Option Investor
Newsletter

Daily Newsletter, Sunday, 12/13/1998

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

Sunday  12-13-98  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 12-13         WE 12-06         WE 11-29         WE 11-22
DOW     8821.76 -194.38  9016.14 -318.94  9333.08 +173.53  +239.96  
Nasdaq  2029.31 + 26.15  2003.16 - 13.29  2016.44 + 87.99  + 68.96  
S&P-100  574.68 -  5.47   580.15 - 10.97   590.77 + 15.81  + 71.82  
S&P-500 1166.46 - 10.28  1176.74 - 15.87  1192.29 + 28.72  + 17.49  
RUT      395.37 -  3.96   398.37 -  3.72   402.09 +  7.81  +  5.80  
TRAN    2929.51 -119.89  3052.25 - 25.56  3077.81 + 19.20  + 39.00
VIX       28.46            24.95            21.58            21.22
Put/Call    .66              .65              .40              .49
******************************************************************

The fuse is lit. The powder keg is ready to blow. We need another
apology quick!


The lack of a substantial, real, heartfelt, admission of guilt, 
apology failed to snuff out the smoldering impeachment fuse. Some 
say it would not have made any difference. Some still think he has
a chance with a real apology. The facts are there. There is no 
escaping the truth. The house has already voted for impeachment and
the next hurdle is the vote by the full house next week. It is 
looking grim. The market is sure to react negatively the closer we
get to the vote. Passage requires 218 votes and many democrats have
already said they have no choice but to vote for impeachment based
on the clear evidence. The only out at this time would be a slim 
chance vote for a censure instead of impeachment. Don't hold your
breath. I only keep mentioning this because of the serious market
impact potential. Whether you are for him or against him, the market
sentiment is still the scoreboard we all live by and it will be
impacted. In the end the Senate will not have enough votes to
impeach so it is meaningless but we may still a market nightmare.

The tech rally appears to be alive and well. The strong showing
Friday by the tech blue chips, after two days of profit taking, was
encouraging. PC sales are up. 67,000 new users login to the Internet
every hour. Retail PC sales are soaring for the holidays. Dell is
actually weeks behind on some models due to high demand. The chip
sector shows no signs of sell off from their recent rally. Without
an impeachment vote we would be having a blowout week. IBM, MSFT,
SUNW, JBL, CSCO have been great plays and could keep on rocking.

Amazing Amazon just keeps on climbing. The Internet Siamese twins,
Yahoo and Amazon, have been trading dollar for dollar for weeks. 
Every time one gained a dollar the other did also. Constantly
closing with $1-2 of each other in price. Last week the air became
too thin for Yahoo as Amazon broke out and Yahoo failed to keep up.
Amazon soared +9.88 on Friday to $223 and Yahoo closed out the
week with a +2.94 at $195.69.  Who knows where this will end but
the trading profits are incredible while it lasts.

The on again, off again December rate cut was dealt another blow
Friday with the stronger than expected retail sales report. Analysts
were expecting a negative number for November but the report showed
a +.6% gain. With consumers spending money in near record amounts
the "wealth" factor will weigh heavily on the Fed board. Recessions
are not accompanied by increasing consumption. We put the chances
of another cut on December 21st at about 30%.

With the market teetering on the cliff it might be good to time to
remind you that it is always advisable to close positions in times
of uncertainty. Sure, the market might shrug off the impeachment
news but couple that with all the earnings warnings, tax selling
and window dressing that will happen next week and there is no
way to guess what direction the market may go. Working in our
favor is the triple witching Friday. Historically this provides
an upward bias to the markets but I don't think we can count on
it this time. There is just too much portfolio shifting that will
occur. Fund managers, smelling a chance to buy cheaper if the
worst happens will be bailing out of their least favorite holdings
to raise cash for the opportunity. We should do the same. If you
have a position that is not performing then don't wait for disaster
to strike. Sell it now and take a deep breath of relief. If you
have some winning positions then tighten up your stops and be 
prepared to sell. December is a tough month before Christmas. After
Christmas we historically have a year end rally. Prepare for it!

Some analysts have continually said that the market will drop
over 1,000 points if the full house votes for impeachment. This
could be an over reaction but do you want to be long if that occurs?
Maybe it will only be 500 points but still, do you want to be long?
Sure, we may have a Houdini type last minute escape and the market
will soar in relief. If that happens you can always buy back in.
Your trading capital is your investment life blood. Protect it.
There will always be another opportunity.

Just for your information, on Friday, a noted bear, Jerry Favors,
actually predicted a rally into December 22nd. Then after the first
of the year he forecasted a 19% jump in the Dow based on a Gant 
chart analysis for the last 100 years. I won't go into the details
but the high side of his estimate for March was 11,500 for the Dow.
Now for Jerry to say this on CNBC is a marked turnaround for him.
Of course he still believes the market will crash after March and
drop below 7,000. Not that I believe either scenario but based on
the indicators we watch I could see 10,000 plus in Jan/Feb easy.
Unfortunately Jerry is a chart technician and does not factor in
things like political news or global events. Now, if we can just 
get past Christmas without self destructing, even the bears will be
on our side.

Yes, we are listing some new call plays because many of our readers
refuse to sit on cash. They must be long in the market at all times.
Personally, I am going to liquidate all my long positions on any
market bump and wait for the smoke to clear. I may sell some more 
out of the money puts on Monday. I want time decay to be on my side.
We had a nice bump at the close Friday, based on apology speculation,
but we may wake up Monday to reality.


Good Luck, Be Careful!

Jim Brown
Editor 


*********************************************************************
NEW SITE UPDATE - New Features
*********************************************************************

If you have not visited our new site then you are missing out on the
new features and daily plays.

Last Wednesday we picked Microsoft as a new play and a new split
candidate. Starting this week we are going to be listing new plays
every day - not just Tue/Thr. 

We also have a closing Market Wrap commentary every day as well.

Our new research page gives you everything you need to evaluate
a stock or pick an option. All on one page!

Stop by and visit. It could be profitable! 



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

                   TIME IS ON YOUR SIDE!!! 
                        YES IT IS!!!

 Would you pay to have extra time to accomplish the things that
you want? In the options market we do have the luxury of buying 
all of the time that we want. All we have to do is pay for it. 
Unfortunately the number one factor contributing to unsuccessful 
trades and lost money is the lack of time. Everyone has been in 
the uncomfortable situation of being correct on the direction of
a particular stock or indexes and not making money with the trade
because time runs out on an option. 

Professional traders make their living out of selling short-term 
options that retail customers buy because they are cheap. Besides
the strike price the most important decision to make is how much 
time to purchase. Do the best you can to take the time decay factor
out of the equation. Even if the move you we looking for occurs in 
a very short period you are going to benefit. But most importantly 
the extra time value that you paid for provides cushion and allows
for the market to fluctuate without forcing you to make a tough 
decision to stay with a position or not. 

Many people are successful trading shorter time horizons. But I 
like not having to be as precise. It requires a lot more work and 
closer attention to hit the short-term home run with the odds 
against you. Ideally, I recommend buying an option with two to 
three months of time or more. In addition because of the 
accelerated time decay in the last 30 days prior to expiration, 
I suggest exiting positions prior to three weeks before expiration.
Inside that time frame the options will melt away if nothing 
significant happens to the underlying stock or index. Like time 
through the hourglass as the saying goes. As you get inside that
window, rollout to a further series to take the time component 
out of the equation. 

Try to make your trading as stress free as possible by formulating
a plan and being disciplined. Mathematically you are better off to
spend the extra premium to get the additional time even if you 
never use it. Buying the more expensive option and risking half of
the premium will yield better results than buying the cheap option
and risking the whole thing. If you are correct they will both be
profitable but that extra time value you purchased allows for you 
to be less exact with your timing. 

Now if I could only find the extra time to....

Alan Knuckman 
Rosenthal Collins Securities 
            (888) 281-9569
             Contact Support


*********************************************************
Market Posture
*********************************************************
As of Market Close - Friday, December 11, 1998

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

DOW Industrials    8,600   9,400   8,822    Neutral  11.24
SPX S&P 500        1,080   1,190   1,166    Neutral  11.24
OEX S&P 100          525     590     575    Neutral  11.24
RUT Russell 2000     340     415     395    Neutral  10.27

NDX NASD 100       1,400   1,640   1,675    Neutral  11.24
MSH High Tech        620     770     777    Neutral  11.24

                   Major Support
Technology           /Resistance    Last    Posture/Since  Alert
****************************************************************
XCI Hardware         610     745     755    Neutral  11.24
CWX Software         525     590     585    Neutral  11.24
SOX Semiconductor    265     325     332    Neutral  11.24
NWX Networking       350     430     380    Neutral  11.24
INX Internet         225     315     330    Neutral  11.13

                   Major Support
Financial            /Resistance    Last    Posture/Since  Alert
****************************************************************
BIX Banking          610     680     632    BEARISH  12.11 *
XBD Brokerage        415     550     470    BEARISH  12.11 *
IUX Insurance        510     625     572    BEARISH  12.11 *

                   Major Support
Other                /Resistance    Last    Posture/Since  Alert
****************************************************************
RLX Retail           660     775     786    Neutral  10.23
DRG Drug             670     755     749    Neutral  11.24
HCX Healthcare       680     760     742    Neutral  11.24
XAL Airline          230     320     278    BEARISH  12.11 *
OIX Oil & Gas        250     270     248    BEARISH  12.3



Posture Alert

Market ended mixed Friday following a week of political and
economic uncertainty.  We remain neutral across the broad
market indices and Technology sectors while these sectors
continue to consolidate.

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.

After breaking down under its declining 200 day moving
average, we have turned Bearish across the Financial and
Airline sectors.

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: 

Atlanta Fed Index  November

Tuesday:

LJR Redbook for 12/07
BTM/Schroeders 12/12
API Oil Stocks 12/11
Consumer Prices November
Ex Food & Energy November
Real Earnings November

Wednesday:

Housing Starts November
Housing Permits November
Industrial Production November
Capacity Utilization November
Import Prices November
Export Prices November

Thursday:

Weekly Jobless Claims 12/12
Wholesale Inventories October
Money Supply (M2) 11/30
Trade Balance October

Friday:

No Releases.

*****************************************************
Last weeks change for this weeks picks:
*****************************************************
Index	Last	Week		
Nasdaq	2029	26.15		
Dow	8822	-194.38		
$OEX	575	-5.47		
$RUT	395	-3.96		
$SPX	1166   -10.28		
$TRAN	2929	-119.89		
$VIX	28.46	3.43		
				
Stock	Last	Week		
				
AMZN	223.0 	34.50	3 Wks until 3:1 split	
AOL	91.56	3.25	Movie debut next Friday	
CMGI	72.44	3.95	Earnings are Tuesday	
CMVT	69.13	4.37	Soaring into the Blue Sky	
CSCO	83.50	5.25	New Price Target	
CVS	52.38	0.74	New High last week	
EMC	81.81	2.82	Going for its 5th Week	
HD	53.19	2.00	Looking Good	
IBM	168.0 	3.75	$5 Bln richer	
JBL	63.19	-0.20	On earnings watch	
KMB	52.25	-1.62	Wait for bounce	
MYG	58.50	1.82	Split candidate	
SUNW	77.38	2.19	Time to shine	
TWX	110.5 	4.44	Splits Tuesday	
WCOM	64.38	2.75	Cuts 2400 jobs	
WMT	76.31	3.21	How high?	
YHOO	195.6 	5.93	Climbing back	
LU	98.94	3.19	Split candidate	
SLR	71.50	1.19	Split candidate	
SGP	57.50	2.75	FDA approvals	
MSFT	134.0 	6.62	Gorilla Wars 	
AGPH	50.06	4.56	Another breakout?	
NOKA	108.3 	-0.31	Split candidate	
				
Puts				
Stock	Last	Week		
AXP	93.75	-4.88	Financial unrest?	
HSY	63.63	-3.37	Halloween is 10 months away	
KO	62.88	-9.93	P3W- Earnings warnings, losing market share	
CCE	34.56	-4.32	Loyal subject to KO	
DD	52.25	-2.88	New Lows	
MOT	57.06	-4.82	Lost that loving feeling	
****************************************************
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.

*****************************************************
NOKA - Nokia $108.38 (-$.31)

BUY CALL JAN-105 NKA-AA OI=343 at $8.75 SL=6.75
BUY CALL JAN-110*NKA-AB OI=332 at $6.00 SL=4.25**PLAY**
BUY CALL JAN-115 NKA-AC OI=197 at $3.75 SL=2.50
BUY CALL APR-115 NKA-DC OI=249 at $8.88 SL=6.75


chart
*****************************************************
WCOM - WorldCom $64.38 (+2.57)(-.63)(+4.94)

BUY CALL JAN-60 LDQ-AL OI=19128 at $5.75 SL=3.75
BUY CALL JAN-65*LDQ-AM OI=17253 at $2.63 SL=1.25**PLAY**
BUY CALL MAR-65 LDQ-CM OI= 7275 at $5.00 SL=3.25


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              12-13-98
Sunday                   2  of  6

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

NOKA - NOKIA
SGP  - Schering Plough
INTC - Intel
AGPH - Agouron Pharmaceuticals
MSFT - Microsoft

Puts

AXP  - American Express
KO   - Coca Cola
CCE  - Coca Cola Enterprises
HSY  - Hershey 
DD   - Dupont
MOT  - Motorola

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

ETEC $37.75 (-2.63) We did not get the bounce off its 200 day moving
average on ETEC like we were looking for on Thursday.  ETEC looks
like it is headed for the $35-$36 range where there is a significant
amount of support for the stock.  Since the ranges are so narrow,
we are going to drop them as a pick.  

TXN $80.86 (-$2.02)  When we first recommended this play last Sunday, 
we warned of possible downgrades as the price continued to increase. 
Instead, on Tuesday, we got 2 strong earnings upgrades, a credit 
rating increase, and an all-time high in price. Then, one day later, 
the dreaded downgrade coupled with a descending market sent the stock 
into a tailspin. On Friday, TXN closed down even as Intel (which 
suffered the same fate) turned up at the end of the day.  Instead
of bouncing off its 10 dma, Friday's drop violated that support. 
While it might bounce on Monday, we'd rather play Intel at this
time. 

Low $43.81 (+$2.13)  On Tuesday, Lowes made a new all-time high, 
but fell with the market the rest of the week. On Thursday, it looked 
like it was trying to move up at the end of the day, but with Lowes 
off another $1.31 on Friday, it was a breach below support at its 
10 dma.  It hasn't closed below its 10 dma for the last 6 weeks.
Again, like TXN, it might bounce but we feel that there are better 
plays to make elsewhere. 

NTAP $71.25 (-3.25) NTAP has been a disappointment. It had a breakout 
on Friday, but it was down, not up. NTAP still has a stock split 
coming up, but this stock has given us no choice but to drop it. 
For those that like stock split plays, following this the next few 
days might provide a entry point, but we'll look for better plays.

ASND $60.19 (+3.13)  Ascend is a great company with a bright future.
We picked them on 12/01 at $58.00.  The play came to blossom last
Monday when ASND jumped up almost $7.00  to $65.00.  While it
tried, the stock couldn't hold on to those gains with the nervous
markets.  ASND is currently sitting on its 10 dma.  It should 
bounce upwards off of the average.  We are just going to write 
this one as a play that has come to fruition and its now time to
move on.  If they bounce, we'll be watching.

