Option Investor
Newsletter

Daily Newsletter, Sunday, 02/21/1999

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The Option Investor Newsletter            Sunday  2-21-99  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 2-19          WE 2-12          WE 2-5           WE 1-29
DOW     9339.95 + 65.06  9274.89 - 29.35  9304.24 - 54.59  +238.16  
Nasdaq  2283.60 - 38.29  2321.89 - 51.73  2373.62 -132.27  +167.01  
S&P-100  620.27 +  4.13   616.14 -  1.53   617.67 - 22.77  + 30.06  
S&P-500 1239.19 +  9.06  1230.13 -  9.27  1239.40 - 40.20  + 54.45  
RUT      392.30 -  6.14   398.44 - 14.28   412.72 - 14.50  +  4.78  
TRAN    3134.51 + 37.62  3096.89 -150.77  3247.66 + 45.29  +138.57  
VIX       30.23            31.35            30.47            26.53
Put/Call    .70              .85              .64              .47
******************************************************************

Rally or just another bounce off the upper end of our trading range?

The Dow rallied back two days in a row to close up +65 for the week.
On Thursday I mentioned that a rise to 9400 could possibly signal
the next drop back down to the bottom of our range at 9200. At
3:30 Friday afternoon it looked like a prophecy come true as the
DOW, up 97.04 at 9395.67, quickly dropped -100 points to negative
territory again. Only late day bargain hunting in the last 10 min
tacked on the +41 at the close. The fear of the weekend just will
not go away. The global currency markets are still too fragile for
many traders and nobody wants to wake up to another devaluation on
Monday morning.

Other noteworthy possibilities for trouble this week include the
the G7 meeting and the Greenspan Humphrey Hawkins testimony.
Tuesday Mr G. is before the Senate Banking Committee and Wednesday
the House Banking Committee. We expect pointed questions and soft
shoe answers but whenever Mr G. talks the traders listen for the
ticking of a market bomb. Actually Mr G. could be in hot water. 
His strong disagreement with Clinton and the plan to invest Social
Security in the stock market has led some analysts to believe
Clinton may not reappoint him in 2000. Gore likes Rubin and former
Fed vice chairman Alan Blinder. President Bush partly blamed Mr G.
for his defeat in 1992 so a win by current Texas gov George Bush
could also unseat him. The market would definitely not like to
see Greenspan go home. Investors have a great respect for Mr G.
and could probably get him elected president if only he could
talk plain English. They feel the last eight years of economic
expansion has been due to Greenspan firmly at the economic wheel.

The positive news Friday that the CPI only rose by +.1%, or only
half of the expected +.2%, and the announcement of an almost 10%
drop in the foreign trade gap, gave the market some much needed
reassurance. With inflation no where in sight the much dreaded
rise in interest rates by the Fed just keeps slipping farther
and farther into the future. Falling commodity prices and Internet
sales competition are keeping retail prices in check with only 
a +2% rise for the year. This lack of inflation can only be seen
as a good omen.

Without any negative news over the weekend and a lack of any
"irrational exuberance" comments from Mr G, the techs could 
continue to recover from the serious profit taking of the last
two weeks. The main problem is still the lack of market breadth. 
The advance decline line was negative on the NYSE again Friday
even though the market closed positive. Declines beat advances
by 1,532 to 1,392. On the Nasdaq the advances won 2,121 to 1,865.
Overall 3,257 advances to 3,395 declines. For a solid market
rally we need to see NYSE advances of at least 2,000 and Nasdaq
advances of at least 2,500. Anything else is a lack of conviction
and should only be viewed as a trading rally. The forecast, 
more of the same. 9200 seems firmly entrenched and hopefully
the breakout of this range will be to the upside.

We have received many emails about the disappointed subscriber
letter we posted in the Readers Write section last week. The
following letter moved us so much I requested permission to
comment on it today.

    I've been reading the DELL lamentations on your web site, 
  and I want to add my two cents, since that is about what I 
  have left.

  Actually, I want to put in a good word for you and your staff,
  both for picking great plays, and for telling us so before we
  broke the rules and went broke. I can say, along with a lot of
  readers, that in the last two weeks, I broke every rule, and 
  paid for it. I put all my eggs in one DELL basket, I held over
  earnings, I didn't take profits when my plays went over 100% 
  profit, I continued to take positions in a down market, I 
  traded on emotion (that bastard analyst has to be wrong), 
  I have sinned.

  So, what do I have to show for my troubles? $10,000 bucks, 
  more or less. But, I had about $150,000 of gains on February 
  1st when DELL hit 110, and my plays went from +50% to +250%.
  And I watched it dwindle away, then took profits, then put 
  those profits back into DELL plays as DELL dipped with a 
  reversing market, having faith in Mikey and the numbers.

  But am I mad at you? Am I bitter? No. You told me so. Your 
  rules, even one or two of them, would have saved me. And your
  picks have been dead on. I played AOL in January for a 150% 
  gain. I played MSFT in Jan for a 100% gain. I took those 
  profits and ploughed them into DELL while the market was still
  rising, and had a huge gain. I went from $22,000 in my brokerage
  and $8,000 in my IRA to a combined profit of about $150,000, 
  and, through violation of the rules, rode it back down to 
  +$10,000. I'm angry at myself for not following your rules, 
  but I am grateful that I have those rules to judge my 
  performance as a novice option trader.

  As they told me in the Marines, "Judgment comes from experience,
  and experience comes from bad judgment." Keep up the good work, 
  and kudos to you and your staff. My $10,000 in profits will more
  than cover your fee, and at +25% every two weeks, my profits are
  going places this year.

  Semper FI
  (name withheld)
  
I reprinted this for several reasons. I have dozens just like
it from the last two weeks. I have hundreds from the last year.
The common thread here is a violation of the rules. The major
rules!! Every time you invest $5 in an option you enter the 
play hoping to get back a $2 or $3 profit. Most of the successful
traders I correspond with only expect $.50 to $1. Nobody enters 
a play for $5 and realistically expects to get back $15 or $20. 
Sure it happens sometimes but those cases are very rare. To be up
+250% and not sell is tempting fate and Murphy. (as in Murphy's
law) Whenever a play goes up that much that fast it has just as 
good a chance of coming down even faster. Another major rule 
violation was the "bet the farm" on one play disaster. Even 
with the amount of money in this portfolio the maximum at risk
in any one play should be 25%. NEVER BET THE FARM. Murphy knows!!
Just because you have more money to lose does not mean you should
be willing to lose it!! There is no such thing as a "sure thing".

I know from experience you cannot "hope a stock up". Your optimism
about XYZ stock has no bearing on the stock price unless you are
Warren Buffet. Do you know that even Warren owns stocks that go
down? When you own 50 mln shares of something that drops -$10 it
ruins your whole day but it happens. Now if Warren bets on stocks
that go down, what makes you think that all of your stocks will
only go up? Be honest, how many times have you bought an option
on a stock and NEVER even considered that it could go down? I
do it every week and every week some stock drops within seconds
of the execution on my order. You must always consider that the
next drop could be the beginning of a series of drops. Nothing
goes up forever.

If you are going to trade options you must be ready to lose
some money. Some plays are never going to work and others will
work beyond your wildest expectations. When a play goes bad, 
GET OUT. Nursing a bad play will only make your other plays
worse. As I mentioned recently, when you are in a bad play
your total focus is on the losing play and it causes oversight
or bad judgement on any other plays you have in progress. Do you
think this gentleman would have been happy to get out with only
a $25k loss or even a $50k loss. Sure! Knowing what he knows
now he would GLADLY have lost $50k. That hurts just writing it
but it is much better than -$150k. Everybody works on different
scales. $50k to him may be the equivalent of $5k to you. It is
still a lot of money and nobody wants to admit the deal is dead
and bite the bullet. We would all rather ride it into the ground
and face getting 1/16th on expiration Friday, hoping all the time
against hope that a miracle will occur. The common question I
get is "I am down $5k on this $10k play, what should I do. I can't
sell because I can't afford to lose the $5k." Can you afford to
lose $10k? 

Need I even mention the cardinal rule of "never hold over earnings"?
Do the recent DELL, IBM or SEPR earnings disasters prove my point?
Even the magic STOCK SPLIT ploy did not help Dell.

Enough, I have run out of space and your patience. Let me leave
you with a final bit of wisdom. "Losing plays tend to stay losing
plays". It boils down to that "time decay" problem AND the loss
of "potential expectations". Once the "expectation" for a stock
is crippled by a drop in price the previous option value is
very rarely regained. 

Good Luck

Jim Brown




************
JIM'S PLAYS		 
************
I bought the Nasdaq dip Friday the 5th and that was about as 
positive as it got. Things were all down hill from there. The
following Monday the market opened up strong and then cratered.
I was just about ready to pull the trigger and bail when the
market turned up and recovered about 30 points. The reduced
expectations had me slightly negative on almost all the
positions but optimistic. Tuesday opened down strong and then
firmed. After watching the market base all afternoon I saw
the advances gaining ground on the Nasdaq and decided to add 
to my positions. I bought more contracts on several and put in
some target shooting orders on others. Then I left the office
for a couple hours. Fatal mistake. The Nasdaq dropped -50 points
just before the close and provided me big surprise when I got
back and found all my orders filled at several dollars more
than the current prices. Wednesday traded flat to down and I
broke one of the rules and added to several positions again.
Thursday the relief rally was truly a relief for me. My AOL
position, over $94k at the time was negative -$74k. The 
only reason I did not sell was the imminent stock split
and several upgrades. This could have bit me bad and I was
sweating bullets. (Now you know why I wrote on nursing bad
positions last week) Because I was so focused on AOL I missed
several good plays where I could have made $75k. Back to the
AOL play, by 2:PM AOL had risen +$8 and my position was now
up +$3,000. The market rally paused about 30 min and I did 
not even think twice about blowing out my 300 AOL contracts
for barely enough to cover commissions. Then the last 30min
rally took hold and AOL went up another +$5. My position then
would have been +$60k. I hate it when that happens! Am I angry?
NO! I was just very thankful to have dodged the bullet. By
not taking the chance on the market dropping again and losing
the capital I am able to use it again in more controlled plays.
My plan on busted plays is simply to get out alive. Once a play
breaks the chances of it going profitable again are slim. Any
opportunity to bail out is greeted warmly. I would much rather
pick a new play, study all the facts and wait for an entry
point, instead of chasing a broken play and the brain damage
it causes. The Thursday rally allowed me to close everything, 
step back and take a deep breath. 

This entire losing week was caused by: 

Buying the dip BEFORE the rebound started.   
Starting too many positions at once.
Failure to sell at first drop.

I consider myself fortunate to break even after the major
Nasdaq drop and violation of several rules.

Stock Qty Symbol AvgCost AvgSell Profit/Loss

AOL   300 AOE-BM  3.13   3.25    +3,900
EGGS   25 EQG-BW  4.00   2.19    -4,525
CIEN   50 EUQ-BX  2.19   1.00    -5,950
PSIX  100 SQP-BF  6.82   6.00    -8,200
DELL   25 DLQ-BR 11.75  12.50    +1,875
EGRP   20 QGR-NI  3.00   6.06    +6,120 (puts)
EGRP   25 QGR-BH  1.94   3.00    +2,650
MSFT  100 MSQ-BX  6.81   6.00    -8,100
EMC    50 EMB-BS  6.25   7.25    +5,000
SUNW   25 SUQ-BS  7.00   8.00    +2,500
LVLT   25 QHN-BJ  8.50   6.88    -4,050
TWA   200 TWA-BU   .31    .00    -6,200

EGRP 6000 stock  48.00  49.00    +6,000
EGRP 6000 stock  46.00  47.00    +6,000
EGRP 8000 stock  38.00  39.00    +8,000

          Total for two weeks    +5,020 (thank you EGRP)

Current positions: 

GADZ - takeover rumor




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

Symbol - Stock      Splits/Date  

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 current play
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 
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
DELL - Dell Computer   2:1 03-05-99 ex-date 03-08
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 
LU   - Lucent          2:1 03-31-99 ex-date 04-01
SUNW - SunMicro        2:1 04-08-99 ex-date 04-09 
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
****************************
Sunday, February 20, 1999

Huge Divergence

Can the broader market climb to new heights when there is a huge 
divergence between DOW and the NYSE advance/decline line?  Check
out the continental divide shown when the two are charted
together.  Although the DOW is above the 100 and 200-day moving
averages, the advance-decline, a measure of market breadth, has
been deteriorating since April of 1998.

This is one reason why Pinnacle has been alerting investors to be
suspicious of every "profit-taking" sell-off they come across. 
It could very well be the start of something more.

What's more, Pinnacle believes that the market will likely begin
to flatten out, consolidate in a trading range before rolling
over into a correction given our technical and sentiment
indicators.  As such, we encourage subscribers to develop a
balance attack and begin to look for hedge/short opportunities.



 


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                       (2/19)     (2/23)     (2/26)  Alert
********************************************************************

Pinnacle Index (OEX):          
-----------------------------------------------------------------
Overhead Resistance (620-635)     1.3
Underlying Support  (595-610)     1.2


Put/Call Ratios:
-----------------------------------------------------------------
CBOE Total P/C Ratio               .9
CBOE Equity P/C Ratio              .7            
OEX P/C Ratio                     1.3                         *  


Peak Open Interest (OEX):
-----------------------------------------------------------------
Puts                              610
Calls                             610
P/C Ratio                         1.1


Market Volatility Index (VIX):	
-----------------------------------------------------------------
CBOE VIX                        30.23                         *



Investors Intelligence:
-----------------------------------------------------------------
Bullish                          55.7%                        *  
Bearish                          28.7%                        *
		



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                       (2/19)     (2/23)    (2/26)
-----------------------------------------------------------------
               
                    (630-635)      2.1    
                    (620-625)      1.0    
Overhead Resistance (620-635)      1.3    

OEX Close                       620.27   

Underlying Support  (595-610)      1.2 
                    (605-610)      1.2   
                    (595-600)      1.1   

Average ratings: 
Resistance levels 2.0 / Support .5

What the Pinnacle Index is telling us:
Overhead sentiment resistance is light at the OEX 620/635
level while the underlying support is light at the
OEX 595/610 level.


Put/Call Ratio 
-----------------------------------------------------------------
                                Friday      Tues      Thurs
Strike/Contracts                (2/19)     (2/23)    (2/26) 
-----------------------------------------------------------------
CBOE Total P/C Ratio               .70
CBOE Equity P/C Ratio              .51
OEX P/C Ratio                     1.03


Peak Open Interest (OEX)
-----------------------------------------------------------------
                     Friday         Tues           Thurs
Strike/Contracts     (2/19)         (2/23)         (2/26)
-----------------------------------------------------------------
Puts                 610 / 8,435   



Calls                660 / 7,650
Put/Call Ratio       1.10

 
 
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 17, 1999                       32.51   *
February 19, 1999                       30.23   *


 
 
 



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


January   6, 1999                     58.3        30.0   
January  13, 1999                     60.0        30.0   
January  20, 1999                     61.7        25.9   
January  27, 1999                     60.7        28.2   

February  3, 1999                     60.0        26.7   
February 10, 1999                     61.7        25.9   
February 17, 1999                     55.7        28.7   *



**************
Market Posture
**************
As of Market Close - Friday, February 19, 1999 

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

DOW Industrials    9,200   9,500   9,340    Neutral   2.11            
SPX S&P 500        1,225   1,280   1,239    Neutral   2.11   
OEX S&P 100          610     635     620    Neutral   2.11    
RUT Russell 2000     420     435     392    BEARISH   2.4    

NDX NASD 100       1,900   2,150   1,935    Neutral   2.19 *   
MSH High Tech        930   1,040     933    Neutral   2.19 *      

                   Key Benchmarks
Technology         Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
XCI Hardware         840     970     844    Neutral   2.19 *         
CWX Software         620     680     603    BEARISH   2.16            
SOX Semiconductor    375     420     390    Neutral   2.11    
NWX Networking       410     450     401    BEARISH   2.12            
INX Internet         450     570     463    Neutral   2.19 *      

                   Key Benchmarks
Financial          Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
BIX Banking          630     675     654    Neutral   2.11                  
XBD Brokerage        630     700     670    Neutral   2.5      
IUX Insurance        570     625     616    Neutral   2.11            

                   Key Benchmarks
Other              Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
RLX Retail           825     880     858    Neutral   2.11    
DRG Drug             750     795     776    Neutral   2.11      
HCX Healthcare       750     780     768    Neutral   2.11              
XAL Airline          300     330     311    Neutral   1.29                
OIX Oil & Gas        230     250     225    BEARISH   2.16                  



Posture Alert

The Morgan Stanley High Tech index, encompassing 35 blue chip 
technology firms, held its first test Thursday/Friday of its
50-day moving average in five months.  We, therefore, have
turned neutral across select technology industry sectors
despite recent bearish opinions about Dell and Microsoft.

