Option Investor
Newsletter

Daily Newsletter, Sunday, 11/15/1998

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

Sunday  11-15-98  1 of 6

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 11-15         WE 11-08         WE 10-30        WE 10-23
DOW     8919.59 - 55.87  8975.46 +383.36  8592.10 +139.81  + 35.53  
Nasdaq  1847.99 -  8.57  1856.56 + 85.17  1771.39 + 77.31  + 72.91  
S&P-100  554.26 -  4.09   558.88 + 21.71   536.97 +  9.91  +  6.83  
S&P-500 1125.72 - 14.81  1141.01 + 42.17  1098.67 + 28.00  + 14.25  
RUT      389.36 - 10.96   400.32 + 22.16   378.16 + 11.00  + 24.18  
TRAN    2871.30 - 97.18  2968.48 + 76.56  2891.92 +114.91  -  3.86
VIX       28.19            24.62            26.56            30.67
Put/Call    .71              .61              .69              .64
******************************************************************

Bomb me, bomb me not, bomb me, bomb me not.


Sound like Saddam Hussein mumbling to himself as he hunts for a
way to squirm out of another rock and hard place scenario. He needs
to be looking for deeper bomb shelter. With Clinton looking for
another news event to refocus the eyes of the world on something
besides his sexual problems, Saddam picked the wrong time to try
and bluff his way to a new agreement.

Only five hours after the new letter agreement was announced the
white house labeled it unacceptable. Why not? For the first time
in years America has full support of the world partners and the
bordering Arab nations. Now is the best time to hold his feet to
the fire. The military is in place again. Just like the last
several buildup/letdown cycles. Saddam stepped over the line one
too many times. Now he is going to pay. Either with bomb damage
or a stronger agreement to take his country apart building by
building by weapons inspectors.

The Iraq agreement basically was an agreement to have the UN
agree to his terms not him agree to the UN terms. Sound familiar?

Why do we care what happens. Personally I don't think this should
have any impact on the market at all. There is no trade. Oil
prices would welcome the drop in oil production a strike could
cause but oil has already blipped because of this. If anything
the defense companies would benefit from having to make another
few hundred cruise missiles. Hardly a national GDP contribution.

The real crisis as we have been saying is the Fed FOMC meeting
on Tuesday. The tide toward a rate cut may have turned and 
professional traders everywhere are taking positions which will
benefit from a market drop. The market has come too far too
fast for the Fed chiefs comfort. The froth in the market at
this point will be a strong influence on the meeting. The credit
spreads Mr Greenspan was worried about last month have improved.
The world markets have rallied. Interest around the world have
been cut. Brazil got more money than they first expected. There
are no fires at present. The urgency for a rate cut is gone.
The only reason they will cut now is because of the possible
confidence damage if they don't cut. Since Greenspan has never
hesitated to talk down markets he thought were overextended in
the past, we have no reason to expect him not to take the path 
of least resistance and do nothing and let the markets settle
again. They meet again in December and could cut the rate again
then. The world will not be that much closer to a recession 
that another cut then could not provide the gentle nudge to
keep the direction positive.

Don't get me wrong. I am still long term bullish and feel the
market will continue on up. If we don't get the cut then we
will just back up some and start over again. The rally Friday
in the face of the Iraq problem and the FOMC meeting shows the
market wants to go up. It just doesn't like surprises.

The positive results for the week included Fridays close at
8919. Breaking the 8900 level again. What had been resistance
earlier may have been broken unless we fall back Monday.
Other market internals that were negative included the Nasdaq
which finished negative on Dell's drop and Internet stock
weakness. The worst performer for the week was the Russell-2000.
Down everyday the Russell is a leading indicator of possible
growing market weakness. On the flip side it has been up strong
the last three weeks and could be just profit taking. The 
bubble theory analysts are making noise again about the 
speculative excesses in the market and point to the Internet
mania as an example. A $9 IPO going to $69 on the first day !
It is only excessive if YOU were not in the group that got to 
buy it at $9!! I guess that includes me and everybody else I 
know. The were three million shares offered and 15 million
traded so that means each one changed hands five times. 

With the on again/off again bombing and the dueling agreements
every hour there is no way to forecast what will happen between
now and Monday. Wait, watch and listen. The market is news
driven and there is no shortage this week.

With this being options expiration week the market bias should
be up but wait for the FOMC meeting outcome before going long.

Good Luck,

Jim Brown
Editor


No trades to report today. I did venture back into the market
on the PUT side and will report on them when they are closed.



**************************************************************
BROKERS CORNER
**************************************************************

Short Term Down a Little, Long Term Up a Lot!

Timing is everything.  The recent run up is nothing short of
astonishing. Five hundred points on the Nasdaq, and 1500 on the 
Dow in just over  a month.  It has been a beautiful ride.  All 
major indices have set off new yearly MACD buy signals.  What 
does this mean?  The market will be in a 6 month rally mode.  
Anyone that studies charts can quickly surmise that this bull 
market has been subjected to 6-month rallies followed by three 
month corrections dating back to 95.  We are one month into the 
good stuff. However, yearly indicators almost always do nothing
for the short term trader.  We have to put our charts under a 
microscope and discover daily trends that will make us money.

My recent studies are showing an over-extended rally, and while
I firmly believe that we are in a very powerful upward market, 
I am advising short term caution. MACD's are somewhat overextended
and starting to role over, and the stochastics are putting off 
toppy signals.  This coupled with the yearly buy signals indicates
a short term pullback followed by another strong rally phase.

If you made a lot of money in this recent rally, sit on some of
it. Preservation is key.  I think we are going higher shortly but
not immediately.  When the time is right, overweight technology.
Earnings may be coming down on the S&P as a whole but they are 
being raised in the technology sector. Specifically, watch 
closely for a break-out on the Semiconductor Index around 320.
There is no greater place to be than in the semi's when they're 
moving.

Good Luck

L Monty McCutcheon
Associate Vice President
Fahenstock & Co.
1-800-735-0993




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

As of Market Close - Friday, November 13, 1998

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

DOW Industrials    8,600   9,300   8,920    Neutral  11.13 *
SPX S&P 500        1,080   1,190   1,126    Neutral  11.13 *
OEX S&P 100          525     570     554    Neutral  11.13 *
RUT Russell 2000     340     415     389    Neutral  10.27

NDX NASD 100       1,400   1,500   1,465    Neutral  11.13 *
MSH High Tech        620     700     678    Neutral  11.13 *
                   Major Support
Technology           /Resistance    Last    Posture/Since  Alert
****************************************************************
XCI Hardware         610     620     660    BULLISH  11.6
CWX Software         475     590     539    Neutral  10.27
SOX Semiconductor    265     325     292    BULLISH  11.10
NWX Networking       300     350     342    Neutral  10.23
INX Internet         225     280     259    Neutral  11.13 *


                   Major Support
Financial            /Resistance    Last    Posture/Since  Alert
****************************************************************
BIX Banking          610     670     634    Neutral  10.23
XBD Brokerage        415     500     444    Neutral  10.27
IUX Insurance        510     625     564    Neutral  10.30

                   Major Support
Other                /Resistance    Last    Posture/Since  Alert
****************************************************************
RLX Retail           660     750     732    Neutral  10.23
DRG Drug             670     720     706    Neutral  11.13 *
HCX Healthcare       680     725     706    Neutral  10.27
XAL Airline          230     320     288    Neutral  10.23
OIX Oil & Gas        230     270     259    Neutral  11.02



Posture Alert

Having reached a KEY MOMENT IN THE MARKET, we have turned
Neutral across the broad market indices and select industry
sectors including many of the high flying Technology sectors.
Although we remain bullish over the longer-term, we believe
that market risk will be greater this week than most given
the FMOC meeting on Tuesday and Iraq crisis.


A detailed description of our Market Posture and its
applications can be found on OI's website at:

http://www.OptionInvestor.com/marketposture



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

Industrial Production for Oct
Capacity Utilization for Oct

Tuesday:

Consumer Price Index Oct
LJR Redbook for 10/31
Ex Food & Energy Oct.
Business Investors Sept
BTM/Schroders Nov
API Oil Stocks Nov

Wednesday:

Import Prices Oct
Export Prices Oct

Thursday:

Weekly Jobless Claims Nov
Housing Starts Oct
Building Permits Oct
Phil Fed Survey Nov
Money Supply (M2) Nov

Friday:

No Releases


*****************************************************
Last weeks change for this weeks picks:
*****************************************************

Index	 Last	Week		
Dow	 8919	-55.87	Down 3 of 5 days	
Nasdq	 1848	- 8.57	Down 3 of 5 days	
$OEX	  554	- 4.09	Down 4 of 5 days	
$SPX	 1126	-14.81	Down 4 of 5 days	
$RUT	  389	-10.96	Down all 5 days	
$TRAN	 2871	-97.18	Down 3 of 5 days	
$VIX	28.19			
				
Stock	Price	Week		
				
YHOO	168.0	14.44	Even with 2 days down	
IBM	157.4	7.51	Now a split candidate	
SBL	53.00	4.13	New pick	
HWP	65.25	2.01	Earnings Monday	
SWY	51.25	1.25	New to the S&P	
MO	54.06	1.06	Settlement??	
MRK	145.6	0.70	Strong split candidate	
KMAG	7.25	0.01	Coming back	
AOL	140.0	0.00	Up $8.38 down 8.38	
PG	89.56	-0.44	At new high	
NETA	45.00	-1.26	Holding	
MYG	50.56	-1.31	Down Wed on profit taking	
DELL	63.94	-1.75	Now a put play	
TLAB	56.63	-1.84	Profit taking	
EMC	67.00	-2.06	Profit taking	
AMGN	80.38	-2.19	Profit taking	
CSCO	64.69	-2.76	Down with Nasdaq	
CMGI	69.63	-3.13	Now a split candidate	
LLY	83.63	-3.55	Profit taking	
				
Puts				
				
AVP	39.25	-3.13	Poor earnings	
DELL	63.94	-1.75	Now a put play	
HSY	65.81	-1.19	Halloween is over	

	
*****************************************************
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 ! 
*****************************************************

None this week.

*****************************************************
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.

*****************************************************
MRK - Merck $145.63 (+0.69)(+9.88)

BUY CALL DEC-140 MRK-LH OI=2309 at $8.88 SL=6.75, ITM $5.63
BUY CALL DEC-145 MRK-LI OI=1839 at $5.50 SL=3.50, ATM
BUY CALL*DEC-150 MRK-LJ OI= 688 at $2.88 SL=1.50  ** play**
BUY CALL JAN-150 MRK-AJ OI=6751 at $5.00 SL=3.25


chart
*****************************************************
MO - Philip Morris Companies  $54.06 (+1.06)

BUY CALL DEC-50 MO-LJ OI=7293  at $5.00, SL=3.00
BUY CALL DEC-55*MO-LK OI=6399  at $1.88, SL= .75 ** play**
BUY CALL JAN-55 MO-AK OI=11222 at $2.50, SL=1.25
BUY CALL MAR-60 MO-CL OI=2488  at $1.94, SL= .75


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 real time, CONTINOUSLY UPDATING, 
or delayed quotes for all exchanges.

If you are considering the volatile world of option trading 
you will find real time 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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card server or you may simply send an email to 
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or you may call us at 303-220-9218 and give us the 
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              11-15-98
Sunday                   2  of  6

© 1998 The Option Investor Newsletter. - All Rights Reserved
****************************************************
PICK SUMMARY
****************************************************
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)

See the Hedge Section for plays

*************************************************************
S&P-500 (SPX) $1125.72 (-14.81)(+42.17)(+28.00)(+14.25)(+72.18)

Market moving up:
BUY CALL NOV-1125  SPT-KE OI=10087 at $15.00 SL=12.00 ATM
BUY CALL NOV-1140  SPT-KH OI=1283  at $ 8.63 SL= 6.00 $15 OTM

Market moving down:
BUY PUT  NOV-1125  SPQ-WE OI=9481  at $11.00 SL= 8.00 ATM


CHART on S&P-500 (SPX) 
*****************************************************************
Russell-2000 (RUT) $389.36 (-10.06)(+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. After the drop last
week wait for the rally to resume before playing calls.

Market moving up:
BUY CALL NOV-390 RUZ-KR OI=426  at $3.38  SL=2.00
BUY CALL NOV-395 RUZ-KT OI=2445 at $1.50  SL= .50

Market moving down:
BUY PUT  NOV-390 RUZ-WR OI=112  at $ 6.50  SL=4.50


CHART on Russell-2000 (RUT) 
*****************************************************************
STOCKS ADDED TO THE PICK LIST
*****************************************************************

Calls

IBM  - International Business Machines
SBL  - Symbol Technologies, Inc.
MO   - Philip Morris

Puts

AVP  - Avon Products
DELL - Dell Computers



*****************************************************************
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:
 
LU $83.63 (-6.50) LU was bound to hit some profit-taking sooner 
or later after running up to a high of $91.63 this week (over 
$28.50 since we picked them on 10/11) - almost a 45% gain in 4 
weeks.  Although LU signed several multi-million $ contracts again 
this week, we feel they have hit another resistance level at $90.  
LU could break through this, but with the FED meeting on Tuesday 
and the telecom stocks tired from their last run it will take a 
strong rally to rejuvenate the sector.



PUTS: 

None.



STOCK SPLIT CANDIDATES 
*****************************************************************
Until the market recovers the number of split candidates worth
playing will be very thin.

MRK - Merck          (above $135)
EMC - EMC Corp
YHOO- Yahoo
CMGI- CMG Info       (vote 12/17)
IBM - IBM            Last announce was at $160

Recent split candidates that announced:

SLE - Sara Lee
AOL - American Online

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


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

None.

*****************************************************
STOCK OPTIONS - DRUGS
*****************************************************
MRK - Merck $145.63 (+0.69)(+9.88)

After a very strong 2 week run and a string of new highs, 
MRK peaked at $148.63 on Tuesday before pulling back with
a sector wide sell-off on Wednesday.  While these pullbacks
are uncomfortable, they are necessary for a continued bull
run.  Besides they provide excellent opportunities to jump
in on the dip.  

For months we've been waiting for Merck to approach the 
$150 level.  Why?  Because they have a history of splitting
at that level.  Their last split was 3:1 in May of '92 
near $150.  Before that they split 3:1 in April of '88
after reaching $180.  Several months ago, MRK said they 
would consider another split once the stock breached $150
again.  Now is our chance to get in before the announcement.
Nothing is a sure thing, but MRK has a BoD meeting 
scheduled for Tuesday, Nov. 24th.  That is only 7 trading 
days away.  Odds are good MRK will be close $150 by then.

News on the week:  Positive press releases on their anti-
inflammatory drug, Vioxx.  Which has re-ignited hope for 
a profitable future after MRK's loses a few patents in the
year 2000.  Upon FDA approval next year, Vioxx's potential 
market could reach as high as $3 bln by the year 2001 with 
over 100 million potential users worldwide.  Plus, MRK 
announced good news concerning Aggrastat, a platelet blocker, 
and Zocor, their cholesterol lowering drug. Both drugs 
continue to show positive data recent studies.

