Option Investor
Newsletter

Daily Newsletter, Sunday, 05/30/1999

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The Option Investor Newsletter            Sunday  5-30-99  1 of 6
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

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

Published three times weekly, Sunday, Tuesday, Thursday evenings.
New plays and market wrap updated daily on the website. 
******************************************************************
Entire newsletter best viewed in COURIER 10 font for alignment
******************************************************************
MARKET STATS FOR LAST WEEK AND PRIOR WEEKS
******************************************************************
	WE 5-28           WE 5-21         WE 5-14          WE 5-7 
DOW    10559.74 -269.54 10829.28 - 84.04 10913.32 -118.27  +242.55  
Nasdaq  2470.52 - 49.62  2520.14 -  7.72  2527.86 + 24.24  - 39.23  
S&P-100  658.66 - 13.10   671.76 -  1.81   673.57 -  8.17  +  6.09  
S&P-500 1301.84 - 28.45  1330.29 -  7.51  1337.80 -  7.30  +  9.82 
RUT      438.68 - 10.46   449.14 +  6.01   443.13 +  7.02  +  3.30  
TRAN    3415.70 -135.56  3551.26 -115.08  3666.34 - 76.49  + 95.54  
VIX       26.38            25.36            29.66            26.72
Put/Call    .54              .64              .71              .61
******************************************************************

What? No triple digit close?

After bouncing like a bunjee jumper for the last three days, Friday's
trading was very calm. Actually, Friday was the second lightest day
of the year for volume on the NYSE at 651 mln and the lightest on
the Nasdaq at 678 mln. Because of the very light volume you cannot
draw many hard conclusions about the markets movement. After rising
early in the day the Dow traded in a 20 point range from 12:30 to 
3:15. A $100 mln sell program hit at 3:15 and with most traders
already gone for the holiday it quickly knocked -70 points off
the Dow before bargain hunters stepped in and bought the dip. 

Ten day Dow Chart

 

Friday Dow Intraday Chart

 

The Nasdaq dipped slightly on profit taking at the open but
with Internets gaining back lost ground the index quickly moved
to positive territory and by 11:00 traders had left and volume
was minimal. The late day Dow sell program hardly even dented
the Nasdaq and the last 30 minutes were marked by strong Internet
buying as the remaining traders took positions ahead of the 
expected bump next week.

Nasdaq Intraday Chart

 


The rally on Friday was another technical relief bounce from
the -235 points on Thursday. The market volatility was eased
somewhat by good economic data from the CPM report. The report
showed the index fell to 57.9 from 63.3 in April. The closely
watched prices-paid index also fell to 52.5 from 56.7, easing
inflation worries somewhat. The Chicago report is the forerunner
to the NAPM index due out on Tuesday. A further slowdown might 
keep the Fed from being too hasty on raising rates. The bond
yield is creeping back up and closed at 5.84% on Friday. 
With continued economic reports showing slowing to no inflation
it is becoming increasingly likely that the rise in the CPI was 
just a fluke and the Fed may have jumped the gun on changing their
bias.

After the big swings in the market this week the profit taking 
should be over. The drop from 11130 to the 10440 range (-700 points)
was more than enough to correct for the recent gains. (+1300)
Now we are on the launching pad. Up or down? The market sentiment
is definitely bullish and eager for another test of the 11000
mark but we are currently in a news vacuum and there is nothing
to cause the market to move. The next earnings reporting cycle 
does not start for six weeks. We could see buying start anytime
as people position themselves for the next cycle. Many analysts
are calling the -700 point drop an excellent buying opportunity
and the advance/decline line on Friday definitely supports the
theory. The NYSE advancers beat decliners 2:1 and the Nasdaq had
a slightly weaker 7:5 ratio. The close by the Dow over 10,500 and
the S&P over 1300 were both positive. The Russell posted a strong
+5.76 move on Friday to show small caps are still alive and well.
New highs/lows were even at 25/23 and gave us no directional help.

Before I rush off on a totally bullish tangent, I have to also
caution you about some things that we saw Friday. Kimo and I looked
at well over 1,000 charts and the patterns were the same. Sharp
declines, sharp bounce then flat. Personally I see the glass half
full and feel the lack of follow through on Friday was lack of
volume and lack of commitment going into the holiday. The local
bear sees the glass half empty and thinks this could just be a 
technical bounce and a plateau before the next leg down. We can't
build a scenario for further drops other than no news to move us
upward. Any drop scenario should be met by bargain hunters under
Dow 10500 and we feel this level should hold. Of course our opinion
is just an opinion. We could have another retest of last weeks lows
before starting the next earnings cycle but I am not leaning in that
direction.

Intel 10 day chart   

 

RNWK 10 day chart

 

EGRP 5 day chart (post split)

 


As always I am urging traders to be cautious before starting
new positions on Tuesday. Don't play in amateur hour (9:30-10:30)
and confirm that advances are stronger than decliners and gaining.
Confirm that the DOW & Nasdaq are both moving up before playing.
A real rally here should be broad based and we do not want to
see the Dow or Nasdaq not participating.

Good Luck, sell too soon

Jim Brown
Editor


Major new alliance:

At the Omega World Seminar last week we concluded talks with
a major player in the options industry. Out of these talks we
have formed an alliance with someone we feel the readers will
recognize immediately. We are pleased to announce that effective
immediately George Fontanills, noted author, teacher and options
guru is on the OIN team. After many in-depth discussions George
and his company Global Investment Research, have partnered with
OIN to provide you the reader with the best options advisory 
service available.

   "OptionInvestor.com is the most complete site for options 
   traders on the internet. It is full of useful information 
   for options traders ranging from the beginner to the 
   advanced trader looking for ways to make money in the 
   markets. It should be an essential part of every traders 
   weapons arsenal for making money in the markets."   
   - George Fontanills

You will soon see many changes at OIN as we integrated the ideas
and products from both companies. We are pleased to have George
and his staff on board and are very excited about the new 
relationship.


HOT NEW Summer Seminar Series:

As part of the new alliance with George Fontanills, 
OptionInvestor.com is presenting a new series of in-depth option 
training seminars to be taught by George Fontanills. George has 
two options training books on the Amazon.com top ten list. 

Details = http://www.OptionInvestor.com/seminar/books.asp

He has been teaching options trading since 1993 and is the pioneer 
of the delta neutral approach to trading options. His nationally 
known Optionetics Course is state of the art. We are very pleased 
to have George teach our readers how to maximize their returns. 

Seminar Schedule

June 21 & 22
BOSTON /Crown Plaza

June 27 & 28
LOS ANGELES / Burbank Airport Hilton

July 18 & 19
DALLAS / Airport Marriott

July 25 & 26
SAN FRANCISCO / Crown Planza


THE COURSES ARE LIMITED TO 100 PERSONS PER EVENT !!!!!

In the past our seminars have filled up within hours of the 
announcements and we expect these to be the same. If you are 
tired fighting the market and are ready to step up to the next 
level then we strongly suggest you attend. There is a full money 
back guarantee and we will allow you to retake the seminar for free 
as many times as you feel necessary to grasp and implement all the 
techniques taught. People fly from around the world to hear George 
speak and you can have two full days of personal attention at the 
OIN seminars.

Go here for details: 
http://www.OptionInvestor.com/seminar/index.asp

We guarantee you will not be disappointed!

Vegas Money Show:

OptionInvestor.com is a major sponsor of the Vegas Money Show
at the Bally's in Las Vegas, Mon-Wed, Jun-7,8,9th. If you 
are are anywhere close to Vegas next week please stop by our
exhibit and say hello.  Chris Verhaegh, Kimo and myself will be
in attendance. 



*********************************************
JIMS PLAYS
*********************************************

I was not in the market the last two weeks in preparation
for the Omega World Seminar last week. The only position
I had open was the CMGI combination play. 

I was short MAY-250 calls at $15.75 and short MAY-210 puts 
at $15.00. I was uncovered and the stock was at $230. When
CMGI started up again I went long at $235 and held it while
it bounced near $250. When it started falling with the rest
of the Internets I sold at $245 for a $10 profit and then
watched it drift back down to end the week at $227. Since
I was safely out of the money on both sides, both options
expired worthless. This was a great play. I made a total 
of $23 on both runs from the $230 range to $245 back. Had 
I been more proactive I could have shorted CMGI on both
runs and made even more.

May-250 calls  $15.75
May-210 puts   $15.00
Short CMGI    -$ 2.00
Long CMGI      $15.00
Long CMGI      $10.00

total profit   $53.75 per share


 


I am a presenter at the Money Show in Vegas next week and
OIN has a big exhibit as well. Therefore I will not be in
the markets this week or next. I am completely in cash.





*********************************************************
Market Sentiment - By Pinnacle Capital Advisors
*********************************************************
Sunday, May 30, 1999

Pull out the Binoculars 

After several volatile sessions, sometimes it's best to step away 
from the trading pit to see the big picture from the Skybox.  At 
Pinnacle Capital Advisors, we use a benchmark trading approach that 
is market neutral and enables us to play the more meaningful moves.  
If you have not had a chance to check out the OEX Skybox on the 
website, we encourage you to do so.  Since its inception last 
Novemeber, the Skybox has garnered a return of more than 240+ 
percent.   

As we moved into the Memorial holiday weekend and into a short 
trading week, several of the key industry sectors printed reversal 
signals but are still trading BELOW their respective 50 and/or 100 
day moving average.  For many sectors this is where the lion share 
of investors will be coming back into the market as they 
anticipate the obviously retracement dip.  What's disconcerting 
to Pinnacle is the high level of optimism in the face of some 
shifting fundamental current such as an interest rate hike.  Savvy 
option traders will want to track the level of out-of-the-money 
(OTM) options on Tuesday (6/1) and Wednesday (6/2) for early signs 
of what option speculators are doing.

Pinnacle is advising its clients to resist the temptation of 
buying this dip and wait until certain market internal find support 
levels. The next couple of months are historically quiet for 
technology companies and if the FED accelerates its interest rate 
hike, the broad market may come under continued pressure.


 


 


 

Mixed Signs:

Market Volatility (VIX):  
Trading at its 50-day moving average (26.35).   Next move above 
or below key benchmark will likely determine market direction over 
the near-term.  

Advance/Decline Line:
After flattening and rolling over last week, the A/D line is 
beginning to check up and could prove Bullish if advancers can out 
pace decliners in the week ahead. 

Russell 2000: 
After recent rally failed just below the 435 benchmark, the small 
cap stocks are beginning to show strength just above its 50/100 day 
moving average. 


BEARISH Signs:

Investor Intelligence:  
As a contrarian indicator, the percent of Bullish investors spiked 
from a week ago suggesting Bullish sentiment is picking up steam 
and investors are ignoring the selloff. 

Interest Rates:
Trading ABOVE 200dma and 5.50 Benchmark (5.823%).

Pinnacle Index:  
Overhead resistance (OEX 680-750) clocking in at 6.8 
suggesting that option speculators are expecting the market to 
advance higher.

Peak Open Interest:  
The contraian put-call ratio clocking in at .82 suggesting bullish
sentiment picking up steam.


OTM Call Analysis

As we move through June'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%     
Friday, May 14              97,861      +218.8%     
Friday, May 21             115,336      +275.0%     


June Expiration Cycle
OEX OTM Call Analysis (Open Interest June 680-750)
******************************************************************
Date                 Open Interest     Change %    Alert
******************************************************************

Friday, May 28           53,502        -


Market Sentiment at a Glance
********************************************************************
                                Friday     Tues      Thurs  
Indicator                       (5/28)     (6/1)     (6/3)Alert
********************************************************************

Pinnacle Index (OEX):          

                    (680-750)      6.8
Overhead Resistance (680-700)      3.7
Underlying Support  (645-660)      1.3
                    (510-660)      3.8

Put/Call Ratios:

CBOE Total P/C Ratio                .6
CBOE Equity P/C Ratio               .5
OEX P/C Ratio                       .8


Peak Open Interest (OEX):

Puts                              650
Calls                             670 
P/C Ratio                         .82  *

Market Volatility Index (VIX):	

CBOE VIX                        26.38  *



Investors Intelligence:

Bullish                         60.9% *
Bearish                         28.7% *	



The Power of Sentiment Analysis

It has often been said that the crowd is right during the market 
trends but wrong at both ends.  Measuring and evaluating the 
sentiment of the crowd, therefore, can give savvy option traders 
a decided edge.

 
Pinnacle Index
******************************************************************
OEX                             Friday      Tues      Thurs
Benchmark                        (5/28)     (6/1)     (6/3)
******************************************************************

                    (680-750)      6.8             
Overhead Resistance (680-700)      3.7

OEX Close                       658.66
 
Underlying Support  (645-660)      1.3        
                    (510-660)      3.8

 
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                 (5/28)     (6/1)     (6/3)
********************************************************************


CBOE Total P/C Ratio               .63
CBOE Equity P/C Ratio              .50
OEX P/C Ratio                      .83


Peak Open Interest (OEX)
********************************************************************
                     Friday         Tues          Thurs
Strike/Contracts     (5/28)          (6/1)        (6/3)
********************************************************************


Puts                 650 / 10,434
Calls                670 / 12,700
Put/Call Ratio       .82 



 


 


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   

May 21, 1999                            25.36 
May 28, 1999                            26.38


 


 

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     
May 12, 1999                          56.9        31.0     
May 19, 1999                          60.9        28.7 *     



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

As of Market Close - Friday, May 28, 1999 

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

DOW Industrials   10,500  11,000  10,560    Neutral   5.28 *
SPX S&P 500        1,325   1,360   1,302    BEARISH   5.25  
OEX S&P 100          660     690     659    BEARISH   5.25  
RUT Russell 2000     435     450     439    Neutral   5.28 *  

NDX NASD 100       2,100   2,250   2,090    BEARISH   5.25 
MSH High Tech      1,000   1,100   1,014    Neutral   5.28 *    

                   Key Benchmarks
Technology         Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
XCI Hardware         900     920     875    BEARISH   5.20
CWX Software         600     675     677    BULLISH   5.28 *
SOX Semiconductor    390     420     388    BEARISH   5.25              
NWX Networking       450     490     530    BULLISH   4.22
INX Internet         550     650     500    BEARISH   5.20             

                   Key Benchmarks
Financial          Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
BIX Banking          700     720     669    BEARISH   5.18   
XBD Brokerage        450     475     435    BEARISH   5.21             
IUX Insurance        645     660     641    BEARISH   5.25 

                   Key Benchmarks
Other              Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
RLX Retail           900     970     835    BEARISH   4.29 
DRG Drug             390     425     358    BEARISH   4.29  
HCX Healthcare       780     850     729    BEARISH   4.29  
XAL Airline          180     210     166    BEARISH   5.21      
OIX Oil & Gas        285     310     294    Neutral   5.13


Posture Alert

Friday's pre-holiday rally showed good strength in all sectors 
except retail. After breaking through major resistance, we have
turned BULLISH on Software. Friday's bounce also made us turn 
Neutral on the Dow, Russell 2000, and High Tech.

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

/members/marketposture

*****************************************************
Coming Events
*****************************************************

Monday: 

Memorial Day holiday
None scheduled

Tuesday:

BTM Schroders        5/29   Forecast:  ----   Previous: -1.9%
NAPM Index            May   Forecast:  53.3   Previous:  52.8
Construction Spending Apr   Forecast:  0.2%   Previous:  0.5%
Leading Indicators    Apr   Forecast:  unch   Previous:  0.1%
LJR Redbook          5/29   Forecast:  ----   Previous:  1.1%

Wednesday:

New Home Sales        Apr   Forecast:  885k   Previous:  909k
API Oil Stocks       5/28   Forecast:  ----   Previous: -3.29M

Thursday:

Jobless Claims       5/29   Forecast:  ----   Previous:  300k
Factory Orders        Apr   Forecast:  0.4%   Previous:  2.0%
NAPM non-manuf.       May   Forecast:  ----   Previous:  64.0
Money Supply (M2)    5/24   Forecast:  ----   Previous:  $7.0B

Friday:

Non-farm Payrolls     May   Forecast:  219k   Previous:  234k
Unemployment Rate     May   Forecast:  4.3%   Previous:  4.3%
Avg. Hourly Earnings  May   Forecast:  0.3%   Previous:  0.2%
Avg. Work Week        May   Forecast:  34.5hr Previous:  34.5hr
Housing Completions   Apr   Forecast:  ----   Previous:  1.723M



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

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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              
Sunday                   2  of  6



**************
BROKERS CORNER
**************

Covered Call Cruncher!!?

I would like to share a strategy that I really like a lot.  It 
is called a diagonal spread.  I know that there are a lot of 
different types of spreads.  And the number of types may 
confuse many.  Therefore, I will explain the concept in detail.

The definition of a diagonal spread is a combination of both 
price and time (calendar) spreads.  For example, a pure time/
calendar spread consists of buying a longer term option (long 
option) and also selling a short term option (short option) 
with the same strike price (ie. Buy 1 XYZ September 90 Call, 
Sell 1 XYZ June 90 Call or Buy 1 XYZ January 2000 90 Put, 
Sell 1 July 90 Put).  As you can see, the strike price is 
the same while the expiration month is different.  

This is called a calendar or time spread.  A price spread 
consists of buying an option at one strike price and also 
selling an option at another strike price.  For instance, Buy 
1 XYZ May 125 Call, Sell 1 XYZ May 130 Call (Bull Call Spread).  
Another example of a price spread would be Buy 1 XYZ June 150 
Put, Sell 1 XYZ 145 June Put (Bear Call Spread).  I hope that 
summary didn't confuse too many people.  A diagonal spread is 
Buying an option at a different strike price and expiration 
month than the option being sold (ie. Buy 1 XYZ August 100 Put, 
Sell 1 XYZ May 90 Put).

