Option Investor
Newsletter

Daily Newsletter, Wednesday, 03/17/2004

HAVING TROUBLE PRINTING?
Printer friendly version
The Option Investor Newsletter                Wednesday 03-17-2004
Copyright 2004, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Markets Blossom Green on St. Patrick's Day
Futures Wrap: See Note
Index Trader Wrap: Leap'n Leprechauns!


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
     03-17-2004            High     Low     Volume Advance/Decline
DJIA    10300.30 +115.63 10326.52 10184.30 1.85 bln   2247/ 623
NASDAQ   1976.76 + 33.67  1980.31  1956.52 1.67 bln   2294/ 765
S&P 100   551.48 +  5.92   552.64   545.56   Totals   4541/1388
S&P 500  1123.75 + 13.05  1125.76  1110.70
RUS 2000  578.57 + 11.93   578.92   566.64
DJ TRANS 2847.65 + 59.30  2855.61  2790.04
VIX        18.11 -  2.23    19.55    17.95
VXO        18.14 -  2.57    19.73    18.07
VXN        24.75 -  2.59    27.31    24.50
Total Volume 3,878M
Total UpVol  3,192M
Total DnVol    631M
52wk Highs     257
52wk Lows       25
TRIN          0.74
PUT/CALL      0.81
*******************************************************************

Markets Blossom Green on St. Patrick's Day
by James Brown

Stocks sprinted higher for the second day in a row buoyed by tame
inflation data and positive earnings reports.  The rally was very
widespread with 27 of the 30 Dow components closing higher.
Buying was very strong in technology stocks, airlines and oil
services.  The only sectors trading lower were the DRG drug index
and the DJUSHB home construction index.  Bullish sentiment was
strong enough to shake off news of the Mount Lebanon hotel
bombing in downtown Baghdad, which hit the wires mid-afternoon.

Global markets traded higher as well.  The Japanese NIKKEI added
194 points to close at 11,436.  The Hang Seng stepped up 43
points to 12,975.  The British FTSE jumped almost 28 points to
4456.  Meanwhile the German DAX and the French CAC both soared
with 1.9% gains.  The bombing news sent gold futures to $4.50
gain to end at $407.10 an ounce.

Market internals for the U.S. exchanges were very bullish but
less than stellar volume casts doubt on the true strength of the
rebound.  Advancing stocks rushed past decliners 22 to 6 on the
NYSE and 23 to 8 on the NASDAQ.  Up volume was an impressive 4.4-
to-1 winner over down volume on the NYSE and 5.2-to-1 gainer on
the NASDAQ but these readers don't compare to the extremely
bearish readers we witnessed on Monday when down volume was 9-to-
1 and 10-to-1 respectively.  Overall volume hit 1.85 billion on
the NYSE and 1.675 billion on the NASDAQ.

There has been a lot of talk this week about market volatility
and investors shuffling positions ahead of this Friday's
quadruple-witching expiration where index options, equity
options, index futures and single-stock futures all expire.  This
could explain some of the rebound.  However, we shouldn't forget
that the Dow and S&P 500 both traded near their 5% correction
levels while the NASDAQ hit a 10% pull back from its highs.
There are a lot of investors, both big and small, that have been
waiting for just such an event and are using the recent weakness
to buy the dip.

The Dow Industrials closed right at the 10,300 level and has
broken the very minor trend of lower highs. The next challenge
for the bulls is to push the Dow through its simple 10-dma at
10,342 as well as overhead resistance at 10,400 and 10,500.  I
believe that the 10,500 level could be the real battle.  A failed
rally at that level will look like a huge entry point to short
the market.  Fortunately, we do have the April earnings season
just around the corner and the recent trend of positive pre-
announcements could still inspire an earnings run.

Chart of the Dow Industrials:



The rebound in the NASDAQ looks less convincing.  The simple 10-
dma will be short-term resistance here too but the Composite also
has minor resistance at the 1982 level.  The real challenge here
may be the 2000 level and the host of moving averages still above
it.  It's a common belief that the semiconductor sector (SOX)
tends to lead the NASDAQ higher or lower.  If the SOX can keep
the rally going then the NASDAQ should be able to challenge the
top of its new descending channel.  Unfortunately, the SOX has
its own challenges to deal with.

Chart of the NASDAQ Composite:



Chart of the Semiconductor Index (SOX):



The major economic report out today was the CPI.  Economists were
looking for a 0.3% rise in February and the headline number
matched expectations.  The core CPI, which excludes the more
volatile food and energy components, jumped 0.2%, which was above
estimates for a 0.1% gain.  Energy prices have been on the rise
and the energy component for February rose 1.7%.  Investors were
happy with these numbers because it soothed fears that the
expanding global economy had not yet sparked a dangerous rise in
inflation.   This follows yesterday's statement from the Federal
Reserve who said the risks of inflation and deflation were almost
equal.

The same cannot be said for the risk of higher oil prices.  Crude
oil closed above $38 a barrel for the first time in 13 years.
Oil saw intraday spikes to $39.99 last year during the Iraq war
and it spiked to $41.15 during the 1991 Iraq war but the last
time crude oil closed this high was September 27th, 1990 at
$39.54 a barrel.  Recent reports have begun to show a trend of
falling supplies for crude oil and gasoline here in the states.
Demand continues to grow and we are approaching the summer
driving season, which will not allow for any slack to rebuild our
stockpiles.  The markets are concerned that OPEC may follow
through on their previously forecasted production cuts in April.
Combine concerns that Venezuela is threatening to cut its supply
to the U.S. and many are forecasting oil to hit $40 a barrel or
higher.  Now most industry experts don't really believe that
Venezuela will follow through on such threats since they need the
money but it doesn't help the situation.