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       2/20     Forecast:  --     Previous:  1.3%
BTM/Schroeders    2/20     Forecast:  --     Previous:  0.1%
Consumer Confidence Feb    Forecast: 127.8   Previous: 127.6
API Oil Stocks    2/20     Forecast:  --     Previous: 332.3M

Greenspan testifies before the Senate Banking Committee

Wednesday:

Greenspan testifies before the House Banking Committee

Thursday:

Jobless Claims    2/20     Forecast: 300k    Previous: 281k 
Durable Goods Ord  Jan     Forecast: -0.4%   Previous: 2.1%  
Existing Home SalesJan     Forecast: 4.98m   Previous: 5.03m
Money Supply (M2) 02/08    Forecast:  --     Previous:-$0.1B
Help Wanted Index  Jan     Forecast:  --     Previous:  88 

Friday:

APICS Survey       Feb     Forecast:  --     Previous: 52.4
GDP               Q4-REV   Forecast:  5.7%   Previous: 5.6% 
Chicago PMI        Feb     Forecast:  --     Previous: 47.1   
Univ of Michigan   Feb     Forecast:  108    Previous: 107.4




***************************************
Last weeks change for this weeks picks:
***************************************
Index    Last  Week
Dow    9339.95  65.06
Nasdaq 2283.60 -38.29
$OEX    620.27   4.13
$SPX   1239.19   9.06
$RUT    392.30  -6.14
$TRAN  3134.51  37.62
$VIX     30.23  -1.12

Stock   Price  Week

UTX     125.44   6.80 Setting new highs!
SCH      69.06   6.37 Strong growth
PVN      98.50   6.19 Nearing new highs
MEDI     55.75   5.50 Charging ahead!
WCOM     84.19   4.74 New 52 week high.
MWD      93.00   4.51 Takeover Target
PG       91.81   4.31 Possible breakout soon.
MCD      85.56   4.26 Splits 2:1 March 5th.
AXNT     36.00   4.16 Gaining momentum
AMGN    124.13   3.88 Splits 2:1 Friday 2/26
CMA      64.56   3.81 Recent Revival.
OSSI     45.63   3.25 Splits 3:2 March 2nd.
LOW      57.06   3.07 Earnings are Monday before the bell
COF     123.88   2.07 Recovering
AOL     160.38   1.88 Splits 2:1 Monday 2/22
VOD     181.81   1.68 Watch for upward trend!
EMC     103.94   1.56 Resisting the tech sell off.
LVLT     57.00   1.00 Recovering
DH       61.19   0.72 Earnings 3/2/99
WMT      84.75   0.37 Wait for confirmation
SLR      86.19   0.19 Splits 2:1 on Thursday
PSIX     33.75  -0.81 Earnings 2/23
ANF      71.06  -3.50 Dropped
AMTD     86.00  -4.31 Dropped, Splits 2:1 2/23
VISX     55.00  -4.75 Dropped
CLX     123.00  -6.50 Dropped

Puts

MSFT    147.69 -10.06 Temporary bounce Friday
HWP      68.31  -8.13 Poor revenue growth
WLA      63.88  -5.13 Worst performing drug
AMZN    101.88  -2.62 Dropped, renewed enthusiasm
CPQ      41.13  -1.88 Dell aftershocks
BDX      33.25  -1.64 Decling strength
BMCS     44.56  -1.49 Fighting overhead resistance
ADBE     42.31  -1.25 Head & shoulders forming
ELNK     62.06  -1.00 Small recovery
WHR      43.31  -0.87 Strong technical decay
ERTS     40.13  -0.56 Barely holding on
BKB      38.63   2.82 Sector strength holding
EBAY    239.50   4.38 Resistance stronger



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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              2-21-99
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

SCH  - Schwab
PVN  - Providian Financial
CMA  - Comerica
AXNT - Axent Technology
OSSI - Outback Steakhouse
PG   - Proctor & Gamble

Puts

EBAY - eBay Inc.

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

AMTD $86.00 (-4.31) We have been recommending day trading 
options on Ameritrade. This volatile stock often trades in a 
wide range on a given day. It provides an option trader who 
can watch live trades the opportunity to move profitably into 
and out of options in a short time frame. We had hoped for a 
split run as well, but did not get it. Ameritrade splits this 
Tuesday, 2-23. That leaves only one trading day before the 
split and we don't suggest holding over a split. 

ANF $71.06 (-3.50)  ANF announced incredible earnings this 
past Tuesday.  Analysts were shocked by the numbers that 
exceeded even their highest expectations.  Goldman Sachs 
increased their 12-18 month price target to $95.  Forecasted 
earnings for 2000 are projected to continue to grow at the 
rate of 30%.  With all of the good news, you'd think ANF would 
continue its upward trend.  However, ANF has fallen below its 
30 dma and is negative for the week.  We are dropping it 
until its technical indicators shape up.   

CLX $123.00 (-6.50) We are dropping CLX after it broke down
substantially from its 10-dma.  CLX is sitting right on its
20-dma, which could provide some support, but we don't like
the looks of this stock in the near term.  CLX gave us a
classic example of taking profits when you can.  CLX shot
up substantially two weeks ago, but gave them all back this
last week.

VISX $55.00 (-4.75) VISX is being dropped this week after
it broke down the last two trading days.  VISX had been in
a consolidation phase and we expected a move up.  Instead,
VISX decided to move down.  Friday was a key day as VISX
traded in a very large range.  In the end, the bears won
the fight.


PUTS: 

AMZN  $101.88 (-2.62)  Just our luck!!  We finally decide to 
add Amazon as a put and what does it do the next day??  Jump 
+$12.38??  Why??  Remember the name CIBC Oppenheimer?  
Remember our friend Mr. Henry "Price Target" Blodget?  He 
decided to praise the Internets this past Friday with some 
bullish comments.  The Internet sector was brought back to 
life immediately.  We have to drop Amazon as a put play.  The 
volatility is back and we feel there are definitely safer 
plays out there.  

AXP - $103.19 .56 (3.25) Recent take-over speculation and
recent bank sector strength provided the boost AXP needed
to break through near-term resistance.  Dropping for now 
until stock breaks below near-term support at $100.

BAC - $64.94 -1.00 (2.06) Stock consolidating at its 50-day 
moving average with no conviction one way or another.  
Dropping until stock breaks down below key support level of $60.

MCHP - $28.63  .13 (-.25) Dropping stock after company 
reached our target of $25.  Appears to show some support at $25. 

PG - $91.81  .19 (4.31) Stock breaking out ABOVE prior near-term
resistance of $90.  Therefore, we are dropping the blue-chip 
company from the puts list.

PHSYB - $68.50 2.00 (4.75) Stock finding near-term support at 
$65.  Therefore, dropping from puts list in favor of other 
opportunities. 


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


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 current play
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 
EBAY - eBay Inc.       3:1 03-01-99 ex-date 03-02 
OSSI - Outback Steaks  3:2 03-02-99 ex-date 03-03 current play
AAS  - Amerisource     2:1 03-03-99 ex-date 03-05
APEX - APEX PC Solution2:1 03-03-99 ex-date 03-05
DELL - Dell Computer   2:1 03-05-99 ex-date 03-08
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 
LU   - Lucent          2:1 03-31-99 ex-date 04-01
SUNW - SunMicro        2:1 04-08-99 ex-date 04-09 
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 $160.38 (+1.88)(P11W +97.55)

Splits on 2/22

See details in sector list

Chart = http://quote.yahoo.com/q?s=AOL&d=3m
*****************************************************
SLR - Solectron, Inc. $86.19 (+.19)(+9.12)

Splits on 2/25

See details in sector list

Chart = http://quote.yahoo.com/q?s=slr&d=3m
*****************************************************
OSSI - Outback Steakhouse $45.63 (+3.25)

Splits on 3/02

See details in sector list

Chart = http://quote.yahoo.com/q?s=orcl&d=3m
*****************************************************
MCD - McDonald's Corporation  $85.56 (+4.25)(+1.00)(+1.50)

Splits on 3/05

See details in sector list

Chart = http://quote.yahoo.com/q?s=mcd&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. 

*****************************************************
AMGN - Amgen $124.13 (+3.88)

Founded in 1980, Amgen is a global biotechnology company that 
develops, manufactures, and markets human therapeutics based 
on advances in cellular and molecular biology.  With sales of 
$2.34 billion, it is the largest of the biotech companies and 
is more than twice the size of its nearest rival.  Amgen's 
products include the billion-dollar blockbusters Epogen (EPO) 
and Neupogen, as well as Infergen.  Epogen is used to treat 
anemia in patients with kidney failure or patients undergoing 
chemotherapy.  Neupogen is used to stimulate the immune system 
and Infergen treats chronic hepatitis.  Many other drugs are 
in the pipeline, but the most important new drug is NESP--a 
next-generation drug to succeed EPO.

split 2:1 this Friday February 26th.

Chart = http://quote.yahoo.com/q?s=AMGN&d=3m
*****************************************************
WCOM - MCIWorldCom $84.19 (+4.75)(P10W+13.50)

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.

Chart = http://quote.yahoo.com/q?s=WCOM&d=3m
*****************************************************
OSSI - Outback Steakhouse $45.63 (+3.25)

The Outback Steakhouse is one of the biggest steakhouse 
chains in the United States with approximately 520 
restaurants.  It even has 21 international establishments.
You can get anything from steaks and chicken to fish and 
pasta.  OSSI also owns a second chain of restaurants named 
Carrabba's Italian Grills.  You may have dined in one of the 
65 operations that let you watch your meal being prepared in 
their exhibition kitchens.  

splitting 3:2 on March 2nd 

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

***************************************
Brokerage/Banking - Sector
***************************************
COF - Capital One $123.88 (+2.07)(+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.

After struggling early in the week, COF initiated its 
turnaround on Thursday by popping up +$3.19.  Look for COF 
to now hold above that $125 level and continue higher 
especially since its trade volume has returned to its usual 
level.  Trading volume has been lower than normal most of this 
week.    

No new news. 

BUY CALL MAR-120 COF-CD OI=572 at $ 9.75 SL= 7.50
BUY CALL MAR-125*COF-CE OI=552 at $ 7.25 SL= 5.75
BUY CALL JUN-125 COF-FE OI= 93 at $15.13 SL=11.75
BUY CALL JUN-130 COF-FF OI=106 at $12.63 SL=10.50

Picked on February 13th at $121.81      PE= 30
Change since picked        +$ 2.07      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 = 409.0 K
Chart = http://quote.yahoo.com/q?s=COF&d=3m
*******************************************
PVN - Providian Financial $98.50 (+6.19)(+2.87)

Providian Financial provides credit, investment services, and 
insurance protection to individual consumers. It is the 
nation's top secured card provider, and is also a leading 
Visa and Mastercard provider. Headquartered in San Francisco, 
PVN still provides traditional banking services in its home 
state of New Hampshire. 

Except for sharp drops in September and October, Providian 
has a beautiful chart. From its bottom in October, it had 
nearly tripled in price by January 28th, when it hit $103.94. 
Then it suffered a market-induced retrenchment during the 
first half of February. Most of the trading during this 
pullback was on relatively light volume. Strong volume 
returned on Feb 18th and 19th, as the stock surged on news 
that it had bought GetSmart, a leading Internet marketplace 
for consumer and business loans. This gives PVN a new 
e-commerce division. We didn't want to recommend PVN after 
the price spike on Thursday following news of the acquisition, 
because sometimes stocks can correct right back when investors 
sell the news. However, after a dip on Friday, PVN turned up 
slightly at the end of the day, so we decided to pick them up. 

More conservative players should wait for PVN to move above 
$103.94 before jumping in.

BUY CALL MAR- 95*PVN-CS OI=416 at $ 7.63 SL= 6.00
BUY CALL MAR-100 PVN-CT OI=146 at $ 5.00 SL= 3.25
BUY CALL MAR-105 PVN-CA OI= 14 at $ 2.88 SL= 1.50
BUY CALL JUN-100 PVN-FT OI=202 at $11.25 SL= 9.00
BUY CALL JUN-105 PVN-FA OI= 17 at $ 8.50 SL= 6.50

Picked on Feb 21 at  $98.50     PE=45
Change since picked  $ 0.00     52 week low= $ 28.38
Analysts Ratings  9-3-1-0-0     52 week high=$103.94
Last earnings 12-98 est=.62     actual=.66 surprise=6%
Next earnings  4-22 est=.70     versus=.39
Average daily volume = 823.1k
Chart = http://quote.yahoo.com/q?s=PVN&d=3m
*******************************************
CMA - Comerica Inc. $64.56 (+3.81)

As Michigan bank holding companies go, there are none bigger 
than Comerica.  The company's nearly 500 offices serve all 
types of customers, from the business elite to the individual 
consumer and small business.  Comerica is strongest in the 
commercial arena, including international finance, and offers 
traditional retail banking and loans.  It has subsidiaries in 
widely scattered US markets (California, Florida, Michigan, 
and Texas) and is stepping into Mexican and Canadian financial 
waters. To reduce its dependence on loan income, Comerica is 
concentrating on adding fee-based businesses.

CMA has come back strong this last week.  CMA consolidated in
the $60 range and has bounced off this level well in the last
week.  CMA did reach an intraday high of $66.13 on Friday, but
settled down with the rest of the market in the last hour of
trading.  CMA did rise every day this last week, but closed
off its highs on each occasion.  Volume has been pretty strong
and this is a bullish sign.

CMA hasn't had much news to report, but did have record earnings
reported back in January.  CMA is expected to make $4.14 a share
in 1999.  This gives CMA a P/E of 15.6.  CMA will not have the
big swings that technology stocks have, but should be a steady
performer.  CMA's 10 and 20-dma are in the midst of a bullish
crossover.

BUY CALL MAR-60*CMA-CL OI=100 at $5.63 SL=3.75 ITM$4.56 
BUY CALL MAR-65 CMA-CM OI=125 at $2.38 SL=1.25
BUY CALL APR-65 CMA-DM OI=125 at $3.13 SL=1.50
BUY CALL APR-70 CMA-DN OI=116 at $1.56 SL=0.75
BUY CALL JUL-70*CMA-GN OI=208 at $3.13 SL=1.50

Picked on Feb.19th at  $64.56   PE = 15
Change since picked     +0.00   52 week low =$46.50
Analysts Ratings    5-6-6-0-0   52 week high=$73.00
Last Earnings   01/99 est .97   actual .97
Next Earnings   04/19 est .98   versus .88
Average daily volume = 375.2 k
Chart = http://quote.yahoo.com/q?s=CMA&d=3m
*******************************************
MWD - Morgan Stanley Dean Witter $93.00(+4.50)(-.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 trended higher this last week and reached an intraday
high of $96.25 on Friday before settling for a minor gain.
MWD's only resistance is at its 52-week high of $97.50, which
was attained back in July.  Looking at a chart reveals that
MWD has had strong support at its ascending 30-dma.  Several
times it has bounced off this support since the October lows.
MWD is still a takeover target and Mondays are usually the
big announcement days.  

MWD announced on Friday that their Annual Shareholder Meeting
will be on April 9th.  This is still a ways off, but this 
could be a time when they announce a split.  Last split was
around $75.00 in early 1997.  Earnings for MWD should be
announced around this same time.  In the meantime, watch for 
pullbacks to MWD's 30-dma for possible entry points.  

BUY CALL MAR- 90 MWD-CR OI= 881 at $7.13 SL=5.25 ITM$3.00 
BUY CALL MAR- 95*MWD-CS OI= 870 at $4.50 SL=2.75
BUY CALL APR- 95 MWD-DS OI=1232 at $6.88 SL=5.00
BUY CALL APR-100 MWD-DT OI= 194 at $4.75 SL=3.00
BUY CALL JUL-100 MWD-GT OI= 134 at $9.00 SL=6.75

Picked on Feb.6th at      $89.00   PE = 18
Change since picked        +4.00   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
*******************************************
SCH - Charles Schwab  $69.06 (+6.37)(-3.37)

Charles Schwab is a holding company with subsidiaries that 
provide financial services, which include discount brokerage, 
trade execution, investment, advisory services, and 
administrative services. One subsidiary performs clearing and 
account maintenance and another is a market maker in Nasdaq 
securities. Schwab is the largest discount brokerage in the 
U.S., and operates 235 branch offices in 46 states, Puerto 
Rico, and the U.K. On Feb.8th, it also entered the Canadian 
market through an acquisition.

Online securities trading is growing by leaps and bounds. One 
in seven trades is now placed through the Internet. With this 
growth in mind, investors have sent Internet brokers' stocks 
soaring in recent months. Schwab traded in the low twenties 
(split-adjusted) in mid-October, but topped out at $72.13 on 
Feb 1st. (SCH split on Dec 14.) The first half of February saw 
consolidation in the stock as the market weakened. Then Schwab 
reported that online trading at the brokerage was up 65% in 
January. Assets in customer accounts reached $521 billion by 
the end of January, an increase of 40% over last year. Schwab 
handled 153,000 trades/day that month, and has doubled its 
capacity for trades during the past three months. Schwab has 
been growing around 20% per year, but numbers like these 
suggest that is currently enjoying a much higher growth rate. 
On the news, the stock began moving up again, and just pushed 
above its 10 dma.

Like its counterparts, Schwab has seen a few glitches in its 
online trading, although nothing like the 3-day problems at 
E*trade recently. In surveys, Schwab gets better than average 
marks for its services, and excellent marks in some areas. 
Competition is heating up, though. Even Merrill Lynch has 
finally decided that it will eventually enter the online 
trading arena. Fortunately for Schwab, it has been in the 
discount brokerage business a long time, and entered the 
online trading business relatively early. It is working hard 
to continue attracting new customers, because it knows that 
most online investors tend to stay with their brokers, even 
when they cost slightly more than the deep discounters. SCH 
is looking strong now, and should continue moving up, market 
permitting. Once it clears its January high of $72.13, there 
is no resistance above.

BUY CALL MAR-65 SCH-CM OI=1015 at $7.50 SL=5.75
BUY CALL MAR-70*SCH-CN OI=1339 at $4.50 SL=2.75
BUY CALL MAR-75 SCH-CO OI= 909 at $2.50 SL=1.25 
BUY CALL JUN-70 SCH-FN OI= 425 at $9.63 SL=7.25
BUY CALL JUN-75 SCH-FO OI= 520 at $7.50 SL=5.75

Picked on Feb 21 at   $69.06     PE=76
Change since picked   $ 0.00     52 week low= $18.50
Analysts Ratings   2-0-6-0-0     52 week high=$72.13
Last earnings 12-98 est=$.23     actual=.26 surprise=13%
Next earnings  4-15 est=$.23     versus=.17
Average daily volume = 1.83 mln
Chart = http://quote.yahoo.com/q?s=SCH&d=3m
*******************************************
Internet - Sector
*******************************************
AOL - America Online $160.38 (+1.88)(P11W +97.55)

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!) 

