Option Investor
Newsletter

Daily Newsletter, Sunday, 02/14/1999

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The Option Investor Newsletter            Sunday  2-14-99  1 of 6
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

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
******************************************************************
MARKET STATS FOR LAST WEEK AND PRIOR WEEKS
******************************************************************
        WE 2-12          WE 2-5           WE 1-29          WE 1-22
DOW     9274.89 - 29.35  9304.24 - 54.59  9358.83 +238.16  -219.88   
Nasdaq  2321.89 - 51.73  2373.62 -132.27  2505.89 +167.01  -  9.27   
S&P-100  616.14 -  1.53   617.67 - 22.77   640.44 + 30.06  -  6.08   
S&P-500 1230.13 -  9.27  1239.40 - 40.20  1279.64 + 54.45  - 18.07   
RUT      398.44 - 14.28   412.72 - 14.50   427.22 +  4.78  -  4.61   
TRAN    3096.89 -150.77  3247.66 + 45.29  3202.37 +138.57  - 84.73   
VIX       31.35            30.47            26.53            32.85
Put/Call    .85              .64              .47              .54
******************************************************************

A classic failed rally or fear of the holiday weekend along with
a post impeachment dip?


Whichever the case may be the techs gave back almost all of their
big gains from Thursday and the Dow followed right along. The top
four stocks in the Nasdaq accounted for a whopping +26% of the
gain on Thursday. The same four stocks on Friday accounted for
50% of the drop. 

The major culprit of course was Dell. Dell was hit before
market opened by two analysts who claimed they were expecting
soft sales from Dell this quarter which will be announced on
Tuesday. That along with a an analyst setting his target price
at $80 sent Dell crashing to a -$12 drop. Dell has always had a
habit of pulling back some just before the earnings as traders
take their profits before the announcement. Dell has done so
well for so long that they are held to a higher standard on
earnings day. Dell has gone up +80% in the last six months and
you can't blame traders for trying to convert the high stock
price back to cash. What has happened may be good in the long
run. The severe drop has setup a lowered expectation of what
to expect from Dell on Tuesday. If Dell blows out the whisper
numbers they could really fly. Just remember that without a
stock split announcement, and at $90 we do not expect one, there
is nothing to hold up the price after the earnings announcement.
If you own Dell currently you should watch for any signs of 
weakness after earnings and bail accordingly.

The market did not sell off on Friday. It drifted off due to 
a lack of buyers again. The talk on the floor was that no one
wanted to hold over the long weekend with Brazil, Argentina,
and Japan all pregnant with the possibility of a currency
event. Japan has used our holidays against us before in the
currency war and will probably use them again. 

Another factor was the end of the impeachment trial. Even though
the outcome was know months ago some traders had expected a
relief rally after the vote was taken. When the rally did not
appear some of the traders who had been holding decided to
move back into cash to be ready for the next cycle. A prime
example of buy the rumor, sell the fact. The market discounts
ever conceivable news event far in advance of the actual event.
The bond market for instance is already pricing in the next
interest rate change as a +.25% hike. It may be months away
but the direction is clear.

The market is still trading in a tight range between 9200-9400
except for brief penetrations to either side. The market could
be sitting up for a series of higher lows. We have penetrated
9200 on the downside only four times this year. The last attempt
on Feb-10th briefly touched 9100 only to rebound to almost 9400.
On Friday we plateaued on the down side at about 9240. Every
drop under 9240 was immediately met with a rebound. I think if
we can continue to hold 9240 and or least 9200 then we will
get a good base built which will protect us from a stronger
drop any time soon. There is still no conviction in the market
on either the buy or sell side. Does "range bound" ring a bell. 

The volatility at this level is tremendous. Last week the
Nasdaq, which had just set an all time high on Feb 1st, was
breaking records almost every day. On Tuesday the Nasdaq had
the third largest drop in history. The previous third worst
was the week before. Then on Thursday we had the largest gain
in history, followed on Friday by the fourth largest drop in
history. Four in the top four in only two weeks. The bright
side for me was the strength of some of the secondary Nasdaq
stocks. Some only dropped fractionally and many actually 
posted some small gains on Friday. I think the Dell assassination
was the key factor in the Friday drop. If they pull off some
strong earnings on Tuesday then the money will move back into 
techs and we could see another rally. Conversely if Dell trips
carrying the hopes of the sector then it is lookout below.
Michael, we could sure use another miracle here! 

Nasdaq support is at 2300 and we have held even in the face
of some serious drops. Should we close way under 2300 the
next stop is 2000. I do not want to go there!! It would be
a good buying opportunity but that assumes you are not
currently invested. The clue to get out would be any close
more than a point or two under 2300. Sit on the sidelines
then and wait for the next move.

The put/call ratios are climbing into rally territory but
are not quite there yet at .82. The VIX spiked to 33.53 
intraday on Friday but quickly dropped back to 31.35 at the
close. The VIX high for the year is only 36.79 on an intraday
basis. This would tend to support a coming rally as well.
Remember, when the VIX is high it is time to buy. When the
VIX is low it is time to go!

The wild card here is still the Russell-2000. At its current
sub 400 level (398.44) it is on the bubble. No significant
Dow rally can last without confirmation from the Russell.
The RUT has been in free fall since Feb-1st and shows no
sign of stopping. There was a momentary sign of life on
Thursday but the EKG took a turn for the worst on Friday.

Volume was still light on Friday but advance/declines were
very negative. The declines beat the advancers by a more
than 2:1 margin. 4736 to 2217. This is not a good sign even
with light volume. We are now negative for eight of the
last ten days. The only positive straw I can grasp at here
is maybe this was a final spasam which normally precedes
the end of a correction. Just a straw! 

You can see the quandary most analysts are in. There are a
lot of both positive and negative signs in the market. We
can go either way. The most positive factor is the strength
of the economy and lack of reasons for a crash. The only
thing the bears can point to is the historically over priced
S&P at 27 times earnings. As long as earnings continue to 
increase then it is not a problem. Some point to an early
Y2K cautionary sell off starting. Too early in our book.
While we are waiting to see how the next chapter in this
market goes, we suggest only taking half of your normal
position and using tighter stops. You never know when the
next big drop may start and it is better to be safe than
sorry. An A.G.Edwards analyst, Stuart Freeman, said again
Friday that he thinks the Dow is fairly valued and still
sees Dow 10,000 soon. We sure hope so Stuart. The Dow did
close well off it's lows of -134 on Friday but we would 
have liked to see something in -50 range or better.

Our buddy, Tom Kurlack, resigned from Merrill Lynch this
week. Seems that many people were angry at him for missing
the big semiconductor rally we have seen in the last two 
months. He is going over to join the team at Tiger 
Management, a well known hedge fund. Gosh, do you think
he wanted to get in one last jab at the market last week
when he cut chip stocks again. Do you think he knew he
was resigning before his highly publicized Intel attack
recently. He has caused more grief for Intel than all the
other chip makers combined. Wish I could say we are sorry
to see you go Tom, but good luck in your new position anyway.
Anybody got any money invested with Tiger?

To summarize the outlook for the week, I wish I could say
something positive but the watchword is caution again. I
hope we are just passing time basing here but we could also
be setting up for the next leg down in a tech correction.
Nobody knows and anybody that tells you they do is lying.
I have been accused lately of having my objectiveness
clouded by excessive optimism. Show me somebody who is
not leaning in one direction or another. I do look at the
market currently with an optimistic view. I see no reason
for the market to move down over the next two months other
than profit taking. With the huge inflow of cash coming
into the market any profit taking dips should be met with
buyers. Granted there is nothing to move the market upward
again either, other than liquidity, until the April earnings
period. Without direction and conviction we are not likely
to see any sustained moves. Just three steps forward, two
steps back until the March pre-earnings run starts. I always
urge readers to do their own research from various sources
and make their own decisions. My decision for this week is
wait, watch and try for quick base hits when situations
present themselves. The bias should be up because of the
February options expiring on Friday. 

Good Luck

Jim Brown


************************************************************
JIM'S PLAYS		 
************************************************************
My plays will be listed in the Tuesday newsletter this week.

I got a lot of email this week about what indicators I 
watch when planning to trade. The answer is many !
I use Interquote as my realtime quote service. I set up
my screen to show my quotes on the left and on the right
I have three "traders window" live charts. I watch the
charts on the Dow ($indu), the Nasdaq ($compx) and the 
OEX ($oex). These are available in the live chart link
on the site. For indicators I use the $tick and $tiki
for ticks on the NYSE and DOW. (On Interquote the $tick
symbol is actually $@tsn). I also watch the advance/declines
on both Nasdaq ($@isz) and the NYSE ($@isn). You will have
to search for the symbols your quote service uses.

Basically I am looking for rising charts on all three
live charts, OEX, INDU, COMPX. I want to see positive
ticks on the Dow and the NYSE. I want to see more advances
than declines on both exchanges. Lately I have had to be
content with simply improving ratios on the adv/decl
since they have been negative 85% of the time.

Secondly I setup on Interquote about ten stocks with the 
specific option I would play if all the factors fall into
place. I also have about 250 symbols grouped by sector
on the same Interquote page, just below the active screen.
If I see something happening to a stock I want to play I
can just scroll down and look at all the major stocks in 
that sector at one glance. This will confirm a sector move
or simply a single stock move. You want the sector to be
positive before you play any stock within the sector.

If you can visualize this, I have 3 charts, and about 40
symbols on the screen at once, all updating in real time.
I have about 250 symbols in real time just out of sight
for confirmation. (Interquote allows up to 300 in one
portfolio) If the all these factors, charts, ticks, advances,
stock and sector are positive then your risk is as small
as you will ever be able to make it. I am not going into 
trying to play a bottom in detail but basically if the 
charts all turn up and the advances and ticks start improving
and the stock/sector all start moving off their lows I will
consider making a play. Again, wait for a significant move
to confirm the direction change before starting a play. 
On any down (or up) move you will get numerous false turns
which last for several minutes. The real turns are usually
strong. The false turns are weak and tenuous. Wait for
confirmation!



************************************************************
Split Calendar
************************************************************ 

Symbol - Stock      Splits/Date  

MRX  - Medicis Pharma  3:2 02-16-99 ex-date 02-17
MRK  - Merck           2:1 02-16-99 ex-date 02-17
JBL  - Jabil Circuit   2:1 02-17-99 ex-date 02-18 
BRCM - Broadcom        2:1 02-17-99 ex-date 02-18
LLTC - Linear Tech     2:1 02-19-99 ex-date 02-22
AMTD - Ameritrade      2:1 02-22-99 ex-date 02-23
GNET - go2net          2:1 02-22-99 ex-date 02-23 no options
AOL  - AmericaOnline   2:1 02-22-99 ex-date 02-23 current play
XRX  - Xerox           2:1 02-23-99 ex-date 02-24
SLR  - Solectron       2:1 02-24-99 ex-date 02-25 current play
AA   - Alcoa           2:1 02-25-99 ex-date 02-26
BMY  - Bristol Meyers  2:1 02-26-99 ex-date 03-01
CEN  - Ceridian        2:1 02-26-99 ex-date 03-01
PDX  - Pediatrix       2:1 02-26-99 ex-date 03-01
AMGN - Amgen           2:1 02-26-99 ex-date 03-01
CPWR - Compuware       2:1 02-26-99 ex-date 03-01
MERQ - Mercury Interact2:1 02-26-99 ex-date 03-01
ORCL - Oracle          3:2 02-26-99 ex-date 03-01 current play
EBAY - eBay Inc.       3:1 03-01-99 ex-date 03-02
AAS  - Amerisource     2:1 03-03-99 ex-date 03-05
APEX - APEX PC Solution2:1 03-03-99 ex-date 03-05
CSGS - CSG Systems     2:1 03-05-99 ex-date 03-08
MCD  - McDonalds       2:1 03-05-99 ex-date 03-08 current play
MHP  - McGraw Hill     2:1 03-08-99 ex-date 03-09
XLNX - Xilinx Inc      2:1 03-11-99 ex-date 03-12
NSOL - Network Solution2:1 03-23-99 ex-date 03-24
MSFT - Microsoft       2:1 03-26-99 ex-date 03-29 current play
SUNW - SunMicro        2:1 04-08-99 ex-date 04-09 current play
INTC - Intel           2:1 04-12-99 ex-date 04-13
EXDS - Exodus Comms    2:1 04-12-99 ex-date 04-13
IBM  - IBM             2:1 05-26-99 ex-date 05-27



*********************************************************
Market Sentiment - By Pinnacle Capital Advisors
*********************************************************

And Lower Highs Spells a Failed Rally

You just saw a classic failed rally develop right before your 
eyes.  As Pinnacle alerted subscribers Thursday night (2/11),
when our trusted sentiment indicators are flashing BEARISH
overtones, the likelihood of a failed rally is stronger -
particularly near key benchmarks.

640 - Monday, February 1st
635 - Wednesday, February 3rd
630 - Thursday, February 11th


 
What does this mean for investors over the near-term.  Simply PUT
(excuse the pun), savvy option traders should be looking to
short the market instead of buying the dip.  One opportunity is
the Networking (NWX) sector within the Technology group.  While
blue-chip tech issues have led the market higher in recent
weeks, take a look at what occurred on Friday (2/12) to
Networking.  It could not hold the gains acquired during
Thursday's (2/11) strong relief rally.  What's more, the
Networking index is now trading BELOW its 50-day moving average
and its break out level of 400.  If Technology is supposed to be 
rock and roll, why is Networking beginning to rolling over? 



Another short/hedge opportunity is within the Hot internet sector.
For aggressive and experienced option traders, the following 
Internet stocks are flashing classic failed rallies which could 
lead into continued sell-offs:

AMTD - Ameritrade
AMZN - Amazon.com
AOL  - America Online 
CMGI - CMGI, Inc
ELNK - EarthLink, Inc
GCTY - Geocities
LCOS - Lycos Inc
RNWK - Real Networks
SEEK - Infoseek
TGLO - TheGlobe.com
XCIT - Excite Inc
YHOO - Yahoo Inc.


A detail breakdown of Pinnacle Capital Advisors' market
sentiment analysis together with supporting charts, graphs,
tables and explanations can be accessed through OI's
website at:

http://www.OptionInvestor.com/marketsentiment/index.asp


Market Sentiment at a Glance
********************************************************************   
                                Friday     Tues      Thurs  
Indicator                       (2/12)     (2/16)    (2/18)   Alert
********************************************************************

Pinnacle Index (OEX):          
-----------------------------------------------------------------
Overhead Resistance (630-655)     5.2
Underlying Support  (600-610)     2.2


Put/Call Ratios:
-----------------------------------------------------------------
CBOE Total P/C Ratio               .5
CBOE Equity P/C Ratio              .4                         
OEX P/C Ratio                     1.0                           *  


Peak Open Interest (OEX):
-----------------------------------------------------------------
Puts                              610    
Calls                             660   
P/C Ratio                        1.20    


Market Volatility Index (VIX):	
-----------------------------------------------------------------
CBOE VIX                        31.35                           *



Investors Intelligence:
-----------------------------------------------------------------
Bullish                          61.7%                          *  
Bearish                          25.9%                          *
		



The Power of Sentiment 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                       (2/12)     (2/16)    (2/18)
-----------------------------------------------------------------
               
                    (650-655)     34.8
                    (640-645)      7.2
                    (630-640)      2.2
Overhead Resistance (630-645)      5.2

OEX Close                       616.14

Underlying Support  (600-610)      2.2 
                    (605-610)      2.0
                    (600-605)      2.6

Average ratings: 
Resistance levels 2.0 / Support .5

What the Pinnacle Index is telling us:
Overhead sentiment resistance is Heavy at the OEX 630/645
level while the underlying support is weak at the
OEX 600/610 level.


Put/Call Ratio 
-----------------------------------------------------------------
                                Friday     Tues      Thurs
Strike/Contracts                (2/12)     (2/16)    (2/18) 
-----------------------------------------------------------------
CBOE Total P/C Ratio               .52 
CBOE Equity P/C Ratio              .36 
OEX P/C Ratio                     1.04


Peak Open Interest (OEX)
-----------------------------------------------------------------
                     Friday         Tues           Thurs
Strike/Contracts     (2/12)          (2/16)          (2/18)
-----------------------------------------------------------------
Puts                 610 / 16,753
Calls                660 / 14,775 
Put/Call Ratio       1.20






Market Volatility Index (VIX)
-----------------------------------------------------------------
                    Major
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

February 12, 1999                       31.35   *





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

February 12, 1999                     60.0        26.7   *



*********************************************************
Market Posture
*********************************************************
As of Market Close - Friday, February 12, 1999 

                   Key Benchmarks
Broad Market       Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************

DOW Industrials    9,200   9,500   9,275    Neutral   2.11            
SPX S&P 500        1,210   1,280   1,230    Neutral   2.11   
OEX S&P 100          610     635     616    Neutral   2.11    
RUT Russell 2000     420     435     398    BEARISH   2.4    

NDX NASD 100       1,900   2,150   1,959    Neutral   2.2  
MSH High Tech        930   1,040     946    Neutral   2.11      

                   Key Benchmarks
Technology         Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
XCI Hardware         860     970     873    Neutral   2.11        
CWX Software         620     680     634    Neutral   2.11           
SOX Semiconductor    375     420     392    Neutral   2.11    
NWX Networking       400     450     398    BEARISH   2.12 *           
INX Internet         470     570     474    Neutral   2.11     

                   Key Benchmarks
Financial          Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
BIX Banking          630     675     633    Neutral   2.11                  
XBD Brokerage        630     700     659    Neutral   2.5      
IUX Insurance        570     610     577    Neutral   2.11            

                   Key Benchmarks
Other              Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
RLX Retail           825     880     844    Neutral   2.11    
DRG Drug             750     795     770    Neutral   2.11      
HCX Healthcare       750     780     766    Neutral   2.11              
XAL Airline          300     330     307    Neutral   1.29                
OIX Oil & Gas        230     250     232    Neutral   2.4                 



Posture Alert

We remain Neutral across broad market indices after giving 
back most of Thursday's (2/11) gain before the long weekend. 
However, we want to caution investors that certain sectors
are beginning to roll over again at or near their key
benchmarks support levels. Within technology, for example, we 
have turned BEARISH on the Networking sector after rolling 
over and falling BELOW its 50-day moving average and key 
benchmark at the NWX 400 level.