Speaking of needing the money the drop in mortgage rates has re-
ignited the refinancing boom.  The Mortgage Bankers Association
of America reported that mortgage applications rose 25.6% last
week to their highest levels since July 2003.  The increase in
applications for home purchases was only 5.6% but the increase
for refi's jumped 39.7%.  Major mortgage lenders like BAC, CFC,
WFC and WM didn't move much on the news but then these stocks
didn't suffer very badly during the recent sell-off.

One of Wednesday's headliners was Bear Stearns (BSC).  The Wall
Street broker-dealer reported earnings this morning that beat
estimates by 57 cents.  Analysts had been looking for $2.00 per
share and BSC reported profits of $361.1 million or $2.57/share.
Revenues jumped from $1.5 billion to $1.7 billion for the
quarter.  This news follows Lehman Brothers (LEH) earnings report
yesterday who reported earnings of $2.21 versus estimates of
$1.66 per share.  Tomorrow we'll hear from Morgan Stanley (MWD)
who is expected to earn 96 cents per share.

Boosting the Dow Transport index to a 2% gain was a very
promising earnings report from Fedex Corp (FDX).  FDX reported
its Q3 earnings this morning of 71 cents per share, which was 5
cents above estimates.  Revenues jumped 9.3% to $6.06 billion and
were boosted by its recent $2.4 billion acquisition of Kinko's.
The delivery company raised its estimates for the current quarter
to $1.15-1.25 per share placing it above average analyst
estimates at $1.16.  The stock soared 4.61% and broke out above
resistance at the $70.00 level.

Internet stocks were the best performing group today.  The INX's
4.1% gain out did the 3.39% bounce in the XAL airlines index.
Driving those gains in the Internets was Yahoo! (YHOO).  The
stock vaulted to a 5.35% gain on big volume after First Albany
and Smith Barney upgraded the stock.  First Albany raised YHOO
from a "neutral" to a "buy" and inched up its price target from
$47 to $48.  Smith Barney was more bullish and raised its price
target from $50 to $60 while lifting its rating from "hold" to a
"buy".

Lately option expiration Friday's have been rather mellow.  That
means that if we're going to see any more volatility related to
investors restructuring positions ahead of expiration then
tomorrow is the day.  Adding to the excitement will be the long-
awaited January PPI report.  This was scheduled to be released
back in February but has been delayed as the government dealt
with various data conversion "difficulties".   They still haven't
told us when to expect the February PPI index but look for
January's tomorrow morning before the bell.  We'll also get the
weekly initial jobless claims, the February leading indicator
numbers and the Philly Fed manufacturing survey.


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

Futures wrap is not emailed due to the excessive number of charts.
It may be read on the website at this address.
http://www.OptionInvestor.com/indexes/futureswrap.asp


***********************************************
2004 Stock Traders Almanac, Mousepad and Video
***********************************************

Those readers who did not sign up for the end of year
special and would still like to get a Stock Traders
Almanac this is your chance.

For only $44.95 you will get:

2004 Stock Traders Almanac - $34.95 value
2004 Option Expiration Mousepad - $14.95 value
Intro to Options Trading Success Video - $84.95 value

We had a few sets left and they are $44.95 per set.

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=3594857663

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


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

Leap'n Leprechauns!

If you were skeptical that Leprechauns really existed, or
uncertain that a pending option expiration, let alone a Triple
Witch expiration might add a little volatility to the market,
then you might believe in Leprechauns, option expiration-related
volatility, or both, after today's trade.

With a last name of "Bailey," you know I believe in Leprechauns.
I was looking for one to strangle earlier today, when power at my
home office would go out, then go back on, then go off, then back
on, then off in intermittent 15-minute spurts.

Option expiration week is tough enough on a trader, without
having some pointy-eared little creature playing with the power
switch.

One can never say for certain that a market's trade was dictated
by option expiration, but there were too many things that took
place in today's trade, which highly suggest there was some
unraveling of options, and index futures, which most likely had
great impact on today's session.

Hold onto your lucky charms, as we aren't through yet, and
there's always tomorrow.

Yes... this is "short-term" observations, or commentary towards
the shorter-term, but I think if we can get some background on
what is going on, it will help us over the next several months.

If you're a bear, and I'm taking on a more bearish outlook for
the next couple of months, then all you can do at this point is
manage your trading with account risk in mind.  In the meantime,
find a piece of shoe leather and bite down hard.

Market Snapshot / Internals - 03/17/04



I'd say today's trade represents a "St. Patrick's Day bounce."
When reviewing my QCharts U.S. Market Watch screen, only the
Pharmaceutical Index (DRG.X) 323.71 -0.66% and Dow Jones Home
Construction Index (DJUSHB) 667.74 -1.45% showed a decline, while
Internet (INX.X) 177.57 +4.10%, Airline (XAL.X) 54.15 +3.39% and
Networking (NWX.X) 273.06 +2.72% lead a long list of sector
gainers.

Pivot Analysis Matrix -



While I would NEVER put on a trade SOLELY based on the theory of
"Max Pain" into options expiration, it is notable that the broad
S&P 500 Index (SPX.X) traded a session high of 1,125.76 today,
where a rally appeared seemingly out of nowhere.  I'm certain
that we started discussing "Max Pain" levels last week.  Tomorrow
is index expiration for the SPX.X.

Now, does the actual "Max Pain" level of 1,125 for the SPX mean
that this is it?  The SPX will now just sit here at 1,125
tomorrow?  NO IT DOES NOT!

If you read this weekend's Ask the Analyst, then the following
chart of the SPX.X might make some sense as to what an options
market maker might be looking at.  He/she has the advantage over
you and I, but if I simply take a retracement Monday's low, and
fit the 50% retracement at my "Max Pain" level of 1,125.00, then
we might be able to get a feel for tomorrow's trade.  Remember
that option/futures expiration isn't over, until it is over!

