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Daily Newsletter, Sunday, 11/01/1998

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The Option Investor Newsletter            11-08-98
Sunday                

************************************************************
HEDGE STRATEGY & RECOMMENDATIONS - Pinnacle Capital Advisors
************************************************************
 
Sunday, November 8, 1998


The Option Investor NFL Challenge

If you follow the NFL, we invite subscribers to check out the Option
Investor NFL Challenge from Pinnacle Capital Advisors.  As part of
our ongoing professional sports analogy, we address several topics
concerning options including market assessment, types of options
and time decay.  It's easy to play and it will reinforce several
important concepts unique to trading options and help build you
level of skill.  You can go directly to this special update via the
following website address:

http://www.OptionInvestor.com/NFLchallenge



What is Once Resistance Becomes Support

As fast as John Glenn's "return flight" to space, we pierced through
key overhead resistance, confirmed that the rally would hold and
now are challenging the high set back in July - all in the past 10
days.

From a technician's point of view (Technical Analysis), what was
once resistance now provides support.  From a broad perspective
this action can be viewed as a Bullish development, particularly
given the current interest rate environment.  We have, therefore,
updated many of our key benchmarks to reflect the strength of the
market.

Alert !!!

We must caution subscribes that what we saw in the past several
weeks was most unusual and to be careful about jumping on the
bandwagon late in the game.  Since the low set on October 8th
(7,350), the DJIA has climbed 1,625 points over 22 trading sessions
or 22%.  This is truly remarkable and we are unlikely to see a run
like this again over the near-term.  To put it better perspective,
the DOW moved an average of 73 points per day.  When can you
remember the DOW moving 73 points over 22 days in a row.  Not too
many and that's what should alert you.

As we talk about in our weekly NFL Challenge, investors must always
keep an eye on the key benchmarks in the market.  These levels give
a frame of reference and help develop the appropriate option
strategies.  After piercing into new territory last week, we
thought it would be appropriate to highlight where we are in the
market.

As shown, many of the broad market indices are challenging summer
highs (within 4%) while the Russell 2000 is still off its high by a
good margin.

Back in September, many analysts believed that the Technology and
Pharmaceutical sectors would lead the market higher.  Don't look
now, but the Hardware (XCI), Internet (INX) and Drug (DRG) sectors
are making new Highs.  Keep an eye on these market leaders.  If
they can break out, they will likely lead the market to new
heights.  If not, you've got your early signal about the fate of
the broader market.


Frame of Reference
*****************************************************
                              Fri  Pct           52   Pct
Industry             Key     11.6  Above       Week   Below
Sector         Benchmark    Close  Bchmrk      High   High
*****************************************************

DOW Dow Jones      8,600    8,975   4.4%      9,368   4.4%
SPX S&P 500        1,100    1,141   3.7%      1,191   3.1%
OEX S&P 100          540      559   3.5%        582   2.8%
Russell 2000         375      400   6.7%        492  23.0%

NDX Nasd           1,400    1,458   4.1%      1,486   1.9%
MSH High Tech        620      669   7.9%        672   1.2%

Technology:
XCI Hardware         625      647   3.5%        648  NEW HIGH
CWX Software         530      536   1.1%        624  16.4%
SOX Semiconductor    265      276   4.2%        331  19.9%
NWX Networking       330      351   6.4%        437  24.5%
INX Internet         225      252   9.6%        253  NEW HIGH

Financial:
BIX Banking          625      661   5.8%        791  19.7%
XBD Brokerage        400      461  15.3%        622  35.0%
IUX Insurance        475      576  21.2%        712  23.6%

Other:
RLX Retail           700      734   4.9%        777   5.9%
DRG Drug             700      722   3.1%        723  NEW HIGH
HCX Healthcare       700      719   2.7%        730   1.5%
XAL Airline          230      308  33.9%        421  36.7%
OIX Oil & Gas        230      259  12.6%        288  11.2%

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


Follow the Chips

In the 1976 movie "All the Presidents Men", Deep Throat tells Bob
Woodward (Robert Redford) to "follow the money" which would unlock
the mystery behind Watergate.  We believe, in many ways, that
supply and demand of processor chips will ultimately determine the
fate of the technology sector and then, in turn, the broader market.

Many software, networking and semiconductor firms have lowered their
earning forecasts for 1999.  And be careful not to get caught in
the euphoria for Dell Computer.  Although they have a great business
model (direct mail), they just put a box around the "processor".
Over the next several weeks, Pinnacle Capital Advisors will be
developing new reference links that focuses on the key components
of the Technology sector.  In the meantime - "follow the chips".
(see Jim's Thursday write up on Dell)

Sentiment Analysis

For those who are tracking our sentiment indicators, please note
that we have advanced into a higher trading range and, therefore,
have updated our schematic below accordingly.

Notice the level of optimism at the OEX-570 level.  This is telling
us many option traders are betting that the OEX will trade over 570
by expiration in two weeks.  This is unlikely given the incredible
run we have had over the past 22 trading sessions.

Keep an eye on these levels for they will likely presage whether we
can move higher or begin to sell-off and retest the breakout OEX
-540 benchmark.


                      Lower End       Upper End
**************************************************
Dow Jones         8,500 - 8,600   9,000 - 9,300
S&P 500 (SPX)     1,100 - 1,125   1,180 - 1,190
S&P 100 (OEX)       530 -   540     570 -   580


Pinnacle Indexes
******************************************************
OEX                    Friday     Friday     Tues     Thurs
Benchmark              (10.30)    (11.6)   (11.10)   (11.12)
******************************************************

Resistance (560-570)     32.2      16.2
           (550-560)     15.2       3.6

Support    (530-540)       .4       1.7
           (520-530)      1.3       1.9


OEX Skybox

We have received an enthusiastic response to our latest options
trading tool - the OEX Skybox.  As highlighted in last week's
newsletter (Sunday 11.1), we are attempting to give subscribers a
"top down" view of this popular Index.  And in a time of market
uncertainty, sometimes one needs to back away from the trading pit
to see the big picture from the Skybox and explore a broader range
of trading strategies and opportunities.

Many traders prefer trading the S&P 100 (OEX) because it tracks
the broader market and most investors tend to gauge the
direction of the overall market better than individual industry
sectors. Another benefit for those new to options, is that
investors tend to trade better by focusing on one or two options.
The OEX Skybox is a great way to start because we give specific
trading instructions every step of the way.

Before each update, Pinnacle Capital Advisors team of technical and
sentiment analysts perform a series of evaluations for each of the
major averages.  We begin by searching for shifts in intermediate
and short-term momentum.  Next we look for premium irregularities
for near and at-the-money (ATM) index options.  Finally, we
determine if the markets are more likely to advance or decline over
the next couple of days.

Unlike other option advisory services, We also provide important
sentiment indicators via our popular Pinnacle Index at key OEX
benchmarks.  As most subscribers have been following, this indicator
measures the level of EXPECTATION and can give savvy option traders
a decided advantage when trading this volatile index.


OEX Skybox Replay

If you referenced this powerful tool last week, it helped you
initiate a new Call position in the OEX NOV-545 while the
S&P 100 advanced higher and triggered one of our recommended call
positions. As instructed below, we are ready to close out the
balance of our position for a 117% profit. You should also be
stopped out of our recent PUT recommendation (11.6) since the
market rallied into positive territory Friday afternoon. We will
have another opportunity to get in again.

Because the OEX skybox is new to OptionInvetsor.com, we are
receiving many emails requesting more information on how to apply
the OEX Skybox.  We are currently developing additional reference
links that describes in greater detail the various elements of the
tool and its many applications.  In the meantime, please know that
it's coming.  You can get a jump, however, by reviewing the
sequence of the trades we made last week.  Note our specific
instructions at each update.

Current Positions:
********************************************************
Symbol                       Last Trade   Protective  Gain/Loss
Entry/Exit Date             Entry Price      Stop       (+/-)
********************************************************

OEX NOV-545 CALL / OEW-KI     |  19.00
10.2                          |   8.75       18.75      10.25 +

Action Instructions:
11.4 Tighten Protective sell stop from $6.75 to $8.75.
11.6 Sell 1/2 of position on open.
11.6 Move up protective sell stop on other half from $8.75 to $14.75
11.9 Move up protective sell stop on balance from $14.75 to $18.75

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

OEX NOV-540 PUT / OEX-WH      |   4.50
11.6 / 11.6                   |   4.50        3.25       1.25 -

Action Instructions:
11.6 Buy OEX-540 PUT on the open at limit 4.50, protect at 3.25
11.6 Got stopped out of position after market rallied.

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


Pull Up A Chair & Join In

Check out our new OEX recommendations for this week.
It?s easy now that you have the OEX Skybox at your side.  As shown
above, we give you step-by-step instructions on entry price, timing,
target and protective sell stops.  All you have to do is follow
along.

We see overhead resistance at the OEX-560 and a sell-off that re
tests the key breakout OEX-540 level over the next couple of days
and are recommending several put recommendations.

If you are more aggressive, you can buy one of our put
recommendations (2) on the open because we see the potential for a
strong reversal into the midst of this "overbought" market.
Alternatively, wait until the market opens and trades below
Friday's close and hits our trigger at the OEX-555 mark.  This will
confirm that the market is selling off before initiating our hedge
position.

As shown by the Gridiron below, we highlight where the OEX is
currently trading relative to important intraday benchmarks.
Notice also that we provide several support and resistance
benchmarks to help subscribers anticipate where the next battle is
likely to be fought.

We also indicate our Pinnacle Index just above (overhead
resistance) or below (underlying support) at key strike price
levels to help highlight the level of optimism.


OEX Skybox
********************************************************
Major Overhead Resistance OEX 560-570
********************************************************

   16.2
  ------- 570 -------------------------------------------------


    8.9                         *** OEX 562 >>>>> (1)
  ------- 560 -------------------------------------------------
** 11.6 ** OEX 558.88>  *** On Open Monday (2)
                            *** OEX 555 >>>>> (4)

  ------- 550 -------------------------------------------------
     .6

                               *** OEX 543 >>>>> (3)
  ------- 540 -------------------------------------------------
    1.7                            *** OEX 538 >>>>> (6)


********************************************************
Major Underlying Support OEX 530/540
********************************************************



OEX Recommendations By Trigger Points
********************************************************
Trigger                         Entry    Target
Point         Action            Price    Price     Stop/Loss
********************************************************

BULLISH Triggers:

(1) BUY CALL DEC-570  OEW-LN   9.25     14.00     6.75
(3) BUY CALL DEC-550  OEW-LJ   8.00     12.00     6.75

BEARISH Triggers:

(2) BUY PUT  NOV-550  OEW-WJ   5.63      8.75     3.75
(4) BUY PUT  NOV-550  OEW-WJ   6.00      9.75     4.25
(6) BUY PUT  NOV-530  OEW-WF   8.00     12.00     6.75

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

Market Watch

Last Thursday night, we began a new section to help alert
subscribers about current EXPECTATIONS and the impact it can have
on the financial markets.  Who would have thought that, on the next
day, Newt Gingrich would announce that he is stepping aside.

Although we may not know the full impact of this development for a
couple of days, it underscores the importance of looking ahead and
anticipating what investors have "factored or priced" into the
market.


********************************************************
Market Event / EXPECTATION               Key Decision Date
********************************************************

Interest Rates:
Rate cut of 25 basis points in Nov       Next FMOC meeting
Followed by another cut in Dec           November 17th

Earnings:
Soft through 1Q99,                       Pre-releases / warnings
Uptrend beginning in 2Q99                December

Political:
November Elections                       November
Speaker of the House / Status Quo



Index Power Grid / Monday (11.9)

We advise clients to develop positions based upon whether industry
sectors are trading above or below key benchmark levels.  These
benchmarks, therefore, are very important and should be viewed
BEFORE initiating new long or short positions with SHORTER time
horizons.

Make a note of our NEW key benchmarks which have been revised after
last week's strong rally.  If the index is trading/trades higher
than our stated Bullish benchmark, go long.  If it is trading/trades
lower than our Bearish Benchmark, go short.  The key to success is
being market neutral and flexible.


Index Power Grid

For Market Trading - Monday, November 9, 1998
                                                       50/100/200
Broad Based        Bearish | Neutral | Bullish    Last    dma
**************************************************************

DOW Industrials    8,900 | |      *  | | 9,000   8,975   +|+|+
SPX S&P 500        1,130 | |     *   | | 1,150   1,141   +|+|+
OEX S&P 100          555 | |     *   | |   562     559   +|+|+
RUT Russell 2000     395 | |     *   | |   405     400   +|@|-

NDX NASD 100       1,450 | |      *  | | 1,460   1,458   +|+|+
MSH High Tech        660 | |     *   | |   670     669   +|+|+

                                                    50/100/200             

Technology         Bearish | Neutral | Bullish    Last    dma
**************************************************************
XCI Hardware         635 | |         |*| 640       647   +|+|+
CWX Software         530 | |     *   | | 540       536   +|+|@
SOX Semiconductor    270 | |      *  | | 280       276   +|+|+
NWX Networking       345 | |     *   | | 355       351   +|+|+
INX Internet         245 | |         |*| 250       252   +|+|+

                                                    50/100/200
Financial          Bearish | Neutral | Bullish     Last   dma
**************************************************************
BIX Banking          650 | |     *   | | 670       661   +|@|-
XBD Brokerage        450 | |    *    | | 470       461   +|@|-
IUX Insurance        570 | |     *   | | 580       576   +|@|-

                                                    50/100/200
Other              Bearish | Neutral | Bullish     Last   dma
**************************************************************
RLX Retail           720 | |     *   | | 740       734   +|+|+
DRG Drug             715 | |         |*| 720       722   +|+|+
HCX Healthcare       700 | |         |*| 700       719   +|+|+
XAL Airline          305 | |  *      | | 315       308   +|@|-
OIX Oil & Gas        255 | |        *| | 260       259   +|@|@


Potential Failed Rallies

The following summarizes the potential failed rallies our analysts
are tracking this week and our NEW recommended short positions.
We have also included the current value of the Pinnacle's sentiment
indicator (PI) as a point of reference for the level of optimism or
expectation.  We recommend taking positions only if they trade
through our recommended entry price.  Short positions should be
initiated using STOP orders.



Symbol                    50/100/200      Last Trade
Entry/Exit Date              dma    PI    Entry/Stop Gain/Loss(+/-)
********************************************************************


Software:
********************************************************************

Compuware / CPWR             +|+|+  8.2 |  59.00
11.9                                    |  58.75    60.25    NEW

Citrix Systems / CTXS        +|+|+  9.8 |  75.38
11.6                                    |  74.75    76.25    NEW


Internet:
********************************************************************
Amazon.con / AMZN            +|+|+  3.5 | 124.56
11.9                                      123.75   125.25    NEW

Retail:
********************************************************************

Best Buy / BBY               +|+|+  4.6 |  47.00
11.9                                    |  45.75   48.25     NEW

Airline:
********************************************************************
American Airlines / AMR      @|-|-  2.1 |  66.75
11.9                                    |  65.75    68.25    NEW


Pinnacle Capital Advisors

Certain market views and recommendations by Pinnacle Capital
Advisors may differ on occasion from the Option Investor due to our
market timing models and underlying technical and sentiment
indicators. Investors are advised to make their own investment
decision based upon their own investment/risk profile.

A detailed description of Pinnacle Capital Advisors' trading approach
and methodology is provided at Option Investor's advisory website. 

www.OptionInvestor.com/pinnacle/meth.htm



*****************************************************
                      DISCLAIMER
*****************************************************
This newsletter is a publication dedicated to the education 
of options traders. The newsletter is an information service 
only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
buy or sell securities presented. All investors should consult 
a qualified professional before trading in any security. The 
information provided has been obtained from sources deemed 
reliable but is not guaranteed as to accuracy or completeness.
The newsletter staff makes every effort to provide timely 
information to its subscribers but cannot guarantee specific 
delivery times due to factors beyond our control.






The Option Investor Newsletter              11-01-98
Sunday                   2  of  7

Published three times weekly, Sunday, Tuesday, Thursday evenings.
© 1998 The Option Investor Newsletter. - All Rights Reserved
*****************************************************************
PICK SUMMARY(best viewed in COURIER 10 for table alignment)
*****************************************************************
SL  = Suggested stop loss. Sell if bid breaks this price.
OI  = Open Interest - the number of open contracts outstanding.
TP/P= True premium or Time premium
RRR = Risk/Reward/Ratio
ITM = In the money
ATM = At the money
OTM = Out of the money
MTD = Move to double - amount stock must move to double option price
                       in one week. ONE WEEK MOVE ONLY !

