Option Investor
Newsletter

Daily Newsletter, Sunday, 11/08/1998

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The Option Investor Newsletter
Copyright 1998, All rights reserved. 
Redistribution in any form strictly prohibited.

Sunday  11-08-98  1 of 7

Posted online for subscribers at http://www.OptionInvestor.com

Published three times weekly, Sunday, Tuesday, Thursday evenings.
*****************************************************************
Entire newsletter best viewed in COURIER 10 font for alignment
*****************************************************************
MARKET STATS FOR LAST WEEK AND PRIOR WEEKS
******************************************************************
        WE 11-08         WE 10-30         WE 10-23        WE 10-16
DOW     8975.46 +383.36  8592.10 +139.81  8452.29 + 35.53  +517.24  
Nasdaq  1856.56 + 85.17  1771.39 + 77.31  1693.86 + 72.91  +128.45  
S&P-100  558.88 + 21.71   536.97 +  9.91   527.78 +  6.83  + 37.31  
S&P-500 1141.01 + 42.17  1098.67 + 28.00  1070.67 + 14.25  + 72.18  
RUT      400.32 + 22.16   378.16 + 11.00   367.05 + 24.18  + 24.47  
TRAN    2968.48 + 76.56  2891.92 +114.91  2777.01 -  3.86  +351.35
VIX       24.62            26.56            30.67            35.84
Put/Call    .61              .69              .64              .61
******************************************************************


Dow 9000 a near miss, Newt neutered.

After eight days in a row without a loss the Dow narrowly missed
the 9000 mark with a 8990 intraday high on Friday. In the last
eight sessions the Dow has added +609 points to the current rally.

This rally has been full of rolling corrections. That means some
stocks have fallen back for several days to consolidate while others
moved on ahead to boost the averages. This "stealth correction" is
good but without a minor blow off soon we could be in for a severe
correction later. You have heard the old saying about "the bigger
they are the harder they fall." This is true in the markets as well.

The terms "tired", "over bought" and "over extended" are becoming
more common in analysts remarks.

It does not take a rocket scientist to run about 50 stock charts 
at random to see a flattening of the recent spikes. While the OEX, 
SPX and INDU charts show no signs of weakening the OEX and INDU 
both peaked at about 1:30 on Friday and were not able to break
resistance in the late afternoon run. Several recent market leaders
appear to be rolling over.

It is simply a matter of time before we pull back sharply to regroup.
Once we do spend a day or two back in rest and test then we can mount
a serious charge at the July highs of 9300+.  Don't get me wrong!
I am still very bullish about the next month in the market. As option
traders we need to be aware of the ebb and flow of the market and
act accordingly. We suggest using tighter stops after the open on
Monday and be faithful about closing your positions with a profit.
There will always be another opportunity to buy back in again. See
the note on cycle trading below.

An unknown for Monday will be the Newt Gingrich resignation. I have
seen mixed signals about the impact. Some say this will help Clinton
and therefore be good for the market. Others say it could forge the
Republicans together in a stronger group making it harder for the
Democrats to get anything done. This is also good for the market.
Gridlock means no sweeping changes. No new unknowns.

Tokyo stocks are probably going to trend lower because of the 
government economic stimulus plan due to be announced on Nov-16th.
Last week officials announced that tax cuts were unlikely anytime
soon. This should put a damper on the Nikkei all week. The big
jump last week when Barton Biggs raised his weighting of Japanese
shares in his model portfolio is also subject to further profit
taking. Key Japanese analysts also feared the Dow would peak at
9000 as well.

Rate cuts around the globe helped markets last week when the Bank
of England, Sweden, Spain and Portugal all cut interest rates. With
fewer nations left to cut rates the global markets lacks incentives
to move upward.

Positive Asian news came in the form of a partial lifting of sanctions
against Pakistan by Clinton. This clears the way for the IMF to resume
lending to that country. The IMF team is scheduled to be in Pakistan
on Monday to resume talks on the stalled $1.56 billion aid program.

Overall our forecast is up for the week but watch for the eventual
pullback. Use it as an opportunity to start new positions when the
up trend continues. 

Readers keep asking for a list of what options I own. This is a
problem in my eyes. Options are much thinner than stocks. If I
said I owned Maytag there is a large group that would buy Maytag
immediately. I do not want to be in the same class as a noted 
option seminar promoter who broadcasts what he buys, waits for
the herd to follow and then sells his position at a profit and
brags about it. You know who I mean. Second, I am a very active
day trader. I can be in cash at the open, own 5-7 stocks at lunch
and be back in cash at the close. To tell you I have no positions
and I am entirely in cash at the end of the day would imply that 
I knew something about the market that I did not tell you and you
should be in cash also. If I told you I was in cash but planned to
buy AOL and CMGI at the open the following day could stimulate 
the readers to do the same. Picture several thousand readers
trying to beat me to the recommended contract on CMGI which only
trades 200 contracts per day. Many noted analysts will tell you
what stocks they own at the bottom of their commentary. That's fine
if your talking about Dell (daily volume 20 million) or AOL (12mil).
When your talking about daily contract volumes of hundreds not
millions the situation is very different. I am planing to bow to 
the requests of you the readers but if I see reactions in the 
open interest/volume of the picks I will stop it immediately.

Beginning in December we are planning to move into a new format
which will have real time commentary and plays three times a day.
Before the bell, Nooner Special and Market Wrap. We have many
other changes planned so stay tuned.


Plan your trades, wait for the right time in the market, execute
your plan.


Jim Brown
Editor


At the time of this writing I am entirely in cash. I closed all my
open long positions Friday afternoon. Over the last week I have 
traded DELL, AOL, CMGI, MER, MSFT, CSCO, $RUT, GTW, DAL. Some several
times.

This week I am considering trades on AOL, MER, CSCO, BAC, CMGI, YHOO,
AMZN, DAL, CSCO, UTX, NOKA, SWY and $RUT. I play both ways so I will be
looking for direction and playing accordingly. I will list the plays
as they occur.


****************************************************
CYCLE TRADING
****************************************************

When the market is roaring upward we tend to forget about the 3,
5, 7 day cycles that govern the individual plays and give us so
many profit opportunities. Every stock, index, market will not go
up or down in a straight line. They tend to conform to cycles.
The most common cycles are "3 up, 1 down", "5 up, 2 down", 7 up,
3 down". This is by no means a sure thing but you can look at any
chart and pick out the patterns. The indexes and markets can and
do cycle in broader patterns that may include several of the smaller
cycles in each broader move. Larger moves upward are followed by
larger moves downward. A normal "retracement could be anywhere between
15-50% of the prior move. Using a $5 move upward on any stock you
could expect a $2 correction before continuing the upward move.
An active option trader will WAIT PAITIENTLY for the correction
before starting a new play. IT WILL COME! When they start the play
they will then watch for the tell tale signs of a slowing move after
two or more days and take their profit. When the stock corrects again
they start over and repeat the play. Sometimes I can trade the same
strike 3 or 4 times before having to move to the next strike because 
the stock has moved up. Each time I make $1-2 profit. If I had held
the option for the entire period I would still have only made $1-2.
The options prices also ebb and flow. A $3 option can go to $4.50,
back to $3.25 then $4.50, then 3.50, then 4.50, then 3.75, then 5.00.
You all know the feeling. Up $2 your feeling good, down -1.50 and your
in the pits. You are just like a yo-yo. Learn to capitalize on these
moves and double and triple your profits. Couple this with the method
we call "target shooting" and you can improve your overall return
more than you can imagine. 

Target shooting means placing limit buy orders about 25% or more 
below the current ask price for the option you want to buy. You 
can go days without being filled. You may have to keep adjusting
your orders to fit the market but when you are filled on a intraday
spike you are filled below the recent resistance and have a much 
greater chance of a substantial profit when the stock bounces. 
Have you ever gotten a quote on an option you own that was $5.00
the day before to see it is still $5.00 but the low for the day 
was $3.00! Sure you have. Would you have wanted more at $3.00? 
Follow the low/high for the day on any option you currently own 
and see what I mean. Practice this technique by paper trading.


*********************************************************
Market Posture
*********************************************************

As of Market Close - Friday, November 6, 1998

                   Major Support
Broad Market         /Resistance    Last    Posture/Since  Alert
****************************************************************

DOW Industrials    8,600   9,300   8,975    BULLISH  11.6  *
SPX S&P 500        1,100   1,190   1,141    BULLISH  11.6  *
OEX S&P 100          540     540     559    BULLISH  11.6  *
RUT Russell 2000     375     375     400    Neutral  10.27

NDX NASD 100       1,400   1,400   1,458    BULLISH  11.6  *
MSH High Tech        620     620     669    BULLISH  11.6  *

                   Major Support
Technology           /Resistance    Last    Posture/Since  Alert
****************************************************************
XCI Hardware         625     630     647    BULLISH  11.6  *
CWX Software         530     540     536    Neutral  10.27
SOX Semiconductor    265     280     276    Neutral  10.23
NWX Networking       330     330     351    Neutral  10.23
INX Internet         225     230     252    BULLISH  11.6  *


                   Major Support
Financial            /Resistance    Last    Posture/Since  Alert
****************************************************************
BIX Banking          625     670     661    Neutral  10.23
XBD Brokerage        400     500     461    Neutral  10.27
IUX Insurance        475     600     576    Neutral  10.30

                   Major Support
Other                /Resistance    Last    Posture/Since  Alert
****************************************************************
RLX Retail           600     750     734    Neutral  10.23
DRG Drug             620     700     722    BULLISH  11.6  *
HCX Healthcare       620     730     719    Neutral  10.27
XAL Airline          230     320     308    Neutral  10.23
OIX Oil & Gas        230     270     259    Neutral  11.02



Posture Alert

After penetrating overhead resistance and holding on to its
gains last week, we have turned Bullish across several of the
broad market indices.

In addition, we have turned Bullish on several industry select
sectors after breaking into new territory and setting new 52-
week highs including Hardware (XCI), Internet (INX) and
Pharmaceutical (DRG).

Alert!

We want to caution subscribers, however, that the market is
VERY "overbought" and that we are likely to get a major
reversal signals in the middle of this week.  A detailed
description of our Market Posture and its applications can be
found on OI's website at:

http://www.OptionInvestor.com/marketposture


Weekly Market Posture Reminder

Our stated market posture is generally 4-6 weeks and is based
upon a number of fundamental, technical and sentiment
indicators.  Subscribers with longer investment time
horizons, will find our Weekly Market Posture to be a
powerful tool in their options toolbox.

Since most subscribers plan their traders over the weekend,
our market posture is updated at the end of each trading week
(based upon Friday's market close).  This means that the
Since date will always be a Friday (i.e. 10.23, 11.6).

The only exception will be if we receive A MAJOR reversal
signal in the MIDDLE of the week.  In this case we will
update our Posture and Since date accordingly.

 
*****************************************************
Coming Events
*****************************************************
Monday: 

No Releases.

Tuesday:

Oil Stocks & Petroleum Data for 10/30
LJR Redbook for 10/31
Leading Economic Indicators for Sept
Non-Farm Productivity for 3Q
Wholesale Inventories Sept

Wednesday:

Veteran's Day Holiday.

Thursday:

Weekly Jobless Claims
Federal Reserve Money Supply
Dell Earnings

Friday:

Average Hourly Earnings for Oct
Unemployment Rate for Oct
Michigan Sentiment Oct
Retail Sales Oct
Producer Prices Oct
Atlanta Fed Index Nov


*****************************************************
Last weeks change for this weeks picks:
*****************************************************
Index	Last	Week		
Dow	8975	383.36	Up +609 in last 8 days	
Nasdq	1856	85.17		
$OEX	 559	21.72		
$SPX	1141	42.17		
$RUT	 400	22.16		
$TRAN	2968	76.56		
				
Stock	Last	Week		
				
CMGI	72.75	15.88	Internet superstock	
AOL	140.0	12.62	2:1 split 11/17	
LU	90.13	9.94	No split but acting like it	
MRK	144.9	9.88	New 52 week high	
LLY	87.38	6.38	New 52 week high	
COF	107.4	5.69	Recovering nicely	
BAC	62.44	4.94	New pick	
EMC	69.06	4.69	New pick	
SGP	107.2	4.60	At new high	
CSCO	67.44	4.44	Beat estimates	
MER	63.00	4.24	Could go to $80	
CMB	61.00	4.20	Steady mover	
STK	37.50	4.06	New pick	
AMGN	82.56	4.00	New pick	
NETA	46.25	3.76	Steady mover	
TLAB	58.47	3.47	No Ciena in sight	
HWP	63.25	3.01	Pulling ahead in PC sector	
MYG	51.88	2.07	Safe and sure	
SWY	50.00	2.06	New S&P-500 play	
PFE	108.8	1.76	New Viagra approvals	
KMAG	7.25	1.63	Aggressive play	
DAL	107.0	1.37	2:1 split 11/16	
PG	90.00	1.32	$94 is 52 week high	
QCOM	56.94	1.31	Beat estimates	
ATI	56.94	1.18	Profit taking mid week	
ABI	45.13	0.44	Takeover play	
DELL	65.69	0.20	On the bottom ??
	
				
Puts				
				
HSY	67.00	-2.31	Multiple downgrades	
CCE	36.94	 0.94	Running out of buyers?	


	
*****************************************************
SPECIAL SHORT TERM SPLIT PLAYS (in order by split date)

We always recommend selling the day of the actual 
split. Profit taking will drive down the price on an
average of 7 of 10 splitters immediately after the split.
They may come back in a week or two but why risk it ! 
*****************************************************
DAL - Delta Airlines  $108.75  (+1.37) (+7.28) (+.38)

Worldwide in 1998 Delta carried more passengers than any 
other airline. Currently Delta has 5,132 flights in 61 
countries daily.  However, Delta is looking at the current 
market conditions with some concern.  But, even with a possible
slowdown, they still feel better positioned now than ever to 
deal with any market shortcomings.  Delta said passenger 
traffic remained high and it ended the qtr with $1.1 billion 
in cash.

DAL closed down -1.75 on Friday, as did most of the other 
major airlines as well.  Usually when the whole airline sector
is down, it means something is going on in the oil sector.  
Many of the major airlines like AMR, U, and DAL included have
all been hovering just below their resistance which has been
difficult to break. The profit taking on Friday may be your
last chance to jump in for this play. With DAL's split coming
up, look for them to break through their  resistance of 110
quickly. Delta is up $1.37 on the week. Not quite the stellar
performance of the previous week's showing of +$7.28.  So 
consider this dip a gift.  Keep in mind, there is only 5
trading days before the 2:1 split on Nov. 16th. As always, 
we recommend selling before the split.

News on the week:  On 11/04, Delta reported on its October 
traffic.  Its load factor(% seats filled) rose 1.8% above a 
year ago.  Traffic in the month rose 5.5%. Southwest Airlines 
Co. also declared on Wednesday, a possible move into the New 
York market.  LUV's MacArthur Airport competition could force 
Delta to reduce LaGuardia airport fares. Southwest's move won't
come into effect until next year.

BUY CALL NOV-105*DAL-KA OI=594 at $5.00 SL=3.25, ITM $3.75
BUY CALL NOV-110 DAL-KB OI=612 at $2.63 SL=1.25, OTM $1.25
BUY CALL DEC-105 DAL-LA OI=272 at $7.87 SL=5.75, ITM $3.75
BUY CALL DEC-110 DAL-LA OI=177 at $5.75 SL=3.50, post split 55s

No fundamentals - split/momentum play only


chart
*****************************************************
AOL - America Online $140.00 (+12.62)(+12.44)(+12.50)(+9.63)

AOL set the 52 week high once again, this time setting a 
new high of 141.50 (up a $1.00). Volume was pretty moderate 
Friday, with an intraday trading range of only $3.00. With a
little more than a week left until the 2:1 split, we could
reach $150 easy. But, be prepared to set your stops and get 
out if it starts to drop. You can always buy it back when it
bounces.

