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Daily Newsletter, Tuesday, 04/20/2004

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The Option Investor Newsletter                 Tuesday 04-20-2004
Copyright 2004, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Greenspamed Again
Futures Markets: See Note
Index Trader Wrap: Greenspan puts thoughts of deflation to bed
Market Sentiment: Rate Fears Loom Again


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      04-20-2004           High     Low     Volume   Adv/Dcl
DJIA    10314.50 -123.40 10487.67 10313.58 1.95 bln  763/2498
NASDAQ   1978.63 - 41.80  2032.41  1978.63 1.92 bln  965/2243
S&P 100   547.10 -  8.68   557.55   547.10   Totals 1728/4741
S&P 500  1118.15 - 17.67  1139.26  1118.09
W5000   10931.10 -170.90 11140.80 10931.06
SOX       469.70 - 17.30   490.32   469.69
RUS 2000  575.81 - 11.14   591.96   575.79
DJ TRANS 2911.27 - 12.50  2954.51  2909.98
VIX        16.67 +  1.25    16.72    14.79
VXO (VIX-O)16.51 +  1.28    16.59    14.74
VXN        23.07 +  1.67    23.12    21.01
Total Volume 4,231M
Total UpVol    739M
Total DnVol  3,464M
Total Adv  1991
Total Dcl  5353
52wk Highs  254
52wk Lows   113
TRIN       1.03
NAZTRIN    1.52
PUT/CALL   0.81
************************************************************

Greenspamed Again
by Jim Brown

It was supposed to be a calm day with no doomsday comments
from Alan Greenspan as he talked about the banking system.
The prepared comments were tame and nobody got excited but
the Q&A turned up the heat. Just as in the past several
supposedly tame comments suddenly triggered a mass exodus
and the Dow dropped more than -150 points in the last hour.
Wonder what he is thinking tonight about his major appearance
before the joint economic committee tomorrow?

Dow Chart - Daily


Nasdaq Chart - Daily


Semiconductor Sector - Daily



It definitely was not economics that tanked the markets today
because there was only one report. The Chain Store Sales rose
+1.0% last week as consumers spent their tax refunds on spring
items and nobody is complaining about that. This was the third
week of increasing gains and some analysts think it is also
a factor showing increasing job growth. I think that is a
stretch but I report, you decide. Analysts are expecting sales
to slow in April to +5% from the +7% rate in March. They are
suggesting the calendar and the weather accelerated buying
a couple weeks earlier than normal.

The bad news that tanked the market was actually good news.
Greenspan said the health of the banking sector was very good
and they would not be hurt by rising interest rates. What
rising rates? Traders were quick to translate that comment
into the logical progression that the Fed was going to raise
rates soon. Why else should the Fed head say they were in
good shape for the coming change. Secondly he said "American
companies had regained some pricing power" and that was one
of the items on the list that needed to be checked off before
the Fed could act. Strike two for the markets. If that was
not enough he continued praising the strength of the economy
and expressed his confidence that jobs would rise strongly.
All good news for the economy but not for the interest rate
outlook. The third strike came when he said the deflation
monster was dead. He said "deflation was no longer a potential
problem" leaving the Fed could concentrate on controlling
inflation. Oops! Without the risk of deflation to keep the
Fed in check and with inflation appearing in almost every
report Greenspan is clear to act. The only weapon in his
arsenal to slow inflation is the interest rate club. He was
clearly dusting it off today and the market cowered in fear.

One quick question. Is there anybody in the market today that
did not know interest rates were about to go up? I seriously
doubt it. Now the $64K question. Why did the market take it
so hard? The market died because the time table suddenly
jumped from Sept/Jan to June/August and right in the middle
of the six month equity window. The Fed funds futures jumped
to a 35% chance of a hike in June and a 100% chance of a hike
in August. They are also indicating a potential 100 basis point
hike by January. To go from a standing start to +100 points
(four quarter point hikes) over the next eight months was
simply too big a leap for the bulls. Confusion is running
rampant and Greenspan speaks again tomorrow on economic
policy. How much more good news can the bulls take? The next
Fed meeting is May 4th, two weeks from today and there is
always an outside chance the Fed could jump start the process
beginning in May. No reasonable analyst is suggesting that
but with an election looming the Fed may want to act soon and
avoid a rate hike immediately before the election. They could
hike in May and again in June then rest until November. The
August and September meetings would be speed bumps where the
threat of a hike could be as effective as a hike without the
political impact. In order for this to work they would have
to act quickly to get the first ones on the board.

The challenge for the Fed is employment and the summer doldrums.
They really need to see if jobs were created in April and that
report is due out on Friday May 7th and the FOMC meeting is
Tuesday May 4th. You and I both know the Fed will have the
numbers in advance of the release. That would suggest another
blowout jobs number could trigger a hike in May to shock the
market and start the process. No hike at the May-4th meeting
will instantly create serious discussions about the coming
jobs report. That same week we have the ISM report (Monday)
Layoffs, Factory Orders, Productivity, Wholesale Trade and
others. Plenty of data for the Fed to analyze for their
Tuesday decision.

McTeer had already set the stage this morning by saying the
Fed could raise rates and still be seen as accommodative.
This was another implied warning for those that refuse to
believe that the Fed is coming. He added to this by saying
the unexpectedly sharp rise in the March Consumer Price
index was disturbing. His comments probably tilted the
sentiment into the worry column and Greenspan's comments
finished the job.

Like I said above, nobody is suggesting the Fed will hike in
May. It is the worry that they COULD hike suddenly that put
the fear in the market. Greenspan was seen as clearing all
the roadblocks off the table in an appearance that was not
seen as a policy event. Traders were suddenly afraid the
policy discussion due on Wednesday could be much more hawkish
and profits from last weeks rebound were quickly taken.

I mentioned on Sunday that there was no real catalyst to
move the markets higher despite the better than expected
earnings. We had the expiration bounce on Friday and rather
listless trading so far this week. After today's drop it
is going to take a serious catalyst to move them higher.

After the bell today we had a strong report from Motorola
which beat estimates of seven cents with a whopping +25 cents.
Troubles at Nokia were apparently rainbows for Motorola. If
you remember I posed that question two weeks ago when NOK
warned. They said the sector grew 25% for the quarter and
I suggested somebody got the business since it was not NOK.
Evidently MOT was standing at the head of the line. MOT also
raise estimates for the current quarter and the stock shot
up +25% in after hours trading. While MOT may bounce semi
stocks on Wednesday the news from the rest of the sector was
not as positive. Other chip/tech companies reporting tonight
included AMCC which beat by two cents, SIMG and SANM beat by
a penny, STK, STX and MKSI announced inline, PSEM missed by
a penny. WEBX beat by a penny and lost -$4.50 in after hours
on guidance. Obviously the broader results were less exciting
for that sector. Nasdaq futures are only up slightly in after
hours.

Stocks were not the only major movers today. The dollar
soared to a five month high and gold fell under $400 once
again. Bonds dropped but not as much as you would have
expected with the yield on the ten year still hovering in
the 4.41% range. The bonds have been early to this move
with a major sell off over the last two weeks. Stocks are
finally catching up.

The Dow rose to within 13 points of 10500 this morning but
closed within 16 points of 10300 this afternoon. With that
move it covered its entire range for the last week. Today's
drop took it below the 50 and 100dma and the uptrend support
dating back to August. 10325 was support for two days last
week and today's close was the lowest close since March 29th.

The Nasdaq lost -42 points to close at 1979 and also the
lowest level since March 29th. The 29th was a major gap up
day and a touch of 1962 would fill that gap. I suspect a
drop to 1962 will be the least of our problems. Should we
move below 1960 I think the Nasdaq has risk to 1900 or
lower.