Volatility marked the overall market and AOL last week.  
Market volume and AOL volume was weak with only 11.4 
million shares of AOL traded Friday.  Where are the buyers 
that will drive the price up?  We think they're still on 
the sidelines in cash waiting for reason to get back in the 
game.  While AOL splits 2:1 Monday, Friday's $4.63 increase 
may be just a head-fake as indicated by light volume.  But, 
if the market turns positive backed with strong volume, AOL 
will fly.  Technical indicators are turning positive as AOL 
bounced off support at it's 30 DMA.  This play carries a 
some risk as internets tend to be volatile.  If you must 
play, confirm that volume is on the rise, or at least the
price is moving up.  Don't roll the dice; use stop-limit
orders to protect your profits.  Remember, we don't 
recommend holding over a split because the average stock
suffers post-split depression.  However, last time AOL 
split, it was charging forward and didn't even blink.
Past performance is no guarantee of future result.

No news since our Thursday update.  The rumor last week 
that AOL may take an ownership position in e-bay seems 
relegated to the back burner for now.  Due to the lack of 
news coming from AOL, we wouldn't be surprised to see 
something newsworthy released when the stock splits.  They 
need the shot in the arm to make the split more than just a 
math exercise.

BUY CALL MAR-155 AOE-CK OI=2874 at $14.88 SL=11.75
BUY CALL MAR-160*AOE-CL OI=7184 at $12.38 SL= 9.75 become 80s
BUY CALL MAR-165 AOE-CM OI=3923 at $10.00 SL= 7.50
BUY CALL APR-165 AOE-DM OI=1845 at $16.25 SL=12.75

Average daily volume: 14.0 mln.
Chart = http://quote.yahoo.com/q?s=AOL&d=3m
*******************************************

SEE DISCLAIMER IN SECTION ONE 

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

The Option Investor Newsletter          2-21-99
Sunday             Part 3 of 6

*******************************************
Internet - Sector (continued)
*******************************************
PSIX - PSINet Inc. $33.75 (-.81)(-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 has been consolidating at its 30-dma.  We thought we
could see a run into earnings on the 23rd, but this hasn't
happened like we thought.  Market permitting, we could see
a nice pop on Monday since it is the last trading day before
the earnings announcement.  Each trader must weight the 
risks of holding over earnings.  When we haven't gotten a
nice earnings run, the expectations for blowout earnings
usually decrease.  Nonetheless, holding over earnings is
a risky proposition.  Unconfirmed rumors remain concerning
a possible buyout of PSIX as they are the last of the
independent broadband ISPs.

PSIX announced this last week that they are redeeming shares
on March 10th of there preferred Series B stock.  There was
a provision that stated these shares could be redeemed if
PSIX closed 30 consecutive days above $18, which occurred on
February 5th.  PSIX states that redeeming these shares will
the save the company $2.4 million in dividend payments per
year.  

BUY CALL MAR-30 SQP-CF OI=250 at $5.88 SL=3.75 ITM $3.75 
BUY CALL MAR-35*SQP-CG OI=811 at $3.25 SL=1.75
BUY CALL APR-35 SQP-DG OI=281 at $4.88 SL=3.50
BUY CALL APR-40 SQP-DH OI=424 at $2.94 SL=1.50

Picked on Feb.4th at      $37.63   PE = n/a
Change since picked        -3.88   52 week low =$ 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
*******************************************
Telecom/Networking - Sector
*******************************************
WCOM - MCIWorldCom $84.19 (+4.75)(P10W+13.50)

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.

Finally, WCOM broke through $82 resistance last week with 
strong volume.  Friday's nearly $2 gain came on 14 million 
shares traded.  Chart is looking strong with MACD and 
stochastics turning positive.  Buying pressure is back up.  
New support is $82.  WCOM continues to grow its alliances, 
most recently in an outsourcing and marketing alliance with 
EDS that could be worth $17 billion.  Any turn for the 
positive in the market backed with strong volume should 
juice the price.  Wait for market confirmation before 
making the play and use stop-limit orders to protect the 
gains.

Baby Bells and GTE have been denied postponements of 
opening their markets to the competitive likes of WCOM, and 
continue to be punished in court and public utility 
commissions nationwide.  WCOM benefits immensely from their 
pain.  WCOM just completed a new internet protocol backbone 
from Los Angeles to San Francisco capable of OC-48 
transmission, or 2.5 gigabits of traffic per second, which 
means many more toll booths along the information super-
highway in which to collect fees.

BUY CALL MAR-80 LDQ-CP OI=13695 at $ 6.38 SL=4.50
BUY CALL MAR-85*LDQ-CQ OI=15090 at $ 3.50 SL=1.75
BUY CALL JUN-80 LDQ-FP OI= 5627 at $10.75 SL=8.50
BUY CALL JUN-85 LDQ-FQ OI= 2810 at $ 8.25 SL=6.25

Picked on November 29th at $62.44       PE = 40 (1999 est.)
Change since picked       +$21.75       52 week high=84.75
Analysts Ratings       21-9-4-0-0       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 = 11.5 mln.
Chart = http://quote.yahoo.com/q?s=WCOM&d=3m
*******************************************
LVLT - Level 3 Communications $57.00(+1.00)(+.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 announced earnings before market on the 18th.  Earnings
came in above estimates, but this doesn't say much when only a 
couple of analysts provided estimates.  LVLT leaders emphasized
the fact that LVLT is in a transitional stage and comparing
past earnings to current earnings are meaningless.  On the 
18th, LVLT bounced strong off its 30-dma and continued up on
Friday.  We still like LVLT as a play and feel that there
is a lot of upward potential still.  Institutional 
ownership is just above 10%.  This gives room for a lot of
buying when these mutual fund managers see the potential in
LVLT.

There isn't any recent news on LVLT, but we do like the fact
that it closed near its high of the day on Friday along with
volume coming in twice as high as normal.  Remember that $60
has been pretty strong resistance.  If we can break through
this level, we will be in a for a blue-sky breakout.

BUY CALL MAR-55*QHN-CK OI= 813 at $5.25 SL=3.50 ITM $2.00 
BUY CALL MAR-60 QHN-CL OI=2840 at $2.88 SL=1.50 
BUY CALL JUN-60 QHN-FL OI= 497 at $7.25 SL=5.25
BUY CALL JUN-65 QHN-FM OI= 726 at $5.25 SL=3.50

Picked on Jan.30th at    $56.38    PE = N/A
Change since picked       +0.62    52 week low =$22.37 
Analysts Ratings      1-2-0-0-0    52 week high=$60.63
Last earnings on 02-99 est=-.28    actual=-.11
Next earnings on 05-18 est=-.45    versus=-.02
Average daily volume = 828.5 K
Chart = http://quote.yahoo.com/q?s=LVLT&d=3m
*******************************************
VOD - Vodafone Group PLC $181.81 (+1.68)(+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. 

VOD traded in a very narrow range this week.  Its low was $181,
and its high was just $184.63.  MACD is turning positive and 
VOD is resting on its 30-dma.  A move above $186 on strong 
volume would be very bullish.  We suggest waiting before 
initiating any new plays.  VOD needs to reestablish its
upward trend again (versus a possible roll over).

No recent news on VOD, but there is a lot of analysts out 
there that feel the telecomms are the place to be this year.
VOD is an ADR, so be aware of the gap openings (whether up
or down).

BUY CALL MAR-180*VOD-CP OI= 132 at $ 8.75 SL= 6.50
BUY CALL MAR-185 VOD-CQ OI=  21 at $ 6.38 SL= 4.50
BUY CALL APR-180 VOD-DP OI=  26 at $11.50 SL= 9.00
BUY CALL APR-185 VOD-DQ OI=  29 at $ 9.75 SL= 7.00

Picked on Feb.12th at $180.13   PE = 65
Change since picked     +1.68   52 week low =$ 82.88
Analysts Ratings    3-3-2-0-0   52 week high=$197.75
Last Earnings   12/98 est ???   actual ???
Next Earnings   07/99 est 1.56  versus ???
Average daily volume = 505.2k
Chart = http://quote.yahoo.com/q?s=VOD&d=3m
*******************************************
Software - Sector
*******************************************
AXNT - Axent Technologies Inc. $36.00 (+4.16)

AXENT Technologies coughs up hackers for fun.  Its security 
management software provides companywide network security, 
including access control, data confidentiality, intrusion 
detection, and remote access and Internet authentication 
services.  The company's Raptor Systems division offers 
firewall protection software, which prevents unauthorized 
access to business networks from outside connections such 
as the Internet.  AXENT derives about 80% of its revenues 
from software license fees and about 20% from service fees 
for consulting, maintenance, and training.  AXENT continues 
to expand its product breadth through acquisitions.

AXNT is being added this week for its strong performance.
AXNT went up every day this week and closed on its high
of the day the last two trading days.  The stock closed
above its 10 and 20-dma on Friday.  AXNT reached a high of
$40.50 back in mid-January and we feel this is where AXNT
is headed.  AXNT is associated with the Internet and we
feel that the Internet stocks may have bottomed out.  

AXNT was mentioned recently in an article about VeriSign. 
VeriSign is another Internet security company.  This 
article mentioned that VeriSign was way overvalued and that
AXNT would be a better play.  On the 10th and 17th, two 
different analysts started AXNT with a buy rating.  AXNT
has a consensus 5-yr growth rate of 37.14%.  

BUY CALL MAR-35 XQE-CG OI=154 at $2.94 SL=1.50 ITM$1.00 
BUY CALL MAR-40 XQE-CH OI= 20 at $ .94 SL=0.00
BUY CALL MAY-35*XQE-EG OI=550 at $4.25 SL=2.50 ITM$1.00 
BUY CALL MAY-40 XQE-EH OI= 62 at $2.63 SL=1.25

Picked on Feb.19th at  $36.00   PE = 34
Change since picked     +0.00   52 week low =$12.00
Analysts Ratings    4-9-1-0-0   52 week high=$40.50
Last Earnings   01/99 est .30   actual .32
Next Earnings   04/27 est .18   versus .13
Average daily volume = 374.2k
Chart = http://quote.yahoo.com/q?s=AXNT&d=3m
*******************************************
Electronics/semi-conductor
*******************************************
SLR - Solectron, Inc. $86.19 (+.19)(+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. 

SLR did some consolidating this week and is resting just 
above its 10 and 20-dma.  SLR's stock split is on the 25th
and we could see a nice run start on Monday.  We are about
to see a bullish 10 and 20-dma crossover.  Make sure SLR
holds above $84, which has been a bit of support.  The $90
level has been pretty strong resistance.  

No recent news, but along with its split coming up next
week, SLR could start an earnings run.  Earnings are scheduled 
to be around the 15th of March.

BUY CALL MAR-85*SLR-CQ OI= 632 at $5.75 SL=4.00 ITM$1.00 
BUY CALL MAR-90 SLR-CR OI= 280 at $3.50 SL=1.75
BUY CALL APR-85 SLR-DQ OI= 505 at $7.38 SL=5.50 ITM$1.00 
BUY CALL APR-90 SLR-DR OI=1924 at $5.00 SL=3.25

Picked on Feb.12th at $86.00   PE = 38
Change since picked    +0.19   52 week low =$35.44
Analysts Ratings   5-8-6-0-0   52 week high=$93.50
Last Earnings  12/98 est .50   actual .52 
Next Earnings  03/15 est .53   versus .41
Average daily volume = 1.08 mln.
Chart = http://quote.yahoo.com/q?s=SLR&d=3m
************************************************************
HARDWARE
************************************************************
EMC - EMC Corporation $103.94 (+1.56)(+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, there was an article in the NY Times on
EMC.  It once again highlighted how EMC dominates the data
storage market which is currently estimated to be $4 billion
annually.  This is expected to grow to $10 billion by 2001. 
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.  There was also another glowing customer
testimonial last week.  This one was from a company that
provides Internet based patient records services for healthcare
facilities.  They selected EMC because of their reliability and
efficient backups.

EMC looks like it is forming a basing pattern, which is more
than the NASDAQ can say.  All of its short term moving averages
are converging, and as witnessed on Friday when EMC went up
$4.00, there can be some powerful moves out of the base.  Even
though EMC is a favorite tech stock, it probably will not be
able to hold up if the NASDAQ continues to sell off.  Also,
remember that EMC is holding a new products meeting on March 1.
At this meeting they will also review their future growth
initiatives.  This meeting may serve to create some momentum
absent any down draft in the market

BUY CALL MAR-100 EMB-CT OI=1153  at $ 8.50 SL= 6.50
BUY CALL MAR-105*EMB-CA OI=2221  at $ 5.50 SL= 3.75
BUY CALL MAR-110 EMB-CB OI=2080  at $ 3.50 SL= 1.75
BUY CALL APR-110 EMB-DB OI=1428  at $ 7.13 SL= 5.25
BUY CALL JUL-110 EMB-GB OI= 557  at $13.25 SL=10.50

Picked on Feb 14th at $102.38    PE=66
Change since picked     +1.56    52 week low =$ 34.25
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
*******************************************
Biotech  - Sector
*******************************************
AMGN - Amgen $124.13 (+3.88)

Founded in 1980, Amgen is a global biotechnology company that 
develops, manufactures, and markets human therapeutics based 
on advances in cellular and molecular biology.  With sales of 
$2.34 billion, it is the largest of the biotech companies and 
is more than twice the size of its nearest rival.  Amgen's 
products include the billion-dollar blockbusters Epogen (EPO) 
and Neupogen, as well as Infergen.  Epogen is used to treat 
anemia in patients with kidney failure or patients undergoing 
chemotherapy.  Neupogen is used to stimulate the immune system 
and Infergen treats chronic hepatitis.  Many other drugs are 
in the pipeline, but the most important new drug is NESP--a 
next-generation drug to succeed EPO.

We re-added Amgen as a play this past Thursday.  Hopefully
you were able to get a head start in this play on Friday. If
not, don't worry.  Even though this is a shorter play,
momentum will play a key role in Amgen's performance in the
upcoming week.  It will split 2:1 this Friday February 26th.
Again, this is a short term play since we never recommend 
holding over the actual split.  7 out of 10 times, profit 
taking seems to set stocks back immediately after the split 
occurs.  You can always jump back in once the upward trend 
is again resumed.  

News:  AMGN announced their earnings back on Jan. 28th. 
They reported $0.90 as opposed to $0.67 from the
fourth quarter a year ago.  Their fourth quarter net income
increased by 33%.  BT Alex Brown reiterated its "strong 
buy" and raised Amgen's price target to $136, up from the
previous price of $125.  Bear Stearns raised estimates for
the company as well.  S&P, Warburg Dillon Read LLC, and 
Everen Securities Inc. also upgraded AMGN.  These should all 
help the split run.
  
BUY CALL MAR-120 AMQ-CD OI=2165 at $ 9.00 SL=6.75 
BUY CALL MAR-125*AMQ-CE OI=2177 at $ 6.63 SL=4.75
BUY CALL APR-120 AMQ-DD OI= 282 at $11.13 SL=8.75
BUY CALL APR-125 AMQ-DE OI= 240 at $ 8.88 SL=6.75

Split play 

Average Daily Volume = 2.50 mln

Chart = http://quote.yahoo.com/q?s=AMGN&d=3m
*******************************************
MEDI - MedImmune $55.75 (+5.50)(-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 on 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. During February's 
weak market, it drifted a little lower, but always found 
support just below $49.00. This past week MEDI pushed past 
resistance at its old high, and on Friday set a new intra-day 
high of $56.19, before closing at $55.75. There is nothing to 
hold the stock back now except general market conditions.

There is no recent news to help propel this stock higher. It 
is simply momentum driven based on strong expectation of 
future growth.

BUY CALL MAR-50 MEQ-CJ OI= 157 at $ 8.25 SL=6.25
BUY CALL MAR-55*MEQ-CK OI=1214 at $ 4.75 SL=3.00
BUY CALL JUN-55 MEQ-FK OI=  67 at $ 9.38 SL=7.00

Picked on Feb 7 at   $52.44   PE = 56
Change since picked    3.31   52 week low= $21.00
Analysts' ratings 6-4-0-0-0   52 week high=$54.50
Last earnings 12-98 est .42   actual .39 surprise=-7%
Next earnings  4-22 est .31   versus .22
Average daily volume = 772.4k

Chart = http://quote.yahoo.com/q?s=MEDI&d=3m
*******************************************
Miscellaneous  - Sector
*******************************************
MCD - McDonald's Corporation  $85.56 (+4.25)(+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.

Many factors can be considered in McDonald's great performance.  
First of all, it is splitting 2:1 on March 5th.  As we draw 
closer to that date, the stock should gain momentum.  Second, 
the tech sector has cooled off on the heels of Dell's earnings
announcements.  Traders are looking away from the technology 
stocks and seem to be focusing on the "cyclicals and 
consumer non-durables". (-Reuters)  McDonald's has thereby 
greatly increased in popularity.  On Friday, over 3 million 
shares exchanged hands when MCD's normal trade volume is 1.65 
million.  Third, McDonald's certainly has the attention of the 
brokers.  Morgan Stanley Dean Witter even raised their price 
target to $100.  Last but not least, MCD broke its former all 
time high and resistance level of $82 and is flying in blue 
skies.  Considering all of these factors, there's a great 
possibility McDonald's will keep up its present course. 

News:  Russia has been having economic trouble.  But, that 
hasn't stopped MCD from investing money there.  It will 
double the number of restaurants in Russia from 50 to 100 
in a 3 year/$100 million expansion plan.   

