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Daily Newsletter, Tuesday, 04/27/2004

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The Option Investor Newsletter                 Tuesday 04-27-2004
Copyright 2004, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: New Excuse
Futures Markets: See Note
Index Trader Wrap: WAITING GAME
Market Sentiment: More of the same


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      04-27-2004           High     Low     Volume   Adv/Dcl
DJIA    10478.16 + 33.40 10537.35 10441.75 1.84 bln 1765/1454
NASDAQ   2032.53 -  4.20  2053.57  2027.64 1.96 bln 1572/1603
S&P 100   555.62 +  1.00   559.91   554.62   Totals 3337/3057
S&P 500  1138.15 +  2.62  1146.84  1135.53
W5000   11129.34 + 19.60 11211.76 11109.70
SOX       468.33 -  6.40   479.48   466.76
RUS 2000  590.76 +  1.31   594.98   587.24
DJ TRANS 2973.28 +  3.10  3001.46  2964.34
VIX        15.07 +  0.30    15.17    14.37
VXO (VIX-O)14.98 +  0.04    15.36    14.24
VXN        21.84 +  0.01    22.32    21.59
Total Volume 4,077M
Total UpVol  1,675M
Total DnVol  2,344M
Total Adv  3769
Total Dcl  3497
52wk Highs  299
52wk Lows   276
TRIN       1.07
NAZTRIN    2.08
PUT/CALL   0.72
************************************************************

New Excuse
by Jim Brown

The market sold off at 2:PM and the excuse given was either
fighting in Iraq or explosions in Syria. Far as I know there
has been fighting in Iraq for quite some time. Syria arrested
three terrorists near the Iranian embassy but it does not
sound like a market moving event. The Dow had risen to strong
resistance at 10530 just before the sell off. Do you think
there was any chance it was just profit taking? Odds are
very good.

Dow Chart - Daily


Nasdaq Chart - Daily


SOX Chart - Daily



The markets rallied at the open but it was not due to strong
Retail Sales because they were far from strong. Sales dipped
last week by -0.5% from the +1.0% gain the week before. The
reason given by retailers is the long lull between Easter
and Mothers Day (May-9th). They expect shopping to improve
again next week.

The real excitement came from a stronger than expected Consumer
Confidence report and a very strong housing report. Consumer
Confidence jumped to 92.9 from 88.5 and well over estimates
of 89. After two months of decline the unexpected jump went
a long way to confirm the recent indications of a growing
economy. Positive consumers spend more money and this helped
provide positive sentiment for stocks. There were strong
gains across all but one component. Both present conditions
and future expectations posted big jumps. Unfortunately those
planning to buy homes fell to 3.5% from 4.2% but auto buyers
jumped to 6.4% from 5.4%. Consumers who felt jobs were now
plentiful rose to the highest level since Sept-2002. Those
that felt jobs were hard to get fell to the lowest level
since Nov-2002.

Also surging higher were Existing Home Sales, which rose at
the fastest rate in more than two years. Sales jumped +5.7%
to 6.48 million and the second highest rate ever. This is
really good news and suggests consumers were expressing their
confidence by purchasing a new home. This jump turned around
a -5.8% slide in January and meager +2.2% gain in February.
I have predicted before that home sales would pick up once
the weather improved and this is proof. The only disturbing
news is the drop in those planning to buy a home in the near
future in the Consumer Confidence report. That could turn
around as well as home builders begin their strong summer
sales push and heighten consumer awareness of available
features. Despite the jump in rates they are still very low
on a historical basis.

Helping the bounce in the home builders was positive comments
from Pulte Homes. (PHM) They are one of the largest builders
in the country and they also build outside the U.S. The CEO
said they controlled 290,000 lots and were growing at 3-4
times the growth rate of the industry. He also said the Fed
could raise interest rates by 300-400 basis points without
materially impacting their business. They build across all
price ranges in multiple geographic areas. They are estimating
earnings of $7.25 for the year and the stock is just over $50.
While this is a stock specific story we are seeing the same
pattern from almost all the homebuilders and the projections
just keep getting better. This positive attitude and results
from those in the sector should continue to boost investor
prospects for a continued economic recovery. Home sales are
a very big component to overall economic health.

However, not all sectors are seeing this kind of growth. We
began seeing some downgrades today on the prospect of tougher
comparisons ahead. As we move into the earnings from smaller
companies we are seeing some earnings misses and/or some soft
forecasts. This translates into lowered earnings estimates
for future quarters. This is actually beneficial to some
extent because it lowers the bar and makes it easier to beat.
Unfortunately it also lowers the price targets as we begin the
PE compression phase.

The semiconductor sector is already seeing this PE compression
as the SOX dropped below critical support at 470 today. The
bloom is off the rose in semis and that led the Nasdaq to a
weaker performance for the day.

The Nasdaq has spent three days trying to break through the
2050 level and today's close was a three-day low. The Nasdaq
is at a critical turning point. In early April it rose to
strong resistance at 2070 with three intraday spikes briefly
higher over a six day period. We saw the mid April pullback
to below 2000 and then a strong dead cat bounce last Thursday.
That bounce culminated on Friday morning at 2050 and that
resistance level has held for three days. The Nasdaq must
rebound from the brink tomorrow or be faced with the potential
for another trip under 2000. The NDX has been fighting the
same battle with resistance at 1500 all month and the best
it could manage before dropping back this week was 1499.45.
This is very strong resistance for the NDX and by association
the Nasdaq Compx.

The Dow has been fighting the same battle at 10550 since early
April and we watched it creep back to 10537 today before a
quick sell off. The sell off was blamed on shooting in Syria
and/or fighting in Iraq but if you look closely at the A/D
line for the last two days I think you will lose that excuse
quickly. On Monday at exactly 2:PM the A/D line dropped -1300
issues. On Tuesday at exactly 2:PM the drop was -1500 issues.
Recently mutual funds have been entering/exiting the market
when? 2:PM. With the indexes right at strong resistance and
near highs for the month this is a very good spot for funds
to take profits. This is not an indication that there is a
specific down trend ahead but simply a good place to shift
cash ahead of some very critical economic reports and a Fed
meeting over the next eight days. It is simply prudent money
management.

A/D Chart - 15 min



There is not enough data yet to determine if we are looking
a bullish May or a bearish May. Earnings are still flowing
and most analysts are still bullish. As long as investors
are still sending in retirement contributions we are likely
to continue to trade in this range. I suggested on Sunday
to sell the tops and buy the bottoms and today was very close
to the top of the range. Until we breakout of the range that
advice remains the same.

The challenge for the next several days will be the impending
Fed meeting on Tuesday and the impact of the economic reports
on their decision. Wednesday is still calm but Thursday starts
the heavy reporting cycle with GDP for Q1, Employment Cost
Index and Help Wanted. Friday picks up the pace with Personal
Income, NY-NAPM, Consumer Sentiment and PMI. Monday has the
ISM so traders will likely want to square positions before
Friday's close to avoid not only weekend event risk but
economic event risk as well. With the Fed meeting on Tuesday
and rising fear they could actually hike rates there may not
be many buyers after tomorrow. Most institutions will want
to see what decision the Fed makes before making a commitment.
Even if you thought there was no chance the Fed would hike
rates and that those economic reports would be strong would
you want to invest millions of dollars near the current market
highs without knowing for sure? Probably not.