On the surface we appear to be oversold from today's drop.
However, the risk of a more in-depth policy clue from Alan
Greenspan on Wednesday suggests we are not going to rebound
out of the gate. We are seeing a minor bounce to the futures
overnight and we could see some gains at the open but I
would not bet on it. I have mentioned before that the market
looks for excuses to explain major moves. Everyone knew
earnings were going to be strong. Everyone knew rates were
about to go up. Everyone knew Greenspan was going to speak
today and tomorrow. I doubt anyone expected him to give the
"Fed will be patient for a considerable period" speech. The
market is priced to perfection for the current earnings and
interest rate environment and a sudden change in that status
quo will force an adjustment in stock prices. Contrary to
public opinion stocks do go up in rising rate environments.
Under the most pessimistic rate threat of a +1% hike over the
next 12 months we would still only be at a 2% Fed funds rate.
Those traders who have been in the market for longer than a
couple years would not worry about the long term impact of
a 2% Fed rate. The market is simply adjusting to the new
environment and used the change as an excuse to take profits.

The electric shock rocket short-circuited today and those
holding the stock received a shock to their portfolio. Yes,
TASR fell back to earth today with a -$34.55 loss (-28%)
on better than expected earnings. Yes, TASR beat the street
by two cents when traders were hoping for a couple dollars
if you believe the gains in the stock over the last couple
of weeks. Revenue soared +300% to $13.1 million for the
quarter. Yes, $13 million not billion. The company had a
market cap yesterday of $1.5 billion but that was cut by
nearly a third today. Everyone knew it would eventually
end badly but not necessarily all in one day. TASR has 9.3
million shares available for trading and nearly 50% of that
total was short according to the latest numbers. However
32 million shares were traded today, nearly four times the
number of shares available. That is even more amazing if
you take into account the 3.5 million held by institutions.
I suspect more than one trader bought the dip today thinking
the misfire in the shock rocket was a buying opportunity.

Tomorrows trading could be hazardous. Volatility has
returned and sentiment took a severe hit today. We have
Greenspan speaking again on economic policy and the Fed
Beige book. It could be the 1-2 punch or it could be all
smoke and mirrors. I would be very careful about any long
positions unless Greenspan has a change of heart after today
and eats his words on national TV. If he rescues the "patient
Fed image" from near death then the markets could also rise
from the ashes. Just don't bet the family fortune without
some serious confirmation.

Enter Passively, Exit Aggressively.

Jim Brown
Editor


***************
FUTURES MARKETS
***************

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



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

Greenspan puts thoughts of deflation to bed

Traders sold just about everything except the dollar when Fed
Chairman Alan Greenspan testified before the Senate Banking
Committee late this afternoon, where the Fed Chairman laid to
rest past worries that deflation posed a threat to the economy.

Greenspan expressed no concern that inflation was too strong, but
put to rest past worries that deflationary pressures were a
threat.  Regarding deflation, Mr. Greenspan commented that
deflationary pressures, "which were a significant concern last
year, by all indications are no longer an issue for us" as
"pricing power is gradually being restored."

"Inflationary pressures will be reasonably well contained so long
as productivity is moving at a reasonably good clip, and unit
labor cots, as best we can judge, are still going down," he said.

Greenspan made the comments in response to questions at the
Senate Banking Committee during testimony on bank regulation. He
made no comments on the economy in his prepared testimony.

Greenspan's comments once again had traders struggling with the
thought that higher interest rates are their way.

Market Snapshot / Internals - 04/20/04 Close



I can't explain today's last two-hour reaction to Fed Chairman
Alan Greenspan's comments.  I thought investors and traders had
some inkling that the Fed might eventually tighten rates, but
just after Greenspan began talking, the mere thought of any Fed
tightening had buyers vanishing with the major indices closing at
their lows of the session.

Treasuries, which had found early morning selling to then trade
relatively unchanged just as Greenspan began speaking saw a surge
of selling into their close, with the benchmark 10-year yield
($TNX.X) jumping 4.3 basis points to finish out with a 4.415%
yield.

Stock futures did edge up in after-hours trade when handset
chipmaker Motorola (NYSE:MOT) $16.22 -2.87% reported quarterly
earnings that blew away Wall Street's estimates.  Last tick on
Motorola had the stock jumping 20% to $19.51 over the New York
ECNs.

After-hours earnings -



After-hours earnings look to be generally inline or higher than
analysts average estimates.

Pivot Analysis Matrix



It wasn't until 02:35 PM EDT that the major indices (INDU, SPX,
OEX, NDX/QQQ) saw firm breaks below their WEEKLY Pivots.  Once
the mid-session lows were violated, it was almost as if today was
the first time market participants really thought the Fed might
eventually raise rates.

Tomorrow, Greenspan is scheduled to testify in front of the Joint
Economic Committee, giving in-depth comments on the economy.

AMEX Gold Bugs ($HUI.X) - Daily Intervals



The dollar continued its torrid climb from the 03:00 PM EDT hour
and traded its MONTHLY R2 the dollar strengthened further on Mr.
Greenspan's comments.  Precious metals along with many industrial
metals witnessed sharp declines in today's trade, where the once
coveted AMEX Gold Bugs Index ($HUI.X) continues to break down,
with today's trade seeing a break of the 200-day SMA.

June Copper futures (hg04m) $1.311 -3.39% dropped more than 4.5
cents on Greenspan's comments, while rumors that China, which had
been a big buyer of copper the past year was starting to sell the
industrial metal, weighed on the metal.

Semiconductor Index (SOX.X) - Daily Intervals



Earlier this morning I posted the SOX.X chart in the Market
Monitor and noted that some resistance at the WEEKLY Pivot seemed
to be keeping gains in the QQQ to a minimum.

Traders in the Market Monitor may have used that observation to
trade a day trade bearish in the QQQ from $36.72, where I had a
downside target to QQQ $36.40 (just above DAILY Pivot of $36.39).
Believe me when I say it was like pulling teeth to get the QQQ to
trade $36.40 when buyers stood firm at $36.41.  It wasn't until
Greenspan's testimony that the Q's finally gave up their WEEKLY
Pivot of $36.41.

Note resistance correlations around QQQ $36.41 in tomorrow's
pivot matrix.

NASDAQ-100 Tracker (QQQ) - Daily Intervals



I can only shake my head and wonder how the QQQ can trade tighter
range of $36.78-$35.41 for the bulk of the session, then
suddenly, bids disappear from the WEEKLY Pivot and Q's close out
at their MONTHLY Pivot of $35.68.

I've marked tomorrow's DAILY R1 and DAILY S2, where in a rather
continued and unpredictable QQQ spat of volatility, who knows how
the market will interpret tomorrow's comments from Greenspan.

The QQQ's last tick in after-hours was $35.88.

S&P 500 Index Chart - Daily Intervals



Just as bids (buyers) seemingly disappeared when the QQQ broke
below its WEEKLY Pivot, it wasn't until the SPX broke its 12:00
PM EDT low of 1,133 that a sell program premium was generated
(first one since very early in the morning) where the SPX cut
lose to close at its lows of the session.

While today's 8% jump in the VIX.X may seem like a lot, and it
is, either bulls are showing some complacency, or institutions,
which will be buyers of puts to hedge bullish positions don't see
the threat of rising rates being a negative for the broader
equity markets.

For those still holding puts from the 1,125 level, I'd error on
the side of caution and should the SPX trade back near its WEEKLY
S2 tomorrow, look to take profits.

Dow Industrials (INDU) Chart - Daily Interval



The INDU looks vulnerable to the 10,200 level and even the "blue
chips" saw bids suddenly disappear.  Even the more defensive drug
components like MRK -1.55%, JNJ -1.46% and PFE -2.34% fell to
their close.  I've yet to fully grasp how higher rates might
impact the drug sector.

Jeff Bailey


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

Rate Fears Loom Again
- J. Brown

The stock market was effectively Greenspammed in the last hour of
trading as investors ran for cover after Alan told the Senate
that the deflation-monster was dead.  Traders immediately
translated his words to mean that inflation was the main threat
and that the Federal Reserve would need to raise rates sooner
rather than later to fight inflation.  The damage was widespread
with only the XAL airline index closing in the green.  Housing
stocks were pummeled and gold stocks plummeted.  Market internals
were very bearish.  Declining stocks trounced advancing issues 3-
to-1 on the NYSE and 22 to 9 on the NASDAQ.  Down volume was
almost five times up volume on the NYSE and the NASDAQ.  Overall
volume was a lot stronger than we've seen the last few sessions.

