Options Trading Lessons

Dell Computer’s sell-off early yesterday pulled
the plug on the rest of the market.
But true to form, Dell managed to rally back to 84 before drifting between 82 and 80. Volume was
big at 56 million (that’s real volume, not double-counted). The drop put Dell down 32 percent in
11 days from the 110 double top, and it of course has company in many of its tech relatives.

After the aggressive end-of-1998 markup and the
“welcome 1999” rally, with high closes of 9643 in the Dow and 1280 in the S&P 500 on January 8,
the market has been stuck in a 5 to 5.5 percent trading range for the past six weeks. Make sure
you have a strategy in place to play the move out of this range.

Yesterday, the futures turned down right before the opening and the tech
stocks went south. Interest rates perked up, the long bond lost almost a point, and the Utility
Index (UTY) closed below its 200-day moving average for the fifth straight day.

On a day that combines a Double-witching option expiration, continued Latin American woes, and Clintons interrogation, its interesting thata mysterious futures buyer pushed up the overnight S&P 500 futures more than a dozen points early in the morning. Maybe its Alice Rivlin from the Federal