That pretty well sums up our forecast. Odds of big bets are
slim and volume has already started to dry up. Volume on the
NYSE and Nasdaq totaled only 3.5B shares today and it should
continue to decline. Keep your eyes open for some new excuses
for market movement and watch that 2:PM time slot for clues
to market direction. Watch the SOX as a leading indicator
for the Nasdaq. We are still range bound and until the trend
changes watch the top of the range (10550/2050) for weakness.

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

WAITING GAME
By Leigh Stevens
lstevens@OptionInvestor.com

THE BOTTOM LINE –
Today's trading constituted a price range that was within
yesterday's (Monday's) Highs and Lows in the Nasdaq indices, both
in the Composite (COMP) and the Nasdaq 100 (NDX) - an "inside
day" - with those indices down on the day by the close.  In the
S&P and Dow, there was only a slight expansion of the High of
today relative to yesterday.  By the close the blue chip segments
were only slightly higher from Monday.

This relatively weak action left everything the same as far as my
technical outlook per my individual chart updates on the indexes
below.  I don't know what might really knock the indices down
sharply, but they are vulnerable to negative "shocks".

TODAY'S TRADING ACTIVITY –
The S&P 500 Index (SPX) gained 2.6 points to 1,138.15. The Dow 30
Average (INDU) was up 33 points to 10,478.16.  The Nasdaq Composite
Index (COMP) fell 4.2 points to close at 2,032.53, well under its
intraday high (at 2,053).

Early strength faded and many market watchers, myself included,
figure that the market indices are stuck in a limited price
range, especially ahead of possible new Fed activity before their
next meeting in early-May.

New violence in Iraq was a reminder of how unstable the situation
is there. With the political debate heating up, there is no clear
or certain prospect for another GOP victory in the fall - a
summer like was had in April would make it difficult for the
Administration to claim success in the fight against extremist
Islam.

Early strength was fed by the Conference Board's April consumer
confidence index increased to 92.9 from 88.5 in March, which was
an upward revision. Street expectations were for 88.7.

The CB survey found that Americans who felt positive about their
present circumstances rose from 84.4 to 90.6., the highest
reading since August 2002. Those who expected things to improve
rose to 94.5 from 91.3.  On the job front Americans who felt that
jobs were harder to find dropped a bit, from 29.9 to 27.6.

Also, adding to positive sentiment in the early going was the
report on existing home sales, as those numbers came in quite
strong.  Estimates had been for a 1% gain to 6.18 million units,
but instead sales jumped to 6.48 million in March.  This came on
the top of Monday's record new home sales.

Since so much strength in the U.S. economy is coming from the
wealth that consumers find in their homes and with this pool
expanding like this, these reports have some wider stock market
influences than just related to homebuilders, mortgage companies,
and realtors.

Somewhat of a downer on Market sentiment later on, was talk that
OPEC was considering a new higher price target, above their
current $22-28 a barrel price band.  Crude prices went to a new
high of $37.60 a barrel in the morning.  Gasoline prices are
already high and with the summer driving season ahead, there is
no relief in site. High gas prices do tend to weigh on consumer
sentiment over time also. Not surprisingly, the oil service
sector was today's big winner (again) with the OSX sector index
up some 3%.

Mostly, earnings reports continue to come in strong and most
companies are beating the estimates.  Yet those that only manage
to beat by a fraction were seeing disappointed selling coming,
such as in Verizon (VZ) and DuPont (DD).  Lockheed Martin (LMT)
did better than expectations, with its net income coming in at 65
cents compared to consensus at 52 cents.

The general trend in earnings continues to be positive, but also
seems to be, for the most part, "priced into" current price
levels.

WORTH REPEATING FROM OIN EARLIER TODAY –
Earnings announcements due out after the close today (Tues)
includes: AFLAC (AFL), Avaya (AV), Flextronic (FLEX), Maxim
Integrated Products (MXIM), McDonald's (MCD), Monster Worldwide
(MNST), Network Associates (NET), RF Micro Devices (RFMD),
Sina.com (SINA), UTStarcom (UTSI), and ValueClick (VCLK).

OTHER MARKETS –
In the Treasury market, the benchmark 10-year Treasury note was
up a scant 3 32nds to wind up at 96 18/32. The dollar was down
0.5 percent vs. the euro at $1.19 but up 0.7 percent versus the
yen, closing at 109.46 yen.

MY INDEX OUTLOOKS –

S&P 500 Index (SPX) – Daily chart:
The up and down sloping trendlines form a symmetrical triangle –
The direction of the move, above or below the trendlines
"resolves" the trend.

Action today was inconclusive - the High penetrated the down
trendline, but then prices fell back from resistance at and just
above this line.  A move is still needed to above 1148-1150 to
break out to the upside and head toward next resistance at 1160
at the prior top. SPX is still trading above its 21-day moving
average which is a plus - stay tuned tomorrow on whether it can
hold 1134.




Key is still whether SPX can hold 1120 support, then at the
trendline around 1105 currently.
1100.

S&P 100 Index (OEX) – Daily chart:

Same oh, same oh -

Key near resistance is 558, then 562 in the S&P 100 (OEX). A
close over 560 is needed to turn things a bit more bullish, but
562 is probably even more key. Support implied by the trendline
comes in around 542. The chart picture remains, on balance,
neutral to bearish.




S&P 100 Index (OEX) – Hourly chart:

Like the S&P 500 daily chart, there was this slight penetration
of the hourly down trendline today, but no follow through.  A
close above this line tomorrow (Wed.) would be a plus for the
bullish case.  Momentum is down however, at least as measured by
the stochastic indicator.  545 looms as key near support - an
hourly close below this level is bearish, with next support at
534-535.




Dow Industrials (INDU) Daily:
10,500 on a closing basis is key resistance still. 10,300 is key
near support.  10,500 is the key area to watch tomorrow.  The
bulls have to prove their case. If long puts, its fairly low risk
to hold this position as long as there is not a move over the
cluster of prior recent highs.




Nasdaq 100 (NDX) Index  – Daily:
1500 is KEY resistance: a close over 1500 and an ability to hold
this level on pullbacks to it, would suggest upside potential to
the prior 1520 high. Doubtful the Nasdaq 100 (NDX) will clear
1520 in the near term.

1450 to 1440 is near support.  If there is a move down below the
centered moving average (21-day average), then I think NDX will
see at least 1445.




Nasdaq 100 tracking Stock (AMEX:QQQ)– Daily:
A lot of resistance is showing at the down trendline, around
37.25-37.50 currently.

I would rather be short the Q's then long, as the risk to reward
looks better.  Stop out just over 37.50 (risk), with downside
potential being to 34.50, maybe 34.




Nasdaq 100 tracking Stock (AMEX:QQQ)– Hourly:
I continue to watch the hourly chart - as long as I don't see an
hourly close over the down trendline, I'm playing this stock for
another downswing. A close over 37.40 is needed to suggest much
upside, say back to 38.40-38.50.




Good Trading Success!


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

More of the same
- J. Brown

Tuesday proved to be somewhat interesting.  Futures were
relatively weak before the open but when the bell rang stocks
shot higher.   There were a couple of economic reports out and
both were stronger than expected.  The Conference Board's
consumer confidence index soared to 92.9, which was above
estimates for a small rise to 88.7.  The survey polled some 5,000
households and found that Americans are growing more optimistic
about the future and about finding a job.

