Option Investor
Newsletter

Daily Newsletter, Sunday, 05/09/1999

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The Option Investor Newsletter            Sunday  5-9-99  1 of 7
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 5-7           WE 4-30          WE 4-23          WE 4-16
DOW    11031.59 +242.55 10789.04 + 99.37 10689.67 +193.78  +320.05  
Nasdaq  2503.62 - 39.23  2542.85 - 47.84  2590.69 +106.65  -109.01  
S&P-100  681.74 +  6.09   675.65 - 11.76   687.41 + 18.76  - 12.69  
S&P-500 1345.00 +  9.82  1335.18 - 21.67  1356.85 + 37.85  - 29.35  
RUT      436.11 +  3.30   432.81 +  1.08   431.73 + 10.15  + 15.72  
TRAN    3742.83 + 95.54  3647.29 + 57.61  3589.68 + 60.98  +158.30  
VIX       26.72            26.07            23.96            25.48
Put/Call    .61              .53              .59              .63
******************************************************************

No employment disaster but interest rates still went up?

Just another logic lapse in the markets on Friday as the employment
report came in at a very tame +234,000 jobs and only +.2% increase
in hourly wages. With unemployment rising to only 4.3% from 4.2%
you would have thought the bond bulls would be running to buy bonds
and sing the praises of the strong but inflation free economy. No
such luck. Like stock traders with huge positions the bond bears
sold heavy into the opening rally and kept it up all day. The bond
yield actually went up for the day to 5.81% in spite of the great
report.

What the heck is going on? It appears the writing is on the wall.
The bond junkies think the Fed will eventually have to raise rates
regardless of the lack of warning signs in the economy. The specter
of a stealth inflation invasion is upon us. Yes, there are no signs
yet, but doctor Greenspan is warning that we have the virus already
but the symptoms have yet to show. Just like kids that wake up one
morning broken out with chicken pox or measles, they had the 
virus for several days but you just could not see it. The bond 
junkies are afraid the economy will get a report someday soon that 
will unexpectedly show inflation gaining speed or worse in full bloom 
and the Fed action will be fast and harsh. Others are still predicting
a pre-emptive strike by the Fed before the actual symptoms show. 
Either way a +.25% rate increase for August is already factored into 
the bonds and some are forecasting a +.75% by the end of the year.
OOPS! The CEO of Fannie Mae, the home loan bank, said on CNBC on 
Friday that the FED was likely to raise rates soon. He said it calmly
with no worry but CNBC played it over and over all day long increasing
the impact. With the repeated emphasis on rates all day long on CNBC 
I am surprised the market managed any rally in the afternoon. Don't 
look now but the next hurdle is the PPI on Thursday, the CPI on 
Friday and the FOMC meeting the next week. 

In spite of the doom and gloom from the markets did manage to put 
in a decent showing after a rocky start. The Dow traded in a narrow
range until about 2:PM when the Friday afternoon bargain hunters
finally appeared. The afternoon rally weakened after 3:00 but a
buy program about 15 min before the close pushed the Dow back to
another closing record.


 

The Nasdaq however struggled all day after looking like 
another wave of Internet selling would overtake the small
amount of tech buying in progress. The tech large caps like
DELL, MSFT, INTC, CSCO all finished positive but most of the
Internets closed down after a brief rally in the afternoon.
An upgrade to EGRP and AMTD kept the Internet brokers afloat
all day but they stood alone among the larger net stocks.


 

The close above 2500 (2503) may have been only mildly
psychologically important. After spending so much time
under 2500 during the week this level may now become
resistance instead of support. It does appear below that
the Nasdaq slide may have slowed but there is not a lot 
of buying pressure to hold it up. The spurt of tech 
buying on Friday was not convincing with the majors only 
adding small numbers, some only fractional gains.


 


 

This Dow chart however looks like the reversed mirror 
image of the Nasdaq chart. The Dow finished at the high
of the week on the strength of the cyclicals again and
one big gainer. IBM soared to a new high adding +$8
after receiving a big upgrade. Other big gainers were
ALD +3.06, DD +1.44 and GT +2.13. If you want to really
understand what is going on behind the Dow I suggest the
DOW-30 Chart link on the newsletter page. 

Chart

If you want to know where the Dow is going this is a
good way to get the "feel" without the hype.

The following chart shows an incredible picture of the
recent past and the complete turnaround of the Advance
Decline line. This is what is providing the strength
behind the rally. In the last five weeks the DOW has 
added, starting with week ending Apr 9th, +341, +320,
+194, +99, +242 for a total of +1200 points without
a major sell off or consolidation period. This is what
is powering the move into the cyclicals. Traders are
scared that the big cap stocks that have gone up so
much in the last three months are going to be the worst
hit when the selling starts. The move into the apparent
safety of the slow moving and recently behind cyclicals
represents a value play and a safety play. However, due
to the huge rise in the cyclicals lately, some over +30%,
they are now becoming risky as traders have huge profits
at risk.


 

Yes, the market is broadening out. It has to! The profits
built into the big caps are enormous. The PE for the S&P
is now over 29 and still rising. Profits are not profits
until you sell the stock. Funds are trying to move money 
carefully out of the big guys and into the midcaps. They 
hope the midcaps will be the beneficiaries when the big 
cap selling starts. Try to take $100 million out of one 
big cap like Intel that trades 20 million shares a day and 
then invest it into ten smaller stocks at $10 mln each 
without broadening the market and inflating the advance
decline line. You cannot do it. Multiply this by hundreds of
funds. Do not get me wrong, this is great news for the market.

So what is the hurry? Historically, May and June have not
been screamers for the averages. Since 1950 May has ranked
as the eighth worst month for the Dow and June is even
worse at number ten. Thus the term "summer doldrums"
is appropriate when applied to the market.

So lets see if you understand my concerns. The market has
risen 1200 points in five weeks without any major profit
taking and we are entering the two month period that has
historically been prone to selling. Earnings are basically
over and bond yields are going out of sight. Liquidity in
the form of tax deductible contributions and tax refunds
is dwindling. Tech stocks are suffering because of the slowing
in Y2K buying. Internet stock IPOs are coming out in multiples
per day and soaking up available funds. Internet stocks which
have been up +100% in just the last two months have now given
back half their gains as constant articles on absurd Internet
valuations bombard the news services. Sounds pretty ominous.

So why should we not rush out and buy bonds for a safe 5.81%
yield? The economy is growing at an astounding rate of 4.4%
with zero hint of inflation. The global economy is healing
quickly. Consumers are spending at a record pace. There is 
no disaster on the economic horizon. As Greenspan said last
week, this is the new economic paradigm. High productivity,
low cost, low unemployment. Our island of prosperity is keeping
the entire world economy afloat. The rules have changed. Maybe 
a PE of 29 is now low. Maybe the new rules are 35, 40, 50!
Nobody knows. Maybe all the caution in the sector rotation
is misplaced. Stocks are still going up. As option traders we 
don't care why. Play winners, replace the losers.

The number one reason for investing in this market now is
also a cardinal rule. "Don't fight the tape." As option traders
we are more nimble than stock holders. You notice I said holders
instead of traders. Holders are always worried about things like
tax implications of selling. If you bought a stock three years
ago at $50 and it moved between $40 and $70 a dozen times to
end up at $55 today, the tax implications on your 10% return 
are painful. To an option trader that owned a $10 option that 
he sold for $15 two weeks later, it is just a cost of doing 
business. As the elite of the trading public we do not care 
which way the market moves as long as we keep our stop losses 
in place. So let the market move whichever way it wants and we 
will still make money. Just keep the rules in focus:

1.) Wait for an entry point
2.) Sell too soon

Maintain your focus, don't buy on impulse, have a great week!


Jim Brown
Editor


*****************************************************
JIM'S PLAYS		 
*****************************************************

I did not have much time to trade this week and again
on impluse I bought dip too soon on Tuesday afternoon.
When the Nasdaq continued down on Wednesday, I got back
out almost immediately and then waited for the next
entry point. The entry came Thursday but I was not
near a PC to trade it until the very end of the day.

Feeling that the DOW could dip after passing 11,000 I
bought some DJX puts on Tuesday as it started to roll
over after passing the milestone. I sold them too soon
but still did ok. I did it again on Friday when it
rolled over again after passing 11,000 at 3:00. 
Unfortunately the last minute buy program reversed the
downward trend at the close. It will be interesting to
see how the Dow opens on Monday after closing at 11,031.

UTX had been moving up as a cyclical/tech play with the
DOW. They announced a split and it looked like a good
DOW/split opportunity. The dip at the close on Tuesday
looked like a buying opportunity and I bought May-140
calls. The market weakness on Wednesday and the post
split announcement depression killed it. 


  

IBM appeared poised to move upward right into their coming
split. I bought it Monday and held until the downdraft on
Wednesday. Sold for a minor profit but when it started back
up on Wednesday afternoon I was suffering from sellers 
remorse. On Thursday I bought back in the morning and then
stopped out again Thursday afternoon. When it gapped open
on friday after the upgrade to a +$4 I thought surely it
would pull back with the Dow not moving. Wrong! When
I tuned back in later I was very depressed to see the +$8.


 

COF announced a 3:1 split last week and took off. The
drop on Monday afternoon looked like an entry point and
I opened a position only to have it die at the open on
Tuesday. I bailed for a breakeven and bought back in
as it started climbing later in the day. The interest
rate scare hammered it again on Wednesday and I again
was lucky enough to bail for a breakeven. COF is high
on my watch list with a 3:1 split coming. As soon as 
it starts its move I plan to be on it. Considering all
the interest rate talk I still think it is showing 
good strength by not slipping out of its 168-170 range.


 

Dell, the 2.4 billion share Titanic. It looks like the
selling has not stopped. In spite of the minor rally
by the Nasdaq on Friday, you can clearly see a top at
$40. It did break out right at the end of the day but
I am not convinced. I bought May-35 options at the
close on Thursday but bailed when the Nasdaq and Dell
dropped at 11:00 on Friday. I still own Dell stock
but I will wait to see if the selling stops before
buying more options. I sold the May-50s on the bump
on Tuesday for about half what they were the week before.
I really made a rookie mistake by letting a large position
drop 50% the previous week. NEVER DO THAT!


 

Last Friday was my normal, two weeks until expiration,
sell naked puts day. With the Nasdaq so weak everything
I had been following was either moving down or had a 
split just before expiration. Either is a recipe for 
disaster. The most likely candidate was CMGI. I saw an
opportunity to double tap the downward trend and coming
split which occurs after expiration. When CMGI failed
to rally on Friday the second time at $230 I sold the
May-250 calls for $15.75 and then a short while later
the May-210 puts for $15.00. I am hoping for CMGI to
trend down some more this week and then trend back up
into the split on May-27th. My risk in selling uncovered
on CMGI is of course huge. To hedge my risk while it
is moving down I also shorted CMGI as it passed through
$225. I will hold the short as long as it is moving
down to protect myself against the chances of being 
PUT at $210. (slim with the split coming) Once the
trend reverses upward I will close the short and go
long the stock to protect myself on being called out
on the upside. At this point I have collected $30.75
and the short is worth $3 more or less. The ideal
position would be to have CMGI continue down to the 
$200-210 range before starting a split run. I would 
cover the short when it passed back through $210 and
go long. If it continued through $250 on its split
run, and you know CMGI would have no trouble moving
that far if the Internet sector turns positive, then
my profit on the transaction would be somewhere in the
$95 range. $10-15 on the short, $40 on the long, $30
on the option premiums. Not bad for two weeks IF I 
don't get whipsawed by the market on the short/long
stock position. This is pretty easy to guard against
with but to cover stop orders. The short/long stock
position will have to be watched closely due to the
volatility of the stock. I will keep you posted.  


 


Calls bought and sold this week. 

IBM   MAY-200 IBM-ET @ $12.50 sold $15.00 profit $ 2.50
COF   MAY-160 COF-EL @ $13.25 sold $13.25 even   $  .00
DJX   MAY-1200DJV-QH @ $ 3.00 sold $ 3.50 profit $  .50
IBM   MAY-200 IBM-EJ @ $16.00 sold $15.00 loss   $ 1.00
COF   MAY-160 COF-EL @ $13.00 sold $13.00 even   $  .00
UTX   MAY-140 UTX-EH @ $10.00 sold $ 8.50 loss   $ 1.50
DELL  MAY-50  DLQ-EJ @ $  .44 sold $  .88 profit $  .44
DELL  MAY-35  DLQ-EG @ $ 6.00 sold $ 5.75 loss   $  .25

Open positions:

LONG  DJX   MAY-112 DJV-QH @ $ 3.00    
SHORT CMGI  MAY-250 GCB-EJ @ $15.75
SHORT CMGI  MAY-210 GCB-QB @ $15.00
SHORT CMGI  stock          @ $225.00
LONG  DELL  stock @ avg of $41.38



*******************************************************
TRADING CONFIGURATION
*******************************************************

Many of the seminar attendees had requested my Interquote
setup and how I use it. After the Qcharts article last
week many have questioned the need for both. That must
remain your decision. Personally I still use both and
for different reasons. The Qcharts is after all basically
a charting program and Interquote is just that, a quote
service. Both are very good in what they do. I use
Interquote as a historical tracking function, sector 
tracking tool and a portfolio tracker.

This is the major portion of the setup which should give you
some scale. It extends off the screen to the right and far below
the screen to the bottom. I will show each section in detail 
below.


 


The header contains all the market indicators I watch. These are by 
no means all possible but these are the ones I deem required. The
symbols by circle 1 are the Interquote symbols for the different 
indicators. I added the english description for this example.
The green numbers at circle 2 are of course the Dow and Nasdaq changes
for the day. Green = positive, Red = negative. Circle 3 is the NYSE
ticks for the last sampling period. The green 505 shows that at the
close on Friday, 505 more stocks had traded higher in the last sampling
period than had traded lower. A red number here is a bad sign meaning
more traded down than up in the last period. This updates every few 
seconds. Circle 4 is the same tick indicator for the DOW 30 stocks.
This means there was a net of 16 positive ticks in the last period.
Circle 5 is the Nasdaq and NYSE net advance declines. For instance
for the Nasdaq there were 2012 higher and 1507 lower making a net
positive of 257 for the last period. This visual representation of 
2,3,4,5 give you an immediate picture of the health of the market. 
If these numbers are all increasing you are in good shape. Numbers
decreasing of course are a warning of things going bad. Simple, visual!


 

This is the body of the screen which I use as a realtime portfolio 
tracker. All these fields are user programmable. Bear with me here.
If you have ever used an Excel spreadsheet you can use this with
ease. We have all the normal columns like symbol, volume, last, bid, 
ask, etc. There are dozens of these and you can place them in any order. 
The power of Interquote lies in the programable fields. For instance
around circle 6 I have programed the field to the left to be a profit
for that trade. I enter the price I paid $13.25 in the third column
and the number of contracts in the fifth column. The fourth column
has been programed to calculate the profit/loss by taking the then
current bid (selling price) and subtracting the purchase price then
multiplying by the number of contracts/shares. This is realtime and
updates tick by tick. As you can see below a zero in column 5 does
not compute. Circle 7 has been programed to sum the entire column
and provide a total profit and loss in real time. As you can see
there is stock on line 15, and long calls/puts on 17, 19, 21, 23,
25, 33 and shorts on 36,37,38. Each field can be programed in seconds
to handle any type of trade. 

Circle 8 has been programmed to take the amount of money in my IRA
and calculate the number of shares of stock I can buy at any moment
of the stock on that line. 

The column under circle 8 has been programed to calculate the amount
invested in each position and total at circle 9. The top number at
9 is "invested" the bottom number is "available" (numbers shown are
for example purposes only) 


 


To the right of the screen above is a weekly tracking section. At the
end of the day I copy the change column into the appropriate day
and this provides me at a glance the history for the week.
The entire column could be programed like the top line (22.38)
to show the total for the week for each stock.


 

Under the main section I have my sector lists. Interquote can
track up to 300 symbols in one portfolio. I have only listed
one sector here but I keep a full 300 symbols representing
each sector. I can then just page down and see in realtime
what each sector is doing.


 

Interquote may not be the answer for you and it may not be
the best program available. There are many features I
do not use but for what I use it for it can't be beat
for me. This is a very brief demo of the features and
only scans the surface. In keeping with making this
the largest newsletter in history I know many of you
already have Interquote so I am going to send everyone
a copy of this portfolio. If you don't have IQ just delete
the email.

Good Luck





*******************************************************
OPTION DISCUSSION GROUPS
*******************************************************

Option Clubs Take Off

Many clubs held their first meeting within 
the last week. Others are hosting the initial
get-together later this month. Participants 
had this to say about the gatherings:

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

It was great to sit and talk with people that speak the same 
language I do! 
tcmsc@webtv.net, Coral Springs, FL

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

We found that most of the members are fairly new (six months or 
less), want to learn more about various trading strategies, and 
get better at timing trades through better understanding of 
technical analysis. 
vester@home.com, Orange County, CA

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

Everybody made a significant contribution and all benefited. 
In short, a good time was had by all. Some just want to confirm 
that there is really money in this, actually talk to someone 
who's made some, smell the battle dust, and get the confidence 
to retry. Others - more advanced - paid cash for the Mercedes, 
paid off the house note, and just want to know if the cash flow 
is consistent enough to quit the job. Then there is always the 
gratifying experience of passing on the knowledge and mentoring 
the less knowledgeable.
geoff.gish@mindspring.com, Atlanta, GA

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

I brought my notebook loaded with TC2000, so we could view the 
technicals of the individual stock we were talking about. We had 
seven, highly motivated, excited people at the meeting and it 
appeared early that we would be there for awhile talking about 
our favorite subject. 
RTBS77@aol.com, Portland, OR

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

We had our first meeting last night and I believe it was quite a 
success. We had 20 people attending with another 3 who could not 
make it. We have scheduled to meet the 4th Thursday of every month.
Our typical agenda will be 45 minutes of general discussion followed
by a topic specific presentation/discussion. We will have our next 
meeting May 27 to get us on our 4th Thursday cycle. At that meeting 
one of the members will bring his lap top and present InterQuote.

john@marymonte.com San Jose, CA

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

We were all pretty excited to get together and talked longer than 
we anticipated. We had many of the same questions and decided to 
meet weekly until we get talked out. Attached is a photo for your 
amusement.
handerson@viewtech.com, Plano, TX


 


ONLY THE LONELY

We have states with interested participants, but NO ORGANIZERS! Being 
an organizer doesn't take much time. An organizer is simply the contact 
person to inform others of meeting times, dates, places, etc. Any further
responsibility is up to each individual. If you live in AR, DE, KY, LA, 
ME, MS, MT, OK, RI, SD, or WV . . . WE NEED YOU to help organize a 
discussion group! 

We also have discussion groups that want more members! There are no dues, 
except the learning experiences you have already earned. We view the 
association with other like-minded traders as an opportunity of a lifetime. 
The opportunity to learn from others that have made and overcome the same 
common mistakes should accelerate your trading skills and hopefully reduce
the expense that comes with a long learning period. 

Contact Support



***************
Market Posture
***************
As of Market Close - Friday, May 7, 1999 

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

DOW Industrials    9,750  11,000  11,032    BULLISH   5.7  *                
SPX S&P 500        1,300   1,350   1,345    Neutral   4.29         
OEX S&P 100          660     690     682    Neutral   4.29           
RUT Russell 2000     390     435     436    BULLISH   5.7  *   

NDX NASD 100       2,100   2,250   2,118    Neutral   5.7  * 
MSH High Tech      1,000   1,100     993    BEARISH   5.6               

XCI Hardware         900     920     872    BEARISH   4.29                    
CWX Software         600     650     623    Neutral   4.22                   
SOX Semiconductor    390     420     387    BEARISH   4.29             
NWX Networking       450     490     507    BULLISH   4.22                 
INX Internet         550     650     539    BEARISH   5.04            

BIX Banking          700     720     712    Neutral   4.30                          
XBD Brokerage        425     500     442    Neutral   4.14             
IUX Insurance        630     660     655    Neutral   4.29                  

RLX Retail           900     970     876    BEARISH   4.29 *             
DRG Drug             390     425     374    BEARISH   4.29             
HCX Healthcare       780     850     765    BEARISH   4.29                      
XAL Airline          170     180     184    BULLISH   5.04      
OIX Oil & Gas        260     285     306    BULLISH   3.30                        



Posture Alert

Diverging opinions with respect to the inflation outlook 
following the release of the employment data caused the
market to end the week essentially where it began.  After
recovering and holding above key benchmarks, we have
turned Bullish again across the Blue Chip DOW and Russell 
2000 and Neutral across the NSAD 100.

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

/members/marketposture



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

None scheduled

Tuesday:

LJR Redbook         5/08   Forecast:  --     Previous: -0.5%
API Oil Stocks      5/07   Forecast:  --     Previous: -1.77M
Non-Farm Productivity Q1   Forecast:  2.8%   Previous:  4.6%  
Unit Labor Costs      Q1   Forecast:  0.5%   Previous: -1.1% 

Wednesday:

Atlanta Fed Index    Apr   Forecast:  --     Previous: 14.3%
Import Prices        Apr   Forecast:  --     Previous: 0.1% 
Export Prices        Apr   Forecast:  --     Previous: -.3% 

Thursday:

Jobless Claims      5/08   Forecast:  --     Previous: 307K 
Money Supply(M2)    5/03   Forecast:  --     Previous: $13.8B 
Producer Price Index Apr   Forecast:  0.4%   Previous:      
Retails Sales        Apr   Forecast:  0.4%   Previous: 0.2% 

Friday:

Consumer Price Index Apr   Forecast:  0.4%   Previous:  0.2%  
Business Inventories Apr   Forecast:  0.2%   Previous:  0.4%
Industrial Prod Cap. Apr   Forecast:  0.3%   Previous:  0.1%
Michigan Sentiment   Mar   Forecast: 80.1%   Previous: 80.1%
Real Earnings        Apr   Forecast:  --     Previous: -0.2%




REAL-TIME Stock an Option Quotes
********************************

We are constantly asked for our recommendations for a 
real time quote service for stocks/options/futures/indexes etc. 