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
MYG  - Maytag
NOKA - Nokia
LU   - Lucent
SLR  - Solectron Corp

Recent split candidates that announced:

*****************************************
STOCKS WITH UPCOMING SPLITS 
*****************************************
We don't list all splits available, only those we feel may have
play possibilities. 

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


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 - DRUGS
*****************************************************
CVS - CVS Corporation $52.38 (+.75)(+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.

Two weeks ago, 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.

CVS was able to scratch out a gain last week and set a new 52 week
high and then pulled back a bit on Friday.  We like the fundamentals
of the industry and the fact that baby boomers are going to be
purchasing more prescriptions as they age, but there just hasn't
been any news on the stock or the sector.  Combine this with fading
volume and it tends to yield a listless stock.  We would really like
to see some more consolidation news to recharge the stock and the
sector.

BUY CALL JAN-50 CVS-AJ OI= 22 at $3.38 SL=1.50
BUY CALL JAN-55 CVS-AK OI=141 at $1.19 SL= 
BUY CALL FEB-50 CVS-BJ OI=522 at $4.50 SL=2.75
BUY CALL FEB-55*CVS-BK OI=367 at $2.19 SL=1.00

Picked on Dec 6th at  $51.63   PE=33
Change since picked    +0.75   52 week low =$29.38
Analysts Ratings   4-7-2-0-0   52 week high=$53.50
Last earnings   9-98 est=.25   actual=.25
Next earnings   2-09 est=.36   versus=.31


CHART  
*****************************************************
SGP  - Schering-Plough Corp. $57.50 (+2.75)

Schering-Plough Corporation is engaged in the discovery,
development, manufacturing and marketing of pharmaceutical and 
health care products worldwide. Products include prescription 
drugs, animal health, foot care, sun care and over-the-counter 
products. The Company's pharmaceutical research activities are 
concentrated in the therapeutic areas of allergic and inflammatory 
disorders, infectious and cardiovascular diseases, oncology and 
central nervous system disorders.

As one of the leaders in a defensive sector that has some of the
strongest earnings expectations for consistent growth, SGP has a
strong following.  SGP had a 2-1 stock split on Dec.3rd and has 
been on a nice post split run. SGP is at new highs and has a lot 
of drugs in the pipeline. Could pull back a little with three 
strong up days. Watch for an upward move and then jump on for the
ride. Earnings aren't until January, but SGP has exceeded earning 
estimates the last 6 times.  A great fundamentals play even if
analysts say they are a little "expensive".

SGP recently announced the FDA approval of Rebetron. This drug
helps fight Hepatitis C. Also recently asked for new drug
application of Asmanex. This is a drug for asthma patients 12 and 
older. SGP is one of the leading drug manufactures and should 
continue to improve their position in the drug industry.

BUY CALL JAN-55.00 SGP-AK OI=5077 at $4.00 SL=2.50 ITM $2.50 
BUY CALL*JAN-57.50 SGP-AP OI=4488 at $2.50 SL=1.25
BUY CALL*JAN-60.00 SGP-AL OI= 876 at $1.38 SL= .63
BUY CALL FEB-57.50 SGP-BP OI= 349 at $3.63 SL=2.00
BUY CALL FEB-60.00 SGP-BL OI= 751 at $2.69 SL=1.25

Picked on Dec.13th at $57.50    PE=49
Changed since picked    0.00    52-week low = $28.59
Analysts Ratings  8-7-11-0-0    52-week high= $57.75
Last Earnings 10-98 est =.28 actual = .29
Next Earnings 01-99 est =.28 versus = .23


CHART
*****************************************************
AGPH - Agouron Pharmaceuticals, Inc. $50.06 (+$4.56)(P3W $7.00)

Agouron Pharmaceuticals sells medicines in 30 countries and develops
treatments for cancer, viral disease, and immuno-inflammatory disease
(including HIV, the common cold, cytomegalovirus infection, herpes,
and hepatitis C.) The company utilizes genetic technology to engineer
synthetic drugs for specifically targeted conditions. Viracept, its 
first commercial product (a protease inhibitor), treats the AIDS 
virus.  Other products under development include VEGF receptors and 
GART and MMP inhibitors for treating solid tumors and metastases 
associated with cancer. Agouron spun off its oncology business as a
new company.

AGPH has been a steady climber since early October's market recovery.
It tends to climb, rest and repeat in 2 week cycles.  Technicals 
show MACD and daily moving average trending up with stock price 
holding through market jitters last week.  This basing is a strong
sign showing that the stock should cycle up again.  Steady and 
rolling, Morgan Stanley has a target price of $54.

AGPH said December 3rd it would begin a Phase I trial (clinical 
trials) in England this month to fight the common cold virus using 
a protease inhibitor that it has developed.  The trial should last 
about a year.

BUY CALL JAN-45 GQA-AI OI= 221 at $7.00 SL $5.00, ITM $5
BUY CALL JAN-50*GQA-AJ OI= 547 at $4.00 SL $2.75
BUY CALL FEB-5O GQA-BJ OI=1071 at $5.38 SL $4.00, extra 30 days

Picked on December 13, 1998 at $ 50.06     PE=97
Change Since Picked           +$  0.00     52 Week High= 50.38
Analysts Ratings             3-6-4-0-0     52 Week Low = 19.25
Last Earnings 09/98 est. 0.20 actual 0.21        surprise 5.0% 
Next Earnings 01-18 est. 0.43 versus 0.15  
       

CHART

*****************************************************
STOCK OPTIONS - TECH 
*****************************************************
IBM  -  $168.00 (+3.75)(-5.76)(+9.81)(+2.69)(+7.51)

The One and Only IBM.  For those of you who don't know that 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 faring well this week even though the rest of the market fell
hard to profit taking.  IBM stayed above their $160 level with a
variety of news to help them along the way. Tuesday AT&T announced
they would be purchasing IBM's Global Network for $5 bln cash.
Wednesday, the Computer Sciences Corp announced the I.R.S. awarded
the CSC led consortium a 15-year outsourcing contract.  Wall Street
analysts feel this deal could be worth $3-5 Bln., but follow up
contracts might reach as much as $10 Bln.  IBM's share would be
about $1 Bln.  It seems the dust may have settled a bit on Friday,
so with a positive day on Monday, look for IBM to continue on to
their target price.  We anticipate a split at/near this level.

Monday IBM announced they have made new chips for their digital 
cameras that will allow them to lower their production price and
overall cost.  Tuesday AT&T bought IBM's Global Network for $5 Bln
cash.  Wednesday the Computer Sciences led consortium was awarded
a 15-year contract by the I.R.S. Thursday IBM and Prodigy
announced they would be offering consumers a timely incentive to
get wired, online and to go shopping.  By purchasing the IBM
Aptiva or ThinkPad Systems, then enrolling in Prodigy, consumers
would receive $100 worth of coupons to go shopping on the now
online stores.

BUY CALL JAN-165 IBM-AM OI=4004 at $ 8.75 SL= 6.50
BUY CALL JAN-170*IBM-AN OI=4703 at $ 6.00 SL= 4.25
BUY CALL JAN-175 IBM-AO OI=2428 at $ 3.75 SL= 2.50
BUY CALL APR-180 IBM-GP OI= 606 at $12.75 SL=10.50

Picked on November 15th at $157.44     PE = 25
Change Since Picked        +$10.56     52 Week High= 170.56
Analysts Ratings        12-8-3-0-0     52 Week Low =  95.62
Last Earnings 10-20 est. 1.53 actual 1.56	 surprise 1.96%
Next Earnings 01-18 est. 2.47 versus 2.11


CHART
   
*******************************************
EMC  - EMC Corporation $81.81 (+2.81)(+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.  

Few people outside the high-tech industry know how EMC dominates the
enterprise storage market.  There was a great article published in
this regard last week that was titled EMC: The Greatest Company You
Never Heard Of.  The article points out that EMC has averaged over
50% annual growth in sales and earnings for the past five years. 
Sales ten years ago were $127 million and now are approaching $4
billion.  If you put $3,000 in EMC at the start of the decade, that
investment would currently be worth over a million dollars .  The
article also termed EMC the 600 pound gorilla of enterprise storage
systems.  It was an interesting article and you can find it on
Yahoo!Finance.

EMC set a new 52 week high last week at $86.63, but pulled back
later in the week to touch its 10 day moving average on both
Thursday and Friday.  As you can tell by the figures below, EMC has
had a great run since we picked them on November 8.  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.  We continue to hear rumors
regarding EMC splitting, but have not been able to confirm anything.

BUY CALL JAN-80 EMC-AP OI=2956 at $ 7.25 SL=5.25
BUY CALL JAN-85*EMC-AQ OI=2568 at $ 4.75 SL=3.00
BUY CALL APR-80 EMC-DP OI= 904 at $12.13 SL=9.50
BUY CALL APR-85 EMC-DQ OI= 635 at $ 9.38 SL=6.75

Picked on Nov 8th at $69.06     PE=36
Change since picked  +12.75     52 week low =$23.50
Analysts Ratings 10-4-0-0-0     52 week high=$86.63
Last earnings  9-98 est=.36     actual=.38
Next earnings  1-28 est=.46     versus=.32


CHART

*******************************************
SUNW - Sun Microsystems $77.38 (+2.09)(-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.  

On Friday, Sun Microsystems tacked on some nice gains by shooting up 
+$4.38 to almost completely cover its losses from the previous three 
days.  SUNW finished positive for the week.  We remain confident in 
SUNW especially since it stayed above its support level of $72 during 
the recent market negativity.  This stock has suffered from 
consolidating as of late but might be on track again if the market 
can get some positive momentum going.  We are still considering SUNW 
a split candidate since it had previously split at the $64 and $80 
levels.  Earnings are due in the middle of January which might pose 
as a convenient time to announce such a split.

News on the week:  SUNW revealed many new advancements to its Java
language this past week.  The improvements allow Java to be used 
for more applications at faster speeds.  It has even taken the "wraps"
off SunSan, a Year 2000 compliance package that its says will greatly 
aid Sun's computer customers who want to prepare for any future Y2K 
concerns.  Sun Microsystems also seems to be holding its head high as 
witness for the government in the Microsoft trial.  Microsoft is being 
tried for possible monopolistic actions by supposedly tampering with
the Java language among other things.  

BUY CALL JAN-75 SUQ-AO OI=3333 at $ 6.38 SL=4.75
BUY CALL JAN-80*SUQ-AP OI=3186 at $ 4.13 SL=2.50
BUT CALL APR-80 SUQ-DP OI=1173 at $ 8.88 SL=6.75
BUY CALL APR-85 SUQ-DQ OI= 512 at $ 7.00 SL=5.25

Momentum Play


CHART
*****************************************************
STOCK OPTIONS - NETWORKING
*****************************************************
CSCO - Cisco Systems $83.50 (+5.25)(-1.75)(+5.38)(+9.92)(-$2.76) 

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. 

Wow!  Nice week for CSCO.  The bears peeked out of the cave but
decided not to hunt this strong and agile prey.  CSCO broke through
resistance at $81 and held in spite of market jitters.  After a 
brief rest in the prior week and last weeks strong showing, we 
expect CSCO to continue its flight to blue sky this week (assuming 
the market cooperates).  Bring on the jet fuel!  As mentioned in
previous editions, 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.

International Data Corporation predicts that 320 million people 
will be online in 2002, up from 100 million now.  Just one of the
reasons CSCO received an upgrade this week from Morgan Stanley with
a new price target of $100.  Also of note, Sprint's new Internet 
based ION phone system to be launched in January will run on Cisco
equipment.  Almost forgot, they had a patent infringement lawsuit
against them dismissed, too.  CEO Chambers still confident of 30%+
growth over the next 3-5 years.  

BUY CALL JAN-80*CYQ-AP OI= 9250 at $6.88 SL=5.00
BUY CALL JAN-85*CYQ-AQ OI= 9886 at $4.25 SL=2.75
BUY CALL APR-85 CYQ-DQ OI= 2339 at $8.75 SL=6.75, lots of time.
BUY CALL APR-90 CYQ-DR OI= 2077 at $6.88 SL=5.00, 4 months away.

LEAP PLAY:

BUY LEAP JAN-2000-90 LCY-AR at $14.38 SL=11.50 
BUY LEAP JAN-2001-90 ZCY-AR at $22.75 SL=18.00

Picked on Oct   8th   $46.69		PE= 84
Change since picked  +$36.81		52 week low =$31.87 
Analysts Ratings 16-15-0-0-0		52 week high=$84.75
Last earnings on 11-04 est=.33  actual=.34  
Next earnings on 02-03 est=.36  versus=.29  


CHART
********************************************
STOCK OPTIONS - INTERNET  
********************************************
CMGI - $72.44 (+3.95)(-20.25)(+11.38)(+7.76)(-3.13)(+15.88)

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

Even though with a turbulent week in the market, CMGI managed
to stay in the green.  Earnings are due to be announced this 
coming Tuesday (12/15) after the close of the market, and don't
forget the shareholder meeting on Thursday (12/17) where they will
be voting to increase they number of shares outstanding which
would provide enough for two future 2:1 stock splits.  Please
examine your own personal tolerance for risk.  There is a lot that
can go against you.  #1, we always recommend against holding over
an earnings announcement.  A company can miss their estimates, can
miss the "whisper" number, or can have a negative conference call
afterward.  They can do all of these things right and the stock
might still go down!  Plus, there is no guarantee that just
because they vote to increase shares (we've never heard of 
shareholders voting no) that they will announce a split any time 
soon.  Not to mention CMGI could get crushed if the Internets 
decide to crash next week.  Make your own decision as to whether 
or not you have the stomach to play this kind of risk as CMGI is
expected to announce negative earnings.  But they do tend to beat 
the estimates.

Wednesday was CMGI's first day of trading in their new Internet
Index on the Philadelphia Exchange.  Friday, the Individual
Investor's Magazine announced that CMGI has been selected as part
of its Magic 25 stock portfolio.  According to Individual Investor
editors, " CMG Information Services, a company we have followed
long and hard, owns interests in a variety of Internet-related
business.  It provides a measure of diversification and comfort to
investing in a sector that's nearly impossible to evaluate." As an
"on the move" stock, the magazine says, " CMG Information Svcs has
only just begun to see the benefits of it's numerous investments
in Internet media companies; in 1999 watch for the spin-off of 
more of its subsidiaries." (Business Wire).  Individual Investors
Magic 25 represents quality stocks that are either substantially 
undervalued or have the momentum to continue posting above-average
returns.

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

BUY CALL JAN-70 QGC-AN OI= 220 at $11.13 SL= 8.75 ITM
BUY CALL JAN-75*QGC-AO OI= 296 at $ 8.88 SL= 6.75
BUY CALL JAN-80 QGC-AP OI= 249 at $ 6.88 SL= 5.25
BUY CALL MAR-80 QGC-CP OI= 223 at $11.63 SL= 9.50

Picked on Oct. 22nd at $52.25      PE = 97 
Change since picked +  $20.19      52 Week High= 91.75
Analysts Ratings    2-4-2-0-0      52 Week Low = 12.37
Last Earnings  9-24 est -0.51 actual 1.27 Surprise +330%
Next Earnings 12-15 est -0.62 versus -.29


CHART
********************************************
YHOO - Yahoo, Inc. $195.69 (+11.94)

Yahoo! Inc. is a global Internet media company that offers a 
network of branded World Wide Web programming that serves millions 
of users daily. As the first online navigational guide to the Web, 
WWW.YAHOO.COM is the single largest guide in terms of traffic, 
advertising, household and business user reach, and is one of the 
most recognized brands associated with the Internet. The Company 
provides targeted Internet resources and communications services 
for a broad range of audiences, based on demographic, key-subject 
and geographic interests.

