Option Investor
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Daily Newsletter, Sunday, 08/15/1999

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The Option Investor Newsletter            Sunday  8-15-99  1 of 6
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

Entire newsletter best viewed in COURIER 10 font for alignment
*******************************************************************
MARKET STATS FOR LAST WEEK AND PRIOR WEEKS
*******************************************************************
         WE 8-13          WE 8-6            WE 7-30         WE 7-23
DOW     10973.65 +259.62 10714.03 + 58.88  10655.15 -255.81 -298.88
Nasdaq   2637.81 + 89.84  2547.97 - 90.52   2638.49 - 53.91 -172.08
S&P-100   688.82 + 14.69   674.13 -  9.16    683.29 - 15.59 - 34.91
S&P-500  1327.68 + 27.39  1300.29 - 28.43   1328.72 - 28.22 - 61.84
RUT       434.05 +  6.01   428.04 - 16.73    444.77 -  3.61 - 16.88
TRAN     3179.07 - 40.96  3220.03 -113.21   3333.24 - 48.25 - 20.38
VIX        22.38 -  4.98    27.36             25.83           23.76
Put/Call     .72              .72               .72             .58
*******************************************************************

Are we suspicious of the rally?

You bet.  But enjoy it while you can.  We may see it for a few more 
days until the euphoria wears off.  In the meantime, thank goodness 
for favorable PPI numbers.  While bearish tones gripped the market 
with force early last week, the bulls just couldn't take it any more 
and put the PPI up as the Holy Grail for the rally that ensued.  In 
truth, the key to the whole battle was that bears moved to the 
sidelines to wait it out, while bulls were looking for any excuse to 
run the market up.  However, based on still sub-1 bln. share volume 
in both the NASDAQ and DOW, We think the markets movement is based 
on lack of selling, not a new bullish trend. 

Let's take a closer look.  In short, Friday's action was borne of a 
flat Producers Price Index (PPI).  By its name, you can infer that 
it's a reflection of prices at the wholesale and producer level.  
The Consumer Price Index (CPI) by contrast is a reflection of retail 
price levels, or the prices that we all pay for goods and services 
in our daily lives.  It's the same comparison between a bushel of 
corn in a field of many, and an ear of corn from the produce section 
of your favorite grocery store.  The big difference in the readings 
is that the CPI is about 58% weighted in services, which are nowhere 
to be found in the PPI.  So there's still a bit of a wild card in 
the CPI, thanks to its inclusion of services.  We'll have to wait 
until Tuesday morning's release of those figures before we can offer 
any comment.  

Anyway, the PPI reflected a flat 0.0% increase at its core rate.  
Yes, energy (a.k.a. oil) was up a whopping 3%, which in our book is 
a big red flag of future inflation.  After all, as we've said 
before, oil is the economic engine of the western world - without 
it, we'd be living in caves still trying to catch dinner with a 
pointy stick.  In what to us is a major surprise, OPEC is closely 
adhering to its prescribed limits, moving the price of oil up.  We 
need it no matter what it costs.  But the market is willing to 
overlook that for now.  The truly good news was that on every other 
level, from food to cars to computers, prices actually fell.  The 
overall PPI figure was +0.2% compared to the market's expectation of 
+0.3%, which anybody would have to view favorably.  And so they did.  
The bond market led the way by shedding about 16 basis points 
throughout the day on Friday to close at 6.10%.  If you can believe 
it, there was actually talk the Fed may not raise rates at the 
August 24 FOMC meeting.  Yeah right. . .fat chance.  While we would 
agree on principal that a rate hike isn't necessary and shouldn't be 
implemented, based on the lack of inflationary signs (except oil, 
which we've already touched on), it's still all but sure to happen 
anyway.  Even so, the positive PPI numbers remove another inflation 
indicator from the Fed's "keep-your-eye-on-it-list" and also ease 
the fear of a disturbing CPI figure on Tuesday.

The DOW gapped up about 100 points on Friday's open to 10,900, its 
Thursday high (before the power went out).  From there, a steady 
ascent to 10,981 ensued before backing off slightly to finish the 
day at 10,973, up 185 points.  The A/D line looked great as 
advancers skunked decliners all day.  In the end, 1952 advancers 
cleaned the clock on 1037 decliners, with volume of only 692 mln. 
shares.  This is actually pretty low.  But for a Friday in August, 
it moves up a notch on the importance scale, but still nothing to 
write home about.  Unfortunately, there were just 42 new highs 
compared to 158 new lows.  Aside from unconvincing volume, if there 
was a weak spot in the internals, this was it.  These are not the 
signs of a sustainable rally.  If you need proof, just take a look 
at IBM.  At one point today, it was reported that it took 20 minutes 
to move just 50,000 shares - no inspiration here.

For the technical chartists in the group, on one hand, the DOW is at 
its 50-dma and could bounce south, while on the other hand, it's 
already bounced north off its 100-dma.  You choose.  We think in the 
grand scheme of things though, sentiment will mow down any chart 
average on the planet.  In this case, it's better to pay attention 
to the trading environment than a line on the chart.

The NASDAQ, home of most technology stocks, and consequently the 
more rate sensitive index had a big day too, reflecting the 
substantial bond yield drop.  The index gapped and climbed to close 
at 2635, up 88 points, which looks good when viewed through 1-week 
goggles.  However, the weeks of April 19, May 10 and June 21 show 
this level as a peak from which the market went down.  The gains in 
July were earnings driven.  Not trying to scare you - just pointing 
it out.  See what we mean on the graph.


 


We are still cautious here.  Nonetheless, today's rally, based on 
relevant PPI data looked OK.  Like the DOW, advancers tap-danced all 
over decliners 2432 to 1467.  The good news is that new highs 
actually outpaced new lows 86 to 58.  We haven't seen that in a 
while (take a bow).  Volume was respectable for a Friday in August 
at 937 mln. shares, but far less convincing than the 1 bln. shares 
we'd like to see for a strong move up.

Honestly folks, no matter what you think of volume, it's the only 
thing that's going raise the price of a stock.  Without volume, 
advances are subject to pullbacks and we remain in trading ranges.  
Breakouts mean very little without volume.

Let's put a little more highlight on the volume issue.  A few 
sectors put on great performances today.  Retail, technology 
(including Internets), financials and Drugs.  Take the drug issues, 
in particular Merck (MRK), Pfizer (PFE) and Eli Lilly (LLY).  Their 
respective average daily volumes are 4.93 mln., 7.08 mln., and 2.87 
mln.  Today's volumes exceeded these averages by strong margins: 
7.08 mln. (numerical coincidence), 10.25 mln. and 3.35 mln., 
respectively.  When this happens, especially on a Summer Friday, you 
can be pretty sure, it's not from folks pulling off the road in 
their motor homes to call Schwab with an order.  This kind of volume 
is the trail that funds and money mangers leave behind.  It's not 
just the high tide floating all boats.

Now contrast this with the Internet sector's AOL, AMZN, YHOO and 
CMGI.  Respective average daily volumes here are 22.12 mln., 8.49 
mln., 9.25 mln., and 6.22 mln.  However, note their volumes today of 
just 14.53 mln., 5.39 mln., 6.12 mln., and 4.79 mln.  Is this 
indicative to you that a big rally is at hand?  Not even close.  
This is clearly a case of the tide floating the boat (interest rate 
driven, not buying pressure driven).  Don't get us wrong; we're all 
for big price moves that Internets give us.  The point we are trying 
to convey is that Internets are not as likely to sustain their rally 
compared to other sectors, as conveyed by an absence of volume 
relative to their daily averages.  Beware the head-fake.

In condensed version, here's other news of interest.  Red Hat 
Software (RHAT) continues to rocket ahead from its $14 IPO on 
Wednesday only to close at $85 on Friday.  Iridium (IRID), the 
satellite-based telephone system was forced into chapter 11 
bankruptcy by its creditors.  Intel set another new high of $79.75 - 
about a 60% move in 2.5 months (profit taking anyone?).  Finally, a 
competing bid to Alcoa's bid for Reynolds metals surfaced today from 
Michigan Avenue Partners, a scrappy and much smaller rival of Alcoa.

All clutter, theory, and hyperbole aside, we were due for a small 
reprieve and this is pretty good.  The PPI has removed an element of 
fear, while investors await the CPI on Tuesday morning.  Aside from 
the price of oil, which the market appears willing to overlook, the 
CPI will most likely give investors another reason to cheer, though 
something could fly out of left field to spook the markets back 
down.  But we don't think so.  Monday should be an up day, but may 
see a pullback late in the afternoon prior to the CPI release.  
Assuming no surprises from the CPI, sentiment is likely strong 
enough to carry the market further up.  In short, we could get 2 
days of price gains on Monday and Tuesday.

However, we want to stress that you use caution.  One CPI hiccup, 
and we'll head right back where we came from.  We will anyway; it 
will just be delayed a couple of days.  The fact is the Fed will 
still most likely act to raise rates, despite benign PPI and CPI.  
That hasn't changed.  What also hasn't changed is that earnings 
season isn't until late September, and it's usually a weak quarter.  
To boot, we've still got that pesky oil price moving insidiously up, 
and 138 days remaining until Y2K.  There just aren't any events on 
the horizon to cause much enthusiasm.  Remember, the market is a 
great humiliator and strives to embarrass as many people as 
possible.  Don't get caught in the euphoria.  It shouldn't last 
long, and when it's over (probably soon), the trend will be down.  
Form a plan and stick to it, using stops if the trade moves against 
you.  Of course, sell too soon.

Buzz Lynn
Research Analyst



*************
COMING EVENTS
*************

Monday: 

None Scheduled

Tuesday:

Consumer Price Index      July   Forecast:   0.3%  Previous: unch 
CPI ex. food & energy     July   Forecast:   0.2%  Previous:  0.1%
Housing Starts            July   Forecast:  1.60M  Previous: 1.571M
Building Permits          July   Forecast:  1.60M  Previous: 1.621M
BTM Schroders             8/14   Forecast:   --    Previous:  0.2%
Industrial Production     July   Forecast:   0.5%  Previous:  0.2%
Capacity Utilization      July   Forecast:  80.6%  Previous: 80.3%
Real Earnings             July   Forecast:   --    Previous:  0.7%
LJR Redbook               8/14   Forecast:   --    Previous:  0.6%
API Oil Stocks            8/13   Forecast:   --    Previous: -3.16M


Wednesday:

None Scheduled

Thursday:

Jobless Claims            8/14   Forecast:  290k    Previous: 284K 
International Trade       June   Forecast:  -$20.0B Previous: -$21.34B  
Philadelpia Fed Index     Aug    Forecast:  10.5    Previous: 7.8   
Money Supply (M2)         8/9    Forecast:   --     Previous: -$6.2B   
   

Friday:

None scheduled




**************
MARKET POSTURE
**************

As of Market Close - Friday, August 13, 1999

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

DOW Industrials   10,500  11,320  10,973    Neutral   7.20
SPX S&P 500        1,330   1,420   1,328    BEARISH   7.30
OEX S&P 100          675     735     689    Neutral   8.13 *
RUT Russell 2000     440     465     434    BEARISH   8.06
NDX NASD 100       2,250   2,468   2,307    Neutral   8.13 *
MSH High Tech      1,125   1,250   1,164    Neutral   8.13 *


XCI Hardware         920   1,090   1,020    Neutral   7.20
CWX Software         725     844     754    Neutral   8.13 *
SOX Semiconductor    450     535     520    Neutral   7.20
NWX Networking       555     625     570    Neutral   8.13 *
INX Internet         500     580     411    BEARISH   7.20


BIX Banking          690     710     650    BEARISH   7.23
XBD Brokerage        410     440     387    BEARISH   7.23
IUX Insurance        645     660     597    BEARISH   7.23


RLX Retail           915     960     855    BEARISH   7.23
DRG Drug             370     400     346    BEARISH   7.20
HCX Healthcare       750     800     709    BEARISH   7.22
XAL Airline          180     190     155    BEARISH   5.21
OIX Oil & Gas        285     310     315    BULLISH   8.10



Posture Alert    
What inflation? The bond market had its best day in months on
Friday, which led to a powerful rally in equities. Many sectors
bumped above key support levels, which were broken only recently.
With Friday's action, we have turned Neutral (from Bearish) on
the S&P 100, NASDAQ 100, Morgan Stanley High Tech, Software,
and Networking.    


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

members.OptionInvestor.com/marketposture



****************
MARKET SENTIMENT 
****************

It's not over, yet!

Friday's bump up was the sort of relief that many investors were 
looking for. All sectors participated with Internet, Software, and
the NDX leading the move. However, we believe there are still some
hurdles to overcome before this race is over. On Monday, most will
investors will probably be cautious going into Tuesday's CPI. We do
have several big names that will be reporting their quarterly report,
so technology stocks have the potential to add to further gains. The 
interest rate game is not nearly over, but August 24 (Fed meeting)
is right around the corner so stay tuned.

Below is an updated list of equities and our Pinnacle Index for
those particular stocks. We have now also included their expected
earnings, the infamous whisper number (if available), and their
estimated earnings release date. What we look for are liquid 
stocks/options that garner a lot of interest from the investment
community. Most of the issues are high tech, and are thus more 
aggressive. We then filter out many of the equities, only to show 
stocks with excessive optimism or pessimism. From a contrarian 
standpoint (a high number is a good indication of extreme optimism,
and a low number is a good indication of extreme pessimism) you
should buy when its low, and sell when its high.


Company          Symbol  Pinnacle   Expected   Whisper#:  Estimated
                           Index:   Earnings:             Date*:

Dell Computer    DELL      4.23     +.17        +.17      8/17
Hewlett Packard  HWP       2.80     +.80        +.82      8/16
AppliedMaterials AMAT      0.92*    +.52        +.57      8/17
Novell           NOVL     10.18*    +.13        +.14      8/19
Intuit           INTU      1.38     -.33        -.30      8/23?
Ciena            CIEN      2.92     -.01        -.00      8/19
Autodesk         ADSK      1.17     +.17        +.17      8/26
Wind River       WIND      1.55     +.15        +.15      8/19

Earnings season will officially be over soon for a couple of months,
but we have several big names going off this week. These companies
can definitely give more fuel-for-the-fire in the bulls camp.
Numerous retail stocks will continue to report, however, none of
them fell under our stock picking criteria. 

On the high expectation side is Novell, coming in with a PI of 10.18. 
Not only is Novell already expected to beat by a penny, but the
option speculators are betting a major run in the short term. Novell
has lagged behind the market (and Microsoft) for many years, but
evidently there is a large following that believes they will crush 
numbers, and will also do so in the future. Large overhang remains at
30 on NOVL.Low expectation stocks include Applied Material, Autodesk,
Wind River, and Intuit. These stocks would be good candidates for a 
contrarian play. Intuit, obviously has been beaten up with its 
association as an Internet stock, but the company has been reporting 
stellar numbers for the last several quarters, so more upside
potential is there. The stock did pop for 5  on Friday, so an
oversold bounce may have already occurred. Autodesk and WindRiver
are lower expectation stocks, but also have a lesser following. If
either of these software companies hints of Y2k not hurting their
results as much as expected in the future, and you could see a 
potential rally. AMAT has a large following, and could make a big
run, but unfortunately, the company's whisper number is already a
nickel higher than expected, so they will have to have a phenomenal
conference call to make a big run.


