Option Investor
Newsletter

Daily Newsletter, Sunday, 12/06/1998

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

Sunday  12-06-98  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 12-06         WE 11-29         WE 11-22         WE 11-15
DOW     9016.14 -318.94  9333.08 +173.53  9159.55 +239.96  - 55.87  
Nasdaq  2003.16 - 13.29  2016.44 + 87.99  1928.21 + 68.96  -  8.57  
S&P-100  580.15 - 10.97   590.77 + 15.81   574.97 + 71.82  -  4.09  
S&P-500 1176.74 - 15.87  1192.29 + 28.72  1163.55 + 17.49  - 14.81  
RUT      398.37 -  3.72   402.09 +  7.81   394.29 +  5.80  - 10.96  
TRAN    3052.25 - 25.56  3077.81 + 19.20  2974.92 + 39.00  - 97.18
VIX       24.95            21.58            21.22            28.19
Put/Call    .65              .40              .49              .71
******************************************************************

Volatility is back and technical analysis is again a wasted effort.


Remember back in September and October when we alternated positive
and negative 100+ point days? Well don't look now but we seemed
locked in that pattern again. News, news, news. Which way is the
wind blowing today? Thursday investors were running from stocks
on Brazil and Asian worries and Friday those same worries were
forgotten in the face of the strong jobs data. Did anything change
between Thursday and Friday? Not one bit. Investor sentiment is
becoming as unpredictable as AOL email.

If you take a longer term look with a historical perspective then
December is playing right along with "normal" patterns. In 1996
and 1997 the market experienced a 6% correction in December which
set the stage for significant runs in the following first quarter.
The low on Thursday was -5% from the recent high and a good case
could be made for optimism based on the past. I know, past performance
does not guarantee future results, but with the bullish undertones
in the market we do look primed to run into January/February
earnings if the global news and pre-warnings don't bite us.

The market internals are mixed and we could still see movement in
either direction. Financials showed some strength Friday and the 
Russell-2000 appears to be basing just under the 200 DMA and could
breakout at any time. Market breadth is still negative and the
major movers are the blue chips. This is exactly like the situation
we had in October. Generals leading, troops lagging back.

At this time of the year with the recent strong market advance I
think the most likely outcome is a trading range between 8800 and
9300. The close for the Dow back over 9000 and the Nasdaq a hair
over 2000 is a good sign. We are at the weekly "key moment"
in the market. Up or down could come just as easy. Transports are
still lagging on cheap oil and we are getting closer to the year
end portfolio adjustment period. The positive interest rate 
environment in Europe should keep their markets positive and some
analysts think the bad news of Asia and Brazil is now factored 
into the U.S. market after the drop this week. Don't forget, 
first quarter earnings warning season is coming fast and several
big names announcing negative outlooks could change the sentiment
in a heartbeat. The bullish jobs report on Friday only provided
a market that wants to go up with a short term reason. The Fed is
most likely to hold on any interest rate change at its December
meeting. Put on your seatbelts, we could have a wild ride between 
now and 1999. On the plus side the month of December is the number
one month for S&P-500 gains and the number three best month for
the Dow. 35 of the last 45 years the last five days of December
and the first two days of January account for Dow gains exceeding
+1.5%. Before you get too excited let me remind you that 1.5%
only amounts to 135 points.

Several notable high flyers captured market attention on Friday.
Lucent made some very positive comments about its near term prospects
and jumped over $7. This and some comments from TLAB helped fire up
the teleceom sector. Nokia also garnered the top spot in deliveries
of digital cell phones worldwide and bounded up +$12 in two days.
Both of these were on our play list for this weekend but they beat
us by a day and now we will wait for a pullback before recommending
them. The more aggressive readers should not wait for us to do the
write-up. If you see an intraday drop and recovery then we think
they would be a great play.

Good Luck

Jim


************************
New Site	
************************

If you have not dropped by the new site yet this weekend please
take a few minutes and come back for a visit.

Beginning this week we are implementing several new features and
formats and will add to the options buffet every weekend through
January.

Some of the new features you have been asking for include archiving
of the different sections on the same link to keep you from going
from place to place to see previous newsletter info.

Aside from the new "newspaper" look and format we are excited about
the many new features. 

Starting today we are including the popular "Global View" commentary
from Jean Jacques Chenier at Global Management.  Mr. Chenier is a
very respected market analyst who also produces the "Trendoscil
Trading System" for futures and options. I think you will find his
commentary very informative.

Starting soon is a weekly "Combat Options" trading session in the
chat rooms with Andrew Aronson and Allan Knuckman from Rosenthal
Collins Securities. They will take your questions in real time and
fire back the answers for all to see and profit. These guys head up
the options trading department and can answer even your toughest
questions. This will be on Wednesday nights in the OIN chat room.
Watch for the premiere session coming soon.

Starting the first week of January we will be adding a commodity
futures trading section to enable traders to profit from the 
world events in a real time environment. Trade bonds, yen, gold,
whatever is hot at the moment. We will teach you how. You thought
stock options provided leverage !! Wait until you see what we have
planned for this section.

Also starting the first week of January we will be going real time
with our live OEX TRADING PIT. We will tell you what to buy and when
to sell using an internal proprietary trading system. Every day we
will give you specific instructions like "BUY FEB-OEX-600 CALL"
We will take all the guess work and mystery out of the OEX decision
process. We will tell you where to place stops and when to sell 
based on a proven trading system. 

Also beginning soon we will have a daily market closing commentary
and random updates throughout the day while the market is open.

We will be starting next week the "Play of the Day" on a nightly
basis. This will pinpoint a suggested high profit play for the
next trading day with a suggested strategy.

Also in January we will offer a managed trading program where
you can open an account and have trades made for you automatically.
We will pick a specific trade each week which we feel has the
greatest possibility of profit and the trade will automatically
be entered into your account. Only subscribers to the Managed
Account Program will receive info on those trades in order to 
protect the value of that trade.

Beginning in February we will offer an "Options Bootcamp Seminar"
in various cities around the U.S.  The hard hitting options
trading course will be taught by our professional traders on
staff and will not be a wimpy concept class. Seating will be 
limited so watch for the dates in a future newsletter.

Our new "Earnings Page" will show you at a glance which companies
announce on a given day within a three month period as well as
an inquiry function that lets you enter a symbol and get immediate
info on a specific stock. We know of no other site that has an
inquiry by symbol of earnings dates and expected earnings.

Our new "Research Page" lets you get charts, option quotes, news
and Zacks info all on one page. 

The "Rumors" section is updated as they are received to allow
you to hear it as soon as we do.

The "Traders Window Chart" allows you to "float" the chart free 
from the browser page and place it anywhere on the screen so you
can watch your stock while you work.

The "Option Quotes" link now brings all the power of the CBOE
direct to your desktop while you are logged in to the newsletter.
No more leaving and logging back in just to get quotes.

We are very excited about these new features as well as the improved
format. We are planning many new features as well and will be 
announcing them in the coming weeks. Stop by and take a test drive
soon. Because this is a major change there are sure to be some
bugs so send us an email if something does not work correctly.

*******************************
Global View: The Euro Dollar
*******************************

At the end of the month, all participating European Union 
Countries are required to have a fixed interest rate and to 
quote all prices in both the national currency and euros.  
Yesterday many of these countries announced an interest rate 
cut, not as any great surprise, but as a requirement for a 
fixed rate across the European Union.  If you want to know 
who will be cutting rates next, you look at the participating
countries and see who NEEDS to cut rates to be in line with 
the other countries.  It is that easy.  Why do you think 
Switzerland is not joining the European Union?  Could it be 
they are a banking haven and if they joined the European Union
they would have a fixed banking rate and lose much of their 
banking privacy laws?  

The European Union countries will be using their national 
currencies for the next two years, but all prices must also 
be quoted in euros so people can get used to the new currency 
and conversions.  On my trip many stores price tags reflected 
both pesetas and euros already!  However, euros will be quoted
for two years but not used until they replace the currencies 
of the entire European Union.  An interesting concept to have
and quote a euro dollar that does not even exist.  This means 
that the European Union has one currency and fixed rate even if
it is expressed by the national currencies of various countries.
Look at it this way, all banks in the EU are paying the exact 
same interest rates effective next month.

Their are many opinions on what effect the euro will have on 
the economies and I will share mine.  Please realize this is 
only an opinion and nothing more.  First, any time a currency
is replaced black money (non-taxed, hidden from the government,
etc.) must be washed.  The money is often washed by purchasing 
expensive tangible assets such as real estate, cars, businesses,
and tangible items or by changing to other currencies not 
effected by the currencies being replaced.  Governments know 
this and this may be a reason for a two-year "grace" period 
before the euros take effect.  Either way this washing of funds
provides an inflow of capital to various markets.  At the end of
the two-year period, any money left in banks will be automatically 
converted to euros.  Just remember that black money is rarely 
left in banks and needs to be washed.  

Another drastic effect of the euro will be the stabilization of 
prices throughout the EU.  Like America the salaries may vary
drastically from different parts of the country, but the price 
of most goods are very competitive.  The cost of gasoline, eggs,
cereal, and milk are all fairly close.  This is not the case in 
Europe, but is often hard to discern unless work with various 
currencies and know exchange rates.  If I told you that you could
buy a widget for 168 German Marks, 3467 Belgian Francs, 60 British
Pounds, 563 French Francs, or 14,306 Spanish Pesetas which one is 
the best value?  Is this a little confusing?  The answer is all of 
the above are equal to approximately $100 US dollars.  

With the advent of the euro price discrepancies are going disappear
and people will be able to compare costs very quickly.  If you are
in the retail business and you learn that in France they sell the 
same product for 40% less you will be able to make a few quick calls
and consider changing distributors.  Trust me when I tell you there
are huge price discrepancies throughout Europe!  Another good 
comparison can be found in families taking vacations.  In the past,
it was difficult to compare prices if you wanted to go on and EU
vacation, but now it will all be in euros right in front of your 
eyes!  The companies with lower costs will win these tourists and 
the tourists bring money that in turn fuels the economy of the 
region.  What would Colorado Springs be if there were no tourists?
Germany is expected to experience hard times because their labor 
force has long been overpaid in comparison to the rest of Europe.
How long before German companies are going to move their factories
to Spain and other low cost labor countries?  An American comparison
is the large number of companies headquartered in the desert state 
of Nevada. Why Nevada? No state income taxes. The European countries
that will benefit the most will be the countries with the low 
business costs, tax rates, and labor forces.   The countries that 
will be most adversely effected will be the countries of higher 
taxes, higher wages, and bureaucratic red tape. Want a tip?  
Determine the lower cost countries and invest in their stock 
market!  Many of the European countries are smaller than Vermont 
or New Hampshire!  Yes, change will come in Europe.

In the future, there will only be three major currencies: the 
American dollar, the euro, and the yen.  With the Euro the EU 
Gross Domestic Product is going to be more readily comparable to
America.  When compared we will see an inflated American economy
compared against a lower EU economy.  What does this mean?  The 
euro will go up and the dollar will go down.  It is already 
happening.  In January of this year exchange rate was 155 pesetas
to 1 dollar.  One week ago the rate was 141 pesetas to the dollar.
Already the dollar has lost 9%.

Gerald Romine

(Gerald is a new analyst for OIN and was traveling in Spain when
he submitted this piece this week) 

**************
Brokers Corner
**************


Bull Call Spread

For many, the idea of spread strategies is foreign and/or boring.  
Some might say that holding a position longer than a few days is 
way too long.  I admit, spreads are usually slow.  However, I have
learned that slow and steady wins the race.  I plan on discussing 
in further detail the Price Spread. Specifically, the Bull Call 
Spread.  I am sure the combo section of OIN has covered this, but 
I believe it deserves additional attention.  The Bull Call Spread 
(Debit Call Price Spread) is simply achieved by buying the lower 
and selling the higher strike price with the same expiration.  As 
the name suggests, pick a stock/index that you are bullish on.

Date 12-7-98
XYZ is trading at 79
DEC 75 Calls are trading at 5.125 to 5.5
DEC 80 Calls are trading at 2.125 to 2.375

For this example, buy the DEC 75 call and sell the DEC 80 call for 
a debit of 3.375 (Sometimes it doesn't hurt to bid and offer for a 
little less and a little more, respectively, in order to decrease 
the debit).  It is not necessary to initiate a position for the 
current month.  In addition, it is not required to have a spread of 
5 points between the two strike prices.

The Basics
A long call (buying) option gives the buyer the right, not the 
obligation, upon exercising to purchase the stock at the specific 
strike price before expiration of the option contract.

A short call (selling) option states that the seller, upon assignment,
must sell the underlying stock at the specific strike price before 
expiration of the option contract

Now comes the part where you make money.   This example is on a stock 
that is only 1 point from being in the money on the short side (the DEC 
80's) and expires in two weeks.  This trade states that you are 
speculating that the stock/index will increase from 79 to above 80 
points by the time the options expire. The first way to make money is 
by the stock closing above 80 upon expiration.  This will cause the 
stock to be sold in your account (short). Then it is your responsibility
to exercise that DEC 75 call so that you buy the stock at 75.  Therefore,
you sell the stock at 80 and buy it at 75. Profit of 5 points per share.
But wait.  You established a 3.375 debit on this trade.  Therefore, you 
profit 5.0 - 3.375 or 1.625 in two weeks.  Now that didn't take too long.
The second way to make money is if the stock trades much higher than the 
strike prices. This places the options deep in the money, which provides 
intrinsic value.  Or an investor could initiate the trade when the stock 
is much less than the example.  For instance, at the money on the long 
call or even out of the money on the long call. If the stock advances, 
you can close the trade out.  You would probably make money on the long 
call and lose on the short.  Buy closing out the spread, you reduce your 
exposure.  Furthermore, the main purpose to this type of position is to 
lower your risk exposure.  This is achieved buy locking in the max profit
and max loss.

That brings me to the downside.  In option trading, there is always the 
risk of losing everything invested.  It is important to develop a strict 
stop loss strategy for all strategies.  I can't tell you what amount you 
should use. That is up to you.  You may decide to use a percentage of the
debit or a dollar amount.  Don't convince yourself that it will come back
if it goes to you desired stop loss.  Take the human element out of the 
equation.  

Note:
Spreads are to be done in margin accounts.  The breakeven point on 
expiration is equal to the long call's strike price plus the debit.  

Note:  Not all investors may be considered suitable for this type of 
strategy.  Ask your broker what requirements he/she has.  

Note: This is only an illustration for educational and informational 
purposes.  Baxter, Banks & Smith, Ltd. and Robert J Ogilvie are not 
recommending Debit Call Spreads and does not guarantee that you will 
profit from the strategy.  

Robert J. Ogilvie 
He is an Investment Broker and Registered Options Principal with Baxter,
Banks & Smith, Ltd., a full service firm in Sarasota, FL. He specializes 
in various portfolio hedging and option trading strategies using both 
equity and index options. Especially the OEX and SPX. He enjoys educating 
investors on the many facets of options trading. He concentrates his 
efforts to client's needs and objectives. You may call him at 
1-800-982-2119. 
You can email him at 




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

As of Market Close - Friday, December 4, 1998

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

DOW Industrials    8,600   9,400   9,016    Neutral  11.24
SPX S&P 500        1,080   1,190   1,177    Neutral  11.24
OEX S&P 100          525     590     580    Neutral  11.24
RUT Russell 2000     340     415     398    Neutral  10.27

NDX NASD 100       1,400   1,640   1,630    Neutral  11.24
MSH High Tech        620     770     763    Neutral  11.24

                   Major Support
Technology           /Resistance    Last    Posture/Since  Alert
****************************************************************
XCI Hardware         610     745     735    Neutral  11.24
CWX Software         525     590     579    Neutral  11.24
SOX Semiconductor    265     325     345    Neutral  11.24
NWX Networking       350     430     382    Neutral  11.24
INX Internet         225     315     307    Neutral  11.13

                   Major Support
Financial            /Resistance    Last    Posture/Since  Alert
****************************************************************
BIX Banking          610     680     670    Neutral  12.3
XBD Brokerage        415     550     491    Neutral  12.3
IUX Insurance        510     625     600    Neutral  12.3

                   Major Support
Other                /Resistance    Last    Posture/Since  Alert
****************************************************************
RLX Retail           660     775     766    Neutral  10.23
DRG Drug             670     755     750    Neutral  11.24
HCX Healthcare       680     760     751    Neutral  11.24
XAL Airline          230     320     300    Neutral  11.24
OIX Oil & Gas        250     270     247    BEARISH  12.3



Posture Alert

Stronger than expected employment report overshadowed the
Brazilian storm cloud creating a strong relief rally.  Until
we get confirmation of the reversal next week, we remain
Neutral across broad market indices and industry sectors.

One positive development Friday (12.4) was the strong reversal
of the Financial sectors at key benchmark levels (just above
100/200 day moving averages).  The Russell 2000 also firmed
as well.  The Airline sector, however, is still sitting
precariously below the declining 200 day moving average.

We CAUTION subscribers that we are near the highs set
during the summer and to tightly protect any long
positions while the market is trading within its potential
failed rally zone.

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: 

Consumer Credit

Tuesday:

LJR Redbook for 11/31
BTM/Schroeders
Rich Federal Survey 
API Oil Stocks

Wednesday:

No Releases

Thursday:

Weekly Jobless Claims
Wholesale
Inventories
Money Supply (M2)

Friday:

Retail Sales
Ex-autos
Producer Prices
Ex-food/energy
Michigan Sentiment
Chicago Fed Index

*****************************************************
Last weeks change for this weeks picks:
*****************************************************
Index	Last	Week			
Dow	9016	-318.94			
Nasdq	2003	-13.29			
$OEX	580	-10.97			
$SPX	1176	-15.87			
$RUT	398	-3.72			
$TRAN	3052	-25.56			
$VIX	24.95	4.26			
					
Stock	Last	Week			
					
TXN	82.88	4.13	Chip Fever !		
LOW	45.00	1.44	Same Store Sales up		
TWX	106.0 	-0.94	2:1 Split 12/15		
WMT	73.19	-3.37	Retail Powerhouse		
BK	36.38	1.94	New Highs		
KMB	53.88	1.57	Diaper Demand		
CMVT	64.75	5.31	Breakout Mode		
NTAP	75.00	1.00	2:1 Split 12/21		
CVS	51.63	1.19	Steady Mover		
ETEC	40.38	5.19	Chips Ahoy!		
JBL	63.38	5.19	It's Alive!		
AMZN	188.5 	-28.13	Ouch!		
YHOO	190.1 	-26.81	Profit Taking		
CMGI	68.50	-20.25	Still Bleeding!		
AOL	88.00	-6.87	Andreessen Who?		
IBM	164.2 	-5.76	Split Candidate		
MER	72.38	-7.62	Correction		
MRK	157.6 	-0.70	Volatility, Where?		
CSCO	78.25	-1.75	Bullish Conference		
EMC	79.00	4.01	Leader of the Pack		
WCOM	61.81	-0.63	Ready to Move		
HD	50.88	-0.79	Sales are Up		
ORCL	36.56	0.68	Tech is Good		
NSCP	37.31	-2.63	You've Got Mail.		
MYG	56.69	2.63	Appliance Bonanza		
ASND	57.06	-2.44	Water Break		
SUNW	75.19	-5.28	Split Candidate		
					
NKE	35.94	-5.06	Brown Shoes?		
MCK	67.69	-7.12	The Unforgiven		
****************************************************
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.