YHOO has stayed in a tighter trading range the last week and has 
room to hit a new high of $227.75. The internets played the up and 
down game last week, yet YHOO finished up $11.94 for the week. A
stock split is a definite possibility. It announced a split in this
range. YHOO is sitting on its 20-dma, which has held since the Oct.
8th low. YHOO is definitely a high risk play, but high risk can 
equal high reward. 

YHOO and Hoover's On-Line hooked up to offer IPO info on YHOO's
finance page. Just another reason for YHOO to continue to lead
the search pages in hits. 

BUY CALL JAN-190 YHU-AR OI=1345 at $26.75 SL=18.00, ITM
BUY CALL JAN-195 YHU-AS OI= 872 at $23.63 SL=16.00, ATM
BUY CALL JAN-200 YHU-AT OI=1964 at $21.50 SL=14.00, OTM
BUY CALL JAN-210 YHU-AB OI=1569 at $17.88 SL=10.00, really OTM
BUY CALL APR-220 YHU-DD OI= 951 at $32.63 SL=24.00, Four Months

(Momentum Play, NO Fundamentals)


CHART
********************************************
AOL - America Online $91.56 (+3.56)(-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!)

AOL showed nice support at $88 last week with buyers stepping in to
"buy the dip" every time.  While closing every day last week higher
but Thursday, AOL has been a steady mover tacking on 15 points in 
the last 23 trading days and looked good even before the rest of the
market's last minute recovery Friday.  AOL closed just shy of its 
daily high.  Word of warning: momentum may be flattening.  Despite 
that AOL has the highest revenues of the internet stocks(and growing
every day), its still an internet stock and may see huge choppiness,
especially when caught in market down-drafts.  Protect your profits,
keep your stop-limits tight.  Wait for the market to trend up before
opening a new position.

This from a news recap: A blockbuster movie about America Online 
will be released on December 18th called You've Got Mail! Often, a
positive spin on a situation slides off onto Wall Street. AOL 
should benefit from having superstars Meg Ryan and Tom Hanks fall 
in love on the screen. If Wall Street is in a euphoric mood during 
the time of this release, things could bode well for the stock 
price of AOL.  In the "non-fluff" category, GTE and Bell Atlantic 
will pay AOL $31 million over 3 years for presence on the site.  
A deal a week- that's all we ask!

BUY CALL JAN- 85  AOL-AQ OI= 8757 at $11.38 SL=8.75 ITM 
BUY CALL JAN- 90  AOL-AR OI= 8397 at $ 8.63 SL=6.50
BUY CALL JAN- 95* AOL-AS OI=11371 at $ 6.38 SL=4.75
BUY CALL APR-100  AOE-DT OI= 2223 at $12.00 SL$9.75 Four Months

- Momentum play.


CHART
********************************************
AMZN - Amazon.com $223.00 (+34.50)(-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. 

Viola! (Whallaa!) +$34.50 on the week.  Just like magic.  Looks like
Amazon is on a tear again, thank goodness.  It has recovered nicely 
even in a rough market troubled by the impeachment hearings and 
earnings warnings from several of the big cap stocks.  It reached 
$224 for the second day in a row.  This could be a new resistance 
level for Amazon.  Keep in mind that the 3:1 stock split is scheduled 
for January 4th and should cause Amazon to take off for new highs.
Heart stopping price swings do not make this a play for the weak
stomached.  

News On The Week:  "A 19-company survey conducted by Gomez Advisors 
Inc. (a company who provides scorecards for a variety of online 
businesses) found Amazon to be the most appealing site for customers 
when judged on factors like ease of use and customer confidence.  
Amazon is by far the volume leader in online book-selling." -(Dow 
Jones Online News)  Trying to stay ahead of the pack, Amazon 
continues to enhance its usefulness to clients.  "Shop the Web" 
is a recent addition that will provide links to products that 
Amazon doesn't carry directly to aid users.  But, competitors are 
always lurking in the shadows.  The Global Media Entertainment 
Network and an alliance between Shopping.com and Icomworld will 
provide the newest competition for Amazon.

*all of these will split into 3 contracts at 1/3 the strike price
after the split.  These are not cheap by any means.

BUY CALL JAN-210 QZN-AB OI= 788 at $37.50 SL=29.00
BUY CALL JAN-220 QZN-AD OI=1968 at $32.38 SL=25.00
BUY CALL JAN-230*QZN-AF OI=2712 at $27.38 SL=21.00
BUY CALL JAN-240 QZN-AH OI=1310 at $22.50 SL=17.50
BUY CALL APR-240 QZN-DH OI= 564 at $40.50 SL=31.00

PURELY MOMENTUM/SPLIT PLAY - NO FUNDAMENTALS


CHART
********************************************
STOCK OPTIONS - TELECOMM
********************************************
CMVT - Comverse Technology, Inc.  $69.13 (+4.38)

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
telecommunications 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. This stock
produces very little news but keeps going up. CMVT has produced a
$10.00 gain in the last two weeks and there seems to be no upward
resistance. CMVT continues to set new 52-week highs. 

An article last Wednesday noted how many intelligent network 
company's have had a hard time surviving. Those that have survived
have done so with mergers. The article mentioned the merger on CMVT
and BSTN last January helped both stay in the picture. Back on Dec.
2nd, BancBoston raised its earnings estimates on CMVT after a 
strong earnings report.

BUY CALL JAN-65 CQV-AM OI=387 at $ 7.00 SL=5.25 ITM $4.13 
BUY CALL JAN-70*CQV-AN OI= 79 at $ 4.18 SL=2.50 low option volume.
BUY CALL APR-70 CQV-DN OI= 75 at $ 7.88 SL=6.00 four months.

Picked on Dec.6th at  $64.75	  PE=31
Changed since picked +$ 4.38	  52-week low	 = $29.38
Analysts Ratings  9-3-0-0-0	  52-week high= $69.75
Last Earnings    12-98 est =.56	actual = .62
Next Earnings     3-99 est =.61	versus = .44


CHART
********************************************
WCOM - WorldCom $64.38 (+2.57)(-.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.

Great resilience.  WCOM hung around the $63 range Monday through 
Wednesday then broke through resistance to finish Friday at a new 
all-time closing high, despite nervous markets.  All overhead 
resistance has cleared.  The chart is beautiful with technicals 
positive.  Look for WCOM to continue its trajectory upward, market
permitting.  This looks like a strong play considering the lack
of profit-taking in recent market weakness.

In the news last week, WCOM announced layoffs for 2300 workers as 
part of a major cost-cutting program - music to market's ears.

BUY CALL JAN-60 LDQ-AL OI=19128 at $5.75 SL=3.75
BUY CALL JAN-65*LDQ-AM OI=17253 at $2.63 SL=1.25
BUY CALL MAR-65 LDQ-CM OI= 7275 at $5.00 SL=3.25

Picked on November 29th at $62.44       PE = 66
Change since picked       +$ 1.94       52 week high=64.63
Analysts Ratings       25-6-1-0-0       52 week low =28.00
Last Earnings 10/29 est .22  actual .21  surprise -4.5%
Next Earnings 02/19 est .22  versus .15


CHART
*****************************************************
LU   - Lucent Technologies, Inc. $99.00 (+3.25)

Lucent Technologies is the leading US maker of telecommunications 
equipment and software, from telephones to business communications 
systems, switching and transmission equipment, and wireless 
networks. Globally, Lucent is a top maker of digital signal 
processors and telecommunications power systems and is a major 
supplier to the personal communication services market. Philips 
Consumer Communications, Lucent's soon-to-be-disbanded joint 
venture with Philips Electronics, is a leading maker of phones 
and answering machines. Technology developed by Bell Labs provides 
the basis for Lucent's products. Most of Lucent's customers are 
telecommunications network operators. AT&T accounts for about 14% 
of Lucent's sales. 

LU sank as low as $94.75 with the decline Friday only to recover
with a $1.75 gain. LU's profit taking may be done for awhile. Wait
for confirmation of a move up before jumping in. LU is a definite
stock split candidate. It announced the last stock split in the
high $90 range. When LU makes a move it is usually very substantial.
As mention before, put open interest is greater than call open 
interest which shows a lot of upward possibility. If LU makes a big
move up, we'll see a rally from the shorts covering. 

Bell Labs, LU research arm, recently announced the development of 
the smallest active region of a transistor. It measures only 20
nanometers wide –about 60 atoms. This ongoing "nanotransistor" 
research at Bell Labs, which is the research and development arm 
of Lucent Technologies, will pave the way for powerful new 
integrated circuits that pack many billions of components on a 
single silicon chip. The transistors themselves will be faster and 
consume significantly less power than current transistors. 

BUY CALL JAN- 95 LU-AS OI= 6523 at $8.25  SL=6.25 ITM $4.00 
BUY CALL JAN-100*LU-AT OI=13292 at $5.63  SL=3.25
BUY CALL JAN-105 LU-AA OI= 6362 at $3.50  SL=1.75
BUY CALL APR-105 LU-DA OI=  853 at $8.38  SL=6.25

Picked on Dec.8th at  $99.06      PE=47
Changed since picked    -.06      52-week low = $ 36.19
Analysts Ratings  8-9-14-0-0      52-week high= $108.50
Last Earnings    10-98 est =.39   actual = .41
Next Earnings     1-99 est =.99   versus = .86	


CHART

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

NOKA - Nokia $108.38 (-$.31)

Nokia, of Finland, is the #1 cellular phone maker in the world and 
a leading supplier of telecommunications systems and equipment. Its
net income is rising rapidly, due to strong increases in sales and
higher margins. This stock has been climbing almost continuously all
year. Even during the overall market drop in early October, Nokia
merely bounced off its 200 day moving average and kept on climbing.

Last week, Ericsson, the Swedish Telecom Co., moved down sharply on
profit warnings and Nokia and other cell phone companies followed
suit. Just recently, Nokia had said that the upcoming year looked
strong, with no serious problems on the horizon. Since even the %17
decline in Ericsson's stock was seen by many to be an overreaction,
and the decline in Nokia's price was only a sympathy move.  This 
really appears as a powerful play.  After a great run, it spent 
the week consolidating and gave us a powerful bump off its 10 dma
on Friday.  They split 2:1 last April at $125 (after a large pre-
split run).  At this level, Nokia is a split candidate again.

Monday 12/7, PaineWebber upgraded Nokia from an attractive to a buy.
All of the recent interest rate cuts in Europe should also help 
Nokia.  They are also a sponsor of the Sugar Bowl. Watch for its 
half-time give-away promotion.  

BUY CALL JAN-105 NKA-AA OI=343 at $8.75 SL=6.75
BUY CALL JAN-110*NKA-AB OI=332 at $6.00 SL=4.25
BUY CALL JAN-115 NKA-AC OI=197 at $3.75 SL=2.50
BUY CALL APR-115 NKA-DC OI=249 at $8.88 SL=6.75

Picked on Dec 13th at $108.38         P/E = n/a
Change since picked: +$  0.00         52 week low=$31.63
Analysts' ratings   7-6-1-1-0         52 week high=$110.44
Last earnings  9/98 est= $.67  actual= $.88 surprise: 31%
Next earnings 12/98 est= $.97  n/a 


CHART

*****************************************************
STOCK OPTIONS - RETAIL
*****************************************************
WMT - Wal-Mart $76.31 +$.56 ($3.12)

Wal-Mart is the leading discount retailer in the world, with a 
presence in all 50 states, as well as Canada, Asia, Latin America, 
and Europe. They operate the #2 grocery chain, behind Kroger's, and
Sam's clubs is the #2 warehouse chain. Recently, 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. 

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. On
Dec. 3rd and Dec 4th, WMT bounced off intra-day lows of $71.44 and
$71.63, respectively, suggesting support at that level. In last 
week's crazy market, the lowest price WMT saw was an intra-day 
$73.25, and it set a new all time high on Wednesday, Dec.9th of
$77.44. Wal-Mart is on track for over $120 billion in sales for its
year end January 1999. 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, but it is rumored that the company wants to 
wait for a higher price before splitting this time. How high is the
question.

On Dec 9th, Wal-Mart agreed to purchase 74 stores in Germany from 
Spar Handels AG. The Interspar hypermarkets to be acquired have a
combined annual sales of about $1.7 billion.

BUY CALL JAN-70 WMT-AN at $8.00 OI=5337 
BUY CALL JAN-75 WMT-AO at $4.38 OI=5351
BUY CALL JAN-80 WMT-AP at $2.00 OI=1919
BUY CALL MAR-75 WMT-CO at $7.00 OI=1679
BUY CALL MAR-80 WMT-CP at $4.25 OI=1988

Picked on Dec 6th at  $73.19         P/E=39
Change since picked  +$ 3.19         52 week low=36.75
Analysts' ratings 7-10-4-0-0         52 week high=77.44
Last earnings 10/98 est= $.44 actual= $.45 surprise: 5%
Next earnings  2-24 est= $.65 versus= $.57


CHART
*****************************************************
KMB - Kimberly-Clark Corp.  $53.19 (-1.69)

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), Depend, GoodNites, Kotex, New Freedom, 
Pull-Ups, and Poise. Consumer tissue products include the Kleenex
Cottonelle, Kleenex Viva, Kimwipes, Scott, and Wypall brands. 

KMB lost ground last week with the Dow, but showed signs of strength
on Friday. As the Dow headed south, KMB kept its head above water 
and finished with a $.63 gain. KMB's 20-dma held again and we could
see a continuation of the up-trend, with the markets help.  We 
recommend that you wait for KMB to close above $53 (or better yet
$54) before starting any plays.

Announced reorganization of company into three divisions. 
(see Thursday update) This and the 20-dma seemed to hold the
shares from a further drop. The industry has been in a downer
since Nov.23rd, yet KMB has continued higher.

BUY CALL JAN-50 KMB-AJ OI=5,910 at $3.50 SL=1.75 $2.25 ITM
BUY CALL JAN-55*KMB-AK OI=4,265 at $ .88 SL=0.00 wait for upward mvmt.
BUY CALL APR-50 KMB-DJ OI=2,765 at $5.13 SL=3.25 $2.25 ITM
BUY CALL APR-55 KMB-DK OI=2,247 at $2.38 SL=1.00

Picked on Dec.6th at  $53.875		PE=22
Changed since picked    -1.69		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


CHART
*****************************************************
HD  - The Home Depot, Inc.  $53.19 (+2.31)(-.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.

HD set a new 52 week high on Wednesday at $55.00 and then pulled
back to its 10 day moving average on Thursday and Friday.  This was
the pattern in several of the stocks that we are currently
following.  HD also exhibited the same pattern last week.  We
wouldn't want HD to break significantly below its 10 day moving
average.  Hopefully HD can keep its run going and with some
cooperation from the markets.  Depending upon your own perspective,
you can either see this as your chance to buy on the dip or wait
for upward confirmation and a close above $55.