Last Sunday's picks made some great one week gains.  Here
were their highs: NOV-125s 7.50 to 17.88 (+138%), NOV-130s
5.13 to 14.00 (+173%), DEC-125s 11.88 to 21.50 (+81%), and
JAN-130s 12.75 to 21.50 (+69%).

America Online is the largest online Internet access service 
in the world. With estimates of 16 million users by the year 
2000 and growing advertising revenues AOL has been called the 
blue chip of the Internets. (If only they could get their mail
problem resolved!). AOL announced a 2:1 split with earnings on 
Oct-27. The split is scheduled for Nov-17th.

BUY CALL NOV-135*AOL-KG OI=6401 at $ 9.25 SL=6.75, ITM $5.00
BUY CALL NOV-140*AOL-KH OI=9835 at $ 6.38 SL=4.50
BUY CALL NOV-145 AOL-KI OI=3606 at $ 4.25 SL=2.50
BUY CALL DEC-140 AOL-LH OI=1995 at $11.63 SL=9.00, post split 70s
BUY CALL DEC-145 AOL-LI OI=1583 at $ 9.25 SL=6.75
BUY CALL JAN-150 AOL-AW OI=2039 at $10.75 SL=8.00, post split 75s 

SPLIT PLAY ONLY - No fundamentals


chart
*****************************************************
THE PLAY OF THE DAY -CALLS- ONLY PLAY IN RISING MARKET
*****************************************************
With all the great plays each week we can never decide on just 
one so take your pick. 

The ones marked * are our choice for risk/reward. 
They may not be your choice.

*****************************************************
Russell-2000 (RUT) $400.32 (+22.16)(+11.11)(+24.18)(+24.47)

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-400 RUZ-KT OI=2153 at $8.13  SL=6.00
BUY CALL NOV-405 RUZ-KA OI=44   at $5.25  SL=3.00


Chart on Russell (RUT)
*****************************************************
SWY - Safeway $50 (+2.06)

On Friday, Safeway jumped $2.81 on the news that it will be 
added to the Standard & Poor's 500 stock index. SWY will 
replace Chrysler Corp. after the close of trade November 12th. 
We are projecting and increase in the stock price based on 
recent history of a similar event with Coca-Cola Enterprises Inc. 
Early last month, when CCE had announced it would be added
to the S&P 500 it jumped from $20 to $40 in about 3 1/2 weeks.
Volume for that time period was about 70 mln; way above CCE's
normal volume for 4 weeks.  With SWY's announcement, trading 
volume and stock price shot up drastically on Friday. SWY's 
normal trading volume is between 1-2 million. On the news, 
it jumped to around 7 million. We are anticipating a huge 
run in the next few days. J.P. Morgan upgraded SWY to a buy 
on Tuesday.

BUY CALL*DEC-50.00 SWY-LJ OI=1208 at $2.69 SL=1.25


chart
*****************************************************
AOL - America Online $140.00 (+12.62)(+12.44)(+12.50)(+9.63)

BUY CALL NOV-135*AOL-KG OI=6401 at $ 9.25 SL=6.75, ITM $5.00
BUY CALL NOV-140*AOL-KH OI=9835 at $ 6.38 SL=4.50

SPLIT PLAY ONLY - No fundamentals


chart
*****************************************************
THE PLAY OF THE DAY -PUTS- ONLY PLAY IN FALLING MARKET
*****************************************************

See the hedge section for possible puts/shorts.

*****************************************************
OPTIONS TRADING BOOKS  - over 50 new books since 9/15
*****************************************************

The OIN bookstore is now open ! For the best in educational
books on trading options go to;

http://www.OptionInvestor.com/bookstore

We get hundreds of emails each month asking for books on 
options and we have organized the best here. Also featured
is a book called "Trading for a Living" by Alexander Elder.
If you ever thought about being a professional trader you
should read this one !


*****************************************************
REAL-TIME Stock an Option Quotes
*****************************************************
We are constantly asked for our recommendations for a 
real time quote service for stocks/options/futures/indexes etc. 

We have reviewed many and give our strongest recommendation
to Interquote. 

Their quotes are delivered in a fully customizable spreadsheet
format with over 20 different data fields available.

They offer tick by tick realtime, CONTINOUSLY UPDATING, 
or delayed quotes for all exchanges.

If you are considering the volatile world of option trading 
you will find realtime option quotes from Interquote a 
valuable resource.

You can get a free trial from Interquote at this address.

http://www.interquote.com


*****************************************************
HOW TO SUBSCRIBE
*****************************************************

We would like to have you as a subscriber. You may subscribe
at any time but your subscription will not start until your
free trial is over.

The monthly subscription price is 24.95
The quarterly price is 64.95 which is $10 off the monthly rate.

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

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information over the phone.

You may also fax the information to: 303-220-0790

*************************************************************
                      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              11-8-98
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) $558.99 (+21.72)(+9.19)(+6.83)(+37.31)(-2.77)(-19.88)

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) $1141.01 (+42.17)(+28.00)(+14.25)(+72.18)(-18.25)

Market moving up:
BUY CALL NOV-1150  SPT-KJ OI=23737 at $14.88 SL=12.00 $ 9 OTM
BUY CALL NOV-1170  SPT-KN OI=598   at $ 6.25 SL= 4.00 $29 OTM

Market moving down:
BUY PUT  NOV-1125  SPQ-WE OI=4089  at $10.25 SL= 8.00 $16 OTM


CHART on S&P-500 (SPX) 
*****************************************************************
Russell-2000 (RUT) $400.32 (+22.16)(+11.11)(+24.18)(+24.47)(-31.31)

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-400 RUZ-KT OI=2153 at $8.13  SL=6.00
BUY CALL NOV-405 RUZ-KA OI=44   at $5.25  SL=3.00

Market moving down:
BUY PUT  NOV-400 RUZ-WT OI=67   at $ 5.75  SL=3.00


CHART on Russell-2000 (RUT) 

*****************************************************************
STOCKS ADDED TO THE PICK LIST - see details in sector list
*****************************************************************


Calls

EMC  - EMC Corporation
STK  - Storage Technology Corp.
AMGN - Amgen, Inc.
SWY  - Safeway
BAC  - BankAmerica
MRK  - Merck

Puts

CCE  - Coca Cola Enterprises


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:
 
NT $44.25 +.38 (+1.44)  While NT did not perform horribly last
week, we don't like the way the major moving averages look.  It
was downgraded twice last week, and with the positive momentum
in other telecom issues, we feel there are better plays.

ABT $47.31 +.75 (+.31)  ABT is losing its momentum.  It has set
some new 52 week highs recently, but it looks like it is about
out of steam.  It is currently only .63 away from a new 52 week
high now but we feel there are better plays in the sector.


PUTS: 

None.

*****************************************************************
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)
EMC - EMC Corp	    

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 $63.00 (+4.24)(+3.69)(+5.57)(+4.12) 

Merrill turned in another great week, ending a 7 day stretch
with Friday's 3/4 point loss (but only after trading higher
intraday).  It looks like MER is starting to stall with
resistance at $65, but with the FED rate cut expected on 
Nov. 17th, the financial sector (with the brokers) should
give us a nice strong run.  With four big weeks in a row
expect some profit-taking on any substantial market dip.
Not to sound redundant, but MER does have a lot of long
term potential and we do recommend the January plays.
However, to buy and hold like that takes patience.  Otherwise,
look for MER to be above $70 within a month.

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.

Weekly news:  Monday MER officially opened its "Ask Merrill" 
website.  They've decided to give away free research reports
for any of the stocks they cover (everything has a price...
expect to be on their cold call and mailing lists for the rest
of your life....just kidding).  Warburg Dillon Read stuck a
"buy" rating on MER, up from a "hold", and said that the 
"improved outlook for stock market bodes well for Merrill".
Not to be outdone, BT Alex Brown said that MER looked like the
"best value" in the entire brokerage sector.  Yet, every
white cloud has its shadow, and MER has been added to a list
of 25 brokers as defendants in a class action lawsuit claiming
they conspired in an IPO fee-fixing scheme.   

BUY CALL NOV-60 MER-KL OI=5352 at $4.38 SL=2.75, ITM $3.00,prem 1.38
BUY CALL NOV-65 MER-KM OI=4558 at $1.69 SL= .75
BUY CALL DEC-65 MER-LM OI=3850 at $3.75 SL=2.25
BUY CALL JAN-70*MER-AN OI=3755 at $3.13 SL=1.50

NO PUT PLAY THIS WEEK.

Picked on October 18th $49.75       PE = 21 
Change since picked   +$13.25       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 0.79 versus 1.17

MACD Chart   CHART   NEWS   Zacks on MER 
*****************************************************
COF - Capital One Fncl $107.44 (+5.69)(+6.13)(+8.36)

Even a PaineWebber downgrade (on Friday) from a "buy" to 
"attractive" was unable to dent COF's charge.  They did fall
from an intraday high of $109.38 but the market's shaky stand
is the most likely culprit there.  Zack's on the other hand
had 2 moderate buys move up to 2 strong buys.  It looks like
COF might be developing a pattern.  For the last two weeks 
in a row COF has taken a good tumble on Monday/Tuesday only 
to turn it around the rest of the week and finish up strong. 
Looks like a classic case of 3 steps forward and 2 steps back.
If its unable to break that pattern, wait for the drop early
in the week and then jump on.  The financial sector should
do well as investor enthusiasm rises for the expected rate
cut coming Nov. 17th.  

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.

News for COF has been sparse this week.  Unless you count
the downgrade from PaineWebber.  Don't those guys know that
COF's management is trying to get this stock to $175 so 
they can cash in some employee options.  

BUY CALL NOV-105 COF-KA OI=412 at $6.88 SL=5.25, ITM $2.44
BUY CALL NOV-110 COF-KB OI=308 at $4.25 SL=2.50
BUY CALL DEC-110 COF-LB OI=520 at $8.75 SL=6.75
BUY CALL DEC-115 COF-LC OI=275 at $6.88 SL=5.25

NO PUT PLAY THIS WEEK.

Picked on Oct. 20th at $91.63         PE= 25                     
Change since picked   +$15.81         52 week high= 129.93 
Analysts Ratings    9-3-3-0-0         52 week low =  43.43  
Last Earnings 10-16  est= 1.00   actual= 1.00   
Next Earnings 01-15  est= 1.01 (-.04)  versus= .86   

MACD Chart   CHART   NEWS   Zacks on COF 
*****************************************************
CMB - Chase Manhattan Corp $61.00 (+4.20)(+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 recently 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.

Chase moved up nicely last week. The chart looks good and with 
any positive market we could add another $3-5 this week. Rumors
that Chase may be interested in buying JP Morgan did not hurt and
only stimulated interest in Chase. If they do announce a deal CMB
stock might suffer a slight setback as the purchaser. Still a 
great play.

BUY CALL NOV-60 CMB-KL OI=2630 at $2.38 SL=1.00, MTD=3.00 ITM=1
BUY CALL DEC-60*CMB-LL OI=5939 at $4.13 SL=2.00, MTD=6.00
BUY CALL JAN-60*CMB-AL OI=4021 at $5.13 SL=3.00, MTD=7.00
BUY CALL JAN-65 CMB-AM OI=4126 at $2.75 SL=1.50, MTD=6.00

Picked on Oct 25th at $55.69     PE=14
Change since picked  +$ 5.31     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 
*****************************************************
BAC - BankAmerica $62.44 (+4.94)

Wading through a cloud of class action lawsuits, BAC is 
rising again.  With the FED expected to lower interest 
rates again on November 17th, the financial sector and
more specifically the banks should finish with a strong
push to the finish line.  As long as Greenspan keeps 
waving the green flag to go, banks like BAC should eat 
up lost ground in a hurry (and blow through any resistance
at $65 without a second thought).  Wait a minute.  Did we
say lawsuits?  Yes, unfortunately, a host of lawyers have
convinced a bunch of angry traders they were victims
and its BAC's fault that their stock price fell from the 
high 90s to the low 50s.  We just want to know if they 
every heard the word "risk" before.  Sure, Russia collapsed,
Latin America almost melted, and Asian still has the flu.
These things tend to have an affect on big banks. BAC had a 
lousy quarter.  Things are looking better and the stock price
is recovering.  We know, we know, its just those nasty
margin calls.  Guess you can't win them all.  But here's 
a hint...trade with stop losses!

The #1 bank in the country was formed when NationsBank 
bought BankAmerica for $43 billion.  The newly formed 
behemoth operates almost 5,000 branches across the states
and around the world.  Headquartered in N. Carolina, 
BAC offers almost every conceivable financial service 
known to man.

Recently BAC had been suffering a little inner turmoil
as a power struggle ensued among the new joint bigwigs.
Evidently, former NationsBank exec, Hugh McColl won the
duel and ousted BAC president David Coulter.  But while
this may have caused some short-term uncertainty, analysts
agree that its better to have just one guy calling the 
shots for the long term health of the company.  This 
tends to eliminate having too many chiefs kind of problems.
Now that its behind them, BAC should start getting back
to business.  

BUY CALL NOV-60 BAC-KL OI=8235 at $3.50 SL=1.75, ITM $2.44
BUY CALL NOV-65 BAC-KM OI=4009 at $ .94 SL= .00
BUY CALL DEC-65 BAC-LM OI=2584 at $2.31 SL=1.00
BUY CALL JAN-65 BAC-AM OI=9175 at $3.50 SL=1.75

SELL PUT NOV-60 BAC-WL OI=1374 B=.88 A=1.13 ROI=6.6%

Picked on October 8th at $62.44       PE = 15 
Change since picked      $ 0.00       52 week high= 88.43
Analysts Ratings    14-14-5-1-1       52 week low = 44.00
Last Earnings 10/14 est 1.00 actual  .50 surprise -50%
Next Earnings 01/11 est 1.02 versus 1.12

MACD Chart   CHART   NEWS   Zacks on BAC 
*****************************************************
ABI - American Bankers Ins. $45.13 (+.44)(+2.87)(+1.31)(+5.62)

Ah...the wonderful world of rumors.  Takeover plays can
be exciting, frightening, or down right boring.  Like now,
as we sit waiting for some action on this company.  I'm
sure some of you read on some of the boards out there about
traders and their "sources".  While there is a lot of 
expectation about a deal, investors will die a slow death
if one never materializes.  Unfortunately, it may have 
already started.  The momentum really turned around this
week as ABI inched up slowly through Wednesday and started
slipping THR/FRI.  But we did say takeover plays require
more risk.  That does not mean you have to sit on your money
until its gone.  

Industry analysts are expecting a deal before the end
of the year, therefore we recommend the January plays over
the Novembers (especially now with only 2 weeks left).  
A lot of traders and analysts were really anticipating 
an offer happening in November.  This may be the last 
week we play it.  We feel that if something doesn't happen
by Friday nervous players will start to sell-off their
position cause their tired of waiting.  As always, since its
become customary to announce acquisitions/mergers on Monday,
if one doesn't appear, expect a dip.

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.

10/14 ABN AMRO re-started coverage of ABI with a "buy" rating
and a 12 month price target of $51.00.

