Option Investor
Newsletter

Daily Newsletter, Sunday, 06/20/1999

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The Option Investor Newsletter            Sunday  6-20-99  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 6-18          WE 6-11           WE 6-4          WE 5-28
DOW     10855.56 +365.06 10490.50 -309.34 10799.84 +240.10  -269.54 
Nasdaq   2563.44 +115.64  2447.80 - 30.54  2478.34 +  7.82  - 49.62 
S&P-100   683.47 + 28.60   654.87 - 17.55   672.42 + 13.76  - 13.10 
S&P-500  1342.84 + 49.20  1293.64 - 34.11  1327.75 + 25.91  - 28.45 
RUT       445.05 +  7.04   438.01 -  4.32   442.33 +  3.65  - 10.46 
TRAN     3396.34 + 51.87  3344.47 -118.26  3462.73 + 47.03  -135.56 
VIX        22.34            27.01            23.45            26.38
Put/Call     .43              .64              .56              .54
******************************************************************

A triple witching Friday and a triple whoopee week!

You just cannot ask for better than we got this week. A +365 point
gain for the Dow and a +115 point gain for the Nasdaq. (Equivalent
to +500 Dow points) All this on a week where the CPI was lurking
like a Titanic size iceberg and Alan Greenspan said the Fed would
raise rates. Can you believe it? Where is the beef? Apparently it
is all on the hoof and stampeding into earnings season. Even the
new downgrade of Intel by Morgan Stanley on Friday and the highest
first hour volume on the NYSE in history did not break the market
stride. The volume was related to the triple witching but did not
move the market as an equal number of positions on both sides just
closed each other out.


 

 
In reality today could have been a good day for profit taking and
after the morning spike we did retreat into negative territory
several times before breaking the end of day tape with a last
minute surge. Every dip was met with buyers but -30 was the most
damage the sellers could do and it only lasted a moment. Almost
all sectors took part with the exception of drugs and semiconductors.
Drugs were only fractionally weak with PFE -.88, MRK -.50, SGP -.34,
BMY -.66 and WLA bucking the trend with a +1.38. 

Intel was downgraded by Morgan Stanley, making the second downgrade
in two days. Citing a manufacturing problem with .18 micron Pentium
III processors, the analyst thought the delay would change the
product mix to a lower margin ratio and impact profits. Intel at
first declined to comment but later in the day announced that they
indeed were having some challenges in yields but "it would have no
impact on their results". The damage had already been done and the
semi sector had already suffered some profit taking from their great
run the last two weeks. KLAC -1.56, LSI -.38, AMAT -2.56, NVLS -1.94,
XLNX -1.44. Minor damage only and about one days gains from last week.
We took the precaution of dropping all the semiconductor stocks
tonight just in case the pause here is not temporary. We will pick
up the leaders again once the pack turns back around.

Gillette, however took heavy fire, as traders nailed it for -5.13
after their profit warning Thursday. Gillette cited weaker global
sales but in reality analysts said things are not good under the 
shave cream and razors. Several units are losing money and repeated
efforts to jump start them are failing. Look for Gillette to continue
bleeding as analysts knick them with downgrades next week.

Things are looking up. Actually, things are looking too good. The
VIX at 22.34 has not been this low since December and indicates
that volatility is non-existent. The put/call ratio at .43 is very
low and indicates everybody is looking for a move in the same
direction. This is fine as long as nobody blinks but the calmness
will start making many old time traders skittish. The old saying
"when the VIX is low its time to go" is bound to start echoing in
the subconscious's of serious market timers. In the meantime we
are in limbo. We have a week with no serious economic reports. 
Yes, the Fed meets the following week but everyone knows what the
outcome is there. The earnings feast will be served starting in 
two weeks and traders are already salivating with anticipation.
I can find no reason not to start new positions and it scares
even a bull like me. The only excuse I could even barely see
using is possible profit taking from this week but I would view
any pullback here as a gift. 


 
The sector to watch would be the Internets. After pulling themselves
out of the depths last week they stalled on Thursday afternoon.
Several followed Yahoo's lead and peaked Thursday morning and then
pulled back in the afternoon and did nothing Friday. This could
just be natural. Some are up +$15-$20 from their lows last week
and normal end of week profit taking could have caused the stall.
Yahoo will announce earnings the second week of July and should
continue their pre-earnings run next week. If Yahoo falters then
they will all falter. Watch them for guidance. Others may move
faster once Yahoo signals the coast is clear. Doubleclick, which
has a new product coming out, Realnetworks, Amazon and of course
AOL, which we made a pick tonight. 

We added several new leverage plays tonight. ASND which is being
bought by Lucent and Honeywell which is being bought by Allied
Signal. Both are being acquired for more than one share of the
purchaser which provides a bigger bump for the acquired company.
For instance a 2 for 1 purchase would result in the company being
bought jumping $2 for every $1 the purchaser gained. Check the
plays for details. 
  
Without a global meltdown over the weekend, none is expected,
and assuming there is no catastrophic earnings warning on Monday
before the bell, then we could see 2600 on the Nasdaq again and
11,000 on the Dow. Simply incredible. The last four weeks were
rocky with sector rotation and selloffs occurring daily. Now that
reports prove that Goldilocks is alive and well and not gaining
weight, the buyers are out in force again. All is forgotten. NOT!
Those who lived through February were hopefully better traders
in the recent correction. If not then surely you will be better
in the next one. Next one? You bet! It is only a matter of time
and you can bet on it. When the earnings bloom starts to wither
in late July you need to be ready to pull in those bullish horns
again. Remember it is not going to be written in three inch 
headlines on the Wall Street Journal and Investors Business Daily
that the rally is over. It is up to all traders to recognize the
warning signs and withdraw safely. Many of our readers only think
markets go up and when markets correct they wrongly interpret is
as just bad picks on our part. Sorry folks but we all know the
market determines stock direction. The best call plays in the
world will go down when the market drops -700 points. You would be
surprised how many people who email us do not understand this 
simple point. We will try to warn you again that things are not
right in the markets. Go back to the May 18th commentary:


I would have to see a real nice uptrend in ANY stock after today before 
I would start any new plays this week. The market looks 
strong but it could be the calm before the storm. Remember we are 
up +1200 points without any significant profit taking. With earnings 
now over we have no news to drive the market. 

Advances are declining again at a rapid rate. Buyer beware! 


                                                          
Do you see the new downward tilt on this chart? Definitely, pick 
your entry points carefully and sell too soon until a new direction 
is established. 

Just superimpose July 1st (earnings month) over April 1st (earnings 
month)on the chart above and you will see what could happen starting 
in July. Yes, summer rally! But as on the chart above, when the 
earnings are over the profit taking begins. Lest you doubt me look 
at the last month on this chart again. Earnings run from April 8th
to May 15th for most. (July 8th to August 15th this time)


 
Sounds simple dosen't it? It is if you follow the rules. Remember
to trade according to our trading plan. "Only trade when the odds
are in your favor". Or as you have heard me say many times, "only
trade when profitable". Many of our readers have a different plan,
"trade whenever the market is open". There is a difference.

Have a great week, pick your entry points, sell too soon!

Jim Brown
Editor


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

Last week I wrote that I was still in Vegas at the Money Show
and had not been trading. The dip in the Nasdaq and Internet
stocks on that Friday had been too tempting and I could not
pass up making a play on Yahoo before the earnings run.
I had bought July-140 calls and sold July-125 puts. I made
a foolish statement about I could not conceive of Yahoo trading
below $125 before earnings. Boy, was I wrong. After spending
Sunday night at the tables, (studying, right?), no the gaming
tables, I woke up late Monday morning to a real shocker. The
Internets had crashed and I was without protection. I had 
failed to place my short order to cover my open put position.
With Yahoo down -$17 at $119 I was seriously in trouble. I
considered the facts. Three weeks till earnings, Internets
down -50% from highs, etc. I elected to wait until Tuesday to
cover while hoping for a dead cat bounce from the -$17
pounding on Monday. Sure enough, Tuesday morning it bounced
back up to almost $130 again. I breathed a sigh of relief
and based on the other bounces across the Internet sector
I elected to stay naked and not cover the puts by shorting
YHOO at $125 as planned. The rest as they say is history.
Yahoo continued on up to $150 on Thursday and I sold my calls
for $18 for a $4.12 profit and I am holding my puts and the
premium is decaying nicely. The calls continued up to over
$21 on Thursday but you know I sell too soon.

I did not trade the rest of the week but I am looking to 
get back into Yahoo calls on Monday if the Internets start 
moving up again. Once I see upward movement I have several
trades planned. Check out the low volume on Friday for YHOO.


Sold Calls JUL-140 YHV-GH @ $18.00 cost = $13.88

Current position:

Short YHOO Puts  JUL-125 YHU-SE @ $10.25 (current $7.25)

 


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

The Boston seminar is in full swing and the Los Angeles
seminar is next weekend. If you live in California you
should not miss it. Remember there is a money back guarantee
and you can take a spouse, sibling or friend for free. What
more could you ask for?

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 !!!!!

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/Optionetics 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 20, 1999 

Is the Summer Correction already Over?

Every year, right about this time, everybody talks about the slow 
summer months and to stay away from technology stocks. Well, we've been 
hearing about the summer slowdown for the last two months. Every year, 
it seems to be starting a little earlier. Pretty soon, we'll start 
talking about the slowdown in December/January. Anyway, this week we 
learned that interest rates will officially rise soon, and that Compaq 
and Intel will be light on their earnings. Usually, with a 1-2-3 punch 
like this, we would all be running for the exit gates, or lying on the 
mat getting a 10-second count. However, technology stocks in general 
had a great week, with the Software, Semiconductor, and Networking 
index's breaking into new 52-week highs. Not to bad.

Here at Pinnacle Capital, we are always weighing market sentiment and 
studying to see which indexes have the next potential run. We have 
mentioned in previous newsletters about particular indexes and the 
bearish sentiment that accompany them, only to see those indexes take 
off shortly afterward. The two indexes that are still extremely bearish 
based upon put/call ratios are the Nasdaq 100 and Internet. The 
Pinnacle Index for these two are .57 and .74 respectively, which 
suggests that the bears still dominate and are expecting a great drop. 
The bearish overtone is so great, that from a contrarian standpoint, 
we would expect to see a rally. When you combine the news the market 
received this week and the reaction to this news + great bearish 
sentiment for these two respective sectors + July earnings season just 
around the corner = what you get is a huge potential short covering 
with the bears getting slaughtered.  


 

 

 
Bullish Signs:

Market Volatility (VIX):  
Closed BELOW its 50-day moving average (22.54) indicating the end of 
the bears.

NWX/CWX:
Networking, and Software indexes breaking out into all-time highs.


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. 

Interest Rates:
Trading ABOVE 200dma and 5.50 Benchmark (5.95%), but below key 6% 
level.


BEARISH Signs:

 
Investor Intelligence:  
As a contrarian indicator, the percent of Bullish investors is over 
58.8% and the amount of bearish investors decrease by 2%. 


Pinnacle Index:  
Overhead resistance (OEX 680-700) did decrease but is still high 
clocking in at 16.00 suggesting that option speculators are expecting 
the market to advance higher.

Peak Open Interest:  
The contraian put-call ratio clocking in at 1.14 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        -
Tuesday, June 1          53,293        -.4%
Thursday, June 03        58,515        +9.7%  
Friday, June 04          61,255        +5%   *

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

Friday, June 19           35,225        -




Market Sentiment at a Glance
********************************************************************
                                 Friday     Tues      Thurs  
Indicator                        (6/18)    (6/22)    (6/24) Alert
********************************************************************

Pinnacle Index (OEX):          

                    (680-750)     16.0  *
Overhead Resistance (680-700)      8.7  *
Underlying Support  (645-660)      2.6  *
                    (510-660)      9.0  *

Put/Call Ratios:

CBOE Total P/C Ratio                .6  *       
CBOE Equity P/C Ratio               .4  *       
OEX P/C Ratio                      1.7  * 


Peak Open Interest (OEX):

Puts                              670   *
Calls                             670   *
P/C Ratio                          1.14 *

Market Volatility Index (VIX):	

CBOE VIX                           22.3 *



Investors Intelligence:

Bullish                         58.80%  *
Bearish                         26.60%  *



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                        (6/18)    (6/22)    (6/24)
******************************************************************

                    (680-750)     16.0  *     
Overhead Resistance (680-700)      8.7  *

OEX Close                        683.5  *
 
Underlying Support  (645-660)      2.6  *
                    (510-660)      9.0  *

 
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                (6/18)    (6/22)     (6/24)
********************************************************************


CBOE Total P/C Ratio             .61      
CBOE Equity P/C Ratio            .39      
OEX P/C Ratio                   1.69     


Peak Open Interest (OEX)
********************************************************************
                     Friday           Tues            Thurs
Strike/Contracts     (6/18)           (6/22)         (6/24)
********************************************************************


Puts                 670 / 21,014   
Calls                670 / 10,862    
Put/Call Ratio       1.14             


 

 
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        Tops                25.01 

June 18, 1999                           22.34  *


 

 
Investors Intelligence Survey
********************************************************************
                    Major             Percent     Percent
Date                Turning Point     Bullish     Bearish
********************************************************************

October 97          Bottom            22.0        48.3       
July 20, 1998       Top               52.0        24.0         
October 8, 1998     Bottom            38.5        42.7
January 11, 1999    Top               58.3        30.0
March 4, 1999       Bottom            49.1        32.5

January   6, 1999                     58.3        30.0   
January  13, 1999                     60.0        30.0   
January  20, 1999                     61.7        25.9   
January  27, 1999                     60.7        28.2   

February  3, 1999                     60.0        26.7   
February 10, 1999                     61.7        25.9   
February 17, 1999                     55.7        28.7   
February 24, 1999                     54.1        31.5   

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

April 07, 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 05, 1999                          58.1        27.6     
May 12, 1999                          56.9        31.0     
May 19, 1999                          60.9        28.7      
May 26, 1999                          61.6        27.7 
June 2, 1999                          61.6        27.7  
June 10, 1999                         58.3        28.7  
June 16, 1999                         58.8        26.3  *



 
*********************************************************
Market Posture
*********************************************************
As of Market Close – Friday, June 18, 1999 

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

DOW Industrials   10,500  11,000  10,855    Neutral   6.15  
SPX S&P 500        1,315   1,355   1,343    Neutral   6.17    
OEX S&P 100          660     690     683    Neutral   6.15  
RUT Russell 2000     435     450     445    Neutral   6.17   

NDX NASD 100       2,100   2,250   2,205    Neutral   6.17    
MSH High Tech      1,000   1,100   1,110    BULLISH   6.19  *     

                   Key Benchmarks
Technology         Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
XCI Hardware         900     920     933    BULLISH   6.17  
CWX Software         660     675     734    BULLSIH   6.17  
SOX Semiconductor    400     425     457    BULLISH   6.10               
NWX Networking       510     565     570    BULLSIH   6.19  *
INX Internet         500     600     469    BEARISH   5.20             

                   Key Benchmarks
Financial          Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
BIX Banking          680     720     690    Neutral   6.17  
XBD Brokerage        425     475     403    BEARISH   5.21             
IUX Insurance        645     660     662    BULLISH   6.17   

                   Key Benchmarks
Other              Bearish/Bullish  Last    Posture/Since  Alert
****************************************************************
RLX Retail           900     970     888    BEARISH   4.29 
DRG Drug             390     425     354    BEARISH   4.29  
HCX Healthcare       780     850     718    BEARISH   4.29  
XAL Airline          180     210     164    BEARISH   5.21      
OIX Oil & Gas        285     310     305    Neutral   5.13



Posture Alert
 
Now that Wall Street is more at ease with interest rates, the market 
is beginning to trend higher. With this latest move, we have turned 
Bullish on High Tech and Networking.

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

/members/marketposture



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

Monday: 

None scheduled

Tuesday:

BTM Schroders       6/19   Forecast:  --     Previous: 0.3%
LJR Redbook         6/19   Forecast:  --     Previous: -0.3%
API Oil Stocks      6/18   Forecast:  ---    Previous: 4.635M 

Wednesday:

None scheduled

Thursday:

Jobless Claims      6/19   Forecast:  304K   Previous: 297K 
Durable Goods Orders May   Forecast:  1.1%   Previous: -2.1%
Help Wanted Index    May   Forecast:  ---    Previous: 87.0  
Money Supply (M2)   6/17   Forecast:  ---    Previous: -$5.9B

Friday:

Real GDP  (final)   Q1     Forecast:  4.2%   Previous: 4.1%  
Existing Home Sales May    Forecast:  5.23M  Previous: 5.24M 
Univ Michigan Sent  June   Forecast:  108.9  Previous: 106.8 


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

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valuable resource.

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

http://www.interquote.com/



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

The Option Investor Newsletter              6-20-99
Sunday                   2  of  6



*************************
Option Discussion Groups
*************************

We received numerous emails entailing growth and knowledge within the first three 
months of the initial announcement of the Trading Clubs. It is exciting to see how 
profitable and how much fun all the participants are having:


Oahu, Hawii

We are up and running. Held out first meeting last month with 8 folks in attendance. 
All with diverse background of experiences. We fondly have name dout club 
Options Discussion Group or "ODG" for short. We decided to meet once a month; 
the Tues following option expiration Fri. Since last meeting, there has been many 
more inquiries. So, I expect our membership has easily doubled. Next meeting Jun 22.

Rick    shemar001@hawaii.rr.com

*******

St. George, Utah
We had our first meeting in St. George, Utah on Saturday June 5. Only three 
participants so far, but 2 other people let me know that they could not attend 
due to the fact that they were out of town, but would be interested in attending 
future meetings. We exchanged backgrounds and trading experiences/approaches. 
Two of the three people went to the Money Show in Las Vegas together, where 
they attended one of the sessions by Jim Brown. I think that it is valuable to find 
even one person who is involved in stock and options trading on a daily basis 
and it looks like we will have at least 4. We are planning to have our meetings 
on the Monday evening after options expiration's Friday. 

Jan Emming  jemming@infowest.com

*******

Alburquerque, New Mexico

The Albuquerque group is meeting every Wednesday evening. There were 9 in 
attendance last night. We have about 12 that are regular attendees. There are 2 
in the outer lying regions of New Mexico that I keep in lively discussion contact 
with by phone and email, making 14 active in New Mexico. At our discussion last 
night we reviewed some TC2000 charts consisting of individual group members 
current positions. As you might expect, several styles exist in the group, but overall 
it appears it will be a very cohesive bunch. 

Kerry J West    kerrywest@att.net

*******

Orlando FL.
The discussion group is going great. We have a meeting every sat. and have 
increased our membership from 10 to over 30 members. I'd like to thank OIN 
for making this possible. You have always had a great service but this has added 
more value . Thanks again and have a great day. 

Butch  B5706901@aol.com

*******

Boston, Massachusetts 
We're about to have our second meeting on June 23 in Boston at 280 Boylston Street, 
Chestnut Hill, from 6:30 - 10 p.m. We're hoping that the people in our group who are 
attending the OIN Seminar in Boston on June21-22 will come to the meeting the night 
after and give us a report on the seminar. Also we've invited one person in the group 
who trades at a professional day trading location to give us a presentation on what 
that's like. We've asked others to give short presentations on their main areas of focus 
re: options as well. Last meeting we had over 25 people. A person at Charles Schwab 
told me that he would tell his clients about the group if  I get him the meeting site and 
times for this next meeting. I announced it in Raging Bull, Yahoo, and Silicon Investor 
at option sites. I got several more people last time that couldn't make it but will come 
to this meeting. We have people from Maine, Rhode Island, Cape Cod and Martha's 
Vineyard coming this time. We've got novices up to professional traders with years 
of experience. Group is about equally men and women, surprisingly enough. Careers 
of the non-full time traders include meeting planners, software engineers, consultants, 
etc. We've got people from several different countries as well. One of them is coming 
this time but couldn't come last time because he was taking his finals at Harvard University!
Most people said at the last meeting that they'd like the group to be educational and 
provide a social outlet since trading/investing is often done alone. We welcome people 
from all over New England. As far as I know I don't think there is another group yet in 
New England unless it's in Conecticut. Correct me if I'm wrong. And put us in touch if 
you would with others in surrounding states in New England that might want to attend 
and don't have something in their area (or they might want to attend both!)

Best wishes,
Kim Lemaire   Contact Support


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

Index     Last   Week
Dow    10855.56 365.05
Nasdaq  2563.44 115.56
$OEX     683.47  28.60
$SPX    1342.84  49.20
$RUT     445.05   7.05
$TRAN   3396.34  51.87
$VIX      22.34  -3.72

Stock            Week

GNET     125.38  15.38  Splitting on Thursday June 24th
AOL      112.00  12.50  New, "jet is back on the runway..."
HON      123.81  10.81  New, leverage play
MOT       93.13   9.75  New, announces earnings July 13th
TLAB      68.25   9.50  New, "breakout with volume"
YHOO     144.25   9.01  High risk earnings run play
ASND     103.63   7.19  New, another leverage play
MSFT      85.00   6.87  New, decisive break out
WCOM      95.25   6.75  New, move Fri showed great strength
IBM      120.75   6.44  Once again near resistance of $123
SLR       64.06   6.37  New, consider pull-backs as buyable
GE       107.56   6.23  Kosovo's rebuilding beneficial to GE
EMC       57.56   6.19  New, earnings could meet or beat est.
NOK       86.13   5.37  Focused on "Mobile Info Society"
TXN      132.75   5.13  Possible split candidate
GTE       71.44   5.13  New, leverage play in hot sector
AA        67.56   4.57  Advancing on strong volume
SUNW      64.06   4.38  New, on the move again
NT        87.88   4.01  Could be a split candidate
FDC       49.50   3.87  New, announcements sparked a rally
TER       67.00   3.68  Dropped, affected by weak chip makers
ELNK      46.88   3.00  New, recovering quickly
CNXT      58.31   2.32  Dropped, semiconductors correcting?
ADPT      34.19   1.56  Dropped, lost wind from sails
NVLS      64.00   1.06  Dropped, semiconductors could correct
AMAT      66.63   0.82  Dropped, profit taking in semi's?
LGTO      55.00   0.26  Dropped, went South
LSI       43.88  -0.13  Dropped, vulnerable to profit taking
BRCM     111.94  -1.05  Dropped, lost ground with Intel

Puts

CLX       94.69  -6.57  Lost ground for 7 consecutive days
KMB       56.12  -3.00  New, no help with the CPI report
GM        62.81  -0.94  New, below all the major averages
MYG       66.75  -0.19  New, overvalued?
TWX       66.75   2.44  New, locked into downward pattern



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

With the bullish trend firmly in place we loaded the deck
this weekend.

CALLS:

ELNK - Earthlink 
GTE  - GTE
AOL  - AmericaOnline
EMC  - EMC Corp
SUNW - SunMicro
FDC  - First Data Corp
SLR  - Solectron
MOT  - Motorola
ASND - Ascend
MSFT - Microsoft
WCOM - MCI Worldcom
TLAB - Tellabs
HON  - Honeywell

PUTS: 

Please confirm downward motion before playing. With the
market in rally mode any beat up stock starts looking
like a value play.

MYG  - Maytag
KMB  - Kimberly Clark
TWX  - Time Warner
GM   - General Motors



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

LSI $43.88 (-0.12) The name of the game this week for 
LSI was consolidation.  After a more than 25% run up in two 
weeks, The stock was vulnerable to profit-taking.  We would 
have expected some very bullish comments from Lehman Bros. 
to hold the stock up.  On Wednesday, they raised their price 
target to $66.00 due to the potential for positive 2Q results.  
But the stock couldn't gather any strength from these comments.  
As we head into next week, all eyes will be on Micron as they 
announce earnings on Wednesday.  MU has had problems in the 
past and if they release any negative sentiment it could hamper 
the entire sector.  Considering the recent news with INTC 
we would rather not hold to a sector that needs to stop and
catch its breath.

TER $67.00 (+3.69)  On Friday, Thomas Weisel initiated 
coverage of TER with a "buy" but it wasn't enough to help 
TER head higher.  The company simply needed a breather.  
After popping up to a new all time high of $69.38 and a gain 
of $6 in the first three days of trading this past week, 
necessary profit taking put TER on the sidelines Thursday 
and Friday.  As we have mentioned before, even though TER 
isn't a chip maker itself, it closely follows the direction 
of the chip stocks.  The chip sector as a whole was 
particularly weak on Friday.  Their weakness might have 
added to the slight sell-off we saw in TER.  The problems 
with INTC might be foreshadowing a correction in the semi's 
next week.  If the semi's correct, TER is going to follow.  
Therefore, we are dropping TER as a completed successful 
play.  Since we added it back on June 6th, the stock 
price has jumped +$5.56.

NVLS $64.00 (+1.06)  We still like NVLS longer term, 
but we are concerned that the semiconductor sector may correct 
next week in sympathy with Intel. Intel had already received 
negative analyst comments on Thursday based on production delays 
in its CopperMine product (a version of Pentium III), and on a 
dip in shipments and prices, and the whole sector saw a slight 
downturn that day. On Friday, however, when Solomon Smith 
Barney downgraded Intel from "strong buy" to "outperform", the 
sector had a stronger negative reaction. Investors may fear 
that Intel will also decide to delay orders for new chip-making 
equipment from companies like NVLS. This stock rose 40% in its 
recent run and could be hurt by profit taking in a correction. 
We are dropping NVLS until we see the effect of Intel's problems. 

BRCM $111.94 (-1.06) This is another chip-maker that lost ground 
on Thursday and Friday following bad news on Intel (see NVLS 
drop). Although BRCM is in a different niche (communications) 
within the semiconductor sector, sometimes investors sell 
everything related to the stock with bad news and ask questions 
later. BRCM's decline lacked conviction as it fell on light 
volume (in fact, Friday's option expiration volume was 
positively anemic), so this stock may not experience a correction. 
A rise in the Internet sector could even help BRCM. However, it 
can be a very volatile stock, and with such a high PE, any 
correction that does occur may be large. We are dropping BRCM, 
but we will be watching it for another play.

CNXT $58.31 (+2.31)  We have decided not to recommend new plays 
on stocks in this group because there may be a correction coming 
in the semiconductors caused by Intel's problems (see NVLS drop). 
CNXT did gain $.38 on Friday, but volume was one third the 
average. If a correction does occur, CNXT could fall a long way, 
since it has risen about $20 (55%) in only 3 weeks. We are 
dropping CNXT.

LGTO $55.00 (+0.25)  We expected LGTO to be a better 
performer this week, especially on Friday. While others in 
the software sector made gains LGTO went south and lost 
$2.31.  For instance, ADBE (who just beat estimates) shot 
up $+8.69.  Currently the spark of momentum needed to climb 
to new levels is lacking.  It's time we drop this stock to 
make room for more lucrative plays.

AMAT $66.63 (+0.82)  Since we first added this stock to our 
pick list it's advanced $5.82, a 9.6% gain in just two 
weeks!  However now we think its time to profess caution.  
AMAT fell -2.56 on Friday as the chip sector ended mixed.  
Furthermore, this loss occurred in the midst of Thomas 
Weisel starting coverage on AMAT with a "buy" rating and 
setting a target price of $85.  On the other hand, this 
loss can easily be interpreted as profit-taking, but we 
believe it may be a foreshadow of what could happen over 
the next few days.  The recent downgrade on Intel, the 
mother of chip stocks, and its very publicized technical 
problems with the Pentium III have put a dark cloud over 
the whole sector.  This may prove to cause a correction in 
the semi-conductors next week.  We certainly don't want our 
readers to get ambushed so we decided to drop AMAT from our 
call list. 

ADPT $34.19 (-1.56) Uh oh.  Don't look now, but didn't we have a 
nice rally last week?  Nobody told ADPT it was suppose to go up.  
So it didn't.  The wind is coming out of the sails technically.  
MACD flattened out, RSI headed down and insider selling has 
picked up.  Volume has been average.  While we may get a small 
rise from here following market-wide profit taking, there are too 
many other good plays in which to place our capital.  Thus, we 
are dropping ADPT from the list.


PUTS: 


None Today


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

TXN - Texas Instruments
NT  - Northern Telecom
MOT - Motorola
AOL - AmericaOnline
 

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


Symbol - Stock         Splits/Date  
CSCO - Cisco Systems   2:1 06-21-99 ex-date 06-22
GPS  - The Gap         3:2 06-21-99 ex-date 06-22 
LNC  - Lincoln Natl.   2:1 06-21-99 ex-date 06-22
TAN  - Tandy Corp      2:1 06-21-99 ex-date 06-22
GNET - Go2Net          2:1 06-24-99 ex-date 06-25 Current Play
BGEN - Biogen          2:1 06-25-99 ex-date 06-28
MSPG - Mindspring      2:1 06-25-99 ex-date 06-28
KR   - Kroger          2:1 06-28-99 ex-date 06-29
PFE  - Pfizer Corp     3:1 06-30-99 ex-date 07-01 
CL   - Colgate         2:1 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
AMTD - Ameritrade      3:1 07-02-99 ex-date 07-06
TQNT - Triquent Semi   3:2 07-08-99 ex-date 07-09
VRTS - Veritas         2:1 07-08-99 ex-date 07-09
TOM  - Tommy Hilfiger  2:1 07-09-99 ex-date 07-12
CC   - Circuit City    2:1 07-15-99 ex-date 07-16
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 ! 
*******************************

GNET - Go2Net, Inc. $125.38  (+15.38)

See details in sector list

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

SUNW - Sun Microsystems $64.06 (+4.38)

See details in sector list

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

******

ELNK - Earthlink $46.88 (+3.00)

See details in sector list

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

******

FDC - First Data Corporation $49.50 (+3.87)

See details in sector list

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

******

WCOM - MCIWorldcom $95.25 (+6.75)

See details in sector list

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


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

SLR - Solectron $64.06 (+6.37)

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

SLR announced its earnings back on Monday June 14th.  It 
matched First Call estimates of $0.29.  Revenue for the 
period was up $2.2 billion, a jump of 68%.  Its net income 
for the third quarter was up 54%.  With the decent numbers 
and a conference call that was interpreted as being bullish, 
investors took the news and ran.  The company resultantly 
shot up +$6.37 in trading this past week.  Even an analyst 
downgrade couldn't dissolve the investor enthusiasm.  
Merrill Lynch cut SLR to a neutral, down from an accumulate 
but their long term rating stayed at a buy.  Looks like a 
simple "valuation" downgrade.  SLR remains a sector leader 
and traders still seem to be hot for this electronics maker.  
Although SLR remains strong, keep in mind that it has posted 
gains for 8 consecutive trading days in a row.  It could 
pull-back for at least 3 days due to stock cycling.  Remember 
that no stock moves in a straight line.  However, consider 
any pull-back as buyable if it is followed by some 
upward confirmation.  

No new news. 

BUY CALL JUL-60*SLR-GL OI=1177 at $6.38 SL=4.75 look for dip
BUY CALL JUL-65 SLR-GM OI= 192 at $3.38 SL=1.75
BUY CALL OCT-60 SLR-JL OI=  57 at $9.88 SL=7.50
BUY CALL OCT-65 SLR-JM OI= 483 at $7.38 SL=5.75

Picked on June 20th at $64.06    PE = 58
Change since picked    +$0.00    52 week low =$19.21
Analysts Ratings    6-6-6-0-0    52 week high=$64.50
Last earnings   03/99 est .21    actual .26
Next earnings   06-15 est .29    versus .21
Average Daily Volume = 1.30 mln
Chart = http://quote.yahoo.com/q?s=SLR&d=3m

****

MOT - Motorola, Inc.  $93.13 (+9.75)

Motorola is a communications/electronics giant.  It is 
fighting Nokia and Ericsson for the number one ranking among 
mobile phone makers.  Its cellular products make up close to 
40% of its sales.  But, Motorola also manufactures and sells 
other products that range from communications systems, 
semiconductors, and electronic engine controls to computer 
systems, two-way radios, and pagers.  With operations in 
approximately 40 countries, it gets close to half of its 
sales from outside the US.   

Motorola is on the move!  On Friday it reached a new all time 
high as the communications sector heated up.  $93.69 is the 
new level to beat.  MOT added a total of +$9.75 in trading for 
the week.  The company thrived with the DOW's +365 point gain 
on the week which might have provided the base for MOT's 
actions.  However, we feel there are several other reasons 
for MOT's success.  Let's start with a pact announced back on 
Monday.  Lucent and MOT reported that they are will work 
together to offer high-speed cable modem technology to cable 
operators.  On the same day, MOT also announced that June 
marks its shipment of 1 million cable subscriber devices.  
Tuesday Motorola announced that it will make a decision in 
July on Iridium, a satellite communications company.  MOT 
currently owns an 18% stake in Iridium and has to decide 
whether it will invest any more money in the company.  
Iridium's global wireless communications project hasn't been
particularly popular with investors since it has been "beset 
by troubles."(-AP)  On Wednesday Motorola said it "expects 
good growth in both the number of mobile phone users and in 
telecommunications equipment industry sales.  It also said 
that it sees the number of cellular phone users climbing to 
1 billion worldwide by 2004."(-Reuters)  What does all this 
recent information add up to?  We feel that MOT can continue 
to climb.  Now its time to add in two other factors.  MOT 
will announce its earnings on July 13th.  It is almost time 
for MOT to start making a run.  What else could MOT announce 
in the near future?  How about a split.  MOT previously split 
2:1 near the $60 level back in 1/93 and then again near the 
$100 level in 4/94.  Currently MOT is trading at the $90 level.  
We feel that MOT could announce a split at its earnings since 
it currently has 1.4 billion shares authorized and only 
603,003,474 issued.  Look for MOT to possibly continue on 
its break-out course. 

Most relevant news mentioned above. 
  
BUY CALL JUL-90 MOT-GR OI=3002 at $ 6.75 SL=5.25
BUY CALL JUL-95*MOT-GS OI=2354 at $ 3.88 SL=2.50
BUY CALL OCT-90 MOT-JR OI=1144 at $11.38 SL=8.75
BUY CALL OCT-95 MOT-JS OI= 910 at $ 8.88 SL=6.75

Picked on June 20th at $93.13    PE = N/A
Change since picked   +$ 0.00    52 week high=$93.69
Analysts Ratings  12-13-8-0-0    52 week low =$38.38
Last earnings 04/99  est 0.23    actual 0.28 
Next earnings 07-13  est 0.41    versus 0.01
Average Daily Volume = 3.45 mln 
Chart = http://quote.yahoo.com/q?s=MOT&d=3m

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





The Option Investor Newsletter          6-20-99
Sunday             Part 3 of 6

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

EMC - EMC Corp. $57.56 (+6.19) 

EMC can emcee your memory. EMC is the #1 maker (ahead of IBM) 
of mainframe computer disk memory hardware and software. The 
company makes RAID (redundant array of independent disks) 
memory storage and retrieval systems for larger mainframe 
computers as well as desktop PCs. EMC markets its memory 
products under the name Symmetrix. Other products let users 
manage remote data and share information across networks of 
different computers. EMC continues to boost its presence in 
software and related services, with an emphasis on overseeing 
a corporation's Internet data. The moves have helped EMC 
increase earnings an average of 30% annually for the last 
half-decade.  (profile from Hoover's Online)

With inflation out of the way for the time being, analysts 
are back to the topic of earnings.  And what they are saying 
is music to the market's ears.  First Call is expecting a 
tremendous 2Q for earnings reports.  The reason we mention 
this here is that EMC was one of the companies singled out 
to meet or beat expectations.  This report was the catalyst 
for a more than 12% move in the stock this week.  But we 
like the stock to move higher since EMC is still $10 off 
a new 52-week high.  If earnings are coming in strong we 
could reach that point in no time.  The stock broke above 
resistance at the 50-dma at $53.50 on Wednesday and rallied 
for the rest of the week.  Hardware stocks have performed 
well this week and IBM received an upgrade Friday lifting 
the group even higher.  But watch for a pullback after a big 
three day rise in the NASDAQ to use as an entry point.  The 
$53.50 mark is support.  But the market may confirm Monday 
that the tech rally is just beginning, in which case choose 
wisely on an entry point and use trailing stops to avoid a 
pullback.  

In the news on Wednesday, EMC has apparently overtaken 
IBM as the leading storage platform for the world's largest 
databases.  This is according to the latest edition of 
Winter Corporation's annual VLDB Survey Program Industry 
Report.  

BUY CALL JUL-55 EMB-GK OI=8022 at $5.12 SL=3.25
BUY CALL JUL-60*EMB-GL OI=5510 at $2.38 SL=1.25
BUY CALL OCT-60 EMB-JL OI=6478 at $6.75 SL=5.00
BUY CALL OCT-65 EMB-JM OI=2044 at $4.75 SL=3.00

Picked on June 20th at  $57.56    P/E = 66
Change since picked      +0.00    52-week high=$67.47
Analysts Ratings    12-4-2-0-0    52-week low =$20.78
Last earnings 04/99 est=   .20    actual= .21
Next earnings 07/99 est=   .24    versus= .18
Average Daily Volume = 6.54 mln 

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

*****

SUNW - Sun Microsystems $64.06 (+4.38)

UltraSPARCs, Netra servers, SPARCstations, and Solaris (for
Unix) are all products of Sun Microsystems.  Sun is also the
creator of the Java, a programming language designed to 
create software that can run unchanged on any kind of computer.
They are known for their saying, "The network is the computer."

SUNW is on the move again after a tame CPI report eased tension 
in the market.  After a period of consolidation for the stock, 
it now looks poised to move higher.  The CPI wasn't the only 
reason for the rally either.  Sun's CEO, Scott McNealy, spoke 
at a software conference this week to 21,000 attendees.  His 
comments were around Java and the steps they have made this 
past year against archrival Microsoft.  Oh yeah, and there is 
still a trial going too.  Any news from Washington about the 
ongoing anti-trust suit against Microsoft will keep trading 
volatile.  You can see this volatility on the chart for the 
past couple months.  But this should help in providing entry 
and exit points.  As far as the sector is concerned, things 
are heating up with both ORCL and ADBE beating the street's 
earnings forecast.  And that's not all!  We are into the final 
few trading days of the quarter, which means window dressing 
time for the fund managers.  They want to make sure their 
portfolio's top ten is made up of the first tier companies 
for publishing in the latest prospectus.  And SUNW is always 
high on the list.  So we should expect above average volume 
and market willing, more upside ahead.

There was lots of news headlines this week (like always for 
SUN).  But one to take note of has to do with the legal 
battle with MSFT.  There will be a hearing in San Jose this 
week to reverse an injunction issued against MSFT.  This is 
just small battle in the big war but one that SUNW needs 
to win.  Look for news of a ruling to affect the stock.     

BUY CALL JUL-60 SUQ-GL OI= 4283 at $6.50 SL=4.75
BUY CALL JUL-65*SUQ-GM OI= 8960 at $3.50 SL=1.75
BUY CALL OCT-65 SUQ-JM OI=10796 at $8.25 SL=6.25
BUY CALL OCT-70 SUQ-JN OI= 2737 at $6.25 SL=4.50

Picked on June 20th at   $64.06    P/E = 46
Change since picked       +0.00    52-week high=$72.50
Analysts Ratings      9-8-4-0-0    52-week low =$19.19
Last earnings 04/99 est=    .35    actual= .36
Next earnings 07/99 est=    .46    versus= .37
Average Daily Volume = 12.76 mln
Chart = http://quote.yahoo.com/q?s=SUNW&d=3m

*****

IBM - International Business Machines $120.75 (+6.44)(-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, and software, 
and they finance all of it. 

We picked up IBM last week to capture a market opportunity. We 
were looking for a quick gain in the stock during a relief rally 
at the beginning of last week. We got what we wanted and then we 
decided to stick with this play when the benign CPI and calming 
testimony from Greenspan helped send IBM higher. Earnings warning 
from Compaq and Western Digital caused only a minor dip in IBM 
on Thursday and it gained $6.44 on the week. IBM has been above 
its 10 dma for the last few trading sessions. On Friday, volume 
was very strong with the stock positive on the day (albeit a 
small gain of $.69), and there appeared to be some institutional 
buying in the volume spike at the end of the day. 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. The stock 
is once again nearing resistance at $123. It needs to show us 
that it can clear that level. 

We mentioned the new IBM 340 MB microdrive, the world's smallest 
hard drive. IBM also launched developerWorks, a new free on-line 
resource providing information for e-business developers. In 
addition, it unveiled the JTAPlchat and JavaPhone, the first 
Java telephony technologies. You will be able to use your 
computer to talk to someone on the phone. New players may wish 
to wait for IBM to clear resistance at $123.

BUY CALL JUL-115 IBM-GC OI=4889 at $ 8.75 SL= 6.50 ITM
BUY CALL JUL-120*IBM-GD OI=6241 at $ 5.38 SL= 3.75
BUY CALL JUL-125 IBM-GE OI=4947 at $ 3.13 SL= 1.50
BUY CALL OCT-125 IBM-JE OI=3234 at $ 9.38 SL= 7.00

Picked on June 13th at $114.31    PE = 30
Change since picked    +$ 6.44    52 week low =$ 53.00 
Analysts Ratings    13-7-4-0-0    52 week high=$123.00 
Last earnings 03/99  est   .70    actual  .77 surprise=10%
Next earnings 08-09  est   .88    versus  .75 
Average daily volume = 5.81 mln.
Chart = http://quote.yahoo.com/q?s=IBM&d=3m

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

YHOO - YAHOO! Inc $144.44 (+9.19)(-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 
gets nearly 31 million 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.

We have the ingredients for potentially big profits in this 
earnings' run play.   Historically, YHOO has had successful 
runs prior to earnings - look at your 6-9 month charts for 
verification.  You'll clearly see the run ups in January 
and April (the last report was on 4-7-99).   We picked up 
this stock last week when the Internets were still in the 
dumps.  We wanted to alert our Internet players to this 
trend so they could start looking for a solid entry point.  
And we're glad we did.  A sector-wide recovery has begun 
and YHOO is leading the way.  On Wednesday, the internets 
surged with double-digit gains across the board.  YHOO 
advanced an impressive $16.38!  With inflation fears 
quelled, neutral CPI data, and relatively calm projections 
by Greenspan, the road is clear. But remember, this play is 
VERY HIGH RISK and not for the faint-hearted.  This play 
needs your undivided attention for maximum success.  Simply 
setting stops may not be the answer as Internets can swing 
wide intraday causing you to get stopped out at the wrong 
time.   Technically, the Internet gauge is up 14% this week 
and YHOO itself is nicely positioned above its 10 dma of 
$140.  But there's still a big gap from its highs back in 
April.  And as always, INTERNET = VOLATILITY so be aware.   

It's confirmed.  The 2Q earnings' results will be reported 
on July 7th.  OIN never recommends holding over an 
earnings' report no matter how promising the outlook.  It's 
much too risky.  Please consider having your positions 
closed out prior to the announcement.  In the news this 
week, YAHOO! announced a marketing pact with AutoWeb.com. 
This multi-year agreement will give users direct access to 
a comprehensive auto buying service.  Just another 
reminder, even after doing all your research and planning, 
nothing is guaranteed.  Know your tolerance for risk.

BUY CALL JUL-140 YHV-GH OI=4391 at $18.38 SL=14.50
BUY CALL JUL-145 YHV-GI OI=2521 at $16.13 SL=12.75
BUY CALL JUL-150*YHV-GJ OI=5041 at $13.88 SL=11.25
BUY CALL JUL-155 YHV-GK OI= 873 at $12.13 SL= 9.75
BUY CALL OCT-150 YHV-JJ OI= 520 at $30.38 SL=23.75
BUY CALL OCT-160 YHV-JL OI= 788 at $26.75 SL=21.00

(the 140s look good if you can afford it.  Consider
buying fewer contracts but deeper in the money.  The 
ITM calls will move with the higher delta - but you
run the risk of watching them move backwards just as
fast if YHOO turns on you)

Picked on June 13th at $135.25    PE = 1563
Change since picked      +9.19    52 week high=$244.00
Analysts Ratings    7-11-6-0-0    52 week low =$ 27.75
Last earnings   03/99 est= .08    actual= .11 surprise=37.50%
Next earnings   07-07 est= .08    versus= .01
Average daily volume = 7.80 mln.
Chart = http://quote.yahoo.com/q?s=YHOO&d=3m

*****

ELNK - Earthlink $46.88 (+3.00)

EarthLink Network is an Internet Service provider(ISP) that 
offers nationwide Internet access and related value-added 
services to individual and business members. ELNK added its 
one millionth customer just before the end of 1998.

ELNK has fallen back to earth since its skyward climb earlier 
in the year. In fact, the stock lost almost two thirds of its 
value in only two months, dropping from a high of $99.38 on 
April 12th to a low of $36.75 on June 15th, as investors dumped 
Internet stocks. But valuations in this sector are much more 
reasonable now and many analysts believe they have bottomed. As 
we move into earnings season, more attention will be directed 
toward these stocks. Since its $36.75 low on Tuesday morning, 
Earthlink has soared over $10.00. It finished the week on a 
strong note by adding $4.75 on Friday and closing right near 
its high of the day. It also climbed through its 10 dma. 
Although it is still losing money, ELNK is a well-established 
ISP with a growing customer base and good revenues. Its business 
relationship with Sprint may give it the potential to reach 
millions of new customers. Losses stem from acquisition and 
costs associated with growth. ELNK is always ranked high on 
lists which rate ISPs, easily beating AOL. If the Internet 
stocks take off again, ELNK should continue to climb.

Although it had one downgrade last week, ELNK has received 
several new "buy" recommendations in the last week and a half. 
Don't forget that this is an Internet stock and it can go down 
just as fast (if not faster) than it goes up. Reread the 
paragraph above and note again the magnitude of the two month 
drop in price. This stock looks like it will continue its 
recovery next week, and it could be very lucrative, but 
volatile Internet stocks are not for everyone!

BUY CALL JUL-45 QKL-GI OI=463 at $ 6.88 SL=5.00
BUY CALL JUL-50*QKL-GJ OI=810 at $ 4.88 SL=3.00
BUY CALL OCT-50 QKL-JJ OI=192 at $10.13 SL=7.75
BUY CALL OCT-55 QKL-JK OI=191 at $ 8.75 SL=6.75

Picked on June 20th at $46.88    PE = n/a
Change since picked   +$ 0.00    52 week low =$19.50 
Analysts Ratings    3-5-1-0-0    52 week high=$99.38
Last earnings 03/99 est -0.15    actual -0.23 surprise=+35%
Next earnings 07-15 est -0.19    versus -0.19
Average daily volume = 1.25 mln.
Chart = http://quote.yahoo.com/q?s=ELNK&d=3m

*****

AOL - America Online Inc $112.00 (+12.50)

AOL is the world's #1 provider of online services with over 
17 million subscribers.  It's acquisitions in 1998 and 1999 
have given the company a 60% market share and diversity.  
CompuServe, an online service geared more to professionals, 
added its 2 million users to the AOL portfolio in 1998.  
This year AOL brought the Web navigator, Netscape, to its 
organization and is also using DIRECTV to launch an 
interactive TV service.

AOL is a favorite stock among many and a bellwether for the 
Internets.  This week it proved its leadership showing a 
12.6% gain on moderately strong volume.  As the inflation 
worries diminished, interest rate deliberation subsided, 
and the CPI report was put behind us, the Internets rallied 
full-throttle.  By Wednesday many of the stocks added double-
digits, including AOL who added $11.75.  Keith Benjamin, 
analyst for BBRS, summed it up like this...the "jet is back 
on the runway and the engines have started".  Another 
analyst from Morgan Stanley, Mary Meeker, admits its 
"difficult to pick a bottom", but thinks the "worst is 
over" for the Internets.  AOL continues to be one of her 
likes.  Presently, AOL is above support at $105 and $110.
This week's rally put its 10 dma behind it at $105.  The 
overhead resistance appears in multiples of 20.  It ascends 
like steps, first its $120, then $140, $160, to the final
barrier at the yearly high of $175.50 it hit in April.  
Look at a 6-month chart for visual application.  

On Friday, Merrill Lynch reiterated its "buy" rating, but 
offered no further comments.  Ladenburg Thalman also 
announced an upgrade on AOL from a "buy" to a "strong buy" 
and set a new target price at $180.  It would be nice to 
see this Internet go back up to that level of trading and 
perhaps split 2:1 again.  You can normally place AOL as a
split candidate above $120.  We're adding AOL to our call list 
because we believe the internets and Techs may continue to 
rally into next week.  Please use CAUTION and be aware that 
this Internet play is HIGH RISK.  The tables can turn 
quickly pushing the stock UP OR DOWN on news or sentiment 
alone.  Stops are always useful and we recommend their use, 
but remember they're difficult to utilize on stocks that 
can have large swings intraday.

BUY CALL JUL-110 AOO-GB OI=13687 at $11.00 SL= 8.75
BUY CALL JUL-115*AOO-GC OI=21301 at $ 6.75 SL= 5.00
BUY CALL JUL-120 AOO-GD OI=12622 at $ 8.25 SL= 6.50
BUY CALL OCT-115 AOO-JC OI= 1796 at $19.88 SL=15.50
BUY CALL OCT-120 AOO-JD OI= 5477 at $17.75 SL=14.00

Picked on June 20th at $112.00    PE = 218
Change since picked      +0.00    52 week high=$175.50
Analysts Ratings   22-12-1-0-0    52 week low =$ 17.25
Last earnings 03/99   est= .09    actual= .11 surprise=22.22%
Next earnings 07-26   est= .11    versus= .09
Average daily volume = 26.60 mln.
Chart = http://quote.yahoo.com/q?s=AOL&d=3m

*****

GNET - Go2Net, Inc. $125.38  (+15.38)

Go2Net, Inc. is a network of branded, technology, and community 
driven Web sites focused on personal finance, information search, 
commerce, and games.  The Company's properties include Silicon 
Investor, a financial discussion site; MetaCrawler, a search/
index guide; and HyperMart, a Web hosting service.  Other sites 
include 100hot, StockSite, PlaySite, and WebMarket. 
(from Bloomberg.com)

+5.88, not bad for a summer Friday.  GNET is turning up the 
heat now.  After the interest rate shot in the arm with a 
low CPI number, the whole sector made a drastic turnaround.
Thank goodness.  For the last 3 weeks, GNET has been hugging 
their 100 dma.  It is almost back to the good old days when
the internets all piled on double digit weeks.  Now remember,
we are only playing GNET as a short term split play.  They 
are splitting after the close on Thursday June 24th, 2:1.
Some of you may have noticed that traders seem to be selling
stocks earlier and earlier to beat the rush.  What used to 
be post-split depression has sometimes turned into day-of-
the-split depression, to now you'll see a sell off two days
ahead of the event.  We are NOT saying this is going to happen,
but we would rather play it safe and get out on Tuesday.
If you decide to hang on, be sure to keep a close eye on your
position.  Internet = Volatility and Risk.  Be careful.

In the news, GNET shareholders approved the investment of
Paul Allen.  This will bring the total investment his 
company, Vulcan Ventures, has invested to $300 million.  
Shareholders also approved an authorization to increase
shares from 50 million to 500 million.  This will give GNET
plenty of shares to due further stock splits.  Also noted
last week was CEO, Mike Ricci's comment that he was comfortable
with estimates that his company would turn a profit of 9 cents
for the third quarter.(- the Red Herring).

BUY CALL JUL-120*GQI-GD OI=697 at $18.25 SL=14.25
BUY CALL JUL-125 GQI-GE OI=125 at $16.13 SL=12.00
BUY CALL JUL-130 GQI-GF OI=167 at $13.88 SL=10.75
BUY CALL OCT-140 GQI-JH OI=231 at $24.50 SL=19.00

Picked on June 17th at $119.50   PE = 443
Change since picked      +5.88   52 week low =$  6.41 
Analysts Ratings     2-2-0-0-0   52 week high=$199.00
Last earnings   04/99 est 0.02   actual  0.07 
Next earnings   07-23 est 0.09   versus -0.03
Average daily volume = 923 K
Chart = http://quote.yahoo.com/q?s=GNET&d=3m

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

GE - General Electric $107.56 (+6.22)

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)

Last Sunday we decided to hold onto GE as a play even though 
it had finished the week down overall.  We felt that GE was a 
keeper based on the situation in Kosovo.  As you well know, 
the damages there are pretty extensive.  Kosovo's electrical 
infrastructure is wiped out.  Who will benefit from that fact?  
GE- plain and simple.  Good thing we held onto this as a play!  
GE finally made the move we were looking for.  It added an 
impressive +$6.22 on the week.  We like the fact that GE is 
now back above its 30 dma.  The minor pullback on Friday could 
be a buying opportunity.  As always, pick your entry point 
carefully.  Wait for the minor pullback to run its course 
and for GE to turn green again before opening any new plays.  
   
News:  Earlier in the week, GE's NBC announced it will invest 
further in Xoom.com.  This will bring NBC's investment to $55 
million in the company.  GE also announced a contract to build 
$600 million worth of engines for Embraer, Latin America's 
largest aircraft maker.  Also, at the aircraft show in Paris 
this past week, Boeing announced new orders for 56 aircraft 
of the 737 series.  "This was good news for GE since only it 
and Snecma make the only engine available on the 737 and 
offer A320 power plants."(-Reuters)

BUY CALL JUL-105*GE-GA OI=2524 at $5.00 SL=3.25 ITM 2.56
BUY CALL JUL-110 GE-GB OI=2813 at $2.19 SL=1.00
BUY CALL SEP-105 GE-IA OI=1282 at $8.50 SL=6.50 ITM 2.56
BUY CALL SEP-110 GE-IB OI=2836 at $6.00 SL=4.25 

Picked on June 5th at $104.88    PE = 36
Change since picked     +2.68    52 week low =$ 69.00
Analysts Ratings   7-10-2-0-0    52 week high=$117.44
Last earnings  04/99 est 0.65    actual 0.65 
Next earnings  07-09 est 0.84    versus 0.74
Average daily volume = 5.09 mln
Chart = http://quote.yahoo.com/q?s=GE&d=3m

*****

HON - Honeywell Inc $123.81 (+10.81)

Honeywell is a leading maker of control systems and components 
for the home and industry, including the aerospace and aviation 
sectors.  For example, they develop and supply the advanced-
technology products for building automation, safety systems 
for fire and security, and services designed to conserve 
energy, protect the environment, and improve productivity. 
Honeywell operates manufacturing facilities worldwide and 
international sales account for about 40% of total revenue. 

Another LEVERAGE play has come to our attention.   Allied 
Signal (ALD), one of the largest and most diversified 
electronics manufacturers, and Honeywell (HON) announced on 
June 7th they had signed a definitive merger agreement.  
The merger has been approved by both Boards of Directors, 
but still requires shareholders' and regulatory officials' 
approval.  The pact will create a $25 bln. global 
technology company bunking a powerhouse in the avionics 
segment.  The deal is expected to close by the 4Q 1999. 
The merger is worth over $15 bln. at current prices (HON 
has 126 mln. shares outstanding).  It works out like this.  
For every one share of HON, the stockholder will receive 
1.875 shares of ALD.  In terms of our leverage play, this 
means for every $1 ALD moves, HON will move $1.875!  ALD 
has been climbing in reaction to investor enthusiasm.  The 
investors can see that the cost savings and related 
synergies of these two companies joining forces will create 
higher profits.  The companies expect immediate accretion 
of. 17 EPS in 2000 and .32 EPS in 2002.   

On the date of the announcement, June 7th, ALD received an 
upgrade by Salomon Smith Barney to an "outperform" from 
"neutral".  HON on the other hand received a little of 
both.  Brown Brothers downgraded HON to a "neutral" from a 
"buy" while Schroders upgraded the stock "significantly 
from an outperform".  Looking at the charts, you'll see in 
May it had a support level of $95-96, then right after the 
merger announcement it found comfort at $112-114.  The 
stock has been on the move again making advances these past 
three days.  At just over $123, HON is now in new 
territory.  On Friday it peaked at 123.88 to set a new 52-
week high.  You may have to find an entry point mid-day near 
this level and keep in mind that consolidation is part of a 
stock's cycle.  When doing your research you'll need to 
investigate both ALD and HON.

Please note:  at this time there are no strike prices above 
120 due to the recent spike of the stock.  Plus, the option
volume is a little bit low.  This just means you need to 
pay special attention to trades and we strongly recommend
limit orders.

BUY CALL JUL-115*HON-GC OI= 218 at $10.88 SL= 8.75 ITM 8.81
BUY CALL JUL-120 HON-GD OI=   5 at $ 7.38 SL= 5.50
BUY CALL AUG-115 HON-HC OI=3061 at $13.25 SL=10.75
BUY CALL AUG-120 HON-HD OI=  10 at $10.00 SL= 7.50

Picked on June 20th at $123.81    PE = 24
Change since picked      +0.00    52 week high=$123.87
Analysts Ratings     4-4-3-0-0    52 week low =$ 58.63
Last earnings 03/99  est=  .80    actual= .83 surprise=3.75%
Next earnings 07-20  est= 1.07    versus= .89
Average daily volume = 871 K
Chart = http://quote.yahoo.com/q?s=HON&d=3m

*********
Software
*********

MSFT - Microsoft $85.00 (+6.87)(-1.43)

Introducing the one and only, amazingly huge Microsoft!  Really, 
this company needs no introduction since it dominates the 
operating system Market with Windows 95, Windows 98 and Windows 
NT installations in over 90% of PC's shipped.  They are also the 
makers of Word, Excel, and Power Point.  (All other inquiries 
should be directed toward their legal council!)

Here's the play: Until last week, MSFT had been range-bound for a 
month and a half between $76 and $81.  Friday, on strong volume 
(almost 42% above average) MSFT broke decisively out of its 
trading range to close at $85, a level not seen since late April.  
With 5.1 bln. shares issued, closing at its high of the day on a 
Friday shows strong buying pressure.  If tech is back, managers 
seem hungry for this issue.  MACD and momentum are positive, with 
stochastic and RSI pointing north, though not quite positive.  
This is a strong technical development.  Careful.  Any market 
wide profit taking could bring MSFT back to $81 (theory: old 
resistance = new support), or lower if coupled with bad trial 
news.  If you see the bounce, that could be the buying 
opportunity.  Next likely resistance: $89.  Earnings are 
tentatively scheduled for July 21.  Sorry, not a split candidate 
this time.  Look for a good entry

Thank goodness, the DOJ vs. Microsoft trial could be coming to an 
end next week.  The witness list is winding down, and presiding 
Judge, Thomas Jackson will decide the fate of software giant in 
the coming weeks.  The real spotlight has been focused on Capitol 
Hill, where Gates, fresh from a shooting of "Mr. Bill goes to 
Washington" has been running a mostly effective media campaign 
attempting to persuade public opinion to his favor, with all the 
fanfare of Presidential press conferences and celebrity 
luncheons.  Most of the coverage has shown a rational, nice guy 
with a business to run.  No matter the outcome, just like 
Greenspan testimony, certainty will be greeted with a sigh of 
investor relief.  That's the backdrop. 

BUY CALL JUL-80 MSQ-GP OI=28492 at $ 6.63 SL=4.75
BUY CALL JUL-85*MSQ-GQ OI=35057 at $ 3.50 SL=1.75
BUY CALL JUL-90 MSQ-GR OI=24255 at $ 1.63 SL=0.75
BUY CALL OCT-85 MSQ-JP OI= 8990 at $11.00 SL=8.75
BUY CALL OCT-90 MSQ JQ OI= 6253 at $ 8.50 SL=6.50

*Note that bullish sentiment is reflected in 15684 open interest
of the OCT-100 calls. We do not recommend OCT-100 calls!

Picked on June 20 at    $85.00    PE = 66
Change since picked      +0.00    52 week low =$42.95
Analysts Ratings   15-12-3-0-0    52 week high=$95.62
Last earnings   04/99 est 0.32    actual 0.35
Next earnings   07-16 est 0.35    versus 0.25
Average daily volume = 25.25 mln. 
Chart = http://quote.yahoo.com/q?s=MSFT&d=3m


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



The Option Investor Newsletter             6-20-99
Sunday                4  of  6

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

TXN - Texas Instruments $132.75 (+5.13)(+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)

Despite solid gains early last week in the wake of analyst 
upgrades and a solid industry rating the week before, TXN traded 
flat Wednesday and Thursday.  Friday, the price dipped $0.75 as 
volume was about half that of previous days - unusual for option 
expiration day.  This probably shouldn't be a concern since a big 
part of total exchange volume occurred in the first hour of 
trading in what was otherwise a slow Friday.  A downgrade and 
earnings estimate cut on INTC from Morgan Stanley rubbed off on 
the sector.  Anyway, TXN reports earnings on July 20 (company 
confirmed) and is also a split candidate.  A year and a half ago, 
TXN staked its future on Digital Signal Processors (DSP's) in 
what seemed a big risk at that time.  The payoff is finally here 
as the use of DSP's in most communications devices is helping 
foster the bandwidth revolution.  In short they are selling lots 
of chips and making money.  We might add that their last split 
was at about $100 in November 1997.  Expectation is currently 
high as momentum/earning/split investors take a position.  Even 
with short bouts of profit taking, support is about $130.50.  By 
the looks of the chart (which is technically strong) TXN may 
remain a bit flat until its 30 DMA catches up to its current 
price.  Target shooting will get you in on average volume days.  
For those already in, any break below $129 should be your sign to 
exit as this indicates broken support.  The only resistance is 
$135.56 set Thursday intraday.  Otherwise, confirm upward 
movement with strong volume to start a new play.

From a TheStreet.com article on Friday, Raymond Rund, managing 
director of Shaker Investments notes, "The PC market drove 
semiconductors in prior years, and I think for the next few years 
it will be communications that drives it," he says. "This will be 
a multiyear expansion; there is a tremendous amount of 
infrastructure being built and a tremendous amount of bandwidth 
being added."  From the same article, "The companies that make 
communications devices are benefiting from the growth of the 
Internet, but they are less risky than the higher-profile Net 
plays.  'The growth rates aren't nearly as high as Internet 
stocks, but they are supported by earnings,' says Ned Brines, 
portfolio manager with Roger Engemann & Associates." 

BUY CALL JUL-125 TXN-GE OI=2283 at $12.75 SL=10.25
BUY CALL JUL-130*TXN-GF OI=1470 at $ 9.63 SL= 7.25
BUY CALL JUL-135 TXN-GG OI= 582 at $ 7.00 SL= 5.25
BUY CALL OCT-130 TXN-JF OI= 398 at $18.50 SL=14.25
BUY CALL OCT-135 TXN-JG OI= 230 at $16.13 SL=12.50

*We are not recommending the JUL-140, but note there are over 
1400 open interests, indicating investor expectations (good sign)

Picked on June 10th at $125.75    PE = 42
Change since picked      +7.00    52 week low =$ 45.38
Analysts Ratings    11-7-5-0-1    52 week high=$135.56
Last earnings   04/99 est 0.61    actual 0.65
Next earnings   07-20 est 0.76    versus 0.35
Average daily volume = 2.79 mln. 
Chart = http://quote.yahoo.com/q?s=TXN&d=3m

*************
Banking
*************

FDC - First Data Corporation $49.50 (+3.87)

Atlanta-based First Data Corporation is the US's largest 
third-party processor of credit card transactions.  It 
provides transaction reports and billing services to 
companies ranging from financial institutions to oil 
companies and retailers.  Western Union and TeleCheck 
are two of its business units. 

Back on Friday in intraday trading, FDC reached a new all 
time high of $49.56.  It also closed trading for the day just 
off its high.  We interpreted this as a bullish sign especially 
since its intraday chart showed the company working its way 
higher throughout the day.  What seemed to cause the bounce 
off FDC's 30 dma back on June 7th?  Two announcements may 
have been interpreted as positive news by investors.  For 
starters, FDC unit TeleCheck announced that it was "providing 
catalog companies, direct marketers, publishers, shopping 
channels and other businesses with a new way to safely accept 
checks via the telephone."(-PRNewswire)  The system is 
projected to benefit both the merchant and the consumer by 
speeding up delivery times since the businesses won't have 
to wait for the shopper's checks to come through the mail.  
More news released on the same day could also be behind 
FDC's established uptrend.  MGM Grand Inc. signed a three 
year deal with Global Cash Access(GCA).  GCA is the country's 
largest provider of cash access services to casinos and was 
formed back in 1998 through a joint venture between Bank of 
America and FDC.  Investors seemed to approve the deal and 
FDC has been climbing ever since.  If the market conditions
can continue to stay green, we feel that FDC has a nice 
chance of heading even higher.

No new news. 
  
BUY CALL JUL-45 FDC-GI OI= 207 at $5.50 SL=3.75
BUY CALL JUL-50*FDC-GJ OI= 268 at $1.75 SL=1.00
BUY CALL AUG-45 FDC-HI OI= 365 at $6.38 SL=4.75
BUY CALL AUG-50 FDC-HJ OI=1119 at $2.94 SL=1.50

Picked on June 20th at $49.50    PE = 43
Change since picked   +$ 0.00    52 week high=$49.56
Analysts Ratings    7-3-5-0-0    52 week low =$19.69
Last earnings 04/99  est 0.29    actual 0.32 
Next earnings 07-23  est 0.40    versus 0.37
Average Daily Volume = 1.43 mln
Chart = http://quote.yahoo.com/q?s=FDC&d=3m

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

AA - Alcoa, Inc $67.56 (+4.56)(+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. 
Its Principal products include alumina and its chemicals, 
automotive components, and beverage cans. 

A few weeks ago we added AA to our call list.  Alcoa, a 
cyclical stock, was benefiting from signs of recovery in 
the manufacturing sector.  Now with the DOW's momentum 
lending a helping hand, AA is continuing to advance on 
strong volume.  For the second day in a row, it set a new 
52-week high.  The record is now $67.94!  With no 
opposition and 3+ points above its 10 dma, the signs are 
positive.  But as we warned earlier in the week, 
consolidation needs to occur sooner than later.  Keep your 
eyes peeled for the profit-takers.  If you do decide to 
start a new play, you may need to find an entry point 
intraday.  Again, please remember to confirm stock 
direction and market sentiment first.

Three firms went to the press with ratings on AA this week. 
On Wednesday, CSFB reiterated a "strong buy" on the stock 
citing that the "global expansion" of major economies 
should help generate more growth for companies like Alcoa.
They also set a 12-month target price of $80.  Then on 
Friday, Goldman Sachs gave no comment but downgraded AA 
from a "trading buy" to a "market outperform".  Prudential 
Securities came back with a reiteration of a "strong buy" 
and a 12-month target price at $92!  

Please note:  at present, there are no strikes above 70.

BUY CALL JUL-65*AA-GM OI=1212 at $5.13 SL=3.50
BUY CALL JUL-70 AA-GN OI= 470 at $2.56 SL=1.25
BUY CALL OCT-65 AA-JM OI= 506 at $9.00 SL=6.75
BUY CALL OCT-70 AA-JN OI= 738 at $6.25 SL=4.50

Picked on June 6th at $61.94    PE = 26
Change since picked    +5.62    52 week high=$67.94
Analysts Ratings   9-2-2-1-0    52 week low =$28.93
Last earnings 03/99 est= .55    actual= .60  surprise=9.09%
Next earnings 07-07 est= .65    versus= .62
Average daily volume = 2.32 mln.
Chart = http://quote.yahoo.com/q?s=AA&d=3m

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

NT - Nortel Networks Corporation $87.88 (+4.00)

Nortel Networks, formerly Northern Telecom, pretty much does 
it all when it comes to digital telecommunications products.  
The company designs, develops, manufactures, markets, sells, 
finances, installs and services telecommunications systems.  
It is second in the world only to Lucent.  60% of its sales 
come from the United States.  BCE, a Canadian telecom 
company, owns 42% of NT.

Nortel initially took a -$2.38 hit when it was announced that 
Mr. House, the President of NT, would be stepping down in the 
fall.  However, the stock recovered the next day and continued 
higher for the rest of the week.  On Friday, NT set a new all 
time high of $87.94 in intraday trading.  It closed just off 
its high and with a +$4.00 gain for the week as a whole.  We 
feel that the stock could continue its present course.  "A 
number of new customer deals and the introduction of its new 
voice technologies for the Net has given Wall Street a reason 
to be optimistic about the firm's future."(-CNET News.com)  
Compared to fellow sector mates like QCOM and Lucent, Nortel 
is undervalued.  However, analysts feel that NT's growth rate 
is improving and that the company could still have some upside.  
If NT can improve its marketing techniques, some feel that it 
could catch its competitors.  Now that NT cracked above its 
old high of $86.50 on above average volume, we feel that 
momentum could carry the stock even higher.  We like the 
fact that the company broke through its resistance, but it 
is always important to confirm both the market's and stock's 
direction before initiating any new plays.  

News:  Keep in mind that PaineWebber recently raised its 
price target for NT to $106, up from $90.  TD Securities 
also increased its estimate to $104, up from their previous 
target of $90.  Also, NT could be a split candidate.  The 
company split 2:1 in January of 1998 when it was close to 
the $100 level.  With unlimited authorization and 668,051,483 
shares issued, the company could possibly announce another 
split.  We don't see any board meetings or conference calls 
in the near future so we might have to wait until earnings 
which are scheduled for July 27th.

BUY CALL JUL-85*NT-GQ OI=1079 at $6.00 SL=4.25 ITM
BUY CALL JUL-90 NT-GR OI= 650 at $3.38 SL=1.75
BUY CALL SEP-85 NT-IQ OI= 292 at $9.63 SL=7.25 ITM
BUY CALL SEP-90 NT-IR OI=  44 at $7.13 SL=5.25

Picked on May 23rd at  $79.94    PE = N/A
Change since picked   +$ 7.94    52 week high=$87.94
Analysts Ratings   7-13-6-0-0    52 week low =$26.81
Last earnings 04/99  est 0.27    actual 0.33 
Next earnings 07-27  est 0.50    versus 0.41
Average Daily Volume = 1.82 mln
Chart = http://quote.yahoo.com/q?s=NT&d=3m

*****

NOK - Nokia Corp $86.13 (+4.13)(+3.62)

Nokia is the world's leading mobile phone supplier and a leading 
supplier of mobile and fixed telecom networks including related 
customer services. Nokia also supplies solutions and products 
for fixed and wireless datacom, as well as multimedia terminals 
and computer displays. 

We added Nokia last week on the strength of its current run, 
which started at this beginning of this month. It had already 
cleared near-term resistance, and on Friday, June 18th, Nokia 
cleared resistance at $85.69, the high it hit in early April 
before it split. Technical indicators look very positive and 
it is trading above its 10 dma. Nokia's PE is lower than the 
average PE in the telecommunication sector and it trades at a 
lower price to earnings growth as well, so it is not quite as 
risky as some of the other stocks in the group, which trade at 
lofty PEs. Nokia regularly announces new products and contracts 
for those products. Earlier this year, it rose to the leadership 
position among the wireless phone makers, and it now sells more 
wireless phones than any other company. Nokia's current focus 
is on developing the "Mobile Information Society", as company 
president Ala Pietila put it. Nokia is combining the Internet 
with wireless communication. Although Nokia just split on April 
12th, 1999, it is almost back the level where it traded just 
before the split. Is another split in the near future? Their 
earnings date is a month away.

In the news:  On Tuesday we told you about NOK's $500 million 
PCS web-capable phone deal with Sprint. On Friday, Nokia moved 
its Silicon Valley IP routing offices to a larger space where 
all its Internet Protocol technology employees can work in one 
location, spearheading Nokia's wireless Internet effort. After
Greenspan removed much of the financial uncertainty from the 
markets, ADR's traded higher Thursday and Friday and stocks in 
Finland set records on Friday. Finnish company Nokia was no 
exception as it set an all-time high of $86.50 and closed very 
near that high at $86.13.

BUY CALL JUL-80 NAY-GP OI=5336 at $8.13 SL=3.50 ITM
BUY CALL JUL-85*NAY-GQ OI=1938 at $4.63 SL=1.75
BUY CALL JUL-90 NAY-GR OI= 589 at $2.63 SL=1.25
BUY CALL OCT-90 NAY-JR OI= 825 at $7.38 SL=5.50

Picked on June 15th at $82.00    PE = 37
Change since picked   +$ 4.13    52 week low =$29.53 
Analysts Ratings    9-5-0-0-0    52 week high=$85.69
Last earnings 03/99 est  0.48    actual 0.38 surprise=+26%
Next earnings 07-22 est  0.48    versus 0.35
Average daily volume = 2.03 mln.
Chart = http://quote.yahoo.com/q?s=NOK&d=3m

*****

GTE - GTE $71.44 (+5.13)

With 1998 revenues of more than $25 billion, GTE is a leading 
telecommunications provider with a  broad array of products and 
services. In the United States, GTE provides local service in 
28 states and wireless service in 17 states, as well as 
nationwide long-distance, directory, and internetworking 
services ranging from dial-up Internet access for individuals 
and small-businesses to Web-based applications for Fortune 500 
companies. Outside the United States, the company serves 
customers on five continents.

In the rapidly changing telecommunications industry, those 
companies that offer a full range of local and long distance, 
voice, and data services will be the best competitors. Hence, 
the flurry of mergers we have seen in this industry. The Bell 
Atlantic (BEL) buyout of GTE has been billed as a "merger of 
equals," and is seen by analysts as a good fit for both companies. 
The $52.8 billion acquisition may save the combined 
company as much as $52.7 million annually and make it one of 
the leading telecommunications companies. In the deal, 
shareholders of GTE will receive 1.22 shares of stock in the 
combined company for each share of GTE stock now owned, 
making this a good leverage play for GTE options. GTE's current 
run began about 2 weeks ago when the stock traded in the low 
60s, and technical indicators are quite positive. GTE closed 
at $71.44 on Friday, barely off its high for the day, and just 
shy of the all time high of $71.81 it set December 31st. Volume 
was double the average on Friday when it added $1.31. During 
the same two week period, BEL has also been on a run, from just 
over $54 to today's close of $60.94.

In the news: The GTE-BEL merger has cleared most regulatory 
hurdles and gained approval from most state authorities. However,
ahead of the New Jersey Board of Public Utilities June 21st 
meeting, a New Jersey rate payer advocate has said the companies 
should agree to share the merger savings benefits with customers 
and demonstrate that the merger will not hurt competition. Also, 
last week GTE continued its efforts in support of open cable 
access by demonstrating that AOL and Compuserve had been able 
to successfully link into GTE's cable services in a two month 
trial project. AT&T, of course, promptly criticized the small 
trial which did not take into account certain problems that 
AT&T said would come up in a larger application. 

BUY CALL JUL-65 GTE-GM OI= 241 at $7.25 SL=5.50
BUY CALL JUL-70*GTE-GN OI=1253 at $3.25 SL=1.75
BUY CALL JUL-75 GTE-GO OI= 240 at $1.00 SL=0.00
BUY CALL SEP-70 GTE-IN OI=1844 at $5.00 SL=3.25
BUY CALL SEP-75 GTE-IO OI= 454 at $2.50 SL=1.25

Picked on June 20th at $71.44    PE = 20
Change since picked   +$ 0.00    52 week low =$46.56 
Analysts Ratings    9-6-3-0-0    52 week high=$71.81
Last earnings 03/99 est  0.75    actual 0.74 surprise=-1%
Next earnings 07-20 est  0.81    versus 0.69
Average daily volume = 1.67 mln.
Chart = http://quote.yahoo.com/q?s=GTE&d=3m

*****

ASND - Ascend Communications $103.63 (+7.19)

Through acquisitions, ASND has broadened its product line and 
become a leader in data networking technology.  Now telecom 
equipment leader Lucent Technologies is buying Ascend to better 
compete in the growing Internet-based voice and data transmission 
markets.  Ascend develops remote-access and networking products 
that connect computers across WANs.  Its equipment includes 
switches, routers, and network access tools, products that are 
used to access the Internet, link branch offices, dial up a 
central computer from home or field offices, and transmit video. 
Customers include telecommunications carriers, ISPs, and video 
equipment providers. (profile thanks to Hoover's)

This play is really simple and is based on Lucent Technologies 
acquisition of ASND.  On June 24, there is a special shareholder 
meeting for what should be rubber stamp approval of the merger.  
For each share of Ascend tendered, holders will receive 1.65 
shares of Lucent.  If approved, the merger will be effective 
immediately.  In short, every $1 gain in Lucent is worth $1.65 of 
Ascend - a leverage play.  Neither of these companies will report 
earnings until late July, so there's no immediate excuse for 
investors to bail out.  LU's and ASND's charts are looking 
technically strong, especially since the telecom equipment 
industry is benefiting from sector rotation and, more 
importantly, growth.  A word of caution, Lucent's competitors 
like Cisco and Nortel Networks are mounting strong products and 
services of their own and have had some bid wins lately, edging 
out LU in its core strengths.  While the tables haven't turned 
overnight, margin pressure is on, which will ultimately effect 
earnings.  This is not a buy and hold play.  Plan to be out by 
the end of the week when the "rumor" turns to "fact".  With so 
many open interests at the $105 strike price, $105 may prove to 
be strong resistance.  Wait for a good entry on any price 
pullback, then execute your plan.

In the news, LU is reported to be acquiring Nexabit, a privately 
held concern, for $800-$900 mln.  Both companies have declined 
comment, but the Street, confident of the acquisition, seems to 
think it won't happen until after the merger with ASND.

BUY CALL JUL-100 QQA-GT OI=  829 at $ 7.63 SL=5.75
BUY CALL JUL-105*QQA-GA OI=10512 at $ 5.00 SL=3.25
BUY CALL SEP-105 QQA-IA OI=  188 at $10.00 SL=7.50

Picked on June 20 at   $103.63    PE = 1035
Change since picked      +0.00    52 week low =$ 32.62
Analysts Ratings     2-8-7-0-0    52 week high=$103.75
Last earnings   04/99 est 0.36    actual 0.36
Next earnings   07-14 est 0.40    versus 0.29
Average daily volume = 3.02 mln. 
Chart = http://quote.yahoo.com/q?s=ASND&d=3m

*****

WCOM - MCIWorldcom $95.25 (+6.75)

Formed in 1998 when WorldCom bought MCI Communications, 
WCOM is now second only to AT&T in the US long-distance 
market.  With a fiber-based diet (fiber-optic networks, 
that is), MCI WorldCom has taken healthy bites of local and 
international telecom and Internet markets in more than 65 
countries.  Its UUNET unit offers Internet access to 
businesses over a massive Internet backbone, while MCI 
WorldCom provides consumer Internet service through an 
alliance with America Online's CompuServe unit.  The 
company also plans to offer high-speed Internet access via 
wireless cable, and it is buying wireless messaging 
provider SkyTel. (profile thanks to Hoover's).

It's hard not to get excited about this play because of the 
shear strength of its move on Friday to a new high of 
$95.25 with volume 56% above average.  Breakouts with 
strong volume are the best kind.  It helps too that WCOM 
closed just $0.06 off its all time high.  Also, the telecom 
and telecom equipment sector are getting some benefit from 
rotation, due to the growth prospects in the industry.  
Telecom is hot!  Now that AT&T/ cable mergers are fading 
from the news, the pure fiber carriers are getting the 
attention.  That said, WCOM has been up 5 days in a row and 
is due for some profit taking.  Though technically strong, 
nothing goes up in a straight line.  Still, mild support is 
at $94 (its previous resistance back in April), with near 
term support at $90-$92 following the breakout.  Target 
shoot according to your risk profile to get the best entry 
and confirm market direction before playing.

Though they currently lack wireless PCS services, WCOM has 
been in and out of negotiations with Nextel, but to no 
avail.  Beyond that, WCOM gave a plethora of press 
propaganda (try saying that 5 times real fast!) this week 
outlining its plan to connect Europe, Africa and Asia by Q1 
2001, as part of a $600 mln. undersea cable construction.  
One fly in the ointment of otherwise strong sentiment, but 
not a big deal, a Skytel class action suit was filed 
alleging misleading comments that stemmed from MCI's denial 
in public of merger talks with Skytel.  Oops.

BUY CALL JUL- 90 LDQ-GR OI=2817 at $7.13 SL=5.25
BUY CALL JUL- 95*LDQ-GS OI=6619 at $3.88 SL=2.50
BUY CALL JUL-100 LDQ-GT OI=3797 at $1.63 SL=0.75
BUY CALL SEP- 95 LDQ-IS OI=6412 at $7.50 SL=5.75
BUY CALL SEP-100 LDQ-IT OI=7541 at $5.13 SL=3.25

Picked on June 20 at    $95.25    PE = N/A
Change since picked      +0.00    52 week low =$39.00
Analysts Ratings    21-5-3-0-0    52 week high=$95.31
Last earnings   04/99 est 0.34    actual 0.36  surprise=5.8%
Next earnings   07-23 est 0.44    versus 0.21
Average daily volume = 11.25. 
Chart = http://quote.yahoo.com/q?s=WCOM&d=3m

*****

TLAB - Tellabs $68.25 (+9.50)

Tellabs' telecommunications equipment is used around the world to 
transmit data, video, and voice signals. Its TITAN digital cross-
connect system (about 60% of sales) helps connect incoming and 
outgoing lines. The company also makes the CABLESPAN universal 
telephony distribution system, which lets cable systems offer 
telephone services. Outside North America, Tellabs offers the 
MartisDXX access and transport network system. Customers include 
phone companies, cable operators, corporations, and government 
agencies. Regional Bell operating companies account for nearly 
one-third of sales. Tellabs operates more than 25 international 
offices. About 70% of its sales are in North America; the rest 
take place in Europe. (profile thanks to Hoover's)

Conversely to the upgrade on June 11 from BBRS (see blow) Tellabs 
got a downgrade Friday from Madison Securities, based on reaching 
fair valuation.  Investor's didn't care as they bid the stock up 
$1.63 on volume surpassing the average by 78%.  TLAB set a new 
all-time high and closed just $0.69 off its intraday high at 
68.25.  This comes following consolidation after a 2:1 split last 
month.  Put succinctly, "breakout with volume", which we consider 
very good news.  Technically, TLAB is super-positive on the MACD 
scale.  Other indicators are catching up.  With 5 days of solid 
gains, there will be profit taking (most likely short-lived given 
sector strength) which can provide a good entry.  Don't blindly 
jump in - the last support was at $63.  That's a long way to fall 
if things turn sour.  Wait for the profit taking and buy the 
recovery.  Upward movement with volume is the key.

In the news, this from BB Robertson Stevens via Bloomberg news: 
"We are initiating coverage of Tellabs with a Buy rating. We are 
introducing our 1999 and 2000 earnings per share estimates of 
$1.24 and $1.55, respectively," said Silverstein. "We believe the 
stock represents a compelling investment opportunity as the 
company continues to richly participate in the ongoing 
communications infrastructure build-out. "Tellabs is a primary 
beneficiary of this build-out, which we believe is many years 
from maturity, more than tripling its revenues in the last four 
years," said Silverstein. "Looking ahead, we believe the company 
has mapped out an impressive product strategy to substantially 
increase its addressable market opportunity by significantly 
expanding its transmission infrastructure product solutions."  
Try to exercise restraint!

** $70 strike prices are the highest available

BUY CALL JUL-65 TEQ-GM OI=1492 at $6.25 SL=4.50
BUY CALL JUL-70*TEQ-GN OI=2350 at $3.50 SL=1.75
BUY CALL SEP-65 TEQ-IM OI=2102 at $9.25 SL=7.00
BUY CALL SEP-70 TEQ-IN OI=3971 at $6.75 SL=6.75

Picked on June 20 at    $68.25    PE = 60
Change since picked      +0.00    52 week low =$15.69
Analysts Ratings   15-16-2-0-0    52 week high=$68.94
Last earnings   04/99 est 0.25    actual 0.26
Next earnings   07-16 est 0.30    versus 0.23
Average daily volume = 2.84 mln. 
Chart = http://quote.yahoo.com/q?s=TLAB&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 
****************

CLX - Clorox Company  $94.69 (-6.56)(-4.75)

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

We added CLX this past Thursday due to the company's strong 
downtrend.  As stated before, we waited this long to re-add 
it since it appeared that CLX was due for a bounce.  But, CLX 
continues to fall.  On Friday, it slumped another -$0.94.  
However, we still have to warn traders of the possibility of 
a recovery.  CLX has lost ground for 7 consecutive trading 
days in a row.  Simple stock cycling trends indicate that CLX 
could be due for a 3 day recovery.  Make sure to pick your 
entry point carefully if you decide to go with CLX as a put.  
Keep in mind that in the first 30 minutes of trading, CLX 
tends to head higher.  Take a look at a 5 day chart for CLX.  
You will see it move to the upside in early trading and then 
drop off.  Accordingly, you could use CLX's daily trend to 
find a more profitable entry point.  

News:  Even though CLX was down again on Friday, it seemed to 
make a run to the upside right near the close of trading.  Make 
sure to confirm the stock's direction on Monday before 
playing CLX.  

BUY PUT JUL-100*CLX-ST OI=86 at $6.88 SL=5.25
BUY PUT JUL- 95 CLX-SS OI=13 at $3.63 SL=1.75

Daily Volume = 513 K 
Chart = http://quote.yahoo.com/q?s=CLX&d=3m

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






The Option Investor Newsletter            6-20-99
Sunday                5  of  6

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

KMB - Kimberly Clarke $56.12 (-3.00) 

Kimberly-Clark is a leading provider of personal paper 
products.  It makes personal-care items (baby wipes, diapers, 
feminine pads), away-from-home products (wipers and washroom 
materials), consumer tissue products (facial tissue, bathroom 
tissue, and paper towels), and medical products (disposable 
surgical masks and wound dressings).  Its personal-care brands 
include the top-selling Huggies, Depend, GoodNites, Kotex, 
New Freedom, Pull-Ups, and Poise.  Consumer tissue products 
include the Kleenex's Cottonelle and Viva, Kimwipes, Scott, 
and Wypall brands.  The company sold its Alabama pulp and 
newsprint operations in March 1997 and is attempting to sell 
its remaining pulp businesses. 

KMB is part of the unlucky few to actually be hurt by the 
CPI report.  It's not that low inflation isn't a good thing, 
but it encourages investors to leave the safety stocks like 
KMB and go back to the high flying tech stocks.  We've seen 
this rotation push KMB right through its 50-dma support at 
$58.00.  Also unfortunate for KMB is the fact the stock 
rose so quickly in April leaving stock without support until 
it reaches the $51.00.  And there is more!  This week KMB 
completed the selling of their pulp mill in Spain and 
announced they would sell their timberlands in Alabama.  
They did this to rid themselves of their paper business just 
as pulp prices are recovering and supporting many of the 
paper stocks.  So is it any wonder that the CEO, CFO and 
another high level employee sold a considerable number of
shares in the low $60s recently?  So we like the play due 
to poor momentum and lack of support.  Like always, use 
your stops and confirm the direction.  If the stock jumps 
back above $58, this will be a signal not to open any new
plays. 

BUY PUT JUL-60 KMB-SL OI= 68 at $4.50 SL=2.75
BUY PUT JUL-55*KMB-SK OI=192 at $1.50 SL=0.75

Average Daily Volume = 1.59 mln

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

****

TWX - Time Warner Inc. $66.75 (+2.44)

Time Warner is the world's largest media and entertainment 
company.  It operates in three segments of the media market.  
It provides entertainment which includes Warner Bros. and 
Warner Music group.  It provides news and information through 
CNN, Time magazine and others.  It also provides tele-
communications through cable system networks.  This 
conglomerate, run by Ted Turner, also owns the Atlanta 
Braves baseball team.  

Time Warner's stock appears to have locked itself into a 
downward trading pattern.  We are recommending TWX as a put 
based on its failed attempts to cross back above the 50-dma 
despite a strong market.  This stems from weakness in the 
sector.  The industry has been hurt lately as advertising 
revenue has come in well below forecast for May and June.  
Also the fallout from the recent AT&T ruling in Oregon is 
still being digested by the markets. This has prompted a 
sell-off in TWX and others in the group.  We had a early week 
rally thanks to many cable companies/analyst meetings on 
June 14 and 15.  But the excitement has obviously worn off 
because TWX broke through strong support at $68.00 late 
on Friday.  Market willing, we see TWX trading down to its
recent low around $62.00.  And if the pattern continues, it 
should surpass that level.  In which case the 200-dma at 
$59.50 would be the next support.  

BUY PUT JUL-70 TWX-SN OI=893 at $5.25 SL=3.50
BUY PUT JUL-65*TWX-SM OI=698 at $2.38 SL=1.25

Average Daily Volume = 3.09 mln

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

****

MYG - Maytag $66.75 (-0.19)

Maytag Corporation makes, distributes and services a broad 
line of home appliances including washers, dryers, vacuums, 
dishwashers, refrigerators and cooking appliances.  They 
are primarily under the of Maytag, Hoover, Jenn-Air and 
Magic Chef.  The Company's home appliances are sold to 
national chain stores, independent retailers and distributors 
in the U.S. and overseas.  Maytag International, Inc., the 
Company's international marketing subsidiary, handles the 
sales of appliances and licensing of certain home appliance 
brands in markets outside the United States and Canada.

We are adding Maytag as a put play due to the change in 
momentum we've seen in the stock the past two weeks.  It
looks like someone hit the sell button and down it went, 
right through the 50-dma.  There are a few different reasons 
as to why the stock may be dropping.  Many stocks had been 
plagued with interest rate worries.  But after the CPI, we
have seen a broad rally which MYG didn't participate in.  
There are other issues with recent quality concerns and 
also sector weakness.  But the real issue may just be an 
over-valued stock after, a long run, that will be facing 
tough year over year comparisons.  In 1998, MYG had very 
solid quarterly results and they will be tough to beat.  
As far as trading goes, we like the entry point after a
week where the stock was flat.  It has been unable to 
move above the resistance of its 50-dma at $68.00.  So 
confirm the trend before playing and remember this play 
is a play that is slow and steady.  The premiums are cheap 
and a 2 or 3 point move in the stock translates nicely 
in percentage terms to the option.
    
BUY PUT JUL-70*MYG-SN OI=18 at $4.18 SL=2.50
BUY PUT JUL-65 MYG-SM OI=33 at $1.44 SL=0.75

Average Daily Volume = 499 K

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

****

GM - General Motors Corp. $62.81 (-0.94)

General Motors is the world's number one vehicle manufacturer 
with more than 100 facilities worldwide.  Buick, Cadillac, 
Chevrolet, GMC, Oldsmobile, Pontiac, and Saturn are all brands 
of cars and trucks in the GM genre.  GM also produces cars for 
foreign companies like Holden, Opel, Isuzu, and Saab. GM even 
has a subsidiary named Hughes Electronics which makes 
communications networks.  

GM is on our put list.  The stock is trading below every one 
of its major averages.  It is lower than its 10, 15, 30, 50, 
100, and even its 200 dma.  What seemed to trigger the sell 
off in the stock since the beginning of June?  For starters, 
auto parts supplier Delphi Automotive Systems became fully 
independent.  It cut its last ties to GM back on May 28th and 
now "jeopardizes GM's status as the world's largest automaker.  
Delphi, with $28.5 billion in annual sales, now has more 
flexibility to serve a wider range of customers."(-Reuters)  
Also in the first week of June the automakers announced the 
results of their May sales.  GM was the biggest disappointment 
since its sales were off by 5%.  Its overall sales of light 
trucks declined 2% and its full size SUVs took the biggest 
hit.  May was the second month in a row that GE announced 
disappointing results.  We are now in June.  What is in 
store for GM's sales?  We won't know for certain until the 
numbers are released.  All we can go on is their last month's
performance and it doesn't look particularly inspiring.  With 
earnings scheduled for July 20th, we feel that GE doesn't have 
a lot of momentum to the upside.  We feel it could head even 
lower.  However, conservative players might want to wait for 
GM to break below its near term price support of $61.56 before 
opening any new put positions.

BUY PUT JUL-65*GM-SM OI=992 at $3.75 SL=2.50
BUY PUT JUL-60 GM-SL OI=362 at $1.38 SL=0.00

Average Daily Volume = 2.65 mln 
Chart = http://quote.yahoo.com/q?s=GM&d=3m





******
Combos      
******
And Now We Forge Ahead!

Friday, June 18
 
U.S. stocks closed the week on a positive note after Federal
Reserve Chairman Alan Greenspan's comments suggested that only
one rate increase was likely in the near future. His testimony
on Thursday before Congress soothed wary investors and most
analysts agree that the expected increase of 25 basis points is
already factored into the market. The Dow was up 13 points to
10,855 and the Nasdaq Composite index rose 19 points to close at
2,563. In the broader market, advancing issues led declines 1,531
to 1,380 on heavy volume of 902 million shares on the New York
Stock Exchange.

Thursday's new plays (positions/prices):

BAANF AUG15C/JUL15C   $0.38 debit (as low as $0.31 near 10 am)
GE    SEP105C/JUL110C $6.50 debit (easy entry at target price)
DD    JAN70C/JUL70C   $5.00 debit (almost unchanged for the day)

Portfolio plays:

Friday's trading was heavy with the quarterly expiration of
index futures, options and options on individual stocks. Our
portfolio was quite active as we rolled forward the last few
calendar plays in July positions. Some of the big movers
included Motorola (MOT), United Airlines (UAL), Sepracor (SEPR)
and Worldcom (WCOM); all in our LEAPS/Covered-Calls section.
Other stocks that performed well when it was most important
(the roll-out to July) included; Agco (AG), C-Cube (CUBE),
EMC Inc. (EMC) and Paxson (PAX).

Our most exciting play was AMZN as it finished the month just
above the sold strike, with a maximum profit for the bullish
debit spread. Of course we did not participate in the the
celebration because our position (and a few others) was closed
earlier in the week to limit potential losses. Another play in
this category was Polaroid (PRD). That play also finished at
maximum profit even though we posted a small loss from an early
exit. On the other hand, there were many plays in which we chose
to take the reduced profits rather than risk an eventual loss.
From my point of view, that seems to be the best approach!

This week, the spreads editor will away from the market on a
much needed vacation. After Tuesday's newsletter (the monthly
summary), we will publish some new strategy discussions on
various spread and combination techniques until he returns.

Good Luck!

Questions and comments on spreads/combos; ray@OptionInvestor.com
******************************************************************
				- NEW PLAYS -
******************************************************************
PRD - Polaroid  $23.87     *** Volatility Play ***

Polaroid supplies instant photographic cameras and films; digital
imaging hardware, software and media; secure identification
systems; graphics imaging systems; sunglasses and polarizers to
markets worldwide. With annual sales of more than $1.8 billion in
1998, PRD is the worldwide leader in instant imaging.

A slew of recent lawsuits have plagued this historic company and
yet the stock price continues to rebound under volatile buying
pressure. As far as the basis for the lawsuit, it's the same old
story. Polaroid and certain officers are charged with issuing a
series of materially false and misleading statements concerning
the company's operations and operating results. Because of the
issuance of these statements, the price of Polaroid common stock
was said to be artificially inflated during the class period in
1997 and 1998.

Regardless of the previous price of the stock and the unhappy
investors from the past, PRD has completed a short-term base in
the $17 - $20 range and is now testing current resistance near
$25. The July options are trading at a much higher premium than
than future positions and we will use this disparity to open a
favorable (neutral) time spread.

PLAY (neutral/calendar spread):

BUY  CALL OCT-25 PRD-JE OI=232  A=$2.87
SELL CALL JUL-25 PRD-GE OI=1092 B=$1.50
INITIAL NET DEBIT TARGET=$1.25 TARGET ROI=50%

Time spreads (horizontal spreads) involve the sale of one option
and the purchase of a more distant option, both with the same
strike price. The philosophy for using calendar spreads is that
time will erode the value of the near-term option at a faster
rate than it will the far-term option. The calendar spread that
is established when the underlying stock is at or near the strike
price of the options used is a neutral spread. If the stock price
remains relatively unchanged until the near-term option expires,
the neutral spread will make a profit. It is generally best to
establish such a spread at least 2 - 3 months before the near
term option expires, capitalizing on the ability to sell another
call against the longer-term option (if necessary). Ideally, the
spreader would like to have the stock be just below the strike
price when the near-term call expires. If the sold options are
in-the-money at expiration, he will have to buy them back to
preserve the long-term position.

Chart = http://quote.yahoo.com/q?s=PRD&d=3m
******************************************************************
BLS - BellSouth  $44.62     *** Disparity Play ***

BellSouth is a holding company providing telecommunications
service and communications systems through two subsidiaries,
BellSouth Telecommunications and BellSouth Enterprises. The
$23 billion communications services company provides telecom,
wireless, cable and digital TV, directory advertising and
publishing, and Internet and data services. BellSouth telecom
provides predominantly tariffed wireline telecommunications
services to a portion of the population in Alabama, Florida,
Georgia, Kentucky, Louisiana, Mississippi, North Carolina,
South Carolina and Tennessee.

The most recent news items include BellSouth's proposal to the
FCC for a $150-million reduction in charges. Most of the cost
cutting will come in an area known as access charges. These are
the per-minute fees long-distance companies pay to use their
switches and lines to originate and terminate long-distance
calls. With a decrease in rates, new revenues must be achieved
in other areas.

Another blow came on Friday when BellSouth announced that it
will hold its 10% stake in Qwest despite the $1 billion paper
loss since QWST launched its hostile bid for US West. The BLS
chairman defended the action by saying that they invested in
Qwest because of that company's portfolio of long-distance
services and products, and its plans for transforming itself
into a global telecommunications powerhouse. BLS executives
are said to be concerned that the transaction could turn into
a huge distraction for Qwest's management, which has indicated
it would proceed with takeover plans regardless of how much
resistance it gets from either target.

The recent news has turned BellSouth into a slightly bearish
issue but this position is well below the current trading range
and the small disparity will allow us a favorable entry.

PLAY (conservative - bullish) debit spread:

BUY  CALL JUL-37.50 BLS-GU OI=291  A=$7.00
SELL CALL JUL-40.00 GLS-GH OI=1401 B=$5.12
INITIAL NET DEBIT TARGET=$ 1.75 ROI(max)=42% B/E=$39.25

Chart = http://quote.yahoo.com/q?s=BLS&d=3m
******************************************************************
GMST - Gemstar  $54.84     *** Time For A Breather ***

Gemstar develops, markets and licenses proprietary technologies
and systems that make technology user-friendly for consumers. The
technology and intellectual properties are licensed to most major
companies in the consumer electronics, satellite, cable and
personal computer industries. Gemstar is a also a leading provider
of electronic program guide services, which allow a user to view
a television program guide on screen, obtain details about a show,
sort shows by themes or categories, and select shows for tuning or
recording, all through the remote control. The electronic program
guide has been built into a number of models of new televisions,
VCRs and TV/VCR combination units. Gemstar's electronic program
guide is also licensed to cable, telco and MMDS service providers,
and has been integrated into direct broadcast satellite receivers,
digital and advanced analog cable set-top boxes, PCTV and other
Internet devices and computer operating systems.

America Online and Gemstar recently announced that they have
reached a long-term licensing agreement for AOL to use Gemstar's
technology and intellectual property to develop and deploy AOL
TV electronic programming guides. The deal will help AOL's plans
to develop its own customized electronic programming guides for
AOL TV that incorporate features of interactive navigation of the
television experience. These guides will enable members to sort
programs by themes or categories, and select shows for viewing or
recording. After that announcement, BancBoston Robertson Stephens
reiterated their 'Strong Buy' rating on Gemstar International.

That was almost a month ago and now the stock is beginning to show
signs of tiring from the recent rally. A short consolidation period
is to be expected and that should be just long enough for us to
profit from the slightly overpriced premiums of the JUL65C series.

PLAY (conservative - bearish) credit spread:

BUY  CALL JUL-70 QLF-GN OI=153  A=$1.93
SELL CALL JUL-65 QLF-GM OI=3311 B=$2.62
INITIAL NET CREDIT TARGET=$0.87 ROI=21% B/E=$65.87

Chart = http://quote.yahoo.com/q?s=GMST&d=3m
******************************************************************
ELN - Elan Corp.  $28.62     ** On The Rebound? ***

Elan develops, manufactures and markets controlled-absorption
drug delivery systems. Their systems are designed to contol the
absorption and utilization of active pharmaceutical compounds.

Elan and MiniMed recently announced that they have entered into
two strategic agreements regarding the distribution of Elan's
Medipad disposable continuous drug delivery system. MiniMed will
have exclusive worldwide distribution rights to the disposable
system, for use with insulin in the treatment of diabetes. In a
related agreement, MiniMed will be the exclusive manufacturer of
the continuous system for all applications and Elan says that
the system may be used with a variety of drugs.

In another development, Elan has received tentative approval
from the FDA to manufacture & market Nifedipine Extended Release
tablets. This calcium channel blocker is the generic equivalent
to Adalat CC, a product for the treatment of hypertension, which
is marketed by Bayer. Market introduction of this product will
depend upon the settlement of legal and patent issues with that
company.

The stock split 2 for 1 earlier this month and promptly followed
the failing drug sector into a downward spiral. A new rumor that
Glaxo and Elan may be in merger discussions has reversed the
bearish trend. It now appears that a new rally may have begun
from a short-term bottom near $25. The break-out above a 30 dma
on increasing volume may be the force necessary to propel this
issue back into a bullish character.

PLAY (conservative - bullish/debit spread):

BUY  CALL JUL-22.50 ELN-GX OI=103 A=$6.62
SELL CALL JUL-25.00 ELN-GE OI=736 B=$4.50
INITIAL NET DEBIT TARGET=$1.87 ROI(max)=33% B/E=$24.38

Chart = http://quote.yahoo.com/q?s=ELN&d=3m
******************************************************************
INDEX OPTION SPREADS...
******************************************************************
As a trader, you may be familiar with options on individual stocks
where you have the right to buy (call option) or the right to sell
(put option) a particular stock at some predetermined price within
some predetermined time. The buyer has the rights and the seller
the obligations. With index options the basic ideas are the same.
Index options allow you to make investment decisions on a specific
market industry or on the market as a whole. Spread strategies can
be made with index options similar to those made with individual
stock options. Many professional traders employ index spreads as a
hedge strategy. We favor debit positions on the SPX for momentum
and longer-term plays and OTM credit spreads on the OEX when the
risk/reward is favorable. Low ROI disparity spreads will be listed
(when available) for the conservative index trader.
*******************************************************************
OEX - S&P 100 Index  $683.47     OTM Credit-Spreads

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

OBSERVATIONS:

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

TECHNICALS:

For the overall market, the long-term pattern is still neutral. It
is a favorable indication that the Dow and the S&P 500 Index remain
above their respective 30 week moving averages. However, the NYSE
Survey is mediocre shape at best with 10% of all groups in Stage 1;
40% in Stage 2; 38% in Stage 3; and 12% in Stage 4. The percentage
of bullish market advisors continues to remain high and that can be
considered a negative indicator as well. One the bright side, the
near term outlook is moderately favorable and it's encouraging that
the Short Term Composite is improving. That should provide a small
upward bias over the next week or two until the recent inflation
woes once again overcomes investors.

Please review the Market Sentiment section for more specific
technical information on the S&P 100 Index.
 
BULLISH...

PLAY (very conservative/credit spread):

BUY  PUT JUL-630 OEY-SF OI=2164 A=$2.75
SELL PUT JUL-635 OEY-SG OI=311  B=$3.12
NET CREDIT TARGET=$0.38 ROI=9%

PLAY (aggressive/credit spread):

BUY  PUT JUL-645 OEY-SI OI=1086 A=$4.25
SELL PUT JUL-650 OEY-SJ OI=3876 B=$5.00
NET CREDIT TARGET=$0.75 ROI=17%

BEARISH...

PLAY (very conservative/credit spread):

BUY  CALL JUL-725 OEZ-GE OI=353  A=$1.25
SELL CALL JUL-720 OEZ-GD OI=1820 B=$1.75
NET CREDIT TARGET=$0.50 ROI=11%

PLAY (aggressive/credit spread):

BUY  CALL JUL-720 OEZ-GD OI=1820 A=$2.00
SELL CALL JUL-710 OEZ-GB OI=1641 B=$3.62
NET CREDIT TARGET=$1.62 ROI=19%

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

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

Please send questions and comments to:

ray@OptionInvestor.com



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


The Option Investor Newsletter            6-20-99
Sunday                6  of  6

**************
COVERED CALLS
**************
The Right Option...

The #1 goal for most option traders is correctly predicting the
future movement of the underlying stock or index. However, once
the decision to open a position has been made, the average
investor will have some difficulty determining which option to
buy or sell. To be a successful trader, you must be able to
select favorable option positions based on pricing and the time
horizon of your play. Using covered-call options as an example,
a conservative investor that uses trend and sentiment analysis
might sell short-term, deep-in-the-money options on technically
favorable stocks. In contrast, an investor that uses fundamental
or valuation analysis to make decisions would generally buy long
-term options or LEAPS and sell monthly out-of-the-money options
to reduce the overall cost basis of the position.

After determining the correct time frame, you must still decide
which option to sell. In most cases, short-term positions are
much more successful if you sell in or at-the-money options. In
this conservative option writing strategy, you should strive for
plays that return a minimum of 2%-3% per month while retaining
downside protection of at least 10% of the current stock price.
The overall position that is constructed using these guidelines
will be a relatively low risk play (regardless of the volatility
of the underlying stock) since the levels of protection will be
large and there is still the expectation of a reasonable return.

For long-term covered-call positions, the goal is to reduce the
overall cost of the stock with the income from monthly sales of
near-term options. Investors that participate in this strategy
with bullish stocks utilize out-of-the-money calls to reduce the
chance of having their short positions exercised (in which case
delivery of the underlying issue would be required). The problem
with this technique is that when one sells an out-of-money option,
the overall position tends to reflect more of the result of the
stock price movement and less of the benefits of writing the call.
This occurs because the premium of the out-of-the-money call is
relatively small and the overall position is very susceptible to 
loss if the underlying stock declines.

There is another concept in option pricing that is very important
when determining the most favorable option to buy or sell. The
technical term is; Implied Volatility. That will be the subject
of our next strategy discussion.

Good Luck!
*******************************************************
SUMMARY OF PREVIOUS PICKS (SUMMARY FOR JUNE EXPIRATION)
*******************************************************
Stock  Price  Last    Mon  Strike  Opt   Profit    ROI   Monthly
Sym    Picked Price        Price   Bid   /Loss           ROI

CPU     8.06   8.06   Jun   7.50  1.13  *$  0.57   8.2%  11.9%
DRYR   15.44  16.38   Jun  15.00  1.19  *$  0.75   5.3%  11.4%
VTEL    5.16   4.69   Jun   5.00  1.13   $  0.66  16.4%  10.2%
SAVLY  16.88  15.63   Jun  15.00  2.19  *$  0.31   2.1%   9.2%
THNK   15.06  17.19   Jun  12.50  3.50  *$  0.94   8.1%   8.8%
MCOM    8.75  11.06   Jun   7.50  1.75  *$  0.50   7.1%   7.8%
CERN   20.13  18.44   Jun  17.50  3.50  *$  0.87   5.2%   7.6%
SKYT   20.88  22.69   Jun  17.50  4.75  *$  1.37   8.5%   7.4%
MCOM    9.31  11.06   Jun   7.50  2.50  *$  0.69  10.1%   7.3%
ATML   23.69  23.25   Jun  22.50  1.56  *$  0.37   1.7%   7.3%
MCNS   13.88  11.38   Jun  10.00  4.63  *$  0.75   8.1%   7.0%
NRES   20.50  21.13   Jun  20.00  1.38  *$  0.88   4.6%   6.7%
PAX    12.81  11.06   Jun  10.00  3.38  *$  0.57   6.0%   6.6%
EGRP   37.69  35.00   Jun  32.50  6.13  *$  0.94   3.0%   6.5%
CERN   19.25  18.44   Jun  17.50  2.25  *$  0.50   2.9%   6.4%
OMPT   17.06  18.94   Jun  15.00  3.25  *$  1.19   8.6%   6.2%
XCED   22.00  19.13   Jun  17.50  5.63  *$  1.13   6.9%   6.0%
RMDY   19.19  21.19   Jun  17.50  2.31  *$  0.62   3.7%   5.3%
XCED   20.06  19.13   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  24.00   Jun  22.50 13.00  *$  1.25   5.9%   5.1%
VIRS   17.31  17.00   Jun  15.00  3.13  *$  0.82   5.8%   5.0%
GCO    12.44  13.63   Jun  10.00  2.88  *$  0.44   4.6%   5.0%
GCTI   20.25  23.06   Jun  17.50  3.50  *$  0.75   4.5%   4.9%
MXWL   22.75  20.75   Jun  20.00  3.38  *$  0.63   3.3%   4.7%
BEAS   17.25  23.06   Jun  15.00  3.00  *$  0.75   5.3%   4.6%
TWRS   20.56  19.75   Jun  17.50  4.00  *$  0.94   5.7%   4.1%
COMS   28.63  28.63   Jun  25.00  4.75  *$  1.12   4.7%   4.1%
PAIR   15.06  11.25   Jun  12.50  3.25   $ -0.56  -4.7%   0.0%
CYOE    8.31   6.13   Jun   7.50  1.56   $ -0.62  -9.2%   0.0%
MCNS   18.25  11.38   Jun  15.00  4.50   $ -2.37 -17.2%   0.0%
--------------------------------------------------------------
NMSS    8.13   8.31   Jul   7.50  1.38  *$  0.75  11.1%   9.7%
TKLC   12.06  11.25   Jul  10.00  2.75  *$  0.69   7.4%   6.4%
CPU     8.38   8.06   Jul   7.50  1.44  *$  0.56   8.1%   5.8%
CAST   15.94  15.25   Jul  15.00  1.88  *$  0.94   6.7%   5.8%
PILL   13.88  13.19   Jul  12.50  2.13  *$  0.75   6.4%   5.5%
KMET   20.88  21.63   Jul  20.00  2.06  *$  1.18   6.3%   5.4%
AVIR   22.75  24.00   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  17.81   Jul  15.00  2.44  *$  0.94   6.7%   4.8%
ARTT   14.69  14.31   Jul  12.50  2.75  *$  0.56   4.7%   4.1%
DUSA    9.75   9.94   Jul   7.50  2.56  *$  0.31   4.3%   3.7%
VLNC    7.50   6.50   Jul   7.50  1.13   $  0.13   2.0%   1.3%
PTEK   15.44  11.88   Jul  12.50  3.75   $  0.19   1.6%   1.0%
NOVT   25.19  20.13   Jul  22.50  4.25   $ -0.81  -3.9%   0.0%
CYOE    7.38   6.13   Jul   7.50  1.00   $ -0.25  -3.9%   0.0%

Previously closed: DMRK (+0.31), SATH(-0.19), TOY (+1.00) and
VVUS (-0.75)

You may consider closing:  CYOE, VLNC, NOVT and PTEK - when/if
it closes below $11.

-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

AMES   47.50  Jul 45.00  QAF GI  4.75  61    42.75   5.26%   5.26%
DIMD    5.06  Jul  5.00  DAQ GA  0.63  1825   4.43  12.87%  12.87%
FFD    16.38  Jul 15.00  FFD GC  2.50  697   13.88   8.07%   8.07%
FIBR   12.63  Jul 10.00  QFW GB  3.25  162    9.38   6.61%   6.61%
MCOM   11.06  Jul  7.50  MQM GU  3.88  641    7.18   4.46%   4.46%
MCOM   11.06  Jul 10.00  MQM GB  2.25  1274   8.81  13.51%  13.51%
SAVLY  15.75  Jul 12.50  QVY GV  4.00  415   11.75   6.38%   6.38%
SQNT   13.75  Jul 12.50  SQQ GV  2.38  763   11.37   9.94%   9.94%
THNK   17.19  Jul 12.50  THU GV  5.13  121   12.06   3.65%   3.65%
THNK   17.19  Jul 15.00  THU GC  3.25  628   13.94   7.60%   7.60%


***************************
Sequenced by Return Called 
***************************
Stock  Price  Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym               Price  Symbol  Bid   Intr  Basis

MCOM   11.06  Jul 10.00  MQM GB  2.25  1274   8.81  13.51%  13.51%
DIMD    5.06  Jul  5.00  DAQ GA  0.63  1825   4.43  12.87%  12.87%
SQNT   13.75  Jul 12.50  SQQ GV  2.38  763   11.37   9.94%   9.94%
FFD    16.38  Jul 15.00  FFD GC  2.50  697   13.88   8.07%   8.07%
THNK   17.19  Jul 15.00  THU GC  3.25  628   13.94   7.60%   7.60%
FIBR   12.63  Jul 10.00  QFW GB  3.25  162    9.38   6.61%   6.61%
SAVLY  15.75  Jul 12.50  QVY GV  4.00  415   11.75   6.38%   6.38%
AMES   47.50  Jul 45.00  QAF GI  4.75  61    42.75   5.26%   5.26%
MCOM   11.06  Jul  7.50  MQM GU  3.88  641    7.18   4.46%   4.46%
THNK   17.19  Jul 12.50  THU GV  5.13  121   12.06   3.65%   3.65%


********************
Company Descriptions
********************

AMES - Ames Department Stores  $47.50  *** STAGE II ***

Ames Department Stores operates 453 discount department stores in 
19 states in the Northeast, Mid-Atlantic and Mid-West and DC. As 
revenues have increased with the acquisition of the Hills Store
company and Caldor Sites (plus more stores in operation), Ames 
continues to climb even during the recent market downturn. The
tape remains strongly bullish and any pullback should be viewed
as a buying opportunity.

Jul 45.00 QAF GI Bid=4.75 OI=61 CB=42.75 RC=5.26% RNC=5.26%

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

*****

DIMD - Diamond Multimedia System $5.06 *** Speculators ONLY ***

DIMD designs, develops, manufactures and markets multimedia and 
connectivity products for IBM compatible PCs and modems for Apple
Macintosh computers. But more importantly: On Tuesday, The 9th 
U.S. Circuit Court of Appeals in San Francisco found that the Rio 
MP300, manufactured by Diamond Multimedia did not qualify as a 
"digital audio recording device" and was not subject to the 
restrictions of the 1992 Audio Home Recording Act. This should
provide short-term positive momentum for DIMD and our cost basis
resides just above support.

Jul 5.00 DAQ GA Bid=0.63 OI=1825 CB=4.43 RC=12.87% RNC=12.87%

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

*****

FFD - Fairfield Communities   $16.38 *** Vacation Season ***

Fairfield Communities is one of the nation's largest and most
comprehensive resort and vacation products companies in the
world, providing quality recreational experiences at twenty-six
locations in 11 states and the Bahamas. They specialize in resort
development and the creation of innovative vacation ownership and
other leisure products. They also provide a complete range of
professional resort management services to the vacation and
hospitality industry. Fairfield moved into lateral consolidation
(buying opportunity?) after being downgraded May 24; now appears
ready to resume its up-trend.

Jul 15.00 FFD GC Bid=2.50 OI=697 CB=13.88 RC=8.07% RNC=8.07%

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

*****

FIBR - Osicom Technologies, Inc.  $12.63 *** Try Again ***

Osicom Tech designs, manufactures and markets optical networking 
products for use in intra-city or metropolitan networks. We will
try Osicom one more time as the $10 call offers favorable downside
protection and a reasonable return. Osicom took a nose dive in 
April over alleged misleading contracts/purchase orders - another
exercise in money management. With several bullish divergence's
now evident, we will again speculate on FIBR.

Jul 10.00 QFW GB Bid=3.25 OI=162 CB=9.38 RC=6.61% RNC=6.61%

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

*****

MCOM - Metricom Inc  $11.06  *** Stage II Up-trend ***

MCOM designs, develops and markets wireless network products and 
services that provide low-cost, easy-to-use data communications 
that can be used in personal computer and industrial applications.
The launch of Ricochet and the new Wireless Access Server System
(providing secure access to LANs and the Internet), bodes well for
MCOM's future (New York City, AvantGo.com, etc.). The tape agrees
as Metricom topped resistance at $10 and is displaying bullish
characteristics. A combination play (sell both the $7.50 calls &
the $10.00 calls) may offer the best balance of return on
investment and downside protection.

** Conservative **

Jul 7.50 MQM GU Bid=3.88 OI=641 CB=7.18 RC=4.46% RNC=4.46%

** Aggressive **

Jul 10.00 MQM GB Bid=2.25 OI=1274 CB=8.81 RC=13.51% RNC=13.51%

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

*****

SAVLY -  Saville Systems  $15.75  *** 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 is continuing to show strength and Saville had coverage
initiated on Wednesday by Kaufman Bros.

Jul 12.50 QVY GV Bid=4.00 OI=415 CB=11.75 RC=6.38% RNC=6.38%

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

*****

SQNT - Sequent Computer Systems  $13.75 

Sequent Computer Systems, Inc. designs, manufactures, and markets 
high performance symmetric multiprocessing and CC-NUMA computer 
systems and operating environment software. Sequent's price jump 
the last two days is the result of Oracle's earnings surprise (on
Monday SQNT had announced a further extension of their alliance
with Oracle which boasts over 400 joint customers over the last
three years). We like the long term chart pattern which appears 
to indicate Sequent may complete a double bottom (from last Oct.)
with a new move above $15.

Jul 12.50 SQQ GV Bid=2.38 OI=763 CB=11.37 RC=9.94% RNC=9.94%

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

*****

THNK - THINK New Ideas, Inc. $17.19   *** Buy-out? ***

THINK provides marketing and communications services including 
traditional advertising and new media (Internet) advertising 
services. THNK has been rising amid speculation that they may
be bought by another company, possibly Razorfish. Think is still
displaying strong technical characteristics as the rumors fly 
and the options remain overvalued. A combination play (sell both
the $12.50 calls and the $15.00 calls) may offer the best balance
of return on investment and downside protection.

** Conservative **

Jul 12.50 THU GV Bid=5.13 OI=121 CB=12.06 RC=3.65% RNC=3.65%

** Aggressive **

Jul 15.00 THU GC Bid=3.25 OI=628 CB=13.94 RC=7.60% RNC=7.60%

Chart = http://quote.yahoo.com/q?s=THNK&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
CFN    4.88 Jul   5.00  CFNGA   0.88  17.95   280   210
PCMS   5.00 Jul   5.00  PQPGA   0.81  16.25   420   306
SBTK  22.13 Jul  22.50  XQYGX   3.25  14.69    55   148
GMGC   4.88 Jul   5.00  GGQGA   0.63  12.82  2200   288
CLST   7.44 Jul   7.50  EQLGU   0.94  12.61   380   377
CWC    7.00 Jul   7.50  CWCGU   0.88  12.50   690    35
DIMD   5.00 Jul   5.00  DAQGA   0.63  12.50   270  1825
EGGS  10.00 Jul  10.00  EGQGB   1.25  12.50   370   462
USWB  22.13 Jul  22.50  QWBGX   2.69  12.15   810   663
SRCM  14.88 Jul  15.00   SQGC   1.75  11.76    80   537
MCOM  11.06 Jul  12.50  MQMGV   1.25  11.30   190   677
CYCH  12.25 Jul  12.50  KBQGV   1.38  11.22   160   609
SAVLY 15.63 Jul  17.50  QVYGW   1.75  11.20   820  1451
SBTK  22.13 Jul  25.00  XQYGE   2.44  11.02    36   308
PCTL   9.34 Jul  10.00  PTQGB   1.00  10.70   100  1746
TIE    9.63 Jul  10.00  TIEGB   1.00  10.39   570   105
FRTE   9.75 Jul  10.00  RQFGB   1.00  10.26   130   339
ZONA   9.88 Jul  10.00  NQZGB   1.00  10.13   120   199
OMKT  12.38 Jul  12.50  OQMGV   1.25  10.10   140  1307
SQNT  13.69 Jul  15.00  SQQGC   1.38  10.05   420   783
SBTK  22.13 Aug  22.50  XQYHX   4.75  21.47     5   669
GMGC   4.88 Aug   5.00  GGQHA   1.00  20.51  1700  6056
SBTK  22.13 Aug  25.00  XQYHE   3.63  16.38   110   638
IFMX   7.41 Aug   7.50  IFQHU   0.94  12.66   190  2191
QNTM  23.88 Aug  25.00  QNQHE   3.00  12.57   420  1682
BXM   24.56 Aug  25.00  BXMHE   2.88  11.70   300   232
SGI   13.31 Aug  15.00  SGIHC   1.38  10.33   130  4297
GMGC   4.88 Aug   7.50  GGQHU   0.50  10.26   140  1045
CFN    4.88 Sep  10.00  CFNIB   0.88  17.95   190   407
CRUS   9.72 Sep  10.00  CUQIB   1.69  17.36    47   591
DRMD  14.00 Sep  15.00  DUQIC   2.25  16.07   190  3624
MDM    7.13 Sep   7.50  MDMIU   1.06  14.91   280  5133
IRF   12.25 Sep  12.50  IRFIV   1.81  14.80   100   173
AFCI  13.63 Sep  15.00  AQFIC   2.00  14.68    86  1664
NE    19.75 Sep  20.00   NEID   2.88  14.56    62  1115
PTEC  11.69 Sep  12.50  PKQIV   1.69  14.44   260   374
OH    12.13 Sep  12.50   OHIV   1.69  13.92   110   132
SYBS   9.88 Sep  10.00  SBQIB   1.31  13.29    73   908
ENER   8.38 Sep  10.00  EQIIB   1.00  11.94    28   776
IDC    4.50 Sep   5.00  IDCIA   0.50  11.11    95  4214
ICIX  25.38 Sep  30.00  QIXIF   2.75  10.84   410    89
KM    17.00 Sep  17.50   KMIW   1.81  10.66   990  3821
ESV   20.50 Sep  22.50  ESVIX   2.13  10.37   110   484






*****************
NAKED PUT SECTION
*****************
Small Losses Equal Big Profits...

Each week we receive dozens of E-mails from investors that have a
history of great trades and yet their portfolios fail to grow. The
most common trait in each of these cases is the failure to manage
losses properly.

The facts are obvious! No one can successfully predict the market
in every case so the key is to take small profits regularly and
prevent losing plays from significantly eroding capital. Losses
are bound to happen, they are inevitable; but that shouldn't keep
you from profiting on a regular basis. The fact is, it's very
difficult for most investors to close out losing plays early.
Successful traders understand there is no reason to hang on to a
losing position when there are so many other profitable plays that
deserve their time and money.

Emotion is the capital killer! Hope, greed and fear all conspire
to remove money from your account that you will never see again.
What generally happens is that the trader says to himself, "If I
just hold on...I'll eventually break even"; "It can't go lower!";
"It's going to come back...it has to!";  The reality is, it rarely
does.

One of the best ways to avoid this trap is to use a trading plan
with pre-determined exits. Stop-loss orders can be used to remove
on-the-spot decision making from the equation, and trailing stops
can be used to follow a position into greater profits while
protecting for reversals.

If you are going to have a plan, stick with it. Don't jump into
trades on emotion, wait for the proper entry points. Study and
identify trends within individual issues before opening a position.
Use technical support areas as buying opportunities and sell on
rallies towards resistance. One of the oldest phrases is; "Buy on
down days, sell on up days" and it is really not that difficult.

If you discover that your losses are consistently larger than your
gains, stop trading! Step back, take a break, a few days off. When
you are ready to try again, evaluate your trading strategies and
review the losses to learn from previous mistakes, then move on!

Success will come when you create a favorable balance between hard
work, sound judgment and patience. Too many traders give up after
a few losing plays, long before they have time to learn and absorb
the various methods required for profitable trading.

Good Luck!
------------------------------------------------------------------
                      *** 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 (SUMMARY FOR JUNE EXPIRATION)
*******************************************************
Stock  Price  Last    Mon  Strike  Opt   Profit   ROI    Monthly
Sym    Picked Price        Price   Bid   /Loss           ROI

THNK   15.00  17.19   Jun  12.50  0.69  *$  0.69  16.5%  23.9%
VIP    24.69  24.63   Jun  22.50  0.44  *$  0.44   5.4%  23.5%
REV    28.13  28.00   Jun  25.00  0.94  *$  0.94  10.4%  22.5%
ALKS   25.75  25.25   Jun  22.50  0.75  *$  0.75   9.6%  20.9%
SAVLY  15.69  15.63   Jun  12.50  0.50  *$  0.50  13.7%  19.9%
FFD    16.13  16.38   Jun  12.50  0.50  *$  0.50  13.4%  19.4%
LHSP   34.56  37.06   Jun  30.00  0.81  *$  0.81   8.0%  17.5%
CMNT   25.25  23.25   Jun  22.50  1.00  *$  1.00  12.0%  17.3%
AVIR   22.75  24.00   Jun  20.00  0.50  *$  0.50   7.3%  15.9%
SATH   10.75   8.38   Jun   7.50  0.44  *$  0.44  17.0%  14.8%
BEAS   17.25  23.06   Jun  15.00  0.94  *$  0.94  16.8%  14.6%
GSTX   12.50  11.88   Jun  10.00  0.56  *$  0.56  18.3%  13.3%
DAB    27.00  27.00   Jun  20.00  0.50  *$  0.50   8.5%  12.3%
QNTM   19.88  23.88   Jun  17.50  0.50  *$  0.50   8.2%  11.9%
IMG     9.81   7.19   Jun   7.50  0.75   $  0.44  16.2%  11.8%
PAMC   34.69  24.00   Jun  22.50  0.81  *$  0.81  10.5%  11.4%
URI    30.25  26.88   Jun  25.00  0.56  *$  0.56   7.6%  10.9%
SKYT   20.13  22.69   Jun  15.00  0.44  *$  0.44   9.8%  10.7%
CMOS   24.81  36.25   Jun  20.00  0.88  *$  0.88  14.7%  10.6%
ANSR   26.38  27.38   Jun  22.50  0.50  *$  0.50   7.0%  10.1%
UCI    24.88  27.31   Jun  22.50  0.31  *$  0.31   3.9%   8.5%
GMST   57.88  54.84   Jun  42.50  0.88  *$  0.88   7.1%   7.7%
USWB   28.56  22.13   Jun  22.50  0.81   $  0.44   6.7%   7.3%
IDTC   26.38  23.19   Jun  15.00  0.38  *$  0.38   6.7%   7.3%
KLAC   49.31  56.44   Jun  40.00  0.69  *$  0.69   6.2%   6.8%
LHSP   39.50  37.06   Jun  25.00  0.44  *$  0.44   5.3%   5.7%
NTPA   36.25  21.69   Jun  22.50  0.56   $ -0.25  -3.2%   0.0%
PTEK   17.50  11.88   Jun  12.50  0.38   $ -0.24  -6.2%   0.0%
NOVT   25.19  20.13   Jun  22.50  0.44   $ -1.93 -24.6%   0.0%
--------------------------------------------------------------
PILL   13.88  13.19   Jul  12.50  0.81  *$  0.81  16.3%  14.1%
SBTK   27.25  22.13   Jul  20.00  0.94  *$  0.94  14.7%  12.8%
PCYC   21.13  23.63   Jul  17.50  0.81  *$  0.81  14.4%  12.5%
CIEN   30.50  30.88   Jul  25.00  0.81  *$  0.81  10.8%   9.4%
REV    30.38  28.00   Jul  22.50  0.69  *$  0.69  10.2%   8.9%
SUGN   22.75  29.19   Jul  17.50  0.44  *$  0.44   8.8%   7.7%
NRES   20.25  21.13   Jul  17.50  0.50  *$  0.50   8.5%   7.4%
CUBE   32.00  32.00   Jul  25.00  0.56  *$  0.56   8.0%   7.0%
EGRP   37.81  35.00   Jul  25.00  0.56  *$  0.56   6.9%   6.0%

Previously closed:  PTVL (-0.06)

-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

AMES   47.50  Jul 40.00  QAF SH  0.69  115   39.31   5.66%
ANAD   31.31  Jul 25.00  DQA SE  0.63  202   24.37   9.14%
BOBJ   37.00  Jul 30.00  BBQ SF  0.69  12    29.31   8.13%
CNTO   50.94  Jul 40.00  COQ SH  0.81  894   39.19   7.36%
CUBE   32.00  Jul 25.00  UQB SE  0.44  21    24.56   6.43%
NE     20.00  Jul 17.50   NE SW  0.50  60    17.00   8.33%
STII   25.00  Jul 20.00  SDQ SD  0.50  5     19.50   9.09%
TDW    28.75  Jul 25.00  TDW SE  0.50  435   24.50   6.06%

*********************************
Sequenced by Return on Investment  
*********************************
Stock  Price  Mon Strike Option  Opt   Open  Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr  Basis  Expired

ANAD   31.31  Jul 25.00  DQA SE  0.63  202   24.37   9.14%
STII   25.00  Jul 20.00  SDQ SD  0.50  5     19.50   9.09%
NE     20.00  Jul 17.50   NE SW  0.50  60    17.00   8.33%
BOBJ   37.00  Jul 30.00  BBQ SF  0.69  12    29.31   8.13%
CNTO   50.94  Jul 40.00  COQ SH  0.81  894   39.19   7.36%
CUBE   32.00  Jul 25.00  UQB SE  0.44  21    24.56   6.43%
TDW    28.75  Jul 25.00  TDW SE  0.50  435   24.50   6.06%
AMES   47.50  Jul 40.00  QAF SH  0.69  115   39.31   5.66%

********************
Company Descriptions
********************

AMES - Ames Department Stores  $47.50  *** STAGE II ***

Ames Department Stores operates 453 discount department stores in 
19 states in the Northeast, Mid-Atlantic and Mid-West and DC. As 
revenues have increased with the acquisition of the Hills Store
company and Caldor Sites (plus more stores in operation), Ames 
continues climb even during the recent market downturn. The tape
remains strongly bullish and any pullback may be viewed as a new
buying opportunity.

Jul  40.00  QAF SH  Bid=0.69  OI=115  CB=39.31  ROI=5.66%

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

*****

ANAD - Anadigics Inc.  $31.31     *** Chip Sector Rally ***

Anadigics is a leading supplier of radio frequency and microwave
gallium arsenide integrated circuits. The company's products are
used to receive and transmit signals in a variety of high volume,
wide-band communications applications in cellular telephones and
personal communication systems, in cable and direct broadcast
television systems, and in fiber optic communication systems. A
new upgrade by Prudential and a hot sector make this a favorable
one month position.

Jul  25.00  DQA SE  Bid=0.63  OI=202  CB=24.37  ROI=9.14%

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

*****

BOBJ - Business Objects  $37.00     *** Own This One! ***

Business Objects is the world's leading provider of integrated
enterprise decision support tools. They provide non-technical
business users access to information stored in data warehouses,
data marts, and packaged business applications. BOBJ provides a
complete suite of decision support tools and DSS administration
for both client/server and Internet environments. A report from
Barrington Research recently offered a BUY rating with a target
of $43 per share. Future EPS forecasts are increasing due to
strong license revenue growth.

Jul  30.00  BBQ SF  Bid=0.69  OI=12  CB=29.31  ROI=8.13%

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

*****

CNTO - Centocor Inc.  $50.94     *** New Drugs ***

Centocor is a biopharmaceutical/drug company specializing in the
development and commercialization of monoclonal antibody-based
products to meet critical human health care needs. The company
perform research in the field of small peptide molecule-based
pharmaceutical products. The stock rallied recently on news that
their drug REMICADE(TM) produced significant reductions of signs
and symptoms in patients with advanced rheumatoid arthritis. The
company continues to be rumored as a takeover candidate.

Jul  40.00  COQ SH  Bid=0.81  OI=894  CB=39.19  ROI=7.36%

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

*****

CUBE - C-Cube Microsystems  $32.00

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 recently
on speculation of better-than-expected earnings and merger rumors.
Analysts expect new sales in their industry to rise and CUBE is
positioned to benefit from its leading edge technology.

Jul  25.00  UQB SE  Bid=0.44  OI=21  CB=24.56  ROI=6.43%

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

*****

NE -  Noble Drilling Corp.  $20.00     *** Oil Service Sector ***

Noble Drilling is a leading provider of diversified services for
the oil and gas industry worldwide. Their activities include
offshore drilling services, engineering and production management.
The company's drilling fleet is broadly diversified, allowing it
to work in a variety of operating conditions. Three upgrades in
the last month and a neutral to bullish chart with recent support
near $17.

Jul  17.50  NE SW  Bid=0.50  OI=60  CB=17.00  ROI=8.33%

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

*****

STII - Stanford Telecommunications  $25.00

Stanford telecommunications designs, manufactures, and markets
advanced digital telecommunications products and systems to
establish or enhance communications via satellites, terrestrial
wireless and cable. They also provide communication systems
networking solutions and GPS navigation products. STII has a new
contract to provide a critical component of the Army's Defense
Satellite Communications System and they recently announced a
service agreement with the FAA worth approximately $100 million
over the next 5 years.

Jul  20.00  SDQ SD  Bid=0.50  OI=5  CB=19.50  ROI=9.09%

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

*****

TDW - Tidewater Inc.  $28.75

TDW serves the international energy industry with two principal
divisions: marine & compression. Their marine division provides
services supporting offshore exploration and production; towing
and handling of mobile drilling rigs; transporting supplies and
personnel necessary to sustain drilling, workover & production
activities; and supporting construction activities. Their other
division provides natural gas & air compression equipment for a
variety of applications. An upgrade last week by Lehman Brothers
and TDW announced on Friday that they have agreed to sell excess
marine property (part of its North Sea safety-standby fleet). The
$40 million all-cash sale is expected to close in late June.

Jul  25.00  TDW SE  Bid=0.50  OI=43  CB=24.50  ROI=6.06%

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

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




DISCLAIMER

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

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