Option Investor

Daily Newsletter, Sunday, 09/12/1999

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The Option Investor Newsletter            Sunday  9-12-99  1 of 7
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

Entire newsletter best viewed in COURIER 10 font for alignment
         WE 9-10           WE 9-3           WE 8-27          WE 8-20
DOW     11028.43 - 50.02 11078.45 - 11.72 11090.17 - 10.44  +126.96
Nasdaq   2886.96 + 43.85  2843.11 + 84.21  2758.90 +110.57  + 10.52
S&P-100   712.79 -  1.10   713.89 +  5.92   707.97 + 11.38  +  7.77
S&P-500  1351.65 -  5.59  1357.24 +  8.97  1348.27 + 11.66  +  8.93
RUT       441.19 +  5.22   435.97 +  3.52   432.45 -  1.93  +  0.33
TRAN     3090.83 - 66.07  3156.90 - 14.45  3171.35 + 20.62  - 28.34
VIX        22.35 -   .96    21.39 -  1.82    23.21 -  0.85  +  1.68
Put/Call     .52              .57              .73              .69

Fed Governors, CPI reports, Housing Starts, Oh my!

While the post-Labor Day rally failed to materialize for the 
entire market as many had hoped, big name tech stocks still 
managed to land on the yellow brick road.  Investors could take 
their pick of reasons not to buy last week with a host of Fed 
governors speaking and a frightfully decisive PPI report 
expected last Friday.  Thus, the stampede to Emerald city that 
we expected last Friday was suddenly lost in a cloud of dust.  
Earnings warnings, higher oil prices, and plenty of Fedspeak 
were enough to keep the Dow 30, OEX, and the S&P 500 all stuck 
in a week long trading range.  Even the yield on the 30 year 
bond couldn't do much more than trade sideways.

Alas, next week does not appear to look much better.  However,
with our normally optimistic outlook, there are opportunities 
aplenty for stock pickers extraordinaire.  Before we can look 
to the future, let's glance back to Friday and see how the 
shortened trading week ended.

After the weathering a handful of speeches from the Fed 
governors, the market was poised to move on the data presented 
in Friday's PPI report.  What we got was a +0.5% gain in 
August.  This was higher than the expected 0.3% economists were 
predicting.  However, excluding the more volatile energy and 
food prices, the "core" rate actually fell -0.1%.  To most of
us this is a mixed bag and amateur hour on Friday showed it.  
The NASDAQ gapped up about 30 points to 2880 and the Dow 
quickly shot up as well before both of them fell back to more 
mundane levels as traders stopped to decipher the data.

Here is how the week looked:







The PPI's core rate that came in unchanged, or down from the 
expected 0.1% gain, is what the market was looking at the most.
This was the 4th decline for 1999 and really helped ease 
concerns among bond traders that the Fed would raise rates 
again in October.  Bond yields gapped lower and actually fell 
to a low of 6.01% (with a little help from the Bank of Japan, 
but more on that later), before climbing back to end the day at 
6.03%.  Economists and the Fed both realize that inflation is 
currently non-existent.  However, our economy is so strong and 
retail spending has been so robust, that both are looking for 
any pressures from the wage market to signal any growth in 
inflation.  The wage market is not the only culprit.  The 
rising price of oil is putting pressure on certain industries 
and inflation may be building in the pipeline.  Additionally, 
economists are noting that the two year decline in commodity 
prices may have stopped.  Any rise in raw materials will 
eventually raise the prices of finished products.  Some expect 
that rising oil/energy and commodity prices may begin to show 
inflation over the next three to six months.  But short term, 
the coast appears clear.  A survey by CBSMarketWatch of 
economist showed that sentiment is 9:1 against a rate hike on 
October 5th.  

News of a 0.9% growth for Japan's 2Q GDP numbers sent the 
dollar to three year lows against a rising yen.  While the 
yen's recent trend is probably still intact, U.S. bond traders 
were happy to see the Japan government step in to buy dollars 
and slow it down.  This added a little extra emphasis to the 
U.S. 30 year bond's drop on Friday before its late day 
recovery. Japan is the second largest economy in the world.  A 
stronger yen only makes its exports more expensive forcing you 
and I to pay more for that new Sega Dreamcast or Honda Accord.  
Not exactly what Japan is looking for while its struggling 
economy finally appears to be pulling out of a 10 year 
recession.  Of course a weaker dollar doesn't help our 
inflation concerns either.  A weaker dollar could add to 
inflation pressures by forcing the price of imports higher and 
increasing exports here at home.  At the moment, domestic 
policy is to let it the currency rates run its course as long 
as it remains slow and steady.  In the mean time, intervention 
on the side of Japan has sparked renewed interest in its 
recovering stock market which is expected to keep the momentum 
alive though next week.

While we are on the subject of foreign markets, most of Europe 
appeared to rally on the U.S. economic data and the continuing 
rise in oil prices.  Germany, France, and Italy were all higher 
on the day while England fell to some late day selling.  Our 
neighbors, Canada and Latin America also gained on the day.

To bring the focus back home, most of us were watching the tech 
stocks.  And how could we not!  The NASDAQ turned the heat on 
slightly after 10 o'clock on Friday and came within less than 
2.5 points of hitting 2900 before succumbing to a little late 
day profit taking ahead of the weekend.  Our old intraday high 
was 2874 set back in mid-July.  Several sectors helped spur the 
rally as hardware, semiconductors, networking, Internet, and 
even software stocks all helped push the index higher.  It is 
not hard to understand why.  With the perception that the Fed 
"should" have a harder time rationalizing a rate hike in 
October, investors fly back to the interest sensitive, high P/E 
growth sectors.

Sector rotation might be making it too simple, but there are 
arguments to support such a move.  Just recently, the passing 
of Thursday, September 9th or 9-9-99 gave the software sector 
it first dress rehearsal for Y2K.  It was previously thought 
that this string of 9's could cause problems with older 
programs.  Without any major failures this week, investors may 
be feeling more confident that Y2K will pass without incident.
We also have a new belief that corporate spending is not 
falling behind like we previously thought.  Again, previous 
assumptions expected corporations to with hold any new spending 
in light of Y2K fears.  This may prove untrue.  Last but not 
least is the growing expectation for holiday sales on the 
Internet.  Last year, holiday sales figures were a mystery.  
This year, expectations are rising.  While this allows us a 
great chance to play the "rumor" it is setting us up for a 
"sell on the news" later in the year.

Let's take a quick look at some of the major events we need to 
be aware of this week:

Tuesday, 14th.  
               8:30 am ET, Retail Sales         estimate +0.7%

Wednesday, 15th.  
               8:30 am ET, CPI Report           estimate +0.3%
               Fed Gov. Ed Gramlich speaking on financial                           

Thursday, 16th.
               8:30 am ET, Jobless Claims
               Fed Gov. Ed Kelley presides over a two day 
               Y2K summit.

Friday, 17th.
               8:30 am ET, Housing Starts
               Y2K summit continues with appearances from 
               Alan Greenspan and other Fed Gov's.

As you can see, it is not the most benign schedule the market 
has to work with.  However, last week didn't look too hot 

What is going to move the markets will be investors' (both 
small and large) fear's of a rate hike in October versus not 
wanting to miss out on possibly the best 3Q earnings in a long 
time.  At this point I'd like to remind you that there is 
something called the greed factor.  Unless we get some drastic 
economic numbers or some extremely negative comments from the 
Fed heads this week then we are likely to see an uptrending 
market.  That does not mean bet the farm on Monday.

This is the week we need to be making our earnings season game 
plan.  Take the time to pinpoint those stocks we want to play 
and identify their earnings dates.  Do they have a previous 
earnings run trend?  When does it normally start?  If you are a 
believer in contrarian viewpoints, look at the current 
disposition of call options versus put options on your favorite 
stocks.  Do you see any overhead resistance or support there?  
Where is the best entry point for you to target shoot your way 
in?  Where and how am I going to allocate my capital for the 
next 6 weeks?  For most of us, we have four weeks before Intel 
kicks off the 3Q earnings season on Tuesday, Oct. 12th.  For 
the braver traders, we have three weeks before Yahoo! kicks off 
the Internet earnings game on Thursday, Oct. 7th.  Everyone 
remembers how we played YHOO last time, right?  You won't see 
it as a current play this weekend, because of its one week $30 
run up.  However, if we get any kind of entry point this week, 
you'll probably see it on the letter soon (I'm hoping for a 
retracement to at least $160, maybe more).  

Technically, Friday's strong close on the NASDAQ with volume of 
1.14 billion bodes well for the tech sector.  Temporary support 
should be 2800.  If the Dow still needs more consolidation, 
look for 10,950 to be our first line of defense.  Many believe 
that if we are to have any kind of sustainable rally we need to 
see a broad market advance.  Without the small caps confirming 
the move, then it is prone to be short lived.  Fortunately, we 
had such a move in the Russell 2000 just last week.  Whether 
this new trend holds up or not remains to be seen. 

Tips for next week: be patient, don't chase stocks you 
shouldn't and don't place all your bets before we see the CPI 
on Wednesday.  After that, we'll probably all go cross eyed 
keeping one eye on the approaching 3Q earnings and the other on 
the October 5th Fed meeting.

Sell too soon.


P.S. Yes, Jim is still the editor but we've grown enough to 
need two.  Secondly, we dropped quite a few plays this weekend 
and some of them are still good plays.  Make a careful decision 
before bailing out of something that may still work for you.


Week ending 9/10/99

I only watched the market three days this week. I was planning 
to be out of town on business the end of the week so I really
wanted only solid plays or none at all. With five Fed speeches
this week and the PPI on Friday I did not expect a blowout week.
I think we will continue to move up but the next milestone is
the CPI next week. Don't get greedy and raise the targets too
fast. If you make a habit of buying high then selling low will
happen more often than not.

The SFA target at $52 never came to pass. SFA traded between
$53 and $55 for three days and was trending down from Tuesday's
high. I am still positive on this stock and I may raise my
target for next week if Fridays trading goes well.

I had a target on AMZN of $60 and I was hoping for some post
split depression. Amazon did nothing and range traded between
$61-64 tue/thr. Thursday PM it did close near the high of the 
day and it may be up Friday. If we can get some momentum on
AMZN then next week might require a higher target.

EXDS - Target of $80 and hold. As of Thursday night we have
not seen $80 yet. $78 looks to be a short term top. Good bounce
off the $72 low on Thursday so again, next week may be the week
for EXDS.

SUNW - SunMicro had a target of $82 and it charged off on
Tue/Wed to a high of $88. I was cussing myself for missing yet
another good run when it rolled over Wednesday afternoon. It did
hit the $82 target on an end of day dip Thursday but after the
roll over from $88 you are thinking, profit taking or selloff?
Since I am going to be on the road on Friday I elected to hold
on SUNW until next week as well.

QCOM - Target $160, never hit and it is showing no strength
at all. Looks like a top at $170. I am dropping QCOM as a 
possible at this time.

What a boring week. I am sorry there were not any exciting
trades to write about. BUT, sometimes the best trade is no
trade at all. It takes patience to wait for a stock to come
to you and sometimes by the time it does you are not sure
you still want it. When things do not go as planned I always
console myself with the fact that by not forcing trades just
for the sake of trading, I did not lose any money. When you
get to the bottom line I think that is what is important.
Trade only when profitable and when ever possible DON'T trade
without a compelling reason. 

I will not be back in the office until Thursday and I am 
not a fan of trading on the road. Therefore there are no
targets for this week. 

Good luck, sell too soon.


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Chicago Fed Index		  July   Forecast:   --    Previous: 131.9


Retail Sales            August  Forecast:   0.8%   Previous:  0.7%
Retail Ex. Autos		August  Forecast:   0.4%   Previous:  0.3%
Atlanta Fed Index		August  Forecast:   --     Previous:  15.2%
BTM Schroders		9/11    Forecast:   --     Previous:  -0.1%
Current Account		Q2 99   Forecast:  -78.5B  Previous:  -$68.58B
Richmond Fed.		August  Forecast:   --     Previous:  N/A
LJR Redbook			9/11    Forecast:   --     Previous:  -0.1%
API Oil Stocks		9/10    Forecast:   --     Previous:  -5.97M


CPI                     August  Forecast:   0.3%   Previous: 0.3%
CPI ex. food/energy	August  Forecast:   0.2%   Previous: 0.2%
Business Inventories    9/4	  Forecast:   0.3%   Previous: 0.3%
Real Earnings		August  Forecast:   --     Previous: 0.1%


Jobless Claims          9/11    Forecast:   283K   Previous: 286K
Industrial Prod. 		August  Forecast:   unch   Previous: 0.7%
Capacity Utilization    August  Forecast:   80.5%  Previous: 80.7%
Phil Fed Survey         Sept.   Forecast:   --     Previous: 12.0
Money Supply (M2)       9/6	  Forecast:   --     Previous: -$4.8B


Housing Starts		August  Forecast:   1.62M  Previous: 1.661M
Building Permits        August  Forecast:   1.59M  Previous: 1.64M
Univ. of Michigan Sent. Sept.   Forecast:   --     Previous: 104.5

Next week's economic releases (preliminary)

September 21 International Trade - July 
September 23 Help Wanted Index  - August 
September 14 Atlanta Fed Index - August 
September 14 Current Account Gap - Q2 
September 15 Business Inventories - July 
September 15 Consumer Price Index - August 
September 15 CPI ex. food & energy - August 
September 15 Real Earnings - August 
September 16 Capacity Utilization - August 
September 16 Industrial Production - August 
September 16 Philadelphia Fed Index - September 
September 17 Building Permits - August 
September 17 Housing Starts - August 
September 17 Michigan Sentiment - September


Market Posture

As of Market Close - Friday, September 10, 1999 

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

DOW Industrials   10,500  11,320  11,028    Neutral   7.20    
SPX S&P 500        1,320   1,420   1,352    Neutral   8.17     
OEX S&P 100          675     735     713    Neutral   8.13     
RUT Russell 2000     440     465     441    Neutral   9.10  *    
NDX NASD 100       2,320   2,400   2,535    BULLISH   9.03   
MSH High Tech      1,120   1,200   1,283    BULLISH   9.03   

                   Key Benchmarks
Technology         Bearish/Bullish  Last    Posture/Since  Alert
XCI Hardware       1,035   1,050   1,141    BULLISH   8.24    
CWX Software         750     800     896    BULLISH   9.03         
SOX Semiconductor    515     520     565    BULLISH   8.24      
NWX Networking       555     625     613    Neutral   8.13      
INX Internet         500     580     475    BEARISH   7.20    

                   Key Benchmarks
Financial          Bearish/Bullish  Last    Posture/Since  Alert
BIX Banking          690     710     610    BEARISH   7.23    
XBD Brokerage        410     440     388    BEARISH   7.23    
IUX Insurance        645     660     597    BEARISH   7.23         

                   Key Benchmarks
Other              Bearish/Bullish  Last    Posture/Since  Alert
RLX Retail           915     960     836    BEARISH   7.23     
DRG Drug             360     390     366    Neutral   8.24    
HCX Healthcare       740     785     748    Neutral   8.24    
XAL Airline          180     190     144    BEARISH   5.21      
OIX Oil & Gas        285     310     315    BULLISH   9.09     

Posture Alert    
Friday's Producer Price Index helped technology stocks and the 
Nasdaq break into new highs.  The Software Index was the leader, 
posting a +3.33% gain, followed by the Internet Index (+2.52%), 
and then Networking (+1.72%).  With Friday's action, we have 
turned Neutral from Bearish on the Russell 2000.

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



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

The Option Investor Newsletter              9-12-99
Sunday                   2  of  7


Sunday, September 12, 1999

Keep'em Coming!

Employment data, PPI, CPI, Fed-Heads, negative pre-announcements, 
Clinton's impeachment, Monica Lewinsky, currency devaluations, 
Russia, Brazil, inflation, Greenspan, and much much more. This 
bull market ceases to amaze everybody. It is like Michael Jordan, 
taking on all-comers, and not breaking a sweat; or Muhammad Ali, 
doing a little shake-n-bake and rhyme, before knocking out his 
opponent. Unfortunately, we probably have all sweat a little 
from time to time; but then again, we are not all Heavy-Weight-
Champions of the World.


Sentiment that seems to be changing in a quick way is the 
bearishness on corporate spending for software, due to Y2K. Wall 
Street always likes to look forward into the future, gaze at the 
crystal ball, and make bold predictions. Just recently, the 
sentiment was that software stocks should be AVOIDED at all costs, 
due to the fact that most companies resources will be used for Y2K, 
and not on software upgrades.  Just yesterday, we heard that a 
major software analyst was quoted as saying that many of the 
software stocks will quadruple in the next year. Not double, but 
quadruple! Pretty bold statement, but look at some of the trodden 
down software stocks (NETA, PSFT, BAANF, too many to list). Then 
look at how brutally punished they got all year (negative sentiment), 
and combine that with the fact that Y2K will most likely be a non-
event, and you have recipe for a big turnaround.  Around the office, 
we ask ourselves, if the second and third-tier software companies 
are poised for a recovery after Y2K, then how big of an increase 
will first-tier software companies such as Microsoft fare when 
corporate spending picks up? Could be the great start to a new 
Millennium, especially if INFLATION stays put!





Investor Intelligence:  
As a contrarian indicator, the amount of Bullish investors is at 
a recent low, and bearish investors is at a recent high.

Market Posture:
Several indexes have broken new highs, including the Nasdaq 100, 
Morgan Stanley High Tech, Software, Hardware, and Semiconductors.

Mixed Signs: 

Interest Rates:
The yield on the 30-yr Treasury is now above the 6% benchmark, but 
still below the 6.272% high. Any break below 6% would be positive, 
while any break into new highs would be extremely negative and take 
this market significantly lower.

The Dow broke new highs, but on very lackluster volume. To truly 
break out to the upside, we need better volume to confirm the move.

Russell 2000: 
Even with the strong rally we've had, the RUT is still technically 
weak, but is showing signs of improvement.


Pinnacle Index:
The Pinnacle Index for the OEX (735-780) is now reaching levels of 
extreme optimism.  From a contrarian standpoint, resistance is 
building in this area, and should the market advance further, this 
was mark the beginning of overhead resistance.

Pre-Earnings Season:
September is the start of pre-release season. 9 times out of ten, 
companies usually let Wall Street know some sort of negative news. 
We have already started to witness the negative pre-announcements 
this last week.

Advance/Decline Line:
The A/D line is still looking negative, even with this latest rally.