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

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

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

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

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

http://www.interquote.com/



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

The Option Investor Newsletter              5-9-99
Sunday                   2  of  7

*********************************************************
Market Sentiment - By Pinnacle Capital Advisors
*********************************************************
Sunday, May 9, 1999

Approaching Failed Rally Zones

Although the Blue-chip Dow Jones Industry average closed in new record 
territory, other broad market indices are nearing potential failed
rally zones and could turn into key reversal signals given our other
technical and sentiment indicators.

Savvy option traders recognize that there are mixed signals being given
by the market including the sector rotation and divergence in put-call
ratios, among others.  Yet when it comes down to determining whether we
are long or short, Pinnacle Capital Advisors likes to use key
benchmarks to break the tie and form its market posture.

If a broad market index or industry sectors is trading ABOVE the
benchmark, we are Bullish.  If the index is trading BELOW the
benchmark, we are Bearish.  It's that simple.  There's no ambiguity. 
If you identify these becnhmarks long before the opening bell, it 
will help you plan and execute your trades during the heat of battle.

Now that the market has recovered from its recent selloff, we are 
getting close to a the place where a "failed rally can occur".  
To technicians, a failed rally is when the stock or index cannot 
reach its previous high and, therefore, becomes a Bearish reversal 
signal over the near-term.

Let's take a closer at two potential failed rallies that could occur
within the and 500 (SPX) and S&P 100 (OEX) this coming week.  Shown 
below are the indices respective highs, recent lows, Friday's (5/7) 
closing price and Pinnacle's projection of where the index could fail 
if the s&P does follow the DOW into record territory.


             52-Week     Recent     Friday's     Potential 
              High        Low       Close       Failed Rally Zone
***********************************************************************
SPX           1,372      1,320       1,345        1,346 - 1,354
OEX             695        670         682          683 -   687

The potential failed rally zone is an area defined by a retracement of
50-66% above its previous low.  As shown above,  the S&P 500 and
100 is currently approaching this zone and investors should pay close
attention to what these indices do.  If the indices fail within this
zone and give a reversal signal, GET OUT.  Don't be a hero.  You will
have another opportunity to get in.

The reason for Pinnacle's caution is based, in part, on our other 
trusted indicators are telling us including our Pinnacle Index and
Investor Intelligence survey results. Take a look, for example, at the
level of out-of-the-money calls over the past week alone - it jumped
36%.

May Expiration Cycle
OEX OTM Call Analysis (Open Interest May 680-750)
--------------------------------------------------------------------
Date                 Open Interest      Change %    
--------------------------------------------------------------------
Friday, April 30            65,936        -       
Friday, May 7               89,736      +36.0% 
 
These indicators suggest that option speculators are betting that the
S&P 500 and 100 will follow the DOW into record territory.  This could
still happen but if it doesn't, savvy investors should be on the right
side of the trade.


From a contrarian sentiment perspective, the level of advisory
newsletters moving over to the Bullish camp is reaching levels
as reflected in this week's Investor Intelligence survey.

                                   Bullish      Bearish
************************************************************
April 28, 1999                        56.1        30.7     
May 5, 1999                           58.1        27.6  *   



BULLISH Signs:

Russell 2000: 
Closed ABOVE key 435 level.  After consolidating just below the
key 435 level, the Russell 2000 index (RUT) closed above the key
435 level. 

Advance/Decline Line:
Recovering appears to be holding but beginning to roll over again.


BEARISH Signs:

Interest Rates:           
Trading ABOVE 200dma and 5.50 Benchmark. (5.813%)

Market Volatility (VIX):  
After consolidating below its 50-day moving average (25.94), the 
VIX closed up sharply and closed above its 50-day moving breaking
the current bullish trend.

Pinnacle Index:  
Our Pinnacle Index has spiked to 5.2 on the OEX (680-750)
suggesting that option speculators are expecting the market to
advance higher.

Investor Intelligence:  
As a contraian indicator, the pecent of Bullish investor spiked 
from a week ago suggesting bullish sentiment picking up steam. 


 



 

 
OTM Call Analysis

As we move through May's expiration cycle, Pinnacle is tracking 
the level of call buying (OTM) between 680-750 among option
speculators. As we have been documenting, excessive out-of-the-
money (OTM) call may serve as overhead resistance.


April Expiration Cycle
OEX OTM Call Analysis (Open Interest Apr 650-700)
-----------------------------------------------------------------
Date                 Open Interest     Change %    Alert
-----------------------------------------------------------------
Friday, March 19            35,626         -
Friday, March 26            60,266      +69.2%     
Friday, April 2             70,952      +99.2%     
Friday, April 9             74,028     +107.8%     


May Expiration Cycle
OEX OTM Call Analysis (Open Interest May 680-750)
-----------------------------------------------------------------
Date                 Open Interest      Change %    Alert
-----------------------------------------------------------------
Friday, April 16            30,697          -
Friday, April 23            53,887       +75.5%      
Friday, April 30            65,936      +114.8%       
Friday, May 7               89,736      +192.3%     *



Market Sentiment at a Glance
****************************************************************
                                Friday     Tues      Thurs  
Indicator                       (5/7)     (5/11)     (5/13)Alert
*****************************************************************

Pinnacle Index (OEX):          
-----------------------------------------------------------------
Overhead Resistance (680-700)     2.3
Underlying Support  (645-660)     2.7    

Put/Call Ratios:
-----------------------------------------------------------------
CBOE Total P/C Ratio               .5
CBOE Equity P/C Ratio              .4
OEX P/C Ratio                     1.8


Peak Open Interest (OEX):
-----------------------------------------------------------------
Puts                              650
Calls                             700
P/C Ratio                         .88 *


Market Volatility Index (VIX):	
-----------------------------------------------------------------
CBOE VIX                        26.72 *          



Investors Intelligence:
-----------------------------------------------------------------
Bullish                         58.6% *
Bearish                         27.6% *	



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                        (5/7)     (5/11)     (5/13)
-----------------------------------------------------------------
               
Overhead Resistance (680-695)      2.1

OEX Close                       674.54

Underlying Support  (645-660)      2.6


 
Average ratings: 
Resistance levels 2.0 / Support Levels .5

What the Pinnacle Index is telling us:
Overhead sentiment resistance is building at the OEX 680/695 
level while the underlying support is holding at the OEX 645/660 
level.


Put/Call Ratio 
-----------------------------------------------------------------
                                Friday      Tues       Thurs
Strike/Contracts                 (5/7)     (5/11)     (5/13)
-----------------------------------------------------------------
CBOE Total P/C Ratio               .54
CBOE Equity P/C Ratio               36
OEX P/C Ratio                     1.84



Peak Open Interest (OEX)
-----------------------------------------------------------------
                     Friday         Tues          Thurs
Strike/Contracts     (5/7)          (5/11)        (5/13)
-----------------------------------------------------------------
Puts                 650 / 12,841
Calls                700 / 15,350
Put/Call Ratio      .84


 

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
March 4, 1999       Bottom              28.15   

April 30, 1999                          26.07 
May 7, 1999                             26.72 


 

 
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
March 4, 1999       Bottom            49.1        32.5

-----------------------------------------------------------------


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                     54.1        31.5   

March 3, 1999                         50.9        32.1   
March 10, 1999                        49.1        32.5   
March 17, 1999                        52.6        17.6     
March 24, 1999                        55.9        29.7     
March 31, 1999                        55.6        31.6     

April 7, 1999                         56.4        31.6     
April 14, 1999                        55.9        30.5     
April 21, 1999                        56.4        30.8     
April 28, 1999                        56.1        30.7     

May 5, 1999                           58.1        27.6  *   




*******************************
Brokers Corner #1
*******************************

Monthly Dividends

In my last article, I asked for suggestions on different strategies
that readers would like to be a little enlightened in. I had many 
requests for Covered Calls. For those of you that like Jim's 
philosophy of 10% a week may not like this strategy. I found this 
to be unusual because of the potential of making large amounts of 
money due the volatility of the markets. A slow and steady strategy 
may not offer the appeal of more aggressive strategies like long 
calls and straddles. However, I don't mean to trivialize the purpose 
and functionality of this strategy. Lately, the market has presented
many opportunities to catch gigantic upswings or downdrafts on 
stocks(CMGI for example). This phenomenon hasn't been reserved 
independently for internet stocks. Financial stocks like PVN moved 
over 15 points on Thursday and another 3+ on Friday. A once docile 
stock, SCH(Charles Schwab) in now a super stock able to go up over 
tall buildings and dive faster than a speeding bullet. I am afraid 
every on will be bored with the idea of making a 5-10% return per 
month on a covered call. The stocks that move fast offer the potential
to make a lot of money fast. However, they also present the risk of 
losing it even faster. Don't get me wrong I love playing options on 
the fast movers. In fact I have my list of favorites (refer to the 
article Another Trading System).

I have to say, I LOVE covered calls. Covered calls are like receiving
a dividend every month. Calls, puts, straddles, strangles, spreads, 
etc. I use them all. Covered calls offer one thing that all of those 
don't. Peace of Mind. I realize that some stocks may drive you crazy 
every day. If you pick the right one's, the stress can be reduced. I 
like to buy stocks with consistent upward movement. Volatility is also
required in order to make some money on the call. When I buy a stock 
for this strategy, I want to have the call assigned. But if market 
conditions don't present this option, I want to own a quality stock 
with great fundamentals and technicals that offer long term potential. 

As option traders, what are we most scared of? Losing the time value 
premium because the stock went down and we want to wait on TIME for 
the stock to come back. With covered calls, you sold that time for 
COLD HARD CASH. You don't have to worry about a little decline one 
week. One of the few risks of this strategy is called opportunity 
loss. This occurs when you buy a stock at 55 and sell a May 60 call 
because it has a good premium. Then in two weeks time the stock 
rockets up to record territory in the 150's. This doesn't happen every
day though. The mechanics of this trade consist of buying a stock that
one thinks will go higher and simultaneously sell a call against the 
stock. The call is sold to open. This is a contract that gives the 
buyer the right not the obligation, to purchase this stock. The seller
has sold the right to sell the stock at the specific strike price. 
There are various strategies that one can do with this. One is buying 
back the call in a closing transaction. Most of the time this is done 
if the stock drops, and the speculator believes that the stock will 
retrace within a short period of time. Then the investor sells the 
option again. This is a more aggressive approach, but it can work for 
you.

There have been many occasions in the past that I like many other 
investors got caught up in the idea of getting a 25% return for one 
month. But soon realized that I would be lucky to break even. And if 
not enough, it might take five months to get out at even. What 
happened to that 25% return? I have found many covered call stocks 
that seem to be very expensive at first, but reveal great returns for 
the money. Some might call them blue chips. I call these stocks 
industry leaders, growth stocks, and portfolio stocks. They usually 
range in price from $30-$70 per share. I try to average 5-10% per 
month consistently. However, I have had some months that presented 
10-25% returns and others that stayed flat. You should also 
familiarize yourselves with the covered call section of the newsletter. 
They have had great results. Remember, you don't have to trade every 
day to make a lot of money in the market. You just have to be 
consistent. Sometimes patients is your best strategy. Slow and steady 
wins the race.

I hope this has helped you. I always enjoy hearing your comments 
and suggestions. If there are some topics you would like to have 
discussed please contact me. 

Note: This article is for information and educational purposes only 
and by no means is recommending trading such strategies. Please refer 
to the disclaimer at the end of the newsletter. 

Robert J Ogilvie, ROP & GSP
Baxter, Banks & Smith, Ltd.
Sarasota, FL
800-982-2119
RJOgil@AOL.COM

*******************************
Brokers Corner #2
*******************************

DO YOU TRADE OPTIONS ON THE INTERNET TO SAVE MONEY OR TO MAKE MONEY?

Options are a great vehicle to trade the markets because of both 
the leverage they provide and the limited-risk provided to those 
who purchase them. The key to successful trading is being
disciplined. Due to the increased leverage inherient in options, 
wild price swings will make you trade emotionally. Plan your trade 
and trade your plans as some have been known to say.

Fear and greed rule the markets. Do not allow these factors to 
dominate your trading, by causing emotional stress and panic with 
every twist or turn throughout the day. You cannot control the 
market; you only can attempt to control the risk. A full service, 
live option specialist will cost a few dollars more (approximately 
the same as Charles Schwab) but the execution difference and piece 
of mind will more than pay for themselves. The simple truth is that 
there is a cost for doing business. Both commission and slippage 
(difference in the bid/offer spread, and execution on stop-loss 
orders) take money from your potential profits.

Internet trading and discount brokerages provide a great service 
for stock traders who know exactly what they want to do without 
dealing with a broker. If you are buying shares for the long term, 
it definitely makes great sense. However, in the labor intense 
option markets, those that need a little assistance, either in 
selecting a strategy based on their individual style or simple
option education, a live option trained specialist can lessen 
anxiety and more importantly increase profitability.

One major advantage in using a live broker is better execution. A 
price difference of 1/8 on the execution of five options contracts 
totals $62.50 and will more than cover the slightly higher full 
service commissions. The reality of option trading is that many 
discount services get paid for their order flow, and have no 
incentive to get good execution. The novice option trader is
unfortunately more content with supposedly saving money on 
commission by seeing the $25 commission on their statements 
rather than understanding the amount that they gave away on 
the execution. We are able to work the difference in the spread 
and get the best possible price.

It is a good idea to have both a profit and stop loss order in 
place to prevent the emotional overreaction that is the detriment 
to most trading. Make a solid plan and have the discipline to stick 
to it. A full service option broker will assist you with your 
strategy in choosing the right strike price and month of option 
expiration based on your style of trading and provide the highest
mathematical probability of success. We can then implement that 
strategy based on your instructions and lessen the burden on yourself.

Of course my opinion of brokerage services is biased because we deal
one-on-one with option traders and think that we add a lot of value 
to the execution that does not necessarily show up on the statements.
It is reflected in the confidence of the clients that we deal with, 
that we are providing the best opportunity to make money with the 
least anxiety. Call us to see how an informed experienced live broker 
can help you make money not save money.

Alan Knuckman
Lasalle Street Securities
Toll Free 888-281-9569
Andrewoption@hotmail.com



Andy and Alan are on our recomended broker page and they have a 
new/old home!


Chicago, Illinois - Business Wire - March 5, 1999 08:30


FULL SERVICE OPTION SPECIALISTS AT LASALLE STREET SECURITIES

Option specialists Andy Aronson and Alan Knuckman head up the options 
division in Chicago and are now available to assist option traders 
across the country. Through a back office change to Lasalle Street 
Securities they are now licensed to do business in all 50 states.

Andy and Alan have not moved their office adjacent to the Chicago 
Board of Options Exchange but simply changed their back office to 
be able to serve clientele throughout the United States. Their option 
expertise and ability to assist clients of all levels of experience 
provide to be valuable assets to both customers and Lasalle Street 
Securities.

Founded in 1974, Lasalle St. Securities customer accounts are carried 
by National Financial, a Fidelity Investments company, and receive 
$99.5 million account protection in addition to the $500,000 provided 
by the Securities Investor Protection Corporation (SIPC).






***************************************
Last weeks change for this weeks picks:
***************************************

Index     Last   Week
Dow    11031.59 242.55
Nasdaq  2503.62 -39.23
$OEX     681.74   6.09
$SPX    1345.00   9.82
$RUT     436.11   3.30
$TRAN   3742.83  95.54
$VIX      26.72   1.71

Stock            Week

QCOM     216.25  16.26 Dropped, looking too weak before split
TMX       88.13  12.38 Great Momenmtum, expect profit taking!
GT        66.75   9.56 New, smokestack stock that is on the run
MCHP      44.31   9.31 New, setting new 52 week highs
IBM      217.25   8.30 Tech's knight in shining armor
TV        48.88   7.88 New, holding its recent gains
TBH       99.50   7.87 New, another with great momentum
AET       95.00   7.31 Setting new highs
UNP       67.00   7.14 Acting very bullish, look for entry
ROK       58.63   7.00 New, no weakness here
BRCM      83.69   6.57 Intraday moves can provide entry points
ALD       64.63   5.88 New, cyclical. If you can't beat them-
EMR       70.06   5.56 New, another cyclical on fire!
BA        45.75   5.13 New, momentum is strong
QWST      90.13   4.69 New, splits 2:1 on May 24th
PPG       69.44   4.50 New, another cyclical with momentum
CMVT      67.44   3.32 Confirm stock and market direction first
HWP       79.94   1.06 Earnings are May 17th, time to run
FD        47.63   0.93 Dropped, earnings before the bell Tues.
CTXS      42.63   0.13 Learn the stock's trading cycles
DELL      40.19  -1.00 Seven trading days left!
LU        57.75  -2.26 Bounce off $56 good, but confirm direction
ANF       91.19  -3.63 Dropped, looking too weak before earnings
COF      169.38  -4.31 Splitting 3:1 on June 1st.
EGRP     110.38  -5.13 Splits 2:1 on May 24th, 2 weeks 2 go
CSCO     108.50  -5.57 Dropped, looking too weak before earnings
VISX     121.75  -7.00 Intraday moves can provide entry points
MFNX      77.06  -7.19 Beware surprise earnings announcement
NITE     145.25  -7.94 Splits 5/17, 5 trading days left!
NTBK     165.00 -23.99 Splits 3:1 on 5/14, should be a good week
RNWK     192.50 -29.00 Dropped, looking too weak before split

Puts

YHOO     147.44 -27.26 New, below its 200 dma and dropping
BVSN      48.00 -10.07 Upgrade is no help
SFE       71.50  -9.51 Still needs to consolidate further
MSPG      88.00  -8.93 Internets still look weak
TBFC      93.12  -4.88 New, new competition will be tough
LVLT      88.50  -1.56 New, another channelling stock at the top
JNJ       96.13  -1.37 Thursday appeared to be a fluke
SEEK      51.13   0.06 Internets still look weak
FNM       72.13   1.18 Time to buy a put again
LOW       54.56   1.81 Dropped, not performing
GIS       75.13   2.01 Dropped, weak reversal still a reversal
DD        74.13   3.44 Dropped, "cyclical" aura too strong
TX        67.25   4.50 New, merger rumors hard to swallow





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

CALLS:

BA   - Boeing   
TV   - Grupo Televisa
ALD  - Allied Signal
TBH  - Telecomunicacoes Brasileiras
ROK  - Rockwell Intl.
PPG  - PPG Industries
GT   - Goodyear Tire & Rubber
MCHP - Microchip Manufacturing
QWST - Qwest Communications 
EMR  - Emerson Electric

PUTS: 

TBFC - Telebanc Financial
YHOO - Yahoo!
TX   - Texaco

 

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

PLAYS CONTINUED IN SECTION THREE.

******************************
SEE DISCLAIMER IN SECTION ONE
******************************



The Option Investor Newsletter          5-9-99
Sunday             Part 3 of 7

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

BA   - Boeing   
TV   - Grupo Televisa
ALD  - Allied Signal
TBH  - Telecomunicacoes Brasileiras
ROK  - Rockwell Intl.
PPG  - PPG Industries
GT   - Goodyear Tire & Rubber
MCHP - Microchip Manufacturing
QWST - Qwest Communications 
EMR  - Emerson Electric

PUTS: 

TBFC - Telebanc Financial
YHOO - Yahoo!
TX   - Texaco

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

QCOM $216.25 (+16.25)  Last week, QCOM added +$16.25 as 
it made its split run.  As those of us who were playing well 
know, it didn't come easy.  QCOM made violent moves each day 
and had us heading to the medicine cabinet for a good dose of 
aspirin.  By looking at QCOM's intraday chart for Friday, QCOM 
began to sell off as the markets surged near the close of 
trading.  This could be a sign of weakness for QCOM and 
therefore, we are dropping it as a play.  If you are still 
holding positions, set those stop losses as tight as possible 
and remember that we never recommend holding over a split 
since 7 out of 10 companies suffer from post split depression.  
QCOM will split its stock 2:1 on Tuesday May 11th.

CSCO $108.50 (-5.56)  Cisco did manage to finish positive 
+1.56 on Friday.  However, with the NASDAQ so bleak this 
earnings run is fizzling.  Earnings are due Tuesday after 
the bell and you're positions should be closed by then anyway.
Remember, there's the possibility of Cisco announcing a 3:2 
split and perhaps that'll spice things up.  But for now we're 
dropping CSCO from our list.

ANF $91.19 (-3.63) We are dropping ANF this week.  The stock 
has broken down below its ascending channel, though it is 
still above the 50-dma.  However, ANF could never get things 
going this last week and had but one day that was positive. 
We still believe that at this price level they remain a split
candidate with their earnings. 

RNWK $192.50 (-29.00) We are going to let RNWK go this week.  
We really thought last weeks conference would spur on some 
buying, but it was not to be.  There are two things still 
intact for the bulls.  RNWK is still holding above its support 
of $180.00 and the stock splits on May 11th.  This things 
could help RNWK this coming week, but the risks are to high 
to recommend.

FD $47.63 (+0.93)  FD will announce its earnings on 
Tuesday before the market opens.  We highly suggest closing 
any open positions on Monday since we never recommend holding 
over the actual report.  Even blow-out numbers with the 
potential for marginal gains aren't enough to justify the 
risk.  Add to that the fact that FD has made a significant 
run for a slow moving stock (a run of $10 in April) and you 
have a decent formula for profit taking no matter what FD 
says during its reports.  We are now dropping it as a play.