Dell and HP can make some big waves. Unfortunately, both stocks have
sentiment that is not giving any extremely bullish or bearish 
sentiment. HP's whisper number is 2 cents higher, but has a medium PI
(Pinnacle Index). Dell's has a higher PI, but a whisper that is in-
line. Both stocks can make major moves either way, but we think both 
companies will report stellar numbers. Overhang on DELL is at 45, and 
115 for HP. These two numbers will be hard to break before the August
options expiration. Have a good trading week, Pinnacle Capital 
Advisors.

  
 


 


 




BULLISH Signs: 

Investor Intelligence:  
As a contrarian indicator, the percent of Bullish investors
decreased 2.2% and Bearish sentiment increased 1.5%.



Mixed Signs: 

Interest Rates:
The yield on the 30-yr Treasury is still above key 6% barrier,
but off the highs of 6.272%.



BEARISH Signs:

Pinnacle Index:
The Pinnacle Index for the OEX (715-745) is now reaching levels of
extreme optimism.  From a contrarian standpoint, resistance is
building in this area, and may indicate a short term top.

Russell 2000: 
Broke below both the 50 and 200 day moving averages, proving very
bearish.
  
Peak Open Interest:  
The contraian put-call ratio clocking in at 1.2 suggesting bullish
sentiment picking up steam.

Market Posture:
Several indexes have just rolled over, including the Dow, OEX, SPX,
networking, and software.

Market Posture 2:
Several indexes continue on their bearish decline, including drugs,
healthcare, brokerage, banking, airlines, Russell 2000, Insurance,
and Internet.

Advance/Decline Line:
The A/D line has been rolling over, and will continue to prove
Bearish if decliners continue to out-pace advancers in the weeks
ahead.




OTM Call Analysis

As we move through the August expiration cycle, Pinnacle is
tracking the level of call buying (OTM) between 690-780 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       +183.5%



August Expiration Cycle
OEX OTM Call Analysis (Open Interest August 690-780)
Date                 Open Interest     Change %    Alert

Friday, July 16           32,285        
Friday, July 23           62,455        +93.4%
Friday, July 30           74,895        +131.9%
Friday, Aug. 06          113,258        +250.8%
Friday, Aug. 13          117,620        +264.3%




Market Sentiment at a Glance     Friday  
Indicator                        (8/13)    Alert


Pinnacle Index (OEX):          

                    
Overhead Resistance (715-745)      8.0
Overhead Resistance (680-710)      2.3
Underlying Support  (630-670)      4.4
                    

Put/Call Ratios:

CBOE Total P/C Ratio                .7
CBOE Equity P/C Ratio               .5
OEX P/C Ratio                      1.2


Peak Open Interest (OEX):

Puts                              670
Calls                             700
P/C Ratio                          .9

Market Volatility Index (VIX):	

CBOE VIX                         22.38



Investors Intelligence:

Bullish                         50.00%  *
Bearish                         29.30%  *


The Power of Sentiment Analysis

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

 
Pinnacle Index
OEX                             Friday
Benchmark                        (8/13)

Overhead Resistance (715-745)    8.03
Overhead Resistance (680-710)    2.33

OEX Close                      688.82
 
Underlying Support  (630-670)    4.36
                     

 
Average ratings: 
Resistance levels 2.0 / Support Levels .5

What the Pinnacle Index is telling us:
Overhead sentiment resistance is building at the OEX 715/745 level 
while the underlying support is holding at the OEX 630/670 level.




Put/Call Ratio                  Friday
Strike/Contracts                (8/13)



CBOE Total P/C Ratio             .69
CBOE Equity P/C Ratio            .49
OEX P/C Ratio                   1.21


(OEX)
Peak Open Interest   Friday
Strike/Contracts     (8/13)


Puts                 670 / 13,875
Calls                700 / 15,403
Put/Call Ratio          .90


 


 



(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 16, 1999       Top                 18.13
August 05, 1999     Bottom?             32.12
  
August 13, 1999                         22.38




 


 




Investors Intelligence Survey
                    Major             Percent     Percent
Date                Turning Point     Bullish     Bearish


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

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

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

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

April 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
July 14, 1999                         55.2        26.7
July 21, 1999                         54.1        27.9
July 28, 1999                         53.6        24.6
Aug  04, 1999                         52.2        27.8
Aug  11, 1999                         50.0        29.3 *



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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 
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editor and staff of The Option Investor Newsletter may own, 
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The Option Investor Newsletter              8-15-99
Sunday                   2  of  6




OPTION CLUB UPDATE
******************

CLUBS ARE GOING WILD!!!  If you would like to join contact us at
Visit@OptionInvestor.com and Organize@OptionInvestor.com.

UPDATE FROM ST. LOUIS:
************************
We had a very successful third meeting this past Monday evening.
Our attendance continued to grow with 17 members in attendance.
For those who couldn't make it we look forward to you attending
the next meeting. As I previously noted, our next meeting will
be August 23 again at 7:00 pm in the same location. I will be
sending a reminder closer to the time. We will not be meeting
Labor Day which would be our regular date. We are meeting
every other Monday at 700 pm.

The first portion of our meeting featured Denny Fischer giving
a discussion about the seminar presented by Online Investors
Advantage and then giving a presentation about research assets
available through Wall Street City in conjunction with OIN.
Denny showed how chart features could be customized to identify
entry and exit points for stocks and their corresponding
options.

We then divided up into three randomly selected groups to work
our paper portfolios. The mission, in case you missed my last
memo, is to pick a $10,000 paper portfolio of options between
this meeting and the next and price them at the close of trading
the day of our next meeting. That would give everybody time to
discuss their choices and come up with a team portfolio. The
only guidance was to select options that expire no sooner than
October and no later than February so we can develop charts and
pick entry and exit points. At our next meeting each team will
present their portfolio and explain how and why they chose the
options they did.

Also for the next meeting I am looking for some more discussion
leaders to present on topics I previously identified or any of
their choice). Doing the research to make a presentation is a
great way to learn and that's what we are all about.

Remember, this is one activity that you will truly only reap
what you sow and the yield is in cash.

Best of luck.
Maris - ltcme108@prodigy.net



LAST WEEKS CHANGE FOR THIS WEEKS PICKS:
***************************************

Index        Last    Week
Dow       10973.65  259.62
Nasdaq     2637.81   89.84
$OEX        688.82   14.69
$SPX       1327.68   27.39
$RUT        434.05    6.01
$TRAN      3179.07  -23.84
$VIX         22.38   -4.98

Calls                Week

BVSN         93.50   21.50  New, vertical ride with new highs
NXLK         97.63   14.13  Selling overdone and unwarranted
VRSN         83.00   12.75  New, top-tier internet play
SNE         129.44    9.44  Poised to spring higher
MMCN         49.88    9.38  New, gaining over 23% this week
LXK          72.63    8.75  LXK added to the S&P 500!!
INTC         79.75    8.19  Continuing to set new highs.
TXN         150.31    7.81  Spliting on Monday, so look out
SLR          74.38    6.25  New, relentless positive momentum
VISX         95.50    5.75  New, looking to make a run
LSI          58.88    5.50  Gaining over 10% this week
NOK          85.75    4.06  New, making its move ready to break
SLB          65.25    1.94  Oil prices reach new 22-month high
DELL         41.44    1.63  Earnings announced on August 17
HGSI         60.13   -0.38  Is this the calm before the storm?

Puts

ATHM         37.00   -5.56  New, AT&T deal with AOL instead?
AHP          40.88   -4.00  New, lawsuits and more lawsuits
NITE         35.50   -1.13  Dropped, pushed by market pressure
TAN          43.81   -0.88  Has Tandy put in a bottom yet?
AMR          61.88   -0.06  Labor negotiations this week
U            32.75    0.31  USAir cannot hold altitude
TBH          74.38    0.38  Ready to move with the CPI
DH           59.75    1.38  Channeling, looking for a breakout
CMGI         81.50    4.50  Dropped, rebounding too much
AMZN         97.44    7.88  Dropped, bouncing with PPI report
MWD          91.69    9.56  Dropped, too hot to handle
BRCM        120.06   11.06  Dropped, no chance to even try
EBAY         98.00   14.75  Dropped, bouncing with Internets



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
ADV = Average Daily Volume
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:

BVSN - Broadvision, Inc.
MMCN - Mmc Networks, Inc.
NOK  - Nokia Corp.
SLR  - Solectron Corp.
VISX - VISX, Inc.
VRSN - Verisign, Inc.


PUTS: 

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

AHP  - American Home Products Corp.
ATHM - Excite@home




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:

No dropped calls today.


PUTS:

AMZN $97.44 (+7.88) The stock market's rally off recent lows 
has brought life to Internet plays like AMZN.  On Friday the 
PPI report came in better than expected showing no signs of 
inflation in the core rate.  That all the markets needed to 
hear and they were off and running.  As you all know by now, 
the Internet and other high-growth sectors have the most to 
gain from such announcements and therefore made some of the 
largest gains on Friday.  This was the fourth straight gain 
for the sector and traders are now looking back at Thursday, 
August 5 as being the short-term bottom.  We couldn't agree 
more and are dropping AMZN as a put play.  Amazon has the 
potential to rally back to the 200-dma near $120 and we not 
want to get caught in the way.

BRCM $120.06 +6.69 (+11.06) The market really gave us the 
Old one, two punch on this play.  We're not just down for the 
Count now, we're TKO'd.  It's time to drop BRCM.  The market
really never gave us a chance to enter this play.  The stall 
in recovery on the low's that initiated our play bounced and 
shot us straight through our resistance.  We're sitting just 
below the 50-dma but investors like the outlook of BRCM and 
are using this as an opportunity to get out.  If you did play 
this stock, your stops should have saved you.  It's better to 
take a small loss but survive to get back into the ring for 
the next bout with another play.

MWD $91.69 (+9.56) Unfortunately it wasn't just a head-
fake, MWD followed the positive market again on Friday and 
flourished under the glow of tame PPI numbers.  This is not 
to say MWD could once again reverse with the CPI data 
coming out on Tuesday and the FOMC in a couple of weeks. 
However considering the $8.38 in gains in the past 3 days, 
this not the optimum time to initiate a new position. 
Remember the technicals too.  MWD did bounce off the 200 
dma at $89 but in the wrong direction for a put play!  MWD 
did provide us with lots of profits since we picked it up 
on July 25th but now the current has changed direction.  
We must drop this play from our put list. 

EBAY $98.00 (+14.75) The Internets are like Timex watches 
- they take a licking and keep on ticking.  The sector 
recovery continued in full-force on Friday after the non-
threatening PPI numbers drove interest rate sensitive 
stocks upwards.  In EBAY's case, it tacked on another $6.63 
moving closer to the 200-dma at $118.  Since EBAY is a 
bellwether for the Internet sector, we obviously don't want 
keep it as a put play consideration in this changed market. 

NITE $35.50 (-1.13) The writing is on the wall.  NITE is 
moving upward in relief generated by the Internet recovery 
and the positive broad market pressure.  After dropping 
through long-time bottom support of $34-35 on Monday, the 
stock began to edge back towards the 200-dma at $34.  On 
Friday it popped over this mark signaling to us it's time to 
move on.  So even though NITE is still negative for the 
week, we're dropping it to make room for better plays.  

CMGI $81.50 (+4.50) What better to fuel an inflationary 
feared market than economic numbers that show some slowing 
in the economy.  The Labor Department reported that producer-
price index for finished goods rose 0.2% in July after easing
0.1% in June.  Economists were expecting the overall index to
rise 0.3%, which does not sound like that much of a difference
but enough to convince us to drop CMGI as a put play.  After
being on the down side for three weeks, the Labor Department's
release of good economic news was enough to ignite the stock
from stall mode into rally mode.  Despite the comeback, stop 
loss orders should have ended the play for most of you.



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

HWP  - Hewlett-Packard (not a current play)

 

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  

ADVS - Advent Software 3:2 08-16-99 ex-date 08-17
LGTO - Legato          2:1 08-16-99 ex-date 08-17
PMA  - PMI Group       3:2 08-16-99 ex-date 08-17
TXN  - Texas Instrument2:1 08-16-99 ex-date 08-17 (current play)
RFMD - RF Micro        2:1 08-19-99 ex-date 08-20
VRIO - Verio           2:1 08-20-99 ex-date 08-23
VERT - Vertical Net    2:1 08-20-99 ex-date 08-23
CLX  - Clorox          2:1 08-23-99 ex-date 08-24
NXLK - Nextlink Comm   2:1 08-27-99 ex-date 08-30 (current play)
AMZN - Amazon.com      2:1 09-01-99 ex-date 09-02 (current play)
TYC  - Tyco            2:1 10-21-99 ex-date 10-22


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 ! 


NXLK - Nextlink Communications $83.50 (-28.63)

Splits 2:1 on 08/27

See details in sector list

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

*****

TXN - Texas Instruments $142.50 (-1.50)(+2.00)

Splits 2:1 on 08/16

See details in sector list

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





THE PLAYS OF THE DAY 
********************
With all the great plays each week we can never decide
on just one so take your pick. 


Call play of the day:

INTC - Intel Corp $79.75 (+8.19)(+2.56) 
Sit back and ride the semiconductor wave.

See details in sector list

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

******

Call play of the day:

SNE - Sony Corp $129.44 (+9.44)(-5.19)(+8.19) 
The DVD craze has propelled Sony to a new 52-week high.

See details in sector list

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

******

Call play of the day:

TXN - Texas Instruments $150.31 (+7.81)(-1.50)
One last day to play TXN before it splits Monday after the close.

See details in sector list

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

******

Put play of the day:

U - USAir Group Inc. $32.75 (+0.31)(-3.19)(-2.56)(-2.00)(-4.81) 
Mayday! Mayday! Oil is rising and USAir is falling.

See details in sector list

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



CALLS
*****



Hardware
*********

DELL - Dell Computer $41.44 (+1.63)(-1.06)(-0.12)(P4W +4.06)

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.  For 1999, Dell 
expects total revenues of $26 bln.  For perspective, that 
greater than Microsoft's anticipated 1999 revenue.  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%.

Thanks to the better than expected PPI numbers released by 
the Labor Department Friday, Dell, like most of the NASDAQ 
components, finished the week on the upside.  The stock 
managed to regain most of its Thursdays losses brought on by 
comments made by a Merrill Lynch analyst.  In that statement 
he warned that the race between PC makers would hurt future 
company profits.  This was a one day setback however and we 
hope to see a small run by Dell before its after-the-bell 
earnings announcement on August 17.  Because we are writing 
Dell as an earnings run candidate, this will be the final 
update and we expect investors to end their play sometime 
before the announcement.  Keep in mind that on Tuesday more 
economic data is going to be released that could effect our 
play.  The CPI figures will be released so us caution and 
trade accordingly.   

