Option Investor

Daily Newsletter, Sunday, 01/17/1999

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

Sunday  1-17-98  1 of 7

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

Published three times weekly, Sunday, Tuesday, Thursday evenings.
New plays and market wrap updated daily on the website. 
Entire newsletter best viewed in COURIER 10 font for alignment
       WE 1-15           WE 1-08         WE 12-31         WE 12-25
DOW     9340.55 -302.77  9643.32 +461.89  9183.43 - 36.56  +342.17  
Nasdaq  2348.20 +  3.79  2344.41 +152.22  2192.60 + 29.52  +119.15  
S&P-100  616.46 - 19.56   636.02 + 32.08   604.03 -  3.91  + 25.30  
S&P-500 1243.26 - 31.43  1275.09 + 45.93  1229.23 +  4.15  + 46.31  
RUT      427.05 -  4.18   431.23 +  9.27   421.96 + 16.42  + 11.78  
TRAN    3148.53 -211.75  3360.28 +210.97  3149.31 +108.48  + 73.44  
VIX       29.75            23.88            25.41            22.04
Put/Call    .56              .48              .55              .52

Never, ever trust a central bank in a foreign country with it's
currency under attack. 

Remember the vow from the central bank in Brazil on Thursday? 
"We will utilize every reserve at our disposal to prevent the
disastrous floating of the Real". I guess their reserves were 
as limited as my wife's checking account since less twelve hours
later they announced they would float the Real on a temporary 
basis in order to protect their reserves. Sounds like a 
contradiction to me. So why did the markets rebound instead of
crash as analysts had predicted?

Ask ten analysts and you will get ten different answers but the
two most common are "it took a level of uncertainty out of the
market" and "relief that the free market forces would now determine
the level of the Real and not artificial stability enforced by the
government". The first one makes no sense at all. On Thursday the
Dow crashed -228 points on worries that Brazil MIGHT float. So
on Friday they floated and because there was no uncertainty left
the market exploded? Lost me there. The second reason make much
more sense. Brazil has been fighting the flight of funds from the
country by raising interest rates to a crushing 40% or more. How
would you like to have that kind of credit card interest? How
can a country survive paying 40% on it's debt? It can't, not for
long. The relief shown in Brazil markets was immediate and huge.
The Bovespa surged +1,690 points or +33.41%. That would be the
equivalent of +3,123 point Dow day. (please, please, just let
me be fully invested the night before!!) I bet they are still
celebrating in Brazil today. Yes their money is worth less but
now they can at least kep more of it. The remaining problem is
with Chile, Argentina, and the other closely linked South American
countries. They will be watching the Real and if it sinks fast
then they will be forced to devalue as well. The dominos are 
already lining up. All eyes will be on the support given to 
Brazil by the U.S. and the IMF in the coming weeks to see if 
the Real can stand on it's own or become a blackhole, sucking
everyone in South America down with it.

Now back to our reality. The market, for whatever reason, 
exploded Friday, the day before a long weekend, when it should
have been cautious. Remember the oversold conditions we talked
about on Thursday. The rubber band analogy I used last week on
the +500 point gain also works on a -500 point loss. When
markets get stretched so tight either way there has to be a
relief day where things snap back to normal. We experienced
that Friday. I have been preaching the return of the January
bull market rally after the profit taking for over a week.
Surprise, it is back! Those of you who bought the dip on
Thursday are looking pretty smart today. 

The Nasdaq actually finished up for the week! Tech stocks
rebounded strong and were really not supported by the Internet
stocks. Some Internets were up Friday but the majors were 
still taking profits. Speaking of major Internet stocks, we
are starting YHOO again today for the split run. Yahoo dropped
-98 points in the last four days but closed +$13 off it's
Friday lows. The 2:1 split is Friday Feb 5th, only three
weeks away. We know the Internets have had several downgrades
in the last week but they were only downgraded on price, not
performance. Those of you who have the ability to trade YHOO
should look for an entry point this week. Don't blindly jump
in on Tuesday. Confirm lack of downward movement first.

We had a conference at the office here last week with many
of the newsletter contributors coming in from all over the U.S. 
We were planning the first Option Investor Seminar in February. 
(details below) What really came out of the planning process 
was the need to educate traders on "trend trading" (not trend 
holding) and setting profit goals. While all this will be 
discussed in detail at the seminar there is a real need based
on the email we get to touch on some of the concepts here. 

Let me try an analogy for trend trading. The market is like
the waves on the ocean. If you are standing on one of the
major surfing beaches you will see wave after wave come
crashing through. Between each major wave is a period of
calm which may have several smaller waves. If you have ever
stood in the surf you are familiar with the sensation called
undertow. This is when the water rushes back out to sea in
preparation for the next wave. Now picture yourself with a
desire to surf. You have seen people do it. You go to a
surfboard shop and buy a board. You ask the salesman if 
surfing is hard. No problem, he says. Lay on the board,
swim out in the surf, catch a wave, stand up on the board
and surf back in. Easy! Now I ask you, can you surf? If you
are like most beginner surfers you get out to the waves but
now you feel more like a piece of driftwood bobbing in an
endless sea than a human mastering the art of surfing. You
are battered, soaked, tired and more likely then not pretty
frustrated with being abused by every wave you tried to
catch. Options trading is like surfing. Trading, the salesman
says, is easy. You just open an account, (board), jump in
the market (ocean), catch a wave (stock), buy some calls
(surf), and end up safely on the beach (profit). NOT!
Most beginning traders think it is this easy. Most end up
on the rocks (broke).

What we want to teach you is to be a successful trader, not
a buy and holder. When you are learning to surf you probably
practice on hundreds of smaller waves. Each one moving you
only a few yards before you fall and have to start over.
Learning how to trade is the same way. You should try to 
catch many small moves and practice improving your skills
before attempting the long run to the beach. I am constantly
besieged by email on new people expecting to buy a $3 option
and sell it for $15. That would be the equivalent of swimming
half a mile off shore, catching a fifty foot wave and surfing
all the way to the beach on your first try. It just does not
happen. What we have tried to teach people in the past it to
take a small profit many times instead of a large profit once.

For those that are mathematically challenged let me illustrate.
If you start with a $10,000 account and generate a 10% profit
every week for a year, WITHOUT COMPOUNDING, after twelve months
you would have over $60,000. If you COMPOUND the 10% then you
would have over $1,000,000. At just 10% a week! Now before you
start firing off those emails I know you can't compound 10%
every week. First you may hit some losers now and then but
you are also going to hit some bigger winners more often. Just
to illustrate. If you bought an option for $5.00 and sold it
for $5.50 that is a 10% profit. Now how many times have you
bought an option and watched it go up $1-$2 and then slip
back down again the next day? More often than not! Now, if
you had put in a sell for $6.00 that is a 20% profit and 
probably would fill the same day. If you did that twice a 
week, how much would that be a week. CLUE 40% Now if you
could get only 10% or $.50 per week compounded over a year
it would be over $1,000,000. Is $.50 hard to do over and 
over and over? Of course not. Is 40% possible? absolutely.
The real number is somewhere in between.

It is only hard to do if you HOLD and not TRADE. How far are
you going to get if you just hold on to your surf board with
both hands for dear life? You will be pushed to and fro 
wherever the ocean (market) takes you. Sometimes you will
be pushed to the beach (profit) or onto the rocks (broke)
or drift out to sea never to be seen again. (clueless)

Now that I have completely lost my train of thought let's
get to the point. Every stock ebbs and flows. Remember the
3-5-7 trend cycle from last week? Up three days, down one,
up five days, down three, up seven days, down five. Every
stock will normally trade in one of these cycles. The trick
is to buy the stock on the down side and sell it on the up
side. Again, you do not have to be in the market every day.
It is better to only be in the market WHEN THERE IS PROFIT
TO BE MADE. Everything else is noise. Sometimes expensive
noise. Learn to play the trends. Watch a stock for several
days. Study the charts. Watch the intraday charts. Learn
how it moves. I traded TXN early last year for a month.
It would always jump up at the open, wander during the day
and drop at the close. For weeks I would sell at the open
for a $.50 to $1.00 profit and then buy the same option
back at the close for almost what I had paid for it the
day before. Day in and day out. Cash flow. 10% a day. 
(don't even bother to compound that) In this current bull
market there are many, many stocks that you can make 10%
or more a day just trading the trends. The larger your
account becomes the easier it gets. You can start taking
5% a day. For instance, look at a CSCO chart or an ASND.
Can you see any way possible to not have made a $1.00 a
day, two or three days a week, just trading those stocks?

The positive trend is the key. Find a stock with a trend,
pick and option, WAIT for an entry point, set a limit sell.
Repeat, repeat, repeat, repeat......

I want 10 volunteers. Pick a stock or two, practice the 
above plan and send me your results. I will publish the
results and give each of you a years free subscription.
Obviously I will have 15,000 emails tomorrow volunteering
and I can't take you all. The first 10 with verifiable
results will qualify. It does not matter whether you trade
one contract or one hundred. The key is the pattern. No
fair using past results. All trades must be after today.
Trade confirmations must be available.

When I publish these results you will never look at a 
mutual fund claiming a 25% annual return again. How can
they brag about beating the S&P!! I would be embarrassed.

I have not seen any earth shaking economic news so far
this weekend and the Fed does not meet again till February
so I would expect the rally we had Friday to continue next
week. I am excited and you should be also. Earnings are
starting to flow and we have many split candidates in the
next 2-3 weeks. This is the perfect time to be in the
market. If you don't profit from it you should be in
mutual funds.

Good Luck

Jim Brown

What a nightmare week! Just goes to show that the best laid 
plans of mice and men sometimes go astray. Everything was
looking so good moving into last week. We expected a little
profit taking and then off to the races again. Little did we
expect a monster dip caused by Brazil at the end of the profit
taking. The put-credit-spreads that were well on their way
to expiring worthless for a full profit, suddenly were in
jeporday of being a serious liability. My INKT 150 puts were
$30 out of the money on Monday and $10 in the money on 
Wednesday! Ouch. Short cover madness. The 130-puts still
expired worthless but I bit the bullet on the $150. Then
on Thursday the 50-contract MCHP $35 put credit spread was 
safely out of the money with MCHP at $41.50. The bid was
$.06 x.19. Thursday night MCHP announced earnings and missed
their estimates by $.01. BOOM! Down $8.00 Friday morning!
The bid is now $3.50 for an option I wrote for $.56. 
Fortunately MCHP came back to close at $35.13. I covered the
50 contracts at $.38 30 min before the close and was happy
to get it. People emailed me last month and asked why I
had closed several put spreads several days early for .25
or less when I could have let them expire worthless. This
was why. Always take a profit when one is available and you
will never lose money. Holding an option long term is like
suicide. The trade will blow up on you when you least expect

The $45 NEON put credit spread was closed at .25 for almost
a maximum profit. 

I closed the ATI calls for a substantial loss after the bidders
started dropping out. Had I held until Friday I could have 
broken even. 

I will probably get criticized for the following but I have
suffered in the past from not selling in the face of seemingly
very bad news and did not want to have history repeat itself.
When the first Asian problem occurred in Oct 1997 I was heavily
invested and did not sell. I thought it was no big deal and
would bounce back in a day or two. I woke up at the open on
the biggest drop day to see the futures lock limit down at
-27 and Dow futures out of sight. It was a disaster and by
not selling at the open I lost almost three times as much.
So the point of the story was I did not want to be holding
if Brazil was going to explode the world economy again.

I took a bloodbath Wednesday morning and sold at the low for
the day. The good news was that I was in cash for the rebound.
Once I realized that the bull market was viewing this as a
buying opportunity I jumped right back in. Basically I broke
even for the day but there was a lot of anguish before the
market closed. 

Summary: Plays from last Sunday

* = long side of the spreads
(10) ATI  JAN-75  CALLS @ $7.00 sold @ 2.19    $ -4,810
(10) INKT JAN-130 PUTS  @ $3.63 covrd@  .25      +3,380
(10) INKT JAN-150 PUTS  @ $4.88 covrd@ 7.63      -2,750
(20)*INKT JAN-125 PUTS  @ $ .69 sold @  .25      -  880
(10) NEON JAN-45  PUTS  @ $1.50 covrd@  .25      +l,250
(10)*NEON JAN-40  PUTS  @ $ .31 expir@  .00      -  310
(50) MCHP JAN-35  PUTS  @ $ .56 covrd@  .38      +  900
(50)*MCHP JAN-30  PUTS  @ $ .31 expir@  .00      -1,550   
                                   Total         -4,770

Stock plays carried over:               

All sold at the open on Wednesday
FLC  5000 @  8.31 sold  8.25    -   300
GLM  5000 @ 10.10 sold  9.63    - 2,350 
SUNW 3000 @ 89.78 sold 89.88    +   300
FTL 10000 @ 17.88 sold 16.06    -18,200
NDB  5000 @ 22.56 sold 19.56    -15,000
PSIX 5000 @ 29.00 sold 23.63    -26,850
                       total    -62,400 OUCH!

Jumped back in on the rebound Wednesday and sold Wednesday:

Bought 10000 KMAG @ 14.13 sold @ 15.44   +13,100
Bought  7000 SUNW @ 91.88 sold @100.00   +56,840
                               total     +69,400

Options bought on the dip Thursday sold Friday:

(100) DELL-FEB-75  CALLS DLQ-BO @ 8.13 sold @ 8.19  +   600
(75)  SUNW-FEB-90  CALLS SUQ-BR @12.25 sold @13.63  +10,350
(75)  MSFT-FEB-140 CALLS MSQ-BH @11.63 sold @12.63  + 7,500
(25)  LU-FEB-100   CALLS LU-BT  @11.75 sold @14.38  + 6,575
(40)  TLAB-FEB-75  CALLS TEQ-BO @ 9.88 sold @11.19  + 5,240
(10)  OEX-FEB-630  CALLS OEY-BF @12.75 sold @11.75  - 1,000
                                            total   +29,265* 

* in hindsight I sold these way early as the end of
day rally would have pushed this total over $60,000.

Total for the week +$31,495 but it was not pretty. I did
sleep better Friday night knowing the week was over.

In retrospect I could have done a lot of things different
and good traders always try not to repeat their mistakes.
Had I not sold at the disaster open it probably would not
have been much different. I would not have lost the $62k
but I would not have been in a position to do the SUNW and
KMAG trade for the +$69k. I personally look at any week
that closes with a profit as a success. 

Current stock holdings:

KMAG 5000 @ 13.56 current 14.88 Seagate sympathy play
SRCM 5000 @ 22.75 current 19.75 AOL rumor surfaced again
PAIR 4000 @ 10.50 current 10.56 Intel takeover rumor

Current options:

(10) OEX-FEB-630 CALLS OEY-BF @ 13.00

OptionInvestor.com Trend Trading Options Seminar

OIN announces it's first ever Option Investing Seminar.
The seminar will be February 23 & 24th in Denver Colorado.

This inaugural event will be a one of a kind special. Readers
have asked for intensive options trading instruction from
the principals at Option Investor. We have put together a
two day event where no one will leave unhappy. A roster of
speakers will give you first hand instruction on how to spot
trends and trade trends. Every facet of options trading will
be covered. If you want to make a living trading options you
will not want to miss this. Unfortunately seating will be
strictly limited for this inaugural event. It is strictly a 
first come first served basis. Only 125 persons will be
able to attend. Everyone who attends will meet the entire
OIN staff and can ask any and all questions as we go through
the material.  

Instructors will include:

Jim Brown, head options guy
Ross Jardine, Vice President of Online Investor Advantage
Richard Kerne, Marketing director OIN
James (kimo) Brown, Vice President Research OIN
Ray Cummins, combo plays editor
Mark Wnetrzaks, covered calls, naked puts editor
Chris Verhaegh, spreads specialist, OIA instructor
Andrew Aronson, Rosenthal Collins
Alan Knuckman, Rosenthal Collins
Austin Tanner, Pinnacle Capital

Other OIN research staff present will include:

Missy Masley Speck, research analyst
Buzz Lynn, research analyst
Jody Osborne, research analyst
Chris Bouck, research analyst
Ted Fritsch, research analyst
Kathryn Robine, research analyst

Meet the other OIN staff as well and put a face with a name:

Kristin Welsh
Dana Ewing
Chris Carlino
Julie Montoya
Sebrina Bowman
Kassity Mihelich
D. J. Smith
Dan Anderson


Tuesday 2/23

6:00-10:00PM Open house - Drop by and meet everyone. Free for
all question and answer session. One on one Q&A with multiple
instructional areas featuring OIN staff. Pick the chat group
you want and really dig in or wander from group to group.
Refreshments and drinks.

Wednesday 2/24

8:00 -8:30  Continental breakfast
8:30 -12:30 Combat Options, Trends, Stealth Trading
12:30-1:00  Working lunch
1:00 -4:30  Strategies, Techniques, Putting it all together
4:30 -5:00  Break
5:00 -??    Person to person Q&A with the entire OIN staff.
        Personal instruction in the area of your choice
        by all the OIN instructors. Choose the group/strategy
        you want and get focused on the right information with
        personal interaction. There is no deadline and we will
        stay until ALL your questions have been answered.

The price $1,295

Where else can you get a full day of personal instruction from
experts in their respective fields in a one on one environment?

Reserve now: Tuesday will be too late. Include your name, email
and phone number and someone will call you to confirm.

*****  Contact Support

Market Sentiment - By Pinnacle Capital Advisors
Excessive Optimism could Spoil the Party

As we enter a key earnings week, keep an eye on what the option
speculators.  If you see excessive call volume, it may signal
that we may be at a near-term top.  If you see increased put
volume, the key reversal we saw on Friday (1/15) could support a
continuation of the bull run.

We are entering a new expiration period and therefore some of the
indexes and put/call ratios will become volatile over the next
couple of days as options traders establish new positions.

Pinnacle is still concerned by the excessive Bullish sentiment as
tracked by Investors Intelligence latest poll - 60% Bullish, %30
Bearish.  This is the highest level for bullish sentiment that
we have seen for a while.

Pinnacle's short-term indicators are still flashing bearish
overtones over the near-term so we advise subscribers to
tightly protect their long positions.  Any questions
regarding market sentiment can be directed at:

Market Sentiment at a Glance
                                Friday    Tues     Thurs  
Indicator                       (1/15)    (1/19)   (1/21)   Alert

Pinnacle Index (OEX):          
Overhead Resistance (620-635)     1.7              
Underlying Support  (595-610)     1.0

Put/Call Ratios:
CBOE Total P/C Ratio               .5
CBOE Equity P/C Ratio              .4                        *                      
OEX P/C Ratio                     1.2    

Peak Open Interest (OEX):
Puts                              610
Calls                             610
P/C Ratio                         1.0

Market Volatility Index (VIX):	
CBOE VIX                         29.75                      *

Investors Intelligence:
Bullish                          60.0%                      *  
Bearish                          30.0%

The Power of Expectation Analysis

It has often been said that the crowd is right during the
market trends but wrong at both ends.  Measuring and
evaluating the sentiment of the crowd, therefore, can give
savvy option traders a decided edge.

Pinnacle Index
OEX                             Friday     Tues     Thurs
Benchmark                       (1/15)     (1/19)   (1/21)

                    (630-635)      2.6
                    (620-625)      1.1
Overhead Resistance (620-635)      1.7   

OEX Close                        616.5

Underlying Support  (595-610)      1.0
                    (605-610)       .9
                    (595-600)      1.0

Average ratings: 
Resistance levels 2.0 / Support .5

What the Pinnacle Index is telling us:
Overhead sentiment resistance is Moderate weak at the OEX 620/635 
level while the underlying support is moderately weak.

Put/Call Ratio 
                                Friday     Tues     Thurs
Strike/Contracts                (1/15)     (1/17)   (1/19) 
CBOE Total P/C Ratio              .52
CBOE Equity P/C Ratio             .38
OEX P/C Ratio                    1.23

Peak Open Interest (OEX)
                     Friday          Tues          Thurs
Strike/Contracts     (1/15)          (1/17)        (1/21)
Puts                 610 / 8,152    
Calls                610 / 8,360    
Put/Call Ratio       .97           


Volatility Index (VIX)
Date                Turning Point       VIX
October 97          Bottom              54.60      
July 20, 1998       Top                 16.88         
October 8, 1998     Bottom              60.63
January 11, 1998    Top                 26.38

January 15, 1999                        29.75


Investors Intelligence Survey
                    Major             Percent     Percent
Date                Turning Point     Bullish     Bearish
October 97          Bottom            22.0        48.3       
July 20, 1998       Top               52.0        24.0         
October 8, 1998     Bottom            38.5        42.7
January 11, 1999    Top ?             58.3        30.0

January 15, 1999                      60.0        30.0   *

Market Posture
As of Market Close - Friday, January 15, 1999 

                   Major Support
Broad Market         /Resistance    Last    Posture/Since  Alert

DOW Industrials    9,100   9,730   9,341    Neutral   1.15 *           
SPX S&P 500        1,210   1,280   1,243    Neutral   1.12    
OEX S&P 100          600     635     616    Neutral   1.12   
RUT Russell 2000     420     435     427    Neutral   1.12  

NDX NASD 100       1,900   2,010   1,982    Neutral   1.8   
MSH High Tech        930     980     969    Neutral   1.8   

                   Major Support
Technology           /Resistance    Last    Posture/Since  Alert
XCI Hardware         830     875     868    Neutral   1.8    
CWX Software         610     665     658    Neutral   1.8         
SOX Semiconductor    360     410     403    Neutral   1.8        
NWX Networking       420     450     441    Neutral   1.8         
INX Internet         470     570     481    Neutral   1.8    

                   Major Support
Financial            /Resistance    Last    Posture/Since  Alert
BIX Banking          650     710     670    Neutral   1.15 *             
XBD Brokerage        630     725     665    Neutral   1.14   
IUX Insurance        590     620     602    Neutral   1.15 *       

                   Major Support
Other                /Resistance    Last    Posture/Since  Alert
RLX Retail           800     860     823    Neutral   1.8  
DRG Drug             740     795     753    Neutral   1.8    
HCX Healthcare       720     780     737    Neutral   1.8            
XAL Airline          310     350     323    Neutral   1.12              
OIX Oil & Gas        245     260     243    BEARISH   1.14               

Posture Alert

After rebounding more than 200 points on Friday (1/15) just
above the 50-day moving average, we have turned Neutral again
across the Dow Jones 30.  We have also turned Neutral across 
the Financial sectors after reversing course at key
benchmarks.  Please make a note of our new bearish benchmarks
for we have updated them accordingly after Friday's key
reversal signal (tweezer bottom). 