Noted below you'll see the spike in volatility as investors
rushed to buy puts and protect themselves and/or profit from the
drop.  Considering that the volatility indices are still near
their lows we could see several days of declines before fear
really sets in.  Investors are completely ignoring the strong
earnings data and choosing to focus on the interest rate issue,
which seems overdone.  A 1/4 point or 1/2 point rise in rates is
not going to derail the economy so patient investors may just
want to sit out for a couple of days as the market readjusts.
Then we can hopefully gauge a new entry point for the rebound.

Noteworthy earnings reports tomorrow morning are Dow components
KO, SBC and UTX.  Plus, we'll hear from CFC, EK, F, JPM  and SIRI
just to pick out a few of the dozens of companies reporting
tomorrow.


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  8235
Current     : 10314

Moving Averages:
(Simple)

 10-dma: 10436
 50-dma: 10441
200-dma:  9924



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  879
Current     : 1118

Moving Averages:
(Simple)

 10-dma: 1134
 50-dma: 1133
200-dma: 1068



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1051
Current     : 1436

Moving Averages:
(Simple)

 10-dma: 1472
 50-dma: 1457
200-dma: 1402



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

The sudden drop in the markets at the end of the day did send
the volatility indices spiking as traders rush to buy puts and
protect positions.  These indices remain near their lows which
suggest we could still see several days of weakness before
investors truly feel fearful.

CBOE Market Volatility Index (VIX) = 16.67 +1.25
CBOE Mkt Volatility old VIX  (VXO) = 16.51 +1.28
Nasdaq Volatility Index (VXN)      = 23.07 +1.67

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.81        833,531       677,967
Equity Only    0.69        699,494       482,043
OEX            1.03         20,975        21,701
QQQ            3.19         27,115        86,456


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

Bullish Percent Data

           Current   Change   Status
NYSE          78.3    - 4     Bull Confirmed
NASDAQ-100    54.0    + 0     Bear Correction
Dow Indust.   90.0    + 0     Bear Correction
S&P 500       75.8    + 0     Bear Confirmed
S&P 100       79.0    + 0     Bull Correction


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

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


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

 5-dma: 1.55
10-dma: 1.48
21-dma: 1.24
55-dma: 1.24


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


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

Market Internals

            -NYSE-   -NASDAQ-
Advancers     676       897
Decliners    2163      2223

New Highs      62        83
New Lows       42        36

Up Volume    371M      318M
Down Vol.   1572M     1542M

Total Vol.  1950M     1883M
M = millions


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

Commitments Of Traders Report: 04/12/04

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

Small specs are the general trading public with commercials being
financial institutions. Commercials are historically on the
correct side of future trend changes while small specs tend
to be wrong.

S&P 500

We continue to see little change in commercial traders' positions.
Small traders are adding to positions and remain bullish although
there is a decent jump in new shorts.


Commercials   Long      Short      Net     % Of OI
03/23/04      401,456   418,732   (17,273)   (2.1%)
03/30/04      407,987   420,624   (12,673)   (1.5%)
04/06/04      409,429   419,471   (10,042)   (1.2%)
04/12/04      412,827   419,910   ( 7,083)   (0.9%)

Most bearish reading of the year: (111,956) -  3/06/02
Most bullish reading of the year:   23,977  - 12/09/03

Small Traders Long      Short      Net     % of OI
03/23/04      130,648    89,943    40,705    18.5%
03/30/04      130,112    81,937    48,175    22.7%
04/06/04      130,262    80,174    50,088    23.8%
04/12/04      135,840    89,090    46,750    20.8%

Most bearish reading of the year:  (1,657)- 5/27/03
Most bullish reading of the year: 114,510 - 3/26/02


E-MINI S&P 500

Commercials have reduced the long positions and added to their
shorts, which is bearish for the markets.  Small traders remain
net long and have increased their bullish positions significantly.


Commercials   Long      Short      Net     % Of OI
03/23/04      268,647   294,930    (26,283)  ( 4.7%)
03/30/04      265,492   305,797    (40,305)  ( 7.1%)
04/06/04      270,904   328,862    (57,958)  ( 9.7%)
04/12/04      261,889   341,163    (79,274)  (13.1%)

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year:  133,299   - 09/02/03

Small Traders Long      Short      Net     % of OI
03/23/04      131,879     59,210    72,669    38.0%
03/30/04      123,494     59,550    63,944    35.0%
04/06/04      148,737     46,235   102,502    52.6%
04/12/04      172,473     52,274   120,199    53.5%

Most bearish reading of the year: (77,385)  - 09/02/03
Most bullish reading of the year: 449,310   - 06/10/03


NASDAQ-100

Almost no change in commercial traders' positions here.
The same can be said for small traders.


Commercials   Long      Short      Net     % of OI
03/23/04       52,014     34,017    17,997   20.9%
03/30/04       52,749     67,967   (15,218) (12.6%)
04/06/04       54,862     34,762    20,100   22.4%
04/12/04       54,144     34,432    19,712   22.3%

Most bearish reading of the year: (21,858)  - 08/26/03
Most bullish reading of the year:  13,386   - 03/16/04

Small Traders  Long     Short      Net     % of OI
03/23/04        9,884    12,887    (3,003)  (13.2%)
03/30/04        8,928    16,551    (7,623)  (30.0%)
04/06/04        7,971    20,721   (12,750)  (44.4%)
04/12/04        8,297    20,746   (12,449)  (42.9%)

Most bearish reading of the year: (10,769) - 06/11/02
Most bullish reading of the year:  19,088  - 01/21/02

DOW JONES INDUSTRIAL

Still no change in commercial traders' positions here either.
It's an even race between longs and shorts.  Small traders
have actually grown more bearish.


Commercials   Long      Short      Net     % of OI
03/23/04       23,048    22,119      929       2.1%
03/30/04       23,642    22,180    1,462       3.2%
04/06/04       23,101    22,108      993       2.2%
04/12/04       23,501    22,748      753       1.6%

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

Small Traders  Long      Short     Net     % of OI
03/23/04        8,344     6,734    1,610     10.7%
03/30/04        7,020     6,711      309      2.3%
04/06/04        7,316     8,085     (769)    (5.0%)
04/12/04        6,136     7,450   (1,314)    (9.7%)

Most bearish reading of the year: (12,106) -  3/09/04
Most bullish reading of the year:   8,523  -  8/26/03

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


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The Option Investor Newsletter                  Tuesday 04-20-2004
Copyright 2004, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: AET, CAT, EBAY, PDCO
Dropped Puts: None
Call Play Updates: BEC, ESRX, WFMI, ZBRA
New Calls Plays: MIK
Put Play Updates: AMG, LEH, PD, QLGC, UTSI
New Put Plays: None


****************
PICKS WE DROPPED
****************

When we drop a pick it doesn't mean we are recommending a sell
on that play. Many dropped picks go on to be very profitable.
We drop a pick because something happened to change its
profile. News, price, direction, etc. We drop it because we
don't want anyone else starting a new play at that time.
We have hundreds of new readers with each issue who are
unfamiliar with the previous history for that pick and we
want them to look at any current pick as a valid play.


CALLS:
*****

Aetna Inc. - AET - close: 86.01 change: -2.68 stop: 83.50

Although it started off in the right direction, our AET play has
clearly failed in its bullish attempt.  The stock ran up to
almost kiss the 20-dma ($89.79) yesterday before the sellers
leaned on the stock in a big way today.  While AET hasn't yet
broken below the $85 support level, the way price peeled off at
the end of the day suggests that any hope for a strong upside
move has been erased.  Rather than wait for another bounce
attempt, we're going to pull the plug tonight before the damage
gets any worse.  Any oversold rebound tomorrow should be used as
a gift of an exit point, not an invitation to new entries.