PUTS: 

LOW $54.56 (+1.81) Downgrade or Upgrade.  Which do you believe?  
Lowe's received a downgrade on Thursday the 29th that triggered 
a sell-off of more than 3 points and pierced key support levels.  
But on Wednesday they got a boost from a Schroder analyst whom 
upgraded the company.  They moved the rating to an Outperform 
Significantly from an Outperform.  Only time will tell who is
right but for now it has killed the momentum on our play and
forced it off the put list.   

GIS $75.12 (+2.00) General Mills successfully moved through
it's resistance in the upper $74 range.  We mentioned this on
Thursday as a level that will hold and provide a new downtrend
or signal for our stop losses to exit the play.  Its not the 
outcome we wanted but its better to take money off the table 
and move on to another play because this could spark a rally 
in GIS back to the 50-dma at $77 due to the change of 
sentiment.    

DD $74.12 (+3.44)  Apparently DD's earnings announcement two 
weeks ago then they said 1999 could see a 'slight' improvement 
has interested investors.  This is an example of the perception 
people have lately of cyclicals.  There is nothing fundamentally 
changed about the chemical industry as prices are still at 
historical lows but investors are viewing them as a safe harbor 
from the volatile technology sector.  No one ever blamed the
market for being logical.  DD is obviously not performing
as a put.




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

PVN  - Providian
MWD  - Dean Witter
ANF  - Abercrombie & Fitch
YHOO - Yahoo

 

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

Symbol - Stock      Splits/Date  

QCOM - Qualcomm        2:1 05-10-99 ex-date 05-11 
RNWK - RealNetworks    2:1 05-10-99 ex-date 05-11 
VISX - Visx Inc        2:1 05-12-99 ex-date 05-13 current play
COX  - Cox Comms       2:1 05-13-99 ex-date 05-14
NITE - Knight-Trimark  2:1 05-14-99 ex-date 05-17 current play
NTBK - NetBa@nk        3:1 05-14-99 ex-date 05-17 current play
PMCS - PMC-Sierra      2:1 05-14-99 ex-date 05-17
TGLO - Theglobe.com    2:1 05-14-99 ex-date 05-17
GMST - Gemstar         2:1 05-14-99 ex-date 05-17
AOC  - Aon Corp        3:2 05-17-99 ex-date 05-18
MEL  - Mellon Bank     2:1 05-17-99 ex-date 05-18
TLAB - Tellabs         2:1 05-17-99 ex-date 05-18
COVD - Covad Comms     3:2 05-18-99 ex-date 05-19
ALTR - Altera Corp     2:1 05-19-99 ex-date 05-20
CDWC - CDW Computer    2:1 05-19-99 ex-date 05-20
MFNX - Metromedia      2:1 05-19-99 ex-date 05-20 current play
ISSX - ISS Group       2:1 05-19-99 ex-date 05-20
CNCX - Concentric Net. 2:1 05-21-99 ex-date 05-24
EGRP - E*Trade         2:1 05-21-99 ex-date 05-24 current play
ETH  - Ethan Allen     3:2 05-21-99 ex-date 05-24
QWST - Qwest Comm      2:1 05-24-99 ex-date 05-25 current play
IBM  - IBM             2:1 05-26-99 ex-date 05-27 current play
CMGI - CMGI Inc        2:1 05-27-99 ex-date 05-28 
EMC  - EMC Corp        2:1 05-28-99 ex-date 06-01 
C    - Citigroup       3:2 05-28-99 ex-date 06-01
CNET - CNET Inc        2:1 05-28-99 ex-date 06-01
VRSN - VeriSign        2:1 05-28-99 ex-date 06-01
APCC - Amer Pwr Conv   2:1 05-28-99 ex-date 06-01
JWA  - John Wiley      2:1 05-28-99 ex-date 06-01
VRSN - VeriSign        2:1 05-28-99 ex-date 06-01
CNET - CNET, Inc.      2:1 05-28-99 ex-date 06-01
COF  - Capital One     3:1 06-01-99 ex-date 06-02 current play
EL   - Estee Lauder    2:1 06-02-99 ex-date 06-03
FON  - Sprint          2:1 06-04-99 ex-date 06-07
TBFC - Telebanc        2:1 06-08-99 ex-date 06-09
LXK  - Lexmark         2:1 06-10-99 ex-date 06-11
BGEN - Biogen          2:1 06-25-99 ex-date 06-28
PFE  - Pfizer Corp     3:1 06-30-99 ex-date 07-01 
SCH  - Schwab          2:1 07-01-99 ex-date 07-02

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

 

SPECIAL SHORT TERM SPLIT PLAYS 
*******************************
We always recommend selling the day of the actual 
split or earlier. 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 ! 


******

VISX - Visx, Inc $121.75 (-7.00)(+13.31)

See details in sector list

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

******

NTBK - NET.B@NK Inc $165.00 (-24.00)(+13.50)

See details in sector list

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

******

NITE - Knight Trimark Group $145.25 (-7.94)(+36.25) 

See details in sector list

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

******

MFNX - Metromedia Fiber Netwk. $77.06 (-7.19)(+5.25)(P6W+36.75)

See details in sector list

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



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

THE PLAYS 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. 

*****************************************************
UNP - Union Pacific Corporation $67.00 (+7.13)(+2.88)

See details in sector list

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

******
NITE - Knight Trimark Group $145.25 (-7.94)(+36.25)

Very High Risk ! 
Splits after close 5/14

See details in sector list

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


******
NTBK - NET.B@NK Inc $165.00 (-24.00)(+13.50)

Very High Risk ! 
Splits after close 5/14

See details in sector list

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



**************
ROLLING STOCK
**************

FNM - Fannie Mae $72.13 (+1.18)(-1.37) (currently a PUT)

Fannie Mae (formerly the Federal National Mortgage Association) 
is a public company whose existence is mandated by the US 
government.  Its purpose is to provide liquidity in the mortgage 
market by buying mortgages from lenders and packaging them for 
resale as bond-like securities.  This cushions lenders from the 
worst effects of fluctuations in interest rates and allows them 
to offer mortgages to people who would not otherwise be 
considered. FNM's status as a government corporation has become
controversial because of the business advantage its federal 
hybrid status gives it over its private rivals. 

For those that have been playing FNM, you have watched a
channeling stock at its best.  FNM reached its lower limit
on May 4th and immediately reversed and headed for its
upper limit around $72.50.  On Friday, FNM reached its upper
limit.  We have to like a channeling stock that moves from
range to range in under a week.  It is now time to buy puts
again, but make sure of a move down.  We don't need to catch 
the whole $6 range, we can wait for confirmation of a new move
down first then catch a point or two.

FNM rose over $3.50 on Friday and at one time was up over $4.50.
This rise came on the jobs report news, which eased investors
concerns about rising interest rates.  

BUY PUT MAY-70*FNM-QN OI=1087 at $1.13 SL=0.00
BUY PUT MAY-75 FNM-QO OI= 154 at $3.75 SL=2.50 ITM $2.77

Average daily volume = 2.56 mln.
Chart = http://quote.yahoo.com/q?s=FNM&d=3m

*****

LVLT - Level 3 Communications $88.50 (-1.56)(+2.56)(P3W+15.25)
(currently a PUT)

Not to be confused with Intel's recent purchase of Level 
One Communications (a high-speed networking chip 
manufacturer), LVLT is the new breed of international phone 
company offering all the bandwidth you can use over its 
facilities-based Internet Protocol fiber network, parts of 
which are still under construction.  They offer local 
service, long distance, data transport and Internet access.  
Interestingly, as a spin-off from Peter Kiewit & Sons, an 
Omaha-based construction giant, LVLT still derives a nice 
chunk of income from coal mining investments (must be 
something in that Omaha water that makes the cash flow as 
well).  Craig McCaw through Nextel and Nextlink has made a 
sizable investment in LVLT in exchange for a piece of 
future capacity.

Don't get us wrong, this company has a great long-term 
future, but seems to be stuck in a newfound channel for 
now.  That's the basis for this play.  Check out the 30-day 
and 10-day charts.  They show strong support at $83 and 
strong resistance at $90.  Friday's trading, in typical 
fashion was a bit light on volume.  We expect volume to 
come back Monday pushing the price back into the $90 range.  
That's when we buy the put with the expectation that it 
will drop back to $83.  That said, this play carries a 
great deal of risk.  LVLT could simply blast through $90 
and never look back.  So, if you take a position, be sure 
to use stops to get out if the trade goes against you.  A 
strong Monday may give us a better buying opportunity if 
LVLT begins to show weakness at the end of Monday's 
trading.  Confirm market and stock direction before 
playing.

Nothing currently in the news that will affect this short-
term play.

***May strikes expire in 2 weeks
BUY PUT MAY-90 QHN-QR OI=189 at $5.75 SL=4.00 ITM 1.50
BUY PUT MAY-85*QHN-QQ OI=157 at $3.50 SL=1.75 OTM

Picked on May 2 at     $88.50    PE =n/a
Change since picked     +0.00    52 week low =$100.12
Analysts Ratings    1-4-0-0-0    52 week high=$ 22.38
Last earnings 04/99 est -0.37    actual -0.33 Surprise=10.81%
Next earnings 08-11 est -0.40    versus -0.01
Average Daily Volume = 1.7 mln.
Chart = http://quote.yahoo.com/q?s=LVLT&d=3m

*********
Internet
*********

NITE - Knight Trimark Group $145.25 (-7.94)(+36.25) 

Knight/Trimark Group is a market maker in equity securities 
listed on the OTC, NYSE, and AMEX.  The company provides market 
makers on over 4200 securities including all securities listed 
on the New York Stock Exchange.  Their customers include all 
of the major financial institutions including Merrill Lynch, 
E*Trade, Paine Webber, Ameritrade and others.  The company has 
been a major benefactor of the online trading revolution.  

Another week filled with opportunities for trading NITE thanks 
to the wild swings provided by the markets.  The entire online
trading sector moved substantially this week as investors took
profit from the recent rise.  But NITE ended on a positive note
finishing out the week by gaining 5.12 on Friday.  We are still
seeing resistance around $148 that kept the stock down on the 
week but we don't expect that to last as the stock split is set
for 5/17.  Watch for any move above resistance to spark a new 
rally taking it back to new highs.  Again due to the high risk 
nature of this play, we recommend giving full attention to your 
stop loss placement.

The news this week on NITE came Wednesday when Art Hogan of 
Jeffries and Co. set a price target of $220 for the stock over 
the next 12 months.  This helped the stock recover from lows set 
early in the week.   

(MAY options only have 2 weeks left!)
BUY CALL MAY-145*TNW-EI OI=169 at $13.88 SL=11.25
BUY CALL MAY-155 TNW-EK OI=202 at $ 9.62 SL=7.00 
BUY CALL JUN-160 TNW-FL OI=176 at $20.38 SL=16.00

Picked on Apr.27th at $126.88   PE = 98
Change since picked    +18.38   52 week low  =$  4.50
Analysts Ratings	  5-1-1-0-0   52 week high =$161.50
Last earnings  04/99 est= .39   actual= .67 surprise=+72%
Next earnings  07/21 est= .61   versus=.23 
Average Daily Volume = 1.81 mln
Chart = http://quote.yahoo.com/q?s=NITE&d=3m

******

NTBK - NET.B@NK Inc $165.00 (-24.00)(+13.50)

Net.B@nk is the largest FDIC-insured bank operating solely 
on the Internet. It has over 25,000 customers from all 50 
states and 20 foreign countries.  The bank has made its mark 
in history by being the first profitable Internet-only bank 
in the US.  Currently, they have over $280 mln in assets. 
They're continually expanding their financial services and 
are accessible to customers 24 hours a day and 7 days a week. 
Net.B@nk can be reached by PC, ATM, phone, or even by mail.

Are you still hanging on?  NTBK went as low as $159 during 
Friday morning's free fall.  The Net.B@nk roller coaster ride 
looped up mid-day to peak at $172.50 then finally back down 
to close at $165.  The stock is below its 10 dma at around 
$170 and the 3 major technicals are definitely pointing down.  
The shares fell 3.2 % on Friday as a result of company news.  
Net.B@nk filed with the SEC to sell 3mln shares of common stock 
and 100 mln of convertible subordinate notes.  The common stock
represents nearly half of the outstanding shares and does reflect 
the 3:1 stock split this month.  They will be the sole issuer of 
the notes which will reach maturity in 2004.  Such a huge 
undertaking gave investors the jitters.  The profits will be 
used for new and existing loan portfolios, security investments,
and the addition of future personnel.  Overall, NTBK was up Monday
and Wednesday at the close, but down for the rest of the week 
with others in the Internet Financial sector. The volume was 
strong no matter which way the stock was moving.  For those that 
chose to jump into the high volatility of this play, the week 
offered solid entry points for profits.  And target shooters were 
given up to 10-20 point spreads on some days.  Be careful,
the news on Friday just made this play that much more volatile.
Only 5 trading days until the split.

NTBK is purely a split-play.  The powerful 3:1 stock split is 
this week on Friday, May 14th. As a reminder, if you have open
positions they should be closed by that time. Option trades need 
as many odds stacked in their favor as possible. It's just too 
risky to hold over a split date since 7 out of 10 stocks will 
go through some kind of depression.

Remember, this play is not for the faint of heart.  It is 
EXTREMELY AGGRESSIVE AND HIGH RISK!  Historically, NTBK hasn't 
always moved with the market so please confirm stock direction 
before you initiate a new play!  STOP LOSSES are going to be
hard to play with because of the huge intraday swings.
Good luck.  

**There's only 2 weeks left for May options**
BUY CALL MAY-160 NQA-EU OI=115 at $24.13 SL=18.00(see above)
BUY CALL MAY-170 NNB-EN OI=186 at $19.75 SL=15.00(see above)
BUY CALL MAY-180 NNB-EP OI=346 at $15.00 SL=11.75(see above)
BUY CALL JUN-170 NNB-FN OI=124 at $35.38 SL=27.75(see above)
BUY CALL JUN-180 NNB-FP OI=154 at $31.38 SL=24.50(see above)

Picked on May 2nd at $189.00   PE = 218
Change since picked   -24.00   52 week low =$10.75
Analysts Ratings   2-0-1-0-0   52 week high=$249.00
Last earnings 4/99  est= .09   actual= .09 
Next earnings 7-20  est= .11   versus= .04
Average daily volume = 899.5K
Chart = http://quote.com/q?s=ntbk&d=3m

*****

EGRP - E*Trade $110.38 (-5.12)(-11.44)(+15.38)  

EGRP is now the #2 online brokerage firm (behind Schwab) 
with over 1,000,000 accounts.  EGRP also offers market 
data, cash and portfolio management services, and options 
trading.  About 30% of sales come from sales of advertising 
on its Web site, international ventures, subscriptions, and 
other services.  Through joint ventures the company also 
operates in such countries as Canada, France, Germany, 
Japan, the Netherlands, and Poland.  SOFTBANK, its joint 
venture partner in E*TRADE Japan, owns 28% of the company.

The success of the online brokers has been nothing short of 
amazing.  EGRP now has over 1,000,000 accounts and 
processed over 65,000 trades per day in the last quarter, 
up about 40% from the previous quarter (yes, 40% in the 
quarter!).  They will spend $200 mln. on advertising this 
year to gain investors' mind-share and build the brand.  
OK, so they're really great; why make the play?  EGRP 
begins trading at a 2:1 split price on May 24, thus we 
should see a split run begin shortly.  While the volumes 
are still low, now is a good time to scale into a position.  
Another potential opportunity: technically, EGRP has made a 
nice pennant, or reverse megaphone looking chart, which 
tells us a breakout is likely at any day now.  Which way?  
The up-slope is steeper than the down-slope, which 
generally signifies an upward breakout.  Pre-split momentum 
may get us there quickly.  More conservative traders will 
wait for a clean break with volume over $123.  Gunslingers, 
be ready for the "OK Corral" scenario.  Because it's an 
Internet stock, this play carries lots of risk.  Confirm 
market direction before playing.

Lehman bros. gave EGRP a big boost on Friday by adding EGRP 
to its "recommended" list citing, "the main driver for 
these companies is the irreversible change in the way 
investors trade stocks, because of the speed, convenience 
and price of doing it online", Lehman's Richard Repetto 
said.  "We're looking at 30 percent (annual) growth in 
accounts over the next three years."(Bloomberg)  Their 
price target is $140

***May strikes expire in 2 weeks
***Due to high volatility, we offer no odd strike prices.

BUY CALL MAY-100 QGZ-ET OI=1370 at $15.75 SL=12.25
BUY CALL MAY-110*QGZ-EB OI=2197 at $10.38 SL= 8.00
BUY CALL MAY-120 QGZ-ED OI=2020 at $ 6.50 SL= 4.75
BUY CALL JUN-110 QGZ-FB OI= 350 at $17.88 SL=14.00
BUY CALL JUN-120 QGZ-FD OI= 681 at $14.00 SL=11.25
BUY CALL JUL-120 QGZ-GD OI= 859 at $20.38 SL=16.00

Picked on April 26 at $119.44  PE = n/a
Change since picked     -9.06  52 week high=144.50
Analysts Ratings    4-4-3-0-0  52 week low =  5.00
Last Earnings 04/99 est -0.16  actual -0.12
Next Earnings 07-21 est -0.02  versus  0.08
Average daily volume = 7.1 mln. 
Chart = http://finance.yahoo.com/q?s=EGRP&d=3m

*****

BRCM - Broadcom $83.69 (+6.56)(+2.63)

Frustrated with how slow the Internet can be at times? Here 
is a stock for you. Broadcom Corporation, a semiconductor 
company based in Irvine, CA, supplies highly integrated, 
system-level silicon solutions that enable broadband 
communications delivery to homes and businesses.  Its products 
enable high-speed transmission of data over existing wires not 
originally designed for digital data transmission. BRCM dominates 
the broadband cable set-top box market as well as the xDSL
(digital subscriber line) broadband side, so it is playing 
BOTH sides of the faster Internet game at the same time. It has
developed integrated circuits for cable modems, high speed 
networking, and satellite and terrestrial digital broadcast. 
BRCM chips provide a better image on the TV screen, eliminating 
fuzziness, sharpening graphics, and providing studio-quality 
text.

On April 21st, BRCM reported earnings that were $.05 above 
expectations on incredible revenue growth of 173%. Preferred 
Capital Markets upgraded it to "buy" from "accumulate", and the 
stock took off. Broadcom and Lucent(LU) both make high speed 
network chips and they were both negotiating with Epigram, which 
makes chipsets for high speed networking over ordinary phone 
lines. Last month, LU got the upper hand when it licensed 
Epigram's video and voice broadband technology and agreed to 
collaborate on a next-generation home net-working standard. Then 
BRCM one-upped LU by BUYING Epigram for $316 mln in stock. 
Epigram's technology is better than its competitors and will 
probably become the next networking standard. Now BRCM has the 
inside track to dominate the emerging high growth home networking 
market, supplying large amounts of voice, video, and data 
transmission simultaneously, and at high speeds.

BRCM dropped to $80.75 late Friday morning, but came back to 
post only a $1.19 loss on the day. In the news: among other 
bullish comments about BRCM, an analyst on CNBC last week noted 
that its orders from Cisco are growing. Also, Joseph Osha at 
Merrill Lynch re-iterated his near-term "buy" on the stock. 
Remember that BRCM can exhibit some of the volatility of an 
Internet stock, so choose your entry wisely.

(MAY options only have 2 weeks left!)
BUY CALL MAY-75 RCQ-EO OI=1594 at $10.00 SL= 7.50
BUY CALL MAY-80 RCQ-EP OI=1225 at $ 6.63 SL= 5.00
BUY CALL MAY-85 RCQ-EQ OI= 717 at $ 3.88 SL= 2.25
BUY CALL JUN-80*RCQ-FP OI= 398 at $10.75 SL= 8.50
BUY CALL AUG-85 RCQ-HQ OI= 576 at $13.63 SL=11.00

Picked on Apr 25th at $77.13      PE = 142
Change since picked  +$ 6.56      52 week low =$23.50 
Analysts Ratings    3-6-1-0-0     52 week high=$95.63
Last earnings  4/21  est 0.14   actual 0.19 surprise=+36%
Next earnings  7-21  est 0.18   versus 0.08
Average daily volume = 1.51 mln
Chart = http://quote.yahoo.com/q?s=brcm&d=3m

***********************
PC Hardware
Software
Electronics
***********************

DELL - Dell Computer $40.19 (-1.00)(-1.81)(P6W +8.69)

Dell is the direct sales model leader and pioneer of the 
on-line retail business.  They sell PC's notebooks, servers 
and work stations built to order direct from their factories 
worldwide.  Eager buyers pony-up 14 million e-$$$ daily for 
their products.  Total annual sales for the trailing 12 
months were $18.2 bln., excluding their recent foray into 
direct selling of other manufacturers' software and support 
products from their gigabuys.com web site.  Despite their 
recent fall from grace, they are growing at an annual rate 
of 38% with margins that are the envy of the industry.  
Return on equity is a whopping 93% and growing.

We keep checking our watch to see if Dell has started an 
earnings run yet.  Nope; not yet!  Dell reports earnings 
May 18 after the close, just 7 trading days away.  It's 
time to get the show on the road.  Michael Dell did just 
that last week at the CEO Conference, wherein he made an 
appearance on CNBC and offered very positive comments, 
considering DELL is in a quiet period (more on that below).  
However, the technicals are not looking so great after a 
rough week on the NASDAQ.  Dell has been in a steady 
descent for the last 10 days.  While we think Dell can get 
to $45 by earnings (market willing), that will prove to be 
strong overhead resistance, as there are over 91,000 open 
interests at this strike.  As a word of caution, any market 
weakness trend could just as easily drop Dell back under 
$39.25, (mild support) or worse, $36 (strong support). It's 
pretty tough to get big daily gains since Dell has 2.4 bln. 
shares in float.  Confirm market strength before playing 
and be prepared to exit the play before earnings.  (We 
don't recommend holding through earnings due to the 
likelihood of post-earnings depression.)

