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Daily Newsletter, Sunday, 05/02/2004

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The Option Investor Newsletter                   Sunday 05-02-2004
Copyright 2004, All rights reserved.                        1 of 5
Redistribution in any form strictly prohibited.

Entire newsletter best viewed in COURIER 10 font for alignment

In Section One:

Wrap: Triple Ugly
Futures Market: See Note
Index Trader Wrap: A BALANCED VIEW
Editor's Plays: Go Long!
Market Sentiment: April Ends Lower
Ask the Analyst: See Note
Coming Events: Earnings, Splits, Economic Events


Posted online for subscribers at http://www.OptionInvestor.com
******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        WE 4-30         WE 4-23         WE 4-16         WE 4-09
DOW    10225.57 -247.27 10472.9 + 20.87 10451.9 +  9.94 - 28.56
Nasdaq  1920.15 -129.62 2049.77 + 54.03 1995.74 - 57.12 -  4.31
S&P-100  540.88 - 15.92  556.80 +  1.86  554.94 -  1.18 -  1.98
S&P-500 1107.30 - 33.30 1140.60 +  6.03 1134.57 -  4.76 -  2.48
W5000  10793.66 -356.76 11150.4 + 72.34 11078.1 - 87.98 - 36.36
SOX      443.48 - 44.50  487.98 +  7.84  480.14 - 31.64 -  2.08
RUT      559.80 - 30.91  590.71 +  7.34  583.37 - 14.51 -  5.57
TRAN    2886.44 -115.27 3001.71 + 62.24 2939.47 + 12.59 - 39.78
******************************************************************

Triple Ugly
by Jim Brown

For the third consecutive day the markets sold off on heavy
volume and serious technical damage has been done. There was
only a minor attempt to rally the big caps but the direction
of tech stocks was never in doubt. Small caps were also weak
and came within two points of a four month low. Big caps,
techs and small caps all closed at the lows of the day after
three days of selling. Definitely a triple ugly day.

Dow Chart - Daily


Nasdaq Chart - Daily



Economically the results were decent but nobody seemed to
care. The report parade began with Personal Income, which rose
+0.4% in March and slightly higher than expected. Considering
all the complaining about lack of leverage by employees this
headline number was a little surprising. However, the wages
component only rose +0.2% and it was the slowest growth of
the year. The higher growth came from proprietors' income
and from supplements to wages. The kicker was the inflation
rate at +0.3%. This translates to a REAL income and spending
rate of only +0.1% and the lowest growth rate since last fall.
Headlines can be very deceiving and they don't always tell
the entire story.

The final Michigan Consumer Sentiment for April at 94.2 was
up from the preliminary number of 93.2 but still lower than
the March 95.8. Both Present Conditions and Expectations
fell for the month. In reality the index has been roughly
flat for the last three months since the 103.8 posted in
January. Consumers are not changing their views along with
the current recovery. That suggests there is little real
confidence of its progress but consumers are waiting
patiently.

The New York NAPM just continues to move forward as economic
conditions in the city improve. The index surged over +10
points to 282.2 for April and all major components jumped
sharply. The +3.8% gain was very strong and shows the
rebound from the 9/11 disaster is well under way. This
is not a true reflection of the rest of the U.S. since the
economic damage to NYC was enormous but it is encouraging
to see the improvement.

A broader representation of the current business environment
came from the Chicago PMI rising well above estimates of 60.0
to 63.9 in April. This is a three month high and suggests
the March lull finally found some traction. March saw a drop
to 57.6 from 63.6 in Feb and analysts worried this was the
beginning of a down trend. With the return to the 63+ level
there was broad relief from the analyst community. Inventory,
production and new orders all jumped nearly +5 points and
posted strong gains. The component with the least gains was
employment at only +1.7. The prices paid component rose to
the highest reading since 1995 at 76.1 and it was also the
highest component in the index. Supplier deliveries hit a
16-year high at 69.7 indicating that delays are very common
and prices paid should continue to rise. I am sure Greenspan
is watching this clear sign of inflation.

The NY-NAPM and the PMI along with other manufacturing surveys
published recently are continuing to show growth although
somewhat limited in some areas. Strong reports like the PMI
are pumping up expectations for the ISM on Monday. It should
be strongly positive and well over the 63.0 consensus. Where
have we heard this recently? GDP maybe? The pre-release hype
builds expectations to levels that may not be met leading to
market letdowns. With that said, the ISM has been flat in
the 62.5 range since November and with consensus only 63.0
I am with the group in thinking we are in for an upside
surprise. We have seen a plateau in this index after last
years growth and resistance appears to be 63.0. A major break,
say to 65, would be very unlikely but 64 may be in the cards.

The challenge here is the Fed. If we had a real breakout it
would drastically increase the chances of a negative Fed
event. That puts us back to wanting the porridge to be just
right and not too hot or cold. The current best guess for the
Fed meeting is for only a change in the Fed statement to a
bias that leans toward rate hikes. The only question today
is how strong that bias statement will be. It will be examined
for hints of how long the Fed will be in a tightening bias and
how high the rates might get. Obviously they will not explain
it in English but the tea leave readers will be dissecting
every word. While there are no hikes expected for May or June
the Fed funds futures are now projecting a hike in Aug, Sept
and Nov with the funds rate being 1.75% in November. That
would be a strong series of hikes in an election year.

The key point beginning to pop up in most reports is rising
inflation. The PMI showed prices paid at a nine year high.
The NY-NAPM Regional Price Index component jumped +9 points
to 71 and well over the multiple consecutive 50s at the end
of 2003 and early 2004. Prices for gross domestic purchases
in the GDP rose +3.2% compared to only +1.4% in the same
period last year. We are reaching the point where the Fed
will have to fight inflation regardless of the speed of
economic growth. That is the under current analysts will be
looking for in the Fed statement.

The growing problem for the markets is not necessarily the
Fed but the lack of aggressive guidance as I have mentioned
before. With earnings suddenly taking a turn for the worse
the markets are not seeing buyers coming in at the dips.
For instance in just the last two days we have had outright
earnings misses or guidance downgrades from GTW, FDRY, BOBJ,
APCC, SPW, IM and WIN just to name a few. There have been
numerous tech stocks with less than expected guidance and
the Nasdaq has suffered for it.

If you doubt the tech flight has begun you only need to look
at SLAB, FFIV, CSCO, NVDA, GNSS, YHOO, ABTL, KLAC, AMAT, etc.
Even IBM has dropped to six-month lows. Hardware, software
and Internet stocks are moving to multi-month lows. Even the
biotech sector, which has seen numerous rockets lately is down
-8% for the week. This is pure PE compression from the lack
of aggressive guidance and profit taking from the 2003 gains.
Expectations at this point are in the tank.

Technically the markets are in trouble. I mentioned Thursday
that the bottom of the range was 10250/1975 and the Nasdaq
had already broken that level. The Dow had broken but then
recovered. Friday the Dow joined the Nasdaq with a new low
for the month and a close at 10225. This is well below all
the short term averages but still well above the 200dma and
well above the 10007 low from March. It is ugly but it is
still not a disaster.

The disaster for the week was the Nasdaq, which closed at
1925 and -134 points below the high for the week. Even more
critical for the Nasdaq was a break of the 200dma at 1933.
The 200dma is historically a rebound point for serious tech
corrections and while the Nasdaq did bounce on the first
touch it failed again at the close. This is the first time
the Nasdaq has closed under the 200dma since March-2003.
This is a critical failure if it holds. I say "holds" since
it happened late on a Friday in front of weekend event risk.
Also, the entire three days of selling could have been the
result of some asset allocation program before month end.
If buyers show up at the open on Monday and push us back over
the 1933 level, only +13 points away, then the tech cat has
at least one life left. If the selling continues at the open
then we are in serious trouble. The 200dma is considered to
be a fairly common institutional sell signal, a stop loss
for funds. Because it is an index it is not going to be a
wide spread dump signal but more of a warning. Funds will
sell individual stocks that break the 200 but not all stocks
just because the Nasdaq broke. It functions more as a warning
to take profits than a general sell signal. Also, they will
not just dump a stock but will begin reducing positions. The
only material support level remaining for the Nasdaq is 1900,
which held in March. The 200dma was 1890 at the time.

There was some discussion in the Market Monitor on Friday
about whether the 200sma (simple) or 200ema (exponential)
was the correct average for determining true support. While
the most common analysis involves the 200sma at 1933 there
is ample reason to suggest the 200ema may be more relative
to the Nasdaq itself. The following chart shows both the
averages and the differences over the last year. The 200ema
is currently 1913 and a negative open on Monday could make
the entire conversation mute.

Nasdaq Chart - Daily with 200 sma/ema




The major problem for the Nasdaq is still the SOX and that
index broke to another new six month low on Friday. There
was an attempt to rally back over 450 at the open but it
quickly failed and moved back down to close near the lows.
The SOX is well below all the averages but is approaching
decent support at 420. That could be the resting point that
provides support for the Nasdaq next week. Many of the chip
stocks are extremely oversold and are due for a bargain
hunting bounce soon.

SOX Chart - Daily


Russell-2000 Chart - Daily




Also providing risk for the Nasdaq is the Russell, which set
a new low for the month and came within two points of setting
a new yearly low. The small cap stocks have been taking the
brunt of the pressure from declining guidance. They do not
have the resources or the breadth of business lines that would
allow one product line to pickup the slack in sales for another.
Many small cap companies are single focus and a slowing of
growth in their target market means a slowing of growth for
the entire company. The current weakness in small caps is a
concern for mutual funds. Many funds concentrate on small caps
for high growth prospects and a drop in the Russell means those
funds are either selling stock or seeing their investments sink
rapidly. The Russell should find support at the 200dma just
over 540.

Nasdaq-100 Index Chart - Daily




If the Nasdaq has any single hope of rebounding at the open
on Monday the NDX is it. The sell off on Friday closed at
exactly 1400 with the 200ema at 1395. This is strong support
and we are significantly oversold on the NDX. The QQQ, which
is based on the NDX, fell nearly -2.50 from the weeks high to
close at $34.80. This -7% drop for the week has been nearly
vertical and has shown no letup. It is time for a bounce if
for no other reason but to relieve the oversold conditions.
The 200ema should be support at 34.69. Putting together the
stop at NDX/QQQ support right at the close and the COMPX 200
ema at 1913 I would be really surprised to see a significant
drop at the open on Monday. If we did have a strong Monday
morning drop it would suggest much more serious problems.

I have mentioned earnings several times and as of Friday
about 80% of companies have reported. The other 20% will
drag out over the next four weeks. Regardless of the earnings
and guidance for those stragglers there is nothing on the
earnings horizon to provide an upside catalyst. For all
practical purposes earnings are over.

The catalyst for next week is clearly the Fed and the economic
reports. We have the ISM on Monday, Factory Orders and FOMC
meeting on Tuesday, Productivity on Thursday and the Jobs
report on Friday. What the Fed does on Tuesday could make
the rest of the week's reports insignificant. The two key
reports are ISM and Jobs. The Jobs data is routinely given
to the Fed in advance of the release. Whether it is ready
on Tuesday for their discussion is unknown. The Jobs are
really the only wild card for a rate hike. The ISM is not
likely to be strong enough to offset the GDP depression and
will not be a material factor unless it is a blowout. The
Jobs report is the key. The Fed has been know to use jobs
as a rate hike trigger in the past. Another blowout could
push the Fed to react. Should the Fed offer a tame bias
statement then I would suspect the jobs report will also
be tame. Should the Fed issue a harsh statement then I
would expect the jobs to be strong.

I have heard very little commentary about the expectations
for Friday and the consensus is for only a gain of +185,000.
Considering last month produced +308,000 new jobs this is a
material drop. If you remember the consensus for last month
was only +100,000. Obviously we have a lot of contradictions.
Higher estimate but much lower than previous gains. This
suggests there is some fear that the month was a blip in
the process and not a real sustainable gain. I have heard
several analysts suggest anything over +100K this month
would be a relief and that worries me. It means they can
see the potential for a drop back under 100K and that the
jobs growth has not really started. I have heard nobody
suggest that the number will be higher than the 185K
consensus. No outrageous whisper numbers, no bragging,
nothing. This may be good. It means there is some fear
of failure and a decent number could actually produce a
surprise. We just do not want it to be too strong or the
Fed could react quickly. In the past they have been known
to act on the following Monday to raise rates. That
potential should keep the lid on any post Jobs blowout
rally.

Trading next week could be crazy. Whenever there is a major
move in the markets that is potentially a trend change the
trading activity increases. Those expecting a bounce rush
in (at least we hope they rush in) and those expecting a
continuation of the drop look for bounces to sell. It can
produce some very volatile conditions. The calming force
should actually be the Fed meeting and that would be a
change. With no rate hike anticipated traders could be
anticipating a post Fed relief rally. If this is the case
then Monday at the open would be the likely place for it
to start. The NDX support at 1400 is my guess for a trigger.
If we do get a bounce on Monday it probably will not be very
strong due to lingering doubt about rates. I would view it
more as positioning for a post Fed move. Volume should be
lighter as long as we move higher. Picking direction after
the Fed meeting is best left to those psychics with a
crystal ball.

Holidays overseas will close the London market on Monday
and the Japan markets for three days starting with Monday.
Since the Nikkei had fallen for three straight days this
could also take some pressure off the U.S. markets.
Personally I will be going long in the Monitor on any
strength at the open. I will be using NDX 1400 as my guide.
Long over 1400, short under 1395. The Dow tried to rally
all day Friday and the Nasdaq kept dragging it down. The
-6% drop in the Nasdaq for the week was three times larger
than the -2% drop in the Dow. That makes the Nasdaq/NDX the
key for me on Monday. One word of caution, if you do get
long don't get married to your positions. Any rally has
plenty going against it for the long term. Until we
determine the new range and direction your stops could
be your best friend. While I can see the potential for a
rebound from 1400 on Monday there is always the chance
that 1400 was the last elevator stop before the express
ride begins. If we do move lower do not fight it. Should
that support fail it could be a long drop.

Enter Very Passively, Exit Very Aggressively!

Jim Brown


**************
FUTURES MARKET
**************

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


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

A BALANCED VIEW
By Leigh Stevens
lstevens@OptionInvestor.com

THE BOTTOM LINE –
The S&P has reached an area where there is some technical
support, although I could see a final drop in the S&P 500 (SPX)
to the 1100-1095 area, to 533-534 in the S&P 100 (OEX) and to
around 10,200 - 10,180 in the Dow 30 Average (INDU). I'm not
saying that I see currently suggesting an immediate resumption of
the strong up trend that existed for the 12 months into the late-
February top.  The blue chip indices are not yet registering a
fully "oversold" condition.  In the short-term I anticipate a
rebound based on the build up of put activity, which reached a
level Friday that functions for me as a contrary indicator - that
is traders got so bearish, as I measure this, that it's bullish.

In the Nasdaq market segment, the Composite (COMP) will probably
not fall much further, maybe back to the 1900 area (from 1925 on
Friday); the Nasdaq 100 should find support around 1400, but 1370
might be touched; QQQ reached minor support at the low end of its
hourly downtrend channel already, at 34.80 - but a fall to the 34
area can't be ruled out if a re-test of the late-March lows was
in the cards.  I somehow think that there will be a rebound from
recent lows.  The Nasdaq has fallen further than the S&P on a
percentage basis, but these indices are also not yet fully
oversold. However, a sideways trend for a few more weeks will
bring oscillator type overbought/oversold measures down further.
Tech earnings were the first to go at the major peak of the
market in 2000 and will likely be the last to come back, at least
on a sustained basis.

Bottom bottom-line to traders: don't overstay in puts taken for a
trade or how NOT to turn a trade into a buy and hold situation
anticipating a further free fall.  Call purchases can be
considered of course if you trade very short-term. I tend to
think that the first rally will not be the most sustained one.

FRIDAY'S TRADING ACTIVITY –

Well they didn't 'dress up' those 'windows' in stock portfolios
for the month that ended Friday, as the tone of trading was
bearish overall for the last week in April - now, on to May.

After holding on to gains for some of Friday, the S&P 50 (SPX)
ended down 6.63 points (-0.6%) to 1,107.26; the Dow 30 Average
(INDU) closed at its intraday low, off 46.70 points (-0.5%),
ending at 10,225.57. [For the week, SPX lost nearly 3% and the
Dow, 2.4%. For the month SPX was down 1.7% and 0.4% year-to-date;
the Dow lost 1.3% for the month of April and 2.2% for the year.]