The second report was the existing home sales numbers.  Like the
new home sales numbers out yesterday these were above
expectations.  Home sales are hot and with the prime home buying
season in front of us (a.k.a. summer) it could be a good quarter
for homebuilders, realtors and mortgage lenders even with a rate
hike.  The broader impact is that consumers tend to buy more
products like furniture and appliances when they move into a home
and that's a big positive for the economy.  What is odd is that
the new home sales numbers yesterday sent the markets lower on
rate fears yet today's number failed to cause much of a reaction.

That's not to say the markets didn't turn lower. The major
indices were near their highs for the session before turning
sharply lower in the afternoon.  Apparently this was due to a new
offensive by coalition forces in Iraq.  The cease-fire with
insurgents in Fallujah ended today.  This evening the military
dropped leaflets saying it's time to give up, this is your last
chance to surrender, we're coming in and a little bit later the
air strikes began.   At the same time there was new violence in
the Syrian capital near several western embassies, which many
believed was a terrorist reaction to the Syrian government's help
with the global war on terrorism.

The stock markets' reaction was to interpret the military's move
in Iraq as a potential spark for new violence around the globe
and possibly here at home.  Thus the natural reaction was to sell
stocks and take profits - at least that's one train of thought.
The selling really wasn't that bad with techs and gold lagging
the bluechips.  Closer to home and probably more important on
investors' minds is the upcoming Fed meeting on May 4th and the
string of economic reports between now and the end of next week.
We appear stuck in a trading range to manage your risk carefully!


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  8305
Current     : 10478

Moving Averages:
(Simple)

 10-dma: 10415
 50-dma: 10420
200-dma:  9956



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  898
Current     : 1138

Moving Averages:
(Simple)

 10-dma: 1132
 50-dma: 1132
200-dma: 1071



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1084
Current     : 1479

Moving Averages:
(Simple)

 10-dma: 1468
 50-dma: 1455
200-dma: 1407



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

There was little change in the volatility indices.  They remain
near their multi-year lows.

CBOE Market Volatility Index (VIX) = 14.07 +0.30
CBOE Mkt Volatility old VIX  (VXO) = 14.98 +0.04
Nasdaq Volatility Index (VXN)      = 21.84 +0.01

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.72        876,032       627,839
Equity Only    0.57        772,474       441,571
OEX            0.97         15,910        15,403
QQQ            3.25         11,842        38,450


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

Bullish Percent Data

           Current   Change   Status
NYSE          77.6    + 0     Bull Confirmed
NASDAQ-100    56.0    - 1     Bear Correction
Dow Indust.   83.3    + 0     Bear Confirmed
S&P 500       74.8    - 1     Bear Confirmed
S&P 100       74.0    - 2     Bear Confirmed


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: 2.41
10-dma: 1.98
21-dma: 1.47
55-dma: 1.37


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    1624      1538
Decliners    1216      1570

New Highs      94        85
New Lows       79        26

Up Volume    910M      607M
Down Vol.    920M     1297M

Total Vol.  1854M     1927M
M = millions


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

Commitments Of Traders Report: 04/20/04

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

Commercials still not willing to place in big one-sided bets.
The remain net short.  Small traders upped their bearish
positions by a couple of thousand contracts.


Commercials   Long      Short      Net     % Of OI
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%)
04/20/04      409,729   421,456   (11,727)   (1.4%)

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
03/30/04      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%
04/20/04      136,699    92,982    43,717    19.0%

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 remain heavily net short the e-minis and small
traders, who typically do the opposite, are right on track
with heavy long positions.


Commercials   Long      Short      Net     % Of OI
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%)
04/20/04      275,985   355,555    (79,570)  (10.1%)

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
03/30/04      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%
04/20/04      186,799     69,137   117,662    46.0%

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


NASDAQ-100

Very little movement in the NDX futures for commercial
traders.  The same can be said for small traders.


Commercials   Long      Short      Net     % of OI
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%
04/20/04       54,852     35,964    18,888   20.8%

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
03/30/04        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%)
04/20/04        8,538    19,431   (10,893)  (39.0%)

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

Hmm... we're seeing a little bit of money getting shuffled
around here.  Commercials are slightly more bullish this
week.  Small traders, as expected, have turned more bearish.


Commercials   Long      Short      Net     % of OI
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%
04/20/04       24,156    22,009    2,147       4.7%

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

Small Traders  Long      Short     Net     % of OI
03/30/04        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%)
04/20/04        5,997     9,631   (3,634)   (23.3%)

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 04-27-2004
Copyright 2004, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: BWA, ZBRA
Dropped Puts: AMG, QLGC
Call Play Updates: BBY, BEC, DGX, MIK, MBG, UOPX, WFMI
New Calls Plays: APA
Put Play Updates: COF
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:
*****

Borg Warner - BWA - close: 87.12 change: -0.05 stop: 86.00

We're probably being too cautious but we're going to cut our
losses in BWA.  Over the weekend we listed BWA as a long
candidate with a trigger to go long if it broke out over
resistance at $90.00 and hit $90.05.  The stock did exactly that.
With a strong Monday morning open for the markets BWA ran to
$90.15 and promptly reversed course.  The sell-off was a bit
steep for us and BWA closed under what should have been support
at the $88.00 mark and its simple 50-dma.  Instead the stock
closed under these levels.  Because we believe BWA should have
support at its 40-dma near the $86.00 mark we left it open
expecting a bounce.  The bounce did not occur but neither did a
test of support at $86.00 and its 40-dma.  BWA found tough
resistance at $87.75 this afternoon and slipped lower again as
the major indices pulled back toward the closing bell.  More
aggressive traders willing to take the "heat" can leave the play
open or look for new entries on a bounce from $86.00.  We're
going to take the loss and close the play.

Picked on April 26 at $ 90.05
Change since picked:   - 2.93
Earnings Date        04/22/04 (confirmed)
Average Daily Volume:     275 thousand
Chart =


---

Zebra Technologies - ZBRA - cls: 71.27 chg: -1.08 stop: 72.50

As promised we are closing ZBRA ahead of its Wednesday morning
earnings report where the company is expected to announce profits
of 52 cents per share.  However, astute readers will note that we
were actually stopped out at $72.50 on Monday's afternoon decline
when ZBRA dipped toward the $72.00 level and closed at $72.35.
We guess it's not a surprise that traders would bring ZBRA back
to support at $70.00 and its simple 50-dma ahead of its earnings
announcement.  Should the stock disappoint it will be an easy
trip toward its 100-dma at $67.50 if not historical support near
$62.50.

Picked on April 11 at $ 73.26
Change since picked:   - 1.99
Earnings Date        04/28/04 (confirmed)
Average Daily Volume:     332 thousand
Chart =



PUTS:
*****

Affiliated Mgrs Grp. - AMG - cls: 50.51 chng: +0.16 stop: 51.75

After getting off to a good start, with its solid break below the
$52.50 area, AMG has stagnated for the past seek, refusing to
drop below the $50 level of support.  Clearly there is some
concerted buying interest at that level, although we can't rule
out one last dip to finally hit our $49 target.  The problem is
that the company is slated to report its quarterly results
tomorrow and it is time for us to close out the play.  Any open
plays should have been closed out today and we can safely watch
the fireworks from the sidelines.  We'll chalk it up as a
successful play, although it would have been preferable to see it
hit that target ahead of earnings.

