Option Investor
Newsletter

Daily Newsletter, Sunday, 06/13/1999

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The Option Investor Newsletter            Sunday  6-13-99  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 6-11           WE 6-4          WE 5-28         WE 5-21 
DOW     10490.50 -309.34 10799.84 +240.10 10559.74 -269.54 - 84.04
Nasdaq   2447.80 - 30.54  2478.34 +  7.82  2470.52 - 49.62 -  7.72
S&P-100   654.87 - 17.55   672.42 + 13.76   658.66 - 13.10 -  1.81
S&P-500  1293.64 - 34.11  1327.75 + 25.91  1301.84 - 28.45 -  7.51
RUT       438.01 -  4.32   442.33 +  3.65   438.68 - 10.46 +  6.01
TRAN     3344.47 -118.26  3462.73 + 47.03  3415.70 -135.56 -115.08
VIX        27.01            23.45            26.38           25.36
Put/Call     .64              .56              .54             .64
******************************************************************

Will they or won't they? Only the Fed head knows for sure.

Stocks followed bonds again today and the trip was not pleasant.
The bond bears beat the bulls bloody today but not due to the
PPI report as expected. The PPI was right on target with a +.2%
increase and the core rate was steady at +.1%. So what was the
problem? The bond bears, feeling dejected that the PPI failed 
support their inflation claims, quickly jumped over to the Retail
Sales report to claim support for their position. The continued
strength in retail sales across the board month after month is
causing concern that with demand high, price inflation cannot be
far behind. 

This week was ugly. Very ugly. After coming within 200 points 
of the recent all time high of 11,130 on Tuesday, the market has
dropped steadily. After rallying briefly this morning to almost 
10,700 the Dow closed today at 10,490, -201 points off its high.
The good news was the rebound off the lows of the day at previous
support of 10,450. After bouncing off the 10,450 level twice in
the morning, rumors of a large hedge fund liquidating stock 
positions in the afternoon caused a brief drop below support.
The market quickly recovered as bargain hunters took advantage
of the oversold conditions. From the 10,920 on Monday to 10,430
at the low today represented a -500 point drop in four days. 
We all know, nothing goes up or down in a straight line and the
market is now poised for another relief rally. -500 in
four days is a major move and many leaders have taken serious
hits. Others have held their ground and appear to be forming a
bottom at this level. The A/D line is very ugly here as sellers
continue to outnumber buyers in numbers but not on heavy volume.


 

The Nasdaq for instance, attempted to rally several times this
week in spite of the Dow drain. Today the index move much below
previous support of 2450 and showed no interest in moving lower
even though the Internets were getting hammered. I view this as
a positive as well. When you consider EBAY dropped -17 after their
site was down all day AND the beating CMGI took today, -11.75,
after reporting a larger than expected loss on Thursday, the 
Nasdaq did ok. The CMGI loss is not important. CMGI is not a 
Quarterly earnings company. The very nature of their business is 
to buy companies, spend money building up their niche and then 
sell them for several times their initial investment. The Nasdaq
leaders hardly budged with CSCO +.38, INTC -.94, MSFT -1.75, 
DELL -.31.


 

With bonds trading over 6% (6.14%) the impact on the market is
always drastic. The magic +6% yield entices some stock holders
back into bonds for a safe investment in turbulent times. The 
chances of a Fed rate hike at the June meeting are approaching
100% with odds of a second hike later now approaching 50%. The
economy is now growing at a rate almost twice what the Fed
considers healthy. Remember the PPI today was only one chapter
in the rate story. The other chapters are the CPI next Wed, 
Greenspan's testimony to the Joint Economic Committee on Thr
and the finale, the FOMC meeting on the 29-30th. While the
remainder of the story has yet to be played the market is acting
on the anticipated result. Many analysts are now saying a 
SECOND rate hike is already factored into the market. What this
means to us is there should not be much downside from here.

Even with earnings warning season in full bloom the possibility
of even stronger earnings from the non-warning S&P companies is
providing some comfort for traders. Even though the market dropped
-500 points from its Monday high it did so on the lightest volume
week this year. The NYSE only managed 680 mln shares Friday and
the Nasdaq only 734 mln shares. The market dropped due to a lack
of buyers not a rush of sellers. 

The Dow and the Drug sector both took a hit from the PFE news
this week not market malaise. With PFE dropping -20 this week
on the news that the Trovan drug was being pulled from marketing
in Europe the sector has simply died in sympathy. MRK is a Dow
stock and dropped -$5 this week. The biggest drag on the Dow
today was HWP, -4.63, after it was announced yesterday that
CEO Lewis Platt said he sold 80,000 shares in May and 100,000
shares in April. The sale was described as "routine" and he
still owns 1.32mln shares but the market did not take the news
well. 

The Russell Shuffle is about to begin. The Russell-2000 Small
Cap Index is getting ready to shed 26 non-small cap Internet
stocks. To qualify for the Russell a stocks market cap must
be under $1.4 bln. This puts many Internet stocks like CMGI,
EGRP, XCIT, LCOS in the upper decks with valuations in the
$10-$20 bln range. After the stocks are dropped the Russell
will move from a 7.7% Internet weighting to only 1.3% of
Internet stocks. The Russell is up +6% for the year including
the current Internets but true small caps are up only +3% 
without them. The change will take place Jun-30th.


 

This week sure does not qualify as the "summer doldrums" and
after this week and the next two, we will be begging for some
doldrums to appear. While I do expect a relief rally on 
Mon/Tue, I do not expect it to go anywhere. We are most likely
trapped in a trading range between 10,300 to 10,700 until after
the Fed meeting on the 29-30th. Even if they do announce a rate
increase the earnings announcements will begin the next week
and will quickly over power any hike jitters. The Feds have
already used their Fed speak to drop -700 points of the Dow in
anticipation of a hike and it is now fairly priced. The period
we have to worry about is the end of July after the majority
of earnings have been announced. The closer we get to Y2K the
more impact news and events will have on the market. Y2K is
also the reason I expect the Feds to leave rates alone after
June. They can't afford to crash an already worried market
just before the anticipated Y2K dip. The wild card here is a
persistent rumor that they could take advantage of the current
market strength to announce a .50% hike and kill two meetings
at once. Then they would not have to change the rate again later.
While this is a remote possibility it is a possibility. There
was a rumor in the markets today that the Fed was holding an
emergency meeting today to discuss raising rates before Jun-30th.
This was just a rumor but it was just another straw for this bull
to carry. A relief rally on Mon/Tue would probably be tradable
but only if you are prepared to sell quickly when the tide turns
south again. While "traders" should be cautious over the next
two weeks, I recommend that "holders" stay out of the market.
You know which category you fall into and you should take action
accordingly. The triple witch Friday would normally give an
upward bias to the market but the economics on Wed/Thr are
more likely to take precedence.

Definitely pick your entry points and sell too soon!

Jim Brown
Editor



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

I am still in Vegas after attending the Money Show. I
had not planned to trade this week but as I sat in my
room watching CNBC Friday afternoon I could not help
myself. I felt the Internet sector was tanked unfairly
by the CMGI earnings and the EBAY website problems.
I had been telling attendees in my workshops all week
that I missed a play on Yahoo last Friday morning and
it spiked +$16 Friday and Monday after the AOL/AT&T
ruling Friday. We feel Yahoo will make an earnings run
into their announcement in early July. We were going 
to make it a play last Sunday but the Friday spike
killed it. The CMGI and EBAY problem today gave me
another chance and I jumped at it. Not only did I buy
calls for the earnings run I also sold puts to
offset my risk. While I cannot imagine YHOO not moving
up at least marginally the next three weeks, I definitely
do not expect it to drop below $125 before earnings.
I will short YHOO to cover if it drops through $125.
Time will tell!

Bought Calls JUL-140 YHV-GH @ $13.88
Sold Puts    JUL-125 YHU-SE @ $10.25


 


***************************************************
SEMINAR UPDATE
***************************************************

The seminars are filling up fast and we have some more
good news for those that have not made that decision to
attend. 

We have not offered it before but many of you have asked.
Yes, you CAN take a partner or friend with you for FREE.

FREE!  That is like getting the seminar for half price!

Invite your spouse, investing offspring or that investor 
from the office and come get the best option trading 
course available.

If the $2,395 price tag is still holding you back we
can also offer the course for $1,995 if you would like
the 16 audio tapes instead of the 8 video tapes. We feel
the video is a much stronger teaching tool and had not
planned to offer the audio option. Several people have 
been asking for this option and it is now available.  

We still strongly recommend the video version.


Home Study Course

Many have expressed disappointment in the scheduling since
they had already planned their vacations. To handle this
problem we recomend the Home Study Option. You get the 
video tapes and the 500 page workbook immediately and are
free to attend the seminar , anytime in the future and as 
many times as you want for free.


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!



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

Sunday, June 13, 1999

Lower High Spells Failed Rally

Take a look at what happened on Tuesday, June 8th across several 
of the broad market indices - a failed rally as measured by a 
lower high.

Index         Prior High    Date      Failed Rally  Date
**************************************************************
DJIA            11,244      5/13        11,000       6/8
S&P 500          1,376      5/14         1,340       6/8
S&P 100            695      5/14           675       6/8

Saavy option traders should not ignore this subtle shift in momentum 
particularly since these broad market indices have closed BELOW their
50-day moving average in the past couple of days.

Pinnacle has been advising clients to take defensive measures since 
April 29 (Retail, Drug and Healthcare) and May 20th (Technology).  
This weekend, we are alerting investors to take defensive positions 
with the Interest rates closing ABOVE 6%. 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.  Out-f-the-money 
call buying is reaching extreme levels (OEX 680-750).


We advise investors to resist the temptation of buying
this dip and wait until certain market internals 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:

Advance/Decline Line:
After checking up last week, the A/D line is beginning to roll over 
and could prove Bearish if decliners out pace advancers in the week 
ahead. 

Russell 2000: 
After recent rally failed just below the 450 benchmark, the small 
cap stocks are beginning to roll over just above its 50 day moving
average. 


BEARISH Signs:

Market Volatility (VIX):  
Closed ABOVE its 50-day moving average (25.9) indicating the end 
of current bullish run. 

Investor Intelligence:  
As a contrarian indicator, the percent of Bullish investors is over 
55% suggesting Bullish sentiment is at extreme level and are ignoring 
the selloff. 

Interest Rates:
Trading ABOVE 200dma and 5.50 Benchmark (6.135%).

Pinnacle Index:  
Overhead resistance (OEX 680-700) clocking in at 12.7 
suggesting that option speculators are expecting the market to 
advance higher.

Peak Open Interest:  
The contraian put-call ratio clocking in at .85 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            -
Friday, June 4           61,255          +14.5%
Friday, June 11          67,597          +26.3%




Market Sentiment at a Glance
******************************************************************
                                Friday     Tues      Thurs  
Indicator                       (6/11)     (6/15)    (6/17) Alert
******************************************************************

Pinnacle Index (OEX):          

                    (680-750)    23.1
Overhead Resistance (680-700)    12.7
Underlying Support  (645-660)     1.5
                    (510-660)     5.2

Put/Call Ratios:

CBOE Total P/C Ratio               .7
CBOE Equity P/C Ratio              .5
OEX P/C Ratio                     1.0


Peak Open Interest (OEX):

Puts                              600
Calls                             670 
P/C Ratio                         .85 *

Market Volatility Index (VIX):	

CBOE VIX                        27.01 *



Investors Intelligence:

Bullish                         58.3% *
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                        (6/11)     (6/15)    (6/17)
****************************************************************

                    (680-750)     23.1             
Overhead Resistance (680-700)     12.7

OEX Close                       654.87
 
Underlying Support  (645-660)      1.5        
                    (510-660)      5.2

 
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                 (6/11)     (6/15)    (6/17)
******************************************************************


CBOE Total P/C Ratio               .66
CBOE Equity P/C Ratio              .49
OEX P/C Ratio                      .96


Peak Open Interest (OEX)
******************************************************************
                     Friday         Tues          Thurs
Strike/Contracts     (6/11)         (6/15)        (6/17)
******************************************************************

Puts                 600 / 11,690
Calls                670 / 13,735



 

Put/Call Ratio       .85 



 



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 14, 1999        Top                 25.01   

June 11, 1999                           27.01 



 



 


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
May 14, 1999        Top               60.9        28.7

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 *     
May 26, 1999                          60.9        28.7 *     

June 2, 1999                          61.6        27.7 *     
June 10, 1999                         58.3        28.7 *     




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

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

DOW Industrials   10,500  11,000  10,491    BEARISH   6.12 *
SPX S&P 500        1,315   1,355   1,294    BEARISH   6.10  
OEX S&P 100          660     690     654    BEARISH   6.12 * 
RUT Russell 2000     435     450     438    Neutral   5.28  

NDX NASD 100       2,100   2,250   2,062    BEARISH   6.8 
MSH High Tech      1,000   1,100   1,030    Neutral   5.28     

                   Key Benchmarks
Technology         Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
XCI Hardware         900     920     871    BEARISH   5.20
CWX Software         660     675     665    Neutral   6.10
SOX Semiconductor    400     425     437    BULLISH   6.10             
NWX Networking       510     565     541    Neutral   6.12 *
INX Internet         500     600     442    BEARISH   5.20             

                   Key Benchmarks
Financial          Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
BIX Banking          680     720     656    BEARISH   5.18   
XBD Brokerage        425     475     390    BEARISH   5.21              
IUX Insurance        645     660     640    BEARISH   6.10 

                   Key Benchmarks
Other              Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
RLX Retail           900     970     858    BEARISH   4.29 
DRG Drug             390     425     350    BEARISH   4.29  
HCX Healthcare       780     850     709    BEARISH   4.29  
XAL Airline          180     210     162    BEARISH   5.21       
OIX Oil & Gas        285     310     299    Neutral   5.13 



Posture Alert

Adopting a bias towards tightening, the FED announcement 
prompted broad markets to retreat from early morning gains. 
We have turned Bearish on the Banking sector while changing 
our posture on Hardware and Internet to Neutral.. 

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


/members/marketposture



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

Monday: 

Business Inventories Apr    Forecast:  0.2%   Previous: 0.5%
Atlanta Fed Index    May    Forecast:  ---    Previous: 13.7

Tuesday:

BTM Schroders       6/12   Forecast:  --     Previous: 0.1%
LJR Redbook         6/12   Forecast:  --     Previous: -0.7%
API Oil Stocks      6/12   Forecast:  ---    Previous: 2.612M 

Wednesday:

Consumer Price Idx. May    Forecast:  0.2%   Previous: 0.7%
CPI ex food/energy  May    Forecast:  0.2%   Previous: 0.4%
Housing Starts      May    Forecast:  1.64M  Previous: 1.574M
Housing Permits     May    Forecast:  1.60M  Previous: 1.569M
Industrial Prod.    May    Forecast:  0.3%   Previous: 0.3%
Capacity Util.      May    Forecast:  80.6%  Previous: 80.6%
Real Earnings       May    Forecast:  ---    Previous: -0.2%

Thursday:

Jobless Claims      6/12   Forecast:  --     Previous: 323K 
International Trade Apr    Forecast: -$19.1B Previous: -$19.7B
Philadelphia Fed    Jun    Forecast:  ---    Previous: 21.1  
Current Account Gap Q1-99  Forecast:  ---    Previous: -$63.77B
Money Supply (M2)   6/7    Forecast:  ---    Previous: $12.9B

Friday:

None scheduled


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

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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.


