Option Investor
Newsletter

Daily Newsletter, Sunday, 02/28/1999

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The Option Investor Newsletter            Sunday  2-28-99  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 2-26          WE 2-19          WE 2-12          WE 2-5
DOW     9306.58 - 33.37  9339.95 + 65.06  9274.89 - 29.35  - 54.59  
Nasdaq  2288.03 +  4.43  2283.60 - 38.29  2321.89 - 51.73  -132.27  
S&P-100  618.42 -  1.85   620.27 +  4.13   616.14 -  1.53  - 22.77  
S&P-500 1238.33 -   .86  1239.19 +  9.06  1230.13 -  9.27  - 40.20  
RUT      392.26 -   .04   392.30 -  6.14   398.44 - 14.28  - 14.50  
TRAN    3207.43 + 72.92  3134.51 + 37.62  3096.89 -150.77  + 45.29  
VIX       29.52            30.23            31.35            30.47
Put/Call    .67              .70              .85              .64
******************************************************************

Position Wanted: Global Finance Manager, 
Qualifications: Able to rock world markets with a single word.

The economic numbers out Friday were much stronger than anyone
expected. Despite the global financial crisis the U.S. economy
grew at its fastest pace in nearly 15 years last quarter. This
closed out a year in which Americans enjoyed the best combination
of rapid growth, low employment and low inflation in at least three
decades.

The nations gross domestic product (GDP), the total output of
goods and services, shot up at a sizzling annual rate of 6.1%
from October through December. This was even better than the +5.6%
rate the government originally reported a month ago. Trade strength
and consumer spending were much stronger than the previous forecast.

Even with the rapid growth inflation was nowhere to be seen. The
inflation tied to the GDP was only up +1% for all of last year.
This was the smallest increase in 49 years. For all of 1998 the
economy grew at +3.9%, the third straight year of above 3% growth.

This is even more remarkable given the impact of the many global
meltdowns during the year. China, Japan, Russia, Brazil, nothing
really hurt in the long run. The oasis of prosperity is still
thriving. Sure the Fed had to vaccinate us with three rate cuts
but we survived. 

This news should be good, right? It is good long term but now there
is no doubt that the Fed will raise rates again soon. Seems they
got carried away and gave us too much candy and now we have to 
go on a diet soon. 

The big news on Friday as far as we are concerned was the trashing
of the PC sector by Compaq and the analysts who quickly piled on
to try and make a name for themselves. The Compaq warning of soft
sales sent ripples across the entire PC sector. The simultaneous
removal of Micron from the Goldman Sachs recommended list nuked
the chip sector also. After the smoke cleared from the double
whammy the carnage looked like this... 

CPQ -5.63, DELL -1.63 (split?), IBM -3.88, GTW -7.44, HWP -4.75
INTC -7.81, MU -9.19, AMAT -8.13, PRIA -5.25, NVLS -6.0, TXN -7.06
AMD was imune with the announcement that they delivered more K6
chips than Intel sold Pentiums, knocking Intel out of the top
spot on high performance processors.

With the flood of tech downgrades I think it is incredible that
the Nasdaq did not finish down -100 points! Minus 39 was bad enough
but this was an opportunity to really demolish the entire tech
sector and drag the Dow down with it. Even with the tech disaster
the Dow did not even retest the lower end of the range at 9200.
The closest we got was a bounce off 9250 and two bounces off 9280!
We were real close (-5) to closing positive when fear of the weekend
took over in the last 10 minutes and knocked off -60 points.

If you look at the results for the week, DOW -33, Nasdaq +4, 
OEX -2, SPX -1, RUT -.04, it looks like a really boring week. 
In reality we covered a range of over 400 points only to end
even for the week. This is a good finish in my book.

When you consider Greenspan talked twice and let it be known in
English that the Fed would not hesitate to raise rates and he
thought a 10% to 20% correction would be healthy and not a problem,
we still did not break support. When the techs got the worst 
possible downgrades on "soft sales" we still held support. When
the economic reports were much stronger than all considered, we
still held support. When the bond market sold off strongly for
three days we still held support. Now before you start getting a
mortgage on the kids to buy calls let me remind you that we may
still see rough times ahead. I can't imagine what could shake
the market worse than we had this week but rest assured there
is always something waiting around the corner. 

I should probably also warn you that Barrons is predicting the
demise of Alan Greenspan in their weekend edition. Now I wrote
about this possibility last week and the impact on the markets.
However, Barrons has a slightly larger readership than OIN so
the impact could be worse. I wonder if they got the Greenspan
idea from us? (joke, lest some of you take me serious)

The week ahead is sure to be filled with 100 point swings and
there is no shortage of economic reports to further cloud the
picture. The main focal point for us as traders should be the
advance/decline line. Until the advances beat decliners on a
regular basis we cannot expect a rally to hold. Continued
deterioration of this indicator is simply like crawling farther
and farther out on a limb every day. Eventually it will break.

Seminar attendees last week had the term "entry point" drilled
into them. The current whipsaw of the range bound market makes 
it imperative that you wait for an entry point in the low end 
of the trading range and then PLAN to sell at the high end of 
the range. You cannot successfully buy and hold options in this
choppy market. You also do not have to trade in this market. You
can wait patiently on the sidelines until a direction is established.
I know this is heresy but the result of trying to trade a choppy 
market without a strict plan could be spending your retirement 
living with your kids for lack of funds.

The market did hold the psychologically important 9300 level
on Friday. I would not be a buyer here. We could get a bounce
to 9400-9500 or we could also test 9100-9200 again on the 
Greenspan article or any of the economic reports this week.
I suggest any rebound under 9200 would be buyable. If we do not
break under 9200 then 9200 or close would be buyable. At the
current 9300 we are sitting right in the middle of the range
and we have no clear direction.

Patience is king but patience with cash is better.  

Wait for an entry point!

Jim Brown
 
PS. I erred on Thursday when listing the seminar attendees from
far away places. The farthest was a young lady from Sydney
Austrailia, Anastasia Iatridou. She won a free subscription
for traveling the farthest. Some more seminar trivia, the
youngest investor was 21,(trading for two years already) Sergio
Chavez from Monterey Mexico and the oldest was 72, Virendra Goel
from Colorado.





************************************************************
JIM'S PLAYS		 
************************************************************
No trades due to seminar.

Current positions: 

GADZ - takeover rumor





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

Don't Internet Users Need a PC?

How long do you think it will take before some analyst figures 
out that if PC sales are slowing, that it may impact the growth 
rate of internet users which, in turn, may pour cold water on the
Internet frenzy -- After all, don't Internet users need a PC?

We may be at a near-term apex for Internet sector for a couple of
reasons.  First, Take a look at what happened to the broader
Technology group this past week.  All of its sectors sold off
And are now trading BELOW their respective 50-day moving averages
with the EXCEPTION of the Internet sector.  Is it possible that 
the Internet sector could soon follow?

 



 


Next, when you think of sectors that can lead the market higher, 
one typically looks to solid blue chip companies with strong
earnings and track records within the Banking, Pharmaceutical
and Technology sectors.  In fact, the sectors that fueled the
Bull run that began on October 8th included Hardware, Software,
Semiconductors, Networking.

So ask yourself when the broader market turns to a sector to lead 
them higher in the days ahead, do you think they are likely to
call on a sector that has yet to turn a profit or one that has a
proven earnings record? 

Finally, our Pinnacle Index, a short-term contrarian sentiment
indicator, are at extreme levels for many of the Internet stocks
as shown below.  This simply means that too many option
speculators are betting that Internet stocks will continue to
rise.  This may happen, but if these lofty expectations are not
met or if a negative news event occurs, the Internet bubble will
pop.  This is particularly true when many of the stocks are very
extended. 


Sentiment Analysis
*****************************************************************
                       Pinnacle       Last              Over(+)
Internet                  Index      Trade    50dma    Under(-)
***************************************************************** 
Sorted by Pinnacle Index:

NSCP    Netscape           16.4     77.44    64.25      13.19+
RNWK    RealNetworks       14.4     70.13    55.50      14.63+   
AMZN    Amazon.com         13.5    128.13   117.25      10.88+
XCIT    Excite, Inc        13.4    102.50    79.50      23.00+
EBAY    eBay Inc           12.0    334.00   252.25      81.75+
SEEK    Infoseek           11.5     71.56    62.75       8.81+
MSPG    Mindspring          9.9     85.50    83.00       2.50+
DCLK    DoubleClick         9.8     89.88    76.00      13.88+
BCST    Broadcast.com       6.6     83.81    65.00      18.81+
CMGI    CMGI Inc            5.8    122.63    93.00      29.63+
AOL     America Online      4.4     88.94    75.50      13.44+
YHOO    Yahoo               3.9    153.50   148.88       4.62+
CNET    CNET, Inc           3.9    114.63    76.00      38.63+      
ATHM    At Home Corp        2.8    106.13    97.00       9.13+
ELNK    Earthlink           2.8     60.19    60.00        .19-
LCOS    Lycos Inc.          3.4     87.63    87.50        .13-


Sorted by Over/Under 50dma:

EBAY    eBay Inc           12.0    334.00   252.25      81.75+
CNET    CNET, Inc           3.9    114.63    76.00      38.63+      
CMGI    CMGI Inc            5.8    122.63    93.00      29.63+
XCIT    Excite, Inc        13.4    102.50    79.50      23.00+
BCST    Broadcast.com       6.6     83.81    65.00      18.81+
RNWK    RealNetworks       14.4     70.13    55.50      14.63+   
DCLK    DoubleClick         9.8     89.88    76.00      13.88+
AOL     America Online      4.4     88.94    75.50      13.44+
NSCP    Netscape           16.4     77.44    64.25      13.19+
AMZN    Amazon.com         13.5    128.13   117.25      10.88+
ATHM    At Home Corp        2.8    106.13    97.00       9.13+
SEEK    Infoseek           11.5     71.56    62.75       8.81+
YHOO    Yahoo               3.9    153.50   148.88       4.62+
MSPG    Mindspring          9.9     85.50    83.00       2.50+
ELNK    Earthlink           2.8     60.19    60.00        .19-
LCOS    Lycos Inc.          3.4     87.63    87.50        .13-


Sorted by Current Price:

EBAY    eBay Inc           12.0    334.00   252.25      81.75+
YHOO    Yahoo               3.9    153.50   148.88       4.62+
AMZN    Amazon.com         13.5    128.13   117.25      10.88+
CMGI    CMGI Inc            5.8    122.63    93.00      29.63+
CNET    CNET, Inc           3.9    114.63    76.00      38.63+      
ATHM    At Home Corp        2.8    106.13    97.00       9.13+
XCIT    Excite, Inc        13.4    102.50    79.50      23.00+
DCLK    DoubleClick         9.8     89.88    76.00      13.88+
AOL     America Online      4.4     88.94    75.50      13.44+
LCOS    Lycos Inc.          3.4     87.63    87.50        .13-
MSPG    Mindspring          9.9     85.50    83.00       2.50+
BCST    Broadcast.com       6.6     83.81    65.00      18.81+
NSCP    Netscape           16.4     77.44    64.25      13.19+
SEEK    Infoseek           11.5     71.56    62.75       8.81+
RNWK    RealNetworks       14.4     70.13    55.50      14.63+   
ELNK    Earthlink           2.8     60.19    60.00        .19-


Sorted by current Call option premium (ATM):

EBAY    eBay Inc           12.0    334.00                22.00
CNET    CNET, Inc           3.9    114.63                13.26
YHOO    Yahoo               3.9    153.50                10.38
MSPG    Mindspring          9.9     85.50                 9.13
AMZN    Amazon.com         13.5    128.13                 8.88
DCLK    DoubleClick         9.8     89.88                 8.76
BCST    Broadcast.com       6.6     83.81                 7.31
CMGI    CMGI Inc            5.8    122.63                 7.88
RNWK    RealNetworks       14.4     70.13                 6.38
ELNK    Earthlink           2.8     60.19                 5.57
XCIT    Excite, Inc        13.4    102.50                 5.38
LCOS    Lycos Inc.          3.4     87.63                 5.26
SEEK    Infoseek           11.5     71.56                 5.07
AOL     America Online      4.4     88.94                 3.75
ATHM    At Home Corp        2.8    106.13                 2.38
NSCP    Netscape           16.4     77.44                  .82

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


 


Over the past couple of weeks, Pinnacle Capital Advisors has been 
documenting key technical and sentiment indicators that are
becoming problematic including the huge divergence between DOW
and the NYSE advance/decline line and optimistic sentiments. 

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                       (2/26)     (3/2)     (3/4)  Alert
********************************************************************

Pinnacle Index (OEX):          
-----------------------------------------------------------------
Overhead Resistance (620-635)     1.2
Underlying Support  (595-610)     1.7


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                             620
P/C Ratio                         1.1


Market Volatility Index (VIX):	
-----------------------------------------------------------------
CBOE VIX                        29.52                         *



Investors Intelligence:
-----------------------------------------------------------------
Bullish                          54.1%                        *  
Bearish                          31.5%                        *
		

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                       (2/26)     (3/2)     (3/4)
-----------------------------------------------------------------
               
                    (630-635)      1.2    
                    (620-625)       .9    
Overhead Resistance (620-635)      1.0    

OEX Close                       618.42   

Underlying Support  (595-610)      1.7 
                    (605-610)      1.7   
                    (595-600)      1.7   

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 firm at the
OEX 595/610 level.


Put/Call Ratio 
-----------------------------------------------------------------
                                Friday      Tues      Thurs
Strike/Contracts                (2/26)     (3/2)      (3/4) 
-----------------------------------------------------------------
CBOE Total P/C Ratio               .73
CBOE Equity P/C Ratio              .52
OEX P/C Ratio                     1.27


Peak Open Interest (OEX)
-----------------------------------------------------------------
                     Friday         Tues           Thurs
Strike/Contracts     (2/26)         (3/2)          (3/4)
-----------------------------------------------------------------
Puts                 610 / 9,902 
Calls                620 / 8,614
Put/Call Ratio       1.15

 







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   *
February 24, 1999                     55.7        28.7   *



*********************************************************
Market Posture
*********************************************************
As of Market Close - Friday, February 26, 1999 

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

DOW Industrials    9,200   9,500   9,306    Neutral   2.25
SPX S&P 500        1,225   1,280   1,238    Neutral   2.11
OEX S&P 100          610     635     618    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     829    BEARISH   2.26  *
CWX Software         620     680     618    BEARISH   2.26  *
SOX Semiconductor    375     420     390    BEARISH   2.26  *
NWX Networking       410     450     403    BEARISH   2.25
INX Internet         450     570     463    Neutral   2.19

                   Key Benchmarks
Financial          Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
BIX Banking          630     675     662    Neutral   2.25  
XBD Brokerage        630     700     697    Neutral   2.25
IUX Insurance        570     625     613    Neutral   2.25

                   Key Benchmarks
Other              Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
RLX Retail           825     880     875    Neutral   2.25
DRG Drug             750     795     791    Neutral   2.25
HCX Healthcare       750     780     782    Neutral   2.25
XAL Airline          300     330     321    Neutral   1.29 
OIX Oil & Gas        230     250     224    BEARISH   2.16



Posture Alert

Following analysts reports about slowing PC sales, we have 
turned BEARISH across select technology sectors including
hardware, software and semiconductors.  We also want to alert 
investors that several broad market indices are sitting at
their 50-day moving averages which, if violated, could create
selling pressure over the near-term.