A detailed description of our Market Posture and its
applications can be found at:




We would like to have you as a subscriber. You may subscribe
at any time but your subscription will not start until your
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The quarterly price is $99.95 which is $20 off the monthly rate.


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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              1-17-98
Sunday                   2  of  7

© 1998 The Option Investor Newsletter. - All Rights Reserved
Coming Events



LJR Redbook       1/16     Forecast:  --     Previous:  2.1%
BTM/Schroeders    1/16     Forecast:  --     Previous:  0.2%
API Oil Stocks    1/16     Forecast:  --     Previous: 321.6M


Building Permits   Dec     Forecast:  --     Previous: 1.651M
Housing Starts     Dec     Forecast:  1.7M   Previous: 1.649M


Jobless Claims    1/16     Forecast: 325k    Previous: 352K
International Trade Nov    Forecast: -$14.0b Previous: -14.2b
Philadelphia FedIdx 1/11   Forecast:  --     Previous: -3.8



OIN Spotlight: Naked-Puts...

Another successful segment of the OIN newsletter is the weekly
"Naked Puts" list. This strategy 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. This section consistently produces 5%-10%
monthly returns with a high probability of success. Those of
you with large stock portfolios should consider this strategy
for generating extra monthly income.

**** See section five for naked puts ****

Last weeks change for this weeks picks:
Index    Last    Week
Dow      9341 -302.77
Nasdq    2348    3.79
$OEX      616  -19.56
$SPX     1243  -31.83
$RUT      427   -4.18
$TRAN    3149 -211.75
$VIX    29.75

Stock   Price   Week

ASND    86.19   14.75 Dropped..play over with LU buyout.
TLAB    85.94   11.63 One week til earnings
SUNW   100.44    9.57 Earnings are on Thursday/ Split candidate
MU      71.31    7.68 Momentum play
ETH     48.94    6.94 Strong momentum after beating estimates
EMC    100.06    6.49 Split Candidate for the 26th
PRIA    34.50    4.87 Recent upgrades
ATI     83.38    4.37 Bought by VOD for $97 a share
CHKPF   51.25    4.37 Earnings surprise expected on the 21st
NOK/A  138.63    3.63 Split Candidate
QCOM    63.88    3.63 Wait until after the earnings report!
DIS     35.75    3.32 Time for a recovery
COF    130.44    3.13 Strong earnings expected Tuesday, Split?
XIRC    39.75    1.37 Large surprise expected on the 21st
DELL    78.94    1.19 Four weeks til earnings
CCU     60.44    0.69 Radio Internet?
MYG     64.25    0.25 Unstoppable machine, making acquisitions
WCOM    75.06    0.06 Done consolidating?
AOL    146.50    0.00 Eight days to earnings/ Split candidate
MSFT   149.75   -0.12 Split Candidate for Tuesday!
T       84.25   -0.82 We want cable modems!
JBL     73.88   -1.01 Profit-taking
FTL     16.50   -1.81 Still a takeover play
LXK     98.06   -2.51 Consistent earnings surprises
LU     110.25   -5.00 Earnings on the 21st.
CSCO   101.69   -5.00 Overreaction is over
UTX    109.50   -5.00 Earnings on Thursday
YHOO   317.00  -26.63 Three weeks left before the split 


RMBS    89.50  -13.38 Earnings warning
XCIT    67.50   -7.50 Internet over extended
CPB     45.13   -7.13 Is it soup yet?
MRK    147.13   -6.68 Drug sector casualty
MCHP    35.13   -5.62 Missed earnings
BAC     64.56   -5.38
WLA     69.81   -3.75 Drug sector casualty
EK      69.00   -3.25 Fuji is winning the war
DD      57.00   -2.50
LLY     81.25   -2.37 Drug sector casualty
BDX     39.75   -1.81 Drug sector casualty
HSY     61.25   -1.75 Still melting
PKN     95.38   -0.56
ERTS    47.00   -0.25
AVT     46.25   -0.19
BMCS    40.06   -0.19

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 ! 
YHOO – Yahoo! Inc. $317.00 (-26.63)(+106.69)

See details in sector list

Chart = http://quote.yahoo.com/q?s=YHOO&d=3m
With all the great plays each week we can never decide
on just one so take your pick. 

MSFT - Microsoft $149.75 (-0.13)(+11.19)(-3.06)(P5W +28.13) 

Split candidate with earnings - See details in sector list

Chart = http://quote.yahoo.com/q?s=MSFT&d=3m
EMC - EMC Corporation $100.06 (+6.50)(+8.56)(+3.38)(+.13)

Split candidate with earnings - See details in sector list

Chart = http://quote.yahoo.com/q?s=EMC&d=3m
SUNW - Sun Microsystems $100.44 (+9.56)(+5.25)(+2.32)(+0.62)

Split candidate with earnings - See details in sector list

Chart = http://quote.yahoo.com/q?s=sunw&d=3m
LU – Lucent Technologies $110.25 (-5.06)(+5.31)(-2.12) 

Split candidate with earnings - See details in sector list

Chart = http://quote.yahoo.com/q?s=LU&d=3m

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.



PRIA - PRI Automation
MU   - Micron Tech
YHOO - Yahoo
NOKA - Nokia
QCOM - Qualcom
TLAB - Tellabs
CSCO - Cisco - back again
CCU  - Clear Channel Comm
ETH  - Ethan Allen
CHKPF- Check Point Software


EK   - Eastman Kodak 
MCHP - Microchip Tech 
RMBS - Rambus 

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.


LOW $50.63(-4.06) We are dropping LOW this week. They have
taken a fall and we don't see any catalyst to continue the
move up.  LOW's has had a nice run. Earnings aren't until 
February and we feel there are other picks that will out-
perform.  We are not saying those holding LOW's should sell,
every investor makes their own decision, we just feel it 
isn't worthy of a new purchase at this point.


CBE - Cooper Industries  $44.81  (­2.69) 
Stock rallied sharply on Friday (1/15) after retesting prior
support at $43. Pinnacle dropping CBE after reaching price


AOL  - America Online
YHOO - Yahoo
EMC  - EMC Corp	    
IBM  - Intl Business Machines.
WMT  - Wal-Mart
SUNW - SunMicro Systems
CSCO - Cisco Systems
MYG  - Maytag
NOKA - Nokia
MSFT - Microsoft
LXK  - Lexmark Intl Group Inc

We don't list all splits available, only those we 
feel may have play possibilities. 

GDT  - Guidant Corp    2:1 01-27-99 ex-date 01-28
INKT - Inktomi         2:1 01-27-98 ex-date 01-28
SPLS - Staples         3:2 01-28-99 ex-date 01-29
EGRP - E*Trade         2:1 01-29-99 ex-date 02-01
WIND - Wind River Sys  3:2 02-04-99 ex-date 02-05
FDS  - FactSet Research3:2 02-05-99 ex-date 02-08
MRK  - Merck           2:1 02-16-99 ex-date 02-17
BMY  - Bristol Meyers  2:1 02-26-99 ex-date 03-01
NSOL - Network Solution2:1 02-26-99 ex-date 03-01

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

CSCO - Cisco Systems $101.69 (-5.00)(+13.88)(-1.38)(P6W +29.49)

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.  About 85% of the routers used to decipher 
and direct data traffic on the Internet are made by Cisco.

Panic, over-reaction, reality. That best describes CSCO's 
trade pattern last week.  We're adding CSCO back after 
dropping it from Tuesday's publication.  The market 
realized that Lucent's acquisition of Ascend is not the end 
of the world for CSCO, sending CSCO back up from its knee-
jerk/market induced sell off. "Often it's the very best 
employees who approach Cisco after a takeover.  "That's 
wonderful for us and bad for the other guy," said Larry 
Lang of CSCO's business services division.  CSCO will 
provide the equipment needed for AT&T to offer 
TV/phone/internet/data services through (what will be) it's 
TCI division.  CSCO is truly leading the development of the 
Internet by helping cable and phone companies complete "the 
last mile", or the distance between the cable in the street 
an your home.  Also making news, this from Newswire, "Cisco 
Systems to Invest $6 Million in Technical Support for 
China; Technical Assistance Center and Additional Support 
Options to Benefit Channel Partners and Customers."

The big picture is that CSCO is due for another split now 
that the price is over $100.  Historically, their split 
range is $80-$100.  While they have enough shares 
outstanding to complete another 3:2 split, a 2:1 would 
require the shareholder's to approve more shares.  Next 
earnings announcement is scheduled for 2/2 (company 
verified); perhaps then we'll get the announcement.  Though 
up to $108 the week before, CSCO couldn't hold the gains and 
fell with LU/ASND and Brazil news.  Nice recovery back over 
$101 on Friday after falling as low as $89 in Wednesday's 
sell-off.  A better entry is now available.  Look for 
market direction and make your move.

BUY CALL FEB-100 CYQ-BT OI=10339 at $8.75 SL=6.50
BUY CALL FEB-105*CYQ-BA OI=11226 at $6.38 SL=4.75
BUY CALL FEB-110 CYQ-BB OI= 9209 at $4.38 SL=2.75
BUY CALL APR-110 CYQ-DB OI= 3296 at $8.38 SL=6.25

BUY LEAP JAN-2000-110 LCY-AB at $20.75 SL=16.00 
BUY LEAP JAN-2001-110 ZCY-AB at $30.13 SL=23.50 

Picked on Oct   8th     $46.69         PE= 113
Change since picked    +$55.00         52 week low =$ 34.31 
Analysts Ratings   17-13-0-0-0         52 week high=$108.00
Last earnings on 11-04 est=.33         actual=.34  
Next earnings on 02-02 est=.36         versus=.29  
Chart = http://quote.yahoo.com/q?s=CSCO&d=3m
Internet - Sector
AOL - America Online $146.50 (+0.00)(-8.63)(+18.50)(P5W+65.06)

America Online is the largest online Internet access 
service in the world.  Membership now exceeds 15 million 
users.  Its Chairman, Steve Case, said more new users 
signed up with AOL on Christmas Day than any other day in 
the company's history.  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!) 

Given Internet weakness last week, it's a wonder AOL 
finished even from the previous week.  AOL traded between 
$130.00 and $167.  What action!  It finished Friday up 
$2.00 on light volume, faring well against significant 
losses on other 1st tier Internet stocks.  Consolidation may 
be nearing an end as we approach earnings.  At these price 
levels, AOL is again well over its historical $120 split 
range, though rumors seem to have died for an immediate 
announcement.  Currently they have 1.8 bln shares 
authorized.  That's enough for a 3:1 split, but a 2:1 is 
more likely.  Earnings are on January 27th (company 
confirmed).  Look for the split announcement then along 
with surprise earnings (as usual).  For the next couple of 
days, target shooting your entry may be a safer play.  As 
always, confirm market direction first.

Making news this week, AOL stated they expect to close the 
Netscape deal by the end of April.  Also, they are 
partnering a deal with Bell Atlantic to bring AOL service 
at DSL speeds (Digital Subscriber Line-1.5 megs of 
bandwidth) to Bell Atlantic customers, putting them in 
competition with @Home, another successful cable internet 
access service.  DSL service could be available by mid-
Summer (at less than $20 additional per month) and will 
cover 15 million homes by the year 2000.  Potential revenue 
is huge.  Other DSL agreements are being discussed with 
other Baby-Bell regional carriers. Never failing to come up 
with new marketing ideas to get subscribers, AOL is taking 
its cue from Amway, Mary Kay and Tupperware, and will begin 
marketing it's AOL Select service through a multi level 
marketing organization called Monument Communications, 
based in McLean, VA.

Still an Internet stock.  

BUY CALL FEB-140 AOE-BH OI= 3433 at $19.00 SL=14.75,ITM 
BUY CALL FEB-145 AOE-BI OI= 2549 at $16.00 SL=12.50,ATM
BUY CALL FEB-150*AOE-BJ OI= 9749 at $13.50 SL=11.25,OTM
BUY CALL APR-145 AOE-DI OI= 1194 at $25.00 SL=19.50,ATM
BUY CALL APR-150 AOE-DJ OI= 3655 at $23.50 SL=18.25,OTM

**Momentum Only, no fundamentals**

Chart = http://quote.yahoo.com/q?s=AOL&d=3m
YHOO – Yahoo! Inc. $317.00 (-26.63)(+106.69)

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 

We are adding YHOO back to the pick list with a precaution:
Wait for a positive confirmation!  YHOO is down over $125 from
its 52-week high.  Of all the Internet stocks, YHOO is the 
closest thing to a blue-chip, except for AOL in this list also.
We like the chances that YHOO will turn strongly positive over 
the next few weeks leading into it's split.  YHOO showed a classic
example of high expectations when it announced great earnings and
a stock split, yet has fallen drastically.  The internets have 
played this game before.  They go in spurts, consolidate and then
take off again.  This is a risky play, but those that are willing
to take the risk, are often rewarded with extraordinary gains.

There are a lot of companies out there trying to duplicate the
success YHOO has had with it's web site.  Many on-line shopping
sites have used YHOO as a model.  Though this seems like it
might eat into YHOO's profits, the fact is that YHOO still leads
the pack.  The more awareness there is for online services, the
more hits YHOO will receive.  These added hits turn into added
advertising revenue which turns into more profits.  Ultimately, 
more profits means higher stock prices. 

BUY CALL FEB-310 YHV-BB OI= 66 at $45.25 SL=35.00 ITM $7.00
BUY CALL FEB-320 YHV-BD OI=102 at $40.38 SL=31.50 
BUY CALL FEB-330*YHV-BF OI=676 at $35.50 SL=27.75 
BUY CALL APR-330 YHV-DF OI=682 at $63.75 SL=50.00
BUY CALL APR-340 YHV-DH OI= 13 at $59.38 SL=46.00

Picked on Jan 16th at $317.00   PE=466
Change since picked     +0.00   52 week low =$ 28.81
Analysts Ratings   8-10-5-0-0   52 week high=$445.00
Last earnings   01-99 est=.16   actual=.21
Next earnings   04-12 est=.16   versus=.04
Chart = http://quote.yahoo.com/q?s=YHOO&d=3m
Telecom - Sector
WCOM - MCIWorldCom $75.06 (+0.06)(+3.25)(+1.62)(P4W +7.69)

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.  
WorldCom's $37 billion purchase of MCI last September 
qualifies it the 7th largest merger or acquisition in 1998.  
WCOM is one of the largest Internet backbone providers in 
the world.  If you're reading this letter, somewhere in the 
transmission, WCOM fiber brought it to you.

Friday, WCOM gained over $4 from Friday's trading low on 
heavy trading - nice comeback.  WCOM is showing a lot of 
relative strength.  In last week's action, profits were 
shaken out and buyers stepped in.  Though WCOM dipped below 
support of $70, they didn't stay there long and finished 
each day at no less than $72.  It appears to have 
consolidated, and having bounced off its moving average, 
should continue upward, market permitting.  Slight 
resistance is $76 with harder resistance at $79.  Any 
volume or overall market strength should push it right 
through.  The markets were not disappointed when WCOM 
backed away from bidding on Air Touch, which helped WCOM's 
recovery.  We're still big believers in Bernie Ebbers, 
WCOM's "awe shucks" chairman.  

The big news last week, the U.S. General Services 
Administration selected MCI WorldCom to provide long-
distance telephone, data and video telecommunications 
services to Federal government agencies worldwide in the 
second and final round of its multi(5)-billion dollar 
FTS2001 competition.  WCOM is in high-bandwidth content 
delivery tests with AOL, which should be successful and 
more fully implemented through Bell Atlantic and SBC's DSL 
services. With recent court rulings preventing the baby 
bells from entering the long distance market in their home 
areas, 20% growth in voice traffic and 100% growth in data 
traffic every 4 months (!!! Gilder Technology Report) this 
spells good news and continued earnings growth for the big 
3 long distance providers.  

BUY CALL FEB-70 LDQ-BN OI= 2654 at $7.50 SL=5.75,ITM $5.06
BUY CALL FEB-75*LDQ-BO OI=12428 at $4.25 SL=2.50,ATM 
BUY CALL FEB-80 LDQ-BP OI=15682 at $2.13 SL=1.00,OTM 
BUY CALL MAR-75 LDQ-CO OI= 7534 at $5.75 SL=4.00 lots of time

Picked on November 29th at $62.44       PE = 87
Change since picked       +$12.62       52 week high=79.19
Analysts Ratings       23-9-2-0-0       52 week low =28.00
Last Earnings 10/29 est .22  actual .21  surprise -4.5%
Next Earnings 02/04 est .22  versus .15
Chart = http://quote.yahoo.com/q?s=WCOM&d=3m
T - AT&T $84.25 (-0.81)(+9.31)(+1.19)(+1.56)(P4W +12.06)

AT&T, the mother of all phone companies isn't just a long 
distance company any more. Through growth and acquisition, 
they now provide data transmission, video tele-
conferencing, PCS/wireless/cellular, Internet, paging and 
local phone services via microwave, fiber and copper 
infrastructure throughout the U.S. and international 
markets.  Their annual revenues in excess of $55 billion 
dwarf their nearest competitor, MCIWorldCom, by 5 times.  
Their 1998 acquisition of TCG (formerly Teleport 
Communications Group, the nations largest competitive local 
exchange carrier) and IBM's data services division will add 
substantially to their revenues.  Pending a merger with 
cable giant, TCI, revenues could grow even more.  Michael 
Armstrong, AT&T's CEO, has investors believing that AT&T is 
no longer a copper wire dinosaur heading-up the telecom 
extinction list.

Great defensive play in the face of market woes last week.  
AT&T dipped just below $81 after the open Wednesday, it's 
low trading point of the week, but finished up strongly at 
$84.75.  Friday's recovery of $2.13 after Thursday's 
nosedive to $82.12 came as investor's realized the sell-off 
was overdone.  Merrill Lynch upgraded the week before last 
to "Long Term Buy".  Technicals are a bit weak in light of 
market conditions, but should recover with any market 
strength.  Still, the big news:  3:2 stock split to occur 
when the TCI deal closes around the end of March (no firm 
date yet-we'll let you know the details when available), $4 
billion stock repurchase (about 2.7% of shares in float at 
current levels) and increased earnings estimates.  With 
some of the profits shaken out, a better entry is possible, 
but confirm direction before playing.  

Not much price moving news this week (other than Brazil).  
The week before last, AT&T got the green light to merge 
with TCI thus creating a huge bandwidth pipe (lots of 
transmission capacity) over "the last Mile" or that short 
distance between the street and your phone jack.  It's 
estimated that it costs $1200 per home for a typical 
utility to trench and install any transmission equipment. 
That's why even though the fiber optic cable runs down your 
street, you can't yet access it.  It's too expensive to get 
it to you.  Soon, you'll be able to bypass that fiber in 
favor of AT&T/TCI cable.  It's already there.  Translation: 
increased revenues.

BUY CALL FEB-80 T-BP OI= 3679 at $6.88 SL=5.25 ITM 4.25
BUY CALL FEB-85*T-BQ OI= 6666 at $3.63 SL=1.75 ATM, 
BUY CALL APR-85 T-DQ OI= 2329 at $6.00 SL=4.25 ATM
BUY CALL JUL-85 T-GQ OI= 1483 at $8.75 SL=6.50 lots of time

Picked on Dec 20th at  $73.00    PE = 22
Change since picked   +$11.25    52 week low = $48.38
Analysts Ratings   9-10-8-0-0    52 week high= $86.75
Last earnings  9-98 est= 1.00    actual= 1.16  
Next earnings  1-26 est= 1.00    versus=  .81

Chart = http://quote.yahoo.com/q?s=T&d=3m
ATI – AirTouch Communications $83.38 (+4.38)(+6.56)(+4.56)(+5.19)

AirTouch Communications provides wireless communications to nearly 
14 million customers in the US and in 11 countries in Asia and 
Europe. Its operations include cellular telephone service (#2 in 
the US, after AT&T), paging, and personal communications service 
through PrimeCo, its joint venture with Bell Atlantic. AirTouch has 
joint ventures in Europe and Asia, including Portugal (Telecel) 
and Sweden (Europolitan), where the cellular market is growing 
rapidly. It holds a minority stake in the Globalstar satellite 
network, which is scheduled to begin providing worldwide digital 
phone communications in 1999.

Well, it is finally done. ATI is merging with Vodaphone. The 
combined company, to be known as Vodafone AirTouch Plc, will 
reach nearly one billion people in 23 countries on four 
continents. Serving over 23 million proportionate cellular 
and PCS customers, Vodafone AirTouch will be the largest 
wireless company in the world by a substantial margin. The 
merger is expected to benefit employees, customers and 
stockholders. The deal puts ATI shares value at $97 based on
the January 15th close. 