**************
TRADERS CORNER
**************

Using Credit Spreads during Volatile Times

During these uncertain times one thing is very certain.  The more 
confused traders get about future market direction, the more 
volatile stocks become in terms of movement.  This also affects 
options premiums, which tend to skyrocket during uncertainties.  
In order to understand the best time to enter a credit spread in 
the equity markets, lets review constructing a credit spread, and 
what credit spreads to use when.

A credit spread basically is a way to take in options premium 
without leaving your strategy open to unlimited risk.  Say for 
example, you are interested in selling call options on XYZ.  In 
order to sell call options outright, you would need a very large 
account due to the margin requirements for short selling call 
options.  A credit spread would allow you to sell these call 
options while setting  protective long calls out of the money.  
This would also lower your margin requirements to the total risk 
on the spread.  A credit spread consists of selling a higher 
priced option and protecting it by buying a lower priced option 
using the same option type and the same expiration dates.  Here 
are two points to remember:

1.  Credit Spreads using Calls are Bearish
2.  Credit Spreads using Puts are Bullish

Think about this for a minute.  It sounds confusing until you 
remember that you are selling the spread, not buying it.  Selling 
calls is bearish, and so is selling the call spread.  Selling the 
puts is bullish, as is selling the put spread.  The risk graph 
looks basically the same as a debit spread, because both have 
limited risk and limited reward.  The chart shows various bull 
put spread risk reward profiles for IBM. Take note that each one 
has a different risk / reward profile.

http://www.OptionInvestor.com/charts/tc1.gif

So what are the best criteria for credit spreads?  Well, the best 
way to take advantage of short-term credit spreads is when 
volatility is on the high side.  You can sell very juicy at the 
money premium, and buy out of the money options as protection.  
Options are most expensive when markets are moving erratically, 
but can also be expensive during very tight market moves just 
before an earnings announcement.  Once an earnings announcement
has been issued, the options premium tends to get "crushed."  
Whether you hold call or put spreads, when volatility collapses, 
this usually results in a positive position for the trader.  The 
best at the money credit spreads happen 30 days or less to 
expiration.

What about credit spreads with more time to expiration?  Hey, you 
can create credit spreads at various strike levels with various 
expiration dates.  Just keep in mind that credit spreads that are 
created using in-the-money options, have a greater chance of being 
assigned and therefore, require more time to expiration to avoid 
this.  The great advantage using in-the-money credit spreads is 
the great risk reward profiles that come from the deep spreads.  
One way of virtually eliminating risk is to enter a long-term put 
credit spread on a quality stock with a long-term uptrend.  Not 
only can you receive a great deal of money for the credit with 
little risk, but some brokerage firms will allow you to use the
money to purchase stock, or better yet, purchase an interest 
bearing fixed asset.  Imagine entering a 30 point credit spread 
with 2 years to expiration, in which you recieve a credit of 27 
points.  Your risk is 3 points, or roughly 10% of the spread.  
Taking your 27 points and investing it into fixed interest bearing 
notes that yield 5% a year would cut your risk on the entire 
position to virtually nothing!  Now thats the great worse case 
scenario if the spread were to widen to the maximum loss.

Tom Gentile
Chief Options Strategist
Global Venture Group

********

LEAPing into the 21st Century

Five years of unprecedented bullish increases may be starting to 
make some investors more cautious than curious.  For instance, 
the euphoria over the DOW breaking the 11,000 mark led to an 
almost immediate back slide that wiped out all the DOW's gains 
below the previous month.  Although the market is still bullish, 
many traders are ready to sell on a dime when the upside looks too 
inflated.  But not to worry—there are ways to benefit from this 
kind of mass psychology in the marketplace if you know how.

Let's cast a glance at a unique option that can prove profitable 
in these yo-yo scenarios.  Introducing LEAPS options (Long-term 
Equity AnticiPation Securities).  LEAPS are long-term options that 
don't expire for at least 9 months. Once an option's expiration 
gets closer than 9 months, they become plain options again with an 
entirely new ticker symbol.  Be this as it may, LEAPS are in every 
way an option.  Their expirations are a long way off which makes 
them prime candidates for long-term plays and secure bets for
shorter-term trades.

For trader's with a traditional buy and hold orientation, options 
usually carry with them the stigma of being short-term trading 
tools with tax consequences.  LEAPS, by the very nature of their 
long-term expiration dates, help to overcome this stigma.  It isn't 
unusual for LEAPS traders to hold a position for more than a year.  
Plus, LEAPS have the added benefit of giving a trader significantly 
more time to be right about a market move. For the past 4 quarters, 
Yahoo! (YHOO) has made some phenomenal runs up in price just prior 
to releasing their earnings report, followed by an abrupt correction.  
All this volatility would lead some people to the kitchen looking for 
that bottle of pepto-bismol.  Instead of buying the stock prior to 
the release, I have chosen to use LEAPS spreads instead.  This lets 
me capitalize on the long-term upswing with very little risk.

Lets look back at some numbers.  On March 26, 1999 Yahoo! was priced 
at 171 ¾ .  Instead of trying to buy the shares (which would have 
cost $17,175 for 100 shares), I prefer to put on a bull call spread 
by purchasing January 2001 YHOO 200 calls and selling January 2001YHOO 
250 Calls at a limit of 15 to the buy side. The cost of the trade is 
therefore $1,500 to control 100 shares, or less than 9% of the long 
stock play.  I placed the trade as a limit order to control my risk/
reward ratio. This trade had a maximum risk of $1,500 and a maximum 
profit of $3,500.  It just had to climb to at least 215 to be 
profitable (the lower strike plus the net debit). In a trade like this 
I have 18 months for Yahoo! to go up 46%.  If the price of Yahoo! hits 
250 before the third week of January 2001, I will make a profit of over 
200% on my investment.  Compare that with the 46% I would make if I 
just bought the stock outright.  And even if you think that the 
Internet bubble may burst sometime soon, I still have plenty of time 
for the stock to recover.  On the other hand, if I owned the stock 
and the bubble burst, I could certainly lose more than the $1,500 I 
invested on the options trade.

With LEAPS in my trader's tool chest, I can safely place spreads and
complex option combinations that keep their potential for making money 
for a long time.  And they're so low maintenance.  I have very little 
time decay to worry about and all the flexibility that options supply.  
So the next time you're shopping for a great trade, check out the very 
last options in the chain—the LEAPS options—and see what kind of spread 
you can come up with.

George A. Fontanills



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


PROPER MONEY MANAGEMENT

One of the common ingredients to becoming a successful options 
trader is proper Money Management.  The hardest element in option 
trading is taking a loss and taking a profit.  I have some basic 
rules that I use when trading options.

The first (and hardest) is realizing that you are in a bad position, 
and taking a loss.  It has been my experience, that if an option 
losses half of its' value, it will more than likely lose all of its' 
value.  Therefore, the first rule of thumb to use in option trading 
is risk about half of the premium.  If an option expires worthless, 
you lose everything.  It is better to salvage what you can and live 
to fight another day. 

The second step to proper Money Management is determining when to get 
out with a profit.  If the Market moves in your favor, I like to take 
profits on half of my position if it doubles in value.  These steps 
will force you to take a profit and more importantly, if the market 
turns around you will not have as many options working against you. 
I never attempt to pick the top of a move; I am much more concerned 
about taking a loss.  If you control the losses, the winners will come.
Another main objective of proper money management is asset allocation.  
I never invest more than 20% of my available capital into one single 
play. (No matter how good it looks).  If that play does not work out, 
I will be forced to start from scratch and build my capital back up 
just to be able to speculate on another option play.  Many of my 
clients feel as if they always have to be invested in one play or 
another.  Cash and patience are two very good things to have.  The 
markets have been here for many years; they are not going anywhere.  
Wait for the market to tell you when to get in. 

Also, and most importantly, try to buy more time when picking option 
plays. I like to look at least three months out when pick option plays.  
It may only cost a few dollars more to get more time.  If the stock 
moves in two weeks the further out option will move as well as the 
shorter time option. However, if the stock fails to move, the shorter 
time option will have more time decay and lose value quicker.  If you 
find that an option is coming upon expiration, it usually will be more 
beneficial to sell the shorter time option and use the premium to buy 
a further out option (time).  Otherwise if the stock drops or stays 
flat the option will lose all of its' time value. Always have an idea 
where to get in and where you will be willing to take profits or a 
loss; then stick to your plan.  You should always use a stop-loss and 
profit orders when trading options.  A full-service broker will be able 
to take a stop-loss order as well as a profit order when you initially 
enter the market.  They should be able to cancel the other order if one 
is filled.  Most people can not afford to be full-time optiontraders.  
Use these orders to take the place of you worrying about where the
market is trading.  The past few weeks have been very difficult to 
trade.

Those people who had taken the time to formulate a plan, and stuck to 
it, did not panic and make a rash and usually wrong decisions.  Trading 
is not easy.  Use these basic tools to help you avoid the 'expensive 
lessons' that I have heard about.

Andrew Aronson
(888) 281-9569
LaSalle St. Securities
Andrewoption@hotmail.com



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

Index       Last    Week
Dow      10490.33 -309.33
Nasdaq    2447.88  -30.52
$OEX       654.87  -17.55
$SPX      1293.64  -34.11
$RUT       438.01   -7.69
$TRAN     3344.47 -118.26
$VIX        27.01    4.25

Stock               Week

BRCM       113.00   15.50  New,  Strong momentum
CNXT        56.00   10.37  New, Huge upgrade - huge move.
TXN        127.63    8.75  New, split candidate with earnings
NVLS        62.94    6.81  Revealed new products on Friday
BVSN        59.13    6.62  New "buy" rating on Friday
AMAT        65.81    5.00  Looks strong, expect profit taking 
LSI         44.00    4.81  New, semiconductors are strong
NT          83.88    4.75  Hit a new 52 week high on Friday
UNPH       144.19    3.88  New, possible buying opportunity
SCI         47.00    2.88  Volume light - confirm direction 1st
SDLI        57.50    2.19  Possible Entry point.
TER         63.31    1.88  Good news for chip stocks=good for TER
AA          63.00    1.06  Likely to move up Monday with the Dow.
EGRP        37.75    0.06  Dropped, not performing
SLR         57.69    0.00  Dropped, earnings Monday
ADPT        32.63   -0.82  Might hit new high if market rallies.
XRX         58.13   -1.44  Confirm direction before playing
LGTO        54.75   -1.51  Looking for more volume to move higher
IBM        114.31   -1.69  New, entry point to catch the bounce
CREE        60.50   -2.63  Dropped, looks ugly.  (no news)
GPS         64.94   -2.82  Split coming on June 22nd.
ORCL        25.31   -3.33  Earnings are Tuesday, don't hold over!
CAT         59.44   -3.38  Look for recovery with the Dow
GE         101.34   -3.54  Support at $100, Kosovo almost @ peace
YHOO       135.25  -12.19  New, time to look for the earnings run!

Puts

CVC         66.00   -9.50  No support untill $60
ATHM        86.00   -8.50  New, break through 200 dma - looks bad.
WHR         62.19   -4.94  New, break down through 50 dma
TMX         70.81   -4.88  Look for drop through support at $69
FDX         50.44   -1.81  Dropped, possible bottom forming



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

LSI  - LSI Logic 
UNPH - Uniphase Corp 
BRCM - Broadcom Corp
IBM  - International Business Machines 
CNXT - Conexant Systems 
YHOO - YAHOO! Inc 

PUTS: 

WHR  - Whirlpool Corp 
ATHM - Excite At Home Corp 




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

EGRP $37.75 (+0.06)  This player is out of the game.  EGRP 
took too much of a beating on Friday losing -1.75 as it 
steadily fell throughout the day.   The injury pushed the 
stock below its 10 dma.  After a great comeback on Monday 
with a $4.19 gain (its mascot TBFC with a whopping $7.87), 
EGRP suffered 4 down days.  Retirement is now inevitable 
and we need to drop it.

CREE $60.50 (-2.63)  We could find no news to account for the 
big sell-off in CREE today other than sympathy to the Nasdaq
(compare the two charts). Cree reached $68 in early trading, 
but it wound up closing below its 10 dma with a $5.50 loss on 
the day. Volume was heavy on a day when market volume was light. 
We have to drop CREE.

SLR $57.69 (+.00) SLR closed out the week exactly even with 
where it ended last week, making its split run look like it was
running in place. But that doesn't give the whole picture of 
where SLR has been this week. It set a new $60 high on Monday, 
then dropped to bounce off its 10 dma at $55.63 Thursday morning. 
Friday morning it rallied to $59.50, but in the end, succumbed 
to market pressure and closed at $57.69, $.43 off its low of 
the day. This stock will release its earnings on Monday.
A weak market has hampered its earnings run, so an upside 
surprise could send its price higher. Just beware that 
investors will be nervous as they await the PPI numbers.
Remember, we never recommend holding over earnings.
It is just not worth the risk.


PUTS: 

FDX $50.44 (-1.81) Federal Express played out how we had 
expected this week.  It continued to pay for breaking down 
through its 50-dma at $54.  The stock has been on a steady 
decline which took it under $50 on Thursday.  But we are 
surprised by its relative strength on Friday in a down market.  
The stock managed to stay positive.  So we are not recommending 
any new put plays for FDX.  This may be a bottom. 




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

TXN - Texas Instruments

 

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


Symbol - Stock         Splits/Date  
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 - Current Play
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
MSPG - Mindspring      2:1 06-25-99 ex-date 06-28
BGEN - Biogen          2:1 06-25-99 ex-date 06-28
PFE  - Pfizer Corp     3:1 06-30-99 ex-date 07-01 
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 ! 

GPS - Gap Stores $64.94 (-2.81)(+5.19)

See details in sector list

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

IBM - International Business Machines $114.31 (-1.69)

See details in sector list

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

******

BVSN - Broadvision Inc. $59.13 (+6.62)(+4.69)

See details in sector list

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

******

NT - Nortel Networks $83.88 (+4.75)

See details in sector list

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



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




*****************************
Conglomerates / Construction
*****************************

GE - General Electric $101.34 (-3.54)(+3.19)

General Electric Company is one of the world's leading multi-
national corporations with interests in aircraft engines, 
appliances, broadcasting, industrial products, power generation 
and financial services. GE Transportation systems is a leading 
U.S. manufacturer of railroad locomotives.  Sales for 1998 were 
derived from financing services, 48%; industrial products and 
systems, 11%; aerospace, 10%; power generation, 8%; plastics, 6%; 
appliances, 6%; technical products and services, 5%; broadcasting, 
5% and other, 1%. (from StockSmartPro)

GE had a negative week, though it did finish slightly positive
on Friday.  We are still holding this play based on the contracts
we expect GE to get in the rebuilding of Kosovo.  Support is 
pretty strong at the $100 level and as the rebuilding news 
starts to become more frequent, we could start to see GE
reap the benefits of the news.  Currently, it seems the peace
plan is still in tact and the Serb troops are moving out.  The
cost to keep peace in Kosovo is estimated at $31 billion, with
a large chunk of this coming from the rebuilding phase. 

GE announced on Friday that a meeting with Chinese delegates
went very well and they see a lot of potential in the region.
GE would like to not only sell products to China, but also
build manufacturing plants to hire the local talent.  As with
all plays, be cautious of the market until we get further clues
on the Feds plans with interest rates.