OTM Call Analysis

As we move through the September expiration cycle, Pinnacle is 
tracking the level of call buying (OTM) between 700-800 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 700-800)
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%        

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

Friday, August 20         41,346          -
Friday, August 27         78,026         +88.7%               
Friday, September 3      104,700        +153.2%

Market Sentiment at a Glance
                                Friday     Tues      Thurs  
Indicator                       (9/10)     (9/14)    (9/16)  Alert

Pinnacle Index (OEX):          

Overhead Resistance (735-780)    108.9
Underlying Support  (710-730)      2.5
Underlying Support  (630-690)      4.2

Put/Call Ratios:

CBOE Total P/C Ratio                .5
CBOE Equity P/C Ratio               .5       
OEX P/C Ratio                      1.3      

Peak Open Interest (OEX):

Puts                              660          
Calls                             720          
P/C Ratio                         1.32

Market Volatility Index (VIX):	

CBOE VIX                         22.35

Investors Intelligence:

Bullish                         44.10%  *
Bearish                         30.50%  *

The Power of Sentiment Analysis

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

Pinnacle Index
OEX                             Friday      Tues       Thurs
Benchmark                       (9/10)      (9/14)     (9/16)

Overhead Resistance (735-780)   108.90
Overhead Resistance (710-730)     2.45

OEX Close                       712.79

Underlying Support  (630-690)     4.20

Average ratings: 
Resistance levels 2.0 / Support Levels .5

What the Pinnacle Index is telling us:
Overhead sentiment resistance is huge at the OEX 735/780 level but 
very light at the 710-730 range.

Put/Call Ratio 
                                Friday     Tues       Thurs
Strike/Contracts                (9/10)     (9/14)     (9/16)

CBOE Total P/C Ratio             .52
CBOE Equity P/C Ratio            .46         
OEX P/C Ratio                   1.32

Peak Open Interest (OEX)
                     Friday           Tues            Thurs
Strike/Contracts     (9/10)           (9/14)          (9/16)

Puts                 660 / 14,393
Calls                720 / 13,506
Put/Call Ratio         1.06


Market Volatility Index (VIX)
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  5, 1999     Bottom?             32.12 
September 10, 1999                      22.35 


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  7, 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   4, 1999                         52.2        27.8 
Aug  11, 1999                         50.0        29.3
Aug  18, 1999                         45.8        31.3
Aug  25, 1999                         44.5        31.1 

Sept  1, 1999                         42.9        31.9 **
Sept  8, 1999                         44.1        30.5 


The Learning Curve

Charting programs, brokers, and how/ when to look at the market 
are common concerns for new traders. I use qcharts 
(www.qcharts.com). Jim described his trading configuration for 
qcharts in the 5/2/99 (newsletter /members/archive/marketwrap/050299_1.asp), 
and for interquote in the 5/9/99 newsletter
I subscribe to the real time service and use the latest version 
of the software. I have three quote sheets down the middle of my 
screen: the stocks; the options on the stocks; and market indexes. 
The index quote sheet includes: INDU*, COMPX*, SPX.X, OEX*, TRAN, 
MSFT, GE, SLB, GPS. These are the symbols for stock indexes, tick 
indicators, advance/ decline lines, yearly highs & lows, futures, 
volatility indexes, bond quotes, sector indexes, and key stocks. 
On the left side of my qcharts, I have 8 charts with the indexes 
marked with asterisk (*). On the right side, I have charts for the
stocks that I am playing. The latest version of qcharts allows me 
to put in position information (#shares, profit/ loss, basis, 
return, etc) on my option quote sheet. This makes it easy to see 
which positions are winning and losing. Also, by right clicking 
on an option symbol and choosing "trade," I can jump to my online 
broker. This makes the Observation - Orientation - Decision - 
Action loop faster. 

Jim wrote a online broker editorial in the 5/16/99 Market Wrap
I really don't want to recommend one broker over another, except to 
say that it really depends on your trading style. After changing 
brokers two times in 99, I ended up with the one that Jim discusses 
in his editorial. My first online broker had fast executions, but 
did not allow stops. My second online broker allowed stops, but the 
speed was very slow and threw me off my gameplan when I saw 
opportunties. I finally concluded that stops were too sensitive to 
volatility. My present broker works through software, and is very 

At a minimum, I look at the market 3 times during a trading day. 
First, at 10:15 - 10:30 EST, after "amateur hour" has ended. During 
the first hour, the market tends to make sudden moves at the open 
only to reverse those moves later. This is sometimes a good time to 
sell because most often the first movement is upward. However, if 
you buy during amateur hour it may be at the emotional high of the 
day. Wait until after amateur hour to establish a market direction. 
Second, at 1:00-2:00, when thousands of traders eat lunch and the 
market tends to slow. This can be a good chance to buy if the market 
was up in the morning. Finally, between 2:55 and 3:05, when direction 
for the final hour is normally determined. I want to decide by 3:10 
which way the market is going and make decisions accordingly. Of 
course, these windows are normally good times to get a true picture, 
but not always. Setting price alerts, either in qcharts, or through 
an online brokerage like E*Trade which will Email them to you, can 
be useful to monitor your plays between these periods.

I load my plays into qcharts each weekend by putting the stocks and 
options in their respective quote sheets. I use the comments box to 
make notes, and set alerts at critical levels discussed in the write 
ups. For calls, I am looking for 1) rising charts on OEX, INDU, 
COMPX 2) positive ticks on the Dow and the NYSE 3) and more advances 
than declines on both exchanges. When the broad indexes line up, I 
can scroll down on my index quote sheet and look at the sector 
indexes, which are discussed in the market posture section of the 
newsletter. If I see a move in a stock I want to play, I can check 
the sector index to determine whether it is a sector move or simply a
single stock move. If all these factors are positive, then I have 
minimized my risk. Particularly when playing a reversal, it is 
essential to confirm the strength of a real turn from a false turn, 
which is weak and tenuous. Anyway, those are the lessons I have 
learned through close reading of the newsletter and through trial 
and error in the last 8 months. I wish I didn't have to learn the 
hard way!

Janar Wasito


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

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.


Index      Last   Week
Dow     11028.43 -50.02
Nasdaq   2887.06  43.92
$OEX      712.79  -1.10
$SPX     1351.66  -5.58
$RUT      441.19   5.22
$TRAN    3090.83 -89.36
$VIX       22.35   0.96

Calls             Week

INKT      128.19  12.44  New, flying high reaching for the top
INTU      103.00  11.00  New, 3:1 split but don't play yet!
HGSI       87.50  10.50  This one is up over 40% since picked
DISH       94.00   8.12  This one was up over 12% in two days
CHKP       93.63   7.94  Rising again and putting up a new high
SFE        72.50   4.62  Continuing to build strong relationships
BGEN       89.00   4.19  Performing in the classic bull manner
AMZN       66.50   4.06  New, no post-split depression here
LGTO       49.13   4.00  After splitting, this ones on a role
CMGI       89.88   3.63  The earnings run is picking up speed
VRSN      112.38   3.13  Dropped, great ride but no more steam
ADI        56.25   2.69  Will the stock hit a new all-time high?
TXN        90.63   2.69  Riding the wave with the tech stocks
EMC        68.13   2.63  New, charts are showing strong momentum
SFA        55.69   2.25  The one that keeps going and going...
QLGC       96.19   2.22  New, check out this chart and trend
ERTS       76.19   1.44  It delivers the games and the gains!
CNXT       77.63   1.25  Its chips are found in mobile devices
SUNW       85.69   1.19  Stock continues to exhibit its strength
FLEX       63.75   0.63  Is history going to repeat itself again?
DELL       49.56   0.13  Renewed interest after strong earnings
CSCO       70.75  -0.19  Dropped, no more strength on this play
NTAP       67.75  -0.75  New, the 4th fastest growing company
MSFT       95.00  -0.88  Dropped, stalling and going nowhere
JDSU      112.00  -1.25  Showing some weakness but still holding
INTC       87.38  -1.93  Riding high on a wave of new products
BVSN      107.00  -2.50  Dropped, acting like a piece of driftwood
MU         74.63  -5.50  Dropped, profit-taking was too strong


IDPH      105.44 -27.06  New, lower forecasts = worried investors
GPS        35.44  -3.19  Will the stock penetrate its 10-dma?
SWY        42.94  -3.19  New, more acquisitions mean trouble
COST       69.88  -2.75  New, it broke another support level
KO         55.13  -2.25  Another executive leaves the company
HNZ        43.00  -1.06  New, ouch, Heinz missed its numbers
CVS        39.88  -0.56  It bounced, but is it for real or not?
JCP        36.13  -0.19  Dropped, we just couldn't break support
ONE        38.81  -0.07  Dropped, moving sideways going nowhere
HRB        47.13   0.69  Dropped, it found its support at $45



QLGC - QLogic Corp
AMZN - Amazon.com
EMC  - EMC Corporation
INKT - Inktomi Corp.
NTAP - Network Appliance Corp.
INTU - Intuit Inc.


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

IDPH - IDEC Pharmaceutical
HNZ  - H.J. Heinz Company
SWY  - Safeway Inc
COST - Costco Wholesale Corporation


The Option Investor Newsletter          9-12-99
Sunday             Part 3 of 7


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.


BVSN $107.00 (-2.50) BVSN has been acting like a piece of 
driftwood caught in an eddy.  Yes it's stuck without direction.
We feel it's best to get out of the water now, with a profit 
while we can.  BVSN has given us a $13.50 gain since our pick.  
14% isn't a bad return for a few weeks.  Many of you did much 
better than that if you protected your returns at the highs.  
Some are just luckier than others, and yes folks, there is a 
certain amount of that in the markets.  Since the market is 
still uncommitted and we could still see the "September sell-off" 
we are dropping BVSN for now.  In addition, BVSN's momentum is 
fading in the stochastic, MACD and volume.  Remember you can't 
emotionally hope for that luck, so stick to what you know and 
what the charts are telling you.  They are telling us that BVSN 
is a bit to risky now.  

MSFT $95.00 (-0.88) Like a nail in a piece of wood, we have hit 
a knot.  It looks like MSFT is range bound and in stall mode 
for a bit.  Since we are turning negative in our technicals 
and have started to sputter, we are dropping MSFT before the 
September weakness and Y2k fears set in.  For you loyal "stick 
to the play" OIN investors, you should have a $2 plus gain, 
which is definitely better than nothing.  We should know by now, 
that if a stock is not moving in the direction we expect, we 
make an assertive decision to drop and invest in some that are.  
Such is our case.  Resistance is at $96 now, so we may see our 
software giant again when it breaks out of the stall and starts 
a new trend.

VRSN $112.38 (+3.13)  VRSN has been a great stock to play 
since we first added it in to our call list in mid-August.  
The options gave us lots of action providing a multitude of 
opportunities for the HIGH RISK INTERNET players to cash in 
on big profits.  Even though the stock once again reached 
new heights on Thursday and set another 52-week on an early 
morning spike, VRSN seems to have lost its overall steam.  
So we're sticking by our rule to not fight the trend and 
retiring the play this weekend.

MU $74.63 (-5.50)  The profit-taking on MU was strong this 
week after the stock peaked at $82.50 on Wednesday morning.  
And unfortunately, the company simultaneously announced 
that same day that its the price increase in its DRAM 
components will unfortunately not affect its 4Q earnings 
but instead be carried over to the following quarter's 
earnings.  These two factors predominantly pressured MU 
to descend below its 10-dma by Friday even in light of 
positive ratings by 3 separate analysts mid-week and a 
powerful Nasdaq market.  We don't recommend bucking this 
recent trend and our dropping MU as a call play.

CSCO $70.75 (-0.19) Sorry Cisco Kid, it's back to the play-pen 
for you.  CSCO hasn't been a fast mover.  While the rest of the 
NASDAQ market was showing strength and setting records last week, 
CSCO never came to the party.  CSCO's trading volume became 
progressively lower throughout the week, as the rest of the 
market traded a billion or more shares.  Currently, money 
managers don't appear to be as interested in the issue.  That 
doesn't mean dump it at any price.  Just make an exit on any 
strength.  Though CSCO is a fine company that dominates its 
field, we can deploy our capital for better use in other plays 
right now.


ONE $38.81 (-0.66) ONE appears to be moving more sideways now 
and we feel its time to look for an exit point for this play.  
Currently, the stock technically and fundamentally is bearish 
but we feel there are more profitable investment opportunities 
out there incurring the same amount of risk.  ONE has only 
dropped $0.66 this week despite the interest rate fears and a 
volatile bond market.  This just isn't enough movement in 
conjunction with these catalysts.  We'll continue to monitor 
ONE's performance in the future and we'll be the first to let you 
know of any new opportunities associated with this stock arise.

JCP $36.13 (-0.19) Another play has run its course and so we 
are dropping JCP for other opportunities.  Despite recent 
downgrades and earnings warnings on JCP, last week the stock 
has managed to hold its ground.  JCP traded just above the 
$35 range throughout the week and on several occasions 
attempted to break though this support level with no avail.  
Unfortunately, investors were too resilient and bought just 
enough stock to keep JCP above this level.  For these reasons 
we have decided to end this play and concentrate our efforts 

HRB $47.13 (+0.69) It was a battle between the technical and 
fundamental indicators and unfortunately the technicals were 
too strong.  We continued to play HRB as a put because of 
investors concerns over the announcement to buy Olde brokerage.  
The stock plummeted after the announcement and continued to 
fall until it reached a support level of $45.  However, the 
stock has managed to hold its support throughout the week 
indicating that the panic may be over.  We were relying on 
weak fundamentals to break through this support but it never 
happened.  Even though weak fundamentals remain momentum has 
subsided, therefore we decided to end the play. 


SNE  - Sony Corp. 
PMCS - PMC-Sierra, Inc. 
SLR  - Solectron, Inc. 
JDSU - JDS Uniphase


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

Symbol - Stock         Splits/Date  

KIDE - 4Kids           2:1 09-13-99 ex-date 09-14
SMTC - Semtech         2:1 09-14-99 ex-date 09-15
MCRL - Micrel          2:1 09-15-99 ex-date 09-16
LSCC - Lattice Semi    2:1 09-16-99 ex-date 09-17
CEFT - Concord EFS     3:2 09-22-99 ex-date 09-23
ROSS - Ross Stores     2:1 09-22-99 ex-date 09-23
MDT  - Medtronic       2:1 09-24-99 ex-date 09-27
VOD  - Vodaphone       5:1 09-30-99 ex-date 10-01
TYC  - Tyco            2:1 10-21-99 ex-date 10-22
SEBL - Siebel Systems  2:1 11-12-99 ex-date 11-15

For a complete list of all the coming splits check out the
"split calendar" on the side of the online edition newsletter

With all the great plays each week we can never decide
on just one so take your pick. 

Call plays of the day:

DELL - Dell Computer $49.56 (+0.13)

See details in sector list

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


SFA - Scientific Atlantic Inc. $55.69 (+2.25)

See details in sector list

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


BGEN - Biogen Inc $89.00 (+4.19)

See details in sector list

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




CHKP - Check Point Software $93.63 (+7.94)

Corporate security has come a long way since the days of night 
watchmen patrolling the grounds.  Most sensitive information 
is on networks, which must be protected from hackers, both 
from within and outside the company.  Check Point Software is 
the leader in firewall products, which help corporations 
protect their networks from unauthorized access (hackers). 
Check Point makes products which verify remote users, controls 
user access, blocks viruses, clears congestion on crowded 
Internet and intranet links and enables companies to set up 
private networks for secure internal and remote communications. 
Based in Israel, Check Point has subsidiaries in Europe, North 
America and the Pacific Rim. 

Check Point put in another impressive week, rising again and 
putting in another 52-week high - a recurring theme since mid-
August.  How long the winning streak will last is anyone's guess, 
but reaching new highs has not attracted any significant selling. 
In fact, recent dips have been accompanied by a decrease in 
volume, indicating more a lack of buyers rather than an increase 
in selling pressure.  News is scarce so we continue to follow 
the trend. With the Nasdaq pushing to new highs, Check Point 
should be in good shape.  There is one caveat, however.  With 
CHKP up almost 20 points in two weeks, you may want to move 
stops up to protect profits. 

No upgrades or downgrades for the week.  In fact, the only news 
items in which CHKP appeared, it was only mentioned peripherally. 

***November strikes will open this week***

BUY CALL OCT-90*KEQ-JR OI=160 at $10.25 SL=7.50
BUY CALL OCT-95 KEQ-JS OI= 21 at $ 7.63 SL=5.75 low OI

Picked on Sep 5th at   $85.56   P/E = 44
Change since picked     +7.94   52-week high=$95.50
Analysts Ratings    9-8-0-0-0   52-week low =$10.89
Last earnings 07/99 est= 0.50   actual= 0.53
Next earnings 10-20 est= 0.56   versus= 0.45
Average Daily Volume =  600 K
Chart = http://quote.yahoo.com/q?s=CHKP&d=3m 


LGTO - Legato $49.13 (+4.00)(+0.69)(+4.88)

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

For our new readers, this is a pure momentum play.  It all 
started last month after LGTO split 2:1 on August 16th.  
The stock began consistently trading above its 10-dma and 
steadily making gains.  Then on August 26th, Legato 
announced the formation of the Celestra Consortium which 
promotes an open and integrated architecture that optimizes 
data movement and management within Storage Area Networks 
(SAN).  This company event boosted the stock out of its $42 
support level on very strong volume.  After the bounce, a 
short period of consolidation followed which offered 
players lots of opportunities to get into this play.

This week was fantastic.  LGTO tacked on $4.00 (or 8%) as 
it stretched into new territory on each consecutive trading 
day - $50.38 is the newest 52-week high.  Now, except for a 
nasty market, there should be nothing to hold LGTO back. 
New support may be forming around $46 so if we are afforded 
an intraday dip to this level, it certainly would be a good 
entry point.  Again recall from previous write-ups, any 
descent below the 10-dma (now at $44) should be a warning 
to tighten those stops or move on.  In the news this week 
Legato announced its Legato Continuum,  an integrated set 
of open software systems and services designed to provide 
users with an enterprise-wide infrastructure to meet both 
data and application availability requirements across 
business units, technologies and geographical boundaries.  
Earnings are expected next month on October 14th.

BUY CALL OCT-40 EQN-JH OI= 73 at $10.13 SL=7.75
BUY CALL OCT-45*EQN-JI OI=608 at $ 6.13 SL=4.50
BUY CALL OCT-50 EQN-JJ OI=307 at $ 3.38 SL=1.75
BUY CALL DEC-45 EQN-LI OI= 65 at $ 8.50 SL=6.50 low OI
BUY CALL DEC-50 EQN-LJ OI=317 at $ 6.13 SL=4.50

Picked on Aug 29th at   $44.44    P/E = 133
Change since picked     +$4.69    52 week high=$50.38
Analysts Ratings    11-5-1-0-0    52 week low =$13.75
Last earnings 06/99  est= 0.26    actual= 0.29 surprise +11.54%
Next earnings 10-14  est= 0.16    versus= 0.08
Average Daily Volume =   914 K 
Chart = http://quote.yahoo.com/q?s=LGTO&d=3m


ERTS - Electronic Arts, Inc. $76.19 (+1.44)(+6.81)(P3W +11.82)

Electronic Arts, headquartered in Redwood City, is the world's 
leading interactive entertainment software company.  Founded 
in 1982, Electronic Arts posted revenues of more than $1.2 
billion for fiscal 1999.  The company develops and publishes 
approximately 100 games and distributes over 1000 software 
titles worldwide for personal computers and video game systems.  
Electronic Arts markets its products under seven brand names: 
Electronic Arts, EA SPORTS(TM), Maxis(TM), ORIGIN(TM), 
Bullfrog(TM) Productions, Westwood Studios(TM) and Jane's 
Combat Simulations.  Sony Playstation software accounts for 
about 40% of its sales.  EA has distribution centers in 75 
countries and derives nearly half its sales internationally. 