If you are not already in ATI, it's too late. ATI will gap open
on Monday.  We will wait and see how the reaction is after 
Monday to decide if we should keep ATI long-term.  The only 
reason we might keep it is because the deal involves 1 share 
of ATI for .5 shares of VOD's ADR share price (plus $9 in cash
per share).  Thus if VOD continues to move up, ATI should
continue to move up too.  ATI is scheduled to announce earnings 
on the 22nd of January. 

Options will be out of date on the open Tuesday (that means
anything we quote today will probably be $10 too cheap by
Tuesday).  If we keep ATI on Tuesday, we will update the 
current option prices. 

Picked on Dec.22nd at  $67.88   PE=82 (and rising)
Changed since picked   +15.12   52-week low = $38.25
Analysts Ratings  13-11-4-0-0   52-week high= $83.50 (not for long)
Last Earnings 10-98  est =.26   actual = .30
Next Earnings 01-22  est =.18   versus = .14
Chart = http://quote.yahoo.com/q?s=ATI&d=3m
LU – Lucent Technologies $110.25 (-5.06)(+5.31)(-2.12) 

Lucent Technologies, Inc. is one of the world's leading 
designers, developers and manufacturers of telecommunications 
systems, software and products. The Company is a global market 
leader in the sale of public telecommunications systems, and 
is a supplier of systems or software to most of the worlds 
largest network operators. They are also a global market 
leader in the sale of business communications systems and 
in the sale of microelectronic components for communications 
applications to manufacturers of communications systems and 

LU is back!!! After trading as low as $96.00 three days ago, 
LU took back over $4 of those losses.  LU took a hit with the 
news it was in talks with Ascend.  When the news became reality, 
LU has firmed and is heading higher into earnings on the 21st. 
LU says the merger will not affect earnings in 1999 and should 
help earnings in 2000. It seems the merger is viewed as 
positive by the public since LU has trended higher since the 
news became official.  There is a possibility that LU could 
announce a split with earnings, but the more likely time will 
be after the shareholders meeting in February.

Lucent announced a new product for radio.  Lucent Digital 
Radio's advancement, called Multi-Streaming, is based on 
state-of-the-art capabilities in audio and wireless channel 
coding technologies from Lucent's Bell Labs, and allows for 
the best-quality FM audio to be delivered over a wide coverage 
area, even under impaired channel conditions.

BUY CALL FEB-105 LU-BA OI=2553 at $11.25 SL= 8.75 ITM $5.25 
BUY CALL FEB-110 LU-BB OI=5658 at $ 8.63 SL= 6.50
BUY CALL FEB-115*LU-BC OI=6763 at $ 6.25 SL= 4.25
BUY CALL APR-110 LU-DB OI=3654 at $13.13 SL=10.50
BUY CALL APR-115 LU-DC OI=3399 at $10.88 SL= 8.50  

Picked on Dec.29th at   $112.06    PE = 53
Change since picked       -1.81    52 week low =$ 34.18 
Analysts Ratings     8-9-12-0-0    52 week high=$120.00
Last earnings on 10-98 est= .39    actual=.41
Next earnings on 01-21 est=1.00    versus=.86
Chart = http://quote.yahoo.com/q?s=LU&d=3m



The Option Investor Newsletter          1-17-98
Sunday             Part 3 of 7

© 1998 The Option Investor Newsletter. - All Rights Reserved
TLAB - Tellabs $85.94 (+11.63)(P3W $10.18)

Tellabs is quickly becoming a powerhouse in the Telecom
equipment industry. With their TITAN and CABLESPAN systems,
and its DXX multiplexers, TLAB is raking in the money from
customers among the telephone companies, cable operators, 
and government agencies.  Though they faded from news of 
their failed merger of Ciena, Tellabs is still a major 

Wow!  What a play.  TLAB gave up only $0.44 in Thursday's 
turmoil and came smokin' back $5.25 on Friday to close at 
$85.94.  Technicals look outstanding with a small 
consolidation already taken place; all indicators in 
positive territory.  We introduced the play Thursday under 
the following logic: TLAB spiked up $13 last Tuesday to $78 
on 11 million shares, $8 higher than resistance previously 
set at $70.  TLAB drifted back to $74, then spiked $5 to 
$79, on average volume of 3.5 million.  Over the previous 3 
trading days, it gained in market weakness while giving 
back only $.44 in heavy trading in a downright bearish 
market - a terrific sign of strength.  3.5 million shares 
traded daily; 147 million shares in float; $3.14 per share 
in cash; 34% return on equity...strong fundamentals.  We 
expect them to announce more contracts in the coming weeks.  
Recent news is capturing investors' eyeballs, making for a 
good story.  We could find no news on Friday driving the 
price; just market recovery and stock momentum. 

Monday, Warburg, Dillion Read raised their rating to a 
"buy" citing raised earnings per share estimates to $2.35 
and $2.93 from $2.30 and $2.85 for 1999 and 2000, 
respectively.  They further state, "fundamentals for the 
telecom equipment group has improved over the past few 
months which improves visibility for Tellabs" and "Our 
checks with Tellabs will report fourth quarter 1998 results 
slightly better than our $0.58 earnings per share estimate, 
as well as having a positive outlook for 1999" (Reuters).  
Also, rumors surfaced last week that TLAB was a targeted 
buyout/merger candidate, but were quickly squashed.  Not
soon enough, though, to draw investor attention to the 
price move.

BUY CALL FEB-80 TEQ-BP OI=1270 at $ 9.75 SL= 7.25 ATM 
BUY CALL FEB-85*TEQ-BQ OI= 965 at $ 7.00 SL= 5.75 OTM 
BUY CALL MAR-85 TEQ-CQ OI= 873 at $ 9.38 SL= 7.00 more time
BUY CALL JUN-85 TEQ-FQ OI= 105 at $13.75 SL=11.00 OTM 
highest strike available

Picked on Jan. 14th     $80.69          PE= 39
Change since picked     $ 5.25          52 week low =$31.38  
Analysts Ratings    15-9-3-0-0          52 week high=$93.12 
Last earnings on 09-98 est=.46          actual=.49  
Next earnings on 01-25 est=.59          versus=.42  
Chart = http://quote.yahoo.com/q?s=TLAB&d=3m
QCOM - Qualcomm, Inc. $63.88 (+3.63)

QCOM develops, manufactures, markets, licenses, and operates
advanced communications systems and products based on digital
wireless technology. The Company's primary product areas are
the OmniTRACS system (a geostationary satellite-based,
mobile communications system providing two-way data and
position reporting services), CDMA wireless communications
systems and products and, in conjunction with others, the
development of the Globalstar low-earth-orbit (LEO)
satellite communications system.  The company's CDMA technology
has become the dominant wireless transmission standard in the
US and Korea, and is gaining momentum in a host of other
countries.  Demand for CDMA phones is surging as the US
wireless industry is migrating from analog to digital.  

In the news last week, QCOM, along with several other
companies, purchased a concession to operate a fixed line
telephone service in Brazil.  QCOM has indicated, in the past,
that it is lobbying China to adopt its CDMA technology.  Since
1990, the average annual growth rate of mobile phone users in
China has been about 160%, according to government figures.
QCOM is building a global presence.  It was also reported on
CNBC on Friday that there is renewed interest in QCOM as a
takeover candidate given the recent acquisition of ATI and the
LU/ASND merger.  If fact, the entire sector is expecting
another round of takeovers given the competitive landscape.

QCOM has been in a basing pattern since last November.  It
actually fell below its 200 day moving average in December, and
then started its current run around the beginning of the year.
QCOM reports earnings on Tuesday just before the close.  As
you know we don't recommend holding over earnings releases, but
QCOM might make an interesting short term trade before the
earnings release.  Depending on the earnings release on
Tuesday, we also like QCOM as a play after the release given
the merger activity in the sector.  After the earnings release,
wait for a direction before initiating a play.  

BUY CALL FEB-60 QAQ-BL OI=1421 at $7.25 SL=5.25
BUY CALL FEB-65*QAQ-BM OI=1224 at $4.38 SL=2.75
BUY CALL FEB-70 QAQ-BN OI= 745 at $2.50 SL=1.25
BUY CALL APR-70 QAQ-DN OI= 401 at $5.13 SL=3.25
BUY CALL JUL-70 QAQ-GN OI=  37 at $7.88 SL=6.25

Picked on Jan 17th at $63.88   PE=22
Change since picked    +0.00   52 week low =$37.75
Analysts Ratings   6-8-6-0-0   52 week high=$67.38
Last earnings  09-98 est=.50   actual=.54
Next earnings  01-19 est=.59   versus=.58
Chart = http://quote.yahoo.com/q?s=QCOM&d=3m
NOK.A – Nokia  $138.59 (+$3.59)

Nokia is a supplier of telecommunications systems and 
equipment and is the world's leading maker of cellular 
phones. It's telecommunications and mobile phone sales are 
growing rapidly, and margins are higher as well. Nokia is 
increasing plant capacity to keep up with demand.

We covered Nokia from Dec. 13th until Jan. 10th as both a 
split candidate and a momentum play. It climbed steadily 
for us into the first week of January, when the stock got 
ahead of itself. It had risen a little too quickly due to 
enthusiasm for the new Euro and to excitement over the ATI 
bids. When it began pulling back from its $142.25 close on 
Jan.6th, we feared a correction and became reluctant to 
recommend new positions, so we dropped it. With yesterday's 
$6.34 rebound, the correction appears to be over, and the 
stock remains well above its moving averages, so we are 
adding it back to our recommended plays. When NOKA 
announced a split in Feb. 1998, a long and steep split run 
followed. We have been unable to confirm the expected 
earnings release date for this foreign owned stock, but we 
will keep you posted, as that is a likely time for a new 
split announcement.

Since we dropped it, Nokia has entered the pre-paid mobile 
phone market in an agreement with Topp Telecom, Inc., of 
Miami. Other recent news on this stock can still be found 
in previous newsletters posted on the O.I. website. When 
researching NOK.A, be aware that some sites require the dot 
and some won't allow it.

BUY CALL FEB-135 NAY-BG OI=393 at $11.38 SL= 9.00
BUY CALL FEB-140*NAY-BH OI=241 at $ 8.88 SL= 6.75
BUY CALL APR-135 NAY-DG OI=299 at $17.00 SL=13.00
BUY CALL APR-140 NAY-DH OI=175 at $14.88 SL=11.75
BUY CALL JUL-140 NAY-GH OI= 14 at $ 9.25 SL= 7.00

Picked on Jan 17th  at  $138.59         P/E= n/a
Change since picked       $0.00         52 week low= 35.31
Analysts' ratings    10-6-0-0-0         52 weekhigh=142.50
Last earnings  9/98  est= $ .67  act=$.88  surprise=31%
Next earnings 12/98  est= $1.01  
Chart = http://quote.yahoo.com/q?s=NOKA&d=3m
Software - Sector
MSFT - Microsoft $149.75 (-0.13)(+11.19)(-3.06)(P5W +28.13) 

From their own words, "Microsoft 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 

Extremely volatile, but almost no change from the previous 
week.  Price range last week was $136 to $150 on above 
average volume for 4 of 5 trading days.  Friday gave us an 
$8 gain following the Brazilian downdraft.  CS First Boston 
said Microsoft "appears on track" to meet or beat estimate 
of 60 cents per share - an increase of 46 percent from the 
42 cents in the same quarter last year.  Sales are expected 
to increase 21 percent to $4.3 billion.  With conviction, 
we still predict a stock split with the earnings 
announcement after the close January 19th (MSFT confirmed 
this date); only 1 trading day away.  Historically, MSFT 
has split like clockwork at $140.  MSFT has expressed 
optimism about their future and has every reason to split 
the stock.  MSFT is trading just $3 off its all-time high 
of $152.50, set the previous week.  Prudential last week 
set a price target of $175.  We think their relative price 
compared to the market reflects strong investor confidence.  
A great play in the making. 

Unsavory news release late Thursday: A federal judge 
scolded Microsoft Corp. over new contract language 
requiring temporary workers to waive any awards from a 
pending lawsuit over the software giant's employment 
practices (Reuters).  It had no affect on the stock, but 
raised eyebrows in the PR department.  Conversely, a new 
Microsoft poll shows that 76 percent of American consumers 
believe that Microsoft has benefited both U.S. consumers 
and the computer software industry (Reuters).  The real 
surprise was another press release stating Robert Bork 
believes Microsoft should be broken into 3 companies; an 
unusual comment from a free market champion, until you 
realize he's paid by Netscape to represent them in the 
Justice Departments case.  Finally, MSFT appealed the Sun-
Java infringement injunction citing that it believes the 
court mistakenly treated the case filed against it by Sun 
as a copyright issue, rather than a contract dispute.  We 
reiterate, "no material effect on earnings".  Everen 
Securities still has their price targets(0-6 months) of 
$161 and their long term (6-18 months) of $200 

BUY CALL FEB-145 MSQ-BI OI= 7806 at $11.38 SL=9.00 ITM 4.75
BUY CALL FEB-150*MSQ-BJ OI=14655 at $ 8.75 SL=6.50 ATM
BUY CALL APR-155 MSQ-DU OI= 3228 at $10.88 SL=8.75 
BUY CALL APR-160 MSQ-DX OI= 3214 at $ 9.25 SL=7.00  

Picked on December 8th at $133.63     PE = 70
Change Since Picked      +$ 16.12     52 Week High= 152.50
Analysts Ratings       14-8-5-0-0     52 Week Low =  62.19
Last Earnings 09/98 est. 0.49 actual .56  surprise 14.29%
Next Earnings 01-19 est. 0.58 versus .43

Chart = http://quote.yahoo.com/q?s=MSFT&d=3m
CHKPF – Check Point Software $51.25 (+4.37)(+1.07)

Network break-ins get doused with Check Point Software 
Technologies' firewall products -- software that protects 
corporate networks from unauthorized access, from both 
inside and outside the company. FireWall-1 authenticates 
remote users, controls access, and blocks viruses and other 
undesirable Web content. Its FloodGate-1 clears up traffic 
congestion on crowded Internet and intranet links by 
allocating available space to company-defined uses. Check 
Point's largest customer is Sun Microsystems' SunSoft, which 
accounts for about 20% of sales. Check Point operates 
subsidiaries in Europe, North America, and the Pacific Rim.

CHKPF is a company that benefits from the explosion in the
Internet.  As companies increase their use of the web, CHKPF's
services will be needed more and more.  CHKPF has an incredible
record of earning surprises.  Next earnings are scheduled for
January 21st.  Holding over earnings is a risky proposition, but
for those risk takers out there, it might pay off.  There is a
possibility that CHKPF might announce a stock split.  They have
plenty of shares, but have never announced a split in the past.
MACD is positive and CHKPF price is above all moving averages. 
Between Tuesday and earnings after the close on Thursday, CHKPF
could have a nice run. 

CHKPF, along with other networking security companies, will be
holding a seminar in February. This seminar will outline the
future of the business and the strategies these companies use
and how they can help other companies with their information
security. CHKPF has a consensus growth rate of 37.55%. Watch
for a pullback and hang on for the ride.

BUY CALL FEB-45 KEQ-BI OI= 153 at $8.75 SL= 6.50 ITM $6.25
BUY CALL FEB-50*KEQ-BJ OI=1034 at $5.63 SL= 3.75 ITM $1.25
BUY CALL FEB-55 KEQ-BK OI= 176 at $3.38 SL= 1.75
BUY CALL APR-50 KEQ-DJ OI=  89 at $8.50 SL= 6.50 ITM $1.25
BUY CALL APR-55 KEQ-DK OI=  35 at $6.50 SL= 4.75

Picked on Jan 17th at $ 51.25   PE=22
Change since picked     +0.00   52 week low =$10.88 
Analysts Ratings    3-8-3-0-0   52 week high=$52.63 
Last earnings   10-98 est=.40   actual=.45
Next earnings   01-21 est=.47   versus=.37
Chart = http://quote.yahoo.com/q?s=CHKPF&d=3m
Semiconductor - Sector
PRIA – PRI Automation, INC. $34.50 (+4.87)

PRIA designs, develops, manufactures, and markets factory 
automation systems for the cleanroom manufacturing 
operations of semi-conductor makers and OEM equipment 
suppliers. Last year's $178.2 million in revenues reflect 
the big downturn in the semi-conductor industry, but that 
is changing. The 1998 glut of chips has been depleted, and 
demand is strong again for these products. 

After hitting a high of $37.50 in Feb. 1998, PRIA stock had 
lost about 75% of its value by the time the market bottomed 
in October. However, it has been climbing fairly steadily 
ever since, except for a brief correction in December. With 
the chip industry recovering, it follows that a company 
such as PRIA will benefit. On January 12th, CIBC Oppenheimer 
upgraded PRIA to strong buy from buy. This as a momentum 
play in an improving industry.  Earnings due out Jan. 28th.

BUY CALL FEB-30*UXQ-BF OI=176 at $6.38 SL=4.75
BUY CALL FEB-35 UXQ-BG OI= 29 at $3.63 SL=1.75
BUY CALL MAY-30 UXQ-EF OI=107 at $9.00 SL=6.75
BUY CALL MAY-35 UXQ-EG OI= 25 at $6.63 SL=5.00

Picked on Jan 17th  at $34.50        P/E= n/a
Change since picked    $ 0.00        52 week low=  9.56
Analysts' ratings   1-5-4-0-0        52 week high=37.50
Last earnings  9/98 act=-$.20  surprise=99%
Next earnings 01-28 est=-$.26
Chart = http://quote.yahoo.com/q?s=PRIA&d=3m
MU – Micron Technology  $71.31 (+7.68)

Micron makes semi-conductor memory products, PCs, circuit 
boards, memory modules, and system level assemblies, and 
has a market cap. of $17.6 billion.  Revenues for MU 
declined last year due to lower selling prices of PCs and 
semi-conductor products. This was a result of too much 
product industry wide and too little demand, but the 
company is recovering now, as demand increases.

With the industry gaining steam, market expectations for 
Micron's earnings were high in December, and the stock 
pulled back when MU did not beat analysts' earnings by a 
wide enough margin. However, MU has lately begun climbing 
again and gathering momentum. Even in this past week's down 
market, the stock looked fairly strong. Chip prices climbed 
6% last week as Koreans permanently slashed production and 
may actually swing the market from an overproduction last 
year to a scarcity in the coming year. The wild card in the 
future supply is Taiwan. Already, though, chip prices, 
which were $200 a year ago, and fell below $60 in May, have 
climbed to near $90. At the same time, sales for PCs and 
the chips that go in them are showing strong increases, and 
that will eventually show up in MU's bottom line. This is a 
momentum play.

CBS Marketwatch screened stocks for 20 different 
characteristics and MU turned out in the top group. The 
five best characteristics: 1)Strong recent earnings/revenue 
growth, 2)Selling at a discount to its growth, 
3)Consistently beats analysts expectations, 4)Earnings 
estimates continually revised upwards, 5)Short- and long-
term relative strength.

BUY CALL FEB-70*MU-BN OI=1757 at $ 7.25 SL= 5.25
BUY CALL FEB-75 MU-BO OI=1109 at $ 5.13 SL= 3.25
BUY CALL APR-70 MU-DN OI= 405 at $11.00 SL= 8.75
BUY CALL APR-75 MU-DO OI= 371 at $ 8.88 SL= 6.75
BUY CALL JUL-75 MU-GO OI= 252 at $12.63 SL=10.25

Picked on Jan  17th at  $71.31         P/E= n/a
Change since picked    $  0.00         52 week low=20.06
Analysts' ratings   10-4-6-0-1         52 week high=71.94
Last earnings  11/98  actual= -.19  surprise=39%
Next earnings  03-22  est   = -.10
Chart = http://quote.yahoo.com/q?s=MU&d=3m
JBL - Jabil Circuit, Inc. $73.88 (-1.00)(+.38)(+2.94)(+3.06)

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

In the news last week, Everen Securities initiated coverage on
JBL with an intermediate term market perform and a long term
outperform.  The press release did note, that in the near-term
they believe that JBL is close to fair value, but in the long
term it should be an outperformer.  The other bit of news that
helped JBL was that Solectron announced a two for one
stock split.  As we have said on more than one occasion, this
industry tends to move together.

Last week, JBL bounced off of its 21 day moving average and
closed right at its 10 day moving average on Friday.  There
also appears to be some support for JBL around $71.  JBL
has been on extended run since last September, and given the
way the sector goes in and out of favor with the Street, you
should keep a close eye on JBL if you are playing it.  If JBL
were to break below $71, in a significant way, we would be very
cautious of the stock.  Also, as with any sector, but more so
with this one, you have to keep an eye on the sector when
playing JBL.

BUY CALL FEB-70 JBL-BN OI=150 at $8.00, SL=6.25
BUY CALL FEB-75*JBL-BO OI=598 at $5.25, SL=3.25
BUY CALL FEB-80 JBL-BP OI=808 at $3.25, SL=1.50
BUY CALL MAR-80 JBL-CP OI=152 at $5.00, SL=3.25
BUY CALL JUN-80 JBL-FP OI=109 at $9.25, SL=6.75

Picked on Dec 6th at  $63.38   PE=33
Change since picked   +10.50   52 week low =$23.00
Analysts Ratings   7-9-5-0-0   52 week high=$79.00
Last earnings  11-98 est=.43   actual=.50
Next earnings  03-17 est=.52   versus=.52
Chart = http://quote.yahoo.com/q?s=JBL&d=3m
Electronics/Peripherals/Hardware  - Sector
LXK – Lexmark Intl. $98.06 (-2.50)(+.06)(+7.25)(+1.31)

Lexmark has good peripheral vision. Lexmark International 
Group is a leading maker of computer printers and related 
products, which generate more than 80% of its sales. Its 
printer line includes laser printers (designed primarily 
for corporate networks and desktops) and ink-jet printers 
(for home and business use). Unlike many of its competitors, 
Lexmark develops and manufactures it's own printers, which 
results in fast product cycle times. The company also makes 
supplies for IBM and other name brand printers and typewriters. 
Lexmark's products are sold in more than 15,000 retail outlets 
in more than 150 countries. 