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 DEC-140 MRK-LH OI=2309 at $8.88 SL=6.75, ITM $5.63
BUY CALL DEC-145 MRK-LI OI=1839 at $5.50 SL=3.50, ATM
BUY CALL*DEC-150 MRK-LJ OI= 688 at $2.88 SL=1.50
BUY CALL JAN-150 MRK-AJ OI=6751 at $5.00 SL=3.25

SELL PUT DEC-140 MRK-XH OI= 781 B=2.75 A=3.13 ROI=8.7%
 *this is a 5 week play, keep your eye on it*

Picked on November 8th at $144.94      PE= 34
Change since picked      +$  0.69      52 week low =$ 85.31
Analysts Ratings     10-13-13-0-0      52 week high=$148.63
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 $83.63 (-3.55)(+6.38)(+3.32)(+2.43)(+1.88)

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

With the NASDAQ and the Dow negative most of the week, selling
pressure on LLY was strong.  It slowly dropped all week to 
profit taking after a strong previous four weeks.  LLY did
announce some good news with their drug ReoPro which is 
used to reduce the complications associated with angioplasty 
by preventing the formation of blood clots.  New reports 
showed that ReoPro reduced the risk of death by 57%.  
Plus, Everen Securities raised their target price for LLY 
from $88 to $94 per share.  LLY has now had a week to 
consolidate but wait for the FED meeting on Tuesday to 
see which direction the market takes before planning any 
new plays.

LLY along with 1999 Miss America, Nicole Johnson, announced 
that they will be launching a new campaign called the 
"Missing Millions" to alert both undiagnosed and diagnosed 
diabetes patients to routinely be checked and treated.
On an alternate note, LLY was selected by FEMALE (Formerly 
Employed Mothers at Leading Edge) as 1998 Family Friendly 
Business Winners.

BUY CALL DEC-80 LLY-LP OI= 965 at $6.13 SL=4.25  
BUY CALL DEC-85 LLY-LQ OI= 779 at $3.13 SL=1.50
BUY CALL JAN-85 LLY-AQ OI=2346 at $4.63 SL=3.25

NO PUT PLAY THIS WEEK.

Picked on Sept 12th at  $74.88	PE = 44  
Changed since picked    +$8.75	52 Week High= 87.88
Analysts Ratings   10-6-13-0-0	52 Week Low = 57.68
Last Earnings 10/21/98 est .51	Actual = .53
Next Earnings 02/05/99 est .55	Versus = .40

MACD Chart   CHART   NEWS   Zacks on LLY 
*****************************************************
AMGN - Amgen, Inc.  $80.38 (-2.19)(+4.00)

The world's largest independent biotechnology company, Amgen,
was founded 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.

There was a research report released this week that indicated
that the long-term prospects for the US biotech industry are
very encouraging.  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.  Two weeks ago AMGN announced 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 two weeks ago and then ran into
some profit taking 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.  AMGN is sitting at what looks
like a little bit of support.  We would like to see AMGN hold
at this support level and then start making new highs. Wait for
some upward movement in AMGN before initiating any new trades
from the long side.

BUY CALL DEC-80 AMQ-LP OI=1044 at $4.00, SL=2.50
BUY CALL DEC-85 AMQ-LQ OI=824  at $1.75, SL= .75
BUY CALL JAN-85 AMQ-AQ OI=3791 at $3.13, SL=1.50
BUY CALL APR-90 AMQ-DR OI=255  at $4.63, SL=3.00

Picked on Nov 8th at $82.56    PE=23
Change since picked   -2.19    52 week low =$46.63
Analysts Ratings 9-10-9-0-0    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 $63.94 (-1.75)(+.20)(+7.26)(+1.56)(+3.87)(-9.88)

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.

It is not often we have to write an obituary for a great play but
for those of us still in denial, Dell may be dead. We still think
Dell is a great company. Great earnings, great sales, growing at
+50%, opening new markets. We think the problems are many.

Everyone remembers when Dell was making huge price runs before 
every earnings announcement. We know for the last three years that
Dell has never disappointed. The stock is some what of a miracle
story. All fairy tales do come to an end. When Dell was making
the big moves and constantly surprising analysts there was a
significantly smaller number of shares outstanding. At 1.3 billion
shares it takes almost $200,000,000 in sales to add $.01 to profits.
$200 million just to make a penny. The point is this, at the 
beginning of 1997 there was only 150 million shares outstanding.
(3, 2:1 splits since then) Then $200 million in sales meant a $.10
change in earnings. This growth in sales was skyrocketing the
quarterly earnings every quarter. People grew accustomed to 
incredible results. Nothing lasts forever. Dell can still do
terrific but now it has reached the stage where the incredible
PE can no longer be supported by huge jumps in earnings. Yes I
know the world is a growth market for Dell. Dell stock will still
go up. It is just that the yield curve is flattening. Investors
will start looking at Dell as a long term buy and hold, make 15%
a year, and be happy stock. Traders will abandon the stock as
an earnings surprises continue to falter. I know this sounds 
like heresy but we have to face the facts. Look at the Gateway
earnings bounce. They surprised the street with $.51 vs estimates
of $.47. Sales were only up +43% and revenue +21% to $1.82 bil.
So how did Gateway's earnings jump so much when they only did one
third the volume of Dell? They only have 150 million shares.
Every $10 mil in profit amounts to $.06 cents per share. For
Dell every $10 mil in profit amounts to $.007 cents per share.
Big surprises are gone. No surprises, no fun. Dell can still be
a great company but it may not be a great play.

Compound the basic stock facts with the new competition. Gateway
is gaining market share with an aggressive marketing program.
Compaq has finally said "enough is enough" and announced an
aggressive move into direct sales which is expected to impact
Dell soon. Compaqs acquisition of Digital is going to take some
server business from Dell. The Asian markets are gearing up to
emulate the direct model as well. You know how small a profit
margin the Asian business models normally need to be successful.
It is far less than the 20-25% that Dell and Gateway are making.

Really, how long did you think the other computer manufacturers
were going to let Dell beat the heck out of them without an
aggressive response.

The flight out of Dell on Wednesday/Thursday/Friday, well over
100 million shares, was the handwriting on the wall. Sure funds
will still buy Dell and many retail investors will also. It is
still a great company. Just don't expect it to double every
year. The PE will sink from 68 to something more reasonable like
Gateway (27), Compaq (23). How does a PE shrink? From declines
in stock price or increased earnings without the stock price
rising. Dell's year EPS is estimated to be $.93. To decline to
a PE more like CPQ and GTW, say 30 the stock price would be
$27.90. A PE of 40 = $37.20, PE of 50 = $46.50. With the current
price at $64, can you see a future trend? It may not happen this
week or this month but it will happen. The bull market rally we
are having now could provide a soft landing for Dell. Slow drops
with intervening bumps but we expect the trend to be down. If
the Fed does not cut rates on Tuesday the drop will be drastic.  

BUY PUT  DEC-65 DLQ-XM OI=8170  at $5.38, SL=3.00
BUY PUT  JAN-65 DLQ-MM OI=5763  at $7.13, SL=5.00

MACD Chart   CHART   NEWS   Zacks on Dell 
*****************************************************
IBM - IBM $157.44 (+7.51)

Company Description:   The One and Only IBM.  For those of you 
who don't know what IBM does, they are one of the world's leaders 
in computer hardware, software and computer services.  Their 
product lines are cornucopia of PC's servers, mainframes, 
notebooks, printers, networking hardware, storage devices, 
telecom equip, and information and technology services.  They 
own Lotus, the creators of Lotus Notes.  Over half of their 
sales are outside the U.S.

Play Description:  Hitting all time highs this week, IBM is 
wandering into uncharted territory.  Despite the negative 
market most of the week, Big Blue continued to buck the 
trend.  It appears that IBM's recent quarterly earnings has
sparked a large wave of enthusiasm for the computer
behemoth's stock price and earnings potential.
Monday, Merrill Lynch's analyst, Steve Milunovich, said he 
boosted his 12-month share target price from $165 to $180.  
Wednesday, BT Alex Brown initiated coverage with a "buy".
Thursday, Thomas Kraemer, analyst with Morgan Stanley Dean 
Witter, raised his target price for IBM from $160 to $181 
citing several strong fundamentals.  In IBM's 3Q report they 
stated that they felt their growth could be contributed to 
their continuing investment for long-term growth through the 
implementation of new technologies like silicon geranium and 
silicon on insulators that yield faster micro-processor speeds 
at lower cost requirements. - (SEC Filing)  Proof of their new 
advancements were released Wednesday with IBM offering a 25 
gigabyte and a 22 gigabyte drive.  Companies taking the new 
drives include, but are not limited to, Gateway 2000 Inc, Hewlett 
Packard CO., and Micron Electronics Inc., IBM will also put 
these drives in their own machines.  

Friday's dip is our cue to jump on while Big Blue takes a
pause before its next journey in search of new highs.
We caution traders to wait until after the FED meeting on 
Tuesday, as the U.S. Treasury Secretary, Robert Rubin 
reminds us, "the global crisis is not over, the world 
financial markets appear to have settled down recently, but 
tough times are still ahead." -(Reuters).  With this in 
mind, watch for market reaction after Tuesday.  Good news 
could mean a good ride in the market.

News Update: IBM 3Q sales of Lotus Notes Email software 
beats those of Microsoft Corp.  IBM and Mentor Graphics 
Corp announce strategic licensing relationship.  IBM announces 
two 18.1 inch active matrix thin film Transistor flat panel 
monitors with an estimated resale price starting at $2849.00  
Monday IBM awarded $15 mill contract to Billing Concepts Corp. 
to provide facilities management and technical support.

BUY CALL DEC-155 IBM-LK OI= 2534 at $7.63 SL= 5.75
BUY CALL DEC-160 IBM-LL OI= 3325 at $4.75 SL= 3.25
BUY CALL JAN-160 IBM-AL OI= 4423 at $7.25 SL= 5.25
BUY CALL JAN-165 IBM-AM OI=  134 at $5.38 SL= 3.75

Picked on November 15th at $157.44     PE = 24
Change Since Picked     +\-  $0.00	     52 Week High= 159.87
Analysts Ratings        13-7-2-0-0	     52 Week Low =  95.25
Last Earnings 10-20 est. 1.53 actual 1.56	 surprise 1.96%
Next Earnings 01-18 est. 2.42		Versus 2.11

MACD Chart   CHART   NEWS   Zacks on IBM 
***************************************************
HWP - Hewlett-Packard Co.  $65.25 (+2.00) (+3.00) (+2.31)

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.  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.  HP considers itself one of the leaders in digital
imaging products and announced that it has received 21 awards
from leading business and trade magazines in the last three
months.

HP announces earnings on Monday.  HP has had a nice run since
mid-October.  As you know, there could be some profit taking
before the announcement or shortly after the announcement.  
Use Dell as a recent example.  HWP received an upgrade on
Wednesday, and the analyst set a target price of $80 based 
on increasing estimates and a multiple in the low 20's.

BUY CALL DEC-65 HWP-LM OI=2404 at $3.50, SL=2.00
BUY CALL DEC-70 HWP-LN OI=930  at $1.38, SL= .50
BUY CALL JAN-70 HWP-AN OI=4843 at $2.38, SL=1.00
BUY CALL FEB-70 HWP-BN OI=220  at $3.38, SL=2.00

Picked on Nov 1st at $60.25    PE=17
Change since picked   +5.00    52 week low =$47.06
Analysts Ratings 9-7-10-0-0    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 
*****************************************************
SBL - Symbol Technologies, Inc.  $53.00  (+4.13)

Symbol Technologies, Inc. is a global leader in mobile
computing and communications systems with innovative customer
solutions based on wireless local area networking, application
specific mobile computing and bar code data capture.  Symbol's
wireless LAN solutions are installed at more than 30,000
customer locations worldwide and support more than six million
Symbol scanners and hand-held computers.  Symbol provides
point-of-activity computing solutions for retailing,
transportation and distribution logistics, parcel and postal
delivery, healthcare, manufacturing and other industries.

Last week SBL acquired a company in Finland.  SBL now has
eleven European subsidiaries.  Revenues are growing rapidly, as
SBL evolves from a bar code management focus to a balanced
supplier of wireless mobile data transaction solutions.  SBL is
laying the groundwork for the future.  It formed a strategic
alliance earlier this year with Cisco Systems and last month
the venture announced a complete solution for providing end
users with integrated wireless voice and data services.

SBL closed at a new high on Friday.  It took out an old high
that it had attempted to break twice in the last 3 months.  You
like to see a stock set a new high after it has attempted it
several times before.  This can mean that it will continue its
move up.  SBL has great looking short term chart.

BUY CALL DEC-50 SBL-LJ OI=34   at $5.25, SL=3.25
BUY CALL JAN-50 SBL-AJ OI=445  at $6.38, SL=4.25
BUY CALL JAN-55 SBL-AK OI=677  at $4.25, SL=2.50
BUY CALL APR-55 SBL-DK OI=102  at $6.50, SL=4.25

Picked on Nov 15th at $53.00   PE=28
Change since picked    +0.00   52 week low =$24.00
Analysts Ratings   2-4-3-0-0   52 week high=$53.00
Last earnings   9-98 est=.38   actual=.40
Next earnings   2-19 est=.40   versus=.33

MACD Chart   CHART   NEWS   Zacks on SBL 
*****************************************************
EMC - EMC Corporation  $67.00 (-2.06)(+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.

A couple of weeks ago, 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. Last week EMC announced that Snap-
On Tools will be implementing an EMC Symmetrix Enterprise
Storage system and software.  Snap-On was experiencing what
many businesses do.  The growth of its applications were
being throttled because its servers were constantly running out
of disk space.

EMC has a strong growth rate and is a good momentum stock.  EMC
pulled back last week to what looks like a little bit of
support.  We would like to see EMC hold at this support level
and then start making new highs. Wait for some upward movement
in EMC before initiating any new trades from the long side.

BUY CALL DEC-65 EMC-LM OI=1601  at $5.38, SL=3.50
BUY CALL DEC-70 EMC-LN OI=1098  at $2.56, SL=1.25
BUY CALL JAN-70 EMC-AN OI=2539  at $4.38, SL=2.75
BUY CALL APR-75 EMC-DO OI=176   at $5.25, SL=3.25

Picked on Nov 8th at $69.06     PE=36
Change since picked   -2.06     52 week low =$23.50
Analysts Ratings 10-4-0-0-0     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 
*****************************************************
STOCK OPTIONS - NETWORKING
*****************************************************
CSCO - Cisco Systems $64.69 (-$2.76)(+4.44)(+4.31)(+3.31)

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 took a small step backward last week.  After surging 
over $24.00 in less than a month, Cisco allowed some profit 
taking.  We should begin to see some upward movement this 
week as buyers look forward to the possible ratecut 
announcement.
 