*****************************************************
TWX  - Time Warner  $106.06  (-.94)

See Comments in Call Section.

 *December plays only have 2 weeks!
BUY CALL DEC-105 TWX-LA OI=1754 at $3.88 SL=2.50           
BUY CALL DEC-110 TWX-LB OI=1845 at $1.94 SL=1.00           
BUY CALL JAN-110*TWX-AB OI=3364 at $4.25 SL=2.50, post split 55s         
BUY CALL JAN-115 TWX-AC OI= 331 at $2.56 SL=1.25           


chart
*****************************************************
BK   - Bank of New York $36.375 (+1.94)

See Comments in Call Section.

BUY CALL DEC-35.00 BK-LG OI=1377 at 1.75 SL=1.00, ITM $1.38 only $.37 premium.
BUY CALL JAN-35.00 BK-AG OI=2282 at 2.50 SL=1.25, ITM $1.38 
BUY CALL JAN-37.50*BK-AU OI= 366 at 1.13 SL=0.00 
BUY CALL JAN-40.00 BK-AH OI= 110 at  .56 SL=0.00 
BUY CALL APR-40.00 BK-DH OI= 167 at 1.50 SL=.75


chart
*****************************************************
NTAP - Network Appliances, Inc.  $75.00 (+1.00)

See Comments in Call Section.

 *December plays only have 2 weeks left!
BUY CALL DEC-70 NJQ-LN OI=209 at 5.88 SL=4.25 ITM $5, only .88 premium
BUY CALL DEC-75 NJQ-LQ OI=367 at 2.88 SL=1.50
BUY CALL JAN-75 NJQ-AO OI= 38 at 6.00 SL=3.50
BUY CALL JAN-80*NJQ-AP OI=281 at 3.50 SL=2.00 post split 40s.


chart
*****************************************************
THE PLAY OF THE DAY -PUTS- ONLY PLAY IN FALLING MARKET
*****************************************************
See Put Section.
*****************************************************
OPTIONS TRADING BOOKS  - over 50 new books since 9/15
*****************************************************

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

http://www.OptionInvestor.com/bookstore

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


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

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

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

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

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

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

http://www.interquote.com


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

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

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

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

To subscribe you may go to our website at 

www.OptionInvestor.com

and click on "subscribe" to use our secure credit 
card server or you may simply send an email to 
"Contact Support" with your
credit card information,(number, exp date, name)
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              12-06-98
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.


************************************************************************
STOCKS ADDED TO THE PICK LIST
************************************************************************

Calls

TXN  - Texas Instruments, Inc.
LOW  - Lowes
TWX  - Time Warner
WMT  - Wal-Mart
BK   - Bank of New York
KMB  - Kimberly-Clark Corp.
CMVT - Comverse Technology Inc.
NTAP - Network Appliances Inc.
CVS  - CVS Corporation
ETEC - Etec Corporation
JBL  - Jabil Circuit, Inc.

Puts

NKE  - Nike
MCK  - McKesson Corp.

************************************************************************
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:
 
LLY $86.13 (-4.76) LLY was doing fairly well holding their own most 
of the week before getting slaughtered in the market sell-off on 
Thursday falling almost 6% to rest below their 30 dma.  While they 
came back over 2 points on Friday, but we really didn't feel it was 
enough.  Coupled with a downgrade by Warburg D. Read, who cut LLY's 
1999 and 2000 earnings due to disappointing info on LLY's Evista 
drug, we felt there were better plays available.

MO $55.56 (-2.56)  It looks like MO's extended run is over, and
that traders are heading for the exits.  It was a good run, and
went a little bit beyond the settlement with the states, but it
looks to be over.  MO has very strong cash flow, so I am sure
that it will have another run, but we will drop them for now.

BBBY $29.75 (-2.19)  BBBY looks like it has rolled over and
trending down.  It had only one up day last week.  We would
have expected the opposite, especially since the reports about
specialty retailers and discounters were good, so we are going
to drop them as a pick

RAD $45.50 (-3.44)  We like the industry that RAD is in, but we
don't like its performance last week.  It looks like it is
going to have trouble with resistance at $49, so we are going
to drop them as a pick, and move the drug store industry play
to CVS.  

PUTS: 

None.


************************************************************************
STOCK SPLIT CANDIDATES 
************************************************************************

YHOO - Yahoo
EMC  - EMC Corp	    
IBM  - Intl Business Machines.
CMGI - CMG Info Services
WMT  - Wal-Mart
SUNW - SunMicro Systems
CSCO - Cisco Systems

Recent split candidates that announced:

MRK  - Merck

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


SCH  - Charles Schwab  3:2 12-11-98 ex-date 12-14 recovering
PVN  - Providian Finl  3:2 12-15-98 ex-date 12-16 recovering 
TWX  - Time Warner     2:1 12-15-98 ex-date 12-16 up 
SLE  - Sara Lee        2:1 12-21-98 ex-date 12-22 recovering
NTAP - Network Appl.   2:1 12-21-98 ex-date 12-22 up
LMT  - Lockheed Martin 2:1 12-31-98 ex-date 01-04 recovering
AMZN - Amazon.com      3:1 01-04-99 ex-date 01-05 rocky

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


************************************************************************
STOCK OPTIONS - FINANCIAL
************************************************************************
MER - Merrill Lynch $72.38 (-7.62)(+8.37)(+9.63)(+1.63)

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

ATTENTION Conservative players.  Remember last week?  You were looking
at MER but thought, "Yeah, these guys might be right.  MER is due for
a pullback.  and the letter says I should wait for the dip."  Well, 
It was a long drawn out, 4 day dip; but we got it.  While MER is 
currently sitting below its 10 dma (which is not desirable), it appears
to be developing a pattern.  Twice now, since its October lows, MER 
dipped below its 10 dma for a couple of days after a good 7 to 10 day 
run.  If it holds true to form, MER should at least jump to $75 on 
Monday (market permitting).  We not saying this is going to happen
because Murphy's law would guarantee just the opposite.  We are 
saying that MER should continue up with the market should the bull
run continue.  Wait to see what direction the market is moving on
Monday.

News for MER has not be noteworthy as of late.  Court approval of
a large settlement for the Orange County fiasco that occurred back
in 1994 finally happened.  More important was the whipping the
financial sector received as investors worried over Brazil and
the implications of Boeing's layoffs and earnings warnings.

 *December plays only have 2 weeks!
BUY CALL DEC-70 MER-LN OI=3694 at $4.50 SL=2.75, ITM
BUY CALL DEC-75 MER-LO OI=8106 at $2.00 SL=1.00
BUY CALL JAN-70 MER-AN OI=4081 at $6.88 SL=5.25
BUY CALL JAN-75*MER-AO OI=3840 at $4.38 SL=2.75

Picked on Nov 17th at   $66.31   PE=23
Change since picked     + 6.07   52 week low =$ 35.75
Analysts Ratings     3-2-7-0-0   52 week high=$109.13
Last earnings    9-98 est=1.21   actual= .28
Next earnings    1-20 est= .78   versus=1.17  

MACD Chart   CHART   NEWS   Zacks on MER 
************************************************************************
BK  - Bank of New York $36.375 (+1.94)

The Bank of New York Company is the leading retail bank in the 
suburban New York area, with more than 350 branches in the tristate 
area. It offers a complete range of banking services including 
residential mortgages and commercial and consumer loans. The 
company is building its corporate fee-based services, focusing in 
particular on trust and custody operations. Other services include
clearing, transfer, and transaction processing; investment banking; 
asset-based finance; American depository receipts; and mergers and 
acquisitions. It has sold its credit card business to Chase 
Manhattan. BK is moving its mortgage operations into a joint venture 
with Alliance Mortgage that will operate under the BK Mortgage name. 

BK recently hit a new high and has been a consistent performer. It 
has broken above prior resistance at $35.50, and, market permitting, 
should rally further from here. Its 10 dma had been resistance 
since the Oct.8th bottom. The 10-day MA is around $35.50. 

Not a whole lot of news of BK, but it does seem to pick up new 
companies every week in their corporate custodial accounts.  The 
latest is Pacific Life. BK will convert their assets in the 2nd 
quarter of next year. On Nov.17th, DaimlerChrysler chose BK to be 
the US transfer agent for the new company.  

BUY CALL DEC-35.00 BK-LG OI=1377 at 1.75 SL=1.00,only $.37 premium.
BUY CALL JAN-35.00 BK-AG OI=2282 at 2.50 SL=1.25, ITM $1.38 
BUY CALL JAN-37.50*BK-AU OI= 366 at 1.13 SL=0.00 
BUY CALL JAN-40.00 BK-AH OI= 110 at  .56 SL=0.00 
BUY CALL APR-40.00 BK-DH OI= 167 at 1.50 SL=.75

Picked on Dec.6th at  $36.38      PE=24
Changed since picked    0.00      52-week low   = $14.00
Analysts Ratings   7-9-6-0-0      52-week high = $36.38
Last Earnings    10-98 est =.39   actual = .39
Next Earnings     1-99 est =.40   versus = .38

MACD Chart   CHART   NEWS   Zacks on BK
************************************************************************
STOCK OPTIONS - DRUGS
************************************************************************
MRK - Merck & Co. $157.63 (-1.25)(+7.38)(+5.88)(+0.69)(+9.88)

In the United States, Merck is the number one pharmaceutical company.
Nasty words like "high cholesterol", "hypertension", and "heart 
failure" are music to their ears. 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.

Finally some daylight after a tough week.  Merck showed some signs 
of a comeback on Friday by closing up +$2.75.  In a market stunned 
by profit taking, international concerns, and some earnings warnings, 
we'd have to say that Merck got off easy by only losing -$1.25 on
the week.  This could be a nice time to head back into Merck if the 
market stays positive on Monday.  Keep in mind that Merck is going 
to split near February 16th, 1999.  

News on the week:  Beginning Jan. 1, 1999, Tufts Health Plan, the 
second largest HMO in Massachusetts, will no longer cover the costs 
for Mevacor, Merck's cholesterol lowering drug, along with 43 other 
drugs from various drug companies.  Other HMO's might soon follow 
in the footsteps of Tufts as they also consider offering the cheaper 
generic drugs to help cut costs.  In a court settlement, the 
District of Columbia and 10 states will soon receive $64.3 million 
form the world's largest drug companies like Merck, Pfizer, BMY, 
Eli Lilly, and several others for selling their pharmaceuticals 
to the HMOs at a discounted price while not offering the same prices 
to the retail pharmacies ($64 mln among these guys is pocket change). 
On Thursday, Merck revised the caution labels on its asthma drug 
Singulair to increase awareness of Churg-Strauss syndrome, a rare 
tissue disorder which can sometimes strike asthma patients.     
  
*Caution: 2 weeks left on Dec plays!
BUY CALL DEC-155 MRK-LK OI=3709 at $4.88 SL=3.25
BUY CALL DEC-160 MRK-LL OI=3762 at $2.31 SL=1.00 
BUY CALL JAN-160 MRK-AL OI=1996 at $5.63 SL=3.75
BUY CALL JAN-165 MRK-AM OI= 380 at $3.75 SL=2.00
BUY CALL APR-170 MRK-DN OI= 583 at $6.75 SL=4.75, POST SPLIT 85's

SELL PUT DEC-155 MRK-XK OI=1447 B=2.06 A=2.44 ROI=6%
 * 2 week play * review risks of selling puts.

Picked on November 8th at $144.94     PE= 36
Change since picked       +$12.69     52 week low =$ 94.81
Analysts Ratings      9-13-14-0-0     52 week high=$160.00
Last earnings 10-16 est 1.12      actual 1.12 
Next earnings 01-27 est 1.16      versus 1.01 

MACD Chart   CHART   NEWS   Zacks on MRK
************************************************************************
CVS - CVS Corporation $51.63 (+1.19)

CVS operates about 4,000 Arbor and CVS drugstores in 24 states and 
the District of Columbia.  Thanks to its acquisitions of Revco and 
Arbor Drugs, CVS is the #2 drugstore chain in the US, trailing only 
Walgreens.  More than 50% of CVS's sales come from pharmacies with 
general merchandise accounting for the rest.  The company also 
provides managed-care drug programs through PharmaCare Management 
Services.  CVS is remodeling the former Revco stores, a conversion 
that includes stocking the stores with hundreds of CVS' private-label 
products.

Last week, CVS announced that same store sales for the month of 
November increased 14% over the year ago period.  Pharmacy same store 
sales rose 19%.  Pharmacy sales represented 60% of total sales in 
November.  These trends are also intact for the year.  Year-to-date 
same store sales increased 10.5% over the same period last year, 
while pharmacy store sales increased 16.2%.  CVS plans to open 375 
new or relocated stores this year, up from 320.  Next year they 
expect to open 400 to 425 stores.  Management believes that their 
new store development plan will contribute significantly to future 
growth.

We have been playing the drug store industry during the past couple 
of weeks, first with LDG and then with RAD.  We like the fundamentals 
of the industry and the consolidation news, so we are adding CVS to 
the play list.  CVS set a new 52 week high on Friday, and has a great 
looking short term chart.  Since the high on Friday is an all time 
high, there isn't any resistance on CVS.  Also, it looks like CVS 
hasn't gotten too far ahead of itself.  

BUY CALL DEC-45 CVS-LI OI=220 at $6.88 SL=5.25
BUY CALL DEC-50 CVS-LJ OI=103 at $2.19 SL=1.00
BUY CALL JAN-55 CVS-AK OI=110 at $1.19 SL= .00
BUY CALL FEB-55*CVS-BK OI=301 at $1.56 SL= .75

Picked on Dec 6th at $51.63    PE=33
Change since picked    +0.00   52 week low =$29.38
Analysts Ratings   4-7-2-0-0   52 week high=$52.63
Last earnings   9-98 est=.25   actual=.25
Next earnings   2-09 est=.36   versus=.31

MACD Chart   CHART   NEWS   Zacks on CVS
***********************************************************
STOCK OPTIONS - TECH 
************************************************************************
IBM  -  Intl Business Machines $164.25 (-5.76)(+9.81)(+2.69)(+7.51)

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.

IBM fell victim along with the rest of the tech sector this week to
profit taking.  To be expected for IBM after they had a run up of
$50 over their Oct. lows.  IBM did however manage to hit another
life-time high on Monday trading at $170.56 before the profit
taking commenced.  With the tech sector working hard on Friday to
bring the market back into the green, IBM managed to stay above 
the $160 level.  With positive market direction IBM should
continue back up towards their $180 target price. At this price
level we are looking for IBM to announce a split. They last split
in June of '97 after a huge pre-split run up.  Internet access
seems to be the driving force behind rising PC sales this
Christmas season. Caution is warned when taking up new positions
in IBM.  Wait for positive movement within IBM since they really
did not participate in Friday's rally (the Dow went up 136 pts and
IBM only went up +0.75)then plan your trades accordingly.

IBM made several announcements this week to include several 
enhancements made to their Net.commerce software, making it one of
the first commerce servers in the industry to support Euro
currency.  IBM joined an alliance with Talk Technology Inc. to
provide the next generation radiology dictation/transcription.
IBM also earned the highest certification for commercial security
ever awarded by the U.S. Government for their cryptographic
coprocessor, which was produced for enabling secure e-business
transactions.

* December plays only have 2 weeks left!

BUY CALL DEC-160 IBM-LL OI= 5162 at $7.00 SL= 5.25
BUY CALL DEC-165 IBM-LM OI= 3408 at $3.88 SL= 2.50
BUY CALL JAN-165 IBM-AM OI= 2857 at $7.50 SL= 5.75
BUY CALL JAN-170 IBM-AN OI= 3352 at $5.00 SL= 3.25
BUY CALL APR-180 IBM-DP OI=  898 at $7.13 SL= 5.25

Picked on November 15th at $157.44     PE = 25
Change Since Picked         +$6.81     52 Week High= 170.56
Analysts Ratings        12-7-3-0-0     52 Week Low =  95.62
Last Earnings 10-20 est. 1.53 actual 1.56	 surprise 1.96%
Next Earnings 01-18 est. 2.45 versus 2.11

MACD Chart   CHART   NEWS   Zacks on IBM
************************************************************************
ORCL - Oracle Corporation  $36.56 (+1.56)(+1.06)(+1.63)

Oracle is the leading developer of database management system 
software, which lets multiple users and applications use the same 
data at the same time.  Its flagship database software runs on 
everything from notebook computers to mainframes.  Oracle8, a faster,
more flexible version of the firm's database software, provides 
support for a system of network computers – stripped-down, low-cost 
computer terminals operated through a control server.  Oracle also 
makes application development productivity tools and computer-
automated software engineering products, among others. 

In the news last week, ORCL announced a new product called
Oracle Internet Bill & Pay 1.0.  This is a bill presentment and
payment solution for businesses that want to provide online billing 
services to their customer's.  It will enable companies to present 
invoices and receive payments online.  It will also allow banks, 
service providers and portals to consolidate bills from multiple 
billers and act as a single online access point for consumers.  
There are several companies that have announced that they will be 
working with ORCL on their new billing system, including EDS and 
CyberCash.

The confusion continues over ORCL's earnings release date.  We 
reported in Thursday's update that a reader indicated that the 
release date was 12/12.  I didn't realized it at the time, but that 
is a Saturday.  YAHOO and Zacks have the release date as 12/08 and 
First Call has it as 12/22.  I would anticipate a release on 12/08 
and have your hand on the trigger.  ORCL set a new 52 week high 
last week, but then pulled back a bit. 

