Option Investor
Newsletter

Daily Newsletter, Tuesday, 02/23/1999

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The Option Investor Newsletter         Tuesday  2-23-99  
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

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

Also provided as a service to The Online Investor Advantage

Published three times weekly, Sunday, Tuesday, Thursday evenings.
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
        2-23-99         High     Low     Volume   Advances Decline
DOW     9544.42 -  8.26 9611.33  9473.24  769,768k  1,261   1,710
Nasdaq  2376.35 + 34.34 2386.48  2342.22  914,171k  1,999   2,143 
S&P-100  635.45 +   .20  640.20   630.87   Totals   3,260   3,853
S&P-500 1271.18 -   .96 1280.43  1263.35            45.8%   54.2%
$RUT     399.01 +  1.19  400.07   397.82
$TRAN   3221.71 -  9.86 3230.58  3204.58
VIX       26.93 +   .13   28.30    26.40
Put/Call Ratio      
*************************************************************

"Stretched" "Overheated" "Overvalued"...

Greenspan definitely "raised questions" and not many answers
as traders looked to the Fed chairman for some direction 
once again.  What we witnessed today was a classic Greenspan
performance.  Not overly optimistic or pessimistic but with
enough comments pointing both directions to keep everyone
utterly confused.  Most market watchers did not anticipate
any revealing comments from Alan today, but traders were
looking for some clues as to the Fed's bias towards 
interest rates.

The markets had sold off quickly after yesterday's surge
sending the Dow to its low of the day at 9473 before 
recovering in front of Greenspan's semi-annual Humphrey-
Hawkins testimony before Congress.  As always the market
seemed poised on his every word but traders didn't quite
seem how to interpret comments like "the economy is 
sound, but is stretched...".  His comments about "equity
prices are high enough to raise questions about whether
shares are overvalued" echoed darkly of his previous 
"irrational exuberance" comment back in 1996 when the
Dow was near 6400.  Indexes promptly dropped on fears 
that his hidden meanings foreshadowed a rise in interest 
rates.  Basically, Greenspan said that if the Fed was 
going to take a bias towards rates it would be to raise
them.  However, with developing economies like Latin
America and Asia still a threat to the U.S. economy, the
Fed will not take any action that might jeopardize their
recoveries.  Greenspan said that our economy should 
remain strong but he cautioned that a potential stock
market crash or inflation pressures still represent a 
threat. [nothing new]

While the Blue chips basically closed the day even,
tech stocks continued their recent drive higher.  MSFT
lead the Nasdaq to a 34 point gain (to 2376) on comments
from Morgan Stanley Dean Witter analyst, Mary Meeker.
She said that MSFT would most likely receive nothing more
than a slap on the wrist and there would be no material
effect on earnings. [gosh, that sounds familiar].  Mary
went on to share her bullish comments about the Internet
and companies that do business there.  Plus, to add even
more visibility for the tech sector, the Robertsons 
Stephens Tech conference in San Francisco is underway 
allowing companies to talk about the future and what is
in store.

The score today showed that the Nasdaq Four did well.
MSFT, INTC, DELL, and CSCO closed positive with all
of them up almost $6 (or more) for the week.  The 
internets also continued their rally another day as
ATHM gained $9.06, AMZN +8.69, XCIT +8.88, and YHOO +7.13.
Software also continued its rally from yesterday while
Drugs participated as well.  Retail consumables were 
mostly down, while Banks (mostly mixed) trended lower.

Considering what the market had to juggle today with
the Greenspan testimony and another day of it tomorrow, 
it did surprisingly well.  International markets were of 
little help as most of them rallied on yesterday's gains 
here at home.  Tokyo was up +1.71%, Hong Kong up +2.22%, 
Frankfurt +2.94%, Paris +1.01%, and London up +1.41%.

We continue to see a decline in the internals of the 
market as Declines beat Advances by 3853 to 3260.  Volume
remains low with 769 mln shares traded on the NYSE and
914 mln for the Nasdaq.  Yet light volume is understandable
considering the Greenspan testimony today.  Investors
have learned to be cautious anytime the Fed chairman speaks.
The advance/decline line is a growing concern for traders.
One comment we heard today was that the NYSE adv/dec line
threatened to break its October lows!