Numbers within ( ) are the amount of change for the week.
Numbers within ( ) may be designated with PxW, like P3W, prior 3 weeks

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.

Analysts ratings: 1-2-3-4-5 
Analysts who follow each stock rate it and these rating are 
accumulated and displayed as follows;

Position 1 = number of analysts recommending "strong buy"
Position 2 = number of analysts recommending "moderate buy"
Position 3 = number of analysts recommending "hold" or "neutral"
Position 4 = number of analysts recommending "moderate sell"
Position 5 = number of analysts recommending "strong sell" 

Example rating 5-3-1-0-0 would be 5 "strong buys", 3 "moderate buys",
1 "hold" recommendation.
*************************************************************
INDEX OPTIONS
*************************************************************

Index options are not for "buy and hold" traders. Normally if
you can't watch your trade during the day you should not play
index options.

*************************************************************
S&P-100 (OEX) $536.97 (+9.19)(+6.83)(+37.31)(-2.77)(-19.88)(+11.21)

See the Hedge Section for plays

Special note: The OEX is a product of the CBOE and the automatic
execution limit is 10 contracts. That means a MARKET order for 10
contracts or less is executed immediately by computer without 
intervention by a human. A limit order or an order for more than
10 contracts must go through a market maker (human) and be matched
manually to a buy/sell. This delays execution and when the markets
are moving fast it can mean the difference of $2 a share in lost 
time and missed limit executions. It is worth your money to have
a real time quote service and use market orders of less than 10 
contracts.


CHART on S&P-100 (OEX) 
*************************************************************
S&P-500 (SPX) $1098.67 (+28.00)(+14.25)(+72.18)(-18.25)(-42.11)

Market moving up:
BUY CALL NOV-1100  SPT-KT OI=15932 at $23.50 SL=20.00 $ 1 OTM
BUY CALL NOV-1125  SPT-KE OI=12627 at $10.75 SL= 8.00 $27 OTM

Market moving down:
BUY PUT  NOV-1080  SPQ-WP OI=1711  at $14.75 SL=12.00 $20 OTM


CHART on S&P-500 (SPX) 
*****************************************************************
Russell-2000 (RUT) $378.16 (+11.11)(+24.18)(+24.47)(-31.31)(-19.31)

If the strong rally continues the Russell should continue to perform
better, percentage wise, than the other indexes. Historically the
Russell regains lost ground about twice as fast.

Market moving up:
BUY CALL NOV-380 RUZ-KP OI=1207 at $8.38  SL=6.00
BUY CALL NOV-390 RUZ-KR OI=368  at $3.50  SL=2.00

Market moving down:
BUY PUT NOV-375 RUZ-WO OI=2000 at $ 6.63  SL=4.00


CHART on Russell-2000 (RUT) 
*****************************************************************
STOCKS ADDED TO THE PICK LIST - see details in sector list
*****************************************************************


Calls

CMB  - Chase Manhattan Bank
DAL  - Delta Airlines
HWP  - Hewlett Packard
ATI  - Airtouch
NT   - Nortel Networks
CPQ  - Compaq
WLA  - Warner Lambert

Puts

No new plays

Aggressive plays (high risk, high reward)

No new plays

Also see the Hedge Section for shorts other plays

*************************************************************
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: 

JBL - $46.31 (-1.44) Not dropping much but failed to make any
progress this week. Will probably come back but the market is
moving faster than JBL.

DO -  $30.69 (+.56) There just isn't enough good news to keep 
the rally going in the oil service sector.  Once there is some 
good news this sector should move nicely, but we will wait until
then.


PUTS: 

IP - $46.44 (+.88) International Paper bounced off its 50 dma on
Friday to gain +2.13 on the Dow euphoria. No reason for the rise
but it is not acting like a put.

DD - $57.75 (-1.39) Dupont bought the largest European coating
company Thursday for $1.9 billion. Actually a good move and the
fact the stock did not fall shows analysts liked it.


*****************************************************************
STOCK SPLIT CANDIDATES - see details in sector list
*****************************************************************
Until the market recovers the number of split candidates worth
playing will be very thin.

MRK - Merck          (above $135)

Recent split candidates that announced:

SLE - Sara Lee
AOL - American Online

***************************************************************
STOCKS WITH UPCOMING SPLITS - see details in sector list
***************************************************************
We don't list all splits available, only those we feel may have
play possibilities. Far right col is current stock trend.


DAL  - Delta Air       2:1 11-16-98 ex-date 11-17 up (current play)
AOL  - America Online  2:1 11-17-98 ex-date 11-18 up (current play)
GPS  - The Gap         3:2 11-30-98 ex-date 12-01 up
BBC  - Bergen Brunswig 2:1 12-01-98 ex-date 12-02 up
SGP  - Schering Plough 2:1 12-02-98 ex-date 12-03 up (current play)
SCH  - Charles Schwab  3:2 12-11-98 ex-date 12-14 up
PVN  - Providian Finl  3:2 12-15-98 ex-date 12-16 up
SLE  - Sara Lee        2:1 12-21-98 ex-date 12-22 up
LMT  - Lockheed Martin 2:1 12-31-98 ex-date 01-04 up 

For a complete list of all the coming splits check out the
"split calendar" on the side of the online edition newsletter
page.

*****************************************************
STOCK OPTIONS - FINANCIAL
*****************************************************
MER - Merrill Lynch $59.00 (+3.69)(+5.57)(+4.12) 

Merrill has been moving fast since its low of $35 just three
weeks ago. MER has a lot of long term potential, therefore
we recommend the January plays for those of you with the
patience to sit on them.  For the rest of us, MER was trading
above $90 before the recent market induced drop. With the IMF
funded to $90 bil and Brazil on the mend, we could see $75 soon.

They are the #1 brokerage in the US.  They have a wide
range of products with a retail brokerage, cash management
services, investment banking, retail banking, and insurance.
They are involved overseas investment services and are a 
leader in the profitable US mergers and acquisitions market.

BUY CALL NOV-55*MER-KK OI=8298 at $5.63 SL=3.50 $4.00 ITM
BUY CALL NOV-60 MER-KL OI=4450 at $2.56 SL=1.25 $1.00 OTM
BUY CALL DEC-60 MER-LL OI=3363 at $4.00 SL=2.50 6 weeks
BUY CALL JAN-60*MER-AL OI=2338 at $5.13 SL=3.50, 11 week play!
BUY CALL APR-60 MER-DL OI= 541 at $7.75 SL=5.25

NO PUT PLAY THIS WEEK.

Picked on October 18th $49.75       PE = 18 
Change since picked   +$ 9.25       52 week high=  109.12 
Analysts Ratings    3-1-7-0-0       52 week low =   35.75
Last Earnings 10/14 est 1.12 actual 1.30  
Next Earnings 01/20 est 0.95 versus 1.17

MACD Chart   CHART   NEWS   Zacks on MER 
*****************************************************
COF - Capital One Fncl $101.75 (+6.13)(+8.36)

Capital One came roaring back to life on Thr/Fri with a +9.13
total for both days. Now above its 50 dma and next resistance at
$115. This is not for the no risk player but with the finance
sector the favorite to recover in the current climate COF could
continue to add $5-7 per week.

Ever received a credit card application in the mail?  I might 
have been from Capital One Financial.  They are the parent co.
of Capital One Bank, and one of America's top 10 credit card
companies.  You are probably in one of their massive databases.
Besides their 3,000 different variations of credit card rates,
limits, charges, and fees; they also include a savings bank, 
consumer lending, and deposit services. On Tuesday 10/20, COF
announced that they were going to beat estimates for 1999. They
felt that next year would be at least 30% higher than 1998.  

Premiums are expensive due to big moves and strong expectations.

BUY CALL NOV-100 COF-KT OI= 456 at $7.63 SL=5.00  $1.75 ITM
BUY CALL NOV-105 COF-KA OI= 272 at $5.00 SL=3.00, riskier play
BUY CALL DEC-105*COF-LA OI= 678 at $8.75 SL=6.25

NO PUT PLAY THIS WEEK.

Picked on Oct. 20th at $91.63         PE= 24                     
Change since picked   +$10.12         52 week high= 129.93 
Analysts Ratings    7-5-3-0-0         52 week low =  42.00  
Last Earnings 10-16  est= 1.00   actual= 1.00   
Next Earnings 01-15  est= 1.05 (+.01)  versus= .86   

MACD Chart   CHART   NEWS   Zacks on COF 
*****************************************************
CCI - Citigroup $47.00 (+.57)(+4.81)

After taking a beating of -2.75 on the Brazil worry Tuesday CCI
came back strong, up +3.50 Thr/Fri. Banking is the hot sector after
being beat up so bad in the market drop. The global scare appears
to be about over with IMF getting a fresh $90 billion boost. If the 
market rally continues CCI will benefit. CCI was the second most 
active stock on the NYSE Friday trading 12 million shares.

The Atlas of the financial services community, Citigroup is
a head and shoulders above its peers.  Formerly Citicorp and
Travelers, CCI offers credit card services, banking, insurance,
and investment services in 100 countries.

After a tough 3Q 1998, which included an after-tax restructuring
charge of $556 mln and large trading losses by their brokerage
firm Salomon Smith Barney, it looks like the worst maybe over.
With a 53% drop in earnings over the previous year, CCI is 
blaming most of the damage to worldwide economic turmoil.  They
told investors that they are curbing the trading risks that 
allowed for such losses through their Salomon Smith Barney
brokerage.  

BUY CALL NOV-45.00*CCI-KI OI=11341 at $3.25 SL=1.50, ITM $2.00
BUY CALL NOV-50.00 CCI-KJ OI=8734  at $ .88 SL= .00, risky 2 week play
BUY CALL DEC-45.00*CCI-LI OI=6425  at $4.38 SL=2.75, ITM $2.00
BUY CALL DEC-50.00 CCI-LJ OI=5370  at $2.06 SL=1.00

NO PUT PLAY THIS WEEK.

Picked on Oct 22nd at  $45.06      PE = 13  
Change since picked   +$ 1.94      52 week high= 73.50 
Analysts Ratings    7-4-7-0-0      52 week low = 28.50  
Last Earnings 10-21 est 0.29 actual 0.30 
Next Earnings 01-20 est 0.69 versus 0.60

CHART   NEWS   Zacks on CCI 
*****************************************************
CMB - Chase Manhattan Corp $56.81 (+1.13)(+6.60)

Chase is a leading provider of financial solutions to individuals
and small businesses, large corporations and government entities.
Chase, with over $365 billion in assets, has relationships with
more than 30 million consumers coast to coast. Chase has made
more U.S. Small Business Administration loans than any other
financial institution in the New York District through the first
nine months of the SBA's fiscal year. Chase recently announced it
is the first bank in the region to enable small business
customers to link deposit, investment and credit accounts for
benefits such as lower fees and higher deposit rates. 

Chase surprised analysts last week by announcing only slightly
lower profits than the previous year and beating estimates of
$.77 soundly with $.94. Chase said it had cut its Asian/Latin
exposure significantly and was poised to post increased earnings
next quarter after cleaning house of many problems this quarter.

When the Brazil rumor made the rounds last week Chase took a -3.69
tumble and we dropped it until the rumor cleared. Beginning Wednesday
the bank sector took of again when it turned out not to be true.
We feel CMB is headed back to its previous level of $75 just
10 weeks ago. 

BUY CALL NOV-55 CMB-KK OI=5667 at $3.50 SL=1.75, $1.81 ITM
BUY CALL NOV-60 CMB-KL OI=1631 at $1.06 SL= .50, high risk
BUY CALL DEC-55*CMB-LK OI=1800 at $5.00 SL=3.00, MTD=8.00
BUY CALL JAN-60*CMB-AL OI=3782 at $3.38 SL=1.75, MTD=6.00

Picked on Oct 25th at $55.69     PE=14
Change since picked  +$ 1.13     52 week low =$35.56
Analysts Ratings  10-7-5-1-0     52 week high=$77.56 
Last earnings   10/20   est=.77  actual=.94    
Next earnings   01-20   est=1.11 versus=.94  


MACD Chart   CHART   NEWS   Zacks on CMB 
*****************************************************
ABI - American Bankers Ins. Grp. $44.69 (+2.87)(+1.31)(+5.62)

Back from the dead. ABI had been consolidating Mon/Tue and we
considered dropping it but with all the positive press we could
not bring ourselves to do it. Patience proved us right. 

Industry analysts are expecting a deal before the end
of the year, therefore we recommend the January plays over
the Novembers. Traditionally, the majority of 
acquisitions/mergers are announced on Mondays.  Takeover
plays by their nature involve a higher level of risk. 
ABI is blaming part of their slowing sales momentum on 
the "lengthy merger process" it endured with Cendant Corp.

American Bankers Insurance Group sells specialty insurance.
ABI wholesales their insurance to auto dealers, financial
institutions, and retailers who then retail the same policy 
to the public.  Coverage includes property, life, unemployment,
and disability. On 10/29 ABI completed its acquisition of MS 
Diversified Corp for $54 million. They feel it will give them
access to the market for extended vehicle service contracts and
enhance shareholder value.

BUY CALL NOV-40 ABI-KH OI=9307 at $5.38 SL=2.75  $4.69 ITM
BUY CALL NOV-45 ABI-KI OI=4345 at $1.69 SL= .75
BUY CALL DEC-45 ABI-LI OI=1146 at $2.63 SL=1.25
BUY CALL*JAN-40 ABI-AH OI=5159 at $6.88 SL=4.75, $4.69 ITM
BUY CALL*JAN-45 ABI-AI OI=3811 at $3.25 SL=1.50

TAKEOVER PLAY

MACD Chart   CHART   NEWS   Zacks on ABI 
*****************************************************
STOCK OPTIONS - DRUGS
*****************************************************
WLA - Warner-Lambert Co.  $78.38 (+2.19)

WLA has three business segments; a pharmaceutical division, a
consumer division, and a confectionery division.  Its
pharmaceutical products include Lipitor, Rezulin and Neurontin. 
Consumer products include Listerine, Benadryl, Sudafed and
Schick.  Confectionery products include Halls, Trident,
Chiclets, Dentyne and Certs.

WLA is growing rapidly.  They announced earnings on October 19,
and beat estimates by 1 cent a share with earnings growth of
46%.  Sales rose 21% to $2.56 billion, driven primarily by
growth in its pharmaceutical division.  Lipitor is the most
widely prescribed cholesterol lowering agent in the US.
Worldwide sales of Lipitor more than doubled to $569 million
for the quarter.  WLA's Rezulin diabetes treatment also
performed well with a 32% sales increase to $181 million. 
Operating margins are also improving thanks to the
pharmaceutical division.

Since August, WLA has been rolling between $65 and $78, and
closed at the top of this roll on Friday.  You can never
predict when a stock will break out of this rolling pattern,
but with its recent earnings announcement and the way the drug
sector has been behaving, we like WLA's chances.  Remember, WLA
closed at resistance on Friday.  If it can move above this, it
really doesn't have any resistance until it reaches its 52 week
high of $86.

BUY CALL NOV-75 WLA-KO OI=6578  at $4.75, SL=3.00
BUY CALL NOV-80 WLA-KP OI=6158  at $2.00, SL=1.00
BUY CALL JAN-85*WLA-AQ OI=2144  at $3.50, SL=2.00

Picked on Nov 1st at  $78.38   PE=45
Change since picked    +0.00   52 week low =$36.17
Analysts Ratings 16-10-4-0-0   52 week high=$85.94
Last earnings   9-98 est=.34   actual=.35
Next earnings  01-27 est=.39   versus=.28

MACD Chart   CHART   NEWS   Zacks on WLA 
*****************************************************
ABT - Abbott Laboratories  $47.00 (+.19) (+2.00)

More than a century ago, 30-year-old Wallace C. Abbott, M.D.,
began making a new form of medicine. Using the active part of
medicinal plants, he formed tiny pills, called "dosimetric
granules," which provided a precisely measured amount of drug.
From a small operation based in Dr. Abbott's Chicago apartment,
Abbott Laboratories has evolved into one of the world's leading
health care companies.  ABT makes drugs, diagnostic tests,
intravenous solutions, laboratory & hospital instruments,
prepared infant formulas, and nutritional products.