Picked on April 18th at      $87.40
Change since picked:          -1.39
Earnings Date               4/29/04 (confirmed)
Average Daily Volume =     1.58 mln
Chart =


---

Caterpillar - CAT - close: 79.98 change: -1.02 stop: 79.99

Dow-component CAT was actually holding up pretty well until the
sell-off began in the last hour of trading.  As the selling
velocity picked up speed CAT broke through support at $80.00 and
crossed our stop loss at $79.99.  The close under this level is
bearish as is the new sell signal on its MACD indicator.  The
company is due to announce earnings on Thursday so we had to
close it tomorrow anyway.

Picked on April 02 at $ 80.25
Change since picked:   - 0.27
Earnings Date        04/22/04 (confirmed)
Average Daily Volume:     2.5 million
Chart =


---

eBay Inc - EBAY - close: 73.97 change: -2.03 stop: 73.80

We mentioned in the MarketMonitor today that the EBAY managed to
hit another new all-time high shortly after the opening bell but
quickly faded back toward the $75 level.  Our note in the monitor
also said that if EBAY closed under $75 we'd probably close the
play tonight instead of Wednesday afternoon since EBAY is due to
announce earnings after the closing bell tomorrow.   We're going
to follow through on that suggestion and close EBAY now since it
has broken the $75 mark and the $74 level in addition to painting
a rather bearish candlestick.  Its MACD is also close to
producing a new sell signal from overbought status.

Picked on April 01 at $ 72.25
Change since picked:   + 1.72
Earnings Date        04/21/04 (confirmed)
Average Daily Volume:     7.0 million
Chart =


---

Patterson Dental Co - PDCO - cls: 76.54 chg: -1.47 stop: 77.35

News is still scarce for PDCO but that didn't stop the stock from
coming within 45 cents of our exit target at $79.95 on Monday.
Unfortunately, $79.50 proved to be the top and today's sell-off
began to pick up speed in the afternoon.  Lately PDCO has managed
to ignore the market's volatility but not today and the stock
traded through our stop loss at $77.35 to close near its 10-dma.
Thankfully we were still able to salvage a $5.21 move in the
stock from our entry point.

Picked on April 04 at $ 72.14
Change since picked:   + 4.40
Earnings Date        02/19/04 (confirmed)
Average Daily Volume:     493 thousand
Chart =



PUTS:
*****

None


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********************
PLAY UPDATES - CALLS
********************

Beckman Coulter - BEC - cls: 56.06 chg: -0.49 stop: 53.99

The markets had a rough day on Tuesday but shares of BEC held up
pretty well and even managed to maintain minor support at the $56
level.  Granted we don't believe this level will hold if the
major indices continue to sink.  Traders can probably remain
patient.  If the broader weakness continues then we might get an
entry point closer to stronger support near $54.00.  Of course by
that time BEC's shorter-term oscillators will all look bearish.
We want to reiterate our suggestion to be patient.  There's no
need to rush into any bullish positions.  BEC did confirm that
its earnings report would come out on May 3rd.

Picked on April 18 at $ 56.16
Change since picked:   - 0.10
Earnings Date        05/03/04 (confirmed)
Average Daily Volume:     333 thousand
Chart =


---

Express Scripts - ESRX - close: 78.17 change: -0.44 stop: 74.95

No matter how we look at it, Tuesday was an ugly day in the
market, with large losses across the board.  In light of that
weakness, our ESRX play actually held up fairly well.  Continuing
on the heels of yesterday's bullish move that broke above the
short-term descending trendline, the stock pushed through to a
new high at $79.45 this morning, before rolling over with the
rest of the market in the afternoon.  Support should now come in
near the $77.50 level, with backup support at the 10-dma
($77.13).  A drop much below that level will have the recent lows
in play near $75 and with earnings coming out next Wednesday,
that won't leave much time for another solid rally attempt.
We're leaving our stop in place at $74.95, although more
conservative traders may want to use a tighter stop just below
the 20-dma ($75.74).  Unless we see renewed strength in the broad
market tomorrow, it is hard to justify new entries either on a
pullback near support or on a breakout over today's high.  At
this point, it would probably be a prudent move to harvest gains
on a test of our lower target at $80.

Picked on April 4th at       $75.36
Change since picked:          +2.81
Earnings Date                4/28/04 (confirmed)
Average Daily Volume =     1.05 mln
Chart =


---

Whole Foods Market - WFMI - cls: 78.31 chng: +0.47 stp:
74.50*new*

One of few bright spots in the market on Tuesday, WFMI continued
the rally that began with its rebound off the long-term rising
trendline last week, reaching up to almost touch the March high
with a trade at $79.22.  Succumbing to the broad market selloff
in the afternoon, the stock tipped over and gave back most of its
intraday gains to close just over $78.  Had the stock closed near
its high, things would have looked quite bullish due to the
strong volume.  But with the intraday reversal, we're confronted
with the very real possibility of a double top being formed.  On
the bullish side of the coin, it is encouraging to see the stock
having moved through the $78 resistance level and if the bulls
can regain control tomorrow, we could actually see a bonified
breakout.  Because of the current uncertain situation, we'd
suggest not taking new entries on a pullback to support, instead
focusing attention on a real breakout to new highs.  Note that
we've raised our stop to $74.50 tonight, as that is below both
the ascending trendline ($74.80) and the 50-dma ($75.74).

Picked on April 15th at      $76.01
Change since picked:          +2.30
Earnings Date               5/05/04 (confirmed)
Average Daily Volume =        687 K
Chart =


---

Zebra Technologies - ZBRA - cls: 70.84 chg: -1.77 stop: 69.99

ZBRA was no hero today.  The stock fell along with the tech
sector as investors fled to cash on higher interest rate fears.
Tech stocks, due to their growth nature, are seen as vulnerable
to higher interest rates, which affect borrowing costs.  Today's
candlestick doesn't look very good for ZBRA and if it doesn't
bounce from $70.50 we'll expect to be stopped out quickly.

Picked on April 11 at $ 73.26
Change since picked:   - 2.42
Earnings Date        04/28/04 (unconfirmed)
Average Daily Volume:     332 thousand
Chart =



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

Michaels Stores Inc. - MIK - cls: 51.23 chng: +0.78 stop: 48.50

Company Description:
Michaels Stores, Inc. is an arts and crafts specialty retailer
providing materials, ideas and education for creative activities.
The company operates 770 Michaels retail stores in 48 states, as
well as in Canada.  The stores offer products for the do-it-
yourself home decorator and arts and crafts supplies.  The
company also operates 153 Aaron Brothers stores in nine states,
offering photo frames, a full line of ready-made frames, custom
framing services and a wide selection of art supplies.  In
addition, the Company owns and operates Star Wholesale, a single-
store wholesale operation located in Dallas, Texas, offering
merchandise primarily to interior decorators/designers,
wedding/event planners, florists, hotels, restaurants and
commercial display companies. Michaels also owns and operates
Artistree, a vertically integrated frame and molding
manufacturing operation that supplies molding and framing to the
Michaels and Aaron Brothers stores nationwide.

Why we like it:
This week may have started out in the bears favor, but you sure
wouldn't know it by looking at the price action in shares of MIK.
Rather than showing weakness, the stock launched higher
yesterday, ending very near its all-time highs from last
November.  Ignoring the broad market weakness today, MIK surged
higher again, tacking on a respectable 1.5% by the close, coming
to rest at new all-time highs.  In looking for the catalyst for
this week's bullish action, we can probably attribute a portion
of the strength to the new Outperform rating from William Blair,
which was issued last Friday.  Note the large red candle on the
chart below.  The trade up near $59 is a bad tick, so we can
ignore that.  Turning to the PnF chart, we can see that the stock
bad tick generated an erroneous high pole.  Factoring that out,
the rally through the $46 level back in February put the stock on
a Buy signal and with that column of X pushing through $51 gives
us a bullish price target of $70.