BUY CALL JUL-100*GE-GT OI= 736 at $4.63 SL=3.25 ITM $1.34
BUY CALL JUL-105 GE-GA OI=2332 at $2.25 SL=1.00
BUY CALL SEP-100 GE-IT OI=3480 at $8.13 SL=6.25 ITM $1.34
BUY CALL SEP-105 GE-IA OI=1109 at $5.63 SL=4.25 

Picked on June 5th at $104.88    PE = 31
Change since picked     -3.54    52 week low =$ 69.00
Analysts Ratings    7-9-2-0-0    52 week high=$117.44
Last earnings  04/99 est 0.65    actual 0.65 
Next earnings  07-08 est 0.84    versus 0.74
Average daily volume = 5.22 mln.
Chart = http://quote.yahoo.com/q?s=GE&d=3m

*****

CAT - Catapillar, Inc $59.44 (-3.38)(+7.93)

Caterpillar Inc. designs, manufactures, and markets 
construction, mining, agricultural, and forestry machinery.  
The Company also manufactures engines and other related parts 
for its equipment. Caterpillar distributes its products through 
a worldwide organization of dealers. (from Bloomberg)

CAT had a negative week with the rest of the market and 
ended down over $3, with most of its losses coming on Friday
when the stock lost $2.44.  CAT is sitting right on its 50-
dma, so we need to see some positive movement and a definite
hold above this level.  We are playing CAT as a post-war
clean up play.  With Serb troops moving out of Kosovo, we
hope to see some information soon on the clean up efforts.
CAT should benefit from all the heavy equipment that will be
needed in the effort.  

Not a lot of news to report on CAT, but it did raise its
quarterly dividend from $.30 to $.325, an 8.3% increase. 
Raising a dividend usually shows that the company feels very
confident in its future prospects.

BUY CALL JUL-55 CAT-GK OI= 102 at $6.00 SL=4.50 ITM $4.44
BUY CALL JUL-60*CAT-GL OI= 245 at $3.00 SL=1.50 
BUY CALL JUL-65 CAT-GM OI= 471 at $1.13 SL=0.00
BUY CALL AUG-60 CAT-HL OI= 650 at $4.00 SL=3.00
BUY CALL AUG-65 CAT-HM OI=1305 at $2.19 SL=1.00

Picked on June 5th at $62.81    PE = 19
Change since picked    -3.38    52 week low =$39.06
Analysts Ratings  5-2-12-0-0    52 week high=$66.44
Last earnings 04/99 est 0.42    actual 0.57 
Next earnings 07-19 est 0.85    versus 1.20
Average daily volume = 1.87 mln.
Chart = http://quote.yahoo.com/q?s=CAT&d=3m

*************
Software & Programming
*************

ORCL - Oracle Corporation $25.31 (-3.33)(+3.88)(-0.94)

Oracle is the leading independent designer, developer, and 
marketer of database management systems software.  Their 
software products allow multiple users to use the same data 
at the same time on everything from notebook computers to 
mainframes.  

We have been playing ORCL as an earnings run play, but as of
Friday, this run had not materialized.  ORCL lost over $3
this last week.  Earnings are on June 15th after the market
close, so that only gives us two days left to play the 
stock.  We have listed a June option for this reason, though
if ORCL does not move up, the time erosion will be very rapid.
ORCL is currently sitting right on its 30-dma, so wait to 
buy until upward movement is verified.  We could see a tech
bounce on Monday, but wait until after the first hour of
trading to see the actual direction.  Remember, we never
hold over earnings, so ORCL will be on the drop list on
Tuesday.

ORCL's earnings are Tuesday, after the close, and last week
many traders bet that news was going to come out that was
negative.  This was evident in the high number of puts that
were trading on the stock.  Nothing was pre-announced, so we
see this as being positive going into earnings (sort of a
contrarian viewpoint).  As always, we don't advise holding 
over earnings.

BUY CALL JUN-25 ORQ-FE OI=14410 at $1.56 SL=0.75 ITM $0.31
BUY CALL JUL-25*ORQ-GE OI= 3000 at $2.50 SL=1.25 ITM $0.31

Picked on June 3rd at $27.50    PE = 36
Change since picked    -2.19    52 week high=$41.17
Analysts Ratings 7-13-10-0-0    52 week low =$12.13
Last earnings 03/99 est 0.19    actual 0.20 
Next earnings 06-15 est 0.32    versus 0.27 
Average Daily Volume = 19.9 mln
Chart = http://quote.yahoo.com/q?s=ORCL&d=3m

*****

LGTO - Legato Systems $54.75 (-1.50)(+1.50)

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.

LGTO was up and down in this week's market; trading in a 
wide range of volume levels.  On Monday we saw a nice 
advance of $3.25 with over 1+ mln shares being traded.  
Tuesday the volume was low and LGTO closed down -1.88, but 
not before peaking at 61.13 early morning.  The descent 
continued on Wednesday pushing the stock back into its 
comfortable support of around $54.  Thursday LGTO fared 
better (but on fairly low volume) to close on the positive 
and near its daily high.  Punk, Ziegal & Co had also 
reiterated its approval of LGTO and restated its "buy" 
rating.  For the most part, the stock traded in its support 
range on Friday leaving it positioned on its 10 dma.  
Upward confirmation should be established before you 
consider beginning a new play.  The market may be on the 
upside early in the week, but expect a roll-over with all 
the anticipation of the CPI and Greenspan.  But if you do 
decide to jump in the game, there's lots of room for profit 
as resistance is way up there at the 52-week high of 
$67.75.  Remember to protect your capital and profits 
- use stops!

Legato Systems reported on Monday they had signed an  
agreement to purchase Vinca Corp for $94 mln. in stock and 
cash.  The deal will close in July.  The acquisition will 
enable Legato's customers to access data at a much faster 
pace.   This purchase, plus the recent addition of FullTime 
Software last October, puts Legato in a very profitable 
position.  They now have a leading-edge advantage for 
providing the best in data availability software solutions 
for distributed systems.

BUY CALL JUL-50 EQN-GJ OI=120 at $7.25 SL=5.50
BUY CALL JUL-55*EQN-GK OI=311 at $4.38 SL=2.75
BUY CALL JUL-60 EQN-GL OI= 35 at $2.50 SL=1.25
BUY CALL SEP-55 EQN-IK OI= 82 at $7.50 SL=5.75
BUY CALL SEP-60 EQN-IL OI=101 at $5.63 SL=4.00

Picked on May 30 at   $54.75    PE = 69
Change since picked    +0.00    52 week low =$23.50
Analysts Ratings  12-4-1-0-0    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 = 1.00 mln.
Chart = http://quote.yahoo.com/q?s=LGTO&d=3m

*****

ADPT - Adaptec Inc. $32.63 (-0.81)(-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. (profile from Hoovers)

ADPT traded negative this last week, but the chart shows
that the stock went into a consolidation phase.  This isn't
surprising considering the market is waiting for news on 
interest rates.  ADPT is still positioned very well for a 
nice jump, but could continue to consolidate until we get a
further idea of what the Fed will do.  The CPI numbers on 
Wednesday could help us out.  ADPT showed some strength on 
Friday, as the stock closed over a dollar off its low of the
day.  ADPT has support at $32, but make sure of a bounce off
this to make sure it holds.  ADPT is still the 800-lb gorilla
of its industry and when the market decides to turn and head
up, ADPT is positioned well to be a market leader.  Only
resistance is the site of ADPT's 52-week high of $35.  Wait
for stronger volume, as ADPT has been trading on one half 
its normal volume.

There isn't any recent news on ADPT, so be patient and wait
for confirmation of a move.  Confirmation would include things
like a jump on increased volume and a move up in the market.

BUY CALL JUL-30 APQ-GF OI=241 at $4.13 SL=2.75 
BUY CALL JUL-35*APQ-GG OI=303 at $1.69 SL=0.75
BUY CALL OCT-30 APQ-JF OI=344 at $6.13 SL=4.50
BUY CALL OCT-35 APQ-JG OI=122 at $3.88 SL=3.00

Picked on May 29th at $30.88    PE = 20
Change since picked    +1.75    52 week low =$ 7.88 
analysts Ratings    2-4-1-0-0    52 week high=$35.00
Last earnings 04/99 est 0.29    actual 0.36 
Next earnings 07-31 est 0.38    versus 0.10
Average daily volume = 2.34 mln
Chart = http://quote.yahoo.com/q?s=ADPT&d=3m

****

BVSN - Broadvision Inc. $59.13 (+6.62)(+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 continues to be a strong mover, though we would like to 
see better volume.  BVSN's chart is very strong with positive
MACD and its price above its 10-dma.  Be aware that there is
some resistance at $62, but if the market decides to get past
the interest rate news, BVSN should continue to new highs. 

BVSN is part of the US Bancorp Piper Jaffray Conference on
June 14th and 15th.  This could provide some positive news
that could keep the stock climbing.  There also is a move 
by e-business sites to use off-the-shelf commerce software
rather than developing their own.  This is a boon for BVSN.
Their One-to-One software is adding new functionality to 
meet these needs.  BVSN was rated a new "buy" at SG Cowen
on Friday.  Remember, the market could be range bound until 
we get a better idea of what the Fed will do with interest 
rates, so be patient.

BUY CALL JUL-55 QVB-GK OI= 25 at $ 8.63 SL= 6.25 ITM $4.13
BUY CALL JUL-60*QVB-GL OI= 23 at $ 6.25 SL= 4.75 volume=42 Fri.
BUY CALL SEP-60 QVB-IL OI=173 at $10.88 SL= 8.00 
BUY CALL SEP 65 QVB-IM OI= 77 at $ 8.88 SL= 6.25 

Picked on May 29th at $53.00    PE = 126
Change since picked    +6.13    52 week low =$ 9.25
Analysts Ratings  8-10-1-0-0    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 = 819 K
Chart = http://quote.yahoo.com/q?s=BVSN&d=3m


*************
Semiconductors
*************

AMAT - Applied Materials, Inc $65.81 (+5.00)(+5.81)

Applied Materials is the world's #1 maker of semiconductor 
wafer fabrication equipment.  They also service the 
semiconductor wafer fabrication equipment and provide all 
the spare parts for the worldwide semiconductor industry.  
Its customers include Advanced Micro Devices, Intel, 
Lucent, and Motorola.  Asia accounts for nearly 50% of 
AMAT's sales revenue. 

AMAT has been a stellar performer throughout the week.  The 
stock tacked on $5 in profits in heavy trading.  A very 
good sign.  If you were target shooting on Friday, you got 
a mid-day dip then saw a nice rise at the end of the day.   
New support seems to be forming around $62-64.  The 52-week 
high is just over the $70 mark at $71.62.   The 10 and 30 
dma's crossed this week at $58 and are now at $61 and $59, 
respectively.  Look for continued strength in the volume 
and keep a close eye on market movement.  Even though AMAT 
has been rising in a tough market, stock direction can turn 
on a dime.  Keep the stops in place; and especially next 
week with all the hoopla about the CPI, Greenspan, and the 
upcoming FOMC meeting on June 30th.

Part of AMAT's success is due Intel and Motorola's 
announcement that they will be moving to 300mm wafers 
by the year 2002 for their semi-conductor manufacturing 
process.  This equates to the need for new machines for the 
Intels of the world, thus sending lots of money towards 
Applied Materials.  Also this week, Warburg Dillon Read 
started coverage on AMAT with a coveted "buy" rating and 
set a $67 target price (lets hope they raise it soon).

BUY CALL JUL-60 ANQ-GL OI=2750 at $8.50 SL=6.50
BUY CALL JUL-65*ANQ-GM OI=3708 at $5.38 SL=3.75
BUY CALL JUL-70 ANQ-GN OI=5062 at $3.00 SL=1.50
BUY CALL OCT-65 ANQ-JM OI= 818 at $9.88 SL=7.50
BUY CALL OCT-70 ANQ-JN OI=1235 at $7.88 SL=6.00

Picked on June 6th at $60.81    PE = 43
Change since picked    +5.00    52 week high=$71.62
Analysts Ratings  16-9-2-0-0    52 week low =$21.56
Last earnings 04/99 est= .27    actual= .36 surprise=33.33%
Next earnings 08-11 est= .53    versus= .19
Average daily volume = 8.77 mln.
Chart = http://quote.yahoo.com/q?s=AMAT&d=3m

*****

TXN - Texas Instruments $127.63 (+8.75)

Texas Instruments Incorporated provides semiconductor products 
worldwide, as well as designs and supplies digital signal 
processing solutions and analog integrated circuits.  The 
Company's semiconductor products include standard logic, 
application-specific integrated circuits, reduced instruction-
set computing microprocessors, and microcontrollers. 
(from Bloomberg.com)

TXN was on fire this last week, after reports showed that the
semi-conductor industry will have better sales than originally
anticipated.  TXN rose close to $9 last week alone.  The stock
has reached a new 52-week high and its chart looks very strong.
With TXN being a leader in the industry, we see it continuing
on a positive track.  TXN has earnings in July and has plenty
of shares to do a stock split.  This is more and more likely
as TXN stays in new high territory.  TXN's last split was in
November of 1997 at around $100.  

The pertinent news for TXN and the sector is that sales in
the Asia-Pacific region increased over 9% in April over last
years same period.  Since foreign sales are very important for 
the bottom line of semi-conductor companies, this news is 
viewed very positively.  

BUY CALL JUL-125*TXN-GE OI=2175 at $ 9.75 SL= 7.25 ITM $2.63
BUY CALL JUL-130 TXN-GF OI= 611 at $ 7.38 SL= 5.75
BUY CALL OCT-125 TXN-JE OI=1156 at $17.88 SL=14.00 ITM $2.63
BUY CALL OCT-130 TXN-JF OI= 320 at $16.00 SL=12.75

Picked on June 10th at $125.75    PE = 42
Change since picked      +1.88    52 week low =$ 45.38
Analysts Ratings    11-7-5-0-1    52 week high=$128.00
Last earnings   04/99 est 0.61    actual 0.65
Next earnings   07-16 est 0.76    versus 0.35
Average daily volume = 2.83 mln. 
Chart = http://quote.yahoo.com/q?s=TXN&d=3m

*****

NVLS - Novellus Systems, Inc.  $62.94 (+6.81)

Novellus Systems Inc. manufactures, markets and services 
advanced automated wafer fabrication systems for the deposition 
of thin films within the semiconductor equipment market. In 
layman's terms, this company makes the machines that make the 
chips that provide the brain power in your computer. It focuses 
on a very important area of the process: depositing the 
insulator and conductor films during the manufacturing cycle.

After rebounding off a low of around $45 for the third time in 
2 months, NVLS is gaining momentum. This time, it has pushed 
through the $60 resistance it hit on the 2 previous tries. 
Volume has been strong even when the market is nearing record 
low volume days. NVLS is trading nicely above its 10 dma and 
a look at the technical charts shows positive signals across the 
board. After some false starts, the chip industry is continuing 
its long, slow recovery. The prospect of a global economic 
recovery is seen as inflationary, and is sending stock prices 
lower, but this sector will actually benefit from a stronger 
world economy. With the health of the chip industry improving, 
the makers of chip manufacturing equipment are recovering as 
well. In addition, Intel's recent decision to use 300-millimeter 
semiconductor wafers will require retooling and necessitate the 
purchase of new chip-making equipment. NVLS is in the right niche 
as new technology demands high quality, high speed, and 
increasingly thinner film deposition. This stock looks like it 
is near the beginning of a run.

On June 11th, NVLS unveiled Coral, its new family of low-k films, 
and Sequel, a next-generation system designed to deposit the 
films. (Look out, Applied Materials, NVLS is coming after you!)
As semiconductor companies switch over to the new 300 mm wafer 
size, they will put more chips on each wafer and pack them 
closer together. Low-k films provide the necessary barrier to 
the copper now being used on the most advanced chips. NVLS lost 
only $.06 on Friday even after the strong move up in price on 
Wednesday and Thursday which followed a new "buy" rating and a 
price target of $69. A mid-day dip provided a buying opportunity.
Semiconductors are a ray of bright light in a dark market, but 
even in this sector, remain cautious and wary of profit-taking.