Now that I laid down the basics, the diagonal spread that I am 
going to concentrate on is a Bullish Call Diagonal Spread.  I 
covered this strategy briefly once in another article.  
However, I am going to cover the all the bases.  As the above 
example shows, a diagonal spread can consist of either a call 
or a put.  In addition, the option being sold can either be 
higher or lower than the option being bought.  

**Note:  If the option sold against the bought (long) option 
is a call and is at a lower strike price and nearer term 
expiration, it is not covered and will require additional 
margin.  Inversely, if the put option sold is at a higher 
strike price and nearer term that the long put, it too will 
require additional margin.  All spreads must be executed in 
a margin account.  

For the purposes of this article, I am only going to cover the 
strategy of Buying a longer term call and Selling a nearer term 
call at a higher strike price.  I will give you the mechanics 
of the trade followed by an example of what you should look for 
when executing a trade like this and then discuss the options 
on closing out the position.

First you need to know the mechanics of this strategy.  We are 
looking for a debit that is preferably less than the price 
spread.  For instance, a price spread of 10 points (Buy strike 
of 50 and sell strike 60) you want a debit less than $10.  I 
like this strategy because I found one main problem with a 
pure calendar spread.  The problem occurs when I research and 
find a sensational stock and it goes up above the strike price 
I sold.  The problem results from the deltas of the long and 
short approaching one another.  When the delta of the short 
option approaches the long options, the value of that option 
is accelerating faster than the long term option.  If both 
options are in the money when I go to close the position out, 
the credit will be less than the initial debit due to this 
phenomenon.  One possible cure is to close out the short side 
when the stock reaches the level of the short strike price 
and sell the next higher strike in order to help cover the 
cost of buying back the option.  Another cure might be to 
close out both legs if the short leg's delta approaches within 
10 delta points of the long legs.  Note: The 10 delta points 
is just an illustration.  I haven't determined if 10 delta 
points is the proper level.  

The diagonal spread protects me from having to close out the 
option I sold because if the stock closes above the sold 
options strike, it will be assigned (the stock will be sold 
at the price of the sold options strike price).  Then I will 
exercise the lower strike option I bought.  I will make the 
difference between the two strikes (the price spread), less 
the initial debit.  If the stock doesn't close above the 
option I sold (short), then I will sell the option for the 
next month and collect the premium for one more month, and 
so on until the stock closes in the money.  Sometimes, if the 
stock advances in the money before expiration, one can close 
out the position for a greater credit than received if 
assigned at expiration.  Why? You ask.  Because the option 
you buy in the money at the lower strike price has a higher 
delta and therefore, accelerates faster than the sold option.  
Now comes the $60K question.  "Instead of only buying the 
call, why did I sell a call against the one that I bought if 
I have to pay more for it when I close everything out?  My 
answer is if you knew for sure that the stock was going up, 
you should have sold you house, car, dog, kids and loaded 
the boat with all you had.  Just kidding!  Simply, you never 
know how an option trade will pan out.  That is why they call 
it speculation.  This strategy allows a little room for error. 

A great feature of this strategy is the hedging capabilities.  
If one invests $8000 cash in a $40 stock, one can afford to 
buy 200 shares of said stock.  If one sells 2 May 45 covered 
calls for $1.50 per contract, one will receive $300 initially.  
If the stock advances above $450, one will receive $45 per 
200 share upon assignment of the May option at expiration.  If 
this occurs, the max profit will be $1300.  Now if the one 
invests in 10 contracts of August 35 calls for $8 per contract, 
one will spend the same $8000.  If one sells 10 contracts of the 
same May 45 calls for $1.50 per contract, one will receive an 
initial $1500.  If the stock advances above $45 per share before 
expiration, one has an option to close out the entire position 
and still have a chance of making a profit (due to the delta's).  
The covered call doesn't have that luxury.  Finally, If the 
stock closes above $45 on expiration of the May call, then 
the May 45 call will be assigned.  This means 1000 shares of 
stock will be sold.  You must cover the short stock by either 
buying the stock at the current market or exercising your August 
35 call.  If you exercise you will be buying the stock at $35 
and selling at $45.  That is a $10 difference multiplied by 
1000 shares.  Your total profit is the $10 difference less 
the initial debit of $6.50 ($8 - $1.50 = $6.50).  Or $3.50 per 
contract ($10 - $6.50).  That is a total gain of $3500.  That 
is a little better than the assigned gain of $1300 from the 
covered call.  One can definitely argue that the stock won't 
lose time value.  This is true.  Furthermore, you make an 
initial return and, if assigned or closed out previous to 
expiration, a closing return.  The initial return, for 
instance, is achieved when you buy XYZ 60 call @ 11 and sell 
XYZ 70 call @ 3.  This is a 27.2% initial return.  The 
assigned return is 20% ($2 profit divided by an $8 debit).

To further illustrate this strategy, we are going shopping 
today for the least expensive debit on XYZ.  The debit is 
created when you pay more for the long term option than you 
can sell the short term option for.  First lets hop in our 
time machine and go back two weeks to Monday the 19th of April.  
The April options have expired and May options still have five 
weeks of premium.  XYZ has May, June, July, & October Expiration.  
XYZ is currently trading at 152.  I want the option I am buying 
to be in the money and still not be over priced in relation to 
the short term option.  First, we will bargain hunt for the July 
150 Calls.  They are trading at $9 per contract.  The May 155 
Calls are trading at $4 per contract.  This give a debit of $5 
and a price spread of 5.  The May 160 Calls are trading at $2 
per contract.  This is good.  It gives a debit of $7 and a price 
spread of 10.  But before we do this trade, lets look at buying 
the July 145 Calls for 12 and Selling the May 155 Calls for 4.  
This is good too.  It gives us an $8 debit and a price spread of 
10.  I realize I said that we want the least expensive spread.  
But the 145 - 155 spread is only $3 from being in the money 
while the 150 - 160 spread is $8 from being in the money.  This 
is up to you!!  In order to help you make the decision, look at 
the initial and potential closing returns as well as the 
likelihood of assignment in the near future.  

There are a few more things to know about this strategy.  One 
good thing is that the long term option's cost basis is reduced.  
This allows room for the stock to fluctuate without having to be 
overly concerned.  It is necessary to place stops on these 
strategies.  One might place the stop at a percentage of the net 
debit.  Remember that both sides must be closed out.  Unless you 
are cleared for naked options, consider the cost of buying back 
the short leg of the spread when calculating your desired stop.  
One can only speculate on the price of the short leg when the 
stock drops to a range of stops.  One other strategy is buying 
back the short and then selling the same option if and when the 
stock advances to safer levels.  I cannot provide all the 
variables that can happen and their respective solutions.  As 
with all strategies, there are various actions that may be done 
that I my not have considered.  

If you have any questions, please contact me.  If there are 
strategies or topics that you feel needs coverage, please let 
me know.  And finally, as with all articles, this in no way 
reflects a recommendation by me, Robert J Ogilvie, my firm, 
Baxter, Banks & Smith, Ltd. or the Option Investor Newsletter.  
This article is intended for the sole purpose of education.  
With that said, No Good Luck, Just Good trading!!

Robert J. Ogilvie, ROP & GSP

He is an Investment Broker and Registered Options Principal with 
Baxter, Banks & Smith, Ltd., a full service firm in Sarasota, FL. 
He specializes in various portfolio hedging and option trading 
strategies using both equity and index options. Especially the 
OEX and SPX. He enjoys educating investors on the many facets of 
options trading. He concentrates his efforts to client's needs 
and objectives. 

Phone: 1-800-982-2119 
Email: RJOgil@aol.com


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

Index     Last    Week
Dow    10559.74 -269.54
Nasdaq  2470.52  -49.62
$OEX     658.66  -13.10
$SPX    1301.84  -28.45
$RUT     438.68  -10.46
$TRAN   3415.70 -135.56
$VIX      26.38    1.02

Stock             Week

MEDI      63.63    8.63  New, gaining momentum
BGEN     109.13    6.64  More than just a "one horse" company
LGTO      54.75    5.69  New, room to run
BVSN      52.00    4.69  New, cheap Internet play
LXK      136.13    2.75  Stock split coming on June 10th
FNM       67.94    1.69  Channeling stock building a base at $67
MWD       96.50    1.63  New, recent performance looks promising
BMCS      49.44    0.75  Possible resistance at $56 and at $60
HWP       94.31    0.44  New, $2 billion stock repurchase plan
DRMD      14.75    0.25  Dropped, moving too slow
SLR       54.75   -0.06  New, techs resurging with buying activity
ABOV      33.25   -0.56  New, climbing back
ADPT      30.88   -0.75  New, 20% growth
CUST      60.00   -0.94  Filing patents at a rapid pace
KEA       29.00   -1.64  Dropped, not going anywhere
PG        93.38   -3.87  Dropped, lack of performance
CB        70.06   -4.45  Dropped, continues to drift lower
SONE      38.38   -8.00  New, Internet/financial
EGRP      44.50   -8.63  New, benefiting from extended trading hrs
PVN       95.88   -8.75  New, buying opportunity
EBAY     177.19  -13.28  New, Internet correction is over

Puts

AMTD      89.69  -14.31  Dropped, extended trading hours
GNET     103.94  -11.00  Dropped, momentum changing
INKT     103.00  -11.00  Dropped, Internet sell-off over
RNWK      70.88  -10.13  Dropped, Internets are recovering
DCLK      97.44  -10.06  Dropped, seems to be rebounding
TBH       83.50   -9.13  Brazil and Argentina still volatile
CLX      100.94   -6.69  New, looking technically frail
SEPR      63.75   -5.00  Dropped, probably found its bottom
IP        50.00   -5.00  New, weakness in paper producers
EK        67.63   -4.94  Fuji! Fuji! Fuji!
DOW      121.50   -4.69  Investors rotating out of the cyclicals
ABF       25.88   -4.25  New, hampered by a string of downgrades
MEA       37.38   -4.00  New, cyclicals coming back to Earth
PFE      107.00   -3.25  Dropped, beating the negative indicators
IR        63.69   -2.62  New, upward momentum fades
TBFC      66.50   -2.38  Dropped, successful play
UNM       53.81   -2.19  New, weak technical outlook
XCIT     133.00    0.05  Dropped, clawing its way back
LLY       71.44    0.13  Dropped, rising on strong volume
AXP      121.06    0.81  Dropped, financials showing strength


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

MEDI - Medimune
PVN  - Providian
ABOV - Abovenet
MWD  - Morgan Stanley
HWP  - Hewlett Packard
LGTO - Legato
EGRP - E*Trade
SLR  - Solectron
SONE - Security First Technologies
BVSN - Broadvision
ADPT - Adaptec
EBAY - Ebay

PUTS: 

CLX  - Clorox
IP   - International Paper 
IR   - Ingersoll Rand
UNM  - Unum
MEA  - Mead
ABF  - Airborne Freight



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

DRMD $14.75 (+0.31) Sorry young feller. . .yur movin' too 
darn slow!  Ya need a little more hitch in yer gitalong.  
Seriously, DRMD is just poking' along and there's no 
volume.  It appears investor interest has moved on and left 
ol' DRMD in the weeds.  We're not saying dump it the first 
thing Tuesday, but our call trading capital is better 
deployed in other plays showing more strength.  Since 
Murphy's law is alive and well, DRMD may give us a bounce 
first thing this week now that we've dropped it.  Take any 
rise in price as an opportunity to move on.

KEA $29.00 (-1.63)  Two weeks ago, KEA finished up +$1.63.  
This past week it finished down -$1.63.  Since KEA doesn't 
seem to be going anywhere quickly, we are dropping it as a 
call.  KEA had shown sparks of strength a few times by 
heading higher even though the overall markets headed lower.
Thursday's action was particularly enlightening.  KEA's 
Board of Directors announced a stock buyback and the stock 
took off.  However, in trading on Friday KEA sunk -$1.44 even 
as the markets rallied.  Most of the sell-off occurred in the 
last hour of trading.  The weakness caught our attention.  We 
went from "enlightening" to "frightening" in a matter of 24 
hours.  With the positive news already out of the bag, KEA may 
run into some headwind and head lower.  It is time to let 
this play go.

CB $70.06 (-4.44) On Monday, CB tested the $76 level for the 
second time in a few weeks, but has pulled back and does not 
appear ready to make another try at it. We held onto CB amid 
swirling reports that Buffet might be selling Hathaway's large 
position in the stock. That rumor has yet to be confirmed, but 
the stock continues to drift lower and technical indicators 
have turned negative, so we decided to drop it.

PG $93.38 (-3.87) We are dropping PG this week.  The stock 
really stumbled in last week's trading and we don't see a bounce 
that will be strong enough to buy into.  There are definitely 
other plays that have better chances of being profitable.  


PUTS: 

LLY $71.44 (+$0.13) During a week of tumult and chaos, LLY 
eked out the tiniest gain. . .$0.13.  Put players made out 
OK if they sold their positions Wednesday or Thursday.  
Friday, they never had a chance, as the intra-day low 
reached to only $69.63.  Even in "Dullsville" on a Friday 
before a long weekend, volume was 30% above average.  
Rising price on strong volume does not make a good put 
play.  Thus we're dropping LLY this weekend.

SEPR $63.75 (-5.00) SEPR turned a nice profit for those who 
played it.  As we warned Thursday unfortunately, $60 proved 
to be strong support.  After gapping up Friday morning, 
SEPR actually bounced off to $61.25 and never looked back, 
as it added $2.75 from Thursday's close on average volume.  
With some rebound activity expected this week, SEPR has 
probably found its bottom (with both hands!) and may 
continue a move up from here.  Move this one to your DROP 
list.

AXP $121.06 (+0.81) Sometimes, a put just doesn't behave 
like one.  Such was the case for AXP as it moved up $4.19 
on Friday.  Based on our caution Thursday night that AXP 
would likely make a recovery with the rest of the market, 
we hope you didn't enter this play.  As we've trumpeted 
occasionally in the Market Wrap, we believe the case for 
inflation is overstated.  With investor rotation out of 
cyclicals and some strength in financials on Friday, the 
market may finally agree.  That said, the PUT list is no 
place for AXP.  So we are dropping them.

PFE $107.00 (-3.25)  When we added PFE as a put play back on 
Tuesday, its technical indicators looked bleak.  Weakening 
markets, a sickly sector, and increased competition led us to 
believe that PFE could head even further into the murk.  
However, PFE has managed to beat the indicators and recover.  
It added +$6.00 in the last two days of trading.  Even though 
we warned in Thursday's write up that PFE could head higher 
for two more days due to simple stock cycling, the drug sector 
may have found a bottom.  After being beaten to a pulp, several 
companies in the drug sector rallied on Friday.  Whether this 
uptrend in PFE and the drug sector is temporary or not, we feel 
that this play has become too risky.  Yes, PFE could fall back. 
But, it could also continue to recover.  There are better places 
to invest you money right now.

XCIT $133.00 (+.06) XCIT was able to claw its way back to even
for the week after being down as much as 20 points.  AtHome 
and Excite announced Friday that their merger had been approved
by AtHome shareholders.  A 2-for-1 split was also approved.  
The ex-date is June 16.  This helped both companies to rebound.  
Your stop losses should have you out of this play already anyway 
as we encouraged last night to lock in your profits and not to 
open any new plays.  But we are dropping XCIT from our put list 
due to their relative performance and our anticipation of a 
relief rally for the hard hit sector.

INKT $103.00 (-11.00) After a week of beatings for the Internets,
the sector appears to be quieting down.  The group as a whole 
has experienced a correction that has left many stocks at a
substantial discount.  INKT is currently 35% lower than its 
52-week high.  We expect bargain hunters to step in now that 
the Internets are showing signs of a bottom.  It's tough for  
the money managers to pass up this group for too long.  INKT
also had some positive comments on Thursday with the launch 
of their European operations.  So we are dropping INKT as a 
put play.

DCLK $97.44 (-10.06) We are dropping Doubleclick from our put
list as momentum in the Internet is changing.  The selling 
pressure is lifting and most stocks are quick to rebound.  
DCLK is no exception as it recovered more than half of this
week's losses Friday.  Most analysts are looking at the recent
correction in the Internets as temporary and healthy.  I'm 
sure it doesn't feel healthy to those who are long the stocks 
but it is a valid point.  There are just too many investors 
waiting on the sidelines who are looking for an entry point
on these stocks.  And they haven't been shy about jumping in.  
We would anticipate more of a rebound in DCLK this week.

GNET $103.94 (-11.00) Momentum is changing in the Internets
so its time to do a little profit-taking.  Go2Net's break 
of support at $120 last Friday was no fluke as the stock 
plummeted to a low of $93.50 on Wednesday.  As always, we 
recommend you trail your stops to lock in profits.  We saw 
lots of volatility in the market this week but the NASDAQ 
firmed the last couple days.  It now looks more likely that
the Internet group will rebound from this correction.  GNET
is also closing in on it's split date on June 24.  So we are
no longer recommending it as a put.

AMTD $89.68 (-14.31) AMTD came unglued this week as the online
brokers took a tumble.  At one point it was down 30% on the 
week.  Unfortunately it dropped so fast we were unable to get
a recommendation out fast enough.  After a technical bounce 
on Wednesday, it dropped back down Thursday by giving up over
5 points.  We now have seen trading quiet down in the sector
and we are looking for a broad technical bounce in the Internets.
This kills our put play of Ameritrade.  If you are staying with
the play, keep your stops set tight to pull you out of the way 
of a rally.  News of extended trading hours does little to help
this as a put since its the online brokers who are going to win
big there.