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

www.OptionInvestor.com/marketposture

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

None Scheduled

Tuesday:

LJR Redbook       2/13     Forecast:  --     Previous:  1.3%
BTM/Schroeders    2/13     Forecast:  --     Previous: -0.8%

Wednesday:

Capacity Util     Jan      Forecast:  80.7%  Previous:  80.9%
API Oil Stocks    2/13     Forecast:  --     Previous: 325.9M
Housing Starts    Jan      Forecast:  1.70M  Previous: 1.72M
Building Permits  Jan      Forecast:  --     Previous: 1.723M
Industrial Prod   Jan      Forecast:  0.1%   Previous: 0.2% 
Export Prices     Jan      Forecast:  --     Previous: -0.2%
Non-Ag            Jan      Forecast:  -0.5%  Previous: -0.7%

Thursday:

Jobless Claims    2/13     Forecast:  --     Previous: 281k 
Producer Price Idx Jan     Forecast:  0.1%   Previous: 0.4%  
PPI ex-food&energy Jan     Forecast:  0.2%   Previous: 1.0% 
Money Supply (M2) 02/08    Forecast:  --     Previous: $8.7B
Phil Fed Index     Feb     Forecast:  --     Previous: 12.4

Friday:

Consumer Price Idx Jan     Forecast:  0.2%   Previous: 0.1%
CPI ex-food&energy Jan     Forecast:  0.3%   Previous: 0.3% 
International trade Dec    Forecast: -$15.4B Previous: -$15.5B
Real Earnings      Jan     Forecast:  --     Previous: 0.5%




*****************************************************
Last weeks change for this weeks picks:
*****************************************************
Index    Last   Week
Dow    9274.89 -29.35
Nasdaq 2321.89 -51.73
$OEX    616.14  -1.53
$SPX   1230.13  -9.27
$RUT    398.44 -14.28
$TRAN  3096.89-150.77
$VIX     31.35   0.88

Stock    Price   Week

SLR      86.00   9.12 It's back.  Splits 2:1 on 2/25
CLX     129.50   8.63 Set new highs last week!
COF     121.81   6.37 New play with strong bounce.
EMC     102.38   4.88 It's back and looks strong.
VOD     180.13   3.25 New play with good recovery.
WCOM     79.44   3.19 Beat earnings, look to hold $80
MCD      81.31   0.99 Splits 2:1 on Mar. 5th.
ANF      74.56   0.94 Earnings expected Tue/Wed.
VISX     59.75   0.56 Held up well in tech sell off.
ORCL     56.69   0.50 Splits 3:2 on Mar. 1st.
LVLT     56.00   0.31 Earnings are Thursday 2/18
WMT      84.38   0.13 Notice! earnings changed to 2/16
SUNW    100.44  -0.19 May have bottomed
MWD      88.50  -0.50 Takeover rumors again.
LOW      54.00  -1.00 Earnings are 2/22
DH       60.56  -1.57 Earnings are 3/2
COMS     32.25  -1.94 Intel takeover rumor.
MEDI     50.25  -2.20 Looks like profit taking is over.
MSFT    157.75  -2.25 Support at $155, watch closely!
MDT      84.00  -2.75 Earnings Tues. 2/16
PSIX     34.56  -2.82 Earnings changed to 2/23
EGRP     46.00  -2.94 Recovering with strong bounce
GTW      70.25  -3.75 Watch DELL for direction.
AMTD     90.31  -5.19 New play, Splits 2:1 on 2/23
AOL     158.50  -5.44 Splits 2:1 on 2/22
UTX     119.00  -6.00 Profit Taking
DELL     89.88 -10.55 Earnings after the bell 2/16

Puts
PHSYB    63.75  -5.06 Breaking down
WLA      69.00  -3.00 Under pressure
MCHP     28.88  -2.63 Trying to hold on
ADBE     43.56  -2.50 Breaking down
BDX      34.88  -1.69 Fighting to stay afloat
ERTS     40.69   0.62 Slipping
BKB      35.81   0.63 Banks next to roll over?
BMCS     46.06   0.88 Looking for direction
AXP      99.94   1.81 Lower high
BAC      62.88   2.13 At 50-dma
PG       87.50   2.63 Multinational play



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

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

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

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

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

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

http://www.interquote.com/


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

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

The monthly subscription price is $39.95
The quarterly price is $99.95 which is $20 off the monthly rate.

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

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and click on "subscribe" to use our secure credit 
card server.

You may also call us at 303-797-0200 and give us the 
information over the phone.

You may also fax the information to: 303-797-1333

*************************************************************
                      DISCLAIMER
*************************************************************
This newsletter is a publication dedicated to the education 
of options traders. The newsletter is an information service 
only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
buy or sell securities presented. All investors should consult 
a qualified professional before trading in any security. The 
information provided has been obtained from sources deemed 
reliable but is not guaranteed as to accuracy or completeness.
The newsletter staff makes every effort to provide timely 
information to its subscribers but cannot guarantee specific 
delivery times due to factors beyond our control.
The Option Investor Newsletter              2-14-99
Sunday                   2  of  6


**************************************
PICK SUMMARY
**************************************
SL  = Suggested stop loss. Sell if bid breaks this price.
OI  = Open Interest - the number of open contracts outstanding.
TP/P= True premium or Time premium
RRR = Risk/Reward/Ratio
ITM = In the money
ATM = At the money
OTM = Out of the money
MTD = Move to double - amount stock must move to double option price
                       in one week. ONE WEEK MOVE ONLY !

Numbers within ( ) are the amount of change for the week.
Numbers within ( ) may be designated with PxW, like P3W, prior 3 weeks

The options with a "*" by the strike price are our choices from the 
group. If the stock moves as expected we feel they have the best 
chance to substantially increase or double in price with the best
risk/reward ratio compared to the other options for the same stock.
You must determine if they fit your risk profile for time and price.

Analysts ratings: 1-2-3-4-5 
Analysts who follow each stock rate it and these rating are 
accumulated and displayed as follows;

Position 1 = number of analysts recommending "strong buy"
Position 2 = number of analysts recommending "moderate buy"
Position 3 = number of analysts recommending "hold" or "neutral"
Position 4 = number of analysts recommending "moderate sell"
Position 5 = number of analysts recommending "strong sell" 

Example rating 5-3-1-0-0 would be 5 "strong buys", 3 "moderate buys",
1 "hold" recommendation.


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

Calls

AMTD - Ameritrade
EMC  - EMC Corp
SLR  - Solectron
COF  - Capital One Finance
VOD  - Vodaphone

Puts

ELNK - Earthlink

*****************************************
PICKS WE DROPPED THIS WEEK
*****************************************
Remember that historically, when we drop a pick it will go up 
10 to 15% the very next week. It is part of Murphy's Law.
Just because we drop a stock as a pick does not mean we are
advocating a "sell" on any position you have. We are simply
dropping our recommendation as a new play. Existing plays
can and do continue on and are usually profitable.
*****************************************

CALLS:

VIA.B $83.00 (-1.19)  Even though Viacom is just beginning 
another uptrend after being hit pretty hard in the weak 
market, we have to drop it as a play.  Virtually no one is 
trading options for this company even though they have decent 
open interest.  We will be keeping an eye on the volume and 
will be watching for it to break its resistance level 
of $85.50.

WAG $60.38 (-0.31)  Split plays are one of the few types of 
plays that can sometimes overcome negative market conditions.  
We want to emphasize the "sometimes" part of that statement.  
Walgreen's had tried and tried to get it going before it split 
2:1 this past Friday.  But, our indecisive market definitely 
held the move back.  We are dropping the play to see what 
happens in trading following the split.  We would like to see 
it break its resistance level of $63.00 and generate another 
uptrend before we will consider covering this company again.  

CC - Circuit City $53.19 (-9.19)  Sometimes a play just 
goes the wrong way.  CC is one of them.  Volume was strong 
in the negative direction indicating investors are bailing 
out.  Technicals are 180 degrees from when we picked CC.  
No news is available showing the reason for the price 
hammering other than the big market drops.  We're not
waiting around to hope it up and are dropping CC until we
find visibility.


PUTS: 

AVT
MRK
SPLN

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

EMC  - EMC Corp	    
WMT  - Wal-Mart
NOKA - Nokia
LXK  - Lexmark Intl Group Inc
VOD  - Vodaphone

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

Symbol - Stock      Splits/Date  


MRX  - Medicis Pharma  3:2 02-16-99 ex-date 02-17
MRK  - Merck           2:1 02-16-99 ex-date 02-17
JBL  - Jabil Circuit   2:1 02-17-99 ex-date 02-18 
BRCM - Broadcom        2:1 02-17-99 ex-date 02-18
LLTC - Linear Tech     2:1 02-19-99 ex-date 02-22
AMTD - Ameritrade      2:1 02-22-99 ex-date 02-23
GNET - go2net          2:1 02-22-99 ex-date 02-23 no options
AOL  - AmericaOnline   2:1 02-22-99 ex-date 02-23 current play
XRX  - Xerox           2:1 02-23-99 ex-date 02-24
SLR  - Solectron       2:1 02-24-99 ex-date 02-25 current play
AA   - Alcoa           2:1 02-25-99 ex-date 02-26
BMY  - Bristol Meyers  2:1 02-26-99 ex-date 03-01
CEN  - Ceridian        2:1 02-26-99 ex-date 03-01
PDX  - Pediatrix       2:1 02-26-99 ex-date 03-01
AMGN - Amgen           2:1 02-26-99 ex-date 03-01
CPWR - Compuware       2:1 02-26-99 ex-date 03-01
MERQ - Mercury Interact2:1 02-26-99 ex-date 03-01
ORCL - Oracle          3:2 02-26-99 ex-date 03-01 current play
EBAY - eBay Inc.       3:1 03-01-99 ex-date 03-02
AAS  - Amerisource     2:1 03-03-99 ex-date 03-05
APEX - APEX PC Solution2:1 03-03-99 ex-date 03-05
CSGS - CSG Systems     2:1 03-05-99 ex-date 03-08
MCD  - McDonalds       2:1 03-05-99 ex-date 03-08 current play
MHP  - McGraw Hill     2:1 03-08-99 ex-date 03-09
XLNX - Xilinx Inc      2:1 03-11-99 ex-date 03-12
NSOL - Network Solution2:1 03-23-99 ex-date 03-24
MSFT - Microsoft       2:1 03-26-99 ex-date 03-29 current play
SUNW - SunMicro        2:1 04-08-99 ex-date 04-09 current play
INTC - Intel           2:1 04-12-99 ex-date 04-13
EXDS - Exodus Comms    2:1 04-12-99 ex-date 04-13
IBM  - IBM             2:1 05-26-99 ex-date 05-27

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


***************************************************
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 ! 
*****************************************************
AOL - America Online $158.50 (-5.50)(P10W +103.05)

Splits in 2/22

See details in sector list

Chart = http://quote.yahoo.com/q?s=AOL&d=3m
*****************************************************
SLR - Solectron, Inc. $86.00 (+9.12)

Splits in 2/25

See details in sector list

Chart = http://quote.yahoo.com/q?s=slr&d=3m
*****************************************************
ORCL - Oracle Corporation  $56.69 (+.50)(+.81)(+5.50)(+2.75)

Splits in 2/26

See details in sector list

Chart = http://quote.yahoo.com/q?s=orcl&d=3m
*****************************************************
THE PLAY OF THE DAY -CALLS- ONLY PLAY IN RISING MARKET
*****************************************************
With all the great plays each week we can never decide
on just one so take your pick. 

*****************************************************
AOL - America Online $158.50 (-5.50)(P10W +103.05)

With just 1 week left before their 2:1 split and a recent
sell off to satisfy the profit taking, AOL looks ready for
a split run. Wait for upward confirmation.

See details in sector list

Chart = http://quote.yahoo.com/q?s=AOL&d=3m
*****************************************************
EMC - EMC Corporation $102.38 (+4.88)

Recovering nicely from the sell off.

See details in sector list

Chart = http://quote.yahoo.com/q?s=emc&d=3m
*****************************************************
SLR - Solectron, Inc. $86.00 (+9.12)

Splits 2/26

See details in sector list

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



***************************************
Brokerage/Banking - Sector
***************************************
COF -  Capital One $121.81 (+6.37)

Capital One is a financial holding company for Capital One 
Bank F.S.B., one of the top 10 credit card companies in the 
US.  COF advertises to its Visa and MasterCard customers over 
3,000 combinations of annual percentage rates, credit limits, 
finance charges, and fees that are available on several of its 
different credit cards.  As you probably well know, it often 
solicits by mail. 

On Jan. 19th, Capital One Financial had a lot to say when it 
released its earnings numbers.  First of all, it reported a 25% 
increase in 4Q earnings and $1.04 per share versus $0.86 from 
last year.  They predicted that they will meet earnings targets 
for this year too.  Their chairman and chief executive officer 
went on to say that they have achieved their earnings growth 
targets for four years in a row while managing to add record 
investments to their business.  He said they were adding 20,000 
new customers every day!  Since that time, the stock has dipped 
in our weakened market that was affected partially from concerns 
of Brazilian and Japanese financial trouble despite the fact 
that COF has virtually no exposure there.  But in the past 
few days, COF has been strong.  If the markets firm this week, 
look for COF to do well.  

News:  To handle its increasing growth demands, COF is 
expanding.  It will open its first facility on the West Coast 
just south of Seattle, Washington.  By Feb. of 2001, it expects 
to employ approximately 500 associates there.  It is also 
expanding in its head quarter state of Virginia.  In 1999 it 
will hire more than 3,000 associates and will lease some 
additional buildings for more space. 

BUY CALL MAR-120*COF-CD OI=448 at $ 9.50 SL= 7.25
BUY CALL MAR-125 COF-CE OI=505 at $ 7.00 SL= 5.25
BUY CALL JUN-120 COF-FD OI= 21 at $16.75 SL=13.00
BUY CALL JUN-125 COF-FE OI= 96 at $14.50 SL=11.75
BUY CALL JUN-130 COF-FF OI=106 at $12.25 SL= 9.50

Picked on February 13th at $121.81      PE= 30
Change since picked        +$ 0.00      52 week low =$ 51.75
Analysts Ratings         9-4-3-0-0      52 week high=$140.00
Last earnings 01/99 est 0.86   actual 1.04 
Next earnings 04/16 est 1.21   versus 0.96
Average Daily Volume = 423.1 K
Chart = http://quote.yahoo.com/q?s=COF&d=3m
*******************************************
MWD - Morgan Stanley Dean Witter $89.00 (-.50)(+2.37)

MWD is a diversified financial service organization which 
provides services in three main areas: securities, asset 
management and credit services.  The company was formed 
through the merger of Morgan Stanley Group Inc. and Dean 
Witter Discover & Co. in June 1997.  Credit services consist 
primarily of the issuance, marketing and servicing of the 
discover card, a general-purpose credit card conducted through 
its subsidiary Novus Credit Services Inc.  The company through 
its subsidiaries provides financial and securities services on 
a global scale and credit and transaction services nationally. 
The securities business serves the investment needs of clients 
by providing a range of financial products, services and 
investment advice.  During 1997 the company acquired Discover 
Brokerage Direct In (formerly Lombard Brokerage Inc).

MWD finished the week almost flat, but we like the fact that
on Friday it only gave up half the gains it made on Thursday.
MWD is sitting right on its 10-dma.  Market permitting, MWD
could be set to reach new highs.   

Hasn't been much in the wind the last few days about a take
over of MWD, but we like the fact that this stock doesn't
necessarily drop without the news.  MWD is in stock split 
territory.  It last split in early 1997 at around $75.  MWD's 
proxy should be put out sometime this month.  This will
announce when the shareholding meeting is.  We will watch this
and let you know when it is announced.  A shareholders meeting
is a good time to announce a stock split. 

BUY CALL MAR-85 MWD-CQ OI= 166 at $7.88 SL=5.75 ITM $3.50 
BUY CALL MAR-90*MWD-CR OI= 748 at $5.25 SL=3.25 
BUY CALL MAR-95 MWD-CS OI= 967 at $3.50 SL=1.75
BUY CALL APR-90 MWD-DR OI=1162 at $7.00 SL=5.25
BUY CALL APR-95 MWD-DS OI=1254 at $5.25 SL=3.25

Picked on Feb.6th at      $89.00   PE = 17
Change since picked        -0.50   52 week low =$36.50 
Analysts Ratings       5-4-5-0-0   52 week high=$97.50
Last earnings on 11-98 est= 0.97   actual= 1.48
Next earnings on 04-07 est= 1.17   versus= 1.10
Average daily volume = 1.99 mln
Chart = http://quote.yahoo.com/q?s=MWD&d=3m
*******************************************
AMTD - Ameritrade $90.31 (-5.19)(+15.25)(+30.25)

Ameritrade is a discount broker that provides electronic 
trading as well as market data and research services. For it 
fiscal year ending 2-25-98, total revenues increased 72% to 
$164.2m. Net loss decreased 98% to $210K. 

Ameritrade has seen its total number of securities 
transactions increase dramatically in the last couple of 
years, and in particular, very recently. The result has been 
a dramatic rise in its stock price and a split announcement, 
which has sent the stock even higher. From its close of $66.75 
on 1-28 to its intra-day high of $135.00 on 2-4, AMTD more 
than doubled in price-in 5 trading days. Looking to recommend 
AMTD for an expected split run, we watched it add 20 points 
on Wednesday from a low shortly after the open. On Thursday,
it gapped up and climbed another $15.00. On Friday, it finally 
gapped down at the open and traded in a 12 point range before 
closing down $8.19 on the day. We decided to grab them on the 
dip for a short split play.

This stock can trade in a wide range in a single day, so you 
may want to day-trade it. With a market this volatile, you 
can make money, sell this option before day's end, and sleep 
well at night. Stock has been trading on very strong volume 
lately. Splits 2:1 on 2-23.  Qualifies as a high risk trade!

!CONFIRM stock direction before playing

BUY CALL MAR- 90*TQA-CR OI=306 at $15.50 SL=11.75
BUY CALL MAR- 95 TQA-CS OI=257 at $13.63 SL=11.00
BUY CALL MAR-100 TQA-CT OI=250 at $12.25 SL= 9.75
BUY CALL MAR-105 TQA-CA OI=116 at $10.38 SL= 7.50

No fundamentals-split play only

Average daily volume = 1.06 mln

Chart = http://quote.yahoo.com/q?s=AMTD&d=3m
*******************************************
EGRP - E*Trade Group, Inc. $46.00 (-2.94)

EGRP is the #3 online brokerage firm with almost 550,000
accounts.  EGRP also offers market data, cash and portfolio
management services, and options trading.  About 30% of sales
come from sales of advertising on its Web site, international
ventures, subscriptions, and other services.  Through joint
ventures the company also operates in such countries as Canada,
France, Germany, Japan, the Netherlands, and Poland.  SOFTBANK,
its joint venture partner in E*TRADE Japan, owns 28% of the
company. 

EGRP has been making quite a bit of news lately with their well
publicized system outages.  In fact, they have gotten hit with
a couple of lawsuits and an investigation by the New York
Attorney General in connection with the outages.  In a more
positive light, EGRP has just completed its initial investment
in E*Offering, a full service investment bank on the Internet. 
E*Offering will underwrite IPO's via the Internet which is in
contrast to the traditional investment bank.  E*Offering already 
has 30 stock offerings lined up.  

EGRP was a new pick last Thursday.  EGRP has been hit hard by
selling in the last week with the news of the system outages. 
We are adding EGRP to the play list because it appears as
though the selling might be over.  EGRP bounced last week off
of $35, which looks like support, and closed just below its 21
day moving average on Friday.  It is always dangerous to try
and pick a bottom, but the online brokerage group has some
tremendous momentum behind it.  Trading volumes surged 34%
during the fourth quarter of 1998 and are up 40% during
January.  EGRP is a volatile stock, so you should make sure it
fits your risk profile before trading it.  

BUY CALL MAR-45 QGR-CI OI= 348 at $ 7.75 SL=5.75
BUY CALL MAR-50*QGR-CJ OI=1164 at $ 6.25 SL=4.25
BUY CALL MAR-55 QGR-CK OI= 971 at $ 4.50 SL=2.75 riskier!
BUY CALL APR-50 QGR-DJ OI=1009 at $ 8.13 SL=6.25
BUY CALL JUL-60 QGR-GL OI= 455 at $10.88 SL=7.50

Picked on Feb 11th at $48.25   PE=n/a
Change since picked    -2.25   52 week low =$ 5.00
Analysts Ratings   2-4-4-0-0   52 week high=$66.44
Last earnings 12-98 est=-.14   actual=-.12
Next earnings 04-14 est=-.18   versus= .08
Average Daily Volume = 6.4 mln
Chart = http://quote.yahoo.com/q?s=EGRP&d=3m
*******************************************
Internet - Sector
*******************************************
AOL - America Online $158.50 (-5.50)(P10W +103.05)

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!) 

AOL suffered with the overall market last week and traded 
in a range of 142-166.  AOL is approaching its 2:1 split 
date of February 22.  Market willing, we should get another 
run.  MACD and stochastic are not looking so hot right now, 
but insiders are buying again, RSI has turned up and there 
was a good bounce off the 30 DMA.  Resistance is $177.  
Kauffman Bros. upgraded AOL to "buy".  Time premiums on 
March strikes are high and will be squeezed this week.  Be 
careful.  Given market jitters, wait for upward market, 
sector and stock confirmation, coupled with volume before 
starting a new play.  AOL still plays like an Internet even 
though funds are buying (Fidelity owns 6.8%).