ERTS continues to deliver the games and the gains.  Sega 
Dreamcast Internet gaming station was released to sellout crowds 
earlier this week.  It looks like a big hit.  Guess who just 
bought the online interactive gaming company, PlayNation?  Yep, 
ERTS did.  With interactive CD-ROM games (Sega Genesis, Nintendo, 
Sony PlayStation), and online gaming now more popular than ever, 
plus the Christmas season on the earnings horizon, it's no wonder 
money managers want a piece of the action.  Helping out in that 
department is 95% institutional ownership, making the float 
fairly low, which requires new entrants desiring large blocks of 
the issue to pay up.  Daily volume between 900 K and 1 mln shares 
last week confirms the interest.  As long as volume remains, ERTS 
should continue to perform.  Support is in the $72-$73 range.  
But on Friday, support came at $75.  Thanks to another new high 
set on Friday, there really is no resistance to speak of, except 
the intraday high of $76.94.  Wait for the market to give us a 
direction on Monday.  Buy the dip, or wait for a clean breakout 
over $77 with volume.  Beware of a potential landmine on 
Wednesday, when the CPI figures will be have been released 
before the market opens.

ERTS continues to roll out new products and spokespersons.  This 
week they announced that Michael Jordan and women's soccer star, 
Julie Foudy would join the line up in interactive game 
appearances and as spokespersons for EA SPORTS.

BUY CALL OCT-70 EZQ-JN OI= 56 at $9.25 SL=7.00
BUY CALL OCT-75*EZQ-JO OI=186 at $6.25 SL=4.50
BUY CALL OCT-80 EZQ-JP OI= 15 at $3.75 SL=2.25 low OI
BUY CALL DEC-75 EZQ-LO OI= 55 at $9.88 SL=7.50
BUY CALL DEC-80 EZQ-LP OI= 25 at $7.75 SL=6.00 low OI

Picked on Aug 22 at    $65.50    P/E = 67
Change since picked    +10.69    52 week high=$77.94 
Analysts Ratings    8-4-1-0-0    52 week low =$33.25
Last earnings  7/99 est= 0.01    actual= 0.04 surprise +300% 
Next earnings 10-22 est= 0.25    versus= 0.17
Average daily volume =  733 K
Chart = http://quote.yahoo.com/q?s=ERTS&d=3m


INTU - Intuit Inc. $103.00  (+11.00)

Intuit is the #1 maker of personal finance software.  Its small 
business accounting and tax software accounts for about half 
of sales but Intuit also makes the well-known Quicken personal 
finance and Turbo Tax filing applications.  The Internet has 
created a simplified opportunity for finance transaction 
processing and Intuit has jumped on the bandwidth wagon.  The 
company offers Internet products and services such as financial 
news site Quicken.com, payroll processing, insurance marketing 
and mortgage filing. Intuit sells via retailers and resellers.

Intuit just recently ended its fiscal year 1999 with solid 
financial performance and a strong balance sheet.  Fiscal Q4 
results, released on Thursday Aug 26, were also $40 million 
stronger than what analysts were expecting.  Intuit said it 
had a loss of $0.26 per share, before special adjustments from 
the sale of securities of $16.3 million, compared with pro 
forma net income of $1.6 million, or 3 cents a share in the 
year-earlier period.  Analysts had expected Intuit to report 
a loss of $0.33 cents a share.  Lise Buyer, an analyst at 
Credit Suisse First Boston raised her rating on the stock to 
a Strong Buy from a Buy.  She believes that this is one of the 
few stocks you can invest in that has a clear firing-on-all-
cylinders business model and also offers all the potential 
benefits of the Internet.  Based on her calculations she has 
put a price target of $115 on the stock.

But we haven't got to the good stuff yet, Intuit announced on 
Thursday after the close that its Board of Directors has declared 
a 3:1 stock split.  The payment date for the stock dividend 
will be September 30.  This caused the big jump on Friday.  We 
are expecting a strong run up ahead of a rather sudden ex-date 
for the stock.  The problem is entry points.  We are listing 
INTU now to be able to jump in at a moment's notice.  We should 
see some support on a pullback to $98 which would make for a 
nice entry and possible resistance is at the 52-week high of 
$110.75.  So keep this one up high on your watch list and cross 
your fingers for a pullback that will allow us jump on board.

     Wait for pullback!

Picked on Sep ??? at             P/E = 17
Change since picked              52 week high=$110.75
Analysts' ratings    3-8-1-0-0   52 week low =$ 34.50		
Last earnings 08/99 est= -0.33   actual= -0.26
Next earnings 11/99 est= -0.56   versus= -0.45
Average daily volume =   741 K
Chart = http://quote.yahoo.com/q?s=INTU&d=3m


INTC - Intel Corp $87.38 (-1.93)(+6.31)(+3.06)(P3W +10.94) 

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 has been riding high on a wave of new products and analyst 
enthusiasm.  The company's foray into the lucrative and growing 
networking market will provide INTC with both diversity and a 
means for future growth.  In the interest of brevity and avoiding 
repetition, we refer you to the INTC write-ups from the past 
week (available on the website) for greater detail.  This play 
has given us ample returns since we added it 6 weeks ago and, 
while the trend is still up, we must be concerned about 
protecting profits.  As we mentioned Thursday, a drop greater 
than one point below the 10-dma could indicate trouble and 
INTC did dip just below its 10-dma on Friday.  Therefore, we 
either need to see a bounce in the stock price this week or be 
prepared for the possibility of more consolidation.  A bounce 
off this level will keep us solidly in the play.  However, further
consolidation would move us to the sidelines until we see a new 
uptrend, perhaps caused by an earnings run. (Earnings are still 
a month away.)  Remember too that interest worries can weigh 
heavily on tech stocks and the CPI report will come out this week.

A great deal of news on INTC has been summarized in our write-ups 
over the last 10 days.  Again, please refer back.  One new item: 
on Sept. 20th, the CBOE will begin trading INTC, among other
options that are now traded on the other exchanges. 

BUY CALL OCT-85*INQ-JQ OI=12417 at $6.25 SL=4.50
BUY CALL OCT-90 INQ-JR OI=11868 at $3.63 SL=2.00
BUY CALL OCT-95 INQ-JS OI= 8696 at $1.94 SL=1.00

Picked on Jul 31st at    $69.00   P/E = 37 
Change since picked      +18.38   52 week high=$89.50 
Analysts' ratings   13-15-6-0-0   52 week low =$37.28 
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 = 22.8 mln 
Chart = http://quote.yahoo.com/q?s=INTC&d=3m 


FLEX - Flextronics International $63.75 (+0.63)

FLEX is a specialist in their field of electronics, 
manufacturing electronic circuit boards and components.  In 
the three months of their latest quarter, the company's sales 
grew to $530 million (a 41% increase) by providing design and 
engineering, state of the art manufacturing, distribution and 
inventory solutions to their OEM clients.  They were able to 
keep $18 million of this, to increase net income 51%.  FLEX 
specializes their services in the telecommunications, medical 
device, electronic components and networking industries.  They 
have strategically located their facilities across the globe, 
to provide customers with the most efficient and cost effective 
solution to their electronic component needs. 

Remember that we are playing FLEX because of it's historical
predictability to use it's chart and 10-dma as support.  This
gave us a nice little bump last week in profit, while the
market was negative.  We now appear to be consolidating back
to support at $62.  Savvy investors should have protected 
gains and stand ready to re-enter on dips close to support.
Friday gave us a dip to $62.88 which would be a buy able point.
Our trend still looks good however, there should be some
continued selling back to support, as our stochastic has
dipped and the market is uncommitted.  A note of comfort could
be the flat interval chart on Friday.  FLEX hung out pretty
steady at the $63.75 level, which should be a short-term support
level.  Remember that support is a base and as a climber climbs,
the base camp moves with him.  Watch the charts to establish 
your base and move parallel with the markets to know when to 
buy.  We are still getting mixed signals as to a rally so
use caution.

FLEX has not provided us with any recent news right now but
as we approach Y2K, we would expect some attention.  They are
in fact very closely tied to the event with their circuit
boards.  Since most tend to procrastinate preparation, watch
for more news in the next few months.

BUY CALL OCT-55 QFL-JK OI=111 at $10.75 SL=7.88
BUY CALL OCT-60*QFL-JL OI=135 at $ 7.25 SL=5.38
BUY CALL OCT-65 QFL-JM OI=225 at $ 4.68 SL=2.75

Picked on Sept. 5th at  $63.13    P/E = 42
Change since picked      +0.63    52 week high=$66.25
Analysts Ratings     9-7-1-0-0    52 week low =$12.00
Last earnings 06/99  est= 0.34    actual= 0.34 
Next earnings  10-8  est= 0.37    versus= 0.30
Average daily volume =   764 K
Chart = http://quote.yahoo.com/q?s=FLEX&d=3m


ADI - Analog Devices Inc $56.25 (+2.69)(+2.25)(+5.44)

Analog Devices, Inc. is a semiconductor company that designs, 
manufactures, and markets high-performance circuits used in 
analog and digital signal applications.  Its normal linear ICs 
translates pressures, temperatures and sound into digital as 
well as analog signals.  The chips are used in communications 
equipment and  computers.  Other arenas where the chips are 
implemented are in engineering, medical and scientific 

ADI had another positive performance on Friday despite the 
sell off at the end of the trading session.  The stock was up 
$0.25 Friday to close at $56.25 on above average volume.  
With Friday's gain, ADI is now once again pushing toward a 
new all-time-high.  Currently, the stock is only $0.63 away 
from setting a new benchmark above $56.88.  Technically, the 
stock is still looking strong.  ADI is still consistently 
closing above its 10-dma, which has also been a good entry 
point.  Also, the semiconductor sector had a fairly good day on 
Friday as well.  The PHLX semiconductor Index was up 5.91 points 
to close at 564.77.  Texas Instruments, LSI Logic and National 
Semiconductor are other stocks to gauge sector performance and 
were also bullish on Friday.  For those of you wanting to get 
into the play, watch the markets direction on Monday before 
you pick your entry point.  If its bullish, ADI could breakout 
to new highs.  With the higher-lows pattern that ADI has in 
place, it either needs to breakout early next week or break 
below support at the 10-dma.  This means stops are a good 
idea at this level.

ADI announced on Sep 10th reiterated its development of the new 
controllerless V.90 modem chipset.  ADI designed the chip set 
with its exclusive partner on the project, 3Com.  The AD1807 
and AD1804 chipset are the first to feature a integration 
between the digital signal processor and the silicon data 
access arrangement. This feature will lead to future cost and 
space reductions. 

BUY CALL OCT-50 ADI-JJ OI=152 at $8.00 SL=6.25
BUY CALL OCT-55*ADI-JK OI=489 at $4.88 SL=3.25
BUY CALL OCT-60 ADI-JL OI=265 at $2.56 SL=1.25

Picked on Aug 28th at    $51.31    P/E = 62 
Change since picked       +4.94    52 week high=$56.88             
Analysts Ratings      8-6-1-0-0    52 week low =$12.00                  
Last earning 08/99    est= 0.29    actual= 0.30                            
Next earning 12-02    est= 0.35    versus= 0.16                            
Average Daily Volume = 1.01 mln 
Chart = http://quote.yahoo.com/q?s=ADI&d=3m


JDSU - JDS Uniphase $112.00 (-1.25)(+3.06)(+8.25)(+4.88)

JDSU is a laser subsystem and equipment manufacturer for the 
photonic/electronic industry.  Their products reside in 
telecommunications, signal processing and laser-based 
semiconductor wafer inspection and analysis equipment.  Their 
chips increase the carrying capacity of fiber optics.  They 
also make dense wavelength division multiplexers (DWDM) which 
monitor network capacity and boost their performance.  Their 
sales are primarily to telecom companies, central switching 
stations, research labs and bar-code scanning manufacturers.  
40% of its sales are derived outside the U.S.

JDSU is beginning to show some weakness in the technical chart, 
which is confirmed by diminishing volume.  While the NASDAQ was 
trading over 1 bln shares per day, JDSU traded just 70% of its 
ADV.  Nobody was lining up to buy this stuff, despite what was 
reported to be a positive analyst meeting at the Salomon Smith 
Barney conference last Tuesday.  Of course, this weakness could 
be a buying opportunity.  JDSU can't keep up with its orders, 
even though it is the largest and most able to supply the 
increasingly demanded volume of active and passive laser 
subsystems that run and manipulate the light down a strand of 
fiber in this new age of photons.  The Growth rate is still 60%; 
margin rate is 23%; thus demand is huge.  We don't think this 
lull in price will last, as long as the rest of the market 
continues its advance into earnings season.  Friday's trading 
found support at $111 but it's a bit stronger at $106.  This play 
is still volatile.  With low volume, plus the jitters that may 
occur prior to Wednesday's CPI figure release, there's added 
risk.  If you can stomach the uncertainty, target shoot the 
dips at your favorite support level.  For you more conservative 
types looking for some action, wait for the move over $115 
backed by strong volume and of course confirm market direction 
before playing.

In a recent SEC filing, JDSU will be holding a special 
shareholder meeting September 28 to vote for an increase of 
authorized shares to 300 mln from 200 mln.  This could allow for 
a 3:2 split, but with 173 mln shares already outstanding, a 2:1 
won't be possible.  Don't read too much into this yet.  It could 
be that JDSU just needs some currency to go shopping for other 
companies that could add to the mix.  SG Cowan has a Strong Buy 
rating issued with a $130 price target.  Gruntal and Co. has a 
Strong Buy rating issued with a price target of $185(!!).  
Salomon Smith Barney, like the gracious host it is, issued a Buy 
rating this week with a $130 price target.

BUY CALL OCT-110*UNQ-JB OI=1050 at $ 9.38 SL= 7.00
BUY CALL OCT-115 UNQ-JC OI= 166 at $ 7.00 SL= 5.25
BUY CALL OCT-120 UNQ-JD OI=1540 at $ 5.13 SL= 3.25 High Risk!
BUY CALL DEC-115 UNQ-LC OI= 180 at $12.50 SL=10.00
BUY CALL DEC-120 UNQ-LD OI=3275 at $10.13 SL= 7.75

Picked on Aug 29th at   $110.19    P/E =N/A
Change since picked       +1.81    52 week high=$120.88
Analysts Ratings     9-10-0-0-0    52 week low =$15.62
Last earnings   07/99 est= 0.21    actual= 0.24 surprise +14.2%
Next earnings   10-27 est= 0.24    versus= 0.12
Average daily volume = 1.60 mln 
Chart = http://quote.yahoo.com/q?s=JDSU&d=3m


The Option Investor Newsletter             9-12-99
Sunday                4  of  7


Semi-Conductor Continued

CNXT - Conexant $77.63 (+1.25)(+5.13)(+5.66)

Spun off as the electronic chip division of Rockwell Intl in 
December 1998, Conexant is a major manufacturer of 56K PC modem 
chips and is now the largest communications semiconductor 
manufacturer in world, with estimated 1999 revenues of $1.4 bln.  
With 56K modems reaching saturation, CNXT has expanded its 
product line to include chips for personal imaging (fax machines, 
office peripherals, video systems), wireless communications 
(cordless phones, global positioning system receivers), digital 
infotainment (cable modems, set-top boxes) and network access 
(corporate hubs and multiplexers).  Network access is another 
name for DSL and Wide area network transport.  Competitors are 
Broadcom, Texas Instruments and Intel.  Customers include Compaq 
and Ericsson.

On Friday, despite losing over $2 with volume only 60% of its 
ADV, CNXT continued to find support at $77, and did so again in 
the final 4 minutes of trading, pulling substantially off its 
low with a final volume surge.  The technical chart is still in 
the positive.  No matter what the day-to-day action looks like, 
CNXT still plays a big part in digital communications.  Just last 
week, Sega released its Dreamcast interactive Web terminal, with 
CNXT modem technology to sellout crowds.  It's a big hit.  Not 
only that but CNXT chips are finding their way into more GSM and 
CDMA mobile PCS devices, cable modems and corporate networks.  
Business is brisk and, according to some analysts, demand is 
outstripping their ability to produce, necessitating construction 
of new capacity in a hurry.  Nonetheless, though setting an all-
time closing high on Thursday, volume remains low, indicating 
CNXT may need a breather.  As noted earlier, support is $77; 
overhead resistance is $81, its intraday high.  Feel free to 
target shoot this at $77 (or better, if your greed factor is a 
bit higher), or wait for a breakout over $81 with volume if you 
want to play it a bit safer.  Target shooting in front of the CPI 
numbers Tuesday may get you a good entry.  Just be mindful that 
investors' cool reception to the numbers may put the chill on 
the play too.

News is sparse but the big announcement last week was Sega's 
release of CNXT powered equipment.  See above.

BUY CALL OCT-75*QXN-JO OI=150 at $ 8.50 SL=6.50
BUY CALL OCT-80 QXN-JP OI=283 at $ 5.50 SL=3.75
BUY CALL JAN-80 QXN-AP OI= 78 at $12.38 SL=9.75
BUY CALL JAN-85 QXN-AQ OI= 28 at $10.25 SL=8.00 low OI

Picked on Sep 5th at     $76.38    P/E = N/A
Change since picked       +1.25    52 week high=$81.00
Analysts Ratings      6-6-0-0-0    52 week low =$13.00
Last earnings 07/99   est= 0.17    actual= 0.24 surprise +41.2%
Next earnings 10-20   est= 0.26    versus= N/A
Average daily volume = 1.51 mln 
Chart = http://quote.yahoo.com/q?s=CNXT&d=3m


TXN - Texas Instruments Inc. $90.63 (+2.69)(+8.38)

Texas Instruments is a global semiconductor company and a 
leading designer and supplier of digital signal processing 
solutions.  TXN has a 45% share of the market for digital 
signal processors.  DSPs convert signals such as sound and 
light into digital form and are used in cellular phones, 
VCRs, camcorders, cars and modems.  The company also makes 
analog chips, logic chips, microprocessors and micro-
controllers.  It's pioneering digital light processor uses 
tiny mirrors to create an ultrasharp display for TVs, PCs 
and movie theaters.  

The roller coaster ride we experienced throughout the week 
finally came to an end, lucky for us we ended on the top.  
Technology stocks rallied Friday as sidelined investors 
rushed back into Internet and Technology stocks, resulting 
in an all-time high for the NASDAQ.  Participating in the 
tech rally was our play, TXN.  Making a slight comeback 
from Wednesday's losses, the stock managed to end the week 
on a positive note.  Other events helping our play are two 
press releases.  First, PaineWebber's raised its price 
target on TXN to $110 and second, Merrill Lynch started TXN 
as its top maker of semiconductor communications chips on 
its list of top 10 technology companies.  With such good 
news about the company lately and considering the strength 
in the overall technology sector, let's see if we can maintain 
this upward momentum into Monday's trading and reach higher 
highs.  We are expecting another volatile week of trading 
as investors prepare for the release of the CPI numbers on 
Wednesday.  To be safe, make use of the recommended stops.     

