.  The company's ESP devices provide engineers with high-
performance of standard products, combined with the flexibility 
of programmable logic.  QuickLogic received a couple upgrades
last month and the current bullish signals suggest investors
are anticipating good news next week (earnings are due April 24).
This position offers a reasonable entry point in a Stage I stock
and target shooting a lower "net-debit" can increase the potential
yield.

MAY 5.00 QIL EA LB=0.30 OI=10 CB=4.73 DE=28 TY=6.2%


*****
SAPE - Sapient  $5.40  *** Bottom Fishing: Part II ***

Sapient (NASDAQ:SAPE) is a business and technology consultancy
that helps large clients achieve explicit business outcomes 
through the rapid application and support of advanced information
technology (IT), primarily on a fixed-price basis.  The company's
global presence enables it to understand and address the business
issues that its clients are facing in both local and global con-
texts.  The company's global distributed delivery model, which is
primarily operated through its office in New Delhi, allows it to
provide solutions at a lower cost and the ability to work 24 hours
each day across all time zones.  What's up with Friday's rally?  A
buy-out?  Or merger?  No news but the heavy volume suggests some-
body knows something.  Target shooting a lower cost basis could
increase the potential yield on this speculative position.

MAY 5.00 QPE EA LB=0.65 OI=40 CB=4.75 DE=28 TY=5.7%


*****
TUNE - Microtune  $15.21  *** Bracing For A Rally? ***

Microtune (NASDAQ:TUNE) is a silicon and systems company that 
designs, manufactures and markets radio frequency (RF)-based 
solutions for the global broadband communications, automotive 
electronics and wireless connectivity markets.  The company's 
products, which include tuners, amplifiers, transceivers and 
short-range wireless radio and base-band processors, offer 
critical, enabling building block functions.  When integrated 
into the company's customers' commercial or consumer equipment,
they permit the transmission and reception of radio signals that
embed video, audio, data and/or voice.  The company's products 
can be classified into two groups, ICs and manufacturing-ready,
system-level solutions, called Modules or MicroModules.  With
earnings due on Monday, we simply favor the bullish technical
indications and our conservative position offers a method to 
participate in the future movement of the issue with relatively
low risk.

MAY 12.50 TUF EV LB=3.40 OI=425 CB=11.81 DE=28 TY=6.3%


*****
WGRD - WatchGuard  $5.89  *** Bottom Fishing: Part III ***

WatchGuard Technologies (NASDAQ:WGRD) is a provider of Internet
security solutions designed to protect enterprises that use the 
Internet for electronic commerce and secure communications.  The
company's products and services are used worldwide, which include
firewalls for access control, virtual private networks (VPNs) 
for secure communications and the ServerLock products for server 
content and application security.  WGRD's core market includes 
small to mid-sized enterprises; large Internet-distributed enter-
prises (IDEs) with ultra-high-speed connections, supporting VPNs 
between the IDEs and their geographically dispersed branch offices
and telecommuters; small and home offices with broadband connect-
ions; and telecommuters.  WatchGuard is another speculative
position that offers a cost basis below historical support.
With earnings due April 25, traders can target-shoot a favorable
net debit from which to speculate on the company's future.

MAY 5.00 RUH EA LB=1.20 OI=100 CB=4.69 DE=28 TY=7.2%


*****
ZIXI - ZixIt  $6.08  *** Bottom Fishing: One Last Time! ***

ZixIt (NASDAQ:ZIXI) is a global provider of secure content 
delivery and management (CDM) solutions and services that 
enable enterprises to enhance their current e-mail networks
and enterprise applications to securely send and receive 
electronic communications.  ZixIt applies its technology and
managed, subscription-based services to enable global enter-
prises to securely distribute electronic content with business
partners, customers and internal employees.  During 1998, ZixIt
sold all of its previous operating businesses and, since January
1999, the company has been developing and marketing products and
services that bring privacy, security and convenience to Internet
communications.  Ok, I'm done.  One more company with earnings
due this week that offers a favorable entry point.  Targeting a
lower net-debit will increase the potential yield and move the
cost basis further below near-term support.

MAY 5.00 HQU EA LB=1.35 OI=669 CB=4.73 DE=28 TY=6.2%


*****

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

URBN   30.30  MAY 30.00   URQ EF  2.05 178   28.25   28    6.7%
IDTI   32.00  MAY 30.00   ITQ EF  3.60 1235  28.40   28    6.1%
PDLI   19.72  MAY 17.50   PQI EW  3.10 4347  16.62   28    5.8%
HLIT   11.32  MAY 10.00   LOQ EB  1.80 431    9.52   28    5.5%
ISLE   20.50  MAY 20.00   QEP ED  1.40 131   19.10   28    5.1%
MKSI   35.70  MAY 35.00   QQB EG  2.25 27    33.45   28    5.0%
ADRX   43.52  MAY 35.00   QAX EG  9.90 234   33.62   28    4.5%


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

Options 101: Q&A Regarding Strategy Selection
By Ray Cummins

One of our new readers asked about the technique of selling puts
to funds the purchase of calls on bullish issues.