TBFC $66.50 (-2.38) Well, Telebanc turned out to be a profitable
play for us.  We watched the stock drop $30 from our initial 
recommendation.  The catalyst was nothing more than good old 
fashion common sense.  The stock had made a euphoric move from 
$8 to $155 and the under lying fundamentals just weren't there 
to support the price rise.  The stock also gave good entry 
points by pausing to rally back for a day or so after each new 
move down.  Now it appears to be bottoming.  A Merrill Lynch 
upgrade still carries a lot of weight and they got one on Monday.  
They were raised to a buy from accumulate.  This probably played 
a big part in being able to halt the slide.  So we are dropping
it from our put list.

RNWK $70.88 (-10.12) We are dropping RNWK for the simple fact 
that we feel the Internets have bottomed temporarily.  RNWK is a 
stock that suffered more than the average Internet play through 
the correction.  If it heads back up, it could do so with a 
vengence.  Watch the sector closely next week and nimble option
traders may be able to play this as a call if it continues to 
rebound.



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

PLAYS CONTINUED IN SECTION THREE.

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






The Option Investor Newsletter         
Sunday             Part 3 of 6

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

PVN  - Providian
MWD  - Dean Witter
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  

COF  - Capital One     3:1 06-01-99 ex-date 06-02
EL   - Estee Lauder    2:1 06-02-99 ex-date 06-03
GP   - Georgia-Pacific 2:1 06-03-99 ex-date 06-04
FON  - Sprint          2:1 06-04-99 ex-date 06-07
ELN  - Elan Corp       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 current play
SDLI - SDL, Inc        2:1 06-10-99 ex-date 06-11
WAT  - Waters Corp     2:1 06-10-99 ex-date 06-11
SBL  - Symbol Tech     3:2 06-14-99 ex-date 06-15
ANF  - Abercrombie&Ftch2:1 06-15-99 ex-date 06-16
STM  - ST Microelec    2:1 06-16-99 ex-date 06-17
PSUN - Pacific Sunwear 3:2 06-18-99 ex-date 06-21
CSCO - Cisco Systems   2:1 06-21-99 ex-date 06-22
GPS  - The Gap         3:2 06-21-99 ex-date 06-22
LNC  - Lincoln Natl.   2:1 06-21-99 ex-date 06-22
TAN  - Tandy Corp      2:1 06-21-99 ex-date 06-22
GNET - Go2Net          2:1 06-24-99 ex-date 06-25
BGEN - Biogen          2:1 06-25-99 ex-date 06-28 current play
MSPG - Mindspring      2:1 06-25-99 ex-date 06-28
CL   - Colgate         2:1 06-30-99 ex-date 07-01
PFE  - Pfizer Corp     3:1 06-30-99 ex-date 07-01 
SCH  - Schwab          2:1 07-01-99 ex-date 07-02
TXU  - Texas Util      2:1 07-01-99 ex-date 07-02
IPG  - Interpublic Grp 2:1 07-15-99 ex-date 07-16
LUV  - Southwest Air   3:2 07-19-99 ex-date 07-20
DISH - EchoStar        2:1 07-19-99 ex-date 07-20
TIF  - Tiffany CO.     2:1 07-21-99 ex-date 07-22
AIG  - American Intl   5:4 07-30-99 ex-date 08-02

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 ! 

******

LXK - Lexmark $136.13 (+2.75)

See details in sector list

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

******

BGEN - Biogen $109.13 (+6.64)

See details in sector list

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

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

BVSN - Broadvision Inc. $52.00 (+4.69)

See details in sector list

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

******

EGRP - E*Trade $44.50 (-8.63 S/A)(-0.34 S/A)
                                        s/a = split adjusted

See details in sector list

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

******

EBAY - EBAY Inc. $177.19 (-13.28)

See details in sector list

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

******



****************
CHANNELING STOCK
****************

FNM - Fannie Mae $67.94 (+1.69)(-1.63)(+1.18)(-1.37) 

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. 

We have been playing FNM as a channeling stock between $66
and $72.  With amazing precision, FNM bounced off $66 on
Monday and remained above the bottom of its channel all 
week long despite the downdraft in the Dow index.  As a matter
of fact, it might be building a base at $67 now.  With any
sort of revival in the financials next week we should be able
to capture a few points as FNM travels back towards the top 
of its channel ($72).  Be quick.  Only grab 2 or 3 points
and get out.  You never know when a channeling stock
might break out (one way or the other).

Considering how the market reacted to interest rate fears,
FNM appeared quite calm all week long.  This is definitely 
a show of strength as long as the Fed just talks about 
rates and doesn't really do anything about them.

BUY CALL JUN-65 FNM-FM OI= 3771 at $4.50 SL=2.50
BUY CALL JUN-70*FNM-FN OI=10417 at $1.56 SL=0 75 

Average daily volume = 2.65 mln.
Chart = http://quote.yahoo.com/q?s=FNM&d=3m

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

CUST - CustomTracks Corp. $60.00 (-.94)(+17.97)

This former electronic security company sold its Cardkey Systems 
business to Johnson Controls on Nov.25, 1998 with plans to remake 
itself into an Internet services and products provider. Its 
original intention to provide music products over the Internet 
is on hold, pending the outcome of the launch of 2 similar 
products by competitors. CustomTracks is now developing an 
Internet transaction payment system, due out in September of 
this year. 

CUST has been on a tear for the last 2 1/2 months and has 
increased nearly 6-fold during that time! Volume is very strong. 
The company has been filing patents at a rapid pace to ensure 
protection of the technology it is developing. CEO David Cook 
and other insiders express great confidence in their Secure 
Internet Payment System, which will be released on or before 
Sept. 30, and previewed on their website in June. Douglas H. 
Kramp, the new Executive V.P. for Strategic Business Development, 
called their Digital Signature System, due out in August, the 
"most exciting development in the Internet since the browser." 
That may be hyperbole, but they ARE putting their money where 
their mouths are, by accumulating stock in their company. CUST 
is not followed by a large number of analysts, so we have no 
earnings estimates for the fundamentals section below. However, 
on May 13th, Joseph Charles & Assoc. gave the stock a near-term 
trading "buy" and a long-term "strong buy". The analyst, David 
Weinstein, finally issued a 12 month price target on May 24th 
of $230. He said that many people are afraid to reveal their 
credit card numbers over the Internet, and CUST's online 
transactions system will allow them to shop online without 
submitting a credit card number. Competitor Verisign has 1% of 
the Internet secure transactions market, which is growing 100% 
to 200% per year. CUST should be able to capture at least that 
much. 

Last Monday, following the new $230 price target, the stock 
soared to $90.00 on 9 times average volume before closing at 
$76.00, up "only" 25% on the day. Then interest rate fears and 
Internet weakness brought out the profit takers and CUST wound 
up losing $.94 on the week. However, the Internets are beginning 
to heat up again, and CUST could take off once more. Remember, 
while this stock has tremendous lucrative potential, it also 
carries RISK. Keep your eyes open for any product delays, 
scoops by competitors, or any heavy insider selling. Then set 
your stops carefully.  Large intraday swings are not uncommon.

BUY CALL JUN-60 HQU-FL OI=599 at $ 9.50 SL= 7.25
BUY CALL JUN-65*HQU-FM OI=966 at $ 7.50 SL= 5.75 
BUY CALL JUL-65 HQU-GM OI= 98 at $12.00 SL= 9.50
BUY CALL AUG-65 HQU-HM OI=148 at $15.38 SL=12.00
BUY CALL AUG-70 HQU-HN OI= 63 at $13.88 SL=11.00

Picked on May 16th at $60.94    PE = n/a
Change since picked  -$ 0.94    52 week low =$ 3.50 
Analysts Ratings         n/a    52 week high=$90.00
Last earnings 03/99 est  n/a    actual -.16
Next earnings 06-99 est  n/a    versus 0.10 
Average daily volume = 735 k
Chart = http://quote.yahoo.com/q?s=CUST&d=3m

****

EGRP - E*Trade $44.50 (-8.63 S/A)(-0.34 S/A)
                                        s/a = split adjusted

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.

EGRP split 2:1 and began trading at its new price last 
Monday.  True to form, investors sold the issue off prior 
to the split.  Surprisingly, EGRP continued to fall, even 
after the split.  The fact is split plays just haven't 
worked that well lately.  So, why pick EGRP now?  With the 
advent of primetime trading hours coming in late Summer, 
online brokerage firms stand to benefit the most, as 
investors and traders will generate revenue for those 
brokerages from additional trading activity.  An added 
bonus for EGRP: They own 25% of Archipelago, an ECN, or 
alternative trading exchange to NASDAQ.  They will garner 
revenue from the exchange as well.  Investors, as indicated 
by trading volume have already begun to pile in.  While 
sentiment has changed on a dime to a positive outlook, the 
technicals are still quite negative from the post-split 
depression, and it will take a while for them to catch up.  
Also, if the Internet sector doesn't take off next week, 
the "extended trading hours" news will be pushed aside 
quickly.  Of course, confirm market direction before 
playing and use stops.  Internet = HIGH RISK!

In the news, according to Media Metrix, which is the leader 
in Internet audience measurement, E*TRADE had one of the 
two largest increases in unique visitors from December 1998 
to March 1999 among the Internet's top ten financial sites. 
E*TRADE had, by far, the greatest reach of any online 
investment services site, according Media Metrix.  In fact, 
Destination E*TRADE attracted more unique visitors than 
Charles Schwab and Ameritrade combined (PR Newswire).

BUY CALL JUN-40 QGZ-FH OI= 336 at $6.75 SL=5.00
BUY CALL JUN-45*QGZ-FI OI= 949 at $4.00 SL=2.50
BUY CALL JUN-50 QGZ-FJ OI=1640 at $2.38 SL=1.25
BUY CALL JUL-45 QGZ-GI OI= 651 at $7.25 SL=5.50
BUY CALL JUL-50*QGZ-GJ OI=1605 at $5.25 SL=3.50

Picked on May 30 at    $44.50    PE = N/A
Change since picked    +$0.00    52 week low =$ 2.50
Analysts Ratings    4-5-3-0-0    52 week high=$72.25
Last earnings  04/99 est -.16    actual -.12  Surprise=25%
Next earnings  07-14 est -.16    versus .08
Average Daily Volume = 6.82 mln. (skewed by split)
Chart = http://quote.yahoo.com/q?s=EGRP&d=3mm

****

ABOV - AboveNet Communications, Inc. $33.25 (-0.56)

AboveNet provides its clients with high performance, managed 
co-location and Internet connectivity solutions.  It equips 
companies that depend on the web to do electronic commerce and 
other mission-critical Internet operations with more efficient
connection capabilities.  ABOV reduces the number of network 
connections data must make during transmission.  ABOV has more 
than 300 corporate customers, some of which include Supernews, 
Liquid Audio, and Internet Gateway.   

Even though it got hit hard in the early part of last week, 
ABOV has since turned it around.  The sell-off in the market 
sent the Internet sector as a whole plunging.  However, ABOV 
has climbed back into the land of the living by annexing 
+$6.56 in the past 3 days of trading.  Its performance on 
Friday was particularly enlightening.  The company climbed 
higher throughout the day as seen on an intraday chart.  It 
closed just twenty-five cents off of its high of the day.  We 
feel that ABOV could be carried higher if the Internets can 
post a comeback in the upcoming week.  However, it may have 
some upward resistance at its 30 dma of $41.66.  Always 
confirm market and stock direction before playing!
Of course, Internet stocks are a volatile bunch and can
turn on a dime.  Be careful.

News:  This past week, ABOV purchased the only commercial 
Internet Exchange facility not owned by a major phone company.  
ABOV acquired the Palo Alto Internet Exchange (PAIX) from 
Compaq for $75 million.  ABOV also extended its agreement 
with Winstar Communications(WCII) in order to continue its 
use of WCII's broadband backbone capability and thereby 
continue to cut costs. 

BUY CALL JUN-30*UBV-FF OI=968 at $6.13 SL=4.25
BUY CALL JUN-35 UBV-FG OI=415 at $3.75 SL=2.50
BUY CALL JUL-30 UBV-GF OI=262 at $8.38 SL=6.50
BUY CALL JUL-35 UBV-GG OI= 83 at $6.13 SL=4.25

Picked on May 30th at $33.25    PE = N/A
Change since picked  +$ 0.00    52 week high=$75.50
Analysts Ratings   3-1-0-0-0    52 week low =$ 5.75
Last earnings 04/99 est  0.00   actual -0.22
Next earnings 07-21 est -0.26   versus -0.27
Average Daily Volume = 1.75 mln
Chart = http://quote.yahoo.com/q?s=ABOV&d=3m

****

SONE - Security First Technologies $38.38 (-8.00)

Security First Technologies (S1) lets you do your banking in 
your pajamas.  The company makes software for performing Web-
based financial services.  Its customizable Virtual Financial 
Manager suite lets banking customers access accounts, pay 
bills, transfer money, open deposit accounts, and track 
expenses securely online.  S1 also offers consulting, training,
product integration, and customer and data service center 
outsourcing.  Customers include Citibank and First National 
Bank.  Products are available directly and through partners 
including BEA Systems and Hewlett-Packard.  S1, which is 
expanding through acquisitions, has sold off the banking  
operations of its Security First Network Bank to Royal Bank 
of Canada. (from Hoovers)

SONE really took a hit with the Internet correction.  SONE's
stock dropped from a high of almost $80 to $30.  Friday saw
the stock make a nice run with a gain of $4, a 10% move.  This 
stock makes Internet banking possible, thus will be effected by
any Internet sector movement.  SONE gave us a strong reversal
off of $30 and while the technicals look bad at least 
everything is screaming "oversold".  Assuming the internets
do rally next week, then SONE should recapture lost ground.

On Thursday, SONE closed its stock deal with Intuit.  Intuit
has options to buy stock from SONE for just above $51.  The
details of the deal are somewhat complicated, but shouldn't
have much effect on the overall price of the shares.  The
deal does help position SONE to be the preeminent financial
service software provider.

BUY CALL JUN-35 QFB-FG OI=149 at $6.13 SL=4.25 ITM $3.38
BUY CALL JUN-40*QFB-FH OI=521 at $4.00 SL=2.50
BUY CALL JUL-35 QFB-GG OI=120 at $7.63 SL=5.75 ITM $3.38
BUY CALL JUL-40 QFB-GH OI=169 at $5.63 SL=4.00

Picked on May 29th at  $38.38    PE = n/a
Change since picked     +0.00    52 week low =$ 4.63 
Analysts Ratings    3-5-0-0-0    52 week high=$79.25
Last earnings 05/99 est -0.14    actual -0.13 
Next earnings 07-28 est -0.12    versus -0.25
Average daily volume =  536 K
Chart = http://quote.yahoo.com/q?s=/SONE&d=3m

*****

EBAY - EBAY Inc. $177.19 (-13.28)

Going once ... going twice ... sold to an eBay user. eBay is a 
person-to-person Internet trading community in which users buy 
and sell personal items in an auction format.  Product 
categories include antiques, dolls, coins, computers, stamps, 
memorabilia, trading cards, and jewelry.  Sellers pay a fee
to have their items placed on the company's Web site, where 
potential buyers browse and make bids on merchandise.  If an 
item sells, eBay will charge the seller a percentage of the 
closing price.  The company has extended its reach in the 
auction industry by agreeing to acquire Butterfield & 
Butterfield, the #3 auction house in the US. (profile from 
Hoovers)
  
EBAY is, well, an Internet stock.  Thus the large moves in the
stock over the last few weeks.  The stock has a 52 week high of
$234 and recently traded as low as $150.  We feel like the 
Internet's are set for a run, and EBAY is one of the Internet
blue chips.  Any Internet play is risky, so make sure it fits
your risk profile.  Also, the options are very pricey, but can
show nice gains.  Internet performance the latter half of this 
week appears to be forcasting a rebound in that sector.  One
reason could be a bullish analyst's comment.  He told investors 
that his prediction for a 40% correction after earnings season 
usually precedes a 100% growth spurt.  With several Internets
down 30% to 50% from their highs (eBay was down 33% as of 
Wednesday's lows), this analysts may be right about a bottom.

Not a lot of news on EBAY.  We have mentioned before that an
analyst from BancBoston Roberts Stephanson stated on Thursday
that he feels the Internet bottom has been reached.  We like
the stocks that have been hit the hardest, yet have the best
business models and are leaders in their field.  EBAY fits
this criteria.

BUY CALL JUN-170 QXB-FV OI= 624 at $20.38 SL=15.75 ITM $7.19
BUY CALL JUN-180*QXB-FW OI=1006 at $14.88 SL=11.50
BUY CALL JUL-180 QXB-GW OI= 319 at $25.75 SL=20.00 
BUY CALL JUL-190 XBA-GR OI= 154 at $21.62 SL=17.50

Picked on May 29th at $177.19    PE = 886
Change since picked     +0.00    52 week low =$  6.00 
nalysts Ratings     4-5-2-0-0    52 week high=$234.00
Last earnings  04/99 est 0.02    actual 0.05 
Next earnings  07-26 est 0.04    versus N/A
Average daily volume = 3.64 mln
Chart = http://quote.yahoo.com/q?s=EBAY&d=3m

*****

BVSN - Broadvision Inc. $52.00 (+4.69)

BroadVision wants to facilitate Web commerce.  Its BroadVision 
One-To-One software lets companies design their own Web sites 
to maximize potential for online sales and marketing.  One-To-
One allows users to manage online transactions involving 
ordering and payment, order fulfillment, billing, customer 
service, and other activities.  It also lets users collect, 
track, and manage information about Web site visitors and use 
the resulting profiles to customize content.  Customers include 
Prodigy Services Company and Olivetti Telemedia.  The company 
has offices in the US, Asia, and Europe.  The Asia/Pacific 
region and Europe account for about 50% of sales.(from Hoovers)

BVSN is another company that we don't see front and center
on the Web, but without it, the Web wouldn't be as productive
as it is.  BVSN may be leading the Internet group.  Not by
price but by trend.  It managed to finish its sell-off early
on Tuesday morning and immediately began its recovery.
The beating Internet stocks were taking in the Nasdaq 
correction brought BVSN all the way down to support at $40.
While it was not there long, it quickly recovered and 
managed to close above its 30 dma by the end of trading. Take a close look at its intraday chart.  BVSN
traded in a very narrow range most of Friday.  There 
was definitely a lot of both buying and selling pressure.