BUY CALL SEP-40*DLQ-IH OI=16465 at $3.63 SL=1.75
BUY CALL SEP-45 DLQ-II OI=17797 at $1.50 SL=0.75
BUY CALL NOV-40 DLQ-KH OI=15021 at $5.63 SL=3.75
BUY CALL NOV-45 DLQ-KI OI=18074 at $3.25 SL=1.63

Picked on July 22 at   $39.63    PE = 67
Change since picked     +1.82    52 week low =$20.38
Analysts Ratings  12-9-12-0-0    52 week high=$55.00
Last earnings  05/99 est 0.16    actual 0.16 
Next earnings  08-17 est 0.17    versus 0.13
Average daily volume = 24.0 mln 
Chart = http://quote.yahoo.com/q?s=DELL&d=3m
   
*****

LXK - Lexmark International $72.63 (+5.88)(+8.75)

Ever wanted someone to see things your way?  Well LXK has
made a business of it!  By understanding customers needs and 
perceptions, they have become one of the leaders in providing 
printing solutions such as Laser, Ink Jet, Dot matrix, and 
all types of printers.  They develop, manufacture and supply 
their extremely high quality products to 150 countries. They 
have taken their revenues up to 3 billion in 1998.  LXK may 
just have success in their genes since they are a spin off 
of IBM and have retained innate values that contribute to 
their success.  Values that focus on everything from customer 
value, relations, service and response.  The company is
continually seeking to raise the level of their playing field 
by providing firsts in quality and standards for the home and 
business printing industry.  As an example, they were the one 
to introduce the first 1200x1200 dpi for laser and ink-jet 
printers.  As LXK keeps up on their high resolution standards, 
we'll all be seeing and reading a little clearer.

Kudos to those of you who got in on the LXK play.  Friday's
move caused the momentum trend of this stock to cross-over
to bullish.  Even though the volume was lower than Thursday's
session, it is still above average and should continue to
rise as more fund managers move into this stock for their
index funds after this week's announcement of LXK being added 
to the S&P 500.  One point of caution on LXK though.  When a 
stock breaks above it's top Bollinger band, it's wise to 
watch the movement the following day.  If the stock gaps down 
significantly, it is usually followed by a few days of profit 
taking.  It's mostly by those who got in Thursday at the low 
price who are taking profits.  If this happens, wait for a 
turn-around and use it as a buying opportunity! Our current 
support is $66 and we have a bullish stochastic and MACD 
breakout.  Yesterday the stock open up over a dollar from 
Thursday's close, probably more on the PPI news than anything. 
LXK saw a steady upward trend all day with a boost in the 
afternoon, sending it to a new short-term high.  The 52-week 
high is now less than $2 away.  Any pull-back, followed by 
upward momentum, is a cue to enter this play.  Remember the 
caution above and protect your profits if you got in on 
Thursday with stops.  

In the news, Kraemer of Morgan Stanley said that investors 
should be "an aggressive buyer now" of LXK and that he sees 
compelling valuation and an under-appreciated business model. 

BUY CALL SEP-65 LXK-IM OI=124 at $9.50 SL=7.50
BUY CALL SEP-70*LXK-IN OI= 98 at $6.25 SL=4.38
BUY CALL SEP-75 LXK-IO OI= 92 at $3.75 SL=2.50
BUY CALL OCT-70 LXK-JN OI=290 at $8.25 SL=6.50

Picked on Aug 12th at  $66.75   PE = 33
Change since picked     +5.88   52 week low =$25.38
Analysts Ratings    4-5-1-0-0   52 week high=$74.38
Last earnings 06/99 est  0.49   actual  0.55 
Next earnings 09/99 est  0.55   versus  0.41
Average daily volume = 935 K
Chart = http://quote.yahoo.com/q?s=LXK&d=3m



Software
********

SLR - Solectron $74.38 (+6.25)

Solectron is a provider of customized manufacturing services 
to OEM manufacturers.  Solectron's services encompass product 
design, systems assembly, software duplication and warehousing. 
Solectron's client base currently includes Hewlett-Packard, 
Cisco Systems and Mitsubishi.  For the first 3 quarters of 
1999's physical year, net sales rose 67% to $6.01 bln and net 
income expanded by 44% to $205.1 mln. These results reflect 
higher sales volume and the acquisitions of Ericsson, NCR and 
IBM's ECAT. 

SLR had tremendous positive momentum on Friday, along with the 
entire tech sector.  SLR gained $4.13 to close at $74.38 with 
1.26 mln shares changing hands.  This stock has shown relentless 
positive momentum over the last two weeks.  This is in-spite 
of the tremendous volatility we have seen due to interest rate 
uncertainty.  On Friday, SLR broke through resistance from its 
old 52-week high and ended the trading session at a new 52-week
high.  We expect the momentum to continue for SLR.  If we get 
good CPI numbers that propel market sentiment, SRL should 
continue to post new highs but use caution ahead of the report.  
Many stocks spiked higher on Friday, leaving us short of an 
entry point.  The trick will be, if the CPI is good and market 
sentiment remains bullish, finding good entry points.  We would 
like to see SLR pullback closer to the 10-dma at $68 before 
entering plays.

There is some recent news appearing over the wires on SLR.  
On Friday, SLR finalized an agreement that was first announced 
last April with Trimble Navigation Ltd.  This is an agreement 
to acquire a 55,000-sq-ft plant in Sunnyvale California.  As 
of Friday SLR will assume all manufacturing responsibilities 
for global positioning systems as well as radio-frequency 
products over the next three year.  Furthermore, it has be 
reported that most tech analyst's concur that the price for 
memory chips has bottomed out and stronger profit margins 
should follow into next year.  The recent price declines are 
attributed to an oversupply of memory chips and has strongly 
impacted the profit margins of manufacturers. 

BUY CALL SEP-70 SLR-IN OI=264 at $11.13 SL= 8.75
BUY CALL SEP-75 SLR-IO OI=209 at $ 4.50 SL= 2.75
BUY CALL OCT-65 SLR-JM OI=241 at $12.50 SL=10.00 
BUY CALL OCT-70 SLR-JN OI=133 at $ 9.00 SL= 6.75

Picked on Aug 24 at   $74.38     PE = 68  
Change since picked     0.00     52 week high=$ 74.75 
Analysts Ratings  6-11-5-0-0     52 week low =$ 19.41   
Last earning 06/99  est 0.29     actual 0.20    
Next earning 09-13  est 0.32     versus 0.23  
Average Daily Volume = 1.30 mln 
Chart = http://quote.yahoo.com/q?s=SLR&d=3m



Internet
********

BVSN - Broadvision, Inc. $93.50 (+21.50)

What happens when you develop great relationships? Chances
are you make friends and doing business with friends is
fun, secure, and long term.  This is the business of BVSN.
They provide Internet software applications that focus on
business relationships.  These application solutions address 
issues such as company business processes, secure online 
transactions, improving speed and performance and Internet 
communications.  These solutions are directed specifically 
to a companies customers, employees and partners.  Another 
key advantage of Broadvision applications is that they can 
integrate into a company's existing system.  These software 
applications are finding great success in the e-commerce 
and financial markets which have attracted over 275 customers 
such as American Airlines, Ernst & Young, Fingerhut, Hartford, 
HWP, Oracle, Toyota and Visa, among others.  With friends 
like these, you can see that Broadvision's strategies are 
working.  Revenues grew 83% last year to $18.5M and the 
company is now in the earnings black at $2.9M.  

Here's a bull that shot out of the gate since earnings on
July 23 and has almost been vertical since.  Investors are
hanging on for this ride!  The stock did not even exhibit 
a post earnings pull-back and has continued to set new highs.  
What really impresses us with BVSN is the fact that through 
all the market correction when most Internet issues were 50% 
to 70% off their highs, this Internet stock did not ever break 
below it's 50-dma.  The strong management team has turned 
things around and they are now even in positive earnings 
territory.  The momentum and timing as of late has been very 
good and the recent gains have been confirmed on above average 
volume.  BVSN has shown signs of staying power as it broke 
above the top Bollinger band but has continued up the following 
two days, another bullish sign for BVSN.  Keep in mind with 
all this bullish news, that the last four days have been very 
strong and cycles tell us that we need to use caution and 
watch for a pull back.  The current support sits at $80 from 
the 10-dma.  Confirm direction and use the recent volatility 
to your advantage.

It's not the news of late that is moving this company since 
there hasn't been much.  There have been a few articles 
listing BVSN as a buy rating in investment opinions.  In 
fact the last 5 analyst moves have been upgrades to a buy 
rating.  

BUY CALL SEP-85 QVB-IQ*OI=249 at $13.38 SL=10.50
BUY CALL SEP-90 QVB-IR OI=  0 at $1O.50 SL= 8.13 Fri vol=22
BUY CALL SEP-95 QVB-IS OI=223 at $ 8.38 SL= 6.33

Picked on Aug 15th at  $93.50   PE = 241
Change since picked     +0.00   52 week low =$ 9.25
Analysts Ratings   8-10-1-0-0   52 week high=$97.50
Last earnings 06/99  est 0.11   actual  0.12 
Next earnings 10-22  est 0.13   versus  0.07
Average daily volume = 549 K 
Chart = http://quote.yahoo.com/q?s=BVSN&d=3m



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




The Option Investor Newsletter          8-15-99
Sunday             Part 3 of 6


CALLS CONTINUED
***************


Internet
********

VRSN - VeriSign Inc $83.00 (+12.75)

VeriSign provides Internet-based trust services that will
authenticate and protect data so secure transactions and 
communications can be conducted over the Internet, intranet 
and extranets.  Websites, enterprises, government agencies 
and even individuals use VeriSign's digital ID's (digital 
certificates) with the encrypted information as cyber-
safeguards for such activities as e-mail, home banking and 
credit card transactions.  Visa represents 14% of total sales.

VRSN is a pure momentum play as day traders first pumped 
up the volume on August 5th and VRSN advanced $11.19!  Some 
institutional buying has also contributed to VeriSign's 
recent comeback.  However according to Stephen Sigmond, 
analyst for Dain Rauscher Wessels, a "top-tier Internet play 
like Verisign which is dominant in its market and on the 
verge of profitability, is the type of company that does 
the best when there's a rebound from a correction" and also 
added that VRSN is known for snapping back the hardest from 
a correction.  In this spirit the stock made $17.55 in gains, 
a breathtaking 27% since Tuesday!  These advances are certainly 
impressive, but it's also intimidating because just as quickly 
as this Internet can recover, so can it make corrections.  
Technically near-term support and the 10-dma indicator are 
both in the range of $70 and have been far surpassed. This 
is a VOLATILE INTERNET STOCK and after such gains you should 
expect some consolidation. We would prefer to get a pullback 
before entering new plays but if the momentum continues, use 
an intraday pullback to jump in. 

On Monday, VeriSign announced a partnership agreement with 
CoSine Communications, a leading provider of managed IP 
service delivery platforms.  Together they will rapidly bring 
Network based VPN services to clients who don't want to build 
and manage their own PKI infrastructure, which is essential 
to having a Virtual Private Network.  At the end of July, 
BBRS reiterated a "buy" rating for VRSN prompted by record 
2Q results and Dain Rauscher Wessels upgraded the stock to 
a "strong buy aggressive".

BUY CALL SEP-80 YVR-IP OI=455 at $11.50 SL= 9.25
BUY CALL SEP-85*YVR-IQ OI=225 at $ 9.13 SL= 6.75
BUY CALL SEP-90 YVR-IR OI=144 at $ 7.13 SL= 5.50
BUY CALL DEC-85 YVR-LQ OI= 45 at $18.13 SL=14.25
BUY CALL DEC-90 YVR-LR OI=325 at $16.38 SL=12.75

Picked on Aug 15th at  $83.00   PE = N/A
Change since picked     +0.00   52 week high=$96.75
Analysts Ratings    5-6-3-0-0   52 week low =$ 9.69
Last earnings 06/99 est= -.02   actual=  .00 
Next earnings 10-22 est=  .02   versus= -.09
Average daily volume = 1.15 mln.
Chart = http://quote.yahoo.com/q?s=VRSN&d=3m



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

INTC - Intel Corp $79.75 (+8.19)(+2.56)

Its best customers are Compaq, Dell, and IBM.  Intel is the
world's #1 chip maker.  The powerful Pentium and low-end Celeron
are Intel's claim to fame.  These microprocessors have provided
the brains for IBM-compatibles since 1981.  Recently INTC has 
began a major push into communications products such as servers
and networking devices.  Their microcontrollers and flash 
memories are used in products for communications, industrial
equipment, and military markets. 

Intel got an added shot in the arm this week.  The tech stocks
got a boost after the "Beige Book" report from the Federal
Reserve showed no signs of that nasty old "I" word.  The report
seemed to ease investor's worries that the Fed will raise 
interest rates at their upcoming meeting on August 24th or at 
least no raise again after that.  Also lending a hand to the 
strength of the sector wide move was Cisco Systems. They 
reported earnings showing surprisingly strong fourth-quarter
profits.  Comments from Paine Webber suggesting a strong second
half of the year for PC sales also added fuel to the fire for 
Intel.  INTC jumped $4.25 on Wednesday after the news, making
a new high at $76.25.  Volume was extremely strong on the 
advance at 40.4 mln shares.  Thursday and Friday it was back 
to business as usual for Intel as it forged ahead making a new 
high at $79.81 in the last 15 minutes of trading Friday which 
should be a positive sign going into next week.   Volume did 
decline late in the week averaging just under 24 mln shares, 
not a negative but worth noting.  We would like to have seen 
the volume remain solidly higher with the price extending as 
it did.  What's in store for next week?  Monday could be quiet 
with investors awaiting the release of the CPI numbers Tuesday 
morning.  Most analysts are looking for the numbers to be in 
line with the PPI, confirming the lack of inflationary pressures.  
If it plays out that way, we would expect INTC to continue to 
make its way higher.  We would be cautious about entering a new 
play in INTC until after the CPI numbers come out Tuesday. 
Move your stops up and have patience.

In other news Paine Webber also raised its price target for 
Intel from $80 to $95.  Citing the acceptance of the high end 
Pentium III processor and the belief that INTC may beat the 
third quarter estimates and come in near $0.58 per share. 

BUY CALL SEP-75*INQ-IO OI=13538 at $7.13 SL=$5.50
BUY CALL SEP-80 INQ-IP OI= 7935 at $4.00 SL=$2.75
BUY CALL SEP-85 INQ-IQ OI= 1170 at $1.88 SL=$0.75
BUY CALL OCT-75 INQ-JO OI=11663 at $8.50 SL=$6.50
BUY CALL OCT-80 INQ-JP OI=15690 at $5.75 SL=$4.50

Picked on July 31st at $69.00   PE = 38
Change since picked    +10.75   52 week high=$79.81 
Analysts' ratings 18-13-7-0-0   52 week low =$34.88
Last earnings  6/99  est 0.54   actual 0.51 surprise=-5.56%
Next earnings 10-13  est 0.56   versus 0.44 
Average daily volume = 22.1 mln
Chart = http://quote.yahoo.com/q?s=INTC&d=3m

*****

LSI - LSI Logic Corp $58.88 (+5.50)(+3.00)

LSI Logic Corporation designs, manufactures, and markets 
semi-conductor products specifically integrated circuits, 
and also storage systems solutions.  Logic's central design 
process is CoreWare.  This program enables a client to 
build a complete customized system on a single chip 
combining microprocessor, logic, and memory functions. 
They have global operations in Canada, Hong Kong, the UK, 
and the US.  Primary customers are equipment manufacturers 
in computers, networking, telecommunications, consumer 
products, and storage systems.  Sony Corp accounts for 12% 
of their sales.