What was encouraging was the Dow's bounce of 9500 twice
in the middle of the day.  Its intraday high of 9611 is
close to its all time high.  After Monday's 200 point
gain, to only lose 8 points is a strong sign.  Plus,
the Nasdaq and the RUT are on a four day winning streak.
If we are to recover, it will have to be confirmed in 
the RUT and today it closed just under 400 at 399.

In sum: Greenspan continues his testimony tomorrow.
No one is expecting much to come of it.  The markets are
likely to trade sideways but then Monday was a surprise.
The markets tend to drop the day after Greenspan speaks
in sort of a sigh of relief (which would be Thursday).  
If you have to trade pick your stocks and wait for the 
market to give you the best entry point.  Many of the 
stocks that have been climbing are potential profit 
taking candidates at this point.  Adjust your stop losses!

Good luck,

Kimo

assistant editor.


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

As of Market Close - Tuesday, February 23, 1999 

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

DOW Industrials    9,200   9,500   9,544    BULLISH   2.22  *            
SPX S&P 500        1,225   1,280   1,271    Neutral   2.11   
OEX S&P 100          610     635     635    Neutral   2.11    
RUT Russell 2000     420     435     399    BEARISH   2.4    

NDX NASD 100       1,900   2,150   2,028    Neutral   2.19    
MSH High Tech        930   1,040     988    Neutral   2.19       

                   Key Benchmarks
Technology         Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
XCI Hardware         840     970     899    BULLISH   2.22  *          
CWX Software         620     680     647    Neutral   2.22  *            
SOX Semiconductor    375     420     408    Neutral   2.11    
NWX Networking       410     450     419    Neutral   2.22  *            
INX Internet         450     570     506    Neutral   2.19       

                   Key Benchmarks
Financial          Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
BIX Banking          630     675     673    BULLISH   2.22  *                
XBD Brokerage        630     700     702    BULLISH   2.22  *     
IUX Insurance        570     625     634    BULLISH   2.22  *           

                   Key Benchmarks
Other              Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
RLX Retail           825     880     885    BULLISH   2.22  *   
DRG Drug             750     795     804    BULLISH   2.22  *     
HCX Healthcare       750     780     793    BULLISH   2.22  *              
XAL Airline          300     330     319    Neutral   1.29                
OIX Oil & Gas        230     250     226    BEARISH   2.16                  



Posture Alert

Broad market breaking to the north side after holding above key 
support levels.  As such, we have turned bullish across select 
industry sectors.

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

www.OptionInvestor.com/marketposture

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


Due to technical difficulties, the Market Sentiment is unavailable.
Please check the website for further updates tomorrow.

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

Please view this in COURIER 10 font for alignment
*****************************************************
RESULTS THIS WEEK


Index    Last    Mon      Tue    Week
Dow    9544.42 212.73    -8.26  204.47
Nasdaq 2376.35  58.41    34.34   92.75
$OEX    635.45  14.98     0.20   15.18
$SPX   1271.18  32.92    -0.96   31.96
$RUT    399.01   5.52     1.19    6.71
$TRAN  3221.71  97.06    -9.86   87.20
$VIX     26.93  -1.43     0.13   -1.30

Stock   Price    Mon      Tue    Week

AOL      88.00  12.63     1.50   14.13  No split depression yet
COF     132.56   5.50     3.19    8.69  Momentum strong
PVN     105.88   5.56     1.81    7.37  New highs
VOD     188.44   6.56     0.06    6.62
SLR      91.25   2.00     3.06    5.06  Splits Thursday
AMGN    128.88   2.50     2.25    4.75  Splits Friday
EMC     108.31   0.25     4.13    4.38  Super stock!
SCH      72.81   2.88     0.88    3.76  Showing strength
MWD      95.88   4.00    -1.13    2.87  Buying opportunity?
DH       64.00   2.19     0.63    2.82
WMT      87.50   3.50    -0.75    2.75  Buying Opportinity?
PSIX     36.13   0.75     1.63    2.38  Beat earnings
LVLT     59.06   2.06     0.00    2.06
CMA      66.06   2.75    -1.25    1.50  Greenspammed
MEDI     56.72   0.50     0.47    0.97  Consolidating gains
AXNT     36.63  -1.63     2.25    0.62  Still performing
MCD      85.69   0.06     0.06    0.12  Splits 3/05
OSSI     45.38   0.13    -0.38   -0.25  Splits 3/02
WCOM     83.94   0.81    -1.06   -0.25  Consolidating
UTX     125.06   1.06    -1.44   -0.38
LOW      56.56   1.38    -1.88   -0.50  Post earnings depression
PG       90.75   1.19    -2.25   -1.06  Support level