If the Nasdaq and the internets can rally next week, BVSN 
has relatively cheap options and may be a better play than
some of the big name stocks.

BUY CALL JUN-50 QVB-FJ OI=784 at $5.00 SL=3.50 ITM $2.00
BUY CALL JUN-55*QVB-FK OI=391 at $2.81 SL=1.50
BUY CALL JUL-50 QVB-GJ OI= 31 at $8.63 SL=6.50 ITM $2.00
BUY CALL JUL-55 QVB-GK OI= 25 at $6.50 SL=4.75

Picked on May 29th at $53.00    PE = 110
Change since picked    +0.00    52 week low =$ 9.25
nalysts Ratings   7-10-1-0-0    52 week high=$72.38
Last earnings 04/99 est 0.08    actual 0.11 
Next earnings 07-22 est 0.11    versus 0.03
Average daily volume = 858 K
Chart = http://quote.yahoo.com/q?s=BVSN&d=3m

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

ADPT - Adaptec Inc. $30.88 (-0.75)

Adaptec makes hardware and software that speed data transfer 
between computers, peripherals, and networks.  The company
dominates the market for SCSI (small computer system interface) 
technology, which enables several peripheral devices to connect 
to one adapter card.  Adaptec sells its host adapters, network 
interface cards, storage controllers, and other systems to 
Compaq, Dell, IBM, and other makers of computers and peripherals.  
Its DirectCD software allows data to be written to CD-recordable 
media.  Adaptec has plants in Singapore and business operations 
in Asia, Europe, and the US. (from Hoovers)

Making quite the comeback since its October lows (of $7.88),
ADPT has more than tripled in price.  ADPT had a huge gap 
up early in January after announcing better than expected
earnings for its Dec. 31st Quarter.  Since then it has been stuck 
in a trading range of $19 to $25 until a breakout early this month.  
After a strong move up (while fighting against a correction in the 
Nasdaq), it appears that ADPT has formed some new support near $29.  
Now that the Nasdaq might rebound, ADPT might return to setting 
new highs as investors focus on their 20% growth in revenues.

On the 26th of May, ADPT announced an addition stock buyback
of up to $200 million.  As always, watch for market direction 
before buying in.

BUY CALL JUN-30*APQ-FF OI=690 at $2.13 SL=1.00 ITM $0.88
BUY CALL JUN-35 APQ-FG OI=  0 at $0.00 SL=0.00 (new strike)
BUY CALL JUL-30 APQ-GF OI=233 at $7.00 SL=3.38 ITM $0.88
BUY CALL JUL-35 APQ-GG OI=  0 at $0.00 SL=0.00 (new strike)
(Wait for volume in $35 strikes)

Picked on May 29th at $30.88    PE = 20
Change since picked    +0.00    52 week low =$ 7.88 
nalysts Ratings    2-4-1-0-0    52 week high=$31.81
Last earnings 04/99 est 0.29    actual 0.36 
Next earnings 07-31 est 0.38    versus 0.10
Average daily volume = 2.28 mln
Chart = http://quote.yahoo.com/q?s=ADPT&d=3m

*****

LGTO - Legato Systems $54.75 (+5.69)(+4.44)(+5.25)

Legato Systems is a developer, manufacturer and seller of 
network storage management software for large-scale 
enterprises and client/server computing environments.  
Their products are designed to work with a wide range of 
storage, client, and server hardware based on Windows, NT, 
UNIX, OS/2, DOS, Netware, and Linux operating systems.

Correction?  What correction?  LGTO never participated in 
the downdraft over the last 2 weeks, as they have been on a 
rise, which began following a bounce off $30 in mid-April.  
Closing at its daily highs last Thursday and Friday was a 
great sign too (on low volume though, we need to take this 
with a small grain of salt).  Short-term support is $50.  
Resistance is way up at $67.  There is room to run.  
Technically, MACD, momentum, and stochastic are heavily 
positive.  Even RSI is positive.  The whole sector seems to 
be enjoying good strength relative to the rest of the 
market.  So what's the downside?  Honestly, it's pretty 
hard to find one, which in and of itself raises a red flag.  
Perched so high on the mountain, it makes an easy target 
for a downgrade, or otherwise bad news.  Make sure the 
sector and market are in your favor, then execute your 
plan.  Be sure to use stops to protect capital and profits.

Nothing like a "strong buy" upgrade to help the cause. . . 
this one, issued by BancBoston Robertson Stevens.  BBRS 
sees revenue upside potential from recent acquisitions of 
Intelliguard and FullTime software.  They further expect 
60% annual revenue growth for fiscal 1999 and 2000.  Two 
weeks prior, SG Cowen began coverage with a "strong buy" as 
well.

BUY CALL JUN-50 EQN-FJ OI=824 at $5.75 SL=4.00
BUY CALL JUN-55*EQN-FK OI=589 at $2.63 SL=1.25
BUY CALL JUN-60 EQN-FL OI=299 at $1.19 SL=0.00
BUY CALL JUL-55 EQN-GK OI=126 at $5.13 SL=3.25
BUY CALL SEP-60 EQN-IL OI= 67 at $5.75 SL=4.00

Picked on May 30 at   $54.75    PE = 66
Change since picked   +$0.00    52 week low =$23.50
Analysts Ratings  10-5-1-0-0    52 week high=$67.75
Last earnings  04/99 est .22    actual .25  Surprise=13.6%
Next earnings  07-21 est .26    versus .15
Average Daily Volume = 1.02 mln.
Chart = http://quote.yahoo.com/q?s=LGTO&d=3m

****

SLR - Solectron $54.75 (-0.06)(+0.31)

Founded in 1977, Solectron is the largest OEM electronics 
contract manufacturer in the world.  Throughout a range of 
industries including avionics, communications, industrial 
and medical instrumentation, and of course, consumer 
electronics and computers, Solectron provides product 
design and prototyping, assembly, packaging and 
warehousing.  Hewlett-Packard, Cisco Systems, and 
Mitsubishi are among its customers.  Solectron is the first 
company to twice win the Malcolm Baldrige Award, given for 
manufacturing excellence.

"Technology?!  What are you thinking?!"  Here's the answer:  
After hitting bottom on Thursday, tech issues saw a 
resurgence of buying activity, as investors started cycling 
out of cyclicals.  For SLR, buying activity was evident 
even up to the close, which occurred just $0.25 off its 
high of the day, a strong technical indicator that shows 
sellers have already done their damage.  We particularly 
like the nice northward bounce off its 50 dma during a 
turbulent week.  SLR now sits just $3.13 off its all-time 
intra-day high of $57.88, which may provide a bit of 
resistance.  Short-term technical support is at about $50.  
Pure technicians may wince at the chart, as indicators 
though still negative, have staged a reversal that has them 
convincingly headed back toward positive.  Sorry, no split 
possibility here, as SLR split 2:1 in Feb. at about $90.  
Conservative traders will want to wait for a breakout over 
$57.88 accompanied by volume.  More risk tolerant types can 
try mid-day target shooting.  In any case, confirm market 
direction and use those stops to protect from loss.

This is really a sector driven play.  Good thing, since 
price-moving news is nowhere to be found.  Just so you know 
as part of their ongoing commitment to quality, they have 
signed a letter of intent to acquire privately held Sequel 
Inc., a notebook computer and liquid crystal display repair 
company.  The deal will close in late June, however, no 
terms were disclosed.

BUY CALL JUN-50 SLR-FJ OI=633 at $6.25 SL=4.50
BUY CALL JUN-55*SLR-FK OI=322 at $2.75 SL=1.25
BUY CALL JUN-60 SLR-FL OI=399 at $1.19 SL=0.00
BUY CALL JUL-55 SLR-GK OI=772 at $4.50 SL=2.75
BUY CALL JUL-60 SLR-GL OI= 41 at $2.44 SL=1.25

Picked on May 30 at   $54.75    PE = 54
Change since picked   +$0.00    52 week low =$17.69
Analysts Ratings   6-6-6-0-0    52 week high=$57.88
Last earnings  03/99 est .26    actual .26
Next earnings  06-15 est .29    versus .20
Average Daily Volume = 1.35 mln.
Chart = http://quote.yahoo.com/q?s=SLR&d=3m

****



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

PLAYS CONTINUED IN SECTION FOUR.

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






The Option Investor Newsletter            
Sunday                4  of  6


***********************
PC Hardware
Software
Electronics cont.
***********************

HWP - Hewlett Packard $94.31 (+0.44)(+9.69)

The granddaddy of high tech companies, Hewlett Packard is a 
manufacturer and marketer of hardware and software 
solutions, computers, printers, testing equipment and 
peripheral devices.  In the future, e-commerce will begin 
to play a bigger role in the revenue stream.

The biggest financial news to come out of HP recently was 
last week's announcement of a $2 bln. stock repurchase 
plan, about 21 mln. shares at the current price.  HP is 
also doing its level best to position itself as an e-
commerce solutions player.  Other than that, this play is 
based mostly on rotation out of cyclicals back into 
technology issues.  The last 2 weeks notwithstanding, HWP 
has a nice looking chart from the previous 60 days.  
Earnings surprised most analysts too, but that didn't rub 
off on the price (even with great results, you can see why 
we never recommend holding over earnings).  While a trend 
is not established in 1 day (Friday, HWP gained $1.69), we 
expect a technology and Internet rebound soon in the big 
cap issues and think HWP will benefit from the activity.  
The chart is technically showing a positive disposition, 
with support at $89.  HWP bounced off its 13 dma in 
Wednesday's action (this is good).  Be careful.  HWP could 
replace Lew Platt with someone that doesn't impress the 
street, or they could be hit with other bad news.  Confirm 
stock, sector, and market direction before starting a play.

Once the King of in-house printer manufacturing, HP has 
more recently begun to outsource the actual manufacturing 
process, both nationally and internationally.  After laying 
off more than 1200 people last year from a Vancouver, WA 
plant, HP will lay off another 350 over the next 6 months.  
In contract news, HP has recently joined UPS in an 
agreement to create digital options for sending and 
tracking paper-based documents over the Internet 
(CBSMarketwatch).

***July strikes are thinly traded.

BUY CALL JUN- 90 HWP-FR OI=3615 at $6.50 SL=4.75
BUY CALL JUN- 95*HWP-FS OI=3826 at $3.25 SL=1.50
BUY CALL JUN-100 HWP-FT OI=1515 at $1.38 SL=0.75
BUY CALL JUL- 95 HWP-GS OI=  76 at $5.38 SL=3.75
BUY CALL JUL-100 HWP-GT OI=  77 at $3.38 SL=1.75

Picked on May 30 at   $94.31    PE = 30
Change since picked   +$0.00    52 week low =$47.06
Analysts Ratings   7-9-9-0-0    52 week high=$97.56
Last earnings  05/99 est .81    actual .88 Surprise = 8.6%
Next earnings  08-17 est .78    versus .58
Average Daily Volume = 3.52 mln.
Chart = http://quote.yahoo.com/q?s=HWP&d=3m

****

LXK - Lexmark International $136.13 (+2.75)(+8.44) 

Lexmark has good peripheral vision.  LXK is a leading maker 
of computer printers and related products, which generate more 
than 80% of its sales.  Its printer line includes laser 
printers (designed primarily for corporate networks and 
desktops) andink-jet printers (for home and business use).  
Unlike many of its competitors, Lexmark develops and 
manufactures its own desktop laser printers, which results in 
fast product cycle times.  The company also makes supplies for 
IBM and other name-brand printers and typewriters.  LXK products 
are sold in more than 15,000 retail outlets in more than 150 
countries. (from Hoovers)

LXK shot up early in the week when the market was struggling,
but gave back much of those gains on Friday.  We see the losses
on Friday as purely profit taking ahead of the long weekend.  
If you have been following this play you know that the numbers
do not tell the tale.  LXK rocketed up to a new 52 week high
late Thursday afternoon  of $145.00.  With a stock split coming 
up on June 10th, Friday may have been our entry point.
Confirm stock (and market) direction before beginning a new
play.  You'll want to make sure all the profit taking is over.

LXK's resistance will be its 52 week high of $145.  Support
is at around $133.  The stock hasn't received any new coverage
since the last update.  LXK is gaining market share in the 
printer sector and is positioned well for the future.

BUY CALL JUN-135*LXK-FG OI=106 at $ 8.38 SL= 6.50 ITM $1.13
BUY CALL JUN-140 LXK-FH OI=260 at $ 5.88 SL= 4.25
BUY CALL JUL-135 LXK-GG OI= 60 at $12.88 SL= 9.75 ITM $1.13
BUY CALL JUL-140 LXK-GH OI= 31 at $10.38 SL= 8.00

Picked on May 20th at $136.13   PE = 32
Change since picked     +0.00   52 week low =$ 50.75 
nalysts Ratings     4-3-1-0-0   52 week high=$145.00
Last earnings  04/19 est 0.88   actual 0.96 
Next earnings  07-19 est 0.99   versus 0.75
Average daily volume = 568 K
Chart = http://quote.yahoo.com/q?s=LXK&d=3m

****

BMCS - BMC Software, Inc. $49.44 (+0.75)(+6.25) 

BMC no longer stands for "big mainframe computer."  BMC 
Software has moved past a reliance on the larger, mature 
systems; the company now provides more than 200 software tools 
for corporate networked computers.  BMC's software speeds up 
databases, eliminates unplanned outages, predicts and removes 
computer bottlenecks, and recovers system assets, among other 
functions. The company's nearly 6,700 customers include credit 
card companies, banks, airlines, and government entities. BMC 
continues to expand its product list through partnerships and 
acquisitions, including its 1999 purchase of rival management 
software maker Boole & Babbage. (from Hoovers)

BMCS held up well last week and looks ready to roll, market 
permitting.  Thursday and Friday saw BMCS go from $44.50 to 
almost $50.  If you are watching the technicals, BMCS is
giving us mixed signals.  Pure momentum and stochastics
don't look so hot.  But, BMCS's MACD just turned positive
again and a close above its resistance level of $48 to $49
looks very positive for next week.  If the Nasdaq sees a 
recovery BMCS should participate.  Overhead resistance 
appears to be at $56 and then again at $60.

No new news for BMCS aside from its advancement to the
number one position in the Middleware Management solutions.
We haven't seen any broker comments for some time (April 7th).
Be cautious about any new statements from the analysts.

BUY CALL JUN-45 BCQ-FI OI=1655 at $5.38 SL=3.75 ITM $4.44
BUY CALL JUN-50*BCQ-FJ OI=1525 at $2.13 SL=1.25
BUY CALL JUL-45 BCQ-GI OI=  30 at $7.00 SL=4.75 ITM $4.44
BUY CALL JUL-50 BCQ-GJ OI=  93 at $4.13 SL=2.50
BUY CALL AUG-50 BCQ-HJ OI=1265 at $5.38 SL=4.00

Picked on May 22nd at $48.69    PE = 25
Change since picked    +0.75    52 week low =$30.00 
nalysts Ratings  10-13-1-0-0    52 week high=$60.25
Last earnings 04/99 est 0.45    actual 0.47 
Next earnings 07-27 est 0.40    versus 0.31
Average daily volume = 4.47 mln
Chart = http://quote.yahoo.com/q?s=BMCS&d=3m

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

MWD - Morgan Stanley Dean Witter & Co. $96.50 (+1.63)

MWD is an investment banking and retail brokerage colossus.  
This global financial services firm operates in three segments:
securities, asset management, and credit services.  It is the 
#2 retail broker in the US behind only Merrill Lynch.  With 
over 430 branches scattered throughout the US and about 30 
abroad, it offers asset and investment management services 
to both individuals and institutions. 
 
Banks and brokerages have been thrown to the lions since the 
Fed announced its "tightened bias" towards raising the 
interest rates.  MWD initially fell with the rest of the 
sector and markets on the reports.  However, MWD's 
performance this past week looks promising.  After dipping 
again on Monday and Tuesday, MWD began its comeback on 
Wednesday with the rally in the market.  When the market fell 
another 235 points on Thursday, MWD held steady.  Friday, it 
was able to continue its ascent in the green market.  MWD 
seems to have found a bottom and is now bouncing back.  
Although it remains to be seen what the Fed will do to the 
interest rates, MWD looks like a potentially sound play for 
the time being (It may have some resistance at its 30 dma 
of $99.28).  It is imperative that you confirm direction first.

News:  MWD has made the news by suspending two employees over 
payments to an informer.  Investigations are underway in the 
controversial $1.35 billion discrimination suit.