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

www.OptionInvestor.com/marketposture

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

Personal Income   Jan      Forecast: 0.4%    Previous: 0.5%
NAPM Index        Feb      Forecast: 49.4    Previous: 49.5
Construction Spend Jan     Forecast: 0.4%    Previous: 1.7%

Tuesday:

LJR Redbook       2/27     Forecast:  --     Previous:  1.8%
BTM/Schroeders    2/27     Forecast:  --     Previous:  2.2%
New Home Sales    Jan      Forecast: 967.0   Previous: 978.0
API Oil Stocks    2/27     Forecast:  --     Previous: 334.14M
Leadin Indicators Jan      Forecast: 0.3%    Previous:  0.3%

Wednesday:

Non-Manufacturing Feb      Foercast:  --     Previous:  54.0

Thursday:

Jobless Claims    2/27     Forecast: 300k    Previous: 293k 
Factory Orders     Jan     Forecast: -0.4%   Previous: 2.3%  
Money Supply (M2) 02/08    Forecast:  --     Previous:-$0.1B

Friday:

Non-Farm Payrolls  Feb     Forecast:  218K   Previous: 245K
Unemployment Rate  Feb     Forecast:  4.3%   Previous: 4.3% 
Average Hourly     Feb     Forecast:  0.3%   Previous: 0.5%   
Average Work Week  Feb     Forecast:  34.5   Previous: 34.5 




*****************************************************
Last weeks change for this weeks picks:
*****************************************************
Index    Last  Week
Dow    9306.58 -33.37
Nasdaq 2288.03   4.43
$OEX    618.42  -1.86
$SPX   1238.33  -0.89
$RUT    392.26  -0.04
$TRAN  3207.43  72.92
$VIX     29.52   1.29

Stock   Price  Week

AMZN    128.13  26.25 Internets are back!
AOL      88.94  15.06 Be cautious of post split fatigue
CMGI    122.63  13.63 Internets are back!
BCST     83.81  13.12 Price Target $100
RNWK     70.13   7.00 New play, strong recent trend
LGTO     49.25   6.75 In strong recovery stage
SCH      74.56   5.52 Finished strong on Friday
SLR      44.69   4.75 Dropped. Split over.
C        58.75   4.56 Two new recent upgrades
MER      76.75   4.37 Sector rotation winner
DLJ      57.00   3.94 Sector rotation winner
COF     127.63   3.75 Price Target $157
PVN     102.13   3.67 Strong bounce off 10 dma
LOW      59.31   2.26 New 52 week high on Friday
PSIX     35.81   2.07 Waiting for upward confirmation
CMA      66.25   1.68 Sector rotation winner
DH       62.56   1.38 Dropped. not moving
WMT      86.13   1.38 Setting new highs
AMGN    124.88   0.74 Dropped. Split over.
VOD     182.19   0.37 Split Candidate
MCD      85.00  -0.57 Splits 2:1 March 5th
MEDI     55.00  -0.76 Resting on 10 dma, should bounce
LVLT     56.00  -1.00 Range Trading
EMC     102.38  -1.56 New products meeting Monday
UTX     123.88  -1.57 Pattern predicts an up week
AXNT     34.31  -1.69 Dropped. not performing
WCOM     82.50  -1.69 Buying opportunity?
OSSI     43.88  -1.76 Splits 2:1 Tuesday 3/02
MWD      90.50  -2.51 Split Candidate

Puts

BMCS     40.88  -3.68 Breaking down
ADBE     40.25  -2.06 Breaking below 100dma
ELNK     60.19  -1.87 Rolling over
CB       60.00  -1.75 Insurance excitement is over
ERTS     39.88  -0.26 Holding steady
BDX      33.50   0.25 Declining relative strength
WHR      43.50   0.53 Still unable to break $44
WLA      68.81   4.93 Below declining average 


****************************************************
REAL-TIME Stock an Option Quotes
****************************************************
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real time quote service for stocks/options/futures/indexes etc. 

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

Their quotes are delivered in a fully customizable spreadsheet
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If you are considering the volatile world of option trading 
you will find realtime option quotes from Interquote a 
valuable resource.

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

http://www.interquote.com/


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

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at any time but your subscription will not start until your
free trial is over.

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

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

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card server.

You may also call us at 303-797-0200 and give us the 
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You may also fax the information to: 303-797-1333

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

The Option Investor Newsletter              2-28-99
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

MER  - Merrill Lynch
DLJ  - Donaldson Lufkin & Jenrette
C    - Citigroup
LGTO - Legato
BCST - Broadcast.Com
RNWK - Real Networks
AMZN - Amazon.Com
CMGI - CMG Info Svcs

Puts

CB   - Chubb Corp
BBY  - Best Buy

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

AMGN $124.88 (+0.75)  Even though AMGN is up for the week,
we are dropping it as a play.  The company split this past
Friday the 26th after the bell.  7 out of 10 splitters 
usually suffer from "post-split depression."  We want to see
how AMGN reacts this coming week.  AMGN had been a 
consistent mover and we expect it to handle twice as many 
shares with no problem.  We will definitely keep our eyes on 
it and add it again if its technicals satisfy our standards.

DH $62.56 (+1.37) A little slow and not 
steady enough.  Although DH has been up slightly in the 
last 2 weeks, and DH is scheduled to report earnings March 
2, its sideways trading isn't moving the price fast enough 
for our liking.  Volume has been weak but may pick up 
Monday and Tuesday, spiking the price one more time in 
anticipation of earnings.  If you have an open position, 
this may be the time to close it since companies reporting 
typically suffer after the announcement.  We still like DH, 
but with little volume and no action, our capital is better 
invested elsewhere until DH breaks out of its trading 
range.  

SLR $44.69 (+3.19) SLR had a very positive week, but we 
are going to drop them for the time being.  We like SLR, 
and could very well pick them back up for a earnings run.
SLR just split and seems to be susceptible to post-split
depression.  Support is at the 50-dma at around $42.50. 
We'll keep an eye on this one.  

AXNT $34.31 (-1.69) We are dropping AXNT this week for
breaking its 30-dma.  Support is around $31-32.  If we see
a bounce off this level we might think about picking AXNT
back up.  AXNT just couldn't hold up with the NASDAQ sell
off.



PUTS: 

None


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

EMC  - EMC Corp - Announced !!	    
WMT  - Wal-Mart
NOKA - Nokia
LXK  - Lexmark Intl Group Inc
VOD  - Vodaphone
MWD  - Dean Witter

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

Symbol - Stock      Splits/Date  


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 dropped
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 dropped
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.

***************************************************
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 ! 
*****************************************************
OSSI - Outback Steakhouse $43.88 (-1.75)(+3.25)

Splits on 3/2 

See details in sector list

Chart = http://quote.yahoo.com/q?s=ossi&d=3m
*****************************************************
MCD - McDonalds Corp  $85.00 (-0.56)(+4.25)(+1.00)(+1.50)

Splits on 3/5

See details in sector list

Chart = http://quote.yahoo.com/q?s=mcd&d=3m
*****************************************************
DELL - Dell Computer

Splits on 3/5

Not a current play but could offer some possibilities

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

*****************************************************
PVN - Providian Financial $102.13 (+3.63)(+6.19)(+2.87)

PVN has been a great performer for us. Although it took a 
big hit with the market downdraft on Wednesday and Thursday, 
it bounced right back with a $3.63 gain on Friday. Support 
was at its 30 day moving average, but it never got that low 
before it turned up again. Looking strong. Be sure to protect 
your gains with trailing stops.

Chart = http://quote.yahoo.com/q?s=pvn&d=3m
*****************************************************
LGTO - Legato Systems $49.25 (+6.75)

In the news, LGTO announced support for Dell's PowerVault
Storage Area Network for the NT market.  This adds to the list
of partnering hardware manufacturers who license and integrate
LGTO's software.  The real news on LGTO happened back in late
January when it announced record earnings and then promptly
started selling off.  Then LGTO got hit by a rumor, around the
first of February, that there were problems in its sale force. 
This only exacerbated the selling.  LGTO denied the sales force
rumors.  

Chart = http://quote.yahoo.com/q?s=LGTO&d=3m
*****************************************************
AMZN - Amazon.com $128.13 (+26.25)

News on the week:  Rumor that AOL might be interested in 
Amazon is growing and would be a big Internet story.

Amazon further expanded its e-tail abilities 
when it announced that it owns a 40% stake in Drugstore.com.  
The new website launched this past Thursday will provide users 
with 24 hour-a-day healthcare product services.  The move shows 
that Amazon is continually working to provide its users with 
more than just a place to buy books.  

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

***************************************
Brokerage/Banking - Sector
***************************************
C - Citigroup $58.75 (+4.56)(+2.31)(P3W +0.25)

What do you get when you cross the largest credit card 
issuer and one of the largest insurance companies on the 
planet?  Citigroup, the largest financial services company 
in the world.  They offer investment services through 
Salomon Smith-Barney and Primerica, real estate services 
through Citicorp real estate, insurance through Travelers, 
not to mention consumer banking and credit cards through 
Citibank.  Sandy Weill and John Reed are co-CEO and co-
chairman of this $57 billion (sales) company

Welcome back from the dead.  Analysts were busy last week 
figuring out that financial services companies were doing 
better than they thought.  Citigroup in particular was 
cited as having much stronger than expected sales growth in 
Latin America.  Donaldson, Lufkin & Jenrette raised C to a 
buy from a market perform and Warburg Dillon Read raised 
earnings estimates from $0.75 to $0.81.  Sentiment is high 
as money rotates out of technicals into financials.  
Technically, MACD, momentum and stochastics are all 
positive, while volume is rising.  C just crossed over both 
its 50 and 200 DMA -- a very good signal to buy.  Confirm 
upward movement, then execute your plan.

In the news last week, Salomon Smith Barney announced a JV 
with Nikko Securities in Japan citing what they believe to 
be greater service demand.  Also, Travelers launched a 
large international advertising campaign to promote its 
global risk management services.

BUY CALL MAR-55*C-CK OI=19294 at $4.75 SL=3.00
BUY CALL MAR 60 C-CL OI=20155 at $1.81 SL=0.75
BUY CALL APR-55 C-DK OI=  895 at $6.13 SL=4.25
BUY CALL APR-60 C-DL OI= 3436 at $3.25 SL=1.50
BUY CALL JUN-60 C-FL OI= 7124 at $5.00 SL=3.25

Picked on February 28 at $58.75       PE =24
Change since picked       +0.00       52 week high=73.50
Analysts Ratings     10-8-6-1-0       52 week low =28.50
Last Earnings 01/99 est .54  actual  .60 surprise +11.0%
Next Earnings 04-21 est .79  versus  .90
Average daily volume =   8.9 mln
Chart = http://quote.yahoo.com/q?s=c&d=3m
*******************************************
COF - Capital One $127.63 (+3.75)(+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.

COF had fun with our nerves last week.  Each day COF would 
finish trading either up more than $3 or down more than $3.  
But for sticking with the swinging stock, COF finally decided 
to reward us with a +$3.75 gain on Friday.  The final upward 
push may have been in part to Jeffrey Evanson's comments.  On 
Friday the Piper Jaffray Inc. analyst initiated coverage on 
COF with a strong buy rating and a $157 twelve month price 
target.  He credited COF's incredible international growth, 
widening margins, cellular business, and improving 
risk-adjusted returns for his opinions.  

No new news. 

BUY CALL MAR-125 COF-CE OI=480 at $ 8.38 SL= 6.50
BUY CALL MAR-130*COF-CF OI=995 at $ 5.88 SL= 4.25
BUY CALL JUN-125 COF-FE OI= 78 at $16.88 SL=13.25
BUY CALL JUN-130 COF-FF OI=124 at $14.88 SL=11.75

Picked on February 13th at $121.81      PE= 31
Change since picked        +$ 5.82      52 week low =$ 51.75
Analysts Ratings         8-5-3-0-0      52 week high=$140.00
Last earnings 01/99 est 0.86   actual 1.04 surprise=+21%
Next earnings 04-16 est 1.21   versus 0.96
Average Daily Volume = 406.5 K
Chart = http://quote.yahoo.com/q?s=COF&d=3m
*******************************************
PVN - Providian Financial $102.13 (+3.63)(+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. 

PVN has been a great performer for us. Although it took a 
big hit with the market downdraft on Wednesday and Thursday, 
it bounced right back with a $3.63 gain on Friday. Support 
was at its 30 day moving average, but it never got that low 
before it turned up again. Looking strong. Be sure to protect 
your gains with trailing stops.

BUY CALL MAR- 95 PVN-CS OI=406 at $ 9.63 SL= 7.25
BUY CALL MAR-100*PVN-CT OI=153 at $ 6.38 SL= 4.50
BUY CALL MAR-105 PVN-CA OI=254 at $ 4.00 SL= 2.50
BUY CALL JUN-105 PVN-FA OI= 60 at $10.50 SL= 8.00

Picked on Feb 21 at  $98.50     PE=48
Change since picked    3.63     52 week low= $ 28.38
Analysts Ratings  7-5-1-0-0     52 week high=$108.81
Last earnings on 12/98 est=.62  actual=.66 surprise=6%
Next earnings on  4-22 est=.70  versus=.39
Average daily volume = 823.1 K
Chart = http://quote.yahoo.com/q?s=pvn&d=3m
*******************************************
CMA - Comerica Inc. $66.25 (+1.69)(+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 had a positive week in spite of the interest rate concerns.
CMA bounced twice off a key support level at $64.38.  This 
price is the site of CMA's 10 and 50-dma.  Another bullish 
sign is the fact that CMA's 10-dma is moving up through the
50-dma.  MACD is positive and improving, which if the market
cooperates, should help CMA move higher this week.  There
hasn't been any recent news on CMA.