Dear Ray,

I am relatively new to options trading and although I have read
many of the popular books, I am still learning about some of the
different strategies used in your newsletter. I noticed on one
of the message boards a comment about buying out-of-the-money
calls with money generated through the sale of out-of-the-money
puts on the same stock. I am aware of your naked-puts section
(and I understand that approach) but how does the "buying calls"
part fit in?  If the stock price rises, are you profiting from
the call or the put or both?  I guess a second question would
be: How does this type of play end?

Thanks for your prompt reply,

RF


Regarding the purchase of calls and the sale of puts on one issue:

The method you described is a variation of a "synthetic position"
that uses "out-of-the-money" options to construct a speculative-
outlook play with lower probability of profit and reduced risk.
The premium from the sold put is used to pay for the long call.
It is a conservative position, based on the OTM put.  If the stock
goes up, the value of the call rises while the price of the put
declines.  When a sufficient upward move (in a timely manner)
occurs, the call can be sold and the put repurchased (or allowed
to expire worthless) to produce a net gain.  Occasionally, these
plays achieve profits in a few days.  At other times, they are
held closer to expiration for a small return and sometimes, they
achieve no profit.  The key is the put must expire (worthless) or
the position may endure a loss.  Of course, you may also choose
to let a (ITM) put be assigned and take possession of the issue
for a long-term portfolio holding or future combination plays
such as writing covered-calls.

The great feature of options is they can be used in a number of
ingenious ways to create the most appropriate position for the
current market outlook and your personal risk-reward attitude.
The right combination of puts and calls can produce an effective
position with results that are similar to being long on the stock,
with less expense, and portfolio collateral can be used to finance
the entire transaction.  This approach also has the potential for
unlimited gain, thus providing an opportunity (one you don't have
with naked-puts alone) to overcome a number of losing plays.  For
most investors, the ability to profit from a stock's movement at
a fraction of the cost of owning the issue is the primary reason
for utilizing options.  The bullish, limited-risk approach falls
into two primary categories: option buying and (covered) option
selling, and the most common method of option trading among retail
participants has always been the purchase of calls.  That technique
can be very profitable but it requires an initial capital outlay
and in the case of in- or at-the-money options, leaves the trader
exposed to a large amount of downside risk.  In addition, traders
who purchase options during a strong directional movement in the
underlying will be forced to pay higher premiums, greatly reducing
the probability of profit.  Those who realize the unique difficulty
associated with this type of approach are forced to remain on the
sidelines until they discover an alternative method.  Fortunately,
there are numerous combination strategies that can help limit the
overall cost of the trade while simultaneously benefiting from
inflated option premiums and the synthetic position fulfills that
objective very well.

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  35.29   APR  30.00  0.95  *$  0.95  11.6%
MATK   31.69  30.51   APR  30.00  0.50  *$  0.50   9.5%
IDTI   33.24  32.00   APR  30.00  0.70  *$  0.70   9.4%
PDE    15.90  17.77   APR  15.00  0.35  *$  0.35   8.7%
MSO    19.97  18.56   APR  17.50  0.60  *$  0.60   8.5%
NOVN   22.39  21.05   APR  20.00  0.70  *$  0.70   8.4%
MANH   35.29  39.55   APR  30.00  0.35  *$  0.35   8.3%
TER    39.43  35.58   APR  35.00  0.65  *$  0.65   7.9%
DCN    19.10  20.74   APR  15.00  0.55  *$  0.55   7.8%
FTI    19.93  20.76   APR  17.50  0.30  *$  0.30   7.4%
ENDO   19.71  17.50   APR  17.50  0.30   $  0.30   7.3%
SYXI   12.05  11.58   APR  10.00  0.25  *$  0.25   7.2%
PLMD   22.83  42.30   APR  17.50  0.50  *$  0.50   7.1%
TER    39.20  35.58   APR  32.50  0.95  *$  0.95   6.9%
OSIS   25.20  23.61   APR  20.00  0.25  *$  0.25   6.8%
ATVI   28.58  31.45   APR  25.00  0.25  *$  0.25   6.7%
MLNM   25.12  22.35   APR  20.00  0.40  *$  0.40   6.4%
TXN    34.09  33.30   APR  30.00  0.75  *$  0.75   6.3%
IDTI   35.99  32.00   APR  27.50  0.65  *$  0.65   6.0%
LRCX   28.88  28.08   APR  25.00  0.65  *$  0.65   5.7%
MLNM   23.66  22.35   APR  17.50  0.40  *$  0.40   5.6%
MRVL   41.38  41.14   APR  30.00  0.70  *$  0.70   5.6%
PLMD   25.95  42.30   APR  20.00  0.35  *$  0.35   5.5%
SNDK   21.10  20.01   APR  17.50  0.25  *$  0.25   5.3%
MRVL   38.60  41.14   APR  27.50  0.50  *$  0.50   5.3%
SKX    19.20  21.79   APR  17.50  0.30  *$  0.30   5.2%
VARI   35.40  34.81   APR  30.00  0.55  *$  0.55   5.1%
VARI   36.78  34.81   APR  35.00  0.40   $  0.21   3.4%
ACN    29.89  24.48   APR  25.00  0.85   $  0.33   3.0%
AVCT   26.79  24.50   APR  25.00  0.50   $  0.00   0.0%
CBST   20.63  16.75   APR  17.50  0.55   $ -0.20   0.0%

