Positive Guidance

The market looks set to open
higher this morning
on the back of positive guidance from Lucent
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and Amazon
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. Right now it is relatively quiet with the Dow
futures up 56.00, S&P futures up 5.80, and the Nasdaq 100 futures up 16.00.
Bond futures are 10/32 lower, and the dollar is higher against the major foreign
currencies, making new highs vs. JPY.

On the economic front, a little excitement at 9:00 A.M.
CST when Leading Indicators is released (expected +. 7%). Earnings of note this
evening:
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,
(
CA |
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,
(
EMLX |
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,
(
IDTI |
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,
(
MLNM |
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,
(
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,
(
STK |
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,
(
TTWO |
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and
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.

As I noted in this weekend’s “Intrinsic Value”,
watch for the politicians to continue to fling their bodies into the Enron
(
ENE |
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fray, seeking to crank up the witch-hunt and capitalize on the issue
in an election year. Look for politicians to begin introducing endless stupid
legislation to deal with the issue, and more importantly, to put themselves in
the spotlight.

Technically Speaking:

The market is hovering just above several key technical
levels. Although oversold at the moment, the market is very vulnerable right
now, as it is extremely sensitive to news.

Updates:

None.

Current Recommendations:

We will be looking to buy puts on strength, particularly
in biotech issues.

Rolls/Adjustments:

Watch alerts!

Recap of open trades:

Long-term

Reverse Collars


(
TLAB |
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— March 17.5/15 reverse collar (long the
March 17.5 calls, short the March 15 puts) at $1.50 credit average (50%).


(
AMD |
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— April 25/15 reverse collar (long the April 25
calls, short the April 15 puts) at $.05 credit (100%).

Buy-writes

*
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AMZN |
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Jan. ’03 10 buy-write @ 5.15 (100%) — hold.

*
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JDSU |
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Jan. ’02 12.5 buy-write @ 9.60 — options
expired worthless, now long the stock at $9.60, stop below.

Proxy buy-writes


(
BA |
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Jan. ’03 35/May 45 call calendar @ $4.75 — hold.

BA Jan. ’03 40/May 45 call calendar @ $2.75 — hold.

Complex Strategies


(
GILD |
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PowerRating)
— Long the GILD Feb. 70 straddle at $8.00
(25%).

Short-term

Call Positions

None.

Call Spread Positions


(
DYN |
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PowerRating)
— Long the March 30/40 1:2 call ratio spread @
$1.50 (100%) — hold.


(
TLAB |
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PowerRating)
— Long the March 17.5/22.5 call spread at
$.80 credit average (50%). Note: This spread is a result of a reverse
collar roll.

Put Positions


(
IBM |
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— Feb. 120 puts long at $8.50 (result of spread
roll).

Put Spread Positions


(
AZO |
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— Long the March 55/65 put spread @ 2.125
(100%) — hold.

STOPS

TLAB: Stop @ 11.95 close only.

JDSU: Stop @ 7.60 close only.

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*Options trading involves substantial risk
and is not suitable for all
investors. Also note that
spread strategies involve multiple commissions and are not risk-free. Most
spreads must be done in a margin account.

*Because of the importance of tax considerations
to all options transactions, the investor considering options should consult
with a tax advisor as to how taxes may affect the outcome of contemplated
options transactions.

*Supporting documentation for claims,
comparisons, recommendations, statistics or other technical data will be
furnished upon request. One or more of the contributors to these commentaries
may have a position in one or more of the securities mentioned.

It is important to note that the options
strategies discussed herein are not suitable to all investors. Options are
complex investment tools and involve substantial risk. Moreover spreading
strategies do not eliminate risk and involve multiple commissions.

Note: All individuals must have read the ODD
carefully before trading options. To obtain the document, click on the OCC link:
https://www.theocc.com/publications/risks/riskchap1.jsp