BUY CALL MAR-65 CMA-CM OI=163 at $2.88 SL=1.50
BUY CALL MAR-70 CMA-CN OI= 55 at $0.69 SL=0.00
BUY CALL APR-65*CMA-DM OI=175 at $3.88 SL=2.25
BUY CALL APR-70 CMA-DN OI=143 at $1.44 SL=0.75
BUY CALL JUL-70 CMA-GN OI=213 at $3.88 SL=2.25

Picked on Feb.19th at  $64.56   PE = 15
Change since picked     +1.69   52 week low =$46.50
Analysts Ratings    5-6-4-0-0   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 $90.75 (-2.25)(+4.50)(P2W+1.87)

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.  The company provides 
financial and securities services on a global scale and credit 
and transaction services nationally. During 1997 the company 
acquired Discover Brokerage Direct In (formerly Lombard 
Brokerage).

MWD had a negative week based on one big down day.  On Tuesday,
MWD reached a new 52-week high, but on Wednesday it tanked
by $6.13.  This drop stopped at MWD's 21-dma, which has been
nice support since mid-December.  On Thursday and Friday, MWD
battled to stay positive.  Financials took a beating on news
that interests could be adjusted up by the Fed.  This doesn't
seem likely for some time though.   

Remember, MWD announced a week ago that their Annual Shareholders 
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.  Current number of shares 
outstanding equal 605 mln while they are authorized for 1.75
bln shares (plenty for another stock split).  Earnings for MWD 
should be announced around this same time.    

BUY CALL MAR- 90*MWD-CR OI= 899 at $4.75 SL=3.00 ITM $.75 
BUY CALL MAR- 95 MWD-CS OI=1950 at $2.69 SL=1.38
BUY CALL APR- 95 MWD-DS OI=1218 at $5.00 SL=3.25
BUY CALL APR-100 MWD-DT OI= 753 at $3.63 SL=1.75
BUY CALL JUL-100 MWD-GT OI=1084 at $7.75 SL=6.00

Picked on Feb.6th at      $89.00   PE = 17
Change since picked        +1.75   52 week low =$36.50 
Analysts Ratings       5-4-4-0-0   52 week high=$97.88
Last earnings on 01/99 est= 0.97   actual= 1.48
Next earnings on 04-07 est= 1.21   versus= 1.10
Average daily volume = 2.07 mln
Chart = http://quote.yahoo.com/q?s=MWD&d=3m
*******************************************
SCH - Charles Schwab  $74.56 (+5.50)(+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 1. (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 a week ago 
pushed above its 10 dma.

On Wednesday, Schwab managed to climb above its January high 
of $72.13, but couldn't hold onto the gains and closed the week 
at $74.56. Market volatility may continue to affect SCH somewhat, 
but it is in a sector that is currently strong and it should be 
able to move up from here. In the news, SCH launched its 
Signature Services--granting more content and services to its 
best customers. Schwab has been up strongly 2 weeks in a row, 
so be sure to use stop loss protection.

BUY CALL MAR-70 SCH-CN OI=2204 at $ 6.75 SL= 5.00 ITM 4.56
BUY CALL MAR-75 SCH-CO*OI=1502 at $ 3.63 SL= 2.00 
BUY CALL JUN-70 SCH-FN OI= 496 at $13.50 SL=11.00
BUY CALL JUN-75 SCH-FO OI= 612 at $11.00 SL= 8.75

Picked on Feb 21 at  $69.06     PE = 81
Change since picked   +5.50     52 week low =$18.50
Analysts Ratings  2-0-6-0-0     52 week high=$74.94
Last earnings on 12/98 est=.23  actual=.26 surprise=13%
Next earnings on  4-15 est=.23  versus=.17
Average daily volume = 1.83 mln
Chart = http://quote.yahoo.com/q?s=sch&d=3m
*******************************************
MER - Merrill Lynch $76.75 (+4.37)(+3.25)

Merrill Lynch is a leading global financial management and 
advisory company with a presence in 43 countries across six 
continents. MER provides investment, financing, insurance
and related services to both individuals and institutions. 
Its client assets total more than $1 trillion. As an
investment bank, it is a top underwriter of debt and  equity 
securities. In addition to brokerage accounts, it  offers 
one of the largest mutual fund groups available. 

In the first half of 1998, MER was on a skyward climb. By  
late July, the stock reached $109.13. After that, its chart  
shows a deep V with a bottom on Oct. 8 of only $35.75. MER  
rebounded to $80.00 by the end of November, but then traded  
between the upper $60s and mid $70s until last week. On 
Feb. 24, MER finally hit $79.94, just shy of its post-Oct.8 
high,  as investment interest shifted into the brokerage 
sector.  The fact that MER appears willing to join the online 
world of trading should help the stock. 	

On February 19, MER signed an agreement to purchase the 
assets of D.E. Shaw Financial Technology, L.P. (DESoFT), a 
developer of Internet technology for financial institutions. 
DESoFT has been a pioneer in developing real-time, online 
trading and sophisticated database applications. This is a 
change for full service broker Merrill Lynch, and shows MER's 
willingness to provide the online service that so many 
clients are demanding. Market permitting, with the rotation 
into brokerage stocks, and MER's move toward online trading, 
the stock should push right past its resistance at $80.00.
	
BUY CALL MAR-75*MER-CO OI=4228 at $4.75 SL=3.00
BUY CALL MAR-80 MER-CP OI=6302 at $2.56 SL=1.25
BUY CALL APR-80 MER-DP OI=4707 at $4.50 SL=2.75
BUY CALL APR-85 MER-DQ OI=3277 at $2.88 SL=1.50
BUY CALL JUL-85 MER-GQ OI= 270 at $6.75 SL=5.00

Picked on Feb 28 at  $76.75      PE= 25
Change since picked    0.00      52 week low =$ 35.75
Analysts Ratings  4-2-6-0-0      52 week high=$109.13 
Last earnings on 12/98 est.= .63 actual= .86 surprise=37%
Next earnings on  4-13 est.=1.00 versus=1.30
Average daily volume = 3.15 mln
Chart = http://quote.yahoo.com/q?s=mer&d=3m

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

SEE DISCLAIMER IN SECTION ONE 

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

The Option Investor Newsletter          2-28-99
Sunday             Part 3 of 6

*******************************************
DLJ - Donaldson Lufkin & Jenrette $57.00 (+3.94)(+3.18)

Donaldson, Lufkin & Jenrette is a leading integrated investment 
and merchant bank serving institutional, corporate, government 
and individual clients. DLJ's businesses include securities 
underwriting; sales and trading; investment and merchant banking; 
financial advisory services; investment research; venture capital; 
correspondent brokerage services; online, interactive brokerage 
services; and asset management. Founded in 1959 and head-
quartered in New York City, DLJ employs approximately 8,500 
people worldwide and maintains offices in 14 cities in the 
United States and 11 cities in Europe, Latin America and Asia. 

DLJ's stock price history is similar to that of Merrill Lynch, 
another new pick in this newsletter. DLJ hit $63.75 on July 13, 
1998, only to plunge to $20.38 by the October 8 low. It 
climbed fairly steadily back to $59.50 by Feb. 3, 1999, but 
consolidated for the next few trading days. It has begun moving 
up again with investor rotation into this sector. On Wednesday, 
Feb. 24, DLJ traded as high as $57.50 before the market brought 
it down slightly. Friday the stock gained $3.00 and looks 
strong for the week ahead, market permitting.

On Thursday, DLJ said it will buy Citibank's correspondent 
securities business, Newbridge Securities, which processes 
trades and provides services to several smaller brokerages. 
Newbridge will be merged with DLJ's Pershing unit, currently 
providing services to 550 small brokerages.

BUY CALL MAR-55*DLJ-CK OI=854 at $5.00 SL=3.25
BUY CALL MAR-60 DLJ-CL OI=558 at $2.63 SL=1.75
BUY CALL APR-60 DLJ-DL OI=198 at $4.87 SL=3.00
BUY CALL JUL-60 DLJ-GL OI=157 at $8.88 SL=6.75

Picked on Feb. 28th at $57.00     PE = 20	
Change since picked      0.00     52 week low =$20.38
Analysts Ratings    0-1-5-0-0     52 week high=$63.75
Last earnings on 12/98 est.= .45  actual= .47 surprise=4%
Next earnings on  4-13 est.= .66  versus=1.00
Average daily volume = 444.0 k
Chart = http://quote.yahoo.com/q?s=dlj&d=3m
*******************************************
Internet - Sector
*******************************************
AOL - America Online $88.94 (+8.75 S/A)(P12W +49.72 S/A)
                                    S/A = split adjusted

America Online is the largest online Internet access 
service in the world.  Membership now exceeds 15 million 
users.  Its Chairman, Steve Case, said more new users 
signed up with AOL on Christmas Day than any other day in 
the company's history.  With estimates of 16 million users 
by the year 2000 and growing advertising revenues AOL has 
been called the blue chip of the Internets. (If only they 
could get their mail problem resolved!) 

AOL split 2:1 last week beginning with Tuesday's trading 
and tacked on $8.75 for the week -- no post split blues 
here.  It didn't hurt that old rumors resurfaced suggesting 
AT&T may buy AOL.  In our estimate, it's not likely given 
AOL's $83.5 billion market cap, but makes for great 
speculation.  AOL is still the fund manager's darling of 
the Internet industry since it has real earnings.  Their 
subscriber base grows by almost 18,000 users daily.  Sales 
have almost doubled over the last 2 years and are expected 
to do so again this year.  With so much profit built in, 
don't be surprised by a profit taking day or two.  Keep 
stops set tight and confirm market direction before 
playing.

In the news, Bertelsmann AG reported selling 880,000 shares 
last Monday.  They still own 15.9 million, thus no need to 
panic.  Also, insiders, including Steven Case, sold a total 
of 500,000 shares.  Again, there is no need to panic; it's 
considered routine.  With AOL headlining as a witness in 
MSFT's DOJ trial, one might expect the bad news to rub off.  
It hasn't.  Don't let it distract your judgement.

BUY CALL MAR-85 AOE-CQ OI=16583 at $ 7.50 SL= 5.75
BUY CALL MAR-90*AOE-CR OI=11377 at $ 4.75 SL= 3.00
BUY CALL APR-90 AOE-DR OI=10395 at $ 9.00 SL= 6.75
BUY CALL APR-95 AOE-DS OI= 2575 at $ 6.75 SL= 5.00
BUY CALL JUL-95 AOE-GS OI= 1314 at $13.75 SL=11.00

**Momentum Only, no fundamentals**

Average daily volume: 26.6 mln.
Chart = http://quote.yahoo.com/q?s=aol&d=3m
*******************************************
BCST - Broadcast.com $83.81 (+13.12)(+1.81)(P3W +0.06 split 
adjusted)

Formally known as Audionet, Broadcast.com carries 
programming to the Net that you might otherwise see on your 
TV or hear on your radio.  They also Webcast live concerts 
sporting events, business conferences, CD's, news and 
audiobooks.  Their sources of content come from 385 radio 
stations, 40 cable and TV networks, and over 420 
professional and college teams.  FYI, it went public last 
July at $9 (split adjusted) and ran the now famous Net-
based Victoria Secrets fashion show.

Friday, the Chicago Board of Options Exchange announced the 
trading of the new Internet Commerce Index (^ECM).  BCST is 
1 of 15 Internet companies to make up the index.  If you 
manage or open a new fund based on this index, you need to 
buy BCST.  BCST had an incredible run up to its last 2:1 
split date on February 12 and had been consolidating at its 
30 DMA ($70) until it came back to life last week on strong 
volume resulting from analyst upgrades and $100 price 
target.  Technically, they have a nice chart with a 
positive MACD and stochastic.  Next earnings are scheduled 
April 12.  It doesn't hurt that because they have so many 
exclusive sources of content, there is a significant 
barrier to entry, which they have exploited well.  Near 
term resistance is $87.88 set intra-day last week.  These 
are expensive; thus we are not recommending any July calls 
at this time.  Confirm market, sector and stock direction 
before playing.  It's an Internet; do a gut-check.

In other news, BCST unveiled a major new programming 
initiative with Capitol Records, called CapitolBroadcasts, 
a co-branded music channel at http://www.capitolbroadcasts.com.
The site showcases audio and video programming from Capitol
Records and its family of labels (Online Investor).

BUY CALL MAR-80 QBC-CP OI=448 at $11.13 SL= 8.75
BUY CALL MAR-85*QBC-CQ OI=921 at $ 8.50 SL= 6.50
BUY CALL MAR-90 QBC-CR OI= 61 at $ 6.50 SL= 4.75
BUY CALL APR-85 QBC-DQ OI=488 at $14.13 SL=11.25
BUY CALL APR-90 QBC-DR OI= 30 at $12.13 SL= 9.50

**no fundamentals, momentum only

Average daily volume=1.8 mln.

Chart=http://quote.yahoo.com/q?s=bcst&d=3m
*******************************************
PSIX - PSINet Inc. $35.81 (+2.06)(-.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 international operations are in Canada, United Kingdom, 
Japan, North America, Asia and Europe. 

PSIX has a decent week considering the volatility in the
market.  PSIX has some room to grow until it hits resistance
at the $39 mark.  PSIX is above both its 10 and 20-dma.  
Make sure PSIX holds this level before purchasing new calls.

We like the fact that analysts have been raising estimates 
and recommendations.  As also mentioned before, PSIX is
calling some its outstanding preferred stock which will also
save the company money.  

BUY CALL MAR-35*SQP-CG OI=1260 at $3.63 SL=1.75
BUY CALL MAR-40 SQP-CH OI=1397 at $1.63 SL=0.75
BUY CALL APR-35 SQP-DG OI= 324 at $5.25 SL=3.50
BUY CALL APR-40 SQP-DH OI= 690 at $3.38 SL=1.25
BUY CALL JUL-40 SQP-GH OI= 480 at $6.50 SL=4.75

Picked on Feb.4th at      $37.63   PE = n/a
Change since picked        -1.82   52 week low =$ 7.31 
Analysts Ratings       5-2-3-0-0   52 week high=$40.19
Last earnings on 02/23 est=-1.07   actual=-1.02
Next earnings on 05-23 est=-1.16   versus=-0.51
Average daily volume = 1.21 mln
Chart = http://quote.yahoo.com/q?s=PSIX&d=3m
*******************************************
RNWK - RealNetworks $70.13 (+7.00)

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

RNWK had a nice breakout on Monday of last week and was able
to hold them throughout the week.  There is resistance in the
$72 range.  A break through this level on strong volume would
be a nice time to play.  RNWK has only one strong buy
recommendation, this is good from the view that there is a
lot of room for upgrades.  RealNetworks looks to be profitable
by Fiscal Year 2000.  