BUY CALL JUL-60 NLQ-GL OI=379 at $7.38 SL=5.75
BUY CALL JUL-65 NLQ-GM OI=208 at $5.00 SL=3.25
BUY CALL SEP-65 NLQ-IM OI=146 at $9.50 SL=7.25
BUY CALL SEP-70 NLQ-IN OI= 98 at $7.13 SL=5.50

Picked on June 10th at $63.00    PE = 37
Change since picked   -$ 0.06    52 week low =$20.88 
Analysts Ratings    5-8-3-0-0    52 week high=$75.50 
Last earnings 03/99  est  .26    actual  .25 surprise=-4%
Next earnings 07-19  est  .31    versus  .46 
Average daily volume = 1.59 mln.
Chart = http://quote.yahoo.com/q?s=NVLS&d=3m

*****

LSI - LSI Logic $44.00 (+4.81)

LSI Logic -- the "system-on-a-chip" company -- designs and 
makes application-specific integrated circuits. The company's 
chips combine the microprocessor, logic, and memory functions 
of an electronic system onto a single chip. At the heart of 
LSI Logic's design process is CoreWare, the company's extensive 
library of industry-standard building blocks. Principal customers 
are manufacturers in the computer, communications, and consumer 
products industries. Electronics giant Sony accounts for about 
22% of LSI's sales. LSI Logic has operations in Canada, Hong 
Kong, Japan, the UK, and the US. About 63% of sales are outside 
the US.  (profile from Hoover's Online)

LSI posted strong gains on the week thanks to positive sector
comments.  Apparently analysts now feel that the industry 
wide downturn is ending. In fact, they expect 12.1% percent 
growth in 1999.  This is the first year of recovery since the
market turned sour in 1995.  It was comments like these that 
sent shares of LSI climbing.  The stock is now trading at levels 
not seen since July of 1997.  We feel that LSI has weathered 
the storm is in the best position to profit from renewed growth.  
The stock has put together an impressive run the past few 
sessions as it has been up on heavy volume.  Use caution 
though as it may be due for a pullback but take advantage of
any such dip as an entry point.  There are still many bumps 
in the road left for the market so be cautious in your trading.

The main news this week stems from the Semiconducter Industry
Association's forecast of growth in the sector.  The chairman 
of LSI pointed to explosive growth in the net as being the 
catalyst for higher demand.  The SIA's new forecast predicts 
revenues of $162.5 billion in worldwide chip revenue.

BUY CALL JUL-40 LSI-GH OI=2416 at $5.50 SL=3.75
BUY CALL JUL-45*LSI-GI OI=1603 at $2.69 SL=1.50
BUY CALL OCT-40 LSI-JH OI=1240 at $8.50 SL=6.50
BUY CALL OCT-45 LSI-JI OI= 837 at $5.50 SL=3.75

Picked on June 11th at $44.00    P/E = N/A
Change since picked     +0.00    52-week high=$44.38
Analysts Ratings   11-4-4-0-0    52-week low =$10.50
Last earnings 04/99 est=  .      actual= .08
Next earnings 07/99 est=  .17    versus= .
Average Daily Volume = 1.85 mln 
Chart = http://quote.yahoo.com/q?s=LSI&d=3m

*****

BRCM - Broadcom Corp. $113.00 (+15.50)

Broadcom Corporation is a leading broadband semiconductor 
company based in Irvine, CA. It develops and manufactures chips 
that enable high-speed transmission of data over existing wires 
not originally designed for digital transmission. It has 
developed integrated circuits for cable modems, high speed 
networking, satellite and terrestrial digital broadcast, and 
xDSL(digital subscriber line) application. BRCM dominates the 
broadband cable set-top box and the cable modem markets. 
Customers include 3Com, Bay Networks, Cisco Systems, General 
Instruments, Motorola, and Scientific Atlanta.

BRCM is becoming a frequent visitor to our recommended list. 
And it's no wonder, as the stock price has increased about 
fourfold since going public April 17th of last year.  BRCM's 
products are at the cutting edge of technology in the 
communications and data transmission arena. (See OIN May 9th 
and 16th for more details on its recently introduced high-speed 
ethernet chips and its acquisition of Epigram, leader in home 
networking technology.)  After some consolidation in late May, 
BRCM started climbing again and on June 10th, it eclipsed the 
high of $109.69 it had set on May 24th. It reached a new high 
of $115.13, but closed at only $107.00, still short of resistance 
at $109.69. The next day, however, it closed at $113.00 after 
reaching a new intra-day high of $117.25. BRCM just split in 
February when it traded around $120 and it is getting close to 
that price once again. This stock trades at a HUGE PE, but it 
is growing at a phenomenal rate and its price is based on 
growth. Note in the fundamentals section below that analysts' 
expectations are for $.19/share this quarter versus $.08 same 
quarter last year. That represents a 238% increase in quarterly 
earnings year over year!

NEWS: On June 8th, BRCM unveiled its second generation very-
high-speed digital subscriber line (VDSL), which will improve 
the performance and extend the reach of broadband telephony 
equipment. BRCM was featured at the Semiconductor Industry 
Radio Show in Friday. Please observe that BRCM has been up 8 days 
in a row and will be due for some profit taking at some point 
in the very near future. Because BRCM has one foot in the 
Internet sector and the other in the chip sector, it can see 
a lot of volatility, so really stay on top of any BRCM positions 
you initiate.

BUY CALL JUL-110 RDZ-GB OI= 85 at $12.75 SL=10.25
BUY CALL JUL-115*RDZ-GC OI=189 at $10.38 SL= 8.00
BUY CALL JUL-120 RDZ-GD OI=339 at $ 8.38 SL= 6.50
BUY CALL AUG-115 RDZ-HC OI= 96 at $14.88 SL=11.75

Picked on June 13th at $113.00    PE = 229
Change since picked    +$ 0.00    52 week low =$ 23.50 
Analysts Ratings     2-6-1-0-0    52 week high=$115.13 
Last earnings 03/99   est  .14    actual  .19 surprise=36%
Next earnings 07-21   est  .19    versus  .08 
Average daily volume = 2.06 mln.
Chart = http://quote.yahoo.com/q?s=BRCM&d=3m

****

CNXT - Conexant Systems $56.00 (+10.37)

Conexant supplies analog PC and fax modem chipsets and provides 
semiconductor products for a broad range of wireline and 
wireless communication application. This semiconductor company 
was spun-off from Rockwell International in December, 1998.

CNXT is on a great run that began in the beginning of the month 
and accelerated last week. The company recently said it is 
experiencing strong growth in its wireless, net work access, 
digital infotainment, and personal imaging businesses. On June 
9th, several analysts raised their earnings estimates for the 
company after it said that it expects third quarter revenue to 
grow by 15% over the prior quarter. Among them were Warberg 
Dillon Read, who raised estimates from $.11 to $.20/share (they 
also raised estimates for 1999 from $.47 to $.93 and for the 
year 2000 from $.29 to $.70); and DLJ, whose estimates for the 
quarter were raised to $.18 from $.11, with 1999 and 2000 
estimates going from $.43 to $.90 and $.28 to $.65 respectively.
Those are some big increases! Other firms upping their 
expectations include: SG Cowen, USB Piper Jaffray, Morgan 
Stanley, and BancBoston Robertson Stephens. With such a flurry 
of positive analyst coverage, how could the stock help but 
not go up? 

News is contained in the paragraph above, but we must issue a 
word of caution here. CNXT has made a BIG move up this past week 
and profit taking often follows such a move, so this play is a 
bit risky. Furthermore, CNXT has only mild support at about $45 
with firmer support around $37, so it could fall a lot in a 
correction. However, with the possibility of a market relief 
rally early in the week, we decided to add CNXT to our list
and catch a few quick points.  This play is not for everyone.
Pick your entry carefully and don't be greedy getting out. 
Use stops!

BUY CALL JUL-50 QXN-GJ OI=324 at $8.88 SL=6.75
BUY CALL JUL-55*QXN-GK OI= 51 at $6.13 SL=4.50
BUY CALL JUL-60 QXN-GL OI= 52 at $4.00 SL=2.50
BUY CALL OCT-60 QXN-JL OI=  6 at $9.25 SL=7.00 vol=250 on Fri.

Picked on June 13th at $56.00    PE = n/a
Change since picked   +$ 0.00    52 week low =$13.00 
Analysts Ratings    5-5-1-0-0    52 week high=$54.38 
Last earnings 03/99  est -.02    actual  .08 surprise=500%
Next earnings 07-19  est  .09    versus  n/a 
Average daily volume = 1.66 mln.
Chart = http://quote.yahoo.com/q?s=CNXT&d=3m




*****************************
PLAYS CONTINUED IN SECTION FOUR.
*****************************
SEE DISCLAIMER IN SECTION ONE
*****************************



*************
Electronics
*************

SDLI - SDL Inc. $57.50 (+2.19)

SDL is the ecology-minded high-tech company -- its products 
preserve bandwidth. SDL mainly sells semiconductor laser pump 
modules to companies that operate fiber-optic, cable television, 
and satellite communication networks. Its laser pump is a chief 
component in DWDM (dense wavelength division multiplexing), 
which sends up to 80 signals (and theoretically more) at 
different wavelengths back and forth across a single optical 
fiber. If you value your downloading time, this is an acronym 
worth knowing. SDL's 200 other optoelectronic devices are used 
in electronics for data storage, cancer treatment, scientific 
instrumentation, and printing. Kopp Investment Advisors owns 
a fourth of SDL.  (profile from Hoover's Online)

SDLI rallied to within a quarter of an all-time high before 
its immunity to the recent Wall Street jitters wore off.  It 
was just too good to be true.  Does anyone remember our final
thought on Thursday??  'SDLI probably can't remain immune 
forever'.  But, with that said, we aren't in that bad of 
shape.  For instance, SDLI still finished higher in a week 
where the Dow lost over 300 points.  Also it hasn't broken 
any support lines or had any negative news announcements.  
So if the markets decide to rebound early next week, which 
we think is likely, SDLI is in a nice position to make some
headway.  The key will be how investors are feeling Monday 
morning.  Let the market start trading to get a feel for the
momentum.  If lights are green, look for an entry point on 
a quick play.  It's difficult to want to stay in for too long
with the CPI and Alan Greenspan speaking.  Things will be 
volatile.  But then again, that's what makes options trading 
effective. 

In the news, there was an article last Wednesday that talked 
about new recruits that the company has hired.  In the article 
is an interesting and encouraging quote from SDL's Managing 
Director, Andy Kitchener.  He said "We are at a crucial and 
dynamic stage in the growth of the company and the addition 
of these three to our team will move us forward -- both in 
the development of the software and in the service we are able 
to offer our fast-expanding customer base."   Other than that, 
the news has been quiet recently.

**Trading Note. Be very cautious about playing options here.
Volume is very low.  If we don't see an increase in volume
soon, we'll have to drop it for lack of option activity.

BUY CALL JUL-55 QSL-GK OI=  0 at $ 9.25 SL= 7.00
BUY CALL JUL-60 QSL-GL OI=  0 at $ 5.62 SL= 3.75
BUY CALL SEP-55 QSL-IK OI= 12 at $14.62 SL=11.50
BUY CALL SEP-65 QSL-IM OI= 16 at $ 9.00 SL= 6.75

Picked on June 10th at $61.94    P/E = 123
Change since picked     -4.44    52-week high=$63.50
Analysts Ratings    6-3-0-0-0    52-week low =$ 4.06
Last earnings 04/99 est=  .      actual= .17
Next earnings 07/99 est=  .16    versus= .08
Average Daily Volume = 302 K
Chart = http://quote.yahoo.com/q?s=SDLI&d=3m

*****

TER - Teradyne, Inc. $63.31 (+1.88)(+8.63)

Teradyne is a leading maker of automatic test equipment and 
related software products used by the electronics and 
communications industries.  Companies can check their 
semiconductors, circuit boards, phone lines, networks, and 
software using TER's devices.  

TER had a positive week, though the last few trading days
the stock consolidated a bit.  Support is at $61, the site
of TER's previous resistance.  TER is not far from its 52-
week high of $66.50, but might have to wait for more news
on the interest rate story before moving above it.  The 
market will most likely continue to rise one day and drop
the next until more is known.  Hopefully, the CPI numbers
will help.  TER dropped slightly on Friday, though the 
volume was very light.  TER is also a benefactor of the 
positive news in the semi-conductor sector.  

Only news on TER is the order it received from Belgacom
for its new 4TEL II advisor application.  The order is worth
about $2 million.  This was announced on the 8th of June at
SUPERCOMM '99.  

BUY CALL JUL-60 TER-GL OI=375 at $ 7.63 SL=5.75 ITM $3.31
BUY CALL JUL-65*TER-GM OI=281 at $ 4.88 SL=3.75
BUY CALL OCT-65 TER-JM OI=375 at $10.25 SL=7.75
BUY CALL OCT-70 TER-JN OI= 25 at $ 8.25 SL=6.25

Picked on June 6th at $61.44    PE = 36
Change since picked    +1.88    52 week low =$15.00
Analysts Ratings   6-4-0-0-0    52 week high=$66.50
Last earnings 04/99 est 0.20    actual 0.20 
Next earnings 07-14 est 0.38    versus 0.46
Average Daily Volume = 1.16 mln
Chart = http://quote.yahoo.com/q?s=TER&d=3m

******

SCI - SCI Systems, Inc. $47.00 (+2.87)(+2.63)(+2.06)

SCI Systems is ranked #2 in the world as the manufacturer of 
electronic components.  (Solectron holds the pole position.)  
The company designs, manufactures, markets, distributes, and 
services products that are used in several industries.  SCI 
is often contracted by the government and companies in the 
computer, aerospace, defense, telecomm, medical, and 
entertainment businesses.  Hewlett-Packard and Apple 
are just two examples of their customers. 

SCI is still a keeper.  SCI has continued to edge a little 
higher even though its trading volume remains depressed.  
Normally SCI has an average daily volume of about 720 K, 
yet all last week the trade volume was below 300 K.  The 
stock traded in a narrow range, but SCI managed to scratch 
its way up higher for the last 3 days.  And all week SCI 
closed in the proximity of its daily highs.  A fair 
accomplishment in this restless market.  So far, it has 
found a comfort zone around $45-46 which is just above its 
10 dma of $44.  This consolidation of sorts may be an entry 
point.  If investor enthusiasm picks up and if the trade 
volumes can return to normal, we could see SCI head higher 
on momentum.  It would be nice if the market got a jump 
start next week, but be prepared anything.  Remember to 
protect your positions and use stops.

Some brief news hit the press on Monday.  SCI announced that
they have shipped their 5 millionth satellite TV receiver to
EchoStar.  SCI has been shipping receivers to DISH from the
beginning of its operations.