In the news, AOL made a marketing deal with Columbia House 
getting access to its 13 million members.  Sun and AOL 
entered an agreement to develop a new web browser in AOL's 
Netscape division.  Sun has committed $1.25 billion to AOL.  
The revenue will be shared jointly.  Finally, ATT announced 
they will allow cable access to ISP's and will not act as a 
cable monopoly that would deny access unless they pay a 
subscriber fee.  AT&T's CEO, Michael Armstrong says 
increased traffic will build revenue and that monopolizing 
cable would be counter-productive.  That's good for AOL.

BUY CALL MAR-155 AOE-CK OI=2094 at $15.75 SL=12.00
BUY CALL MAR-160*AOE-CL OI=4304 at $13.38 SL=10.75
BUY CALL MAR-165 AOE-CM OI=3135 at $11.38 SL= 9.00
BUY CALL APR-165 AOE-DM OI=1813 at $16.75 SL=13.00

**Momentum & Split play**

Average daily volume: 14.6 mln.

Chart = http://quote.yahoo.com/q?s=AOL&d=3m
*******************************************
PSIX - PSINet Inc. $34.56 (-2.82)(+3.44)  

PSINet Inc. provides internet access services and Internet 
Protocol based value-added services to businesses throughout 
the United States and to other international customers. The 
company offers a broad spectrum of internet access services 
ranging from dial-up services to continuous access services 
using dedicated high-speed network circuits. The services also 
Include like web hosting, multi-currency electronic commerce, 
collocation, security services and other related services. The 
company has around 26,400 customers as of 31 December 1997. The 
international operations are in Canada, United Kingdom, Japan, 
North America, Asia and Europe. 

PSIX had a rough week, but we like the fact that it bounced
strongly off its 30-dma last Wednesday.  PSIX is an internet
stock and though it doesn't tend to be as volatile as the
other Internet plays, it still is affected by the moves in
the industry.  In our prior updates we stated the earnings
date as the 16th of February.  We saw a lot of sites change
this date so we called investor relations and the official
earnings date is before market on the 23rd of February.  The
whisper number is $-.95.

PSIX will look overseas to speed its growth.  The Net service  
provider's CFO, Ed Postal, said the company has made 18 
acquisitions in the past 12 months and is focused on making 
more in the near future. Business will be driven by "the need 
for more and more businesses to have global access to the 
Internet and by companies who want their presence accessible 
throughout the world," he said Thursday. High-growth areas 
include Canada and Asia, he said. Europe is also a target, 
although Postal said it's not growing as quickly. Postal said 
the company plans to invest another $600 million in its network, 
although he gave no timeframe.

BUY CALL MAR-30 SQP-CF OI=237 at $6.75 SL=5.00 ITM $4.56 
BUY CALL MAR-35*SQP-CG OI=768 at $4.13 SL=2.50
BUY CALL MAR-40 SQP-CH OI=842 at $2.31 SL=1.13 
BUY CALL APR-35 SQP-DG OI=289 at $5.63 SL=3.75
BUY CALL APR-40 SQP-DH OI=408 at $3.88 SL=2.25

Picked on Feb.4th at      $37.63   PE = n/a
Change since picked        -3.07   52 week low =$ 7.31 
Analysts Ratings       3-2-4-0-0   52 week high=$40.19
Last earnings on 10-98 est= -.82   actual=-.78
Next earnings on 02-23 est=-1.07   versus=-.36
Average daily volume = 1.19 mln
Chart = http://quote.yahoo.com/q?s=PSIX&d=3m
*******************************************

SEE DISCLAIMER IN SECTION ONE 

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

The Option Investor Newsletter          2-14-99
Sunday             Part 3 of 6

*******************************************
Telecom/Networking - Sector
*******************************************
WCOM - MCIWorldCom $79.44 (+3.19)(P9W+8.94)

Telecommunications behemoth, MCIWorldCom, is the recent 
offspring between a marriage of formerly #2 long distance 
provider MCI and #4 provider WorldCom.  Now the newly 
formed giant of giants is duking it out with AT&T as they 
stake their claim in the local phone service, international 
service, cellular, paging, and Internet access arenas.  
WorldCom's $37 billion purchase of MCI last September 
qualifies it the seventh largest merger or acquisition in 
1998.  WCOM is one of the largest Internet backbones 
providers in the world.  If you're reading this letter, 
somewhere in the transmission, WCOM fiber brought it to 
you.

It was a wild week for NASDAQ stocks, but WCOM, one of the 
top 5 weights in the NASDAQ 100, tacked on a gain.  
Earnings were a "penny ahead" at $0.23, compared with $0.10 
a year ago.  Data revenue jumped 29% and international 
revenue grew 55%.  WCOM struggled to break $80 and did last 
week but couldn't hold through the market down draft, 
giving up only $1 on Friday.  Volume was strong at 16 
million shares.  This is a good sign.  Technicals are 
turning up and about to go positive.  Two analysts put a 
"buy" rating on WCOM and upped their target prices to $95 
and $100.  Market willing, WCOM will get off the launch 
pad.  We think this 2 week consolidation is about over.  
New resistance is $82.  We recommend waiting until it 
penetrates that level with volume before starting the new 
play.  Don't hit your head on the ceiling!

MCI WorldCom announced it has signed an agreement with 
Electronic Data Systems (EDS), valued at about $17 billion, 
to exchange assets and employees.  In the on-going multiple 
court cases against the Baby Bells, WCOM hit the bull's eye 
when the Washington Utilities and Transportation Commission 
(WUTC) ruled last week that US West has consistently 
violated laws and engaged in practices to impede 
competition in the local phone market. The finding adopts 
almost every remedial recommendation proposed by MCI 
WorldCom in its complaint (PRNewswire).  This great news 
will be shared with all competitive local exchange carriers.

BUY CALL MAR-75 LDQ-CO OI= 6974 at $7.13 SL=5.25 ITM $4.44
BUY CALL MAR-80*LDQ-CP OI=14169 at $4.25 SL=2.50
BUY CALL MAR-85 LDQ-CQ OI=12408 at $2.06 SL=1.00
BUY CALL JUN-80 LDQ-FP OI= 4694 at $8.38 SL=6.25
BUY CALL JUN-85 LDQ-FQ OI= 2472 at $6.38 SL=4.25

Picked on November 29th at $62.44       PE = 86
Change since picked       +$17.00       52 week high=81.87
Analysts Ratings       22-9-3-0-0       52 week low =37.00
Last Earnings 02/11 est .22  actual .23  surprise +4.5%
Next Earnings 05/05 est .34  versus .10
Average daily volume = 10.2 mln.
Chart = http://quote.yahoo.com/q?s=WCOM&d=3m
*******************************************
LVLT - Level 3 Comm. $56.00 (+.31)(+3.31)
 
Acting as a stepping stone for Craig McCaw will take LVLT to 
the next level. LVLT is developing a national fiber-optic 
network, which a McCaw investment firm and McCaw-controlled 
Nextel and Nextlink will stake for $700 million in return for 
network capacity. LVLT will use Internet technology to offer 
local and long-distance services, to be provided initially 
through an 8,000-mile network leased from Frontier. LVLT also 
provides computer outsourcing and systems integration through 
subsidiary PKS Information Services. 

LVLT has been in somewhat of a range for the last week.  It
has been up one day, down the next.  This isn't too surprising
considering the market.  This week has been very tough on
technology stocks, yet LVLT has held up pretty strong.  LVLT
has a small gain to show and that can't be said for most
tech stocks.  The NASDAQ suffered about a 2% loss this past
week.  There is strong resistance at $60.  We feel if LVLT
can break this barrier there will be shorts running for the
exits.  A nice, short squeeze would be wonderful.

LVLT will announce earnings before the market on the 18th of
February.  This should help the volume to pick up.  The last
week has been below average volume for LVLT.  This is a 
bullish sign during a down or sideways moving period.  We 
feel volume and price will pickup this coming week.  Of course
the market in general will have a lot to do with this.  We 
can't get a good read on earnings this next week because 
there are only a few analysts and their earnings are very
diverse.  We do not recommend holding over earnings due to
the risks of a negative surprise.

BUY CALL MAR-55*QHN-CK OI= 730 at $5.00 SL=3.50 ITM $1.00 
BUY CALL MAR-60 QHN-CL OI=2401 at $2.94 SL=1.50 
BUY CALL MAR-65 QHN-CM OI=1477 at $1.50 SL= .75
BUY CALL JUN-60 QHN-FL OI= 433 at $7.00 SL=5.25
BUY CALL JUN-65 QHN-FM OI= 329 at $5.13 SL=3.50

Picked on Jan.30th at    $56.38    PE = N/A
Change since picked       -0.38    52 week low =$22.37 
Analysts Ratings      1-2-0-0-0    52 week high=$60.63
Last earnings on 10-98 est=-.15    actual=-.15
Next earnings on 02-18 est=-.28    versus=.??
Average daily volume = 639K
Chart = http://quote.yahoo.com/q?s=LVLT&d=3m
*******************************************
COMS- 3Com Corp $32.25 (-1.94)(-12.81)

3Com Corporation is the ranked #2 in the world as a maker of 
computer networking products.  Cisco is currently holding the 
number one spot. Its name "3Com" stands for the three "coms":  
computer, communication, and connectivity.  The company has 
offices in 45 countries with over half of its sales coming from 
outside the US.  It is a broad-based provider of local area 
network (LAN) and wide area network (WAN) systems for large 
and small business, home, and service provider markets.

All right already.  Our "dead cat" is already dead!  But the 
market doesn't seem to have any sympathy and it hit COMS for 
another -$1.56 on Friday.  When a good stock has been 
pulverized, it often rebounds.  Now that the market is assured 
that Clinton is still our nation's President, maybe it will 
ease up on our lowly 3Com.   We will be attentively listening 
for Intel to announce any future plans involving COMS since it 
is still rumored that a buy out is possible.  Again, this is a 
risky play.  Wait for some positive movement in the stock 
before investing.  

News:  3Com continues to own the top market share for Fast 
Ethernet network interface cards.  The company introduced 
its first version 20 years ago and still holds a 49% piece 
of the market.  

BUY CALL MAR-30.00 THQ-CF OI= 687 at $4.63 SL=2.75
BUY CALL MAR-32.50 THQ-CZ OI= 703 at $3.25 SL=1.75
BUY CALL MAR-35.00 THQ-CG OI=2685 at $2.00 SL=1.00
BUY CALL APR-30.00 THQ-DF OI=1345 at $5.75 SL=4.25
BUY CALL APR-32.50 THQ-DZ OI=1655 at $4.25 SL=2.75
BUY CALL APR-35.00*THQ-DG OI=5510 at $3.25 SL=1.75

Dead Cat Bounce/Take Over play

Average Daily Volume = 7.81 mln

Chart = http://quote.yahoo.com/q?s=COMS&d=3m
*******************************************
VOD - Vodafone Group PLC $180.13 (+3.25)

The vote is in, and Vodafone Group is the UK's #1 mobile 
telecommunications company, serving about four million 
customers.  It operates analog and digital cellular networks 
offering voice communications, messaging, paging, and mobile 
data services.  Vodafone sells its cellular phone services 
through three distribution businesses: Vodafone Retail, 
Vodafone Connect, and Vodafone Corporate.  The company provides 
cellular services in 12 countries outside the UK; international 
operations account for 28% of total revenues.  Vodafone will 
nearly double its size with the purchase of US-based AirTouch 
Communications. 

We are adding VOD back to the pick list.  VOD had a decent week
considering all the volatility.  VOD bounced off its 50-dma 
last week and came back strong.  Remember that VOD and AirTouch
are joining forces this year.  ATI shareholders are getting
1/2 a share of VOD plus $9.00 for every share they own.  ATI did 
announced earnings this month and they were very positive.

Remember that VOD is an ADR.  This means it is a foreign stock.
Because of this fact, VOD tends to gap open (or down).  VOD 
does have some resistance in the $185 range.  Support is 
around $170.00.  VOD is a stock split candidate.

Playing VOD:  If you look at their chart, you will notice
VOD tends to move up $10 and then dip for 2-3 days.  Not
always though, sometimes it'll go up $20, but it does dip.
Conservative players should wait for the dip and bounce
up.

BUY CALL MAR-180*VOD-CP OI= 116 at $ 9.63 SL= 7.00
BUY CALL MAR-185 VOD-CQ OI=   7 at $ 7.50 SL= 5.75
BUY CALL APR-180 VOD-DP OI=  23 at $13.00 SL=10.50
BUY CALL APR-185 VOD-DQ OI= 106 at $10.50 SL= 8.00
BUY CALL JUL-190 VOD-GR OI= 390 at $15.00 SL=11.75

Picked on Feb.12th at $180.13   PE = 65
Change since picked     +0.00   52 week high=$197.75
Analysts Ratings    3-4-2-0-0   52 week low =$ 82.88
Last Earnings   12/98 est ???   actual ???
Next Earnings   07/99 est 1.56  versus ???
Average daily volume = 467.7 K
Chart = http://quote.yahoo.com/q?s=VOD&d=3m
*******************************************
Software - Sector
*******************************************
MSFT - Microsoft $157.75 (-2.25)(P11W +46.38) 

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 
landscape. 

"It may be jittery for a few days", we noted last Sunday.  
However, MSFT was not as prone to jitters as the rest of 
the market.  It traded in a range of 159-166, closing down 
$5 near its Friday low on slightly higher than average 
volume.  For the last 2 weeks, MSFT has been consolidating 
in the $160 range.  Technicals are actually negative, but 
MSFT is resting at its 30 DMA at which we expect a bounce.  
MSFT is the heaviest weighted stock in the NASDAQ 100 at 
15% of the index.  As goes MSFT, so goes the market, 
mostly.  With blowout earnings, a 2:1 split effective March 
26, 25 million copies of Windows 98 sold, strong adoption 
of NT and SQL, we expect the general to keep marching.  
Wait for reversal of current market direction before 
starting a new play.  Sometimes sitting out is best until 
the smoke clears.

Last week, MSFT announced an agreement with British Telecom 
to develop wireless Internet and data services throughout 
Europe.  Microsoft will provide the software it hopes will 
out-position Psion/Symbian, while BT gets the traffic that 
strengthens its alliance with AT&T.  Now, live from the 
Left Coast, the Mongrel Hordes of alternative operating 
system users (Linux, Beos, etc.) are planning to converge 
on MSFT's Silicon Valley offices demanding refunds for the 
cost of Windows 95/98/NT!  By their admission, "It will be 
a spectacle in some way.  That spectacle will depend on the 
people and the energy that all comes together in that 
place."  Groovy.  Meanwhile, the DOJ trial goes on with 
MSFT still on the stand.  The spotlight is hot as DOJ tries 
to establish that IE browser is separate from Windows and 
that bundling is monopolistic.  Try that one on AOL as 
their Netscape division develops a new browser to unseat 
MSFT as AOL's preferred browser.  Editorial:  Just like IBM 
in the early '80's, we think this is a moot issue since new 
technologies are sprinting far ahead of the current 
argument.  By the time it's over, it won't have mattered 
anyway.  As we've said before, no material effects on 
earnings.

BUY CALL MAR-155 MSQ-CU OI=1380 at $10.63 SL= 8.25
BUY CALL MAR-160 MSQ-CX OI=2963 at $ 8.13 SL= 6.25
BUY CALL APR-160 MSQ-DX OI=6176 at $11.63 SL= 9.25
BUY CALL APR-165*MSQ-DW OI=7560 at $ 9.25 SL= 7.00
BUY CALL JUL-170 MSQ-GV OI=5595 at $13.25 SL=10.75

Picked on December 8th at $133.63     PE = 67
Change Since Picked      +$ 24.12     52 Week High= 175.94
Analysts Ratings       14-9-5-0-0     52 Week Low =  76.44
Last Earnings 01-19 est. 0.58 actual .73 surprise    25.86%
Next Earnings 04-22 est. 0.64 versus .50
Average daily volume = 15.0 mln.
Chart = http://quote.yahoo.com/q?s=MSFT&d=3m
*******************************************
ORCL - Oracle Corporation  $56.69 (+.50)(+.81)(+5.50)(+2.75)

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

In the news last week, Salomon upgraded ORCL to a buy and
raised their 1999 earnings estimates.  At the Goldman Sachs
tech conference last week, ORCL spoke again of their vision for
the Internet as a platform for running database software such
as their Oracle8I.  Also last week, ORCL and CPQ announced a
strategic alignment of their partner programs.  The combination
of the programs offers partners free dual certifications on
ORCL and CPQ technologies and exclusive access to customer
leads that result from the combined programs.  

ORCL didn't do too bad last week relative to the NASDAQ.  It
bounced nicely off of its 21 day moving average and managed to
post a small gain.  ORCL has some good things going for it.  It
splits it stock the week after next, and its Japan's subsidiary
IPO a couple of weeks ago was pretty hot.  On Friday last week
JD Edwards, a competitor, issued an earnings warning.  JD
Edwards typically sells its software to smaller companies than
ORCL.  Some think that the reason that JD Edwards is having
trouble is because ORCL is starting to sell to that market. 
ORCL did not react too badly to the news on Friday, but you can
never tell what is going to happen after the news is digested.  

BUY CALL MAR-55 ORQ-CK OI= 3147  at $5.63 SL=3.75
BUY CALL MAR-60*ORQ-CL OI=11804  at $3.38 SL=1.50
BUY CALL MAR-65 ORQ-CM OI= 2624  at $1.81 SL=0.75
BUY CALL JUN-60 ORQ-FL OI= 2924  at $7.13 SL=5.25
BUY CALL SEP-60 ORQ-IL OI= 1902  at $9.38 SL=6.75

Picked on Jan 24th at $49.88   PE=37
Change since picked    +6.81   52 week low =$18.19
Analysts Ratings  8-14-8-0-0   52 week high=$61.75
Last earnings  11-98 est=.24   actual=.28
Next earnings  03-12 est=.29   versus=.22
Average Daily Volume = 7.9 mln
Chart = http://quote.yahoo.com/q?s=ORCL&d=3m
*******************************************
Electronics/semi-conductor
*******************************************
SLR - Solectron, Inc. $86.00 (+9.12)

Solectron is the world's second-largest provider of contract 
manufacturing services for original equipment manufacturers 
(after SCI Systems). It builds electronic systems and sub-
systems for customers in a range of industries, including 
computers, consumer electronics, industrial and medical 
instrumentation, avionics, communications, and semiconductor 
applications. Solectron's services include product design and 
prototyping, systems assembly, software duplication, packaging,
and warehousing. Among its customers are Hewlett-Packard, Dell 
Computer, Cisco Systems, and NCR Corporation.  Solectron is 
the first company to win the Malcolm Baldrige Award -- given 
for manufacturing excellence -- twice. 

Our old friend SLR is back on the pick list.  SLR increased 
over 10% last week in a bad market.  There is some resistance
in the $89-90 range.  Make sure that SLR is continuing its
upward trend before initiating new plays.  With the gains it
has made this last week, profit taking could take place.  We
feel SLR should continue up, mainly because its stock split
is scheduled to occur on the 25th of February.  A smart play
would be to wait for a dip and bounce before buying.

During the first week of February, SLR won a contract to supply
IBM with its mother boards for mobile products.  This has added
a lot of interest in SLR.  Last week, on the 9th, an analyst
raised its rating from buy to strong buy.  SLR can really go
when its ready and we think it is. 