BUY CALL MAR-70*QRN-CN OI=677 at $ 6.25 SL= 4.25
BUY CALL MAR-75 QRN-CO OI=871 at $ 3.88 SL= 2.25
BUY CALL APR-70 QRN-DN OI=  9 at $11.00 SL= 8.75
BUY CALL APR-75 QRN-DO OI= 23 at $ 8.63 SL= 6.50
BUY CALL MAY-75 QRN-EO OI= 64 at $12.63 SL=10.00

Picked on Feb.27th at   $70.13   PE = n/a
Change since picked      +0.00   52 week low =$14.50
Analysts Ratings     1-6-3-0-0   52 week high=$74.50
Last Earnings   01/99 est -.04   actual -.02
Next Earnings   04-27 est -.02   versus -.07
Average daily volume = 906.3 k
Chart = http://quote.yahoo.com/q?s=RNWK&d=3m
*******************************************
AMZN - Amazon.com $128.13 (+26.25)

One of the giants among the volatile Internet stocks burning 
up portfolios of shorts and longs alike.  Now claiming 3 
million titles, Amazon.com has dubbed themselves as the world's 
biggest bookstore.  They also sell CDs and videos.  With one of 
the web's most popular websites, they offer customers up to 40%
discounts. 

AMZN is quite a ways from its highs back in January.  But, if you 
take a look at Amazon's graph, you will see an almost perfect 
two week uptrend.  That is one of the most consistent moves for 
Amazon that we have ever seen!  We had been playing it as a put 
until we had to drop it on 2/21 because of the impact CIBC 
Oppenheimer's Henry Blodget had when he announced a bullish 
outlook for Amazon and the internets.  Those initial comments 
set Amazon on another rampage.  We feel that AMZN has 
the support of most analysts as of late and the sector seems to 
be making a turn around.  BancBoston Robertson Stephens was the 
latest to upgrade Amazon with a strong buy rating.  At this 
point, look for a dip and following bounce higher or upward
confirmation.  

News on the week:  Amazon further expanded its e-tail abilities 
when it announced that it owns a 40% stake in Drugstore.com.  
The new website launched this past Thursday will provide users 
with 24 hour-a-day healthcare product services.  The move shows 
that Amazon is continually working to provide its users with 
more than just a place to buy books.  

BUY CALL MAR-120 YZZ-CD OI=4814 at $16.38 SL=12.75
BUY CALL MAR-130*YZZ-CF OI=5631 at $10.50 SL= 8.75
BUY CALL APR-130 YZZ-DF OI=3221 at $17.63 SL=13.75
BUY CALL APR-140 YQN-DH OI=1347 at $14.38 SL=11.25

Picked on February 28th at $128.13      PE= N/A
Change since picked        +$ 0.00      52 week low =$ 10.87
Analysts Ratings         5-8-6-0-0      52 week high=$199.12
Last earnings 01/99 est  -0.08  actual  -0.14 surprise=-75% 
Next earnings 04-27 est  -0.28  versus  -0.07
Average Daily Volume = 12.6 mln
Chart = http://quote.yahoo.com/q?s=amzn&d=3m
*******************************************
CMGI - CMGI, Inc. $122.63 (+13.63)

CMGI invests in, develops, and integrates advanced Internet,
interactive, and database management technologies. The company 
delivers creative products and services that will both generate 
and profit from direct marketing opportunities on the Internet.
A recognized leader in the Internet arena, CMGI combines 
operating companies with strategic venture investments to 
create a broad and diverse set of businesses delivering
Internet solutions.  Microsoft, Intel and Sumitomo hold 
minority positions in CMGI.

Back in early February, CMGI seemed to free fall off a cliff.  
CMGI owns a 20% stake in Lycos, which at that same time released 
its highly unpopular plans to merge with USA Networks.  Lycos 
absolutely crashed and burned over sixty dollars.  CMGI, Lycos's 
largest shareholder, was drug down in sympathy.  Since that time, 
CMGI has recovered nicely.  We expect the up trend to continue 
especially if the markets can provide a rally to further propel 
CMGI back to its highs reached in January at the $140-$150 level.

News:  On Friday, Lycos announced that its shareholders 
will vote on the merger in about 90 days.  The transaction, if 
approved, should close sometime in June.

BUY CALL MAR-120 QGW-CD OI=830 at $13.00 SL=10.50
BUY CALL MAR-125*QGW-CE OI=503 at $10.25 SL= 7.50
BUY CALL MAR-130 QGW-CF OI=744 at $ 8.50 SL= 6.50 
BUY CALL APR-120 QGW-DD OI= 70 at $22.13 SL=17.25
BUY CALL JUN-125 QGW-FE OI=102 at $30.88 SL=24.00

Picked on February 28th at $122.63      PE= 0
Change since picked        +$ 0.00      52 week low  =$ 10.50
Analysts Ratings         2-4-2-0-0      52 week high =$155.00
Last earnings 12/98 est  0.12  actual  1.54 surprise=+366% 
Next earnings 03-11 est -0.23  versus -0.15
Average Daily Volume = 2.94 mln
Chart = http://quote.yahoo.com/q?s=cmgi&d=3m
*******************************************
Telecom/Networking - Sector
*******************************************
WCOM - MCIWorldCom $82.50 (-1.69)(+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.

WCOM got a hair cut Friday.  It was looking like a small 
loss until the last 2 hours of trading, where it widened to 
lose $3.38 for the day on low volume.  If a stock drops, we 
want it to drop on low volume.  This indicates a lack of 
sellers with conviction --not panic.  WCOM is still the 
dominant player in the new telecom era with over 20% annual 
revenue growth.  As more people join the Internet, the 
greater the traffic carried, and thus more revenues for WCOM.  
They continue, with the help of PUC's and the Supreme Court, 
to hammer the Baby Bells into opening their markets to
competitive local traffic.  Technically, WCOM is positive on
MACD, momentum and stochastics.  Near-term support is $82.
Resistance is $86.25, set intra-day last week.  Looks like a
buying opportunity to us.  Keep stops set and confirm upward
movement before playing.

This week, the Supreme Court essentially ruled that the 
call from your computer to your ISP over the local phone 
companies circuits is a long distance call, thus the local 
companies collect a termination fee.  Who will you be angry 
with?  Your local phone company who will collect it from 
your ISP, who will collect it from you in higher access 
fees.  What to do?  Ditch the local phone company in favor 
of a competitor who won't collect a fee from itself, like 
WCOM (or any other competitor like LVLT, AT&T, QWST, etc.) 
for instance!  Another stake in the heart of Baby Bells.

BUY CALL MAR-80*LDQ-CP OI=14283 at $ 5.00 SL=3.25
BUY CALL MAR-85 LDQ-CQ OI=15362 at $ 2.38 SL=1.25
BUY CALL APR-80 LDQ-DP OI=  287 at $ 6.75 SL=5.00
BUY CALL APR-85 LDQ-DQ OI= 1400 at $ 4.13 SL=2.50
BUY CALL JUN-85 LDQ-FQ OI= 4424 at $ 7.13 SL=5.25

Picked on November 29th at $62.44       PE = 40 (1999 est.)
Change since picked       +$20.06       52 week high=86.25
Analysts Ratings       22-8-3-0-0       52 week low =37.00
Last Earnings 02/98 est .22  actual .23  surprise +4.5%
Next Earnings 05/05 est .34  versus .10
Average daily volume = 11.4 mln.
Chart = http://quote.yahoo.com/q?s=wcom&d=3m
*******************************************
LVLT - Level 3 Comm. $56.00 (-1.00)(+1.00)(P2W+3.62)
 
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. 

As we mentioned in Thursday's update, LVLT has been in a 
trading range from $55-$60.  The limits in this range have
been hit numerous times, sometimes both in one day.  We are
keeping LVLT on the list because it has not broke down and
when it does clear $60, we should see a nice short squeeze.
On Friday, LVLT trading a little below $55, but came right
back to its range by the close.  

No recent news, but LVLT is constantly announcing new cities
that are being brought into their network.  This last week,
Atlanta was brought on board.

BUY CALL MAR-55*QHN-CK OI= 762 at $3.88 SL=2.25 ITM$1.00 
BUY CALL MAR-60 QHN-CL OI=4095 at $1.63 SL=0.75 
BUY CALL JUN-60 QHN-FL OI= 579 at $6.25 SL=4.50
BUY CALL JUN-65 QHN-FM OI= 709 at $4.25 SL=2.50
BUY CALL SEP-65 QHN-IM OI= 699 at $7.25 SL=5.25

Picked on Jan.30th at    $56.38    PE = N/A
Change since picked       -0.38    52 week low =$22.37 
Analysts Ratings      1-2-0-0-0    52 week high=$60.63
Last earnings on 02/99 est=-.28    actual=-.11
Next earnings on 05-18 est=-.45    versus=-.02
Average daily volume = 795.5 k
Chart = http://quote.yahoo.com/q?s=LVLT&d=3m
*******************************************
VOD - Vodafone Group PLC $182.19 (+.38)(+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.  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. 

Not a lot of action in VOD again this week, though VOD did
trade as high as $189.75 before coming down with the market.
Support is pretty strong at the 50-dma at $178.  When the
market decides to head higher, we feel VOD will be a very
strong stock to watch.  No recent news to report.  

An alternative to playing VOD would be to play ATI due to
their impending merger.  While ATI will only move about 1/2 
what VOD does it is easier to trade because of larger open
interest and higher option volumes. 

BUY CALL MAR-180*VOD-CP OI= 127 at $ 8.13 SL= 6.25
BUY CALL MAR-185 VOD-CQ OI=  42 at $ 5.38 SL= 3.50
BUY CALL APR-180 VOD-DP OI=  36 at $11.88 SL= 9.25
BUY CALL APR-185 VOD-DQ OI=  26 at $ 9.13 SL= 6.75
BUY CALL JUL-190 VOD-GR OI= 390 at $14.75 SL=11.50

Picked on Feb.12th at $180.13   PE = 65
Change since picked     +2.06   52 week low =$ 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 = 526.9k
Chart = http://quote.yahoo.com/q?s=VOD&d=3m
*******************************************
Software - Sector
*******************************************
LGTO - Legato Systems $49.25 (+6.75)

LGTO develops and supports network storage management software
products that back up and protect data across corporate
computer networks.  Its NetWorker software for UNIX, Microsoft
Windows NT, and Novell's NetWare operating systems
automatically transfers files onto larger storage devices.
LGTO's Global Enterprise Management of Storage (G.E.M.S.),
which works with NetWorker, controls storage management across
a company's multisite network.  Products account for about 60%
of the company's sales.  The rest comes from technical support
services and a growing list of more than 20 partnering hardware
manufacturers who license and integrate NetWorker into their
systems and pay LGTO regular royalties.

As indicated below, LGTO was in a steady downtrend since late
January, but it look like it has found a bottom.  It dipped
below its 200 day moving average, and then started its current
uptrend.  In fact it has been up for the last 7 days.  LGTO
closed right at its 21 day moving average on Friday.  The next
levels of resistance for LGTO are its 30 and 50 day moving
averages which are at $52.83 and $55.53, respectively.  As you
know, stocks trade in cycles, and they do go up without
interruption.  LGTO may be one to buy on a pullback.  

In the news, LGTO announced support for Dell's PowerVault
Storage Area Network for the NT market.  This adds to the list
of partnering hardware manufacturers who license and integrate
LGTO's software.  The real news on LGTO happened back in late
January when it announced record earnings and then promptly
started selling off.  Then LGTO got hit by a rumor, around the
first of February, that there were problems in its sale force. 
This only exacerbated the selling.  LGTO denied the sales force
rumors.  

BUY CALL MAR-45 EQN-CI OI=485 at $6.00 SL=4.25
BUY CALL MAR-50*EQN-CJ OI=442 at $3.13 SL=1.50
BUY CALL MAR-55 EQN-CK OI=414 at $1.25 SL=0.00
BUY CALL APR-45 EQN-DI OI=130 at $7.75 SL=5.75
BUY CALL JUN-50 EQN-FJ OI=134 at $8.00 SL=6.25

Picked on Feb 28th at $49.25   PE=65
Change since picked    +0.00   52 week low =$22.00
Analysts Ratings   7-5-1-0-0   52 week high=$67.75
Last earnings  12/98 est=.22   actual=.24
Next earnings  04-21 est=.23   versus=.13
Average Daily Volume = 806 K
Chart = http://quote.yahoo.com/q?s=LGTO&d=3m
*******************************************

PLAYS CONTINUED IN SECTION FOUR.

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


The Option Investor Newsletter             2-28-99
Sunday                4  of  6

************************************************************
EMC - EMC Corporation $102.38 (-1.56)(+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, EMC announced a 2 for 1 stock split.
Implementation of the split is subject to stockholder approval
and an increase in the number of authorized shares at the
annual shareholder meeting on May 5.  If approved at the
shareholder meeting the record date for the split will be May
14 and the distribution date will be May 28.  Also, EMC is
holding a new products and growth initiative meeting on Monday. 
We are looking for some positive news to come out of this
meeting.

All of EMC's short term moving averages are converging.  On
Friday EMC closed right between its 21 and 30 day moving
averages.  We thought EMC was gaining some momentum during the
first part of the week, but it could not withstand the selling
pressure in the techs.  EMC has been bouncing off of support
levels.  In fact, EMC made a good day trade on Thursday and
Friday as it bounced nicely off of support at $100.  On both
days, it made $4 moves intraday. 

BUY CALL MAR-100 EMB-CT OI=1492 at $ 7.38 SL= 5.25
BUY CALL MAR-105*EMB-CA OI=3603 at $ 5.00 SL= 3.25
BUY CALL MAR-110 EMB-CB OI=2838 at $ 3.00 SL= 1.50
BUY CALL APR-110 EMB-DB OI=1871 at $ 6.88 SL= 4.75
BUY CALL JUL-110 EMB-GB OI= 773 at $13.25 SL=10.50

Picked on Feb 14th at $102.38    PE = 66
Change since picked     +0.00    52 week low =$ 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 = 3.6 mln
Chart = http://quote.yahoo.com/q?s=EMC&d=3m
*******************************************
Biotech  - Sector
*******************************************
MEDI - MedImmune, Inc. $55.00 (-.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 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 it reached the 
$59.00 level twice, but market jitters brought it back down. 
It now has new resistance at that level, and needs to hold 
above it before resuming its climb.

In the news, MEDI announced an alliance with Ixsys this past 
week to develop 4 antibodies that may inhibit or shrink 
cancerous tumor growth, among other things. The joint effort 
could generate as much as $50 million, excluding royalties, 
if it succeeds.
 