BUY CALL JUL-45 SCI-GI OI=743 at $4.75 SL=3.00
BUY CALL JUL-50*SCI-GJ OI=599 at $2.38 SL=1.25
BUY CALL JUL-55 SCI-GK OI=100 at $0.94 SL=0.00
BUY CALL OCT-50 SCI-JJ OI=198 at $5.25 SL=3.50
BUY CALL OCT-55 SCI-JK OI=100 at $3.50 SL=1.75

Picked on June 3rd at  $43.50    PE = 23
Change since picked     +3.50    52 week high=$59.38
Analysts Ratings   10-8-1-0-0    52 week low =$20.75
Last earnings 04/99  est 0.45    actual 0.48 
Next earnings 08-03  est 0.57    versus 0.54
Average Daily Volume = 720 K
Chart = http://quote.yahoo.com/q?s=SCI&d=3m

*****

UNPH - Uniphase Corp $144.19 (+3.88)

Uniphase Corporation makes fiber-optic telecommunications 
equipment (about 60% of sales), laser subsystems, and laser-
based semiconductor wafer inspection and analysis equipment. 
The optoelectronics company's chips are used in communications 
to increase the carrying capacity of optical fibers. Uniphase 
supplies its laser subsystems to equipment manufacturers in 
various markets, including bar code scanning, biotechnology, 
and printing. The company also makes equipment used to identify 
microscopic defects in semiconductor wafers. Uniphase, which is 
merging with Canadian rival JDS FITEL, operates in Australia, 
Germany, the Netherlands, Switzerland, the UK, and the US. About 
40% of its sales are outside the US.  (profile from Hoover's
Online)

Shares of UNPH rose this week as anticipation that a growing 
appetite for their fiber optic technology is present.  This 
helped the stock overcome a jittery market to post gains of 
almost 4 dollars on the week.  It also helped that an analyst 
from Schroder & Co. decided to initiate coverage on the company 
with an outperform rating.  Most of the news came out during 
a major telecommunications trade show in Atlanta.  Talk was of 
increased product demand by Nortel (which has also done very 
well lately) and excitement over their pending merger with JDS
Fitel.  The stock has continued to break to new highs constantly
for almost a year and each time it pauses for a pullback which
provides a good entry point.  We like the stock here for its 
strength in a weak market.  Be careful though as we are 
expecting an event filled week.  Use stops in all cases.

We touched on most relevant news in the above paragraph but 
there was also an article on Wednesday announcing a new vice-
president for the company.  But no there was no news that 
would otherwise be considered trade worthy.

BUY CALL JUL-140*UQD-GU OI=179 at $14.12 SL=11.25
BUY CALL JUL-145*UQD-GI OI= 44 at $11.50 SL= 9.00
BUY CALL SEP-145 UQD-II OI=221 at $19.00 SL=15.25
BUY CALL SEP-150 UQD-IJ OI=316 at $16.75 SL=13.50

Picked on June 11th at $144.19    P/E = 123
Change since picked      +0.00    52-week high=$155.75
Analysts Ratings     7-8-0-0-0    52-week low =$ 31.25
Last earnings 04/99 est=   .      actual= .36
Next earnings 07/99 est=   .40    versus= .
Average Daily Volume = 639 K
Chart = http://quote.yahoo.com/q?s=UNPH&d=3m


*************
Hardware
*************

XRX - Xerox Corp $58.13 (-1.43)(+3.37)

Xerox is engaged in the global document processing market.
Like Band-Aid is to an adhesive bandage and Kleenex is to a 
tissue so is Xerox to copiers.  The company integrates 
copiers, fax machines, scanners, printers, and PC software 
to create pretty much any kind of document you can imagine. 
They operate through subsidiaries Xerox Limited and Fuji 
Xerox and their fastest growing business segment is in 
digital products which accounts for nearly half of sales.

Let's be honest.  This has been a tough week in the market. 
XRX has yet to make any spectacular moves.  The only saving 
grace is just a hair under it 10 dma and hasn't had any 
significant losses.  XRX is also slightly below its near-
term support of $59-60.  The volume is strong and suggests 
some investors may be choosing to have cash in hand.  XRX 
is a prime target as it's right near its yearly high of 
63.93.  If the market does rise on Monday or Tuesday, be 
ready to get in and out of your play.  Expect that the 
market may react negatively in anticipation of the CPI and 
other news events relative to the big "I's" - Inflation and 
Interest Rates.

On Wednesday, Xerox reported they expect "revenue growth 
between 4% and 6% for the second quarter and full year" 
according to Michael Ruffolo, president of the Document 
Solutions Group (Dow Jones).  They also unveiled a new 
product, the Xerox 8855 DWS Plus, which is designed for use 
by print room managers who demand quality for complex 
printing projects.

BUY CALL JUL-55*XRX-GK OI=2540 at $5.25 SL=3.50
BUY CALL JUL-60 XRX-GL OI=1700 at $2.75 SL=1.50
BUY CALL OCT-60 XRX-JL OI= 415 at $5.88 SL=4.25
BUY CALL OCT-65 XRX-JM OI=1263 at $3.75 SL=2.25

Picked on June 6th at $59.56    PE = 22
Change since picked    -1.43    52 week high=$63.93
Analysts Ratings  10-1-3-0-0    52 week low =$39.00
Last earnings 03/99 est= .48    actual= .48
Next earnings 07/22 est= .62    versus= .54
Average daily volume = 2.29 mln.
Chart = http://quote.yahoo.com/q?s= XRX&d=3m

*****

IBM - International Business Machines $114.31 (-1.69)

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

We recently covered IBM in pre-split territory in early May 
after it blew away earnings estimates on the strength of its 
software business. Since then, it has been to $123/share and 
back down again. It now sits at short term support and (we 
believe) is ready to rebound with the Dow. Here's the idea: 
after so many days of trading lower, the Dow is due for a 
relief rally, possibly on Monday. If that happens, IBM will 
get carried higher with it. Of course, this week's coming CPI 
report will cause more caution by mid week, and the approach 
of the FOMC meeting later in the month will have investors 
quaking, but in between, there will be chances to play good, 
solid stocks like IBM.

This is not a news driven play, but an attempt to capture a 
market opportunity. Be sure to confirm the beginning of a rally 
in the Dow and in the stock before initiating a play in IBM. 
Although you don't get in at the lowest price that way, it is 
safer than blindly jumping in at the open on a Monday morning. 
Resistance is at the previously set high of $123.

BUY CALL JUL-110 IBM-GB OI=5123 at $9.00 SL=6.75
BUY CALL JUL-115*IBM-GC OI=4220 at $6.00 SL=4.25
BUY CALL JUL-120 IBM-GD OI=4845 at $3.75 SL=2.25
BUY CALL OCT-120 IBM-JD OI=4538 at $9.00 SL=6.75
BUY CALL OCT-125 IBM-JE OI=3139 at $7.13 SL=5.25

Picked on June 13th at $114.31    PE = 30
Change since picked    +$ 0.00    52 week low =$20.88 
Analysts Ratings    13-7-4-0-0    52 week high=$75.50 
Last earnings 03/99  est   .70    actual  .77 surprise=10%
Next earnings 08-09  est   .88    versus  .75 
Average daily volume = 5.75 mln.
Chart = http://quote.yahoo.com/q?s=IBM&d=3m

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

YHOO - YAHOO! Inc $135.25 (-12.19)

Yahoo! Inc is a global Internet media company that offers 
an online guide to web navigation, a branded network of 
comprehensive information, communication services, and 
shopping access to millions of users daily.  Yahoo! can lay 
claim to the top spot among Internet portals.  The Web site 
draws millions of visitors each month.  It's also one of 
the few Internet players operating in the black.  The bulk 
of Yahoo!'s revenue comes from its 3800 advertisers and 
their banners.  Presently YAHOO! is working on a deal with 
Broadcast.com which will give them access to Web-based 
audio and video.

Now I bet you're all wondering why this Internet stock is 
coming aboard our call list.  You're probably saying to 
yourself things like. . . the Internets are taking a 
beating these past couple weeks, there's rate concerns to 
ponder, what about the CPI data, and the FOMC meeting this 
month?  Well, it's all about earnings and historical 
patterns.  Typically, YHOO has had great success with its 
earnings' runs.  Take a look at the big picture on your 
charts.  Now take a closer look a 6-9 month chart - you can 
easily see a run up at the beginning of January and in 
April (4-7-99 was the last earnings report).   As of now, 
the date is set for July 7th - this will be confirmed ASAP. 
Since there's only about 3 weeks left until earnings are 
expected, we wanted to alert the Internet players.  Now may 
be the time to start looking for a solid entry point. 

Good news is officially hitting the press in the June 14th 
issue of Inter@active Week.  YAHOO! Inc has topped their 
list as the company with the most financial momentum in 
1998!  Their research was based on 4 items of criteria:  
revenue growth, operating-income growth, 1-year total 
return to shareholders, and market capitalization.  
Following YHOO is AOL, BRCM, QCOM, MSPC, CNET, DELL, 
XCIT, ASND, and NSOL.  

There's lots of potential for big profits if the play goes 
your way, but of course, there is NEVER a guarantee.  This 
play could turn us upside down & inside out and then spit 
us out just for fun.   THIS IS A HIGH INTERNET RISK PLAY.  
Those who play the Internets know all too well that danger 
and mayhem lurks in the shadows. You know the drill - keep 
the reins tight and jump out if the ship starts sinking!

BUY CALL JUL-130 YHU-GF OI= 506 at $18.63 SL=14.50
BUY CALL JUL-140*YHV-GH OI=1620 at $14.00 SL=11.25
BUY CALL JUL-150 YHV-GJ OI=1913 at $10.38 SL= 8.00
BUY CALL OCT-140 YHV-JH OI= 231 at $27.13 SL=21.00
BUY CALL OCT-150 YHV-JI OI= 402 at $23.50 SL=18.25

Picked on June 13th at $135.25    PE = 1590
Change since picked      +0.00    52 week high=$244.00
Analysts Ratings    7-12-6-0-0    52 week low =$ 27.75
Last earnings   03/99 est= .08    actual= .11 surprise=37.5%
Next earnings   07-07 est= .08    versus= .01
Average daily volume = 7.35 mln.
Chart = http://quote.yahoo.com/q?s=YHOO&d=3m


*************
Retail
*************

GPS - Gap Stores $64.94 (-2.81)(+5.19)

International specialty retailer The Gap, Inc. operates nearly 
2,500 stores in the US, UK, Canada, France, Germany, and Japan. 
The stores sell casual apparel, personal care products, and 
accessories for men, women, and children under a variety of 
brand names, including The Gap, GapKids, babyGap, Banana 
Republic, and Old Navy. The Gap designs virtually all of the 
products sold under its brand names in company-operated stores. 
The Gap stores offer extensive selections of classically-styled 
casual apparel at moderate price points. Banana Republic stores 
offer fashionable collections of dress-casual and tailored 
clothing and accessories for men and women at higher price 
points. Old Navy offers value- priced apparel, shoes, and 
accessories for adults and infants.  (profile from Baseline 
Financial Services)

GPS is now just a week away from a stock split.  The stock 
is set to go ex-dividend on June 21st.  This may be why GPS 
managed to post a gain on Friday despite nervous investors.  
This bodes well for our play.  The stock has been trading on
both sides of the 50-dma recently and the stock split may 
provide the push it needs to move firmly above it.  But our
play is revolving mainly around the upcoming split.  The 
start of the week could provide the rebound that we need in
the broad markets to ignite GPS.  Look for a quick play so 
you don't get left holding the bag if Greenspan or the CPI 
numbers decide to stir up the markets.  

There hasn't been any company specific news to report this 
week which leaves our play left to move with the industry 
and markets.

BUY CALL JUL-60 GPS-GL OI= 67 at $7.12 SL=5.25
BUY CALL JUL-65*GPS-GM OI=212 at $4.00 SL=2.50
BUY CALL SEP-65 GPS-IM OI=555 at $6.88 SL=5.25
BUY CALL SEP-70 GPS-IN OI=702 at $4.62 SL=2.75

Picked on June 06th at $67.75    P/E = 41
Change since picked     -2.81    52-week high=$77.38
Analysts Ratings    8-7-6-0-0    52-week low =$30.25
Last earnings 05/99 est=  .31    actual= .34
Next earnings 08/99 est=  .29    versus= .23
Average Daily Volume = 1.94 mln
Chart = http://quote.yahoo.com/q?s=GPS&d=3m


*************
Basic materials
*************

AA - Alcoa, Inc $63.00 (+1.06)(+6.94)

Alcoa is the world's #1 aluminum manufacturer.  They are a 
fully integrated aluminum company with about 215 operating 
locations in 31 countries.  Alcoa's operations include 
bauxite mining, alumina refining, and aluminum smelting. 
It's Principal products include alumina and its chemicals, 
automotive components, and beverage cans. 

After breaking its resistance at $61-62, AA seems to be 
finding comfortable support around $63.  Thursday it tested 
its new opposition, the yearly high of $66.93, as it traded 
above $65 for a good portion of the afternoon.  On Friday, 
the stock suffered some profit-taking on fairly moderate 
volume - AA isn't immune to the market's selling pressure. 
It's still situated above its 10 dma of $61 and the 
technicals look strong.  All week, AA has closed near its 
highs which is definitely a bullish sentiment.  But lets 
keep in mind that stocks move in cycles.  Expect some 
consolidation possibly in the next few days.   The market 
may prove to skittish next week.  Plot your strategy 
carefully and keep the stops in place.

In the news, Alcoa signed an agreement with Metal Arts thus 
giving Alcoa the license to use the MicroSmooth process in 
chrome plating aluminum auto and truck wheels.   

BUY CALL JUL-60 AA-GL OI= 408 at $5.88 SL=4.25
BUY CALL JUL-65*AA-GM OI=1014 at $3.25 SL=1.75
BUY CALL OCT-65 AA-JM OI= 475 at $6.38 SL=4.75
BUY CALL OCT-70 AA-JN OI= 719 at $4.13 SL=2.50

Picked on June 6th at $61.94    PE = 25
Change since picked    +1.06    52 week high=$66.93
Analysts Ratings   8-2-3-1-0    52 week low =$28.93
Last earnings 03/99 est= .55    actual= .60 surprise=9%
Next earnings 07-07 est= .65    versus= .62
Average daily volume = 2.43 mln.
Chart = http://quote.yahoo.com/q?s=AA&d=3m

*************
Telecom
*************

NT - Nortel Networks $83.88 (+4.75)

Nortel is a leading global provider of communications network 
solutions.  Nortel provides network and telecommunications 
equipment and related services in North America, Caribbean and 
Latin America, Europe, the Middle East, and Asia/Pacific.  
Nortel also provides products and services to the tele-
communications and cable television industries, businesses, 
universities, governments and other institutions worldwide.
(from Zacks)

NT reached a new 52-week high on Friday, before tailing off
and closing down for the day.  A little profit taking isn't
surprising after such large gains and the volume was its
lightest in 5 days.  NT has mild support at the $82 level, so a 
bounce off this point could be buyable.  NT continues to be
a player in a hot sector and recently had its price target
raised to $95 from $86 by Prudential.  

As with all plays, we need to be cautious over the next
week.  With the CPI numbers coming out Wednesday and Greenspan
speaking shortly thereafter, the market will be very weary.
The actual Fed meeting isn't until the end of the month.  If
we get a non-inflationary report from the CPI numbers, the
market could rally.  It's pretty much believed that the market
has already priced in a 25 basis point raise by the Fed.

BUY CALL JUL-80 NT-GP OI=728 at $ 7.00 SL=5.25 ITM $3.88
BUY CALL JUL-85*NT-GQ OI=905 at $ 4.50 SL=3.25
BUY CALL SEP-80 NT-IP OI=490 at $10.25 SL=7.75 ITM $3.88
BUY CALL SEP-85 NT-IQ OI=154 at $ 7.63 SL=5.75
(85's are highest current strike)

Picked on June 10th at $85.38    PE = 37
Change since picked     -1.50    52 week low = $26.81
Analysts Ratings   6-14-6-0-0    52 week high= $86.88
Last earnings  04/99 est 0.33    actual 0.33 
Next earnings  07-27 est 0.50    versus 0.41
Average daily volume = 1.86 mln.
Chart = http://quote.yahoo.com/q?s=NT&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 
****************

TMX - Telefonos de Mexico $70.81 (-4.25)(-4.88)

TMX is Mexico's equivalent to AT&T.  It has more than 9 million
phone lines and 250,000 public phones in their network.  Just
like AT&T, Telefonos de Mexico lost its monopoly in the long
distance service arena.  But it continues to dominate local 
service.  They have also begun issuing calling cards and Internet
access to add to its product lines.  Telmex has also signed a 
joint venture with Sprint to begin to exploit the U.S.-Mexico 
long distance market. 