Needless to say, we're unlikely to see anything in that range
during the duration of this play.  But with earnings scheduled
for late May, there's certainly plenty of time for this rally to
play out to significantly higher levels.  The $55 level looks
like a good initial target and we'll use that for now, looking
for further clues to the stock's upside potential as the play
unfolds.  Should MIK pull back to test the $49.00-49.50 level as
new support, that would make for an excellent continuation entry.
Note how the 10-dma ($49.56) provided solid support prior to this
breakout, and we would expect it to continue to provide support
going forward.  Momentum traders should look for new entries on
further strength above today's $51.57 intraday high.  Initial
stops should be placed at $48, which is solidly below the recent
consolidation, as well as the 50-dma ($48.04)

Suggested Options:
Shorter Term: The May $50 Call will offer short-term traders the
best return on an immediate move, as it is currently in the
money.

Longer Term: Aggressive longer-term traders can use the June $55
Call, while the more conservative approach will be to use the
June $50 Call.  Our preferred option is the June $50 strike, as
it is currently in the money and should provide sufficient time
for the play to move in our favor ahead of earnings.

BUY CALL MAY-50 MIK-EJ OI= 389 at $2.20 SL=1.00
BUY CALL JUN-50*MIK-FJ OI= 576 at $2.95 SL=1.50
BUY CALL JUN-55 MIK-FK OI= 340 at $0.80 SL=0.40

Annotated Chart of MIK:



Picked on April 20th at      $51.23
Change since picked:          +0.00
Earnings Date               5/26/04 (confirmed)
Average Daily Volume =        336 K
Chart =



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*******************
PLAY UPDATES - PUTS
*******************

Affiliated Mgrs - AMG - cls: 50.48 chng: -1.28 stop: 53.50*new*

It looks like we got in line with the bears just in time, as AMG
broke down on strong volume yesterday, breaking the 100-dma
($52.30) and cementing the break below the 38% retracement we
mentioned over the weekend.  If there was any question as to the
veracity of the bearish action, it was removed today, with AMG
selling off further on even stronger volume (nearly double the
ADV) and breaching the 50% retracement of the rally from the
November lows.  That brings our exit target in the $48-49 area
into clear focus as a target to be reached later this week.  The
200-dma ($48.56) is almost on top of the 62% retracement and
along with the PnF bearish price target at $49, we should expect
to see a rebound attempt once price reaches that area.  Traders
should look at a dip into that $48-49 area as a signal to harvest
gains and move to the sidelines.  Note that we've aggressively
lowered our stop to $53.50, just over the intraday highs from
late last week.  We are not recommending new positions at this
time.

Picked on April 18th at       $52.91
Change since picked:           -2.43
Earnings Date                4/28/04 (unconfirmed)
Average Daily Volume =         559 K
Chart =


---

Lehman Brothers - LEH - cls: 75.91 chng: -1.80 stop: 78.25*new*

We were clearly a bit nervous over the weekend, looking at the
strength of the rebound in shares of LEH and it certainly looked
like our $80 stop could be threatened early this week.
Fortunately, the rally attempt stalled right below the 10-dma
(now $78.87) and the stock has tipped over hard in the past two
sessions, losing 2.3% today alone.  That marks the worst close
for LEH since late December and it brings our target at the 200-
dma (currently $74.53) into focus as a very real target, possibly
as early as tomorrow.  We're still recommending exits on a touch
of that average, as the first test of that average is likely to
generate another bounce attempt.  Better to harvest the gains and
move to the sidelines.  Obviously, we are not recommending new
entries at this time.  Stops should now be aggressively tightened
to $78.25, just above today's intraday high, and more than likely
above the 10-dma by tomorrow.

Picked on April 6th at        $81.77
Change since picked:           -5.86
Earnings Date                3/16/04 (confirmed)
Average Daily Volume =      2.26 mln
Chart =


---

Phelps Dodge - PD - close: 70.65 chg: -4.26 stop: 74.61*new*

Investors appear to be abandoning ship in shares of PD as copper
futures took a 3.9% nosedive and while stocks turned mostly
weaker on Tuesday afternoon copper was weak all day long.  Shares
of PD dropped 5.68% and are quickly approaching our suggested
exit near the $70 level.  We're actually suggesting traders begin
taking profits now.  However, instead of our usual exit plan to
set an official price point we're going to see if PD can break
support at the $70.00 mark.  Should this occur it could be a
quick drop to historical support and technical support near
$65.00.  We know, we know... this sounds like we're getting
greedy.  After all the failed rally under $76 worked out
perfectly.  Readers might want to consider selling half or a good
chunk of their positions now and leave a small speculative
portion open to see how far PD will drop.  We're lowering the
stop loss to $74.61, which is today's high.

Picked on April 13 at $ 75.15
Change since picked:   - 4.50
Earnings Date        04/28/04 (confirmed)
Average Daily Volume:     2.3 million
Chart =


---

QLogic Corp. - QLGC - close: 27.83 change: -1.08 stop: 29.50*new*

Help, I've fallen and I can't get up!  That statement certainly
applies to shares of QLGC in the past week.  As we suspected,
once the $31 support level broke, there's really been nothing in
the way of support to slow the stock's fall and today saw the
stock notching another 52-week low.  The next level that might
motivate a rebound attempt is found near $25 and there's
certainly nothing wrong with harvesting gains near that level.
QLGC is already down more than 10% from our picked price, so it's
really quite difficult to suggest new entries at this time.
Remember, the company is set to release earnings next Wednesday,
so when the next rebound attempt gets underway, it will probably
spell the end of the play because there will be insufficient time
for another rollover before we need to drop the play ahead of
earnings.  Therefore, it makes sense that we ought to get more
aggressive with our stop.  We're lowering our official stop to
$29.50 tonight, just above the top of the short-term
consolidation that preceded today's breakdown.

Picked on April 13th at       $31.00
Change since picked:           -3.17
Earnings Date                4/28/04 (confirmed)
Average Daily Volume =      4.49 mln
Chart =


---

UTStarcom, Inc. - UTSI - cls: 26.89 chng: -0.91 stop: 28.25*new*

After trying valiantly to put in a new base above $27, UTSI got
slammed lower again on Tuesday, pressured by the extreme weakness
across the Technology sector.  Peeking its nose just over $28
this morning, UTSI didn't maintain that level for long before the
sellers came out to play, driving the stock below recent support
and ending at a fresh 11-month low.  While we're targeting a drop
into the $24-25 area where the stock has strong support, remember
that there's the potential for support to materialize near $26.
With the proximity of earnings (next Tuesday), we don't have the
time to weather an oversold bounce and still have time to ride
the stock lower before having to drop the play ahead of earnings.
That means we need to get more aggressive with our stops, locking
in as much of our gains as possible, while still leaving the door
open for another drop into the end of the week.  We are not
recommending new entries at this time and are aggressively
tightening our stop to $28.25, just over today's intraday high.

Picked on March 30th at       $29.38
Change since picked:           -2.49
Earnings Date                4/27/04 (confirmed)
Average Daily Volume =      3.12 mln
Chart =



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

None


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DISCLAIMER
**********

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


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The Option Investor Newsletter                  Tuesday 04-20-2004
Copyright 2004, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Watch List: Resisting the Sell-off
Spreads & Straddles: "Deflation Is No Longer A Threat..."
Premium Selling Plays: Naked Puts & Calls


**********
WATCH LIST
**********

Resisting the Sell-off

___________________________________________________________________

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.
___________________________________________________________________


C.R.Bard - BCR - close: 100.25 change: +1.45

WHAT TO WATCH: Topping our list tonight is BCR.  The stock
managed to breakout over resistance at $100.00 in spite of the
growing sell-off in the markets.  After the bell the company beat
earnings estimates by 16 cents (not including one-time items).
Hmm.. makes one wonder if the results weren't already known.
Given its relative strength this certainly looks like one to
watch!

Chart=


---

Becton Dickinson - BDX - close: 50.60 change: +0.25

WHAT TO WATCH: The breakout over $50.50 and its pull back to
retest this level as support makes BDX look like a potential
bullish candidate.  As a matter of fact if you squint your eyes
the daily chart on BDX almost looks like a reverse H&S pattern.
Plus, the MACD looks encouraging.  However, traders should
probably wait for BDX to announce earnings on Thursday before
considering positions.