Picked on April 18th at       $52.91
Change since picked:           -2.40
Earnings Date                4/28/04 (confirmed)
Average Daily Volume =         570 K
Chart =


---

QLogic Corp. - QLGC - close: 26.31 change: -0.17 stop: 27.50

They don't get much better than this.  QLGC cooperated
beautifully throughout the duration of this play, just continuing
to work its way lower from the breakdown under $31 to today's
fresh 52-week low.  It's entirely possible that the stock will
continue down from here, hitting our first target at $25 and
possibly our aggressive $20 target.  Unfortunately, we just don't
have the freedom to stick with it due to the company's pending
earnings report.  The announcement will come out tomorrow and as
we mentioned over the weekend, all open positions should now be
closed with a tidy gain.  After the post-earnings volatility
calms down, we'll take another look and see if there's another
viable play on the stock.

Picked on April 13th at       $31.00
Change since picked:           -4.69
Earnings Date                4/28/04 (confirmed)
Average Daily Volume =      4.51 mln
Chart =



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

Best Buy Co - BBY - close: 55.74 change: +0.95 stop: 51.99

The RLX retail index traded to a new all-time high today before
paring its gains ahead of the closing bell.  Likewise BBY hit a
new relative high but fortunately managed to maintain the
majority of its gains.  We're feeling pretty confident in BBY's
relative strength lately.  The stock's P&F chart has recently
broken out to a triple-top breakout buy signal and points to a
$67 price target.  We're only targeting $60, which seems more
reasonable for a short-term trade.  Volume was better than
average today, which is a bullish development.

Picked on April 23 at $ 55.05
Change since picked:   + 0.69
Earnings Date        03/31/04 (confirmed)
Average Daily Volume:     3.6 million
Chart =



---

Beckman Coulter - BEC - cls: 56.08 chg: -0.67 stop: 54.99*new*

Uh-oh!  Profit taking has hit BEC for its third day in a row
after breaking out to new highs last week.  We knew the stock was
a bit overbought but expected in the $55.50-56.00 level to hold
up.  Thankfully it has and shares closed above the $56 level this
afternoon but its MACD indicator is looking rather bearish and is
close to producing a sell signal but that really shouldn't be a
surprise.  The challenge now is that we're running low on time.
BEC is due to report earnings on Monday.  That means we'll be
closing the play this coming Friday.  That only gives the stock
three days to produce any sort of pre-earnings ramp up.  We're
not suggesting any new positions and we're going to tighten the
stop loss to $54.99.

Picked on April 18 at $ 56.16
Change since picked:   - 0.08
Earnings Date        05/03/04 (confirmed)
Average Daily Volume:     333 thousand
Chart =


---

Quest Diagnostics - DGX - close: 84.67 change: -0.35 stop: 82.00

Sadly, the follow-through in shares of DGX following Friday's
breakout to new recent highs was virtually nonexistent.  The
stock inched above that $86.50 level on the open yesterday and
then promptly headed south, erasing most of Friday's gains by the
closing bell.  DGX drifted a bit further south today and it looks
like a bona fide test of support at the 10-dma ($83.41) and 20-
dma ($83.36) is in the cards.  How the stock responds to that
test of support will tell us a lot about the viability of the
play.  There's significant historical support near $83 as well,
so if DGX doesn't bounce strongly on this test of support, we can
take it as a bad omen.  Aggressive entries can be taken on a
successful bounce, but make sure to use a tight stop in case the
rebound fails.  We're maintaining our stop at $82, which is just
under the 50-dma ($82.37), as well as the bottom of the post-
earnings gap.

Picked on April 25th at      $86.15
Change since picked:          -1.48
Earnings Date               4/22/04 (confirmed)
Average Daily Volume =        672 K
Chart =


---

Michaels Stores - MIK - cls: 51.63 chng: +0.40 stop: 48.50

After the strong breakout last week, we were expecting to see
some consolidation before shares of MIK would be ready to
continue their ascent and that's precisely what we saw to start
out the week yesterday.  MIK dropped back to $51 and then caught
a decent rebound from that level today.  The 10-dma ($50.78) is
rising to meet horizontal support near $51 and the 20-dma isn't
far behind at $49.87.  Buying the dips certainly looks like the
way to play this one, and entries in the $50-51 area look
favorable. MIK should not be a fast-moving stock, but we are
looking for a steady ascent into the company's earnings report at
the end of May.  Traders that would prefer to enter on strength
can wait for a breakout over $52.60, but our preference is still
entries on pullbacks.  We're maintaining a fairly liberal stop
for now, keeping it at $48.50, which is just under strong support
near $49, also the site of the 30-dma.

Picked on April 20th at      $51.23
Change since picked:          +0.40
Earnings Date               5/26/04 (confirmed)
Average Daily Volume =        331 K
Chart =


---

Mandalay Resort Group - MBG - cls: 60.00 chg: -0.17 stop: 58.99

Everyone is still bullish on gambling stocks and MBG appears to
be the crowd favorite but the stock continues to consolidate
sideways.  We're still untriggered and waiting for MBG to trade
above $61.51 to open the play.  The good news is that we should
see a move soon in MBG as the consolidation pattern has gotten
extremely narrow.  The bad news is that the breakout could go
either way with its neutral pennant-shaped pattern.  Keep your
eyes open.  MBG should be a mover soon.

Picked on April xx at $ 00.00 <-- see TRIGGER
Change since picked:   + 0.00
Earnings Date        06/03/04 (unconfirmed)
Average Daily Volume:     1.1 million
Chart =



---

Univ. of Phoenix - UOPX - cls: 89.80 chng: -2.39 stop: 87.50

Right from the outset, we knew that chasing the breakout in
shares of UOPX was a risky play, and that's why we stated our
preference for entries on a pullback to test firm support near
$90.  Well, the expected pullback got started yesterday and
really picked up steam today, with the stock falling to close
just below $90.  This could be a solid entry point, but the thing
that causes us to be cautious is the way price fell through both
the 10-dma ($90.46) and the 20-dma ($90.06) today and stayed
below those two averages right into the close.  UOPX looks to
have some solid support near $89 and a rebound from that level
can be used for entry.  But remember to wait for the bounce
before playing, as we don't want to fall into the trap of trying
to catch a falling knife.  The advantage of buying this dip is
that entry is that much closer to our $87.50 stop and if UOPX is
going to bounce, this is the place from which it should start.
More conservative traders will want to see a solid move (read:
volume) back over the $92 level before playing.

Picked on April 22nd at      $93.87
Change since picked:          -4.07
Earnings Date               3/12/04 (confirmed)
Average Daily Volume =        183 K
Chart =


---

Whole Foods Market - WFMI - cls: 80.55 chng: +0.76 stp: 77.90

Ever since we began coverage a couple weeks ago, WFMI has been a
solid performer, steadily gaining ground an throwing in a couple
of solid breakouts in the process.  Most recently, the stock
pushed through the $80 level to new all-time highs on Friday and
after a couple days of consolidation near its highs, it looks
ready to break out again.  Recall that the company is set to
release earnings next Wednesday, so traders opening new positions
at this point need to be prepared for it to be a quick hit and
run play.  The $78 level should now be strong support, and it did
its job last week.  That support level is now reinforced by the
10-dma ($78.33), and that should keep our $77.90 stop out of
danger.  We're suggesting that stops should be trailed just
behind the 10-dma, as with earnings just over a week away, there
really isn't time for a dip back to support and subsequent rally
to new highs.  For those brave souls willing to game new entries,
the best bet looks like a breakout entry over $81.25 (just over
today's intraday high).  A breakout and rally up to the $84 level
later this week should be used as an aggressive exit point.