The Nasdaq Composite also closed right around its Friday intraday
low, off 38.6 points (-2%) to close at 1920.15. [For the week,
COMP was off a sizable 6.3%, putting it down 4.1% on the year.]
The Nasdaq extended its losing streak to five straight days on
Friday.

Jitters about an expected shift in interest rates, combined with
China's attempts to cool its economy and developments in the
Middle East all conjoined to keep pressure on stocks in April.

The worst performers continue to be tech stocks - networkers,
internet, semiconductors, hardware, software, airlines,
biotechnology, and the broker sectors were some of the market's
worst-performing groups. Drugs, gold, integrated oil and natural
gas were among the few winners.

Next week brings another round of economic reports with the ISM
index on Monday, the FOMC meeting on Tuesday, the ISM services on
Wednesday and the non-farm payrolls report on Friday.

An early bounce occurred Friday, as the market took kindly to
another round of economic data, earnings from select Dow-
components here at home and news in Iraq - namely, a pullback
by Marines from Fallujah, Iraq. This was not to last of course.

Personal income and spending numbers came out before Friday's
Open and showed just a 0.1% gain, the smallest in five months.
Real disposable incomes increased 0.1 percent in March, the
smallest gain in six months. This was still good-news if the
focus was on whether there is a compelling reason for the Fed to
hike interest rates at some point.

The Chicago PMI (Purchasing Manager's Report) was expected
to jump from 57.6 in March to 60-61 in April. The Chicago PMI
report beat estimates and was reported at 63.9, but as OIN noted
Friday, this report was not soothing to those concerned about an
interest rate rise.

The latest numbers from the University of Michigan consumer
sentiment were expected to rise a bit. Sure enough, the U of M
said its consumer sentiment index improved to 94.2 in April from
93.2 earlier in the month - however, their index was down from
95.8 in March so there was little to cheer about.

Expect some Monday morning reporting on any market comments from
Warren Buffett, who is hosting his company's annual shareholder
meeting in Omaha this weekend, with thousands of investors and
fans flocking to hear what he has to say about the business cycle
and where he thinks the economy might be headed this year.

OTHER MARKETS –
The benchmark 10-year Treasury note closed up 12/32 at 96 5/32,
with its yield falling to 4.49%, down from 4.55% on Thursday. In
the Forex markets, the dollar was off slightly against the euro
to wind up at $1.1973 in New York trading. The greenback was up
0.5% against the Yen, closing at 110.43 yen to the dollar.


MY INDEX OUTLOOKS –

S&P 500 Index (SPX) – Daily chart:

The recent lows have put SPX back at its rising longer-term up
trendline and could be a natural stopping point to the recent
decline.  On the other hand, a decisive break below the bottom
line of the symmetrical triangle type pattern traced out on the
chart below could suggest a more bearish outcome than this. My
best guess is that the immediate further downside potential is
limited, especially given the bullish 1-day reading on my Call to
Put options indicator.

Resistance is at 1140, support in the 1105-1107 area, then at
1100-1095. I would prefer taking put profits and buying further
dips by going into index calls, looking for at least a short-term
bounce.




S&P 100 Index (OEX) – Daily chart:

My view of the OEX is similar to that of the SPX, in that there
is some likelihood that the recent drop to the up trendline might
be the low.  However, its also quite possible that the prior lows
around 532-534 get re-tested, which would also put the S&P 100
Index down at the lower trading band or envelope line (equaling a
level that is 3.5% under its 21-day moving average) as well as in
the area of its 200-day moving average.

The envelope lines are something I use as a benchmark only as the
S&P tends to trade within these extremes a lot of the time.
However, indicators like the 200-day average are more universal -
institutional money managers will take note of the 200-day
average and might use it as a benchmark and see this area as a
place to do some more buying. And these folks are the 900 pound
gorillas of the market.

Near resistance is at 547-548, then at 555 on up to 558. I don't
always repeat what I think is obvious (ha) - the green up arrows
is what I figure as significant or noteworthy support points and
the red down arrows are at noteworthy resistance areas.




Dow Industrials (INDU) Daily:

You can see from the right hand Weekly (close-only) chart below
that this Index has barely fallen from its recent peak.  But that
recent peak was also a downside reversal from a longer-range
(down) trendline (relative to tops made in Jan 2000 and May 2001)
- and this top also was in the area of a prior significant peak.
Since uptrends are defined as a series of higher rally peaks, the
Dow has failed to establish that there is a major bull market in
place - not yet.

Shorter-term, resistance is in the 10,500 area, and support as
suggested by the daily chart up trendline, is around 10,200.
Intermediate support is figured at 10,000, at the 200-day moving
average. (I figure major support at 8,500 at the long-term weekly
up trendline.) Often, when INDU has an "inside day" like it did
on Friday (the price range being 'within' the prior day's), this
marks the end of the decline short-term.  Stay tuned on that.

If there was one more shot down to 102-101.8, I would not only
exit puts in the Dow Index options - DJX - but buy some calls,
anticipating a tradable rebound in the coming week.




Nasdaq Composite (COMP) Index – Daily:

Resistance is at 1980 at a prior low  - what was support tends to
"become" resistance - as noted on the level gray line on the
chart below.  Next higher and more key resistance is at 2050, at
the down trendline.

Key areas I'm watching on the downside: at the lower envelope
line and already reached on Friday, with the decline to the 1920
area; and, the obvious technical support at 1900 as implied by
the prior lows.  Hey, it worked before to buy tech in this area
in terms of the Composite!  The market works on price history to
some extent.




On a short to Intermediate-term basis, the Composite is now
registering in an oversold area, at least as suggested by the 14-
day RSI.  Stay tuned on what effect this has if investors
continue to treat tech stocks as having unacceptable levels of
risk around current (P/E) multiples based on expected earnings.

Nasdaq 100 (NDX) Index  – Daily:

"1410, maybe a quick dip to 1400, is my target on NDX, with
upside potential back up; to 1450 on a rebound" - what I said in
my Thursday night Index Wrap. I would add that there is potential
for re-test of the prior lows around 1370.

However, NDX on Friday got back to the previously broken down
trendline as can be seen on the chart - if a return to a
previously broken UP trendline is the "kiss of death" trendline
as I sometimes call it (smiley face), then a return to the
previously broken DOWN trendline could be called the "kiss of
life" trendline:-  Stay tuned on this.

Anyway, I tend to think it's too obvious a next downside target
as being to the prior lows.  Hey, if it was that easy, we would
all be rich or richer than we are from trading activities anyway!




Nasdaq 100 tracking Stock (AMEX:QQQ)– Hourly:

In the 'Opps I spoke to soon' category of life, here is also what
I mused on my previous Index commentary: "contrary to what I said
about a target to 35, then maybe to 34.50 (or 34), in the short-
term I think that the Q's could rally some first, probably back
up to 36.30 or so." - WRONG! - well it goes to show, don't be
hasty to give up on your objectives.  So now we are in the zone
where I see potential support shaping up, what!?

I did cover some short positions in QQQ stock on Friday but
didn't yet buy to play an anticipated bounce given the weak tone
of the market in the afternoon.  However, buying under 35, on
down to 34 and using an exiting sell stop at 33.7, I consider a
trade on the long side to have some short-term upside potential
and decent risk to reward.

I figure near resistance to be at 35.60-35.75, then at 36.50 at
the 21-day moving average, on up to around 36.75 at the upper end
of the hourly downtrend channel drawn on the QQQ hourly chart
below right. The other noteworthy technical/chart aspect is that
Friday's low put the Q's back to a possible (downside) stopping
point at the previously broken down trendline on the Daily
(below, left) chart.




Good Trading Success!


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

Go Long!

After a -300 point Dow drop from the week's highs and a
-138 point drop in the Nasdaq there has to be a relief
rally around here somewhere. I know we have all uttered
those words before but this time it is different. (grin)

This is a short term, high speculation play for 2-3 days
maximum. Don't play this if you are not prepared to lose
all or part of your investment. This is a roll of the
dice that we see a rebound from NDX 1400, Dow 10200,
Nasdaq 1900-1913.

The only question is long what? The NDX is right on
support at 1400. (QQQ 35.00)

The QQQ options are:

May-$33 Call QAV-EG $2.10
May-$34 Call QAV-EH $1.35
May-$35 Call QQQ-EI $0.75
May-$36 Call QQQ-EJ $0.35

A $1 rise in the QQQ will change to premium to near the
one above it. The $35 option would jump to $1.25 est. The
$36 option would jump to $0.70 est.

For a percentage increase the $36 option would double or
a +100% increase. The $35 option would rise about +90%
and the $34 option about 70%.

The dollar risk is less on the $36 option because only
35 cents is at risk. Unfortunately there is a high risk
of loss because it is already out of the money.

The $35 option may have a smaller percentage gain on a
$1 move but the amount of profit is also higher at 70
cents. Everything has a trade off between risk and reward.

I am not going to debate the various strikes because
everyone has their preferences. Choose the one you like
and target $36 for an exit. Stop on this play would be
$33.95. ($34 is strong support) But be aware that the
majority of the premium would evaporate before $34. With
only three weeks left this is a three-day play, max!
If the target is not hit by Wednesday exit promptly.

QQQ Chart - Daily




DJX Options

The same scenario exists on the DJX options. With the
Dow at 10225 the odds of hitting 10300 are decent and
10350 slightly less. 10400 would be a real stretch for
me but it depends on Mr. Market.

The DJX strikes are:

May-$101 Call DJV-EW $2.10
May-$102 Call DJV-EX $1.50
May-$103 Call DJV-EY $0.95
May-$104 Call DJV-EZ $0.60

With the Dow at 10225 today a +100 point gain to 10325
would move each premium up one strike. 60-95, 95-1.50,
1.50-2.10. Any more over 10325 would be icing on the cake.


The target on the Dow would be 10325-10350. Don't get
greedy. I would set a stop at 10175. If it breaks 10200
you should be ready to bail. This is a three-day play,
max! If the target is not hit by Wednesday exit promptly.

Dow/DJX Chart - Daily




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

EBAY Update

It was a tough week for the EBAY put play. After trending
down on Monday there was a rumor on Tuesday that they were
going to announce a 2:1 split. Shorts covered and the stock
jumped from $81.31 to $84.75. Those that kept the faith
were rewarded and the rumor faded and EBAY closed at the
low for the week on Friday at $79.91.

The Google news is hogging the airwaves and drawing attention
to the very expensive PE ratios for EBAY, AMZN and YHOO. The
prices for each are taking a dive although it could be months
before the Google IPO is priced.

The market drop is not hurting this play either and I think
the worst is over. A move farther under $80 next week could
set the pattern and our target at $76 is not that far away.

http://members.OptionInvestor.com/editorplays/edply_042504_1.asp



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

Taser Update

Take this one to the bank. TASR split 2:1 on Friday and the
stock lost another -5.50 to close at $32.34 ($64.68 split
adjusted) This is well under out $110 short and the potential
for TASR to return to the split price of $55 is nearly zero.

If everything continues according to plan you will be put
the stock at $55 and that stock will cover your short at
$55. The $23 in premium you received minus the $3 estimated
for slippage in the three transactions nets you a nice $20
profit.

With all the premium in the $55 puts being ITM at $23.00 and
TASR -$23 below the strike price you could close the trade
now for the bid/ask spread and be done.

Do me a favor. Help me keep my eyes open for another high
flyer we can do this with in the future.

http://members.OptionInvestor.com/editorplays/edply_041804_1.asp

http://members.OptionInvestor.com/editorplays/edply_042504_1.asp


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


News Corp Update $36.56

Still waiting for a chance to fill the last one third of
the position. Waiting until entire position is filled to
sell calls against our current leaps. It would help to
have a market bounce to actually produce some call premium
to sell. I am very encouraged by the staying power of NWS.
It was actually positive on Friday.

Still unfilled:

Buy (2) Jan-2006 $40 Calls WLN-AH with a touch of
200dma (currently $35.05)

http://members.OptionInvestor.com/editorplays/edply_041104_1.asp

http://members.OptionInvestor.com/editorplays/edply_041804_1.asp


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

April Ends Lower
- J. Brown

Boy, what a week.  The NASDAQ ended the week down five days in a
row for a 129-point loss (-6.29%) and a technical breakdown below
its simple 200-dma.  The Dow Industrials lost 200 points but
remained within its April trading range.  Concerns over interest
rates, the economy, the presidential election and Iraq continue
to buffet the markets and there doesn't appear to be any let up
in sight.

The country is still very divided over the upcoming election and
the Iraq conflict as evidenced by the reaction to Koppel's
Nightline television show on Friday.  Ted Kopped planned to read
the names of 500 of the war dead from Iraq as their photos
flashed across the screen in an effort to "humanize" them.  Some
felt it was not an act of honoring the dead but a political move
to undermine the President's support.

Not helping matters was the prisoner-photo scandal where a dozen
American soldiers sadly mistreated and abused naked Iraqis.  It
was not our proudest moment and that handful of soldiers
undermined the presence of the 135,000+ servicemen who are doing
their job honorably.  Our opponents were more than happy to air
the material as fodder to fuel the rising resentment against the
U.S.  How does this affect the stock market?  Wall Street is
already nervous about how Iraq will affect the upcoming November
elections and scenes of misuse under American soldiers can spark
a new round of violence in Iraq and abroad.

Believe it or not earnings season is still very much in full
swing but the majority of the large caps and S&P 500 components
have already announced.  Investors are turning their focus on
economic reports and that we might be more thankful since the
latest batch of earnings reports have been mostly flat to
negative.  Next week is full of major economic news and they will
likely set the tone for trading through May.  The ISM index comes
out on Monday and while traditionally a market mover investors
may sit tight as we wait for Tuesday's FOMC meeting.  Wednesday
unveils the ISM services index and Friday the non-farm payrolls
report.

Coincidentally, the Stock Traders Almanac states that the first
day of trading in May has been up 5 out of the last 6 years.
Considering how short-term oversold the markets are odds for a
bounce look good.


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  8340
Current     : 10225

Moving Averages:
(Simple)

 10-dma: 10376
 50-dma: 10395
200-dma:  9973



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  902
Current     : 1107

Moving Averages:
(Simple)

 10-dma: 1127
 50-dma: 1130
200-dma: 1073



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1094
Current     : 1401

Moving Averages:
(Simple)

 10-dma: 1458
 50-dma: 1450
200-dma: 1409



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

The VIX and VXO, while up strongly this week, remain within their
April trading range.  The VXN has broken out of its recent
trading range on the breakdown in the NASDAQ but the VXN has yet
to break out above its 200-dma.

CBOE Market Volatility Index (VIX) = 17.19 +0.59
CBOE Mkt Volatility old VIX  (VXO) = 17.56 +0.26
Nasdaq Volatility Index (VXN)      = 25.73 +0.83

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

          Put/Call Ratio  Call Volume   Put Volume

Total          1.02        794,028     1,605,964
Equity Only    0.95        681,410       649,293
OEX            0.82         22,197        18,132
QQQ            2.04        144,106       293,838


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

Bullish Percent Data

           Current   Change   Status
NYSE          73.7    - 1     Bull Confirmed
NASDAQ-100    43.0    - 4     Bear Confirmed
Dow Indust.   80.0    + 0     Bear Confirmed
S&P 500       69.6    - 2     Bear Confirmed
S&P 100       70.0    - 3     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: 1.75
10-dma: 1.29
21-dma: 1.11
55-dma: 1.18


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    1064       934
Decliners    1723      2161

New Highs      32        37
New Lows       65        56

Up Volume    535M      316M
Down Vol.   1405M     1820M

Total Vol.  1972M     2152M
M = millions


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

Commitments Of Traders Report: 04/27/04

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 aren't making any big moves and remain net bearish.
Small trades are relatively flat from last week as well and
remain net bullish.

Commercials   Long      Short      Net     % Of OI
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%)
04/27/04      406,927   416,244   ( 9,317)   (1.1%)

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
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%
04/27/04      133,775    90,535    43,240    19.3%

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

Commercial traders have upped their bets on both longs and
shorts but remain net bearish.  Small traders have decreased
the size of their long positions but are still strongly bullish.


Commercials   Long      Short      Net     % Of OI
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%)
04/27/04      291,365   370,549    (79,184)  (12.0%)

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
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%
04/27/04      175,788     69,613   106,175    43.3%

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


NASDAQ-100

There is virtually zero movement in the positions for commercial
traders but luck would have it the little movement we did get
pushed them to a new bullish high.  Small traders are also
stuck in limbo.