Last week HD announced that they will begin testing its new
Villager's Hardware Store concept with four stores in New Jersey. 
The stores will be only a third of the size of its warehouse-style
stores and carry mostly merchandise for small home projects, such as
tools, garden supplies and paints.  HD will able to bring
convenience to the consumer who doesn't want to deal with the huge
parking lots, crowded corridors and long checkout lines of the
warehouse stores.  HD will also be able to bring its low pricing to
these stores as well.  This new format may be able to fuel HD's
growth, in addition to the growth HD already has planned in its
warehouse type stores.

BUY CALL JAN-50*HD-AJ OI=8021 at $4.38 SL=2.75
BUY CALL JAN-55*HD-AK OI=5638 at $1.69 SL=0.75
BUY CALL FEB-55 HD-BK OI=6722 at $2.88 SL=1.50
BUY CALL MAY-60 HD-EL OI=5256 at $2.81 SL=1.38

Picked on Nov 29th at $51.75   PE=51
Change since picked    +1.44   52 week low =$26.47
Analysts Ratings  7-12-7-0-0   52 week high=$55.00
Last earnings  10-98 est=.25   actual=.26
Next earnings   2-24 est=.26   versus=.20


CHART
*****************************************************
MYG - Maytag $58.50 (+1.81)(+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 a few 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.

This week has been really hard on the market.  So many things to 
worry about-  earnings warnings, impeachment problems, and unstable 
foreign markets.  It sure is nice to know you can count on Maytag.  
Again it finished the week by posting a gain.  However, it didn't 
break its new resistance level of $60.13.  The highest it got on 
Friday was to $58.94.  You can either buy MYG on the dip now (watch
for market direction) or wait for MYG to get above resistance at 
$60.  MYG had a couple of splits in the late 1980s.  Currently, MYG 
is in split territory.

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

BUY CALL JAN-55 MYG-AK OI=2588 at $4.38 SL=2.75, premium=$0.88
BUY CALL JAN-60 MYG-AL OI= 478 at $1.56 SL=1.00
BUY CALL APR-60 MYG-DL OI=  57 at $3.63 SL=1.75

Momentum play only


CHART
*****************************************************
STOCK OPTIONS - SEMICONDUCTOR
*****************************************************
INTC - Intel Corporation $116.44 +$1.82 (+$.13)

Intel, the world's biggest semi-conductor company, is the largest 
supplier of microprocessors, flash memory, and PC chipsets. It is 
also a leading supplier of embedded RISC processors, micro-
controllers, and low-end networking solutions. It commands a 90% 
sales share of the PC processor market. While chip-makers suffered
from a glut of chips in 1997 and early 1998, inventories have shrunk
and demand is high once again. In fact, one analyst believes that 
the industry is in the early stages of a new bull cycle and its
leader, Intel, will be riding high.

Over the last five years, Intel's earnings per share have grown at
36%. This compares with 26.6% for the industry and 13.9% for the S&P.
From a low of less than $80.00 in early October of this year, Intel
rose to a new intra-day high of 124.00 on Tuesday, Dec. 8, propelled
in part by analysts raising targets on the semiconductors. That day,
Marc Edelstone, at Morgan Stanley, raised his price target on Intel 
to $150.00 from $130.00. Credit Suisse First Boston also has a 
$150.00 12-month price target. However, profit-taking and a down
market took its toll the rest of the week, and bearish comments from
Dan Scovel of Fahnestock and Co. accelerated the downdraft. A lower
price on this stock may be healthy, though, allowing a breather after
a long run-up and a better entry point for investors. Intel turned up
again after 3:00, closing $.13 above the previous Friday's close.
Analysts have expectations for fourth quarter revenue growth of 10% 
to 12% over the third quarter, and claim that revenues are strong
across virtually every segment and product line in Intel's business.
Both Christmas and corporate year-end purchases of computers should
further boost the demand for Intel's products.

Recent news: Intel made an equity investment in NETPodium, a company
marketing interactive broadcasting software which offers live 2-way
interactions over the internet. On 12/7, Intel joined other computer
industry and telephone companies in making a proposal to the FCC with
the intent of setting ground rules which encourage investment in high
speed ASDL internet access. On 12/8.Intel said it will donate its
design for the pentium processor to Doe labs, in an effort to help
researchers for the U.S. government make radiation-proof chips.

BUY CALL JAN-110 INQ-AB OI=12440 at $10.50 SL= 7.50
BUY CALL JAN-115 INQ-AC OI= 8744 at $ 7.38 SL= 5.25
BUY CALL JAN-120*INQ-AD OI=22968 at $ 5.00 SL= 3.25
BUY CALL JAN-125 INQ-AE OI=10285 at $ 3.38 SL= 1.50, Very Aggressive!
BUY CALL APR-115 INQ-DC OI= 3497 at $13.00 SL=10.50
BUY CALL APR-120 INQ-DD OI= 7225 at $10.25 SL= 7.50, Four Months

Picked on Dec. 13th at $116.44        P/E=33
Change since picked   +$  0.00        52-week low=$65.66
Analyst's ratings  12-13-9-0-0        52-week high=$124.00
Last earnings  9/98 est=$ .79 actual= $.89 surprise: 13%
Next earnings 12/98 est=$1.02 versus=$0.98 


CHART
*****************************************************

JBL - Jabil Circuit, Inc. $63.19 (-.19)(+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.

At the beginning of the week chip stocks, and related manufacturers,
were getting nothing but positive comments and at the end of the
week they were getting hit with valuation concerns.  I think this is
indicative of the kind of market we are in right now.  JBL announced
last week that it is reducing a charge it took in its fourth quarter
ended August 31, in connection with an acquisition.  The charge was
reduced from $24.4 million to $20.8 million.  This is equivalent to
about 6 cents per share for their fiscal year.

JBL set a new 52 week high last week, but then fell back towards the
end of the week.  We are playing JBL as a run into their earnings
announcement.  First Call has their earnings release date as 12/15
and Zacks has it as 12/16.  We are looking for a pop on Monday and
Tuesday.  Remember holding over earnings release dates has not been
very profitable lately.  If we don't get the move we are looking for
on Monday or Tuesday, wait until after JBL releases earnings to
reevaluate them.   

BUY CALL JAN-60 JBL-AL OI=474 at $7.00 SL=5.25
BUY CALL JAN-65*JBL-AM OI=247 at $4.50 SL=2.75
BUY CALL MAR-65 JBL-CM OI= 41 at $7.25 SL=5.50
BUY CALL JUN-70 JBL-FN OI= 50 at $8.13 SL=6.25

Picked on Dec 6th at  $63.38   PE=43
Change since picked    -0.19   52 week low =$23.00
Analysts Ratings   6-8-6-0-0   52 week high=$66.56
Last earnings   8-98 est=.33   actual=.35
Next earnings  12-15 est=.43   versus=.49


CHART
*****************************************************
STOCK OPTIONS - MISC
*****************************************************
TWX - Time Warner $110.19 (+4.13)

Time Warner is the world's leading media company. 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. With Warner Brother
movies (Superman, Lethal Weapon, etc.); Warner's and its Castle Rock
division's TV shows (Seinfeld, ER, Friends, etc.); the musical
recordings divisions; etc, TWX is a well-diversified company. But the
real growth potential of this media and entertainment giant is its
cable business. Time Warner owns CNN, TBS Superstation, TNT, Cartoon
Network, and Turner Classic Movies.

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 declining, 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. 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 had 
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. TWX climbed $1.50 in the last 1 1/2 hours of
trading Friday, so the trend is still up. However, as always, we 
must caution you about holding over the 2-for-1 stock split 
scheduled for Tuesday, Dec. 15th. The average stock suffers a 
post-split depression in price. It's your choice.

In other areas of its business, Time's Information Please has teamed
up with 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. And finally, TWX is working with AT&T 
on a deal to provide local phone service over its cable wires. They
also agreed to swap certain cable systems in order to increase 
cable system efficiency.

BUY CALL JAN-110*TWX-AB OI=4284 at $6.25 SL=4.25, post split 55s
BUY CALL JAN-115 TWX-AC OI= 831 at $4.00 SL=2.50
BUY CALL MAR-115 TWX-CC OI= 199 at $7.88 SL=6.25

Picked on Dec 6th at $106.06        P/E = n/a
Change since picked +$  4.13        52 week low=$58.13
Analysts' Ratings 6-11-1-0-0        52 week high=$112.50
Last earnings 9/98 est= -.07 actual= -.06 surprise: 14%
Next earnings 2-10 est= 0.15 versus= 0.06


CHART
*****************************************************
MSFT - Microsoft $134.00 (+6.62 for the week)(P2W +13.75) 

From their own words, "Mircosoft Rules." Although it's current 
reign is being rocked with revolution, the Evil M-pire (as some 
programmers and anti-Internet Explorer browser patriots call it), 
has been fighting the Federal government on anti-trust grounds for 
months. The line to take their turn and bad mouth the bully was long
and distinguished. The fact is, MSFT is good at what they do. They 
are the world's #1 software company (Y2K compliant or not!) and 
their operating systems dominate the PC landscape. 

We felt strongly enough about MSFT to add it to our picks last
Tuesday.  Sentiment is that the lawsuit is hog-wash since S. 
Carolina dropped the charges.  We expect others to follow since, 
after AOL's announcement of its purchase of Netscape (NSCP), what's
left of the trial is mostly smoke and mirrors.  At the risk of 
sounding like a broken record, "...there will be no financial impact
on MSFT from the trial".  MSFT closed just $.63 shy of its all-time
high of $134.63 on Friday following a turbulent week and is a split
candidate at the $140 level.  Their recent break through resistance
in the high 120s is very encouraging.  Look for the up-trend to
continue.

When you are the 800lb. gorilla, you make a great target for smaller
gorillas who want your turf.  To that end, Sun Micro (SUNW) and 
Oracle (ORCL) have announced they will jointly develop a computer 
that does not require an operating system (true vapor-ware)!  No 
time frame was given and both companies declined to comment.  Even 
so, Microsoft's Windows runs more than 80 percent of the world's 
personal computers and sales of its NT operating system are growing
faster than its competitors.

BUY CALL JAN-130 MSQ-AF OI=16727 at $ 8.63 SL=6.75, ITM $4.00
BUY CALL JAN-135*MSQ-AZ OI= 6940 at $ 5.88 SL=4.00
BUY CALL JAN-140 MSQ-AH OI=21744 at $ 3.75 SL=2.00, lots of volume
BUY CALL APR-140 MSQ-DH OI= 1288 at $10.00 SL=7.50, 16 WEEKS
 
Picked on December 8th at $133.63     PE = 62
Change Since Picked      +$  0.37     52 Week High= 134.63
Analysts Ratings      11-10-5-0-0     52 Week Low =  59.00
Last Earnings 09/98 est. 0.49 actual 0.56  surprise 14.29%
Next Earnings 01-21 est. 0.58 versus 0.43


CHART

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

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









The Option Investor Newsletter             12-13-98
Sunday                4  of  6

******************************************************************
COVERED CALL SECTION FOR DECEMBER 13, 1998
******************************************************************
Blue-chip stocks rallied in the last hour of trading on Friday,
nearly erasing a full day's losses, but still ended in negative
territory. A rebound in technology stocks managed to push the
Nasdaq composite higher but most investors are becoming extremely
pessimistic amid a gloomy outlook for fourth quarter earnings and
jitters over the possible impeachment of President Bill Clinton.
The Dow Jones industrial average was down 194 points for the week
and after the close, the U.S. House of Representatives Judiciary
Committee voted to recommend impeachment of Clinton for perjury.
In addition, the market will have to go over two more hurdles
before the end of the year. It will have to weather the earnings
warnings season, an unsettling period for investors as companies
raise the curtains on their results and these pre-announcements
will provide few jolly times for Christmas. Already seven of the
thirty companies that make up the DJIA have said their 4th quarter
profits will be disappointing. If that isn't enough, Wall Street
could really turn frightful if the Fed decides to keep interest
rates unchanged because many investors believe that rate cuts may
be the only magic potion that will keep stocks from falling. There
will more nail biting in the days leading to the 12/22 meeting of
the central bank's policy-setting Federal Open Market Committee.
From a technical standpoint, some would say a major double top is
forming and this trend will probably become more apparent in the
coming months. The current advance/decline statitistics are very
poor and the "new high"/"new low" figures are mediocre. Overall,
the near-term outlook is very poor.

The worrisome market situation and the precarious position of the
Presidency dictates a conservative approach to this week's plays.
Many of these recommendations will be based on downside support
rather than upside potential so don't substitute a higher strike
price for the sold call unless you are willing to sacrifice the
low risk attitude. Some of the candidates will be better for long
term plays and they may require selling a number of calls over
the next few months to achieve a favorable return. Good Luck!
******************************************************************
SUMMARY OF PREVIOUS PICKS (1 week left for DEC strikes)
******************************************************************
Stock  Price  Currnt Mon-Strike Opt    Profit   ROI  Annual
Sym    Picked Price      Price  Bid    /Loss         ROI 