WFR     8.60   8.55   MAY   7.50  0.30  *$  0.30   9.9%
OATS   10.63  10.50   MAY  10.00  0.45  *$  0.45   9.6%
ADPT   14.57  14.68   MAY  12.50  0.40  *$  0.40   8.4%
IMCO   14.22  15.25   MAY  12.50  0.50  *$  0.50   8.1%
SNDK   20.37  20.01   MAY  17.50  0.65  *$  0.65   7.9%
ENER   24.24  24.45   MAY  22.50  0.75  *$  0.75   7.5%
EAGL   17.00  18.25   MAY  15.00  0.45  *$  0.45   7.4%
VECO   33.97  33.99   MAY  30.00  1.00  *$  1.00   6.8%
RMCI   25.45  24.20   MAY  20.00  0.40  *$  0.40   6.3%
TOL    27.58  27.29   MAY  25.00  0.65  *$  0.65   6.2%
MARY   21.50  23.20   MAY  17.50  0.40  *$  0.40   5.8%
LNCR   31.28  32.60   MAY  30.00  0.80  *$  0.80   5.8%
VECO   35.97  33.99   MAY  30.00  0.45  *$  0.45   4.4%

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

Comments:

Despite the recent broad-market slump, the April expiration
period provided some very profitable opportunities for put
writers.  Our portfolio also enjoyed relatively favorable
results and with equity values beginning to stabilize, the
profit potential for the month of May should be excellent.
Issues on the watch-list include Veeco (NASDAQ:VECO) and
Right Management Consultants (NASDAQ:RMCI) and both plays
are candidates for exit or adjustment on any close below
their respective technical support levels at $29 and $22.

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

AEIS   36.71  MAY 30.00   OEQ QF  0.40 10    29.60   28    5.2%
CTLM   13.86  MAY 12.50   UUM QV  0.45 0     12.05   28   10.5%
IDTI   32.00  MAY 25.00   ITQ QE  0.40 231   24.60   28    6.4%
ISLE   20.50  MAY 17.50   QEP QW  0.30 41    17.20   28    5.9%
JDAS   35.29  MAY 30.00   QAH QF  0.45 20    29.55   28    5.3%
PHSY   26.01  MAY 20.00   HYQ QD  0.40 855   19.60   28    7.8%
TTWO   26.53  MAY 22.50   TUO QX  0.55 90    21.95   28    8.4%
VIRL   17.81  MAY 15.00   UVB QC  0.50 100   14.50   28   11.3%

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

VIRL   17.81  MAY 15.00   UVB QC  0.50 100   14.50   28   11.3%
CTLM   13.86  MAY 12.50   UUM QV  0.45 0     12.05   28   10.5%
TTWO   26.53  MAY 22.50   TUO QX  0.55 90    21.95   28    8.4%
PHSY   26.01  MAY 20.00   HYQ QD  0.40 855   19.60   28    7.8%
IDTI   32.00  MAY 25.00   ITQ QE  0.40 231   24.60   28    6.4%
ISLE   20.50  MAY 17.50   QEP QW  0.30 41    17.20   28    5.9%
JDAS   35.29  MAY 30.00   QAH QF  0.45 20    29.55   28    5.3%
AEIS   36.71  MAY 30.00   OEQ QF  0.40 10    29.60   28    5.2%


Company Descriptions

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

*****
AEIS - Advanced Energy Industries  $36.71  *** Entry Point! ***

Advanced Energy Industries (NASDAQ:AEIS) designs, manufactures
and supports a group of key subsystems for vacuum process systems.
Their product offerings are classified as direct current, radio
frequency, flow and temperature control products, as well as ion
and plasma sources and IKOR products that empower next-generation
microprocessors and ASICs.  These unique products are used in
plasma-based thin-film processing equipment that is essential to
the manufacture of semiconductors; compact disks, DVDs and other
digital storage media; flat-panel computer and television screens;
coatings for architectural glass and optics; and a power supply
for advanced technology computer workstations.  AEIS reported
acceptable earnings for the quarter with a 26% sequential revenue
increase over the previous period, suggesting that their industry
is in the early stages of recovery.  Another positive indication
for the company is the current backlog of orders and traders who
want to own the issue at a discounted price should consider this
position.

MAY 30.00 OEQ QF LB=0.40 OI=10 CB=29.60 DE=28 TY=5.2%


*****
CTLM - Centillium  $13.86  *** Earnings Play! ***

Centillium Communications (NASDAQ:CTLM) delivers products that
enable broadband communications to the home and business.  The
company provides broadband equipment vendors with system-level
products for the DSL market, and is leveraging its technology
and expertise to develop products for complementary markets that
share common technologies and customers.  The company also makes
products for the Voice-over-Packet market and networks.  The
quarterly earnings season is coming to an end and Centillium is
one of the companies that has yet to announce its results.  Some
analysts believe they will comfortably meet expectations and
based on the recent technical indications, investors appear to
agree with that outlook.  Traders can speculate on the upcoming
report with this conservative position.