Telmex started the week by clinging on to support at the 50-dma 
at $75.00 but it was unable to hold.  After Friday's sell off, 
the stock finished at $70.81, which was also the low for the day.  
These are all encouraging signs our play.  We want to again 
recommend that you tighten the stops to lock in your profits.  
As far as the outlook goes, Telmex is a blue-chip ADR that 
will continue to roll with the market.  Friday's weakness in 
the Dow really stung TMX as the stock fell $2.50.  It may not
sound as impressive as some of the high volatility Internet 
plays but TMX doesn't carry the same premiums either.  That 
is the beauty in a play like this.  So we are now looking for 
support around $69.00 which was a resistance point in April.  
Also the 200-dma at $56 will be support but we don't expect 
to hit that anytime soon.  If we get a relief rally after 
three weeks of selling, we would expect the $75.00 mark to 
be possible resistance.  Watch for Fed rumors to continue to 
drive the market and therefore affect our play. 

BUY PUT JUL-75*TMX-SO OI=1439 at $6.75 SL=5.00 higher Delta
BUY PUT JUL-70 TMX-SN OI=  95 at $3.75 SL=2.25

Average Daily Volume = 1.95 mln

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

*****

CVC - Cablevision Systems Corp $66.00 (-9.50)(-3.38)

CVC owns and operates cable television systems which provide 
telecommunication and entertainment services.  They operate 
primarily in the northeast areas of New York City, Boston, 
and Cleveland.  Cablevision has over 3 million subscribers 
in the NY area alone.  Through their subsidiary, Rainbow 
Media, CVC owns 80% of Madison  Square Garden, the NY Nicks 
and Rangers, and cable channels like American Movie Classics 
and Bravo.

Strong volume and a down market created profits for this 
put play as is evident throughout the week.  Monday it 
spiked down $5 in exceptionally heavy trading at 1.58 mln. 
shares exchanging hands.  Monday's descent was helped along 
by the Oregon's Federal Court Ruling regarding the imminent 
possibility that AT&T will have to let Internet companies 
have access to their cable lines.  If this ruling is 
enforced, it will cost cable companies millions in lost 
revenue.  Tuesday and Wednesday, CVC hovered right around 
its near-term resistance at $70-71 on rather low volume. 
Thursday's trading gave us a good "bearish" indication 
that it was headed towards its 200 dma at about $59 as it 
dipped down to $66.75 right near the close.  CVC gave up a 
total of $3 that day and showed strength by closing below 
resistance.   Merely driven by market sentiment and good 
volume, CVC shed almost another 2 points on Friday in a 
steady descent.  The stock is certainly positioned well 
below its 50 dma of $78-79 and the technicals are in our 
favor pointing to the negative.   However, I'd like to 
caution you.  Pick your entry points carefully and have 
you're exit plans in place.  The market may rally early in 
the week and you don't want to be caught holding the bag.

most of the volume is still in June, but there is
only 1 week left.  These are July's.

BUY PUT JUL-65 CVC-SM OI=  4 at $4.75 SL=2.75
BUY PUT JUL-70 CVC-SN OI= 32 at $7.75 SL=5.25 VOL=85 Fri.

Average daily volume = 449 K
Chart = http://quote.yahoo.com/q?s=CVC&d=3m

*****

WHR - Whirlpool Corp $62.19 (-4.94)

Whirlpool manufactures and markets major home appliances 
and related products for commercial and home use.  WHR 
ranks #2 in the world only after Sweden's Electrolux and is 
#1 in the US.  The company makes washers, dryers, 
dishwashers, dehumidifiers, microwave ovens, ranges, 
refrigerators, freezers, and air conditioners. They 
manufacture their products in 13 countries and sells them 
in 170 under brand names such as Kenmore, Sears, Whirlpool, 
KitchenAid, Roper, Inglis, and Speed Queen. 

As the stock's volume picked up to normal ranges mid-week, 
WHR began to drop.  Recently, it had found support around 
$66-67.  At the end of May, it tested its bottom resistance 
of $63-64 only to bounce back in a slight rebound.  This 
Thursday it again dipped to that range and positioned 
itself a fraction below the 50 dma.  Friday gave confirm to 
the negative direction.  WHR lost $1.50 and confirmed its
break down through its 50 dma.  Things do not look good
for this stock.  What is worse is WHR should have been
climbing as a "defensive" stock while the Dow was 
correcting.  Confirm stock direction first since the market
is likely to bounce upward on Monday.


***Again, most of the action is still in the June options,
but there is only 1 week left.  We would play July's but
volume there is terrible.  Play the Sept's unless you can
handle 5 days to expiration for June's.  Option volume
has been traditionally low for WHR.

BUY PUT SEP-60 WHR-UL OI= 72 at $4.00 SL=2.50
BUY PUT SEP-65 WHR-UM OI= 32 at $6.63 SL=4.75

Average daily volume = 468 K
Chart = http://quote.yahoo.com/q?s=WHR&d=3m

******************************
RECOMMENDED PUTS CONTINUED IN SECTION 5
******************************
SEE DISCLAIMER IN SECTION ONE
******************************





**************************
RECOMMENDED PUTS CONTINUED
**************************

ATHM - Excite At Home Corp $86.00 (-8.50)

At Home provides high-speed Internet access and other online 
services to consumers and businesses.  They use cable 
television infrastructure and leased digital communication 
lines to deliver data about 100 times faster than traditional 
telephone modems.  At Home has about 330,000 customers across 
US and Canada.  The company has access to 60 mln potential
customers in North America through already existing cable. 

At first, ATHM jumped ahead on Monday balking at the 
Portland, Oregon ruling.  As the week progressed, the 
controversial decision to give "open-season" access to all 
the internets of its cable system (currently owned by AT&T) 
put serious pressure on the stock.  ATHM has been in a 
general downtrend since the $8.26 bln. merger with the #2 
web-directory, Excite (notice the new name).  And now in 
light of the Federal ruling, its competitive edge 
relationships with AT&T and other cable companies is being 
undermined.  Recently ATHM tried to find a support level 
roughly around $120-124, but even that didn't last long.  
On strong volume, ATHM has since made a steadfast decline. 
Take a look at your charts for visual confirmation.  By 
this Friday, ATHM was in a range it had eluded since late 
December of 1998.   It lost a whopping 7.4% (-6.88) to 
close at $86.  This placed the stock just under its 200 dma 
of $91-92.  There doesn't seem to be many signs of 
recovery.  The only tid-bit came from a maintained "market 
outperform" rating from Goldman Sachs.  Remember this 
market is ferocious and will eat you alive.  Couple that 
with the fact that INTERNET PLAYS ARE HIGH RISK , 
please plan your strategy carefully.  Be patient for a 
solid entry and exit with discipline.  As always, confirm
stock direction before playing.

BUY PUT JUL-80*AHQ-SP OI=1076 at $ 8.00 SL= 6.00
BUY PUT JUL-85 AHQ-SQ OI= 462 at $10.50 SL= 7.75
BUY PUT JUL-90 AHQ-SR OI=1512 at $13.13 SL=10.25

Average daily volume = 4.18 mln.
Chart = http://quote.yahoo.com/q?s=ATHM&d=3m




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

Increasing Bond Prices Rattle Investors...


Friday, June 11

U.S. stocks closed lower on Friday as concerns about inflation
and higher interest rates continue to plague the market. The Dow
ended lower for the third straight session, closing at 10,490,
down over 300 points for the week. The 30-year Treasury bond fell
a full point and its yield jumped to 6.15%, the highest level in
almost two years. The Nasdaq composite index fell 36 points to
2448 and Internets led the way down. The S&P 500 index was 34
points lower at 1,293. Volume was very light on the NYSE at
692 million shares.

Thursday's new plays (positions/prices):

RAL   SEP30C/JUN30C  $1.43 debit (priced at 9:45 am)
MU    JUL37C/JUL40C  $1.87 debit ($1.75 during the afternoon)
OCLR  JUL15C/JUL15P  $4.12 debit (better than our target)

Ralston Purina opened about 15 minutes late, up $1, and remained
at that level for most of the day. In the late afternoon, the
stock price receded under the pressure of the bearish market.
Micron fell right from the open but the spread position held its
value throughout the session. The implied volatility on Ocular
Sciences options continued at extreme levels through mid-morning
but deflated near midday. A 20 contract position was executed in
the afternoon by one of our readers at a $4.12 debit, and that's
a favorable entry price on this speculation play. The options on
this issue are very overpriced and will shrink quickly if the
stock fails to move significantly in the next few days. Plan to
manage the position with conservation of capital as a priority.

Portfolio plays:

Unocal (UCL) continued to rally with the oil stocks allowing us
to roll forward into July with our long-term calendar spread. The
cost basis for the new position, OCT45C/JUL45C is $0.75. Primus
Telecom (PRTL) rebounded today and once again, a favorable exit
was available ($0.38 profit) for the short-term, bullish debit
spread. Our long-term straddle on Conrail (CSX) traded for $7.25
credit today; a $1.00 profit on the AUG50C/AUG50P position. Most
of the other debit straddles are still negative but the earliest
expiration is in September. Hopefully, the market will break-out
of the current (range-bound) trend long before those options
expire.

With one week until the June strike date, many of this month's
plays have returned favorable profits and we expect the last few
days to produce more winners. Our main concern this week is the
call-credit spread on Xylinx (XLNX) at $50, the calendar position
on Merrill Lynch (MER) and the LEAPS/covered call play on Proctor
& Gamble (PG).

Good Luck!

Please send questions and comments to ray@OptionInvestor.com
******************************************************************
				- NEW PLAYS -
******************************************************************
CUBE - C-Cube Microsystems  $31.93     *** Big News? ***

C-Cube Microsystems is the industry leader in the development and
delivery of highly integrated digital video silicon and systems
solutions. The semiconductor division produces these products for
the communications and consumer electronics markets, including
digital set-top boxes, VCD, and DVD.

The stock gapped-up Friday on speculation of better-than-expected
earnings and new merger rumors. Traders now expect the #1 maker of
digital video chips to top previous forecasts and some are saying
the company is a takeover candidate. 

The stock price reached $32.25, a 52-week high and its shares have
more than doubled from a low in last October. Analysts expect new
sales in their industry to rise and the company is positioned to
benefit from its leading edge technology.

Options to buy C-Cube were the second-biggest gainers in U.S.
markets and implied volatilities jumped well above recent levels.
We will use the premium disparity in the short-term options to
open a favorable (bullish) position at a small discount.

PLAY (conservative/diagonal spread):

BUY  CALL AUG-30 UQB-HF OI=1177 A=$5.37
SELL CALL JUN-35 UQB-FG OI=830  B=$0.81
INITIAL NET DEBIT TARGET=$4.38 TARGET ROI=50%

Note: In this type of spread, 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 may hold the
long-term position for future profits or sell a July call to
further reduce our debit. There are many other ways to exit this
type of position and you should review those techniques with your
broker prior to entering the play.

Chart = http://quote.yahoo.com/q?s=CUBE&d=3m
******************************************************************
CUI - Coach USA  $38.62     *** Takeover Play ***

Coach USA is the largest provider of motorcoach bus tours and
charters, airport shuttle, and taxi services in the U.S. Their
main business is providing buses for tour groups, conventions
and special events and it is  one of the largest private sector
providers of commuter and transit services in the U.S.

Coach was a big gainer last week after the company announced an
anonymous suitor had made a $1.15 billion cash offer to acquire
it. The four-year-old company, which has grown rapidly through
acquisitions, did not identify the bidder and said it would not
make any further comment until the negotiations led to a firm
agreement or were terminated. The company is a favorable merger
target because they have been aggressive in consolidating the
motor coach industry and they have improved their margins in
every quarter since they went public. Experts said a foreign
company was probably the most likely bidder as there were few
U.S. candidates that fit the buyer's profile. Britain's
Stagecoach Holdings and Canada's Laidlaw were listed as the
most likely suitors.

The offer of $42 is expected to remain firm and possibly move
even higher. With the current stock price just under $40 and
the extreme premiums for June options, there is a favorable
volatility position for those who like to speculate.

PLAY (aggressive/calendar spread):

BUY  CALL JUL-40 CUI-GH OI=220 A=$1.75
SELL CALL JUN-40 CUI-FH OI=94  B=$0.56
INITIAL NET DEBIT TARGET=$1.00 TARGET ROI=20%

Chart = http://quote.yahoo.com/q?s=CUI&d=3m
******************************************************************
REV - Revlon  $29.37     ** More Merger-Mania ***

Revlon makes and sells consumer products including cosmetics and
skin care, fragrance and personal care products; and professional
products consisting of hair and nail care products. They are the
personal products industry leader. They continue to agrressively
development new grooming ideas like Super Lustrous Haircolor and
other soon-to-be launched products such as age defying makeup and
medicated lip-color. They are also focusing on the expansion of
the Glowtion skin brightener segment into the mass market.

The company fundamentals are strong and Revlon is certainly one
of the world's best known brand names in cosmetics. It stands
for high-quality, innovative products. The company's marketing
expertise has helped to create one of the strongest cosmetics
franchises in the world and these fundamental strengths will
continue to fuel future growth.

Revlon jumped again last month on speculation that it was to be
acquired by fragrance and cosmetics maker Coty. The excitement
has since faded but there are other potential suitors for Revlon
including Procter & Gamble, France's L'Oreal and Anglo-Dutch
Unilever.

As long as the rumors remain, REV should continue to be a very
favorable position. There are some small premium disparities
in the July ITM options that will help us participate in a
bullish debit spread with a high probability of success.

PLAY (conservative/debit spread):

BUY  CALL JUL-22.50 REV-GX OI=496  A=$7.75
SELL CALL JUL-25.00 REV-GE OI=1245 B=$5.75
INITIAL NET DEBIT TARGET=$1.87 ROI(max)=33% B/E=$24.37

PLAY (aggressive/debit spread):

BUY  CALL JUL-22.50 REV-GX OI=496  A=$7.75
SELL CALL JUL-30.00 REV-GF OI=1545 B=$3.25
INITIAL NET DEBIT TARGET=$4.25 ROI(max)=76% B/E=$26.75

Chart = http://quote.yahoo.com/q?s=REV&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.
******************************************************************
SNDK - SanDisk  $32.31     *** A Nice Mover ***

SanDisk Corporation, the world's largest supplier of flash data
storage products, designs, manufactures and markets industry
standard, solid-state data, digital imaging and audio storage
products using its patented, high density flash memory and
controller technology.

SanDisk's CompactFlash memory cards have a dominant market share,
in the small but fast-growing digital camera industry. The new
designs have been the key to success, since the cameras must be
built to work with a specific type of flash memory. SanDisk has
licensed its CompactFlash technology to some chip companies and
a majority of major camera makers.

Last week, Sandisk started moving again, even in the wake of the
broad sell-off in tech stocks. There was no news to explain the
move but the stock has been volatile in the past without any
apparent reason. Last year, the stock suffered a brutal beating
only to rebound dramatically in recent months. This type of
extreme movement should help us profit from the purchase of a
neutral position.

We will play two opposing, in-the-money options and trade the
play initially like a straddle, hoping to profit from a severe
movement in the next few months.