Specialized chip-maker LSI gained over 10% this week on 
strong trading volume.  Except for the squeeze on Thursday 
when Merrill Lynch comments pummeled the PC sector and the 
chips ultimately fell in sympathy but the losses wouldn't 
last.  For instance, take a look at the mother of all chip 
makers, Intel (a current play), and you can see its strong 
recovery too.  LSI hit new 52-week highs four out of five 
days this week!  The latest record was set during the last 
hour of trading on Friday.  The stock spiked up and crested 
at $58.88, bullishly finishing smack on the daily high!  
This week support was established right around $54, which 
is just above the 10-dma of $51.  Now if the hefty advances 
continue into next week's market, keep these points of 
reference in mind when planning your strategy.  If the stock 
begins to consolidate, you'll want to see it stay above 
these levels and then bounce again before initiating a new 
position.

In the news on Tuesday, Banc of America Securities started 
coverage for LSI with a "strong buy" rating.  There was no 
other company specific news to affect trading.

BUY CALL SEP-50 LSI-IJ OI=1698 at $10.25 SL=7.75
BUY CALL SEP-55*LSI-IK OI=1110 at $ 6.25 SL=4.50
BUY CALL SEP-60 LSI-IL OI=  74 at $ 3.88 SL=2.50 Low OI
BUY CALL OCT-55 LSI-JK OI= 577 at $ 7.88 SL=6.25
BUY CALL OCT-60 LSI-JL OI= 722 at $ 5.25 SL=3.50

Picked on Aug 8th at   $53.38    PE = N/A
Change since picked     +5.50    52 week high=$58.88
Analysts Ratings   10-5-3-0-0    52 week low =$10.50
Last earnings 07/99  est= N/A    actual= .21 
Next earnings 10-21  est= .29    versus= .14
Average daily volume = 1.79 mln.
Chart = http://quote.yahoo.com/q?s=LSI&d=3m 

*****

TXN - Texas Instruments $150.31 (+7.81)(-1.50)

TXN sold its defense electronics and memory chip units almost 
2 years ago to focus their digital signal processor business. 
TXN is the world's largest supplier of DSP's, commanding over 
45% of the segment.  You will find them in over half the world's 
cell phones, modems, cars and camcorders to name a few items.  
In addition, they manufacture microcontrollers, microprocessors 
and analog and logic chips.  Only one third of its business is 
in the U.S. 75% of its revenues is derived from semiconductor 
sales.  

TXN splits Monday after the close so our play is quickly coming 
To an end.  Shares of Texas Instruments bounced off its 50-dma 
at $137.63 on Tuesday and began our anticipated split run.  
TXN opened $2.75 higher Wednesday morning and didn't look back.  
We had positive economic data released Wednesday which gave 
renewed strength to the semiconductor industry.  The industry 
stalled somewhat after Wednesday due to some negative analyst 
comments from Merrill Lynch, however TXN continued its march 
to higher ground.  Technically TXN looks very strong as the 
MACD and Stochastics have both turned positive now that we are
past the recent decline.  However with the stock splitting 
after the close of business on Monday we can't recommend holding 
on to TXN into Tuesday's trade.  We can only suggest you pay 
close attention to the action on Monday and exit the play prior
to Monday's close.  IF we don't get a post split depression 
and the semiconductor industry remains strong following the 
release of the CPI numbers Tuesday, we will keep our eye on 
TXN for new opportunities.  Again plan to exit the play some 
time on Monday.

There is no other news at this time.

BUY CALL SEP-145*TXN-IW OI= 431 at $11.50 SL=8.75
BUY CALL SEP-150 TXN-IV OI= 602 at $ 8.75 SL=6.75
BUY CALL SEP-155 TXN-IX OI= 164 at $ 6.88 SL=5.25
BUY CALL OCT-150 TXN-JV OI=1586 at $12.50 SL=9.75
BUY CALL OCT-155 TXN-JX OI=4767 at $10.38 SL=8.00

Picked on Aug 5th at  $139.63   PE = 67
Change since picked    +10.69   52 week high =$155.68
Analysts Ratings   13-9-6-1-0   52 week low  =$ 45.38
Last earnings 07/99  est 0.86   actual 0.92 surprise = 6.9%
Next earnings 10-20  est 0.85   versus 0.41
Average daily volume = 2.51 mln. 
Chart = http://quote.yahoo.com/q?s=TXN&d=3m  


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

MMCN - MMC Networks $49.88 (+9.38)

MMCN is in the computer peripherals sector.  The company 
develops and supplies network processors.  These high-
performance, software-programmable processors form the core 
silicon engines of LAN and WAN switches and routers.  The 
PS1000 for Fast Ethernet networks, or the ATMS2000 for 
asynchronous transfer mode networks and the AnyFlow 5000 
modular processors for network flexibility are some of the 
company's products.  Although most of MMCN's sales come from 
within the US, the company also operates in Asia, Europe, 
the Middle East and North America.

Investors added MMCN to their lists of stocks to buy this
week.  With the release of positive economic data and the 
wall of worry concerning interest rates crumbling somewhat, 
MMCN gained over 23% this week.  Since releasing earnings in 
the middle of July, MMCN had lost ground and since has been 
consolidating in the $38 to 42 area.  Wednesday that all 
changed with the release of the "Beige Book" from the Federal 
Reserve and the release of strong fourth quarter results from 
their top customer CISCO Systems.  Since Wednesday MMCN has 
gained $10.94, closing at its high of the day Friday at $49.88.  
MMCN is closing in on its 52-week high of $51.50 and is being 
supported by strong volume.  Volume the past three days has 
averaged over 1.10 mln shares or more the double its normal 
days business.  The CPI is due out Tuesday morning and is 
expected to reflect the same as PPI with little or no inflation,  
giving us little need to worry about interest rates at least 
for the immediate future.  We expect MMCN to continue it's 
move higher given the strength of the recent move.  Monday 
may be quiet with perhaps a small amount of profit taking.  
On Tuesday if the economic data remains positive we are looking 
for MMCN to continue its recent ascent on its old high.  Do 
make sure you check the action in the broader markets and the 
CPI numbers before initiating a new play in MMCN.  As always,
assess your risk profile and set your stops accordingly.

Earlier this week MMCN received an upgrade from AG Edwards
to a buy rating and was reiterated a buy from analyst Alvin
Kressler at Kaufman Brothers.  Both companies raised their
price target to $60 per share.  MMCN also announced they had 
formed a partnership with Lara Technology to develop highly 
coupled search engine and network processor solutions.

BUY CALL SEP-40 CMQ-IH OI=30 at $10.63 SL=$8.25
BUY CALL SEP-45 CMQ-II OI=37 at $ 7.00 SL=$5.50
BUY CALL SEP-50*CMQ-IJ OI= 9 at $ 4.50 SL=$3.25
BUY CALL OCT-50 CMQ-JJ OI=12 at $ 5.88 SL=$4.50
BUY CALL OCT-55 CMQ-JK OI= 3 at $ 4.25 SL=$3.00

Picked on Aug 14th at $49.88   PE = 125
Change since picked     0.00   52 week high=$51.50 
Analysts Ratings   4-7-1-0-0   52 week low =$ 7.75
Last earnings  6/99 est 0.11   actual 0.12 surprise=+9.09%
Next earnings 10-15 est 0.13   versus 0.09 
Average daily volume   = 471 K 
Chart = http://quote.yahoo.com/q?s=MMCN&d=3m

*****

NOK - Nokia Corporation $85.75 (+4.06)

Nokia is a supplier of telecommunications systems & equipment. 
Its core businesses include the development, manufacture & 
delivery of operator-driven infrastructure solutions and end-
user-driven mobile phones.  Having caught the Web wave, Nokia 
also offers phones with Internet access using wireless 
application protocol.

What a comeback! And the question is will it continue?  With 
the help of lower than expected PPI numbers, the tech-heavy 
NASDAQ Composite Index surged 85.67 to 2635.16 on Friday, its 
fourth-largest point gain ever.  In connection with the surge 
in the Nasdaq, our new play, NOK couldn't help but join in on 
the festivities.  Turning around from its low for the month 
on August 4 at $78.75, the stock has climbed its way back to 
its 50-dma.  We expect the stock to breakthrough its 50-dma 
and continue its climb toward $95, its next resistance level.  
This rally is based on the fact that many sidelined investors 
finally found a reason to get back into the market with Friday's 
rally and many are headed back into telecoms like Nokia.  Keep 
in mind there is more important economic information that will 
be released on Tuesday when CPI numbers will be announced.  
Because of these unknowns and a volatile market, use caution 
during this play and make your trades accordingly.  We would 
not recommend any new plays until NOK breaks firmly above the 
50-dma at $86.50.

There was some good news about NOK was on August 12.  For the 
second year in a row, the editors of Industry Week magazine 
have named Nokia one of Industry Week's 100 Best Managed 
Companies worldwide.  Winning companies were evaluated for 
growth in profit-margin, sales-turnover, revenues, inventory-
turnover, profits, profit margin, leverage, return on assets, 
return on equity, total revenues, earnings per share and net 
income. 

BUY CALL SEP-80*NAY-IP OI= 149 at $8.88 SL=6.50
BUY CALL SEP-85 NAY-IQ OI= 577 at $5.63 SL=3.75
BUY CALL SEP-90 NAY-IR OI= 356 at $3.50 SL=1.75
BUY CALL OCT-85 NAY-JQ OI=2309 at $7.38 SL=5.50

Picked on August 14 at $85.75    PE = N/A
Change since picked      0.00    52 week low =$29.53
Analysts Ratings   10-6-1-0-0    52 week high=$99.38
Last earnings  06/99 est 0.49    actual N/A 
Next earnings  10-21 est 0.50    versus 0.49
Average Daily Volume = 2.8 mln
Chart = http://quote.yahoo.com/q?s=NOK&d=3m
 
*****

NXLK - Nextlink Communications $97.63 (+14.13)(-28.63)

Nextlink communications provides local facilities-based
telecommunication services with a focus on delivering switched
services to commercial customers.  They compete with some big
names such as US West, Bell Atlantic, and SBC Communications.
Providing services in 38 major U.S. markets, NXLK offers access
services to long-distance carriers and automated call centers.
They build fiber-optic rings in cities to provide local and 
long-distance phone service mainly to smaller businesses.

How high can it bounce?  Shares of Nextlink stock rebounded 
$14.13 this week from the free fall of the previous week of 
$28.63.  For you technical types that's a retracement of about 
50%.  After making a mid-week low of $77.00, buyers decided
that the little guys may have a chance after all.  As one 
analyst remarked, the recent sell-off of NXLK stock seemed 
to be overdone and completely unwarranted.  Analyst Micheal 
Renegar of Banc of America Securities said "Investors had a 
Sell-first-and-figure-out-the-news-later mentality."  The 
release Friday of the positive economic data concerning
inflation and interest rates seemed to be just what the doctor
ordered for NXLK.  Nextlink jumped over $20 per share from 
its Wednesday low to a high of $97.94, closing near the high
at $97.63 on Friday.  Volume was a little better than normal,
averaging about 665K per day Thursday and Friday.  This leads
us to believe that at this point the recovery is bounce and
not yet a and not a change of trend.  As long as inflation 
and interest rate scenario remain in check NXLK could continue 
its upward movement.  Many of the smaller local phone exchanges 
are very capital intensive and need huge amounts of financing, 
which is why interest rates can have such a large influence on 
the price of their stock.  It's hard enough for them to compete 
against the "big boys", and higher interest rates make it that 
much harder.  For the week ahead, it's a mixed bag.  We are 
awaiting the release of the ex-date for the 2:1 split which 
looks like it should be around August 27th, which gives credence
to a split run and a continuation of higher prices.  Although 
technically, the recent bounce may be a bit overdone and we 
could see NXLK pullback to the $90-92 area.  However, Tuesday 
brings us the release of the latest CPI numbers which should 
confirm the lack of inflation or the need to raise interest 
rates.  If that's the case NXLK could continue its assault 
back to higher ground.  If we do get a pullback, WAIT for a 
bounce with good volume before considering a new play. If 
you are in a current play, move you stops up to protect your 
profits, and wait for the numbers.

There is no other news at this time.

BUY CALL SEP- 95 QNF-IS OI= 53 at $10.25 SL=$8.00
BUY CALL SEP-100*QNF-IT OI=190 at $ 7.88 SL=$6.00
BUY CALL SEP-105 QNF-IA OI= 20 at $ 6.13 SL=$4.75
BUY CALL OCT-100 QNF-JT OI= 64 at $11.13 SL=$8.75

Picked on Aug 7th at   $83.50   PE = N/A
Change since picked    +14.13   52 week high=$115.38 
Analysts' ratings   8-2-3-0-0   52 week low =$ 10.56
Last earnings   6/99 est-2.41   actual -2.24 surprise=+7.05%
Next earnings  10-22 est-2.61   versus -1.57 
Average daily volume =  598 K
Chart = http://quote.yahoo.com/q?s=NXLK&d=3m



Drugs/Biotechnology
*******************

HGSI - Human Genome Sciences, Inc. $60.13 (+0.12)(-0.37)

If you think there are a lot of Jeans on the market (Levis,
Guess CK etc.), wait until you see what HGSI is discovering. 
The company started in 1992 and has a passion for discovering
Genes; only, Human genes.  Since their inception they have 
Been first in the discovery of many of our genes, over 6,300.  
The great thing is that they then use this knowledge and 
apply it to form gene and protein based medications and 
treatments.  This is exciting technology and tends to bring 
us full circle!  HGSI just may be the ones to show us that 
the answers to our medical problems actually do lie within 
us.  The company already has three of their products 
undergoing human clinical trial.  These products hope to 
aid in vascular regeneration, treatment of breast and ovarian 
cancers, tissue repair and more.  This appears to be a very 
promising company, that will be able to provide natural 
solutions to humanity.

Is this the calm before the storm or a fishing trip we're
on?  In either case, it appears patience and waiting are the
keywords.  There hasn't been anything to move HGSI this last
week.  That being the case, our trade momentum on the stock 
remains above average but is deteriorating every day we 
experience these lulls.  This is somewhat characteristic as 
shown on a daily chart.  We see periods of range bound trading, 
followed by brief and significant rallies.  It's during these 
light periods that we still notice increased daily activity 
during amateur hour in the morning and during the last hour.  
For the time being, our resistance level is looking to be 
around $61 with support at $58.  Watch your August positions 
closely!  As we sit here waiting for a move, our options are 
like ice in the water, slowly melting away to nothing.  So 
protect yourself and keep your stops set tight, especially 
if you have any August positions.

We want news!  We want news!  After reviewing the sources, 
there is not much to be found that hasn't already been 
reported.  As mentioned earlier, news is what will move us 
either up or down on this stock.  Again, it's only a matter 
of time until some more positive gene news comes so hang in 
there.