ABT has been on the rise since its earnings announcement on
October 8, with a 12.8% increase in net income.  They met
analysts expectations and indicated that US sales were up 7.3%
from the same period a year ago.  On a business segment basis,
the hospital and laboratory products led sales growth with an
increase of 6.5% compared to a 5.5% increase in sales for the
drug and nutritional products business.

There has been very little news on ABT lately.  Last week the
only press release was about a joint supply agreement for a
clinical diagnostic product.  In the absence of news, ABT will
be subject to the moves of the market and drug companies, in
general.  ABT's beta is exactly 1.00.  That means, on a
historical basis, its stock price movement mirrors the market.
ABT has set new 52 week highs each of the last two weeks.  Last
week it was down early in the week and then set a new 52 week
high on Thursday.

BUY CALL NOV-45 ABT-KI OI=4609  at $2.81, SL=1.50
BUY CALL NOV-50 ABT-KJ OI=1215  at $0.50, risky
BUY CALL JAN-50*ABT-AJ OI=1628  at $1.63, SL= .75

Picked on Oct 25th at $46.81   PE=30
Change since picked     +.19   52 week low =$28.53
Analysts Ratings   5-7-8-0-0   52 week high=$47.81
Last earnings   9-98 est=.34   actual=.34
Next earnings   1-18 est=.41   versus=.37

MACD Chart   CHART   NEWS   Zacks on ABT 
*****************************************************
SGP - Schering Plough $102.88 (+2.56)(+2.44)(+3.19)(-4.82)

Slow and steady SGP just keeps making decent weekly gains.
On 10/26 the European Medical Products Agency issued a 
unanimous positive opinion recommending approval of their
brain cancer and melanoma cancer drug.

Ploughing ahead, SGP turned in a great quarter with
a 21% rise in profits, a 16% climb in overall sales, and a
24% jump in domestic sales of prescription drugs.  No word yet 
on whether SGP got that patent extension for their cash cow 
Claritin, rest it assured if they do (did?) when the public 
finds out it should give  the stock a boost.  
Their 2:1 split is coming on Dec. 2nd.

SGP develops and markets a plethora of products.  These 
range from OTC drugs, prescription drugs, sun care, foot care,
and animal health products.  The #1 antihistamine in the world
is SGP's Claritin.  SGP is also known for their Dr. Scholl's 
foot care products, the Coppertone line of sun care, and their
Afrin nasal sprays.  

BUY CALL NOV-100 SGP-KT OI=2676 at $4.88  SL=2.75  $2.88 ITM
BUY CALL NOV-105 SGP-KA OI=2072 at $2.13  SL=1.00
BUY CALL DEC-105 SGP-LA OI=363  at $4.25  SL=2.25
BUY CALL JAN-100 SGP-AT OI=1259 at $8.88  SL=6.75, post split 50s!
BUY CALL*FEB-100 SGP-BT OI= 268 at $10.50 SL=6.75, post split 50s!

NO PUT PLAY THIS WEEK.

Picked on August 15th at $ 94.75        PE= 43           
Change since picked     +$  8.13        52 week high= 108.87 
Analysts Ratings     10-7-11-0-0        52 week low =  51.00  
Last Earnings 10-20  est= .57    actual= .58                 
Next Earnings 01-27  est= .55    versus= .46   

MACD Chart   CHART   NEWS   Zacks on SGP 
*****************************************************
LLY - Eli Lilly $81.00 (+3.32)(+2.43)(+1.88)(-3.51)(-1.69)

Lilly, along with the entire drug sector continues to benefit
from the strong market rally. On Friday Lilly announced a beefed
up and reorganized sales force to market the drug Evista. The
target market is not being reached and Lilly is taking steps to
make doctors in that market aware of the benefits of Evista in
preventing osteoporosis in women. Analysts feel the targeted
effort cold easily double or triple the $48 million last year
sales.

Did somebody say Prozac?  LLY not only makes the popular
anti-depressant, but a host of other drugs as well: Gemzar
for pancreatic cancer; Humalog, a type of insulin; ReoPro,
a blood-clot inhibitor; and the schizophrenic therapy drug
Zyprexa.  LLY also deals with vitamins, sedatives, antibiotics,
growth hormones, anti-ulcer drugs, and feed additives for 
livestock.  LLY is investigating the future of their Evista
drug (designed to fight osteoporosis) in the fight against 
breast cancer.  Eli Lilly reported their 3Q earnings on 10/21
and beat estimates by 2 cents. "We expect this trend of 
aggressive growth to continue", said Sidney Taurel, the CEO of 
LLY.  

BUY CALL NOV-80 LLY-KP OI=3891 at $3.00 SL=1.50
BUY CALL*JAN-80 LLY-AP OI=2721 at $5.75 SL=3.75, 11 week play
BUY CALL JAN-85 LLY-AQ OI=2505 at $3.50 SL=1.50 

NO PUT PLAY THIS WEEK.

Picked on Sept. 12th at $74.88       PE = 41
Change since picked    +$ 6.12       52 week high= 81.75
Analysts Ratings   11-6-13-0-0       52 week low = 57.68
Last Earnings 10/21 est .51  actual .53 
Next Earnings 02-05 est .52  versus .40

MACD Chart   CHART   NEWS   Zacks on LLY 
*****************************************************
PFE - Pfizer $107.31 (+3.80)(+5.05)(+5.44)

Pfizer gave back -.44 to profit taking on Friday but still put
in a strong week. PFE just keeps turning in decent weekly gains.
If the Dow rally continues we expect PFE to continue upward as
well.

Is it any wonder that one of the world's top producers of
veterinary medicines for farm and domestic animals is also
the creator of Viagra (the infamous male anti-impotence drug).
Pfizer makes a number of consumer products in addition to
their prescription drugs (like BenGay muscle rub and Visine
eyedrops).  They also co-market Lipitor (cholesterol drug) with
Warner-Lambert (WLA).

10/22 due to the markets, PFE and Stryker have changed the
sale price of PFE's Howmedica unit from $1.9 bln to $1.65 bln.
10/20 PFE plans to add a $10 mln expansion to Ontario plant.
10/19 Deutsche Bank upgrades PFE to "buy" from "accumulate".
10/15 Another lawsuit over a Viagra O.D.
10/14 Viagra officially goes on sale in Italy.

BUY CALL NOV-105 PFE-KA OI=7850 at $4.88 SL=3.00 $2.31 ITM
BUY CALL*DEC-105 PFE-LA OI=3842 at $7.38 SL=5.00 $2.31 ITM
BUY CALL DEC-110 PFE-LB OI=6082 at $4.25 SL=2.00

NO PUT PLAY THIS WEEK.

Picked on October 13th at $87.50      PE = 49 
Change since picked      +$19.81      52 week high= 121.75
Analysts Ratings     13-5-14-0-0      52 week low =  56.25
Last Earnings 10-13 est .57  actual .51  
Next Earnings 01-20 est .56  versus .43

MACD Chart   CHART   NEWS   Zacks on PFE 
*****************************************************
STOCK OPTIONS - TECH 
*****************************************************
DELL Computer $65.50 (+7.26)(+1.56)(+3.87)(-9.88)(-3.37)(+8.19)

Dell is the largest direct sales PC manufacturer in the world. Also
listed at 125 in the Fortune-500 and 343 in the Global-500 of top
companies. Dell has consistently outperformed any other major stock
for price performance. Dell is up +1200% in the last five years and
has split their stock five times in the last three years.

Michael Dell said Friday 10/23 that the companies sales on the 
Internet continue to rise from the $6 million a day posted last 
quarter. Dell also said that Internet sales were increasing as a
percentage of revenues. Companies are buying more complicated and 
higher priced servers that previously required personal sales calls.

Michael also said the Asian economic turmoil was continuing to work
in Dell's favor. Prices of components continue to fall making Dell's
total costs cheaper every day. Michael said again that their inventory
turns over every eight days allowing Dell to pass the savings along
to the customer. Even though the ASP (average sales price) is shrinking
Dells profit margins are growing. Michael also said that revenue from
the Asia-Pacific region were growing well in excess of the 7% from
last quarter and well in excess of the rest of the industry. He said
the current cost reduction mode of corporations has resulted in more
calls to Dell asking for bids than they have ever had before. Business
is good, very good, according to Michael.

Business Week said on Friday 10/23 that they picked Dell as the number
one high tech financial company in the world. Business Week took a
careful statistical look at performance in the high-tech industry.
Companies were judged on revenue growth, total revenues, shareholder
return and return on equity. The top ten in order were Dell, VOD, SAP,
NOK/A, IM, AOL, CPWR, MSFT, EMC and LXK. 

Compaq said Friday 10/30 that they were taking their holy war with
Dell to a new level. They are announcing on Wednesday Nov-11th a
new direct sales from their website program. They will feature build
to order incentives to attack Dell's success. However, not to be
outdone Dell announced they were going to aggressively recruit local
and regional computer dealers, including Compaq partners, to sell Dell
products into the small and medium-sized business market. Dell has
also ramped up informational efforts to reach this audience. 

Dell had a good week even with the Nasdaq rise slowing. Dell was
weak on profit taking early Friday but firmed in the last hour. Up
from slightly negative at midday to close +.75. We feel the Nasdaq
weakness is about over and we could see some big gains again next
week when the Dow rests. Dell overcame resistance at $60 this week
and has now slipped past resistance at $65. Dell's 52 week high was
$69.25 before the Oct 8th crash.

Our current target price by earnings on 11/12 is $70-75 BUT Dell has 
been known to go up $20 in one week during earnings runs. Michael 
has already prewarned that they expect to beat estimates. 

Remember Dell may be a superstock but it will rise and fall with
the Nasdaq. 

BUY CALL NOV-60 DLQ-KL OI=34203 at $7.50, SL=5.00, $5.50 ITM
BUY CALL NOV-65 DLQ-KM OI=34198 at $4.38, SL=2.50, MTD=6.00
BUY CALL DEC-65 DLQ-LM OI=4301  at $7.00, SL=5.00, MTD=9.00
BUY CALL JAN-65 DLQ-AM OI=12867 at $8.75, SL=6.50, MTD=10.00

BUY LEAP JAN-00-70*LDE-AN OI=2941 at $18.50, SL=16.00 (2 splits?)

Picked on Jan 18th at $24.22     PE=55 based on 1998 eps $2.07
Change since picked  +$41.28     52 week low =$17.50 (split adj)
Analysts Ratings  9-10-9-0-1     52 week high=$69.25 
Last earnings    8/18   est=.23  actual=.25 surprise   
Next earnings   11-12   est=.26  versus=.17 increase 

MACD Chart   CHART   NEWS   Zacks on Dell 
****************************************************
CPQ - Compaq Computer Corp.  $31.63 (+2.75)

CPQ was founded in 1982, and is a Fortune Global 100 company.
CPQ is the second largest computer company in the world and the
largest global supplier of personal computers.  Compaq develops
and markets hardware, software, solutions, and services,
including industry-leading enterprise computing solutions,
fault-tolerant business-critical solutions, networking and
communication products, commercial desktop and portable
products and consumer PCs. Compaq products are sold and
supported in more than 100 countries through a network of
38,000 authorized Compaq marketing partners.

CPQ announced earnings a couple of weeks ago that was 1 cent a
share better than expectations.  Sales increased 36%. Price
competition also seems to be easing a bit from the first six
months, permitting gross margins to widen a bit more than
expected.  This is partly because CPQ cleared its inventory
channels and no longer had to cut prices of older models to
move them out.  CPQ characterizes itself as being in a
transitional period following its $8 billion acquisition of
Digital Equipment Corporation in June, 1998.  

CPQ is showing some pretty good momentum.  On a worldwide
basis, Compaq's market share grew to 14.4 percent in the third
quarter as the company shipped nearly 1 million more units than
its nearest competitor. Compaq's PC market share in the U.S.
grew to 15.8 percent in the third quarter from 14.4 percent in
the previous quarter.

CPQ had a nice gain on Friday and closed above its 200 day
moving average of $30.  This is a good sign, and we would like
to see it hold above this critical support level.  The next
level of resistance for CPQ is in the $33-$34 range.  

BUY CALL NOV-30 CPQ-KF OI=35650  at $2.44, SL=1.25
BUY CALL NOV-35 CPQ-KG OI=10700  at $0.31, very risky
BUY CALL JAN-35*CPQ-AG OI=37730  at $1.63, SL= .75

Picked on Nov 1st at  $31.63   PE=33
Change since picked    +0.00   52 week low =$22.94
Analysts Ratings 20-10-6-0-0   52 week high=$38.69
Last earnings   9-98 est=.06   actual=.07
Next earnings  01-21 est=.36   versus=.42

MACD Chart   CHART   NEWS   Zacks on CPQ
****************************************************
HWP - Hewlett-Packard Co.  $60.25 (+2.31)

HWP was founded in 1939 by Bill Hewlett and Dave Packard. The
company's first product, built in a Palo Alto garage, was an
audio oscillator -- an electronic test instrument used by sound
engineers. One of HP's first customers was Walt Disney Studios,
which purchased eight oscillators to develop and test an
innovative sound system for the classic movie "Fantasia."

Hewlett-Packard is one of the world's largest computer
companies and the foremost producer of test and measurement
instruments. The company's has 29,000 products.  Today, most of
HP's revenue comes from computers -- ranging in size from
palmtops to supercomputers -- plus peripherals and services. HP
is the fastest-growing personal computer company in the world.
In addition, HP manufactures and services networking products
to help customers connect HP computers as well as those of
other manufacturers. 

HP is also the world's leading supplier of printers that set
the standard for technology, performance and reliability,
including HP LaserJet and DeskJet printers, DesignJet large-
format printers, ScanJet scanners, OfficeJet all-in-ones and
CopyJet color printer-copiers.  But, it has been challenged
recently by Xerox, Cannon and Lexmark.  On Thursday, HP
announced its biggest new product roll out in its history.  It
has more than 20 new products, including:  advanced color
printers; devices that print, copy, scan and fax; and a unique
hand-held device that lets traveling business people scan and
store documents, then bring the images back to the office 

HWP has been on a nice run since early October.  We would have
included it as a play earlier, but since HWP has a history of
disappointing the Street with earnings, we didn't want to touch
it until it cleared its 200 day moving average of $60.  Also,
the major new product announcement last week may be the news
that propels HWP into its earnings announcement on 11/17.  The
warning here is don't play HWP if it breaks below $60.

BUY CALL NOV-60 HWP-KL OI=13399 at $2.50, SL=1.25
BUY CALL JAN-65*HWP-AM OI=4920  at $2.50, SL=1.25

Picked on Nov 1st at  $60.25   PE=17
Change since picked    +0.00   52 week low =$47.06
Analysts Ratings  8-7-11-0-0   52 week high=$82.38
Last earnings   7-98 est=.55   actual=.58
Next earnings  11-17 est=.74   versus=.75

MACD Chart   CHART   NEWS   Zacks on HWP 
*****************************************************
STOCK OPTIONS - NETWORKING
*****************************************************
CSCO - Cisco Systems $63.00 (+4.31)(+3.31)(+5.31)(-5.69)

Cisco is the leading networker and is expected to help 
build the next generation Internet. Their goal is to allow
people to access or transfer information without regard to 
differences in time, place or type of computer systems, voice
or data.

Cisco took another major step towards merging voice and data
with its purchase of Selsius recently for $145 million. Selsius
is a maker of Internet protocol PBX systems for office telephone
networks. Just another bite for Cisco as it attempts to take
control of the "trillions" of dollars at stake in Internet
business over the next four years.

10/5 Cisco announced the acquisition of American Internet Corp. 
AIC is a leading provider of software solutions for IP address
management and Internet access. AIC technology deals with 
set top boxes, cable modems and IP address configuration and
authentication. The price was $56 mil all stock.

Cisco started a $60 mil ad campaign including TV ads on
Aug 24th to boost their brand name. New products from companies
like Sony will have a "Cisco Networks" sticker modeled in
the vein of Intel's successful "Intel Inside" logo. Cisco
is pulling out all the stops in its war with 3Com and you
can bet this 800lb gorilla is going to end up on top.

