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Daily Newsletter, Wednesday, 04/30/2003

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The Option Investor Newsletter                Wednesday 04-30-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Distribution Zone
Futures Wrap: So Close But just Out of Reach
Index Trader Wrap: See Note
Weekly Fund Family Profile: Fayez Sarofim & Co.
Options 101: Setting Up For MOPO


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
      04-30-2003           High     Low     Volume Advance/Decline
DJIA     8480.09 - 22.90  8528.75  8432.12 1.98 bln   1974/1285
NASDAQ   1464.31 -  6.99  1472.69  1459.04 1.64 bln   1754/1377
S&P 100   465.53 -  0.40   468.25   462.75   Totals   3728/2662
S&P 500   916.92 -  0.92   922.01   911.70
RUS 2000  398.68 +  2.90   399.85   394.46
DJ TRANS 2408.87 +  7.99  2419.78  2381.30
VIX        23.63 +  0.27    24.12    23.35
VXN        33.67 +  0.09    33.64    32.59
TRIN       1.30
PUT/CALL   0.68
*******************************************************************

Distribution Zone
Jonathan Levinson

A lot of shares changed hands today, with no significant
technical developments taking place other than the upper
resistance lines on the charts holding back the indices. They
traded flat to slightly down on volume that was heavier than
yesterday on the NYSE and unchanged from yesterday on the COMPX.
The VIX and VXN put in higher lows and higher highs, while
finishing only marginally higher from yesterday.


Chart of the INDU




The ascending triangle continued to develop today without any
sign of breakout in either direction, and the 8300-8500 range
remains in play.  Note that the ascending triangle is a bullish
formation.  Note as well that if not for the tweezer top printed
on the 24th of March, it would be a bearish ascending wedge
instead.  No conclusion can be drawn either way- the market will
have to tell us.

Chart of the COMPX




The COMPX continues to print its large bearish ascending wedge
with the oscillators in topping territory.  While this formation
is characterized by higher lows and higher highs, it tends to
break to the south in nearly 75% of cases, as discussed in my
futures wraps over the past week.

The real news took place in the US Dollar Index, which got
croaked all night, and then began printing lower lows throughout
the day, setting a 4 year low against the Euro and a new bear
market low of 97.10.  This occurred as word circulated concerning
the Treasury's record-breaking note sale next week, which will
comprise $22 billion in 3-years, $18 billion in 5-years, and $18
billion in 10-years for a total of $58B.  The Treasury said that
these auctions will not be impacted by the debt ceiling, but
added that without a change in the law the government will only
have sufficient funding through mid-May.

Weekly Chart of the US Dollar Index





Note that today's price is not reflected in the above weekly
chart, and today's print of 97.10 took out downside support.
Unless the index bounces from here, the MacD could give a fresh
signal from way below the zero line- a distinctly not-bullish
indication if it occurs.

Gold put in a solid day, breaking the 340/oz resistance level and
tacking on gains of over $6 as of the time of this writing.

The day started with disappointing economic data.  The Mortgage
purchase index decreased by 1% to 356 from 359.9 the previous
week, with the refi index down .25% to 5092.  These figures are
significant to the extent that mortgage loans and refinancings
create a significant amount of the liquidity currently available
to the US financial markets.  At 10AM, the Chicago Purchasing
Managers Index for April disappointed to the downside, coming in
at 47.6 vs. the 49.3 reading forecast by economists.   Any
reading below 50 is indicative of contraction in industrial
activity.

Mr. Greenspan testified before Congress today, and in his
inimitable fashion had much to say, and implied exponentially
more than he said.  As always, I recommend reading his comments
directly, accessible at
http://www.federalreserve.gov/boarddocs/hh/2003/april/testimony.htm.
What I took away from his testimony, listened to on Bloomberg
radio while posting in the Market Monitor, was that he feels it
necessary to caution that the fabled "2nd half recovery" may not
actually come in the 2nd half of this year.  He sounded very
short of solutions, and Congress seemed to be pushing for
suggestions in that direction.  At issue were national and state
deficits, continued unemployment, continued economic contraction
and the like.  He mentioned that SARS had not significantly
impacted the economy, either domestically or in other countries,
at this point in time.  The market held up quite well during his
testimony and continued to do so throughout the remainder of the
session.  Mainstream media services noted the Chairman's optimism
about stock prices and the economy in general, but also
acknowledged his "cautious" tone and comments.

The White House announced that the President will address the
nation on Thursday night from the deck of the USS Abraham Lincoln
to declare the end of "major combat operations" in Iraq.

TYC was halted for good part of the morning when it was announced
that the company would report a loss of 23 cents per share for
Q2, in line with Wall Street's consensus estimate, along with a
story in the Wall Street Journal that the company would disclose
fresh accounting problems to the tune of over $1B.  Tyco was
originally scheduled to report on Thursday.  It traded heavily
throughout the session, managing to close higher by 1.50%, and
then gave back nearly all of its gains following the release of
its numbers after the bell.  It posted a loss, with earnings of
23 cents vs. consensus expectations of 34 cents per share and
news of $1B in accounting charges.

It was reported that GE is in talks to sell its Financial
Guaranty Insurance unit for more than $2B to a group including
PMI, BAC, private-equity firms the Blackstone Group and Cypress
Group, the Post said.  FGIC provides insurance for municipal
bonds, and in light of my views regarding the credit bubble and
state and municipal finances, I think that this is great decision
by GE.

Best Buy reaffirmed guidance for a 14 to 16 percent increase this
year in profits and a rise of 11 to 13 percent in sales.  Adobe
rose 3% after hours after raising guidance on stronger than
expected sales of its Acrobat software.

DELL's COO stated today that he "sees no sign of an uptick in
corporate technology demand", which confirms what we've been
hearing recently from the majority of the tech companies that
have just reported.  Ingram Micro got smoked as it announced
earnings in line with estimates but forecasted a sequential drop
in earnings for the second quarter to between $14 million to $19
million, or 9 to 12 cents per share, due to "softer demand" in
North America. Despite this, the COMPX and QQQ saw only minor
losses today, as investors continued to ignore the fundamentals
and shrug off negative news.

On the "he-said-she-said" front, the NYSE refused to confirm that
it had invited former U.S. Secretary of State Madeline Albright
to join its board, following a Reuter's story that Richard Grasso
had asked her to do so.  The NYSE is seeking to fill the void
caused by Sandy Weill's withdrawal of his candidacy.

For tomorrow, the trendlines on the charts above will be key, as
will the action in the US Dollar Index overnight.  Heavy selling
came in just before the bell on the indices, and QQQ was trading
27.43 after hours.  Until the lower supports get taken out, we'll
continue to print an ever-narrowing range near what remains the
top of the current rally.  The market continues to prove
resilient and entirely resistant to bad news, but bulls'
inability to propel the indices above resistance today despite
solid volume was a telling sign.  The volatility indices remain
severely oversold, and the oscillators on the indices remain
overbought.  With no sign of economic data to celebrate, other
than the consumer confidence numbers yesterday which are
admittedly "soft" data, bulls are going to need a lot of will to
take out the sellers just above current levels.  The wildcard, in
my opinion, will be short sellers.  We've seen increasing support
from short covering, and indeed this entire rally has occurred on
a declining US Dollar.  The readiness of the put to call ratio to
race to the top of its range intraday tells us that shorts are
still active, and as long as they are, the potential for a short
squeeze above resistance such as we saw yesterday morning is a
real risk for bears.  Tomorrow's employment data at 8:30AM could
prove the catalyst in either direction, either invigorating bears
and prompting them hold instead of covering, or igniting the
bulls and a short covering rally.

One last thing:  There's an expression, "Sell in May and go
away."  With the end-of-month window dressing now complete and
this seasonal clichi on traders' minds, there will be
expectations of downside in the market.  I don't believe that
they will be sufficient to reverse a strong reaction to positive
employment data tomorrow, but it's worth keeping in mind.  See
you at the bell!