LXK consolidated this last week and is sitting right on its 
20-dma. We still like LXK with earnings on the 26th of January. 
Remember, holding over earnings is risky. In the case of LXK, 
the risk might be justified if they announce a stock split. 
Each individual has to weigh out the risk themselves. 

LXK hasn't had any news the last few days. These last few 
weeks have seen LXK get recommended by many different 
professionals as a great stock to own for 1999. Remember, 
LXK has had an average earnings surprise of 11.75% over the 
last four quarters. This could help propel LXK higher before 
earnings on the expectation. There are different earnings dates 
listed on the web, but First Call does list the 26th of January. 
We will continue to try to get a fixed date from investor 

BUY CALL FEB- 95 LXK-BS OI= 53 at $ 9.38 SL=6.75 ITM $3.06 
BUY CALL FEB-100*LXK-BT OI=514 at $ 7.38 SL=5.25 
BUY CALL FEB-105 LXK-BA OI=284 at $ 5.00 SL=3.25
BUY CALL APR-100 LXK-DT OI= 52 at $11.75 SL=9.25
BUY CALL APR-105 LXK-DA OI= 40 at $ 9.50 SL=7.00

Picked on Dec 15th at    $88.38   P/E = 29
Change since picked:     + 9.68   52 week low =$ 33.63
Analysts' ratings     1-4-1-0-0   52 week high=$103.50
Last earnings  10-98 est= $ .79   actual= $.81
Next earnings  01-26 est= $1.09   prior = $.78
Chart = http://quote.yahoo.com/q?s=LXK&d=3m
EMC - EMC Corporation $100.06 (+6.50)(+8.56)(+3.38)(+.13)

EMC is a Fortune 500 company that designs, manufactures,
markets an 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.  

There really wasn't any news last week on EMC.  We think the
real story happened on Thursday, when the NASDAQ was down and
EMC went up.  This suggests that there are still a lot of
buyers who want EMC stock.  This was confirmed by the move EMC
made on Friday.  We continue to read  articles that discuss EMC
being in model portfolios of 20 to 30 growth stocks.  There was
an article in MSN MoneyCentral about EMC being one of the top
30 growth stocks.  EMC has been, and is continuing to be, a
great momentum stock.

EMC took off again on Friday.  It set a new 52 week high on
Friday, and closed near the high.  As we discussed above, EMC
is one of those stocks that people keep buying.  As long as
there are buyers of the stock, we believe it will continue with
it's momentum.  EMC is also a split candidate.  We know we keep
saying this, but as it continues to move up, it only increases
the probability of a split.  A year ago this last November EMC
split at around $63 after a strong move.  FYI - EMC reports
earnings before the open on 1/26.

BUY CALL FEB- 95 EMC-BS OI=1072  at $10.75 SL= 8.50
BUY CALL FEB-100*EMC-BT OI=3511  at $ 8.25 SL= 6.25
BUY CALL APR- 95 EMC-DS OI= 540  at $15.50 SL=11.75
BUY CALL APR-100 EMC-DT OI=2619  at $12.88 SL=10.50

Picked on Nov 8th at $69.06     PE=58
Change since picked  +31.00     52 week low =$ 23.50
Analysts Ratings 10-4-0-0-0     52 week high=$100.19
Last earnings  9-98 est=.36     actual=.38
Next earnings  1-26 est=.46     versus=.32
Chart = http://quote.yahoo.com/q?s=EMC&d=3m
XIRC – Xircom Inc. $39.88 (+1.38)(+4.50)(+1.25)

Xircom makes adapters that connect portable PCs to corporate 
networks, the Internet, and commercial online services. The 
company's products include adapter/modem cards (CreditCard 
Ethernet+Modem), network adapters for portable PCs (Pocket 
Ethernet Adapter, Pocket Token Ring Adapter), and modem-only 
PC cards (CreditCard Modem). Xircom sells its products to 
original equipment manufacturers and through a worldwide 
network of distributors, value-added resellers, and computer 
retailers. Over half of its income is from foreign sales. 
Intel owns 11% of Xircom; chairman and CEO Dirk Gates owns 
about 5%.

XIRC is expecting to announce earnings that are 300% higher
than the same quarter last year.  With the large earning
surprises XIRC has had the last four quarter, a nice run 
could develop into earnings. Though a split isn't likely, 
the company has enough shares to announced one. There is 
no split history for XIRC.  XIRC reached a new 52-week high
on Friday when it hit $40.50.

XIRC was recently selected as one of the best mobile PC cards. 
Its product will be competing with 3COM and a few others for 
the best mobile PC card.  This award ceremony is put on the 
Mobility Awards. 3COM is one of the biggest competitors of XIRC. 

BUY CALL FEB-35 XQR-BG OI= 41 at $6.63 SL=4.75 ITM $4.88 
BUY CALL FEB-40*XQR-BH OI=467 at $3.75 SL=2.25
BUY CALL MAR-35 XQR-CG OI=127 at $7.50 SL=5.75 ITM $4.88 
BUY CALL MAR-40 XQR-CH OI=116 at $4.88 SL=3.00
BUY CALL JUN-40 XQR-FH OI= 55 at $7.38 SL=5.50  

Picked on Jan.9th at    $38.50    PE = 28
Change since picked      +1.33    52 week low =$ 9.25
Analysts Ratings     4-2-1-0-0    52 week high=$40.50
Last earnings on 10-98 est=.25    actual=.33
Next earnings on 01-21 est=.34    versus=.11
Chart = http://quote.yahoo.com/q?s=XIRC&d=3m


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             1-17-98
Sunday                4  of  7

© 1998 The Option Investor Newsletter. - All Rights Reserved
DELL - Dell Computer $79.00 (+1.19)(+4.62)(P3W+6.00)

Dell is the largest direct sales PC manufacturer in the 
world, listed at 125th in the Fortune-500 and 343rd in the 
Global-500 of top companies, with $16.8 billion in sales 
over the last 4 quarters. Dell has consistently 
outperformed any other major stock for price performance. 
Dell is up +1200% in the last five years and has split 
their stock five times in the last three years, two times 
in 1998 alone.  Dell is a low price, high margin producer 
because it has only 6 days of inventory and doesn't have to 
pay its suppliers (some who manufacture in Asia) until 8 
days later. Since Dell gets paid before it manufactures a 
box, they have a huge cash float—can you say "83% return on 
equity?"  In late December, they announced a multi-year 
marketing deal with AOL to place AOL on all Dell desktops. 
In its server business, Dell managed a 62% year over year 
sequential revenue growth.  With over 200 product and 
service awards earned during 1998, Dell has not forgotten 
its manufacturing and marketing prowess

Veteran readers may recall our obituary to DELL written in 
October.  For those who missed it, "It is not often we have 
to write an obituary for a great play but for those of us 
still in denial, Dell may be dead.  We still think Dell is 
a great company.  Great earnings, great sales, growing at 
+50%, opening new markets.  We think the problems are 
many."  We assumed that the shares in float, now totaling 
about 980 million (that's "m", not "b"), had split so many 
times, so as to dilute the stock's ability to have big 
daily run-ups or even bigger earnings per share surprises.  
We reasoned it now takes an additional $10 million of 
earnings to create $.01 per share surprise.  Dell used to 
surprise us by $.05 routinely—pretty hard now to hide $50 
million quarterly from Wall Street, especially for an 
earnings surprise.  In essence, Dell's ratio of daily 
turnover compared to shares in float couldn't move the 
price as much.  To add insult to injury, Dell really 
flattened out after its last split run to $69, where it 
fell back to languish in the $60-$66 range.  In early 
November, DELL spiked up  to $72 in anticipation of another 
earnings surprise but couldn't hold it after the 
announcement.  So we dropped it despite its sound 
fundamentals.  Now, Dell's back.

From their 10Q filed with the SEC December 14th, we glean 
the following: During the third quarter and first nine 
months of fiscal 1999, enterprise unit sales increased 112% 
and 165%, respectively, compared to the third quarter and 
first nine months of fiscal 1998, and increased 
sequentially 13% over the second quarter of fiscal 1999. 
Notebook unit sales increased 141% and 123% in the third 
quarter and first nine months of fiscal 1999, compared to 
the same period of the prior fiscal year, and increased 
sequentially 16% over the second quarter of fiscal 1999. 
Net revenue increased in all geographic regions in the 
third quarter and the first nine months of fiscal 1999 as 
compared to the same periods of fiscal 1998. Net revenue 
for the third quarter of fiscal 1999 compared to the third 
quarter of fiscal 1998 increased 46% in the Americas, 68% 
in Europe and 49% in Asia-Pacific and Japan. Net revenue 
for the first nine months of fiscal 1999 compared to the 
first nine months of fiscal 1998 increased 48% in the 
Americas,67% in Europe and 39% in Asia-Pacific and Japan. 

Nowadays, this stuff barely makes the news.  We think their 
price would be higher if it did.

The first week of January, Dell announced that it will 
begin shipping Precision Workstations with the new 450 MHz 
Xeon chip, Celeron-based desktops and Genesis chip based 
flat screened monitors(reasonably priced too!), all while 
cutting the prices of its Precision Workstations by 7.7%.  
Last week, they began offering their new Latitude LT ultra-
light notebooks weighing just over 3 lbs.  Over the Holiday 
season, industry-wide average selling prices dropped below 
$1000; not at Dell. "The high-end has disappeared from 
retail, but it hasn't totally gone away. It has gone to 
Dell and Gateway," states a Dow Jones article.  Dell 
investor relations say that driven by an increase in 
industry events, Dell will have more news opportunities 
beginning in February. Technicals not so hot after the 
Brazil news week.  But even with lack of headline news, 
investors are still piling into Dell, up more than $1 
during a negative 300 point week on the DOW.  

All told (sentiment, business model, recent quiet, earnings 
coming) we think Dell is already getting more notice prior 
to earnings (scheduled Tuesday, February 16th, after market 
close) and will give us that run-up one more time.  Now's 
the time to scale into a position 

BUY CALL FEB-75 DLQ-BO OI=18306 at $8.38 SL=6.50, ITM
BUY CALL FEB-80*DLQ-BP OI=19747 at $5.63 SL=3.75
BUY CALL MAY-85 DLQ-EQ OI= 9798 at $9.25 SL=6.75

Picked on Jan. 6th at $75.25      PE = 74
Change since picked  +$ 3.75      52 week low =$19.81
Analysts Ratings 12-8-10-0-0      52 week high=$82.25
Last earnings 10/98 est= .27      actual=.28 surprise +3.7%
Next earnings 02-16 est= .31      versus=.20
Chart = http://quote.yahoo.com/q?s=DELL&d=3m
SUNW - Sun Microsystems $100.44 (+9.56)(+5.25)(+2.32)(+0.62)

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 Wednesday, Sun Microsystems flew up to $104.50 in intraday 
trading on false rumors.  By the end on the week, SUNW added 
+$9.56 based on facts.  The company is leading the charge into 
the future.  This week, SUNW announced many developments 
including its end to end computing platform to be used in
telecommunication services, adapted Java to be incorporated 
into the digital TV industry, and several other product and 
service advancements.  Earnings for SUNW will be reported on 
Jan. 21st.  We are predicting a stock split announcement at 
that time as well.  If the market conditions continue to 
improve like they did on Friday, look for Sun to continue 
its upward trek.   

Other News:  Morgan Stanley Dean Witter raised its 12-month
price target for SUNW to $132, up from the previous price of
$104.  Scott McNealy, Chairman, CEO, and President of Sun 
Microsystems will give his thoughts on the future of network 
computing in business in the next century at a seminar called
 "PAYMENTS 99: How to Compete and Prosper in the World of 
Electronic Commerce" which will be held in April in Atlanta.

BUY CALL FEB- 95 SUQ-BS OI=6524 at $11.00 SL= 8.75
BUY CALL FEB-100*SUQ-BT OI=4610 at $ 8.38 SL= 6.50
BUY CALL APR- 95 SUQ-DS OI=2464 at $15.00 SL=11.75
BUY CALL APR-100 SUQ-DT OI=1867 at $12.50 SL=10.50

Momentum Play

Chart = http://quote.yahoo.com/q?s=sunw&d=3m
Retail  - Sector
MYG - Maytag $64.25 (+0.25)(+1.75)(+0.50)(+1.81)(+1.44)(+1.81)

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 
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.

Wheew!  That was close!  With factors like impeachment and 
Brazil rocking the market, we were beginning to think this 
would be the week Maytag ended its streak.  But no, our steady 
steamer pulled it out on Friday by annexing +$1.00.  It 
finished in the green for the eighth consecutive week in a 
row.   The turn around on Friday reaffirmed that MYG is still 
venturing higher.  Maytag remains a split candidate and 
announces their earnings on Feb. 4th.  We are hoping for a 
3:2 split, but that might not come until the shareholder 
meeting in May.  

News on the week:  On Friday, Maytag made one of its rare 
appearances in the news.  It signed an agreement to buy Jade 
Range, a high-end appliance manufacturer.  Maytag hopes the 
addition will augment their ability to develop new ideas and 
increase customer satisfaction.

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

BUY CALL FEB-60 MYG-BL OI= 248 at $5.38 SL=3.75
BUY CALL FEB-65 MYG-BM OI= 478 at $2.13 SL=1.00
BUY CALL APR-60 MYG-DL OI= 619 at $6.63 SL=4.75
BUY CALL APR-65*MYG-DM OI= 560 at $3.75 SL=2.50

Momentum play only

Chart = http://quote.yahoo.com/q?s=myg&d=3m
ETH – Ethan Allen Interiors, Inc. $48.94 (+6.94)(+1.00) 

Ethan Allen Interiors manufactures quality home furnishings. 
A vertically integrated company, Ethan Allen has three saw-
mills and about 20 furniture factories: These make the 
majority of Ethan Allen furnishings that are sold all over 
the country through a network of more than 300 stores. Most 
of the stores are operated by independent dealers who are 
required to deal exclusively in Ethan Allen products and 
follow preset guidelines. Products created by the company 
include sofas, love seats, area rugs, lighting products, 
and floor coverings. Styles featured in Ethan Allen stores 
include Formal, American Country, Casual Contemporary, and 
Classic Elegance.

ETH has been on a tear lately, going up 8 of the last 9 days.
ETH announced earnings on the 13th, two cents better than
estimates.  This was the 14th consecutive quarter that ETH has
increased its earnings.  ETH is still $18 away from its 52-
week high reached in late March.  We feel with the earnings
announcement momentum, and the strong housing in the U.S.,
that ETH can continue to trade upward.  Next resistance is in
the $52 range.

The only news of late on ETH is the great earnings it posted
on the 13th of January.  Managed stores increased sales by 23%.
Watch for a positive move through the $50-52 range before
initiating new plays.

BUY CALL FEB-45*ETH-BI OI=261 at $5.63 SL= 3.50 ITM $3.94
BUY CALL FEB-50 ETH-BJ OI=216 at $2.69 SL= 1.35 
BUY CALL MAY-45 ETH-EI OI= 86 at $7.75 SL= 6.00 ITM $3.94
BUY CALL MAY-50 ETH-EJ OI=  0 at $5.25 SL= 3.50 
BUY CALL AUG-50 ETH-HJ OI= 23 at $6.75 SL= 5.00
(50 is highest strike)

Picked on Jan 14th at  $48.94   PE=30
Change since picked     +0.00   52 week low =$23.63
Analysts Ratings    2-8-1-0-0   52 week high=$66.63
Last earnings   01-99 est=.73   actual=.75
Next earnings   04-14 est=.73   versus=.64
Chart = http://quote.yahoo.com/q?s=ETH&d=3m
Miscellaneous  - Sector
FTL - Fruit of the Loom $16.69 (-1.81) 
Fruit of the Loom is a global manufacturer of activewear
and casualwear products, men's and boy's underwear, women's
and girl's underwear, infant and toddler wear, printable 
outerwear, sportwear.  Under the "Fruit of the Loom" BVD,
Munsingwear, Wilson, Pro Player, Gitano, Best and the 
Cumberland Bay labels. 

We added FTL last week on very strong rumors of a possible
take over bid coming from an unknown source.  The dollar 
figure was for a $23.00 cash buyout. Several times this week,
trading had been halted for large block orders to fill. Giving
us positive feelings of a pending announcement.  After five
days of constant monitoring of the newswires with no results.
We turned to the trusty (yea right) chat rooms.  Just no news 
out there on this one.  No one at the Chicago based company
was available for comment.  This begs the question.  Could
this be like your child at play? When it gets too quiet in 
the house, could something be up?  Remember, takeover plays
are inherently riskier than most due to their vulnerability 
to both bad news or lack of news.

On Friday, even with the unbelievable bounce back of the 
markets, FTL did not run with the crowd. Opening at $17.06
then floating to $17.37 through out the day.  It closed just
above its daily low to at $16.69.  Slowing volatility and 
decreasing volume could mean caution for players on this 
BUY CALL FEB-15.00 FTL-BC OI= 731 at $3.50 SL=1.75 ITM 1.69
BUY CALL FEB-17.50*FTL-BW OI=1986 at $2.18 SL=1.00 
BUY CALL MAY-15.00 FTL-EC OI= 147 at $4.50 SL=2.75
BUY CALL MAY-17.50 FTL-EW OI= 238 at $3.25 SL=1.50 

Takover play -

Chart = http://quote.yahoo.copm/q?s=FTL&d=3m
COF – Capital One Financial $130.44 (+3.13)(+12.31)

Capital One Financial, a financial services holding company, 
is the parent for Capital One Bank, one of the US's top 10 
credit card companies. Using the information on consumers in 
its massive databases, the company solicits Visa and 
MasterCard customers by mail. The company's 3,000 variations 
of annual percentage rates, credit limits, finance charges, 
and fees range from platinum and gold cards for preferred 
customers to secured and unsecured cards for customers with 
limited credit histories. Other subsidiaries include a 
federally chartered savings bank that offers credit cards, 
consumer lending, and deposit services and a company that 
provides internal support services. 

COF had a pretty good comeback on Friday with a gain of $3.25.
Earnings are scheduled for the 19th of January and there is a
decent chance that a split could be announced.  COF is trading
near its all-time highs, but has no history of splits. Once
again, there is a large risk associated with holding over 
earnings.  However, COF is expected to turn in some strong 

Preliminary numbers for credit card numbers are looking very 
positive for the holiday season. An analyst at JP Morgan feels 
that COF outperformed its peers. An analyst at Goldman Sachs 
stated; "The combination of strong fees driven by account 
growth improvement in core credit is likely to produce very 
strong earnings visibility at both Capital One and Providian." 
Earnings are expected to come in strong. 

BUY CALL FEB-125 COF-BE OI=124 at $12.00 SL= 9.50 ITM $5.44
BUY CALL FEB-130*COF-BF OI=218 at $ 9.38 SL= 7.00
BUY CALL FEB-135 COF-BG OI= 84 at $ 7.13 SL= 5.25
BUY CALL MAR-135 COF-CG OI=  0 at $ 9.63 SL= 7.00 (NEW STRIKE)
BUY CALL JUN-135 COF-FG OI= 10 at $16.00 SL=12.5O (NEW STRIKE)

Picked on Jan 14th at $127.18   PE=30
Change since picked     +3.26   52 week low =$ 50.56
Analysts Ratings    9-4-3-0-0   52 week high=$132.50
Last earnings  10-98 est=1.00   actual=1.00
Next earnings  01-19 est=1.04   versus= .86
Chart = http://quote.yahoo.com/q?s=COF&d=3m
DIS - Disney $35.75. (+3.32)

Striving to be the premier entertainment company, Disney 
has revenues of $10,055.1 million. It is involved in 
movies, television, theme parks and resorts, home video, 
travel, books, music, theater, and creative design. 
Recently, It has added an Internet portal in a joint 
venture with Infoseek, in which it has a 43% stake.

The past year has been tough for Disney, due to high 
programming costs at its ABC division, and to weak demand 
for its products in Asia. On Jan. 13, Brown Brothers 
lowered its short term view of DIS from buy to neutral, but 
raised its long view from neutral to buy. Last week Merrill 
Lynch's Jessica Reif Cohen lowered earnings estimates for 
the current fiscal quarter from .27 to .23, and for the 
fiscal year ending Sept. 1999 from .91 to .86. She cited 
softness in consumer products and broadcasting operations, 
and continued weakness in Asia. However, three other 
analysts believe the stock is oversold and that DIS is 
experiencing a recovery. On Jan.12th, Goldman Sachs raised 
their rating from Neutral to Outperform, and Soloman Smith 
Barney raised theirs from Neutral to Buy. On Jan. 11th, ING 
Baring Furman Selz upgraded DIS to Buy from Hold. On Jan. 
12th, Disney and Infoseek launched their new Internet portal 
site, Go Network (www.go.com). Numbers show that it will be 
one of the top 5 sites on the Internet. Following the 
upgrades and the new portal launch, Disney stock has 
performed well. Its chart looks good and it has pushed 
through the major moving averages. Although it was down 
yesterday along with a lot of other stocks, and slightly 
lower today, it is still up $3.32 for the week.