BUY CALL MAR-50 MEQ-CJ OI=199 at $6.38 SL=4.50
BUY CALL MAR-55*MEQ-CK OI=772 at $3.13 SL=1.50
BUY CALL JUN-50 MEQ-FJ OI= 22 at $9.75 SL=7.25
BUY CALL JUN-55 MEQ-FK OI= 70 at $7.75 SL=6.00

Picked on Feb 7th at $52.44    PE = 60
Change since picked    2.56    52 week low= $21.00
Analysts' ratings 6-4-0-0-0    52 week high=$59.00
Last earnings on 12-98 est=.42 actual=.39 surprise=-7%
Next earnings on  4-22 est=.31 versus=.22
Average daily volume = 772.4 k
CHART - http://quote.yahoo.com/q?s=MEDI&d=3m
*******************************************
Miscellaneous  
*******************************************
MCD - McDonalds Corp  $85.00 (-0.56)(+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.

When the market makes the big swings exemplified in last week's 
trading, the best performing stocks seem to be affected the most.  
When things get shaky, investors who don't want to stomach the 
high uncertainty seem to take profits on their big gainers.  
McDonald's had been in the middle of a great run.  It even set 
another all time high at $86.75 on Wednesday the 24th.  At these 
levels in a volatile market, investor's chose to take some 
profits and thus MCD's -$0.56 finish for the week.  However, 
this could be your chance to buy on the dip.  MCD is splitting 
2:1 this Friday, March 5th.  Look for MCD to make another run 
this week.  

News:  On Friday Feb. 26th, McDonald's launched its new 
"McDonald's Gives You More" campaign in a dozen markets to 
show customers all the ways it "Gives You More" for your 
time and money. 

BUY CALL MAR-80 MCD-CP OI=2215 at $6.38 SL= 4.75 ITM $5.00
BUY CALL MAR-85*MCD-CQ OI=2716 at $3.00 SL= 1.50
BUY CALL MAR-90 MCD-CR OI=1351 at $1.13 SL= 0.00
BUY CALL JUN-85 MCD-FQ OI= 601 at $7.13 SL= 5.25
BUY CALL JUN-90 MCD-FR OI=3330 at $4.75 SL= 3.25

Picked on February 7th at $80.31      PE= 38
Change since picked      +$ 4.69      52 week low =$50.00
Analysts Ratings       5-7-7-0-0      52 week high=$86.75
Last earnings 01/99 est  0.58  actual  0.64 surprise=+10%
Next earnings 04-19 est  0.58  versus  0.52
Average Daily Volume = 1.71 mln
Chart = http://quote.yahoo.com/q?s=MCD&d=3m
*******************************************
UTX - United Technologies Corp. $123.88 (-1.56)(+6.44)(-6.00)

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

UTX set a new 52 week high on Monday.  It traded down for the
rest of the week and recovered a bit on Friday.  We liked the
bounce it made off of its 21 day moving average on Friday.  In
fact playing bounces off support levels such as these can be
very profitable.  The support levels also give you very logical
stops just below the support level.  If the stock doesn't
bounce off of the support like you expect, you know that the
play isn't likely to succeed.  UTX's trading pattern for the
last few weeks has been one up week and then down the next
week.  Last week was the down week.  Remember, UTX is a Dow 30
component, so we will need some support from the market for it
to go up.

In the news last week, 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.  Also, UTX received an order for $3
billion of jet engines from UPS.  UTX will start delivering the
engines next year. 

BUY CALL MAR-115 UTX-CC OI=514 at $10.00 SL= 7.50
BUY CALL MAR-125*UTX-CE OI=208 at $ 3.63 SL= 1.75
BUY CALL MAR-130 UTX-CF OI=331 at $ 1.88 SL= 0.75
BUY CALL MAY-130 UTX-EF OI=222 at $ 5.00 SL= 3.25
BUY CALL AUG-120 UTX-HD OI=114 at $13.25 SL=10.50

Picked on Jan 10th at $114.69   PE=22
Change since picked     +9.19   52 week low =$ 71.75
Analysts Ratings    8-4-4-0-0   52 week high=$127.00
Last earnings  12-98 est=1.11   actual=1.16
Next earnings  04-20 est=1.20   versus=1.04
Average Daily Volume = 719 K
Chart = http://quote.yahoo.com/q?s=UTX&d=3m
*******************************************
WMT Wal-Mart $86.13 (+1.38)(+.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 playing WMT as a slow but steady momentum stock 
and as a split candidate. WMT reported outstanding Q4 earnings, 
and strongly increased same store and total sales, but did not 
give us a split. With other companies announcing splits well 
after announcing earnings, it is still a possibility. WMT has 
been setting new highs, only to be pulled back each time it 
does by market weakness. Early Wednesday, the stock hit $ 89.50, 
but succumbed to market pressures and sold off the rest of the 
day. WMT ended the week on a positive note, making small gains 
both Thursday and Friday. It seems to have support at its 
30 dma.

In the news, a $2.3 million award in a sexual discrimination 
lawsuit against a Sam's Club was upheld this past week, but 
it shouldn't hurt the stock. If the market co-operates, WMT 
looks like it wants to move higher.

BUY CALL MAR-80 WMT-CP OI=2468 at $7.25 SL=5.50 
BUY CALL MAR-85*WMT-CQ OI=6464 at $3.75 SL=2.25
BUY CALL APR-85 WMT-DQ OI= 262 at $6.00 SL=4.25 
BUY CALL JUN-90 WMT-FR OI=2758 at $6.13 SL=4.50

Picked on Jan 26th at $83.56    PE = 42  
Change since picked    +2.57    52 week low= $46.13
Analysts' ratings 7-11-4-0-0    52 week high=$89.50
Last earnings on 12/98 est=.66  actual=.70  
Next earnings on 5-12  est=.43  versus=.37
Average daily volume = 2.81 mln
Chart = http://quote.yahoo.com/q?s=WMT&d=3m
*******************************************
OSSI - Outback Steakhouse $43.88 (-1.75)(+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 spent most of last week slowly slipping downhill.  
We were beginning to wonder how much profit taking and 
the volatile markets would affect the stock.  But, OSSI
rekindled the fire on Friday by recovering +$2.06 and 
cut the drop short way before needing to use its 30 dma 
as support.  We expect the stock to recover nicely and 
head to new highs especially if the markets can rally.  
OSSI is also splitting 3:2 this Tuesday, March 2nd.
Remember that we recommend selling before the actual 
split.  Profit taking will drive down the price on an 
average of 7 out of 10 splitters immediately after the 
split. 

No new news.  

BUY CALL MAR-40*OSQ-CH OI=136 at $5.00 SL=3.25 ITM
BUY CALL MAR-45 OSQ-CI OI=744 at $2.19 SL=1.00
BUY CALL MAY-40 OSQ-EH OI=439 at $6.75 SL=5.25
BUY CALL MAY-45 OSQ-EI OI=213 at $3.88 SL=2.50

Picked on February 21st at $45.63      PE= 21
Change since picked        -$1.76      52 week low  =$ 23.37
Analysts Ratings        5-6-2-0-0      52 week high =$ 46.75
Last earnings 02/99 est 0.52   actual 0.52 surprise=+18%
Next earnings 04-20 est 0.54   versus 0.45
Average Daily Volume = 549.0 K
Chart = http://quote.yahoo.com/q?s=OSSI&d=3m
*******************************************
LOW - Lowe's Companies $59.31 (+2.25)(+3.06)(-1.00)

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.

LOW suffered a bit of profit taking after its earnings
announcement, but then turned around and started a slow and
steady move up.  LOW set a new 52 week high on Friday.  LOW not
only has the secondary offering of stock, mentioned below, but
it also did a private placement of debt two weeks ago.  LOW
expects to close on its acquisition of Eagle Hardware by the
end of April.  LOW has very aggressive expansion plans, so we
are hoping for a nice extended run out of LOW.  

In the news last week, LOW 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%.  Also, LOW
announced that the pricing on the 5.5 million share common
stock offering will be $58.  The offering represents 1.56% of
the total outstanding shares of LOW, so we don't believe it
will have a material impact on the share price of LOW.

BUY CALL MAR-55 LOW-CK OI= 545  at $5.25 SL=3.25
BUY CALL MAR-60 LOW-CL OI=1144  at $2.13 SL=1.00
BUY CALL APR-60*LOW-DL OI=1841  at $3.63 SL=1.75
BUY CALL JUL-60 LOW-GL OI= 265  at $6.63 SL=4.75

Picked on Jan 31st at $58.31   PE=40
Change since picked    +1.00   52 week low =$23.88
Analysts Ratings  8-13-4-0-0   52 week high=$60.06
Last earnings  01/99 est=.27   actual=.30
Next earnings  05-21 est=.32   versus=.27
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 
*************************************************************
CB - Chubb Corp. $60.00 (-1.75) 

We are adding CB as a put candidate because of its failure 
to break through its 50-dma.  CB is an insurance company 
providing mainly property and casualty insurance.  CB has 
had decreasing earnings over the last four quarters and is 
scheduled to be short of prior earnings in its May quarter.  
Insurance companies can also suffer from interest rate 
increases.  We see CB dropping down to the $55 range.

BUY PUT MAR-60*CB-OL OI= 82 at $2.56 SL=1.50
BUY PUT MAR-55 CB-OK OI=151 at $0.75 SL=0.00

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

*****

BBY - Best Buy $92.75 (-.63)(6.88)

Best Buy Company sells personal computers and other home 
office products, consumer electronics, entertainment
software, major appliances and related accessories
through its retail stores. 

Best Buy is an extended play and particularly attractive given 
the latest news about slowing PC sales.  Circuit City (CC)
broke down last week from 52-week highs and Best Buy could 
follow.  We are recommending a entering the stock at this
level even though it is at its highs and above the 50-day
moving average because the stock is very extended.  The stock
option could garner a profit just from profit taking alone. 
And if the news surrounding slowing PC sales spreads to the
retail sector, the play may give us some additional pop.

BUY PUT MAR-95 BBY-OS OI=179 at $6.50 SL=4.75
BUY PUT MAR-90 BBY-OR OI=618 at $4.38 SL=2.25
BUY PUT APR-90 BBY-PR OI= 20 at $7.00 SL=4.75

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

Current Recommendations at a Glance:

*****

WHR - Whirlpool $43.50 (+0.19)(-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.

WHR continues to bump its head on $44.  It just can't break 
through.  Technically, WHR trades below its 30, 50 and 
200DMA, which makes a poor looking chart with poor 
expectations.  If current or downtrending market conditions 
persist, WHR should bounce south of its 30-day average.  
With interest rates on the rise at home, tough economic 
conditions internationally and fixed costs that can't be 
squeezed, margins and profits will drop.  WHR is still on 
S&P credit watch with negative implications.

No news in sight.  Options tend to be thinly traded.

BUY PUT MAR-50 WHR-OJ OI=198 at $6.63 SL=4.75 ITM 6.50
BUY PUT MAR-45*WHR-OI OI=255 at $2.56 SL=1.25 ITM 1.50
BUY PUT MAR-40 WHR-OH OI=167 at $0.44 SL=0.00 OTM

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

*****

ADBE - Adobe Systems, Inc. $40.25 (-2.81) (-2.06)

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 
failed at key resistance point of $45. 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=520  @ $5.75 SL=3.25
BUY PUT MAR-40 AEQ-OH OI=191  @ $2.69 SL=1.25
BUY PUT APR-40 AEQ-PH OI=554  @ $3.63 SL=1.75

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

*****

BDX - Becton, Dickinson and Company $33.50 (.00) (-.25)

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. 

BUY PUT MAR-40 BDX-OH OI=1630 at $7.00 SL=5.75
BUY PUT MAR-35 BDX-OG OI= 388 at $2.31 SL=1.25
BUY PUT APR-40 BDX-PH OI= 300 at $7.38 SL=5.25

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

*****

BMCS - BMC Software $40.88 (-.69) (-3.69)

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=829  at $5.25 SL= 3.75
BUY PUT MAR-40 BCQ-OH OI=1313 at $2.00 SL=  .75
BUY PUT APR-40 BCQ-PH OI=244  at $3.50 SL= 1.75

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

*****

ELNK - EarthLink Network, Inc. $60.19 (-1.00) (-1.88)

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 bails
out of the Internet sector, investors are likely to exit the
weaker issues first.

BUY PUT MAR-60 QKL-OL OI=162 @ $4.88 SL=2.75
BUY PUT MAR-55 QKL-OK OI=391 @ $2.94 SL= .75
BUY PUT APR-55 QKL-PK OI= 94 @ $5.63 SL=3.75

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

*****

ERTS - Electronic Arts Inc. $39.88 (-.63) (.25)

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-40 EZQ-OH OI=159 @ $2.44 SL=1.00
BUY PUT MAR-35 EZQ-OG OI=210 @ $1.06 SL= .13
BUY PUT APR-40 EZQ-PH OI=32  @ $3.50 SL=1.75

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

*****

WLA - Warner Lambert $68.81 (1.56) (4.94)

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-70  WLA-ON OI=2855 @ $3.25 SL=2.50
BUY PUT MAR-65  WLA-OM OI=3087 @ $1.75 SL= .50
BUY PUT APR-70  WLA-OM OI=2643 @ $4.88 SL=2.75

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            2-28-99
Sunday                5  of  6

******************************************************************
Combos
******************************************************************
Tech Stocks Routed...

U.S. Stocks fell Friday in the wake of negative comments by some
major Wall Street analysts on technology companies. The disparate
views about slowing growth in the industry revenues fed on many
investors anxieties about the high valuation of the overall market
and spurred a big sell-off in the sector. The tech group had been
the pace-setter for the recent market upturn. The DJIA ended down
59 points at 9306, closing lower for the fourth session in a row.
The Nasdaq index slumped 38 points to 2288, continuing the slide
from Thursday's 33 point drop. In the broader market, declining
issues led advances by a small margin on active volume of 763
million shares on the New York Stock Exchange.

Thursday's new plays:

With today's ominous opening (and the Merrill Lynch announcement),
these tech sector plays were not favorable. However, we will list
the average prices in case any of you decided to play...

DELL $81.75 MAR75C/MAR80C  $2.87 Debit  (Held up ok?)
HWP  $71.19	APR65C/70C/75C $1.38 Debit  (Down almost $5)
RMBS $74.81	MAR60P/MAR65P  $1.00 Credit (Easy entry...but?!?)

Portfolio activities:

The response to the Merrill Lynch analyst who launched the attack
on the computer giants (IBM, HWP, CPQ and DELL) was delayed until
today. HWP and CPQ were hit particularly hard and they dropped
through their February lows. Other tech stocks joined the panic
with the worst punishment going to the chip stocks. They now have
a lot of work to do before they can build some kind of a base and
start a new rally.

A few of our debit spreads, including the small speculation plays
that expire in March are now failing technically. You may decide
to roll-out of these plays into credit spreads to recover losses
or return to a profitable cost basis. One of the positions that
we rolled is ADI (MAR30C at $1.00) and we plan to move the AT&T
spread to a call-credit spread; MAR90C/85C on Monday. Others that
we are considering are PTEK, OMPT and AZPN. None of these are big
losers but there may be an opportunity to make them profitable.