************
FUTURES WRAP
************

So Close But just Out of Reach
By Jim Brown

      04-30-2003           High     Low
DJIA     8490.09 - 22.90  8528.75  8432.12
NASDAQ   1464.31 -  6.99  1472.69  1459.04
S&P 500   916.92 -  0.92   922.01   911.70
NDX      1106.06 - 10.73  1116.85  1104.39
ES03M     915.50 -  0.50   921.50   910.00
YM03M    8453.00 - 24.00  8508.00  8407.00
NQ03M    1107.00 -  9.50  1119.00  1105.50

Daily Pivots (rounded to nearest point)
           R2     R1    Pivot   S1     S2
DJIA      8580   8535   8484   8439   8387
COMPX     1479   1472   1465   1458   1452
ES03M      927    921    916    910    904
YQ03M     8557   8505   8456   8404   8355
NQ03M     1124   1115   1110   1102   1097

I think I can, I think I can the little index kept saying on
Wednesday as it neared and briefly touched the top of the hill.
The Dow managed to top 8520 for the tenth time since early
March but just could not hold over that critical level once
again.

The end of month window dressing powered the averages to test
their resistance over and over but they just cannot get through
the strong selling. The SPX is the biggest laggard with 920
resistance very strong and dating back to July 2000. Until the
S&P can move over 920 convincingly the rest of the indexes are
stuck repeating the same trading range over and over.

The ES traded in a narrow range between 910-921 and after two
attempts to break the 910 support spent most of the day easing
back to the top with multiple levels of pauses. 917-918 provided
afternoon support but volume was equal on both sides.

At 3:45 as the ES struggled to break 920 again the bottom suddenly
fell out of the market and a trio of big brokers, Morgan, Goldman
and Merrill began dumping the big S&P contracts. The ES fell from
920 to 912.75 in about 15 min. The end of month sellers were
either waiting for an end of quarter buying spurt at the close to
sell into or were booking profits from the months gains. Either
way the selling was fast and on strong volume.

The other futures followed suit with the S&P leading. The Dow
futures close at 8453, over 50 points below its late afternoon
high. The NDX futures have been struggling with 1118 with a
couple of brief forays only slightly above. The end of day drop
knocked the NDX back to 1106 and below the troublesome 1118 level
once again.

In my opinion the rally from the last week has been driven by
earnings and expectations that maybe things are not as bad as
they seem. So far only the consumer sentiment numbers bear this
out. We had a great month with the major indexes up strongly
and the Nasdaq posting the second best April ever. Tomorrow we
get the ISM report at 10:AM and Friday has the Jobs report.
Both of these could sink the current sentiment or give it a
significant boost.

The indexes are priced to perfection and at a dead stop just
under strong resistance. If they could not break the resistance
during two strong earnings weeks they could be in trouble if the
ISM or Jobs report disappoint.

I would not advise positions ahead of the ISM at 10:AM. That
should give us an indication of direction going into Friday's
Jobs. Historically the Apr-30/May-1st period has been bullish
with downtrends beginning soon thereafter. All the factors
appear to be lining up for a repeat of that history.

Current ES resistance 920, support 910.
Current YM resistance 8500, support 8400.
Current NQ resistance 1118, support 1100.


Dow Chart - 120 min




Nasdaq Chart - Daily




ES03M Chart - 120 min




NQ03M Chart - 120 min




YM03M - 120 min





S&P Cash Chart - Daily





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

Check the Site Later Tonight For Jeff's Index Trader Article
http://members.OptionInvestor.com/itrader/marketwrap/iw_043003_1.asp


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**************************
WEEKLY FUND FAMILY PROFILE
**************************

Fayez Sarofim & Co.

This week, we profile Fayez Sarofim & Company, a firm of about 20
investment professionals that manages investment portfolios for a
wide range of clients and serves as the sub-investment advisor on
four Dreyfus Corp. stock funds including the $3.2 billion Dreyfus
Appreciation Fund (DGAGX).  Fayez Sarofim, president and chairman
of the board of the investment firm he founded in 1958, serves as
the lead portfolio manager of all four of the Dreyfus sub-advised
equity funds.  Mr. Sarofim is a Chartered Investment Counselor as
well as a member of the New York Society of Security Analysts and
the Houston Society of Financial Analysts.  He is also a director
of several international companies.

Charles Sheedy, Christopher Sarofim, and Catherine Crain serve on
the firm's portfolio management team.  Mr. Sheedy joined the firm
in 1971 and is a senior vice president.  He chairs the "Strategy"
group at Fayez Sarofim, co-manages the Dreyfus Appreciation Fund,
and manages numerous separate accounts.  Christopher Sarofim came
on board in 1988 and is a vice president.  He is a co-manager on
the funds that Fayez Sarofim & Co. manages for Dreyfus, Julius
Baer, and Global Asset Management.  Chris also manages numerous
separate accounts.  Crain, a Chartered Financial Analyst, joined
Fayez Sarofim in 1993 and is a Principal at the firm.  Ms. Crain
oversees the firm’s relationship as a sub-advisor to the Dreyfus
Corp. and is co-manager of the Dreyfus Variable Investment Fund:
Appreciation Portfolio.

Fayez Sarofim's partnership with The Dreyfus Corp. began in 1990
when his firm was appointed sub-investment advisor of the no-load
Dreyfus Appreciation Fund.  The firm has been sub-advisor of the
fund since 1990, building a solid long-term performance record in
the domestic equity class.  Total assets exceed $3 billion today,
evidence of its the fund's success.  Fayez Sarofim & Co. has been
the subadvisor of the Dreyfus Premier Worldwide Growth Fund since
1993, the Dreyfus Premier Tax Managed Growth Fund since 1997, and
the Dreyfus Premier Core Equity Fund since 1998.  More on each of
these funds in the Fund Overview section.

The no-load Dreyfus Appreciation Fund has a minimum investment of
$2,500 to open a regular account ($750 for initial IRAs; $100 for
initial AIPs).  It currently has an expense ratio of 0.97%, below
average relative to the domestic equity fund universe.  The three
Dreyfus Premier Funds are load funds and are sold and distributed
primarily through financial advisors.  For our report we will use
the Class A shares of the funds, which have an initial sales load
of 5.75%, but have the lowest expense ratios of the various load
share classes (near 1.35%).  The Premier funds require $1,000 to
open a regular account ($750 for IRAs, $100 for AIPs).

For complete fund information, go to the www.dreyfus.com website.
For information on Fayez Sarofim & Company as an investment firm,
go to the www.sarofim.com website.

Fund Overview

Our focus this week is on the four Dreyfus stock funds, which are
sub-advised by Fayez Sarofim & Company.  In managing these equity
portfolios for Dreyfus Corporation, the firm focuses on growth in
earnings (and earnings power) to produce return from appreciation
and income.  Fundamental economic and company-by-company analysis
is the foundation of the firm's top-down, flexible process, which
emphasizes large-cap, high-quality, multi-national companies with
highly predictable earnings growth and market multiples.

Fayez Sarofim & Co. has sub-advised the Dreyfus Appreciation Fund
since December 1990, using the same philosophy and process as the
firm employs in managing its institutional accounts.  It seeks to
provide long-term capital growth consistent with the preservation
of capital by investing primarily in the common stock of domestic
and foreign issuers.  Dividend income is a secondary objective of
the fund.  Morningstar calls Dreyfus Appreciation Fund a reliable
fund that holds a portfolio of blue-chip stocks for the very long
haul.  Its competitive returns, moderate risks and costs, and tax
efficiency help to make the Dreyfus Appreciation Fund a fine core
holding, they say.

Dreyfus Premier Worldwide Growth Fund, which the firm has managed
since 1993, is comparable to the Dreyfus Appreciation Fund except
that it generally has more foreign content and more of a "growth"
style bias.  At least 25% of fund assets are normally invested in
foreign companies (31.7% as of March 31, 2003).  Pfizer and Exxon
Mobil are the fund's top two holdings as they are for the Dreyfus
Appreciation Fund, so owning both funds is likely to result in at
least some overlap.  At 2%, the fund's portfolio turnover rate is
ultra low like its sibling, making for a very tax efficient fund.

FS & Co. has been sub-advisor to the Dreyfus Premier Tax Managed
Growth Fund since 1997.  It has the same large-cap core style as
the Dreyfus Appreciation Fund, while adhering to an explicit tax
managed strategy.  In other words, the fund proactively seeks to
minimize realized capital gains and taxable investment income to
investors, while providing long-term appreciation for investors.
It may be suitable for investors who desire Sarofim's investment
style and are looking for an additional level of tax efficiency.