S&P 500 Index (SPX.X) Chart - 30-minute intervals



At the open, when the SPX jumped above 1111.62, a next level of
upside risk could have been established at 1,119.89 (that's
pretty close to tomorrow's DAILY PIVOT).  When 1,119.89, or the
prior 30-minute bar was taken out to the upside, the next level
of upside risk was 1,125.00, or the March "Max Pain" level.

I don't want to just focus on the in the money put holders, who
obviously experienced some PAIN today, but what do you think some
of the March 1,150 put (SPTOJ) are thinking tonight?  Let's also
take into consideration the open interest (OI) of approximately
40,622 March 1,100 call holders.  How are they feeling tonight!
You're darned right in thinking that they believe in Leprechans,
as long as the SPX stays above 1,119.  A break below 1,119 could
have all of today's gains being at risk.

Do you see how we should still expect, or be prepared for
volatility, and how the unraveling of some futures or options
trades can just build on itself?

e-mini March S&P futures (es04h) - Daily Intervals



We can perhaps see how some unwinding in the futures market took
place today, when the e-mini gapped back above 1,112, where risk
was immediately assessed to 1,129.50-1,131.25 "zone of
resistance" where I would have to have a BEARISH bias.  Is 1,130
in play tomorrow?  Certainly!  DAILY R1 in the SPX is 1,129.44,
and WEEKLY Pivot of 1,128.79 is also close.  Add to that the 30-
minute chart, and we still be alert to a potentially higher
trade, especially if today's highs are taken out.

Now here is where I would really start taking some notes as to my
more bearish thoughts (based on market internals, bullish %
deteriorating) into FRIDAY's close.

If it is true, that much of the gains found are being largely
driven by option/futures expiration, then SMART MONEY in the
MARKET that KNOWS the major indices still have some downside
(below the lows set this week) will most likely be positioning
themselves with a BEARISH bias around the 1,130 level.

At least I think so.

NASDAQ-100 Tracking Stock (QQQ) - Daily Intervals



One observation I'd make tonight is the rather notable drop-off
in volume today, but boy did we make some notes as to higher
levels of option volume!  Again, this suggests to me that today's
trade was highly impacted by option/futures trade.

I also made note today that the Market Volatility Index (VIX.X)
18.11 -10.96%, NASDAQ-100 Volatility Index (VXN.X) 24.75 -9.47%
and the VXO.X 18.14 -12.4% imploded today, and it wasn't just on
call buying, but put options were also very active, and to get
such a drop in the volatility indicators, with heavy put volume,
that has me believing that today's gains for the indices was
influenced by an unraveling of positions in the options market.

Tomorrow, I'm going to begin building some further observations
and trading plans, which surrounds the VIX.X.  There are some
VERY GOOD ties we can make between the S&P 500 Bullish % ($BPSPX)
and the VIX.X.  If you were with us in March of 2003, you know
what I'm talking about.

Jeff Bailey


***********************************************
2004 Stock Traders Almanac, Mousepad and Video
***********************************************

Those readers who did not sign up for the end of year
special and would still like to get a Stock Traders
Almanac this is your chance.

For only $44.95 you will get:

2004 Stock Traders Almanac - $34.95 value
2004 Option Expiration Mousepad - $14.95 value
Intro to Options Trading Success Video - $84.95 value

We had a few sets left and they are $44.95 per set.

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=3594857663

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


*******************
FREE TRIAL READERS
*******************

If you like the results you have been receiving we
would welcome you as a permanent subscriber.

The monthly subscription price is $49.95. The quarterly
price is $129.95 which is $20 off the monthly rate.

We would like to have you as a subscriber. You may
subscribe at any time but your subscription will not
start until your free trial is over.

To subscribe you may go to our website at

www.OptionInvestor.com

and click on "subscribe" to use our secure credit
card server or you may simply send an email to

 "Contact Support"

with your credit card information,(number, exp date, name)
or you may call us at 303-797-0200 and give us the
information over the phone.

You may also fax the information to: 303-797-1333


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

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


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

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

Contact Support


The Option Investor Newsletter                Wednesday 03-17-2004
Copyright 2004, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: AET, LXK
Dropped Calls: None
Dropped Puts: None
Spreads, Combinations & Premium-Selling Plays: Stocks Soar After
    Fed Soothes!
Watch List: Buy The Dip Opportunities


***********************************************
2004 Stock Traders Almanac, Mousepad and Video
***********************************************

Those readers who did not sign up for the end of year
special and would still like to get a Stock Traders
Almanac this is your chance.

For only $44.95 you will get:

2004 Stock Traders Almanac - $34.95 value
2004 Option Expiration Mousepad - $14.95 value
Intro to Options Trading Success Video - $84.95 value

We had a few sets left and they are $44.95 per set.

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=3594857663

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


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

AET - Call
Raise Stop Loss from 85.95 up to 86.95
    (plan to exit if AET hits  $89.00.)

---

LXK - call
Raise Stop Loss from $82.00 up to $85.00


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

None


***********************************************
2004 Stock Traders Almanac, Mousepad and Video
***********************************************

Those readers who did not sign up for the end of year
special and would still like to get a Stock Traders
Almanac this is your chance.

For only $44.95 you will get:

2004 Stock Traders Almanac - $34.95 value
2004 Option Expiration Mousepad - $14.95 value
Intro to Options Trading Success Video - $84.95 value

We had a few sets left and they are $44.95 per set.

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=3594857663

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


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

None


***********************************************
2004 Stock Traders Almanac, Mousepad and Video
***********************************************

Those readers who did not sign up for the end of year
special and would still like to get a Stock Traders
Almanac this is your chance.