In earlier news this past week, Cisco and VocalTech announced 
Wednesday that the two companies are developing "interoper-
ability between their telephony products".  The deal will help 
establish industry standards to create new networks that 
support both voice and data traffic, a replacement to phone 
and Internet networks that currently exist.  Analysts at 
Soundview upgraded CSCO from a "buy" to a "strong buy" and 
raised their price target to $87.00.  Also in the news, CSCO 
announced its new NetRanger intrusion detection system. The 
new device provides "reliable, secure and cost-effective
solutions" to monitor networks from both internal and external
attacks. 

BUY CALL DEC-60 CYQ-LL OI=2682 at $6.63 SL=4.75, ITM
BUY CALL DEC-65 CYQ-LM OI=7659 at $3.38 SL=1.50 
BUY CALL DEC-70 CYQ-LN OI=8627 at $1.31 SL=0.00
BUY CALL JAN-70 CYQ-AN OI=7621 at $2.69 SL=1.25

LEAP PLAY:

BUY LEAP JAN-2000-70 LCY-AN at $12.13 SL= 9.50 
BUY LEAP JAN-2001-70 ZCY-AM at $17.25 SL=14.00

Picked on Oct   8th   $46.69		PE= 69 
Change since picked  +$17.99		52 week low =$31.76 
Analysts Ratings 15-14-0-0-0		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. $56.63 (-1.84)(+3.47)(+.20)(+9.87)

Tellabs spent the week fighting the market's downward
pressure and eventually lost.  However, we feel TLAB 
has plenty of long term potential and if the market
can rally beyond Tuesday it should give TLAB the fuel
they need to break through resistance at $60 (which 
they bounced off of on Thursday).  Conservative players
should wait until after the FOMC meeting on Tuesday and
really conservative players should wait until TLAB 
closes above $60.  After that, expect TLAB to run to 
$70. 

News for the week was sparse but positive with a 3 year 
deal, estimated around $150 mln, with Priority Telecom.  
The deal entitles an extension of their CABLESPAN services 
to homes in Paris, France and regions the Netherlands.  

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 DEC-55 TEQ-LK OI=2057 at $5.25 SL=3.50
BUY CALL DEC-60 TEQ-LL OI=3500 at $2.88 SL=1.50 
BUY CALL MAR-60 TEQ-CL OI= 618 at $6.50 SL=4.75, plenty of time.

NO PUT PLAY THIS WEEK.

Picked on October 22nd at $52.56       PE = 28 
Change since picked      +$ 4.07       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 
****************************************************
STOCK OPTIONS - INTERNET  
****************************************************
AOL - America Online $140.00 (0.00)(+12.62)(+12.44)(+12.50)

AOL started Friday morning strong, opening up $1.75.  Intraday
trading rode AOL up as high as $144.44 before profit takers 
decided to get out while they could.  With only two more 
trading days left until AOL splits 2:1, we could see AOL test 
its recently acquired 52 week high of $149.00.  Normally, a 
stock will either go down or stay flat after a split as 
investors sell their positions.  This could happen on the 
day of the split.  But, AOL is not your 'normal' stock. 
Holding over the split is cautioned and is considered an 
aggressive strategy.  It is well advised to set your stop 
losses according to your risk profile.

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 

In news earlier this past week, AOL announced that worldwide 
membership has now exceeded 14 million users (not including 
CompuServe).  Goldman Sach's upgrade of E-Bay's price target 
and Volpe Brown's (brokerage) positive comments about Excite 
helped fuel the huge momentum in the entire Internet sector 
this week. AOL purchased PersonaLogic, a consumer buying guide 
company, to make e-commerce easier for its 14 million members.

*these will all split into 2 contracts at half the 
strike price after 11/17.  Contact your broker for 
the new strikes after Tuesday..

BUY CALL DEC-135 AOL-LG OI=2418 at $14.13 SL=11.25, ITM
BUY CALL DEC-140 AOL-LH OI=3140 at $11.38 SL= 8.75 
BUY CALL DEC-145 AOL-LI OI=3717 at $ 9.13 SL= 6.75
BUY CALL JAN-150 AOL-AW OI= 324 at $10.75 SL= 8.75

SPLIT PLAY ONLY - No fundamentals

MACD Chart   CHART   NEWS   Zacks on AOL
****************************************************
YHOO - Yahoo Inc. $168.00 (+14.44)

This past week, we continually saw daily double digit trading 
ranges with Wednesday trading as much as $17.88 intraday.  
Yahoo's $5.25 drop on Friday is a result of profit taking.  
However, this is a prime opportunity to start a new position 
in Yahoo.  Remember, Yahoo, like most Internet stocks can move 
quite violently, so be sure to set your stops.

Where do we start?  Unless you've been living under a rock,
the media has been happy to tell you that Internet mania 
is back!  Is it all just a speculation bubble or the eager
beginnings of the industry for the next century.  Analysts
and journalists alike can't seem to make up their minds.
However, the public has.  Mr. Joe Investor has decided that
the net is the place to be.  In the growing legion of net
stocks that fuel the frenzy, a few are head and shoulders
above the rest. Yahoo is one of the tallest.  Since Oct. 9th
it has rocketed from $105 to over $180 for a 70% gain.
In the world of Internet stocks, words like overvalued, 
overbought, and P/E have no meaning.  Therefore we submit
Yahoo as a momentum candidate that also qualifies as a 
split candidate.  Yahoo's last split was June of this year.
They announced their split after reaching the $180 level.

For those of you who don't know, investors have been
driving the recent wave of Internet mania with eggnog dreams.
There is a growing expectation that 1998 will be the year
that the web becomes a significant source of income and
sales for the holiday shopping season.  For weeks analysts
and corporations have been trying to out do themselves with
higher and higher estimates for just how much business the
Internet will supply by the year 2001 and beyond.

On Tuesday, Yahoo's Sports division became an official sponsor 
of the 49th NHL All-Star Game.  In addition to that, Yahoo's 
Employment section on the web signed a deal with 
VaultReports.com, a leading Internet career-research and 
recruiting company.  The two deals should give Yahoo's already 
expansive content another boost.  Wednesday proved that even 
search engines can take over the world as Yahoo announced 
the launching of Yahoo Espana, a version specifically 
designed for users in Spain.  This arrangement should increase 
Yahoo's exposure by over 2 million new viewers.

The Amazing Internet search engine/web portal/online 
community/get your free email account provider.  They are 
the #1 web site on the planet with 115 mln page views a day.

>>due to extreme valuations AND volatility, these are considered 
HIGH RISK plays.  We are not responsible for upset stomachs.<<

BUY CALL DEC-165 YHQ-LM OI= 391 at $17.38 SL=14.00, ITM
BUY CALL DEC-170 YHQ-LN OI=1145 at $15.50 SL=12.25 
BUY CALL DEC-175 YHQ-LO OI= 407 at $13.00 SL=10.50
BUY CALL JAN-180 YHU-AP OI=  57 at $16.25 SL=13.50

PURELY MOMENTUM PLAY - NO FUNDAMENTALS

MACD Chart   CHART   NEWS   Zacks on YHOO
****************************************************
CMGI - $69.63 (-3.13)(+15.88)(+10.38)
 
Direct marketer/mailing list provider gone Internet. This 
company has really moving towards the future. Originally a 
mailing list compiler/sales company, they have branched out 
to the 'net. Now almost half their income comes from net 
related services. Many consider them an Internet fund rolled 
into one stock. They have stakes in over a 25 different Internet 
companies. They own 23% of LYCOS and 29% of Geocities.

CMGI spent this week riding a roller coaster and ended up 
at $69.63 and (-$3.13) for the week.  This to be 
expected with the NASDAQ negative most of the week.  Investors 
should hold on, the Christmas shopping craze has not yet begun. 
"Most people expected some seasonality to appear in these 
companies in the third quarter and it didn't happen, so the 
fourth quarter could be gangbusters" said Ryan Jacobs, portfolio 
manager with the Internet Fund. - (Red Herring)  There is a lot 
of good news that is driving the Internet stocks up.  CMGI 
contributing with their investment to Virtual Ink, which allows 
people to share workflow over the Internet.  We were unable to 
confirm, but sources tell us that CMGI will be presenting a 
shareholder vote to increase outstanding shares from 40 mln to 
100 mln on Dec 17th 1998.  Currently there are 23.1 million 
shares outstanding. If adopted could allow two 2:1 splits.  
This is a definite possibility because last April (21st) CMGI
announced a 2:1 split after the stock shot above $90.00.
With the current craze in Internet stocks, look for CMGI to 
continue to climb but beware of the FED meeting on Tuesday 
before taking any new positions.  CMGI may have been down this 
week, but it deserved a break after its steep run up.

Planet Direct announces the addition of eight new content 
partners providing valuable information and community 
features to registered members.  

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

BUY CALL DEC-65 QGC-LM OI= 178 at $10.75 SL=  8.75
BUY CALL DEC-70 QGC-LN OI= 366 at $ 8.00 SL=  6.25
BUY CALL DEC-75 QGC-LO OI= 470 at $ 6.00 SL=  4.25
BUY CALL MAR-70 QGC-CN OI= 147 at $13.88 SL= 11.25

NO PUT PLAY THIS WEEK.

Picked on Oct. 22nd  at $52.25	PE = 126
Change since picked   + $17.38	52 Week High= 91.75
Analysts Ratings     2-5-1-0-0	52 Week Low =  9.56
Last Earnings 9-24  est - 0.51 actual 1.27  Surprise +330%
Next Earnings 12-10 est - 0.60 Versus  -.29

MACD Chart   CHART   NEWS   Zacks on CMGI 
****************************************************
STOCK OPTIONS - MISC
****************************************************
NETA - Network Associates  $45.00 (-1.25)(+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.

I 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.  A couple of weeks ago
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.

News from last week was NETA announced a new product that
combines Dr. Solomon's Software search engine with NETA's
flagship VirusScan technology, called Total Virus Defense 4.0. 
The new product has better heuristics so it can detect more
unknown viruses.  NETA also announced participation in the the
Microsoft Certified Solution Provider Alliance.  Through the
alliance, NETA will be offering product discounts and special
training incentives to members.

NETA ran into some profit taking and has lost some steam.  It
had one good up day last week and the rest of the days were
down. The next level of resistance is at $47-$48.  NETA's short
terms moving averages are still intact, and as long as it stays
above its 200 day moving average we still think it has some
potential to move up.

BUY CALL DEC-45 CQM-LI OI=1404  at $3.38, SL=1.75
BUY CALL DEC-50 CQM-LJ OI=1134  at $1.31, SL= .50
BUY CALL MAR-50 CQM-CJ OI=685   at $4.38, SL=2.25

Picked on Oct 25th at $39.06    PE=22
Change since picked    +5.94    52 week low =$25.50
Analysts Ratings  8-12-0-0-0    52 week high=$56.88
Last earnings   9-98 est=.41    actual=.38
Next earnings   1-20 est=.45    versus=.33

MACD Chart   CHART   NEWS   Zacks on NETA 
****************************************************
MO - Philip Morris Companies  $54.06 (+1.06)

The house the Marlboro Man built, MO is the world's largest
tobacco marketer; it controls about half of the US tobacco
market, and its Marlboro brand is one of the world's two most
valuable brands (Coca-Cola is the other). The company also
makes such brands as Virginia Slims and Benson & Hedges.  MO
gets almost half of its revenues (but only one-third of its
profits) from food and beer subsidiaries that include Kraft
(the US's largest food company and marketer of such leading
brands as Jell-O, Oscar Mayer, and Post cereals) and Miller
Brewing (ranked #2 among US beer makers, after Anheuser-Busch).
It also operates financial services and real estate investment
businesses. 

It was announced this weekend that the tobacco industry and
state attorneys general expect to complete a $206 billion
settlement to resolve health care claims.  This would be the
largest settlement of a civil lawsuit in US history.  The
current settlement proposal is less than the $368 billion
proposed in June, 1997.  The settlement would pay participating
states over the next 25 years.  If tobacco companies choose to
finance the settlement deal by raising prices, the cost of a
pack of cigarettes could rise by 35 cents over the next five
years.  Also this week MO announced a $115.5 million settlement
of shareholder lawsuits.

MO set a new 52 week high last week, and has been on a great
run since mid-September.  There are a couple of ways to look at
the recent lawsuit settlements. One school of thought would
suggest that now that the numbers are known, along with MO's
ability to finance the settlements, the fact that the
uncertainty is gone would cause the stock to go up.  As we all
know in this crazy business, you can never be sure you have the
correct read.  We would like to see MO move above its recent
high on strong volume.

BUY CALL DEC-50 MO-LJ OI=7293  at $5.00, SL=3.00
BUY CALL DEC-55 MO-LK OI=6399  at $1.88, SL= .75
BUY CALL JAN-55 MO-AK OI=11222 at $2.50, SL=1.25
BUY CALL MAR-60 MO-CL OI=2488  at $1.94, SL= .75

Picked on Nov 15th at $54.06   PE=17
Change since picked    +0.00   52 week low =$34.75
Analysts Ratings   3-6-4-1-1   52 week high=$54.50
Last earnings   9-98 est=.83   actual=.81
Next earnings   1-28 est=.72   versus=.66

MACD Chart   CHART   NEWS   Zacks on MO 
****************************************************
PG - Procter & Gamble $89.56 (-.44)(+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 said it is seeking bidders for its Hawaiian Punch brand.
The brand represents about 3% of PG's sales.  PG has been
remaking itself in an effort to concentrate on what it sees as
its key brands.  PG is hoping to boost profit and double its
sales over the next 10 years as part of its "Organization 2005" plan.

PG has also been getting a lot of press 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 that they
are changing the way they compensate their ad agencies for
creative, sales producing ads. Instead of paying agencies a
commission on what the ad costs, they are going to test two
different payment systems.  Both systems would tie agency pay
directly to PG's revenue, rewarding the ad agency when sales
increase.  PG also indicated that they want to find a system
that is "media-neutral".

PG has had a nice run since mid-September.  As you can tell by
the weekly changes above, the rise is definitely decelerating. 
Two weeks ago, PG had trouble breaking $90 and this week it had
trouble breaking $91.  We are leaving them on the play list
because we feel if PG can break $91, it will be an easy run to
its 52 week high of $94.