PLAY (conservative/debit straddle):

BUY CALL OCT-30 SWQ-JF OI=74  A=$6.50
BUY PUT  OCT-35 SWQ-VG OI=101 A=$6.25
INITIAL NET DEBIT TARGET=$12.50 TARGET ROI=25%

Chart = http://quote.yahoo.com/q?s=SNDK&d=3m
******************************************************************
COHR - Coherent  $17.00     *** Another Probability Play ***

Coherent is recognized as a world leader in the manufacture and
marketing of laser systems for medical, scientific and commercial
applications. The company also designs precision optics and other
related accessories used in medical applications; ophthalmology,
obstetrics and gynecology, and aesthetic surgery.

The company recently announced that the Novus® Verdi® Diode Pumped
Green Photocoagulator received clearance from the U.S. Food & Drug
Administration for ophthalmic use; an anticipated introduction of
a fully solid state green photocoagulator to the market. (huh?)

The refined optical design of this fiber based laser delivery
device offers ophthalmologists a new technology choice for
treating patients with sight threatening retinal diseases and
glaucoma.

Sounds pretty cool but far too complicated for me. This play is
simply based on cheap options and a high probability of the stock
reaching either of the break-even targets in the next few months.

PLAY (conservative/debit straddle):

BUY CALL NOV-17.50 HRQ-KW OI=202 A=$1.87
BUY PUT  NOV-17.50 HRQ-WW OI=0   A=$2.68
INITIAL NET DEBIT TARGET=$4.37 TARGET ROI=25%

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


Please send questions and comments to:

ray@OptionInvestor.com



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



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

Covered Calls And LEAPS...

With the recent uncertainty in the market, we have received an
increasing number of requests for information on covered-calls
with LEAPS. Here is an explanation of the basic concepts and
common trading techniques that will help you profit from this
conservative, long-term strategy.

LEAPS can be an ideal investment medium for the option trader who
expects long-term growth in an underlying stock but does not want
to make the substantial capital outlay required for entering a
long-term position in the stock. With expiration dates months or
even years in the future, time decay occurs very slowly for LEAPS.
Buying LEAPS is an effective way to benefit from a stock's price
movement without incurring the risk associated with an outright
stock purchase. It is also an excellent option strategy that finds
the happy medium between aggressive, short-term option trading and
an outright purchase of the underlying issue.

Covered call writing is a stock options trading strategy that some
investors use when they are looking for a conservative risk/return
profile, while maintaining a meaningful profit potential in either
bullish or bearish market environments. An investor will generally
want to write a covered call to generate income, collecting the
premium for the sale of the option against a stock in his or her
portfolio. This strategy can also be used with LEAP options but it
differs because it does not involve the ownership of shares of the
underlying stock; the LEAP is substituted for the long position.

The strategy is basically a calendar spread...

Calendar spreads (time spreads) involve the sale of one option and
the purchase of a more distant option, generally both with the
same strike price. The basic strategy implies a neutral philosophy
based on the fact that time will erode the value of the near-term
option at a faster rate than it will the far-term option. There is
the additional benefit that comes from writing calls against the
long position each month, thus lowering the overall cost basis of
the LEAP.

Ideally, the investor would like to have the stock price finish
just below the sold strike price when the near-term call expires.
However, if the short-term position is in-the-money the last day
of the strike period, you just buy it back so that you don't have
to exercise the LEAP to cover your obligation; that would defeat
the purpose of the strategy. At the beginning of each new strike
period, you sell the next month's call to further reduce the cost
basis of the LEAP.

Larry McMillan's book, "Options As A Strategic Investment" has
some excellent information on calendar spreads and other 'time
selling' strategies.

Good Luck!
******************************************************************
SUMMARY OF PREVIOUS PICKS (1 Week until June expiration)
******************************************************************
Stock  Price  Last    Mon  Strike  Opt   Profit    ROI   Monthly
Sym    Picked Price        Price   Bid   /Loss           ROI

CPU     8.06   8.44   Jun   7.50  1.13  *$  0.57   8.2%  11.9%
DRYR   15.44  16.25   Jun  15.00  1.19  *$  0.75   5.3%  11.4%
VTEL    5.16   4.75   Jun   5.00  1.13   $  0.72  17.9%  11.1%
THNK   15.06  16.13   Jun  12.50  3.50  *$  0.94   8.1%   8.8%
MCOM    8.75  10.81   Jun   7.50  1.75  *$  0.50   7.1%   7.8%
CERN   20.13  18.81   Jun  17.50  3.50  *$  0.87   5.2%   7.6%
SKYT   20.88  21.19   Jun  17.50  4.75  *$  1.37   8.5%   7.4%
MCOM    9.31  10.81   Jun   7.50  2.50  *$  0.69  10.1%   7.3%
MCNS   13.88  13.00   Jun  10.00  4.63  *$  0.75   8.1%   7.0%
NRES   20.50  20.00   Jun  20.00  1.38   $  0.88   4.6%   6.7%
PAX    12.81  12.50   Jun  10.00  3.38  *$  0.57   6.0%   6.6%
EGRP   37.69  37.75   Jun  32.50  6.13  *$  0.94   3.0%   6.5%
CERN   19.25  18.81   Jun  17.50  2.25  *$  0.50   2.9%   6.4%
OMPT   17.06  18.00   Jun  15.00  3.25  *$  1.19   8.6%   6.2%
XCED   22.00  20.38   Jun  17.50  5.63  *$  1.13   6.9%   6.0%
RMDY   19.19  19.94   Jun  17.50  2.31  *$  0.62   3.7%   5.3%
XCED   20.06  20.38   Jun  15.00  5.75  *$  0.69   4.8%   5.2%
IDXC   23.94  22.63   Jun  20.00  4.63  *$  0.69   3.6%   5.2%
PAMC   34.25  26.50   Jun  22.50 13.00  *$  1.25   5.9%   5.1%
VIRS   17.31  17.06   Jun  15.00  3.13  *$  0.82   5.8%   5.0%
GCO    12.44  12.69   Jun  10.00  2.88  *$  0.44   4.6%   5.0%
CYOE    8.31   7.06   Jun   7.50  1.56   $  0.31   4.6%   5.0%
GCTI   20.25  22.50   Jun  17.50  3.50  *$  0.75   4.5%   4.9%
MXWL   22.75  21.13   Jun  20.00  3.38  *$  0.63   3.3%   4.7%
BEAS   17.25  23.38   Jun  15.00  3.00  *$  0.75   5.3%   4.6%
TWRS   20.56  18.88   Jun  17.50  4.00  *$  0.94   5.7%   4.1%
COMS   28.63  25.81   Jun  25.00  4.75  *$  1.12   4.7%   4.1%
PAIR   15.06  11.88   Jun  12.50  3.25   $  0.07   0.6%   0.4%
MCNS   18.25  13.00   Jun  15.00  4.50   $ -0.75  -5.5%   0.0%
TOY ** 23.50  20.25   Jun  22.50  2.00   $ -1.25  -5.8%   0.0%
VVUS**  4.75   3.56   Jun   5.00  0.63   $ -0.56 -13.6%   0.0%
--------------------------------------------------------------
CYOE    7.38   7.06   Jul   7.50  1.00   $  0.68  10.7%   7.7%
VLNC    7.50   7.00   Jul   7.50  1.13   $  0.63   9.9%   6.1%
CPU     8.38   8.44   Jul   7.50  1.44  *$  0.56   8.1%   5.8%
NOVT   25.19  24.75   Jul  22.50  4.25  *$  1.56   7.4%   5.4%
AVIR   22.75  25.06   Jul  20.00  4.13  *$  1.38   7.4%   5.4%
AAC     7.69   8.00   Jul   7.50  0.69  *$  0.50   7.1%   5.2%
CBTSY  16.50  17.44   Jul  15.00  2.44  *$  0.94   6.7%   4.8%
PTEK   15.44  13.31   Jul  12.50  3.75  *$  0.81   6.9%   4.3%

** You may consider closing TOY and VVUS

Previously dropped: DMRK, SATH (Both are currently positive)

-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

ATML   23.69  Jun 22.50  AQT FX  1.56  1398  22.13   1.67%   1.67%
SAVLY  16.88  Jun 15.00  QVY FC  2.19  5041  14.69   2.11%   2.11%
------------------------------------------------------------------
ARTT   14.69  Jul 12.50  AOQ GV  2.75  190   11.94   4.69%   4.69%
CAST   15.94  Jul 15.00  ZQR GC  1.88  10    14.06   6.69%   6.69%
DUSA    9.75  Jul  7.50  QDU GU  2.56  10     7.19   4.31%   4.31%
KMET   20.88  Jul 20.00  KQE GD  2.06  12    18.82   6.27%   6.27%
NMSS    8.13  Jul  7.50  YYQ GU  1.38  118    6.75  11.11%  11.11%
PILL   13.88  Jul 12.50  PQQ GV  2.13  264   11.75   6.38%   6.38%
TKLC   12.06  Jul 10.00   KQ GB  2.75  120    9.31   7.41%   7.41%
******************************************************************
Sequenced by Return Called 
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym               Price  Symbol  Bid   Intr  Basis

SAVLY  16.88  Jun 15.00  QVY FC  2.19  5041  14.69   2.11%   2.11%
ATML   23.69  Jun 22.50  AQT FX  1.56  1398  22.13   1.67%   1.67%
------------------------------------------------------------------
NMSS    8.13  Jul  7.50  YYQ GU  1.38  118    6.75  11.11%  11.11%
TKLC   12.06  Jul 10.00   KQ GB  2.75  120    9.31   7.41%   7.41%
CAST   15.94  Jul 15.00  ZQR GC  1.88  10    14.06   6.69%   6.69%
PILL   13.88  Jul 12.50  PQQ GV  2.13  264   11.75   6.38%   6.38%
KMET   20.88  Jul 20.00  KQE GD  2.06  12    18.82   6.27%   6.27%
ARTT   14.69  Jul 12.50  AOQ GV  2.75  190   11.94   4.69%   4.69%
DUSA    9.75  Jul  7.50  QDU GU  2.56  10     7.19   4.31%   4.31%
******************************************************************
Company Descriptions
******************************************************************
ATML - Atmel Corporation  $23.69  *** Hot Sector ***

ATML designs, develops, manufactures, and markets high performance
non-volatile memory and logic integrated circuits using its metal-
oxide semiconductor technologies. Atmel was upgraded in early May
and recently moved above technical resistance on increasing volume.
A short term speculative play with a long term, favorable outlook.

Jun 22.50 AQT FX Bid=1.56 OI=1398 CB=22.13 RC=1.67% RNC=1.67%

Chart = http://quote.yahoo.com/q?s=ATML&d=3m
******************************************************************
SAVLY -  Saville Systems  $16.88  *** 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.
The tape has been showing strength since May with triple volume 
over the last three days; the price is now above the May high.

Jun 15.00 QVY FC Bid=2.19 OI=5041 CB=14.69 RC=2.11% RNC=2.11%

Chart = http://quote.yahoo.com/q?s=SAVLY&d=3m
******************************************************************
                         - JULY PLAYS -
******************************************************************
ARTT - Advanced Radio Telecom  $14.69  *** Telecom ***

Advanced Radio provides wireless broadband telecommunications 
services using microwave transmissions in the 38GHz band of the 
radio spectrum throughout the U.S. ARTT started the latest uptrend
when Qwest Communications and nine technology investment funds 
agreed to invest $251 million, which should help to speed the 
construction of its local wireless networks. Though an upgrade 
followed, WinStar Communications (which owns a stake in ARTT) has
yet to give their support. We like the recent support from the
April/May highs; very bullish chart characteristics.

Jul 12.50 AOQ GV Bid=2.75 OI=190 CB=11.94 RC=4.69% RNC=4.69%

Chart = http://quote.yahoo.com/q?s=ARTT&d=3m
******************************************************************
CAST -  Citation Corporation  $15.94  *** Double Bottom ***

Citation Corp manufactures cast, forged and machined components 
made primarily from iron, steel and aluminum materials for the 
capital and durable goods industries. No recent news as Citation
continues its uptrend that started in April shortly before beating
estimates for the second straight quarter. CAST moved above the
neckline of the recent double bottom with volume increasing on
the successive rallies.

Jul 15.00 ZQR GC Bid=1.88 OI=10 CB=14.06 RC=6.69% RNC=6.69%

Chart = http://quote.yahoo.com/q?s=CAST&d=3m
******************************************************************
DUSA - DUSA Pharmaceuticals, Inc  $9.75   *** Drugs Are Hot! ***

DUSA Pharmaceuticals Inc. is a development stage pharmaceutical 
company engaged in the development of photodynamic therapy and 
photodiagnosis utilizing 5-aminolevulinic acid for various medical
indications. DUSA's recent uptrend stalled when news that the 
FDA would delay (for unrelated administrative reasons) until July
DUSA's presentation covering its new drug application for Levulan® 
Photodynamic Therapy. The long term outlook is still bullish and
the cost basis is below recent support.

Jul 7.50 QDU GU Bid=2.56 OI=10 CB=7.19 RC=4.31% RNC=4.31%

Chart = http://quote.yahoo.com/q?s=DUSA&d=3m
******************************************************************
KMET - KEMET Corporation  $20.88  *** Technicals Only ***

KMET and subsidiaries are engaged in the manufacture and sale of 
solid tantalum and multilayer ceramic capacitors in the worldwide 
market under the KEMET brand name. Recently announced that they
have signed a cooperative promotional agreement with NEC. KEMET
expects to begin shipping its KO Caps at the rate of 1 million 
parts per month in June, increasing to 10 million parts per month 
by the first quarter of 2000. The recent bullish technicals 
suggest that KEMET may soon test the 1997 high.

Jul 20.00 KQE GD Bid=2.06 OI=12 CB=18.82 RC=6.27% RNC=6.27%

Chart = http://quote.yahoo.com/q?s=KMET&d=3m
******************************************************************
NMSS - Natural Microsystems Corp  $8.13  *** Buy-Out Rumors ***

NMSS designs, manufactures and markets integrated hardware and 
software products which enable others to develop and implement 
Open Telecommunications applications and systems. NMSS recently
closed above its 150 dma after rebounding from the April low.
Rumors are starting to run on the message boards that Natural
Micro is ripe for a takeover. (I like the old adage - "the tape
doesn't lie") Buying pressure has been constant; volume has been
increasing during the last month.

Jul 7.50 YYQ GU Bid=1.38 OI=118 CB=6.75 RC=11.11% RNC=11.11%

Chart = http://quote.yahoo.com/q?s=NMSS&d=3m
******************************************************************
PILL - ProxyMed, Inc.  $13.88   *** New Web Site ***

ProxyMed provides healthcare electronic data interchange products 
and services to physicians, independent physician associations, 
insurance payers, pharmacies, laboratories and nursing homes. 
PILL has been consolidating after reaching a new high in April.
On Wednesday, ProxyMed announced a strategic relationship with 
Renaissance Interactive Inc. to design and develop ProxyMed's 
Physician Office Web Portal Site, ProxyMed.com, which is scheduled
to be launched later this summer. Several bullish divergence’s
and the cost basis is below the 150 dma.

Jul 12.50 PQQ GV Bid=2.13 OI=264 CB=11.75 RC=6.38% RNC=6.38%

Chart = http://quote.yahoo.com/q?s=PILL&d=3m
******************************************************************
TKLC - TEKELEC  $12.06   *** Is The Slump Over? ***

TEKELEC designs, manufactures and markets innovative switching 
solutions and diagnostic systems for the global communications
marketplace. Lots of news on acquisitions, sales, and new equip-
ment as Tekelec has rebounded from its April low. Buying pressure
has been increasing with recent volume support suggesting that a
move above the 150 dma is just around the corner.