Cisco made good progress this week with a +$4.31 gain. Cisco
was weak with the Nasdaq on Friday but firmed up in the late
afternoon. A Cisco executive had mis-spoken about projected
growth on Thursday which led to the softness. The story was
corrected Friday and it started up again. We feel the 
consolidation period is over and the  Nasdaq should soar again 
next week. Cisco is one of the four major Nasdaq components. 
Our short term target is $70 and $80 by the end of November. 
We could see a couple good days before earnings on Wednesday 
Nov-4th.

BUY CALL NOV-60 CYQ-KL OI=18524 at $5.00 SL=3.00 $6.00 MTD $3 ITM
BUY CALL NOV-65 CYQ-KM OI=15919 at $2.00 SL=1.00 $4.00 MTD
BUY CALL DEC-60 CYQ-LL OI=1574  at $6.38 SL=4.25 $8.00 MTD
BUY CALL DEC-65 CYQ-LM OI=1302  at $3.63 SL=2.00 $6.00 MTD
BUY CALL JAN-65*CYQ-AM OI=5124  at $4.75 SL=2.73 3 months

LEAP PLAY:

BUY LEAP JAN-2000-65 LCY-AM at $13.75 SL=11.00 
BUY LEAP JAN-2001-65 ZCY-AM at $18.75 SL=15.00    

Picked on Oct   8th   $46.69		PE= 52 
Change since picked  +$16.31		52 week low =$30.28 
Analysts Ratings 20-11-3-0-0		52 week high=$70.17
Last earnings on  8-04 est=.47  actual=.48  
Next earnings on 11-04 est=.50  versus=.39  

MACD Chart   CHART   NEWS   Zacks on CSCO 
****************************************************
TLAB - Tellabs Inc. $55.00 (+.20)(+9.87)

Tlab slowed this week as talk of a potential Ciena takeover loomed
again. Tlab was not mentioned but there is still interest in the
merger. Investors were bidding up Ciena and avoiding TLAB. If 
nothing is announced on Monday then TLAB should resume its upward
course.

Since its bottom just a couple of weeks ago, Tellabs has been
white hot as investors try to recover lost ground after sinking
with a troubled Ciena and suffering through a broker merger deal.
Nov-20th TLAB announced their 3Q results with the best quarter 
in TLAB's history.  Beating estimates by 3 cents, sales were 
up 37% and net income was up over 50% (not including charges).
In a recent interview, the CEO of TLAB said he believes that they
will beat estimates for 4Q by a "penny or two".  TLAB is still
considering future acquisitions, and their CEO said they are
still willing to talk with Ciena but would "wait until the dust
settled".  With a bright outlook for the future, TLAB could
easily be trading at the mid-60s to the low-70s again. 

Tellabs is quickly becoming a powerhouse in the Telecom
equipment industry. With their TITAN and CABLESPAN systems,
and its DXX multiplexers, TLAB is raking in the money from
customers among the telephone companies, cable operators, 
and government agencies.  


BUY CALL NOV-50 TEQ-KJ OI=1918 at $6.63 SL=4.75, $5.00 ITM
BUY CALL NOV-55 TEQ-KK OI=1726 at $3.50 SL=1.75
BUY CALL DEC-55 TEQ-LK OI=2000 at $4.75 SL=3.50
BUY CALL DEC-60*TEQ-LL OI=2777 at $2.94 SL=1.50
BUY CALL MAR-60 TEQ-CL OI= 575 at $6.50 SL=4.75

NO PUT PLAY THIS WEEK.

Picked on October 22nd at $52.56       PE = 25 
Change since picked      +$ 2.44       52 week high= 93.12
Analysts Ratings     14-10-3-0-0       52 week low = 31.37
Last Earnings 10-15 est .46  actual .49 surprise +6.5% 
Next Earnings 01-26 est .57  versus .42

MACD Chart   CHART   NEWS   Zacks on TLAB 
****************************************************
LU - Lucent Tech. $80.19 (+2.19)(+5.25)(+9.43)(+.06)

Lucent's rapid advance slowed somewhat with the Dow weakness early 
in the week. News of a pending $1 billion wireless contract
in Brazil is good news for LU and bad news for NT and Ericsson.
If it comes to pass look for LU to rocket again. 

To recap the recent news..LU turned in a record fiscal 4Q with
profits jumping 49%.  Revenues rose 16% to $8 bln with a 
3% climb in gross margins (to 47.1%).  Important news was
the breakup of LU and Philips' joint venture.  LU's CFO gave
an interview on 10/22.  He said they do not and have not 
seen a slow down in telecom equipment sales.  They predict the
telecom market to grow by 15%; of course they plan to 
outperform the general market.  In other news, LU is becoming
a key player in the microchip market.  They specialize in 
(what else) communication chips.  LU actually derived
10% of its revenues, or $3 bln from its chip sales.  This makes
LU Microelectronics (their chip division) about 1/3 the size
of Texas Instruments.  Their chip sales grew by 10% outperforming
the overall depression in the semiconductor industry.  Expect
the recent optimism in the chip sector to rub off on Lucent.

The leading US producer of telecom equipment and software.
Their products range from telephones to switching equipment to
wireless networks.  Lucent is also a global leader in digital
signal processors and telecom power systems.

-news abbreviated- 
10/22 LU and Philips call it quits in joint venture, and
LU releases 3Q earnings of $.41 beating estimates of $.39.
10/21 LU unveils its IP exchange system.  This allows companies
to "converge voice, data and fax traffic over their local" and
WAN, and the net.
10/20 LU is the market leader in the U.S. call center market
shipping 3 times as many systems as its nearest rival.
10/15 unveils its TrueWave XL fiber and $200 mln, 4 yr. contract.
10/14 LU is testing its Digital Radio IBOC system and 
Oppenheimer initiates LU with a "buy".
10/13 LU wins a 5 year, $200 mln contract from Allegiance Telecom.
10/12 LU's Fitel joint venture wins $50 mln fiber cable deal.

BUY CALL NOV-75 LU-KO OI= 8800 at $6.50 SL=4.50, ITM $5.19
BUY CALL NOV-80 LU-KP OI=13373 at $3.13 SL=1.50
BUY CALL DEC-80 LU-LP OI= 2452 at $5.50 SL=3.75
BUY CALL JAN-80*LU-AP OI= 7252 at $6.50 SL=4.25, 11 week play

NO PUT PLAY THIS WEEK.

Picked on October 11th at $63.06      PE= 98           
Change since picked      +$17.13      52 week high= 108.50
Analysts Ratings      9-8-14-0-0      52 week low =  36.18
Last Earnings 10-22 est= .39  actual= .41                 
Next Earnings 01-20 est= .97  versus= .86

MACD Chart   CHART   NEWS   Zacks on LU 
****************************************************
QCOM - Qualcomm, Inc.  $55.63 (+1.38) (+6.75)

QCOM develops, manufactures, markets, licenses, and operates
advanced communications systems and products based on digital
wireless technology. The Company's primary product areas are
the OmniTRACS(R) system (a geostationary satellite-based,
mobile communications system providing two-way data and
position reporting services), CDMA wireless communications
systems and products and, in conjunction with others, the
development of the Globalstar(TM) low-earth-orbit (LEO)
satellite communications system. Other Company products include
the Eudora Pro(R) electronic mail software and ASIC products.

The company's CDMA has become the dominant wireless
transmission standard in the US and Korea, and is gaining
momentum in a host of other countries.  Demand for CDMA phones
is surging as the US wireless industry is migrating from analog
to digital.  QCOM believes the users of its CDMA wireless
communications technology will reach 20 million by the end of
the year.  It also indicated that it is lobbying China to adopt
its CDMA technology.  Since 1990, the average growth rate of
mobile phone users in China has been about 160%, according to
government figures.  China expects to have 50 million mobile
phone users by the turn of the century.

QCOM's revenues continue to soar.  Last week QCOM announced
that it signed a multi-year contract with US West, estimated to
have sales of at least $50 million.  The contract is to expand
personal communications services coverage into over 10 new
markets.  Revenues rose 158% in fiscal 1997 and are on pace to
climb around 60% in the fiscal year just ended September 30,
1998. Volume and margin trends are encouraging and its business
in Korea has held up better than anticipated.

The play here is a run into the earnings announcement on
November 10.  On Wednesday, QCOM had a scary gap down at the
open, but recovered nicely.  This is actually a good sign as
buyers stepped in to buy what they viewed as a bargain.  The
significant support level for QCOM is its 200 day moving
average of $52.  It also cleared some resistance at about that
same level.

BUY CALL NOV-55 QAQ-KK OI=2455 at $3.63, SL=2.00
BUY CALL NOV-60 QAQ-KL OI=1394 at $1.63, SL= .75
BUY CALL JAN-60*QZQ-AL OI=4878 at $5.13, SL=3.00

Picked on Oct 25th at $54.25   PE=29
Change since picked    +1.38   52 week low =$37.75
Analysts Ratings   7-7-5-0-0   52 week high=$71.94
Last earnings   6-98 est=.33   actual=.26
Next earnings  11-10 est=.50   versus=.41

MACD Chart   CHART   NEWS   Zacks on QCOM 
****************************************************
ATI - AirTouch Communications, Inc.  $56.06 (+5.75)

ATI is a wireless telecommunications company and is licensed to
provide cellular service to approximately 235 million people
across the world.  They have 15 million wireless subscribers
that include cellular, PCS, and paging.

ATI has proven its prowess in the competitive US market.
Competition for domestic cellular and PCS customers is intense.
Average revenue per minute of use and revenue per customer have
trended downward in the industry due to price incentives, and
the addition of low-usage accounts.  ATI has a good track
record of effectively leveraging high sales volumes.  Tight
management of pricing plans and service cost reductions made
ATI "free" cash flow positive in both 1997 and 1996.  ATI's
overseas markets also hold appealing potential.  The
penetration rate in its foreign markets is only 12% compared to
22% in the US.

On October 22, ATI reported its best third quarter ever, a 40%
jump in profits to $178 million, boosted by strong sales
overseas and despite increased competition in the US.  Revenues
rose to $1.96 billion from $1.58 billion as the company added
1.9 	million new customers.  Also, despite the global economic
crisis, its international ventures showed the strongest growth
adding 735,000 subscribers, double the figure added in last
year's third quarter.

In conjunction with its earnings announcement, ATI also
announced that since June, 1998, it has repurchased $115
million of its common stock.  The open market transactions are
part of a $1 billion repurchase plan authorized last year.

Last week ATI started what looks like the second leg of a
upward trend it started in early October.  It closed on Friday
at minor resistance which looks like the last resistance until
its 52 week high of $65.63.  

BUY CALL NOV-55 ATI-KK OI=1624 at $3.13, SL=1.50
BUY CALL NOV-60 ATI-KL OI=1718 at $1.19, SL= .50
BUY CALL JAN-60*ATI-AL OI=1405 at $3.13, SL=1.50

Picked on Nov 1st at  $56.06   PE=53
Change since picked    +0.00   52 week low =$33.00
Analysts Ratings 13-10-4-0-0   52 week high=$65.63
Last earnings   9-98 est=.26   actual=.30
Next earnings  01-01 est=.16   versus=.14

MACD Chart   CHART   NEWS   Zacks on ATI
****************************************************
NT - Northern Telecom, Ltd.  $42.81 (+9.25)

NT is leading producer of telecommunications systems sold
around the world.  It is the biggest supplier in Canada and
second to ATT in the US.  Its product lines include enterprise
networks, public carrier networks, wireless networks and
broadband networks.

NT just recently completed its acquisition of Bay Networks.
The acquisition should enable NT to take advantage of the
industry's fundamental change to data.  In traditional circuit
switched networks, information streams must stay on the same
path.  However, networks based on Internet technology are
rapidly gaining in popularity because of their ability to allow
packets of information to switch to the fastest path which
results in more efficient communications.  This change is
reflected in the 40% annual growth rate in data networking
equipment sales as opposed to 5% for telecom equipment.

Last week NT announced earnings, excluding extraordinary items,
of 42 cents a share which was 6 cents a share better than
analysts estimates.  President and CEO John Roth expects
revenue growth in the fourth quarter in the strong teens.  NT's
bullish outlook reflects the first full quarter Bay Networks
will be a division of the company.  Excluding Bay's
contribution, NT's revenue grew by 12% in the third quarter.

On Friday, NT closed above some minor resistance.  Our read of
the chart looks like there is no additional resistance until it
reaches its 200 day moving average of $53.  We also like NT
because its PE ratio is significantly less than it peers.

BUY CALL NOV-40 NT-KH OI=2357  at $4.00, SL=2.00
BUY CALL NOV-45 NT-KI OI=921   at $1.50, SL= .75
BUY CALL DEC-45*NT-LI OI=851   at $2.69, SL=1.25

Picked on Nov 1st at  $42.81   PE=19
Change since picked    +0.00   52 week low =$26.81
Analysts Ratings  8-10-4-0-0   52 week high=$69.25
Last earnings   9-98 est=.36   actual=.42
Next earnings  01-27 est=.75   versus=.74

MACD Chart   CHART   NEWS   Zacks on NT
****************************************************
STOCK OPTIONS - INTERNET  
****************************************************
AOL - America Online (see split plays - section one)
****************************************************
CMGI - CMG Info. $56.88 (+2.38)(+10.38)

We got the pullback on profit taking Tue/Wed and gave us another
opportunity to get into CMGI cheap. Some weakness Friday after
the +$4.75 Thursday but we expect it to keep on climbing as long
as AOL/YHOO/AMZN continue to blaze new trails. With AOL on a split
run it should hold up the rest of the sector the next two weeks.

With companies like Lycos and GeoCities sprouting from 
the web success incubator of CMGI, investors are paying 
attention.  This corporate Internet investment extraordinaire 
has brought in a 1,575% return on its Internet investments since
1995.  Today, the CEO of CMGI was outlining their investment
strategy for the future of the web.  He believes that the web 
will "displace client services" and corporations can save big 
bucks using the web to replace certain client-server 
applications.  He also sees the future of the web in e-commerce 
and local ISPs. CMGI's momentum has turned around since its
early October lows. Due to their large portfolio of companies, 
they are one of the better diversified investments for traders 
who want to invest in the web. 

Direct marketer/mailing list provider gone Internet.
This company has really moving towards the future. Originally
a mailing list compiler/sales company, they have branched
out to the 'net.  Now almost half their income comes from
net related services.  Many consider them an Internet fund
rolled into one stock.  They have stakes in over a 25
different Internet companies.  They own 23% of LYCOS and 29%
of Geocities.

**CMGI is a volatile stock.  Double check your capacity 
to endure wide price swings.

BUY CALL NOV-50 QGC-KJ OI=634 at $8.88 SL=6.25, ITM $6.88
BUY CALL NOV-55 QGC-KK OI=872 at $5.50 SL=3.25, ITM $1.88
BUY CALL NOV-60 QGC-KL OI=684 at $3.25 SL=1.50
BUY CALL DEC-60*QGC-LL OI=307 at $6.25 SL=3.75

NO PUT PLAY THIS WEEK.

Picked on Oct. 22nd at $52.25         PE= 65      
Change since picked   +$ 4.63         52 week high= 91.75 
Analysts Ratings    2-5-1-0-0         52 week low =  8.75 
Last earnings  9-24  est -.55 actual 1.27   surprise +330% 
Next earnings 12-10  est -.48 versus -.29  

MACD Chart   CHART   NEWS   Zacks on CMGI 
****************************************************
STOCK OPTIONS - MISC
****************************************************
NETA - Network Associates  $42.50 (+3.44) (+5.81)

NETA was formed in December, 1997, from the merger of McAfee
Associates and Network General.  The company is a leading
supplier of virus protection, network management, help-desk &
storage management software.  

NETA continues to fill out its technology portfolio through
acquisitions.  The strategy has transformed it from a developer
of virus detection products into a provider of enterprise
network security applications.  By integrating acquired
products into suites, rather than offering individual products,
the company can deliver price/performance characteristics that
competitors find difficult to match.  NETA's most recent
acquisitions were Dr. Solomon and Cyber media.