Puts
WHR      43.31  -1.25     1.25    0.00
ERTS     40.63   1.00    -0.50    0.50
BDX      33.81   0.69    -0.13    0.56
ADBE     43.75   1.44     0.00    1.44
BMCS     46.88   1.44     0.88    2.32
BKB      41.50   1.38     1.50    2.88
ELNK     65.00  -1.56     4.50    2.94
CPQ      44.25   1.56     1.56    3.12  Dropped
HWP      73.13   5.56    -0.75    4.81  Dropped
WLA      69.69   3.56     2.25    5.81  Recovering?
MSFT    155.44   1.06     6.63    7.69  Dropped
EBAY    282.63  39.25     3.88   43.13  Dropped


PICKS WE DROPPED
****************
When we drop a pick it doesn't mean we are recommending a sell
on that play. Many dropped picks go on to be very profitable.
We drop a pick because something happened to change its
profile. News, price, direction, etc. We drop it because we
don't want anyone else starting a new play at that time. 
We have hundreds of new readers with each issue who are
unfamiliar with the previous history for that pick and we
want them to look at any current pick as a valid play.


CALLS:
******

none

PUTS:
******

CPQ $44.25 +1.56 (+3.12)  Even though we feel CPQ is beginning 
an overall downtrend, in the past three days of trading it has 
managed to post some gains.  After falling over 12 points 
since the end of January, a slight U-turn up was bound to come 
sometime for the stock.  Hambrecht & Quist may have brought 
some attention to CPQ after they initiated coverage of the 
stock with a buy stating that "sentiment for the major PC 
suppliers has turned more favorable."(-Reuters)  However, we 
don't expect this to be a sustained uptrend due to competition 
and decreased revenues.  But until the reversal comes again, 
we are dropping it as one of our plays.   

MSFT $155.44 +6.63 (+7.69)  Even in yesterday's action, 
MSFT looked weak compared to the rest of the NASDAQ "Five 
Horsemen" (MSFT, INTC, CSCO, WCOM, DELL - in that order) .  
Today, on positive words from Mary Meeker of Morgan Stanley 
that MSFT is unlikely to receive anything more than a wrist 
slap from the government, MSFT leaped out of its bear cave 
to join the bulls.  Normally we'd be cheering on gains like 
this, but as a put, MSFT went the wrong way on strong 
volume.  Sadly, we're dropping them as a pick until they 
give us more clear direction.

HWP $73.13 -0.75 (+4.82)  The Grand-daddy of high tech 
leaves our put column tonight, even though it went down 
today on average volume.  Yesterday's $5.57 gain on the 
heels of a massive e-commerce equipment and service roll-
out has too much staying power. In an interview, Ann 
Livermore, vice president and general manager of H-P's 
Enterprise Computing Solutions division, and Lewis Platt's 
heir-apparent said the company is concentrating on E (for 
electronic) services it believes will be in great demand in 
the second phase of Internet development.  The market is 
back on HP's side and is giving HP another chance to "show 
us the money".  Thus we're dropping them as a put play.


PICK NEWS - CALLS
*******************************************************

EMC $108.13 +3.94 (+4.19) EMC made a very good move today, and
got as high as $109.06.  It is starting to get near its 52 week
high of $109.88.  We would really like to see EMC take out this
high, which it posted about a month ago, on strong volume.  We
haven't had any news on EMC, but it looks like EMC is gaining
some momentum into its new products and growth initiative
meeting which is next Monday.  

AMGN $128.88 +2.25 (+4.75)  AMGN is moving like a race car
in the Indy 500.  If you thought +$2.50 was fast on Monday,
how do you describe the additional +$2.25 on Tuesday?  Amgen
had so much momentum that it even reached another all time 
high in intraday trading at $131.63.  The company is 
splitting 2:1 this Friday, February 26th.  Set your stop 
losses tight to protect your profits.  Also remember that 
we never recommend holding over the actual split.    