There was little news on Texas Instruments this week.  On 
Thursday, TXN was listed on the Merrill Lynch top 10-tech. 
stocks pick list.  This news should help our play as investors 
update up their own portfolios with the recommended stocks.  
On Wednesday, PaineWebber said it raised its price target on 
Texas Instruments to $110 per share from $85.
BUY CALL OCT- 85 TNZ-JQ OI= 993 at $8.88 SL=6.75
BUY CALL OCT- 90*TNZ-JR OI=1950 at $5.88 SL=4.25
BUY CALL OCT- 95 TNZ-JS OI= 660 at $3.63 SL=1.75
BUY CALL OCT-100 TNZ-JT OI= 797 at $2.06 SL=1.00 High Risk!

Picked on Aug 31st at    $82.06    P/E = 78
Change since picked       +8.56    52-week high=$92.69
Analysts Ratings     14-9-5-1-0    52-week low =$22.69
Last earnings 07/99   est= 0.80    actual= 0.92
Next earnings 10-19   est= 0.43    versus= 0.41
Average daily volume = 3.40 mln
Chart = http://quote.yahoo.com/q?s=TXN&d=3m


DELL - Dell Computer $49.56 (+0.13)(+2.38)

Dell is the direct sales model leader and pioneer of the online 
retail business.  They sell PC's notebooks, servers and work 
stations built to order direct from their factories worldwide.  
Dell also markets a variety of peripherals and software for 
other manufacturers.  They are growing at an annual rate of 41% 
with margins that are the envy of the industry. Their return on
equity is a whopping 79%.  Almost 70% of its systems are sold 
to government entities and large businesses.  They are the 
world's leading direct computer systems company and one of the 
top five computer vendors in the world.

A week of opportunity is what we will call this past week for 
Dell.  We mentioned that buying the dips to the 10-dma have 
proved to be profitable lately and we got our chance mid-week.  
Dell dipped to $47.63 on Wednesday before rebounding to close 
right back at short-term highs.  We have built a nice pattern 
of higher-lows which makes us believe we could break above $50 
next week if the market cooperates.  Our next resistance point 
would be at the old 52-week high at $55.  Dell's strength for 
the past few weeks have come from renewed interest after a 
strong earnings report.  Dell is also in a hot sector, which is 
entering it's strong season.  The next entry points should be 
a bounce off the 10-dma again or a breakout over $50.  Either 
way we will need the NASDAQ to continue to shine for optimum 
The big news this week was Wednesday's announcement after the 
close to purchase ConvergeNet Technologies for $340 million.  
This is part of Dell's plan to become one of the top 3 companies 
in computer storage.  The Dell will record a one-time charge 
against after-tax earnings of five to seven cents per share 
for purchased in-process research and development expenses.  
We think of this a positive development as storage is considered 
to have the best growth potential among the computer sector 
in the next couple years. 

BUY CALL OCT-45 DLQ-JI OI=15793 at $5.88 SL=4.25
BUY CALL OCT-50*DLQ-JJ OI=31123 at $2.81 SL=1.50
BUY CALL NOV-50 DLQ-KJ OI=36147 at $4.38 SL=2.75
BUY CALL NOV-55 DLQ-KK OI=22198 at $2.25 SL=1.00

Picked on Sep 5th at     $49.44    P/E = 73
Change since picked       +0.13    52 week high=$55.00
Analysts Ratings    13-12-7-0-0    52 week low =$20.38
Last earnings 08/99   est= 0.17    actual= 0.19 
Next earnings 11-12   est= 0.20    versus= 0.14
Average daily volume = 24.8 mln
Chart = http://quote.yahoo.com/q?s=DELL&d=3m


SUNW - Sun Microsystems Inc, $85.69 (+1.19)(+8.31)(+1.94)

Sun Microsystems is the largest computer maker that uses its 
own chips.  Probably their most talked about product is "JAVA", 
a programming language which is intended to create software 
that can run unchanged on any kind of computer.  SUNW is also 
a leading maker of UNIX-based workstation computers, storage 
devices and servers.  They compete with the biggest on the 
block in Microsoft, IBM and Compaq.  SUNW markets its hardware 
and software products to primarily in the telecommunications 
and financial industries.  General Electric is on of their 
better customers and accounts for approximately 14% of their 

Shares of Sun Microsystems managed to close out the week on a
positive note.  After a long holiday weekend investors came back
to work ready to buy.  SUNW made a new high Wednesday at $88.00
before the bulls decided to take some money off the table.  
Prices of the chip maker then slid to an intraday support level 
of $81.75 when the buyers decided to step back up to the plate.  
Volume on the decline was a solid 11.0 mln shares but did seem 
to be "orderly" as compared to a mad rush to get out.  Can SUNW 
continue the strength exhibited in Friday's session?  We believe 
it probably can but it will require some fresh buying and new 
found enthusiasm.  Investors and analysts alike aren't overly 
excited about the release of Sun Microsystem's "Sun Ray" desktop
computer unit released earlier this week.  Being selected by 
Merrill Lynch to be one of their "Top Ten Tech" investments may
help light a fire under SUNW and a reiteration of a Buy rating
from Bear, Stearns & Co. won't hurt either.  We have more reports
being released this week, with most eyes focused on the CPI, 
which will be out bright and early Wednesday.  PPI didn't help 
much Friday and the CPI may not either.  If SUNW is going to make
its way higher it may have to go it alone or get some help from 
others in the hardware industry.  We should see more institutions
back in the game this week which could also give SUNW an added 
nudge.  If you are in a play in SUNW, keep your stops tight.
In considering a new play assess your risk profile, and look for 
a positive movement supported by strong volume.  

In the news, SUNW lost two more members of its corporate family
this week.  Wednesday A. Michael Spence resigned from the board 
of directors, to pursue other interests.  Friday William J. 
Raduchel resigned to join America Online, as the company's chief
technology officer.  Raduchel's departure come just weeks after
SUNW lost its chief Java technology executive Alan Baratz.

BUY CALL OCT-80 SUQ-JP*OI=11070 at $8.63 SL=$6.50
BUY CALL OCT-85 SUQ-JQ OI= 5442 at $5.50 SL=$3.75
BUY CALL OCT-90 SUQ-JR OI= 4130 at $3.38 SL=$1.75

Picked on Aug 28th at    $76.19    P/E = 67
Change since picked       +9.50    52 week high=$88.00
Analysts Ratings     10-9-3-0-0    52 week low =$19.19
Last earnings 06/99   est= 0.47    actual= 0.48 surprise +2.13%
Next earnings 10-14   est= 0.31    versus=-0.25
Average daily volume = 7.96 mln
Chart = http://quote.yahoo.com/q?s=SUNW&d=3m


QLGC - QLogic Corp. $96.19 (+2.22)(+2.69)

If time is money, then QLogic is providing eight of the ten 
top server manufacturers with better speed and performance than 
their competition.  Companies like IBM, Dell, Fujitsu, Quantum, 
Hitachi and others, all view QLogic as the innovator and the 
place to be when it comes to providing SCSI, enclosure management 
products, storage subsystems and data storage peripherals.  
QLOGIC is so innovative that they were the ones who provided 
the industry with the first standard  SCSI processor.  Labeled 
as one of the "most booming young companies" of 1998 by Fortune 
Magazine, they are responsible for the new growth market of 
Fibre Channel.  This is allowing them to be ranked a true 
leader in the electronic components and semiconductor industry. 

QLGC has an incredible chart and a strong trend.  The stock 
has been very consistent in using it's support lines as 
stability and offering good buying opportunities.  For the most 
part, this support has been the 10 & 20-dma's however, the 
50-dma has also prevented the stock from turning into a negative 
trend.  So onward and upward QLGC went to a new 52-week high 
on Friday.  Business and earnings have also been good for QLGC.  
In a very bullish move, the company announced a 2:1 stock 
split days before their earnings announcement.  They then gave 
investors a 20% surprise in earnings, along with the stock split 
in August.  QLGC looks poised to continue this high growth and 
investors have been rewarded for the companies good management.  
QLGC stands ready to gain on any tech rally and, as stated 
above, is resilient to support on corrections.  It is prudent 
to point out, that we haven't seen the conviction in the 
market yet so be careful.  Y2K and the ever present economy 
could throw us a wrench.  Confirm a commitment upward in the 
market and stock before entering.

Robert Zuccaro, manager of the Grand Prix Fund referred to
QLGC as one of his picks for successful, high growth 
stocks.  He noted that the companies strong growth are 
one of the reasons his fund does so well.  Kevin Marder of
CBS Marketwatch also listed QLGC in his list of companies
that showed a lot of institutional buying interest.

BUY CALL OCT- 90 QLQ-JR OI=117 at $12.13 SL=9.50
BUY CALL OCT- 95*QLQ-JS OI=137 at $ 9.38 SL=6.83
BUY CALL OCT-100 QLQ-JT OI=266 at $ 6.63 SL=4.75

Picked on Sept 12th at  $96.19    P/E = 109
Change since picked      +0.00    52 week high=$98.75
Analysts Ratings     3-3-1-0-0    52 week low =$12.63
Last earnings 06/99  est= 0.25    actual= 0.30 
Next earnings 10-08  est= 0.31    versus= 0.17
Average daily volume =   565 K
Chart = http://quote.yahoo.com/q?s=QLGC&d=3m


EMC - EMC Corporation $68.13 (+2.63)(+5.25)

At times, we all need someone to back us up.  Well EMC makes it 
their business to back us up.  They focus solely on providing 
the world with leading solutions on information storage and
retrieval systems.  They are literally the world leaders in this 
area on every platform.  Because of their focus and dedication,
they have obtained significant customers in banking, 
telecommunications, airline, manufacturing, Internet and other
industries where the management of massive information is
critical.  There's a good chance that your information is 
handled by an EMC system somewhere.  They're managed well also 
with a 52% return in net income.  

They're back!  Talk to almost any investor and they'll probably 
tell you they're familiar with EMC.  This was an incredible 
growth stock last year and then it fell into some range 
trading in early April of this year.  Friday EMC broke 
resistance at $66 and shot ahead to a new 52 week high of 
$68.94.  This move is showing momentum as well with a little 
above average volume and a widening MACD due to news.  The 
stock has been impressively resilient to the recent market 
fluctuations and appears ready to ride any tech rally that
we may see.  Typically a break above resistance with momentum 
is a sign of a continued and renewed trend.  We'd like to think
so.  Friday the stock closed near it's high but not quite there 
due to some late day profit-taking.  This is a sign of
caution so confirm continued buying and a positive market
before playing.

On Friday, Merrill Lynch listed it's top recommendations
in technology stocks, of which EMC was listed in the
"favored 15" list.  They mentioned that they were focusing
away from the Internets and more on the underlying hardware
and software companies.  This news was definitely a contributing 
factor to Friday's move in EMC shares.  Worth noting, DELL 
announced they would buy ConvergeNet Technologies, a competitor 
of EMC.  They said however that they were going to focus on mid-
range systems and leave the large enterprise market to EMC.  

BUY CALL OCT-60 EMB-JL OI= 8640 at $9.63 SL=7.38
BUY CALL OCT-65*EMB-JM OI= 6491 at $6.00 SL=4.25
BUY CALL OCT-70 EMB-JN OI= 9886 at $3.25 SL=1.63

Picked on Sep 12th at   $ 68.13    P/E = 74
Change since picked       +0.00    52 week high=$68.94
Analysts Ratings     14-6-2-0-0    52 week low =$20.81
Last earnings 06/99   est= 0.24    actual= 0.27 
Next earnings 10-19   est= 0.27    versus= 0.19
Average daily volume = 5.56 mln
Chart = http://quote.yahoo.com/q?s=EMC&d=3m


NTAP - Network Appliance Corp. $67.75 (-0.75)

Their customer base is an impressive group of clients.  Names 
like Yahoo, AOL, Motorola, Siemens and the UK's #1 ISP Demon 
Internet depend on them daily.  Network Appliance uses its 
Netcache software and NetApp suite of network storage servers 
or filers.  These products are designed for and provide fast 
reliable cost effective service for Internet service providers 
and corporate intranets.  NTAP's hi-powered ONTAP operating 
system allows simultaneous access by users from Windows, UNIX 
and Web platforms.  NTAP is located in Sunnyvale, Ca and 
competes against EMC, Sun Microsystems, Cisco Systems and Novell. 

What's not to like about a company that has made it to the 
number 4 spot on  Forbes 1999 list of "America's Fastest Growing 
Companies."  NTAP also earned a position in the S&P 500 Index.
NTAP was one of the lucky few this past earnings season that 
didn't get kicked in the teeth for reporting better than 
expected earnings.  Since beating the street by $0.02 on August 
18th NTAP has climbed from the $55 area to a high Tuesday of 
$69.69.  After retreating to the $65 area near its 10-dma, NTAP 
regained its focus yesterday closing up over $2 for the session 
on better than average volume with 1.5 mln shares changing 
hands.  Sales for the computer networks company rose over 80% 
and net income jumped 90% in the latest quarter and current 
projections are for more of the same.  We would look for more 
upgrades from analysts as the last upgrades came in May.  It 
may a little early yet but on August 27th, NTAP filed with the 
SEC to have an additional 3.3 mln shares reserved for issuance.  
Their annual stockholders meeting is scheduled for October 26th 
in Sunnyvale, Ca.  NTAP did split in late December of 1997 
and 1998.  When they announced the split last year shares of 
NTAP were trading in the $70-$72 area.  The tech sector has 
basically remained very strong and has led the NASDAQ to new 
highs.  Intraday support for NTAP is in the $65 area.  When 
considering a play in NTAP, look for a positive move in the 
stock itself accompanied by those in its industry.  As always
assess your risk profile and set your stops accordingly. 

Earlier this week NTAP and Legato Systems announced a partnership
dedicated to delivering open and scalable data protection 
solutions for enterprise customers.  The two companies are 
co-founders of the Network Data Management Protocol(NDMP), an
open standard protocol for network-based backup of network-
attached storage.

BUY CALL OCT-60*NJQ-JL OI= 72 at $ 9.75 SL=$7.50
BUY CALL OCT-65 NJQ-JM OI= 30 at $ 6.50 SL=$4.75 low OI
BUY CALL OCT-70 NJQ-JN OI=341 at $ 3.88 SL=$2.50
BUY CALL DEC-65 NJQ-LM OI=130 at $10.13 SL=$7.50
BUY CALL DEC-70 NJQ-LN OI= 78 at $ 7.75 SL=$6.00

Picked on Sep 11th at    $67.75    P/E = 130
Change since picked       +0.00    52 week high=$69.69
Analysts Ratings      6-3-1-0-0    52 week low =$16.00
Last earnings 08/99   est=-0.14    actual= 0.16 surprise +14.3%
Next earnings 11-17   est= 0.17    versus=-0.11
Average daily volume = 1.07 mln
Chart = http://quote.yahoo.com/q?s=NTAP&d=3m


HGSI - Human Genome Sciences $87.50 (+10.50)(+5.25)(P5W+27.38)

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.

Our speculation play with HGSI has paid off for us, to the tune 
of over 40% since our pick.  We choose HGSI, as a play for it's
technical strength and ability to use it's 10-dma as a guide.
Kudos to those who have profited, as we have seen investors
expectations of HGSI become reality on the hope of new a 
break through in the drug and biotechnology sector.  A word
to the wise.  Even though HGSI still has a lot of potential,
protect your success.  Friday's action in the stock has turned
us negative on our 9/3 day stochastic.  We are also seeing a
significant drop in volume.  Over 50% less than average. 
Combine this with the uncertainty of the market and you can
see the need for caution.  Any news surprise can start us up
again but for now we don't see anything immediate.  Support 
sits at $78 and resistance is at $90.  Wait until HGSI 
approaches support or breaks through resistance before
initiating any new plays.

Patent filings play a key role in the price movement of HGSI.
Friday, Roger A Armitage announced his resignation from the
board of directors with HGSI.  He has accepted a position with
Eli Lilly as Vice President, and general patent counselor. His
effort on behalf of HGSI will be greatly missed.

BUY CALL OCT-80*HQI-JP OI=50 at $12.00 SL=9.50
BUY CALL OCT-85 HQI-JQ OI=19 at $ 9.13 SL=6.75 low OI
BUY CALL OCT-90 HQI-JR OI=97 at $ 7.38 SL=5.75 High Risk!

Picked on Aug 8th at    $60.50     P/E = N/A
Change since picked     +27.00     52-week high=$96.25
Analysts Ratings     1-3-2-0-0     52-week low =$24.50
Last earnings 07/99  est=-0.20     actual= -0.10
Next earnings 10-28  est=-0.32     versus= -0.09
Average Daily Volume =   526 K
Chart = http://quote.yahoo.com/q?s=HGSI&d=3m


BGEN - Biogen Inc $89.00 (+4.19)

Biogen is a biopharmaceutical company that researches, develops, 
manufactures, and markets drugs for human health care.  They 
develop and test drugs for multiple sclerosis, pulmonary diseases, 
kidney diseases and disorders, inflammatory afflictions and 
cardiovascular dysfunction as well as focusing on developmental 
biology and gene therapy.  However, Biogen derives about 55% 
of its revenues from the sale of AVONEX, a drug used to treat 
different forms of relapsing multiple sclerosis.  They also make 
money from royalties received on worldwide sales by licensees.  
Biogen also has research alliances with global pharmaceutical 
firms such as Creative BioMolecules, CV Therapeutics and Merck.

We just added this call play on Thursday evening and there are 
numerous conditions in its favor.  First it's evident from 
looking at a 10-day chart that BGEN first broke out during the 
powerful market rally last Friday on September 3rd.  It left 
its firm support level of $77 and $79 to consecutively climb 
into new territory by the day.  On Friday, BGEN peaked at $90.44 
to set the newest 52-week high.  On both Thursday and Friday, 
the stock performed in a classic bull manner by advancing 
straight up from the open.  Second the biotech sector is hot 
and is continuously gaining the respect of WallStreet investors.  
Couple these factors with earnings just around the corner, 
expected on October 4th, and BGEN should have some good 
momentum for a profitable earnings' run.  The following tidbit 
of information may or may not play into this scenario but 
nonetheless needs to be mentioned.  BGEN is actually at a 
price level where it can be considered a split candidate.  
Now granted the stock just split 2:1 on June 25th and 
presently with only 220 mln shares authorized and 150 mln 
shares outstanding there's not quite enough for another 
one but still it became a possibility when BGEN reached $80.  
The last Annual Stockholder's Meeting was on June 11th and 
thus far, there's no word on a Special Meeting, but we'll keep 
you posted on any new developments.   

If the stock pulls back to $85 (which could evolve as new 
support), this would be a solid entry point.  If not, you'll 
need to look for an intraday bottom next week to jump into a 
position.  On Thursday, analyst Todd R. Nelson of Dain 
Rauscher Wessels started coverage for BGEN with a new Buy 
Average rating and issued a 12-month target price of $112. 
He cited a strong outlook for near-term revenue for AVONEX 
and also stated that ROE looks to be over 25% for 1999-2000.