NETA reported earnings two weeks ago and beat estimates with a
52% increase in net income(excluding acquisition related
charges) from the year ago quarter.  Net revenues rose 35% for
the nine months ended September 30, compared to the same period
last year.  On October 7, McAfee Software, a division of NETA,
announced it was the number two software publisher in the US
behind Microsoft.  It displaced Symantec (the publisher of the
Norton Office Suite) from the second slot.

Like most technology stocks, there is lot of news during the
week which helps bring attention to the stock.  Last week NETA
announced a joint marketing agreement with Ernst & Young, a big
six accounting firm, two research contracts with the US
Department of Defense, its firewall product won Best of Show at
a trade show, and its McAfee Office Suite is being launched in
Hong Kong.

NETA made some nice gains on Thursday and Friday last week.  On
Friday, it closed above its 200 day moving average of $42. The 
next level of resistance is at $47-$48.

BUY CALL NOV-40 CQM-KH OI=1646 at $4.00, SL=2.00
BUY CALL NOV-45 CQM-KI OI=287  at $1.31, SL= .50
BUY CALL DEC-45*CQM-LI OI=1094 at $2.69, SL=1.25

Picked on Oct 25th at $39.06   PE=22
Change since picked    +3.44   52 week low =$25.50
Analysts Ratings  7-11-1-0-0   52 week high=$56.88
Last earnings   9-98 est=.41   actual=.38
Next earnings   1-20 est=.46   versus=.33

MACD Chart   CHART   NEWS   Zacks on NETA 
****************************************************
PG - Procter & Gamble Co.  $88.69 (+1.25)(+3.69)(+6.38)

PG markets a broad range of consumer products worldwide in 5
business segments: laundry and cleaning, paper, beauty care,
food and beverage, and health care.  You will recognize most of
its brand names: Tide, Cheer, Crest, Ivory, Zest, Cascade,
Pringles, Scope, Bounty, Charmin, Pampers, Crisco, Jif,
Folgers, Old Spice, and Hawaiian Punch - to name a few.

PG reported earnings two weeks ago of 80 cents a share compared
with analysts estimates of 77 cents per share.  Fiscal first
quarter earnings rose by 7.4% from the year ago period, and
were helped by price increases and a favorable product mix.
John Pepper, PG Chairman & CEO, said, "We delivered solid
earnings this quarter, despite the difficult global economic
situation.  Like many other multi-national companies, our sales
growth has been negatively impacted in developing markets of
the world, especially Russia, Asia, and parts of Latin America.
Our people in these areas are doing magnificent work, not only
on reducing costs where necessary, but also on investing for
the future.  We expect our sales and earnings growth rate to
accelerate in the second half of the fiscal year, behind a
strong initiative pipeline."

PG has had a nice run since mid-September along with the other
defensive stocks.  As you can tell by the weekly changes above,
the rise would appear to be decelerating.  PG is at minor
resistance currently, but there really isn't any other
significant resistance until it reaches its 52 week high of
$94.

The weekly trading pattern of the last two weeks has been for
PG to trade down early in the week, only to go up later in the
week.  We all know the fact that the pattern exists doesn't
mean that it will repeat itself next week.

BUY CALL NOV-85 PG-KQ OI=3321  at $5.63, SL=3.50
BUY CALL NOV-90 PG-KR OI=4127  at $1.88, SL= .88
BUY CALL JAN-95*PG-AS OI=2919  at $2.31, SL=1.25

Picked on Oct 18th at $83.75   PE=28
Change since picked    +4.94   52 week low =$62.00
Analysts Ratings   4-8-4-1-0   52 week high=$94.00
Last earnings   9-98 est=.77   actual=.80
Next earnings   1-27 est=.77   versus=.71

MACD Chart   CHART   NEWS   Zacks on PG 
****************************************************
AGGRESSIVE PLAYS
****************************************************
Plays in this section are high risk and have a high
possibility of total loss of all premiums invested.

We suggest small positions of risk capital only. We
view these as "lottery" plays. A hit produces big
returns but the hits may be few.

Play at your own risk!
****************************************************
KMAG - Komag $5.63 (+.88)(+1.66)

Up +82% in the last two weeks !! Something is cooking here.
Buy options or just buy the stock at this price. 

Recovering from an industry wide depression in the electronic
storage (disk drive) market, KMAG is on the move.  They beat 
estimates for the 3Q by 15 cents.  We put this into our long 
shot category based on the large rise in recent insider buying. 
Several of Komag's directors and officers have been picking up 
stock in 20K to 30K share chunks. Obviously this would lead one
to believe they know something we don't.  However, sometimes 
insiders are buying for an event that is a few months (or years)
down the road.  Thus, we suggest the March plays for a high risk
trade like this.

A specialty manufacturer of magnetic thin-film disks that 
spin in your hard drive.  Majority of sales belong to 
Western Digital, IBM, Quantum, Seagate, and Maxtor.

10/15 3Q earnings of $.51 Loss beat estimates of a $.66
loss and 1997's $1.01 loss (3Q). 

*high risk*
BUY CALL DEC-5.00 KMQ-LA OI=370 at $1.44 
BUY CALL DEC-7.50 KMQ-LU OI=247 at $ .56 
BUY CALL MAR-5.00 KMQ-CA OI=516 at $2.13 SL=1.00
BUY CALL*MAR-7.50 KMQ-CU OI=183 at $1.25 SL= .50

Lottery Ticket play - No Fundamentals.

MACD Chart   CHART   NEWS   Zacks on KMAG 
***********************************************************
                      DISCLAIMER
***********************************************************
This newsletter is a publication dedicated to the education 
of options traders. The newsletter is an information service 
only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
buy or sell securities presented. All investors should consult 
a qualified professional before trading in any security. The 
information provided has been obtained from sources deemed 
reliable but is not guaranteed as to accuracy or completeness.
The newsletter staff makes every effort to provide timely 
information to its subscribers but cannot guarantee specific 
delivery times due to factors beyond our control.






The Option Investor Newsletter             11-01-98
Sunday                3  of  7

© 1998 The Option Investor Newsletter. - All Rights Reserved
******************************************************************
COVERED CALL SECTION FOR NOVEMBER 1, 1998
******************************************************************
The market is experiencing an excellent intermediate rally that 
should last several more weeks. However, we are still not resolved
that a new bull market has begun and will continue to be cautious.
Even though the market has moved into a new rotational character,
(which is generally considered bullish) we must protect for the 
possibility of a renewed bearish trend. Many sectors are moving 
higher and the surprises are mostly positive but the near-term 
upside is probably limited. We are most likely in a new broad
trading range with several hundred Dow points between the support
and resistance. In this climate, specific stocks can still perform
well but others will falter after short rallies. We can't expect
the market to perform as well as it has in recent years even if
we are quite optimistic about the long-term trend. For now, our
focus will continue to be consistent returns with relatively small
downside risk. Good Luck!
******************************************************************
STRATEGIES: The BUY-WRITE technique...
******************************************************************
Currently, most of the covered-call plays that we recommend in the
OIN are ITM (in the money) positions. We favor this conservative 
strategy as it provides us with a relatively stable annualized
return even in a bearish market. We try to construct plays that
utilize over-valued option premiums to provide a reasonable profit
with adequate downside protection. Our technical research exposes
stocks that have a high probability of finishing above the sold
strike at expiration and whose premium provides a final cost-basis
(break-even price) that is at or below the current price trend or
trading range. When entering these plays, a BUY-WRITE order can be
a useful method to establish the overall profit/loss position.
One of the editors wrote this synopsis of a recent trade to help
new investors understand the technique...

My goal was to open a position this week to write about in the OIN.
While scanning the plays on Monday morning, I noticed the option
premiums quickly falling as SELL orders were executed on several
recommended covered-call positions. This happens frequently to
the plays we list as many are opened in the first hour of trading.
If too many calls are sold without any buying pressure, the bid
premium drops quickly towards the intrinsic value and the ITM play
becomes unfavorable. On Wednesday, I finally spotted a respectable
premium disparity in the NTKI options; the stock ask was $5.50 and
the NOV $5.00 call was bid at $1.25. This ITM call provided a cost
basis of $4.25 with a possible profit of $0.75/share (four weeks)
if called-out. I placed an order about 20 minutes before the close,
with the Buy-Write method but was not filled. On Thursday, I again
watched for an entry into several stocks and noticed that the NTKI
NOV $5 call was still over-priced. The stock price was now around
$5.28 ask and the call was bid at $1.12. This provided a net-debit
entry of $4.16 (even better than Wednesdays' price). I liked the
overall risk-reward and thus placed an order using the Buy-Write.
I called my broker and placed the following order: "I would like to
buy 600 shares of NTKI in my margin account and write 6 contracts
of the NTKI NOV $5 call for a net-debit of $4.15. The specialist
had originally quoted a lower call bid but I let the order stand,
hoping to trade inside the spread. About thirty minutes later, my
order was filled. I had bought NTKI at $5.18 and sold the calls at
$1.06 which produced a net debit of $4.12, actually better than I
had planned. With commissions, this trade produced approximately
0.71 profit/share. In a margin account, that's about a 34% return
for four weeks, assuming NTKI stays above $5. The break-even or
cost basis is around $4.29, so on the expiration date, any close
above that price is profit . By using the buy-write, my position
was established at an acceptable risk/reward ratio. I did not have
to monitor the stock movement and the order was filled only when
the price reached the appropriate net-debit. I gave up any future
gains to realize the available profit. On Friday, NTKI traded as
high as $6.87 after the details of the upcoming merger with CDNW
were released. I could have sold the stock for a better profit if
I had not sold the call but that is the trade-off in covered-call
strategies. It is very difficult to predict when a stock is going
to move significantly, so many conservative investors use the
Buy-Write strategy to lock in an acceptable return that provides
good down-side protection.
******************************************************************
SUMMARY OF PREVIOUS PICKS (3 weeks to go)
******************************************************************
Stock   Price   Currnt  Mon-Strike  Opt    Profit/Loss
Sym     Picked  Price       Price   Bid         +/-  

CDRD    18.00   30.38   Nov-15.00   4.25   *$  1.25
ICST    10.75   13.25   Nov-10.00   1.94   *$  1.19
ICOS    19.63   18.50   Nov-17.50   3.25   *$  1.12
ENMD    24.63   26.13   Nov-20.00   5.75   *$  1.12
DTLN    29.88   29.75   Nov-25.00   6.00   *$  1.12
TWMC    20.63   20.63   Nov-17.50   4.13   *$  1.00
NMR     12.31   14.19   Nov-12.50   0.81   *$  1.00
PMRX    10.00   10.75   Nov-10.00   0.94   *$  0.94
VSVR    12.75   12.44   Nov-12.50   1.25    $  0.94
MRVT    10.38   12.50   Nov-10.00   1.31   *$  0.93
SUPX    10.59   11.13   Nov-10.00   1.50   *$  0.91
IMNR    11.56   12.25   Nov-10.00   2.44   *$  0.88
TALK     6.88    8.97   Nov- 5.00   2.75   *$  0.87
ICOS    17.38   18.50   Nov-15.00   3.13   *$  0.75
PILL     8.50    8.50   Nov- 7.50   1.75   *$  0.75
POWI    11.50   16.00   Nov-10.00   2.25   *$  0.75
CDNW     8.25    7.31   Nov- 7.50   1.69    $  0.75
IKN      7.44    9.44   Nov- 7.50   0.69   *$  0.75
PILL     8.81    8.50   Nov- 7.50   2.06   *$  0.75
ABTE     4.84    7.31   Nov- 5.00   0.56   *$  0.72
ELE     24.06   25.44   Nov-22.50   2.25   *$  0.69
NTKI     5.56    4.94   Nov- 5.00   1.31    $  0.69
SUPX    11.00   11.13   Nov-10.00   1.69   *$  0.69
TV      18.50   27.13   Nov-15.00   4.13   *$  0.63
MOGN     8.38    7.50   Nov- 7.50   1.44    $  0.56
PERC    21.50   23.88   Nov-17.50   4.50   *$  0.50
PSCX     9.19    9.63   Nov- 7.50   2.13   *$  0.44
MCHM     5.69    7.75   Nov- 5.00   1.13   *$  0.44
BTIM    10.56    8.75   Nov- 7.50   3.50   *$  0.44
VIP     14.06   11.75   Nov-12.50   2.75    $  0.44
SMTK     6.13    5.81   Nov- 5.00   1.56   *$  0.43
SNAP    15.75   15.56   Nov-12.50   3.63   *$  0.38
VIRS    12.38   11.63   Nov-10.00   2.75   *$  0.37
SMTL     7.75    6.44   Nov- 7.50   1.13    $ -0.18
ALYD     7.00    6.31   Nov- 7.50   0.50    $ -0.19

Profit/Loss Column: Asterisk indicates stock price above strike 
price and should be called.  Stock that will not be called is 
assumed sold at current price.(for tracking)
******************************************************************
NEW PICKS   
******************************************************************
Some of this weeks new candidates were dropped because the bid/ask
spreads were artificially large at the close of trading on Friday.
With our current method of profit calculation, these plays would
display very low return rates in the ROI tables even though the
actual price paid (for the stock) on Monday morning would make the
position favorable. For this reason, we ask you to review all of
our recommendations even when the ROI is less than you prefer as
many of these plays can be significantly improved just by gaining
an 1/8 in the opening transaction. Two of the plays that we did
not list were DGN $17.31 ; NOV15C $2.31 (played  as a naked-put)
and SDC $18.75 ; NOV17.50C $1.68 because of inflated ask prices
at the close Friday.
******************************************************************
Definitions:
RC  - Return if called
RNC - Return not called (doesn't account for loss in stock price)
******************************************************************
Sequenced by Company
******************************************************************
Stock  Price  Mon-Strike Option Opt  Open   Cost   RC      RNC
Sym               Price  Symbol Bid  Intr   Basis   

DIMD    5.84  Nov- 5.00  DAQ KA 1.13 643     4.71   6.16%   6.16%
DSLGF  12.31  Nov-10.00  DQG KB 2.75 284     9.56   4.60%   4.60%
GALTF  15.75  Nov-12.50  QFG KV 3.63 268    12.12   3.14%   3.14%
GALTF  15.75  Nov-15.00  QFG KC 2.13 116    13.62  10.13%  10.13%
KNT    16.63  Nov-15.00  KNT KC 2.00 491    14.63   2.53%   2.53%
NCSS   17.63  Nov-17.50  NQW KW 1.25 20     16.38   6.84%   6.84%
RFMD   24.00  Nov-22.50  RQZ KX 2.25 418    21.75   3.45%   3.45%
TLC    26.13  Nov-22.50  TLC KX 4.13 747    22.00   2.27%   2.27%
VIRS   11.75  Nov-10.00  VQP KB 2.25 2       9.50   5.26%   5.26%
******************************************************************
Sequenced by RC 
******************************************************************
Stock  Price  Mon-Strike Option Opt  Open   Cost   RC      RNC
Sym               Price  Symbol Bid  Intr   Basis   

GALTF  15.75  Nov-15.00  QFG KC 2.13 116    13.62  10.13%  10.13%
NCSS   17.63  Nov-17.50  NQW KW 1.25 20     16.38   6.84%   6.84%
DIMD    5.84  Nov- 5.00  DAQ KA 1.13 643     4.71   6.16%   6.16%
VIRS   11.75  Nov-10.00  VQP KB 2.25 2       9.50   5.26%   5.26%
DSLGF  12.31  Nov-10.00  DQG KB 2.75 284     9.56   4.60%   4.60%
RFMD   24.00  Nov-22.50  RQZ KX 2.25 418    21.75   3.45%   3.45%
GALTF  15.75  Nov-12.50  QFG KV 3.63 268    12.12   3.14%   3.14%
KNT    16.63  Nov-15.00  KNT KC 2.00 491    14.63   2.53%   2.53%
TLC    26.13  Nov-22.50  TLC KX 4.13 747    22.00   2.27%   2.27%
******************************************************************
Sequenced by RNC 
******************************************************************
Stock  Price  Mon-Strike Option Opt  Open   Cost   RC      RNC
Sym               Price  Symbol Bid  Intr   Basis   

GALTF  15.75  Nov-15.00  QFG KC 2.13 116    13.62  10.13%  10.13%
NCSS   17.63  Nov-17.50  NQW KW 1.25 20     16.38   6.84%   6.84%
DIMD    5.84  Nov- 5.00  DAQ KA 1.13 643     4.71   6.16%   6.16%
VIRS   11.75  Nov-10.00  VQP KB 2.25 2       9.50   5.26%   5.26%
DSLGF  12.31  Nov-10.00  DQG KB 2.75 284     9.56   4.60%   4.60%
RFMD   24.00  Nov-22.50  RQZ KX 2.25 418    21.75   3.45%   3.45%
GALTF  15.75  Nov-12.50  QFG KV 3.63 268    12.12   3.14%   3.14%
KNT    16.63  Nov-15.00  KNT KC 2.00 491    14.63   2.53%   2.53%
TLC    26.13  Nov-22.50  TLC KX 4.13 747    22.00   2.27%   2.27%
******************************************************************
Company Descriptions for New Picks
******************************************************************
The more speculative plays will be marked with *** as they may be
more risky or have less technical support for the stock.
Definitions:
OI - Open Interest
CB - Cost Basis (Price paid - Premium received)
******************************************************************
DIMD - Diamond Multimedia System $5.84  *** lawsuit ***

DIMD designs, develops, manufactures and markets multimedia and 
connectivity products for IBM compatible PCs and modems for Apple
Macintosh computers. Currently the recording industry is trying 
to stop DIMD from shipping their new portable music player but has
failed.  BOP is marginally bullish and this stock seems to have
entered a stage 1 base since Sep.  Watch for news and play with
positive market momentum...