BUY CALL MAR-85 SLR-CQ OI= 486 at $6.38 SL=4.50
BUY CALL MAR-90 SLR-CR OI= 169 at $4.00 SL=2.50
BUY CALL APR-85 SLR-DQ OI= 480 at $7.63 SL=5.75
BUY CALL APR-90*SLR-DR OI=1858 at $5.25 SL=3.50
BUY CALL JUL-95 SLR-GS OI= 245 at $8.00 SL=6.25

Picked on Feb.12th at $86.00   PE = 38
Change since picked    +0.00   52 week high=$35.44
Analysts Ratings   4-9-6-0-0   52 week low =$93.50
Last Earnings  12/98 est .50   actual .52 
Next Earnings  03/15 est .53   versus .41
Average daily volume = 1.05 mln.
Chart = http://quote.yahoo.com/q?s=SLR&d=3m
*******************************************
DELL - Dell Computer $89.88 (-10.56)(P8W+33.25)

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 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

In a steal for home plate, Dell was beaned by a "frozen 
rope" from left field in Friday's action, knocking it out-
cold.  Two analysts warned that sales may be slowing and 
that Dell may have a fair value of only $80.  That's all 
investors needed to trigger the dumping of 66 million Dell 
shares, taking Dell down $13 on Friday.  Never mind that 
earnings are still expected to beat expectations when they 
are announced Tuesday, February 16 after the close (market 
is closed Monday).  You can listen to the call at 
www.dell.com/corporate/investor/earningscall/021699/.  
A split announcement doesn't look all that promising until 
Dell approaches $110 again.  

It's tough to continue to recommend this play against the 
market winds.  But, we still do.  Here's why:  Nobody knows 
what the numbers are.  Dell does not provide guidance on 
their revenue and is not talking because they're in the 
quiet period before they report on Tuesday.  Last week, 
Michael Dell said they will have 25% of the world PC market 
by 2004, up from 9% now.  They have out-gunned their 
competitors to become #1 in the workstation market, tied 
with Hewlett Packard, in just 18 months.  Friday's selling 
of 66 million shares were investors, and funds alike 
throwing in the towel -- complete fear and capitulation.  
The time to buy is when nobody wants the shares.  We think 
the attitude will improve after the fear wears off and they 
announce sales and earnings.  Those of us that still have 
February options are hurting and may want to sell into any 
market strength on Tuesday to "get something back", while 
others may opt to hold in anticipation (not recommended on 
principal) that the analysts are wrong -- your choice.  Any 
new plays should be for March calls, or later.  Not for 
faint-hearted right now.  Use risk capital only, or sit 
aside.

Other news is insignificant to the stock price since all 
eyes are focused on Tuesday after the close.  We'll report 
the results in Tuesday's update.

BUY CALL MAR-85 DLQ-CQ OI=3491 at $12.25 SL= 9.75
BUY CALL MAR-90*DLQ-CR OI=5444 at $ 9.50 SL= 7.00
BUY CALL MAR-95 DLQ-CS OI=5613 at $ 7.13 SL= 5.25
BUY CALL MAY-95 DLQ-ES OI=3661 at $12.63 SL=10.00

Picked on Jan. 6th at  $75.25     PE = 100
Change since picked   +$14.63     52 week low =$ 27.12
Analysts Ratings 11-10-10-0-0     52 week high=$110.00
Last earnings 10/98  est= .27     actual=.28 surprise +3.7%
Next earnings 02-16  est= .31     versus=.20
Average Daily Volume = 18.9 mln.
Chart = http://quote.yahoo.com/q?s=DELL&d=3m
*******************************************
SUNW - Sun Microsystems $100.44 (-0.19)(-11.13)(+13.75)(-2.44)

UltraSPARCs, Netra servers, SPARCstations, and Solaris (for
Unix) are all products of Sun Microsystems.  Sun is also the
creator of the Java, a programming language designed to 
create software that can run unchanged on any kind of computer.
They are known for their saying, "The network is the computer."

Sun has truly had an up and down week.  Up Monday, down the 
next two days, up Thursday, and down again on Friday to total 
a slight loss of only -$0.19.  Now that we know Clinton will 
still be the President, the market might stabilize and Sun 
could do the same.  Look for it to turn around and head back 
up especially since it is splitting 2:1 on April 8th.

News:  On Friday, Sun Microsystems and Oracle reached an
unprecedented breakthrough.  The companies used a single Sun
Enterprise 10000 server to "scale to an almost unimaginable 
power metric more than three times greater than that of the
nearest rival."(-PRNewswire)  In other news, Sun and Lucent
released the results of their alliance that began back in 
1998- AnyPath.  It is a new messaging architecture that will
allow subscribers to exchange messages and information across 
any worldwide network.
 
Wait for upward confirmation before initiating plays!

BUY CALL MAR- 95 SUQ-CS OI=1269 at $11.25 SL= 8.75
BUY CALL MAR-100*SUQ-CT OI=1390 at $ 8.50 SL= 6.50
BUY CALL MAR-105 SUQ-CA OI=1692 at $ 5.88 SL= 4.25
BUY CALL APR- 95 SUQ-DS OI=1636 at $13.50 SL=11.25
BUY CALL APR-100 SUQ-DT OI=5868 at $11.38 SL= 8.75
BUY CALL APR-105 SUQ-DA OI=1458 at $ 8.63 SL= 6.50

Momentum Play

Average Daily Volume = 7.83 mln

Chart = http://quote.yahoo.com/q?s=SUNW&d=3m
*******************************************
GTW - Gateway, Inc. $70.25 (-1.75)

Gateway (formerly Gateway 2000) is the #2 direct marketer of 
PCs in the US behind global leader Dell.  The company provides 
products directly to computer users ordering by phone or Web 
site instead of through resellers, cutting markup costs and 
releasing new technology faster.  The company makes both 
desktop and portable PCs, PCTVs, and NetPCs (cheap, 
stripped-down computers designed to be attached to networks). 
Gateway also sells component add-ons such as CD-ROMs and offers 
Internet access (gateway.net).  More than a third of its 
products are sold to consumers.  Chairman and founder Ted Waitt 
and his brother Norm own 44% and 8% of Gateway, respectively. 

GTW had a horrific day with the rest of the computer stocks.
Analysts came out and said pricing pressures are going to 
hurt the earnings of these companies.  We think this is a
little overblown, but nonetheless, Friday was a killer.  GTW
dropped $5.75.  The $70 level is a level of support, but if
it breaks through this level, GTW could drop to the low $60
range.  Make sure GTW moves above $70 on strong volume before
buying into new plays. 

We discussed in our original write up on GTW, that it is 
relatively inexpensive, according to some analysts, compared
to the likes of Dell.  Dell has a p/e ratio of close to 100,
whereas GTW's p/e is in the 20's.  We are not saying GTW is
a better company or stock than Dell, we just see a large
discrepancy in the perceived value.  We like the fact that
if Dell does announce great earnings, GTW will follow in
unison.  Dell's earnings are on Tuesday.

BUY CALL MAR-65 GTW-CM OI=1257 at $9.13 SL=6.75
BUY CALL MAR-70*GTW-CN OI=1535 at $6.63 SL=4.75
BUY CALL MAR-75 GTW-CO OI= 954 at $4.38 SL=2.50
BUY CALL JUN-75 GTW-FO OI= 255 at $9.38 SL=7.00
BUY CALL JUN-80 GTW-FP OI= 409 at $7.63 SL=5.75

Picked on Feb.11th at $76.00   PE = 27
Change since picked    -5.75   52 week high=$36.13
Analysts Ratings  10-6-6-0-0   52 week low =$80.44
Last Earnings  01/99 est .78   actual .81 
Next Earnings  04/21 est .60   versus .48
Average daily volume = 2.04 mln.
Chart = http://quote.yahoo.com/q?s=GTW&d=3m
*******************************************
EMC - EMC Corporation $102.38 (+4.88)

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.  

In the news, last week EMC announced an analyst meeting
scheduled for March 1.  At this meeting they plan to announce
new products and review their growth initiatives.  We mention
this because it may serve to create some momentum into the
meeting much in the same way an earnings release does.  A
couple of weeks ago a book was released and EMC was one of the
featured companies.  It was titled Radical Marketing.  The book
details how EMC triumphed against much larger competitors.  The
Internet and E-commerce should continue to drive EMC's sales,
as 8 of the 10 largest Internet service providers use EMC
storage systems.

EMC is back as a pick.  We dropped it a couple of weeks ago
when it started a slide, but it now looks like it might be
regaining some momentum.  EMC was picked back in November and
went up around $40, until we dropped it.  It is quickly
becoming recognized as a technology powerhouse along with the
rest of the big boys.  During the period that EMC was a drop,
it pulled back to its 30 day moving average and now looks like
it is ready to start regaining some momentum.

BUY CALL MAR-100 EMB-CT OI= 895  at $ 9.13 SL= 6.75
BUY CALL MAR-105*EMB-CA OI=1787  at $ 6.63 SL= 4.75
BUY CALL APR-105 EMB-DA OI= 894  at $ 9.75 SL= 7.00
BUY CALL JUL-110 EMB-GB OI= 508  at $13.38 SL=10.50

Picked on Feb 14th at $102.38    PE=66
Change since picked     +0.00    52 week low =$ 32.31
Analysts Ratings   10-5-0-0-0    52 week high=$109.88
Last earnings   12-98 est=.46    actual=.48
Next earnings   04-22 est=.39    versus=.28
Average Daily Volume = 3.5 mln
Chart = http://quote.yahoo.com/q?s=EMC&d=3m
*******************************************

PLAYS CONTINUED IN SECTION FOUR.

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

The Option Investor Newsletter             2-14-99
Sunday                4  of  6

*******************************************
Biotech  - Sector
*******************************************
VISX - Visx Inc. $59.75 (+.56)(-1.81)(+3.37)

Visx, Incorporated designs and develops proprietary 
technologies and systems for laser vision correction, an 
outpatient surgical procedure. The devices of the company 
are used primarily in the correction of refractive vision 
disorders such as nearsightedness, astigmatism and 
farsightedness. The company's products include VISX System, 
a fully integrated medical device incorporating an excimer 
laser and a computer-driven workstation for use by an 
ophthalmologist. The use of the VISX System is controlled 
by a VisionKey Card, which is a proprietary optical memory 
card and is sold separately. The VisionKey provides the 
user with access to software upgrades and can facilitate 
the collection of patient's data. Systems sales accounted 
for 50% of 1997 revenues and royalties, service and other 
revenues, 50%.

Not much of a gain this week for VISX, but a gain nonetheless.
VISX has been consolidating in the $58-$60 range.  We would 
like to see a break above this level on strong volume.  On 
down days for VISX, volume has been very light.  VISX's 10
and 20-dma are flat.  We foresee a nice move in the near
term, but need some positive news to start it.  

VISX was reiterated attractive by Paine Webber on the 10th 
and was listed as likely to beat earnings again.  Support
is around $57.50; you might try target shooting to get an
entry point.

BUY CALL MAR-55 VSQ-CK OI=201 at $7.75 SL=5.50 ITM $4.75  
BUY CALL MAR-60*VSQ-CL OI=292 at $5.13 SL=3.25
BUY CALL MAR-65 VSQ-CM OI=174 at $3.13 SL=1.50 
BUY CALL JUN-60 VSQ-FL OI= 36 at $9.88 SL=7.25
BUY CALL JUN-65 VSQ-FM OI=215 at $8.00 SL=6.25

Picked on Jan.30th at   $61.00    PE = 40
Change since picked      -1.25    52 week low =$10.00 
Analysts Ratings     3-1-1-0-0    52 week high=$64.75
Last earnings on 01-99 est=.35    actual=.36
Next earnings on 04-20 est=.36    versus=.29
Average daily volume = 747 K
Chart = http://quote.yahoo.com/q?s=VISX&d=3m
*******************************************
MDT - Medtronic $84.00 (-2.75)(+7.06)(+11.81)

Medtronic is a medical technology company, which provides 
therapeutic, diagnostic and monitoring products for the 
cardiac rhythm management, other cardiovascular, and 
neurological markets. For the 6 months ended 10-30-98, net 
sales rose 4% to $1.43B. Net income rose 2% to $299.4M, helped
by strong sales of the Kappa 700 series pacemakers and of 
neurostimulation devices.

Medtronic has risen over $20.00 since mid-January, hitting a 
new intra-day high on 2-3 of $89.25. A variety of good news 
items have contributed to the rise. On 1-29, MDT's next 
generation dual chamber defibrillator, an implantable pacing 
device, was released in the U.S. The Kappa 700 was already 
approved in Europe and enjoying wide acceptance along with 
growing sales. Its earlier-than-expected approval here one-
upped rival Guidant(GDT) in the competition to claim the leading 
technology. Two upgrades followed on 2-1 and 2-2. MDT also 
just completed two mergers. It's merger with Sofomor Danek 
will broaden MDT's market position in spinal and neurosurgery 
fields. (Products in this field are currently about 20% of 
sales.) The Arterial Vascular merger will add a leadership 
role in coronary stents. (Cardiac rhythm management makes 
up 50% of sales.) Medtronic expects sales of $5 billion in 
2000 and a 15% plus growth rate.

In the medical arena, staying on the cutting edge of 
technology or drug development is imperative to remain 
ahead of the competition. ST Jude was just downgraded because 
MDT and GDT now control the defibrillator market. (St Jude 
markets only a single chamber defibrillator.) With its new 
product, MDT is now the leader in defibrillators, and will 
soon give GDT a run for its money in the lucrative stent market, 
when Arterial Vascular releases its newest stent. That stent 
may edge out GDT's successful "Duet". Given its recent run-up 
in price, and high PE, this week's loss was small, suggesting 
strength in the stock. However, investors will want to lock 
in profits if the market gets any uglier, so confirm direction 
and volume before playing.

Trading in MDT this past week was lighter than normal. If the 
market rebounds, MDT is poised to move up on increasing in 
volume.

*CAUTION, First Call expects earnings on Tuesday.  We do
not recommend holding over earnings due to the risk of 
disappointments.  While this company has a history of 2:1
stock splits and they are in split territory (last one was
9/97). They do not have enough shares available to 
announce one; unless of course they make it contingent on
shareholder approval with a special shareholders meeting.
They normally hold their annual shareholder meeting in August
which makes a split announcement now unlikely.  

BUY CALL MAR-80 MDT-CP OI= 199 at $6.88 SL=5.25 ITM
BUY CALL MAR-85*MDT-CQ OI= 559 at $3.75 SL=2.00
BUY CALL MAR-90 MDT-CR OI=1399 at $1.94 SL=1.00
BUY CALL MAY-85 MDT-EQ OI= 258 at $6.75 SL=5.00
BUY CALL MAY-90 MDT-ER OI= 204 at $4.88 SL=3.00

Picked on Feb 7 at     $86.75     PE = 85
Change since picked     -2.75     52 week low= $47.94
Analysts'ratings  13-18-4-0-0     52 week high=$89.25
Last earnings 10-98 est  0.33     actual .33 surprise=0%
Next earnings  2-16 est  0.38     versus .30
Average daily volume = 2.13mln
http://quote.yahoo.com/q?s=MDT&d=3m
*******************************************
MEDI - MedImmune Inc. $50.25 (-2.19)(+2.94)(+3.06)

Based in Gaithersburg, Maryland, MedImmune is a biotechnology 
company engaged in the development and marketing of products 
for the prevention and treatment of infectious diseases and 
for use in transplantation medicine. Revenues for the quarter 
ended 12-31 rose 73% to $92.9M from $53.8M. Three big drugs 
developed by this company are: Synagis, a respiratory 
antibody and the first monoclonal antibody ever to be licensed
for any infectious disease; Cytagan, MEDI's first antibody 
product, which is still growing in sales; and RespiGam, used 
to treat respiratory infections in infants.

MEDI split 12-31 and then consolidated for several days before
starting up again. On 1-27, it reported a record fourth quarter,
but did not meet estimates. Earnings were $.39 versus $.07. 
SG Cowan initiated coverage the same day with a strong buy, 
and the stock hit a new high of $52.50. It pulled back for a 
few days after earnings, but it had begun moving up again 
until last week's down market took its toll. MEDI's losses 
occurred on light volume, indicating a lack of strong selling 
interest. MEDI is building support just under $49.00, which 
should hold unless we get a market meltdown. Look for rising 
price on stronger volume before initiating a new play.

MedImmune reports that it is expecting higher margins, profits,
and sales in 1999. No new news.

BUY CALL MAR-45 MEQ-CI OI=106 at $7.50 SL=5.50 ITM $5
BUY CALL MAR-50*MEQ-CJ OI=157 at $4.50 SL=2.75
BUY CALL MAR-55 MEQ-CK OI=922 at $2.56 SL=1.25
BUY CALL JUN-50 MEQ-FJ OI= 54 at $8.75 SL=6.75
BUY CALL JUN-55 MEQ-FK OI= 67 at $6.50 SL=4.75

Picked on Feb 7 at     $52.44     PE = 56
Change since picked   -$ 2.19     52 week low = 21.00
Analysts' ratings   6-5-0-0-0     52 week high= 54.50
Last earnings 12-98 est $0.44     act $.39 surprise=7.14%
Next earnings  4-22 est $0.31  versus $.22
Average Daily Volume = 846.7 K
Chart = http://quote.yahoo.com/q?s=MEDI&d=3m
*******************************************
Miscellaneous  - Sector
*******************************************
MCD - McDonald's Corporation  $81.31 (+1.00)(+1.50)

Who in America hasn't heard of Ronald?  Who hasn't tasted a 
Big Mac?  This Fortune 500 company is the #1 fast-food chain 
in the US with 12,450 stands and a 42% grip on the hamburger 
business market share.  It is even more popular overseas with 
over 24,000 restaurants that account for almost 60% of the 
company's revenues.

Since we initiated coverage of McDonald's, it has finished 2 
weeks in a row with a net gain.  Even through a market that 
seems to prefer instability, MCD's has managed to sustain its 
upward movement.  It is splitting 2:1 on March 5th- only 14 
trading days away.  This might be an opportune time to open 
positions and prepare for the split run.  Watch for the markets 
to give the green light first though.  

News on the week:  On Thursday 2/11, McDonald's set a new all 
time high of $82.00.  It bounced of that level again on Friday.  
Looks like we have a new resistance level for the company. In 
other news, McDonald's is delisting from the Tokyo bourse on 
May 19th.  The company believes that the being removed won't 
affect its popularity in Japan since they are already highly 
recognized.  

BUY CALL MAR-80*MCD-CP OI=2163 at $4.63 SL= 2.75
BUY CALL MAR-85 MCD-CQ OI=1597 at $2.50 SL= 1.25
BUY CALL JUN-80 MCD-FP OI= 623 at $8.38 SL= 6.50
BUY CALL JUN-85 MCD-FQ OI= 477 at $5.88 SL= 4.25
BUY CALL JUN-90 MCD-FR OI=2396 at $4.00 SL= 2.50

Picked on February 7th at $80.31      PE= 37
Change since picked      +$ 1.00      52 week low =$50.00
Analysts Ratings       5-6-7-0-0      52 week high=$82.00
Last earnings 01-99 est  0.58  actual  0.64 
Next earnings 04-19 est  0.58  versus  0.52
Average Daily Volume = 1.69 mln
Chart = http://quote.yahoo.com/q?s=MCD&d=3m
*******************************************
UTX - United Technologies Corp. $119.00 (-6.00)(+5.56)(+4.88)

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

In the news last week, Warburg Dillon Read initiated coverage
on UTX with a buy rating and a 12 month price target of $145. 
They also indicated that they were highly confident in the
company's ability to deliver 15 percent earning per share
growth in 1999. In other news, UTX's Otis Elevator Co.,
announced a new product call REM - Remote Elevator Monitoring. 
The system is designed to spot problems before they occur and
notify maintenance dispatch.  The technology could have many
other applications.  Also last week, UTX announced its
sponsorship of AmericaOne, one of the participants in the 2000
America's Cup.  UTX's researchers and engineers are assisting
in the research and design of the boats.  