The Dreyfus Premier Core Equity Fund (originally called Dreyfus
Tax Smart Fund) has been managed by FS & Co. since 1998, and is
also managed similarly to the Dreyfus Appreciation Fund.  It is
geared to investors who are more comfortable investing through a
financial advisor.

Fund Performance

The flagship Dreyfus Appreciation Fund is currently rated 5 stars
by Morningstar, their highest overall "risk-adjusted" performance
rating.  Morningstar gives out 5 stars only to the top 10% within
a respective category.

Relative to his large-cap blend category peers, Fayez Sarofim has
produced "high" returns over time with a "below average" level of
risk using Morningstar's return and risk ratings.  In addition to
being a Lipper Leader for Total Return, the fund is also a Lipper
Leader for Preservation (www.lipperleaders.com).  Lipper's Lipper
Leader ratings are based on trailing 3-year performance (relative
to similar funds).







Though the Dreyfus Appreciation Fund is up only 2.2% so far this
year (compared to a 4.8% YTD return by the S&P 500 index) it has
one of the best long-term performance records in the large-blend
category.  For the 10-year period ended March 31, 2003, the fund
had an average annual total return of 9.5%, compared to 8.5% for
the S&P 500 index, solid enough to rank in the top decile of the
Morningstar large-blend category.

Below is a summary of the fund's trailing 1-year, 3-year and 5-
year average annual total returns through April 29, 2003, using
data from Morningstar.


 1-Year Return/% Rank in Category:
 -12.3% Dreyfus Appreciation (DGAGX) 23rd Percentile
 -13.9% Morningstar Large-Blend Fund Average

 3-Year Annualized Return/% Rank in Category:
 - 8.6% Dreyfus Appreciation (DGAGX) 12th Percentile
 -12.6% Morningstar Large-Blend Fund Average

 5-Year Annualized Return/% Rank in Category:
 - 0.7% Dreyfus Appreciation (DGAGX) 20th Percentile
 - 2.8% Morningstar Large-Blend Fund Average


Fayez Sarofim's 10-year numbers show that his buy/hold strategy
has potential to outperform both the market and category peers.
His trailing 1-year, 3-year and 5-year numbers indicate that he
is capable of minimizing losses during market downturns (versus
similar funds).  So, you really could not ask for anything more
if you are a true long-term investor.  Sarofim buys and holds a
diversified portfolio of blue-chip names for the very long haul,
making it an appropriate match for investors with long horizons.

Although low portfolio turnover can raise short-term volatility,
Sarofim has done a nice job of managing risk over the long term,
producing a favorable risk-reward tradeoff for patient investors.
Below average expenses and low portfolio turnover make it a good
fund for a regular (taxable) account.

Each of the three Dreyfus Premier funds that are sub-advised by
Fayez Sarofim & Co. has at least one share class that is 4-star
rated by Morningstar.  The Dreyfus Premier Core Equity Fund has
produced "low" risk and "above average" returns relative to its
large-cap blend peers, according to Morningstar.  The Worldwide
Growth and Tax Managed Growth funds have produced below average
risk relative to their category peers, while generating average
to above average returns on a relative basis to category peers.

Below is a summary of the three Dreyfus Premier funds that are
managed by Fayez Sarofim & Co., using Morningstar data for the
Class A shares of the funds through April 29, 2003.


 1-Year Return/% Rank in Category:
 -13.6% Dreyfus Prem Worldwide Growth (DROGX) 21st Percentile
 -12.5% Dreyfus Prem Tax Managed Grth (DTMGX) 26th Percentile
 -12.8% Dreyfus Prem Core Equity (DLTSX) 34th Percentile

 3-Year Annualized Return/% Rank in Category:
 -12.3% Dreyfus Prem Worldwide Growth (DROGX) 33rd Percentile
 - 9.4% Dreyfus Prem Tax Managed Grth (DTMGX) 16th Percentile
 - 9.3% Dreyfus Prem Core Equity (DLTSX) 15th Percentile

 5-Year Annualized Return/% Rank in Category:
 -2.8% Dreyfus Prem Worldwide Growth (DROGX) 38th Percentile
 -1.2% Dreyfus Prem Tax Managed Grth (DTMGX) 24th Percentile
  N/a  Dreyfus Prem Core Equity (DLTSX)  N/a


You can see that the performance for these Dreyfus Premier funds
is similar but perhaps not as strong as the Dreyfus Appreciation
Fund, which has lower annual operating expenses to go along with
its no-load cost structure.  The philosophy and process on these
funds are all similar to the Dreyfus Appreciation Fund, so gross
performance (before fees) is fairly comparable.  After deduction
of expenses, however, total returns of the Dreyfus Premier funds
aren't quite as good as the Dreyfus Appreciation Fund.  With its
low 0.97% expense ratio, Dreyfus Appreciation Fund has a moderate
cost advantage over similar funds, including its "load" siblings.

Conclusion

The three Dreyfus Premier stock funds managed by Fayez Sarofim &
Co. are similar to the no-load Dreyfus Appreciation Fund and are
geared to people that invest through a financial advisor.  While
they vary in their cost structure and availability, all the load
class shares have relatively higher operating expense associated
with them.  If you are a direct investor, then you are likely to
find the Dreyfus Appreciation Fund to be a more attractive stock
fund choice because of its below-average expense ratio.

Because Fayez Sarofim & Co. buys and holds common stocks for the
very long term, the Dreyfus Appreciation Fund may be volatile in
the short term.  However, over the long term, portfolio risk has
been "below average" relative to other domestic stock funds, for
an attractive risk-reward tradeoff to investors.  Those who seek
an actively managed and tax efficient large-cap core equity fund
have a reliable option in the Dreyfus Appreciation Fund, managed
by Fayez Sarofim & Co.

Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com


***********
OPTIONS 101
***********

Setting Up For MOPO
by Mark Phillips
mphillips@OptionInvestor.com

In Monday's article, we spent some time addressing the question of
whether it is time for to start sharpening our claws for another
exhilarating ride down the charts.  After looking at a long-term
chart of the SPX and supporting charts of some of the additional
indicators I use for assessing the likelihood of a trend change, I
came to the conclusion that we can sharpen those claws, but we
better not slip them on just yet.

If you missed that discussion, click on the following link to
catch up.

MOPO - Remember That Term?
http://www.OptionInvestor.com/traderscorner/tc_042803_1.asp

I'm going to go light on the charts tonight, as those posted on
Monday really haven't changed much.  But I do want to take a more
detailed look at the SPX chart.  Actually, we need to look at two
separate views in order to show all the important details.

SPX Daily Chart -- View #1




Here we can see that the $920-925 area at the top of the
descending channel is presenting a stiff obstacle for the bulls.
But at the same time, each failure is being bought at
progressively higher lows.  In fact, bulls are likely encouraged
by the fact that the past couple days have had the bulk of price
action (and the closes) above the descending trendline from the
August, November and January highs.  Clearing off the chart and
applying a different set of lines gives us another picture of the
battle that is currently underway.

SPX Daily Chart -- View #2




As the battle over SPX 920 continues, we have a pretty mature
bearish ascending wedge in progress.  It comes to an apex near 932
(right at the January highs), but there is a slight problem.
Bearish ascending wedges that are going to break down in textbook
fashion, typically do so about 2/3 of the way between the
beginning of the pattern and its apex.  As you can see, we are
right at that point in the pattern, with the wedge approximately 7
weeks old and only about 3 weeks left until the apex is reached.
A break from this wedge should occur in the next 2-5 days in my
view.

But wait a minute, you say.  The VIX hasn't yet fallen into the
19-21 area, the SPX Bullish % is still rising and is not yet in
overbought territory.  How right you are!  See, the price chart of
the SPX is telling us that it is at a critical inflection point,
but we don't have enough evidence yet to tell us that down is the
high-odds bet.

I think there are a couple different ways this might play out.
The first scenario is that the SPX does fail to push through the
top of its channel and we get the bearish breakdown below the
bottom of the wedge.  Such a development should have the index
vulnerable to the bottom of that wedge pattern near the $790-800
level.  But that breakdown would not be the high-odds MOPO trade
that we're targeting here.  It could make for a very nice downside
trade, but remember, we're looking to have several disparate
indicators all tell us to play the downside -- that we don't yet
have.