BUY CALL MAR-80 MCD-CP OI=2262 at $7.00 SL= 5.25
BUY CALL MAR-85*MCD-CQ OI=1900 at $3.75 SL= 2.50
BUY CALL JUN-85 MCD-FQ OI= 505 at $8.00 SL= 6.25
BUY CALL JUN-90 MCD-FR OI=2612 at $5.50 SL= 3.75

Picked on February 7th at $80.31      PE= 37
Change since picked      +$ 5.25      52 week low =$50.00
Analysts Ratings       5-6-7-0-0      52 week high=$85.62
Last earnings 01-99 est  0.58  actual  0.64 
Next earnings 04-19 est  0.58  versus  0.52
Average Daily Volume = 1.65 mln
Chart = http://quote.yahoo.com/q?s=MCD&d=3m
*******************************************
UTX - United Technologies Corp. $119.00 (+6.44)(-6.00)(+5.56)

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, UTX confirmed that its automotive unit
is up for sale, and that the first round of bids were received
during the last few weeks.  Analysts have placed the value of
the unit at between $2 to $3 billion.  UTX expects to close on
a deal by early summer. Also, UTX announced that it will spend
$120 million on the Y2K issue this year, and emphasized that
this is being funded through operating cash flows and not
through extraordinary expenditures.

UTX set a new 52 week high on Friday, and closed near the high. 
You have to like a stock that is making new highs in this
market.  UTX is a Dow 30 component and tends to be very Dow
sensitive.  This was not the case last week.  But, remember 3
weeks ago when UTX made a good move, contrary to the Dow, and
corrected back to the historical pattern the next week.  UTX
has some good news and growth forecasts going for it, but you
need to aware of its recent trading patterns when playing it. 

BUY CALL MAR-115 UTX-CC OI=526 at $12.75 SL=10.00
BUY CALL MAR-125*UTX-CE OI=185 at $ 6.13 SL= 4.25
BUY CALL MAR-130 UTX-CF OI=125 at $ 3.88 SL= 1.75
BUY CALL MAY-130 UTX-EF OI=128 at $ 8.25 SL= 6.25

Picked on Jan 10th at $114.69   PE=22
Change since picked    +10.75   52 week low =$ 71.75
Analysts Ratings    8-4-4-0-0   52 week high=$125.75
Last earnings  12-98 est=1.11   actual=1.16
Next earnings  04-20 est=1.20   versus=1.04
Average Daily Volume = 712K
Chart = http://quote.yahoo.com/q?s=UTX&d=3m
*******************************************
DH - Dayton Hudson $61.63 (+1.07)(P8W +11.49)

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.

DH offers another example if how important overall market 
volume is if we want prices to rise.  With sidelined money 
waiting to get back in the game, DH will drift.  DH's 
strength, however, is its small portion of float not owned 
by institutions -- about 40 million shares.  This means 
that if funds want to buy, they have to get a block from 
another fund (not likely, unless they pay up), or they buy 
it on the open market where there are only 40 million 
shares available, not institutionally owned.  In short, the 
price rises with lack of supply and onslaught of demand.  
We're still waiting.  When the market firms and is backed 
with market-wide volume, DH will join in the fun.  Until 
then, be patient and wait for the market to come to you 
before starting a play.  Analysts have upped DH current 
earnings estimates from $.87 to $.89, due March 2.

Retailers are enjoying a strong quarter with K-Mart and 
Wal-Mart expecting the biggest year over year gains.  
Presumably, this means Target, DH's largest division, too.  
Also, no cause for alarm, but Sears has announced their 
intention to get more competitive with these 3 in its 
clothing line.  No offense to Sears, but rearranging the 
deck chairs on the Titanic didn't affect the tide in New 
York City either.
  
BUY CALL MAR 55 DH-CK OI=1114 at $ 7.38 SL=5.50 ITM $6.63
BUY CALL MAR-60*DH-CL OI=1478 at $ 4.13 SL=2.50
BUY CALL MAR-65 DH-CM OI= 886 at $ 1.75 SL=0.75
BUY CALL APR-60 DH-DL OI= 274 at $ 5.25 SL=3.50
BUY CALL APR-65 DH-DM OI= 170 at $ 3.25 SL=1.50

Picked on Jan. 24th     $59.94          PE= 31
Change since picked     $+1.69          52 week low =$31.44  
Analysts Ratings    10-4-3-0-0          52 week high=$66.00 
Last Earnings on 10-98 est=.39          actual=.39
Next earnings on 03-02 est=.89          versus=.76  
Average daily volume = 1.9 mln.
Chart = http://quote.yahoo.com/q?s=DH&d=3m
*******************************************
PG - Procter & Gamble $91.81 (+4.31)

You will recognize many of the brand names of PG such as Tide,
Folgers, Pampers, Scope, and Cover Girl.  PG is the US's #1
manufacturer of household products and the world's largest
advertiser.  PG operates in five main product categories:
laundry and cleaning (detergents, bleaches), paper goods
(diapers, toilet paper, feminine protection products), beauty
care (lotions, shampoos), food and beverage (coffee, juices,
snacks), and health care (toothpaste, over-the-counter
medicines).  PG also produces As the World Turns and two other
soap operas.  Roughly half of PG's sales come from outside the
US.  Among its many innovations, PG developed olestra, a fat
substitute used in snacks and crackers. 

In the news last week, PG reached a settlement with the
Japanese-based Kao Corp. on a patent dispute for a disposable
diaper.  PG had decided its diaper patents licensed by Kao held
greater value than those PG had licensed from Kao, prompting
the settlement and a series of payments from Kao to PG.  PG
announced earnings in late January, and at that time, they
indicated that they expect profit per share growth to be in the
upper single digits for the quarter ended 03/99 and profit per
share growth to be in the high teens for the quarter ended
06/99.  

PG has been in a basing pattern since the first of December,
during which time it has bounced off of its 200 day moving
average several times.  If fact, PG a was pick during its last
run which lasted from late October to the first of December. 
We liked the move PG made last week so we are adding them as a
pick.  We would really like to see the move last week confirmed
by PG taking out its 52 week high at $94.81.  This would be a
very good sign of PG's momentum.  

BUY CALL MAR-90*PG-CR OI=1410  at $4.25 SL=2.50
BUY CALL MAR-95 PG-CS OI=1559  at $1.69 SL=0.75
BUY CALL APR-95 PG-DS OI=2531  at $3.25 SL=1.50
BUY CALL JUL-95 PG-GS OI=1734  at $6.00 SL=4.25

Picked on Feb 21st at $91.81   PE=31
Change since picked    +0.00   52 week low =$65.13
Analysts Ratings   3-8-5-0-1   52 week high=$94.81
Last earnings  12-98 est=.77   actual=.78
Next earnings  04-23 est=.69   versus=.65
Average Daily Volume = 2.2 mln
Chart = http://quote.yahoo.com/q?s=PG&d=3m
*******************************************

PLAYS CONTINUED IN SECTION FOUR.

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

SEE DISCLAIMER IN SECTION ONE

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

The Option Investor Newsletter             2-21-99
Sunday                4  of  6

************************************************
WMT - Wal-Mart $84.75 (+.37)(+.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.

We have been recommending WMT as a slow but steady momentum 
stock with the possibility of a split announcement with 
earnings. Although we did not get the split we were hoping 
for, WMT beat estimates and announced record earnings of $1.6 
billion in the fourth quarter, an increase of 21%. Earnings 
per share were $.70 versus $.57 the previous year. Estimates 
had been for $.66. Same store sales were up 8.7%, while overall 
sales rose 15%. Tight controls on costs and especially strong 
sales of sporting goods, electronics, and food helped the 
bottom line. Its international stores performed especially 
well. Wal-Mart has plans for more international as well as 
domestic expansion.

In the 2 days following its strong earnings announcement, 
Wal-Mart traded as high as $88.69, but investors were quick 
to lock in profits in this weak market, and the stock has been 
consolidating since then. Wait for upward momentum again 
before jumping in.

BUY CALL MAR-80 WMT-CP OI=2785 at $7.00 SL=5.35 
BUY CALL MAR-85*WMT-CQ OI=6560 at $4.00 SL=2.50 
BUY CALL JUN-85 WMT-FQ OI=1597 at $8.00 SL=6.25
BUY CALL JUN-90 WMT-FR OI=2163 at $6.00 SL=4.25 

Picked on Jan 26 at   $83.56       PE = 46  
Change since picked    +1.19       52 week low= $44.31
Analysts' ratings 7-11-4-0-0       52 week high=$88.69
Last earnings 12-98 est= .66       actual .70  
Next earnings  5-12 est= .43       versus .37
Average daily volume = 2.81mln
Chart = http://quote.yahoo.com/q?s=WMT&d=3m
*******************************************
OSSI - Outback Steakhouse $45.63 (+3.25)

The Outback Steakhouse is one of the biggest steakhouse 
chains in the United States with approximately 520 
restaurants.  It even has 21 international establishments.
You can get anything from steaks and chicken to fish and 
pasta.  OSSI also owns a second chain of restaurants named 
Carrabba's Italian Grills.  You may have dined in one of the 
65 operations that let you watch your meal being prepared in 
their exhibition kitchens.  

OSSI has exhibited a wonderful uptrend since mid-Jan.  It 
offered more reasons to continue its course on Wednesday 
Feb. 17th as it matched Wall Street's expectations for its
earnings.  OSSI reported a strong $0.52 eps that was up from 
$0.44 a year ago in the fourth quarter.  Add to that the 
fact that OSSI is splitting 3:2 on March 2nd and you have 
quite the recipe for success.  Look for OSSI to "fire up the 
barbie."

News:  On Thursday, Morgan Stanley Dean Witter's analyst
Howard Penney upgraded OSSI to outperform from neutral.

BUY CALL MAR-40 OSQ-CH OI=136 at $6.63 SL=4.75
BUY CALL MAR-45*OSQ-CI OI= 78 at $3.13 SL=1.50
BUY CALL MAY-40 OSQ-EH OI=439 at $8.13 SL=6.25
BUY CALL MAY-45 OSQ-EI OI=114 at $5.13 SL=3.25

Picked on February 21st at $45.63      PE= 22
Change since picked       +$ 0.00      52 week low  =$ 23.37
Analysts Ratings        5-6-2-0-0      52 week high =$ 46.31
Last earnings 02/99 est 0.52   actual 0.52 
Next earnings 04/20 est 0.54   versus 0.45
Average Daily Volume = 454.9 K
Chart = http://quote.yahoo.com/q?s=OSSI&d=3m
*******************************************
LOW - Lowe's Companies, Inc. $57.06 (+3.06)(-1.00)(-3.31)

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, LOW plans to issue an additional $300
million in common stock.  In some cases, the market will view
this type of news as dilutive, and the stock will go down, but
this was not the case with LOW.  LOW also sold $400 million in
30 year bonds last week in a private placement.  The proceeds
of both the stock and bond sales will be used to finance their
growth plans.  Couple this with a good earnings announcement on
Monday, and LOW might make a nice move next week.  

LOW announces earnings before the bell on Monday.  Wait and see
what the earnings are, and how the market is reacting, before
initiating any new trades in LOW.  On Friday, LOW broke out of
a short term basing pattern.  We don't know if this was in
reaction to the earnings announcement on Monday, or if we will
get some follow through next week.  As we indicated above, next
week could be a good week for LOW as earnings numbers are 
expected to be strong.

BUY CALL MAR-55 LOW-CK OI= 403  at $4.00 SL=2.50
BUY CALL MAR-60 LOW-CL OI=1093  at $1.63 SL=0.75
BUY CALL APR-60*LOW-DL OI=1815  at $2.88 SL=1.25
BUY CALL JUL-60 LOW-GL OI= 236  at $5.63 SL=3.75

Picked on Jan 31st at $58.31   PE=40
Change since picked    -1.25   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



*************************************************************
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 
*************************************************************
EBAY - eBay Inc.  $239.50 (+4.38) (3.50)

EBay Inc. operates an on-line person-to-person trading 
community in which buyers and seller are brought to together
in an auction format to trade personal items.  Company began
trading publicly last September and is among the more active
stocks among speculators.  

This is our hot internet stock to bust play.  The stock has 
gone on an amazing run since the stock starting trading
publicly last September.  Stock climbed from $50 to $300 in
less than 3 months without a proven track record.  Stock has 
retested upper end of range twice and is now sitting at its
50-day moving average.  We believe that the company will will 
begin to roll over once investors examine closely
the business model and competition for similar service
surfaces.  What's more, overhead sentiment resistance is 
beginning to reach extreme levels as reflected in a Pinnacle's
sentiment indicator.    

BUY PUT MAR-210 QXB-OB OI=132 @ $20.00 SL=15.88
BUY PUT MAR-195 QXB-OS OI= 85 @ $15.38 SL=10.25

http://quote.yahoo.com/q?s=ebay&D=3m 
**************************************************************
MSFT - Microsoft $147.75 (-10.00)(P2W -17.25)

Microsoft is the largest computer software maker in the 
world, responsible for 90% of the operating systems in PC's 
sold today.

We dropped MSFT as a call and picked it up as a put on 
Thursday of last week.  MSFT gained $2 on Friday.  Leave it 
to Murphy.  Even so, we think this is a feint.  Here's 
why:  options, which expired Friday, showed over 33,000 put 
contracts in the money wherein put investors were sticking 
their owned shares, or buying shares they didn't own to 
fulfill their obligation under the put. Without this added 
volume, MSFT would likely have stayed even or dropped on 
otherwise low volume.  As written Thursday, they have still 
violated their 30-day moving average and are giving a poor 
performance on the witness stand in the DOJ trial.  MSFT is 
strongly negative technically, indicating further 
probability of price drop.  Support is $140.  Their split 
is not until March 26, too far away to cause a split run.  
This is a fast play as long as the market remains weak.  Be 
careful.  MSFT, despite its problems, will likely firm with 
market strength.  Confirm the down market, then make your 
play.  Remember to use stops when you reach your price 
target, or if the trade goes against you.

BUY PUT MAR-145*MSQ-OI OI=4938 at $5.25 SL=3.50
BUY PUT MAR-150 MSQ-OJ OI=4497 at $7.88 SL=6.00

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

************************************************************
WHR - Whirlpool $43.31 (-0.88)(P3W -7.44)

Whirlpool is an appliance manufacturer and marketer of 
commercial and home appliances with facilities in North, 
South and Central America, Asia, Africa, the Middle East, 
and Europe.  They own the brand names Whirlpool, Kitchenaid 
and Roper among others

Murphy strikes again.  Too bad he didn't read the news.  
"Going forward, it is expected that Latin American exposure 
will continue to adversely impact operating performance in 
1999. Standard & Poor's placed Whirlpool Corp.'s single-
'A'-minus senior unsecured debt and corporate credit 
ratings on Credit Watch with negative implications." 
(Reuters).  As we wrote Thursday, WHR is showing strong 
technical decay with violated 30 DMA and recent break 
through previous support of $44, despite Friday's spike of 
$1.69.  MACD, Stochastics, Momentum and RSI are negative.  
With Latin American and Asian exposure, not to mention the 
rest of the world, WHR has every reason to fall long-term 
until this condition noted by Standard and Poors reverses.  
Confirm the direction before making the play.

BUY PUT MAR-50 WHR-OJ OI=256 at $7.38 SL=5.50 ITM 6.69
BUY PUT MAR-45*WHR-OI OI=115 at $3.25 SL=1.75 ITM 1.69
BUY PUT MAR-40 WHR-OH OI= 12 at $0.75 SL=0.00 thinly traded

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

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

HWP - Hewlett Packard $68.31 (-8.13) (P2W -1.94)

The granddaddy of high tech companies, Hewlett Packard is a 
manufacturer and marketer of hardware and software 
solutions, computers, printers, testing equipment and 
peripheral devices.

Chairman Lewis Platt said the company is still not meeting 
growth objectives.  "While we turned in a respectable 
bottom-line outcome this quarter, revenue growth remains 
the key concern, "Platt said. "However, there are many 
reasons for continued caution, given the economic 
environment. We're seeing only slight improvement in Asia, 
and slowing in North America and Europe in some 
businesses."   Morgan Stanley Dean Witter analyst Tom 
Kraemer kept his "neutral" rating on Hewlett-Packard even 
though HP delivered the worst result since before '95, 
missing his estimate by $500M... Adds 3 of HWP's 5 largest 
businesses (UNIX servers, PCs, printers) failed to deliver 
expected growth "HP is being valued like a growth company, 
but the outlook for growth continues to deteriorate." 
(Reuters, AP, Marketwatch).  This is not the makings of a 
winner for us either.  HP, despite a small gain Friday, 
fell and now trades below its 30 DMA and technical support 
of $72.  Next stop --$64.  This could reverse quickly 
should the market take off again.  Keep your stop-limits in 
place and confirm negative stock direction before playing.

BUY PUT MAR-70*HWP-ON OI= 823 at $4.00 SL=2.50, ITM $1.69
BUY PUT MAR-65 HWP-OM OI=1609 at $1.75 SL=0.75

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

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

CPQ - Compaq Computer $41.13 (-1.87)

Compaq owns 12% share of the PC maker market to give it the 
#1 ranking in the world.  It is the 3d largest computer firm 
behind IBM and HWP. CPQ develops and manufactures a wide range 
of computing products that range from desktop and portable 
computers to PC servers.    

Compaq fell -1.87 this past week.  We don't see any light at 
the end of the tunnel for Compaq and we expect the downtrend 
to continue.  Compaq has been steadily falling since back in 
January after they announced their earnings.  Even though 
they beat estimates, immediately after they began a free fall.  
This past week, Dell's decreased revenues further weakened the 
tech sector.  Analysts continue to point at declining 
revenues for the box makers and claim that the future will
be wrought with stiff competition.