BUY CALL SEP-55*HQI-IK OI=41 at $8.13 SL=5.88
BUY CALL SEP-60 HQI-IL OI=56 at $5.00 SL=3.75
BUY CALL OCT-55 HQI-JK OI=17 at $9.50 SL=7.25
BUY CALL OCT-60 HQI-JI OI=32 at $6.75 SL=5.25

Picked on Aug 8th at   $39.63    PE = N/A
Change since picked     -0.38    52 week low =$22.75
Analysts Ratings    1-3-2-0-0    52 week high=$64.25
Last earnings 05/99 est -0.20    actual -0.10 
Next earnings 09/99 est -0.30    versus -0.09
Average daily volume = 356.1K 
Chart = http://quote.yahoo.com/q?s=HGSI&d=3m

*****

VISX - Visx Inc $95.50 (+5.69)(-11.00)

Visx is engaged in the design, marketing, and sales of its 
Star S2 excimer laser correction unit.  This was the first 
FDA approved laser eye surgery machine that is used to 
correct near-sightedness, astigmatism, and far-sightedness.  
Surgeons who correct other defects and diseases of the cornea 
in an outpatient procedure also use this machine.

VISX is coming off a strong week and it has caught the 
attention of our researchers as a viable call play.  The 
stock was up strong on moderate volume on Friday.  VISX 
ended the trading session right at its daily high of $95.50, 
which is considered a bullish sign.  VISX seems to have 
positioned itself for a strong rebound and after losing some 
momentum the last two weeks. The reason for the drop was more 
than just the broad market decline.  There were rumors that 
the price of the laser machine may be dropping to increase 
sales.  The initial reaction by investors was not good but 
after a review of the numbers by the analysts, it appears 
that more sales could actually increase profits.  There are 
no present signs of slowing its positive momentum and SG Cowen 
has upgraded the stock to a strong buy.  Expect a health surge 
in the stock if economic data next week promotes the bullish 
market sentiment. 

BancBoston Robertson Stephens (BBRS) senior medical analyst 
Wade H. King restates his buy rating for VISX.  Mr. King feels 
there is no comparable growth and investment opportunity today 
in the medical device industry.  Furthermore, BBRS is advising 
investors that any deflation in the price of VISX should be 
viewed as a buying opportunity and should be acted upon swiftly.

BUY CALL SEP-90  VFS-IR OI=1167  at $10.00 SL=7.50
BUY CALL SEP-95 *VFS-IS OI=1086  at $ 7.50 SL=5.75
BUY CALL SEP-100 VFS-IT OI= 501  at $ 5.25 SL=3.50
BUY CALL SEP-105 VFS-IA OI= 431  at $ 3.75 SL=2.50
 
Picked on Aug 13 at  $95.50        PE = 81  
Change since picked    0.00        52 week high=$103.88   
Analysts Ratings  6-3-2-0-0        52 week low =$ 10.50 
Last earning 07/99 est 0.32        actual 0.15 
Next earning 10-14 est 0.33        versus 0.16   
Average Daily Volume = 1.85 mln 
Chart = http://quote.yahoo.com/q?s=VISX&d=3m
 


Oil Services
************

SLB - Schlumberger Limited $65.25 (+1.94)

Schlumberger is one of the world's largest and most diversified 
oil services firms, operating in more than 100 countries.  
Its Oilfield Services unit provides practically everything 
needed for finding oil, including interpreting seismic data,
drilling rigs and services, wireline logging, constructing 
wells and project management. Its Measurement & Systems unit, 
which makes smart cards and other measurement and transaction 
systems, is a world leader in gas, water, and electric meter 
manufacturing.

As oil prices continue to rise so does the potential for our 
current play on SLB.  Oil prices ended a busy week with a 
climb to a 22-month peak Friday at $21.67 a barrel, extending 
a six-month rally fueled by shrinking crude and gasoline 
supplies in the U.S.  Despite this great news, when the Labor
Department released the lower than expected figures for the 
PPI on the same day, many investors decided to leave this 
safe haven and jump into the beaten tech sector.  Even though 
the tech sector had their day, with the price of oil reaching 
new highs and inflationary uncertainty within the market, we 
feel Schlumberger's stock price has room to grow, hopefully 
surpassing its high of $68.50 it set on August 12.  Please 
use caution on the play because the Labor Department will 
release the CPI numbers on Tuesday and, like on Friday, it 
could effect our play.

There was no new news reported on SLB for Friday but just to 
reiterate Wednesday's news, Bear Stearns initiated coverage 
on SLB at a buy rating. 

BUY CALL SEP-65*SLB-IM OI= 824 at $3.50 SL=1.75
BUY CALL SEP-70 SLB-IN OI=2915 at $1.44 SL=0.75
BUY CALL NOV-65 SLB-KM OI=3922 at $6.00 SL=4.25
BUY CALL NOV-70 SLB-KN OI=8683 at $3.75 SL=1.75

Picked on Aug 10th at  $66.38    PE = 76
Change since picked     +1.13    52 week low =$40.06
Analysts Ratings    7-9-8-1-0    52 week high=$68.50
Last earnings  07/99 est 0.25    actual 0.63 
Next earnings  10-22 est 0.26    versus 0.13
Average daily volume = 3.2 mln
Chart = http://quote.yahoo.com/q?s=SLB&d=3m


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




The Option Investor Newsletter             8-15-99
Sunday                4  of  6


CALLS CONTINUED
***************


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

SNE - Sony Corp $129.44 (+9.44)(-5.19)(+8.19)

Sony is a consumer electronics and multimedia entertainment 
company.  It sells products like TVs, VCRs, MiniDisc systems, 
stereos, digital camcorders, DVD video players, and the 
Playstation home video game system.  It is also in the process 
of strengthening its position in the music and image-based 
software markets.  Some of Sony's entertainment assets include 
Columbia TriStar Motion Picture, Columbia TriStar Television, 
Sony Pictures Studio, and Columbia and Epic record labels.  
Other high-tech products include flat-screen TVs, digital 
TVs, CD-ROMs, and digital cellular telephones.  

Last week we said Sony was poised to spring higher and it 
did not despite us.  It was one of the few stocks that was 
moving up since Monday and therefore was in a great position 
when the market started to move on Wednesday.  We had lots 
of positive news to help fuel the stock as well, starting 
with an upgrade from Merrill Lynch.  They raised their price 
target for SNE due to cost-cutting efforts and restructuring 
that will help the company's bottom line.  There was also a 
report on Thursday that Sony will work with Nippon Zeon to 
develop plastic disks for computer hard drives which helped 
drive the stock but the good news doesn't end there.  Friday 
morning Sony had a press release stating they would start 
selling music on the Internet in Japan.  The new site would 
feature music from Japan's top producers and singers.  So 
what do you get if you combine all this news together?  A 
new 52-week high!  It broke above the old high of $126.88 
on Friday and closed at $129.44, just under the day-high.  
These are all bullish signs but it will be interesting Monday 
to see if the market can hold its gains.  Don't commit to 
any new plays if the market seems jittery.

We mentioned all the pertinent news above but wanted to expand 
on the plastic hard drive news.  The press release states that 
the cost of making plastic disks with a storage capacity of 
five gigabytes would be 30 to 40 percent lower than other 
conventional aluminum disks.  SNE is in talks with Castlewood 
Systems Inc, among others, on commercialization of hard disk 
drives using plastic based disks.  Leave it to Sony to find 
a better and cheaper way to improve electronic products.

BUY CALL SEP-125*SNE-IE OI= 58 at $ 9.13 SL=6.75
BUY CALL SEP-130 SNE-IF OI= 22 at $ 6.13 SL=4.25
BUY CALL OCT-125 SNE-JE OI= 74 at $11.38 SL=9.00
BUY CALL OCT-130 SNE-JF OI=325 at $ 8.63 SL=6.50

Picked on July 2nd at $125.19     P/E = 30
Change since picked     +4.25     52-week high=$129.50
Analysts Ratings    0-0-0-0-0     52-week low =$60.25
Last earnings 07/29 est=  N/A     actual= N/A
Next earnings 10/99 est=  N/A     versus= N/A
Average Daily Volume = 190 K
Chart = http://quote.yahoo.com/q?s=SNE&d=3m
 



PUTS, PUTS, PUTS
*****************
Put plays can be very profitable but have a larger risk than
call plays. When a stock is falling the entire investment
community (except the shorts) is hoping it will reverse and
start back up. The company management is also doing everything
they can to shore up their stock price. The company issues
press releases, brokers talk it up, analysts try to put a
positive spin on everything. Then of course there is the death
knell, the "buy recommendation" simply because the price has
dropped to some level that analysts feel attractive again. 
Buyers who like the stock wait until it appears a bottom has
been reached and then jump on it in a feeding frenzy. They may
already have a large position and are averaging down. Many
factors can stop a free falling stock in mid drop.



Recommended Puts 
****************

AMR - AMR Corporation $61.88 (-0.06)(-2.94)

American is the #2 airline in the United States behind UAL's 
United Airlines.  AMR is a leader in air transportation, in 
the development and application of information technology for 
aviation, and travel and tourism.  American serves about 180 
destinations in the Americas and Europe with hubs in Chicago, 
Dallas/Fort Worth, Miami, and San Juan, Puerto Rico.  They 
offer a wide range of other aviation-related activities, 
including management services, training and consulting.  AMR 
also provides commuter service through American Eagle and owns 
Reno Air, which operates primarily in the western US.  

AMR has a busy week and month ahead as they continue to try 
and iron out problems with their pilots.  They will go back 
to bargaining table again this week to try to settle the issue 
of pay for Reno Air pilots.  Reno Air is the company they have 
agreed to buy in a transaction listed to settle at the end 
of the month but a deal needs to be struck first.  The problem 
is AMR pilots get paid double that of Reno Air so management 
is left to try and incorporate a new salary plan to make both 
sides happy.  This event should take center stage this week 
and we will be watching for headlines that affect our play.  
The other main event is the continual rise in oil prices.  
It closed the week just under $22 a barrel or double what it 
was just seven months ago.  This is the catalyst that caused 
AMR to drop through the 200-dma a week ago.  The stock has 
rebounded and is trying to claw its way back above this key 
support line but the light volume is signifying that investor 
interest is just not there.  So watch for confirmation that 
the stock does roll over after hitting the 200-dma and consider 
this a possible entry point.  Also don't forget your stops in 
case there is a surprise announcement concerning labor talks.  

BUY PUT SEP-65*AMR-UM OI= 94 at $4.88 SL=3.25
BUY PUT SEP-60 AMR-UL OI=214 at $2.44 SL=1.25

Average Daily Volume = 940 K
Chart = http://quote.yahoo.com/q?s=AMR&d=3m

****

DH - Dayton Hudson Corp $59.75 (+1.38)(-6.31)

Dayton Hudson is a general merchandise retailer.  
Presently, they operate 851 Target's, 268 Mervyns, and 63 
other department store locations throughout the US.  DH 
also has a catalog unit, Dayton Hudson's Rivertown Trading 
and an apparel supply unit, Associated Merchandising. 
However, Target is the force behind the corporation and 
accounts for over 75% of total sales.

Overall, the prospect of another interest rate increase at 
the FOMC meeting on August 24th coupled with the potential 
of rising consumer prices put a damper on the retail sector 
this past week.  However, the lower-than-expected PPI data 
presented a bullish sentiment on Friday and the broad 
markets rallied strong.  Let's take a look at the stock's 
position from a technical standpoint.  The 200-dma at $60 
has established itself as overhead resistance and bottom 
support has formed around $58.  For the most, part DH has 
been channeling in this range since a week ago Thursday.   
Using this information, it'd be best to see the stock drive 
through $58 before beginning a new play.  Plus consider two 
important events that occur this Tuesday.  First, Dayton 
Hudson will report earnings which are expected to be strong 
so look out for a spike upwards.  Second is the CPI numbers 
which will show if inflationary costs are being passed to 
the consumer.  Remember the PPI data was lower-than-expected 
altogether, yet the housing sector indexes rose and this is 
an underlying concern.  A conservative player will likely 
wait and see how the hand plays out before opening any new 
positions.

BUY PUT SEP-60*DH-UL OI= 37 at $3.38 SL=1.75
BUY PUT SEP-55 DH-UK OI=115 at $1.38 SL=0.75

Average Daily Volume = 1.54 mln
Chart = http://quote.yahoo.com/q?s=DH&D=3m
 
****

TAN - Tandy Corp. $43.81 (-0.88)(-6.63)

They are one of the leading electronic retailers in the U.S.,
with over 7,000 company-owned or franchised RadioShack stores.
They compete with the likes of Best Buy, Circuit City and 
CompUSA.  Tandy stores sell electronic parts, audio and visual
equipment, cell and conventional phones, computers and a vast 
array of batteries and antennas.  They have added the concept 
of a "store-within-a-store" by bringing in products like Compaq
computers, Sprint phone products, and RCA electronics.  In 
an attempt to keep the black in their bottom line, Tandy has 
sold their unprofitable electronic chains, Incredible Universe, 
McDuff and Computer City chains. 

Has Tandy put in a bottom yet?  We don't think so.  The recent 
bounce after Tuesday's low of $37.38, we believe, is just that
a bounce.  Tandy has dropped over 34% since its high of $56.75 
made on July 13th.  It is not unreasonable to expect a bounce 
back to resistance from its recent low.  Since being picked 
TAN has given us the opportunity to make a small profit but a 
profit none the less.  We are now waiting for our next chance.  
The overall trend though is still down.  Currently Tandy's 
stock is in a 'What have you done for me lately mode.'  The 
answer is nothing!  Sales are still soft.  They are trying 
to recoup from the losses connected to the sale of their 
Computer City chain.  They do have potential on the horizon 
which may bring the electronic retailers back in favor with 
analysts and investors.  Their merger with Amerilink Corp 
took effect July 30th.  Amerilink is a leading provider of 
installation and cabling services.  This move will enhance 
Tandy's opportunities in the home-connectivity arena, however 
that is in the future.  Currently we are patiently waiting for 
TAN to make its next move south.  TAN did move up to its 10-dma 
at its high Friday of $44.81.  The next area of resistance is 
in the$46-$47 area.  Look for TAN to meet resistance and resume
its downward movement.  Consider a new play in TAN if this move 
is accompanied by better than average volume.

Be careful, option open interest is very low!

BUY PUT SEP-40 TAN-UH OI=45 at $1.19 SL=$0.50
BUY PUT SEP-45*TAN-UI OI=13 at $3.50 SL=$2.25

Average daily volume = 1.04 mln
Chart = http://quote.yahoo.com/q?s=TAN&d=3m

****

TBH - Telebras $74.38 (+0.38)(-2.38)

Telebras is a holding company for the telecommunications 
sector in Brazil.  In essence, it is the AT&T of Brazil. 
However, as a foreign Corporation, TBH trades in American 
Depositary Receipts (ADR).  An ADR is a share of ownership 
of a foreign-based company held in a vault of a U.S Bank 
that  entitles shareholders to all dividends and capital 
gain.  In September 1998, the company spun off its 
telecommunications business into 12 new holding companies. 
ADR's represent ownership in all 12 companies.  

TBH was up $1.63 on Friday to close out the week at $74.38.  
Volume today was slightly below average with 1.46 mln shares 
changing hands.  There was limited news released on TBH today 
but it is a safe assumption to project negative momentum by 
traders in anticipation of Tuesday's release of the CPI.  TBH 
has still not penetrated its ten day moving average and will 
not likely do so on Monday.  If CPI data on Tuesday comes in 
below expectations, it would be prudent to use caution on TBH.  
In fact, your stops should be set tight to take you out of 
the play on any rally over $75.  However, if the CPI does show 
signs of undermining the bullish momentum that the markets 
experienced on Friday, we should be in good shape.  TBH has 
still performed poorly relative to the market and is showing 
signs of further weakness.