BUY CALL OCT-85*BGQ-JQ OI=319 at $7.50 SL=5.75
BUY CALL OCT-90 BGV-JR OI=165 at $4.63 SL=3.00
BUY CALL OCT-95 BGV-JS OI=  0 at $2.69 SL=1.25 **NEW STRIKE**
BUY CALL JAN-90 BGV-AR OI=542 at $9.50 SL=7.25
BUY CALL JAN-95 BGV-AS OI=  0 at $7.63 SL=6.00 **NEW STRIKE**

Picked on Sep 9th at     $89.19    P/E = 68
Change since picked       -0.19    52 week high=$90.44
Analysts Ratings     9-12-5-0-0    52 week low =$25.18
Last earnings 06/99   est=-0.32    actual= 0.34 surprise +6.25%
Next earnings 10-04   est= 0.36    versus=-0.25
Average Daily Volume = 1.91 mln
Chart = http://quote.yahoo.com/q?s=BGEN&d=3m


CMGI - CMG Information Services Inc $89.88 (+3.63)(-0.88)

CMGI invests in, develops, and integrates advanced Internet, 
Interactive and database management technologies.  The company's 
venture capital arm is called @Ventures and boasts a portfolio 
of over 30 Internet companies such as Lycos and Raging Bull.  
One of the more prominent additions to its portfolio is a 83% 
acquisition of search engine, Alta Vista.  The majority of 
CMGI's revenues (80%) is derived from fulfillment and mailing 
list services.  CEO David Wetherell has about 19% stake in CMGI.

CMGI is a pure and simple earnings' run play.  We added it to 
our call list last week to give readers the opportunity for an 
early entry.  Historically, CMGI is a good candidate for a 
run a couple weeks before its earnings' announcement.  It's 
confirmed that CMGI will report on September 27th, after the 
bell.  So this gives us two weeks to make our plays.  Remember, 
plan to be out of any positions by the time the company reports.  
It's not worth the risk to hold over earnings as many stocks 
will then decline no matter how good the numbers turn out.  
Overall the tech sector is doing well amid the looming interest 
rate scuttlebutt and this is certainly a consequential factor 
in this play.  On Friday, the friendly PPI data gave CMGI 
investors the green light to leave near-term support at $84-85 
and move ahead.  CMGI advanced $2.50 on an increasing level of 
volume (4.71 mln) placing it right on its 50-dma.  A more 
conservative player may wait for it to break through this 
technical indicator as it has previously acted as a point of 

In the news this week, CMGI announced its second offering 
for its discretionary Direct Share Program for its majority-
owned operating companies.  If you have a minimum of 100 
shares in one account as of record on August 25th, then you 
may qualify for an invitation to purchase shares of CMGI's 
NaviSite, a Wesite and application hosting & management 
services company, at the IPO offering price which is 
scheduled to take place in late September.   Also, Mondera.com, 
an e-tailer of luxurious gifts and fine jewelry, secured 
$13 mln from @Ventures to expand its marketing campaign.

BUY CALL OCT-85 QGW-JQ OI=750 at $11.75 SL= 9.25
BUY CALL OCT-90*QGW-JR OI=762 at $ 8.88 SL= 6.75
BUY CALL OCT-95 QGW-JS OI=565 at $ 6.50 SL= 4.75
BUY CALL DEC-90 QGW-LR OI=502 at $15.50 SL=12.00
BUY CALL DEC-95 QGW-LS OI=506 at $13.13 SL=10.75

Picked on Sep 5th at     $86.25    P/E = 154
Change since picked       +3.63    52-week high=$165.00
Analysts Ratings      2-7-0-0-0    52-week low =$  8.87
Last earnings 04/99   est=-0.19    actual=-0.27 surprise -42.1%
Next earnings 09-27   est=-0.20    versus= 0.32
Average Daily Volume = 5.66 mln
Chart = http://quote.yahoo.com/q?s=CMGI&d=3m


The Option Investor Newsletter             9-12-99
Sunday                5  of  7


Internet Continued

SFE - Safeguard Scientifics, $72.50 (+4.62)

SFE invests in and develop partnerships in young, primarily
high-tech information companies.  Safeguard Scientifics takes
the next step in providing managerial assistance to help make
the companies stock desirable to the public.  Safeguard then 
sells all or part of its interest and SFE's own stockholders
profit from rights offerings in the companies Safeguard invests
in.  In short Safeguard is an information technology "holding 
company" that develops and operates Internet-related companies.
They have invested in such high-tech ventures as ComuCom and
Nextron Communications.  Their primary competitor is CMGI,

It's one of those companies you don't hear a whole lot about 
in the news.  SFE continues to locate and develop partnerships 
with quality young high-tech companies, takes them through 
their IPO, aides in the management of the companies and the 
shareholders of SFE continue to reap the rewards.  One such 
company is Chroma Vision Medical Systems(CVSN), which yesterday 
entered a partnership to aid in developing a cancer angiogenesis 
test.  In short, it will aid in determining the treatment 
necessary for particularly aggressive cancers and guide Doctors 
in the needed therapy.  SFE gave us good entry point Wednesday 
and again Friday.  SFE has continued its "text-book" upward 
channel which began back in the first week of August.  We are 
looking for shares of SFE to continue higher as the interest 
in the stock and the volume picked up late in the week, even 
considering the mixed mood in the broader markets.  Technically, 
if SFE can break through resistance in the $75.50 area there 
is no overhead resistance until the $83-$84 area.  MACD has 
just rolled over into positive territory as well.  SFE was able 
to shake off the non-event PPI report Friday and hopefully will 
do the same Wednesday with the release of the CPI numbers.  SFE 
did gap up at the open Friday.  For the "Techies" amongst us 
there is a gap just under $71 which should provide support for 
SFE.  If you entered a play on SFE, adjust you stops accordingly.  
Before entering a new play, confirm a positive move with volume.

In the news, SFE received its first upgrade in nearly six months 
Wednesday when First Union upgraded it from an Outperform to a

BUY CALL OCT-65 SFE-JM OI=119 at $10.25 SL=$7.75
BUY CALL OCT-70*SFE-JN OI=165 at $ 6.75 SL=$5.00
BUY CALL OCT-75 SFE-JO OI= 75 at $ 4.50 SL=$2.75
BUY CALL NOV-70 SFE-KN OI=705 at $ 9.38 SL=$7.00
BUY CALL NOV-75 SFE-KO OI=969 at $ 7.25 SL=$5.50

Picked on Sep 7th at    $70.75     P/E = 18
Change since picked      +1.75     52-week high=$120.00
Analysts Ratings     5-5-1-0-0     52-week low =$ 17.13
Last earnings 06/99  est= 0.19     actual= 0.33
Next earnings 10-19  est= 0.15     versus=-0.55
Average Daily Volume =   472 K
Chart = http://quote.yahoo.com/q?s=SFE&d=3m


AMZN - Amazon.com $66.50 (+4.06)

Amazon.com has become the icon for e-commerce, as they have 
expanded from books to include CD's, online auctions, videos, 
etc.  They also have invested in companies offering online 
pharmacy, groceries and pet supplies.  We're talking online 
diversification here.  Sales have grown to $608 million as of 
the last quarter, up from $203.3 million.  This growth is due 
to Amazon's unique methods of retaining customers and servicing 
those customers like no other online site.  CEO Jeff Bezos 
started Amazon in 1995, they now have more than 10.7 million 
customers that they sell to. 

Looking for a great value and fundamental play?  Don't go here.  
This one is purely Internet momentum based (ok; some fundamentals 
- Christmas selling season is coming).  We were playing AMZN on a 
split run prior to its split date of September 2 but had to drop 
it then in anticipation of a normal split depression.  The good 
news is that AMZN never had a split depression.  Having remained 
flat or risen in price on increasing volume since the split, it's 
back on our list.  Very simply, AMZN now trades back over its 
200-dma since mid-July, excepting a short pop up (reminiscent of 
a prairie dog temporarily sticking its head out of the hole) and 
consolidation in late August.  The whole Internet sector as a 
subsection of technology has momentum behind it and we expect 
that rotation to carry through next week, barring any 
unpleasantries on the inflation front.  Technically, there is 
good support at $62 and we believe dips are buyable to that 
point.  Resistance is at $68, then $70.  However, based on a cup 
and handle formation (a favorite of Investors' Business Daily 
readers) in the making since mid-July, it appears that AMZN is 
likely to continue up.  While we're not making any predictions, 
the next resistance point is at $80.  Remember that playing 
the Internets is for seasoned roller coaster stomachs.  Gyrations 
are wild.  Exercise caution, especially in front of the CPI 
figures on Wednesday morning and wait for the market to give us 
direction before getting in.  Note the change in symbol roots.

In real news, Delta Airlines lost its CFO to AMZN last week, who 
will replace Joy Covey, the current CFO.  Don't fret.  She's been 
promoted to chief strategy officer (is that a title?).  
Furthermore, CIBC began coverage with a Buy rating.  If you're 
watching the buzz on the Net, there were chat rooms buzzing that 
Oprah was going to be auctioning some of her memorabilia on the 
site October 2 and that Jeff Bezos, AMZN's CEO would be making 
an appearance on the Oprah show.  That part is for fun so don't 
base your play on it.

BUY CALL OCT-60 YZZ-JL OI=6183 at $10.38 SL= 8.00
BUY CALL OCT-65*YZZ-JM OI=6400 at $ 7.63 SL= 5.75
BUY CALL OCT-70 YQN-JN OI=6532 at $ 5.38 SL= 3.50
BUY CALL JAN-65 YQN-AM OI=6144 at $13.75 SL=11.00
BUY CALL JAN-70 YQN-AN OI=4287 at $11.63 SL= 9.25

Picked on Sep 12th at    $66.50    P/E = N/A
Change since picked       +0.00    52 week high=$110.62
Analysts Ratings     10-6-4-0-0    52 week low =$ 11.69
Last earnings 07/99  est= -0.49    actual= -0.51 surprise -4.1%
Next earnings 10-27  est= -0.53    versus= -0.47
Average daily volume = 9.30 mln 
Chart = http://quote.yahoo.com/q?s=AMZN&d=3m


INKT - Inktomi Corp. $128.19 (+12.44) 

Inktomi develops and markets software applications designed to 
increase performance of large-scale networks.  Products consist 
of network cache application, Internet search engines and Internet 
shopping engines.  Inktomi's software applications are used 
by Yahoo and also by Hotbot.  For the first nine months of 1999, 
revenues totaled $45 mln.  This was an increase from $12.2 mln 
in 1998.  Also, net loss rose 21% to $19.3 mln during the same 
time period.

INKT is a powerful internet stock with a lot of bullish momentum
behind it.  The stock was up $3.31 points on Friday to end the 
trading session at $128.19.  The benign PPI report on Friday 
morning eased fears of further interest rate hikes and was the 
catalyst that sparked the rally for the entire internet sector.  
The Goldman Sachs Internet Index gained 2.5% on Friday, showing 
renewed strength in the Internets.  Right now INKT, and the 
Internets, have a favorable interest rate environment to operate 
within which is causing the sector to gain momentum and the 
confidence from investors.  From a technical perspective, INKT 
is strong, trading well above its 10-dma of $128.19.  More 
importantly, it has broken above the $122 level that was the 
previous resistance.  Market willing, INKT should climb to 
the next resistance at $140.  If the market decides not to 
cooperate, it will send INKT back to support at $122.  If it 
holds, it will make for a good entry point.  This is purely 
a momentum play so keep your ear on the pulse of the markets 
to make sure it maintains the current rhythm.   

Currently, there are no recent news articles impacting INKT
at this time.

BUY CALL OCT-125*QYK-JE OI=1036 at $13.88 SL=11.25
BUY CALL OCT-130 KYQ-JF OI= 524 at $11.63 SL= 9.50 
BUY CALL OCT-140 KYQ-JH OI= 457 at $ 7.38 SL= 5.75

Picked on Sep 10th at   $128.19     P/E = N/A 
Change since picked       +0.00     52 week high=$159.13             
Analysts Ratings      6-6-3-0-0     52 week low =$ 26.56                 
Last earning 07/14   est= -0.11     actual= -0.10                            
Next earning 10-22   est= -0.09     versus= -0.16                            
Average Daily Volume = 2.11 mln 
Chart = http://quote.yahoo.com/q?s=INKT&d=3m


SFA - Scientific Atlantic Inc. $55.69 (+2.25)(+2.00)(+4.94)

Scientific-Atlanta provides satellite-based and terrestrial-
based networks to a range of customers in a variety of 
applications and provides network management and systems 
integration.  They are also a leader on top of the TV market. 
The company is one of the largest makers of set-top boxes used 
by subscribers to receive cable TV programming and interactive 
services such as movies-on-demand and e-mail.

Time and time again SFA ceases to amaze us with its relentless 
strength for reaching new highs.  Once again, with a little help 
from a late market rally in technology stocks, SFA managed to 
set yet another 52-week high to end the week.  This stock keeps 
going and going higher and higher, it's not the fastest moving 
stock but it gets results.  As a momentum play, SFA has continued 
to meet our expectations with its resilience.  Currently driving 
SFA are investors that continue to buy and hold the stock and 
patiently wait for those higher highs.  These individuals have 
been rewarded very handsomely for their patience, as the stock 
has increased just under $20 or 45 percent in the past month 
alone.  Hopefully this upward trend will continue on Monday, 
which is very possible considering how technology stocks rallied 
to end the week.  After consolidating since Tuesday, SFA is 
looking anxious to make a new move higher.  It bounced off the 
10-dma on Wednesday as is now right under the 52-week high.  
If SFA starts moving, you may have to resort to an intraday 
dip if you want in.  Even though we remain bullish, place the 
recommended stops to be safe after this already amazing run.

There was no additional news to report on SFA at this time. 

BUY CALL OCT-45 SFA-JI OI= 30 at $11.75 SL=9.00
BUY CALL OCT-50 SFA-JJ OI=160 at $ 7.63 SL=5.75
BUY CALL OCT-55*SFA-JK OI=631 at $ 4.25 SL=2.50
BUY CALL OCT-60 SFA-JL OI= 45 at $ 2.06 SL=1.00

Picked on Aug 26th at    $51.13    P/E = 41
Change since picked       +4.56    52-week high=$55.69
Analysts Ratings      8-8-2-0-0    52-week low =$11.75
Last earnings 08/12   est= 0.33    actual= 0.59
Next earnings 10-22   est= 0.28    versus= 0.38
Average Daily Volume = 1.30 mln
Chart = http://quote.yahoo.com/q?s=SFA&d=3m


DISH - EchoStar Communications, $94.00 (+8.12)(+8.63)

Located in Littleton, Co is the second-largest provider of
satellite broadcasting.  EchoStar operates the DISH Network
and offers more than 300 channels of digital TV and audio
programming.  They have over 2.4 million subscribers and also
provide satellite delivery of local network stations in several
large markets.  DISH has formed a partnership with Microsoft 
to provide WebTV access through its DBS system.  They compete 
with industry heavy-weights DIRECTV, Time Warner and AT&T 
Broadband & Internet Services.

DISH had a volatile week, but did give us a chance at a fair
profit.  Tuesday started the week off with a merger in the 
broadcast industry between industry giants Viacom and CBS.
Investors seemed to like what they saw and the potential in the 
merger.  Shares of DISH chimed in closing up $3.13 on the day.
If traders and investors approved of the news Tuesday, they 
were apparently exuberant Wednesday, as DISH exploded to a high
of $96.38 in the first hour of trading.  Apparently investors
figured a move of over 12% in less than two days wasn't a bad 
return and the selling began.  By the end of the day DISH had
fallen back to an intraday low of $87.25.  Did we mention DISH
had a volatile week?  Friday the buyers returned to the party
driving DISH $5.94 higher on volume of over 1.60 mln shares.
All eyes will be on Cape Canaveral early Monday morning as 
EchoStar will hopefully see the launch of EchoStar V, a satellite
that will allow the DISH network to offer 500 channels, including
high definition television, Dolby Digital surround sound and
high-speed interactive television and data services.  DISH seemed
to be unaffected by the mixed results in the broader markets
Friday.  We have the release of CPI on Wednesday and are really
expecting no big surprises.  We do expect shares of DISH to 
continue higher but it has been volatile so keep you stops 
close.  If you are looking at a new play in DISH, as always
confirm market and stock direction before entering a new play.

There is no other news at this time.

BUY CALL OCT- 90*UAB-JR OI=286 at $11.38 SL=$ 9.00
BUY CALL OCT- 95 UAB-JS OI=  8 at $ 8.88 SL=$ 6.75 low OI
BUY CALL OCT-100 UAB-JT OI= 16 at $ 6.88 SL=$ 5.00
BUY CALL DEC- 95 UAB-LS OI= 16 at $15.38 SL=$12.00
BUY CALL DEC-100 UAB-LT OI= 61 at $13.50 SL=$11.00

Picked on Sep 4th at    $85.88    P/E = N/A
Change since picked      +8.13    52 week high=$96.38
Analysts Ratings    10-6-0-0-0    52 week low =$ 8.75
Last earnings 06/99  est=-0.93    actual=-0.80 surprise +13.98%
Next earnings 11-10  est=-0.83    versus=-0.68
Average daily volume =   734 K
Chart = http://quote.yahoo.com/q?s=DISH&d=3m



KO - Coca-Cola Co $55.13 (-2.25)

If you've never heard of Coca-Cola before, welcome to planet
Earth.  Based in Atlanta, Coke is among the recognizable name 
brands in the world.  As the world's largest producer and 
distributor of soft drink syrups and concentrates, Coke has 
over a 50% market share and sells their products in about 200 
countries around the globe.  Coca-Cola offers 160 brands of 
soft drinks including Sprite, diet Sprite, TAB, Fanta, Fresca, 
Mr. Pibb, Hi-C, Mello Yello, Barq's, Surge, Citra, POWERaDE, 
Fruitopia and specialty overseas brands, as well as all of 
the Minute Maid brand fruit drinks.  

After Monday's sharp decline, Coke had a fairly quiet week.
The main news items for the week was that another executive 
has left Coke for another company.  By my math this is the 3rd 
executive to jump ship during the past six months.  Perhaps 
more significant, S&P is now considering a downgrade in KO's 
corporate credit rating.  Their senior notes are currently an 
AA-, so they are far from a junk bond but obviously S&P is 
seeing reason for concern with KO's bottom line.  With no other 
news to go on, we will keep our current positions.  Coke still 
has not broken through support at the 52-week low of $53.63 
but has failed at every rally attempt.  Looking at a fast 
stochastic, KO was probably a little oversold after Monday so 
it appears that a little time is needed to get the bears ready 
to push through the support level.  Upside resistance appears 
fairly strong at 60 but a strong rally seems unlikely unless 
the market as a whole takes off, in which case any put becomes 

BUY PUT OCT-60*KO-VL OI=1536 at $5.50 SL=3.75
BUY PUT OCT-55 KO-VK OI=2635 at $1.94 SL=1.00 

Average Daily Volume = 3.20 mln
Chart = http://quote.yahoo.com/q?s=KO&d=3m 


GPS - The Gap Inc $35.44 (-3.19)(-3.44)

The Gap Inc is a international clothing retailer that operates 
almost 2,600 clothing stores in the United States, Canada, 
France, Germany, Japan, and the UK.  Its stores offer a 
tremendous variety of men's and women's casual clothing.  The 
clothing sold at The Gap consist of T-shirts, jeans, and khakis 
pants.  The company's owns other retail chains including Banana 
Republic, Old Navy Clothing Co, and GapKids.  For the first 13 
weeks ending in May 1, 1999, net sales increased 32% to $2.28 
bln and net income increased 49% to more than $202 mln.