Commercials   Long      Short      Net     % of OI
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%
04/27/04       54,196     33,948    20,248   23.0%

Most bearish reading of the year: (21,858)  - 08/26/03
Most bullish reading of the year:  20,248   - 04/27/04

Small Traders  Long     Short      Net     % of OI
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%)
04/27/04        9,008    20,347   (11,339)  (38.6%)

Most bearish reading of the year: (12,750) - 04/06/04
Most bullish reading of the year:  19,088  - 01/21/02

DOW JONES INDUSTRIAL

Commercial traders aren't changing their bets on the Dow either
and remain marginally net long.  Small traders remain net bearish
but they have reduced their short positions.


Commercials   Long      Short      Net     % of OI
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%
04/27/04       23,676    22,009    1,667       3.6%

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
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%)
04/27/04        5,998     8,868   (2,870)   (19.3%)

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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***************
ASK THE ANALYST
***************

No Ask the Analyst This Week


*************
COMING EVENTS
*************

-----------------
Earnings Calendar
-----------------

Symbol  Co                  Date         Comment           EPS Est

------------------------- MONDAY -------------------------------

ACDO   Accredo Health        Mon, May 3  Before the Bell      0.42
AMH    AmerUs Grp Co.        Mon, May 3  After the Bell       0.98
AXS    Axis Capl Hldg Lmtd   Mon, May 3  After the Bell       0.82
BBD    Banco Bradesco S.A.   Mon, May 3  -----N/A-----         N/A
BEC    Beckman Coulter       Mon, May 3  Before the Bell      0.51
CDIS   Cal Dive Intl         Mon, May 3  After the Bell       0.25
CEPH   Cephalon, Inc.        Mon, May 3  After the Bell       0.29
BAP    Credicorp             Mon, May 3  -----N/A-----        0.29
CMLS   Cumulus Media Inc.    Mon, May 3  After the Bell      -0.01
DVA    DaVita                Mon, May 3  -----N/A-----        0.72
EOG    EOG Res               Mon, May 3  Before the Bell      0.89
EYET   Eyetech Pharm         Mon, May 3  After the Bell      -0.38
FHCC   First Health Grp      Mon, May 3  -----N/A-----        0.32
GPRO   Gen-Probe             Mon, May 3  After the Bell       0.33
ICOS   ICOS Corp             Mon, May 3  -----N/A-----       -1.40
IMH    Impac Mortgage Hldg   Mon, May 3  After the Bell        N/A
IACI   InterActiveCorp       Mon, May 3  Before the Bell      0.16
MAS    Masco                 Mon, May 3  Before the Bell      0.43
MXRE   Max Re Capital Ltd.   Mon, May 3  Before the Bell      0.66
MCY    Mercury General       Mon, May 3  Before the Bell      0.89
MET    MetLife Inc.          Mon, May 3  After the Bell       0.75
NBIX   NEUROCRINE BIOSCI     Mon, May 3  Before the Bell     -0.36
SPOT   PanAmSat              Mon, May 3  -----N/A-----        0.18
PPS    Post Prop, Inc        Mon, May 3  After the Bell       0.41
QGENF  Qiagen N.V.           Mon, May 3  After the Bell       0.08
PFG    The Principal Finl GrpMon, May 3  After the Bell       0.65
UNTD   United Online Inc.    Mon, May 3  Before the Bell      0.21
WRC    Westport Res Corp     Mon, May 3  After the Bell       0.43
WEC    Wisconsin Energy Corp Mon, May 3  Before the Bell      0.76
XL     XL Capital Ltd        Mon, May 3  After the Bell       2.20


------------------------- TUESDAY ------------------------------

ACAS   Am Capital Strat      Tue, May 4  After the Bell       0.70
AOC    Aon Corp              Tue, May 4  -----N/A-----        0.56
ITU    Banc Itau Hldg Finan  Tue, May 4  Before the Bell      1.29
GIB    CGI Grp               Tue, May 4  -----N/A-----         N/A
XEC    Cimarex Energy Co.    Tue, May 4  -----N/A-----        0.65
CCU    Clear Channel Comm    Tue, May 4  Before the Bell      0.14
CTV    CommScope             Tue, May 4  After the Bell       0.02
DF     Dean Foods            Tue, May 4  Before the Bell      0.45
EMR    Emerson Electric      Tue, May 4  Before the Bell      0.68
EOP    Equity Off Prop Trust Tue, May 4  Before the Bell      0.66
GET    Gaylord Entertainment Tue, May 4  Before the Bell     -0.39
GLG    Glamis Gold Ltd       Tue, May 4  Before the Bell      0.05
GTM    GULFTERRA NRG PART LP Tue, May 4  Before the Bell      0.43
HIG    Hartford Finl Serv    Tue, May 4  After the Bell       1.47
HCC    HCC Insurance Hldg    Tue, May 4  After the Bell       0.63
HNT    Health Net, Inc.      Tue, May 4  Before the Bell      0.53
HTG    Hrtg Prp Invst Trst   Tue, May 4  After the Bell       0.70
HEW    Hewitt Associates     Tue, May 4  Before the Bell      0.30
HIW    Highwoods Prop        Tue, May 4  After the Bell       0.60
IGL    IMC Global            Tue, May 4  -----N/A-----        0.04
IRGI   Inveresk Research Grp Tue, May 4  After the Bell       0.28
KZL    Kerzner Intl Limited  Tue, May 4  -----N/A-----        1.12
KOSP   Kos Pharm             Tue, May 4  Before the Bell      0.28
LAF    Lafarge North America Tue, May 4  -----N/A-----       -0.89
LNC    Lincoln Natl          Tue, May 4  After the Bell       0.91
MLM    Martin Marietta Mat   Tue, May 4  Before the Bell     -0.15
MVL    Marvel Enterprises    Tue, May 4  Before the Bell      0.21
MBI    MBIA Inc.             Tue, May 4  Before the Bell      1.27
NFP    Natl Finl Partners    Tue, May 4  After the Bell       0.37
NXY    Nexen                 Tue, May 4  -----N/A-----        0.95
NBL    Noble Energy, Inc.    Tue, May 4  Before the Bell      0.98
NOC    Northrop Grumman      Tue, May 4  -----N/A-----        1.21
OCAS   Ohio Casualty         Tue, May 4  After the Bell       0.36
PDX    Pediatrix Medical Grp Tue, May 4  Before the Bell      0.85
PFGC   PERFORMANCE FOOD GRP  Tue, May 4  Before the Bell      0.14
PER    Perot Sys             Tue, May 4  Before the Bell      0.15
PKZ    PETROKAZAKHSTAN INC   Tue, May 4  Before the Bell      1.16
PCG    PG&E Corp             Tue, May 4  -----N/A-----        0.42
PL     Protective Life Corp  Tue, May 4  Before the Bell      0.74
PDLI   Protein Design        Tue, May 4  After the Bell      -0.11
PRU    Prudential Finl, Inc. Tue, May 4  After the Bell       0.73
KWK    Quicksilver Res       Tue, May 4  After the Bell       0.30
Q      Qwest Comm            Tue, May 4  Before the Bell     -0.14
RNR    RenaissanceRe Hldg    Tue, May 4  After the Bell       1.61
SWY    Safeway, Inc.         Tue, May 4  -----N/A-----        0.22
TLM    Talisman Energy       Tue, May 4  -----N/A-----        1.33
TLD    TDC A/S               Tue, May 4  -----N/A-----         N/A
THC    Tenet Healthcare      Tue, May 4  Before the Bell      0.02
TEVA   Teva Pharmaceutical   Tue, May 4  Before the Bell      0.59
DTV    The DIRECTV Grp, Inc. Tue, May 4  -----N/A-----        0.01
PNX    The Phoenix Co, Inc.  Tue, May 4  Before the Bell      0.16
TYC    Tyco Intl             Tue, May 4  Before the Bell      0.36
VSH    Vishay Intertech, Inc.Tue, May 4  Before the Bell      0.14
WWCA   Western Wireless      Tue, May 4  After the Bell       0.11
WFMI   Whole Foods Market    Tue, May 4  After the Bell       0.50


------------------------ WEDNESDAY -----------------------------

ARG    Airgas                Wed, May 5  After the Bell      0.28
ADRX   Andrx Corp            Wed, May 5  After the Bell      0.26
WTR    Aqua America          Wed, May 5  Before the Bell     0.17
BCE    BCE                   Wed, May 5  Before the Bell      N/A
CNQ    Canadian Ntrl Res LmtdWed, May 5  -----N/A-----       1.56
CPG    Chelsea Prop Grp, Inc.Wed, May 5  After the Bell      0.87
CSR    Credit Suisse Grp     Wed, May 5  Before the Bell      N/A
CCI    Crown Castle Intl     Wed, May 5  After the Bell     -0.19
CVS    CVS Corp              Wed, May 5  Before the Bell     0.56
ENB    Enbridge Inc.         Wed, May 5  -----N/A-----        N/A
FRT    Fedl Rlty Invst Trust Wed, May 5  -----N/A-----       0.69
FST    Forest Oil Corp       Wed, May 5  After the Bell      0.45
GMST   Gemstar-TV Guide Intl Wed, May 5  After the Bell      0.05
GPK    GRAPH PACK INTL CORP  Wed, May 5  After the Bell       N/A
IPXL   Impax Laboratories    Wed, May 5  Before the Bell    -0.03
KCI    KINETIC CONCEPTS INC  Wed, May 5  Before the Bell      N/A
LM     Legg Mason            Wed, May 5  Before the Bell     1.15
MCH    Millennium Chemicals  Wed, May 5  Before the Bell    -0.17
NFS    Nationwide Finl Serv  Wed, May 5  After the Bell      0.78
NKTR   NEKTAR THERAPEUTICS   Wed, May 5  -----N/A-----      -0.39
NTLI   NTL INC               Wed, May 5  Before the Bell    -2.18
OGE    OGE Energy            Wed, May 5  Before the Bell    -0.04
OTEX   Open Text             Wed, May 5  Before the Bell     0.23
PNP    Pan Pacific Retl Prop Wed, May 5  Before the Bell     0.84
PEI    Penn Rl Est Invst TrstWed, May 5  Before the Bell     0.87
PMI    PMI Grp               Wed, May 5  -----N/A-----       0.90
PUB    PUBLICIS Grpe SA      Wed, May 5  Before the Bell      N/A
IQW    Quebecor World        Wed, May 5  -----N/A-----       0.11
RA     Reckson Assoc Rlty    Wed, May 5  After the Bell      0.58
SRV    Service Corp Intl     Wed, May 5  Before the Bell     0.15
TRK    Speedway Motorsports  Wed, May 5  Before the Bell     0.50
STO    Statoil ASA           Wed, May 5  Before the Bell      N/A
SGY    Stone Energy          Wed, May 5  After the Bell      1.40
TEM    Telefonica Moviles    Wed, May 5  Before the Bell      N/A
TELN   Telenor ASA           Wed, May 5  -----N/A-----        N/A
TU     TELUS                 Wed, May 5  During the Markey    N/A
TS     TENARIS S A           Wed, May 5  -----N/A-----       0.66
BCO    The Brink's Co        Wed, May 5  Before the Bell     0.18
TRW    TRW Auto              Wed, May 5  Before the Bell     0.45
UNM    UnumProvident Corp    Wed, May 5  After the Bell      0.38


------------------------- THUSDAY -----------------------------

ATVI   Activision            Thu, May 6  After the Bell       0.01
AL     Alcan Inc.            Thu, May 6  -----N/A-----        0.58
ATK    Alliant TechSys Inc.  Thu, May 6  Before the Bell      0.87
ALO    Alpharma              Thu, May 6  After the Bell       0.01
AFR    Am Finl Rlty Trust    Thu, May 6  Before the Bell      0.26
AIV    Apartment Invst & Mgt Thu, May 6  Before the Bell      0.67
AHL    Aspen Ins Hldg LimitedThu, May 6  After the Bell       0.70
BCH    Banco de Chile        Thu, May 6  -----N/A-----        0.45
BE     BearingPoint, Inc.    Thu, May 6  Before the Bell      0.04
BIO    Bio-Rad Laboratories  Thu, May 6  -----N/A-----        0.86
BUH    Buhrmann NV           Thu, May 6  -----N/A-----         N/A
CPN    Calpine Corp          Thu, May 6  Before the Bell     -0.11
CPT    Camden Prop Trust     Thu, May 6  After the Bell       0.77
CMX    CareMark Rx, Inc.     Thu, May 6  -----N/A-----        0.32
CZ     Celanese AG           Thu, May 6  -----N/A-----         N/A
CHC    CharterMac            Thu, May 6  -----N/A-----        0.41
CZN    Citizens Comm Co.     Thu, May 6  Before the Bell      0.10
CLX    Clorox                Thu, May 6  Before the Bell      0.56
CMS    CMS Energy Corp.      Thu, May 6  Before the Bell      0.41
CNO    CONSECO INC           Thu, May 6  Before the Bell      0.44
CEI    Crescent Real Est Eq  Thu, May 6  Before the Bell      0.21
DEG    Delhaize Grp          Thu, May 6  Before the Bell       N/A
DVN    Devon Energy Corp     Thu, May 6  Before the Bell      1.84
DISH   EchoStar Comm Corp.   Thu, May 6  Before the Bell      0.16
FS     Four Seasons Hotels   Thu, May 6  Before the Bell      0.15
FOX    Fox Entertainment Grp Thu, May 6  Before the Bell      0.28
FMS    Fresenius Medical CareThu, May 6  -----N/A-----         N/A
GFI    Gold Fields Limited   Thu, May 6  -----N/A-----        0.06
GLDN   Golden Telecom        Thu, May 6  Before the Bell      0.45
HCP    Health Cr Prop Invest Thu, May 6  Before the Bell      0.42
HCN    Health Care REIT, Inc.Thu, May 6  After the Bell       0.73
HB     Hillenbrand Ind       Thu, May 6  Before the Bell      0.98
IDA    Idacorp Holding       Thu, May 6  Before the Bell      0.44
IPR    Intl Power            Thu, May 6  Before the Bell       N/A
IPCR   IPC Hldg              Thu, May 6  Before the Bell       N/A
IST    Ispat Intl            Thu, May 6  Before the Bell       N/A
KG     King Pharm            Thu, May 6  Before the Bell      0.33
LAMR   LAMAR ADVERTISING CO  Thu, May 6  Before the Bell     -0.09
MGA    Magna Intl Inc.       Thu, May 6  -----N/A-----        1.76
NXL    Nw Pln Exl Rlty Trust Thu, May 6  Before the Bell      0.49
NVDA   NVIDIA Corp           Thu, May 6  -----N/A-----        0.10
OSG    Overseas Shipholding  Thu, May 6  Before the Bell      1.84
PIXR   Pixar Anima Studios   Thu, May 6  After the Bell       0.39
PTP    Platinum Udrwrtr Hldg Thu, May 6  After the Bell       0.78
PSA    Public Storage        Thu, May 6  After the Bell       0.66
RRD    RR Donnelley          Thu, May 6  After the Bell       0.10
SPG    Simon Prop Grp, Inc.  Thu, May 6  After the Bell       0.96
SBGI   Sinclair Broadcast GrpThu, May 6  Before the Bell     -0.04
SNN    Smith & Nephew        Thu, May 6  Before the Bell       N/A
SDX    Sodexho Alliance S.A. Thu, May 6  -----N/A-----         N/A
STRA   Strayer Education     Thu, May 6  Before the Bell      0.74
TI     Telecom Italia        Thu, May 6  -----N/A-----         N/A
TSO    Tesoro Petroleum      Thu, May 6  Before the Bell      0.71
MNY    The MONY Grp Inc.     Thu, May 6  Before the Bell      0.05
NWS    The News Corp Limited Thu, May 6  Before the Bell      0.27
RSE    The Rouse Co          Thu, May 6  Before the Bell      0.96
TRN    Trinity Ind           Thu, May 6  Before the Bell     -0.21
TRZ    Trizec Prop, Inc.     Thu, May 6  Before the Bell      0.41
TXU    TXU Corp.             Thu, May 6  Before the Bell      0.57
UVN    Univision Comm        Thu, May 6  After the Bell       0.08
VRX    Valeant Pharm Intl    Thu, May 6  -----N/A-----        0.06
HLTH   WebMD                 Thu, May 6  After the Bell       0.09
WGR    Western Gas Res       Thu, May 6  Before the Bell      0.79
WMB    Williams Co Inc.      Thu, May 6  Before the Bell      0.08
XMSR   XM Satellite Radio    Thu, May 6  Before the Bell     -0.81