USAI   34.88  26.88 Dec-25.00 12.00  *$ 2.12    9%  161%
CELG   11.38  12.00 Dec-10.00  1.94  *$ 0.56    6%  155%
PRLS    8.00  18.19 Dec- 7.50  1.63  *$ 1.13   18%  154%
OMKT   20.75  13.31 Dec-12.50  9.25  *$ 1.00    9%  151%
AMCC   33.63  35.75 Dec-35.00  2.19  *$ 3.56   11%  148%
AWRE   16.88  21.50 Dec-17.50  1.50  *$ 2.12   14%  144%
KTO    11.69  11.75 Dec-10.00  2.19  *$ 0.50    5%  137%
OMKT    8.00  13.31 Dec- 7.50  1.31  *$ 0.81   12%  126%
ESSI    7.94   8.25 Dec- 7.50  1.19  *$ 0.75   11%  116%
MMCN   11.75  11.25 Dec-10.00  2.56  *$ 0.81    9%  115%
SDRC   16.88  17.94 Dec-17.50  1.25  *$ 1.87   12%  104%
EGGS    9.06  19.69 Dec- 7.50  2.31  *$ 0.75   11%   97%
PMRX   10.69  12.06 Dec-10.00  1.50  *$ 0.81    9%   92%
VIRS   12.19  12.00 Dec-10.00  3.00  *$ 0.81    9%   92%
CMIC   12.63  10.88 Dec- 5.00  7.88  *$ 0.25    5%   91%
PILL   10.81  10.88 Dec-10.00  1.69  *$ 0.88   10%   90%
USWB   18.63  21.56 Dec-17.50  2.69  *$ 1.56   10%   85%
IMCL    9.19  10.25 Dec- 7.50  2.13  *$ 0.44    6%   81%
PAGE    5.84   6.25 Dec- 5.00  1.13  *$ 0.29    6%   80%
CIEN   17.13  15.63 Dec-15.00  3.38  *$ 1.25    9%   79%
CYCH   11.94  14.81 Dec-10.00  2.50  *$ 0.56    6%   77%
TSIX   11.44  13.19 Dec-10.00  2.13  *$ 0.69    7%   77%
VCAM   15.00  16.69 Dec-10.00  5.38  *$ 0.38    4%   69%
ABTX   14.13  10.94 Dec-10.00  4.63  *$ 0.50    5%   69%
CKSG   36.50  31.00 Dec-30.00  7.63  *$ 1.13    4%   68%
SGI    13.06  13.38 Dec-12.50  1.31  *$ 0.75    6%   67%
EXDS   34.50  49.88 Dec-30.00  6.63  *$ 2.13    8%   66%
AWRE   16.88  21.50 Dec-15.00  2.75  *$ 0.87    6%   64%
RIVL   10.00  11.13 Dec- 7.50  2.75  *$ 0.25    3%   60%
CHRZ   24.88  22.00 Dec-20.00  5.63  *$ 0.75    4%   51%
AMCC   33.63  35.75 Dec-30.00  4.75  *$ 1.12    4%   51%
ACO    11.50   9.88 Dec-10.00  1.81   $ 0.19    2%   50%
SKYT   22.31  24.19 Dec-20.00  3.00  *$ 0.69    4%   47%
IDTC   19.25  15.25 Dec-15.00  4.75  *$ 0.50    3%   45%
PMTC   16.13  15.59 Dec-17.50  1.06   $ 0.52    3%   30%
NMR    17.13  16.25 Dec-17.50  1.38   $ 0.50    3%   28%
ATVI   13.56  11.81 Dec-12.50  2.00   $ 0.25    2%   23%
PLX    18.63  13.94 Dec-15.00  4.25   $-0.44   -3%    0%
ITVU   18.00  13.25 Dec-15.00  3.75   $-1.00   -7%    0%
GMGC    7.00   5.50 Dec- 7.50  1.06   $-0.44   -7%    0%
PPOD    8.63   5.94 Dec- 7.50  2.13   $-0.56   -9%    0%
PLX    18.63  13.94 Dec-17.50  2.75   $-1.94  -12%    0%
VIP    20.69  12.38 Dec-15.00  6.38   $-1.94  -14%    0%
AKSY    7.00   4.75 Dec- 7.50  0.44   $-1.81  -28%    0%
TLXN   30.13  15.00 Dec-25.00  5.88   $-9.25  -38%    0%
--------------------------------------------------------
PSCX   11.31  10.19 Jan-10.00  2.19  *$ 0.88   10%   84%
PPOD    6.75   5.31 Jan- 5.00  2.13  *$ 0.38    8%   71%
MWHS   28.38  28.38 Jan-25.00  5.13  *$ 1.75    8%   65%
ABTX   12.69  10.94 Jan-10.00  3.25  *$ 0.56    6%   52%
SER     6.38   6.13 Jan- 5.00  1.63  *$ 0.25    5%   46%
DOSE    4.06   3.50 Jan- 5.00  0.50   $-0.06   -2%    0%

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

Profit/Loss Column: Asterisk indicates stock price above strike 
price and should be called.  Stock that will not be called is 
assumed sold at current price.(for tracking)
******************************************************************
NEW PICKS   
******************************************************************
Definitions:
RC  - Return if called
RNC - Return not called (doesn't account for loss in stock price)
******************************************************************
Sequenced by Company
******************************************************************
Stock  Price  Mon-Strike Option Opt  Open   Cost   RC      RNC
Sym               Price  Symbol Bid  Intr   Basis   

BOCI    5.56  DEC- 5.00  BQC LA 1.00 286     4.56   9.59%   9.59%
-----------------------------------------------------------------
APLX    4.94  JAN- 5.00  LQX AA 0.63 503     4.31  15.94%  14.49%
FILE   10.38  JAN-10.00  IAQ LB 1.44 443     8.94  11.89%  11.89%
HDL    12.94  JAN-12.50  HDL AV 1.44 15     11.50   8.70%   8.70%
ITVU   13.25  JAN-10.00  QYU AB 4.13 15      9.13   9.59%   9.59%
MCHM    8.25  JAN- 7.50   QQ AU 1.63 42      6.63  13.21%  13.21%
PPRT   13.88  JAN-12.50  QPN AV 2.25 30     11.63   7.53%   7.53%
SDTI   18.31  JAN-15.00  QSD AC 4.13 601    14.19   5.73%   5.73%
SYBS    7.81  JAN- 7.50  SBQ AU 0.94 778     6.88   9.09%   9.09%
TDFX   16.44  JAN-15.00   FQ AC 2.44 205    14.00   7.14%   7.14%
VRTY   22.50  JAN-20.00  YQV AD 4.13 165    18.38   8.84%   8.84%
******************************************************************
Sequenced by RC 
******************************************************************
Stock  Price  Mon-Strike Option Opt  Open   Cost   RC      RNC
Sym               Price  Symbol Bid  Intr   Basis   

BOCI    5.56  DEC- 5.00  BQC LA 1.00 286     4.56   9.59%   9.59%
-----------------------------------------------------------------
APLX    4.94  JAN- 5.00  LQX AA 0.63 503     4.31  15.94%  14.49%
MCHM    8.25  JAN- 7.50   QQ AU 1.63 42      6.63  13.21%  13.21%
FILE   10.38  JAN-10.00  IAQ LB 1.44 443     8.94  11.89%  11.89%
ITVU   13.25  JAN-10.00  QYU AB 4.13 15      9.13   9.59%   9.59%
SYBS    7.81  JAN- 7.50  SBQ AU 0.94 778     6.88   9.09%   9.09%
VRTY   22.50  JAN-20.00  YQV AD 4.13 165    18.38   8.84%   8.84%
HDL    12.94  JAN-12.50  HDL AV 1.44 15     11.50   8.70%   8.70%
PPRT   13.88  JAN-12.50  QPN AV 2.25 30     11.63   7.53%   7.53%
TDFX   16.44  JAN-15.00   FQ AC 2.44 205    14.00   7.14%   7.14%
SDTI   18.31  JAN-15.00  QSD AC 4.13 601    14.19   5.73%   5.73%
******************************************************************
Sequenced by RNC 
******************************************************************
Stock  Price  Mon-Strike Option Opt  Open   Cost   RC      RNC
Sym               Price  Symbol Bid  Intr   Basis   

BOCI    5.56  DEC- 5.00  BQC LA 1.00 286     4.56   9.59%   9.59%
-----------------------------------------------------------------
APLX    4.94  JAN- 5.00  LQX AA 0.63 503     4.31  15.94%  14.49%
MCHM    8.25  JAN- 7.50   QQ AU 1.63 42      6.63  13.21%  13.21%
FILE   10.38  JAN-10.00  IAQ LB 1.44 443     8.94  11.89%  11.89%
ITVU   13.25  JAN-10.00  QYU AB 4.13 15      9.13   9.59%   9.59%
SYBS    7.81  JAN- 7.50  SBQ AU 0.94 778     6.88   9.09%   9.09%
VRTY   22.50  JAN-20.00  YQV AD 4.13 165    18.38   8.84%   8.84%
HDL    12.94  JAN-12.50  HDL AV 1.44 15     11.50   8.70%   8.70%
PPRT   13.88  JAN-12.50  QPN AV 2.25 30     11.63   7.53%   7.53%
TDFX   16.44  JAN-15.00   FQ AC 2.44 205    14.00   7.14%   7.14%
SDTI   18.31  JAN-15.00  QSD AC 4.13 601    14.19   5.73%   5.73%
******************************************************************
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)
******************************************************************
BOCI - Boca Research, Inc.  $5.56 *** 1 WEEK PLAY - RISKY ***

Boca Research, Inc. designs, manufactures, markets and supports 
data communications, videoconferencing, multimedia and networking
products to facilitate the transmission of information on PCs and
computer networks. Speculation from AOL-web TV deal to Oracle
connection is running rampant on the message boards and may be
driving this "rocket" up-trend. Will the heavy volume last...for
one more week? What is your risk/reward tolerance? 

DEC 5.00 BQC-LA BID=1.00 OI=286 CB=4.56 RC=9.59% RNC=9.59%


CHART  
******************************************************************
APLX - Applix, Inc.  $4.94

Applix develops, markets, and supports front-office software 
applications which allow organizations to become "real-time"
enterprises by improving decision making/corporate productivity.
Recently announced a joint sales agreement with Educom Business 
Solutions. Speculation on Oracle/Sun building a computer without
an Operating System may be driving the current price movement.
Recent double-bottom with a close above resistance at $4 bodes
well for a continued up trend. Stock has moved above it's 200 dma
with next resistanc around $5.50.

JAN 5.00 LQX-AA BID=0.63 OI=503 CB=4.31 RC=15.94% RNC=14.49%


CHART  
******************************************************************
FILE - FileNET Corporation  $10.38

FILE develops/markets and services a family of integrated document
management software products designed to manage information and 
enhance enterprise productivity.  Dec 7 FILE announced that Roger
Siboni, president and CEO of Epiphany Inc., has joined the Co's 
board of directors. In a stage I base since Oct with strong signs
of accumulation, File may be ready for a short term breakout from
it's $9 support level. 

JAN 10.00 IAQ-LB BID=1.44 OI=443 CB=8.94 RC=11.89% RNC=11.89%


CHART  

******************************************************************
HDL - Handleman Company  $12.94

HDL is engaged in the sale and distribution of pre-recorded music,
prerecorded video, hardcover and paperback books, and PC software
to retail chain stores.  Options were started on HDL as of Dec 4.
Stock is charging up on strong technical support and looks to be
ready to take out the recent Nov high.

JAN 12.50 HDL-AV BID=1.44 OI=15 CB=11.50 RC=8.70% RNC=8.70%


CHART  

******************************************************************
ITVU - InterVU, Inc.  $13.25   *** 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. 12/1 announced
that it has been issued notices of allowance from the U.S. Patent
& Trademark Office for two pending U.S. patent applications for
audio and video delivery over the Internet and more recently a
strategic relationship which will bring the highest quality, 300K
broadband streaming video to MUSICVIDEOS.COM users.

JAN 10.00 QYU-AB BID=4.13 OI=15 CB=9.13 RC=9.59% RNC=9.59%


CHART  

******************************************************************
MCHM - MacroChem Corporation  $8.25

MacroChem Corp. engages in the development and commercialization 
of transdermal drug delivery compounds and systems designed to 
promote the delivery of drugs from the surface of the skin into 
the skin and bloodstream.  MCHM has formed a near-term head-and-
shoulders bottom with support level around our cost basis.  BOP 
has shown steady accumulation as MCHM has been working hard to
break resistance at $9.00.

JAN 7.50 QQ-AU BID=1.63 OI=42 CB=6.63 RC=13.21% RNC=13.21%


CHART  

******************************************************************
PPRT - Pharmaprint Inc. $13.88 

PPRT, a development stage company, develops and manufactures 
pharmaceutical versions of herbal medicines to be used in the 
treatment of various maladies.  Though reported a loss for the
2Q, revenues totalled $4.3 million (up from $0) which reflects
completed development, manufacture and delivery of AHP Products.
May have moved to a higher trading range after trading from $9 to 
$11.50 over the last five months (if the current upside breakout
stalls).

JAN 12.50 QPN-AV BID=2.25 OI=30 CB=11.63 RC=7.53% RNC=7.53%


CHART  

******************************************************************
SDTI - Security Dynamics Tech.  $18.31  *** WEB Security ***

SDTI provides enterprise network and data security solutions to 
help companies conduct business securely, protect corporate assets
and facilitate electronic commerce. A couple of lawsuits just 
filed after being upgraded last week. Nearing resistance on it's
current up trend but our cost basis is at strong support near $14.

JAN 15.00 QSD-AC BID=4.13 OI=601 CB=14.19 RC=5.73% RNC=5.73%


CHART  

******************************************************************
SYBS - Sybase, Inc.  $7.81 

SYBS develops/markets/supports client server software products and
services for integrated enterprise-wide information management 
systems.  Lots of news on this stock, almost daily.  A short term
head and shoulders bottom is apparent in the current up trend that 
started in Oct.  Our cost basis is below a support level at $7. 

JAN 7.50 SBQ-AU BID=0.94 OI=778 CB=6.88 RC=9.09% RNC=9.09%


CHART  

******************************************************************
TDFX - 3Dfx Interactive, Inc.  $16.44  

TDFX is a developer of high performance, cost effective 3D media 
processors, software and related technology for the interactive 
electronic entertainment market.  Dec 7 TDFX announced that it 
has shipped more than 1 million Voodoo Banshee chips. Their 3Q EPS
nearly tripled from last year.  Topped the Nov high and recently 
closed above it's 200 dma with good technical support. 

JAN 15.00 FQ-AC BID=2.44 OI=205 CB=14.00 RC=7.14% RNC=7.14%


CHART  

******************************************************************
VRTY - Verity, Inc.  $22.50  *** Internet/Earnings ***

Verity develops, markets and supports knowledge retrieval software
products for application developers, corporate internet users and 
e-commerce sites that enables organizations to manage text based 
information.  Dec 9 announced that IBM will become an OEM partner 
for the Verity K2 Advanced Search toolkit.  Rumors of VRTY beating
the whisper on "earnings" due out around Dec 15.  In a stage II 
climb for two months and no real sign of weakening...yet. 