BUY CALL NOV-40 ABI-KH OI=9137 at $5.38 SL=3.50 ITM $5.13 P=.25
BUY CALL NOV-45 ABI-KI OI=5104 at $1.38 SL= .75
BUY CALL*JAN-40 ABI-AH OI=5138 at $7.13 SL=5.25 ITM $5.13
BUY CALL*JAN-45 ABI-AI OI=4021 at $3.63 SL=1.75
BUY CALL JAN-50 ABI-AJ OI=9714 at $1.75 SL= .75

TAKEOVER PLAY

MACD Chart   CHART   NEWS   Zacks on ABI 
*****************************************************
STOCK OPTIONS - DRUGS
*****************************************************
SGP - Schering Plough $107.25 (+4.60)(+2.56)(+2.44)(+3.19)

Closing at the absolute high of the day on Friday, SGP is 
only $1.63 away from a new 52 week high.  More good news is
the fact that they closed above $106 for the week.  The 106 
level had served as overhead resistance more than once for
SGP.  With a rally going on in the drug sector and a run
away bull market in the streets, look for SGP to break out
in the near future.  However, we can't be lopsided in our
enthusiasm.  After 4 profitable weeks, traders will not 
hesitate to lock in profits if an overall market correction
rears its head.  We suggest you use your head, plan your
trade and trade your plan.  Think about when you want to 
get in AND get out.  With a 2:1 split coming on Dec. 2nd
expect SGP to be a little more resilient than the rest of the
drug stocks.

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.  

News for the week: SGP signed a deal with Pharmacopeia, Inc. 
for a 5 year research "collaboration" to help develop new drug
discoveries.  Then on Wednesday, SGP was unfairly penalized 
with a 78 cent drop as Pharmacopeia got downgraded.

BUY CALL NOV-105 SGP-KA OI= 2169 at $3.38 SL=1.50, ITM $2.25
BUY CALL NOV-110 SGP-KB OI=11139 at $1.25 SL= .00
BUY CALL DEC-110 SGP-LB OI=  297 at $3.25 SL=1.50,post split 55s
BUY CALL*JAN-110 SGP-AB OI= 1832 at $5.38 SL=3.25,post split 55s
BUY CALL*FEB-110 SGP-BB OI= 1016 at $7.25 SL=5.25,post split 55s

NO PUT PLAY THIS WEEK.

Picked on August 15th at $ 94.75        PE= 44           
Change since picked     +$ 12.50        52 week high= 108.87 
Analysts Ratings     10-7-11-0-0        52 week low =  57.18  
Last Earnings 10-20  est= .57    actual= .58                 
Next Earnings 01-27  est= .55    versus= .46   

MACD Chart   CHART   NEWS   Zacks on SGP 
*****************************************************
MRK - Merck & Co. $144.94 (+9.88)

Merck is number one in the world of pharmaceuticals and 
wants to stay that way. With Glaxo Wellcome and Pfizer on 
its heels, it is putting in extra hours developing new 
products and marketing strategies. How about new products? 
With many in development, MRK is the currently most excited 
about Vioxx. The stock jumped $3.00 on Friday in anticipation 
of the data to be released for this new anti-inflammatory/pain 
fighting drug. Vioxx is very similar to aspirin. The good 
news is that Vioxx should not cause the irritation to the 
stomach lining that its predecessor can sometimes do. What 
does this mean? Two things: less inflammation and less chance 
of causing an ulcer. Yeah!! Merck will seek marketing approval 
from the FDA later this year . 

How about new marketing strategies? Merck is trying to catch 
Warner Lambert Co's profits from Lipitor by introducing a 
"Money Back Guarantee" on its similar product Zocor. "This 
is a novel approach to the serious problem of patients not 
following through with using cholesterol-lowering drugs" said 
Dr. Rodman Stark, vice president of science and medicine for 
the American Heart Association . Even though this refund policy 
has been touted by some as a gimmick, Charles Inlander was 
quoted as saying, "It's good for consumers because they can 
try a product and see if it works" (-AP). 

As a result of the expected positive announcement next week 
on Vioxx and the new guarantee for Zocor, Merck has touched 
an all time high at $145.50 intraday on Friday. We're also
feeling encouraged with this week's strong performance 
through its old resistance at $138 which it set back in 
July and bounced off of again in September.  Look for the 
stock to keep reaching to new levels in a positive market.

Nasty words like "high cholesterol", "hypertension", and
"heart failure" are music to the ears of Merck.  They have
made a business of treating the conditions Americans fall
under with our eating habits.  MRK is the #1 drug producer 
in the States and is tied for first to be the world's 
biggest drug manufacturer.  Some of the drugs you might be
taking are: Zocor, Mevacor, Vasotec, Prinivil, and Propecia.

BUY CALL NOV-140 MRK-KH OI=5728 at $6.25 SL=4.25, ITM $4.94
BUY CALL NOV-145 MRK-KI OI= 148 at $3.13 SL=1.50
BUY CALL*DEC-145 MRK-LI OI=1176 at $5.25 SL=3.50
BUY CALL JAN-150 MRK-AJ OI=5583 at $4.75 SL=3.00

NO PUT PLAY THIS WEEK.

Picked on November 8th at $144.94      PE= 32
Change since picked      +$  0.00      52 week low =$ 85.31
Analysts Ratings     10-13-12-0-0      52 week high=$145.50
Last earnings 10-16 est 1.12 actual 1.12 
Next earnings 01-27 est 1.16 actual 1.01              

MACD Chart   CHART   NEWS   Zacks on MRK 
*****************************************************
LLY - Eli Lilly $87.38 (+6.38)(+3.32)(+2.43)(+1.88)

Lilly is continuing to rally with the drug sector. LLY reached 
another all time high, trading at $87.88 on Friday.  Although 
LLY has not released any information as to what is contributing 
to this rise in the stock price, it could be the continuing 
excitement of LLY's new drug for women's osteoporosis.  LLY 
plans on expanding its work force to provide additional support
for Evista's release by reaching more private practice doctors.
Enthusiasm for LLY's stock might also be attributed to the
increase in prescription drugs or the growing demand for LLY's
cancer treatment drugs.  Whatever the case, the drug sector
in general will continue to do well as our aging Baby-boomer
population ages into maturity (and requiring more and more 
medical attention).  Now that its finally busted through 
resistance at $82, we expect LLY to do some bull riding.  
Although with Lilly its bound to be longer than an 8 second
ride.  Expect another round of profit-taking on the next
market dip, but then once it stops jump back in for the next
ride up.

Eli Lilly and Company is a global research-based pharmaceutical
corporation out of Indianapolis, IN.  Eli Lilly is dedicated 
to creating and delivering innovative pharmaceutical-based 
health care solutions that enable people to live longer, 
healthier and more active lives.  Eli Lilly is the maker of 
the popular anti-depressant Prozac; the Schizophrenic therapy 
drug Zyprex; Gemzan for pancreatic cancer, Evista (designed to
fight osteoporosis) in the fight against breast cancer; 
Humulog, a type of insulin; and ReoPro, blood clotting 
inhibitor.  LLY also deals with vitamins, sedatives, 
antibiotics, growth hormones, anti-ulcer drugs and feed 
additives for livestock

Weekly News: SangStat's (SANG) SangCya cyclosporine drug, 
used to fight the body's rejection in organ transplants, 
was approved for marketing on Tuesday. The drug Cyclosporine 
will be manufactured by Gensia-Sicor (GNSA). Eli Lilly will 
fill and finish cyclosporine into the SangCya drug.

BUY CALL NOV-85 LLY-KQ OI=1058 at $3.88 SL=2.50, ITM $2.38
BUY CALL*DEC-85 LLY-LQ OI= 554 at $5.75 SL=4.00, ITM
BUY CALL JAN-85 LLY-AQ OI=2323 at $7.00 SL=5.25, ITM
 * highest strikes available

NO PUT PLAY THIS WEEK.

Picked on Sept. 12th at $74.88       PE = 43
Change since picked    +$12.50       52 week high= 87.88
Analysts Ratings   10-6-13-0-0       52 week low = 57.68
Last Earnings 10/21 est .51  actual .53 
Next Earnings 02-05 est .51 (-.01) versus .40

MACD Chart   CHART   NEWS   Zacks on LLY 
*****************************************************
PFE - Pfizer  $108.88  (+1.38)(3.80)(+5.05)(+5.44)

Pfizer has been as busy as a beaver.  Goals are very important 
if you want to achieve anything.  Pfizer has its eyes on being
#1.  William C. Steere, Jr., chairman and CEO of Pfizer, said
Friday, "We've never been more clearly focused as a 
pharmaceutical company and on our goal of becoming number one 
in our industry." -(Reuters). Pfizer considers itself
currently holding the number three ranking in terms of sales.
Merck & Co. has the number one spot while Glaxo Wellcome PLC 
trails in second.  But, Pfizer plans to take them to the
top spot.  They are going to invest about $2.2 bln on R&D
by the end of 1998.  The money has been earmarked for new
drug programs, researching new applications for current 
existing products, and increasing their world-wide sales
force.  Steere went on to say, "Our product portfolio is young, 
strong and growing."  Earlier in the decade, we launched six 
products in six years. We are now conducting clinical
development programs that could potentially lead to the 
launches of eight products in three years... with more to 
come." With such a positive outlook on the future, PFE jumped 
$1.50 on Friday.  Pfizer has finally managed to close above
$108 which is a bullish sign for next week. 

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 
eye drops).  They also co-market Lipitor (cholesterol drug) 
with Warner-Lambert (WLA).

News for the week:  Along with Pfizer's focus on the future 
mentioned above, PFE is already moving up.  OSI Pharmaceuticals,
Inc.  announced Friday that PFE had successfully finished 
Phase I clinical trials for CP-358,774 and will soon begin 
Phase II clinical trials in the US.   These two companies work
together in a research alliance to find ways to fight cancer.
CP-358,774 is a new anti-cancer drug that may be able to help
fight a variety of cancers including ovarian, pancreatic, 
non-small cell lung cancers, and squamous cell cancers of the 
head and neck.  Singapore will be trying Viagra for six months 
with extended contract potential after a more thorough review.
Pfizer Inc. and Hoechst Marion Roussel AG announced Wednesday 
Nov. 6th that they will be working together to manufacture, 
co-develop, and co-promote inhaled insulin.  Insulin is used 
to fight diabetes, a disease which affects more than 142 mln
people worldwide.

BUY CALL NOV-105 PFE-KA OI=7365 at $5.75 SL=4.00, ITM $3.88
BUY CALL NOV-110 PFE-KB OI=8223 at $2.25 SL=1.00
BUY CALL*DEC-110 PFE-LB OI=6479 at $5.00 SL=3.25 
BUY CALL JAN-115 PFE-AC OI=2659 at $4.63 SL=3.00

NO PUT PLAY THIS WEEK.

Picked on October 13th at $87.50      PE = 52
Change since picked      +$21.38      52 week high= 121.75
Analysts Ratings     13-5-14-0-0      52 week low =  66.31
Last Earnings 10-13 est .57  actual .51
Next Earnings 01-20 est .53(-0.03)  versus .43

MACD Chart   CHART   NEWS   Zacks on PFE 
*****************************************************
AMGN - Amgen, Inc.  $82.56 (+4.00)

The world's largest independent biotechnology company, Amgen,
was founded in Thousand Oaks, California in 1980 as AMGen
(Applied Molecular Genetics). Amgen's corporate mission is to
be the world leader in developing and delivering important,
cost-effective therapeutics based on advances in cellular and
molecular biology.  In depth knowledge developed through the
utilization of state of the art cellular and molecular biology
enables Amgen scientists to discover and develop both naturally
occurring proteins and small molecules that could potentially
serve as human therapeutics. Its products include Epogen, for
anemia associated with chronic kidney failure, Neupogen, a
stimulator of the immune system, and Infergen, for chronic
hepatitis C.

AMGN announced earnings last week of 83 cents per share
compared to 31 cents per share for the year ago period.  The
increase is in part due to a charge in the year ago period. 
Sales increased 16%.  AMGN has little exposure to the troubled
economies and currencies of Asia, Eastern Europe and Latin
America, deriving almost all of its sales in the US and Western
Europe.  AMGN also announced last week that it has completed
its $1 billion stock buyback from October, 1997 and it will
start a new $1 billion stock buyback program through the end of
1999.

AMGN set a new 52 week high last week and should have cleared
out all resistance.  AMGN was also up every day last week.  One
of the reasons we like AMGN as a play is due its P/E ratio,
which is reasonable compared to other pharmaceutical equities

BUY CALL NOV-80 AMQ-KP OI=7523  at $4.13, SL=2.00
BUY CALL DEC-80 AMQ-LP OI=1007  at $6.13, SL=4.00
BUY CALL*DEC-85 AMQ-LQ OI=586   at $3.25, SL=2.00
BUY CALL*JAN-85 AMQ-AQ OI=3203  at $4.50, SL=2.50

Picked on Nov 8th at $82.56   PE=23
Change since picked   +0.00   52 week low =$46.63
Analysts Ratings  2-3-4-0-0   52 week high=$83.44
Last earnings  9-98 est=.82   actual=.83
Next earnings  1-28 est=.83   versus=.67

MACD Chart   CHART   NEWS   Zacks on AMGN 
*****************************************************
STOCK OPTIONS - TECH 
*****************************************************
DELL Computer $65.69 (+.20)(+7.26)(+1.56)(+3.87)(-9.88)(-3.37)

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 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.

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 tough week. Only down one day but barely positive
the last two days. Dell has been weak with the rest of the PC
sector when it should have been leading. All the news is positive
and points to a great fourth quarter but we are not seeing that
reflected in the stock price. Dell announces earnings after the
close on Thursday. If we don't get any bounce before earnings
our best hope is a relief rally after the announcement. We would
caution about starting any new plays before earnings. Although
Michael Dell has prewarned that Dell is having a great quarter,
failure to hit the whisper number (some say as high as $.35) may
cause an immediate drop. 

Even though we are not recommending any new plays on Dell we are
listing both calls and puts for those readers that disagree with
our caution.

BUY CALL NOV-60 DLQ-KL OI=32495 at $7.25, SL=5.00, $5.69 ITM
BUY CALL NOV-65 DLQ-KM OI=39058 at $3.88, SL=2.00, MTD=6.00
BUY CALL DEC-65 DLQ-LM OI=6934  at $6.50, SL=4.50, MTD=9.00
BUY CALL JAN-65 DLQ-AM OI=13272 at $8.00, SL=6.00, MTD=10.00

BUY PUT  NOV-70 DLQ-WN OI=5714  at $6.13, SL=4.00
BUY PUT  NOV-65 DLQ-WM OI=11904 at $3.13, SL=1.50
BUY PUT  DEC-65 DLQ-XM OI=2868  at $5.50, SL=3.00

Picked on Jan 18th at $24.22     PE=55 based on 1998 eps $2.07
Change since picked  +$41.47     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 (whisper .33-35)

MACD Chart   CHART   NEWS   Zacks on Dell 
****************************************************
HWP - Hewlett-Packard Co.  $63.25 (+3.00) (+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.  Two week ago, 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 is one of those stocks that was so beaten up that it
actually has some room to run before it reaches its 52 week
high.  The wave of new product announcements just keep coming
from HWP.  On Wednesday, they announced their most affordable
color printer ever.  The printer, the DeskJet 420C, is expected
to sell for $119 at retail.  The new product announcements
should keep fueling HWP's positive momentum.  The warning here
is that HWP has a history of disappointing earnings
announcements.  If the Street gets any hint at a disappointing
earnings announcement on 11/16, there could be some profit
taking.