Picked on April 15th at      $76.01
Change since picked:          +4.54
Earnings Date               5/05/04 (confirmed)
Average Daily Volume =        694 K
Chart =



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

Apache Corp. - APA - close: 44.27 change: +1.33 stop: 42.00

Company Description:
Apache Corporation is an independent energy company that explores
for, develops and produces natural gas, crude oil and natural gas
liquids.  In North America, the company's exploration and
production interests are focused in the Gulf of Mexico, the Gulf
Coast, the Permian Basin, the Anadarko Basin and the Western
Sedimentary Basin of Canada.  Outside of North America, Apache
has exploration and production interests offshore western
Australia, offshore and onshore Egypt, offshore The People's
Republic of China and onshore Argentina, as well as exploration
interests in Poland.  As of December 31, 2002, APA had total
estimated proven reserves of 637 million barrels of crude oil,
condensate and natural gas liquids and 4.1 trillion cubic feet
(Tcf) of natural gas.  Combined, these total estimated proved
reserves are equivalent to 1.3 billion barrels of oil or 7.9 Tcf
of gas.

Why we like it:
While the price of many commodities has taken a hit in recent
weeks, that effect has been minimal in the Energy sector with
Crude Oil and Natural Gas prices holding near their highs.
Natural Gas did drop back to test its 50-dma last week, but then
shot higher again on Monday and the June futures contract (NG04M)
is once again challenging the $6.00 level.  APA has been one of
the better performing stocks in the sector, successfully breaking
out to new all-time highs ahead of last week's earnings report.
After the requisite post-report profit taking, the stock
rebounded strongly from its rising trendline yesterday, which is
also the site of the 30-dma ($42.89).  Turning to the PnF chart,
the bullish picture is reinforced, with the recent breakout above
$44 generating a Triple Top Buy signal.  The successful rebound
from the ascending trendline looks doubly encouraging due to the
fact the bounce occurred near $43, indicating that old resistance
at that level has now been transformed to new support.

There's no need to use a trigger for the play, since the breakout
and subsequent rebound from resistance-turned-support has already
occurred.  Clearly the best entry would come on another test of
support near $43, but more aggressive traders can certainly
consider entries on a breakout above short-term resistance at
$44.50.  We should expect to see some resistance near the recent
highs in the $44.50-46.00 area and then APA will be in breakout
mode once again.  We'll target a rally to $48 initially, but
we're really looking for a continued bullish move to
psychological resistance at $50.  Initial stops should be set at
$42, which is just under the 50-dma ($42.05).  Look for continued
strength in the price of Natural Gas and the Oil Services sector
(OSX.X) to confirm our bullish outlook for APA.

Suggested Options:
Shorter Term: The May $45 Call will offer short-term traders the
best return on an immediate move, as it is currently at the
money.

Longer Term: Aggressive longer-term traders can use the June $45
Call, while the more conservative approach will be to use the
June $40 Call.  Our preferred option is the June $45 strike, as
it is currently at the money and should provide sufficient time
for the play to move in our favor.

BUY CALL MAY-40 APA-EH OI= 248 at $4.50 SL=2.75
BUY CALL MAY-45 APA-EI OI=3122 at $0.90 SL=0.45
BUY CALL JUN-40 APA-FH OI=  10 at $5.00 SL=3.00
BUY CALL JUN-45*APA-FI OI= 940 at $1.45 SL=0.75

Annotated Chart of APA:



Picked on April 27th at      $44.27
Change since picked:          +0.00
Earnings Date               4/22/04 (confirmed)
Average Daily Volume =        621 K
Chart =



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Personal Service and Education


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

Capital One - COF - close: 68.43 chg: -0.75 stop: 70.01

Perfect!  COF continued to sink on Monday and triggered our put
play by breaking support at its 100-dma and at the $68.00 level.
Our trigger was $67.99.  When then lowered our stop loss to 70.01
in Monday night's newsletter.  The stock shot higher very early
on Tuesday but failed again at $70.00, which is now resistance.
The high today was $69.85.  With today's failed rally this looks
like a good spot to consider new bearish positions as we target a
move toward the simple 200-dma now at $62.50.

Picked on April 26 at $ 67.99
Change since picked:   + 0.44
Earnings Date        04/21/04 (confirmed)
Average Daily Volume:     2.2 million
Chart =



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

None


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

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The Option Investor Newsletter                  Tuesday 04-27-2004
Copyright 2004, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Watch List: More Bullish Candidates
Spreads & Straddles: Rising Consumer Confidence Inspires Brief Rally!
Premium Selling Plays: Naked Puts & Calls


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

More Bullish Candidates

___________________________________________________________________

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.
___________________________________________________________________


Briggs Stratton - BGG - close: 72.23 change: +2.61

WHAT TO WATCH: This looks like an entry point for bulls.  BGG
announced very strong earnings last week and sent the stock
soaring above resistance at $70.00.  BGG's Q3 profits soared 66%
to $2.88 per share.  Plus, the company raised its full year
estimates by nearly 30%.  We like how shares have pulled back to
fill the gap from last Thursday and rebounded back above
resistance at $70.00.  After nearly five months of consolidating
sideways between $64 and $70 this stock looks ready to run.

Chart=


---

American Standard Co - ASD - close: 108.93 change: +1.19

WHAT TO WATCH: Split traders will want to keep an eye on ASD.
The company is set to hold its annual shareholder meeting on May
4th where they will vote to approve the 3-for-1 stock split
announced weeks ago.  Technical traders may want to watch it for
a breakout over resistance at $110 and its simple 50-dma.  Should
this occur we would target a move toward its highs near $116.

Chart=


---

ITT Industries - ITT - close: 81.82 change: +2.17

WHAT TO WATCH: The volume-powered move above resistance at $80.00
makes ITT look like a decent relative strength play.  This is
especially true with the major averages apparently stuck in a
trading range ahead of the fed meeting next week.  Its P&F chart
is very bullish and points to a triple-digit price target.  We'd
try and catch a dip back toward $80.00 and then target a short-
term move to $85.00-87.50.

Chart=


---

Yahoo! Inc - YHOO - close: 57.54 change: +0.54

WHAT TO WATCH: Internet stocks like YHOO are holding a lot of
investor interest lately.  Is there room for both YHOO and
Google?  Will investors rotate money out of YHOO and into Google
if it IPO's?  If that's true why is YHOO climbing with the
announcement of a Google IPO nearly imminent?  The relative
strength in YHOO looks great but we hesitate to suggest long
plays because the stock is so overbought.  Aggressive traders
might consider longs but we'd use a tight stop loss.

Chart=



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

IGT $39.77 +0.50 - It's very possible that the sell-off in IGT is
overdone.  The stock is the major player in its field and at
least one analyst has come out saying the recent weakness is a
buying opportunity.  We think they might be right.  The drop
stalled at its 100-dma, which coincided with price support near
$37.50-38.00  A rebound over $40.00-41.00 could be a decent
trigger for an aggressive long.

ETN $60.64 +0.53 - This still looks like a potential bullish
candidate if it can breakout over $62.00.


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

Rising Consumer Confidence Inspires Brief Rally!
By Ray Cummins

Stocks ended mixed Tuesday, despite an early buying spree which
erupted on news of positive economic data and another round of
favorable earnings.