------------------------- FRIDAY -------------------------------

BLDP   Ballard Power Sys     Fri, May 7  Before the Bell     -0.28
EAS    Energy East Corp      Fri, May 7  After the Bell       0.90
EPC    Epcos                 Fri, May 7  Before the Bell       N/A
EVG    Evergreen Res         Fri, May 7  -----N/A-----        0.43
FE     FirstEnergy           Fri, May 7  -----N/A-----        0.44
IST    Ispat Intl            Fri, May 7  -----N/A-----         N/A
MAC    Macerich Co           Fri, May 7  -----N/A-----        0.86
CLI    Mack-Cali Rlty Corp   Fri, May 7  Before the Bell      0.87
DCM    NTT DoCoMo            Fri, May 7  -----N/A-----         N/A
POM    Pepco Hldg, Inc.      Fri, May 7  -----N/A-----        0.14
PNW    Pinnacle West Capital Fri, May 7  Before the Bell      0.24
PXD    Pioneer Ntrl Res Co   Fri, May 7  Before the Bell      0.50
NZT    Tlcm Corp New Zealand Fri, May 7  -----N/A-----         N/A
IPG    Interpub Grp of Co    Fri, May 7  Before the Bell      0.00
TOT    Total                 Fri, May 7  -----N/A-----        2.05


----------------------------------------------
Upcoming Stock Splits In The Next Two Weeks...
----------------------------------------------

Symbol  Co Name              Ratio    Payable     Executable

TCBK    TriCo Bancshares          2:1      Apr  30th   May   3rd
KENT    Kent Finl Serv, Inc       2:1      May   3rd   May   4th
LACO    Lakes Entertainment, Inc  2:1      May   3rd   May   4th
COBZ    CoBix Inc                 3:2      May   3rd   May   4th
TLM     Talisman Energy Inc       3:1      May   4th   May   5th
RBA     Ritchie Bros. Auctioneers 2:1      May   4th   May   5th
BEBE    bebe stores, Inc          3:2      May   5th   May   6th
FARM    Farmer Bros. Company     10:1      May  10th   May  11th
YHOO    Yahoo! Inc                2:1      May  11th   May  12th
DNA     Genentech Inc             2:1      May  12th   May  13th
IKNX    IKONICS Corp              3:2      May  13th   May  14th
NSM     Natl Semiconductor Corp   2:1      May  13th   May  14th
SYK     Stryker Corp              2:1      May  14th   May  17th
TOUS    Technical Olympic USA, Inc3:2      May  14th   May  17th
BCR     C.R.Bard                  2:1      May  14th   May  17th


--------------------------
Economic Reports This Week
--------------------------

Earnings season is still very much in full swing but the majority
of the S&P 500 have already announced.  This week Wall Street
will focus on economic reports like the ISM index on Monday, the
FOMC meeting on Tuesday, the ISM services on Wednesday, and the
non-farm payrolls report on Friday.

==============================================================
                       -For-

----------------
Monday, 05/3/04
----------------
Auto Sales (NA)            Apr  Forecast:    5.7M  Previous:     5.6M
Truck Sales (NA)           Apr  Forecast:    7.8M  Previous:     7.6M
Construction Spending (DM) Mar  Forecast:    0.5%  Previous:    -0.1%
ISM Index (DM)             Apr  Forecast:    62.7  Previous:     62.5


-----------------
Tuesday, 05/4/04
-----------------
Factory Orders (DM)        Mar  Forecast:    2.4%  Previous:     0.3%
FOMC Meeting (DM)


-------------------
Wednesday, 05/5/04
-------------------
ISM Services (DM)          Apr  Forecast:    65.0  Previous:     65.8


------------------
Thursday, 05/6/04
------------------
Initial Claims (BB)      05/01  Forecast:    335K  Previous:     338K
Productivity-Prel. (BB)     Q1  Forecast:    3.5%  Previous:     2.6%


----------------
Friday, 05/7/04
----------------
Nonfarm Payrolls (BB)      Apr  Forecast:    168K  Previous:     308K
Unemployment Rate (BB)     Apr  Forecast:    5.7%  Previous:     5.7%
Hourly Earnings (BB)       Apr  Forecast:    0.2%  Previous:     0.1%
Average Workweek (BB)      Apr  Forecast:    33.8  Previous:     33.7
Wholesale Inventories (DM) Mar  Forecast:    0.5%  Previous:     1.2%
Consumer Credit (DM)       Mar  Forecast:   $7.0B  Previous:    $4.2B


Definitions:
DM=  During the Market
BB=  Before the Bell
AB=  After the Bell
NA=  Not Available


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The Option Investor Newsletter                   Sunday 05-02-2004
Sunday                                                      2 of 5

In Section Two:

Watch List: Lots of Weakness
Dropped Calls: BEC
Dropped Puts: None


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

Lots of Weakness

___________________________________________________________________

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.
___________________________________________________________________


Intl Business Machines - IBM - close: 88.17 change: -0.91

WHAT TO WATCH: Tech and hardware related stocks were hit hard
this week as the GHA hardware index posted its fifth decline in a
row and its fourth day under support at 240 and its 200-dma.
Meanwhile after valiantly trying to hold above support at $90.00
this week shares of IBM finally succumbed to the selling pressure
and broke down on Thursday.  That weakness resumed on Friday but
the stock held meager support in the 87.50-88.00 range.  If you
squint at IBM's daily chart it would appear to be creating a
head-and-shoulders pattern.  If this is true then the potential
target would be close to the $80.00 mark.  Unfortunately it's a
bit challenging to pinpoint where the neckline should be on this
H&S pattern.  We think IBM is worth watching because the GHA is
overdue for a bounce.  If IBM bounces you can bet there will be a
lot of focus on the $90 level.  A failure there and this could be
a good short play.  Should there be no bounce at all look for a
drop under $87.50.  Oops!  We almost forgot.  IBM's decline did
produce a new sell signal on its P&F chart but it is currently
perched just above P&F support.  This is a pivotal area indeed!

Chart=


---

Media General - MEG - close: 71.88 change: -0.52

WHAT TO WATCH: MEG could be potential bullish candidate.  Shares
broke out over the $70.00 level two weeks ago and the stock has
been able to maintain its gains despite the market's weakness
this week.  Its P&F chart looks very bullish with a triple-top
breakout buy signal and a $93.00 price target.  MEG's weekly
chart is also noteworthy because it looks like a long-term cup
and handle formation.  Of course the bottom of the cup appears to
have a big "W" bottom in it.

Chart=


---

Netease.com - NTES - close: 41.03 change: -2.59

WHAT TO WATCH: We wanted to add NTES as a put play on Wednesday
when shares broke down through support and broke what appeared to
be the neckline of a slanted head-and-shoulders pattern.
Unfortunately, we could not because the company was due to report
earnings on Thursday, April 29th.  NTES managed to beat estimates
by a penny but that didn't stop the stock from falling further to
support near $40.00.  NTES, like its other Chinese Internet
counterparts, is being negatively impacted by the Chinese
government's decision to slow down its economy before it over
heats.  We would watch NTES for a potential bearish play on a
breakdown under $40.00 or a failed rally under $45.00.

Chart=


---

Intl Rectifier - IRF - close: 39.64 change: -0.30

WHAT TO WATCH: Yuck! The action in IRF doesn't look like the
stock beat earnings by 3 cents and raised its guidance does it?
The stock has been trading lower toward the bottom of its
descending channel but what makes it noteworthy is the rising
volume on the declines.  Volume was very big on Friday because
IRF had just announced earnings on Thursday evening.  The close
under the $40 mark looks very bearish but the decline stalled
right at the bottom of its channel.  It's probably not a
coincidence that IRF's decline also stalled right at its P&F
support as well.  A bounce from here is certainly possible but
we're watching it for a breakdown.

Chart=



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

BSX $41.19 +0.41 - We mentioned BSX as a potential bullish
candidate on Thursday.  The stock has pulled back toward support
at $40.00 and its 100-dma this past week.  BSX tested this level
three times this week before bouncing higher on Friday.  Its MACD
is hinting a new buy signal soon.

VIP $89.76 -0.53 - Russian cellphone provider VIP has broken
support at its 50-dma and the $90.00 level.  The stock looks
short-term oversold but long-term overbought.  We could see it
pull back to $85.00 and its 100-dma.

AMGN $56.41 -1.71 - Heads up!  AMGN is quickly approaching key
support at $56 and it looks ready to break it.

CSCO $20.91 -1.00 - Uh-oh!  CSCO has broken key support at $22
and its 200-dma.  Earnings are expected on May 11th.

ADI $42.60 -1.39 - ADI has broken key support at $45.00 and its
200-dma but stopped right at the bottom of its new descending
channel.


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**************************
PICKS WE DROPPED THIS WEEK
**************************

Remember that historically, when we drop a pick it will go up
10 to 15% the very next week. It is part of Murphy's Law.
Just because we drop a stock as a pick does not mean we are
advocating a "sell" on any position you have. We are simply
dropping our recommendation as a new play. Existing plays
can and do continue on and are usually profitable.


CALLS
^^^^^

Beckman Coulter - BEC - cls: 55.84 chg: -0.23 stop: 54.99

Once again BEC tested support near the $55.00 mark but it held.
Traders jumped in to buy the dip in the last hour of trading but
it wasn't enough to push BEC into the green.  As per our previous
instructions we're closing the play ahead of its earnings report
on Monday.  Consensus estimates are for BEC to earn 51 cents per
share.

Picked on April 18 at $ 56.16
Change since picked:   - 0.32
Earnings Date        05/03/04 (confirmed)
Average Daily Volume:     333 thousand
Chart =



PUTS
^^^^

None


***********
DEFINITIONS
***********

! Please note changes to the Option Chains for new call and put
  plays.  We are no longer listing a "SL" or Suggested Stop Loss
  on individual options.  Most brokers offer the ability to list
  a stop loss for your option on the underlying stock.

  All of OptionInvestor.com's directional call or put plays list
  a suggested stop loss for the stock itself and if the stock
  trades at or below that stop on an intraday basis we will
  close any hypothetical play at that time.

OI  = Open Interest - the number of open contracts outstanding.
Last Trade @ = Indicates where the option traded last.
ITM = In the money
ATM = At the money
OTM = Out of the money
ADV = Average Daily Volume

The options with a "*" by the strike price are our choices from the
group. If the stock moves as expected we feel they have the best
chance to substantially increase or double in price with the best
risk/reward ratio compared to the other options for the same stock.
You must determine if they fit your risk profile for time and price.

RISKS of SELLING PUTS:
The risk of selling naked puts is always the possibility
of a catastrophic event that drops the stock below the
strike price and could result in the stock being PUT to you.
Always protect yourself with a "buy to cover" limit order
to take you out before this can happen.



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DISCLAIMER
**********

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The Option Investor Newsletter                   Sunday 05-02-2004
Sunday                                                      3 of 5

In Section Three:

Current Calls: AU, BBY, DGX, GDW, MIK, WFMI
New Calls: None
Current Put Plays: ASD, COF, SLAB
New Puts: AMZN, LTR

! Please note changes to the Option Chains for new call and put
  plays.  We are no longer listing a "SL" or Suggested Stop Loss
  on individual options.  Most brokers offer the ability to list
  a stop loss for your option on the underlying stock.

  All of OptionInvestor.com's directional call or put plays list
  a suggested stop loss for the stock itself and if the stock
  trades at or below that stop on an intraday basis we will
  close any hypothetical play at that time.



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

Anglogold - AU - close: 31.42 change: +0.08 stop: 30.49

Company Description:
AngloGold is a major global gold producer with 19 operations, in
8 countries worldwide.  The company also has extensive and
focused exploration activities in 10 countries.
(source: company website)

Why We Like It: (Original Play from Thursday)
Gold and gold stocks have been getting crushed lately.  Gold has
dropped from its early April highs near $430 an ounce to almost
$380 intraday on Wednesday.  The XAU gold & silver index has
plummeted with it to new seven-month lows.  Shares of AU have
likewise fallen precipitously.  So why are we considering a
bullish play?  We have a couple of reasons but first we must
disclose that this is a very high-risk play.  We only recommend
it for speculators willing to handle the volatility.  We are
going to use a tight stop loss to try and limit our risk but with
every play we list it's never a guarantee.

First of all, why go long gold now?  Gold has been getting
whacked on the strength in the U.S. dollar.  However, the U.S.
dollar has been struggling with resistance at its 200-dma (we're
using the Qcharts symbol DX00Y).  Today the dollar dropped
strongly after failing at resistance again.  This looks like a
bearish reversal for the dollar and that lead to a decent
intraday rebound for gold.  Looking at the gold futures we see a
small "hammer" candlestick with the bounce above $380.  So we
have a potential one-day bearish reversal in the dollar and a
potential one-day bullish reversal in gold.

Now why AU?  Shares of AU are seriously oversold.  The stock
closed at $42.27 in March and it closed at $30.77 yesterday.
That's a 27% drop in a month.  AU probably suffered more than
some of its peers because the company issued an earnings warning
several days ago due to a drop in output.  Earnings were out this
morning and while the headline number was bad analysts commenting
on the report said the results were not as bad as expected.  We
also like AU for a few technical reasons.  Its daily/weekly chart
shows the stock bouncing from its long-term trendline stretching
back to October 2002.  This is bolstered by historical support
near $30.00 from last summer.  Plus, its P&F chart, as abysmal as
it looks, has already reached its bearish price target.  That
doesn't mean it can't keep dropping but the potential for a
turnaround is there.

How are we going to play AU?  We're going to use a TRIGGER at
$32.01.  Shares of AU failed several times this morning just
under the $32.00 mark.  If we use a trigger to catch a breakout
we'll be playing the upward momentum from a deeply oversold
condition.  However, if we are triggered we'll use a tight stop
under yesterday's low at $30.49.  There is plenty of overhead
resistance as the stock stepped its way down but hopefully it can
step its way up too.  Remember, this is a speculative rebound
play.  Essentially we're trying to catch the proverbial "falling
knife" because it appears to have finally hit the floor.

Weekend Update:
Gold stocks did indeed try to rebound on Friday but the rally was
short-lived.  Gold futures, the XAU index and shares of AU all
faded from their early morning strength to close nearly
unchanged.  However, the rally higher was enough to trigger us.
As a matter of fact AU gapped higher at $32.25.  This is above
our trigger at $32.01 and changes our entry point.  Our stop loss
at $30.49 is still in effect.


Suggested Options:
We're going to suggest the June calls.  Our favorites are the
June 30's.

BUY CALL JUN 30 AU-FF OI= 184 Last traded @ $2.85
BUY CALL JUN 35 AU-FG OI= 668 Last traded @ $0.75

Annotated Charts:




Picked on April 30 at $ 32.25
Change since picked:   - 0.83
Earnings Date        04/29/04 (confirmed)
Average Daily Volume:     1.0 million
Chart =


---

Best Buy Co - BBY - close: 54.25 change: +0.07 stop: 51.99

Company Description:
Minneapolis-based Best Buy Co., Inc. is North America's leading
specialty retailer of consumer electronics, personal computers,
entertainment software and appliances. The Company's subsidiaries
operate retail stores and/or Web sites under the names: Best Buy
(BestBuy.com), Future Shop (FutureShop.ca), Geek Squad
(GeekSquad.com), and Magnolia Audio Video (Magnoliaav.com). The
Company's subsidiaries reach consumers through more than 750
stores in the United States and Canada. (source: company press
release)

Why We Like It:
It has been a pretty rough week for stocks but BBY held up
relatively well.  We're still trying to play the reverse head-
and-shoulders pattern.  The pull back to the $53.00 level might
be a nice entry point but given the bearish market tone we'd
probably feel more comfortable initiating new positions once BBY
trades back above the $55 mark.  Currently the RLX retail index
has pulled back from all-time highs toward the lower-end of its
recent trading range and is also due for a bounce, which should
help BBY's performance.

Suggested Options:
Short-term traders can choose between the May and June options.
Our choice is probably the June 55s or the May 50s.