Chart=


---

Stryker Corp - SYK - close: 97.41 change: -1.84

WHAT TO WATCH: SYK has been a big winner for traders during the
month of April boosted by a strong earnings report last week.
The last few days have seen SYK struggle with resistance at the
$100 mark but considering how overbought the stock is it isn't a
surprise.  The company just announced a 2-for-1 split today,
which could help keep the momentum alive since the payable date
is in early May.  We'd look for a bounce from the $95-96 level as
a potential entry point.  However, watch for earnings from rival
ZMH on April 26th as a potential influence on the stock.

Chart=


---

Tiffany & Co - TIF - close: 40.51 change: +0.95

WHAT TO WATCH: TIF managed to buck the trend today and 2.4% rally
to a new relative high.  The move also broke through resistance
at $40.00 and its simple 200-dma on better than average volume.
Normally, that's good news and characteristics of a potential
bullish play.  However, the rally stopped at its descending
trendline of resistance (stretch a line across the late December
high and the early March highs.  TIF's simple 100-dma also
pressured the stock this morning.  We'd look for a move over
$41.50 or maybe $42.00 before considering bullish positions.

Chart=



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

BBY $52.80 -0.20 - We're still watching BBY for a breakout over
the $55.00 mark but today's failure at $54.00 could be bad news.

GDW $100.91 -0.93 - Earlier today we were looking at GDW as a
potential bullish play since shares were bouncing from round-
number support at $100 after reporting earnings this morning.
Unfortunately, that bounce failed.  Now bears can watch it for a
breakdown below its 200-dma.

PRU $42.96 -1.08 - This looked more attractive as a bearish
candidate early in the session but today's breakdown
$43.50 and its 100-dma still looks like an entry for a run
towards its 200-dma.


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*******************
SPREADS & STRADDLES
*******************

"Deflation Is No Longer A Threat..."
By Ray Cummins

Those words, uttered today during a key congressional testimony
by Federal Reserve chief Alan Greenspan, guided share values
sharply lower in afternoon trading.

Investors interpreted his comments as a sign that inflationary
pressures were picking up in the U.S. economy, which could lead
to an increase in interest rates sooner rather than later.  The
Dow Jones Industrial Average sank on the news, down 123 points
at 10,314, despite better than expected earnings from Altria
Group (NYSE:MO), Pfizer (NYSE:PFE) and General Motors (NYSE:GM).
The NASDAQ Composite was down 41 points at 1,978 with computer
hardware issues among the worst performers.  The S&P 500 Index
fell 17 points to 1,118 as gold, oil, REITs, and mining stocks
slumped.  On the broader market, decliners outpaced advancers
by roughly 3 to 1 on both the New York Stock Exchange and the
NASDAQ.  Volume was 1.51 billion on the NYSE and 1.9 billion on
the technology exchange.  Treasury prices fell on concerns about
inflationary pressures.  The 10-year Treasury note slipped 18/32
while its yield, which is used to set mortgage and corporate
borrowing rates, rose to 4.46%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 04/18/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.


PUT-CREDIT SPREADS

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

HSIC    75.81  76.26   MAY  65  70   0.45  69.55   0.45   Open
NAV     49.90  48.53   MAY  40  45   0.60  44.40   0.60   Open
HDI     55.63  58.00   MAY  47  50   0.25  49.75   0.25   Open
PDCO    74.97  78.62   MAY  65  70   0.65  69.35   0.65   Open

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


CALL-CREDIT SPREADS

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

SOHU    25.46  23.14   MAY  35  30   0.60  30.60   0.60   Open
SFNT    31.65  29.66   MAY  40  35   0.70  35.70   0.70   Open
MERQ    45.59  45.68   MAY  55  50   0.60  50.60   0.60   Open
NEM     42.86  43.06   MAY  50  47   0.25  47.75   0.25   Open
RYL     77.41  78.18   MAY  90  85   0.60  85.60   0.60   Open

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


DEBIT STRADDLES

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

LF      19.67  21.97   JUN    20    20     3.50    4.00    Open
BSTE    30.63  40.00   JUL    30    30     6.00   11.50    Open?
MKSI    23.10  21.82   JUL    22    22     4.70    5.50    Open

Biosite (NASDAQ:BSTE) has been the best performing position in
recent weeks, however LeapFrog (NYSE:LF) and MKS Instruments
have also been active, providing favorable short-term gains.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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.

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

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.

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

CME - Chicago Mercantile  $116.11  *** All-Time High! ***

Chicago Mercantile Exchange Holdings (NYSE:CME) is the holding
company for Chicago Mercantile Exchange and its subsidiaries.
CME is a designated contract market for the trading of futures
and options on futures contracts.  Trades are executed through
open outcry, electronic trading and various privately negotiated
transactions.  Through its in-house Clearing House Division, CME
clears, settles, nets and guarantees performance of all matched
transactions in its products.  CME resulted from the completion
of a demutualization process whereby Chicago Mercantile Exchange,
an Illinois not-for-profit membership organization, became a
Delaware for-profit corporation.  The transaction resulted in a
conversion of membership interests in the Illinois organization
into stock ownership in the Delaware corporation.

CME - Chicago Mercantile Exchange  $116.11

PLAY (less conservative - bullish/credit spread):

BUY  PUT  MAY-100.00  CME-QT  OI=111  ASK=$1.25
SELL PUT  MAY-105.00  CME-QA  OI=93   BID=$1.85
INITIAL NET-CREDIT TARGET=$0.65-$0.70
POTENTIAL PROFIT(max)=15% B/E=$104.35


__________________________________________________________________

MATK - Martek Biosciences  $65.12  *** Uptrend Resumes! ***

Martek Biosciences (NASDAQ:MATK) develops and sells products
made from microalgae.  Microalgae are microplants.  The firm
is engaged in the commercial development of microalgae into a
portfolio of high value products and new product candidates
consisting of Nutritional Products, Advanced Detection Systems
and Other Products, primarily Algal Genomics.  Their nutritional
products include nutritional oils for infant formula, dietary
supplementation and other products. Advanced Detection Systems
products include fluorescent dyes from various algae for use
in scientific applications for detection of certain biological
processes.

MATK - Martek Biosciences  $65.12

PLAY (less conservative - bullish/credit spread):

BUY  PUT  MAY-55.00  KQT-QK  OI=285  ASK=$0.35
SELL PUT  MAY-60.00  KQT-QL  OI=548  BID=$1.00
INITIAL NET-CREDIT TARGET=$0.65-$0.70
POTENTIAL PROFIT(max)=15% B/E=$59.35



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

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.

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

AMZN - Amazon.com  $45.20  *** Stalled Rally? ***

Amazon.com (NASDAQ:AMZN) is a website where customers can find
and discover anything they may want to buy online.  The company
lists millions of items in categories such as books, music, DVDs,
videos, consumer electronics, toys, camera and photo items, PC
software, computer and video games, tools and hardware, outdoor
living items, kitchen and house-wares products, toys, baby and
baby registry, travel services and magazine subscriptions.  At
its Amazon Marketplace, Auctions and zShops services, businesses
and individuals can sell virtually any product to millions of
customers, and with Amazon.com Payments, sellers are able to
accept credit card transactions in addition to other methods of
payment.  The company operates a U.S.-based Website: amazon.com,
and four internationally focused Websites: www.amazon.co.uk,
www.amazon.de, www.amazon.fr and www.amazon.co.jp.