News:  On Friday, Compaq made a slight rally of +$0.56.  But 
both Thursday and Friday the markets were green and that was 
all CPQ could come up with.  The move has simply reconfirmed 
Compaq's weakness in our eyes.

BUY PUT MAR-42.5 CPQ-OV OI=2260 at $3.25 SL=1.75 
BUY PUT MAR-40.0*CPQ-OH OI=5268 at $2.00 SL=1.00
BUY PUT MAR-37.5 CPQ-OU OI=5363 at $1.25 SL=0.00

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

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

ADBE - Adobe Systems, Inc. $42.31 (-.06) (-1.25)

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. 

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=511 @ $4.38 SL=2.25
BUY PUT MAR-40 AEQ-OH OI=115 @ $1.88 SL= .75

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

*****

BDX - Becton, Dickinson and Company $33.25 (-.38) (-1.63)

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. 

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

BUY PUT MAR-40 BDX-OH OI=1650 at $7.50 SL=5.75
BUY PUT MAR-35 BDX-OG OI= 374 at $2.88 SL=1.25

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

*******

BKB - Bank of Boston - $38.63 (.56) (2.81)

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.

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-40   BKB-OH OI=329  @ $2.75 SL=1.75
BUY PUT MAR-37.5 BKB-OZ OI=  5  @ $1.56 SL= .75

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

******

BMCS - BMC Software $44.56 (.63) (-1.50)

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.

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=192  at $3.50 SL= 2.00
BUY PUT MAR-40 BCQ-OH OI=929  at $1.50 SL=  .25

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

******** 

ELNK - EarthLink Network, Inc. $62.063 (-.31) (-1.00)

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

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=432 @ $8.50 SL=6.88
BUY PUT MAR-60 QKL-OH OI= 62 @ $5.88 SL=3.50

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

*****

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

Electronic Arts is an interactive entertainment software
company. The company develops, publishes and distributes
software worldwide for personal computers and advanced
entertainment systems. 

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-45 EZQ-OI OI= 38 @ $6.13 SL=4.88
BUY PUT MAR-40 EZQ-OH OI=136 @ $3.00 SL=1.50

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

*****

WLA - Warner Lambert $63.888 (-2.50)  (-5.13)

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

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-65  WLA-OM OI=743 @ $3.63 SL=2.50
BUY PUT MAR-60  WLA-OL OI=839 @ $1.31 SL= .75

http://quote.yahoo.com/q?s=wla&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            2-21-99
Sunday                5  of  6

************************************************************
Combos
************************************************************
Volatility dominates the markets...

Friday, February 19

U.S. markets ended higher Friday, closing a week of incredible
volatility as Wall Street's appetite for technology shares was
dampened by disappointing results from some big-name companies.
The DJIA ended up 41 points at 9,339. The Nasdaq index gained
22 points to close at 2,283. In the broader market, declining
issues led advances 15 to 13 on moderate volume of 700 million
shares on the New York Stock Exchange. Investors were shopping
for bargains among battered technology stocks, but they still
favored some of the big-name companies, even among the Internet
shares and investors who have made money in the techs feel its
still the place to be.

Portfolio Plays:

This was a rough month for all the traders that participated in
directional strategies. The only ones that avoided the massacre
were those in volatility positions. Our portfolio suffered right
along with the rest. Our credit spreads were mostly profitable
but many of those that we were "stopped-out" of, came back to
finish positive. Luckily, a couple of the worst continued in the
opposite direction and were easily exited as roll-outs. Many of
our calendar positions suffered from the recent market drought.
Some of the (short) February positions expired worthless and a
few were rolled forward. Many of the time spreads still require
the sale of March positions and those are noted in the summary.

One of the more significant adjustments was the "roll-up" of the
SEPR LEAP play to the $110 strike. We paid more in the short term
but should be ahead when the long position catches up with the
stock price. The GTSG straddle could easily have been closed for
a profit of $1.50 on Friday but we will let the position run as
it is only a week old. That decision will probably come back to
haunt us. The bearish portion of the EGRP spread/straddle could
be closed for a small profit of $2.25 but that will require a
resumption of the upward trend in the stock for the overall play
to be profitable.

This week, we will have a slightly smaller spreads/combos section
as the editor will be preparing for (and attending) the "Options
Bootcamp" in Denver. This will be the inaugural event for the OIN
and the instructors will include some of the most knowledgable
experts in the industry (including Jim). We hope you will all be
able to attend one of these classes at some time in the future.
The next one is in March and our friends at the Online Investors
Advantage (professional traders/instructors!) will take over the
series in April. A schedule of future events will be available
soon from Dana at the OIN office; dana@OptionInvestor.com

Thursday's New Plays:

HD  $58.43   LJAN60/MAR60C  $7.38  Debit (Priced near the open)
LU  $101.00  MAR120C/MAR85P $2.31  Credit (Good mover,easy entry)
GE  $100.62  MAR110C/MAR90P $1.62  Credit (Didn't meet our limit)
******************************************************************
			- CREDIT SPREAD SUMMARY -
******************************************************************
Stock  Pick     Last    Position     Credit  Cost     G/L   Status

AAPL  $41.38   $37.19  FEB35P/37P    $0.87   $1.25  ($0.38) Closed
ACAI  $30.38   $31.81  FEB22P/25P    $0.38   $0.00   $0.38  Closed
COF   $130.43  $123.88 FEB105P/110P  $0.62   $1.00  ($0.38) Closed
DELL  $88.50   $80.13  MAR65P/70P    $0.81   $0.31   $0.50  Closed
DLP   $36.87   $30.50  FEB25P/30P    $0.75   $0.00   $0.75  Closed
DST   $61.62   $55.75  FEB50P/55P    $0.75   $0.25   $0.50  Closed
EAII  $50.62   $48.00  FEB65C/60C    $0.50   $0.00   $0.50  Closed
ELN   $68.93   $74.44  FEB80C/75C    $0.75   $0.62   $0.12  Closed
EMC   $98.50   $103.94 FEB75P/FEB80P $0.50   $0.00   $0.50  Closed
GMST  $59.87   $60.25  FEB40P/45P    $0.50   $0.00   $0.50  Closed
INTC  $137.19  $128.06 MAR115P/120P  $0.75   $1.00  ($0.25)  Open
LXK   $102.43  $103.00 FEB85P/90P    $0.38   $0.00   $0.38  Closed
MRK   $139.00  $79.00  FEB160C/155C  $0.75   $1.00  ($0.25) Closed
MSFT  $171.56  $147.69 MAR155P/160P  $1.38  ($1.25)  $2.62  Closed
SDTI  $25.50   $16.38  FEB17P/FEB20P $0.50   $0.50   $0.00  Closed
SNC   $40.00   $36.06  FEB30P/35P    $0.43   $1.43  ($1.00) Closed
SRCM  $20.87   $17.50  FEB15P/17P    $0.75   $0.50   $0.25  Closed
TXN   $95.06   $93.00  FEB105C/100C  $0.43   $0.00   $0.43  Closed
TXN   $95.06   $93.00  FEB105C/100C  $0.50   $0.00   $0.50  Closed
WLP   $72.62   $76.94  FEB85C/80C    $0.75   $0.00    0.75  Closed
YHOO  $172.25  $135.31 FEB130C/135C  $0.00   $0.00   $0.00  No play

Credit spreads are profitable if both positions remain OTM until
expiration. The cost-to-close price can be used to compare the
initial opening credit to the current spread value.
******************************************************************
			- CALENDAR SPREAD SUMMARY -
******************************************************************
Stock   Pick     Last      Position   Debit   Value   G/L   Status

ADI   $32.38   $29.00     MAR35C     $0.93   $0.50  ($0.43)  Open
AZPN  $17.06   $13.88     MAR15C     $2.25   $0.75  ($1.50)  Open
CTXS  $89.00   $74.94     MAR90C     $4.87   $1.38  ($3.50)  Open
GLW   $48.81   $48.06     MAR50C     $1.12   $1.38   $0.25   Open
GM    $71.50   $85.44  MAR70C/FEB75C $4.50   $6.00   $1.50  Closed
HNZ   $54.56   $57.69     MAR55C     $4.50   $4.50   $0.00   Open
NRC   $48.56   $54.00  MAR50C/FEB50C $1.12   $1.50   $0.38  Closed
OMPT  $14.06   $11.31     MAR15C     $1.50   $0.38  ($1.12)  Open
PLCM  $26.75   $21.81     MAR25C     $0.87   $0.93   $0.12   Open
PTEK  $11.38   $8.69      MAR12C     $0.50   $0.43  ($0.06)  Open
RDRT  $18.93   $11.06  MAR17C/FEB20C $1.75   $1.00  ($0.75) Closed
USAI  $41.62   $38.00     MAR40C     $1.75   $1.62  ($0.12)  Open
XRX   $116.31  $116.00 MAR120C/F120C $2.87   $4.00   $1.12  Closed

Long Term Plays:

Stock   Pick     Last    Position     Debit  Value    G/L   Status

ATI   $64.93   $91.11  LJAN70/FEB75C  $8.50  $9.50   $1.00  Closed
CATP  $30.12   $29.50  JUN30C/MAR30C  $3.00  $3.25   $0.25   Open
CD    $19.93   $17.13  LJAN20/MAR20C  $3.00  $3.12   $0.12   Open
CPQ   $42.68   $41.13  APR45C/MAR45C  $0.00  $3.12   $3.12   Open
DIS   $38.00   $34.13     LJAN40      $4.00  $3.50  SellCall Open
HAL   $31.00   $28.88  LJAN30/MAR35C  $6.25  $5.25  ($1.00)  Open
HD    $58.43   $60.25  LJAN60/MAR60C  $7.38   New     Play   Open
HUM   $19.50   $17.25     MAY20C      $1.25  $1.00  SellCall Open
INTC  $137.19  $128.06 APR135C/M135C  $3.75  $3.00   $0.75   Open
ITWO  $34.87   $26.38     MAY35C      $4.38  $1.75  SellCall Open
JNJ   $86.63   $86.63  LJAN85/MAR85C  $7.50  $7.50   $0.00   Open
NOVL  $18.19   $18.31  MAY17C/MAR20C  $0.38  $1.87   $1.50   Open
NWAC  $25.00   $24.25  JUN25C/MAR25C  $1.38  $1.87   $0.50   Open
OXHP  $20.06   $17.44  MAY20C/MAR20C  $0.06  $0.62   $0.56   Open
PCS   $21.81   $31.50  MAY22C/MAR25C  $1.00  $3.00   $2.00   Open
SEPR  $99.62   $116.00 LJAN100/M110C  $25.25 $21.50 ($3.75) RollUp
SGP   $53.88   $52.81  LJAN55/MAR55C  $5.87  $6.75   $0.87   Open
SKYT  $26.38   $19.00     JUN25C      $2.38  $1.25  SellCall Open
SUNW  $94.50   $96.44  LJAN100/M100C  $8.75  $15.50  $6.75   Open
UK    $41.50   $40.25  APR42C/MAR42C  $0.75  $1.00   $0.25   Open
WCOM  $74.25   $84.19  LJAN75/MAR75C  $4.12  $10.00  $5.87   Open

The calendar (or time spread) is profitable if the value of the
position exceeds the initial debit (or cost-basis) at the end of
the expiration period for the long position. However, because we
track the plays based on the current closing cost/value, the gains
for time spreads will rarely be reflected until the play closes.
Each month, as we sell a new call against the long position, the
net cost should decline or the position value should increase.
******************************************************************
				- DEBIT SPREADS -
******************************************************************
Stock  Pick    Last     Position    Debit   Value    G/L   Status

ABI   $48.87  $47.75    FEB50C-S    $2.87    1.75  ($1.12) Closed
ADI   $32.38  $29.00   FEB30C/32C   $0.00   $0.00   $0.00  No play
AIG   $102.93 $115.63   FEB85P-S    $0.12    0.38   $0.25  Closed
AMP   $51.06  $53.69   MAR45C/50C   $3.75    4.25   $0.50   Open
AMR   $57.00  $53.75   FEB60P/55P   $3.50   $4.00   $0.50  Closed
AOL   $146.50 $160.25  FEB155C/160C $2.50   $4.00   $1.50  Closed
AOL   $146.50 $160.25  FEB155C/160C $1.50   $2.25   $0.75  Closed
CIEN  $18.68  $22.44  FEB12C/FEB17C $3.50   $4.50   $1.00  Closed
EGRP  $48.25  $40.13   MAR40P/35P   $1.75   $2.25   $0.50   Open
EGRP  $48.25  $40.13   MAR60C/65C   $1.25   $0.38  ($0.87)  Open
FTL   $18.50  $13.75  FEB15C/FEB20C $1.50   $2.38   $0.87  Closed
FTU   $52.50  $52.31   FEB55C/60C   $0.00   $0.00   $0.00  No play
IBM   $185.50 $171.63  MAR175C/185C $5.00   $3.12  ($1.87)  Open
IBM   $185.50 $171.63  MAR175C/185C $3.00   $3.12   $0.12   Open
KSU   $45.75  $45.50   MAR30C/40C   $8.25   $8.00  ($0.25)  Open
LEVL  $38.00  $31.38  FEB30C/FEB35C $3.25   $4.38   $1.12  Closed
LU    $107.87 $103.00  FEB105C/110C $1.75   $3.25   $1.50  Closed
LUV   $26.06  $30.00  FEB22C/FEB25C $1.25   $2.25   $1.00  Closed
LUV   $29.06  $30.00   MAR25C/30C   $3.12   $3.50   $0.38   Open
LVLT  $44.19  $57.00  MAR37C/MAR45C $4.62   $7.00   $2.38  Closed
MCD   $79.06  $85.56   MAR75C/80C   $3.12   $4.00   $0.87   Open
MENT  $14.25  $13.88   MAR12C/15C   $1.00   $1.25   $0.25   Open
ONE   $47.50  $51.31   FEB50P/47P   $1.25   $1.25   $0.00  Closed
OXHP  $20.06  $17.44    FEB20C-S    $1.38   $1.87   $0.50  Closed
OXHP  $20.06  $17.44    FEB20C-S    $1.00   $1.87   $0.50  Closed
QNTM  $24.87  $20.25    FEB25C-S    $1.25   $1.75   $0.50   Open
RHD   $17.68  $15.56  MAR15C/MAR17C $1.12   $1.00  ($0.12)  Open
RNWK  $62.00  $63.13   MAR65C/70C   $2.25   $1.87  ($0.38)  Open
RNWK  $62.00  $63.13   MAR55P/50P   $1.62   $1.62   $0.00   Open
SCUR  $26.75  $19.50  FEB20C/FEB25C $3.75   $3.00  ($0.75) Closed
T     $91.93  $85.75   MAR85C/95C   $5.87   $3.25  ($2.62)  Open
ZD    $20.31  $16.81  FEB15C/FEB20C $0.00   $0.00   $0.00  No play

A debit-spread is profitable if the value of the position exceeds
the initial cost of the spread when the play is closed. However,
because we track plays based on the current cost/value, potential
gains may not be reflected until both positions are closed.
******************************************************************
				- DEBIT STRADDLES -
******************************************************************
Stock  Pick    Last    Position     Debit   Value   G/L   Status

BLS   $49.50  $45.31 FEB50C/FEB47P  $0.68   $2.50   $1.81  Closed
GTSG  $63.43  $53.50 APR65C/APR60P  $10.00  $11.12  $1.12   Open
JMED  $35.19  $28.38 MAR35C/MAR35P  $1.25   $1.12  ($0.12) Closed
LSI   $27.06  $27.25 APR30C/APR25P  $3.25   $2.81  ($0.43)  Open
NXTL  $29.68  $30.56 MAY35C/MAY35P  $0.00   $2.12   $2.12  Closed
PMS   $37.62  $39.13 MAY40C/MAY35P  $4.62   $5.00    0.38   Open
TECD  $22.93  $20.25 MAR22C/MAR22P  $3.50   $4.25   $0.75   Open
TSM   $19.00  $19.13 APR20C/APR17P  $2.75   $2.81   $0.06   Open

Butterfly Spreads:

CNTO  $39.90  $40.44 MAR35C/40C/45  $0.87   $1.75   $0.87  Closed
QTRN  $49.50  $45.00 MAR45C & 55C   $3.38   $3.12  ($0.38)  Open

A debit-straddle is profitable when the value of the position
exceeds the initial cost of the spread.
******************************************************************
				- CREDIT STRADDLES -
******************************************************************
Stock  Pick     Last     Position    Credit  Cost   G/L   Status

LU   $101.00  $103.00  MAR120C/MAR85 $2.31   New-Play      Open
GE   $100.62  $100.38  MAR110C/MAR90 $1.62   New-Play      Open

A credit-straddle is profitable if the cost to close the position
is less than the initial credit from the spread.
******************************************************************
				- NEW PLAYS -
******************************************************************
More Butterfly Spreads:

The butterfly spread is generally a neutral position that is a
combination of both a BULL spread and a BEAR spread. This spread
is designed primarily for the stock that will not experience much
of a net rise or decline by expiration. It usually requires only
a small investment or collateral requirement and has limited risk
but profits are limited as well. It can also be costly in terms of
commissions so you should consider playing these combinations with
a low cost (discount) broker. There are three strike prices in a
butterfly spread with calls, and it can also be done with puts or
a combination of the two. There are several approaches to trading
butterflys successfully and most have similiar risk/reward numbers.
One method would be to only trade high reward/risk flys that have
3 weeks or less remaining. The objective is to ride them out for a
few weeks and capture the time decay as it is highest in the final
weeks of the trade). Another method is to trade the longer term
positions, initially centered. As time passes, and the stock price
moves away from the center of your spread, your strategy is that
at some point before expiration, the stock will again cross the
middle strike of the straddle, allowing you to exit the trade at
a profit. Good Luck!
*****************************************************************
AAPL - Apple Computer  $37.19     *** Technicals Only ***

Apple Computer makes the Macintosh computer and the Mac OS. Its
other products include peripherals, laptops, servers, Internet
tools, and networking and connectivity products. Software unit
FileMaker (formerly Claris) makes database and application tools.