Our long position (APR45C) on CPQ was sold today for $0.87 to
retain some of the existing profit. We will try to sell the
bearish portion of the TSM position (APR17P) on Monday for $1.12,
closing the entire play for a profit of $0.75. Good Luck!
******************************************************************
				- NEW PLAYS -
******************************************************************
CKH - Seacor Smit  $39.38     *** Oil Services ***

SEACOR SMIT operates a fleet of marine vessels supporting offshore
oil and gas exploration and development projects. It maintains a
fleet of offshore supply/handling vessels in the Gulf of Mexico,
West Africa, and the North Sea, among other places. Their services
include towing and anchor handling of drill rigs and other marine
equipment; delivery of cargo, supplies, and personnel to offshore
rigs and platforms; transportation for offshore construction and
maintenance work; standby safety support; seismic mapping; well
stimulation; freight hauling; line handling; and responding to oil
spill emergencies.

The company announced mediocre earnings in early February and
then a new repurchase program. The securities covered by the
repurchase program include the company's common stock and they
have about $33 million available for repurchases. Since 1/1/99,
they have repurchased $26 million in securities, including 593K
shares of common stock. They still have about 12 million shares
of common stock outstanding.

The company should probably wait a while longer as the technicals
reflect a good possibility for further decline in the stock price.

PLAY (conservative/debit spread):

BUY  PUT MAR-45 CKH-OI OI=364 A=$6.00
SELL PUT MAR-40 CKH-OH OI=256 B=$2.62
INITIAL NET DEBIT TARGET=$3.38 ROI(max)=48%

Chart = http://quote.yahoo.com/q?s=CKH&d=3m
******************************************************************
CNXT - Conexant Systems  $17.00     *** Where to from here? ***
		
Conexant Systems is the $1.2 billion company that was created when
Rockwell International spun off its semiconductor systems business
to shareowners in December 1998. Conexant continues to expand its
product lines to offset the sagging sales of its flagship PC modem
chip business. It is the world's largest independent company that
focuses exclusively on providing semiconductors for communications
and electronics. Its other products are chips for personal imaging,
wireless communications, digital infotainment and network access.

New coverage by DLJ, an upgrade by Merrill Lynch in early February
and leading-edge product announcements have not given this stock
any direction since it came on the market near $17. We hope that
is exactly where it finishes the March strike period and the cost
for this speculation opportunity is very small.

PLAY (conservative/time spread):

BUY  CALL APR-17.50 QXN-DW OI=174 A=$2.43
SELL CALL MAR-17.50 QXN-CW OI=162 B=$1.93
INITIAL NET DEBIT TARGET=$0.43 TARGET ROI=50%

Chart = http://quote.yahoo.com/q?s=CNXT&d=3m
******************************************************************
MNMD - Minimed Inc  $85.25     *** FDA Approval ***

MiniMed is the #1 maker of external insulin pumps and related
disposables for the treatment of diabetes. The pumps deliver
hundreds of tiny infusions of insulin, thus replacing the need
for injections. MiniMed also makes glucose monitors and the firm
has alliances to retool its pumps to deliver drugs that treat
high blood pressure and HIV. MiniMed acquired Home Medical Supply,
whose pharmacies allow MiniMed to distribute prescription drugs.

The share price may rise on Monday as the FDA panel recommended
approval (on Friday) of the company's glucose monitoring system,
a wearable device used to help monitor blood sugar levels for
diabetic patients. To demonstrate the success of the system, MNMD
compared its results with finger-prick measures. In studies of 62
diabetics, the MiniMed system was just as accurate 86% of the
time. The FDA, however, said it thought the two systems agreed
only 73% of the time and the agency reviewers said the variables
could keep the two tests from lining up, which certainly calls
the results into question.

We are going to watch for (and play) any momentum by purchasing
the long position first and waiting for strength or weakness in
the stock. If you can achieve a small profit on the long option,
close the position. When the stock price falters, initiate the
spread for a credit by selling the lower priced call.

PLAY (very conservative/credit spread):

BUY  CALL MAR-115 MAQ-CC OI=137 A=$0.81
SELL CALL MAR-110 MAQ-CB OI=272 B=$1.19
INITIAL NET CREDIT TARGET=$0.50 ROI=11% (3 weeks)

Chart = http://quote.yahoo.com/q?s=MNMD&d=3m
******************************************************************
BGEN - Biogen $96.12     *** Strong Sector ***

Biogen researches, develops, and markets biopharmaceuticals to
treat a variety of ailments. About 55% of total sales are from
AVONEX, a drug used to treat relapsing multiple sclerosis. The
company is developing a number of drugs to treat inflammation,
pulmonary diseases, kidney diseases and disorders, and central
nervous system disorders. Biogen also makes money by licensing
drugs it has developed to other companies; such products include
alpha interferon and a hepatitis B vaccine.

Biogen recently approved the repurchase of up to 4 million shares
(5.3% of its stock) to enhance long-term shareholder value. The
company said it will use the shares for general purposes, such as
stock issued under employee stock option/stock purchase plans.

The announcement rekindled interest in the slumping issue and
with the recent record earnings report and new worries in some of
the other sectors, this bio-technology issue should perform well
over the next few weeks. The worst case is you could elect to own
the stock for $84.

PLAY (conservative/credit spread):

BUY  PUT MAR-80 BGQ-OP OI=131 A=$1.00
SELL PUT MAR-85 BGQ-OQ OI=715 B=$1.75
INITIAL NET CREDIT TARGET=$0.87 ROI=21%

Chart = http://quote.yahoo.com/q?s=BGEN&d=3m
******************************************************************
ALLC - Allied Capital  $17.62     *** Technicals Only ***

Allied Capital is a business development company that was formed
by the merger of five Allied investment firms. Allied's financial
services include commercial mortgage loans, mezzanine loans for
acquisitions and recapitalizations, and SBA loans. Allied also
offers investment advisory services for the management of private
fund investments. The company owns two small-business investment
subsidiaries and one SBA lending subsidiary.

Allied Capital recently announced positive 1998 financial results.
Net income for 1998 was $78.1 million, or $1.50 per share, a 21%
increase over 1997 net income and 1998 EPS exceeded the First Call
consensus estimate of $1.49 per share. They also announced Friday,
that the board of directors has declared a quarterly dividend of
$0.40 per share for the first quarter of 1999. The $0.40/share
dividend represents a 14% increase over the 1998 dividend of $0.35
per share. The dividend is payable to shareholders of record on
March 19, 1999.

There may be a small run for the dividend so our plan will be to
close the position before the last week of the March strike if
there is a profit available. In the worst case scenario, (a very
strong run to the record date) we can use a buy-to-close stop on
the call position for a target stock price near $19. The stock
has not traded above that price for about 6 months and that
would also be near the break-even cost basis for the entire play.

PLAY (aggressive/credit straddle):

SELL CALL MAR-17.50 CQL-CW OI=100 B=$0.68
SELL PUT  MAR-17.50 CQL-OW OI=33  B=$0.56
INITIAL NET CREDIT TARGET=$1.38 TARGET ROI=25%

Chart = http://quote.yahoo.com/q?s=ALLC&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, 
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 
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The newsletter staff makes every effort to provide timely 
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The Option Investor Newsletter            2-28-99
Sunday                6  of  6

******************************************************************
COVERED CALL SECTION - One Possible Remedy...
******************************************************************
A remedy for struggling covered-call stocks...

Here is a repair technique that can be used for long-term covered
call stocks that have slumped in the recent market. The goal is to
allow the stock owner (who is currently in a losing position) to
lower the break-even price while significantly increasing the
profit potential.

We are going to try to improve our overall position through the
addition of a bull-call spread to our covered-call strategy. The
example that I had planned to use has since rebounded (of course
it was shortly after our monthly summary) so I will just refer to
a generic stock (XYZ).

An investor purchases 500 shares of XYZ at $20 and sells (5) FEB20
calls for a premium of $1.00. The cost basis is $19.00. At the end
of the strike period, the stock has fallen to $18.00 and the calls
have expired but there is now a realized loss of $1.00. The trader
still likes the long term outlook for the stock but is concerned
about further downside risk and still has the desire to recover
lost profit potential. The stock owner could try to improve the
overall position by purchasing (5) MAR $17.50 calls and selling
(10) MAR $20.00 calls. The new position is a combination of the
covered write and the bull-call spread. The components are; LONG
500 XYZ, LONG (5) MAR $17.50 calls and SHORT (10) MAR $20.00 calls.
The new position does NOT have any naked or uncovered calls.

Without going into the specific mathematical details, I will try
to explain the basic advantages of the play. We will assume that
buying the (5) $17.50 calls and selling the (10) $20.00 calls will
cost a small, additional debit. On some occasions, the sold calls
(twice as many) will roughly equal the price of the bought calls
and thus no extra costs (other than commissions) are required for
the play. However, any additional money invested towards the new
position will lower the new break-even (below the current one) by
approximately that amount. Now, if XYZ should continue to decline
and eventually finish below $17.50, all of the calls will expire
worthless and the stock owner will only be slightly worse off. The
overall cost-basis is increased by the additional amount spent for
the bull-spread.(This should be around 2-4% of the stock price, or
about $0.50 in this example) If XYZ finishes at or above $20.00 at
expiration, the play will return maximum profit, easily 2-3 times
more than the simple covered call. (This profit can be determined
by calculating the various prices based on the stock closing at
exactly $20.00 on the strike date.)

The advantage becomes apparent as you compare the final outcome
when the stock price finishes within the strike prices. Remember,
the downside B/E is now lowered by about $0.50, the same amount as
additionally invested for the bull-spread, and upside profit for
the new play occurs (and increases exponentially) at a much lower
stock price. All of these results for any particular position can
be analyzed by simply comparing both plays at the various prices.
This strategy offers an excellent opportunity for restoring lost
profit potential at a reasonable cost...Good Luck!
******************************************************************
SUMMARY OF PREVIOUS PICKS (3 weeks to March strike date)
******************************************************************
Stock  Price  Last   Mon  Strike  Opt     Profit   ROI   Monthly
Sym    Picked Price       Price   Bid     /Loss          ROI

ESPI    5.38   5.50   Mar   5.00  1.06  *$  0.68  15.7%  13.7%
BAMM   11.81  11.19   Mar  10.00  3.13  *$  1.32  15.2%  13.2%
NXTR   10.38  13.81   Mar  10.00  1.44  *$  1.06  11.9%  12.9%
GADZ    7.69   8.00   Mar   7.50  0.94  *$  0.75  11.1%  12.1%
ZD     16.94  16.81   Mar  15.00  3.38  *$  1.44  10.6%  11.5%
ARTT    8.00   8.00   Mar   7.50  1.50  *$  1.00  15.4%  11.1%
IGEN   28.50  30.25   Mar  25.00  5.00  *$  1.50   6.4%   6.9%
BVSN   40.00  44.88   Mar  35.00  7.50  *$  2.50   7.7%   6.7%
PPOD    9.13   8.25   Mar   7.50  2.13  *$  0.50   7.1%   6.2%
CIEN   22.44  27.88   Mar  20.00  3.50  *$  1.06   5.6%   6.1%
CTYA   33.63  34.69   Mar  30.00  5.13  *$  1.50   5.3%   5.7%
WKR    17.88  20.13   Mar  17.50  1.25  *$  0.87   5.2%   5.7%
BTIM   16.63  16.13   Mar  12.50  4.88  *$  0.75   6.4%   5.5%
CLST   12.31  11.38   Mar  10.00  3.00  *$  0.69   7.4%   5.4%
XYLN   19.94  26.50   Mar  17.50  3.25  *$  0.81   4.9%   5.3%
BYND   28.00  26.00   Mar  20.00  9.50  *$  1.50   8.1%   5.0%
ITVU   22.75  20.50   Mar  17.50  6.00  *$  0.75   4.5%   4.9%
CKFR   30.56  34.25   Mar  25.00  6.88  *$  1.32   5.6%   4.8%
SNAP   19.25  15.63   Mar  15.00  5.13  *$  0.88   6.2%   4.5%
MYLX   11.88  11.50   Mar   7.50  4.75  *$  0.37   5.2%   3.8%
SRCM   21.06  16.19   Mar  17.50  5.00   $  0.13   0.8%   0.7%
LGND** 12.81   9.81   Mar  12.50  1.31   $ -1.69 -14.7%   0.0%

ALKS was previously dropped and is now positive.(Murphy's law)

** LGND - A closing price at $9.50 was reached Wednesday but the
stock did not fall below it. If LGND fails to move above its 150
dma ($10.20) and remain there, you may consider closing the play.

-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.
******************************************************************
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

BTC    14.50  Mar 15.00  BTC CC  0.81  250   13.69   9.57%   5.92%
CCMC   10.69  Mar 10.00  QYS CB  1.69  345    9.00  11.11%  11.11%
CNXT   17.06  Mar 15.00  QXN CC  2.75  11    14.31   4.82%   4.82%
CRCL   17.25  Mar 17.50  HQA CW  0.81  100   16.44   6.45%   4.93%
GYMB   10.50  Mar 10.00  GMQ CB  1.06  179    9.44   5.93%   5.93%
NIN    22.63  Mar 20.00  NIN CD  3.50  310   19.13   4.55%   4.55%
PDQ    10.31  Mar 10.00  PDQ CB  1.25  1291   9.06  10.38%  10.38%
POSS   11.00  Mar 10.00  UPQ CB  1.50  758    9.50   5.26%   5.26%
******************************************************************
Sequenced by Return Called 
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym               Price  Symbol  Bid   Intr  Basis

CCMC   10.69  Mar 10.00  QYS CB  1.69  345    9.00  11.11%  11.11%
PDQ    10.31  Mar 10.00  PDQ CB  1.25  1291   9.06  10.38%  10.38%
BTC    14.50  Mar 15.00  BTC CC  0.81  250   13.69   9.57%   5.92%
CRCL   17.25  Mar 17.50  HQA CW  0.81  100   16.44   6.45%   4.93%
GYMB   10.50  Mar 10.00  GMQ CB  1.06  179    9.44   5.93%   5.93%
POSS   11.00  Mar 10.00  UPQ CB  1.50  758    9.50   5.26%   5.26%
CNXT   17.06  Mar 15.00  QXN CC  2.75  11    14.31   4.82%   4.82%
NIN    22.63  Mar 20.00  NIN CD  3.50  310   19.13   4.55%   4.55%
******************************************************************
Sequenced by Return Not Called
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym               Price  Symbol  Bid   Intr  Basis

CCMC   10.69  Mar 10.00  QYS CB  1.69  345   9.00   11.11%  11.11%
PDQ    10.31  Mar 10.00  PDQ CB  1.25  1291  9.06   10.38%  10.38%
GYMB   10.50  Mar 10.00  GMQ CB  1.06  179   9.44    5.93%   5.93%
BTC    14.50  Mar 15.00  BTC CC  0.81  250  13.69    9.57%   5.92%
POSS   11.00  Mar 10.00  UPQ CB  1.50  758   9.50    5.26%   5.26%
CRCL   17.25  Mar 17.50  HQA CW  0.81  100  16.44    6.45%   4.93%
CNXT   17.06  Mar 15.00  QXN CC  2.75  11   14.31    4.82%   4.82%
NIN    22.63  Mar 20.00  NIN CD  3.50  310  19.13    4.55%   4.55%
******************************************************************
Company Descriptions
******************************************************************
BTC - BancTec  $14.50     *** Reorganization! (OTM play) ***

BancTec markets electronic processing systems and services for
financial transaction documentation. BancTec also makes software
for electronically processing credit, debit, and courtesy cards 
for electronic check authorization. Services include system
installation and maintenance. BancTec's reorganization is well
underway and new software products will solidify their market
leadership in complex transaction management applications. Good
support near $13 and solid buying pressure on improving volume.