BUY CALL JUN- 95*MWD-FS OI=2404 at $6.38 SL=4.75
BUY CALL JUN-100 MWD-FT OI= 692 at $4.13 SL=2.50
BUY CALL JUL- 95 MWD-GS OI=1053 at $8.63 SL=6.50
BUY CALL JUL-100 MWD-GT OI=2298 at $6.50 SL=4.75

Picked on May 30th at  $96.50    PE = 16
Change since picked   +$ 0.00    52 week high=$116.94
Analysts Ratings   22-8-3-0-0    52 week low =$ 36.50
Last earnings 03/99  est 1.10    actual 1.76
Next earnings 06-24  est 1.45    versus 1.37
Average Daily Volume = 2.30 mln
Chart = http://quote.yahoo.com/q?s=MWD&d=3m

****

PVN - Providian Financial $95.88 (-8.75)

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

PVN is beginning to recover from a sell-off and you have a 
buying opportunity. PVN was the 7th best-performing S&P stock 
in 1998 and one of the top financial stocks. As recently as 
April 22, 1999, PVN traded at $138.00/share. Profit taking set 
in at that lofty level when a hoped-for split was not announced 
during earnings season. Inflation fears also hurt this interest 
rate sensitive stock. The really big anchor, however, was news 
on May 19th that the San Francisco district attorney's office 
had opened a consumer fraud investigation of Providian. PVN 
stock sank $17.19, or 14% that day. A company newswire the next 
day affirming 1999 earnings guidance of $3.50/share (72% growth) 
and $4.72/share for 2000 (35% growth), briefly arrested the 
free-fall. After a lawsuit against PVN was filed on May 24th on 
behalf of a Providian cardholder, though, PVN dropped as low 
as $81.25 on May 24th. The company quickly addressed the 
negative PR with "an enhanced customer satisfaction program". 
CIBC World Markets started PVN with a "strong buy" on May 25th. 
On May 27th, PVN rose 8% after Paine Webber, Salomon Smith 
Barney, and AG Edwards all raised their ratings to a "buy".  
Piper Jaffray, BT Alex Brown, and Prudential Securities all 
reiterated their "strong buy" ratings, while Keefe, Bruyette, 
and Bear Stearns reiterated their "buy"s. Across the board, 
analysts agree that the reaction to the investigation was way 
overdone and they see this as a buying opportunity.

PVN appears to have bottomed on Wednesday. Thursday's $6.62 
(8%) climb was on 4.5 times the average volume and volume was 
still above average on Friday's $5.88 (6.5%) gain. PVN can move 
up quickly once it gathers momentum--take a look at its chart. 
We should mention again, however, that PVN is interest rate 
sensitive. A small increase will not sink it, but a series of 
increases will certainly take a toll. PVN is a split candidate--
it last split 3:2 around $90 in December, 1998. Be sure to 
use stops.

BUY CALL JUN- 95*PVN-FS OI= 293 at $6.88 SL=5.00
BUY CALL JUN-100 PVN-FT OI=1563 at $5.00 SL=3.25
BUY CALL JUL-100 PVN-GT OI=  20 at $8.38 SL=6.50	
BUY CALL JUL-105 PVN-GA OI=  16 at $6.38 SL=4.50

Picked on May 30th at $95.88    PE = 23
Change since picked  +$ 0.00    52 week low =$ 28.38 
Analysts Ratings   8-3-0-0-0    52 week high=$138.00 
Last earnings 03/99 est  .72    actual  .78 surprise=8%
Next earnings 07-22 est  .84    versus  .43 
Average daily volume = 1.19 mln.
Chart = http://quote.yahoo.com/q?s=PVN&d=3m

*****************
Medical & Biotech
*****************

BGEN - Biogen $109.13 (+6.62)

This biopharmaceutical company develops, manufactures, and 
markets drugs for humans. Biogen's main drug is Avonex, an 
interferon beta used to slow the progression of multiple 
sclerosis (MS). 

After a month-long correction, shares of Biogen started to rise 
the second week in May as results began to come in for BGEN's 
experimental new drug for psoriasis, Amevive. Critics had called 
BGEN a "one-horse" company with Avonex pulling all the load. 
Even with revenues up 50% last quarter and profits up 65%, BGEN 
needed another product. The new once/week dosing for Avonex 
would help, but the real catalyst for the rise in share price 
was the fact that Amevive was successful in phase II trials and 
is now entering phase III trials for FDA approval. According 
to analysts, the drug promises to achieve peak sales of at 
least that of Avonex: $395 mln,. Two other drugs are in the 
pipeline, but approval is farther in the future:  Adentri, for 
edema, and Antova, primarily for the treatment of lupus. 
Potential competition for the Antova market was just eliminated 
when La Jolla and Abbott Labs pulled their Lupus drug out of 
phase II/III trials. Also helping the stock was speculation that 
BGEN was a buyout candidate. (JNJ was mentioned as a possible 
suitor after its failed bid for Centocor.)

On Tuesday, Biogen reported positive results from an Amevive 
dosing trial on humans. The drug was found safe and effective 
and had minimal side effects. Following that news, coverage was 
initiated May 26th by Bear Stearns with a "buy" rating. ING 
Baring Furman upgraded the stock the same day to "strong buy" 
from "buy". In addition, Piper Jaffray reiterated its "buy" 
rating. BGEN has just moved back above its 50 dma and is looking 
technically strong once again.  In an erratic market that lost 
ground last week, BGEN was up on good volume every day but 
Friday, when it lost only $.44 on very light volume. Biogen 
appears ready to continue its climb.

BUY CALL JUN-105 BGQ-FA OI=194 at $7.25 SL=5.50
BUY CALL JUN-110*BGQ-FB OI=468 at $4.25 SL=2.50
BUY CALL JUN-115 BGQ-FC OI=166 at $2.19 SL=1.00
BUY CALL JUL-110 BGQ-FB OI=532 at $7.50 SL=5.75
BUY CALL JUL-115 BGQ-GC OI=211 at $5.38 SL=3.50

Picked on May 27th at $109.56    PE = 40
Change since picked   +$ 0.44    52 week low =$ 41.75 
Analysts Ratings    9-8-4-0-0    52 week high=$120.50
Last earnings 03/99 est  0.58    actual 0.58 surprise=+0%
Next earnings 07-09 est  0.64    versus 0.41
Average daily volume = 1.30 mln.
Chart = http://quote.yahoo.com/q?s=BGEN&d=3m

*****

MEDI - MedImmune $63.63 (+8.63)

MedImmune is a biotechnology company engaged in the development 
and marketing of products for the prevention and treatment of 
infectious diseases and for use in transplantation medicine. 
Three big drugs developed by this company are: Synagis, a 
respiratory antibody and the first monoclonal antibody ever to 
be licensed for any infectious disease; Cytagan, MEDI's first 
antibody product, which is still growing in sales; and RespiGam, 
used to treat respiratory infections in infants.

We are picking up Medi as a momentum play. The stock started 
moving last Monday and it rose every day of the week. On 
Wednesday, it climbed through its 10 dma. Then on Friday, it 
cleared near-term resistance in the low $60s on strong volume. 
The only technical resistance left is at $66.00, the intra-day 
high it set on March 17th. Major technical indicators are 
turning positive as the stock gains momentum. MEDI is one of a 
handful of biotechnology companies that are currently profitable 
and it has several new drugs in the pipeline. 

On may 20th, MEDI said it will redeem $60 million of convertible 
subordinated notes due in 2003, a move that will increase 
shareholders equity. The stock may also benefit when MEDI 
presents at the Third Informed Investors Beltway Biotech Stocks 
Forum on June 5th. Up 5 days in a row now, Medi may pause 1 or 
2 days next week.  Wait for your entry point.

BUY CALL JUN-60 MEQ-FL OI=239 at $5.88 SL=3.00
BUY CALL JUN-65*MEQ-FM OI=249 at $3.00 Sl=1.50
BUY CALL JUL-60 MEQ-GL OI= 43 at $7.13 SL=5.50
BUY CALL SEP-65 MEQ-IM OI= 46 at $8.13 SL=6.25

Picked on May 30th at $63.63    PE = 58
Change since picked  +$ 0.00    52 week low =$21.00 
Analysts Ratings   8-3-0-0-0    52 week high=$66.00 
Last earnings 03/99 est  .35    actual  .45 surprise=29%
Next earnings 07-22 est -.23    versus -.35 
Average daily volume = 869 k
Chart = http://quote.yahoo.com/q?s=MEDI&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 
****************

DOW - Dow Chem. $121.50 (-4.69)(-9.13)

Surprise!  Dow is chemicals company. . .no "dot-com" here.  
But you already knew that, didn't you?  Of course, they 
manufacture and sell chemicals, plastics, including 
agricultural and consumer products.  Production facilities 
are in Canada, North, Central and South America, Europe and 
the Pacific.  Annual sales total about $18 bln.

Not much change since we picked DOW on Thursday (+0.06).  
Here's repeat of the rationality behind the play: Get ready 
for a rotation out of cyclicals.  The cyclical lift that 
DOW received, along with the rest of the group, has about 
crested the top of the mountain.  In a 50 day period, which 
ended the first week of May, DOW rose from $91 to $138, a 
52% gain.  At that time, some of the air began to escape 
the balloon, just like the Internets that preceded it.  All 
technical indicators are in solid negative territory.  
Thanks too to the rapid rise in price, there isn't much 
support anywhere on the way down until it gets to $112 
(home of the 50 dma).  The 10-day chart still looks awful 
with no relief in site.  In fact, 4 days ago, DOW crossed 
south below its 30 dma.  If cyclicals continue to fall out 
of favor with investors, look for further weakness in DOW.  
Beware of the dreaded upgrade or otherwise good news.  
Stops will help here.  Confirm market direction before 
playing.

Never really all that sharp in the PR department, DOW 
issued a press release singing the praises of a newly 
formed venture with a Chinese-owned petroleum trading 
company.  Perhaps they thought this might be seen as good 
news.  The company will initially focus on the 
international trade of chemical products and will also 
export machinery, textiles, clothing and light industrial 
goods.  It will gradually include high-tech products 
(gasp!!) and other products in its portfolio.

BUY PUT JUN-125 DOW-RE OI=199 at $6.50 SL=4.75
BUY PUT JUN-120*DOW-RD OI=554 at $3.75 SL=2.25

Average Daily Volume = 1.01 mln.
Chart = http://quote.yahoo.com/q?s=DOW&d=3m

****

TBH - Telebras $83.50 (-9.06)(-9.38)

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

TBH suffered this week due to concerns of political scandals
and devaluation fears from Argentina.  Most of the rumors had
subsided by the end of the week but all is still not well south
of the equator.  Brazil's currency, the Real, has continued to 
be volatile.  The Brazilian index, the Bovespa, continues to 
teeter around the support level of 10,800.  Remember this is 
the same index that fell below 5000 in mid-January.  That means
lots of profit-taking could be ahead.  We are also watching the
court battle between the civil servants and the government.  
In order to effect the $41.5 million IMF relief package, congress
enacted an increase to the social security tax.  The civil 
servants group went to court and won a favorable ruling against
a 25% increase.  The government wants to resolve this quickly 
as to not jeopardize the IMF funding.  This is a key issue 
traders in Brazil are focusing on.  Tighten up your stops to 
lock in profits.  The 200-dma is the next support level at $79.

BUY PUT JUN-85*TBH-RQ OI=3829 at $5.62 SL=3.75
BUY PUT JUN-80 TBH-RP OI=5774 at $3.38 SL=1.75

Average Daily Volume = 1.77 mln

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

****

EK - Eastman Kodak Co. $73.00 (-4.63)

Eastman Kodak develops, manufactures, and markets imaging 
products for the consumer and for businesses. This includes 
film, chemicals, and paper; cameras; projectors; various imaging 
systems; scanners and printers; software; copiers; and 
accessories. If you have never used Kodak film, you probably 
1)have no children, 2)have never been on vacation, or 3)don't 
know how to use a camera.

Kodak hit $88.94 back in July of 1998, almost as high as the 
high it set in January of 1997, but it went downhill after 
that. The descent continued until last month, when a positive 
earnings report suggested that the company's restructuring 
effort was beginning to pay off. Kodak reversed course and 
almost reached $80 earlier this month. Alas, competition from 
Fuji has cut short the rally. Fuji is lowering film prices just 
ahead of the busiest film months of the year. Kodak's margins 
will suffer and its profits will decline as it is forced to 
lower its own film prices, says Prudential Securities analyst 
B. Alex Henderson, who questions whether the company will be 
able to make its numbers in the current quarter. Only last 
month, independent market research data showed Fuji gaining 
market share at Kodak's expense. While Kodak is around for the 
long term, and it offers much more than just film, in the short 
term, investor worries are sending the stock price lower. 

The developing film price war between Fuji and Kodak is getting 
a lot of exposure in the media. Retail surveys released by both 
ACNielsen Corp. and Information Resources Inc. show market share 
declines by Kodak and corresponding gains by Fuji. Kodak is 
taking a shot at the surveys' methodology, claiming it is "short 
term in focus and based on a partial view of the market." In 
order to compete, Kodak is introducing more low-end products, 
launching a sales campaign aimed at teens, and increasing its 
presence in Japan. Investors are so far unimpressed. EK lost 
another 8.5% last week after losing 6% just the week before. 

BUY PUT JUN-70 EK-RN OI= 950 at $3.38 SL=1.75
BUY PUT JUN-75*EK-RO OI=1143 at $7.63 SL=6.00 

Picked on May 16th at $67.63     PE = 15
Change since picked  -$ 5.37     52 week low =$60.81 
Analysts Ratings   7-6-1-0-0     52 week high=$88.94
Last earnings 03/99 est 0.70     actual 0.80 surprise=+3.9%
Next earnings 07-15 est 1.50     versus 1.38
Average daily volume = 1.308 mln.
Chart = http://quote.yahoo.com/q?s=EK&d=3m

****

CLX - Clorox Company  $100.94 (-6.69)

Clorox is most known as the maker of the number one bleach in 
the world.  However, CLX also makes several other laundry, 
cleaning, and household products.  Pine-Sol, Soft Scrub, Tilex, 
and Glad trash and sandwich bags are just a few other Clorox 
goods.  In 1999, CLX acquired First Brands to increase its 
hold in the cat litter and car care business as well as extend 
its reach into the plastic wrap market.  Over 80 countries sell 
Clorox products.  

CLX looks technically frail.  In trading this past week, it 
dropped -$6.69.  Investor skepticism has influenced the 
overall markets and sent them spiraling back to earth.  
Just the threat of a rate hike has caused the sectors to 
rotate and the markets to tumble.  We feel that CLX could 
continue to correct especially since its P/E ratio may be 
on the high side considering its expected growth rate.  The 
fact that CLX continued to fall on Friday was another sign 
we took into account when deciding to add it as a put.  The 
markets headed higher and yet CLX continued to sink.  As 
always, confirm stock direction before opening any new 
positions.  Early next week, the markets may continue to 
rally.  But, the threat of a rate hike still looms.  We feel 
investors will remain cautious.   

No new news.

BUY PUT JUN-105 CLX-RA OI= 91 at $5.75 SL=4.25
BUY PUT JUN-100*CLX-RT OI=102 at $2.94 SL=1.50

Daily Volume = 861.3 K (vol. from 5/28/99)
P/E = 41
Chart = http://quote.yahoo.com/q?s=CLX&d=3m

****

IP - International Paper $50.00 (-5.00)

International Paper Company is a global producer and distributor 
of forest and paper products, including printing and writing 
papers, pulp, tissue, paperboard, packaging, and wood products.  
The company controls about seven million acres of forestland 
in the US and, through a subsidiary, holds interests in 800,000 
acres in New Zealand.  In May 1999, IP acquired Union Camp, 
which is a wood, paper and chemicals company.  The company has 
production facilities in 50 countries and customers in more 
than 130.

We have noticed a lot of weakness in the paper and pulp producers
recently and IP is no exception.  Commodity prices in general
remain at extremely low levels.  Paper prices are coming in 
equal to or less than the same quarter of last year.  Sales 
volume has also slowed.  IP's stock is reflecting the troubles.  
On Friday, it broke below its 50-dma at $51.  Support is thin 
for IP until it hits the $45 level.  We anticipate further 
declines as investors pull out of the cyclical group to take 
advantage of some newly found discounts in the technology and 
Internet sectors.  It's always important to confirm market 
direction especially since the stock lost almost 10% last week.  
It may be ready for a technical bounce.  But that would make 
for a good entry point after re-affirming stock direction 
post bounce.  Once you've opened a play, place your stops 
accordingly.  

BUY PUT JUN-55 IP-RK OI=232 at $5.62 SL=3.75
BUY PUT JUN-50*IP-RJ OI=412 at $2.00 SL=1.00

Average Daily Volume = 1.54 mln

Chart = http://quote.yahoo.com/q?s=IP=3m

****

IR - Ingersoll Rand $63.69 (-2.62)

The words "Ingersoll-Rand" could be tattooed on the biceps of 
the industrial age. A leading global manufacturer of construction 
and industrial machinery, Ingersoll-Rand makes mining equipment, 
air compressors, production equipment (such as air-powered tools),
bearings, components, power-generation pumps, and architectural 
hardware. The company supplies its branded Bobcat loaders, Club 
Car golf cars, Master Lock door hardware, Steelcraft doors, and 
Thermo King transport temperature-control systems through 60 sales 
and service subsidiaries and a network of distributors in more 
than 100 countries. The company has some 100 manufacturing 
facilities worldwide; about 40% of sales are to overseas 
companies. (profile from Hoover's Online)

We are adding IR as a put play due to its exuberant rise in
April as investors looked for safe-haven plays in the cyclical 
stocks.  The momentum that carried this from the $53 price to
nearly $70 in six trading days has past.  Since then the stock 
has been unable to rally and is left to drift back to a more 
normal valuation.  Most companies in this group have had a 
similar experience and are now rolling over.  IR is resting 
right above it's 50-dma at $62.  Cautious investors may want 
to wait until the stock actually closes below that point before 
opening a new play.  But we feel that since most other 'cyclical' 
stocks are either at or below their respective 50-dma's that 
we have a good chance IR will follow.  After that, the $53 range 
that it broke out from will be the next support.  And there is 
no recent company news to report that would influence our play
other than a third (and unexpected) rally in the cyclicals
again.