With the help of returning co-founder Steve Jobs, AAPL is trying
to recover from a slide in sales and market share. It has pulled
the plug on Macintosh clone making and is pushing a future of
low-cost network computers. The Macintosh has also returned as a
high volume platform for software developers serving the business
professional and the consumer and education markets.

APPL has traded near $35 for over six months. There is no reason
for a fundamental change in the underlying character or future
outlook. This play is based on favorable option premiums and the
technical history of the stock.

PLAY (conservative/neutral credit spread):

BUY  PUT APR-32.50 AAQ-PZ OI=879  A=$1.87
SELL PUT APR-35.00 AAQ-PG OI=2656 B=$2.62

BUY  CALL APR-37.50 AAQ-DU OI=1534 A=$4.00
SELL CALL APR-35.00 AAQ-DG OI=4006 B=$5.00

INITIAL NET CREDIT TARGET=$2.00 ROI(max)=66%

Chart = http://quote.yahoo.com/q?s=AAPL&d=3m
******************************************************************
BSX - Boston Scientific  $27.43     *** It was a rebound... ***

Boston Scientific makes medical supplies used in many surgical
procedures. Its products are minimally invasive and are used to
diagnose and treat conditions in a wide variety of medical fields
including cardiology, gastroenterology, pulmonary medicine,
radiology, urology, and vascular surgery. Products fashioned by
Boston Scientific include catheters, surgical grafts, ureteral
stents, polypectomy snares, and lithotripsy devices.

BSX rebounded last week after announcing it will cut 2,000 jobs
over the next year as it integrates last year's acquisition of
Schneider Worldwide and streamlines its manufacturing operations.
But, Moody's Investors Service recently lowered the long-term
and revolving credit facilities ratings of BSX and all ratings
remain under review for possible downgrade. Moody's cited some
concerns regarding the ability and willingness of the company
to access the equity markets, especially given the company's
currently depressed stock price and the recent commencement
of a Department of Justice investigation. 

Basically, we believe the stock price willl stagnate in the
current trading range near $25 until all of the past company
problems can be worked out. The technicals suggest a continued
horizontal movement and the risk/reward is incredibly favorable
with an initial debit of only $0.50.

PLAY (conservative/neutral spread):

BUY  (5)  CALLS MAY-22.50 BSX-EX OI=736  A=$6.25
SELL (10) CALLS MAY-25.00 BSX-EE OI=1359 B=$4.25
BUY  (5)  CALLS MAY-27.50 BSX-EY OI=597  A=$3.00
INITIAL NET DEBIT TARGET=$0.50 ROI(max)=400%

Chart = http://quote.yahoo.com/q?s=BSX&d=3m
******************************************************************
UK - Union Carbide  $40.25     *** 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.
The big reason for the implied volatility is the renewed rumor
of a possible merger or the sale of a portion of the company to
other industry giants. The management is actively beating the
bushes, looking at whatever deals might be out there but the view
by many is that it won't happen this year. We will focus on the
sideways trending technical history and the low initial debit
(or risk) to make this neutral spread favorable.

PLAY (conservative/neutral spread):

BUY  (5)  CALLS APR-37.50 UK-DU OI=15  A=$5.75
SELL (10) CALLS APR-42.50 UK-DV OI=658 B=$3.12
BUY  (5)  CALLS APR-47.50 UK-DW OI=211 A=$1.75
INITIAL NET DEBIT TARGET=$1.00 MAX ROI=400%

Chart = http://quote.yahoo.com/q?s=UK&d=3m
******************************************************************
ONSL - Onsale.com  $32.56     *** Where will the drop stop? ***

ONSALE operates auctions on the where it sells such items as
refurbished and closeout computers and related products, consumer
electronics, sports equipment, and time-share condominiums. The
company's around-the-clock auctions let customers bid on 1000's of
items per week. ONSALE has more than 650,000 registered bidders and
continues to broaden its product variety through alliances. Repeat
customers account for 75% of sales and more than 1,000 other Web
sites have links to ONSALE's site.

Onsale recently expanded its services to offer a broad range of
new computer products with "Onsale atCost"; that lets customers
purchase new computer products at today's wholesale prices plus
a transaction fee rather than the common retail markup. They also
launched a $10 million advertising campaign that features radio
and print ads that target the increasing number of buyers who
utilize the Internet to purchase PCs and computer products.

The recent downtrend has given us good option premiums well below
the current price and a slight change in the BOP with an oversold
condition suggest this one may be ready to rebound.
 
PLAY (speculative/credit spread):

BUY  PUT MAR-22.50 QOL-OX OI=91  A=$0.87
SELL PUT MAR-25.00 QOL-OE OI=228 B=$1.25
INITIAL NET CREDIT TARGET=$0.50 ROI=25%

Chart = http://quote.yahoo.com/q?s=ONSL&d=3m
******************************************************************
CIEN - Cienna  $22.44     *** A New Outlook! ***

CIENA makes dense wavelength division multiplexing (DWDM) systems
for use with long-distance fiber-optic telecom networks. CIENA's
MultiWave DWDM systems allow optical fiber to carry 40 times more
data, graphic, and voice information without requiring more lines.
MultiWave systems include optical transmission terminals, optical 
amplifiers, and network management software (WaveWatcher).

Shares of Ciena Corp rose on Friday after they posted solid first
quarter results and two analysts upgraded the stock. The results
marked an improvement over the previous quarter and showed Ciena
may be turning the corner after struggling the past few months.
Ciena has had trouble ever since its proposed acquisition by rival
Tellabs fell apart and it lost its chance for a potential AT&T
contract. Analysts believe the worst is over for Ciena and are now
urging investors with a long-term investment horizon to buy the
stock. We will play along with a conservative time spread.

PLAY (conservative/long-term play):

BUY  CALL JUL-22.00 EUQ-GD OI=1701 A=$6.00
SELL CALL MAR-25.00 EUQ-CX OI=4194 B=$2.12
INITIAL NET DEBIT TARGET=$3.75 TRAGET ROI=50%

Note: In the long-term calendar spread, we are reducing the net
cost of the long option by the amount of credit from the sale of
the nearer-term option. If the near-term call expires worthless,
we will sell the APR call to further reduce our debit. If the
short-term position is ITM on the last day of the strike, you
need to buy it back so that you DON'T have to exercise the long
term position. In that case, your long position is going up in
value also and on the last day of the strike period, the short
call will shrink down to intrinsic value so you should be ahead
in the play even after you buy it back.

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


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                      DISCLAIMER
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This newsletter is a publication dedicated to the education 
of options traders. The newsletter is an information service 
only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
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information provided has been obtained from sources deemed 
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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            2-21-99
Sunday                6  of  6

************************************************************
COVERED CALL SECTION 
************************************************************
Success Basics...

We often receive letters from new traders asking about the most
important rules or "lessons" they need to learn to be successful.

Here are a few of those tried and tested elements:

The first one is; "Know thyself!" Think about the outcome that is
expected from your trading activities and your portfolio. Once you
determine your risk/reward attitude, you can construct your plays
accordingly.

Next, you must understand (completely!) any strategy that you are
using and what your specific goals are for that particular trade.
You can't make good decisions without knowing the mechanics of a
specific technique. Don't use complex or advanced methods simply
because they are intriguing. The BEST strategy is the simplest one
that accomplishes your goals!

Once you have a candidate in mind, do your homework! Know the
company and the calendar of upcoming events. Knowledge is power!

When you are ready to trade, use simple proven techniques and
develop target prices for all potential plays. Know your exits
before going in and take the human factor out of trading with
STOPS and GTC orders. When news or events change the character of
the play, make the necessary adjustments. Learn to trade on YOUR
terms, not the markets'!

The most painful lesson comes when you close a losing trade. It's
very difficult to learn to close out losing plays early but the
simple fact is; There is no reason to hang on to a losing position
when there are so many other profitable plays that deserve your
time and money. Accept your losses, learn from your mistakes (and
evaluate each one critically) then move on!

Success will come when you create a favorable balance between
hard work and patience. Too many traders give up after a few
losing plays, long before they have time to learn (and absorb!)
the various methods required for profitable trading.
******************************************************************
SUMMARY OF PREVIOUS PICKS (FINAL LIST FOR FEBRUARY)
******************************************************************
Stock  Price  Last   Mon  Strike  Opt     Profit   ROI    Monthly
Sym    Picked Price       Price   Bid     /Loss           ROI

MCRE    5.38   7.44   Feb   5.00  1.25  *$   0.87  21.1%  13.1%
CMTO   24.81  23.19   Feb  22.50  3.50  *$   1.19   5.6%  12.1%
USWB   30.56  32.38   Feb  30.00  2.75  *$   2.19   7.9%  11.4%
ARTT    7.38   7.31   Feb   7.50  1.13   $   1.06  17.0%  10.5%
SCIO   10.25   9.31   Feb   7.50  3.38  *$   0.63   9.2%  10.0%
SUGN   15.63  17.63   Feb  15.00  1.81  *$   1.18   8.5%   9.3%
BTIM   18.50  16.00   Feb  15.00  4.88  *$   1.38  10.1%   8.8%
MCHM    8.75   8.25   Feb   7.50  1.94  *$   0.69  10.1%   8.8%
BID    32.25  30.56   Feb  30.00  5.88  *$   3.63  13.8%   8.5%
DOSE    6.50   6.00   Feb   5.00  2.00  *$   0.50  11.1%   8.0%
SDLI   50.00  52.88   Feb  45.00  7.25  *$   2.25   5.3%   7.6%
RNWK   56.50  63.13   Feb  45.00 14.25  *$   2.75   6.5%   7.1%
PPOD    6.81   8.88   Feb   5.00  2.31  *$   0.50  11.1%   6.9%
ABTEE   8.75   8.75   Feb   7.50  1.88  *$   0.63   9.2%   6.6%
AWA    21.63  22.75   Feb  20.00  2.50  *$   0.87   4.5%   6.6%
FHT    20.50  24.50   Feb  17.50  3.50  *$   0.50   2.9%   6.4%
ARTT    8.25   7.31   Feb   7.50  1.44   $   0.50   7.3%   6.4%
ITVU   24.50  22.75   Feb  17.50  8.13  *$   1.13   6.9%   6.0%
CHRX   21.38  22.63   Feb  20.00  3.13  *$   1.75   9.6%   6.0%
CIEN   22.25  22.44   Feb  20.00  2.50  *$   0.25   1.3%   5.5%
CMTO   27.56  23.19   Feb  22.50  6.13  *$   1.07   5.0%   5.4%
BNYN   14.44  10.13   Feb  10.00  5.13  *$   0.69   7.4%   5.4%
ARTT    7.38   7.31   Feb   5.00  2.75  *$   0.37   8.0%   5.0%
SYMM    8.56   7.13   Feb   7.50  1.88   $   0.45   6.7%   4.9%
PTVL   22.19  19.94   Feb  15.00  8.13  *$   0.94   6.7%   4.8%
PTVL   18.38  19.94   Feb  12.50  6.88  *$   1.00   8.7%   4.7%
SPNSF  10.44   9.25   Feb  10.00  1.56   $   0.37   4.2%   4.5%
XEIKY  27.50  28.13   Feb  25.00  3.50  *$   1.00   4.2%   4.5%
GALTF  25.50  21.50   Feb  22.50  5.38   $   1.38   6.9%   3.7%
SPNSF  10.13   9.25   Feb  10.00  1.25   $   0.37   4.2%   3.6%
NEWZ   11.63   9.69   Feb  10.00  2.44   $   0.50   5.4%   3.4%
OXHP   20.06  17.44   Feb  17.50  3.38   $   0.76   4.6%   3.3%
HLIT   24.63  21.63   Feb  22.50  3.25   $   0.25   1.2%   1.7%
EXCA   10.81   9.50   Feb  10.00  1.38   $   0.07   0.7%   1.1%
SUIT   32.00  29.06   Feb  30.00  3.00   $   0.06   0.2%   0.4%
CDNW   20.75  17.00   Feb  17.50  3.75   $   0.00   0.0%   0.0%
INVX   18.38  16.25   Feb  17.50  1.81   $  -0.32  -1.9%   0.0%
OXHP   20.06  17.44   Feb  20.00  2.00   $  -0.62  -3.4%   0.0%
NSTA   26.25  21.25   Feb  25.00  4.13   $  -0.87  -3.9%   0.0%
PLCM   25.88  21.81   Feb  25.00  3.00   $  -1.07  -4.7%   0.0%
TOK     9.75   7.69   Feb  10.00  1.63   $  -0.43  -5.3%   0.0%
PTVL   26.56  19.94   Feb  22.50  5.13   $  -1.49  -7.0%   0.0%
SDTI   22.00  16.38   Feb  20.00  4.38   $  -1.24  -7.0%   0.0%
INFM    6.13   4.19   Feb   5.00  1.56   $  -0.38  -8.3%   0.0%
QNTM   26.88  20.25   Feb  25.00  3.75   $  -2.88 -12.5%   0.0%
INFS   11.38   7.75   Feb  10.00  2.06   $  -1.57 -16.8%   0.0%
PTVL   28.38  19.94   Feb  25.00  4.38   $  -4.06 -16.9%   0.0%
ODIS   10.00   7.00   Feb  10.00  1.00   $  -2.00 -22.2%   0.0%
---------------------------------------------------------------
BAMM   11.81  11.25   Mar  10.00  3.13  *$   1.32  15.2%  13.2%
ARTT    8.00   7.31   Mar   7.50  1.50   $   0.81  12.5%   9.0%
SRCM   21.06  17.50   Mar  17.50  5.00   $   1.44   9.0%   7.8%
ESPI    5.38   4.69   Mar   5.00  1.06   $   0.37   8.6%   7.4%
BVSN   40.00  40.00   Mar  35.00  7.50  *$   2.50   7.7%   6.7%
PPOD    9.13   8.88   Mar   7.50  2.13  *$   0.50   7.1%   6.2%
BTIM   16.63  16.00   Mar  12.50  4.88  *$   0.75   6.4%   5.5%
CLST   12.31  10.94   Mar  10.00  3.00  *$   0.69   7.4%   5.4%
BYND   28.00  24.75   Mar  20.00  9.50  *$   1.50   8.1%   5.0%
CKFR   30.56  33.88   Mar  25.00  6.88  *$   1.32   5.6%   4.8%
SNAP   19.25  15.88   Mar  15.00  5.13  *$   0.88   6.2%   4.5%
MYLX   11.88   9.50   Mar   7.50  4.75  *$   0.37   5.2%   3.8%
LGND** 12.81  10.75   Mar  12.50  1.31   $  -0.75  -6.5%   0.0%
ALKS** 31.25  24.75   Mar  30.00  4.00   $  -2.50  -9.2%   0.0%


-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).

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

** You may need to consider closing these plays:

- LGND, only if it breaks $9.50 on a closing basis. Downgraded on
  Friday but still shows favorable accumulation.
- ALKS, posted poor earnings and has now broken down technically.
  A close below $24 would be very bearish.
******************************************************************
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   22.44  Mar 20.00  EUQ CD  3.50  2052  18.94   5.60%   5.60%
CTYA   33.63  Mar 30.00  CQA CF  5.13  3012  28.50   5.26%   5.26%
GADZ    7.69  Mar  7.50  EQK CU  0.94  1008   6.75  11.11%  11.11%
IGEN   28.50  Mar 25.00   GQ CE  5.00  90    23.50   6.38%   6.38%
ITVU   22.75  Mar 17.50  QYU CW  6.00  43    16.75   4.48%   4.48%
NXTR   10.38  Mar 10.00  NQX CB  1.44  115    8.94  11.86%  11.86%
WKR    17.88  Mar 17.50  WKR CW  1.25  8     16.63   5.23%   5.23%
XYLN   19.94  Mar 17.50  YXQ CW  3.25  549   16.69   4.85%   4.85%
ZD     16.94  Mar 15.00   ZD CC  3.38  369   13.56  10.62%  10.62%
******************************************************************
Sequenced by Return Called 
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym               Price  Symbol  Bid   Intr  Basis

NXTR   10.38  Mar 10.00  NQX CB  1.44  115    8.94  11.86%  11.86%
GADZ    7.69  Mar  7.50  EQK CU  0.94  1008   6.75  11.11%  11.11%
ZD     16.94  Mar 15.00   ZD CC  3.38  369   13.56  10.62%  10.62%
IGEN   28.50  Mar 25.00   GQ CE  5.00  90    23.50   6.38%   6.38%
CIEN   22.44  Mar 20.00  EUQ CD  3.50  2052  18.94   5.60%   5.60%
CTYA   33.63  Mar 30.00  CQA CF  5.13  3012  28.50   5.26%   5.26%
WKR    17.88  Mar 17.50  WKR CW  1.25  8     16.63   5.23%   5.23%
XYLN   19.94  Mar 17.50  YXQ CW  3.25  549   16.69   4.85%   4.85%
ITVU   22.75  Mar 17.50  QYU CW  6.00  43    16.75   4.48%   4.48%
******************************************************************
Sequenced by Return Not Called
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym               Price  Symbol  Bid   Intr  Basis

                SAME AS ABOVE - ALL PLAYS IN-THE-MONEY
******************************************************************
Company Descriptions
******************************************************************
CIEN - Cienna  $22.44    *** Earnings were good! ***

CIENA makes dense wavelength division multiplexing (DWDM) systems
for use with long-distance fiber-optic telecom networks. CIENA's
MultiWave DWDM systems allow optical fiber to carry 40 times more
data, graphic, and voice information without requiring more lines.
MultiWave systems include optical transmission terminals, optical 
amplifiers, and network management software (WaveWatcher). New
contracts, still rumors of a merger and broker upgrades followed
the positive earnings. A great long-term play!