BUY PUT*SEP-75 TBH-UO OI=1493 at $4.50 SL=2.75
BUY PUT SEP-80 TBH-UP OI=1607 at $7.63 SL=6.25

Average Daily Volume = 1.77 mln
Chart = http://quote.yahoo.com/q?s=TBH&d=3m

****

U - USAir Group Inc. $32.75 (+0.31)(-3.19)(-2.56)(-2.00)(-4.81)

As one of the top 10 airlines in the U.S., US Airways Group 
is the holding company for US Airways, Inc., Shuttle, Inc., 
Allegheny Airlines, Inc., Piedmont Airlines, Inc., and PSA 
Airlines, Inc.  As a certified air carrier, they are engaged 
primarily in the business of transporting passengers, mail, 
and property.  USAir is still trying to emerge from a rough 
decade which has included low-fare competition, labor disputes, 
and early retirement by more than 300 pilots.  Currently one 
of their more popular routes comes from Shuttle, Inc. which 
operates the US Airways Shuttle between New York and 
Washington. 

For the first time in six weeks U has ended the week higher, 
although not by much.  The stock dipped down to $30.63 by mid 
week before rebounding with the market to end up fractionally.  
For some it may have triggered your stops to exit the play 
but we are not ready to concede any future plays on U.  The 
reasoning is simple.  USAir rallied with the markets based 
on the benign inflation and improving overall sentiment.  
In reality it was more likely to continue dropping based on 
oil prices which closed near $21.84 on Friday.  That is the 
high close for the week, month, year, etc.  This has to be 
unsettling to the airlines which will have higher fuel costs.  
We also get the sense that the Dow Transport rally late in 
the week was more of a technical bounce from the drop it 
took at the start of the week.  So look for an entry point 
on USAir as it heads down from the 10-dma at $33.  The stock 
has failed to hold above that mark in over a month.  Keep 
your eye on the price of oil as well since it will dictate 
the direction of the airline sector.  

BUY PUT SEP-35 U-UG OI=245 at $4.25 SL=2.50
BUY PUT SEP-30*U-UF OI=499 at $1.50 SL=0.75

Average Daily Volume = 859 K
Chart = http://quote.yahoo.com/q?s=U&d=3m



******************************
PUTS CONTINUED IN SECTION FIVE
******************************
SEE DISCLAIMER IN SECTION ONE
******************************

The Option Investor Newsletter             8-15-99
Sunday                5  of  6


NEW PUTS
********

AHP - American Home Products $40.88 (-4.00)

AHP is engaged in the discovery, development, manufacture, 
distribution and sale of a diversified line of products in 
3 business segments: Pharmaceuticals, Consumer Health Care 
and Agricultural products.  Among AHP's products is an estrogen 
replacement drug Premarin and such familiar consumer products 
as Advil, Robitussin, and Preparation H.   AHP also owns a 
majority stake in biotech firm Immunex Corp.

American Home Products has seen better times, even last weeks 
rally in the market was not enough to help this wounded stock.  
These wounds derived from recent lawsuits against the company 
involving Pondimin and Redux, dietary supplements used to help 
individuals loose weight.  Several people that have used of 
these drugs claimed it caused heart valve damage, and are now 
seeking restitution.  About 20 of the cases have been settled 
out of court already, however, about 4000 lawsuits have been 
filed against the company.  With such bad news, can you blame 
the stock for being as depressed as it is?  Since its high in 
April at $70.25, AHP has continued a downward trend ending 
Friday near its 52-week low of $40.50.  The stock continues to 
fall further below its 50 and 200-dma, which is not a good sign.  
We expect this downward trend to continue as the lawsuits 
persist, however, do use caution on this play because the stock 
has taken such a beating.  Look for an entry point once the 
stock has fallen below the $40 range.     

BUY PUT SEP-40 AHP-UH OI= 246 at $1.75 SL=1.00
BUY PUT SEP-45*AHP-UI OI=1032 at $4.75 SL=2.75

Average Daily Volume = 6.20 mln
Chart = http://quote.yahoo.com/q?s=AHP&d=3m
 
****
  
ATHM - Excite@home $37.00 (-5.56)

ATHM was formed with the combination of two Internet power 
houses, Excite and AtHome.  They merged in the Spring of 1999.  
The combined entity uses cable TV systems to provide high-
speed Internet access to consumers and businesses and operates 
the Excite Internet portal.  The Company's primary offering, 
the @Home service, allows residential subscribers to connect 
their personal computers via cable modems to the Company's 
new high-speed Internet.  They market their services to over 
500,000 customers and has 15 million visitors to the Excite 
site monthly.  The portal features search services, online 
shopping, and content on topics such as careers and travel not 
to mention e-mail, voice mail and fax messages. 

The rally was no relief to AtHome as rumors circulate that 
AT&T is talking about allowing AOL to have greater access to 
AT&T's networks.  This would diminish the role ATHM would play 
for AT&T.  The news broke on Monday in a New York Times article 
that cited "executives close to the companies."  Speculation 
has swirled for months that AT&T might be shopping around but 
this is the first news that an alliance is in the works.  AT&T 
reiterated its commitment to ExciteAtHome Corp. and denied 
that it was in talks for a deal with Internet leader America 
Online.  AT&T Corp.'s race to wire America with fast Internet 
service over cable lines is quickly turning into the Web's 
most complicated business deal.  AT&T is spending $120 billion 
to buy cable TV lines, in large part to offer speedy Web hook-
ups to customers all over America.  Needless to say this is 
far from over.  We are adding ATHM as a put play due to its 
poor relative performance this week.  The stock should retest 
the lows set earlier in the week at $33.  Watch for an entry 
point and expect more volatility.

BUY PUT AHQ-UH*SEP-40 OI=2477 at $6.00 SL=4.25
BUY PUT AHQ-UG SEP-35 OI= 640 at $3.13 SL=1.50

Average Daily Volume = 7.57 mln
Chart = http://quote.yahoo.com/q?s=ATHM&d=3m



COMBOS      
******

Markets Rally On Tame PPI Report..


U.S. stocks staged a broad based recovery Friday on the news that
a key inflation gauge rose only modestly in July. While experts
on the street anticipate the Federal Reserve will raise interest
rates at its August 24 meeting, investors were cautiously subdued
after the announcement with new expectations of nothing more than
a small future increase. The Dow ended 184 points higher at 10,973
and for the week, it was up 260 points. The Nasdaq index jumped 85
points to close at 2,635. In the broader market, advancing issues
beat decliners by a 2-1 margin on moderate volume of 694 million
shares on the NYSE. The benchmark 30-year Treasury bond rose more
than a point and its yield, which moves in the opposite direction
to the price, fell to 6.09%.

This week's new plays (positions/opening prices/strategy):

Nielsen Media  (NMR) SEP25C/SEP30C   $3.12  debit  bull-call
J.P. Morgan    (JPM) SEP140P/130P    $8.00  debit  bear-put
Intl. Paper    (IP)  OCT55C/AUG55C   $1.75  debit  calendar
Dupont         (DD)  LJAN80C/AUG80C  $0.00  debit  LEAPS/CC's

Dupont (DD) was the only unavailable position in Tuesday's new
plays. The stock price opened down $1.75 and the premiums for
the AUG-$80 call options quickly evaporated.

Portfolio plays:

Some good news finally arrived Friday as the Producer Price Index
came in below expectations and softened investor's fears that the
recent climb in crude prices would push the key inflation measure
higher. Despite the tame overall and core price readings, experts
remained convinced the Fed will boost interest rates at its next
meeting to head-off future inflation. The real issue is whether
or not the Federal Reserve will follow up on any August increase
with another move at its subsequent meeting in October.

Regardless of future interest rate moves, today was nice change
of pace from the recent trend. With a renewed investor interest,
many of our slumping long-term positions moved back into their
previous trading ranges and a few of the previously closed (to
limit losses) plays are now profitable. Here is a brief synopsis
of the spreads/combos portfolio by category:

Calendar spreads:

The week-ending rally moved many of our horizontal positions back
to the sold strike prices (the area of maximum profit). The best
performing plays in this group are Baker Hughes (BHI), 3Com Corp
(COMS), Cisco (CSCO), IMC Global (IGL), International Paper (IP),
Newmont Gold (NEM) and Unocal (UCL). Our star performer in this
portfolio was Macromedia (MACR), which gapped up $3.31 to finish
at $35. There were also a few bearish positions that we closed
earlier in the week to lock-in profits (or limit losses). Those
plays included HealthSouth (HRC), Intimate Brands (IBI), Ralston
Purina (RAL) and Apria Healthcare (AHG); which made a nice rally
on Thursday to let us exit with a small consolation bonus. The
diagonal spread on AtHome (ATHM) was moved forward into September
with a $1.00 credit against the overall cost basis.

Credit Spreads:

Costco (COST) was a big mover during the week, climbing to a high
near $77 on Thursday, and allowing us to close the position at a
debit of $1.12. They rest of the credit positions are comfortably
OTM and we expect them to finish profitably.

Debit Spreads:

Many of the August debit plays were closed previously but today's
rally did provide us the opportunity to roll the Cyberian Outpost
(COOL) position into September with a $10 covered-combo. The new
cost basis is $8.50. One position that we are watching closely is
the J.P. Morgan (JPM) bear-put spread. The stock price moved up
to the $130 range on the positive (PPI) economic report.

Neutral Positions:

We managed to trade out of the bearish position on British Telecom
(BTY) for a small loss ($2.00) during the week but today the stock
gapped up $5 to finish just below $160. With our luck, it will now
move back into the previous range near $170 (Murphy's Law). Robert
Half (RHI) and Gaylord Entertainment (GET) were also closed early
to limit losses with the time-to-expiration approaching one month.
Our debit butterfly on Torchmark (TMK) is trading at a 100% profit
and the probability of a higher return at expiration next Friday
is excellent.

Long-Term Plays and LEAPS/Covered-Calls:

Most analysts are convinced that today's rally was simply a short
term technical bounce and with a rate increase expected next week,
we decided to roll forward some of our bullish time spreads into
September. The best performers in this group were Solectron (SLR),
Sun Microsystems (SUNW), Johnson & Johnson (JNJ), Medtronics (MDT)
and General Motors (GM). A complete list of the current positions
will be published after the monthly expiration next Friday.

Good Luck!
******************************************************************
                            - NEW PLAYS -

This week, the spreads/combos editor is attending the "Money Show"
in Seattle, Washington. There will be no "New Plays" until next
week but this is an excellent opportunity to publish another
educational narrative on spread and combination trading.
******************************************************************

Today we will begin a discussion on the techniques of stock index
spreaders and the mechanics of intra-market arbitrage. Before we
begin, it is important to understand that the spreader's trading
philosophy differs from the hedger's because the spreader never
assumes a position in the underlying instrument; rather he tries
to combine a long contract with an offsetting short contract to
achieve profits on market price differences.

First, About Indexes..

Stock indexes are portfolios which are composed of many different
company's shares. Different indexes have different values because
of the composite shares' performance and the way they are weighted
in the index. The S&P 500 Index for example, is a value weighted
combination of 500 different companies, representing approximately
80% of the value of all the shares traded on the New York Stock
Exchange. Each company's weight in the index is determined by its
relative market importance and their values are then computed by
multiplying each company's number of outstanding shares of common
stock by the share's current cash market price. These values then
are summed and compared to a 1941-1943 base period to determine
the final cash value. The cash market values of the S&P 500 Index
represent the interaction between a market-wide rate of return
and the average growth rate in earnings (and dividends) and will
accurately reflect the overall market supply and demand factors.

And Now The Futures..

In addition to acting as general market indicators, indexes have
been widely adopted as underlying instruments for futures. The
underlying interest may be anything from grain to gold and silver
or Treasury bonds. In the case of a futures contract, the seller
agrees to provide an underlying commodity (or instrument) at a
specified price and time while the buyer of the futures contract
agrees to buy the product on the same terms. Historically, the
need for futures grew out of America's agricultural economy of
the early 1900's. Farmers would agree to sell their crops, when
harvested, at some specific future date, at a profitable price.
Speculators would purchase these contracts with the expectation
of reselling the crops at even higher prices, thereby making a
profit for themselves. In addition to market speculators, food
processors and wholesale manufactures would purchase futures to
guarantee the cost of raw materials for future production.

In time, the futures contract has become a trading vehicle of
its own and it is now offered on a host of underlying interests,
including stock indexes. The problem with index futures is the
actual delivery of the underlying instrument in the event the
seller decides to "exercise" the contract. In reality, only a
small percentage of futures are exercised, so physical delivery
is not likely. Nevertheless, when a contract is exercised, the
seller's duty is to deliver the commodity; wheat, orange juice,
or pork bellies etc.. to the buyer. In the case of an index
future, cash is the actual method of payment.

The most common index futures traders in the market today are
institutions (insurance companies, banks, and brokerage firms)
that need to protect large positions in stocks and mutual funds.
The portfolios for these types of investors generally include
positions in many different instruments. By diversifying their
stock holdings, they hedge the risk of loss if one issue drops
in value. The gains on other components in the portfolio are
used to offset such a loss. The problem with this practice is
the lack of protection for a market-wide or across-the-board
loss, in which the majority of the securities in a portfolio
are affected by a major downturn. This is where index futures
are most useful. Institutions purchase futures contracts on
the indexes whose composition resembles the mix of stocks in
their portfolio. The futures contract provides the necessary
downside protection without exposing the stock portfolio to
excessive risk and is used as a hedge against the loss of
inventory value. In addition to the institutional "insurance"
buyers, speculators and other position traders will attempt to
profit by taking outright long or short positions in futures
contracts. This type of activity helps maintain a mechanism of
risk transfer mechanism for investments in farming, industrial
goods, and other financial instruments.

Next week, we will discuss the mechanics of index arbitrage,
otherwise known as the "cash and carry".

Good Luck!

Questions & comments on spreads/combos to ray@OptionInvestor.com



STRADDLES
*********

MARKET CONSOLIDATION REVIEW FOR THIS WEEK - Well a new week is
dawning, and as parents start to shout hurrah as they put their
kids on the school bus for another year.  Sectors that are
consolidating include energy stocks as well as the airline stocks.
The cheapest options to buy right now are in the food sector as
well as the the metals and mining stocks.  Take a look at these
stocks that are consolidating.  They also offer cheap option
premium straddle buyers.  Stocks for the following week are as
follows:



 


Whirlpool (WHR)
Last Price 69 7/8, IV range 31.63 - 57.08, Current 36.12

Were back! Whirlpool had another week of market consolidation.
Remember that it may take 2-3 weeks for a stock that is in
consolidation mode will attempt to break the boundaries of its
wedge formation.  Option volatility has not risen at all, and
this still looks like a good stock that has straddle potential.
No real news coming out for now, but with Maytag getting chopped
up, this stock should react soon.