Disney's ABC division has worked out final details for 
2,000 production and technical workers to return to work 
following a lockout that began after a one day strike on 
Nov. 3rd. The union agreed to give a warning before going on 
strike. Their contract had expired in 3/97. The company has 
named Thomas Schumaker a new president and put him in 
charge of its animated movie and theater business. Also, 
DIS may be interested in Livent Inc., a theater company.
With the market heating up again, Disney shouldn't be far
behind.  Earnings are expected Jan.27th.

BUY CALL FEB-35*DIS-BG OI=2761 at $3.00 SL=$1.50
BUY CALL FEB-40 DIS-BH OI=1689 at $ .81 SL=$0.00
BUY CALL APR-35 DIS-DG OI=8078 at $4.00 SL=$2.50
BUY CALL APR-40 DIS-DH OI=6098 at $1.94 SL=$1.00
BUY CALL JUL-40 DIS-GH OI=1057 at $3.25 SL=$1.50
Picked on Jan 14th at   $36.06         P/E=33
Change since picked:     -.31         52 week low= $22.50
Analysts' ratings 2-10-11-0-0         52 week high=$42.78
Last earnings    9/98 est=.15 act=.16  surprise=7%
Next earnings   01-27 est=.26 versus .36
Chart = http://quote.yahoo.com/q?s=DIS&d=3m
UTX - United Technologies Corp. $109.69 (-5.00)(+5.94)

UTX makes a variety of products, from elevators to air
conditioners. Its subsidiary Carrier is the world's largest
maker of heating and air-conditioning systems.  It manufactures
and services heating, ventilating, and refrigeration equipment. 
UTX's Otis is the world's #1 elevator manufacturer; it also
makes and services escalators, moving sidewalks, and shuttle
systems.  Its subsidiary Hamilton Standard produces engine
controls, environmental systems, propellers, and other flight
systems. Another subsidiary Pratt & Whitney makes engines for
both commercial and military aircraft.  The company's Sikorsky
unit makes helicopters

We are amazed at the number of varied businesses of UTX.  For
example, last week UTX announced that its Hamilton Standard
unit signed a letter of intent to joint venture with KLM Royal
Dutch Airlines to focus on the maintenance of pneumatic
aircraft components.  In the press release it indicated that
its Hamilton unit also makes space suits for the NASA shuttle
program.  Otherwise, if you look at the new clipping services
such as Yahoo!Finance, the clippings all involve the movement
of the Dow.  UTX is a Dow 30 component.  Last split was 12/96
in the $130 to $140 range, but this was after a strong run up
from the announcement.  There is a possibility of another
split announcement with earnings on Thursday.  UTX has enough
shares for a 2:1.

You might be asking yourself, why we are leaving UTX on the
current play list.  It closed a below its 10 day moving average
and doesn't look like a healthy momentum stock.  We are leaving
it on the play list because it is very Dow reactive.  If we get
a good move in the Dow, UTX could be a good play.  UTX's beta
is 1.10.  Last week, however, the Dow dropped 3.13% and UTX
dropped 4.36%.  This would make its beta, for last week, equal
to 1.4.  Therefore, if the Dow makes a nice move up next week,
UTX may make a good play.  Remember, UTX reports earnings on
1/21, and we don't recommend holding over earnings release
dates unless you think the stock will split.  This is a tough
call but the safe move is to avoid it.

BUY CALL FEB-110 UTX-BB OI=164 at $4.75 SL=3.25
BUY CALL FEB-115*UTX-BC OI=184 at $2.63 SL=1.25
BUY CALL MAY-110 UTX-EB OI= 96 at $8.13 SL=6.25
BUY CALL MAY-115 UTX-EC OI=190 at $6.00 SL=4.25

Picked on Jan 10th at $114.69   PE=22
Change since picked     -5.00   52 week low =$ 67.00
Analysts Ratings    8-4-4-0-0   52 week high=$115.81
Last earnings  09-98 est=1.36   actual=1.41
Next earnings  01-21 est=1.11   versus= .97
Chart = http://quote.yahoo.com/q?s=UTX&d=3m

Clear Channel Communications is a diversified media company
that owns or programs radio and television stations and is
one of the largest domestic outdoor advertising companies
based on its total advertising display faces.  Currently they
own stations located principally in the South, Southeast, 
Southwest, Northeast and Midwest, employing a wide variety 
of programming format, such as News/Talk/Sports, Country, 
Adult Contemporary, Urban and Album Rock.

Recommending a communication company with radio stations,
while the technical stocks, especially the Internet area is
in everyone's gun sites?  Yep, read on.  CCU this week, joined
a consortium of other communication companies; Jaycor, 
Chancellor, Heftel broadcasting, just to name a few.  
This group has been investing in a Maryland company, USADigital 
Radio Inc.  USADigital is developing a crystal clear digital 
signal.  This CD-quality sound along with the digital technology 
would allow the radio stations (you guessed it) to offer 
e-mail, Internet access and other data services over existing 

On January 4th, CCU bounced off of support of $52.00.  Then
raced towards it's resistance of $60.00 on January 8th. It then
retraced to $55.50 and as of Friday, closed over its $60.00 
resistance giving it new support at $60.00 for the coming week.
Watch for a strong opening on Tuesday, but don't be fooled. 
Wait for a little pull back and positive movement before 
taking this one on. 

BUY CALL FEB-55 CCU-BK OI= 484 AT $7.37 SL=5.50
BUY CALL FEB-60*CCU-BL OI= 220 AT $4.00 SL=2.50
BUY CALL FEB-65 CCU-BM OI= 331 AT $2.12 SL=1.00
BUY CALL APR-60 CCU-DL OI=  52 AT $6.00 SL=4.25
BUY CALL APR-65 CCU-DM OI= 214 AT $4.25 SL=2.50

Picked on Jan. 17 at $60.44     PE=208
Change since picked    0.00     52 week low =$31.00
Analysts Ratings 12-2-3-0-0     52 week high=$62.31
Next earnings 02-10 est=.09     versus=.-18
Chart = http://quote.yahoo.com/q?s=CCU&d=3m

The Option Investor Newsletter            1-17-98
Sunday                5  of  7

© 1998 The Option Investor Newsletter. - All Rights Reserved
Trading lessons...

This week we are going discuss one of the many pitfalls that you
will eventually encounter as a trader; Incorrect Information...

Occasionally, we will discover an error in a stock or option quote
and usually it comes to us "the hard way". Last week, we offered
a position on Reliance Bancorp (RELY) and it turns out that the
option quoted was for another stock. It was not a research error
or miss-type, just erroneous quote information provided to the
trading public. One of our faithful readers had the unfortunate
experience of buying into this play on the assumption that the
option existed. We received permission to reprint portions of his
remarks to educate our readers. Here is the general narrative;

"I did my 'due diligence' on the options play with Reliance
Bancorp but like a growing number of people this was all handled
on-line with me as the only human in the food chain willing to
take any chances. Oddly though, I did speak to two other people
in this and got an interesting mix of answers.

I used (two common brokerages; names deleted) for my information,
perhaps using two separate entities was my downfall here. One
stated just as you did that there was a Reliance, FEB25-Call at
the same bid as you published. If fact, it showed an array of
options for Reliance. However, come to find out they were Verio.

I then bought shares of Reliance on-line through another broker in
my IRA with the intention of selling calls against them the next
day. When I entered the ticker symbol to 'sell calls to open', I
was greeted by a statement about Verio. Calling the broker, I was
told that the ticker symbol was in fact for Verio but only the Feb.
call. I then contacted the option trading desk and found that the
ticker symbol belonged to Verio and there were no options on RELY
at all. I was fooled by the apparent presence of options at one
brokerage, which tells me that I need to do all my research
through the top name brokerage." 

The reader went on to point out that; "It turned out to be the
systems that were fouled up and not the analysis, all information
that is received on-line or through humans should be verified
before investing...I sure plan to do so from now on!"

Words of wisdom for sure!


Stock  Price  Last   Mon  Strike  Opt    Profit   ROI   Monthly
Sym    Picked Price       Price   Bid    /Loss          ROI

DOSE    4.06   7.06  Jan   5.00  0.50  *$  1.44  40.4%  29.3%
ITVU   17.69  24.50  Jan  15.00  3.25  *$  0.56   3.9%  16.9%
APLX    4.94   5.00  Jan   5.00  0.63   $  0.69  16.0%  13.9%
MCHM    8.44   8.63  Jan   7.50  1.38  *$  0.44   6.2%  13.5%
DBCC   17.81  21.75  Jan  15.00  3.63  *$  0.82   5.8%  12.6%
MCHM    8.25   8.63  Jan   7.50  1.63  *$  0.88  13.3%  11.6%
CYCH   20.69  19.75  Jan  17.50  3.63  *$  0.44   2.6%  11.2%
FILE   10.38  11.50  Jan  10.00  1.44  *$  1.06  11.9%  10.3%
NTKI   15.75  15.44  Jan  12.50  4.00  *$  0.75   6.4%   9.2%
CYCH   15.00  19.75  Jan  12.50  3.00  *$  0.50   4.2%   9.1%
NOVT   24.06  25.44  Jan  22.50  2.88  *$  1.32   6.2%   9.0%
WAVO    9.38   9.38  Jan   7.50  2.31  *$  0.43   6.1%   8.8%
SPYG   20.88  18.13  Jan  17.50  4.38  *$  1.00   6.1%   8.8%
BMP    24.56  24.25  Jan  20.00  6.00  *$  1.44   7.8%   8.4%
ITVU   13.25  24.50  Jan  10.00  4.13  *$  0.88   9.6%   8.4%
EGGS   20.88  23.25  Jan  17.50  4.00  *$  0.62   3.7%   8.0%
SYBS    7.81   8.28  Jan   7.50  0.94  *$  0.63   9.2%   8.0%
VRTY   22.50  35.06  Jan  20.00  4.13  *$  1.63   8.9%   7.7%
HDL    12.94  13.13  Jan  12.50  1.44  *$  1.00   8.7%   7.6%
PPRT   13.88  13.13  Jan  12.50  2.25  *$  0.87   7.5%   6.5%
EOG    16.94  16.81  Jan  15.00  2.75  *$  0.81   5.7%   6.2%
PPOD    6.75   8.25  Jan   5.00  2.13  *$  0.38   8.2%   6.0%
MANU   13.75  15.38  Jan  10.00  4.25  *$  0.50   5.3%   5.7%
VIRS   12.75  14.13  Jan  10.00  3.25  *$  0.50   5.3%   5.7%
VOLVY  23.75  27.75  Jan  20.00  4.75  *$  1.00   5.3%   5.7%
DBCC   17.81  21.75  Jan  12.50  5.63  *$  0.32   2.6%   5.7%
MICA   17.13  17.00  Jan  12.50  5.25  *$  0.62   5.2%   5.7%
MWHS   28.38  43.50  Jan  25.00  5.13  *$  1.75   7.5%   5.5%
VSVR   16.75  17.13  Jan  15.00  2.44  *$  0.69   4.8%   5.2%
SDTI   18.31  27.50  Jan  15.00  4.13  *$  0.82   5.8%   5.0%
PTVL   14.69  22.50  Jan  10.00  5.13  *$  0.44   4.6%   5.0%
ABTX   12.69  14.38  Jan  10.00  3.25  *$  0.56   5.9%   4.3%
SER     6.38   6.13  Jan   5.00  1.63  *$  0.25   5.3%   3.8%
CYLKE   4.31   3.81  Jan   5.00  0.50   $  0.00   0.0%   0.0%
TERA    7.88   6.63  Jan   7.50  1.19   $ -0.06  -0.9%   0.0%
IMNR   13.13  10.25  Jan  12.50  2.00   $ -0.88  -7.9%   0.0%
TDFX   16.44  12.38  Jan  15.00  2.44   $ -1.62 -11.6%   0.0%
PSCX   11.31   8.00  Jan  10.00  2.19   $ -1.12 -12.3%   0.0%
TOK     9.75  11.00  Feb  10.00  1.63  *$  1.88  23.2%  14.4%
MCRE    5.38   7.63  Feb   5.00  1.25  *$  0.87  21.1%  13.1%
ARTT    7.38   8.00  Feb   7.50  1.13  *$  1.25  20.0%  12.4%
BID    32.25  32.13  Feb  30.00  5.88  *$  3.63  13.8%   8.5%
DOSE    6.50   7.06  Feb   5.00  2.00  *$  0.50  11.1%   8.0%
SDTI   22.00  27.50  Feb  20.00  4.38  *$  2.38  13.5%   7.3%
PPOD    6.81   8.25  Feb   5.00  2.31  *$  0.50  11.1%   6.9%
ABTE    8.75   9.50  Feb   7.50  1.88  *$  0.63   9.2%   6.6%
GALTF  25.50  26.25  Feb  22.50  5.38  *$  2.38  11.8%   6.4%
CHRX   21.38  21.25  Feb  20.00  3.13  *$  1.75   9.6%   6.0%
NEWZ   11.63  13.00  Feb  10.00  2.44  *$  0.81   8.8%   5.5%
BNYN   14.44  15.75  Feb  10.00  5.13  *$  0.69   7.4%   5.4%
ARTT    7.38   8.00  Feb   5.00  2.75  *$  0.37   8.0%   5.0%
PTVL   22.19  22.50  Feb  15.00  8.13  *$  0.94   6.7%   4.8%
PTVL   18.38  22.50  Feb  12.50  6.88  *$  1.00   8.7%   4.7%
NSTA   26.25  24.00  Feb  25.00  4.13   $  1.88   8.5%   4.6%
OXHP   20.06  18.88  Feb  17.50  3.38  *$  0.82   4.9%   3.6%
OXHP   20.06  18.88  Feb  20.00  2.00   $  0.82   4.5%   3.3%
SYMM    8.56   6.75  Feb   7.50  1.88   $  0.07   1.0%   0.8%

-ROI is equal to the profit (or loss) divided by the cost-basis.
 Monthly ROI represents the return on a monthly basis.
 Example: a 10% return in 20 days equals 15.2% ROI for a month).
-Margin is not used in any calculations.
-Profit/Loss Column: Asterisk indicates stock price above strike 
 price and should be called.  Stock that will not be called is 
 assumed sold at current price (for tracking purposes).


Determining when to exit a play is a matter of personal preference
but we strongly recommended closing any play that falls more than
20% below the initial cost-basis. Some positions may eventually
become profitable but it is generally more productive to exit a
losing play and move your capital into another prospective trade.

OI - Open Interest
CB - Cost Basis (Prc pd - Prm rec'd = CB, the break-even point)
RC  - Return Called
RNC - Return Not Called (Stock Price Unchanged)

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

ARTT    8.25  Feb  7.50  AOQ BU  1.44  375    6.81  10.13%  10.13%
BTIM   18.50  Feb 15.00  QBO BC  4.88  109   13.62  10.13%  10.13%
INFS   11.38  Feb 10.00  IQL BB  2.06  147    9.32   7.30%   7.30%
ITVU   24.50  Feb 17.50  QYU BW  8.13  33    16.37   6.90%   6.90%
MCHM    8.75  Feb  7.50   QQ BU  1.94  120    6.81  10.13%  10.13%
MRVT   15.13  Feb 12.50  SQD BV  3.25  35    11.88   5.22%   5.22%
MWY    10.88  Feb 10.00  MWY BB  1.50  537    9.38   6.61%   6.61%
PLCM   25.88  Feb 25.00  QHD BE  3.00  109   22.88   9.27%   9.27%
QNTM   26.88  Feb 25.00  QNQ BE  3.75  4697  23.13   8.08%   8.08%
SPNSF  10.13  Feb 10.00  QHH BB  1.25  372    8.88  12.61%  12.61%

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

SPNSF  10.13  Feb 10.00  QHH BB  1.25  372    8.88  12.61%  12.61%
ARTT    8.25  Feb  7.50  AOQ BU  1.44  375    6.81  10.13%  10.13%
BTIM   18.50  Feb 15.00  QBO BC  4.88  109   13.62  10.13%  10.13%
MCHM    8.75  Feb  7.50   QQ BU  1.94  120    6.81  10.13%  10.13%
PLCM   25.88  Feb 25.00  QHD BE  3.00  109   22.88   9.27%   9.27%
QNTM   26.88  Feb 25.00  QNQ BE  3.75  4697  23.13   8.08%   8.08%
INFS   11.38  Feb 10.00  IQL BB  2.06  147    9.32   7.30%   7.30%
ITVU   24.50  Feb 17.50  QYU BW  8.13  33    16.37   6.90%   6.90%
MWY    10.88  Feb 10.00  MWY BB  1.50  537    9.38   6.61%   6.61%
MRVT   15.13  Feb 12.50  SQD BV  3.25  35    11.88   5.22%   5.22%

Sequenced by Return Not Called
Stock  Price  Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym               Price  Symbol  Bid   Intr  Basis

SPNSF  10.13  Feb 10.00  QHH BB  1.25  372    8.88  12.61%  12.61%
ARTT    8.25  Feb  7.50  AOQ BU  1.44  375    6.81  10.13%  10.13%
BTIM   18.50  Feb 15.00  QBO BC  4.88  109   13.62  10.13%  10.13%
MCHM    8.75  Feb  7.50   QQ BU  1.94  120    6.81  10.13%  10.13%
PLCM   25.88  Feb 25.00  QHD BE  3.00  109   22.88   9.27%   9.27%
QNTM   26.88  Feb 25.00  QNQ BE  3.75  4697  23.13   8.08%   8.08%
INFS   11.38  Feb 10.00  IQL BB  2.06  147    9.32   7.30%   7.30%
ITVU   24.50  Feb 17.50  QYU BW  8.13  33    16.37   6.90%   6.90%
MWY    10.88  Feb 10.00  MWY BB  1.50  537    9.38   6.61%   6.61%
MRVT   15.13  Feb 12.50  SQD BV  3.25  35    11.88   5.22%   5.22%

Company Descriptions
ARTT - Advanced Radio Telecom  $8.25  *** Hot Sector ***

ARTT provides wireless broadband telecommunications services 
using microwave transmissions throughout the U.S. Jan 12th 
announced operating results: increasing markets; increasing
buildings to which ARTT has access; number of fully connected
buildings has increased; and customer service orders are up.
Climbing above 150 dma on strong volume with short term BUY
signals and good accumulation.

FEB 7.50 AOQ-BU BID=1.44 OI=375 CB=6.81 RC=10.13% RNC=10.13%

Chart = http://quote.yahoo.com/q?s=ARTT&d=3m
BTIM - BioTime  $18.50    *** Pharmaceutical/Research ***

BioTime, Inc. is a development stage company which is engaged in
the research and development of aqueous based synthetic solutions
which can be used as blood substitutes. Working on Hextend(r) for
replacing blood volume lost during surgery and trauma without the
risk of contamination by blood borne pathogens. Recently filed to
offer shares through a rights offering to its shareholders and
set 1/5/99 as tentative record date. The offering raises capital
without diluting the existing ownership interests. Short-term
technical support around $15.

FEB 15.00 QBO-BC BID=4.88 OI=109 CB=13.62 RC=10.13% RNC=10.13%

Chart = http://quote.yahoo.com/q?s=BTIM&d=3m
INFS - In Focus Systems $11.38  *** Earnings Soon? ***

INFS develops, manufactures and markets multimedia projection 
products and service to present video, audio, graphics and data 
from personal computers, workstations, VCRs/laser disc players.
No recent news since about mid-Dec. Earnings due on Jan 21.
In a stage II climb on strong volume with recent price spike
(speculation on earnings?). The cost basis is just above support
and this stock is technically, a strong looking long term play. 

FEB 10.00 IQL-BB BID=2.06 OI=147  CB=9.32 RC=7.30%  RNC=7.30%

Chart = http://quote.yahoo.com/q?s=INFS&d=3m
ITVU - InterVu  $24.50     *** Internet Connections? ***

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. Leading provider
of video-on-demand and live broadcasts. Recently signed agreements
with OnRadio and INTERVU Inc. Technical short term BUY signals 
have triggered, strong volume and BOP, and 6 month support around
our cost basis. Still hasn't filled it's measured gap (climb) last
Friday so we remain cautious with this ITM candidate.

FEB 17.50 QYU-BW BID=8.13 OI=33 CB=16.37 RC=6.90% RNC=6.90%

Chart = http://quote.yahoo.com/q?s=ITVU&d=3m
MCHM - MachroChem Corp.  $8.75  *** Pharmaceuticals ***

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. The most recent development is the new
preliminary review of a Phase IIB study of Topiglan. This topical
gel formulation of alprostadil for the treatment of male erectile
dysfunction indicates the application is effective in increasing
penile rigidity in patients with significant erectile dysfunction.
Still consolidating around $8.50 as we return for the next month.

FEB 7.50 QQ-BU BID=1.94 OI=120 CB=6.81 RC=10.13% RNC=10.13%

Chart = http://quote.yahoo.com/q?s=mchm&d=3m
MRVT - Miravant Medical Tech.  $15.13  *** Pharmaceuticals ***

MRVT is engaged in the research and development of drugs and 
medical device products for use in photodynamic therapy, a
procedure which uses light-activated drugs to achieve selective 
photochemical destruction of diseased cells. Jan 6 started phase 
III clinical trials to treat the advanced form of age-related 
macular degeneration (AMD). Just closed above the 150 dma with
technical strength increasing and short-term buy signals evident.  