GPS gained $0.25 on Friday to finally end the trading session 
at $35.69.  From a technical perspective, GPS closed well below 
its 10-dma of $37.87.  The 10-dma seems to be a barrier that 
GPS has not been able to penetrate over the last couple of days.  
If the stock starts to rally, it could climb back to the 10-dma 
so watch out.  We are concerned about the double-bottom GPS 
put in on Thursday and Friday at $35.  This may act as short-
term support.  The high open interest in the 35-strike contracts 
is also confirming this.  This sector is full of mixed stocks 
lately.  GPS is obviously on the downside thanks to tough 
year-over-year comparisons and a tougher retail environment 
from interest rate fears.  We are not recommending any new 
plays on GPS until it breaks below $35.  The next support 
will then be $30.     
BUY PUT OCT-40*GPS-VH OI=133 at $5.25 SL=3.50
BUY PUT OCT-35 GPS-VG OI=846 at $2.06 SL=1.00

Average daily volume = 2.09 mln 
Chart = http://quote.yahoo.com/q?s=GPS&d=3m 


CVS - Cvs Corporation $39.88 (-0.56)

CVS is a drugstore chain specializing in prescription drugs, 
over-the-counter drugs, photofinishing services and film, 
greeting cards, beauty & cosmetics, convenience foods and 
seasonal merchandise.  It operates about 4,200 drugstores in 
24 states in the eastern US. Thanks to its acquisitions of 
Revco and Arbor Drugs, CVS is the #2 drugstore chain in the 
US in total sales and #1 in store count and prescriptions 
filled.  Nearly 60% of sales come from pharmacies.  CVS's 
purchase of online pharmacy Soma has expanded its market 
reach to the Internet. 

Unfortunately Friday was not a good start for our new put 
play on CVS.  The stock broke away from its normal downward 
trend that was present for the last month and a half.  We 
mentioned in Thursday's write up that since the stock had 
fallen so far so fast it had the potential to turn and 
disappointingly, this is what happened.  Whether this was a 
dead cat bounce or and actual turnaround remains to be seen.  
We decided to continue the play to confirm whether or not 
the bounce was for real.  From a technical standpoint, CVS 
remains in poor standing, the stock continues to trade well 
below its moving averages and just above its 52-week low set 
last Thursday at $37.25.  Even though we remain bearish on CVS, 
use extreme caution because Friday's rally was supported by 
above average volume, which indicates strength behind the move.  
Continue to watch the stock carefully and confirm negative 
movement before placing new trades.

BUY PUTS OCT-40*CVS-VH OI=94 at $2.50 SL=1.25
BUY PUTS OCT-35 CVS-VG OI=40 at $0.69 SL=0.00 High Risk!

Average daily volume = 2.30 mln
Chart = http://quote.yahoo.com/q?s=CVS&d=3m 


IDPH - IDEC Pharmaceutical $105.44 (-27.06)

IDEC Pharmaceuticals focuses on the commercialization and 
development of targeted therapies for the treatment of cancer 
and autoimmune diseases.  The company's only approved product, 
the best-selling Rituxan, treats non-Hodgkin's lymphoma which 
afflict approximately 240,000 patients in the United States 
and rheumatoid arthritis, which afflicts almost 2 million 
people in the United States.  IDEC's antibody products act 
chiefly through immune system mechanisms, exerting their effect 
by binding to specific, readily targeted immune cells in the 
patient's blood or lymphatic systems. 

How quickly the momentum can change!  IDPH had been soaring 
for months before comments from the company that sales may not 
live up to Q3 forecasts have investors jumping ship.  The news 
came out Thursday morning and caused the stock to fall from 
$138 to $105 in less than 30 minutes.  The concern stems from 
the company saying that sales would come in at the low end of 
estimates.  This is because Q2 sales numbers were partially 
over-inflated because IDEC was raising the price for their drug 
on Sep 01 and therefore companies bought more into inventory 
before the price rise.  That would obviously hurt Q3 because 
some buyers may already be stacked with product.  Another problem 
hurting the stock is a very thin float, thus the $33 drop in 
30 minutes.  The stock did instantly turn around to end Thursday 
at $124 as the CEO reiterated his confidence in Rituxan's growth 
potential. It didn't matter though as the selling resumed on 
Friday and the stock ended at a short-term and day-low, below 
the 50-dma.  This is an EXTREMELY HIGH-RISK PLAY and not for 
all investors.  But we see potential for the stock to drop to 
support at $83 from the 100-dma.  IDPH will remain VERY VOLATILE 
in the short-term so you need pick good entry points to be 
successful.  There is no doubt the long-term outlook for IDEC 
is bright but the steep run up and thin float make the stock 
vulnerable to some more profit-taking. 
BUY PUT OCT-110 IDQ-VB OI=290 at $13.38 SL=10.75
BUY PUT OCT-105 IDQ-VA OI= 39 at $10.25 SL= 7.50 low OI
BUY PUT OCT-100*IDQ-VT OI=547 at $ 8.13 SL= 6.25

Average Daily Volume = 531 K
Chart = http://quote.yahoo.com/q?s=IDPH&d=3m


HNZ - H.J. Heinz Company $43.00 (-1.06)

We've all seen the bottle of Heinz on the restaurant table 
but did you know that Heinz is also responsible for items like 
Weight Watchers, StarKist, Ore-Ida, 9-Live's and others that 
we've come to know and love?  In fact Heinz has 5000 varieties 
of products that they produce and distribute world wide.  The 
company has grown from a horse drawn delivery in the 1800's, 
to a world leader in the food industry.  The company continues 
to grow through acquisition, creative distribution and pricing, 
to the tune of 1%.  The bottom line however, has been hurt by 
increased costs and lower margins.  

So are we not putting Ketchup on our eggs or what?  Heinz has 
missed their earnings numbers and is now experiencing trouble
with their stock.  It's pay back for having to use the knife to
get the ketchup out of the bottle!  Seriously, this is every
stocks worry, the dreaded downgrade.  Investors knew this was
coming, as the stock has been in a slide for some time.  HNZ 
has dropped below all moving averages and has no clearly defined 
support level.  Look out below, a new 52-week low!  What's to 
catch us?  Not much right now.  Our technical indicators are 
looking pretty bearish and we've doubled our volume on the 
news.  We expect to continue the down trend as our market frets 
and more analysts follow with opinions.  As always, confirm 
both market and stock direction before playing.

September 8th was not a good day for bullish HNZ investors, 
the company missed their numbers.  An expected 66 cents per 
share was met with a 65 cent result.  Even though HNZ showed 
some growth, it didn't meet expectations.  Worries are that 
sales are slipping, which brought about a DLJ downgrade on 
Friday.  It appears the salsa revolution has taken over.

BUY PUT OCT-45 HNZ-VI*OI=113 at $3.13 SL=1.50
BUY PUT OCT-40 HNZ-VH OI=155 at $0.50 SL=0.00 High Risk!

Average daily volume = 850 K
Chart = http://quote.yahoo.com/q?s=HNZ&d=3m


SWY - Safeway Inc $42.94 (-3.19)

Safeway operates a retail food and drug chain throughout the 
US and Canada.  They have over 1,500 supermarkets operating 
under the Safeway, Dominick's, Vons and Carr-Gottstein names.  
Safeway also operates a network of distribution, manufacturing 
and food processing facilities.  They are continuing to add 
to their portfolio and are presently acquiring the privately-
held Houston-based grocer, Randall's Food Markets.  In the 
foreign markets, Safeway holds a 49% interest Casa Ley, S.A. 
de C.V., a food chain in western Mexico.  Kohlberg Kravis 
Roberts owns about 6% of Safeway.

SWY first caught our attention when it descended against the 
back drop of an explosive market on Friday, Sep 3rd following 
a Strong Buy reiteration by Banc of America Securities the 
previous day.  This was the first sign of its threatening 
downward spiral.  Then on Wednesday the company announced a 
$1.5 bln three-tranche debt offering.  This news event wasn't 
well received by investors and the stock edged lower.  To add 
to the discord, on Friday SWY announced the $1.8 bln acquisition 
of Randall's Food Markets was approved.  Safeway will pay 
approximately $855 mln in cash and issue about $10.9 mln in 
shares.  Overall SWY has lost $3.19 or 7% of its share price 
this week.  Plus, these losses were amid strong volume.  For 
example, by Thursday trading volume had reached more than double 
its ADV - a very bearish implication.  From a technical view, 
SWY is now below its near-term support level of $46-47 and 
heading towards its 52-week record low of $37.62 reached back 
in Sep/Oct of 1998.  Typically once SWY definitely makes its 
move under the 10-dma (now at $46) it will generally fall about 
8 or so points.  This can be confirmed by looking at a 6-month 
chart.  SWY trades in a relatively narrow range so on one hand 
this makes it more difficult to get an entry if the stock 
continues in a perpetual downslide but on the flip side it's 
much easier to protect your capital and profits with stops.  

BUY PUT OCT-50 SWY-VJ OI=300 at $7.38 SL=5.75
BUY PUT OCT-45*SWY-VI OI=161 at $3.25 SL=1.75
BUY PUT OCT-40 SWY-VH OI=102 at $0.88 SL=0.00 High Risk!

Average Daily Volume = 1.95 mln
Chart = http://quote.yahoo.com/q?s=SWY&d=3m


COST - Costco Wholesale Corporation $69.88 (-2.75)

Costco Companies is the largest wholesale club operator in the 
US.  The company operates about 300 membership warehouse stores 
serving 27 million members in the eastern and western US, 
Canada, Mexico, South Korea, Taiwan and the UK, primarily 
under the Costco Wholesale name.  Stores offer discount prices 
on 3,600 to 4,000 products ranging from alcoholic beverages 
and computer hardware and software to pharmaceuticals and 
tires.  Certain club memberships also offer products and 
services such as car and home insurance, mortgage services, 
and small-business loans; many stores also sell fresh food. 

If your seeking a momentum play that has potential, you may 
want to take a look at our latest put play on COST.  Like many 
of the retail stocks this summer, Costco's stock price has 
been plagued by earnings warnings form various competitors.  
Investors, worried that the whole sector is plagued, have 
been selling shares and making there way to greener pastures.  
This is evident throughout stocks within the sector, including 
Costco.  The stock is currently trading below its 50-dma and 
200-dma and on Friday fell below its support level at $70.  
Technically, this is not a good sign for the stock seeing that 
the next support level is over $10 away around the $57-$58 
range.  Considering the depressed nature of the sector it is 
possible that the stock may fall to these lower levels.  In 
contrast to our views, there was an article released on Friday 
stating that Boring Portfolio announced its intention to add 
COST to its portfolio, a total of $7000 during the next 5 days. 
(No that $7000 was not a misprint) Obviously this invest is 
meaningless to support the stock, you never know how strong 
his following is that will mimic his moves.  Even though we 
stand by our bearish outlook, use caution with this new play 
and we recommend you confirm the stocks direction before placing 
a trade.  Remember the play rides on COST falling below its 
strong support at $70.  Friday's close at $69.88 may just be 
a head fake so confirm direction first.

BUY PUT OCT-70 PRQ-VN OI=791 at $3.75 SL=2.50
BUY PUT OCT-75 PRQ-VO*OI=319 at $6.88 SL=5.25

Average daily volume = 1.85 mln
Chart = http://quote.yahoo.com/q?s=COST&d=3m


The Option Investor Newsletter            9-12-99
Sunday                6  of  7


A New Record And Another Key Moment..

Friday, September 10

Markets were mixed Friday after a report on inflation clouded the
issue of inflation and the probability of higher interest rates.
The Dow Jones industrial average fell 50 points to 11,028 while
the Nasdaq composite rose 35 points to a new record high of 2887.
The S&P 500 index rose 4 points to 1351 and advances "edged-out"
declines on volume of 802 million shares. The long Treasury bond
rose 26/32, pushing the yield lower to 6.03%.

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

Philip Morris  MO    JAN35C/OCT40C  $6.38  debit  LEAPS/CC's
Philip Morris  MO    OCT32C/OCT37C  $4.00  debit  bull-call
Barnes/Noble   BNBN  OCT15C/OCT17C  $1.75  debit  bull-call
Unify          UNFY  OCT12C/OCT17C  $4.12  debit  bull-call

We started the day chasing a big mover as Unify opened almost $3
higher with the Internet/Tech rally. It appeared as though there
would be no chance for this play but eventually, the stock came
back to earth. By 10:30 AM, the stock was up less than a dollar
and the option prices had stabilized. The opening target was not
available and a slightly higher entry at $4.12 was probably the
best one could expect. Barnesandnoble.com opened with slightly
less enthusiasm and it remained in a fairly small range for most
of the morning. The options were relatively un-traded and while
the target was never achieved, a reasonable entry of $1.75 was
available for a short time before 10:00 AM and then again near
10:45 AM. Philip Morris was down from the start and never made
much of an effort at a positive day. The LEAPS/CC's play traded
much lower than our target but because a limit order would have
been filled on the way down, we will record the entry as $6.38.
The bullish debit-spread target was easily achieved at $4.00.

Portfolio plays:

Another day of selective trading as Blue-chip issues faltered
while technology stocks moved higher. Hardware and chip stocks
started the rally and big advances by Compaq (CPQ) and National
Semiconductor (NSM) led our small and mid-cap portfolios. NSM
reported a first-quarter profit with stronger-than-expected
bookings and said improving market conditions put them ahead
of schedule in their efforts to turn a profit. CPQ was also a
standout with the stock climbing over $2 to a recent high near
$25. Both of these positions are being closed on the rally to
lock-in favorable returns. Peoplesoft (PSFT) continued its
bullish run with a close above the 26-week high near $18. Now
we are looking for some consolidation near this price with our
sold strike (October) at $17.50.

In the group of larger issues, Echostar (DISH) and EMC Corp
(EMC) were the leaders. DISH moved another $6 to a new closing
high at $94 and EMC vaulted $2.62 to a 52-week high near $68.
Both of these plays have achieved substantial profits and may
be closed early to avoid future downside risk. Home Depot (HD)
was another outstanding performer today, up $1.62 to the $68
range. This position is also being closed early to protect
favorable profits. Even our brokerage stocks participated with
Lehman Brothers (LEH) and Merrill Lynch (MER) both moving up
during the session.

Oil stocks have been on a rampage and we used the recent rally
to close and roll-forward many of our positions. Most notable
in the portfolio are Halliburton (HAL) and Unocal (UCL) which
have profited in every play offered since we started following
those issues early in the year. The long-term position on Exxon
(XON) was moved forward to October for a small credit of $0.75.

Other adjustments in the LEAPS/CC's section included; General
Motors (GM), which was rolled to October for a $1.00 credit at
the $70 strike; and Computer Associates (CA), a brand new play
that we were bounced out of on today's $5 rally. The stock rose
10% today on speculation that a recovery in the software market
would boost their revenues. CA is also rumored to have landed
several new deals and this helped push the stock to another of
today's 52-week highs at $60. The only solace was that the move
was nice and slow throughout the early part of the day and our 
buy-to-close STOP was filled near 10:00 AM, well before the big
surge. Had we been able to predict the giant closing rally, our
transaction might have ended profitably. This dilemma is all a
result of our aggressive stance in the bullish opening position
(JAN01-60C/SEP55C) and it will surely require a few months to
repair, if we can manage to stay ahead of the stock. A superb
lesson for the teacher may be the best that comes from this one.

Here are today's new positions (adjustments to October plays):

Exxon           XON  JAN01-85/OCT85C  $9.12  debit 
Comp Assoc.     CA   JAN01-60/OCT60C  $8.62  debit
General Motors  GM   JAN01-75/OCT70C  $8.50  debit
General Motors  GM   JAN01-75/OCT70C  $5.75  debit

New Items:

This month I received a number of suggestions from readers and
have decided to make some subtle changes in the Spreads/Combos
section to improve the quality of our product. The majority of
questions that we answer for this section are very basic and
the primary failure that we see in new traders is the inability
to manage their positions effectively. One of our goals is to
teach investors everything they must know to become successful
traders. One problem with the spreads section is that much of
the research time is spent tracking old plays that are deep ITM
with little need for further adjustment. One way we can remedy
this situation is to close the majority of our older positions;
including those that are significantly profitable (or beyond 
reasonable salvation). Then we will try to focus on individual
plays and the conditions that we use to evaluate each position
for probability of profit. We will also discuss common entry
and exit strategies along with basic roll-out/up techniques
for specific spreads. In this manner, we can began to improve
our role as a trading resource rather than just a play provider.
Hopefully, this will result in a much better product for the
majority of our readership.

Good Luck!

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

Today we have some new volatility plays based on small disparities
in the front-month option prices. The short-term positions will
profit if the underlying issue remains in a small range and the
longer-term calendar spreads will benefit from the sale of new
options (a lower cost basis) at the end of each strike period.
There is also a conservative (bullish) debit spread based on a
recent spike in implied volatility.
BCR - C.R. Bard  $51.25     *** Takeover Rumors ***

C.R. Bard is engaged in the design, manufacture, packaging,
distribution and sale of medical, surgical, diagnostic and
patient care devices. Hospitals, physicians and nursing homes
purchase approximately 90% of the company's products, most of
which are used once and discarded. C.R. Bard is also a leading
multinational developer, manufacturer and marketer of health
care products.

Standard & Poor recently revised its outlook on C.R. Bard and
affirmed its outstanding ratings for the company. The outlook
revision reflects improved operating performance and a more
conservative financial profile. Bard's investment-grade ratings
come from the medical device manufacturer's solid position in
several business segments, strong cash flow, and moderate debt
burden. Bard also holds important positions in the surgical,
urological, and vascular products markets, with a particular
strength in catheters and access port products. New product
development will also be a key to their success, as offerings
are subject to technological changes and the company's product
breadth is an advantage because customers are increasingly
dealing with fewer vendors.
The company has in the past been rumored as a takeover candidate
and with OTM call options active, there is a favorable (bullish)
position for those who like to speculate.

PLAY (aggressive - bullish/calendar spread):

BUY  CALL JAN-55 BCR-AK OI=71  A=$3.75
SELL CALL OCT-55 BCR-JK OI=330 B=$1.68

Chart = http://quote.yahoo.com/q?s=BCR&d=3m
ZOLT - Zoltek Companies  $7.68     *** Cheap Speculation ***

Zoltek develops, manufactures and markets advanced materials and
industrial products. The Carbon Fibers Division manufactures
carbon fibers for use in composites which replace metals or
conventional fiberglass materials. The Equipment and Services
Division supplies industrial process equipment, aftermarket
components and repair services for the chemical, petrochemical
and food processing, and power generating industries. They also
have a subsidiary, Zoltek Properties, a real estate holding

A very unique niche company that once traded in the $50 range.
Not much news but the third quarter report suggested that any
significant growth potential for the carbon fiber industry was
still a year or more in the future. Some of their International
products (Mavilon acrylic fiber lines) are being converted to
production lines and even though sales are up for carbon fiber,
margins are down. Their acrylic fiber sales are down, and now
the losses are widening for these products. Who knows when the
company will return to glory.