For only $44.95 you will get:

2004 Stock Traders Almanac - $34.95 value
2004 Option Expiration Mousepad - $14.95 value
Intro to Options Trading Success Video - $84.95 value

We had a few sets left and they are $44.95 per set.

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=3594857663

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


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

Stocks Soar After Fed Soothes!
By Ray Cummins

The major equity averages rallied Wednesday amid positive earnings
reports and a favorable outlook for interest rates.

The Dow Jones Industrial Average jumped 155 points to 10,300, its
biggest percentage gain in over a month on strength in Caterpillar
(NYSE:CAT), General Motors (NYSE:GM), J.P. Morgan (NYSE:JPM) and
Wal-Mart (NYSE:WMT).  The NASDAQ Composite rose 33 points to 1,976
with Internet media firm Yahoo (NASDAQ:YHOO) bolstering the index
after a bullish call from Smith Barney.  The Standard & Poor's 500
Index added 13 points to 1,123 as virtually every sector enjoyed
some upside activity.  Market breadth was overwhelmingly positive
with winners ahead of losers by roughly 3 to 1 on both exchanges.
Trading volume was 1.50 billion on the New York Stock Exchange and
1.67 billion on the NASDAQ.  The bond market dipped lower with the
benchmark 10-year note down 6/32 while its yield climbed to 3.70%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 03/16/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

LSCP     MAR    17    17.10   19.63    0.40   6.20%    2.34%
PCLN     MAR    22    21.70   22.63    0.80   7.85%    3.69%
AMLN     MAR    20    19.55   22.90    0.45   6.42%    2.30%
ATRX     MAR    22    22.05   24.44    0.45   6.79%    2.04%
BRCM     MAR    37    36.95   39.00    0.55   4.29%    1.49%
OSTK     MAR    20    19.35   28.99    0.65  10.25%    3.36%
NEOL     MAR    17    16.95   21.01    0.55  10.48%    3.24%
RMBS     MAR    30    28.90   27.82   (1.08)  0.00%    3.81%
ADEX     MAR    20    19.55   20.13    0.45   8.22%    2.30%
ALXN     MAR    20    19.70   22.68    0.30   6.05%    1.52%
APPX     MAR    30    29.70   40.04    0.30   4.59%    1.01%
ATRX     MAR    22    22.20   24.44    0.30   6.03%    1.35%
MRVL     MAR    37    37.10   40.60    0.40   4.40%    1.08%
NEOL     MAR    17    17.30   21.01    0.20   5.25%    1.16%
OSTK     MAR    20    19.70   28.99    0.30   6.70%    1.52%
SEPR     MAR    17    17.25   45.50    0.25   5.37%    1.45%
ADEX     APR    20    19.45   20.13    0.55   5.64%    2.83%
ALXN     MAR    22    22.05   22.68    0.45  10.40%    2.04%
KMRT     MAR    30    29.65   33.82    0.35   6.19%    1.18%
NEOL     APR    15    14.55   21.01    0.45   6.79%    3.09%
OSTK     MAR    25    24.65   28.99    0.35   9.74%    1.42%
PKZ      MAR    25    24.60   29.51    0.40   8.63%    1.63%
AAPL     MAR    25    24.65   25.82    0.35   9.53%    1.42%
AMLN     APR    22    21.80   22.90    0.70   6.68%    3.21%
APPX     APR    33    32.48   40.04    0.90   5.98%    2.77%
ASKJ     MAR    25    24.70   28.29    0.30  10.09%    1.21%
NEOL     APR    15    14.65   21.01    0.35   5.57%    2.39%
NKTR     APR    20    19.20   19.39    0.19   2.11%    4.17%
OSTK     APR    25    24.30   28.99    0.70   7.25%    2.88%
APPX     APR    33    32.73   40.04    0.65   5.76%    1.99%
ASKJ     APR    25    24.15   28.29    0.85   9.04%    3.52%
CLZR     APR    23    22.15   26.31    0.35   4.85%    1.58%
JNPR     APR    22    21.85   24.40    0.65   7.82%    2.97%
NEOL     APR    15    14.65   21.01    0.35   6.74%    2.39%
PDII     APR    22    21.80   24.92    0.70   8.31%    3.21%
SWIR     APR    22    22.15   30.19    0.35   5.03%    1.58%

As noted on Sunday, positions in Semtech (NASDAQ:SMTC) and
Interdigital (NASDAQ:IDCC) have previously been closed to
limit potential losses.  Rambus (NASDAQ:RMBS) and Nektar
(NASDAQ:NKTR) are on the "early exit" list.  New positions
in Pep Boys (NYSE:PBY) and Invision Technologies (NASDAQ:INVN)
were not available due to "gap-up" activity on the day after
the plays were published.


NAKED CALLS

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

AAII     MAR    25    25.40    8.55    0.40   7.47%    1.57%
CMTL     MAR    35    35.45   23.78    0.45   7.46%    1.27%
FLML     MAR    35    35.35   24.83    0.35   6.02%    0.99%
MHS      MAR    35    35.45   32.15    0.45   4.40%    1.27%
CECO     MAR    55    55.50   48.36    0.50   4.96%    0.90%
ECLG     MAR    22    22.85   18.86    0.35  10.15%    1.53%
ESI      MAR    50    50.30   28.75    0.30   4.96%    0.60%
ISSI     MAR    17    17.85   14.50    0.35  11.45%    1.96%
NTLI     MAR    70    70.50   56.89    0.50   6.27%    0.71%
SEAC     APR    20    20.40   13.69    0.40   7.86%    1.96%
CECO     APR    55    55.65   48.36    0.65   5.59%    1.17%
ERES     APR    35    35.30   26.66    0.30   4.73%    0.85%
FARO     APR    30    30.40   23.13    0.40   7.33%    1.32%

The new position in Nam Tai Electronics (NASDAQ:NTE) was not
available due to bearish activity on the day after the play
was published.