JAN 20.00 YQV-AD BID=4.13 OI=165 CB=18.38 RC=8.84% RNC=8.84%


CHART  

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

Stock	Price	Month	Strike Symbol Price PctRtn Vol OpnInt
MANU	12.38	Jan	12.50	ZUQAV	2.44	19.70	335	866	
SMTK	3.81	Jan	5.00	QMMAA	0.75	19.67	215	428	
SPLN	16.88	Jan	17.50	QSPAW	2.75	16.30	56	464	
MANU	12.38	Jan	15.00	ZUQAC	2.00	16.16	176	497	
TERA	7.00	Jan	7.50	QIPAU	1.06	15.18	29	96	
SRCM	14.00	Jan	15.00	SQAC	2.13	15.18	105	539	
OMKT	13.31	Jan	15.00	OQMAC	2.00	15.02	279	686	
OMPT	7.19	Jan	7.50	QTTAU	1.06	14.78	20	100	
CYCH	14.81	Jan	15.00	KBQAC	2.19	14.77	46	1333	
FP	3.81	Jan	5.00	FPAA	0.56	14.75	415	3966	
AND	9.81	Jan	10.00	ANDAB	1.44	14.65	5	154	
NTKI	13.38	Jan	15.00	QNKAC	1.94	14.49	60	568	
BTIM	13.13	Jan	15.00	QBOAC	1.88	14.29	21	116	
USSB	9.63	Jan	10.00	QUSAB	1.38	14.29	245	988	
DANKY	4.47	Jan	5.00	DNQAA	0.63	13.99	33	653	
FFTI	9.94	Jan	10.00	QFOAB	1.38	13.84	8	52	
NOI	10.00	Jan	10.00	NOIAB	1.38	13.75	25	55	
ESPI	7.50	Jan	7.50	AQAU	1.00	13.33	20	40	
PDQ	10.00	Jan	10.00	PDQAB	1.31	13.13	336	1334	
PHYC	4.81	Jan	5.00	PQHAA	0.63	12.99	10	84	
AHG	7.25	Jan	7.50	AHGAU	0.94	12.93	10	326	
REXI	8.88	Jan	10.00	QREAB	1.13	12.68	46	97	
ZD	11.44	Jan	12.50	ZDAV	1.44	12.57	126	1113	
VIRS	12.00	Jan	12.50	VQPAV	1.50	12.50	1	1	
SPYG	20.44	Jan	22.50	YQGAX	2.50	12.23	1	311	
MCHM	8.25	Jan	10.00	QQAB	1.00	12.12	48	249	
WAVO	8.25	Jan	10.00	WKQAB	1.00	12.12	130	800	
GGO	16.19	Jan	17.50	GGOAW	1.94	11.97	213	1211	
BNYN	8.44	Jan	10.00	QYNAB	1.00	11.85	108	1381	
PTVL	15.31	Jan	17.50	QUTAW	1.81	11.84	21	150	
HPRT	6.88	Jan	7.50	HQKAU	0.81	11.82	45	748	
JDAS	9.63	Jan	10.00	QAHAB	1.13	11.69	14	742	
ORG	11.94	Jan	12.50	ORGAV	1.38	11.52	15	1199	
CNCX	24.50	Jan	25.00	QXFAE	2.81	11.48	10	246	
APLX	4.91	Jan	5.00	LQXAA	0.56	11.46	7	503	
CIG	14.31	Jan	15.00	CIGAC	1.63	11.35	88	12	
DRMD	3.88	Jan	5.00	DUQAA	0.44	11.29	74	175	
IMRS	21.63	Jan	22.50	QIQAX	2.44	11.27	41	245	
ARQL	5.00	Jan	5.00	QETAA	0.56	11.25	15	118	
UTI	7.25	Jan	7.50	UTIAU	0.81	11.21	117	575	
NBR	12.50	Jan	12.50	NBRAV	1.38	11.00	10	96	
REDB	4.56	Jan	5.00	JQRAA	0.50	10.96	15	360	
CELG	12.00	Jan	12.50	LQHAV	1.31	10.94	58	2426	
CLST	7.44	Jan	7.50	EQLAU	0.81	10.92	20	853	
CHRZ	22.00	Jan	22.50	ZQHAX	2.38	10.80	103	249	
IPEC	9.88	Jan	10.00	IQPAB	1.06	10.76	4	40	
SPLN	16.88	Jan	20.00	QSPAD	1.81	10.74	20	575	
ENMD	24.50	Jan	25.00	QMAAE	2.63	10.71	2	82	
PDE	7.06	Jan	7.50	PDEAU	0.75	10.62	18	155	
MMCN	11.25	Jan	12.50	CMQAV	1.19	10.56	15	170	
MATK	8.88	Jan	10.00	KQTAB	0.94	10.56	5	82	
MMG	4.75	Jan	5.00	MMGAA	0.50	10.53	100	1050	
CATP	20.81	Jan	22.50	TQPAX	2.19	10.51	11	203	
BOBJY	19.06	Jan	20.00	BBQAD	2.00	10.49	35	160	
AWRE	21.50	Jan	22.50	WUQAX	2.25	10.47	77	205	
LIPO	9.56	Jan	10.00	LPQAB	1.00	10.46	61	1093	
GADZ	7.25	Jan	7.50	EQKAU	0.75	10.34	34	94	
IMNR	13.31	Jan	15.00	IMQAC	1.38	10.33	105	600	
ABTX	10.94	Jan	12.50	QXQAV	1.13	10.29	54	2237	
SER	6.13	Jan	7.50	SERAU	0.63	10.20	5	90	
EGGS	19.69	Jan	22.50	EGQAX	2.00	10.16	78	584	
PLC	4.31	Jan	5.00	PLCAA	0.44	10.14	10	931	
TALK	8.63	Jan	10.00	QQKAB	0.88	10.14	1565	8764	
RHC	14.88	Jan	15.00	RHCAC	1.50	10.08	170	40	
VNT	17.50	Jan	20.00	VNTAD	1.75	10.00	8	2721	
SMTK	3.81	Feb	5.00	QMMBA	1.00	26.23	32	1354	
DANKY	4.47	Feb	5.00	DNQBA	1.13	25.17	287	681	
WSTL	4.88	Feb	5.00	QLWBA	1.00	20.51	10	207	
OMKT	13.31	Feb	15.00	OQMBC	2.63	19.72	20	446	
OMPT	7.19	Feb	7.50	QTTBU	1.38	19.13	90	208	
HYPT	12.13	Feb	12.50	QPIBV	2.31	19.07	35	35	
PAH	7.25	Feb	7.50	PAHBU	1.38	18.97	6	290	
IMRS	21.63	Feb	22.50	QIQBX	3.63	16.76	49	898	
ATRX	12.50	Feb	12.50	OQFBV	2.06	16.50	5	176	
ENMD	24.50	Feb	25.00	QMABE	4.00	16.33	5	472	
ATML	15.00	Feb	15.00	AQTBC	2.38	15.83	30	774	
TAVA	5.94	Feb	7.50	QTVBU	0.94	15.79	53	840	
CIG	14.31	Feb	15.00	CIGBC	2.25	15.72	5	11	
SPGLA	4.38	Feb	5.00	SQEBA	0.69	15.71	14	441	
DANKY	4.47	Feb	7.50	DNQBU	0.69	15.38	28	680	
EGHT	6.50	Feb	7.50	EDQBU	1.00	15.38	35	407	
SER	6.13	Feb	7.50	SERBU	0.94	15.31	15	414	
PTEN	4.22	Feb	5.00	NZQBA	0.63	14.81	200	484	
TKLC	16.94	Feb	17.50	KQBW	2.50	14.76	18	42	
IOM	6.88	Feb	7.50	IOMBU	1.00	14.55	434	10585	
LIPO	9.56	Feb	10.00	LPQBB	1.38	14.38	524	414	
CPSS	3.50	Feb	5.00	QCQBA	0.50	14.29	20	376	
AHAA	24.75	Feb	25.00	GAQBE	3.50	14.14	4	2	
WAVO	8.25	Feb	10.00	WKQBB	1.13	13.64	143	686	
BFT	22.38	Feb	22.50	BFTBX	3.00	13.41	3	604	
REGI	6.53	Feb	7.50	QRGBU	0.88	13.40	10	78	
AVIR	20.88	Feb	22.50	QCVBX	2.75	13.17	15	31	
IMNR	13.31	Feb	15.00	IMQBC	1.75	13.15	1	1018	
CHRX	19.13	Feb	20.00	RHQBD	2.50	13.07	3	321	
TCNOF	13.94	Feb	15.00	TQYBC	1.81	13.00	10	87	
CENT	16.44	Feb	17.50	EQHBW	2.13	12.93	5	15	
CBTSY	16.63	Feb	17.50	QAGBW	2.13	12.78	50	4979	
OSI	24.81	Feb	25.00	OSIBE	3.13	12.59	40	150	
CLCX	5.63	Feb	7.50	QXTBU	0.69	12.22	47	845	
OMKT	13.31	Feb	20.00	OQMBD	1.63	12.21	25	694	
CD	19.63	Feb	20.00	CDBD	2.38	12.10	326	20515	
STRX	10.44	Feb	12.50	TQQBV	1.25	11.98	14	131	
HYPT	12.13	Feb	15.00	QPIBC	1.44	11.86	101	91	
AMTD	20.13	Feb	22.50	TQABX	2.38	11.80	44	189	
SEBL	26.50	Feb	30.00	SGQBF	3.13	11.79	2	897	
PRIA	20.75	Feb	22.50	UXQBX	2.44	11.75	4	92	
DSP	14.94	Feb	15.00	DQCBC	1.75	11.72	4	479	
OXHP	14.00	Feb	15.00	OQXBC	1.63	11.61	37	2500	
IMRS	21.63	Feb	25.00	QIQBE	2.50	11.56	8	282	
GFI	3.25	Feb	5.00	GFIBA	0.38	11.54	45	225	
PCMS	3.25	Feb	5.00	PQPBA	0.38	11.54	120	820	
DORL	19.75	Feb	20.00	QDLBD	2.25	11.39	10	88	
GMGC	5.50	Feb	7.50	GGQBU	0.63	11.36	5	1114	
UIHIA	17.13	Feb	17.50	QUWBW	1.94	11.31	2	50	
AG	7.19	Feb	7.50	AGBU	0.81	11.30	25	217	
OMPT	7.19	Feb	10.00	QTTBB	0.81	11.30	20	386	
VIAS	6.09	Feb	7.50	QVVBU	0.69	11.28	10	357	
IDTI	5.75	Feb	7.50	ITQBU	0.63	10.87	27	3887	
MWY	10.94	Feb	12.50	MWYBV	1.19	10.86	22	815	
CKFR	20.75	Feb	22.50	FCQBX	2.25	10.84	10	136	
SCUR	18.00	Feb	20.00	UQUBD	1.94	10.76	3	44	
TKLC	16.94	Feb	20.00	KQBD	1.81	10.70	34	73	
WAVO	8.25	Feb	12.50	WKQBV	0.88	10.61	20	476	
NXTL	22.50	Feb	22.50	FQCBX	2.38	10.56	32	1174	
MICA	17.75	Feb	20.00	MQIBD	1.88	10.56	12	285	
SYMM	6.63	Feb	7.50	SQGBU	0.69	10.38	30	103	

**********************************************
NAKED PUT SECTION FOR DECEMBER 13, 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. There is
one very important rule; Don't sell naked puts on stocks that you
don't want to own! It is also important that you consider using
trading STOPS on naked option positions to help limit losses when
the stock price drops. Many professional traders suggest closing
the position when the stock price falls below the sold strike or
using a buy-to-close STOP at a price that is no more than twice
the original premium from the sold option.
*****************************************************				- DEFINITIONS -
******************************************************
A put writer assumes the obligation to buy the underlying 
security at a specific price for a premium. There are two 
reasons for this commitment; An investor unwilling to 
purchase stock at the current price might write put options, 
hoping to take a position, (acquire the stock) at a lower 
price. Another successful outcome is to just receive the 
"premium" income if the stock remains above the sold
strike price. If the stock price finishes below the sold 
strike, the seller (or writer) of the put option is 
obligated to purchase the underlying stock (100 
shares/contract) at the exercise price. When this occurs, 
the cost of the stock (or the break-even) will be the 
exercise price less the premium. When the sold strike price
goes "in-the-money", an investor must be ready to buy the 
stock at any time because option contracts can be exercised 
early. The put seller may also close the position by simply 
"buying-back" the sold (short) put option.
******************************************************************
SUMMARY OF PREVIOUS PICKS (1 week left for DEC strikes)
******************************************************************
Stock  Price  Currnt Mon-Strike Opt    Profit   ROI  Annual
Sym    Picked Price      Price  Bid    /Loss         ROI 

APM     8.31   8.19  Dec- 7.50  0.69  *$ 0.69   22%  375%
KTO    11.69  11.75  Dec-10.00  0.44  *$ 0.44   13%  334%
EGGS    9.06  19.69  Dec- 7.50  0.75  *$ 0.75   27%  232%
BAANF  12.50  10.44  Dec-10.00  0.38  *$ 0.38   13%  229%
DCLK   33.31  36.50  Dec-25.00  1.31  *$ 1.31   16%  171%
VIRS   12.00  12.00  Dec- 7.50  0.31  *$ 0.31   11%  149%
VIRS   12.19  12.00  Dec- 7.50  0.38  *$ 0.38   13%  141%
GBTVK   7.06   5.63  Dec- 5.00  0.19  *$ 0.19   12%  124%
WALL   17.75  18.25  Dec-15.00  0.44  *$ 0.44    9%  120%
NMR    17.13  16.25  Dec-15.00  0.75  *$ 0.75   14%  119%
ITVU   18.00  13.25  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  20.94  Dec-17.50  0.38  *$ 0.38    7%   96%
CKSG   26.31  31.00  Dec-17.50  0.50  *$ 0.50    9%   91%
CNCX   29.00  24.50  Dec-22.50  0.31  *$ 0.31    5%   88%
SRCM   18.25  14.00  Dec-12.50  0.19  *$ 0.19    5%   86%
BTIM   14.25  13.13  Dec- 7.50  0.19  *$ 0.19    6%   81%
AMCC   30.50  35.75  Dec-22.50  0.50  *$ 0.50    8%   79%
CKSG   36.50  31.00  Dec-25.00  0.31  *$ 0.31    4%   71%
PLX    18.63  13.94  Dec-15.00  0.63   $-0.43  -10%    0%
PLX    18.88  13.94  Dec-15.00  0.31   $-0.75  -18%    0%
IDTC   20.56  15.25  Dec-17.50  0.50   $-1.75  -31%    0%
CLCX    9.75   5.63  Dec- 7.50  0.50   $-1.38  -56%    0%
TLXN   30.13  15.00  Dec-25.00  1.00   $-9.00 -114%    0%
---------------------------------------------------------
ITVU   14.00  13.25  Jan-10.00  0.69  *$ 0.69   20%  172%
TALK   10.13   8.63  Jan- 5.00  0.25  *$ 0.25   11%   95%
CELG   11.38  12.00  Jan- 7.50  0.25  *$ 0.25   10%   86%
ABTX   12.69  10.94  Jan- 7.50  0.25  *$ 0.25    9%   78%

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

Profit/Loss Column: Asterisk indicates stock price above strike
price and 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 

DRTE   22.75  DEC-20.00  DEQ XD  0.31  20     19.69   4.69%
-----------------------------------------------------------
APM     8.69  JAN- 5.00  APM MA  0.25  4453    4.75  12.58%
CDNW   17.25  JAN-10.00  NWQ MB  0.69  60      9.31  16.62%
GALTF  22.69  JAN-15.00  QFG MC  0.38  95     14.63   7.63%
ITVU   13.25  JAN-10.00  QYU MB  0.75  0       9.25  22.06%
NXTR   10.13  JAN- 7.50  NXQ MU  0.25  94      7.25  10.99%
SDTI   18.31  JAN-12.50  QSD MV  0.38  102    12.13   9.29%
SPYG   20.50  JAN-12.50  YQG MV  0.31  72     12.19   7.08%
TDFX   16.44  JAN-12.50   FQ MV  0.31  0      12.19   8.68%
VRTY   22.50  JAN-17.50  YQV MW  0.75  5      16.75  14.29%
ZILA   10.25  JAN- 7.50  QWC MU  0.38  1115    7.13  15.46%
******************************************************************
Sequenced by Return on Investment (ROI) 
******************************************************************
Stock  Price  Mon-Strike Option  Opt   Open   Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr   Basis  Expired 

DRTE   22.75  DEC-20.00  DEQ XD  0.31  20     19.69   4.69%
-----------------------------------------------------------
ITVU   13.25  JAN-10.00  QYU MB  0.75  0       9.25  22.06%
CDNW   17.25  JAN-10.00  NWQ MB  0.69  60      9.31  16.62%
ZILA   10.25  JAN- 7.50  QWC MU  0.38  1115    7.13  15.46%
VRTY   22.50  JAN-17.50  YQV MW  0.75  5      16.75  14.29%
APM     8.69  JAN- 5.00  APM MA  0.25  4453    4.75  12.58%
NXTR   10.13  JAN- 7.50  NXQ MU  0.25  94      7.25  10.99%
SDTI   18.31  JAN-12.50  QSD MV  0.38  102    12.13   9.29%
TDFX   16.44  JAN-12.50   FQ MV  0.31  0      12.19   8.68%
GALTF  22.69  JAN-15.00  QFG MC  0.38  95     14.63   7.63%
SPYG   20.50  JAN-12.50  YQG MV  0.31  72     12.19   7.08%
******************************************************************
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
******************************************************************
DRTE - Dendrite Intl.  $22.75     *** 1 WEEK PLAY ***

With a strong focus on the Pharmaceutical and Consumer Packaged
Goods (CPG) industries, Dendrite is a leading global provider of
highly-specialized, integrated product and service offerings to
support sales strategies for a sustained competitive advantage.
Recently announced that it extended its revolving credit facility
with Chase Manhattan Bank and increased its size from $5 million
to $15 million while also receiving a decreased interest rate.
Trading channel bottom just below cost-basis at $19.69.