BUY CALL NOV-60 HWP-KL OI=13080 at $4.00, SL=2.50
BUY CALL DEC-60 HWP-LL OI=1455  at $5.38, SL=3.25
BUY CALL*DEC-65 HWP-LM OI=1314  at $2.38, SL=1.25
BUY CALL*JAN-65 HWP-AM OI=5772  at $3.38, SL=2.00

Picked on Nov 1st at $60.25   PE=17
Change since picked   +3.00   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 11-16 est=.74   versus=.75

MACD Chart   CHART   NEWS   Zacks on HWP 
****************************************************
EMC - EMC Corporation  $69.06 (+4.69)

EMC is a Fortune 500 company that designs, manufactures,
markets and supports high performance storage products.  The
company's products store retrieve, manage, protect and share
information form all major computing environments, including
UNIX, Windows NT and mainframe platforms.

EMC and its enterprise storage systems have developed a clear
cut technological edge over its competition.  The company has
been able to successfully leverage its leadership position in
the mainframe storage area into the lucrative, faster growing
open systems market.  And since EMC's only business is
enterprise storage and related software, unlike its primary
competitors, it has been able to focus its research and
development efforts on maintaining its sound market position.

On Tuesday last week, EMC detailed its multiyear strategy for
creating networks of low cost data storage devices capable of
managing the explosion of corporate computer information and
meeting the needs for employees to have immediate access to
such data.  EMC calls its new method of storing data its
Enterprise Storage Networks.  On 10/20 EMC announced third
quarter earnings jumped 51 percent and 2 cents per share ahead
of analysts expectations.  

EMC has had a very strong growth rate over the past 5 years and
that growth rate is expected to continue.  On Wednesday last
week an analyst at Merrill Lynch made some very positive
comments about EMC and set a price target of $78.  On those
comments, EMC set a new 52 week high last week.  EMC has a very
good looking short term chart and is also a split candidate.

BUY CALL NOV-65 EMC-KM OI=3970  at $5.25, SL=3.25
BUY CALL DEC-65 EMC-LM OI=1496  at $7.25, SL=5.50
BUY CALL*DEC-70 EMC-LN OI=859   at $4.13, SL=2.75
BUY CALL*JAN-70 EMC-AN OI=2387  at $5.50, SL=3.00

Picked on Nov 8th at $69.06   PE=36
Change since picked   +0.00   52 week low =$23.50
Analysts Ratings 9-5-1-0-0    52 week high=$69.81
Last earnings  9-98 est=.36   actual=.38
Next earnings  1-28 est=.46   versus=.32

MACD Chart   CHART   NEWS   Zacks on EMC 
****************************************************
STK - Storage Technology Corp.  $37.50 (+4.06)

STK is a leading provider of network storage.  The company's
products and services are used to store, transport and secure
more than 100 petabytes of the world's information ranging from
mainframe data to client/server applications to video, audio
and still images.  The explosion in digital information and
data intensive applications is driving demand for universal
access to data.  Industry experts project that fully half of
the world's information will be digitized by 2003, compared to
only 15% today.

On 10/22 STK announced earnings of 48 cents per share compared
to 44 cents per share for the year ago period.  Revenues grew
by 8% for the same period.  Sales of enterprise tape products
were strong, including large tape libraries, adding to the
industry's largest installed base of automated solutions. 
Along with the earnings announcement, STK also announced that
since October, 1997 they have repurchased 19% of their
outstanding shares.

On Friday, STK closed above its 200 day moving average of
$35.50.  The play on STK is for it to ride on the coat tails 
of the momentum that EMC is generating for the sector.  STK
doesn't have nearly as strong of a growth rate as EMC, and its
story isn't as sexy, but it P/E ratio is also significantly
less than EMC's.  Do not play STK if it breaks below its 200
day moving average.

BUY CALL NOV-35 STK-KG OI=53   at $3.13, SL=2.00
BUY CALL*DEC-35 STK-LG OI=197  at $4.13, SL=2.75
BUY CALL DEC-40 STK-LH OI=338  at $1.69, SL= .75
BUY CALL*JAN-40 STK-AH OI=409  at $2.44, SL=1.25

Picked on Nov 8th at $37.50   PE=11
Change since picked   +0.00   52 week low =$20.13
Analysts Ratings  3-3-3-0-0   52 week high=$51.13
Last earnings  9-98 est=.48   actual=.48
Next earnings  1-22 est=.79   versus=.73

MACD Chart   CHART   NEWS   Zacks on STK 
*****************************************************
STOCK OPTIONS - NETWORKING
*****************************************************
CSCO - Cisco Systems $67.44 (+4.44)(+4.31)(+3.31)(+5.31)

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 ended another positive week edging closer to its 52 week
high.  Since Cisco has been going up like gang-busters over 
the past month, it might see some resistance at the $70 level,
its 52 week high. Cisco should continue on its upward trend 
next week, but be prepared for some profit-taking on any
substantial market dips. 

CSCO announced Friday there were no plans to discount their
technology.  Cisco currently maintains 50-60% margins on it's
product line.  Cisco CEO, John Chambers announced, "I believe
we're the only company in the industry that truly controls our
destiny."  Chambers might be optimistic about the future of
Cisco, but this decision may end up hurting them in the long 
run.  Rival companies, such as Lucent and Nortel will try to 
grab market share by sacrificing their margins.  In other 
news, earlier last week, Cisco announced that they were 
acquiring Suma Four, Inc. The new deal will allow Cisco to 
offer ISPs voice mail, calling cards, and voice activated 
dialing.  Cisco also attempted to strengthen its market share 
by releasing a new router designed for small and medium-sized 
companies. On Thursday, CSCO was downgraded by AG Edwards 
from a Buy to an Accumulate (no details).  The eagerly 
anticipated earnings report showed Cisco beating its estimate 
by $0.01 for the fourth straight quarter.  This was a 54% 
increase from first-quarter earnings.  In additional news, 
both Ciena and Cisco landed a contract with Enron 
Communications. "Ciena will supply equipment that increases 
the capacity of fiber optic networks, which will be 
used together with Cisco's gigabit switch routers (GSRs)" 
-(Reuters).

BUY CALL NOV-65 CYQ-KM OI=22108 at $3.63 SL=1.75, ITM $2.44
BUY CALL NOV-70 CYQ-KN OI=14389 at $ .94 SL=
BUY CALL*DEC-70 CYQ-LN OI= 5277 at $2.38 SL=1.00
BUY CALL JAN-70 CYQ-AN OI= 6261 at $3.88 SL=2.25

LEAP PLAY:

BUY LEAP JAN-2000-70 LCY-AN at $13.75 SL=11.00 
BUY LEAP JAN-2001-70 ZCY-AM at $17.13 SL=14.00

Picked on October 8th $46.69		PE= 53 
Change since picked  +$20.75		52 week low =$31.76 
Analysts Ratings 15-14-1-0-0		52 week high=$70.17
Last earnings on 11-04 est=.33  actual=.34  
Next earnings on 02-03 est=.36  versus=.29  

MACD Chart   CHART   NEWS   Zacks on CSCO 
****************************************************
TLAB - Tellabs Inc. $58.47  (+3.47)(+.20)(+9.87)

Hope you jumped in on the dip last Monday, because TLAB
proceeded to climb almost 5 1/2 points throughout the 
rest of the week.  Pressure on TLAB's stock price eased
after Ciena's Wednesday announcement that they were more 
interested in building their business than looking for 
a buyer.  

With the recent rumors and speculation of a merger with
Ciena somewhat swept under the rug (for now), TLAB has
been able to gain their market composure.  But a word of
caution, Mondays are a prime time merger announcement 
zone and nervous investors may cause TLABs to dip if
someone decides to talk about that lump under the rug.
If nothing happens, then expect TLAB to continue their 
climb.  They have a long way to go sitting almost 40%
below their 52 week high.  Zack's had a strong buy move
to a moderate buy this week.

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-55 TEQ-KK OI=2105 at $5.00 SL=3.25, ITM $3.47
BUY CALL NOV-60 TEQ-KL OI=1562 at $2.00 SL=1.00, OTM $1.53
BUY CALL*DEC-60 TEQ-LL OI=3319 at $4.13 SL=2.50 
BUY CALL MAR-60 TEQ-CL OI= 613 at $7.50 SL=5.75, plenty of time.

NO PUT PLAY THIS WEEK.

Picked on October 22nd at $52.56       PE = 27 
Change since picked      +$ 5.91       52 week high= 93.12
Analysts Ratings     13-11-3-0-0       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 $90.13 (+9.94) (+2.19) (+5.25) (+9.43) 

Lucent was up again today with four new contracts under 
their belt this week. One of their leading competitors,
CSCO, was downgraded Thursday and then on Friday announced
that they will not be discounting their technology. CSCO
stated they will maintain margins of 50-60%, while their
competitors, like LU, have lower margins at 30-40%. We feel
that LU will keep climbing while the overall market 
continues its bull run.  However, be prepared for any 
significant profit-taking after its $27 jump in the last 4 
weeks. That means plug in those stop losses.  New players 
may want to wait for the next dip.

Last week's picks made some awesome one week gains.  These
were their highs:  NOV-75s 6.50 to 15.88 (+144%), NOV-80s
3.13 to 11.25 (+259%), DEC-80s 5.50 to 12.50 (+127%), and
JAN-80s 6.50 to 13.75 (+112%).  

Lucent made several announcements this week. They have been
selected by Singapore's PBTS operator StarHub Pte Ltd. on a
multi-million dollar deal. Lucent was awarded exclusive
supply rights for the first four years. They also signed a
$108 million contract with and Irish communications company,
OCEAN, plus two separate multi-million dollar contracts with 
Portugal Telecom in San Paulo Brazil.   Lucent and Orkit
comm. stated that they have signed a marketing agreement
targeting growth in the ADSL market in Europe, Middle East
and the African regions.  CTR Group released information 
that they are close in finalizing almost $3 billion in
financing for the first phase of Project Oxygen.  Lucent had
announced back in May that they won a four year contract
for more than $1 billion worth of networking equipment for
the project. In other news, Lucent has signed up four 
additional desktop PC manufacturers, Legend Computer Systems, 
NEC Corp., Packard Bell NEC., and Samsung
Electronics for its new modem communications chip set.

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.

BUY CALL NOV-85 LU-KQ OI=13450 at $6.38 SL=4.75, ITM $5.13
BUY CALL NOV-90 LU-KR OI=  678 at $3.13 SL=1.50, ATM
BUY CALL*DEC-90 LU-LR OI= 4013 at $5.25 SL=3.25 
BUY CALL DEC-95 LU-LS OI=  400 at $3.25 SL=1.50
BUY CALL JAN-95 LU-AS OI= 4376 at $4.63 SL=2.75, 10 week play.

NO PUT PLAY THIS WEEK.

Picked on October 11th at $63.06	PE= 118 
Change since picked       +27.07	52 Week High = 108.50
Analysts Rating	    9-9-14-0-0	52 Week Low  =  36.18
Last Earnings 10-22  est=0.39		Actual = 0.41
Next Earnings 01-20  est=0.96(-.01)	Versus = 0.86	

MACD Chart   CHART   NEWS   Zacks on LU 
****************************************************
QCOM - Qualcomm, Inc.  $56.94 (+1.31)(+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

Last week, QCOM reported earnings of 54 cents per share versus
analysts estimates for 50 cents per share and the year ago
period of 42 cents per share.  Revenues increase 54% for the
quarter over the year ago period.  The strong sales gains are
attributed to its CDMA digital wireless communications products
and services and their growing global market acceptance.  Also,
QCOM and Microsoft announced plans to unveil a new company next
week which will focus on wireless communication, information
technology and computing.  The two companies will host a press
conference on November 10, at which time they will demonstrate
the services they will offer.  Interesting enough, last month
QCOM completed the spin-off of its equity investments in
certain wireless operators to form Leap
Wireless.

QCOM gave up some of its gains last week on profit taking after
the earnings announcement.  We have left QCOM on the play list
because of the apparent momentum from its earnings announcement
and the strong revenue growth, along with its joint venture
announcement with Microsoft.  You need to be aware in playing
QCOM that it has had a nice run into its earnings announcement
and could suffer some post earnings depression.

BUY CALL NOV-55 QAQ-KK OI=2542  at $3.38, SL=1.75
BUY CALL DEC-55 QAQ-LK OI=1450  at $5.25, SL=3.00
BUY CALL DEC-60 QAQ-LL OI=558   at $2.75, SL=1.25
BUY CALL*JAN-60 QZQ-AL OI=612   at $4.13, SL=2.00

Picked on Oct 25th at $54.25   PE=29
Change since picked    +2.69   52 week low =$37.75
Analysts Ratings   7-7-5-0-0   52 week high=$71.94
Last earnings   9-98 est=.50   actual=.54
Next earnings   1-20 est=.60   versus=.50

MACD Chart   CHART   NEWS   Zacks on QCOM 
****************************************************
ATI - AirTouch Communications, Inc. $56.94 (+.88)(+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. All of the
above accolades were confirmed last week in The Wall Street
Journal's annual Wireless issue covering the sector.  The
analysts were fairly positive on the industry.  They also spoke
very highly of ATI's management team.  The consensus view was
that quality management teams were few and far between in the
industry, but ATI's management team was at the top of the list

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.

We are hoping that the selling that ATI suffered on Tuesday and
Wednesday cleared out most of the sellers.  If it did, the
minor resistance on ATI at $57-58 should be no problem.  If it
can clear this resistance it looks like the last resistance
until its 52 week high of $65.63.  

BUY CALL NOV-55 ATI-KK OI=1398  at $3.13, SL=1.75
BUY CALL*DEC-55 ATI-LK OI=8061  at $4.38, SL=2.50
BUY CALL DEC-60 ATI-LL OI=151   at $2.00, SL=1.00
BUY CALL*JAN-60 ATI-AL OI=1845  at $3.00, SL=1.50

Picked on Nov 1st at  $56.06   PE=53
Change since picked    +0.88   52 week low =$33.00
Analysts Ratings 13-11-3-0-0   52 week high=$65.63
Last earnings   9-98 est=.26   actual=.30
Next earnings  01-01 est=.17   versus=.14

MACD Chart   CHART   NEWS   Zacks on ATI
****************************************************
STOCK OPTIONS - INTERNET  
****************************************************
AOL - America Online (see split plays - section one)
****************************************************
CMGI - CMG Info. $72.75 (+15.88)(+10.38)

Giving us the best impression of the shuttle launch yet, 
CMGI rocketed to a weekly high of $77.25 (Friday) which 
put it +$20.38 from last week's close.  That's almost a
36% jump in 1 week.  Unfortunately with an uncommitted
market on Friday it slipped to $72.75, but no one's 
complaining.  Except maybe the shorts!  The recent market
rally has been nothing but gasoline for the Internet's
bonfire.  Several of the main net stocks are setting or
approaching new highs.  CMGI still has a ways to go, but
give it another week or two.  Amazon's trouble on Friday
may have been the culprit that pulled CMGI back from
another positive close.  However, AOL's upcoming split
will probably continue to lead the Internet sector higher.
Needless to say...with profits this big, any major market
dip could prompt a serious bout of profit-taking.  Apply
stop losses or just blow on the dice for one more throw.
We're still bullish because momentum is still very strong
and any chance traders had to profit-take this week, CMGI 
only dipped fractionally.  

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 25
different Internet companies.  

News this week included Lycos buying exclusive rights
for some online auction technology.  Lycos also initiates
its "Go Get It" ad campaign.  Plus, CMGI's NaviSite
announced a handful of new deals.  Really big news was 
CMGI's new financial stake in Internet conferencing firm,
Virtual Ink.  Virtual Ink has designed technology that
will allow users to "virtual whiteboard" across the net.
The market for this application is thought to be 
"enormous".

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

BUY CALL NOV-70 QGC-KN OI= 28 at $6.38 SL=4.50, ITM $2.75
BUY CALL NOV-75 QGC-KO OI=207 at $3.88 SL=2.50
BUY CALL DEC-75*QGC-LO OI=417 at $7.50 SL=5.75

NO PUT PLAY THIS WEEK.