BUY CALL DEC-90 PG-LR OI=2756  at $3.38, SL=1.75
BUY CALL DEC-95 PG-LS OI=2148  at $1.31, SL= .50
BUY CALL JAN-95 PG-AS OI=3272  at $2.38, SL=1.00
BUY CALL APR-95 PG-DS OI=481   at $5.38, SL=3.00

Picked on Oct 18th at $83.75   PE=28
Change since picked    +5.81   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 $51.25 (+1.25)(+2.06)

This is one of those times where the numbers, the news, and 
the charts don't add up.  For days now Safeway's volume 
has been gaining momentum heading into Thursday when SWY
was added to the S&P 500.  Index funds who track the fund
were forced to buy into this new addition creating a lot
of traffic for SWY's stock.  Evidently KKR, a private
buyout firm, was planning to sell 20 mln shares of SWY
on Thursday to coincide with it being added to the S&P.
Morgan Stanley handled the transaction for them.  The 
NYSE is conducting an investigation because after trading
near $50 to $51 all day, minutes before the close, the
specialists that was handling SWY marked the price up 
$4.  This allowed KKR and Morgan Stanley to sell those
20 mln shares at $55.  What a deal! [some of our readers
made some good returns with open limit sell orders].  But
SWY's stock price promptly dropped back to close the day
at $50.50 (+1.31 for Thursday).  NYSE is checking to see
if any impropriety took place near the close of the day.
Fortunately for any option players who missed the spike
on Thursday, SWY spiked again on Friday up to $53.00.
SWY's stock should continue to climb as strong volume
pushes the price higher (at least for the next several
days).  

News on the week:  Safeway's Canadian subsidiary may have
prevented a strike vote with a tentative settlement for a 
local union representing 4000 employees.  Safeway may 
start to feel some tighter competition with Albertson's
planning a merger with American Stores which would create
the nation's largest food store chain.

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 DEC-47.50 SWY-LW OI=1195 at $4.75 SL=3.00, ITM $3.75
BUY CALL DEC-50.00 SWY-LJ OI=5054 at $2.94 SL=1.50
BUY CALL DEC-55.00 SWY-LK OI= 549 at $1.06 SL= .00
BUY CALL JAN-55.00 SWY-AK OI= 318 at $1.50 SL= .75

NO PUT PLAY THIS WEEK.

No fundamentals - News Event play only

MACD Chart   CHART   NEWS   Zacks on SWY 
****************************************************
MYG - Maytag $50.56 (-1.32)(+2.07)(+2.56)

Once again MYG has bounced off resistance at $52 for the
3rd time in recent history.  However, it has managed to 
hold on to its big gains from its 4 week run.  The bad 
news is MYG dropped with the Dow early this week.  The
good news is MYG rose with the Dow later in the week.
Thus, if we don't get Greenspammed on Tuesday, MYG should
have enough momentum to break through $52 and keep going.
And if we don't get a rate cut....

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 DEC-50 MYG-LJ OI= 576 at $2.13 SL=1.00 
BUY CALL JAN-50 MYG-AJ OI=3175 at $2.63 SL=1.25 

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 (-0.00)(+1.63)(+.88)(+1.66)

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.

After dropping $.38 Thursday, Komag recovered to close the 
week unchanged.  As a reminder, we put KMAG into our long 
shot category based on the large rise in recent insider 
buying.  Several of Komag's directors and officers have 
been picking up stock in 20K to 30K share chunks.  Obviously 
this would lead one to believe they know something we don't.  
However, sometimes insiders are buying for an event that is 
a few months (or years) down the road.  Thus, we suggest the 
March plays for a high risk trade like this.

*high risk*
BUY CALL DEC-5.00 KMQ-LA OI=440 at $2.63 SL=1.25
BUY CALL DEC-7.50 KMQ-LU OI=423 at $0.88 SL= .00
BUY CALL MAR-5.00 KMQ-CA OI=532 at $3.00 SL=1.50
BUY CALL*MAR-7.50 KMQ-CU OI=611 at $1.75 SL=1.00
BUY CALL MAR-10   KMQ-CB OI=205 at $1.00 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             11-15-98
Sunday                4  of  7

COVERED CALL SECTION FOR NOVEMBER 15, 1998
© 1998 The Option Investor Newsletter. - All Rights Reserved
*******************************************
The market is now being spooked by uncertainties concerning Iraq
and whether the Fed will cut interest rates again. Nevertheless,
underneath it all, many technically strong stocks are rebounding
well. One of the most important of the vital signs is the put/call
ratio. The current trend is still down even with the extremely
overbought conditions. The optimism has yet to become excessive
and thus the market could easily move higher after it digests the
recent flurry of pent-up demand. A far as the sectors go; the new
trouble in the Middle East may boost oil prices but the service
group (composed of the small oil stocks that we use for covered
calls) is turning somewhat bearish. Gold stocks look good if you
are anticipating a war but the call option premiums aren't very
attractive with the recent monetary rally now fading. Many of the
smaller tech/Internet stocks have already advanced significantly,
much better than those in the Dow, and now they are susceptible to
large corrections. Basically, even though the market may seem to
be struggling for direction, it has provided an excellent environ-
ment for the success of specific stocks. These strong issues will
present buying opportunities as further backing and filling takes
place. It is our goal to find the positions that provide enough
downside protection to weather the near-term backpedaling when it
occurs. With that focus in mind, this week's plays be a mixture of
moderately bullish stocks with excellent long-term potential and
some technically supported ITM positions for the conservative, low
risk investors...Good Luck!


SUMMARY OF PREVIOUS PICKS (1 week left for the November strikes)
******************************************************************
Stock  Price  Currnt Mon-Strike Opt    Profit   ROI  Annual
Sym    Picked Price      Price  Bid    /Loss         ROI 

TALK    6.88  10.75  Nov- 5.00  2.75  *$ 0.87   21%  220%
NTKI    5.56   8.75  Nov- 5.00  1.31  *$ 0.75   18%  184%
GALTF  15.75  15.00  Nov-15.00  2.13   $ 1.38   10%  176%
ABTE    4.84   7.19  Nov- 5.00  0.56  *$ 0.72   17%  175%
SMTL    7.75   8.13  Nov- 7.50  1.13  *$ 0.88   13%  173%
PMRX   10.00  10.56  Nov-10.00  0.94  *$ 0.94   10%  151%
CDNW    8.25  11.50  Nov- 7.50  1.69  *$ 0.94   14%  149%
PMRY   18.75  19.00  Nov-17.50  2.13  *$ 0.88    5%  138%
VIP    14.06  13.31  Nov-12.50  2.75  *$ 1.19   11%  137%
MRVT   10.38  13.75  Nov-10.00  1.31  *$ 0.93   10%  134%
NSTA   18.25  21.75  Nov-15.00  4.13  *$ 0.88    6%  126%
NCSS   17.63  21.13  Nov-17.50  1.25  *$ 1.12    7%  119%
ICST   10.75  13.56  Nov-10.00  1.94  *$ 1.19   14%  117%
IKN     7.44   9.19  Nov- 7.50  0.69  *$ 0.75   11%  116%
PILL    8.81  10.63  Nov- 7.50  2.06  *$ 0.75   11%  116%
VSVR   12.75  12.75  Nov-12.50  1.25  *$ 1.00    9%  113%
NMR    12.31  16.00  Nov-12.50  0.81  *$ 1.00    9%  113%
DIMD    5.84   5.13  Nov- 5.00  1.13  *$ 0.29    6%  107%
MOGN    8.38   7.88  Nov- 7.50  1.44  *$ 0.56    8%  105%
SUPX   10.59  10.00  Nov-10.00  1.50   $ 0.91   10%  104%
MCHM    5.69   8.00  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  10.00  Nov-10.00  1.69   $ 0.69    7%   97%
PRMS   13.25  12.88  Nov-12.50  1.19  *$ 0.44    4%   95%
VIRS   11.75  12.19  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  12.38  Nov-10.00  2.44  *$ 0.88   10%   84%
BTIM   12.25  13.50  Nov-10.00  2.56  *$ 0.31    3%   83%
PILL    8.50  10.63  Nov- 7.50  1.75  *$ 0.75   11%   83%
PSCX    9.19   9.38  Nov- 7.50  2.13  *$ 0.44    6%   81%
BTIM   10.56  13.50  Nov- 7.50  3.50  *$ 0.44    6%   81%
DSLGF  12.31  13.19  Nov-10.00  2.75  *$ 0.44    5%   80%
TWMC   20.63  21.25  Nov-17.50  4.13  *$ 1.00    6%   79%
POWI   11.50  20.13  Nov-10.00  2.25  *$ 0.75    8%   70%
DTLN   29.88  32.63  Nov-25.00  6.00  *$ 1.12    5%   68%
CDRD   18.00  34.13  Nov-15.00  4.25  *$ 1.25    9%   68%
RFMD   24.00  25.13  Nov-22.50  2.25  *$ 0.75    3%   60%
CIEN   17.13  17.13  Nov-15.00  2.44  *$ 0.31    2%   55%
GALTF  15.75  15.00  Nov-12.50  3.63  *$ 0.38    3%   54%
ENMD   24.63  23.00  Nov-20.00  5.75  *$ 1.12    6%   52%
ICOS   19.63  20.25  Nov-17.50  3.25  *$ 1.12    7%   51%
VIRS   12.38  12.19  Nov-10.00  2.75  *$ 0.37    4%   50%
ICOS   17.38  20.25  Nov-15.00  3.13  *$ 0.75    5%   46%
KNT    16.63  17.88  Nov-15.00  2.00  *$ 0.37    3%   44%
SNAP   15.75  14.94  Nov-12.50  3.63  *$ 0.38    3%   41%
TLC    26.13  26.44  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  26.75  Nov-15.00  4.13  *$ 0.63    4%   38%
ELE    24.06  26.31  Nov-22.50  2.25  *$ 0.69    3%   27%
ALYD    7.00   6.06  Nov- 7.50  0.50   $-0.44   -7%    0%
---------------------------------------------------------
PRLS    8.00   8.06  Dec- 7.50  1.63  *$ 1.13   18%  154%
SDRC   16.88  17.50  Dec-17.50  1.25   $ 1.87   12%  104%
EGGS    9.06  13.13  Dec- 7.50  2.31  *$ 0.75   11%   97%
PILL   10.81  10.63  Dec-10.00  1.69  *$ 0.88   10%   90%
USWB   18.63  18.19  Dec-17.50  2.69  *$ 1.56   10%   85%
CIEN   17.13  17.13  Dec-15.00  3.38  *$ 1.25    9%   79%
EXDS   34.50  34.13  Dec-30.00  6.63  *$ 2.13    8%   66%
NMR    17.13  16.00  Dec-17.50  1.38   $ 0.25    2%   14%
GMGC    7.00   5.88  Dec- 7.50  1.06   $-0.06   -1%    0%
PMTC   16.13  14.81  Dec-17.50  1.06   $-0.26   -2%    0%

NON-MARGIN CALCULATIONS:
ROI is equal to the profit (or loss) divided by the cost-basis.
Annual ROI represents the return on a yearly basis (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   

ONSL   21.56  Nov-20.00  QOL KD 2.25 983    19.31   3.57%   3.57%
TALK   10.88  Nov-10.00  QQK KB 1.38 3674    9.50   5.26%   5.26%
-----------------------------------------------------------------
ATVI   13.56  Dec-12.50  AQV LV 2.00 34     11.56   8.13%   8.13%
AWRE   16.88  Dec-15.00  WUQ LC 2.75 184    14.13   6.16%   6.16%
AWRE   16.88  Dec-17.50  WUQ LW 1.50 165    15.38  13.78%   9.75%
ESSI    7.94  Dec- 7.50  QES LU 1.19 46      6.75  11.11%  11.11%
OMKT    8.00  Dec- 7.50  OQM LU 1.31 168     6.69  12.11%  12.11%
PLX    18.63  Dec-15.00  PLX LC 4.25 0      14.38   4.31%   4.31%
PLX    18.63  Dec-17.50  PLX LW 2.75 50     15.88  10.20%  10.20%
PMRX   10.69  Dec-10.00  QPA LB 1.50 105     9.19   8.81%   8.81%
SGI    13.06  Dec-12.50  SGI LV 1.31 1032   11.75   6.38%   6.38%
TSIX   11.44  Dec-10.00  QXS LB 2.13 90      9.31   7.41%   7.41%
VIRS   12.19  Dec-10.00  VQP LB 3.00 200     9.19   8.81%   8.81%


Sequenced by RC 
******************************************************************
Stock  Price  Mon-Strike Option Opt  Open   Cost   RC      RNC
Sym               Price  Symbol Bid  Intr   Basis   

TALK   10.88  Nov-10.00  QQK KB 1.38 3674    9.50   5.26%   5.26%
ONSL   21.56  Nov-20.00  QOL KD 2.25 983    19.31   3.57%   3.57%
-----------------------------------------------------------------
AWRE   16.88  Dec-17.50  WUQ LW 1.50 165    15.38  13.78%   9.75%
OMKT    8.00  Dec- 7.50  OQM LU 1.31 168     6.69  12.11%  12.11%
ESSI    7.94  Dec- 7.50  QES LU 1.19 46      6.75  11.11%  11.11%
PLX    18.63  Dec-17.50  PLX LW 2.75 50     15.88  10.20%  10.20%
PMRX   10.69  Dec-10.00  QPA LB 1.50 105     9.19   8.81%   8.81%
VIRS   12.19  Dec-10.00  VQP LB 3.00 200     9.19   8.81%   8.81%
ATVI   13.56  Dec-12.50  AQV LV 2.00 34     11.56   8.13%   8.13%
TSIX   11.44  Dec-10.00  QXS LB 2.13 90      9.31   7.41%   7.41%
SGI    13.06  Dec-12.50  SGI LV 1.31 1032   11.75   6.38%   6.38%
AWRE   16.88  Dec-15.00  WUQ LC 2.75 184    14.13   6.16%   6.16%
PLX    18.63  Dec-15.00  PLX LC 4.25 0      14.38   4.31%   4.31%


Sequenced by RNC 
******************************************************************
Stock  Price  Mon-Strike Option Opt  Open   Cost   RC      RNC
Sym               Price  Symbol Bid  Intr   Basis   

TALK   10.88  Nov-10.00  QQK KB 1.38 3674    9.50   5.26%   5.26%
ONSL   21.56  Nov-20.00  QOL KD 2.25 983    19.31   3.57%   3.57%
-----------------------------------------------------------------
OMKT    8.00  Dec- 7.50  OQM LU 1.31 168     6.69  12.11%  12.11%
ESSI    7.94  Dec- 7.50  QES LU 1.19 46      6.75  11.11%  11.11%
PLX    18.63  Dec-17.50  PLX LW 2.75 50     15.88  10.20%  10.20%
AWRE   16.88  Dec-17.50  WUQ LW 1.50 165    15.38  13.78%   9.75%
PMRX   10.69  Dec-10.00  QPA LB 1.50 105     9.19   8.81%   8.81%
VIRS   12.19  Dec-10.00  VQP LB 3.00 200     9.19   8.81%   8.81%
ATVI   13.56  Dec-12.50  AQV LV 2.00 34     11.56   8.13%   8.13%
TSIX   11.44  Dec-10.00  QXS LB 2.13 90      9.31   7.41%   7.41%
SGI    13.06  Dec-12.50  SGI LV 1.31 1032   11.75   6.38%   6.38%
AWRE   16.88  Dec-15.00  WUQ LC 2.75 184    14.13   6.16%   6.16%
PLX    18.63  Dec-15.00  PLX LC 4.25 0      14.38   4.31%   4.31%


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 pd - Prem received = break-even price)
**************************************************
ONSL - Onsale Inc.  $21.56  *** Internet E-commerce ***

ONSALE is a leading electronic retailer pioneering an efficient
and entertaining new distribution channel; the interactive online
auction. Internet stocks are likely to benefit from the holiday
shopping. As a group, they have experienced a stunning surge in
stock price as e-commerce companies gear up for the Christmas
season. ONSL recently recorded its 8 millionth bid on its website
which comes less than two months after the company hit the 7 mil.
bid plateau. ONSALE also teamed with Yahoo! in the third quarter
to offer person-to-person online auctions. A slight correction in
the last few days offer a good entry position on this ONE WEEK
play. BOP, MS, and TSV are all confirming the current up-trend
with support around $19.50.