DEC  20.00  DEQ-XD  BID=0.31  OI=20  CB=19.69  ROI=4.69%


CHART  

******************************************************************
APM - Applied Magnetics  $8.69     *** Hot Sector ***

APM is an independent supplier of magnetic recording heads and of
head stack assemblies for disk drives. APM and DAS Devices Inc.
both makers of computer hard disk drive products have agreed for
APM to acquire DAS for 13 million shares. APM has also entered
into an agreement with certain institutional investors to raise
$20 million simultaneously with the completion of the merger,
through a private placement of common equity. Recent support near
the sold strike.

JAN  5.00  APM-MA  BID=0.25  OI=4453  CB=4.75  ROI=12.58%


CHART  

******************************************************************
CDNW - CDNOW  $17.25     *** Internet ***

CDnow is an online retailer of CDs and other music-related stuff
with different items available for purchase through its web site.
The latest round of e-commerce alliances includes such as AMZN,
LCOS and CDNW. A merger announcement in November with NTKI and
recently launched C2, a new CDnow automated business network
program that allows corporate or business websites to offer their
visitors direct access to CDnow's music-related items, contests,
promotions and sales. Favorable risk/reward and a fair price to
own the stock.

JAN  10.00  NWQ-MB  BID=0.69  OI=60  CB=9.31  ROI=16.62%  


CHART  

******************************************************************
GALTF - Galileo Tech.  $22.69     *** Semiconductors ***

Galileo Technology, a market leader in complex data communications
systems on silicon, is one of the semiconductor industry's fastest
growing suppliers of complex, high-performance, integrated circuit
devices. The Fabless Semiconductor Association (FSA) recognized
GALTF as an Outstanding Financial Performer and a company that
doubled their revenue and/or net income year-over-year. Merrill
Lynch raised to a short-term "Accumulate" in mid-November.

JAN  15.00  QFG-MC  BID=0.38  OI=95  CB=14.63  ROI=7.63%


CHART  

******************************************************************
ITVU - Intervue Inc.  $13.25     *** 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. 12/1 announced
that it has been issued notices of allowance from the U.S. Patent
& Trademark Office for two pending U.S. patent applications for
audio and video delivery over the Internet and more recently a
strategic relationship which will bring the highest quality, 300K
broadband streaming video to MUSICVIDEOS.COM users.

JAN  10.00 QYU-MB  BID=0.75  OI=0  CB=9.25  ROI=22.06%
 

CHART  

******************************************************************
NXTR - NeXstar Pharmaceuticals  $10.13

NXTR is engaged in the development, manufacture and sale of pharm.
products to treat life-threatening and other serious deseases and
markets AmBisome, an antifungal agent, and DaunoXome; anticancer
drug. Recent reported results of trials evaluating the safety and
effectiveness of DaunoXome, show significant activity against life
threatening hematological malignancies, specifically in lymphoma.
Also will proceed to separate its existing businesses, creating
two independent, publicly-traded companies, the other to be named
Iterex Technologies,which will further commercialize its compound
discovery technologies. The split will be accomplished through a
dividend of shares of Iterex Technologies to existing NeXstar
shareholders and is expected to be completed first half of 1999.

JAN  7.50  NXQ-MU  BID=0.25  OI=94  CB=7.25  ROI=10.99%
 

CHART  

******************************************************************
SDTI - Security Dynamics  $18.31     *** Frivolous Lawsuit? ***

Security Dynamics is a leading provider of enterprise network
and data security solutions that help companies conduct business
securely, protect corporate information assets and facilitate
business-to-business electronic commerce. SoundView Technology
security analyst Paul Saunders upgraded Security Dynamics Tech.to
a "Buy" with a 12 month target of $30/share but then the company
announced last week that a purported class action lawsuit has been
brought against it and certain of its officers and directors. Will
it affect the stock? We don't think a $6 drop is likely but who
knows?!?

JAN  12.50  QSD-MV  BID=0.38  OI=102  CB=12.13  ROI=9.29%


CHART  

******************************************************************
SPYG - Spyglass Inc.  $20.50     *** Internet/Merger ***

SPYG develops, markets and distributes Internet technologies,
content services and professional services that enable various
non-PC devices to work with the Internet. Rumors have circulated
that Spyglass may announce an alliance with a major computer
company. Options traders recently said call volume had been heavy
and one options analyst said it trades like a takeover stock.
Spyglass chief financial officer Gary Vilchick declined comment
on the rumors and attributed the strong performance in the stock
to General Instruments Corp.'s purchase of a 5 % stake in SPYG
last month and to Spyglass's improving financing situation. 

JAN  12.50  YQG-MV  BID=0.31  OI=72  CB=12.19  ROI=7.08%


CHART  

******************************************************************
TDFX - 3Dfx Interactive, Inc.  $16.44  

TDFX is a developer of high performance, cost effective 3D media 
processors, software and related technology for the interactive 
electronic entertainment market.  Dec 7 TDFX announced that it 
has shipped more than 1 million Voodoo Banshee chips. Their 3Q EPS
nearly tripled from last year.  Topped the Nov high and recently 
closed above it's 200 dma with good technical support. 

JAN  12.50  FQ-MV  BID=0.31  OI=0  CB=12.19  ROI=8.68%


CHART  

******************************************************************
VRTY - Verity, Inc.  $22.50  *** Internet ***

Verity develops, markets and supports knowledge retrieval software
products for application developers, corporate internet users and 
e-commerce sites that enables organizations to manage text based 
information.  Dec 9 announced that IBM will become an OEM partner 
for the Verity K2 Advanced Search toolkit.  Rumors of VRTY beating
the whisper on "earnings" due out around Dec 15.  In a stage II 
climb for two months and no real sign of weaking...yet. 

JAN  17.50  YQV-MW  BID=0.75  OI=5  CB=16.75  ROI=14.29%


CHART  

******************************************************************
ZILA - Zila Inc.  $10.25

Zila, Inc. is a manufacturer and marketer of pharmaceutical,
biomedical, dental and nutritional products. Just announced
revenues of $16,503,000 and net income of $0.02 per share for
the first quarter of fiscal year 1999 beating the estimates.
The company maintained a strong balance sheet with insignificant
long-term debt. Zila's current ratio is a healthy 3.5 to 1. Also
announced that the U.S. Food & Drug Administration's Oncologic
Drugs Advisory Committee will review Zila's New Drug Application
for its oral cancer detection system, OraTest®, on 1/13/1999.

JAN  7.50  QWC-MU  BID=0.38  OI=1115  CB=7.13  ROI=15.46%


CHART  


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





The Option Investor Newsletter             12-13-98
Sunday                4  of  6

*****************************************************************
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.
*****************************************************************
AXP - American Express Company  $93.75 (-4.88)

American Express is one of the US's largest financial services
companies and is the largest corporate travel agency. Not only does
it offer American Express cards and traveler's checks, it also
publishes magazines (Food & Wine, Departures, Travel & Leisure) and
provides financial advisory services. The company consists of three
units: Travel Related Services, American Express Financial Advisors
(formerly IDS), and American Express Bank. American Express, which
is continuing the drastic makeover that began with its spin-off of
stockbroker Lehman Brothers, is focusing on its corporate travel and
credit card businesses. Investor Warren Buffett's Berkshire Hathaway
owns about 11% of American Express. 

The short-term moving averages on the DOW have turned down.  AXP
being a DOW component is no exception.  The news last week was that
the consumer's healthy appetite for spending could prevent the
Federal Reserve from cutting interest rates for a fourth time since
September.  Financial stocks tend to do better when interest rates
are lower.  AXP is partly a financial stock and suffered the
consequences.  The Federal Reserve is scheduled to meet on 12/22.

AXP was hanging around just below its 200 day moving average last
week, when on Friday it broke below it.  Its 200 day moving average
is at $97.50.  It generally is not a good sign when a stock breaks
below its 200 day moving average.  The next significant moving
average for AXP to break would be its 50 day moving average, which
is at $91.53.  If it breaks below this, it looks like its next level
of support is at around $85.

BUY PUT DEC-95 AXP-XS OI=2167 at $2.81 SL=1.50, only FIVE days left!
BUY PUT JAN-95*AXP-MS OI=1023 at $5.50, SL=3.50
BUY PUT JAN-90 AXP-MR OI=1433 at $3.25, SL=1.50


CHART  NEWS   
*****************************************************************
DD Dupont $52.25 (-2.88)

Dupont is the largest chemical company in the world. It mines, 
manufacturers, explores, and sells a variety of products including 
chemicals, fibers, polymers, petroleum, life sciences, and other 
diversified businesses. Thus, low commodity prices can really affect 
this global giant.

After setting a new high in May of $84.44, the stock has underperformed 
ever since. It has been unable to rally above its 200-day moving average 
since mid-July and it moved below its 50-dma in late November. After 
Monday's close last week, DD closed lower on each successive day. It 
tried to rally early Friday A.M., but was unable to hold its intraday 
high of $54.50. Instead, DD hit a new 52 week low of $52.06.  They did 
manage to close slightly off the bottom as the Dow rallied near the close
Friday.  

BUY PUT DEC-55 DD-XK OI=2126 at $3.13 SL=1.50, only 5 days left!
BUY PUT JAN-55 DD-MK OI=2157 at $4.25 SL=2.50
BUY PUT JAN-50*DD-MJ OI=2095 at $1.63 SL= .75


CHART  NEWS   
*****************************************************************
HSY Hershey $63.63 (-$3.37)

Hershey manufacturers, sells, and distributes consumer foods. These 
include chocolates and other sweets, baking ingredients, and pasta.

Hershey, like many food stocks, is sometimes seen as a defensive 
play when investors are bearish on other stocks. A chart of HSY shows 
the company making new highs even as the S&P was at its low for the 
year in early October. As the S&P rebounded, Hershey moved in the 
opposite direction and has been mostly below its 50- and 200-day moving 
averages ever since. This past week, HSY was down every day, INCLUDING 
declining market days. The charts look bad for HSY (or good, if you 
are looking to buy puts). On Friday, the stock bounced a little near 
the end of trading, but was still only $.62 off its low of the day.

Hershey said on Nov. 10 that it is seeking to sell its eight pasta 
brands (Ronzoni, San Georgio, etc). They have $100 million in annual 
sales.

BUY PUT HSY-XM DEC-65 OI=166 at $1.82 SL= .75,  only 5 days left! 
BUY PUT HSY-MM*JAN-65 OI=107 at $2.75 SL=1.38


CHART  NEWS   
*****************************************************************
KO - Coca Cola $62.88 (P3W -$9.93)

PUT play only!  KO'd and crushed by KO! For those who missed the 
action Friday, KO lost $3.23 per share on 2.5 times their average 
volume (over 10 million shares traded!).  With over 60% of profits 
from international sales, case sales running flat, deflation jitters, 
Asia, Brazil, etc. in the news, KO issued a current earnings warning 
Friday morning accompanied by an unfavorable forward earnings outlook.  
It was "lights out".  The technical chart broke downward hard and 
shows some of the most negative indicators we've seen in a while.  
KO is the largest soft drink syrup producer in the world and owns 
the Coke, Coca-Cola, Sprite, etc. brands.  The news of Cokes's purchase 
of Cadbury-Schwepps (makers of Dr. Pepper, Crush) international 
marketing rights for $1.8 billion, unfortunately, didn't help - more
international exposure.  The forseeable future does not look good 
for KO.

BUY PUT DEC-65 KO-XM OI=4549 at $2.38 SL $1.00, ITM $2.12, 1 week expiration
BUY PUT JAN-60 KO-ML OI=7031 at $1.75 SL $ .75
BUY PUT JAN-65*KO-MM OI=6968 at $4.00 SL $2.50


CHART  NEWS   
*****************************************************************
CCE - Coca Cola Enterprises $34.56 (P3W -$4.32)

CCE is a bottler and distributor of Coke products, spun off from KO years
ago but still 44% owned by KO.  90% of CCE revenues come from KO.  These
two are tightly bound by a short umbilical cord.  What befalls KO, befalls
CCE.  Charts look the same.  See particulars above.

BUY PUT DEC-37.50 CCE-XU OI=349 at $3.25 SL=2.00, ITM $3, 5 days left! 	
BUY PUT DEC-35.00 CCE-XG OI=299 at $1.25 SL= .50, ITM $ .44, no time!
BUY PUT JAN-35.00*CCE-MG OI= 94 at $2.19 SL $1.75
BUY PUT JAN 37.50*CCE-MU OI= 85 at $4.00 SL $2.75, ITM, more time 


CHART  NEWS   
*****************************************************************
MOT - Motorola $57.06 (-$4.82) 

Motorola makes mobile phones (including those used by the new, 
satellite based Iridium of which it owns approximately 20%), two-way 
radios, pagers, computers, electronic components and systems, and 
networking peripherals.  They also develop wireless telecom services 
in emerging countries. Once the clear leader, electronics giant 
Motorola recently gave up the top spot among mobile phone makers to 
Nokia.  Cellular products make up nearly 40% of Motorola's sales; 
semiconductors account for 24%.  The company has operations in nearly 
60 countries; 45% of its sales are outside the US.  Earlier this year, 
Motorola was expected to eliminate roughly 15,000 jobs as part of cost 
cutting and consolidation necessitated by falling analog phone sales, 
low chip prices, and a meltdown in its Asian markets.

Last week, Motorola's competitor, Ericsson announced current and 
forward looking earnings warnings.  MOT fell in sympathy.  A case of 
tail wags dog?  Not so fast.  MOT fundamentals including earnings 
growth, sales and profits have deteriorated over the last 2 years s
purring announcements of half-hearted restructuring and cost cutting 
- happens once every 9 months.  To boot, technicals including MACD, 
momentum, stochastics and RSI are negative and trending down since 
December 1st.  MOT failed to close above its 30 day moving average 
last Thursday and Friday - a bad sign.  

BUY PUT JAN-60 MOT-ML OI=6757 at $4.50 SL=3.00, ITM $2.94
BUY PUT JAN-55 MOT-MK OI=4538 at $1.94 SL=1.00, OTM


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            12-13-98
Sunday                5  of  6
*****************************************************************
COMBINATION PLAYS - WEEKLY PLAY RECAP
*****************************************************************
This week, the spreads editor is grateful to be a guest of Online
Investors Advantage at a stock/option seminar in Las Vegas. The
professionals at OIA are committed to teaching average people to
successfully trade stocks and options in today's market. They have
a seven step wealth building program that provides all levels of
investors with the tools and knowledge to enhance any portfolio 
return. We are happy that they have chosen the Option Investor
Newsletter to provide stock and option candidates for their new
and current graduates and look forward to working with them on
our new advanced trading program; "The Options Bootcamp".