From a Reuters report, which seems almost like a transcript 
from the CNBC interview, "The industry is very healthy, at 
least for companies that are well-positioned, so we're 
doing quite well," said Dell.  "The PC market, the server 
market continue to grow at rapid rates.  Our direct model 
continues to power ahead.  The Internet is a major driver 
of growth for us.  The Internet is right at the core of 
everything we are doing.  Last quarter, 25 percent of our 
sales were online and that's running at a $5 billion run 
rate.  We're supporting our customers online and an 
increasing percentage of our support transactions are 
occurring online."  Sounds positive to us.  Also of note, 
Dell will build a new manufacturing facility in Nashville, 
TN that will eventually employ 3000 people.  Ad spending 
will increase this year too, as Dell hired a new agency, 
Ammirati Puris Lintas.


***May strikes expire in 2 weeks
BUY CALL MAY-35 DLQ-EG OI=16949 at $6.00 SL=4.25 ITM $5.19
BUY CALL MAY-40*DLQ-EH OI=49615 at $2.75 SL=1.25
BUY CALL MAY-45 DLQ-EI OI=91039 at $1.00 SL=0.00
BUY CALL JUN-40 DLQ-FH OI= 8076 at $4.50 SL=2.75
BUY CALL JUN-45 DLQ-FI OI=14613 at $2.38 SL=1.00

Picked on April 18 at  $38.25  PE = 81 
Change since picked     +1.94  52 week low =$16.56
Analysts Ratings 10-13-11-0-0  52 week high=$55.00
Last earnings   02/99 est .16  actual .16
Next earnings   05-18 est .16  versus .11
Average Daily Volume = 44.0 mln.
Chart = http://quote.yahoo.com/q?s=DELL&d=3m


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

PLAYS CONTINUED IN SECTION FOUR.

*****************************
SEE DISCLAIMER IN SECTION ONE
*****************************


The Option Investor Newsletter             5-9-99
Sunday                4  of  7

Calls Continued:
******

HWP - Hewlett-Packard $79.94 (+1.06)(+1.75)(+6.75)

Started in a garage in 1939 by Bill Hewlett and Dave Packard, 
Hewlett-Packard is now one of the world's largest computer 
companies and the leading producer of test and measurement 
instruments. It makes over 29,000 products for personal use 
and for use in industry, business, engineering, science, 
medicine and education. In addition, the company makes 
networking products, medical electronic equipment, instruments 
and systems for chemical analysis, handheld calculators and 
electronic components. 

We are recommending HWP as an earnings run play. The number 2 
computer maker began climbing in a sympathy move following IBM's 
very strong earnings announcement and other positive news reported 
back in April. Unfortunately, general weakness in technology 
stocks has prevented a powerful run in HWP so far, but if 
investors rotate back into these stocks, we could see a sprint 
to the finish. Earnings are due out one week from tomorrow on 
May 17th.

PC and other high growth stocks are more susceptible to interest 
rates hikes than many other stocks are, and HWP sold off a bit 
Thursday ahead of the jobs report. After the jobs numbers were 
released on Friday, HWP gained $2.63, but on light volume. 
Although a few financial reports will be released next week as 
well, Greenspan's speech and the jobs report were the biggies 
for the next couple of weeks. A little renewed interest in growth 
stocks would give HWP the boost it needs for the earnings run 
home stretch. In the news: HWP has joined other PC makers in a 
Y2K alliance that will launch a live Y2K compliance website on 
Monday at www.pcy2000.org.  

(MAY options only have 2 weeks left!)
BUY CALL MAY-75 HWP-EO OI=9491 at $6.38 SL=4.50
BUY CALL MAY-80*HWP-EP OI=8234 at $3.00 SL=1.50
BUY CALL MAY-85 HWP-EQ OI=4445 at $1.13 SL=0.50
BUY CALL JUN-80 HWP-FP OI=1870 at $5.00 SL=3.25
BUY CALL JUN-85 HWP-FQ OI=1010 at $2.94 SL=1.50

Picked on May 2nd at  $77.13       PE = 21
Change since picked  +$ 2.81       52 week low =$47.06
Analysts Ratings  7-10-8-0-0       52 week high=$83.88
Last earnings 01/99 est 0.83   actual 0.92 surprise=+10%
Next earnings 05-17 est 0.79   versus 0.65
Average daily volume = 3.35 mln
Chart = http://quote.yahoo.com/q?s=hwp&d=3m

*****

IBM - IBM Corp. $217.25 (+8.06)(+9.44)(+29.37)(P3W -2.00)

Anybody not know what IBM does?  No?  Good.  Just in case, 
IBM is the granddaddy of the modern-day technology 
business.  They develop, make and sell new technology, 
solutions, products including mainframes and PC's, computer 
services, software and finance all of it.

Let's see. . . awesome earnings, 9% dividend increase, $3.5 
bln. stock repurchase, analyst upgrades, what's left?  
Right!  A 2:1 split!  IBM's split is effective May 26.  
Market willing, we should get a split run which appears to 
have already started, maybe a little bit too soon.  Be on 
the lookout for profit taking.  Friday intra-day support is 
$211, a little stronger at $208, strongest at $204.  
Technically, IBM's chart is nicely positive.  Oh yes, we 
almost forgot to mention, IBM closed at a new all-time 
high, just $0.25 off it's all-time trading high.  It's 
tough to find anything negative about this company right 
now, which by itself ought to throw caution flag.  
Nonetheless, IBM is looking really strong and should make 
quite a nice play if we follow the rules.  Keep stops set 
to protect your profits and confirm market direction before 
getting in.

On the heels of 2 analyst upgrades last week to "buy" and 
"strong buy", analyst R. Gary Helmig at SoundView 
Technology Group said in a research note that Big Blue is 
off to a "strong start" and that sales of servers are 
"particularly strong."  Helmig also said he remains 
concerned about the second half of 1999 due to Y2K, yet 
reiterated his "buy" rating on the company as well as the 
price target of $225 a share (CBSMarketWatch).  Looks like 
we're already there.

***May strikes expire in 2 weeks
BUY CALL MAY-210 IBM-EB OI=11591 at $10.25 SL= 7.75
BUY CALL MAY-220*IBM-ED OI= 6260 at $ 4.88 SL= 3.00
BUY CALL JUN-210 IBM-FB OI= 3467 at $15.00 SL=11.75
BUY CALL JUN-220 IBM-FD OI= 2656 at $ 9.75 SL= 5.25
BUY CALL JUL-230 IBM-GU OI=  589 at $ 9.00 SL= 6.75

Picked on May 2 at   $209.19  PE = 29
Change since picked    +8.06  52 week low =$106.00
Analysts Ratings  13-6-4-0-0  52 week high=$217.50
Last earnings 04/99 est 1.41  actual 1.55   Surprise=9.9%
Next earnings 07-20 est 1.75  versus 1.50
Average Daily Volume = 5.1 mln.
Chart = http://quote.yahoo.com/q?s=IBM&d=3m

******

MCHP - Microchip Manufacturing Inc. $44.31 (+9.31)

Microchip Technology develops, manufactures and markets field 
programmable 8-bit microcontrollers, application-specific 
standard products (ASSPs) and related memory products for 
high-volume embedded control applications in the consumer, 
automotive, office automation, communications and industrial 
markets.  They provide cost-effective field programmability 
for high-volume applications and believes that its PIC(R) 
product family is a price/performance leader in the worldwide 
8-bit microcontroller market.

MCHP has been on a nice uptrend the last week, rising over
25%.  This is especially impressive when we look at what the
Tech market in general did, which was nothing.  Some of this
jump can be attributable to a short squeeze.  The stock has
a short interest ratio of five.  MCHP is another stock that
has closed near its highs each day last week, a very bullish
sign.  On Friday, MCHP closed right on its high of the day,
which is also a 52 week high.  Be careful of any profit taking
by target shooting an entry point.  Target shooting is extremely 
effective when the market makes such large intra-day swings.

Last Thursday, MCHP was reiterated a "strong buy" at Prudential.
We feel MCHP could be a great play if the NASDAQ decides to 
make a push to new highs, like the Dow has.  

BUY CALL MAY-40 QMT-EH OI=406 at $5.00 SL=3.25 ITM $4.31
BUY CALL JUN-40*QMT-FH OI= 82 at $6.75 SL=4.75 ITM $4.31 
BUY CALL JUN-45 QMT-FI OI=  0 at $4.00 SL=2.50 new strike
BUY CALL JUL-45 QMT-GI OI=242 at $4.88 SL=3.25 

Picked on May 8th at  $44.31    PE = 27
Change since picked    +0.00    52 week low =$17.00
Analysts Ratings   6-4-3-0-0    52 week high=$44.31
Last Earnings 04/99  est .35    actual .36 
Next Earnings 07-22  est .38    versus .31
Average daily volume = 632.4K
Chart = http://quote.yahoo.com/q?s=MCHP&d=3m

*****

CTXS - Citrix Systems, Inc $42.63 (+0.13)(+3.81)(+8.44)

Citrix provides application server products and technologies 
that allows networked computers to run Windows-based programs 
from a central server.  This gives their clients effective 
and efficient management of their applications.  Its WinFrame 
software is used by well-known companies such as Sears Tire 
Centers and Hewlett-Packard Europe.

CTXS finished on a strong point advancing +1.69 on Friday.  
The stock kept pushing for gains intraday.  Then on a burst of 
volume it jumped up almost a point during the last minutes of 
trading. Results have been mixed for CTXS this week.  New support 
seems to have settled around $41-42 and now immediate resistance 
is at $43-44.  The ADV* started off strong, but by Thursday it was
lagging behind. If the NASDAQ surges next week, CTXS could try 
and break its overhead resistance at its 52-week high of $53.75.

This stock had split 2:1 on March 25th and then by mid-April 
CTXS had picked up some speed.  Upgrades followed shortly 
thereafter by AG Edwards and Needham & Co.  There is no other 
news driving this stock; it is purely a momentum play. Look for 
a solid bounce during heavy trading for your confirmation.

**There's only 2 weeks left for May options**
BUY CALL MAY-40 XSQ-EH OI= 890 at $3.88 SL=2.50
BUY CALL MAY-45 XSQ-EI OI=1467 at $1.25 SL=0.50
BUY CALL JUN-40 XSQ-FH OI= 761 at $5.25 SL=3.50
BUY CALL JUN-45*XSQ-FI OI=1012 at $3.13 SL=1.50

Picked on April 25th at $38.69   PE = 46
Change since picked      +3.94   52 week low =$23.12
Analysts Ratings     7-1-0-0-0   52 week high=$53.75
Last earnings    3/99 est= .14   actual= .28 
Next earnings    7-20 est= .28   versus= .19
*Average daily volume = 2.64 mln
Chart= http://quote.yahoo.com/q?s=ctxs&d=3m

**************
NETWORKING &
COMMUNICATIONS
**************

TBH - Telecomunicacoes Brasileiras, SA $99.50 (+7.87)

Telebras was a holding company for the telecommunications sector 
in Brazil. On September 21, 1998, the Company spun off its
telecommunications businesses as 12 new holding companies. This
security is a receipt which represents ownership in the 12 new
companies. (Bloomberg.com)

TBH left its recent support of $90-92 to advance to higher places 
this week.  The 3-point escalation on Friday is very important 
because it propelled the stock past old resistance set back in 
November of 1998.  Now there is no proximate opposition, but 
in the distance is the 52-week high of $127.93.  This is 
basically a momentum play but can be driven by news events 
or more upgrades. Now how far the momentum can continue to 
drive this stock upward only time will tell.  You'll need to 
find the dips (which may be intraday) to get a solid entry 
point.  Timing is everything.  Please consider using stops to 
protect your profits.  Remember, stocks move in cycles.  
Be prepared for profit taking and take the quick profit 
yourself.  Don't shoot for the homerun here.  Grab a couple 
of points from the strong momentum and be gone.

There is some news with respect to the whole Brazilian
telecommunication industry. On July 1st, they will all enter 
into a $2.36 bln long-distance phone market war.  Bonari 
(backed by Sprint) and Embratel (backed by MCI) are vying for 
the blue ribbon share.

(MAY options only have 2 weeks left!)
BUY CALL MAY- 95 TBH-ES OI=3530 at $6.25 SL=4.50
BUY CALL MAY-100 TBH-ET OI=2466 at $3.25 SL=1.75
BUY CALL MAY-105 TBH-EA OI=2124 at $1.44 SL=0.75
BUY CALL JUN-100*TBH-FT OI=4127 at $6.00 SL=4.25
BUY CALL JUN-105 TBH-FA OI=2440 at $3.88 SL=2.50
BUY CALL JUL-105 TBH-GA OI= 220 at $6.00 SL=4.25

Picked on May 9th at $99.50   PE = 8
Change since picked   +0.00   52 week low =$50.12
Analysts Ratings        N/A   52 week high=$127.93
Last earnings           N/A
Next earnings           N/A
Average daily volume = approximately 1.7 mln
Chart = http://quote.yahoo.com/q?s=tbh&d=3m

******

LU - Lucent Technologies, Inc $57.75 (-2.25)(+1.75)

Lucent Technologies is the world's largest telecommunication 
equipment and software maker. They are a spin-off of AT&T. 
Lucent  furnishes wireline and wireless access, local, long 
distance, and international voice, data and video services 
and even cable. AT&T presently accounts for about 15% of 
Lucent's sales.

LU gave us some hope on Friday.  After taking a dip to $56.25 
early morning, the stock was steady at around $57 for most of 
the day.  A spike in interest towards the end of trading boosted 
it a little more for a promising $1.25 finish.  This moves LU 
closer to its 10 dma at $59 and back into its recent support 
level of $57-58. The overhead resistance is found in the $62-63 
range. A conservative player would look for continuing upward 
movement on Monday before opening a new position. Current 
holders should be encouraged by the double bounce off of $56.

After the bell on Thursday, AG Edwards upgraded LU from a 
"maintain" to an "accumulate" rating. This may have influenced 
the stock's positive direction on Friday. In other news this 
week, Lucent announced an Internet-based venture with its own 
spin-off, Persystant Technologies. BitRoom Collaboration System 
will take networked users (wired, wireless, laptop, or even 
multimedia PC) and link them with public Internet or corporate 
Intranet - this is quite the leading edge in technology.  On 
Friday, Lucent announced they received the coveted 
"Tester's Choice" award from Data Communications magazine for 
its Cajun P550 routing switch.  For the techies, the publication
was evaluating Layer 4 switches from 5 different vendors.

**There's only 2 weeks left for May options**
BUY CALL MAY-55 LU-EK OI= 7732 at $4.00 SL=2.50
BUY CALL MAY-60 LU-EL OI=20341 at $1.25 SL=0.50
BUY CALL JUN-60*LU=FL OI= 2454 at $3.00 SL=1.50
BUY CALL JUN-65 LU-FM OI= 2551 at $1.50 SL=0.75
BUY CALL JUL-65 LU-GM OI=14031 at $2.75 SL=1.50

Picked on May 2nd at   $60.00   PE = 80
Change since picked     -2.25   52 week low =$26.68
Analysts Ratings 10-11-11-0-0   52 week high=$67.00
Last earnings 3/99   est= .15   actual= .17   surprise= 13.33%
Next earnings 7-22   est= .23   versus= .16
Average daily volume = 14.1 mln
Chart = http://quote.com/q?s=lu&d=3m

*****

CMVT - Comverse Technology, Inc. $67.44 (+3.32)(-1.07)(+5.69)

CMVT makes enhanced telecommunications systems and is the 
third-largest firm in the voice mail market (after Lucent's 
Octel and Northern Telecom).  Its TRILOGUE INfinity and 
Access NP product lines supply voice and fax messaging, 
automated personal assistant, and call answering services. 
TRILOGUE is marketed to telecommunications network operators 
and gives multiple telephone users access to integrated 
digital information and messaging services.  CMVT's AUDIODISK 
and ULTRA lines are communications monitoring systems used by 
police and surveillance agencies, correctional institutions, 
emergency 911 services, financial institutions, and 
tele-marketers.

Overall, CMVT had a very good week, considering the problems 
the NASDAQ had.  CMVT was up 4 out of 5 days and was up 
strong Monday through Wednesday.  We really like CMVT going
forward.  The stock still has a very positive MACD and closed
substantially off its lows on Friday.  CMVT reached several
new 52 week highs last week and looks poised to do the same
this coming week, market permitting.  Thursday and Friday
saw CMVT consolidate its gains a bit, which is positive for
the stock going forward.  We could also see an earnings run
start very soon, with earnings expected during the first 
week of June.

CMVT was reiterated a strong buy at USBancorp with a price
target of $79.00.  Lehman also reiterated its buy rating and
Goldman Sachs reiterated that CMVT is on its recommend list.    

(MAY options only have 2 weeks left!)
BUY CALL MAY-65 CQV-EM OI= 71 at $4.00 SL=2.50 ITM $2.44 
BUY CALL MAY-70*CQV-EN OI=132 at $1.94 SL=1.00
BUY CALL JUN-65 CQV-FM OI=  6 at $6.75 SL=4.75 ITM $2.44 
BUY CALL JUN-70 CQV-FN OI=  6 at $3.88 SL=2.50 

Picked on Apr.25th at $65.19  PE = 34
Change since picked    +2.25  52 week low =$19.58
Analysts Ratings   8-2-0-0-0  52 week high=$71.00
Last Earnings 03/99  est .42  actual .44 
Next Earnings 06-01  est .44  versus .34
Average daily volume = 1.06 mln.
Chart = http://quote.yahoo.com/q?s=CMVT&d=3m

******

TMX - Telefonos de Mexico, S.A. de C.V. $88.13 (+12.38)(+4.19)

TMX, otherwise known as Telmex, is the dominant phone carrier 
in Mexico.  It is also the most heavily weighted stock on the 
Mexican stock exchange.  The company has more than 9 million 
phone lines and its TELCEL unit provides cellular phone service 
to more than 1.1 million users.  Carso Global Telecom, France 
Telecom, and SBC Communications hold voting control of the 
company.

WOW!!  The markets surged heading into the close of trading on 
Friday and TMX exploded to a +$7.13 gain and an all time high 
of $88.13.  The company had an incredibly strong week by adding 
a total of +$12.38 throughout overall market indecisiveness.  
What's all the commotion about?  TMX is shaping up- plain and 
simple.  Investors undoubtedly approve of some of TMX's recent 
business moves.  The company recently dissolved their alliance 
with Sprint by purchasing Sprint's 50% stake in their U.S. 
joint venture.  Plus, TMX recently announced an agreement with 
SBC Communications.  The two companies agreed to buy Cellular 
Communications of Puerto Rico Inc. for $814 million.  Looks 
like TMX is on the move. However, set your stop losses 
accordingly.  After any big gain, profit takers come out of 
the woodwork.  Protect those profits!

News:  On Friday, Dresdner Kleinwort Benson Research initiated 
coverage of TMX with a buy recommendation.    

(MAY options only have 2 weeks left!)
BUY CALL MAY-80 TMX-EP OI=1601 at $8.63 SL=6.50
BUY CALL MAY-85 TMX-EQ OI=  27 at $4.50 SL=2.75
BUY CALL JUN-80 TMX-FP OI=1922 at $9.88 SL=7.50
BUY CALL JUN-85*TMX-FQ OI= 216 at $6.25 SL=4.75
(85s are the highest strikes available) 

Picked on May 2nd at  $75.75     PE = 25
Change since picked  +$12.38     52 week low =$32.75
Analysts Ratings   1-3-4-0-0     52 week high=$88.13
Last earnings 04/99 est 1.03   actual 1.37 
Next earnings 07-27 est 1.07   versus 0.99
Average Daily Volume = 1.30 mln

*****

MFNX - Metromedia Fiber Netwk. $77.06 (-7.19)(+5.25)(P6W+36.75)

You want bandwidth?  We got your bandwidth right here! How 
about 380,000-miles of dedicated fiber-optic network?  We 
got you covered in New York City metro area (including 
parts of Jersey), Chicago, Philly and Washington, DC too.  
Our lease arrangements with communications carriers, 
including local-exchange carriers; long-distance, paging, 
cellular, PCS, and cable companies let us save our Internet 
service providers, and corporate and government customers 
lots of money when they access our network.  We're 
expanding our US-to-UK services through a joint venture 
with Racal Telecom.  Our chairman and CEO Stephen Garofalo 
owns about 30% of the stock, and John Kluge, one of a 
handful of deci-billionaires in the country owns 60% of the 
voting shares, so you know we aren't going anywhere.  
Meter's runnin' buddy, what'll it be?

This is an earnings and split play only.  MFNX opened 
trading last Monday at $85 but couldn't hold it, as it 
closed below $80 every day last week on lower than average 
volume, except Wednesday wherein volume was twice the norm.  
In general, Wednesday was an uncomfortable day for all 
NASDAQ stocks so we're pleased that it bounced hard off its 
low of $67.  Technically, all indicators are in negative 
territory, but seem to be flattening out for a reversal.  
The good news is that after closing Friday at its high of 
the day, RSI turned up, signaling that we may be headed for 
higher prices.  With a 2:1 split scheduled for May 19 after 
the close (the third in the last 12 mos.), we may see 
investors make a run at it.  The float is just under 17 
mln. shares currently, which means any extra volume could 
jump-start the price.  Confirm market direction before 
jumping in.

Now, our emphatic words of caution.  We now have an 
earnings release date, sort of.  Late Friday, MFNX's 
investor relations told us that earnings would be released 
"this coming week between Wednesday and Friday".  That's 
May 12-14.  They could not be more specific, which presents 
its own danger of catching investors off-guard with a mid-
day release - sudden death if the news is bad.  As a rule, 
we never recommend holding through earnings since most 
companies experience a post-earnings depression, though in 
MFNX's case, their split occurs the following week.  Even 
so, a split may not be enough to prop up the price if the 
Street is disappointed with earnings.  Besides, you can 
always take a position again if earnings are good.  Use 
your own judgement consistent with your risk profile.  
UNCERTAINTY =HIGH RISK!!!  No other news to be found.