BUY PUT JUN-65*IR-RM OI= 26 at $3.25 SL=1.75 caution, low OI
BUY PUT JUN-60 IR-RL OI=180 at $1.00 SL=0.00

Average Daily Volume = 547 K

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


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

PUTS CONTINUED IN SECTION 5

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






The Option Investor Newsletter            5-30-99
Sunday                5  of  6

**********************
Recommended Puts Cont.
**********************

UNM - UNUM Corporation $53.81 (-2.19)

UNUM is a leading insurance company which specializes in long 
term and short term disability insurance. This segment accounted 
for nearly 60% of the company's total revenue in 1997. UNUM 
also provides group life, individual disability, long term 
care insurance, special risk reinsurance and payroll-deducted 
voluntary employee benefit products, including cancer policies. 
The company offers a wide range of life insurance products, 
primarily universal life and whole life policies. UNUM operates 
in North America, Latin America, the United Kingdom and the 
Pacific Rim. The North American subsidiaries operate out of 
about 45 offices throughout the US and in Canada. In 1997, 
the company acquired Options and Choices, Inc. Unum agreed to 
acquire insurance holding company Provident in November 1998.
(profile from Baseline Financial Services)

UNM is being added to our put list due to its weak technical
outlook.  The stock had a big run in April as investors left
technology issues and put their money into safer investments.
This turned out to be a temporary move and the money is now 
flowing back out of these cyclical stocks.  UNUM's core business
remains unchanged during the recent fluctuations in the stock.
They recently received approval from the FTC to go ahead with
their merger with Provident.  We like the stock as a put since
momentum has left this group.  The stock had a similar move 
6 months ago when it spiked suddenly, rolled over and spiked 
back down.  That is a good example of how quickly money will
flow into safety stocks during uncertainty and how fast it 
will flow back out when value is recognized in the high growth
stocks.  We are watching the $51 dollar range as potentially
giving support.  This is where the 50 and 200-dma converge.  
But it would not be surprising to see a move right through that
level as it has done many times before.  Confirm market direction
before opening new plays.

BUY PUT JUN-55*UNM-RK OI= 30 at $2.62 SL=1.25 caution, low OI
BUY PUT JUN-50 UNM-RJ OI=110 at $ .56 SL=0.00

Average Daily Volume = 503 K

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

****

MEA - Mead Corp $37.38 (-4.00)

The Mead Corppration is a paper and pulp producer and a leading 
manufacturer of office and school supplies.  Mead's Fine Paper
division manufactures coated and uncoated paper for commercial
printing.  They also produce coated paperboard, corrugated
cardboard and many other products.  Mead has manufacturing 
plants in Europe, U.S. and Canada.  And they control over two 
million acres of U.S. timberlands.

Mead is one of many companies that benefited from the push
to cyclical stocks in April.  That push is now over and these
stocks are coming back to earth.  The rally in April was clearly
over done because the fundamentals remain unchanged.  In Mead's 
most recent 10-Q report filed with the SEC, they stated that 
pulp prices remain low and sales volume was actually decreasing.
We have been waiting for the market to confirm direction before
recommending MEA as a put.  It looks like we have the break in
momentum we wanted.  The stock broke it's 50-dma today at $38.
The rapid rise in the stock left it open to profit-takers who 
have been holding the stock for 6 months while it went no where. 
Market willing, we could see a continuation down to the 200-dma 
at $32. 

BUY PUT JUN-40*MEA-RH OI=80 at $2.81 SL=1.50
BUY PUT JUN-35 MEA-RG OI=20 at $ .56 SL=0.00

Average Daily Volume = 393 K

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

****

ABF - Airborne Freight $25.88 (-4.25)

Airborne Freight Corporation is an integrated air express 
transportation company, providing next morning delivery 
throughout the United States, and to and from most foreign 
countries.  The company also acts as an international and 
domestic freight forwarder for heavy weight freight.  The 
company has over 14,000 trucks and vans delivering door-to-
door packages. The company also offers two deferred service 
products, Next Afternoon Service and Second Day Service.

The bad news keeps rolling in for ABF.  Today the company 
received a downgrade from Schroder & Co.  It was from 
outperform significantly to perform in line.  This is just 
another in a string of downgrades that started when the 
company missed their First Call estimate on their 1Q report
released late April.  They blamed higher operating expenses 
and lower growth.  And they are not the only shipping company
to suffer either.  Federal Express is experiencing similar
troubles.  It will be interesting to see how their operating
expenses are faring now with oil prices 50% higher than they
were in the first quarter!  But what attracts us to the play 
now is the stock's failure to hold at the 200-dma at $28.  
That support line had held on the previous two attempts to 
break through.  Watch for a bounce after six straight down
days and use it as an entry point after confirming downward
direction again.

BUY PUT JUN-30*ABF-RF OI=1755 at $4.75 SL=3.00 lower premium
BUY PUT JUN-25 ABF-RE OI= 289 at $1.12 SL=0.00

Average Daily Volume = 553 K

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



***********************************************************
Combos      
***********************************************************

A Good Time For A Holiday...

Friday, May 28

U.S. Markets rallied on Friday as bottom fishing investors looked
for bargains ahead of the holiday weekend. The Dow finished up 93
points at 10,560 on extremely light volume that may have boosted
the market's advance. The Nasdaq index climbed 51 points to 2470.
Advancing issues outpaced decliners by about two-to-one on quiet
trading of 653 million shares on the NYSE.

Thursday's new plays (positions - prices):

MER JUL85C/JUN85C $2.12 debit (possibly as low as $2.00)
MER JUL90C/JUN90C $2.00 debit (priced near 10 AM)
WMB JUL45C/JUL50C $3.25 debit (unable to achieve target price)

Merrill Lynch was volatile most of the morning and both targets
were easily achieved within 1 hour of the market open. WMB was
disappointing as the disparity in the sold call faded right from
the start. A technically favorable position was opened at a
slightly higher debit but there was no discount in the spread.

Portfolio plays:

Skytel was in the news as MCI WorldCom finally agreed to buy the
paging company for $1.3 billion in stock. Based on MCI WorldCom's
closing stock price Friday, the agreement values SkyTel common
stock at $21.59. It will be interesting to find out how our long
term position (SEP - 22.50 Call) is priced on Monday. Our current
debit is $0.50.

Good Luck!
******************************************************************
				- NEW PLAYS -
******************************************************************
PSFT - Peoplesoft  $16.19     *** On The Rebound! ***

PeopleSoft is a global supplier of enterprise applications for
business and government. PeopleSoft makes software that automates
basic business functions, such as accounting or human resource
operations. PeopleSoft solutions for manufacturing, supply chain,
financial, project and human resource management are used by more
than 3,000 customers worldwide.

The big news at PSFT is a new chief! Craig Conway takes the role
of president and chief operating officer of a company well known
for executive turnover and layoffs. Earlier this year, they cut
430 jobs including many key positions. The appointment comes as
PeopleSoft tries to shift its business away from big-ticket
software products to faster-growing Internet opportunities.

The company is currently developing the PeopleSoft Business
Network for e-business applications. They are developing content
that unleashes the power of people to work and transact business
in the Internet-enabled world. PSBN incorporates many business 
transactions, knowledge and sophisticated analytics within and
across enterprise boundaries, and makes all of this content
available to employees, customers, and suppliers through an easy
to use Internet portal. A new product to allow companies to buy
and sell items online is expected later this summer.

PeopleSoft also recently announced a range of new and innovative
knowledge tools and service programs, enabling customers to get
the most value out of their PeopleSoft implementations. The new
product; PeopleSoft Advantage, is a framework of technology and
customer services designed to provide maximum value of ownership
throughout the PeopleSoft systems lifecycle, including planning,
implementation, production, and enhancement. PSA features the
Advantage ToolKit, a web-enabled knowledge management solution
designed to guide customers through each phase of the lifecycle.
The new services include PeopleSoft Express, a rapid-results
implementation approach. PSFT also unveiled lifecycle service and
support programs offering direct access to specialized knowledge
and customer assistance.

PSFT has favorable fundamental outlook with a new identity and
some leading edge products. The positive change of character is
reflected in the short-term technical history of the stock chart.

PLAY (conservative/long-term):

BUY  CALL JAN-17.50 PQO-AW OI=30   A=$3.62
SELL CALL JUN-17.50 PQO-FW OI=1691 B=$0.43
INITIAL NET DEBIT TARGET=$3.00 TARGET ROI=75%

Note: We are reducing the net cost of the long-term option with
the credit from the sale of the nearer-term option. If the near
term call expires worthless, we will sell a July call to further
reduce our debit. If the short-term position is ITM on the last
day of the strike, you need to buy it back so that you DON'T
have to exercise the long term position. In that case, your long
position is going up in value also and near the last day of the
strike period, the short option will shrink down to intrinsic
value. As long as the stock price doesn't climb too far, you will
still be ahead in the play even after you buy the short position
back.

Chart = http://quote.yahoo.com/q?s=PSFT&d=3m
******************************************************************
PAX - Paxson Communications  $12.94     *** Takeover Rumors ***

Paxson Communications Corporation owns and operates the nation's
seventh largest and newest network. It has nationwide broadcast
television and cable distribution for its network; PAX TV, the
national family entertainment network. The foundation of PAX's
current prime-time schedule includes the off-network hit series
Touched By An Angel, Dr. Quinn, Medicine Woman, and Diagnosis
Murder. The network also has other original programming as well
as theatrical specials and made-for-television movies.

Paxson stock started moving up in mid-March when the Associated
Press and other news services reported that Time Warner and GE
were possibly interested in buying the fledgling television
network. The company's ownership of 72 stations gives it good
flexibility and makes it a viable target for any of the larger
media companies. PAX TV's distribution covers more than 70% of
U.S. households and its 18-49 year-old audience jumped over 50%
from last August to the first week of February. That type of
consumer interest vastly increases the network's advertising
and revenue prospects for a potential buyer.

When the news broke, Paxson's only comment was that it's in
discussions with a number of unnamed companies about possible
partnerships. Some analysts have speculated that America Online
might be a possible suitor as that type of acquisistion would
allow AOL to get into America's living rooms through television.
Since it doesn't already own TV stations, AOL wouldn't face the
possible antitrust hurdles that might exist for one of the more
traditional media companies.

Regardless of the possible new owners, PAX is well established
in a bullish trend with excellent technicals and lots of rumors
to keep it moving. A small disparity in the front-month OTM
options will allow us to open a favorable speculation play.

PLAY (speculative/calendar spread):

BUY  CALL SEP-15 PAX-IC OI=911 A=$1.68
SELL CALL JUN-15 PAX-FC OI=459 B=$0.31
INITIAL NET DEBIT TARGET=$1.25 TARGET ROI=50%

Chart = http://quote.yahoo.com/q?s=PAX&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.
******************************************************************
BEAM - Summit Technology  $19.75     *** A Big Mover! ***

Summit Technology is a leading developer and manufacturer of
ophthalmic laser systems designed to correct common vision
disorders. In 1995, Summit was the first excimer laser company
to receive FDA approval for its excimer laser system for the
correction of mild to moderate myopia in the U.S. Through its
wholly-owned subsidiary, Lens Express, Summit sells contact
lenses and related products.

Summit recently completed a merger with Autonomous Technologies
in a deal valued at $224 million. Both companies make laser
technology used in eye surgery but Autonomous uses the missile
tracking technology it developed for the Pentagon's "Star Wars"
program to combat nearsightedness. The tracking system enables
greater precision during laser surgery.

The acquisition should be positive in the long-term because it
adds second-generation technology to Summit's current list of
high-tech tools. With its scanning and eye tracking ability,
and the potential for customized procedures, that technology
should help increase market share in the future.

Last week, shares prices of all of the companies in the laser
vision correction industry fell in sympathy with VISX after the
Wall Street Journal reported that the company is facing patent
challenges for its laser technology. It had a patent rejected
by the U.S. Patent Office, and an FTC judge will soon rule on
whether the company committed fraud. That event caused a steep
dive in BEAM's stock value, moving the implied volatility even
higher from its already lofty perch.

Our goal in this play is to have both 'short' options expire
OTM, but if we had a choice, it wouldn't be so bad to own this
stock for about $14.

PLAY (aggressive/credit strangle):

SELL CALL JUN-25 BAQ-FE OI=1095 B=$0.43
SELL PUT  JUN-15 BAQ-RC OI=942  B=$0.38
INITIAL NET CREDIT TARGET=$1.00 ROI=25%

Chart = http://quote.yahoo.com/q?s=BEAM&d=3m
******************************************************************
ACO - AMCOL  $14.19    ***  Off And Running! ***

AMCOL is a specialty chemical and minerals company that produces
and markets a wide range of products used for many industrial,
environmental and consumer-related applications.

At the company's most recent annual meeting, the Chairman and
Chief Executive Officer John Hughes told shareholders he believes
that AMCOL will experience a 7% growth in sales, 22% growth in
operating profit, and 25% growth in net income for 1999. Their
first quarter was indeed very strong and continued growth is
expected in each of their our core segments; absorbent polymers,
minerals and environmental. During the meeting, AMCOL directors
increased the company's regular quarterly dividend from $0.06
to $0.07. The current dividend is payable June 7, 1999, to
shareholders of record on May 24, 1999.

Other new projects include a manufacturing facility for its
geotextile liner products in Poland and an aquisition of a 20%
minority interest in Ashapura Minechem Limited; a leader in
minerals production in India. Ashapura's high-quality minerals
deposits, strategic location and technological expertise provide
an excellent foundation for future growth and will add to the
revenues of AMCOL through a subsidiary, Volclay International.

I think this play is probably more bullish than bearish but in
either direction, a $2.12 move to the break-even point should
easily be achieved by the middle of summer.

PLAY (conservative/debit straddle):

BUY CALL DEC-15 ACO-LC OI=30 A=$1.06
BUY PUT  DEC-15 ACO-XC OI=0  A=$1.25
INITIAL NET DEBIT TARGET=$2.12 TARGET ROI=50%

Chart = http://quote.yahoo.com/q?s=ACO&d=3m
******************************************************************
TMK - Torchmark  $32.75     *** Outlook...Neutral! ***

Torchmark is a holding company for insurance subsidiaries that
provide individual life and health insurance. They also offer
financial planning services. United American Insurance has whole
and term life insurance as well as Medicare supplements and other
long-term care policies for the elderly. Liberty National Life
Insurance sells life and health insurance, and American Income
Life Insurance provides supplemental insurance in the US, Canada,
New Zealand, Puerto Rico, and the Virgin Islands.

The only recent news was a mediocre earnings report and the
announcement that the Board of Directors declared a dividend of
$.09 per share. The date of record is the close of business on
7/9/1999 and the dividend will be paid 7/30/1999.

This play is based solely on technicals and the short-term future
outlook for the company. A trading channel is well established in
the range from $30 - $39. There is no reason to believe the trend
will change significantly in the next 12 weeks. The initial debit
is very small, allowing a low risk entry and the disparity in the
sold call presents us with a small discount to enter the play.

PLAY (conservative/debit butterfly):

BUY  (5)  CALLS  AUG-30 TMK-HF OI=20   A=$5.37
SELL (10) CALLS  AUG-35 TMK-HG OI=1065 B=$2.75
BUY  (5)  CALLS  AUG-40 TMK-HH OI=421  A=$1.56

INITIAL NET DEBIT TARGET = $1.00 ROI (max) = 400%
DOWNSIDE B/E = $31.00 UPSIDE B/E = $39.00

The butterfly spread is generally a neutral position that is a
combination of both a BULL spread and a BEAR spread. This spread
is designed primarily for the issue that will not experience much
of a net rise or decline by expiration. It usually requires only
a small investment or collateral requirement and has limited risk
but profits are limited as well. It can also be costly in terms of
commissions so you should consider playing these combinations with
a low cost (discount) broker. There are three strike prices in a
butterfly spread with calls, and it can also be done with puts or
a combination of the two. There are several approaches to trading
butterflys successfully and most have similiar risk/reward numbers.
The best (and simplest) outcome would be for the stock price to
finish the August expiration period at $35, where the maximum
profit of $4.00 is achieved.

Chart = http://quote.yahoo.com/q?s=TMK&d=3m
******************************************************************
INDEX OPTION SPREADS...
******************************************************************
As a trader, you may be familiar with options on individual stocks
where you have the right to buy (call option) or the right to sell
(put option) a particular stock at some predetermined price within
some predetermined time. The buyer has the rights and the seller
the obligations. With index options the basic ideas are the same.
Index options allow you to make investment decisions on a specific
market industry or on the market as a whole. Spread strategies can
be made with index options similar to those made with individual
stock options. Many professional traders employ index spreads as a
hedge strategy. We favor debit positions on the SPX for momentum
and longer-term plays and OTM credit spreads on the OEX when the
risk/reward is favorable. Low ROI disparity spreads will be listed
(when available) for the conservative index trader.
*******************************************************************
OEX - S&P 100 Index  $658.66     OTM Credit-Spreads

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

OBSERVATIONS:

For OTM credit spread trades, we like to use the actively-traded
S&P 100 Index options because they contain much more premium than
options on individual stocks and provide an underlying instrument
less prone to huge, gapping moves. Remember however, that you can
always be exercised early so monitor your positions daily.

TECHNICALS:

Currently, the short term outlook is negative but the pattern is
becoming oversold. We would expect a short term rally (bull trap?)
over the next few trading sessions with the markets becoming range
bound. The previous support areas will now become resistance for
any renewed uptrend and a significant change in character must
occur before the market can move onto higher ground.

Review the Pinnacle Hedge-Section for more specific technical
information on the S&P 100 Index.
 
BULLISH...