PUT-CREDIT SPREADS

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

CERN    46.09  42.94   MAR  35  40   0.60  39.40   0.60   Open
DNA     98.25 104.55   MAR  85  90   0.70  89.30   0.70   Open
ESRX    70.58  74.24   MAR  60  65   0.65  64.35   0.65   Open
NBR     46.97  44.20   MAR  40  42   0.25  42.25   0.25   Open
BSX     41.94  39.85   MAR  35  37   0.25  37.25   0.25   Open
CEC     34.06  37.30   MAR  30  32   0.36  32.64   0.36   Open
ONXX    36.80  34.46   MAR  30  35   0.55  34.45   0.01   Open?
OSTK    29.27  28.99   MAR  22  25   0.30  24.70   0.30   Open
RYL     85.72  89.30   MAR  75  80   0.50  79.50   0.50   Open
GS     107.09 103.06   MAR  95 100   0.65  99.35   0.65   Open
MSTR    64.78  52.73   MAR  50  55   0.55  54.45  (1.72) Closed
MICC    22.06  18.58   MAR  17  19   0.12  18.63  (0.05)  Open?
VIP     83.25  88.34   MAR  70  75   0.65  74.35   0.65   Open
GDT     69.79  64.07   MAR  60  65   0.65  64.35  (0.28) Closed
MTH     71.09  74.42   MAR  60  65   0.70  64.30   0.70   Open
APOL    77.82  81.78   APR  65  70   0.60  69.40   0.60   Open
BZH    111.90 108.08   APR  95 100   0.70  99.30   0.70   Open
KBH     78.71  79.25   APR  65  70   0.55  69.45   0.55   Open
COF     73.50  72.73   APR  60  65   0.50  64.50   0.50   Open
HUG     52.95  50.55   APR  45  50   0.50  49.50   0.50   Open
SYMC    44.64  43.01   APR  37  40   0.35  39.65   0.35   Open

L/P = Long Put  S/P = Short Put  CB = Cost Basis  G/L = Gain/Loss

Guidant (NYSE:GDT) and Microstrategy (NASDAQ:MSTR) became the
most recent candidates for early exit during Tuesday's session.
Positions in Sears (NYSE:S), which is positive, and Synopsys
(NASDAQ:SNPS), have previously been closed to limit losses.


CALL-CREDIT SPREADS

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

CYBX    27.04  21.20   MAR  35  30   0.65  30.65   0.65   Open
SOHU    29.05  23.53   MAR  40  35   0.60  35.60   0.60   Open
KLAC    54.24  52.01   MAR  65  60   0.60  60.60   0.60   Open
IACI    31.92  29.98   MAR  37  35   0.30  35.30   0.30   Open
NVLS    33.26  30.63   MAR  40  37   0.30  37.80   0.30   Open
BBBY    40.62  39.12   MAR  45  42   0.30  42.80   0.30   Open
LLTC    40.03  36.98   MAR  45  42   0.25  42.75   0.25   Open
PIXR    65.76  63.45   MAR  75  70   0.55  70.55   0.55   Open
SFNT    37.96  37.34   MAR  45  40   0.60  40.60   0.60   Open
UTEK    26.28  22.24   MAR  35  30   0.60  30.60   0.60   Open
AMZN    44.87  42.13   MAR  55  50   0.50  50.50   0.50   Open
CTAS    42.77  42.30   MAR  50  45   0.60  45.60   0.60   Open
CCU     43.44  40.72   MAR  50  45   0.60  45.60   0.60   Open
DISH    35.50  34.56   APR  42  40   0.30  40.30   0.30   Open
NVLS    31.15  30.63   APR  37  35   0.35  35.35   0.35   Open
ADBE    36.46  35.35   APR  45  40   0.55  40.55   0.55   Open
VSEA    40.85  37.76   APR  50  45   0.60  45.60   0.60   Open
COGN    29.54  28.70   APR  35  32   0.35  32.85   0.35   Open
SFA     31.96  31.31   APR  40  35   0.55  35.55   0.55   Open

L/C = Long Call  S/C = Short Call  CB = Cost Basis  G/L = Gain/Loss

The bearish position in Icos (NASDAQ:ICOS), which is positive, as
well as the spreads in Neurocrine Bisosciences (NASDAQ:NBIX), OSI
Pharmaceuticals (NASDAQ:OSIP), and Multimedia Gaming (NASDAQ:MGAM)
have previously been closed to limit losses.


DEBIT STRADDLES

Stock   Pick   Last   Exp.   Long  Long  Initial   Max     Play
Symbol  Price  Price  Month  Call  Put    Debit   Value   Status

SNP     40.74  40.65   APR    40    40     5.70    5.70    Open
TTWO    32.03  34.14   MAR    32    32     3.20    3.00    Open?
CCMP    44.55  41.40   APR    45    45     5.90    5.75    Open
AMX     35.66  34.99   MAY    35    35     3.65    4.30    Open
AIG     74.28  71.18   MAY    75    75     5.60    6.50    Open
SLB     65.13  62.51   MAY    65    65     6.75    6.50    Open
LEN     55.58  56.01   MAR    55    55     2.40    2.25    Open
TEK     29.59  28.68   MAR    30    30     1.45    1.35    Open

Hovnanian (NYSE:HOV) was the "play of the month," offering up to
a $8.00 gain on $7.00 invested.  Straddles in Martek Biosciences
(NASDAQ:MATK), Bear Stearns (NYSE:BSC) and Forest Labs (NYSE:FRX),
which is now profitable, have previously been closed to preserve
capital.  Prices for the new positions in American International
(NYSE:AIG) and Schlumberger (NYSE:SLB), as well as any potential
gains (max. value) for existing straddles, will not be accurate
this month as I did not monitor the portfolio during my recent
absence from the market.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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 Pharma Partners  $41.75  *** New 2004 High! ***

American Pharmaceutical Partners (NASDAQ:APPX) is a specialty
drug company that develops, manufactures and markets injectable
pharmaceutical products, focusing on the oncology, anti-infective
and critical care markets.  The company is one of the largest
producers of injectables, with more than 130 generic products in
more than 350 dosages and formulations.