UTX $125.06 -1.44 (-.38) UTX made a good move on Monday and
traded down today on what looked like profit taking.  UTX set a
new 52 week high on Monday at $127.  In the news, UTX agreed to
acquire Sundstrand Corp. for $70 per share, which will consist
of $35 per share in cash and .279 common shares of UTX. 
Sundstrand is an aerospace products manufacturer and the
acquisition will expand UTX's presence in the aerospace and
aviation parts and services businesses.  Sundstrand also
produces industrial products such as pumps and gears. 
Industrial companies are increasingly joining the merger game.  

LOW $56.56 -1.88 (-.50) LOW made a good move yesterday after
its earnings announcement.  It even opened at a new 52 week
high today and then traded down for the rest of the day.  LOW
announced earnings before the open yesterday and reported
earnings of 30 cents per share versus estimates of 27 cents per
share and the year ago period of 21 cents per share.  Sales
increased 21%.  It is difficult to say whether the profit
taking is over on LOW.  We would wait and see whether it is
before initiating any new positions.  



***** Play updates continued in section two *****


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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         Tuesday  2-23-99  
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.


PICK NEWS - CALLS (continued)
*******************************************************

COF $132.56 +3.19 (+8.68)  An unexpected surge in the market 
on Monday was simply wonderful for COF.  The stock was 
propelled over its 30 dma as it added +$5.50.  On Tuesday, it 
continued its upward course by holding the previous day's 
gains and annexing another +$3.19.  Its price resistance is at 
the $133 level.  If it can rise above that, its only other 
resistance is at its all time high of $140 set back on 1/20.  
In other news, COF's business in the UK has greatly exceeded 
their expectations.  To keep up with their incredible growth 
rate overseas, Capital One plans to invest $33 million and add 
a total of 1,200 new jobs by the end of the year 2000 to their
establishments in England.

PVN $105.88 +1.81 (+7.38)  Simply put, PVN has been one of 
our top recent picks.  Take a look at its graph.  It exhibits 
a great two week uptrend in blue sky territory.  This week's 
market performance have been icing on the cake.  On Monday, PVN 
rocketed up +$5.56 as the market also flew.  With strength, 
the company held on to those gains and added another +1.81 to 
set an all time high of $107.94 during Tuesday's action.  
Keep those stop losses tight to protect your profits!

PG $90.75 -2.25 (-1.06) PG closed right at a support level
today.  PG made a nice, orderly move yesterday and then traded
down today.  PG is still above its 10 day moving average which
is at $89.75.  We read a technical analysts report today that
indicated if PG could break through the $94 level that it would
be a very bullish sign for the stock.  It will need to hold the
current support level before that is possible.  In the news,
there was an article about interactive advertising.  PG, one of
the world's largest advertisers, believes that the new
technology will change their whole business.  PG appears to be
a leader in this area.

MCD $85.69 +0.06 (+0.13)  McDonald's continues to defy 
gravity when it comes to setting new all time highs.  On 
Tuesday in intraday trading it notched another one- this time 
at $86.56 level.  The stock's momentum stems primarily from 
two factors: confidence in the sector and the fact that MCD 
will split 2:1 on March 5th.  Watch for MCD to continue its 
run.  In other news, MCD is expanding its foreign presence in 
India and Ireland to meet customer demands.  

MEDI $56.72 +0.47 (+0.97)  MedImmune seems to be holding its 
gains from the past week and adding even more. The rally on 
Monday helped MEDI gain +$0.50 and set another all time high 
at $57.75 in intraday trading.  The strong finish for the 
NASDAQ again on Tuesday helped it add a little more.  There 
really hasn't been any news to spur these gains except for the 
company's future outlook and market conditions as we explained 
in Sunday's write-up.  Keep your stop losses in check to 
protect any profits.  

OSSI $45.38 -0.38 (-0.25)  OSSI has been steeply gaining 
since back in January.  It has avoided serious profit taking 
for weeks now and appears to be consolidating its gains.  On 
Tuesday, it finally consolidated- but, only for a -$0.38 dip.  
Even though we feel that OSSI is still play with lots of 
potential, we suggest waiting for it to resume is uptrend 
before starting any new plays.  OSSI will be splitting its 
stock 3:2 on March 2nd.  

