Today’s Action Important, Technically

The Mideast tinderbox is a further wild card, as Israeli troops mass at the Gaza
border. June crude futures are up $.24 at the moment, and the dollar is lower vs.
the major currencies. In Europe, the FTSE was unchanged at 5198, while the DAX
was down 0.7% to 4935. In Asia, the Nikkei was down 0.9% at 11,531, and the Hang
Seng dropped 0.5% to 11,646.

In corporate news, WorldCom
(
WCOM |
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Chart |
News |
PowerRating) had its debt rating reduced and has
suffered several downgrades (thanks for help, boys, it’s trading below $2.00).
Boeing
(
BA |
Quote |
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PowerRating) is the subject of a Business Week article saying that the
company may have exploited accounting rules to conceal production problems in
1997. This could be proxy buy-write material again if the stock takes a
hit. IBM is reportedly set lay off another 8000 employees.

Volatility

Volatility popped back yesterday, with the VIX gaining 1.07 to 24.36 and taking
out yesterday’s high (hmm…). The VXN gained 2.27 to 48.08, and the QQV picked
up 1.67 to 41.62.

Trade Updates (5/09/02)

We were active yesterday. Per Wednesday’s midday Alert, we
"calendarized" some of our June put positions by selling May puts
against them:

(
DJX |
Quote |
Chart |
News |
PowerRating) — We sold the May 100 puts at $1.00 against our long June
100 puts, effectively putting us into the May/June 100 put calendar spread (long
the June 100 puts, short the May 100 puts) at $1.75.

(
SMH |
Quote |
Chart |
News |
PowerRating) — We sold the May 40 puts at $1.00 against our long June 40
puts, effectively putting us into the May/June 40 put calendar spread (long the
June 40 puts, short the May 100 puts) at $1.75.

(
MER |
Quote |
Chart |
News |
PowerRating) — We bought the MER June/July 40 put calendar spread at $.50
(50%).

We also added several new recommendations today (below).

(
WMT |
Quote |
Chart |
News |
PowerRating)/
(
TGT |
Quote |
Chart |
News |
PowerRating) — Traders long the WMT June 55 puts may sell them (to
close) and buy the TGT June 40 puts (to open). Do this swap for a $1.50 credit
(for example, buy the TGT June 40 puts at $1.00, sell the WMT June 55 puts at
$2.50). To get this done, WMT will have to sell off a bit, or TGT rally a bit.
This trade lets us realize a $2.50 profit on the WMT puts and gives us the TGT
puts for free.

Working Orders (Old Recommendations)

(
CHIR |
Quote |
Chart |
News |
PowerRating) — Sell all CHIR July 50 calls at $1.00 to close.

(
MLNM |
Quote |
Chart |
News |
PowerRating) — Sell all MLNM May 25 calls at $.50 to close.

(
MSFT |
Quote |
Chart |
News |
PowerRating) — Buy the June/July 50 put calendar spread (buy the July 50 puts,
sell the June 50 puts) at $.50 (50%).

Rolls/Adjustments

(
DYN |
Quote |
Chart |
News |
PowerRating) — Holders of the DYN January 15 call/June 20 call proxy
buy-write (long the January 15 calls, short the June 20 calls at $3.20),
buy the June 20 calls (to close) and sell the September 17.5 calls (to open) for
$1.25 credit (to you).

(
HAL |
Quote |
Chart |
News |
PowerRating) — Holders of the HAL July 20 buy-write, work to sell the HAL July
17.5/20 call spread at $1.00. This will "roll" the position into the
July 17.5 buy-write.

Buy-writes

Proxy buy-writes

(
DYN |
Quote |
Chart |
News |
PowerRating) — Long the January 15/June 20 proxy buy-write at $3.20 (50%).

Call Spread Positions

None.

Put Positions

(
WMT |
Quote |
Chart |
News |
PowerRating) — Long the June 55 puts at $1.00 credit, due to roll on 5/6/02
(37.5%).

Spread Positions