MAR 20.00 EUQ-CD BID=3.50 OI=2052 CB=18.94 RC=5.60% RNC=5.60%

Chart = http://quote.yahoo.com/q?s=CIEN&d=3m
******************************************************************
CTYA - Century Communications  $33.63  *** For Sale? ***

Century Communications is principally engaged in the ownership and
operation of cable television systems. As of 5/31/98, the Company
owned 72 systems in 25 states, with 1.3 million subscribers. When
CTYA posted poor earnings, it did little to stop the speculation
on a possible buyout.  On 2/12, Moody's Investors Service revised
the outlook for Century's ratings to positive from stable. Now
forming a support area above $30 after gapping up in December.

MAR 30.00 CQA-CF BID=5.13 OI=3012 CB=28.50 RC=5.26% RNC=5.26%

Chart = http://quote.yahoo.com/q?s=CTYA&d=3m
******************************************************************
GADZ - Gadzooks, Inc.  $7.69  *** Insider Buying?  ***

Gadzooks is a mall-based, specialty retailer of casual apparel and
related accessories for young men and women principally between 
the ages of 13 and 19. On 2/3, they announced that sales for the
four weeks ended 1/30/99, were up 13.3 percent. Rumors of being
a takeover candidate and a 1008 open interest in the Mar 5 calls?
Hmmmmm. In a stage I base since September with signs of increased
volatility.

MAR 7.50 EQK-CU BID=0.94 OI=1008 CB=6.75 RC=11.11% RNC=11.11%

Chart = http://quote.yahoo.com/q?s=GADZ&d=3m
******************************************************************
IGEN - IGEN International  $28.50

IGEN bases its medical diagnostic systems on a special technology
called Electrochemiluminescence. The systems screen for a range of
diseases and help discover new drugs. Its patented ORIGEN nucleic
acid probe system is used by hospitals, universities, and clinical
and laboratories for conducting in vitro genetic testing. A solid
earnings report with record royalty revenue came in early February.
Technical support near the current price makes this play favorable.

MAR 25.00 GQ-CE BID=5.00 OI=90 CB=23.50 RC=6.38% RNC=6.38%

Chart = http://quote.yahoo.com/q?s=IGEN&d=3m
******************************************************************
ITVU - InterVU  $22.75  *** Deep in the money ***

InterVU lets you watch news on the Internet by enabling business
advertisers, Web developers, and others to present videos online.
Its clients add videos to their Web sites and banner ads. InterVU
also creates banners; offers VUTOPIA, targeting specific markets;
and presents live broadcasts. Some new contracts and products for
IBM & MSFT customers will keep this company in positive revenues.
A unique technical outlook with a new trading range around $20.

MAR 17.50 QYU-CW BID=6.00 OI=43 CB=16.75 RC=4.48% RNC=4.48%

Chart = http://quote.yahoo.com/q?s=ITVU&d=3m
******************************************************************
NXTR - NeXstar Pharmaceuticals  $10.38  *** Ready to Run? ***

NXTR is engaged in the development, manufacture and sale of 
pharmaceutical products to treat life-threatening and other
serious diseases. NXTR markets AmBisome, an antifungal agent, 
and DaunoXome, an anticancer drug. Earnings are expected on
the 4th of March. No real news but the message board is saying
buyout? Stock seems to be slowly working to the topside of a 
stage I base. Recent volume spike (?) and signs of accumulation 
may mean that more than one person now believes in the rumor.

MAR 10.00 NQX-CB BID=1.44 OI=115 CB=8.94 RC=11.86% RNC=11.86%

Chart = http://quote.yahoo.com/q?s=NXTR&d=3m
******************************************************************
WKR - Whittaker Corporation  $17.88  *** Speculation ***

WKR develops innovative fluid control and fire safety systems for 
aerospace and industrial applications. Earnings are expected on
March 2. Stock gapped up in December after the EPA announced WKR
is set to be taken off the Superfund National Priorities List and
Tennenbaum & Co. mentioned it would like to acquire the company.
Recent signs of maxed BOP (accumulation) with no news?

MAR $17.50 WKR-CW BID=1.25 OI=8 CB=16.63 RC=5.23% RNC=5.23%

Chart = http://quote.yahoo.com/q?s=WKR&d=3m
******************************************************************
XYLN - Xylan Corporation  $19.94

Xylan Corp. a provider of high-bandwidth switching systems that 
enhance the performance of existing local area networks and 
facilitate migration to networking technologies such as ATM. 
Posted $0.23 vs $0.14 4Q EPS on January 22. Recently announced
that the VA hospitals in Georgia, Alabama and South Carolina, 
will build fully switched networks using Xylan OmniSwitches. 
XYLN appears to have re-entered a previous trading range from $15
to $22. Long term possibilities; 30 dma recently crossed above
150 dma.

MAR 17.50 YXQ-CW BID=3.25 OI=549 CB=16.69 RC=4.85% RNC=4.85%

Chart = http://quote.yahoo.com/q?s=xyln&d=3m
******************************************************************
ZD - Ziff Davis  $16.94     *** Internet Publishing ***

Ziff-Davis is the #2 US computer magazine publisher and a leading
worldwide provider of technology information via magazines, TV and
online services. ZD produces more than 80 publications including
PC Magazine and PC Week. ZDNet.com (website) offers computer news,
and other related services. The company is spinning off its online
operations and that may be driving the speculation in the options
but they also recently reported an increase in circulation. The
new E-commerce frenzy will also boost the stock. Technical support
near the current price and again at $13. A favorable risk/reward.

MAR 15.00 ZD-CC BID=3.38 OI=369 CB=13.56 RC=10.62% RNC=10.62%

Chart = http://quote.yahoo.com/q?s=ZD&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
ENMD  17.38 Mar    17.50  QMACW     3.13   17.99      18      83
ARTT   7.31 Mar     7.50  AOQCU     1.25   17.09     375     265
TERA   5.00 Mar     5.00  QIPCA     0.75   15.00      30     357
BOCB   9.94 Mar    10.00  BOQCB     1.44   14.47       5      70
PTVL  19.94 Mar    20.00  QUTCD     2.75   13.79     268     292
WAVO   7.25 Mar     7.50  WKQCU     1.00   13.79      85     476
THQI  22.19 Mar    22.50  QHICX     3.00   13.52      66     252
PAGE   4.31 Mar     5.00  PGQCA     0.56   13.04       1     692
WSTL   4.88 Mar     5.00  QLWCA     0.63   12.82     356      42
ESST   4.94 Mar     5.00  SEQCA     0.63   12.66      13       7
ZD    16.81 Mar    17.50   ZDCW     2.13   12.64     268     999
GSTX   7.44 Mar     7.50  QGSCU     0.94   12.61      10     232
PDX   23.44 Mar    25.00  PDXCE     2.94   12.53     122      52
MRVT  10.00 Mar    10.00  SQDCB     1.25   12.50      20    1736
WAXS   7.19 Mar     7.50  WXQCU     0.88   12.17       2      76
GCTI  17.50 Mar    17.50  QHFCW     2.13   12.14       4     190
NIN   19.94 Mar    20.00  NINCD     2.38   11.91     189     414
BD    15.00 Mar    15.00   BDCC     1.75   11.67      70     641
DHSM   2.19 Mar     5.00  DQJCA     0.25   11.43       5     229
SRCM  17.50 Mar    17.50   SQCW     2.00   11.43      31     188
BEAM   5.00 Mar     5.00  BAQCA     0.56   11.25      21    2468
AMKR  10.00 Mar    10.00  QELCB     1.13   11.25      40    1743
ENMD  17.38 Mar    20.00  QMACD     1.94   11.15      24     137
GZTC   4.50 Mar     5.00  GEQCA     0.50   11.11      20     235
GMGC   4.50 Mar     5.00  GGQCA     0.50   11.11      26     208
GTIS   4.50 Mar     5.00  GQBCA     0.50   11.11      10     314
GELX  19.13 Mar    20.00  GQXCD     2.13   11.11      25      15
AFCI   9.59 Mar    10.00  AQFCB     1.06   11.07      74    2125
HS    11.88 Mar    12.50   HSCV     1.31   11.05     165    1104
ICGX  16.44 Mar    17.50  QIGCW     1.81   11.03     165      74
PATH   9.69 Mar    10.00  AQECB     1.06   10.97      20      40
NPTH   4.56 Mar     5.00  DQWCA     0.50   10.96      10     350
DBCC  14.31 Mar    15.00  BQDCC     1.56   10.92     260     519
MCRE   7.44 Mar     7.50  MQZCU     0.81   10.92      25     258
PTEK   8.69 Mar    10.00  TQOCB     0.94   10.79     407     835
XYLN  19.88 Mar    20.00  YXQCD     2.13   10.69     239    1377
ESPI   4.69 Mar     5.00   AQCA     0.50   10.67     112     388
EGHT   4.69 Mar     5.00  EDQCA     0.50   10.67       5      19
PTVL  19.94 Mar    22.50  QUTCX     2.13   10.66      38      80
PILL  10.00 Mar    10.00  PQQCB     1.06   10.63       5     141
SCUR  19.50 Mar    20.00  UQUCD     2.06   10.58       5      39
Z      4.19 Mar     5.00    ZCA     0.44   10.45     811     888
EGGS  17.38 Mar    17.50  EGQCW     1.81   10.43      73     796
KELL  16.81 Mar    17.50  KQCCW     1.75   10.41       4     250
HRBC   7.25 Mar     7.50   BQCU     0.75   10.34      25     494
GEMS   3.66 Mar     5.00  GQMCA     0.38   10.26       7     312
VLSI   9.75 Mar    10.00  VLQCB     1.00   10.26       5     149
DMIC   7.34 Mar     7.50  DMQCU     0.75   10.21       1     107
IDC    4.94 Mar     5.00  IDCCA     0.50   10.13    1238    4580
AMMB   9.88 Mar    10.00  UKQCB     1.00   10.13     175     945
FGCI   6.81 Mar     7.50  JZQCU     0.69   10.09      95      26
CIEN  22.44 Mar    22.50  EUQCX     2.25   10.03    3498    4194
PWAV  24.94 Mar    25.00  VFQCE     2.50   10.03      26      83
SPLH   7.50 Mar     7.50  QRXCU     0.75   10.00      66      64
CLCX   5.00 Mar     5.00  QXTCA     0.50   10.00      30     155
TRL    9.38 Mar    10.00  TRLCB     0.94   10.00     906     466
PTVL  19.94 Apr    20.00  QUTDD     4.25   21.32       5     431
ZD    16.81 Apr    17.50   ZDDW     3.38   20.07      75    1689
SRCM  17.50 Apr    17.50   SQDW     3.38   19.29      15     330
ESST   4.94 Apr     5.00  SEQDA     0.94   18.99       1     315
PTVL  19.94 Apr    22.50  QUTDX     3.75   18.81       5     623
PILL  10.00 Apr    10.00  PQQDB     1.75   17.50     108     132
APM    4.19 Apr     5.00  APMDA     0.69   16.42      78    2026
SIII   7.50 Apr     7.50  SQIDU     1.19   15.83      10     815
TRL    9.38 Apr    10.00  TRLDB     1.44   15.33     128      34
EPTO   6.69 Apr     7.50  QTPDU     1.00   14.95      11    1740
AINN   4.22 Apr     5.00  QAIDA     0.63   14.81       2     162
CIEN  22.44 Apr    22.50  EUQDX     3.25   14.48      61    3167
PLC    4.75 Apr     5.00  PLCDA     0.69   14.47      26    1729
ZD    16.81 Apr    20.00   ZDDD     2.38   14.13      68     689
SRCM  17.50 Apr    20.00   SQDD     2.44   13.93      10     186
CELG  13.75 Apr    15.00  LQHDC     1.88   13.64      20     295
NTKI  13.19 Apr    15.00  QNKDC     1.75   13.27      28     349
TALK  11.63 Apr    12.50  QQKDV     1.50   12.90     204    1939
SMOD  16.50 Apr    17.50  UYQDW     2.13   12.88      23     396
VLSI   9.75 Apr    10.00  VLQDB     1.25   12.82      70     414
WHC   20.00 Apr    20.00  WHCDD     2.56   12.81      20      29
BNYN  10.13 Apr    12.50  QYNDV     1.25   12.35     130     263
HPRT   6.75 Apr     7.50  HQKDU     0.81   12.04      12     149
PTVL  19.94 Apr    25.00  QUTDE     2.38   11.91      10     466
CDO   11.56 Apr    12.50  CDODV     1.38   11.89      10     126
MERCS  7.38 Apr     7.50  MQCDU     0.88   11.86      12      42
MMCN  13.00 Apr    15.00  CMQDC     1.50   11.54      10      92
ABTX   5.50 Apr     7.50  QXQDU     0.63   11.36     178    3355
CREAF 12.13 Apr    12.50  RFQDV     1.38   11.34      40     240
RDRT  11.06 Apr    12.50  RDQDV     1.25   11.30      10     353
SQNT   9.44 Apr    10.00  SQQDB     1.06   11.26       5     133
PRD   22.25 Apr    22.50  PRDDX     2.50   11.24     183     738
SNDK  24.63 Apr    25.00  SWQDE     2.75   11.17       2      53
MRVC   6.75 Apr     7.50  VQXDU     0.75   11.11      10     750
FORE  15.94 Apr    17.50  FQODW     1.75   10.98     222    1890
MUEI  14.38 Apr    15.00  MQUDC     1.56   10.87     114     281
SCIO   9.31 Apr    10.00  JQSDB     1.00   10.74      54     268
ISIP  11.75 Apr    12.50  QISDV     1.25   10.64      15     107
CYBX   9.50 Apr    10.00  QAJDB     1.00   10.53      10     281
SYMC  19.19 Apr    20.00  SYQDD     2.00   10.42      20     414
STAT  11.56 Apr    12.50  TAQDV     1.19   10.27       2     318
CFWY  14.25 Apr    15.00  XQFDC     1.44   10.09      20    1305
YELL  17.38 Apr    17.50  EEQDW     1.75   10.07      10      88
PDQ    9.94 Apr    10.00  PDQDB     1.00   10.06      20     325
CIEN  22.44 Apr    25.00  EUQDE     2.25   10.03    1295    4172
WSTL   4.88 May     5.00  QLWEA     1.19   24.36      40     104
ARTT   7.31 May     7.50  AOQEU     1.75   23.93       7     216
PHYN   9.63 May    10.00  PQEEB     2.25   23.38       5      25
GMGC   4.50 May     5.00  GGQEA     1.00   22.22     251    1598
OMPT  11.31 May    12.50  QTTEV     2.25   19.89      15     245
ENMD  17.38 May    20.00  QMAED     3.38   19.42      15     308
JDEC  14.75 May    15.00  QJDEC     2.81   19.07      10      73
TKLC  10.50 May    12.50   KQEV     2.00   19.05      10     106
SCUR  19.50 May    20.00  UQUED     3.63   18.59       5     213
TWLB   9.44 May    10.00  QBTEB     1.75   18.54     300     142
FORMF  4.44 May     5.00   OQEA     0.81   18.31       8      33
PDX   23.44 May    25.00  PDXEE     4.25   18.13      18      16
PTEK   8.69 May    10.00  TQOEB     1.56   17.99      25    1378
Z      4.19 May     5.00    ZEA     0.75   17.91      85     802
STRX  11.94 May    12.50  TQQEV     2.13   17.80      30     401
IMRS  19.06 May    20.00  QIQED     3.38   17.70      28      43
BD    15.00 May    15.00   BDEC     2.63   17.50      50      80
BILL  10.00 May    10.00  QBIEB     1.75   17.50      10     555
FGCI   6.81 May     7.50  JZQEU     1.19   17.43       8     123
ENMD  17.38 May    22.50  QMAEX     3.00   17.27      12     129
AND    6.56 May     7.50  ANDEU     1.13   17.14     250      59
SPGLA  7.41 May     7.50  SQEEU     1.25   16.88       3      30
OMKT  12.63 May    15.00  OQMEC     2.13   16.83      35     489
ALYD  10.06 May    12.50  QLIEV     1.63   16.15      60     260
PSSI  12.44 May    12.50  PYQEV     2.00   16.08       7      62
PWAV  24.94 May    25.00  VFQEE     4.00   16.04      13      56
CBTSY 16.63 May    17.50  QAGEW     2.63   15.79      42     315
SGO    4.75 May     5.00  SGOEA     0.75   15.79      20     250
HYSL  14.25 May    15.00  WQEEC     2.25   15.79      65      45
LCBM  10.00 May    10.00  OLQEB     1.56   15.63      10      67
MCLL   4.44 May     5.00  LQLEA     0.69   15.49      20      70
VTO    4.88 May     5.00  VTOEA     0.75   15.38      20      49
ITCD  14.69 May    15.00  QIJEC     2.25   15.32      10     104
IMCL   9.50 May    10.00  QCIEB     1.44   15.13       2     128
TQNT  17.00 May    17.50  TQNEW     2.56   15.07      10     101
IMNR   8.88 May    10.00  IMQEB     1.31   14.79      10     270
SCTC   8.88 May    10.00  YQSEB     1.31   14.79      20     265
PCMS   6.44 May     7.50  PQPEU     0.94   14.56     144    1445
MICA  12.06 May    12.50  MQIEV     1.75   14.51      50     125
DSTM   9.13 May    10.00  DQKEB     1.31   14.38       7     100
BTC   13.63 May    15.00  BTCEC     1.94   14.22      20      35
SUIT  29.06 May    30.00  TQUEF     4.13   14.19      10      13
SAVLY 19.06 May    20.00  QVYED     2.69   14.10      13     236
SHFL   7.13 May     7.50  SFQEU     1.00   14.04       2      60
STBI   6.75 May     7.50  SQKEU     0.94   13.89      11     100
IDTI   7.25 May     7.50  ITQEU     1.00   13.79     211    1668
IFMX   9.56 May    10.00  IFQEB     1.31   13.73     161    1868
CLST  10.94 May    12.50  EQLEV     1.50   13.71      44      86
FCX    9.19 May    10.00  FCXEB     1.25   13.61       1     281
RIG   22.38 May    22.50  RIGEX     3.00   13.41       3     157
BAANF  9.53 May    10.00  BQFEB     1.25   13.11      80    1400
UWW    7.63 May    10.00  UWWEB     1.00   13.11      40    2033
OXHP  17.44 May    17.50  OQXEW     2.25   12.90      43    1292
PDX   23.44 May    30.00  PDXEF     3.00   12.80       5     231
TAVA   5.44 May     7.50  QTVEU     0.69   12.64      45     681
QMDC  16.88 May    20.00  QCDED     2.13   12.59     210      46
DANB  18.88 May    20.00  QUBED     2.38   12.58      25     114
SCUR  19.50 May    25.00  UQUEE     2.38   12.18      30      40
HOT   29.94 May    30.00  HOTEF     3.63   12.11      89     535
CBTSY 16.63 May    20.00  QAGED     2.00   12.03      22     172
FGCI   6.81 May    10.00  JZQEB     0.81   11.93      30      44
INVX  16.25 May    17.50  IVQEW     1.94   11.92       3     152
TKLC  10.50 May    15.00   KQEC     1.25   11.90       8     156
CPU   11.13 May    12.50  CPUEV     1.31   11.80     120    2030
TEAM   7.44 May     7.50  QEAEU     0.88   11.76      60     221
SGI   17.00 May    17.50  SGIEW     2.00   11.76      97    1816
ATRX  14.94 May    15.00  OQFEC     1.75   11.72      41      80
CD    17.13 May    17.50   CDEW     2.00   11.68     177    4462
CEPH   8.06 May    10.00  CQEEB     0.94   11.63      73    1033
LGND  10.75 May    12.50  LQPEV     1.25   11.63      30     376
HMA   14.06 May    15.00  HMAEC     1.63   11.56       8    1658
CNC   29.25 May    30.00  CNCEF     3.38   11.54      40    1089
IOM    6.50 May     7.50  IOMEU     0.75   11.54     794   10841
PTEK   8.69 May    12.50  TQOEV     1.00   11.51     160    1035
MLHR  17.44 May    17.50  MHQEW     2.00   11.47      30      61
ITWO  26.38 May    30.00   JQEF     3.00   11.37      17     396
BCU    5.00 May     5.00  BCUEA     0.56   11.25     120     290
CDN   26.81 May    30.00  CDNEF     3.00   11.19     101     393
PERI  10.63 May    12.50  HQSEV     1.19   11.18       3      37
ALYD  10.06 May    15.00  QLIEC     1.13   11.18       5     540
DSP   16.88 May    17.50  DQCEW     1.88   11.11      40     106
NSM   11.25 May    12.50  NSMEV     1.25   11.11      50     764
ZAP    9.56 May    12.50  ZAPEV     1.06   11.11      13     534
JDEC  14.75 May    17.50  QJDEW     1.63   11.02       3      76
FTL   13.75 May    15.00  FTLEC     1.50   10.91      70     531
JNY   28.75 May    30.00  JNYEF     3.13   10.87       3     401
QNTM  20.25 May    22.50  QNQEX     2.19   10.80      46     738
ADTN  20.88 May    22.50  RQAEX     2.25   10.78       4      55
CYTC  19.75 May    22.50  YQKEX     2.13   10.76       6      13
PSSI  12.44 May    15.00  PYQEC     1.31   10.55       3     162
TCNOF 13.06 May    15.00  TQYEC     1.38   10.53      50     120
OMPT  11.31 May    15.00  QTTEC     1.19   10.50      25     742
BAANF  9.53 May    12.50  BQFEV     1.00   10.49      50     863
NS     8.94 May    10.00   NSEB     0.94   10.49       3     189
STRX  11.94 May    15.00  TQQEC     1.25   10.47      33     217
AG     7.19 May     7.50   AGEU     0.75   10.43      25     189
BD    15.00 May    17.50   BDEW     1.56   10.42      27     125
CHMD   9.63 May    10.00  HQCEB     1.00   10.39       4      23
WIRE  10.88 May    12.50  QWREV     1.13   10.34       5     347
SPCT  12.88 May    15.00  QCSEC     1.31   10.19      10      91
BYD    4.31 May     5.00  BYDEA     0.44   10.14       4    1630
HUM   17.25 May    17.50  HUMEW     1.75   10.14      42     103
LIPO  13.00 May    15.00  LPQEC     1.31   10.10       2     791
BSX   27.44 May    27.50  BSXEY     2.75   10.02     178     597