FEB 12.50 SQD-BV BID=3.25 OI=35 CB=11.88 RC=5.22% RNC=5.22%

Chart = http://quote.yahoo.com/q?s=MRVT&d=3m
MWY - Midway Games Inc.  $10.88  *** Gaming Sector ***

Midway Games Inc. designs, publishes and markets interactive 
entertainment software played in both the coin-operated and
home markets. Earnings are due (tentatively) Jan 22. No recent
news since Dec when a downgrade had negligible effect on price.
In a stage I base since Oct and establishing support above $10.

FEB 10.00 MWY-BB BID=1.50 OI=537 CB=9.38 RC=6.61% RNC=6.61%

Chart = http://quote.yahoo.com/q?s=MWY&d=3m
PLCM - Polycom, Inc.  $25.88  *** Stage 2 ***

Polycom, Inc. develops, manufactures and markets teleconferencing 
products that facilitate meetings at a distance. Earnings are due
out this week (20th?). Jan 11, announced Ameritech will now offer 
Polycom's ViewStation to its business customers. In a stage II 
climb, slightly overextended, but technical strength remains,
suggesting a continuance of the current trend. 

FEB 25.00 QHD-BE BID=3.00 OI=109 CB=22.88 RC=9.27% RNC=9.27%

Chart = http://quote.yahoo.com/q?s=PLCM&d=3m
QNTM - Quantum Corporation  $26.88  *** Data Storage ***

Quantum Corporation designs, develops and markets information 
storage products, including high-performance, high-quality 
half-inch cartridge tape drives, tape media, tape autoloaders, 
hard disk drives and solid state disk drives. Earnings due out
Jan 20 at 2:15 pm with a conference call following. Upgraded
last Monday. Strong chart/up trend since the beginning of Jan.
Bullish technical characteristics with good support around $24.

FEB 25.00 QNQ-BE BID=3.75 OI=4697 CB=23.13 RC=8.08% RNC=8.08%

Chart = http://quote.yahoo.com/q?s=QNTM&d=3m
SPNSF - Sapiens International  $10.13  *** New High ***

SPNSF develops, markets and supports enterprise-wide solutions 
for the rapid development of scaleable mission-critical software 
applications. For the fiscal year ended 12/31/97, total revenues 
rose 14% to $44.6 million. Recently awarded an outsourcing 
project valued at several million dollars. Recovered quickly 
from Wednesday's market induced drop and quickly surged to a new
52 week high.  Strong technicals suggest that SPNSF is ready to

FEB 10.00 QHH-BB BID=1.25 OI=372 CB=8.88 RC=12.61% RNC=12.61%

Chart = http://quote.yahoo.com/q?s=SPNSF&d=3m
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 

Stock   Price Month Strike Symbol Price PctRtn   Vol OpnInt
DBCC    21.75  Feb   22.50 BQDBX   5.00  22.99   442   683
DBCC    21.75  Feb   25.00 BQDBE   4.38  20.11  2109   487
HPRT     7.50  Feb    7.50 HQKBU   1.38  18.33    55   162
SRCM    19.75  Feb   20.00  SQBD   3.50  17.72   148   574
PTVL    22.50  Feb   22.50 QUTBX   3.88  17.22    24    30
CYCH    19.75  Feb   20.00 KBQBD   3.13  15.82   206   967
LWN      4.81  Feb    5.00 LWNBA   0.75  15.58   365    10
WAVO     9.38  Feb   10.00 WKQBB   1.44  15.33   239  1358
PTEK     9.63  Feb   10.00 TQOBB   1.44  14.94   878  2684
ARQL     7.25  Feb    7.50 QETBU   1.06  14.66    57   373
ABTE     9.50  Feb   10.00 QZBBB   1.38  14.47    87  1420
SAM     10.00  Feb   10.00 SAMBB   1.44  14.38   207   209
SRCM    19.75  Feb   22.50  SQBX   2.75  13.92   278   952
BNYN    15.75  Feb   17.50 QYNBW   2.19  13.89    77   518
SPGLA    9.03  Feb   10.00 SQEBB   1.25  13.84   317   540
BAANF   12.31  Feb   12.50 BQFBV   1.69  13.71    90  1051
RCNC    22.88  Feb   25.00 RBQBE   3.13  13.66   168   241
BTIM    18.50  Feb   20.00 QBOBD   2.50  13.51   185   463
MRVT    14.88  Feb   15.00 SQDBC   2.00  13.45    29   293
OMKT    14.00  Feb   15.00 OQMBC   1.88  13.39   504  2506
DBCC    21.75  Feb   30.00 BQDBF   2.88  13.22  5457  4502
FTL     16.69  Feb   17.50 FTLBW   2.19  13.11   787  1986
OMPT    12.50  Feb   12.50 QTTBV   1.63  13.00    17   992
AND      9.63  Feb   10.00 ANDBB   1.25  12.99   223   565
UBB     12.06  Feb   12.50 UBBBV   1.56  12.95    35    72
CBTSY   16.63  Feb   17.50 QAGBW   2.13  12.78   338  5643
PTVL    22.50  Feb   25.00 QUTBE   2.88  12.78   182   191
DRMD     5.00  Feb    5.00 DUQBA   0.63  12.50     2   249
IMIC     5.00  Feb    5.00 QVUBA   0.63  12.50    26   145
TRA      6.50  Feb    7.50 TRABU   0.81  12.50     1   526
USWB    29.06  Feb   30.00 QWBBF   3.63  12.47   452  1049
ZITL     4.06  Feb    5.00 ZQIBA   0.50  12.31   170  1772
PCTL     9.69  Feb   10.00 PTQBB   1.19  12.26   160   944
ABTX    14.38  Feb   15.00 QXQBC   1.75  12.17   569  4390
EGGS    23.25  Feb   25.00 EGQBE   2.81  12.10   890  3133
TNFI    12.50  Feb   12.50 QFIBV   1.50  12.00    24   126
AKLM     9.94  Feb   10.00 KKQBB   1.19  11.95   104   311
XYLN    19.97  Feb   20.00 YXQBD   2.38  11.89    67   357
CEPH    10.00  Feb   10.00 CQEBB   1.19  11.88   499  2729
ZAP     12.13  Feb   12.50 ZAPBV   1.44  11.86    43   599
NTKI    15.44  Feb   17.50 QNKBW   1.81  11.74   109   702
TDFX    12.38  Feb   12.50  FQBV   1.44  11.62    84   237
FHS      9.81  Feb   10.00 FHSBB   1.13  11.46    10    50
ADLT     9.81  Feb   10.00 LQYBB   1.13  11.46     4    35
GLFD    14.81  Feb   15.00 GQFBC   1.69  11.39    95    12
PILL     9.88  Feb   10.00 PQQBB   1.13  11.39    40    91
UWW     11.06  Feb   12.50 UWWBV   1.25  11.30   179   895
MICA    17.00  Feb   17.50 MQIBW   1.88  11.03    30   928
HYPT    14.75  Feb   15.00 QPIBC   1.63  11.02  1194   155
AEN     18.75  Feb   20.00 AENBD   2.06  11.00   163   209
GADZ     7.44  Feb    7.50 EQKBU   0.81  10.92    11   375
KMAG    14.88  Feb   15.00 KMQBC   1.63  10.92    15   296
MYGN     9.75  Feb   10.00 GSQBB   1.06  10.90    30   142
ALYD     9.19  Feb   10.00 QLIBB   1.00  10.88    46   808
ESST     7.50  Feb    7.50 SEQBU   0.81  10.83    33   401
CYCH    19.75  Feb   22.50 KBQBX   2.13  10.76    39   528
BNYN    15.75  Feb   20.00 QYNBD   1.69  10.71    29    94
SUPX    12.25  Feb   12.50 TXQBV   1.31  10.71    30   112
QNTM    26.88  Feb   27.50 QNQBY   2.88  10.70   173  1468
PETM     9.94  Feb   10.00 PQMBB   1.06  10.69    25  7343
WDC     19.88  Feb   20.00 WDCBD   2.13  10.69   804  3175
SPYG    18.13  Feb   20.00 YQGBD   1.94  10.69    92   324
DIMD     9.38  Feb   10.00 DAQBB   1.00  10.67   186  1444
AVIR    24.69  Feb   25.00 QCVBE   2.63  10.63    69   367
ZD      17.69  Feb   20.00  ZDBD   1.88  10.60   200  1229
CYBX    11.25  Feb   12.50 QAJBV   1.19  10.56    25    22
GMGC     5.94  Feb    7.50 GGQBU   0.63  10.53   103  1644
GALTF   26.25  Feb   30.00 QFGBF   2.75  10.48   170   343
VLNC     7.75  Feb   10.00 VHQBB   0.81  10.48    40    40
BOBJY   29.88  Feb   30.00 BBQBF   3.13  10.46    20    20
SPLH     9.56  Feb   10.00 QRXBB   1.00  10.46   204   141
EEX      7.19  Feb    7.50 EEXBU   0.75  10.43     8     4
TERA     6.63  Feb    7.50 QIPBU   0.69  10.38    15   665
VLSI    12.06  Feb   12.50 VLQBV   1.25  10.36   222   930
ASYT    24.75  Feb   25.00 QQYBE   2.56  10.35     5    17
PCMS     7.25  Feb    7.50 PQPBU   0.75  10.34   151  1086
STAR     7.31  Feb    7.50 LQSBU   0.75  10.26    58   219
CIEN    18.94  Feb   20.00 EUQBD   1.94  10.23  1741  1383
MLG     12.25  Feb   12.50 MLGBV   1.25  10.20    21   768
UCP      7.38  Feb    7.50 UCPBU   0.75  10.17     9   469
MCHM     8.63  Feb   10.00  QQBB   0.88  10.14     5   430
PSQL    13.63  Feb   15.00 PQSBC   1.38  10.09   165   167
CNDS     7.50  Feb    7.50 KQNBU   0.75  10.00    30   147
ICIX    15.00  Feb   15.00 QIXBC   1.50  10.00    50    49
DBCC    21.75  Mar   22.50 BQDCX   7.25  33.33   319   501
PRTG     4.00  Mar    5.00 GRQCA   1.13  28.13    10   290
DBCC    21.75  Mar   25.00 BQDCE   6.00  27.59   844   132
LCCI     5.00  Mar    5.00 QXCCA   1.25  25.00    10   295
DBCC    21.75  Mar   30.00 BQDCF   5.00  22.99   879   758
DRMD     5.00  Mar    5.00 DUQCA   1.13  22.50    43  1456
MRVT    14.88  Mar   15.00 SQDCC   3.25  21.85    10   250
ZITL     4.06  Mar    5.00 ZQICA   0.88  21.54    10  3978
CYCH    19.75  Mar   20.00 KBQCD   4.13  20.89     4   295
GGUY     4.50  Mar    5.00 GQUCA   0.94  20.83     1    61
CYGN     6.94  Mar    7.50 YNQCU   1.44  20.72    20   277
FOTO     3.75  Mar    5.00 FOQCA   0.75  20.00     7   244
BTIM    18.50  Mar   20.00 QBOCD   3.50  18.92    34   313
GADZ     7.44  Mar    7.50 EQKCU   1.38  18.49     2   202
EGGS    23.25  Mar   25.00 EGQCE   4.25  18.28    20   954
COB      4.19  Mar    5.00 COBCA   0.75  17.91    35  1375
GECM     2.88  Mar    5.00 GQYCA   0.50  17.39     5   240
CYCH    19.75  Mar   22.50 KBQCX   3.38  17.09    16   454
PHL      3.00  Mar    5.00 PHLCA   0.50  16.67    14   368
ABTE     9.50  Mar   10.00 QZBCB   1.56  16.45  1289  1368
ADAX     3.47  Mar    5.00 AQHCA   0.56  16.22    40   197
TERA     6.63  Mar    7.50 QIPCU   1.06  16.04    16  1956
VNTV    11.06  Mar   12.50 QTZCV   1.75  15.82     4   539
SAM     10.00  Mar   10.00 SAMCB   1.56  15.63    25   167
ISSI     4.06  Mar    5.00 IXQCA   0.63  15.38     5   856
AMMB    10.75  Mar   12.50 UKQCV   1.63  15.12    52   649
ICGX    18.63  Mar   20.00 QIGCD   2.75  14.77     1   388
PAGE     6.81  Mar    7.50 PGQCU   1.00  14.68   125   588
MCHM     8.63  Mar   10.00  QQCB   1.25  14.49    10   822
MEDA     4.75  Mar    5.00 MQACA   0.69  14.47    70  1402
NPTH     6.50  Mar    7.50 DQWCU   0.94  14.42     3   122
RCNC    22.88  Mar   25.00 RBQCE   3.25  14.21    58   631
HBI      6.19  Mar    7.50 HBICU   0.88  14.14    28  1454
GSTRF   21.38  Mar   22.50 YVQCX   3.00  14.04     7   561
CELL    17.38  Mar   17.50 QEFCW   2.44  14.03    25   931
DAVX     9.44  Mar   10.00  VQCB   1.31  13.91    30   218
MPN      4.50  Mar    5.00 MPNCA   0.63  13.89     1   258
AFCI    13.75  Mar   15.00 AQFCC   1.88  13.64   947   772
NBTY     6.88  Mar    7.50 NBQCU   0.94  13.64     5  1819
MRVT    14.88  Mar   17.50 SQDCW   2.00  13.45     2   183
RAYS     9.31  Mar   10.00 RQYCB   1.25  13.42   135   540
KELL    24.38  Mar   25.00 KQCCE   3.25  13.33     5   174
HRBC     7.55  Mar   10.00  BQCB   1.00  13.25    20   141
DJT      4.25  Mar    5.00 DJTCA   0.56  13.24    15   728
XYLN    19.97  Mar   20.00 YXQCD   2.63  13.15   505   498
TGX      8.63  Mar   10.00 TGXCB   1.13  13.04     2   275
THQI    28.94  Mar   30.00 QHICF   3.75  12.96    20   611
VLNC     7.75  Mar   10.00 VHQCB   1.00  12.90    55  1172
HMAR     5.81  Mar    7.50 VQHCU   0.75  12.90     2   262
IDC      4.44  Mar    5.00 IDCCA   0.56  12.68    27  4958
IDTC     9.91  Mar   12.50 IQJCV   1.25  12.62    69   191
BEAS    13.94  Mar   15.00 BRQCC   1.75  12.56   190   941
SYBS     8.28  Mar   10.00 SBQCB   1.00  12.08   119   487
TLXN    13.50  Mar   15.00 TNQCC   1.63  12.04    51   338
OEI      6.38  Mar    7.50 OEICU   0.75  11.76    40   127
AAIR     3.19  Mar    5.00 VJQCA   0.38  11.76   100  2511
GERN    11.25  Mar   12.50 GQDCV   1.31  11.67    17  2252
CRUS    12.50  Mar   12.50 CUQCV   1.44  11.50    40   758
LRCX    28.44  Mar   30.00 LMQCF   3.25  11.43   293    87
DGN     19.75  Mar   20.00 DGNCD   2.25  11.39    39  1134
INTS    14.31  Mar   15.00 QINCC   1.63  11.35    23   194
DMIC     8.88  Mar   10.00 DMQCB   1.00  11.27     4   102
GSTX     8.88  Mar   10.00 QGSCB   1.00  11.27     3   151
DRMD     5.00  Mar    7.50 DUQCU   0.56  11.25    10  1392
STAR     7.31  Mar    7.50 LQSCU   0.81  11.11    30   181
CATP    27.00  Mar   30.00 TQPCF   3.00  11.11   103   846
AMKR    10.75  Mar   12.50 QELCV   1.19  11.05    61   133
EGGS    23.25  Mar   30.00 EGQCF   2.50  10.75    59   706
VVUS     2.91  Mar    5.00 VVQCA   0.31  10.75    20  1841
NBR     14.13  Mar   15.00 NBRCC   1.50  10.62     9   304
CHRZ    27.38  Mar   30.00 ZQHCF   2.88  10.50    15   483
NEM     19.31  Mar   20.00 NEMCD   2.00  10.36    17  2057
WWW     12.06  Mar   12.50 WWWCV   1.25  10.36    10   196
ICN     24.25  Mar   25.00 ICNCE   2.50  10.31     6  1167
PLAT    13.38  Mar   15.00 FLQCC   1.38  10.28   771   627
TGX      8.63  Mar   12.50 TGXCV   0.88  10.14     2   255
XYLN    19.97  Mar   22.50 YXQCX   2.00  10.02     7   366
CY       9.38  Mar   10.00  CYCB   0.94  10.00     5  1273
HPRT     7.50  Apr    7.50 HQKDU   2.13  28.33    25   111
PTVL    22.50  Apr   22.50 QUTDX   6.25  27.78     2   172
LWN      4.81  Apr    5.00 LWNDA   1.19  24.68   110   184
PTVL    22.50  Apr   25.00 QUTDE   5.50  24.44     4   523
SRCM    19.75  Apr   22.50  SQDX   4.63  23.42   120    50
SWW      4.69  Apr    5.00 SWWDA   1.06  22.67    66   706
ZD      17.69  Apr   20.00  ZDDD   4.00  22.61    51   265
BNYN    15.75  Apr   17.50 QYNDW   3.50  22.22    57   157
NTKI    15.44  Apr   17.50 QNKDW   3.38  21.86     5   186
ODIS     9.50  Apr   10.00 QSEDB   2.06  21.71    19   268
CYBX    11.25  Apr   12.50 QAJDV   2.44  21.67     4   117
SRCM    19.75  Apr   25.00  SQDE   4.13  20.89     2    23
FP       2.44  Apr    5.00  FPDA   0.50  20.51    54  1979
ALSC     4.91  Apr    5.00 QASDA   1.00  20.38   553  2437
ESCMF    7.38  Apr    7.50 QFCDU   1.50  20.34    60   605
AKLM     9.94  Apr   10.00 KKQDB   2.00  20.13    32   689
USWB    29.06  Apr   30.00 QWBDF   5.63  19.35   100   219
BRKT    15.00  Apr   15.00 BUQDC   2.88  19.17    11    24
UBB     12.06  Apr   12.50 UBBDV   2.25  18.65   175    57
SPYG    18.13  Apr   20.00 YQGDD   3.38  18.62     1   248
DAOU     8.06  Apr   10.00 QQXDB   1.50  18.60     9   126
ZD      17.69  Apr   22.50  ZDDX   3.25  18.37    24   254
SPLH     9.56  Apr   10.00 QRXDB   1.75  18.30    10   205
NEWZ    13.00  Apr   15.00 QBEDC   2.38  18.27     4    58
CIEN    18.94  Apr   20.00 EUQDD   3.38  17.82   294  3294
GALTF   26.25  Apr   30.00 QFGDF   4.63  17.62     5    18
MANU    15.38  Apr   17.50 ZUQDW   2.69  17.48   125   419
PCTL     9.69  Apr   10.00 PTQDB   1.69  17.42    79   529
DIMD     9.38  Apr   10.00 DAQDB   1.63  17.33    55   925
TRA      6.50  Apr    7.50 TRADU   1.13  17.31    12   250
TALK    13.50  Apr   15.00 QQKDC   2.31  17.13    23  1212
WDC     19.88  Apr   20.00 WDCDD   3.38  16.98   497  3327
INFS    11.25  Apr   12.50 IQLDV   1.88  16.67    19    14
PTVL    22.50  Apr   30.00 QUTDF   3.75  16.67    57   443
PLC      4.56  Apr    5.00 PLCDA   0.75  16.44    75  1650
SDTI    27.50  Apr   30.00 QSDDF   4.50  16.36   110  2235
TWA      5.00  Apr    5.00 TWADA   0.81  16.25  1106  8415
AMD     22.38  Apr   22.50 AMDDX   3.50  15.64   176   716
CORR    12.00  Apr   12.50 CHQDV   1.88  15.63    10   164
FHT     18.81  Apr   20.00 FHTDD   2.94  15.61    51   367
BIR      4.81  Apr    5.00 BIRDA   0.75  15.58    40   167
AVNT    21.69  Apr   22.50 NVQDX   3.38  15.56    20     1
VLSI    12.06  Apr   12.50 VLQDV   1.88  15.54     3   956
SIII     6.94  Apr    7.50 SQIDU   1.06  15.32    11   723
PSIX    28.56  Apr   30.00 SQPDF   4.38  15.32    51   367
ZOLT     9.00  Apr   10.00 QOTDB   1.38  15.28    16   473
HPRT     7.50  Apr   10.00 HQKDB   1.13  15.00     1    45
SOC      7.50  Apr    7.50 SOCDU   1.13  15.00   942  4003
SCIXF   11.75  Apr   12.50 SXQDV   1.75  14.89    20  2010
ANAD    12.75  Apr   15.00 DQADC   1.88  14.71    45   149
NSTA    24.00  Apr   25.00 NQBDE   3.50  14.58    10    45
TV      22.31  Apr   22.50  TVDX   3.25  14.57    30    72
ZD      17.69  Apr   25.00  ZDDE   2.56  14.49    10   248
ABTX    14.38  Apr   15.00 QXQDC   2.06  14.35   522  5230
MMCN    21.06  Apr   25.00 CMQDE   3.00  14.24    14    65
HMTT    14.06  Apr   15.00 HTQDC   2.00  14.22    15   179
WMAR    12.50  Apr   12.50 XWQDV   1.75  14.00     8    46
CELG    17.63  Apr   20.00 LQHDD   2.44  13.83     5    20
PSFT    23.56  Apr   25.00 PQODE   3.25  13.79   220  2723
MUEI    16.88  Apr   17.50 MQUDW   2.31  13.70    12   638
KLIC    22.13  Apr   22.50 KQSDX   3.00  13.56     2   160
OWN     14.81  Apr   15.00 OWNDC   2.00  13.50    20    20
RDRT    19.50  Apr   20.00 RDQDD   2.63  13.46    11   483
PSQL    13.63  Apr   15.00 PQSDC   1.81  13.30    33   169
HS      16.50  Apr   17.50  HSDW   2.19  13.26     2   267
CIEN    18.94  Apr   22.50 EUQDX   2.50  13.20   241  1211
FRTE     8.06  Apr   10.00 RQFDB   1.06  13.18    10   244
SPLH     9.56  Apr   12.50 QRXDV   1.25  13.07     4   115
DURA    15.00  Apr   15.00 DQRDC   1.94  12.92   129   376
INTV    17.00  Apr   17.50 VQNDW   2.19  12.87    10   372
ORG     15.69  Apr   17.50 ORGDW   2.00  12.75     5   128
AKLM     9.94  Apr   12.50 KKQDV   1.25  12.58    79   595
SCIO    10.94  Apr   12.50 JQSDV   1.38  12.57   405   250
ANDW    19.94  Apr   20.00 AQNDD   2.50  12.54    25  1135
BTGC     7.00  Apr    7.50 QTGDU   0.88  12.50    16   956
WAXS    12.00  Apr   15.00 WXQDC   1.50  12.50    60   349
FORE    20.25  Apr   22.50 FQODX   2.50  12.35   435   829
MAT     22.31  Apr   22.50 MATDX   2.75  12.32     3   182
PKD      4.06  Apr    5.00 PKDDA   0.50  12.31   320  3162
GNCI    17.31  Apr   17.50 GQNDW   2.13  12.27   653  1048
WDC     19.88  Apr   22.50 WDCDX   2.44  12.26   117   104
VRTX    29.75  Apr   30.00 VQRDF   3.63  12.18    43   132
ABTX    14.38  Apr   17.50 QXQDW   1.75  12.17   330  4270
AAC      4.13  Apr    5.00 AACDA   0.50  12.12     5   455
AMSC    10.31  Apr   12.50 QAYDV   1.25  12.12   120   114
ZILA     5.69  Apr    7.50 QWCDU   0.69  12.09    96  1272
SQNT    13.44  Apr   15.00 SQQDC   1.63  12.09   115   240
SEW      4.19  Apr    5.00 SEWDA   0.50  11.94    15   543
ADPT    24.13  Apr   25.00 APQDE   2.88  11.92    29   134
CTAL    16.88  Apr   17.50 QANDW   2.00  11.85     5   116
STN      9.50  Apr   10.00 STNDB   1.13  11.84   100    96
PAIR    10.56  Apr   12.50 PQGDV   1.25  11.83   168  1948
PWN     13.75  Apr   15.00 PWNDC   1.63  11.82     1   101
BMG      4.25  Apr    5.00 BMGDA   0.50  11.76    10  1094
BUR      9.63  Apr   10.00 BURDB   1.13  11.69    10    34
ESST     7.50  Apr   10.00 SEQDB   0.88  11.67    15    94
LOR     19.31  Apr   20.00 LORDD   2.25  11.65     7  1721
GLM      9.13  Apr   10.00 GLMDB   1.06  11.64    61  2966
EPTO     7.00  Apr   10.00 QTPDB   0.81  11.61    40  1000
TALK    13.50  Apr   17.50 QQKDW   1.56  11.57     4  1361
APM      7.63  Apr   10.00 APMDB   0.88  11.48   640  7721
BDT      6.56  Apr    7.50 BDTDU   0.75  11.43    10    95
UBB     12.06  Apr   15.00 UBBDC   1.38  11.40    12  2342
SFSK    21.50  Apr   22.50 FQKDX   2.44  11.34    25   248
TJX     28.75  Apr   30.00 TJXDF   3.25  11.30  1036   695
PGEX    26.69  Apr   30.00 QAEDF   3.00  11.24    45   294
EGLS    14.00  Apr   17.50 EIQDW   1.56  11.16    30    77
CS      10.13  Apr   12.50  CSDV   1.13  11.11   144  2036
MLI     24.75  Apr   25.00 MLIDE   2.75  11.11    20   184
ERICY   24.94  Apr   25.00 RQCDE   2.75  11.03     8  2150
SDC     17.00  Apr   17.50 SDCDW   1.88  11.03     4   326
MWL     12.00  Apr   12.50 MWLDV   1.31  10.94    10   160
AMD     22.38  Apr   25.00 AMDDE   2.44  10.89   535  2738
PMRY    21.25  Apr   22.50 PBQDX   2.31  10.88     6     2
SRM     10.44  Apr   12.50 SRMDV   1.13  10.78    45    50
CMIN     9.88  Apr   10.00 LQCDB   1.06  10.76     5    15
CVG     18.81  Apr   20.00 CVGDD   2.00  10.63     8   283
MRVC     7.69  Apr   10.00 VQXDB   0.81  10.57     5   515
MANU    15.38  Apr   20.00 ZUQDD   1.63  10.57    66   454
EOG     16.81  Apr   17.50 EOGDW   1.75  10.41    40   378
IMN     17.13  Apr   17.50 IMNDW   1.75  10.22    10   235
ALSC     4.91  Apr    7.50 QASDU   0.50  10.19    10   216
SYMC    22.88  Apr   25.00 SYQDE   2.31  10.11   147   474
HXL      8.69  Apr   10.00 HXLDB   0.88  10.07     5   132
CSN     19.88  Apr   20.00 CSNDD   2.00  10.06     3    45
ACN     14.94  Apr   15.00 ACNDC   1.50  10.04    15    82
GSB     18.69  Apr   20.00 GSBDD   1.88  10.03    20   139
BEAV    16.88  Apr   20.00 BQVDD   1.69  10.00     3    78