UTX is a Dow 30 component and tends to be very Dow sensitive. 
Last week we discussed how UTX posted a 4.65% gain, but the Dow
really didn't do much, falling .5%.  The move that UTX made was
powered by some good news and favorable money movement.  This
week UTX posted a 4.8% loss, and the Dow had a .3% loss.  This
is a good illustration of how, without news and other external
factors to move a stock, it will have a tendency to correct
back to its historical pattern.  

BUY CALL MAR-115*UTX-CC OI=507 at $ 8.63 SL=6.50 ITM $4.00
BUY CALL MAR-125 UTX-CE OI=151 at $ 3.50 SL=1.75
BUY CALL MAY-120 UTX-ED OI=253 at $ 9.38 SL=6.75
BUY CALL MAY-130 UTX-EF OI=120 at $ 5.25 SL=3.25
BUY CALL AUG-120 UTX-HD OI=111 at $12.38 SL=9.50

Picked on Jan 10th at $114.69   PE=22
Change since picked     +4.31   52 week low =$ 71.75
Analysts Ratings    8-4-4-0-0   52 week high=$125.00
Last earnings  12-98 est=1.11   actual=1.16
Next earnings  04-20 est=1.20   versus=1.04
Average Daily Volume = 682K
Chart = http://quote.yahoo.com/q?s=UTX&d=3m
*******************************************
DH - Dayton Hudson $60.56 (-1.57)(P7W +13.06)

Dayton Hudson is the parent company of Target Stores, which 
accounts for approximately 75% of the company's sales.  
Target is the #3 large-format, discount department store 
behind K-Mart and Wal-Mart, #2 and #1, respectively, and 
the focus of Dayton Hudson's expansion.  Target (pronounced 
"Tar-zhay" in some circles) differentiates itself by 
offering more upscale merchandise than either K-Mart or 
Wal-Mart, but with prices similar to the K-Mart/Wal-mart 
genre.  Dayton Hudson also operates Mervyn's California and 
Marshall Field's.  All told, Dayton Hudson operates over 
1100 stores under the 3 formats, generating almost $28 
billion in 1998 sales.  1189 institutions own 89.5% of the 
395 million shares in float leaving about 40 million shares 
in daily float.

Considering the hit the market took last week, it could 
have been worse if DH investors headed for the exits.  They 
didn't and Friday's $1 loss came with only 63% of normal 
volume -- no sellers indicating most are comfortable 
sitting at this level.  DH has only 40 million shares not 
institutionally owned and available for daily trade.  Any 
volume over their 2 million share daily average tends to 
goose the price.  Year over year store volumes and overall 
sales continue to grow above the rest of the industry.  
This is a favorite of fund managers.  Fidelity filed Form 
13A/G with the SEC last week showing they own almost 38 
million shares or 8.4% of the company.  Analysts have upped 
DH current earnings estimates from $.87 to $.89, due March 
2.

DH announced 2 weeks ago that January same store sales 
increased 9.6% in its Target division, and 7.6% in 
Mervyn's.  System-wide net sales were up 15% from last 
year.  DH plans to open 31 new Target stores in the next 6 
months, and over 70 total in 1999.  Otherwise, news on DH 
is scarce.

BUY CALL MAR 55 DH-CK OI=1114 at $ 7.25 SL=5.50
BUY CALL MAR-60*DH-CL OI=1291 at $ 4.13 SL=2.50
BUY CALL MAR-65 DH-CM OI= 545 at $ 2.00 SL=1.00
BUY CALL APR-60 DH-DL OI= 285 at $ 5.13 SL=3.25
BUY CALL APR-65 DH-DM OI= 122 at $ 2.75 SL=1.25
BUY CALL JUL-65 DH-GM OI=  89 at $ 5.63 SL=3.75,more time

Picked on Jan. 24th     $59.94          PE= 31
Change since picked     $+0.62          52 week low =$31.44  
Analysts Ratings    10-4-3-0-0          52 week high=$66.00 
Next earnings on 03-02 est=.89          versus=.76  
Average daily volume = 2.0 mln.
Chart = http://quote.yahoo.com/q?s=DH&d=3m
*******************************************
LOW - Lowe's Companies, Inc. $54.00  (-1.00)(-3.31)(+5.50)

LOW is the #2 US home improvement chain, after The Home Depot,
and has more than 474 stores in 26 states.  LOW sells a broad
range of building supplies, hardware, home decor and garden
products, appliances, lumber, tools, paint, and consumer
electronics.  LOW helps customers design kitchens and even
installs many of its products, including doors, flooring, and
cabinets.  LOW continues to expand from its original eastern US
stronghold and is adding more stores in the South, Midwest, and
West.  Late last year it announced the acquisition of Eagle
Hardware a regional home improvement chain with 35 stores in
the West.

In the news last week, there was an article about the fact that
most retailers will report earnings over the next couple of
weeks, and analysts expect profits to match or exceed their
estimates because of strong sales.  Building supply retailers,
such as LOW, were helped by the housing boom across the US
that has been driven by low mortgage rates.  In other news, LOW
purchased the naming rights to Charlotte Motor Speedway, making
LOW the first company to purchase naming rights at a major auto
racing facility.

LOW fell below its 30 day moving average last week and is
currently sitting right at its 21 day moving average.  LOW
reports earnings on 02/22.  We are playing LOW as a run into
their earnings announcement.  We are hoping the run will be
fueled by the article on Friday with analysts expecting
retailers to meet or exceed expectations. 

BUY CALL MAR-50*LOW-CJ OI= 117 at $5.63 SL=3.75 ITM $4.00
BUY CALL MAR-55 LOW-CK OI= 316 at $2.81 SL=1.25
BUY CALL MAR-60 LOW-CL OI=1086 at $1.13 SL=0.00
BUY CALL APR-60 LOW-DL OI=1613 at $2.13 SL=1.00
BUY CALL JUL-60 LOW-GL OI= 231 at $4.25 SL=2.50

Picked on Jan 31st at $58.31   PE=40
Change since picked    -4.31   52 week low =$23.88
Analysts Ratings  8-13-4-0-0   52 week high=$58.75
Last earnings  10-98 est=.31   actual=.33
Next earnings  02-22 est=.27   versus=.21
Average Daily Volume = 1.3 mln
Chart = http://quote.yahoo.com/q?s=LOW&d=3m
*******************************************
WMT - Wal-Mart $84.38 (+.13)(-1.75)(+2.00)

Wal-Mart is the leading discount retailer in the world, with 
a presence in all 50 states, as well as Canada, Mexico, Asia,
Latin America, and Europe. In addition to discount department
stores, it operates the #2 grocery chain, behind Kroger's, 
and Sam's clubs, which is the #2 warehouse chain. This retail 
giant's market capitalization is $182.3 billion.

In general, most retailer's November sales were weak, but 
they picked up a lot in December. January sales were 
downright robust. The Q4 for most retailers ends in January 
and WMT is no exception. It is expected to be near the top 
of the pack in sales increases as stores begin to report 
fourth quarter earnings. We are recommending WMT as a slow 
but steady momentum stock with strong fundamentals. We also 
believe that the company may announce a split with earnings 
due out 2-16 or 2-24 (see below). Wal-Mart is well above the 
price it sold for in each of its previous splits. This time 
the company wanted to wait for a higher stock price before 
splitting, and the rumored (it is only a rumor!) target is 
$85.00. Wal-Mart has been unable to close above $85.00 for 
more than a few days in a row. It now sits just below that 
(possible) magic number.

Please note that different sources show different dates for 
WMT's fourth quarter earnings report. Three sources show 2-24,
including Zacks. On Friday, two sources began showing 2-16 as 
the report date. Companies first issue an expected report date, 
which is sometimes changed as the date approaches. We discovered 
the possible date change too late to contact them before the 
weekend. If you own WMT options and do not wish to hold over 
earnings, they can be reached at 1-800-925-6278 or 1-501-273-
8446 to confirm the date.  We are recommending you adjust 
your play strategy to the 16th earnings date (Tuesday)!

BUY CALL MAR-80 WMT-CP OI=3630 at $7.38 SL= 5.25 ITM 
BUY CALL MAR-85*WMT-CQ OI=7027 at $4.38 SL= 2.75
BUY CALL MAR-90 WMT-CR OI=5751 at $2.50 SL= 1.25
BUY CALL JUN-85 WMT-FQ OI=1753 at $8.50 SL=10.75
BUY CALL JUN-90 WMT-FR OI=1648 at $6.25 SL= 4.50

Picked on Jan 26 at   $83.56       PE = 44  
Change since picked    +0.82       52 week low= $41.69
Analysts' ratings 8-11-4-0-0       52 week high=$86.44
Last earnings 10-99 est  .44       actual .45 surprise 5% 
Next earnings 2-24  est  .66       versus $.57
Average daily volume = 2.8 mln
Chart = http://quote.yahoo.com/q?s=WMT&d=3m
*******************************************
ANF - Abercrombie & Fitch $74.56 (+0.93)(-3.13)(+7.00)

Abercrombie & Fitch sells men's and women's casual clothes 
and accessories in over 170 stores across America.  Their 
comfortable styles of jeans and crews are especially popular 
with teens and college students.  Check out this Volkswagen 
hip-hop retailer the next time you are strolling through 
the mall.

ANF survived another crazy week in the markets.  It managed 
to stay above its 30 day moving average and also finished the 
week up +$0.93.  If the markets clear up in the next few days 
of trading, look for ANF to challenge its resistance level of 
$79.38 set back on 2/4.  Earnings will be announced this week 
on either Tuesday the 16th as listed in First Call or Wed. Feb. 
17th as reported in Zack's.  Even though retailers like ANF 
are expected to post strong results, we still don't recommend 
holding over the announcements.  They would have to crush Wall 
Street estimates in order to cause the stock to jump 
substantially.  If they report in line with expectations the 
stock could rise slightly, hold, or drop off.  It's just not 
worth it to take the chance and we suggest closing positions 
ahead of time.  

We will mention the possibility of a split with earnings 
despite the fact we have no split history for the stock.
However, since their IPO 10/96 at $16 the stock has
more than quadrupled in price and they have plenty of 
authorized shares.  This is not a recommendation to
hold over earnings!
 
No new news.

BUY CALL MAR-70 ANF-CN OI=  55 at $ 8.38 SL=6.50
BUY CALL MAR-75*ANF-CO OI= 266 at $ 6.38 SL=4.75
BUY CALL MAR-80 ANF-CP OI=1679 at $ 4.38 SL=2.75
BUY CALL MAY-75 ANF-EO OI= 622 at $10.13 SL=7.50

Picked on January 26th at $73.94      PE= 52
Change since picked      +$ 0.62      52 week low =$29.50
Analysts Ratings      10-3-1-0-0      52 week high=$79.37
Last earnings 10/98 est 0.34   actual 0.47 
Next earnings 02/17 est 0.96   versus 0.68
Average Daily Volume = 502.5 K
Chart = http://quote.yahoo.com/q?s=ANF&d=3m
*******************************************
CLX - Clorox Co. $129.50 (+8.62)(-4.25)(+10.75)
 
Clorox Company manufactures non-durable consumer products. 
Brands include Clorox Bleach, Kingsford Charcoal, Formula 
409, Pine-Sol, Combat ant & roach killers and Hidden Valley 
Ranch salad dressings. Products are sold primarily through 
grocery stores and other retail outlets. The company supplies
products to the food service industry. The company's products 
are sold in over 90 countries in addition to the United States.
 
CLX traded as high as $132.94 this week.  CLX is considered a
defensive play, but we liked the fact that even on Thursday's
big market move, CLX had a very nice day.  With a drop of $2.81
on Friday, CLX gave back some of its incredible runs, but still
looks very strong.  On the 11th, Paine Webber reiterated is 
attractive rating on CLX.    

CLX announced on Friday that they will be releasing about 5%
of First Brands administrative staff.  First Brands was just
recently taken over by CLX.  First Brands currently has about
5000 employee's.  CLX has enough shares to do a 3-1 split and 
last split in September of 1997 at around the price of $135.  
CLX announced the split with their July 1997 earnings.  If 
CLX can hold its gains, a stock split with earnings in April 
is likely.

BUY CALL MAR-125 CLX-CE OI= 37 at $ 8.25 SL=6.25 ITM $4.50 
BUY CALL MAR-130 CLX-CF OI= 10 at $ 5.38 SL=3.50
BUY CALL APR-125*CLX-DE OI=308 at $10.13 SL=7.50 ITM $4.50 
BUY CALL APR-130 CLX-DF OI=180 at $ 7.75 SL=5.75
BUY CALL JUL-130 CLX-GF OI= 32 at $12.00 SL=9.50

Picked on Jan.28th at   $121.69    PE = 43
Change since picked       +7.81    52 week low =$ 75.50
Analysts Ratings      5-4-3-0-0    52 week high=$132.94
Last earnings on 01/99  est=.54    actual=.55
Next earnings on 04-21  est=.83    versus=.72
Average daily volume = 484 K
Chart = http://quote.yahoo.com/q?s=CLX&d=3m


*************************************************************
DISCLAIMER
*************************************************************

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


The Option Investor Newsletter            2-14-99
Sunday                5  of  6

*************************************************************
PUTS, PUTS, PUTS
*************************************************************
Put plays can be very profitable but have a larger risk than
call plays. When a stock is falling the entire investment
community (except the shorts) is hoping it will reverse and
start back up. The company management is also doing everything
they can to shore up their stock price. The company issues
press releases, brokers talk it up, analysts try to put a
positive spin on everything. Then of course there is the death
knell, the "buy recommendation" simply because the price has
dropped to some level that analysts feel attractive again. 
Buyers who like the stock wait until it appears a bottom has
been reached and then jump on it in a feeding frenzy. They may
already have a large position and are averaging down. Many
factors can stop a free falling stock in mid drop.
*************************************************************
Recommended Puts 
*************************************************************

New Recommendations at a Glance:
ELNK - EarthLink Network, Inc.          $63.06 (-3.75) (-9.69)


Current Recommendations at a Glance:
ADBE - Adobe Systems, Inc.              $43.56 (-1.50) (-2.50)
AXP  - American Express Company         $98.94 (-1.06) (1.81)
BAC  - Bank of America                  $62.88 (-2.06) (2.125)
BDX  - Becton, Dickinson and Company    $34.88 (- .19) (-1.69)
BKB  - Bank of Boston                   $35.81 (-1.25) (.625)
BMCS - BMC Software                     $46.06 (- .69) (-.87)
ERTS - Electronic Arts Inc.             $40.69 (- .38) ( .62)
MCHP - Microchip Technology Inc         $28.88 (-1.63) (-2.63)
PG   - Procter & Gamble Company         $87.50 (- .94) (2.62)
PHSYB- Pacificare Health Systems        $63.75 (-2.63) (-5.06)
WLA  - Warner Lambert                   $69.00 (  .06) (-3.00)



New Recommendations:
***************************

ELNK - EarthLink Network, Inc. $63.06 (-3.75) (-9.69)
Software

Company Description:
EarthLink Network (ELNK) is an Internet Service provider, who 
supplies access, information, assistance, and services to its
customers, introducing them to the Internet. 

Play Description:
The company competes in the hot Internet sector but is among
only a few Internet companies trading below its 50-day moving
average.  If the broad market begins to roll over and bail
out of the Internet sector, investors are likely to exit the
weaker issues first.

BUY PUT MAR-65 QKL-OM OI=313 @ $9.50 SL=7.88
BUY PUT MAR-60 QKL-OL OI= 21 @ $6.88 SL=4.75

http://quote.yahoo.com/q?s=elnk&D=3m 



************************
Current Recommendations:
************************

ADBE - Adobe Systems, Inc. $43.56 (-1.50) (-2.50)
Software

Company Description:
Adobe Systems, Inc. (ADBE) is a leading provider of publishing
and imaging software technologies, and the second largest
desktop software company in the world with annual revenues
approaching $1 billion. Adobe develops, markets and supports
computer software products that enable users to create,
display, print and communicate all forms of electronic
documents. 

Play Description:
The Company continues to be cautious about licensing revenue
in the short term due to weak Japanese market conditions and
uncertain timing of OEM customer introductions of products
incorporating Adobe's latest technologies. The Company is
coming out of a recent restructuring and trying to focus its
resources on high growth revenue opportunities in digital
color, color inkjet, short-run on-demand digital printing,
and digital copiers... although licensing revenue is likely
to be flat in the short-term. Other risks include product
shipment delays, market acceptance of new products and
upgrades, declines in printer licensing business. Stock likely
to fail at key resistance point of $48. Declining relative
strength and aggressive earnings projections may disappoint. 
Many analysts have a hold on the stock. Slight distribution
taking place among top institutional shareholders. Excessive 
call open interest at overhead strikes serves as overhead 
resistance. 

BUY PUT MAR-45 AEQ-OI OI=419 @ $4.00 SL=2.25
BUY PUT MAR-40 AEQ-OH OI=62  @ $1.81 SL= .75

http://quote.yahoo.com/q?s=adbe&D=3m 

***********

AXP - American Express Company $98.94 -1.06 (1.81)
Financial

Company Description:
American Express Company (AXP) and its subsidiaries provide
travel relatedservices, financial advisory services, and
internationalbanking services worldwide. For the 9 months
ended 9/98, revenues rose 8% to $14.07B. Net income rose 8%
to $1.61B.Revenues reflect higher worldwide billed
businesses,Cardmember spending and loans, and higher
management anddistribution fees. Earnings also reflects
decreased lossprovisions on charge cards.

Play Description:
Stock violated key support benchmark of $100 and now trading
below 50-day moving average.  See potential sell-off to $90
and re-test of $80.

BUY PUT MAR-100  AXP-OT OI=183 @ $5.25 SL=3.25
BUY PUT MAR-95   AXP-OS OI=579 @ $3.25 SL=2.00

http://quote.yahoo.com/q?s=axp&D=3m 

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

BAC - Bank of America $62.88 (-2.06) (2.125)
Banking

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
sector.

BUY PUT MAR-65  BAC-OM OI= 730 @ $5.13 SL=3.75
BUY PUT MAR-60  BAC-OL OI=1194 @ $2.81 SL=1.25

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

*****

BDX - Becton, Dickinson and Company $34.88 (-.19) (-1.69)
Healthcare

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. 

Play Description:
Becton Dickinson and Co. shares under pressure concerns about 
the medical equipment company's growth rate. Analysts also 
cite over weakening trend in the company's diabetes business. 

Update:
Stock rallied last week after big drop but downward trend is 
in tact.

BUY PUT MAR-40 BDX-OH OI=1475 at $6.00 SL=4.75
BUY PUT MAR-35 BDX-OG OI= 256 at $2.38 SL=1.25

http://quote.yahoo.com/q?s=bdx&D=3m 

*******

BKB - Bank of Boston - $35.81 (-1.25) (.625)
Financial

Company Description:
Bank of Boston (BKB) is a bank holding company with both
domestic andinternational operations. For the 9 months ended
9/30/98,total interest income increased 8% to $4.14B. Net
interest income after loan loss provision decreased 2% to
$1.61B.Net income applicable to Common decreased 7% to
$576M. Netinterest income reflects increased average earning
assets,offset by a higher loan loss provision. Net income
reflectsincreased salaries and employee benefits.

Play Description:
Stock violated key support benchmark of $40 and now trading
below 50 and 100-day moving averages.  See potential sell-off
to $30.

BUY PUT MAR-35   BKB-OG OI=433  @ $1.81 SL=1.75
BUY PUT MAR-32.5 BKB-OZ OI= 20  @ $1.00 SL= .25

http://quote.yahoo.com/q?s=bkb&D=3m 

*******

BMCS - BMC Software $46.06 (-.69) (-.87)
Software

Company Description:
BMC Software provides systems management softwaresolutions 
for host mainframe and distributed informationsystems, and
also offers maintenance, enhancement & supportservices 
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.