Nov 5.00 DAQ-KA Bid=1.13 OI=643 CB=4.71 RC=6.16% RNC=6.16%


CHART  NEWS   
******************************************************************
DSLGF - Discreet Logic Inc.  $12.31  *** takeover ***

DSLGF develops, assembles, markets and supports nonlinear, online,
digital systems and software for creating, editing and compositing
imagery and special effects for film, video, HDTV, broadcast and 
the Web.  Price dropped after announcing lower than expected 
earnings but the deal with Autodesk ($31.19) is still expected to
close in December. ADSK will issue 0.525 shares of common stock 
for each outstanding share of DSLGF stock.  The stock has been 
trading around $12 and quickly jumped back to this level as the 
Autodesk deal is controlling the price. 

Nov 10.00 DQG-KB Bid=2.75 OI=284 CB=9.56 RC=4.60% RNC=4.60%


CHART  NEWS   
******************************************************************
GALTF - Galileo Technology Ltd.  $15.75 *** momentum play ***

Galileo Technologies defines, develops and markets advanced 
digital semiconductor devices that perform critical functions for
network systems.  Needham & Co started coverage with a "strong-
buy" as GALTF posted decent earnings for the last 9 months.  Late
stage 1 stock closing above recent resistance and nearing a stage
2 breakout as BOP is maxed out. Semiconductor sector is strong.

Nov 12.50 QFG-KV Bid=3.63 OI=268 CB=12.12 RC=3.14%  RNC=3.14%

and the more bullish perspective...

Nov 15.00 QFG-KC Bid=2.13 OI=116 CB=13.62 RC=10.13% RNC=10.13%


CHART  NEWS   
******************************************************************
KNT - Kent Electronics Corp.  $16.63  *** Sector strength ***

Kent Electronics Corp. distributes electronic products, including 
wire and cable, connectors, components and interconnect assemblies
KNT also manufactures battery power packs and other electronic 
components through its subsidiaries. Mid Oct reported negative
earnings which the stock seems to have anticipated.  DLJ quickly
upgrade to a BUY shortly afterward.  Buying pressure is strong as
stock has rebounded solidly from a double bottom. Dipped on Friday
but any further drop should offer a good entry point as the stock
(like the market in general) is overbought. Play only if market 
continues to rally... 

Nov 15.00 KNT-KC Bid=2.00 OI=491 CB=14.63 RC=2.53% RNC=2.53%


CHART  NEWS   
******************************************************************
NCSS - NCS HealthCare, Inc.  $17.63

NCS HealthCare, Inc. provides a range of health care services to 
long-term care institutions, including pharmacy and related mngmnt
srv's, automated medical record keeping, drug therapy evaluation 
and regulatory assistance.  On Oct 29th, announced record revenues
and earnings for its fiscal first quarter ended Sept 30, 1998 and
Wheat First Union quickly upgraded NCSS from Outperform to Buy.
BOP reversal from selling to strong buying as this stock rebounds
from mid-Oct low.  

Nov 17.50 NQW-KW Bid=1.25 OI=20 CB=16.38 RC=6.84% RNC6.84%


CHART  NEWS   
******************************************************************
RFMD - RF Micro Devices, Inc.  $24.00  

RFMD designs, develops and markets proprietary analog radio 
frequency and intermediate frequency integrated circuits for 
wireless applications.  Mid October coverage initiated by Volpe
Brown and CS First Boston.  Oct 20 RFMD successfully completes
its ISO-9001 certification program and audit while reporting a 
net increase in revenues.  In an up-trend since July with strong
BOP and general stage II characteristics.  

Nov 22.50 RQZ-KX Bid=2.25 OI=418 CB=21.75 RC=3.45%  RNC=3.45%


CHART  NEWS   
******************************************************************
TLC - Learning Company,Inc.  $26.13  *** Earnings Nov 4 ***

TLC develops, publishes and markets consumer software in the 
education and reference category and is one of the country's 
leading developers of consumer software for the entire family.
Announced Oct 29 a new program to enable districts and schools 
to purchase its award-winning titles at substantial savings. 
BOP is indicating steady buying pressure as stock has rebounded
from a short-term double bottom and crossed above it's 200 day
moving average. 

Nov 22.50 TLC-KX Bid=4.13 OI=747 CB=22.00 RC=2.27% RNC=2.27%


CHART  NEWS   
******************************************************************
VIRS - Triangle Pharmaceuticals  $11.75  ***still flat***

Triangle Pharmaceuticals Inc. is a pharmaceutical company engaged 
in the development of new drug candidates primarily in the
antiviral area, with a particular focus on therapies for HIV.
Oct 5 announced that a patent was issued for FTC to Emory U. on
Sept. 29.  VIRS has exclusive worldwide license to all of Emory's
rights to purified forms of FTC in the HIV and HBV fields.  In a
stage 1 base with an isosceles triangle formation apparent that
suggests the current trend will continue.  This week even has a
better cost basis and return than last week's play.

Nov 10.00 VQP-KB Bid=2.25 0I=2  CB=9.50 RC=5.26% RNC=5.26%


CHART  NEWS   
******************************************************************


The Email Version Section is below the Strictly Percentage List


************************************************************
CALLS STRICTLY PERCENTAGE LIST
************************************************************
These Pct are not calculated using margin. These are pure 
returns. Margin will increase the percentages. No recommendation
is made on these plays. This is only a numerically produced list 
of the options with the highest percentage of return for dollars
invested. If you want to do your own research this is where to 
start.