This month, the naked-put portfolio performed very well. Most of
the success was due to the January effect and the bullish movement
of the market after the new year's holiday. Some of the more
successful plays were Internet and Pharmaceutical positions. In
fact, a number of Internet stocks continue to climb as if the sky
had no ceiling. We did have one negative position. Zila fell on
news that Federal advisers recommended against approval of Oratest,
a test to help see cancerous lesions in the mouth. The play should
have been closed for a $0.75 loss.

Brazilian woes continue...

The market is being subdued by the deteriorating situation in
Brazil and no one knows whether this virus will spread like the
Asian Flu. It all stems from the fact that the current world
markets are very susceptible to global meltdown and the closest
thing to a controlling entity is the US government. A serious
situation like the South American financial turmoil won't go away
quickly and although the floating of the Brazilian 'real' should
help the situation in the short-term, it may not prevent trouble
from spreading to other countries. Our economy has never been out
of control but we now face a period of potentially disappointing
earnings reports which will definitely have an effect on the U.S.
stock market in the coming weeks. Good Luck!


Stock  Price  Last   Mon  Strike  Opt    Profit   ROI   Monthly
Sym    Picked Price       Price   Bid    /Loss          ROI

MCHM    8.44   8.63  Jan   7.50  0.38  *$  0.38  13.5%  29.4%
ITVU   17.69  24.50  Jan  12.50  0.25  *$  0.25   6.6%  28.7%
SPLN   28.19  31.00  Jan  22.50  0.38  *$  0.38   6.3%  27.4%
DBCC   17.81  21.75  Jan  12.50  0.38  *$  0.38   9.6%  21.0%
ITVU   13.25  24.50  Jan  10.00  0.75  *$  0.75  22.1%  19.2%
CELG   16.69  17.63  Jan  12.50  0.50  *$  0.50  13.0%  18.9%
BTIM   17.38  18.50  Jan  12.50  0.31  *$  0.31   8.2%  17.8%
SPLN   17.19  31.00  Jan  12.50  0.44  *$  0.44  11.3%  16.4%
PTVL   14.69  22.50  Jan  10.00  0.50  *$  0.50  14.5%  15.8%
CDNW   17.25  20.38  Jan  10.00  0.69  *$  0.69  16.7%  14.5%
ITVU   14.00  24.50  Jan  10.00  0.69  *$  0.69  19.8%  14.3%
IGEN   30.63  34.25  Jan  25.00  0.44  *$  0.44   6.2%  13.5%
CDNW   17.63  20.38  Jan  10.00  0.50  *$  0.50  12.4%  13.5%
ZAP    12.38  12.13  Jan   7.50  0.25  *$  0.25   9.2%  13.3%
NOVT   24.06  25.44  Jan  20.00  0.56  *$  0.56   9.2%  13.3%
VRTY   22.50  35.06  Jan  17.50  0.75  *$  0.75  14.3%  12.4%
PDQ    10.38  10.75  Jan   7.50  0.25  *$  0.25  10.7%  11.7%
APM     8.69   7.63  Jan   5.00  0.25  *$  0.25  12.6%  10.9%
ABTX   11.19  14.38  Jan   7.50  0.25  *$  0.25  10.0%  10.9%
NITE   24.00  41.94  Jan  15.00  0.25  *$  0.25   5.0%  10.8%
VIRS   13.13  14.13  Jan  10.00  0.19  *$  0.19   6.7%   9.8%
NXTR   10.13   9.25  Jan   7.50  0.25  *$  0.25  11.0%   9.5%
BMP    24.56  24.25  Jan  17.50  0.44  *$  0.44   8.2%   8.9%
CELG   15.00  17.63  Jan  10.00  0.25  *$  0.25   7.7%   8.4%
SDTI   18.31  27.50  Jan  12.50  0.38  *$  0.38   9.4%   8.2%
TALK   10.13  13.50  Jan   5.00  0.25  *$  0.25  11.0%   7.9%
SDTI   22.00  27.50  Jan  15.00  0.25  *$  0.25   5.4%   7.8%
SRCM   17.19  19.75  Jan  10.00  0.25  *$  0.25   6.8%   7.4%
CELG   11.38  17.63  Jan   7.50  0.25  *$  0.25   9.9%   7.2%
GALTF  22.69  26.25  Jan  15.00  0.38  *$  0.38   7.7%   6.7%
ABTX   12.69  14.38  Jan   7.50  0.25  *$  0.25   9.0%   6.5%
SPYG   20.50  18.13  Jan  12.50  0.31  *$  0.31   7.0%   6.1%
TDFX   16.44  12.38  Jan  12.50  0.31   $  0.19   5.3%   4.6%
TERA    7.88   6.63  Jan   7.50  1.00   $  0.13   3.4%   3.7%
ZILA   10.25   5.69  Jan   7.50  0.38   $ -1.43 -58.8%   0.0%
BNYN   14.44  15.75  Feb  10.00  0.69  *$  0.69  19.3%  14.0%
VIRS   14.63  14.13  Feb  10.00  0.44  *$  0.44  13.1%   9.5%
PCYC   25.38  24.25  Feb  20.00  0.63  *$  0.63  11.1%   8.0%
OXHP   20.06  18.88  Feb  17.50  0.63  *$  0.63  10.3%   7.5%
MUSE   29.38  28.00  Feb  17.50  0.63  *$  0.63   9.7%   7.0%

-ROI is equal to the profit (or loss) divided by the original
 investment requirement (varies broker to broker). 
-Monthly ROI represents the return on a monthly basis.
 Example: a 10% return in 20 days equals 15.2% ROI for a month).
-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)

OI  - Open Interest
CB  - Cost Basis (break-even point if put exercised) 
ROI - Return On Investment
Sequenced by Company
Stock  Price  Mon Strike Option  Opt   Open  Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr  Basis  Expired

PTVL   22.50  Feb 15.00  QUT NC  0.81  48    14.19  15.25%
SCUR   26.00  Feb 20.00  UQU ND  0.56  123   19.44   9.72%
SDTI   27.63  Feb 17.50  QSD NW  0.56  25    16.94   9.20%
SMOD   25.38  Feb 22.50  UYQ NX  1.63  91    20.87  18.31%
SPLN   31.13  Feb 22.50  QSP NX  1.00  40    21.50  13.84%
SRCM   19.75  Feb 15.00   SQ NC  1.06  2     13.94  21.16%
VIRS   14.13  Feb 10.00  VQP NB  0.38  58     9.62  11.85%
WAVO    9.44  Feb  7.50  WKQ NU  0.63  247    6.87  25.02%
Sequenced by Return on Investment  
Stock  Price  Mon Strike Option  Opt   Open  Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr  Basis  Expired

WAVO    9.44  Feb  7.50  WKQ NU  0.63  247    6.87  25.02%
SRCM   19.75  Feb 15.00   SQ NC  1.06  2     13.94  21.16%
SMOD   25.38  Feb 22.50  UYQ NX  1.63  91    20.87  18.31%
PTVL   22.50  Feb 15.00  QUT NC  0.81  48    14.19  15.25%
SPLN   31.13  Feb 22.50  QSP NX  1.00  40    21.50  13.84%
VIRS   14.13  Feb 10.00  VQP NB  0.38  58     9.62  11.85%
SCUR   26.00  Feb 20.00  UQU ND  0.56  123   19.44   9.72%
SDTI   27.63  Feb 17.50  QSD NW  0.56  25    16.94   9.20%
Company Descriptions
PTVL - Preview Travel  $22.50

PTVL is a provider of branded online travel services for leisure 
and small business travelers. Preview Travel has been in a stage 
I base since October. Recently corrected after a quick doubling
in price due to the Internet craze. Gaining notice with coverage
initiated by Friedman Billings and now Warburg Dillon Reid. Good
bullish potential with stock above 150 dma and support near $15.

FEB  15.00  QUT-NC  BID=0.81  OI=48  CB=14.19  ROI=15.25%

Chart = http://quote.yahoo.com/q?s=PTVL&d=3m
SCUR - Secure Computing  $26.00

Secure Computing Corporation designs, develops, markets and sells
complete network security solutions, including firewalls, filters,
authentication and network services. Earnings are due shortly and
the whisper number is moving higher. SCUR is expected to maintain
a 30-50% growth rate and now option interest is increasing with
rumors of a stock split. Paine Webber reiterated "BUY" rating with
a conservative target of $30.

FEB  20.00  UQU-ND  BID=0.56  OI=123  CB=19.44  ROI=9.72%

Chart = http://quote.yahoo.com/q?s=SCUR&d=3m
SDTI - Security Dynamics  $27.63

SDTI provides enterprise network and data security solutions.
The recent lawsuits have been forgotten and analyst upgrades
have had a positive effect. The company started a market trial
program of higher levels of security for customers like IBM and
introduced SecurWorld for delivering two-factor authentication.
A good technical play with Internet bias. Stock price is trading
above all recent resistance and the current trend is bullish.

FEB  17.50  QSD-NW  BID=0.56  OI=25  CB=16.94  ROI=9.20%

Chart = http://quote.yahoo.com/q?s=SDTI&d=3m
SMOD - Smart Modular  $25.38

SMOD designs, manufactures and markets memory modules, personal
computer card products and embedded processor modules for the
telecommunication, computer and networking industries. Experts
say the sector is already grappling with the specter of a supply
crunch for DRAM devices. Brisk demand from PC makers may cause a
severe shortage that will result in excessively high premiums for
the technology. We prefer to play based on the support near $20.

FEB  22.50  UYQ-NX  BID=1.63  OI=91  CB=20.87  ROI=18.31%

Chart = http://quote.yahoo.com/q?s=SMOD&d=3m
SPLN - Sportsline  $31.13

Sportsline USA, Inc. is an Internet-based sports media company
that provides branded, interactive information and programming
as well as merchandise to sports enthusiasts worldwide. Some say
its #1 in sports information on the Internet and more rumors of
a target-price upgrade. The new issue of the Dines Letter rates
SPLN as one of 4 top Internet stocks to buy now! A steady climb
since mid-Oct and a recent gap-up when the company said it will
post outstanding Q4 revenues, up 90% from a year ago. CBS's new
record-breaking IPO (Marketwatch.com) probably helps this one!

FEB  22.50  QSP-NX  BID=1.00  OI=40  CB=21.50  ROI=13.84%

Chart = http://quote.yahoo.com/q?s=SPLN&d=3m
SRCM - SourceMedia  $19.75

SRCM is a provider of information and programming through
the company's proprietary digital operating systems to mass
market consumers. Customers subscribe to Source Media audio
content and have it featured on their web site. The company
launched audio programming with Broadcast.com and says the
Internet audio means it has content on PC's, cable TV and
telephones. A rumored deal with American Online may also be
causing some of the buying pressure and the stock has good
technical support around $15.

FEB  15.00  SQ-NC  BID=1.06  OI=2  CB=13.94  ROI=21.16%

Chart = http://quote.yahoo.com/q?s=SRCM&d=3m
VIRS - Triangle Pharm.  $14.13

Triangle Pharmaceuticals is a pharmaceutical company engaged 
in the development of new drug candidates primarily in the
antiviral area. Still playing this stock again as it has exited
the tip of the isosceles triangle formation and started to move
higher. Dec 15 entered into definitive purchase agreements to
sell 4.8m newly issued shares of stock to selected investors for
a price of $10. Technically still neutral (basing) to bullish.

FEB  10.00  VQP-NB  BID=0.38  OI=58  CB=9.62  ROI=11.85%

Chart = http://quote.yahoo.com/q?s=VIRS&d=3m
WAVO - Wavephore  $9.44

Wavephore is a media content integrator and architect of digital
communications systems. Recently sold $7.5 million worth of its
common stock to a current institutional shareholder at a premium,
thus eliminating any near term financing issues. Also provided a
warrant to the investor to acquire an additional 250,000 shares
at $10.66. The funds will be used for working capital and should
fund existing operations beyond 1999. Good support around $8.

FEB  7.50  WKQ-NU  BID=0.63  OI=247  CB=6.87  ROI=25.02%

Chart = http://quote.yahoo.com/q?s=WAVO&d=3m

See Disclaimer in Section One.


The Option Investor Newsletter             1-17-98
Sunday                7  of  7

© 1998 The Option Investor Newsletter. - All Rights Reserved
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.

Recommended Puts 
New Recommendations at a Glance:

EK   - Eastman Kodak     - $69.00  (-3.25)
MCHP - Microchip Tech    - $35.13  (­5.62)
RMBS - Rambus            - $89.50  (-13.38)

Current Recommendations at a Glance:

AVT  - Avnet, Inc.       - $46.25  (­.19)
BAC  - Bank of America   - $64.56  (­5.38)
BDX  - Becton, Dickinson - $39.75  (­1.81)
BMCS - BMC Software      - $40.06  (­.19) 
CPB  - Campbell Soup     - $45.13  (-7.12)
DD   - DuPont de Nemours - $57.00  (­2.50)
ERTS - Electronic Arts   - $47.00  (­.25) 
HSY  - Hershey Foods     - $61.25  (­1.75) 
LLY  - Eli Lilly         - $81.25  (-2.37) 
MRK  - Merck             - $147.13 (-6.68)
PKN  - Perkin-Elmer      - $95.38  (-.55)
WLA  - Warner Lambert    - $69.81  (­3.75)
XCIT - Excite, Inc.      - $67.50  (7.50)

Dropped Plays:
Cooper Industries (CBE)  - $44.81  (­2.69) 

Failed Rallies:

EK - Eastman Kodak - $69.00 (-3.25)

Company Description:
Eastman Kodak Co. primarily develops, manufactures and markets
consumer and commercial imaging products. For the nine months
ended 9/98, revenues fell 7% to $10.08 billion. Net income
increased 49% to $1.12 billion. Revenues suffered from
decreased selling prices, unfavorable effects of foreign
currency rate changes, and the transfer of a portion of the
graphics business to a joint venture. 

Play Description:

Kodak struggling to overcome cost cutting, digital imaging, 
pricing pressures on film, (and) problems in the copier 
business. Average price for a film roll fell about 13 percent
in the fourth quarter from a year ago, and was down five 
percentage points from the third quarter. Kodak also 
struggling to hold its U.S. market share. Pacific Rim, 
Latin America and Russia are under enormous duress, ı99 
earnings consensus now lower than the previous estimate 
of $5.20 per share. Stock now trading below the 200 moving 
day average and likely to test prior lows at $55.

Play: Failed Rally

BUY PUT FEB-70 EK-NN OI=836 @ $3.50 SL=2.00

Chart = http://quote.yahoo.com/q?s=ek&d=3m

Microchip Tech (MCHP) - $35.13 (-4.63)

Company Description:
MCHP develops, manufactures and markets programmable 8-bit 
microcontrollers, application specific standard products 
and related specialty memory products for consumer, 
automotive, office automation, industrial and communications

Play Description:
Microchip is struggling to restructure its operations to try
to eliminate the company's older, less-efficient manufacturing
capacity and to manage inventory levels. Analysts recently cut
estimates for fiscal ı99 and ı00. Microchip's December quarter
was characterized by continued low order visibility, along with
some weakness in end-of-quarter turns order shipments, Stock 
recently gapped off of failed rally point of $40 and may test 
prior lows in the $20ıs 

BUY PUT FEB-40 QMT-NH OI=37 @ $6.63 SL=4.25
BUY PUT FEB-35 QMT-NG OI=21 @ $3.25 SL=2.00

Chart = http://quote.yahoo.com/q?s=mchp&d=3m

RMBS - Rambus  - $89.50 (-8.50)

Company Description:
Rambus designs, develops, licenses, and markets high speed 
chip to chip interface technology to enhance the performance
and cost-effectiveness of computers, consumer electronics and
other electronic systems. Rambus has been viewed as a hot growth
company because users want high-speed graphics -- and its stock 
has soared from its $12 offer price just over a year ago. But 
its lack of progress in the personal computer market has tied 
its earnings to the cycles of highly seasonal video games, sold
mostly in the Christmas season. Instead of an anticipated lift 
to earnings this year, the personal computer segment will consume
additional expenses over the next few quarters as it tries to move
upstream into the PC main memory market.