The rally was supported by Conference Board data that reflected
much-improved consumer confidence and favorable jobs statistics.
Reports on existing home sales were also good with the National
Association of Realtors reporting that sales rose 5.7% in March,
well ahead of economists' forecasts for the period.  But, the
ebullient outlook did not last long as investors became worried
about geopolitical issues and future interest rates.  The Dow
Jones Industrial average finished up 33 points at 10,478 after
rising as high as 10,537 intra-day.  The NASDAQ Composite Index
ended 4 points lower at 2,032, well below its 2,053 high for the
session.  The S&P 500 closed up 2 points at 1,138, with oil and
oil services, retail, and drugstore issues enjoying solid gains.
Advancers led decliners by a ratio of 6 to 5 on volume of about
1.52 billion on the New York Stock Exchange, however breadth was
roughly even on the NASDAQ where 1.92 billion shares traded.  In
the Treasury market, the benchmark 10-year note was up 7/32 at
96 23/32 to yield 4.41%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 04/25/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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  78.41   MAY   65  70  0.45  69.55   0.45   Open
NAV     49.90  48.38   MAY   40  45  0.60  44.40   0.60   Open
DNA    112.00 118.22   MAY   95 100  0.50  99.50   0.50   Open
EBAY    75.94  82.14   MAY   65  70  0.65  69.35   0.65   Open
HDI     55.63  58.07   MAY   47  50  0.25  49.75   0.25   Open
PDCO    74.97  77.01   MAY   65  70  0.65  69.35   0.65   Open
CME    116.11 118.85   MAY  100 105  0.60 104.40   0.60   Open
MATK    65.12  68.13   MAY   55  60  0.60  59.40   0.60   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  22.84   MAY   35  30  0.60  30.60   0.60   Open
SFNT    31.65  28.60   MAY   40  35  0.70  35.70   0.70   Open
GENZ    46.40  46.46   MAY   55  50  0.60  50.60   0.60   Open
PRX     55.25  44.00   MAY   65  60  0.65  60.65   0.65   Open
MERQ    45.59  46.54   MAY   55  50  0.60  50.60   0.60   Open
NEM     42.86  40.40   MAY   50  47  0.25  47.75   0.25   Open
RYL     77.41  80.07   MAY   90  85  0.60  85.60   0.60   Open
AMZN    45.20  46.29   MAY   55  50  0.65  50.65   0.65   Open
BOBJ    27.85  29.10   MAY   35  30  0.75  30.75   0.75   Open

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

Business Objects (NASDAQ:BOBJ) is on the "watch" list and further
upside activity would suggest an early exit in the bearish spread.


DEBIT STRADDLES

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

SSYS    20.88  23.16   MAY    22    20     2.10    2.00    Open
ZMH     80.84  82.82   MAY    80    80     4.90    6.15    Open
COCO    32.46  35.37   MAY    32    32     4.10    4.70   No Play
LF      19.67  23.25   JUN    20    20     3.50    5.25    Open
BSTE    30.63  40.65   JUL    30    30     6.00   11.50    Open?
MKSI    23.10  22.19   JUL    22    22     4.70    5.50    Open

Biosite (NASDAQ:BSTE) has been the best performing position in
recent weeks, but Zimmer Holdings (NYSE:ZMH), LeapFrog (NYSE:LF)
and MKS Instruments have also been active, providing favorable
short-term gains.  The recent position in Corinthian Colleges
(NASDAQ:COCO) was not available at the target entry price, due
to the "gap-up" on the day after the straddle was listed as a
new candidate.

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

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

BJS - BJ Services  $47.20  *** Multi-Year High! ***

BJ Services (NYSE:BJS) is a provider of pressure pumping and
other oilfield services serving the petroleum industry worldwide.
The company's pressure pumping services consist of cementing and
stimulation services, and are used in the completion of new oil
and natural gas wells and in remedial work on existing wells,
both onshore and offshore.  BJ's other oilfield services include
completion tools, completion fluids and casing and tubular
services provided to the oil and natural gas exploration and
production industry, commissioning and inspection services
provided to refineries, pipelines and offshore platforms and
production chemical services.

BJS - BJ Services  $47.20

PLAY (less conservative - bullish/credit spread):

BUY  PUT  MAY-42.50  BJS-QV  OI=890  ASK=$0.30
SELL PUT  MAY-45.00  BJS-QI  OI=177  BID=$0.65
INITIAL NET-CREDIT TARGET=$0.35-$0.45
POTENTIAL PROFIT(max)=14% B/E=$44.65


__________________________________________________________________

NBR - Nabors Industries  $47.03  *** Strong Sector! ***

Nabors Industries (NYSE:NBR) is a land drilling contractor that
conducts oil, gas and geothermal land drilling operations in the
lower 48 United States, Alaska, Canada, South and Central America,
the Middle East and Africa.  It is also a land well servicing and
workover contractor with operations in the U.S. and Canada.  The
company owns over 900 land workover and well servicing rigs in the
United States, and over 200 land workover and well servicing rigs
in Canada.  Nabor's also provides offshore platform workover and
drilling rigs and owns 43 platform, 16 jack-up and three barge
rigs in the Gulf of Mexico and international markets.  These rigs
provide well servicing, workover and drilling services.

NBR - Nabors Industries  $47.03

PLAY (less conservative - bullish/credit spread):

BUY  PUT  MAY-42.50  NBR-QV  OI=654  ASK=$0.25
SELL PUT  MAY-45.00  NBR-QI  OI=461  BID=$0.60
INITIAL NET-CREDIT TARGET=$0.35-$0.45
POTENTIAL PROFIT(max)=14% B/E=$44.65



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

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.

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

BSX - Boston Scientific  $40.25  *** Profit-Taking Underway! ***

Boston Scientific (NYSE:BSX) is a global developer, maker and
seller of medical devices whose products are used in a range of
interventional medical specialties, including interventional
cardiology, peripheral interventions, neurovascular intervention,
electrophysiology, vascular surgery, endoscopy, oncology, urology
and gynecology.

BSX - Boston Scientific  $40.25

PLAY (less conservative - bearish/credit spread):

BUY  CALL  MAY-45.00  BSX-EI  OI=14839  ASK=$0.20
SELL CALL  MAY-42.50  BSX-EV  OI=13678  BID=$0.45
INITIAL NET-CREDIT TARGET=$0.30-$0.35
POTENTIAL PROFIT(max)=14% B/E=$42.80


__________________________________________________________________

RIMM	- Research In Motion  $97.54  *** Premium-Selling Only! ***

Research In Motion (NASDAQ:RIMM) is a designer, manufacturer and
seller of wide area wireless solutions for the worldwide mobile
communications market.  Through the development of integrated
hardware, software and services that support multiple wireless
network standards, the firm provides platforms and solutions for
seamless access to time-sensitive information including e-mail,
phone, short message service messaging, as well as Internet and
intranet-based corporate data applications.