While I don't know what the probabilities are, the better setup
for a MOPO trade would be to see the SPX push through the top of
the ascending wedge, possibly into the $935-940 area.  At the same
time, we would likely see the VIX falling into the 19-21 area that
has always signaled an impending market top.  But we still have
the issue of the Bullish %.  Looking at it on the PnF chart, we
can see that the bearish resistance line comes in at 65%
currently.  While we're still a ways from there at 56%, I can see
where a rally to the $940 area would bring with it some internal
strengthening that ought to have the Bullish % approaching that
65% area.

This is where the SharpChart version of the Bullish % is so
useful, as it really gives us a quantifiable measure with which to
gauge that turning point in the Bullish % that might not show up
quite as readily on the PnF chart.  We have two things to watch
for on that chart -- the first is for the Bullish % line to cross
down through the 10-dma, while the confirmation comes from the CCI
oscillator dropping below 100 and then crossing the zero line.

So let's see if I can put it together in a summarized form.

Case 1:
The SPX confirms the bearish ascending wedge with a break to the
downside, but the VIX never drops into that 19-21 range.  Partial
positions could be entered on the break from the wedge ($900 at
this time), but prudent traders would wait for confirmation from
the Bullish % SharpChart before rounding out to full bearish
positions.

Case 2:
We get an upside breakout through the upper bound of the
descending channel and through the top of the ascending wedge
pattern.  TAKE NO ACTION on this move.  If there is to be a
bearish resolution, it will happen when the SPX breaks back down
into the wedge and out the other side.  That would confirm that
the breakout was a bull trap.  It is on the break back down
through the bottom of the wedge that we can get serious.  What I
like about this scenario, is the upside break would likely get the
VIX closer to our desired action zone (making the options a bit
cheaper as well) and have the Bullish % advancing closer to that
65% area.  If we got a VIX down in the 19-21 "action zone", I
would consider initiating partial bearish positions in the $930-
940 area (see resistance zone laid out on the first chart above),
but wait for a break below the lower bound of the wedge in
addition to a cross of the Bullish % line back under its 10-dma
before rounding out to a full position.

Alright, now that we have our scenarios laid out for initiating a
MOPO trade, we have to decide on what vehicle to utilize.  Should
we focus on the SPX or how about the DOW or the NASDAQ?  What
expiration month?  What strikes?  So many questions...

First off, I would eliminate the NASDAQ or QQQ from consideration.
This isn't so much because I don't expect the NASDAQ to fall with
the rest of the market, but because I think its downside is more
limited.  I went into my rationale behind this belief in a couple
of articles I wrote at the start of the year.  Here are the links
in case you missed them.

'Tis The Season
http://www.OptionInvestor.com/traderscorner/tc_010603_1.asp

'Tis The Season, Part II
http://members.OptionInvestor.com/options101/opt_010803_1.asp

So that leaves us with the DOW or the SPX.  There's no reason why
the OEX couldn't be used as an alternate to the SPX.  To me, this
is a matter of personal preference and account size.  Smaller
accounts will want to focus on the DJX because of the lower cost
per contract.  This allows for legging in and out of the trade
with multiple contracts while still remaining within the confines
of the money management guidelines laid out in your business plan.
Larger accounts will want to focus on the SPX or OEX so they
aren't having to deal with excessive commissions or large order
sizes.  My personal preference is to trade the DJX, but that is a
decision based more on personal comfort than anything else.

How much time?  This strategy is a bit different than the MOCO
strategy we've talked about in the past, as market reversals from
low extremes on the VIX tend to take longer to work than those
that occur from VIX high extremes.  Look at a daily chart of the
SPX or DJX from last year at this time.  While the VIX low was
reached in late March, the first leg down completed in early May
(6 weeks later), but the real payoff came in July, 4 months after
the VIX low.  For that reason, I would err on the side of caution
and buy at least 4 months of time, preferably more.  I like the
September expiration for the best odds of minimizing the issue of
time decay while we let the trade work through the summer
doldrums.

The issue of which strike to buy is rather difficult right here,
because we don't really know where the market will be trading when
we get our entry signals.  So rather than specify exact strikes, I
think the best way to set up the trade is by selecting strikes a
defined distance from current market value at the time the entry
signal arrives.  We're buying plenty of time, so we want to make
leverage work in our favor by going with Out of the Money strikes.
For the DJX, I would go 4-5 strikes OTM, while for the SPX, 2
strikes OTM should be optimal.  For current levels, that would
mean using the DJX SEP-80 Puts, or the SPX SEP-850 puts.  You can
adjust the selected strikes up or down depending on where the
indices are trading at the time of entry.

I know I've probably left out some important details here, but I
think we've got a pretty good roadmap to work with.  Get your
action plan laid out now and then wait for the fireworks to begin!

If I've left any questions unanswered, feel free to drop me an
email and we'll address them in group fashion as time permits.

Mark


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The Option Investor Newsletter                Wednesday 04-30-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: AZO, NXTL
Dropped Calls: None
Dropped Puts: None
Play of the Day: Call - AZO
Big Cap Covered Calls & Naked Puts: The Market "Tug-O-War"
Continues!
Market Watch: Mostly Four-Lettered Symbols


Updated on the site tonight:
Market Posture: Bulls Still In Control


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

AutoZone - AZO - close: 80.81 change: +0.47 stop: 77.90*new*

AZO continued to trade higher today with positive comments from
Merrill Lynch's retail analyst team helping out.  We're raising
our stop to $77.90.  Meanwhile, traders who have not yet
considered their profit targets should do so.  We're going to set
a suggested exit range between $83 and #85.  We'll pick a
specific target as AZO climbs higher.

Picked on April 13th at  $75.24
Change since picked:      +5.57
Earnings Date          06/03/03 (unconfirmed)
Average Daily Volume = 1.22 mln

---

Nextel Communications - NXTL - cls: 14.76 chg: -0.85 stop: 13.90

You can send your thanks to the telecom analyst at Deutsche
Securities.  The company issued a "sell" rating on NXTL claiming
that maybe the stock price had risen higher than the company's
financial position would dictate.  We're wondering if maybe
NXTL's stock price had risen higher than they expected and
suddenly their short positions were hurting (pure speculation on
our part).  Guess you can tell we don't trust the timing on some
of these buy and sell signals from brokers.  At any rate, the
pull back is offering readers a chance to gauge their entries on
the breakout above major resistance.  We would expect NXTL to
stay above the $14 level and more specifically to remain above
the $14.50 level.  Our stop is at $13.90.  We listed a range last
night of $15.00 to $14.50 to enter the play, so our official
entry is $15.00.  You, on the other hand, might be able to target
shoot a much better entry if the dip continues tomorrow.  Look
for signs of a bounce.

Picked on April 30th at $15.00
Change since picked:     -0.24
Earnings Date         04/23/03 (confirmed)
Average Daily Volume = 21.6 Million


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

None


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

None


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

AutoZone, Inc. - AZO - close: 80.81 change: +0.47 stop: 77.90

Company Description:
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.

Why we like it (Sunday, April 28th's write up):
While the price action in AZO over the past couple days certainly
can't be termed bullish, we are far from disappointed with the way
the stock is behaving.  Our initial profit target of $80 was
achieved on Wednesday, and traders that took advantage of that
strength to harvest gains should be happy with that decision.
Since the opening bell on Thursday, AZO has seen some orderly
profit taking, with mild support being felt near the $78 level.
Particularly encouraging is the light volume that has accompanied
the price decline over the past couple days, with Friday's tally
of 787K shares just barely over 60% of the ADV.  Support gets a
bit firmer near $77, becoming fairly strong at $76 and (hopefully)
impenetrable just above $75, with additional support provided by
the ascending trendline and 20-dma ($75.02).  Oscillators are
starting to look a bit toppy, but we'll stick with the dominant
trend as long as it lasts.  Judging by the mild pullback so far, a
rebound from the $76-77 area should provide for another solid
entry ahead of a renewed push towards the $80 resistance level.
Provided the bulls can push through that level this time, we'll
look to harvest gains again in the $83-84 area.  Until we see the
depth of the current pullback, maintain stops at $74.75.