Jul 10.00 KQ GB Bid=2.75 OI=120 CB=9.31 RC=7.41% RNC=7.41%

Chart = http://quote.yahoo.com/q?s=TKLC&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
SAVLY   16.81  Jul  17.50  QVYGW  2.38   14.13  470   645
TKLC    12.00  Jul  12.50   KQGV  1.38   11.46   90   237
CS      14.25  Jul  15.00   CSGC  1.56   10.96  310  6511
SUGN    22.25  Jul  22.50  UGQGX  2.38   10.67  100    57
REV     29.38  Jul  30.00  REVGF  3.00   10.21  130  1545
GMGC     3.69  Aug   5.00  GGQHA  0.63   16.95  110  6059
CPU      8.44  Aug  10.00  CPUHB  1.00   11.85  400  3300
PTEN     9.75  Aug  10.00  NZQHB  1.13   11.54  130  1412
SBTK    27.13  Aug  30.00  XQYHF  3.13   11.52  130   172
SAVLY   16.81  Aug  20.00  QVYHD  1.88   11.15  750   583
OMKT    12.63  Aug  15.00  OQMHC  1.38   10.89   29  2186
CYMI    23.44  Aug  25.00  CQGHE  2.44   10.40  190   487
IDTI     9.13  Aug  10.00  ITQHB  0.94   10.27   44  2037
IOM      4.31  Aug   5.00  IOMHA  0.44   10.14  270  8120





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


Trading In The 90's...You Can Be Successful!

The stock market brings together a world of traders and investors
with different expectations and goals. Many of us play stocks and
options with an opinion on which direction the market will move 
while others use spreads and combination strategies to profit
from price discrepancies between similar and related positions.
Traders buy options because they have increased leverage with
limited risk. They allow you to control an expensive stock for
a fraction of the price and the cost is limited to the price you
pay for the option. Others use options to protect existing stock
holdings and acquire new issues. Even market-makers contribute as
middlemen, buying and selling to accommodate other participants.

You may think that options trading is very risky but there are
people who make money consistently with proven strategies and
methods. They succeed by using the proper techniques and sound
money management. You can be successful but first you must define
your goals and risk - reward profile. Most investors simply want
financial independence and a comfortable standard of living. The
key is to construct favorable positions that are appropriate for
your type of portfolio and risk tolerance.

Before you begin trading options, develop a plan. After you have
specific goals in place, it is much easier to concentrate on the
strategies and trading techniques. Use the newsletter for a wide
range of candidates and narrow them down through your own "due
diligence" until you find plays that meet your requirements. Use
sound money management such as "stop loss" and "limit" orders to
maximize profits on the winners and reduce losses on plays that
don't perform as expected.

Surviving the "learning curve" to eventually profit in the market
is not easy. Most traders lose money in the beginning but being
human, they rarely talk about their failures. Listening to those
who have played the markets, it would seem that no one ever made
a losing trade. The fact is, every successful trader has his/her
share of disaster stories. What separates the successful option
trader is the ability to survive those occurrences and profit
from the experience.

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 (1 Week until June expiration)
******************************************************************
Stock  Price  Last    Mon  Strike  Opt   Profit    ROI   Monthly
Sym    Picked Price        Price   Bid   /Loss           ROI

THNK   15.00  16.13   Jun  12.50  0.69  *$  0.69  16.5%  23.9%
REV    28.13  29.38   Jun  25.00  0.94  *$  0.94  10.4%  22.5%
ALKS   25.75  25.38   Jun  22.50  0.75  *$  0.75   9.6%  20.9%
IMG     9.81   8.00   Jun   7.50  0.75  *$  0.75  27.7%  20.0%
SAVLY  15.69  16.81   Jun  12.50  0.50  *$  0.50  13.7%  19.9%
FFD    16.13  15.25   Jun  12.50  0.50  *$  0.50  13.4%  19.4%
LHSP   34.56  35.94   Jun  30.00  0.81  *$  0.81   8.0%  17.5%
CMNT   25.25  22.44   Jun  22.50  1.00   $  0.94  11.3%  16.3%
AVIR   22.75  25.06   Jun  20.00  0.50  *$  0.50   7.3%  15.9%
SATH   10.75   9.50   Jun   7.50  0.44  *$  0.44  17.0%  14.8%
BEAS   17.25  23.38   Jun  15.00  0.94  *$  0.94  16.8%  14.6%
USWB   28.56  24.88   Jun  22.50  0.81  *$  0.81  12.4%  13.5%
GSTX   12.50  11.00   Jun  10.00  0.56  *$  0.56  18.3%  13.3%
DAB    27.00  25.75   Jun  20.00  0.50  *$  0.50   8.5%  12.3%
NOVT   25.19  24.75   Jun  22.50  0.44  *$  0.44   5.6%  12.2%
QNTM   19.88  21.31   Jun  17.50  0.50  *$  0.50   8.2%  11.9%
PAMC   34.69  26.50   Jun  22.50  0.81  *$  0.81  10.5%  11.4%
URI    30.25  25.81   Jun  25.00  0.56  *$  0.56   7.6%  10.9%
SKYT   20.13  21.19   Jun  15.00  0.44  *$  0.44   9.8%  10.7%
CMOS   24.81  35.75   Jun  20.00  0.88  *$  0.88  14.7%  10.6%
PTEK   17.50  13.31   Jun  12.50  0.38  *$  0.38   9.8%  10.6%
ANSR   26.38  24.19   Jun  22.50  0.50  *$  0.50   7.0%  10.1%
UCI    24.88  25.50   Jun  22.50  0.31  *$  0.31   3.9%   8.5%
NTPA   36.25  27.00   Jun  22.50  0.56  *$  0.56   7.2%   7.8%
GMST   57.88  59.88   Jun  42.50  0.88  *$  0.88   7.1%   7.7%
IDTC   26.38  19.94   Jun  15.00  0.38  *$  0.38   6.7%   7.3%
KLAC   49.31  53.69   Jun  40.00  0.69  *$  0.69   6.2%   6.8%
LHSP   39.50  35.94   Jun  25.00  0.44  *$  0.44   5.3%   5.7%

Previously Dropped: PTVL (currently positive)

-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

VIP    24.69  Jun 22.50  VIP RX  0.44  20    22.06   5.41%
----------------------------------------------------------
CIEN   30.50  Jul 25.00  EUQ SE  0.81  558   24.19  10.79%
CUBE   32.00  Jul 25.00  UQB SE  0.56  40    24.44   8.05%
EGRP   37.81  Jul 25.00  QGR SE  0.56  833   24.44   6.89%
NRES   20.25  Jul 17.50  QNN SW  0.50  10    17.00   8.55%
PCYC   21.13  Jul 17.50  QPY SW  0.81  0     16.69  14.38%
PILL   13.88  Jul 12.50  PQQ SV  0.81  290   11.69  16.26%
REV    30.38  Jul 22.50  REV SX  0.69  51    21.81  10.20%
SBTK   27.25  Jul 20.00  XQY SD  0.94  65    19.06  14.71%
SUGN   22.75  Jul 17.50  UGQ SW  0.44  0     17.06   8.82%
******************************************************************
Sequenced by Return on Investment  
******************************************************************
Stock  Price  Mon Strike Option  Opt   Open  Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr  Basis  Expired

VIP    24.69  Jun 22.50  VIP RX  0.44  20    22.06   5.41%
----------------------------------------------------------
PILL   13.88  Jul 12.50  PQQ SV  0.81  290   11.69  16.26%
SBTK   27.25  Jul 20.00  XQY SD  0.94  65    19.06  14.71%
PCYC   21.13  Jul 17.50  QPY SW  0.81  0     16.69  14.38%
CIEN   30.50  Jul 25.00  EUQ SE  0.81  558   24.19  10.79%
REV    30.38  Jul 22.50  REV SX  0.69  51    21.81  10.20%
SUGN   22.75  Jul 17.50  UGQ SW  0.44  0     17.06   8.82%
NRES   20.25  Jul 17.50  QNN SW  0.50  10    17.00   8.55%
CUBE   32.00  Jul 25.00  UQB SE  0.56  40    24.44   8.05%
EGRP   37.81  Jul 25.00  QGR SE  0.56  833   24.44   6.89%
******************************************************************
Company Descriptions
******************************************************************
                       - ONE WEEK PLAY -
******************************************************************
VIP - VimpelCom  $24.69     *** A New Trend? ***

VimpelCom is a leading provider of cellular telecommunications in
Russia, marketing its services under the brand name "Bee Line".
VimpelCom Group operates GSM-900/1800 and Digital-AMPS cellular
networks in the Moscow License Area, which includes the City of
Moscow and the Moscow Region. The VimpelCom Group holds cellular
licenses covering approximately 70% of Russia's population. VIP
was also the first Russian Company listed on the New York Stock
Exchange. A recent transaction involving strategic ownership of
Telenor East has been completed a new technical break-out may
be on the horizon.

Jun  22.50  VIP RX  Bid=0.44  OI=20  CB=22.06  ROI=5.41%

Chart = http://quote.yahoo.com/q?s=VIP&d=3m
******************************************************************
                         - JULY PLAYS -
******************************************************************
CIEN - Ciena Corporation $30.50     *** A New Outlook! ***

CIENA's market leading optical networking systems form the core
of telecommunications networks worldwide. CIENA's networking
solutions utilize bandwidth expanding dense wavelength division
multiplexing (DWDM) technology for long-haul, short-haul and
metropolitan applications. CIENA's intelligent optical core
switch, delivers dynamic provisioning, grooming, flexible
capacity management and survivability. The company also provides
a range of engineering services for the Telecom industry. New
upgrades and a favorable technical outlook make CIEN a favorable
stock to own.

Jul  25.00  EUQ SE  Bid=0.81  OI=558  CB=24.19  ROI=10.79%

Chart = http://quote.yahoo.com/q?s=CIEN&d=3m
******************************************************************
CUBE - C-Cube Microsystems  $32.00     *** Big Mover! ***

C-Cube Microsystems is the industry leader in the development and
delivery of highly integrated digital video silicon and systems
solutions. The semiconductor division produces these products for
the communications and consumer electronics markets, including
digital set-top boxes, VCD, and DVD. The stock gapped-up on new
speculation of better-than-expected earnings and merger rumors.
A speculative play based on recent trading volume and option
interest.

Jul  25.00  UQB SE  Bid=0.56  OI=40  CB=24.44  ROI=8.05%

Chart = http://quote.yahoo.com/q?s=CUBE&d=3m
******************************************************************
EGRP - E*TRADE Group, Inc.  $37.81  *** Own This Stock ***

E*TRADE Group, Inc. is a provider of online investing services.
They are expanding their services and recently signed a deal to
merge with Telebanc (TBFC). Gomez Advisors (www.gomez.com) again
rated E*trade the number one investment service. Monday's launch
of E*Offering and the announcement of E*trade's French affiliate
CPR-E*TRADE opening its Web site did little to raise prices with
the current down Market. But the prospects look interesting as
E*trade positions itself to lead in Internet Investment services.
We think $24.44 is a great price for E*trade.

Jul 25.00 QGR SE Bid=0.56 OI=833 CB=24.44 ROI=6.89%

Chart = http://quote.yahoo.com/q?s=EGRP&d=3m
******************************************************************
NRES - Nichols Research Corp. $20.25 *** 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. Nichols is in a strong up trend from the March lows
while making acquisitions and announcing contracts. Nichols 
delivered one of the largest Federal SAP(TM) R/3 implementations 
two months ahead of schedule. Recent technicals suggest continued 
upward movement.

Jul 17.50 QNN SW Bid=0.50 OI=10 CB=17.00 ROI=8.55%

Chart = http://quote.yahoo.com/q?s=NRES&d=3m
******************************************************************
PCYC - Pharmacyclics  $21.13     *** New Drugs ***

PCYC is a pharmaceutical company developing energy-potentiating
drugs to improve radiation therapy and chemotherapy of cancer,
and to enable or improve the photodynamic therapy of certain
cancers, atherosclerotic cardiovascular disease and diseases of
the retina. Their products are ring-shaped small molecules which
are patented agents from the company's technology platform for
designing and synthesizing drugs. The texaphyrins localize in
cancer cells, atherosclerotic plaque and neovasculature, where
they can be activated by various forms of energy; X-rays, light
and chemotherapeutics, to eliminate diseased tissue.

Jul  17.50  QPY SW  Bid=0.81  OI=0  CB=16.69  ROI=14.38%

Chart = http://quote.yahoo.com/q?s=PCYC&d=3m
******************************************************************
PILL - ProxyMed, Inc.  $13.88 

ProxyMed provides healthcare electronic data interchange products
services to physicians, independent physician associations, 
insurance payers, pharmacies, laboratories and nursing homes. 
PILL has been consolidating after reaching a new high in April.
On Wednesday, ProxyMed announced a strategic relationship with 
Renaissance Interactive Inc. to design and develop ProxyMed's 
Physician Office Web Portal Site, ProxyMed.com, which is scheduled
to be launched later this summer. Several bullish divergence’s
and the cost basis is below the 150 dma.

Jul 12.50 PQQ SV Bid=0.81 OI=290 CB=11.69 ROI=16.26%

Chart = http://quote.yahoo.com/q?s=PILL&d=3m
******************************************************************
REV - Revlon  $30.38      *** Merger Rumors Abound! ***

Revlon is the 'personal products' industry leader. They continue
to develop new grooming ideas like Super Lustrous Haircolor. Other
soon-to-be launched products include age defying makeup, medicated
lip-color and the expansion of the Glowtion skin brightener segment
in the mass market. REV jumped again last month on reports that it
was to be acquired by fragrance and cosmetics maker Coty. Most of
the excitement has faded but there are other potential suitors for
Revlon including Procter & Gamble, France's L'Oreal or Anglo-Dutch
Unilever. As long as the rumors remain, REV should continue to be
a favorable stock. The recent support area is above the strike.

Jul 22.50 REV SX Bid=0.69 OI=51 CB=21.81 ROI=10.20%

Chart = http://quote.yahoo.com/q?s=REV&d=3m
******************************************************************
SBTK - Sabratek Corp. $27.25     *** Healthcare Science ***

Sabratek develops, produces and markets technologically advanced,
user-friendly, interactive therapeutic and diagnostic medical
systems. Their family of companies provide a Virtual Hospital; a
seamless system that is designed to surround the patient at any
point of care with the technology required to clinically manage
the patient's condition. The company focuses on products to allow
health care providers to lower health care costs, expand access,
and maintain quality across the continuum of care. Their recent
acquisition of LifeWatch; a provider of telephonic arrhythmia
monitoring service, will help SBTK maintain a dominant position
in the industry.

Jul  20.00  XQY SD  Bid=0.94  OI=65  CB=19.06  ROI=14.71%

Chart = http://quote.yahoo.com/q?s=SBTK&d=3m
******************************************************************
SUGN - Sugen  $22.75     *** More Drugs ***

SUGEN is a biopharmaceutical company focused on the discovery and
development of small molecule drugs, targeting specific cellular
signal transduction pathways. In addition to SU5416, SUGEN has two
other anti-cancer drugs in development: SU101 (a PDGF receptor
inhibitor) is in Phase III trials in refractory brain cancer, will
be entering Phase III in refractory prostate cancer this year, and
is in Phase II in ovarian and non-small cell lung cancers; and
SU6668, a multi-mechanism inhibitor of angiogenesis & tumor growth,
is in Phase I for the treatment of solid tumors. Lots of potential
with the recent trials and upcoming drug approvals.

Jul  17.50  UGQ SW  Bid=0.44  OI=0  CB=17.06  ROI=8.82%

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



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



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