A strange technical formation suggests this stock may have come
to the bottom and the low-cost of this play negates any serious
risk. You will need to trade with at least 10 contracts for any
reasonable profit (and to overcome the commission costs of each
month's adjustments).

PLAY (conservative - neutral/calendar spread):

BUY  CALL JAN-7.50 QOT-DU OI=26 A=$1.50
SELL CALL SEP-7.50 QOT-IU OI=35 B=$0.31

Chart = http://quote.yahoo.com/q?s=ZOLT&d=3m
BJS - BJ Services Company  $39.00   *** Technicals Only ***

BJ Services Company is a leading provider of pressure pumping and
other oilfield services serving the petroleum industry worldwide.
BJ's pressure pumping services consist of well stimulation,
cementing, sand control and coiled tubing services used in the
completion of new oil and natural gas wells and in remedial work
on existing wells, both onshore and offshore. Oilfield services
include casing and tubular products, missioning and inspection,
pipelines and offshore platforms and specialty chemicals.

BJS is one of the many oil service companies that is benefitting
from the recent rise in crude oil prices. While we favor the
short-term bullish trend for this issue, it appears that some
consolidation may need to occur near the current price. We do
expect to buy-back the sold option next Friday but the premium
disparity is significant and hopefully the stock movement will
allow us to profit on the way up.
PLAY (aggressive - neutral/calendar spread):

BUY  CALL OCT-40 BJS-JH OI=128 A=$2.75
SELL CALL SEP-40 BJS-IH OI=98  B=$0.81

Chart = http://quote.yahoo.com/q?s=BJS&d=3m
TUTS - Tut Systems  $29.75   ** We Still Use Copper? ***

Tut Systems designs, develops and markets advanced communications
products which enable high-speed data access over the copper
infrastructure of telephone companies, as well as the telephone
wires in homes, businesses and other buildings. These products
incorporate Tut's proprietary FastCopper technology in a cost
effective, scalable and easy to deploy solution to exploit the
underutilized bandwidth of copper telephone wires.

A nice rally occured last week after ReFlex Communications signed
a multi-year agreement to purchase Tut's Expresso MDU high-speed
Internet access product line, in a deal worth an expected minimum
of $15 million. ReFlex is a rapidly growing provider of enhanced
broadband Internet communication and they are positioned to
deploy Tut's IP equipment for high-speed Internet services in
the booming multi-tenant marketplace.

TUT recently announced successful tests of voice over IP (VoIP) 
residential gateways with the Clarent Command Center and Tut's
Expresso MDU system providing the underlying IP network. The
tests validated interoperability and the use of the emerging
Media Gateway Control Protocol (MGCP), for linking remote VoIP
gateways to central VoIP call agents. Together, these products
allow service providers to offer bundles of voice over IP and
high-speed Internet services over a common IP infrastructure
to both commercial and residential subscribers.

The new technical trend appears favorable with positive upward
bias on excellent buying pressure and heavy volume support. The
deep ITM position offers a relatively safe investment for the
possibility of a 30% return.

PLAY (conservative - bullish/debit spread):

BUY  CALL OCT-22.50 QSS-JX OI=38 A=$8.25
SELL CALL OCT-25.00 QSS-JE OI=99 B=$6.25
INITIAL NET DEBIT TARGET=$1.88 ROI(max)=33% B/E=$24.38

Chart = http://quote.yahoo.com/q?s=TUTS&d=3m
				 - STRADDLES -
These plays are based on the current price or trading range of
the underlying issue and the statistical pricing history of its
options along with the probability of a profitable outcome. News
and market sentiment will have an effect on these positions so
review each play individually and make your own decision about
the future outcome of the stock price.
DLJ - Donaldson, Lufkin and Jenrette  $50.13

Donaldson, Lufkin and Jenrette is an integrated investment and
merchant bank that serves institutional, corporate, governmental
and individual clients. Co. is a holding company which conducts
its business through various subsidiaries including its principal
broker-dealer subsidiary, Donaldson, Lufkin & Jenrette Securities
Corporation. The company's businesses include underwriting, sales
and trading; merchant banking; financial advisory services;
investment research; correspondent brokerage services; and
asset management.

PLAY (conservative - neutral/debit straddle):

BUY  CALL JAN-50 DLJ-AJ OI=110 A=$7.25
BUY  PUT  JAN-50 DLJ-MJ OI=38  A=$6.25

Chart = http://quote.yahoo.com/q?s=DLJ&d=3m
CAL - Continental Airlines  $36.43

Continental Airlines is the fifth largest airline in the U.S.,
offering more than 2,000 jet and Express departures daily to 132
domestic and 57 international destinations. Operating major hubs
in Newark, Houston, Guam and Cleveland, they are strategically
positioned for transcontinental travel, and offer extensive
service to Latin America and Europe via its Houston and Newark
gateways. Continental was recently ranked the top airline in
customer satisfaction among the nine major U.S. carriers on
long-haul flights.

PLAY (conservative - neutral/debit straddle):

BUY CALL MAR-35 CAL-CG OI=0  A=$5.50
BUY PUT  MAR-35 CAL-OG OI=25 A=$3.37

Chart = http://quote.yahoo.com/q?s=CAL&d=3m
AVI - Avis Rent-A-Car  $22.81

Avis Rent A Car is a holding company which operates the second
largest general use car rental business in the world, based on
total revenue and volume of rental transactions. The Company
rents vehicles to business and leisure travelers in over 530
rental locations in airport, downtown and suburban markets in
the United States, Canada, Puerto Rico, U.S. Virgin Islands,
Argentina, Australia and New Zealand.

PLAY (conservative - neutral/debit straddle):

BUY CALL DEC-22.50 AVI-LX OI=5 A=$2.68
BUY PUT  DEC-22.50 AVI-XX OI=3 A=$2.00

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

One of the most conservative, neutral combination strategies
profits from large, abrupt movements in the underlying issue.
Before we can begin a discussion on the proper techniques for
purchasing straddles, there are a few definitions that must be
fully understood.

Option Pricing: The primary influence on an option's price is the 
movement of the underlying security. The next important factor is
time value. An option's price decays each day it is in existence.
The closer the option gets to expiration, the faster it decays.
There are other, less important factors that affect the price of
an option including interest and dividend rates.
Volatility: The volatility component of option pricing is a
measure of the range the underlying security is expected to
change over a given period of time. The actual measurement is
the standard deviation of the daily price changes in the issue.

Historical (statistical) Volatility: A measure of how quickly the
underlying security has moved in the past. It is a mathematical
definition based on historical prices. In most cases, the higher
the statistical volatility, the more an option is worth.

Implied Volatility: The market's estimate of future volatility of
the underlying security. Implied volatility calculators start with
the current option price and extrapolate the theoretical value of
volatility. Even though it is a computed value, it is still just
an estimate and is subject to errors (or irregularities) when the
market performs unexpectedly. In general terms, implied volatility
is the volatility value that makes an option's fair value equal to
its actual market price.

Debit straddle: A neutral option trading strategy, which consists
of the purchase a put and a call, generally with the same strike
and the same expiration month. The position will benefit from a
large move in one direction or the other and based on the size
and timeliness of the move, it can generate large profits. The
risk, (if little or no movement occurs) is limited to the initial
amount paid for the straddle. By carefully identifying undervalued
options and making reasonable assumptions about future movements
in the underlying security, this can be a profitable strategy with
very limited risk.

There are three rules to identifying favorable conditions for a
straddle purchase. First, the trader should select options that
are undervalued (cheap). Next, the underlying security must have
the potential to move (high or low) enough to make the straddle
profitable. Finally, the underlying stock should have a history
of multiple movements through a sufficient range in the required
amount of time to justify the overall risk/reward of the position.

The first step is to determine how fairly the options are priced.
This may be done with sophisticated pricing software or by simply
comparing the current levels of implied volatility to past levels
of implied volatility. When the relative implied volatility is
low, options are effectively under priced.

After identifying a series of inexpensive options, the trader must
determine if the underlying stock has the ability to move to a
profitable position in the required amount of time. (Three months
is generally the shortest recommended period for debit straddles;
shorter-term positions suffer from time decay too quickly.) With
a simple probability calculator, it is easy to estimate the chance
of the underlying stock finishing outside the break-even points at
expiration. One thing you must understand when using these tools
is that historical volatility measures are generally based on 10,
20, 50 and 100 day statistics and thus it is important to make a
conservative estimate so as to not to artificially inflate the
probability of profit.

The next step is to look at a price chart of the stock to see if
it has a history of moving the required distance in the allotted
time frame. The important thing to examine is how often the issue
moves through the necessary profit range in each of the past four
or five 'three-month' periods. Once again, simple option analysis
software will do this automatically and more importantly, it will
forecast the probability of actually profiting from the position.

One thing to be aware of when buying any option is that time decay
becomes greatest during the last month before expiration. A three
month debit straddle will have lost approximately 50% of its value
before the beginning of the worst erosion period even if the stock
remains exactly at the original price when the position was opened.
This makes it very important to use a mental loss limit near one-
half the cost of the initial straddle purchase to preserve capital
in the event the underlying issue does not perform as expected.

After the position is open and the underlying stock begins to make
a move, it is necessary to decide whether to ride the trend to the
break-even point or trade against the straddle. One technique is
to hold the straddle until the value of either option pays for the
entire position, then the remaining option is risk free with
unlimited profit potential. A similar method bases the target exit
on the sum total of both positions. When one position is worth the
total initial debit, both positions are closed and the premium
from the lower priced option is profit. The latter strategy works
well when there is still ample time until the options expire.

'Riding the trend' is considered the more profitable technique for
directional traders but it involves additional risk and requires
knowledge of basic technical analysis. The most common approach to
this strategy is to monitor the underlying issue for a breakout or
key reversal through a technical support or resistance level. When
the new trend has been positively identified, the lower priced
options (losing side) are sold along with one-half of the higher
priced options (profitable side). The remaining position is held
until a reasonable profit target is met and downside protection
is maintained with a trailing stop. Advanced traders favor this
follow-up technique because it is based on known technical trends
and the action generally occurs near the position's break-even
points. When one of these points is reached, two simple trades
lower the overall cost basis while retaining a high probability
of eventual profit.

Determining how and when to exit a play is a matter of personal
preference but in most cases, if the underlying issue performs
poorly, the play should be liquidated before time value decay
erodes the entire position significantly. As the last month of
option life approaches, you should begin to plan an exit. Study
the daily movement of the underlying issue and use it to your
advantage to exit the position; selling each option for whatever
you can get when instincts (not emotion!), tell you it's right.
It's very difficult to learn to close out losing plays early but
the simple fact is; there is no reason to hang on to a losing
position when there are so many other profitable plays that
deserve your time and money. Accept your losses, learn from
your mistakes, evaluate each one critically, then move on!

Favorable debit straddles are relatively simple to uncover. The
basic requirements are inexpensive options on issues that have
proven historical volatility. The strategy is very simple and
perfect for the novice trader providing he or she understands
option pricing basics and follows a few simple guidelines. This
type of strategy can generate excellent returns because losses
are limited to the initial investment and profits are limited
only by time and volatility in the underlying issue.

More information on this and other spread/combination strategies
can be found in Larry McMillan's book, "Options As A Strategic
Investment", available in the OIN bookstore.

Good Luck! 


The Option Investor Newsletter            9-12-99
Sunday                7  of  7


Selling LEAPS...

One of our subscribers requested that we discuss selling LEAPS
as covered-calls. Here are the basic facts...

LEAPS - Long-term Equity AnticiPation Securities are options
with expiration dates far in the future (now available for the
year 2002), that allow investors to establish long or short

Strategies involving selling LEAPS options do not differ much from
those involving shorter-term options. LEAPS can be sold against
the underlying stock just as short-term options can. The covered
write position will have the same limited profit potential when
compared to outright stock ownership but will outperform that
strategy if the stock price falls or remains relatively unchanged.
A trader that sells LEAPS will take in substantial premium when
compared to the short-term covered-call and thus has a smaller
cash investment (since he is selling a more expensive option).
The larger premium of this call also produces a significantly
lower break-even price for the overall position and the LEAPS
writer has a higher net return if exercised, because he wrote a
more expensive option initially. The long-term position can also
benefit from regular dividends.

The most significant difference in the LEAPS options is the slow
rate of time decay. These long-term options also retain their time
value even when they are substantially 'in' or 'out' of the money.
This characteristic will significantly affect a traders ability to
roll-out of a position because the option is relatively expensive
to buy back. On the other hand, the short-term covered call writer
that is faced with rolling down may transition to LEAPS as a means
of retaining a large premium even though he is moving to a less
profitable position. (Rolling down means to buy back the call that
is currently written and sell another with a lower strike price.)

The large absolute premiums available in this type of strategy
make these positions unusually attractive. The key is to compare
the difference in annualized returns from LEAPS versus those that
can be made from repeatedly selling the shorter-term calls.

Good Luck!


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

AERL   17.50  19.00   SEP  17.50  1.00  *$  1.00   6.1%  14.2%
NFLD   12.63  13.50   SEP  12.50  0.75  *$  0.62   5.2%  12.2%
WSTL    7.75   8.44   SEP   7.50  1.25  *$  1.00  15.4%  11.1%
OLS     9.94  10.44   SEP  10.00  1.00  *$  1.06  11.9%  10.3%
VTS    19.25  20.81   SEP  17.50  3.25  *$  1.50   9.4%  10.2%
MXTR    5.03   7.00   SEP   5.00  0.63  *$  0.60  13.6%   9.9%
NPIX   18.94  17.50   SEP  17.50  2.13   $  0.69   4.1%   9.6%
IDTI   14.69  21.81   SEP  15.00  1.31  *$  1.62  12.1%   8.8%
PILL   13.94  13.50   SEP  12.50  1.88  *$  0.44   3.6%   8.5%
LYNX   13.00  12.81   SEP  12.50  1.13  *$  0.63   5.3%   7.7%
NRES   24.50  24.00   SEP  20.00  5.13  *$  0.63   3.3%   7.6%
TMAR    7.63   9.44   SEP   7.50  0.81  *$  0.68  10.0%   7.2%
NTAI   14.88  15.50   SEP  15.00  1.00  *$  1.12   8.1%   7.0%
IMNR    5.63   5.53   SEP   5.00  1.00  *$  0.37   8.0%   6.9%
PR     19.25  21.50   SEP  20.00  0.94  *$  1.69   9.2%   6.7%
KING   31.50  36.00   SEP  30.00  2.81  *$  1.31   4.6%   6.6%
PCYC   29.13  41.06   SEP  22.50  7.88  *$  1.25   5.9%   6.4%
MRVC   14.88  24.50   SEP  12.50  3.00  *$  0.62   5.2%   5.7%
ADAP   33.00  36.25   SEP  30.00  4.13  *$  1.13   3.9%   5.7%
CS     15.50  17.94   SEP  15.00  1.06  *$  0.56   3.9%   5.6%
GNSS   24.88  25.63   SEP  22.50  2.88  *$  0.50   2.3%   5.3%
FLC    13.13  15.19   SEP  12.50  1.19  *$  0.56   4.7%   5.1%
IRF    16.00  17.00   SEP  15.00  1.81  *$  0.81   5.7%   5.0%
MOGN   11.88  13.13   SEP  10.00  2.31  *$  0.43   4.5%   4.9%
IDTI   18.88  21.81   SEP  17.50  2.13  *$  0.75   4.5%   4.9%
IDTC   18.88  23.38   SEP  15.00  4.50  *$  0.62   4.3%   4.7%
MRVC   14.50  24.50   SEP  12.50  2.63  *$  0.63   5.3%   4.6%
MAK    13.69  12.63   SEP  12.50  1.81  *$  0.62   5.2%   4.5%
PESC   23.88  28.88   SEP  22.50  2.69  *$  1.31   6.2%   4.5%
RIGS   19.81  18.81   SEP  17.50  3.00  *$  0.69   4.1%   4.5%
RNBO   13.88  13.19   SEP  12.50  2.19  *$  0.81   6.9%   4.3%
NETA   17.56  20.34   SEP  15.00  3.50  *$  0.94   6.7%   4.2%
USAI   45.94  44.31   SEP  45.00  3.50   $  1.87   4.4%   3.2%
ATML   39.88  38.19   SEP  40.00  2.63   $  0.94   2.5%   2.7%
SBGI   20.31  18.50   SEP  20.00  1.69   $ -0.12  -0.6%   0.0%
TIE    11.19   8.75   SEP  10.00  2.13   $ -0.31  -3.4%   0.0%
PXD    12.69  11.13   SEP  12.50  1.13   $ -0.43  -3.7%   0.0%
PENN    9.88   8.63   SEP  10.00  0.75   $ -0.50  -5.5%   0.0%

NVDA   26.00  26.44   OCT  25.00  3.38  *$  2.38  10.5%   6.5%
BRKT   15.88  17.19   OCT  15.00  2.25  *$  1.37  10.1%   6.2%
ENER   13.88  12.75   OCT  12.50  2.31  *$  0.93   8.0%   6.0%
RDRT    5.88   6.06   OCT   5.00  1.31  *$  0.43   9.4%   5.8%
COMS   25.69  27.25   OCT  25.00  2.50  *$  1.81   7.8%   4.8%
TSK    17.50  16.81   OCT  17.50  1.63   $  0.94   5.9%   4.4%
NTMV    7.19   6.50   OCT   7.50  1.00   $  0.31   5.0%   3.7%
PCTL    5.69   4.50   OCT   5.00  1.19   $  0.00   0.0%   0.0%


USAI - Tested $43 successfully.
ATML - Consolidating.
SBGI - Working back towards resistance.
TIE  - Oversold bounce? Short-term buy signals evident.
PXD  - Oils heating up, upgraded Friday and now oversold.
PENN - Expect a short-term technical rally.
TSK  - Consolidating, negative indication closing below $15.
NTMV - $6 should provide support.
PCTL - Consider an exit if it moves below $4.