Play-of-the-Day Comments (Wednesday, April 30th):
Shares of AZO have been very strong and out performing the RLX
retail index and the DJIA.  The close above $80 looks strong and
could have shorts concerned enough to cover some positions.
Furthermore, the retail sector team at Merrill Lynch came out
with bullish comments on a number of stocks and AZO was one of
their favorites.

Suggested Options:
Originally, we were suggesting the May 75 calls but shares have
performed well and short-term traders may do better with May 80
calls.  The May 75s have certainly appreciated since we first
picked them.

Longer Term: Traders looking to capitalize on a sustained breakout
move over the next few weeks will want to look to the May 80 Call
or even the June 80 Call.  These options are currently out of the
money, but should provide sufficient time for the stock to move
higher without time decay becoming a dominant factor over the
short run.

BUY CALL*MAY-80 AZO-EP OI=1108 at $2.55 SL=1.25
BUY CALL MAY-85 AZO-EQ OI= 333 at $0.55 SL=0.00*more risky*
BUY CALL JUN-80 AZO-FP OI= 561 at $4.20 SL=2.00
BUY CALL SEP-85 AZO-IQ OI= 271 at $4.40 SL=2.20

Annotated Chart of AZO:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-30/AZO043003.gif



Picked on April 13th at  $75.24
Change since picked:      +5.57
Earnings Date          06/03/03 (unconfirmed)
Average Daily Volume = 1.25 mln


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*********************************************
SPREADS, COMBINATIONS & PREMIUM-SELLING PLAYS
*********************************************

The Market "Tug-O-War" Continues!
By Ray Cummins

Bears battled bulls throughout the session Wednesday with the
carnivores coming out on top as technology stocks led a closing
retreat in the major equity averages.

The NASDAQ Composite eased 7 points to 1,464 with semiconductor
and computer hardware shares among the biggest losers.  The Dow
Jones Industrial Average slid 22 points to 8,480 on weakness in
McDonald's (NYSE:MCD), Boeing (NYSE:BA), and Coca-Cola (NYSE:KO).
The S&P 500 Index edged down 1 point to 916 despite strength in
gold, oil service and airline stocks.  Winners outnumbered losers
by a 3 to 2 margin on the Big Board and by 9 to 7 on the hi-tech
exchange.  Trading was heavy, with 1.65 billion shares changing
hands on the New York Stock Exchange while 1.58 billion shares
were traded on the NASDAQ.  Treasuries rallied, with the 30-year
bond up almost a full point, propelled by the weak manufacturing
data.  The benchmark 10-year note rose 22/32 to 100-7/32, pushing
its yield down to 3.85%.

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

SUMMARY OF CURRENT POSITIONS - AS OF 4/29/03

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

The following summary is a reasonable account of the positions
previously offered in this section.  However, no representation
is being made as to the actual performance of a position and in
fact, there are frequently large differences between the summary
results and those of our subscribers, due to the variety of ways
in which each play can be opened, closed, and/or adjusted.  In
addition, the summary might not be completely representative of
the manner in which the average trader would react to changing
conditions in a position and to the options market in general.
The editor of this section does not take actual positions in any
published plays and the summary comments are simply a service to
help new traders understand when positions might be opened and
closed.  In most cases, actions taken based on the commentary
would be far too late to be effective, thus it is not intended
as a substitute for personal trade management nor does it in
any way replace your duty to diligently monitor and manage the
positions in your portfolio.


MONTHLY YIELD FOR UNCOVERED OPTIONS: MAXIMUM & SIMPLE

The Maximum Yield (listed in the summary and with "naked" option
selling plays) is the greatest possible profit available in the
position.  This amount, expressed as a percentage, is based on
the initial margin requirement as determined by the Board of
Governors of the Federal Reserve, the U.S. options markets and
other self-regulatory organizations.  Although increased margin
requirements may be imposed either generally or in individual
cases by various brokerage firms, our calculations use the widely
accepted margin formulas from the Chicago Board Options Exchange.
The "Simple Yield" is based on the cost of the underlying issue
(in the event of assignment), including the premium from the sold
option, thus it reflects the maximum potential loss in the trade.


Naked Puts
**********

Stock  Strike Strike  Cost Current   Gain    Max   Simple
Symbol  Month  Price Basis  Price   (Loss)  Yield  Yield

AVID     MAY    20   19.50  27.53   $0.50   5.89%   2.56%
ERES     MAY    22   21.90  29.76   $0.60   6.03%   2.74%
JCOM     MAY    25   24.70  28.84   $0.70   6.83%   2.83%
RYL      MAY    42   41.50  53.84   $1.00   4.45%   2.41%
AVID     MAY    20   19.70  27.53   $0.30   4.53%   1.52%
CTSH     MAY    18   17.27  18.64   $1.10   14.54%  6.37%
JCOM     MAY    22   21.80  28.84   $0.70   8.33%   3.21%
ADI      MAY    25   24.65  33.82   $0.35   4.94%   1.42%
BBY      MAY    27   27.00  34.40   $0.50   5.32%   1.85%
KLAC     MAY    32   32.05  41.20   $0.45   4.64%   1.40%
LLTC     MAY    27   27.15  35.62   $0.35   4.45%   1.29%
MSTR     MAY    22   22.00  32.79   $0.50   7.92%   2.27%
SLAB     MAY    22   22.15  28.70   $0.35   5.63%   1.58%
XLNX     MAY    22   21.90  27.44   $0.60   7.82%   2.74%
AVCT     MAY    27   27.20  30.01   $0.30   4.33%   1.10%
COF      MAY    35   34.50  40.10   $0.50   5.48%   1.45%
CELG     MAY    22   22.20  26.91   $0.30   5.90%   1.35%
ERES     MAY    25   24.70  29.76   $0.30   5.22%   1.21%
ICOS     MAY    22   21.95  26.93   $0.55   9.61%   2.51%
KLAC     MAY    35   34.60  41.20   $0.40   4.88%   1.16%
OVTI     MAY    22   22.20  23.79   $0.30   5.86%   1.35%


Naked Calls
***********

Stock  Strike Strike Cost  Current   Gain    Max   Simple
Symbol Month  Price  Basis  Price   (Loss)  Yield  Yield

CCMP     MAY    50   50.70  44.57   $0.70   5.44%  1.38%
MERQ     MAY    37   37.95  34.43   $0.45   5.59%  1.19%
QLGC     MAY    42   43.40  41.63   $0.90   6.76%  2.07% *
IGEN     MAY    45   45.50  34.84   $0.50   6.90%  1.10%
QCOM     MAY    35   35.85  31.89   $0.85   7.39%  2.37%
NE       MAY    35   35.35  30.72   $0.35   4.15%  0.99%

The bearish play in Qlogic (NASDAQ:QLGC) has previously
been closed to limit potential losses.  Cabot Micro
(NASDAQ:CCMP) remains on the "early-exit" watch-list.


Put-Credit Spreads
******************

Symbol  Pick   Last   Month L/P S/P Credit  C/B    G/L  Status

BBH     97.50 102.26   MAY   85  90  0.60  89.40  $0.60  Open
CAT     51.71  52.39   MAY   45  47  0.30  47.20  $0.30  Open
RYL     47.52  53.84   MAY   40  42  0.25  42.25  $0.25  Open
VIP     37.73  40.60   MAY   30  35  0.60  34.40  $0.60  Open
EVG     47.07  47.50   MAY   40  45  0.50  44.50  $0.50  Open
KRON    43.41  46.17   MAY   35  40  0.45  39.55  $0.45  Open
TBL     47.84  50.90   MAY   43  45  0.25  44.75  $0.25  Open
CTX     63.70  65.13   MAY   55  60  0.55  59.45  $0.55  Open
RUT-X  394.97 395.78   MAY  370 380  1.10 378.90  $1.10  Open


Call-Credit Spreads
*******************

Symbol  Pick   Last   Month L/C S/C Credit  C/B    G/L   Status

APC     46.05  44.90   MAY  55  50   0.50  50.50  $0.50   Open
ATK     53.08  53.75   MAY  65  60   0.45  60.45  $0.45   Open
TOT     65.30  65.80   MAY  75  70   0.65  70.65  $0.65   Open
CAH     56.55  54.96   MAY  65  60   0.80  60.80  $0.80   Open
GM      34.48  36.29   MAY  40  38   0.30  37.80  $0.30   Open
MXIM    35.51  40.68   MAY  45  40   0.75  40.75  $0.07  Closed
MHP     56.65  60.42   MAY  65  60   0.65  60.65  $0.23   Open?
DGX     56.70  58.37   MAY  65  60   0.85  60.85  $0.85   Open?
EASI    37.91  34.11   MAY  43  40   0.50  40.50  $0.50   Open
MMM     129.00 126.97  MAY  140 135  0.80  135.80 $0.80   Open
DRYR    62.30  64.39   MAY  75  70   1.10  71.10  $1.10   Open
SYMC    42.85  44.28   MAY  50  45   0.70  45.70  $0.70   Open?
UHS     38.50  37.97   MAY  45  40   0.60  40.60  $0.60   Open

The bearish spread in Maxim Integrated Products (NASDAQ:MXIM)
has previously been closed to limit potential losses.  Symantec
(NASDAQ:SYMC), Quest Diagnostics (NYSE:DGX), and McGraw-Hill
(NYSE:MHP) are "early exit" candidates.