AMZN - Amazon.com  $45.20

PLAY (less conservative - bearish/credit spread):

BUY  CALL  MAY-55.00  ZQN-EK  OI=5871  ASK=$0.25
SELL CALL  MAY-50.00  ZQN-EJ  OI=8377  BID=$0.85
INITIAL NET-CREDIT TARGET=$0.65-$0.70
POTENTIAL PROFIT(max)=15% B/E=$50.65


__________________________________________________________________

BOBJ - Business Objects  $27.85  *** Profit-Taking Continues! ***

Business Objects S.A. (NASDAQ:BOBJ) develops, sells and supports
business intelligence software for client/server environments,
intranets, extranets and the Internet.  The three main markets
for BI are enterprise, extranet and analytic applications.  For
enterprise, Business Objects products provide employees with
information to make better business decisions.  Deployments can
range from small workgroups to enterprise deployments exceeding
50,000 users.  For extranet, products allow organizations to
build stronger relationships by linking customers, partners and
suppliers via the world-wide web, and for analytic applications,
products offer packaged practice analytics, alerts driven by
business rules and workflow for specific business users, such as
sales managers or supply chain managers.

BOBJ - Business Objects  $27.85

PLAY (less conservative - bearish/credit spread):

BUY  CALL  MAY-35.00  BBQ-EG  OI=104  ASK=$0.20
SELL CALL  MAY-30.00  BBQ-EF  OI=308  BID=$0.90
INITIAL NET-CREDIT TARGET=$0.75-$0.80
POTENTIAL PROFIT(max)=17% B/E=$30.75



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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.

_________________________________________________________________

COCO - Corinthian Colleges  $32.46  *** Earnings Play! ***

Corinthian Colleges (NASDAQ:COCO) is one of the largest for-profit
post-secondary education companies in the United States.  The firm
serves the large and growing segment of the population seeking to
acquire new, career-oriented education to become more qualified
and marketable in today's demanding workplace environment.  The
company had more than 43,200 students enrolled as of June 30, 2003.
At year-end 2003, the company operated 69 colleges and two training
centers in 21 states, including 18 in California and 12 in Florida.
The company's quarterly earning report is due on 4/28/04.

COCO - Corinthian Colleges  $32.46

PLAY (speculative - neutral/debit straddle):

BUY CALL  MAY-32.50  UCS-EZ  OI=1633  ASK=$1.80
BUY PUT   MAY-32.50  UCS-QZ  OI=891   ASK=$1.90
INITIAL NET-DEBIT TARGET=3.50-$3.60
INITIAL TARGET PROFIT=$1.15-$1.90



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

SEE DISCLAIMER - SECTION 1

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


*****************************************
PREMIUM-SELLING PLAYS: NAKED PUTS & CALLS
*****************************************

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

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 04/18/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

FWHT     MAY    17    17.15   21.01    0.35   4.27%   2.04%
MICC     MAY    17    17.15   23.60    0.35   4.39%   2.04%
MNST     MAY    22    21.95   27.90    0.55   4.48%   2.51%
PLMO     MAY    17    16.90   20.65    0.60   6.80%   3.55%
HNT      MAY    22    22.00   26.05    0.50   4.76%   2.27%
IPXL     MAY    20    19.50   23.24    0.50   5.43%   2.56%
SSNC     MAY    22    21.60   25.00    0.90   7.85%   4.17%
TINY     MAY    15    14.70   18.73    0.30   4.60%   2.04%
ACCL     MAY    17    17.25   17.19   (0.06)  0.00%   1.45%
ADEX     MAY    20    19.45   21.17    0.55   6.05%   2.83%
IMM      MAY    15    14.70   19.44    0.30   5.24%   2.04%
IPXL     MAY    20    19.65   23.24    0.35   4.93%   1.78%
JBLU     MAY    22    22.15   24.60    0.35   4.11%   1.58%
LSCP     MAY    22    21.95   26.97    0.55   6.11%   2.51%
TINY     MAY    17    17.00   18.73    0.50   7.27%   2.94%
USG      MAY    15    14.25   15.46    0.75  11.45%   5.26%
XMSR     MAY    25    24.50   27.32    0.50   4.90%   2.04%
ASKJ     MAY    30    29.50   36.11    0.50   5.42%   1.69%
BRCM     MAY    37    36.70   39.76    0.80   5.86%   2.18%
CLZR     MAY    15    14.25   15.85    0.75  12.47%   5.26%
FWHT     MAY    20    19.35   21.01    0.65   8.83%   3.36%
IMM      MAY    17    17.05   19.44    0.45   8.37%   2.64%
INSP     MAY    35    34.45   39.97    0.55   5.28%   1.60%
MRVL     MAY    42    41.55   44.95    0.95   6.00%   2.29%
NFLX     MAY    27    27.10   30.75    0.40   4.65%   1.48%
ESIO     MAY    22    22.10   23.55    0.40   6.15%   1.81%
HOLX     MAY    20    19.50   22.07    0.50   8.05%   2.56%
GVHR     MAY    25    24.65   28.20    0.35   5.85%   1.42%
HSII     MAY    22    22.25   24.30    0.25   3.81%   1.12%
IMM      MAY    17    17.25   19.44    0.25   6.08%   1.45%
LF       MAY    20    19.55   21.97    0.45   7.54%   2.30%
TOMO     MAY    12    12.25   13.03    0.25   6.96%   2.04%
TSAI     MAY    20    19.80   22.71    0.20   4.37%   1.01%
TSO      MAY    20    19.50   21.25    0.50   8.18%   2.56%

Some of the new positions may not have been available at the
listed prices, due to the recent volatile market activity.
Conservative traders should consider closing positions in
Pharmacopeia (NASDAQ:ACCL), Tom Online (NASDAQ:TOMO), USG
Corporation (NYSE:USG), and Netflix (NASDAQ:NFLX).


NAKED CALLS

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

AFCI     MAY    25    25.75   20.41    0.75   7.73%   2.91%
QLGC     MAY    37    37.95   28.80    0.45   4.22%   1.19%
AVCT     MAY    37    38.15   33.13    0.65   6.74%   1.70%
INTU     MAY    47    48.00   42.09    0.50   4.10%   1.04%
PPCO     MAY    20    20.30   16.39    0.30  10.11%   1.48%


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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.

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

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.

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

NEW NAKED-PUT CANDIDATES

Stock   Strike Strike Cost   Current   Max     Max    Simple
Symbol  Month  Price  Basis   Price   Profit  Yield   Yield

APPX     MAY    35    34.65   44.00    0.35   4.47%   1.01%
EYE      MAY    17    17.20   19.85    0.30   5.96%   1.74%
JCOM     MAY    22    22.30   26.25    0.20   3.37%   0.90%
MGAM     MAY    22    21.90   24.82    0.60   8.55%   2.74%
MICC     MAY    22    22.10   25.50    0.40   6.16%   1.81%
NET      MAY    17    17.10   19.15    0.40   7.30%   2.34%
NIHD     MAY    33    32.88   37.78    0.50   5.22%   1.52%
PXLW     MAY    17    16.95   18.57    0.55   9.31%   3.24%
SNIC     MAY    17    17.15   19.81    0.35   6.87%   2.04%

__________________________________________________________________

APPX - American Pharma Partners  $43.48  *** Premium-Selling! ***

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  $43.48

PLAY (sell naked put):

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

SELL PUT  MAY 35    AQO QG    1480   0.35  34.65   4.5%   1.0% *
SELL PUT  MAY 40    AQO QH    1468   1.35  38.65  10.6%   3.5%


__________________________________________________________________

EYE - Visx  $19.85  *** Bottom-Fishing Only! ***

Visx (NASDAQ:EYE) is engaged in the development of proprietary
technologies and systems for laser vision correction.  Laser
vision correction relies on a computerized laser system to treat
nearsightedness, farsightedness and astigmatism with the goal of
eliminating or reducing reliance on eyeglasses and contact lenses.
The company's Excimer Laser System (the Visx System) ablates or
removes submicron layers of tissue from the surface of the cornea
to reshape the eye, thereby improving vision.  The Visx system
also treats certain types of corneal pathologies in an outpatient
procedure known as PhotoTherapeutic Keratectomy.  The company's
significant customers include Laser Vision Centers, and TLC Laser
Eye Centers.