APPX - American Pharma Partners  $41.75

PLAY (sell naked put):

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

SELL PUT  APR 33.37 AXD PV     456   0.35  33.03   4.7%   1.1% *
SELL PUT  APR 35    AQO PG    2142   0.60  34.40   6.7%   1.7%
SELL PUT  APR 36.62 AXD PW     425   0.80  35.83   7.6%   2.2%


__________________________________________________________________

BRCM - Broadcom  $40.18  *** Consolidation Complete? ***

Broadcom (NASDAQ:BRCM) is a leading provider of highly integrated
silicon solutions that enable broadband communications and the
networking of voice, video and data services.  Using proprietary
technologies and advanced design methodologies, Broadcom designs,
develops and supplies complete system-on-a-chip solutions and
related hardware and software applications for all broadband
communications markets.  Their diverse product portfolio includes
solutions for digital cable and satellite set-top boxes; cable
and DSL modems and residential gateways; high-speed transmission
and switching for local, metropolitan, wide area and storage
networking; home and wireless networking; cellular and terrestrial
wireless communications; Voice over Internet Protocol (VoIP)
gateway and telephony systems; broadband network processors; and
SystemI/O(TM) server solutions.

BRCM - Broadcom  $40.18

PLAY (sell naked put):

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

SELL PUT  APR 35    RCQ PG    3009   0.45  34.55   4.6%   1.3% *
SELL PUT  APR 37.5  RCQ PT    1596   1.10  36.40   8.9%   3.0%


__________________________________________________________________

ELN - Elan Corporation  $18.65  *** Rally Mode! ***

Elan Corporation (NYSE:ELN) is an integrated biopharmaceutical
firm engaged in research and development in Alzheimer's disease,
Parkinson's disease, multiple sclerosis, pain management and
autoimmune diseases.  The company's objective is to discover
and develop products that will fulfill the unmet medical needs
of patients.  Elan conducts its worldwide business, including
research and development, manufacturing and marketing, through
wholly owned subsidiaries incorporated in Ireland, the United
States, the United Kingdom and other countries.

ELN - Elan Corporation  $18.65

PLAY (sell naked put):

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

SELL PUT  APR 15    ELN PC    7912   0.35  14.65   9.8%   2.4% *
SELL PUT  APR 17.5  ELN PW    2191   1.15  16.35  18.0%   7.0%


__________________________________________________________________

OSTK - Overstock.com  $31.48  *** Entry Point? ***

Overstock.com (NASDAQ:OSTK) is an online "closeout" retailer
offering discount, brand-name merchandise for sale primarily
over the Internet.  The company's merchandise offerings include
bed-and-bath goods, kitchenware, watches, jewelry, electronics,
sporting goods and designer accessories.  Overstock offers its
customers an opportunity to shop for bargains conveniently,
while offering an alternative inventory liquidation distribution
channel to its suppliers.  The company typically offers around
5,000 non-media products and over 100,000 media products (books,
CDs, DVDs, video cassettes and video games) in seven departments
on its Websites, www.overstock.com, www.overstockb2b.com and
www.worldstock.com.

OSTK - Overstock.com  $31.48

PLAY (sell naked put):

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

SELL PUT  APR 22.5  QKT PX     282   0.25  22.25   4.5%   1.1% *
SELL PUT  APR 25    QKT PE     410   0.70  24.30  11.7%   2.9%


__________________________________________________________________

PCLN - Priceline.com  $23.80  *** Bracing For A Rally? ***

Priceline.com (NASDAQ:PCLN) offers products for sale in two major
categories: a travel service that offers leisure airline tickets,
hotel rooms, rental cars, packaged vacations and cruises; and a
personal finance service that offers home mortgages, refinancing
and home equity loans through an independent licensee.  PCLN also
owns travel Web sites Lowestfare.com and Rentalcars.com.  The firm
is part-owner of Internet travel service Travelweb.  Priceline.com
licenses its business model to independent licensees, including
pricelinemortgage and certain international licensees.

PCLN - Priceline.com  $23.80

PLAY (sell naked put):

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

SELL PUT  APR 20    PUZ PD    1937   0.25  19.75   4.9%   1.3% *
SELL PUT  APR 22.5  PUZ PX    1289   0.90  21.60  11.5%   4.2%


__________________________________________________________________

SYMC - Symantec  $43.72  *** Uptrend Intact! ***

Symantec (NASDAQ:SYMC) provides content and network security
software and appliance solutions to enterprises, individuals and
service providers.  The firm provides client, gateway and server
security solutions for virus protection, firewall and virtual
private network, security management, intrusion detection, e-mail
filtering and Internet content, remote management technologies
and security services to enterprises and service providers
worldwide.  The company views its business in five operating
major segments: enterprise security, enterprise administration,
consumer products, services and other activities.