NOV 20.00 QOL-KD BID=2.25 OI=983  CB=19.31  RC=3.57%  RNC=3.57%


CHART  NEWS   
**************************************************
TALK - Tel-Save Holdings, Inc.  $10.88  *** 1 WEEK PLAY ***
 
TALK is a provider of long distance telecommunication services to
small and medium-sized businesses and residential customers in the
United States. Tel-Save is expecting to report a revenue increase 
of over 50% from 3Q 1997 and a reduced EPS loss as low as $0.70,
much better than analysts' estimates of $1.45 loss. TALK also has
resumed a repurchase of up to $300 million of its common stock. 
Current up trend is supported by good BOP and excellent TSV.
NOTE *** Talk may announce earnings before Monday's open. ***

Nov 10.00 QQK-KB Bid=1.38 OI=3674  CB=9.50  RC=5.26%  RNC=5.26%


CHART  NEWS   
**************************************************
ATVI - Activision, Inc.  $13.56   

Activision, Inc. is an international publisher, developer and 
distributor of interactive entertainment software.  Though ATVI
reported 2Q loss the stock quickly rebounded at reports of new
game releases (Asteroids-all-new 3D version; Apocalypse, an action
shooter with film star Bruce Willis' interactive debut; Fighter 
Squadron: The Screamin Demons Over Europe, the next elevation 
in World War II flight simulations).  These are played on either
the PlayStation or the Nintendo(R) 64 (I use them!). The stock
is currently at resistance: BOP is maxed, strong TSV, and a
volume surge signal...a possible break through?

DEC 12.50 AQV-LV BID=2.00 OI=34  CB=11.56  RC=8.13%  RNC=8.13%


CHART  NEWS   
**************************************************
AWRE - Aware, Inc.  $16.88  

AWRE designs, develops and markets telecommunications software, 
hardware designs, chipsets and products that increase the speed 
of data communications over copper telephone lines.  Mid OCT 
reported breakeven vs. $0.11 EPS loss for 3Q. Preferred Capital
Markets, Inc. initiated coverage of Aware with a hold and BB 
Robertson Stephens initiated coverage with a buy rating in NOV.
Very strong stage II characteristics as stock has reached a 52
week high and is close to a new all time high.

DEC 15.00 WUQ-LC BID=2.75 OI=184  CB=14.13  RC=6.16%  RNC=6.16%

Aggressive Play:

DEC 17.50 WUQ-LW BID=1.50 OI=165  CB=15.38  RC=13.78%  RNC=9.75%
 

CHART  NEWS   
**************************************************
ESSI - Eco Soil Systems, Inc.  $7.94

Eco Soil Systems, Inc. markets and supports a proprietary line of
microbial products, through two patented distribution systems, 
which control soil, crop and water problems.  End of October
reported 3Q EPS of $0.12 vs. $0.05 (diluted) and after a quick
post earnings drop, resumed it's up-trend. A BOP reversal showing
good buying pressure with our cost basis at support.

DEC 7.50 QES-LU BID=1.19 OI=46  CB=6.75  RC=11.11%  RNC=11.11%


CHART  NEWS   
**************************************************
OMKT - Open Market, Inc.  $8.00  *** Internet Rally ***

OMKT develops, markets, licenses and supports enterprise-class, 
packaged application software products and professional services
that allow its customers to engage in Internet commerce, 
info commerce and publishing. Open Market has been in a stage 1
base since Oct when they announced they will have lower revenues 
and their stock sank. On Oct 15, BOP switched quickly to buying 
after they announced a new software licensing agreement with AOL.
BOP is still increasing, TSV has recently crossed above zero, and
volume support the current up trend. The last two days (dip)
offer a excellent entry with a cost-basis below current support.

DEC 7.50 OQM-LU BID=1.31 OI=168  CB=6.69  RC=12.11%  RNC=12.11%


CHART  NEWS   
**************************************************
PLX - Plaines Resources  $18.63  *** OIL ***

Plains Resources is an independent energy company engaged upstream
in the exploitation, development, acquisition and exploration of
crude oil/natural gas and the midstream marketing, transportation,
terminalling and storage of crude oil. PLX recently reported net
income for the 3rd QTR 1998 of $3.6 million, a 31% increase over
the 3rd QTR of 1997. J.P. Morgan initiated coverage with a buy
rating based on several catalysts for stock appreciation; sale of
42% of its midstream assets, a step likely to unlock the intrinsic
value of its midstream assets, an acquisition in the upstream
sector, possibility of a share buyback program in the first half
of 1999 and conversion of series "E" preferred shares to common
stock (when the common stock reaches $21.60), a step likely to be
accretive to earnings per share.  A short term head-n-shoulders
bottom, breakout is currently being supported with strong BOP/MS
and TSV. (Used "last" price in play calculation above as the
bid-ask spread is inflated).

DEC 15.00 PLX-LC BID=4.25 OI=0  CB=14.38 RC=4.31%  RNC=4.31%

Aggressive:

DEC 17.50 PLX-LW BID=2.75 OI=50 CB=15.88 RC=10.20% RNC=10.20%


CHART  NEWS   
**************************************************
PMRX - Pharmaceutical Marketing  $10.69

PMRX provides a range of information and market research services
to pharmaceutical and healthcare companies in the United States
to enable them to optimize their sales and marketing performance.
Most of the Company's information services are generated from
proprietary databases which contain unique healthcare market data.
The Company sold most of its non-US assets to IMS Health for
shares of IMS Health common stock. Recently reported 1Q earnings 
with revenues up 16% (excluding divested subsidiaries revenues).
TSV and Money Stream are confirming the current (slow but steady)
up-trend.

DEC 10.00 QPA-LB BID=1.50 OI=105 CB=9.19 RC=8.81% RNC=8.81%


CHART  NEWS   
**************************************************
SGI - Silicon Graphics, Inc.  $13.06

SGI produces workstations and graphics servers that deliver 
advanced 3D graphics and computing capabilities for engineering
and creative professionals.  Posted a smaller than expected 1Q
loss; $0.24 on 10/21. Several recent news releases on new MAC chip
"new super-computer breakthrough", and the Reality Center to be
deployed in Latin America, have SGI in a strong up-trend. A slight
correction Friday (DELL sympathy?) offers a good entry point.
BOP, TSV, MS and volume surge bode well for continued upward
momentum.

DEC 12.50 SGI-LV BID=1.31 OI=1032 CB=11.75 RC=6.38% RNC=6.38%


CHART  NEWS   
**************************************************
TSIX - Transition Systems, Inc. $11.44  *** Earnings Nov 18? ***

TSIX provides management information technology to hospitals, 
integrated delivery networks, physician groups and other 
healthcare concerns.  On Oct 29, Transition Systems signed a
definitive agreement to be acquired by Eclipsys Corporation.
(0.525 shares of ECLP for each share of TSIX).  Recently warned
4Q earnings will miss estimates by about $0.07 and was quickly
downgraded by Volpe Brown.  The speculation on the current 
acquisition is fueling the up-trend so watch for momentum. BOP, 
MS, and TSV are all maxed as this stock climbs out of a rounded
bottom (saucer) formation. Be careful as TSIX price is now tied
to ECLP's price movement...

DEC 10.00 QXS-LB BID=2.13 OI=90  CB=9.31  RC=7.41%  RNC=7.41%


CHART  NEWS   
**************************************************
VIRS - Triangle Pharmaceuticals  $12.19  *** Drug Sector ***

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

DEC 10.00 VQP-LB BID=3.00 OI=200  CB=9.19  RC=8.81%  RNC=8.81%  
 

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
MANU	14.69	Dec	15.00	ZUQLC	2.25	15.32	5	154	
SQNT	12.44	Dec	12.50	SQQLV	1.88	15.08	29	196	
ODIS	4.69	Dec	5.00	QSELA	0.69	14.67	15	80	
ERGO	3.44	Dec	5.00	QGOLA	0.50	14.55	55	435	
VRTY	14.94	Dec	15.00	YQVLC	2.13	14.23	85	142	
GERN	11.94	Dec	12.50	GQDLV	1.69	14.14	10	334	
TXCC	24.56	Dec	25.00	TZQLE	3.38	13.74	4	23	
IOM	7.38	Dec	7.50	IOMLU	1.00	13.56	1226	8237	
AND	10.00	Dec	10.00	ANDLB	1.31	13.13	8	250	
ABTE	7.19	Dec	7.50	QZBLU	0.94	13.04	35	2212	
NBTY	6.91	Dec	7.50	NBQLU	0.88	12.67	79	3478	
PSCX	9.38	Dec	10.00	QPSLB	1.19	12.67	20	105	
AGTX	13.88	Dec	15.00	QDXLC	1.75	12.61	27	120	
PAIR	9.97	Dec	10.00	PQGLB	1.25	12.54	79	609	
CEGE	4.48	Dec	5.00	QIILA	0.56	12.54	10	273	
GGUY	5.00	Dec	5.00	GQULA	0.63	12.50	8	28	
ZOLT	12.00	Dec	12.50	QOTLV	1.50	12.50	5	90	
CKSG	26.25	Dec	30.00	OIQLF	3.25	12.38	6	142	
SCTC	17.31	Dec	17.50	YQSLW	2.13	12.27	2	22	
JDAS	9.69	Dec	10.00	QAHLB	1.19	12.26	59	429	
PPOD	6.19	Dec	7.50	QPPLU	0.75	12.12	30	400	
WAVO	6.19	Dec	7.50	WKQLU	0.75	12.12	10	363	
GALTF	15.00	Dec	15.00	QFGLC	1.81	12.08	5	7	
QMDC	24.88	Dec	25.00	QCDLE	3.00	12.06	30	145	
MATK	9.88	Dec	10.00	KQTLB	1.19	12.03	20	40	
GYMB	7.31	Dec	7.50	GMQLU	0.88	11.97	20	54	
SPLH	9.44	Dec	10.00	QRXLB	1.13	11.92	26	79	
ICII	7.88	Dec	10.00	BQJLB	0.94	11.90	5	20	
TDFX	14.75	Dec	15.00	FQLC	1.75	11.86	14	545	
EGRP	22.13	Dec	22.50	QGRLX	2.63	11.86	4	120	
ARTT	4.75	Dec	5.00	AOQLA	0.56	11.84	62	30	
CIEN	17.13	Dec	17.50	EUQLW	2.00	11.68	59	1286	
PDLI	24.63	Dec	25.00	PQILE	2.88	11.68	3	134	
DHSM	2.69	Dec	5.00	DQJLA	0.31	11.63	10	127	
CLCX	9.69	Dec	10.00	QXTLB	1.13	11.61	65	283	
COB	4.31	Dec	5.00	COBLA	0.50	11.59	25	414	
MMCN	10.94	Dec	12.50	CMQLV	1.25	11.43	23	108	
ORG	13.69	Dec	15.00	ORGLC	1.56	11.42	54	438	
AMTD	17.25	Dec	17.50	TQALW	1.94	11.23	10	106	
DBCC	6.69	Dec	7.50	BQDLU	0.75	11.21	50	326	
KMAG	7.25	Dec	7.50	KMQLU	0.81	11.21	20	423	
MRVT	13.75	Dec	15.00	SQDLC	1.50	10.91	74	217	
CELL	12.25	Dec	12.50	QEFLV	1.31	10.71	90	1156	
IO	9.94	Dec	10.00	IOLB	1.06	10.69	86	867	
PIR	9.50	Dec	10.00	PIRLB	1.00	10.53	152	1016	
EGGS	13.13	Dec	15.00	EGQLC	1.38	10.48	266	2250	
ERTH	14.91	Dec	15.00	QERLC	1.56	10.48	53	70	
AWRE	16.81	Dec	17.50	WUQLW	1.75	10.41	186	165	
HS	13.88	Dec	15.00	HSLC	1.44	10.36	22	82	
IDTC	18.13	Dec	20.00	IQJLD	1.88	10.34	25	1590	
ENMD	23.00	Dec	25.00	QMALE	2.38	10.33	90	125	
SMOD	20.00	Dec	22.50	UYQLX	2.06	10.31	5	222	
BBX	7.31	Dec	7.50	BBXLU	0.75	10.26	30	321	
LVCI	14.63	Dec	15.00	QVLLC	1.50	10.26	7	556	
SEV	9.25	Dec	10.00	SEVLB	0.94	10.14	50	494	
VRC	9.25	Dec	10.00	VRCLB	0.94	10.14	386	382	
DOSE	4.31	Dec	5.00	XUQLA	0.44	10.14	10	2054	
ESIO	29.63	Dec	30.00	EQOLF	3.00	10.13	10	92	
FEN	6.19	Dec	7.50	FENLU	0.63	10.10	30	280	
WSTL	6.81	Dec	7.50	QLWLU	0.69	10.09	177	214	
BEAS	22.38	Dec	22.50	BRQLX	2.25	10.06	10	180	
NTKI	8.75	Dec	12.50	QNKLV	0.88	10.00	21	129	
NTKI	8.75	Jan	10.00	QNKAB	1.75	20.00	30	188	
SQNT	12.44	Jan	12.50	SQQAV	2.44	19.60	45	342	
FP	3.00	Jan	5.00	FPAA	0.56	18.75	10	2963	
ERTH	14.91	Jan	15.00	QERAC	2.75	18.45	252	350	
MCOM	7.38	Jan	7.50	MQMAU	1.31	17.80	37	114	
MRVC	7.38	Jan	7.50	VQXAU	1.31	17.80	70	540	
PAIR	9.97	Jan	10.00	PQGAB	1.75	17.55	31	1010	
CIEN	17.13	Jan	17.50	EUQAW	3.00	17.52	54	5004	
MMCN	10.94	Jan	12.50	CMQAV	1.88	17.14	5	158	
ABTX	13.44	Jan	15.00	QXQAC	2.25	16.74	30	1775	
ORG	13.69	Jan	15.00	ORGAC	2.25	16.44	30	590	
ALTN	3.81	Jan	5.00	AQAAA	0.63	16.39	10	854	
EGRP	22.13	Jan	22.50	QGRAX	3.50	15.82	6	272	
JDAS	9.69	Jan	10.00	QAHAB	1.50	15.48	10	237	
TALK	10.75	Jan	12.50	QQKAV	1.56	14.53	9	5415	
INGR	6.63	Jan	7.50	IGQAU	0.94	14.15	20	719	
CBSI	24.88	Jan	25.00	CQQAE	3.50	14.07	11	160	
HS	13.88	Jan	15.00	HSAC	1.94	13.96	10	245	
SRCM	12.75	Jan	15.00	SQAC	1.75	13.73	90	827	
POSS	9.13	Jan	10.00	UPQAB	1.25	13.70	74	110	
GEM	7.31	Jan	7.50	GEMAU	1.00	13.68	60	60	
PUMA	4.13	Jan	5.00	ZVQAA	0.56	13.64	5	82	
HMTT	11.50	Jan	12.50	HTQAV	1.56	13.59	32	296	
PDQ	9.25	Jan	10.00	PDQAB	1.25	13.51	45	911	
LRCX	16.69	Jan	17.50	LMQAW	2.25	13.48	19	113	
ESST	5.63	Jan	7.50	SEQAU	0.75	13.33	69	334	
CELG	9.06	Jan	10.00	LQHAB	1.19	13.10	22	441	
AWRE	16.81	Jan	17.50	WUQAW	2.19	13.01	20	24	
BRKS	14.00	Jan	15.00	BQEAC	1.81	12.95	51	77	
MANU	14.69	Jan	17.50	ZUQAW	1.88	12.77	4	168	
USWB	18.19	Jan	20.00	QWBAD	2.31	12.71	5	581	
FILE	8.00	Jan	10.00	ILQAB	1.00	12.50	15	236	
GALTF	15.00	Jan	15.00	QFGAC	1.88	12.50	100	720	
CREAF	14.00	Jan	15.00	RFQAC	1.75	12.50	1	903	
SMOD	20.00	Jan	22.50	UYQAX	2.50	12.50	20	320	
VYTL	16.00	Jan	17.50	VQLAW	2.00	12.50	15	39	
NAV	24.06	Jan	25.00	NAVAE	3.00	12.47	2	671	
FORE	14.38	Jan	15.00	FQOAC	1.75	12.17	8	6133	
DSPG	17.50	Jan	17.50	DPQAW	2.13	12.14	5	36	
DBRN	15.00	Jan	15.00	DBQAC	1.81	12.08	20	31	
SIII	4.19	Jan	5.00	SQIAA	0.50	11.94	46	1800	
HXL	12.13	Jan	12.50	HXLAV	1.44	11.86	10	118	
MCOM	7.38	Jan	10.00	MQMAB	0.88	11.86	244	70	
BNYN	5.31	Jan	7.50	QYNAU	0.63	11.76	110	164	
CIEN	17.13	Jan	20.00	EUQAD	2.00	11.68	119	5532	
SUPG	7.50	Jan	7.50	UQGAU	0.88	11.67	15	369	
SDTI	10.88	Jan	12.50	QSDAV	1.25	11.49	23	154	
EGRP	22.13	Jan	25.00	QGRAE	2.50	11.30	15	2211	
ABTX	13.44	Jan	17.50	QXQAW	1.50	11.16	2	1097	
SOC	6.75	Jan	7.50	SOCAU	0.75	11.11	150	6841	
SQNT	12.44	Jan	15.00	SQQAC	1.38	11.06	51	399	
EPTO	6.25	Jan	7.50	QTPAU	0.69	11.00	1000	219	
SFSK	20.50	Jan	22.50	FQKAX	2.25	10.98	53	510	
CPU	13.88	Jan	15.00	CPUAC	1.50	10.81	6	923	
TWA	4.63	Jan	5.00	TWAAA	0.50	10.81	50	1908	
ISIP	11.06	Jan	12.50	QISAV	1.19	10.73	5	247	
MAVK	7.00	Jan	7.50	KQGAU	0.75	10.71	2	143	
TSA	7.06	Jan	7.50	TSAAU	0.75	10.62	85	967	
NXTL	22.38	Jan	22.50	FQCAX	2.38	10.61	50	684	
NSCP	27.25	Jan	30.00	NQYAF	2.88	10.55	153	3466	
KNT	17.88	Jan	20.00	KNTAD	1.88	10.49	83	296	
KLIC	16.50	Jan	17.50	KQSAW	1.69	10.23	6	511	
NSM	14.13	Jan	15.00	NSMAC	1.44	10.18	265	4896	
CS	11.69	Jan	12.50	CSAV	1.19	10.16	122	3105	
AEIS	14.81	Jan	15.00	OEQAC	1.50	10.13	7	155	
COL	22.50	Jan	22.50	COLAX	2.25	10.00	2	182	
NTKI	8.75	Jan	17.50	QNKAW	0.88	10.00	20	88	