Picked on Oct. 22nd at $52.25         PE= 93      
Change since picked   +$20.50         52 week high= 91.75 
Analysts Ratings    2-5-1-0-0         52 week low =  9.56 
Last earnings  9-24  est -.55 actual 1.27   surprise +330% 
Next earnings 12-10  est -.60 (-.12) versus -.29  

MACD Chart   CHART   NEWS   Zacks on CMGI 
****************************************************
STOCK OPTIONS - MISC
****************************************************
AMR - AMR Corp. $66.75 (-.80)(+6.25)

Well, in a disappointing week AMR really didn't do much.
However, it does look like its building a new bottom at this 
level.  Why are we keeping it?  Even though it had a slightly
negative week it still managed to hold above its previous
resistance level of $66.  Besides after last week's 10% jump
it needed time to consolidate.  Looking forward to the week 
ahead, AMR should keep climbing as DAL pulls the sector 
forward with their 2:1 split coming Nov. 16th.  Plus, as 
oil prices continue to trickle lower, the airline sector 
should glide higher.  Conservative players should wait for
positive movement to confirm the upward trend.

AMR is actually the holding company for American Airlines.
American is the #2 airlines in the states (United is #1).
AMR has about 160 destinations spread throughout the 
Americas and Europe.  AMR also owns American Eagle
airlines and about 80% of the SABRE Group travel reservation
system.

The week in review: AMR's services division won a 3 yr. contract
with Air Canada for their Newark Int'l Airport.  AMR's 
American Eagle line reported a 13.3% rise in October traffic.
The altitude of AMR's stock was probably affected by news 
that Southwest airlines is considering a move into the New 
York market.  This would put a sizable crimp on all of the 
incumbent airlines.  Any move would not take place until next 
year.  Thursday was back to more good news with another 
contract for AMR's service division down in Florida.  Of 
course the media tried to put a negative spin to AMR's 
announcement that they would be retiring 10 extra planes 
this year (total of 16).  What about the $40 mln they are 
going to save in maintenance costs or how about the 46 new 
planes they expect to receive from Boeing to replace them?

BUY CALL NOV-65.00 AMR-KM OI=1965 at $3.25 SL=1.50, ITM $1.75
BUY CALL NOV-67.50 AMR-KU OI= 708 at $1.69 SL= .75     
BUY CALL*DEC-65.00 AMR-LM OI= 313 at $4.88 SL=3.25, ITM $1.75
BUY CALL DEC-70.00 AMR-LN OI= 268 at $2.50 SL=1.25 
BUY CALL JAN-70.00 AMR-AN OI=1601 at $3.63 SL=2.00

NO PUT PLAY THIS WEEK.

Picked on November 3rd at $67.38       PE = 9  
Change since picked      -$ 0.63       52 week high= 89.93
Analysts Ratings       4-4-2-0-0       52 week low = 45.62
Last Earnings 10/21 est 2.30 actual 2.48 surprise 7.83%
Next Earnings 01/20 est 1.33 versus 1.10

MACD Chart   CHART   NEWS   Zacks on AMR
************************************************************
NETA - Network Associates  $46.25 (+3.75)(+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 on 10/20 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.

We think the interesting story on NETA is how they are
distancing themselves from their nearest competitor, Symantec,
the maker of the Norton Utilities Suite.  In early October,
McAfee Software, a division of NETA, announced it was the
number two software publisher in the US behind Microsoft.  It
displaced Symantec from the second slot.  Last week Symantec,
had to recall from all retail outlets all copies of its Norton
Uninstall Deluxe because it allegedly contains code copied from
one of NETA's products.  Two weeks ago NETA announced two
research contracts with the US Department of Defense, and its
firewall product won Best of Show at a trade show.

NETA was up 4 days last week.  Since it has cleared its 200 day
moving average of $42, it has been moving nicely. The next
level of resistance is at $47-$48.

BUY CALL NOV-45 CQM-KI OI=579   at $2.63, SL=1.25
BUY CALL*DEC-45 CQM-LI OI=1185  at $4.25, SL=2.50
BUY CALL DEC-50 CQM-LJ OI=1016  at $2.06, SL=1.00
BUY CALL MAR-50 CQM-CJ OI=678   at $5.00, SL=3.00

Picked on Oct 25th at $39.06   PE=22
Change since picked    +7.19   52 week low =$25.50
Analysts Ratings  8-11-1-0-0   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. $90.00 (+1.31)(+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 on 10/22 of 80 cents a share compared with
analysts estimates of 77 cents per share.  John Pepper, PG
Chairman & CEO, said, "We expect our sales and earnings growth
rate to accelerate in the second half of the fiscal year,
behind a strong initiative pipeline."

The press that PG has been getting in the last couple of weeks
has been regarding their advertising campaigns, and primarily
their on-line advertising initiatives.  PG spends $3 billion
per year on advertising.  PG has been an innovator in
advertising and announced last week that they are changing the
way they compensate their ad agencies for creative, sales
producing ads. One of the on-line ad networks - Link Exchange -
that PG uses reached 41.9% of unique web users in the month of
September.

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 closed on Friday
at minor resistance.  It tried all week to break 90, but just
couldn't do it.  If it can get through 90 there isn't any other
significant resistance until it reaches its 52 week high of
$94.

The weekly trading pattern of the last three 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-90 PG-KR OI=4470  at $2.00, SL=1.00
BUY CALL*DEC-90 PG-LR OI=1918  at $3.75, SL=2.00
BUY CALL DEC-95 PG-LS OI=1228  at $1.56, SL= .75
BUY CALL JAN-95 PG-AS OI=3020  at $2.63, SL=1.25

Picked on Oct 18th at $83.75   PE=28
Change since picked    +6.25   52 week low =$62.00
Analysts Ratings   4-8-5-0-0   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 
****************************************************
SWY - Safeway $50 (+2.06)

On Friday, Safeway jumped $2.81 on the news that it will be 
added to the Standard & Poor's 500 stock index. SWY will 
replace Chrysler Corp. after the close of trade November 12th. 
We are projecting and increase in the stock price based on 
recent history of a similar event with Coca-Cola Enterprises Inc. 
Early last month, when CCE had announced it would be added
to the S&P 500 it jumped from $20 to $40 in about 3 1/2 weeks.
Volume for that time period was about 70 mln; way above CCE's
normal volume for 4 weeks.  With SWY's announcement, trading 
volume and stock price shot up drastically on Friday. SWY's 
normal trading volume is between 1-2 million. On the news, 
it jumped to around 7 million. We are anticipating a huge 
run in the next few days. J.P. Morgan upgraded SWY to a buy 
on Tuesday.

News on the week: Safeway is always on the hunt to expand. 
It is currently looking in the US and in Canada. "Safeway 
has 211 stores in Canada's western provinces, where it is 
the dominant food and drugstore concern." (-Reuters). Back 
in the US, Safeway is opening its $91 million distribution 
center and warehouse facility. "This state-of-the-art facility 
will create greater operating efficiency for this part of 
our business and assist us in providing even better service 
to our shoppers," said Eastern Division President Mike 
Bessire. 

Safeway is one of the largest food retailers in the nation. 
Only Kroger and Wal-Mart are larger. Safeway has approximately 
1,400 stores concentrated in the western areas of the US 
and Canada. Two of Safeway's largest possessions are The 
Vons Companies and Casa Ley, two large supermarket chains. 
Safeway also manufactures and sells private-label merchandise. 
Safeway is continually building bigger stores and upgrading 
their older possessions.

BUY CALL NOV-47.50 SWY-KW OI=1054 at $3.25 SL=1.50, ITM $2.50
BUY CALL NOV-50.00 SWY-KJ OI= 260 at $1.56 SL= .75, ATM
BUY CALL DEC-50.00 SWY-LJ OI=1208 at $2.69 SL=1.25
BUY CALL JAN-50.00 SWY-AJ OI=1776 at $3.25 SL=1.50
 *these are the highest calls available, -so far.

NO PUT PLAY THIS WEEK.

No fundamentals - News Event play only

MACD Chart   CHART   NEWS   Zacks on SWY 
****************************************************
MYG - Maytag $51.88 (+2.07)(+2.56)

Maytag is the stealth play of the month. Maytag is not a sexy
fast mover and kind of gets overlooked in the winner category.
Maytag manufactures appliances from components made in Asia.
Their component prices have been falling but the prices of
their products have been stable. They announced record profits
two weeks ago as consumers have been buying the new models of 
their products in record numbers. Income rose +50%. They are 
also benefiting from a new distribution agreement with Sears.
Maytag is well positioned to weather any economic slowdown
because of its strength in the higher priced market segments
and in commercial products.

This is a "safe" play but not a fast mover. Options are cheap.

BUY CALL NOV-50 MYG-KJ OI=158  at $2.38 SL=1.00  $1.88 ITM
BUY CALL DEC-50 MYG-LJ OI=574  at $3.00 SL=1.75  $1.88 ITM
BUY CALL JAN-50 MYG-AJ OI=3112 at $3.75 SL=2.25  $1.88 ITM

Momentum play only

MACD Chart   CHART   NEWS   Zacks on MYG 
*****************************************************
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 $7.25 (+1.63)(+.88)(+1.66)

Up another 29% this week!  Komag finally gave into some
profit-taking and ended its 8 day winning streak.  However,
it only slipped 50 cents and that was after it made a break
for $8.00.  This week's surge was powered by good news
in the beleaguered disk-drive parts sector.  Suspension
parts maker, Hutchinson Technology beat their earnings
on Wednesday by 4 cents and claimed that shipments were
up over 50%.  These positive numbers were followed up 
with an optimistic conference call for the future.  A 
growing number of analysts believe that the disk-drive
sector is finally emerging from its depression.  This play
was initiated a couple of weeks ago on news of strong
insider buying and a great 3Q earnings report.

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.

*high risk*
BUY CALL DEC-5.00 KMQ-LA OI=431 at $2.75 SL=1.25
BUY CALL DEC-7.50 KMQ-LU OI=390 at $1.25 SL= .00
BUY CALL MAR-5.00 KMQ-CA OI=553 at $3.38 SL=1.50
BUY CALL*MAR-7.50 KMQ-CU OI=455 at $2.00 SL=1.00
BUY CALL MAR-10   KMQ-CB OI=171 at $1.25 SL= .00

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             11-08-98
Sunday                4  of  7

© 1998 The Option Investor Newsletter. - All Rights Reserved
******************************************************************
COVERED CALL SECTION FOR NOVEMBER 8, 1998
******************************************************************
This was an exceptionally strong week in the market and with any
luck, it will continue to remain positive for several more weeks.
Many stocks are overbought but the incredible investor enthusiasm
continues to push the prices upward. This a positive sign of solid
underlying strength. Many stocks are now breaking above long-term
moving averages (from well formed bases) on heavy accumulation. A
NYSE survey now shows about 35% of all stocks in a technical base
and about 37% in a bullish trend. However, the near-term pattern
is very overbought and a mild correction is certainly overdue. In
anticipation of this short-term pullback, our focus will continue
to be on the cost-basis, selling short-term ITM calls to limit our
downside exposure. In addition, we will also offer some OTM plays
on quality issues with reasonable bullish potential. Our ultimate
goal is to provide consistent, favorable returns on technically
sound, conservative plays with minimal downside risk. Good Luck!
******************************************************************
STRATEGIES...ITM vs OTM
******************************************************************
All covered-calls involve selling a call against stock that is
owned. If the stock declines, the covered writer will offset part
of his loss by the amount of the option premium. The two most
common approaches are the out-of-the-money covered call and the
in-the-money covered call. Some investors prefer to strive for
higher potential returns through the selling of out-of-the-money
calls. These OTM plays offer greater rewards but also have less
downside protection. The maximum potential profit of an OTM play
(while generally greater than that of an ITM play) will always
require a rise in price by the underlying stock. Thus, by using
an OTM option, the overall position tends to reflect more of the
result of the stock price movement and less of the benefits of
writing the call. Since the premium is much smaller, the total
position will be more susceptible to loss if the stock declines.
ITM plays are more defensive, offering less risk but also smaller
reward potential. These positions appeal to those investors that
expect to earn a relatively consistent, moderate return while also
striving for preservation of capital. In spite of having a smaller
profit potential, they can be attractive on a percentage return
basis, especially when the stock is held in a margin account. Even
if the stock declines, the position can still make a profit. Those
who believe in this conservative approach consider both downside
protection and potential return. The entire position is viewed as
a single entity and the trader is not overly concerned with stock
ownership. This "total return" concept represents the true focus
of most successful covered call writers.

OUR CURRENT APPROACH...
The ideal covered call offers reduced risk and a good probability
of making a profit. Our primary goal is to provide plays that make
acceptable returns while still receiving an above-average amount
of protection. One of the main factors that we concentrate on is
the "return if called". This is the return on investment that one
would achieve if the stock were called away. For an ITM play, the
"return if called" would be attained even if the stock price were
unchanged at option expiration. One can compare potential plays
more fairly using this approach since no assumption is made about
stock price movement. In this conservative option writing strategy,
we look for plays that return a minimum of 2%-3% per month with
downside protection of at least 10% (of the current stock price).
The overall position that is constructed using these guidelines
will be a relatively low risk play (regardless of the volatility
of the underlying stock) since the levels of protection will be
large and there is still the expectation of a reasonable return.

A VERY SIMPLE CONCEPT...
The primary objective of covered writing for most investors is
increased income though stock ownership. The amount of downside
protection and the return on investment are both very important
considerations in determining which play to choose. The technical
and fundamental outlook of the underlying stock must also be
favorable. A minimally acceptable return is somewhat a matter of
personal preference but with the current market volatility, it
would appear that the advantages of the in-the-money position,
(more consistent profits and reduced risk) are more attractive to
the majority of investors. 
This week we will begin listing the annualized ROI to demonstrate
the attractive profits that are available with this strategy...
******************************************************************
SUMMARY OF PREVIOUS PICKS (2 weeks to go...)
******************************************************************
Stock  Price  Currnt Mon-Strike Opt   Profit   ROI  Annual
Sym    Picked Price      Price  Bid   /Loss         ROI 