EYE - Visx  $19.85

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  EYE QW     105   0.30  17.20   6.0%   1.7% *


__________________________________________________________________

JCOM - j2 Global Communications  $26.25  *** Entry Point? ***

j2 Global Communications (NASDAQ:JCOM) provides outsourced value
added messaging and communications services to individuals and
businesses throughout the world.  The company offers faxing and
voicemail solutions, Web initiated conference calling, document
management solutions and unified messaging services.  j2 Global
markets its services principally under the brand names eFax and
jConnect.  The company delivers its services through its global
telephony/Internet protocol network, which spans more than 600
cities in 18 countries across five continents, including four
capital cities in Latin America where j2 Global has launched its
unique service.

JCOM - j2 Global Communications  $26.25

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  JQF QX    1143   0.20  22.30   3.4%   0.9% TS
SELL PUT  MAY 25    JQF QE     260   0.80  24.20   9.3%   3.3%


__________________________________________________________________

MGAM - Multimedia Games  $24.82  *** Next Leg Up? ***

Multimedia Games (NASDAQ:MGAM) is the leading supplier of
interactive electronic games and player stations to the rapidly
growing Native American gaming market.  The company's games are
delivered through a telecommunications network that links its
player stations with one another both within and among gaming
facilities.  Multimedia Games designs and develops networks,
software and content that provide its customers with a range of
gaming systems.  The company's development and marketing efforts
focus on Class II gaming systems and Class III video lottery
systems for use by Native American tribes throughout the United
States.

MGAM - Multimedia Games  $24.82

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  QMG QX     466   0.60  21.90   8.6%   2.7% *
SELL PUT  MAY 25    QMG QE      60   1.60  23.40  16.0%   6.8%


__________________________________________________________________

MICC - Millicom Cellular  $25.50  *** Wireless Telecom Giant ***

Millicom International Cellular S.A. (NASDAQ:MICC) is a global
telecommunications investor with cellular operations in Asia,
Latin America and Africa.  The company has a number of cellular
operations and licenses in countries around the world and the
group's cellular operations have a combined population under
license of over 500 million people.  In addition, MIC operates
a GSM clearing house, provides high-speed wireless data services
in various countries and has a licenses to develop high speed
wireless data services in other areas.  MIC also has a major
interest in Tele2 AB, an alternative pan-European telecom firm
offering fixed and mobile telephony, data network and Internet
services.

MICC - Millicom Cellular  $25.50

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  CQD QX      45   0.40  22.10   6.2%   1.8% *
SELL PUT  MAY 25    CQD QE     655   1.25  23.75  13.4%   5.3%


__________________________________________________________________

NET - Networks Associates  $19.15  *** Entry Point? ***

Networks Associates (NYSE:NET) is a supplier of computer security
solutions designed to prevent intrusions on networks and protect
computer systems from the next generation of blended attacks and
threats.  The company offers two principal families of products:
McAfee System Protection Solutions, which delivers anti-virus and
security products and services, designed to protect systems such
as desktops and servers; and McAfee Network Protection Solutions,
which offers products designed to maximize the performance and
security of networks.  These products are offered to many large
enterprises, governments, small and medium sized business and
consumer users.

NET - Networks Associates  $19.15

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  NET QW    2288   0.40  17.10   7.3%   2.3% *


__________________________________________________________________

NIHD - NII Holdings  $37.78  *** Rally Mode! ***

NII Holdings (NASDAQ:NIHD) provides digital wireless communication
services for business customers through four operating companies
located in selected Latin American markets.  The firm was formerly
known as Nextel International.  Its main operations are in major
business centers and related transportation corridors of Mexico,
Brazil, Peru and Argentina.  It also provides analog specialized
mobile radio services through two operating companies in Chile.

NIHD - NII Holdings  $37.78

PLAY (sell naked put):

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

SELL PUT  MAY 33.37 QHQ QQ     23    0.50  32.88   5.2%   1.5% *
SELL PUT  MAY 35    QHQ QG     21    0.90  34.10   8.0%   2.6%


__________________________________________________________________

PXLW - Pixelworks  $18.57  *** Digital Display Technology ***

Pixelworks (NASDAQ:PXLW), headquartered in Tualatin, Oregon, is a
leading provider of system-on-a-chip ICs for the advanced display
market.  Pixelworks' solutions process and optimize video, computer
graphics and Internet information for display on a wide variety of
devices, including flat-panel monitors, digital televisions and
multimedia projectors, used in business and consumer markets.  The
company's broad IC product line is used by leading manufacturers of
consumer electronics and computer display products to enhance image
quality and ease of use.

PXLW - Pixelworks  $18.57

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  PUO QW     200   0.55  16.95   9.3%   3.2% *


__________________________________________________________________

SNIC - Sonic Solutions  $19.11  *** Consolidation Complete? ***

Sonic Solutions (NASDAQ:SNIC) develops and markets computer-based
tools that enable the creation of digital audio and video titles
in the CD-Audio and DVD-Video formats, and in related formats.
The company also licenses the software technology underlying its
tools to various other companies to incorporate in products they
develop.  It has three business units corresponding to its three
product categories: professional products, desktop products and
technology products.

SNIC - Sonic Solutions  $19.11

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  QNI QW     42    0.35  17.15   6.9%   2.0% *
SELL PUT  MAY 20    QNI QD     55    1.20  18.80  15.1%   6.4%



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

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.

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

PHTN - Photon Dynamics  $30.56  *** Premium-Selling Only! ***

Photon Dynamics (NASDAQ:PHTN) is a provider of yield management
solutions to the flat panel display (FPD) industry.  The company
also offers yield management solutions for the printed circuit
board assembly and advanced semiconductor packaging industries
and the cathode ray tube display and CRT glass and auto glass
industries.  The firm's test, repair and inspection systems are
used by manufacturers to collect data, analyze product quality
and identify and repair product defects at critical steps in the
manufacturing.

PHTN - Photon Dynamics  $30.56

PLAY (sell naked call):

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

SELL CALL  MAY 35    PDU EG     190   0.60  35.60   8.4%   1.7% *
SELL CALL  MAY 32.5  PDU EZ     194   1.30  33.80  13.1%   3.8%


__________________________________________________________________

SFA - Scientific Atlanta  $30.85  *** Next Leg Down? ***

Scientific-Atlanta (NYSE:SFA) provides customers with broadband
transmission networks, digital interactive subscriber systems,
content distribution networks and worldwide customer service and
support.  SFA has evolved from a manufacturer of electronic test
equipment for antennas and electronics to a producer of a wide
variety of products for the cable television industry, including
digital video, voice and data communications products.  SFA is
changing the way consumers interact with their televisions, and
is a supplier of transmission networks for broadband access to
the home, digital interactive subscriber systems for video, high
speed Internet, voice over IP networks, and worldwide customer
service and support.

SFA - Scientific Atlanta  $30.85

PLAY (sell naked call):

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

SELL CALL  MAY 35    SFA EG    1191   0.55  35.55   7.4%   1.5% *
SELL CALL  MAY 30    SFA EF     730   2.20  32.20  16.7%   6.8%


__________________________________________________________________

SOHU - Sohu.com  $21.85  *** China Internet Slump! ***

Sohu.com (NASDAQ:SOHU) is an Internet portal in China.  The firm's
portal consists of sophisticated Chinese language Web navigational
and search capabilities, 15 main content channels, Internet-based
communications and community services, and a unique platform for
e-commerce and short messaging services.  Each of the company's
interest-specific main channels contains multi-level sub-channels
that cover a range of topics; news, business, entertainment, sports
and careers.  The firm also offers free Web-based e-mail.  Sohu.com
offers a universal registration system, and the company's portal
attracts consumers and merchants alike.  One of the key features is
a proprietary Web navigational and search capabilities that reflects
the cultural characteristics and thinking and viewing habits of the
People's Republic of China Internet users.

SOHU - Sohu.com  $21.85

"SPECULATIVE" PLAY (sell naked call):

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

SELL CALL  MAY 25    UZK EE    3026   0.75  25.75  13.8%   2.9% *
SELL CALL  MAY 22.5  UZK EX    1104   1.50  24.00  18.3%   6.3%



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