	


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



NAKED PUT SECTION FOR NOVEMBER 15, 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.



SUMMARY OF PREVIOUS PICKS (1 week left for Nov strikes)
***********************************************************
Stock  Price  Currnt Mon-Strike Opt    Profit   ROI  Annual
Sym    Picked Price      Price  Bid    /Loss         ROI 

TALK    6.88  10.75  Nov- 5.00  0.69  *$ 0.69   33%  348%
BTIM   12.25  13.50  Nov-10.00  0.38  *$ 0.38   13%  327%
PMRY   18.75  19.00  Nov-15.00  0.44  *$ 0.44   11%  274%
GALTF  15.75  15.00  Nov-12.50  0.56  *$ 0.56   15%  262%
CDNW    8.25  11.50  Nov- 7.50  0.81  *$ 0.81   24%  251%
CIEN   17.13  17.13  Nov-15.00  0.50  *$ 0.50   10%  250%
NSTA   18.25  21.75  Nov-12.50  0.50  *$ 0.50   12%  244%
CIEN    9.31  17.13  Nov- 7.50  0.56  *$ 0.56   23%  236%
BTIM   10.56  13.50  Nov- 7.50  0.44  *$ 0.44   17%  225%
CDIS   21.69  19.38  Nov-17.50  0.63  *$ 0.63   12%  214%
ORG    10.50  13.69  Nov- 7.50  0.63  *$ 0.63   23%  201%
TWMC   19.56  21.25  Nov-15.00  0.88  *$ 0.88   18%  192%
SNAP   14.81  14.94  Nov-12.50  0.81  *$ 0.81   18%  191%
RFMD   24.00  25.13  Nov-22.50  1.00  *$ 1.00   11%  191%
TALK    7.31  10.75  Nov- 5.00  0.25  *$ 0.25   15%  191%
CLCX    8.94   9.69  Nov- 7.50  0.25  *$ 0.25   10%  182%
DTLN   29.75  32.63  Nov-22.50  0.69  *$ 0.69   10%  181%
TZA     8.06   9.06  Nov- 5.00  0.25  *$ 0.25   13%  175%
PMRX    9.06  10.56  Nov- 7.50  0.38  *$ 0.38   16%  162%
DDIM   12.50  10.81  Nov-10.00  0.50  *$ 0.50   17%  145%
TWMC   20.63  21.25  Nov-15.00  0.50  *$ 0.50   11%  141%
DGN    17.31  16.31  Nov-15.00  0.38  *$ 0.38    8%  132%
PGO    18.75  19.00  Nov-15.00  0.38  *$ 0.38    9%  120%
RCOT   22.38  17.75  Nov-17.50  0.31  *$ 0.31    6%  112%
TUP    16.25  19.00  Nov-15.00  0.63  *$ 0.63   11%  112%
RFMD   20.81  25.13  Nov-17.50  0.44  *$ 0.44    8%  105%
MUEI   17.06  22.63  Nov-15.00  0.63  *$ 0.63   12%  102%
RXSD   18.75  15.50  Nov-15.00  0.31  *$ 0.31    8%  100%
ICST   12.63  13.56  Nov- 7.50  0.25  *$ 0.25    9%   94%
MUEI   18.19  22.63  Nov-15.00  0.38  *$ 0.38    9%   89%
PSSI   20.38  21.88  Nov-15.00  0.31  *$ 0.31    7%   74%
---------------------------------------------------------
EGGS    9.06  13.13  Dec- 7.50  0.75  *$ 0.75   27%  232%
NMR    17.13  16.00  Dec-15.00  0.75  *$ 0.75   14%  119%

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

Profit/Loss Column: Asterisk indicates stock price above strike
price and put option should expire - not be exercised.  Stock 
to be exercised assumed sold at current price.(for tracking)


NEW PICKS - Sequenced by Company
**************************************************
Stock  Price  Mon-Strike Option  Opt   Open   Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr   Basis  Expired 

ONSL   21.56  Nov-17.50  QOL WW  0.31  268    17.19   6.36%
-----------------------------------------------------------
AMCC   30.50  Dec-22.50  QLL XX  0.50  27     22.00   7.58%
CKSG   26.31  Dec-17.50  OIQ XW  0.50  320    17.00   8.68%
CLCX    9.75  Dec- 7.50  QXT XU  0.50  117     7.00  20.41%
DCLK   33.31  Dec-25.00  QTD XE  1.31  30     23.69  16.43%
GBTVK   7.06  Dec- 5.00  GBQ XA  0.19  720     4.81  11.86%
PLX    18.63  Dec-15.00  PLX XC  0.63  0      14.37  14.15%
VIRS   12.19  Dec- 7.50  VQP XU  0.38  4       7.12  13.48%


Sequenced by Return on Investment (ROI) 
**************************************************
Stock  Price  Mon-Strike Option  Opt   Open   Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr   Basis  Expired 

ONSL   21.56  Nov-17.50  QOL WW  0.31  268    17.19   6.36% 
-----------------------------------------------------------
CLCX    9.75  Dec- 7.50  QXT XU  0.50  117     7.00  20.41% 
DCLK   33.31  Dec-25.00  QTD XE  1.31  30     23.69  16.43% 
PLX    18.63  Dec-15.00  PLX XC  0.63  0      14.37  14.15% 
VIRS   12.19  Dec- 7.50  VQP XU  0.38  4       7.12  13.48% 
GBTVK   7.06  Dec- 5.00  GBQ XA  0.19  720     4.81  11.86% 
CKSG   26.31  Dec-17.50  OIQ XW  0.50  320    17.00   8.68% 
AMCC   30.50  Dec-22.50  QLL XX  0.50  27     22.00   7.58% 


Company Description for New Picks
**************************************************
The more speculative naked put plays will be marked ***. 
The idea is to sell the naked put and have the option 
expire worthless with you keeping the premium.
OI  - Open Interest
CB  - Cost Basis (break-even price) 
ROI - Return On Investment
**************************************************
ONSL - Onsale Inc.  $21.56  *** Internet E-commerce ***

   SEE COVERED CALL SECTION FOR DESCRIPTION
          (1 week play)

NOV  17.50  QOL-WW  BID=0.31  OI=268  CB=17.19  ROI=6.36%


CHART  NEWS   
**************************************************
AMCC - Applied Micro Circuits  $30.50 *** Internet Hardware ***

AMCC is focused on the fiber-optics-based, high-performance
communications market that is being driven by increasing demand
for greater bandwidth to accommodate growth in the Internet, the
World Wide Web, and cellular and facsimile communications, as well
as applications such as remote network access, video conferencing
and higher-speed, data-intensive communication between local-area
networks. Experts are saying some of the best stocks are found
among Internet chip companies supplying the basic technology of
Internet infrastructure.

DEC  22.50  QLL-XX  BID=0.50  OI=27  CB=22.00  ROI=7.58%


CHART  NEWS   
**************************************************
CKSG - CKS Group  $26.31  *** Internet Rally/Merger ***
 
CKS Group is a provider of marketing communication programs that
utilize both traditional marketing disciplines, such as product
branding and advertising, as well as advanced technology solutions
and new media-including Internet development, database architecture
and enterprise systems integration. A pending merger with USWeb
Corporation and the establishment of Reinvent Communications will
bring more attention to this Internet media company.

DEC  17.50  OIQ-XW  BID=0.50  OI=320  CB=17.00  ROI=8.68%


CHART  NEWS   
**************************************************
CLCX - Computer Learning Centers  $9.75  *** On the Rebound? ***
 
CLCX provides information technology and computer-related training
and education. It offers instruction in growing technologies such
as client-server, databases, networking and object-oriented
programming. The "great dumpster caper" and the recent lawsuit
dropped the stock to new lows but the fear factor with respect to
possible loss of government funding has subsided as all 23 centers
now participate in Title IV programs. Many investors are expecting
a positive announcement from the DOE concerning the shareholder
allegations.

DEC  7.50  QXT-XU  BID=0.50  OI=117  CB=7.00  ROI=20.41%


CHART  NEWS   
**************************************************
DCLK - DoubleClick, Inc.  $33.31  *** Internet Rally ***

DoubleClick provides comprehensive advertising solutions for
Internet advertisers and Web publishers. DCLK recently announced
it has licensed its DART technology to several new clients. Also
reported a fiscal Q3 loss of $0.28 per share, wider than the $0.19
per share loss reported a year ago but not quite as bad as the
$0.29 per share loss expected by analysts. Play based on the huge
market expansion and merger activity that the Internet ad industry
is undergoing.

DEC  25.00  QTD-XE  BID=1.31  OI=30  CB=23.69  ROI=16.43%
  

CHART  NEWS   
**************************************************
GBTVK - Granite Broadcasting  $7.06 

Granite Broadcasting Corporation operates ten television stations
in geographically diverse markets reaching 7.0% of the nation's
television households. They operate dominant stations in stable
economies with strong local advertising momentum, and are a key
partner in the fast-growing WB Network. During the fourth quarter,
the Company expects to increase revenue by approximately 10% over
the same period last year and to achieve a double-digit gain in
broadcast cash flow.

DEC  5.00  GBQ-XA  BID=0.19  OI=720  CB=4.81  ROI=11.86%


CHART  NEWS   
**************************************************
PLX - Plaines Resources  $18.63  *** OIL ***

   SEE COVERED CALL SECTION FOR DESCRIPTION

DEC  15.00  PLX-XC  BID=0.63  OI=0  CB=14.37  ROI=14.15%


CHART  NEWS   
**************************************************
VIRS - Triangle Pharmaceuticals  $12.19  *** Drug Sector ***

   SEE COVERED CALL SECTION FOR DESCRIPTION

DEC  7.50  VQP-XU  BID=0.38  OI=4  CB=7.12  ROI=13.48%
 

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              11-15-98
Sunday                   4  of  6

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 Hershey Foods $65.81 (-1.06)(-2.31)

Hershey wandered aimlessly last week but trended down. The rally
on Friday sparked a gain of $.69. This was not enough of a gain
to cause us to drop it but we still advise confirming downward
motion before starting a new play. This could be just a pause
before the next leg down.