TALK    6.88  10.81  Nov- 5.00  2.75  *$ 0.87  21%  220%
NTKI    5.56   5.41  Nov- 5.00  1.31  *$ 0.75  18%  184%
GALTF  15.75  16.00  Nov-15.00  2.13  *$ 1.38  10%  176%
ABTE    4.84   7.13  Nov- 5.00  0.56  *$ 0.72  17%  175%
SMTL    7.75   8.19  Nov- 7.50  1.13  *$ 0.88  13%  173%
CDNW    8.25   8.13  Nov- 7.50  1.69  *$ 0.94  14%  149%
VIP    14.06  14.00  Nov-12.50  2.75  *$ 1.19  11%  137%
MRVT   10.38  15.50  Nov-10.00  1.31  *$ 0.93  10%  134%
PMRX   10.00   9.88  Nov-10.00  0.94   $ 0.82   9%  132%
NSTA   18.25  22.00  Nov-15.00  4.13  *$ 0.88   6%  126%
NCSS   17.63  20.63  Nov-17.50  1.25  *$ 1.12   7%  119%
ICST   10.75  13.75  Nov-10.00  1.94  *$ 1.19  14%  117%
IKN     7.44   9.56  Nov- 7.50  0.69  *$ 0.75  11%  116%
PILL    8.81   9.50  Nov- 7.50  2.06  *$ 0.75  11%  116%
VSVR   12.75  13.00  Nov-12.50  1.25  *$ 1.00   9%  113%
NMR    12.31  16.88  Nov-12.50  0.81  *$ 1.00   9%  113%
DIMD    5.84   6.25  Nov- 5.00  1.13  *$ 0.29   6%  107%
MOGN    8.38   8.00  Nov- 7.50  1.44  *$ 0.56   8%  105%
SUPX   10.59  10.75  Nov-10.00  1.50  *$ 0.91  10%  104%
MCHM    5.69   9.13  Nov- 5.00  1.13  *$ 0.44  10%  101%
SMTK    6.13   5.25  Nov- 5.00  1.56  *$ 0.43   9%   98%
SUPX   11.00  10.75  Nov-10.00  1.69  *$ 0.69   7%   97%
VIRS   11.75  11.88  Nov-10.00  2.25  *$ 0.50   5%   91%
PERC   26.94  25.00  Nov-25.00  3.00   $ 1.06   4%   90%
IMNR   11.56  13.00  Nov-10.00  2.44  *$ 0.88  10%   84%
PILL    8.50   9.50  Nov- 7.50  1.75  *$ 0.75  11%   83%
PSCX    9.19   9.50  Nov- 7.50  2.13  *$ 0.44   6%   81%
BTIM   10.56  12.25  Nov- 7.50  3.50  *$ 0.44   6%   81%
DSLGF  12.31  14.69  Nov-10.00  2.75  *$ 0.44   5%   80%
TWMC   20.63  24.00  Nov-17.50  4.13  *$ 1.00   6%   79%
POWI   11.50  17.00  Nov-10.00  2.25  *$ 0.75   8%   70%
DTLN   29.88  33.50  Nov-25.00  6.00  *$ 1.12   5%   68%
CDRD   18.00  32.00  Nov-15.00  4.25  *$ 1.25   9%   68%
RFMD   24.00  24.50  Nov-22.50  2.25  *$ 0.75   3%   60%
GALTF  15.75  16.00  Nov-12.50  3.63  *$ 0.38   3%   54%
ENMD   24.63  31.75  Nov-20.00  5.75  *$ 1.12   6%   52%
ICOS   19.63  20.00  Nov-17.50  3.25  *$ 1.12   7%   51%
VIRS   12.38  11.88  Nov-10.00  2.75  *$ 0.37   4%   50%
ICOS   17.38  20.00  Nov-15.00  3.13  *$ 0.75   5%   46%
KNT    16.63  15.75  Nov-15.00  2.00  *$ 0.37   3%   44%
SNAP   15.75  15.50  Nov-12.50  3.63  *$ 0.38   3%   41%
TLC    26.13  27.31  Nov-22.50  4.13  *$ 0.50   2%   40%
PERC   21.50  25.00  Nov-17.50  4.50  *$ 0.50   3%   38%
TV     18.50  28.94  Nov-15.00  4.13  *$ 0.63   4%   38%
ELE    24.06  25.88  Nov-22.50  2.25  *$ 0.69   3%   27%
ALYD    7.00   6.25  Nov- 7.50  0.50   $-0.25  -4%   ---

ROI is equal to the profit (or loss) divided by the cost-basis.
Annual ROI represents the return based on a yearly investment.
(example: a 10% return in 20 days equals 183% ROI for a year.)

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

BTIM   12.25  Nov-10.00  QBO KB 2.56 393     9.69   3.20%   3.20%
CIEN   17.13  Nov-15.00  EUQ KC 2.44 7942   14.69   2.11%   2.11%
PMRY   18.75  Nov-17.50  PBQ KW 2.13 61     16.62   5.29%   5.29%
PRMS   13.25  Nov-12.50  RQS KV 1.19 163    12.06   3.65%   3.65%
-----------------------------------------------------------------
CIEN   17.13  Dec-15.00  EUQ LC 3.38 1945   13.75   9.09%   9.09%
EGGS    9.06  Dec- 7.50  EGQ LU 2.31 1180    6.75  11.11%  11.11%
EXDS   34.50  Dec-30.00  QED LF 6.63 4      27.87   7.64%   7.64%
NMR    17.13  Dec-17.50  NMR LW 1.38 0      15.75  11.11%   8.76%
PMTC   16.13  Dec-17.50  PMQ LW 1.06 736    15.07  16.12%   7.03%
PRLS    8.00  Dec- 7.50  QLS LU 1.63 110     6.37  17.74%  17.74%
SDRC   16.88  Dec-17.50  SLQ LW 1.25 0      15.63  11.96%   8.00%
USWB   18.63  Dec-17.50  QWB LW 2.69 590    15.94   9.79%   9.79%
******************************************************************
Sequenced by RC 
******************************************************************
Stock  Price  Mon-Strike Option Opt  Open   Cost   RC      RNC
Sym               Price  Symbol Bid  Intr   Basis   

PMRY   18.75  Nov-17.50  PBQ KW 2.13 61     16.62   5.29%   5.29%
PRMS   13.25  Nov-12.50  RQS KV 1.19 163    12.06   3.65%   3.65%
BTIM   12.25  Nov-10.00  QBO KB 2.56 393     9.69   3.20%   3.20%
CIEN   17.13  Nov-15.00  EUQ KC 2.44 7942   14.69   2.11%   2.11%
-----------------------------------------------------------------
PRLS    8.00  Dec- 7.50  QLS LU 1.63 110     6.37  17.74%  17.74%
PMTC   16.13  Dec-17.50  PMQ LW 1.06 736    15.07  16.12%   7.03%
SDRC   16.88  Dec-17.50  SLQ LW 1.25 0      15.63  11.96%   8.00%
NMR    17.13  Dec-17.50  NMR LW 1.38 0      15.75  11.11%   8.76%
EGGS    9.06  Dec- 7.50  EGQ LU 2.31 1180    6.75  11.11%  11.11%
USWB   18.63  Dec-17.50  QWB LW 2.69 590    15.94   9.79%   9.79%
CIEN   17.13  Dec-15.00  EUQ LC 3.38 1945   13.75   9.09%   9.09%
EXDS   34.50  Dec-30.00  QED LF 6.63 4      27.87   7.64%   7.64%
******************************************************************
Sequenced by RNC 
******************************************************************
Stock  Price  Mon-Strike Option Opt  Open   Cost   RC      RNC
Sym               Price  Symbol Bid  Intr   Basis   

PMRY   18.75  Nov-17.50  PBQ KW 2.13 61     16.62   5.29%   5.29%
PRMS   13.25  Nov-12.50  RQS KV 1.19 163    12.06   3.65%   3.65%
BTIM   12.25  Nov-10.00  QBO KB 2.56 393     9.69   3.20%   3.20%
CIEN   17.13  Nov-15.00  EUQ KC 2.44 7942   14.69   2.11%   2.11%
-----------------------------------------------------------------
PRLS    8.00  Dec- 7.50  QLS LU 1.63 110     6.37  17.74%  17.74%
EGGS    9.06  Dec- 7.50  EGQ LU 2.31 1180    6.75  11.11%  11.11%
USWB   18.63  Dec-17.50  QWB LW 2.69 590    15.94   9.79%   9.79%
CIEN   17.13  Dec-15.00  EUQ LC 3.38 1945   13.75   9.09%   9.09%
NMR    17.13  Dec-17.50  NMR LW 1.38 0      15.75  11.11%   8.76%
SDRC   16.88  Dec-17.50  SLQ LW 1.25 0      15.63  11.96%   8.00%
EXDS   34.50  Dec-30.00  QED LF 6.63 4      27.87   7.64%   7.64%
PMTC   16.13  Dec-17.50  PMQ LW 1.06 736    15.07  16.12%   7.03%
******************************************************************
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)
******************************************************************
BTIM - BioTime, Inc.  $12.25   *** Bad Rumors ***

BioTime, Inc. is a development stage company which is engaged in 
the research and development of aqueous based synthetic solutions 
which can be used as blood substitutes.  Recent news "battle" with
Asensio & Company has increased speculation on BTIM.  First salvo
caused selling that has since reversed with price rebounding and 
crossing above 200 dma. Two-week play to stay above $10.

Nov 10.00 QBO-KB Bid=2.56 OI=393  CB=9.69 RC=3.20% RNC=3.20%


CHART  NEWS   
******************************************************************
CIEN - Cienna  $17.13  *** Battered and Beaten ***

CIENA Corporation designs, manufactures and sells dense wavelength
division multiplexing systems for fiberoptic comm. networks. The
company's shares have tanked severely in the wake of one of the
most peculiar telecom mergers never to take place. The speculation
on this company continues as rumors fly: a new merger? no merger?
BOP maxed and positive TSV with support at $15.00. 

short-term play

Nov 15.00 EUQ-KC Bid=2.44 OI=7942 CB=14.69 RC=2.11% RNC=2.11%

long-term play

Dec 15.00 EUQ-LC Bid=3.38 OI=1945 CB=13.75 RC=9.09% RNC=9.09%


CHART  NEWS   
******************************************************************
EGGS - Egghead.com  $9.06 *** Internet Momentum ***

EGGS is a reseller of PC software, hardware and related products
through its subsidiaries. Internet fever is running wild and the
buying mania for these more speculative stocks heated up last week.
Rumor has Amazon.com apparently considering acquiring a software
retailer and that bodes well for EGGS. A technical support level
exists slightly above our cost basis of $6.75.

Dec 7.50 EGQ-LU Bid=2.31 OI=1180 CB=6.75 RC=11.11% RNC=11.11%


CHART  NEWS   
******************************************************************
EXDS - Exodus Communications  $34.50

Exodus Communications is a provider of Internet system and network
management solutions. Just announced a new agreement with CORIO 
and appointed a new vice president of marketing and strategy.
Maxed BOP rebound off an extended double bottom with positive TSV
and volume surge. Support at $28 and resistance at $36.

Dec 30.00 QED-LF Bid=6.63 OI=4   CB=27.87 RC=7.64% RNC=7.64%


CHART  NEWS   
******************************************************************
NMR - Nielsen Media Research  $17.13  *** OTM play ***

NMR conducts television audience measurement and related services.
Still climbing after our pick two weeks ago so we offer a more 
bullish play. Several contracts recently signed, block trades, an 
Internet venture with NetRatings all bode well. BOP is now maxed
with TSV above zero and climbing. Gapped on Friday so watch for
a better entry price on a whipsaw or go with the Buy-Write.
 
Dec 17.50 NMR-LW Bid=1.38 OI=0   CB=15.75 RC=11.11% RNC=8.76%


CHART  NEWS   
******************************************************************
PMRY - Pomeroy Computer Resource  $18.75  *** Earnings NOV.10 ***

PMRY sells, installs and services microcomputers and microcomputer
equipment for business, professional, educational and government 
customers.  No recent news but earnings should be out this week 
and there is speculation to their content. Recent breakout of 
double bottom with support around $16.50 for a short term play.

Nov 17.50 PBQ-KW Bid=2.13 OI=61 CB=16.62 RC=5.29% RNC=5.29%


CHART  NEWS   
******************************************************************
PMTC - Parametric Technology  $16.13  *** Long-term ***

PMTC develops, markets and supports Pro/ENGINEER (R) Solutions, a 
family of software products that automate the complete product 
development process within the mechanical computer-aided design, 
manufacturing and engineering industry.  Posted $0.17 vs. $0.15 
for the 4Q EPS and received several orders through Oct. Basing
since July and at a good entry point as it appears to complete a
round (saucer) bottom formation with maxed BOP. An OTM play at
the expense of downside protection.

Dec 17.50 PMQ-LW Bid=1.06 OI=736 CB=15.07 RC=16.12% RNC=7.03%


CHART  NEWS   
******************************************************************
PRLS - Peerless Systems Corp  $8.00  *** Earnings NOV.19 ***

PRLS is a leading provider of software based embedded imaging 
systems to original equipment manufacturers of digital document
products.  Revenues for the quarter ended July 31 increased 42%.
Breaking out of stage 1 base with strong BOP and confirming TSV.
Profit taking on Friday(?) may offer a good entry point, new
technical support above our cost-basis.

Dec 7.50 QLS-LU Bid=1.63 OI=110 CB=6.37 RC=17.74% RNC=17.74%


CHART  NEWS   
******************************************************************
PRMS - Premisys Communications  $13.25  *** Two-week play ***

PRMS designs, manufactures and markets integrated digital access 
products for telecommunications service providers which assist 
public carriers in building, expanding & managing their networks.
Positive earnings in Oct with an upgrade and block trades bode
well for this rebounding stock.  BOP (buying pressure) is maxed,
TSV maxed, and volume surge point to a continued uptrend.

Nov 12.50 RQS-KV Bid=1.19 OI=163 CB=12.06 RC=3.65% RNC=3.65%


CHART  NEWS   
******************************************************************
SDRC - Structural Dynamics   $16.88  *** Long-term ***

SDRC is a leading international supplier of Mechanical Design
Automation and Testing software, Product Data Management software,
and related services. They help manufacturers optimize products
early in the design process. The company reported Q3 EPS of $0.23,
at the high end of the $0.16 to $0.25 range offered by analysts
and $0.02 higher than the estimate. Total revenues rose 17%, led
by a 35% sales increase in Asia, of all places. The firm is now
the EDA market leader in Japan with clients like Toshiba, Hitachi,
and Matsushita. Merrill Lynch liked the sound of that and raised
SDRC's near-term rating. The chart is technically very bullish.
OTM play at the expense of downside protection

Dec 17.50 SLQ-LW Bid=1.25 OI=0   CB=15.63 RC=11.96% RNC=8.00%


CHART  NEWS   
******************************************************************
USWB - U.S. Web  $18.63

USWeb Corporation  is a leading strategic Internet services firm
helping clients achieve profit, market share and customer loyalty
objectives through Internet strategies and systems. USWB recently
reported fiscal Q3 EPS of $0.02, beating the estimate of a $0.01
per share loss for the quarter. Also debuted USWeb Electronic
Services, a new initiative that aims to extend the effectiveness
of corporate IT and announced a relationship to build an extended
IT infrastructure with MSFT. Last week, named Robert Shaw, a
professional services and recruiting specialist from Oracle as
the new CEO. Another excellent chart with recent support slightly
above the cost-basis.