 *Decembers only have 2 weeks left!
BUY CALL DEC-35 ORQ-LG OI=4420 at $2.63 SL=1.25
BUY CALL DEC-40 ORQ-LH OI=2666 at $0.63 SL= .00, risky!
BUY CALL JAN-40*ORQ-AH OI=9058 at $1.25 SL= .00
BUY CALL MAR-40*ORQ-CH OI=2152 at $2.75 SL=1.25, plenty of time.

Picked on Nov 21st at $34.81   PE=23
Change since picked    +2.62   52 week low =$17.75
Analysts Ratings  7-14-9-0-0   52 week high=$37.00
Last earnings   8-98 est=.16   actual=.20
Next earnings  12-08 est=.24   versus=.19

MACD Chart   CHART   NEWS   Zacks on ORCL
************************************************************************
EMC  - EMC Corporation $79.00 (+4.00)(+5.00)(+3.00)(-2.06)

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 from all major 
computing environments, including UNIX, Windows NT and mainframe 
platforms.  EMC markets its memory products under the name Symmetrix.  
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.  

In the news last week, two analysts raised their price targets on EMC. 
One analyst raised their price target to $95 and the other to $87. It 
was noted that EMC is growing faster than other well known technology 
names, but commands a lower multiple than all but Intel.  EMC also 
announced a strategic alliance with NEC Corporation.  NEC will be 
reselling EMC Symmetrix storage systems with its NT and Unix based 
computer systems.  EMC expects $100 million in revenue from this 
alliance.  In general, the news surrounding EMC is very positive.  

EMC set a new 52 week high last week at $80.50 on Wednesday. EMC is 
also a split candidate.  Last November EMC split at around $63 after 
a strong move.  We are in similar territory again.  One of the best 
ways to profit from split announcements is to position yourself in 
the stock before the split announcement.  EMC is a strong growth 
stock with positive earnings and margin momentum.

 *December plays only have 2 weeks left!
BUY CALL DEC-75 EMC-LO OI=2030 at $5.50 SL=3.50
BUY CALL DEC-80 EMC-LQ OI=1003 at $2.50 SL=1.25
BUY CALL JAN-80*EMC-AQ OI=2063 at $5.13 SL=3.25
BUY CALL JAN-85 EMC-AS OI=  78 at $3.13 SL=1.50
BUY CALL APR-85 EMC-DS OI=  89 at $7.63 SL=5.75

Picked on Nov 8th at $69.06     PE=36
Change since picked   +9.94     52 week low =$23.50
Analysts Ratings 10-4-0-0-0     52 week high=$80.50
Last earnings  9-98 est=.36     actual=.38
Next earnings  1-28 est=.46     versus=.32

MACD Chart   CHART   NEWS   Zacks on EMC
************************************************************
SUNW - Sun Microsystems $75.19 (-5.18)

UltraSPARCs, Netra servers, SPARCstations, and Solaris (for Unix) 
are all products of Sun Microsystems.  Sun is also the creator of 
the Java computer language.  They are also the recent partners with 
AOL in the Netscape merger.

Consolidation, profit-taking, pull back, dip, breather, the
pause that refreshes...call it whatever you want, SUNW lost about
6% on the week.  Which is okay after a 100% climb in 8 weeks.
This was overdue (yeah, where have you heard that before...) and 
now that its out of the way, watch out New Years.  SUNW appears to
have found new support between $72 and $74 (a critical step above
its previous resistance of $70).  With earnings due in the middle
of January, we could see an earnings run.  Not to mention, SUNW 
is a big split candidate.  Their last split was at the very end
of 1996.  They split 2:1 near $64.  Their split before that was
the year before around $80.  The possibilities are getting stronger.

The not so little company from Palo Alto, CA appears to be giving
the big, bad M-Pire (MSFT) a hard time in court over its Java
programming language.  Not just over browser wars anymore, the 
U.S. gov't is using SUNW's Java language as a nail in MSFT's legal
coffin.  There was more broker activity this week.  You'll remember
that Merrill raised SUNW's price targets two weeks ago.  This week
Soloman Smith Barney downgraded SUNW on valuation, but at the same
time, Morgan Stanley and DLJ both told their clients to buy SUNW
on any weakness.  DLJ also has a strong target price for SUNW.

 * December plays only last 2 more weeks!
BUY CALL DEC-70 SUQ-LN OI=3099 at $ 6.88 SL=5.25, lower premium.
BUY CALL DEC-75 SUQ-LO OI=3701 at $ 3.38 SL=1.50
BUY CALL JAN-75 SUQ-AO OI=2786 at $ 6.00 SL=4.25
BUY CALL JAN-80*SUQ-AP OI=2804 at $ 3.88 SL=1.75
BUY CALL APR-85 SUQ-DQ OI= 386 at $ 6.00 SL=4.25, lots of time.

Momentum Play

MACD Chart   CHART   NEWS   Zacks on SUNW
************************************************************
STOCK OPTIONS - NETWORKING
************************************************************
CSCO - Cisco Systems $78.25 (-1.75)(+5.38)(+9.92)(-$2.76)(P2W +8.75) 

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. 

The Play:
Striving to break through $80 several times this week, market 
conditions just wouldn't let CSCO do its thing.  Actually, after 
such a strong run, CSCO could use the rest and consolidation that
occur whiled the market churned.  With a good recovery on Tuesday
and Friday, we feel that CSCO is primed to break out again next
week (assuming the market cooperates).  Believe it or not, CSCO's
last 7 splits have all occurred between $78 and $100.  Since its
last one was not more than 3 months ago, we really don't expect
another so soon (maybe near next earnings) but it could happen.

Big news for CSCO this week was its more recent acquisition, 
PipeLinks. PipeLinks develops high capacity routers that will help 
CSCO pursue its goal to dominate the data convergence market.  At 
the tech conference in Arizona this week, CSCO's CEO told reporters 
that he felt CSCO could do better than 30% annually for the next 3 
to 5 years. That's a lot of routers!

 *Decembers only have 2 weeks left!
BUY CALL DEC-75 CYQ-LO OI=12704 at $4.75 SL=3.25
BUY CALL DEC-80 CYQ-LP OI=12940 at $2.00 SL=1.00
BUY CALL JAN-80*CYQ-AP OI= 7875 at $3.88 SL=2.50
BUY CALL JAN-85*CYQ-AQ OI= 4759 at $2.06 SL=1.00
BUY CALL APR-85 CYQ-DQ OI= 2054 at $6.00 SL=4.50

SELL PUT DEC-75 CYQ-XO OI=4055 B=1.44 A=1.63 ROI=8.4%
 *review risks of selling puts! 2 week play.

LEAP PLAY:

BUY LEAP JAN-2000-90 LCY-AR at $10.75 SL= 8.75 
BUY LEAP JAN-2001-90 ZCY-AR at $17.63 SL=13.50

Picked on Oct   8th   $46.69		PE= 81
Change since picked  +$31.56		52 week low =$31.87 
Analysts Ratings 16-14-0-0-0		52 week high=$80.37
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
***********************************************************
NTAP - Network Appliances, Inc.  $75.00 (+1.00)

Just because you can't see computer files in cyberspace doesn't mean 
that they don't need to be filed. Network Appliance takes care of 
this problem with its NetCache software and NetApp suite of network 
storage servers, or "filers." These products are designed for high-
traffic, data-intensive networks typically used by Internet service
providers and corporate intranets. Equipment features include quick 
installation (about fifteen minutes), few system commands (only 40), 
high-powered ONTAP operating system, fibre channel support, and 
SecureShare simultaneous access by users from all Windows, UNIX, and 
Web platforms. Customers include Yahoo!, AOL, Motorola, Siemens, and 
the UK's #1 ISP, Demon Internet. 

NTAP has been consolidating the last 2 weeks, but did not have much 
of a down move during the rough last week in the market. Friday, 
NTAP bounced off its 10-day MA and gained over $3.00 on the day.  
NTAP has a 2-1 stock split coming up on Dec. 21st.  Market permitting 
we could see a nice split run. NTAP's split takes place after Dec. 
options expiration.

NTAP announced earnings on Nov.17th. Earnings increased 71%.  NTAP 
also recently announced an agreement with Dell to provide equipment 
for their business systems. Dell will start marketing the equipment 
under the Dell name next year.  Analysts feel NTAP will continue to 
growth earnings at a 60% growth, with no ceiling in sight.

 *December plays only have 2 weeks left!
BUY CALL DEC-70 NJQ-LN OI=209 at 5.88 SL=4.25 ITM $5, only .88 premium
BUY CALL DEC-75 NJQ-LQ OI=367 at 2.88 SL=1.50
BUY CALL JAN-75 NJQ-AO OI= 38 at 6.00 SL=3.50
BUY CALL JAN-80*NJQ-AP OI=281 at 3.50 SL=2.00 post split 40s.

SELL PUT DEC-70 NJQ-XN OI= 90 B=1.19 A=1.56 ROI= 7.3%
SELL PUT DEC-75 NJQ-XO OI= 89 B=3.13 A=3.50 ROI=17.2% (riskier)
 * 2 week plays! Review the risks of selling puts.

Picked on Dec.6th at  $75.00      PE= 98
Changed since picked    0.00      52-week low  = $23.75
Analysts Ratings   3-2-0-0-0      52-week high = $77.00
Last Earnings   11-98 est = .20   actual = .22
Next Earnings    2-99 est = .23   versus = .15

MACD Chart   CHART   NEWS   Zacks on NTAP
***********************************************************
ASND - Ascend $57.06 (-2.44)

Ascend is a major provider for products connecting your computers 
across WANs.  Their two main product lines, MAX and Pipeline, provide
products that allow users to transit voice, video, data, and remote
access to central computer from different branches or portables
(respectively).  Ascend manufactures products necessary for video 
conferencing networks.  

ASND is another tech stock that has been on fire for the last five
weeks.  Yet when traders had the opportunity to profit take, the
best they could do was 2 1/2 points.  Two weeks ago, ASND had finally
broken though overhead resistance at $55.  Through all of the market
volatility last week they finished the week above this support level.
Friday's performance was less than desirable so we recommend you wait
for positive movement in the stock before initiating any plays.  

News for the week, what there was of it, was positive.  A lot of the
tech stocks received a big boost from the tech conference in Arizona
last week.  ASND's CEO came out with some very bullish statements 
about the industry and ASND (of course, what is he suppose to say?).  
He did say that ASND was well positioned to capture a lot of the 
growing data convergence market (but he'll be fighting LU and CSCO 
for market share if one of them doesn't buy him first).  He also 
felt that corporate spending was trending positive as companies 
upgrade to newer, faster equipment with the growing needs/
opportunities with the Internet and corporate intranets.

 *Decembers only have 2 weeks left!
BUY CALL DEC-55 QQA-LK OI=6057 at $3.88 SL=2.50, ITM
BUY CALL DEC-60 QQA-LL OI=5622 at $1.44 SL= .75, riskier
BUY CALL JAN-60*QQA-AM OI=7206 at $4.00 SL=2.50
BUY CALL MAR-65*QQA-CM OI= 317 at $4.50 SL=2.75

NO PUT PLAY THIS WEEK.

Picked on December 1st at $58.00     PE= 48     
Change since picked      -$ 0.94     52 week high= 59.62 
Analysts Ratings      7-10-5-0-0     52 week low = 22.00 
Last Earnings  9/98  est= .31  actual= .32  surprise +3.2%
Next Earnings 01-20  est= .32  versus= .24

MACD Chart   CHART   NEWS   Zacks on ASND
***********************************************************
STOCK OPTIONS - INTERNET  
***********************************************************
CMGI - $68.50 (-20.25)(+11.38)(+7.76)(-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 ompiler/ 
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. 

Ouch! Down $20 for the week!  We warned you about wide price swings.
Profit-taking this steep can be expected after a run up from $36 to 
$90 in 2 months.  Normally we would drop a stock after such a drastic
fall.  However, CMGI remains on our list for a couple of reasons.  
Earnings are expected on Dec. 11th and their shareholder meeting
is on Dec. 17th.  We hinted a few weeks ago that CMGI has planned to 
increase the number of shares outstanding (that means they want to 
split!).  According to their SEC filings, the vote is to increase 
shares from 40 mln to 100 mln.  This would be enough for (2) 2:1 
splits since current shares outstanding are only 23 mln.  A word of 
caution though, CMGI's lack of participation in the rally today
concerns us.  We DO NOT recommend any plays on CMGI until their 
momentum turns positive.  Patience is a virtue.

Planet Direct announced a strategic partnership agreement with 
up2technologies Inc. Planet Direct will be providing the online 
content to up2technologies Inc. new portal site.  NaviSite was
selected by Compaq to provide high end web hosting services to CPQ's
"Ask Alta Vista a Question". The "Ask Alta Vista" knowledge base 
will include 6 million of the most popular questions and answers on
the Internet.

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

BUY CALL DEC-70 QGC-LN 
BUY CALL DEC-75 QGC-LO 
BUY CALL JAN-70 QGC-AN 
BUY CALL JAN-75 QGC-AO 
BUY CALL JAN-80 QGC-AP 
... We did not list any prices because we do not
recommend any plays until CMGI turns back around.

Picked on Oct. 22nd at $52.25      PE = 93
Change since picked   +$16.25      52 Week High= 91.75
Analysts Ratings    2-4-2-0-0      52 Week Low = 10.75
Last Earnings  9-24 est -0.51  actual 1.27 Surprise +330%
Next Earnings 12-10 est -0.53  versus  .12

MACD Chart   CHART   NEWS   Zacks on CMGI
***********************************************************
YHOO - Yahoo Inc. $189.75 (-27.19)(+25.93)(+23.01)(+14.44)

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.

The Play:
It was bound to happen sooner or later.  Correcting a little over 
11% from its high, investors finally decided to take some profits
home for the holidays.  New Internet IPOs stole the spotlight all
week while YHOO consolidated to find support in the low 180s.  
We still feel that the trend is positive for the major Internets
(YHOO, AMZN, AOL), but wait for YHOO to re-confirm that trend.  
They remain a split candidate.  Their last split was in June after 
announcing above $180.  Management might announce another split as 
we approach their January earnings date.

Yahoo's news this week seemed a little bland with the market 
volatility garnering all the attention.  YHOO did release their new 
city search and restaurant finder.  They also enhanced their real
estate section with a handful of new features.

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

 *Decembers only have 2 weeks left!
BUY CALL DEC-185 YHU-LQ OI= 382 at $16.50 SL=12.00, ITM
BUY CALL DEC-190 YHU-LR OI= 935 at $13.25 SL=10.50, ATM
BUY CALL DEC-195 YHU-LS OI=1633 at $11.63 SL= 9.00, OTM
BUY CALL JAN-190 YHU-AR OI=1463 at $25.00 SL=19.50
BUY CALL JAN-200 YHU-AT OI=1564 at $19.88 SL=15.50

For those of you with a Death Wish...we were going to list a few
puts to sell.  But just couldn't bring ourselves to do it.  We're
afraid some of you might actually jump on it.

PURELY MOMENTUM PLAY - NO FUNDAMENTALS

MACD Chart   CHART   NEWS   Zacks on YHOO
***********************************************************
AOL - America Online $88.00 (-6.49)(+10.02)

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!)

The Play:
AOL is definitely keeping its plate full.  Surviving a rocky week
with single digit profit-taking is a blessing.  AOL had more than
doubled from its low on Oct. 8th.  The potential for serious selling
blew right past us.  Investors pounced on this Internet blue chip
everytime it dipped below $85 (they were just slow to react on 
Thursday).  Considering that AOL appeared to disregard the 
typical post-split depression and made an offer to buy Netscape
(normally the buyer goes down and the buyee goes up), this last 
week was pretty amazing.  Look for momentum to continue upward.
People tend to buy what they "know" and a large portion of the
population is going to be online on AOL this winter when the cold
weather finally hits.  Lets just hope AOL users don't get any
busy signals like a couple of years ago.

The news this week seemed to focus on the holidays.  Online
sales are sure to be a focus for the Internets this season.
The street seemed to take a little more time to digest the
AOL/NSCP merger.  Reel.com, the online movie retailer, opened
up shop on AOL this week.  Just in time for Christmas.

AOL is still an Internet stock...use caution.

 *Decembers only have 2 weeks left!
BUY CALL DEC-85 AOL-LQ OI= 6002 at $6.63 SL=4.75
BUY CALL DEC-90 AOL-LR OI=12033 at $3.75 SL=2.00
BUY CALL JAN-90 AOL-AR OI= 7321 at $8.63 SL=6.50
BUY CALL JAN-95*AOL-AS OI=10195 at $6.38 SL=4.75 

- Momentum play.

MACD Chart   CHART   NEWS   Zacks on AOL
***********************************************************
AMZN - Amazon.com $188.50 (-28.13)(+36.00)(+52.88)

One of the giants among the volatile Internet stocks burning up 
portfolios of shorts and longs alike. Now claiming 3 million titles, 
Amazon.com has dubbed themselves as the world's biggest bookstore. 
They also sell CDs and videos. With one of the web's most popular 
Websites, they offer customers up to 40% discounts. 

What a gut wrenching week for Amazon.  Is a roller coaster ride 
descriptive enough?  We did warn that with the huge gains AMZN had 
added in recent weeks, some profit taking and consolidation were due.  
It just happened to come nastier than expected this week in the midst 
of the market looking to take some profits before the holidays 
coupled with your typical overseas turmoil.  Even Friday when the 
market soared to a +136.46 finish, Amazon refused to post a positive 
number to ease our minds going into the weekend.  It continued down 
another dollar.  But look at it this way, any finish less than a 
twenty point drop spells relief almost as good as Rolaids.  Watch 
for the market to continue its upward momentum early next week but 
EXERCISE EXTREME CAUTION if you decide to initiate a play before 
momentum truly turns around.  Even though the big Internets like 
Amazon will be the first to move in a positive market, don't try to 
pick a bottom.  This is extremely risky.  Be patient.  There is 
plenty of time to play before Amazon's split near Jan. 4th 1999.

News On The Week: NetFlix.com became Amazon's newest promotional 
partner on Friday when the two companies agreed to direct their 
customers to one another when they are looking to buy or rent DVD 
movies. In line with the holiday spirit, Amazon announced that it 
would join with the Starbright Foundation to help raise money for 
seriously ill children by donating some of the funds generated from 
book sales.