Stock	Price	Month	Strike	Symbol	Price	PctRtn	Vol	OpnInt

SER	5.00	Nov	5.00	SERKA	0.69	13.75	71	437	
PMSI	7.50	Nov	7.50	QSIKU	0.94	12.50	2	247	
AAM	4.19	Nov	5.00	AAMKA	0.50	11.94	333	441	
HYPT	9.75	Nov	10.00	QPIKB	1.13	11.54	42	129	
ENCD	4.38	Nov	5.00	QEMKA	0.50	11.43	15	142	
MANU	14.38	Nov	15.00	ZUQKC	1.63	11.30	29	443	
CIEN	17.19	Nov	17.50	EUQKW	1.94	11.27	8005	7113	
FP	4.56	Nov	5.00	FPKA	0.50	10.96	571	3516	
NSTA	16.69	Nov	17.50	NQBKW	1.81	10.86	34	140	
IKN	9.44	Nov	10.00	IKNKB	1.00	10.60	258	145	
REGI	9.44	Nov	10.00	QRGKB	1.00	10.60	130	228	
HS	9.75	Nov	10.00	HSKB	1.00	10.26	152	1852	
AMKR	4.88	Nov	5.00	QELKA	0.50	10.26	10	152	
ABTE	7.31	Nov	7.50	QZBKU	0.75	10.26	61	515	
NTKI	4.94	Nov	5.00	QNKKA	0.50	10.13	70	553	
RCOT	22.25	Nov	22.50	ROQKX	2.25	10.11	5	246	
FP	4.56	Dec	5.00	FPLA	0.94	20.55	115	580	
NTKI	4.94	Dec	5.00	QNKLA	1.00	20.25	30	250	
SRCM	12.44	Dec	12.50	SQLV	2.44	19.60	10	75	
AAM	4.19	Dec	5.00	AAMLA	0.81	19.40	107	425	
MANU	14.38	Dec	15.00	ZUQLC	2.50	17.39	5	28	
TERA	6.53	Dec	7.50	QIPLU	1.13	17.22	98	1764	
PRXL	22.06	Dec	22.50	VBQLX	3.75	17.00	111	30	
MMCN	10.50	Dec	12.50	CMQLV	1.75	16.67	12	1	
WFR	6.88	Dec	7.50	WFRLU	1.13	16.36	10	61	
ZILA	4.69	Dec	5.00	QWCLA	0.75	16.00	67	165	
CFN	7.44	Dec	7.50	CFNLU	1.19	15.97	10	20	
ABTX	14.31	Dec	15.00	QXQLC	2.25	15.72	214	91	
BTIM	8.75	Dec	10.00	QBOLB	1.38	15.71	24	1425	
DLGC	22.50	Dec	22.50	DQLLX	3.50	15.56	11	53	
PRLS	6.88	Dec	7.50	QLSLU	1.06	15.45	13	50	
CMPC	4.88	Dec	5.00	ICQLA	0.75	15.38	10	37	
ABTE	7.31	Dec	7.50	QZBLU	1.13	15.38	74	1555	
DSLGF	12.38	Dec	12.50	DQGLV	1.88	15.15	24	26	
CEPH	7.50	Dec	7.50	CQELU	1.13	15.00	265	320	
GYMB	6.69	Dec	7.50	GMQLU	1.00	14.95	5	12	
AFCI	9.69	Dec	10.00	AQFLB	1.44	14.84	342	1175	
HYPT	9.75	Dec	10.00	QPILB	1.44	14.74	40	30	
CBTSY	11.94	Dec	12.50	QAGLV	1.75	14.66	13	18	
IGEN	29.88	Dec	30.00	GQLF	4.38	14.64	82	571	
EMIS	7.38	Dec	7.50	MTQLU	1.06	14.41	10	100	
HELE	14.88	Dec	15.00	EHQLC	2.13	14.29	10	79	
IMNR	12.25	Dec	12.50	IMQLV	1.75	14.29	20	160	
ODIS	4.44	Dec	5.00	QSELA	0.63	14.08	10	80	
PWAV	12.06	Dec	12.50	VFQLV	1.69	13.99	70	59	
DRXR	9.88	Dec	10.00	RXQLB	1.38	13.92	20	55	
AHG	4.06	Dec	5.00	AHGLA	0.56	13.85	15	531	
JDAS	9.50	Dec	10.00	QAHLB	1.31	13.82	14	11	
IDC	5.00	Dec	5.00	IDCLA	0.69	13.75	128	4680	
STO	9.56	Dec	10.00	STOLB	1.31	13.73	10	920	
ENVY	29.50	Dec	30.00	OYQLF	4.00	13.56	7	415	
PGEX	28.88	Dec	30.00	QAELF	3.88	13.42	2	18	
SPLN	14.06	Dec	15.00	QSPLC	1.88	13.33	2	11	
VVUS	2.84	Dec	5.00	VVQLA	0.38	13.19	55	1333	
ROSI	9.13	Dec	10.00	QRSLB	1.19	13.01	40	63	
GLBL	9.63	Dec	10.00	GQOLB	1.25	12.99	8	234	
OMPT	9.25	Dec	10.00	QTTLB	1.19	12.84	10	41	
VIP	11.75	Dec	15.00	VIPLC	1.50	12.77	10	11	
CYMI	12.25	Dec	12.50	CQGLV	1.56	12.76	10	87	
MWY	9.81	Dec	10.00	MWYLB	1.25	12.74	12	120	
CLCX	8.94	Dec	10.00	QXTLB	1.13	12.59	108	151	
REGI	9.44	Dec	10.00	QRGLB	1.19	12.58	80	110	
ERGO	4.00	Dec	7.50	QGOLU	0.50	12.50	10	35	
MRVT	12.50	Dec	12.50	SQDLV	1.56	12.50	5	520	
PCTY	17.00	Dec	17.50	TYQLW	2.13	12.50	3	90	
IDTC	16.63	Dec	17.50	IQJLW	2.06	12.41	11	82	
AWRE	12.13	Dec	12.50	WUQLV	1.50	12.37	4	56	
SSAX	6.13	Dec	7.50	AXQLU	0.75	12.24	210	80	
GCR	3.06	Dec	5.00	GCRLA	0.38	12.24	170	670	
FILE	9.25	Dec	10.00	ILQLB	1.13	12.16	15	20	
ICGX	20.69	Dec	22.50	QIGLX	2.50	12.08	8	757	
SBTK	30.00	Dec	30.00	XQYLF	3.63	12.08	25	220	
STAA	8.81	Dec	10.00	SQTLB	1.06	12.06	7	126	
ZD	6.75	Dec	7.50	ZDLU	0.81	12.04	10	31	
GSTRF	16.75	Dec	17.50	YVQLW	2.00	11.94	72	727	
DDIM	14.75	Dec	15.00	QMLC	1.75	11.86	13	104	
ISSI	4.22	Dec	5.00	IXQLA	0.50	11.85	250	81	
SAVLY	16.88	Dec	17.50	QVYLW	2.00	11.85	7	148	
VC	4.75	Dec	5.00	VCLA	0.56	11.84	10	164	
CLST	6.88	Dec	7.50	EQLLU	0.81	11.82	12	248	
SEEK	29.63	Dec	30.00	QILF	3.50	11.81	246	1745	
TDFX	12.19	Dec	12.50	FQLV	1.44	11.79	60	351	
ONSL	18.63	Dec	20.00	QOLLD	2.19	11.74	8	179	
SEBL	20.44	Dec	22.50	SGQLX	2.38	11.62	3	28	
PRXL	22.06	Dec	25.00	VBQLE	2.56	11.61	89	582	
EX	8.63	Dec	10.00	EXLB	1.00	11.59	83	172	
BEAS	19.59	Dec	20.00	BRQLD	2.25	11.48	2	375	
DSP	9.81	Dec	10.00	DQCLB	1.13	11.46	20	195	
NSCP	21.44	Dec	22.50	NQYLX	2.44	11.37	89	93	
OO	8.81	Dec	10.00	OOLB	1.00	11.35	10	21	
TWA	5.00	Dec	5.00	TWALA	0.56	11.25	10	1086	
RCOT	22.25	Dec	22.50	ROQLX	2.50	11.24	15	50	
PHYC	7.25	Dec	7.50	PQHLU	0.81	11.21	87	1425	
IPEC	8.94	Dec	10.00	IQPLB	1.00	11.19	32	73	
TALK	8.97	Dec	10.00	QQKLB	1.00	11.15	198	1417	
ISIP	9.63	Dec	10.00	QISLB	1.06	11.04	10	47	
FP	4.56	Dec	7.50	FPLU	0.50	10.96	20	921	
HMSY	6.88	Dec	7.50	HQNLU	0.75	10.91	4	13	
PM	9.75	Dec	10.00	PMLB	1.06	10.90	13	71	
HRC	12.13	Dec	12.50	HRCLV	1.31	10.82	20	350	
LRCX	14.44	Dec	15.00	LMQLC	1.56	10.82	32	155	
EGGS	6.94	Dec	7.50	EGQLU	0.75	10.81	52	1114	
MRVC	6.94	Dec	7.50	VQXLU	0.75	10.81	82	69	
IO	8.75	Dec	10.00	IOLB	0.94	10.71	65	347	
IPIC	3.50	Dec	5.00	IQHLA	0.38	10.71	56	757	
AZPN	14.00	Dec	15.00	ZQPLC	1.50	10.71	7	40	
PPD	23.94	Dec	25.00	PPDLE	2.56	10.70	10	18	
ADI	19.88	Dec	20.00	ADILD	2.13	10.69	76	538	
KEG	9.94	Dec	10.00	KEGLB	1.06	10.69	2	48	
MAST	23.50	Dec	25.00	QACLE	2.50	10.64	10	118	
IKN	9.44	Dec	10.00	IKNLB	1.00	10.60	34	238	
RBMG	14.75	Dec	15.00	RQHLC	1.56	10.59	10	10	
OXHP	11.81	Dec	12.50	OQXLV	1.25	10.58	103	709	
SKYT	16.56	Dec	17.50	MMQLW	1.75	10.57	52	29	
NXTR	8.88	Dec	10.00	NQXLB	0.94	10.56	10	21	
MDM	3.56	Dec	5.00	MDMLA	0.38	10.53	30	2167	
TNFI	11.94	Dec	12.50	QFILV	1.25	10.47	20	110	
IDPH	29.88	Dec	30.00	IDQLF	3.13	10.46	7	246	
DBCC	4.19	Dec	5.00	BQDLA	0.44	10.45	20	398	
USWB	14.38	Dec	15.00	QWBLC	1.50	10.43	290	441	
VLSI	9.63	Dec	10.00	VLQLB	1.00	10.39	352	129	
PRMA	7.25	Dec	7.50	PQRLU	0.75	10.34	5	311	
DGN	17.00	Dec	17.50	DGNLW	1.75	10.29	187	363	
AVIR	19.00	Dec	20.00	QCVLD	1.94	10.20	5	5	
CELL	12.25	Dec	12.50	QEFLV	1.25	10.20	17	1081	
VIAS	6.13	Dec	7.50	QVVLU	0.63	10.20	15	20	
SFSK	22.13	Dec	22.50	FQKLX	2.25	10.17	2	40	
PRST	7.38	Dec	7.50	PQKLU	0.75	10.17	28	123	
PCTL	7.38	Dec	7.50	PTQLU	0.75	10.17	13	235	
PPOD	3.69	Dec	5.00	QPPLA	0.38	10.17	38	372	
XIRC	29.50	Dec	30.00	XQRLF	3.00	10.17	16	285	
ANTC	16.63	Dec	17.50	AQCLW	1.69	10.15	28	34	
HLX	8.63	Dec	10.00	HLXLB	0.88	10.14	190	380	
ICIX	18.50	Dec	20.00	QIXLD	1.88	10.14	165	266	
PWRH	9.88	Dec	10.00	QVLB	1.00	10.13	20	61	
CYTC	16.75	Dec	17.50	YQKLW	1.69	10.07	10	23	
ENMD	26.13	Dec	30.00	QMALF	2.63	10.05	59	38	
PSQL	9.38	Dec	10.00	PQSLB	0.94	10.00	10	66	
BVSN	15.00	Dec	17.50	QVBLW	1.50	10.00	3	193	
FP	4.56	Jan	5.00	FPAA	1.13	24.66	59	2450	
ESTI	7.44	Jan	7.50	ELQAU	1.75	23.53	2	119	
CIEN	17.19	Jan	17.50	EUQAW	4.00	23.27	719	4085	
MANU	14.38	Jan	15.00	ZUQAC	3.25	22.61	2	125	
JDAS	9.50	Jan	10.00	QAHAB	2.00	21.05	13	198	
ABTX	14.31	Jan	15.00	QXQAC	2.94	20.52	124	1535	
GYMB	6.69	Jan	7.50	GMQAU	1.31	19.63	12	20	
DK	7.50	Jan	7.50	DKAU	1.44	19.17	5	218	
FHS	11.75	Jan	12.50	FHSAV	2.25	19.15	2	37	
CHIR	22.50	Jan	27.50	CIQAY	4.25	18.89	40	1085	
MANU	14.38	Jan	17.50	ZUQAW	2.63	18.26	10	72	
SPLN	14.06	Jan	15.00	QSPAC	2.50	17.78	15	547	
SQNT	9.88	Jan	10.00	SQQAB	1.75	17.72	88	376	
TRID	4.63	Jan	5.00	TQSAA	0.81	17.57	10	417	
TWA	5.00	Jan	5.00	TWAAA	0.88	17.50	46	1847	
TALK	8.97	Jan	10.00	QQKAB	1.56	17.42	757	4304	
DIMD	5.75	Jan	7.50	DAQAU	1.00	17.39	62	991	
PSQL	9.38	Jan	10.00	PQSAB	1.63	17.33	10	236	
PRMA	7.25	Jan	7.50	PQRAU	1.25	17.24	50	279	
IKN	9.44	Jan	10.00	IKNAB	1.63	17.22	87	193	
CIEN	17.19	Jan	20.00	EUQAD	2.88	16.73	1588	4565	
CORR	12.06	Jan	12.50	CHQAV	2.00	16.58	17	254	
VLSI	9.63	Jan	10.00	VLQAB	1.56	16.23	25	1262	
SRCM	12.44	Jan	15.00	SQAC	2.00	16.08	10	380	
LRCX	14.44	Jan	15.00	LMQAC	2.31	16.02	140	32	
PGEX	28.88	Jan	30.00	QAEAF	4.63	16.02	20	97	
LWN	9.06	Jan	10.00	LWNAB	1.44	15.86	30	3051	
VC	4.75	Jan	5.00	VCAA	0.75	15.79	75	859	
USWB	14.38	Jan	15.00	QWBAC	2.25	15.65	20	1222	
FILE	9.25	Jan	10.00	ILQAB	1.44	15.54	65	171	
ESST	4.44	Jan	5.00	SEQAA	0.69	15.49	27	577	
APM	4.06	Jan	5.00	APMAA	0.63	15.38	201	2153	
PCTL	7.38	Jan	7.50	PTQAU	1.13	15.25	45	108	
NSCP	21.44	Jan	22.50	NQYAX	3.25	15.16	34	1667	
FP	4.56	Jan	7.50	FPAU	0.69	15.07	11	488	
AWRE	12.13	Jan	12.50	WUQAV	1.81	14.95	20	502	
TSEMF	7.13	Jan	7.50	TWQAU	1.06	14.91	20	758	
SCIXF	9.00	Jan	10.00	SXQAB	1.31	14.58	30	2700	
PRRC	6.88	Jan	10.00	MQXAB	1.00	14.55	20	60	
MRVC	6.94	Jan	7.50	VQXAU	1.00	14.41	50	658	
SPLH	8.44	Jan	10.00	QRXAB	1.19	14.07	74	23	
BRKT	14.69	Jan	15.00	BUQAC	2.00	13.62	13	325	
SFSK	22.13	Jan	22.50	FQKAX	3.00	13.56	196	479	
CPU	13.94	Jan	15.00	CPUAC	1.88	13.45	5	785	
HRC	12.13	Jan	12.50	HRCAV	1.63	13.40	13	298	
IDPH	29.88	Jan	30.00	IDQAF	4.00	13.39	7	353	
ABTX	14.31	Jan	17.50	QXQAW	1.88	13.10	287	1234	
GTIS	6.81	Jan	7.50	GQBAU	0.88	12.84	50	260	
BTGC	7.31	Jan	7.50	QTGAU	0.94	12.82	10	665	
KNT	16.19	Jan	17.50	KNTAW	2.06	12.74	10	287	
CHKPF	22.75	Jan	25.00	KEQAE	2.88	12.64	44	770	
ESTI	7.44	Jan	10.00	ELQAB	0.94	12.61	40	199	
MANU	14.38	Jan	20.00	ZUQAD	1.81	12.61	20	312	
AU	25.00	Jan	25.00	AUAE	3.13	12.50	2	206	
UBB	17.38	Jan	20.00	UBBAD	2.13	12.23	26	260	
SOC	6.69	Jan	7.50	SOCAU	0.81	12.15	83	5273	
SFDS	19.63	Jan	20.00	FDQAD	2.38	12.10	10	61	
CREAF	14.06	Jan	15.00	RFQAC	1.69	12.00	87	910	
AAC	4.19	Jan	5.00	AACAA	0.50	11.94	30	328	
NMGC	16.75	Jan	17.50	GJQAW	2.00	11.94	10	518	
BOBJY	16.81	Jan	17.50	BBQAW	2.00	11.90	149	76	
TALK	8.97	Jan	12.50	QQKAV	1.06	11.85	538	5683	
PSFT	21.19	Jan	22.50	PQOAX	2.50	11.80	9	825	
IBC	25.00	Jan	25.00	IBCAE	2.94	11.75	25	12	
TSM	14.94	Jan	15.00	TSMAC	1.75	11.72	5	1034	
LOR	18.81	Jan	20.00	LORAD	2.19	11.63	541	647	
GLM	12.38	Jan	12.50	GLMAV	1.44	11.62	114	1628	
RDC	14.56	Jan	15.00	RDCAC	1.69	11.59	59	730	
CRUS	9.72	Jan	10.00	CUQAB	1.13	11.58	15	1506	
ERTH	9.19	Jan	10.00	QERAB	1.06	11.56	50	172	
SRCM	12.44	Jan	17.50	SQAW	1.44	11.56	22	69	
HS	9.75	Jan	12.50	HSAV	1.13	11.54	15	157	
MTIC	3.25	Jan	5.00	QTXAA	0.38	11.54	105	1027	
NICEY	19.00	Jan	20.00	QICAD	2.19	11.51	10	126	
EGRP	18.00	Jan	20.00	QGRAD	2.06	11.46	209	452	
RENO	6.56	Jan	7.50	RQNAU	0.75	11.43	87	402	
NSCP	21.44	Jan	25.00	NQYAE	2.44	11.37	188	2350	
ICST	13.25	Jan	15.00	IBQAC	1.50	11.32	5	372	
NSTA	16.69	Jan	20.00	NQBAD	1.88	11.24	15	1019	
AMES	18.38	Jan	20.00	QAFAD	2.06	11.22	14	270	
WCII	27.00	Jan	30.00	WQSAF	3.00	11.11	2	1404	
CYM	12.44	Jan	12.50	CYMAV	1.38	11.06	5	228	
GSNX	5.13	Jan	7.50	GQSAU	0.56	10.98	7	21	
ORG	16.00	Jan	17.50	ORGAW	1.75	10.94	24	827	
RADAF	14.44	Jan	15.00	QDRAC	1.56	10.82	5	183	
ATML	11.56	Jan	12.50	AQTAV	1.25	10.81	87	1052	
MTZ	23.81	Jan	25.00	MTZAE	2.56	10.76	5	881	
JDAS	9.50	Jan	12.50	QAHAV	1.00	10.53	40	23	
SYBS	5.94	Jan	7.50	SBQAU	0.63	10.53	20	373	
FORE	15.63	Jan	17.50	FQOAW	1.63	10.40	62	3894	
EFII	24.06	Jan	25.00	EFQAE	2.50	10.39	86	3637	
CS	11.44	Jan	12.50	CSAV	1.19	10.38	263	3042	
BNE	13.88	Jan	15.00	BNEAC	1.44	10.36	8	20	
KLIC	16.31	Jan	17.50	KQSAW	1.69	10.34	23	424	
AWRE	12.13	Jan	15.00	WUQAC	1.25	10.31	11	291	
VYTL	13.38	Jan	17.50	VQLAW	1.38	10.28	20	34	
FJC	4.88	Jan	5.00	FJCAA	0.50	10.26	3	40	
CIEN	17.19	Jan	22.50	EUQAX	1.75	10.18	180	415	
HMTT	8.63	Jan	10.00	HTQAB	0.88	10.14	22	1330	
SPNSF	6.81	Jan	7.50	QHHAU	0.69	10.09	80	636	
RATL	22.38	Jan	22.50	RAQAX	2.25	10.06	11	67	
ABTX	14.31	Jan	20.00	QXQAD	1.44	10.04	10	492	



	
******************************************************************
NAKED PUT SECTION as of NOVEMBER 1, 1998
******************************************************************
Many of the bullish stocks are very over-bought and thus it is
important to focus primarily on the cost-basis. Selling naked-puts
is one of the best ways to achieve a technically correct entry
position for owning a stock. To utilize this strategy, get naked
option writing approval from your broker as soon as possible. You
will need this eventually to use many of the advanced strategies
so ask for it early, even if you are not ready to implement the
sophisticated techniques. Don't be afraid of naked options. Have
the necessary tools at your disposal and use them in the correct
manner that feels comfortable. Many people consider naked option
writing to be risky or dangerous compared to a relatively "safe"
strategy like covered-call writing. However, the potential profit
and the inherent risk of selling Email Version is exactly equivalent
to covered-call writing.
******************************************************************
WARNING...DANGER AHEAD...
******************************************************************
Occasionally a company will experience catastrophic news causing
a severe drop in the stock price. This may cause a devastatingly
large loss which may wipe out all of your smaller gains. It is
important that you consider using trading STOPS on naked option
positions. Many professional traders suggest a STOP order price
of no more than twice the original premium from the position.
Unless STOPS are used properly, this type of strategy carries an
enormous risk for very little profit.
******************************************************************
SUMMARY OF PREVIOUS PICKS 
******************************************************************
Stock   Price   Currnt  Mon-Strike  Opt    Profit/Loss
Sym     Picked  Price       Price   Bid         +/-  

TWMC    19.56   20.63   Nov-15.00   0.88   *$  0.88
SNAP    14.81   15.56   Nov-12.50   0.81   *$  0.81
TALK     6.88    8.97   Nov- 5.00   0.69   *$  0.69
MUEI    17.06   20.94   Nov-15.00   0.63   *$  0.63
ORG     10.50   16.00   Nov- 7.50   0.63   *$  0.63
TUP     16.25   15.56   Nov-15.00   0.63   *$  0.63
CDNW     8.25    7.31   Nov- 7.50   0.81    $  0.62
CIEN     9.31   17.19   Nov- 7.50   0.56   *$  0.56
DDIM    12.50   14.75   Nov-10.00   0.50   *$  0.50
TWMC    20.63   20.63   Nov-15.00   0.50   *$  0.50
BTIM    10.56    8.75   Nov- 7.50   0.44   *$  0.44
RFMD    20.81   23.75   Nov-17.50   0.44   *$  0.44
MUEI    18.19   20.94   Nov-15.00   0.38   *$  0.38
PMRX     9.06   10.75   Nov- 7.50   0.38   *$  0.38
PGO     18.75   21.38   Nov-15.00   0.38   *$  0.38
PSSI    20.38   22.13   Nov-15.00   0.31   *$  0.31
RXSD    18.75   17.94   Nov-15.00   0.31   *$  0.31
ICST    12.63   13.25   Nov- 7.50   0.25   *$  0.25
TALK     7.31    8.97   Nov- 5.00   0.25   *$  0.25
TZA      8.06    8.75   Nov- 5.00   0.25   *$  0.25

Profit/Loss Column: Asterisk indicates stock price above strike
price and put option should expire - not be exercised.  Stock 
to be exercised assumed sold at current price.(for tracking)
******************************************************************
NEW PICKS
******************************************************************
Sequenced by Company
******************************************************************
Stock  Price  Mon-Strike Option  Opt   Open   Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr   Basis  Expired 

CDIS   21.69  Nov-17.50  KPQ WW  0.63  0      16.87  12.31%
CLCX    8.94  Nov- 7.50  QXT WU  0.25  2379    7.25  10.48%
DGN    17.31  Nov-15.00  DGN WC  0.38  10     14.62   7.61%
DTLN   29.75  Nov-22.50  OGQ WX  0.69  80     21.81  10.39%
GALTF  15.75  Nov-12.50  QFG WV  0.56  42     11.94  15.09%
RCOT   22.38  Nov-17.50  ROQ WW  0.31  145    17.19   6.48%
RFMD   24.00  Nov-22.50  RQZ WX  1.00  95     21.50  10.99%
******************************************************************
Sequenced by Return on Investment (ROI) 
******************************************************************
Stock  Price  Mon-Strike Option  Opt   Open   Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr   Basis  Expired 

GALTF  15.75  Nov-12.50  QFG WV  0.56  42     11.94  15.09%
CDIS   21.69  Nov-17.50  KPQ WW  0.63  0      16.87  12.31%
RFMD   24.00  Nov-22.50  RQZ WX  1.00  95     21.50  10.99%
CLCX    8.94  Nov- 7.50  QXT WU  0.25  2379    7.25  10.48%
DTLN   29.75  Nov-22.50  OGQ WX  0.69  80     21.81  10.39%
DGN    17.31  Nov-15.00  DGN WC  0.38  10     14.62   7.61%
RCOT   22.38  Nov-17.50  ROQ WW  0.31  145    17.19   6.48%
******************************************************************
Company Description for New Picks
******************************************************************
The more speculative naked put plays will be marked ***. The idea
is to sell the naked put and have the option expire worthless with
you keeping the premium.
OI  - Open Interest
CB  - Cost Basis 
ROI - Return On Investment
******************************************************************
CDIS - Cal Dive Intl.  $21.69 *** sector strength ***

Cal Dive International, Inc. is a provider of subsea construction,
maintenance and salvage services to the offshore natural gas and
oil industry in the U.S. Gulf of Mexico. CDIS was one of only
three oilfield service companies to qualify for the annual Forbes
magazine list of the 200 best companies with revenues less than
$350 million. Brookstreet started the company as a buy on Oct. 13
and then revoked that recommendation last week thus starting the
recent downtrend. We think the positive BOP reflects the current
investor sentiment and the stock resides in a very bullish sector.
The chart also reflects recent support just above the cost-basis.