Play Description:
A leader in enterprise-level software was downgraded by
Soundview in October 98 and by Morgan Stanley in December. 
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

BUY PUT MAR-45 BCQ-OI OI=74   at $4.75 SL= 2.75
BUY PUT MAR-40 BCQ-OH OI=244  at $2.19 SL= 1.25

http://quote.yahoo.com/q?s=bmcs&D=3m 

*******

ERTS - Electronic Arts Inc. $40.69 (-.38) (.62)
Software

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. 

Play Description:
The interactive software business is 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. Recent price action after earnings release
and concerns over declining margins makes us bearish. Holiday
enthusiasm was indeed 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. 

BUY PUT MAR-40 EZQ-OH OI=135 @ $3.13 SL=2.00
BUY PUT MAR-35 EZQ-OG OI=210 @ $1.13 SL= .13

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

*******

MCHP - Microchip Technology Inc $28.88 (-1.63) (-2.63)
Semiconductor

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 markets. 

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 1999 and 2000.
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 $20?s 

Update:
Stock saw a relief rally last week but is still trading below
declining 50 and 100-day moving averages.  Could retest $20 
if stock breaks under $30.

BUY PUT MAR-30 QMT-OF OI=105 @ $3.50 SL=2.25
BUY PUT MAR-25 QMT-OE OI=800 @ $1.19 SL= .25

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

*******

PG - Procter & Gamble Company $87.50 (-.94) (2.62)
Consumer

Company Description:
The Procter & Gamble Co. (PG) markets a broad range
ofconsumer products worldwide in 5 business segments:
Laundryand Cleaning, Paper, Beauty Care, Food and Beverage,
and Health Care. For the 3 months ended 9/98,
revenuesincreased 2% to $9.51B. Net income applicable to
Commonincreased 8% to $1.14B. Revenues reflect price
increasesand favorable product mix. Earnings benefited from
lowercosts of production.

Play Description:
Stock breaking down after recent failed rally at $91.  Now 
trading below 50 amd 100-day moving averages.  Could sell-off
to $80 or $70 if broader market breaks down.

BUY PUT MAR-90  PG-OR OI= 329 @ $3.00 SL=1.75
BUY PUT MAR-85  PG-OQ OI= 329 @ $ .69 SL= 

http://quote.yahoo.com/q?s=pg&D=3m

*******

PHSYB - Pacificare Health Systems $63.75 (-2.63) (-5.06)
Healthcare

Company Description:
Pacificare Health Systems (PHSYB) is a managed health care
services company which serves customers in commercial and
government product lines. PHSYB also manages, develops and
markets HMO products and related services. 

Play Description:
Stock breaking down after recent failed rally at $80.  
Trading below declining 50 and 100-day moving averages and 
now under key $70 level.

BUY PUT MAR-70 HYQ-ON OI=22 @ $8.25 SL=5.75
BUY PUT MAR-65 HYQ-OM OI=96 @ $5.13 SL=3.75

http://quote.yahoo.com/q?s=phsyb&D=3m 

*******

WLA - Warner Lambert $69.00 (.06)  (-3.00)
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. 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.
Stock's recent rallied failed just under its declining 50-day
moving average with overhead resistance building between $70-75.

BUY PUT MAR-70  WLA-ON OI=1141 @ $3.88 SL=2.50
BUY PUT MAR-65  WLA-OM OI= 607 @ $1.75 SL= .50

http://quote.yahoo.com/q?s=wla&D=3m 

******************************************************************
Combos
******************************************************************
Friday, February 12  Where do we go from here?

Stocks closed lower Friday and the Nasdaq gave back most of the
record gains it posted in the prior session on concern that Dell
might report disappointing sales figures next week. The Nasdaq
Index slid 83 points to 2321.89 and recorded its fourth biggest
point drop ever. Reflecting the day's sell-off in tech stocks and
the computer group, International Business Machines posted the
worst drop in the Dow, shedding 5 points to $173. The DJIA ended
down 88 points at 9,274.89. In the broad market, declining issues
led advancing issues 17 to 11 on volume of 686 million shares on
the New York Stock Exchange.

Friday's new plays:

HNZ 	$54.56  MAR55C/FEB55C	Debit   $1.50 (best around 10:47)
TXN	$95.06  FEB105C/100C	Credit  $0.43 (down at the open)
EGRP	$48.25  MAR40P/35P	Debit   $1.75 (down, then flat)
EGRP	$48.25  MAR60C/65C	Debit   $1.25 ("             ")
LSI 	$27.06  APR30C/APR25P	Debit   $3.25 (right on target)

Other portfolio activites:

Wow, what a ride! One day later and all of our tech's are in the
dumps again. MSFT is our greatest concern since the credit spread
is now ITM. With today's slump, it may be just the chance we need
to double up on this play. AMR hit a low near $54 and the bearish
debit spread could have been exited for a small profit ($0.38).
If you decided to hold, just check the weekend news and be ready
for a Tuesday rebound. QTRN is nearing the bottom of its current
trading range and the bearish portion of the butterfly spread will
need to be closed soon. The MAR50C/55C could have been closed for
$1.00 debit on Friday, leaving you with a break-even of $2.87 on
the bullish portion (MAR45C/50C) of the play. Watch this one for
a further decline to the $45 area next week. Good Luck!
******************************************************************
NEW PLAYS -

Neutral Positions: Lots of requests for non-directional plays and
straddles/strangles. They are generally overpriced and unfavorable
(as debit positions) in the current market but we have found a few
that should be profitable. Most are relatively short-term so watch
each position closely and be prepared to trade-out of each play if
they don't make significant moves in the first few weeks.
******************************************************************

TECD - Tech Data  $22.93     *** Recent Slump ***

Tech Data is the world's #2 distributor of computer products. It
supplies more than 75,000 different items, including PCs, software,
hardware, and supplies. The company distributes products from more
than 900 manufacturers to more than 100,000 resellers. They have
customers in more than 30 countries and the company owns most of
Europe's top distributor, Computer 2000. Tech Data also offers a
variety of product training and support services such as technical
advice and advertising assistance.

The recent fall from grace started in late December and the stock
had lost half of its value to a low of $19 just before the recent
earnings announcement. Credit Suisse First Boston analyst Joel
Pitt recently initiated coverage of Tech Data with a "buy" rating.
He said revenues from the distributor channel will grow faster
than the personal computer/information technology market and set
a $30 target for Tech Data, noting that the current price creates
a buying opportunity. The technical bounce was starting to occur
when Morgan Stanley analyst Shelby Flack made matters worse by
lowering her rating to "neutral" last week. Either direction is
fine with me as long as it moves.

PLAY (conservative/debit straddle):

BUY CALL MAR-22.50 TDQ-CX OI=2025 A=$2.12
BUY PUT  MAR-22.50 TDQ-OX OI=39   A=$1.62
INITIAL NET DEBIT TARGET=$3.50 TARGET ROI=20%
INITIAL GTC CLOSING PRICE (both positions)=$4.25

Chart = http://quote.yahoo.com/q?s=TECD&d=3m
******************************************************************
GTSG - Global TeleSystems  $63.43     ***  European Telecom ***

Global TeleSystems Group (GTS) operates Russia On Line, the first
Russian-language Internet service. GTS provides local and long
distance telephone services and cellular and data networks for
businesses, consumers, and other telecommunications providers in
Russia and the Ukraine. They operate through TeleComm of Moscow,
EDN Sovintel, TeleRoss, GTS Cellular, and Sovam Teleport, and own
varying stakes in all of these companies. It supplies telecom and
fiber-optic transport services in Europe through various companies
and will grow significantly with its purchase of UK-based Esprit
Telecom Group.

Lots of new agreements and joint ventures as the largest American
telecom companies compete for market share in the emerging growth
countries. Most experts believe 1999 is going to be a banner year
for the 'Eurocoms' sector and BancBoston Robertson Stephens senior
European telecom analyst Christine Nairne recently made favorable
comments on the industry and highlighted several telecom services
stocks that may be expected to lead the group this year, including
Global TeleSystems. Telecom services are continuing to increase in
nearly every country and Internet and other data-related services
are just starting to accelerate in much of Europe.

The chart reflects some excellent volatility over the past month
and the current range is from $55 to $65. Plenty of time remains
for this position to profit from a break-out or rolling exit.

PLAY (conservative/debit strangle):

BUY CALL APR-65 GTQ-DM OI=178 A=$5.12
BUY PUT  APR-60 GTQ-PL OI=105 A=$5.50
INITIAL NET DEBIT TARGET=$10.25 TARGET ROI=25%
INITIAL GTC CLOSING PRICE (both positions)=$12.50

Chart = http://quote.yahoo.com/q?s=GTSG&d=3m
******************************************************************
PMS - Policy Management Systems  $37.62   *** Recent Slam ***

A leading developer of insurance industry software, PMS provides
software and other services to the insurance/financial services
markets. The company also provides professional and outsourcing
services. Policy Management's software includes applications for
property/casualty insurance, forms processing, rating, claims and
billing. 

Policy Management Systems fell $11 last week after just meeting
earnings estimates in their quarterly report. Some say the fall
was because PMS suffers from a history of poor financial controls
and a credibility problem whenever there are substantial one-time
charges or earnings disappointments. Other comments were about a
recent problem with the P&C software and service side, which is
the company's core business. This came from a rumor that Commerce
Insurance Company is severing all relationships with PMS even
though they have been using PMSC's Series III P&C system for over
two years. CGI has spent millions of dollars on their system and
if it doesn't work, that won't help PMSC's reputation. The
company immediately tried to quell the disturbance by announcing
a new product line (PMSCiSolutions suite) and a new contract with
Interstate Insurance to use their new Internet-based solutions
software. 

Lots of time for this play to profit and the stock is certainly
going to move, one way or the other. The OI is small now but will
increase as we move into March and the speculation on PMS's future
starts to occur. Use a limit order to enter each position.

PLAY (long-term/debit strangle):

BUY CALL MAY-40 PMS-EH OI=12 A=$2.93
BUY PUT  MAY-35 PMS-QG OI=2  A=$1.93
INITIAL NET DEBIT TARGET=$3.75 TARGET ROI=35%
INITIAL GTC CLOSING PRICE (both positions)=$5.00

Chart = http://quote.yahoo.com/q?s=PMS&d=3m
******************************************************************
TSM - Tiawan Semiconductor  $19.00     *** Far East Markets ***

Taiwan Semiconductor pioneered the integrated circuit foundry
concept, making ICs on contract without developing any product of
its own, and today is a world leader in that industry. They take
a client's product all the way from design to making templates for
mass-produce semiconductor chips and final testing/assembly. TSM
has five plants in Taiwan's version of Silicon Valley, and a US
plant is set to open in 1998. Philips Electronics owns 28% of the
company.

This stock is in a group of Asian ADRs that is greatly affected by
the various economic changes (rate-cuts, monetary policies) in the
far east markets. This gives us the opportunity to use the changes
in world economics (on a much smaller scale) to our advantage. TSM
stock is also directly linked to the chip sector, and any changes
in the outlook for that group, will affect the stock price. I like
the sharp, active price changes that occur daily. You should plan
to trade-out of this play.

PLAY (conservative/debit strangle):

BUY CALL APR-20.00 TSM-DD OI=1376 A=$1.68
BUY PUT  APR-17.50 TSM-PW OI=230  A=$1.43
INITIAL NET DEBIT TARGET=$3.00 TARGET ROI=33%
INITIAL GTC CLOSING PRICE (both positions)=$4.00

Chart = http://quote.yahoo.com/q?s=TSM&d=3m
******************************************************************
RNWK - Real Networks  $62.00     *** Internet Play ***

RealNetworks pioneered the streaming software that allows audio
and video broadcasters to deliver their products over the Web in
real time. The company's RealPlayer software is used by more than
30 million Web surfers who download the software. Software license
fees from broadcasters account for more than 75% of RealNetworks'
sales. Companies that have purchased the company's broadcasting
tools and services include ABC, At Home, Dow Jones and NBC.

Internet broadcasting is fast blossoming into the next mass medium
and Net-based broadcasting has jumped dramatically in the past two
years. Some analysts believe that industry growth will increase
exponentially because the technology is global, user-controlled
and capable of delivering live/on-demand material over unlimited
channels.

The incredible volatility and the favorable option premiums will
allow us to pay for the entire position with just one large move
in the stock price. However, our goal is to profit both ways so
play this just like a straddle and keep in mind that consistent,
small gains are always the goal.

PLAY (conservative/neutral combination):

BUY  CALL MAR-65 QRN-CM OI=148 A=$7.87
SELL CALL MAR-70 QRN-CN OI=167 B=$5.38
INITIAL NET DEBIT TARGET=$2.38 TARGET ROI=20%

BUY  PUT MAR-55 QRN-OK OI=35 A=$5.62
SELL PUT MAR-50 QRN-OJ OI=94 B=$3.38
INITIAL NET DEBIT TARGET=$2.12 TARGET ROI=20%

Chart = http://quote.yahoo.com/q?s=RNWK&d=3m
******************************************************************
UK - Union Carbide  $41.50     *** Technicals Only ***

Union Carbide is a chemical company that leads the world in making
ethylene oxide and ethylene glycol (used to make antifreeze and
polyester fibers). Its specialty/intermediary chemicals segment is
one of the largest manufacturers of polyethylene (the most widely
used plastic in the world); and it also makes solvents, coatings,
latex, resins, emulsions, and plasticizers.

Upgrades/downgrades, a fair earnings report, new plant openings
and product ventures all "in the news" over the past few weeks.
We are focusing however, on the extreme option interest and the
sideways trending technical history to make this play favorable.
Remember, in the time spread, we reduce the net cost of the long
term option by the credit from the sale of the nearer term call.
We will close that position (or let it expire) on the MAR strike
date and sell the remaining long position soon after that while
the time value is still intact.

PLAY (conservative/time spread):

BUY  CALL APR-42.50 UK-DV OI=568 A=$3.75
SELL CALL MAR-42.50 UK-CV OI=699 B=$2.50
INITIAL NET DEBIT TARGET=$1.12 TARGET ROI=25%

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

******************************************************************
INDEX OPTION SPREADS...
******************************************************************
As a trader, you may be familiar with options on individual stocks
where you have the right to buy (call option) or the right to sell
(put option) a particular stock at some predetermined price within
some predetermined time. The buyer has the rights and the seller
the obligations. With index options the basic ideas are the same.
Index options allow you to make investment decisions on a specific
market industry or on the market as a whole. Spread strategies can
be made with index options similar to those made with individual
stock options. Many professional traders employ index spreads as a
hedge strategy. We favor debit positions on the SPX for momentum
and longer-term plays and OTM credit spreads on the OEX when the
risk/reward is favorable. Low ROI disparity spreads will be listed
(when available) for the conservative index trader.
*******************************************************************
OEX - S&P 100 Index  $616.14     OTM Credit-Spreads

The Standard & Poor's 100 Index is a capitalization-weighted index
of 100 stocks from a broad range of industries. The component
stocks are weighted according to the total market value of their
outstanding shares. The impact of a component's price change is
proportional to the issue's total market value, which is the share
price times the number of shares outstanding. 

OBSERVATIONS:

For OTM credit spread trades, we like to use the actively-traded
S&P 100 Index options because they contain much more premium than
options on individual stocks and provide an underlying instrument
less prone to huge, gapping moves. Remember however, that you can
always be exercised early so monitor your positions daily. More
technical analysis and information on the OEX is available in the
Pinnacle "Market Sentiment" section.
 
Conservative...

PLAY (Bullish/disparity play-low ROI):

BUY  PUT FEB-580 OEW-NP OI=7050 A=$1.00
SELL PUT FEB-585 OEW-NQ OI=4516 B=$1.25
NET CREDIT TARGET=$0.25 ROI=5% (1 week)

Aggressive...

PLAY (Bearish):

BUY  CALL FEB-640 OEY-BH OI=9212  A=$0.75
SELL CALL FEB-635 OEY-BG OI=10656 B=$1.18
NET CREDIT TARGET=$0.50 ROI=11%

CHART= http://quote.yahoo.com/q?s=^oex&d=b



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The Option Investor Newsletter            2-14-99
Sunday                6  of  6

******************************************************************
COVERED CALL SECTION 
******************************************************************
Buying stock on margin...

Covered-calls on margin:

If you are one of our regular subscribers, you know that our plays
are generally very conservative and almost always "in-the-money".
We focus on this method because our primary goal is to provide
positions that generate consistent, acceptable returns while still
receiving an above-average amount of downside protection. Trading
on margin is a great way to enhance profits when used correctly.

Margin guidelines:

To establish and maintain a margin account, a broker requires a
minimum of $2,000-$5,000 in any combination of cash or marginable
securities to be on deposit at your brokerage. Margin accounts are
required to maintain certain minimum equity levels; generally 30%
of the portfolio value. If the market value of your margin account
declines below that ratio, the broker may request that you deposit
more collateral. A margin maintenance "call" should always be
answered promptly with the delivery of additional securities or
funds to avoid liquidation of your portfolio holdings.

The advantage of trading on margin is that your return is doubled.
The downfall lies in the fact that you may be asked to contribute
more collateral to the brokerage should the value of your stock
decline significantly. In our current approach, we generally do
not expect to own the stock at the end of the strike period. That
is the basic reason a margin loan is favorable. If we open a new
position and it turns negative (drops below technical support and
nears a 20% loss), we always recommend that you consider closing
the play to preserve capital. The key is to monitor your positions
closely and use sound judgment (no emotions!). If you follow this
practice, the net loss will always be kept to a minimum and your
remaining funds can be moved into another play. Good Luck!