>>These are HIGH RISK plays! ...and expensive too!<<

*Caution: 2 weeks left on December plays!

BUY CALL DEC-185 ZQN-LQ OI= 654 at $18.00 SL=14.00
BUY CALL DEC-190 ZQN-LR OI= 960 at $14.00 SL=11.25
BUY CALL DEC-195 QZN-LS OI= 593 at $11.63 SL= 9.50
BUY CALL DEC-200 QZN-LT OI=2798 at $ 9.63 SL= 7.25
BUY CALL JAN-200*QZN-AT OI=1198 at $24.63 SL=19.00, post split 66s
BUY CALL JAN-210 QZN-AB OI= 771 at $20.38 SL=15.50, post split 70s

PURELY MOMENTUM/SPLIT PLAY - NO FUNDAMENTALS

MACD Chart   CHART   NEWS   Zacks on AMZN
***********************************************************
NSCP - Netscape $37.31 (-2.63)(+.75)

The company whose name use to be a synonym for the Internet, 
Netscape was the first to offer a successful graphical browser for 
surfing the web that caught on with the masses.  Now they have a 
huge web presence and they continue to pioneer the frontier of 
e-commerce.

The Play:
Its been a little bit of a tough week for NSCP.  2 weeks ago AOL
announced a stock for stock deal to acquire Netscape (then worth
over $4 bln).  AOL had just finished an incredible run and was due 
for some profit-taking.  Now that NSCP's stock price is super glued 
to AOL's when AOL hit some profit-taking (not much), NSCP fell with 
the Internet behemoth.  Fortunately, when AOL turns it back around, 
NSCP should take off with them.  For every $1 AOL climbs, NSCP will 
gain $.45.  This is definitely an opportunity to let options leverage 
that movement versus just playing the stock.

News for NSCP has most been references in the MSFT trial and the AOL 
buyout.  Although AOL's president Steve Case offered NSCP's talented 
staff an extra months pay to stay on board (plus, they get to keep 
their Netscape email addresses).

 *Decembers only have 2 weeks left!
BUY CALL DEC-35 NQY-LG OI=2488 at $3.50 SL=1.75
BUY CALL DEC-40 NQY-LH OI=5866 at $1.06 SL=0.00, risky
BUY CALL JAN-40 NQY-AH OI=5452 at $3.13 SL=1.50
BUY CALL JAN-45 NQY-AI OI=4418 at $1.50 SL= .75
BUY CALL APR-45 NQY-DI OI=1019 at $4.25 SL=2.50, plenty of time.

- Take Over Play.

MACD Chart   CHART   NEWS   Zacks on NSCP
***********************************************************
STOCK OPTIONS - TELECOMM
***********************************************************
CMVT - Comverse Technology, Inc.  $64.75 (+5.31)

Comverse Technology makes enhanced telecommunications systems and is 
the third-largest firm in the voice mail market (after Lucent's Octel 
and Northern Telecom). Its TRILOGUE INfinity and Access NP product 
lines supply voice and fax messaging, automated personal assistant, 
and call answering services. TRILOGUE is marketed to telecommunica-
tions network operators and gives multiple telephone users access to 
integrated digital information and messaging services.  Comverse's 
AUDIODISK and ULTRA lines are communications monitoring systems used 
by police and surveillance agencies, correctional institutions, 
emergency 911 services, financial institutions, and telemarketers. 

CMVT has had a very nice run from the lows in October. Last week's 
profit taking in the market did not effect CMVT. The price gapped above
resistance on 12/02/98 and went up the next two days. With the positive 
earnings and new high, CMVT could have a continued rally. BancBoston 
recently raised its price target to $70. CMVT relative strength compared 
to the market has made a bullish crossover. 

CMVT doesn't have much news other than the positive earnings last week. 
The earnings report sparked a surge of interest in this stock.  Piper
Jaffray came out very bullish on the stock, raised their earnings 
estimates by 10 cents, and raised their target price to $69.  The 
analyst was impressed by the record backlog of business and favorable
financial trends with a 49% increase in non-Asia business -(Reuters).
Plus, FAC/Eqts First Albany upgraded the stock from a "buy" to a 
"strong buy" on Wednesday in wake of CMVT's earnings report.

 *the December plays only have 2 weeks left!
BUY CALL DEC-60 CQV-LL OI= 290 at 5.50 SL=3.00, ITM $4.75
BUY CALL DEC-65 CQV-LM OI=  46 at 2.13 SL=1.25
BUY CALL JAN-60 CQV-AL OI=1349 at 7.00 SL=3.75, ITM $4.75
BUY CALL JAN-65 CQV-AM OI= 362 at 4.25 SL=2.50
 * highest strikes so far.

Picked on Dec.6th at   $64.75      PE=28
Changed since picked     0.00      52-week low = $29.38
Analysts Ratings    8-4-0-0-0      52-week high= $64.94
Last Earnings  12-98 est =.56      actual = .62
Next Earnings   3-99 est =.61      versus = .44

MACD Chart   CHART   NEWS   Zacks on CMVT
***********************************************************
WCOM - WorldCom $61.83 (-.63)(+4.94)

Telecommunications behemoth, MCIWorldCom, is the recent offspring
between a marriage of formerly #2 long distance provider MCI and 
#4 provider WorldCom.  Now the newly formed giant of giants is 
duking it out with AT&T as they stake their claim in the local phone
service, international service, cellular, paging, and Internet access
arenas.

Despite a rough and tumble week, WCOM hung on to most of last week's
gains.  Holding above key resistance at $58, WCOM bounced off of it
in Tuesday's rebound.  Friday they bounced off of their 10 dma.
Closing near its high of the day on Friday and less than a point from
its 52 week high, momentum should carry this stock to new highs 
breaking out of this week's consolidating grip.  No new news.

 *Decembers only have 2 weeks left!
BUY CALL DEC-60 LDQ-LL OI=17176 at $2.81 SL=1.50
BUY CALL DEC-65 LDQ-LM OI= 6134 at $ .63 SL= .00, risky play
BUY CALL JAN-60 LDQ-AL OI=19992 at $4.13 SL=2.50
BUY CALL JAN-65*LDQ-AM OI=14980 at $1.75 SL= .88
BUY CALL MAR-65 LDQ-CM OI= 7537 at $3.88 SL=2.50

SELL PUT DEC-60 LDQ-XL OI=2185 A=.75 B=1.00 ROI=5.7%
 *review the risks of selling puts! 2 week play.

Picked on November 29th at $62.44       PE = 66
Change since picked       -$ 0.61       52 week high=62.75
Analysts Ratings       25-6-0-0-0       52 week low =28.50
Last Earnings 10/29 est .22  actual .21  surprise -4.5%
Next Earnings 02/19 est .22  versus .15

MACD Chart   CHART   NEWS   Zacks on WCOM
***********************************************************
STOCK OPTIONS - RETAIL
***********************************************************
WMT - Wal-Mart  $73.19  (-3.37)

The biggest of the big, the king of retailing is Wal-Mart.  This 
super soaker of retail sales is bigger than Kmart, J.C.Penney, and
Sears combined.  They operate over 3400 stores and are expanding
into international markets.  Wal-Mart is an outstanding company that 
delivers high returns for investors year after year.  Started in 1962 
and incorporated in 1969 as Wal-Mart Stores, this national discount 
retailer has simply blown away the competition.  

Wal-Mart has been climbing since late September, and, although it
corrected somewhat during the summer and fall market turmoil, it never
saw the precipitous drop that many other stocks suffered.  Last week
it was down slightly and bounced off 71.50 Thursday and 71.63
Friday, suggesting downside support at that level.  This is a strong
stock, and most important for option investors, a stock that is
already well above the price of all but one of its ten 2-for-1 stock
splits.  The last three splits occurred when the stock was trading in
the mid- 60s.  It has not split since February, 1993.  Maybe the time
is right.  [editors note*  a few months ago we were running WMT as a 
split candidate, however at the time, during our research we came 
across an article from a local paper in Arkansaw (where WMT is based).
The article said that while investors would be hoping for a split,
WMT's management did not have plans to split at that time but would
rather let the stock run up higher.  Its been awhile since the article
and the stock is higher.  The question is, "is it high enough?".]

*As one of the Dow 30 stocks, this would be a great time to buy on the
dip if you believe the Dow will rally in the next couple of weeks.

Last week, worries over a warning from Sears hit the stock prices of 
retailers. Sales of department stores are down due to unseasonably 
warm weather and changes in shoppers' preferences.  However, November  
sales reports just out show that specialty stores and discount retailers 
are doing just fine, thank you.  Wal-Mart reported a net sales increase 
of 13.7% and a same-store sales increase of 7.6%.  This compares to an 
increase of 6.1% during the same period a year ago.  

 *December plays only last 2 weeks!
BUY CALL DEC-70 WMT-LN OI=3988 at 4.25 SL=2.50       
BUY CALL DEC-75 WMT-LO OI=4159 at 1.25 SL= .00       
BUY CALL JAN-75*WMT-AO OI=5628 at 3.00 SL=1.50       
BUY CALL MAR-75 WMT-CO OI=1107 at 5.63 SL=3.50      
BUY CALL MAR-80*WMT-CP OI=1155 at 3.25 SL=1.50       

Picked on Dec 6th at   $73.19      P/E= 37
Change since picked   +$ 0.00      52 week low = 36.75
Analysts' ratings  6-11-1-0-0      52 week high= 77.25
Last earnings 10/98 est= $.44 actual= $.45  surprise: +5%
Next earnings 02-24 est= $.65 versus= $.57      

MACD Chart   CHART   NEWS   Zacks on WMT
***********************************************************
KMB - Kimberly-Clark Corp.	$53.875 (+1.57)

Kimberly-Clark is the world's top provider of personal paper products. 
It makes personal care items (baby wipes, diapers, feminine pads, 
incontinence items, and training and youth pants), away-from-home 
products (wipes and washroom materials), consumer tissue products 
(facial tissue, bathroom tissue, and paper towels), and medical 
products (disposable surgical masks and wound dressings). Its 
personal care brands include Huggies (#1 diaper in the US), Depends, 
GoodNites, Kotex, New Freedom, Pull-Ups, and Poise. Consumer tissue 
products include the Kleenex Cottonelle, Kleenex Viva, Kimwipes, 
Scott, and Wypall brands. 

KMB is usually a defensive stock, but it has been very offensive as 
of late. It is in a very nice up-trend and was hardly affected by 
the profit taking last week. Next resistance level is near the $56 
level.  PE ratio is below industry average of 28.5.  News is a 
little scarce on KMB.  However, the week before Thanksgiving, 
Prudential upgraded the stock to a "strong buy".  KMB has been a
very strong steady mover, not prone to big swings.  The JAN-55s
look good...we caution against the Decembers.

 * December plays only have 2 weeks!
BUY CALL DEC-50 KMB-LJ OI=6520 at 4.13 SL=2.50 ITM $3.88
BUY CALL DEC-55 KMB-LK OI= 110 at  .56 SL=0.00, tempting - but risky!
BUY CALL JAN-50 KMB-AJ OI=5979 at 4.88 SL=2.50 ITM $3.88
BUY CALL JAN-55*KMB-AK OI=4208 at 1.50 SL= .75
BUY CALL APR-60 KMB-DL OI=1006 at 1.38 SL= .75, plenty of time.

Picked on Dec.6th at  $53.875     PE=22
Changed since picked     0.00     52-week low = $35.88
Analysts Ratings    5-4-3-0-0     52-week high= $59.44
Last Earnings  10-98 est =.62     actual = .63
Next Earnings   1-99 est =.68     versus = .62

MACD Chart   CHART   NEWS   Zacks on KMB
***********************************************************
HD  - The Home Depot, Inc.  $50.88 (-.88)(+2.44)

HD has over 700 stores, and is the largest home improvement retailer 
in the US and has a significant presence in Canada. The company's 
primary market is the "do-it-yourself" market, but it also serves the
professional contractor.  The company stresses customer service 
(including plenty of how-to information), low prices, and a broad 
product assortment.  It is a pioneer in the warehouse store category.
The typical store is more than 100,000 sq. ft. and stocks 40,000 to 
50,000 items, including lumber, floor and wall coverings, plumbing
supplies, hardware, tools, and paint.  HD is expanding into Puerto 
Rico and South America.

There really wasn't much news on HD last week, except for the general 
reports that discounters and specialty retailers posting excellent 
sales in November.  HD is one of the largest and leads the industry 
in sales and profits on both an aggregate and a per-store basis.  
HD is able to achieve consistently high operating margins and its 
efficiency also enables it to make each new warehouse store profitable 
from the beginning.  HD has reported positive earnings comparisons 
in every quarter for the past twelve years.  HD plans to grow to
1100 stores in the next 3 to 5 years.

HD gently pulled back to its 10 day moving average and then turned 
up towards the end of the week.  There appears to be some support 
for HD at around $49.50 and again at $48.75.  Last week HD bounced 
off $49.50 several times.  HD can put on some steady and extended 
runs.  With some cooperation from the market, it may have started 
a second leg.

BUY CALL DEC-50 HD-LJ OI=3453 at $2.13 SL=1.00
BUY CALL JAN-50*HD-AJ OI=8433 at $3.25 SL=1.50
BUY CALL JAN-55 HD-AK OI=5454 at $1.25 SL= .00
BUY CALL MAY-55 HD-EK OI= 287 at $3.88 SL=2.50, these look good too.

Picked on Nov 29th at $51.75   PE=51
Change since picked     -.88   52 week low =$26.47
Analysts Ratings  7-12-7-0-0   52 week high=$52.00
Last earnings  10-98 est=.25   actual=.26
Next earnings   2-24 est=.26   versus=.20

MACD Chart   CHART   NEWS   Zacks on HD
***********************************************************
MYG - Maytag $56.69 (+2.63)(+4.00)(-1.32)(+2.07)(+2.56)

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 slow down because of its strength in the 
higher priced market segments and in commercial products. Maytag is 
the stealth play of the month. Maytag is not a sexy fast mover and 
kind of gets over looked in the winner category.

Maytag continues to hold above its former resistance level of $56 
even through this past week's choppiness.  Maytag finished the week 
positive again and now can make a serious run at the all time high 
it set in intraday trading on Thursday at $57.25.  Watch for the 
market to continue the momentum it started on Friday.  There is 
still no new news on the week for Maytag.

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

***Caution: 2 weeks left on December plays***
BUY CALL DEC-50 MYG-LJ OI= 577 at $6.75 SL=5.25 
BUY CALL DEC-55 MYG-LK OI= 218 at $2.19 SL=1.00
BUY CALL JAN-55 MYG-AK OI=2588 at $3.13 SL=1.50 
BUY CALL JAN-60 MYG-AL OI= 369 at $1.00 SL=0.00

Momentum play only

MACD Chart   CHART   NEWS   Zacks on MYG 
***********************************************************
LOW - Lowes  $45.00  (+1.44)

Lowes Companies is the second largest retailer of home improvement
products in the world, catering to both do-it-yourself customers and
commercial businesses.  It operates 473 stores in 26 states and plans
to open many more.  Fortune Magazine listed it as one of the "100 best
companies to work for in America".  In each of the last three 
quarters, earnings per share have increased over 30%.  On Dec.3rd,
November sales were reported up 21.1% over last November, while same
store sales were up 6.9%.  The stock price has been rising and in 
early November pushed through its 50- and 200-day moving averages.
LOW has a very strong and steady chart.  They barely even hiccupped
last week.  They finished very strong on Friday and should move 
right through any resistance at $45 next week.

Look around you--the construction industry in this country is booming,
as confirmed by the construction numbers in the unemployment report
released last week.  With the warm weather this fall and interest
rates as low as they are, home improvement will only continue at this
pace and that is good news for Lowes!

 *December plays only have 2 weeks left! 
BUY CALL DEC-45.00 LOW-LI OI= 307 at $1.43 SL= .75                
BUY CALL JAN-40.00 LOW-AH OI=1322 at $6.00 SL=4.25, only $1 premium.                
BUY CALL JAN-45.00*LOW-AI OI=5971 at $2.50 SL=1.25                
BUY CALL JAN-47.50 LOW-AT OI= 917 at $1.50 SL= .75            

Picked on Dec 6th at    $45.00        P/E= 34
Change since picked    +$ 0.00        52 week low = 21.56
Analysts' ratings   10-9-4-0-0        52 week high= 46.18
Last earnings  10/98 est= .31 actual= .33  surprise: 6.5%
Next earnings  02-23 est= .25 versus= .20

MACD Chart   CHART   NEWS   Zacks on LOW 
***********************************************************
STOCK OPTIONS - SEMICONDUCTOR
***********************************************************
TXN - Texas Instruments, Inc. $82.88  (+4.13)

Head Quarterd in Dallas, TX, Texas Instruments is the leader in the
DSP market.  These digital signal processors convert sound and light
into digital signals.  With a wide range of applications, DSPs can
be found in VCRs, cell phones, hard drives, and even your automobile.
These are the engines driving the digitalization of electronics.

Chip makers have had it rough this year with the world-wide glut in
computer chips, and Texas Instruments is no exception.  Third quarter
income dropped 31%.   But these stocks have been rebounding from the
October lows.   Excess chip supply is being used up and demand is
strong.   As the stock prices in this group rise dramatically,
analysts and portfolio managers have begun to call them overpriced and
downgrade them.  Oddly, even as they do so, they are raising their
price targets.  (For example, Prudential lowered Intel from a 'strong
buy' to 'accumulate', but raised its price target from $120 to $130.)  

TXN has risen substantially in price since Oct. 8.  Two recent
downgrades (by ABN Amro on 11-20 and Needham and Co. on 11-23) were
based on this rapid rise in price.  However, BancBoston upgraded the
stock on 11-19, citing TXN's focus on the new DSPs.  TXN is
positioning itself as the Intel of digital-signal processors (DSPs). 
BancBoston sees TXN as gaining as much as 70% of the DSP market from 
its current 45% share and that should help TXN's share price.  (IBM 
has decided to compete in this market, too.)  

Texas Instruments says it has divested 12 operations and acquired 7
others in the last 20 months and its focus has become clearer.  It
recently announced that it was closing an Italian plant and ending a
joint venture with Samsung, both of which should improve
profitability.  On 12/1, Commscope purchased a clad wire fabrication
equipment unit from TXN.  Also on 12/1, TI Singapore (which is 40% of
TI's Asian revenues) said it expects revenue growth of 15% in 1999. 
That should reassure investors concerned with Asian exposure that 
TXN has been vaccinated for the Asian Flu.