Synthetic Positions
*******************

Symbol  Pick   Last   Month    L/C   S/P   Credit   M/V    Status

GYI     32.43  32.87   JUL     35    30    (0.10)   1.20    Open

Getty Images (NYSE:GYI) has achieved a favorable profit in less
than one week.


Questions & comments on spreads/combos to Contact Support
**************

NEW POSITIONS

This following group of plays is simply a list of candidates to
supplement your search for profitable trading positions.  As with
any new investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
are suitable for your personal skill level, risk-reward tolerance
and portfolio outlook.  In addition, we recommend that you avoid
any trading techniques in which you are not completely comfortable
with the potential capital loss, the necessary adjustments, and
the common entry-exit strategies.  The positions with "*" will be
included in the weekly summary.  Those with "TS" (Target-Shoot)
are below our minimum monthly return, but may offer a favorable
entry price with a limit order, due to the daily volatility of
the underlying issue.

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

BULLISH PLAYS - NAKED PUTS

All of these issues have robust option premiums and relatively
favorable technical indications.  However, current news and market
sentiment will have an effect on these stocks, so review each play
thoroughly and make your own decision about its future outcome.

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

The sale of uncovered puts entails considerable financial risk,
far more than the initial margin or collateral required to open
a position.  The maximum financial obligation for the sale of a
naked put is the strike price (of the underlying stock) that is
sold.  Although this obligation is reduced by the premium from
the sale of the option, a writer of puts should have the cash or
collateral equivalent of the sold strike price in reserve at all
times.  In addition, there is one very important rule when using
this strategy: Don't sell puts on stocks that you don't want to
own!  Why?  Because stocks occasionally experience catastrophic
declines, exponentially increasing the margin maintenance and
possibly causing a devastating shortfall in your portfolio.  It
is also important that you consider using trading stops on naked
option positions to help limit losses when a stock's price falls.
Many professional traders suggest closing the position when the
underlying share value moves below the sold strike, or using a
"buy-to-close" stop order at a price that is no more than twice
the original premium received from the sold option.

***************
APPX - American Pharmaceutical  $23.29  *** Premium Selling! ***

American Pharmaceutical Partners (NASDAQ:APPX) is a specialty
pharmaceutical company that develops, manufactures and markets
injectable pharmaceutical products.  The firm produces over 100
generic injectable pharmaceutical products in more than 300
dosages and formulations. Its primary focus is in the oncology,
anti-infective and critical care markets.  The company makes
products in all of the three basic forms in which injectable
drugs are sold: liquid, powder and lyophilized (freeze-dried).

APPX - American Pharmaceutical  $23.29

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  MAY 17.5  AQO QW    2,366   0.15  17.35   5.9%   0.9% TS
SELL PUT  MAY 20    AQO QD    1,895   0.60  19.40  17.2%   3.1% *
SELL PUT  MAY 22.5  AQO QX      481   1.15  21.35  22.6%   5.4%


**************
BBY - Best Buy  $34.58  *** Bullish Retailer! ***

Best Buy Company (NYSE:BBY) is specialty retailer of consumer
electronics, personal computers, entertainment software and
appliances.  Best Buy operates retail stores and commercial
Websites under the brand names Best Buy, Media Play, On Cue,
Sam Goody, Suncoast, Magnolia Hi-Fi and Future Shop.  The firm
operates three segments: Best Buy, Musicland and International.
Best Buy is mainly a specialty retailer of consumer electronics,
home office equipment, entertainment software and appliances.
Also included in the Best Buy segment is Seattle-based Magnolia
Hi-Fi, a high-end retailer of audio and video products.  Their
Musicland segment is primarily a mall-based retailer of movies,
prerecorded music, video games and other entertainment-related
products.  The International segment consists of Future Shop, a
specialty retailer of consumer electronics, home office equipment,
entertainment software and appliances with operations in Canada.

BBY - Best Buy Company  $34.58

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  MAY 32.5  BBY QZ    3,392   0.50  32.00   7.8%   1.6% *
SELL PUT  MAY 35    BBY QG    2,570   1.35  33.65  16.4%   4.0%


**************
COF - Capital One  $41.87  *** Rally Mode! ***

Capital One Financial (NYSE:COF) is a holding company whose major
subsidiaries market a variety of financial products and services
to consumers using its proprietary information-based strategy.
The company's primary business is consumer lending, with a focus
on credit cards, but including other consumer lending activities
such as unsecured installment lending and automobile financing.
The company's principal subsidiary, Capital One Bank, a limited
purpose, state-chartered credit card bank, offers credit card
products.  Capital One, F.S.B., a federally chartered bank, offers
consumer lending and deposit products.  Capital One Services, the
other major subsidiary, provides various operating, administrative
and business services to the company and its subsidiaries.

COF - Capital One  $41.87

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  MAY 37.5  COF QU    3,885   0.35  37.15   5.2%   0.9% *
SELL PUT  MAY 40    COF QH    2,129   0.85  39.15  10.3%   2.2%


**************
ICOS - ICOS Corporation  $26.74  *** Drug Speculation Only! ***

ICOS Corporation (NASDAQ:ICOS) develops pharmaceutical products
with significant commercial potential by combining its unique
capabilities in molecular, cellular and structural biology,
high-throughput drug screening, medicinal chemistry and gene
expression profiling.  The firm applies its integrated approach
to erectile dysfunction and other urologic disorders, sepsis,
pulmonary arterial hypertension and cardiovascular diseases, as
well as inflammatory diseases.  The company has established
collaborations with pharmaceutical and biotechnology companies
to enhance its internal development capabilities and to offset
a substantial portion of the financial risk of developing its
product candidates.

ICOS - ICOS Corporation  $26.74

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  MAY 22.5  IIQ QX    1,307   0.35  22.15   9.8%   1.6% *
SELL PUT  MAY 25    IIQ QE    2,699   0.90  24.10  17.4%   3.7%


**************
IDCC - InterDigital  $22.53  *** Near Multi-Year Highs! ***

InterDigital Communications (NASDAQ:IDCC) specializes in the
architecture, design and delivery of wireless technology and
product platforms.  Over the course of its corporate history,
the company has amassed a substantial and significant library of
digital wireless systems experience and know-how, and holds an
extensive worldwide portfolio of patents in the wireless systems
field.  InterDigital markets its technologies and solutions
primarily to wireless communications equipment producers and
related suppliers.  In addition, the company licenses its Time
Division Multiple Access and Code Division Multiple Access
patents to equipment manufacturers worldwide.  The company's
quarterly earnings report is due 5/13/03.

IDCC - InterDigital  $22.53

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  MAY 20    DAQ QD     521    0.30  19.70   8.4%   1.5% *
SELL PUT  MAY 22.5  DAQ QX     302    1.15  21.35  21.6%   5.4%


**************
JPM - J.P. Morgan Chase  $29.35  *** Blue-Chip Portfolio Stock ***

J.P. Morgan Chase (NYSE:JPM), is a global financial services firm
established more than 150 years ago.  The company has assets of
$755 billion and operations in more than 50 countries.  The firm
is a global leader in investment banking, asset management, private
banking, private equity, custody and transaction services, as well
as retail and middle market financial services.  A component of the
Dow Jones Industrial Average, J.P. Morgan Chase is headquartered in
New York and serves more than 30 million consumer customers and the
world's most prominent corporate, institutional and government
clients.