VOD $188.44 +0.06 (+6.63)  VOD exploded to a +$6.56 gain on 
Monday.  It managed to hold the spike on Tuesday even as it 
again moved within a narrow trading range.  It has now soared 
quite a bit above its 30 dma and the only resistance in sight 
is $197.75, the company's all time high.  We would still like 
to see VOD's daily trade volume increase over its norm to 
further drive the upward momentum.  But, if the markets can 
head higher, VOD should do just fine anyway.  VOD remains a 
split candidate at these levels.  

WMT $87.50 -0.75 (+2.75)  After announcing their earnings 
last week, WMT seemed to be consolidating.  But, Monday's 
green markets helped push WMT up again +$3.50.  On Tuesday, 
WMT began the day on a high note.  It rose to $88.56 and fell 
just short of challenging its all time high of $88.69.  But 
profit taking took its toll and set WMT back -$0.75 as 
investors sold knowing the scary affect Greenspan can have on 
the markets when he speaks.  Wait for another green signal 
before opening new plays in Wal-Mart.

AOL $88.38 +1.88 (+8.19 split adjusted)  AOL shot ahead $13 
on average volume yesterday in anticipation of its 2:1 
stock split effective today.  Today they gave us another 
bump reflecting the new split price.  We would expect twice 
the volume given the split and we got it:  33 million 
shares!  Subscribers, including AOL's compuserve division, 
now exceed 18 million individual users.  Revenues are 
expected to double again this year.  While not closing at 
an all-time high (split adjusted), AOL reached $91.94 
intra-day, which serves as its current resistance.  Beware 
of the post-split depression, but AOL should move to new 
highs.  Confirm market direction and keep the stops close 
to protect your profits.

WCOM $83.91 -1.06 (-0.25)  WCOM tacked on a small gain 
yesterday but gave it back (and then some) today, both on 
average volume.  Normally, WCOM should rise with the 
NASDAQ, but last week, WCOM went up while the market 
drifted.  We chalk it up to profit taking.  Support is $82, 
overhead resistance is $85, its all-time trading high.  No 
news to speak of, other than continued good outlook from 
analysts.  If the NASDAQ gives back some of its gains from 
the last 2 days, WCOM will go with it.  Protect your 
profits with stop-limit orders or trailing stops, and 
confirm market direction before entering a new play.

DH $64.00 +0.63 (+2.81)  A strong but silent participant 
from the retail sector, DH pushed up over $2 yesterday, and 
gave us another $0.63 today on average volume.  Retail has 
been on a roll for the last 2 weeks with Wal-Mart and Home 
Depot among others carrying the torch for the group.  DH's 
strength is its low, non-institutional float of 40 million 
shares.  When funds won't sell, buyers can only acquire 
from the market maker, whose job it is to raise the price -
low supply, high demand.  DH is a relatively safe play and 
not as prone to the huge drops of the tech companies.  
Confirm market direction before playing.

SLR $91.25 +3.06 (+5.06) SLR is set to split February 25 
and is on a run toward earnings around March 15.  SLR 
continues to move up from its 30 DMA and is technically 
strong.  Look for the play to continue.  Confirm market 
direction before staring a new play.

SCH $72.81 +0.88 (+3.75) Schwab made the move to blue sky on
Monday and continued the climb today with increasing volume.
On Monday, Schwab announced the introduction of a new 
customer initiative, Schwab Signature Services. The program
replaces and significantly expands upon Schwab's traditional
services. With toady's close, the previous resistance around 
$69 becomes support.

LVLT $59.06 UnCH (+2.06) Level 3 Comm. has made it to it's 
resistance at $60.  There is a short term stochastic buy 
signal evident which may help push LVLT higher.  Still no 
news and a tightening of stops may be a prudent move to lock
in profits from the recent run-up. Entering with new plays 
should now be avoided till a close above Resistance.

PSIX $36.13 +1.63 (+2.38) PSINet Inc. today reported record
revenues for the fourth quarter and year ended December 31,
1998 and posted $1.61 loss vs. $0.63 loss. Part of this was
a ($0.59 per share) charge for acquired in-process research
and development related to PSIX's acquisition of Tokyo 
Internet which brings the earnings in line with estimates. 
For those traders who held over earnings they received a 
nice profit for their gamble as PSIX avoid being in the 80%
group that drops after earnings. PSIX did slowly slide lower
throughout the day to its close which could be a sign of 
post earnings weakness.