Last week Texas Instruments defied gravity at times and rose even as
other chip-makers (including Intel) fell with the market.  The
momentum is certainly with this stock and it still has considerable
upside potential, but watch out for more downgrades as the stock price
increases and more analysts begin consider it overvalued.

 *December plays only have 2 weeks left!
BUY CALL DEC-80 TXN-LP OI=2088 at $4.50 SL=2.75                
BUY CALL DEC-85 TXN-LQ OI= 955 at $2.00 SL=1.00               
BUY CALL JAN-80 TXN-AP OI=1832 at $6.88 SL=5.25                
BUY CALL JAN-85*TXN-AQ OI= 691 at $4.25 SL=2.50               
BUY CALL JAN-90 TXN-AR OI= 552 at $2.50 SL=1.25                 

Picked on Nov 20th at $82.88      P/E= 76       
Change since picked  +$ 0.00      52 week low =$39.63
Analysts' ratings 10-7-4-0-1      52 week high=$83.62
Last earnings   9-98 est= .30 actual= .41  surprise:37%
Next earnings  12-98 est= .53 versus= .55

MACD Chart   CHART   NEWS   Zacks on TXN 
***********************************************************
ETEC - EMC Corporation $79.00 (+4.00)(+5.00)(+3.00)(-2.06)

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 from all major 
computing environments, including UNIX, Windows NT and mainframe 
platforms.  EMC markets its memory products under the name Symmetrix.  
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.  

In the news last week, two analysts raised their price targets on EMC. 
One analyst raised their price target to $95 and the other to $87. It 
was noted that EMC is growing faster than other well known technology 
names, but commands a lower multiple than all but Intel.  EMC also 
announced a strategic alliance with NEC Corporation.  NEC will be 
reselling EMC Symmetrix storage systems with its NT and Unix based 
computer systems.  EMC expects $100 million in revenue from this 
alliance.  In general, the news surrounding EMC is very positive.  

EMC set a new 52 week high last week at $80.50 on Wednesday. EMC is 
also a split candidate.  Last November EMC split at around $63 after 
a strong move.  We are in similar territory again.  One of the best 
ways to profit from split announcements is to position yourself in 
the stock before the split announcement.  EMC is a strong growth 
stock with positive earnings and margin momentum.

 *December plays only have 2 weeks left!
BUY CALL DEC-75 EMC-LO OI=2030 at $5.50 SL=3.50
BUY CALL DEC-80 EMC-LQ OI=1003 at $2.50 SL=1.25
BUY CALL JAN-80*EMC-AQ OI=2063 at $5.13 SL=3.25
BUY CALL JAN-85 EMC-AS OI=  78 at $3.13 SL=1.50
BUY CALL APR-85 EMC-DS OI=  89 at $7.63 SL=5.75

Picked on Nov 8th at $69.06     PE=36
Change since picked   +9.94     52 week low =$23.50
Analysts Ratings 10-4-0-0-0     52 week high=$80.50
Last earnings  9-98 est=.36     actual=.38
Next earnings  1-28 est=.46     versus=.32

MACD Chart   CHART   NEWS   Zacks on ETEC 
***********************************************************
JBL - Jabil Circuit, Inc. $63.38 (+5.19)

JBL is the third-largest US manufacturer of circuit board systems, 
trailing SCI Systems and Solectron. The company's products are used 
in PCs, printers, network hardware, cellular phones, and cars. JBL's 
major customers include Hewlett Packard, 3Com, and Cisco Systems 
with more than half of its revenues coming from telecommunications 
companies.  JBL's customers use contract manufacturers, like JBL, 
to save money and improve production times.  JBL has manufacturing 
facilities in Malaysia, Mexico, the UK, and the US.  Insiders own
approximately 41% of the company

In the news last week, JBL announced that they were going to double 
their manufacturing plant in Mexico.  Management indicated that they 
are seeing a strong demand for additional capacity in North America, 
especially in areas that provide access to low cost manufacturing.  
They viewed the expansion plans as an indication of the strength of 
both current and new business opportunities in Mexico.  Also in the
news, there was an article on Thursday about the implied volatility 
in most semiconductor stock options rising.  This was taken as an
indication of strong speculative interest in the group.  

We are adding JBL to the play list because of the positive analysts 
comments about the industry last week, and as a run into their 
earnings announcement on 12/15.  Since JBL has had a good run, it 
may be subject to some profit taking, especially if there is any 
hint of disappointment in it earnings announcement.  There will 
some resistance on JBL just above $70.  

 *Decembers only have 2 weeks left!
BUY CALL DEC-60 JBL-LL OI=574 at $4.88 SL=3.25
BUY CALL DEC-65 JBL-LM OI= 63 at $2.56 SL=1.25
BUY CALL JAN-60 JBL-AL OI=416 at $7.13 SL=5.25
BUY CALL JAN-65*JBL-AM OI= 14 at $4.50 SL=2.25

Picked on Dec 6th at  $63.38   PE=43
Change since picked    +0.00   52 week low =$23.00
Analysts Ratings   6-8-6-0-0   52 week high=$65.13
Last earnings   8-98 est=.33   actual=.35
Next earnings  12-15 est=.43   versus=.49

MACD Chart   CHART   NEWS   Zacks on JBL 
***********************************************************
STOCK OPTIONS - MISC
***********************************************************
TWX - Time Warner  $106.06  (-.94)

We are all familiar with Time Warner's publications.  Time, Inc.
publishes 32 magazines and accounted for 21% of the total advertising
revenue generated by U.S. magazines last year.  Thirty-two of its
books made the New York Times best-seller list in 1997.  We have all
watched Warner Brother movies (Superman, Lethal Weapon, etc.), and we
have watched Warner's and its Castle Rock division's TV shows: 
Seinfeld, ER, Friends, etc.  But we may not appreciate where the real
growth potential of this media and entertainment giant is.  Although
criticized for it at the time, TWX's decision to diversify into the
cable business looks good now.   Cable companies represent a defensive
investment choice because their growth continues even in times of
economic slowdown.  And since cable companies' capital spending
requirements are slowing down, they are finally showing positive free
cash flow.  In addition, they benefit from interest rate cuts.  Credit
Suisse claims that each 100-basis-point drop should result in an 8%
increase in stock price.   Time Warner owns TBS Superstation, TNT,
Cartoon Network, and Turner Classic Movies.  

A 16% long-term growth rate is expected for TWX and Credit Suisse has
a less-than 12-month target of $115.  It is doing well with video
rentals and having a movie grossing in the top 10 for the Thanksgiving
holiday week.  Over the past year and a half, Ted Turner has reduced
his holdings from 11% to 10%, but this was done in order to cover his
pledge of $100,000/year toward U.N. causes.  TWX's TNT and TBS just
announced that they have acquired the rights to 97 more movies. 
Viewer market share for the major networks continues to slip and cable
companies are the beneficiaries.  After setting a new high last 
Monday of $109 before the drop, TWX suffered some profit-taking with
the rest of the market before bouncing back with a strong finish
on Friday.  We are looking for a strong run up to their 2:1 split
date on Dec. 15th.

In other areas of its business, Time's Information Please has teamed
up Excite to provide a powerful reference system for its users.  Also,
Road Runner, a new joint venture between TWX, MediaOne, Microsoft,
Compac, and Advance/Newhouse, formed to provide high speed internet
service, has exceeded initial expectations with 160,000 subscribers
already. 

 *December plays only have 2 weeks!
BUY CALL DEC-105 TWX-LA OI=1754 at $3.88 SL=2.50           
BUY CALL DEC-110 TWX-LB OI=1845 at $1.94 SL=1.00           
BUY CALL JAN-110*TWX-AB OI=3364 at $4.25 SL=2.50, post split 55s         
BUY CALL JAN-115 TWX-AC OI= 331 at $2.56 SL=1.25           

Picked on Dec 6th at   $106.06      P/E= n/a
Change since picked:  +$  0.00      52 week low  =$ 57.62
Analysts' Ratings   6-11-2-0-0      52 week high =$109.00
Last earnings 9/98 est= -.07 actual= -.06  surprise:  14%
Next earnings 2-10 est=  .15 versus= .06    

MACD Chart   CHART   NEWS   Zacks on TWX 
******************************************************************
                      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             12-06-98
Sunday                3  of  6

© 1998 The Option Investor Newsletter. - All Rights Reserved
******************************************************************
COVERED CALL SECTION FOR DECEMBER 06, 1998
Most stocks closed higher on Friday, buoyed by the positive news
concerning US jobs data. The markets' strength was also due to an
easing of concerns over the financial stability of Latin America
and a positive outlook for big-caps. Yet the gain did not erase
the losses earlier this week. Most of the Dow Industrials finished
higher but technology stocks were the real leaders. Tech stocks
have performed very well during the recovery but there are still
many stocks within the Dow that have performed poorly and are now
turning down short of new highs. These stocks are household names
and they act as bellwethers for future market trends. The current
direction is difficult to analyze because there are a number of
distorting effects like "tax selling". Even though December is
usually a strong month, the fact is: some of our most significant
industrial exporters are having a hard time and many companies are
discovering that they underestimated the consequences of the world
financial turmoil. The central banks of Europe have admitted that
things are worse than they expected and that is why they dropped
their interest rates. By any reasonable methodology, most foreign
markets have to be viewed as still in "bearish" cycles.

So, we have good reason to be nervous as there are many negative 
indicators such as: "overheated" investor speculation, and the
extremely high level of bullish market advisors and NYSE short
sellers, and the Advance/Decline line divergence to name a few. 
If there is a another short-term rally, it will probably be 
extremely selective and many of the gains will occur because of
seasonal effects. With that in mind, we will continue to focus 
on conservative positions with reasonable returns and favorable 
downside protection...Good Luck!
******************************************************************
SUMMARY OF PREVIOUS PICKS (Two Weeks To Strike Date)
******************************************************************
Stock  Price  Currnt Mon-Strike Opt    Profit   ROI  Annual
Sym    Picked Price      Price  Bid    /Loss         ROI 

USAI   34.88  29.13  Dec-25.00 12.00  *$ 2.12    9%  161%
PRLS    8.00   8.06  Dec- 7.50  1.63  *$ 1.13   18%  154%
AMCC   33.63  37.13  Dec-35.00  2.19  *$ 3.56   11%  148%
AWRE   16.88  22.56  Dec-17.50  1.50  *$ 2.12   14%  144%
OMKT    8.00  10.31  Dec- 7.50  1.31  *$ 0.81   12%  126%
ESSI    7.94   9.00  Dec- 7.50  1.19  *$ 0.75   11%  116%
MMCN   11.75  13.69  Dec-10.00  2.56  *$ 0.81    9%  115%
EGGS    9.06  17.81  Dec- 7.50  2.31  *$ 0.75   11%   97%
PMRX   10.69  11.25  Dec-10.00  1.50  *$ 0.81    9%   92%
VIRS   12.19  11.13  Dec-10.00  3.00  *$ 0.81    9%   92%
CMIC   12.63  11.38  Dec- 5.00  7.88  *$ 0.25    5%   91%
PILL   10.81  10.63  Dec-10.00  1.69  *$ 0.88   10%   90%
USWB   18.63  21.13  Dec-17.50  2.69  *$ 1.56   10%   85%
ATVI   13.56  13.06  Dec-12.50  2.00  *$ 0.94    8%   85%
IMCL    9.19  11.38  Dec- 7.50  2.13  *$ 0.44    6%   81%
PAGE    5.84   7.03  Dec- 5.00  1.13  *$ 0.29    6%   80%
CIEN   17.13  17.88  Dec-15.00  3.38  *$ 1.25    9%   79%
CYCH   11.94  14.13  Dec-10.00  2.50  *$ 0.56    6%   77%
TSIX   11.44  12.19  Dec-10.00  2.13  *$ 0.69    7%   77%
SDRC   16.88  16.88  Dec-17.50  1.25   $ 1.25    8%   70%
VCAM   15.00  16.63  Dec-10.00  5.38  *$ 0.38    4%   69%
ABTX   14.13  12.56  Dec-10.00  4.63  *$ 0.50    5%   69%
CKSG   36.50  30.50  Dec-30.00  7.63  *$ 1.13    4%   68%
SGI    13.06  12.94  Dec-12.50  1.31  *$ 0.75    6%   67%
EXDS   34.50  35.44  Dec-30.00  6.63  *$ 2.13    8%   66%
AWRE   16.88  22.56  Dec-15.00  2.75  *$ 0.87    6%   64%
RIVL   10.00  10.88  Dec- 7.50  2.75  *$ 0.25    3%   60%
PMTC   16.13  16.06  Dec-17.50  1.06   $ 0.99    7%   57%
CHRZ   24.88  20.88  Dec-20.00  5.63  *$ 0.75    4%   51%
AMCC   33.63  37.13  Dec-30.00  4.75  *$ 1.12    4%   51%
SKYT   22.31  21.63  Dec-20.00  3.00  *$ 0.69    4%   47%
PPOD    8.63   6.63  Dec- 7.50  2.13   $ 0.13    2%   35%
IDTC   19.25  14.88  Dec-15.00  4.75   $ 0.38    3%   34%
NMR    17.13  15.69  Dec-17.50  1.38   $-0.06    0%    0%
ITVU   18.00  13.88  Dec-15.00  3.75   $-0.37   -3%    0%
GMGC    7.00   5.69  Dec- 7.50  1.06   $-0.25   -4%    0%
PLX    18.63  13.75  Dec-15.00  4.25   $-0.63   -4%    0%
OMKT   20.75  10.31  Dec-12.50  9.25   $-1.19  -10%    0%
VIP    20.69  12.94  Dec-15.00  6.38   $-1.37  -10%    0%
PLX    18.63  13.75  Dec-17.50  2.75   $-2.13  -13%    0%
AKSY    7.00   4.88  Dec- 7.50  0.44   $-1.68  -26%    0%

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). MARGIN NOT
USED IN CALCULATIONS.

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   

ACO    11.50  Dec-10.00  ACO LB 1.81 0       9.69   3.20%   3.20%
CELG   11.38  Dec-10.00  LQH LB 1.94 315     9.44   5.93%   5.93%
KTO    11.69  Dec-10.00  KTO LB 2.19 37      9.50   5.26%   5.26%
TLXN   30.13  Dec-25.00  TNQ LE 5.88 1051   24.25   3.09%   3.09%
-----------------------------------------------------------------
ABTX   12.69  Jan-10.00  QXQ AB 3.25 1306    9.44   5.93%   5.93%
DOSE    4.06  Jan- 5.00  XUQ AA 0.50 292     3.56  40.45%  14.04%
MWHS   28.38  Jan-25.00  MQR AE 5.13 20     23.25   7.53%   7.53%
PPOD    6.75  Jan- 5.00  QPP AA 2.13 10      4.62   8.23%   8.23%
PSCX   11.31  Jan-10.00  QPS AB 2.19 165     9.12   9.65%   9.65%
SER     6.38  Jan- 5.00  SER AA 1.63 10      4.75   5.26%   5.26%
******************************************************************
Sequenced by RC 
******************************************************************
Stock  Price  Mon-Strike Option Opt  Open   Cost   RC      RNC
Sym               Price  Symbol Bid  Intr   Basis   

CELG   11.38  Dec-10.00  LQH LB 1.94 315     9.44   5.93%   5.93%
KTO    11.69  Dec-10.00  KTO LB 2.19 37      9.50   5.26%   5.26%
ACO    11.50  Dec-10.00  ACO LB 1.81 0       9.69   3.20%   3.20%
TLXN   30.13  Dec-25.00  TNQ LE 5.88 1051   24.25   3.09%   3.09%
-----------------------------------------------------------------
DOSE    4.06  Jan- 5.00  XUQ AA 0.50 292     3.56  40.45%  14.04%
PSCX   11.31  Jan-10.00  QPS AB 2.19 165     9.12   9.65%   9.65%
PPOD    6.75  Jan- 5.00  QPP AA 2.13 10      4.62   8.23%   8.23%
MWHS   28.38  Jan-25.00  MQR AE 5.13 20     23.25   7.53%   7.53%
ABTX   12.69  Jan-10.00  QXQ AB 3.25 1306    9.44   5.93%   5.93%
SER     6.38  Jan- 5.00  SER AA 1.63 10      4.75   5.26%   5.26%
******************************************************************
Sequenced by RNC 
******************************************************************
Stock  Price  Mon-Strike Option Opt  Open   Cost   RC      RNC
Sym               Price  Symbol Bid  Intr   Basis   

CELG   11.38  Dec-10.00  LQH LB 1.94 315     9.44   5.93%   5.93%
KTO    11.69  Dec-10.00  KTO LB 2.19 37      9.50   5.26%   5.26%
ACO    11.50  Dec-10.00  ACO LB 1.81 0       9.69   3.20%   3.20%
TLXN   30.13  Dec-25.00  TNQ LE 5.88 1051   24.25   3.09%   3.09%
-----------------------------------------------------------------
DOSE    4.06  Jan- 5.00  XUQ AA 0.50 292     3.56  40.45%  14.04%
PSCX   11.31  Jan-10.00  QPS AB 2.19 165     9.12   9.65%   9.65%
PPOD    6.75  Jan- 5.00  QPP AA 2.13 10      4.62   8.23%   8.23%
MWHS   28.38  Jan-25.00  MQR AE 5.13 20     23.25   7.53%   7.53%
ABTX   12.69  Jan-10.00  QXQ AB 3.25 1306    9.44   5.93%   5.93%
SER     6.38  Jan- 5.00  SER AA 1.63 10      4.75   5.26%   5.26%
******************************************************************
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)
******************************************************************
ACO - Amcol International Corp.  $11.50  ** Stage I Base **

Amcol International produces absorbent polymers, and manufactures 
benonite products which have a variety of industrial, commercial,
and agricultural applications. ACOL also operates a transportation
business. A $0.06 dividend payable Jan 4 to shareholders of record
Dec 7 and a million share buy back authorization was announced in
early Nov. A basing stock in a short term isosceles triangle that
is pointing to a price above $10.