PLAY (conservative/credit spread):

BUY  PUT JUN-620 OEY-RD OI=6422 A=$4.25
SELL PUT JUN-625 OEY-RE OI=4033 B=$5.00
NET CREDIT TARGET=$0.75 ROI=17%

PLAY (very conservative/low ROI):

BUY  PUT JUN-600 OEY-RT OI=9674 A=$2.25
SELL PUT JUN-610 OEY-RB OI=5040 B=$3.00
NET CREDIT TARGET=$0.75 ROI=8%

BEARISH...

PLAY (conservative/credit spread):

BUY  CALL JUN-690 OEY-FR OI=4434 A=$2.31
SELL CALL JUN-680 OEY-FP OI=9987 B=$4.12
NET CREDIT TARGET=$1.81 ROI=22%

PLAY (very conservative/low ROI):

BUY  CALL JUN-700 OEZ-FT OI=6822 A=$1.18
SELL CALL JUN-695 OEY-FS OI=3554 B=$1.62
NET CREDIT TARGET=$0.43 ROI=9%

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

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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 
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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            5-30-99
Sunday                6  of  6

*********************
COVERED CALL SECTION
*********************

Return On Investment' Explained...

Each month we receive numerous requests for an explanation of our
'return on investment' calculations with respect to covered-calls.
There are two very simple formulas that we use; one for positions
that are in-the-money and another for the out-of-the-money plays.

First, some definitions: ROI (return on investment) is determined
for two circumstances, the return if the stock is called-away (RC),
and the return if the stock is not called-away (RNC). RNC is cal-
culated with the stock price remaining unchanged and is valuable 
in evaluating out-of-the-money calls. Cost basis: this is the 
actual amount that you have invested for the duration of the play.

For in-the-money plays that are called-away:

The net premium would be the option premium 'minus' the difference
between the cost of the stock and the strike price sold (since the
stock would be called away at the strike price). 

Example:

XYZ stock - $12.00, sold strike - $10.00, option premium - $2.50
net premium = $2.50 - ($12 - $10) = $0.50
cost basis = 12.00 - 2.50 = 9.50 (ROI = 0.50/9.50 = 5.26%)

In this case, the RNC is the same because if the stock price 
remains unchanged, you would still get called out. This example
would also apply to at-the-money (ATM) calls.

For out-of-the-money plays that are called away:

The net premium would be the option premium 'plus' the difference
between the cost of the stock and the strike price sold. For plays
in which the stock is not called away, the premium is not adjusted
because the stock price remains unchanged.

Example:

XYZ - $12.00, strike - $12.50, option premium - $1.00
net premium if called = $1.00 + ($12.50-$12) = $1.50
cost basis = $12.00 - $1.00 = $11.00
RC = $1.50 / $11.00 = 13.64%
RNC = $1.00 / $11.00 = 9.09% (In this case, you don't receive any
gain from the stock price moving up to the sold strike.)

Return-not-called (RNC) is generally used to evaluate OTM covered
call positions. The reason; if the return-called is 25% but the
return with the stock unchanged is only 3%, the success of the play
depends almost completely on stock movement as opposed to favorable
valuation of the option premium. An OTM covered-call position is
used only when you are extremely bullish on the stock, the sector,
and the market in general. For that reason, we rarely offer OTM
plays. We favor ITM positions with overvalued option premiums on
technically healthy stocks. We value downside protection as much
as the overall return and writing calls at ITM strike prices allows
us to lower our cost basis to the current technical support areas.
In this manner, one can produce reasonable monthly returns and
still be successful even when the stock price falls 10%-20%.

Good Luck!
******************************************************************
SUMMARY OF PREVIOUS PICKS (3 weeks to June expiration)
******************************************************************
Stock  Price  Last    Mon  Strike  Opt    Profit   ROI   Monthly
Sym    Picked Price        Price   Bid    /Loss          ROI

VTEL    5.16   4.94   Jun   5.00  1.13   $  0.91  22.6%  14.0%
CYOE    8.31   7.56   Jun   7.50  1.56  *$  0.75  11.1%  12.1%
MCNS   18.25  15.00   Jun  15.00  4.50   $  1.25   9.1%   9.9%
DMRK   10.38   9.81   Jun  10.00  1.81   $  1.24  14.5%   9.0%
THNK   15.06  14.88   Jun  12.50  3.50  *$  0.94   8.1%   8.8%
MCOM    8.75   9.75   Jun   7.50  1.75  *$  0.50   7.1%   7.8%
SKYT   20.88  20.31   Jun  17.50  4.75  *$  1.37   8.5%   7.4%
MCOM    9.31   9.75   Jun   7.50  2.50  *$  0.69  10.1%   7.3%
MCNS   13.88  15.00   Jun  10.00  4.63  *$  0.75   8.1%   7.0%
PAX    12.81  12.94   Jun  10.00  3.38  *$  0.57   6.0%   6.6%
OMPT   17.06  17.44   Jun  15.00  3.25  *$  1.19   8.6%   6.2%
XCED   22.00  19.25   Jun  17.50  5.63  *$  1.13   6.9%   6.0%
XCED   20.06  19.25   Jun  15.00  5.75  *$  0.69   4.8%   5.2%
PAMC   34.25  26.00   Jun  22.50 13.00  *$  1.25   5.9%   5.1%
TOY    23.50  23.06   Jun  22.50  2.00  *$  1.00   4.7%   5.1%
VIRS   17.31  18.50   Jun  15.00  3.13  *$  0.82   5.8%   5.0%
GCO    12.44  13.38   Jun  10.00  2.88  *$  0.44   4.6%   5.0%
GCTI   20.25  23.13   Jun  17.50  3.50  *$  0.75   4.5%   4.9%
BEAS   17.25  20.38   Jun  15.00  3.00  *$  0.75   5.3%   4.6%
TWRS   20.56  20.13   Jun  17.50  4.00  *$  0.94   5.7%   4.1%
COMS   28.63  27.31   Jun  25.00  4.75  *$  1.12   4.7%   4.1%
PAIR   15.06  12.44   Jun  12.50  3.25   $  0.63   5.3%   3.9%
VVUS    4.75   4.28   Jun   5.00  0.63   $  0.16   3.9%   2.4%
SATH   10.75   8.69   Jun  10.00  2.19   $  0.13   1.5%   1.3%

-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

CERN   20.13  Jun 17.50  CQN FW  3.50  1191  16.63   5.2%   5.2%
CPU     8.06  Jun  7.50  CPU FU  1.13  7985   6.93   8.2%   8.2%
IDXC   23.94  Jun 20.00  XQW FD  4.63  78    19.31   3.6%   3.6%
MXWL   22.75  Jun 20.00  QMW FD  3.38  3     19.37   3.3%   3.3%
NRES   20.50  Jun 20.00  QNN FD  1.38  27    19.12   4.6%   4.6%
RMDY   19.19  Jun 17.50  LRQ FW  2.31  210   16.88   3.7%   3.7%
----------------------------------------------------------------
PTEK   15.44  Jul 12.50  TQO GV  3.75  4     11.69   6.9%   6.9%
VLNC    7.50  Jul  7.50  VHQ GU  1.13  30     6.38  17.7%  17.7%
******************************************************************
Sequenced by Return Called 
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost    RC     RNC
Sym               Price  Symbol  Bid   Intr  Basis

CPU     8.06  Jun  7.50  CPU FU  1.13  7985   6.93   8.2%   8.2%
CERN   20.13  Jun 17.50  CQN FW  3.50  1191  16.63   5.2%   5.2%
NRES   20.50  Jun 20.00  QNN FD  1.38  27    19.12   4.6%   4.6%
RMDY   19.19  Jun 17.50  LRQ FW  2.31  210   16.88   3.7%   3.7%
IDXC   23.94  Jun 20.00  XQW FD  4.63  78    19.31   3.6%   3.6%
MXWL   22.75  Jun 20.00  QMW FD  3.38  3     19.37   3.3%   3.3%
----------------------------------------------------------------
VLNC    7.50  Jul  7.50  VHQ GU  1.13  30     6.38  17.6%  17.6%
PTEK   15.44  Jul 12.50  TQO GV  3.75  4     11.69   6.9%   6.9%
******************************************************************
Sequenced by Return Not Called
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym               Price  Symbol  Bid   Intr  Basis

           SAME AS ABOVE - ALL SOLD CALLS ARE ITM OR ATM
******************************************************************
Company Descriptions
******************************************************************
CERN - Cerner Corporation  $20.13   *** Insider Buying? ***

Cerner designs, develops, markets, installs and supports health 
information systems for use in healthcare organizations. For the 
quarter ended 4/3/99, total revenues increased 18% with net income 
at $2.8 million, up from $671,000. No recent news since May 21,
when coverage was initiated by BT Alex Brown. The chart reflects
increased buying pressure (insider buying?) and technical support
is near our cost basis.

Jun 17.50 CQN FW Bid=3.50 OI=1191 CB=16.63 RC=5.23% RNC=5.23%

Chart = http://quote.yahoo.com/q?s=CERN&d=3m
******************************************************************
CPU - CompUSA, Inc.  $8.06   *** Revamped Web site ***

CompUSA is a retailer of personal computer hardware, software, 
accessories, and related products and services and operates 162 
computer superstores. Yes, CompUSA who momentarily shook the Tech
sector back in March with its third and fourth quarter warnings.
The price has moved above recent resistance on increasing volume 
and CPU is gaining attention with its work on the CompUSANET.com
web site.

Jun 7.50 CPU FU Bid=1.13 OI=7985 CB=6.93 RC=8.23% RNC=8.23%

Chart = http://quote.yahoo.com/q?s=CPU&d=3m
******************************************************************
IDXC - IDX Systems Corporation  $23.94  *** On the rebound ***

IDX Systems provides health care information systems and solutions
that include software, hardware, and related services which enable
healthcare organizations to improve the quality of patient care 
and workflow processes. Technically, IDX appears to be exiting a
rounded bottom formation on increasing volume. The tape reacted
positively after announcements were made about the acquisition of
ChannelHealth in April. New coverage and an upgrade last week.

Jun 20.00 XQW FD Bid=4.63 OI=78 CB=19.31 RC=3.57% RNC=3.57%

Chart = http://quote.yahoo.com/q?s=IDXC&d=3m
******************************************************************
MXWL - Maxwell Technologies Inc. 22.75  *** Trading Range ***

Maxwell develops, manufactures, and markets pulsed power based 
systems and components for a wide range of commercial applications
to commercial customers and the U.S. government. No recent news,
though Maxwell is expected to report earnings after the close on
Tuesday. Our cost basis is in the middle of a long term support 
area from $19 to $23. There are some signs of increased buying
pressure and a positive divergence in TSV.

Jun 20.00 QMW FD Bid=3.38 OI=3 CB=19.37 RC=3.25% RNC=3.25%

Chart = http://quote.yahoo.com/q?s=MXWL&d=3m
******************************************************************
NRES - Nichols Research Corp. $20.50  *** Information Tech ***

Nichols Research is a professional services company focusing on 
the application of engineering principles and technology in four
market areas: national security, government, commercial and 
healthcare. The chart is in a strong uptrend from the March lows
as the company makes new acquisitions and contract agreements.
Recent short-term buy signals should move the stock above its
150 dma and test the April high.

Jun 20.00 QNN FD Bid=1.38 OI=27 CB=19.12 RC=4.60% RNC=4.60%

Chart = http://quote.yahoo.com/q?s=NRES&d=3m
******************************************************************
RMDY - Remedy Corporation  $19.19

Remedy Corporation develops, markets and supports highly adaptable
client/server and web-based application software and solutions for
employee-intensive business processes. Remedy is 'on the rebound'
after posting record 1Q results ($0.11 vs. 0.08). Remedy appears
ready to test the Jan-Feb highs and the strike price is below
recent support.

Jun 17.50 LRQ FW Bid=2.31 OI=210 CB=16.88 RC=3.67% RNC=3.67%

Chart = http://quote.yahoo.com/q?s=RMDY&d=3m
******************************************************************
                          - July Plays -
******************************************************************
PTEK - Premier Technologies  $15.44   ** A Successful Venture **
        
Premiere Technologies provides innovative solutions to simplify
communications by combining the power of the Internet with the
reach of the telephone. PTEKVentures.com is part of Premiere
Technologies' strategic investment and partnership arm. PTEK
shares jumped on speculation about the value of its holdings in 
WebMD, which has agreed to merge with Healtheon. The merger 
is valued at 500 million and is one of five PTEKVentures.com 
portfolio partnerships.

Jul 12.50 TQO GV Bid=3.75 OI=4 CB=11.69 RC=6.93% RNC=6.93%

Chart = http://quote.yahoo.com/q?s=PTEK&d=3m
******************************************************************
VLNC - Valence Technology, Inc.  $7.50  *** Speculation! ***

Valence Technology, Inc. is engaged in research and development 
to produce advanced rechargeable batteries based upon lithium and 
polymer technologies. We have been watching Valence for a while 
and like the recent shipment of its new, proprietary lithium 
polymer battery components. Will this emerge into a salable 
product and finally provide revenues? Time will tell but the 
speculation leading into July earnings will be interesting. This 
is a speculative play and should be monitored closely for changes
in the character of the stock chart.