Profit warnings from major US companies and concerns about the
possible impeachment of President Bill Clinton have caused a bad
case of the jitters on the US market. The Dow Jones Industrial
Average fell sharply and a profits warning from soft drinks giant
Coca-Cola added to the market gloom. Major European stock markets
also ended sharply lower. The Brazilian stock market plunged 3%
and shares in Tokyo and Hong Kong also suffered heavy losses.

There was activity in the spreads portfolio on Friday. The new
plays included calendar spreads with LEAPS on T and TWX and both
spreads were available near the recommended prices. The AAS credit
spread (DEC70C/65C bear-call) traded around $0.62 for most of the
day. COMS was lackluster and a low opening debit of $1.25 was
easily achieved but the stock fell on a day with good movement in
the techs so keep an eye on this one Monday. No positions were
initiated on SUNW as that stock (and ORCL) went straight up from
the open on speculation of their new deal to work together on a
type of computer that does not require an operating system. With
Microsoft now mired in its antitrust case with the government, its
competitors have begun to attack Microsoft more directly. Another
interesting mover was TLXN. The stock price gapped down $10 on the
news of a restated earnings. The buy-to-close price for the short
option initially traded around $8.50-$9.00 and the long options
finished near $7.50 bid. The closing debit should have been around
$1.25-$1.50.
******************************************************************
		- NEW PLAYS -
******************************************************************
VOD - Vodaphone  $149.19     Call-Credit Spread

VOD provides international mobile telecom services which include
selling/renting cellular telephone equipment, providing messaging,
third-party charging and data transmission facilities and access
to information services. Last week, European telecommunication
ADRs were beaten down after Sweden's LM Ericsson issued a profit
warning for the remainder of 1998 and into 1999. Ericsson's
difficulties caused some sympathy selling in other issues as the
mobile telephone and equipment maker said that earnings would be
15-20% below expectations for 1998 and next year, the results
would fail to meet long-term growth goals. The play is based on a
short-term bearish market trend and the heavy BOP distribution.

PLAY (aggressive):
BUY  CALL DEC-160 VOD-LL OI=5  A=$0.87
SELL CALL DEC-155 VOD-LK OI=13 B=$2.00
NET CREDIT TARGET=$1.19 ROI=31%


CHART  NEWS   
******************************************************************
SEIC - SEI Investments Co. $95.00     Put-Credit Spread (Again!)

SEI Investments is organized around two primary business lines:
Investment Technology and Services and Asset Management. SEIC
announced recently that its Board of Directors has approved a
semi-annual dividend of $.16/share of stock to shareholders of
record on 1/5/1999, payable on 1/25/1999. Also announced that
the Board of Directors has declared a dividend on its shares of
Common Stock of preferred shares rights (Rights) as part of a
Stockholders Rights Plan at the rate of one Right per share of
Common Stock. Not much else in the news, just a one week (repeat)
play to hold above the sold strike (and the short-term technical
support) at $85.

PLAY (conservative):
BUY  PUT DEC-80 QEI-XP OI=54  A=$0.43
SELL PUT DEC-85 QEI-XQ OI=148 B=$0.75
NET CREDIT TARGET=$0.38 ROI=8% (1 week) 


CHART  NEWS   
******************************************************************
VNWK - Visual Networks  $33.93     Put-Debit Spread

Visual Networks, Inc. designs, manufactures and sells wide-area-
network (WAN) service level management systems for statistically
multiplexed technologies such as Frame Relay and IP/Internet. Not
much news, but on Friday there was a significant increase in put
option volume across various the series. Something is in the works
and the chart is exhibiting some bearish characteristics; a toppy
formation and buying pressure falling with TSV leading the price
downward.

PLAY (conservative):
BUY  PUT DEC-40 QVN-XH OI=10  A=$6.87
SELL PUT DEC-35 QVN-XI OI=150 B=$2.87
NET DEBIT TARGET=$3.75 ROI(max)=33%


CHART  NEWS   
******************************************************************
				- INDEX SPREADS -
******************************************************************
OEX - S&P 100 Index     $574.68     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 outcome of President Clinton's situation may have
some adverse market effects but excellent support exists around
530-545 and the resistance for the OEX is now around 580. Most
analysts agree that we will continue to see consolidation near
the current level. Review the Pinnacle Hedge-Section for more
specific technical information on the S&P 100 Index.
 
PLAY (very conservative-bearish disparity play):

BUY  CALL DEC-600 OEW-LT OI=12693 A=$0.50
SELL CALL DEC-595 OEW-LS OI=7598  B=$0.75
NET CREDIT TARGET=$0.25 ROI=5% (1 week)

PLAY (very conservative-bullish disparity play):

BUY  PUT DEC-545 OEW-XI OI=4927  A=$1.50
SELL PUT DEC-550 OEW-XJ OI=12505 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             12-13-98
Sunday                6  of  6

************************************************************
HEDGE STRATEGY & RECOMMENDATIONS - Pinnacle Capital Advisors
************************************************************
Sunday, December 13, 1998


The Ship is Starting to Leak

Don't look now, but many of the industry sectors are beginning
to leak including the Financial and Transportation sectors.
What's more the Russell 2000 is sitting precariously below its
declining 200 day moving average and getting ready to roll
over.

With several DOW component stocks issuing earnings warnings
the overall market is also beginning to quiver.  Keep your
eye on the Russell 2000.  Pinnacle believes that if this
sector rolls over, other sectors may soon follow.

To help subscribers identify the next sectors likely to roll
over, we have summarized and sorted the major industry
sectors by the percent above and below its 200-day moving
average, used many investor to segment sector weakness.

We have also included two types of alerts: (1) sectors trading
just above this key benchmark including the DOW, Networking
and software sectors; (2) sectors well above their benchmark
signaling potentially extreme condition such as the Internet
sector.


200-Day Moving Average Analysis
****************************************************************
                     200            Percent
By Broad Market      dma    Last    Above/Below 200dma
****************************************************************

MSH High Tech        620     777    25% +
NDX NASD 100       1,400   1,675    20% +
OEX S&P 100          525     575    10% +
SPX S&P 500        1,080   1,166     8% +
DOW Industrials    8,520   8,822     4% +    Alert *
-------------------------------------------- 200day Moving Average
RUT Russell 2000     410     395     4% -


                     200            Percent
By Industry Sector   dma    Last    Above/Below 200dma
****************************************************************

INX Internet         225     330    47% +    Alert *
XCI Hardware         595     755    27% +
SOX Semiconductor    270     332    23% +
RLX Retail           670     786    17% +
DRG Drug             650     749    15% +
HCX Healthcare       650     742    14% +
CWX Software         525     585    11% +    Alert *
NWX Networking       350     380     9% +    Alert *
-------------------------------------------- 200day Moving Average
XBD Brokerage        470     470     0% -
BIX Banking          650     632     3% -
IUX Insurance        590     572     3% -
OIX Oil & Gas        255     248     3% -
XAL Airline          330     278    16% -

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

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              (12/4)   (12/11)   (12/15)   (12/17)
**************************************************************

Resistance (600-605)     46.4    44.9
           (590-595)      5.3     3.8

Support    (565-570)      1.4     1.4
           (555-560)      1.6     1.7


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

On Friday (12/11), the market gapped down and bounced off the
key OEX 570 benchmark and triggered a new call position.  We
also got stopped out of the remaining half of our Short
position (DEC 580 Put) for a nice profit.

Later in the day, the OEX tested the key OEX 570 and actually
traded as low as 567.92 reaching another of our Bearish
triggers.  However, we did not initiate the DEC 560 Put
position, because the OEX quick snapped back above the key
OEX 570 benchmark.

We therefore, move into expiration week with one long  (call
position and recommend protecting this position tightly since
the premium will evaporate quickly if the market shows any
sign of weakness.


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

OEX DEC-580 PUT  / OEW-XP     |   5.75
12/8 / 12/9                   |   4.63       5.75      1.12 +

OEX DEC-580 PUT  / OEW-XP     |  10.13
12/8 / 12/11                  |   4.63       9.50      4.87 +

Trading Instructions:
12/8  New PUT position Filled @ favorable price of $4.63
12/9  Adjust protective sell stop from $10.75 to $5.75
12/9  Place limit order to sell one half of position at $ $10.75
12/9  Stopped out of half of our position @ $5.75
12/11 Tighten protective stop for remaining position @ $9.50
12/11 Stopped out of remaining position @ $9.50


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

OEX DEC-580 CALL / OEW-LP     |   4.38
12/8 / 12/11                  |   4.50       3.75      .38 +

Trading Instructions:
12/11  New Call position Filled @ $4.50
12/14  Protect entire position tightly at $3.75

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



OEX Skybox Reference Link

For those new to Pinnacle's 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


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.



OEX Skybox Return Inception to Date - 232%

We have summarized below our trades to date.  Assuming an
equal investment on each trade, The OEX Skybox has garnered a
return of 232% across ten trades (6 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
12/1 / 12/2                7.75   10.75    3.00 +      3,000 +


OEX DEC-580 PUT  / OEW-XP
1130 / 12/4                7.25   12.00    4.75 +      4,750 +


OEX DEC-560 PUT  / OEW-XL
12/3  / 12/4               8.38    5.13    3.75 -      3,750 -


OEX DEC-580 PUT  / OEW-XP
12/8 / 12/9                4.63    5.75    1.12 +        560 +
12/8 / 12/11               4.63    9.50    4.87 +      2,425 +             


********************************************************************
OEX Skybox Return / 232%                          23,170 +
********************************************************************


New OEX Recommendations

Check out our new OEX recommendations for the balance of the 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
*****************************************************************
   44.9
  ------- 600 -------------------------------------------------
    3.8                            *** OEX 593 >>>>> (1)
  ------- 590 -------------------------------------------------
                               *** OEX 588 >>>>> (2)
    1.1                    *** OEX 583 >>>>> (3)
  ------- 580 -------------------------------------------------
** DEC 11 ** OEX 574.68 )
  ------- 570 -------------------------------------------------
    1.4                    *** OEX 568 >>>>> (4)
  ------- 560 -------------------------------------------------
    1.7

*****************************************************************
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 JAN-600  OEY-AT   10.75    15.75     8.50
(3) BUY CALL JAN-590  OEW-AR   12.25    16.75    10.50

BEARISH Triggers:

(2) BUY PUT  JAN-580  OEW-MP   10.25    15.75     8.25
(4) BUY PUT  JAN-560  OEW-ML   11.75    16.75     9.50

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





Index Power Grid - Monday 12/14

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 14, 1998

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

DOW Industrials    8,900 |*|         | | 9,100   8,822   +|+|+
SPX S&P 500        1,160 | | *       | | 1,190   1,166   +|+|+
OEX S&P 100          570 | | *       | |   590     575   +|+|+
RUT Russell 2000     390 | |        *| |   400     395   +|@|-

NDX NASD 100       1,575 | |         |*| 1,635   1,675   +|+|+
MSH High Tech        740 | |         |*|   765     777   +|+|+

                                                    50/100/200             

Technology         Bearish | Neutral | Bullish    Last    dma
**************************************************************
XCI Hardware         720 | |         |*| 740       755   +|+|+
CWX Software         570 | |      *  | | 600       585   +|+|+
SOX Semiconductor    290 | |         |*| 320       332   +|+|+
NWX Networking       370 | |       * | | 390       380   +|+|+
INX Internet         255 | |         |*| 325       330   +|+|+

                                                    50/100/200
Financial          Bearish | Neutral | Bullish     Last   dma
**************************************************************
BIX Banking          645 |*|         | | 670       632   -|-|-
XBD Brokerage        480 |*|         | | 500       470   @|@|@
IUX Insurance        585 |*|         | | 620       572   -|-|-

                                                    50/100/200
Other              Bearish | Neutral | Bullish     Last   dma
**************************************************************
RLX Retail           750 | |         |*| 780       786   +|+|+
DRG Drug             725 | |     *   | | 755       749   +|+|+
HCX Healthcare       725 | | *       | | 760       742   +|+|+
XAL Airline          295 |*|         | | 310       278   -|-|-
OIX Oil & Gas        255 |*|         | | 265       248   -|-|-





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. After the market sold off precipitously last week,
we have updated several of our protective sell stops to lock in
profit.  Please make a note of these changes.


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


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

BMC Software / BMCS      +|+|+  3.7 |  47.00
12/4 /  12/11                       |  50.75    47.25    3.00 +
Stopped Out

Computer Assoc / CA      +|@|-  5.6 |  42.25
12/4                                |  43.75    44.25    1.50 +


Networking:
********************************************************************
Cabletron / CS           +|-|-  2.6 |   8.31
12/4                                |   8.75    10.25     .44 +



Financial:
********************************************************************
JP Morgan / JPM          +|@|-  4.0 | 100.50
12/8                                | 109.75   103.25    9.25 +

Bank America / BAC       +|@|-  5.7 |  58.88
12/8                                |  62.75    60.25    3.88 +

Bank Boston / BKB        +|@|-  6.1 |  39.50
12/11                               |  39.75    42.25     .25 +

Lehman Brothers / LEH    +|@|-  1.1 |  43.94
12/8                                |  46.75    45.25    2.81 +



Transportation:
********************************************************************
Boeing / BA              +|@|-  5.6 |  33.13
12/2                                |  33.69    35.25     .56 -

AMR Corp / AMR           +|@|@  8.9 |  58.25
12/4                                |  66.75    60.25    8.50 +




* NEW - New recommendation / NT - Not Triggered



NFL Challenge Update

Ok, Now it gets down to the hard part.  With three weeks left
until expiration, we all have to decide which option to close
out and which one to let run.  After a review of the
remaining schedule by playoff contenders in the NFC, Pinnacle
has elected to trade Tampa Bay for Green Bay.

Here's why.  Green Bay (8-5), Tampa Bay (6-7), Arizona (6-7)
and New Orleans (6-7) are all fighting for the last two
playoff spots.  Green Bay plays Chicago twice in its last
three games and unless the Packers fall completely apart is
likely to win at least two of its remaining three games.
This will give them 10 victories and a seat at the party.
This leaves three teams - Arizona, New Orleans and Tampa Bay
tied with identical records at 6-7 fighting for the last
spot.

Here are their remaining schedule:

Arizona (6-7)     @ Philadelphia (3-10)   W
                  New Orleans (6-7)       ?
                  San Diego (5-8)         W

Tampa Bay (6-7)   Pittsburgh (7-6)        ?
                  @ Washington (4-9)      W
                  @ Cincinnati (2-11)     W

New Orleans (6-7) Atlanta (11-2)          L
                  @ Arizona (6-7)         ?
                  Buffalo (8-5)           ?

Based upon the strength of the remaining schedule, we are less
confident in New Orleans making the cut than we are with Arizona
and Tampa Bay.  And since Arizona has a better division record
than Tampa Bay, we are going with the Cardinals in the event of a tie.

This gives us the teams we believe will make the NFC playoffs
in our portfolio - Minnesota, Green Bay, Atlanta, San
Francisco, Dallas and Arizona.



Pinnacle Capital Advisors

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


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



DISCLAIMER

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

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

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