DEC 10.00 ACO-LB BID=1.81 OI=0 CB=9.69 RC=3.20% RNC=3.20%


CHART  NEWS   
******************************************************************
CELG - Celgene Corp.  $11.38  *** Pharmaceuticals ***

Celgene Corp is a specialty company engaged in the development and
commercialization of human pharmaceuticals and agrochemicals. 3Q 
loss narrows and announces IND application for CDC 801 to FDA for 
the treatment of Crohn's Disease.  In a stage I base for several
months with solid BOP accumulation.

DEC 10.00 LQH-LB BID=1.94 OI=315 CB=9.44 RC=5.93% RNC=5.93%


CHART  NEWS   
******************************************************************
KTO - K2, Inc.  $11.69  *** On The Rebound? ***

KTO is a diversified manufacturer and distributor of brand name 
sporting goods and other recreational products such as skis,
snowboards, in-line skates and mountain bikes.  After taking a
restructuring charge for the 3Q and posting a loss, KTO has been
in a stage I base since Oct. BOP is nearly maxed since early Nov
and TSV has recently crossed above the zero line.

DEC 10.00 KTO-LB BID=2.19 OI=37 CB=9.50 RC=5.26% RNC=5.26%


CHART  NEWS   
******************************************************************
TLXN - Telxon Corporation  $30.13  *** Rumored Buyout *** 

TLXN designs, manufactures, integrates, markets and supports 
wireless and mobile transaction-based wireless automation systems
and solutions.  A RUMORED buyout by SBL could be driving the 
price on Telxon Corp.  There is no official news of any kind but
this stock recently entered stage II (though it must now work 
through resistance at $30 to $35).

DEC 25.00 TNQ-LE BID=5.88 OI=1051 CB=24.25 RC=3.09% RNC=3.09%


CHART  NEWS   
******************************************************************
ABTX - AgriBioTech, Inc.  $12.69  *** Take-over/Merger ***

AgriBioTech, Inc. is a full service seed company specializing in 
developing, processing, packaging and distributing varieties of
forage and cool season turfgrass seeds. In the process of inter-
grating it's many acquisitions and still looking for a buyer.
Still good technical support at our cost basis with recent BOP
reversal towards buying/accumulation. 

JAN 10.00 QXQ-AB BID=3.25 OI=1306 CB=9.44 RC=5.93% RNC=5.93%


CHART  NEWS   
******************************************************************
DOSE - PharMerica, Inc.  $4.06  *** OTM Speculation ***

DOSE provides institutional pharmacy services to long-term care 
facilities and correctional institutions and supplies medical 
equipment, disposable surgical supplies, and infusion supplies 
and equipment.  Lots of speculation on possible buyout, credit 
downgrades, positive / negative rumors all make for a great 
premium play. In a stage I base since Sep with a recent positive
TSV divergence and support near our cost basis.

JAN 5.00 XUQ-AA BID=0.50 OI=292 CB=3.56 RC=40.45% RNC=14.04%


CHART  NEWS   
******************************************************************
MWHS - Micro Warehouse, Inc.  $28.38  

MWHS is a specialty catalog retailer and direct marketer of 
personal computers, software, accessories and peripherals. In an
up-trend after reporting 3Q EPS of $0.33 at the end of OCT. Solid
technicals are evident as MWHS tries to break through resistance
around $28 - $29.

JAN 25.00 MQR-AE BID=5.13 OI=20 CB=23.25 RC=7.53% RNC=7.53%


CHART  NEWS   
******************************************************************
PPOD - Peapod, Inc.  $6.75  *** Internet Groceries?  ***

Peapod is an interactive, online grocery shopping and delivery 
company and a provider of targeted media and research services.
Still like this play from last week with a great entry price and
cost basis.  First delivery of Internet orders from newly opened
Long Island distribution center due on Dec 7!  BOP still maxed 
and TSV positive.
 
JAN 5.00 QPP-AA BID=2.13 OI=10 CB=4.62 RC=8.23% RNC=8.23%


CHART  NEWS   
******************************************************************
PSCX - PSC Inc.  $11.31

PSC Inc. designs, manufactures, and markets handheld and fixed 
position laser-based bar code scanners for the automatic ID and 
data collection market.  In a strong up-trend after reporting
record 3Q earnings at the end of Oct. Maxed BOP, volume surge,
and positive TSV may help PSCX move through resistance at $12.

JAN 10.00 QPS-AB BID=2.19 OI=165 CB=9.12 RC=9.65% RNC=9.65%


CHART  NEWS   
******************************************************************
SER - Servico, Inc.  $6.38  *** Merger ***

SER owns and manages 72 hotels nationwide. Substantially all of 
the Company's hotels are "full service" properties offering 
lodging, food, beverage and meeting facilities. In the process of
completing a merger with Impac to form a new company to be named 
Lodgian in the 4Q of 1998.  In a stage I base since Oct (with an
increase in volume) as speculation increases on the merger.

JAN 5.00 SER-AA BID=1.63 OI=10 CB=4.75 RC=5.26% RNC=5.26%


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
CYGN	5.00	Dec	5.00	YNQLA	0.69	13.75	105	162	
VNT	14.75	Dec	15.00	VNTLC	1.75	11.86	110	641	
DBCC	10.00	Dec	10.00	BQDLB	1.13	11.25	592	3264	
PTVL	17.00	Dec	17.50	QUTLW	1.81	10.66	74	761	
BNYN	7.06	Dec	7.50	QYNLU	0.75	10.62	55	449	
IDTC	14.88	Dec	15.00	IQJLC	1.50	10.08	14	157	
DBCC	10.00	Jan	10.00	BQDAB	2.25	22.50	173	1160	
MANU	11.81	Jan	12.50	ZUQAV	2.25	19.05	65	798	
AHAA	21.50	Jan	22.50	GAQAX	4.00	18.60	50	3	
EGGS	17.81	Jan	20.00	EGQAD	3.25	18.25	336	796	
PPOD	6.63	Jan	7.50	QPPAU	1.19	17.92	54	131	
VLNC	9.75	Jan	10.00	VHQAB	1.69	17.31	13	613	
CYCH	14.13	Jan	15.00	KBQAC	2.44	17.26	5	821	
VNT	14.75	Jan	15.00	VNTAC	2.50	16.95	300	553	
BNYN	7.06	Jan	7.50	QYNAU	1.19	16.81	127	389	
DANKY	3.53	Jan	5.00	DNQAA	0.56	15.93	88	147	
SGE	11.88	Jan	12.50	SGEAV	1.88	15.79	250	1023	
WAVO	8.31	Jan	10.00	WKQAB	1.31	15.79	92	322	
OMKT	10.31	Jan	12.50	OQMAV	1.63	15.76	53	75	
EGGS	17.81	Jan	22.50	EGQAX	2.75	15.44	78	340	
SRCM	16.19	Jan	17.50	SQAW	2.50	15.44	114	404	
PLC	4.88	Jan	5.00	PLCAA	0.75	15.38	10	845	
CEPH	7.38	Jan	7.50	CQEAU	1.13	15.25	55	208	
MMCN	13.69	Jan	15.00	CMQAC	2.06	15.07	10	309	
LRCX	20.00	Jan	20.00	LMQAD	3.00	15.00	40	303	
UTI	7.50	Jan	7.50	UTIAU	1.13	15.00	310	775	
CEXP	4.66	Jan	5.00	XQPAA	0.69	14.77	23	182	
NTKI	13.13	Jan	15.00	QNKAC	1.88	14.29	58	564	
PAIR	7.03	Jan	7.50	PQGAU	1.00	14.22	805	301	
HPRT	7.06	Jan	7.50	HQKAU	1.00	14.16	140	789	
AMKR	6.25	Jan	7.50	QELAU	0.88	14.00	80	30	
SCIO	7.38	Jan	7.50	JQSAU	1.00	13.56	3	518	
CELG	11.19	Jan	12.50	LQHAV	1.50	13.41	145	2314	
KNT	14.50	Jan	15.00	KNTAC	1.94	13.36	58	363	
EGGS	17.81	Jan	25.00	EGQAE	2.38	13.33	112	505	
NS	7.06	Jan	7.50	NSAU	0.94	13.27	10	10	
SPLH	7.06	Jan	7.50	QRXAU	0.94	13.27	15	34	
SPYG	21.75	Jan	22.50	YQGAX	2.88	13.22	113	209	
CBTSY	9.94	Jan	10.00	QAGAB	1.31	13.21	5	44	
ICA	4.75	Jan	5.00	ICAAA	0.63	13.16	2	241	
ALSC	3.88	Jan	5.00	QASAA	0.50	12.90	4	2653	
EGLS	14.75	Jan	15.00	EIQAC	1.88	12.71	50	2231	
SDTI	15.88	Jan	17.50	QSDAW	2.00	12.60	54	227	
VIP	12.94	Jan	15.00	VIPAC	1.63	12.56	100	272	
DBCC	10.00	Jan	12.50	BQDAV	1.25	12.50	33	513	
CWC	9.50	Jan	10.00	CWCAB	1.19	12.50	15	120	
CIG	12.13	Jan	12.50	CIGAV	1.50	12.37	30	330	
MOGN	12.13	Jan	12.50	QOGAV	1.50	12.37	2	135	
CKFR	17.38	Jan	17.50	FCQAW	2.13	12.23	20	65	
CLCX	6.19	Jan	7.50	QXTAU	0.75	12.12	74	270	
SPYG	21.75	Jan	25.00	YQGAE	2.63	12.07	47	658	
IMNR	12.00	Jan	12.50	IMQAV	1.44	11.98	50	15	
SMOD	22.25	Jan	22.50	UYQAX	2.63	11.80	10	464	
IOM	7.44	Jan	7.50	IOMAU	0.88	11.76	90	1460	
PTVL	17.00	Jan	20.00	QUTAD	2.00	11.76	16	1722	
SIII	4.78	Jan	5.00	SQIAA	0.56	11.76	15	1820	
TSCC	9.63	Jan	10.00	QSTAB	1.13	11.69	10	66	
AHG	7.50	Jan	7.50	AHGAU	0.88	11.67	4	215	
WCII	30.00	Jan	30.00	WQSAF	3.50	11.67	14	1606	
DIMD	7.09	Jan	7.50	DAQAU	0.81	11.45	75	1282	
HPH	9.31	Jan	10.00	HPHAB	1.06	11.41	50	23	
ICGX	23.00	Jan	25.00	QIGAE	2.63	11.41	11	524	
ZITL	3.31	Jan	5.00	ZQIAA	0.38	11.32	90	86	
KERA	11.13	Jan	12.50	KVQAV	1.25	11.24	35	82	
ZD	10.63	Jan	12.50	ZDAV	1.19	11.18	348	750	
PRMS	14.56	Jan	15.00	RQSAC	1.63	11.16	6	345	
LVCI	17.50	Jan	17.50	QVLAW	1.94	11.07	3	65	
PDE	7.38	Jan	7.50	PDEAU	0.81	11.02	35	115	
PTEK	4.56	Jan	5.00	TQOAA	0.50	10.96	10	5	
REDB	4.00	Jan	5.00	JQRAA	0.44	10.94	13	307	
APLX	4.00	Jan	5.00	LQXAA	0.44	10.94	15	444	
EGRP	24.00	Jan	25.00	QGRAE	2.63	10.94	558	785	
ABTE	7.44	Jan	7.50	QZBAU	0.81	10.92	20	121	
OMKT	10.31	Jan	15.00	OQMAC	1.13	10.91	132	260	
BKS	29.88	Jan	30.00	BKSAF	3.25	10.88	58	1345	
JDAS	9.25	Jan	10.00	QAHAB	1.00	10.81	30	455	
SPLN	18.50	Jan	20.00	QSPAD	2.00	10.81	35	383	
GGO	14.50	Jan	15.00	GGOAC	1.56	10.78	5	70	
CDE	4.69	Jan	5.00	CDEAA	0.50	10.67	10	55	
ADAC	24.63	Jan	25.00	QABAE	2.63	10.66	5	7	
CYCH	14.13	Jan	17.50	KBQAW	1.50	10.62	64	175	
SYBS	7.06	Jan	7.50	SBQAU	0.75	10.62	152	626	
WAVO	8.31	Jan	12.50	WKQAV	0.88	10.53	12	192	
PSUN	13.69	Jan	15.00	PVQAC	1.44	10.50	30	138	
NTKI	13.13	Jan	17.50	QNKAW	1.38	10.48	25	203	
MRVC	6.56	Jan	7.50	VQXAU	0.69	10.48	20	766	
AND	10.75	Jan	12.50	ANDAV	1.13	10.47	7	126	
GERN	10.81	Jan	12.50	GQDAV	1.13	10.40	100	80	
FHT	13.25	Jan	15.00	FHTAC	1.38	10.38	125	205	
LWN	8.44	Jan	10.00	LWNAB	0.88	10.37	40	5082	
TWMC	21.75	Jan	22.50	TQTAX	2.25	10.34	15	31	
EX	17.00	Jan	17.50	EXAW	1.75	10.29	505	9	
LDRY	7.38	Jan	7.50	YQRAU	0.75	10.17	65	313	
GSTRF	18.44	Jan	20.00	YVQAD	1.88	10.17	130	58	
PSFT	19.75	Jan	20.00	PQOAD	2.00	10.13	244	2148	
ANAD	14.25	Jan	15.00	DQAAC	1.44	10.09	13	538	
UWW	8.69	Jan	10.00	UWWAB	0.88	10.07	50	150	
STAR	7.47	Jan	7.50	LQSAU	0.75	10.04	5	18	
SRCM	16.19	Jan	20.00	SQAD	1.63	10.04	210	923	
NN	30.00	Jan	30.00	NNAF	3.00	10.00	156	3136	
SFA	20.00	Jan	20.00	SFAAD	2.00	10.00	53	295	
TEK	25.00	Jan	25.00	TEKAE	2.50	10.00	20	708	
DANKY	3.53	Feb	5.00	DNQBA	0.88	24.78	140	388	
OMKT	10.31	Feb	12.50	OQMBV	2.25	21.82	69	754	
CEPH	7.38	Feb	7.50	CQEBU	1.56	21.19	458	1055	
ELNT	4.44	Feb	5.00	ETQBA	0.94	21.13	10	268	
SMTK	4.13	Feb	5.00	QMMBA	0.81	19.70	85	1079	
WAVO	8.31	Feb	10.00	WKQBB	1.63	19.55	122	577	
AFLX	9.00	Feb	10.00	XFQBB	1.63	18.06	20	43	
PWAV	12.44	Feb	12.50	VFQBV	2.19	17.59	20	193	
CLCX	6.19	Feb	7.50	QXTBU	1.06	17.17	170	651	
IMRS	19.00	Feb	20.00	QIQBD	3.13	16.45	12	244	
OMPT	8.81	Feb	10.00	QTTBB	1.44	16.31	3	372	
MCRE	5.06	Feb	7.50	MQZBU	0.81	16.05	5	242	
DOCSF	4.69	Feb	5.00	OQZBA	0.75	16.00	40	166	
CIG	12.13	Feb	12.50	CIGBV	1.94	15.98	30	194	
IOM	7.44	Feb	7.50	IOMBU	1.19	15.97	94	10338	
BD	12.19	Feb	12.50	BDBV	1.94	15.90	10	73	
MEDX	4.75	Feb	5.00	XDQBA	0.75	15.79	5	490	
HPH	9.31	Feb	10.00	HPHBB	1.44	15.44	10	127	
CKFR	17.38	Feb	17.50	FCQBW	2.63	15.11	13	196	
EGHT	7.88	Feb	10.00	EDQBB	1.19	15.08	365	4179	
AMTD	18.25	Feb	20.00	TQABD	2.75	15.07	1	54	
VSNT	2.94	Feb	5.00	VQKBA	0.44	14.89	15	140	
OMKT	10.31	Feb	15.00	OQMBC	1.50	14.55	23	414	
PZX	8.94	Feb	10.00	PZXBB	1.25	13.99	25	44	
WAVO	8.31	Feb	12.50	WKQBV	1.13	13.53	26	446	
RXSD	11.63	Feb	12.50	RKQBV	1.56	13.44	65	65	
JDEC	28.00	Feb	30.00	QJDBF	3.75	13.39	184	35	
CDE	4.69	Feb	5.00	CDEBA	0.63	13.33	40	660	
AVIR	24.44	Feb	25.00	QCVBE	3.25	13.30	5	332	
ATML	14.25	Feb	15.00	AQTBC	1.88	13.16	26	753	
RCOT	16.63	Feb	17.50	ROQBW	2.19	13.16	1	119	
LIPO	9.06	Feb	10.00	LPQBB	1.19	13.10	50	348	
ALLP	3.34	Feb	5.00	AYQBA	0.44	13.08	30	3694	
NSM	16.75	Feb	17.50	NSMBW	2.19	13.06	75	275	
EDFY	8.19	Feb	10.00	YQBB	1.06	12.98	12	166	
KERA	11.13	Feb	12.50	KVQBV	1.44	12.92	20	60	
IMRS	19.00	Feb	22.50	QIQBX	2.44	12.83	34	790	
SLVN	27.50	Feb	30.00	NQVBF	3.50	12.73	8	124	
CPU	13.88	Feb	15.00	CPUBC	1.75	12.61	38	744	
CCMC	11.44	Feb	12.50	QYSBV	1.44	12.57	3	428	
Z	7.00	Feb	7.50	ZBU	0.88	12.50	20	4	
TWLB	12.56	Feb	15.00	QBTBC	1.56	12.44	2	54	
KEA	29.25	Feb	30.00	KEABF	3.63	12.39	2	248	
STRX	12.88	Feb	15.00	TQQBC	1.56	12.14	45	354	
FGII	12.38	Feb	15.00	FQGBC	1.50	12.12	4	145	
SBTK	16.50	Feb	17.50	XQYBW	2.00	12.12	5	93	
IMCL	11.38	Feb	12.50	QCIBV	1.38	12.09	10	349	
ALYD	9.31	Feb	10.00	QLIBB	1.13	12.08	20	702	
PTEN	4.25	Feb	5.00	NZQBA	0.50	11.76	75	950	
CCC	7.00	Feb	7.50	CCCBU	0.81	11.61	80	158	
OMKT	10.31	Feb	17.50	OQMBW	1.19	11.52	11	235	
ELY	12.50	Feb	12.50	ELYBV	1.44	11.50	60	1560	
IMNR	12.00	Feb	12.50	IMQBV	1.38	11.46	20	936	
PRIA	27.13	Feb	30.00	UXQBF	3.00	11.06	7	53	
GMGC	5.69	Feb	10.00	GGQBB	0.63	10.99	95	967	
SSAX	6.88	Feb	7.50	AXQBU	0.75	10.91	100	332	
RIG	24.63	Feb	25.00	RIGBE	2.69	10.91	20	148	
AEM	4.06	Feb	5.00	AEMBA	0.44	10.77	60	852	
CLFY	19.75	Feb	20.00	QCYBD	2.13	10.76	1000	4021	
STBI	5.88	Feb	7.50	SQKBU	0.63	10.64	10	180	
DANKY	3.53	Feb	7.50	DNQBU	0.38	10.62	10	679	
CD	19.13	Feb	20.00	CDBD	2.00	10.46	628	19041	
AFLX	9.00	Feb	12.50	XFQBV	0.94	10.42	26	80	
RARE	12.13	Feb	12.50	QRHBV	1.25	10.31	10	14	
RON	22.63	Feb	25.00	RONBE	2.31	10.22	10	60	
BGP	22.06	Feb	22.50	BGPBX	2.25	10.20	6	529	
BSX	27.19	Feb	27.50	BSXBY	2.75	10.11	9	555	
CBTSY	9.94	Feb	12.50	QAGBV	1.00	10.06	27	414	
ADTN	24.25	Feb	25.00	RQABE	2.44	10.05	27	176	
ULGX	4.38	Feb	5.00	YQUBA	0.44	10.00	50	200	
******************************************************************
NAKED PUT SECTION FOR December 6, 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.
                         *** WARNING!!! ***
Occasionally a company will experience catastrophic news causing
a severe drop in the stock price. This may cause a devastatingly
large loss which may wipe out all of your smaller gains. It is
important that you consider using trading STOPS on naked option
positions. Many professional traders suggest a STOP order price
of no more than twice the original premium from the position.
Unless STOPS are used properly, this type of strategy carries an
enormous risk for very little profit.
******************************************************************
SUMMARY OF PREVIOUS PICKS 
******************************************************************
Stock  Price  Currnt Mon-Strike Opt    Profit   ROI  Annual
Sym    Picked Price      Price  Bid    /Loss         ROI 