***May strikes expire in 2 weeks
BUY CALL MAY-75 QFN-EO OI= 299 at $ 6.63 SL= 4.75
BUY CALL MAY-80*QFN-EP OI=1006 at $ 4.38 SL= 2.75
BUY CALL MAY-85 QFN-EQ OI= 999 at $ 2.75 SL= 1.50
BUY CALL JUN-80 QFN-FP OI= 144 at $ 8.38 SL= 6.25
BUY CALL JUN-85 QFN-FQ OI= 144 at $ 6.75 SL= 5.00

Picked on April 11 at $67.38  PE = N/A
Change since picked    +9.68  52 week low =$ 6.38
Analysts Ratings   4-1-0-0-0  52 week high=$88.75
Last earnings 02/99 est -.01  actual  .00
Next earnings 05-12 est -.17  versus -.05
Average Daily Volume = 718 K
Chart = http://quote.yahoo.com/q?s=MFNX&d=3m

******

TV - Grupo Televisa, S.A. $48.88 (+7.88)

Grupo Televisa is the largest Spanish-language media company 
in the world.  60% of its revenues come from its TV businesses. 
However, the company also produces and broadcasts radio 
programming, music records, and feature films.  It promotes 
sports and special events, provides outdoor advertising 
services and publishes magazines and newspapers as well.  

TMX has been one hot company.  Take a look at its graph if 
you want to see a consistent gainer.  Lets start off with its 
earnings.  Back on April 28th, the company reported better 
than expected results.  Cost cutting and an increased volume 
of television advertising sales were major factors in the 
increased numbers.  The outlook is projected to be even more 
profitable.  An expected recovery in the Mexican advertising 
market could mean solid results throughout 1999.  Overall 
economic conditions throughout Mexico and Latin America have 
caught the attention of investors who seem to be turning their 
bullish eyes towards the leading companies in these countries.  
Look for TV to head higher.

News:  This past week a unit of Mexico's Inbursa bank, owned 
by billionaire Carlos Slim, took a 24% stake in TV.  The stock 
quickly popped up on the news.  Carlos Slim is the equivalent 
of Warren Buffet in our country.  When he makes a move, people 
take note.  Even though Inbursa may sell its stake, investors 
know Slim's track record of finding good values.  

(MAY options only have 2 weeks left!)
BUY CALL MAY-40 TV-EH OI=449 at $ 9.13 SL=6.75
BUY CALL MAY-45 TV-EI OI= 42 at $ 4.50 SL=2.75
BUY CALL JUN-50*TV-FJ OI=  0 at $ 2.75 SL=1.25 new stike...
..good volume on Friday.

Picked on May 9th at   $48.88      PE = 42
Change since picked    +$0.00      52 week low =$14.88
Analysts Ratings    2-4-0-0-0      52 week high=$49.50
Last earnings 04/99 est  0.62   actual  0.02  
Next earnings 10-01 est -0.06   versus -0.57
Average Daily Volume = 500.5 K
Chart = http://quote.yahoo.com/q?s=TV&d=3m

*****

QWST - Qwest Communications $90.13 (+4.69)

Qwest Communications International Inc. provides communications 
services to business customers, governmental agencies, and 
consumers. The Company also constructs and installs fiber optic 
systems for other communications providers, as well as for its 
own use. Qwest's communications services include Internet and 
multimedia services, as well as traditional voice communications 
services. 

One of our recommendations, BRCM, makes the chips that allow 
high-speed Internet communications. Qwest makes the NETWORK over 
which the data flows. It also offers traditional long-distance 
service, and has formed KPNQwst with KPN, a Dutch Telecom Co., 
to exploit international communications opportunities. It has 
been visionary in laying down fiber-optic cable earlier than 
its competitors and it currently has a 400% plus growth rate. 
Last quarter its $.01 earnings beat estimates of $.00 and it 
announced a 2:1 stock split, pending shareholder approval. The 
stock price initially rose, but it has pulled back over the 
last couple of weeks. On Thursday, May 6th, when shareholders 
approved the stock split, which will occur on May 24th, the stock 
resumed its climb. It was up both Thursday and Friday and we 
expect to see a split run from here.

In the news: John A McMster was just appointed CEO of KPNQwest. 
Also, QWST announced that it was awarded a $9 mln communications 
contract from Walgreen Co. Note: this is a high growth stock 
that may react to inflation fears.

(MAY options only have 2 weeks left!)
BUY CALL MAY-85 QWA-EQ OI=1421 at $7.38 SL=5.50
BUY CALL MAY-90 QWA-ER OI=2646 at $4.50 SL=2.75
BUY CALL MAY-95*QWA-ES OI=1885 at $2.38 SL=1.25 more aggressive
BUY CALL JUN-90 QWA-FR OI=1109 at $8.75 SL=6.75
BUY CALL JUN-95 QWA-FS OI= 534 at $6.38 SL=4.50

Picked on May 9th at $ 90.13      PE = na
Change since picked +$  0.00      52 week low =$ 22.00 
Analysts Ratings   5-8-5-0-0      52 week high=$104.75
Last earnings  3/99 est 0.00   actual 0.01 
Next earnings 07-27 est 0.02   versus -.06
Average daily volume = 3.29 mln
Chart = http://quote.yahoo.com/q?s=qwst&d=3m

**********
FINANCIAL
**********

COF - Capital One Financial Corp. $169.38 (-4.31)(+9.44)

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.

The financial sector remains a wild card hiding in Greenspan's 
shadow.  If the Fed gives us a surprise rate hike, the 
financials could suffer.  However, COF could be a good bet 
whether the Fed increases rates or not.  The company will 
split 3:1 on June 1st.  Split plays are especially powerful.  
Their momentum can often carry a stock higher even if the 
market turns especially choppy. However, there are always
exceptions and you never want to fight an up hill battle.
If the market's move downward, you had better be playing with
stops to protect your investment.  Since there is 3 weeks left,
don't rush this one.  There is still plenty of time to play. 
(COF has strong support at the $168 level.  Any substantial 
move off of this level could indicate the beginnings of a 
split run.)

No new news.

(MAY options only have 2 weeks left!)
BUY CALL MAY-165 COF-EM OI=112 at $ 9.88 SL= 7.50
BUY CALL MAY-170 COF-EU OI=729 at $ 7.13 SL= 5.25
BUY CALL JUN-165 COF-FM OI= 62 at $14.88 SL=11.75
BUY CALL JUN-170*COF-FU OI=633 at $12.63 SL=10.50
 
Picked on May 2nd at   $173.69     PE = 42
Change since picked     -$4.31     52 week low =$ 51.75
Analysts Ratings    11-6-1-0-1     52 week high=$176.88
Last earnings  04/99  est 0.96     actual 1.18 
Next earnings  07-16  est 1.23     versus 0.96
Average Daily Volume = 436.7 K
Chart = http://quote.yahoo.com/q?s=COF&d=3m

*****

AET - Aetna $95.00 (+7.31)(+3.31)

Aetna is traditionally known as one of the leading providers
of insurance in the U.S. It also has diversified to become one 
of the largest financial services, health insurance, and 
managed-care providers. Aetna's products include retirement 
services, variable life annuities, long-term care insurance, 
and pension administration just to name a few. These products 
and services are offered in countries all over the world.

AET has been on a nice rise the last week, and we feel it
should continue.  We were a bit concerned with what the jobs
report would do on Friday, but it came out very positive for
the market.  Interest sensitive stocks are breathing a sigh
of relief.  AET traded as high as $96.19 on Friday, a new
52 week high.  AET is definitely a stock split candidate in
this range, but we don't have a date for a shareholders meeting.

Many financials stocks are getting a boost from the Senate
passage of the Bank Reform Bill.  If passed by the President,
this would repeal the Glass-Stegall Act of 1993.  This would
clear the way for mergers between banks and investment firms.

(MAY options only have 2 weeks left!)
BUY CALL MAY-90 AET-ER OI=1031 at $6.00 SL=4.50 ITM $5.00
BUY CALL MAY-95 AET-ES OI=  70 at $2.50 SL=1.25
BUY CALL JUN-90 AET-FR OI=  27 at $7.25 SL=5.50 ITM $5.00
BUY CALL JUN-95*AET-FS OI=  53 at $4.25 SL=2.75

Picked on May 6th at $93.38   PE = 80
Change since picked   +0.00   52 week low =$60.19 
Analysts Ratings  5-3-7-0-0   52 week high=$93.94
Last earnings 4/99 est=1.01   actual=1.08 
Next earnings 8-06 est=1.09   versus= .95
Average daily volume = 561.1K
Chart = http://quote.yahoo.com/q?s=AET&d=3m

******************************
SEE DISCLAIMER IN SECTION ONE
******************************



The Option Investor Newsletter            5-9-99
Sunday                5  of  7

**************
Transportation 
**************

UNP - Union Pacific Corporation $67.00 (+7.13)(+2.88)

Union Pacific Railroad is the largest railroad in the US with 
almost 40,000 rail miles in 23 states.  Their territory is 
primarily west of the Mississippi, but extends into Mexico and 
Canada. The UNP operates its rail transportation through its 
subsidiary Union Pacific Railroad and its trucking venture is 
by a secondary business, Overnite Transportation. 

For the newcomers, we just added this stock to our call list 
on Thursday.  And what a showstopper it was on Friday. First 
thing in the morning, the stock touched off a new 52-week high 
at $67.00.  Then it took a leisurely lunch dipping down to 
$65.50 offering a nice entry point. The icing on the cake came 
at the finish.  UNP closed up $2.38 and right on its daily high! 
This is indubitably bullish sentiment. Also note, the volume 
was exceptionally high at 2.3 mln shares traded versus its ADV 
of 819.4K.  But consider the obvious, the stock is now in new 
territory and with the recent advances profit-takers may appear.  
So use discipline and strategy when starting a new play.  Look 
for the dips (which could be intraday), but remember to watch 
the stock's volume for momentum and market sentiment for 
direction.  (note: nothing moves in a straight line, remember 
you stock cycles)

April 20th marked the beginning of good things to come for Union
Pacific.  First, Merrill Lynch upgraded UNP and on two accounts.  
For the long term it raised its rating from "accumulate" to 
"buy" and for the near term it went from "neutral" to "accumulate".  
Two days later on April 22nd, Union Pacific came in with better 
than expected earnings at .56 p/s; beating the Street estimates 
by 27%!  Gruntal & Co followed up the next day by raising its 
estimates for 1999 and 2000, reiterating its "strong buy" 
rating on UNP, and increasing its target price for the stock 
to $77 from $70.  Just last week, Business Week reported an 
executive from Gruntal & Co, Joseph Battipaglia, listed UNP 
among its "favorites" out of the larger transportation stocks.

**There's only 2 weeks left for May options**
BUY CALL MAY-60 UNP-EL OI= 205 at $7.50 SL=5.75 low premium!
BUY CALL MAY-65 UNP-EM OI= 143 at $3.25 SL=1.75
BUY CALL MAY-70 UNP-EN OI=   0 at $0.75 SL=0.00  *new strike
BUY CALL JUN-65*UNP-FM OI= 182 at $4.75 SL=3.00
BUY CALL JUN-70 UNP-FN OI    0 at $2.00 SL=1.00  *new strike
BUY CALL AUG-65 UNP-HM OI=  83 at $6.50 SL=4.75

Picked on May 6th at $64.63   PE = 21
Change since picked   +2.38   52 week low =$37.31
Analysts Ratings 3-6-6-0-0    52 week high=$67.00
Last earnings 3/99 est= .44   actual=  .56   surprise= 27.27%
Next earnings 7-29 est= .70   versus= -.60
Average daily volume = 819.4K
Chart = http://quote.com/q?s=unp&d=3m

*****
Misc 
*****

BA - Boeing Company $45.75 (+5.13)

Boeing is the world's leading maker of commercial jet 
airplanes.  After acquiring McDonnell Douglas (the world's 
#1 military aircraft maker) in 1997, BA became the #1 
aerospace company too.  Boeing now designs and manufactures 
jets, military aircraft, helicopters, and space and missile 
systems.

Take a look at a graph of Boeing and it will be easy to see 
why we are adding it as a play.  The company has made a 
significant jump in stock price over the past few weeks since 
announcing its earnings.  Back on April 15th, Boeing reported 
earnings that beat analyst expectations by  seven cents.  They 
also reported a nine-fold increase in first quarter profits.  
The company is shaping up by reorganizing and increasing its 
operational performance.  Not only are some of its recent 
efforts showing up in the bottom line, but the future profit 
outlook is optimistic as well.  On Friday, Chairman and Chief 
Executive Philip Condit said that growth in Asia was getting 
better.  He went on to say that Boeing would continue to 
improve its profit margins by "trimming expenses and tweaking 
production systems."(-Dow Jones)  He said that the company 
would also continue to implement its layoff strategy.  With 
a decent future in store, BA could very well fly higher.  

News:  BA's current orders are at record levels.  Both the 
government and commercial airlines are expected to place new 
orders in upcoming months.  BA expects to deliver about 620 
aircraft in 1999.  It expects to deliver 480 in the year 
2000 with the same amount of profit margin as that in 1999. 
(-CBS MarketWatch)
  
BUY CALL MAY-45 BA-EI OI=7657 at $1.69 SL=1.00
BUY CALL JUN-45*BA-FI OI=1821 at $2.88 SL=1.50
BUY CALL JUN-50 BA-FJ OI= 377 at $0.81 SL=0.00

Picked on May 9th at  $45.75     PE = 29
Change since picked   +$0.00     52 week low =$29.50
Analysts Ratings  4-7-14-0-0     52 week high=$52.38
Last earnings 04/99 est 0.05   actual 0.50 
Next earnings 07-23 est 0.48   versus 0.26
Average Daily Volume = 3.52 mln
Chart = http://quote.yahoo.com/q?s=BA&d=3m

******

ALD - AlliedSignal, Inc $64.63 (+5.88)

AlliedSignal, a global conglomerate, is an advanced 
technology and manufacturing company with operations in 40 
countries.  It serves customers in a wide variety of 
business segments.  ALD provides aerospace technology like 
weather-radar systems and automotive products such as Fram 
filters and Prestone anti-freeze. They also develop and 
manufacture chemicals, fibers, plastics, and advanced 
materials.  For example, our law enforcement benefit from 
Spectra, a polymer used in body armor.

ALD is a strong momentum played spurred on by recent analyst 
remarks and some good news.  This stock left the mid-40's range 
in March and kept climbing on unusually high volume.  In the 
middle of April it consolidated for a short spell at $55-56.  
Then last week ALD made a bold move and found new support in 
the $59-61 range. By Tuesday it was trying to push through $62 
and it finally did on Thursday, peaking at $62.19 during intraday
trading.  But Friday ALD really showed its true colors and spiked
up +3.06 to close at $64.63.  It also made the record books by 
setting an all-time new high at $65 just minutes before the bell.  
This was the second consecutive day ALD opened low and just kept
advancing all day long!  Remember, stocks move in cycles.  
Be prepared for profit taking and take the quick profit yourself.  
Don't shoot for the homerun here.  Grab a couple of points 
from the strong momentum and be gone.

The momentum in the past weeks caught the eye of analyst, 
Brian Langenberg, of CSFB.  On Tuesday, he started coverage as 
a "buy" and set a target price of $70 on ALD.  He cited strong
fundamentals, reasonable valuation, and excellent cash flow.  
In other related news, AlliedSignal and DSM (the 2nd largest 
chemical maker in the Netherlands) settled a two-year-old dispute
regarding a patent claim on a super-strength fiber.  Each will be 
able to sell its own version  anywhere they chose - may the 
competition continue.  The $2 bln proposed merger of BF Goodrich 
and Coltec Ind has officially been put on hold by the Court of 
Appeals.  On April 30th, a temporary injunction was awarded to ALD.
AlliedSignal alleges violations of anti-trust laws and breach of 
existing contracts.     

Note:  Option contracts are presently not available above 
strike-65 due to the recent surge of the stock.

(MAY options only have 2 weeks left!)
BUY CALL MAY-60 ALD-EL OI=174 at $5.25 SL=3.50
BUY CALL MAY-65 ALD-EM OI=130 at $1.69 SL=1.00
BUY CALL JUN-60 ALD-FL OI=781 at $6.38 SL=4.75
BUY CALL JUN-65*ALD-FM OI=212 at $3.13 SL=1.50

Picked on May 9th at  $64.63   PE = 23
Change since picked    +0.00   52 week low =$32.62
Analysts Ratings   8-4-1-0-0   52 week high=$65.00
Last earnings 3/99 est= 0.59   actual= 0.59
Next earnings 7-13 est= 0.70   versus= 0.61
Average daily volume = 1.73 mln
Chart = http://quote.yahoo.com/q?s=ALD&d=3m

*****

ROK - Rockwell Intl. $58.63 (+7.00)(-0.31)(P3W+9.75)

Once a defense industry giant before selling off its 
defense division to Boeing, Rockwell is now one of the 
largest industrial automation companies in the world.  They 
make power transmission products, programmable logic 
controllers, industrial motors and worker-machine interface 
devices.  In addition, they also manufacture avionics, 
global positioning, flight control and cockpit display 
equipment.  They also designed the previous generation 56K 
flex modem technology through their semiconductor unit, 
which was sold off as Conexant, now the world's largest 
maker of DSL chips.

Rockwell is a great beneficiary of the recent sector 
rotation into companies that your parents and grandparents 
came to love years ago, and whose fortunes are greatly tied 
to Boeing and other "smokestack" manufacturers.  Boeing's 
stock has exploded since the rotation began, the rotation 
of which was spawned by perception of worldwide economic 
recovery.  Boeing has received a flurry of new orders, both 
military and civilian in the last 30 days (if oil prices 
begin to fall again, the orders will get even better).  
Guess who makes most of the avionics, not to mention the 
inner workings of those assembly lines belonging to other 
cyclical manufacturers?  Right; ROK!  You won't be able to 
tell the difference between ROK and Boeing's technical 
charts, both of which look great since mid-April.  
Technical indicators are all in positive territory.  ROK 
closed at its intra-day trading high on Friday, less than 
$1 away from a new 52-week high on double its normal volume 
- a very bullish sign, which should give us a bit more run-
up (market willing) before reversing.  Keep your eye on 
Boeing, protect your capital with stops in case the market 
rotates again, and confirm market direction before playing.

Price-moving news is scarce on ROK, so look to Boeing (BA) 
for a better glimpse of ROK's future.

***May strikes expire in 2 weeks
***No $60 strikes are available yet

BUY CALL MAY-50 ROK-EJ OI=291 at $8.88 SL=6.50
BUY CALL MAY-55 ROK-EK OI= 74 at $4.13 SL=2.50
BUY CALL JUN-50 ROK-FJ OI= 89 at $9.13 SL=6.75
BUY CALL JUN-55*ROK-FK OI=150 at $5.13 SL=3.25

Picked on May 2 at    $58.63    PE = na
Change since picked    +0.00    52 week low =$32.12
Analysts Ratings   0-5-6-0-0    52 week high=$59.06
Last earnings 04/99 est 0.71    actual 0.74 Surprise=4.23%
Next earnings 07-20 est 0.75    versus 0.45
Average Daily Volume = 485 K
Chart = http://quote.yahoo.com/q?s=ROK&d=3m

*****

PPG - Ppg Industries Inc. $69.44 (+4.50)

PPG Industries, Inc. supplies products for the manufacturing, 
construction, automotive, chemical processing, and other 
industries worldwide.  The Company makes protective and 
decorative coatings, flat glass, fabricated glass products, 
continuous-strand fiber glass products, and industrial and 
specialty chemicals. (from Bloomberg.com)

PPG hit a double bottom around $50 about a month ago and
has been heading up ever since.  PPG is definitely a benefactor
of the strong economy and the continued strength in the 
building sector.  It hasn't hurt either that there has been
a shift to these cyclical stocks.  MACD is very strong and we
can't see any reason why the stock won't continue further for 
the very near future (however, be prepared for any new sector
rotation).  We do need to be careful of any profit taking on 
such large, quick gains.  The $66.50 level seems to be a bit of 
support.  Playing a bounce off this level would be a good entry 
point.

When looking at a long term chart, we have noticed that the 
stock has consistently had strong gains going into the summer
months.  We feel the same might happen again.   

BUY CALL MAY-65 PPG-EM OI=432 at $5.25 SL=3.75 ITM $4.44 
BUY CALL MAY-70 PPG-EN OI= 55 at $1.75 SL=1.00
BUY CALL JUN-65 PPG-FM OI= 20 at $6.38 SL=4.75 ITM $4.44 
BUY CALL JUN-70*PPG-FN OI= 55 at $2.88 SL=1.50 

Picked on May 8th at  $69.44    PE = 19
Change since picked    +0.00    52 week low =$47.94
Analysts Ratings   3-2-4-0-0    52 week high=$76.63
Last Earnings 04/99 est 0.78    actual 0.81 
Next Earnings 07-15 est 1.00    versus 1.16
Average daily volume = 525K
Chart = http://quote.yahoo.com/q?s=PPG&d=3m

*****

GT - Goodyear Tire & Rubber Company $66.75 (+9.56)

The Goodyear Tire & Rubber Company develops, manufactures, 
distributes, and sells tires for most applications.  The 
Company also manufactures and markets several lines of 
rubber and rubber-related chemicals; provides automotive 
repair services; and retreads truck, aircraft, and heavy 
equipment tires.  Goodyear provides its products and services 
worldwide. (from Bloomberg.com)

GT is getting very close to reaching its new 52 week high 
which was obtained almost a year ago.  Last week, GT closed
almost right on its high every day.  This is a signal that
shows the bulls winning the battle.  GT is another cyclical
stock that is benefiting from the shift to its sector.  The
economy has definitely been a boon also.  Remember, stocks 
move in cycles.  Be prepared for profit taking and take the 
quick profit yourself.  Don't shoot for the homerun here.  
Grab a couple of points from the strong momentum and be gone.