MAY 12.50 UUM QV LB=0.45 OI=0 CB=12.05 DE=28 TY=10.5%


*****
IDTI - Integrated Device Tech.  $32.00  *** More Earnings! ***

Integrated Device Technology (NASDAQ:IDTI) designs, develops,
manufactures and markets a broad range of high-performance
semiconductor products.  Applications for the company's products
include: data networking and telecommunications equipment, such
as routers, hubs, switches, cellular base stations and other
devices; storage area networks; other networked peripherals and
servers; and personal computers.  IDT fabricates substantially
all of its semiconductor wafers using advanced (CMOS) process
technology in the company's own fabrication facilities.  The
company assembles or packages the majority of its products in
facilities that it owns in Malaysia and the Philippines, where
it also conducts product test operations.  Options premiums in
Integrated Device Technology are slightly higher than normal,
due to company's impending earnings announcement.  IDTI expects
fourth quarter revenue to be "flat to slightly up" and analysts
at CIBC World Markets support that outlook, having recently
issued and an upgrade on the stock.  This position offers a
favorable cost basis for investors who wouldn't mind owning a
leading company in the semiconductor group.

MAY 25.00 ITQ QE LB=0.40 OI=231 CB=24.60 DE=28 TY=6.4%


*****
ISLE - Isle of Capri Casinos  $20.50  *** Hot Sector! ***

Isle of Capri Casinos (NASDAQ:ISLE) is a developer, owner and
operator of branded gaming and related lodging and entertainment
facilities.  The company owns and operates 12 gaming facilities
located in Lake Charles and Bossier City, Louisiana; Biloxi,
Vicksburg, Tunica, Natchez and Lula, Mississippi; Bettendorf,
Marquette, and Davenport, Iowa; Kansas City, Missouri; and Las
Vegas, Nevada.  The company also owns an interest in casino and
hotel facility in Black Hawk, Colorado.  The facilities in Lake
Charles, Bossier City, Biloxi, Vicksburg, Tunica, Natchez, Lula,
Kansas City, Marquette, Bettendorf and Black Hawk operate under
the name "Isle of Capri" and feature the tropical island theme.
The gaming facility in Davenport, Iowa operates under the name
"Rhythm City."  The gaming facility in Las Vegas, Nevada operates
under the "Lady Luck" name.  In addition, the company owns and
operates a pari-mutuel harness racing facility in Pompano Beach,
Florida.  The Resorts and Casinos sector is "hot" and the chart
for ISLE suggests the bullish trend will continue.  Traders who
want a low risk basis in the issue should consider this play.

MAY 17.50 QEP QW LB=0.30 OI=41 CB=17.20 DE=28 TY=5.9%


*****
JDAS - JDA Software Group  $35.29  *** All-Time High? ***

With more than 4,300 retail, manufacturing and wholesale clients
in 60 countries, JDA Software Group (NASDAQ:JDAS) is the global
leader in providing integrated software and professional services
for the retail demand chain.  By exploiting its market position
and financial strength, JDA commits significant its resources to
advancing JDA Portfolio, its suite of merchandising, POS, analytic
and collaborative solutions that improve revenues, efficiency and
customer focus.  JDA is headquartered in Scottsdale, Arizona and
employs more than 1,400 associates operating from 36 offices in
major cities throughout North America, South America, Europe, Asia
and Australia.  Shares of JDAS spiked again last week ahead of the
company's quarterly earnings and the question now is, "Will the
results justify the recent rally?"  The technical pattern suggests
there is buying support near our cost basis, thus this play offers
favorable risk versus reward for traders who are bullish on the
issue.

MAY 30.00 QAH QF LB=0.45 OI=20 CB=29.55 DE=28 TY=5.3%


*****
PHSY - PacifiCare Health Systems  $26.01  *** Big News! ***

PacifiCare Health Systems (NASDAQ:PHSY) is a healthcare services
company with operations in managed care products for employer
groups and Medicare beneficiaries in the U.S. and Guam, serving
approximately four million members.  The company operates health
maintenance organizations (HMOs) and offers HMO-related products
and services.  The company's commercial and Medicare programs are
designed to deliver quality healthcare and customer service to
members, cost effectively.  The company also offers a variety of
specialty HMO managed care, and HMO-related products and services
that employers can purchase to supplement their basic commercial
plans or as stand-alone products.  The company's other specialty
products include pharmacy benefit management, behavioral health
services, life/health insurance, and dental and vision services.
Insider buying has been increasing among the health insurers and
analysts say its a good sign because it means management thinks
the industry is recovering.  Shares of PHSY certainly reflect
that optimism as the company's stock price is up over 40% in the
last week.  Traders can speculate on the future success of one
of the most popular companies in the Healthcare industry with
this position.