Nov  17.50  KPQ-WW  Bid=0.63  OI=0  CB=16.87  ROI=12.31%


CHART  NEWS   
******************************************************************
CLCX - Computer Learning Centers  $8.94  *** on the rebound ***
 
CLCX provides information technology and computer-related training
and education. It offers instruction in growing technologies such
as client-server, databases, networking and object-oriented
programming. The "great dumpster caper" and the recent lawsuit
dropped the stock to new lows but the fear factor with respect to
possible loss of government funding has subsided as all 23 centers
now participate in Title IV programs. Many investors are expecting
a positive announcement from the DOE concerning the shareholder
allegations.

Nov   7.50  QXT-WU  Bid=0.25  OI=2379  CB=7.25  ROI=10.48%


CHART  NEWS   
******************************************************************
DGN - Data General Corporation  $17.31  *** Take-over ***

DGN designs, manufactures, and sells multi-user computer systems,
peripheral equipment, communication systems, and related products.
Combination of good earnings and rumored buyers of DGN (STK, SUNW,
HWP, & even IBM) as mentioned in Business Week, has caused the 
price to jump.  All technical indicators have jumped as we take 
advantage of market conditions and speculative buying...

Nov  15.00  DGN-WC  Bid=0.38  OI=10  CB=14.62  ROI=7.61%


CHART  NEWS   
******************************************************************
DTLN - Data Transmission Network  $29.75 *** Merger? ***

DTLN, an electronic information/communication services company,
is engaged in the electronic satellite delivery of time-sensitive
information. Oct.21 announced partnership with Atlantic Financial
an online brokerage firm in Boston. Oct 27 DTLN reported record
revenues though they took a big hit on earnings this quarter due
to the Galaxy IV satellite problem and early repayment of debt.
Seems to have formed a base since Oct. with a BOP reversal and a
short-term bottom around $25. An excellent technical entry point
to own this stock.

Nov  22.50  OGQ-WX  Bid=0.69  OI=80  CB=21.81  ROI=10.39%


CHART  NEWS   
******************************************************************
GALTF - Galileo Technology Ltd.  $15.75

  * SEE COVERED CALL SECTION FOR WRITE UP *

Nov  12.50  QFG-WV  Bid=0.56  OI=42  CB=11.94  ROI=15.09%


CHART  NEWS   
******************************************************************
RCOT - Recoton  $22.38

Recoton Corp. is a worldwide marketer and producer of consumer
electronic products for after market use including speakers, car
audio products, amplifiers, wireless technology products, video
products and others. The Company reported record second quarter
net sales, which increased by 24% due primarily to the outstanding
performance of globally marketed multimedia and stereo products
including highly regarded brand names such as Jensen, Advent, AR-
Acoustic Research and NHT. The chart reflects a steady climb from
early October on renewed investor interest. The stock price could
easily return to the mid-upper $20 range.

Nov  17.50  ROQ-WW  Bid=0.31  OI=145  CB=17.19  ROI=6.48%


CHART  NEWS   
******************************************************************
RFMD - RF Micro Devices, Inc.  $24.00

  * SEE COVERED CALL SECTION FOR WRITE UP *

Nov  22.50  RQZ-WX  Bid=1.00  OI=95  CB=21.50  ROI=10.99%


CHART  NEWS   
******************************************************************
NO COVERED PUT SECTION UNTIL MARKET TURNS DOWN...
******************************************************************

**************************************************************
                      DISCLAIMER
**************************************************************
This newsletter is a publication dedicated to the education 
of options traders. The newsletter is an information service 
only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
buy or sell securities presented. All investors should consult 
a qualified professional before trading in any security. The 
information provided has been obtained from sources deemed 
reliable but is not guaranteed as to accuracy or completeness.
The newsletter staff makes every effort to provide timely 
information to its subscribers but cannot guarantee specific 
delivery times due to factors beyond our control.






The Option Investor Newsletter              11-01-98
Sunday                   4  of  7

Published three times weekly, Sunday, Tuesday, Thursday evenings.
© 1998 The Option Investor Newsletter. - All Rights Reserved
****************************************************
PUTS, PUTS, PUTS
****************************************************
Put plays can be very profitable but have a larger risk than
call plays. When a stock is falling the entire investment
community (except the shorts) is hoping it will reverse and
start back up. The company management is also doing everything
they can to shore up their stock price. The company issues
press releases, brokers talk it up, analysts try to put a
positive spin on everything. Then of course there is the death
knell, the "buy recommendation" simply because the price has
dropped to some level that analysts feel attractive again. 
Buyers who like the stock wait until it appears a bottom has
been reached and then jump on it in a feeding frenzy. They may
already have a large position and are averaging down. Many
factors can stop a free falling stock in mid drop.
****************************************************
UK - Union Carbide $38.50 (-1.31)(-1.94)

Union Carbide was the recipient of the unusual downgrade
to "unattractive" which is about the equivalent of "strong
sell" in street lingo. Paine Webber was the giver of the
award. UK had been attempting a recovery but bounced off
their 50dma and headed south. UK announced earnings of $.55
down from $1.18 but they beat the streets reduced estimates
of $.53. With the market up so strong Thr/Fri we are not 
surprised they did not drop.

BUY PUT NOV-40.00 UK-WH OI=306 at $2.56 SL=1.25 


CHART  NEWS   
****************************************************
BSX - Boston Scientific  $54.50 (-.06)(+5.00)

Boston Scientific announced after the close 10/23 that they 
had postponed their earnings announcement scheduled for Tuesday
for at least a week. Something about having to resolve some
accounting questions. While this is not unheard of, there
is also a rumor that some of their accounting practices are
not standard. This could be the day of reckoning approaching.
WE HAVE NO FACTS - THIS IS ONLY UNSUBSTANTIATED RUMORS. Check
the stock direction on Monday before playing.

BUY PUT NOV-55 BSX-WK OI=565 at $3.38 SL=2.00 $.50 ITM


CHART  NEWS   
***********************************************************
                      DISCLAIMER
***********************************************************
This newsletter is a publication dedicated to the education 
of options traders. The newsletter is an information service 
only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
buy or sell securities presented. All investors should consult 
a qualified professional before trading in any security. The 
information provided has been obtained from sources deemed 
reliable but is not guaranteed as to accuracy or completeness.
The newsletter staff makes every effort to provide timely 
information to its subscribers but cannot guarantee specific 
delivery times due to factors beyond our control.






The Option Investor Newsletter            11-01-98
Sunday                5  of  7


******************************************************************
COMBINATION PLAYS
******************************************************************
US stocks were boosted last week by strong economic growth in the
third quarter and improved investor confidence. The G7 reaffirmed
its commitment to global economic growth by announcing the streng-
thening of arrangements to fight financial market contagion. The
president backed that move by stating that US economic growth now
depends upon building a stronger global economy. Investors also
remain convinced the Federal Reserve will pull out all the stops
to maintain moderate growth and avoid a recession. With all this
positive sentiment, it's hard to believe that the market needs to
go through a consolidation phase to remain technically healthy.
It's also amazing that even with the overbought conditions, the
market has continued to strengthen. The next few days will surely
be interesting as a short-term correction might be averted if the
DOW and NASDAQ composite close above their respective 30 week
moving averages. This would produce yet another significant upward
move but even then some would argue that it is nothing more than a
short-term bear market rally. We prefer to adopt a more wait and
see attitude...
******************************************************************
NEW PLAYS...
******************************************************************
SBTK-Sabertek $30.00		Put-Credit Spread

SBTK develops, produces and markets technologically-advanced, user
friendly and cost-effective multi-therapy infusion systems for the
alternate-site health care market.
 
NEWS/OBSERVATIONS:
Sabratek has demonstrated strong revenue growth (up 143% in 1997)
from its core product offerings, including pumps, disposables, and
pre-filled syringe products. The company is expected to maintain
strong top and bottom line growth fueled primarily by the Rocap
line and the company's disposable tubing sets.

TECHNICALS:
The stock has rebounded strongly since early October on the news
of an upgrade by BankBoston Robert Stevens. Having now broken a
four month top formation, the stock price should hold above our
short position through the November expiration.

PLAY (conservative):
BUY  PUT NOV-22.50 XQY-WX OI=288 A=$0.43
SELL PUT NOV-25.00 XQY-WE OI=135 B=$0.75
NET CREDIT(approx)=$0.38 ROI=18%

MACD Chart   CHART   NEWS   Zacks on SBTK
******************************************************************
SPOT-PanAmSat $37.93		Call-Credit Spread

SPOT is a provider of global satellite-based communications
services. Satellite services are provided to the broadcasting and
business communications markets, and also to the long-distance
telephony market.

NEWS/OBSERVATIONS:
Panamsat recently reported lower than expected 3rd Qtr earnings.
The company blamed losses at its DirecTV business for the downturn.
Morgan Stanley analyst Marc Nabi cut the company's 1999 price
target to $50 from $60 to account for the market's intolerance of
risk. Credit Suisse First Boston cut its rating on the company to
hold from buy.

TECHNICALS:
Even with extremely negative BOP, the stock price launched last
week right along with the space shuttle, climbing 10% in two days.
The rebound helped stir option prices up above the current trading
top of $40. With renewed speculation in the stock, we should be
able to leg into a reasonable credit spread as the stock moves
higher. We will begin begin this play with the purchase of the
long call. If the stock continues to rise, we will place a GTC
sell order on the position for a small profit. When the stock
exhibits weakness, we will sell the lower strike call to create
the credit spread.

PLAY (conservative):
BUY  CALL NOV-50 OQO-KJ OI=134 A=$0.81
SELL CALL NOV-45 OQO-KI OI=163 B=$1.25
INITIAL CREDIT(approx)=$0.50 ROI=11%

CHART   NEWS   Zacks on SPOT
******************************************************************
ASDV-Aspect Development $31.62		Call-Credit Spread

Aspect Development, Inc. is the leading worldwide provider of
enterprise systems for Component & Supplier Management (CSM).
Aspect CSM solutions reduce product cost, operations expense and
design cycle time by providing strategic decision support for
procurement, product development and operations to manufacturers
in the electronics, aerospace & defense, automotive, industrial,
process and CPG markets.

NEWS/OBSERVATIONS:
ASDV fell to a yearly low (around $17) in early October on concern
that its revenue growth may slow as companies defer orders to
focus on the Year 2000 problem. Some general worries about the
software industry also appeared to play a part in the decline. The
rebound really started when the company announced that they had
been awarded three key patents covering its parametric search and
electronic catalog technology.

TECHNICALS:
A nice steady climb back to the previous trading range around $35
began when the company announced some new product patents. There
is still room for some upward movement to the current resistance
(around $35) allowing us to once again play both trends. Traders
can use the same technique (as in the play above) for the credit
spread.

PLAY (conservative):
BUY  CALL NOV-45 QDV-KI OI=73 A=$0.50
SELL CALL NOV-40 QDV-KH OI=22 B=$0.87
NET CREDIT(approx)=$0.43 ROI=9%

PLAY (debit-spread, bullish momentum):
BUY  CALL NOV-25 QDV-KE OI=168 A=$7.75
SELL CALL NOV-30 QDV-KF OI=301 B=$3.87
NET DEBIT(approx)=$3.62 ROI(max)=38%

MACD Chart   CHART   NEWS   Zacks on ASDV
******************************************************************
WLA-Warner Lambert $78.38		*** Long-term play ***

WLA is a manufacturer of ethical pharmaceuticals, biologicals,
capsules, consumer health care products and confectionary products.

NEWS/OBSERVATIONS:
An awesome company with excellent long-term prospects for growth.
Innovative new products that address important medical needs have 
established Warner-Lambert as one of the fastest growing companies
in the world. WLA recently reported that earnings per share went
up 46% on a 21% sales gain for the third quarter of 1998. WLA has
now reported increases in earnings per share of at least 30% for
five consecutive quarters. Based on current planning assumptions,
the company anticipates an increase in diluted earnings per share
of 30% in 1999.

TECHNICALS:
In the long-term view,(weekly chart) WLA is in a solid stage II
trend and trading above it's 30 week moving average. The near-term
outlook is quite toppy even though it is showing renewed strength
with the recent BOP reversal. WLA needs to work through resistance
around $77-$79 (and then again at $81-$83) before moving into a
higher trading range. This should give us the opportunity to start
our play with a reduced cost basis for the long position.

PLAY (conservative):
BUY  CALL JAN00-80 LWL-AP OI-1243 A=$14.38
SELL CALL NOV-80   WLA-KP OI=6158 B=$1.75
NET DEBIT(approx)=$12.50 TARGET ROI=120%

Note: In the bullish calender spread, the speculator is trying to
reduce the net cost of a longer-term call by the amount of credit
from the sale of a nearer term call. If the near-term call expires
worthless, we will sell the DEC call to further reduce our debit.
Some would sell the excess time value in the ATM calls for more
premium but we prefer to sell OTM positions during the first few
months of this type of play to reduce the chance of the short call
finishing ITM.
 
MACD Chart   CHART   NEWS   Zacks on WLA
******************************************************************
INDEX SPREADS...
******************************************************************
As a trader, you may be familiar with options on individual stocks
where you have the right to buy (call option) or the right to sell
(put option) a particular stock at some predetermined price within
some predetermined time. The buyer has the rights and the seller
the obligations. With index options the basic ideas are the same.
Index options allow you to make investment decisions on a specific
market industry or on the market as a whole. Spread strategies can
be made with index options similar to those made with individual
stock options.Many experienced traders think it is a good strategy
to have one index spread in play at all times as a hedge. We favor
debit positions that will make money in both directions and have
little time decay. We will also list OTM credit positions when the
risk/reward is favorable and low ROI disparity spreads for the
conservative index trader.
******************************************************************
OEX-S&P 100 Index	$536.30	ITM Credit-Spreads
The Standard & Poor's 100 Index is a capitalization-weighted index
of 100 stocks from a broad range of industries. The component
stocks are weighted according to the total market value of their
outstanding shares. The impact of a component's price change is
proportional to the issue's total market value, which is the share
price times the number of shares outstanding. 

OBSERVATIONS:
For credit spread trades, we like to use the actively-traded S&P
100 Index (OEX) options because they contain much more premium
than options on individual stocks and provide an underlying
instrument less prone to huge, gapping moves.

TECHNICALS:
A chart of the OEX reflects significant long-term resistance just
above our current price (around 535) with some additional work to
be done up near the yearly highs around 560. Support (near the
yearly low) exists around 450. Both plays offer a favorable risk/
reward ratio.

PLAY (aggressive-bearish):
BUY  CALL NOV-565 OEW-KM OI=4903 A=$1.56
SELL CALL NOV-560 OEW-KL OI=9829 B=$2.31
NET CREDIT(approx)=$0.87 ROI=21%

PLAY (conservative-bullish)
BUY  PUT NOV-500 OEW-WT OI=11554 A=$3.12
SELL PUT NOV-505 OEW-WA OI=3517  B=$3.62
NET CREDIT(approx)=$0.50 ROI=11%


CHART  

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                      DISCLAIMER
***********************************************************
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only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
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options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
buy or sell securities presented. All investors should consult 
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information provided has been obtained from sources deemed 
reliable but is not guaranteed as to accuracy or completeness.
The newsletter staff makes every effort to provide timely 
information to its subscribers but cannot guarantee specific 
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