GT was named supplier of the year by General Motors last
week and also announced a parts replacement website.  We
like the fact that a company like GT is making its way
toward e-commerce.  It shows they are willing to change
for the sake of growth. 

BUY CALL MAY-60 GT-EL OI=301 at $7.25 SL=5.25 ITM $6.75
BUY CALL MAY-65 GT-EM OI= 11 at $2.88 SL=1.50 ITM $1.75 
BUY CALL JUN-60 GT-FL OI= 84 at $7.50 SL=5.25 ITM $6.75
BUY CALL JUN-65*GT-FM OI= 82 at $4.00 SL=2.75 ITM $1.75 

Picked on May 8th at  $66.75    PE = 17
Change since picked    +0.00    52 week low =$45.44
Analysts Ratings   3-2-4-0-0    52 week high=$73.25
Last Earnings 04/99 est 0.78    actual 0.81 
Next Earnings 07-15 est 1.00    versus 1.16
Average daily volume = 525K
Chart = http://quote.yahoo.com/q?s=GT&d=3m

*****

EMR - Emerson Electric Co. $70.06 (+5.56) 

Founded in 1890 in St. Louis, Missouri, as a manufacturer of 
electric motors and fans, Emerson is now a global manufacturer 
and marketer of a broad range of electronic, electrical, and 
related products and systems for industrial, commercial and 
consumer markets. Emerson's businesses include process controls, 
HVAC/R components, motors and drives, industrial components and 
equipment, tools, electronic and computer support products, and 
fractional motors and appliance components. Emerson has more 
than 60 divisions, with 100,000 employees making and selling 
products in more than 150 countries. Your air-conditioner, 
washer and dryer, furnace, and other appliances may contain 
Emerson products. Some of its better-known products include 
Rosemount instruments, Copeland compressors, Sears Craftsman(r) 
hand tools, RoboGrip pliers, and In-Sink-Erator waste disposals.

Emerson has been climbing lately and has risen steadily for 
the last two weeks, as investors show renewed interest in 
cyclical stocks. Volume has been increasing as the stock gains 
momentum. Many analysts see a turnaround beginning in the Asian 
economies, and that would generally benefit the cyclicals. In 
addition, the stock is strong from a technical point of view. 
It pushed above its 200 dma less than three weeks ago and is 
now above all its moving averages. MACD, MOM, and other technical 
indicators are all positive as well.  Remember, stocks move 
in cycles.  Be prepared for profit taking and take the quick 
profit yourself.  Don't shoot for the homerun here.  Grab a 
couple of points from the strong momentum and be gone.

With two straight weeks of upward movement, you may want to look 
for a dip to enter this one. In the news, On 5/6, EMR was cut 
to a "neutral" by Brown Brothers Harriman & Co., but they still 
maintain it as a "long-term buy". Also, last week Emerson formed 
an office of chairman and promoted 3 executives in a program to 
improve the way the company grooms managers for leadership 
positions.

(MAY options only have 2 weeks left!)
BUY CALL MAY-65 EMR-EM OI=  31 at $5.38 SL=3.50
BUY CALL JUN-65 EMR-FM OI=1837 at $5.88 SL=4.00
BUY CALL JUN-70*EMR-FN OI= 354 at $2.63 SL=1.25

Picked on May 9th at $ 70.06      PE = 22
Change since picked +$  0.00      52 week low =$51.44 
Analysts Ratings   6-3-3-0-0      52 week high=$68.94
Last earnings  3/99 est 0.74      actual 0.74 
Next earnings 08-03 est 0.79      versus 0.73
Average daily volume = 1.16 mln
Chart = http://quote.yahoo.com/q?s=emr&d=3m

******
DRUGS  
******
VISX - Visx, Inc $121.75 (-7.00)(+13.31)

Visx is a leader in the development of refractive laser 
technology. It designs and makes surgical systems that re-
contour the front surface of the cornea of the human eye in 
order to correct vision problems. It claims about 75% of the 
laser vision correction market, its only business. VISX systems 
are available worldwide.

The laser vision correction market is expected to more than 
triple from 425,000 procedures done in 1998 to 1.3 mln in 2000 
and the company sees earnings growth of between 25 and 35% 
annually. We covered this stock during its earnings run for a 
nice gain and we had visions of the same sort of gain during a 
stock split run. We expected a split announcement with earnings 
and sure enough, we got a 2:1 scheduled for May 13th. VISX has 
more than doubled in price since late February, but is off its 
high of $141.50, a resistance level we would be happy to see. 
This stock is not for everyone due to its high volatility, but 
nimble traders who can enter and exit at the right time can make 
big profits. 

Last week VISX traded in a range of nearly $20.00. On Friday 
alone, its seesaw trading range was over $5.00, and it closed 
the day up just $.88. This stock can move up (and down) large 
amounts in a day. If investors can shake off the inflation 
fears that especially hurt high growth stocks, VISX could see 
a nice pop this week. We never recommend holding over a split 
since most stocks experience some post-split depression. Plan 
to be out of your positions before the close on Friday, May 12th.

(MAY options only have 2 weeks left!)
BUY CALL MAY-120 VFS-ED OI=334 at $ 9.88 SL=7.50
BUY CALL MAY-125 VFS-EE OI=649 at $ 7.00 SL=5.25
BUY CALL MAY-130 VFS-EF OI=751 at $ 5.63 SL=4.00
BUY CALL JUN-130 VFS-FF OI=481 at $11.13 SL=8.75

Picked on May 2nd at $128.75      PE = 51
Change since picked  $- 7.00      52 week low =$ 20.63 
Analysts Ratings    3-2-1-0-0     52 week high=$141.50
Last earnings  3/99  est 0.54   actual 0.58 surprise=+7.4%
Next earnings  7-14  est 0.56   versus 0.29
Average daily volume = 801.5 k
Chart = http://quote.yahoo.com/q?s=visx&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 
****************

MSPG - MindSpring Enterprises, Inc. $88.00 (-8.93)(-11.31)

MindSpring is now the fourth largest Internet service provider 
behind only AOL, the Microsoft Network, and AT&T.  Not bad 
company to be ranked against!  MSPG has boosted its standings 
by making several acquisitions.  The company now has more than 
one million subscribers.  MSPG focuses on serving individual 
users and small businesses through dial-up Internet access 
and business services.

MSPG is behaving exactly as planned and is turning in some 
nice profits as a put.  The company shed -$8.93 this past 
week.  If the markets decide to sell off, that will only push 
MSPG lower- perhaps all the way to its support around the $80 
level.  However, any company that has suffered losses will do 
everything it can to get back on track.  This should be 
interpreted as a strong reason to use your stop losses in 
case the turnaround comes sooner than the bounce off its 
support. 

News:  "Mindspring and BellSouth announced an alliance under 
which MindSpring will provide high-speed Internet access 
over BellSouth's network." (Dow Jones)

(MAY options only have 2 weeks left!)
BUY PUT MAY-90 MQD-QR OI=424 at $ 8.50 SL= 6.50
BUY PUT MAY-85 MQD-QQ OI=412 at $ 5.75 SL= 4.25

Average Daily Volume = 1.32 mln
Chart = http://quote.yahoo.com/q?s=MSPG&d=3m

*****

SFE - Safeguard Scientifics $71.50 (-9.51)(-7.00)

SFE's business practices revolve around the information 
technology business.  The company identifies, invests in, 
and develops primarily high-tech ventures.  SFE's 
stockholders profit mainly through rights offerings 
(where they have the right to buy shares in the companies 
Safeguard invests in.) 

SFE continued its downtrend on Friday.  The company fell an 
additional -$2.38 and was oblivious to the surge in market 
near the end of trading.  This is a weak sign.  However, SFE 
could have some support at its 50 dma of $68.42.  If it 
manages to slip below that, the next plateau could be at a 
price support of approximately $63.  Always protect your 
profits with stop losses.  

No new news.

(MAY options only have 2 weeks left!)
BUY PUT MAY-75 SFE-QO OI=270 at $8.50 SL=6.50
BUY PUT MAY-70*SFE-QN OI=390 at $5.75 SL=4.25

Average Daily Volume = 776.6 K
Chart = http://quote.yahoo.com/q?s=SFE&d=3m

*****

BVSN - Broadvision $48.00 (-10.06)

Broadvision provides integrated software application systems.  
These systems enable users to create applications for marketing
and selling their services on the World Wide Web.  Broadvision's
software is designed as a platform to conduct e-commerce 
transactions, offer online financial services, and deliver 
information to customers.  Their One-to-One software enables 
venders to tailor their marketing efforts directly to each 
visitor based on a set of business rules.  Thus making it 
easier for both parties to interact.

BVSN showed why it has made the put list on Friday as the stock
not only failed to participate in the NASDAQ rally but closed 
down despite an upgrade from Kaufmann Brothers.  That's not 
a very impressive showing.  Kaufmann raised its rating to Buy
from Accumulate.  The stock provided an entry point as it traded 
up to $51.25 before plummeting back to a day-low of 45.62.  
However, it wasn't totally immune to the Nasdaq rally and did
close Friday at $48.00 (but it was still negative for the day). 
As we stated on Thursday the 200-dma is the next clearly defined 
support but it is down in the low $30 range.  We see more 
weakness in the Internet group as the sector is showing a 
negative technical pattern.  Use these intraday swings as chance 
to profit on short term plays.   

BUY PUT MAY-50*QVB-QJ OI=216 at $5.38 SL=3.75
BUY PUT MAY-45 QVB-QI OI= 96 at $2.81 SL=1.38

Average Daily Volume = 446 K

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

******

SEEK - Infoseek Corp. $51.12 (+.06)

Infoseek develops and services Internet software products and 
services.  The company provides Web-based navigational services
that helps users access resources on the Internet.  They produce
the GO network and the Infoseek Service comprehensive gateways.
They combine content from search and navigational capabilities,
directories of relevant information and content from media leaders.
They also produce Internet sites in a joint venture with Disney
such as ESPN and ABCNEWS.

Trading in SEEK got more interesting this week as the stock
received a much needed upgrade on Wednesday.  Warburg Dillon
Reed upgraded Infoseek to a Buy from a Hold.  They also set a
price target between $70 and $75 a share.  They feel that the
revenue concerns, that have plagued SEEK ever since their earnings
release, have been resolved and should pick up from here.  That
had SEEK moving against the tide to post a gain of more than 
10 points.  But it looks to have only been an opportunity to
start a new play as the stock has already given back half of
that. We should see the stock challenge the 200-dma again at 
the $45 level.  Use the volatility to your advantage in choosing
entry and exit points.

BUY PUT MAY-50*QI-QJ OI=316 at $3.75 SL=2.25
BUY PUT JUN-40 QI-RI OI=230 at $4.25 SL=2.75

Average Daily Volume = 2.33 mln

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

*****

JNJ - Johnson & Johnson $96.13 (-1.37)

Johnson & Johnson is one of the world's largest and diversified 
makers of healthcare products.  JNJ has three distinct business
segments serving the consumer, professional, and pharmaceutical 
markets.  As a consumer you're probably most familiar with their 
over-the-counter brands like Tylenol, Band-Aids, and "no tears" 
baby shampoo.  But Johnson & Johnson reaches beyond that realm 
and expands all aspects of its product lines through acquisitions.
They are truly a healthcare giant.

This play is based on the possibility of $3 bln stock deal 
between Johnson & Johnson and Centacor (CNTO). Rumors about 
merger negotiations started to fly-high by last week-end and 
it was whispered that an agreement may be reached rather quickly.  
As of this Saturday, Chairman of JNJ, Ralph Larsen, declined to 
comment on the speculation that his company might acquire CNTO.  
If news hits the press that they've reached an agreement then 
initially JNJ could suffer some consequences. Investors will be 
concerned about dilution to Johnson & Johnson's earnings because 
it would be using a huge amount of stock to pay for 
Centacor.  Then after this initial unrest, they'll come to their 
senses and realize the benefits of such a healthy acquisition. 
Whether related to the buzzing rumors or not, Friday, 
April 30th, PaineWebber downgraded JNJ from "attractive" to 
"neutral", but without offering any additional rumors.

Besides JNJ's bullish rally on Thursday, the stock has been 
bearish for the week. The technical indicators MACD, STO, and MOM 
are also still negative and suggest further descent. However 
consider the stock has formed new support in the range of $96-97 
and this right on its 21 dma.  A conservative player might wait 
for further confirmation on Monday before beginning a new play.
Remember this play involves a higher level of risk as it's based 
solely on the prospect of a $3 bln stock deal which could may or
may not materialize.

**There's only 2 weeks left for May options**
BUY PUT MAY- 90 JNJ-QR OI=1321 at $0.63 SL=0.00
BUY PUT MAY- 95*JNJ-QS OI=1819 at $1.88 SL=1.00
BUY PUT MAY-100 JNJ-QT OI= 562 at $5.13 SL=3.25

Average daily volume = 2.17 mln
Chart = http://quote.yahoo.com/q?s=jnj&d=3m

*****

TBFC - Telebanc Financial Corp $93.12 (-4.88)

Telebank is the largest electronic bank in the U.S. that has
no tellers and no branches.  The company does most of its 
transactions over the Internet, along with phone and mail
interaction with their customers.  The bank's loan portfolio
is made up primarily of fixed-rate and adjustable mortgages.
At the company's Web site, you can open accounts, transfer 
between accounts, pay bills and view balances.  Customers 
can also access over 430,000 ATMs worldwide.  Telebank also
sells insurance products, CDs and investment advice through 
their site.

Telebank, a holding of Telebanc Financial, has taken advantage
of the online craze by pioneering the model of doing transactions 
on the Internet.  There success, of course, comes with a price.
Now everyone wants a piece of the action.  That is why you 
are seeing jitters recently with TBFC's stock.  Wells Fargo 
online was introduced last month and there are more announcements
pending.  Capital One Financial could announce as soon as Monday 
that they will roll out a model of online banking similar to 
TBFC.  And COF will be a formidable foe.  We also like the  
current trading pattern which has pushed under the 30-dma again.
Next stop for support is the 50-dma at $79.  Also weakness 
in many major financials the past two weeks is signaling more
dips ahead.  Check the chart to pick an entry point.  You'll 
see that the last ten days has established a downtrend line.

(MAY options only have 2 weeks left!)
BUY PUT MAY-95 TFU-QS OI= 10 at $10.88 SL= 7.50
BUY PUT MAY-90 TFU-QR OI=110 at $ 8.13 SL= 6.25

Average Daily Volume = 347 K

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


*****

SEE DISCLAIMER IN SECTION ONE

*****


The Option Investor Newsletter            5-9-99
Sunday                6  of  7

***************
Puts Continued
***************

YHOO - Yahoo! $147.44 (-27.26)

Yahoo is one of the first Internet navigational service companies.
Its services are used to guide the World Wide Web.  Its site 
allows for users to scan a subject-based directory of Web sites
and pages to guide yourself more efficiently around the Web.  
They currently have more than 1.2 million Web site listings.  
And they have also been in acquisition mode to broaden their 
business model by acquiring both Geocities and Broadcast.com 
in 1999. 

We've all witnessed the collapse of the Internets this week 
and Yahoo has been no exception.  In fact, it has bore the 
brunt of the selling by giving back more than 15%.  Unfortunately
the end does not appear in sight.  YHOO dropped through key 
support this week by penetrating the 50-dma.  The fundamentals
are unchanged but with the big runs the Internets typically 
make ahead of the earnings season its left the group vulnerable
to profit-taking.  At this stage, it may be headed to the 200-dma
around $110.  Did you know that the stock last touched that 
moving average in September of 1998 when the stock traded at 
$25 (post-split)?  That should give you an indication of the 
amount of profits to be locked in.  As always use caution when
entering a new play, as investors are anxious to own this group
but look for any rally to be short-lived as institutions continue
to dump stock based on the technical pattern and valuation.

(MAY options only have 2 weeks left!)
BUY PUT MAY-150*YHV-QJ OI=1972 at $10.25 SL= 7.50
BUY PUT JUN-145 YHV-RI OI= 192 at $14.25 SL=11.25

Average Daily Volume = 10.16 mln

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

*****

TX - Texaco $67.25 (+4.50)

Texaco is one of the major players in the oil and gas industry 
as it is involved in exploration, production and distribution.  
It hardly needs an introduction, as it's the third largest fuel 
provider in the United States.  The company provides over 13,000 
gas stations in the U.S and over 8,000 in other countries.  It 
has interests in more than 150 countries world-wide.  The company 
also produces alternate forms of energy for manufacturing, power 
and chemicals.      

Rumors of merger mania hit the oil patch Friday as Texaco traded
up over $5.  Rumors started swirling at 2:00p ET that Chevron
was considering a bid for TX.  That sent shares sky-rocketing 
towards $70 before settling out at $67.25.  This is a rumor that
could spread quickly due to the consolidation taking place in 
the industry.  We've seen Exxon and Mobil merge, BP Amoco agreed 
to acquire Atlantic Richfield and Royal Dutch/Shell.  But we are 
skeptical of the rumor since information is still sketchy.  Even 
if it pans out, it could be months before an official announcement.  
This provides for a quick hit on some put contracts.  Watch the 
open Monday for an entry point and check the news wires since 
there is bound to be plenty of speculation before making a 
decision on a new play.  We could fall right back to $60 but 
stops will be crucial to avoid getting hurt by any more rumors.

Rumor plays = Risky plays

(MAY options only have 2 weeks left!)
BUY PUT MAY-70 TX-QN OI= 10 at $2.94 SL=1.50
BUY PUT MAY-65*TX-QM OI=168 at $1.44 SL= .75

Average Daily Volume = 1.73 mln

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

***********************************************************
Combos      
***********************************************************
Inflation Report Soothes The Restless Bears...

Friday, May 7

The index of blue-chip stocks climbed to yet another record high
as fears of inflation faded on the announcement of a favorable
U.S. employment report. The Dow closed up 84 points at 11,031
and the technology-heavy Nasdaq joined the rally, rebounding 31
points from Thursday's slide to finish at 2503. In the broader
market, advancing issues led declines 17 to 13 on active volume
of 817 million shares on the New York Stock Exchange.

Thursday's new plays (positions/prices):

CS   JUL12C/MAY12C  $0.93 debit  (opened lower - down all day)
AOL  MAY100P/M105P  $1.00 credit (easy entry at target price)
CPQ  LJAN25/MAY25C  $3.75 debit  (unable to achieve $3.50 target)

Portfolio plays:

There wasn't much excitement this week in the spreads portfolio.
Most of our new positions are performing well and only a few of
the older plays have been closed this month, to limit losses;
and those were nominal.

The good news; WCOM has managed to stay afloat after testing the
lower limit of its recent trading range and BRCM has moved into
the low 80's, allowing that spread to be closed for $1.25 profit.
AEOS may have started a post-split dip but the overall position
is still profitable at $0.62 credit. Don't let that one get away!
TXN appears to be firming near $100, well above our sold position
and WCII and CNCX both rebounded off technical support, giving us
hope that they may hold their current range. UMG appears to have
settled in near $80 and you can see how the 'Implied Volatility'
affects options prices; they are only worth about 75% of what
they were a few days ago, when the stock was at the same price.
A couple of our debit plays are trading near parity and should be
closed for maximum profit. They are RX (MAY37P/35P debit spread)
and UTX, (MAY125C/130C debit spread).

Friday's market activity left us with some excellent volatility
plays as stocks rebounded for strong gains and the option buyers
rose to the occasion. The market-makers are experts at inflating
premiums when an option is in demand or the underlying issue is
performing well. Occasionally, they provide us with overpriced
options relative to other time periods or strike dates. Spread
traders know that there is an identifiable relationship between
these different series and that's when we buy the underpriced
(long) position and sell the overpriced (short) position. We
expect to profit as the prices of the options return to a linear
relationship.

Two of these opportunities appeared in the Oil sector with TX and
UCL. TX may appear to be a longer-term position but it is actually
just a 'two week' play. Remember, we are selling excess premium in
the front-month option and expect to close the play as soon as the
short position expires, or is repurchased. Any other exit would be
determined by an extreme change in the stock price between now and
the May expiration.

Good Luck!

Please send your questions and comments to ray@OptionInvestor.com
******************************************************************
				- NEW PLAYS -
******************************************************************
TX - Texaco  $67.25     *** Volatility Play ***

Texaco and its affiliates discover and produce oil & natural gas;
manufacture and market high-quality fuels and lubricant products;
operate trading, transportation and distribution facilities; and
produce alternate forms of energy for power, manufacturing and
chemicals. The company has grown to become world-renowned, with
one of the most recognized brands and they are poised to meet the
world's growing demand for energy.
 
Texaco shares surged $5 Friday in heavy trading on speculation
the company was a takeover target of its long-time partner in
Asia, Chevron. Both companies declined comment but a subsequent
Bloomberg report cited a "person familiar with the negotiations"
as saying the discussions are underway. The speculation, which
started in London, drove Texaco shares to a 52-week high at $70
before the stock edged back slightly at the close.

A Texaco spokesman said the talk is just speculation and rumor
but late last month, Texaco Chief Executive Officer Peter Bijur
told the annual meeting the company is open to the concept of
acquisitions and mergers. Following the recent Exxon/Mobil and
BP Amoco/ARCO mergers, Chevron would be the fourth largest oil
company and Texaco would be the eighth largest with 86% of CHV's
production volumes.

The key to this play is that implied volatility swelled in the
front-month call options and most of the retail traders are
buying the May $70 positions. We will use the small disparity
to speculate on the short-term outcome of the rumor speculation.