MAY 20.00 HYQ QD LB=0.40 OI=855 CB=19.60 DE=28 TY=7.8%


*****
TTWO - Take-Two Int. Software  $26.53  *** Rally Underway! ***

Take-Two Interactive Software (NASDAQ:TTWO) is an integrated
developer, marketer, distributor and publisher of interactive
entertainment software games and accessories for the personal
computer, PlayStation, PlayStation2, Nintendo Game Boy Color,
Nintendo GameCube, Nintendo Game Boy Advance and the Xbox.  The
company publishes and develops products through various wholly
owned subsidiaries including Rockstar Games, Rockstar Studios,
Gathering of Developers, TalonSoft, Joytech, PopTop, Global Star
and under the Take-Two brand name.  The company maintains sales
and marketing offices in Cincinnati, New York, Toronto, London,
Paris, Munich, Vienna, Copenhagen, Milan, Sydney and Auckland.
Take Two's game sales jumped 79% in the first quarter while net
income quadrupled to $34 million, but an investigation by the
SEC has overshadowed the company's recent success.  Apparently,
investors have decided the probe involving revenue recognition
in prior periods will not affect the future because the issue
is in "rally mode."  This position offers a conservative method
to profit from the current upside activity.

MAY 22.50 TUO QX LB=0.55 OI=90 CB=21.95 DE=28 TY=8.4%


*****
VIRL - Virage Logic  $17.81  *** Solid Earnings! ***

Virage Logic (NASDAQW:VIRL) provides embedded memory in the form
of semiconductor intellectual property for "systems-on-a-chip"
integrated circuits that power Internet and various high-speed
communications, computer and consumer products, such as cellular
and digital phones, pagers, digital cameras, DVD players, modems
and switches.  The company's semiconductor intellectual property
consists of embedded memories; compilers that allow designers to
configure the company's memories into different sizes and shapes
on a single chip; memory test processor and fuse box components
for embedded test and repair of defective cells; and software
development tools that can be used to build memory compilers.
The company also provides custom memory design services.  Virage
recently reported that second-quarter net earnings increased,
with revenues rising 10% on net income of $1.2 million, up from
$968,000 in the same quarter last year.  Virage also said it
expects revenues to continue rising in the third quarter and
this position allows traders to speculate conservatively on
continued bullish activity in the issue.

MAY 15.00 UVB QC LB=0.50 OI=100 CB=14.50 DE=28 TY=11.3%


*****

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

PMCS   18.05  MAY 15.00   SQL QC  0.60 1406  14.40   28   13.7%
WEBX   18.44  MAY 15.00   UWB QC  0.45 69    14.55   28   11.1%
SLAB   35.88  MAY 30.00   QFJ QF  0.90 469   29.10   28   10.4%
OATS   10.50  MAY 10.00   QOQ QB  0.35 20     9.65   28    9.4%
VTS    18.50  MAY 17.50   VTS QW  0.55 1332  16.95   28    8.6%
PLUG   10.83  MAY 10.00   PQL QB  0.30 145    9.70   28    8.6%
GSF    32.55  MAY 30.00   GSF QF  0.75 886   29.25   28    7.3%
ADRX   43.52  MAY 30.00   QAX QF  0.60 123   29.40   28    7.0%
PLXS   25.85  MAY 22.50   QUA QT  0.45 400   22.05   28    6.6%



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


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

A Market Without Direction!
By Ray Cummins

******************************************************************
                         - MARKET RECAP -
******************************************************************
Friday, April 19

Stocks ended mixed today with industrial issues leading the Dow
higher while the NASDAQ consolidated on weakness in networking
and semiconductor shares.

The Dow Jones Industrial Average gained 51 points to finish at
10,257 despite a mixed bag of earnings reports and warnings of a
possible terrorist threat against U.S. financial institutions.
The blue-chip leaders were Disney (NYSE:DIS), American Express
(NYSE:AXP), International Paper (NYSE:IP), United Technologies
(NYSE:UTX) and Hewlett-Packard (NYSE:HPW).  The NASDAQ Composite
Index slid 5 points to 1,796 even as technology bellwethers Sun 
Microsystems (NASDAQ:SUNW) and Microsoft (NASDAQ:MSFT) notched
solid gains.  Sun Microsystems was also the most actively traded
issue on the technology exchange, rallying over 7% after posting
a narrower-than-expected loss and announcing it expects to return
to profitability in the June quarter.  The broader market S&P 500
Index ended almost unchanged, furthering the argument that stock
prices are stuck in a range with little overall direction.  One
analyst noted that investors still harbor an array of concerns
that could limit any market gains and that outlook was evident on
the Big Board, where market breadth was barely positive on light
volume of only 1.19 billion shares.  Volume was slightly higher
on the technology exchange, where 1.64 billion shares were traded
with a bias towards declining issues.  In the bond market, the
10-year Treasury note ended the session almost where it started,
up less than 1/16 point while its yield slid to 5.20%.  The long
bond (30-year) was more active, climbing just over 1/8 point to
yield 5.69%.