SYMC - Symantec  $43.72

PLAY (sell naked put):

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

SELL PUT  APR 37.5  SYQ PU    1928   0.25  37.25   2.5%   0.7% TS
SELL PUT  APR 40    SYQ PH    5346   0.60  39.40   4.9%   1.5% *


__________________________________________________________________

XMSR - XM Satellite Radio  $27.56  *** The Rally Resumes! ***

XM Satellite Radio (NASDAQ:XMSR) is America's #1 satellite radio
service with over 1 million subscribers.  Broadcasting live daily
from Washington, DC, New York City and Nashville, Tennessee at the
Country Music Hall of Fame, XM provides its loyal listeners with
over 100 digital channels of choice: 70 music channels, more than
35 of them commercial-free, from hip hop to opera, classical to
country, bluegrass to blues; and 31 channels of premiere sports,
talk, comedy, kid's and entertainment programming.  Compact and
stylish XM satellite radio receivers for the home, the car, the
computer and even a "boom-box" for on the go are available from
retailers nationwide.

XMSR - XM Satellite Radio  $27.56

PLAY (sell naked put):

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

SELL PUT  APR 22.5  QSY PX    3271   0.20  22.30   3.8%   0.9% TS
SELL PUT  APR 25    QSY PE    4324   0.60  24.40   7.7%   2.5% *


__________________________________________________________________

YHOO - Yahoo!  $44.85  *** Upgrade = Rally! ***

Yahoo! (NASDAQ:YHOO) is a global Internet business and consumer
services company that offers a comprehensive branded network of
properties and services to more than 200 million individuals
worldwide.  The company offers an online navigational guide to the
Internet via its www.yahoo.com Website, which is a guide in terms
of traffic, advertising and household and business user reach.
Through Yahoo! Enterprise Solutions, the firm also provides many
business services designed to enhance the productivity and Web
presence of its clients.  Yahoo! has offices in the United States,
Europe, Asia, Latin America, Australia and Canada.

YHOO - Yahoo!  $44.85

PLAY (sell naked put):

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

SELL PUT  APR 40    YHQ PH    9570   0.60  39.40   5.1%   1.5% *
SELL PUT  APR 42.5  YHQ PV   10433   1.30  41.20   9.0%   3.2%



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

DNA - Genentech  $106.82  *** Near Multi-Year Highs! ***

Genentech (NYSE:DNA) is a biotechnology firm using human genetic
information to discover, develop, manufacture and commercialize
biotherapeutics for significant unmet medical needs.  The company
manufactures and commercializes 10 biotechnology products directly
in the United States.  These include Herceptin, Rituxan, TNKase,
Activase, Cathflo Activase, Nutropin Depot, Nutropin AQ, Nutropin
human growth hormone, Protropin and Pulmozyme.  The company also
licenses several additional products to other companies and its
product development efforts, including those of its collaborative
partners, cover a wide range of medical conditions, including
cancer, respiratory disorders, cardiovascular diseases, endocrine
disorders and inflammatory and immune problems.

DNA - Genentech  $106.82

PLAY (conservative - bullish/credit spread):

BUY  PUT  APR-90.00  DNA-PR  OI=1864  ASK=$0.60
SELL PUT  APR-95.00  DNA-PS  OI=3358  BID=$1.10
INITIAL NET-CREDIT TARGET=$0.55-$0.65
POTENTIAL PROFIT(max)=14% B/E=$94.45


__________________________________________________________________

FDX - FedEx  $71.59  *** Favorable Earnings Outlook! ***

FedEx Corporation (NYSE:FDX) provides transportation, e-commerce
and supply chain management services.  Services offered by FedEx
include worldwide express delivery, ground small-package delivery,
less-than-truckload freight delivery, global logistics, supply
chain management and customs brokerage, and facilitation as well
as electronic commerce solutions.  The firm offers its integrated
business solutions through a wide range of operating companies.
In February, the company acquired Kinko's, a provider of document
solutions and business services.

FDX - FedEx  $71.59

PLAY (less conservative - bullish/credit spread):

BUY  PUT  APR-65.00  FDX-PM  OI=2835  ASK=$0.30
SELL PUT  APR-70.00  FDX-PN  OI=1383  BID=$1.10
INITIAL NET-CREDIT TARGET=$0.85-$0.90
POTENTIAL PROFIT(max)=20% B/E=$69.15



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

AFCI - Advanced Fibre Comm.  $22.23  *** Contract Concerns! ***

Advanced Fibre Communications (NASDAQ:AFCI) develops, manufactures
and supports a family of telecommunications access products and
services.  The firm's products and services enable the connection
between the central office switches of telecommunications service
providers and their end users for voice and high-speed Internet,
data and video communications.  Their products include integrated
multi-service access platforms, central office switching platforms,
optical add-drop multiplexers, integrated access devices, network
element management systems and cabinets, as well as many related
professional services.

AFCI - Advanced Fibre Comm.  $22.23

PLAY (sell naked call):

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

SELL CALL  APR 25    AQF DE    2578   0.50  25.50   8.8%   2.0% *
SELL CALL  APR 22.5  AQF DX    6773   1.30  23.80  15.3%   5.5%


__________________________________________________________________

FLSH - M-Systems Flash  $19.61  *** In A Trading Range? ***

M-Systems Flash Disk Pioneers (NASDAQ:FLSH) is a developer,
manufacturer and marketer of data storage products, which
provide the functionality of a mechanical hard drive on a
solid-state silicon chip.  The company's products are based
on its patented TrueFFS technology, and include both removable
and non-removable data storage media in a range of capacities,
interfaces and form factors.  M-Systems has three major product
lines: the DiskOnChip, DiskOnKey and Fast Flash Disk product
families.