JPM - J.P. Morgan Chase  $29.35

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  MAY 27.5  JPM QY   16,409    0.25  27.25   4.7%   0.9% TS
SELL PUT  MAY 30    JPM QF    4,603    1.10  28.90  15.5%   3.8%


**************
OVTI - OmniVision  $24.29  *** Consolidation Complete? ***

OmniVision Technologies (NASDAQ:OVTI) designs, develops and sells
high performance, high quality and cost efficient semiconductor
imaging devices for computing, telecommunications, industrial,
automotive and consumer electronics applications.  The company's
main product, an image sensing device called a CameraChip, is used
to capture an image in cameras and camera-related products in a
range of imaging applications such as personal computer cameras,
digital still cameras, security and surveillance cameras, personal
digital assistant cameras, mobile phone cameras, and cameras for
automobiles and toys that incorporate both still picture and live
video applications.  Last Quarter, OmniVision exceeded consensus
quarterly earnings estimates and revenue projections, aided by
exceptionally strong demand from makers of digital still cameras
and cameras for cell phones.

OVTI - OmniVision  $24.29

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  MAY 20    UCM QD     339    0.25  19.75   8.4%   1.3% *
SELL PUT  MAY 22.5  UCM QX     421    0.65  21.85  14.4%   3.0%


**************
PHSY - PacifiCare  $31.77  *** Favorable Earnings! ***

PacifiCare Health Systems (NASDAQ:PHSY) offers managed care and
other health insurance products to employer groups and Medicare
beneficiaries in eight western states and Guam.  The company's
commercial and senior plans include various health maintenance
organizations (HMOs), preferred provider organizations (PPOs),
and Medicare Supplement products.  The firm also offers a variety
of specialty managed care products and services that employees can
purchase as a supplement to basic commercial and senior medical
plans or as stand-alone products.  These products include pharmacy
benefit management (PBM), behavioral health services, group life
and health insurance, dental and vision benefit plans.

PHSY - PacifiCare Health Systems  $31.77

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  MAY 27.5  HYQ QY     690    0.25  27.25   5.5%   0.9% *
SELL PUT  MAY 30    HYQ QF     791    0.80  29.20  13.0%   2.7%


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

BULLISH PLAYS - CREDIT SPREADS

These candidates are based on the underlying issue's technical
history or trend.  The probability of profit in these positions
may also be higher than other plays in the same strategy, due to
small disparities in option pricing however, each play should be
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and trading style.

***************
CFC - Countrywide Financial  $67.60  *** All-Time High! ***

Countrywide Financial (NYSE:CFC), formerly Countrywide Credit
Industries, is a holding company that originates, purchases,
sells and services mortgage loans through its major subsidiary,
Countrywide Home Loans.  The company's mortgages are principally
prime credit first-lien mortgage loans secured by single one- to
four-family residences (prime credit first mortgages).  The firm
also offers home equity loans and sub-prime credit loans.  CFC,
through its other wholly owned subsidiaries, offers products and
services that are largely complementary to its mortgage banking
business, including lender-placed mortgage insurance, insurance
brokerage, mortgage-backed securities brokerage and underwriting,
brokerage of bulk servicing transactions, loan processing and
servicing in foreign countries, and retail banking.  The company
conducts its business through four segments: Insurance Segment,
Capital Markets Segment, Global Segment and Banking Segment.  The
company's quarterly earnings are due 4/29/03.

CFC - Countrywide Financial  $67.60

PLAY (conservative - bullish/credit spread):

BUY  PUT  MAY-60.00  CFC-QL  OI=1897  ASK=$0.25
SELL PUT  MAY-65.00  CFC-QM  OI=595   BID=$0.60
INITIAL NET-CREDIT TARGET=$0.40-$0.50
POTENTIAL PROFIT(max)=8% B/E=$64.60


**************
PLMD - PolyMedica  $36.95  *** DOJ Settlement Pending? ***

PolyMedica (NASDAQ:PLMD) is a provider of direct-to-consumer
medical products and services, conducting business through its
Chronic Care, Professional Products and Consumer Healthcare
segments.  The company sells diabetes supplies and products,
and provides services to Medicare-eligible seniors suffering
from diabetes and related chronic diseases through its Chronic
Care segment.  Through its Professional Products segment, it
provides direct-to-consumer prescription respiratory supplies
and services to Medicare-eligible seniors suffering from chronic
obstructive pulmonary disease.  It also markets, manufactures
and distributes a broad line of prescription urological and
suppository products.  PolyMedica markets prescription oral
medications not covered by Medicare to its existing customers
through its Professional Products segment.

PLMD - PolyMedica  $36.95

PLAY (speculative - bullish/credit spread):

BUY  PUT  MAY-30  PM-QF  OI=205  ASK=$0.45
SELL PUT  MAY-35  PM-QG  OI=72   BID=$0.95
INITIAL NET-CREDIT TARGET=$0.50-$0.60
POTENTIAL PROFIT(max)=11% B/E=$34.50


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

NEUTRAL PLAYS - STRADDLES & STRANGLES

Based on analysis of the historical option pricing and technical
background, these positions meet the fundamental criteria for
favorable volatility-based plays.

***************
SNE - Sony  $24.74  *** Reader's Request! ***

Sony Corporation (NYSE:SNE) and its consolidated subsidiaries
develop, design, manufacture and sell electronic equipment,
instruments and devices for consumer and industrial markets.  It
also develops, produces, manufactures and markets home-use game
consoles and software, and develops, produces, manufactures and
distributes recorded music in all commercial formats and musical
genres.  Sony is also engaged in the development, manufacture,
distribution and broadcasting of image-based software, including
film, video and television, and in various financial service
businesses, including insurance operations through a Japanese
life insurance subsidiary and non-life insurance subsidiaries,
banking operations through a Japanese Internet-based banking
subsidiary and leasing and credit financing operations in Japan.
Sony also has Internet-related businesses, an advertising agency
business in Japan and location-based entertainment businesses in
Japan and the United States.

SNE - Sony  $24.74

PLAY (speculative - neutral/debit straddle):

BUY  CALL  JUN-25.00  SNE-FE  OI=4843  A=$1.40
BUY  PUT   JUN-25.00  SNE-RE  OI=1442  A=$1.60
INITIAL NET-DEBIT TARGET=$2.90-$3.00
INITIAL PROFIT TARGET=$0.75-$1.25


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

BEARISH PLAYS - NAKED CALLS

Based on analysis of option pricing and the underlying stock's
technical background, these positions meet our fundamental
criteria for bearish "premium-selling" strategies.  Each issue
has robust option premiums, a well-defined resistance area and
a high probability of remaining below the target strike prices.
As with any recommendations, these positions should be carefully
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and personal trading style.

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

The sale of uncovered calls entails considerable financial risk,
far more than the initial margin or collateral required to open
the position.  The maximum financial obligation for the sale of a
naked option is the strike price (of the underlying stock) that
is sold.  Although this obligation is reduced by the premium from
the sale of the option, a writer of options must have the cash or
collateral equivalent of the sold strike price in reserve at all
times.  The simple fact is: stocks often experience large price
swings, exponentially increasing the margin maintenance and very
possibly causing a devastating shortfall in your portfolio.  It
is also important that you consider using trading stops on naked
option positions to help limit losses when a stock price moves in
a volatile manner.  Many professional traders suggest closing the
position when the underlying share value moves beyond the sold
strike, or using a "buy-to-close" stop order at a price that is no
more than twice the original premium received from the sold option.

***************
EASI - Engineered Support  $34.73  *** Downtrend Intact! ***

Engineered Support Systems (NASDAQ:EASI) along with its various
subsidiaries, designs and manufactures military support equipment
and electronics for the United States armed forces.  The company
also engineers and manufactures air handling and heat transfer
equipment, material handling equipment and custom molded plastic
products for commercial and industrial users. Engineered Support
Systems' six wholly owned subsidiaries are Systems & Electronics
(SEI), Engineered Air Systems (Engineered Air), Keco Industries,
(Keco), Engineered Coil Company (d/b/a Marlo Coil), Engineered
Electric Company (d/b/a Fermont) and Engineered Specialty
Plastics.