Play Description:
Investor disappointment relates to appreciably slower earnings
growth now anticipated for DRAM chip enhancement technologies
developer over the next few quarters. Expected seasonal
decline in royalties from shipments of Rambus-enhanced chips
used in Nintendo 64 video games, among other things will
temper EPS figures for balance of year -"no better than
flat" compared with fiscal first quarter results. Year-over
year earnings growth now estimated at about 14%, well off the
43% hoped for by analysts. Stock likely to trade back to 
support levels at 200 day moving average at around $65 after
a failed rally at $99. 

Play: Failed Rally

BUY PUT FEB-90 BNQ-NR OI=225 @ $10.00 SL=7.25
BUY PUT FEB-85 BNQ-NQ OI=1665 @ $7.38 SL=5.00

Chart = http://quote.yahoo.com/q?s=rmbs&d=3m

AVT - Avnet, Inc. - $46.25 .56 (­.19)

Company Description:
Avnet, Inc. is a distributor of electronic components and
computer products to industrial customers worldwide. AVT
also distributes a variety of computer products to both the
end user and reseller channels. For the three months ended
10/2/98, sales rose 13% to $1.58 billion. Net income fell
63% to $15.7 million. 

Play Description:
Downward trending gross profit margin is due primarily to the
competitive environment in the electronics distribution
marketplace as a result of the global industry correction
cycle as well as the increased sales of computer products,
including microprocessors, which have lower gross margins
than other products in the Avnetıs product line. Avnet needs
to overcome new organizational structure to better focus on
its core businesses to better serve the needs of customers
and suppliers. Recent news of a "significant" slump in
December sales of core products in its electronics and
computer marketing groups will result in fiscal Q2 EPS of
about $0.75, missing the First Call mean estimate of $0.91. 
Stock failed on recent rally at key price point of $60 with
downside gap large enough to drive a truck through. Stock now
under short and long-term moving averages. Lots of overhead. 
Likely to retest 52 week lows at $35. 

Play: Failed Rally

Stock experiencing continued weakness off of recent earnings
warning. Stock now under short and long-term moving averages.
Lots of overhead. Could to retest 52 week lows at $35. Stock
moved up only fractionally during broad market rally Friday. 
Tighten protective stop loss - $48.

BUY PUT FEB-45 AVT-NI OI=276 @ $2.25 SL=1.00
BUY PUT FEB-40 AVT-NH OI= 58 @ $ .88 SL= .25

Chart = http://quote.yahoo.com/q?s=AVT&d=3m

BAC - Bank of America  - $64.56  (­5.38)

Company Description:
Bank of America (BAC) is a multi-bank holding company that
provides banking and related services throughout the Mid
Atlantic, Midwest and South. For the nine months ended
9/30/98, total interest income rose 4% to $28.95 billion. 
Net interest income after loan loss provision fell 10% to
$11.28 billion. Net income applicable to Common fell 20% to
$4 billion. Results reflect increased earning assets, offset
by a lower net interest yield and $1.19 billion in merger and
restructuring costs.

Play Description:
U.S. bank and broker shares are experiencing weakness on
renewed signs of economic and political trouble in Brazil,
where U.S. financial institutions have sizeable operations,
and profit-taking. Brazilian markets were roiled after a
large state within the country last week decided to halt
payments on its debt to the central government. Some of this
concern carried over to U.S. markets, knocking financial
stocks off highs hit earlier in 1999. The Bovespa has been
weak, and concerns about Brazil will cool the financial

Stock likely to test trading range of $55-60, still continues
to underperform sector, has declining relative strength, and
failed at the 200 moving day average.

Play: Failed Rally

The financial sector under pressure because of Brazil. 
Moved up on Fridayıs (1/15) strong relief rally but 
recommend staying with position while BAC stays below $65.

BUY PUT FEB-70 BAC-NN OI= 797 @ $7.25 SL=5.00
BUY PUT FEB-65 BAC-NM OI=5857 @ $4.50 SL=3.00

Chart = http://quote.yahoo.com/q?s=bac&d=3m

DD - DuPont de Nemours  - $57.00 (­2.50)

Company Description:
E.I. DuPont de Nemours and Company operates in five principal
industry segments: Chemicals, Fibers, Polymers, Life
Sciences, and Diversified Businesses. For the 9 months ended
9/30/98, total revenues rose 1% to $19.29B. Net income from
continuing operations before extraordinary item and
applicable to Common fell 37% to $859M. Revenues benefited
from acquisitions. Earnings were offset by a $651M
increase in purchased in-process R&D charges.

Play Description:
Pricing pressures from overcapacity continue to weigh on the
chemical group. Street has been busy cutting the group's
earnings estimates for the next couple of quarters, as
troubled economies in Asia and Latin America suggest that
demand/pricing conditions won't improve any time soon. 
Commodity chemicals such as ethylene hardest hit, with prices
falling by as much as 50% over past year. Stocks have seen
some buying interest in recent weeks on hopes that lower
interest rates will jumpstart sagging global economy. But
gains appear more a function of underlying market strength and
light bargain hunting than any sea change in expectations for
a sustained earnings recovery. Chemical companies are
cutting jobs and reducing production to adjust to challenging
conditions. Comparison periods will also become more
attractive by mid-CY99. However, until that time there is no
reason to suspect the group to do anything but underperform
the market. Given existing oversupply, declining earnings
growth, slowing worldwide economic growth and the market's
preference for momentum over turnaround situations, DD could
be under pressure over the near-term. After advancing $7
over the past couple of weeks, DuPont signaled a failed rally
at its declining 200-day moving average. Target - $53.

Play: Failed Rally

Stock moved higher during Fridayıs (1/15) broad relief rally. 
Stock still below declining moving averages. Tighten
protective sell stop to $60.25.

BUY PUT FEB-60 DD-NL OI=338 @ $5.00 SL=3.75
BUY PUT FEB-55 DD-NK OI=902 @ $1.75 SL= .75

Chart = http://quote.yahoo.com/q?s=dd&d=3m

BMCS - BMC Software  - $40.06 (­.19) 

Company Description:
BMC Software provides systems management software solutions
for host mainframe and distributed information systems, and
also offers maintenance, enhancement & support services. For
the six months ended 9/98, revenues rose 44% to $461.5M. Net
income totaled $133.4M, up from $34.4M. Revenues reflect
increased capacity-based upgrade fees and increased license
fees. Earnings reflect greater interest earned on cash
balances and decreased acquired R&D charges. 

Play Description:
A leader in enterprise-level software was downgraded by
Soundview in October 98 and by Morgan Stanley last month. 
The distributed systems and application management markets in
which the Company operates are far more crowded and
competitive than its traditional mainframe systems management
markets. The Company has experienced long development cycles
and product delays in the past, particularly with some of its
distributed systems products, and expects to have delays in
the future. Delays in new mainframe or distributed systems
product introductions or less-than-anticipated market
acceptance of these new products are possible and would have
an adverse effect on the Company's revenues and earnings.

Stock showing classic signs of a failed rally trading below
its declining 50, 100 and 200-day moving average and is
dangerously testing it prior support of $40. If BMCS break
below $40, could garner additional profits. Separately, BMC 
Software announce today (1/5) that Platinum will abandon all
claims against MBC Software in Platinumıs lawsuit against

Play: Failed Rally

Although Prudential raised its rating on the stock to a strong
buy from a accumulate Friday (1/15), Pinnacle remains bearish
on the stock while it trades below its declining moving
averages. $41 is key benchmark. It the stock continues to
trade below $41, look for more downside action. Tighten
protective stop to $42.25.

BUY PUT FEB-45 BCQ-NI OI=1736 at $7.38 SL= 5.00
BUY PUT FEB-40 BCQ-NH OI=1599 at $4.00 SL= 2.25

Chart = http://quote.yahoo.com/q?s=BMCS&d=3m

WLA - Warner Lambert  - $69.81 (­3.75) Pharmaceutical

Company Description:
Warner Lambert is a manufacturer of ethical pharmaceuticals,
biologicals, capsules, consumer health care products and
confectionary products. 

Play Description:
Shares of large U.S. drug companies are being hurt by profit
taking and concerns about proposed changes to the Medicare
payment system. Recently, a Bipartisan Commission opened the
door for Medicare to cover prescription drugs for
beneficiaries, a recommendation that if adopted, could put
pressure on drug companies. Recent inquiries regarding the
safety of Rezulin received nationally televised attention and
may give rise to investor concern. Also, it may be
difficult to sustain the growth rates for Lipitor, Rezulin
and Neurontin products that WLA has enjoyed this past year.

Top side consolidation since July may be difficult to overcome
in extended market conditions. Given that the drug sector
has and will continue to be a strong performing sector, we
recommend a modest sell-off price targets of $55 to 60.

Play: Failed Rally

Top side consolidation since July may be difficult to overcome
in extended market conditions. Actually lost more than $1 on
a day that the broad market gain 200 point. Tighten
protective sell stop to $71.25.

BUY PUT FEB-75 WLA-NO OI=1064 @ $7.13 SL=5.75
BUY PUT FEB-70 WLA-NN OI=2057 @ $4.00 SL=2.50

Chart = http://quote.yahoo.com/q?s=WLA&d=3m

LLY - Eli Lilly   - $81.25  (-2.37) 

Company Description:
Eli Lilly and its subsidiaries, discovers,
develops, manufactures and sells products and provides
services in one industry segment: Life Sciences. LLY also
provides healthcare management services. For the 9 months
ended 9/30/98, net sales rose 18% to $7.18B. Net income
totaled $1.54B vs. a loss of $844.6M. Results reflect
increased sales of Prozac, Gemzar and Evista, and the 
absence of a $2.44B asset impairment charge. 

Play Description:
A leading healthcare management services provider recent
topped out at its 52-week high of $91.31 and showing classic
signs of a failed rally trading above its 50, 100 and 200-day
moving averages. Retracement target $75-80 after climbing
30% over the past three months.

Play: Failed Rally

A leading healthcare management services provider recent
topped out at its 52-week high of $91.31 and showing classic
signs of a failed rally trading above its 50, 100 and 200-day
moving averages. Rallied over $6 on Wednesday but still
below failed rally point of $85.despite being upgraded by
ING. Tighten protective sell stop to $85.25.

BUY PUT FEB-85 LLY-NQ OI= 924 at $5.88 SL= 4.25
BUY PUT FEB-80 LLY-NP OI=1555 at $3.13 SL= 2.25

Chart = http://quote.yahoo.com/q?s=LLY&d=3m

BDX - Becton Dickinson & Co  - $39.75  (­1.81)
Medical Equipment

Company Description: 
Becton, Dickinson and Company manufactures and sells a broad
line of medical supplies and devices and diagnostic systems 
used by health care professionals, medical research 
institutions and the general public. For the FY ended 9/30/98,
revenues rose 11% to $3.12B. Net income applicable to Common 
fell 21% to $233.3M. Revenues benefited from acquisitions. 
Earnings were offset by a $90.9M charge for restructuring
and the write-down of impaired assets.

Play Description:
Topside consolidation makes for conservative play. Stock is
unlikely to go much higher than the trading range of about
$43 in the next 3-6 monthsŠ Earnings are projected to be
$1.57 share for fiscal 99 with a PE of 24.5, fairly pricey. 
If Stock violates support at $38.00 could retest low set back
in September at $34. Stock moved up only fractionally during
broad market rally Friday. Tighten protective stop loss - $42.

Play: Failed Rally

Stock moved up only fractionally during broad market rally
Friday. Tighten protective stop loss - $42.

BUY PUT FEB-40 BDX-NH OI=114 at $2.50 SL=1.25
BUY PUT FEB-35 BDX-NG OI=134 at $ .69 SL= .25

Chart = http://quote.yahoo.com/q?s=BDX&d=3m

Campbell Soup Company (CPB) - $45.13 -.81 (-7.12)

Company Description:
Campbell Soup Company is a global manufacturer and marketer of
branded convenience food products operating in three business
segments: Soup and Sauces, Biscuits and Confectionery, and
Foodservice. Campbell Soup Company is the world's largest
maker and marketer of soup with fiscal 1998 sales of $6.7

Play Description:
Warm weather, flat sales, inefficient supply chain, and
companyıs ability to achieve costs savings and capacity
utilization are being called into question by analysts. 
Increased marketing and selling expenses, increased store
level inventory levels, encroachment from private label (store
brand) products, reduced consumption levels and a recent
announce of new cost-cutting initiatives will cause fiscal
1999 earnings to fall short of analysts' estimates by 18 to
23 cents per share. Analysts surveyed by First Call Corp.,
which tracks such estimates, had expected the company to earn
$2.13 a share during the year, which ends July 31. Campbell
earned $1.90 a share in the prior year. Campbell Soup Co.
said it now expects U.S. soup consumption to rise by only 1
to 2 percent in the second quarter from the previous year,
not 4 to 5 percent.

Stock recently failed at $59 and then broke key support at
$54.00 on news of earnings shortfall. Excessive call buying
recently is bearish and may provide continued overhead

Play: Earnings Warnings

Stock gave up nearly $1 during the strong broad relief rally
Friday (1/15). Stock still under pressure with considerable
overhead at $49.

BUY PUT FEB-50 CPB-NJ OI=135 @ $5.63 SL=3.25
BUY PUT FEB-45 CPB-NI OI=309 @ $2.13 SL=1.00

Chart = http://quote.yahoo.com/q?s=cpb&d=3m

ERTS - Electronic Arts Inc.  - $47.00  (­.25) 

Company Description:
Electronic Arts is an interactive entertainment software
company. The company develops, publishes and distributes
software worldwide for personal computers and advanced
entertainment systems. Electronic Arts posted revenues of
US$909 million for fiscal 1998. The interactive software
business has historically been a volatile and highly dynamic
industry affected by changing technology, limited hardware
platform life cycles, hit products, competition, component
supplies, seasonality, consumer spending and other economic
trends. The business is also intensely competitive. 

Play Description:
Product development is becoming more complex, time-consuming,
costly to develop and increasing "hits" driven than earlier
generation products. Company produces games for proprietary
video game platforms such as the PlayStation and the N64 ­ in
direct competition with Sony and Nintendo. Gross margins are
likely to decline because of increased N64 products, which
carry significantly lower margins due to high cost of goods. 
Increased financial difficulties by distributors could have
an adverse effect on the operating results. Whisper number
of $1.18 per share for earnings due to be released on
1/21/99. Pinnacle believes that holiday enthusiasm, if any,
will be short-lived by the realities of an increasing complex
and competitive market for entertainment software. 

The stock is likely to struggle under recent consolidation
levels and test recent lows just a few months back. Whisper
number of $1.18 per share for earnings due to be released on
1/21/99. Pinnacle believes that holiday enthusiasm, if any,
will be short-lived by the realities of an increasing complex
and competitive market for entertainment software.

Play: Failed Rally

The stock moved higher during Fridayıs strong relief rally. 
Still sitting precariously at it 200-day moving average.
Tighten protective sell stop to $49.25. Whisper number of
$1.18 per share for earnings due to be released on 1/21/99. 
Pinnacle believes that holiday enthusiasm, if any, will be
short-lived by the realities of an increasing complex and
competitive market for entertainment software. If ERTS
trades below $44, could retest prior low of $34-39.

BUY PUT FEB-50 EZQ-NI OI= 0 @ $5.63 SL=4.75
BUY PUT FEB-45 EZQ-NI OI=30 @ $2.50 SL=1.00

Chart = http://quote.yahoo.com/q?s=erts&d=3m

HSY - Hershey Foods  - $61.25 (­1.75) 

Company Description:
Hershey Foods (HSY) manufactures, distributes, and sells a
broad line of chocolate and non-chocolate confectionery,
pasta and grocery products. For the nine months ended
10/4/98, net sales rose 4% to $3.2 billion. Net income rose
5% to $230.9 million. Revenues reflect higher sales of core
confectionery brands and incremental sales from the
introduction of new confectionery products. Earnings also
reflect reduced marketing costs for existing brands and lower
selling costs in foreign markets.

Play Description:
Stock continues to struggle following analyst downgrades and
Q4 weakness. Margins are likely to be under pressure with
increased costs. Stock simply seems to be out of favor and 
relative strength is declining. Likely to test lows at $48.

Play: Sector Weakness

Stock moved higher during Fridayıs (1/15) strong broad market
relief rally. Stock still trading below break down price of 
$62. Tighten protective stop to $62.25.

BUY PUT FEB-65 HSY-NM OI=192 @ $4.38 SL=2.75
BUY PUT FEB-60 HSY-NL OI=371 @ $1.63 SL= .75

Chart = http://quote.yahoo.com/q?s=hsy&d=3m

MRK - Merck  - $147.13 (-6.68)

Company Description:
Merck is a pharmaceutical company that discovers, develops,
produces and markets human/animal health products and
services. Merck also provides pharmaceutical benefit 
services. For the 9 months ended 9/30/98, sales rose 11%
to $19.37B. Net income rose 14% to $3.85B. Revenues
reflect higher sales of established major products & newer
products, and growth from the Merck Medco Managed Care
business. Earnings also reflect gains on the sales of

Play Description:
After climbing 38% over the past four months, this leading
pharmaceutical company is showing signs of potential
failed rally below its 52-week high of $161.75. Retracement
target $136-$140. Pinnacleıs sentiment indicator is reaching
extreme levels (4.7) setting this high tech company up for a
precipitous sell-off if expectations donıt measure up within
the drug sector. 

Play: Failed Rally

Keep an eye on MRKıs key benchmark at $145. If MRK trades
below this key benchmark, it could re-test support at $136 
at its 200-day moving average. Drugs starting to see sector

BUY PUT FEB-145 MRK-NI OI=1378 at $4.50 SL= 3.25
BUY PUT FEB-140 MRK-NH OI=1177 at $2.88 SL= 1.75

Chart = http://quote.yahoo.com/q?s=mrk&d=3m

PKN - Perkin-Elmer Corporation  - $95.38  (-.55) Healthcare

Company Description:
Perkin-Elmer Corporation (PKN) develops, manufactures and
markets life science systems and analytical instruments for
the pharmaceutical, biotech, environmental, agricultural, 
forensics and chemical industries. For the three months ended
9/98, revenues rose 16% to $375.8 billion. Net income fell
21% to $17 million. Revenues reflect higher sales of biotech
products in the U.S. and Europe. Earnings suffered from
higher R&D, merger charges, decreased interest income, a $3.1
million loss at Tecan and a higher tax rate.

Play Description:
PKN operates internationally, with manufacturing and
distribution facilities in various countries throughout the
world and derives approximately 53% of its revenues from
countries outside of the United States. Results continue to
be affected by market risk, including fluctuations in foreign
currency exchange rates and changes in economic conditions in
foreign markets. Company is in the process of reorganizing
the Company's capital structure to help move Perkin-Elmer
toward a market leader in biomedical and genomics
information. They are currently evaluating strategic
alternatives for our analytical instruments business. 

Distribution among top institutional shareholders is taking
place as stock is likely to trade back into trading range of
$65-75. Stock moving up in anticipation of Celera Genomics
spinoff but sale of the AI division may be dragging on. 
Questions also remain about suitable valuation level after 
spinoff. Todayıs price action attributable to possible delays
in Celera Genomics spinoff.

Play: Failed rally

Consolidating tightly in upper range ($90-98). We still
anticipate a sell-off and retracement to $86.

BUY PUT FEB-100 PKN-NT OI=19 @ $7.50 SL=6.00
BUY PUT FEB-95 PKN-NS OI=164 @ $4.75 SL=3.00

Chart = http://quote.yahoo.com/q?s=pkn&d=3m

XCIT - Excite, Inc. - $67.50 (7.50)

Company Description:
Excite, Inc. (XCIT) is a global media Company offering
consumers and advertisers comprehensive Internet navigation
services with extensive personalization capabilities. The
Company's services include the Excite and WebCrawler brands.
For the nine months ended 9/30/98, revenues totalled $100
million, up from $33.6 million. Net loss rose 40% to $39.7
million. Results reflect a greater number of advertisers
purchasing banners, offset by a $10.1 million amortization
charge and higher technology costs.

Play Description:
Stock likely to move in sympathy with Internet selloff on
earnings news. Excite is a 2nd tier stock that has
consolidated and for which heavy call activity may provide
overhead resistance in near term. Gravity-defying Internet
stock valuations may be nearing culminationŠ a correction in
the sector will create winners and losers, intensifying
competitive pressure and drive companies to consolidate.

Limited operating history; no assurance of profitability,
potential fluctuations in quarterly results; unpredictability
of future revenues, risks associated with banner advertising, 
intense competition in the sale of advertising on the web, risks
related to sponsorships, and risks related to netcenter agreement
are just a few of the many risk factors that investors will soon 
reckon with.

Play: Overbought / Overextended 
EXTREMELY RISKY! Trade accordingly

Moved up fractionally during Fridayıs (1/15) strong relief
rally. Still over extended at $67. Tighten protective sell 
stop to $70.25.

BUY PUT FEB-75 KQB-NO OI=112 @ $15.25 SL=11.75
BUY PUT FEB-70 KQB-NN OI=162 @ $12.13 SL= 9.75
BUY PUT FEB-65 KQB-NM OI=246 @ $ 8.63 SL= 6.75

Chart = http://quote.yahoo.com/q?s=xcit&d=3m

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