 


Exxon - (XON)
Last Price 81 9/16, IV range 22.55 - 38.55, current 22.55

Now here's a beauty... This stock has it all.  Nice consolidation
for the last several months.  Also, the last 6 months range has
been from 62 to nearly 90 per share.  Look at the options implied
volatility folks.  Its on the lows of the year.  Now it CAN go
lower, but for how long.  For XON to really move, it would mean a
new high or a nice pullback of Oil prices.  That could be a
possibility in the near-term.  



 


Winn Dixie Stores (WIN)
Last Price 38 9/16,  IV range 59.09 - 33.23, Current 33.23

Winn Dixie operates food stores across the southern part of the US.
Food stores in general, have some straddle criteria in that most
have the cheap options premiums needed for a really cheap, low
risk straddle.  This one sure does.  Look at the lows in implied
volatility.  We are scraping the bucket here.  The recent drop the
downside suggests a 50% profit from current straddle prices.  Also,
there is market consolidation when you look at the recent chart on
WIN.



 


Minnesota Mining and Manufacturing (MMM)
Last Price 97 11/16,  IV range 43.66 - 25.11, Current 25.11

Anyone that has "Post-It" notes in their workspace knows what
made 3M a popular company. MMM also markets electrical and
telecommunication products, medical devices, office supplies and
major automotive parts. Merrill lynch just issued a buy on MMM
and the stock, although consolidating, is at new highs.  Either
this stock is going to gain momentum and carry through, or it
will pull back.  Once again, as straddle traders, we don't care
as long as it moves.  



 


Gannett Corp (GCI)
Last Price 69 15/16,  IV range 23.90-32.10,  Current IV 27.00

Heres a company that not everyone knows. GCI publishes newspapers,
operates broadcasting stations and cable television systems, and
is engaged in marketing, commercial printing, a newswire service
and data services. They currently have a 15 point trading range,
which is nearly triple that of the 60 day options.  They also have
a dividend announcement soon.  The options are very cheap, and this
stock has been on our consolidation screen for a few days now.


It's time to say goodbye to everyone that we met in Seattle.  Thanks
for all the comments you had on the straddle section.  I will
continue to answer questions in the Straddle Mailbag section, that
will be published in Tuesday's and Thursday's updates.  It's also
time to say goodbye to DELL straddles, as the earnings report is
due soon. As far as all straddles and any long option trades for
that matter are concerned, they may have different names, but exit
them the same.  Pick a profit point to get out at, use a time stop
that is 30 days to the expiration date of the options as a stop out
for either a profit or loss, and like I have said before, buy before
the rumor, and sell before the news...

Tom Gentile


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



The Option Investor Newsletter            8-15-99
Sunday                6  of  6


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

Technical Analysis Basics...

Relative Strength Indicator (RSI)

The RSI is a momentum indicator which measures a stocks price
with relation to its past performance. It is front weighted thus
it reflects a better velocity reading than other indicators and
is less affected by sharp rises or drops in the stock's price.
The best characteristic of this indicator is that it filters out
some of the noise in a stock's trading activity.

RSI's absolute levels are 0 and 100. Traditionally, buy signals
are indicated at 20 to 30, and sell signals are triggered at 70
to 80 but these numbers will vary somewhat depending on the
number of days used in the calculation. A shorter span of time
will result in a more volatile indicator with extreme values
while a longer period results in a less volatile reading with
fewer extreme indications.

Some analysts use the RSI indicator to compare multiple equities
against each other but that is not an infallible system. Some
stocks may retreat when their RSI indicator reaches one number
while others react at slightly different levels. However, these 
levels are still relatively close to each other and the majority 
change direction near 30 and 70.

RSI is a momentum indicator that can indicate changes ahead of
price movements because the RSI treats price as a rubber band. 
The rubber band can be stretched to a certain point, and unless
it breaks, the rubber band will contract. RSI also works well 
with trendlines, support and resistance lines, and divergence.

One of the best characteristics of the RSI is the indication
that is given when there is a divergence between price action and
the RSI. When you observe an upwardly sloping price and downward
sloping RSI, this generally indicates that price is about to move
lower. The reverse is true for downward sloping price and upward
sloping RSI. Learn more about technical indicators like RSI in 
"Technical Analysis from A to Z" by Steven B. Achelis.

Good Luck!


SUMMARY OF PREVIOUS PICKS
*****

Stock  Price  Last    Mon  Strike  Opt    Profit  ROI   Monthly
Sym    Picked Price        Price   Bid    /Loss         ROI

CYLK    5.06   5.63   Aug   5.00  0.56  *$  0.50 11.1%  16.1%
FRTE   11.63  13.63   Aug  10.00  2.75  *$  1.12 12.6%   7.8%
SQNT   17.50  17.38   Aug  15.00  3.88  *$  1.38 10.1%   7.3%
FUSE    5.69   6.50   Aug   5.00  1.00  *$  0.31  6.6%   7.2%
LIPO   20.88  24.81   Aug  20.00  2.38  *$  1.50  8.1%   5.9%
FRTE   13.69  13.63   Aug  12.50  1.81  *$  0.62  5.2%   5.7%
WSTL    8.97   7.69   Aug   7.50  2.00  *$  0.53  7.6%   5.5%
CS     14.81  13.75   Aug  12.50  3.00  *$  0.69  5.8%   5.1%
IRF    13.19  16.00   Aug  12.50  1.63  *$  0.94  8.1%   5.0%
NEWZ    8.13   7.38   Aug   7.50  1.06   $  0.31  4.4%   4.8%
LIPO   22.00  24.81   Aug  20.00  2.75  *$  0.75  3.9%   4.2%
NPIX   19.13  18.00   Aug  15.00  4.75  *$  0.62  4.3%   3.7%
BNBN   19.25  16.88   Aug  17.50  3.13   $  0.76  4.7%   3.4%
CIEN   37.13  34.00   Aug  35.00  4.38   $  1.25  3.8%   3.3%
AVL    16.75  14.44   Aug  15.00  2.19   $ -0.12 -0.8%   0.0%
NOVT   22.75  19.00   Aug  20.00  3.50   $ -0.25 -1.3%   0.0%
NFLD   13.25  11.75   Aug  12.50  1.25   $ -0.25 -2.1%   0.0%
MESG   19.75  13.44   Aug  15.00  5.88   $ -0.43 -3.1%   0.0%
IDTC   22.50  15.88   Aug  17.50  5.88   $ -0.74 -4.5%   0.0%
NTPA   27.19  20.44   Aug  22.50  5.63   $ -1.12 -5.2%   0.0%
GLFD   16.44  13.63   Aug  15.00  2.06   $ -0.75 -5.2%   0.0%
CATP   18.13  15.56   Aug  17.50  1.69   $ -0.88 -5.4%   0.0%
COOL   12.63   8.88   Aug  10.00  3.13   $ -0.62 -6.5%   0.0%
ANET   15.56  11.13   Aug  12.50  3.50   $ -0.93 -7.7%   0.0%
SYNM    9.44   8.25   Aug  10.00  0.50   $ -0.69 -7.7%   0.0%

WSTL    7.75   7.69   Sep   7.50  1.25  *$  1.00 15.4%  11.1%
MXTR    5.03   5.03   Sep   5.00  0.63  *$  0.60 13.6%   9.9%
IDTI   14.69  17.50   Sep  15.00  1.31  *$  1.62 12.1%   8.8%
TIE    11.19  10.81   Sep  10.00  2.13  *$  0.94 10.4%   7.5%
TMAR    7.63   8.13   Sep   7.50  0.81  *$  0.68 10.0%   7.2%
PR     19.25  20.25   Sep  20.00  0.94  *$  1.69  9.2%   6.7%
PENN    9.88   9.94   Sep  10.00  0.75   $  0.81  8.9%   6.4%
SBGI   20.31  20.50   Sep  20.00  1.69  *$  1.38  7.4%   5.4%
PESC   23.88  26.94   Sep  22.50  2.69  *$  1.31  6.2%   4.5%
USAI   45.94  47.00   Sep  45.00  3.50  *$  2.56  6.0%   4.4%
NETA   17.56  16.56   Sep  15.00  3.50  *$  0.94  6.7%   4.2%
RNBO   13.88  11.88   Sep  12.50  2.19   $  0.19  1.6%   1.0%

You may consider closing on further weakness:

NOVT - A good rally could rescue the position.
NFLD - Sept 12.50C = $0.75...
MESG - (The 15.00 strike), a rally may help.
NTPA - New uptrend is promising, Sept 22.50c = $2.06.
GLFD - If it fails to hold above $13.00.
ANET - Market rally not helping...time to cut losses?
SYNM - Long term play to sell OTM calls reducing cost basis.
CATP, COOL and IDTC - The market rally should help.

Previously closed: 

RRRR, MESG (17.50), PAMC, SNRS, ATVI*, CCCG, UBET, ARM, DGN*
* Murphy's Law - now positive.


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

OCLR   18.50  Aug 17.50  QLO HW  1.50  291   17.00   2.9%   2.9%

IMNR    5.63  Sep  5.00  IMQ IA  1.00  0      4.63   8.0%   8.0%
IRF    16.00  Sep 15.00  IRF IC  1.81  427   14.19   5.7%   5.7%
MAK    13.69  Sep 12.50  MAK IV  1.81  10    11.88   5.2%   5.2%
MRVC   14.50  Sep 12.50  VQX IV  2.63  45    11.88   5.3%   5.3%
NTAI   14.88  Sep 15.00  QNA IC  1.00  130   13.88   8.1%   7.2%
OLS     9.94  Sep 10.00  OLS IB  1.00  539    8.94  11.9%  11.2%
PXD    12.69  Sep 12.50  PXD IV  1.13  95    11.56   8.2%   8.2%


Sequenced by Return Called
*****

Stock  Price  Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym               Price  Symbol  Bid   Intr  Basis

OCLR   18.50  Aug 17.50  QLO HW  1.50  291   17.00   2.9%   2.9%

OLS     9.94  Sep 10.00  OLS IB  1.00  539    8.94  11.9%  11.2%
PXD    12.69  Sep 12.50  PXD IV  1.13  95    11.56   8.2%   8.2%
NTAI   14.88  Sep 15.00  QNA IC  1.00  130   13.88   8.1%   7.2%
IMNR    5.63  Sep  5.00  IMQ IA  1.00  0      4.63   8.0%   8.0%
IRF    16.00  Sep 15.00  IRF IC  1.81  427   14.19   5.7%   5.7%
MRVC   14.50  Sep 12.50  VQX IV  2.63  45    11.88   5.3%   5.3%
MAK    13.69  Sep 12.50  MAK IV  1.81  10    11.88   5.2%   5.2%


Sequenced by Return Not Called
*****

Stock  Price  Mon Strike Option  Opt   Open  Cost    RC      RNC
Sym               Price  Symbol  Bid   Intr  Basis

OCLR   18.50  Aug 17.50  QLO HW  1.50  291   17.00   2.9%   2.9%

OLS     9.94  Sep 10.00  OLS IB  1.00  539    8.94  11.9%  11.2%
PXD    12.69  Sep 12.50  PXD IV  1.13  95    11.56   8.2%   8.2%
IMNR    5.63  Sep  5.00  IMQ IA  1.00  0      4.63   8.0%   8.0%
NTAI   14.88  Sep 15.00  QNA IC  1.00  130   13.88   8.1%   7.2%
IRF    16.00  Sep 15.00  IRF IC  1.81  427   14.19   5.7%   5.7%
MRVC   14.50  Sep 12.50  VQX IV  2.63  45    11.88   5.3%   5.3%
MAK    13.69  Sep 12.50  MAK IV  1.81  10    11.88   5.2%   5.2%


Company Descriptions
*****

OCLR - Ocular Sciences, Inc.  $18.50 *** 1 Week Play ***

OCLR is engaged in the design, manufacture and distribution of 
contact lenses and conducts business under the name of Ocular
Sciences/American Hydrox. Ocular recently introduced a lens
marketed for daily disposal in Japan and Europe, and is 
evaluating the introduction of such a lens in the U.S. With 
recent option volume unusually high (call buyers) and no news, 
this one-week play offers a favorable entry point. Next month's
options could further reduce the cost basis.

Aug 17.50 QLO HW Bid=1.50 OI=291 CB=17.00 RC=2.9% RNC=2.9%

Chart = http://quote.yahoo.com/q?s=oclr&d=3m
*****
IMNR - Immune Response Corp.  $5.63 *** Stage I Base ***

IMNR is a biopharmaceutical company developing immune-based 
therapies to induce specific T cell response for the treatment
of HIV, autoimmune diseases, gene therapy and cancer. IMNR took
a hit in May after stopping a patient study of Remune AIDS 
Therapy. The 2Q loss widened as IMNR restructured and reduced
its work force. IMNR plans on concentrating on developing HIV
and arthritis drugs, which are in late-stage development.

Sep 5.00 IMQ IA Bid=1.00 OI=0 CB=4.63 RC=8.0% RNC=8.0%

Chart = http://quote.yahoo.com/q?s=imnr&d=3m
*****
IRF - International Rectifier  $16.00 *** Hot Sector ***

IRF designs, manufactures and markets power semiconductors, 
including control integrated circuits, diodes, rectifiers, and 
power MOSFETS which are used for power conversion. IRF reported
increasing income and revenues (4Q) before non-recurring charges
and promptly had coverage upgraded/initiated to a BUY. The chart
remains bullish as IRF has closed above resistance at $14 which
completed a double bottom formation.

Sep 15.00 IRF IC Bid=1.81 OI=427 CB=14.19 RC=5.7% RNC=5.7%

Chart = http://quote.yahoo.com/q?s=irf&d=3m
*****
MAK - Group Maintenance America  $13.69 *** Break Out? ***

Group Maintenance America is a nationwide provider of mechanical 
and electrical services, including heating, ventilation and air 
conditioning, plumbing and electrical services, to residential 
and commercial customers. MAK, citing strong same-store revenue 
growth and continued momentum of acquisition activity, reported 
that second quarter revenue increased 140%. MAK's tape is now
improving and we like the cost basis below the July low.

Sep 12.50 MAK IV Bid=1.81 OI=10 CB=11.88 RC=5.2% RNC=5.2%

Chart = http://quote.yahoo.com/q?s=mak&d=3m
*****
MRVC - MRV Communications, Inc.  $14.50  *** Hot Sector ***

MRV designs, manufactures and sells computer networking products,
primarily Ethernet local area network switches, hubs and related 
equipment, and fiber optic components for voice, video and data 
transmission. MRV returned to profitability on increasing revenues
during the second quarter. Technicals remain bullish and the cost
basis is just above the 150 dma.

Sep 12.50 VQX IV Bid=2.63 OI=45 CB=11.88 RC=5.3% RNC=5.3%

Chart = http://quote.yahoo.com/q?s=mrvc&d=3m
*****
NTAI - Nam Tai Electronics, Inc.  $14.88  *** China ***

Nam Tai based in China, is a full service contract manufacturer. 
NTAI provides hardware and software design, plastic molding, 
component purchasing, assembly into finished products or 
electronic subassemblies, post-assembly testing and shipping.
On Monday, NTAI posted 2Q EPS $0.51 vs. $0.27 on increasing net
sales, up 37%, and operating income, up 57%. NTAI has move out
of a Stage I base on increasing volume and is nearing resistance
at $15. A favorable long term play using overvalued OTM calls to
reduce the cost basis.