OI - Open Interest
CB - Cost Basis (Price paid - Prem rec'd, 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

NETS   27.38  SEP 25.00  NTU IE  3.00  1912  24.38   2.6%   2.6%
TRVL   13.50  SEP 12.50  TVU IV  1.31  28    12.19   2.6%   2.6%

CIEN   39.75  OCT 35.00  EUQ JG  6.13  3946  33.63   4.1%   4.1%
CS     18.06  OCT 17.50   CS JW  2.00  8999  16.06   8.9%   8.9%
DCTM   17.13  OCT 15.00  QDC JC  3.00  1334  14.13   6.2%   6.2%
MOGN   13.13  OCT 12.50  QOG JV  1.63  259   11.50   8.7%   8.7%
OIL    13.19  OCT 12.50  OIL JV  1.38  330   11.81   5.8%   5.8%
SOFN   26.25  OCT 22.50  SUC JX  5.00  339   21.25   5.9%   5.9%

Sequenced by Return Called

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

NETS   27.38  SEP 25.00  NTU IE  3.00  1912  24.38   2.6%   2.6%
TRVL   13.50  SEP 12.50  TVU IV  1.31  28    12.19   2.6%   2.6%

CS     18.06  OCT 17.50   CS JW  2.00  8999  16.06   8.9%   8.9%
MOGN   13.13  OCT 12.50  QOG JV  1.63  259   11.50   8.7%   8.7%
DCTM   17.13  OCT 15.00  QDC JC  3.00  1334  14.13   6.2%   6.2%
SOFN   26.25  OCT 22.50  SUC JX  5.00  339   21.25   5.9%   5.9%
OIL    13.19  OCT 12.50  OIL JV  1.38  330   11.81   5.8%   5.8%
CIEN   39.75  OCT 35.00  EUQ JG  6.13  3946  33.63   4.1%   4.1%

Company Descriptions

NETS - YouthStream Media Networks  $27.38 *** One Week Play ***

YouthStream Media is a gateway to the young adult marketplace, 
with a strong emphasis on the high school and college audience. 
The company has 80 years of aggregate college market experience 
and their offerings are leveraged by more than 7000 high schools
and 2000 U.S. college campuses. Recently launched mybytes.com,
the first vertical Internet hub developed specifically for the 
college market. Will the advertisers pay to reach this core
adult market; ages 18-25? Worthy speculation for one week.

SEP 25.00 NTU IE Bid=3.00 OI=1912 CB=24.38 RC=2.6% RNC=2.6%

Chart = http://quote.yahoo.com/q?s=NETS&d=3m
TRVL - Travel Services Intl.  $13.50  *** One Week Play ***

Travel Services is a specialized distributor of cruise vacations, 
domestic and international airline tickets and European auto 
rentals, and a provider of electronic hotel reservation services, 
to both travel agents and travelers. Travel Services rebounded 
strongly off its May low and is currently consolidating. Closing
at the high on both Thursday and Friday raises the probability
of a favorable outcome for this one week speculation play.

SEP 12.50 TVU IV Bid=1.31 OI=28 CB=12.19 RC=2.6% RNC=2.6%

Chart = http://quote.yahoo.com/q?s=trvl&d=3m
CIEN - CIENA Corporation  $39.75 *** Merger Rumors ***

CIENA designs, manufactures and sells open architecture, dense 
wavelength division multiplexing systems for fiberoptic 
communications networks. After beating estimates last quarter,
CIENA was upgraded and on Friday had coverage started. CIENA
has resumed its up-trend after a post earnings consolidation.
Now rumors are circulating: a new merger attempt with TLAB?
Favorable long-term position with support at our cost basis. 

OCT 35.00 EUQ JG Bid=6.13 OI=3946 CB=33.63 RC=4.1% RNC=4.1%

Chart = http://quote.yahoo.com/q?s=cien&d=3m
CS - Cabletron Systems, Inc.  $18.06 *** Take Over Target? ***

CS provides high-performance networking solutions and delivers 
dependable network access and communications through its scaleable
products designed for enterprise networks and service providers.
Lots of news as Cabletron's new CEO works on rebuilding and/or 
positioning the company for a possible sale or partnership. 
The technicals remain strong as investors speculate on Cabletron's
valuation. Past rumors mention a global telecom giant's interest
and a price range of $20 a share. Earnings expected September 20.

OCT 17.50 CS JW Bid=2.00 OI=8999 CB=16.06 RC=8.9% RNC=8.9%

Chart = http://quote.yahoo.com/q?s=cs&d=3m
DCTM - Documentum, Inc. $17.13 *** Stage I Base ***

Documentum develops, markets and supports a software application 
environment for automating the flow of knowledge in and between 
organizations, and a family of Web applications that accelerate 
product and process innovation. On Tuesday, Aug 31, Documentum
announced its integration with PSFT's new contracts application.
Now the stock is $3 higher on increased volume? Is DCTM ready to
exit the top of its 6 month base? A cost basis at support with 
improving technicals offers another favorable speculation play.

OCT 15.00 QDC JC Bid=3.00 OI=1334 CB=14.13 RC=6.2% RNC=6.2%

Chart = http://quote.yahoo.com/q?s=dctm&d=3m
MOGN - MGI Pharma, Inc.  $13.13 *** Long Term Uptrend ***

MGI Pharma, Inc. is a human pharmaceutical company that acquires, 
develops and markets differentiated, specialty pharmaceuticals 
and medical products for therapeutic markets of unmet need. In 
July, MGI Pharma reported a 46% increase in revenues on a 2Q EPS
of $0.04. Recently began co-promoting Azulfidine EN-tabs with
Pharmacia & Upjohn for patients with rheumatoid arthritis. MOGN,
in a slow up-trend since late '97, is a favorable long term play.

OCT 12.50 QOG JV Bid=1.63 OI=259 CB=11.50 RC=8.7% RNC=8.7%

Chart = http://quote.yahoo.com/q?s=mogn&d=3m
OIL - Triton Energy Ltd  $13.19 *** Oil Sector ***

OIL, an international oil and gas company, explores and produces 
through affiliates and subsidiaries. OIL's properties are located 
in Colombia, Malaysia-Thailand, Africa, Asia, Middle East and 
Europe. With Triton's restructuring plan and cost reductions 
almost complete, they should start to benefit from increased oil
production and rising prices. The stock's technicals continue to 
improve with established support near our cost basis.

OCT 12.50 OIL JV Bid=1.38 OI=330 CB=11.81 RC=5.8% RNC=5.8%

Chart = http://quote.yahoo.com/q?s=oil&d=3m
SOFN - SoftNet Systems, Inc.  $26.25 *** New Strength ***

SoftNet is a high-speed broadband Internet access and content 
services company. SOFN provides a complete turnkey Internet 
service to cable partners and markets a high-speed commercial 
Internet link. Softnet is aggressively pursuing affiliation
agreements with other cable operators to market cable-based
Internet services.  Last quarter their revenues increased over
300%. With the Internet sector rebooting, SoftNet is showing
strength: taking out the August high on increasing volume and
moving above its 150 dma.

OCT 22.50 SUC JX Bid=5.00 OI=339 CB=21.25 RC=5.9% RNC=5.9%

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


Position Trading For Profit...

In option markets there are many ways to trade for profit. One
strategy involves speculating on the direction in which the
underlying security will move. If a trader correctly predicts
the market direction and takes the appropriate position he can
expect to make a profit. But even when the market moves in the
predicted direction, owning the correct position (CALL or PUT)
in an option market will not necessarily be profitable. The
reason is, over short periods of time, (while the trader is 
waiting for the option price to move towards the theoretical
value) the position is at risk from a variety of changes in
the market which threaten his potential profit.

A spread is a technique which involves the buying and selling of
simultaneous but opposing positions in different option series.
An experienced trader knows there is an identifiable relationship
between the different series and when the relationship appears to
be temporarily mispriced, the spread trader will try to buy the
under-priced position and sell the overpriced position. The trader
expects to maximize his profits as the prices of the instruments
return to a linear relationship. Another type of spread involves
the price relationship between different time periods or strike
dates. In its simplest form, it is called a calendar spread. When
this relationship is violated in the marketplace, a potential
opportunity again exists by selling the overpriced contract and
buying the under-priced contract.

Much of the sophisticated trading in stock/option markets involves
identifying and tracking spread relationships. When a trader finds
that a spread position is mispriced, it can be just as profitable
to buy or sell the spread as to take an outright long (or short)
position in a single instrument. A trader will sometimes have to
hold a correctly positioned option contract for an extended period
in order to profit from the movement of the underlying security.
Unfortunately, over short periods of time, he may have to endure
adverse movements in the positions value. The price fluctuations
might even be severe enough that the trader, (because of capital
requirements) will not be able to maintain the position. If he is
forced to liquidate the position prior to expiration, there is no
guarantee that he will profit from a correct directional forecast
of the underlying security.

Basically, spread trading is an attempt to reduce the effects of
short-term volatility that goes with any investment. The strategy
benefits from the law of probability by enabling a trader to hold
option positions over longer periods of time and most of these
techniques will help maintain profit potential while reducing the
short-term risk. 

Visit the spreads/combos section to learn more about position
trading techniques.

Good Luck!


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

ENER   13.88  12.75   SEP  12.50  0.31  *$  0.31   6.9%  16.2%
IRF    16.81  17.00   SEP  15.00  0.31  *$  0.31   5.9%  13.9%
CRUS    8.88  11.75   SEP   7.50  0.38  *$  0.38  14.9%  13.0%
ADAP   30.75  36.25   SEP  25.00  0.88  *$  0.88  11.8%  12.9%
MCOM   25.56  23.63   SEP  17.50  0.88  *$  0.88  14.7%  12.8%
PAX    15.31  15.63   SEP  12.50  0.44  *$  0.44  11.7%  12.7%
PCYC   29.13  41.06   SEP  20.00  0.69  *$  0.69  10.6%  11.5%
RIGS   19.81  18.81   SEP  17.50  0.63  *$  0.63  10.1%  11.0%
NVDA   26.00  26.44   SEP  22.50  0.56  *$  0.56   7.5%  10.9%
NETG   22.25  29.13   SEP  17.50  0.63  *$  0.63  12.4%  10.8%
NSM    28.56  34.69   SEP  25.00  0.63  *$  0.63   7.4%  10.7%
CLTR   29.13  22.25   SEP  20.00  0.63  *$  0.63   9.8%  10.6%
ADAP   22.88  36.25   SEP  17.50  0.75  *$  0.75  14.1%  10.2%
ZRAN   30.63  33.88   SEP  25.00  0.50  *$  0.50   7.0%  10.2%
VTS    19.25  20.81   SEP  15.00  0.38  *$  0.38   9.0%   9.8%
BEAS   24.25  26.50   SEP  20.00  0.38  *$  0.38   6.5%   9.4%
GNSS   24.06  25.63   SEP  20.00  0.38  *$  0.38   6.4%   9.3%
KING   28.63  36.00   SEP  25.00  0.69  *$  0.69   8.1%   8.8%
CYMI   36.88  36.38   SEP  30.00  0.50  *$  0.50   6.0%   8.7%
SCMM   47.88  45.63   SEP  35.00  0.75  *$  0.75   7.3%   7.9%
NMR    33.50  36.94   SEP  25.00  0.63  *$  0.63   8.6%   7.5%
PESC   23.88  28.88   SEP  17.50  0.50  *$  0.50   9.5%   6.9%
CORR   22.50  22.72   SEP  17.50  0.44  *$  0.44   8.9%   6.5%
BOBJ   47.19  54.88   SEP  35.00  0.75  *$  0.75   7.4%   6.4%
SBGI   20.50  18.50   SEP  17.50  0.38  *$  0.38   6.8%   5.9%
PLMD   17.88  27.13   SEP  15.00  0.31  *$  0.31   6.8%   5.9%
CSE    48.06  49.81   SEP  40.00  0.75  *$  0.75   6.3%   5.5%
USAI   45.94  44.31   SEP  40.00  0.81  *$  0.81   6.1%   4.4%
TDW    34.44  34.13   SEP  30.00  0.56  *$  0.56   5.7%   4.1%
DD     74.75  65.75   SEP  65.00  1.00  *$  1.00   4.7%   3.4%
CMTO   18.81  13.44   SEP  15.00  0.75   $ -0.81 -18.0%   0.0%

DUSA   15.50  15.00   OCT  12.50  0.88  *$  0.88  21.6%  16.0%
CYBX   18.69  19.63   OCT  15.00  0.69  *$  0.69  15.4%  11.4%
MYGN   11.88  13.63   OCT  10.00  0.50  *$  0.50  14.8%  11.0%
ORTL   18.88  17.50   OCT  15.00  0.44  *$  0.44  10.5%   7.8%
PRTL   23.06  21.00   OCT  17.50  0.50  *$  0.50   9.8%   7.3%
HELX   30.25  31.00   OCT  22.50  0.50  *$  0.50   7.6%   5.7%
KING   32.81  36.00   OCT  25.00  0.44  *$  0.44   6.3%   4.7%


DD   - Will the oversold rally last till Friday?
CMTO - Should continue to rebound out of oversold condition.
       Oct-$15 calls are $1.00. Speculation should increase  
       towards November (and possible approval by CableLabs?).
PRTL - A new public offering announced Friday; dilution?

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

CIEN   39.75  OCT 30.00  EUQ VF  0.44  714   29.56   5.2%
CS     18.06  OCT 15.00   CS VC  0.50  1008  14.50  10.7%
HELX   31.00  OCT 25.00  HHQ VE  0.94  68    24.06  12.8%
HLTH   34.94  OCT 25.00  HUT VE  0.69  95    24.31   9.0%
IDTC   23.38  OCT 17.50  IQJ VW  0.63  29    16.88  11.8%
MK     10.81  OCT 10.00   MK VB  0.31  0      9.69   8.2%
NVX     7.19  OCT  5.00  NVX VA  0.38  244    4.63  20.7%
USWB   28.50  OCT 22.50  QWB VX  0.50  536   22.00   8.1%

Sequenced by ROI  

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

NVX     7.19  OCT  5.00  NVX VA  0.38  244    4.63  20.7%
HELX   31.00  OCT 25.00  HHQ VE  0.94  68    24.06  12.8%
IDTC   23.38  OCT 17.50  IQJ VW  0.63  29    16.88  11.8%
CS     18.06  OCT 15.00   CS VC  0.50  1008  14.50  10.7%
HLTH   34.94  OCT 25.00  HUT VE  0.69  95    24.31   9.0%
MK     10.81  OCT 10.00   MK VB  0.31  0      9.69   8.2%
USWB   28.50  OCT 22.50  QWB VX  0.50  536   22.00   8.1%
CIEN   39.75  OCT 30.00  EUQ VF  0.44  714   29.56   5.2%

Company Descriptions
CIEN - CIENA Corporation  $39.75 *** Merger Rumors ***

CIENA designs, manufactures and sells open architecture, dense 
wavelength division multiplexing systems for fiberoptic 
communications networks. After beating estimates last quarter,
CIENA was upgraded and on Friday had coverage started. CIENA
has resumed its uptrend after a post earnings consolidation.
Now rumors are circulating: a new merger attempt with TLAB?
Favorable speculation with support above the strike price.

OCT  30.00  EUQ VF  Bid=0.44  OI=714  CB=29.56  ROI=5.2%

Chart = http://quote.yahoo.com/q?s=CIEN&d=3m
CS - Cabletron Systems, Inc.  $18.06 *** Take Over Target? ***

CS provides high-performance networking solutions and delivers 
dependable network access and communications through its scaleable
products designed for enterprise networks and service providers.
Lots of news as Cabletron's new CEO works on rebuilding and/or 
positioning the company for a possible sale or partnership. 
The technicals remain strong as investors speculate on Cabletron's
valuation.  Past rumors mention a global telecom giant's interest
and a price range of $20 a share. Earnings expected September 20.

OCT  15.00  CS VC  Bid=0.50  OI=1008  CB=14.50  ROI=10.7%   

Chart = http://quote.yahoo.com/q?s=CS&d=3m
HELX - Helix Technology Corp. $31.00  *** A New High? ***

HELX is engaged in the development and application of cryogenic 
vacuum technology and provides innovative solutions to customer
requirements in select markets worldwide. Helix business depends
in large part upon the capital expenditures of semiconductor 
(Hot Sector) manufacturers. Last quarter's revenues increased
26% with net income more than doubling. Another technically 
strong stock that is just shy of reaching its all-time high.
Why pay retail if you don't have to?

OCT  25.00  HHQ VE  Bid=0.94  OI=68  CB=24.06  ROI=12.8%    

Chart = http://quote.yahoo.com/q?s=HELX&d=3m
HLTH - Healtheon  $34.94   *** Speculation Only! ***

Healtheon is applying advanced Internet technology to enable
healthcare providers and consumers to interact with healthcare
institutions; to securely communicate, exchange information and
perform complex transactions. Healtheon's services simplify the
business and clinical processes of healthcare, provide timely
access to information and help provide better service. Rumors
of a possible merger and the WebMD deal (now past the lockup
period and 180-day insider restrictions) make this a favorable
speculation play.

OCT  25.00  HUT VE  Bid=0.69  OI=95  CB=24.31  ROI=9.0% 

Chart = http://quote.yahoo.com/q?s=HLTH&d=3m
IDTC - IDT Corp.  $23.38  *** Target Shooting With Naked Puts ***

IDT Corporation is a telecommunications company which offers a 
range of integrated long-distance telephone, Internet access
services, and prepaid calling cards. In August, IDTC jumped
with the rocket-rally of its IPO after NTOP had a sleeper start. 
Now that NTOP is a day-trader's toy, analysts speculate whether 
IDTC is under-valued or NTOP is over-valued. IDTC then dropped 
when it announced its $0.05 attack on the long distance giants.
For the speculative crowd: a cost basis at support offering a
favorable risk-reward scenario. 

OCT  17.50  IQJ VW  Bid=0.63  OI=29  CB=16.88  ROI=11.8%    

Chart = http://quote.yahoo.com/q?s=IDTC&d=3m
MK - Morrison Knudsen  $10.81     *** Strange Pattern ***

Morrison Knudsen is an international provider of engineering
construction management services, comprehensive environmental
and hazardous substance remediation services to governmental
and private-sector clients, and diverse heavy construction
for highway, airport, water resource, railway and commercial
building industries. They also provide mine engineering for
diverse customers. New service contracts and a very unusual
technical history make this an interesting candidate.

OCT  10.00  MK VB  Bid=0.31  OI=0  CB=9.69  ROI=8.2%

Chart = http://quote.yahoo.com/q?s=MK&d=3m
NVX - North American Vaccine  $7.19

North American Vaccine is engaged in the research, development,
production and marketing of vaccines for the prevention of
infectious diseases in children and adults. Their first product
is a patented, monocomponent acellular pertussis vaccine for the
prevention of whooping cough. It's been combined with diphtheria
and tetanus toxoids for use in an all-in-one pediatric booster.
The Company has other vaccines in various stages of development.
Speculation on negotiations involving strategic initiatives and
product development has created some short-term volatility and
higher option premiums.

OCT  5.00  NVX VA  Bid=0.38  OI=244  CB=4.63  ROI=20.7%

Chart = http://quote.yahoo.com/q?s=NVX&d=3m
USWB - USWeb  $28.50   *** Off And Running! ***

USWeb/CKS is a professional services firm that was formed by the
merger of USWeb Corporation and CKS Group. Together, they define
strategies and implement innovative ways to build businesses by
combining the expertise of strategy, Internet technology and
marketing communications. USWeb/CKS helps clients differentiate
their products and services, strengthen customer relationships,
leverage human capital, and improve business efficiency in the
new era of E-commerce. Buyout rumors drove it higher and now a
growing interest in web enablers is sustaining the rally.

OCT  22.50  QWB VX  Bid=0.50  OI=536  CB=22.00  ROI=8.1%

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



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