PLAY (aggressive/calendar spread):

BUY  CALL JUN-70 TXN-FN OI=135 A=$3.50
SELL CALL MAY-70 TXN-EN OI=20  B=$2.50
INITIAL NET DEBIT TARGET=$1.00 TARGET ROI=50%

Chart = http://quote.yahoo.com/q?s=TX&d=3m
******************************************************************
UCL - Unocal  $44.38     *** Birds Of A Feather... ***

Unocal is a leading independent oil and gas exploration and
production company with pipeline and power plant development
projects worldwide.

When the news broke on TX and CHV, rumors also circulated about
a possible link between Unocal and the other oil giants. Shares
of UCL climbed $2.44 but Unocal attributed the new stock strength
to an improved S&P debt rating and had no comment on acquisition
rumors.

The nice thing about this play is the favorable technical outlook
for Unocal. We will approach this calendar position from a long
term perspective and use the overpriced options to achieve a small
discount in the cost of the October call.

PLAY (conservative/calendar spread):

BUY  CALL OCT-45 UCL-JI OI=0  A=$4.12
SELL CALL MAY-45 UCL-EI OI=61 B=$1.38
INITIAL NET DEBIT TARGET=$2.50 TARGET ROI=75%

Chart = http://quote.yahoo.com/q?s=UCL&d=3m
******************************************************************
MACR - Macromedia  $40.84     *** Awesome Earnings! ***

Macromedia's mission is to add life to the Web by providing its
award-winning Web Publishing, Web Traffic, and other web learning
solutions to web designers, consumers, and the enterprise. MACR is
delivering a new generation of Internet tools and technologies
designed to transform the Web experience.

Last year was very successful for Macromedia as the acceptance of
products like Dreamweaver, Flash, Fireworks, Generator & Pathware
accelerated their growth. The company created a new generation of
software to enable content creators to add life to the Web. Those
products translated into fourth-quarter earnings that tripled and
web-related revenue now accounts for about three-quarters of total
sales.

On Friday, shares rose almost $2 and retail option players joined
in the activity, buying-up the May $40 call options. We like the
company long-term but expect some consolidation near $45 before
this month's options expire. Play this aggressive position only
if you agree.

PLAY (aggressive/calendar spread):

BUY  CALL JUN-40 MRQ-FH OI=108 A=$4.87
SELL CALL MAY-40 MRQ-EH OI=527 B=$3.00
INITIAL NET DEBIT TARGET=$1.75 TARGET ROI=25%

Chart = http://quote.yahoo.com/q?s=MACR&d=3m
******************************************************************
                      - TECHNICALS ONLY -

These plays are based on the current price or trading range of
the underlying issue and the recent technical history or trend.
The probability of profit from these positions is also higher
than other plays in the same strategy. Current news and market
sentiment will have an effect on these positions so review each
play individually and make your own decision about the future
outcome of the stock price.
******************************************************************
KMT - Kennametal  $30.62     *** Diversity Is A Good Thing ***

Kennametal is a vertically integrated manufacturer and marketer
of a comprehensive offering of consumable tools, tooling systems
and related supplies for the metalworking, mining and highway
construction, oil and energy industries, and wear-resistant
parts for a wide range of industries.

Kennametal was hammered in late March after saying lower-than-
expected sales would lead to sequentially flat fiscal Q3 sales
and earnings, with EPS $0.23 to $0.28 below the mean estimate of
$0.73. The eventual earnings reported in late April were less
than spectacular but the stock continued to move higher. Some new
contracts, an award from General Motors and the election of a CEO
conspired to drive the stock upward almost 50% in one month. An
upgrade on Friday by Merril Lynch was the 'icing on the cake'!

The options are valued fairly and we like short-term volatility
in the underlying issue. The September positions should give us
plenty of time to profit from this neutral strategy.

PLAY (conservative/debit straddle):

BUY CALL SEP-30 KMT-IF OI=32 A=$3.87
BUY PUT  SEP-30 KMT-UF OI=0  A=$2.93
INITIAL NET DEBIT TARGET=$6.50 TARGET ROI=50%

Chart = http://quote.yahoo.com/q?s=KMT&d=3m
******************************************************************
TXN - Texas Instruments  $106.00     *** Rangebound? ***

Texas Instruments (TI) leads the digital signal processor market.
DSPs convert signals such as sound and light into digital signals.
They are used in programmable products such as VCRs/camcorders,
automobiles, computer peripherals and in more than 85 million
cellular phones. TI continues to pioneer new technologies such as
its digital light processor technology that uses tiny mirrors to
create an ultrasharp display for TVs and home computers. TI sold
its defense electronics/memory chip units to focus on its core
DSP business.

Technology and computer chip companies continued their volatile
streak last month as analysts jockeyed for the most outrageous
prediction of the future outlook for the semiconductor industry.
TXN played right along with the group, moving twice through its
recent range ($100-$115) in April. This unique stock is one of
my favorite issues for option strategies because it always has
good 'open interest' and the volatility allows even us average
traders to profit in just about any of the basic combination
techniques. This time, we move back to our neutral outlook with
the short-strangle.

PLAY (aggressive/credit strangle):

SELL CALL MAY-115 TXN-EC OI=1764 B=$1.38
SELL PUT  MAY-95  TXN-QS OI=1465 B=$1.12
INITIAL NET CREDIT TARGET=$2.50 ROI=14%

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

*****************************************************
Please send questions and comments to:

 ray@OptionInvestor.com

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



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


The Option Investor Newsletter            5-9-99
Sunday                7  of  7

*********************
COVERED CALL SECTION
*********************
Covered-Call Roll-Up...

One of the most common situations the covered-call writer may
encounter is the one in which the underlying stock price rises
significantly after the initial position has been established.
There are generally several choices available if this happens.
The trader may decide to do nothing and just let his stock be
called away, accepting the return that he had hoped for when he
established the position. However, if the stock rises fairly
quickly or the written call comes to parity, the writer may
either close the position early or "roll-up" the position.

Closing Early...

As the stock increases in price, the written call will lose its
time premium and may even begin to trade near parity. If this
occurs, the trader may decide to close the position in advance
of expiration by purchasing the sold call and selling the stock
outright for a slightly smaller profit than originally intended.
The advantage of closing a covered call early is that the trader
can gain the return in a shorter period of time, increasing his
annualized profit on the position. The decision to execute this
trade can be determined by simply calculating and comparing the
return on investment (profit vs. time) for both positions. The
favored exit strategy would be to place the order, to close the
position, as a 'net' transaction; the opposite of the standard
entry method (buy-write) used to open this type of play.

Rolling Up...

The writer will be buying back the call that was originally sold
and selling a new call with a higher strike price to increase
his profit potential. When one rolls up, he must also increase
the debit of the position and the downside break-even point is
raised by the amount of the new debit required. The new position
is also subject to a potential loss if the stock should pull back.
Some traders will sell a more distant expiration (rolling forward)
when rolling up, to reduce the debit required or lower the overall
break-even price.

Basically, rolling up increases one's profit potential but also
creates more risk from a stock price reversal. Most experts say
it is not advisable to roll up if at least a 10% correction in
the stock price cannot be withstood. Remember, the initial return
for the covered call was set when the position was established and
if this goal is being met, the trader should be very careful when
risking that profit.

Good Luck!
******************************************************************
SUMMARY OF PREVIOUS PICKS (2 weeks to the May expiration)
******************************************************************
Stock  Price  Last    Mon  Strike  Opt    Profit   ROI   Monthly
Sym    Picked Price        Price   Bid    /Loss          ROI

GSTX   12.69  12.50   May  12.50  1.38   $  1.19  10.5%  11.4%
AND     7.75   8.25   May   7.50  1.25  *$  1.00  15.4%  11.1%
HRBC   10.94  13.13   May  10.00  1.63  *$  0.69   7.4%  10.7%
SATH   11.81  10.63   May  10.00  2.63  *$  0.82   8.9%   9.7%
ETV     7.56   7.13   May   7.50  1.13   $  0.70  10.9%   9.5%
OMKT   13.75  12.94   May  12.50  2.19  *$  0.94   8.1%   8.8%
MI     18.38  17.19   May  12.50  7.00  *$  1.12   9.8%   8.6%
TWMC   14.38  13.13   May  12.50  2.75  *$  0.87   7.5%   8.1%
QGLY    5.13   5.03   May   5.00  0.63  *$  0.50  11.1%   8.0%
DBCC   17.75  16.50   May  15.00  4.00  *$  1.25   9.1%   7.9%
IDTC   28.50  25.94   May  22.50  7.13  *$  1.13   5.3%   7.7%
DBCC   16.63  16.50   May  15.00  2.38  *$  0.75   5.3%   7.6%
SPYG   18.13  21.75   May  15.00  3.88  *$  0.75   5.3%   7.6%
GSTX   11.06  12.50   May  10.00  2.13  *$  1.07  12.0%   7.4%
HYPT   12.50  12.00   May  10.00  3.38  *$  0.88   9.6%   7.0%
OMKT   15.00  12.94   May  12.50  3.38  *$  0.88   7.6%   6.6%
NAVR   15.88  14.50   May  12.50  4.25  *$  0.87   7.5%   6.5%
LBFC   10.69  11.78   May  10.00  1.50  *$  0.81   8.8%   6.4%
KLOC   13.75  12.13   May  10.00  4.75  *$  1.00  11.1%   6.0%
ARTT   13.00  13.38   May  10.00  3.75  *$  0.75   8.1%   5.9%
HDL    13.88  13.19   May  12.50  2.31  *$  0.93   8.0%   5.8%
CYCH   18.19  14.81   May  15.00  4.13   $  0.75   5.3%   5.8%
BEAM   17.44  15.44   May  15.00  3.00  *$  0.56   3.9%   5.6%
OMKT   16.13  12.94   May  12.50  4.50  *$  0.87   7.5%   5.4%
EXCA   14.25  15.38   May  12.50  2.75  *$  1.00   8.7%   5.4%
IDTC   30.44  25.94   May  22.50  9.00  *$  1.06   4.9%   5.4%
HDL    14.06  13.19   May  12.50  2.13  *$  0.57   4.8%   5.2%
GCTI   17.00  18.75   May  12.50  5.13  *$  0.63   5.3%   4.6%
ADPT   24.06  24.00   May  22.50  2.25  *$  0.69   3.2%   4.6%
CENT   15.13  14.00   May  12.50  3.13  *$  0.50   4.2%   4.5%
BNYN   15.88  12.06   May  12.50  4.00   $  0.18   1.5%   1.3%
CELG   19.31  16.63   May  17.50  2.81   $  0.13   0.8%   0.9%
EGGS   17.63  13.88   May  15.00  3.63   $ -0.12  -0.9%   0.0%
PILL   19.00  13.31   May  15.00  5.50   $ -0.19  -1.4%   0.0%
PILL   16.88  13.31   May  15.00  3.25   $ -0.32  -2.3%   0.0%
--------------------------------------------------------------
VVUS    4.75   5.19   Jun   5.00  0.63  *$  0.88  21.4%  13.3%
DMRK   10.38   9.69   Jun  10.00  1.81   $  1.12  13.1%   8.1%
VTEL    5.16   4.19   Jun   5.00  1.13   $  0.16   4.0%   2.5%

Dropped Plays: FIBR

-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

CDNW   16.88 May 15.00  NWQ EC 2.38  2487  14.50   3.45%   3.45%
DIGE   13.13 May 12.50  QDG EV 1.19  79    11.94   4.69%   4.69%
EDFY   12.00 May 10.00   YQ EB 2.63  1497   9.37   6.72%   6.72%
LBFC   11.81 May 12.50  QBB EV 0.44  540   11.37   9.94%   3.87%
TX     67.75 May 60.00   TX EL 9.00  2489  58.75   2.13%   2.13%
----------------------------------------------------------------
MCOM    9.31 Jun  7.50  MQM FU 2.50  55     6.81  10.13%  10.13%
OMPT   17.06 Jun 15.00  QTT FC 3.25  672   13.81   8.62%   8.62%
PAIR   15.06 Jun 12.50  PQG FV 3.25  7758  11.81   5.84%   5.84%
TWRS   20.56 Jun 17.50  QYW FW 4.00  0     16.56   5.68%   5.68%
******************************************************************
Sequenced by Return Called 
******************************************************************
Stock  Price Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym              Price  Symbol  Bid   Intr  Basis

LBFC   11.81 May 12.50  QBB EV 0.44  540   11.37   9.94%   3.87%
EDFY   12.00 May 10.00   YQ EB 2.63  1497   9.37   6.72%   6.72%
DIGE   13.13 May 12.50  QDG EV 1.19  79    11.94   4.69%   4.69%
CDNW   16.88 May 15.00  NWQ EC 2.38  2487  14.50   3.45%   3.45%
TX     67.75 May 60.00   TX EL 9.00  2489  58.75   2.13%   2.13%
----------------------------------------------------------------
MCOM    9.31 Jun  7.50  MQM FU 2.50  55     6.81  10.13%  10.13%
OMPT   17.06 Jun 15.00  QTT FC 3.25  672   13.81   8.62%   8.62%
PAIR   15.06 Jun 12.50  PQG FV 3.25  7758  11.81   5.84%   5.84%
TWRS   20.56 Jun 17.50  QYW FW 4.00  0     16.56   5.68%   5.68%
******************************************************************
Sequenced by Return Not Called
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym               Price  Symbol  Bid   Intr  Basis

EDFY   12.00 May 10.00   YQ EB 2.63  1497   9.37   6.72%   6.72%
DIGE   13.13 May 12.50  QDG EV 1.19  79    11.94   4.69%   4.69%
LBFC   11.81 May 12.50  QBB EV 0.44  540   11.37   9.94%   3.87%
CDNW   16.88 May 15.00  NWQ EC 2.38  2487  14.50   3.45%   3.45%
TX     67.75 May 60.00   TX EL 9.00  2489  58.75   2.13%   2.13%
----------------------------------------------------------------
MCOM    9.31 Jun  7.50  MQM FU 2.50  55     6.81  10.13%  10.13%
OMPT   17.06 Jun 15.00  QTT FC 3.25  672   13.81   8.62%   8.62%
PAIR   15.06 Jun 12.50  PQG FV 3.25  7758  11.81   5.84%   5.84%
TWRS   20.56 Jun 17.50  QYW FW 4.00  0     16.56   5.68%   5.68%
******************************************************************
Company Descriptions
******************************************************************
CDNW - CDnow, Inc.  $16.88  *** Takeover Speculation ***

CDnow, Inc. is an online retailer of CDs and other music-related 
products with over 390,000 different items available for purchase 
through its web site. CDnow shares spiked at the end of April on
rumors that TWX or BMG might be interested in them. CDNW's
earnings on Wednesday reflected a greater loss this quarter (the
NTKI merger completed) but also showed a doubling of revenues.
A short term speculation play on buy-out rumors as the Internet
music wars continue. Interesting that Legg Mason started coverage
with a 'Buy" rating on Thursday.

May 15.00 NWQ-EC Bid=2.38 OI=2487 CB=14.50 RC=3.45% RNC=3.45% 

Chart = http://quote.yahoo.com/q?s=CDNW&d=3m
******************************************************************
DIGE - Digene Corporation  $13.13  *** FDA Approval ***

Digene Corporation develops, manufactures and markets DNA testing 
systems for the screening, monitoring and diagnosis of human 
disease. Digene started a strong up-trend in April after getting
approval from the FDA for market clearance on its HPV Test, a DNA
based technology to detect the human papillomavirus (HPV). With
Blue Cross (New York) providing coverage for this test and then
receiving market approval for Brazil and Argentina, Digene's 
shares rocketed above resistance at $10 and are near an all-time
high. Earnings were reported on Thursday (losses narrowing) and
with the new HPV test, the next quarter should be interesting.

May 12.50 QDG-EV Bid=1.19 OI=79 CB=11.94 RC=4.69% RNC=4.69% 

Chart = http://quote.yahoo.com/q?s=DIGE&d=3m
******************************************************************
EDFY - Edify Corporation  $12.00  *** Internet Banking ***

Edify Corp. is a supplier of enterprise self service software 
solutions that enable organizations to automate, integrate and
personalize interactions with customers and employees through 
multiple channels. EDFY exploded when it announced the first
shipments of its Electronic Banking System (Release 3) Consumer
Banking Suite. Earnings in mid April showed a greater loss but
did little to slow the recent run-up in price. EDFY appears ready
to run with the Internet banking frenzy. The chart is bullish
and a double bottom pattern may have been completed.

May 10.00 YQ-EB Bid=2.63 OI=1497 CB=9.37 RC=6.72% RNC=6.72% 

Chart = http://quote.yahoo.com/q?s=EDFY&d=3m
******************************************************************
LBFC - Long Beach Financial Corp  $11.81  *** Own This One! ***

Long Beach Financial is engaged in originating, purchasing and 
selling subprime residential mortgage loans secured by one-to-four
unit family residences. LBFC share value paused momentarily after
it was downgraded on March 29, but then it resumed the up-trend,
closing above the Jan-Feb high. With earnings out of the way and 
volume still increasing, Long Beach may break through resistance
at $14. A short term play with a long term outlook.

May 12.50 QBB-EV Bid=0.44 OI=540 CB=11.37 RC=9.94% RNC=3.87% 

Chart = http://quote.yahoo.com/q?s=LBFC&d=3m
******************************************************************
TX - Texaco, Inc.  $67.75  *** Buy-out Speculation ***

Texaco is engaged in the worldwide exploration for and production,
transportation, refining and marketing of crude oil, natural gas 
liquids, natural gas and petroleum products. Earnings were lower
(of course) and oil prices weakened (a little), but Texaco's 
shares surged on Friday?  Why? Chevron! Of course it's speculation 
and rumor with no comment from Chevron. But we like the overpriced
option premiums!

May 60.00 TX-EL Bid=9.00 OI=2489 CB=58.75 RC=2.13% RNC=2.13% 

Chart = http://quote.yahoo.com/q?s=TX&d=3m
******************************************************************
MCOM - Metricom, Inc.  $9.31  *** What's Up! ***

MCOM designs, develops and markets wireless network products and 
services that provide low-cost, easy-to-use data communications 
that can be used in personal computer and industrial applications.
There is no news and yet Metricom has jumped almost $2 since last
Wedneday! The chart reflects a fairly stable up-trend with good
support near our cost basis. Is Metricom ready to explode? That
remains to be seen, but the prospects are interesting.

Jun 7.50 MQM-FU Bid=2.50 OI=55 CB=6.81 RC=10.13% RNC=10.13% 

Chart = http://quote.yahoo.com/q?s=MCOM&d=3m
******************************************************************
OMPT - Omnipoint Corporation  $17.06  

OMPT designs, develops, manufactures and markets wireless digital
communications products and services. Omnipoint has been in an up
trend since Oct., stair stepping higher with lateral corrections.
Earnings are due within the next week or so (they may be late).
The chart is bullish with short-term support near our cost basis.

Jun 15.00 QTT-FC Bid=3.25 OI=672 CB=13.81 RC=8.62% RNC=8.62% 

Chart = http://quote.yahoo.com/q?s=OMPT&d=3m
******************************************************************
PAIR - PairGain $15.06  *** The News Scam ***

PairGain's products enable high-speed transmission of data via
copper telephone lines, providing a cost-effective alternative
to installing and routing fiber optics directly to users while
allowing services such as high-speed Internet access. Regional
telephone companies are its biggest customers and they plan on
boosting sales in areas where copper infrastructure is pervasive,
particularly outside the US. Now that they have caught the guy
who faked the news story (he even worked for Pairgain), why is
the stock going up? More Telecom buy-out speculation? The tape
does not lie! Speculators only please...

Jun 12.50 PQG-FV Bid=3.25 OI=7758 CB=11.81 RC=5.84% RNC=5.84% 

Chart = http://quote.yahoo.com/q?s=PAIR&d=3m
******************************************************************
TWRS - Crown Castle Intl. Corp.  $20.56  *** More Telecom ***

Crown Castle International owns, operates and manages wireless 
communications sites and broadcast transmission networks. TWRS 
also provides network design, radio frequency engineering, site 
development and other services. Crown Castle has started another
up-trend after consolidating near $18. Earnings showed a greater
loss than expected but were accompanied by an initial "strong buy"
recommendation by Morgan Stanley DW later in the day. The chart
is bullish and TWRS could be heading for a new all-time high.