Sep 15.00 QNA IC Bid=1.00 OI=130 CB=13.88 RC=8.1% RNC=7.2%

Chart = http://quote.yahoo.com/q?s=ntai&d=3m
*****
OLS - Olsten Corporation  $9.94  *** Take-over? ***

Olsten Corp. engages in staffing services (providing assignment 
employees to business, industry and govt.), and health services
(providing network services and healthcare personnel). Swiss-
based temporary employment company Adecco SA, on Thursday, said
it plans to announce a takeover next Monday. Olsten said on
Wednesday, it was in talks with another company regarding a 
"possible significant corporate transaction."  Hmmmm.... Next 
week should be interesting.

Sep 10.00 OLS IB Bid=1.00 OI=539 CB=8.94 RC=11.9% RNC=11.2%

Chart = http://quote.yahoo.com/q?s=ols&d=3m
*****
PXD - Pioneer Natural Resources  $12.69  *** Hot Sector ***

PXD is an independent oil and gas exploration and production 
company with operations in TX, KS, OK, LA, NM, The Gulf of Mexico,
Argentina and Canada. On August 2, Pioneer announced the closing 
transaction with CNG for $62.3 million for the sale of natural 
gas properties in South Texas. Proceeds will be used to retire 
bank debt, in line with the company's plan to reduce costs and 
debt. With the current strength in the oil sector, Pioneer is 
rallying from a consolidation area and nearing the May high.

Sep 12.50 PXD IV Bid=1.13 OI=95 CB=11.56 RC=8.2% RNC=8.2%

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




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

Technical Analysis Basics - Stochastics..

The stochastic oscillator compares the current stock price to its
price range over a specifically identified period of time. This
indicator is based on the theory that in an upward trending market,
stocks tend to close near their highs and in a downward trending
market, stocks tend to close near their lows. That would indicate
that as an upward trend erodes, stocks close further away from the
highs and vice versa. The stochastic indicator attempts to reflect
when prices start to group around their lows in an upward market,
and just the opposite in a down-trending market. The theory is that
these are the conditions which indicate a trend reversal is about
to occur.
 
The stochastic indicator is plotted as two lines on a chart with
values ranging from 0 to 100. They are the %D line and %K line
and the %D line is considered the more significant of the two.
Readings above the 80 line are strong and indicate that the price
is probably closing near its high and likewise, readings below 20
indicate that price is closing near its low. Ordinarily, the %K
line will reverse direction before the %D line but, when the %D
line changes direction prior to the %K line, a slow and steady
reversal in the stock price is usually indicated. A very powerful
move is indicated when the plot approaches 0 and 100. When the
stochastic nears these extremes following a pullback in price, a
good entry point is generally indicated. Many times, when the %K
or %D lines begin to flatten out, this is an indication that the
trend will reverse during the next trading range.

One of the simplest applications for the oscillator is to watch
for the divergence on the chart. That is when the price is making
higher highs but the stochastic oscillator is making lower lows, 
(or just the opposite). In either case, the indicator is usually
demonstrating a change in price before price itself is reversing
and this can help you determine when to enter or exit a position.

Good Luck


SUMMARY OF PREVIOUS PICKS 
*****

Stock  Price  Last    Mon  Strike  Opt    Profit  ROI   Monthly
Sym    Picked Price        Price   Bid    /Loss         ROI

ADAP   22.63  26.31   Aug  17.50  0.44  *$  0.44  8.9%  12.8%
MGCX   28.00  22.50   Aug  20.00  1.13  *$  1.13 16.8%  12.2%
NETS   19.56  24.63   Aug  15.00  0.75  *$  0.75 16.1%  11.7%
PCYC   27.75  26.75   Aug  22.50  0.69  *$  0.69 10.6%  11.5%
LYNX   14.63  13.88   Aug  12.50  0.31  *$  0.31  7.7%  11.1%
NETS   23.50  24.63   Aug  17.50  0.25  *$  0.25  5.1%  11.0%
PTVL   23.63  18.50   Aug  17.50  0.81  *$  0.81 14.6%  10.6%
QNTM** 24.56  23.19   Aug  17.50  1.00  *$  1.00 16.9%  10.5%
GISX   20.25  17.88   Aug  17.50  0.56  *$  0.56  9.5%  10.3%
AFCX   37.06  35.94   Aug  30.00  0.38  *$  0.38  4.7%  10.1%
ZRAN   24.50  24.88   Aug  20.00  0.38  *$  0.38  6.7%   9.7%
NETA   17.56  16.56   Aug  15.00  0.31  *$  0.31  6.5%   9.4%
GISX   21.13  17.88   Aug  17.50  0.56  *$  0.56 10.4%   9.0%
PMRY   14.50  14.25   Aug  12.50  0.25  *$  0.25  6.2%   8.9%
CDNW   19.94  15.25   Aug  15.00  0.56  *$  0.56 12.3%   8.9%
CLEC   27.00  24.19   Aug  22.50  0.56  *$  0.56  8.2%   8.9%
PERI   21.50  21.50   Aug  17.50  0.38  *$  0.38  7.6%   8.3%
LIPO   20.88  24.81   Aug  17.50  0.63  *$  0.63 11.3%   8.1%
ALKS   30.63  35.13   Aug  25.00  0.25  *$  0.25  3.6%   7.9%
HNCS   37.44  34.38   Aug  30.00  0.56  *$  0.56  6.9%   7.5%
PTVL   23.38  18.50   Aug  15.00  0.25  *$  0.25  5.1%   7.3%
MIPS   43.94  38.25   Aug  30.00  0.75  *$  0.75  7.9%   6.8%
VSTR   38.13  42.25   Aug  30.00  0.50  *$  0.50  6.2%   6.7%
CIEN   37.13  34.00   Aug  30.00  0.63  *$  0.63  7.5%   6.6%
ADAP   23.19  26.31   Aug  17.50  0.44  *$  0.44  8.7%   6.3%
DRIV   32.44  22.69   Aug  22.50  0.50  *$  0.50  7.2%   6.2%
MCOM   35.38  25.50   Aug  20.00  0.44  *$  0.44  5.9%   5.1%
PRIA   38.63  28.75   Aug  30.00  1.00   $ -0.25 -2.9%   0.0%
PZX    10.94   9.19   Aug  10.00  0.69   $ -0.12 -2.9%   0.0%
PSSI   12.00   9.38   Aug  10.00  0.44   $ -0.18 -5.6%   0.0%
AMTD   38.19  23.75   Aug  25.00  0.75   $ -0.50 -6.0%   0.0%
RNBO   13.88  11.88   Aug  12.50  0.25   $ -0.37 -8.4%   0.0%

ADAP   22.88  26.31   Sep  17.50  0.75  *$  0.75 14.1%  10.2%
PESC   23.88  26.94   Sep  17.50  0.50  *$  0.50  9.5%   6.9%
CORR   22.50  24.00   Sep  17.50  0.44  *$  0.44  8.9%   6.5%
USAI   45.94  47.00   Sep  40.00  0.81  *$  0.81  6.1%   4.4%
TDW    34.44  34.50   Sep  30.00  0.56  *$  0.56  5.7%   4.1%
DD     74.75  72.75   Sep  65.00  1.00  *$  1.00  4.7%   3.4%

** With the retirement of QNTM, shareholders will receive
   one-half share of HDD ($7.00) and one share of DSS ($21.31)
   for each share of QNTM.

You may consider closing on further weakness:

PRIA - Uptrend looks promising.
PZX  - Weakening further; test of April low likely.
PSSI - Especially breaking support at $8.50.
AMTD - Current rally may rescue position.
RNBO - SEP-12.50 call could lower cost basis to $11.44.

Previously Closed: 

PAMC, CDNW(17.50), RMII, BYND, IDTC, RSLC, SNRS, DRIV(25.00)

NEW PICKS
*********
Definitions:
OI  - Open Interest
CB  - Cost Basis (break-even point if put exercised) 
ROI - Return On Investment 


Sequenced by Company
*****

Stock  Price  Mon Strike Option  Opt   Open  Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr  Basis  Expired

BOBJ   47.19  Sep 35.00  BBQ UG  0.75  7     34.25   7.4%
CRUS    8.88  Sep  7.50  CQU UU  0.38  75     7.12  14.9%
CSE    48.06  Sep 40.00  CSE UH  0.75  35    39.25   6.3%
MCOM   25.56  Sep 17.50  MQM UW  0.88  80    16.62  14.7%
NETG   22.25  Sep 17.50  NUG UW  0.63  25    16.87  12.4%
NMR    33.50  Sep 25.00  NMR UE  0.63  5     24.37   8.6%
PLMD   17.88  Sep 15.00   PM UC  0.31  0     14.69   6.8%
SBGI   20.50  Sep 17.50  JQO UW  0.38  20    17.12   6.8%


Sequenced by ROI  
******

Stock  Price  Mon Strike Option  Opt   Open  Cost   ROI Opt
Sym               Price  Symbol  Bid   Intr  Basis  Expired

CRUS    8.88  Sep  7.50  CQU UU  0.38  75     7.12  14.9%
MCOM   25.56  Sep 17.50  MQM UW  0.88  80    16.62  14.7%
NETG   22.25  Sep 17.50  NUG UW  0.63  25    16.87  12.4%
NMR    33.50  Sep 25.00  NMR UE  0.63  5     24.37   8.6%
BOBJ   47.19  Sep 35.00  BBQ UG  0.75  7     34.25   7.4%
SBGI   20.50  Sep 17.50  JQO UW  0.38  20    17.12   6.8%
PLMD   17.88  Sep 15.00   PM UC  0.31  0     14.69   6.8%
CSE    48.06  Sep 40.00  CSE UH  0.75  35    39.25   6.3%


Company Descriptions
*****

BOBJ - Business Objects S.A.   $47.19 

Business Objects S.A. develops, markets, and supports integrated 
enterprise decision support software tools which allow non-
technical end-users to access, report and analyze information in 
relational databases. In July, BOBJ reported record 2Q results
with revenues up 45% over the prior year. On July 29, Goldman
Sachs upgraded BOBJ to 'Recommended List.' Bounced successfully
off support (FEB-MAR highs) at $38 and nearing an all-time high.

Sep 35.00 BBQ UG Bid=0.75 OI=7 CB=34.25 ROI=7.4%

Chart = http://quote.yahoo.com/q?s=bobj&d=3m
*****
CRUS - Cirrus Logic, Inc.  $8.88 *** Stage I Base ***

Cirrus Logic, Inc. designs and manufactures integrated circuits 
that employ precision linear and advanced mixed-signal processing
technologies, enabling system-level applications in mass storage,
audio and precision data conversion. On July 27, Cirrus Logic
announced that its Crystal Semiconductor division was awarded $20 
million in damages following its successful patent infringement 
suit against OPTi Inc. and TriTech Microelectronics. CRUS also 
acquired AudioLogic Inc., as it bolsters its position to be a 
leading supplier in the rapidly emerging Internet music market.

Sep 7.50 CQU UU Bid=0.38 OI=75 CB=7.12 ROI=14.9%

Chart = http://quote.yahoo.com/q?s=crus&d=3m
*****
CSE - Case Corporation  $48.06  *** Take-over ***

Case Corporation designs, manufactures, markets and distributes 
farm and light to medium sized construction equipment such as 
loader/backhoes, farm tractors and self-propelled combines. 
New Holland (NH), which is controlled by auto maker Fiat, said it
will pay $4.3 billion, or $55 per share, to buy CSE. A July 22
news release stated the deal was going ahead as planned and was 
expected to close this fall. 

Sep 40.00 CSE UH Bid=0.75 OI=35 CB=39.25 ROI=6.3%

Chart = http://quote.yahoo.com/q?s=cse&d=3m
*****
MCOM - Metricom, Inc.  $25.56 *** New Up Leg? ***

Metricom is a leading provider of mobile data networking and
technology. The Company's Ricochet service provides mobile
professionals with high-performance, cost-effective untethered
access to the Internet, private Intranets, local-area networks,
e-mail, and other online services. The infusion of capital - 
$600 million - from Vulcan and MCI Worldcom, should help plans 
to begin offering a national 128 kbps mobile data service by 
the middle of next year. Monday, MCOM announced the appointment 
of James Wall to CFO and by Wednesday the stock started to rally,
perhaps signaling a new uptrend.

Sep 17.50 MQM UW Bid=0.88 OI=80 CB=16.62 ROI=14.7%

Chart = http://quote.yahoo.com/q?s=mcom&d=3m
*****
NETG - NetGravity, Inc. $22.25  *** Take-over ***

NetGravity, Inc. is a provider of online advertising and direct 
marketing software solutions. NETG develops, markets and supports 
a mission-critical Adserver family of software products. In July,
DCLK and NETG reported that the companies signed a definitive 
agreement to merge in a transaction valued at $530 million where
DCLK ($82.38) will issue 0.28 shares of its common stock for each 
share of NETG common stock (related value of NETG is $23.06). 
Shares of DCLK would need to fall $20 to $62.50 for NETG to be
valued below the $17.50 strike.

Sep 17.50 NUG UW Bid=0.63 OI=25 CB=16.87 ROI=12.4%

Chart = http://quote.yahoo.com/q?s=netg&d=3m
*****
NMR - Nielsen Media Research  $33.50  

Nielsen Media Research, the famous TV ratings company, is one of
the leading providers of television information services in the
U.S. and Canada, serving national and local customers including
television networks, independent stations, syndicators, cable
systems & affiliates, advertisers and their agencies. In late 
July, NMR announced that net income for the most recent quarter 
increased 15.3%, a sizable gain and well in line with analysts 
estimates. On Wednesday, NMR announced a 3-year agreement with 
Cox Communications to provide local cable television audience 
measurement services in 18 local markets across the country.

Sep 25.00 NMR UE Bid=0.63 OI=5 CB=24.37 ROI=8.6%

Chart = http://quote.yahoo.com/q?s=nmr&d=3m
*****
PLMD - PolyMedica Corporation  $17.88 *** Entry Point ***

PolyMedica is a provider of direct-to-consumer specialty medical 
products and services, primarily focused in the diabetes supplies 
and consumer healthcare markets. In July, PolyMedica reported 
1Q EPS rise of 92% on a 53% revenue gain. Accelerating customer 
shipments in the Company's direct-to-consumer diabetes supplies 
business is fueling the very strong start for fiscal 2000. The
cost basis of $14.69 offers a favorable entry point for those 
with a long term outlook. 

Sep 15.00 PM UC Bid=0.31 OI=0 CB=14.69 ROI=6.8%

Chart = http://quote.yahoo.com/q?s=plmd&d=3m
*****
SBGI - Sinclair Broadcast Group  $20.50 *** Own This One ***

Sinclair Broadcast Group owns or provides programming services
to 59 television stations in 38 markets. Sinclair is selling its
radio stations and is concentrating on its TV operations looking
towards digital integration and the convergence of television 
and the Internet. They beat street estimates in the 2Q and said
the network compensation arrangements proposed by FOX and ABC 
would not stem cash flow as much as it had earlier anticipated.
Sinclair has moved above the neckline of a double bottom and is
showing fine technical strength offering a favorable long-term 
outlook.

Sep 17.50 JQO UW Bid=0.38 OI=20 CB=17.12 ROI=6.8%

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


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



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