MWD $95.88 -1.13 (+2.88) Morgan Stanley didn't have any big
announcement Monday but did manage a $4 dollar gain closing
at an all time new high.  Today's profit taking should be 
short lived, market permitting, and a move above $97 on 
strong volume would confirm yesterday's close.

AXNT $36.63 +2.25 (+0.63) Though Monday's drop was somewhat
worrisome in context with yesterday's strong rally, Axent
managed to redeem itself today. AXNT announced today that 
they have been voted "Best Buy" in the February issue
of SECURE Computing Magazine. Today's close moves AXNT into 
January's resistance area with several short term buy signals
lending credence for a move to a new high.

CMA $66.06 -1.25 (+1.56) Today Comerica suffered from profit 
taking and post Greenspanism (Sorry Mr. Webster). The 
technical health seems to be improving with increased signs 
of buying pressure and volume support on the recent climb 
from consolidation at $60. New support should now be in the 
$64 to $65 range with yesterday's close. We still have 
Mr. Greenspan reporting tomorrow with financial stocks most 
vulnerable to any negative innuendo so caution is recommended.

PICK NEWS - PUTS
*******************************************************

Due to technical difficulties, a portion of our put updates are unavailable.
Please check the website for further updates tomorrow.

WHR $43.31 +1.25 (0.00)  Up one day, down the next.  
Despite strength in some market segments, WHR failed to 
penetrate its $44 resistance, even though volume was 
strong.  We view that as a good sign as it just makes 
resistance stronger.  Technicals are still negaitve, but 
MACD is slightly positive - no cause for alarm.  With world 
financial fears heightening and interest rates on the rise, 
the case for pain is high.  If the current advance stalls, 
WHR will be among the first to retreat.  Confirm the flat 
of down market before making a play.


******************
NEW PLAYS 
******************

NONE

*****************************************************
COMBINATION PLAYS   
*****************************************************
- PLAY RECAP -

Monday, February 22

The Dow Jones Industrial Average racked up its third-biggest point
gain of the year Monday, as investors focused on big-name stocks.
Most investors bet that Federal Reserve Chair Alan Greenspan won't
say anything to rattle Wall Street in this week's congressional
testimony. The DJIA was up 212 points and both the Nasdaq and S&P
500 indexes followed the lead, closing significantly higher.

On Monday, the spreads editor was enroute to the OIN seminar in
Denver and did not have the opportunity to watch the market. With
that in mind, these opening prices are based on the trading range
of each individual position throughout the day. The options that
had good volume are fairly easy to document but other lightly
traded series may more difficult to estimate accurately. Those of
you that placed orders on these plays are welcome to send your
entry prices and I will adjust the summary accordingly.

New Sunday Plays:

ONSL $32.56 MAR22P/MAR25P  $0.38 Credit (Just below the limit)
CIEN $22.44 JUL22C/MAR25C  $3.87 Debit  (Easy entry!)
AAPL $37.19 APR32P/APR35P  $0.93 Credit (Big opening gap/no play)
AAPL $37.19 APR37C/APR35C  $1.06 Credit ("                     ")
BSX $27.43 MAY22C/25C/27C $0.50 Debit  (Easy entry!)
UK $40.25 APR37C/42C/47C $1.00 Debit  (Didn't move much at all)

Other portfolio positions: HNZ (MAR55C) was sold at $4.50.

Tuesday, February 23

U.S. stocks were mixed Tuesday in choppy trading as comments by
Federal Reserve chairman Alan Greenspan about the economy and
high stock prices dominated the news. After trading in negative
territory for much of the day, the DJIA ended little changed.
Technology stocks were unfazed and the Nasdaq Index rallied 32
points. A new group of stock splits boosted select issues but
the broader market was still slightly lower and declining stocks
outnumbered gainers on both the NYSE and the Nasdaq.

Some of the bullish portfolio positions were closed on Tuesday as
the market sold-off on the post Greenspan slump. GLW (MAR50C) was
exited for $5.00, a $3.87 profit on the announcement of a 2 for 1
split. USAI (MAR40C) was sold at $3.00 for a small profit. PLCM
was exited at $1.12.