************************************************************
NAKED PUT SECTION
************************************************************
Technical Indicators...Stochastics:

The stochastic oscillator compares the current stock price to its
price range over a specifically identified period of time. This
indicator is based on the theory that in an upward trending market,
stocks tend to close near their highs and in a downward trending
market, stocks tend to close near their lows. That would indicate
that as an upward trend erodes, stocks close further away from the
highs and vice versa. The stochastic indicator attempts to reflect
when prices start to group around their lows in an upward market,
and just the opposite in a down-trending market. The theory is that
these are the conditions which indicate a trend reversal is about
to occur.
 
The stochastic indicator is plotted as two lines on a chart with
values ranging from 0 to 100.  They are the %D line and %K line
and the %D line is considered the more significant of the two.
Readings above the 80 line are strong and indicate that the price
is probably closing near its high and likewise, readings below 20
indicate that price is closing near its low. Ordinarily, the %K
line will reverse direction before the %D line but, when the %D
line changes direction prior to the %K line, a slow and steady
reversal in the stock price is usually indicated. A very powerful
move is indicated when the plot approaches 0 and 100. When the
stochastic nears these extremes following a pullback in price, a
good entry point is generally indicated. Many times, when the %K
or %D lines begin to flatten out, this is an indication that the
trend will reverse during the next trading range.

One of the simplest applications for the oscillator is to watch
for the divergence on the chart. That is when the price is making
higher highs but the stochastic oscillator is making lower lows, 
(or just the opposite). In either case, the indicator is usually
demonstrating a change in price before price itself is reversing
and this can help you determine when to enter or exit a position.
******************************************************************
SUMMARY OF PREVIOUS PICKS (FINAL LIST FOR FEBRUARY)
******************************************************************
Stock  Price  Last   Mon  Strike  Opt     Profit   ROI    Monthly
Sym    Picked Price       Price   Bid     /Loss           ROI

ITRI    8.00   8.69   Feb   7.50  0.56  *$   0.56  17.2%  24.9%
CKFR   30.56  33.88   Feb  25.00  0.38  *$   0.38   5.4%  23.5%
DLP    37.19  30.50   Feb  30.00  1.31  *$   1.31  14.6%  21.1%
BTIM   16.00  16.00   Feb  12.50  0.31  *$   0.31   8.8%  19.2%
SRCM   19.75  17.50   Feb  15.00  1.06  *$   1.06  21.2%  18.4%
SRCM   19.00  17.50   Feb  15.00  0.50  *$   0.50  11.6%  16.8%
BYND   28.00  24.75   Feb  20.00  0.69  *$   0.69  11.0%  15.9%
VRIO   29.25  27.69   Feb  22.50  0.94  *$   0.94  13.8%  15.0%
CMTO   24.81  23.19   Feb  20.00  0.38  *$   0.38   6.9%  15.0%
BNYN   14.44  10.13   Feb  10.00  0.69  *$   0.69  19.3%  14.0%
PTVL   22.50  19.94   Feb  15.00  0.81  *$   0.81  15.3%  13.3%
PTEK   11.19   8.69   Feb   7.50  0.31  *$   0.31  12.2%  13.2%
WAVO    9.44   7.25   Feb   7.50  0.63   $   0.38  15.1%  13.1%
SPLN   31.13  38.38   Feb  22.50  1.00  *$   1.00  13.8%  12.0%
HLIT   24.63  21.63   Feb  20.00  0.44  *$   0.44   7.8%  11.3%
USWB   30.56  32.38   Feb  25.00  0.56  *$   0.56   7.8%  11.2%
PTVL   26.56  19.94   Feb  20.00  0.50   $   0.44   7.6%  11.0%
SDLI   50.00  52.88   Feb  40.00  0.81  *$   0.81   7.5%  10.9%
VIRS   14.13  12.13   Feb  10.00  0.38  *$   0.38  11.8%  10.3%
CMTO   27.56  23.19   Feb  20.00  0.56  *$   0.56   9.2%  10.0%
VIRS   14.63  12.13   Feb  10.00  0.44  *$   0.44  13.1%   9.5%
CATP   25.00  29.50   Feb  20.00  0.44  *$   0.44   8.1%   8.8%
CDNW   23.75  17.00   Feb  15.00  0.38  *$   0.38   7.4%   8.0%
MUSE   29.38  34.88   Feb  17.50  0.63  *$   0.63   9.7%   7.0%
OXHP   20.06  17.44   Feb  17.50  0.63   $   0.57   9.4%   6.8%
RNBO   24.00  19.38   Feb  20.00  0.69   $   0.07   1.1%   1.2%
SCUR   26.00  19.50   Feb  20.00  0.56   $   0.06   1.0%   0.9%
PLCM   26.75  21.81   Feb  22.50  0.75   $   0.06   0.8%   0.9%
SDTI   27.63  16.38   Feb  17.50  0.56   $  -0.56  -9.2%   0.0%
POWI   31.75  22.13   Feb  25.00  0.44   $  -2.43 -35.8%   0.0%
PTVL   28.38  19.94   Feb  22.50  0.38   $  -2.18 -36.0%   0.0%
PCYC   25.38  16.63   Feb  20.00  0.63   $  -2.74 -48.1%   0.0%
---------------------------------------------------------------
EGRP   46.06  40.13   Mar  35.00  2.13  *$   2.13  18.8%  16.3%
DRMD    6.75   6.50   Mar   5.00  0.25  *$   0.25  15.6%  13.6%
BVSN   40.00  40.00   Mar  30.00  1.00  *$   1.00  11.1%   9.7%
THQI   23.25  22.19   Mar  15.00  0.69  *$   0.69  12.9%   9.4%
SUIT   32.00  29.06   Mar  25.00  0.88  *$   0.88  12.1%   8.8%
CIEN   24.19  22.44   Mar  17.50  0.63  *$   0.63  11.5%   8.3%
PSUN   27.00  26.00   Mar  20.00  0.69  *$   0.69  11.3%   8.2%
ZONA   32.25  25.75   Mar  25.00  0.75  *$   0.75  10.4%   7.5%
BTIM   16.63  16.00   Mar  10.00  0.25  *$   0.25   7.0%   6.1%
AVID   30.00  30.13   Mar  22.50  0.44  *$   0.44   6.8%   5.9%
CATP   30.00  29.50   Mar  22.50  0.44  *$   0.44   6.8%   5.9%

-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

AWA    22.75  Mar 20.00  AWA OD  0.69  206   19.31   9.80%
CIEN   22.44  Mar 17.50  EUQ OW  0.44  344   17.06   8.93%
CLST   10.94  Mar  7.50  EQL OU  0.25  60     7.25  10.25%
HRBC    7.25  Mar  5.00   BQ OA  0.31  70     4.69  17.61%
IGEN   28.50  Mar 22.50   GQ OX  0.63  10    21.87   9.95%
ITVU   22.75  Mar 15.00  QYU OC  0.38  25    14.62   7.71%
OMKT   12.69  Mar 10.00  OQM OB  0.38  21     9.62  13.02%
ZD     16.94  Mar 12.50   ZD OV  0.44  0     12.06  11.49%
******************************************************************
Sequenced by Return on Investment  
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr  Basis  Expired

HRBC    7.25  Mar  5.00   BQ OA  0.31  70     4.69  17.61%
OMKT   12.69  Mar 10.00  OQM OB  0.38  21     9.62  13.02%
ZD     16.94  Mar 12.50   ZD OV  0.44  0     12.06  11.49%
CLST   10.94  Mar  7.50  EQL OU  0.25  60     7.25  10.25%
IGEN   28.50  Mar 22.50   GQ OX  0.63  10    21.87   9.95%
AWA    22.75  Mar 20.00  AWA OD  0.69  206   19.31   9.80%
CIEN   22.44  Mar 17.50  EUQ OW  0.44  344   17.06   8.93%
ITVU   22.75  Mar 15.00  QYU OC  0.38  25    14.62   7.71%
******************************************************************
Company Descriptions
******************************************************************
AWA - America West Holdings  $22.75     *** Takeover! ***

America West Holdings is the holding company for America West
Airlines, a commercial airline carrier serving the U.S., Canada
and Mexico. The stock price surged on Friday after a published
report said United Airlines had made a takeover offer for the
airline, which could enhance United's already strong position in
the western United States. Strictly speculation but also a nice
price to own the stock.

MAR 20.00 AWA-OD BID=0.69 OI=206 CB=19.31 ROI=9.80%

Chart = http://quote.yahoo.com/q?s=AWA&d=3m
******************************************************************
CIEN - Cienna  $22.44    *** Earnings were good! ***

CIENA makes dense wavelength division multiplexing (DWDM) systems
for use with long-distance fiber-optic telecom networks. CIENA's
MultiWave DWDM systems allow optical fiber to carry 40 times more
data, graphic, and voice information without requiring more lines.
MultiWave systems include optical transmission terminals, optical 
amplifiers, and network management software (WaveWatcher). New
contracts, still rumors of a merger and broker upgrades followed
the positive earnings. A great long-term play!

MAR 17.50 EUQ-OW BID=0.44 OI=344 CB=17.06 ROI=8.93%

Chart = http://quote.yahoo.com/q?s=CIEN&d=3m
******************************************************************
CLST - CellStar Corporation  $10.94

CellStar is a non-carrier wholesale distributor of wireless phones
for Motorola, Ericsson, Nokia, QUALCOMM, Sony and NEC. Operations
are in various countries. Investors liked the recent moves by CLST
as it repositions for the future, (new CFO, upgrades, contracts).
Over the last few weeks, BOP has moved higher and stock price has
been basing for several months. Support at the sold strike.

MAR 7.50 EQL-OU BID=0.25 OI=60 CB=7.25 ROI=10.25%

Chart = http://quote.yahoo.com/q?s=CLST&d=3m
******************************************************************
HRBC - Harbinger  $7.25     *** Technicals Only ***

HRBC develops, markets, and supports software products and
provides computer communication network and consulting services
to enable businesses to engage in electronic commerce. Recently
reported record earnings, a broker upgrade followed and some new
strategic initiatives. They all combine with a strike price well
below technical support to make this a favorable play.

MAR 5.00 BQ-OA BID=0.31 OI=70 CB=4.69 ROI=17.61%

Chart = http://quote.yahoo.com/q?s=HRBC&d=3m
******************************************************************
IGEN - IGEN International  $28.50

IGEN bases its medical diagnostic systems on a special technology
called Electrochemiluminescence. The systems screen for a range of
diseases and help discover new drugs. Its patented ORIGEN nucleic
acid probe system is used by hospitals, universities, and clinical
and laboratories for conducting in vitro genetic testing. A solid
earnings report with record royalty revenue came in early February.
Technical support near the current price makes this play favorable.

MAR 22.50 GQ-OX BID=0.63 OI=10 CB=21.87 ROI=9.95%

Chart = http://quote.yahoo.com/q?s=IGEN&d=3m
******************************************************************
ITVU - InterVU  $22.75

InterVU lets you watch news on the Internet by enabling business
advertisers, Web developers, and others to present videos online.
Its clients add videos to their Web sites and banner ads. InterVU
also creates banners; offers VUTOPIA, targeting specific markets;
and presents live broadcasts. Some new contracts and products for
IBM & MSFT customers will keep this company in positive revenues.
A unique technical outlook with a new trading range around $20.

MAR 15.00 QYU-OC BID=0.38 OI=25 CB=14.62 ROI=7.71%

Chart = http://quote.yahoo.com/q?s=ITVU&d=3m
******************************************************************
OMKT - Open Market  $12.69     *** Internet Commerce ***

Open Market develops software that allows companies to manage
secure transactions over the Internet. Clients use the company's
transaction management, authentication and authorization, and Web
content conversion products. Open Market's "Folio" publishing
software lets customers create professional information materials.
Solid fourth quarter results and new partnerships with CSCO and
SUNW. Excellent support at $13 and buying pressure has resumed.

MAR 10.00 OQM-OB BID=0.38 OI=21 CB=9.62 ROI=13.02%

Chart = http://quote.yahoo.com/q?s=OMKT&d=3m
******************************************************************
ZD - Ziff Davis  $16.94     *** Internet Publishing ***

Ziff-Davis is the #2 US computer magazine publisher and a leading
worldwide provider of technology information via magazines, TV and
online services. ZD produces more than 80 publications including
PC Magazine and PC Week. ZDNet.com (website) offers computer news,
and other related services. The company is spinning off its online
operations and that may be driving the speculation in the options
but they also recently reported an increase in circulation. The
new E-commerce frenzy will also boost the stock. Technical support
near the current price and again at $13. A favorable risk/reward.

MAR 12.50 ZD-OV BID=0.44 OI=0  CB=12.06 ROI=11.49%

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



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newsletter picks are not to be considered a recommendation 
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