Dec 17.50 QWB-LW Bid=2.69 OI=590 CB=15.94 RC=9.79% RNC=9.79%


CHART  NEWS   


********************************************************
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
	
OMKT	7.44	Nov	7.50	OQMKU	1.00	13.45	2	659	
IMIC	5.00	Nov	5.00	QVUKA	0.63	12.50	110	105	
CWC	9.94	Nov	10.00	CWCKB	1.13	11.32	189	1032	
KERA	7.50	Nov	7.50	KVQKU	0.81	10.83	20	132	
SER	7.00	Nov	7.50	SERKU	0.75	10.71	104	134	
CPSS	4.88	Nov	5.00	QCQKA	0.50	10.26	3	283	
BTIM	12.25	Nov	12.50	QBOKV	1.25	10.20	97	152	
OMPT	11.75	Nov	12.50	QTTKV	1.19	10.11	630	185	
DAOU	4.38	Nov	5.00	QQXKA	0.44	10.00	10	126	
ERGO	4.69	Dec	5.00	QGOLA	1.06	22.67	3	375	
BTIM	12.25	Dec	12.50	QBOLV	2.63	21.43	35	703	
CWC	9.94	Dec	10.00	CWCLB	1.94	19.50	5	70	
FEN	7.25	Dec	7.50	FENLU	1.38	18.97	200	70	
APM	5.00	Dec	5.00	APMLA	0.94	18.75	118	885	
SER	7.00	Dec	7.50	SERLU	1.31	18.75	42	50	
IO	9.94	Dec	10.00	IOLB	1.75	17.61	88	565	
MANU	14.25	Dec	15.00	ZUQLC	2.44	17.11	45	46	
AGTX	15.50	Dec	17.50	QDXLW	2.63	16.94	8	62	
EFTC	4.47	Dec	5.00	QEELA	0.75	16.78	34	90	
CKSG	24.56	Dec	25.00	OIQLE	4.00	16.28	82	222	
AMMB	7.31	Dec	7.50	UKQLU	1.19	16.24	20	487	
MMCN	9.81	Dec	10.00	CMQLB	1.56	15.92	2	290	
KMAG	7.25	Dec	7.50	KMQLU	1.13	15.52	86	390	
GLBL	9.69	Dec	10.00	GQOLB	1.50	15.48	153	247	
SCUR	14.75	Dec	15.00	UQULC	2.25	15.25	44	130	
CBTSY	12.31	Dec	12.50	QAGLV	1.88	15.23	61	121	
VIP	14.00	Dec	15.00	VIPLC	2.13	15.18	70	25	
CCON	9.94	Dec	10.00	ONQLB	1.50	15.09	100	30	
VLNC	7.06	Dec	7.50	VHQLU	1.06	15.04	79	836	
PRTG	3.38	Dec	5.00	GRQLA	0.50	14.81	10	80	
SAVLY	19.00	Dec	20.00	QVYLD	2.75	14.47	20	15	
OMKT	7.44	Dec	7.50	OQMLU	1.06	14.29	12	105	
ABTX	11.81	Dec	12.50	QXQLV	1.69	14.29	124	184	
ABTE	7.13	Dec	7.50	QZBLU	1.00	14.04	120	1786	
MRVC	7.19	Dec	7.50	VQXLU	1.00	13.91	20	131	
EGGS	9.06	Dec	10.00	EGQLB	1.25	13.79	371	3258	
ATRX	9.75	Dec	10.00	OQFLB	1.31	13.46	25	20	
SQNT	9.94	Dec	10.00	SQQLB	1.31	13.21	71	46	
SPLN	16.13	Dec	17.50	QSPLW	2.13	13.18	60	52	
DBCC	4.75	Dec	5.00	BQDLA	0.63	13.16	70	484	
JDAS	9.75	Dec	10.00	QAHLB	1.25	12.82	136	26	
DSLGF	14.69	Dec	15.00	DQGLC	1.88	12.77	110	16	
GSTX	7.44	Dec	7.50	QGSLU	0.94	12.61	25	186	
AAM	3.00	Dec	5.00	AAMLA	0.38	12.50	73	961	
ICOM	3.00	Dec	5.00	KQILA	0.38	12.50	6	1045	
VNT	17.06	Dec	17.50	VNTLW	2.13	12.45	16	5838	
CIEN	17.13	Dec	17.50	EUQLW	2.13	12.41	315	956	
TSA	7.06	Dec	7.50	TSALU	0.88	12.39	30	133	
DANKY	4.56	Dec	5.00	DNQLA	0.56	12.33	30	116	
NXTR	9.75	Dec	10.00	NQXLB	1.19	12.18	10	35	
CYMI	12.38	Dec	12.50	CQGLV	1.50	12.12	16	133	
MRVT	15.50	Dec	17.50	SQDLW	1.88	12.10	13	209	
ZD	6.75	Dec	7.50	ZDLU	0.81	12.04	12	42	
ZITL	4.19	Dec	5.00	ZQILA	0.50	11.94	313	9874	
TOK	9.44	Dec	10.00	TOKLB	1.13	11.92	10	121	
AFCI	11.56	Dec	12.50	AQFLV	1.38	11.89	64	1541	
GSNX	7.38	Dec	7.50	GQSLU	0.88	11.86	16	23	
HS	17.00	Dec	17.50	HSLW	2.00	11.76	25	122	
MICA	14.88	Dec	15.00	MQILC	1.75	11.76	110	181	
STRX	14.88	Dec	15.00	TQQLC	1.75	11.76	60	234	
MYGN	11.75	Dec	12.50	GSQLV	1.38	11.70	11	1	
TEAM	7.50	Dec	7.50	QEALU	0.88	11.67	182	145	
PRRC	6.50	Dec	7.50	MQXLU	0.75	11.54	6	47	
SDLI	25.00	Dec	25.00	QSLLE	2.88	11.50	15	37	
SNDK	12.00	Dec	12.50	SWQLV	1.38	11.46	32	10	
WAVO	6.06	Dec	7.50	WKQLU	0.69	11.34	44	230	
FA	14.94	Dec	15.00	FALC	1.69	11.30	1	75	
GTIS	7.25	Dec	7.50	GQBLU	0.81	11.21	80	75	
GCR	3.94	Dec	5.00	GCRLA	0.44	11.11	50	870	
RCOT	19.19	Dec	20.00	ROQLD	2.13	11.07	129	15	
CQB	12.44	Dec	12.50	CQBLV	1.38	11.06	44	234	
REXI	9.28	Dec	10.00	QRELB	1.00	10.77	25	369	
AATT	16.31	Dec	17.50	QVILW	1.75	10.73	3	7	
FP	3.50	Dec	5.00	FPLA	0.38	10.71	15	1001	
MPN	7.00	Dec	7.50	MPNLU	0.75	10.71	15	181	
CREE	29.50	Dec	30.00	CQRLF	3.13	10.59	11	175	
IMNR	13.00	Dec	15.00	IMQLC	1.38	10.58	110	685	
SFSK	22.50	Dec	22.50	FQKLX	2.38	10.56	26	74	
GCO	7.13	Dec	7.50	GCOLU	0.75	10.53	46	147	
LGND	12.00	Dec	12.50	LQPLV	1.25	10.42	56	92	
EFS	28.81	Dec	30.00	EFSLF	3.00	10.41	7	20	
ANTC	17.44	Dec	17.50	AQCLW	1.81	10.39	25	66	
TWA	4.81	Dec	5.00	TWALA	0.50	10.39	50	1137	
PWAV	14.50	Dec	15.00	VFQLC	1.50	10.34	30	87	
ESTI	7.31	Dec	7.50	ELQLU	0.75	10.26	8	51	
INVX	17.13	Dec	17.50	IVQLW	1.75	10.22	25	10	
ESV	14.69	Dec	15.00	ESVLC	1.50	10.21	1454	2126	
HMSY	7.38	Dec	7.50	HQNLU	0.75	10.17	10	28	
IDTI	7.38	Dec	7.50	ITQLU	0.75	10.17	347	334	
XYLN	17.25	Dec	17.50	YXQLW	1.75	10.14	82	677	
INHL	28.38	Dec	30.00	QNHLF	2.88	10.13	5	36	
IOM	8.69	Dec	10.00	IOMLB	0.88	10.07	4909	5060	
IPIC	3.75	Dec	5.00	IQHLA	0.38	10.00	10	835	
WMS	10.00	Dec	10.00	WMSLB	1.00	10.00	2	125	
BNYN	5.00	Jan	5.00	QYNAA	1.31	26.25	45	338	
DAOU	4.38	Jan	5.00	QQXAA	1.06	24.29	10	96	
APM	5.00	Jan	5.00	APMAA	1.06	21.25	18	2676	
ABTX	11.81	Jan	12.50	QXQAV	2.25	19.05	105	2225	
CHIR	22.50	Jan	27.50	CIQAY	4.25	18.89	4	1041	
MANU	14.25	Jan	15.00	ZUQAC	2.63	18.42	28	144	
ALTN	4.13	Jan	5.00	AQAAA	0.75	18.18	28	738	
PRRC	6.50	Jan	7.50	MQXAU	1.13	17.31	8	171	
NXTR	9.75	Jan	10.00	NQXAB	1.69	17.31	1	233	
FRTE	4.56	Jan	5.00	RQFAA	0.75	16.44	30	400	
CIEN	17.13	Jan	17.50	EUQAW	2.81	16.42	46	4611	
HPRT	7.25	Jan	7.50	HQKAU	1.19	16.38	292	1242	
PLC	6.44	Jan	7.50	PLCAU	1.00	15.53	5	452	
BTGC	7.30	Jan	7.50	QTGAU	1.13	15.42	3	680	
REV	24.31	Jan	25.00	REVAE	3.75	15.42	18	126	
RENO	6.94	Jan	7.50	RQNAU	1.06	15.32	92	675	
TALK	10.81	Jan	12.50	QQKAV	1.63	15.03	1164	5508	
WMS	10.00	Jan	10.00	WMSAB	1.50	15.00	2178	151	
ZD	6.75	Jan	7.50	ZDAU	1.00	14.81	2	54	
USWB	18.63	Jan	20.00	QWBAD	2.75	14.77	16	359	
HS	17.00	Jan	17.50	HSAW	2.50	14.71	3	144	
AMES	20.00	Jan	20.00	QAFAD	2.94	14.69	42	311	
ALSC	4.72	Jan	5.00	QASAA	0.69	14.57	375	2627	
SCIO	6.88	Jan	7.50	JQSAU	1.00	14.55	27	483	
SOC	6.88	Jan	7.50	SOCAU	1.00	14.55	331	6710	
SQNT	9.94	Jan	10.00	SQQAB	1.44	14.47	20	441	
FP	3.50	Jan	5.00	FPAA	0.50	14.29	62	2636	
SRCM	15.81	Jan	17.50	SQAW	2.25	14.23	35	114	
ORG	14.13	Jan	15.00	ORGAC	2.00	14.16	15	617	
UBB	21.50	Jan	22.50	UBBAX	3.00	13.95	1515	145	
MTZ	22.50	Jan	22.50	MTZAX	3.13	13.89	15	702	
NTKI	5.41	Jan	7.50	QNKAU	0.75	13.87	20	144	
SUPG	7.25	Jan	7.50	UQGAU	1.00	13.79	15	354	
FFTI	8.19	Jan	10.00	QFOAB	1.13	13.74	5	34	
VCAM	13.25	Jan	15.00	VQDAC	1.81	13.68	20	10	
FHS	14.75	Jan	15.00	FHSAC	2.00	13.56	31	70	
VNT	17.06	Jan	17.50	VNTAW	2.31	13.55	9	1038	
APCO	9.75	Jan	10.00	QFMAB	1.31	13.46	38	287	
ESST	4.19	Jan	5.00	SEQAA	0.56	13.43	50	638	
NXLK	28.88	Jan	30.00	QNFAF	3.88	13.42	15	529	
SCIXF	8.88	Jan	10.00	SXQAB	1.19	13.38	246	2943	
ERTH	9.44	Jan	10.00	QERAB	1.25	13.25	140	249	
MANU	14.25	Jan	17.50	ZUQAW	1.88	13.16	10	87	
INGR	6.25	Jan	7.50	IGQAU	0.81	13.00	10	719	
TWA	4.81	Jan	5.00	TWAAA	0.63	12.99	23	1893	
EGRP	23.13	Jan	25.00	QGRAE	3.00	12.97	500	651	
PAIR	11.13	Jan	12.50	PQGAV	1.44	12.92	55	1487	
WAXS	23.88	Jan	25.00	WXQAE	3.00	12.57	5	750	
OIL	12.44	Jan	12.50	OILAV	1.56	12.56	127	1552	
ICST	13.75	Jan	15.00	IBQAC	1.69	12.27	70	528	
SPYG	14.81	Jan	15.00	YQGAC	1.81	12.24	17	547	
SFSK	22.50	Jan	22.50	FQKAX	2.75	12.22	20	486	
SPLH	10.75	Jan	12.50	QRXAV	1.31	12.21	5	88	
COHO	4.63	Jan	5.00	QHOAA	0.56	12.16	10	153	
PSIX	16.50	Jan	17.50	SQPAW	2.00	12.12	110	712	
CIEN	17.13	Jan	20.00	EUQAD	2.06	12.04	129	5531	
CBIZ	16.63	Jan	17.50	SSQAW	2.00	12.03	1	51	
NRGN	16.13	Jan	17.50	NQOAW	1.94	12.02	6	33	
SRCM	15.81	Jan	20.00	SQAD	1.88	11.86	167	784	
SDTI	13.75	Jan	15.00	QSDAC	1.63	11.82	26	179	
SNB	4.25	Jan	5.00	SNBAA	0.50	11.76	20	10	
PMRY	18.63	Jan	20.00	PBQAD	2.19	11.74	10	30	
MERCS	7.50	Jan	7.50	MQCAU	0.88	11.67	53	10	
RDC	15.00	Jan	15.00	RDCAC	1.75	11.67	5	709	
RRC	6.44	Jan	7.50	RRCAU	0.75	11.65	7	135	
RADAF	14.13	Jan	15.00	QDRAC	1.63	11.50	15	191	
SNDK	12.00	Jan	12.50	SWQAV	1.38	11.46	15	245	
AVNT	16.38	Jan	17.50	NVQAW	1.88	11.45	7	25	
CPU	15.44	Jan	17.50	CPUAW	1.75	11.34	22	625	
OWN	13.25	Jan	15.00	OWNAC	1.50	11.32	324	10	
PRMS	13.25	Jan	15.00	RQSAC	1.50	11.32	43	212	
ENZ	11.69	Jan	12.50	ENZAV	1.31	11.23	30	977	
KNT	15.75	Jan	17.50	KNTAW	1.75	11.11	10	287	
PRMA	9.00	Jan	10.00	PQRAB	1.00	11.11	42	170	
PUMA	4.50	Jan	5.00	ZVQAA	0.50	11.11	36	113	
ORG	14.13	Jan	17.50	ORGAW	1.56	11.06	20	1201	
DGN	18.75	Jan	20.00	DGNAD	2.06	11.00	83	874	
ISIP	11.94	Jan	12.50	QISAV	1.31	10.99	8	302	
CEXP	5.75	Jan	7.50	XQPAU	0.63	10.87	50	225	
CD	13.81	Jan	15.00	CDAC	1.50	10.86	1065	15364	
SYBS	6.94	Jan	7.50	SBQAU	0.75	10.81	114	458	
AMD	24.44	Jan	25.00	AMDAE	2.63	10.74	574	7154	
ICOS	20.00	Jan	20.00	IIQAD	2.13	10.63	60	1083	
ASPX	3.53	Jan	5.00	AQXAA	0.38	10.62	18	534	
PRRC	6.50	Jan	10.00	MQXAB	0.69	10.58	100	80	
ABTX	11.81	Jan	15.00	QXQAC	1.25	10.58	164	1591	
NMGC	17.75	Jan	20.00	GJQAD	1.88	10.56	32	1131	
FORE	16.13	Jan	17.50	FQOAW	1.69	10.47	525	3931	
AWA	16.31	Jan	17.50	AWAAW	1.69	10.34	8	107	
PSFT	23.06	Jan	25.00	PQOAE	2.38	10.30	59	1966	
CUBE	22.50	Jan	22.50	UQBAX	2.31	10.28	14	323	
ACTN	29.38	Jan	30.00	QNCAF	3.00	10.21	20	190	
ESCMF	9.19	Jan	10.00	QFCAB	0.94	10.20	3	421	
MMCN	9.81	Jan	15.00	CMQAC	1.00	10.19	5	245	
MUEI	22.13	Jan	22.50	MQUAX	2.25	10.17	33	242	
VYTL	17.25	Jan	20.00	VQLAD	1.75	10.14	69	228	
SRR	9.88	Jan	10.00	SRRAB	1.00	10.13	15	200	
TMM	4.94	Jan	5.00	TMMAA	0.50	10.13	120	10	
USWB	18.63	Jan	22.50	QWBAX	1.88	10.07	65	470	
BDI	7.50	Jan	7.50	BDIAU	0.75	10.00	14	141	

******************************************************************
NAKED PUT SECTION FOR NOVEMBER 8, 1998
******************************************************************
Selling naked-puts offers an attractive method of generating small
profits on portfolio collateral. A premium is received for the
obligation to buy the underlying security at a specific price. A
successful outcome is achieved if the stock remains above the sold
strike at expiration. It is also 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       +/-  