Mar 15.00 BTC-CC Bid=0.81 OI=250 CB=13.69 RC=9.57% RNC=5.92%

Chart = http://quote.yahoo.com/q?s=BTC&d=3m
******************************************************************
CCMC - Concentra Managed Care  $10.69  *** Buy-Out? ***

Concentra Managed Care is a provider of comprehensive outsource 
solutions for cost containment and fully integrated care mngmnt
for employers and payers in the occupational, auto and group 
healthcare markets. No recent news since being downgraded at the
beginning of Feb after posting a 4Q loss of $0.11. Stock is in
a stage I base since Oct, holding above our cost basis. Message
boards are talking about a possible buyout. That could be what
is keeping the price afloat.

Mar 10.00 QYS-CB Bid=1.69 OI=345 CB=9.00 RC=11.11% RNC=11.11%

Chart = http://quote.yahoo.com/q?s=CCMC&d=3m
******************************************************************
CNXT - Conexant Systems Inc.  $17.06  *** IPO Speculation ***

Conexant supplies analog PC and fax modem chipsets and provides 
semiconductor products for a broad range of wireline and wireless
communication applications. For the three months ended 1/1/99, 
revenues fell 23% to $294.7 million. A three week speculation
play that CNXT will stay above $15. The cost basis is below the
January low (closing basis).

Mar 15.00 QXN-CC Bid=2.75 OI=11  CB=14.31 RC=4.82% RNC=4.82%

Chart = http://quote.yahoo.com/q?s=CNXT&d=3m
******************************************************************
CRCL - Circle Int'l Group, Inc.  $17.25  *** New Sector? ***

Circle International Group provides transportation and integrated 
logistics services for the international movement of goods and
furnishes value-added information, distribution and inventory 
management services worldwide. With oil prices continuing to fall
and airfreight increasing, CRCL looks to be ready to move out of
its stage I base. Short term buy signals have been triggered on
this more speculative candidate.

Mar 17.50 HQA-CW Bid=0.81 OI=100 CB=16.44 RC=6.45% RNC=4.93%

Chart = http://quote.yahoo.com/q?s=CRCL&d=3m
******************************************************************
GYMB - Gymboree Corporation  $10.50  *** Breakout?  ***

GYMB is a specialty retailer of apparel and accessories for 
children ages newborn to seven years old. GYMB also offers 
directed parent-child development play programs for ages newborn 
to five years old. On Thursday, GYMB reported that its net income
fell but it beat estimates by $0.02. The post earnings dip should
offer a great entry point. The retail sector has been rebounding
and GYMB is showing strong technical buy signals with a support
area near our cost basis.

Mar 10.00 GMQ-CB Bid=1.06 OI=179 CB=9.44 RC=5.93% RNC=5.93%

Chart = http://quote.yahoo.com/q?s=GYMB&d=3m
******************************************************************
NIN - Nine West Group Inc.  $22.63  *** Takeover bid? ***

NIN designs, develops, and markets quality, fashionable women's 
footwear and accessories through department, specialty and Company
owned retail stores. This stock is climbing fast after a SEC probe
ended with no action being taken and the upgrades sprouted. NIN
is in a strong stage II climb and rumors of a take-over bid have
boosted the call premiums allowing us to pick our entry price.

Mar 20.00 NIN-CD Bid=3.50 OI=310 CB=19.13 RC=4.55% RNC=4.55%

Chart = http://quote.yahoo.com/q?s=NIN&d=3m
******************************************************************
PDQ - Prime Hospitality Corp. $10.31  *** Trading Frenzy ***

PDQ is a hotel owner/operator, which as of 2/98, owned or leased
135 hotels, including 18 hotels under sale/leaseback agreements, 
and managed 12 hotels for third parties in 29 states and the 
Virgin Islands. For the nine months ended 9/98, revenues rose 38% 
to $347.3 million. Rumors have resurfaced that Marriott might be
interested in purchasing PDQ. This caused a new surge in buying
pressure. The inflated premiums and recent buy signals fit into
a reasonable risk/reward profile.

Mar 10.00 PDQ-CB Bid=1.25 OI=1291 CB=9.06 RC=10.38% RNC=10.38%

Chart = http://quote.yahoo.com/q?s=PDQ&d=3m
******************************************************************
POSS - Possis Medical, Inc. $11.00  *** Technical Play ***

Possis Medical, Inc. is a developer, manufacturer and marketer of
medical devices. Now that the earnings are past (2Q $0.25 loss vs.
$0.25 loss) with record three and six month product sales, Possis
Medical looks to have taken-off. Strong volume support and maxed
BOP (buying pressure) may help push POSS above its resistance at
$11.50. The bullish move up out of the recent stagnant formation
(isosceles triangle) should help this stock stay above $10.

Mar 10.00 UPQ-CB Bid=1.50 OI=758 CB=9.50 RC=5.26% RNC=5.26%

Chart = http://quote.yahoo.com/q?s=POSS&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
BOCI   3.88  Mar   10.00  BQCCB   0.50  12.90    10    30
NIN   22.44  Mar   22.50  NINCX   2.63  11.70   329   229
CORR   9.81  Mar   10.00  CHQCB   1.13  11.46   150   138
Z      4.94  Mar    5.00    ZCA   0.56  11.39  1029  1994
UAG    7.38  Mar    7.50  UAGCU   0.81  11.02    20   290
TKLC  12.13  Mar   12.50   KQCV   1.25  10.31    44   159
DDIM   4.94  Mar    5.00   QMCA   0.50  10.13     5   108
THQI  19.88  Mar   20.00  QHICD   2.00  10.06    30   257
IDTC  12.44  Mar   12.50  IQJCV   1.25  10.05   127   556
COB    5.00  Mar    5.00  COBCA   0.50  10.00    30  1421
TERA   5.00  Mar    5.00  QIPCA   0.50  10.00   118   698
Z      4.94  Apr    5.00    ZDA   1.00  20.25   438   115
MRVT   9.94  Apr   10.00  SQDDB   1.94  19.50    10    58
TERA   5.00  Apr    5.00  QIPDA   0.94  18.75     7    39
ABTX   4.38  Apr    5.00  QXQDA   0.75  17.14    60   403
SPYG  12.31  Apr   12.50  YQGDV   2.06  16.75    91   186
GELX  17.19  Apr   17.50  GQXDW   2.88  16.73    38   206
GMGC   4.91  Apr    5.00  GGQDA   0.81  16.56    53    48
LRCX  29.56  Apr   30.00  LMQDF   4.63  15.64    11    50
ZD    16.81  Apr   17.50   ZDDW   2.63  15.61    69  1833
NIN   22.44  Apr   22.50  NINDX   3.50  15.60    50    53
UAG    7.38  Apr    7.50  UAGDU   1.13  15.25    10    45
SPLH   7.00  Apr    7.50  QRXDU   1.06  15.18    21   340
PTEK   9.13  Apr   10.00  TQODB   1.38  15.07    26   162
INTV  10.88  Apr   12.50  VQNDV   1.63  14.94   108   497
ERTH   9.31  Apr   10.00  QERDB   1.38  14.77     3   323
SGE    7.25  Apr    7.50  SGEDU   1.06  14.66   100    64
CLCX   4.31  Apr    5.00  QXTDA   0.63  14.49    10    53
MMCN  14.06  Apr   15.00  CMQDC   2.00  14.22    24   176
CYGN   5.75  Apr    7.50  YNQDU   0.81  14.13    33    65
APM    4.00  Apr    5.00  APMDA   0.56  14.06    10 12291
BTIM  16.13  Apr   17.50  QBODW   2.25  13.95     5   120
PSQL   7.25  Apr    7.50  PQSDU   1.00  13.79    61   352
ALYD   9.13  Apr   10.00  QLIDB   1.25  13.70    10    45
AEIS  19.25  Apr   20.00  OEQDD   2.63  13.64    38    98
HMTT   6.91  Apr    7.50  HTQDU   0.94  13.57    30   341
PTVL  20.38  Apr   22.50  QUTDX   2.75  13.50    29   758
HS     7.00  Apr    7.50   HSDU   0.94  13.39   298   498
ITRI   7.00  Apr    7.50  IQQDU   0.94  13.39    10    28
CHRZ  14.94  Apr   15.00  ZQHDC   2.00  13.39    10    44
WDC    9.50  Apr   10.00  WDCDB   1.25  13.16    87   705
IDTC  12.44  Apr   12.50  IQJDV   1.63  13.07    30    20
ITWO  24.94  Apr   25.00   JQDE   3.25  13.03    10    18
NM     6.75  Apr    7.50   NMDU   0.88  12.96   207   215
BD    11.69  Apr   12.50   BDDV   1.50  12.83   110    97
XYLN  26.50  Apr   27.50  YXQDY   3.38  12.74    20    15
NTKI  12.81  Apr   15.00  QNKDC   1.63  12.68    10   454
GTIS   4.94  Apr    5.00  GQBDA   0.63  12.66    10   324
INPR   5.00  Apr    5.00  BLQDA   0.63  12.50    84   394
KMAG   7.00  Apr    7.50  KMQDU   0.88  12.50    10     6
OII   10.00  Apr   10.00  OIIDB   1.25  12.50     7    20
PAGE   4.00  Apr    5.00  PGQDA   0.50  12.50     3    30
PILL  10.00  Apr   10.00  PQQDB   1.25  12.50    15   136
WAVO   7.00  Apr    7.50  WKQDU   0.88  12.50    20    38
CYCH  13.03  Apr   15.00  KBQDC   1.63  12.47    10    52
OMPT  11.63  Apr   12.50  QTTDV   1.44  12.37    10    63
RCGI  19.81  Apr   20.00  NUQDD   2.44  12.30     8    10
DCTM  21.38  Apr   22.50  QDCDX   2.63  12.28     1    40
POSS  10.88  Apr   12.50  UPQDV   1.31  12.07    13   152
ENMD  18.69  Apr   20.00  QMADD   2.25  12.04     5    15
ROMC  12.00  Apr   12.50  RPQDV   1.44  11.98    17    10
ZAP    9.44  Apr   10.00  ZAPDB   1.13  11.92    35    38
KERA  12.13  Apr   12.50  KVQDV   1.44  11.86    20    35
DIMD   7.00  Apr    7.50  DAQDU   0.81  11.61   139   660
CREAF 12.50  Apr   12.50  RFQDV   1.44  11.50    13   349
PPOD   8.25  Apr   10.00  QPPDB   0.94  11.36     3   134
FORE  14.50  Apr   15.00  FQODC   1.63  11.21   349  1110
IM    22.00  Apr   22.50   IMDX   2.44  11.08     5    50
DBCC  15.25  Apr   17.50  BQDDW   1.69  11.07   121   383
OMKT  13.00  Apr   15.00  OQMDC   1.44  11.06    44   583
THQI  19.88  Apr   22.50  QHIDX   2.19  11.01   643    32
BKS   29.63  Apr   30.00  BKSDF   3.25  10.97   103   600
PIN    4.56  Apr    5.00  PINDA   0.50  10.96    10  1560
RATL  29.69  Apr   30.00  RAQDF   3.25  10.95     6  1899
TEK   19.50  Apr   20.00  TEKDD   2.13  10.90    10    24
SDTI  18.50  Apr   20.00  QSDDD   2.00  10.81    26   262
VYTL  19.13  Apr   20.00  VQLDD   2.06  10.78    10  2435
ZD    16.81  Apr   20.00   ZDDD   1.81  10.78    85   768
UWW    7.00  Apr    7.50  UWWDU   0.75  10.71    10     5
IMRS  18.13  Apr   20.00  QIQDD   1.94  10.69     2    30
TECD  17.00  Apr   17.50  TDQDW   1.81  10.66     8    30
GIC   29.38  Apr   30.00  GICDF   3.13  10.64     5   508
DAOU   5.31  Apr    7.50  QQXDU   0.56  10.59     3   375
PRRC   6.50  Apr    7.50  MQXDU   0.69  10.58    10   152
REMC  17.19  Apr   17.50  RYQDW   1.81  10.55     5    40
STAT  10.75  Apr   12.50  TAQDV   1.13  10.47     5   329
HPRT   6.63  Apr    7.50  HQKDU   0.69  10.38    20   163
AWA   17.00  Apr   17.50  AWADW   1.75  10.29    10   451
TWLB   8.53  Apr   10.00  QBTDB   0.88  10.26    50   195
PENN   9.75  Apr   10.00  UQNDB   1.00  10.26    15   210
DRMD   6.13  Apr    7.50  DUQDU   0.63  10.20    20    45
RII   12.25  Apr   12.50  RIIDV   1.25  10.20    50   724
VANS   6.75  Apr    7.50  VQGDU   0.69  10.19    20   260
BEAV  14.75  Apr   15.00  BQVDC   1.50  10.17     1   363
XYLN  26.50  Apr   30.00  YXQDF   2.69  10.14   115    14
ADPT  19.94  Apr   20.00  APQDD   2.00  10.03    12   680
ORG   13.75  Apr   15.00  ORGDC   1.38  10.00     7   567
TKLC  12.13  May   12.50   KQEV   2.88  23.71    36   131
GMGC   4.91  May    5.00  GGQEA   1.13  22.93     5  2180
PTEK   9.13  May   10.00  TQOEB   1.88  20.55    50  1339
Z      4.94  May    5.00    ZEA   1.00  20.25   330   836
OMPT  11.63  May   12.50  QTTEV   2.13  18.28    30   258
VIAS   4.81  May    5.00  QVVEA   0.88  18.18     6   112
ZAP    9.44  May   10.00  ZAPEB   1.69  17.88    20  2556
CLCX   4.31  May    5.00  QXTEA   0.75  17.39    10   326
PRIA  30.00  May   30.00  UXQEF   5.13  17.08    14   109
ITWO  24.94  May   25.00   JQEE   4.25  17.04     3    85
ANIK   4.81  May    5.00  AKQEA   0.81  16.88    20   167
OMKT  13.00  May   15.00  OQMEC   2.19  16.83    61   533
FGCI   5.97  May    7.50  JZQEU   1.00  16.75     4   148
CMOS  21.13  May   22.50  CQSEX   3.38  15.98     5    45
QNTM  16.44  May   17.50  QNQEW   2.63  15.97   382   207
ALYD   9.13  May   10.00  QLIEB   1.44  15.75    10   438
MCRE   6.44  May    7.50  MQZEU   1.00  15.53    10   133
FLM    7.38  May    7.50  FLMEU   1.13  15.25   100    49
JDEC  15.81  May   17.50  QJDEW   2.38  15.02     2   202
PWAV  23.50  May   25.00  VFQEE   3.50  14.89    11    59
CLST  11.38  May   12.50  EQLEV   1.69  14.84     4   208
IMRS  18.13  May   20.00  QIQED   2.63  14.48    20   131
BTC   14.06  May   15.00  BTCEC   2.00  14.22    50    55
HYSL  14.19  May   15.00  WQEEC   2.00  14.10    20   130
SPGLA  7.13  May    7.50  SQEEU   1.00  14.04    15    93
TWLB   8.53  May   10.00  QBTEB   1.19  13.92     5   466
WIND  22.81  May   25.00  QWVEE   3.13  13.70     6    45
ARTT   8.00  May   10.00  AOQEB   1.06  13.28     8   414
BAANF  9.44  May   10.00  BQFEB   1.25  13.25    10  1614
AZPN  12.81  May   15.00  ZQPEC   1.69  13.17    15   147
TAVA   6.19  May    7.50  QTVEU   0.81  13.13    25  1019
UICI  23.00  May   25.00  FQJEE   3.00  13.04    15    81
PPD   28.75  May   30.00  PPDEF   3.75  13.04     3    59
DTLN  22.88  May   25.00  OGQEE   2.94  12.84     5   250
NOI    8.88  May   10.00  NOIEB   1.13  12.68    15   196
MWHS  19.75  May   25.00  MQREE   2.50  12.66     1    32
STRX  13.00  May   15.00  TQQEC   1.63  12.50    35   302
ATML  17.19  May   17.50  AQTEW   2.13  12.36     5   748
PCMS   6.34  May    7.50  PQPEU   0.75  11.82    22  1523
MRL    6.38  May    7.50  MRLEU   0.75  11.76     4   275
STBI   6.50  May    7.50  SQKEU   0.75  11.54     2   111
CYMI  22.88  May   25.00  CQGEE   2.63  11.48    12   234
IFMX   8.75  May   10.00  IFQEB   1.00  11.43   103  2436
CNC   29.94  May   30.00  CNCEF   3.38  11.27    20  1147
MICA   8.47  May   10.00  MQIEB   0.94  11.07    33    90
CLFY  27.13  May   30.00  QCYEF   3.00  11.06     9    16
PSSI  11.38  May   12.50  PYQEV   1.25  10.99    72    84
LIPO  13.69  May   15.00  LPQEC   1.50  10.96    10   791
PTEK   9.13  May   12.50  TQOEV   1.00  10.96    20  1225
UCP    5.81  May    7.50  UCPEU   0.63  10.75    10   285
HUM   17.50  May   17.50  HUMEW   1.88  10.71     2   114
WAVO   7.00  May   10.00  WKQEB   0.75  10.71    87  1061
ENMD  18.69  May   25.00  QMAEE   2.00  10.70     5   438
FCX    9.44  May   10.00  FCXEB   1.00  10.60    15   281
USAD   6.50  May    7.50  UQCEU   0.69  10.58     2    83
OXHP  18.94  May   20.00  OQXED   2.00  10.56    18  1440
HAIN  19.13  May   20.00  QQHED   2.00  10.46     8   166
QNTM  16.44  May   20.00  QNQED   1.69  10.27   150   788
SGI   15.94  May   17.50  SGIEW   1.63  10.20    58  1966
CD    16.56  May   17.50   CDEW   1.69  10.19    96  5590
GMGC   4.91  May    7.50  GGQEU   0.50  10.19     5  1149
Z      4.94  May    7.50    ZEU   0.50  10.13     5   473