APM     8.31   8.69  Dec- 7.50  0.69  *$ 0.69   22%  375%
EGGS    9.06  17.81  Dec- 7.50  0.75  *$ 0.75   27%  232%
BAANF  12.50  12.00  Dec-10.00  0.38  *$ 0.38   13%  229%
DCLK   33.31  32.56  Dec-25.00  1.31  *$ 1.31   16%  171%
VIRS   12.00  11.13  Dec- 7.50  0.31  *$ 0.31   11%  149%
VIRS   12.19  11.13  Dec- 7.50  0.38  *$ 0.38   13%  141%
GBTVK   7.06   6.00  Dec- 5.00  0.19  *$ 0.19   12%  124%
WALL   17.75  17.31  Dec-15.00  0.44  *$ 0.44    9%  120%
NMR    17.13  15.69  Dec-15.00  0.75  *$ 0.75   14%  119%
ITVU   18.00  13.88  Dec-12.50  0.25  *$ 0.25    6%  113%
TIG    14.25  15.56  Dec-10.00  0.25  *$ 0.25    8%  105%
SMOD   23.94  22.25  Dec-17.50  0.38  *$ 0.38    7%   96%
CKSG   26.31  30.50  Dec-17.50  0.50  *$ 0.50    9%   91%
CNCX   29.00  27.50  Dec-22.50  0.31  *$ 0.31    5%   88%
SRCM   18.25  16.19  Dec-12.50  0.19  *$ 0.19    5%   86%
BTIM   14.25  14.88  Dec- 7.50  0.19  *$ 0.19    6%   81%
AMCC   30.50  37.13  Dec-22.50  0.50  *$ 0.50    8%   79%
CKSG   36.50  30.50  Dec-25.00  0.31  *$ 0.31    4%   71%
PLX    18.63  13.75  Dec-15.00  0.63   $-0.62  -14%    0%
PLX    18.88  13.75  Dec-15.00  0.31   $-0.94  -23%    0%
CLCX    9.75   6.19  Dec- 7.50  0.50   $-0.81  -33%    0%
IDTC   20.56  14.88  Dec-17.50  0.50   $-2.12  -37%    0%

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 

KTO    11.69  Dec-10.00  KTO XB  0.44  0       9.56  12.84%
TLXN   30.13  Dec-25.00  TNQ XE  1.00  1019   24.00  12.62%
-----------------------------------------------------------
ABTX   12.69  Jan- 7.50  QXQ MU  0.25  437     7.25   8.97%
CELG   11.38  Jan- 7.50  LQH MU  0.25  58      7.25   9.90%
ITVU   14.00  Jan-10.00  QYU MB  0.69  0       9.31  19.77%
TALK   10.13  Jan- 5.00  QQK MA  0.25  6075    4.75  10.98%
******************************************************************
Sequenced by Return on Investment (ROI) 
******************************************************************
Stock  Price  Mon-Strike Option  Opt   Open   Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr   Basis  Expired 

KTO    11.69  Dec-10.00  KTO XB  0.44  0       9.56  12.84%
TLXN   30.13  Dec-25.00  TNQ XE  1.00  1019   24.00  12.62%
-----------------------------------------------------------
ITVU   14.00  Jan-10.00  QYU MB  0.69  0       9.31  19.77%
TALK   10.13  Jan- 5.00  QQK MA  0.25  6075    4.75  10.98%
CELG   11.38  Jan- 7.50  LQH MU  0.25  58      7.25   9.90%
ABTX   12.69  Jan- 7.50  QXQ MU  0.25  437     7.25   8.97%
******************************************************************
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
******************************************************************
KTO -  $11.69  (See Covered Call Section)

DEC  10.00  KTO-XB  BID=0.44  OI=0  CB=9.56  ROI=12.84%
******************************************************************
TLXN - $30.13  (See Covered Call Section)
 
DEC  25.00  TNQ-XE  BID=1.00  OI=1019 CB=24.00  ROI=12.62%
******************************************************************
ABTX - $12.69  (See Covered Call Section)

JAN  7.50  QXQ-MU  BID=0.25  OI=437  CB=7.25  ROI=8.97%
******************************************************************
CELG - $11.38  (See Covered Call Section)

JAN  7.50  LQH-MU  BID=0.25  OI=58  CB=7.25  ROI=9.90%
******************************************************************
ITVU - InterVU, Inc.  $14.00    *** Internet ***

InterVU, Inc. is a development stage company which utilizes a 
proprietary software system for routing and distributing high
quality video over the Internet at high speeds. Losses increased
as stated Oct 21 but ITVU has jumped on the Internet wagon with
patents on Internet audio and video to be granted. In a slight 
correction which could be a buy opportunity or as noted here, 
provides a premium for a naked put entry (to own the stock). 

JAN  10.00  QYU-MB  BID=0.69  OI=0  CB=9.31  ROI=19.77%


CHART  NEWS   
******************************************************************
TALK - Tel-Save.com, Inc.  $10.13 *** Internet? ***
 
TALK is a provider of long distance telecommunication services to
small and medium-sized businesses and residential customers in the
United States. End of November name change from Tel-Save Holdings
may have initiated the recent spike in price (".com"...Hmmmm).  
Reported 3Q record revenues with less than expected losses. This
play also offers a good entry to own the stock. With a strike price
below current support you may only get the premium.

JAN  5.00  QQK-MA  BID=0.25  OI=6075  CB=4.75  ROI=10.98%


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

For information on the above plays Click here to email Ray Cummins

**************************************************************
                      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              12-06-98
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.
****************************************************
NKE - Nike   $35.94   (-5.06)

The King of athletic shoes, NIKE controls over 40% of the coveted
American shoe market.  With designs for almost every sport under the
sun, NIKE has branched out into athletic wear.  Currently doing 
business in over 100 countries.

In February of 1997, Nike, the footware giant, was trading in the
mid-$70's.  It's come a long way down to the mid-$30's, and last week
moved decisively below both its 50- and 200-day moving averages.  What
went wrong?  Last year demand from economically-troubled Asia softened
and inventories grew.  Negative publicity surrounding working
conditions in its factories in third-world countries caused many
customers in the U.S. to shun Nike's products.  Although the company
has taken some steps to make improvements, as recently as last month,
a conference by the National Labor Committee received press that
called attention to extremely low pay, abusive managers, and sweatshop
conditions.  Nike's stock price, which had been up slightly in early
November, headed south again following the reports.  It hasn't helped
that the trend in casual footware is now moving away from athletic
shoes to "brown shoes". 

While Nike is a serious competitor, and long-term it will be O.K.,
earnings growth for the year ending May '99 are expected to be off
2.6%.  (Other shoe and related apparel companies are expected to slow
also, but only 1.8%.)  On 12/3, BT Alex Brown downgraded NKE from a
buy to a market perform.  

Earnings due out approximately December 18!  Short term play.

 *December plays only last 2 weeks!
BUY PUT DEC-35.00 NKE-XG OI= 271 at $1.19 SL= .00
BUY PUT DEC-37.50 NKE-XU OI= 308 at $2.81 SL=1.50
BUY PUT JAN-35.00 NKE-MG OI= 716 at $1.94 SL=1.00
BUY PUT JAN-37.50 NKE-MU OI=1809 at $3.38 SL=1.50 


CHART  NEWS   
******************************************************************
MCK - McKesson Corp $67.69 (-7.12)

MCK is the biggest wholesale drug distributor in North America with
their US operations, their Canadian subsidiary, and a 25% stake in
Mexico's leading drug distributor.  They provide a range of home 
care, health and beauty, and pharmaceuticals to over 18,000 outlets.
Their two major subsidiaries are McKesson Water Products, the #2 
bottled water company in the States, and McKesson Pharmacy Systems, 
who provide business management systems to drug stores and 
pharmacies.  (They are a Fortune 100 company)

While most of the big caps are recovering nicely from their October 
lows Mckesson has doubled back to slip past crucial support at $69
while there rest of the market was up 136 points on Friday.  The 
beleaugered stock seems to have fallen out of favor with the market.
Monday's drop sent it crashing through its 200 dma.  The only real
news for MCK is their regulatory waiting period to buy HBOC, an 
information systems and technology expert for the health care 
industry, has expired.  MCK and HBOC are free to do the deal.  MCK 
is to pay 0.37 shares for every 1 share of HBOC.  The buyout is
pendant on shareholder approval.  However, instead of the merger 
infusing energy and interest into the stocks, HBOC also appears to 
be leading a slow death.  Look for downward momentum to continue.

 *December plays only have 2 weeks.
BUY PUT DEC-70 MCK-XN OI= 300 at $3.75 SL=2.50 ITM
BUY PUT DEC-65 MCK-XM OI=1179 at $1.31 SL= .00
BUY PUT JAN-70 MCK-MN OI=  28 at $5.25 SL=3.25, low OI.
BUY PUT FEB-65 MCK-NM OI=  76 at $4.50 SL=2.75


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            12-06-98
Sunday                5  of  6

*****************************************************************
COMBINATION PLAYS - WEEKLY PLAY RECAP
*****************************************************************
On Thursday, the SPREADS editor was enroute to a trading seminar
and encountered some technical difficulties while publishing his
section of the newsletter. I apologize for any inconvenience the
omission may have caused and will happily answer all questions
concerning any portfolio activities on an Email basis. Send all
inquiries to me at Ray@OptionInvestor.com.

This week, we are going to discuss another popular strategy...
****************************************************************
			- RATIO CALL SPREADS -
****************************************************************
The ratio call spread is a neutral strategy in which one buys a
number of calls at a lower strike price and sells more calls at
a higher strike. This type of play offers a large probability of
making a limited profit with low downside risk and a relatively
small investment. It is one of the more attractive techniques
since the trader is buying mostly intrinsic value and selling a
relatively large amount of time value.
     
The ratio spread has a defined range within which a profit can be
made at expiration. If the spread is initially established for a
credit, there is no downside risk at all. The profit or loss at
expiration is constant below the lower strike price because both
options are worthless in that area. The maximum profit occurs when
the stock finishes exactly at the strike price of the sold options.
The greatest risk in a ratio spread lies to the upside, where the
loss may be theoretically unlimited.

Many neutral investors prefer ratio spreads because the downside
risk or gain is predetermined in the opening ratio and therefore
the position does not require much monitoring on the downside. The
margin investment required for a ratio spread is normally fairly
small since (on the long side) one is buying a call rather than
buying the stock. The actual position is really the combination
of a bull spread and a naked call thus the net investment is equal
to the collateral required for the naked calls plus (or minus) the
net debit (or credit) of the spread.

As in many spreads, there is more than one way to implement the
strategy. The most common philosophy is that ratio spreads should
be established for credits so that there is no chance of losing
money on the downside. Traders that use this method generally
want the underlying stock to be below the sold strike price when
the spread is established. The further the stock is below the
strike, the more attractive the spread will be be. This type of
play has no downside risk, because even if the stock collapses,
the profit will be equal to the initial credit received.

The trader that plays both debit and credit spreads will generally
have a better selection of candidates to choose from and will also
be able to assume a more neutral posture on the stock. Those who
trade only credit spreads will return smaller profits (when the
stock remains relatively unchanged) but will not have to worry
about any risk on a declining stock. 

If the stock price falls significantly after the play is opened, a
downside follow-up is not required when the initial spread was for
a credit. If the initial spread was a debit, the trader may want to
roll-down the written calls. Follow-up action for an upside move
usually consists of buying some more long calls to reduce the
ratio in the spread. Eventually, the goal would be to reduce the
spread ratio to 1:1 (a normal bull spread). In addition to the
defensive actions, ratio spreads can also be closed early to take
a profit or limit losses. The most common situation occurs when
the stock price is close to the higher strike price and the
time value on the sold position has eroded significantly. Another
alternative is to re-adjust the ratio to reflect any new opinion
on the underlying stock or to re-establish a neutral profit range.
******************************************************************
NEW PLAYS...
******************************************************************
TLXN - Telxon  $30.12     Put-Credit Spread

TLXN designs, manufactures, integrates, markets and supports
wireless and mobile transaction-based wireless automation systems
and solutions. The stock price started to climb in mid-October
after the company reported earnings; Q2 EPS of $0.22, meeting
market expectations. The company said it is "confident" in its
ability to meet operating and financial goals for the second half
of 1999. The stock broke above a technical base in early November
and is now approaching a previous range around $30 with excellent
volume and solid buying pressure. A good candidate to remain above
the sold strike at $25 for two weeks.

PLAY (aggressive):
BUY  PUT DEC-22.50 TNQ-XX OI=73   A=$0.31
SELL PUT DEC-25.00 TNQ-XE OI=1019 B=$1.00
NET CREDIT TARGET=$0.75 ROI=42% B/E=$24.25

MACD Chart   CHART   NEWS   Zacks on TLXN
******************************************************************
BRCM - Broadcom Corp.  $93.12     Put-Credit Spread

Broadcom Corp. is a developer of integrated silicon solutions that
enable broadband digital data transmissions to the home and within
the business enterprise. The Co's products enable the high-speed
transmission of data over existing communications infrastructures.
Early last week, hardware stocks rebounded on optimism surrounding
the kickoff of the holiday retail season. Analysts expect strong
PC sales and firming component prices to boost stock prices in the
December quarter. Bear Stearns & Co. Inc. said a study by Market
Maps Inc. projects a 50% increase in consumer PC purchases this
holiday season compared to a year ago. Coverage was initiated on
Thursday by Needham and Co. The play is based primarily on recent
technical strength in the stock and a positive money stream that
should support the price above $80 in the short-term.

PLAY (conservative):
BUY  PUT DEC-75 RCQ-XO OI=218 A=$0.87
SELL PUT DEC-80 RCQ-XP OI=91  B=$1.50
NET CREDIT TARGET=$0.75 ROI=17% B/E=79.25

MACD Chart   CHART   NEWS   Zacks on BRCM
******************************************************************
VNT - Compania Anonima Nacional  $14.75     Call-Credit Spread

VTN is a telecommunications provider, offering switched, local,
domestic and long distance service throughout Venezuela. Many
Venezuelan stocks have slumped recently as pollsters predict a
easy victory in upcoming presidential elections for populist
Hugo Chavez. Some analysts say the market has already discounted
a Chavez victory but with the December 6 presidential elections
upon us, the local market has become sensitive to indications of
whether Chavez will stave off a challenge from former governor
Henrique Salas. Despite attempts to moderate his rhetoric recently.
Chavez's plans to dissolve Congress, redraft the constitution and
redirect state-owned oil company Petroleos de Venezuela continue
to concern investors. Venezuela's telecom sector is already going
to spend over $100 million to beat the year 2000 technical bug and
VNT, which enjoys a monopoly on all fixed-lines, will face a far
greater expenditure of at least $70 million, including spending
for its Movilnet wireless telephone unit. Even with the forecast
election results, this stock has proven short-term resistance from
$16-$17 and should remain below the sold strike for two weeks.

PLAY (conservative):
BUY  CALL DEC-20.00 VNT-LD OI=130  A=$0.43
SELL CALL DEC-17.50 VNT-LW OI=6780 B=$0.75
NET CREDIT TARGET=$0.38 ROI=18% B/E=17.87

MACD Chart   CHART   NEWS   Zacks on VNT
******************************************************************
IBM - Intl.Business Machines  $164.25     Call-Credit Spread

IBM develops, manufactures and sells advanced technology products,
including computers and microelectronic technology, software,
networking systems and information technology-related services.
IBM and many other blue chips lost ground last week, with sharp
rises by tech stocks blunted by renewed worries about overseas
economies. Fears that big-caps are going to find the situation
abroad worsening in the near term is taking an even heavier toll
on their bottom lines. This recent sell-off is evident in the IBM
chart as the buying pressure over the last five days has dropped
significantly (and actually moved into distribution on Friday).
We will begin this play, (with a Monday morning rally in mind)
with the purchase of the long call, hoping to benefit from any
upward movement. If the stock continues to rise, sell the long
position for a small profit. When the stock exhibits weakness,
sell the lower strike call to create the credit spread.