Hershey was the classic defensive play. A consumer food product 
that women cannot live without. 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".  

BUY PUT DEC-65 HSY-XM OI=431 at $2.56 SL=1.50 $.81 OTM


CHART  NEWS   
****************************************************
DELL Computer $63.94 (-1.75)(+.20)(+7.26)(+1.56)(+3.87)(-9.88)

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.

It is not often we have to write an obituary for a great play but
for those of us still in denial, Dell may be dead. We still think
Dell is a great company. Great earnings, great sales, growing at
+50%, opening new markets. We think the problems are many.

Everyone remembers when Dell was making huge price runs before 
every earnings announcement. We know for the last three years that
Dell has never disappointed. The stock is some what of a miracle
story. All fairy tales do come to an end. When Dell was making
the big moves and constantly surprising analysts there was a
significantly smaller number of shares outstanding. At 1.3 billion
shares it takes almost $200,000,000 in sales to add $.01 to profits.
$200 million just to make a penny. The point is this, at the 
beginning of 1997 there was only 150 million shares outstanding.
(3, 2:1 splits since then) Then $200 million in sales meant a $.10
change in earnings. This growth in sales was skyrocketing the
quarterly earnings every quarter. People grew accustomed to 
incredible results. Nothing lasts forever. Dell can still do
terrific but now it has reached the stage where the incredible
PE can no longer be supported by huge jumps in earnings. Yes I
know the world is a growth market for Dell. Dell stock will still
go up. It is just that the yield curve is flattening. Investors
will start looking at Dell as a long term buy and hold, make 15%
a year, and be happy stock. Traders will abandon the stock as
an earnings surprises continue to falter. I know this sounds 
like heresy but we have to face the facts. Look at the Gateway
earnings bounce. They surprised the street with $.51 vs estimates
of $.47. Sales were only up +43% and revenue +21% to $1.82 bil.
So how did Gateway's earnings jump so much when they only did one
third the volume of Dell? They only have 150 million shares.
Every $10 mil in profit amounts to $.06 cents per share. For
Dell every $10 mil in profit amounts to $.007 cents per share.
Big surprises are gone. No surprises, no fun. Dell can still be
a great company but it may not be a great play.

Compound the basic stock facts with the new competition. Gateway
is gaining market share with an aggressive marketing program.
Compaq has finally said "enough is enough" and announced an
aggressive move into direct sales which is expected to impact
Dell soon. Compaqs acquisition of Digital is going to take some
server business from Dell. The Asian markets are gearing up to
emulate the direct model as well. You know how small a profit
margin the Asian business models normally need to be successful.
It is far less than the 20-25% that Dell and Gateway are making.

Really, how long did you think the other computer manufacturers
were going to let Dell beat the heck out of them without an
aggressive response.

The flight out of Dell on Wednesday/Thursday/Friday, well over
100 million shares, was the handwriting on the wall. Sure funds
will still buy Dell and many retail investors will also. It is
still a great company. Just don't expect it to double every
year. The PE will sink from 68 to something more reasonable like
Gateway (27), Compaq (23). How does a PE shrink? From declines
in stock price or increased earnings without the stock price
rising. Dell's year EPS is estimated to be $.93. To decline to
a PE more like CPQ and GTW, say 30 the stock price would be
$27.90. A PE of 40 = $37.20, PE of 50 = $46.50. With the current
price at $64, can you see a future trend? It may not happen this
week or this month but it will happen. The bull market rally we
are having now could provide a soft landing for Dell. Slow drops
with intervening bumps but we expect the trend to be down. If
the Fed does not cut rates on Tuesday the drop will be drastic.  

BUY PUT  DEC-65 DLQ-XM OI=8170  at $5.38, SL=3.00
BUY PUT  JAN-65 DLQ-MM OI=5763  at $7.13, SL=5.00


CHART  NEWS   
****************************************************
AVP - Avon Products $39.25 (-3.13)

After posting disappointing earnings Avon has rolled over and
appears to be heading down. There is no negative news but any
market weakness could accelerate the slide. This is a momentum
play only.

BUY PUT DEC-40 AVP-XH OI=478 at $2.88 Sl=1.50


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            11-15-98
Sunday                5  of  7


******************************************************************
COMBINATION PLAYS
******************************************************************
Blue chip stocks did well Friday after the international financial
aid package was approved for Brazil. The Nasdaq market slumped for
a third straight day amid another bout of profit-taking. Trading
was light as investors remain nervous before the FOMC meeting even
though most market watchers still expect the Fed to cut the rates.
The overall opinion is that this week will be anti-climactic with
the market already having factored in a rate cut. But, if the Fed
decides to leave rates unchanged, it will be a big disappointment
and the still shaky financial markets will probably suffer. The
strong retail sales report forecast a healthy Christmas season but
also added to worries about how the Fed will act. Oil stocks were
mixed after several stocks rose on Thursday when tensions between
the United States and Iraq intensified. The Nasdaq fell primarily
because of a drop in prices for Yahoo and Dell Computer, and even
though several small Internet stocks climbed to new highs, many of
the tech stocks got hit purely in sympathy with DELL. The downside
gap was on heavy and increasing volume and this on earnings well
above a year ago and in line with consensus estimates. Supposedly
the "whisper estimates" were higher however, and DELL disappointed.
Our plays on DELL (NOV52P/50P and NOV80C/75C credit spreads) are
both safely OTM and we expect them to expire profitably next week.
******************************************************************
STRATEGIES...Closing simple debit/credit spreads...
******************************************************************
Generally, with most debit spreads, it is not mandatory for the
trader to take any follow-up action prior to expiration. Hopefully
the stock price will finish at or above your break-even point and
the spread can be closed on the last day by repurchasing the short
position (or allowing it to expire if it is OTM) and selling the
long position for a profit. If the stock advances substantially
shortly after opening the spread, the value of the long position
may increase to a point where the play can be sold for a nominal
(but short-term) return. The trader should be aware that there is
possibility of assignment when the short position goes deeply ITM.
In the event that the short side of a spread is assigned, you may
satisfy the notice by simply exercising the long position of the
spread. There are stock commissions involved so try to avoid this
whenever possible. If the stock falls or changes character, the
trader may want to buy-back the spread in order to limit losses.
In any case, the order to liquidate should be entered as a spread
transaction unless your are an experienced trader and well aware
of the risks associated with "legging-out" of the play. Some of
the advanced spreaders prefer to buy back the short call if the
stock drops in price to lock in profit on that side of the play.
They will then hold the long position in hopes of a rise in stock
price. Others will sell the long position and expect the short to
expire worthless (when/if the stock price remains below the sold
strike price). This is a very risky technique and should not be
used by novice traders. Both of these methods are examples of
"legging-out" of the spread.

For credit spreads, a favorable outcome is for the stock price to
finish outside (OTM) of both positions. In this case, both options
expire worthless and you are left with the original credit as the
profit. To "roll-out" of a credit spread, place an order to close
the short option anytime the stocks trades (and preferably closes)
above technical resistance with a sustained movement, not a gap!
The technique is based on the probability that the stock should
continue to move in that direction. After the short position is
repurchased, wait for the stock to lose momentum and sell the long
position to close the entire play. It is a difficult technique to
perform when emotion enters the formula but it works well once you
become experienced at it. The key to success is using the method at
known resistance or support levels, otherwise you are basically
just speculating about the stocks next move.

Remember, the nice thing about spreads is; once you understand
them, you can turn many losing plays into winning ones with the
effective use of STOPS's and by rolling out-of/into new positions
when the stock turns against you. When you do lose, atleast you
have reduced your losses by leveraging against another position.
The successful trader will utilize the strategies that work best
for each particular situation and construct his plays based on
the appropriate risk/reward attitude of his financial position.

We will discuss more about credit-spread techniques next week...
******************************************************************
NEW PLAYS-CREDIT SPREADS...Based on technical analysis and current
momentum. These plays have reasonable returns (for one week) and
relatively low risk...first the BEARISH plays... 
******************************************************************
SMOD - Smart Modular $20.00     Call-Credit Spread

SMART Modular Technologies, Inc. is a leading manufacturer of
specialty and standard memory modules, Flash memory cards, high
performance embedded computer boards, as well as I/O product
solutions. SMART offers more than 500 products to leading OEMs in
the computer, networking, and telecommunications industries. No
recent (public?) news to explain the sudden change in character.
The stock just rolled over last week as the BOP moved into heavy
distribution. Volume increased as the stock went lower and that
just made things worse. The money stream is now heading for the
basement and the price closed near it's daily low on Friday.

PLAY (conservative):
BUY  CALL NOV-25.00 UYQ-KE OI=489 A=$0.43
SELL CALL NOV-22.50 UYQ-KX OI=602 B=$0.68
NET CREDIT(approx)=$0.31 ROI=14%

MACD Chart   CHART   NEWS   Zacks on SMOD
******************************************************************
PGR - Progressive Corp. $140.00     Call-Credit Spread

The Progressive Corp. is an insurance holding company for many
subsidiaries which provide personal auto insurance and specialty
property-casualty insurance. PGR also has one mutual insurance
company affiliate. So far, 1998 hasn't been the best year for
property & casualty insurers. The S&P Supercomposite Property
Casualty Index is down 4.8%. Solomon Smith Barney and AG Edwards
both downgraded the company in early November. The chart reflects
a recent failed rally near $145 and the BOP is moving quickly into
negative territory. Volume is dropping off and the RS is drifting
lower.

PLAY (conservative):
BUY  CALL NOV-150 PGR-KJ OI=134 A=$1.00
SELL CALL NOV-145 PGR-KI OI=143 A=$1.56
NET CREDIT(approx)=$0.68 ROI=15%

MACD Chart   CHART   NEWS   Zacks on PGR
******************************************************************
SEPR - Sepracor $70.87     Call-Credit Spread

Sepracor is a specialty pharmaceutical company that develops and
commercializes potentially improved versions of widely-prescribed
drugs. Referred to as Improved Chemical Entities (ICE), these new
pharmaceuticals are being developed as proprietary, single-isomer
or active-metabolite versions of these leading drugs. They are
designed to offer meaningful improvements in patient outcome
through reduced side effects, therapeutic efficacy, an improved
dosage. The company reported less than oustanding earnings in late
October, even missing the lowered estimates by a large amount. The
stock was downgraded by Gruntal last week. The latest climb to the
recent highs around $75 does not have the necessary BOP/MS support.
The current pullback may allow us to make a one week play on this
declining stock.
 
PLAY (conservative):
BUY  CALL NOV-80 ERQ-KP OI=8   A=$0.31
SELL CALL NOV-75 ERQ-KO OI=373 B=$0.87
NET CREDIT(approx)=$0.62 ROI=14%

MACD Chart   CHART   NEWS   Zacks on SEPR
******************************************************************
BULLISH PLAY...
******************************************************************
TBH - Telebras Holding Co. $79.93     Put-Credit Spread

TBH is the issue acting as an umbrella for the TBR group's holding
companies. TBR, through its operating subsidiaries, is a supplier
of public telecommunications services in Brazil, providing all
inter-state, international and intra-state services. The Latin
American ADRs eased last week amid concerns about a possible
attempt to blackmail the Brazilian President Fernando Henriqu
Cardoso. Investors in Latin America also were waiting for
announcement of an International Monetary Fund bailout package
for Brazil. The regional ADRs were hurt by what authorities
described as a suspected attempt to blackmail Cardoso with
documents claiming to show he had millions of dollars stashed in
the Cayman Islands. The stock tape reflects solid support around
$70 and even with the recent slump, the stock price should remain
above the sold position for one week.

PLAY (conservative):
BUY  PUT NOV-65 TBH-WM OI=5760 A=$0.25
SELL PUT NOV-70 TBH-WN OI=4457 B=$0.62
NET CREDIT(approx)=$0.43 ROI=9% (1 week)

MACD Chart   CHART   NEWS   Zacks on TBH
******************************************************************
READERS REQUEST-MORE STRADDLES/STRANGLES...These plays are based
on stock and option volatility, option pricing and basic technical
analysis. In the debit plays, you should initially expect to hold
the positions until one pays for both but that's just while you
still have lots of time value. If you do get to that point, where
one position is worth your total initial debit, you may decide to
close both positions and take whatever premium is still left in
the lower priced option as your profit...
******************************************************************
CAT - Caterpillar $47.50     Debit Strangle/Rolling Options

CAT designs, manufactures and markets earth moving, construction
and materials handling machinery and heavy-duty engines. Shares of
the heavy equipment maker Caterpillar Inc. fell more than 5% last
week amid analyst concern of weaker construction equipment market.
Salomon Smith Barney said it was getting confirmation from dealers
competitors and other industry sources that the business could be
slowing down and mentioned they would not argue with those looking
to swap out of names such as CAT at this juncture. CAT could also
slide further in the large equipment segment as the list of world
economic markets with potential problems continues to grow. The
chart reflects an excellent near-term rolling trend and the price
is positioned nicely on the 30 day moving average.

PLAY (conservative):
BUY CALL JAN-50 CAT-AJ OI=1886 A=2.25
BUY PUT  JAN-45 CAT-MI OI=8201 A=2.00
NET DEBIT(approx)=$4.00 TARGET ROI=30%
INITIAL GTC CLOSING PRICE=$5.20


CHART  
******************************************************************
SCI - SCI Systems $42.93     Debit Strangle

SCI Systems, Inc. is a diversified electronics manufacturer whose
products and systems are supplied to a variety of aerospace,
commercial and industrial customers. SCI is the world's largest
provider of electronics manufacturing services. Recently announced
that its Brazilian subsidiaries: Advanced Electronic Integration
LTDA and Advanced Electronic Technology LTDA have occupied a world
class electronics manufacturing service facility located in Brazil.
Also announced a mediocre earnings report in mid-October but the
numbers were in line with estimates and that elicited an upgrade
from CIBC Oppenheimer. The chart reflects a $20 (100%) price swing
in the last two months and excellent historical volatility.

PLAY (conservative):
BUY CALL JAN-45 SCI-AI OI=460 A=$2.50
BUY PUT  JAN-40 SCI-MH OI=150 A=$2.56
NET DEBIT(approx)=$4.75 TARGET ROI=30%
INITIAL GTC CLOSING PRICE=$6.20


CHART  
******************************************************************
BBC - Bergen Brunswig $60.12     Debit Straddle

Bergen Brunswig Corporation is one of the nation's leading supply
channel management companies. In addition to its diversified
healthcare product offerings, the company offers innovative
logistics management programs in pharmaceuticals and medical,
surgical supplies to all healthcare venues. The company reported
strong earnings and excellent forecasts back in early November and
was promptly upgraded. They also announced the purchase of the
specialty care provider Stadtlander Drug Co. for $428 million in
cash, stock and transaction costs. They expect to complete the
transaction within 90 days, subject to shareholder approval and
other conditions. A 2:1 stock split is expected on 12/1 with a
$0.075 cash dividend on the split shares. The record date was 11/2.
The chart reflects excellent volatility over the past few months
with a 100% change in price in 75 days. Lots of gapping moves and
we expect the active trend to continue as BBC is now trading above
all recent resistance.