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

Applied Mat. (NSDQ:AMAT)  MAY40P/MAY42P  $0.30   credit  bull-put
Eli Lilly    (NYSE:LLY)   MAY85C/MAY80C  $0.60   credit  bear-call
Oil Hldrs    (AMEX:OIH)   MAY75C/MAY70C  $0.90   credit  bear-call
Edison       (NSDQ:EDSN)  SEP15C/MAY15C  $1.00   debit   calendar
Metris       (NYSE:MXT)   MAY17P/APR17P  $0.70   debit   calendar
Trimeris     (NSDQ:TRMS)  OCT45C/MAY45C  $3.00   debit   calendar
Advanta      (NSD:ADVNB)  JUL12C/MAY12P  $2.10   debit   straddle
Quest        (NSDQ:DGX)   APR85C/APR85C  $2.30   debit   straddle
Excel        (NSDQ:XLTC)  APR22C/APR22P  $1.40   debit   straddle

The Spreads-Combos portfolio enjoyed a number of new winners this
week as the volatility in stock prices continued.  Debit straddles
in Quest Diagnostics and Excel Technology achieved excellent gains
on quarterly earnings announcements and the unexpected news in
Trimeris provided a short-term gain in the bullish calendar spread.
The share value of Trimeris, a small biotechnology company, soared
on stellar results from pivotal tests on an experimental AIDS drug
which could help patients who are resistant to currently available
treatments.  Our bullish position traded at a credit of $3.50 for
a brief period after the news, offering a 15% profit in less than
one week.  At the same time, the bearish outlook play in Metris
experienced some hardship when the underlying issue plunged more
than 25% in the wake of its quarterly earnings announcement.  Our
forecast for a declining share value was right on target but there
was no reason to believe the stock price would tank after Metris
met consensus estimates.  Another surprise occurred in the credit
spread on the Oil Services Holdrs play as President Hugo Chavez
was returned to power in Venezuela on Sunday night, thus limiting
the possibility of a hike in the country's oil output.  The news
was a catalyst for upside activity in crude prices prior to the
start of equity trading on Monday and analysts quickly jumped on
the "bullish" bandwagon.  Traders who initiated the spread on the
"gap-open" reversal were rewarded with a higher-than-expected
credit, but the downward trend was no longer an ally in the play.
Now the issue is testing resistance at $70 and any move above the
current range (on heavy volume) should signal an early exit or
adjustment in the position.
  

Portfolio Activity:

The April options expiration generated relatively little activity
for positions in this section but the few remaining short-term
plays benefited from this week's bullish activity.  The bullish
synthetic position in St. Jude Medical (NYSE:STJ) was rescued as
the company's shares jumped to a new "all-time" high on Friday.
The overall profit in the play as only $0.50 but considering the
unfavorable activity last week, that was a very favorable outcome.
A similar scenario occurred in XM Satellite Radio (NASDAQ:XMSR),
which rallied to the sold (put) strike in our synthetic position,
thus eliminating the requirement to purchase the stock or close a
losing play.  One position that needed the bullish activity was
our credit spread in Advent Software (NASDAQ:ADVS) and as noted
last week, our goal was to "use any upward bias to exit or adjust
the position."  Fortunately, the stock rebounded above $58 Tuesday,
offering a great opportunity to exit the position.

The debit-straddles portion of the Combos portfolio has been very
successful over the past few months and this week, the positive
results continued as J.P. Morgan Chase (NYSE:JPM) and Scientific
Atlanta (NYSE:SFA) were added to the "profitable" list.  Shares
of SFA hit a recent high near $25 Friday, offering a $4.75 credit
on $2.30 invested in only 10 trading days.  The upward activity
in JPM yielded a smaller straddle credit, however it was entirely
in the bullish portion of the play and there is definitely future
upside potential in that issue.  Our index-based positions on the
Mini-NDX (CBOE:MNX), the NASDAQ 100 Trust (AMEX:QQQ) and the S&P
100 Index (CBOE:OEX) were also profitable and we were pleased to
receive some positive comments on the broader-market strategies.
Among this month's winning positions, notable performances were
seen in Providian Financial (NYSE:PVN), Sandisk (NASDAQ:SNDK),
Fomento Economico (NYSE:FMX), Veeco instruments (NASDAQ:VECO),
Tidewater (NYSE:TDW), Networks Associates (NYSE:NET) and Reliant
Resources (NYSE:RRI).

Questions & comments on spreads/combos to Contact Support
******************************************************************
                          - NEW PLAYS -
******************************************************************
AXP - American Express  $43.43  *** Reader's Request! ***

American Express Company (NYSE:AXP) is engaged primarily in the
business of providing travel-related services, financial advisory
services and international banking services throughout the world.
The company provides charge and credit cards, traveler's checks
and services, financial planning, investment products, insurance
and international banking.  The American Express Travel Related
Services Company provides a global card network, issuing and
processing services, the American Express Card, the Optima Card,
a number of co-brand Cards, other consumer and corporate lending
and banking products, a network of automated teller machines, the
American Express Travelers Check, stored value products, business
expense management products and services, corporate and consumer
travel products and services, accounting and business consulting
services, magazine publishing, merchant transaction processing
and point of sale and back office products and services.