One of last week's plays; CMSX, was offered a buy-out agreement on
Monday, before the market opened. We will happily take credit for
the successful forecast but no play was available and it is not
listed in our summary.
******************************************************************
SUMMARY OF PREVIOUS PICKS (1 week to Feb strike date)
******************************************************************
Stock  Price  Last    Mon  Strike  Opt     Profit   ROI   Monthly
Sym    Picked Price        Price   Bid     /Loss          ROI

MCRE    5.38   8.09   Feb   5.00  1.25  *$   0.87  21.1%  13.1%
ARTT    7.38   7.69   Feb   7.50  1.13  *$   1.25  20.0%  12.4%
USWB   30.56  33.00   Feb  30.00  2.75  *$   2.19   7.9%  11.4%
CMTO   24.81  22.31   Feb  22.50  3.50   $   1.00   4.7%  10.2%
SCIO   10.25   8.81   Feb   7.50  3.38  *$   0.63   9.2%  10.0%
SUGN   15.63  15.75   Feb  15.00  1.81  *$   1.18   8.5%   9.3%
ARTT    8.25   7.69   Feb   7.50  1.44  *$   0.69  10.1%   8.8%
BTIM   18.50  16.50   Feb  15.00  4.88  *$   1.38  10.1%   8.8%
MCHM    8.75   8.22   Feb   7.50  1.94  *$   0.69  10.1%   8.8%
EXCA   10.81  10.88   Feb  10.00  1.38  *$   0.57   6.0%   8.8%
BID    32.25  31.69   Feb  30.00  5.88  *$   3.63  13.8%   8.5%
DOSE    6.50   6.56   Feb   5.00  2.00  *$   0.50  11.1%   8.0%
SDLI   50.00  56.25   Feb  45.00  7.25  *$   2.25   5.3%   7.6%
SUIT   32.00  30.75   Feb  30.00  3.00  *$   1.00   3.4%   7.5%
PTVL   26.56  24.75   Feb  22.50  5.13  *$   1.07   5.0%   7.2%
RNWK   56.50  62.00   Feb  45.00 14.25  *$   2.75   6.5%   7.1%
PPOD    6.81   9.06   Feb   5.00  2.31  *$   0.50  11.1%   6.9%
PTVL   28.38  24.75   Feb  25.00  4.38   $   0.75   3.1%   6.8%
ABTE    8.75   8.56   Feb   7.50  1.88  *$   0.63   9.2%   6.6%
AWA    21.63  20.00   Feb  20.00  2.50   $   0.87   4.5%   6.6%
CDNW   20.75  18.38   Feb  17.50  3.75  *$   0.50   2.9%   6.4%
FHT    20.50  24.38   Feb  17.50  3.50  *$   0.50   2.9%   6.4%
ITVU   24.50  22.75   Feb  17.50  8.13  *$   1.13   6.9%   6.0%
CHRX   21.38  21.56   Feb  20.00  3.13  *$   1.75   9.6%   6.0%
NEWZ   11.63  10.06   Feb  10.00  2.44  *$   0.81   8.8%   5.5%
BNYN   14.44  11.06   Feb  10.00  5.13  *$   0.69   7.4%   5.4%
ARTT    7.38   7.69   Feb   5.00  2.75  *$   0.37   8.0%   5.0%
INVX   18.38  17.31   Feb  17.50  1.81   $   0.74   4.5%   4.9%
PTVL   22.19  24.75   Feb  15.00  8.13  *$   0.94   6.7%   4.8%
NSTA   26.25  24.06   Feb  25.00  4.13   $   1.94   8.8%   4.8%
PTVL   18.38  24.75   Feb  12.50  6.88  *$   1.00   8.7%   4.7%
XEIKY  27.50  25.56   Feb  25.00  3.50  *$   1.00   4.2%   4.5%
CMTO   27.56  22.31   Feb  22.50  6.13   $   0.88   4.1%   4.5%
OXHP   20.06  18.25   Feb  17.50  3.38  *$   0.82   4.9%   3.6%
SPNSF  10.44   9.06   Feb  10.00  1.56   $   0.18   2.0%   2.2%
SPNSF  10.13   9.06   Feb  10.00  1.25   $   0.18   2.0%   1.8%
OXHP   20.06  18.25   Feb  20.00  2.00   $   0.19   1.1%   0.8%
HLIT   24.63  21.38   Feb  22.50  3.25   $   0.00   0.0%   0.0%
INFM    6.13   4.56   Feb   5.00  1.56   $  -0.01  -0.2%   0.0%
GALTF  25.50  20.00   Feb  22.50  5.38   $  -0.12  -0.6%   0.0%
SYMM    8.56   6.63   Feb   7.50  1.88   $  -0.05  -0.7%   0.0%
SDTI   22.00  17.25   Feb  20.00  4.38   $  -0.37  -2.1%   0.0%
TOK     9.75   7.88   Feb  10.00  1.63   $  -0.24  -3.0%   0.0%
PLCM   25.88  21.31   Feb  25.00  3.00   $  -1.57  -6.9%   0.0%
QNTM   26.88  20.88   Feb  25.00  3.75   $  -2.25  -9.7%   0.0%
INFS   11.38   7.88   Feb  10.00  2.06   $  -1.44 -15.5%   0.0%
ODIS   10.00   7.38   Feb  10.00  1.00   $  -1.62 -18.0%   0.0%
---------------------------------------------------------------
ARTT    8.00   7.69   Mar   7.50  1.50  *$   1.00  15.4%  11.1%
CLST   12.31  11.13   Mar  10.00  3.00  *$   0.69   7.4%   5.4%
BYND   28.00  25.00   Mar  20.00  9.50  *$   1.50   8.1%   5.0%
SNAP   19.25  17.13   Mar  15.00  5.13  *$   0.88   6.2%   4.5%
MYLX   11.88  11.25   Mar   7.50  4.75  *$   0.37   5.2%   3.8%
ALKS   31.25  27.75   Mar  30.00  4.00   $   0.50   1.8%   1.1%

-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).
******************************************************************
NEW PICKS   
******************************************************************
Definitions:
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

CIEN   22.25  Feb 20.00  EUQ BD  2.50  7298  19.75   1.27%   1.27%
------------------------------------------------------------------
BAMM   11.81  Mar 10.00  QMZ CB  3.13  43     8.68  15.21%  15.21%
BTIM   16.63  Mar 12.50  QBO CV  4.88  211   11.75   6.38%   6.38%
BVSN   40.00  Mar 35.00  QVB CG  7.50  144   32.50   7.69%   7.69%
CKFR   30.56  Mar 25.00  FCQ CE  6.88  82    23.68   5.57%   5.57%
ESPI    5.38  Mar  5.00   AQ CA  1.06  156    4.32  15.74%  15.74%
LGND   12.81  Mar 12.50  LQP CV  1.31  620   11.50   8.70%   8.70%
PPOD    9.13  Mar  7.50  QPP CU  2.13  363    7.00   7.14%   7.14%
SRCM   21.06  Mar 17.50   SQ CW  5.00  172   16.06   8.97%   8.97%

RC 1.27% for 1 week = greater than 5.5% return on a monthly basis
******************************************************************
Sequenced by Return Called 
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym               Price  Symbol  Bid   Intr  Basis

CIEN   22.25  Feb 20.00  EUQ BD  2.50  7298  19.75   1.27%   1.27%
------------------------------------------------------------------
ESPI    5.38  Mar  5.00   AQ CA  1.06  156    4.32  15.74%  15.74%
BAMM   11.81  Mar 10.00  QMZ CB  3.13  43     8.68  15.21%  15.21%
SRCM   21.06  Mar 17.50   SQ CW  5.00  172   16.06   8.97%   8.97%
LGND   12.81  Mar 12.50  LQP CV  1.31  620   11.50   8.70%   8.70%
BVSN   40.00  Mar 35.00  QVB CG  7.50  144   32.50   7.69%   7.69%
PPOD    9.13  Mar  7.50  QPP CU  2.13  363    7.00   7.14%   7.14%
BTIM   16.63  Mar 12.50  QBO CV  4.88  211   11.75   6.38%   6.38%
CKFR   30.56  Mar 25.00  FCQ CE  6.88  82    23.68   5.57%   5.57%
******************************************************************
Sequenced by Return Not Called
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym               Price  Symbol  Bid   Intr  Basis

       SAME AS RETURN CALLED - ALL PLAYS ARE IN-THE-MONEY
******************************************************************
Company Descriptions
******************************************************************
CIEN - CIENA Corporation  $22.25  *** 1 Week Play ***

CIENA Corp. designs, manufactures and sells open architecture, 
dense wavelength division multiplexing systems for fiberoptic 
communications networks.  Zacks is expecting an earnings report 
date of Feb. 18, one day before the strike.  Cowen & Co recently
upgraded CIEN to a strong buy and the chart is exhibiting strong 
technical characteristics.  A one week play to make a quarter 
(using a buy-write order) with long term potential.

FEB 20.00 EUQ-BD BID=2.50 OI=7298 CB=19.75 RC=1.27% RNC=1.27%

Chart = http://quote.yahoo.com/q?s=CIEN&d=3m
******************************************************************
BAMM - Books-A-Million, Inc. $11.81  *** High Priced Memories ***

Books-A-Million, Inc. is principally engaged in the sale of books,
magazines and related items through a chain of over 165 retail 
bookstores in 17 states (as of 1/98). Everyone remembers BAMM - 
the $5 to $40 stock in two days after announcing, yes, that's
right, a web site!  Well, they are now optionable as of the end
of Jan.  The stock is basing around a more reasonable $10 but the
$40 memory is providing great premiums which offer an even better
cost basis to own the stock.

MAR 10.00 QMZ-CB BID-3.13 OI=43 CB=8.68 RC=15.21% RNC=15.21%

Chart = http://quote.yahoo.com/q?s=BAMM&d=3m
******************************************************************
BTIM - Biotime  $16.63     *** Our Old Favorite ***

A development-stage biomedical company that develops aqueous-based
synthetic solutions that can be used to replace massive blood loss
during cardiac bypass and neurosurgery or due to traumatic injury.
These solutions also are intended to work as plasma extenders,
preservatives of body organs and tissues, and blood substitutes
during hypothermic (low-temperature) surgeries. No news is a good
thing for this old technical favorite. Hasn't been below $12.00
for two months and current support is from $14 to $15.

MAR 12.50 QBO-CV BID=4.88 OI=211 CB=11.75 RC=6.38% RNC=6.38%

Chart = http://quote.yahoo.com/q?s=BTIM&d=3m
******************************************************************
BVSN - Broadvision  $40.00     *** E-commerce ***

BVSN facilitates Web commerce with it's One-To-One software that 
lets companies design their own Web sites to maximize profit 
potential. One-To-One manages online transactions such as ordering
and payment, billing, customer service etc. Some new contracts 
and a broker upgrade helped this stock past a mediocre earnings 
report in January and the technicals reveal excellent support 
around $32.

MAR 35.00 QVB-CG BID=7.50 OI=144 CB=32.50 RC=7.69% RNC=7.69%

Chart = http://quote.yahoo.com/q?s=BVSN&d=3m
******************************************************************
CKFR - Checkfree Holdings  $30.56     *** E-commerce ***

CheckFree offers electronic data interchange systems that allow
customers to make routine payments and collections, do financial
transactions electronically, and make purchases on the Internet.
CKFR provides all electronic services and is the de facto back
end processing engine for electronic bill presentment and home
banking, whether through banks or Internet portals. Met earnings
estimates in late January and was promptly upgraded. 

MAR 25.00 FCQ-CE BID=6.88 OI=82 CB=23.68 RC=5.57% RNC=5.57%
    
Chart = http://quote.yahoo.com/q?s=CKFR&d=3m
******************************************************************
ESPI - e.spire Communications $5.38  *** Speculation ***

ESPI is a facilities based Integrated Communications Provider to 
businesses primarily in major markets in the southern half of the
United States. Earnings are expected on Feb. 17.  ESPI is working
on getting fiber optics into the Washington, D.C. area by the 
third quarter of 1999.  Strong technicals signals are evident 
with volume increasing over the last month of trading...possible
speculation of a buy out or merger with companies that needs fiber 
optic access.

MAR 5.00 AQ-CA BID=1.06 OI=156 CB=4.32 RC=15.74% RNC=15.74%

Chart = http://quote.yahoo.com/q?s=ESPI&d=3m
******************************************************************
LGND - Ligand Pharmaceutical $12.81  *** Drug Research ***

LGND is engaged in the discovery and development of drugs that 
regulate hormone activated Intracellular Receptors and cytokine
activated Signal Transducers and Activators of Transcription. The
recent gap-up in price was due to LGND receiving FDA approval for
ONTAK, which treats a rare form of cancer. Stock has slowly been
working back to a previous trading range around $13. Some short 
term technical support near our cost basis.

MAR 12.50 LQP-CV BID=1.31 OI=620 CB=11.50 RC=8.70% RNC=8.70%

Chart = http://quote.yahoo.com/q?s=LGND&d=3m
******************************************************************
PPOD - Peapod, Inc. $9.13  *** Internet Groceries ***

Peapod is an interactive, online grocery shopping and delivery 
company and a provider of targeted media and research services.
We played this one back on Jan. 3, and now see a new entry point
that provides good downside protection.  The price jumped on Feb.
8th when Piper Jaffray initiated coverage with a "strong buy".
Technical characteristics are still excellent.

MAR 7.50 QPP-CU BID=2.13 OI=363 CB=7.00 RC=7.14% RNC=7.14%

Chart = http://quote.yahoo.com/q?s=PPOD&d=3m
******************************************************************
SRCM - SourceMedia  $21.06     *** Speculation Only ***

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. A rumored deal with AOL may
have fizzled but USVGA and SRCM have entered into an agreement in
principle with certain binding provisions to form a joint venture 
to focus on the development of local content and interactive 
services for the cable television and satellite marketplace.
Support are near our cost basis with earnings expected Feb 19.

MAR 17.50 SQ-CW BID=5.00 OI=172 CB=16.06 RC=8.97% RNC=8.97%

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



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

Stock  Price  Month   Strike Symbol   Price PctRtn Vol OpnInt
GZTC    4.88    Mar     5.00 GEQCA     0.88 17.95   50   215
PTVL   24.75    Mar    25.00 QUTCE     4.00 16.16  148   209
THQI   22.00    Mar    22.50 QHICX     3.50 15.91   15   191
ZD     16.94    Mar    17.50 ZDCW      2.63 15.50   47   739
UWW     7.38    Mar     7.50 UWWCU     1.13 15.25   30   131
BTIM   16.50    Mar    17.50 QBOCW     2.50 15.15    5   619
PETC    7.44    Mar     7.50 QPTCU     1.13 15.13   10    51
ENMD   21.13    Mar    22.50 QMACX     3.13 14.79   92    10
ABTE    8.56    Mar    10.00 QZBCB     1.25 14.60  898  3261
TERA    4.75    Mar     5.00 QIPCA     0.69 14.47  149   260
AND     7.06    Mar     7.50 ANDCU     1.00 14.16    8   129
SPYG   12.00    Mar    12.50 YQGCV     1.69 14.06   17   184
CORR    9.81    Mar    10.00 CHQCB     1.38 14.01   10    52
CHRZ   17.06    Mar    17.50 ZQHCW     2.38 13.92   51   453
HYPT   12.25    Mar    12.50 QPICV     1.69 13.78    8    50
WAVO    7.31    Mar     7.50 WKQCU     1.00 13.68   24   352
GADZ    7.38    Mar     7.50 EQKCU     1.00 13.56   24  1013
ODIS    7.38    Mar     7.50 QSECU     1.00 13.56    8    87
DAOU    6.50    Mar     7.50 QQXCU     0.88 13.46  395   293
PCMS    7.13    Mar     7.50 PQPCU     0.94 13.16   10    80
BILL   10.00    Mar    10.00 QBICB     1.31 13.13   10   169
SMOD   16.31    Mar    17.50 UYQCW     2.13 13.03    2    50
ESSI    7.31    Mar     7.50 QESCU     0.94 12.82   10   133
SEV     4.88    Mar     5.00 SEVCA     0.63 12.82    8   511
GALTF  20.00    Mar    20.00 QFGCD     2.56 12.81    4   117
MATK    7.38    Mar     7.50 KQTCU     0.94 12.71   20    60
CWC     7.50    Mar     7.50 CWCCU     0.94 12.50    3  1643
SRCM   21.00    Mar    22.50 SQCX      2.63 12.50   59   173
EGGS   17.31    Mar    17.50 EGQCW     2.13 12.27   45   724
PDLI   19.38    Mar    20.00 PQICD     2.38 12.26    6    50
CIEN   22.13    Mar    22.50 EUQCX     2.69 12.15  231  1719
DBCC   16.50    Mar    17.50 BQDCW     2.00 12.12   78   801
RDRT   12.38    Mar    12.50 RDQCV     1.50 12.12   26    40
SQNT   10.00    Mar    10.00 SQQCB     1.19 11.88   10    10
OLCMF   4.25    Mar     5.00 OQLCA     0.50 11.76   10    60
ARQL    6.38    Mar     7.50 QETCU     0.75 11.76    1   159
BEAM    4.81    Mar     5.00 BAQCA     0.56 11.69    8  2319
PRST    9.63    Mar    10.00 PQKCB     1.13 11.69    5   233
MENT   12.38    Mar    12.50 MGQCV     1.44 11.62    3   316
CMPC    4.94    Mar     5.00 ICQCA     0.56 11.39   40   733
CATP   29.75    Mar    30.00 TQPCF     3.38 11.34   19  1557
BNYN   11.06    Mar    12.50 QYNCV     1.25 11.30   27   233
GEMS    4.44    Mar     5.00 GQMCA     0.50 11.27   30   279
CYCH   13.94    Mar    15.00 KBQCC     1.56 11.21   24   853
DRMD    6.75    Mar     7.50 DUQCU     0.75 11.11  225  1677
OCN     9.00    Mar    10.00 OCNCB     1.00 11.11   63   727
Z       4.50    Mar     5.00 ZCA       0.50 11.11  179   449
ICII    7.33    Mar     7.50 BQJCU     0.81 11.09    3    85
PPOD    9.06    Mar    10.00 QPPCB     1.00 11.03   65   782
CNDS    6.81    Mar     7.50 KQNCU     0.75 11.01   10   360
ALYD    9.25    Mar    10.00 QLICB     1.00 10.81   48   211
TCA    10.00    Mar    10.00 TCACB     1.06 10.63   20    36
ICGX   18.88    Mar    20.00 QIGCD     2.00 10.60   15   614
CFN     4.75    Mar     5.00 CFNCA     0.50 10.53   55   459
ENMD   21.13    Mar    25.00 QMACE     2.19 10.36   40   138
SCUR   19.38    Mar    20.00 UQUCD     2.00 10.32    5    45
APM     4.88    Mar     5.00 APMCA     0.50 10.26  110   131
IMCL    9.75    Mar    10.00 QCICB     1.00 10.26   15   190
BTIM   16.50    Mar    20.00 QBOCD     1.69 10.23   30   602
HRBC    7.38    Mar     7.50 BQCU      0.75 10.17   25   410
KELL   19.69    Mar    20.00 KQCCD     2.00 10.16   10   231
TRL    19.75    Mar    20.00 TRLCD     2.00 10.13   10   378
PAIR    9.89    Mar    10.00 PQGCB     1.00 10.11   26   487
NTKI   13.63    Mar    15.00 QNKCC     1.38 10.09  121   323
OMKT   13.69    Mar    15.00 OQMCC     1.38 10.05  231  1466
AVID   29.94    Mar    30.00 AQICF     3.00 10.02   10   320
KERA   11.88    Mar    12.50 KVQCV     1.19 10.00    2    13
PTVL   24.75    Apr    25.00 QUTDE     5.13 20.71    7   439
SRCM   21.00    Apr    22.50 SQDX      4.13 19.64   10    89
MCOM    6.88    Apr     7.50 MQMDU     1.31 19.09   10   373
MENT   12.38    Apr    12.50 MGQDV     2.19 17.68    8  6152
SPNSF   9.06    Apr    10.00 QHHDB     1.50 16.55    3  1256
CIEN   22.13    Apr    22.50 EUQDX     3.63 16.38   29  3012
ABTX    6.38    Apr     7.50 QXQDU     1.00 15.69    5  3417
CELG   13.56    Apr    15.00 LQHDC     2.13 15.67   15   282
APM     4.88    Apr     5.00 APMDA     0.75 15.38   15  1938
NTKI   13.63    Apr    15.00 QNKDC     2.06 15.14   10   239
TCA    10.00    Apr    10.00 TCADB     1.50 15.00   20   260
ZD     16.94    Apr    20.00 ZDDD      2.50 14.76   22   688
PTVL   24.75    Apr    30.00 QUTDF     3.63 14.65    3   462
ERTH    9.06    Apr    10.00 QERDB     1.31 14.48   25   260
PRST    9.63    Apr    10.00 PQKDB     1.38 14.29   10  1053
SRCM   21.00    Apr    25.00 SQDE      3.00 14.29   66   501
STAF   17.16    Apr    17.50 FVQDW     2.44 14.21   10    35
ESTI   12.50    Apr    12.50 ELQDV     1.75 14.00  170   451
PAIR    9.89    Apr    10.00 PQGDB     1.38 13.90   40  2368
PAUH    6.75    Apr     7.50 PUQDU     0.94 13.89    5    68
AKLM    9.25    Apr    10.00 KKQDB     1.25 13.51   16   780
TALK   10.69    Apr    12.50 QQKDV     1.44 13.45    8  1041
MCHP   28.88    Apr    30.00 QMTDF     3.88 13.42    6    81
JDAS    7.13    Apr     7.50 QAHDU     0.94 13.16   10   314
BRKT   10.94    Apr    12.50 BUQDV     1.44 13.14   10   100
TRA     6.06    Apr     7.50 TRADU     0.75 12.37   10   272
PSQL    9.13    Apr    10.00 PQSDB     1.13 12.33    1   752
CIEN   22.13    Apr    25.00 EUQDE     2.69 12.15  108  4160
PIOS    7.38    Apr     7.50 OQJDU     0.88 11.86   10    42
ZD     16.94    Apr    22.50 ZDDX      2.00 11.81   50   378
WDC    11.75    Apr    12.50 WDCDV     1.38 11.70   35   714
FORE   16.06    Apr    17.50 FQODW     1.88 11.67  118  1722
NMGC   13.50    Apr    15.00 GJQDC     1.56 11.57  115   289
ISIP   12.00    Apr    12.50 QISDV     1.38 11.46    3    97
RADAF  15.00    Apr    15.00 QDRDC     1.69 11.25    7   249
VC      2.25    Apr     5.00 VCDA      0.25 11.11   20   623
MUEI   14.19    Apr    15.00 MQUDC     1.56 11.01   20   277
FAF    24.63    Apr    25.00 FAFDE     2.69 10.91   30    30
UTI     6.88    Apr     7.50 UTIDU     0.75 10.91    4   140
SYMC   18.53    Apr    20.00 SYQDD     2.00 10.79   10   372
SMOD   16.31    Apr    20.00 UYQDD     1.75 10.73    3   176
SKYW   29.19    Apr    30.00 UWQDF     3.13 10.71    8    32
WAXS    8.19    Apr    10.00 WXQDB     0.88 10.69   26   169
PILL   10.63    Apr    12.50 PQQDV     1.13 10.59    5   148
PDQ     9.50    Apr    10.00 PDQDB     1.00 10.53   10   325
DIMD    7.75    Apr    10.00 DAQDB     0.81 10.48    5  1053
EOG    17.00    Apr    17.50 EOGDW     1.75 10.29   40  1099
PENN    9.81    Apr    10.00 UQNDB     1.00 10.19   30   190
BNYN   11.06    Apr    15.00 QYNDC     1.13 10.17   50   570
WMS     8.00    Apr    10.00 WMSDB     0.81 10.16   50  4921
SDTI   17.25    Apr    22.50 QSDDX     1.75 10.14   10   163
TTEC    7.50    Apr     7.50 QTCDU     0.75 10.00   20    10
WAVO    7.31    May     7.50 WKQEU     1.88 25.64   25   366
ENMD   21.13    May    22.50 QMAEX     4.63 21.89   14   123
PCMS    7.13    May     7.50 PQPEU     1.50 21.05   10  1283
OMKT   13.69    May    15.00 OQMEC     2.88 21.00    8   471
ENMD   21.13    May    25.00 QMAEE     4.38 20.71  350   174
SCUR   19.38    May    20.00 UQUED     3.88 20.00    4   219
TAVA    6.38    May     7.50 QTVEU     1.25 19.61    6   637
IDTI    7.06    May     7.50 ITQEU     1.38 19.47    5  1654
DSTM    9.50    May    10.00 DQKEB     1.81 19.08   50    55
ZAP     9.88    May    10.00 ZAPEB     1.88 18.99    5  2521
PZX     9.25    May    10.00 PZXEB     1.75 18.92    4     9
WAVO    7.31    May    10.00 WKQEB     1.38 18.80   10   901
SCTC    9.31    May    10.00 YQSEB     1.75 18.79    1   354
CBTSY  17.38    May    17.50 QAGEW     3.25 18.71  100   215
ORTL    7.25    May     7.50 OQEEU     1.31 18.10    4    12
IMNR    9.75    May    10.00 IMQEB     1.75 17.95    2   214
NOI     9.88    May    10.00 NOIEB     1.75 17.72    4   170
BAANF   9.06    May    10.00 BQFEB     1.56 17.24   20  1251
TQNT   18.13    May    20.00 TQNED     3.13 17.24   15   105
QMDC   21.38    May    22.50 QCDEX     3.63 16.96    8     6
PWAV   24.00    May    25.00 VFQEE     4.00 16.67   10    31
Z       4.50    May     5.00 ZEA       0.75 16.67   85   672
VST     9.94    May    10.00 VSTEB     1.63 16.35   10    75
PTEK    8.03    May    10.00 TQOEB     1.31 16.34   21   809
MCRE    8.09    May    10.00 MQZEB     1.31 16.22   10    48
CPU    11.88    May    12.50 CPUEV     1.88 15.79   50  1962
GMGC    5.56    May     7.50 GGQEU     0.88 15.73   25  1107
ZONA   28.13    May    30.00 NQZEF     4.38 15.56   34    86
BGP    14.88    May    15.00 BGPEC     2.31 15.55   23   143
PDLI   19.38    May    20.00 PQIED     3.00 15.48  100    27
JDEC   15.00    May    17.50 QJDEW     2.31 15.42  104     1
ATML   14.69    May    15.00 AQTEC     2.25 15.32   21  2004
RCOT   14.69    May    15.00 ROQEC     2.25 15.32   14   184
SGI    17.31    May    17.50 SGIEW     2.63 15.16   20  1742
FTL    14.44    May    15.00 FTLEC     2.19 15.15   29   426
IFMX    9.13    May    10.00 IFQEB     1.38 15.07   33  1679
TKLC   12.94    May    15.00 KQEC      1.94 14.98   25   121
QNTM   20.88    May    22.50 QNQEX     3.13 14.97    5   726
PETM    9.69    May    10.00 PQMEB     1.44 14.84    2  6648
IOM     6.50    May     7.50 IOMEU     0.94 14.42  445  9986
ENMD   21.13    May    30.00 QMAEF     3.00 14.20   23   696
LIPO   13.59    May    15.00 LPQEC     1.88 13.79   20   741
DSP    17.44    May    17.50 DQCEW     2.38 13.62    6   106
PAH     5.63    May     7.50 PAHEU     0.75 13.33   15   774
UTR    15.00    May    15.00 UTREC     2.00 13.33    3    21
MRL     6.63    May     7.50 MRLEU     0.88 13.21    5   271
MGXI    9.00    May    10.00 XQGEB     1.19 13.19   30    10
FUSE   10.06    May    12.50 QMLEV     1.31 13.04   29   250
OMPT   11.63    May    15.00 QTTEC     1.50 12.90   25   895
DANKY   5.38    May     7.50 DNQEU     0.69 12.79  259   949
PMTC   14.25    May    15.00 PMQEC     1.81 12.72    1   952
ATVI   11.88    May    12.50 AQVEV     1.50 12.63    1    52
CD     17.00    May    17.50 CDEW      2.13 12.50 1571  3725
AVIR   24.25    May    25.00 QCVEE     3.00 12.37    5   532
TAVA    6.38    May    10.00 QTVEB     0.75 11.76   95   626
OXHP   18.25    May    20.00 OQXED     2.13 11.64  113   905
HMA    13.00    May    15.00 HMAEC     1.50 11.54   60  1695
ZAP     9.88    May    12.50 ZAPEV     1.13 11.39    2   528
DANB   18.38    May    20.00 QUBED     2.06 11.22    4   114
CMOS   25.88    May    30.00 CQSEF     2.88 11.11   10   873
HET    14.75    May    15.00 HETEC     1.63 11.02    9   306
FTL    14.44    May    17.50 FTLEW     1.56 10.82   10   608
PCMS    7.13    May    10.00 PQPEB     0.75 10.53   15  2768
FRED   14.38    May    15.00 FQREC     1.50 10.43    4    84
BSX    26.81    May    27.50 BSXEY     2.75 10.26   20   520
IMNR    9.75    May    12.50 IMQEV     1.00 10.26   15   457
CEPH    8.00    May    10.00 CQEEB     0.81 10.16   27  1988
BCC    29.94    May    30.00 BCCEF     3.00 10.02    5   101
JDEC   15.00    May    20.00 QJDED     1.50 10.00   57    47