RIMM	- Research In Motion  $97.54

PLAY (conservative - bearish/credit spread):

BUY  CALL  MAY-115.00  RUP-EC  OI=2945  ASK=$0.50
SELL CALL  MAY-110.00  RUP-EB  OI=6121  BID=$0.90
INITIAL NET-CREDIT TARGET=$0.50-$0.60
POTENTIAL PROFIT(max)=11% B/E=$110.50



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

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


*****************************************
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 04/25/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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   23.02    0.35   4.27%   2.04%
MICC     MAY    17    17.15   27.80    0.35   4.39%   2.04%
MNST     MAY    22    21.95   28.70    0.55   4.48%   2.51%
PLMO     MAY    17    16.90   19.62    0.60   6.80%   3.55%
HNT      MAY    22    22.00   26.01    0.50   4.76%   2.27%
IPXL     MAY    20    19.50   24.65    0.50   5.43%   2.56%
SSNC     MAY    22    21.60   26.44    0.90   7.85%   4.17%
TINY     MAY    15    14.70   20.82    0.30   4.60%   2.04%
ACCL     MAY    17    17.25   17.65    0.25   4.08%   1.45%
ADEX     MAY    20    19.45   20.93    0.55   6.05%   2.83%
IMM      MAY    15    14.70   19.85    0.30   5.24%   2.04%
IPXL     MAY    20    19.65   24.65    0.35   4.93%   1.78%
JBLU     MAY    22    22.15   28.54    0.35   4.11%   1.58%
LSCP     MAY    22    21.95   33.46    0.55   6.11%   2.51%
TINY     MAY    17    17.00   20.82    0.50   7.27%   2.94%
USG      MAY    15    14.25   15.80    0.75  11.45%   5.26%
XMSR     MAY    25    24.50   27.82    0.50   4.90%   2.04%
ASKJ     MAY    30    29.50   41.33    0.50   5.42%   1.69%
BRCM     MAY    37    36.70   42.21    0.80   5.86%   2.18%
CLZR     MAY    15    14.25   16.79    0.75  12.47%   5.26%
FWHT     MAY    20    19.35   23.02    0.65   8.83%   3.36%
IMM      MAY    17    17.05   19.85    0.45   8.37%   2.64%
INSP     MAY    35    34.45   40.32    0.55   5.28%   1.60%
MRVL     MAY    42    41.55   44.40    0.95   6.00%   2.29%
NFLX     MAY    27    27.10   29.61    0.40   4.65%   1.48%
ESIO     MAY    22    22.10   23.77    0.40   6.15%   1.81%
HOLX     MAY    20    19.50   22.77    0.50   8.05%   2.56%
GVHR     MAY    25    24.65   27.37    0.35   5.85%   1.42%
HSII     MAY    22    22.25   24.94    0.25   3.81%   1.12%
IMM      MAY    17    17.25   19.85    0.25   6.08%   1.45%
LF       MAY    20    19.55   23.25    0.45   7.54%   2.30%
TOMO     MAY    12    12.25   12.68    0.25   6.96%   2.04%
TSAI     MAY    20    19.80   23.50    0.20   4.37%   1.01%
TSO      MAY    20    19.50   20.90    0.50   8.18%   2.56%
APPX     MAY    35    34.40   44.18    0.60   5.81%   1.74%
BLDP     MAY    10     9.75   11.46    0.25   6.55%   2.56%
ELN      MAY    17    17.30   23.53    0.20   4.01%   1.16%
ERES     MAY    25    24.50   34.52    0.50   6.05%   2.04%
HOLX     MAY    20    19.65   22.77    0.35   4.54%   1.78%
LSCP     MAY    22    22.10   33.46    0.40   5.49%   1.81%
PDII     MAY    22    21.75   27.03    0.75   8.99%   3.45%
TELK     MAY    22    22.20   28.53    0.30   4.32%   1.35%
TNOX     MAY    15    14.50   17.40    0.50   8.35%   3.45%
APPX     MAY    35    34.65   44.18    0.35   4.47%   1.01%
EYE      MAY    17    17.20   22.68    0.30   5.96%   1.74%
JCOM     MAY    22    22.30   25.25    0.20   3.37%   0.90%
MGAM     MAY    22    21.90   23.75    0.60   8.55%   2.74%
MICC     MAY    22    22.10   27.80    0.40   6.16%   1.81%
NET      MAY    17    17.10   19.04    0.40   7.30%   2.34%
NIHD     MAY    33    32.88   39.72    0.50   5.22%   1.52%
PXLW     MAY    17    16.95   20.17    0.55   9.31%   3.24%
SNIC     MAY    17    17.15   20.00    0.35   6.87%   2.04%

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


NAKED CALLS

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

AFCI     MAY    25    25.75   21.06    0.75   7.73%    2.91%
QLGC     MAY    37    37.95   27.14    0.45   4.22%    1.19%
AVCT     MAY    37    38.15   35.28    0.65   6.74%    1.70%
INTU     MAY    47    48.00   44.32    0.50   4.10%    1.04%
PPCO     MAY    20    20.30   16.11    0.30  10.11%    1.48%
SINA     MAY    45    45.55   35.83    0.55   6.61%    1.21%
NANO     MAY    20    20.40   14.58    0.40  10.66%    1.96%
PHTN     MAY    35    35.60   31.45    0.60   8.38%    1.69%
SFA      MAY    35    35.55   35.96   (0.41)  0.00%    1.55% *
SOHU     MAY    25    25.75   22.84    0.75  13.84%    2.91%

Conservative investors should consider closing the position in
Scientific America (NYSE:SFA) after the company's "bullish"
earnings report.

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

ALKS     MAY    15    14.70   16.18    0.30   6.80%   2.04%
ATRS     MAY    25    24.55   29.00    0.45   7.08%   1.83%
DRTE     MAY    17    17.20   19.00    0.30   5.94%   1.74%
FWHT     MAY    20    19.65   23.00    0.35   6.77%   1.78%
GNTA     MAY     8     7.00   16.35    0.50  16.81%   7.14%
INSP     MAY    30    29.50   41.52    0.50   7.20%   1.69%
ISPH     MAY    15    14.50   16.56    0.50  11.39%   3.45%
PTEN     MAY    35    34.65   38.56    0.35   3.63%   1.01%
UTHR     MAY    22    22.10   25.77    0.40   6.82%   1.81%
__________________________________________________________________

ALKS - Alkermes  $16.18  *** Entry Point? ***

Alkermes (NASDAQ:ALKS) is a pharmaceutical company developing
products based on applying its sophisticated drug delivery
technologies to enhance therapeutic outcomes.  The company's
areas of focus include controlled, extended-release of injectable
drugs using its ProLease and Medisorb delivery systems, and the
development of inhaled pharmaceuticals based on its proprietary
Advanced Inhalation Research pulmonary delivery system.  Alkermes
partners its proprietary technology systems and drug delivery
expertise with many other pharmaceutical companies, and it also
develops novel, proprietary drug candidates for its own account.

ALKS - Alkermes  $16.18

PLAY (sell naked put):

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

SELL PUT  MAY 15    QAL QC     578  0.30  14.70   6.8%   2.0% *


__________________________________________________________________

ATRS - Altiris  $29.00  *** Bracing For A Rally? ***

Altiris (NASDAQ:ATRS) offers a range of Web-enabled solutions
that empower organizations to easily manage desktops, notebooks,
handhelds, and Windows, Linux and UNIX servers throughout the IT
lifecycle.  Altiris provides fully integrated, complete systems
management solutions for client and mobile, server, and asset
management.  The company automates, simplifies, and reduces the
cost and complexity of IT lifecycle management with a rapid
return on investment.

ATRS - Altiris  $29.00

PLAY (sell naked put):

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

SELL PUT  MAY 25    QJI QE    1105   0.45  24.55   7.1%   1.8%


__________________________________________________________________

DRTE - Dendrite  $19.00  *** Rally In Progress! ***

Dendrite International (NASDAQ:DRTE) provides multiple sales and
marketing solutions and related services to life sciences clients.
The company was originally established to provide sales force
automation solutions for the pharmaceutical industry.  Dendrite
also offers knowledge-based, technology-driven solutions that
increase the effectiveness of sales, marketing and clinical
processes for pharmaceutical and other life sciences clients.