One of our readers asked for some long-term calendar spread
candidates in the financial services sector, based on the recent
bullish activity in the group.  From a fundamental viewpoint,
American Express is one of the faster recovering companies in
the industry and its quarterly earnings report reflects that
position.  American Express announced last week that profits
for the first quarter rose 15%, driven by cost-cutting measures
and sound asset management.  The company's earnings were at the
high end of expectations and based on the solid capital levels,
AXP expects to begin repurchasing their common stock at the end
of the second quarter.

The technical indications suggest the stock has future upside
potential and reasonable buying support near $40.  However, the
overhead supply at $45 will likely limit AXP's near-term gains
and that provides us with an excellent opportunity to initiate
a bullish "premium-selling" position.

PLAY (conservative - bullish/calendar spread):

BUY  CALL  JAN03-45  VAX-AI  OI=6136  A=$4.10
SELL CALL  MAY02-45  AXP-EI  OI=1375  B=$0.75
INITIAL NET DEBIT TARGET=$3.15-$3.20  TARGET PROFIT=75-90%


******************************************************************
AMAT - Applied Materials  $26.48  ** Chip-Equipment Bellwether **

Applied Materials (NASDAQ:AMAT) develops, manufactures, sells
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.

For those of you who are interested in selling time-premium on
a technology issue, Applied Materials is an excellent candidate.
AMAT is one of the bellwethers in the semiconductor-equipment
group and the company recently completed its third stock split
in five years.  The intermediate-term (bullish) trend remains
intact and there is buying support at $23 and $25.  At the same
time, the resistance near $28 should limit any near-term gains,
providing a great opportunity to initiate a long-term calendar
spread.

PLAY (very conservative - bullish/calendar spread):

BUY  CALL  JAN03-30  VPJ-AF  OI=26770   A=$3.40
SELL CALL  MAY02-30  ANQ-EF  OI=12555   B=$0.35
INITIAL NET DEBIT TARGET=$2.85-$2.90  TARGET PROFIT=100%


******************************************************************
CAM - Cooper Cameron  $55.20  *** Oil Service Sector ***

Cooper Cameron (NYSE:CAM) is an international manufacturer and
provider of pressure control systems, equipment and services,
including valves, wellheads, controls, chokes, assembled systems
and blowout preventers for oil and gas drilling and production
used in onshore, offshore and subsea applications.  Cooper is
also a manufacturer of integral engine-compressors, reciprocating
compressors, turbochargers and centrifugal air compressors.  The
company's operations are organized into four separate business
segments, Cameron, Cooper Cameron Valves, Cooper Energy Services
and Cooper Turbocompressor, each of which is also a division.

The Oil Service sector has performed well in recent sessions and
with the flurry of broker upgrades in the group, as well as the
unexpected decline in crude supplies, the bullish activity will
likely continue in the near-term.  In addition, Cooper Cameron
is set to report earnings on April 30, so there may be a slight
upward bias in the stock as most companies in the segment have
exceeded consensus profit estimates in their quarterly results.
Traders who believe that CAM will post favorable numbers in the
upcoming announcement can speculate on that outcome with this
conservative position.
 
PLAY (conservative - bullish/credit spread):

BUY  PUT  MAY-45  CAM-QI  OI=426  A=$0.25
SELL PUT  MAY-50  CAM-QJ  OI=77   B=$0.75
INITIAL NET CREDIT TARGET=$0.55-$0.60  PROFIT(max)=12%


******************************************************************
MCHP - Microchip Technology  $46.14  *** Earnings Speculation! ***

Microchip Technology (NASDAQ:MCHP) develops and manufactures
specialized semiconductor products used by its customers for a
wide variety of embedded control applications.  The company's
product portfolio comprises field-programmable RISC-based
microcontrollers that serve eight- and 16-bit embedded control
applications and a broad spectrum of high-performance linear and
mixed-signal, power management and thermal management devices.
The company also offers complementary microperipheral products,
including interface devices, serial EEPROMS and its patented
KEELOQ security devices.  The company markets its products to
automotive, communications, computing, consumer and industrial
control companies.  Their systems are ISO 9001 (1994 version)
and QS9000 (1998 version) certified.

Microchip Technology is scheduled to report quarterly earnings
this week and although the recent price activity suggests the
results will be favorable, there is enough doubt among traders
to generate some excess premium in the (OTM) put options.  Our
opinion is that the numbers will be acceptable and in addition,
the upcoming 3-for-2 stock split (record date 4/22) should be a
catalyst for future upside activity.  Traders can profit from
that outcome with this position.