************************************************************
NAKED PUT SECTION
************************************************************
Moving Average...

Moving averages are one of the simplest and most useful technical
indicators available. The basic definition of a moving average is
that it is the average price of a security at a specific point in
time. The purpose of the moving average is to show a trend over a
given time period and display it in a smoothed fashion. The most
common time periods are probably 15, 30, and 150 days. Each time
span tells a different story and traders use different numbers to
suit their individual needs. The shorter time span produces a more
sensitive moving average while the longer time span reflects a
smoother history.

There are many types of moving averages but the most common is the
"simple" average (not weighted) that is based on the closing price
of the stock for that particular day. Moving averages can become
more powerful when multiple histories are plotted on one chart. An
example would be "stochastics", but stock-price reversals in the
direction of a moving average are usually more reliable than the
moving average crossover. Remember, false signals can occur when
using moving averages, so successful traders use other indicators
to confirm the direction of price.

Most experts agree that the average itself can act as an area of
support and resistance. Just like a trendline, the more times a
moving average is touched, the greater the significance of any
violation. A violation of the moving average is usually a warning
that a change in character may be taking place but confirmations
of trend changes should also be sought from alternative technical
indicators. You can learn more about technical analysis in "How
to Profit in Bull and Bear Markets" by Stan Weinstein. Good Luck!
------------------------------------------------------------------
                      *** WARNING!!! ***
Occasionally a company will experience catastrophic news causing
a severe drop in the stock price. This may cause a devastatingly
large loss which may wipe out all of your smaller gains. There is
one very important rule; Don't sell naked puts on stocks that you
don't want to own! It is also important that you consider using
trading STOPS on naked option positions to help limit losses when
the stock price drops. Many professional traders suggest closing
the position when the stock price falls below the sold strike or
using a buy-to-close STOP at a price that is no more than twice
the original premium from the sold option.
******************************************************************
SUMMARY OF PREVIOUS PICKS 
******************************************************************
Stock  Price  Last    Mon  Strike  Opt     Profit   ROI   Monthly
Sym    Picked Price        Price   Bid     /Loss          ROI

ITRI    8.00   9.56   Feb   7.50  0.56  *$   0.56  17.2%  24.9%
DLP    37.19  31.94   Feb  30.00  1.31  *$   1.31  14.6%  21.1%
BTIM   16.00  16.50   Feb  12.50  0.31  *$   0.31   8.8%  19.2%
SRCM   19.75  21.00   Feb  15.00  1.06  *$   1.06  21.2%  18.4%
SRCM   19.00  21.00   Feb  15.00  0.50  *$   0.50  11.6%  16.8%
BYND   28.00  25.00   Feb  20.00  0.69  *$   0.69  11.0%  15.9%
WAVO    9.44   7.31   Feb   7.50  0.63   $   0.44  17.5%  15.2%
VRIO   29.25  28.38   Feb  22.50  0.94  *$   0.94  13.8%  15.0%
CMTO   24.81  22.31   Feb  20.00  0.38  *$   0.38   6.9%  15.0%
BNYN   14.44  11.06   Feb  10.00  0.69  *$   0.69  19.3%  14.0%
PTVL   28.38  24.75   Feb  22.50  0.38  *$   0.38   6.3%  13.6%
PTVL   22.50  24.75   Feb  15.00  0.81  *$   0.81  15.3%  13.3%
PTEK   11.19   8.03   Feb   7.50  0.31  *$   0.31  12.2%  13.2%
PTVL   26.56  24.75   Feb  20.00  0.50  *$   0.50   8.6%  12.5%
SPLN   31.13  41.25   Feb  22.50  1.00  *$   1.00  13.8%  12.0%
RNBO   24.00  20.13   Feb  20.00  0.69  *$   0.69  11.0%  11.9%
HLIT   24.63  21.38   Feb  20.00  0.44  *$   0.44   7.8%  11.3%
USWB   30.56  33.00   Feb  25.00  0.56  *$   0.56   7.8%  11.2%
SDLI   50.00  56.25   Feb  40.00  0.81  *$   0.81   7.5%  10.9%
VIRS   14.13  12.31   Feb  10.00  0.38  *$   0.38  11.8%  10.3%
CMTO   27.56  22.31   Feb  20.00  0.56  *$   0.56   9.2%  10.0%
VIRS   14.63  12.31   Feb  10.00  0.44  *$   0.44  13.1%   9.5%
CATP   25.00  29.75   Feb  20.00  0.44  *$   0.44   8.1%   8.8%
CDNW   23.75  18.38   Feb  15.00  0.38  *$   0.38   7.4%   8.0%
OXHP   20.06  18.25   Feb  17.50  0.63  *$   0.63  10.3%   7.5%
POWI   31.75  25.13   Feb  25.00  0.44  *$   0.44   6.5%   7.0%
MUSE   29.38  31.00   Feb  17.50  0.63  *$   0.63   9.7%   7.0%
SDTI   27.63  17.25   Feb  17.50  0.56   $   0.31   5.1%   4.4%
SCUR   26.00  19.38   Feb  20.00  0.56   $  -0.06  -1.0%   0.0%
PLCM   26.75  21.31   Feb  22.50  0.75   $  -0.44  -6.1%   0.0%
PCYC   25.38  17.50   Feb  20.00  0.63   $  -1.87 -32.8%   0.0%
---------------------------------------------------------------
THQI   23.25  22.00   Mar  15.00  0.69  *$   0.69  12.9%   9.4%
SUIT   32.00  30.75   Mar  25.00  0.88  *$   0.88  12.1%   8.8%
CIEN   24.19  22.13   Mar  17.50  0.63  *$   0.63  11.5%   8.3%
PSUN   27.00  26.75   Mar  20.00  0.69  *$   0.69  11.3%   8.2%
ZONA   32.25  28.13   Mar  25.00  0.75  *$   0.75  10.4%   7.5%

-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)
******************************************************************
NEW PICKS
******************************************************************
Definitions:
OI  - Open Interest
CB  - Cost Basis (break-even point if put exercised) 
ROI - Return On Investment - formula: premium received divided by
the collateral required by the broker (the greater of 40% of the
current price of the stock plus the premium, minus the difference
between the cost of the stock and the strike price; or 20% of the 
current price of the stock plus the premium.) As you move further
from the stock price, the 20% requirement will take precedence.
ROI may vary based on equity required by each individual broker.
******************************************************************
Sequenced by Company
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr  Basis  Expired

CKFR   30.56  Feb 25.00  FCQ NE  0.38  1141  24.63   5.33%
----------------------------------------------------------
AVID   30.00  Mar 22.50  AQI OX  0.44  60    22.06   6.80%
BTIM   16.63  Mar 10.00  QBO OB  0.25  145    9.75   6.99%
BVSN   40.00  Mar 30.00  QVB OF  1.00  187   29.00  11.11%
CATP   30.00  Mar 22.50  TQP OX  0.44  153   22.06   6.80%
DRMD    6.75  Mar  5.00  DUQ OA  0.25  378    4.75  15.63%
EGRP   46.06  Mar 35.00  QGR OG  2.13  461   32.88  18.74%

ROI 5.3% for 1 week = greater than a 23% return monthly basis
******************************************************************
Sequenced by Return on Investment  
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr  Basis  Expired

CKFR   30.56  Feb 25.00  FCQ NE  0.38  1141  24.63   5.33%
----------------------------------------------------------
EGRP   46.06  Mar 35.00  QGR OG  2.13  461   32.88  18.74%
DRMD    6.75  Mar  5.00  DUQ OA  0.25  378    4.75  15.63%
BVSN   40.00  Mar 30.00  QVB OF  1.00  187   29.00  11.11%
BTIM   16.63  Mar 10.00  QBO OB  0.25  145    9.75   6.99%
AVID   30.00  Mar 22.50  AQI OX  0.44  60    22.06   6.80%
CATP   30.00  Mar 22.50  TQP OX  0.44  153   22.06   6.80%
******************************************************************
Company Descriptions
******************************************************************
CKFR - Checkfree Holdings  $30.56     *** 1 Week Play ***

CheckFree offers electronic data interchange systems that allow
customers to make routine payments and collections, do financial
transactions electronically, and make purchases on the Internet.
CKFR provides all electronic services and is the de facto back
end processing engine for electronic bill presentment and home
banking, whether through banks or Internet portals. Met earnings
estimates in late January and was promptly upgraded. A one-week
play to hold $25.

FEB 25.00 FCQ-NE BID=0.38 OI=1141 CB=24.63 ROI=5.33%
    
Chart = http://quote.yahoo.com/q?s=CKFR&d=3m
******************************************************************
AVID - Avid Technology  $30.00

Avid Technology is a producer of systems for capturing, editing,
and distributing digital media. Their customers include leading
film studios, television networks, and recording studios. Its
all-digital, disk-based systems have revolutionized audio, film,
and video editing. On Thursday, the company said it would not
report 4th quarter net income until it evaluates adjustments from
its purchase of Softimage Inc. Morgan Stanley raised their rating
on Friday to "outperform". New buying-pressure and support at $22.

MAR 22.50 AQI-OX BID=0.44 OI=60 CB=22.06 ROI=6.80%

Chart = http://quote.yahoo.com/q?s=AVID&d=3m
******************************************************************
BTIM - Biotime  $16.63     *** Our Old Favorite ***

A development-stage biomedical company that develops aqueous-based
synthetic solutions that can be used to replace massive blood loss
during cardiac bypass and neurosurgery or due to traumatic injury.
These solutions also are intended to work as plasma extenders,
preservatives of body organs and tissues, and blood substitutes
during hypothermic (low-temperature) surgeries. No news is a good
thing for this old technical favorite. Hasn't been below $12.00
for two months and current support is from $14 to $15.

MAR 10.00 QBO-OB BID=0.25 OI=145 CB=9.75 ROI=6.99%

Chart = http://quote.yahoo.com/q?s=BTIM&d=3m
******************************************************************
BVSN - Broadvision  $40.00     *** E-commerce ***

BVSN facilitates Web commerce with it's One-To-One software that 
lets companies design their own Web sites to maximize profit 
potential. One-To-One manages online transactions such as ordering
and payment, billing, customer service etc. Some new contracts 
and a broker upgrade helped this stock past a mediocre earnings 
report in January and the technicals reveal excellent support 
around $32.

MAR 30.00 QVB-OF BID=1.00 OI=187 CB=29.00 ROI=11.11%

Chart = http://quote.yahoo.com/q?s=BVSN&d=3m
******************************************************************
CATP - Cambridge Tech Partners  $30.00     *** Nice Rebound ***

CATP provides information technology and software development for
companies seeking to shift to client/server networks from older
mainframe computers but stymied by the growing complexity of
computer technology. Services include custom software deployment,
electronic commerce development, information technology strategy,
management consulting, network services, and training. CATP said
Thursday it expects to hit $1 billion in revenues by 2001 and now
sees its interactive business nearly doubling this year. We like
the solid base and a new bullish trend that started in January.

MAR 22.50 TQP-OX BID=0.44 OI=153 CB=22.06 ROI=6.80%

Chart = http://quote.yahoo.com/q?s=CATP&d=3m
******************************************************************
DRMD - Duramed  $6.75     *** Own this one! ***

Duramed Pharmaceuticals makes generic prescription. It also has
approval to market a hydroxyurea capsule for treating cancer. The
company has applied for FDA approval for an estrogen-replacement
drug and they are expanding into branded products. The company
sells to drugstore chains, wholesalers, and private distributors.
Lots of speculation over the upcoming earnings, expected 2/26/99,
and other new drug reports. A good place to own it at $4.75.

MAR 5.00 DUQ-OA BID=0.25 OI=378 CB=4.75 ROI=15.63%

Chart = http://quote.yahoo.com/q?s=DRMD&d=3m
******************************************************************
EGRP - E*trade Group  $46.06     *** E-brokerage ***

E*TRADE Group is the #3 online brokerage firm. The Internet is
about 80% of their trading volume. E*TRADE also offers market
data, cash and portfolio management services. The company has
completed its initial investment in E*OFFERING, a new investment
bank on the Internet that will enable visitors to research info
on subscribed public offerings. You will probably place the trade
on E*trade...A great price to own it!

MAR 35.00 QGR-OG BID=2.13 OI=461 CB=32.88 ROI=18.74%

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



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