EASI - Engineered Support Systems  $34.73

PLAY (sell naked call):

Action     Month &   Option    Open   Last  Cost    Max.   Simple
Req'd      Strike    Symbol    Int.   Price Basis  Yield   Yield

SELL CALL  MAY 36.62 RUF EY     39    0.30  36.93   4.6%   0.8% *
SELL CALL  MAY 35    UFE EG     45    0.90  35.90  11.8%   2.5%


**************
OHP - Oxford Health  $29.27  *** Earnings Speculation Only! ***

Oxford Health Plans (NYSE:OHP) is a healthcare company providing
health benefit plans in New York, New Jersey and Connecticut.  The
company's product line includes its point-of-service plans, the
Freedom Plan and the Liberty Plan, health maintenance organizations,
preferred provider organizations, Medicare+Choice plans and also
third-party administration of employer-funded benefit plans.  The
company offers its products through its HMO subsidiaries and also
through Oxford Health Insurance, a health insurance subsidiary.

OHP - Oxford Health  $29.27

PLAY (sell naked call):

Action     Month &  Option    Open   Last  Cost    Max.   Simple
Req'd      Strike   Symbol    Int.   Price Basis  Yield   Yield

SELL CALL  MAY 32.5 OHP EZ      622  0.35  32.85   7.5%   1.1% *
SELL CALL  MAY 30   OHP EF   10,242  1.10  31.10  17.3%   3.5%


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

BEARISH PLAYS - CREDIT SPREADS

All of these positions are favorable candidates for "bear-call"
credit spreads, based on the current price or trading range of
the underlying issue and its recent technical history or trend.
The probability of profit from these positions may be higher
than other plays in the same strategy, due to disparities in
option pricing.  However, current news and market sentiment will
have an effect on these issues, so review each play individually
and make your own decision about its future outcome.

**************
APC - Anadarko Petroleum  $44.40  *** Next Leg Down? ***

Anadarko Petroleum (NYSE:APC), through RME Petroleum Company,
RME Holding Company, Anadarko Canada Energy, Anadarko Canada
Corporation, RME Land and Anadarko Algeria Company, is a global
independent oil and gas exploration and production company.  The
The company's major areas of operations are located in the United
States, primarily in Texas, Louisiana, the mid-continent region
and the western states, Alaska and in the shallow and deep waters
of the Gulf of Mexico, as well as in Canada and Algeria.  APC is
also active in Venezuela, Qatar, Oman, Egypt, Australia, Tunisia,
Congo and Gabon.

APC - Anadarko Petroleum  $44.40

PLAY (conservative - bearish/credit spread):

BUY  CALL  JUN-50.00  APC-FJ  OI=270  ASK=$0.25
SELL CALL  JUN-47.50  APC-FW  OI=900  BID=$0.55
INITIAL NET-CREDIT TARGET=$0.35-$0.45
POTENTIAL PROFIT(max)=16% B/E=$47.85


**************
CDWC - CDW Computer Centers  $42.63  *** Downgrade = Sell-Off! ***

CDW Computer Centers (NASDAQ:CDWC) is a direct marketer of various
brands of computers and related technology products and services.
CDW's extensive offering of products, including hardware, software
and accessories, combined with its service offerings, provide
comprehensive solutions for its customers' technology needs.  The
company offers more than 80,000 products, which include a wide
range of product types from manufacturers such as Cisco, Compaq,
Hewlett-Packard, IBM, Intel, Microsoft, Sony and Toshiba, among
others.  The company's value-added services include its ability to
custom-configure multi-branded solutions for its many customers
and offer technical support 24 hours a day, seven days a week.
The company has two main operating segments, corporate, which is
comprised of business customers, but also includes consumers, and
public sector, which is comprised of federal, state and local
government and educational institutions who are served by CDW
Government, a wholly owned subsidiary.

CDWC - CDW Computer Centers  $42.63

PLAY (conservative - bearish/credit spread):

BUY  CALL  MAY-50.00  DWQ-EJ  OI=987   ASK=$0.20
SELL CALL  MAY-45.00  DWQ-EI  OI=1673  BID=$0.55
INITIAL NET-CREDIT TARGET=$0.40-$0.50
POTENTIAL PROFIT(max)=8% B/E=$45.40


**************
MMM - 3M Corporation  $126.04  *** Trading-Range Top At $130 ***

3M Company (NYSE:MMM), formerly known as Minnesota Mining and
Manufacturing Company, is an integrated enterprise characterized
by intercompany cooperation in research, manufacturing and sale
of products.  3M's business has developed from its research and
technology in coating and bonding for coated abrasives, the
company's original product.  Coating and bonding is the process
of applying one material to another, such as abrasive granules
to paper or cloth (coated abrasives), adhesives to a backing
(pressure-sensitive tapes), ceramic coating to granular mineral
(roofing granules), glass beads to plastic backing (reflective
sheeting) and low-tack adhesives to paper (repositionable notes).
The company conducts business through six operating segments:
Industrial Markets; Transportation, Graphics and Safety Markets;
Health Care Markets; Consumer and Office Markets; Electro and
Communications Markets, and Specialty Material Markets.

MMM - 3M Corporation  $126.04

PLAY (less conservative - bearish/credit spread):

BUY  CALL  MAY-135.00  MMM-EG  OI=3383  A=$0.15
SELL CALL  MAY-130.00  MMM-EF  OI=6046  B=$0.70
INITIAL NET-CREDIT TARGET=$0.55-$0.70
POTENTIAL PROFIT(max)=12% B/E=$130.55


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

SEE DISCLAIMER - SECTION 1

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


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

Mostly Four-Lettered Symbols

Apollo Group - APOL - close: 54.14 change: -0.74

This education stock has been kicking butt with its relative
strength against the markets.  Actually, the entire sector is
doing well.  Short-term traders can look for a pull back to the
$53 area as an entry point to go long.  Use a tight stop.

http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-30/APOL043003.gif

---

Dollar Tree Stores - DLTR - close: 25.44 change: +0.31

Shares of DLTR have vaulted above their simple 200-dma and the
$25 level on an upgrade by Merrill Lynch, which occurred on
Tuesday.  Shares were able to maintain their strength today and
we could be witnessing a runaway gap.  The next level of
resistance is $27.50.

http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-30/DLTR043003.gif

---

Citrix Systems - CTXS - close: 19.00 change: +0.20

Software company Citrix has seen its stock explode higher on its
stronger than expected earnings news a week ago.  This could be
part of a short squeeze but looking at the weekly chart we see
CTXS currently battling with crucial resistance between $19 and
$20.  We'd look for a good sized pull back before considering a
long play.

http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-30/CTXS043003.gif

---

Capital One - COF - close: 41.87 change: +1.77

Yup, these are the folks who bring you the "What's in your
wallet?" commercials.  Shares have been on a steady uptrend for
weeks and we mentioned the breakout this morning on the Market
Monitor.  The $40-41 area has been serious resistance and the
breakout could have shorts scurrying for cover.  The upside
breakout also shows up on the point-and-figure chart.
Contributing to the move was an upgrade by JP Morgan this
morning.  We'd look for a pull back to $40 as an entry and use a
tight stop as share look overbought.

http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-30/COF043003.gif


-----------------------------------
RADAR SCREEN - more stocks to watch
-----------------------------------


AMLN $19.10 - AMLN was on the Watch List on Monday and the stock
has continued to climb.  Shares are technically above serious
resistance at $19.00 but the stock looks very extended.

CKFR $27.57 - Still watching and waiting for that pull back.  The
$25 level may be the area to watch.

GRMN $42.38 - Yet another one that brings back memories of the
bull market.  Shares of GRMN are up another 8% today.  Earnings
were today.  Looks like the results were good.  Volume was very
strong today.  We still wouldn't chase it.

TRMB $25.18 - This one just won't stop now will it?  Shares are
up another seven percent since Monday.  Earnings were last night
after the close.  Surprise, they were supposed to be today.
Looks like the numbers were good.  We wouldn't chase it here.

CMGI $0.99 - Certainly not an optionable play for us, nor would
we suggest trading CMGI as a stock due to its volatile swings.
However, after reminiscing briefly over the go-go days we noted
that CMGI was up 20% from its mid-April lows.


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

Bulls Still In Control

To Read The Rest of The OptionInvestor.com Market Watch Click Here
http://www.OptionInvestor.com/marketposture/mp_043003.asp


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