BUY CALL MAY 50 BBY-EJ OI= 3561 Last traded @ $4.90
BUY CALL MAY 55 BBY-EK OI=19563 Last traded @ $1.45
BUY CALL JUN 55 BBY-FK OI=12372 Last traded @ $2.60

Annotated Chart:



Picked on April 23 at $ 55.05
Change since picked:   - 0.80
Earnings Date        03/31/04 (confirmed)
Average Daily Volume:     3.6 million
Chart =


---

Quest Diagnostics - DGX - close: 84.35 change: +0.00 stop: 82.00

Company Description:
Quest Diagnostics was the result of a 1996 Corning spinoff, and
currently holds the title of the world's #1 clinical laboratory.
DGX performs more than 100 million routine tests annually,
including cholesterol, HIV, pregnancy, alcohol, and pap smear
tests.  Operating laboratories throughout the US and in Brazil,
Mexico, and the UK, DGX also performs esoteric testing (complex,
low-volume tests) and clinical trials.  The company serves
doctors, hospitals, HMOs, and other labs as well as corporations,
government agencies, and prisons.

Why we like it:
In a week of carnage, our DGX play actually held up pretty well,
refusing to violate any levels of support.  On both Thursday and
Friday, the 10-dma ($84.05) was tested and held, as the daily
Stochastics work their way towards oversold territory.  It would
have been nice to see the stock continue its breakout over $86,
but in light of the broad market weakness, that would have been
quite the feat of bullishness.  A rebound from the $83.50-84.00
area still looks like a solid bullish entry, although
conservative traders may want to wait for some sign of an upturn
in the daily oscillators before taking the plunge.  Those looking
to enter on strength will need to wait at least for a move back
over $86 and preferably a breakout to new recent highs above
$86.75.  We'll maintain our stops at $82 for the time being, as
that is below both the 50-dma ($82.57) and the bottom of the
post-earnings gap ($82.35).

Suggested Options:
Shorter Term: The May $85 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 $90
Call, while the more conservative approach will be to use the
June $85 Call.  Our preferred option is the June $85 strike, as
it is currently at the money and should provide sufficient time
for the play to move in our favor.

BUY CALL MAY-80 DGX-EP OI= 869 last traded @ $4.80
BUY CALL MAY-85 DGX-EQ OI=2155 last traded @ $1.30
BUY CALL JUN-85*DGX-FQ OI= 682 last traded @ $2.55
BUY CALL JUN-90 DGX-FR OI=2305 last traded @ $0.80

Annotated Chart of DGX:



Picked on April 25th at      $86.15
Change since picked:          -1.80
Earnings Date               4/22/04 (confirmed)
Average Daily Volume =        652 K
Chart =


---

Golden West Fin. - GDW - close: 105.11 change: +0.12 stop: 99.75

Company Description:
Golden West Financial Corporation is a holding company for its
wholly owned, federally chartered savings bank subsidiary, World
Savings Bank, FSB (WSB).  WSB has a wholly owned subsidiary,
World Savings Bank, FSB (WTX), a federally chartered savings
bank.  The company, through its financial institution
subsidiaries, operates 268 savings branches in nine states and
311 loan offices in 38 states, of which 110 loan offices are
located in savings branches.  The company's primary source of
revenue is interest from loans on residential real estate and
mortgage-backed securities.

Why we like it:
Beginning the day with an upward move, GDW failed to deliver on
the breakout we're expecting ahead of the weekend.  The stock
surged to $105.95 at the open, before falling back to trade in a
narrow consolidation range right into the close.  We were looking
for a break over $106 to justify entries, and since that trigger
wasn't quite hit, we're still on the sidelines.  That said, the
stock actually performed fairly well in light of the weakness
prevalent across most sectors towards the end of the day and is
still poised to make that strong upward move.  Our plan remains
unchanged.  Wait for the breakout over $106 (and the 100-dma)
before taking a position, with aggressive entries on the initial
breakout and more conservative entries on a subsequent pullback
to test support in the $104-105 area.  Once clear of near
resistance, look for a rally up to test the 50-dma ($109.65) as
the first goal, at which point conservative traders should book
some gains.  Should the bulls gain some momentum, we can look for
a stronger rally up to the $112-113 area.  For now, we'll
maintain our stop at $99.75.

Suggested Options:
Shorter Term: The May $105 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 $110
Call, while the more conservative approach will be to use the
June $105 Call.  Our preferred option is the June $105 strike, as
it is currently at the money and should provide sufficient time
for the play to move in our favor.

BUY CALL MAY-100 GDW-ET OI= 207 last traded @ $5.80
BUY CALL MAY-105 GDW-EA OI= 636 last traded @ $2.40
BUY CALL JUN-105*GDW-FA OI= 209 last traded @ $3.60
BUY CALL JUN-110 GDW-FB OI=   3 last traded @ $1.55

Annotated Chart of GDW:



Picked on April 29th at     $104.99
Change since picked:          +0.12
Earnings Date               4/20/04 (confirmed)
Average Daily Volume =        662 K
Chart =


---

Michaels Stores - MIK - cls: 50.03 chng: +0.58 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:
The big drop in shares of MIK on Thursday certainly forced
traders to re-evaluate their stance on the stock, as the 30-dma
($49.32) was tested and price actually dipped briefly below the
$49 level.  For aggressive traders, that was a gift of an entry
point, as the stock came back to give a solid test of broken
resistance as new support.  The big question is whether this is
another bullish entry point or if the stock is just pausing on
the way back down.  Friday's slight rebound certainly didn't
answer the question, but it left behind a nice little inside day.
Traders that like to trade that pattern have a couple of key
metrics with which to proceed early next week.  A breakout over
Thursday's high ($50.66) would be the signal to go long, while a
break below $48.95 (Thursday's low) would signal continued
weakness ahead.  Aggressive traders could even target new entries
on a successful bounce from above Thursday's low, looking for a
new rally attempt and breakout to new highs.  Daily Stochastics
are now almost oversold, so that works in favor of the bulls.
There's strong support at $49, which is now backed up by the 50-
dma ($48.60) and if that strong support can't hold, then we'll
clearly want to exit the play.  That suggests our $48.50 stop is
in exactly the right position.

Suggested Options:
Shorter Term: The May $50 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 $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 at 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= 358 last traded @ $1.20
BUY CALL JUN-50*MIK-FJ OI= 735 last traded @ $2.10
BUY CALL JUN-55 MIK-FK OI= 688 last traded @ $0.40

Annotated Chart of MIK:



Picked on April 20th at      $51.23
Change since picked:          -1.20
Earnings Date               5/26/04 (confirmed)
Average Daily Volume =        327 K
Chart =


---

Whole Foods Market - WFMI - cls: 80.03 chng: +0.05 stp: 79.25

Company Description:
Whole Foods Market, Inc. owns and operates a chain of natural and
organic foods supermarkets in the United States.  As of September
28, 2003, it operated 145 stores in 26 states, the District of
Columbia and Canada.  Regional distribution centers, bakehouse
facilities, commissary kitchens, seafood processing facilities,
produce procurement centers and a coffee roasting operation
support the Company's stores.  WFMI's product selection has a
heavy emphasis on perishable foods designed to appeal to both
natural foods and gourmet shoppers.  Its product categories
include, but are not limited to, produce, seafood, grocery, meat
and poultry, bakery, prepared foods and catering, specialty
(beer, wine and cheese), whole body (nutritional supplements,
vitamins, body care and educational products such as books),
floral, pet products and household products.

Why we like it:
After a week of consolidation as the broad market headed
decidedly south, our WFMI is poised to make one more directional
move ahead of Wednesday's earnings report.  While the $81 level
has served as firm resistance over the past week, the stock has
found firm support above our $79.25 stop.  Friday's price action
saw a brief dip below the 10-dma ($79.60), but the stock managed
to recover a bit at the end of the day to end almost exactly in
the middle of the week's range.  Due to the proximity of
earnings, we are not in favor of new entries.  From here on, it
is a matter of maximizing gains and protecting the lion's share
of those gains.  A break below our stop should have traders
exiting the play, while a breakout over $81 should have the stock
making strides towards our final target in the $83-84 area.
Regardless of price action, all positions should be closed by the
end of the day on Tuesday to avoid the risk of holding over the
earnings announcement.  We'll be officially dropping the play
Tuesday night.

Suggested Options:
We have not listed any current strikes this weekend, as we are
not recommending new positions at this time due to WFMI's
scheduled earnings release next week.

Annotated Chart of WFMI:



Picked on April 15th at      $76.01
Change since picked:          +4.02
Earnings Date               5/05/04 (confirmed)
Average Daily Volume =        696 K
Chart =



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

None


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Capital One - COF - close: 65.53 chg: -0.54 stop: 69.01

Company Description:
Headquartered in McLean, Virginia, Capital One Financial
Corporation (www.capitalone.com) is a holding company whose
principal subsidiaries, Capital One Bank and Capital One, F.S.B.,
offer consumer lending products and Capital One Auto Finance,
Inc., offers automobile and other motor vehicle financing
products. Capital One's subsidiaries collectively had 46.7
million managed accounts and $71.8 billion in managed loans
outstanding as of March 31, 2004. Capital One, a Fortune 500
company, is one of the largest providers of MasterCard and Visa
credit cards in the world. (source: company press release)

Why We Like It:
Our COF put play has performed as expected, albeit slightly
slower than estimated.  Potentially slowing the descent of many
financials is the consolidation patterns in the banking indices.
The BKX banking index has been consolidating sideways but is now
nearing support at 95 and its 200-dma.  The BIX banking index is
also consolidating above its 200-dma but its consolidation looks
like a bear flag pattern.  We're encouraged by the steady decline
in shares of COF and the stock is nearing our exit range near its
200-dma.

We hesitate to suggest new bearish positions since the $65 level
could act as support.  Plus, like many stocks, COF is short-term
oversold and due for a bounce.  Should a bounce materialize look
for a failed rally under $68.00 but be sure to look for the roll
over. The 10-dma and the 100-dma are converging near the $69 mark
so we're going to leave our stop loss unchanged at $69.01.  We're
also going to give COF an official exit point at $62.75, just
above its 200-dma.

Suggested Options:
Short-term traders can choose from the May or June options.
Since there is still four weeks left for May options we'll
suggest the May 70s.

BUY PUT MAY 70 COF-QN OI= 6470 Last traded @ $5.30
BUY PUT MAY 65 COF-QM OI= 7579 Last traded @ $2.05

Annotated Chart:



Picked on April 26 at $ 67.99
Change since picked:   - 2.46
Earnings Date        04/21/04 (confirmed)
Average Daily Volume:     2.2 million
Chart =


---

Silicon Labs. - SLAB - close: 47.15 change: -2.88 stop:
52.00*new*

Company Description:
Silicon Laboratories designs, manufactures and markets
proprietary high-performance mixed-signal integrated circuits
(ICs) for the wireless, wireline and optical communications
industries.  The company initially focused its efforts on
developing ICs for the personal computer modem market and is now
applying its mixed-signal and communications expertise to the
development of ICs for other high growth communications devices,
such as wireless telephones and optical network applications.

Why we like it:
Continuing the bearish trend that prevailed throughout last week,
the Semiconductor index (SOX.X) drilled to new recent lows on
Friday, and a continued drop towards the $420 level seems
assured.  Following the lead of the SOX, our new SLAB play broke
down with conviction, shattering the $49 support level, then the
200-dma ($48.57) and coming to rest just over the $47 level after
probing as low as $46.30.  Volume on the decline was well over
the ADV and suggest more weakness to come.  So long as the SOX
continues its decline to the $420 level, we should see SLAB drill
down to at least $45.  Should the SOX drop all the way to strong
support near $400, then our eventual target near $43 should be
reached as well.  A drop to that level should be used to exit the
play for a very nice and quick gain.  Traders still looking for
an entry should be eyeing a failed rebound below the 200-dma as
their opportunity.  Note that we've lowered our stop to $52,
which is just above Thursday's intraday high, and it should not
be threatened unless there is a decided change of trend.

Suggested Options:
Aggressive short-term traders will want to use the May 50 Put.
Those with a more conservative approach will want to use the June
50 put.  Our preferred option is the June 50 strike, as it is
currently in the money and should provide ample time for the play
to move in our favor.  Note that there is a June $45 strike
available, but there is currently on open interest.

BUY PUT MAY-50 QFJ-QJ OI=2296 last traded @ $4.20
BUY PUT MAY-45 QFJ-QI OI=1087 last traded @ $1.50
BUY PUT JUN-50*QFJ-RJ OI=  67 last traded @ $5.20

Annotated Chart of SLAB:



Picked on April 29th at       $50.03
Change since picked:           -2.88
Earnings Date                4/26/04 (confirmed)
Average Daily Volume =      1.31 mln
Chart =



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

Amazon.com - AMZN - close: 43.60 chg: -2.59 stop: 46.35

Company Description:
Amazon.com, a Fortune 500 company based in Seattle, opened on the
World Wide Web in July 1995 and today offers Earth's Biggest
Selection. Amazon.com seeks to be Earth's most customer-centric
company, where customers can find and discover anything they
might want to buy online, and endeavors to offer its customers
the lowest possible prices. Amazon.com and other sellers offer
millions of unique new and used items in categories such as
health and personal care, jewelry and watches, gourmet food,
sports and outdoors, apparel and accessories, books, music, DVDs,
electronics and office, kids and baby, and home and garden.
(source: company press release)

Why We Like It:
The NASDAQ Composite's breakdown under its simple 200-dma was big
news on Friday.  That's a major technical no-no that will likely
cause investors to re-evaluate their tech holds and consider
taking some money off the table.  The rotation may have already
begun in the Internet sector.  The INX Internet index lead the
decliners on Friday with a 4.27% drop.  The move broke support at
its simple 40, 50, & 100-dma's as well as the 180 mark.  The MACD
on the INX is in a sell signal and the group looks headed for its
own 200-dma near last month's support at 168.  So the next
question is, "why AMZN?"  We think AMZN looks like a good bearish
candidate because its rebound from the March lows was halted at
resistance in the $48-49 region.  Shares spent the majority of
April struggling to breakout and even a better than expected
earnings report couldn't inspire investors to add to positions.
Looking deeper at the earnings report Wall Street was
disappointed that AMZN didn't offer more bullish guidance and
analysts are concerned about AMZN's thinning profit margins.

Friday's technical breakdown in the tech sector was very evident
in AMZN with a 5.6% drop through support at $45.00 and its own 40
& 50-dma's.  Furthermore the drop produced a strong failed rally
pattern at resistance on its point-and-figure chart that now
points to a $38 price target.  We suspect that if the trend has
changed in the NASDAQ that AMZN could hit the $35 region (see
chart).  Another sentiment reason for bears to give AMZN another
look is the Google IPO.  Many pundits believe that investors
could take some cash out of their AMZN, YHOO and EBAY positions
so they can invest in the new soon-to-be-public Internet darling
Google.

Short-term traders can target the $40.00 mark but we're going to
target a move to its descending trendline of lows.  We'll start
the play with a stop loss at Friday's high $46.35.

Suggested Options:
May options are certainly a choice but traders only have three
weeks before these expire.  Our preference is the June 45s or
40s.

BUY PUT JUN 40.00 ZQN-RH OI= 537 Last traded @ $1.20
BUY PUT JUN 42.50 ZQN-RV OI=2664 Last traded @ $2.10
BUY PUT JUN 45.00 ZQN-RI OI=2291 Last traded @ $3.40

Annotated Chart:



Picked on May 02 at $ 43.60
Change since picked: - 0.00
Earnings Date      04/22/04 (confirmed)
Average Daily Volume:   8.4 million
Chart =


---

Loews Corp - LTR - close: 58.01 chg: -0.39 stop: 60.01

Company Description:
Loews Corp is a New York, NY based holding company that owns a
number of major subsidiaries.  LTR owns 100% of Lorillard, a
cigarette company (a.k.a. the Carolina Group); Loews Hotels, and
Texas Gas Transmission.  LTR is a majority owner in Bulova Corp
(97% owner), CNA Financial (90% owner) and Diamond Offshore
Drilling (54% owner). (source: company press release)

Why We Like It:
If you're an optimist you'd probably call LTR's lack of weakness
a sign of relative strength.  We suspect that investors are just
in shock and trying to digest the various numbers before making
any decisions.  Analysts were looking for LTR to report profits
of $1.35 per share on Thursday versus 87 cents a year ago.  LTR
turned in 5 cents with revenues slipping 12% to $3.49 billion.
The poor performance appears to be a big loss for its CNA
Financial life insurance business, slowing sales for its
cigarette maker Lorillard (the Carolina Group), and an earnings
miss for its Diamond Offshore subsidiary (DO).  Why shares
didn't plummet on the news is a mystery but the stock does look
weak.