PLAY (aggressive/short-term):
BUY CALL DEC-60 BBC-LL OI=3846 A=$2.81
BUY PUT  DEC-60 BBC-XL OI=105  A=$2.68
NET DEBIT(approx)=$5.25 TARGET ROI=20%
INITIAL GTC CLOSING PRICE=$6.30

PLAY (conservative):
BUY CALL MAR-60 BBC-CL OI=144 A=$5.87
BUY PUT  MAR-60 BBC-OL OI=48  A=$5.12
NET DEBIT(approx)=$10.50 TARGET ROI=50%
INITIAL GTC CLOSING PRICE=$15.00


CHART  
******************************************************************
DKB - Dekalb $90.00     Credit Strangle (AGAIN!)

DEKALB Genetics Corporation is a worldwide leader in agricultural
genetics and biotechnology for seed and swine.
 
NEWS/OBSERVATIONS:
Lots of news/activity last week with the two merger companies has
boosted the option premiums in both directions. MTC announced a
major restructuring including the sale of businesses and lay-offs.
DKB released it's positive hybrid corn yield results and defended
their legal position in the Pioneer (PHB) lawsuit. They announced
a regular quarterly dividend of $0.035 per share. Monsanto still
expects the $2.3 billion merger deal to close around the end of
the year.

TECHNICALS:
In a rough trading range from $95 to $86 since July. In the last
three months, an isosceles triangle has started to form which may
suggest the current sideways trend will continue. The short-term
trading has been more volatile and the price is moving slightly
downward. The center of the triangle exists around $90 with some
support levels at $89 and $87. Other indicators are flat/neutral
confirming the present range.

PLAY (aggressive):
SELL CALL NOV-95 DKB-KS OI=1597 B=$1.25
SELL PUT  NOV-80 DKB-WP OI=706  B=$1.62
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.


CHART  
******************************************************************
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.
******************************************************************
OEX - S&P 100 Index	$554.26     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. Recent support now exists around 530. Review the
Hedge-Section for more specific technical information on the OEX.
Both plays are conservative (1 week) and outside of the current
technical trading range.

PLAY (conservative-bearish):
BUY  CALL NOV-575 OEW-KO OI=8647 A=$0.50
SELL CALL NOV-570 OEW-KN OI=7250 B=$1.06
NET CREDIT(approx)=$0.56 ROI=12%

PLAY (conservative-bullish):
BUY  PUT NOV-525 OEW-WE OI=9773  A=$0.93
SELL PUT NOV-530 OEW-WF OI=12575 B=$1.25
NET CREDIT(approx)=$0.38 ROI=8%


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            11-15-98
Sunday                5  of  6
************************************************************
HEDGE STRATEGY & RECOMMENDATIONS - Pinnacle Capital Advisors
************************************************************ 
Sunday, November 15, 1998


The Power of Rotation

One of the many subtleties in a dynamic market is the rotation of
funds from one industry sector to another.  And it's easy to miss
the rotation if investors simply follow broad market indices such
as the DOW or the S&P 100 (OEX) to frame their view of the market
and subsequent investment decisions.

For example, the DOW could remain unchanged on a day that JPM moves
up $2.00 while IBM sell-off $2.00.  Yet this action may be giving
clues to important turnarounds.  This move could be signaling a
short-term sell-off in Technology and a rally in Financials.

Understanding sector rotation is critical when trading options
because timing is key to success.  For example, if investors wait
until the DOW reaches certain benchmark levels, one could miss an
ideal entry point.

That is why Pinnacle Capital Advisors presents and breaks down its
Market Posture and Index Power Grid (IPG) by industry SECTOR.  And
as far as we know, OptionInvestor.com is the only investment
advisory website that provides this additional insight.



It's not WHETHER we want to buy, It's WHEN

One the biggest issue Pinnacle often faces with its clients is
building a portfolio of core blue chip stocks.  To no surprise,
many of our clients want to own many of the leaders within the high
flying Technology and Internet sectors including Dell, Cisco, IBM ,
Yahoo and America Online, among others.

Caught up in the excitement of emerging technologies, some investors
find themselves chasing stocks that have run up precipitously or
that are "overextended".

As a market-timing technician, we know that there are logical entry
and exit points that provide a better risk/reward ratio.  The key
to market timing is understanding that each industry sector marches
to the tune of a different drummer.  This beat often dictates when
a sector is most likely to advance or sell-off and can help option
traders get a jump on other investors.

As illustrated below, we highlight some of the key events (or
decision points) that can drive the sectors? movement.  Some
events, such as interest rates and the price of crude oil, can
impact several industry groups concurrently.

Sector                   Drivers
****************************************************************
Technology               Chips supply / Earnings forecasts
Financial                Interest rates / FMOC meetings
Retail                   Holiday season
Pharmaceutical           Product approvals
Airline                  Business Travel / Crude Oil
Oil & Gas                Crude Oil / Political events
Momentum Stocks          Cash Inflow / Earnings releases


After Dell reported its earnings, we are likely to see a classic
rotation between the Technology and Financial sectors, particularly
with all eyes focused on the interest rate again.  As we touch on
in our weekly NFL Challenge, the key to winning is ANTICIPATING the
market's natural rotation.



The Option Investor NFL Challenge

This week, 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 and rotation,
developing a balance attacks and capital allocation.  It's easy to
follow and it will reinforce several important concepts unique to
trading options and help build your skill level.  You can go
directly to this special update via the following website address:

http://www.OptionInvestor.com/NFLchallenge



Sentiment Analysis

We have received many inquires about our sentiment analysis tools
and Pinnacle Index. We are in the process of developing a reference
link that explains our popular sentiment indicator and gives
specific examples of its applications.

In the meantime, we encourage subscribers to pick Bernie Schaeffer's
latest book entitled "The Option Advisor".  It's one of the best
books that talks about sentiment analysis and the impact of
EXPECTATIONS.  It is a must read and you can order it directly
through OI's bookstore link on the website.

http://www.OptionInvestor.com/bookstore

During expiration week, we are focused squarely on the level of
EXPECTATION at key benchmarks in the market - OEX-540 / OEX-570.
Based upon our analysis, the market is NOT likely to move higher
over the near term until the current level of optimism subsides.

The best example of what we are talking about is Dell Computer.
Last week, the level of EXPECTATION had run up precipitously before
its earnings report causing the stock to sell-off even though they
beat their estimates.  This is not to say that Dell can't move
higher.  But often times the euphoria has to give way before a
stock can move higher.

This, in part, is what's happening in the broader market today.
With a favorable interest rate environment, Brazil's bailout in
place, and favorable news from Intel and Dell, everyone EXPECTS us
the market move higher.  This is evidence by the call open interest
on the NOV/DEC OEX 560-570.


KEY MOMENT IN THE MARKET

Purely from a sentiment analysis perspective, we are at a key moment
in the market.  It is unclear, for example, what the option players
will likely do as we approach the final week the current expiration
period, particularly after Tuesday's FMOC meeting.

If we see, for example, a rush to buy out-of-the-money (OTM)
December/January call options WITHOUT an increase in put options at
key support levels (OEX-540), the market could become range bound
over the near-term and, therefore, will impact short-term option
strategies.  Keep an eye on these levels for they will likely
presage whether the market will move higher or begin to sell-off.


Trading Range         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              (11.6)     (11.13)   (11.17)   (11.19)
*****************************************************************

Resistance (560-570)     16.2     7.1
           (550-560)      3.6     1.9

Support    (530-540)      1.7     1.4
           (520-530)      1.9     2.3

Average ratings:
Resistance levels 2.0 / Support .5

What the Pinnacle Index is telling us:
Overhead sentiment resistance very strong at the OEX 570 levels
while the underlying support is moderately firm.


OEX Skybox

We have received an enthusiastic response to our latest options
trading tool - the OEX Skybox.  If you referenced this powerful tool
over the past couple of weeks, it helped you initiate new long and
short positions in the market.

For those new to the OEX Skybox we have summarized below our trades
to date.  Assuming an equal investment on each trade, The OEX
Skybox has garnered a return of 94%.


OEX Skybox Track Record / November 1998
********************************************************************
Symbol                     Entry   Exit   Gain/Loss
Entry/Exit Date            Price   Price    (+/-)     Profit
********************************************************************

OEX NOV-545 CALL / OEW-KI
11.2 / 11.6                8.75   18.75   10.00 +     10,000 +

OEX NOV-540 PUT  / OEW-WH
11.6 / 11.6                4.50    3.25    1.25 -      1,250 -

OEX NOV-550 PUT  / OEW-WJ
11.9 / 11.11               5.63    8.75    3.12 +      1,560 +
11.9 / 11.13               5.63    6.50     .87 +        435 +

********************************************************************
OEX Skybox Return / 92%                                9,185 +
********************************************************************


New OEX Recommendations

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

Our strategy this week is to take a more conservative approach to
the market and our entry points.  As shown by the OEX Skybox
gridiron, we are advising clients to wait until the OEX reaches key
benchmark levels.

Notice that the OEX Skybox highlights where the OEX is currently
trading relative to important intraday benchmarks. We also indicate
our Pinnacle Index just above (overhead resistance) or below
(underlying support) at key strike price levels to highlight
current sentiment levels.



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

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

    7.1                     *** OEX 562 >>>>> (1)
  ------- 560 -------------------------------------------------

** 11.13 ** OEX 554.26>

  ------- 550 -------------------------------------------------
    2.3
                            *** OEX 547 >>>>> (2)

                                *** OEX 543 >>>>> (3)
  ------- 540 -------------------------------------------------
    1.4                             *** OEX 538 >>>>> (4)


*****************************************************************
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    10.25     14.00     8.75
(3) BUY CALL DEC-550  OEW-LJ     8.00     12.00     6.75

BEARISH Triggers:

(2) BUY PUT  DEC-550  OEW-XJ    10.25     15.75     8.75
(4) BUY PUT  DEC-520  OEW-XF     9.00     14.75     6.25

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


Market At a Glance

Since we alerted subscribers of the market's major reversal signal
October 8th, we have seen the market rally precipitously and offer
several positive developments from a Bullish viewpoint.

Bullish Developments:

1) Favorable technical trends developing.
Several sectors crossing over and holding above 200-dma (semi
conductors, oil & gas, etc.)

2) Favorable interest rate environment.
Particularly if Greenspan cuts rates.

3) Reversals in key Financial sectors.
Financial sector turned around Friday (11.13) giving us a higher low
and may begin to mount a run at the overhead resistance levels at
significant benchmarks.

4) Cash Inflow.
Still plenty of cash on the sidelines for Fund managers to put to work.

5) Put activity on the DOW stocks.
Heavy put volume of the DOW could serve as support to the market.

6) Insider Buying.
Still seeing a lot of insider buying taking place.

7) The Dow Theory.
The Transportation sector checked up Friday (11.13) signaling a higher
low.



In contrast, there are potentially Bearish developments that can keep
the market range bound.

Bearish Developments:

1) EXPECTATIONS!
Overhead sentiment resistance, as measured by our Pinnacle Index, is
reaching extreme levels at the OEX 570 benchmark.

2) Russell 2000.
We don't like how the Russell 200 is behaving.  The sector is
rolling over under its 200-day moving average.  Although the
generals (Blue Chips / Technology) are charging higher, the troops
(mid cap) are not following.

3) Financial / Transportation sectors.
Although beginning to firm and turnaround, they are not out of the
woods yet. Need to stay focused on these sectors.





Index Power Grid / Monday (11.16)

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 action.  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 16, 1998

                                                    50/100/200
Broad Based        Bearish | Neutral | Bullish    Last    dma
**************************************************************

DOW Industrials    8,900 | | *       | | 9,000   8,920   +|+|+
SPX S&P 500        1,115 | |    *    | | 1,150   1,126   +|+|+
OEX S&P 100          545 | |     *   | |   560     554   +|+|+
RUT Russell 2000     395 |*|         | |   400     389   +|@|-

NDX NASD 100       1,460 | |  *      | | 1,505   1,465   +|+|+
MSH High Tech        675 | | *       | |   700     678   +|+|+

                                                    50/100/200             

Technology         Bearish | Neutral | Bullish    Last    dma
**************************************************************
XCI Hardware         655 | |  *      | | 680       660   +|+|+
CWX Software         520 | |        *| | 540       539   +|+|+
SOX Semiconductor    270 | |       * | | 295       292   +|+|+
NWX Networking       340 | | *       | | 355       342   +|+|+
INX Internet         255 | | *       | | 280       259   +|+|+

                                                    50/100/200
Financial          Bearish | Neutral | Bullish     Last   dma
**************************************************************
BIX Banking          620 | |   *     | | 670       634   +|+|@
XBD Brokerage        425 | |   *     | | 465       444   +|+|-
IUX Insurance        555 | |    *    | | 570       564   +|-|-

                                                    50/100/200
Other              Bearish | Neutral | Bullish     Last   dma
**************************************************************
RLX Retail           710 | |     *   | | 740       732   +|+|+
DRG Drug             700 | | *       | | 725       706   +|+|+
HCX Healthcare       700 | | *       | | 730       706   +|+|+
XAL Airline          280 | |  *      | | 315       289   -|-|-
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 |  56.93
11.9                                    |  58.75    58.25    1.82 +

Computer Science / CSC       -|-|-  5.2 |  52.06
                                        |  51.75    54.25     NEW

Computer Associates / CA     +|+|-  4.2 |  44.38
                                        |  43.75    45.25     NEW

Electronic Arts / ERTS       +|+|-  3.2 |  43.00
                                        |  42.75    45.25     NEW

Networking:
********************************************************************
Cisco / CSCO                 +|+|+  3.2 |  64.69
11.13                                      64.75    65.25     .06 +

Tellabs / TLAB               +|+|-  3.2 |  56.63
                                        |  55.75    57.25     NEW


Internet:
********************************************************************
Yahoo / AMZN                 +|+|+  5.5 | 168.00
                                          166.75   170.25     NEW

Amazon.con / AMZN            +|+|+  3.5 | 127.75
                                          126.75   130.25     NEW

* Short-term Sell-off play Only.

Financial:
********************************************************************
Allstate / ALL               -|-|-  5.3 |  40.00
                                           39.75    40.25     NEW

Retail:
********************************************************************
Best Buy / BBY               +|+|+  4.6 |  44.13
11.9                                    |  45.75   48.25      1.62 +


Drug Healthcare:
********************************************************************
American Home Products / AHP -|-|-  5.5 |  47.50
                                        |  46.75    50.25     NEW

Pacificare / PHSYB           -|-|-  4.5 |  77.75
                                        |  77.38    80.25     NEW


* NEW - New recommendation / NT - Not Triggered




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.



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