RFMD   24.00  24.50  Nov-22.50  1.00  *$  1.00
TWMC   19.56  24.00  Nov-15.00  0.88  *$  0.88
CDNW    8.25   8.13  Nov- 7.50  0.81  *$  0.81
SNAP   14.81  15.50  Nov-12.50  0.81  *$  0.81
TALK    6.88  10.81  Nov- 5.00  0.69  *$  0.69
DTLN   29.75  33.50  Nov-22.50  0.69  *$  0.69
MUEI   17.06  22.13  Nov-15.00  0.63  *$  0.63
ORG    10.50  14.13  Nov- 7.50  0.63  *$  0.63
TUP    16.25  19.19  Nov-15.00  0.63  *$  0.63
CDIS   21.69  20.50  Nov-17.50  0.63  *$  0.63
CIEN    9.31  17.13  Nov- 7.50  0.56  *$  0.56
GALTF  15.75  16.00  Nov-12.50  0.56  *$  0.56
DDIM   12.50  13.00  Nov-10.00  0.50  *$  0.50
TWMC   20.63  24.00  Nov-15.00  0.50  *$  0.50
NSTA   18.25  22.00  Nov-12.50  0.50  *$  0.50
BTIM   10.56  12.25  Nov- 7.50  0.44  *$  0.44
RFMD   20.81  24.50  Nov-17.50  0.44  *$  0.44
MUEI   18.19  22.13  Nov-15.00  0.38  *$  0.38
PMRX    9.06   9.88  Nov- 7.50  0.38  *$  0.38
PGO    18.75  21.25  Nov-15.00  0.38  *$  0.38
DGN    17.31  18.75  Nov-15.00  0.38  *$  0.38
PSSI   20.38  22.75  Nov-15.00  0.31  *$  0.31
RCOT   22.38  19.19  Nov-17.50  0.31  *$  0.31
ICST   12.63  13.75  Nov- 7.50  0.25  *$  0.25
TALK    7.31  10.81  Nov- 5.00  0.25  *$  0.25
TZA     8.06   9.88  Nov- 5.00  0.25  *$  0.25
CLCX    8.94  12.31  Nov- 7.50  0.25  *$  0.25
RXSD   18.75  12.94  Nov-15.00  0.31   $ -1.75 ***

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)

*** This would be current loss position if a proper buy-to-close
stop was not used. (ie. buy stop at $1.00, equals a $0.69 loss).
******************************************************************
NEW PICKS
******************************************************************
Sequenced by Company
******************************************************************
Stock  Price  Mon-Strike Option  Opt   Open   Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr   Basis  Expired 

BTIM   12.25  Nov-10.00  QBO WB  0.38  844     9.62  12.54%
CIEN   17.13  Nov-15.00  EUQ WC  0.50  1782   14.50   9.57%
PMRY   18.75  Nov-15.00  PBQ WC  0.44  302    14.56  10.50%
-----------------------------------------------------------
EGGS    9.06  Dec- 7.50  EGQ XU  0.75  119     6.75  26.65%
NMR    17.13  Dec-15.00  NMR XC  0.75  0      14.25  13.71%
******************************************************************
Sequenced by Return on Investment (ROI) 
******************************************************************
Stock  Price  Mon-Strike Option  Opt   Open   Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr   Basis  Expired 

BTIM   12.25  Nov-10.00  QBO WB  0.38  844     9.62  12.54%
PMRY   18.75  Nov-15.00  PBQ WC  0.44  302    14.56  10.50%
CIEN   17.13  Nov-15.00  EUQ WC  0.50  1782   14.50   9.57%
-----------------------------------------------------------
EGGS    9.06  Dec- 7.50  EGQ XU  0.75  119     6.75  26.65%
NMR    17.13  Dec-15.00  NMR XC  0.75  0      14.25  13.71%
******************************************************************
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.
OI  - Open Interest
CB  - Cost Basis 
ROI - Return On Investment
******************************************************************
BTIM - BioTime, Inc.  $12.25   

  SEE COVERED CALL SECTION FOR WRITE UP

Nov  10.00  QBO-WB  Bid=0.38  OI=844  CB=9.62  ROI=12.54%


CHART  NEWS   
******************************************************************
CIEN - Cienna  $17.13


  SEE COVERED CALL SECTION FOR WRITE UP

Nov  15.00  EUQ-WC  Bid=0.50  OI=1782 CB=14.50  ROI=9.57%


CHART  NEWS   
******************************************************************
EGGS - Egghead.com  $9.06 

  SEE COVERED CALL SECTION FOR WRITE UP

Dec  7.50  EGQ-XU  Bid=0.75  OI=119  CB=6.75  ROI=26.65%


CHART  NEWS   
******************************************************************
NMR - Nielsen Media Research  $17.13 

  SEE COVERED CALL SECTION FOR WRITE UP

Dec  15.00  NMR-XC  Bid=0.75  OI=0   CB=14.25  ROI=13.71%


CHART  NEWS   
******************************************************************
PMRY - Pomeroy Computer Resource  $18.75 

  SEE COVERED CALL SECTION FOR WRITE UP

Nov  15.00  PBQ-WC  Bid=0.44  OI=302  CB=14.56  ROI=10.50%


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              11-08-98
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.
****************************************************
HSY $67.00 (-2.31)

Hershey was the classic defensive play. A consumer food product that
women cannot live without. With the market in full rally mode Hershey
has dropped from a high of $75 to $68. Analysts are now being more
picky and pointing out that increased milk prices are going to put
a crimp in the next quarters profits and the Halloween quarter for
Hershey was actually last quarter. Warburg Dillon Reed downgraded
them to a "sell" and Merrill Lynch to a "neutral". Barrons is running
an article this weekend that is not kind to Hershey. 

BUY PUT NOV-65 HSY-WM OI=254 at $1.44 SL= .75 $2.00 OTM
BUY PUT NOV-70 HSY-WN OI=593 at $4.38 SL=2.75 $3.00 ITM
BUY PUT DEC-65 HSY-XM OI=417 at $2.88 SL=1.50 $2.00 OTM


CHART  NEWS   
*****************************************************************
CCE $36.94 (+.94)

Coca Cola Enterprises in a larger bottler of Coke products. They
had been trending down until they were picked to move into the S&P
500 five weeks ago. Their average daily volume before the selection
was 400,000 shares. Since then they have traded over 70 million
shares or an avg of 2.8 mil per day. (about 7x normal). The stock
rose from $25 to $39 before starting back down last week. Volume
Friday was only 649,000. If the volume continues to drop so will
the stock. Confirm downward movement before starting a play.

BUY PUT NOV-37.50 CCE-WU OI=873 at $1.88 SL= .88, .56 ITM
BUY PUT DEC-37.50 CCE-XU OI=40  at $3.00 SL=1.50, .56 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            11-08-98
Sunday                5  of  7


COMBINATION PLAYS - WEEKLY PLAY RECAP
**********************************************************
Friday was a banner day for the spreads section led by EGRP, a one
day play for $0.75! (Don't you wish you had just bought/sold the
call!) These strategies normally work best on trades with slightly
longer time horizons but we always take profits off the table when
they become available. Leave the "home runs" in the speculation
portfolio. Our call-debit play on XIRC hit the GTC price and was
closed for a profit of $0.75 (10 days). INTC made a valiant effort
but fell back again to around $95. We decided to close our NOV110C
at $0.87, exiting the play with only a small profit. TXN is the
other chart that we are monitoring for a break-out. It is starting
to build steam around $65 but just can't make the hurdle. The time
value in the NOV calls is going to erode significantly in the next
week so we will watch this one closely. DELL was up almost $1 at
midday but faded toward the close. We opened a call-credit spread
(NOV80C/75C) at $0.38. BAC and WFC were less than outstanding, but
both had made recent gap-ups and we expect the positive trends to
continue next week. The available entry price on WFC (NOV37C/40C)
was $2.12 and on the BAC (NOV60C/65C) spread it was about $2.75.
Our MSFT recommendation on Thursday is the basis for a long-term
play that we are going to track for future strategy discussions.
Our opening long position is the JAN00-115C at $16.00 and we have
sold against that call, a NOV115C at $0.87. Our initial cost for
the LEAP is now $15.12. More about that strategy next week...
******************************************************************
NEW PLAYS...
******************************************************************
SAPE - Sapient $47.25			Put-Credit Spread

Sapient Corporation is an innovative provider of integrated
management consulting services, Internet commerce solutions, and
systems implementation services, including ERP implementations.
 
NEWS/OBSERVATIONS:
Sapient has concentrated on expanding its business in six target
industry segments: Energy Services, Healthcare, Government,
Manufacturing, Communications and Financial Services. In response
to growing demand for end-to-end Internet services they acquired
Studio Archetype. Recently, they announced financial results for
the third quarter; revenues were up 71%, net income was up 63%.
Morgan Stanley raised the buy rating to outperform from neutral
and set a $42 a share price target in mid-October.

TECHNICALS:
A fairly steep rebound from yearly lows in early October has now
brought the stock price back to a recent trading range around $45.
The BOP and TSV are both confirming the trend but the stock will
likely trade sideways as it tests old resistance at the current
price. There is a good indication that it will hold above $40 for
two weeks.

PLAY (conservative):
BUY  PUT NOV-35 QPE-WG OI=59   A=$0.56
SELL PUT NOV-40 QPE-WH OI=1098 B=$1.00
NET CREDIT(approx)=$0.50 ROI=11%

MACD Chart   CHART   NEWS   Zacks on SAPE
******************************************************************
IDTC - Integrated Device Tech. $20.25		Put-Credit Spread

IDT Corporation is a telecommunications company which offers a
broad range of integrated long-distance telephone and Internet
access services.

NEWS/OBSERVATIONS:
Integrated Device Technology, a maker of semiconductor products,
has agreed to merge with Quality Semiconductor Inc. in a stock
deal that would exchange each Quality share for 0.6875 shares of
IDT's common stock. But the more recent speculation has IDTC
acquiring another company, TGRP. Some investors suggest that the
company is going to release major business news prior to earnings.
but the most significant rumor is that the company will release
much better earnings than were originally expected.

TECHNICALS:
The chart is somewhat bullish but much less sound than we would
prefer. However, this play is motivated by speculative investing
and that evidence lies in the volume of Fridays trading. Any news
will affect the stock price so review the latest announcements
before opening a position.

PLAY (speculative):
BUY  PUT NOV-15.00 IQJ-WC OI=211 A=$0.12
SELL PUT NOV-17.50 IQJ-WW OI=118 B=$0.43
NET CREDIT(approx)=$0.38 ROI=18%

MACD Chart   CHART   NEWS   Zacks on IDTC
******************************************************************
GDW - Golden West Financial $94.68		Call-Credit Spread

Golden West Financial is a savings and loan holding company for
the World Savings and Loan Association and the World Savings Bank.
 
NEWS/OBSERVATIONS:
Just one recent news item; the company posted a positive earnings
report in mid-October and repurchased company stock during the
quarter. The play is based on technicals.

TECHNICALS:
GDW is currently in an up-trend but with a volume drop, neutral
BOP, and a short-term TSV divergence (which suggests it may not
last). Some resistance must be worked through at $95 to $97 and
again at $102 to $104.  From a long term view this stock may be
in a stage III (top) formation.

Once again, a reasonable way to begin this play is with the
purchase of the long call, hoping to benefit from any further
rally. If the stock continues to rise, try to sell the long
position for a small profit. If the stock exhibits weakness,
sell the lower strike call to create the credit spread.

PLAY (conservative):
BUY  CALL NOV-110 GDW-KB OI=1031 A=$0.38
SELL CALL NOV-105 GDW-KC OI=75   B=$0.75
NET CREDIT(approx)=$0.50 ROI=11%

MACD Chart   CHART   NEWS   Zacks on GDW
******************************************************************
ATHM-At Home Corp. $44.68		Call-Credit Spread

ATHM is a provider of internet services over the cable television
infrastructure and leased digital telecommunication lines to
consumers and businesses.
 
NEWS/OBSERVATIONS:
Reported mediocre earnings in mid-October and some new contracts
with various companies. Also announced a broadband content
development and promotional relationship that will give @Home
users access to enhanced content and existing programming assets
from MTV Online. Of course, some of AT&T's recent news affects
ATHM as their high-speed Internet service is owned by TCI (TCOMA),
a company that is currently in a merger transaction with AT&T.
The play is based on technicals.

TECHNICALS:
ATHM is in an ascending triangle and is having trouble breaking
resistance at $45 to $46. Several divergence indicators suggest
that this is a worrisome stock: TSV has trended down while price
moved up; BOP has crossed below zero line suggesting new selling
pressure; volume has been flat (not supporting the price). The
long-term trend appears to be slightly down as this stock has
entered stage III.

PLAY (conservative):
BUY  CALL NOV-55 AHQ-KK OI=254  A=$0.25
SELL CALL NOV-50 AHQ-KJ OI=1185 B=$0.56
NET CREDIT(approx)=$0.38 ROI=8% (2 weeks)

MACD Chart   CHART   NEWS   Zacks on ATHM
******************************************************************
DKB - Dekalb $90.87				Credit Strangle

DEKALB Genetics Corporation is a worldwide leader in agricultural
genetics and biotechnology for seed and swine.
 
NEWS/OBSERVATIONS:
In mid-October, DKB reported improved worldwide seed revenue for
fiscal 1998, but higher sample seed usage and production costs led
to significantly lower earnings.  The company followed that report
with a statement that it expects its $2.3 billion merger deal with
Monsanto Co. to close around the end of the year. DeKalb said that
MTC's broken merger agreement with American Home Products Corp.
should have no effect on the acquisition.

TECHNICALS:
In a trading range from $95 to $86 since July. Last three months,
an isosceles triangle formation is apparent which suggests the 
current trend will continue. Currently in a down-trend towards
the center of the triangle with two support levels at $89 and $87.
Many indicators are flat or neutral confirming current sideways
movement. 

PLAY (aggressive):
SELL CALL NOV-95 DKB-KS OI=590 B=$1.00
SELL PUT  NOV-85 DKB-WQ OI=100 B=$1.87
NET CREDIT(approx)=$3.00 ROI=12%

Note: Credit strangles are very speculative. Always discuss the
risks associated with naked option positions before opening this
type of play and consider using trading STOPS. Many professional
traders suggest a STOP order price of no more than twice the
original premium from the position.

MACD Chart   CHART   NEWS   Zacks on DKB
******************************************************************
INDEX OPTION 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. This week, we have credit positions.
******************************************************************
OEX - S&P 100 Index	$558.88		OTM 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 new optimism as the price now trades
in a higher range with a recent positive move in buying pressure
and excellent TSV. Some additional work still needs to be done up
near the yearly highs around 560 and most suggest that is the new
short term top. Long-term support (at the yearly low) now exists
around 450. Review the Hedge-Section for more specific technical
information on the OEX. The bullish play is very conservative and
low ROI. The bearish play is aggressive but is still well above
technical resistance and offers a favorable risk/reward ratio.

PLAY (aggressive-bearish):
BUY  CALL NOV-585 OEW-KQ OI=4467 A=$0.68
SELL CALL NOV-580 OEW-KP OI=6554 B=$1.18
NET CREDIT(approx)=$0.50 ROI=11%

PLAY (disparity play-low ROI)
BUY  PUT NOV-525 OEW-WE OI=9487  A=$1.93
SELL PUT NOV-530 OEW-WF OI=11575 B=$2.25
NET CREDIT(approx)=$0.31 ROI=6% (two weeks)


CHART  
***********************************************************
                      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            11-08-98
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.





DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

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