DRTE - Dendrite  $19.00

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  DEQ QW       3   0.30  17.20   5.9%   1.7% *


__________________________________________________________________

FWHT - FindWhat.com  $23.00  *** Another Big Day! ***

FindWhat.com (NASDAQ:FWHT) operates online marketplaces that
connect the consumers and businesses that are most likely to
purchase specific goods and services with the advertisers that
provide those goods and services.  Online advertisers determine
the per-click fee they will pay for their advertisements, which
FindWhat.com and its private-label partners such as Terra Lycos's
Lycos.com and HotBot distribute to millions of Internet users.
Their network includes hundreds of distribution partners, such as
CNET's Search.com, Excite, Webcrawler, NBCi, MetaCrawler, Dogpile,
Go2Net and Microsoft Internet Explorer Autosearch.

FWHT - FindWhat.com  $23.00

PLAY (sell naked put):

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

SELL PUT  MAY 20    HFQ QD     351   0.35  19.65   6.8%   1.8% *


__________________________________________________________________

GNTA - Genta  $16.35  *** Genasense Speculation Only! ***

Genta Incorporated (NASDAQ:GNTA) is a biopharmaceutical company
with a diversified product portfolio that is focused on delivering
innovative products for the treatment of patients with cancer.  The
company's research platform is anchored by two major programs that
center on oligonucleotides (RNA/DNA-based medicines) and small
molecules.  Genasense (oblimersen sodium), the firm's lead compound
from its oligonucleotide program, is being developed with Aventis
and is currently undergoing late-stage, Phase 3 clinical testing.
The leading drug product in Genta's small molecule program is
Ganite (gallium nitrate injection), which is for treatment of
cancer-related hypercalcemia that is resistant to hydration.

GNTA - Genta  $16.35

"VERY SPECULATIVE" PLAY (sell naked put):

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

SELL PUT  MAY  7.5  GJU QU   66712   0.50   7.00  16.8%   7.1% *


__________________________________________________________________

INSP - InfoSpace  $41.52  *** Earnings Speculation! ***

InfoSpace (NASDAQ:INSP) develops and delivers a wireless and
Internet platform of software and application services to a
range of customers that span each of its wireline, merchant
and wireless business units.  Many of the company's products
and application services are offered to its customers, which,
in turn, offer these products and application services to
their customers as their own solutions.  InfoSpace provides
its services across multiple platforms, including personal
computers and non-PC devices.

INSP - InfoSpace  $41.52

PLAY (sell naked put):

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

SELL PUT  MAY 30    IOU QF     215   0.50  29.50   7.2%   1.7% *


__________________________________________________________________

ISPH - Inspire Pharma  $16.56  *** Positive Drug Data! ***

Inspire Pharmaceuticals (NASDAQ:ISPH) is a development-stage
company engaged in the discovery and development of novel
pharmaceutical products that treat diseases characterized by
deficiencies in the body's innate defense mechanisms of mucosal
hydration and mucociliary clearance, as well as other non-mucosal
disorders.

ISPH - Inspire Pharma  $16.56

PLAY (sell naked put):

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

SELL PUT  MAY 15    JPU QC      15   0.50  14.50  11.4%   3.4% *


__________________________________________________________________

PTEN - Patterson-UTI Energy  $38.56  *** Oil Service Soars! ***

Patterson-UTI Energy (NASDAQ:PTEN) is an operator of land-based
drilling rigs in North America.  Formed in 1978 and reincorporated
in 1993, the company operates in three industry segments: contract
drilling, which Patterson-UTI markets to major and independent oil
and natural gas producers and operators; drilling and completion
fluids services, which provides drilling fluids, completion fluids
and related services to oil and natural gas producers, and pressure
pumping services, which provides pressure-pumping services in the
Appalachian Basin.

PTEN - Patterson-UTI Energy  $38.56

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    NZQ QG    1040   0.35  34.65   3.6%   1.0% TS
SELL PUT  MAY 37.5  NZQ QU     272   0.95  36.55   7.9%   2.6%


__________________________________________________________________

UTHR - United Therapeutics  $25.77  *** Rally Mode! ***

United Therapeutics (NASDAQ:UTHR) is a biotechnology company
focused on the development and commercialization of therapeutics
to treat chronic and life-threatening diseases in 3 therapeutic
areas: cardiovascular medicine, infectious disease and oncology.
It has 5 therapeutic platforms: Prostacyclin analogs are stable
synthetic forms of a molecule that has effects on blood-vessel
health and function; Remodulin has been approved in the United
States for the treatment of pulmonary arterial hypertension in
patients with New York Heart Association Class II-IV symptoms;
Immunotherapeutic monoclonal antibodies are antibodies that
activate patients' immune systems to treat cancer; Glycobiology
anti-viral agents are a class of small molecules that may be
effective as an oral therapy for hepatitis C or other infections,
and Telemedicine involves portable digital devices that enable
physicians to remotely monitor patients' bodily measurements.

UTHR - United Therapeutics  $25.77

PLAY (sell naked put):

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

SELL PUT  MAY 22.5  FUH QX    1693   0.40  22.10   6.8%   1.8% *



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

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.

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

NFI - NovaStar Financial  $33.40  *** Volatility = Premium! ***

NovaStar Financial (NYSE:NFI) is a specialty finance firm that
originates, invests in and services residential nonconforming
loans.  NFI operates through three separate but inter-related
units: mortgage lending and loan servicing, mortgage portfolio
management and branch operations.  The company offers a range
of mortgage loan products to borrowers (nonconforming borrowers)
that do not satisfy the credit, collateral, documentation or
other underwriting standards prescribed by conventional mortgage
lenders and loan buyers, including government-sponsored entities
such as Federal National Mortgage Association (Fannie Mae) or
Federal Home Loan Mortgage Corporation (Freddie Mac).

NFI - NovaStar Financial  $33.40

PLAY (sell naked call):

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

SELL CALL  MAY 45    NFI EI    1233   0.40  45.40   7.2%   0.9% *
SELL CALL  MAY 40    NFI EH    1136   1.20  41.20  19.1%   2.9%


__________________________________________________________________

PHTN - Photon Dynamics  $29.26  *** Sell-Off in Progress! ***

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  $29.26

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     236   0.30  35.30   6.1%   0.8% *
SELL CALL  MAY 32.5  PDU EZ     379   0.90  33.40  12.2%   2.7%


__________________________________________________________________

RMBS - Rambus  $21.11  *** Infineon Lawsuit Delayed! ***

Rambus (NASDAQ:RMBS) designs, develops and markets "chip-to-chip"
interface solutions that enhance the performance and effectiveness
of its client's chip and system products.  These solutions include
multiple chip-to-chip interface products, which can be grouped into
two categories: memory interfaces and logic interfaces.  Rambus'
memory interface products provide an interface between memory chips
and logic chips.  In addition, the firm's logic interface products
provide an interface between two logic chips.  Rambus has two major
memory interface products: Rambus dynamic random access memory and
Yellowstone.  Additionally, it offers a logic interface product for
high-speed serial chip-to-chip communications between logic chips
in a range of computing, networking and communications applications.

RMBS - Rambus  $21.11

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    BNQ EE    6289   0.30  25.30   7.8%   1.2% *
SELL CALL  MAY 22.5  BNQ EX    1012   0.85  23.35  13.6%   3.6%



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SEE DISCLAIMER - SECTION 1

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