The failed rally under $60.00 on Thursday looked like a decent
entry point but there was very little follow through on Friday.
So to protect ourselves we want to see some conviction and will
wait for LTR to trade at or below our TRIGGER at $57.74.  P&F
chart readers can wait for the new sell signal if LTR trades
under $57.00.  Our first target is the $54 region, which would be
a 38.2% retracement of LTR's run from the November lows to the
March highs.  Watch out for potential support at its 100-dma
($55.65).

Suggested Options:
If we are triggered the June 60s and 55 puts look like good bets.

BUY PUT JUN 55 LTR-RK OI= 80 Last traded @ $1.00
BUY PUT JUN 60 LTR-RL OI=107 Last traded @ $3.20

Annotated Chart:



Picked on May xx at $ xx.xx <-- see trigger!
Change since picked: - 0.00
Earnings Date      04/29/04 (confirmed)
Average Daily Volume:   419 thousand
Chart =



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The Option Investor Newsletter                   Sunday 05-02-2004
Sunday                                                      4 of 5

In Section Four:

Leaps: Schizophrenic Trade
Option Spreads: Hard & Fast Rules Aren’t Always So Hard Or So
    Fast


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LEAPS
*****

Schizophrenic Trade
By Mark Phillips
mphillips@OptionInvestor.com

I wouldn't necessarily say that applies to the week
just completed, as it went out on a very bearish note,
with key support being challenged across all the major
indices.  No, what I'm referring to is what we can
expect in terms of action on Tuesday afternoon.  The
much-anticipated FOMC meeting is on the agenda and we
have a pretty clear roadmap of what to expect.  Oh,
nobody knows what the Fed will do, but I'll address
that topic in a bit.  We all know what to expect from
the market though.  It will go deathly quiet a few
hours before the meeting, then gyrate wildly for about
45 minutes before finally picking a direction and
following it into the close.  If the past is any guide
to the future, we should then expect to see that
direction reversed on Wednesday.  Schizophrenia anyone?

If you're like me, you've learned to simply stay out of
the way on those FOMC days and try not to let the
short-term gyrations cloud your view of the longer-term
trends that are in place.  The Fed has had rates
obscenely low for a long time and everyone knows that
has to change eventually.  Pointing to a few recent
economic reports, the talking heads are talking about
how the Fed "has to" raise rates and will probably do
so in May or June.  Fuggeddaboudit!  The Fed is waiting
for the jobs to appear and I think it will be very
unlikely to see the rosy jobs picture the Fed wants in
time for a rate hike prior to the August meeting.
Right now, the Fed is focused on getting investors used
to the idea of rising rates, and that means a possible
change to the bias statement, but at the same time lots
of pleasing words to indicate that it won't happen
quickly.

I alluded to this last week, but let's talk about it
again.  The Fed Funds rate is at 1% and even the August
Fed Funds futures are only pricing in a 25 basis point
hike.  Let's be pragmatic here.  How much of an effect
is a 0.25% rise in interest rates likely to have?
None!  The market is a forward looking mechanism and is
trying to effectively price in the reality that rates
will be rising before the end of the year.  This
increase in rates will have a significant impact on
those that have been playing the "carry trade" game,
borrowing cheap short-term money and investing on
longer-term higher-yielding instruments.  But in terms
of what it means to the economy, the impact will be
negligible.  Rising interest rates should not have a
material impact on business expansion and growth until
the FF rate is over 3%.  I would be surprised to see
that level even next year.

So while most investors are focused on the near-term
moves by the Fed, we can rest comfortably knowing that
the investment climate for equities should remain
stable.  What has changed now and we must adjust to it
is that the easy gains of the past 12 months are
history.  To make money on the long side, we're clearly
going to need to be more discriminating.  And the other
side of the coin is that there should be more viable
opportunities for solid plays to the downside as those
stocks that will be negatively affected by the rising
interest rate environment begin to weaken.

So with that as our backdrop, what's going on in the
market?  Despite the very negative week that we just
completed, the big picture really hasn't changed that
much.  The DOW, S&Ps and NASDAQ are still mired in
their trading ranges, but the outlook is turning more
negative.  The picture is the worst in the Technology
sector, with weakness being led by the Semiconductors
and the Biotechnology sector really starting to play
catch up to the downside.  I'm maintaining my view of a
rangebound market though until we see the bottom of the
ranges we've become familiar with in recent months get
broken to the downside.  To reiterate, that's 10,000
for the DOW, 1080 for the SPX and 1900 for the NASDAQ
Composite.

Based on the price action last week and the bearish
developments in the PnF view, I expect the NASDAQ to
break down.  That doesn't necessarily mean a breakdown
on Monday (although that could happen), but it does
mean that the downside is where we should focus our
efforts for Technology plays.  Looking at the PnF chart
of the NDX, we can see price challenging the bullish
support line at 1400 and on a Sell signal with a target
at 1320.  The 20-point box size view is less negative
though, with a trade at 1360 necessary to create a Sell
signal.  One interesting point is that on the 20-point
scale, the bullish support line is at 1320, lining up
with that target from the traditional scale.

The PnF chart for the COMPX is similarly negative, with
another new Sell signal and a new tentative downside
target of 1780.  The bullish support line at 1960 has
already been smashed.  Turning to the 20-point scale
chart, there's more trouble for the bulls, with the
bullish support line being broken and the 1900 price
objective almost sure to be hit next week.  The bullish
percent reading on both indices is decidedly bearish,
with the NDX still Bear Confirmed and now back at 43%.
On the COMPX, we're also in Bear Confirmed and now down
to 54%.  This isn't a situation for chasing the index
lower with long-term positions, but the next failed
rally attempt may be just the ticket we're looking for.
For that reason, the QQQ looks like it could offer some
solid downside potential in the months ahead, and I've
added it to our Radar Screen this weekend.

The view on the DOW and the S&Ps is less clear at this
point.  The DOW has given another PnF Sell signal on
the standard scale chart, but when we step back to the
100-point scale, we see that it will require a trade at
10,000 to turn things bearish.  The bullish percent
chart is still in Bear Confirmed and back at 80%.  We
certainly wouldn't want to be considering bullish
position trades there, but I'm not yet convinced it
makes sense to put on a bearish trade either.

As we've talked about recently, the SPX needs to trade
1080 before giving us a Sell signal and we're clearly
not there yet.  But the bullish percent chart cracked
under 70% last week and that certainly suggests that
the bears are gaining strength.

Within the context of correcting off the recent highs,
Technology is still the weakest link, but none of the
major indices have shown enough weakness to suggest
that it's time to completely ditch bullish plays.
There's enough weakness to make us want to tighten up
our stops on bullish plays (like we're doing with EBAY
this weekend), but not enough to aggressively chase the
downside.  On the other side of the coin, initiating
new long-term bullish positions is a much more
aggressive stance than it was a few short weeks ago.

April earnings are effectively over and while it's been
a positive affair, investors have decided that there
hasn't been enough glowing bullish commentary from
corporate chieftains to justify holding onto large
paper gains as we head into the bad six months (May
through October) of the year.  The "Sell in May and Go
Away" trade appears to be playing out a bit earlier
than usual, but that doesn't mean it is the end of the
cyclical bull.  It just means that we'll need to be
more discriminating in our bullish trades and that we
ought to have more choices with viable downside trades.

I've had to keep things short this weekend due to
incessant Technology challenges, but we'll pick things
up in greater detail next week.  Without further ado,
let's dive into a quick review of our current plays and
play candidates.

Portfolio:

HD - I'm actually glad I exercised some patience last
week and didn't jettison this rather boring play just
yet.  Helped along by the broad market weakness, HD is
back to testing key support at $35, with the 200-dma
just below that level.  Either we're going to see a
rebound back into the recent trading range, or a
decisive breakdown.  With the clear bearish picture on
the weekly chart, I tend to favor the downside here.
Expect bulls to continue to defend the stock all the
way down to the $33 lows from December, but if that
level cracks then a drop down to the $30 level ought to
be a slam dunk.  While all eyes are focused on the Fed
meeting next week, I think the real catalyst for HD
will be the outcome from earnings on May 18th.  Stay
the course for now, but let's tighten our stop to $39.
That is still above the top of the trading range of the
past several months and just over the 200-week moving
average ($38.95), which ought to present formidable
resistance.

CHK - It was a rough week for the bulls, but our
Natural Gas play is still working quite nicely for us.
A huge part of that dynamic is the reality that prices
for gas are still near their highs and there is nothing
in the supply/demand equation to suggest a change in
the trend.  CHK moved down from its new highs just
under $14.50 strictly due to the weakness across the
broad market.  All things considered, the stock is
continuing to look strong here, as the dips are being
met by renewed buying interest in the $13.50 area.
Remember a few weeks ago when we looked at that level
as resistance?  We're seeing the process of resistance
being converted to support.  Last week the 200-dma
moved over $12, further protecting our stop and I see
nothing to cause concern for our play.  I would view
any steep drop to the $13 area as an opportunity for
late-comers to enter the play.  The next upside
objective will be for the stock to top $14.50, as that
will give us another PnF Buy signal to reinforce the
bullish picture.

LUV - No matter how we slice it, last week's price
action for LUV, the Airline index (XAL.X) and the
Transports ($TRAN) was unpleasant.  Of course, with
losses across the board in the market, the weakness is
really no great shock.  LUV fell back to its 50-dma,
and while that provided near-term support, the bigger
concern for me is the price action on the XAL, which
broke its $54 support level and appears headed for the
March lows near $50.  If that level breaks, then I
think we'll be faced with a problem with our LUV play
and will probably we looking at a challenge to our
$12.75 stop.  For now, we'll stay the course, and look
for the stock to find support near $14 and resume its
recent rise.

EBAY - Rumors of an upcoming split sent our EBAY play
soaring again last week, reaching a high of $84.75
before the selling across the market dragged the bulls
back to reality.  No matter what happens from here,
EBAY has been a nice winning play, with the 2005 LEAP
still offering us better than a 100% gain from the
point of entry.  The stock fell back on Friday to close
right at $80 and with the post-earnings volatility
we've seen, the picture on the PnF chart has changed
significantly.  It would now only take a drop to $79 to
create a new Sell signal and with the kind of gains we
have accrued so far, there's no need to stick around if
such a signal is issued.  So I've raised our stop to
$79 this weekend.  If it is hit, then don't hesitate to
lock in those gains.  And for those of you that got
nervous last week and pulled the plug with tidy gains,
Congratulations!

Watch List:

TYC - My apologies, as I made a mistake last week.  I
neglected to update our entry target from the $27
level, where it currently remains.  I had intended to
raise it to $28.  That said, regardless of where the
entry target was, there was certainly no justification
for entering the play last week as there wasn't even a
hint of a rebound on the way down.  Not only that, but
I've suggested that the prudent approach would be to
wait until after the company's May 4th earnings
announcement before taking a position.  Well, we'll get
the verdict on Tuesday, where we'll see the results, as
well as investor reaction to those results.  I think we
can reasonably get a little cute with the entry
strategy in light of last week's earnings report.  A
dip and rebound from the $26 level of support can be
used for aggressive entries, while a move back over $28
would be the way to enter on strength.  We'll
officially take whichever entry materializes first, but
only AFTER the earnings report.  Should TYC deteriorate
below $26 without a bounce, odds are very good that
we'll be forced to reconsider the merits of the play
and possibly drop it.  One factor that should be
considered is the view on the weekly chart, which shows
a rather bearish tone in terms of Stochastics.  In my
view, that makes this play more aggressive than it was
when we first considered it a few months back.

AIG - The price action in AIG last week makes a great
example of what constitutes an entry point (according
to the strategy we employ here) and what does not.  AIG
did fall into the $71-72 targeted entry zone over the
past 3 days, yet we have not added it to the Portfolio.
Why?  Quite simply, there hasn't been a credible bounce
to indicate to us that this is the bottom of the
current short-term decline.  There's little point in
trying to catch a falling knife, especially in the
currently uncertain market environment.  We're going to
maintain our current $71-72 entry target, and that
means, a bounce and close over $72 will be an entry
signal.  Should price continue to deteriorate from
here, we'll be comfortably watching from the sidelines,
able to re-evaluate unemotionally.  More aggressive
traders can target entries off the stronger support
near $70, but we won't officially take a position until
AIG closes back over $72.

Radar Screen:

GM - The broad market slide last week sent the GM bulls
packing, at least temporarily, as the stock ran into
stiff resistance near $50 and fell back towards its 50-
dma.  Looking at the daily chart, I can actually make
an argument for a near-term H&S bottom forming with the
neckline at $50.  It's an ugly formation, but it is
possible.  Additionally, we do have the weekly
Stochastics in confirmed bullish ascent, so it isn't
time for a new play just yet.  But a couple more weeks
could do the trick.  Patience is still warranted, but
hopefully we'll get a shot at a bearish entry in the
vicinity of that long-term descending trendline.

EK - Just like GM, EK managed enough of an upside move
to drag the weekly Stochastics into a bullish ascent
(although it's been quite muted so far), but last
week's market slide kept the bulls on the defensive.
EK is now coming back to test support in the $25 area,
but my expectation is for a continued upside move, even
if it is feeble.  We'll want to start thinking more
aggressively about a bearish Watch List play once the
weekly Stochs get closer to overbought territory and
the price gets back over the $27-28 area.  We still
have time to wait for the right entry setup.

QQQ - Am I nuts?  Quite possibly, but in terms of this
play idea, I don't think so.  We've been watching all
the major indices in consolidation patterns lately, and
by far the NASDAQ is the weakest of the bunch.  Add in
the fact that both the NDX and the COMPX are on fresh
PnF Sell signals and selling volume is on the rise and
I think we might have the setup for a nice bearish
position trade setting up.  Even the weekly Stochastics
are looking like they want to give a short-cycle
bearish reversal.  We don't want to chase the Techs
lower at this point -- in fact I would expect at least
a token oversold rebound next week.  But once that has
run its course, we should be set for a decent run to
the downside.  We'll look to put the QQQ on the Watch
List for a bearish play next weekend.

Closing Thoughts:
Earnings are essentially over and all eyes are turning
back to the economy.  It is still growing, but not at
what we would call a robust pace.  More importantly,
myopic traders have focused their attention on the
action of the Fed next Tuesday.  Once again, the report
should be a non-event and I suspect the catalyst to
undo some of the damage inflicted on the broad market
over the past week.  Don't get me wrong, I don't expect
a swift rally to new highs anytime soon, but I think
the FOMC meeting may be the catalyst to work off some
of the near-term oversold condition.  Whether that sets
the stage for a renewed move down or a steady rise and
recovery remains to be seen.  Remember, we still have
NOT broken the trading range I've been talking about
these past several weeks.  Eventually it will break,
but for now the DOW remains pinned between 10,000-
10,700 and the NASDAQ Composite between 1900-2100.  It
will take a decisive break of one end of that range to
get some conviction for long-term directional plays on
the broad market.

Have a great week!

Mark


LEAPS Portfolio

Current Open Plays



LEAPS Watchlist

Current Possibles

SYMBOL  SINCE    TARGET PRICE  TARGETED LEAP  SYMBOL

CALLS:
TYC    03/07/04   $27          JAN-2005 $ 30  ZPA-AF
                            CC JAN-2005 $ 25  ZPA-AE
                               JAN-2006 $ 30  WPA-AF
                            CC JAN-2006 $ 25  WPA-AE
                            PP JUL-2004 $ 25  TYC-SE
AIG    04/25/04   $71-72       JAN-2005 $ 75  ZAF-AO
                            CC JAN-2005 $ 70  ZAF-AN
                               JAN-2006 $ 75  WAP-AO
                            CC JAN-2006 $ 70  WAP-AN
                            PP AUG-2004 $ 65  AIG-TM



PUTS:
None


New Portfolio Plays

None

New Watchlist Plays

None


Drops

MLNM $15.80 Investors' reaction to MLNM's earnings
report on Thursday provided ample evidence that it
isn't the news that's important, but that the key is
really how the results stack up against expectations
ahead of the news.  MLNM narrowed its loss for the
quarter, handily beating estimates of a 21 cent deficit
with only a 7 cent loss.  Apparently that wasn't good
enough, as the stock tanked on the news, plunging
through our $16 stop and bringing the play to a swift
end.  This is another example of how our protective
puts work to our advantage.  While we took a sizeable
hit on our LEAPS, the protective put soared to almost
double our cost of entry.  Traders that employed the
insurance put, saw a net loss of only 25 cents on the
2005 LEAP and $0.35 on the 2006 LEAP.  Not the result
that we were hoping for, but definitely not a disaster.