Jul 7.50 VHQ GU Bid=1.13 OI=30 CB=6.38 RC=17.65% RNC=17.65%

Chart = http://quote.yahoo.com/q?s=VLNC&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
VTEL   4.94 Jun    5.00 VQEFA   0.75  15.19   158   1717
TERA   4.94 Jun    5.00 QIPFA   0.69  13.92    25    565
MCOM   9.75 Jun   10.00 MQMFB   1.31  13.46   397   1358
ERTH   7.50 Jun    7.50 QERFU   1.00  13.33     8     58
ABTE   7.25 Jun    7.50 QZBFU   0.94  12.93   130   3008
HPH    7.19 Jun    7.50 HPHFU   0.88  12.17   117    132
APOS   5.00 Jun    5.00 QAPFA   0.56  11.25    10    190
IDXC  23.88 Jun   25.00 XQWFE   2.50  10.47    17    234
HPH    7.19 Jul    7.50 HPHGU   1.50  20.87   131     50
MCOM   9.75 Jul   10.00 MQMGB   2.00  20.51   124    594
TERA   4.94 Jul    5.00 QIPGA   1.00  20.25    15     10
ABTE   7.25 Jul    7.50 QZBGU   1.25  17.24    85    128
IDTC  22.13 Jul   22.50 IQJGX   3.63  16.38    81     36
OMKT  12.38 Jul   12.50 OQMGV   2.00  16.16    20     72
VLNC   7.44 Jul    7.50 VHQGU   1.19  15.97     8     30
SPYG  19.31 Jul   20.00 YQGGD   3.00  15.53     8   1021
PHYC   6.97 Jul    7.50 PQHGU   1.06  15.25    10      6
BEAM  19.75 Jul   20.00 BAQGD   3.00  15.19   104    415
PTVL  17.38 Jul   17.50 QUTGW   2.50  14.39    42    333
NCDI   4.88 Jul    5.00 NQKGA   0.69  14.10    60     10
ONSL  19.50 Jul   20.00 QOLGD   2.75  14.10    21      1
PAIR  12.44 Jul   12.50 PQGGV   1.75  14.07    38   1971
EDFY  12.00 Jul   12.50  YQGV   1.69  14.06    10     39
CFN    7.13 Jul    7.50 CFNGU   1.00  14.04     3    100
SRCM  16.50 Jul   17.50  SQGW   2.31  14.02    10    157
FILE   9.88 Jul   10.00 ILQGB   1.38  13.92    11    491
MTSN   7.19 Jul    7.50 QQMGU   1.00  13.91    10    160
CS    14.88 Jul   15.00  CSGC   2.06  13.87   437   4743
IDXC  23.88 Jul   25.00 XQWGE   3.25  13.61    50     53
CATP  17.00 Jul   17.50 TQPGW   2.31  13.60   132    105
GMGC   3.69 Jul    5.00 GGQGA   0.50  13.56    54     10
OMPT  17.44 Jul   17.50 QTTGW   2.31  13.26   145    175
WIT   17.50 Jul   17.50 WITGW   2.31  13.21   315   2686
PPOD   9.00 Jul   10.00 QPPGB   1.19  13.19    28     35
AAIR   4.75 Jul    5.00 VJQGA   0.63  13.16    10     35
HUM   12.56 Jul   22.50 HUMGX   1.65  13.13    10     41
DIMD   4.41 Jul    5.00 DAQGA   0.56  12.77    16   1282
PCMS   4.41 Jul    5.00 PQPGA   0.56  12.77    13     10
PCTL   8.88 Jul   10.00 PTQGB   1.13  12.68   123   1122
CYCH  14.00 Jul   15.00 KBQGC   1.75  12.50    24     50
TTEC   7.50 Jul    7.50 QTCGU   0.94  12.50    10    663
TGX    7.50 Jul    7.50 TGXGU   0.94  12.50    40     30
REV   29.13 Jul   30.00 REVGF   3.63  12.45   130   1529
IDTC  22.13 Jul   25.00 IQJGE   2.75  12.43    27     93
SGI   12.38 Jul   12.50 SGIGV   1.50  12.12     4    198
PILL  13.50 Jul   15.00 PQQGC   1.63  12.04    10    730
ESPI  11.44 Jul   12.50  AQGV   1.38  12.02    67     83
NETA  14.69 Jul   15.00 CQMGC   1.75  11.91    26     89
CBSI  24.25 Jul   25.00 CQQGE   2.88  11.86     2    441
HLX    7.38 Jul    7.50 HLXGU   0.88  11.86   125    269
VNWK  29.50 Jul   30.00 QVNGF   3.50  11.86     2     12
ARTT  11.31 Jul   12.50 AOQGV   1.31  11.60    60     40
TCA   11.94 Jul   12.50 TCAGV   1.38  11.52    20     95
VICR  16.50 Jul   17.50 VIQGW   1.88  11.36     5     45
HPH    7.19 Jul   10.00 HPHGB   0.81  11.30    18    114
HS     4.44 Jul    5.00  HSGA   0.50  11.27    69   3592
CLCX   5.00 Jul    5.00 QXTGA   0.56  11.25    40     15
WAVO   6.69 Jul    7.50 WKQGU   0.75  11.21    14    217
SAVLY 15.69 Jul   17.50 QVYGW   1.75  11.16    85    312
ARTT  11.31 Jul   15.00 AOQGC   1.25  11.05    19      5
DRMD  14.75 Jul   15.00 DUQGC   1.63  11.02     7    193
SPYG  19.31 Jul   22.50 YQGGX   2.13  11.00    21    203
CYGN  11.38 Jul   12.50 YNQGV   1.25  10.99    25     30
ASDV  14.25 Jul   15.00 QDVGC   1.56  10.96     6    110
COMS  27.50 Jul   27.50 THQGY   3.00  10.91    19   3017
RMDY  19.00 Jul   20.00 LRQGD   2.06  10.86     6     40
PWAV  23.13 Jul   25.00 VFQGE   2.50  10.81    10     12
IM    29.00 Jul   30.00  IMGF   3.13  10.78    10    171
SUPG  17.44 Jul   17.50 UQGGW   1.88  10.75    45     23
BELW   4.69 Jul    5.00 UQQGA   0.50  10.67    50    327
UAG   10.00 Jul   10.00 UAGGB   1.06  10.63    20     46
HTCH  23.25 Jul   25.00 UTQGE   2.44  10.48     6     10
CEXP   6.56 Jul    7.50 XQPGU   0.69  10.48    50    907
RDRT   6.59 Jul    7.50 RDQGU   0.69  10.43    40    644
GERN  12.00 Jul   12.50 GQDGV   1.25  10.42    10     11
REGI   7.25 Jul    7.50 QRGGU   0.75  10.34    20     50
SYBS   9.69 Jul   10.00 SBQGB   1.00  10.32    14    163
BNYN  11.06 Jul   12.50 QYNGV   1.13  10.17    14    387
REL    9.94 Jul   10.00 RELGB   1.00  10.06    36    245
SFSK  12.50 Jul   12.50 FQKGV   1.25  10.00     6    398
BTIM  11.25 Jul   12.50 QBOGV   1.13  10.00    40     15
FFTI  10.00 Jul   10.00 QFOGB   1.00  10.00    10     76
EDFY  12.00 Aug   12.50  YQHV   2.38  19.79     4    360
MAPX   9.50 Aug   10.00 RQQHB   1.88  19.74     7    110
GMGC   3.69 Aug    5.00 GGQHA   0.69  18.64   300   5860
PCMS   4.41 Aug    5.00 PQPHA   0.81  18.44    25    345
OMPT  17.44 Aug   17.50 QTTHW   3.13  17.92    15   1019
DDIM   4.00 Aug    5.00  QMHA   0.69  17.19    40    589
SKI    4.50 Aug    5.00 SKIHA   0.75  16.67    40    220
WAVO   6.69 Aug    7.50 WKQHU   1.06  15.89    30    956
HPH    7.19 Aug   10.00 HPHHB   1.13  15.65    30    595
REGI   7.25 Aug    7.50 QRGHU   1.13  15.52     5    229
AND    6.94 Aug    7.50 ANDHU   1.06  15.32     4    200
CHMD   7.00 Aug    7.50 HQCHU   1.06  15.18    10    115
NFLD  12.06 Aug   12.50 DHQHV   1.81  15.03    10    214
ARTT  11.31 Aug   12.50 AOQHV   1.69  14.92     8    416
IMCL  19.75 Aug   20.00 QCIHD   2.88  14.56     5    461
HTCH  23.25 Aug   25.00 UTQHE   3.38  14.52    10    286
WIND  21.00 Aug   22.50 QWVHX   3.00  14.29    31    129
OMKT  12.38 Aug   15.00 OQMHC   1.75  14.14   145   1885
SBTK  22.63 Aug   25.00 XQYHE   3.13  13.81    11    150
Z     10.94 Aug   12.50   ZHV   1.50  13.71    30    293
HYSL  15.56 Aug   17.50 WQEHW   2.13  13.65     4    650
ALKS  24.75 Aug   25.00 QALHE   3.38  13.64     5     36
PTEK  15.44 Aug   17.50 TQOHW   2.06  13.36     5    858
RXSD  17.06 Aug   17.50 RKQHW   2.25  13.19    15    579
IDXC  23.88 Aug   30.00 XQWHF   3.13  13.09    10    213
MCRE   5.88 Aug    7.50 MQZHU   0.75  12.77     5    239
SAVLY 15.69 Aug   17.50 QVYHW   2.00  12.75    20    310
PDX   22.56 Aug   25.00 PDXHE   2.88  12.74     2    212
PETM   9.00 Aug   10.00 PQMHB   1.13  12.50    50   6642
FGCI   9.09 Aug   10.00 JZQHB   1.13  12.37     5    242
IOM    4.56 Aug    5.00 IOMHA   0.56  12.33   185   7185
CMOS  29.63 Aug   30.00 CQSHF   3.63  12.24     5    165
DTLN  22.31 Aug   25.00 OGQHE   2.69  12.04     1     83
ATML  19.75 Aug   20.00 AQTHD   2.38  12.03    54   2081
OXHP  19.06 Aug   20.00 OQXHD   2.25  11.80   102   2690
LIPO  14.31 Aug   15.00 LPQHC   1.69  11.79    19    436
ACAI  17.50 Aug   20.00 QKAHD   2.06  11.79    10      2
SCUR   3.72 Aug    5.00 UQUHA   0.44  11.76    30    156
KEA   29.00 Aug   30.00 KEAHF   3.38  11.64     2   1453
IMRS  20.94 Aug   25.00 QIQHE   2.44  11.64     5    114
QMDC  10.31 Aug   15.00 QCDHC   1.19  11.52     2     97
JBHT  16.88 Aug   17.50 JHQHW   1.94  11.48    10     29
WAVO   6.69 Aug   10.00 WKQHB   0.75  11.21    25   1189
APOL  27.94 Aug   30.00 OAQHF   3.13  11.19     1    227
ARTT  11.31 Aug   15.00 AOQHC   1.25  11.05     5    312
CPU    8.06 Aug   10.00 CPUHB   0.88  10.85   124   2954
ENMD  26.00 Aug   30.00 QMAHF   2.75  10.58     5    264
IFMX   6.66 Aug    7.50 IFQHU   0.69  10.33    40   1878
RIG   24.63 Aug   25.00 RIGHE   2.50  10.15    10    557
PTEK  15.44 Aug   20.00 TQOHD   1.56  10.12    21   1024




*******************************
NAKED PUT SECTION
*******************************

Technical Analysis...An Overview...

There are three types of information that most traders use to
determine a bias or opinion on a specific stock. The first is
"fundamental" analysis; income statements, balance sheets, and
the future projections for revenues and earnings. The second
is "sentiment" analysis; investor expectations of market and
individual stock performance, news or upcoming events and other
possible activities such as mergers and stock splits. The final
category is "technical" analysis or "charting".

This method relies on the actual history of trading and price
in a specific stock. The issue can also be a future, index, or
industry group. Most analysts believe that charts can reflect
all of the known information and public opinion surrounding a
particular stock or security.

Technical analysis involves the use of historical pricing to
identify trends and patterns. Different types of indicators are
displayed on price charts. Moving averages, support/resistance
lines, envelopes, Bollinger bands, and momentum curves are all
common indicators. Price, time and volume are all inputs into
these indicators. Price reflects the level of change in the
attitude of investors. Time measures the cycle or period of
change and volume (relative to its past history) measures the
intensity of that change.

Various systems have been developed to help traders form an
opinion based on the chart patterns and predict future turning
points (and direction) in the underlying issue. Analysis begins
by determining the strength and direction of a trend. The basis
for future predictions is supported by the fact that once a
trend is in motion, it will continue in that direction until a
change in character occurs.

Successful analysts will look at many indicators from different
perspectives and identify signals that forecast upcoming changes
or trend reversals. When you can do this accurately on a regular
basis, your portfolio value will grow consistently, regardless
of the overall market character.

Good Luck!
------------------------------------------------------------------
Selling naked-puts offers an attractive method of generating small
profits on portfolio collateral. A premium is received for the
obligation to buy the underlying security at a specific price. A
successful outcome is achieved if the stock remains above the sold
strike at expiration. It is also one of the best ways to achieve a
technically correct entry position for owning a stock.
                      *** WARNING!!! ***
Occasionally a company will experience catastrophic news causing
a severe drop in the stock price. This may cause a devastatingly
large loss which may wipe out all of your smaller gains. There is
one very important rule; Don't sell naked puts on stocks that you
don't want to own! It is also important that you consider using
trading STOPS on naked option positions to help limit losses when
the stock price drops. Many professional traders suggest closing
the position when the stock price falls below the sold strike or
using a buy-to-close STOP at a price that is no more than twice
the original premium from the sold option.
******************************************************************
SUMMARY OF PREVIOUS PICKS (3 weeks to June expiration)
******************************************************************
Stock  Price  Last    Mon  Strike  Opt    Profit   ROI   Monthly
Sym    Picked Price        Price   Bid    /Loss          ROI

IMG     9.81   7.81   Jun   7.50  0.75  *$  0.75  27.7%  20.0%
SATH   10.75   8.69   Jun   7.50  0.44  *$  0.44  17.0%  14.8%
BEAS   17.25  20.38   Jun  15.00  0.94  *$  0.94  16.8%  14.6%
USWB   28.56  25.38   Jun  22.50  0.81  *$  0.81  12.4%  13.5%
GSTX   12.50  12.25   Jun  10.00  0.56  *$  0.56  18.3%  13.3%
PAMC   34.69  26.00   Jun  22.50  0.81  *$  0.81  10.5%  11.4%
SKYT   20.13  20.31   Jun  15.00  0.44  *$  0.44   9.8%  10.7%
CMOS   24.81  29.63   Jun  20.00  0.88  *$  0.88  14.7%  10.6%
PTEK   17.50  15.44   Jun  12.50  0.38  *$  0.38   9.8%  10.6%
PTVL   23.00  17.38   Jun  17.50  0.75   $  0.63  11.8%  10.2%
NTPA   36.25  28.13   Jun  22.50  0.56  *$  0.56   7.2%   7.8%
GMST   57.88  61.81   Jun  42.50  0.88  *$  0.88   7.1%   7.7%
IDTC   26.38  22.13   Jun  15.00  0.38  *$  0.38   6.7%   7.3%
KLAC   49.31  45.50   Jun  40.00  0.69  *$  0.69   6.2%   6.8%
LHSP   39.50  35.13   Jun  25.00  0.44  *$  0.44   5.3%   5.7%

-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

ANSR   26.38  Jun 22.50  QRA RX  0.50  250   22.00   7.0%
CMNT   25.25  Jun 22.50  QDO RX  1.00  175   21.50  12.0%
DANB   27.00  Jun 20.00  QUB RD  0.50  141   19.50   8.5%
FFD    16.13  Jun 12.50  FFD RV  0.50  230   12.00  13.4%
QNTM   19.88  Jun 17.50  QNQ RW  0.50  543   17.00   8.2%
SAVLY  15.69  Jun 12.50  QVY RV  0.50  81    12.00  13.7%
THNK   15.00  Jun 12.50  THU RV  0.69  25    11.81  16.5%
URI    30.25  Jun 25.00  URI RE  0.56  668   24.44   7.6%
******************************************************************
Sequenced by Return on Investment  
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr  Basis  Expired

THNK   15.00  Jun 12.50  THU RV  0.69  25    11.81  16.5%
SAVLY  15.69  Jun 12.50  QVY RV  0.50  81    12.00  13.7%
FFD    16.13  Jun 12.50  FFD RV  0.50  230   12.00  13.4%
CMNT   25.25  Jun 22.50  QDO RX  1.00  175   21.50  12.0%
DANB   27.00  Jun 20.00  QUB RD  0.50  141   19.50   8.5%
QNTM   19.88  Jun 17.50  QNQ RW  0.50  543   17.00   8.2%
URI    30.25  Jun 25.00  URI RE  0.56  668   24.44   7.6%
ANSR   26.38  Jun 22.50  QRA RX  0.50  250   22.00   7.0%
******************************************************************
Company Descriptions
******************************************************************
ANSR - AnswerThink Consulting  $26.38  *** Internet Commerce ***

AnswerThink Consulting Group provides integrated consulting and
technology enabled solutions focused on the emerging Internet
driven electronic commerce marketplace. AnswerThink offers a wide
range of integrated solutions, including benchmarking, business
process transformation, software implementation and decision
support technology. A merger with TriSpan diversified the company
and new alliances are expected to boost profits. A nice break-out
above recent technical resistance.

Jun  22.50  QRA RX  Bid=0.50  OI=250  CB=22.00  ROI=7.0%

Chart = http://quote.yahoo.com/q?s=ANSR&d=3m
******************************************************************
CMNT - Computer Network Tech.  $25.25  *** Great Technicals ***

Computer Network Technology provides hardware & software products
and services for the implementation of Storage Area Networking,
Enterprise Application Integration and re-engineering solutions.
CMNT builds business-critical networks with greater connectivity
and access to information, without sacrificing performance or
security. New alliances including an agreement with EMC. Just a
great looking chart with the 25 dma at our cost basis.

Jun  22.50  QDO RX  Bid=1.00  OI=175  CB=21.50  ROI=12.0%

Chart = http://quote.yahoo.com/q?s=CMNT&d=3m
******************************************************************
DANB - Dave & Busters  $27.00     *** Moving To The NYSE ***

Founded in 1982, Dave & Buster's is one of the country's leading
upscale, restaurant/entertainment concepts. There are 19 D&B's
across the United States with 4 more stores scheduled to open in
1999. By the end of the year 2000, Dave & Buster expect to have
30 locations throughout the country. DANB will begin trading on
the New York Stock Exchange on Friday, June 4, 1999. Excellent
technical base at the cost basis.

Jun  20.00  QUB RD  Bid=0.50  OI=141  CB=19.50  ROI=8.5%

Chart = http://quote.yahoo.com/q?s=DANB&d=3m
******************************************************************
FFD - Fairfield Communities  $16.13   *** Vacation Season ***

Fairfield Communities is one of the nation's largest and most
comprehensive resort and vacation products companies in the
world, providing quality recreational experiences at twenty-six
locations in 11 states and the Bahamas. They specialize in resort
development and the creation of innovative vacation ownership and
other leisure products. They also provide a complete range of
professional resort management services to the vacation and
hospitality industry. An excellent stage II chart with support
near $10-$12.

Jun  12.50  FFD RV  Bid=0.50  OI=230  CB=12.00  ROI=13.4%

Chart = http://quote.yahoo.com/q?s=FFD&d=3m
******************************************************************
QNTM - Quantum  $19.88  *** Own This One! ***

Quantum Corporation is a diversified mass storage company and the
highest volume global supplier of hard disk drives for personal
computers. They are also a leading supplier of high capacity hard
drives and the worldwide revenue leader among all classes of tape
drives. Quantum sells a broad range of other storage products to
OEM and distribution customers worldwide. Recently announced they
are acquiring Meridian Data to expand their storage business by
increasing its technology base. Also participating in a $200 mil.
share buy-back program. $17 is a great price to own the stock.

Jun  17.50  QNQ RW  Bid=0.50  OI=543  CB=17.00  ROI=8.2%

Chart = http://quote.yahoo.com/q?s=QNTM&d=3m
******************************************************************
SAVLY -  Saville Systems  $15.69     *** Merger Target! ***

Saville is a leading provider of convergent billing & customer
care solutions for the telecommunications industry. Saville
operates globally with offices in the U.S., Canada, Ireland,
Australia, U.K. and Germany, and has more than 1,400 employees
worldwide. Saville's shares on the Nasdaq have lost almost half
their value since January and with the recent consolidation in
the billing software industry, they are now a takeover target.
Saville offers services in an area which analysts say is the
fastest growing market in Europe's software scene and their
products will help other companies exploit earnings potential.

Jun  12.50  QVY RV  Bid=0.50  OI=81  CB=12.00  ROI=13.7%

Chart = http://quote.yahoo.com/q?s=SAVLY&d=3m
******************************************************************
THNK - THINK New Ideas, Inc. $15.00  *** Buy-out? ***

THINK provides marketing and communications services including 
traditional advertising and new media (Internet) advertising 
services. THNK has been rising amid speculation that they may
be bought by another company, possibly Razorfish. A new upgrade
was issued last week with a price target of $25. The chart is
still reflecting increased buying pressure and the cost basis
is at the bottom of recent support.

Jun  12.50  THU RV  Bid=0.69  OI=25  CB=11.81  ROI=16.5%

Chart = http://quote.yahoo.com/q?s=THNK&d=3m
******************************************************************
URI - United Rentals  $30.25   *** Takeover Wars! ***

United Rentals is the largest equipment rental company in North
America and serves over 900,000 customers through its network of
506 locations in 41 states, Canada and Mexico. United Rentals
launched a hostile $553 million bid for Rental Service in April
and has fought to block the NationsRent-Rental Service merger,
which was announced in January. Now it has extended its $22.75
per share offer for Rental Service stock to June 18, 1999. The
company outlook is favorable in the long-run but we think the
share price will hold-up to the June expiration.

Jun  25.00  URI RE  Bid=0.56  OI=668  CB=24.44  ROI=7.6%

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



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

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

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Option Investor Inc
PO Box 630350
Littleton, CO 80163

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