Jun 17.50 QYW-FW Bid=4.00 OI=0 CB=16.56 RC=5.68% RNC=5.68% 

Chart = http://quote.yahoo.com/q?s=TWRS&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
EDFY   12.00 May   12.50  YQEV   1.69  14.06   871   1305
PCMS    5.00 May    5.00 PQPEA   0.56  11.25    21   1791
MCOM    9.19 May   10.00 MQMEB   1.00  10.88   393    377
SAVLY  14.13 May   15.00 QVYEC   1.50  10.62  1007   2341
EDFY   12.00 Jun   12.50  YQFV   2.81  23.44   357    325
PCMS    5.00 Jun    5.00 PQPFA   1.13  22.50    10    383
SAVLY  14.13 Jun   15.00 QVYFC   2.63  18.58  1215    460
GMGC    4.53 Jun    5.00 GGQFA   0.81  17.93   148   2507
CYCH   14.81 Jun   15.00 KBQFC   2.44  16.46     5   1180
GSTX   12.50 Jun   12.50 QGSFV   1.94  15.50    35    604
CDNW   16.75 Jun   17.50 NWQFW   2.50  14.93   263    334
VTEL    4.19 Jun    5.00 VQEFA   0.63  14.93     2   1095
DCTM   15.19 Jun   17.50 QDCFW   2.25  14.81    15    210
WSTL    6.75 Jun    7.50 QLWFU   1.00  14.81   310    105
VLNC    7.25 Jun    7.50 VHQFU   1.06  14.66    25   1184
PTEK   13.25 Jun   15.00 TQOFC   1.88  14.15    81   1491
MCHM    8.88 Jun   10.00  QQFB   1.25  14.08    38   1506
PRTL   14.31 Jun   15.00 PQWFC   2.00  13.97     4    409
IUSAA   6.88 Jun    7.50 HAQFU   0.94  13.64     6     35
MCOM    9.19 Jun   10.00 MQMFB   1.25  13.61    35     82
CLST    7.38 Jun    7.50 EQLFU   1.00  13.56     5    879
FFD    14.75 Jun   15.00 FFDFC   2.00  13.56    95    103
SKYC   13.06 Jun   15.00 KQFFC   1.75  13.40   100    114
BDT     4.69 Jun    5.00 BDTFA   0.63  13.33    10    423
AGTX    9.38 Jun   10.00 QDXFB   1.25  13.33    30    202
REV    24.44 Jun   25.00 REVFE   3.25  13.30   114     42
ORTL    9.50 Jun   10.00 OQEFB   1.25  13.16    79     10
STRX    9.50 Jun   10.00 TQQFB   1.25  13.16    15    277
ARTT   13.38 Jun   15.00 AOQFC   1.75  13.08    18    374
TDFX   17.31 Jun   17.50  FQFW   2.25  13.00   114    345
APOL   22.38 Jun   22.50 OAQFX   2.88  12.85    10     17
IMG     9.75 Jun   10.00 IMGFB   1.25  12.82    12    308
WIND   14.63 Jun   15.00 QWVFC   1.88  12.82   121     78
SRCM   19.59 Jun   20.00  SQFD   2.50  12.76     3    155
TNSI   23.81 Jun   25.00 JQTFE   3.00  12.60     1     81
VIRS   14.94 Jun   15.00 VQPFC   1.88  12.55    40    318
EAII   22.00 Jun   22.50 QNEFX   2.75  12.50     5     70
Z      10.00 Jun   10.00   ZFB   1.25  12.50   115    903
BYND   24.06 Jun   25.00 QYDFE   3.00  12.47     9    223
ESPI   12.13 Jun   12.50  AQFV   1.50  12.37    61   1184
ONSL   24.25 Jun   25.00 QOLFE   3.00  12.37    49    146
MMCN   24.34 Jun   25.00 CMQFE   3.00  12.32    15     69
DJT     4.63 Jun    5.00 DJTFA   0.56  12.16   190    446
MTIC    9.31 Jun   10.00 QTXFB   1.13  12.08   215    335
NL     12.50 Jun   12.50  NLFV   1.50  12.00    50     30
NCDI    6.25 Jun    7.50 NQKFU   0.75  12.00   104    563
PMTC   12.50 Jun   12.50 PMQFV   1.50  12.00   406   1173
BNYN   12.06 Jun   12.50 QYNFV   1.44  11.92    13     30
ETEC   29.69 Jun   30.00 EBQFF   3.50  11.79     4    172
ANTC   29.75 Jun   30.00 AQCFF   3.50  11.76    10    143
APCO    9.06 Jun   10.00 QFMFB   1.06  11.72    30     87
IDTC   25.94 Jun   30.00 IQJFF   3.00  11.57   179    989
PPOD   11.44 Jun   12.50 QPPFV   1.31  11.48    15    504
PHYC    4.92 Jun    5.00 PQHFA   0.56  11.43    30    490
USWB   23.00 Jun   25.00 QWBFE   2.63  11.41    26    379
CYCH   14.81 Jun   17.50 KBQFW   1.69  11.39   265   1272
DBCC   16.50 Jun   17.50 BQDFW   1.88  11.36    27   1104
ICGX   22.00 Jun   22.50 QIGFX   2.50  11.36     8    576
OMPT   17.06 Jun   17.50 QTTFW   1.94  11.36    80    902
INPR    4.44 Jun    5.00 BLQFA   0.50  11.27    70    144
OEI     9.44 Jun   10.00 OEIFB   1.06  11.26   200    651
CDNW   16.75 Jun   20.00 NWQFD   1.88  11.19    45    392
TLXN    8.97 Jun   10.00 TNQFB   1.00  11.15    10   1238
SKYT   18.00 Jun   20.00 MMQFD   2.00  11.11   152   2058
CMOS   24.81 Jun   25.00 CQSFE   2.75  11.08    14     32
GCTI   18.75 Jun   20.00 QHFFD   2.06  11.00    25    282
FGCI    9.67 Jun   10.00 JZQFB   1.06  10.99   180     16
PDX    18.25 Jun   20.00 PDXFD   2.00  10.96    36    152
MCRE    6.88 Jun    7.50 MQZFU   0.75  10.91     5     86
NETA   12.13 Jun   12.50 CQMFV   1.31  10.82    92    421
EGGS   13.88 Jun   15.00 EGQFC   1.50  10.81   123   1268
HPH     9.31 Jun   10.00 HPHFB   1.00  10.74    27    287
TALK   11.69 Jun   12.50 QQKFV   1.25  10.70  2009   5146
TQNT   29.31 Jun   30.00 TQNFF   3.13  10.66     3     37
TGX     7.06 Jun    7.50 TGXFU   0.75  10.62    16   1078
SEV     4.13 Jun    5.00 SEVFA   0.44  10.61    25    622
ECLP   25.00 Jun   25.00 IQVFE   2.63  10.50     2    265
TKLC    9.56 Jun   10.00  KQFB   1.00  10.46    15    186
PTVL   22.63 Jun   25.00 QUTFE   2.31  10.22    20    209
ZAP     8.63 Jun   10.00 ZAPFB   0.88  10.14     3    101
SGI    12.38 Jun   12.50 SGIFV   1.25  10.10    30    345
MAG     9.94 Jun   10.00 MAGFB   1.00  10.06    10    441
BEAS   16.19 Jun   17.50 BRQFW   1.63  10.04    14   1460
BRKS   21.88 Jun   22.50 BQEFX   2.19  10.00    75    192
CIEN   25.00 Jun   25.00 EUQFE   2.50  10.00    54   1984
BDT     4.69 Jul    5.00 BDTGA   1.00  21.33    10   1279
MCOM    9.19 Jul   10.00 MQMGB   1.75  19.05    31    403
VNWK   30.00 Jul   30.00 QVNGF   5.63  18.75     5      2
SANG   11.81 Jul   12.50 QDYGV   2.00  16.93    12     15
MTIC    9.31 Jul   10.00 QTXGB   1.50  16.11     3   1205
SPYG   21.75 Jul   22.50 YQGGX   3.50  16.09    26    186
HNCS   21.00 Jul   22.50 NSQGX   3.25  15.48     8    101
ZOLT    9.69 Jul   10.00 QOTGB   1.50  15.48    16    126
REV    24.44 Jul   25.00 REVGE   3.75  15.35    54   1240
USWB   23.00 Jul   25.00 QWBGE   3.38  14.67     2    342
MXTR    6.44 Jul    7.50 MQLGU   0.94  14.56     2   1003
ENZ    10.00 Jul   10.00 ENZGB   1.44  14.38    20    442
NBIX    4.94 Jul    5.00 QAVGA   0.69  13.92    20     75
CLCI   10.00 Jul   10.00 QAZGB   1.38  13.75     3     99
PDE     9.63 Jul   10.00 PDEGB   1.31  13.64    60    492
MTZ    29.44 Jul   30.00 MTZGF   4.00  13.59    86    279
INTV    9.75 Jul   10.00 VQNGB   1.31  13.46     4    188
SSNC   14.94 Jul   15.00 QUQGC   2.00  13.39     2      7
ZD     13.81 Jul   15.00  ZDGC   1.81  13.12    45    498
AMSC   12.00 Jul   12.50 QAYGV   1.56  13.02     5     10
CIEN   25.00 Jul   25.00 EUQGE   3.25  13.00    89   5015
SPYG   21.75 Jul   25.00 YQGGE   2.81  12.93   144    618
KLIC   21.25 Jul   22.50 KQSGX   2.69  12.65    80    116
DIMD    4.00 Jul    5.00 DAQGA   0.50  12.50    30   1001
DCTM   15.19 Jul   20.00 QDCGD   1.88  12.35    12    156
CORR   12.25 Jul   12.50 CHQGV   1.50  12.24     1    205
HMTT    3.61 Jul    5.00 HTQGA   0.44  12.12    10    243
CDO    22.75 Jul   25.00 CDOGE   2.75  12.09    16   1166
COMS   26.38 Jul   27.50 THQGY   3.13  11.85    21   2589
LCP    11.81 Jul   12.50 LCPGV   1.38  11.64     8    407
SDTI   21.50 Jul   22.50 QSDGX   2.50  11.63     5    189
REL     9.31 Jul   10.00 RELGB   1.06  11.41    10    140
GELX   16.56 Jul   17.50 GQXGW   1.88  11.32     1     54
SYMC   19.00 Jul   20.00 SYQGD   2.13  11.18     3    294
GLM    14.69 Jul   15.00 GLMGC   1.63  11.06   175   1718
IMG     9.75 Jul   12.50 IMGGV   1.06  10.90     9     85
CELG   16.63 Jul   20.00 LQHGD   1.81  10.90    10    585
PTVL   22.63 Jul   30.00 QUTGF   2.44  10.77     2    456
ENTU   20.38 Jul   25.00 QYEGE   2.19  10.74    10    119
SMOD   14.13 Jul   15.00 UYQGC   1.50  10.62    15    169
DK      9.00 Jul   10.00  DKGB   0.94  10.42     2    410
MPS    13.38 Jul   15.00 MPSGC   1.38  10.28    70    564
CPQ    24.75 Jul   25.00 CPQGE   2.50  10.10  2832  18290
RRC     4.38 Jul    5.00 RRCGA   0.44  10.00    11    242






*******************************
NAKED PUT SECTION
*******************************
Naked Put Roll-Out...

There are two basic strategies that most traders use to profit
from the sale of naked puts. The first technique involves writing
at-the-money puts to take advantage of a bullish movement in the
underlying stock for large, short-term profits. A less aggressive
method is to write an out-of-the-money put, hoping that the sold
position will expire worthless. Either technique can be used to
take a position in a stock but in a majority of cases, naked put
writing is applied as a deep out-of-the-money strategy in which
the investor uses the collateral value of his security holdings
to return a small profit.

The strategy of selling out-of-the-money naked puts on bullish
issues is a relatively conservative technique but occasionally,
you will be faced with a position that is in-the-money as the
expiration date approaches. One of the most common methods for
preventing a potential loss in this situation is the "roll-out"
and it is used when the stock price falls to the sold strike.
Remember, selling a naked-put obligates the writer to purchase
the underlying issue at the sold strike price. If the stock
remains above the sold strike, the writer retains the premium
for the sold option.  However, if the stock price falls, the
writer may choose to roll out and forward in his position. He
may buy-back the puts that were originally sold and sell enough
longer-term options, generally at the next lower strike price,
to generate a credit.  In this method, no debits are incurred
but a realized loss is taken in the interim. If the stock price
continues to fall, the process is repeated.  Eventually, the
stock should stop falling and the last set of written options
will expire worthless.  At that time, the traders' overall
profit will consist of the sum of all the previous credits.

There are two requirements for success in this strategy.  The
first is that the underlying stock must eventually rebound and
the second is that the investor have enough collateral backing
to stay with the strategy even if the stock falls significantly.
A large stock portfolio is best for this type of trading because
the collateral required for naked option writing may be in the
form of cash or securities. There are no margin interest charges
and the stocks in the portfolio are unaffected unless there is a
need for additional cash to close the position prematurely. This
simple exit strategy offers a high degree of (eventual) success
although there may be an accumulation of losses before a profit
is achieved.

Good Luck!
******************************************************************
SUMMARY OF PREVIOUS PICKS (2 weeks to the May expiration)
******************************************************************
Stock  Price  Last    Mon  Strike  Opt    Profit   ROI   Monthly
Sym    Picked Price        Price   Bid    /Loss          ROI

DBCC   16.63  16.50   May  15.00  0.88  *$  0.88  14.9%  21.6%
TWMC   15.44  13.13   May  12.50  0.50  *$  0.50  13.4%  19.4%
ENMD   24.75  25.63   May  20.00  1.50  *$  1.50  22.6%  16.3%
IMG    11.25   9.75   May   7.50  0.38  *$  0.38  14.4%  15.7%
NETG   40.50  31.00   May  25.00  0.94  *$  0.94  10.4%  15.1%
CYCH   15.94  14.81   May  15.00  1.63   $  1.44  20.4%  14.8%
PTEK   16.25  13.25   May  12.50  0.63  *$  0.63  16.2%  14.1%
MAST   14.75  15.75   May  12.50  0.38  *$  0.38   9.4%  13.7%
CUST   34.88  37.88   May  22.50  1.00  *$  1.00  12.5%  13.6%
PAIR    9.63  15.06   May   7.50  0.44  *$  0.44  18.6%  13.4%
PTVL   22.94  22.63   May  17.50  0.81  *$  0.81  15.0%  13.0%
IDTC   28.50  25.94   May  20.00  0.50  *$  0.50   8.1%  11.7%
HLYW   25.00  22.97   May  20.00  0.44  *$  0.44   8.0%  11.6%
CMTO   29.94  30.44   May  22.50  0.69  *$  0.69  10.3%  11.2%
XCED   18.50  18.00   May  15.00  0.56  *$  0.56  12.6%  10.9%
CYCH   18.88  14.81   May  12.50  0.50  *$  0.50  11.7%  10.2%
VRIO   62.88  64.50   May  40.00  1.56  *$  1.56  11.0%   9.6%
CDIS   29.63  30.81   May  25.00  0.69  *$  0.69   8.7%   9.5%
PAMC   33.25  30.13   May  20.00  0.63  *$  0.63   8.7%   9.4%
NSIT   27.75  26.63   May  20.00  0.50  *$  0.50   8.3%   9.0%
PAMC   34.50  30.13   May  22.50  0.44  *$  0.44   6.0%   8.7%
AEIS   32.63  30.00   May  25.00  0.56  *$  0.56   7.9%   8.6%
VWRX   25.63  25.50   May  20.00  0.31  *$  0.31   5.7%   8.3%
IDTC   30.44  25.94   May  20.00  0.50  *$  0.50   7.6%   8.2%
NETG   44.94  31.00   May  25.00  0.94  *$  0.94   9.5%   8.2%
AEIS   28.00  30.00   May  22.50  0.31  *$  0.31   5.2%   7.5%
NAV    43.56  54.63   May  35.00  0.75  *$  0.75   7.8%   6.8%
DELL   38.25  40.19   May  30.00  0.63  *$  0.63   7.6%   6.6%
DELL   43.63  40.19   May  35.00  0.88  *$  0.88   9.1%   6.6%
NMR    27.81  27.69   May  22.50  0.44  *$  0.44   7.0%   5.1%
NWAC   29.25  32.00   May  25.00  0.50  *$  0.50   6.3%   4.6%
BNYN   17.38  12.06   May  12.50  0.56   $  0.12   3.0%   2.2%

Dropped Plays: ONSL

-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

AEIS   30.00  May 25.00  OEQ QE  0.44  350   24.56   5.91%
NAV    54.81  May 50.00  NAV QJ  0.75  125   49.25   4.20%
PTVL   22.63  May 20.00  QUT QD  0.69  354   19.31   9.70%
SKYT   18.00  May 15.00  MMQ QC  0.50  1914  14.50  10.64%
STII   19.13  May 17.50  SDQ QW  0.50  22    17.00   7.67%
----------------------------------------------------------
CMOS   24.81  Jun 20.00  CQS RD  0.88  0     19.12  14.68%
GSTX   12.50  Jun 10.00  QGS RB  0.56  36     9.44  18.30%
IMG     9.81  Jun  7.50  IMG RU  0.75  60     6.75  27.65%
******************************************************************
Sequenced by Return on Investment  
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr  Basis  Expired
SKYT   18.00  May 15.00  MMQ QC  0.50  1914  14.50  10.64%

PTVL   22.63  May 20.00  QUT QD  0.69  354   19.31   9.70%
STII   19.13  May 17.50  SDQ QW  0.50  22    17.00   7.67%
AEIS   30.00  May 25.00  OEQ QE  0.44  350   24.56   5.91%
NAV    54.81  May 50.00  NAV QJ  0.75  125   49.25   4.20%
----------------------------------------------------------
IMG     9.81  Jun  7.50  IMG RU  0.75  60     6.75  27.65%
GSTX   12.50  Jun 10.00  QGS RB  0.56  36     9.44  18.30%
CMOS   24.81  Jun 20.00  CQS RD  0.88  0     19.12  14.68%
******************************************************************
Company Descriptions
******************************************************************
AEIS - Advanced Energy Ind. $30.00

Advanced Energy Industries is the leading manufacturer of power
delivery systems that are critical in the manufacturing of chips,
data storage media, flat panel displays, and other products using
thin-film technology. Within its comprehensive product portfolio
of direct current (DC), low/mid-frequency and radio frequency (RF)
solutions, the company sells products critical in applications
ranging from compact and digital video disks, flat panel displays,
logic semiconductor devices, among many other applications. They
just reported excellent margin and revenue growth from a sharp
increase in new orders for semiconductor companies.

May  25.00  OEQ QE  Bid=0.44  OI=350  CB=24.56  ROI=5.91%

Chart = http://quote.yahoo.com/q?s=AEIS&d=3m
******************************************************************
NAV - Navistar Intl.  $54.81     *** Own This One! ***

Navistar International Corp. is a leading producer of trucks
and school buses. The company is also a worldwide leader in the
manufacture of mid-range diesel engines for the International®
brand, and a private label designer and manufacturer of diesel
engines for other selected industrial and off-highway markets.
Recently raised its forecast for industry demand, projecting a
significantly stronger 1999 performance. Two Broker upgrades
followed the announcement and the stock is still moving higher.

May  50.00  NAV QJ  Bid=0.75  OI=125  CB=49.25  ROI=4.20%

Chart = http://quote.yahoo.com/q?s=NAV&d=3m
******************************************************************
PTVL - Preview Travel  $22.63     *** Internet Commerce ***

Preview Travel is a leading provider of branded online travel
services offering one-stop shopping for tickets and vacations
as well as integrated access to travel information, merchandise,
news and resources. One of the Top 50 most visited web sites and
ranked the #1 online travel service by Gomez Advisors. Also one
of the Forbes ASAP Dynamic 100 Top Technology Companies. They
operate the primary travel service on America Online, Excite,
Lycos, Snap and USA Today. Record earnings reported in mid-April.

May  20.00  QUT QD  Bid=0.69  OI=354  CB=19.31  ROI=9.70%

Chart = http://quote.yahoo.com/q?s=PTVL&d=3m
******************************************************************
SKYT - Skytel  $18.00     *** On The Rebound? ***
        
SkyTel is a leader in wireless messaging and is moving toward
true nationwide messaging through a series of innovations that
culminated in SKYT's two-way interactive messaging service. This
enables customers to exchange messages with the Internet & other
pagers, receive messages via email and the Internet, and send
messages to any telephone in the United States. Just announced
a new nationwide wireless email product for customers who send
and receive large amounts of information. Also a rumored as a
takeover target.

May  15.00  MMQ QC  Bid=0.50  OI=1914  CB=14.50  ROI=10.64%

Chart = http://quote.yahoo.com/q?s=SKYT&d=3m
******************************************************************
STII - Stanford Telecom  $19.13     *** Satellite Components ***

Stanford Telecom designs, manufactures & markets advanced digital
communications products and systems to enhance communications via
satellites, terrestrial wireless and cable. They perform system
design including communication waveforms, modulation techniques,
ASIC design, radio frequency antennas and converters, software
and firmware, asynchronous transfer mode design and advanced
manufacturing techniques and processes. A recent contract making
parts for the U.S. Army's Defense Satellites virtually guarantees
them future revenues.

May  17.50  SDQ QW  Bid=0.50  OI=22  CB=17.00  ROI=7.67%

Chart = http://quote.yahoo.com/q?s=STII&d=3m
******************************************************************
CMOS - Credence Systems  $24.81     *** Sector Rebound! ***

Credence Systems Corporation is a leader in the manufacture of
automatic test equipment (ATE) for the worldwide semiconductor
industry. Credence offers a wide range of products with test
capabilities for digital, mixed-signal & memory semiconductors.
Utilizing its patented CMOS technologies, Credence products are
designed to meet the strict time-to-market and cost of ownership
requirements of its customers. A rebound in the industry and two
upgrades in April should help this stock remain in the $20 range.

Jun  20.00  CQS RD  Bid=0.88  OI=0  CB=19.12  ROI=14.68%

Chart = http://quote.yahoo.com/q?s=CMOS&d=3m
******************************************************************
GSTX - GST Telecommunications  $12.50     *** Telecom ***

GST Telecommunications is an Integrated Communications Provider
with a broad range of integrated telecom products and services,
including local dial tone, Internet, long distance and enhanced
data services throughout the United States. GST is focusing on
its western regional strategy by anchoring its next generation
networks in local markets & connecting them via fiber networks.
They just introduced a new line of products to provide business
customers with the communication tools needed for information
intensive markets. Leading edge communications is the place to
invest and we think this is a good long-term position at $9.43.

Jun  10.00  QGS RB  Bid=0.56  OI=36  CB=9.44  ROI=18.30%

Chart = http://quote.yahoo.com/q?s=GSTX&d=3m
******************************************************************
IMG - Intermagnetics  $9.81     *** An Attractive Position ***

Intermagnetics is a leading developer and manufacturer of low and
high temperature superconducting magnets, wire and cable as well
as associated low-temperature refrigeration equipment, and radio
frequency coils, a combination which is essential to successful
application of superconductivity, especially in equipment for
Magnetic Resonance Imaging. They also supply permanent magnet
systems, materials separation equipment and replacements for
ozone-depleting refrigerants. IMG is now regarded as the leader
in the commercialization of applied superconductivity and rumors
of a merger/buy-out are circulating.

Jun  7.50  IMG RU Bid=0.75  OI=60  CB=6.75  ROI=27.65%

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




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