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Option Spread Strategies
************************

Hard & Fast Rules Aren’t Always So Hard Or So Fast
By Mike Parnos, Investing With Attitude

It’s been an eventful week, to say the least.  The market is a
little more fickle than usual.  It was over-reacting to
everything.  Why?  Probably PMS (Perverse Market Syndrome).
Fortunately, it doesn’t happen every month, but often enough to
make life a little miserable.

I want to address some emails I received about our BBH Iron Condor
position.  I’ve been in California and had technical problems with
sending email.  If you haven’t received an email response to your
questions and comments, you should soon.
_____________________________________________________

Mike,
Shouldn’t the BBH position have been closed out on Tuesday when it
spike up and hit $160 – well over the safety range?  In hindsight
now, not doing it would have been the smart thing.  But, you can’t
use hindsight in live trading.

Mike,
Regarding your May BBH condor, I exited the play when BBH was in
the $160 range and notice that you still have this play as an
active play on the website.  What are your rules for plays that
exceed their safety parameters?  Do you hold for a period of time
to see if the index returns?  Or do you immediately roll out and
try to establish the position if it re-enters it’s range?

Mike,
You’re terrific and I have made money following your strategies.
But I am confused.  The BBH position shot up to $160 early this
week.  Why wasn’t the position bought back and a loss recorded?
You always say that if our breakeven points are violated, it’s
time to bail out – even if it is possible that the underlying will
recover.  This is what prevents a major loss on just one position.
I’m confused because sometimes you follow this concept and
sometimes you don’t.  Please explain.

Dear Students,
All good questions.  Let’s take a closer look at the market
action.
a) Friday 4/23 – BBH closed at $150.50.
b) Monday 4/26 – BBH gapped way up, opening at $155.40.  It then
ran all the way up to $160.25.  Closed at $157.11.
c) Tuesday 4/27 – BBH traded down to $154.65.
d) Wednesday 4/28 – BBH tanked, with the market, closing at
$152.75.

Why didn’t I close out the position?  The gap.  Those of you who
are familiar with technical analysis know that large gaps tend to
reverse and fill.  If you look at a candlestick chart of Monday’s
BBH action, you’ll see a large wick.  That means that, it may have
spiked up to $160, but almost immediately it began to give back
most of the gain.  It reversed.

With that kind of action, it made sense to give BBH a chance to
move back down.  We got lucky and BBH has since moved down to
below $150 – comfortably within our range – for now.  But there
are still three weeks left to expiration.  Anything can happen.
BBH has not gone down as dramatically as other indexes have in the
last few days.  When the market has its oversold bounce, BBH may
again threaten the $155 short strike – and, this time, it won’t
likely be a gap.

Those CPTI students who closed the position did the prudent thing.
My decision was strictly a judgment call.  Taking the early loss
and eliminating your exposure was not an unwise decision.  It
enables you to use those maintenance dollars elsewhere for the
three weeks remaining in this option cycle.  That’s why there are
no hard and fast rules that dictate a particular action for every
scenario.

MNX At Risk
Our MNX position is very close to violating our short $140 strike.
However, the market is due for an oversold bounce.  I’m going to
be a little patient with MNX and give the buyers an opportunity to
jump back into the market and bring MNX back up into our range.

Track Record Requests
I’ve had a number of requests for a track record of our CPTI
positions since the inception of our “educational” porftfolio –
back in October of 2002.  I’m working on it, during the
commercials.  When it’s available to get posted, I’ll keep you
posted.
______________________________________________________

MAY CPTI POSITIONS
Remember, May is a five-week option cycle.  Get comfortable.
We’re going to exercise some patience and self-discipline.  That’s
the best kind of exercise.  It beats the hell out of a
Stairmaster.  It’s more profitable, too – usually.

May Position #1 – SPX Iron Condor – 1107.30
We sold 10 SPX May 1080 puts and bought 10 SPX May 1070 puts for a
total credit of $1.90 ($1,900).  Then we sold 7 SPX May 1175 calls
and bought 7 SPX May 1190 calls for a credit of  $1.40 ($980).
Our total net credit and potential profit is $2,880.  Our maximum
profit range is 1080 to 1175.  Maintenance: $10,500.

May Position #2 – RUT Iron Condor – 559.80
We sold 10 RUT May 620 calls and bought 10 RUT May 630 calls for a
credit of $1.20 ($1,200).  Then we sold 10 RUT May 540 puts and
bought 10 RUT May 530 puts for a credit of $1.30 ($1,300).  Our
total net credit and profit potential is $2,500.  Our maximum
profit range is 540 to 620.  Maintenance: $10,000.

May Position #3 – MNX Iron Condor - $140.14
We sold 10 MNX May $152.50 calls and bought 10 MNX May $157.50
calls for a credit of $.80 ($800).  Then we sold 10 MNX May $140
puts and bought 10 MNX May $135 puts for a credit: $.95 ($950).
Our total net credit and profit potential is $1,750.  Our maximum
profit range is $140 to $152.50.  Maintenance: $5,000.

May Position #4 – BBH Iron Condor - $149.93
We sold 10 BBH May $155 calls and bought 10 BBH May $165 calls for
a credit of $.70 ($700).  Then we sold 10 BBH May $135 puts and
bought 10 BBH May $125 puts for a credit of  $.70 ($700).  Our
total net credit and profit potential is $1.40 x 10 contracts =
$1,400.  Our maximum profit range is  $135 to $155.  Maintenance:
$10,000.

______________________________________________________

ONGOING POSITIONS

QQQ ITM Strangle – Ongoing Long Term -- $34.77
We bought 10 contracts of the 2005 QQQ $39 puts and 10 contracts
of the 2005 QQQ $29 calls for a total debit of $14,300.   We make
money by selling near term puts and calls every month.  Here's
what we've done so far:
Oct. $33 puts and Oct. $34 calls – credit of $1,900. Nov. $34 puts
and calls – credit of $1,150. Dec. $34 puts and calls – credit of
$1,500.  Jan. $34 puts and calls – credit of $850.  Feb. $34 calls
and $36 puts – credit of $750. Mar. $34 calls and $37 puts –
credit of $1,150. Apr. $34 calls and $37 puts – credit of $750.
May $34 calls and $37 puts – credit of $800.  Total credit:
$8,850.

Note:  We haven't included the proceeds from this long term QQQ
ITM Strangle in our profit calculations.  It's a bonus!  And it's
a great cash flow generating strategy.

ZERO-PLUS Strategy.  OEX – 540.88
In my Feb. 8th column, I outlined a strategy based on an initial
investment of $100,000.  $74,000 was spent on zero coupon bonds
maturing in seven years at a value of $100,000.  The principal
$100,000 investment is guaranteed.  We’re trading the remaining
$26,000 to generate a “risk free” return on the original
investment.

Long Term: Bought 3 OEX Jan. 2006 540 calls @ $81 (x 300 =
$24,300)
March: Sold 3 OEX 585 calls @ $3.10 (x 300 = $930)
March: 535/525 Bull Put spread for credit of $1.10 (x 300 = $330).
Bought back 3 OEX March 585 calls for $.10 & sold 3 of March 560
calls for $1.35.  A credit of $1.25 x 300 = $375.00.  Bought back
March 560 calls for $.15, locked in profit of $120 x 3 = $360.
Cash position is $3,320 ($1,620 plus the unused $1,700).  Our cash
position as of April expiration is $2,640 plus unused $1,700 =
$4,340.

The April 570 OEX call expired worthless.  The OEX 515/505 bull
put spread also expired worthless. (Isn’t this fun?)

New May Zero Plus BPS Position
We sold 5 OEX May 530 puts and buy 5 contracts of May 520 puts for
credit of  $1.10 (x 5 contracts = $550).

We sold a call against our long 540 call. We sold 5 OEX April 575
calls for $1.40 (x 5 contracts = $700).

Note:  If the market doesn’t bounce early on Monday, I’m
considering buying back the 575 call (now at about $.25), waiting
for the bounce, and then selling it again (or perhaps a slightly
lower strike price).

If both of these plays work out, we can add another $1,250 to our
cash total – just a little bonus while we wait for the market to
go up.
______________________________________________________

New To The CPTI?
Are you a new Couch Potato Trading Institute student?  Do you have
questions about our educational plays or our strategies?  To find
past CPTI (Mike Parnos) articles, first look under "Education" on
the OI home page and click on "Traders Corner."  For more recent
columns, you can look under “Strategies” and click on
“Combinations.”  They're waiting for you 24/7.
______________________________________________________

Happy Trading!
Remember the CPTI credo: May our remote batteries and self-
discipline last forever, but mierde happens. Be prepared! In
trading, as in life, it’s not the cards we’re dealt. It’s how we
play them. Your questions and comments are always welcome.

Mike Parnos
CPTI Master Strategist and HCP
______________________________________________________

Couch Potato Trading Institute Disclaimer
All results reported in this section are hypothetical. While the
numbers represented here may have been achieved or beaten by our
readers, we make no representation that any individual investor
achieved these exact results. The tracking for the plays listed in
this section uses closing prices for the day the newsletter is
published and it is not meant to imply that any reader actually
received those prices or participated in these recommendations.
The portfolio represented here is hypothetical and for investment
education purposes only. It is only an illustration of what type
of gains a knowledgeable investor might receive utilizing these
strategies.


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The Option Investor Newsletter                   Sunday 05-02-2004
Sunday                                                      5 of 5

In Section Five:

Spreads and Straddles: Earnings Season Fails To Impress...
Premium-Selling Plays: Naked Puts & Calls


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

Earnings Season Fails To Impress...
By Ray Cummins

Equity values moved lower Friday as inflation concerns overcame
positive economic news and a slew of favorable profit reports.

The Dow Jones industrial average slid 46 points to 10,225, with
Walt Disney (NYSE:DIS), Hewlett-Packard (NYSE:HPQ), Honeywell
(NYSE:HON) and SBC Communications (NYSE:SBC) among the biggest
losers.  The NASDAQ Composite plunged 38 points to 1,920 as chip
and internet issues continued to suffer from profit-taking.  The
broader S&P 500 Index fell 6 points to 1,107 with obvious selling
pressure in lodging, brokerage, biotechnology, and managed care
stocks.  Trading was heavy with 1.6 billion shares swapped on the
New York Stock Exchange while 2.1 billion shares were crossed on
the NASDAQ.  Market breadth was decidedly negative as decliners
ousted advancers 3 to 2 on the Big Board and more than 2 to 1 on
the technology exchange.  Treasury prices rebounded from recent
losses with the 10-year note up 9/32, while its yield closed at
4.50%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 04/30/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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  70.47   MAY   65  70  0.45  69.55   0.45   Open?
NAV     49.90  45.15   MAY   40  45  0.60  44.40   0.60   Open?
DNA    112.00 122.80   MAY   95 100  0.50  99.50   0.50   Open
EBAY    75.94  80.03   MAY   65  70  0.65  69.35   0.65   Open
HDI     55.63  56.32   MAY   48  50  0.25  49.75   0.25   Open
PDCO    74.97  73.66   MAY   65  70  0.65  69.35   0.65   Open
CME    116.11 117.30   MAY  100 105  0.60 104.40   0.60   Open
MATK    65.12  63.41   MAY   55  60  0.60  59.40   0.60   Open
MTG     74.42  73.62   MAY   60  65  0.50  64.50   0.50   Open
SLAB    56.33  47.15   MAY   45  50  0.60  49.40  (2.25) Closed
BJS     47.30  44.50   MAY   42  45  0.30  44.70  (0.20)  Open?
NBR     47.03  44.36   MAY   42  45  0.30  44.70  (0.34)  Open?

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

The position in Silicon Labs (NASDAQ:SLAB) should have been closed
Thursday, when the issue moved below the sold (put) strike, for a
smaller than published loss.  Positions in BJ Services (NYSE:BJS),
Nabors Industries (NYSE:NBR), Henry Schein (NASDAQ:HSIC), and
Navistar (NYSE:NAV) are on the "watch" list and will be closed on
any further downside activity.


CALL-CREDIT SPREADS

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

SOHU    25.46  16.74   MAY  35  30   0.60  30.60   0.60   Open
SFNT    31.65  21.50   MAY  40  35   0.70  35.70   0.70   Open
GENZ    46.40  43.50   MAY  55  50   0.60  50.60   0.60   Open
PRX     55.25  40.30   MAY  65  60   0.65  60.65   0.65   Open
MERQ    45.59  42.65   MAY  55  50   0.60  50.60   0.60   Open
NEM     42.86  37.40   MAY  50  47   0.25  47.75   0.25   Open
RYL     77.41  78.95   MAY  90  85   0.60  85.60   0.60   Open
AMZN    45.20  43.60   MAY  55  50   0.65  50.65   0.65   Open
BOBJ    27.85  21.92   MAY  35  30   0.75  30.75   0.75   Open
NTES    51.43  41.03   MAY  65  60   0.50  60.50   0.50   Open
VECO    27.43  22.75   MAY  35  30   0.55  30.55   0.55   Open
BSX     40.25  41.19   MAY  45  42   0.25  42.75   0.25   Open
RIMM    97.54  87.10   MAY 115 110   0.50 110.50   0.50   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

SSYS    20.88  20.44   MAY    22    20     2.10    2.25    Open?
ZMH     80.84  79.85   MAY    80    80     4.90    6.15    Open?
COCO    32.46  30.58   MAY    32    32     3.70    5.00   No Play
AH      35.78  33.04   MAY    35    35     3.10    2.90    Open
QLTI    29.60  27.07   MAY    30    30     3.00    3.80    Open
LF      19.67  21.51   JUN    20    20     3.50    5.25    Open
BSTE    30.63  39.50   JUL    30    30     6.00   11.50    Open?
MKSI    23.10  19.20   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),
MKS Instruments (NASDAQ:MKSI) and QLT Inc. (NASDAQ:QLTI) have
been active as well, providing favorable short-term gains.  The
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.

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

AVP - Avon Products  $84.00  *** Favorable Earnings! ***

Avon Products (NYSE:AVP) is a global manufacturer and marketer
of beauty and related products.  The company's products fall
into three major product categories: Beauty, which consists of
cosmetics, fragrances and toiletries; Beauty Plus, consisting
of fashion jewelry, watches, apparel and accessories, and Beyond
Beauty, which consists of home products, gift and decorative
products and candles.  Avon's business primarily consists of one
industry segment, direct selling, which is conducted worldwide.
The firm's segments are based on geographic operations in four
regions: North America, Latin America, Europe and the Pacific.

AVP - Avon Products  $84.00

PLAY (conservative - bullish/credit spread):

BUY  PUT  MAY-75.00  AVP-QO  OI=310  ASK=$0.15
SELL PUT  MAY-80.00  AVP-QP  OI=101  BID=$0.55
INITIAL NET-CREDIT TARGET=$0.45-$0.55
POTENTIAL PROFIT(max)=9% B/E=$79.55


__________________________________________________________________

MUR - Murphy Oil  $68.50  *** Bullish Profit Report! ***

Murphy Oil (NYSE:MUR) is a worldwide oil and gas exploration and
production firm with refining and marketing operations in North
America and the United Kingdom.  The company was reorganized in
1983 to operate primarily as a holding company of its various
businesses.  Its operations are currently classified into two
business activities: exploration and production and refining and
marketing.  Murphy's exploration and production activities are
subdivided into geographic segments including the United States,
Canada, United Kingdom, Ecuador, Malaysia and all other countries.
The company's refining and marketing activities are subdivided
into geographic segments for North America and United Kingdom.

MUR - Murphy Oil  $68.50

PLAY (less conservative - bullish/credit spread):

BUY  PUT  MAY-60.00  MUR-QL  OI=711   ASK=$0.15
SELL PUT  MAY-65.00  MUR-QM  OI=1405  BID=$0.70
INITIAL NET-CREDIT TARGET=$0.55-$0.60
POTENTIAL PROFIT(max)=12% B/E=$64.45



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

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.

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

MRVL - Marvell Technology  $38.92  *** Sell-Off Underway! ***

Marvell Technology Group (NASDAQ:MRVL) is a global semiconductor
provider of broadband communications and storage solutions.  The
company's product portfolio consists of switching, transceiver,
wireless, computer connectivity, gateways, telecom controller
and storage solutions that power the entire communications
infrastructure, including enterprise, metro, home and storage
networking.  Its core technologies were initially focused on the
storage market, where it provided products to drive manufacturers
such as Fujitsu, Hitachi, Samsung, Seagate and Toshiba.