PLAY (aggressive):
BUY  CALL DEC-175 IBM-LO OI=1753 A=$0.75
SELL CALL DEC-170 IBM-LN OI=4820 B=$1.75
NET CREDIT TARGET=$1.12 ROI=28%

MACD Chart   CHART   NEWS   Zacks on IBM
******************************************************************
NKE - Nike  $35.93     Put-Debit Spread

Nike designs, developments and markets high quality footwear,
apparel, equipment, and accessory products. The Asian flu may be
working on this one again as earnings are coming up and no less
than 4 brokerages have downgraded this stock in the last month.
One comment made was that the institutions are finally getting
fed up with the continuing erosion of sales and profits and the
managements constant denials about the future. A reference to
the negative outlook made by Standard and Poors will also affect
this stock. The chart reflects a previous ability to drop into
the low 30's and that's far beyond our target.

PLAY (conservative):
BUY  PUT JAN-35.00 NKE-MG OI=716 A=$1.93
SELL PUT JAN-32.50 NKE-MZ OI=59  B=$0.87
NET DEBIT TARGET=$0.93 MAX ROI=167%
ROI TARGET=35% INITIAL GTC CLOSING PRICE=1.25
 
MACD Chart   CHART   NEWS   Zacks on NKE
******************************************************************
INDEX OPTION SPREADS...
******************************************************************
As a trader, you may be familiar with options on individual stocks
where you have the right to buy (call option) or the right to sell
(put option) a particular stock at some predetermined price within
some predetermined time. The buyer has the rights and the seller
the obligations. With index options the basic ideas are the same.
Index options allow you to make investment decisions on a specific
market industry or on the market as a whole. Spread strategies can
be made with index options similar to those made with individual
stock options. Many professional traders employ index spreads as a
hedge strategy. We favor debit positions for momentum plays on the
SPX and OTM credit spreads (OEX) when the risk/reward is favorable.
Low ROI disparity spreads will be listed (when available) for the
conservative index trader.
*******************************************************************
OEX - S&P 100 Index     $580.15     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:

It appears the market is now range-bound for the short-term and
any new rallies should be very selective and brief. The next few
weeks should include lots of volatility as Internet issues find
their support levels and blue chips struggle with lower earnings
forecasts. The technical resistance for the OEX is now around 580
and most analysts agree that we will continue to see consolidation
at this level. Short-term support now exists around 530-545. Review
the Pinnacle Hedge-Section for more specific technical information
on the S&P 100 Index.
 
PLAY (conservative-bearish):

BUY  CALL DEC-610 OEY-LB OI=7159 A=$0.62
SELL CALL DEC-605 OEW-LA OI=3963 B=$1.00
NET CREDIT TARGET=$0.43 ROI=9%

PLAY (very conservative-bullish disparity play):

BUY  PUT DEC-545 OEW-XI OI=3673  A=$1.56
SELL PUT DEC-550 OEW-XJ OI=10893 B=$1.87
NET CREDIT TARGET=$0.38 ROI=8%


CHART on S&P-100 (OEX) 
************************************************************

For information on the above plays Click here to email Ray Cummins

***********************************************************
                      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             12-06-98
Sunday                6  of  6

************************************************************
HEDGE STRATEGY & RECOMMENDATIONS - Pinnacle Capital Advisors
************************************************************
Sunday, December 6, 1998


Follow the Chips

Last month, we advised subscribers to "follow the chips"
because the semiconductor sector would likely determine the fate
of the Technology sector.  Don't look now, but the
Semiconductor sector has broken out to a new 52-week high and
has fueled the broader Technology sectors.  Since its October
low (October 8th), the Semiconductor Index (SOX) has climbed
87% and outpaced the broader market.

                SOX
Date            Index    Footnotes
*****************************************************
October 8th      185.00   1998 Low
December 4th     344.66   87% Increase from 98 Low

52-week High    344.66   Alert *
5-Year High     401.95   14% from all 5-year high


Intel, the NASD chip leader, reiterated that its 4Q98 revenues
would be up 8-10 percent due to strong PC demand.  This led
the rally Friday in the Semiconductor sector despite fear of
declining chip prices.

The following summarizes the most active semiconductors stocks
on Friday (12/4).  As shown, we list the total number of
shares traded (in millions), the most active option series and
the number of contracts traded for the series.  Finally, we
list as a point of reference the time value of the ATM
options.



Semiconductor Option Activity
**************************************************************
                         Shares
                         Traded   Most Active         Time
Company          Symbol  (12/4)   Series / Contracts  Value
**************************************************************

Intel            INTC     17.6    C DEC 115   5,604   3.13
Micron Tech      MU        8.5    P DEC 45    6,199   2.63
Texas Inst       TXN       3.6    C DEC 80    1,963   1.62
Advanced Micro   AMD       4.2    C JAN 30    1,105   1.00
Analog Devices   ADI       5.0    C DEC 30      807   1.13
Motorola         MOT       2.6    C DEC 60      656   1.20
National Semi    NSM       4.1    C DEC 15      533    .75
LSI Logic        LSI       2.6    C DEC 20      505    .88
Atmel            ATML      1.4    C DEC 15      200   1.50
Xilinx           XLNX      3.3    C JAN 60      112    .88
VLSI Tech        VLSI      1.1    C DEC 12.5    109    .26
Vitesse Semi     VTSS      1.8    C JAN 40       87   1.25
Altera           ALTR      3.1    C JAN 60       51   2.44
Linear Tech      LLTC      1.2    P DEC 75       45   2.25
Microchip        MCHP      2.1    C DEC 40       21   1.88
Maxim Integrated MXIM      1.8    C JAN 45       10   1.00

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


Pinnacle Breakout Recommendations:

Intel (INTC) - $116.31

 Sell DEC-115 PUT  INQ-XC at  2.75  SL=4.25

Micron Technology (MU) - $50.13

      Sell DEC-50  PUT  MU-XJ  at  2.63  SL=4.25

Altera (ALTR) - $55.69

      Sell DEC-55  PUT  LTQ-XK at  2.19  SL=4.25

Linear Technology (LLTC) - $79.13

      Sell DEC-80  PUT  LLQ-XP at  3.75  SL=5.25




Pinnacle Index

We have received many emails regarding our Pinnacle Index and
its application.  Some are confused about what all the
numbers mean.  To begin, its important to realize that like
other sentiment indicators, the Pinnacle Index is a
contrarian indicator.  This means that if the Pinnacle Index
reaches extreme levels, it could presage that a market
turning point is near.

There are two types of Pinnacle Indexes - one that measures
OVERHEAD sentiment RESISTENCE; one that measures UNDERLYING
sentiment SUPPORT.  As shown below, the average overhead
sentiment should clock in at 2.0.  A reading above 2.0 means
that extreme optimism (Bullish sentiment) building.
The average underlying support sentiment should clock in at
.5.  A reading above .5 means that there is extreme pessimism
(Bearish sentiment) is building.

Pinnacle Capital Advisors uses this indicator, among others,
to help presage key benchmark levels and market turning
points.

For example, when these indices reach extreme levels, as they
are slowing becoming NOW, it generally suggests that we will
likely be range bound in a trading range.  This knowledge
helps us develop the appropriate option strategies.


Trading Range         Lower End       Upper End
**************************************************
Dow Jones         8,500 - 8,600   9,400 - 9,950
S&P 500 (SPX)     1,080 - 1,100   1,190 - 1,200
S&P 100 (OEX)       530 -   540     590 -   600


Pinnacle Indexes
**************************************************************
OEX                    Friday    Friday   Tues     Thurs
Benchmark              (11/27)   (12/4)   (12/8)   (12/10)
**************************************************************

Resistance (600-605)     36.2    46.4
           (590-595)      3.3     5.3

Support    (565-570)      1.1     1.4
           (555-560)      1.2     1.6


Average ratings:
Resistance levels 2.0 / Support .5

What the Pinnacle Index is telling us:
Overhead sentiment resistance is heavy at the OEX 590/600
level while the underlying support is moderately weak.


OEX Skybox Reference Link

For those of you who have been requesting more information
about the OEX Skybox, Pinnacle Capital Advisors has written
a comprehensive reference link that can be accessed on OI's
website or you can go directly to it by the following:

http://www.OptionInvestor.com/OEXSkybox


As promised, the Referenced Link includes an overview of the
new option service together with a detailed description of
the OEX Skybox components, application and a replay of the
trading activity since its inception on November 1st.  We also
include a track record.  The following is the table of
contents for the Reference Link

Section   Topic
************************************************************

   1      OEX Skybox Overview
   2      OEX Skybox Track Record
   3      OEX Skybox Components / Legend
   4      OEX Skybox Application
   5      OEX Skybox Replay



OEX Skybox

On Friday (12/3), the market rallied following stronger than
expected employment data stopping us out of
our PUT positions.  You will notice that the OEX gapped up
more than 6 OEX points and took away some pretty good profits
on our open PUT positions.  This will happen sometimes but
its important to maintain our discipline of protecting our
positions and GETTING OUT if the trade does not go our way.
Remember, we were expecting that the market would continued
its sell-off.  When the market gapped up ABOVE our OEX 570
benchmark, that was your signal to get out.


Trigger AND Price

Ok.  What about our Bullish trigger at the OEX 573 mark.  Did
we get in.  The answer is NO.  Even though the OEX gapped up
above OEX 570 and reached our trigger point (573), we could
not get our recommended entry price of $6.25.  Because the
market gapped up, the OEX 580 Call option gapped up as well
and opened at $8.13 (previous close - $5.75.  Although it
sold off to the low of the day $6.88, it did not reach our
limit order.  Therefore, Pinnacle did not get executed and we
missed out on the nice run.

This will happen from time to time, but its important to
remember that we need two things to happen before we initiate
a new position - Trigger AND price.  Had we chased the option
at the open and gotten filled at $8.13 and the market sold
off again, we would be forced to get out at a loss.



OEX Skybox Replay:
*****************************************************************
Symbol                       Last Trade   Protective  Gain/Loss
Entry/Exit Date             Entry Price      Stop       (+/-)
*****************************************************************

OEX DEC-580 PUT  / OEW-XP     |  12.00
11/30 / 12/4                  |   7.25       15.25      4.75 +

Action Instructions:
11/30 New PUT position Filled @ limit price of $7.25
12/1  Tighten protective sell stop from $5.25 to $8.25
12/4  Tighten protective sell stop from $8.25 to $15.75
12/4  Stopped out on the open @ $12.00



OEX DEC-560 PUT  / OEW-XL     |    5.13
12/3                          |    8.38       6.75       3.75 -

Action Instructions:
12/3  New PUT position Filled @ favorable price of $8.38
12/4  Adjust protective sell stop to $6.75
12/4  Stopped out on the open @ $5.13



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

None

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




For those new to Pinnacle?s 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 202% across nine trades
(5 PUTS / 4 CALLS).


OEX Skybox Track Record / November-December 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 DEC-570 PUT  / OEW-XN
11.23 / 11.27              6.25    4.75    1.50 -      1,500 -

OEX DEC-580 CALL / OEW-LP
11.20 / 11.30              8.75   16.75    8.00 +      8,000 +

OEX DEC-590 CALL / OEW-LR
11.23 / 11.30              9.25    9.75     .50 +        500 +

OEX DEC-580 CALL / OEW-LP  7.75   10.75    3.00 +      3,000 +
12.1 / 12.2

OEX DEC-580 PUT  / OEW-XP  7.25   12.00    4.75 +      4,750 +
11.30 / 12.4

OEX DEC-560 PUT  / OEW-XL  8.38    5.13    3.75 -      3,750 -
12.3  / 12.4

********************************************************************
OEX Skybox Return / 202%                              20,185 +
********************************************************************



New OEX Recommendations

Check out our new OEX recommendations for the coming 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.

We believe that the OEX will likely be range bound between the
OEX 560 and OEX 590 for the next couple of weeks and will
offer subscribers several opportunities to profit from the
OEX.




OEX Skybox
*****************************************************************
Major Overhead Resistance OEX 590-600
*****************************************************************

   46.4
  ------- 600 -------------------------------------------------

    5.3                        *** OEX 593 >>>>> (1)
  ------- 590 -------------------------------------------------
                           *** OEX 588 >>>>> (2)

** DEC 4  ** OEX 580.15 )
  ------- 580 -------------------------------------------------
     .9

                           *** OEX 573 >>>>> (3)
  ------- 570 -------------------------------------------------
    1.4                            *** OEX 568 >>>>> (4)


  ------- 560 -------------------------------------------------
    1.6

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





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

BULLISH Triggers:

(1) BUY CALL DEC-600  OEY-LT    7.75    11.75     6.75
(3) BUY CALL DEC-580  OEW-LP    6.25     9.75     4.75

BEARISH Triggers:

(2) BUY PUT  DEC-580  OEW-XP    6.75    10.75     5.25
(4) BUY PUT  DEC-560  OEW-XL    8.75    15.75     6.75

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



Index Power Grid - Monday 12/7

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.


Index Power Grid

For Market Trading - Monday, December 7, 1998

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

DOW Industrials    8,900 | | *       | | 9,100   9,016   +|+|+
SPX S&P 500        1,160 | |    *    | | 1,190   1,177   +|+|+
OEX S&P 100          570 | |    *    | |   590     580   +|+|+
RUT Russell 2000     390 | |        *| |   400     398   +|@|-

NDX NASD 100       1,575 | |        *| | 1,635   1,630   +|+|+
MSH High Tech        740 | |        *| |   765     763   +|+|+

                                                    50/100/200             

Technology         Bearish | Neutral | Bullish    Last    dma
**************************************************************
XCI Hardware         720 | |        *| | 740       735   +|+|+
CWX Software         570 | |      *  | | 600       579   +|+|+
SOX Semiconductor    290 | |         |*| 320       345   +|+|+
NWX Networking       370 | |    *    | | 390       382   +|+|+
INX Internet         255 | |    *    | | 325       307   +|+|+

                                                    50/100/200
Financial          Bearish | Neutral | Bullish     Last   dma
**************************************************************
BIX Banking          645 | |         |*| 670       670   +|+|+
XBD Brokerage        480 | |    *    | | 500       491   +|+|+
IUX Insurance        585 | |    *    | | 620       600   +|+|+

                                                    50/100/200
Other              Bearish | Neutral | Bullish     Last   dma
**************************************************************
RLX Retail           750 | |   *     | | 780       766   +|+|+
DRG Drug             725 | |       * | | 755       750   +|+|+
HCX Healthcare       725 | |     *   | | 760       751   +|+|+
XAL Airline          295 | |  *      | | 310       300   +|@|-
OIX Oil & Gas        255 |*|         | | 265       247   +|+|@



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

Citrix / CTXS            +|+|+  7.8 |  81.81
12/4                                |  81.75    83.25     .06 -

BMC Software / BMCS      +|+|+  3.7 |  47.19
12/4                                |  50.75    51.25    3.09 +

Computer Assoc / CA      +|@|-  5.6 |  43.81
12/4                                |  43.75    45.25     .06 -


Networking:
********************************************************************
Cabletron / CS           +|-|-  2.6 |   9.88
12/4                                |   8.75    10.25     .13 -



Financial:
********************************************************************
JP Morgan / JPM          +|@|-  4.0 | 110.69
                                    | 109.75   112.25    NEW

Bank America / BAC       +|@|-  5.7 |  64.63
                                    |  62.75    65.25    NEW

Bank Boston / BKB        +|@|-  6.1 |  41.25
                                    |  39.75    42.25    NEW

Lehman Brothers / LEH    +|@|-  1.1 |  47.56
                                    |  46.75    48.25    NEW


These are the same recommendations as last Thursday with NEW entry
prices.



Transportation:
********************************************************************
Boeing / BA              +|@|-  5.6 |  32.94
12/2                                |  33.69    35.25     .75 +

AMR Corp / AMR           +|@|@  8.9 |  66.63
12/4                                |  66.75    70.25     .12 +


Oil & Gas:
********************************************************************
Exxon / XON              +|@|-  4.9 |  70.56
                                    |  69.75   72.25     NT


* NEW - New recommendation / NT - Not Triggered



NFL Challenge

For those who selected the following teams in their portfolio
in the first week of the NFL Challenge, you are still in the
running to win the competition should these teams continue to
rally and make the playoffs.  Remember the winner is the
subscriber that not has the correct portfolio at the end of
the season but who picked the team MOST OTM as of October
31st.

For example, If you picked Detroit (2-5) or Baltimore (2-5)
and they continue their comeback and get in, the subscriber
who picked Detroit and Baltimore (Both 5-7 now) will likely
be crowned the winner.

Deepest ATM / OTM Still in Playoff Contention
***************************************************************
NFC              10/31 12/7      AFC            10/31 12/7
***************************************************************
1. Detroit        2-5   5-7     1. Baltimore     2-5   5-7
2. Tampa Bay      3-4   5-7     2. San Diego     3-5   5-7
2. Arizona        3-4   6-6     3. Tennessee     3-4   6-6
                                4. Buffalo       4-3   7-5
                                4. Seattle       4-3   6-6
                                4. Kansas City   4-3   5-7


With four weeks left the playoff picture in the NFL is still
up for grabs.  In Tuesday's (12.3), we invited subscribers to
identify the "Key Moments in the Market" by identifying the
key match-ups that would likely determine the playoff picture
this weekend.  Stayed tuned to the games this weekend and
email your trade as quick as possible.  Each trade will be
date and time stamped.

NFC Key Moments:              AFC Key Moments:

NY Giants @ ARIZONA           NEW ENGLAND @ PITTSBURGH
Green Bay @ TAMPA BAY         BALTIMORE @ TENNESSEE
Dallas @ NEW ORLEANS          SEATTLE @ NY JETS
DETROIT @ Jacksonville        MIAMI @ OAKLAND
                              KANSAS CITY @ Denver
                              BUFFALO @ Cincinnati


Arizona, at 6-6, is in the driver's seat to claim the last
playoff spot in the NFC but three teams (Tampa Bay, New
Orleans and Detroit) are right behind them.  For Tampa Bay,
New Orleans and Detroit, this weekend represents a key moment
because they would likely fall out of the race should they
lose given their remaining schedule.

In the AFC, the playoff picture is up for grabs, yet the our
Technical Analysis reveals that the outcome of six games this
weekend will likely determine who gets in and who is left
out.  Check out the New England @ Pittsburgh.  Big game.
Both 7-5.  Our call: Winner likely moves on to the playoffs, Loser
stays home.

Other key moments include teams on the bubble - Baltimore,
Kansas City and San Diego.  One more loss, and it's likely
over for them.




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
*************************************************************
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The newsletter staff makes every effort to provide timely 
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