Wait And See

No economic numbers today, and a lot of people are blasting off early for spring
break, and of course next week is Passover/Easter week, and a four-day trading
week. Expect volume to start dropping off and volatility to continue to slide.
The markets will be choppy, keep it light and nimble.

Volatility

Volatility got massacred yesterday. After being up during the morning’s sell-off
it came slamming down hard with the afternoon rally. We are breaking into new
territory in the VXN and QQV. The VIX is now set to probe the lows of August of
2000. The VIX settled at 19.98, down .75 on the day, the VXN dropped 1.18 to
close at 36.97, and the QQV dropped to 31.87, down .81 on the day. The QQV is
now approximately HALF of what it was during the September/October panic.

I REPEAT: Although volatility may be undergoing a structural
change, we still consider volatility this low to be a red flag and a cause
for concern! If you are exposed to the market and are concerned, puts could not
be any cheaper, make use of them!

Trade Updates (3/21/02)

Calpine
(
CPN |
Quote |
Chart |
News |
PowerRating) — We successfully executed the "roll" we have been
recommending in Calpine for the last few days. We bought the May 15 calls (to
open) and sold the April 12.5 calls (to close) and collected an $.80 credit.
This rolls our April 12.5 call position "up and out" and takes $.80
off the table. We are now long the May 15 calls at an effective price of $.40!

(
QQQ |
Quote |
Chart |
News |
PowerRating) — We bought the QQQ April 36 puts at $1.10 against the 36.54 level
and $.90 against the 37.11 level.

Qualcomm
(
QCOM |
Quote |
Chart |
News |
PowerRating) — We sold the remaining 75% of our April 40/50 call spread
position at $3.00 yesterday. We booked a disappointing $.50 profit on the
remaining 75% vs. a $2.00 profit on the first 25%, but that’s the way it goes.

(
SMH |
Quote |
Chart |
News |
PowerRating) — We bough the April 45 puts at $1.70 against the 46.45 level. This
brings us up to a 60% position at an average price of $1.76.

We were reconsidering our positions in
(
CHIR |
Quote |
Chart |
News |
PowerRating) and
(
MLNM |
Quote |
Chart |
News |
PowerRating), but the BTK
(
$BTK.X |
Quote |
Chart |
News |
PowerRating) had an outside reversal UP day, so we will hold!

Chiron
(
CHIR |
Quote |
Chart |
News |
PowerRating) — Investors long the July 50 calls at $3.30 (50%)
may sell the July 60 calls against their positions at $1.00. This will roll us
into the July 50/60 call spread at $2.30.

Disney
(
DIS |
Quote |
Chart |
News |
PowerRating) — Investors long the April 22.5/25 reverse collar
(long the April 25 calls, short the April 22.5 puts) at a $1.15 credit (75%) may
want to consider the following roll: Buy the Disney April 22.5 put/April 27.5
collar (buy the April 22.5 puts, sell the April 27.5 calls) for zero. This will
"roll" you into the DIS April 25/27.5 bull call spread at a $1.15
credit.

(
DIS |
Quote |
Chart |
News |
PowerRating) — April 25/22.5 reverse collar (long the April 25 calls, short the
April 22.5 puts) at a $1.15 credit (75%).

Buy-writes

(
APC |
Quote |
Chart |
News |
PowerRating) — Long the May 60 calls at $1.75 (50%).

(
CHIR |
Quote |
Chart |
News |
PowerRating) — Long the July 50 calls at $3.30 (50%).

(
CPN |
Quote |
Chart |
News |
PowerRating) — Long the May 15 calls at $.40 (50%).

(
MLNM |
Quote |
Chart |
News |
PowerRating) — Long the May 25 calls at $2.40 (50%).

Call Spread Positions

None.

Put Positions:

Put Spread Positions