MRVL - Marvell Technology  $38.92

PLAY (less conservative - bearish/credit spread):

BUY  CALL  MAY-45.00  UVM-EI  OI=3545  ASK=$0.40
SELL CALL  MAY-42.50  UVM-ET  OI=2084  BID=$0.65
INITIAL NET-CREDIT TARGET=$0.30-$0.35
POTENTIAL PROFIT(max)=14% B/E=$42.80


__________________________________________________________________

OVTI - OmniVision Technologies  $22.38  *** Sector Slump! ***

OmniVision Technologies (NASDAQ:OVTI) designs, develops and
markets high-performance, cost-efficient semiconductor image
sensor devices.  The company's main product, an image sensing
device called the CameraChip, is used to capture an image in
a variety of consumer and commercial mass market applications,
including digital still cameras, cellular telephones, security
and surveillance cameras and video game consoles.  The firm's
CameraChips are manufactured using the complementary metal oxide
semiconductor (CMOS) process, the most widely utilized method of
producing modern integrated circuits.

OVTI - OmniVision Technologies  $22.38

PLAY (less conservative - bearish/credit spread):

BUY  CALL  MAY-30.00  UCM-EF  OI=13355  ASK=$0.20
SELL CALL  MAY-25.00  UCM-EE  OI=5432   BID=$0.70
INITIAL NET-CREDIT TARGET=$0.55-$0.60
POTENTIAL PROFIT(max)=12% B/E=$25.55



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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.
__________________________________________________________________

HOTT - Hot Topic  $22.26  *** Earnings Speculation! ***

Hot Topic (NASDAQ:HOTT) is a specialty retailer operating the Hot
Topic and Torrid store concepts.  The company offers a selection
of music-licensed and music-influenced apparel, accessories and
gift items for young men and women principally between the ages
of 12 and 22.  The company has recently launched a second retail
concept under the trade name Torrid, which offers a selection of
apparel, lingerie, shoes and accessories centered around various
lifestyles for plus-size females between the ages of 15 and 29.
The firm also maintains two distinct Websites, www.hottopic.com
and www.torrid.com, which reflect the Hot Topic and Torrid store
concepts and sell certain items of merchandise.  Earnings are due
on May 19, 2004.

HOTT - Hot Topic  $22.26

PLAY (very speculative - neutral/debit straddle):

BUY CALL  MAY-22.50  UHO-EX  OI=158  ASK=$0.85
BUY PUT   MAY-22.50  UHO-QX  OI=922  ASK=$1.05
INITIAL NET-DEBIT TARGET=1.75-$1.80
INITIAL TARGET PROFIT=$0.60-$1.05



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

SEE DISCLAIMER - SECTION 1

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


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*****************************************
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 04/30/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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   20.10    0.35   4.19%   2.04%
MICC     MAY    17    17.15   25.13    0.35   4.31%   2.04%
MNST     MAY    22    21.95   25.61    0.55   4.39%   2.51%
PLMO     MAY    17    16.90   16.19   (0.71)  0.00%   3.55%
HNT      MAY    22    22.00   25.44    0.50   4.76%   2.27%
IPXL     MAY    20    19.50   20.80    0.50   5.43%   2.56%
SSNC     MAY    22    21.60   23.09    0.90   7.85%   4.17%
TINY     MAY    15    14.70   17.29    0.30   4.60%   2.04%
ACCL     MAY    12    17.25   17.93    0.25   3.62%   1.45%
IMM      MAY    15    14.70   18.80    0.30   4.66%   2.04%
IPXL     MAY    20    19.65   20.80    0.35   4.38%   1.78%
JBLU     MAY    22    22.15   27.70    0.35   3.65%   1.58%
LSCP     MAY    22    21.95   29.84    0.55   5.43%   2.51%
TINY     MAY    17    17.00   17.29    0.29   3.75%   2.94%
USG      MAY    15    14.25   14.23   (0.02)  0.00%   5.26%
XMSR     MAY    25    24.50   23.96   (0.54)  0.00%   2.04%
ASKJ     MAY    30    29.50   35.37    0.50   4.47%   1.69%
BRCM     MAY    37    36.70   37.83    0.80   4.83%   2.18%
CLZR     MAY    15    14.25   10.57   (3.68)  0.00%   5.26%
FWHT     MAY    20    19.35   20.10    0.65   7.29%   3.36%
IMM      MAY    17    17.05   18.80    0.45   6.91%   2.64%
INSP     MAY    35    34.45   32.91   (1.54)  0.00%   1.60%
MRVL     MAY    42    41.55   38.92   (2.63)  0.00%   2.29%
ESIO     MAY    22    22.10   20.44   (1.66)  0.00%   1.81%
HOLX     MAY    20    19.50   20.15    0.50   5.51%   2.56%
GVHR     MAY    25    24.65   22.14   (2.51)  0.00%   1.42%
HSII     MAY    22    22.25   24.83    0.25   2.61%   1.12%
IMM      MAY    17    17.25   18.80    0.25   4.16%   1.45%
LF       MAY    20    19.55   21.51    0.45   5.16%   2.30%
TSAI     MAY    20    19.80   21.23    0.20   2.99%   1.01%
TSO      MAY    20    19.50   20.31    0.50   5.60%   2.56%
APPX     MAY    35    34.40   42.26    0.60   5.81%   1.74%
BLDP     MAY    10    9.75    10.37    0.25   6.55%   2.56%
ELN      MAY    17    17.30   21.60    0.20   4.01%   1.16%
ERES     MAY    25    24.50   31.48    0.50   6.05%   2.04%
HOLX     MAY    20    19.65   20.15    0.35   4.54%   1.78%
LSCP     MAY    22    22.10   29.84    0.40   5.49%   1.81%
PDII     MAY    22    21.75   25.56    0.75   8.99%   3.45%
TELK     MAY    22    22.20   23.50    0.30   4.32%   1.35%
TNOX     MAY    15    14.50   17.05    0.50   8.35%   3.45%
APPX     MAY    35    34.65   42.26    0.35   3.75%   1.01%
EYE      MAY    17    17.20   21.89    0.30   5.00%   1.74%
JCOM     MAY    22    22.30   23.16    0.20   2.82%   0.90%
MGAM     MAY    22    21.90   22.25    0.35   4.18%   2.74%
MICC     MAY    22    22.10   25.13    0.40   5.16%   1.81%
NET      MAY    17    17.10   15.68   (1.42)  0.00%   2.34%
NIHD     MAY    32    32.88   35.05    0.50   4.38%   1.52%
PXLW     MAY    17    16.95   17.88    0.55   7.81%   3.24%
SNIC     MAY    17    17.15   18.03    0.35   5.76%   2.04%
CAMD     MAY    15    14.60   14.35   (0.25)  0.00%   2.74%
DNDN     MAY    13    12.25   13.00    0.25   6.83%   2.04%
FWHT     MAY    20    19.60   20.10    0.40   7.10%   2.04%
MICC     MAY    25    24.45   25.13    0.55   7.25%   2.25%
NIHD     MAY    35    34.50   35.05    0.50   5.01%   1.45%
OSTK     MAY    30    29.25   36.24    0.75   9.75%   2.56%
SNIC     MAY    17    17.20   18.03    0.30   6.05%   1.74%
TINY     MAY    17    17.20   17.29    0.09   1.98%   1.74%
UTHR     MAY    20    19.65   24.62    0.35   6.71%   1.78%
ALKS     MAY    15    14.70   15.34    0.30   6.80%   2.04%
ATRS     MAY    25    24.55   25.31    0.45   7.08%   1.83%
DRTE     MAY    17    17.20   17.09   (0.11)  0.00%   1.74%
FWHT     MAY    20    19.65   20.10    0.35   6.77%   1.78%
GNTA     MAY     7     7.00    8.60    0.50  16.81%   7.14%
INSP     MAY    30    29.50   32.91    0.50   7.20%   1.69%
ISPH     MAY    15    14.50   16.44    0.50  11.39%   3.45%
PTEN     MAY    35    34.65   36.19    0.40   4.13%   1.01%
UTHR     MAY    22    22.10   24.62    0.40   6.82%   1.81%

Some of the portfolio plays may not have been available at
the listed prices, due to recent volatile market activity.
As noted previously, positions in ADE Corp. (NASDAQ:ADEX),
Tom Online (NASDAQ:TOMO), Netflix (NASDAQ:NFLX), and USG
Corp. (NYSE:USG) have been closed early to limit losses.  In
addition, a number of issues should have been exited earlier
in the week and most of the portfolio issues are now on the
"watch" list.  Considering the bearish trend, conservative
traders should close any naked-put positions on stocks that
have less than "outstanding" technical indications.


NAKED CALLS

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

AFCI     MAY    25    25.75   16.79    0.75   7.73%    2.91%
QLGC     MAY    37    37.95   26.99    0.45   4.22%    1.19%
AVCT     MAY    37    38.15   32.08    0.65   4.61%    1.70%
INTU     MAY    47    48.00   42.51    0.50   2.80%    1.04%
PPCO     MAY    20    20.30   15.90    0.30   6.92%    1.48%
SINA     MAY    45    45.55   28.50    0.55   6.61%    1.21%
NANO     MAY    20    20.40   11.84    0.40  10.66%    1.96%
PHTN     MAY    35    35.60   30.72    0.60   7.03%    1.69%
SFA      MAY    35    35.55   32.39    0.55   6.17%    1.55%
SOHU     MAY    25    25.75   16.74    0.75  11.61%    2.91%
SWIR     MAY    35    35.60   22.36    0.60   9.26%    1.69%
HOV      MAY    42    42.90   35.97    0.40   4.07%    0.93%
NFI      MAY    45    45.40   32.46    0.40   7.16%    0.88%
PHTN     MAY    35    35.30   30.72    0.30   6.07%    0.85%
RMBS     MAY    25    25.30   18.61    0.30   7.84%    1.19%


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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    Stock   Option   Max.   Simple
Symbol  Month  Price  Basis   Price   Price   Yield   Yield

ARTC     MAY    22    22.20   23.50    0.30   5.52%   1.35%
CPKI     MAY    20    19.70   20.91    0.30   6.19%   1.52%
HEW      MAY    30    29.50   30.91    0.50   6.70%   1.69%
ISPH     MAY    15    14.55   16.44    0.45  12.90%   3.09%
MGM      MAY    20    19.65   21.02    0.35   7.24%   1.78%
SONO     MAY    20    19.60   21.74    0.40   8.71%   2.04%
USPI     MAY    35    34.35   36.22    0.65   7.48%   1.89%

__________________________________________________________________

ARTC - ArthroCare  $23.50  *** A Cut Above The Rest? ***

ArthroCare (NASDAQ:ARTC) is a medical device firm that develops,
manufactures and sells products based on its patented Coblation
technology.  The firm's products allow surgeons to operate with
a high level of precision and accuracy, limiting damage to
surrounding tissue and potentially reducing pain and speeding
recovery for the patient.  Arthrocare's products operate at
lower temperatures than traditional electrosurgical or laser
surgery tools, and enable surgeons to ablate, shrink, sculpt,
cut, aspirate and suction soft tissue, and seal small bleeding
vessels.  Its surgery systems consist of a controller unit and
an assortment of sterile, single-use disposable devices that are
specialized for specific types of surgery.

ARTC - ArthroCare  $23.50

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  ARU QX    166   0.30  22.20   5.5%   1.4%


__________________________________________________________________

CPKI - California Pizza Kitchen  $20.91  *** Food For Thought! ***

California Pizza Kitchen (NASDAQ:CPKI) is a restaurant chain with
a particular focus on the premium pizza segment.  The company's
restaurants, which feature an exhibition-style kitchen centered
around an open flame oven, provide a distinctive, casual dining
experience that is designed to be family friendly and have broad
consumer appeal.  Its menu focuses on imaginative toppings and
showcase recipes that capture tastes and flavors that customers
readily identify, but don't typically associate with pizza, pasta
or salads.

CPKI - California Pizza Kitchen  $20.91

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    CUH QD     21    0.30  19.70   6.2%   1.5%


__________________________________________________________________

HEW - Hewitt Associates  $30.91  *** Earnings Speculation ***

Hewitt Associates (NASDAQ:HEW) is a global provider of human
resources outsourcing and consulting services.  The company's
outsourcing business is comprised of three primary benefits
administration services, new payroll administration service
and workforce management solution.  In this segment, Hewitt
applies its human resources expertise and employ its integrated
technology systems to administer its clients' human resources
programs: benefits, payroll and workforce management.  Through
its consulting business, Hewitt provides an array of consulting
and actuarial services covering the design, implementation,
communication and operation of health and welfare, compensation
and retirement plans and broader human resources programs and
processes.

HEW - Hewitt Associates  $30.91

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    HEW QF     623   0.50  29.50   6.7%   1.7%


__________________________________________________________________

ISPH - Inspire Pharma  $16.44  *** 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  $16.44

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     105   0.45  14.55  12.9%   3.1%


__________________________________________________________________

MGM - Metro-Goldwyn-Mayer  $21.02  *** Merger Target? ***

Metro-Goldwyn-Mayer (NYSE:MGM) is a global entertainment content
company.  Through its subsidiaries, including Metro-Goldwyn-Mayer
Studios, MGM is actively engaged in the development and worldwide
production and distribution of entertainment products, including
theatrical motion pictures, television programming, home video,
interactive media, music and licensed merchandise.  The company's
principal subsidiaries are Metro-Goldwyn-Mayer Studios, United
Artists Corporation, United Artists Films Inc. and Orion Pictures
Corporation.  MGM's library contains thousands of theatrically
released feature film titles and television episodes.  The firm
also has ownership interests in television channels which are
distributed to subscribers in over 100 countries and territories
around the globe.

MGM - Metro-Goldwyn-Mayer  $21.02

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    MGM QD    3846   0.35  19.65   7.2%   1.8%


__________________________________________________________________

SONO - SonoSite  $21.74  *** Seeing Is Believing! ***

SonoSite (NASDAQ:SONO) is a provider of high-performance digital
ultrasound imaging systems for use in a wide variety of clinical
applications and settings.  The company focuses on six key market
segments: radiology, obstetrics/gynecology, emergency medicine,
surgery, cardiology and vascular medicine.  Their systems offer
an integrated color display, control panel and keyboard and they
are built on the same hardware platform, which provides internal
storage for images, clinical analysis packages, measurement tools
and direct personal computer connectivity.

SONO - SonoSite  $21.74

PLAY (sell naked put):

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

SELL PUT  MAY 20    UZS QD      22   0.40  19.60   8.7%   2.0%


__________________________________________________________________

USPI - United Surgical Partners  $36.22  *** Solid Earnings! ***

United Surgical Partners (NASDAQ:USPI) operates "short-stay"
surgical facilities, including surgery centers and private
surgical hospitals in the United States, Spain and the United
Kingdom.  The firm focuses on providing surgical facilities
that meet the needs of patients, physicians and payors better
than hospital-based and other outpatient surgical facilities.

USPI - United Surgical Partners  $36.22

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    QPJ QG      12   0.65  34.35   7.5%   1.9%



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

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.

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

FLSH - M-Systems Flash Disk Pioneers  $17.45  *** Next Leg Down? ***

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

FLSH - M-Systems Flash Disk Pioneers  $17.45

PLAY (sell naked call):

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

SELL CALL  MAY 20    FFU ED    1868   0.25  20.25   8.6%   1.2%


__________________________________________________________________

NTE - Nam Tai Electronics  $17.90  *** Post-Earnings Sell-Off? ***

Nam Tai Electronics (NYSE:NTE) is an electronics manufacturing
and design services provider to a select group of original
equipment manufacturers of telecommunications and consumer
electronic products.  Through the firm's extensive electronics
manufacturing services operations, Nam Tai provides electronic
components and subassemblies, including liquid crystal display
panels, LCD and RF modules, FPC subassemblies and image sensors.
These components are used in a wide variety of electronic devices
including cellular phones, digital cameras, handheld video games
and microwave ovens.

NTE - Nam Tai Electronics  $17.90

PLAY (sell naked call):

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

SELL CALL  MAY 22.5  NTE EX    1366   0.50  23.00  19.6%   2.2% *
SELL CALL  MAY 20    NTE ED    1351   1.10  21.10  28.6%   5.2%


__________________________________________________________________

BRCM - Broadcom  $37.83  *** Profit-Taking Underway! ***

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

BRCM - Broadcom  $37.83

PLAY (sell naked call):

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

SELL CALL  MAY 42.5  RCQ ES   19379   0.30  42.80   4.5%   0.7%
SELL CALL  MAY 40    RCQ EH   16680   0.75  40.75   8.8%   1.8%



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

SEE DISCLAIMER - SECTION 1

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


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