************************************************************
NAKED PUT SECTION - More Technical Indicators...
************************************************************
Technical Indicators...Bollinger Bands...

Bollinger Bands are similar to upper and lower envelopes that
surround the stock price on a chart. They are generally plotted
two standard deviations away from a simple moving average. This
is the primary difference between Bollinger Bands and envelopes.
Envelopes are plotted a fixed percentage above and below a moving
average but Bollinger Bands adjust themselves to current market
conditions because standard deviation is a measure of volatility.
They widen during volatile markets and contract during the less
volatile periods.

Occasionally, Bollinger Bands are displayed with a simple moving
average line. The time period for the moving average can vary but
10 days is most common for short term trading. The SD value can
also be increased or decreased to suit your personal preference.
Most technicians lower the value to 1-1/2 standard deviations
away from the moving average when using a 10 day moving average.

Bollinger Bands do not provide the complete picture and should be
used with another indicator. When price touches one of the bands,
it could indicate a continuation of the trend or a reversal in the
other direction. Most technicians use the RSI or MACD to confirm
the indications. RSI is an excellent indicator with respect to the
overbought and oversold conditions. Generally, when price touches
the upper band, and RSI is below 70, the trend will continue. The
opposite is true for the lower band, and RSI indications above 30.
Conversely, when the price touches the upper band and RSI is near
75-80, the trend may reverse itself and move downward. The same
condition exists when the price touches the lower band and RSI is
below 25-20.

One thing to remember; don't use indicators that rely on the same
inputs to confirm the Bollinger band indication. MACD and RSI fall
into this category. Consider using On Balance Volume or the Money
Stream. RSI, On Balance Volume, and Money Stream measure different
things and can be used together as further confirmation of a trend.
------------------------------------------------------------------
Selling naked-puts offers an attractive method of generating small
profits on portfolio collateral. A premium is received for the
obligation to buy the underlying security at a specific price. A
successful outcome is achieved if the stock remains above the sold
strike at expiration. It is also one of the best ways to achieve a
technically correct entry position for owning a stock.
                      *** WARNING!!! ***
Occasionally a company will experience catastrophic news causing
a severe drop in the stock price. This may cause a devastatingly
large loss which may wipe out all of your smaller gains. There is
one very important rule; Don't sell naked puts on stocks that you
don't want to own! It is also important that you consider using
trading STOPS on naked option positions to help limit losses when
the stock price drops. Many professional traders suggest closing
the position when the stock price falls below the sold strike or
using a buy-to-close STOP at a price that is no more than twice
the original premium from the sold option.
******************************************************************
SUMMARY OF PREVIOUS PICKS 
******************************************************************
Stock  Price  Last   Mon  Strike  Opt     Profit   ROI   Monthly
Sym    Picked Price       Price   Bid     /Loss          ROI

HRBC    7.25   6.50   Mar   5.00  0.31  *$  0.31  17.6%  19.1%
EGRP   46.06  46.00   Mar  35.00  2.13  *$  2.13  18.8%  16.3%
OMKT   12.69  13.00   Mar  10.00  0.38  *$  0.38  13.0%  14.1%
DRMD    6.75   6.13   Mar   5.00  0.25  *$  0.25  15.6%  13.6%
ZD     16.94  16.81   Mar  12.50  0.44  *$  0.44  11.5%  12.5%
CLST   10.94  11.38   Mar   7.50  0.25  *$  0.25  10.2%  11.1%
IGEN   28.50  30.25   Mar  22.50  0.63  *$  0.63  10.0%  10.8%
CIEN   22.44  27.88   Mar  17.50  0.44  *$  0.44   8.9%   9.7%
BVSN   40.00  44.88   Mar  30.00  1.00  *$  1.00  11.1%   9.7%
THQI   23.25  19.88   Mar  15.00  0.69  *$  0.69  12.9%   9.4%
SUIT   32.00  29.38   Mar  25.00  0.88  *$  0.88  12.1%   8.8%
ITVU   22.75  20.50   Mar  15.00  0.38  *$  0.38   7.7%   8.4%
CIEN   24.19  27.88   Mar  17.50  0.63  *$  0.63  11.5%   8.3%
PSUN   27.00  28.50   Mar  20.00  0.69  *$  0.69  11.3%   8.2%
ZONA   32.25  27.63   Mar  25.00  0.75  *$  0.75  10.4%   7.5%
BTIM   16.63  16.13   Mar  10.00  0.25  *$  0.25   7.0%   6.1%
AVID   30.00  29.31   Mar  22.50  0.44  *$  0.44   6.8%   5.9%
CATP   30.00  25.13   Mar  22.50  0.44  *$  0.44   6.8%   5.9%
AWA**  22.75  17.00   Mar  20.00  0.69   $ -2.31 -32.8%   0.0%

** You may consider dropping AWA as the stock price suffered a
   large loss after AWA declined to merge with United Airlines.

-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

BTC    14.50  Mar 12.50  BTC OV  0.38  0     12.12   9.09%
CIEN   27.81  Mar 22.50  EUQ OX  0.38  877   22.12   6.13%
DLP    32.56  Mar 25.00  DLP OE  0.63  1751  24.37   8.82%
GLIA   27.00  Mar 20.00  QGL OD  0.31  40    19.69   5.43%
OXHP   19.00  Mar 17.50  OQX OW  0.44  1755  17.06   6.73%
PRD    24.25  Mar 20.00  PRD OD  0.44  419   19.56   7.47%
SDLI   54.50  Mar 45.00  QSL OI  1.38  20    43.62  10.09%
******************************************************************
Sequenced by Return on Investment  
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr  Basis  Expired

SDLI   54.50  Mar 45.00  QSL OI  1.38  20    43.62  10.09%
BTC    14.50  Mar 12.50  BTC OV  0.38  0     12.12   9.09%
DLP    32.56  Mar 25.00  DLP OE  0.63  1751  24.37   8.82%
PRD    24.25  Mar 20.00  PRD OD  0.44  419   19.56   7.47%
OXHP   19.00  Mar 17.50  OQX OW  0.44  1755  17.06   6.73%
CIEN   27.81  Mar 22.50  EUQ OX  0.38  877   22.12   6.13%
GLIA   27.00  Mar 20.00  QGL OD  0.31  40    19.69   5.43%
******************************************************************
Company Descriptions
******************************************************************
BTC - BancTec  $14.50     *** Reorganization! ***

BancTec markets electronic processing systems and services for
financial transaction documentation. BancTec also makes software
for electronically processing credit, debit, and courtesy cards 
for electronic check authorization. Services include system
installation and maintenance. BancTec's reorganization is well
underway and new software products will solidify their market
leadership in complex transaction management applications. Good
support near $13 and solid buying pressure on improving volume.

MAR  12.50  BTC-OV  Bid=0.38  OI=0  CB=12.12  ROI=9.09%

Chart = http://quote.yahoo.com/q?s=BTC&d=3m
******************************************************************
CIEN - Cienna  $27.81     *** Own this one! ***

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 new price target of $36 from Prudential!

MAR  22.50  EUQ-OX  Bid=0.38  OI=877  CB=22.12  ROI=6.13%

Chart = http://quote.yahoo.com/q?s=CIEN&d=3m
******************************************************************
DLP - Delta and Pine Land  $32.56     *** Merger with MTC ***

Delta and Pine Land leads the US in cottonseed production and it
also breeds, produces, and sells soybean seed. Monsanto is buying
D&PL, and together, they have developed herbicide-tolerant cotton
and soybeans, as well as pest-resistant cottonseed. D&PL is now
researching the controversial "terminator" gene, which germinates
once and would necessitate annual seed purchases. The merger is
the play and it is expected to be completed in late March/early
May. Watch MTC for stock price changes as it affects DLP.

MAR  25.00  DLP-OE  Bid=0.63  OI=1751  CB=24.37  ROI=8.82%

Chart = http://quote.yahoo.com/q?s=DLP&d=3m
******************************************************************
GLIA - Gliatech  $27.00     *** Bio-Tech ***

Gliatech develops and sells absorbable medical devices made of a
carbohydrate polymer designed to inhibit excessive surgical scars
and adhesions after surgery. The company's ADCON products protect
a patient's internal tissues from scarring following surgeries.
The company has also developed its glial cell technology to find
possible drugs to treat attention deficit hyperactivity disorder,
sleep disorders, and Alzheimer's disease. They recently canceled
plans to build new corporate headquarters; concentrating instead
on higher priority items like "making a profit". Maybe it worked!

MAR  20.00  QGL-OD  Bid=0.31  OI=40  CB=19.69  ROI=5.43%

Chart = http://quote.yahoo.com/q?s=GLIA&d=3m
******************************************************************
OXHP - Oxford health Plans  $19.00     *** Long-term play ***

Oxford is a managed health care company that provides benefit plan
HMOs and other health plans to about two million enrollees. Their
Freedom Plan allows the choice of physicians outside the network.
Its HMO products include a more economical point-of-service plan
called the Liberty Plan. The financial turn-around is on track and
the company is profiting from higher premiums. A new upgrade was
just announced last week. Short-term technical support at $17.

MAR  17.50  OQX-OW  Bid=0.44  OI=1755  CB=17.06  ROI=6.73%

Chart = http://quote.yahoo.com/q?s=OXHP&d=3m
******************************************************************
PRD - Polaroid  $24.25     *** Back on track! ***

Polaroid manufactures some 50 kinds of instant film and more than
100 different cameras that do the developing for you. The company
also sells conventional film, digital products, polarized sheet
products, sunglasses, and videotape. Polaroid's products are used
in various fields and industries. New technology, a bullish chart
pattern and a long-term upgrade from Merrill Lynch make this play
favorable.

MAR  20.00  PRD-OD  Bid=0.44  OI=419  CB=19.56  ROI=7.47%

Chart = http://quote.yahoo.com/q?s=PRD&d=3m
******************************************************************
SDLI - SDL Inc  $54.50     *** Own this one! ***

SDL makes semiconductor optoelectronic integrated circuits and
semiconductor lasers/fiber-optic systems. The company's products
are designed to overcome the traditional limitations of other
electronic and optical technologies. SDL makes applications that
assist various medical, chemical and electronic procedures. SDLI
was upgraded in early February and strangely enough, they just
purchased Polaroid's fiber-laser business. Technically, a very
sound play but make sure you are in favor of owning the stock!

MAR  45.00  QSL-OI  Bid=1.38  OI=20  CB=43.62  ROI=10.09%

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




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