FLSH - M-Systems Flash  $19.61

PLAY (sell naked call):

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

SELL CALL  APR 22.5  FFU DX    1515   0.25  22.75   5.6%   1.1% *
SELL CALL  APR 20    FFU DD    1325   0.95  20.95  13.2%   4.5%



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

BBBY - Bed Bath & Beyond  $39.04  *** Next Leg Down? ***

Bed Bath & Beyond (NASDAQ:BBBY) is an operator of stores selling
predominantly better quality domestics merchandise and other home
furnishings typically found in better department stores.  The
company operates hundreds of Bed Bath & Beyond stores in the U.S.
and one territory.  Domestics merchandise includes bed linens and
related items, bath items and kitchen textiles.  Home Furnishings
include kitchen and tabletop items, fine tabletop and giftware,
basic house-wares and general home furnishings.

BBBY - Bed Bath & Beyond  $39.04

PLAY (less conservative - bearish/credit spread):

BUY  CALL  APR-45.00  BHQ-DI  OI=1144  ASK=$0.15
SELL CALL  APR-42.50  BHQ-DV  OI=3391  BID=$0.40
INITIAL NET-CREDIT TARGET=$0.25-$0.30
POTENTIAL PROFIT(max)=11% B/E=$42.75


__________________________________________________________________

MSTR - MicroStrategy  $52.64  *** Revenge Play! ***

MicroStrategy (NASDAQ:MSTR) is a global leader in the increasingly
critical business intelligence software market.  Large and small
firms alike are harnessing MicroStrategy's business intelligence
software to gain vital insights from their data to help them
proactively enhance cost-efficiency, productivity and customer
relations and optimize revenue-generating strategies.  The firm's
business intelligence platform offers exceptional capabilities that
provide organizations, in virtually all facets of their operations,
with user-friendly solutions to their data query, reporting, and
advanced analytical needs, and distributes valuable insight on
this data to users via web, wireless, and voice.

MSTR - MicroStrategy  $52.64

PLAY (conservative - bearish/credit spread):

BUY  CALL  APR-65.00  EOU-DM  OI=675  ASK=$0.55
SELL CALL  APR-60.00  EOU-DL  OI=950  BID=$1.10
INITIAL NET-CREDIT TARGET=$0.60-$0.70
POTENTIAL PROFIT(max)=14% B/E=$60.60



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
STRADDLES AND STRANGLES
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

__________________________________________________________________

No straddles or strangles today.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

SEE DISCLAIMER - SECTION 1

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


***********************************************
2004 Stock Traders Almanac, Mousepad and Video
***********************************************

Those readers who did not sign up for the end of year
special and would still like to get a Stock Traders
Almanac this is your chance.

For only $44.95 you will get:

2004 Stock Traders Almanac - $34.95 value
2004 Option Expiration Mousepad - $14.95 value
Intro to Options Trading Success Video - $84.95 value

We had a few sets left and they are $44.95 per set.

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=3594857663

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


**********
Watch List
**********

Buy The Dip Opportunities

___________________________________________________________________

How to use this watch list:
  Readers can use the candidates below as a springboard for their
  own research.  Many are in the process of breaking support or
  resistance or in the process of starting new trends or
  extending old ones.  With your own due diligence these could be
  strong potential plays.
___________________________________________________________________


Legg Mason Inc - LM - close: 92.45 change: +1.93

WHAT TO WATCH: Wall Street's biggest brokerage firms have begun
announcing earnings this week.  LEH started it off on Tuesday.
BSC announced today.  Both have beaten analysts' estimates as
expected.  MWD is due to report tomorrow and GS announces next
week.  With earnings soaring investor attitude should remain
bullish.  LM doesn't announce until May so we don't have to worry
about any post-earnings "sell the news".  That allows bulls to
focus on today's bounce from the $90.00 level and its 50-dma
support.  There is resistance near $95 but this still looks like
an entry point.

Chart=


---

Coach Inc - COH - close: 41.12 change: +0.97

WHAT TO WATCH: Luxury goods retailer COH broke out above
resistance at $40.00 in early March and rallied toward the $45
level.  When the selling hit last week the stock pulled back
toward the $40 level, which had now become support.  We like how
the stock has built a little base at $40 over the last few days
and today's bounce looks like a bullish entry point to catch
another run toward $45.00.

Chart=


---

Borg Warner - BWA - close: 87.64 change: +1.67

WHAT TO WATCH: BWA has been a frequent candidate on our watch
list.  The stock broke down below the $90 level of support
several days ago and has continued to slip toward minor support
at $85.00.  The recent bounce back above the simple 10-dma looks
like a tempting entry point for longs but it would be an
aggressive play.  Short-term technicals like the RSI and
stochastics are positive and its MACD is hinting at a potential
turnaround.  The challenge is overhead resistance both at $90 and
the 50-dma near 91.90. Bears can look for a failed rally under
$90.00 to consider new short positions.

Chart=


---

Pharmaceutical Research - PRX - close: 57.83 change: -1.17

WHAT TO WATCH: The markets are up two days in a row and that
makes the weakness in PRX really stand out.  The stock has broken
support at its 50 and 200-dma's. It has broken support at the
$60.00 level and its technicals are all pointing lower.
Conservative traders might want to use a trigger under the
February low of $57.35 and target a move toward the $52.50
region.

Chart=



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

PDCO $68.86 -0.33 - This stock might be a bullish candidate if it
can breakout over the $71 level.


*******************
FREE TRIAL READERS
*******************

If you like the results you have been receiving we
would welcome you as a permanent subscriber.

The monthly subscription price is $49.95. The quarterly
price is $129.95 which is $20 off the monthly rate.

We would like to have you as a subscriber. You may
subscribe at any time but your subscription will not
start until your free trial is over.

To subscribe you may go to our website at

www.OptionInvestor.com

and click on "subscribe" to use our secure credit
card server or you may simply send an email to

 "Contact Support"

with your credit card information,(number, exp date, name)
or you may call us at 303-797-0200 and give us the
information over the phone.

You may also fax the information to: 303-797-1333


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

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


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

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

Contact Support



DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives