Option Investor
Newsletter

Daily Newsletter, Sunday, 07/11/1999

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The Option Investor Newsletter            Sunday  7-11-99  1 of 7
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

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

Published three times weekly, Sunday, Tuesday, Thursday evenings.
New plays and market wrap updated daily on the website. 
******************************************************************
Entire newsletter best viewed in COURIER 10 font for alignment
******************************************************************
MARKET STATS FOR LAST WEEK AND PRIOR WEEKS
******************************************************************
         WE 7-9            WE 7-2           WE 6-25         WE 6-18
DOW     11193.70 + 54.46 11139.24 +586.68 10552.56 -303.00  +365.06  
Nasdaq   2793.07 + 52.05  2741.02 +188.37  2552.65 - 10.79  +115.64  
S&P-100   722.88 +  6.66   716.28 + 44.99   671.29 - 12.18  + 28.60  
S&P-500  1403.28 + 12.06  1391.22 + 75.91  1315.31 - 27.53  + 49.20  
RUT       457.98 +  1.47   456.51 + 13.40   443.11 -  1.94  +  7.04  
TRAN     3427.32 - 88.67  3515.99 199.88   3316.11 - 80.23  + 51.87  
VIX        19.09            18.85            22.61            22.34
Put/Call     .46              .47              .53              .43
******************************************************************

New high, new high, new high !

Two Fridays in a row we have had new highs for the three major
market indexes. Would it be too much to ask for a triple-triple
for next Friday? The market is definitely moving in the right 
direction but the gains for the week were only marginal. The Dow 
lagged the Nasdaq percentage wise with only a +54 points for the 
week compared to the +52 for the Nasdaq but considering the +5.6% 
and +7.4% from last week we should be happy with any forward 
progress. We did not even get close to our 11,100 support line on
Friday and closed at the high of the day. NYSE ticks turned in a 
very positive +896 at the close and both Nasdaq and NYSE advancers 
were beating decliners by a wide margin. (+411 Nasdaq, +683 NYSE)

 

 



While the DOW held its ground for the week and ended on a
very positive note, the Nasdaq broke out of its recent trading 
range and headed for blue sky. It is hard to picture the summer
tech wreck, which comes at the end of summer, with techs doing
so well now. When the August tech slump starts just remember
the tech pullback in May/June when the higher interest rate
talk was taking the spotlight.

The last two weeks went very well and we should all be grateful
to the Fed for giving us another chance for a nice earnings
season. Just remember, what the Fed giveth the Fed can take away.
Even with the strong earnings cycle upon us the rumblings of the
next Fed meeting in August are starting to surface. Interest rates
are still hovering around 6% and the bond bears refuse to go into
hibernation. I would urge you to make the most out of the next
three weeks or so and then be very cautious.

The transports refused to confirm the Dow advance and closed
down -88 for the week. Oil prices crossed $20 a BBL and oil
sensitive stocks have started to react negatively. Airlines are
drifting down as well as companies like Airborne Freight and
Federal Express. The market was suffering from cheap oil back
in the winter but now the other end of the spectrum is coming
back to haunt us. Almost everything we do is impacted by oil
prices and if prices inch up much more we will see an accelerated
impact in the markets.

The good news sector for the week had to be the PC makers. Multiple
upgrades and lack of weak Y2K sales have reawakened CPQ, DELL and
Gateway. IBM just keeps setting new highs every day and is showing
no signs of slowing. The semiconductor sector is still hot and
Intel is only 6 points away from an all time high. Dell burst out
of the earnings gate the last three days and went from a low of
36.63 on Wednesday to close at almost $43 on Friday. This is way
too early for a Dell earnings run and the jump was due to multiple
upgrades this week. We are adding Dell to our play list tonight
but strongly urge you to wait for a pullback to start a position.
Dell does not report earnings until mid August and we have a long
time to wait.

No negative trial publicity is showing up in the results for
Microsoft. After struggling recently it is only $2 away from the
all time high set back in April. Microsoft reports earnings on 
the 19th which give us another week to play. Microsoft is under
investigation by the SEC for managing their earnings reporting.
They literally have billions of dollars in earnings reserves that
they may have to reclassify eventually. The talk around the
office here is that Microsoft may start releasing some of this
earnings treasure to relieve the pressure. This could result in
a significant jump over street estimates next week. We will still
not recommend holding over but we could get an interesting run.

Small caps are starting to cook and several of the researchers here
are putting extra money to work in the little stuff. Some of the
non-optionable stocks we have been playing are HSAC, PWER, MTIC,
INFS, AGY, CXY. We get a lot of requests for stuff like this by
email so here were the hot ones from last week. As always, buyer
beware.

Earnings will take center stage early in the week but the economic
calendar this week is about as dangerous as a minefield in Kosovo.
Import Prices, Export Prices, PPI, CPI, Business Inventories, Real
earnings, Industrial Production. Monday will probably be up but
after the open on Tuesday the outlook hinges entirely on the PPI/CPI.
These will be viewed as warning signs for the next Fed step and any
signs of inflation would be greeted very badly. Tighten your stops
on Tuesday and pray for friendly numbers. 
 
July options expire on Friday!

Good Luck, Sell too soon.

Jim Brown
Editor

PS: If you are only reading the email version and not viewing 
these sections on the website you are missing out. The imbedded
charts and links are provide a much more visual image on the
website than is possible in an email format.



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

The vote is in and I should never have doubted. I received 351
emails asking to keep this section and 3 that wanted it cancelled.
I read every one and had tears in my eyes on several. The confidence
the readers place in OIN is scary and humbling. I created a link
for all the emails if you want to see what others said. 

/charts/jimsplays.html

After getting such a strong response we have decided to use the
Traders Corner section to highlight the plays of the staff. We 
will have someone write a recap of a play or two as often as 
possible so you can benefit from the trading "style" of more than
one professional trader. It should be an exciting section since
we have a very broad cross section of trading styles represented.
From day-trading Internet stocks to complicated spread strategies
that routinely locks in nickels to quarters. Look for it to start
next Sunday.


WOW, what a week. In last weeks column I was loaded with more
positions than anyone should really carry. It paid off well, this
time. The market rally on Tuesday morning was very strong and broad
based but fortunately I was sitting in front on my PC when it rolled
over at 1:PM. The long term buy and holders will not like this but
when the ticks went negative and the advances started declining I
bailed and kept 95% of the profit to that point. If you read my 
commentary on Sunday and Tuesday you know I was looking for a
bout of profit taking to start on Wednesday. With that in the
forecast I did not want to risk holding my July options since
nobody knows how long the selling will last.


 



I am going to just recap the trades I closed on Tuesday and 
then describe the new positions.

Sold  MSFT Calls JUL-80  MSQ-GP @ $11.63 cost $ 8.75 
Sold  SEPR Calls JUL-80  ERQ-GP @ $ 7.88 cost $ 8.75 
Sold  NSOL Calls JUL-70  JNQ-GN @ $16.38 cost $14.25 
Sold  LCOS Calls JUL-90  QWL-GR @ $17.25 cost $12.75 
Sold  BRCM Calls JUL-125 RDZ-GE @ $19.50 cost $13.25 
Sold  SFE  Calls JUL-60  SFE-GL @ $10.63 cost $ 7.50 
Sold  TXN  Calls JUL-130 TXN-GF @ $13.88 cost $13.13 
Sold  VOD  Calls JUL-190 VOD-GR @ $20.75 cost $16.38 

Yes, I could have held some of these for more money given
the profit taking only lasted two days but if it had lasted
five days my July options would have dropped considerably.


Yahoo !!!!!!!!!!!!!!!!!!!!!!!!

My Yahoo play could not have worked better than the way
we played it. I really hope some of the readers were 
shadowing me on this one. Going into the week I was up
+$13.75 per share on the earnings run plays and the plan
was to sell calls at the open after earnings and short the
stock. I sold August 170 calls @ $19.38 and shorted YHOO
at $172 when it rolled over Thursday afternoon. I covered
the short at $160.50 at the close on Friday after it seemed 
to find support at $160. Remember, sell too soon. The Aug
calls are now $12.00 and have almost a 100% chance of 
expiring worthless. So currently I am now up $13.75 + 11.50
on the short and +7.38 on the calls for a total of $32.63
per share on the play. If the calls expire worthless I 
will have made $44.63 on a stock that was $130 when I
started the play. Please do not take this as bragging. I
just get excited and hope that you see the possibilities
of using more than one strategy to make money.

 


Here are the two previous earnings runs on which I based
the Yahoo play. Refer to the previous weeks columns to 
get a recap of the previous plays.

 


Last week I bought calls and sold puts on Microsoft
in preparation for their earnings run. They announce
on Jul-19th.  When they sold off on profit taking Tuesday
I sold the calls for a nice profit but missed getting back 
in on the closing dip because I was still expecting the 
market to be down Wed/Thr. When it was evident on Friday
that the market was done selling I re-entered the calls
and was very glad to see MSFT close at the high of the day.
Monday is looking real good! The Jul-90 Puts I sold at $3.50
are now $.63 and should expire worthless for a total profit.
 
 



The QCOM puts gave me a scare on Wednesday but after the
announcement on Thursday of Qualcom being added to the
S&P-500 they are as good as expired. I received $6.88 as
premium and they were $2.19 at the close on Friday.
Because of the announcement I bought QCOM stock on the midday
dip on Friday at $149 as well as July $130 calls at $21.00.
I bought deep in the money to get 100% delta and minimum
time premium decay as July options expire next week.

 


Micron Technology started bouncing several days ago from
a long slide. I don't think I have ever made money on 
Micron. It always turns over when I buy it. I apologize
in advance to any MU holders currently if history repeats
itself. When it started up on Friday afternoon on the 
announcement they were going to give away free PCs to
anyone who signed up for their Internet service, I bit 
the bullet and opened a play. You and I both know that
this is a ploy, just like giving away free cell phones.
But, how many cell phones are there in circulation now
that were not there before the practice became common?
Micron has been a distant cousin to Dell and Gateway 
but I think they are becoming more aggressive and more
visible. I bought July $45 calls for $4.50 as the stock 
crossed $49. My time premium was only $.50. Of course my
delta is 100% so any profit taking by Micron will hit me
100% as well.

 
 
 






Safegard Scientific had been on my watch list since it started
recovering from the slide in late June. After making good
money on them last Tuesday I was cussing myself for not getting
back in on Wednesday when it bounced off $68. After gapping
open on Friday I took advantage of the midday pullback to
reopen a call position. I own July-60 calls @14.63. Buyers
remorse set in late Friday after it flat lined at $74 all
afternoon. Hoping for a pop at the open on Monday again.
If you will notice on the bottom chart it gapped up at the
open every day last week.

 
 





ITVU is a stock that some of the guys at the office have
been playing in their retirement accounts. It is strictly
a momentum play and I bought the July-$45 calls at $7.00
to try and get a quick pop next week. The stock is at $51.50
and my time premium is only $.50, delta 100% again.

 



High Speed Access is a recent IPO and is not optionable.
I bought the stock Wednesday at $36.50 and it is kicking 
butt. Up +$8.56 Friday. Strictly a momentum play!  
 



The big loser for the week was MCOM. I bought it on 
Wednesday at the close and was sitting pretty Friday
morning when it gapped open bigtime. Because I was 
"trading" Friday I did not have any stops set. I left
the PC for about 30 minutes and disaster struck. There
was absolutely no news and it appears to be just profit
taking. It is still up +157% in the last two weeks.
Paul Allen is a big investor in MCOM and spoke highly
of it at the Sun Valley conference late Friday afternoon.
I hope he continues to speak very highly since my $12
options are now $4.50. I feel like the guy in the Etrade
commercial that runs to tell his boss he quit after seeing
his stock gap up strongly only to come back to the PC to
see it in the tank...... (July $40 calls @$12.00)

 



My last position is very generic. When the market started
to firm Friday afternoon and the advances started picking
up and the ticks started accelerating, I could not resist
nibbling at some OEX calls. This time of month the time
premium is low enough that I can justify the risk. I am
not normally an OEX player. This is just a speculation 
play based on my belief that the market will be up Monday.
I plan on getting a couple points and bailing. July-$710
calls @ $14.25.

 



I am looking for a bottom in VOD to start another position 
before the shareholder meeting on the 21st. 



Current positions:

Short YHOO Calls AUG-170 YHV-HN @ $19.38 (current 12.00)
Short QCOM Puts  JUL-140 AAW-SH @ $ 6.88 (current $2.19)
Short MSFT Puts  JUL-90  MSQ-SR @ $ 3.50 (current $ .63)

Long  MSFT Calls JUL-80  MSQ-GP @ $12.13 (current 13.00)
Long  ITVU Calls JUL-45  QYU-GI @ $ 7.00 (current $7.00)
Long  MCOM Calls JUL-40  MQM-GH @ $12.00 (current $4.50)ouch!
Long  SFE  Calls JUL-60  SFE-GL @ $14.63 (current 14.75)
Long  MU   Calls JUL-45  MU-GI  @ $ 4.50 (current  6.00)
Long  OEX  Calls JUL-710 OEZ-GB @ $14.50 (current 15.50)

Long  HSAC stock @ $36.50 (current $47.69)
Long  QCOM stock @ 149.00 (current 148.75)



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


Monday: 

Chicago Fed Index   May    Forecast:  --     Previous: 131.4

Tuesday:

Atlanta Fed Index   Jun    Forecast:  --     Previous: 9.1
BTM Schroders       7/10   Forecast:  --     Previous: 0.1%
LJR Redbook         7/10   Forecast:  --     Previous: -0.4%
API Oil Stocks      7/09   Forecast:  --     Previous: -1.924M
Import Prices       Jun    Forecast:  --     Previous: 0.7%
Export Prices       Jun    Forecast:  --     Previous: unch
Richmond Fed Index  Jun    Forecast:  --     Previous: na   

Wednesday:

Producer Price Indx June   Forecast:  0.1%   Previous: 0.2%
PPI ex-food/energy  June   Forecast:  0.1%   Previous: 0.1%
Retail Sales        June   Forecast:  0.3%   Previous: 1.0% 
Retail Sales x-auto June   Forecast:  0.4%   Previous: 0.5%   

Thursday:

Jobless Claims      7/10   Forecast:  308k   Previous: 294K 
Consumer Price Indx June   Forecast:  0.1%   Previous: unch 
CPI ex-food/energy  June   Forecast:  0.1%   Previous: 0.1%  
Money Supply (M2)   7/05   Forecast:  ---    Previous: $4.9B 
Business Inventories May   Forecast:  0.2%   Previous: 0.2%
Phil Fed Survey     July   Forecast:  --     Previous: 5.3 
Real Earnings       June   Forecast:  --     Previous: 0.7%

Friday:

Industrial Prod     Jun    Forecast:  0.2%   Previous: 0.2%
Capacity Util       Jun    Forecast:  80.4%  Previous: 80.5%
Univ MI Sentiment   Jun    Forecast:  107.5  Previous: 107.3



**************
MARKET POSTURE
**************
As of Market Close - Friday, July 9, 1999 

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

DOW Industrials   10,500  11,000  11,194    BULLISH   7.01
SPX S&P 500        1,315   1,355   1,403    BULLISH   7.01
OEX S&P 100          660     690     723    BULLISH   6.29
RUT Russell 2000     390     450     458    BULLISH   6.29

NDX NASD 100       2,110   2,220   2,393    BULLISH   6.29
MSH High Tech      1,010   1,080   1,216    BULLISH   6.19

XCI Hardware         900     950   1,051    BULLISH   6.17
CWX Software         675     700     802    BULLSIH   6.17
SOX Semiconductor    410     425     509    BULLISH   6.10
NWX Networking       525     545     601    BULLISH   6.25
INX Internet         500     510     561    BULLISH   7.01

BIX Banking          680     720     715    Neutral   6.29
XBD Brokerage        410     425     437    BULLISH   7.01
IUX Insurance        645     660     657    Neutral   6.29

RLX Retail           900     910     947    BULLISH   6.29
DRG Drug             370     400     373    Neutral   7.01
HCX Healthcare       750     800     765    Neutral   7.01
XAL Airline          180     190     170    BEARISH   5.21
OIX Oil & Gas        285     310     307    Neutral   5.13


Posture Alert
Friday's gains capped off a very solid week, as the market posture 
remains heavily bullish. Numerous indexes continue to break out 
into new highs (NWX, CWX, XCI). With a large number of corporate 
earnings due out the next couple of weeks, further upside potential 
is strong for select indexes.    

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

/members/marketposture




****************
Market Sentiment 
****************
The Speculators are Back!

Our friends who have been such good indicators of market direction in 
the past are starting to jump back into the market. Calculating the 
Pinnacle Index for the July OEX expirations, we saw these speculators 
buying large quantities of calls between 730-750. When you combine 
such a short time period until expiration with the fact that some of 
these speculators are buying options so far out of the money, what you 
get is a losing trade. These wrong-ways missed the run we just had 
this last week and a half, and are now trying to join the party. 
During these last several weeks, you could have blindly picked a stock 
and made good money, but these speculators have been watching the 
whole time. Looking at the July and August expirations, the quantity 
of OTM options tells us is that overhead resistance is becoming 
stronger and stronger and that the likelihood of a major broad market 
advancement this next week will be limited most likely to selected 
stocks. So choose you stocks/options carefully.

On the opposite end of this spectrum is the rampant OTM put buying. 
These opposite thinking wrong-ways are hoping for a major correction 
in the next 5 days. Nice try, and thanks for your donation. What 
these speculators are showing us is that even though the broad market 
has had a huge run-up, any major sell-off is unlikely. The underlying 
support is only growing larger. For the OEX, we see support building 
up in the 700-720 area. 

Due to many requests, the next several (market sentiment) newsletters 
will concentrate on the Pinnacle Index for individual stocks, so 
investors may gauge what the overall tone is for companies going into 
their quarterly report. This should give investors a better 
indication to buy/sell/hold into earnings. Have a good week. 

 


 


 


Bullish Signs:

OEX Put Buying:
From a contrarian standpoint, the amount of puts in the 700-715 range 
is giving good support for this market and could help fuel additional 
upside potential.

Market Posture:
Several indexes breaking into new highs, including the Dow, OEX, 
networking, software, and semiconductors.

Investor Intelligence:  
As a contrarian indicator, the percent of Bullish investors decreased 
by over 3% and the percent of Bearish investors increased by 2%.

Russell 2000: 
Trending above both moving average, and also above key 450 benchmark.

Mixed Signs:

Interest Rates:
The 30-yr Treasury is beginning to retrace back under the key 6% level.


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. 

BEARISH Signs:
  
 
Peak Open Interest:  
The contraian put-call ratio clocking in at .5 suggesting bullish
sentiment picking up steam.

OTM Call Analysis

As we move through July'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.

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

Friday, June 19           35,225        -
Friday, June 25           63,342        +79.8%
Friday, July 02           87,833       +149.3%
Friday, July 09           99,855       +283.5%


Market Sentiment at a Glance                                 
                                 Friday 
Indicator                        (7/09) 

Pinnacle Index (OEX):          

                    
Overhead Resistance (720-750)      7.9
Underlying Support  (685-710)      1.3
                    (650-710)      2.1

Put/Call Ratios:

CBOE Total P/C Ratio                .5        
CBOE Equity P/C Ratio               .4
OEX P/C Ratio                      1.5


Peak Open Interest (OEX):

Puts                              600
Calls                             730
P/C Ratio                          1.01

Market Volatility Index (VIX):	

CBOE VIX                          19.09 



Investors Intelligence:

Bullish                         52.60%
Bearish                         27.20%


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.

 
OEX Pinnacle Index               Friday 
Benchmark                        (7/09)

Overhead Resistance (720-750)    7.9

OEX Close                        722.68
 
Underlying Support  (685-710)    1.3
                    (650-710)    2.1

 
Average ratings: 
Resistance levels 2.0 / Support Levels .5

What the Pinnacle Index is telling us:
Overhead sentiment resistance is building at the OEX 725/750 level 
while the underlying support is holding at the OEX 685/710 level.

Put/Call Ratio                  Friday
Strike/Contracts                (7/09) 

CBOE Total P/C Ratio             .54
CBOE Equity P/C Ratio            .40
OEX P/C Ratio                   1.48

Peak Open Interest   Friday  
Strike/Contracts     (7/09) 

Puts                 600 / 12,089
Calls                730 / 11,917
Put/Call Ratio       1.01


 


 


VIX
Volatility Index    Major
Date                Turning Point       VIX

October 97          Bottom              54.60      
July 20, 1998       Top                 16.88         
October 8, 1998     Bottom              60.63
January 11, 1998    Top                 26.38
March 4, 1999       Bottom              28.15   
May 14, 1999        Top                 25.01 

July 9, 1999                            19.09  *


 


 


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 
June 24, 1999                         57.5        26.5  
June 30, 1999                         55.8        25.7  
July 07, 1999                         52.6        27.2  *
 



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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              7-11-99
Sunday                   2  of  7


*******************
Next weeks earnings
*******************
Day   Symbol   EPS  Company

7/12  ALFA     0.33 ALFA Corp.
7/12  AMTD     0.10 Ameritrade
7/12  GRAN     0.33 Bank of Granite Corp
7/12  ERTS     0.01 Electronic Arts
7/12  HLX      0.02 Halter Marine Group Inc
7/12  HMS      0.14 Host Marriott Services
7/12  IDXC     0.00 IDX Systems Corp.
7/12  JEC      0.63 Jacobs Engineering Group I
7/12  MTMS     0.10 Made 2 Manage Systems
7/12  MTW      0.76 Manitowoc Company Inc.
7/12  SCTC     0.20 Systems & Computer Technology
7/12  WAB      0.50 Westinghouse Air Brake
7/12  WHIT     0.13 Whittman-Hart Inc
7/12  ASO      0.40 AmSouth Bancorp
7/13  AFS      0.49 Associates First Capital Corp.
7/13  CMSB     0.29 Commonwealth Bancorp.
7/13  DJ       0.61 Dow Jones & Co. Inc.
7/13  ENE      0.50 Enron Corporation
7/13  FTBK     0.33 Frontier Financial
7/13  GMGC      NA  General Magic Inc.
7/13  GGG      0.57 Graco Inc.
7/13  HRZ      0.77 Hertz Corp.
7/13  HI       0.67 Household International Inc.
7/13  INCY    -0.21 Incyte Pharmaceuticals Inc.
7/13  LTEK     0.42 Life Technologies Inc.
7/13  MSCA     0.60 M.S. Carriers Inc.
7/13  MAGN    -0.36 Magainin Pharmaceuticals Inc.
7/13  MRIS     0.77 Marshall & Ilsley Corp.
7/13  SSTI    -0.13 Silicon Storage Technology
7/13  STLD     0.21 Steel Dynamics Inc.
7/13  STI      0.95 SunTrust Banks Inc.
7/13  WFSL     0.51 Washington Federal Savings
7/13  WABC     0.47 Westamerica Bancorporation
7/14  CBH      0.56 Commerce Bancorp Inc.
7/14  CMNT     0.11 Computer Network Technology Corp.
7/14  FFCH     0.34 First Financial Holdings
7/14  FISB     0.38 First Indiana Corp.
7/14  FTEN     0.45 First Tennessee National
7/14  GSE       NA  Gundle/SLT Environmental Inc.
7/14  HBAN     0.48 Huntington Bancshares Inc.
7/14  IMP      0.33 Imperial Bancorp
7/14  INKT    -0.11 Inktomi Corp.
7/14  KLT      0.51 Kansas City Power & Light Co.
7/14  KNT      0.07 Kent Electronics
7/14  ENP      0.56 Kinder Morgan Energy Partners
7/14  MAVK    -0.19 Maverick Tube
7/14  MHP      0.44 McGraw Hill Inc.
7/14  ODSI    -0.02 Optical Data Systems Inc.
7/14  OMI      0.19 Owens & Minor Inc.
7/14  RDRT    -0.45 Read-Rite Corp.
7/14  SOTR     0.63 SouthTrust Corp.
7/14  SMP       NA  Standard Motor Products Inc.
7/14  TFX      0.63 Teleflex Inc.
7/14  USB      0.54 U.S. Bancorp
7/15  AEIS     0.07 Advanced Energy Ind.
7/15  ADV       NA  Advest Group
7/15  ANDW     0.16 Andrew Corp.
7/15  ARQL    -0.28 ArQule Inc.
7/15  ASPT    -0.24 Aspect Telecommunications Corp.
7/15  ASTE     0.50 Astec Industries Inc.
7/15  BA       0.47 Boeing Company
7/15  CORR    -0.43 COR Therapeutics Inc.
7/15  CTP       NA  Central Maine Power
7/15  DR        NA  Coastal Physician Group
7/15  CNB      0.26 Colonial Bancorp
7/15  CLP      0.78 Colonial Properties Trust
7/15  CMND      NA  Command Systems
7/15  CBSS     0.47 Compass Bancshares Inc
7/15  CPLY     0.05 Copley Pharm. Inc.
7/15  CBSS     0.10 Cort Business Services Corp.
7/15  CYTO      NA  Cytogen Corporation
7/15  DWTI      NA  Dataware Technologies
7/15  DFC      0.37 Delta Financial Corp.
7/15  DOL      0.88 Dole Food Company
7/15  ETW       NA  E Town Corp.
7/15  ELE       NA  ENDESA, S.A. (Spain)
7/15  ELN      0.29 Elan Corporation PLC
7/15  EPTO      NA  Epitope Inc.
7/15  EXPT    -0.17 Exabyte Corp.
7/15  FDCC      NA  Factual Data Corp.
7/15  IT       0.27 Gartner Group
7/15  GSE      0.26 Gillette Company (The)
7/15  GLM      0.15 Global Marine Inc.
7/15  GDT      0.33 Guidant Corporation
7/15  HNCS     0.19 HNC Software Inc.
7/15  HDI      0.43 Harley Davidson Inc.
7/15  HSC      0.59 Harsco Corp.
7/15  HERZ      NA  Hertz Tech
7/15  IPR       NA  Inprise Corp.
7/15  INMT     0.58 Intermet Corp.
7/15  ION      0.32 Ionics Inc.
7/15  KAMNA    0.32 Kaman Corporation
7/15  LSTR     0.96 Landstar Systems Inc.
7/15  LUSA     0.22 Life USA Holding Inc.
7/15  LSS     -0.21 Lone Star Technologies Inc.
7/15  MMCN     0.11 MMC Networks Inc.
7/15  MYG      0.96 Maytag Corporation
7/15  MDR      0.38 McDermott International Inc.
7/15  MRE      0.28 Medco Research Inc.
7/15  MMGR     0.25 Medical Manager Corp.
7/15  MNTR     0.24 Mentor Corp.
7/15  MRK      0.61 Merck & Co.
7/15  MERQ     0.17 Mercury Interactive Corp.
7/15  MESA     0.17 Mesa Airlines Inc.
7/15  MCOM      NA  Metricom Inc.
7/15  MLR     -0.19 Miller Industries Inc.
7/15  MTX      0.69 MineralsTechnologies Inc.
7/15  NVP      0.26 Nevada Power Company
7/15  NEON     0.12 New Era of Networks
7/15  NFB      0.40 North Fork Bancorporation
7/15  NUE      0.53 Nucor Corporation
7/15  OPTI      NA  OPTI Inc.
7/15  ODP      0.21 Office Depot Inc.
7/15  OWC      1.29 Owens-Corning Fiberglass
7/15  OXHP    -0.19 Oxford Health Plans Inc.
7/15  PMCS     0.19 PMC-Sierra Inc.
7/15  PMCS     0.41 Phillips Petroleum Company
7/15  SIII    -0.22 S3 Inc.
7/15  SAWS     0.34 Sawtek Inc
7/15  SEG      0.34 Seagate Technology
7/15  SDTI     0.15 Security Dynamics Inc.
7/15  SUB      0.70 Summit Bancorp
7/15  TMA      0.24 Thornburg Mortgage Asset Corp.
7/15  TGIC     0.49 Triad Guaranty Inc.
7/15  UMBF     0.75 UMB Financial Corp.
7/15  VOLVY     NA  Volvo AB
7/15  WTNY     0.64 Whitney Holding Corp.
7/15  WL       0.89 Wilmington Trust Corp.
7/15  EGLO    -0.06 eGlobe
7/16  BEZ      0.31 Baldor Electric Co.
7/16  CEG       NA  Baltimore Gas & Electric Co.
7/16  CAT      0.83 Caterpillar Tractor
7/16  DFS      1.09 Department 56 Inc.
7/16  EIX      0.41 Edison International
7/16  ELCO    -0.08 Elcom International Inc.
7/16  FCF      0.40 First Commonwealth Financial Corp.
7/16  GME       NA  General Motors - Class E
7/16  GNV       NA  Geneva Steel Company
7/16  GTAX     0.03 Gilman and Ciocia Inc.
7/16  GLT      0.28 Glatfelter PH Co.
7/16  GNI       NA  Great Northern Iron Ore Properties
7/16  GFF      0.20 Griffon Corporation
7/16  GAC      0.90 Gulfstream Aerospace Corp.
7/16  HMK      0.17 HA-LO Industries Inc.
7/16  HCR      0.44 HCR Manor Care
7/16  HQ       0.82 Hambrecht & Quist Group
7/16  HLI      0.78 Hartford Life Inc
7/16  HAS      0.10 Hasbro Inc.
7/16  HSIC     0.40 Henry Schein Inc.
7/16  HPK      0.31 Hollywood Park Inc.
7/16  IBP      0.64 IBP Inc.
7/16  ICF       NA  ICF Kaiser International
7/16  ICN      0.39 ICN Pharmaceuticals Inc.
7/16  IMR      0.32 IMCO Recycling Inc.
7/16  IDX      0.03 Identix Inc.
7/16  IMUL      NA  ImmuLogic Pharmaceutical Corp.
7/16  IMMU      NA  Immunomedics Inc.
7/16  IHK       NA  Imperial Holly
7/16  IRIC     0.02 Information Resources Inc.
7/16  INSUA    0.23 Insituform Technologies Inc.
7/16  III      0.36 Insteel Industries Inc.
7/16  IART    -0.32 Integra LifeSciences Corp.
7/16  IPX      0.36 Interpool Inc.
7/16  J         NA  Jackpot Enterprises Inc.
7/16  KCLI      NA  Kansas City Life
7/16  KSU      0.66 Kansas City Southern Ind. Inc.
7/16  KELYA    0.57 Kelly Services Inc.
7/16  KES       NA  Keystone Consolidated Industries Inc.
7/16  KSTN     0.52 Keystone Financial Inc.
7/16  KRC      0.62 Kilroy Realty Corp.
7/16  LJLB    -0.28 LJL Biosystems
7/16  LHO      0.67 LaSalle Hotel Properties
7/16  LDR       NA  Landaver Inc.
7/16  EMN      0.15 Lawter International Inc.
7/16  LEG      0.37 Leggett & Platt Inc.
7/16  LUK       NA  Leucadia National Corp
7/16  LBFC     0.25 Long Beach Financial Corp.
7/16  MDSN      NA  Madison Gas & Electric Co.
7/16  MARSA    0.38 Marsh Supermarkets Inc.
7/16  MAT      0.15 Mattel Inc.
7/16  MRII      NA  Medical Resources Inc.
7/16  MTL      0.74 Mercantile Bancorp Inc.
7/16  MAIR     0.39 Mesaba Holdings Inc.
7/16  METZ     0.35 Metzler Group Inc.
7/16  MWY      0.05 Midway Games Inc.
7/16  GRO      0.06 Mississippi Chemical Corporation
7/16  MOBI     0.17 Mobius Management
7/16  MODI     0.74 Modine Manufacturing Co.
7/16  MMO       NA  Monarch Machine Tool Co.
7/16  MGN       NA  Morgan Products Ltd.
7/16  NAFC      NA  Nash Finch Company
7/16  FLYR     0.34 Navigant International
7/16  NEWZ    -0.25 NewsEdge
7/16  NBL      0.04 Noble Affiliates Inc.
7/16  NVDM      NA  Novadigm Inc.
7/16  OWLDD     NA  One World Systems
7/16  OSTE     0.23 Osteotech, Inc.
7/16  OXGN      NA  Oxigene Inc.
7/16  PAG      0.61 Pacific Gulf Properties Inc.
7/16  PZZA     0.39 Papa John's International Inc.
7/16  PGEO      NA  Paradigm Geophysical
7/16  PTEN    -0.11 Patterson Energy
7/16  SPWY     0.78 Penske Motorsports
7/16  PNU      0.41 Pharmacia & Upjohn Inc.
7/16  REIN     0.09 Recovery Engineering
7/16  RKT      0.28 Rock-Tenn Company
7/16  RT       0.38 Ryerson Tull Inc.
7/16  AOS      0.58 Smith A.O. Corp.
7/16  SWFT     0.25 Swift Transportation Co.
7/16  TRB      0.86 Tribune Company



Last weeks change for this weeks picks:
***************************************
Index   Last         Week
Dow      11126.89    54.46
Nasdaq    2771.86    51.87
$OEX       718.31     6.60
$SPX      1394.42    12.06
$RUT       454.75     1.47
$TRAN     3451.39   -88.67
$VIX        19.87     1.58

Calls                Week

EXDS       136.38    17.63  New, earnings run is beginning
NXLK        93.00    14.94  New, another buy rating
AOL        128.25    13.00  Split candidate, earnings are coming
ITVU        51.50     9.00  New, strategic alliance with CNET
VRIO        74.75     7.94  Volume and momentum picking up
DCLK       102.94     7.69  New, earnings play, Internet is hot
BRCM       143.75     6.73  Still climbing higher, split cand.
CMGI       121.00     6.63  New, breaking out - popular sector
QCOM       148.75     6.50  Transamerica out, Qualcomm in
TMCS        34.88     5.75  New, Internet earnings play
DELL        42.81     5.69  New, here come the PC makers
IBM        137.38     5.13  Box makers seeing sustained growth
HWP        106.69     4.94  Ratings confirmed, price target set
TXN        146.56     4.88  Still hitting new highs
SLR         71.94     4.81  All-time high on Friday
ABOV        43.75     4.50  New, leverage play for MFNX
VISX        89.50     4.38  Earnings on Wednesday the 14th
COST        85.94     4.13  New, strong same-store sales
VRSN        89.63     4.06  Dropped, successful play
INKT       140.00     3.63  Optimism spreading among Internets
BBY         76.00     3.00  Digital revolution is here
SUNW        72.94     2.88  Spilt announcement with earnings?
INTC        66.25     2.75  And now for the earnings...
MSPG        51.13     2.50  Possible takeover by PC maker
RNWK        92.38     2.44  New, deals with Microsoft
DRIV        35.25     1.69  Looks strong headed into earnings
SNE        114.38     1.63  Electronic retail is heating up
VOD        207.13     1.63  Possible split announcement coming
MOT         97.94     1.38  Dropped, earnings are Tuesday
LU          71.94     1.25  Earnings in 9 days
MSFT        93.25     1.25  Six trading days from earnings
SONE        48.25     1.06  Consolidating for the next move
NXTL        50.00     0.81  Reporting earnings on Thursday
CSCO        67.06     0.00  Technical indicators looking good
CTXS        60.75     0.00  Dropped, performance anemic
TOM         76.63     0.00  Dropped, splits on Monday
NOK         94.44    -0.13  Final leg of earnings run
EFII        54.38    -0.38  Dropped, earnings are soon
NT          90.06    -0.50  Strong bounce off 10-dma
COF         56.00    -1.32  Dropped, underperforming
ICIX        30.00    -1.57  Dropped, stuck in a range?
PFE         37.19    -1.63  Dropped, rather play something else
CAH         68.63    -1.75  Dropped, too much consolidating
SGP         51.75    -2.12  Dropped, needs to regroup
JDSU       170.88    -2.37  Dropped, wait for new trend
MMCN        48.19    -2.50  Dropped, successful play

Puts

YHOO       164.44   -18.13  History repeats itself
IMNX       119.00   -14.13  New, costs expected to affect earnings
SAPE        47.75   -10.38  New, rumored to miss earnings
FDX         48.50    -6.43  New, missed whisper, high oil $$
JCP         45.44    -4.19  New, falling behind competition
WPI         35.94    -2.25  New, something fishy here?
MCK         32.56    -0.07  Dropped, not moving
FON         51.00     0.13  Dropped, new support at $50
GBLX        40.03     0.44  Dropped, counter offer possible
AT          71.50     2.19  Dropped, broke above $70.50





PICK SUMMARY
*************

SL  = Suggested stop loss. Sell if bid breaks this price.
OI  = Open Interest - the number of open contracts outstanding.
TP/P= True premium or Time premium
RRR = Risk/Reward/Ratio
ITM = In the money
ATM = At the money
OTM = Out of the money
MTD = Move to double - amount stock must move to double option price
                        in one week. ONE WEEK MOVE ONLY !

Numbers within ( ) are the amount of change for the week.
Numbers within ( ) may be designated with PxW, like P3W, prior 3 weeks

The options with a "*" by the strike price are our choices from the 
group. If the stock moves as expected we feel they have the best 
chance to substantially increase or double in price with the best
risk/reward ratio compared to the other options for the same stock.
You must determine if they fit your risk profile for time and price.

Analysts ratings: 1-2-3-4-5 
Analysts who follow each stock rate it and these rating are 
accumulated and displayed as follows;

Position 1 = number of analysts recommending "strong buy"
Position 2 = number of analysts recommending "moderate buy"
Position 3 = number of analysts recommending "hold" or "neutral"
Position 4 = number of analysts recommending "moderate sell"
Position 5 = number of analysts recommending "strong sell" 

Example rating 5-3-1-0-0 would be 5 "strong buys", 3 "moderate buys",
1 "hold" recommendation.


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

CALLS:

TMCS - Ticketmaster
CMGI - CMGI Inc.
ITVU - InterVU
NXLK - Nextlink Communications
DCLK - Doubleclick Inc.
COST - Costco Companies Inc.
RNWK - RealNetworks Inc.
DELL - Dell Computer
EXDS - Exodus Communications
ABOV - AboveNet Communications Inc.

PUTS: 

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

IMNX - Immunex Corp.
SAPE - Sapient Corp.
FDX  - Federal Express Corp.
JCP  - J.C. Penney Inc.
WPI  - Watson Pharmaceutical


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:

VRSN $89.00 (+4.06) We are dropping VRSN, not for lack of
performance, but because of its performance.  The stock has
been very good to us and is right under its 52 week high.  We
like this stock, but after such large gains, we feel there
are other plays that might produce better going forward.  In the
two weeks we covered the stock it went up about $17.00 

CTXS $59.88 (+0.00)  After leaving support at $54 and $56
last month and setting new highs along the way, it appears 
CTXS is settling down.   This week, the stock traded 
narrowly right around $59-60 on low volume.  It showed no 
enthusiasm as it approaches earnings on July 20th.  We're 
dropping CTXS to make room for better plays.  It may still
make an earnings run (and probably will because we are 
dropping it) but last week's performance was too anemic for
us.

CAH $67.94 (-1.75) Cardinal has been stuck in a range for 
most of the week.  We added it as a call due to the surprising 
recovery of the drug sector.  But instead we’ve gotten a mixed 
group that is being driven by specific stocks.  We still like 
CAH to advance in the near-term but we want to focus on stocks 
that are moving right now.  So if you are staying in the play,
circle July 27 on the calendar.  That is the earnings date.  
But for now we are dropping it from the call list.   

SGP $52.38 (-2.13) We aren’t getting the action we had hoped
for from Schering.  Granted this was probably more of a 
consolidation week after a big move last week but we feel 
there are too many other stocks to make money on during 
earnings season.  So it’s hard to justify waiting for the 
stock to move higher.  If you are staying with the play, 
remember earnings are on July 21.  

PFE $37.00 (-1.63) PFE gained a split-adjusted $4.81 the week 
before last and it hit $39.25 on Monday. Then it began to drift 
lower. After PFE lost another $.19 on strong volume on Friday, 
we decided to drop this play. It's not that $1.63 is such a big 
loss on the week (especially compared to the gain the week 
before). It's just that there are other plays that offer a 
chance for greater profit during this earnings season.  If you 
are in PFE options, the company has told us that they never 
announce an exact earnings date. However, they expect to announce 
at the end of the week of July 12th or at the beginning of the 
following week. After some consolidation this past week 
to digest the previous week's gains, PFE may now make a nice 
earnings run, but we are moving on to other plays.

MMCN $47.00 (-2.50) MMCN had a little profit taking set in this
week.  It really hasn't continued up with the strength we 
would like to have seen. It was a good play (we picked it at
$40 and it went to $50), however we feel there are better 
opportunities available, and earnings are due to be released 
Thursday.

MOT $99.69 (+1.30) MOT had another stellar week, however we don't
want to overstay our welcome.  MOT made a new 52 week high 
hitting $100.19 on Friday with good volume, especially for 
a "Summer Friday".  Earnings are to be reported Tuesday, and 
rather than get caught up in any pre-earnings jitters we will
say, "Until we meet Again" to this old friend.

JDSU $166.88 (-1.00) Time to say goodbye to another friend.  JDSU
had an erratic week.  With the new merger being completed
early last week, JDSU was up and down like a yo-yo, hitting
a new high at $177.44 in the matter of a couple of days.  JDSU
did announce a 2:1 stock split for July 23rd, and we decided
maybe we should sit this one out until it finishes consolidating.
If it ever reaches its 30 dma or 50 dma (look at the old UNPH
char), be sure to look for a bounce upward.

COF $55.38 (-1.31) An earnings run, that never really started
running. COF did pick up just over a $1 at its high for the
week.  It basically stumbled into overhead resistance, and
couldn't get out of its own way.  Earnings come out Friday
the 16th, so there still is a little time.  With no momentum
behind it, we simply feel there are better places to be.
[editor's note: some of us feel that COF will still make a 
run into earnings, but last week's performance didn't give us
much ammo to argue their case. - Kimo] Watch your stops.

TOM $76.38 (+0.00) Right where we started.  Tuesday it looked
like we might be good to go, jumping up over $2.00 making 
a high of $78.50. As the post holiday week dragged on volume
and interest in our stock split play seemed to dry up.  TOM
never went lower, it just never went really anywhere.  TOM
splits after the close of business Monday, and it will have
to do without us this time.

EFII $56.06 (-0.38) Earnings are scheduled for Wednesday, July 14 
after the close.  After last Wednesday's drop from $58, shooting 
star on Thursday and lack of volume Friday, we're cutting it 
loose early and moving on.  Besides as we've noted, insiders have 
sold sizable positions in May and June.  With investors 
propensity to sell earlier knowing they will be have rug yanked 
on earnings, now's the time to exit.

ICIX $30.06 (-1.56)  Sorry, ICIX is just not performing like a 
good call during earnings season.  So far, the SBC buyout rumor 
isn't panning out.  A loss for the week on low volume while the 
rest of the market sets records isn't worth keeping.  There seems 
to be no more wind to fill the sails. . .time to motor up and 
head for shore.

PUTS:

MCK $32.19 (-.06) We have decided to let MCK go.  The stock 
seems to have built a pretty good base and the odds of its
going down any further have evaporated.  Though MCK continues
to be the receiver of lawsuits and bad news, the stock seems
to have drop enough to make it a value play.

GBLX $40.44 (+0.44)  GBLX played a game of give and take 
this week.  By Friday this stock never offered us any 
bearish indication that it would break through its apparent 
bottom resistance of $40 and continue its descent.   
Without any further evidence of downward movement, we must 
drop GBLX even though the riches and spoils of the Qwest 
battle are yet to be known.

AT $71.50 (+2.19) Alltel rallied above the resistance level 
of $70.50 on Friday which signals an end to our play.  We 
were looking for the resistance from the 50-dma to keep the 
stock down.  Instead in moved past that level on decent 
volume.  This is probably related to enthusiasm for the 
upcoming earnings report on July 21.  We don’t expect any 
kind of upside surprise with the release but this event 
will likely support AT over the short-term.  There was no 
other news to prompt a rally on Friday.

FON $50.25 (+0.13) There is something about the $50 mark 
on FON that spurs investors to buy.  You can see that pattern 
in the chart.  Apparently there are some institutions that 
were ready to buy at that level.  Whatever the reason, we’ve 
seen support this past week.  It may be due to the earnings 
announcement that is only 9 trading days away.  So we are 
dropping it as a play to focus on some of the main other 
issues that are actually moving in the market.   




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

TXN  - Texas Instruments
NT   - Northern Telecom
INKT - Inktomi
SUNW - SunMicro
AOL  - America Online
VOD  - Vodaphone Airtouch (4:1 possible)
HWP  - Hewlett-Packard
QCOM - Qualcom
BRCM - Broadcom
 

STOCKS WITH UPCOMING SPLITS 
****************************

We don't list all splits available, only those we 
feel may have play possibilities. 

The number of splits has slowed down considerably but we
are sure to get another flood with the earnings announcements.

Symbol - Stock         Splits/Date  

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
LCOS - Lycos           2:1 07-26-99 ex-date 07-27
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 ! 
*******************************

None today



*******************************************************
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. 
*******************************************************



AOL - America Online $128.25 (+13.00)

See details in sector list

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

******

MSFT - Microsoft $93.25 (+1.25)(+7.06)(-0.06)(+6.87)(-1.43)
No trial for 90 days, earnings July-19th

See details in sector list

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

******

IBM-Intl. Business Machines $137.38 (+5.13)(+8.75)(P2W+9.19)
New 52 week high

See details in sector list

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



Plays continued in section three

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




The Option Investor Newsletter          7-11-99
Sunday             Part 3 of 7


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

HWP - Hewlett Packard $106.69 (+4.94)(+9.12)

Hewlett Packard is best known as the #2 worldwide provider 
of computers, peripherals, and computer related services 
standing only behind the "Big Blue".  Almost 85% of sales 
revenue is derived from this aspect of the business. But HWP 
also makes testing and measurement equipment and medical 
equipment products which it plans on developing and combining 
into a separate company. 

HWP has been a stellar performer.  For the last 2 out of 4 
days the stock advanced higher into new territory.   
Overall, this shortened week started off on the right foot.  
Lehman Brothers, came back on Tuesday with a second 
reiteration of its "buy" rating and raised the short-term 
target price to $120 from $105.  On Thursday, comments from 
Richard Chu, analyst at SG Cowen, excited shareholders and 
gave a boost to the hardware sector in general.  He 
reiterated his "strong buy" rating on HWP and upgraded the 
target price to $125.  He cited expectations of double-
digit revenue growth for the company after several quarters 
of reporting zero growth as his motivating factor.  That 
day HWP tacked on $6.50!  Volume was exceptional at 5.63 
mln. shares exchanging hands.   A new record high was set 
at $106.38 only to be broken on Friday.  HWP hit $106.94 
during a late afternoon rally attempt.  

HWP began charging ahead with its sector at the beginning 
of July.  Its earnings report is only due in mid-August. 
But to sweeten up the pot, HWP is considered a split 
candidate.  It last split 2:1 back in July of 1996 when it 
was around $80-85.  The stock is well above that level now 
and has plenty of shares authorized.  The possibility of a 
split announcement near earnings is growing.  

BUY CALL AUG-100 HWP-HT OI=2552 at $10.25 SL=7.75
BUY CALL AUG-105*HWP-HA OI=1520 at $ 6.88 SL=5.25
BUY CALL AUG-110 HWP-HB OI= 474 at $ 4.38 SL=2.75
BUY CALL NOV-110 HWP-KB OI= 345 at $ 9.63 SL=7.25

Picked on July 1st at $102.00    PE = 29
Change since picked     +4.69    52 week high=$106.94
Analysts Ratings   6-10-9-0-0    52 week low =$ 47.06
Last earnings 04/99  est= .80    actual= .88   surprise=10%
Next earnings 08-16  est= .79    versus= .58
Average daily volume = 3.33 mln.
Chart = http://quote.yahoo.com/q?s=HWP&d=3m
  
*****

SUNW - Sun Microsystems $72.94 (+2.88)(+5.19)(+0.81)(+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."

There it is ladies and gentlemen, a new 52-week high.  SUNW 
rallied with the market Friday afternoon and edged out the 
old mark of $72.50.  If you have been following this play, 
you know we have been anticipating this result for the past 
week.  Sun had been creeping up on it the last three days 
and used a burst of buying the last hour to move above the 
old record.  In fact, Sun closed right at the high for the 
day as well.  So we have two bullish indicators working in 
our favor for Monday.  Like always, you need to use caution 
if you are looking to open a new play at this point.  You 
can see from the chart that the stock has been up four weeks 
in a row.  But we are in the midst of an earnings run so 
there is no reason to abandon the play just yet.  Also it 
is important to keep in mind what happened on March 17 of 
this year.  SUN Micro’s board held a special meeting to vote 
on only one item.  That was to increase the number of 
authorized shares from 900 K to 1.8 mln.  You know what that 
means.  A possible split announcement with earnings.  But 
keep your stops set to lock in your profits in case we get 
a correction in the markets.    
    
In the news on Friday was an article announcing that SUNW 
has broken two world records for performance in Baan Enterprise 
Resource Planning (ERP) software applications.  And I bet 
you didn’t even know (ERP) Olympics were going on!  Maybe 
the real news in this story was that this was the third 
year in a row that SUNW lead its competitors in performance.  
Just another indication of a bright future outlook.  

BUY CALL AUG-70*SUQ-HN OI=3781 at $7.00 SL=5.25 ITM 2.94
BUY CALL AUG-75 SUQ-HO OI=4059 at $4.50 SL=2.75
BUY CALL AUG-80 SUQ-HP OI= 487 at $3.44 SL=1.00 very aggressive
BUY CALL OCT-70 SUQ-JN OI=3387 at $9.75 SL=7.25
BUY CALL OCT-75 SUQ-JO OI=1726 at $7.38 SL=5.50

Picked on June 20th at   $64.06    P/E = 53
Change since picked       +8.88    52-week high=$72.94
Analysts Ratings      9-9-4-0-0    52-week low =$19.19
Last earnings 04/99 est=    .35    actual= .36
Next earnings 07/22 est=    .46    versus= .37
Average Daily Volume = 12.75 mln
Chart = http://quote.yahoo.com/q?s=SUNW&d=3m
  
*****

IBM-Intl. Business Machines $137.38 (+5.13)(+8.75)(P2W+9.19)

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. 

IBM has been on a run fueled by last quarter's strong earnings 
and a new focus on software and e-business applications. Investors
see the formerly stodgy Big Blue as a conservative way to invest 
in the Internet, and that is helping the stock. The computer 
services industry is expected to grow at a double digit rate 
for years in this increasingly Internet oriented world, and 
IBM is positioning itself to take advantage of that growth. 
In addition, analysts now believe that there is evidence for 
"sustained growth among the computer makers". HWP (itself also 
supplying e-services )is soaring, and even Dell and Apple are 
climbing on positive comments and/or upgrades. The whole sector 
is strong, as is the Internet sector. IBM set new highs 3 of 
the 4 trading days last week. On Friday it reached $137.44, 
and closed only $.06 off its high, thus setting the stage for 
a strong week next week, as it enters the final lap of its 
earnings run. The date will be July 19th (company confirmed), 
a week from Monday. Look for continued gains this week, but 
plan to be out before IBM reports earnings.

In the news, IBM announced that its AS/400e server was able to 
support 12,000 concurrent users running on BaanERP software. 
That is 40% more than the closest competitor can muster. Also 
on Friday, LiquidAudio had an impressive IPO. It competes with 
a competing digital music format being developed jointly by 
IBM and Sony Corp. 

BUY CALL AUG-135*IBM-HG OI=3108 at $8.50 SL=6.50
BUY CALL AUG-140 IBM-HH OI=3477 at $6.00 SL=4.25
BUY CALL AUG-145 IBM-HI OI= 342 at $4.00 SL=2.50
BUY CALL OCT-150 IBM-JJ OI= 996 at $6.25 SL=4.50

Picked on June 13th at $114.31    PE = 35
Change since picked   +$ 23.07    52 week low =$ 55.38 
Analysts Ratings    13-7-4-0-0    52 week high=$135.50 
Last earnings 03/99  est   .70    actual  .77 surprise=10%
Next earnings 07-19  est   .88    versus  .75 
Average daily volume = 5.99 mln.
Chart = http://quote.yahoo.com/q?s=IBM&d=3m

*****

DELL - Dell Computer $42.81 (+5.68)(+0.19)

The one, the only, the amazing. . . Dell!  Dell is the 
direct sales model leader and pioneer of the on-line retail 
business.  They sell PC's notebooks, servers and work 
stations built to order direct from their factories 
worldwide.  Eager buyers pony-up 18 million e-$$$ daily for 
their products.  Total annual sales for the trailing 12 
months were $18.2 bln., excluding their recent foray into 
direct selling of other manufacturers' software and support 
products from their gigabuys.com web site.  Despite their 
recent fall from grace, they are growing at an annual rate 
of 41% with margins that are the envy of the industry.  
Return on equity is a whopping 79%.

Like a phoenix on the desert, Dell has kept on performing no 
matter how many feathers the analysts try to pluck from it.  To 
get right to it, DELL on Friday pierced the level at which it 
traded on its last earnings date ($42.31), just prior to the 
"disappointing" announcement that it grew at less than a 50% 
rate.  Dell closed at $42.81 on over 46 mln. shares traded, 
making it the most active issue traded on Friday.  In a very 
bullish sign, its 50-dma bounced off its 200-dma in the process.  
Investors were concerned that that the sub-$1000 category was 
going to eat Dell alive.  Not so.  As early as June 9, 
International Data Corporation announced that they expected 
worldwide PC shipments to grow by over 21% this year instead of 
the previously forecast 16.5%.  Then analysts squealed about the 
falling ASP's, or average selling prices.  That Dell's least 
expensive model is $899 compared to competitors in the $300-$500 
range doesn't hold water since over 90% of Dell's customers are 
businesses.  A comment from Michael Dell stating "the company 
earned 55 percent of the PC industry's total profit in the first 
quarter and that its profit share may increase in the second 
quarter".  Not many noticed that either.  

Technically, the chart looks outstanding and ready for more 
growth.  Volume, which started up on Wednesday, culminated in 
over 46 mln. shares trading on Friday.  This isn't window 
dressing and it isn't Ma and Pa Kettle.  It's institutional 
buyers voting with their $$$, as reflected in the volume.  In the 
options business, we go where the money is.  Institutions will 
continue to buy more since it's the last of the 5 generals on the 
NASDAQ that hasn't had a recent run, even though its growth rate 
is greater than any of the other 4 (MSFT, INTC, CSCO, and WCOM).  
We guess fund mangers finally recognized that too.  In fact, it 
was Goldman Sachs who made the first recent public announcement 
of support for Dell by adding the stock to its private client 
list.  That started the ball rolling Friday morning.  

However (there's always a catch), following this spike, we need 
to see the price pullback some.  There are big open interests in 
the JUL-40 calls (64,588), AUG-40 calls (45,824), and AUG-45 
calls (45,155), telling us that the current price is exceeding 
future sentiment - not exactly a great time to buy.  Thus, we 
offer no options listed for you to trade.  This is the time for 
DISCIPLINE and PATIENCE.  Plan your entry and wait to get it.  
You won't be missing any earnings run, since earnings won't be 
announced until August 18 (company confirmed).  The closest 
support is $40, after that, $37.  Plan your entry based on your 
own risk profile.  The point is to wait for it, not chase it.  We 
know. . .this is like putting candy in front of your kid and 
telling him/her "don't eat it".  But we have to ask, was your 
child better off having learned personal discipline?  Or hungrily 
stuffing it in their gullet only to suffer a stomach ache?  'Nuff 
said.

Picked on July 11 at $(not yet!)    PE = 69
Change since picked        +0.00    52 week low =$20.38
Analysts Ratings     10-9-12-0-0    52 week high=$55.00
Last earnings     05/99 est 0.16    actual 0.16 
Next earnings     08-18 est 0.17    versus 0.13
Average daily volume = 26.13 mln. 
Chart = http://quote.yahoo.com/q?s=DELL&d=3m


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

DCLK - Doubleclick Inc. $102.94 (+7.69)

DoubleClick Inc. provides Internet advertising services for 
advertisers and Web publishers worldwide.  The DoubleClick 
Network provides fully-outsourced ad sales, delivery, and 
Related services to publishers of highly trafficked web sites, 
including AltaVista, The Dilbert Zone, Macromedia, and U.S. 
News Online.  The DoubleClick Network focuses on meeting the
advertising needs of Internet advertisers who target users 
on a national, international, or local basis.  The company's 
DART Service enables Web publishers, advertisers, and ad 
agencies to control the targeting, delivery, measurement, 
and analysis of their online marketing campaigns on a real-
time basis.

Doubleclick is one of many Internet companies that are heading 
into earnings season with lots of with high expectations.  
Yahoo got the party off on the right foot with very positive 
results in both earnings and revenues.  This is translating 
to big moves from some of the second-tier stocks that have 
more potential to surprise the street.  Especially for the 
search engine companies that analyst feel will do the best.  
DCLK is one of those companies so we are adding them to the 
call list for the earnings run.  They are scheduled to report 
on July 20.  That means this will be a quick play.  Many of 
the Internet issues are forming a nice pattern on the charts, 
DCLK included.  It is breaking back above the 50 and 100-dmas. 
So watch for any weakness in the NASDAQ to provide an entry 
point for a new play.  But don’t expect too much downside in 
this market which has been showing great strength.  

More proof of DCLK’s strength lies in a Thursday news article 
about troubles DCLK had with a coding bug.  It caused short 
term technical difficulties for their advertising links.  
But investors didn’t mind as the stock finished higher both 
Thursday and Friday. 

BUY CALL AUG-100*QWE-HT OI=340 at $15.88 SL=12.25
BUY CALL AUG-105 QWE-HA OI=228 at $13.63 SL=11.00
BUY CALL AUG-110 TDU-HB OI=194 at $11.75 SL= 9.50
BUY CALL OCT-110 TDU-JB OI=177 at $19.75 SL=15.50

Picked on July 11th at  $102.94    P/E = N/A
Change since picked       +0.00    52-week high=$176.00
Analysts Ratings      8-3-0-0-0    52-week low =$6.75
Last earnings 04/99 est=   -.15    actual= -.13
Next earnings 07/20 est=   -.13    versus= -.14
Average Daily Volume = 2.60 mln
Chart = http://quote.yahoo.com/q?s=DCLK&d=3m   

*****

RNWK - RealNetworks, Inc. $92.38 (+2.44)

RealNetworks is an established leader in streaming media 
technology on the Internet. It is helping transform the Internet 
into the next mass medium by making real-time, or streaming, 
Internet broadcasting possible and profitable. In four years, 
RealNetworks software systems have become the most pervasive 
method of streaming media on the Internet.

Like a lot of the Internets, RNWK set an all-time high back 
in early April, and then dropped like a brick for a couple of 
months. It has been on the comeback trail since it bottomed in 
mid-June. The week ended July 2nd was an especially strong one 
for the stock as it gained 46%. Of course, it benefited from 
the Fed's change to a neutral rate stance, along with the rest 
of the market. But this company had big news of its own to drive 
up the price. First, just before the rate hike, RNWK announced 
RealSlideShow, a product that allows audio combined with digital 
images to be sent over the Internet. A distribution agreement 
for the software was signed with Adobe. It also announced an 
important upgrade to its RealProducer G2. On the heels of this 
news, BancBoston Robertson Stephens analyst John F. Powers 
reiterated his "buy" rating. The "real" news came Friday, 
however, when it was revealed that RNWK will upgrade Microsoft's 
WebTV technology to support its new RealAudio format and will 
also develop a new audio player for Microsoft's Windows CE 
operating system. (WebTV links TV to the Internet, and Windows 
CE is used in such things as hand held computers.) This is a 
powerful acknowledgement of RNWK's leadership, coming from 
Microsoft(MSFT)! MSFT once owned a stake in RNWK, but sold it 
to develop MediaPlayer, a competing product. Shares of RNWK 
rose over 12% the day of this announcement. After a pullback 
in the middle of last week, the stock is heading up again, and 
we look for increasing momentum as RNWK heads toward its 
earnings date in a week and a half.

News is contained in the paragraph above. Please remember that 
this is an Internet stock and is therefore subject to a lot 
of volatility!

BUY CALL AUG- 90 RNW-HR OI= 746 at $14.63 SL=11.50
BUY CALL AUG- 95 RNW-HS OI= 277 at $12.38 SL=10.00
BUY CALL AUG-100*RNW-HT OI=1579 at $ 9.75 SL= 7.25 we are brave!

Picked on July 11th at $92.38    PE = n/a
Change since picked   +$ 0.00    52 week low =$  7.63 
Analysts Ratings    1-7-1-0-0    52 week high=$131.88 
Last earnings 03/99  est -.01    actual -.01 surprise=0%
Next earnings 07-20  est -.01    versus -.04 
Average daily volume = 2.78 mln.
Chart = http://quote.yahoo.com/q?s=RNWK&d=3m

*****

EXDS - Exodus Communications $136.38 (+17.63)

Exodus Communications tries to be the perfect host (the Web type, 
that is).  Founded by Indian immigrants K. B. Chandrasekhar and 
B. V. Jagadeesh, the company offers services, such as server 
hosting and Internet connectivity, which let businesses outsource 
the management of their Internet sites.  Exodus has thirteen 
Internet Data Centers (8 more planned by year-end) where clients 
store their servers in secure vaults.  In addition to providing 
storage space, the company furnishes services such as maintenance 
and network connections.  Its clients include CBS Sports, eBay, 
and MSN Hotmail.  Exodus is expanding its geographic penetration 
and security services offerings through acquisitions. 
(Description from Hoover's)

Let's get straight to it.  Web server hosting and network 
maintenance (server farms), though competitive, is a hot market.  
It's a growing field with growth fueled by large companies 
preferring to outsource the headaches (think "Exodus = 
Excedrin").  Let's play it.  Like lots of other Internet 
companies, this one isn't profitable yet either.  No matter, 
technically, this is one fine looking chart, thanks to takeover 
speculation, which stems from Metromedia Fiber Network's (MFNX) 
acquisition (for a juicy premium) of AboveNet (ABOV), a no frills 
competitor.  Check out the chart.  This is a textbook breakout 
backed with above average volume, except Friday when it went up 
and closed on a strong up tick anyway at a new high.  Support is 
at $134, a bit more at $130.  Resistance is $138.  Dips look 
buyable, but for conservative types, wait for a break over $138.  
Earnings are tentatively scheduled July 22.  Zack's says July 28.  
Confirm market direction before playing.

From Bloomberg, "investors are factoring in AboveNet, which sold 
for a nice premium and didn't have many of the value-added 
services that Exodus has," BancBoston Robertson Stephens analyst 
Rick Juarez said. "The market is recognizing an industry 
leader."  Also, their chairman and co-founder was named 1999 
entrepreneur of the year by Ernst and Young.  

**these are expensive, but look at the chart.  This is a 
higher risk play (Internet) and not for everyone!

BUY CALL AUG-130*EXF-HF OI=150 at $20.88 SL=16.25 high prices!
BUY CALL AUG-135 EXF-HG OI= 95 at $18.75 SL=14.50
BUY CALL AUG-140 EXF-HH OI= 56 at $16.38 SL=12.75
BUY CALL AUG-145 EXF-HI OI= 35 at $14.25 SL=11.25

Picked on July 11 at  $136.38    PE = N/A
Change since picked     +0.00    52 week low =$  7.75
Analysts Ratings   10-3-1-0-0    52 week high=$139.50
Last earnings  4/99 est -0.57    actual -0.55 
Next earnings  7-22 est -0.50    versus -0.36
Average daily volume = 2.07 mln. 
Chart = http://quote.yahoo.com/q?s=EXDS&d=3m

*****

ABOV - AboveNet Communications Inc $43.75 (+4.50)

AboveNet Communications provides Internet connectivity
and co-location solutions for high bandwidth applications.
They provide outsourced Internet hosting to companies that 
depend on the Web for their business.  ABOV is the architect 
of the Internet Service Exchange(TM)

AboveNet split 2:1 back on May 10th.  It the went south
and formed a base in $24-$32 area.  In the middle of June 
ABOV started to move up breaking out of the base it had been
in for about three weeks.  Then on June 23rd Metromedia Fiber
Network (MFNX) announced that they were acquiring ABOV in a
stock for stock buyout.  ABOV jumped about $4 on the news.
Concerning the merger, "By combining Metromedia Fiber Network's 
virtually unlimited, pure photonic fiber network with AboveNet's 
high-performance connectivity solutions, Internet traffic is able 
to low more predictably, far more reliably and at far lower 
costs," Metromedia Fiber said (-Reuters).  What we have is 
a combination earnings run (for ABOV which announces July 23rd)
and a leverage play for MFNX, which has turned around from the
initial drop on the announcement of the merger.  ABOV is basically
resistance free for several points, but ABOV's stock price should
be reflective of MFNX's now.  If so, MFNX should make it to $44
before resistance slows it down.  And at a leverage of 1.175 
shares of MFNX for 1 share of ABOV we could get about $4.75
out of ABOV even without any earnings excitement.

BUY CALL AUG-40 UBV-HH OI=484 at $6.63 SL=5.25
BUY CALL AUG-45*UBV-HI OI=590 at $4.13 SL=3.00
BUY CALL AUG-50 UBV-IJ OI=423 at $2.38 SL=1.50
BUY CALL NOV-45 UBV-KI OI=133 at $8.38 SL=6.50

Picked on July 10,  at  $43.75   PE = N/A
Change since picked    +$ 0.00   52 week high=$75.50 
Analysts’ ratings    2-1-1-0-0   52 week low =$ 5.75
Last earnings   3/99 est -0.23   actual-0.22 surprise=+7%
Next earnings   6/99 est -0.28   versus N/A 
Average daily volume  1.89 mln.
Chart = http://quote.yahoo.com/q?s=abov&d=3m

*****

TMCS - Ticketmaster Online-Citysearch $34.88 (+5.75)

Combining online ticket sales with citywide entertainment on the
Internet was a no-brainer for Barry Diller, mastermind behind
TMCS and chairman of USA Networks, which owns 60% of the company. 
At TMCS, residents of 25 urban hubs in 12 US states, Washington, 
DC, and four other countries can access local information on
entertainment, business, news, and other activities.  If there's
something worth seeing, they can buy tickets online from TMCS, 
with access to events in more than 40 states, Canada, and the UK. 
After the company's planned merger with Lycos collapsed, it 
bought online dating service Match.com instead. (from Hoovers)

TMCS has made a substantial move over the last month, and the
stock chart is showing increasing buying pressure.  MACD is 
positive and volume has picked up substantially over the last
ten trading days.  TMCS is still well below its 52 week high
of $80.50, but with the Internet sector showing strength and
TMCS looking very strong, we like the probability of TMCS moving
higher.  TMCS was at $21.56 just one month ago.  We don’t see
much resistance until the $39 mark, but watch for profit taking
as the stock has gone up for five straight days.  Earnings are 
in a few weeks and the feeling from the street is that Internet 
stocks will announce very strong earnings.  This should benefit 
TMCS as it moves closer to its earnings date.

TMCS recently signed an agreement with the SCI-FI channel to
offer a co-branded auction site.  This will allow SCI-FI fans
the opportunity to bid on memorabilia from their favorite SCI-FI
movies and shows.  This partnership is being done through TMCS’s
CityAuction company.  

BUY CALL AUG-30*QMF-HF OI= 59 at $7.13 SL=5.50 ITM $4.88
BUY CALL AUG-35 QMF-HG OI= 31 at $4.25 SL=3.25
BUY CALL OCT-35 QMF-JG OI=196 at $6.38 SL=5.00
BUY CALL OCT-40 QMF-JH OI=318 at $4.38 SL=3.25

Picked on July 11th at $34.88    PE = n/a 
Change since picked     +0.00    52 week low =$14.00 
Analysts Ratings    1-2-0-0-0    52 week high=$80.50 
Last earnings 04/99 est -0.29    actual -0.25 
Next earnings 07-28 est -0.28    versus n/a 
Average daily volume = 673 K 
Chart = http://quote.yahoo.com/q?s=TMCS&d=3m

*****

ITVU - InterVU Inc. $51.50 (+9.00)

INTERVU provides Web site owners and content publishers with 
services for the delivery -- "streaming" or downloading -- of 
live and on-demand video and audio content over the Internet. 
INTERVU's services automate the publishing, distribution and 
programming of video and audio content. INTERVU uses a scalable, 
patent-pending distribution network comprised of servers 
strategically located in major Internet hosting centers. 
INTERVU's customers use its video and audio distribution services 
to transmit entertainment, sports, news, business to business, 
advertising and distance learning content. INTERVU's current 
customers include CNN, House of Blues, Intel, Microsoft, 
MovieFone, MSNBC, NBC, Onradio.com, RadioWave.com, Saatchi & 
Saatchi, and Turner Broadcasting. 

ITVU has a pretty uptrend going and this on increased volume.
The stock is showing more and more buying pressure with MACD
strong and getting stronger.  All the excitement appeared to 
start when CNET launched new television and video features for
their audience back on June 28th.  To do so, CNET had to develop
a strategic relationship with ITVU.  It definitely appeared to 
bring some new attention to ITVU's stock price.  The stock's only 
resistance is at $54, the stock's recent high.  Beware, ITVU 
could have some profit taking after such incredible gains ($30 
to $50).  ITVU did trade down slightly on Friday, but did close 
almost a dollar off its intraday low.  Frankly, we are amazed at 
its apparent strength given its run up.  Earnings are at the end 
of the month and the stock should see some strength from an 
earnings run.  Confirm market direction.

**Trading note:  In the interest of full disclosure, Jim, our
main editor does own options on ITVU.

ITVU is in the right sector of the Internet as streaming content
companies have been in the news and spotlight.  We like the future 
of this industry and see ITVU benefiting from it.

BUY CALL AUG-45*QYU-HI OI= 65 at $10.38 SL=8.00 ITM $6.50
BUY CALL AUG-50 QYU-HJ OI= 69 at $ 7.75 SL=6.00 ITM $1.50
BUY CALL AUG-55 QYU-HK OI=  0 at $ 5.63 SL=3.50 new strike
BUY CALL SEP-50 QYU-IJ OI=233 at $ 9.63 SL=7.50 ITM $1.50
BUY CALL SEP-55 QYU-IK OI=182 at $ 7.75 SL=6.00 

Picked on July 10th at $51.50    PE = n/a 
Change since picked     +0.00    52 week low =$ 5.13 
Analysts Ratings    2-3-0-0-0    52 week high=$82.00 
Last earnings 05/99 est -0.42    actual -0.31 
Next earnings 07-28 est -0.48    versus -0.28 
Average daily volume = 598 K
Chart = http://quote.yahoo.com/q?s=ITVU&d=3m

*****

CMGI - CMGI Inc. $121.00 (+6.63)

It may not be a household name, but CMGI is one of the chief 
architects of the Internet.  What began as a direct marketing 
firm has become a prolific investor in the future of the Internet.
CMGI's venture capital arm, @Ventures, is a savvy trend-spotter
boasting a portfolio with stakes in more than 30 Internet 
companies (Lycos, Raging Bull).  It is buying 83% of search engine
AltaVista, which it plans to grow into its centerpiece Web 
property.  Its Internet Group includes a string of majority-owned
companies (Engage Technologies, Planet Direct) offering services 
such as Web hosting.  About 80% of CMGI's revenue comes from
fulfillment and mailing list services. (from Hoovers)

CMGI has not been making huge daily gains, but has been a 
consistent climber over the last week.  The stock broke through
its 50-dma at the end of June and has held it since.  We really
like CMGI going forward, even though their earnings are not
until September.  The stock is considered an Internet blue chip, 
and as Internet stocks announce stronger and stronger earnings,
CMGI should benefit.  The company recently bought the Alta Vista
search engine from Compaq.  This purchase should help solidify 
CMGI’s core holdings.  The deal will also place links and banners
to CMGI companies on Compaq’s newer computers.  CMGI is still
well off its 52 week high of $165.  There is some resistance at
the $123.50 mark, so watch for this.  

The big news for CMGI was the recent acquisition of Alta Vista.
The street loved this move as CMGI made a strong move on the
announcement.  This took away fears that CMGI might be classified
as a just a mutual fund of Internet companies.  CMGI has been 
very good at spotting upcoming Internet companies, now the street 
will be anxious to see how it does actually running one.  We 
expect they will do very well.

BUY CALL AUG-115 GCB-HC OI=427 at $16.38 SL=12.50
BUY CALL AUG-120*GCB-HD OI=544 at $13.88 SL=11.00 
BUY CALL AUG-125 GCB-HE OI=350 at $11.50 SL= 9.00
BUY CALL AUG-130 GCB-HF OI=608 at $ 9.50 SL= 7.50
BUY CALL SEP-130 GCB-IF OI=614 at $15.50 SL=12.00

Picked on July 10th at $121.00    PE = 1210
Change since picked      +0.00    52 week low =$  8.63 
Analysts Ratings     2-7-0-0-0    52 week high=$165.00 
Last earnings  06/99 est -0.18    actual -0.27 
Next earnings  09-11 est -0.18    versus +0.32 
Average daily volume = 6.12 mln. 
Chart = http://quote.yahoo.com/q?s=CMGI&d=3m


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




The Option Investor Newsletter             7-11-99
Sunday                4  of  7

******************
INTERNET CONTINUED
******************

AOL - America Online $128.25 (+13.00)

America Online is the world’s leading provider of Internet 
and online services.  It currently has over 17 million 
subscribers between its two divisions, America Online and 
CompuServe.  AOL Interactive Services product group operates 
the company's America Online service & manages the AOL Instant 
Messenger service, the AOL.COM Web site, and AOL NetFind.  
In 1999 it purchased Netscape Communications which brought 
the popular Navigator Web browser and the Netcenter Internet 
portal to AOL.  That’s not the only purchase this year 
either.  In May they bought MovieFone Incorporated to add 
to an already commanding list of services.

After a brief pullback Friday morning AOL rallied back with 
the market to close higher once again.  Internets in general 
were relatively flat on Friday but investors were anxious to 
jump in near the close.  This is because the earnings run is now 
in full swing.  AOL is set to report after the close on July 22,
with and expectation of 0.11 cents.  They are also a possible 
stock split candidate.  We mentioned on Thursday that there 
are not enough shares currently authorized to do a 2-for-1 
split but they may consider either a shareholder meeting to 
authorize more shares or do a 3-for-2.  Either way we are 
including them as a split candidate due to past history of 
such announcements in this price range.  Look for momentum 
to continue this week as most investors still consider the 
stock cheap relative to its 52-week high which is still over 
$45 away at $175.50.  Plus entry points are becoming extremely 
important now that premiums are inflating due to recent 
enthusiasm.  Refer to Thursday’s write up if you would like 
more information on our play of AOL.     

There was an article out after the close Friday indicating 
which Web sites were the most popular for Internet users 
for the week ending June 28.  Once again AOL was on the top 
for users and advertisers.  We bring this up because it was 
after the close in case you missed it and also it should be 
an indication that all is well heading into earnings.        

BUY CALL AUG-120 AOO-HD OI=5460 at $16.00 SL=12.50 Higher Delta!
BUY CALL AUG-125 AOO-HE OI=5948 at $13.25 SL=10.75
BUY CALL AUG-130*AOO-HF OI=5591 at $10.50 SL= 8.50
BUY CALL AUG-135 AOO-HG OI=4046 at $ 8.63 SL= 6.50 
BUY CALL OCT-135 AOO-JG OI=5454 at $15.25 SL=11.75
   
Picked on July 08th at  $127.69    P/E = 156
Change since picked       +0.56    52-week high=$175.50
Analysts Ratings    24-12-1-0-0    52-week low =$ 17.25
Last earnings 04/99 est=    .09    actual= .11
Next earnings 07/22 est=    .11    versus= .06
Average Daily Volume = 12.75 mln
Chart = http://quote.yahoo.com/q?s=AOL&d=3m

*****

DRIV - Digital River Inc. $35.25 (+1.69)(+8.06)

Digital River takes the rough water out of online sales.  The 
company manages online stores for software publishers and 
retailers, creating and maintaining personalized Web stores 
that sell software.  Online shoppers interested in purchasing 
software are transferred to the Digital River site (the company
replicates client Web sites so that buyers are unaware they've 
been transferred to Digital River), where they make purchases 
that Digital River processes and fills.  The majority of sales 
come through software publisher clients.  The company also 
offers merchandising, marketing, and distribution services. 
Customers include Corel, Cyberian Outpost, Micro Warehouse, and 
Wal-Mart. (from Hoovers)

DRIV had a fairly strong week, though it was lower than the
week before.  DRIV still looks very strong going into earnings
on the 21st and the chart shows increased buying pressure.  This
is another Internet stock that should benefit from YHOO's 
performance as investors bid up the net stocks into their earnings
dates.  The stock is currently sitting right on resistance, so a
break upward should clear this problem.  Volume continues to be 
stronger on up days, which is a good sign.  DRIV also has strong 
support at $31.00.

On Friday, DRIV announced the acquisition of Universal Commerce.
This acquisition will help expand DRIV’s client base to include
an additional 1,000 publishers of shareware.

BUY CALL AUG-30*DQI-HF OI=287 at $7.50 SL=5.50 ITM $5
BUY CALL AUG-35 DQI-HG OI=134 at $5.13 SL=3.75
BUY CALL AUG-40 DQI-HH OI=100 at $3.00 SL=1.50 
BUY CALL SEP-35 DQI-IG OI=395 at $6.75 SL=5.25 
BUY CALL SEP-40 DQI-IH OI=421 at $4.75 SL=3.50 

Picked on July 3rd at  $33.56    PE = n/a 
Change since picked     +1.69    52 week low =$ 5.00 
Analysts Ratings    6-2-1-0-0    52 week high=$61.38 
Last earnings 04/99 est -0.29    actual -0.27 
Next earnings 07-21 est -0.31    versus ?????
Average daily volume = 801 K 
Chart = http://quote.yahoo.com/q?s=DRIV&d=3m

*****

VRIO - Verio Inc $74.75 (+7.94)(+4.13)(+7.50)

Verio is a national provider of Internet services to 
primarily small and medium sized business.  With a huge wad 
of cash from a host of venture-capital firms and an IPO, 
Verio is buying regional and local Internet service 
providers (ISPs) across the US. It owns or has majority 
stakes in more than 35 business-oriented providers across 
the US. Verio is buying ISPs with a large number of 
dedicated accounts (business accounts with direct lines to 
the provider).   The firm's customers include General 
Electric, Microsoft, Princeton University, and Ziff-Davis. 
Brooks Fiber Properties, a unit of MCI WorldCom, owns 
approximately 17% of Verio.

It appeared VRIO was beginning to consolidate around $67 
and $69, then bang!  VRIO left its relative support and the 
10 dma at $68 and is on the move again.  The stock has 
spiked up $9 in the last 3 days of trading!  The volume has 
picked-up momentum too and this is definitely a bullish 
indication.  For instance on Friday, the trading was very 
heavy at double its normal volume.  VRIO is now in the running 
to break its overhead resistance at $78, the 52-week high.  
Be careful of profit-takers at these higher levels.  
Consider using stops to protect your capital and profits.

Earnings are still weeks away on August 20th.  This run-up 
began in June when Verio made software alliances with AOL 
and MSFT.  The investors liked the recent deals and saw how 
it firmly established Verio's leading-edge position in the 
Web-hosting business.   Plus, on June 23rd, the company 
surpassed the 250,000 Web-site milestone and more 
enthusiasm was generated for the stock.  The trend may 
continue through earnings' season.

BUY CALL AUG-70 RLQ-HN OI= 666 at $ 9.25 SL=7.00 ITM 4.75
BUY CALL AUG-75*RLQ-HO OI= 212 at $ 6.75 SL=5.00
BUY CALL AUG-80 RLQ-HP OI= 281 at $ 4.50 SL=2.75
BUY CALL NOV-80 RLQ-KP OI=1471 at $11.13 SL=8.75

Picked on June 27 at    $62.68    PE = N/A
Change since picked     +12.07    52 week high=$78.00
Analysts Ratings     6-2-1-0-0    52 week low =$13.00
Last earnings 03/99 est= -1.31    actual= -1.24 surprise=5.34%
Next earnings 08-20 est= -1.30    versus= -1.33
Average daily volume = 880 K
Chart = http://quote.yahoo.com/q?s=VRIO&d=3m
 
*****

MSPG - Mindspring $51.13 (+2.50)(+9.85 S/A)

MindSpring Enterprises relies on acquisitions to spring into the 
top tier of US ISPs.  With more than one million subscribers 
throughout the US, MindSpring rivals EarthLink for the #4 spot 
behind industry titan American Online (17 million accounts), the 
Microsoft Network, and AT&T WorldNet.  Dial-up Internet access 
offerings account for nearly 85% of MindSpring's sales.  The 
company also provides Web hosting (45,000 accounts) and dedicated 
access lines for business customers.  MindSpring, working to 
maintain its reputation for outstanding customer service as it 
grows, now offers high-speed cable modem Internet access over 
leased networks. (Description from Hoover's)

MSPG is up on rumors that it may be taken over by a PC box maker 
ever since it announced to the world that it is looking for 
alliances and relationships, this following rumors that Gateway 
may be interested in purchasing Earthlink.  Last Thursday, MSPG 
spiked up over $8, as they cancelled an analyst meeting, citing 
continuing merger discussions.  By the way, the rumor prior to 
the cancellation was that DELL is the suitor - again, just a 
rumor until further notice.  Anyway, Friday the price fell back 
$2 on over 2.5 times the normal volume.  Intra-day support was at 
$50, where it bounced after the open.  Toward the end of the day, 
it bounced again off $51, but that wasn't as convincing as it 
happened too late on Friday, as traders had already headed for 
the beach.  The close was far down from its intra-day high of 
$54.88.  The Euphoria may have further worn off by Monday, which 
won't be helped at all if the market backs off its record setting 
ways, something we expect this week after setting 3 new ones last 
week.  Earnings are not until late in the month (tentatively set 
for July 28).  We'll just have to wait for Monday to pick a 
direction on this one.  If the rumor loses speed, the stock may 
suffer.  If there's a buzz around the issue, volume will be the 
key to taking a position.  Confirm market direction first and 
keep your stops in place if you're already in the play to prevent 
any further loss.  MSPG is volatile, so give your stops some room 
to jiggle.  This is not a "buy the dipper" right now.

The news is in the play.  But note that 1 analyst went from 
"hold" to "strong buy" since we picked it.

BUY CALL AUG-45 MQD-HI OI= 528 at $10.13 SL=7.50
BUY CALL AUG-50*MQD-HJ OI=1235 at $ 7.50 SL=5.75
BUY CALL AUG-55 MQD-HK OI= 630 at $ 5.50 SL=3.75
BUY CALL OCT-50 MQD-JJ OI= 678 at $11.00 SL=8.75

Picked on June 29th at  $48.63    PE = 444
Change since picked      +2.50    52 week low =$11.56
Analysts Ratings     7-5-0-0-0    52 week high=$66.50
Last earnings   05/99 est 0.15    actual 0.16 surprise = 6.7%
Next earnings   07-28 est 0.17    versus 0.08
Average daily volume = 2.10 mln. 
Chart = http://quote.yahoo.com/q?s=MSPG&d=3m

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

INKT - Inktomi Corp $140.00 (+3.63)

Inktomi develops and markets scalable software applications 
to intensify and strengthen larger networks.  Their 
Internet search engine, which provides a fast and 
customizable Web search, is used by Yahoo!  Other products 
include a large-scale network caching application for ISPs 
(like AOL) and corporations that need help addressing 
capacity constraints in high-traffic network routes; and 
also, they have an Internet shopping engine.  Inktomi has 
operations in the US and UK.

INKT got serious on June 30th and tacked on a double-digit 
gain of $12.37 for a $131.50 finish.  The new "buy" rating 
that day by Pacific Crest Securities surely had its 
influence.   INKT has so far not returned to its old 
support of about $112-116 as it rides upward.  The 
earnings' report from YHOO spread optimism and 
encouragement throughout the Internet sector on Thursday. 
INKT advanced over $4 on moderate volume.  On Friday, INKT 
was rather flat trading narrowly between $138 and $140.  A 
good entry point if you were willing to forsake a show in 
volume. The stock faces near resistance of $145.13 (an 
intraday high hit on Monday) as its earnings' date 
approaches us next week on July 15th.  Beyond that point, 
the 52-week high is at $159.12 - a height reached back in 
April around 1Q earnings.  You may have to look intraday 
for an entry point.  Remember this is an Internet and 
experiences volatility and wide intraday swings.  This play 
is HIGH RISK.  Be careful!  Remember, this play is over
in four days.  [editor's note: Some of you may have noticed
that INKT split 2:1 last January near $150.  At the moment
they have slightly over 48 mln shares outstanding and 100 mln
authorized.  We could see a split announcement with earnings.
Although I still advise against holding over earnings hoping
for a split.  If they do, we'll play it for the split run.
- Kimo]

On Tuesday, Henry Blodget of Merrill Lynch resumed coverage 
of INKT as an "accumulate" and also reiterated his "long-
term buy" rating.   His 12-month target price is set at 
$160.  He cited their "most important product, network 
caching software, is expected to grow from 1.6 bln. in 2000 
to more than 4 bln. in 2003" as his primary factor.   On 
Friday, the Chicago Board Options Exchange (CBOE) announced 
they will list LEAPS on Inktomi Corp.  The strike prices 
will be in multiples of 10 from 110-170, inclusive, with 
expiration dates in January 2001 and January 2002.

BUY CALL AUG-135*KYQ-HG OI= 721 at $20.50 SL=16.00 ITM 5.00
BUY CALL AUG-140 KYQ-HH	OI= 565 at $18.13 SL=14.25
BUY CALL AUG-150*KYQ-HJ OI= 172 at $13.88 SL=11.25 Aggressive

Picked on July 8th at $139.88    PE = N/A
Change since picked     +0.13    52 week high=$159.12
Analysts Ratings    5-5-3-0-0    52 week low =$ 19.50
Last earnings 03/99 est= -.10    actual= -.09    surprise=10%
Next earnings 07-15 est= -.11    versus= -.13
Average daily volume = 2.21 mln.
Chart = http://quote.yahoo.com/q?s=INKT&=3m

*****

MSFT - Microsoft $93.25 (+1.25)(+7.06)(-0.06)(+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!)

Tap, tap, tap, tap. . .that's the sound of our collective OIN 
foot waiting for MSFT to start its earnings run.  Earnings are 
July 19 (company confirmed), 1 trading day following expiration 
of July contracts.  Technically MSFT is looking pretty strong as 
nears its all-time high of $95.  Support of $92 seems to be 
holding too.  Also, MSFT closed just $0.06 off its intra-day high 
- a good sign, especially since it happened on a Friday when 
traders normally leave early for the Summer weekends.  As we've 
noted in previous write-ups, there are still over 64,000 open 
interests in the July 95 and 100 strike prices, telegraphing that 
investors expect MSFT to go higher than its current $93.25.  We 
concur, but also remind our readers that with new NASDAQ records 
being set daily, there will be a day when we see another 
pullback.  MSFT is the NASDAQ's biggest component and will go 
with it.  That said, earnings season momentum is really strong 
and the pullback should be short.  There are probably a few more 
points to be garnered from this play.  Just don't give back any 
of your profits while you wait for them.  Like last week, if you 
are sitting on a mountain of profit, keep a tighter reign on your 
stop order.  Otherwise, buy the dip after you see the bounce.  As 
always confirm market direction before starting a new play.  You 
have 6 trading days.  Ready. . .go!

With the trial relegated to the back burner, there is nothing of 
significance in the news to move MSFT.  The play here is all 
about earnings. 

***Gutsy types can play in-the-money July strikes since the time 
value is mostly shaken out, but we don't list any here

BUY CALL AUG-90*MSQ-HR OI= 8922 at $ 7.00 SL=5.25
BUY CALL AUG-95 MSQ-HS OI= 8283 at $ 4.25 SL=2.50
BUY CALL OCT-95 MSQ-JS OI=14735 at $ 7.25 SL=5.50

Picked on June 20 at    $85.00    PE = 73
Change since picked      +8.25    52 week low =$43.88
Analysts Ratings   15-13-2-0-0    52 week high=$95.62
Last earnings   04/99 est 0.32    actual 0.35
Next earnings   07-19 est 0.35    versus 0.25
Average daily volume = 24.63 mln. 
Chart = http://quote.yahoo.com/q?s=MSFT&d=3m
 
*****

SONE - Security First Technologies $48.25 (+1.06)(+10.19)

Security First Technologies (S1) lets you do your banking in 
your pajamas.  The company makes software for performing 
Web-based financial transactions.  Its customizable Virtual 
Financial Manager suite enables bank customers to access accounts, 
pay bills, transfer money, open deposit accounts, track expenses, 
and make investments securely online.  S1 also offers training, 
consulting, and data service center outsourcing to customers, 
which include Citibank and Bank of America.  Its products are 
available directly and through partners such as Andersen 
Consulting and Hewlett-Packard.  S1, which is expanding through 
acquisitions, has sold the banking operations of its Security 
First Network Bank to Royal Bank of Canada. (from Hoovers)

SONE didn’t have nearly the week it had two weeks ago, but still
finished with over a 2% gain.  The stock actually consolidated
a bit after its big gains the week before.  This isn’t all bad,
a stock needs to digest gains before it can move further.  It
was nice to see SONE do this without losing value.  A bullish
sign has developed for SONE as its up days are on strong volume,
and down days on light volume.  The stock has some mild support
built up the last few days at $47.75.  Watch for a bounce off
this level for a good buying opportunity.

SONE has earnings at the end of the month, and should develop
a nice earnings run into this date.  With Yahoo! leading the
way with strong earnings, we feel many other Internet stocks
will benefit and also show strong earnings.

BUY CALL AUG-45 QFB-HI OI=124 at $7.00 SL=5.50 ITM $3.25 
BUY CALL AUG-50*QFB-HJ OI=250 at $4.50 SL=3.25 
BUY CALL OCT-45 QFB-JI OI=122 at $9.63 SL=7.75 ITM $3.25 
BUY CALL OCT-50 QFB-JJ OI=295 at $7.63 SL=5.75 

Picked on July 3rd at  $47.19    PE = n/a
Change since picked     +1.06    52 week low =$ 4.63 
Analysts Ratings    3-5-0-0-0    52 week high=$79.25 
Last earnings 05/99 est -0.14    actual -0.13 
Next earnings 07-28 est -0.11    versus -0.25 
Average daily volume = 624 K 
Chart = http://quote.yahoo.com/q?s=SONE&d=3m



**************
Semiconductors
**************
INTC - Intel Corp $66.25 (+2.75)(+8.19)

Intel designs, manufactures, and markets microprocessors 
Its star performer is the Pentium. It has been providing the 
microcomputer components for IBM-compatible PCs since 1981. 
With an overwhelming 85% of the market share, Intel is dominant 
in the semiconductor industry.  

This is a pure and simple earnings play.  Intel announces 
in two days on Tuesday July 13th.  Plan to be out of any 
open positions by then.  Once again for a refresher, OIN 
never recommends holding over an earnings' date.  The risk 
factor is too high!  Take your profits and get out.  And 
this comes with the knowledge that Intel will likely have 
an excellent report due to its cost-cutting measures. 

Intel was a steady performer this week making consistent 
gains.  On Tuesday, two analysts had this stock on their 
hot list.  Merrill Lynch raised its rating to "buy" from 
"accumulate" and reiterated a target price of $86.  Then 
Prudential also pushed up its rating to a "strong buy" from 
"accumulate".  Then sour remarks came from BBRS who 
maintained a "long-term attractive" rating on INTC, but cut 
the 2Q and fiscal estimates.  The volume was remarkable 
that day at 28.71 shares being traded.   Unfortunately the 
trading volume fell back to normal levels for the remainder 
of the week.   

In the news, Intel announced 94% of Dialogic shares have 
been tendered under its June 7th offer.  They expected the
acquisition to be completed by about July 8th (we have not
seen anything about it yet).  Intel also announced a definitive
agreement to acquire Softcom Microsystems, a privately held 
company, in an all cash transaction.  No further details were 
available.  Softcom develops and markets semi-conductor products 
used to transfer voice and data across the Internet and within 
traditional networks.

BUY CALL AUG-60*INQ-HL OI= 8715 at $7.88 SL=6.25 ITM $6.25
BUY CALL AUG-65 INQ-HM OI=10602 at $4.63 SL=3.00
BUY CALL AUG-70 INQ-HN OI= 9267 at $2.38 SL=1.25
BUY CALL OCT-65 INQ-JM OI= 9768 at $6.88 SL=5.25
BUY CALL OCT-70 INQ-JN OI=10448 at $4.50 SL=2.75

Picked on July 4th at $63.50    PE = 28
Change since picked    +2.75    52 week high=$71.87
Analysts Ratings 16-13-7-0-0    52 week low =$34.87
Last earnings 03/99 est= .54    actual= .57 surprise=5.56%
Next earnings 07-13 est= .53    versus= .33
Average daily volume = 21.10 mln.
Chart = http://quote.yahoo.com/q?s= INTC&d=3m
 
*****

TXN - Texas Instruments $146.56 (+4.87)(+5.69)(+2.75)(P2W+13.88)

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

TXN will report earnings on July 20 (company confirmed) and is 
also a split candidate.  Their last split (2:1) was in November 
1997 at about $100.  They do not currently have enough shares to 
make it happen and have yet to issue a proxy statement to 
shareholders for approval.  If they announce a split with 
earnings, it will take a while for it to actually become 
effective.  Even so, semiconductor companies are expected to 
report strong earnings this quarter.  Though TXN showed us the 
money again this week, volume is slacking off, telling us that 
that TXN may decide to take this coming week off despite 
earnings.  Technical indicators too confirm the flattening out.  
TXN believers will point to the nice price bounce off $145.50 to 
$146, despite Thursday and Friday's low volumes.  Believers can 
also point to Friday's new all-time trading high of $148.13 as a 
positive factor for the coming week.  The fact is TXN has come a 
long way in a hurry.  Also, A new market wide trend is developing 
that has news pundits remarking that "companies like GE, YHOO and 
AA are selling off even though they reported strong earnings", 
leading them to further conclude that good earnings are already 
priced in.  Uh Oh!  The secret is out!  Pundits further conclude 
that perhaps investors will begin selling and not hold over 
earnings.  Wow, wish we'd thought of that!  That said, watch for 
profit taking in front of earnings.  If you see a return of 
volume, there are probably a few more points of gain to be had.  
Don't be greedy.  Protect your profits with stops and confirm 
market direction before taking a new position.  

In the news, a hot new company, Efficient Networks (proposed 
symbol EFNT) is scheduled for IPO this coming week is.  TXN owns 
13% of the company.  The hype may rub off on TXN, though we 
suspect this tail can only wag the Big Dog so far.

BUY CALL AUG-140 TXN-HU OI= 633 at $14.13 SL=11.25
BUY CALL AUG-145 TXN-HW OI= 669 at $11.50 SL= 9.25
BUY CALL AUG-150*TXN-HV OI=1671 at $ 9.13 SL= 6.75
BUY CALL OCT-150 TXN-JV OI= 652 at $14.50 SL=11.50

Picked on June 10th at $125.75    PE = 94
Change since picked     +20.81    52 week low =$ 45.38
Analysts Ratings    11-8-5-0-1    52 week high=$148.13
Last earnings   04/99 est 0.61    actual 0.65
Next earnings   07-20 est 0.76    versus 0.35
Average daily volume = 2.57 mln. 
Chart = http://quote.yahoo.com/q?s=TXN&d=3m

*****

BRCM - Broadcom Corp. $143.75 (+6.72)(+23.90)(+1.19)

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

BRCM continues its earnings run with only a week and a half to 
go before it announces. Last week BRCM added $6.72 and that was 
after gaining $23.90 the week before! BRCM has more than 
quadrupled since it went public April 17th of last year, and 
it gained 135% in the 3 month period ended June 30th. BRCM's 
products are at the cutting edge of technology in the 
communications and data transmission arena, a hot stock area. 
BRCM just split in February when it traded around $120 and it 
is well over that price now. This stock trades at a HUGE PE, 
but it is growing at a phenomenal rate and its price is based 
on growth. The company told us it will release earnings on the 
21st after the close. It has easily beat earnings estimates in 
previous quarters, and investors are expecting more of the same.
[editor's note: We are adding BRCM to our split candidate list
as well.  They last split in the $120 area and after their 
latest run the beginning of April, they are due to split again.
They have plenty of shares authorized to do a split or two. 
- Kimo]

BRCM saw a bit of profit taking Wednesday and early Thursday, 
but its 10 dma provided support. We must warn again that BRCM 
has one foot in the Internet sector and the other in the chip 
sector, so it can see a LOT of volatility. Look for a good 
entry and stay on top of any BRCM positions you initiate. No 
new news.

BUY CALL AUG-140*RDZ-HH OI=648 at $16.38 SL=12.75
BUY CALL AUG-145 RDZ-HI OI=186 at $14.00 SL=11.25
BUY CALL AUG-150 RDZ-HJ OI=211 at $11.88 SL= 9.50

Picked on July 4th at $137.03    PE = n/a
Change since picked   +$ 6.72    52 week low =$ 23.50 
Analysts Ratings    3-7-1-0-0    52 week high=$148.50 
Last earnings 03/99  est  .14    actual  .19 surprise=36%
Next earnings 07-21  est  .17    versus  .08 
Average daily volume = 2.22 mln.
Chart = http://quote.yahoo.com/q?s=BRCM&d=3m
 
*****

SLR - Solectron $71.94 (+4.81)(+4.31)

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

SLR seems to have regained its recently misplaced momentum.
It posted a new 52 week high on Friday at $71.94, closing up
$4.81 for the week.  It seems to jump up early in the day,
make a new high and then trade sideways for a couple of days
and then repeat itself all over again.  Volume has been 
averaging just over 1.1 mln shares on its up days recently 
and around 800K-900K on its sideways days.  Technically
it has formed a nice channel to the upside, since early June,
coming down to touch its 10dma twice. MACD is still strong.
SLR looks as though it should continue its overall upward ways.
Support is at $70.00 and $68.00.  We hope you have already
moved your stops up accordingly to protect current profits. 
We are looking for the current earnings euphoric environment
to keep this momentum play going. 

Deutsche Banc Alex. Brown initiated coverage of SLR with a
buy rating on Thursday.  The California State Labor Commissioner
said last week that it plans to form a task force of state and
federal labor officials, to investigate a newspaper's report
that SLR and other Silicon Valley high-tech companies have 
paid Asian immigrant’s low wages to assemble electronic parts
at home. Stay Tuned.

BUY CALL AUG-70*SLR-HN OI=220 at $5.50 SL=4.25
BUY CALL AUG-75 SLR-HO OI= 33 at $3.13 SL=2.50 Low OI
BUY CALL OCT-70 SLR-JN OI= 71 at $7.13 SL=5.75 
BUY CALL OCT-75 SLR-JO OI= 85 at $5.75 SL=3.50  

Picked on June 20th at  $64.06   PE = 61
Change since picked    +$ 7.88   52 week high=$71.94 
Analysts’ ratings    6-6-6-0-0   52 week low =$26.81
Last earnings   6/99  est 0.20   actual 0.29 surprise=+7%
Next earnings   9/99  est 0.32   versus 0.23 
Average daily volume  1.30 mln.
Chart = http://quote.yahoo.com/q?s=slr&d=3m


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





The Option Investor Newsletter             7-11-99
Sunday                5  of  7

*********************************
Telecom/Communications/Networking
*********************************

CSCO - Cisco Systems $67.06 (+0.00)(+5.75)(+2.81 SA)

Cisco's the big kid on the network block.  The leading supplier 
of products that link LANs and WANs, Cisco Systems controls about 
85% of the global market for routers and switches, which direct 
information on a network.  The company's other products include 
dial-up access servers and network management software.  Cisco is 
using acquisitions (more than 30 since 1993) to broaden its 
product line and is licensing products to widen the influence of 
its Cisco Internetwork Operating System (Cisco IOS) software, 
hoping to make it an industry standard.  Strategic relationships 
with the industry's biggest players (including Alcatel, 
Microsoft, Qwest, and U S WEST) are boosting Cisco's influence on 
the networking industry. (Description from Hoover's)

Still a great looking technical chart, but no change for the week 
doesn't make us any money.  In fact we lose some thanks to time 
value erosion of current month strike prices.  After a strong 
run, CSCO just took the week off.  However, this is earnings 
season and the overall market is advancing.  CSCO doesn't report 
earnings until August 10 (company confirmed), so it may take 
another week of consolidation before it finds its legs.  Despite 
slacking volume on Wednesday, Thursday, and Friday, the lows were 
getting higher - a good sign.  It confirms the consolidation.  
Friday, support jumped up to $66.50, where buyers propped up the 
price on 3 occasions - another good sign.  For options traders of 
quality issues, consolidation can be viewed as generally a good 
thing since it deflates option premiums, creating buying 
opportunities for the patient investor in anticipation of 
predictable breakouts.  In short, scaling into an August position 
will likely yield the highest gains in anticipation of earnings.  
Target shoot your entry in anticipation of a quick NASDAQ 
correction if your risk profile allows it.  Otherwise confirm 
market direction before starting a new play. 

No news right now that will move the stock.

BUY CALL AUG-60 CYQ-HL OI= 3718 at $9.00 SL=6.75
BUY CALL AUG-65 CYQ-HM OI= 9170 at $5.50 SL=3.75
BUY CALL AUG-70*CYQ-HN OI=13130 at $2.81 SL=1.50 feeling lucky?
BUY CALL OCT-70 CYQ-JN OI=10579 at $5.50 SL=3.75

Picked on June 29th at  $62.50    PE = 115
Change since picked      +4.56    52 week low =$20.56
Analysts Ratings   19-12-0-0-1    52 week high=$69.25
Last earnings   05/99 est 0.37    actual 0.38 surprise = 2.7%
Next earnings   08-10 est 0.40    versus 0.32
Average daily volume =14.97 mln. 
Chart = http://quote.yahoo.com/q?s=CSCO&d=3m

*****

NXTL - Nextel Communications Inc $50.00 (+0.81)(+2.75)(+1.69)

Nextel is a digital and analog wireless communications 
service company.  They are increasing their presence in the 
industry with the help of equipment provider Motorola, who 
has a 24% stake, and wireless pioneer Craig McCaw, who has 
about a 20% stake.  The company is setting itself apart 
from its cellular competitors by undercutting its prices.  

There are only a few more days to play this stock.  NXTL is 
reporting earnings this Thursday on July 15th.  This week 
has not been spectacular.  It traded relatively flat and 
the momentum tapered off too.  The stock formed a 
comfortable support level at $49.  Since it set its 
newest 52-week high ($50.75) a week ago last Wednesday, 
NXTL has been unable to break through this point of 
opposition.  If you do decide to open a new position for a 
quick play, look for a bounce off $49 or a breakthrough of
$50 on strong volume first.  And remember, holding over an 
earnings' announcement is much too risky.

Nextel and Sprint Corp (PCS) got unwanted publicity this 
week.  They are two of the  wireless companies that begin 
charging airtime the moment a caller presses the "send" 
key.  It's irrelevant whether or not the call actually 
makes a connection.   The policy is perfectly legal, but 
consumer advocates are up in arms.

BUY CALL AUG-45 FQC-HI OI=3106 at $6.75 SL=5.00 ITM $5
BUY CALL AUG-50*FQC-HJ OI=2438 at $3.50 SL=1.75
BUY CALL AUG-55 FQC-HL OI=1001 at $1.63 SL=0.75

Picked on June 27 at    $46.44    PE = N/A
Change since picked      +3.56    52 week high=$50.75
Analysts Ratings    11-5-4-0-0    52 week low =$15.37
Last earnings 03/99 est= -1.43    actual= -1.37 surprise=4.20%
Next earnings 07-15 est= -1.36    versus= -1.45
Average daily volume = 4.79 mln.
Chart = http://quote.yahoo.com/q?s=NXTL&d=3m
 

*****

NT - Nortel Networks Corporation $90.06 (-$.50)(+7.13)

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. 

Nortel started the week on a positive note, adding $1.00 to
to its pre-holiday close.  Wednesday it stayed on track making
a new 52 week high at $93.50 early in the session.  That 
apparently got the markets attention, as profit takers stepped
in.  From that point until midday on Friday, the sellers 
managed to shave $5.00 off the price of NT shares, taking it
to a low of $88.50.  At that point NT bounced off its 10dma,
and regained $2.75 to close at $90.06, down $.50 for the week.
At this point the 10dma has provided support for NT, and it has
regained its composure.  Again what concerns us here is that 
the move down has been on better than average volume, where the 
move back up was on lighter than average volume, although it was
a somewhat typical "Summer Friday".  Earnings are to be released
July 27th and we should see NT get back on track next week,
however keep an eye for any close below Fridays low. Adjust your
stops accordingly.  Don't forget, NT is a split candidate.
 
News: Not really much to report.  Talks between Nortel and 
Avici Systems failed on Wednesday.  NT had considered buying
the startup company, which it already owns a 20% stake.
Warburg Dillon Read Inc. upgraded NT from a hold to a buy. 

BUY CALL AUG-85 NT-HQ OI=423 at $8.38 SL=6.50 ITM $5
BUY CALL AUG-90*NT-HR OI=361 at $5.75 SL=4.25
BUY CALL AUG-95 NT-HS OI=518 at $3.38 SL=2.50
BUY CALL SEP-90 NT-IR OI=149 at $7.25 SL=5.75 (Low Volume)
BUY CALL SEP-95 NT-IS OI=148 at $4.75 SL=3.50 (Low Volume)

Picked on May 23rd  at  $79.94   PE N/A
Change since picked    +$10.12   52 week high=$93.50 
Analysts’ ratings   7-11-6-0-0   52 week low =$26.81
Last earnings   4/99  est 0.27   actual 0.33 surprise=+7%
Next earnings   7/99  est 0.50   versus 0.41 
Average daily volume  1.80 mln.
Chart = http://quote.yahoo.com/q?s=NT&d=3m

*****

NOK - Nokia Corp $94.44 (-.12)(+9.31)(-.88)(+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. 

Nokia paused last week before the final leg of its earnings run 
to take a breather after gaining $9.31 the week before and
setting 3 consecutive new highs in a row. A sympathy move down 
following the unexpected resignation of rival Ericsson's chief 
executive made Thursday afternoon a great entry point, as it 
bounced off its 10 dma. We expect the stock to move up from 
here with only 8 trading days to go before it announces earnings. 
The company has told us that it will announce on July 22nd 
before the open. Something to watch is the earnings report due 
out from Motorola early this week. Nokia may react to any 
surprises from this rival as well. Nokia continues to focus on 
developing the "Mobile Information Society" by combining the 
Internet with wireless communication. The company is working 
hard to get its WAP standard accepted for wireless data 
communication. 

No new news.

BUY CALL AUG- 90*NAY-HR OI=453 at $8.50 SL=6.50 ITM $5
BUY CALL AUG- 95 NAY-HS OI=892 at $6.25 SL=4.50
BUY CALL AUG-100 NAY-HT OI=535 at $3.75 SL=2.25
BUY CALL OCT-100 NAY-JT OI=446 at $6.88 SL=5.25

Picked on June 15th at $82.00    PE = 44
Change since picked   +$12.44    52 week low =$29.53 
Analysts Ratings    9-4-0-0-0    52 week high=$97.63
Last earnings 03/99 est  0.39    actual 0.48 surprise=+26%
Next earnings 07-26 est  0.49    versus 0.35
Average daily volume = 2.17 mln.
Chart = http://quote.yahoo.com/q?s=NOK&d=3m
 
*****

LU - Lucent Technologies, Inc. $71.94 (+1.25)(+7.00)(+3.00)

LU is spun (off) gold.  The company, which was spun off from
telecommunications giant AT&T, is North America's leading maker 
of telecom equipment and software, including business 
communications systems, switching and transmission equipment, 
and wireless networks.  LU also makes integrated circuits and
telecommunications power systems and is a major supplier to the 
personal communications services market.  Technology developed 
by Bell Labs provides the basis for many of LU's products, but 
the company has become a force in the broadband (voice, data, 
and video) networking market through acquisitions.  Most of 
LU's customers are telecom network operators such as AT&T.
(from Hoovers)

LU didn’t reach a new 52 week high on Friday intraday, but
did close at one.  This last week was actually a bit quiet
on the Lucent front.  The stock never lost much, but never
gained much either.  For the week, volume was very average,
except for Friday, which was fairly low.  Earnings are around
the corner for LU and we expect to see a solid run into LU’s
earnings date of July 22nd.  MACD is still very strong and
LU is in a very popular industry.  One in which the spotlight
seems to be shining at the moment.

LU should continue to see strength from being mentioned in 
Salomon’s “Ten Exceptional Names” list.  A little steam might
have been let out on Thursday as AG Edwards cut it to a
“maintain” position.  

BUY CALL AUG-70*LU-HN OI= 5896 at $5.38 SL=4.00 ITM $1.94
BUY CALL AUG-75 LU-HO OI= 7190 at $2.88 SL=1.50
BUY CALL OCT-70 LU-JN OI= 7732 at $8.00 SL=6.25 ITM $1.94
BUY CALL OCT-75 LU-JO OI= 3464 at $5.50 SL=4.25

Picked on June 29th at $66.69    PE = 56
Change since picked     +5.25    52 week low =$26.72
Analysts Ratings 10-12-10-0-0    52 week high=$73.13
Last earnings  04/99 est 0.15    actual 0.17 
Next earnings  07-22 est 0.23    versus 0.16
Average daily volume = 9.67 mln
Chart = http://quote.yahoo.com/q?s=LU&d=3m

*****

VOD - Vodaphone Group $207.13 (+1.63)(+.75)(-8.06) 

The vote is in, and Vodafone Group is the UK's #1 mobile 
telecommunications company, serving about four million customers. 
It operates analog and digital cellular networks offering voice 
communications, messaging, paging, and mobile data services. 
Vodafone sells its cellular phone services through three 
distribution businesses: Vodafone Retail, Vodafone Connect, and 
Vodafone Corporate.  The company provides cellular services in 
12 countries outside the UK; international operations account 
for 28% of total revenues.  Vodafone will nearly double its 
size with the purchase of US-based AirTouch Communications. 
(from Hoovers) 

VOD has been playing the up a few days down a day game.  Recently
the stock went up four straight days, but since has come down
the last two.  A bullish indicator is the fact that the down
days are not equaling the up days in amount or number.  VOD is
expected to announce a stock split at its meeting on July 21st
and as this is more and more publicized, the stock should benefit.
VOD’s recent drop should be about over as it has just about
retraced 50% of its gain.  We see $205 being the approximate
bottom.  Watch for a bounce near this level if the stock does
drop any further.  Unfortunately, since VOD is an ADR, it tends
to gap up or down at the open.  Overall, we see VOD moving up
and eclipsing previous highs as it gets closer to its meeting.

VOD had a few reiterations this last week which should help
keep interest in the stock also.  Goldman Sachs maintained VOD
on its recommend list, showing they feel VOD is still a top
stock.

BUY CALL AUG-200 VOD-HT OI= 233 at $15.75 SL=12.50 ITM $7.13 
BUY CALL AUG-210*VOD-HB OI=1304 at $10.63 SL= 8.00 
BUY CALL AUG-220 VOD-HD OI= 914 at $ 6.50 SL= 5.00 braver
BUY CALL OCT-210 VOD-JB OI= 182 at $17.88 SL=14.75
BUY CALL OCT-220 VOD-JD OI= 216 at $13.38 SL=10.50

Picked on June 26th at $204.75    PE = 73 
Change since picked      +2.38    52 week low =$ 94.00 
Analysts Ratings     4-2-1-0-0    52 week high=$216.44 
Last earnings   04/99 est ?       actual ? 
Next earnings      ?  est 1.56    versus ? 
Average daily volume = 1.09 mln
Chart = http://quote.yahoo.com/q?s=VOD&d=3m

****

NXLK - Nextlink Communications, Inc. $93.00 (+14.94) 

Nextlink Communications is a local exchange carrier that 
provides telecommunication services via its own fiber-optic 
network.  They provide switched local and long distance 
services to primarily small to medium-sized businesses. 
This fast growing broadband telecommunication provider has 
26 networks in 15 states and services in 41 markets.  Just
this week they began offering commercial service in 
Northern and Central New Jersey.  This company is proving 
itself to be one of the fastest growing end to end 
broadband providers in the industry.

On Thursday, Nextlink announced they will team up with 
Westbank Projects Corp of Vancouver, BC and Microsoft to 
create a "smart" community (a state-of-the-art technology 
environment) in the Lincoln Square development of Bellevue 
Washington.  NXLK stock responded by advancing $6.25 - a 
7.6% increase.  Friday the volume was also strong and the 
stock tacked on another $4.75!  I'm sure the "buy" rating 
from Fahnestock certainly helped too.   NXLK had broke out 
of support ($75-78) on Tuesday when it popped over its 10 
dma of $80.  Definitive confirmation of upward movement 
came on the above-mentioned Thursday and Friday.  Of course
the most realistic reason NXLK took off on Thursday was
a comment in the "Heard on the Street" column for the Journal.
The article mentioned that SBC Communications would have to
partner up or acquire companies that offer local phone 
services in key cities due to requirements in their deal
to acquire Ameritech.  The FTC is asking SBC to offer local
phone services in 30 markets outside SBC's home territory.
How does NXLK fit in the picture?  They were mentioned as 
a possible partner (a.k.a. takeover target)with SBC.
(-theStreet.com)

Earnings are due in a couple weeks on July 30th.
Also in the news, Pacific Crest had reiterated a "strong 
buy" on NXLK back on June 29th.  Analyst, Brent Bracelin, 
had set the target price at $120. 

BUY CALL AUG-90 QNF-HR OI=88 at $ 9.88 SL= 7.50
BUY CALL AUG-95*QNF-HS OI= 0 at $ 7.13 SL= 5.25 newest strike
BUY CALL OCT-90 QNF-JR OI=61 at $15.13 SL=12.00
BUY CALL OCT-95 QNF-JS OI= 0 at $12.38 SL=10.00 newest strike
**caution, the AUG calls have low volume.

Picked on July 11th at  $93.00    PE = N/A
Change since picked      +0.00    52 week high=$94.43
Analysts Ratings     7-0-4-0-0    52 week low =$10.56
Last earnings 03/99 est= -2.28    actual= -2.17    surprise=4.82%
Next earnings 07-30 est= -2.43    versus= -1.42
Average daily volume = 535 K
Chart = http://quote.yahoo.com/q?s=NXLK&d=3m

*****

QCOM - Qualcomm $148.75 (+6.50)(+17.50)(-3.00)(+21.00)

Qualcomm is the inventor of CDMA technology, the new industry 
standard for mobile communications used in cellular phones, 
wireless telephone system equipment, and satellite ground 
stations.  Its OmniTRACS global positioning system is used by the 
trucking industry to monitor traveling truckers.  In a joint 
venture with several companies, including Loral, QUALCOMM is 
developing the Globalstar system of low-orbiting satellites, 
which will offer telecommunications services around the world 
(and should smoke Iridium like a pork chop, we might add). 
QUALCOMM also publishes the popular Eudora e-mail software.

Well, that was fun!  What would have otherwise been a down week 
turned out to be a barn-burner, as the S&P announced it will add 
QCOM into the S&P 500 in place of TransAmerica.  This was a great 
added bonus for those already in the play.  The main reason for 
the play though is that earnings are July 20, 1999 at approx. 
1:30 p.m. PST (company confirmed).  How about the possibility of 
another split then too?  While not guaranteed, QCOM last 
announced a 2:1 split on April 14, when it traded at $157.  With 
the help of earnings season and the addition to the S&P, QCOM 
could be there again by earnings and announce another 2:1 split.  
There are 300 mln. shares authorized.  There are 150.646 mln. 
shares issued - slightly too many to pull off a split without a 
shareholder vote.  Still no special proxy yet.  We'll keep 
watching and let you know when we see it.  Technically, QCOM 
looked strong again after its spike on Friday, as it closed at a 
new high, but nowhere near its spike to $153.63 at the open 
following the S&P announcement.  Friday, support was good at $148 
and should hold, barring any market weakness (which 
unfortunately, following 9 days of gains, if you don't count the 
1-day -4 point hiccup, we are due for one).  Still looks good to 
us.  Just exercise caution since QCOM's volatility makes it a bit 
riskier play.  Confirm market direction before jumping in.

Announced on CNBC last week before the market opened, they noted 
QCOM had gained 600 K new customers in Korea during the month of 
May and they are expected to announce a major equipment sale to 
Sprint in the next 2 weeks.  Not only that, but Lehman Bros. was 
"pounding the table" on QCOM while they raised earnings 
estimates by another $0.02.  We've just learned too that 4 more 
Globalstar satellites were launched this Saturday morning, which 
will allow them to provide satellite-based CDMA telephone service 
starting this Fall.  QCOM is one of the founders of Globalstar.  
Iridium pork chop, anyone?

BUY CALL AUG-145*AAW-HI OI= 806 at $17.50 SL=13.75
BUY CALL AUG-150 AAW-HJ OI=1095 at $15.50 SL=12.00
BUY CALL AUG-155 AAW-HK OI= 377 at $13.50 SL=11.00
BUY CALL OCT-150 AAW-JJ OI= 608 at $23.00 SL=18.00

Picked on June 22 at $130.63    PE = 406
Change since picked   +13.62    52 week low =$ 18.88
Analysts Ratings   7-7-3-0-0    52 week high=$153.63
Last earnings 04/99 est 0.49    actual 0.21 surprise = 41.38%
Next earnings 07-20 est 0.55    versus 0.17
Average daily volume = 3.51 mln. 
Chart = http://quote.yahoo.com/q?s=QCOM&d=3m

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

COST - Costco Companies Inc $85.94 (+4.13)

Costco is the largest "wholesale" club operator in the U.S.
They operate about 288 membership warehouse stores.  They 
are located Canada, the United Kingdom, Korea, Japan and
in Mexico.  The company also operates Costco Online, an
E-commerce Website. They offer discounts on everything from
food to pharmaceuticals, and tires to computers.

The retail industry perked again this week with the release
of the June sales report. Many of the heavy hitters scored
increases of 6% to 10% compared to the same period last year.
COST reported net sales of $2.72 billion, up 13% from last
year.  For the first 42 weeks of their fiscal year Costco
has enjoyed a 9% increase over last year for comparable
warehouse sales. In early October of 1998 COST started a run
from $41.25 that went virtually uninterrupted until April 7th
when it made a high of $93.75.  COST retreated to $70 area,
to form a base for about a month.  June 29th COST broke out
of that basing pattern and has been on the move since.  Volume
has been solid on the most recent advance as well.  Technically
MACD has turned positive and a new channel pointing north has
formed.  This is primarily a strong industry play, with a 
solid company.  Support is at $83.00-$84.00, so pick your entry
point on positive directional movement, with good volume.

There is little news other than the retail sales report that 
came out Thursday.  Deutsche Banc Alex. Brown also resumed 
coverage Thursday with a strong by rating and a 12-month 
target of $100. 
 
BUY CALL AUG-80 PRQ-HP OI=124 at $ 9.00 SL=7.00
BUY CALL AUG-85*PRQ-HQ OI= 54 at $ 5.75 SL=4.50
BUY CALL AUG-90 PRQ-HR OI= 49 at $ 3.63 SL=1.75
BUY CALL OCT-80 PRQ-JP OI=165 at $11.88 SL=9.50
BUY CALL OCT-85 PRQ-JQ OI=154 at $ 8.88 SL=6.75

Picked on July 10th at  $85.94   PE = 39
Change since picked   +$  0.00   52 week high=$93.75 
Analysts’ ratings    5-7-6-0-0   52 week low =$41.25
Last earnings   5/99 est  0.44   actual 0.46 surprise=+5%
Next earnings   8/99 est  0.76   versus 0.66 
Average daily volume 2.15 mln.
Chart = http://quote.yahoo.com/q?s=cost&d=3m

*****

BBY - Best Buy $76.00 (+3.00)(+9.56)(+3.44)

Best Buy Company sells personal computers and other home office 
products, consumer electronics, entertainment software, major 
appliances and related accessories nationwide through its 
retail stores. It is one of the fastest growing retail specialty 
companies in the country.

Best Buy has been on a tear for some time, following a record 
first quarter. It moved up fairly steadily until last Thursday, 
when it finally saw 2 days in a row of profit-taking after 
setting new all-time highs for 7 days in a row. Like its 
competition, Circuit City, BBY has managed to thrive in the 
cut-throat competition in the discount electronics business, 
even as others have fallen by the wayside. The company is 
capitalizing on the digital revolution, as consumers spend big 
bucks on everything digital. It operates 314 "superstores" in 
36 states with plans to open 45 to 50 new stores each year. In 
fact, BBY plans to double its size and sales in the next 5 years. 
(Sales were just over $10 bln. last year.) In addition to more 
stores, the company will add new products and services and further 
develop its Internet strategy, where it currently offers music 
and movies online. BBY beats earnings estimates quarter after 
quarter. It has even surpassed its own sales projections for 
digital products, and while PC prices are declining, high volume 
is making up for lower per unit revenue. Technically, the stock 
looks great as well. Last, but by no means least, BBY was added 
to the S&P 500 on June 29th, replacing Airtouch, which was bought 
out by Vodaphone, another OI pick. That means that every S&P 500 
index fund MUST BUY shares of BBY. 

On Friday when the stock lost $1.50 for the second day in a 
row, volume was only slightly more than normal, but it occurred 
on a typical summer Friday, with somewhat low market volume. 
BBY also closed almost at its low of the day. This suggests 
that profit taking may not be completely over. Watch the stock 
for a good entry. No new news. 

P.S. don't be surprised if BBY announces another split with
earnings in September.

BUY CALL AUG-70 BBY-HN OI=317 at $10.25 SL=7.50
BUY CALL AUG-75*BBY-HO OI=186 at $ 7.50 SL=5.75 wait for dip!
BUY CALL AUG-80 BBY-HP OI=159 at $ 5.13 SL=3.50
BUY CALL SEP-80 BBY-IP OI= 79 at $ 7.25 SL=5.50

Picked on July 1st at  $68.81    PE = 51
Change since picked   +$ 7.19    52 week low =$15.97 
Analysts Ratings    8-5-0-0-0    52 week high=$80.50 
Last earnings 05/99  est  .20    actual  .22 surprise=10%
Next earnings 09-15  est  .29    versus  .21 
Average daily volume = 1.79 mln.
Chart = http://quote.yahoo.com/q?s=BBY&d=3m

*****

SNE - Sony Corp $114.38 (+1.63)(+8.56)

Established in 1946 in Japan, Sony is engaged in the 
development, design, manufacture, and sale of various kinds of 
electronic equipment, instruments and devices for the consumer 
and professional markets. Sony's principal manufacturing 
facilities are located in Japan, North America, Europe and Asia.
In addition Sony is engaged in leasing, credit card business, 
satellite distribution services. The company is also actively
engaged in the worldwide music and image-based software markets.

SNE has formed a nice channel to the upside since early June,
when it started from its base of around $90.00 and began its
accent upward.  Confidence of an economic recovery in Japan has
really sparked the recent move.  Friday Sony made another 52
week high at $114.75 on strong volume of 344K,(196K is average).
If SNE holds true to its most recent pattern it could retrace
$1.00 - $2.00 and then start a new move up.  We would view any
pullback to $112.00 -$113.00 as a potential buying opportunity
until the market tells us different (-that or a bounce off its
10 dma).  If profit taking does begin in earnest the 10dma is at 
$110.00 and should provide some support.  The Japanese 
electronic stocks have been doing very well lately and there is 
no reason at this time to believe the overall trend won't 
continue.  As always consider your individual risk profile and 
set your stops accordingly. 

Sony did announce Wednesday it plans to stop selling mobile
phones in North America. They want to concentrate their
resources on the development of next-generation digital mobile
phones.  About 200 employees will lose their jobs as a result
of this move.  SNE said they will try to find jobs at other U.S. 
subsidiaries for those involved.   

**Volume and OI in AUG Options very low. Be careful** 

BUY CALL AUG-110 SNE-HB OI= 94 at $8.13 SL=6.25
BUY CALL AUG-115*SNE-HC OI= 24 at $5.13 SL=3.25
BUY CALL OCT-115 SNE-JC OI=150 at $8.13 SL=6.25
(115s are the highest strikes at the moment)

Picked on June 29th at $108.19   PE = 26
Change since picked   +$ 10.12   52 week high=$114.75 
Analysts’ ratings    1-0-0-0-0   52 week low =$ 26.81
Last earnings   3/99   est N/A   actual N/A surprise=+0%
Next earnings   3/00   est N/A   versus N/A 
Average daily volume  =   196K
Chart = http://quote.yahoo.com/q?s=sne&d=3m
 
********************
Drugs/Biotech
********************

VISX - Visx, Inc $89.50 (+4.37)(+4.38)(+8.69)

Visx is a leader in the development of refractive laser 
technology, with a $5 billion market cap. It designs and makes 
surgical systems that re-contour the front surface of the 
cornea of the human eye in order to correct vision problems. 
It claims about 75% of the laser vision correction market, its 
only business. VISX systems are available worldwide.

We are covering VISX to take advantage of its earnings run. A 
change in Fed interest rate stance made it more friendly to 
high growth stocks. That was the catalyst for VISX to take off 
again, following a correction in second half of May caused by 
investor's fears of a negative outcome in an FTC case 
against the company. The ruling went in favor of the company, 
however, and an appeal by the FTC will take at least a year or 
more and have no effect on operations of the company in the 
meantime. The laser vision correction market is expected to 
more than triple from 425,000 procedures done in 1998 to 1.3 
mln in 2000 and the company sees earnings growth of between 25 
and 35% annually. Earnings increased 700% over the last 8 months. 
The soaring price of this stock is a result of that incredible 
growth. Be forewarned, this is a very volatile stock. It can 
rise AND fall a great deal within a trading day.
  
VISX saw some profit-taking on Friday as it lost $3.50 and 
closed near its low. However, it was a summer Friday, and the 
stock had been up the previous 5 days in a row, so we're not 
too worried. The company has told us that it will release 
earnings Wednesday, July 14th after the close. We will therefore 
be dropping VISX in Tuesday's letter. Sometimes a stock sells 
off before the earnings day, be sure to protect your profits 
with stops if you can't watch the stock. This stock is not for 
everyone due to its high volatility.
 
Note: July options expire in 5 days!!! (They are included ONLY 
because investors should be out of VISX options before the July 
14th close anyway.)

BUY CALL JUL-85*VFS-GQ OI= 957 at $ 6.75 SL= 5.00
BUY CALL JUL-90 VFS-GR OI=1205 at $ 3.88 SL= 2.25
BUY CALL AUG-90 VFS-HR OI=1221 at $ 8.75 SL= 6.75
BUY CALL SEP-90 VFS-IR OI= 131 at $12.13 SL=10.25

Picked on Jul 4th at  $85.13     PE = n/a
Change since picked   $ 4.37     52 week low =$10.50 
Analysts Ratings   5-3-2-0-0     52 week high=$93.25
Last earnings 03/99 est 0.27     actual 0.29 surprise=+7%
Next earnings 07-14 est 0.29     versus 0.14
Average daily volume = 1.63 mln.
Chart = http://quote.yahoo.com/q?s=VISX&d=3m


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






The Option Investor Newsletter            7-11-99
Sunday                6  of  7

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

YHOO - Yahoo! Inc $160.00 (-18.13)

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.

Because of Yahoo's history around its earnings' date we 
switched it to a put play on Tuesday evening, the day 
before its earnings' announcement.   Historically, YHOO has 
an immediate sell-off (no matter what the numbers or 
possibility of a split announcement) and declines for a few 
weeks after it reports.   We'd been reminding our readers 
that OIN never recommends holding any call positions over 
an earnings' date for at least a week prior to this switch.  
Your call positions should have all been closed.

History, so far, is repeating itself and YHOO has lost over 
$18 this week.  Earnings were beat as they came in on July 
7th at a whisper number of .11 versus the official estimate 
of .08, but it was no blowout and there was no split 
announcement.  Still all the components of the report were 
positive.  The next day analysts came out of the woodwork 
reiterating their "buy" positions on YHOO.  CSFB even 
raised its fiscal estimates for the stock.  We recommended 
caution at this precarious point even though YHOO had had 3 
days of steady losses.  YHOO followed its pattern and fell 
again on Friday.  It dipped as low as $159 and shed $4.44 
by the bell!  Re-confirm direction before you jump into 
this game.  This is a VERY HIGH RISK INTERNET PLAY and NOT 
for everyone.

BUY PUT AUG-150*YHV-TJ OI=946 at $10.25 SL= 7.75 we are brave!
BUY PUT AUG-155 YHV-TK OI=242 at $12.88 SL=10.50
BUY PUT AUG-160 YHV-TL OI=651 at $15.50 SL=12.00

Average daily volume = 8.38 mln.
Chart = http://quote.yahoo.com/q?s=YHOO&d=3m




********
NEW PUTS
********

IMNX - Immunex Corporation $119.00 (-14.13)

Immunex is biopharmaceutical company that develops and 
manufactures products to fight cancer, immunological 
disorders, and infectious diseases.  Some of its better 
known drugs include Leukine (used to treat bone marrow 
transplant patients), Novantrone (used for leukemia or 
prostate cancer patients), and Enbrel (for rheumatoid 
arthritis).  American Home Products owns a 54% stake in 
Immunex.

IMNX suffered this week due to a downgrade from analyst Adams 
Harkness.  It was only one analyst from a smaller firm but 
when you’re trading at a 1000 P.E., you don’t have a lot of 
room for error.  According to Adams Harkness, the stock has 
hit their price-target already for the year.  They also 
cited higher research and development costs along with higher 
selling, general and administrative costs.  This is expected 
to cut into earnings over the next six months.  We will soon 
find out if they are right since IMNX is set to report on 
July 20.  The way it has been trading ahead of earnings is 
not what you would want to see if you own the stock.  So 
we are recommending puts based on the high valuation and 
fears of an earnings shortfall.  IMNX broke the 50-dma today 
and would need to fall to $100 before finding support.  So 
look for an entry point intraday.  But remember we are only 
seven days from earnings.  Stocks can go up for no reason 
except they are closing in on the reporting date.  

BUY PUT AUG-120*IUU-TD OI=21 at $10.63 SL=8.00
BUY PUT AUG-115 IUU-TC OI=23 at $ 8.13 SL=6.25

Average Daily Volume = 939 K
Chart = http://quote.yahoo.com/q?s=IMNX&d=3m    

****
  
SAPE - Sapient Corp. $47.75 (-10.38)

Sapient Corporation provides management consulting services, 
Internet commerce solutions, and systems implementation 
services.  Their integrated management consulting services 
involve helping clients create and implement business 
strategies that enable them to create value through the use 
of information technology, particularly the Internet.  Sapient 
also develops custom software applications, integrates 
existing third-party applications, or integrates its own 
solutions.  And Sapient provides implementation services for 
Oracle enterprise resource planning systems.

You know your stock is in trouble with you have coverage 
started with a buy rating and you still fall over 4 dollars.  
That is what happen on Friday to SAPE.  The stock has taken 
a beating this week on heavy volume.  Most of it has to do 
with rumors floating around that they will miss their EPS 
estimate.  They also have apparently moved their earnings 
date back by one week to the July 22.  These may all be signs 
that something is wrong.  Maybe the huge short interest is 
there for a reason.  But we are including it as a put due to 
the volatility and poor technical outlook.  Some of the above 
factors may be helping but it’s difficult to pin down the 
precise reason.  That makes this a high risk play.  Now that 
it is under the 200-dma, there isn’t a lot of support. We 
don’t see support again until the low $40 range.  You can 
see what happened when the stock did this last July on a 
longer term chart.  It was quite awhile before it stopped 
dropping.  Use caution when picking your entry point and 
expect lots of action. [editor's note: We were going to pick
them as a put on Thursday, but we need more time to investigate
why the stock was falling.  sorry.  - Kimo]

BUY PUT AUG-50 QPE-TJ OI= 0 at $ 6.50 SL=4.75 just opened
BUY PUT AUG-45*QPE-TI OI= 0 at $ 4.00 SL=2.50 new, vol=140

Average Daily Volume = 237 K
Chart = http://quote.yahoo.com/q?s=SAPE&d=3m      

****

FDX-Federal Express Corp. $48.50 (-6.43)

Headquartered in Memphis, TN, FedEx is the world's largest 
express shipping company. Its 192,000 employees ship over 3.2 
million packages daily to 210 countries around the world. In 
addition to air freight, FDX offers business-to-business 
delivery through its RPS ground shipping unit. Its entire hub 
and spoke shipping system (not just its airplanes and trucks) 
operates like finely tuned, well-oiled machine.

On May 30th, FedEx delivered record fourth quarter earning of 
$.73/share versus $.57/share for the prior year's Q4, beating 
analysts' estimates of $.71. It benefited from lower fuel costs 
(with some hedging), strict cost controls, and productivity 
gains. Earnings were up 30%. So why are we recommending puts 
on FDX?? Simply because MARKET expectations (the whisper numbers) 
had grown so high for the stock that it was unable to exceed 
them, let alone meet them, and FDX lost altitude on the stellar 
earnings report. It did climb slightly after the Fed moved to 
a neutral interest rate stance, but last week FDX went into a 
tailspin, descending further each day. Compounding the problem, 
oil has recently reached price levels not seen in more than a 
year and a half. The rising cost of fuel (a large portion of 
expenses for an airline) will tend depress FDX share price. Then 
on Friday, June 8th, Airborne Freight (ABF) pre-warned that it 
expects earnings to be 12% below analysts' estimates, and FDX 
could drop further in sympathy. ABF cited lack of growth in 
domestic shipping. Domestic shipping happened to be the area 
of lowest growth for FDX last quarter--that segment of its 
business grew only 4%. It has been suggested that after the 
Christmas season, Internet related shipping has not risen as 
quickly as stockholders expected it would, and they don't like 
to be disappointed. Long term, FedEx is a healthy and strong 
company, but in the short term, we expect it to fall lower, 
especially if oil prices remain high. Caution: a significant 
drop in oil prices would hurt this play.

BUY PUT AUG-45 FDX-TI OI= 84 at $1.44 SL= .75
BUY PUT AUG-50*FDX-TJ OI=471 at $3.88 SL=2.50

Picked on July 11th at $48.50    PE = 23
Change since picked   +$ 0.00    52 week low =$61.88 
Analysts Ratings    3-1-7-0-0    52 week high=$21.81 
Last earnings 05/99  est  .69    actual  .73 surprise=+6%
Next earnings 09-24  est  .56    versus  .50 
Average daily volume = 1.36 mln.
Chart = http://quote.yahoo.com/q?s=FDX&d=3m

****

JCP - J.C. Penney $45.44 (-4.19)

J. C. Penney Company, Inc. main business consists of providing 
merchandise and services to consumers through department 
stores that include catalog departments.  The company markets 
apparel, accessories, home furnishings, jewelry and shoes.  
To boost sales at its JCPenney stores, the company is expanding 
that chain's private-label brands (Arizona Jean Co., Hunt Club, 
Worthington) and plans to feature them in special boutiques 
within the stores. The Company also has several direct 
marketing insurance subsidiaries which market life, health, 
accident and credit insurance as well as a growing portfolio 
of non-insurance products.

J.C. Penney is struggling in the one area that most other 
retail stores are enjoying healthy growth.  That area is same-
store sales.  Otherwise known as the key indicator of future 
profits.  Retail is a great sector to invest in for the simple 
reason of monthly same-store sales numbers.  They are announced 
in the first week of each month and they help give you an idea 
of which way earnings may be headed.  They should do this for 
all companies.  Nevertheless J.C.Penney, despite the money 
they have spent to renovate their stores to compete with other 
major retailers, continues to have negative results.  This 
while other companies are taking advantage of a booming 
economy and some times double-digit gains in year over year 
sales.  Our feeling is that they will continue to fall behind 
other retailers.  The stock broke below support on heavy 
volume this week as investors have apparently decided the 
wait is over for a turn around.  The stock is right at the 
200-dma and may bounce first before going lower.  This should 
help us in getting a decent entry point for our play.  Like 
always, use caution but any move under $45 should be another 
sell signal to stock holders.

BUY PUT AUG-50*JCP-TJ OI=640 at $5.50 SL=3.75
BUY PUT AUG-45 JCP-TI OI=671 at $2.19 SL=1.13

Average Daily Volume = 844 K

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

****

WPI- Watson Pharmaceutical $35.94 (-2.25)

Watson Pharmaceuticals manufactures and markets generic and 
proprietary drugs, focusing on hard-to-make niche 
pharmaceuticals.  The company makes generic versions of brand-
name products, including anti-hypertensives Tenex and Dilacor, 
analgesics Vicodin and Lortab, and asthma drugs Proventil 
and Ventolin.  Watson's proprietary drugs include Microzide, 
an anti-hypertensive, Loxitane, an anti-psychotic drug, and 
Norco, an analgesic.  The company markets its products to 
drug distributors, wholesalers, drugstore chains, hospitals, 
and HMOs. 

Watson is a company that has been plagued with troubles over 
the past six months.  It started when the FDA announced its 
concerns over quality and manufacturing problems.  This sent 
the stock plummeting from its lofty levels.  It's now about 
50% off its highs but a new batch of problems has been ignited.  
On Wednesday, it was rumored from a DLJ analyst that WPI would 
miss their earnings numbers for this quarter.  Although the 
company denied that on Thursday, the stock still fell and ended 
the week nearing the 52-week low.  These are just a few of the 
problems that plague WPI.  Technically, there is something 
very fishy about the way it has been trading also.  You'll 
notice the stock has failed to get above the 50-dma.  It has 
the appearance of heavy selling or possibly shorting going on 
at that level.  That has been the best entry point over the 
past six months.  From here we expect the stock to retest its 
year lows near $30.  Earnings are on August 3rd and that may 
shed some light on the current situation but by the way the 
stock is trading, it doesn't look good.  Use stops on all your 
plays to protect against an earnings surprise.

BUY PUT AUG-40 WPI-TH OI= 759 at $5.63 SL=3.75
BUY PUT AUG-35*WPI-TG OI=1647 at $2.63 SL=1.25

Average Daily Volume = 578 K
Chart = http://quote.yahoo.com/q?s=WPI&d=3m 
           





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

Another Week Of Records..

U.S. stocks climbed back into record territory on speculation of
positive corporate earnings announcements in the coming weeks.

Friday, July 9

U.S. stocks climbed back into record territory on speculation of
positive corporate earnings announcements in the coming weeks.
The Dow industrial average closed up 66 points at a new high of
11,193. The Nasdaq index of technology stocks also vaulted to its
third consecutive record close, up 21 points to end at 2,793. The
S&P 500 stock index gained 8 points to close at a record 1,403.
In the broader market, advancing issues outnumbered decliners by
more than three to two on 703 million shares traded on the NYSE.

Thursday's new plays (positions/prices):

Johnson & Johnson  (JNJ)  LJAN100C/J100C  $12.12  debit
Medtronic          (MDT)  LJAN75C/JUL80C  $17.50  debit
Solectron          (SLR)  LJAN70C/JUL75C  $18.00  debit
Sun Microsystems   (SUNW) LJAN75C/JUL75C  $19.50  debit

Most of these long term positions were available at-or-below the
suggested entry debit. Some of the more aggressive traders legged
into the spreads at significantly better prices; SUNW at $18.87
debit was about the best of the day. The initial opening price
for Solectron (SLR), was adjusted lower based on the change in
option prices and Johnson & Johnson (JNJ) was unavailable at the
recommended target. All of these plays are covered-calls on 2001
LEAPS and we will track them on a monthly basis.

Portfolio plays:

DuPont (DD) was a big contributor to the Dow rally today; the
stock price rose $3 after the company announced terms for the
spinoff of its remaining Conoco holdings. Our long-term calendar
spread benefited from the bullish move and it is now $0.50 ITM
with 6 months time value left on the long position.

With only one week to go, we have started to close (or adjust)
many of the profitable plays. In the calendar spreads portfolio,
these positions currently offer a positive return; Agco (AG),
Baan Company (BAANF), C-Cube (CUBE), Novell (NOVL), Quantum
(QNTM) and Silicon Graphics (SGI). Our bullish diagonal spreads
are performing fairly well; Auto Protection (APCO) is $1.00 ITM,
Apria (AHG) is in a recovery mode, General Electric (GE) is still
holding on to the edge of the profit envelope near $117 and Comp
USA (CPU) needs a small rebound to transition to a positive play.
The bullish debit spreads are performing very well and all but one
of the July positions can be closed early at maximum profit. These
include; Global Marine (GLM), Micron (MU), Revlon (REV) - the ITM
play and Earthlink (ELNK). The straddles and strangles are a mixed
lot. British Telecom (BTY) is inside the maximum profit range and
Torchmark (TMK) has been an outstanding butterfly, moving only $4
in the past 6 weeks. Spacelabs Medical (SLMD) is currently inside
both short positions but Mastec (MTZ) has moved above the sold
call at $30. The bearish position was closed one week early to
lock-in profits and avoid a potential loss. The worst performers
in the straddle group are Gaylord (GET) and Robert Half (RHI).
With any luck, their range-bound trend will end soon.

Questions & comments on spreads/combos to ray@OptionInvestor.com
******************************************************************
				- NEW PLAYS -
******************************************************************
CEXP - Corporate Express  $8.38     *** New Outlook ***

Corporate Express is a leading supplier of essential office and
computer products and services to corporations that value
innovative procurement solutions. Corporate Express currently
operates in nearly 300 locations, including 89 distribution
centers, and employs approximately 15,000 people around the
world. A subsidiary, CEXP Document & Print Management, is a
leading national designer and provider of custom business forms,
pressure-sensitive label products and forms management systems
that enable customers to enhance productivity and reduce costs
associated with managing information.

The company recently reported favorable earnings on net sales
that increased 6% to $972,059,000. The International division
was a standout with sales up 18% on acquisition related revenue
and growth from 11 new office product companies. Net sales for
the company's desktop software segment increased 25% on new
enterprise agreements and added software sales.

The current focus of the company is their Document & Print
Management segment and that group just announced an alliance
that offers easy-to-use, cost-effective solutions for customer's
print-on-demand needs through the integration of XYAN's national
network of digital production centers. XYAN's distribute & print
capabilities will complement the document management services
that Corporate Express currently provides to large customers
through its Odyssey Integrated Services® program. The new print
centers will communicate electronically with Corporate Express'
Odyssey Network (TM) software.

With the new investor interest, implied volatility has increased
on the front-month call options and that's just the edge we need
to open a conservative, low cost calendar spread.

PLAY (bullish - calendar spread):

BUY  CALL OCT-10 XQP-JB OI=2033 A=$0.75
SELL CALL AUG-10 XQP-HB OI=590  B=$0.38
INITIAL NET DEBIT TARGET=$0.31 TARGET ROI=100%

It is generally best to establish this type of spread at least
2 - 3 months before the long option expires, capitalizing on the
ability to sell another option against the longer-term position.
That is the basic idea in this spread play; selling time value
in the options when they are overpriced (high implied volatility)
and buying it back (if necessary) when they return to intrinsic
value. Ideally, the spreader would like to have the stock finish
just below the sold strike when the near-term option expires. If
the short 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=CEXP&d=3m
******************************************************************
OC - Orion Capital  $40.75     *** Volatility Play ***

Orion Capital Corporation is a leader in the specialty property
and casualty insurance business through subsidiaries, which
include DPIC Companies, EBI Companies, OrionAuto (formerly
Guaranty National), and Orion Specialty.

This stock has been on the move lately, climbing $10 in two weeks
on the continued speculation of a possible takeover or divestiture
of the various company segments. Shares of the Connecticut-based
insurer have risen by nearly a third since late June and experts
say these types of companies are undervalued. On Friday, Allstate
agreed to buy workplace insurance distributor American Heritage
Life Investment for $1.1 billion and that could be fueling the
rumors that Orion is next in line.

Insider buying was apparent over the last few months and implied
volatility and volume recently increased as investors moved into
speculative positions. The July options, which will lose value
quickly as Friday's monthly expiration approaches, are very
expensive. This is a very aggressive, one week play based on the
large premium disparity in the July $40 (call) options. The stock
price will need to remain in a fairly small trading range for
this position to profit.

PLAY (speculative/neutral time spread):

BUY  CALL AUG-40 OC-HH OI=556  A=$4.25
SELL CALL JUL-40 OC-GH OI=1080 B=$2.62
INITIAL NET DEBIT TARGET=$1.50 TARGET ROI=25%

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 this type of spread is
that time will erode the value of the near-term option at a
faster rate than it will the far-term option. The 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.

Chart = http://quote.yahoo.com/q?s=OC&d=3m
******************************************************************
WWCA - Western Wireless  $30.62     *** AT&T Merger/Buyout ***

Western Wireless is a leading provider of wireless communications
services in the western United States. The communications company
currently offers cellular service marketed with the 'Cellular One'
name in 17 Western states.

Shares of Western Wireless starting moving in early July amid
rumors that the company may be acquired by AT&T Corp. WWCA has
been seen as a prime target since they made plans to spin off
VoiceStream Wireless. AT&T has said they want to expand their
wireless network and would be willing to make acquisitions.
Experts say the deal fits into T's strategy to have a nationwide
system with all of its wireless traffic on its own network. AT&T
recently closed another acquisition of a wireless phone company,
Vanguard Cellular Systems, which helped expand its coverage in
the northeastern United States. Western Wireless serves mostly
rural areas in the western U.S. but they have over 8 million
potential customers.

A small disparity in the August ITM call options will allow us
speculate on the outcome of the recent rumors in a conservative,
low-cost, debit position.

PLAY (bullish/debit spread):

BUY  CALL AUG-22.50 WRQ-HX OI=1002 A=$9.00
SELL CALL AUG-25.00 WRQ-HE OI=139  B=$7.12
INITIAL NET DEBIT TARGET=$1.75 ROI(max)=42% B/E=$24.25

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

These plays are based on the current price or trading range of
the underlying issue and the recent technical history or trend.
Current news and market sentiment will have an effect on these
positions so review each play individually and make your own
decision about the future outcome of the stock price.
******************************************************************
WRC - World Color Press  $29.81     *** Up, Up And Away ***

World Color Press is a leader in the management and distribution
of print and digital media information. The company specializes
in the production and distribution of content for customers in
the commercial, magazine, catalog, direct mail and directory
markets. World Color employs over 16,500 employees and operates
58 facilities with a network of sales offices nationwide.

A recent acquisition of privately held Metroweb Corporation,
a high quality publication and commercial printer with annual
revenues of approximately $20 million and the establishment of
a new stock ownership plan are the only news items of interest.

The key to the recent movement is probably speculation on a
buyout/merger with Quebecor Printing (PRW). Regardless of the
outcome, the chart is bullish with excellent support just below
the cost basis of the position.
 
PLAY (aggressive - bullish/debit spread):

BUY  CALL AUG-22.50 WRC-HX OI=56  A=$8.50
SELL CALL AUG-30.00 WRC-HF OI=396 B=$3.87
INITIAL NET DEBIT TARGET=$4.37 ROI(max)=71% B/E=$26.87

Chart = http://quote.yahoo.com/q?s=WRC&d=3m
******************************************************************
DTPI - Diamond Tech. Partners  $25.75   *** Disparity Play ***

Diamond Technology Partners is a management-consulting firm that
helps clients develop and implement digital strategies; business
strategies for the digital age. The company serves clients across
the United States and internationally in the financial services,
consumer products, consumer services, communications, utilities,
insurance and health care industries.

Not much news recently but a very strong technical pattern and
positive fundamental outlook. The options are thinly traded but
the disparity is quoted at two different exchanges. First one in
gets the prize (if the market-makers don't adjust the prices
before Monday morning).

PLAY (conservative - bullish/debit spread):

BUY  CALL AUG-20.00 DUP-HD OI=0 A=$6.25
SELL CALL AUG-22.50 DUP-HX OI=0 B=$4.37
INITIAL NET DEBIT (at market)=$1.87 ROI(max)=33% B/E=$21.87

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



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




The Option Investor Newsletter            7-11-99
Sunday                7  of  7


COVERED CALLS
**************

Value Investing - Choosing Fundamentally Sound Stocks...

There has been lots of discussion recently about stock valuation
and the return to fundamental analysis in long-term investing.
Warren Buffett of Berkshire Hathaway explains the concept best;
Evaluating securities and businesses for investment purposes
has always involved a mixture of qualitative and quantitative
factors. At one extreme, the analyst exclusively oriented to
qualitative factors would say, "Buy the right company (with the
right prospects, inherent industry conditions, management, etc.)
and the price will take care of itself". On the other hand, the
quantitative spokesman would say, "Buy at the right price, and
the company (and stock) will take care of itself". In the world
of the stock market, money can be made with either approach and
a combination of both may offer the best balance in a portfolio.

The first step in examining the fundamental factors in a company
(net asset value, working capital, price-to-earnings ration, debt
to equity ratio etc..) is to identify the minimum criteria that
determines a favorable characteristic in each specific category. 
A well known expert on fundamental analysis, Benjamin Graham, made
the following list of attributes of an undervalued stock. In his
list, criteria 1 through 5 measure risk;  while 6 and 7 establish
financial soundness; and 8 through 10 show a history of stable
earnings.  Any company that meets 7 out of the 10 criteria is
considered undervalued.

1. An earnings-to-price yield (reverse of P/E ratio) double the
   current AAA bond yield.  If the AAA bond yield is 6%, the
   earnings yield should be 12%.
2. A price-to-earnings ratio that is 40% of the highest average
   P/E ratio achieved by the shares in the most recent 5 years.
3. A dividend yield of 2/3 the AAA bond yield. Stocks that lack
   either a dividend or current profits are eliminated here.
4. A stock price that is 2/3 the tangible book value per share.
5. A stock price that is 2/3 the net current asset value or the
   net quick liquidation value.
6. Total debt that is lower than the tangible book value.
7. A current ratio of 2 or more. This is a measure of liquidity,
   or a company's ability to pay its debts from income.
8. Total debt of no more than the net quick liquidation value.
9. Earnings that have doubled in the most recent 10 years.
10.Earnings that have declined no more than 5% in 2 of the past
   10 years.

Some of the criteria in Graham's list are more important to
certain types of investors than others. Depending on a trader's
risk/reward attitude (income, safety, growth), he can select
those elements that best achieve future goals and give heavier
weighting to those valuation attributes that primarily define
his investing style.

Good Luck!



SUMMARY OF PREVIOUS PICKS 
*************************
Stock  Price  Last    Mon  Strike  Opt   Profit    ROI   Monthly
Sym    Picked Price        Price   Bid   /Loss           ROI

DIMD    5.06   5.56   Jul   5.00  0.63  *$  0.57  12.9%  14.0%
MRL    13.50  13.81   Jul  12.50  1.63  *$  0.63   5.3%  11.5%
SQNT   13.75  17.44   Jul  12.50  2.38  *$  1.13   9.9%  10.8%
GISX   18.25  19.69   Jul  17.50  1.88  *$  1.13   6.9%  10.0%
NMSS    8.13  11.00   Jul   7.50  1.38  *$  0.75  11.1%   9.7%
VVTV   19.00  24.63   Jul  17.50  2.56  *$  1.06   6.4%   9.3%
FIBR   14.00  14.38   Jul  12.50  2.00  *$  0.50   4.2%   9.1%
NETG   25.25  29.63   Jul  22.50  3.63  *$  0.88   4.1%   8.8%
FFD    16.38  16.63   Jul  15.00  2.50  *$  1.12   8.1%   8.8%
SQNT   16.94  17.44   Jul  15.00  2.50  *$  0.56   3.9%   8.4%
PRGN   26.38  27.94   Jul  25.00  2.25  *$  0.87   3.6%   7.8%
FIBR   12.63  14.38   Jul  10.00  3.25  *$  0.62   6.6%   7.2%
SAVLY  15.75  14.25   Jul  12.50  4.00  *$  0.75   6.4%   6.9%
TKLC   12.06  12.00   Jul  10.00  2.75  *$  0.69   7.4%   6.4%
ENZN   16.88  23.75   Jul  15.00  2.50  *$  0.62   4.3%   6.2%
PERI   15.13  18.75   Jul  12.50  3.13  *$  0.50   4.2%   6.0%
LWIN   20.06  18.63   Jul  17.50  3.25  *$  0.69   4.1%   5.9%
PRGN   24.75  27.94   Jul  22.50  3.13  *$  0.88   4.1%   5.9%
CAST   15.94  15.94   Jul  15.00  1.88  *$  0.94   6.7%   5.8%
SKYC   17.06  20.75   Jul  15.00  2.63  *$  0.57   4.0%   5.7%
AMES   47.50  46.50   Jul  45.00  4.75  *$  2.25   5.3%   5.7%
PILL   13.88  14.94   Jul  12.50  2.13  *$  0.75   6.4%   5.5%
KMET   20.88  24.34   Jul  20.00  2.06  *$  1.18   6.3%   5.4%
AVIR   22.75  28.38   Jul  20.00  4.13  *$  1.38   7.4%   5.4%
GSTX   14.00  14.97   Jul  12.50  1.94  *$  0.44   3.6%   5.3%
AAC     7.69   8.19   Jul   7.50  0.69  *$  0.50   7.1%   5.2%
NSM    25.00  28.00   Jul  22.50  3.25  *$  0.75   3.4%   5.0%
CBTSY  16.50  21.88   Jul  15.00  2.44  *$  0.94   6.7%   4.8%
CPU     8.38   7.38   Jul   7.50  1.44   $  0.44   6.3%   4.6%
ARTT   14.69  14.00   Jul  12.50  2.75  *$  0.56   4.7%   4.1%
THNK   17.19  14.19   Jul  12.50  5.13  *$  0.44   3.6%   4.0%
DUSA    9.75  11.94   Jul   7.50  2.56  *$  0.31   4.3%   3.7%
THNK   17.19  14.19   Jul  15.00  3.25   $  0.25   1.8%   1.9%
--------------------------------------------------------------
SNRS   13.06  18.75   Aug  10.00  4.38  *$  1.32  15.2%   9.4%
FRTE   11.63  10.50   Aug  10.00  2.75  *$  1.12  12.6%   7.8%
IRF    13.19  13.25   Aug  12.50  1.63  *$  0.94   8.1%   5.0%

Previous Closed:

*    PTEK;  failed support at $11.00
*    CYOE;  bullish trend reversed, downgraded
*    VLNC;  broke 150 dma, now positive
*    NOVT;  broke 150 dma, holding above $20

Unplayable (and very positive):

*    MCOM...Wow, a $35 rally!

-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).


*********
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

SDTI   22.56  Jul 20.00  QSD GD  3.50  1280  19.06   4.9%   4.9%
----------------------------------------------------------------
BNBN   19.25  Aug 17.50  BEU HW  3.13  255   16.12   8.6%   8.6%
DGN    17.81  Aug 15.00  DGN HC  3.50  526   14.31   4.8%   4.8%
LIPO   20.88  Aug 20.00  LPQ HD  2.38  326   18.50   8.1%   8.1%
MESG   19.75  Aug 15.00  MUG HC  5.88  178   13.87   8.1%   8.1%
PAMC   33.69  Aug 25.00  QMC HE 10.63  49    23.06   8.4%   8.4%
SQNT   17.50  Aug 15.00  SQQ HC  3.88  1046  13.62  10.1%  10.1%
WSTL    8.97  Aug  7.50  QLW HU  2.00  835    6.97   7.6%   7.6%



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

SDTI   22.56  Jul 20.00  QSD GD  3.50  1280  19.06   4.9%   4.9%
----------------------------------------------------------------
SQNT   17.50  Aug 15.00  SQQ HC  3.88  1046  13.62  10.1%  10.1%
BNBN   19.25  Aug 17.50  BEU HW  3.13  255   16.12   8.6%   8.6%
PAMC   33.69  Aug 25.00  QMC HE 10.63  49    23.06   8.4%   8.4%
MESG   19.75  Aug 15.00  MUG HC  5.88  178   13.87   8.1%   8.1%
LIPO   20.88  Aug 20.00  LPQ HD  2.38  326   18.50   8.1%   8.1%
WSTL    8.97  Aug  7.50  QLW HU  2.00  835    6.97   7.6%   7.6%
DGN    17.81  Aug 15.00  DGN HC  3.50  526   14.31   4.8%   4.8%



Company Descriptions
*********************
SDTI - Security Dynamics  $22.56  *** One Week Play ***

SDTI provides enterprise network and data security solutions, 
helping companies to conduct business securely, protect corporate 
assets & facilitate electronic commerce. Its SecurID, ACE/Server,
and ACM access-control software work with UNIX and Windows NT
operating systems. SDTI started its recent run on news that its
subsidiary, RSA Data Security, launched RSA Consulting Services,
a full-service, experienced consulting group for secure
application development. Earnings are expected on July 15.

Jul 20.00 QSD GD Bid=3.50 OI=1280 CB=19.06 RC=4.9% RNC=4.9%

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

*****

BNBN - BarnesandNoble.com inc.  $19.25 *** IPO Speculation ***

BNBN is an online retailer of books and complementary information,
entertainment and intellectual property-based products. It is 
increasing its customer base through pacts with portals like AOL 
and Microsoft's MSN. On Wednesday, BNBN announced the launch of 
its Music Store featuring the All-Music Guide database, the most 
authoritative online source for recorded music. Look out Amazon!
BNBN isn't worried about the competition, they are fast becoming
the competition.

Aug 17.50 BEU HW Bid=3.13 OI=255 CB=16.12 RC=8.6% RNC=8.6%

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

*****

DGN - Data General Corp.  $17.81  *** Very Conservative ***

DGN designs, manufactures, markets and supports a family of open 
computer systems including servers and mass storage products that
provide solutions for high performance customer applications. On
June 23, Data General  introduced its next-generation high-end 
enterprise NT server, the AViiON® AV 8900. DGN has rebounded off 
its April low and remains bullish. This is a relatively low ROI
(3.5% return, monthly basis) which could be doubled using margin.
The cost basis is near technical support. Earnings are expected
on July 19.

Aug 15.00 DGN HC Bid=3.50 OI=526 CB=14.31 RC=4.8% RNC=4.8%

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

*****

LIPO - Liposome Company, Inc.  $20.88   *** Stage II ***

Liposome is a biopharmaceutical company engaged in the discovery, 
development, manufacturing and marketing of proprietary lipid and 
liposome-based pharmaceuticals, primarily for the treatment of 
cancer and other life-threatening illnesses. LIPO's current stage
II climb started after reporting 1Q earnings in April (its second 
consecutive quarterly profit). On Wednesday, Liposome announced it
has filed a New Drug Submission for marketing approval of Evacet 
in Canada (they already have filed with the USF&DA and Europe).
Breaking resistance near $26.00 would move Liposome into blue sky
territory.

Aug 20.00 LPQ HD Bid=2.38 OI=326 CB=18.50 RC=8.1% RNC=8.1%

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

*****

MESG - MessageMedia Inc.  $19.75 

MESG is a services company which provides e-mail based customer 
relationship management and direct marketing services, which 
enables companies to integrate sales and marketing functions into 
e-mail messages to their customers. MessageMedia started moving 
in June after announcing plans to acquire closely-held Revnet 
Systems (to gain e-mail database-software technology) and Decisive 
Technology (provider of continuous customer feedback solutions).
The chart appears bullish as MESG is just shy of breaking above
the April high.

Aug 15.00 MUG HC Bid=5.88 OI=178 CB=13.87 RC=8.1% RNC=8.1%

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

*****

PAMC - Provident American Corp.  $33.69   *** Technical Buy? ***

Provident American through its subsidiaries, Provident Indemnity 
Life Insurance and HealthAxis.com Inc., markets and underwrites 
medical (a majority of their sales) and life insurance under 
ordinary and group plans. They also have agreements with America 
Online and others to offer health insurance online. PAMC broke 
above its recent consolidation area, moving $11 in 7 days, but
there has been no news. Hmmmm. Several buy signals have been
triggered on increasing volume...can a new high be far behind?
If not, we still like the support area near $25.

Aug 25.00 QMC HE Bid=10.63 OI=49 CB=23.06 RC=8.4% RNC=8.4%

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

*****

SQNT - Sequent Computer Systems  $17.50 *** IBM Take Over? ***

Sequent, the leader in Intel-based solutions for the data center, 
designs, manufactures, and markets high performance symmetric 
multiprocessing and CC-NUMA computer systems and operating 
environment  software.  Sequent supports more than 10,000 
installations worldwide, including many of the world's largest
and most sophisticated OLTP, DSS and RDBMS applications. Still
waiting on news that IBM will acquire Sequent...the silence is
deafening. A speculative play with a favorable cost basis.
Earnings are expected on July 23.

Aug 15.00 SQQ HC Bid=3.88 OI=1046 CB=13.62 RC=10.1% RNC=10.1%

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

*****

WSTL - Westell Technologies Inc.  $8.97 

Westell Technologies designs, manufactures, markets and services
a range of digital and analog products used by phone companies to
deliver services primarily over existing copper telephone wires 
that connect end users to a phone company's central office. Lots 
of news in May and June (partnerships, products, upgraded). WSTL 
is fairly bullish, climbing up and out of a stage I base. The
recent trend is to move up sharply then consolidate laterally.
Earnings are expected on July 23.

Aug 7.50 QLW HU Bid=2.00 OI=835 CB=6.97 RC=7.6% RNC=7.6%

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

Volume was not available from CBOE at press time.

Stock Price Month Strike Symbol  Price PctRtn OpnInt
SNRS   18.75  Aug  20.00 RNUHD   3.38  18.00  3880
GEMS    5.00  Aug   5.00 GQMHA   0.88  17.50   320
NCSS    5.00  Aug   5.00 NQWHA   0.88  17.50    71
TSEMF   7.13  Aug   7.50 TWQHU   1.19  16.67    47
FIBR   14.38  Aug  15.00 QFWHC   2.38  16.52  1292
INPR    5.00  Aug   5.00 BLQHA   0.81  16.25   142
CHMD   10.00  Aug  10.00 HQCHB   1.63  16.25    88
GTRC    9.69  Aug  10.00 GURHB   1.50  15.48    30
BYND   29.50  Aug  30.00 QYDHF   4.50  15.25   310
NETG   29.63  Aug  30.00 NUGHF   4.50  15.19    59
GBTVK   7.44  Aug   7.50 GBQHU   1.13  15.13   200
OXGN    9.19  Aug  10.00 QYOHB   1.38  14.97    87
COOL    9.81  Aug  10.00 QOOHB   1.44  14.65   249
NEON   17.50  Aug  17.50 QNOHW   2.56  14.64   238
RACN    7.38  Aug   7.50 MCQHU   1.06  14.41   104
NETS   19.56  Aug  20.00 NTUHD   2.81  14.38   175
ADACE   7.13  Aug   7.50 QABHU   1.00  14.04   139
MESG   19.75  Aug  20.00 MUGHD   2.75  13.92    87
PPRT    4.94  Aug   5.00 QPNHA   0.69  13.92   108
ITIG    6.75  Aug   7.50 ITUHU   0.94  13.89    30
KNDL   15.00  Aug  17.50 KQRHW   2.06  13.75   118
SKI     5.00  Aug   5.00 SKIHA   0.69  13.75   271
ZDZ    24.56  Aug  25.00 ZDZHE   3.38  13.74    26
ASTX   20.56  Aug  22.50 AUTHX   2.81  13.68    23
HMK     5.94  Aug  10.00 HMKHB   0.81  13.68    70
IDTC   22.25  Aug  22.50 IQJHX   3.00  13.48   579
IRID    8.81  Aug  10.00 QAKHB   1.19  13.48  1234
MRVC   14.88  Aug  15.00 VQXHC   2.00  13.45   394
WRC    29.81  Aug  30.00 WRCHF   4.00  13.42   396
NVX     6.56  Aug   7.50 NVXHU   0.88  13.33    23
TIER    6.56  Aug   7.50 QTIHU   0.88  13.33    77
VICR   19.75  Aug  20.00 VIQHD   2.63  13.29    36
ONSL   20.75  Aug  22.50 QOLHX   2.75  13.25    44
CDNW   19.88  Aug  20.00 NWQHD   2.63  13.21  1787
FVCX    7.13  Aug   7.50 FXQHU   0.94  13.16   343
ALSI   24.00  Aug  25.00 AIUHE   3.13  13.02    10
QMDC    9.63  Aug  10.00 QCDHB   1.25  12.99  1286
TLSP    7.25  Aug   7.50 QBAHU   0.94  12.93    66
PHYC    5.81  Aug   7.50 PQHHU   0.75  12.90    35
DGN    17.50  Aug  17.50 DGNHW   2.25  12.86  1691
TGLO   18.06  Aug  20.00 GLUHD   2.31  12.80   237
MTSN   12.25  Aug  12.50 QQMHV   1.56  12.76    94
PTVL   23.56  Aug  25.00 QUTHE   3.00  12.73  1019
REGI    7.38  Aug   7.50 QRGHU   0.94  12.71   282
CYBX   11.88  Aug  12.50 QAJHV   1.50  12.63    70
WSTL    8.91  Aug  10.00 QLWHB   1.13  12.63   534
DRMD   15.00  Aug  15.00 DUQHC   1.88  12.50    73
MWHS   15.00  Aug  15.00 MQRHC   1.88  12.50   183
PCOP   10.00  Aug  10.00 PQAHB   1.25  12.50   116
KLOC    6.56  Aug   7.50 KCUHU   0.81  12.38   206
BEST   16.38  Aug  17.50 BUTHW   2.00  12.21     8
VVTV   24.63  Aug  25.00 UVRHE   3.00  12.18   192
FIBR   14.38  Aug  17.50 QFWHW   1.75  12.17   161
OH     12.38  Aug  12.50  OHHV   1.50  12.12     5
MGCX   27.88  Aug  30.00 MGUHF   3.38  12.11    16
CAO    24.88  Aug  25.00 CAOHE   3.00  12.06    10
USWB   24.88  Aug  25.00 QWBHE   3.00  12.06  1030
TSFW   22.06  Aug  22.50 SUWHX   2.63  11.90   302
GSNX   14.25  Aug  15.00 GQSHC   1.69  11.84    20
MCRE    6.88  Aug   7.50 MQZHU   0.81  11.82   792
PTEC   15.88  Aug  17.50 PKQHW   1.88  11.81   244
GLFD   14.88  Aug  15.00 GQFHC   1.75  11.76    11
TGX     7.44  Aug   7.50 TGXHU   0.88  11.76   330
KERA   26.63  Aug  30.00 KVQHF   3.13  11.74   233
EXCA   11.75  Aug  12.50 XQAHV   1.38  11.70    52
TSP    21.44  Aug  22.50 TSPHX   2.50  11.66   294
EPIC    5.38  Aug   7.50 PQSHU   0.63  11.63    71
DUSA   11.94  Aug  12.50 QDUHV   1.38  11.52    49
SQNT   17.44  Aug  17.50 SQQHW   2.00  11.47  1596
LDW     7.13  Aug   7.50 LDWHU   0.81  11.40    10
SBTK   23.06  Aug  25.00 XQYHE   2.63  11.38   689
MRVT    8.81  Aug  10.00 SQDHB   1.00  11.35    20
SNRS   18.75  Aug  22.50 RNUHX   2.13  11.33   217
SPLH    7.19  Aug   7.50 QRXHU   0.81  11.30    69
SCUR    4.44  Aug   5.00 UQUHA   0.50  11.27   257
CPLY   10.00  Aug  10.00 LXQHB   1.13  11.25    45
STNR   30.00  Aug  30.00 QFRHF   3.38  11.25    10
APOS    6.13  Aug   7.50 QAPHU   0.69  11.22    28
MYLX    8.94  Aug  10.00 MJQHB   1.00  11.19   295
SCSWF  12.38  Aug  12.50 QSOHV   1.38  11.11    52
SIII   12.38  Aug  12.50 SQIHV   1.38  11.11  1746
SVE    22.00  Aug  22.50 SVEHX   2.44  11.08   766
OSTE   24.88  Aug  25.00 OQQHE   2.75  11.06   205
FNF    19.81  Aug  20.00 FNFHD   2.19  11.04    70
RURL    9.06  Aug  10.00 QWMHB   1.00  11.03    32
ARDT   19.88  Aug  20.00 KQVHD   2.19  11.01   258
GIFI   12.50  Aug  12.50 QIFHV   1.38  11.00   370
PQT     8.00  Aug  10.00 PQTHB   0.88  10.94   453
DLTK    9.75  Aug  10.00 DSQHB   1.06  10.90    27
NSPK   11.50  Aug  12.50 NNQHV   1.25  10.87   261
BEAM   19.63  Aug  20.00 BAQHD   2.13  10.83   342
MANU   15.00  Aug  15.00 ZUQHC   1.63  10.83   208
CERN   17.50  Aug  17.50 CQNHW   1.88  10.71    20
AGS    11.69  Aug  12.50 AGSHV   1.25  10.70    47
IMRS   16.38  Aug  17.50 QIQHW   1.75  10.69   262
SGE     6.44  Aug   7.50 SGEHU   0.69  10.68   101
ANET   15.88  Aug  17.50 QTEHW   1.69  10.63   306
RWAV    7.06  Aug   7.50 RQRHU   0.75  10.62    10
MRCY   29.50  Aug  30.00 QYRHF   3.13  10.59   287
CVD    22.44  Aug  22.50 CVDHX   2.38  10.58   297
FFTI    9.50  Aug  10.00 QFOHB   1.00  10.53    88
CMTO   18.47  Aug  20.00 CQHHD   1.94  10.49   303
NOVT   20.88  Aug  22.50 QOHHX   2.19  10.48    25
FLH    10.75  Aug  12.50 FLHHV   1.13  10.47    95
NEON   17.50  Aug  20.00 QNOHD   1.81  10.36   293
CLEC   24.75  Aug  25.00 QFUHE   2.56  10.35    60
CLPA   13.31  Aug  15.00 QJCHC   1.38  10.33    45
TDFX   14.56  Aug  15.00  FQHC   1.50  10.30   204
PRST    7.31  Aug   7.50 PQKHU   0.75  10.26    74
WIND   14.63  Aug  15.00 QWVHC   1.50  10.26   255
AFLX    3.66  Aug   5.00 XFQHA   0.38  10.26   491
EFAX   18.38  Aug  20.00 FUWHD   1.88  10.20    73
TSFW   22.06  Aug  25.00 SUWHE   2.25  10.20   373
PCTL    6.75  Aug  10.00 PTQHB   0.69  10.19    43
COOL    9.81  Aug  12.50 QOOHV   1.00  10.19   286
PCYC   27.00  Aug  30.00 QPYHF   2.75  10.19    22
ROSI    6.75  Aug   7.50 QRSHU   0.69  10.19   886
RMII   13.50  Aug  15.00 RMUHC   1.38  10.19   389
CGZ     7.38  Aug  10.00 CGZHB   0.75  10.17    41
FC      7.38  Aug   7.50  FCHU   0.75  10.17    10
MESG   19.75  Aug  22.50 MUGHX   2.00  10.13   800
Z       9.88  Aug  10.00   ZHB   1.00  10.13  3564
FRTE   10.50  Aug  12.50 RQFHV   1.06  10.12    97
ICO    12.38  Aug  12.50 ICOHV   1.25  10.10   101
PLMD    9.94  Aug  10.00  PMHB   1.00  10.06    60
PILL   14.94  Aug  15.00 PQQHC   1.50  10.04   188
CATP   16.81  Aug  17.50 TQPHW   1.69  10.04   540
DSP    29.94  Aug  30.00 DQCHF   3.00  10.02   549
GSTX   14.97  Aug  15.00 QGSHC   1.50  10.02   363
CHMD   10.00  Aug  12.50 HQCHV   1.00  10.00   140
MWHS   15.00  Aug  17.50 MQRHW   1.50  10.00   320
MSM    10.00  Aug  10.00 MSMHB   1.00  10.00    20
NCSS    5.00  Aug   7.50 NQWHU   0.50  10.00   182
SGI    17.50  Aug  17.50 SGIHW   1.75  10.00 13250
WTHG   15.00  Aug  15.00 WTQHC   1.50  10.00   202
PPRT    4.94  Sep   5.00 QPNIA   1.44  29.11   113
LUK    23.88  Sep  27.50 LUKIY   6.75  28.27    59
GEMS    5.00  Sep   5.00 GQMIA   1.25  25.00   694
NVX     6.56  Sep   7.50 NVXIU   1.50  22.86   199
ETV     6.31  Sep   7.50 ETVIU   1.38  21.78   363
WND    14.63  Sep  15.00 WNDIC   3.13  21.37   588
PRXL   12.00  Sep  12.50 VBQIV   2.56  21.35    20
APOS    6.13  Sep   7.50 QAPIU   1.25  20.41   184
CEGE    4.94  Sep   5.00 QIIIA   1.00  20.25   284
MAXI    4.75  Sep   5.00 MQHIA   0.94  19.74    95
IDTC   22.25  Sep  22.50 IQJIX   4.38  19.66   239
ANIC    9.91  Sep  10.00 NIQIB   1.88  18.93   985
ROSI    6.75  Sep   7.50 QRSIU   1.25  18.52   419
FMXI    6.13  Sep   7.50 FQXIU   1.13  18.37   130
ZDZ    24.56  Sep  25.00 ZDZIE   4.50  18.32   351
CFN     4.44  Sep   5.00 CFNIA   0.81  18.31   199
BYND   29.50  Sep  30.00 QYDIF   5.25  17.80  1274
HCIA   10.00  Sep  10.00 ZHQIB   1.75  17.50   203
ASDV   20.94  Sep  22.50 QDVIX   3.63  17.31     1
MMWW   21.50  Sep  22.50 EQBIX   3.63  16.86   207
DUSA   11.94  Sep  12.50 QDUIV   2.00  16.75    83
VVTV   24.63  Sep  25.00 UVRIE   4.00  16.24   305
MCHM    6.56  Sep   7.50  QQIU   1.06  16.19   228
GHV     3.50  Sep   5.00 GHVIA   0.56  16.07  1032
DRMD   15.00  Sep  15.00 DUQIC   2.38  15.83  4735
PGA     9.88  Sep  10.00 PGAIB   1.56  15.82   122
PCYC   27.00  Sep  30.00 QPYIF   4.25  15.74    20
NUS    19.88  Sep  20.00 NUSID   3.00  15.09   370
ASMI    7.47  Sep   7.50 IQBIU   1.13  15.06   206
CERN   17.50  Sep  17.50 CQNIW   2.63  15.00   159
VRC    10.00  Sep  10.00 VRCIB   1.50  15.00   810
CATP   16.81  Sep  17.50 TQPIW   2.50  14.87  1202
EAII   24.06  Sep  25.00 QNEIE   3.50  14.55   214
ONSL   20.75  Sep  22.50 QOLIX   3.00  14.46   125
KOPN   23.50  Sep  25.00 KQOIE   3.38  14.36   157
KMAG    3.06  Sep   5.00 KMQIA   0.44  14.29   935
GSTX   14.97  Sep  15.00 QGSIC   2.13  14.20   450
MRVT    8.81  Sep  10.00 SQDIB   1.25  14.18   320
FA     12.38  Sep  12.50  FAIV   1.75  14.14    60
IONA   17.25  Sep  17.50 YWQIW   2.44  14.13    88
BEAM   19.63  Sep  20.00 BAQID   2.75  14.01  1437
EGGS   11.81  Sep  12.50 EGQIV   1.63  13.76  1267
GNSS   22.75  Sep  25.00 QFEIE   3.13  13.74    51
GLFD   14.88  Sep  15.00 GQFIC   2.00  13.45   116
TGX     7.44  Sep   7.50 TGXIU   1.00  13.45   895
SKYC   20.75  Sep  22.50 KQFIX   2.75  13.25     9
VNTV   10.38  Sep  12.50 QTZIV   1.38  13.25   145
IDTC   22.25  Sep  25.00 IQJIE   2.94  13.20   619
TLXN    8.56  Sep  10.00 TNQIB   1.13  13.14   201
OH     12.38  Sep  12.50  OHIV   1.63  13.13   328
SEV     3.81  Sep   5.00 SEVIA   0.50  13.11   669
PAGE    5.73  Sep   7.50 PGQIU   0.75  13.08  3673
TDFX   14.56  Sep  15.00  FQIC   1.88  12.88   312
DGN    17.50  Sep  17.50 DGNIW   2.25  12.86  1852
ZRAN   18.00  Sep  20.00 ZUOID   2.31  12.85   120
GADZ   13.63  Sep  15.00 EQKIC   1.75  12.84    10
GLIA   22.50  Sep  25.00 QGLIE   2.88  12.78   188
GLIA   22.50  Sep  22.50 QGLIX   2.88  12.78    83
ICGX   23.50  Sep  25.00 QIGIE   3.00  12.77   687
TWMC   11.75  Sep  12.50 TQTIV   1.50  12.77   576
CFN     4.44  Sep   7.50 CFNIU   0.56  12.68   322
WERN   19.78  Sep  20.00 WQXID   2.50  12.64    38
MSCC   10.00  Sep  10.00 QMSIB   1.25  12.50    55
VIRS   16.50  Sep  17.50 VQPIW   2.06  12.50    95
RURL    9.06  Sep  10.00 QWMIB   1.13  12.41   293
ENER   10.13  Sep  12.50 EQIIV   1.25  12.35   184
CYCH   12.81  Sep  15.00 KBQIC   1.56  12.20   463
BEV     7.19  Sep   7.50 BEVIU   0.88  12.17  6257
UBS     9.25  Sep  10.00 UBSIB   1.13  12.16  1850
CERN   17.50  Sep  22.50 CQNIX   2.13  12.14   422
ADLT    7.75  Sep  10.00 LQYIB   0.94  12.10    23
OCA    15.00  Sep  15.00 OCAIC   1.81  12.08   299
PSUN   23.88  Sep  25.00 PVQIE   2.88  12.04    13
PPOD    8.88  Sep  10.00 QPPIB   1.06  11.97   853
PTEC   15.88  Sep  17.50 PKQIW   1.88  11.81    10
NPTH    4.25  Sep   5.00 DQWIA   0.50  11.76   215
ESA    11.25  Sep  12.50 ESAIV   1.31  11.67   114
NWK    11.25  Sep  12.50 NWKIV   1.31  11.67    83
DBCC   10.75  Sep  12.50 BQDIV   1.25  11.63   623
ESV    19.38  Sep  20.00 ESVID   2.25  11.61  1114
CSGS   29.13  Sep  30.00 QGAIF   3.38  11.59   274
RAYS   15.31  Sep  17.50 RQYIW   1.75  11.43   110
NETA   16.44  Sep  17.50 CQMIW   1.88  11.41  3232
MAST   17.63  Sep  20.00 QACID   2.00  11.35   145
ORB    22.13  Sep  22.50 ORBIX   2.50  11.30   145
SEM     8.88  Sep  10.00 SEMIB   1.00  11.27    11
GZTC    5.00  Sep   5.00 GEQIA   0.56  11.25   143
ZDZ    24.56  Sep  30.00 ZDZIF   2.75  11.20   261
GCTI   28.00  Sep  30.00 QHFIF   3.13  11.16   652
ONSL   20.75  Sep  25.00 QOLIE   2.31  11.14   742
IDX     9.00  Sep  10.00 IDXIB   1.00  11.11  1436
VSIO   29.56  Sep  30.00 VQJIF   3.25  10.99    76
OCN     8.00  Sep  10.00 OCNIB   0.88  10.94    56
FINL   11.44  Sep  12.50 FQNIV   1.25  10.93   352
PRGY   27.50  Sep  30.00 PUYIF   3.00  10.91   268
PAGE    5.73  Sep  10.00 PGQIB   0.63  10.90   112
IHS     6.31  Sep  10.00 IHSIB   0.69  10.89   528
IHS     6.31  Sep   7.50 IHSIU   0.69  10.89   784
VLNC    6.94  Sep   7.50 VHQIU   0.75  10.81  1219
CATP   16.81  Sep  20.00 TQPID   1.81  10.78  1302
SVGI   16.88  Sep  17.50 VQQIW   1.81  10.74   498
CYGN   11.06  Sep  12.50 YNQIV   1.19  10.73   143
CCBL   28.00  Sep  30.00 LQEIF   3.00  10.71    45
HBI     5.88  Sep   7.50 HBIIU   0.63  10.64   701
CRUS    8.84  Sep  10.00 CUQIB   0.94  10.60   724
AFCI   16.63  Sep  17.50 AQFIW   1.75  10.53    25
FLC     9.50  Sep  10.00 FLCIB   1.00  10.53  7330
BEAS   27.50  Sep  30.00 BRQIF   2.88  10.45    64
TSX     8.38  Sep  10.00 TSXIB   0.88  10.45    71
ASYT   28.75  Sep  30.00 QQYIF   3.00  10.43   231
PRXL   12.00  Sep  17.50 VBQIW   1.25  10.42     5
TWTC   27.25  Sep  30.00 TTUIF   2.81  10.32   111
RMDY   26.38  Sep  30.00 LRQIF   2.69  10.19    26
AVI    29.69  Sep  30.00 AVIIF   3.00  10.11    96
NBTY    6.81  Sep   7.50 NBQIU   0.69  10.09  4392
NH     16.81  Sep  17.50  NHIW   1.69  10.04   134
DRMD   15.00  Sep  17.50 DUQIW   1.50  10.00  1214






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

Market Terms And Definitions - Stock Types...

Over the past few weeks, there have been numerous news articles
about the group of stocks known as "cyclicals". I received lots
of email requesting a definition of that term and I think it is
important for the new investor to understand the different types
of stocks in the market and the way they are classified.

The basic categories are: Blue Chip stocks, Growth stocks, Income
stocks, Cyclical stocks, Defensive stocks and Speculative stocks.

Blue Chip stocks are historically the best long-term investments.
These companies are well established, quality issues like Dupont,
General Electric, IBM, and Proctor & Gamble. They generally pay
good dividends and are considered the bellwethers of the market.

Growth stocks are those companies which have a high probability
of capital appreciation. They retain most of their earnings and
usually don't pay dividends. All of their available funds are
plowed back into the company for future expansion and acquisition
or research. These stocks are more volatile and are generally
considered speculative investments.

Income stocks are conservative issues that have yields comparable
with corporate bonds. These companies can pay competitive returns
because their products or services are superior to others in the
industry and they also have the possibility of price appreciation.

A cyclical company is one whose earnings fluctuate with changes
in a particular business or industry cycle. When the economic
conditions are favorable, the company's stock and earnings rise.
As the cycle ends, the company's revenues and stock value falls
back to its previous position.

Defensive or safety stocks are those which remain stable even in
declining markets. These stocks usually include utilities, drug
manufacturers, and consumer non-durables or food companies. They
hold their value in recessions because their products are always
in demand regardless of the economic climate.

In the past, speculative stocks were generally identified by P/E
ratios. These issues were considered aggressive when they had
price to earnings ratios in the multiples of 50 to 100. Now most
Internet stocks have P/E's well into the hundreds and this long
term fundamental indicator may no longer be an accurate measure 
for gauging investment risk.

Another type of high risk stock is the 'new issue', now commonly
known as the IPO - Initial Public Offering. These stocks usually
have incredible volatility when they begin trading and can move
from just a few dollars up into the $100's over the course of
one day's activity. Some examples of recent blockbuster IPO"s
include Liquid Media (LQID) and Koop.com (KOOP).

Good Luck!




SUMMARY OF PREVIOUS PICKS 
*************************
Stock  Price  Last    Mon  Strike  Opt   Profit    ROI   Monthly
Sym    Picked Price        Price   Bid   /Loss           ROI

BYND   27.81  29.50   Jul  22.50  0.56  *$  0.56   8.8%  19.1%
SEEK   55.88  51.50   Jul  45.00  0.88  *$  0.88   7.1%  15.5%
CUST   50.06  41.94   Jul  35.00  1.13  *$  1.13  10.1%  14.7%
PILL   13.88  14.94   Jul  12.50  0.81  *$  0.81  16.3%  14.1%
CACS   35.00  41.50   Jul  25.00  0.75  *$  0.75   9.7%  14.0%
MERQ   35.38  38.25   Jul  30.00  0.88  *$  0.88   9.1%  13.2%
NTBK   39.00  35.75   Jul  30.00  0.50  *$  0.50   6.0%  13.1%
SBTK   27.25  23.06   Jul  20.00  0.94  *$  0.94  14.7%  12.8%
PCYC   21.13  27.00   Jul  17.50  0.81  *$  0.81  14.4%  12.5%
SBA    27.38  27.69   Jul  25.00  0.50  *$  0.50   5.5%  12.0%
RIGS   20.63  19.94   Jul  17.50  0.44  *$  0.44   7.9%  11.5%
SPLN   34.31  37.31   Jul  25.00  0.38  *$  0.38   5.2%  11.4%
ICGX   23.13  23.50   Jul  20.00  0.31  *$  0.31   4.8%  10.5%
ANAD   31.31  36.00   Jul  25.00  0.63  *$  0.63   9.1%   9.9%
STII   25.00  29.25   Jul  20.00  0.50  *$  0.50   9.1%   9.9%
GALT   41.00  54.25   Jul  35.00  0.75  *$  0.75   6.7%   9.7%
CIEN   30.50  34.06   Jul  25.00  0.81  *$  0.81  10.8%   9.4%
EGRP   39.94  39.75   Jul  32.50  0.38  *$  0.38   4.3%   9.3%
SGI    14.63  17.50   Jul  12.50  0.25  *$  0.25   6.3%   9.1%
NE     20.00  20.50   Jul  17.50  0.50  *$  0.50   8.3%   9.1%
PWAV   30.50  34.16   Jul  25.00  0.44  *$  0.44   6.2%   8.9%
REV    30.38  28.25   Jul  22.50  0.69  *$  0.69  10.2%   8.9%
BOBJ   37.00  36.81   Jul  30.00  0.69  *$  0.69   8.1%   8.8%
PRD    27.50  28.69   Jul  22.50  0.38  *$  0.38   6.0%   8.6%
CNTO   50.94  48.94   Jul  40.00  0.81  *$  0.81   7.4%   8.0%
SUGN   22.75  30.25   Jul  17.50  0.44  *$  0.44   8.8%   7.7%
NRES   20.25  21.19   Jul  17.50  0.50  *$  0.50   8.5%   7.4%
CUBE   32.00  33.28   Jul  25.00  0.56  *$  0.56   8.0%   7.0%
CUBE   32.00  33.28   Jul  25.00  0.44  *$  0.44   6.4%   7.0%
TDW    28.75  30.50   Jul  25.00  0.50  *$  0.50   6.1%   6.6%
AMES   47.50  46.50   Jul  40.00  0.69  *$  0.69   5.7%   6.1%
EGRP   37.81  39.75   Jul  25.00  0.56  *$  0.56   6.9%   6.0%
--------------------------------------------------------------
QNTM   24.56  24.69   Aug  17.50  1.00  *$  1.00  16.9%  10.5%

Unplayable (and very positive):

*    NLC - Merger/Buyout announced before the market opened.

-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

ADAP   23.19  Aug 17.50  CQI TW  0.44  100   17.06   8.7%
AMTD   38.19  Aug 25.00  TAZ TE  0.75  635   24.25   8.9%
BYND   29.50  Aug 20.00  QYD TD  0.75  1522  19.25  11.3%
CDNW   19.94  Aug 15.00  NWQ TC  0.56  735   14.44  12.3%
DRIV   35.31  Aug 25.00  DQI TE  0.88  47    24.12  11.1%
LIPO   20.88  Aug 17.50  LPQ TW  0.63  185   16.87  11.2%
MGCX   28.00  Aug 20.00  MGU TD  1.13  3     18.87  16.8%
NETS   19.56  Aug 15.00  NTU TC  0.75  30    14.25  16.1%
PAMC   33.69  Aug 20.00  QMC TD  0.56  10    19.44   7.7%
PTVL   23.63  Aug 17.50  QUT TW  0.81  39    16.69  14.6%



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

MGCX   28.00  Aug 20.00  MGU TD  1.13  3     18.87  16.8%
NETS   19.56  Aug 15.00  NTU TC  0.75  30    14.25  16.1%
PTVL   23.63  Aug 17.50  QUT TW  0.81  39    16.69  14.6%
CDNW   19.94  Aug 15.00  NWQ TC  0.56  735   14.44  12.3%
BYND   29.50  Aug 20.00  QYD TD  0.75  1522  19.25  11.3%
LIPO   20.88  Aug 17.50  LPQ TW  0.63  185   16.87  11.2%
DRIV   35.31  Aug 25.00  DQI TE  0.88  47    24.12  11.1%
AMTD   38.19  Aug 25.00  TAZ TE  0.75  635   24.25   8.9%
ADAP   23.19  Aug 17.50  CQI TW  0.44  100   17.06   8.7%
PAMC   33.69  Aug 20.00  QMC TD  0.56  10    19.44   7.7%




Company Descriptions
********************
ADAP - Adaptive Broadband  $23.19   *** An Old (New) Favorite ***

Adaptive Broadband, formerly known as California Microwave (CMIC),
designs, manufactures and markets sophisticated systems and
products used worldwide in satellite and wireless communications
for the transmission of voice, data, facsimile and video. ADAP
also provides industry-leading solutions for satellite-based data
communications and terrestrial wireless telemetry networks.

Aug  17.50  CQI TW  Bid=0.44  OI=100  CB=17.06  ROI=8.7%
        
Chart = http://quote.yahoo.com/q?s=ADAP&d=3m

*****

AMTD - Ameritrade  $38.19     *** E*trade Challenger? ***

Ameritrade Holding Corporation is a pioneer in the discount and
online brokerage industry with brokerage and clearing services to
individual consumer investors and other financial institutions.
Subsidiaries of Ameritrade Holding include: Ameritrade, Accutrade,
AmeriVest, OnMoney, and Advanced Clearing. Some say this company
is poised to topple E*trade; the leader in discount Internet
brokerages. The cost basis near $24 is a good place to start.

Aug  25.00  TAZ TE  Bid=0.75  OI=635  CB=24.25  ROI=8.9%

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

*****

BYND - Beyond.com Corp.  $29.50   *** Internet Commerce ***

BYND is a leading online re-seller of commercial off-the-shelf
computer software to the consumer, small business and large
enterprise markets. Through its online store, BYND offers a
comprehensive selection of software, customer service and
competitive pricing. BYND is the undisputed brand leader in
category (selling software in a digital downloaded form) and
is still rumored to be a takeover target of AMZN.

Aug  20.00  QYD TD  Bid=0.75  OI=1522  CB=19.25  ROI=11.3%

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

*****

CDNW - CdNow  $19.94     *** Internet Commerce ***

CdNow is one of the most popular e-commerce sites, especially
among teens, and is the largest retailer of custom music tracks
on the Internet. CDNW offers over 500,000 music-related items;
album recommendations, custom CDs, music samples, and a vast
library of interviews & news from top music writers. An alliance
with Atlantic Records and Microsoft may vault this company to the
top of the heap.

Aug  15.00  NWQ TC  Bid=0.56  OI=735  CB=14.44  ROI=12.3%

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

*****

DRIV - Digital River, Inc.   $35.31   

DRIV provides comprehensive electronic commerce outsourcing
solutions to software publishers and online retailers. DRIV
derives its revenue primarily from sales of 3rd party software
by managing online stores for software publishers and retailers.
DRIV has completed a short-term W formation after an upgrade in
June and several partnerships. On Friday, Digital announced the
acquisition of Universal Commerce, Inc., which should expand
their client base to include an additional 1,000 publishers of
shareware. Earnings are expected around July 21.

Aug  25.00  DQI TE  Bid=0.88  OI=47  CB=24.12  ROI=11.1%   

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

*****

LIPO - Liposome Company, Inc.  $20.88   *** Stage II ***

Liposome is a biopharmaceutical company engaged in the discovery, 
development, manufacturing and marketing of proprietary lipid and 
liposome-based pharmaceuticals, primarily for the treatment of 
cancer and other life-threatening illnesses. LIPO's current stage
II climb started after reporting 1Q earnings in April (its second 
consecutive quarterly profit). On Wednesday, Liposome announced it
has filed a New Drug Submission for marketing approval of Evacet 
in Canada (they already have filed with the USF&DA and Europe).
Breaking resistance near $26.00 would move Liposome into blue sky
territory.

Aug  17.50  LPQ TW  Bid=0.63  OI=185  CB=16.87  ROI=11.2%   

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

*****

MGCX - MGC Communications, Inc.  $28.00   *** Break Out? ***

MGC provides local phone service, custom calling features, long 
distance and Internet services to small business and residential 
customers in Las Vegas, Atlanta, Chicago, southern Florida and 
selected areas of southern California, including Los Angeles and 
San Diego. MGC announced on Wednesday that their 2Q revenues, 
lines sold/installed, and lines provisioned increased to record
levels. Recent bullish signals and Friday's move broke the
current downtrend indicating a possible change of character.

Aug  20.00  MGU TD  Bid=1.13  OI=3  CB=18.87  ROI=16.8%   

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

*****

NETS - YouthStream Media Networks  $19.56   

YouthStream Media owns and operates a proprietary national 
network of theaters on college campuses which deliver 
entertainment and educational events via satellite for display 
through high resolution video projectors on movie theater sized
screens. They serve about 40 colleges and universities. NETS
started climbing in June on news about its exclusive online 
partner, CommonPlaces and its August IPO mybytes.com. Thursday,
YouthStream announced they are now part of the Russell 2000.

Aug  15.00  NTU TC  Bid=0.75  OI=30  CB=14.25  ROI=16.1% 
  
Chart = http://quote.yahoo.com/q?s=nets&d=3m

*****

PAMC - Provident American Corp.  $33.69   *** Technical Buy? ***

Provident American through its subsidiaries, Provident Indemnity 
Life Insurance and HealthAxis.com Inc., markets and underwrites 
medical (a majority of their sales) and life insurance under 
ordinary and group plans. They also have agreements with America 
Online and others to offer health insurance online. PAMC broke 
above its recent consolidation area, moving $11 in 7 days, but
there has been no news. Hmmmm. Several buy signals have been
triggered on increasing volume...can a new high be far behind?
If not, we still like the support area near $25.

Aug  20.00  QMC TD  Bid=0.56  OI=10  CB=19.44  ROI=7.7%    

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

*****

PTVL - Preview Travel  $23.63     *** Internet Commerce ***

Preview Travel is a provider of branded online travel services
for leisure and small business travelers providing a full-service
travel agency online through its own web site and travel services
via AOL, Excite, and Lycos. Recently completed a short-term W
formation in June after announcing a #1 ranking by Gomez Advisors,
pacts with American Airlines and Carnival Cruise Lines, and the
launch of its "adventure" travel site). PTVL has moved above its
150 dma as the secondary Internet issues heat up.

Aug  17.50  QUT TW  Bid=0.81  OI=39  CB=16.69  ROI=14.6%

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


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