In the long-term calendar spreads, we sold calls on HUM; MAR20C at
$0.38 and rolled down to the MAR30C on ITWO, selling it for $1.50.
We still need to sell positions on DIS and SKYT. It is possible
we will roll-down on both of these plays. Good Luck!
******************************************************************
                          - NEW PLAYS -
******************************************************************
PG - Proctor & Gamble $90.75     *** Neutral Position ***

P&G is the #1 US manufacturer of household products; laundry
and cleaning items, paper goods, beauty care, food/beverage and
and health care plus toothpaste and medicines. The company made
olestra, a fat substitute used in snacks and crackers. It also
produces soap operas; "As the World Turns, Another World, and
Guiding Light. P&G has shifted its strategy; reorganizing global
business units instead of by geographic regions.

Not much news recently but many consumer and manufacturing shares,
(those that are more economically sensitive during signs of an
economic expansion) fell today after Greenspan said that while he
expects continued growth in the economy, there are still dangers
from possible higher inflation and a potential stock market drop.

We like the technical stability in the underlying issue. PG is in
a trading range from $83 to $93 with no signs of a break-out. The
volume has not supported the recent run-up and there is strong
resistance around $93 stretching back to July of last year. The
150 dma is providing strong support.

PLAY (conservative/neutral spread):

BUY  (5)  CALLS APR-85 PG-DQ OI=2490 A=$8.62
SELL (10) CALLS APR-90 PG-DR OI=2832 B=$5.25
BUY  (5)  CALLS APR-95 PG-DS OI=2739 A=$2.68
INITIAL NET DEBIT TARGET=$0.62 ROI(max)=700%

Chart = http://quote.yahoo.com/q?s=pg&d=b
******************************************************************
DAL - Delta Airlines  $57.16     *** Neutral Position ***

Delta Air Lines, the US's third-largest airline flies to about 150
cities across the US and more than 30 other countries. Their hubs
include Atlanta, Dallas-Fort Worth, Cincinnati, Los Angeles, New
York City, and Salt Lake City. The company has built up a low-fare
regional carrier service and owns 38% of the computer reservation
service WORLDSPAN. CEO Leo Mullin was hired to improve performance,
and the carrier is pushing to expand its service in Latin America
and other international markets.

Airlines stocks moved ahead on Monday led partially by gains in
Delta Air Lines. Delta's gains were assisted by an upgrade by DLJ.
DLJ declined to confirm the change, but according to some market
sources, DLJ raised its earnings forecast for 1999 and contended
estimates for the entire group may be too low. DLJ said Delta has
the cleanest blend of internally generated earnings strength and
the best protection from adverse circumstances of all the large
domestic carriers.

The small upward movement boosted option interest and with the
current sideways trend of the stock, we may be able to ride this
position for a small 3 week profit. The break-even/profit range
is from $51.50 to $58.50.

PLAY (conservative/neutral spread):

BUY  (5)  CALLS MAR-50 DAL-CJ OI=89   A=$8.62
SELL (10) CALLS MAR-55 DAL-CK OI=631  B=$4.12
BUY  (5)  CALLS MAR-60 DAL-CL OI=1524 A=$1.50
INITIAL NET DEBIT TARGET=$1.50 ROI(max)=230%

Chart = http://quote.yahoo.com/q?s=dal&d=b
******************************************************************
NXTL - Nextel  $30.93   *** Poor earnings ***

Nextel Communications is a major cellular phone company providing
specialized mobile radio services to truckers and taxi drivers. It
it is accelerating its digital network buildout with the help of
cash infusions from equipment provider Motorola (which holds a 24%
stake in the company) and wireless communications pioneer Craig
McCaw and his family. Nextel service areas are expected to cover
most of the US population by 1998. The company has licenses in
Canada, Asia, and Latin America and is working to distinguish
itself from other cellular providers, primarily by cutting charges.

As a result of the recent expansion, subscriber rates exceeded the
analysts' expectations but today's earnings did not! Results were
basically in line with Wall Street's expectations; NXTL expected
to lose $1.41. Shares dipped with the announcement, which analysts
attribute to investor disappointment with the report.

The worrisome technical outlook leads us to the conclusion that
this one has further to go...

PLAY (conservative/debit spread):

BUY  PUT MAR-35 FQC-OG OI=29   A=$4.87
SELL PUT MAR-30 FQC-OF OI=1528 B=$1.43
INITIAL NET DEBIT TARGET=$3.25 ROI(max)=53%

Chart = http://quote.yahoo.com/q?s=nxtl&d=b

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