PLAY (conservative - bullish/credit spread):

BUY  PUT  MAY-35  QMT-QG  OI=266  A=$0.20
SELL PUT  MAY-40  QMT-QH  OI=320  B=$0.65
INITIAL NET CREDIT TARGET=$0.55-0.60  PROFIT(max)=12%


******************************************************************
ADRX - Andrx Corporation  $43.52  *** Speculation Only! ***

Andrx Corporation (NASDAQ:ADRX) commercializes controlled-release
oral pharmaceuticals using proprietary drug delivery technologies.
The company has nine proprietary controlled-release drug delivery
technologies that are patented for certain applications or for
which it has filed for patent protection for certain applications.
Andrx uses its proprietary delivery technologies and formulation
skills to develop bio-equivalent versions of selected controlled
release brand name pharmaceuticals, and other controlled release
formulations of existing immediate-release or controlled-release
drugs.  The company is also developing bio-equivalent versions of
specialty, niche and immediate-release pharmaceutical products.

Shares of Andrx began a long-awaited recovery last week as news
of AstraZeneca's (NYSE:AZN) setbacks in their battle to fend off
copycat versions of the best-selling ulcer pill Prilosec spread
among traders.  Some analysts suggested the activity reflects a
shift in favor of generic drug companies in the fight over the
$6-billion-a-year market for the popular product.  Andrx has been
battling AstraZeneca in court since last December over the right
to sell a generic form of the medicine and experts believe that
a possible launch of the generic version may occur as soon as the
third quarter of this year.  Apparently investors agree with that
optimistic outlook as they have been steadily moving back into
ADRX over the past week.  Those who believe the recovery will
continue in the near-term can attempt to profit from that outcome
with this position.

PLAY (very speculative - bullish/synthetic position):

BUY  CALL  MAY-55  QAX-EK  OI=972   A=$1.40
SELL PUT   MAY-30  QAX-QG  OI=1193  B=$1.30
INITIAL NET CREDIT TARGET=$0.10-$0.25  TARGET PROFIT=$0.75-$1.00

Note:  Using options, the position is similar to being long the
stock.  The collateral requirement for the sold (short) put is
approximately $1,000 per contract.


******************************************************************
                   - STRADDLES AND STRANGLES -

All of these issues meet our fundamental criteria for favorable
straddles; cheap option premiums, a history of adequate price
movement and the potential for volatility in the stock or its
industry.  This selection process provides the best combination
of low risk and potentially high reward however, as with any
positions, they must be evaluated for portfolio suitability and
reviewed with regard to your strategic approach and trading style.

******************************************************************
BMC - BMC Software  $15.47  *** Earnings Speculation! **

BMC Software (NYSE:BMC) is a independent systems software vendor
delivering comprehensive enterprise management.  The company is
focused on Assuring Business Availability by providing software
solutions that enhance the overall availability, performance and
recoverability of customers' business-critical applications to
help them better manage their businesses.  Their portfolio of
systems management solutions allows its customers to manage the
various components and technologies within their information
technology (IT) systems from end to end, from legacy databases
and applications on large mainframes to customer-facing Web
portals and exchanges.  The company's quarterly earnings are
due on 5/6/02.

PLAY (speculative - neutral/debit straddle):

BUY  CALL  MAY-15  BMC-EC  OI=238  A=$1.30
BUY  PUT   MAY-15  BMC-QC  OI=597  A=$0.90
INITIAL NET DEBIT TARGET=$2.00  TARGET PROFIT=20-25%


******************************************************************
EMLX - Emulex  $30.20  *** Probability Play! ***

Emulex Corporation (NASDAQ:EMLX) is a designer, developer and
supplier of a broad line of storage networking host bus adapters,
application-specific computer chips and software products that
provide connectivity solutions for storage area networks, network
attached storage and redundant array of independent disks storage.
The company's products are based on internally developed ASIC,
firmware and software technology, and offer support for a wide
variety of SAN protocols, configurations, system interfaces and
operating systems.  Emulex's architecture offers customers a
stable applications program interface that has been preserved
across multiple generations of adapters, and to which many of the
original equipment manufacturers have customized software for
mission-critical server and storage system applications.

PLAY (speculative - neutral/debit straddle):

BUY  CALL  MAY-30  UMQ-EF  OI=1703  A=$2.65
BUY  PUT   MAY-30  UMQ-QF  OI=636   A=$2.60
INITIAL NET DEBIT TARGET=$5.00 TARGET PROFIT=15-25%


******************************************************************
VRTS - Veritas Software  $30.62  *** Probability Play! ***

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

PLAY (speculative - neutral/debit straddle):

BUY  CALL  MAY-30  VIV-EF  OI=2327   A=$2.90
BUY  PUT   MAY-30  VIV-QF  OI=18063  A=$2.25
INITIAL NET DEBIT TARGET=$5.00 TARGET PROFIT=15-25%


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


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

Two Big Board favorites debut this weekend, one bullish and the 
other bearish.  Plus, several candidates inch closer to action levels.

To Read The Rest of The OptionInvestor.com Market Watch Click Here
http://members.OptionInvestor.com/watchlist/042102.asp


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

Tight trading Friday resulted in no movement in posture.  
No levels were broken, but some sectors are approaching 
actionable points.


To Read The Rest of The OptionInvestor.com Market Posture Click Here
http://www.OptionInvestor.com/marketposture/042102_1.asp


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**********

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